Allowance for Credit Losses The allowance for credit losses represents an estimate of the losses expected from the companys receivable portfolio.
The level of the allowance is based on many quantitative and qualitative factors, including historical loss experience by product category, portfolio duration, delinquency trends, economic conditions and credit risk quality.
The adequacy of the allowance is assessed quarterly.
Different assumptions or changes in economic conditions would result in changes to the allowance for credit losses and the provision for credit losses.
The total allowance for credit losses at October 31, 2012, 2011 and 2010 was $243 million, $269 million and $296 million, respectively.
The decreases in 2012 and 2011 were primarily due to decreases in loss experience.
The assumptions used in evaluating the companys exposure to credit losses involve estimates and significant judgment.
The historical loss experience on the receivable portfolio represents one of the key assumptions involved in determining the allowance for credit losses.
Over the last five fiscal years, this percent has varied by an average of approximately plus or minus .23 percent, compared to the average loss experience percent during that period.
Holding other assumptions constant, if this estimated loss experience on the receivable portfolio were to increase or decrease .23 percent, the allowance for credit losses at October 31, 2012 would increase or decrease by approximately $70 million.


| Accrued Balance at November 27 1998 Total Charges Cash Payments Adjustments Accrued Balance at December 3 1999 | Accrual related to previous restructurings |


| Fiscal Years Ending Amount | September 24, 2005 | September 30, 2006 | September 29, 2007 | September 27, 2008 | September 26, 2009 | Thereafter | Total (not reduced by minimum sublease rentals of $165) |


Sources of Liquidity Primary sources of liquidity for Citigroup and its principal subsidiaries include: ?
deposits; ?
collateralized financing transactions; ?
senior and subordinated debt; ?
commercial paper; ?
trust preferred and preferred securities; and ?
purchased/wholesale funds.
Citigroups funding sources are diversified across funding types and geography, a benefit of its global franchise.
Funding for Citigroup and its major operating subsidiaries includes a geographically diverse retail and corporate deposit base of $774.2 billion.
These deposits are diversified across products and regions, with approximately two-thirds of them outside of the U. S.  This diversification provides the Company with an important, stable and low-cost source of funding.
A significant portion of these deposits has been, and is expected to be, long-term and stable, and are considered to be core.
There are qualitative as well as quantitative assessments that determine the Companys calculation of core deposits.
The first step in this process is a qualitative assessment of the deposits.
For example, as a result of the Companys qualitative analysis certain deposits with wholesale funding characteristics are excluded from consideration as core.
Deposits that qualify under the Companys qualitative assessments are then subjected to quantitative analysis.
Excluding the impact of changes in foreign exchange rates and the sale of our retail banking operations in Germany during the year ending December 31, 2008, the Companys deposit base remained stable.
On a volume basis, deposit increases were noted in Transaction Services, U. S.  Retail Banking and Smith Barney.
This was partially offset by the Companys decision to reduce deposits considered wholesale funding, consistent with the Companys de-leveraging efforts, and declines in International Consumer Banking and the Private Bank.
Citigroup and its subsidiaries have historically had a significant presence in the global capital markets.
The Companys capital markets funding activities have been primarily undertaken by two legal entities: (i) Citigroup Inc. , which issues long-term debt, medium-term notes, trust preferred securities, and preferred and common stock; and (ii) Citigroup Funding Inc.  (CFI), a first-tier subsidiary of Citigroup, which issues commercial paper, medium-term notes and structured equity-linked and credit-linked notes, all of which are guaranteed by Citigroup.
Other significant elements of longterm debt on the Consolidated Balance Sheet include collateralized advances from the Federal Home Loan Bank system, long-term debt related to the consolidation of ICGs Structured Investment Vehicles, asset-backed outstandings, and certain borrowings of foreign subsidiaries.
Each of Citigroups major operating subsidiaries finances its operations on a basis consistent with its capitalization, regulatory structure and the environment in which it operates.
Particular attention is paid to those businesses that for tax, sovereign risk, or regulatory reasons cannot be freely and readily funded in the international markets.
Citigroups borrowings have historically been diversified by geography, investor, instrument and currency.
Decisions regarding the ultimate currency and interest rate profile of liquidity generated through these borrowings can be separated from the actual issuance through the use of derivative instruments.
Citigroup is a provider of liquidity facilities to the commercial paper programs of the two primary Credit Card securitization trusts with which it transacts.
Citigroup may also provide other types of support to the trusts.
As a result of the recent economic downturn, its impact on the cashflows of the trusts, and in response to credit rating agency reviews of the trusts, the Company increased the credit enhancement in the Omni Trust, and plans to provide additional enhancement to the Master Trust (see Note 23 to Consolidated Financial Statements on page 175 for a further discussion).
This support preserves investor sponsorship of our card securitization franchise, an important source of liquidity.
Banking Subsidiaries There are various legal limitations on the ability of Citigroups subsidiary depository institutions to extend credit, pay dividends or otherwise supply funds to Citigroup and its non-bank subsidiaries.
The approval of the Office of the Comptroller of the Currency, in the case of national banks, or the Office of Thrift Supervision, in the case of federal savings banks, is required if total dividends declared in any calendar year exceed amounts specified by the applicable agencys regulations.
State-chartered depository institutions are subject to dividend limitations imposed by applicable state law.
In determining the declaration of dividends, each depository institution must also consider its effect on applicable risk-based capital and leverage ratio requirements, as well as policy statements of the federal regulatory agencies that indicate that banking organizations should generally pay dividends out of current operating earnings.
Non-Banking Subsidiaries Citigroup also receives dividends from its non-bank subsidiaries.
These non-bank subsidiaries are generally not subject to regulatory restrictions on dividends.
However, as discussed in Capital Resources and Liquidity on page 94, the ability of CGMHI to declare dividends can be restricted by capital considerations of its broker-dealer subsidiaries.
CGMHIs consolidated balance sheet is liquid, with the vast majority of its assets consisting of marketable securities and collateralized short-term financing agreements arising from securities transactions.
CGMHI monitors and evaluates the adequacy of its capital and borrowing base on a daily basis to maintain liquidity and to ensure that its capital base supports the regulatory capital requirements of its subsidiaries.
Some of Citigroups non-bank subsidiaries, including CGMHI, have credit facilities with Citigroups subsidiary depository institutions, including Citibank, N. A.
Borrowings under these facilities must be secured in accordance with Section 23A of the Federal Reserve Act.
There are various legal restrictions on the extent to which a bank holding company and certain of its non-bank subsidiaries can borrow or obtain credit from Citigroups subsidiary depository institutions or engage in certain other transactions with them.
In general, these restrictions require that transactions be on arms length terms and be secured by designated amounts of specified collateral.
See Note 20 to the Consolidated Financial Statements on page 169.


| 2017 2016 2015 | Interest incurred | Less: Capitalized interest | Interest Expense |


| Year ended December 31, | 2006 | (in millions) | Operating results: | Revenues | Benefits and expenses | Adjusted operating income | Realized investment gains (losses), net, and related adjustments(1) | Related charges-1(2) | Income from continuing operations before income taxes, equity in earnings of operating joint ventures, extraordinary gain on acquisition andcumulative effect of accounting change acquisition and cumulative effect of accounting change |


| Year Ended December | $ in millions | Compensation and benefits | Brokerage, clearing, exchange and distribution fees | Market development | Communications and technology | Depreciation and amortization | Occupancy | Professional fees | Other expenses | Total operating expenses | Headcount atperiod-end |


| YearendedDecember 31 | In millions | Gains (losses) on derivatives recognized in OCI – (effective portion) | Less: Gains (losses) reclassified from accumulated OCI into income – (effective portion) | Interest income | Noninterest income | Total gains (losses) reclassified from accumulated OCI into income – (effective portion) | Net unrealized gains (losses) on cash flow hedge derivatives |


| (Dollars in millions, except per share information; shares in thousands) 2008 2007 2006 | Earnings per common share | Net income | Preferred stock dividends-1 | Net income available to common shareholders | Average common shares issued and outstanding | Earnings per common share | Diluted earnings per common share | Net income available to common shareholders | Average common shares issued and outstanding | Dilutive potential common shares-2, 3 | Total diluted average common shares issued and outstanding | Diluted earnings per common share |


| In millions 2014 2013 | January 1 | Accretion (including excess cash recoveries) | Net reclassifications to accretable from non-accretable (a) | Disposals | December 31 | Shares in thousands | December 31, 2013 | Granted | Vested/Released | Forfeited | December 31, 2014 |


The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at December 31, 2015 and 2014.
Allowance and Carrying Value by Portfolio Segment


| 2001 2000 1999 | Options Outstanding | Balance at beginning of year | Granted | Exercised | Lapsed or cancelled | Balance at end of year | Options exercisable at end of year | Weighted average fair value of options granted during the year |


| Percent of Total Net Tangible Assets -1 Percent Change in Economic Value For a Given Change in Interest Rates Over / (Under) Base Case Parallel Shocks | Basis point change scenario | Total loans | Total investments and other earning assets | Total net tangible assets -2 | Total deposits | Total borrowings | Total net tangible liabilities -3 | December 31, | (dollar amounts in millions) | Consolidated capital calculations: | Common shareholders’ equity | Preferred shareholders’ equity | Total shareholders’ equity | Goodwill | Other intangible assets | Other intangible asset deferred tax liability-1 | Total tangible equity-2 | Preferred shareholders’ equity | Total tangible common equity-2 | Total assets | Goodwill | Other intangible assets | Other intangible asset deferred tax liability-1 | Total tangible assets-2 | Tier 1 capital | Preferred shareholders’ equity | Trust-preferred securities | REIT-preferred stock | Tier 1 common equity-2 | Risk-weighted assets (RWA) | Tier 1 common equity / RWA ratio-2 | Tangible equity / tangible asset ratio-2 | Tangible common equity / tangible asset ratio-2 | Tangible common equity / RWA ratio-2 |


| 2016 2015 2014 2013 | -$51,232 |


Humana Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) not be estimated based on observable market prices, and as such, unobservable inputs were used.
For auction rate securities, valuation methodologies include consideration of the quality of the sector and issuer, underlying collateral, underlying final maturity dates, and liquidity.
Recently Issued Accounting Pronouncements There are no recently issued accounting standards that apply to us or that will have a material impact on our results of operations, financial condition, or cash flows.3.
ACQUISITIONS On December 21, 2012, we acquired Metropolitan Health Networks, Inc. , or Metropolitan, a Medical Services Organization, or MSO, that coordinates medical care for Medicare Advantage beneficiaries and Medicaid recipients, primarily in Florida.
We paid $11.25 per share in cash to acquire all of the outstanding shares of Metropolitan and repaid all outstanding debt of Metropolitan for a transaction value of $851 million, plus transaction expenses.
The preliminary fair values of Metropolitan’s assets acquired and liabilities assumed at the date of the acquisition are summarized as follows:


Commercial Paper We are authorized to borrow up to $10.0 billion under our U. S.  commercial paper program.
We also maintain a European UNITED PARCEL SERVICE, INC.  AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 81 NOTE 7.
DEBT AND FINANCING ARRANGEMENTS The following table sets forth the principal amount, maturity or range of maturities, as well as the carrying value of our debt obligations, as of December 31, 2012 and 2011 (in millions).
The carrying value of these debt obligations can differ from the principal amount due to the impact of unamortized discounts or premiums and valuation adjustments resulting from interest rate swap hedging relationships.
Commercial Paper We are authorized to borrow up to $10.0 billion under our U. S.  commercial paper program.
We also maintain a European commercial paper program under which we are authorized to borrow up to ¬1.0 billion in a variety of currencies.
No amounts were outstanding under these programs as of December 31, 2012.
The amount of commercial paper outstanding under these programs in 2013 is expected to fluctuate.
Fixed Rate Senior Notes We have completed several offerings of fixed rate senior notes.
All of the notes pay interest semiannually, and allow for redemption of the notes by UPS at any time by paying the greater of the principal amount or a Â¡Â°make-wholeÂ¡Â± amount, plus accrued interest.
We subsequently entered into interest rate swaps on several of these notes, which effectively converted the fixed interest rates on the notes to variable LIBOR-based interest rates.
The average interest rate payable on these notes, including the impact of the interest rate swaps, for 2012 and 2011, respectively, were as follows:


| Years Ended December 31, | (Dollars in millions) | 2014 | Attritional | Catastrophes | Total segment | 2013 | Attritional | Catastrophes | Total segment | 2012 | Attritional | Catastrophes | Total segment | Variance 2014/2013 | Attritional | Catastrophes | Total segment | Variance 2013/2012 | Attritional | Catastrophes | Total segment | (Some amounts may not reconcile due to rounding.) |


EDWARDS LIFESCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12.
COMMON STOCK (Continued) The Company also maintains the Nonemployee Directors Stock Incentive Compensation Program (the Nonemployee Directors Program).
Under the Nonemployee Directors Program, each nonemployee director may receive annually up to 10,000 stock options or 4,000 restricted stock units of the Companys common stock, or a combination thereof, provided that in no event may the total value of the combined annual award exceed $0.2 million.
Additionally, each nonemployee director may elect to receive all or a portion of the annual cash retainer to which the director is otherwise entitled through the issuance of stock options or restricted stock units.
Each option and restricted stock unit award granted in 2011 or prior generally vests in three equal annual installments.
Each option and restricted stock unit award granted after 2011 generally vests after one year.
Upon a directors initial election to the Board, the director receives an initial grant of restricted stock units equal to a fair market value on grant date of $0.2 million, not to exceed 10,000 shares.
These grants vest over three years from the date of grant.
Under the Nonemployee Directors Program, an aggregate of 1.4 million shares of the Companys common stock has been authorized for issuance.
The Company has an employee stock purchase plan for United States employees and a plan for international employees (collectively ESPP).
Under the ESPP, eligible employees may purchase shares of the Companys common stock at 85% of the lower


| 2015 2014 2013 | Net sales | Operating profit | Operating margins | Backlog at year-end |


| (Dollar amounts in millions) CLOs Sponsored Private Equity Fund Total Consolidated VIEs | Assets of consolidated VIEs: | Cash and cash equivalents | Bank loans, bonds and other investments | Liabilities of consolidated VIEs: | Borrowings | Other liabilities | Appropriated retained earnings | Non-controlling interests of consolidated VIEs | Total BlackRock net interests in consolidated VIEs |


| In millions 2013 2014 2015 2016 2017 Thereafter | Lease obligations | Purchase obligations (a) | Total |


| Years Ended December 31, 2016/2015 2015/2014 | (Dollars in millions) | Gross written premiums | Net written premiums | Premiums earned | Incurred losses and LAE | Commission and brokerage | Other underwriting expenses | Underwriting gain (loss) | Point Chg | Loss ratio | Commission and brokerage ratio | Other underwriting expense ratio | Combined ratio | (Some amounts may not reconcile due to rounding.) |


| (in millions) First Quarter Second Quarter Third Quarter Fourth Quarter Total | 2017 | Operating revenues | Operating income | Net income | 2016 | Operating revenues | Operating income | Net income |


ALM Activities Interest rate contracts and foreign exchange contracts are utilized in the Corporations ALM activities.
The Corporation maintains an overall interest rate risk management strategy that incorporates the use of interest rate contracts to minimize significant fluctuations in earnings that are caused by interest rate volatility.
The Corporations goal is to manage interest rate sensitivity so that movements in interest rates do not significantly adversely affect net interest income.
As a result of interest rate fluctuations hedged fixed-rate assets and liabilities appreciate or depreciate in market value.
Gains or losses on the derivative instruments that are linked to the hedged fixed-rate assets and liabilities are expected to substantially offset this unrealized appreciation or depreciation.
Interest income and interest expense on hedged variable-rate assets and liabilities increase or decrease as a result of interest rate fluctuations.
Gains and losses on the derivative instruments that are linked to these hedged assets and liabilities are expected to substantially offset this variability in earnings.
Interest rate contracts, which are generally non-leveraged generic interest rate and basis swaps, options and futures, allow the Corporation to manage its interest rate risk position.
Non-leveraged generic interest rate swaps involve the exchange of fixed-rate and variable-rate interest payments based on the contractual underlying notional amount.
Basis swaps involve the exchange of interest payments based on the contractual underlying notional amounts, where both the pay rate and the receive rate are floating rates based on different indices.
Option products primarily consist of caps, floors and swaptions.
Futures contracts used for the Corporations ALM activities are primarily index futures providing for cash payments based upon the movements of an underlying rate index.
The Corporation uses foreign currency contracts to manage the foreign exchange risk associated with certain foreign currency-denominated assets and liabilities, as well as the Corporations investments in foreign subsidiaries.
Foreign exchange contracts, which include spot and forward contracts, represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreedupon settlement date.
Exposure to loss on these contracts will increase or decrease over their respective lives as currency exchange and interest rates fluctuate.


Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview U. S.  economic growth, retail sales and industrial production continued at a moderate pace in 2014, which resulted in growth in the small package delivery market.
Continued strong growth in e-commerce and omni-channel retail sales has driven package volume increases in both commercial and residential products.
Given these trends, overall volume growth was strong during the year, and products most aligned with business-to-consumer and retail industry shipments experienced the fastest growth.
Economic conditions in Europe have deteriorated somewhat, as solid growth in the United Kingdom is being offset by slower growth in Germany and general economic weakness in France and Italy.
Economic growth in Asia has continued, though growth in China has moderated.
The uneven nature of economic growth worldwide, combined with a trend towards more intra-regional trade, has led to shifting trade patterns and resulted in overcapacity in certain trade lanes.
These factors have created an environment in which customers are more likely to trade-down from premium express products to standard delivery products in both Europe and Asia.
As a result of these circumstances, we have adjusted our air capacity and cost structure in our transportation network to better match the prevailing volume mix levels.
Our broad portfolio of product offerings and the flexibilities inherent in our transportation network have helped us adapt to these changing trends.
While the worldwide economic environment has remained challenging in 2014, we have continued to undertake several initiatives in the U. S.  and internationally to (1) improve the flexibility and capacity in our delivery network; (2) improve yield management; and (3) increase operational efficiency and contain costs across all segments.
Most notably, the continued deployment of technology improvements (including several facility automation projects and the accelerated deployment of our On Road Integrated Optimization and Navigation system - "ORION") should increase our network capacity, and improve operational efficiency, flexibility and reliability.
Additionally, we have continued to adjust our transportation network and utilize new or expanded operating facilities to improve time-in-transit for shipments in each region.


x Level 2 - Level 2 inputs are inputs other than quoted prices included in level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date.
Level 2 inputs include the following: - quoted prices for similar assets or liabilities in active markets; - quoted prices for identical assets or liabilities in inactive markets; - inputs other than quoted prices that are observable for the asset or liability; or - inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 2 consists primarily of individually owned debt instruments or shares in common trusts.


| Period of Expiration | 2010-2016 | Federal net operating losses | State net operating losses | Foreign net operating losses | Federal R&D credits | CA credits | CT credits | MA credits | IN credits |


Cash Used in Investing Activities For the year ended March 31, 2015, net cash used for investing activities included $26.1 million for the purchase (net of maturities) of marketable securities, $15.7 million for our acquisition of ECP and AIS, $5.2 million for the purchase of property and equipment mostly related to expansion of manufacturing capacity in Danvers, Massachusetts and Aachen, Germany and $2.9 million of investments in private medical technology companies.


CF INDUSTRIES HOLDINGS, INC.  116 15.
Derivative Financial Instruments We use derivative financial instruments to reduce our exposure to changes in commodity prices and foreign currency exchange rates.
Commodity Price Risk Management Natural gas is the largest and most volatile component of the manufacturing cost for nitrogen-based products.
We manage the risk of changes in natural gas prices primarily through the use of derivative financial instruments.
The derivatives that we use for this purpose are primarily natural gas fixed price swaps and natural gas options traded in the OTC markets.
These natural gas derivatives settle using primarily a NYMEX futures price index, which represents the basis for fair value at any given time.
We enter into natural gas derivative contracts with respect to natural gas to be consumed by us in the future, and settlements of those derivative contracts are scheduled to coincide with our anticipated purchases of natural gas used to manufacture nitrogen products during those future periods.
We use natural gas derivatives as an economic hedge of natural gas price risk, but without the application of hedge accounting.
As a result, changes in fair value of these contracts are recognized in earnings.
As of December 31, 2016, we have natural gas derivative contracts covering periods through the end of 2018.
As of December 31, 2016 and 2015, we had open natural gas derivative contracts for 183.0 million MMBtus and 431.5 million MMBtus, respectively.
For the year ended December 31, 2016, we used derivatives to cover approximately 84% of our natural gas consumption.
Foreign Currency Exchange Rates A portion of the costs for our capacity expansion projects at our Donaldsonville, Louisiana complex and Port Neal, Iowa complex were euro-denominated.
In order to manage our exposure to changes in the euro to U. S.  dollar currency exchange rates, we hedged our projected euro-denominated payments through the end of 2016 using foreign currency forward contracts.


| Fiscal Years Ended | (dollars in thousands) | Cash and cash equivalents at beginning of period | Net cash provided by operating activities | Net cash used in investing activities | Net cash used in financing activities | Cash and cash equivalents at end of period -1 |


Individual Life Operating Results The following table sets forth the Individual Life segments


(1) Includes equity securities classified as “trading account assets supporting insurance liabilities” and other equity securities classified as trading securities under U. S.  GAAP, but are held for “other than trading” activities in our segments that offer insurance, retirement and annuities products.
(2) The notional and fair value of equity-based derivatives and the fair value of variable annuity and other living benefit feature embedded derivatives are also reflected in amounts under “Market Risk Related to Interest Rates” above, and are not cumulative.
(3) Excludes any offsetting impact of derivative instruments purchased to hedge changes in the embedded derivatives.
Amounts reported net of third-party reinsurance.


| Reported amount Currency translation benefit/(cost) | In millions, except per share data | Revenues | Company-operated margins | Franchised margins | Selling, general & administrative expenses | Operating income | Net income | Earnings per common share—diluted |


Mondavi produces, markets and sells premium, super-premium and fine California wines under the Woodbridge by Robert Mondavi, Robert Mondavi Private Selection and Robert Mondavi Winery brand names.
Woodbridge and Robert Mondavi Private Selection are the leading premium and super-premium wine brands by volume, respectively, in the United States.
The acquisition of Robert Mondavi supports the Companys strategy of strengthening the breadth of its portfolio across price segments to capitalize on the overall growth in the premium, super-premium and fine wine categories.
The Company believes that the acquired Robert Mondavi brand names have strong brand recognition globally.
The vast majority of Robert Mondavis sales are generated in the United States.
The Company intends to leverage the Robert Mondavi brands in the United States through its selling, marketing and distribution infrastructure.
The Company also intends to further expand distribution for the Robert Mondavi brands in Europe through its Constellation Europe infrastructure.
The Company and Robert Mondavi have complementary businesses that share a common growth orientation and operating philosophy.
The Robert Mondavi acquisition provides the Company with a greater presence in the fine wine sector within the United States and the ability to capitalize on the broader geographic distribution in strategic international markets.
The Robert Mondavi acquisition supports the Companys strategy of growth and breadth across categories and geographies, and strengthens its competitive position in its core markets.
In particular, the Company believes there are growth opportunities for premium, super-premium and fine wines in the United Kingdom, United States and other wine markets.
Total consideration paid in cash to the Robert Mondavi shareholders was $1,030.7 million.
Additionally, the Company expects to incur direct acquisition costs of $11.2 million.
The purchase price was financed with borrowings under the Companys 2004 Credit Agreement (as defined in Note 9).
In accordance with the purchase method of accounting, the acquired net assets are recorded at fair value at the date of acquisition.
The purchase price was based primarily on the estimated future operating results of Robert Mondavi, including the factors described above, as well as an estimated benefit from operating cost synergies.
The results of operations of the Robert Mondavi business are reported in the Constellation Wines segment and have been included in the Consolidated Statement of Income since the acquisition date.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the Robert Mondavi acquisition at the date of acquisition.
The Company is in the process of obtaining third-party valuations of certain assets and liabilities, and refining its restructuring plan which is under development and will be finalized during the Companys year ending February 28, 2006 (see Note19).
Accordingly, the allocation of the purchase price is subject to refinement.
Estimated fair values at December 22, 2004, are as follows:


PART I Item 1: Business Incorporated in 1967, Applied, a Delaware corporation, provides manufacturing equipment, services and software to the global semiconductor, flat panel display, solar photovoltaic (PV) and related industries.
Applieds customers include manufacturers of semiconductor wafers and chips, flat panel liquid crystal and other displays, solar PV cells and modules, and other electronic devices.
These customers may use what they manufacture in their own end products or sell the items to other companies for use in advanced electronic components.
Applieds fiscal year ends on the last Sunday in October.
Applied operates in four reportable segments: Silicon Systems Group, Applied Global Services, Display, and Energy and Environmental Solutions.
Applied manages its business based upon these segments.
A summary of financial information for each reportable segment is found in Note 16 of Notes to Consolidated Financial Statements.
A discussion of factors that could affect operations is set forth under Risk Factors in Item 1A, which is incorporated herein by reference.
In November 2011, Applied completed the acquisition of Varian Semiconductor Equipment Associates, Inc.  (Varian), a leading supplier of ion implantation equipment to the semiconductor and solar industries.
The acquisition expanded Applied's technologies for chip and solar module manufacturing.
The acquired business is primarily included in consolidated results of operations and the results of the Silicon Systems Group and Applied Global Services segments.
Net sales by reportable segment for the past three fiscal years were as follows:


| Years Ended December 31, | 2010 | GAAP | (in millions, except percentages) | Revenues | Management and financial advice fees | Distribution fees | Net investment income | Premiums | Other revenues | Total revenues | Banking and deposit interest expense | Total net revenues | Expenses | Distribution expenses | Interest credited to fixed accounts | Benefits, claims, losses and settlement expenses | Amortization of deferred acquisition costs | General and administrative expense | Total expenses | Pretax income |


MetLife, Inc.  Notes to the Consolidated Financial Statements  (Continued) variable annuity products offered by the Company.
The Company utilizes exchange-traded equity futures in non-qualifying hedging relationships.
Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company.
To hedge against adverse changes in equity indices, the Company enters into contracts to sell the equity index within a limited time at a contracted price.
The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price.
In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options.
Equity index options are included in equity options in the preceding table.
The Company utilizes equity index options in non-qualifying hedging relationships.
Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company.
In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period.
Equity variance swaps are included in variance swaps in the preceding table.
The Company utilizes equity variance swaps in non-qualifying hedging relationships.
Total rate of return swaps (TRRs) are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and LIBOR, calculated by reference to an agreed notional principal amount.
No cash is exchanged at the outset of the contract.
Cash is paid and received over the life of the contract based on the terms of the swap.
These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date.
The Company uses TRRs to hedge its equity market guarantees in certain of its insurance products.
TRRs can be used as hedges or to synthetically create investments.
The Company utilizes TRRs in non-qualifying hedging relationships.


Sales and Trading Revenue The Corporation enters into trading derivatives to facilitate client transactions and to manage risk exposures arising from trading account assets and liabilities.
It is the Corporation’s policy to include these derivative instruments in its trading activities which include derivatives and non-derivative cash instruments.
The resulting risk from these derivatives is managed on a portfolio basis as part of the Corporation’s Global Markets business segment.
The related sales and trading revenue generated within Global Markets is recorded in various income statement line items including trading account profits and net interest income as well as other revenue categories.
However, the majority of income related to derivative instruments is recorded in trading account profits.
Sales and trading revenue includes changes in the fair value and realized gains and losses on the sales of trading and other assets, net interest income, and fees primarily from commissions on equity securities.
Revenue is generated by the difference in the client price for an instrument and the price at which the trading desk can execute the trade in the dealer market.
For equity securities, commissions related to purchases and sales are recorded in the “Other” column in the Sales and Trading Revenue table.
Changes in the fair value of these securities are included in trading account profits.
For debt securities, revenue, with the exception of interest associated with the debt securities, is typically included in trading account profits.
Unlike commissions for equity securities, the initial revenue related to broker/dealer services for debt securities is typically included in the pricing of the instrument rather than being charged through separate fee arrangements.
Therefore, this revenue is recorded in trading account profits as part of the initial mark to fair value.
For derivatives, all revenue is included in trading account profits.
In transactions where the Corporation acts as agent, which include exchange-traded futures and options, fees are recorded in other income (loss).
Gains (losses) on certain instruments, primarily loans, that the Global Markets business segment shares with Global Banking are not considered trading instruments and are excluded from sales and trading revenue in their entirety.


| Long-term Debt Operating Leases Sub-lease Income | (in millions) | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 and thereafter | Total | Year ended December 31, | 2007 | (in millions) | Life insurance sales-1: | Excluding corporate-owned life insurance: | Variable life | Universal life | Term life | Total excluding corporate-owned life insurance | Corporate-owned life insurance | Total | Life insurance sales by distribution channel, excluding corporate-owned life insurance-1: | Prudential Agents | Third party | Total |


Long-term product offerings include alpha-seeking active and index strategies.
Our alpha-seeking active strategies seek to earn attractive returns in excess of a market benchmark or performance hurdle while maintaining an appropriate risk profile, and leverage fundamental research and quantitative models to drive portfolio construction.
In contrast, index strategies seek to closely track the returns of a corresponding index, generally by investing in substantially the same underlying securities within the index or in a subset of those securities selected to approximate a similar risk and return profile of the index.
Index strategies include both our non-ETF index products and iShares ETFs.
Although many clients use both alpha-seeking active and index strategies, the application of these strategies may differ.
For example, clients may use index products to gain exposure to a market or asset class, or may use a combination of index strategies to target active returns.
In addition, institutional non-ETF index assignments tend to be very large (multi-billion dollars) and typically reflect low fee rates.
Net flows in institutional index products generally have a small impact on BlackRock’s revenues and earnings.
Equity Year-end 2017 equity AUM totaled $3.372 trillion, reflecting net inflows of $130.1 billion.
Net inflows included $174.4 billion into iShares ETFs, driven by net inflows into Core funds and broad developed and emerging market equities, partially offset by non-ETF index and active net outflows of $25.7 billion and $18.5 billion, respectively.
BlackRock’s effective fee rates fluctuate due to changes in AUM mix.
Approximately half of BlackRock’s equity AUM is tied to international markets, including emerging markets, which tend to have higher fee rates than U. S.  equity strategies.
Accordingly, fluctuations in international equity markets, which may not consistently move in tandem with U. S.  markets, have a greater impact on BlackRock’s equity revenues and effective fee rate.
Fixed Income Fixed income AUM ended 2017 at $1.855 trillion, reflecting net inflows of $178.8 billion.
In 2017, active net inflows of $21.5 billion were diversified across fixed income offerings, and included strong inflows into municipal, unconstrained and total return bond funds.
iShares ETFs net inflows of $67.5 billion were led by flows into Core, corporate and treasury bond funds.
Non-ETF index net inflows of $89.8 billion were driven by demand for liability-driven investment solutions.
Multi-Asset BlackRock’s multi-asset team manages a variety of balanced funds and bespoke mandates for a diversified client base that leverages our broad investment expertise in global equities, bonds, currencies and commodities, and our extensive risk management capabilities.
Investment solutions might include a combination of long-only portfolios and alternative investments as well as tactical asset allocation overlays.
Component changes in multi-asset AUM for 2017 are presented below.


| In millions December 312014 December 312013 | Total consumer lending | Total commercial lending | Total TDRs | Nonperforming | Accruing (a) | Credit card | Total TDRs |


CECONYs gas sales and deliveries, excluding off-system sales, in 2016 compared with 2015 were:


| 2017 2016 2015 | Expected life (in years) | Average risk-free interest rate | Expected volatility | Expected dividend yield |


| In millions December 312014 December 312013 | BlackRock | Tax credit investments (a) | Private equity | Visa | Other | Total | Accruing | Dollars in millions | December 31, 2014 | Commercial Lending | Commercial | Commercial real estate | Equipment lease financing | Total commercial lending | Consumer Lending | Home equity | Residential real estate (f) | Credit card | Other consumer (g) | Total consumer lending | Total | Percentage of total loans | December 31, 2013 | Commercial Lending | Commercial | Commercial real estate | Equipment lease financing | Total commercial lending | Consumer Lending | Home equity | Residential real estate (f) | Credit card | Other consumer (g) | Total consumer lending | Total | Percentage of total loans |


and initiatives, partially offset by the elimination of certain intercompany expenses previously charged to the International segment, and a tax benefit associated with a 2006 income tax expense related to a revision of an estimate.  ?
Indias income from continuing operations decreased primarily due to headcount increases and growth initiatives, as well as the impact of valuation allowances established against losses in both years.  ?
South Koreas income from continuing operations decreased due to a favorable impact in 2006 associated with the implementation of a more refined reserve valuation system, as well as additional expenses in 2007 associated with growth and infrastructure initiatives, partially offset by continued growth and lower DAC amortization, both in the variable universal life business.
The Auto & Home segments income from continuing operations increased primarily due to an increase in premiums and other revenues, an increase in net investment income, an increase in net investment gains and a decrease in other expenses.
These were partially offset by losses related to higher claim frequencies, higher earned exposures, higher losses due to severity, an increase in unallocated claims adjusting expenses and an increase from a reduction in favorable development of 2006 losses, partially offset by a decrease in catastrophe losses, which included favorable development of 2006 catastrophe liabilities, all of which are related to policyholder benefits and claims.
Corporate & Others income from continuing operations increased primarily due to higher net investment income, lower net investment losses, lower corporate expenses, higher other revenues, integration costs incurred in 2006, and lower legal costs, partially offset by a decrease in tax benefits, higher interest expense on debt, higher interest on uncertain tax positions, and higher interest credited to bankholder deposits.
Revenues and Expenses Premiums, Fees and Other Revenues Premiums, fees and other revenues increased by $1,609 million, or 6%, to $29,673 million for the year ended December 31, 2007 from $28,064 million for the comparable 2006 period.
The following table provides the 2007 change in premiums, fees and other revenues by segment:


| Table 40 Commercial Credit Exposure by Type December 31 | Commercial Utilized-1 | (Dollars in millions) | Loans and leases | Derivative assets-4 | Standby letters of credit and financial guarantees | Debt securities and other investments-5 | Loans held-for-sale | Commercial letters of credit | Bankers’ acceptances | Foreclosed properties and other-6 | Total |


| Year Ended December | $ in millions | Interest rates | Equity prices | Currency rates | Commodity prices | Diversification effect | Total |


| 2015 2014 (In millions, except percentages) | Silicon Systems | Applied Global Services | Display | Energy and Environmental Solutions | Total |


ITEM 3.
LEGAL PROCEEDINGS We are from time to time subject to various actions, claims, suits, government investigations, and other proceedings incidental to our business, including those arising out of alleged defects, breach of contracts, competition and antitrust matters, product warranties, intellectual property matters, personal injury claims and employment-related matters.
It is our opinion that the outcome of such matters will not have a material adverse impact on our consolidated financial position, results of operations, or cash flows.
With respect to warranty matters, although we cannot ensure that the future costs of warranty claims by customers will not be material, we believe our established reserves are adequate to cover potential warranty settlements.
However, the final amounts required to resolve these matters could differ materially from our recorded estimates.
GM Ignition Switch Recall In the first quarter of 2014, GM, Delphi’s largest customer, initiated a product recall related to ignition switches.
Delphi has received requests for information from, and is cooperating with, various government agencies related to this ignition switch recall.
In addition, Delphi has been named as a co-defendant along with GM (and in certain cases other parties) in product liability and class action lawsuits related to this matter.
During the second quarter of 2014, all of the class action cases were transferred to the United States District Court for the Southern District of New York (the “District Court”) for coordinated pretrial proceedings.
Two consolidated amended class action complaints were filed in the District Court on October 14, 2014.
Delphi was not named as a defendant in either complaint.
Delphi believes the allegations contained in the product liability cases are without merit, and intends to vigorously defend against them.
Although no assurances can be made as to the ultimate outcome of these or any other future claims, Delphi does not believe a loss is probable and, accordingly, no reserve has been made as of December 31, 2014.
Unsecured Creditors Litigation Under the terms of the Fourth Amended and Restated Limited Liability Partnership Agreement of Delphi Automotive LLP (the “Fourth LLP Agreement”), if cumulative distributions to the members of Delphi Automotive LLP under certain provisions of the Fourth LLP Agreement exceed $7.2 billion, Delphi, as disbursing agent on behalf of DPHH, is required to pay to the holders of allowed general unsecured claims against Old Delphi, $32.50 for every $67.50 in excess of $7.2 billion distributed to the members, up to a maximum amount of $300 million.
In December 2014, a complaint was filed in the Bankruptcy Court alleging that the redemption by Delphi Automotive LLP of the membership interests of GM and the PBGC, and the repurchase of shares and payment of dividends by Delphi Automotive PLC, constituted distributions under the terms of the Fourth LLP Agreement approximating $7.2 billion.
Delphi considers cumulative distributions through December 31, 2014 to be substantially below the $7.2 billion threshold, and intends to vigorously contest the allegations set forth in the complaint.
Accordingly, no accrual for this matter has been recorded as of December 31, 2014.


| December 31, 2010 December 31, 2009 | Industry-1 | (in millions) | Corporate securities: | Manufacturing | Utilities | Services | Finance | Energy | Retail and Wholesale | Transportation | Other | Total corporate securities | Asset-backed securities-2 | Commercial mortgage-backed | U.S. Government | Residential mortgage-backed | Foreign government-3 | State & Municipal | Total-4 |


Pension and Other Postretirement Benefit Plans Savings Plan We maintain a defined contribution plan covering eligible U. S.  employees.
We contribute 5% of eligible compensation for most of the plan participants.
Certain plan participants’ contributions and Company contributions are based on collective bargaining agreements.
The total expense for our savings plan was approximately $48 million, $46 million, and $42 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Pension Plans Our U. S.  pension plan is a defined benefit plan that covers substantially all of our U. S.  employees and provides benefits under a cash balance formula.
A participant in the cash balance plan accrues benefits through contribution credits based on a combination of age and years of service, times eligible compensation.
Interest is also credited to the participant’s plan account.
A participant becomes fully vested in the plan after three years, and may take a lump sum distribution upon termination of employment or retirement.
Certain collectively bargained and grandfathered employees continue to accrue benefits through career pay or final pay formulas.
Two of our subsidiaries, Kinder Morgan Canada Inc.  and Trans Mountain Pipeline Inc.  (as general partner of Trans Mountain Pipeline L. P. ), are sponsors of pension plans for eligible Canadian and Trans Mountain pipeline employees.
The plans include registered defined benefit pension plans, supplemental unfunded arrangements (which provide pension benefits in excess of statutory limits) and defined contributory plans.
Benefits under the defined benefit components accrue through career pay or final pay formulas.
The net periodic benefit costs, contributions and liability amounts associated with our Canadian plans are not material to our consolidated income statements or balance sheets; however, we began to include the activity and balances associated with our Canadian plans (including our Canadian OPEB plans discussed below) in the following disclosures on a prospective basis beginning in 2016.
The associated net periodic benefit costs for these combined Canadian plans of $12 million and $10 million for the years ended December 31, 2015 and 2014, respectively, were reported separately in prior years.
Other Postretirement Benefit Plans We and certain of our U. S.  subsidiaries provide other postretirement benefits (OPEB), including medical benefits for closed groups of retired employees and certain grandfathered employees and their dependents, and limited postretirement life insurance benefits for retired employees.
Our Canadian subsidiaries also provide OPEB benefits to current and future retirees and their dependents.
Medical benefits under these OPEB plans may be subject to deductibles, co-payment provisions, dollar
had no accrued penalties as of both December 31, 2017 and 2016 and $2 million in accrued penalties as of December 31, 2015.
All of the $97 million of unrecognized tax benefits, if recognized, would affect our effective tax rate in future periods.
In addition, we believe it is reasonably possible that our liability for unrecognized tax benefits will decrease by approximately $6 million during the next year to approximately $91 million, primarily due to lapses in statute of limitations partially offset by additions for state filing positions taken in prior years.
We are subject to taxation, and have tax years open to examination for the periods 2011-2016 in the U. S. , 2005-2016 in various states and 2007-2016 in various foreign jurisdictions.
Impact of 2017 Tax Reform On December 22, 2017, the U. S.  enacted the 2017 Tax Reform.
Among the many provisions included in the 2017 Tax Reform is a provision to reduce the U. S.  federal corporate income tax rate from 35% to 21% effective January 1, 2018.
As of December 31, 2017, we had deferred tax assets related to our net operating loss carryforwards and tax credits, in addition to tax basis in excess of accounting basis primarily related to our investment in KMP.
Prior to the 2017 Tax Reform, the value of these deferred tax assets was recorded at the previous income tax rate of 35%, which represented their expected future benefit to us.
As a result of the 2017 Tax Reform, the future benefit of these deferred tax assets was re-measured at the new income tax rate of 21% and we recorded an approximate $1,240 million provisional non-cash adjustment for the year ended December 31, 2017.
We determined the effects of the rate change using our best estimate of temporary book-to-tax differences.
Upon final analysis and remeasurement of our deferred tax balances, the December 31, 2017 adjustment we recorded to reflect the change in corporate income tax rates may need to be adjusted in subsequent periods.
In addition, the 2017 Tax Reform will require a mandatory deemed repatriation of post-1986 undistributed foreign earnings and profits.
As of December 31, 2017, we have recorded a provisional amount for this 2017 Tax Reform provision and we are continuing to finalize earnings and profits used in this calculation as well assess other 2017 Tax Reform impacts to complete our analysis on this provision.
However, we do not expect this provision of the 2017 Tax Reform to be material to us.
The income tax rate change in the 2017 Tax Reform had an impact not only on our corporate income taxes but also resulted in us recording an approximate $144 million after-tax ($219 million pre-tax) provisional non-cash adjustment, including our share of equity investee provisional adjustments, related to our FERC regulated business for the year ended December 31, 2017.
We have determined a reasonable estimate of its impact and recorded a provisional regulatory reserve as of December 31, 2017.
However, as the impact on the regulatory rate making process is currently uncertain, we have not completed our assessment of the 2017 Tax Reform’s effect on our FERC regulated business.
As described above, we continue to assess the impact of the 2017 Tax Reform on our business in order to complete our analysis.
Any adjustment to our provisional amounts will be reported in the reporting period in which any such adjustments are determined and may be material in the period in which the adjustments are made.6.


| At December 31, | 2010 | Criticized commercial loans, beginning of period | New additions/increases | Advances | Upgrades to Pass | Payments | Loan losses | Criticized commercial loans, end of period |


| As of December 31, 2012 | Ownership | (In percentages) | InfraServ GmbH & Co. Gendorf KG | InfraServ GmbH & Co. Knapsack KG | InfraServ GmbH & Co. Hoechst KG |


(18) Concentration of Risk The Company generates a significant amount of revenue from large customers, however, no customers accounted for more than 10% of total revenue or total segment revenue in the years ended December 31, 2007, 2006 and 2005.
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents and trade receivables.
The Company places its cash equivalents with high credit quality financial institutions and, by policy, limits the amount of credit exposure with any one financial institution.
Concentrations of credit risk with respect to trade receivables are limited because a large number of geographically diverse customers make up the Companys customer base, thus spreading the trade receivables credit risk.
The Company controls credit risk through monitoring procedures.


| EntergyArkansas EntergyGulf StatesLouisiana EntergyLouisiana EntergyMississippi EntergyNew Orleans EntergyTexas SystemEnergy | (In Thousands) | 2011: | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | 2010: | First Quarter | Second Quarter | Third Quarter | Fourth Quarter |


| 2012 2011 2010 | (in millions) | Total net revenues | Income (loss) from discontinued operations | Gain on sale | Income tax benefit | Loss from discontinued operations, net of tax |


| December 31, | 2009 | (In millions) | Fund Groupings: | Equity | Balanced | Bond | Money Market | Specialty | Total |


| October 31, | 2005 | (in thousands) | Computer and other equipment | Buildings | Furniture and fixtures | Land | Leasehold improvements | 516,981 | Less accumulated depreciation and amortization | Total property and equipment, net |


As of 30 September 2016 and 2015, there were no assets or liabilities classified as discontinued operations relating to the Homecare business.5.  BUSINESS RESTRUCTURING AND COST REDUCTION ACTIONS The charges we record for business restructuring and cost reduction actions have been excluded from segment operating income.
Cost Reduction Actions In fiscal year 2016, we recognized an expense of $33.9 ($24.0 after-tax, or $.11 per share) for severance and other benefits related to cost reduction actions which resulted in the elimination of approximately 700 positions.
The expenses related primarily to the Industrial Gases – Americas and the Industrial Gases – EMEA segments.
The following table summarizes the carrying amount of the accrual for cost reduction actions at 30 September 2016:


The Government segments SG&A expense ratio was 13.5% for 2002, increasing 70 basis points compared to 12.8% in 2001.
This increase resulted from the items discussed above and a change in the mix of revenues.
A higher proportion of revenues was generated from administrative services fees, primarily from the TRICARE Regions 2 and 5 acquisition and the implementation of the TRICARE for Life benefit programs effective October 1, 2001.
ASO business carries a much higher SG&A ratio than fully insured business.
Depreciation and amortization was $120.7 million in 2002, a decrease of $40.8 million, or 25.3%, from $161.5 million in 2001.
As discussed in Note 2 to the consolidated financial statements, we ceased amortizing goodwill on January 1, 2002 in accordance with adopting a new accounting standard.
This decreased goodwill amortization by $55 million.
On a comparable basis, depreciation and amortization was $106.5 million in 2001, excluding goodwill amortization expense.
The $14.2 million increase in 2002 compared to 2001, as adjusted, resulted from capital expenditures primarily related to our technology initiatives and a full year of amortization of other intangible assets related to the acquisition of TRICARE Regions 2 and 5 on May 31, 2001.
Interest Expense Interest expense was $17.3 million in 2002, a decrease of $8.0 million from $25.3 million in 2001.
This decrease primarily resulted from lower interest rates.
Income Taxes Our effective tax rate in 2002 of 32% decreased 4% compared to the 36% effective tax rate in 2001.
The lower effective tax rate in 2002 primarily resulted from the cessation of non-deductible goodwill amortization on January 1, 2002, partially offset by higher state income taxes and a lower proportion of tax-exempt investment income to pretax income.
In addition, during 2002, the Internal Revenue Service completed their audit of all open years prior to 2000, which resulted in a favorable adjustment to the estimated accrual for income taxes of approximately $32.6 million.
This was offset by an increase of approximately $24.5 million in the capital loss valuation allowance after we reevaluated probable capital gain realization in the allowable carryforward period based upon our capital gain experience beginning in 2000 and consideration of alternative tax planning strategies.
See Note 7 to the consolidated financial statements for a complete reconciliation to the federal statutory rate.
Liquidity Our consolidated liquidity continued to strengthen in 2003, with cash and cash equivalents increasing to $931.4 million at December 31, 2003 from $721.4 million at December 31, 2002.
Because we operate as a holding company, our parent company is dependent upon dividends and administrative expense reimbursements from our subsidiaries, most of which are subject to regulatory restrictions.
Our parent company liquidity also improved during 2003.
Cash, cash equivalents and short-term investments at our parent company amounted to $399.4 million at December 31, 2003, increasing $212.4 million from $187.0 million at December 31, 2002.
The primary source for the increase in cash and cash equivalents has been the increase in our net income.
The change in cash and cash equivalents for the years ended December 31, 2003, 2002 and 2001 is summarized as follows:


| Year Ended December 31, | 2018 | Dividend Reinvestment and Stock Purchase Plan | Conversion of DownREIT units | Exercise of stock options | Vesting of restricted stock units | Repurchase of common stock | December 31, | 2018 | Cumulative foreign currency translation adjustment-1 | Unrealized gains (losses) on derivatives, net | Supplemental Executive Retirement plan minimum liability and other | Total accumulated other comprehensive income (loss) |


variable annuities.
Individual variable annuity gross sales were $7.1 billion in 2005, an increase of $1.3 billion from 2004, reflecting the introduction of new product features late in the first quarter of 2005.2004 to 2003 Annual Comparison.
Sales of new life insurance, excluding corporate-owned life insurance, measured as described above, increased $50 million from 2003 to 2004.
Sales of our universal life products, which were updated as to features and pricing in June 2003, increased $46 million.
Sales of life insurance by Prudential Agents increased $6 million from 2003 to 2004, reflecting an increase in agent productivity that more than offset a decline in the number of agents from 4,320 at December 31, 2003 to 3,682 at December 31, 2004.
Sales by the third party distribution channel, excluding corporate-owned life insurance, increased $44 million from 2003 to 2004, reflecting increased universal and term life sales through this distribution channel.
Total account values for fixed and variable annuities amounted to $51.3 billion as of December 31, 2004, an increase of $3.8 billion from December 31, 2003.
The increase came primarily from increases in the market value of customers’ variable annuities, as well as net sales of $923 million.
Individual variable annuity gross sales increased by $1.4 billion, from $4.4 billion in 2003 to $5.8 billion in 2004, reflecting the inclusion of variable annuity sales from American Skandia for only the last eight months of 2003.
Fixed annuities gross sales increased by $285 million from 2003 to 2004, reflecting a new product introduced in 2004.
Surrenders and withdrawals increased $1.6 billion from 2003 to 2004, reflecting the additional period of activity from American Skandia, as well as the impact of higher average account values.


| Four Quarters Ended Four Quarters Ended | Financial Covenants | Interest coverage ratio (not less than)1 | Actual interest coverage ratio | Leverage ratio (not greater than)1 | Actual leverage ratio | EBITDA1 |


ILLUMINA, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) In accordance with SFAS No.142, Goodwill and Other Intangible Assets, the goodwill is not amortized, but will be subject to a periodic assessment for impairment by applying a fair-value-based test.
None of this goodwill is expected to be deductible for tax purposes.
The Company performs its annual test for impairment of goodwill in May of each year.
The Company is required to perform a periodic assessment between annual tests in certain circumstances.
The Company has performed its annual test of goodwill as of May 1, 2006 and has determined there was no impairment of goodwill during 2006.
The Company allocated $15.8 million of the purchase price to in-process research and development projects.
In-process research and development (IPR&D) represents the valuation of acquired, to-becompleted research projects.
At the acquisition date, CyVeras ongoing research and development initiatives were primarily involved with the development of its VeraCode technology and the BeadXpress Reader.
These two projects were approximately 50% and 25% complete at the date of acquisition, respectively.
As of December 31, 2006, these two projects were approximately 90% and 80% complete, respectively.
The value assigned to purchased IPR&D was determined by estimating the costs to develop the acquired technology into commercially viable products, estimating the resulting net cash flows from the projects, and discounting the net cash flows to their present value.
The revenue projections used to value the IPR&D were, in some cases, reduced based on the probability of developing a new technology, and considered the relevant market sizes and growth factors, expected trends in technology, and the nature and expected timing of new product introductions by the Company and its competitors.
The resulting net cash flows from such projects are based on the Companys estimates of cost of sales, operating expenses, and income taxes from such projects.
The rates utilized to discount the net cash flows to their present value were based on estimated cost of capital calculations.
Due to the nature of the forecast and the risks associated with the projected growth and profitability of the developmental projects, discount rates of 30% were considered appropriate for the IPR&D.
The Company believes that these discount rates were commensurate with the projectsstage of development and the uncertainties in the economic estimates described above.
If these projects are not successfully developed, the sales and profitability of the combined company may be adversely affected in future periods.
The Company believes that the foregoing assumptions used in the IPR&D analysis were reasonable at the time of the acquisition.
No assurance can be given, however, that the underlying assumptions used to estimate expected project sales, development costs or profitability, or the events associated with such projects, will transpire as estimated.
At the date of acquisition, the development of these projects had not yet reached technological feasibility, and the research and development in progress had no alternative future uses.
Accordingly, these costs were charged to expense in the second quarter of 2005.


| $ in millions 2011 2010 $ Change % Change | Cash and cash equivalents | Unsettled fund receivables | Current investments | Assets held for policyholders | Non-current investments | Investments of consolidated investment products | Intangible assets, net | Goodwill | Unsettled fund payables | Policyholder payables | Current maturities of total debt | Long-term debt | Long-term debt of consolidated investment products | 2017 | Statutory Rate | Foreign jurisdiction statutory income tax rates | State taxes, net of federal tax effect | Impact of the 2017 Tax Act | Change in valuation allowance for unrecognized tax losses | Share Based Compensation | Other | (Gains)/losses attributable to noncontrolling interests | Effective tax rate per Consolidated Statements of Income |


Certain structured liabilities The Company has elected the fair value option for certain structured liabilities whose performance is linked to structured interest rates, inflation or currency risks (“structured liabilities”).
The Company elected the fair value option, because these exposures are considered to be trading-related positions and, therefore, are managed on a fair value basis.
These positions will continue to be classified as debt, deposits or derivatives (Trading account liabilities) on the Company’s Consolidated Balance Sheet according to their legal form.
For those structured liabilities classified as Long-term debt for which the fair value option has been elected, the aggregate unpaid principal balance exceeded the aggregate fair value by $125 million and $671 million as of December 31, 2009 and 2008, respectively.
The change in fair value for these structured liabilities is reported in Principal transactions in the Company’s Consolidated Statement of Income.
Related interest expense is measured based on the contractual interest rates and reported as such in the Consolidated Income Statement.


Use of Estimates The preparation of the accompanying Consolidated Financial Statements in conformity with U. S.  GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of reserves and expenses.
These estimates and assumptions are based on management's best estimates and judgments.
Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment.
Management believes its estimates to be reasonable given the current facts available.
Aon adjusts such estimates and assumptions when facts and circumstances dictate.
Illiquid credit markets, volatile equity markets, and foreign currency exchange rate movements increase the uncertainty inherent in such estimates and assumptions.
As future events and their effects cannot be determined, among other factors, with precision, actual results could differ significantly from these estimates.
Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the financial statements in future periods.
increase was partially offset by a 1.3% comparable store sales decline and the unfavorable effect of fluctuations in foreign currency exchange rates.
The components of the net revenue increase in fiscal 2009 were as follows:


(1) Separate account assets represent segregated funds that are invested for certain customers.
Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts.
Separate account assets classified as Level 3 consist primarily of real estate and real estate investment funds.
Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Companys Consolidated Statement of Financial Position.
(2) Netting amounts represent cash collateral and the impact of offsetting asset and liability positions held with the same counterparty.
(3) Includes reclassifications to conform to current period presentation.
The methods and assumptions the Company uses to estimate fair value of assets and liabilities measured at fair value on a recurring basis are summarized below.
Information regarding Separate Account Assets is excluded as the risk of assets for these categories is primarily borne by our customers and policyholders.


| Millions of Dollars 2006 2005 2004 | Rental income | Net gain on non-operating asset dispositions | Interest income | Sale of receivables fees | Non-operating environmental costs and other | Total |


| Net Sales Orders -1 Fiscal Year Ended September 30, | Net Homes Sold | 2014 | East | Midwest | Southeast | South Central | Southwest | West | 29,709 | Sales Order Cancellations Fiscal Year Ended September 30, | Cancelled Sales Orders | 2014 | East | Midwest | Southeast | South Central | Southwest | West | 9,057 |


| 2018 2017 2016 | Balance at January 1 | Extensions and Discoveries | Revisions | Acquisition of Reserves | Sale of Reserves | Conversion to Proved Developed Reserves | Balance at December 31 |


CITIZENS FINANCIAL GROUP, INC.  MANAGEMENT'S DISCUSSION AND ANALYSIS 87 Net interest income of $3.1 billion in 2013 decreased $169 million, or 5%, from $3.2 billion in 2012, and reflected a four basis point decline in net interest margin to 2.85%.
The decrease in net interest income was driven by a reduction in earning asset yields given the relatively persistent low-rate environment, as well as a decrease in loan and securities portfolio balances, which were partially offset by a reduction in pay-fixed swap costs and improved deposit spreads.
Average interest-earning assets decreased $4.0 billion driven by a $2.9 billion decrease in consumer real estate secured portfolios, a $2.3 billion decrease in the investment securities portfolio and a $385 million decrease in student and other installment loans, which were partially offset by a $1.1 billion increase in total commercial loans and a $581 million increase in auto loans.
The four basis point decrease in net interest margin reflected the effect of the relatively persistent low-rate environment, which led to a decline in earning asset yields that outpaced our ability to reduce the cost of interest-bearing liabilities.
The decline in earning asset yields reflected continued prepayment of higher yielding consumer real estate secured loans as well as the contractual amortization of higher yield portfolios, which were entered into in higher interest rate environments.
In addition, intense industry- wide competition for loans compressed spreads on new originations and resulted in downward pressure on loan yields.
To a lesser extent, rates on interest-bearing deposits also declined compared to 2012.
Industry wide, net interest margins experienced downward pressure as higher rate loan and securities balances ran off and deposit rates approached floors beneath which they cannot be reduced further.
The net yield on average interest-earning assets decreased 20 basis points to 3.25% in 2013 from 3.45% in 2012, reflecting a 17 basis point decline in the loan and lease portfolio yield and a 35 basis point decline in the investment portfolio yield from 2012.
The decline in average yields largely reflected the effect of the continued low-rate environment as new loans and securities were issued at lower rates and prepayment speeds on higher rate fixed assets in the portfolio increased.
Investment portfolio income of $488 million decreased $136 million, or 22%, from 2012, and the yield on the portfolio declined 35 basis points to 2.29%.
These results were impacted by our strategic decision to slow down reinvestment activity in the first half of 2013, given extremely low levels of market rates.
Our total interest-bearing deposit costs in 2013 decreased $159 million, or 42%, from $375 million in 2012 and reflected a 23 basis point decrease in the rate paid on deposits to 0.32% from 0.55% in 2012.
The rates paid on term deposits declined to 0.91% from 1.80% in 2012.
As a result of the historically low interest rate environment, many deposit products have hit pricing floors at or near zero, limiting further rate reductions and thus compressing margin.
The total cost of borrowed funds increased to 6.53% from 3.11% in 2012 due in part to additional subordinated debt issued in 2013 and the full expense impact of the subordinated debt issued in 2012, and also due to the impact of allocated hedge expense and netting of repurchase agreements.
Excluding the cost of the hedge expense and netting, the total borrowed funds rates were 3.11% and 3.47% for 2013 and 2012, respectively.


Table 52: Enterprise  Wide Gains/Losses Versus Value-atRisk
Total customer-related trading revenue was as follows: Table 53: Customer-Related Trading Revenue (a)
(a) Customer-related trading revenues exclude underwriting fees for both periods presented.
(b) Includes changes in fair value for certain loans accounted for at fair value.
Customer-related trading revenues for 2014 decreased $86 million compared with 2013.
The decrease was primarily due to market interest rate changes impacting credit valuations for customer-related derivatives activities and reduced derivatives client sales revenues, which were partially offset by improved securities and foreign exchange client sales results.


On May 13, 2010, the shareholders of the Company approved the Regions Financial Corporation 2010 Long-Term Incentive Plan (2010 LTIP), which permits the Company to grant to employees and directors various forms of incentive compensation.
These forms of incentive compensation are similar to the types of compensation approved in prior plans.
The 2010 LTIP authorizes 100 million common share equivalents available for grant, where grants of options count as one share equivalent and grants of full value awards (e. g. , shares of restricted stock and restricted stock units) count as 2.25 share equivalents.
Unless otherwise determined by the Compensation Committee of the Board of Directors, grants of restricted stock and restricted stock units accrue dividends as they are declared by the Board of Directors, and the dividends are paid upon vesting of the award.
The 2010 LTIP closed all prior long-term incentive plans to new grants, and accordingly, prospective grants must be made under the 2010 LTIP or a successor plan.
All existing grants under prior long-term incentive plans were unaffected by this amendment.
The number of remaining share equivalents available for future issuance under the 2010 LTIP was approximately 84 million at December 31, 2011.
Grants of performance-based restricted stock typically have a one-year performance period, after which shares vest within three years after the grant date.
Restricted stock units, which were granted in 2008, have a vesting period of five years.
Generally, the terms of these plans stipulate that the exercise price of options may not be less than the fair market value of Regions common stock at the date the options are granted; however, under prior stock option plans, non-qualified options could be granted with a lower exercise price than the fair market value of Regions common stock on the date of grant.
The contractual life of options granted under these plans ranges from seven to ten years from the date of grant.
Regions issues new shares from authorized reserves upon exercise.
Grantees of restricted stock awards or units must either remain employed with the Company for certain periods from the date of grant in order for shares to be released or issued or retire after meeting the standards of a retiree, at which time shares would be prorated and released.


Off-Balance Sheet Arrangements We enter into various off-balance-sheet arrangements in the ordinary course of business, primarily to meet the needs of our customers and to reduce our own exposure to interest rate risk.
These arrangements include firm commitments to extend credit and letters of credit.
Additionally, we enter into guarantees and other similar arrangements as part of transactions in the ordinary course of business.
For additional information on each of these arrangements, see Note 21—Commitments, Contingencies and Other Regulatory Matters of Item 8.
Financial Statements and Supplementary Data.
Contractual Obligations and Commitments The following table summarizes our contractual obligations at December 31, 2011 and the effect such obligations are expected to have on our liquidity and cash flow in future periods (dollars in millions):


| 2010 % Change 2009 % Change 2008 | Revenue | Gross Profit | Gross Profit Margin |


CITIZENS FINANCIAL GROUP, INC.  MANAGEMENT’S DISCUSSION AND ANALYSIS 44 Overview We are one of the nation’s oldest and largest financial institutions, with $149.5 billion of total assets as of December 31, 2016.
Headquartered in Providence, Rhode Island, we deliver a broad range of retail and commercial banking products and services to individuals, institutions and companies.
Our approximately 17,600 colleagues strive to meet the financial needs of customers and prospects through approximately 1,200 branches and approximately 3,200 ATMs operated in 11 states in the New England, Mid-Atlantic and Midwest regions and through our online, telephone and mobile banking platforms.
We conduct our banking operations through two wholly-owned banking subsidiaries, Citizens Bank, N. A.  and Citizens Bank of Pennsylvania and we operate our businesses through two operating segments: Consumer Banking and Commercial Banking.
Consumer Banking average loans and leases totaled $55.1 billion in 2016 compared with $51.5 billion in 2015 and represented approximately 55% of average total operating segment loan and lease balances (including loans held for sale) compared with 55% of average total operating segment loan and lease balances (including loans held for sale) in 2015.
Consumer Banking serves retail customers and small businesses with annual revenues of up to $25 million with products and services that include deposit products, mortgage and home equity lending, student loans, auto financing, credit cards, business loans and wealth management and investment services.
Commercial Banking average loans and leases totaled $45.9 billion in 2016 compared with $41.6 billion in 2015, and represented approximately 45% of average total operating segment loan and lease balances (including loans held for sale) compared with 45% of average total operating segment loan and lease balances (including loans held for sale) in 2015.
Commercial Banking offers corporate, institutional and not-for-profit clients a full range of wholesale banking products and services including lending and deposits, capital markets, treasury services, foreign exchange and interest hedging, leasing and asset finance, specialty finance and trade finance.
Non-core assets are primarily loans that are not aligned to our strategic priorities, generally as a result of geographic location, industry, product type, or risk level and are included in other.
Non-core assets of $2.8 billion as of December 31, 2016 increased $422 million, or 18%, from December 31, 2015.
These results were driven by a $909 million increase in total commercial non-core loans related to the transfer of a $1.2 billion lease and loan portfolio tied to legacy RBS aircraft leasing borrowers that we placed in runoff following a review of Asset Finance in third quarter 2016.
The increase in commercial non-core loans was partially offset by a $616 million decrease in total retail non-core loans.
The largest component of our retail non-core portfolio is the home equity products serviced by others portfolio (a portion of which we now service internally).
Non-core assets are included in Other along with the treasury function, securities portfolio, wholesale funding activities, goodwill, community development assets and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses not attributed to the Consumer Banking or Commercial Banking segments.
For 2016, we recorded income before income tax expense and net income of $1.5 billion and $1.0 billion, respectively.2016 results included a $31 million pre-tax, or $19 million after-tax, benefit from notable items, presented below.


BUSINESS SEGMENTS REVIEW We have six reportable business segments: ?
Retail Banking ?
Corporate & Institutional Banking ?
Asset Management Group ?
Residential Mortgage Banking ?
BlackRock ?
Non-Strategic Assets Portfolio Business segment results, including the basis of presentation of inter-segment revenues, and a description of each business are included in Note 23 Segment Reporting included in the Notes To Consolidated Financial Statements in Item 8 of this Report.
Certain amounts included in this Business Segments Review section and the Business Segment Highlights in the Executive Summary section of this Item 7 differ from those amounts shown in Note 23, primarily due to the presentation in Item 7 of this Report of business net interest revenue on a taxable-equivalent basis.
Note 23 presents results of businesses for 2015, 2014 and 2013.


| 2013 2012 2011 | Beginning outstanding balance | Achieved | Released | Forfeited | Ending outstanding balance |


| Year Ended December 31, | 2017 | (in thousands) | Cash provided by operating activities | Cash provided by (used in) investing activities | Cash provided by financing activities | Effect of exchange rate changes | Net increase (decrease) in cash and cash equivalents |


| December 31, | 2010 | NAIC 1 | NAIC 2 | NAIC 3 | NAIC 4 | NAIC 5 | NAIC 6 |


9.
Preferred and Common Stock Preferred Stock  Xcel Energy has authorized 7,000,000 shares of preferred stock with a $100 par value.
At Dec.  31, 2008 and 2007, Xcel Energy had six series of preferred stock outstanding, redeemable at its option at prices ranging from $102 to $103.75 per share plus accrued dividends.
The holders of the $3.60 series preferred stock are entitled to three votes per each share held.
The holders of the other series of preferred stock are entitled to one vote per share.
In the event dividends payable on the preferred stock of any series outstanding is in arrears in an amount equal to four quarterly dividends, the holders of preferred stocks, voting as a class, are entitled to elect the smallest number of directors necessary to constitute a majority of the Board of Directors.
The holders of common stock, voting as a class, are entitled to elect the remaining directors.
The charters of some of Xcel Energys subsidiaries also authorize the issuance of preferred stock.
However, at Dec.  31, 2008 and 2007, there are no preferred shares of subsidiaries outstanding.
The following table lists preferred shares by subsidiary.


| 2019 2018 2017 | Cost of sales | Research and development | Selling, marketing, general and administrative | Special charges | Total stock-based compensation expense |


| Payment Period | Contractual Obligations | Debt-1 | Interest on fixed rate debt obligations-2 | Operating leases | Purchase obligations-3 | $16,264 |


| As of December 31, (in billions) 2003 2002 | Derivative receivables: | Derivative receivables MTM | Collateral held against derivatives | Derivative receivables – net current exposure | Reduction in exposure to 3-year average exposure | Economic credit exposure |


Table VIII Selected Loan Maturity Data (1, 2)
(1) Loan maturities are based on the remaining maturities under contractual terms.
(2) Includes loans measured at fair value in accordance with SFAS 159.
(3) Loan maturities include direct/indirect consumer, other consumer, commercial real estate and commercial–foreign loans.


On November 1, 2016, management evaluated the net assets of Alcoa Corporation for potential impairment and determined that no impairment charge was required.
The cash flows related to Alcoa Corporation have not been segregated and are included in the Statement of Consolidated Cash Flows for 2016.
The following table presents depreciation, depletion and amortization, restructuring and other charges, and purchases of property, plant and equipment of the discontinued operations related to Alcoa Corporation:


| (Amounts in millions) 2008 2009 2010 2011 2012 Thereafter | Cash flow hedges-1: | Notional amount | Weighted average rate received | Weighted average rate paid | Fair value hedges-1: | Notional amount | Weighted average rate received | Weighted average rate paid | Nonhedges: | Receive fixed rate/pay variable rate: | Notional amount | Weighted average rate received | Weighted average rate paid | Receive variable rate/pay fixed rate: | Notional amount | Weighted average rate received | Weighted average rate paid | Basis swaps: | Notional amount | Weighted average rate received | Weighted average rate paid | Net notional |


| Actual For Capital Adequacy  Purposes To Be Well Capitalized  Under Prompt Corrective  Action Provisions | Amount | As of March 31, 2011: | Total risk-based capital ratio-1 | Tier 1 risk-based capital ratio-2 | Tier 1 capital ratio (leverage)(3) | Tangible equity ratio-4 | As of March 31, 2010: | Total risk-based capital ratio-1 | Tier 1 risk-based capital ratio-2 | Tier 1 capital ratio (leverage)(3) | Tangible equity ratio-4 |


| 2011 2010 2009 | External sales: | Residential Furnishings—Coated Fabrics Unit | Commercial Fixturing & Components—Storage Products Unit | External sales | Earnings (loss): | Residential Furnishings—Coated Fabrics Unit -1 | Commercial Fixturing & Components—Storage Products Unit -1 | Subsequent activity related to divestitures completed prior to 2009 -1(2) | Loss before interest and income taxes | Income tax benefit (expense) | Loss from discontinued operations, net of tax |


| Year Ended December 31, | 2018 | Net income (loss) applicable to common shares | NAREIT FFO | FFO as adjusted | FAD | As of December 31, 2010 | Notional | (in millions) | Financial assets with interest rate risk: | Fixed maturities -1 | Commercial mortgage and other loans | Policy loans | Derivatives: | Swaps | Futures | Options | Forwards | Variable annuity and other living benefit feature embedded derivatives -2 | Financial liabilities with interest rate risk: | Short-term and long-term debt | Debt of consolidated variable interest entities -3 | Investment contracts | Bank customer liabilities | Net estimated potential loss |


| Successor | Year Ended   December 31,   2006 | % of | $ | (In millions) | North America | Europe/Africa | Asia/Australia | Rest of World |


| Millions Dec. 31, 2011 Dec. 31, 2010 | Accounts payable | Income and other taxes | Accrued wages and vacation | Dividends payable | Accrued casualty costs | Interest payable | Equipment rents payable | Other | Total accounts payable and othercurrent liabilities |


| Years Ended December 31, | 2008 | (Thousands of dollars) | General partner distributions | Incentive distributions | Total distributions to general partner |


Incurred Losses and LAE.
The following table presents the incurred losses and LAE for the U. S.  Reinsurance segment for the periods indicated.


Results of Discontinued Operations Our discontinued operations generated after-tax income of $366.6 million and $141.4 million in fiscal 2015 and 2014, respectively.
The results of discontinued operations for fiscal 2015 include a pre-tax gain of $625.6 million ($379.6 million after-tax) recognized on the formation of the Ardent Mills joint venture.
The results for fiscal 2014 reflect a pre-tax gain of $90.0 million ($55.7 million after-tax) related to the disposition of three flour milling facilities as part of the Ardent Mills formation.
In fiscal 2014, we also completed the sale of a small snack business, Medallion Foods, for $32.0 million in cash.
We recognized an after-tax loss of $3.5 million on the sale of this business in fiscal 2014.
In fiscal 2014, we recognized an impairment charge related to allocated amounts of goodwill and intangible assets, totaling $15.2 million after-tax, in anticipation of this divestiture.
We also completed the sale of the assets of the Lightlife? business for $54.7 million in cash.
We recognized an after-tax gain of $19.8 million on the sale of this business in fiscal 2014.


| Year EndedDecember 31, | 2016 | Reported tax rate | Impact of certain receipts/charges* | 12.4% | (in millions) | Deposits with a stated maturity of less than one year-1 (2) | Term deposits-1 | Long-term borrowed funds-1 (3) | Contractual interest payments-4 | Operating lease obligations | Purchase obligations-5 | Total outstanding contractual obligations | December 31, | (dollars in millions) | Commitment amount: | Undrawn commitments to extend credit | Financial standby letters of credit | Performance letters of credit | Commercial letters of credit | Marketing rights | Risk participation agreements | Residential mortgage loans sold with recourse | Total |


| Outstandings Nonperforming Accruing Past Due   90 Days or More | December 31 | (Dollars in millions) | U.S. commercial-2 | Commercial real estate-3 | Commercial lease financing | Non-U.S.commercial | 278,950 | U.S. small business commercial-4 | Total commercial loans excluding loans measured at fair value | Total measured at fair value-5 | Total commercial loans and leases |


| Total Return-1 | Vornado | Three-month | One-year | Three-year | Five-year | Ten-year |


Notes to Consolidated Financial Statement 03 ?PROPERTY ACQUISITIONS 2010 ACQUISITIONS In January 2010, we became the sole owner of 100 Church Street, a 1.05?
million square-foot (unaudited) office tower located in downtown Manhattan, following the successful foreclosure of the senior mezzanine loan at the property.
Our initial investment totaled $40.9?million, which was comprised of a 50% interest in the senior mezzanine loan and two other mezzanine loans at 100 Church Street, which we acquired from Gramercy Capital Corp.  (NYSE: GKK), or Gramercy, in the summer of 2007.
At closing of the foreclosure, we funded an additional $15.0?million of capital into the project as part of our agreement with Wachovia Bank, N. A.  to extend and restructure the existing financing.
Gramercy declined to fund its share of this capital and instead transferred its interests in the investment to us at closing.
The restructured $139.7?million mortgage carries an interest rate of 350 basis points over the 30-day LIBOR.
The restructured mortgage matures in January 2013 and has a one-year extension option.
The following summarizes our allocation of the purchase price of the assets acquired and liabilities assumed upon the completion of the foreclosure of 100 Church Street (in thousands):


Regional Affiliates’ passenger revenues, which are based on industry standard proration agreements for flights connecting to American flights, increased $315 million or 15.7 percent as a result of passenger yield increase of 8.4 percent.
Regional Affiliates’ traffic increased 6.7 percent to 8.8 billion revenue passenger miles (RPMs), while capacity increased 5.3 percent to 12.2 billion ASMs, resulting in a 1.0 point increase in passenger load factor to 72.4 percent.
Cargo revenues increased 16.3 percent, or $94 million, primarily as a result of increased volume, particularly in the Latin America and Pacific regions.
Other revenues increased 5.3 percent, or $120 million, to $2.4 billion due to increases in certain passenger service charge volumes and fees and increased revenue associated with the sale of mileage credits in the AAdvantage frequent flyer program.
Operating Expenses 2010 Compared to 2009 The Company’s total operating expenses increased 4.5 percent, or $939 million, to $22 billion in 2010 compared to 2009.
American’s mainline operating expenses per ASM in 2010 increased 3.2 percent compared to 2009 to 12.62 cents.
The increase in operating expense was largely due to a year-over-year increase in fuel prices from $2.01 per gallon in 2009 to $2.31 per gallon in 2010, including the impact of fuel hedging.
Fuel expense was the Company’s second largest single expense category in 2010 and the price increase resulted in $716 million in incremental year-over-year fuel expense in 2010 (based on the year-over-year increase in the average price per gallon multiplied by gallons consumed, inclusive of the impact of fuel hedging).
A return to the recent historically high fuel prices and/or disruptions in the supply of fuel would further materially adversely affect the Company’s financial condition and results of operations.
The remaining increase in operating expense