EDWARDS LIFESCIENCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 13.
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 20,000 stock options or 8,000 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.
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.
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 shares.
Each option received as a deferral of the cash retainer immediately vests on the grant date, and each restricted share award vests after one year.
Upon a directors initial election to the Board, the director receives an initial grant of stock options 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 of the fair market value of Edwards Lifesciences common stock on the effective date of subscription or the date of purchase.
Under the ESPP, employees can authorize the Company to withhold up to 12% of their compensation for common stock purchases, subject to certain limitations.
The ESPP is available to all active employees of the Company paid from the United States payroll and to eligible employees of the Company outside the United States, to the extent permitted by local law.
The ESPP for United States employees is qualified under Section 423 of the Internal Revenue Code.
The number of shares of common stock authorized for issuance under the ESPP was 6.9 million shares.
The fair value of each option award and employee stock purchase subscription is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following tables.
The risk-free interest rate is estimated using the U. S.  Treasury yield curve and is based on the expected term of the award.
Expected volatility is estimated based on a blend of the weighted-average of the historical volatility of Edwards Lifesciences stock and the implied volatility from traded options on Edwards Lifesciences stock.
The expected term of awards granted is estimated from the vesting period of the award, as well as historical exercise behavior, and represents the period of time that awards granted are expected to be outstanding.
The Company uses historical data to estimate forfeitures and has estimated an annual forfeiture rate of 5.4%.
The Black-Scholes option pricing model was used with the following weighted-average assumptions for options granted during the following periods: Option Awards


| (in millions) GAAP Basis Impact on Cash Flows of Consolidated Sponsored Investment Funds Cash Flows Excluding Impact of Consolidated Sponsored Investment Funds | Cash and cash equivalents, December 31, 2013 | Cash flows from operating activities | Cash flows from investing activities | Cash flows from financing activities | Effect of exchange rate changes on cash and cash equivalents | Net change in cash and cash equivalents | Cash and cash equivalents, December 31, 2014 | Cash flows from operating activities | Cash flows from investing activities | Cash flows from financing activities | Effect of exchange rate changes on cash and cash equivalents | Net change in cash and cash equivalents | Cash and cash equivalents, December 31, 2015 |


SELECTED FINANCIAL DATA The selected earnings data, per share data and balance sheet data for each of the five most recent years ended December 31 set forth below, have been derived from our audited consolidated financial statements.
The following data should be read in conjunction with our consolidated financial statements and notes to consolidated financial statements in Item 8 "Financial Statements and Supplementary Data. "


Table of Contents Contractual Obligations We have various financial obligations that require future cash payments.
The following table outlines the timing of payment requirements related to our commitments as of December 31, 2011:


| Net Sales Year-end Assets | (Dollars in Millions) | United States | Europe, Middle East and Africa | Other Western Hemisphere | Pacific | Total |


| Year ended December 31, | 2016 | (in millions) | Annualized new business premiums: | On an actual exchange rate basis: | Life Planner operations | Gibraltar Life | Total | On a constant exchange rate basis: | Life Planner operations | Gibraltar Life | Total |


| Plan Category Number Of Securities To Be Issued Upon ExerciseOf Outstanding Options, Warrants And Rights (a) Weighted-Average Exercise Price Of Outstanding Options, WarrantsAnd Rights (b) Number Of Securities Remaining Available For Future Issuance UnderEquity Compensation Plans (excluding securities reflected in column (a)) (c) | Equity compensation plans approved by security holders-1 | Equity compensation plans not approved by security holders-2 | Total |


| As of December 31, 2014 | Ownership | (In percentages) | InfraServ GmbH & Co. Gendorf KG | InfraServ GmbH & Co. Hoechst KG | InfraServ GmbH & Co. Knapsack KG |


| Cash $429 | Inventory, including fair value adjustments | Other tangible assets | Accounts payable and accrued expenses | Deferred revenue, including fair value adjustments | Developed technology | In-process research and development | Trade names | Non-compete agreements | Deferred taxes, net | Goodwill | Purchase Price |


| 2009 2008 | Financial Services Business | ASSETS | Fixed maturities, available for sale, at fair value | Fixed maturities, held to maturity, at amortized cost | Trading account assets supporting insurance liabilities, at fair value | Other trading account assets, at fair value | Equity securities, available for sale, at fair value | Commercial mortgage and other loans | Policy loans | Securities purchased under agreements to resell | Other long-term investments | Short-term investments | Total investments | Cash and cash equivalents | Accrued investment income | Deferred policy acquisition costs | Deferred income taxes, net | Other assets | Separate account assets | TOTAL ASSETS | LIABILITIES AND EQUITY | LIABILITIES | Future policy benefits | Policyholders’ account balances | Policyholders’ dividends | Securities sold under agreements to repurchase | Cash collateral for loaned securities | Income taxes | Short-term debt | Long-term debt | Other liabilities | Separate account liabilities | Total liabilities | COMMITMENTS AND CONTINGENT LIABILITIES | EQUITY | Accumulated other comprehensive income (loss) | Other attributed equity | Total attributed equity | Noncontrolling interests | Total equity | TOTAL LIABILITIES AND EQUITY |


Department of Labor Fiduciary Rule Our Individual Retirement and Group Retirement operating segments provide products and services to certain employee benefit plans that are subject to restrictions imposed by ERISA and the Internal Revenue Code, including the requirements of the DOL Fiduciary Rule.
For additional information about the DOL Fiduciary Rule, see Part I, Item 1.  Business – Regulation.
We have been analyzing the DOL Fiduciary Rule’s potential impact on our customers, distribution partners, financial advisors and our Individual Retirement and Group Retirement businesses, and preparing to implement the necessary adjustments to achieve compliance with the DOL Fiduciary Rule.
Overall, the DOL Fiduciary Rule as currently promulgated would result in increased compliance costs and, as currently promulgated, may create increased exposure to legal claims under certain circumstances, including class actions.
The DOL has also issued interpretive guidance on the DOL Fiduciary Rule, and we are evaluating whether or not this guidance would affect the actions we would need to take to comply with the DOL Fiduciary Rule.
On February 3, 2017, the new administration issued a memo requiring the DOL to review the DOL Fiduciary Rule and determine whether the DOL Fiduciary Rule will adversely impact the ability of retirement savers to access information and financial advice.
Accordingly, the DOL announced that it would consider legal options for postponing the applicability date of the DOL Fiduciary Rule while the DOL considers the issues raised in the referenced memo.
We are closely following the DOL’s pronouncements about further delays to the DOL Fiduciary Rule’s effective date.


CREDIT RISK MANAGEMENT Credit risk is the risk of loss from obligor or counterparty default.
The Firm provides credit (for example, through loans, lending-related commitments and derivatives) to customers of all sizes, from large corporate clients to the individual consumer.
The Firm manages the risk/reward relationship of each credit extension and discourages the retention of assets that do not generate a positive return above the cost of the Firms risk-adjusted capital.
In addition, credit risk management includes the distribution of the Firms wholesale syndicated loan originations into the marketplace (primarily to IB clients), with retained exposure held by the Firm averaging less than 10%.
Wholesale loans generated by CB and AM are generally retained on the balance sheet.
With regard to the consumer credit market, the Firm focuses on creating a portfolio that is diversified from both a product and a geographic perspective.
Within the mortgage business, originated loans are either retained in the mortgage portfolio, or securitized and sold selectively to U. S.  government agencies and U. S.  government-sponsored enterprises.
Credit risk organization Credit risk management is overseen by the Chief Risk Officer and implemented within the lines of business.
The Firms credit risk management governance consists of the following functions: ?
establishing a comprehensive credit risk policy framework ?
calculating the allowance for credit losses and ensuring appropriate credit risk-based capital management ?
assigning and managing credit authorities in connection with the approval of all credit exposure ?
monitoring and managing credit risk across all portfolio segments ?
managing criticized exposures Risk identification The Firm is exposed to credit risk through lending and capital markets activities.
Credit risk management works in partnership with the business segments in identifying and aggregating exposures across all lines of business.
Risk measurement To measure credit risk, the Firm employs several methodologies for estimating the likelihood of obligor or counterparty default.
Losses generated by consumer loans are more predictable than wholesale losses, but are subject to cyclical and seasonal factors.
Although the frequency of loss is higher on consumer loans than on wholesale loans, the severity of loss is typically lower and more manageable on a portfolio basis.
As a result of these differences, methodologies for measuring credit risk vary depending on several factors, including type of asset (e. g. , consumer installment versus wholesale loan), risk measurement parameters (e. g. , delinquency status and credit bureau score versus wholesale risk rating) and risk management and collection processes (e. g. , retail collection center versus centrally managed workout groups).
Credit risk measurement is based upon the amount of exposure should the obligor or the counterparty default, the proba


| 2016 2015 2014 | Expected term (in years)(1) | Risk-free rate of return-2 | Expected volatility-3 | Expected dividend yield-4 | Fair value per option granted |


| Years Ended December 31, | (in millions) | Operating Revenues | Operating Expenses | Operation, maintenance and other | Depreciation and amortization | Property and other taxes | Impairment charges | Total operating expenses | Gains on Sales of Other Assets and Other, net | Operating Loss | Other Income and Expenses | Interest Expense | Loss Before Income Taxes | Income Tax Benefit | Less: Loss Attributable to Noncontrolling Interests | Segment Income | Renewable plant production, GWh | Net proportional MW capacity in operation |


Stock Performance Graph At least annually, we consider which companies comprise a readily identifiable investment peer group.
McDonald's is included in published restaurant indices; however, unlike most other companies included in these indices, which have no or limited international operations, McDonald's does business in more than 100 countries and a substantial portion of our revenues and income is generated outside the U. S.  In addition, because of our size, McDonald's inclusion in those indices tends to skew the results.
Therefore, we believe that such a comparison is not meaningful.
Our market capitalization, trading volume and importance in an industry that is vital to the U. S.  economy have resulted in McDonald's inclusion in the Dow Jones Industrial Average (DJIA) since 1985.
Like McDonald's, many DJIA companies generate meaningful revenues and income outside the U. S.  and some manage global brands.
Thus, we believe that the use of the DJIA companies as the group for comparison purposes is appropriate.
The following performance graph shows McDonald's cumulative total shareholder returns (i. e. , price appreciation and reinvestment of dividends) relative to the Standard & Poor's 500 Stock Index (S&P 500 Index) and to the DJIA companies for the five-year period ended December 31, 2017.
The graph assumes that the value of an investment in McDonald's common stock, the S&P 500 Index and the DJIA companies (including McDonald's) was $100 at December 31, 2012.
For the DJIA companies, returns are weighted for market capitalization as of the beginning of each period indicated.
These returns may vary from those of the Dow Jones Industrial Average Index, which is not weighted by market capitalization, and may be composed of different companies during the period under consideration.


| 2006 2005 2004 | Processing and services revenues | Cost of revenues | Gross profit | Selling, general and administrative expenses | Research and development costs | Operating income |


| Fourth Quarter Change | (dollar amounts in thousands) | Personnel costs | Outside data processing and other services | Net occupancy | Equipment | Deposit and other insurance expense | Professional services | Marketing | Amortization of intangibles | OREO and foreclosure expense | Loss (Gain) on early extinguishment of debt | Other expense | Total noninterest expense | Full-time equivalent employees, at period-end |


| SPP Total Portfolio | 2016 | Rental revenues-1 | HCP share of unconsolidated JV revenues | Operating expenses | HCP share of unconsolidated JV share of operating expenses | NOI | Non-cash adjustments to NOI | Adjusted NOI | Non-SPP adjusted NOI | SPP adjusted NOI | Adjusted NOI % change | Property count-2 | Average occupancy | Average occupied sq. ft. | Average annual total revenues per occupied sq. ft. | Average annual rental revenues per occupied sq. ft. |


Voluntary Option Exchanges—In February 2004, the Company issued to eligible employees 1,064,353 options with an exercise price of $11.19 per share.
These options were issued in connection with a voluntary option exchange program entered into by the Company in August 2003, pursuant to which the Company accepted for surrender and cancelled options to purchase a total of 1,881,981 shares of its Class A common stock having an exercise price of $10.25 or greater.
The program, which was offered to both full and part-time employees,


There is no established public trading market for Simon’s Class B common stock.
Dividends on the Class B common stock are identical to the common stock.
Holders The number of holders of record of common stock outstanding was 1,208 as of February 14, 2017.
The Class B common stock is subject to two voting trusts as to which Herbert Simon and David Simon are the trustees.
Shares of Class B common stock convert automatically into an equal number of shares of common stock upon the occurrence of certain events and can be converted into shares of common stock at the option of the holders.
Dividends We must pay a minimum amount of dividends to maintain Simon’s status as a REIT.
Simon’s future dividends and future distributions of the Operating Partnership will be determined by Simon’s Board of Directors, in its sole discretion, based on actual and projected financial condition, liquidity and results of operations, cash available for dividends and limited partner distributions, cash reserves as deemed necessary for capital and operating expenditures, financing covenants, if any, and the amount required to maintain Simon’s status as a REIT.
Common stock cash dividends during 2016 aggregated $6.50 per share.
Common stock cash dividends during 2015 aggregated $6.05 per share.
In January 2017, Simon’s Board of Directors declared a quarterly cash dividend of $1.75 per share of common stock payable on February 28, 2017 to stockholders of record on February 14, 2017.
We offer a dividend reinvestment plan that allows Simon’s stockholders to acquire additional shares by automatically reinvesting cash dividends.
Shares are acquired pursuant to the plan at a price equal to the prevailing market price of such shares, without payment of any brokerage commission or service charge.


| As of December 31, 2013 (In thousands) | Current assets from discontinued operations | Noncurrent assets from discontinued operations | Current liabilities from discontinued operations | Long-term liabilities from discontinued operations | Net assets from discontinued operations | 2014 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | 2013 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | As of December 31, | Balance Sheet Data | (In thousands) | Cash, cash equivalents and current marketable investment securities | Total assets | Long-term debt and capital lease obligations (including current portion) | Total stockholders’ equity (deficit) | For the Years Ended December 31, | Statements of Operations Data | (In thousands, except per share amounts) | Total revenue | Total costs and expenses | Operating income (loss) | Net income (loss) attributable to DISH Network | Basic net income (loss) per share attributable to DISH Network | Diluted net income (loss) per share attributable to DISH Network |


| (Millions) 2012 2011 2010 | Royalty income | Share of net earnings of equity affiliates (See Note 5) | Gain on sale of assets | Other | Total |


| 2007 2006 2005 | (In millions) | Amortization of acquired intangibles |


| Fair  Value Weighted- Average Prepayment Speed Weighted- Average Discount Rate Annual Expected Credit Defaults | (Dollars in thousands) | Retained subordinated interests: | As of securitization date | As of December 31, 2004 | Impact on fair value of 10% adverse change | Impact on fair value of 20% adverse change |


THE GOLDMAN SACHS GROUP, INC.  AND SUBSIDIARIES Notes to Consolidated Financial Statements Unsecured Short-term and Long-term Borrowings.
The significant inputs to the valuation of unsecured shortterm and long-term borrowings at fair value are the amount and timing of expected future cash flows, interest rates, the credit spreads of the firm, as well as commodity prices in the case of prepaid commodity transactions.
The inputs used to value the embedded derivative component of hybrid financial instruments are consistent with the inputs used to value the firms other derivative instruments.
See Note 7 for further information about derivatives, Note 15 for further information about unsecured short-term borrowings, and Note 16 for further information about long-term borrowings.
Certain of the firms unsecured short-term and long-term borrowings are classified in level 3, substantially all of which are hybrid financial instruments.
As the significant unobservable inputs used to value hybrid financial instruments primarily relate to the embedded derivative component of these borrowings, these inputs are incorporated in the firms derivative disclosures related to unobservable inputs in Note 7.
Customer and Other Receivables.
Customer and other receivables at fair value primarily consist of prepaid commodity transactions and transfers of assets accounted for as secured loans rather than purchases.
The significant inputs to the valuation of such receivables are commodity prices, interest rates, the amount and timing of expected future cash flows and funding spreads.
As of both December 2018 and December 2017, the firms level 3 customer and other receivables were not material.
Deposits.
The significant inputs to the valuation of time deposits are interest rates and the amount and timing of future cash flows.
The inputs used to value the embedded derivative component of hybrid financial instruments are consistent with the inputs used to value the firms other derivative instruments.
See Note 7 for further information about derivatives and Note 14 for further information about deposits.
The firms deposits that are classified in level 3 are hybrid financial instruments.
As the significant unobservable inputs used to value hybrid financial instruments primarily relate to the embedded derivative component of these deposits, these inputs are incorporated in the firms derivative disclosures related to unobservable inputs in Note 7.


| Return Periods (in years) 1 in 20 1 in 50 1 in 100 1 in 250 1 in 500 1 in 1,000 | Exceeding Probability | (Dollars in millions) | Zone/ Peril | Southeast U.S., Wind | California, Earthquake | Texas, Wind |


(15)Divestitures and Discontinued Operations On December 7, 2016, the Company entered into a definitive agreement to sell the SunGard Public Sector and Education ("PS&E") businesses for $850 million.
The transaction included all PS&E solutions, which provide a comprehensive set of technology solutions to address public safety and public administrationn needs of government entities as well as the needs of K-12 school districts.
The divestiture is consistent with our strategy to serve the financial services markets.
We received cash proceeds, net of taxes and transaction-related expenses of approximately $500 million.
Net cash proceeds are expected to be used to reduce outstanding debt (see Note 10).
The PS&E businesses are included in the Corporate and Other segment.
The transaction closed on February 1, 2017, resulting in an expected pre-tax gain ranging from $85 million to $90 million that will


| December 31, | 2003 | (Dollars in thousands) | Nonperforming assets: | Loans past due 90 days or more | Nonaccrual loans | Total nonperforming assets | Nonperforming loans as a percent of total gross loans | Nonperforming assets as a percent of total assets | Allowance for loan losses | As a percent of total gross loans | As a percent of nonaccrual loans | As a percent of nonperforming loans | (for the year ended December 31, in millions) | Average investments (a) | Net investment income | Average pretax yield (b) | Average pretax equivalent yield (b) | Average aftertax yield (b) |


| December 31, 2011 | Direct | (In millions) | Assets: | Premiums, reinsurance and other receivables | Deferred policy acquisition costs and value of business acquired | Total assets | Liabilities: | Future policy benefits | Policyholder account balances | Other policy-related balances | Other liabilities | Total liabilities |


2025 Notes.
In May 2015, the Company issued ¬700 million of 1.25% senior unsecured notes maturing on May 6, 2025 (the Â¡Â°2025 NotesÂ¡Â±).
The notes are listed on the New York Stock Exchange.
The net proceeds of the 2025 Notes were used for general corporate purposes, including refinancing of outstanding indebtedness.
Interest of approximately $10 million per year based on current exchange rates is payable annually on May 6 of each year.
The 2025 Notes may be redeemed in whole or in part prior to maturity at any time at the option of the Company at a Â¡Â°make-wholeÂ¡Â± redemption price.
The unamortized discount and debt issuance costs are being amortized over the remaining term of the 2025 Notes.
Upon conversion to U. S.  dollars the Company designated the ¬700 million debt offering as a net investment hedge to offset its currency exposure relating to its net investment in certain euro functional currency operations.
A gain of $19 million, net of tax, was recognized in other comprehensive income for 2015.
No hedge ineffectiveness was recognized during 2015.2024 Notes.
In March 2014, the Company issued $1.0 billion in aggregate principal amount of 3.50% senior unsecured and unsubordinated notes maturing on March 18, 2024 (the Â¡Â°2024 NotesÂ¡Â±).
The net proceeds of the 2024 Notes were used to refinance certain indebtedness which matured in the fourth quarter of 2014.
Interest is payable semi-annually in arrears on March 18 and September 18 of each year, or approximately $35 million per year.
The 2024 Notes may be redeemed prior to maturity at any time in whole or in part at the option of the Company at a Â¡Â°make-wholeÂ¡Â± redemption price.
The unamortized discount and debt issuance costs are being amortized over the remaining term of the 2024 Notes.2022 Notes.
In May 2012, the Company issued $1.5 billion in aggregate principal amount of unsecured unsubordinated obligations.
These notes were issued as two separate series of senior debt securities, including $750 million of 1.375% notes, which were repaid in June 2015 at maturity, and $750 million of 3.375% notes maturing in June 2022 (the Â¡Â°2022 NotesÂ¡Â±).
Net proceeds were used to fund the repurchase of BlackRockÂ¡Â¯s common stock and Series B Preferred from Barclays and affiliates and for general corporate purposes.
Interest on the 2022 Notes of approximately $25 million per year, respectively, is payable semi-annually on June 1 and December 1 of each year, which commenced December 1, 2012.
The 2022 Notes may be redeemed prior to maturity at any time in whole or in part at the option of the Company at a Â¡Â°make-wholeÂ¡Â± redemption price.
The Â¡Â°make-wholeÂ¡Â± redemption price represents a price, subject to the specific terms of the 2022 Notes and related indenture, that is the greater of (a) par value and (b) the present value of future payments that will not be paid because of an early redemption, which is discounted at a fixed spread over a


product management, business development and client service.
Our alternatives products fall into two main categories  core, which includes hedge funds, funds of funds (hedge funds and private equity) and real estate offerings, and currency and commodities.
The products offered under the BAI umbrella are described below.
Core.  ?
Hedge Funds ended the year with $26.6 billion in AUM, down $1.4 billion as net inflows into singlestrategy hedge funds of $1.0 billion were more than offset by return of capital on opportunistic funds.
Market valuation gains contributed $1.1 billion to AUM growth.
Hedge fund AUM includes a variety of single-strategy, multi-strategy, and global macro, as well as portable alpha, distressed and opportunistic offerings.
Products include both open-end hedge funds and similar products, and closed-end funds created to take advantage of specific opportunities over a defined, often longerterm investment horizon.  ?
Funds of Funds AUM increased $6.3 billion, or 28%, to $29.1 billion at December 31, 2012, including $17.1 billion in funds of hedge funds and hybrid vehicles and $12.0 billion in private equity funds of funds.
Growth largely reflected $6.2 billion of assets from SRPEP as we expanded our fund of funds product offerings and further engage in European and Asian markets.  ?
Real Estate and Hard Assets AUM totaled $12.7 billion, down $0.1 billion, or 1%, reflecting $0.6 billion in client net redemptions and distributions and $0.5 billion in portfolio valuation gains.
Offerings include high yield debt and core, value-added and opportunistic equity portfolios and renewable power funds.
We continued to expand our real estate platform and product offerings with the launch of our first U. S.  real estate investment trust (REIT) mutual fund and addition of an infrastructure debt team to further increase and diversify our offerings within global infrastructure investing Currency and Commodities.
AUM in currency and commodities strategies totaled $41.4 billion at year-end 2012, flat from year-end 2011, reflecting net outflows of $1.5 billion, primarily from active currency and currency overlays, and $0.8 billion of market and foreign exchange gains.
Claymore also contributed $0.9 billion of AUM.
Currency and commodities products include a range of active and passive products.
Our iShares commodities products represented $24.3 billion of AUM, including $0.7 billion acquired from Claymore, and are not eligible for performance fees.
Cash Management Cash management AUM totaled $263.7 billion at December 31, 2012, up $9.1 billion, or 4%, from year-end 2011.
Cash management products include taxable and tax-exempt money market funds and customized separate accounts.
Portfolios may be denominated in U. S.  dollar, Euro or British pound.
At year-end 2012, 84% of cash AUM was managed for institutions and 16% for retail and HNW investors.
The investor base was also predominantly in the Americas, with 69% of AUM managed for investors in the Americas and 31% for clients in other regions, mostly EMEA-based.
We generated net inflows of $5.0 billion during 2012, reflecting continued uncertainty around future regulatory changes and a challenging investing environment.
To meet investor needs, we sought to provide new solutions and choices for our clients by launching short duration products in the United States, which both immediately address the challenge of a continuing low interest rate environment and will also be important investment options should regulatory changes occur.
In the EMEA business, and in particular for our Euro product set, we have taken action to ensure that we can provide effective cash management solutions in the face of a potentially negative yield environment by taking steps to launch new products and re-engineer our existing product set.


| Years Ended | September 26, 2009 | Amount | Total Revenues | Operating Loss |


| 2013 2012-1 2011-1 | (dollars in millions) | Net revenues: | Transactional | Asset management | Net interest | Other | Net revenues | 2017 | $ in millions | Total non-interest revenues | Interest income | Interest expense | Net interest | Net revenues | Income from continuing operations before income taxes | Provision for income taxes3 | Income from continuing operations | Income (loss) from discontinued operations, net of incometaxes | Net income | Net income applicable to noncontrolling interests | Net income applicable to Morgan Stanley | 2016 | $ in millions | Total non-interest revenues | Interest income | Interest expense | Net interest | Net revenues | Income from continuing operations before income taxes | Provision for income taxes3 | Income from continuing operations | Income (loss) from discontinued operations, net of incometaxes | Net income | Net income (loss) applicable to noncontrolling interests | Net income applicable to Morgan Stanley | 2015 | $ in millions | Totalnon-interest revenues | Interest income | Interest expense | Net interest | Net revenues | Income from continuing operations before income taxes | Provision for income taxes3 | Income from continuing operations | Income (loss) from discontinued operations, net of incometaxes | Net income | Net income applicable to noncontrolling interests | Net income applicable to Morgan Stanley | 2017 | U.S. GAAP | Adjusted effective income taxrate—non-GAAP1 |


Certain Investments in Private Equity and Real Estate Ventures and Certain Equity Method and Other Investments Citigroup invests in private equity and real estate ventures for the purpose of earning investment returns and for capital appreciation.
The Company has elected the fair value option for certain of these ventures, because such investments are considered similar to many private equity or hedge fund activities in Citi’s investment companies, which are reported at fair value.
The fair value option brings consistency in the accounting and evaluation of these investments.
All investments (debt and equity) in such private equity and real estate entities are accounted for at fair value.
These investments are classified as Investments on Citigroup’s Consolidated Balance Sheet.
Changes in the fair values of these investments are classified in Other revenue in the Company’s Consolidated Statement of Income.
Citigroup also elected the fair value option for certain non-marketable equity securities whose risk is managed with derivative instruments that are accounted for at fair value through earnings.
These securities are classified as Trading account assets on Citigroup’s Consolidated Balance Sheet.
Changes in the fair value of these securities and the related derivative instruments are recorded in Principal transactions.
Effective January 1, 2018 under ASU 2016-01 and ASU 2018-03, a fair value option election is no longer required to measure these non-marketable equity securities through earnings.
See Note 1 to the Consolidated Financial Statements for additional details.


| December 31, | 2011 | Pre-and Post-Medicare eligible claims |


| As of December | $ in millions | Cash instruments | Derivatives | Other financial assets | Total |


| 2016 Quarters 2015 Quarters | (Dollars in millions) | Average balance sheet | Total loans and leases | Total assets | Total deposits | Long-term debt | Common shareholders’ equity | Total shareholders’ equity | Asset quality-3 | Allowance for credit losses-4 | Nonperforming loans, leases and foreclosed properties-5 | Allowance for loan and lease losses as a percentage of total loans and leases outstanding-5, 6 | Allowance for loan and lease losses as a percentage of total nonperforming loans and leases-5, 6 | Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the PCI loan portfolio-5, 6 | Amounts included in allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases-7 | Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases-5, 7 | Net charge-offs-8 | Annualized net charge-offs as a percentage of average loans and leases outstanding-5, 8 | Annualized net charge-offs as a percentage of average loans and leases outstanding, excluding the PCI loan portfolio-5 | Annualized net charge-offs and PCI write-offs as a percentage of average loans and leases outstanding-5 | Nonperforming loans and leases as a percentage of total loans and leases outstanding-5, 6 | Nonperforming loans, leases and foreclosed properties as a percentage of total loans, leases and foreclosed properties-5, 6 | Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs-6, 8 | Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs, excluding the PCI loan portfolio-6 | Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs and PCI write-offs-6 | Capital ratios at period end-9 | Risk-based capital: | Common equity tier 1 capital | Tier 1 capital | Total capital | Tier 1 leverage | Tangible equity-2 | Tangible common equity-2 |


Measurement of Fair Value in Inactive Markets.
In April 2009, the FASB revised the authoritative guidance for fair value measurements and disclosures, which reaffirms that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.
It also reaffirms the need to use judgment in determining if a formerly active market has become inactive and in determining fair values when the market has become inactive.
There was no impact to the Companys financial statements upon adoption.


Table of Contents These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control.
A detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations is described in Part I of this Form 10-K under the heading of
Risk Factors.

” We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
WEBSITE ACCESS TO COMPANY REPORTS Our investor website is http://investor.
ralphlauren.
com.
We were incorporated in June 1997 under the laws of the State of Delaware.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 are available at our investor website under the caption
SEC Filings
 promptly after we electronically file such materials with or furnish such materials to the SEC.
Information relating to corporate governance at Polo Ralph Lauren Corporation, including our Corporate Governance Policies, our Code of Business Conduct and Ethics for all directors, officers, and employees, our Code of Ethics for Principal Executive Officers and Senior Financial Officers, and information concerning our directors, Committees of the Board, including Committee charters, and transactions in Polo Ralph Lauren Corporation securities by directors and executive officers, is available at our website under the captions
Corporate Governance
 and
SEC Filings.

” Paper copies of these filings and corporate governance documents are available to stockholders without charge by written request to Investor Relations, Polo Ralph Lauren Corporation, 625 Madison Avenue, New York, New York 10022.
In this Form 10-K, references to
Polo,

ourselves,

we,

our,

us
 and the
Company
 refer to Polo Ralph Lauren Corporation and its subsidiaries, unless the context indicates otherwise.
Due to the collaborative and ongoing nature of our relationships with our licensees, such licensees are sometimes referred to in this Form 10-K as
licensing alliances.

” Our fiscal year ends on the Saturday closest to March 31.
All references to
Fiscal 2011
 represent the 52-week fiscal year ended April 2, 2011.
All references to
Fiscal 2010
 represent the 53-week fiscal year ended April 3, 2010.
All references to
Fiscal 2009
 represent the 52-week fiscal year ended March 28, 2009.
PART I Item 1.  Business.
General Founded in 1967 by Ralph Lauren, we are a global leader in the design, marketing and distribution of premium lifestyle products, including men’s, women’s and children’s apparel, accessories (including footwear), fragrances and home furnishings.
We believe that our global reach, breadth of product and multi-channel distribution is unique among luxury and apparel companies.
We operate in three distinct but integrated segments: Wholesale, Retail and Licensing.
The tables below show our net revenues and operating profit (excluding unallocated corporate expenses and legal and restructuring charges) by segment for the last three fiscal years.


Investments The fair value of commercial mortgage loans, except those with significant credit deterioration, is determined by discounting contractual cash flows using discount rates that reflect current pricing for loans with similar remaining maturities and characteristics including loan-to-value ratio, occupancy rate, refinance risk, debt-service coverage, location, and property condition.
For commercial mortgage loans with significant credit deterioration, fair value is determined using the same adjustments as above with an additional adjustment for the Company’s estimate of the amount recoverable on the loan.
The fair value of policy loans is determined using discounted cash flows.
Receivables The fair value of consumer bank loans is determined by discounting estimated cash flows and incorporating adjustments for prepayment, administration expenses, severity and credit loss estimates, with discount rates based on the Company’s estimate of current market conditions.
Loans held for sale are measured at the lower of cost or market and fair value is based on what secondary markets are currently offering for loans with similar characteristics.
Brokerage margin loans are measured at outstanding balances, which are a reasonable estimate of fair value because of the sufficiency of the collateral and short term nature of these loans.
Restricted and Segregated Cash Restricted and segregated cash is generally set aside for specific business transactions and restrictions are specific to the Company and do not transfer to third party market participants; therefore, the carrying amount is a reasonable estimate of fair value.
Amounts segregated under federal and other regulations may also reflect resale agreements and are measured at the cost at which the securities will be sold.
This measurement is a reasonable estimate of fair value because of the short time between entering into the transaction and its expected realization and the reduced risk of credit loss due to pledging U. S.  government-backed securities as collateral.
Other Investments and Assets Other investments and assets primarily consist of syndicated loans.
The fair value of syndicated loans is obtained from a nationally-recognized pricing service.
Future Policy Benefits and Claims The fair value of fixed annuities, in deferral status, is determined by discounting cash flows using a risk neutral discount rate with adjustments for profit margin, expense margin, early policy surrender behavior, a provision for adverse deviation from estimated early policy surrender behavior, and the Company’s nonperformance risk specific to these liabilities.
The fair value of other liabilities including non-life contingent fixed annuities in payout status, equity indexed annuity host contracts and the fixed portion of a small number of variable annuity contracts classified as investment contracts is determined in a similar manner.
The dividend yield assumption assumes the Company’s average dividend payout would continue with no changes.
The expected volatility for grants in 2010, 2009 and 2008 was based on the Company’s implied volatility and the Company’s historical stock volatility.
The expected volatility for grants in 2008 also considered historical volatilities experienced by a peer group of companies.
The risk-free interest rate for periods within the expected option life is based on the U. S.  Treasury yield curve at the grant date.
The expected life of the option is based on the Company’s past experience.
The weighted average grant date fair value for options granted during 2010, 2009 and 2008 was $15.89, $8.93 and $14.00, respectively.


| 2006 2005 2004 2003 2002 | Beginning Stores | New Stores-1 | Stores Closed | Ending Stores |


| December 31, | 2008 | Weighted average discount rate | Rate of compensation increase | Average expected retirement age |


| Funds Separate Accounts Securities Total | Balance at January 1, 2016 | Inflows | Outflows | Market appreciation (depreciation) | Balance at December 31, 2016 |


| (Dollars in millions) 2015 2014 2013 | Net income | Other comprehensive income (loss), net-of-tax: | Net change in available-for-sale debt and marketable equity securities | Net change in debit valuation adjustments | Net change in derivatives | Employee benefit plan adjustments | Net change in foreign currency translation adjustments | Other comprehensive income (loss) | Comprehensive income |


| 2010 2009 2008 2007 2006 | Net income | Depreciation and amortization | Interest expense | Early extinguishment of debt | Other interest income | EBITDA | Gain on sale of real estate | Adjusted EBITDA |


CAPITAL RESOURCES AND LIQUIDITY CAPITAL RESOURCES Overview Capital has historically been generated by earnings from Citi’s operating businesses.
Citi may also augment its capital through issuances of common stock, convertible preferred stock, preferred stock, equity issued through awards under employee benefit plans, and, in the case of regulatory capital, through the issuance of subordinated debt underlying trust preferred securities.
In addition, the impact of future events on Citi’s business results, such as corporate and asset dispositions, as well as changes in accounting standards, also affect Citi’s capital levels.
Generally, capital is used primarily to support assets in Citi’s businesses and to absorb market, credit, or operational losses.
While capital may be used for other purposes, such as to pay dividends or repurchase common stock, Citi’s ability to utilize its capital for these purposes is currently restricted due to its agreements with the U. S.  government, generally for so long as the U. S.  government continues to hold Citi’s common stock or trust preferred securities.
See also “Supervision and Regulation” below.
Citigroup’s capital management framework is designed to ensure that Citigroup and its principal subsidiaries maintain sufficient capital consistent with Citi’s risk profile and all applicable regulatory standards and guidelines, as well as external rating agency considerations.
The capital management process is centrally overseen by senior management and is reviewed at the consolidated, legal entity, and country level.
Senior management is responsible for the capital management process mainly through Citigroup’s Finance and Asset and Liability Committee (FinALCO), with oversight from the Risk Management and Finance Committee of Citigroup’s Board of Directors.
The FinALCO is composed of the senior-most management of Citigroup for the purpose of engaging management in decision-making and related discussions on capital and liquidity matters.
Among other things, FinALCO’s responsibilities include: determining the financial structure of Citigroup and its principal subsidiaries; ensuring that Citigroup and its regulated entities are adequately capitalized in consultation with its regulators; determining appropriate asset levels and return hurdles for Citigroup and individual businesses; reviewing the funding and capital markets plan for Citigroup; and monitoring interest rate risk, corporate and bank liquidity, and the impact of currency translation on non-U.
S.  earnings and capital.
Capital Ratios Citigroup is subject to the risk-based capital guidelines issued by the Federal Reserve Board.
Historically, capital adequacy has been measured, in part, based on two risk-based capital ratios, the Tier 1 Capital and Total Capital (Tier 1 Capital + Tier 2 Capital) ratios.
Tier 1 Capital consists of the sum of “core capital elements,” such as qualifying common stockholders’ equity, as adjusted, qualifying noncontrolling interests, and qualifying mandatorily redeemable securities of subsidiary trusts, principally reduced by goodwill, other disallowed intangible assets, and disallowed deferred tax assets.
Total Capital also includes “supplementary” Tier 2 Capital elements, such as qualifying subordinated debt and a limited portion of the allowance for credit losses.
Both measures of capital adequacy are stated as a percentage of risk-weighted assets.
Further, in conjunction with the conduct of the 2009 Supervisory Capital Assessment Program (SCAP), U. S.  banking regulators developed a new measure of capital termed “Tier 1 Common,” which has been defined as Tier 1 Capital less non-common elements, including qualifying perpetual preferred stock, qualifying noncontrolling interests, and qualifying mandatorily redeemable securities of subsidiary trusts.
Citigroup’s risk-weighted assets are principally derived from application of the risk-based capital guidelines related to the measurement of credit risk.
Pursuant to these guidelines, on-balance-sheet assets and the credit equivalent amount of certain off-balance-sheet exposures (such as financial guarantees, unfunded lending commitments, letters of credit, and derivatives) are assigned to one of several prescribed risk-weight categories based upon the perceived credit risk associated with the obligor, or if relevant, the guarantor, the nature of the collateral, or external credit ratings.
Risk-weighted assets also incorporate a measure for market risk on covered trading account positions and all foreign exchange and commodity positions whether or not carried in the trading account.
Excluded from risk-weighted assets are any assets, such as goodwill and deferred tax assets, to the extent required to be deducted from regulatory capital.
See “Components of Capital Under Regulatory Guidelines” below.
Citigroup is also subject to a Leverage ratio requirement, a non-risk-based measure of capital adequacy, which is defined as Tier 1 Capital as a percentage of quarterly adjusted average total assets.
To be “well capitalized” under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 Capital ratio of at least 6%, a Total Capital ratio of at least 10%, and a Leverage ratio of at least 3%, and not be subject to a Federal Reserve Board directive to maintain higher capital levels.
The following table sets forth Citigroup’s regulatory capital ratios as of December 31, 2009 and December 31, 2008.


Year ended September 30, 2010 Compared with the Year ended September 30, 2009  Capital Markets Capital Markets pre-tax results increased $10.8 million, or 15%, with net revenues increasing $56.7 million, or 11%, as compared to the prior year.
We realized significant increases in underwriting fees of $52.1 million, or 100%, mergers and acquisition fees of $17 million, or 42%, and commissions from institutional equity sales of $24.3 million, or 12%.
These increases were offset by a decrease in fixed income sales commissions of $26.7 million, or 15%, and trading profits, which are primarily related to fixed income products and declined in comparison to the prior year by $9.8 million, or 24%.
Despite the unfavorable comparison, trading profits were historically strong, although slightly below the record level experienced in the prior year.
The number of lead and co-managed underwritings during the year were up 76% and 32%, respectively, as compared to the prior year, a time when underwritings were down dramatically due to the then-existing market conditions.
The dramatically improved equity market conditions in the current year versus the prior year were conducive to generating the increased equity market commissions, merger and acquisition fees and underwriting fees.
Our increased merger and acquisition activity arose primarily from engagements by companies in the Healthcare, Business Services and Energy sectors.
Non-interest expenses increased $44.9 million, or 10%, primarily resulting from compensation related costs.
The current year includes the addition of investment bankers added in the Lane Berry acquisition, which occurred in the third quarter of the prior year, and increased incentive compensation resulting from the increased profitability in our equity capital markets business.


| December 31 | 2009 | (Dollars in millions) | Allowance for loan and lease losses | Residential mortgage | Home equity | Discontinued real estate | Credit card – domestic | Credit card – foreign | Direct/Indirect consumer | Other consumer | Total consumer | Commercial – domestic-1 | Commercial real estate | Commercial lease financing | Commercial – foreign | Total commercial-2 | Allowance for loan and lease losses | Reserve for unfunded lending commitments-3 | Allowance for credit losses-4 |


| 2009 2008 2007 | Average common shares outstanding | Dilutive share equivalents from share-based plans | Average common and common equivalent sharesoutstanding — assuming dilution |


| 2001 2000 | Gain on sales of depreciable properties | Gain on land sales | Impairment adjustment | Total |


(1) Excludes fixed maturities designated as held-to-maturity.
Classified by NAIC or equivalent rating.
The following table sets forth the fair value of our international insurance operations’ portfolio of liquid assets, including cash and short-term investments, fixed maturity investments other than those designated as held-to-maturity, classified by NAIC or equivalent rating, and public equity securities, as of the dates indicated.


The Company updated its Required Capital Framework methodology, with the regulatory changes becoming effective in 2013.
As a result of this update to the Required Capital Framework methodology, and taking the estimated impact of Basel 2.5 into consideration, Parent capital is estimated to decrease by approximately $13 billion with a corresponding increase allocated to the business segments.
Liquidity.
The Basel Committee has developed two standards for supervisors to use in liquidity risk supervision.
The first standards objective is to promote the short-term resilience of the liquidity risk profile of banks and bank holding companies.
The Basel Committee developed the Liquidity Coverage Ratio (LCR) to ensure banks have sufficient high-quality liquid assets to cover net cash outflows arising from significant stress over 30 calendar days.
The standard requires that the value of the ratio be no lower than 100%; the Company is compliant with this liquidity standard.
The second standards objective is to promote resilience over a longer time horizon.
The Net Stable Funding Ratio (NSFR) has a time horizon of one year and builds on traditional net liquid asset and cash capital methodologies used widely by internationally active banking organizations to provide a sustainable maturity structure of assets and liabilities.
The NSFR is defined as the amount of available stable funding to the amount of required stable funding.
This ratio must be greater than 100%.
After an observation period that began in 2011, the LCR, including any revisions, will be introduced on January 1, 2015.
The NSFR, including any revisions, will move to a minimum standard by January 1, 2018.
The Company will continue to monitor the development of these standards, including any further calibration by the Basel Committee and their potential impact on the Companys current liquidity and funding requirements.


| 2015 2014 Weighted AverageMaturityIn Years | Unsecured bonds private placement - fixed rate | Term loan - variable rate | Bonds public offering - fixed rate | Unsecured debt, net-1 | Lines of credit, net-2 | Total unsecured debt | Weighted average interest rate on fixed rate unsecured and unsecured private placement bonds | Weighted average interest rate on variable rate term loan | Weighted average interest rate on lines of credit |


| 2016 2015 | Trade receivables — billed | Trade receivables — unbilled | Total trade receivables | Allowance for doubtful accounts | Total trade receivables, net | For the years ended December 31, | Units granted | Weighted-average fair value at date of grant | Monte Carlo simulation assumptions: | Estimated values | Dividend yields | Expected volatility |


| December 31, Credit exposure Nonperforming(d) | (in millions) | Loans retained | Loans held-for-sale | Loans at fair value | Loans – reported | Derivative receivables | Receivables from customers and other(a) | Total wholesale credit-related assets | Lending-related commitments(b) | Total wholesale credit exposure | Credit Portfolio Management derivatives notional, net(c) | Liquid securities and other cash collateral held against derivatives |


| 2017 2016 | Projected benefit obligation | Accumulated benefit obligation | Fair value of plan assets |


| 2016 2015 2014 | Net sales | Operating profit | Operating margin | Backlog atyear-end |


| Contractual cash outflows Contractual cash inflowsMinimum rent underfranchise arrangements | In millions | 2009 | 2010 | 2011 | 2012 | 2013 | Thereafter | Total |


On October 31, 2008, we acquired PHP Companies, Inc.  (d/b/a Cariten Healthcare), or Cariten, for cash consideration of approximately $291.0 million, including the payment of $34.9 million during 2010 to settle a purchase price contingency.
The Cariten acquisition increased our commercial fully-insured and ASO presence as well as our Medicare HMO presence in eastern Tennessee.
During 2009, we continued our review of the fair value estimate of certain other intangible and net tangible assets acquired.
This review resulted in a decrease of $27.1 million in the fair value of other intangible assets, primarily related to the fair value assigned to the customer contracts acquired.
There was a corresponding adjustment to goodwill and deferred income taxes.
The


| Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life in Year Aggregate Intrinsic Value | Options outstanding at September 27, 2008 | Granted | Cancelled/forfeited | Net effect of option cancellation/regrant | Exercised | Options outstanding at September 26, 2009 | Options exercisable at September 26, 2009 | Options vested and expected to vest at September 26, 2009 -1 |


(1) Includes exploratory wells drilled and suspended awaiting a sanctioned development plan or being evaluated to assess the economic viability of the well.
(2) Includes wells pending completion activities.
(3) Includes the Karish and Tanin exploratory wells which have been classified as assets held for sale as of December 31, 2015 and were divested in January 2016.
See Item 8.
Financial Statements and Supplementary Financial Data  Note 6.
Capitalized Exploratory Well Costs for additional information on suspended exploratory wells.


| Operating Results | Americas | Year Ended December 31, 2013 | (In millions) | Revenues | Premiums | Universal life and investment-type product policy fees | Net investment income | Other revenues | Net investment gains (losses) | Net derivative gains (losses) | Total revenues | Expenses | Policyholder benefits and claims and policyholder dividends | Interest credited to policyholder account balances | Goodwill impairment | Capitalization of DAC | Amortization of DAC and VOBA | Amortization of negative VOBA | Interest expense on debt | Other expenses | Total expenses | Provision for income tax expense (benefit) | Operating earnings | Adjustments to: | Total revenues | Total expenses | Provision for income tax (expense) benefit | Income (loss) from continuing operations, net of income tax |


| Pension Benefits Other Benefits | Dollars in Millions | Service cost — benefits earned during the year | Interest cost on projected benefit obligation | Expected return on plan assets | Amortization of prior service cost/(benefit) | Amortization of net actuarial loss | Net periodic benefit cost | Curtailments | Settlements | Special termination benefits | Total net periodic benefit cost | Continuing operations | Discontinued operations | Total net periodic benefit cost |


Note: We have not declared any cash dividends on common stock for the periods shown.
(1) On September 1, 2015, CBRE, Inc. , our wholly-owned subsidiary, closed on a Stock and Asset Purchase Agreement with Johnson Controls, Inc.  (JCI) to acquire JCI’s Global Workplace Solutions (JCI-GWS) business (which we refer to as the GWS Acquisition).
The results for the year ended December 31, 2015 include the operations of JCI-GWS from September 1, 2015, the date such business was acquired.
(2) See Income Per Share information in Note 15 of our Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report.
(3) Includes EBITDA related to discontinued operations of $7.9 million and $5.6 million for the years ended December 31, 2013 and 2012, respectively.
EBITDA and adjusted EBITDA are not recognized measurements under accounting principles generally accepted in the United States, or GAAP.
When analyzing our operating performance, investors should use these measures in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with GAAP.
We generally use these non-GAAP financial measures to evaluate operating performance and for other discretionary purposes.
We believe these measures provide a more complete understanding of ongoing operations, enhance comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected charges that may obscure trends in the underlying performance of our business.
Because not all companies use identical calculations, our presentation of these measures may not be comparable to similarly titled measures of other companies.
EBITDA represents earnings before net interest expense, write-off of financing costs on extinguished debt, income taxes, depreciation and amortization.
Amounts shown for adjusted EBITDA further remove (from EBITDA) the impact of certain cash and non-cash charges related to acquisitions, cost-elimination expenses and certain carried interest incentive compensation (reversal) expense to align with the timing of associated revenue.
We believe that investors may find these measures useful in evaluating our operating performance compared to that of other companies in our industry because their calculations generally eliminate the effects of acquisitions, which would include impairment charges of goodwill and intangibles created from acquisitions, the effects of financings and income taxes and the accounting effects of capital spending.
EBITDA and adjusted EBITDA are not intended to be measures of free cash flow for our discretionary use because they do not consider certain cash requirements such as tax and debt service payments.
These measures may also differ from the amounts calculated under similarly titled definitions in our debt instruments, which amounts are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.
We also use adjusted EBITDA as a significant component when measuring our operating performance under our employee incentive compensation programs.


| A.M. Best Standard & Poor's Moody's | Senior Notes | Long Term Notes |


| Retirement and Investor Services Principal Global Investors Principal International U.S. Insurance Solutions Corporate Consolidated | (in millions) | Balances at January 1, 2009 | Foreign currency translation | Balances at December 31, 2009 | Impairment | Foreign currency translation | Other | Balances at December 31, 2010 |


| Years Ended December 31, | 2011 | CIEs | (in millions) | Revenues | Net investment income (loss) | Other revenues | Total revenues | Banking and deposit interest expense | Total net revenues | Expenses | Distribution expenses | Interest and debt expense | General and administrative expense | Total expenses | Pretax loss | Less: Net income (loss) attributable to noncontrolling interests | Pretax loss attributable to Ameriprise Financial |


Amortization of acquired intangibles: Pro forma adjustment to increase noninterest expense by $28 million and $44 million for the years ended December 31, 2016 and 2015, to record estimated amortization of acquired intangible assets.
Huntington merger-related costs: Pro forma results include Huntington merger-related costs which primarily included, but were not limited to, severance costs, professional services, data processing fees, marketing and advertising expenses totaling $281 million for the year ended December 31, 2016.
Other adjustments: Pro forma results also include adjustments related to branch divestitures, incremental interest expense on the issuance on acquisition debt, elimination of FirstMerit's intangible amortization expense, FirstMerit merger-related costs, and related income-tax effects.
Branch divestiture: On December 5, 2016, Huntington completed the previously announced sale of 13 acquired branches and certain related assets and deposit liabilities to First Commonwealth Bank, the banking subsidiary of First Commonwealth Financial Corporation.
The sale was in connection with an agreement reached with the U. S.  Department of Justice in order to resolve its competitive concerns about Huntington’s acquisition of FirstMerit.
Total deposits and loans transferred to First Commonwealth Bank in the transaction totaled $620 million and $106 million, respectively.4.


| $ in millions 2015 2014 2013 2012 2011 | Acquisition/disposition related: | Employee compensation expense | Transaction and integration expense | Intangible amortization expense | Change in contingent consideration estimates | Other acquisition-related items | Adjustments to operating income | Gain on sale of CLO management contracts | Change in contingent consideration estimates | Taxation: | Taxation on transaction and integration | Taxation on amortization | Deferred taxation | Taxation on change in contingent consideration estimates | Taxation on gain on sale of CLO management contracts | Taxation on other acquisition-related items | (Income)/loss from discontinued operations, net of taxes | Adjustments to net income attributable to Invesco Ltd. |


Key Performance Indicators.
Management focuses on a variety of key indicators to monitor operating and financial performance.
These performance indicators include measurements of operating revenue, change in operating revenue, operating income, operating margin, net income, diluted earnings per share, cash provided by operating activities and capital expenditures.
Key performance indicators for the twelve months ended December 31, 2018, 2017 and 2016, include the following:


REPUBLIC SERVICES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) credit exposure, we continually monitor the credit worthiness of the financial institutions where we have deposits.
Concentrations of credit risk with respect to trade accounts receivable are limited due to the wide variety of customers and markets in which we provide services, as well as the dispersion of our operations across many geographic areas.
We provide services to commercial, industrial, municipal and residential customers in the United States and Puerto Rico.
We perform ongoing credit evaluations of our customers, but generally do not require collateral to support customer receivables.
We establish an allowance for doubtful accounts based on various factors including the credit risk of specific customers, age of receivables outstanding, historical trends, economic conditions and other information.
Accounts Receivable, Net of Allowance for Doubtful Accounts Accounts receivable represent receivables from customers for collection, transfer, recycling, disposal and other services.
Our receivables are recorded when billed or when the related revenue is earned, if earlier, and represent claims against third parties that will be settled in cash.
The carrying value of our receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value.
Provisions for doubtful accounts are evaluated on a monthly basis and are recorded based on our historical collection experience, the age of the receivables, specific customer information and economic conditions.
We also review outstanding balances on an account-specific basis.
In general, reserves are provided for accounts receivable in excess of 90 days outstanding.
Past due receivable balances are written-off when our collection efforts have been unsuccessful in collecting amounts due.
The following table reflects the activity in our allowance for doubtful accounts for the years ended December 31, 2013, 2012 and 2011:


| Years ended December 31 (in millions) 2014 2013 2012 | Net interest income | Provision for loan losses | Total non-interest income | Total non-interest expense | Income before income tax expense | Income tax expense | Net income | Average total assets | Average total liabilities |


| 2013 $1,842,355 | 2014 | 2015 | 2016 | 2017 | Thereafter |


| Payments Due By Fiscal Year  (in $000’s) | Contractual Obligations | Operating Lease Commitments | Contractual Obligations -1 | Total Obligations |


No.159 requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings at each reporting date.
SFAS No.159 is effective for fiscal years beginning after November 15, 2007 and is required to be adopted by the Company beginning in the first quarter of fiscal 2009.
Although the Company will continue to evaluate the application of SFAS No.159, management does not currently believe adoption will have a material impact on the Companys financial condition or operating results.
In September 2006, the FASB issued SFAS No.157, Fair Value Measurements, which defines fair value, provides a framework for measuring fair value, and expands the disclosures required for fair value measurements.
SFAS No.157 applies to other accounting pronouncements that require fair value measurements; it does not require any new fair value measurements.
SFAS No.157 is effective for fiscal years beginning after November 15, 2007 and is required to be adopted by the Company beginning in the first quarter of fiscal 2009.
Although the Company will continue to evaluate the application of SFAS No.157, management does not currently believe adoption will have a material impact on the Companys financial condition or operating results.
In June 2006, the FASB issued FASB Interpretation No.
(FIN) 48, Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No.109.
FIN 48 clarifies the accounting for uncertainty in income taxes by creating a framework for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions that they have taken or expect to take in a tax return.
FIN 48 is effective for fiscal years beginning after December 15, 2006 and is required to be adopted by the Company beginning in the first quarter of fiscal 2008.
Although the Company will continue to evaluate the application of FIN 48, management does not currently believe adoption will have a material impact on the Companys financial condition or operating results.


| (In millions) 2009 2008 | Asset retirement obligations as of January 1 | Liabilities incurred, including acquisitions | Liabilities settled | Accretion expense (included in depreciation, depletion and amortization) | Revisions to previous estimates | Held for sale | Asset retirement obligations as of December 31(a) |


We define past-due loans as loans on which contractual principal or interest payments are over 90 days delinquent, but for which interest continues to be accrued.
No institutional loans were 90 days or more contractually past due as of December 31, 2011, 2010, 2009, 2008 or 2007.
Although a portion of the CRE loans was 90 days or more contractually past due as of December 31, 2011, 2010, 2009 and 2008, we do not report them as past-due loans, because in accordance with GAAP, the interest earned on these loans is based on an accretable yield resulting from management’s expectations with respect to the future cash flows for each loan relative to both the timing and collection of principal and interest as of the reporting date, not the loans’ contractual payment terms.
These cash flow estimates are updated quarterly to reflect changes in management’s expectations, which consider market conditions.
We generally place loans on non-accrual status once principal or interest payments are 60 days past due, or earlier if management determines that full collection is not probable.
Loans 60 days past due, but considered both well-secured and in the process of collection, may be excluded from non-accrual status.
For loans placed on non-accrual status, revenue recognition is suspended.
As of December 31, 2011 and 2010, approximately $5 million and $158 million, respectively, of the aforementioned CRE loans had been placed by management on non-accrual status, as the yield associated with these loans, determined when the loans were acquired, was deemed to be non-accretable.
This determination was based on management’s expectations of the future collection of principal and interest from the loans.
The decline in loans on non-accrual status at December 31, 2011 compared to December 31, 2010 resulted mainly from the transfer of certain CRE loans to other real estate owned in 2011 in connection with foreclosure or similar transactions.
These transactions had no impact on our 2011 consolidated statement of income.
The following table presents contractual maturities for loan and lease balances as of December 31, 2011:


The company saw an increase in revenue in 2023.
Table 1: Revenue Details
This revenue increase was due to the launch of new products.


OTHER CONTINGENCIES — INDEMNIFICATIONS Equatorial Guinea Tax Claim: In 2004, we received a request for indemnification from the purchaser of CMS Oil and Gas.
The indemnification claim relates to the sale of our oil, gas and methanol projects in Equatorial Guinea and the claim of the government of Equatorial Guinea that we owe $142 million in taxes in connection with that sale.
CMS Energy concluded that the government’s tax claim is without merit and the purchaser of CMS Oil and Gas submitted a response to the government rejecting the claim.
The government of Equatorial Guinea has indicated that it still intends to pursue its claim.
We cannot predict the financial impact or outcome of this matter.
Moroccan Tax Claim: In May 2007, we sold our 50 percent interest in Jorf Lasfar.
As part of the sale agreement, we agreed to indemnify the purchaser for 50 percent of any tax assessments on Jorf Lasfar attributable to tax years prior to the sale.
In December 2007, the Moroccan tax authority concluded its audit of Jorf Lasfar for tax years 2003 through 2005.
The audit asserted deficiencies in certain corporate and withholding taxes.
In January 2009, we paid $18 million, which was charged against a tax indemnification liability established when we recorded the sale of Jorf Lasfar, and accordingly it did not affect earnings.
Marathon Indemnity Claim regarding F. T.  Barr Claim: On December 3, 2001, F.  T.  Barr, an individual with an overriding royalty interest in production from the Alba field, filed a lawsuit in Harris County District Court in Texas against CMS Energy, CMS Oil and Gas and other defendants alleging that his overriding royalty payments related to Alba field production were improperly calculated.
CMS Oil and Gas believes that Barr was paid properly on gas sales and that he was not entitled to the additional overriding royalty payment sought.
All parties signed a confidential settlement agreement on April 26, 2004.
The settlement resolved claims between Barr and the defendants, and the involved CMS Energy entities reserved all defenses to any indemnity claim relating to the settlement.
There is disagreement between Marathon and certain current or former CMS Energy entities as to the existence and scope of any indemnity obligations to Marathon in connection with the settlement.
Between April 2005 and April 2008, there were no further communications between Marathon and CMS Energy entities regarding this matter.
In April 2008, Marathon indicated its intent to pursue the indemnity claim.
Present and former CMS Energy entities and Marathon entered into an agreement tolling the statute of limitations on any claim by Marathon under the indemnity.
CMS Energy entities dispute Marathon’s claim, and will vigorously oppose it if raised in any legal proceeding.
CMS Energy entities also will assert that Marathon has suffered minimal, if any, damages.
CMS Energy cannot predict the outcome of this matter.
If Marathon’s claim were sustained, it would have a material effect on CMS Energy’s future earnings and cash flow.


| December 31, | Balance Sheet Data | Cash, cash equivalents and marketable securities | Short-term borrowings | Current portion of long-term debt | Long-term debt | Total debt |


| (in millions) Unrealized gains/(losses) on AFS securities(a) Translation adjustments, net of hedges Cash flow hedges Net loss and prior service costs/(credit) of defined benefit pension and OPEB plans Accumulated other comprehensive income/(loss) | Balance at December 31, 2006 | Cumulative effect of changes inaccounting principles (for fairvalueoption elections) | Balance at January 1, 2007, adjusted | Net change | Balance at December 31, 2007 | Net change | Balance at December 31, 2008 | Net change | Balance at December 31, 2009 |


| Premiums Payable Premiums Receivable | (in millions) | 2013 | 2014 | 2015 | 2016 | 2017 | 2018-2027 |


In addition to product warranties, the Company from time to time in its normal course of business indemnifies other parties with whom it enters into contractual relationships, including customers, lessors and parties to other transactions with the Company, with respect to certain matters.
In these limited matters, the Company has agreed to hold certain third parties harmless against specific types of claims or losses such as those arising from a breach of representations or covenants, third-party claims that the Companys products when used for their intended purpose(s) and under specific conditions infringe the intellectual property rights of a third party, or other specified claims made against the indemnified party.
It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision.
Historically, payments made by the Company under these obligations have not been material.
NOTE 17: Contingencies Hatamian Securities Litigation On January 15, 2014, a class action lawsuit captioned Hatamian v.  AMD, et al.
, C. A.
No.3:14-cv-00226 (the Hatamian Lawsuit) was filed against the Company in the United States District Court for the Northern District of California.
The complaint purports to assert claims against the Company and certain individual officers for alleged violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Rule 10b-5 of the Exchange Act.
The plaintiffs seek to represent a proposed class of all persons who purchased or otherwise acquired our common stock during the period April 4, 2011 through October 18, 2012.
The complaint seeks damages allegedly caused by alleged materially misleading statements and/or material omissions by the Company and the individual officers regarding its 32nm technology and Llano product, which statements and omissions, the plaintiffs claim, allegedly operated to artificially inflate the price paid for the Companys common stock during the period.
The complaint seeks unspecified compensatory damages, attorneys fees and costs.
On July 7, 2014, the Company filed a motion to dismiss plaintiffs claims.
On March 31, 2015, the Court denied the motion to dismiss.
On May 14, 2015, the Company filed its answer to plaintiffs corrected amended complaint.
On September 4, 2015, plaintiffs filed their motion for class certification, and on March 16, 2016, the Court granted plaintiffs motion.
A court-ordered mediation held in January 2016 did not result in a settlement of the lawsuit.
The discovery process was concluded.
The plaintiffs and defendants filed cross-motions for summary judgment, and briefing on those motions was completed in July 2017.
On October 9, 2017, the parties signed a definitive settlement agreement resolving this matter and submitted it to the Court for approval.
Under the terms of this agreement, the settlement will be
We believe that existing cash, cash equivalents and investments of approximately $5.0 billion, together with cash generated from operations and cash available through our credit agreement, will be sufficient to fund our operating activities, capital expenditures, stock repurchases and other obligations for the foreseeable future.
Commitments and Contingencies We have certain fixed contractual obligations and commitments that include future estimated payments.
Changes in our business needs, contractual cancellation provisions, fluctuating interest rates, and other factors may result in actual payments differing from the estimates.
We cannot provide certainty regarding the timing and amounts of these payments.
We have presented below a summary of the most significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our consolidated financial position, results of operations, and cash flows.
The following table summarizes our fixed contractual obligations and commitments (in thousands):


| 2010 2009 2008 | Cost of sales | Royalties | Product development | Advertising | Amortization | Selling, distribution and administration |


The decrease in net periodic benefit cost for pension and other postretirement benefit plans in 2014 as compared with 2013 is largely attributable to a change in the discount rate.
In connection with restructuring actions (see Note 3), termination charges were recorded in 2014, 2013 and 2012 on pension and other postretirement benefit plans related to expanded eligibility for certain employees exiting Merck.
Also, in connection with these restructuring activities, curtailments were recorded in 2014, 2013 and 2012 on pension and other postretirement benefit plans
Table of Contents Affiliate Information” below).


| Comparable sales impact 0.9% | Non-comparable sales-1 | Net store changes | Total revenue increase |


| Other Postretirement Benefits | Pension   Benefits | (In millions) | 2008 | 2009 | 2010 | 2011 | 2012 | 2013-2017 |


| Interest Rate Contracts Fiscal Year Foreign Exchange Contracts  Fiscal Year Equity  Contracts  Fiscal Year Commodity Contracts  Fiscal Year Total  Fiscal Year | In Millions | Derivatives in Cash Flow Hedging Relationships: | Amount of gain (loss) recognized in othercomprehensive income (OCI) (a) | Amount of net gain (loss) reclassified fromAOCI into earnings (a) (b) | Amount of net gain (loss) recognizedin earnings (c) | Derivatives in Fair Value Hedging Relationships: | Amount of net gain (loss) recognizedin earnings (d) | Derivatives Not Designated as Hedging Instruments: | Amount of net gain (loss) recognizedin earnings (d) | May 27, 2018 | Assets | Gross Amounts  Not Offset  in the  Balance Sheet (e) | In Millions | Commodity contracts | Interest rate contracts | Foreign exchange contracts | Equity contracts | Total | Options Outstanding (Thousands) | Balance as of May 27, 2018 | Granted | Exercised | Forfeited or expired | Outstanding as of May 26, 2019 | Exercisable as of May 26, 2019 | Fiscal Year | In Millions | Net cash proceeds | Intrinsic value of options exercised |


by the Companys life insurance subsidiaries were on deposit with various states as required by law.
Statutory capital and surplus for RiverSource Life was $2.7 billion, $3.1 billion and $2.7 billion for the years ended December 31, 2013, 2012 and 2011, respectively.
Statutory net income (loss) for RiverSource Life was $1.3 billion, $2.0 billion and $(599) million for the years ended December 31, 2013, 2012 and 2011, respectively.
Ameriprise Certificate Company (ACC) is registered as an investment company under the Investment Company Act of 1940 (the 1940 Act).
ACC markets and sells investment certificates to clients.
ACC is subject to various capital requirements under the 1940 Act, laws of the State of Minnesota and understandings with the Securities and Exchange Commission (SEC) and the Minnesota Department of Commerce.
The terms of the investment certificates issued by ACC and the provisions of the 1940 Act also require the maintenance by ACC of qualified assets.
Under the provisions of its certificates and the 1940 Act, ACC was required to have qualified assets (as that term is defined in Section 28(b) of the 1940 Act) in the amount of $4.0 billion and $3.5 billion at December 31, 2013 and 2012, respectively.
ACC had qualified assets of $4.2 billion and $3.7 billion at December 31, 2013 and 2012, respectively.
Ameriprise Financial and ACC entered into a Capital Support Agreement on March 2, 2009, pursuant to which Ameriprise Financial agrees to commit such capital to ACC as is necessary to satisfy applicable minimum capital requirements, up to a maximum commitment of $115 million.
For the years ended December 31, 2013 and 2012, ACC did not draw upon the Capital Support Agreement and had met all applicable capital requirements.
Threadneedles required capital is predominantly based on the requirements specified by its regulator, the Financial Services Authority (FSA), under its Capital Adequacy Requirements for asset managers.
The Company has four broker-dealer subsidiaries, American Enterprise Investment Services Inc. , Ameriprise Financial Services, Inc. , RiverSource Distributors, Inc.  and Columbia Management Investment Distributors, Inc.
The broker-dealers are subject to the net capital requirements of the Financial Industry Regulatory Authority (FINRA) and the Uniform Net Capital requirements of the SEC under Rule 15c3-1 of the Securities Exchange Act of 1934.
Ameriprise Trust Company is subject to capital adequacy requirements under the laws of the State of Minnesota as enforced by the Minnesota Department of Commerce.
In 2012, Ameriprise Bank requested regulatory approval to convert from a federal savings bank to a limited powers national trust bank.
Conditional approval for this conversion was received in December 2012, and the conversion to a limited powers national trust bank, as well as the renaming of the entity as Ameriprise National Trust Bank, was completed in January 2013.
Prior to this conversion, Ameriprise Bank, FSB was subject to regulation by both the Comptroller of Currency (OCC), as a federal savings bank, and by the Federal Deposit Insurance Corporation (FDIC) in its role as insurer of its deposits.
Following the conversion, Ameriprise National Trust Bank remains subject to regulation by the OCC and, to a limited extent, by the FDIC.
As a limited powers national association, Ameriprise National Trust Bank remains subject to supervision under various laws and regulations enforced by the OCC, including those related to capital adequacy, liquidity and conflicts of interest.21.


| December 31, 2009 Percentage of Total December 31, 2008 Percentage of Total | (dollars in thousands) | U.S. Treasury and other U.S. government corporations and agencies: | U.S. Treasury and agency obligations | Mortgage-backed securities | Tax-exempt municipal securities | Mortgage-backed securities: | Residential | Commercial | Asset-backed securities | Corporate debt securities | Redeemable preferred stock | Total debt securities |


| Years Ended December 31, | 2015 | (in millions) | 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 | Interest and debt expense | General and administrative expense | Total expenses | Income from continuing operations before income tax provision | Income tax provision | Income from continuing operations | Loss from discontinued operations, net of tax | Net income | Less: Net income attributable to noncontrolling interests | Net income attributable to Ameriprise Financial |


| Year Ended December 31, | 2009 | (in millions) | Asset Retirement Obligations, Beginning of Period | Liabilities Incurred in Current Period | Liabilities Settled in Current Period | Revisions | Accretion Expense | Asset Retirement Obligations, End of Period |


Non-Strategic Assets Portfolio This business segment (formerly Distressed Assets Portfolio) consists primarily of acquired non-strategic assets that fall outside of our core business strategy.
Non-Strategic Assets Portfolio had earnings of $200 million in 2011 compared with a loss of $57 million in 2010.
The increase was primarily attributable to a lower provision for credit losses partially offset by lower net interest income.


Shareholders Equity Common Equity As of both December 2017 and December 2016, the firm had 4.00 billion authorized shares of common stock and 200 million authorized shares of nonvoting common stock, each with a par value of $0.01 per share.
Dividends declared per common share were $2.90 in 2017, $2.60 in 2016 and $2.55 in 2015.
On January 16, 2018, the Board of Directors of Group Inc.  (Board) declared a dividend of $0.75 per common share to be paid on March 29, 2018 to common shareholders of record on March 1, 2018.
The firms share repurchase program is intended to help maintain the appropriate level of common equity.
The share repurchase program is effected primarily through regular open-market purchases (which may include repurchase plans designed to comply with Rule 10b5-1), the amounts and timing of which are determined primarily by the firms current and projected capital position, but which may also be influenced by general market conditions and the prevailing price and trading volumes of the firms common stock.
Prior to repurchasing common stock, the firm must receive confirmation that the FRB does not object to such capital action.
The table below presents the amount of common stock repurchased by the firm under the share repurchase program.


| Pension   Benefits  (In millions) | 2008 | 2009 | 2010 | 2011 | 2012 | 2013-2017 |


| Year Ended December 31, | 2005 | Net income | As reported | Compensation expense | Pro forma | Basic net income (loss) per common share | Diluted net income (loss) per common share | Basic net income (loss) per common share — pro forma | Diluted net income (loss) per common share — pro forma |


| Options Outstanding and Exercisable | Range of | Exercise Prices | $29.50-29.71 | $34.45-39.46 | Total |


| December 31, 2006 December 31, 2005 | Amortized Cost | (in millions) | Short-term Investments and Cash Equivalents | Fixed Maturities: | U.S. Government | Foreign Government | Corporate Securities | Asset-Backed Securities | Mortgage Backed | Total Fixed Maturities | Equity Securities | Total trading account assets supporting insurance liabilities |


(g) Property, Plant, and Equipment—We record property, plant, and equipment at cost.
Cost includes material, labor, overhead, and both debt and equity components of AFUDC.
Additions to and significant replacements of property are charged to property, plant, and equipment at cost; minor items are charged to other operation and maintenance expense.
The cost of depreciable utility property less salvage value is charged to accumulated depreciation when property is retired.
We record straight-line depreciation expense over the estimated useful life of utility property using depreciation rates approved by the applicable regulators.
Annual utility composite depreciation rates are shown below:


The decrease in gross margin versus 2012 was primarily due to unfavorable product mix and lower high-horsepower volumes, partially offset by improved price realization, decreased material and commodity costs and favorable foreign currency fluctuations.
The decrease in selling, general and administrative expenses was primarily due to lower discretionary spending and the absence of restructuring charges incurred in 2012, partially offset by increased headcount.
The decrease in research, development and engineering expenses was primarily due to lower discretionary spending in 2013, partially offset by increases in new product development spending and increased headcount to support our strategic growth initiatives.
The increase in equity, royalty and interest income from investees was primarily due to higher earnings at Beijing Foton Cummins Engine Co. , Ltd.  within the light-duty business and Dongfeng Cummins Engine Company, Ltd. , partially offset by lower earnings at Beijing Foton Engine Company, Ltd.  (Heavy-duty) in anticipation of production in the second quarter of 2014.
Operating Expenses:


| 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 | United Parcel Service, Inc. | Standard & Poor’s 500 Index | Dow Jones Transportation Average |


| 2008 2007 2006 | Cash, cash equivalents, and short-term investments | Accounts receivable, net | Inventory | Working capital | Annual operating cash flow |


| (Dollars in millions) Total 2005 2006- 2007 2008- 2009 Later Years | Contractual obligations assumed by United States Steel | Long-term debt(a) | Sale-leaseback financing (includes imputed interest) | Capital lease obligations | Operating lease obligations | Operating lease obligations under sublease | Total contractual obligations assumed by United States Steel |


We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense in the Consolidated Statements of Earnings, which is consistent with the recognition of these items in prior reporting periods.
As of January 1, 2007, we recorded a liability of $9.6 million for accrued interest and penalties, of which $7.5 million would impact our effective tax rate, if recognized.
The amount of this liability is $19.6 million as of December 31, 2007.
Of this amount, $14.7 million would impact our effective tax rate, if recognized.
We expect that the amount of tax liability for unrecognized tax benefits will change in the next twelve months; however, we do not expect these changes will have a significant impact on our results of operations or financial position.
The U. S.  federal statute of limitations remains open for the year 2003 and onward with years 2003 and 2004 currently under examination by the IRS.
It is reasonably possible that a resolution with the IRS for the years 2003 through 2004 will be reached within the next twelve months, but we do not anticipate this would result in any material impact on our financial position.
In addition, for the 1999 tax year of Centerpulse, which we acquired in October 2003, one issue remains in dispute.
The resolution of this issue would not impact our effective tax rate, as it would be recorded as an adjustment to goodwill.
State income tax returns are generally subject to examination for a period of 3 to 5 years after filing of the respective return.
The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states.
We have various state income tax returns in the process of examination, administrative appeals or litigation.
It is reasonably possible that such matters will be resolved in the next twelve months, but we do not anticipate that the resolution of these matters would result in any material impact on our results of operations or financial position.
Foreign jurisdictions have statutes of limitations generally ranging from 3 to 5 years.
Years still open to examination by foreign tax authorities in major jurisdictions include Australia (2003 onward), Canada (1999 onward), France (2005 onward), Germany (2005 onward), Italy (2003 onward), Japan (2001 onward), Puerto Rico (2005 onward), Singapore (2003 onward), Switzerland (2004 onward), and the United Kingdom (2005 onward).


Distribution’s 2013 annual sales decreased 6% from 2012, and decreased 15% from 2011.
Operating profits in 2013 were a loss of $389 million (a gain of $43 million excluding goodwill impairment charges and reorganization costs) compared with $22 million ($71 million excluding reorganization costs) in 2012 and $34 million ($86 million excluding reorganization costs) in 2011.
Annual sales of printing papers and graphic arts supplies and equipment totaled $3.2 billion in 2013 compared with $3.5 billion in 2012 and $4.0 billion in 2011 reflecting declining demand and the discontinuation of a distribution agreement with a large manufacturer of graphic supplies.
Trade margins as a percent of sales for printing papers were down from both 2012 and 2011.
Revenue from packaging products was flat at $1.6 billion in 2013, 2012 and 2011 despite the significant decline of a large high-tech customer's business.
Packaging margins remained flat to the 2012 level, and up from 2011.
Facility supplies annual revenue was $845 million in 2013, down from $944 million in 2012 and $981 million in 2011.
Operating profits in 2013 included a goodwill impairment charge of $400 million and reorganization costs for severance, professional services and asset write-downs of $32 million.
Operating profits in 2012 and 2011 included reorganization costs of $49 million and $52 million, respectively.
Looking ahead to the 2014 first quarter, operating profits will be seasonally lower, but will continue to reflect the benefits of strategic and other cost reduction initiatives.


| Period Total Numberof SharesPurchased AveragePrice Paidper Share Total Number ofShares NotPurchased as Part ofPublicly AnnouncedPlans or Programs (a) Total Number ofShares Purchased asPart of PubliclyAnnounced Plans orPrograms Approximate DollarValue of Shares thatMay Yet Be PurchasedUnder the Plans orPrograms (b) | October 2016 | November 2016 | December 2016 | Total |


| Year Ended December 31, 2017 to 2018 % Change 2016 to 2017 % Change | 2018 | (in thousands) | Cost of revenue | Cost of revenue as a percentage of revenue |


| Period Total Number of Shares Purchased-1 Average Price Paid per Share-2 Total Number of Shares Purchased as Part of Publicly Announced Plans orPrograms Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans orPrograms  (in millions) | October 2012 | November 2012 | December 2012 | Total Fourth Quarter |