VERTEX PHARMACEUTICALS INCORPORATED Notes to Consolidated Financial Statements (Continued) O.
Significant Revenue Arrangements (Continued) $7 million of development and commercialization milestone payments.
Additionally, Kissei agreed to reimburse the Company for certain development costs, including a portion of costs for Phase 2 trials of VX-702.
Research funding ended under this program in June 2000, and the Company has received the full amount of research funding specified under the agreement.
Kissei has exclusive rights to develop and commercialize VX-702 in Japan and certain Far East countries and co-exclusive rights in China, Taiwan and South Korea.
The Company retains exclusive marketing rights outside the Far East and co-exclusive rights in China, Taiwan and South Korea.
In addition, the Company will have the right to supply bulk drug material to Kissei for sale in its territory and will receive royalties or drug supply payments on future product sales, if any.
In 2006, 2005 and 2004, approximately $6.4 million, $7.3 million and $3.5 million, respectively, was recognized as revenue under this agreement.
The $7.3 million of revenue recognized in 2005 includes a $2.5 million milestone paid upon Kissei’s completion of regulatory filings in preparation for Phase 1 clinical development of VX-702 in Japan.
P.  Employee Benefits The Company has a 401(k) retirement plan (the “Vertex 401(k) Plan”) in which substantially all of its permanent employees are eligible to participate.
Participants may contribute up to 60% of their annual compensation to the Vertex 401(k) Plan, subject to statutory limitations.
The Company may declare discretionary matching contributions to the Vertex 401(k) Plan that are payable in the form of Vertex common stock.
The match is paid in the form of fully vested interests in a Vertex common stock fund.
Employees have the ability to transfer funds from the Company stock fund as they choose.
The Company declared matching contributions to the Vertex 401(k) Plan as follows (in thousands):


| Years Ended December 31, | 2009 | (in millions, except percentages) | Revenues | Management and financial advice fees | Distribution fees | Net investment income | Premiums | Other revenues | Total revenues | Banking and deposit interest expense | Total net revenues | Expenses | Distribution expenses | Interest credited to fixed accounts | Benefits, claims, losses and settlement expenses | Amortization of deferred acquisition costs | General and administrative expense | Total expenses | Pretax income |


In connection with this project, we eliminated 749 positions.
We incurred $54.7 million of net expenses, most of which was cash.
We recorded $0.4 million of restructuring charges relating to this action in fiscal 2018, restructuring charges were reduced by $0.4 million in fiscal 2017, and we incurred $54.7 million of restructuring charges in fiscal 2016.
This action was completed in fiscal 2018.
In fiscal 2015, we announced Project Century (Century) which initially involved a review of our North American manufacturing and distribution network to streamline operations and identify potential capacity reductions.
In fiscal 2016, we broadened the scope of Century to identify opportunities to streamline our supply chain outside of North America.
As part of Century, in the second quarter of fiscal 2016, we approved a restructuring plan to close manufacturing facilities in our Europe & Australia segment supply chain located in Berwick, United Kingdom and East Tamaki, New Zealand.
These actions affected 287 positions and we incurred $31.8 million of net expenses related to these actions, of which $12 million was cash.
We recorded $1.8 million of restructuring charges relating to these actions in fiscal 2017 and $30.0 million in fiscal 2016.
These actions were completed in fiscal 2017.
As part of Century, in the first quarter of fiscal 2016, we approved a restructuring plan to close our West Chicago, Illinois cereal and dry dinner manufacturing plant in our North America Retail segment supply chain.
This action affected 484 positions, and we incurred $109.3 million of net expenses relating to this action, of which $21 million was cash.
We recorded $6.9 million of restructuring charges relating to this action in fiscal 2018, $23.2 million in fiscal 2017 and $79.2 million in fiscal 2016.
This action was completed in fiscal 2018.
As part of Century, in the first quarter of fiscal 2016, we approved a restructuring plan to close our Joplin, Missouri snacks plant in our North America Retail segment supply chain.
This action affected 125 positions, and we incurred $8.0 million of net expenses relating to this action, of which less than $1 million was cash.
We recorded $1.4 million of restructuring charges relating to this action in fiscal 2018, $0.3 million in fiscal 2017, and $6.3 million in fiscal 2016.
This action was completed in fiscal 2018.
We paid cash related to restructuring initiatives of $53.6 million in fiscal 2018, $107.8 million in fiscal 2017, and $122.6 million in fiscal 2016.
In addition to restructuring charges, we expect to incur approximately $130 million of project-related costs, which will be recorded in cost of sales, all of which will be cash.
We recorded project-related costs in cost of sales of $11.3 million in fiscal 2018, $43.9 million in fiscal 2017, and $57.5 million in fiscal 2016.
We paid cash for project-related costs of $10.9 million in fiscal 2018, $46.9 million in fiscal 2017, and $54.5 million in fiscal 2016.
We expect these activities to be completed in fiscal 2019.
Restructuring charges and project-related costs are classified in our Consolidated Statements of Earnings as follows:


Table 3
Table of Contents ETHANOL We own 14 ethanol plants with a combined ethanol production capacity of 1.73 billion gallons per year.
Our ethanol plants are dry mill facilities(a) that process corn to produce ethanol, distillers grains, and corn oil(b).
We source our corn supply from local farmers and commercial elevators.
Our facilities receive corn primarily by rail and truck.
We publish on our website a corn bid for local farmers and cooperative dealers to facilitate corn supply transactions.
We sell our ethanol primarily to refiners and gasoline blenders under term and spot contracts in bulk markets such as New York, Chicago, the U. S.  Gulf Coast, Florida, and the U. S.  West Coast.
We also export our ethanol into the global markets.
We ship our dry distillers grains (DDGs) by truck or rail primarily to animal feed customers in the U. S.  and Mexico.
We also sell modified distillers grains locally at our plant sites, and corn oil by truck and rail.
We distribute our ethanol through logistics assets, which include railcars owned by us.
The following table presents the locations of our ethanol plants, their approximate annual production capacities for ethanol (in millions of gallons) and DDGs (in tons), and their approximate annual corn processing capacities (in millions of bushels).


| Years ended December 31 2018 2017 2016 | U.S. | U.K. | Netherlands and Canada | Total |


| Years Ended December 31, | 2008 | Collection | Landfill | Transfer | Wheelabrator | Recycling | Other | Intercompany | Total |


| 2007 2006 2005 | Interest and dividend income | Net foreign exchange transaction loss | Asbestos settlement and related costs | Advisory expenses incurred prior to ceasing work on an acquisition | Loss on sale of small product line | Gain on termination of forward starting interest rate swaps | Other, net | Other income, net |


| In millions of dollars 2009 2008 2007 | Net interest revenue | Non-interest revenue | Total revenues, net of interest expense | Total operating expenses | Provisions for loan losses and for benefits and claims | (Loss) from continuing operations before taxes | Income taxes (benefits) | (Loss) from continuing operations | Income (loss) from discontinued operations, net of taxes | Net income (loss) before attribution of noncontrolling interests | Net income attributable to noncontrolling interests | Net income (loss) |


| Pension Benefits | 2013 | (In millions) | Components of net periodic benefit cost: | Service cost | Interest cost | Expected return on plan assets | Amortization: | - prior service cost (credit) | - actuarial loss | Net settlement loss(a) | Net periodic benefit cost(b) | Other changes in plan assets and benefit obligations recognized in other comprehensive (income) loss (pretax): | Actuarial loss (gain) | Amortization of actuarial (loss) gain | Prior service cost (credit) | Amortization of prior service credit (cost) | Spin-off downstream business(c) | Total recognized in other comprehensive (income) loss | Total recognized in net periodic benefit cost and other comprehensive (income) loss |


| In millions 2011 2010 | January 1 | Reserve adjustments, net | Losses – loan repurchases and settlements | Loan sales | December 31 |


(1) For purposes of this computation, earnings are defined as income from continuing operations before income taxes excluding undistributed income (loss) from equity method investments, fixed charges and interest capitalized.
Also excludes earnings attributable to noncontrolling interests.
Fixed charges are the sum of gross interest expense, interest credited to policyholders’ account balances and an estimated interest component of rent expense.
Due to the Company’s loss for the year ended December 31, 2008, the ratio coverage was less than 1:1 and is therefore not presented.
Additional earnings of $859 million would have been required for the year ended December 31, 2008 to achieve a ratio of 1:1.
(2) The Company adopted the authoritative guidance for employers’ accounting for defined benefit pension and other postretirement plans effective December 31, 2006, which amended previous guidance, and resulted in a reduction of Prudential Financial, Inc.  equity of $556 million upon adoption.


| 2004 2003 2002 2001 | $40,549 |


Vendor Non-Trade Receivables The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these vendors who manufacture sub-assemblies or assemble final products for the Company.
The Company purchases these components directly from suppliers.
Vendor non-trade receivables from three of the Companys vendors accounted for 38%, 18% and 14% of total vendor non-trade receivables as of September 26, 2015 and three of the Companys vendors accounted for 51%, 16% and 14% of total vendor non-trade receivables as of September 27, 2014.


| Restricted Stock Units Outstanding Weighted-   Average Grant-   Date Fair Value   Per Share | Restricted stock units outstanding at October 30, 2010 | Units granted | Restrictions lapsed | Units forfeited | Restricted stock units outstanding at October 29, 2011 |


In response to the economic crisis and unusual financial market events that occurred in 2008 and continued into 2009, we decided to utilize excess debt capacity.
The Holding Company completed three debt issuances in 2009.
The Holding Company issued $397 million of floating rate senior notes in March 2009, $1.3 billion of senior notes in May 2009, and $500 million of junior subordinated debt securities in July 2009.
In February 2009, in connection with the initial settlement of the stock purchase contracts issued as part of the common equity units sold in June 2005, the Holding Company issued common stock for $1.0 billion.
The proceeds from these equity and debt issuances were used for general corporate purposes and have resulted in increased investments and cash and cash equivalents held within Banking, Corporate & Other.
Operating earnings available to common shareholders improved by $114 million, of which $254 million was due to MetLife Bank and its acquisitions of a residential mortgage origination and servicing business and a reverse mortgage business, both during 2008.
Excluding the impact of MetLife Bank, our operating earnings available to common shareholders decreased $140 million, primarily due to lower net investment income, partially offset by the impact of a lower effective tax rate.
The lower effective tax rate provided an increased benefit of $139 million from the prior year.
This benefit was the result of a partial settlement of certain prior year tax audit issues and increased utilization of tax preferenced investments, which provide tax credits and deductions.
Excluding a $68 million increase from MetLife Bank, net investment income decreased $283 million, which was primarily due a decrease of $287 million due to lower yields, partially offset by an increase of $4 million due to an increase in average invested assets.
Consistent with the consolidated results of operations discussion above, yields were adversely impacted by the severe downturn in the global financial markets, which primarily impacted fixed maturity securities and real estate joint ventures.
The increased average invested asset base was due to cash flows from debt issuances during 2009.
Our investments primarily include structured finance securities, investment grade corporate fixed maturity securities, U. S.  Treasury, agency and government guaranteed fixed maturity securities and mortgage loans.
In addition, our investment portfolio includes the excess capital not allocated to the segments.
Accordingly, it includes a higher allocation to certain other invested asset classes to provide additional diversification and opportunity for long-term yield enhancement including leveraged leases, other limited partnership interests, real estate, real estate joint ventures and equity securities.
After excluding the impact of a $394 million increase from MetLife Bank, other expenses increased by $20 million.
Deferred compensation costs, which are tied to equity market performance, were higher due to a significant market rebound.
We also had an increase in costs associated with the implementation of our Operational Excellence initiative.
These increases were partially offset by lower postemployment related costs and corporate-related expenses, specifically legal costs.
Legal costs were lower largely due to the prior year commutation of asbestos policies.
In addition, interest expense declined slightly as a result of rate reductions on variable rate collateral financing arrangements offset by debt issuances in 2009 and 2008.


| September 30, 2007 September 30, 2006 September 30, 2005 | (in 000's) | Net Unrealized (Loss) Gain on Available for Sale Securities, Net of | Tax Effect Of -$1,217 in 2007, $129 in 2006, and $51 in 2005 | Net Unrealized Gain on Interest Rate Swaps Accounted for as Cash Flow | Hedges, Net of Tax Effect of $0 in 2007, $28 in 2006, and | $566 in 2005 | Net Change in Currency Translations, Net of Tax Effect of $11,463 in | 2007, $1,312 in 2006, and $3,078 in 2005 | Other Comprehensive Income |


| FCX Issuer FM O&G LLC Guarantor Non-guarantor Subsidiaries Eliminations Consolidated FCX | Revenues | Total costs and expenses | Operating (loss) income | Interest expense, net | Net gain (loss) on early extinguishment of debt | Other income (expense), net | (Loss) income before income taxes and equity in affiliated companies’ net earnings (losses) | Benefit from (provision for) income taxes | Equity in affiliated companies’ net earnings (losses) | Net income (loss) from continuing operations | Net income from discontinued operations | Net income (loss) | Net income attributable to noncontrolling interests: | Continuing operations | Discontinued operations | Net income (loss) attributable to common stockholders | Other comprehensive income (loss) | Total comprehensive income (loss) |


| 2003 2002 2001 | Balance, January 1, | Granted—treasury issuance | Granted—original issuance | Total granted | Vested | Forfeited | Balance, December 31, | Shares Under Option | Balance, January 1, 2001 | Granted | Exercised | Canceled or lapsed | Balance, December 31, 2001 | Granted | Exercised | Canceled or lapsed | Balance, December 31, 2002 | Granted | Exercised | Canceled or lapsed | Balance, December 31, 2003 |


MetLife, Inc.  Notes to Consolidated Financial Statements  (Continued) reserved for issuance under the 2005 Directors Stock Plan are 2,000,000.
As of December 31, 2007, the aggregate number of shares remaining available for issuance pursuant to the 2005 Stock Plan and the 2005 Directors Stock Plan were 60,862,366 and 1,918,170, respectively.
Stock Option exercises and other stock-based awards to employees settled in shares are satisfied through the issuance of shares held in treasury by the Company.
Under the current authorized share repurchase program, as described previously, sufficient treasury shares exist to satisfy foreseeable obligations under the Incentive Plans.
Compensation expense related to awards under the Incentive Plans is recognized based on the number of awards expected to vest, which represents the awards granted less expected forfeitures over the life of the award, as estimated at the date of grant.
Unless a material deviation from the assumed rate is observed during the term in which the awards are expensed, any adjustment necessary to reflect differences in actual experience is recognized in the period the award becomes payable or exercisable.
Compensation expense of $145 million, $144 million and $120 million, and income tax benefits of $51 million, $50 million and $42 million, related to the Incentive Plans was recognized for the years ended December 31, 2007, 2006 and 2005, respectively.
Compensation expense is principally related to the issuance of Stock Options, Performance Shares and LTPCP arrangements.
As described in Note 1, the Company changed its policy prospectively for recognizing expense for stock-based awards to retirement eligible employees.
Had the Company continued to recognize expense over the stated requisite service period, compensation expense related to the Incentive Plans would have been $118 million, $116 million and $120 million, rather than $145 million, $144 million and $120 million, for the years ended December 31, 2007, 2006 and 2005, respectively.
Had the Company applied the policy of recognizing expense related to stock-based compensation over the shorter of the requisite service period or the period to attainment of retirement eligibility for awards granted prior to January 1, 2006, pro forma compensation expense would have been $118 million, $120 million and $122 million for the years ended December 31, 2007, 2006 and 2005, respectively.
Stock Options All Stock Options granted had an exercise price equal to the closing price of the Companys common stock as reported on the New York Stock Exchange on the date of grant, and have a maximum term of ten years.
Certain Stock Options granted under the Stock Incentive Plan and the 2005 Stock Plan have or will become exercisable over a three year period commencing with the date of grant, while other Stock Options have or will become exercisable three years after the date of grant.
Stock Options issued under the Directors Stock Plan were exercisable immediately.
The date at which any Stock Option issued under the 2005 Directors Stock Plan becomes exercisable would be determined at the time such Stock Option is granted.
A summary of the activity related to Stock Options for the year ended December 31, 2007 is presented below.
The aggregate intrinsic value was computed using the closing share price on December 31, 2007 of $61.62 and December 29, 2006 of $59.01, as applicable.


Income Taxes The Company utilizes the asset and liability approach defined in SFAS No.109, “Accounting for Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement amounts and the tax bases of assets and liabilities.
Earnings per Share (“EPS”) Basic EPS is calculated by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding.
Diluted EPS is similar to basic EPS, but adjusts for the effect of the potential issuance of common shares by application of the treasury stock method.
Reclassifications Certain revisions and reclassifications have been made to the consolidated financial statements of the prior years to conform to the current year presentation.
As a result, Financial Service Fees revenue and Investment Advisory Fees expense increased by approximately $12.8 million and $11.2 million, respectively, for the years ended September 30, 2006 and 2005.
These revisions did not impact the Company’s net income for the years ended September 30, 2006 and 2005.
The Company also reclassified certain amounts from cash to segregated assets and reverse repurchase agreements on its 2006 and 2005 Consolidated Statements of Financial Condition and related cash flow activity on its 2006 and 2005 Consolidated Statements of Cash Flows.
For fiscal year 2006, $176.8 million was reclassified from cash to segregated assets and $72.5 million was reclassified from cash to securities purchased under agreements to resell.
For fiscal year 2005, $146.4 million was reclassified from cash to segregated assets and $137.3 million was reclassified from cash to securities purchased under agreements to resell.
These revisions did not impact the Company’s net income for the years ended September 30, 2006 and 2005.
In the quarter ended September 30, 2007, a new segment was established: Proprietary Capital.
The components of this segment were previously included in the Asset Management and Other segments.
Reclassifications have been made in the segment disclosure for previous years to conform to this presentation.
Additional information is provided in Note 22 below.


| For the year ended December 31, | 2005-1 | (in thousands, except per share results) | Revenues | Net income | Earnings per common share: | Basic | Diluted |


| Payments Due by Period | Total | Long-term debt-1 | Interest on long-term debt-2 | Facility and equipment operating leases-3 | Software licensing-4 | Purchase obligations-5 | Uncertain tax positions-6 | Total |


| Year ended December 31, | 2005 | (in millions) | Canadian operations | Property and casualty insurance | Prudential Securities capital markets | Gibraltar Casualty | Other divested businesses | Total divested business excluded from adjusted operating income |


| Consolidated Performance Summary 2010 -1 2009 -2(3) 2008 | Revenue | Revenue gain % | Comparable store sales % gain (decline) | Gross profit as % of revenue-4 | SG&A as % of revenue-4 | Operating income | Operating income as % of revenue | Net earnings | Diluted earnings per share | For the years ended December 31 | In millions of dollars | Service cost and amortization of prior service cost | Interest cost, expected return on plan assets and amortization of net loss | Administrative expenses | Net periodic pension benefit cost | Assumptions: | Average discount rate assumptions—net periodic benefit cost calculation | Average discount rate assumptions—benefit obligation calculation | Asset return assumptions | Financial Services Businesses as of December 31, 2010 | Level 1 | (in millions) | Fixed maturities, available for sale: | U.S. Treasury securities and obligations of U.S. government authorities and agencies | Obligations of U.S. states and their political subdivisions | Foreign government bonds | Corporate securities | Asset-backed securities | Commercial mortgage-backed securities | Residential mortgage-backed securities | Subtotal | Trading account assets supporting insurance liabilities: | U.S. Treasury securities and obligations of U.S. government authorities and agencies | Obligations of U.S. states and their political subdivisions | Foreign government bonds | Corporate securities | Asset-backed securities | Commercial mortgage-backed securities | Residential mortgage-backed securities | Equity securities | Short-term investments and cash equivalents | Subtotal | Other trading account assets: | U.S. Treasury securities and obligations of U.S. government authorities and agencies | Obligations of U.S. states and their political subdivisions | Foreign government bonds | Corporate securities | Asset-backed securities | Commercial mortgage-backed securities | Residential mortgage-backed securities | Equity securities | All other | Subtotal | Equity securities, available for sale | Commercial mortgage and other loans | Other long-term investments | Short-term investments | Cash equivalents | Other assets | Subtotal excluding separate account assets | Separate account assets-3 | Total assets | Future policy benefits | Long-term debt | Other liabilities | Total liabilities |


| Year Ended December 31, | (dollars in millions) | Service charges and fees-1 | Card fees | Capital markets fees-1 | Trust and investment services fees | Letter of credit and loan fees-1 | Foreign exchange and interest rate products-1 | Mortgage banking fees | Securities gains, net | Other income-1(2) | Noninterest income |


ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of our security holders through solicitation of proxies or otherwise, during the fourth quarter of our fiscal year ended December 31, 2008.


| Year Ended September 30, | 2017 | Stock Options | Outstanding at beginning of year | Exercised | Cancelled or expired | Outstanding at end of year | Exercisable at end of year |


| % of Revenue % of Net Income % of Total Assets | Segment | Utility | Non-Utility Nuclear | Parent Company &Other Business Segments |


Improving Credit Quality Our de-leveraging efforts reduced parent level debt by $1.2 billion in 2003 (including the secured equity-linked loan previously issued by AES New York Funding L. L. C. ).
We refinanced and paid down near-term maturities by $3.5 billion and enhanced our year-end liquidity to over $1 billion.
Our average debt maturity was extended from 2009 to 2012.
At the subsidiary level we continue to pursue limited recourse financing to reduce parent credit risk.
These factors resulted in an overall reduced cost of capital, improved credit statistics and expanded access to credit at both AES and our subsidiaries.
Liquidity at the AES parent level is an important factor for the rating agencies in determining whether the Company’s credit quality should improve.
Currency and political risk tend to be biggest variables to sustaining predictable cash flow.
The nature of our large contractual and concession-based cash flow from these businesses serves to mitigate these variables.
In 2003, over 81% of cash distributions to the parent company were from U. S.  large utilities and worldwide contract generation.
On February 4, 2004, we called for redemption of $155,049,000 aggregate principal amount of outstanding 8% Senior Notes due 2008, which represents the entire outstanding principal amount of the 8% Senior Notes due 2008, and $34,174,000 aggregate principal amount of outstanding 10% secured Senior Notes due 2005.
The 8% Senior Notes due 2008 and the 10% secured Senior Notes due 2005 were redeemed on March 8, 2004 at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest to the redemption date.
The mandatory redemption of the 10% secured Senior Notes due 2005 was being made with a portion of our ‘‘Adjusted Free Cash Flow’’ (as defined in the indenture pursuant to which the notes were issued) for the fiscal year ended December 31, 2003 as required by the indenture and was made on a pro rata basis.
On February 13, 2004 we issued $500 million of unsecured senior notes.
The unsecured senior notes mature on March 1, 2014 and are callable at our option at any time at a redemption price equal to 100% of the principal amount of the unsecured senior notes plus a make-whole premium.
The unsecured senior notes were issued at a price of 98.288% and pay interest semi-annually at an annual


| 2015 2014 | Deferred tax assets related to: | Accrued compensation and benefits | Pensions(a) | Other postretirement benefit obligations | Contract accounting methods | Foreign company operating losses and credits | Other | Valuation allowance(b) | Deferred tax assets, net | Deferred tax liabilities related to: | Goodwill and purchased intangibles | Property, plant and equipment | Exchanged debt securities and other(c) | Deferred tax liabilities | Net deferred tax assets(d) |


| 2018 2019 2020 2021 2022 Thereafter Total | $211 |


| Year ended December 31,(in millions) 2013 2012 2011 | Asset management | Investment management fees(a) | All other asset management fees(b) | Total asset management fees | Total administration fees(c) | Commissions and other fees | Brokerage commissions | All other commissions and fees | Total commissions and fees | Total asset management, administration and commissions |


The decrease in the discount rate from December 31, 2015 to December 31, 2016 resulted in an increase in the projected benefit obligations of our qualified defined benefit pension plans of approximately $1.4 billion at December 31, 2016.
The increase in the discount rate from December 31, 2014 to December 31, 2015 resulted in a decrease in the projected benefit obligations of our qualified defined benefit pension plans of approximately $2.1 billion at December 31, 2015.
The long-term rate of return assumption represents the expected long-term rate of earnings on the funds invested, or to be invested, to provide for the benefits included in the benefit obligations.
That assumption is based on several factors including historical market index returns, the anticipated long-term allocation of plan assets, the historical return data for the trust funds, plan expenses and the potential to outperform market index returns.
Plan Assets Investment policies and strategies  Lockheed Martin Investment Management Company (LMIMCo), our whollyowned subsidiary, has the fiduciary responsibility for making investment decisions related to the assets of our postretirement benefit plans.
LMIMCos investment objectives for the assets of these plans are (1) to minimize the net present value of expected funding contributions; (2) to ensure there is a high probability that each plan meets or exceeds our actuarial longterm rate of return assumptions; and (3) to diversify assets to minimize the risk of large losses.
The nature and duration of benefit obligations, along with assumptions concerning asset class returns and return correlations, are considered when determining an appropriate asset allocation to achieve the investment objectives.
Investment policies and strategies governing the assets of the plans are designed to achieve investment objectives within prudent risk parameters.
Risk management practices include the use of external investment managers; the maintenance of a portfolio diversified by asset class, investment approach and security holdings; and the maintenance of sufficient liquidity to meet benefit obligations as they come due.
LMIMCos investment policies require that asset allocations of postretirement benefit plans be maintained within the following approximate ranges:


| Pension Benefits Retiree Medical and Other Postretirement Benefits | 2015 | For plans with accumulated benefit obligations exceeding the fair value of plan assets: | Projected benefit obligation (PBO) | Accumulated benefit obligation (ABO) | Accumulated postretirement benefit obligation (APBO) | Fair value of plan assets | ABO less fair value of plan assets |


Note: The table above does not include unamortized discounts associated with our senior notes, or amounts related to interest rate contracts used to hedge the fair value of certain of our senior notes.
In July 2011, Fitch Ratings upgraded our corporate credit rating to BBB-, an investment-grade rating; and in February 2012, Moody’s Investors Service upgraded our corporate credit rating to Baa3, an investment-grade rating.
In addition, Standard & Poor’s Ratings Services has maintained an investment-grade corporate credit rating for us since 2009.
We believe our investment grade credit profile reflects the size and diversity of our product portfolio, our leading share position in several of our served markets, our strong cash flow, our solid financial fundamentals and our financial strategy.
Term Loan and Revolving Credit Facility During 2011, we prepaid the remaining $1.000 billion of our term loan maturities without premium or penalty.
In the second quarter of 2012, we established a $2.000 billion revolving credit facility, maturing in April 2017, with a global syndicate of commercial bank and terminated our previous


| As of December | in millions | Additional collateral or termination payments for a one-notch downgrade | Additional collateral or termination payments for a two-notch downgrade |


| Amount (In Millions) | 2006 net revenue | Fuel recovery | Volume/weather | Rider revenue | Net wholesale revenue | Other | 2007 net revenue |


Real Estate Real estate consists primarily of commercial equity real estate.
As of December 31, 2008 and 2007, the carrying amount of equity real estate investment was $915.2 million and $859.6 million, respectively, or 1% of U. S.  invested assets.
Our commercial equity real estate is held in the form of wholly owned real estate, real estate acquired upon foreclosure of commercial mortgage loans and majority owned interests in real estate joint ventures.
Equity real estate is categorized as either real estate held for investment or real estate held for sale.
 Real estate held for investment totaled $779.8 million and $777.2 million as of December 31, 2008 and 2007, respectively.
The carrying value of real estate held for investment is generally adjusted for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Such impairment adjustments are recorded as net realized losses and, accordingly, are reflected in our consolidated results of operations.
For the years ended December 31, 2008 and 2007, there were no such impairment adjustments.
The carrying amount of real estate held for sale as of December 31, 2008, was $135.4 million, net of valuation allowance of $3.5 million.
The carrying amount of real estate held for sale as of December 31, 2007, was $82.4 million.
There was no valuation allowance at December 31, 2007.
Once we identify a real estate property to be sold and commence a plan for marketing the property, we classify the property as held for sale.
We establish a valuation allowance subject to periodic revisions, if necessary, to adjust the carrying value of the property to reflect the lower of its current carrying value or the fair value, less associated selling costs.
We use research, both internal and external, to recommend appropriate product and geographic allocations and changes to the equity real estate portfolio.
We monitor product, geographic and industry diversification separately and together to determine the most appropriate mix.
Equity real estate is distributed across geographic regions of the country with larger concentrations in the South Atlantic, West South Central and Pacific regions of the United States as of December 31, 2008.
By property type, there is a concentration in office, industrial site buildings, and retail that represented approximately 79% of the equity real estate portfolio as of December 31, 2008.


| Year ended December 31, | 2016 | (in millions) | Operating results-1: | Revenues | Benefits and expenses | Adjusted operating income | Realized investment gains (losses), net, and related adjustments | Related charges | Investment gains (losses) on trading account assets supporting insurance liabilities, net | Change in experience-rated contractholder liabilities due to asset value changes | Income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures | Year Ended December 31, | 2016 | Yield-1 | ($ in millions) | Fixed maturities | Trading account assets supporting insurance liabilities | Equity securities | Commercial mortgage and other loans | Policy loans | Short-term investments and cash equivalents | Other investments | Gross investment income before investment expenses | Investment expenses | Investment income after investment expenses | Investment results of other entities and operations-2 | Total investment income | Year Ended December 31, | 2016 | Yield-1 | ($ in millions) | Fixed maturities | Trading account assets supporting insurance liabilities | Equity securities | Commercial mortgage and other loans | Policy loans | Short-term investments and cash equivalents | Other investments | Gross investment income before investment expenses | Investment expenses | Total investment income |


gran ted , mo dified, or settled on or after Janu ary 1, 2003.
Aw a rds u n der th e Comp any’s stock o ptio n plan s vest over p erio ds ran gin g fro m o n e to th ree years.
Th ere f o re, th e co st related to stock-based emp loyee co mp en sation fo r emplo yee sto ck o ption s includ ed in th e d eter mination o f n et in co me fo r th e years end ed Decemb er 31, 2005, 2004 and 2 003 is less than th at which would have been recogn ized if the fair value b as ed metho d h ad b een app lied to all award s sin ce the origin al effective d ate of SFAS No.123.
Th e Comp any will ad op t the p rovision s o f SFAS 123(R), “Share Based Paymen t,” usin g th e mo difie d p rosp ective transitio n metho d o n Jan uar y 1, 2006.
Th e Co mp an y do es no t exp ect the ad op tio n of SFAS 123( R) to h ave a material imp act on its fin an cial p osition or resu lts o f op eration s. However, the ad op tio n o f SFAS1 23(R)will ch ange th e ser v i c e p eriod for, an d timin g of, th e reco gnitio n o f comp en sation cost related to re t i rement eligib ility, which will g en erally result in accelerated expen se recogn ition b y th e Co mp an y for its stock based co mpen satio n pro grams.
Th e Co mpan y cu rre n t l y re c o rd s co mpens atio n cost over th e vesting perio d, r e g a rdless of eligibility for re t i rement (see Note 8, “Commitmen ts an d Co ntin gen cies,” for a d iscussion of th e Comp an y’s re t i remen t p lan).
If th e Co mpan y h ad re c o rd ed compen sation co st based on re t i remen t eligibility, th e in cr eas e to co mpen satio n cost du rin g th e year en ded Decemb er 31 , 2005 wou ld n ot h ave been mater ial.


| 2009 2008 2007 | Unrecognized tax benefits, January 1 | Gross increases—tax positions in prior periods | Gross decreases—tax positions in prior periods | Gross increases—current period tax positions | Change due to exchange rate fluctuations | Settlements | Lapse of statute of limitations | Unrecognized tax benefits, December 31 | Interest | Penalties | Total reserve for tax contingencies, December 31 |


Reclassifications The Company has reclassified certain prior years amounts to conform to the current years presentation.
As of December 31, 2010, we have U. S.  tax net operating loss, capital loss and tax credits, the tax effect of which was $252 million, as compared to $261 million as of December 31, 2009.
In addition, we have foreign tax net operating loss carryforwards and tax credits, the tax effect of which was $341 million as of December 31, 2010, as compared to $334 million as of December 31, 2009.
These tax attributes will expire periodically beginning in 2011.
After consideration of all positive and negative evidence, we believe that it is more likely than not that a portion of the deferred tax assets will not be realized.
As a result, we established a valuation allowance of $357 million as of December 31, 2010 and $329 million as of December 31, 2009.
The increase in the valuation allowance as of December 31, 2010, as compared to December 31, 2009, is attributable primarily to foreign net operating losses generated during the year.
The income tax impact of the unrealized gain or loss component of other comprehensive income was a benefit of $16 million in 2010, a benefit of $4 million in 2009, and a provision of $1 million in 2008.
We do not provide income taxes on unremitted earnings of our foreign subsidiaries where we have indefinitely reinvested such earnings in our foreign operations.
We do not believe it is practical to estimate the amount of income taxes payable on the earnings that are indefinitely reinvested in foreign operations.
Unremitted earnings of our foreign subsidiaries that we have indefinitely reinvested in foreign operations are $9.193 billion as of December 31, 2010 and $9.355 billion as of December 31, 2009.
As of December 31, 2010, we had $965 million of gross unrecognized tax benefits, of which net $859 million, if recognized, would affect our effective tax rate.
As of December 31, 2009, we had $1.038 billion of gross unrecognized tax benefits, of which net $908 million, exclusive of interest and penalties, if recognized, would affect our effective tax rate.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):


| Year ended December 31  Dollars in millions 2008 2007 | Net interest income | Net interest margin |


| 2012 2013 2014 | Cash flows from operating activities—continuing operations | Cash flows from investing activities—continuing operations | Cash flows from financing activities—continuing operations | Cash and cash equivalents at the end of year |


| Millions of kWhs Delivered Revenues in Millions | Twelve Months Ended | Description | Residential/Religious | Commercial/Industrial | Retail access customers | Public authorities | Other operating revenues | Total |


| Investment Objective Value in Billions Percentage of Total AUM | Equity | Growth potential, income potential, value or various combinations thereof | Multi-Asset/Balanced | Asset allocation, balanced, flexible, alternative and income-mixed funds | Fixed Income | Global/international, U.S. tax-free and U.S. taxable | Cash Management | Short-term liquid assets | Total | (in millions) | Gross amount of interest income that would have been recorded in accordance with original contractual terms, and had been outstanding throughout the year or since origination, if held for only part of the year-1 | Interest income actually recognized | Total interest income foregone |


| (In millions) 2019 2020 2021 2022 2023 Thereafter Total | Minimum lease payments | Less: income from subleases -1 | Net minimum lease payments |


Policyholders’ account balances primarily represent an accumulation of account deposits plus credited interest less withdrawals, expense charges and mortality charges, if applicable.
These policyholders’ account balances also include provisions for benefits under non-life contingent payout annuities.
Included in “Funding agreements” at December 31, 2016 and 2015 are $3,758 million and $2,957 million, respectively, related to the Company’s Funding Agreement Notes Issuance Program (“FANIP”).
Under this program, which has a maximum authorized amount of $15 billion of medium-term notes and $3 billion of commercial paper, Delaware statutory trusts issue short-term commercial paper and/or medium-term notes to investors that are secured by funding agreements issued to the trusts by Prudential Insurance.
The outstanding commercial paper and notes have fixed or floating interest rates that range from 0.0% to 2.6% and original maturities ranging from seven days to five years.
Included in the amounts at December 31, 2016 and 2015 is the medium-term note liability, which is carried at amortized cost, of $3,210 million and $2,958 million, respectively and short-term note liability of $550 million and $0, respectively.
Also included in “Funding agreements” are collateralized funding agreements issued to the Federal Home Loan Bank of New York (“FHLBNY”) of $1,001 million for both December 31, 2016 and 2015.
These obligations, which are carried at amortized cost, have fixed or floating interest rates that range from 1.1% to 1.7% and original maturities ranging from four to seven years.
For additional details on the FHLBNY program, see Note 14.
Interest crediting rates range from 0% to 7.5% for interest-sensitive life contracts and from 0% to 13.3% for contracts other than interest-sensitive life.
Less than 1% of policyholders’ account balances have interest crediting rates in excess of 8%.11.


| Fiscal Years Operating   Leases | 2011 | 2012 | 2013 | 2014 | 2015 | Later Years | Total |


News and Information Services The Company’s News and Information Services segment consists primarily of Dow Jones, News Corp Australia, News UK, the New York Post and News America Marketing.
This segment also includes Unruly, a global video


(a) Unrealized gains/(losses) due to instrument-specific credit risk (DVA) for liabilities for which the fair value option has been elected is recorded in OCI, while realized gains/(losses) are recorded in principal transactions revenue.
Realized gains/(losses) due to instrument-specific credit risk recorded in principal transactions revenue were not material for the years ended December 31, 2018, 2017 and 2016.
(b) Long-term debt measured at fair value predominantly relates to structured notes.
Although the risk associated with the structured notes is actively managed, the gains/(losses) reported in this table do not include the income statement impact of the risk management instruments used to manage such risk.
(c) Reported in mortgage fees and related income.
(d) Reported in other income.
(e) Changes in fair value exclude contractual interest, which is included in interest income and interest expense for all instruments other than hybrid financial instruments.
For further information regarding interest income and interest expense, refer to Note 7.
Determination of instrument-specific credit risk for items for which a fair value election was made The following describes how the gains and losses that are attributable to changes in instrument-specific credit risk, were determined.  ?
Loans and lending-related commitments: For floating- rate instruments, all changes in value are attributed to instrument-specific credit risk.
For fixed-rate instruments, an allocation of the changes in value for the period is made between those changes in value that are interest rate-related and changes in value that are credit-related.
Allocations are generally based on an analysis of borrower-specific credit spread and recovery information, where available, or benchmarking to similar entities or industries.  ?
Long-term debt: Changes in value attributable to instrument-specific credit risk were derived principally from observable changes in the Firms credit spread as observed in the bond market.  ?
Securities financing agreements: Generally, for these types of agreements, there is a requirement that collateral be maintained with a market value equal to or in excess of the principal amount loaned; as a result, there would be no adjustment or an immaterial adjustment for instrument-specific credit risk related to these agreements.


Stock Repurchase Programs and Dividends on Common Stock As described in Note 11 to the financial statements in Item 8 of this Annual Report, during fiscal 2014, fiscal 2013, and fiscal 2012 we continued to repurchase shares of our common stock under a series of repurchase programs that our Board of Directors has authorized.
At July 31, 2014, we had authorization from our Board of Directors to expend up to an additional $1.9 billion for stock repurchases through August 19, 2017.
During fiscal 2014 and 2013 we also continued to pay quarterly cash dividends on shares of our outstanding common stock.
In August 2014 our Board of Directors declared a quarterly cash dividend of $0.25 per share of outstanding common stock


| Years Ended September 30, | 2019 | Foreign net sales to unaffiliated customers | Foreign segment income | Foreign long-lived assets | Foreign operations as a percent of consolidated operations: | Foreign net sales to unaffiliated customers | Foreign segment income | Foreign long-lived assets |


| Year Ended December 31, Year Ended December 31, | 2017 | Cash products (shares in millions): | NYSE listed (Tape A) issues: | Handled volume | Matched volume | Total NYSE listed consolidated volume | Share of total matched consolidated volume | NYSE Arca, NYSE American and regional listed (Tape B) issues: | Handled volume | Matched volume | Total NYSE Arca, NYSE American and regional listed consolidated volume | Share of total matched consolidated volume | Nasdaq listed (Tape C) issues: | Handled volume | Matched volume | Total Nasdaq listed consolidated volume | Share of total matched consolidated volume | Total cash volume handled | Total cash market share matched | Equity options (contracts in thousands): | NYSE equity options | Total equity options volume | NYSE share of total equity options | Revenue capture or rate per contract: | Cash products revenue capture (per 100 shares) | Equity options rate per contract |


| Funds Separate Accounts Securities Total | Balance at January 1, 2015 | Inflows | Outflows | Market appreciation (depreciation) | Balance at December 31, 2015 |


| (Dollars in millions) December 31, 2004 | Obligations of equity affiliates | Residual value guarantees | Total |


| Maturing in Year Ending October 31, | 2019 | (in thousands) | Cash & Cash equivalent (variable rate) | Average interest rate | Short-term debt (variable rate): | Revolver | Average interest rate | Term Loan | Average interest rate | Credit Facility in China | Average interest rate | October 31, | 2018 | (in thousands) | Computer and other equipment | Buildings | Furniture and fixtures | Land | Leasehold improvements | 935,988 | Less accumulated depreciation and amortization-1 | Total |


Financial Highlights Net Interest Income Net interest income on a FTE basis decreased $7.1 billion to $45.6 billion for 2011 compared to 2010.
The decline was primarily due to lower consumer loan balances and yields and decreased investment security yields, including the acceleration of purchase premium amortization from an increase in modeled prepayment expectations, and increased hedge ineffectiveness.
Lower tradingrelated net interest income also negatively impacted 2011 results.
Our consolidated net cash flows used for investing activities were $4.2 billion in 2010, compared with $3.2 billion in 2009.
Net investing activities for the indicated periods were related primarily to net purchases of fixed maturities and for 2010 included the acquisitions of Rain and Hail and Jerneh Insurance Berhad.
Our consolidated net cash flows from financing activities were $732 million in 2010, compared with net cash flows used for financing activities of $321 million in 2009.
Net cash flows from/used for financing activities in 2010 and 2009, included dividends paid on our Common Shares of $435 million and $388 million, respectively.
Net cash flows from financing activities in 2010, included net proceeds of $699 million from the issuance of long-term debt, $1 billion in reverse repurchase agreements, and $300 million in credit facility borrowings.
This was partially offset by repayment of $659 million in debt and share repurchases settled in 2010 of $235 million.
For 2009, net cash flows used for financing activities included net proceeds from the issuance of $500 million in long-term debt and the net repayment of debt and reverse repurchase agreements of $466 million.
Both internal and external forces influence our financial condition, results of operations, and cash flows.
Claim settlements, premium levels, and investment returns may be impacted by changing rates of inflation and other economic conditions.
In many cases, significant periods of time, ranging up to several years or more, may lapse between the occurrence of an insured loss, the reporting of the loss to us, and the settlement of the liability for that loss.
From time to time, we utilize reverse repurchase agreements as a low-cost alternative for short-term funding needs.
We use these instruments on a limited basis to address short-term cash timing differences without disrupting our investment portfolio holdings and settle the transactions with future operating cash flows.
At December 31, 2010, there were $1 billion in reverse repurchase agreements outstanding (refer to Short-term Debt).
In addition to cash from operations, routine sales of investments, and financing arrangements, we have agreements with a bank provider which implemented two international multi-currency notional cash pooling programs to enhance cash management efficiency during periods of short-term timing mismatches between expected inflows and outflows of cash by currency.
In each program, participating ACE entities establish deposit accounts in different currencies with the bank provider and each day the credit or debit balances in every account are notionally translated into a single currency (U. S.  dollars) and then notionally pooled.
The bank extends overdraft credit to any participating ACE entity as needed, provided that the overall notionally-pooled balance of all accounts in each pool at the end of each day is at least zero.
Actual cash balances are not physically converted and are not co-mingled between legal entities.
ACE entities may incur overdraft balances as a means to address short-term timing mismatches, and any overdraft balances incurred under this program by an ACE entity would be guaranteed by ACE Limited (up to $150 million in the aggregate).
Our revolving credit facility allows for same day drawings to fund a net pool overdraft should participating ACE entities withdraw contributed funds from the pool.


| Property Name Interest Rate Face Amount Annual Debt Service -1 Maturity Date | Summit Mall | The Crossings Premium Outlets | Town Center at Cobb | University Park Village | White Oaks Mall | Williamsburg Premium Outlets | Wolfchase Galleria | Woodland Hills Mall | Total Consolidated Secured Indebtedness | Unsecured Indebtedness: | Simon Property Group, LP: | Global Commercial Paper - Euro | Global Commercial Paper - USD | Supplemental Credit Facility - USD | Supplemental Credit Facility - Yen Currency | Unsecured Notes - 22B | Unsecured Notes - 22C | Unsecured Notes - 23A | Unsecured Notes - 24B | Unsecured Notes - 25A | Unsecured Notes - 25B | Unsecured Notes - 25C | Unsecured Notes - 26A | Unsecured Notes - 26B | Unsecured Notes - 27A | Unsecured Notes - 27B | Unsecured Notes - 28A | Unsecured Notes - 28B | Unsecured Notes - 29A | Unsecured Notes - 29B | Unsecured Notes - 30A | Unsecured Notes - 30B | Unsecured Notes - 31A | Unsecured Notes - 31B | Unsecured Notes - 31C | Unsecured Notes - Euro 1 | Unsecured Notes - Euro 2 | Unsecured Notes - Euro 3 | Total Consolidated Unsecured Indebtedness | Total Consolidated Indebtedness at Face Amounts | Premium on Indebtedness | Discount on Indebtedness | Debt Issuance Costs on Fixed-Rate Indebtedness |


| Year ended December 31, | 2005 | (In millions) | U.S. treasury and government agency securities | Corporate debt securities | Mortgage-backed and other securities | $431 |


| RevPAR Occupancy Average Daily Rate | 2016 | JW Marriott | The Ritz-Carlton | W Hotels | Composite North American Luxury-1 | Marriott Hotels | Sheraton | Westin | Composite North American Upper Upscale-2 | North American Full-Service-3 | Courtyard | Residence Inn | Composite North American Limited-Service-4 | North American - All-5 | RevPAR | 2016 | JW Marriott | The Ritz-Carlton | W Hotels | Composite North American Luxury-1 | Marriott Hotels | Sheraton | Westin | Composite North American Upper Upscale-2 | North American Full-Service-3 | Courtyard | Residence Inn | Fairfield Inn & Suites | Composite North American Limited-Service-4 | North American - All-5 |


| Citigroup Inc. Citibank, N.A. | Seniordebt | Fitch Ratings (Fitch) | Moody’s Investors Service (Moody’s) | Standard & Poor’s (S&P) |


| 2017 2016 2015 | (In thousands) | Residential | Commercial | Industrial | Public & other | Total |


| December 31 | (Dollars in millions) | Consumer | Residential mortgage-2 | Home equity | Discontinued real estate-3 | U.S. credit card | Non-U.S. credit card | Direct/Indirect consumer-4 | Other consumer-5 | Total consumer loans | Consumer loans accounted for under the fair value option-6 | Total consumer | Commercial | U.S. commercial-7 | Commercial real estate-8 | Commercial lease financing | Non-U.S. commercial | Total commercial loans | Commercial loans accounted for under the fair value option-6 | Total commercial | Total loans and leases |


| Year Ended December 31, Change | (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) | Net sales | Cost of goods sold | Gross profit | Research and development (R&D) expenses | Selling and administrative (S&A) expenses | Restructuring and other charges, net | Operating profit | Interest expense | Other expense, net | Income before taxes | Taxes on income | Net income | Net income per share — diluted | Gross margin | R&D as a percentage of sales | S&A as a percentage of sales | Operating margin | Effective tax rate | Segment net sales | Flavors | Fragrances | Consolidated |


Mortgage fees and related income This revenue category primarily reflects CCB’s Mortgage Production and Mortgage Servicing revenue, including: fees and income derived from mortgages originated with the intent to sell; mortgage sales and servicing including losses related to the repurchase of previously-sold loans; the impact of risk management activities associated with the mortgage pipeline, warehouse loans and MSRs; and revenue related to any residual interests held from mortgage securitizations.
This revenue category also includes gains and losses on sales and lower of cost or fair value adjustments for mortgage loans held-for-sale, as well as changes in fair value for mortgage loans originated with the intent to sell and measured at fair value under the fair value option.
Changes in the fair value of CCB MSRs are reported in mortgage fees and related income.
Net interest income from mortgage loans is recorded in interest income.
For a further discussion of MSRs, see Note 17 on pages 299–304 of this Annual Report.
Card income This revenue category includes interchange income from credit and debit cards and net fees earned from processing credit card transactions for merchants.
Card income is recognized as earned.
Annual fees and direct loan origination costs are deferred and recognized on a straight-line basis over a 12-month period.
Expense related to rewards programs is recorded when the rewards are earned by the customer and netted against interchange income.
Credit card revenue sharing agreements The Firm has contractual agreements with numerous co-brand partners and affinity organizations (collectively, “partners”), which grant the Firm exclusive rights to market to the customers or members of such partners.
These partners endorse the credit card programs and provide their customer and member lists to the Firm, and they may also conduct marketing activities and provide awards under the various credit card programs.
The terms of these agreements generally range from three to ten years.
The Firm typically makes incentive payments to the partners based on new account originations, charge volumes and the cost of the partners’ marketing activities and awards.
Payments based on new account originations are accounted for as direct loan origination costs.
Payments to partners based on charge volumes are deducted from interchange income as the related revenue is earned.
Payments based on marketing efforts undertaken by the partners are expensed by the Firm as incurred and reported as noninterest expense.
Other income Included in other income is operating lease income of $1.5 billion, $1.3 billion and $1.2 billion for the years ended December 31, 2013, 2012 and 2011, respectively.
Additionally, included in other income is a net pre-tax gain of approximately $1.3 billion, from the sale of the Visa B Shares.
See Note 2 on pages 192–194 of this Annual Report for more information.


| Less Than One Year 2005-2006 2007-2008 More than Five Years Total | Contractual Obligations: | Long-Term Debt | Line of Credit | Acquisition and construction commitments | $250,587 |


Recoverability of goodwill is measured at the reporting unit level and begins with a qualitative assessment to determine if it is more likely than not that the fair value of each reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test prescribed by GAAP.
For those reporting units where it is required, the first step compares the carrying amount of the reporting unit to its estimated fair value.
If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired and the second step of the impairment test is not necessary.
To the extent that the carrying value of the reporting unit exceeds its estimated fair value, a second step is performed, wherein the reporting unit's carrying value of goodwill is compared to the implied fair value of goodwill.
To the extent that the carrying value exceeds the implied fair value, impairment exists and must be recognized.
The calculation of estimated fair value is based on two valuation techniques, a discounted cash flow model (income approach) and a market adjusted multiple of earnings and revenues (market approach), with each method being weighted in the calculation.
The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.
The estimated fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit, as determined in the first step of the goodwill impairment test, was the price paid to acquire that reporting unit.
Recoverability of other intangible assets with indefinite useful lives (i. e.  Trademarks) is determined on a relief from royalty methodology (income approach), which is based on the implied royalty paid, at an appropriate discount rate, to license the use of an asset rather than owning the asset.
The present value of the after-tax cost savings (i. e.  royalty relief) indicates the estimated fair value of the asset.
Any excess of the carrying value over the estimated fair value is recognized as an impairment loss equal to that excess.
Intangible assets such as patents, customer-related intangible assets and other intangible assets with finite useful lives are amortized on a straight-line basis over their estimated economic lives.
The weighted-average useful lives approximate the following:


NOTE 13 EMPLOYEE BENEFIT PLANS Pension And Postretirement Plans We have a noncontributory, qualified defined benefit pension plan covering eligible employees.
Benefits are determined using a cash balance formula where earnings credits are a percentage of eligible compensation.
Earnings credit percentages for those employees who were plan participants on December 31, 2009 are frozen at their level earned to that point.
Earnings credits for all employees who become participants on or after January 1, 2010 are a flat 3% of eligible compensation.
Plan participants at December 31, 2009 earn interest based on 30-year Treasury securities with a minimum rate, while new participants on or after January 1, 2010 are not subject to the minimum rate.
Pension contributions are based on an actuarially determined amount necessary to fund total benefits payable to plan participants.
We also maintain nonqualified supplemental retirement plans for certain employees and provide certain health care and life insurance benefits for qualifying retired employees (postretirement benefits) through various plans.
The nonqualified pension and postretirement benefit plans are unfunded.
PNC currently intends to begin funding some or all of the postretirement medical benefit obligations through a voluntary employee beneficiary association (VEBA) in mid-to-late 2015.
PNC reserves the right to terminate plans or make plan changes at any time.
We use a measurement date of December 31 for plan assets and benefit obligations.
A reconciliation of the changes in the projected benefit obligation for qualified pension, nonqualified pension and postretirement benefit plans as well as the change in plan assets for the qualified pension plan follows.


| North America Europe,Middle East& Africa Asia Pacific South America Total | Signal and Power Solutions | Advanced Safety and User Experience | Total |


| 2012 2011 2010 | Net sales | Operating profit | Operating margins | Backlog at year-end |


| Year ended September 30, % change | $ in thousands | Revenues: | Securities commissions and fees: | Fee-based accounts | Mutual funds | Insurance and annuity products | Equity products | Fixed income products | New issue sales credits | Subtotal securities commissions and fees | Interest income | Account and service fees: | Mutual fund and annuity service fees | RJBDP fees - third-party banks | Affiliate deposit account servicing fees from RJ Bank | Client account and service fees | Client transaction fees and other | Subtotal account and service fees | Other | Total revenues | Interest expense | Net revenues | Non-interest expenses: | Sales commissions | Admin & incentive compensation and benefit costs | Communications and information processing | Occupancy and equipment costs | Business development | Jay Peak matter | Other | Total non-interest expenses | Pre-tax income |


| 2015 2014 2013 | Asset impairments | Layoff costs | Legal matters in Italy | Net loss on divestitures of businesses | Resolution of a legal matter | Other | Reversals of previously recorded layoff and other exit costs | Restructuring and other charges |


| September 30, 2007 September 30, 2006 | (in 000's) | Current Portion of Loans Payable | Long-Term Portion of Loans Payable | Total Loans Payable |


| For the years ended December 31, | 2006 | Statements of Income: | Revenue | Restaurant sales | Franchise royalties and fees | Total revenue | Food, beverage and packaging costs | Labor costs | Occupancy costs | Other operating costs | General and administrative expenses | Depreciation and amortization | Pre-opening costs | Loss on disposal of assets | Total costs and expenses | Income (loss) from operations | Interest income | Interest expense | Income (loss) before income taxes | (Provision) benefit for income taxes(1) | Net income (loss) | Earnings (loss) per share(2) | Basic | Diluted | Shares used in computing earnings (loss) per share(2) | Basic | Diluted |


| In millions Interest OnlyProduct Principal andInterest Product | 2016 | 2017 | 2018 | 2019 | 2020 and thereafter | Total (a) (b) |


| (in millions) Purchase Commitments Operating Leases | 2014 | 2015 | 2016 | 2017 | 2018 | Subsequent years | $5,410.2 |


The following table summarizes NRG's U. S.  Coal capacity and the corresponding revenues and average natural gas prices and positions resulting from Coal hedge agreements extending beyond December 31, 2013, and through 2018 for the East region:


| Millions OperatingLeases CapitalLeases | 2017 | 2018 | 2019 | 2020 | 2021 | Later years | Total minimum lease payments | Amount representing interest | Present value of minimum lease payments |


W.  Subsequent Events Management evaluated all activity of Arconic and concluded that no subsequent events have occurred that would require recognition in the Consolidated Financial Statements or disclosure in the Notes to the Consolidated Financial Statements, except as noted below: On January 22, 2019, the Company announced that its Board of Directors (the Board) had determined to no longer pursue a potential sale of Arconic as part of its strategy and portfolio review.
On February 6, 2019, the Company announced that the Board appointed John C.  Plant, current Chairman of the Board, as Chairman and Chief Executive Officer of the Company, effective February 6, 2019, to succeed Chip Blankenship, who ceased to serve as Chief Executive Officer of the Company and resigned as a member of the Board, in each case as of that date.
In addition, the Company announced that the Board appointed Elmer L.  Doty, current member of the Board, as President and Chief Operating Officer, a newly created position, effective February 6, 2019.
Mr.  Doty will remain a member of the Board.
The Company also announced that Arthur D.  Collins, Jr. , current member of the Board, has been appointed interim Lead Independent Director of the Company, effective February 6, 2019.
On February 8, 2019, the Company announced the following key initiatives as part of its ongoing strategy and portfolio review: plans to reduce operating costs, designed to maximize the impact in 2019; the planned separation of its portfolio into Engineered Products and Forgings (EP&F) and Global Rolled Products (GRP), with a spin-off of one of the businesses; the potential sale of businesses that do not best fit into EP&F or GRP; execute its previously authorized $500 share repurchase program in the first half of 2019; the Board authorized an additional $500 of share repurchases, effective through the end of 2020; and plans to reduce its quarterly common stock dividend from $0.06 to $0.02 per share.
On February 19, 2019, the Company entered into an accelerated share repurchase (“ASR”) agreement with JPMorgan Chase Bank to repurchase $700 of its common stock, pursuant to the share repurchase program previously authorized by the Board.
Under the ASR agreement, Arconic will receive initial delivery of approximately 32 million shares on February 21, 2019.
The final number of shares to be repurchased will be based on the volume-weighted average price of Arconic’s common stock during the term of the transaction, less a discount.
The ASR agreement is expected to be completed during the first half of 2019.
The Company will evaluate its organizational structure in conjunction with the planned separation of its portfolio and changes to its reportable segments are expected in the first half of 2019.
The increase in comprehensive income (loss) attributable to Johnson Controls was due to higher net income (loss) attributable to Johnson Controls ($2,479 million) and an increase in other comprehensive loss attributable to Johnson Controls ($195 million) primarily related to favorable foreign currency translation adjustments.
These year-over-year favorable foreign currency translation adjustments were primarily driven by the strengthening of the euro and British pound currencies against the U. S.  dollar, partially offset by the weakening of the Japanese yen currency against the U. S.  dollar.
Segment Analysis Management evaluates the performance of its business units based primarily on segment EBITA, which is defined as income from continuing operations before income taxes and noncontrolling interests, excluding general corporate expenses, intangible asset amortization, net financing charges, significant restructuring and impairment costs, and net mark-to-market adjustments on pension and postretirement plans.
Building Technologies & Solutions


| Year ended December 31 (in millions) 2015 2014 2013 % Change 2014 to 2015 % Change 2013 to 2014 | Revenue | Operating costs and expenses | Operating loss before depreciation and amortization |


| Defined Benefit Pension Plan Postretirement Healthcare Plans Supplemental Executive Retirement Plan | 2009 | Components of net periodic benefit cost: | Service cost | Interest cost | Expected return on plan assets | Curtailment recognition | Net periodic benefit cost | Weighted average assumptions used to determine net periodic benefit cost: | Discount rate | Expected return on plan assets | Rate of compensation increase |


Recent Credit Ratings Developments On November 29, 2018, Moodys placed the long-term ratings of Citigroup and Citibank, N. A.  on Review for Possible Upgrade.
 Over the course of the review period, Moodys will assess, among other things, Citis ability to achieve its medium-term efficiency and profitability targets while maintaining strong governance and risk controls.
On February 21, 2019, Moodys upgraded the ratings for long-term debt, deposits and counterparty risk of Citigroup and certain of its subsidiaries, as well as the baseline credit assessment (BCA) of Citibank, N. A.
In addition, Moodys affirmed all short-term ratings and assessments of Citigroup and those subsidiaries.
The ratings outlook was changed to Stable from Review for Possible Upgrade.
 Potential Impacts of Ratings Downgrades Ratings downgrades by Moodys, Fitch or S&P could negatively impact Citigroups and/or Citibanks funding and liquidity due to reduced funding capacity, including derivative triggers, which could take the form of cash obligations and collateral requirements.
The following information is provided for the purpose of analyzing the potential funding and liquidity impact to Citigroup and Citibank of a hypothetical, simultaneous ratings downgrade across all three major rating agencies.
This analysis is subject to certain estimates, estimation methodologies, judgments and uncertainties.
Uncertainties include potential ratings limitations that certain entities may have with respect to permissible counterparties, as well as general subjective counterparty behavior.
For example, certain corporate customers and markets counterparties could re-evaluate their business relationships with Citi and limit transactions in certain contracts or market instruments with Citi.
Changes in counterparty behavior could impact Citis funding and liquidity, as well as the results of operations of certain of its businesses.
The actual impact to Citigroup or Citibank is unpredictable and may differ materially from the potential funding and liquidity impacts described below.
For additional information on the impact of credit rating changes on Citi and its applicable subsidiaries, see Risk FactorsLiquidity Risks above.
Citigroup Inc.  and CitibankPotential Derivative Triggers As of December 31, 2018, Citi estimates that a hypothetical one-notch downgrade of the senior debt/long-term rating of Citigroup Inc.  across all three major rating agencies could impact Citigroups funding and liquidity due to derivative triggers by approximately $0.2 billion, compared to $0.4 billion as of September 30, 2018.
Other funding sources, such as secured financing transactions and other margin requirements, for which there are no explicit triggers, could also be adversely affected.
As of December 31, 2018, Citi estimates that a hypothetical onenotch downgrade of the senior debt/long-term rating of Citibank across all three major rating agencies could impact Citibanks funding and liquidity by approximately $0.5 billion, compared to $1.2 billion as of September 30, 2018.
In total, Citi estimates that a one-notch downgrade of Citigroup and Citibank, across all three major rating agencies, could result in increased aggregate cash obligations and collateral requirements of approximately $0.7 billion, compared to $1.6 billion as of September 30, 2018 (see also Note 22 to the Consolidated Financial Statements).
As detailed under HighQuality Liquid Assets above, the liquidity resources that are eligible for inclusion in the calculation of Citis consolidated HQLA were approximately $339billion for Citibank and $65 billion for Citis non-bank and other entities, for a total of approximately $404 billion as of December 31, 2018.
These liquidity resources are available in part as a contingency for the potential events described above.
In addition, a broad range of mitigating actions are currently included in Citigroups and Citibanks contingency funding plans.
For Citigroup, these mitigating factors include, but are not limited to, accessing surplus funding capacity from existing clients, tailoring levels of secured lending and adjusting the size of select trading books and collateralized borrowings from certain Citibank subsidiaries.
Mitigating actions available to Citibank include, but are not limited to, selling or financing highly liquid government securities, tailoring levels of secured lending, adjusting the size of select trading assets, reducing loan originations and renewals, raising additional deposits or borrowing from the FHLB or central banks.
Citi believes these mitigating actions could substantially reduce the funding and liquidity risk, if any, of the potential downgrades described above.


| For the Years Ended December 31, 2014, 2013 and 2012 | Residential Mortgage Banking | 2014 | Net interest income(a) | Noninterest income | 421,514 | Provision for credit losses | Amortization of core deposit and other intangible assets | Depreciation and other amortization | Other noninterest expense | Income (loss) before taxes | Income tax expense (benefit) | Net income (loss) | Average total assets (in millions) | Capital expenditures (in millions) |


| Amount (In Millions) | 2015 net revenue | Nuclear realized price changes | Rhode Island State Energy Center | Nuclear volume | FitzPatrick reimbursement agreement | Nuclear fuel expenses | Other | 2016 net revenue |


| Years Ended December 31,(in millions) 2010 2009 2008 | Summary: | Net cash provided by (used in) operating activities | Net cash provided by (used in) investing activities | Net cash used in financing activities | Effect of exchange rate changes on cash | Change in cash | Cash at beginning of year | Reclassification of assets held for sale | Cash at end of year |


Credit risk capital Credit risk capital is estimated separately for the wholesale businesses (IB, CB, TSS and AM) and consumer businesses (RFS and CS).
Credit risk capital for the overall wholesale credit portfolio is defined in terms of unexpected credit losses, both from defaults and declines in the portfolio value due to credit deterioration, measured over a one-year period at a confidence level consistent with an AA credit rating standard.
Unexpected losses are losses in excess of those for which provisions for credit losses are maintained.
The capital methodology is based upon several principal drivers of credit risk: exposure at default (or loan-equivalent amount), default likelihood, credit spreads, loss severity and portfolio correlation.
Credit risk capital for the consumer portfolio is based upon product and other relevant risk segmentation.
Actual segment level default and severity experience are used to estimate unexpected losses for a one-year horizon at a confidence level consistent with an AA credit rating standard.
Statistical results for certain segments or portfolios are adjusted to ensure that capital is consistent with external benchmarks, such as subordination levels on market transactions or capital held at representative monoline competitors, where appropriate.
Market risk capital The Firm calculates market risk capital guided by the principle that capital should reflect the risk of loss in the value of portfolios and financial instruments caused by adverse movements in market variables, such as interest and foreign exchange rates, credit spreads, securities prices and commodities prices.
Daily Value-at-Risk (VaR), biweekly stress-test results and other factors are used to determine appropriate capital levels.
The Firm allocates market risk capital to each business segment according to a formula that weights that segments VaR and stress-test exposures.
See Market Risk Management on pages 111116 of this Annual Report for more information about these market risk measures.
Operational risk capital Capital is allocated to the lines of business for operational risk using a risk-based capital allocation methodology which estimates operational risk on a bottom-up basis.
The operational risk capital model is based upon actual losses and potential scenario-based stress losses, with adjustments to the capital calculation to reflect changes in the quality of the control environment or the use of risk-transfer products.
The Firm believes its model is consistent with the new Basel II Framework.
Private equity risk capital Capital is allocated to privately and publicly held securities, third-party fund investments and commitments in the private equity portfolio to cover the potential loss associated with a decline in equity markets and related asset devaluations.
In addition to negative market fluctuations, potential losses in private equity investment portfolios can be magnified by liquidity risk.
The capital allocation for the private equity portfolio is based upon measurement of the loss experience suffered by the Firm and other market participants over a prolonged period of adverse equity market conditions.
Regulatory capital The Board of Governors of the Federal Reserve System (the Federal Reserve) establishes capital requirements, including well-capitalized standards for the consolidated financial holding company.
The Office of the Comptroller of the Currency (OCC) establishes similar capital requirements and standards for the Firms national banks, including JPMorgan Chase Bank, N. A. , and Chase Bank USA, N. A.
The Federal Reserve granted the Firm, for a period of 18 months following the Bear Stearns merger, relief up to a certain specified amount and subject to certain conditions from the Federal Reserves risk-based capital and leverage requirements with respect to Bear Stearns risk-weighted assets and other exposures acquired.
The amount of such relief is subject to reduction by one-sixth each quarter subsequent to the merger and expires on October 1, 2009.
The OCC granted JPMorgan Chase Bank, N. A.  similar relief from its risk-based capital and leverage requirements.
JPMorgan Chase maintained a well-capitalized position, based upon Tier 1 and Total capital ratios at December 31, 2008 and 2007, as indicated in the tables below.
For more information, see Note 30 on pages 212213 of this Annual Report.


| Year ended December 31,(in millions, except rates) 2017 2016 2015 | Net interest income – managed basis(a)(b) | Less: CIB Markets net interest income(c) | Net interest income excluding CIB Markets(a) | Average interest-earning assets | Less: Average CIB Markets interest-earning assets(c) | Average interest-earning assets excluding CIB Markets | Net interest yield on average interest-earning assets – managed basis | Net interest yield on average CIB Markets interest-earning assets(c) | Net interest yield on average interest-earning assets excluding CIB Markets |


| Quarter Ended | March 31, | 2006 | Processing and services revenues | Earnings before income taxes, equity in earnings (loss) of unconsolidated entities and minority interest | Net earnings | Basic earnings per share | Diluted earnings per share | 2005 | Processing and services revenues | Earnings before income taxes, equity in earnings (loss) of unconsolidated entities and minority interest | Net earnings | Basic earnings per share | Diluted earnings per share |


| Bank of America Corporation Bank of America, N.A. | Standardized Approach | (Dollars in millions, except as noted) | Risk-based capital metrics: | Common equity tier 1 capital | Tier 1 capital | Total capital-4 | Risk-weighted assets (in billions) | Common equity tier 1 capital ratio | Tier 1 capital ratio | Total capital ratio | Leverage-based metrics: | Adjusted quarterly average assets (in billions)(5) | Tier 1 leverage ratio | SLR leverage exposure (in billions) | SLR | December 31, 2017 | Risk-based capital metrics: | Common equity tier 1 capital | Tier 1 capital | Total capital-4 | Risk-weighted assets (in billions) | Common equity tier 1 capital ratio | Tier 1 capital ratio | Total capital ratio | Leverage-based metrics: | Adjusted quarterly average assets (in billions)(5) | Tier 1 leverage ratio |


| ($ in millions) Proceeds | 3-year variable rate bank loan-1 | 2.30% notes, due 2019 | 15-year 2.5% fixed rate note-1 | 30-year 3.0% fixed rate note-1 | Total cash proceeds |


| Years ended December 31, | 2014 | Statutory U.S. federal income tax rate | State income tax, net of federal effect | Differences in rates and taxability of foreign subsidiaries and joint ventures | Research tax credits | Other, net | Effective tax rate |


| 2018 2017 Change % Change | Work days | Revenue(in thousands) | Operating ratio | Net income(in thousands) | Diluted earnings per share | LTL tons(in thousands) | LTL shipments(in thousands) | LTL weight per shipment(lbs.) | LTL revenue per hundredweight | LTL revenue per shipment | LTL revenue per intercity mile | LTL intercity miles(in thousands) | Average length of haul(miles) |


Services Sales Our services sales represent about 20% of our net sales for 2012 and 2011.
Our services sales decreased $209 million, or 2%, during 2012 compared to 2011.
Services sales at MFC decreased about $105 million primarily due to lower volume and risk retirements on various services programs.
Services sales at MST decreased about $60 million primarily due to lower volume on various training services programs.
Services sales at IS&GS decreased about $40 million primarily due to the substantial completion of the Outsourcing Desktop Initiative for NASA (ODIN) during 2011 and lower volume on the Hanford Mission Support (Hanford) contract, partially offset by higher net sales from QTC, which was acquired in the fourth quarter of 2011.
Our services sales represent about 20% of our net sales for 2011 and 2010.
Our services sales increased $283 million, or 3%, during 2011 compared to 2010.
The increase in services sales was attributable to higher services sales at both our MFC and IS&GS business segments.
Services sales at MFC increased about $215 million primarily due to growth on the Special Operations Forces Contractor Logistics Support Services (SOF CLSS) program, partially offset by decreased volume on various services programs.
Services sales at IS&GS increased about $155 million due to activities on a number of smaller contracts.


| Year Ended December 31, | 2010 | (in millions) | Asset management fees and other income | Interest Rate | Commodity | Currency | Equity | Total asset management fees and other income | Year ended December 31, | 2010 | (in millions) | Annualized New Business Premiums-1: | Variable Life | Universal Life | Term Life | Total | Annualized new business premiums by distribution channel-1: | Prudential Agents | Third party | Total |


| Common Stock Treasury Stock | Balance, January 1, 2000 | Shares issued | Treasury stock purchased | Balance, December 31, 2000 | Shares issued | Treasury stock purchased | Balance, December 31, 2001 | Shares issued | Treasury stock purchased | Balance, December 31, 2002 |


| 2011 Quarters 2010 Quarters | (Dollars in millions, except per share information) | Reconciliation of average shareholders’ equity to average tangible shareholders’ equity | Shareholders’ equity | Goodwill | Intangible assets (excluding MSRs) | Related deferred tax liabilities | Tangible shareholders’ equity | Reconciliation of period-end common shareholders’ equity to period-end tangible common shareholders’ equity | Common shareholders’ equity | Goodwill | Intangible assets (excluding MSRs) | Related deferred tax liabilities | Tangible common shareholders’ equity | Reconciliation of period-end shareholders’ equity to period-end tangible shareholders’ equity | Shareholders’ equity | Goodwill | Intangible assets (excluding MSRs) | Related deferred tax liabilities | Tangible shareholders’ equity | Reconciliation of period-end assets to period-end tangible assets | Assets | Goodwill | Intangible assets (excluding MSRs) | Related deferred tax liabilities | Tangible assets |


Note 10.
Commitments and Contingencies Credit-Related Commitments and Contingencies: Credit-related financial instruments, which are off-balance sheet, include indemnified securities financing, unfunded commitments to extend credit or purchase assets, and standby letters of credit.
The potential loss associated with indemnified securities financing, unfunded commitments and standby letters of credit is equal to the total gross contractual amount, which does not consider the value of any collateral.
The following table summarizes the total gross contractual amounts of credit-related off-balance sheet financial instruments at December 31.
Amounts reported do not reflect participations to independent third parties.


| In millions of dollars at year end Due within 1 year Over 1 year but within 5 years Over 5 years Total | Corporate loan portfolio maturities In U.S. offices: | Commercial and industrial loans | Financial institutions | Mortgage and real estate | Lease financing | In offices outside the U.S. | Total corporate loans | Fixed/variable pricing of corporate loans with maturities due after one year-1 | Loans at fixed interest rates | Loans at floating or adjustable interest rates | Total |


| Years Ended December 31, | 2010 | (In millions) | Balance at January 1, | Additions for tax positions of prior years | Reductions for tax positions of prior years | Additions for tax positions of current year | Reductions for tax positions of current year | Settlements with tax authorities | Lapses of statutes of limitations | Balance at December 31, |


| Pro Forma Stock-Based Compensation Expense Year Ended December 31, | Millions of Dollars, Except Per Share Amounts | Net income, as reported | Stock-based employee compensation expense, reported in net income, net of tax | Total stock-based employee compensation expense determined under fair value–based method for allawards, net of tax [a] | Pro forma net income | Earnings per share – basic, as reported | Earnings per share – basic, pro forma | Earnings per share – diluted, as reported | Earnings per share – diluted, pro forma |


| December 31, 2016 December 31, 2015 | In millions | Derivatives used for hedging under GAAP | Interest rate contracts (c): | Fair value hedges | Cash flow hedges | Foreign exchange contracts: | Net investment hedges | Total derivatives designated for hedging | Derivatives not used for hedging under GAAP | Derivatives used for mortgage banking activities (d): | Interest rate contracts: | Swaps | Futures (e) | Mortgage-backed commitments | Other | Subtotal | Derivatives used for customer-related activities: | Interest rate contracts: | Swaps | Futures (e) | Mortgage-backed commitments | Other | Subtotal | Foreign exchange contracts and other | Subtotal | Derivatives used for other risk management activities: | Foreign exchange contracts and other (f) | Total derivatives not designated for hedging | Total gross derivatives | Less: Impact of legally enforceable master netting agreements | Less: Cash collateral received/paid | Total derivatives |


| December 31, Change from 2017-2016 | (in millions) | Commercial | Commercial real estate | Leases | Total commercial loans and leases | Residential mortgages | Home equity loans | Home equity lines of credit | Home equity loans serviced by others | Home equity lines of credit serviced by others | Automobile | Education-1 | Credit cards | Other retail | Total retail loans | Total loans and leases |


| Years Ended December 31, 2007/2006 2006/2005 | (Dollars in millions) | Gross written premiums | Net written premiums | Premiums earned | Incurred losses and LAE | Commission and brokerage | Other underwriting expenses | Underwriting (loss) gain | Point Chg | Loss ratio | Commission and brokerage ratio | Other underwriting expense ratio | Combined ratio | (Some amounts may not reconcile due to rounding.) |


Insurance  Overseas Generals net premiums written decreased in 2009, compared with 2008, primarily due to a strengthening of the U. S.  dollar relative to major currencies.
Refer to the table below for the impact of foreign exchange on net premiums written and earned.
On a constant dollar basis, our international retail operations experienced P&C growth in all regions, with the exception of the Far East, and reported increased A&H business in Europe, Asia, and Latin America.
In addition to the unfavorable foreign exchange impact, our London wholesale business unit reported lower constant dollar production within most product lines.
Insurance  Overseas Generals net premiums written increased in 2008, compared with 2007, primarily due to the inclusion of Combined Insurance, which added $370 million of net premiums written.
Insurance  Overseas Generals net premiums earned decreased in 2009, compared with 2008, primarily due to an unfavorable foreign exchange impact.
On a constant dollar basis, net premiums earned increased due to growth in P&C production in our international retail operations.
Our London wholesale operations reported a decline in net premiums earned due to lower production.
Insurance  Overseas Generals net premiums earned increased in 2008, compared with 2007, primarily due to the added premiums from Combined Insurance, growth in A&H production, and favorable foreign exchange impact.
Combined Insurance added $371 million to this segments 2008 net premiums earned.


| U.S. Canada Total | Proved undeveloped reserves as of December 31, 2013 | Extensions and discoveries | Revisions due to prices | Revisions other than price | Sale of reserves | Conversion to proved developed reserves | Proved undeveloped reserves as of December 31, 2014 |


| December 31, (in millions) 2008 2007 | Securities purchased under resale agreements(a) | Securities borrowed(b) | Securities sold under repurchase agreements(c) | Securities loaned |


HOVENSA L. L. C.  Joint Venture The Corporation has a 50% interest in HOVENSA, a joint venture with a subsidiary of Petroleos de Venezuela, S. A.
(PDVSA), which owns a refinery in St.  Croix, U. S.  Virgin Islands.
In January 2012, HOVENSA shut down its refinery as a result of continued substantial operating losses due to global economic conditions and competitive disadvantages versus other refiners, despite efforts to improve operating performance by reducing refining capacity to 350,000 from 500,000 barrels per day in the first half of 2011.
During 2012 and continuing into 2013, HOVENSA and the Government of the Virgin Islands engaged in discussions pertaining to HOVENSA’s plan to run the facility as an oil storage terminal while the Corporation and its joint venture partner pursue a sale of HOVENSA.
Table of Contents VALERO ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Cash Flow Hedges Cash flow hedges are used to hedge price volatility in certain forecasted feedstock and refined product purchases, refined product sales, and natural gas purchases.
The objective of our cash flow hedges is to lock in the price of forecasted feedstock, product or natural gas purchases or refined product sales at existing market prices that we deem favorable.
As of December 31, 2011, we had the following outstanding commodity derivative instruments that were entered into to hedge forecasted purchases or sales of crude oil and refined products.
The information presents the notional volume of outstanding contracts by type of instrument and year of maturity (volumes in thousands of barrels).


Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options.
Fixed maturity securities not due at a single maturity date have been included in the above table in the year of final contractual maturity.
RMBS, CMBS and ABS are shown separately in the table, as they are not due at a single maturity.
Evaluating Available-for-Sale Securities for Other-Than-Temporary Impairment As described more fully in Note 1, the Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings in accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired.
As described more fully in Note 1, effective April 1, 2009, the Company adopted new OTTI guidance that amends the methodology for determining for fixed maturity securities whether an OTTI exists, and for certain fixed maturity securities, changes how the amount of the OTTI loss that is charged to earnings is determined.
There was no change in the OTTI methodology for equity securities.
With respect to fixed maturity securities, the Company considers, amongst other impairment criteria, whether it has the intent to sell a particular impaired fixed maturity security.
The Companys intent to sell a particular impaired fixed maturity security considers broad portfolio management objectives such as asset/liability duration management, issuer and industry segment exposures, interest rate views and the overall total return focus.
In following these portfolio management objectives, changes in facts and circumstances that were present in past reporting periods may trigger a decision to sell securities that were held in prior reporting periods.
Decisions to sell are based on current conditions or the Companys need to shift the portfolio to maintain its portfolio management objectives including liquidity needs or duration targets on asset/liability managed portfolios.
The Company attempts to anticipate these types of changes and if a sale decision has been made on an impaired security, the security will be deemed other-than-temporarily impaired in the period that the sale decision was made and an OTTI loss will be recorded in earnings.
In certain circumstances, the Company may determine that it does not intend to sell a particular security but that it is more likely than not that it will be required to sell that security before recovery of the decline in estimated fair value below amortized cost.
In such instances, the fixed maturity security will be deemed other-than-temporarily impaired in the period during which it was determined more likely than not that the security will be required to be sold and an OTTI loss will be recorded in earnings.
If the Company does not have the intent to sell (i. e. , has not made the decision to sell) and it does not believe that it is more likely than not that it will be required to sell the security before recovery of its amortized cost, an impairment assessment is made, as described in Note 1.
Prior to April 1, 2009, the Companys assessment of OTTI for fixed maturity securities was performed in the same manner as described below for equity securities.


| (Square feet in thousands) United States Other Countries Total | Owned | Leased | Total |


| 2012 2011 | At December 31,(in millions) | Liability for unpaid claims and claims adjustment expense(a) | Future policy benefits for life and accident and health insurance contracts | Reserve for unearned premiums | Reinsurance assets(b) |