CBRE GROUP, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) foreign currency denominated EBITDA.
Hedge accounting was not elected for any of these contracts.
Included in the consolidated statement of operations were net gains of $5.3 million for the year ended December 31, 2014 resulting from net gains on foreign currency exchange forward contracts.
As of December 31, 2014, we had 52 foreign currency exchange forward contracts outstanding covering a notional amount of $302.0 million.
As of December 31, 2014, the fair value of forward contracts with two counterparties aggregated to a $0.5 million asset position, which was included in other current assets in the accompanying consolidated balance sheets.
As of December 31, 2014, the fair value of forward contracts with four counterparties aggregated to a $1.3 million liability position, which was included in other current liabilities in the accompanying consolidated balance sheets.
We also routinely monitor our exposure to currency exchange rate changes in connection with certain transactions and sometimes enter into foreign currency exchange option and forward contracts to limit our exposure to such transactions, as appropriate.
In the normal course of business, we also sometimes utilize derivative financial instruments in the form of foreign currency exchange contracts to attempt to mitigate foreign currency exchange exposure resulting from intercompany loans.
Included in the consolidated statements of operations were net gains of $4.3 million for the year ended December 31, 2014, and net losses of $1.8 million and $4.4 million for the years ended December 31, 2013 and 2012, respectively, resulting from net gains/losses on these foreign currency exchange option and forward contracts.
As of December 31, 2014, the fair value of forward contracts with one counterparty aggregated to a $0.8 million asset position, which was included in other current assets in the accompanying consolidated balance sheets.
As of December 31, 2014, the fair value of forward contracts with one counterparty aggregated to a $0.1 million liability position, which was included in other current liabilities in the accompanying consolidated balance sheets.
As of December 31, 2013, we did not have any such foreign currency exchange contracts outstanding.
We also enter into loan commitments that relate to the origination of commercial mortgage loans that will be held for resale.
FASB ASC Topic 815 requires that these commitments be recorded at their fair values as derivatives.
Included in the consolidated statements of operations were net gains of $2.4 million for the year ended December 31, 2014, resulting from gains on these loan commitments.
As of December 31, 2014, the fair value of such contracts with three counterparties aggregated to a $2.4 million asset position, which was included in other current assets in the accompanying consolidated balance sheets.
The net impact on our financial position and earnings resulting from loan commitments for years prior to 2014 was not significant.6.


NOTES to the consolidated financial statements Research and Development Research and development costs, including new product development programs, regulatory compliance and clinical research, are expensed as incurred.
Pension Plans The Company maintains pension plans covering certain international employees, which the Company accounts for in accordance with FASB Statement No.87, Employers Accounting for Pensions.
The assets, liabilities and costs associated with these plans were not material in 2004, 2003 and 2002.
Net Income Per Common Share Net income per common share is based upon the weighted average number of common shares and common share equivalents outstanding each year.
New Accounting Standards On December 16, 2004, the FASB issued Statement No.123(R), Share-Based Payment, which is a revision of Statement No.123, Accounting for Stock-Based Compensation.
Statement No.123(R) supersedes APB Opinion No.25, Accounting for Stock Issued to Employees and amends Statement No.95, Statement of Cash Flows.
In general, Statement No.123(R) contains similar accounting concepts as those described in Statement No.123.
However, Statement No.123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.
Pro forma disclosure is no longer an alternative.
The Company expects to adopt Statement No.123(R) when it becomes effective on July 1, 2005.
Statement No.123(R) permits public companies to adopt the new requirements using one of two methods: 1.
A modified prospective method in that compensation cost is recognized beginning with the effective date (a) based on the requirements of Statement No.123(R) for all share-based payments granted after the effective date of Statement No.123(R) and (b) based on the requirements of Statement No.123 for all awards granted to employees before July 1, 2005 that remain unvested as of July 1, 2005.2.
A modified retrospective method that includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under Statement No.123 for purposes of pro forma disclosures either (a) for all prior periods presented or (b) for prior interim periods of the year of adoption.
The Company is currently evaluating which method it will use to adopt the requirements of Statement No.123(R).
As permitted by Statement No.123, the Company is currently accounting for share-based payments to employees using Opinion No.25s intrinsic value method and, as such, generally recognizes no compensation cost for employee stock options, except as disclosed in Note M.  Accordingly, the adoption of Statement No.123(R)s fair value method will impact the Companys statements of operations.
The impact of adoption of Statement No.123(R) cannot be quantified at this time because it will depend on the level of share-based payments granted in the future and the method used to value such awards.
However, had the Company adopted Statement No.123(R) in prior periods, the impact of that standard would have approximated the impact of Statement No.123 and net income and net income per share would have been reported as the following pro forma amounts:


(a) This category includes wind energy de-bundled from RECs and also includes Windsource RECs.
Xcel Energy uses RECs to meet or exceed state resource requirements and may sell surplus RECs.
(b) Includes energy from other sources, including solar, biomass, oil and refuse.
Distributed generation from the Solar*Rewards program is not included, and was approximately 0.198, 0.152, and 0.146 net million KWh for 2013, 2012 and 2011, respectively NATURAL GAS UTILITY OPERATIONS Overview The most significant developments in the natural gas operations of the utility subsidiaries are continued volatility in natural gas market prices, uncertainty regarding political and regulatory developments that impact hydraulic fracturing, safety requirements for natural gas pipelines and the continued trend of declining use per customer, as a result of improved building construction technologies, higher appliance efficiencies and conservation.
From 2000 to 2013, average annual sales to the typical residential customer declined 17 percent and the typical small commercial and industrial customer declined 11 percent on a weather-normalized basis.
Although wholesale price increases do not directly affect earnings because of natural gas cost-recovery mechanisms, high prices can encourage further efficiency efforts by customers.
The Pipeline and Hazardous Materials Safety Administration Pipeline Safety Act — The Pipeline Safety, Regulatory Certainty, and Job Creation Act, signed into law in January 2012 (Pipeline Safety Act) requires additional verification of pipeline infrastructure records by pipeline owners and operators to confirm the maximum allowable operating pressure of lines located in high consequence areas or more-densely populated areas.
The DOT Pipeline and Hazardous Materials Safety Administration (PHMSA) will require operators to re-confirm the maximum allowable operating pressure if records are inadequate.
This process could cause temporary or permanent limitations on throughput for affected pipelines.
In addition, the Pipeline Safety Act requires PHMSA to issue reports and develop new regulations including: requiring use of automatic or remote-controlled shut-off valves; requiring testing of certain previously untested transmission lines; and expanding integrity management requirements.
The Pipeline Safety Act also raises the maximum penalty for violating pipeline safety rules to $2 million per day for related violations.
While Xcel Energy cannot predict the ultimate impact Pipeline Safety Act will have on its costs, operations or financial results, it is taking actions that are intended to comply with the Pipeline Safety Act and any related PHMSA regulations as they become effective.
PSCo can generally recover costs to comply with the transmission and distribution integrity management programs through the PSIA rider.
NSP-Minnesota Public Utility Regulation Summary of Regulatory Agencies and Areas of Jurisdiction — Retail rates, services and other aspects of NSP-Minnesota’s retail natural gas operations are regulated by the MPUC and the NDPSC within their respective states.
The MPUC has regulatory authority over security issuances, certain property transfers, mergers with other utilities and transactions between NSP-Minnesota and its affiliates.
In addition, the MPUC reviews and approves NSP-Minnesota’s natural gas supply plans for meeting customers’ future energy needs.
NSP-Minnesota is subject to the jurisdiction of the FERC with respect to certain natural gas transactions in interstate commerce.
NSP-Minnesota is subject to the DOT, the Minnesota Office of Pipeline Safety, the NDPSC and the SDPUC for pipeline safety compliance, including pipeline facilities used in electric utility operations for fuel deliveries.


| Year Ended December 31, | (dollars in millions) | Service charges and fees | Card fees | Trust and investment services fees | Mortgage banking fees | Capital markets fees | Foreign exchange and letter of credit fees | Bank-owned life insurance income | Securities gains, net | Other income-1 | Noninterest income |


Average interest-earning deposits with banks, which are primarily maintained with the Federal Reserve Bank, increased significantly in the comparison to the prior year period as we continued to enhance our liquidity position.
Average noninterest-earning assets decreased in 2014 compared with 2013, primarily reflecting lower unsettled securities sales, partially offset by higher investment securities valuation adjustments, both of which are included in noninterest-earning assets for average balance sheet purposes.
Average total deposits increased $10.8 billion in 2014 compared with the prior year, driven by an increase of $12.1 billion in average transaction deposits, which grew to $189 billion in 2014.
Higher average money market deposits, average noninterest-bearing deposits, and average interestbearing demand deposits drove the increase in both commercial and consumer average transaction deposits.
These increases were partially offset by a decrease of $2.6 billion in average retail certificates of deposit attributable to runoff of maturing accounts.
Total deposits at December 31, 2014 were $232.2 billion compared with $220.9 billion at December 31, 2013 and are further discussed within the Consolidated Balance Sheet Review section of this Item 7.
Average total deposits represented 68% of average total assets for 2014 and 69% for 2013.
Average borrowed funds increased in 2014 compared with 2013 primarily due to increases in average Federal Home Loan Bank (FHLB) borrowings, average bank notes and senior debt, and average subordinated debt, in part to enhance our liquidity position.
These increases were partially offset by a decline in average commercial paper.
Total borrowed funds at December 31, 2014 were $56.8 billion compared with $46.1 billion at December 31, 2013 and are further discussed within the Consolidated Balance Sheet Review section of this Item 7.
The Liquidity Risk Management portion of the Risk Management section of this Item 7 includes additional information regarding our borrowed funds.
Business Segment Highlights Total business segment earnings were $3.9 billion in 2014 and $4.0 billion in 2013.
The Business Segments Review section of this Item 7 includes further analysis of our business segment results during 2014 and 2013, including presentation differences from Note 24 Segment Reporting in our Notes To Consolidated Financial Statements in Item 8 of this Report.
Note 24 Segment Reporting presents results of businesses for 2014, 2013 and 2012.
We provide a reconciliation of total business segment earnings to PNC total consolidated net income as reported on a GAAP basis in Note 24 Segment Reporting in our Notes To Consolidated Financial Statements in Item 8 of this Report.


| Homes Closed and Home Sales Revenue Fiscal Year Ended September 30, | Homes Closed | 2014 | East | Midwest | Southeast | South Central | Southwest | West | 28,670 |


| In millions 2018 2017 2016 | Balance at January 1 | (Additions) reductions based on tax positions related to current year | (Additions) for tax positions of prior years | Reductions for tax positions of prior years | Settlements | Expiration of statutes oflimitations | Currency translation adjustment | Balance at December 31 | Non-financial Assets | (Dollars in thousands) | Lennar Homebuilding: | Finished homes and construction in progress -2 | Land and land under development -3 | Investments in unconsolidated entities -4 | Rialto Investments: | Real estate owned -5 | Total JV Assets | (Dollars in thousands) | Partner Type: | Financial | Land Owners/Developers | Other Builders | Strategic | Total | Land seller debt and other debt | Total JV debt | Lennar’s Investment | (Dollars in thousands) | Top Ten JVs -1: | Platinum Triangle Partners | Heritage Fields El Toro | Central Park West Holdings | Newhall Land Development | Runkle Canyon | Ballpark Village | LS College Park | MS Rialto Residential Holdings | Treasure Island Community Development | Rocking Horse Partners | 10 largest JV investments | Other JVs | Total | Land seller debt and other debt | Total JV debt |


| $ in billions Total Equity Fixed Income Balanced Money Market-5 Alternatives-6 | December 31, 2016 | Long-term inflows-2 | Long-term outflows | Long-term net flows | Net flows in non-management fee earning AUM | Net flows in institutional money market funds | Total net flows | Market gains and losses-2 | Transfers-5 | Acquisitions/dispositions, net | Foreign currency translation | December 31, 2017 | Average AUM | % of total average AUM | December 31, 2015 | Long-term inflows | Long-term outflows | Long-term net flows | Net flows in non-management fee earning AUM | Net flows in institutional money market funds | Total net flows | Market gains and losses-2 | Acquisitions/dispositions, net | Foreign currency translation | December 31, 2016 | Average AUM | % of total average AUM | December 31, 2014 | Long-term inflows | Long-term outflows | Long-term net flows | Net flows in non-management fee earning AUM | Net flows in institutional money market funds | Total net flows | Market gains and losses-2 | Acquisitions/dispositions, net | Foreign currency translation | December 31, 2015 | Average AUM | % of total average AUM |


PRUDENTIAL FINANCIAL, INC.  Notes to Consolidated Financial Statements Concentrations of Financial Instruments The Company monitors its concentrations of financial instruments and mitigates credit risk by maintaining a diversified investment portfolio which limits exposure to any one issuer.
As of both December 31, 2016 and 2015, the Companys exposure to concentrations of credit risk of single issuers greater than 10% of the Companys stockholders equity included securities of the U. S.  government, certain U. S.  government agencies and certain securities guaranteed by the U. S.  government, as well as the securities disclosed below.


| ($ in millions) 2013 Change 2012 Change 2011 | Materials and production | Marketing and administrative | Research and development-1 | Restructuring costs | Equity income from affiliates | Other (income) expense, net | $38,488 |


| (In thousands) 2017 % of Revenue 2016 % of Revenue % Change | Domestic Segment | Revenues | Costs of revenue | Operating expenses | Total costs and expenses | Domestic operating earnings | Global Segment | Revenues | Costs of revenue | Operating expenses | Total costs and expenses | Global operating earnings | Other, net | Consolidated operating earnings |


LUBRICANTS AND SPECIALTY PRODUCTS OPERATIONS Our lubricants and specialty products operations consist of our Petro-Canada Lubricants and Tulsa rack forward businesses.
Our Petro-Canada Lubricants business produces automotive, industrial and food grade lubricants and greases, base and process oils and specialty fluids and is the largest manufacturer of high margin Group III base oils in North America and is the world's largest producer of pharmaceutical white oils.
Products are marketed in 80 countries worldwide to a diverse customer base through a global sales force and distributor network.
Our Tulsa Refinery produces high quality base oils, process oils, waxes, horticultural oils and asphalt performance products.
Products are marketed worldwide through strategically located terminals in the United States and selected distributors internationally.
The following table sets forth information about our lubricants and specialty products operations and includes our Petro-Canada Lubricants business for the period February 1, 2017 (date of acquisition) through December 31, 2017.


| 2011 2010 2009 | Common Stock | Balance January 1 | Mandatory conversion of 6% convertible preferred stock | Issuances of shares in connection with the Merger | Issuances-1 | Purchases of treasury stock | Cancellations of treasury stock-2 | Balance December 31 | Pension Plans | December 31 | Net periodic benefit cost | Discount rate | Expected rate of return on plan assets | Salary growth rate | Benefit obligation | Discount rate | Salary growth rate | December 31 | Health care cost trend rate assumed for next year | Rate to which the cost trend rate is assumed to decline | Year that the trend rate reaches the ultimate trend rate |


Commitments and Contingencies—Litigation,” to our consolidated financial statements.
We expect that this increase in selling, general and administrative expense will be offset somewhat by the moratorium of the medical device tax in the U. S.  for the next two calendar years beginning in January 2016.
Income Tax Provision We recorded an income tax provision of $27.7 million for fiscal 2016, compared to an income tax benefit of $84.9 million for fiscal 2015.
The increase in income tax provision for fiscal 2016 was due to the fact that we had a full valuation allowance on most of our federal, state and certain foreign deferred tax assets prior to March 31, 2015, at which time most of the valuation allowance was reversed.
The income tax provision for fiscal 2016 was primarily due to the income before taxes of $65.8 million generated in fiscal 2016, primarily in the U. S.  and Germany.
The income tax benefit in fiscal 2015 was comprised of an $87.1 million deferred tax benefit primarily due to the release of our valuation allowance on certain of our deferred tax assets in the year ended March 31, 2015, partially offset by a current income tax provision of $2.2 million in U.
S and Germany.
Net Income For fiscal 2016, we recognized net income of $38.1 million, or $0.90 per basic share and $0.85 per diluted share, compared to $113.7 million, or $2.80 per basic share and $2.65 per diluted share for fiscal 2015.
Our net income for fiscal 2016 was driven primarily to higher Impella product revenue due to greater utilization of our Impella products in the U. S.  and Europe, partially offset by the increase in income tax provision for fiscal 2016 due to the fact that we had a full valuation allowance on most of our deferred tax assets prior to March 31, 2015, at which time most of the valuation allowance was reversed.
Our net income for fiscal 2015 included an income tax benefit of $84.9 million, primarily due to the release of our valuation allowance on certain of our deferred tax assets.


| Net realized/unrealized gains (losses) included in Transfers in and/or Purchases, issuances Unrealized gains | December 31, | In millions of dollars | State and municipal | Foreign government | Corporate | Equity securities | Other debt securities | Non-marketable equity securities | Total investments | Loans | Mortgage servicing rights | Other financial assets measured on a | recurring basis | Liabilities | Interest-bearing deposits | Federal funds purchased and securities | loaned or sold under agreements | to repurchase | Trading account liabilities | Securities sold, not yet purchased | Short-term borrowings | Long-term debt | Other financial liabilities measured on a | recurring basis |


| Years Ended December 31, | 2010 | (In millions, except | per share data) | Total revenues | Income (loss) from continuing operations, net of income tax, attributable to common shareholders | Income (loss) from continuing operations, net of income tax, attributable to common shareholders per common share: | Basic | Diluted |


To minimize the income volatility resulting from the remeasurement of net monetary assets and payables denominated in a currency other than the functional currency, we enter into foreign currency forward contracts, which are considered economic hedges.
The objective is to offset the gain or loss from remeasurement with the gain or loss from the fair market valuation of the forward contract.
These derivative instruments are not designated as hedges under GAAP.
The table below summarizes our outstanding foreign currency forward contracts.
Only the U. S.  dollar forward contracts are designated and qualify for hedge accounting as of each period presented below.
The currencies in this table represent 94 percent and 95 percent of the notional amounts of contracts outstanding as of December 31, 2013 and 2012.


| December 31, 2010 December 31, 2009 | (in millions) | Assets: | Fixed maturities | Equity securities | Mortgage and other loans receivable | Finance receivables, net of allowance | Other invested assets* | Securities purchased under agreements to resell | Short-term investments | Cash | Unrealized gain on swaps, options and forward transactions | Liabilities: | Policyholder contract deposits associated with investment-type contracts | Securities sold under agreements to repurchase | Securities and spot commodities sold but not yet purchased | Unrealized loss on swaps, options and forward transactions | Trust deposits and deposits due to banks and other depositors | Federal Reserve Bank of New York Commercial Paper Funding Facility | Federal Reserve Bank of New York credit facility | Other long-term debt | Buildings and improvements | Office furniture and equipment | Manufacturing and engineering equipment | Vehicles |


Coal Combustion Residuals In June 2010 the EPA issued a proposed rule on coal combustion residuals (CCRs) that contained two primary regulatory options: (1) regulating CCRs destined for disposal in landfills or received (including stored) in surface impoundments as so-called “special wastes” under the hazardous waste program of RCRASubtitle C; or (2) regulating CCRs destined for disposal in landfills or surface impoundments as non-hazardous wastes under Subtitle D of RCRA.
Under both options, CCRs that are beneficially reused in certain processes would remain excluded from hazardous waste regulation.
In April 2015 the EPA published the final CCR rule with the material being regulated under the second scenario presented above - as non-hazardous wastes regulated under RCRA Subtitle D.  The final regulations create new compliance requirements including modified storage, new notification and reporting practices, product disposal considerations, and CCR unit closure criteria.
Entergy believes that on-site disposal options will be available at its facilities, to the extent needed for CCR that cannot be transferred for beneficial reuse.
In December 2016, the Water Infrastructure Improvements for the Nation Act was signed into law, which authorizes states to regulate coal ash rather than leaving primary enforcement to citizen suit actions.
States may submit to the EPA proposals for permit programs.
Entergy is monitoring state agency actions and will participate in the regulatory development process.


NOTE 15.
LEASES, OTHER COMMITMENTS, AND CONTINGENCIES Our leases are generally for warehouse space and equipment.
Rent expense under all operating leases from continuing operations was $189.4 million in fiscal 2018, $188.1 million in fiscal 2017, and $189.1 million in fiscal 2016.
Some operating leases require payment of property taxes, insurance, and maintenance costs in addition to the rent payments.
Contingent and escalation rent in excess of minimum rent payments and sublease income netted in rent expense were insignificant.
Noncancelable future lease commitments are:


| December 31 | 2008 | Other current assets | Sundry | Other current liabilities | Deferred income taxes | $18.9 |


During 2012, CMG revenue increased by $104.9 compared to 2011, due principally to an organic revenue increase of $91.8.
The organic revenue increase was primarily due to net client wins and net higher spending from existing clients across all disciplines, primarily in our events marketing and public relations businesses.
The international organic revenue increase occurred throughout nearly all regions, primarily in the Asia Pacific region, most notably in Australia, Singapore and China, and in the United Kingdom, where our events marketing business benefited from work performed for the London Olympics in the third quarter of 2012.
Revenues in the events marketing business can fluctuate due to timing of completed projects where we act as principal, as revenue is typically recognized when the project is complete.
The domestic organic revenue increase was primarily due to growth in our public relations and sports marketing businesses.


| 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter | 2009 | (Unaudited) (In millions, except per share data) | Revenues | Gross margin | Gross margin % | Restructuring charges | Goodwill impairment | Intangible and other asset impairment | Net income | Basic earnings per common share | Diluted earnings per common share | Weighted average common shares outstanding | Diluted weighted average common shares outstanding | Cash dividends declared per common share | Price range of common stock | High | Low |


Cost of Sales and Service Revenues Cost of product sales, cost of service revenues, income from operating investments, net, and general and administrative expenses were as follows:


| Fiscal Year ($ in millions) | 2007 | 2008 | 2009 | 2010 | 2011 | Thereafter | Total minimum lease payments | Less: Amount representing interest | Present value of net minimum lease payments |


E.  During 2014, we acquired real estate for $11.6 million via exchanges of our properties.
F.  Accrued costs on properties under development resulted in an increase in buildings and improvements and accounts payable of $2.6 million and $4.0 million at December 31, 2016 and 2014, respectively.16.
Employee Benefit Plan We have a 401(k) plan covering substantially all of our employees.
Under our 401(k) plan, employees may elect to make contributions to the plan up to a maximum of 60% of their compensation, subject to limits under the Code.
We match 50% of each of our employee's salary deferrals up to the first 6% of the employee's eligible compensation.
Our aggregate matching contributions each year have been immaterial to our results of operations.17.
Common Stock Incentive Plan In 2012, our Board of Directors adopted and stockholders approved the Realty Income Corporation 2012 Incentive Award Plan, or the 2012 Plan, to enable us to motivate, attract and retain the services of directors and employees considered essential to our long-term success.
The 2012 Plan offers our directors and employees an opportunity to own our stock or rights that will reflect our growth, development and financial success.
Under the terms of the 2012 plan, the aggregate number of shares of our common stock subject to options, restricted stock, stock appreciation rights, restricted stock units and other awards, will be no more than 3,985,734 shares.
The 2012 Plan has a term of ten years from the date it was adopted by our Board of Directors.
The amount of share-based compensation costs recognized in general and administrative expense on our consolidated statements of income was $12.0 million during 2016, $10.4 million during 2015, and $12.0 million during 2014.
A.
Restricted Stock The following table summarizes our common stock grant activity under our 2012 Plan.
Our outstanding restricted stock vests over periods ranging from immediately to five years.


UNITED PARCEL SERVICE, INC.  AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 43 Income Tax Expense The following table sets forth income tax expense and our effective tax rate for the years ended December 31, 2017, 2016 and 2015 (in millions):


The Business Banking segment provides deposit, lending, cash management and other financial services to small businesses and professionals through the Companys banking office network and several other delivery channels, including business banking centers, telephone banking, Internet banking and automated teller machines.
The Commercial Banking segment provides a wide range of credit products and banking services to middle-market and large commercial customers, mainly within the markets the Company serves.
Among the services provided by this segment are commercial lending and leasing, letters of credit, deposit products and cash management services.
The Commercial Real Estate segment provides credit services which are secured by various types of multifamily residential and commercial real estate and deposit services to its customers.
Activities of this segment include the origination, sales and servicing of commercial real estate loans.
The Discretionary Portfolio segment includes securities, residential mortgage loans and other assets; short-term and long-term borrowed funds; brokered deposits; and Cayman Islands branch deposits.
This segment also provides foreign exchange services to customers.
The Residential Mortgage Banking segment originates and services residential real estate loans for consumers and sells substantially all of those loans in the secondary market to investors or to the Discretionary Portfolio segment.
The segment periodically purchases servicing rights to loans that have been originated by other entities.
Residential real estate loans held for sale are included in the Residential Mortgage Banking segment.
The Retail Banking segment offers a variety of services to consumers through several delivery channels that include banking offices, automated teller machines, telephone banking and Internet banking.
The All Other category includes other operating activities of the Company that are not directly attributable to the reported segments; the difference between the provision for credit losses and the calculated provision allocated to the reportable segments; goodwill and core deposit and other intangible assets resulting from acquisitions of financial institutions; merger-related gains and expenses resulting from acquisitions; the net impact of the Companys internal funds transfer pricing methodology; eliminations of transactions between reportable segments; certain nonrecurring transactions; the residual effects of unallocated support systems and general and administrative expenses; and the impact of interest rate risk management strategies.
The amount of intersegment activity eliminated in arriving at consolidated totals was included in the All Other category as follows:


| Year Ended December 31, Change from 2008 to 2009 Change from 2009 to 2010 | 2008 | (In thousands, except percentages) | Cost of net revenues: | Marketplaces | As a percentage of total Marketplaces net revenues | Payments | As a percentage of total Payments net revenues | Communications | As a percentage of total Communications net revenues | Total cost of net revenues | As a percentage of net revenues |


On January 29, 2003, the Company declared a quarterly cash dividend of $.455 per share, payable on February 28, 2003, to common shareholders of record on February 14, 2003.
MetLife, Inc.  Notes to Consolidated Financial Statements — (Continued) Casualty Insurance Company intends to vigorously defend these matters.
However, any adverse rulings could result in an increase in the Company’s hurricane-related claim exposure and losses.
Based on information known by management, it does not believe that additional claim losses resulting from Hurricane Katrina will have a material adverse impact on the Company’s consolidated financial statements.
Argentina The Argentinean economic, regulatory and legal environment, including interpretations of laws and regulations by regulators and courts, is uncertain.
Potential legal or governmental actions related to pension reform, fiduciary responsibilities, performance guarantees and tax rulings could adversely affect the results of the Company.
Upon acquisition of Citigroup’s insurance operations in Argentina, the Company established insurance liabilities, most significantly death and disability policy liabilities, based upon its interpretation of Argentinean law at the time and the Company’s best estimate of its obligations under such law.
In 2006, a decree was issued by the Argentine Government regarding the taxability of pesification-related gains resulting in the reduction of certain tax liabilities.
In 2007, pension reform legislation in Argentina was enacted which changed the Company’s obligations and resulted in the elimination of the death and disability liabilities and the establishment of a liability for servicing obligations.


Defined Contribution Plans We maintain a nonleveraged employee stock ownership plan (ESOP) which forms part of the Air Products and Chemicals, Inc.  Retirement Savings Plan (RSP).
The ESOP was established in May of 2002.
The balance of the RSP is a qualified defined contribution plan including a 401(k) elective deferral component.
A substantial portion of U. S.  employees are eligible and participate.
We treat dividends paid on ESOP shares as ordinary dividends.
Under existing tax law, we may deduct dividends which are paid with respect to shares held by the plan.
Shares of the Company’s common stock in the ESOP totaled 3,031,534 as of 30 September 2016.
Our contributions to the RSP include a Company core contribution for certain eligible employees who do not receive their primary retirement benefit from the defined benefit pension plans, with the core contribution based
distillate retail gross margin partially offset by higher administrative expenses.
The refining and wholesale marketing margin in 2003 averaged 6.0 cents per gallon, versus 2002 level of 3.9 cents.
The gasoline and distillate gross margin for its retail business was 12.3 cents per gallon in 2003, as compared to 10.1 cents per gallon in 2002.
The higher administrative expenses were due primarily to higher employee related costs.
Results for 2003 also included $34 million of gains from the sale of certain interests in refined product pipelines.
Derivative losses, which are included in the refining and wholesale marketing margin, were $272 million in 2004 compared to $158 million in 2003 and $124 million in 2002.
These derivative losses were generally incurred to mitigate the price risk of certain crude oil and other feedstock purchases, to protect carrying values of excess inventories and to protect crack spread values.
Gains on the sale of SSA stores included in segment income were $17 million, $8 million and $37 million for 2004, 2003 and 2002.
IG segment income increased by $51 million in 2004 from 2003, following a decrease of $26 million in 2003 from 2002.
The increase in 2004 was primarily due to increased earnings from our investment in AMPCO and higher income from LNG operations, partially offset by costs associated with ongoing development of certain integrated gas projects and lower margins from gas marketing activities, including recognized changes in the fair value of derivatives used to support those activities.
The AMPCO methanol plant in Equatorial Guinea operated at a 95 percent on-stream factor in 2004 and prices were strong, averaging nearly $227 per ton for the year.
Additionally, the 2003 results included an impairment charge of $22 million on an equity method investment and a loss of $17 million on the termination of two tanker operating leases.
The decrease in 2003 is due to the impairment charge of $22 million and the loss of $17 million on leases as discussed above and higher expenses related to the development of an integrated gas business, partially offset by higher AMPCO earnings.


| Amount of gain (loss) recognized in net income on derivatives for the year ended December 31, | Derivatives not designated as hedging instruments | (in millions) | Interest rate contracts | Foreign exchange contracts | Equity contracts | Credit contracts | Other contracts -1 | Total | December 31, 2009 | Carrying amount | ($ in millions) | Fixed maturity securities: | Public | Private | Equity securities | Mortgage loans: | Commercial | Residential | Real estate held for sale | Real estate held for investment | Policy loans | Other investments | Total invested assets | Cash and cash equivalents | Total invested assets and cash | December 31, 2009 | Carrying amount | ($ in millions) | U.S. Government and agencies | States and political subdivisions | Non-U.S. governments | Corporate — public | Corporate — private | Residential pass-through securities | Commercial mortgage-backed securities | Residential collateralized mortgage obligations | Asset-backed securities | Total fixed maturity securities | December 31, 2009 | Risk Management Strategy | Primary duration-managed | Duration-monitored | Non duration-managed | Total |


| 2008 2007 2006 | Gain on disposition, adjustment or impairment of acquired assets and obligations | Consulting and professional fees | Employee severance and retention | Information technology integration | In-process research & development | Integration personnel | Facility and employee relocation | Distributor acquisitions | Sales agent and lease contract terminations | Other | Acquisition, Integration and Other |


| December 31, 2008Dollars in millions 1 Year or Less After 1 Year through 5 Years After 5 Years through 10 Years After 10 Years Total | SECURITIESAVAILABLEFORSALE | US Treasury and government agencies | Residential mortgage-backed | Commercial mortgage-backed | Asset-backed | State and municipal | Other debt | Total debt securities available for sale | Fair value | Weighted-average yield, GAAP basis | SECURITIESHELDTOMATURITY | Commercial mortgage-backed | Asset-backed | Other debt | Total debt securities held to maturity | Fair value | Weighted-average yield, GAAP basis | (In millions) | Assets (a) | Liabilities |


| Year Ended December | in millions | Fixed Income, Currency and Commodities Client Execution | Equities client execution1 | Commissions and fees | Securities services | Total Equities | Total net revenues | Operating expenses | Pre-tax earnings | December 31, 2010 | Amortized Cost | (in millions) | Short-term investments and cash equivalents | Fixed maturities: | Corporate securities | Commercial mortgage-backed securities | Residential mortgage-backed securities | Asset-backed securities | Foreign government bonds | U.S. government authorities and agencies and obligations of U.S. states | Total fixed maturities | Equity securities | Total trading account assets supporting insurance liabilities | December 31, 2010 | Industry-1 | (in millions) | Corporate Securities: | Manufacturing | Utilities | Services | Finance | Energy | Transportation | Retail and Wholesale | Other | Total Corporate Securities |


| December 31,   2007 March 31,   2008 June 30,   2008 September 30,   2008 December 31,   2008 | (In millions) | Regulatory capital | Arbitrage — multi-sector CDO | Arbitrage — corporate | Total |


GECS global revenues decreased 1% to $26.4 billion in 2010, compared with $26.7 billion and $37.2 billion in 2009 and 2008, respectively, primarily as a result of decreases in Europe.
GECS global revenues as a percentage of total GECS revenues were 52% in 2010, compared with 51% and 53% in 2009 and 2008, respectively.
GECS global revenue decreased by 28% in 2009 from $37.2 billion in 2008, primarily due to dispositions in Europe and the Pacific Basin.


| Expected to mature before December 31, | December 31, 2015 | ($ millions, except percentages) | Fixed rate debt | Principal ($) | Fixed rate payable | Floating rate debt | Principal ($) | Variable rate payable(ii) | Derivatives - interest rate swaps | Notional principal ($) | Fixed rate receivable | Variable rate payable |


| Shares (In millions) | $11.00 | $12.00 | $13.00 | $14.00 | $15.00 | $16.00 | $17.00 | $18.00 | $19.00 | $20.00 |


During fiscal 2013 we generated $1.4 billion in cash from operations.
We also received $165 million in cash from the issuance of common stock under employee stock plans.
During the same period we used $308 million in cash for net purchases of investments, $292 million for the repurchase of shares of our common stock under our stock repurchase programs, $203 million for the payment of cash dividends, and $195 million for capital expenditures.


During fiscal 2017, the Internal Revenue Service (IRS) concluded its field examination of our federal tax returns for fiscal 2013 and 2014.
The audit closure and related adjustments did not have a material impact on our results of operations or financial position.
In fiscal 2018, we recorded an adjustment related to a prior year which increased income tax expense by $40.9 million.
We have notified and are working with the IRS to resolve the issue.
We determined the adjustment to be immaterial to our Consolidated Statements of Earnings for the fiscal year ended May 27, 2018.
We have effectively settled all issues with the IRS for fiscal years 2014 and prior.
During fiscal 2017, the Brazilian tax authority, Secretaria da Receita Federal do Brasil (RFB), concluded audits of our 2012 and 2013 tax return years.
These audits included a review of our determinations of amortization of certain goodwill arising from the acquisition of Yoki.
The RFB has proposed adjustments that effectively eliminate the goodwill amortization benefits related to this transaction.
We believe we have meritorious defenses and intend to contest the disallowance.
We apply a more-likely-than-not threshold to the recognition and derecognition of uncertain tax positions.
Accordingly, we recognize the amount of tax benefit that has a greater than 50 percent likelihood of being ultimately realized upon settlement.
Future changes in judgment related to the expected ultimate resolution of uncertain tax positions will affect earnings in the period of such change.
The following table sets forth changes in our total gross unrecognized tax benefit liabilities, excluding accrued interest, for fiscal 2018 and fiscal 2017.
Approximately $135 million of this total in fiscal 2018 represents the amount that, if recognized, would affect our effective income tax rate in future periods.
This amount differs from the gross unrecognized tax benefits presented in the table because certain of the liabilities below would impact deferred taxes if recognized.
We also would record a decrease in U. S.  federal income taxes upon recognition of the state tax benefits included therein.


| Facility Drawn(a) Available Cash Liquidity Facility | (Millions of Dollars) | NSP-Minnesota | PSCo | SPS | Xcel Energy — Holding Company | NSP-Wisconsin(b) | Total |


| Dollars in millions 2015 2014 | January 1 | Total net charge-offs | Provision for credit losses | Net change in allowance for unfunded loan commitments and letters of credit | Write-offs of purchased impaired loans (a) | Other | December 31 | Net charge-offs to average loans (for the year ended) | Allowance for loan and lease losses to total loans (a) | Commercial lending net charge-offs | Consumer lending net charge-offs | Total net charge-offs | Net charge-offs to average loans (for the year ended) | Commercial lending | Consumer lending |


RETIREMENT BENEFITS Pension and Postretirement Plans The Company has several non-contributory defined benefit pension plans covering certain U. S. employees and has various defined benefit pension and termination indemnity plans covering employees outside the U. S. The U. S. qualified defined benefit plan was frozen effective January 1, 2008 for most employees.
Accordingly, no additional compensation-based contributions have been credited to the cash balance portion of the plan for existing plan participants after 2007.
However, certain employees covered under the prior final pay plan formula continue to accrue benefits.
The Company also offers postretirement health care and life insurance benefits to certain eligible U. S. retired employees, as well as to certain eligible employees outside the U. S. The Company also sponsors a number of non-contributory, nonqualified pension plans.
These plans, which are unfunded, provide supplemental defined pension benefits to certain U. S. employees.
With the exception of certain employees covered under the prior final pay plan formula, the benefits under these plans were frozen in prior years.
The plan obligations, plan assets and periodic plan expense for the Company’s most significant pension and postretirement benefit plans (Significant Plans) are measured and disclosed quarterly, instead of annually.
The Significant Plans captured approximately 90% of the Company’s global pension and postretirement plan obligations as of December 31, 2016.
All other plans (All Other Plans) are measured annually with a December 31 measurement date.
Net (Benefit) Expense The following table summarizes the components of net (benefit) expense recognized in the Consolidated Statement of Income for the Company’s pension and postretirement plans, for Significant Plans and All Other Plans:


| (in millions) December 31,2017 December 31,2016 | Available-for-sale investments | Held-to-maturity investments | Trading investments: | Consolidated sponsored investment funds: | Debt securities | Equity securities | Other equity and debt securities | Deferred compensation plan mutual funds | Total trading investments | Other investments: | Equity method investments-1 | Cost method investments-2 | Carried interest-3 | Total other investments | Total investments |


As of Dec.  31, 2005 and 2004, a 100-basis-point change in the benchmark rate on Xcel Energy’s variable rate debt would impact pretax interest expense by approximately $10.3 million and $6.8 million, respectively.
See Note 12 to the Consolidated Financial Statements for a discussion of Xcel Energy and its subsidiaries’ interest rate swaps.
Xcel Energy and its subsidiaries also maintain trust funds, as required by the Nuclear Regulatory Commission (NRC), to fund certain costs of nuclear decommissioning, which are subject to interest rate risk and equity price risk.
As of Dec.  31, 2005 and 2004, these funds were invested primarily in domestic and international equity securities and fixed-rate fixed-income securities.
Per NRC mandates, these funds may be used only for activities related to nuclear decommissioning.
The accounting for nuclear decommissioning recognizes that costs are recovered through rates; therefore fluctuations in equity prices or interest rates do not have an impact on earnings.
Credit Risk In addition to the risks discussed previously, Xcel Energy and its subsidiaries are exposed to credit risk.
Credit risk relates to the risk of loss resulting from the nonperformance by a counterparty of its contractual obligations.
Xcel Energy and its subsidiaries maintain credit policies intended to minimize overall credit risk and actively monitor these policies to reflect changes and scope of operations.
Xcel Energy and its subsidiaries conduct standard credit reviews for all counterparties.
Xcel Energy employs additional credit risk control mechanisms when appropriate, such as letters of credit, parental guarantees, standardized master netting agreements and termination provisions that allow for offsetting of positive and negative exposures.
The credit exposure is monitored and, when necessary, the activity with a specific counterparty is limited until credit enhancement is provided.
At Dec.  31, 2005, a 10-percent increase in prices would have resulted in a net mark-to-market increase in credit risk exposure of $44.2 million, while a decrease of 10 percent would have resulted in a decrease of $41.1 million.


| Years ended December 31, | 2006 | IAN | Goodwill impairment | Other | Total |


| Increase/(Decrease)in Fair Market Value | As of December 31, | 2017 | 2016 |


NET INCOME PER COMMON SHARE The computation of basic net income allocated to common stockholders is calculated by reducing net income for the period by dividends paid or declared and undistributed net income for the period that are allocated to participating securities to arrive at net income allocated to common stockholders.
Net income allocated to common stockholders is divided by the weighted average number of common shares outstanding during the period to determine net income per share allocated to common stockholders.
The computation of diluted earnings per share is calculated by dividing net income allocated to common stockholders by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.
The dilutive effect is calculated using the more dilutive of the two-class or treasury stock method.
basis with each other.
The Global FX segment also includes non-deliverable forward FX transactions executed on Cboe SEF.
See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and Note 17—Segment Reporting to the notes to our Consolidated Financial Statements for discussion of total revenues, revenues before reimbursements, segment operating profit and total assets by business segment.
Certain areas within our segments operate globally.
For information regarding risks related to our international operations see ‘‘Risk Factors.
’’ The following chart illustrates volume for options (Cboe Options, C2 Options, BZX Options and EDGX Options); Futures (CFE); U. S.  Equities (BZX Equities, BYX Equities, EDGA Equities, EDGX Equities); European Equities; and Global FX (Cboe FX) for the periods indicated (which includes information prior to the acquisition of Bats):


| Year Ended December 31, | 2014 | (Dollars in thousands, except share data) | Weighted average shares: | Basic | Diluted | STATEMENTS OF CASH FLOWS DATA: | Net cash provided by operating activities | Net cash used in investing activities | Net cash (used in) provided by financing activities | OTHER DATA: | EBITDA -3 |


| 2018 2017 | Television programming | Released, less amortization | In production | Pre-production | Theatrical programming | Released, less amortization | In production | Pre-production | Total program production costs |


Operating Expenses The following table provides a summary of certain of our operating expenses:


THE GOLDMAN SACHS GROUP, INC.  AND SUBSIDIARIES Managements Discussion and Analysis Non-Interest Revenues.
Investment banking revenues in the consolidated statements of earnings were $7.03 billion for 2015, 9% higher than 2014, due to significantly higher revenues in financial advisory, reflecting strong client activity, particularly in the U. S.  Industry-wide completed mergers and acquisitions increased significantly compared with the prior year.
Revenues in underwriting were lower compared with a strong 2014.
Revenues in debt underwriting were lower compared with 2014, reflecting significantly lower leveraged finance activity.
Revenues in equity underwriting were also lower, reflecting significantly lower revenues from initial public offerings and convertible offerings, partially offset by significantly higher revenues from secondary offerings.
Investment management revenues in the consolidated statements of earnings were $5.87 billion for 2015, 2% higher than 2014, due to slightly higher management and other fees, primarily reflecting higher average assets under supervision, and higher transaction revenues.
Commissions and fees in the consolidated statements of earnings were $3.32 billion for 2015, essentially unchanged compared with 2014.
Market-making revenues in the consolidated statements of earnings were $9.52 billion for 2015, 14% higher than 2014.
Excluding a gain of $289 million in 2014 related to the extinguishment of certain of our junior subordinated debt, market-making revenues were 18% higher than 2014, reflecting significantly higher revenues in interest rate products, currencies, equity cash products and equity derivatives.
These increases were partially offset by significantly lower revenues in mortgages, commodities and credit products.
Other principal transactions revenues in the consolidated statements of earnings were $5.02 billion for 2015, 24% lower than 2014.
This decrease was primarily due to lower revenues from investments in equities, principally reflecting the sale of Metro International Trade Services (Metro) in the fourth quarter of 2014 and lower net gains from investments in private equities, driven by corporate performance.
In addition, revenues in debt securities and loans were significantly lower, reflecting lower net gains from investments.
Net Interest Income.
Net interest income in the consolidated statements of earnings was $3.06 billion for 2015, 24% lower than 2014.
The decrease compared with 2014 was due to lower interest income resulting from a reduction in interest income related to financial instruments owned, at fair value, partially offset by the impact of an increase in total average loans receivable.
The decrease in interest income was partially offset by a decrease in interest expense, which primarily reflected lower interest expense related to financial instruments sold, but not yet purchased, at fair value and other interest-bearing liabilities, partially offset by higher interest expense related to long-term borrowings.
See Supplemental Financial Information  Statistical Disclosures  Distribution of Assets, Liabilities and Shareholders Equity for further information about our sources of net interest income.
Operating Expenses Our operating expenses are primarily influenced by compensation, headcount and levels of business activity.
Compensation and benefits includes salaries, discretionary compensation, amortization of equity awards and other items such as benefits.
Discretionary compensation is significantly impacted by, among other factors, the level of net revenues, overall financial performance, prevailing labor markets, business mix, the structure of our sharebased compensation programs and the external environment.
In addition, see Use of Estimates for additional information about expenses that may arise from litigation and regulatory proceedings.
In the context of the challenging environment during the first half of 2016, we completed an initiative that identified areas where we can operate more efficiently, resulting in a reduction of approximately $900 million in annual run rate compensation.
For 2016, net savings from this initiative, after severance and other related costs, were approximately $500 million.


Other Commitments The Company utilizes several outsourcing partners to manufacture sub-assemblies for the Companys products and to perform final assembly and testing of finished products.
These outsourcing partners acquire components and build product based on demand information supplied by the Company, which typically covers periods up to 150 days.
The Company also obtains individual components for its products from a wide variety of individual suppliers.
Consistent with industry practice, the Company acquires components through a combination of purchase orders, supplier contracts and open orders based on projected demand information.
Where appropriate, the purchases are applied to inventory component prepayments that are outstanding with the respective supplier.
As of September 26, 2015, the Company had outstanding off-balance sheet third-party manufacturing commitments and component purchase commitments of $29.5 billion.


| (millions) AmortizedCost FairValue | Due in one year or less | Due after one year through five years | Due after five years through ten years | Due after ten years | Total fixed maturities |


| (in millions) 2017 2018 2019 2020 2021 Thereafter Total | Long-term debt obligations | Interest payments -1 | Lease obligations -1 | Purchase obligations -1 | Minimum royalty obligations -1 | Legal reserves | Unrecognized tax benefits -2 | $2,501 |


| As of or for the year ended December 31, EMEA Asia/Pacific Latin America/Caribbean | (in millions, except headcount and where otherwise noted) | Revenue(a) | Countries of operation(b) | New offices | Total headcount(c) | Front-office headcount | Significant clients(d) | Deposits (average)(e) | Loans (period-end)(f) | Assets under management(in billions) | Client assets (in billions) | Assets under custody (in billions) |


Interest payments increased in 2015 primarily due to a higher level of debt outstanding.
Interest payments remained relatively flat in 2014.
The increase in income tax payments in 2015 was primarily due to higher taxable income from operations offset by the timing of certain tax deductions.
The decrease in income tax payments in 2014 was primarily due to the settlement of tax disputes and the repatriation of foreign earnings in 2013.
The decrease was partially offset by higher taxable income from operations and the net impact of the economic stimulus legislation in 2014.
We expect income tax payments to increase in 2016 primarily due to higher taxable income from operations.
Investing Activities Net cash used in investing activities in 2015 consisted primarily of cash paid for capital expenditures, intangible assets, acquisitions and the purchases of investments, which was partially offset by proceeds from the sales of businesses and investments.
Net cash used in investing activities in 2014 consisted primarily of cash paid for capital expenditures and intangible assets.
Net cash used in investing activities in 2013 consisted primarily of cash paid for capital expenditures, acquisitions and construction of real estate properties, purchases of investments, and cash paid for intangible assets.
Capital Expenditures Our most significant recurring investing activity has been capital expenditures in our Cable Communications segment, and we expect that this will continue in the future.
The table below summarizes the capital expenditures we incurred in our Cable Communications segment in 2015, 2014 and 2013.


| Year ended December 31, (in millions)(a) 2004 2003 2002 | U.S. | Non-U.S.(b) | Income before income tax expense |


| Year Ended December 31, | 2011 | Operating Income | Add: Depreciation and Amortization | Intangible Impairments | Loss on Disposal/Write-Down of Property, Plant and Equipment (Excluding Real Estate), Net | Recall Costs-1 | REIT Costs-2 | Adjusted OIBDA |


| Year Ended May 31, Unaudited | 2013 | (Actual) | (in thousands, except per share data) | Total revenues | Net income attributable to Global Payments | Net income per share attributable to Global Payments, basic | Net income per share attributable to Global Payments, diluted |


NOTE 6 ACQUISITIONS AND JOINT VENTURES OLMUKSAN 2014: In May 2014, the Company conducted a voluntary tender offer for the remaining outstanding 12.6% public shares of Olmuksan.
The Company also purchased outstanding shares of Olmuksan outside of the tender offer.
As of December 31, 2014 and 2015, the Company owned 91.7% of Olmuksan's outstanding and issued shares.2013: On January 3, 2013, International Paper completed the acquisition (effective date of acquisition on January 1, 2013) of the shares of its joint venture partner, Sabanci Holding, in the Turkish corrugated packaging company, Olmuksa International Paper Sabanci Ambalaj Sanayi ve Ticaret A. S. , now called Olmuksan International Paper Ambalaj Sanayi ve Ticaret A. S.  (Olmuksan), for a purchase price of $56 million.
The acquired shares represented 43.7% of Olmuksan's shares.
Prior to this acquisition, International Paper held a 43.7% equity interest in Olmuksan.
Because the transaction resulted in International Paper becoming the majority shareholder, owning 87.4% of Olmuksan's outstanding and issued shares, its completion triggered a mandatory call for tender of the remaining public shares which began in March 2013 and ended in April 2013, with no shares tendered.
As a result, the 12.6% owned by other parties were considered non-controlling interests.
Olmuksan's financial results have been consolidated with the Company's Industrial Packaging segment beginning January 1, 2013, the effective date which International Paper obtained majority control of the entity.
Following the transaction, the Company's previously held 43.7% equity interest in Olmuksan was remeasured to a fair value of $75 million, resulting in a gain of $9 million.
In addition, the cumulative translation adjustment balance of $17 million relating to the previously held equity interest was reclassified, as expense, from accumulated other comprehensive income.
The final purchase price allocation indicated that the sum of the cash consideration paid, the fair value of the noncontrolling interest and the fair value of the previously held interest was less than the fair value of the underlying assets by $21 million, resulting in a bargain purchase price gain being recorded on this transaction.
The aforementioned remeasurement of equity interest gain, the cumulative translation adjustment to expense, and the bargain purchase gain are included in the Net bargain purchase gain on acquisition of business in the accompanying consolidated statement of operations.
The following table summarizes the final allocation of the purchase price to the fair value of assets and liabilities acquired as of January 1, 2013, which was completed in the fourth quarter of 2013.


(1) Certain assets in non-managed accounts, predominately comprised of cash balances, are excluded from the calculation of the account value for fee billing purposes.
The amounts presented have been revised from the amounts initially reported to reflect only billable assets and to present such balances on a consistent basis with those reported as of September 30, 2013.
(2) In mid-February 2013, the client accounts of MK & Co.  were converted onto the RJ&A platform.
Year ended September 30, 2013 compared with the year ended September 30, 2012  Asset Management Pre-tax income in the Asset Management segment increased $29 million, or 43%, over the prior year.
Investment advisory fee revenue increased by $49 million, or 25%, generated by an increase in assets under management.
Assets under management in managed programs have increased $13.2 billion, or 31%, over the prior year.
The increase results from a combination of net inflows, inflows resulting from our acquisition of an interest in ClariVest, inflows resulting from the conversion of MK & Co.  accounts to the RJ&A platform, and market appreciation in asset values.
Assets under management in non-managed programs have increased $9.4 billion, or 17%, over the prior year.
The increase results from a combination of net inflows, inflows resulting from the conversion of MK & Co.  accounts to the RJ&A platform, and market appreciation in asset values.
Other revenue increased by $7 million, or 18%, primarily resulting from an increase in fee income generated by our RJT subsidiary reflecting a 19% increase in RJT client assets as compared to the prior year, to $2.92 billion as of September 30, 2013.
Expenses increased by approximately $25 million, or 15%, resulting from a $11 million, or 13%, increase in administrative and incentive compensation and benefits costs, a $7 million, or 25%, increase in investment sub-advisory fees, a $4 million, or 12%, increase in other expenses and a $3 million, or 16%, increase in communications and information processing expense.
The increase in administrative and incentive compensation expense is a result of the combination of increases in salary expenses resulting from the addition of ClariVest, annual increases and additions to staff associated with our legacy operations, as well as an increase in performance compensation which is directly related to the increase in investment advisory fee revenues.
The increase in investment sub-advisory fee expense is directly related to the increase in advisory fees paid to the external managers associated with certain assets included within the UMA and Raymond James Consulting Services programs.
The increase in other expense is primarily due to increases in the costs incurred so that certain funds sponsored by Eagle are available as investment choices on the platforms of other broker-dealers and increases in the expenses of RJT result from the increase in client assets.
The increase in communication and information processing expense is primarily a result of the addition of ClariVest operations and costs associated with the implementation of a new back-office system supporting this segment.
Year ended September 30, 2012 compared to the year ended September 30, 2011  Asset Management Pre-tax income in the Asset Management segment in fiscal year 2012 increased $1 million, or 2%, as compared to the prior year.
Investment advisory fee revenue in fiscal year 2012 increased by $10 million, or 5%, generated by an increase in assets under management.
Total legacy Raymond James assets under management in managed programs were $8.5 billion more at September 30, 2012 than they were as of September 30, 2011, an increase of 24% (fee revenue excludes fees arising from fee-based assets in programs managed by Morgan Keegan as the revenues associated with these activities are reflected in our PCG segment until the PCG integration occurs in fiscal year 2013).
Since the prior year, net inflows of client assets into managed programs approximated $3 billion while asset values have increased by $5.5 billion.
Despite the decrease in assets under management in non-managed programs experienced during the fourth quarter of fiscal year 2011, resulting in lower revenue during our first quarter of fiscal year 2012, assets in non-managed programs steadily increased during fiscal year 2012.
As a result of the manner in which our fee revenues are computed, the increase in assets under management experienced during the September 2012 quarter will have a positive impact on our billings for the first quarter of fiscal year 2013.
Expenses increased by approximately $10 million, or 6%, in fiscal year 2012 resulting from a $5 million, or 6%, increase in administrative and performance based incentive compensation, and a $5 million, or 17%, increase in other expenses.
The increase in other expense is primarily due to increases in various corporate overhead allocations to this segment, increases in the costs incurred so that certain funds sponsored by Eagle are available as investment choices on the platforms of other broker-dealers, and an increase in the third party expenses RJT incurred in the performance of certain of its obligations to clients.


material impact on the service cost and interest cost components of net periodic benefit costs for a 1% change in the assumed health care trend rate.
For most of the participants in the U. S.  plan, Aons liability for future plan cost increases for pre-65 and Medical Supplement plan coverage is limited to 5% per annum.
Because of this cap, net employer trend rates for these plans are effectively limited to 5% per year in the future.
During 2007, Aon recognized a plan amendment which phases out post-65 retiree coverage in its U. S.  plan over the next three years.
The impact of this amendment on net periodic benefit cost is being recognized over the average remaining service life of the employees.14.


Market Risk Related to Foreign Currency Exchange Rates As a U. S. -based company with significant business operations outside of the U. S. , particularly in Japan, we are exposed to foreign currency exchange rate risk related to these operations, as well as in our general account investment portfolio and other proprietary investment portfolios.
For our international insurance operations, changes in foreign currency exchange rates create risk that we may experience volatility in the U. S.  dollar-equivalent earnings and equity of these operations.
We actively manage this risk through various hedging strategies, including the use of foreign currency hedges and through holding U. S.  dollar-denominated securities in the investment portfolios of certain of these operations.
Additionally, our Japanese insurance operations offer a variety of non-yen denominated products which are supported by investments in corresponding currencies.
While these non-yen denominated assets are economically matched to the currency of the product liabilities, the accounting treatment may differ for changes in the value of these assets and liabilities due to moves in foreign currency exchange rates, resulting in volatility in reported U. S.  GAAP earnings.
This volatility has been mitigated by disaggregating the U. S.  and Australian dollar-denominated businesses in Gibraltar Life into separate divisions, each with its own functional currency that aligns with the underlying products and investments.
For certain of our international insurance operations outside of Japan, we elect to not hedge the risk of changes in our equity investments due to foreign exchange rate movements.
For further information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of Foreign Currency Exchange Rates—Impact of products denominated in non-local currencies on U. S.  GAAP earnings” above.
For our domestic general account investment portfolios supporting our U. S.  insurance operations and other proprietary investment portfolios, our foreign currency exchange rate risk arises primarily from investments that are denominated in foreign currencies.
We


| Years ended December 31 (in millions) 2006 2005 2004 | Net interest income (loss) | Non-interest income: | Fee-based revenues | Net security losses | Bank-owned life insurance | Other non-interest income | Total non-interest income | Non-interest expense | Loss before income tax expense | Income tax benefit | Loss from continuing operations | Average earning assets | Average liabilities | Year end assets |


| $ in millions Before Consolidation-1 Consolidated Investment Products-2 Adjustments-1(3) Total | Year ended December 31, 2010 | Total operating revenues | Total operating expenses | Operating income | Equity in earnings of unconsolidated affiliates | Interest and dividend income | Other investment income/(losses) | Interest expense | Income before income taxes | Income tax provision | Net income | (Gains)/losses attributable to noncontrolling interests in consolidated entities, net | Net income attributable to common shareholders |


Credit Derivative Portfolio by Counterparty


| Net unrealized gains on available-for-sale securities Net unrealized gains on derivative instruments Foreign currency translation adjustment Unrecognized postretirement benefit obligations Accumulated other comprehensive income | (in millions) | Balances at January 1, 2007 | Net change in unrealized gains on fixed maturities, available-for-sale | Net change in unrealized gains on equity securities, available-for-sale | Net change in unrealized gains on equity method subsidiaries and minority interest adjustments | Adjustments for assumed changes in amortization pattern | Net change in unrealized gains on derivative instruments | Change in net foreign currency translation adjustment | Change in unrecognized postretirement benefit obligations | Net change in provision for deferred income tax benefit (expense) | Balances at December 31, 2007 |


| Balance at January 1, 2013 $180,993 | Increases in current period tax positions | Decreases in prior period measurement of tax positions | Balance at December 31, 2013 | Increases in current period tax positions | Decreases in prior period measurement of tax positions | Balance at December 31, 2014 |


| Balance at January 1, 2007 $183,953 | Additions based on tax positions related to the current year | Additions for tax positions of prior years | Reductions for tax positions of prior years | Cash advance in connection with proposed settlement | Settlements with taxing authorities | Reductions as a result of the lapse of statute of limitations | Balance as of December 31, 2007 |


| ($ in millions) 2012 2011 2010 | Underwritten products | Traditional life insurance premiums | Accident and health insurance premiums | Interest-sensitive life insurance contract charges | Subtotal | Annuities | Immediate annuities with life contingencies premiums | Other fixed annuity contract charges | Subtotal | Life and annuity premiums and contract charges-1 |


| December 31, 2015 December 31, 2014 | Industry-1 | (in millions) | Corporate securities: | Finance | Consumer non-cyclical | Utility | Capital goods | Consumer cyclical | Foreign agencies | Energy | Communications | Basic industry | Transportation | Technology | Industrial other | Total corporate securities | Foreign government-3 | Residential mortgage-backed | Asset-backed securities-4 | Commercial mortgage-backed | U.S. Government | State & Municipal-5 | Total-6 |


| 2014 Unrestricted 2013 Unrestricted | Retail notes*: | Equipment: | Agriculture and turf | Construction and forestry | Total | Wholesale notes | Sales-type leases | Total |


| Years Ended December 31, | 2009 | (in millions) | Assets: | Commercial mortgage loans: | Changes in instrument-specific credit risk | Other changes in fair value | Liabilities: | Long-term debt: | Changes in fair value |


| Net Sales-1 Assets Property, Plant, and Equipment | Years Ended December 31 | United States | China | Brazil | United Kingdom | Germany | Israel | Singapore | Other nations, net of eliminations | $30,146 |


| Period Standard Deviation Suggested 2018 Scenario 2018 Scenario as a Multiple of Standard Deviation 2018 Change/ Return 2018 as a Multiple of Standard Deviation Original 2017 Scenario (based on Standard Deviation for 1997-2017 Period) | 10-Year Treasury | S&P 500 | USD/JPY | Market/Monetization Risk | Cash Flow Mismatch Risk | Event Funding Risk | Financing Risk |


| Dollars in millions December 31 2011 December 312010 | Fair value | Weighted-average life (in years) (a) | Weighted-average constant prepayment rate (a) | Weighted-average option adjusted spread | Amount | Dollars in millions | Commercial | Commercial real estate | Equipment lease financing | Home equity | Residential real estate | Non government insured | Government insured | Credit card | Other consumer | Non government insured | Government insured | Total |


| Year Ended December 31, 2017 2016 2015 | Balance at beginning of year | Net charges to costs and expenses1 | Write-offs | Other2 | Balance at end of year |


| 12 Months Ended December 30,2016 11 Months Ended January 1,2016 12 Months Ended January 30,2015 | Cost-reimbursement and fixed price-incentive fee (FP-IF) | Time and materials (T&M) and fixed-price-level-of-effort (FP-LOE) | Firm-fixed-price (FFP) | Total |


In 2014, the Company incurred other operating charges of $1,183 million.
These charges primarily consisted of $601 million due to the Company’s productivity and reinvestment program and $208 million due to the integration of our German bottling and distribution operations.
In addition, the Company incurred a charge of $314 million due to a write-down we recorded related to our concentrate sales receivables from our bottling partner in Venezuela and an impairment of a Venezuelan trademark primarily due to higher exchange rates.
The write-down was recorded as a result of our revised assessment of the U. S.  dollar value we expect to realize upon the conversion of the Venezuelan bolivar into U. S.  dollars by our bottling partner to pay our concentrate sales receivables.
The Company also recorded a loss of $36 million as a result of the restructuring and transition of the Company’s Russian juice operations to an existing joint venture with an unconsolidated bottling partner.
Refer to Note 18 of Notes to Consolidated Financial Statements and see below for additional information on our productivity and reinvestment program as well as the Company’s other productivity, integration and restructuring initiatives.
Refer to Note 1 of Notes to Consolidated Financial Statements for additional information on the Venezuelan currency rate change.
Refer to Note 19 of Notes to Consolidated Financial Statements for the impact these charges had on our operating segments.


| Year Ended December 31, | 2016 | (in millions) | Commercial mortgage loans-1: | Carrying value as of period end | Realized investment gains (losses) net | Mortgage servicing rights-2: | Carrying value as of period end | Realized investment gains (losses) net | Cost method investments-3: | Carrying value as of period end | Realized investment gains (losses) net |


| Property, City, State, Zip Code Year Completed Year Acquired Square Feet-1 /Apartment Units Average Rent Per Square Foot Percentage Leased-2 Principal Tenant(s) | Mount Vernon/South Valley/7770 Richmond HwyAlexandria, VA 22306-3(6)(12) | Old Keene MillSpringfield, VA 22152 | Pan AmFairfax, VA 22031 | Pentagon RowArlington, VA 22202-12 | Pike 7 PlazaVienna, VA 22180-6 | Shoppers’ WorldCharlottesville, VA 22091-12 | Shops at Willow LawnRichmond, VA 23230 | Tower Shopping CenterSpringfield, VA 22150 | Tyson’s StationFalls Church, VA 22043-12 | Village at ShirlingtonArlington, VA 22206-7 | Total All Regions—Retail-14 | Total All Regions—Residential |


| 2013 2012 | Notes with rates from 2.13% to 6.15%, due 2016 to 2042 | Notes with rates from 7.00% to 7.75%, due 2016 to 2036 | Notes with a rate of 7.38%, due 2013 | Other debt | Total long-term debt | Less: unamortized discounts | Total long-term debt, net of unamortized discounts | Less: current maturities of long-term debt | Total long-term debt, net |


| Operating leases Purchase commitments | (In thousands) | 2006 | 2007 | 2008 | 2009 | 2010 | Beyond 2010 | $325,530 |


In January 2010, the FASB issued FASB ASU 2010-06, Fair Value Measurements and Disclosures: Improving Disclosures about Fair Value Measurements (ASU 2010-06), which amends FASB ASC Topic 820.
The update provides additional disclosures for transfers in and out of Level 1 and 2 and for activity in Level 3 and clarifies certain other existing disclosure requirements.
The Company adopted ASU 2010-06 beginning January 15, 2010.
This update had no impact on the Companys financial position, results of operations or cash flows.4.


| 2010 2009 2008 | Number of Shares | (In millions except share price) | Nonvested balance at beginning of period | Granted | Forfeited | Vested | Nonvested balance at end of period |


| Pension Postretirement | Minimum | Asset Category | U.S. Equities | International Equities | Fixed Maturities | Short-term Investments | Real Estate | Other |


Note 12 – Securities Securities are classified as AFS, held-to-maturity (“HTM”) or trading.
Securities classified as trading assets are discussed in Note 3 on pages 195–215 of this Annual Report.
Predominantly all of the Firm’s AFS and HTM investment securities (the “investment securities portfolio”) is held by CIO in connection with its asset-liability management objectives.
At December 31, 2013, the average credit rating of the debt securities comprising the investment securities portfolio was AA+ (based upon external ratings where available, and where not available, based primarily upon internal ratings which correspond to ratings as defined by S&P and Moody’s).
AFS securities are carried at fair value on the Consolidated Balance Sheets.
Unrealized gains and losses, after any applicable hedge accounting adjustments, are reported as net increases or decreases to accumulated other comprehensive income/(loss).
The specific identification method is used to determine realized gains and losses on AFS securities, which are included in securities gains/(losses) on the Consolidated Statements of Income.
HTM debt securities, which management has the intent and ability to hold until maturity, are carried at amortized cost on the Consolidated Balance Sheets.
For both AFS and HTM debt securities, purchase discounts or premiums are amortized into interest income.
Other-than-temporary impairment AFS debt and equity securities and HTM debt securities in unrealized loss positions are analyzed as part of the Firm’s ongoing assessment of other-than-temporary impairment (“OTTI”).
For most types of debt securities, the Firm considers a decline in fair value to be other-than-temporary when the Firm does not expect to recover the entire amortized cost basis of the security.
For beneficial interests in securitizations that are rated below “AA” at their acquisition, or that can be contractually prepaid or otherwise settled in such a way that the Firm would not recover substantially all of its recorded investment, the Firm considers an OTTI to have occurred when there is an adverse change in expected cash flows.
For AFS equity securities, the Firm considers a decline in fair value to be other-than-temporary if it is probable that the Firm will not recover its amortized cost basis.
Potential OTTI is considered using a variety of factors, including the length of time and extent to which the market value has been less than cost; adverse conditions specifically related to the industry, geographic area or financial condition of the issuer or underlying collateral of a security; payment structure of the security; changes to the rating of the security by a rating agency; the volatility of the fair value changes; and the Firm’s intent and ability to hold the security until recovery.
For AFS debt securities, the Firm recognizes OTTI losses in earnings if the Firm has the intent to sell the debt security, or if it is more likely than not that the Firm will be required to sell the debt security before recovery of its amortized cost basis.
In these circumstances the impairment loss is equal to the full difference between the amortized cost basis and the fair value of the securities.
For debt securities in an unrealized loss position, including AFS securities the Firm has the intent and ability to hold, the expected cash flows to be received from the securities are evaluated to determine if a credit loss exists.
In the event of a credit loss, only the amount of impairment associated with the credit loss is recognized in income.
Amounts relating to factors other than credit losses are recorded in OCI.
The Firm’s cash flow evaluations take into account the factors noted above and expectations of relevant market and economic data as of the end of the reporting period.
For securities issued in a securitization, the Firm estimates cash flows considering underlying loan-level data and structural features of the securitization, such as subordination, excess spread, overcollateralization or other forms of credit enhancement, and compares the losses projected for the underlying collateral (“pool losses”) against the level of credit enhancement in the securitization structure to determine whether these features are sufficient to absorb the pool losses, or whether a credit loss exists.
The Firm also performs other analyses to support its cash flow projections, such as first-loss analyses or stress scenarios.
For equity securities, OTTI losses are recognized in earnings if the Firm intends to sell the security.
In other cases the Firm considers the relevant factors noted above, as well as the Firm’s intent and ability to retain its investment for a period of time sufficient to allow for any anticipated recovery in market value, and whether evidence exists to support a realizable value equal to or greater than the carrying value.
Any impairment loss on an equity security is equal to the full difference between the amortized cost basis and the fair value of the security.


| Year Ended December 31 2008 2007 | (In millions) | Balance at January 1 | Additions based on tax positions related to the current year | Reductions for tax positions related to the current year | Lapse of statute of limitations | Settlements | Balance at December 31 |


ACCOUNTING FOR PLANNED MAJOR MAINTENANCE ACTIVITIES In September 2006, the FASB issued FASB Staff Position (FSP) No.
AUG AIR-1, Accounting for Planned Major Maintenance Activities, which permits the application of three alternative methods of accounting for planned major maintenance activities: the direct expense, built-in-overhaul, and deferral methods.
The FSP is effective for the first fiscal year beginning after December 15, 2006.  International Paper will adopt the direct expense method of accounting for these costs in 2007 with no impact on its annual consolidated financial statements.


| Year Ended December 31, | 2015 | Total revenues, less transaction-based expenses | Operating income | Income from continuing operations attributable to ICE | Income from discontinued operations, net of tax | Net income attributable to ICE | Basic earnings per common share: | Continuing operations | Discontinued operations | Basic earnings per share | Diluted earnings per share | Continuing operations | Discontinued operations | Diluted earnings per share |


INTEREST RATE RISK We are exposed to interest rate volatility with regard to future issuances of fixed-rate debt, and existing and future issuances of floating-rate debt.
Primary exposures include U. S.  Treasury rates, LIBOR, Euribor, and commercial paper rates in the United States and Europe.
We use interest rate swaps, forward-starting interest rate swaps, and treasury locks to hedge our exposure to interest rate changes, to reduce the volatility of our financing costs, and to achieve a desired proportion of fixed rate versus floating-rate debt, based on current and projected market conditions.
Generally under these swaps, we agree with a counterparty to exchange the difference between fixed-rate and floating-rate interest amounts based on an agreed upon notional principal amount.
Floating Interest Rate Exposures  Floating-to-fixed interest rate swaps are accounted for as cash flow hedges, as are all hedges of forecasted issuances of debt.
Effectiveness is assessed based on either the perfectly effective hypothetical derivative method or changes in the present value of interest payments on the underlying debt.
Effective gains and losses deferred to AOCI are reclassified into earnings over the life of the associated debt.
Ineffective gains and losses are recorded as net interest.
The amount of hedge ineffectiveness was less than $1 million in fiscal 2019, a $2.6 million loss in fiscal 2018, and less than $1 million in fiscal 2017.
Fixed Interest Rate Exposures  Fixed-to-floating interest rate swaps are accounted for as fair value hedges with effectiveness assessed based on changes in the fair value of the underlying debt and derivatives, using
considered a derivative, it is exempt from derivative accounting as it is excluded from the scope pursuant to paragraph 11(a) of SFAS 133.
As of December 31, 2007, based on the Companys stock price, the redemption value of this embedded derivative was approximately $87 million.


| Domestic Pension Plans Foreign Pension Plans Postretirement Benefit Plans | December 31, | Amounts recognized in consolidated balance sheet | Non-current asset | Current liability | Non-current liability | Net liability recognized | Accumulated benefit obligation | Amounts recognized in accumulated other comprehensive loss | Net actuarial loss | Prior service cost (credit) | Transition obligation | Total amount recognized | Plans with underfunded or unfunded accumulated benefit obligation | Aggregate projected benefit obligation | Aggregate accumulated benefit obligation | Aggregate fair value of plan assets |


| December 31, 2011 | Problem, potential problem, and restructured | Carrying amount | (in millions) | Three months or less | Greater than three to six months | Greater than six to nine months | Greater than nine to twelve months | Greater than twelve months | Total fixed maturities, available-for-sale |


| Incremental | In billions of dollars | Impact of consolidation | Credit cards | Commercial paper conduits | Student loans | Private label consumer mortgages | Municipal tender option bonds | Collateralized loan obligations | Mutual fund deferred sales commissions | Subtotal | Impact of deconsolidation | Collateralized debt obligations-2 | Equity-linked notes-3 | Total |


| 2008 $— | 2009 | 2010 | 2011 | 2012 | Thereafter | Total future principal payments of corporate debt | Unamortized discount, net | Total corporate debt |


Table of Contents Concentrations in the Available Sources of Supply of Materials and Product Although most components essential to the Companys business are generally available from multiple sources, a number of components are currently obtained from single or limited sources.
In addition, the Company competes for various components with other participants in the markets for mobile communication and media devices and personal computers.
Therefore, many components used by the Company, including those that are available from multiple sources, are at times subject to industry-wide shortage and significant pricing fluctuations that could materially adversely affect the Companys financial condition and operating results.
The Company uses some custom components that are not commonly used by its competitors, and new products introduced by the Company often utilize custom components available from only one source.
When a component or product uses new technologies, initial capacity constraints may exist until the suppliers yields have matured or manufacturing capacity has increased.
If the Companys supply of components for a new or existing product were delayed or constrained, or if an outsourcing partner delayed shipments of completed products to the Company, the Companys financial condition and operating results could be materially adversely affected.
The Companys business and financial performance could also be materially adversely affected depending on the time required to obtain sufficient quantities from the original source, or to identify and obtain sufficient quantities from an alternative source.
Continued availability of these components at acceptable prices, or at all, may be affected if those suppliers concentrated on the production of common components instead of components customized to meet the Companys requirements.
The Company has entered into agreements for the supply of many components; however, there can be no guarantee that the Company will be able to extend or renew these agreements on similar terms, or at all.
Therefore, the Company remains subject to significant risks of supply shortages and price increases that could materially adversely affect its financial condition and operating results.
Substantially all of the Companys hardware products are manufactured by outsourcing partners that are located primarily in Asia.
A significant concentration of this manufacturing is currently performed by a small number of outsourcing partners, often in single locations.
Certain of these outsourcing partners are the sole-sourced suppliers of components and manufacturers for many of the Companys products.
Although the Company works closely with its outsourcing partners on manufacturing schedules, the Companys operating results could be adversely affected if its outsourcing partners were unable to meet their production commitments.
The Companys purchase commitments typically cover its requirements for periods up to 150 days.


| Defined benefit pension plans | U.S. | For the year ended December 31, (in millions)(a) | Components of net periodic benefit costs | Benefits earned during the period | Interest cost on benefit obligations | Expected return on plan assets | Amortization of unrecognized amounts: | Prior service cost | Net actuarial (gain) loss | Curtailment (gain) loss | Settlement (gain) loss | Special termination benefits | Net periodic benefit costs reported inCompensation expense |


| Cost of Fuels(dollars per mmbtu) 2015 2014 2013 | Coal(a) | Nuclear(b) | Natural gas(c) | Weighted average – all fuels(d) |


| Qualified DefinedBenefit Pension Plans(a) Retiree Medical andLife Insurance Plans | 2017 | Service cost | Interest cost | Expected return on plan assets | Recognized net actuarial losses | Amortization of net prior service (credit) cost(b) | Total net periodic benefit cost |


NOTE 16.  BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION We operate in the packaged foods industry.
On April 24, 2018, we acquired Blue Buffalo, which became our Pet operating segment.
In the third quarter of fiscal 2017, we announced a new global organization structure to streamline our leadership, enhance global scale, and drive improved operational agility to maximize our growth capabilities.
This global reorganization required us to reevaluate our operating segments.
Under our new organization structure, our chief operating decision maker assesses performance and makes decisions about resources to be allocated to our operating segments as follows: North America Retail; Convenience Stores & Foodservice; Europe & Australia; Asia & Latin America; and Pet.
Our North America Retail operating segment reflects business with a wide variety of grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar and discount chains, and e-commerce grocery providers.
Our product categories in this business segment are ready-to-eat cereals, refrigerated yogurt, soup, meal kits, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grain, fruit and savory snacks, and a wide variety of organic products including refrigerated yogurt, nutrition bars, meal kits, salty snacks, ready-to-eat cereal, and grain snacks.
Our major product categories in our Convenience Stores & Foodservice operating segment are ready-to-eat cereals, snacks, refrigerated yogurt, frozen meals, unbaked and fully baked frozen dough products, and baking mixes.
Many products we sell are branded to the consumer and nearly all are branded to our customers.
We sell to distributors and operators in many customer channels including foodservice, convenience stores, vending, and supermarket bakeries in the United States.
Our Europe & Australia operating segment reflects retail and foodservice businesses in the greater Europe and Australia regions.
Our product categories include refrigerated yogurt, meal kits, super-premium ice cream, refrigerated and frozen dough products, shelf stable vegetables, grain snacks, and dessert and baking mixes.
We


| 2009 2008 | (in millions) | Individual annuities | Group annuities | Guaranteed investment contracts and guaranteed interest accounts | Funding agreements | Interest-sensitive life contracts | Dividend accumulation and other | Total policyholders’ account balances |


| December 31, 2013 December 31, 2012 | (in millions) | Financial Assets: | Cash and cash equivalents | Accounts receivable | Cash and cash equivalents of consolidated VIEs | Financial Liabilities: | Accounts payable and accrued liabilities | Short-term borrowings | Long-term borrowings |


NOTE 8 POSTRETIREMENT BENEFITS AND EMPLOYEE STOCK OWNERSHIP PLAN We offer various postretirement benefits to our employees.
Defined Contribution Retirement Plans We have defined contribution plans which cover the majority of our U. S.  employees, as well as employees in certain other countries.
These plans are fully funded.
We generally make contributions to participants' accounts based on individual base salaries and years of service.
Total global defined contribution expense was $292, $305 and $311 in 2016, 2015 and 2014, respectively.
The primary U. S.  defined contribution plan (the U. S.  DC plan) comprises the majority of the expense for the Company's defined contribution plans.
For the U. S.  DC plan, the contribution rate is set annually.
Total contributions for this plan approximated 14% of total participants' annual wages and salaries in 2016 and 2015 and 15% in 2014.
We maintain The Procter & Gamble Profit Sharing Trust (Trust) and Employee Stock Ownership Plan (ESOP) to provide a portion of the funding for the U. S.  DC plan and other retiree benefits (described below).
Operating details of the ESOP are provided at the end of this Note.
The fair value of the ESOP Series A shares allocated to participants reduces our cash contribution required to fund the U. S.  DC plan.
Defined Benefit Retirement Plans and Other Retiree Benefits We offer defined benefit retirement pension plans to certain employees.
These benefits relate primarily to local plans outside the U. S.  and, to a lesser extent, plans assumed in previous acquisitions covering U. S.  employees.
We also provide certain other retiree benefits, primarily health care and life insurance, for the majority of our U. S.  employees who become eligible for these benefits when they meet minimum age and service requirements.
Generally, the health care plans require cost sharing with retirees and pay a stated percentage of expenses, reduced by deductibles and other coverages.
These benefits are primarily funded by ESOP Series B shares and certain other assets contributed by the Company.
Obligation and Funded Status.
The following provides a reconciliation of benefit obligations, plan assets and funded status of these defined benefit plans: