Hologic, Inc.  Notes to Consolidated Financial Statements (continued) (In thousands, except per share data) Acquisition of R2 Technology, Inc.  On July 13, 2006, the Company completed the acquisition of R2 Technology, Inc.  (
R2
) pursuant to an Agreement and Plan of Merger dated April 24, 2006.
The results of operations for R2 have been included in the Company’s consolidated financial statements from the date of acquisition as part of its Mammography/Breast Care business segment.
R2, previously located in Santa Clara, California, develops and sells computer-aided detection technology and products (
CAD
), an innovative technology that assists radiologists in the early detection of breast cancer.
The aggregate purchase price for R2 of approximately $220,600 consisted of approximately 8,800 shares of Hologic Common Stock valued at $205,500, cash paid of $6,900, debt assumed of $5,700 and approximately $2,500 for acquisition related fees and expenses.
The Company determined the fair value of the shares issued in connection with the acquisition in accordance with EITF Issue No.99-12, Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination.
The components and allocation of the purchase price, consists of the following approximate amounts:


| As of December 31, 2006 (in millions) Before the adoption of SFAS No. 158 Adjustments After the adoption of SFAS No. 158 | Other assets | Total assets | Other liabilities | Total liabilities | Accumulated other comprehensive loss | Total stockholders’ equity |


| Contractual Obligations Payments Due by Period | Total | (In thousands) | Homebuilding—Senior notes and other debts payable | Financial services—Notes and other debts payable | Interest commitments under interest bearing debt -1 | Operating leases | Total contractual obligations -2 |


Environmental Matters Our operations, like operations of other companies engaged in similar businesses, involve the use, disposal and cleanup of substances regulated under environmental protection laws.
We are involved in a sizeable number of remediation actions to clean up hazardous wastes as required by federal and state laws.
Such statutes require that responsible parties fund remediation actions regardless of fault, legality of original disposal or ownership of a disposal site.
Expenditures for site remediation actions amounted to approximately $0.2 billion in 2010, $0.3 billion in 2009 and $0.2 billion in 2008.
We presently expect that such remediation actions will require average annual expenditures of about $0.4 billion for each of the next two years.
As previously disclosed, in 2006, we entered into a consent decree with the Environmental Protection Agency (EPA) to dredge PCB-containing sediment from the upper Hudson River.
The consent decree provided that the dredging would be performed in two phases.
Phase 1 was completed in May through November of 2009.
Between Phase 1 and Phase 2 there was an intervening peer review by an independent panel of national experts.
The panel evaluated the performance of Phase 1 dredging operations with respect to Phase 1 Engineering Performance Standards and recommended proposed changes to the standards.
On December 17, 2010, EPA issued its decisions setting forth the final performance standards for Phase 2 of the dredging project, incorporating aspects of the recommendations from the independent peer review panel and from GE.
In December 2010, we agreed with EPA to perform Phase 2 of the project in accordance with the final performance standards set by EPA.
We have reviewed EPAs final performance standards for Phase 2 to assess the potential scope and duration of Phase 2, as well as operational and engineering changes that could be required.
Based on this review and our best professional engineering judgment, we increased our reserve for the probable and estimable costs for completing the Hudson River dredging project by $0.8 billion in the fourth quarter of 2010.


| (In millions) Term Maximum Potential Undiscounted Payments as of December 31, 2004(l) | Indebtedness of equity investees: | LOCAP(a) | LOOP(a) | Centennial(b) | Guarantees/indemnifications related to asset sales: | Yates(c) | Canada(d) | Miscellaneous asset sales(e) | Other: | United States Steel(f) | Centennial Pipeline catastrophic event(g) | Alliance Pipeline(h) | Kenai Kachemak Pipeline LLC(i) | Corporate assets(j)(j) | Mobile transportation equipment leases(k) |


| Change | (dollars in millions) | Revenues | Costs of revenue | as a percentage of revenues | Selling, general and administrative expenses | as a percentage of revenues | Segment profit | as a percentage of revenues |


| ($ in millions) Reserve for Property-Liability insurance claims and claims expense Reinsurance recoverables, net | 2009 | Industry pools and facilities | Asbestos and environmental | Other including allowance for future uncollectible reinsurance recoverables | Total Property-Liability |


| Branches | Alabama | Arkansas | Florida | Georgia | Illinois | Indiana | Iowa | Kentucky | Louisiana | Mississippi | Missouri | North Carolina | South Carolina | Tennessee | Texas | Virginia | Total | 2018 | (In millions, except per share data) | EARNINGS SUMMARY | Interest income, including other financing income | Interest expense and depreciation expense on operating lease assets | Net interest income and other financing income | Provision for loan losses | Net interest income and other financing income after provision for loan losses | Non-interest income | Non-interest expense | Income from continuing operations before income taxes | Income tax expense | Income from continuing operations | Income (loss) from discontinued operations before income taxes | Income tax expense (benefit) | Income (loss) from discontinued operations, net of tax | Net income | Net income from continuing operations available to common shareholders | Net income available to common shareholders | Earnings per common share from continuing operations – basic | Earnings per common share from continuing operations – diluted | Earnings per common share – basic | Earnings per common share – diluted | Return on average common stockholders' equity - continuing operations-1(3) | Return on average tangible common stockholders’ equity (non-GAAP) - continuing operations(1)(2)(3) | Return on average assets - continuing operations-1(3) | BALANCE SHEET SUMMARY | As of December 31 | Loans, net of unearned income | Allowance for loan losses | Assets | Deposits | Long-term debt | Stockholders’ equity | Average balances | Loans, net of unearned income | Assets | Deposits | Long-term debt | Stockholders’ equity | SELECTED RATIOS | Basel I Tier 1 common regulatory capital (non-GAAP)(4) | Basel III common equity Tier 1 ratio-5 | Basel III common equity Tier 1 ratio—Fully Phased-In Pro-Forma (non-GAAP)(2)(4)(5) | Tier 1 capital-4(5)(6) | Total capital-4(5)(6) | Leverage capital-4(5)(6) | Tangible common stockholders’ equity to tangible assets (non-GAAP)(2) | Efficiency ratio | Adjusted efficiency ratio (non-GAAP)(2) |


| As of December | $ in millions | Global Core Liquid Assets (GCLA) | Other cash | GCLA and cash | Secured client financing | Inventory | Secured financing agreements | Receivables | Institutional Client Services | Public equity | Private equity | Debt | Loans receivable | Other | Investing & Lending | Total inventory and relatedassets | Other assets | Total assets | Years Ended November 30, | 2010 | (In thousands) | Sales of homes | Cost of homes sold | Gross margins on home sales | Valuation adjustments to finished homes, CIP and land on which we intend to build homes | Gross margins on homes sales excluding valuation adjustments | Principal Maturities of Unconsolidated JVs by Period | (In thousands) | Net recourse debt to Lennar | Reimbursement agreements | Maximum recourse debt exposure to Lennar | Debt without recourse to Lennar | Total |


| (In Thousands) | 2004 | 2005 | 2006 | 2007 | 2008 | Years thereafter | Total | Less: Amount representing interest | Present value of net minimum lease payments |


| Shareholder Approved Plans | 2005 | Risk-free Interest Rate | Dividend Yield | Volatility | Expected Lives (Years) |


Items Measured at Fair Value on a Nonrecurring BasisDuring the year ended December 31, 2012, certain long-lived assets held and used with a carrying value of $5,379.2 million were written down to their net realizable value of $5,357.7 million as a result of an asset impairment charge of $21.5 million, which was recorded in other operating expenses in the accompanying consolidated statements of operations.
During the year ended December 31, 2011, long-lived assets held and used with a carrying value of $4,280.8 million were written down to their net realizable value of $4,271.8 million, resulting in an asset impairment charge of $9.0 million.
These adjustments were determined by comparing the estimated proceeds from sale of assets or the projected future discounted cash flows to be provided from the long-lived assets (calculated using Level 3 inputs) to the assets carrying value.
There were no other items measured at fair value on a nonrecurring basis during the year ended December 31, 2012.
Fair Value of Financial InstrumentsThe carrying value of the Companys financial instruments, with the exception of long-term obligations, including the current portion, reasonably approximate the related fair value as of December 31, 2012 and 2011.
The Companys estimates of fair value of its long-term obligations, including the current portion, are based primarily upon reported market values.
For long-term debt not actively traded, fair value was estimated using a discounted cash flow analysis using rates for debt with similar terms and maturities.
As of December 31, 2012, the carrying value and fair value of long-term obligations, including the current portion, were $8.8 billion and $9.4 billion, respectively, of which $4.9 billion was measured using Level 1 inputs and $4.5 billion was measured using Level 2 inputs.
As of December 31, 2011, the carrying value and fair value of long-term obligations, including the current portion, were $7.2 billion and $7.5 billion, respectively, of which $3.8 billion was measured using Level 1 inputs and $3.7 billion was measured using Level 2 inputs.13.


| Fiscal 2015 Quarter Ended | (In millions, except per share amounts) | Total net revenue | Cost of revenue | All other costs and expenses | Operating income (loss) from continuing operations | Net income (loss) from continuing operations | Net income (loss) from discontinued operations | Net income (loss) | Basic net income (loss) per share from continuing operations | Basic net income (loss) per share from discontinued operations | Basic net income (loss) per share | Diluted net income (loss) per share from continuing operations | Diluted net income (loss) per share from discontinued operations | Diluted net income (loss) per share |


ssion of The Capital Markets Company BVBA ("Capco") contingent consideration liability.
(d)Derivative Financial Instruments The Company accounts for derivative financial instruments in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 815, Derivatives and Hedgingg .
During 2016, 2015 and 2014, the Company engaged in hedging activities relating to its variable rate debt through the use of interest rate swaps.
The Company designates these interest rate swaps as cash flow hedges.
The estimated fair values of the cashh flow hedges are determined using Level 2 type measurements.
They are recorded as an asset or liability of the Company and are included in the accompanying Consolidated Balance Sheets in prepaid expenses and other current assets, other non-current assets, accounts payable and accrued liabilities or other long-term liabilities, as appropriate, and as a component of accumulated other comprehensive earnings, net of deferred taxes.
A portion of the amount included in accumulated other comprehensive earnings is recorded in interest expense as a yield adjustment as interest payments are made onn the Company’s Term and Revolving Loans (Note 10).
The Company’s existing cash flow hedge is highly effective and there was no impact on 2016 earnings due to hedge ineffectiveness.
It is our policy to execute such instruments with credit-worthy banks and not to enter into derivative financial instruments for speculative purposes.
As of December 31, 2016, we believe that our interest rate swap counterparty will be able to fulfill its obligations under our agreement.
The Company's foreign exchange risk management policy permits the use of derivative instruments, such as forward contracts and options, to reduce volatility in the Company's results of operations and/or cash flows resulting from foreign exchange rate fluctuations.
During 2016 and 2015, the Company entered into foreign currency forward exchange contracts to hedge foreign currency exposure to intercompany loans.
As of December 31, 2016 and 2015, the notional amount of these derivatives was approximately $143 million and a $81 million, respectively, and the fair value was nominal.
These derivatives have not been designated as hedges for accounting purposes.
We also use currency forward contracts to manage our exposure to fluctuations in costs caused by variations in Indian Rupee ("IINR") exchange rates.
As of December 31, 2016, the notional amount of these derivatives was approximately $7 million and the fair vallue was less than $1 million, which is included in Prepaid Expenses and Other Current Assets in the Consolidated Balance Sheets.
These INR forward contracts are designated as cash flow hedges.
The fair value of these currency forward contracts is determined using currency u exchange market rates, obtained from reliable, independent, third party banks, at the balance sheet date.
The fair value of forrward contracts is subject to changes in currency exchange rates.
The Company has no ineffectiveness related to its use of currency fforward contracts in connection with INR cash flow hedges.
In September 2015, the Company entered into treasury lock hedges with a total notional amount of $1.0 billion, reducing the risk of changes in the benchmark index component off the 10-year treasury yield.
The Company designated these derivatives as cash flow hedges.
On October 13, 2015, in conjunction with the pricing of the $4.5 billion seniorr notes, the Company terminated these treasury lock contracts for a cash settlement payment of $16 million, which was recorded as a component of Other Comprehensive Earnings and will be reclassified as an adjustment to interest expense over the ten years during which the related interest payments that were hedged will be recognized in income.


Employees We currently have approximately 10,000 employees.
Environmental Regulation We have a dedicated environmental program that is designed to reduce the utilization and generation of hazardous materials during the manufacturing process as well as to remediate identified environmental concerns.
As to the latter, we are currently engaged in site investigations and remediation activities to address environmental cleanup from past operations at current and former production facilities.
The Company regularly evaluates its remediation programs and considers alternative remediation methods that are in addition to, or in replacement of, those currently utilized by the Company based upon enhanced technology and regulatory changes.
We are sometimes a party to environmental lawsuits and claims and have received notices of potential violations of environmental laws and regulations from the U. S.  Environmental Protection Agency (the "EPA") and similar state authorities.
We have also been identified as a potentially responsible party ("PRP") for cleanup costs associated with off-site waste disposal at federal Superfund and state remediation sites.
For all such sites, there are other PRPs and, in most instances, our involvement is minimal.
In estimating our liability, we have assumed that we will not bear the entire cost of remediation of any site to the exclusion of other PRPs who may be jointly and severally liable.
The ability of other PRPs to participate has been taken into account, based on our understanding of the parties’ financial condition and probable contributions on a per site basis.
Additional lawsuits and claims involving environmental matters are likely to arise from time to time in the future.
We incurred $3.2 million, $23.3 million, and $4.4 million of expenses during the years ended December 31, 2017, 2016, and 2015, respectively, for environmental remediation at sites presently or formerly owned or leased by us.
As of December 31, 2017 and 2016, we have recorded reserves for environmental matters of $28.9 million and $30.6 million.
Of these amounts $8.9 million and $9.6 million, respectively, relate to remediation of sites previously disposed by us.
Given the evolving nature of environmental laws, regulations and technology, the ultimate cost of future compliance is uncertain.
PRUDENTIAL FINANCIAL, INC.  Notes to Consolidated Financial Statements 20.
FAIR VALUE OF ASSETS AND LIABILITIES (continued)


(2) Benefits and expenses exclude related charges which represent the unfavorable (favorable) impact of Realized investment gains (losses), net, on interest credited to policyholders’ account balances.
For a discussion of these items see “—Realized Investment Gains and General Account Investments— Realized Investment Gains.
” Adjusted Operating Income 2005 to 2004 Annual Comparison.
Adjusted operating income increased $50 million, from $174 million in 2004 to $224 in 2005, primarily due to an increase in net investment income and growth in the segment’s group life insurance business, as well as lower costs in 2005 related to legal and regulatory matters.2004 to 2003 Annual Comparison.
Adjusted operating income increased $5 million, from $169 million in 2003 to $174 million in 2004.
Adjusted operating income for 2003 included a net favorable effect of $8 million from refinements in group life reserves for waiver of premium features and estimates of amounts due policyholders on experience rated cases.
Excluding these items, adjusted operating income increased $13 million primarily due to more favorable mortality experience in our group life insurance business which was partially offset by less favorable claims experience in our group disability business and costs related to legal and regulatory matters that were incurred during 2004.
Revenues 2005 to 2004 Annual Comparison.
Revenues, as shown in the table above under “—Operating Results,” increased by $308 million, from $3.892 billion in 2004 to $4.200 billion in 2005.
Group life insurance premiums increased by $272 million, from $2.274 billion in 2004 to $2.546 billion in 2005, primarily reflecting growth in business in force resulting from new sales and continued strong persistency, which improved from 94% in 2004 to 95% in 2005.
Group disability premiums, which include long-term care products, increased by $48 million, from $676 million in 2004 to $724 million in 2005, primarily reflecting growth in business in force resulting from new sales and continued strong persistency, which declined slightly from 86% in 2004 to 85% in 2005.
Net investment income increased by $32 million, primarily reflecting a larger base of invested assets due to business growth.2004 to 2003 Annual Comparison.
Revenues increased by $175 million, from $3.717 billion in 2003 to $3.892 billion in 2004.
Group life insurance premiums increased by $71 million, from $2.203 billion in 2003 to $2.274 billion in 2004, primarily reflecting growth in business in force resulting from new sales and continued strong persistency, which improved slightly from 93% in 2003 to 94% in 2004.
Group disability premiums, which include long-term care products, increased by $46 million, from $630 million in 2003 to $676 million in 2004, primarily reflecting growth in business in force resulting from new sales and continued strong persistency, which improved slightly from 85% in 2003 to 86% in 2004.
The increase in premiums also reflects the negative effect in 2003 of a $9 million increase in our estimate of amounts due policyholders on experience rated cases, as discussed above.
Policy charges and fee income increased by $80 million, which includes the negative effect in 2003 of a $17 million increase in our estimate of amounts due policyholders on experience rated cases, as discussed above.
Excluding the effect of this refinement, policy charges and fee income increased by $63 million, primarily reflecting higher charges and fees on experienced rated contracts sold to employers for funding of employee benefit programs.
Partially offsetting these increases was a decrease in net investment income of $24 million, due primarily to a decrease in income from policyholder loans.
The decrease in income from policyholder loans reflects reductions in the balances of these loans, which also results in a corresponding decline in interest credited to policyholders’ account balances.


| December 31, 2016 Level 1 Level 2 Level 3 Total | (In millions) | Fixed maturity securities: | Corporate and other bonds | States, municipalities and political subdivisions | Asset-backed: | Residential mortgage-backed | Commercial mortgage-backed | Other asset-backed | Total asset-backed | U.S. Treasury and obligations of government-sponsored enterprises | Foreign government | Redeemable preferred stock | Fixed maturitiesavailable-for-sale | Fixed maturities trading | Total fixed maturities | Equity securitiesavailable-for-sale | Equity securities trading | Total equity securities | Short term investments | Other invested assets | Receivables | Life settlement contracts | Payable to brokers |


| 2008 2007 | Balance at beginning of period | Increases as a result of tax positions taken during a prior year | Decreases as a result of tax positions taken during a prior year | Settlements with taxing authorities | Lapse of statutes of limitation | Increases as a result of tax positions taken during the current year | Balance at end of period |


The contractual life of one option was extended in 2005 for the benefit of a retiring officer.
This modification, which was accounted for under the intrinsic value method, resulted in an after-tax charge of $369 thousand.
No equity awards were cash settled during the three years ended December 31, 2006.
Note 13Business Segments Torchmarks segments are based on the insurance product lines it markets and administers: life insurance, health insurance, and annuities.
These major product lines are set out as segments because of the common characteristics of products within these categories, comparability of margins, and the similarity in regulatory environment and management techniques.
There is also an investment segment which manages the investment portfolio, debt, and cash flow for the insurance segments and the corporate function.
Torchmarks management evaluates the overall performance of the operations of the Company in accordance with these segments.
Life insurance products include traditional and interest-sensitive whole life insurance as well as term life insurance.
Health products are generally guaranteed-renewable and include Medicare Supplement, Medicare Part D, cancer, accident, long-term care, and limited-benefit hospital and surgical coverages.
Annuities include both fixed-benefit and variable contracts.
Variable contracts allow policyholders to choose from a variety of mutual funds in which to direct their deposits.
Torchmark markets its insurance products through a number of distribution channels, each of which sells the products of one or more of Torchmarks insurance segments.
The tables below present segment premium revenue by each of Torchmarks marketing groups.
Market Risk Sensitivity.
Torchmarks financial securities are exposed to interest rate risk, meaning the effect of changes in financial market interest rates on the current fair value of the companys investment portfolio.
Since 94% of the book value of our investments is attributable to fixed-maturity investments (and virtually all of these investments are fixed-rate investments), the portfolio is highly subject to market risk.
Declines in market interest rates generally result in the fair value of the investment portfolio exceeding the book value of the portfolio and increases in interest rates cause the fair value to decline below the book value.
Under normal market conditions, we do not expect to realize these unrealized gains and losses because it is generally our investment strategy to hold these investments to maturity.
The long-term nature of our insurance policy liabilities and strong cash-flow operating position substantially mitigate any future need to liquidate portions of the portfolio.
The increase or decrease in the fair value of insurance liabilities and debt due to increases or decreases in market interest rates largely offset the impact of rates on the investment portfolio.
However, in accordance with GAAP, these liabilities are not marked to market.
The following table illustrates the market risk sensitivity of our interest-rate sensitive fixed-maturity portfolio at December 31, 2010 and 2009.


The security-specific collateral review is performed to estimate potential future losses.
This review incorporates assumptions about expected future collateral cash flows, including projected rental rates and occupancy levels that varied based on property type and submarket.
The results of the security-specific collateral review allowed the Company to estimate the expected timing of a securitys first loss, if any, and the probability and severity of potential ultimate losses.
The Company then discounted these anticipated future cash flows at the securitys book yield prior to impairment.
Included in corporate and equity security types were direct private investments that were impaired primarily due to the likelihood of a disruption in contractual principal and interest payments due to the restructuring of the debtors obligation.
Impairments on equity securities were primarily related to preferred stock associated with these direct private investments.
Impairments on securities for which the Company has the intent to sell were primarily on corporate bonds, certain ABS aircraft bonds and CMBS as market pricing continues to improve and the Company would like the ability to reduce certain exposures.
In addition to the credit impairments recognized in earnings, the Company recognized non-credit impairments in other comprehensive income of $89 for the year ended December 31, 2011, predominantly concentrated in CRE CDOs and RMBS.
These non-credit impairments represent the difference between fair value and the Companys best estimate of expected future cash flows discounted at the securitys effective yield prior to impairment, rather than at current market implied credit spreads.
These non-credit impairments primarily represent increases in market liquidity premiums and credit spread widening that occurred after the securities were purchased, as well as a discount for variable-rate coupons which are paying less than at purchase date.
In general, larger liquidity premiums and wider credit spreads are the result of deterioration of the underlying collateral performance of the securities, as well as the risk premium required to reflect future uncertainty in the real estate market.
Future impairments may develop as the result of changes in intent to sell of specific securities or if actual results underperform current modeling assumptions, which may be the result of, but are not limited to, macroeconomic factors and security-specific performance below current expectations.
Ultimate loss formation will be a function of macroeconomic factors and idiosyncratic security-specific performance.
Year ended December 31, 2010 For the year ended December 31, 2010, impairments recognized in earnings were comprised of credit impairments of $372 primarily concentrated on structured securities associated with commercial and residential real estate.
Also included were impairments on debt securities for which the Company intended to sel1 of $54, mainly comprised of CMBS bonds in order to take advantage of price appreciation, as well as impairments on equity securities of $8 primarily on below investment grade securities depressed 20% for more than six months.
Year ended December 31, 2009 Impairments recognized in earnings were comprised of credit impairments of $1.2 billion primarily concentrated on CRE CDOs, belowprime RMBS and CMBS.
Also included were impairments on debt securities for which the Company intended to sell of $156, mainly comprised of corporate financial services securities, as well as impairments on equity securities of $136 related to below investment grade hybrid securities.


During December 2010, ACE repurchased 4,926,082 Common Shares in a series of open market transactions.
The cost of these shares, which were placed in treasury, totaled $303 million.
ACE repurchased these Common Shares to partially offset potential dilution from the exercise of stock options and the granting of restricted stock under share-based compensation plans.
Common Shares in treasury are used principally for issuance upon the exercise of employee stock options, for issuance of restricted stock, and for purchases under the ESPP.
At December 31, 2010 and 2009, 6,151,707 and 1,316,959 Common Shares, respectively, remain in treasury after net shares redeemed under employee share-based compensation plans.
Common Shares issued to employee trust are issued by the Company to a rabbi trust for deferred compensation obligations as discussed in Note 12 f) below.
Authorized Share Capital for General Purposes The Board has shareholder-approved authority as set forth in the Articles of Association to increase for general purposes the Companys share capital from time to time through May 19, 2012, by the issuance of up to 140,000,000 fully paid up Common Shares, with a par value equal to the par value of ACEs Common Shares as set forth in the Articles of Association at the time of any such issuance.
It is expected that the Company will seek shareholder approval in 2012 for a new pool of authorized share capital for general purposes to replace the existing 140,000,000 share pool when it expires.
Conditional share capital for bonds and similar debt instruments The share capital of the Company may be increased through the issuance of a maximum of 33,000,000 fully paid up Common Shares with a par value of CHF 30.57 each through the exercise of conversion and/or option or warrant rights granted in connection with bonds, notes, or similar instruments, issued or to be issued by the Company, including convertible debt instruments.
Conditional share capital for employee benefit plans The share capital of the Company may be increased through the issuance of a maximum of 27,148,782 fully paid up Common Shares with a par value of CHF 30.57 each in connection with the exercise of option rights granted to any employee of the Company, and any consultant, director, or other person providing services to the Company.
c) ACE Limited securities repurchase authorization In November 2010, the Board authorized the repurchase of up to $600 million of ACEs Common Shares through December 31, 2012.
This authorization was granted to allow ACE to repurchase Common Shares to partially offset potential dilution from the exercise of stock options and the granting of restricted stock under share-based compensation plans.
Such repurchases may be made in the open market, in privately negotiated transactions, block trades, accelerated repurchases and/ or through option or other forward transactions.
As discussed above, $303 million of this authorization was utilized during December 2010.


| % of Consolidated Revenues | 2001 | (In Thousands) | Labor | Facilities | Transportation | Product Cost of Sales | Other | $576,538 |


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


A valuation allowance totaling $45.4 million, $43.9 million and $40.4 million as of 2013, 2012 and 2011 year end, respectively, has been established for deferred income tax assets primarily related to certain subsidiary loss carryforwards that may not be realized.
Realization of the net deferred income tax assets is dependent on generating sufficient taxable income prior to their expiration.
Although realization is not assured, management believes it is morelikely-than-not that the net deferred income tax assets will be realized.
The amount of the net deferred income tax assets considered realizable, however, could change in the near term if estimates of future taxable income during the carryforward period fluctuate.
The following is a reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2013, 2012 and 2011:


| Year Ended | December 31, 2007 | % of | $ | (In millions, except percentages) | North America | Europe/Africa | Asia/Australia | Rest of World |


| In millions at December 31 2007 2006 | Pulp, paper and packaging facilities | Mills | Packaging plants | Other plants, properties and equipment | Gross cost | Less: Accumulated depreciation | Plants, properties and equipment, net |


MetLife, Inc.  Notes to Consolidated Financial Statements  (Continued) In addition to reinsuring mortality risk as described previously, the Company reinsures other risks, as well as specific coverages.
The Company routinely reinsures certain classes of risks in order to limit its exposure to particular travel, avocation and lifestyle hazards.
The Company has exposure to catastrophes, which could contribute to significant fluctuations in the Companys results of operations.
The Company uses excess of retention and quota share reinsurance arrangements to provide greater diversification of risk and minimize exposure to larger risks.
The Company had also protected itself through the purchase of combination risk coverage.
This reinsurance coverage pooled risks from several lines of business and included individual and group life claims in excess of $2 million per policy, as well as excess property and casualty losses, among others.
This combination risk coverage was commuted during 2005.
The Company reinsures its business through a diversified group of reinsurers.
No single unaffiliated reinsurer has a material obligation to the Company nor is the Companys business substantially dependent upon any reinsurance contracts.
The Company is contingently liable with respect to ceded reinsurance should any reinsurer be unable to meet its obligations under these agreements.
In the Reinsurance Segment, Reinsurance Group of America, Incorporated (RGA) retains a maximum of $6 million of coverage per individual life with respect to its assumed reinsurance business.
The amounts in the consolidated statements of income are presented net of reinsurance ceded.
Information regarding the effect of reinsurance is as follows:


Operating Activities Operating activities consist primarily of net income adjusted for certain non-cash items.
Non-cash items include depreciation and amortization, unrealized foreign currency transaction gains and losses, stock-based compensation, deferred income taxes and changes in reserves for doubtful accounts, returns, discounts and inventories.
In addition, operating cash flows include the effect of changes in operating assets and liabilities, principally accounts receivable, inventories, accounts payable, accrued expenses and income taxes payable and receivable.
Cash used in operating activities was $14.6 million for the year ended December 31, 2007 compared to cash provided by operating activities of $10.7 million during the same period in 2006.
The $25.3 million additional net use of cash in operating activities was due to increased cash outflows from operating assets and liabilities of $45.6 million, partially offset by increased non-cash items of $6.7 million and an increase in net income of $13.6 million year-over-year.
The increase in cash outflows related to changes in operating assets and liabilities periodover-period was primarily due to the following: ?
a larger increase in inventory levels of $57.5 million, primarily due to our planned strategy for additional core inventory needed to support the anticipated consumer demand for our products, higher average cost per unit due to product mix and increased in-transit inventory as a result of increased sourcing from Asia; ?
increased accounts receivable driven by a 29.0% increase in net sales for the three months ended December 31, 2007 compared to the same period of the prior year; partially offset by ?
lower income taxes receivable in 2007 compared to 2006.
Non-cash items primarily increased in 2007 as a result of higher depreciation and amortization expense relating to the expansion of our distribution and corporate facilities and our footwear promotional rights, higher


Federal Income Taxes We have elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code of 1986, as amended.
To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement to distribute at least 90% of our adjusted taxable income to our stockholders.
Management intends to continue to adhere to these requirements and to maintain our REIT status.
As a REIT, we are entitled to a tax deduction for some or all of the dividends we pay to shareholders.
Accordingly, we generally will not be subject to federal income taxes as long as we distribute an amount equal to or in excess of our taxable income currently to shareholders.
We are also generally subject to federal income taxes on any taxable income that is not currently distributed to our shareholders.
If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes and may not be able to qualify as a REIT for four subsequent taxable years.
REIT qualification reduces, but does not eliminate, the amount of state and local taxes we pay.
In addition, our financial statements include the operations of taxable corporate subsidiaries that are not entitled to a dividends paid deduction and are subject to corporate federal, state and local income taxes.
As a REIT, we may also be subject to certain federal excise taxes if we engage in certain types of transactions.


| Year ended December 31, | (Dollars in thousands, except employees) | Compensation and benefits: | Salaries and wages | Incentive compensation | ESOP | Other employee compensation and benefits -1 | Total compensation and benefits | Period-end full-time equivalent employees | Average full-time equivalent employees |


| Quarter | First | 2014 | Net revenues | Operating profit | Earnings (loss) before income taxes | Net earnings (loss) | Net earnings (loss) attributable to Hasbro, Inc. | Per common share | Net earnings (loss) attributable to Hasbro, Inc. | Basic | Diluted | Market price | High | Low | Cash dividends declared |


| $ in millions Before Consolidation-1 Consolidated Investment Products Adjustments-2 Total | As of December 31, 2010 | Current assets | Non-current assets | Total assets | Current liabilities | Long-term debt of consolidated investment products | Other non-current liabilities | Total liabilities | Retained earnings appropriated for investors in consolidated investment products | Other equity attributable to common shareholders | Equity attributable to noncontrolling interests in consolidated entities | Total liabilities and equity |


| December 31, 2014 December 31, 2013 | (dollars in millions) | Securities Available for Sale: | U.S. Treasury | State and political subdivisions | Mortgage-backed securities: | Federal agencies and U.S. government sponsored entities | Other/non-agency | Total mortgage-backed securities | Total debt securities | Marketable equity securities | Other equity securities | Total equity securities | Total securities available for sale | Securities Held to Maturity: | Mortgage-backed securities: | Federal agencies and U.S. government sponsored entities | Other/non-agency | Total securities held to maturity | Total securities available for sale and held to maturity |


| December 31, (in millions) 2010 2009 | Securities purchased under resale agreements(a) | Securities borrowed(b) | Securities sold under repurchase agreements(c) | Securities loaned |


| Years Ended December 31, | 2013 | (in millions) | Revenues | Management and financial advice fees | Distribution fees | Net investment income | Premiums | Other revenues | Total revenues | Banking and deposit interest expense | Total net revenues | Expenses | Distribution expenses | Interest credited to fixed accounts | Benefits, claims, losses and settlement expenses | Amortization of deferred acquisition costs | Interest and debt expense | General and administrative expense | Total expenses | Operating earnings | Years Ended December 31, | 2014 | (in millions) | Total net revenues | Less: Revenue attributable to CIEs | Less: Net realized gains | Less: Market impact on indexed universal life benefits | Operating total net revenues | Contractual obligations byperiod as of June 30, 2011 | Operating lease obligations | Capital lease obligations | Notes payable, includingaccrued interest | Purchase obligations | Total |


Fixed maturities of $1 million as of December 31, 2010 will mature in 2013.
Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties.
tax returns for 2001 and beyond are open for examination under statute.
Currently, unrecognized tax benefits are not expected to change significantly over the next 12 months.19.


| Year ended December 31, | 2018 | (in millions, except as noted) | Net sales | Cost of sales | Gross margin | Gross margin percentage | Sales volume by product tons (000s) | Sales volume by nutrient tons (000s)(1) | Average selling price per product ton | Average selling price per nutrient ton-1 | Gross margin per product ton | Gross margin per nutrient ton-1 | Depreciation and amortization | Unrealized net mark-to-market (gain) loss on natural gas derivatives |


(a) U. S.  and international equity securities include investments in small, medium, and large capitalization stocks of public companies held in commingled trust funds.
(b) Cash and cash equivalents are liquid short-term investment funds and include net receivables and payables of the trust.
These funds are available for immediate use to fund daily operations, execute investment policies, and serve as a temporary investment vehicle.
The master trust limits the use of derivatives through direct or separate account investments, such that the derivatives used are liquid and able to be readily valued in the market.
Derivative usage in separate account structures is primarily for gaining market exposure in an unlevered manner or hedging investment risks.
The fair market value of the pension master trust's derivatives through direct or separate account investments resulted in a net asset of approximately $4 million and a net liability of $1 million as of December 31, 2018 and 2017, respectively.
There was no activity attributable to Level 3 retirement plan assets during the years ended December 31, 2018 and 2017.18.


| Year ended December 31, | (in thousands, except per share data) | Total revenue | Net income | Earnings per share: | Basic | Diluted |


CAPITAL STOCK AND EARNINGS PER SHARE We are authorized to issue 250 million shares of preferred stock, none of which were issued or outstanding as of December 31, 2013.
The numerator for both basic and diluted earnings per share is net earnings available to common stockholders.
The denominator for basic earnings per share is the weighted average number of common shares outstanding during the period.
The denominator for diluted earnings per share is weighted average shares outstanding adjusted for the effect of dilutive stock options and other equity awards.
The following is a reconciliation of weighted average shares for the basic and diluted share computations (in millions):


| 2006 2005 | (in millions) | Life insurance | Individual and group annuities and supplementary contracts | Other contract liabilities | Subtotal future policy benefits excluding unpaid claims and claim adjustment expenses | Unpaid claims and claim adjustment expenses | Total future policy benefits |


| Year Ended June 30, 2013 | (In millions) | Foreign exchange contracts |


The amounts provided above for amortization of prior service credit and amortization of loss represent the reclassifications of prior service credits and net actuarial losses that were recognized in Accumulated other comprehensive income (loss) in prior periods.
The settlement losses recorded in 2019 and 2018 primarily included lump sum benefit payments associated with the Companys U. S.  supplemental pension plan.
The Company recognizes pension settlements when payments from the supplemental plan exceed the sum of service and interest cost components of net periodic pension cost associated with this plan for the fiscal year.
As further discussed in Note 2, upon adopting an accounting standard update on October 1, 2018, all components of the Companys net periodic pension and postretirement benefit costs, aside from service cost, are recorded to Other income (expense), net on its consolidated statements of income, for all periods presented.


| For the Year 2012 | Life | Distribution Channel | United American Independent | Liberty National Exclusive | American Income Exclusive | Family Heritage | Direct Response | Medicare Part D | Other | $1,808,524 | For the Year 2011 | Life | Distribution Channel | United American Independent | Liberty National Exclusive | American Income Exclusive | Direct Response | Medicare Part D | Other | $1,726,244 | For the Year 2010 | Life | Distribution Channel | United American Independent | Liberty National Exclusive | American Income Exclusive | Direct Response | Medicare Part D | Other | $1,663,699 | 2014 | Volatility factor | Dividend yield | Expected term (in years) | Risk-free rate |


| 2009 2010-2011 2012-2013 after 2013 Total | (In Millions) | Planned construction and | Capital investment -1 | Long-term debt | Capital lease payments | Operating leases | Purchase obligations -2 | Nuclear fuel lease obligations -3 |


| Loss recognized in OCI(effective portion) Locationof (loss)/gain reclassifiedfrom OCI into income(effective portion) (Loss)/gain reclassifiedfrom OCI into income(effective portion) Location of (loss)/gain recognized in income(ineffective portion and amountexcluded from effectiveness testing) (Loss)/gain recognizedin income (ineffectiveportion andamount excluded fromeffectiveness testing) | 2016 | Foreign exchange forwards |


| December 31, 2011 | Fair Value Measurements at Reporting Date Using | Quoted Prices in Active Markets for Identical Assets  and Liabilities  (Level 1) | (In millions) | Assets | Fixed maturity securities: | U.S. corporate securities | Foreign corporate securities | Foreign government securities | RMBS | U.S. Treasury and agency securities | CMBS | State and political subdivision securities | ABS | Other fixed maturity securities | Total fixed maturity securities | Equity securities: | Common stock | Non-redeemable preferred stock | Total equity securities | Trading and other securities: | Actively Traded Securities | FVO general account securities | FVO contractholder-directed unit-linked investments | FVO securities held by CSEs | Total trading and other securities | Short-term investments -1 | Mortgage loans: | Commercial mortgage loans held by CSEs | Mortgage loans held-for-sale: -2 | Residential mortgage loans | Securitized reverse residential mortgage loans | Total mortgage loans held-for-sale | Total mortgage loans | Other invested assets: | MSRs | Other investments | Derivative assets: -3 | Interest rate contracts | Foreign currency contracts | Credit contracts | Equity market contracts | Total derivative assets | Total other invested assets | Net embedded derivatives within asset host contracts -4 | Separate account assets -5 | Total assets |


| Net Charge-offs Net Charge-off Ratios-1 | (Dollars in millions) | Commercial real estate – non-homebuilder | Office | Multi-family rental | Shopping centers/retail | Industrial/warehouse | Multi-use | Hotels/motels | Land and land development | Other-2 | Total non-homebuilder | Commercial real estate – homebuilder | Total commercial real estate |


| At December 31, | (Dollars in thousands) | Balance at beginning of year | Liabilities assumed | Adjustments to reserves | Benefits paid in the current year | Balance at end of year |


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


| As of December 31, 2008 | Level 1 | (in millions) | Fixed maturities, available for sale | Trading account assets supporting insurance liabilities | Other trading account assets | Equity securities, available for sale | Commercial mortgage and other loans | Other long-term investments | Short-term investments | Cash and cash equivalents | Other assets | Sub-total excluding separate account assets | Separate account assets-1 | Total assets | Future policy benefits | Long-term debt | Other liabilities | Total liabilities |


| Fiscal Years Ended | March 31, 2012 | (millions) | Basic | Dilutive effect of stock options, restricted stock and restricted stock units | Diluted shares |


| 2004 Entergy  Arkansas Entergy  Gulf States Entergy  Louisiana Entergy  Mississippi Entergy  New Orleans System  Energy | (In Thousands) | Current: | Federal (a)(b) | State (a)(b) | Total (a)(b) | Deferred -- net | Investment tax credit | adjustments -- net | Recorded income tax expense | 2003 | (In Thousands) | Current: | Federal (a) | State (a) | Total (a) | Deferred -- net | Investment tax credit | adjustments -- net | Recorded income tax expense | 2016 | Decommissioning Trust Fair Values | (In Millions) | Utility: | ANO 1 and ANO 2 | River Bend | Waterford 3 | Grand Gulf | Entergy Wholesale Commodities |


| Year Ended December 31, | 2015 | % of | $Revenues | ($ in thousands) | Expenses | Employee compensation and benefits | Depreciation and amortization | Technology and communications | Professional and consulting fees | Occupancy | Marketing and advertising | General and administrative | Total expenses |


Charges from suppliers for the firm purchase of gas, which are based on formulas or indexes or are subject to negotiation, are generally designed to approximate market prices.
The gas supply contracts are for various terms extending to 2012.
The Utilities have contracts with interstate pipeline companies for the purchase of firm transportation from upstream points where gas has been purchased to the Utilities distribution systems, and for upstream storage services.
Charges under these transportation and storage contracts are approved by the FERC.
Such contracts are for various terms extending to 2023.
The Utilities are required to pay certain fixed charges under the supply, transportation and storage contracts whether or not the contracted capacity is actually used.
These fixed charges amounted to approximately $277 million in 2009, including $272 million for CECONY.
See Contractual Obligations below.
In Steam Sales and Deliveries CECONYs steam sales and deliveries for the last five years wer addition, the Utilities purchase gas on the spot market and contract for interruptible gas transportation.
See Recoverable Energy Costs in Note A to the financial statements in Item 8.
Steam Operations Steam Facilities CECONYs capitalized costs for utility plant, net of accumulated depreciation for steam facilities were $1,555 million and $1,512 million at December 31, 2009 and 2008, respectively.
CECONY generates steam at one steam-electric generating station and five steam-only generating stations and distributes steam to its customers through approximately 105 miles of transmission, distribution, and service piping


| In millions 2006 2005 2004 | Sales | Operating Profit |


| Smart Plans and Other Consumer Membership Other Commercial Membership Commercial Medical Membership | Fully-insured | ASO | Total Commercial medical |


| For the Year Ended December 31, | (Millions of Dollars) | Operating revenues | Energy costs | Operating income | Net income | Total assets (e)(f) | Long-term debt (e) | Shareholder’s equity |


Investment Income 2012 compared to 2011 The decrease in investment income in 2012 compared with 2011 was primarily caused by an $8 million decline in fair value adjustments and an $25 million decline in realized gains on sales of investments.
These declines were partially offset by an increase in interest income, largely due to having a higher average balance of interest-earning cash and investments in our portfolio in 2012 compared with 2011.2011 compared to 2010 The increase in investment income in 2011 compared with 2010 was caused by a combination of factors.
During 2011, we realized $20 million in net gains on the sales of auction rate securities, preferred equity securities and an S&P 500 index fund, as well as a mark-to-market gain on investments.
In 2010, we recorded a $21 million impairment on certain asset-backed auction rate securities, which resulted from provisions that allowed the issuers of the securities to subordinate our holdings to newly-issued debt or to tender for the securities at less than their par value.
Additionally in 2010, we recorded an $8 million loss on the sale of auction rate securities.
The remaining change in investment income was caused by a lower yield earned on our invested assets; however, this was largely offset by a higher average balance of interest-earning investments in our portfolio.
Interest Expense 2012 compared to 2011 Interest expense increased in 2012 compared with 2011, largely due to a higher average balance of debt outstanding, as well as a higher effective interest rate incurred on our debt.
The higher effective interest rate largely resulted from two factors: (1) having a greater proportion of fixed-rate debt outstanding relative to lower-yielding variable rate debt and (2) an increase in the interest rate indices underlying our variable-rate debt and swaps in 2012.
Additionally, interest expense increased in 2012 compared with 2011 due to unfavorable fair value adjustments on interest rate swaps that have not been designated as hedges, as well as the imputation of interest expense on the multiemployer pension withdrawal liability related to the New England Pension Fund.


| RSUs PSUs | Numberof Shares | Nonvested January 1, 2018 | Granted | Vested | Forfeited | Nonvested December 31, 2018 |


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


| December 31, | 2015 | (millions, except percentages) | Cash and Cash Equivalents | Amount Available to be Borrowed Under Credit Facility-1 | Total Liquidity | Total Debt-2 | Total Shareholders' Equity | Ratio of Debt-to-Book Capital-3 |


| 2017 $4.5 | 2018 | 2019 | 2020 | 2021 | 2021-2025 |


We increased our gross profit by $163.5 million for the fiscal year ending September 30, 2011 as compared to the prior fiscal year, resulting in a 110 basis point expansion in gross profit margin to 43.7%.
This increase was principally the result of enhanced product mix, lower manufacturing costs as a result of higher factory utilization, and the aforementioned increase in net revenue.
During fiscal 2011 we continued to benefit from higher contribution margins associated with the licensing and/ or sale of intellectual property.
We increased our gross profit by $138.6 million for the fiscal year ended October 1, 2010 as compared to the prior fiscal year, resulting in a 300 basis point expansion in gross profit margin to 42.6%.
This was principally the result of continued factory process and productivity enhancements, product end-to-end yield improvements, year-over-year material cost reductions, targeted capital expenditure investments and the aforementioned increase in net revenue.
During fiscal 2010 we continued to benefit from higher contribution margins associated with the licensing and/ or sale of intellectual property.


| Portfolio by Type # of Properties # of Beds/ Units Revenue Percent of Total Revenues Real Estate Investments, at Cost Percent of Real Estate Investments Real Estate Investment Per Bed/Unit Number  of  Locations -1 | (Dollars in thousands) | Seniors Housing and Healthcare-Related Properties | Seniors housing communities | Skilled nursing facilities | Hospitals | MOBs-2 | Other properties | Total seniors housing and healthcare-related properties | Other Real Estate Investments | Loans receivable | Total |


| Year Ended  December 28,  2003 Year Ended  December 29,  2002 Change | (In thousands) | Product revenue | Service revenue | Research revenue | Total revenue |


(a) Includes tax benefits associated with settlement of acquired entity tax contingencies.
The net operating loss carryforwards at December 31, 2016 and 2015 follow: Table 94: Net Operating Loss Carryforwards


| 2013 2012 | Deferred acquisition  costs | (in millions) | Other long-term assets | Trade accounts payable and accrued expenses | Long-term liabilities | Total asset (liability) |


| Dividend | Record Date | August 5, 2005 | November 4, 2005 | February 3, 2006 | May 5, 2006 | August 18, 2006 | November 3, 2006 | February 2, 2007 | May 4, 2007 | 2009 | Weighted average shares outstanding for basic net earnings per share | Effect of dilutive stock options and other equity awards | Weighted average shares outstanding for diluted net earnings per share |


| 2013 | Labor-related deemed claim -1 | Aircraft and facility financing renegotiations and rejections -2, -3 | Fair value of conversion discount -4 | Professional fees | Other | Total reorganization items, net | (Dollars in millions) | Long-term debt (including current portion) | Interest on debt* | Pension and other post retirement cash requirements | Capital lease obligations | Operating lease obligations | Purchase obligations not recorded on statement of financial position | Purchase obligations recorded on statement of financial position | Total contractual obligations |


| Restricted Stock Units Granted | Vesting Period | One year | Two years | Five years | Total shares granted |


2014 vs.  2013 Sales increased 9%, as higher volumes of 9% and favorable currency of 1% were partially offset by lower pricing of 1%.
Electronics sales increased 8%, as higher delivery systems equipment sales and materials volumes of 8% and favorable currency of 1% were partially offset by lower pricing of 1%.
Performance Materials sales increased 10%, as higher volumes of 11% were partially offset by lower pricing of 1%.
The higher volumes were across all product lines and major regions.
The lower pricing was primarily due to unfavorable mix impacts.
Operating income of $425.3 increased 32%, or $104.0, primarily from higher volumes of $93, lower operating costs of $31, and favorable currency impacts of $5, partially offset by unfavorable price and mix impacts of $26.
Operating margin of 17.4% increased 310 bp, primarily due to improved loading and leverage from the higher volumes and improved cost performance, partially offset by the unfavorable pricing impacts.2013 vs.  2012 Sales decreased 3%, as lower volumes of 4% and lower pricing of 1% were partially offset by acquisitions of 2%.
Electronics sales decreased 8%, as weaker materials volumes and equipment sales were partially offset by the acquisition of DA NanoMaterials.
Performance Materials sales increased 2%, as higher volumes of 4% were partially offset by lower pricing of 2%.
The increase in volumes was primarily due to strength in the automobile and U. S.  housing markets partially offset by weaker volumes to certain construction markets and marine coatings.
The lower pricing was primarily due to unfavorable mix impacts.
Operating income of $321.3 decreased 25%, or $104.3, and operating margin of 14.3% decreased 400 bp, as 2012 included a gain on the previously held equity interest in DA NanoMaterials of $85.9.
On a non-GAAP basis, operating income of $321.3 decreased 5%, or $18.4, primarily from unfavorable price and mix impacts of $15, lower volumes of $9, and higher operating costs of $4 partially offset by higher acquisitions of $6 and favorable currency of $4.
Operating margin decreased 30 bp, primarily due to lower volumes and unfavorable price mix.


| December 31, | (Dollars in thousands) | Technology | Private Equity | Life Sciences | Private Client Services | Premium Wine | All other sectors | Total nonaccrual loans |


| In millions 2015 2016 2017 2018 2019 Thereafter | Maturities of long-term debt (a) | Debt obligations with right of offset (b) | Lease obligations | Purchase obligations (c) | Total (d) |


| Fiscal years ended October 31, | 2017 | In millions | Stock-based compensation expense from continuing operations | Income tax benefit | Stock-based compensation expense from continuing operations, net of tax | Stock-based compensation expense from discontinued operations |


| Balance, November 3, 2007 $9,889 | Additions for tax positions of current year | Balance, November 1, 2008 | Additions for tax positions of current year | Balance, October 31, 2009 |


| September 30, | 2009 | (In millions) | Warranty liability, beginning of year | Warranties issued | Changes in liability for pre-existing warranties | Settlements made | Warranty liability, end of year |


10.
GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS Goodwill HII performs impairment tests for goodwill as of November 30 of each year, or when evidence of potential impairment exists.
Goodwill is tested for impairment between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company’s reporting units below their carrying value.
In light of the adverse equity market conditions that began in the second quarter of 2011 and the resultant decline in industry market multiples and its market capitalization, the Company performed an interim goodwill impairment analysis as of September 30, 2011.
The analysis resulted in a $290 million non-cash goodwill impairment charge recorded in the Company’s Ingalls segment in 2011.
Due to the complexities involved in determining the implied fair value of the goodwill of each reporting unit, the Company initially recorded a preliminary goodwill impairment charge of $300 million in the third quarter of 2011, which represented its best estimate of the impairment amount at the time of the filing of the Company’s third quarter report.
The goodwill impairment charge was later adjusted to $290 million in the fourth quarter of 2011, based on the final impairment analysis.
The goodwill at these businesses has no tax basis, and, accordingly, there was no tax benefit associated with recording the impairment charge.
No goodwill impairment was recognized at the Newport News segment, as the Company’s analysis indicated its fair value was in excess of its carrying value as of September 30, 2011.
The Company performed its annual goodwill impairment testing as of November 30, 2011, and determined that no further impairment was necessary, as the testing indicated the fair value of each reporting unit exceeded its corresponding carrying value.
Accumulated goodwill impairment losses at December 31, 2011 and 2010, were $2,780 million and $2,490 million, respectively.
The accumulated goodwill impairment losses at December 31, 2011 and 2010, for Ingalls were $1,568 million and $1,278 million, respectively.
The accumulated goodwill impairment losses at both December 31, 2011 and 2010, for Newport News were $1,212 million.
Prior to completing the second step related to the goodwill impairment charge in 2011, HII tested its purchased intangible assets and other long-lived assets for impairment, and the carrying values of these assets were determined not to be impaired.
The changes in the carrying amounts of goodwill during 2011 and 2010 were as follows:


| At December 31, 2017 | (Dollars in millions) | U.S. Reinsurance | International | Bermuda | Insurance | Total excluding A&E | A&E | Total including A&E | (Some amounts may not reconcile due to rounding.) | At December 31, 2016 | (Dollars in millions) | U.S. Reinsurance | International | Bermuda | Insurance | Total excluding A&E | A&E | Total including A&E | (Some amounts may not reconcile due to rounding.) |


| December 31 | 2006 | (In thousands) | Loans | Commercial, financial, agricultural, etc | Real estate: | Residential | Commercial | Construction | Consumer | Total loans | Leases | Commercial | Consumer | Total leases | Total loans and leases |


| Location Size (square feet) Principal Usage | 333 S. Wabash Avenue Chicago, Illinois | 401 Penn Street Reading, Pennsylvania | 2405 Lucien Way Maitland, Florida | 40 Wall Street New York, New York | 1100 Ward Avenue Honolulu, Hawaii | 101 S. Phillips Avenue Sioux Falls, South Dakota | 600 N. Pearl Street Dallas, Texas | 675 Placentia Avenue Brea, California | 1249 S. River Road Cranbury, New Jersey | 4267 Meridian Parkway Aurora, Illinois |


Concentrations Of Credit And Counterparty Credit Risk During fiscal 2012, Wal-Mart Stores, Inc.  and its affiliates (Wal-Mart) accounted for 22 percent of our consolidated net sales and 30 percent of our net sales in the U. S.  Retail segment.
No other customer accounted for 10 percent or more of our consolidated net sales.
WalMart also represented 6 percent of our net sales in the International segment and 7 percent of our net sales in the Bakeries and Foodservice segment.
As of May 27, 2012, Wal-Mart accounted for 26 percent of our U. S.  Retail receivables, 5 percent of our International receivables, and 9 percent of our Bakeries and Foodservice receivables.
The five largest customers in our U. S.  Retail segment accounted for 54 percent of its fiscal 2012 net sales, the five largest customers in our International segment accounted for 26 percent of its fiscal 2012 net sales, and the five largest customers in our Bakeries and Foodservice segment accounted for 46 percent of its fiscal 2012 net sales.
We enter into interest rate, foreign exchange, and certain commodity and equity derivatives, primarily with a diversified group of highly rated counterparties.
We continually monitor our positions and the credit ratings of the counterparties involved and, by policy, limit the amount of credit exposure to any one party.
These transactions may expose us to potential losses due to the risk of nonperformance by these counterparties; however, we have not incurred a material loss.
We also enter into commodity futures transactions through various regulated exchanges.
The amount of loss due to the credit risk of the counterparties, should the counterparties fail to perform according to the terms of the contracts, is $19.5 million against which we do not hold collateral.
Under the terms of master swap agreements, some of our transactions require collateral or other security to support financial instruments subject to threshold levels of exposure and counterparty credit risk.
Collateral assets are either cash or U. S.  Treasury instruments and are held in a trust account that we may access if the counterparty defaults.


The 2011 and 2012 purchase price adjustments relate primarily to adjustments in taxes payable and deferred income taxes, including changes in the liability for unrecognized tax benefits.
Goodwill Impairment Charges 2012 Charges We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that impairment may exist.
In the second quarter of 2012, we performed our annual goodwill impairment test for all of our reporting units and concluded that the goodwill within our EMEA reporting unit was impaired and recorded a $3.602 billion ($3.579 billion after-tax) charge in the second quarter of 2012.
We finalized the second step of the EMEA goodwill impairment test during the third quarter of 2012, in accordance with ASC Topic 350, Intangibles -Goodwill and Other, and there were no adjustments to the charge upon finalization.
In the third quarter of 2012, we performed an interim goodwill impairment test and recorded a non-cash $748 million (pre- and after-tax) charge associated with our U. S.  Cardiac Rhythm Management (U. S.  CRM) reporting unit, primarily driven by the reduction in the estimated size of the U. S.  CRM market, related adjustments to our business and other competitive factors, which led to lower projected U. S.  CRM results compared to prior forecasts.
We finalized the second step of the U. S.  CRM goodwill impairment test during the fourth quarter of 2012, in accordance with ASC Topic 350, Intangibles -Goodwill and Other, and there were no adjustments to the charge upon finalization.
Non-Vested Stock We value restricted stock awards and DSUs based on the closing trading value of our shares on the date of grant.
Information related to non-vested stock awards during 2012, 2011, and 2010 is as follows:


| (Thousands of Barrels per Day) 2003 2002 2001 | Gasoline | Distillates | Propane | Feedstocks and Special Products | Heavy Fuel Oil | Asphalt | TOTAL | Matching Buy/Sell Volumes included in above |


| Shares Weighted-Average Exercise Price (per share) Weighted-Average Remaining Life (years) Aggregate Intrinsic Value | Options outstanding at January1, 2013 | Granted | Forfeited or expired | Exercised | Options outstanding at December 31, 2013 | Exercisable at December 31, 2013 | 2013 | Intrinsic value | Exercise proceeds | Income tax benefit |


| December 31, | Subsidiaries | (In millions) | Metropolitan Life Insurance Company | Metropolitan Life Insurance Company | Metropolitan Life Insurance Company | Metropolitan Life Insurance Company | Total |


The following table summarizes information about Noble Energy’s stock options which were outstanding, and those which were exercisable, as of December 31, 2002.


| Pensions Other Postretirement Benefits | (Millions) | Projected benefitobligation, January 1 | Service cost | Interest cost | Plan amendments | Actuarial losses (gains) | Benefits paid | Foreign currency translation adjustments | Other | Projectedbenefitobligation, December 31 | Market value of planassets, January 1 | Actual return on plan assets | Company contributions | Participant contributions | Benefits paid | Plan expenses and other-net | Foreign currency translation adjustments | Market value of planassets, December 31 | Funded Status | Amounts recognized in the Consolidated Balance Sheet: | Accounts payable and accrued liabilities | Accrued pensions | Other postretirement benefits | Net liabilityrecognized |


| Cash $27,961 | Accounts receivable | Inventory | Property and equipment | Other tangible assets | Accrued taxes | Accounts payable and accrued expenses | Customer relationships | Business licenses | Trade names | Deferred taxes, net | Goodwill | Purchase Price |


| Table 17 Long-term Debt by Major Currency December 31 | (Dollars in millions) | U.S. Dollar | Euro | British Pound | Japanese Yen | Australian Dollar | Canadian Dollar | Other | Total long-term debt |


| 2015 2014 | (in thousands) | Trade accounts payable | Compensation and benefits | Third party processing expenses | Commissions to third parties | Accrued fees and assessment expenses | Other | $312,647 | Customer-related intangible assets | Acquired technology | Trademarks and trade names | Covenants-not-to-compete | Total estimated acquired intangible assets |


| Year ended December 31, | (in millions) | Stock-based compensation: | Restricted stock and RSUs | Long-term incentive plans to be funded by PNC | Total stock-based compensation | Outstanding at | December 31, 2013 | Granted | Converted | Forfeited | December 31, 2014-1 |


| In millions of dollars 2009 2008 2007 2006 2005 | Citicorp | Citi Holdings | Total non-accrual loans (NAL) | Corporate non-accrual loans-1 | North America | EMEA | Latin America | Asia | $13,545 | Citicorp | Citi Holdings | $13,545 | Consumer non-accrual loans-1 | North America | EMEA | Latin America | Asia | $18,639 | Citicorp | Citi Holdings | $18,639 |


| Year ended December 31, | 2018 | (in millions) | Segment impacts of intercompany arrangements: | International Insurance | PGIM | Retirement-1 | Impact of intercompany arrangements-2 | Corporate and Other operations: | Impact of intercompany arrangements-2 | Settlement gains (losses) on forward currency contracts(3) | Net benefit (detriment) to Corporate and Other operations | Net impact on consolidated revenues and adjusted operating income | Year ended December 31, | 2018 | (in millions) | Operating results: | Capital debt interest expense | Investment income, net of operating debt interest expense | Pension and employee benefits | Other corporate activities-1 | Adjusted operating income | Realized investment gains (losses), net, and related adjustments | Related charges | Divested and Run-off Businesses | Equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests | Income (loss) before income taxes and equity in earnings of operating joint ventures | December 31, 2018 | PrudentialInsurance | (in billions) | Cash and short-term investments | Fixed maturity investments-1: | High or highest quality | Other than high or highest quality | Subtotal | Public equity securities, at fair value | Total | December 31, 2018 | Prudentialof Japan | (in billions) | Cash and short-term investments | Fixed maturity investments-3: | High or highest quality-4 | Other than high or highest quality | Subtotal | Public equity securities | Total |


| In millions 2005 2004 2003 | Sales | Operating Profit |


Leveraged Loans Certain loans in the Corporation's commercial portfolio are considered leveraged transactions.
These loans are typically used for mergers, acquisitions, business recapitalizations, refinancing and equity buyouts.
To help mitigate the risk associated with these loans, the Corporation focuses on middle market companies with highly capable management teams, strong sponsors and solid track records of financial performance.
Industries prone to cyclical downturns and acquisitions with a high degree of integration risk are generally avoided.
Other considerations include the sufficiency of collateral, the level of balance sheet leverage and the adequacy of financial covenants.
During the underwriting process, cash flows are stress tested to evaluate the borrowers' abilities to handle economic downturns and an increase in interest rates.
The FDIC defines higher-risk commercial and industrial (HR C&I) loans for assessment purposes as loans generally with leverage of four times total debt to earnings before interest, taxes and depreciation (EBITDA) as well as three times senior debt to EBITDA, excluding certain collateralized loans.
HR C&I loans were $2.5 billion and $2.7 billion at December 31, 2018 and 2017, respectively.
Criticized loans within the HR C&I loan portfolio were $147 million and $284 million at December 31, 2018 and 2017, respectively.
Charge-offs of HR C&I loans totaled $15 million in 2018 and $9 million in 2017.


Open interest is the aggregate number of contracts (long or short) that clearing members hold either for their own account or on behalf of their clients.
Open interest refers to the total number of contracts that are currently open — in other words, contracts that have been traded but not yet liquidated by either an offsetting trade, exercise, expiration or assignment.
Open interest is also a measure of the future activity remaining to be closed out in terms of the number of contracts that members and their clients continue to hold in the particular contract and by the number of contracts held for each contract month listed by the exchange.
The following charts and table presents our year-end open interest for our futures and options contracts (in thousands, except for


| Business Segment Major Products | Industrial and Transportation | Health Care | Display and Graphics | Consumer and Office | Safety, Security and Protection Services | Electro and Communications | Net Sales | (Millions) | Industrial and Transportation | Health Care | Display and Graphics | Consumer and Office | Safety, Security and Protection Services | Electro and Communications | Corporate and Unallocated | Total Company | Assets | (Millions) | Industrial and Transportation | Health Care | Display and Graphics | Consumer and Office | Safety, Security and Protection Services | Electro and Communications | Corporate and Unallocated | Total Company |


| 2007 2006 | Years ended December 31, (In millions) | Foreign exchange products | Interest-rate products |


| Years Ended December 31, | 2014 | (in millions) | Revenues | Management and financial advice fees | Distribution fees | Net investment income | Premiums | Other revenues | Total revenues | Banking and deposit interest expense | Total net revenues | Expenses | Distribution expenses | Interest credited to fixed accounts | Benefits, claims, losses and settlement expenses | Amortization of deferred acquisition costs | Interest and debt expense | General and administrative expense | Total expenses | Operating earnings |


Impaired commercial mortgage and other loans with no allowance for losses are loans in which the fair value of the collateral or the net present value of the loans expected future cash flows equals or exceeds the recorded investment.
The average recorded investment in impaired loans before allowance for losses was $750 million for 2010.
Net investment income recognized on these loans totaled $35 million for the year ended December 31, 2010.
See Note 2 for information regarding the Companys accounting policies for commercial mortgage and other loans.
Non-performing commercial mortgage and other loans with no allowance for losses are loans in which the fair value of the collateral or the net present value of the loans expected future cash flows equals or exceeds the recorded investment.
The average recorded investment in non-performing loans before allowance for losses was $835 million for 2009.
Net investment income recognized on these loans totaled $47 million for 2009.
See Note 2 for information regarding the Companys accounting policies for commercial mortgage and other loans.
The net carrying value of commercial loans held for sale by the Company as of December 31, 2010 and 2009 was $136 million and $124 million, respectively.
As of December 31, 2010 and 2009, all of the Companys commercial loans held for sale were collateralized, with collateral primarily consisting of office buildings, retail stores, apartment complexes and industrial buildings.
In certain transactions, the Company prearranges that it will sell the loan to an investor.
As of December 31, 2010 and 2009, $136 million and $113 million, respectively, of loans held for sale are subject to such arrangements.
The following tables set forth the credit quality indicators as of December 31, 2010, based upon the recorded investment gross of allowance for credit losses.
Commercial mortgage loansIndustrial buildings


| Fiscal Years Ended | April 3,   2010 | (millions) | Net revenues: | United States and Canada | Europe | Asia(a) | Other regions | Total net revenues |


Other Income and Expense Other income and expense for the three fiscal years ended September 27, 2008, are as follows (in millions):
Total other income and expense increased $21 million to $620 million during 2008 as compared to $599 million and $365 million in 2007 and 2006, respectively.
While the Companys cash, cash equivalents and short-term investment balances increased by 59% in 2008, other income and expense increased only 4% due to the decline in the weighted average interest rate earned of 3.44%.
The overall increase in other income and expense is attributable to the Companys higher cash and short-term investment balances, which more than offset the decline in interest rates during 2008 as compared to 2007.
The weighted average interest rate earned by the Company on its cash, cash equivalents, and short-term investments was 5.27% and 4.58% during 2007 and 2006, respectively.
During 2008, 2007 and 2006, the Company had no debt outstanding and accordingly did not incur any related interest expense.


| Year Ended or At December 31 | (in thousands, except notional value) | Average Daily Volume: | Product Lines: | Interest rate | Equity | Foreign exchange | Agricultural commodity | Energy | Metal | Total Average Daily Volume | Method of Trade: | Electronic | Open outcry | Privately negotiated | CME ClearPort | Total Average Daily Volume | Other Data: | Total Notional Value (in trillions) | Total Trading Volume (round turn trades) | Open Interest at Year End (contracts) |


Regulatory Requirements Restrictions on the transfer of funds exist under regulatory requirements applicable to certain of the Company’s subsidiaries.
At December 31, 2010, the aggregate amount of unrestricted net assets was approximately $2.4 billion.
The National Association of Insurance Commissioners (‘‘NAIC’’) defines Risk-Based Capital (‘‘RBC’’) requirements for insurance companies.
The RBC requirements are used by the NAIC and state insurance regulators to identify companies that merit regulatory actions designed to protect policyholders.
These requirements apply to both the Company’s life and property casualty insurance companies.
In addition, IDS Property Casualty is subject to the statutory surplus requirements of the State of Wisconsin.
The Company’s life and property casualty companies each met their respective minimum RBC requirements.
State insurance statutes also contain limitations as to the amount of dividends and distributions that insurers may make without providing prior notification to state regulators.
For RiverSource Life, dividends or distributions in excess of statutory unassigned surplus, as determined in accordance with accounting practices prescribed by the State of Minnesota, require advance notice to the Minnesota Department of Commerce, RiverSource Life’s primary regulator, and are subject to potential disapproval.
In addition, dividends whose fair market value, together with that of other dividends or distributions made within the preceding 12 months, exceeds the greater of (i) the previous year’s statutory net gain from operations or (ii) 10% of the previous year-end statutory capital and surplus are referred to as ‘‘extraordinary dividends.
’’ Extraordinary dividends also require advance notice to the Minnesota Department of Commerce, and are subject to potential disapproval.
Government debt securities of $6 million and $7 million at December 31, 2010 and 2009, respectively, held by the Company’s life insurance subsidiaries were on deposit with various states as required by law and satisfied legal requirements.
Statutory capital and surplus for RiverSource Life were $3.7 billion, $3.4 billion and $2.5 billion for the years ended December 31, 2010, 2009 and 2008, respectively.
Ameriprise Certificate Company (‘‘ACC’’) is registered as an investment company under the Investment Company Act of 1940 (the ‘‘1940 Act’’).
ACC markets and sells investment certificates to clients.
ACC is subject to various capital requirements under the 1940 Act, laws of the State of Minnesota and understandings with the Securities and Exchange


Owned and leased hotel expenses decreased during the year ended December 31, 2016 compared to the year ended December 31, 2015 primarily as a result of the effect of foreign currency changes and property disposals.
Foreign currency changes accounted for $65 million of the decrease.
On a currency neutral basis, owned and leased hotel expenses decreased $54 million, primarily as a result of the decrease in expenses of $66 million from properties disposed between January 1, 2015 and December 31, 2016.


| Years Ended December 31, 2015/2014 2014/2013 | (Dollars in millions) | Gross written premiums | Net written premiums | Premiums earned | Incurred losses and LAE | Commission and brokerage | Other underwriting expenses | Underwriting gain (loss) | Point Chg | Loss ratio | Commission and brokerage ratio | Other underwriting expense ratio | Combined ratio | (NM, not meaningful) | (Some amounts may not reconcile due to rounding.) | At December 31, | (Dollars in millions) | U.S. Reinsurance | International | Bermuda | Mt. Logan | Total | (Some amounts may not reconcile due to rounding.) |


| 2005 2004 2003 Change 2004–2005 | (Dollars in millions) | Years Ended December 31, | Salaries and employee benefits | Information systems and communications | Transaction processing services | Occupancy | Merger, integration and divestiture | Restructuring | Other | Total operating expenses | Number of employees at year-end |


| 25 Basis Point Increase 25 Basis Point Decrease | Pension Plans | Discount Rate: | Effect on net periodic benefit cost | Effect on projected benefit obligation | Return on Assets: | Effect on net periodic benefit cost | Postretirement Medical Plans | Discount Rate: | Effect on net periodic benefit cost | Effect on projected benefit obligation | Health Care Cost Trend Rate: | Effect on net periodic benefit cost | Effect on projected benefit obligation |


H&R BLOCK BANK  In March 2006, the Office of Thrift Supervision (OTS) approved the charter of HRB Bank, which commenced operations on May 1, 2006.
Operations of HRB Bank are primarily focused on providing limited retail banking services to tax clients of H&R Block.
HRB Bank offers the H&R Block Prepaid Emerald MasterCard?
and Emerald Advance lines of credit through our Tax Services segment, and also holds certain FDIC-insured deposits for customers of HRBFA.
In fiscal years 2008 and 2007, HRB Bank purchased mortgage loans primarily from OOMC and H&R Block Mortgage Corporation (HRBMC).
Although HRB Bank no longer intends to purchase mortgage loans, it continues to hold mortgage loans for investment purposes.
HRB Bank had mortgage loans held for investment of $966.3 million and $1.4 billion at April 30, 2008 and 2007, respectively.
HRB Bank earns interest income on mortgage loans held for investment and other investments and bank card transaction fees on the use of debit cards and fees from the use of ATM networks.
HRB Bank is dependent upon H&R Block and its affiliates for shared administrative services.
A significant portion of HRB Banks deposit base includes deposits relating to the business of affiliates.
The information required by the SECs Industry Guide 3, Statistical Disclosure by Bank Holding Companies, is included in Item 7.
discontinued operations, which incurred significant losses in fiscal years 2008 and 2007.
The data set forth below should be read in conjunction with Item 7 and our consolidated financial statements in Item 8.


Financing Activities Our cash flows from financing activities reflect issuances and repayments of debt, proceeds from stock issuances related to our equity incentive programs and repurchases of common stock pursuant to our authorized repurchase programs, discussed in Note L—Stockholders’ Equity to our consolidated financial state	ext{ments included in Item 8 of this Annual Report.
Additionally, our financing activities included $156 million of contingent payments in 2015, $34 million of payments in 2014 and $160 million of payments in 2013 associated with our previous acquisitions.
Our liquidity plans are subject to a number of risks and uncertainties, including those described in Item 1A.
Risk Factors of this Annual Report, some of which are outside our control.
Macroeconomic conditions, adverse litigation outcomes and other risk and uncertainties could limit our ability to successfully execute our business plans and adversely affect our liquidity plans.


The fair value of long-term debt was determined based upon quoted market prices for the same or similar debt issues.


| Year ended December 31, 2007 Year ended December 31, 2006 | Yield-1 | ($ in millions) | Fixed maturities | Trading account assets supporting insurance liabilities | Equity securities | Commercial loans | Policy loans | Short-term investments and cash equivalents | Other investments | Gross investment income before investment expenses | Investment expenses | Investment income after investment expenses | Investment results of other entities and operations-2 | Total investment income |


| Plan Category (a)Number of securities to be issued upon exercise of outstanding options,warrants and rights (b)Weighted-average exerciseprice of outstandingoptions, warrants andrights (c)Number of securitiesremaining available forfuture issuance underequity compensation plans(excluding securitiesreflected in column (a)) | Equity compensation plans approved by security holders-1 | Options | Restricted Stock Units (RSUs)/Performance Stock Units (PSUs) | Equity compensation plans not approved by security holders-3 | Options | GRAND TOTAL |


ONEOK Partners commodity price risk is estimated as a hypothetical change in the price of NGLs, crude oil and natural gas at December 31, 2008, excluding the effects of hedging and assuming normal operating conditions.
ONEOK Partners condensate sales are based on the price of crude oil.
ONEOK Partners estimates the following: ?
a $0.01 per gallon decrease in the composite price of NGLs would decrease annual net margin by approximately $1.2 million; ?
a $1.00 per barrel decrease in the price of crude oil would decrease annual net margin by approximately $1.0 million; and ?
a $0.10 per MMBtu decrease in the price of natural gas would decrease annual net margin by approximately $0.6 million.
The above estimates of commodity price risk do not include any effects on demand for its services that might be caused by, or arise in conjunction with, price changes.
For example, a change in the gross processing spread may cause a change in the amount of ethane extracted from the natural gas stream, impacting gathering and processing margins, NGL exchange revenues, natural gas deliveries, and NGL volumes shipped and fractionated.
ONEOK Partners is also exposed to commodity price risk primarily as a result of NGLs in storage, the relative values of the various NGL products to each other, the relative value of NGLs to natural gas and the relative value of NGL purchases at one location and sales at another location, known as basis risk.
ONEOK Partners utilizes fixed-price physical forward contracts to reduce earnings volatility related to NGL price fluctuations.
ONEOK Partners has not entered into any financial instruments with respect to its NGL marketing activities.
In addition, ONEOK Partners is exposed to commodity price risk as its natural gas interstate and intrastate pipelines collect natural gas from its customers for operations or as part of its fee for services provided.
When the amount of natural gas consumed in operations by these pipelines differs from the amount provided by its customers, the pipelines must buy or sell natural gas, or store or use natural gas from inventory, which exposes ONEOK Partners to commodity price risk.
At December 31, 2008, there were no hedges in place with respect to natural gas price risk from ONEOK Partners natural gas pipeline business.
Distribution  Our Distribution segment uses derivative instruments to hedge the cost of anticipated natural gas purchases during the winter heating months to protect their customers from upward volatility in the market price of natural gas.
Gains or losses associated with these derivative instruments are included in, and recoverable through, the monthly purchased gas cost mechanism.
Energy Services  Our Energy Services segment is exposed to commodity price risk, basis risk and price volatility arising from natural gas in storage, requirement contracts, asset management contracts and index-based purchases and sales of natural gas at various market locations.
We minimize the volatility of our exposure to commodity price risk through the use of derivative instruments, which, under certain circumstances, are designated as cash flow or fair value hedges.
We are also exposed to commodity price risk from fixed-price purchases and sales of natural gas, which we hedge with derivative instruments.
Both the fixed-price purchases and sales and related derivatives are recorded at fair value.


| Year Ended | September 30, 2007 | ($ in 000's) | Revenues | Investment Advisory Fees | Other | Total Revenues | Expenses | Compensation Expense | Other Expenses | Total Expenses | Minority Interest | Pre-tax Earnings |


| 2003 Entergy  Arkansas Entergy  Gulf States Entergy  Louisiana Entergy  Mississippi Entergy  New Orleans System  Energy | (In Thousands) | Computed at statutory rate -35% | Increases (reductions) in tax | resulting from: | State income taxes net of | federal income tax effect | Regulatory differences - | utility plant items | Amortization of investment | tax credits | Flow-through/permanent | differences | Benefit of Entergy Corp. expenses | Other -- net | Total income taxes | Effective Income Tax Rate |


| In millions December 312013 December 312012 | Other real estate owned (OREO): | Residential properties | Residential development properties | Commercial properties | Total OREO | Foreclosed and other assets | Total OREO and foreclosed assets |


REPUBLIC SERVICES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued) total notional value of $210.0 million, matured in August 2011.
This maturity was identical to our unsecured notes that also matured in August 2011.
Under the swap agreements, we paid interest at floating rates based on changes in LIBOR and received interest at a fixed rate of 6.75%.
We reduced interest expense by $5.4 million and $8.5 million due to periodic settlements of active swap agreements during years ended December 31, 2011 and 2010.
At December 31, 2012 and 2011 we had no interest rate swap agreements outstanding.
From time to time, we enter into treasury and interest rate locks to manage exposure to fluctuations in interest rates in anticipation of future debt issuances.
These transactions are accounted for as a cash flow hedges.
As of December 31, 2012 and 2011, no interest rate lock cash flow hedges were outstanding.
During the second quarter 2012, we entered into a number of interest rate lock agreements having an aggregate notional amount of $200.0 million with fixed interest rates approximating 2.20% to manage exposure to fluctuations in interest rates in anticipation of the planned issuance of the 3.550% Notes.
Upon issuance of the 3.550% Notes, we terminated the interest rate locks and paid $4.8 million to the counterparties.
The effective portion of the interest rate locks, recorded as a component of accumulated other comprehensive income, was $4.7 million, or $2.7 million net of tax.
During the first and second quarters of 2011, we entered into a number of interest rate lock agreements having an aggregate notional amount of $725.0 million with fixed interest rates ranging from 3.10% to 4.61% to manage exposure to fluctuations in interest rates in anticipation of the planned issuance of the 2011 Notes.
Upon issuance of the 2011 Notes, we terminated the interest rate locks and paid $36.5 million to the counterparties.
The effective portion of the interest rate locks, recorded as a component of accumulated other comprehensive income, was $36.2 million, or $21.2 million net of tax.
During the first quarter of 2010, we entered into interest rate lock agreements having an aggregate notional amount of $500.0 million to hedge interest rates in connection with the issuance of the 2010 Notes.
Upon issuance of these notes, we terminated the interest rate locks and paid approximately $7.0 million to the counterparties.
The effective portion of the interest rate locks, recorded as a component of accumulated other comprehensive income, was $6.4 million or $3.7 million net of tax.
As of December 31, 2012 and December 31, 2011, the effective portion of the interest rate locks, recorded as a component of accumulated other comprehensive income, was $24.6 million and $23.2 million, respectively.
The effective portion of the interest rate locks will be amortized as an adjustment to interest expense over the life of the issued debt using the effective interest rate method.
We expect to amortize $2.5 million over the next twelve months as a yield adjustment to our senior notes.
The effective portion of the interest rate locks amortized as a net increase to interest expense during the years ended December 31, 2012, 2011 and 2010 was $2.2 million, $1.4 million and $0.4 million, respectively.


| 2017 2016 | Income taxes recovered through rates | Removal costs recovered through rates | Pension and other postretirement benefit balancing accounts | Other | Total Regulatory Liabilities |


| December 31, | 2012 | (in millions) | PSU expense before income tax | Tax benefit | PSU expense, net of tax | Total value of PSUs converted-1 | Total fair value of PSUs vested |


| (Dollars in thousands, except per share amounts) 2005 | Net loss | Pro forma | Earnings per share - basic | Pro forma | Earnings per share - diluted | Pro forma |