Research, Development and Engineering Applied’s long-term growth strategy requires continued development of new products.
The Company’s significant investment in research, development and engineering (RD&E) has generally enabled it to deliver new products and technologies before the emergence of strong demand, thus allowing customers to incorporate these products into their manufacturing plans at an early stage in the technology selection cycle.
Applied works closely with its global customers to design systems and processes that meet their planned technical and production requirements.
Product development and engineering organizations are located primarily in the United States, as well as in Europe, Israel, Taiwan, and China.
In addition, Applied outsources certain RD&E activities, some of which are performed outside the United States, primarily in India.
Process support and customer demonstration laboratories are located in the United States, China, Taiwan, Europe, and Israel.
Applied’s investments in RD&E for product development and engineering programs to create or improve products and technologies over the last three years were as follows: $1.3 billion (18 percent of net sales) in fiscal 2013, $1.2 billion (14 percent of net sales) in fiscal 2012, and $1.1 billion (11 percent of net sales) in fiscal 2011.
Applied has spent an average of 14 percent of net sales in RD&E over the last five years.
In addition to RD&E for specific product technologies, Applied maintains ongoing programs for automation control systems, materials research, and environmental control that are applicable to its products.


(1) Represents estimated fair value for fixed maturity securities, and for short-term investments and cash equivalents, estimated fair value or amortized cost, which approximates estimated fair value.
(2) The Company’s investment in Mexico government and agency fixed maturity securities at December 31, 2011 of $5.0 billion is less than 10% of the Company’s equity.
Concentrations of Credit Risk (Equity Securities).
The Company was not exposed to any concentrations of credit risk in its equity securities holdings of any single issuer greater than 10% of the Company’s equity or 1% of total investments at December 31, 2011 and 2010.
Maturities of Fixed Maturity Securities.
The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date (excluding scheduled sinking funds), were as follows a


| (in 000s, except per share amounts) | Fiscal Year 2011 | Revenues | Income (loss) from continuing operations before taxes (benefit) | Income taxes (benefit) | Net income (loss) from continuing operations | Net income (loss) from discontinued operations | Net income (loss) | Basic earnings (loss) per share: | Net income (loss) from continuing operations | Net loss from discontinued operations | Net income (loss) | Diluted earnings (loss) per share: | Net income (loss) from continuing operations | Net loss from discontinued operations | Net income (loss) |


Liquidity and Capital Resources Liquidity is essential to our business.
The primary goal of our liquidity management activities is to ensure adequate funding to conduct our business over a range of market environments.
Senior management establishes our liquidity and capital policies.
These policies include senior management’s review of short-and long-term cash flow forecasts, review of monthly capital expenditures, the monitoring of the availability of alternative sources of financing, and the daily monitoring of liquidity in our significant subsidiaries.
Our decisions on the allocation of capital to our


| Pension Benefits Year Ended December 31, Other Benefits Year Ended December 31, | 2018 | (In millions) | Components of net periodic benefit cost: | Service cost | Interest cost | Expected return on plan assets | Amortization: | - prior service cost (credit) | - actuarial loss | Net settlement loss(a) | Net periodic benefit cost(b) | Other changes in plan assets and benefit obligations recognized in other comprehensive (income) loss (pretax): | Actuarial loss (gain) | Amortization of actuarial gain (loss) | Prior service cost (credit) | Amortization of prior service credit (cost) | Total recognized in other comprehensive (income) loss | Total recognized in net periodic benefit cost and other comprehensive (income) loss |


| Year Ended December 31 2017 over 2016 2016 over 2015 | ($ in millions) | Cost of product sales | % of product sales | Cost of service revenues | % of service revenues | Income (loss) from operating investments, net | Other income and gains | General and administrative expenses | % of total sales and service revenues | Goodwill impairment | Cost of sales and service revenues |


Investing Activities Net cash used in investing activities increased $189.6 million in 2015 compared to 2014.
The increase was primarily due to the completion of the acquisition of Kelway by purchasing the remaining 65% of its outstanding common stock on August 1, 2015.
Additionally, capital expenditures increased $35.1 million to $90.1 million from $55.0 million for 2015 and 2014, respectively, primarily for our new office location and an increase in spending related to improvements to our information technology systems.
Net cash used in investing activities increased $117.7 million in 2014 compared to 2013.
We paid $86.8 million in the fourth quarter of 2014 to acquire a 35% non-controlling interest in Kelway.
Additionally, capital expenditures increased $7.9 million to $55.0 million from $47.1 million in 2014 and 2013, respectively, primarily for improvements to our information technology systems during both years.
Financing Activities Net cash used in financing activities increased $114.5 million in 2015 compared to 2014.
The increase was primarily driven by share repurchases during the year ended December 31, 2015 which resulted in an increase in cash used for financing activities of $241.3 million.
For more information on our share repurchase program, see Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
” The increase was partially offset by the changes in accounts payable-inventory financing, which resulted in an increase in cash provided for financing activities of $20.4 million, and the net impact of our debt transactions which resulted in cash outflows of $7.1 million and $145.9 million during the years


| Company Type Interest Rate Maturity Amount  (in thousands) | American Water Capital Corp. | Other subsidiaries | Other subsidiaries | Other subsidiaries | Other | Total retirements & redemptions |


| Short-term debt Senior long-term debt | Moody’s | JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A. | Chase Bank USA, N.A. |


(a) On October 25, 2013, we acquired Boise Inc.  (Boise).
The 2013 consolidated earnings results include Boise for the period of October 25 through December 31, 2013.
(b) EBITDA represents income before interest (interest expense and interest income), income tax provision (benefit), and depreciation, amortization, and depletion.
We present EBITDA because it provides a means to evaluate our performance on an ongoing basis using the same measure that is used by our management and because it is frequently used by investors and other interested parties in the evaluation of companies.
EBITDA, however, is not a measure of our liquidity or financial performance under generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income, income from operations, or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.
The use of EBITDA instead of net income has limitations as an analytical tool, including the inability to determine profitability; the exclusion of interest expense, interest income, and associated significant cash requirements; and the exclusion of depreciation, amortization, and depletion, which represent significant and unavoidable operating costs, given the level of our indebtedness and the capital expenditures needed to maintain our businesses.
Our measures of EBITDA are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.
Any analysis of non-GAAP financial measures should be done in conjunction with results presented in accordance with GAAP.
The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such.
See Reconciliations of NonGAAP Financial Measures to Reported Amounts included in this Item 7 for a reconciliation of non-GAAP measures to the most comparable GAAP measure.
expense was primarily a result of lower capitalized interest ($6.3 million) related primarily to the Counce, Tennessee linerboard mill and Valdosta, Georgia linerboard mill major energy projects and additional interest expense ($2.1 million) related to PCAs term loan of $150.0 million borrowed in October 2011.
PCAs effective tax rate was 57.0% for the year ended December 31, 2012, which included a 22.5% higher rate from amending our 2009 tax return in 2012 related to alternative energy tax credits as described in Note 6, Alternative Energy Tax Credits, of the Notes to Consolidated Financial Statements in Part II, Item 8.
Financial Statements and Supplementary Data of this Form 10-K.
Excluding the amendment, the 2012 effective tax rate would have been 34.5% for the year ended December 31, 2012, compared to 35.1% for the year ended December 31, 2011.
The effective tax rate varies from the U. S.  federal statutory tax rate of 35.0% principally due to the impact of the alternative energy tax credits in 2012, state and local income taxes and the domestic manufacturers deduction.
PCA had no material changes to its reserve for unrecognized tax benefits under ASC 740, Income Taxes, during 2012.
Liquidity and Capital Resources Sources and Uses of Cash Our primary sources of liquidity are net cash provided by operating activities and available borrowing capacity under our revolving credit facility.
We ended the year with $191.0 million of cash and $331.0 million of unused borrowing capacity under the revolving credit facility, net of letters of credit.
Currently, our primary uses of cash are for operations, capital expenditures, debt service (including voluntary payments of debt), and declared common stock dividends, which we expect to be able to fund from these sources.
We believe that net cash generated from operating activities, cash on hand, available borrowings under our revolving credit facility and available capital through access to capital markets will be adequate to meet our liquidity and capital requirements, including payments of any declared common stock dividends for the foreseeable future.
As our debt or credit facilities become due, we will need to repay, extend or replace such facilities.
Our ability to do so will be subject to future economic conditions and financial, business, and other factors, many of which are beyond our control.
Below is a summary table of our cash flows, followed by a discussion of our sources and uses of cash through operating activities, investing activities, and financing activities (dollars in millions):


| Pension Benefits-1 Other Retiree Benefits-2 | Years ended June 30 | CHANGE IN BENEFIT OBLIGATION | Benefit obligation at beginning of year-3 | Service cost | Interest cost | Participants' contributions | Amendments | Actuarial loss/(gain) | Acquisitions/(divestitures) | Special termination benefits | Currency translation and other | Benefit payments | BENEFIT OBLIGATION AT END OF YEAR-3 |


New Accounting Pronouncements In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No.48 (FIN 48), Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No.109, Accounting for Income Taxes.
 FIN 48 was issued to reduce the diversity in practice associated with certain aspects of recognition, disclosure and measurement related to accounting for uncertain income tax positions.
We are required to adopt FIN 48 effective January 1, 2007.
We do not believe the adoption of FIN 48 will have a material impact on our financial position, results of operations or cash flows.
In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No.108 (SAB 108), Considering the Effects of Prior Year Misstatements in Current Year Financial Statements.
 SAB 108 was issued to provide consistency between how registrants quantify financial statements misstatements.
Historically, there have been two widely-used methods for quantifying the effects of financial statement misstatements.
These methods are commonly referred to as the roll-over method and iron curtain method.
The roll-over method quantifies the amount by which the current income statement is misstated.
The iron curtain quantifies the error as the cumulative amount by which the current year balance sheet is misstated.
SAB 108 establishes an approach that requires quantification of financial statement misstatements based on the effects of the misstatement on each the income statement, balance sheet and the related disclosures.
This approach is commonly referred to as the dual approach.
 We adopted SAB 108 during the fourth quarter of 2006 in connection with the preparation of our annual financial statements for the year ending December 31, 2006.
The adoption of SAB 108 did not have a material impact on our financial positions, results of operations or cash flows.
In September 2006, the FASB issued SFAS No.157 Fair Value Measurements.
 SFAS No.157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.
SFAS No.157 applies to accounting pronouncements that require or permit fair value measurements, except for share-based payments under SFAS No.123R.
We are required to


| Period Total Number   of Shares   Purchased-1 Average   Price Paid   per Share Total Number of   Shares Purchased as   Part of Publicly   Announced Program Approximate Dollar   Value of Shares   Remaining that may be   Purchased Under   the Program | October 1-31, 2009 | November 1-30, 2009 | December 1-31, 2009 | Three Months Ended | March 31, 2009 | (Unaudited) | (In $ millions, except per share data) | Net sales | Gross profit | Other (charges) gains, net | Operating profit (loss) | Earnings (loss) from continuing operations before tax | Amounts attributable to Celanese Corporation | Earnings (loss) from continuing operations | Earnings (loss) from discontinued operations | Net earnings (loss) | Earnings (loss) per share — basic | Earnings (loss) per share — diluted | Three Months Ended | March 31, 2008 | (Unaudited) | (In $ millions, except per share data) | Net sales | Gross profit | Other (charges) gains, net | Operating profit (loss) | Earnings (loss) from continuing operations before tax | Amounts attributable to Celanese Corporation | Earnings (loss) from continuing operations | Earnings (loss) from discontinued operations | Net earnings (loss) | Earnings (loss) per share — basic | Earnings (loss) per share — diluted |


| 2005 2004 2003 | Discretionary matching contributions for the year ended December 31, | Shares issued for the year ended December 31, | Shares issuable as of the year ended December 31, |


| $ in millions 2010 2009 $ Change % Change | Investment management fees | Service and distribution fees | Performance fees | Other | Total operating revenues | Third-party distribution, service and advisory expenses | Proportional share of revenues, net of third-partydistribution expenses, from joint venture investments | Management fees earned from consolidated investment products | Other revenues recorded by consolidated investment products | Net revenues |


Indemnification agreements  general In connection with issuing securities to investors, the Firm may enter into contractual arrangements with third parties that require the Firm to make a payment to them in the event of a change in tax law or an adverse interpretation of tax law.
In certain cases, the contract also may include a termination clause, which would allow the Firm to settle the contract at its fair value in lieu of making a payment under the indemnification clause.
The Firm may also enter into indemnification clauses in connection with the licensing of software to clients (software licensees) or when it sells a business or assets to a third party (third-party purchasers), pursuant to which it indemnifies software licensees for claims of liability or damages that may occur subsequent to the licensing of the software, or third-party purchasers for losses they may incur due to actions taken by the Firm prior to the sale of the business or assets.
It is difficult to estimate the Firms maximum exposure under these indemnification arrangements, since this would require an assessment of future changes in tax law and future claims that may be made against the Firm that have not yet occurred.
However, based on historical experience, management expects the risk of loss to be remote.


| Three months ended | December 31, 2016 | Interest income | Interest expense | Net interest income | Provision for credit losses | Net interest income after provision for credit losses | Total noninterest income | Total noninterest expense | Income before income taxes | Provision for income taxes | Net income | Dividends on preferred shares | Net income applicable to common shares | Common shares outstanding | Average—basic | Average—diluted-2 | Ending | Book value per common share | Tangible book value per common share-3 | Per common share | Net income—basic | Net income—diluted | Cash dividends declared | Common stock price, per share | High-4 | Low-4 | Close | Average closing price | Return on average total assets | Return on average common shareholders’ equity | Return on average tangible common shareholders’ equity-5 | Efficiency ratio-6 | Effective tax rate | Margin analysis-as a % of average earning assets-7 | Interest income-7 | Interest expense | Net interest margin-7 | Revenue—FTE | Net interest income | FTE adjustment | Net interest income-7 | Noninterest income | Total revenue-7 |


| Year Ended December 31, 2005 (In millions) | Revenues | Expenses | Income from discontinued operations before provision for income tax | Provision for income tax | Net investment gain, net of income tax | Income from discontinued operations, net of income tax |


APACHE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued) In November 2015, the FASB issued ASU 2015-17 Balance Sheet Classification of Deferred Taxes, which requires all companies to classify deferred tax assets, liabilities, and related valuation allowances as noncurrent on the balance sheet effective for annual periods beginning after December 15, 2016, with early adoption allowed.
Apache has elected to adopt the accounting standard for the year ended December 31, 2015 and as a result, all deferred tax assets, liabilities, and related valuation allowances are classified as noncurrent on Apache Corporations December 31, 2015 consolidated balance sheet.
Prior consolidated balance sheets were not retrospectively adjusted.
Net deferred tax assets and liabilities are included in the consolidated balance sheet as follows:


| Year Ended December 31, | 2011 | (millions) | Stock-Based Compensation Expense Included in | General and Administrative Expense | Exploration Expense and Other | Total Stock-Based Compensation Expense | Tax Benefit Recognized |


Assets under administration (
‘‘AUA’’) include assets for which we provide administrative services such as client assets invested in other companies’ products that we offer outside of our wrap accounts.
These assets include those held in clients’ brokerage accounts.
We generally record fees received from administered assets as distribution fees.
We do not exercise management discretion over these assets and do not earn a management fee.
These assets are not reported on our Consolidated Balance Sheets.
AUA also includes certain assets on our Consolidated Balance Sheets for which we do not provide investment management services and do not recognize management fees, such as investments in non-affiliated funds held in the separate accounts of our life insurance subsidiaries.
These assets do not include assets under advisement, for which we provide model portfolios but do not have full discretionary investment authority.


| Payments Due by Period | Total | (in millions) | Debt | Interest -1 | Operating leases -2 | Purchase obligations -3 | Future policy benefits payable and otherlong-term liabilities -4 | Total |


| Vascular North America Anesthesia/Respiratory North America Surgical North America EMEA Asia All Other Total | (Dollars in thousands) | Balance as of December 31, 2013 | Goodwill | Accumulated impairment losses | 240,169 | Goodwill related to acquisitions | Translation adjustment | Balance as of December 31, 2014 | Goodwill | Accumulated impairment losses | $240,169 |


Restricted Stock Units RSUs are granted to certain employees and are payable in shares of our common stock.
RSU shares are accounted for at fair value based upon the closing stock price on the date of grant.
The corresponding expense is amortized over the vesting period, typically three years.
The fair values of RSU awards granted during the years ended December 31, 2018, 2017, and 2016 were $70.95, $72.47, and $71.46, respectively.
The number of shares ultimately issued for the RSU program remains constant with the exception of forfeitures.
Pursuant to this program, 1.3 million, 1.4 million, and 1.3 million shares were granted and approximately 1.0 million, 0.9 million, and 0.6 million shares were issued during the years ended December 31, 2018, 2017, and 2016, respectively.
Approximately 0.8 million shares are expected to be issued in 2019.
As of December 31, 2018, the total remaining unrecognized compensation cost related to nonvested RSUs was $112.2 million, which will be amortized over the weightedaverage remaining requisite service period of 21 months.


| Pretax Increase (Decrease) 2012 2011 | (in millions) | Other revenues | Benefits, claims, losses and settlement expenses | Amortization of DAC | Interest credited to fixed accounts | Total expenses | Total-1 |


| Years Ended December 31, 2014 2013 | Purchases of shares from noncontrolling interests | Dividends paid to noncontrolling interests | Proceeds from sale-leaseback |


| Market Number  of stores | United Kingdom | Mexico | India | Australia | South Korea | Canada | Turkey | Japan | France | Taiwan |


Capacity and Other Contracted Revenue Sources NRG's revenues and cash flows benefit from capacity/demand payments and other contracted revenue sources, originating from market clearing capacity prices, Resource Adequacy contracts, tolling arrangements, PPAs and other long-term contractual arrangements: ?
Capacity auctions  The Company's largest sources of capacity revenues are capacity auctions in PJM, ISO-NE, and NYISO.
Both ISO-NE and PJM operate a pay-for-performance model where capacity payments are modified based on real-time performance, where NRG's actual revenues will be the combination of revenues based on the cleared auction MWs plus the net of any over- and under-performance of NRG's fleet.
PJM integrated a new Capacity Performance product into the market in 2015, as further described in Regulatory Matters.
In addition, MISO has an annual auction, known as the Planning Resource Auction, or PRA.
The Gulf Coast assets situated in the MISO market may participate in this auction.
In certain circumstances, capacity from the Gulf Coast region may be sold into the PJM market.  ?
Resource Adequacy and bilateral contracts  In California, there is a resource adequacy requirement mandated by law that is satisfied through bilateral contracts.
The Company's newer generation in California is contracted under longterm tolling agreements.
Certain other sites in California have short-term tolling agreements or resource adequacy contracts.
In addition, NRG earns demand payments from its long-term full-requirements load contracts with nine Louisiana distribution cooperatives, which expire in 2025.
Demand payments from the current long-term contracts are tied to summer peak demand and provide a mechanism for recovering a portion of the costs associated with new or changed environmental laws or regulations.
In Texas, capacity and contracted revenues are through bilateral contracts with load serving entities.  ?
Long-term PPAs  Output from the majority of renewable energy assets and certain conventional energy plants is sold through long-term PPAs and tolling agreements to a single counterparty, which is often a utility or commercial customer.


R&D expense increased 36% during 2011 compared to 2010, it declined slightly as a percentage of net sales, due to the 66% year-over-year growth in the Company’s net sales during 2011.
R&D expense increased 34% or $449 million to $1.8 billion in 2010 compared to 2009.
This increase was due primarily to an increase in headcount and related expenses in the current year to support expanded R&D activities.
Also contributing to this increase in R&D expense in 2010 was the capitalization in 2009 of software development costs of $71 million related to Mac OS X Snow Leopard.
Although total R&D expense increased 34% during 2010, it declined as a percentage of net sales given the 52% year-over-year increase in net sales in 2010.
The Company continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace and are directly related to timely development of new and enhanced products that are central to the Company’s core business strategy.
As such, the Company expects to make further investments in R&D to remain competitive.


| Millions Est.2013 2012 2011 2010 | Net periodic pension cost | Net periodic OPEB cost/(benefit) |


| 2008 2007 | (Dollars in billions) | United States | Australia | Great Britain | Spain | Italy | Portugal | Germany | Netherlands | Belgium | Greece | Other | Total conduit assets |


| Net tangible assets acquired as of July 13, 2006 $1,200 | In-process research and development | Developed technology and know how | Customer relationship | Trade name | Order Backlog | Deferred income taxes | Goodwill | Estimated Purchase Price |


| 2005 2004 2003 | (Dollars in millions) | Net sales | % change compared with prior year | Segment profit | % change compared with prior year |


| For the Year Ended December 31, 2006 | First Quarter | Revenues | Income from continuing operations applicable to common shares | Discontinued operations | Net income applicable to common shares | Earnings per share: | Basic: | Income from continuing operations applicable to common shares | Discontinued operations | Net income applicable to common shares | Diluted: | Income from continuing operations applicable to common shares | Discontinued operations | Net income applicable to common shares | Dividends declared per share | 12/31/2002 | Ventas | NYSE Composite Index | All REIT Index | Healthcare REIT Index | Russell 1000 Index | As of December 31, | 2007 | Swap | (In thousands) | Notional amount | Gross book value | Fair value -1 | Fair value reflecting change in interest rates: -1 | -100 BPS | +100 BPS |


licensed software upgrade rights, installation fees, transaction processing and subscriptions, decreased 1% from 2016 to 2015.
The decrease in system sales was primarily driven by a decline in technology resale.  ?
Support and maintenance revenues increased 4% to $1.0 billion in 2016 compared to $976 million in 2015.
This increase was primarily attributable to continued success selling Cerner Millennium applications and implementing them at client sites.  ?
Services revenue, which includes professional services (excluding installation) and managed services, increased 16% to $2.4 billion in 2016 from $2.1 billion in 2015.
This increase was driven by a $207 million increase in professional services due to growth in implementation and consulting activities and growth in managed services of $124 million as a result of continued demand for our hosting services.
Revenue backlog, which reflects contracted revenue that has not yet been recognized as revenue, increased 12% to $15.9 billion in 2016 compared to $14.2 billion in 2015.
This increase was driven by solid levels of new business bookings revenue during the past four quarters, including strong levels of managed services bookings that typically have longer contract terms.
Costs of Revenue Costs of revenue as a percent of total revenues were 16% in 2016 compared to 17% in 2015.
The lower costs of revenue as a percent of total revenues was primarily driven by a lower mix of technology resale, which carries a higher cost of revenue.
Costs of revenue includes the cost of reimbursed travel expense, sales commissions, third party consulting services and subscription content and computer hardware, devices and sublicensed software purchased from manufacturers for delivery to clients.
It also includes the cost of hardware maintenance and sublicensed software support subcontracted to the manufacturers.
Such costs, as a percent of total revenues, typically have varied as the mix of revenue (software, hardware, devices, maintenance, support, services and reimbursed travel) carrying different margin rates changes from period to period.
Costs of revenue does not include the costs of our client service personnel who are responsible for delivering our service offerings.
Such costs are included in sales and client service expense.
Operating Expenses Total operating expenses increased 7% to $3.1 billion in 2016, compared with $2.9 billion in 2015.  ?
Sales and client service expenses as a percent of total revenues were 43% in 2016, compared to 42% in 2015.
These expenses increased 13% to $2.1 billion in 2016, from $1.8 billion in 2015.
Sales and client service expenses include salaries and benefits of sales, marketing, support, and services personnel, depreciation and other expenses associated with our managed services business, communications expenses, unreimbursed travel expenses, expense for share-based payments, and trade show and advertising costs.
The growth in services expense and increase as a percent of total revenues reflects hiring of services personnel to support the strong growth in services revenue.  ?
Software development expenses as a percent of total revenues were 11% in 2016, compared to 12% in 2015.
Expenditures for software development include ongoing development and enhancement of the Cerner Millennium and HealtheIntent platforms, with a focus on supporting key initiatives to enhance physician experience, revenue cycle and population health solutions.
A summary of our total software development expense in 2016 and 2015 is as follows:


Contract options in our defense businesses represent agreements to perform additional work beyond the products and services associated with firm contracts, if the customer exercises the option.
These options are negotiated in conjunction with a firm contract and provide the terms under which the customer may elect to procure additional units or services at a future date.
Contract options in the Aerospace group represent options to purchase new aircraft and long-term agreements with fleet customers.
We recognize options in backlog when the customer exercises the option and establishes a firm order.
On December 31, 2009, the estimated potential value associated with these IDIQ contracts and contract options was approximately $17.6 billion, up from $16.8 billion at the end of 2008.
This represents our estimate of the potential value we will receive.
The actual amount of funding received in the future may be higher or lower.
We expect to realize this value over the next 10 to 15 years.


| Year ended December 31, | 2006 | (in millions) | Impact on revenues and adjusted operating income: | International Insurance | International Investments | Total International Insurance and Investments Division | December 31, 2006 | (in millions) | Forward currency contracts | Cross-currency coupon swap agreements | Foreign exchange component of interest on dual currency investments | Total | -1 | NAIC Designation | (in millions) | 1 | 2 | Subtotal Investment Grade | 3 | 4 | 5 | 6 | Subtotal Below Investment Grade | Total | -1 | NAIC Designation | (in millions) | 1 | 2 | Subtotal InvestmentGrade | 3 | 4 | 5 | 6 | Subtotal Below Investment Grade | Total |


| December 31, 2008 December 31, 2007 | Notional | Amount | (In millions) | Interest rate swaps | Interest rate floors | Interest rate caps | Financial futures | Foreign currency swaps | Foreign currency forwards | Options | Financial forwards | Credit default swaps | Synthetic GICs | Other | Total |


| 2005 2004 | December 31, (in millions) | Total private equity investments |


Goodwill and Other Intangible Assets Goodwill and intangible assets deemed to have indefinite lives are not amortized but are instead subject to impairment tests.
For the years ended December 31, 2012, 2011 and 2010, the tests did not indicate impairment.
shares may be issued.
Awards granted under the Advisor Group Deferral Plan may be settled in cash and/or shares of the Company’s common stock according to the award’s terms.
As of December 31, 2012, there were approximately 0.3 million units outstanding under the Advisor Group Deferral Plan, of which nil were fully vested.
Threadneedle Equity Incentive Plan On an annual basis, certain key Threadneedle employees are eligible for awards under an equity incentive plan (‘‘EIP’’) based on a formula tied to Threadneedle’s financial performance.
Awards under the EIP were first made in April 2009; prior awards were made under the equity participation plan (‘‘EPP’’).
In 2011, Threadneedle’s articles of incorporation were amended to create a new class of Threadneedle corporate units to be granted under a modified EIP plan.
Employees who held EIP units granted prior to 2011 were given the choice to exchange their existing units at the exchange date.
EIP awards may be settled in cash or Threadneedle corporate units according to the award’s terms.
For awards granted prior to 2011, the EIP provides for 100% vesting after three years, with a mandatory call after six years.
For converted units and awards granted after February 2011, the EIP provides for 100% vesting after two and a half years, with no mandatory call date.
Converted units and units granted after February 2011 have dividend rights once fully vested.
The EPP provides for 50% vesting after three years and 50% vesting after four years, with required cash-out after five years.
EIP and EPP awards are subject to forfeitures based on future service requirements.
The value of the awards is recognized as compensation expense evenly over the vesting periods.
Generally, the expense is based on the grant date fair value of the awards as determined by an annual independent valuation of Threadneedle’s fair market value; however, for awards accounted for as a liability the expense is adjusted to reflect Threadneedle’s current calculated value (the change in the value of the awards is recognized immediately for vested awards and over the remaining vesting period for unvested awards).
During the years ended December 31, 2012, 2011 and 2010, cash settlements of EPP and EIP awards were $31 million, $14 million and $18 million, respectively.17.


| (millions) 2013 2012 2011 | Balance at January 1 | Less reinsurance recoverables on unpaid losses | Net balance at January 1 | Incurred related to: | Current year | Prior years | Total incurred | Paid related to: | Current year | Prior years | Total paid | Net balance at December 31 | Plus reinsurance recoverables on unpaid losses | Balance at December 31 |


approval of the Texas Commission on Environmental Quality (TCEQ).
We estimate that the pump and treat system will continue to operate until 2042.
We plan to perform additional work to address other environmental obligations at the site.
This additional work includes remediating, as required, impacted soils, investigating groundwater west of the former PUI facility, performing post closure care for two closed RCRA surface impoundment units, and establishing engineering controls.
In 2012, we estimated the total exposure at this site to be $13.
There has been no change to the estimated exposure.
ASSET RETIREMENT OBLIGATIONS Our asset retirement obligations are primarily associated with Industrial Gases on-site long-term supply contracts, under which we have built a facility on land owned by the customer and are obligated to remove the facility at the end of the contract term.
The retirement of assets includes the contractually required removal of a long-lived asset from service, and encompasses the sale, removal, abandonment, recycling, or disposal of the assets as required at the end of the contract terms.
The timing and/or method of settlement of these obligations are conditional on a future event that may or may not be within our control.
Changes to the carrying amount of our asset retirement obligations are as follows:


| Commitment Expiration By Period | (In millions) | Standby letters of credit | Surety bonds | Guarantees | Total commitments |


| Con Edison Con Edison of New York | (Millions of Dollars) | Depreciation | Regulatory asset – future income tax | State income tax | Capitalized overheads | Other | Net Liabilities | Investment Tax Credits | Deferred Income Taxes and Investment Tax Credits | Deferred Income Taxes – Recoverable Energy Costs | Total Deferred Income Taxes and Investment Tax Credits |


| In thousands Cash-Payable Incentive/ Performance Units Cash-Payable Restricted ShareUnits Total | Outstanding at December 31, 2013 | Granted | Vested and Released | Forfeited | Outstanding at December 31, 2014 |


| (Dollars in billions) Preliminary Incremental GAAP Assets Estimated Incremental Risk-Weighted Assets | Type of VIE/QSPE | Credit card securitization trusts(1) | Asset-backed commercial paper conduits(2) | Municipal bond trusts | Home equity lines of credit | Other | Total |


| (In millions) Total 2007 2008- 2009 2010- 2011 Later Years | Contractual obligations assumed by United States Steel | Long-term debt(a) | Sale-leaseback financing (includes imputed interest) | Capital lease obligations | Operating lease obligations | Operating lease obligations under sublease | Total contractual obligations assumed by United States Steel |


| 2008 | Revenue | OILFIELD SERVICES | North America | Latin America | Europe/CIS/Africa | Middle East & Asia | Elims/Other-1 | 24,282 | WESTERNGECO | Goodwill and intangible assets | All other assets | Corporate-2 | Interest income-3 | Interest expense-4 | Charges & credits-5 | $27,163 |


| July 31, 2013 July 31, 2012 | (In millions) | Classification on balance sheets: | Cash and cash equivalents | Investments | Funds held for customers | Long-term investments | Total cash and cash equivalents, investments and funds held for customers |


| Name of Shareholder Number of Shares Issued | Jessica Cosentino | Ricardo Cosentino | Victoria Cosentino | Mafalda Cosentino | Totals |


(1) Includes consolidating adjustments.
(2) Revenues exclude Realized investment gains (losses), net, and related adjustments.
See Realized Investment Gains and General Account InvestmentsRealized Investment Gains.
 (3) Revenues exclude net investment gains and losses on trading account assets supporting insurance liabilities.
See Trading Account Assets Supporting Insurance Liabilities.
 (4) See Divested Businesses.

Public Fixed MaturitiesCredit Quality The following table sets forth our public fixed maturity portfolios by NAIC rating attributable to the Financial Services Businesses as of the dates indicated.


FHLB Advances and Other Borrowings FHLB Advances—The Company had $0.7 billion and $0.5 billion in floating-rate and $0.2 billion and $1.8 billion in fixed-rate FHLB advances at December 31, 2012 and 2011, respectively.
The floating-rate advances adjust quarterly based on the LIBOR.
During the year ended December 31, 2012, $650.0 million of fixed-rate FHLB advances were converted to floating-rate for a total cost of approximately $128 million which was capitalized and will be amortized over the remaining maturities using the effective interest method.
In addition, during the year ended December 31, 2012, the Company paid down in advance of maturity $1.0 billion of its FHLB advances and recorded $69.1 million in losses on the early extinguishment.
This loss was recorded in the gains (losses) on early extinguishment of debt line item in the consolidated statement of income (loss).
The Company did not have any similar transactions for the years ended December 31, 2011 and 2010.
As a condition of its membership in the FHLB Atlanta, the Company is required to maintain a FHLB stock investment currently equal to the lesser of: a percentage of 0.2% of total Bank assets; or a dollar cap amount of $26 million.
Additionally, the Bank must maintain an Activity Based Stock investment which is currently equal to 4.5% of the Bank’s outstanding advances at the time of borrowing.
On a quarterly basis, the FHLB Atlanta evaluates excess Activity Based Stock holdings for its members and makes a determination regarding quarterly redemption of any excess Activity Based Stock positions.
The Company had an investment in FHLB stock of $67.4 million and $140.2 million at December 31, 2012 and 2011, respectively.
The Company must also maintain qualified collateral as a percent of its advances, which varies based on the collateral type, and is further adjusted by the outcome of the most recent annual collateral audit and by FHLB’s internal ranking of the Bank’s creditworthiness.
These advances are secured by a pool of mortgage loans and mortgage-backed securities.
At December 31, 2012 and 2011, the Company pledged loans with a lendable value of $4.8 billion and $5.0 billion, respectively, of the one- to four-family and home equity loans as collateral in support of both its advances and unused borrowing lines.


Note 14.
Income Taxes Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to tax benefit carryforwards and to differences between the financial statement amounts of assets and liabilities and their respective tax basis.
Deferred tax assets and liabilities are measured using enacted tax rates.
A valuation reserve is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized.
The tax benefit associated with the stock option compensation deductions will be credited to equity when realized.
At March 31, 2009, the Company had federal and state net operating loss carryforwards, or NOLs, of approximately $145.1 million and $97.1 million, respectively, which begin to expire in fiscal 2010.
Additionally, at March 31, 2009, the Company had federal and state research and development credit carryforwards of approximately $8.1 million and $4.2 million, respectively, which begin to expire in fiscal 2010.
The Company acquired Impella, a German-based company, in May 2005.
Impella had pre-acquisition net operating losses of approximately $18.2 million at the time of acquisition (which is denominated in Euros and is subject to foreign exchange remeasurement at each balance sheet date presented), and has since incurred net operating losses in each fiscal year since the acquisition.
During fiscal 2008, the Company determined that approximately $1.2 million of pre-acquisition operating losses could not be utilized.
The utilization of pre-acquisition net operating losses of Impella in future periods is subject to certain statutory approvals and business requirements.
Due to uncertainties surrounding the Companys ability to generate future taxable income to realize these assets, a full valuation allowance has been established to offset the Companys net deferred tax assets and liabilities.
Additionally, the future utilization of the Companys NOL and research and development credit carry forwards to offset future taxable income may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code due to ownership changes that have occurred previously or that could occur in the future.
Ownership changes, as defined in Section 382 of the Internal Revenue Code, can limit the amount of net operating loss carry forwards and research and development credit carry forwards that a company can use each year to offset future taxable income and taxes payable.
The Company believes that all of its federal and state NOLs will be available for carryforward to future tax periods, subject to the statutory maximum carryforward limitation of any annual NOL.
Any future potential limitation to all or a portion of the NOL or research and development credit carry forwards, before they can be utilized, would reduce the Companys gross deferred tax assets.
The Company will monitor subsequent ownership changes, which could impose limitations in the future.


| In millions of dollars Liquidity Facilities LoanCommitments | Citicorp | Citi-administered asset-backed commercial paper conduits (ABCP) | Third-party commercial paper conduits | Asset-based financing | Municipal securities tender option bond trusts (TOBs) | Municipal investments | Other | Total Citicorp | Citi Holdings | Citi-administered asset-backed commercial paper conduits (ABCP) | Third-party commercial paper conduits | Collateralized loan obligations (CLOs) | Asset-based financing | Municipal investments | Investment Funds | Other | Total CitiHoldings | Total Citigroup funding commitments |


Nonaccrual loans totaled $874 million or 1.36% of outstanding loans and leases at December 31, 2013, compared with $1.01 billion or 1.52% at December 31, 2012 and $1.10 billion or 1.83% at December 31, 2011.
The decline in nonaccrual loans at the end of 2013 as compared with December 31, 2012 and 2011 was largely due to lower commercial loans and commercial real estate loans on nonaccrual status.
Since December 31, 2011, additions to nonaccrual loans were more than offset by the impact on such loans from payments received and charge-offs.
Nevertheless, conditions in the U. S.  economy have continued to result in generally higher levels of nonaccrual loans than historically experienced by the Company.
Accruing loans past due 90 days or more (excluding acquired loans) totaled $369 million or .58% of total loans and leases at December 31, 2013, compared with $358 million or .54% at December 31, 2012 and $288 million or .48% at December 31, 2011.
Those loans included loans guaranteed by government-related entities of $298 million, $316 million and $253 million at December 31, 2013, 2012 and 2011, respectively.
Such guaranteed loans included one-to-four family residential mortgage loans serviced by the Company that were repurchased to reduce servicing costs, including a requirement to advance principal and interest payments that had not been received from individual mortgagors.
Despite the loans being purchased by the Company, the insurance or guarantee by the applicable government-related entity remains in force.
The outstanding principal balances of the repurchased loans that are guaranteed by government-related entities aggregated $255 million at December 31, 2013, $294 million at December 31, 2012 and $241 million at December 31, 2011.
The remaining loans in this classification were loans considered to be with creditworthy borrowers that were in the process of collection or renewal.
A summary of nonperforming assets and certain past due, renegotiated and impaired loan data and credit quality ratios is presented in table 12.


Cash Flows Our estimated future benefit payments for funded and unfunded plans are as follows (in millions):
1 The expected benefit payments for our other postretirement benefit plans are net of estimated federal subsidies expected to be received under the Medicare Prescription Drug, Improvement and Modernization Act of 2003.
Federal subsidies are estimated to be $3 million for the period 2019-2023 and $2 million for the period 2024-2028.
The Company anticipates making pension contributions in 2019 of $32 million, all of which will be allocated to our international plans.
The majority of these contributions are required by funding regulations or law.


| Years Ended December 31, 2007/2006 2006/2005 | (Dollars in millions) | Gross written premiums | Net written premiums | Premiums earned | Incurred losses and LAE | Commission and brokerage | Other underwriting expenses | Underwriting 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.) |


| 2004 2003 2002 | (in millions) | Selling, general andadministrative expenses | Research and development expenses | Royalty expense | Amortization expense |


Sales Recognition The Company recognizes sales when title and risk of loss pass to the customer.
The terms of the Company’s sales are split approximately evenly between FOB shipping point and FOB destination.
The timing of the Company’s recognition of FOB destination sales is determined based on shipping date and distance to the destination.
The Company has no significant or unusual price protection, right of return or acceptance provisions with its customers nor is it the Company’s practice to replace goods damaged or lost in transit.
Sales allowances and discounts can be reasonably estimated throughout the period and are deducted from sales in arriving at net sales.
Certain aluminum segment customers have fixed pricing arrangements covering specified aggregate quantities of aluminum contained in their purchases over the term of the agreements.
The Company generally purchases in advance sufficient quantities of aluminum inventory to “hedge” this fixed pricing commitment.
Shipping and Handling Fees and Costs The Company reports Shipping and Handling Fees and Costs in accordance with Emerging Issues Task Force (“EITF”) issue No.00-10, “Accounting for Shipping and Handling Fees and Costs.
” As such, in the Consolidated Statement of Earnings all amounts billed to customers by the Company related to shipping and handling are included in “Net sales” and the Company’s shipping and handling costs are included in “Cost of goods sold.
” Restructuring Costs The Company recognizes a liability for costs associated with an exit or disposal activity when the liability is incurred.
Certain termination benefits for which employees are required to render service are recognized ratably over the respective future service periods.
Income Taxes The provision for income taxes is determined using the asset and liability approach of accounting for income taxes.
Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid.
The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year.
Deferred taxes result from differences between the financial and tax basis of the Company’s assets and liabilities and are adjusted for changes in tax rates and laws, as appropriate.
A valuation allowance is provided to reduce deferred tax assets when management cannot conclude that it is more likely than not that a tax benefit will be realized.
A provision is also made for taxes on undistributed earnings of foreign subsidiaries and related companies to the extent that such earnings are not deemed to be permanently invested.
This provision would be offset by available foreign tax credits.
The calculation of the Company’s U. S. , state, and foreign tax liabilities involves dealing with uncertainties in the application of complex global tax laws.
The Company recognizes potential liabilities for anticipated tax issues which might arise in the U. S.  and other tax jurisdictions based on management’s estimate of whether, and the extent to which, additional taxes will be due.
If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary.
Conversely, if the estimate of tax liabilities proves to be less than the ultimate tax assessment, a further charge to tax expense would result.
Concentration of Credit Risks, Exposures and Financial Instruments The Company manufactures, markets, and distributes engineered products for the various end markets described in Note L.  Operations are principally located in the United States, although the Company also has operations in Canada, Europe, Latin America, Asia, Australia and South Africa.
The Company performs ongoing credit evaluations of its customers’ financial conditions and generally requires no collateral from its customers, some of which are highly leveraged.
The Company maintains allowances for potential credit losses and such losses have generally been within management’s expectations.
The Company has no material guarantees or liabilities for product warranties which would require disclosure under Financial Accounting Standards Board Interpretation (FIN) No.45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.
” From time to time, the Company will enter into contracts to hedge foreign currency denominated transactions, natural gas purchases, and interest rates related to the Company’s debt.
To minimize the risk of counter party default, only highly-rated financial institutions that meet certain requirements are used.
The Company does not anticipate that any of the financial institution counter parties will default on their obligations.
The carrying value of cash and short-term financial instruments approximates fair value due to the short maturity of those instruments.
Other Risks The Company obtains insurance for workers’ compensation, automobile, product and general liability, property loss and medical claims.
However, the Company has elected to retain a significant portion of expected losses


| In millions of dollars 2010 2009 2008 2007 2006 | Citicorp | Citi Holdings | Total non-accrual loans (NAL) | Corporate non-accrual loans-1 | North America | EMEA | Latin America | Asia | $8,610 | Citicorp | Citi Holdings | $8,610 | Consumer non-accrual loans-1 | North America | EMEA | Latin America | Asia | $10,797 | Citicorp | Citi Holdings | $10,797 | December 31, 2014 | 2019 Notes | Principal amounts: | Principal | Unamortized initial purchasers' discount and debt discount-1 | Net carrying amount | Carrying amount of the equity component-2 |


Litigation The nature of Huntingtons business ordinarily results in a certain amount of pending as well as threatened claims, litigation, investigations, regulatory and legal and administrative cases, matters and proceedings, all of which are considered incidental to the normal conduct of business.
When the Company determines it has meritorious defenses to the claims asserted, it vigorously defends itself.
The Company considers settlement of cases when, in managements judgment, it is in the best interests of both the Company and its shareholders to do so.
On at least a quarterly basis, Huntington assesses its liabilities and contingencies in connection with threatened and outstanding legal cases, matters and proceedings, utilizing the latest information available.
For cases, matters and proceedings where it is both probable the Company will incur a loss and the amount can be reasonably estimated, Huntington establishes an accrual for the loss.
Once established, the accrual is adjusted as appropriate to reflect any relevant developments.
For cases, matters or proceedings where a loss is not probable or the amount of the loss cannot be estimated, no accrual is established.
In certain cases, matters and proceedings, exposure to loss exists in excess of the accrual to the extent such loss is reasonably possible, but not probable.
Management believes an estimate of the aggregate range of reasonably possible losses, in excess of amounts accrued, for current legal proceedings is up to $65 million at December 31, 2016.
For certain other cases, and matters, Management cannot reasonably estimate the possible loss at this time.
Any estimate involves significant judgment, given the varying stages of the proceedings (including the fact that many of them are currently in preliminary stages), the existence of multiple defendants in several of the current proceedings whose share of liability has yet to be determined, the numerous unresolved issues in many of the proceedings, and the inherent uncertainty of the various potential outcomes of such proceedings.
Accordingly, Managements estimate will change from time-to-time, and actual losses may be more or less than the current estimate.
While the final outcome of legal cases, matters, and proceedings is inherently uncertain, based on information currently available, advice of counsel, and available insurance coverage, Management believes that the amount it has already accrued is adequate and any incremental liability arising from the Companys legal cases, matters, or proceedings will not have a material negative adverse effect on the Companys consolidated financial position as a whole.
However, in the event of unexpected future developments, it is possible that the ultimate resolution of these cases, matters, and proceedings, if unfavorable, may be material to the Companys consolidated financial position in a particular period.


| Millions of Dollars 2009 2008 2007 | Cash provided by operating activities | Cash used in investing activities | Cash used in financing activities | Net change in cash and cash equivalents |


Item 1B.
Unresolved Staff Comments.
None.
Item 2.
Properties.3Ms general offices, corporate research laboratories, and certain division laboratories are located in St.  Paul, Minnesota.
In the United States, 3M has nine sales offices in eight states and operates 74 manufacturing facilities in 27 states.
Internationally, 3M has 148 sales offices.
The Company operates 93 manufacturing and converting facilities in 32 countries outside the United States.3M owns substantially all of its physical properties.3Ms physical facilities are highly suitable for the purposes for which they were designed.
Because 3M is a global enterprise characterized by substantial intersegment cooperation, properties are often used by multiple business segments.
Item 3.
Legal Proceedings.
Discussion of legal matters is incorporated by reference from Part II, Item 8, Note 13, Commitments and Contingencies, of this document, and should be considered an integral part of Part I, Item 3, Legal Proceedings.
 Item 4.
Submission of Matters to a Vote of Security Holders.
None in the quarter ended December 31, 2007.
PART II Item 5.
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Equity compensation plans information is incorporated by reference from Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of this document, and should be considered an integral part of Item 5.
At January 31, 2008, there were approximately 121,302 shareholders of record.3Ms stock is listed on the New York Stock Exchange, Inc.  (NYSE), the Chicago Stock Exchange, Inc. , and the SWX Swiss Exchange.
Cash dividends declared and paid totaled $.48 per share for each quarter of 2007, and $.46 per share for each quarter of 2006.
Stock price comparisons follow:


| 2012 2011 2010 | Beginning Balance | Increases related to tax positions taken during a prior year | Decreases related to tax positions taken during a prior year | Increases related to tax positions taken during the current year | Decreases related to settlements with taxing authorities | Decreases related to expiration of statute of limitations | Ending Balance |


Fiscal 2011 Acquisitions: TCT International Co. , Ltd.  On June 1, 2011, the Company completed the acquisition of 100% of the equity interest in TCT International Co. , Ltd.  (“TCT”) and subsidiaries, a privately-held distributor of medical products, including the Company’s ThinPrep Pap Test, related instruments and other diagnostic and surgical products.
TCT’s operating subsidiaries are located in Beijing, China.
The Company’s acquisition of TCT has enabled it to obtain an established nationwide sales organization and customer support infrastructure in China, which is consistent with the Company’s international expansion strategy.
TCT has been integrated within the Company’s international operations, and its results are primarily reported within the Company’s Diagnostics reporting segment and to a lesser extent within the Company’s GYN Surgical reporting segment from the date of acquisition.
The Company concluded that the acquisition of TCT did not represent a material business combination, and therefore, no pro forma financial information has been provided herein.
The purchase price of $148.4 million was comprised of $135.0 million in cash, of which $100.0 million was paid up-front and $35.0 million plus a working capital adjustment $13.2 million, was deferred for one year.
In addition, $0.9 million was paid in the first quarter of fiscal 2012 for additional assets acquired.
The deferred payment was recorded on a present value basis of $47.5 million in purchase accounting to reflect fair value, and such payment was being accreted through interest expense over the one year deferral period.
The $35.0 million and a portion of the working capital adjustment of $8.5 million were paid in the fourth quarter of fiscal 2012.
As agreed to by the parties, the remainder is due after the completion of fiscal 2013.
In addition, the majority of the former shareholders of TCT may receive two annual contingent earn-out payments (subject to adjustment) not to exceed $200.0 million less the deferred payment.
The contingent earn-out payments are based on a multiple of incremental revenue growth for the one year periods beginning January 1, 2011 and January 1, 2012 as compared to the respective prior year periods, and are payable after the first and second anniversaries from the date of acquisition, respectively.
Since these payments are contingent on future employment, they are being recognized as compensation expense ratably over the required service periods, the first and second year anniversaries from the date of acquisition.
Based on actual and projected revenues for the TCT business, the Company recorded compensation expense of $75.5 million and $17.6 million in fiscal 2012 and 2011, respectively.
In the third quarter of fiscal 2012, the first measurement period was completed, and the Company paid the earned contingent consideration of $54.0 million in the fourth quarter of fiscal 2012.
As of September 29, 2012, the Company has accrued $39.1 million for the second contingent earn-out payment.
The Company did not issue any equity awards in connection with this acquisition, and third-party transaction costs were not significant.
The allocation of the purchase price was based on estimates of the fair value of assets acquired and liabilities assumed as of June 1, 2011.


| (in millions) December 31, 2009 December 31, 2010 February 16, 2011 | Reference to market indices | Expected loss models | Negotiated amount | Total |


Segment Measures In managing our business, we analyze operating performance separately for our Financial Services Businesses and our Closed Block Business.
For the Financial Services Businesses, we analyze our segments operating performance using adjusted operating income.
 Results of the Closed Block Business for all periods are evaluated and presented only in accordance with U. S.  GAAP.
Adjusted operating income does not equate to income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures or net income as determined in accordance with U. S.  GAAP but is the measure of segment profit or loss we use to evaluate segment performance and allocate resources, and consistent with authoritative guidance, is our measure of segment performance.
The adjustments to derive adjusted operating income are important to an understanding of our overall results of operations.
Adjusted operating income is not a substitute for income determined in accordance with U. S.  GAAP, and our definition of adjusted operating income may differ from that used by other companies.
However, we believe that the presentation of adjusted operating income as we measure it for management purposes enhances understanding of our results of operations by highlighting the results from ongoing operations and the underlying profitability of the Financial Services Businesses.
See Note 22 to the Consolidated Financial Statements for further information on the presentation of segment results and our definition of adjusted operating income.
Effective with the third quarter of 2010, we amended our definition of adjusted operating income as it relates to certain variable annuity contracts and defined contribution accounts that contain optional guaranteed living benefit features.
Changes in the fair value of these optional living benefit features, which are accounted for as embedded derivatives, are primarily driven by changes in the policyholders account balance and changes in the capital market and policyholder behavior assumptions used in the valuation of the embedded derivatives, including equity market returns, interest rates, market volatility, benefit utilization, contract lapses, contractholder mortality, and withdrawal rates.
The changes in fair value of the embedded derivative liabilities also reflect an increase or decrease in the market-perceived risk of our non-performance.
We hedge or limit our exposure to certain risks associated with these living benefit features through a combination of product design elements and externally purchased hedging instruments.
In addition, beginning in the second quarter of 2009, we expanded our hedging program to include a portion of the market exposure related to the overall capital position of the variable annuity business.
During the second quarter of 2010, the equity component of the capital hedge within the variable annuity business was replaced with a new capital hedge program that more broadly addressed equity market exposure of the statutory capital within the Financial Services Businesses as a whole.
Changes in the value of the embedded derivatives inclusive of the market-perceived risk of our non-performance, and the related hedge positions are reported in Realized investment gains (losses), net.
 Historically, adjusted operating income included the changes in fair value of these embedded derivatives and related hedge positions, in the period they occurred, and also included the related impact to amortization of deferred policy acquisition and other costs.
Adjusted operating income under the amended definition excludes any amounts related to changes in the market value of the embedded derivatives and related hedge positions, and the related impact to amortization of deferred policy acquisition and other costs.
Adjusted operating income for all periods presented has been revised to conform to the amended definition.
We view adjusted operating income under the amended definition as a more meaningful presentation of our results for purposes of analyzing the operating performance of, and allocating resources to, our business segments, as the amended definition presents results on a basis more consistent with the economics of the businesses.
The accounting for these products and associated derivatives under U. S.  GAAP has not changed.
Adjusted operating income under the amended definition excludes net gains of $312 million, net gains of $2 million, and net losses of $216 million for the years ended December 31, 2010, 2009 and 2008, respectively, related to changes in the market value of the embedded derivatives and related hedge positions, and the related impact to amortization of deferred policy acquisition and other costs.
Of the $312 million in net gains for the year ended December 31, 2010, net gains of $12 million and $2 million are reflected within the U. S.  GAAP results of the Individual Annuities and Retirement segments, respectively, and net gains of $298 million are reflected within our Corporate and Other operations.


Our AFS securities are carried at fair value on a recurring basis.
These include certain agency and agencysponsored mortgage-backed securities and municipal bonds.
Quoted market prices are not available for these securities.
As a result, we use a third-party pricing service to determine fair value and classify the securities as Level 2.
The services pricing model is based on market data and utilizes available trade, bid and other market information for similar securities.
The fair values provided by third-party pricing service are reviewed and validated by management of HRB Bank.
There were no transfers of AFS securities between hierarchy levels during the fiscal years ended April 30, 2012 and 2011.
assumed validity rates and loss severities would result in losses beyond SCCs accrual of approximately $31 million.
This sensitivity is hypothetical and is intended to provide an indication of the impact of a change in key assumptions on the representation and warranty claims liability.
In reality, changes in one assumption may result in changes in other assumptions, which could affect the sensitivity and the amount of losses.
A rollforward of our accrued liability for representation and warranty claims is as follows:


| (In millions, except per share amounts) 2007 2006 | Revenues and other income | Income from continuing operations | Net income | Per share data: | Income from continuing operations – basic | Income from continuing operations – diluted | Net income – basic | Net income – diluted |


Summary of Significant 2017 Events In October 2017, we (a) repriced and increased the then existing $750 million revolving credit facility with a new $875 million revolving credit facility (the “New Revolving Loan Facility”), (b) repriced the approximately $1,412 million principal amount outstanding under the existing senior secured term A facility (the “New Term A Loan Facility”), and (c) added a new $375 million term B loan facility due 2021.
Also, we completed the redemption of all of our then outstanding 4.625% Senior Notes due 2020 (“Notes”), at a price including accrued and unpaid interest, of $1,044.41 per $1,000 of outstanding principal amount of Notes.
No Notes remained outstanding after the redemption.
In April 2017, Norwegian Joy was delivered.
In February 2017, we announced Project Leonardo, under which we plan to introduce an additional four ships with expected delivery dates through 2025.
We have an option to introduce two additional ships for delivery in 2026 and 2027, subject to certain conditions.
These four Project Leonardo ships are each 140,000 gross tons with approximately 3,300 Berths.
The contract price for each of the four ships is Summary of Significant 2017 Events In October 2017, we (a) repriced and increased the then existing $750 million revolving credit facility with a new $875 million revolving credit facility (the ¡°New Revolving Loan Facility¡±), (b) repriced the approximately $1,412 million principal amount outstanding under the existing senior secured term A facility (the ¡°New Term A Loan Facility¡±), and (c) added a new $375 million term B loan facility due 2021.
Also, we completed the redemption of all of our then outstanding 4.625% Senior Notes due 2020 (¡°Notes¡±), at a price including accrued and unpaid interest, of $1,044.41 per $1,000 of outstanding principal amount of Notes.
No Notes remained outstanding after the redemption.
In April 2017, Norwegian Joy was delivered.
In February 2017, we announced Project Leonardo, under which we plan to introduce an additional four ships with expected delivery dates through 2025.
We have an option to introduce two additional ships for delivery in 2026 and 2027, subject to certain conditions.
These four Project Leonardo ships are each 140,000 gross tons with approximately 3,300 Berths.
The contract price for each of the four ships is approximately €800.0 million, subject to certain conditions, or $960.4 million based on the exchange rate as of December 31, 2017.
We have obtained export credit financing for the ships which is expected to fund approximately 80% of the contract price of each ship expected to be delivered through 2025, subject to certain conditions.
Executive Overview Total revenue increased 10.7% to $5.4 billion for the year ended December 31, 2017 compared to $4.9 billion for the year ended December 31, 2016.
Gross Yield increased 4.4%.
Net Revenue for the year ended December 31, 2017 increased 11.2% to $4.2 billion from $3.8 billion in the same period in 2016 with an improvement in Net Yield of 4.9% and an increase in Capacity Days of 6.0%.
For the year ended December 31, 2017, we had net income and diluted EPS of $759.9 million and $3.31, respectively.
For the year ended December 31, 2016, we had net income and diluted EPS of $633.1 million and $2.78, respectively.
Operating income increased 13.3% to $1.0 billion for the year ended December 31, 2017 from $925.5 million for the year ended December 31, 2016.
We had Adjusted Net Income and Adjusted EPS of $907.7 million and $3.96, respectively, for the year ended December 31, 2017, which includes $147.8 million of adjustments primarily consisting of expenses related to non-cash compensation, amortization of intangible assets, write-offs of fees related to extinguishment of debt and refinancing of certain credit facilities and certain other adjustments compared to Adjusted Net Income and Adjusted EPS of $776.3 million and $3.41, respectively, for the year ended December 31, 2016.
A 14.7% improvement in Adjusted EBITDA was achieved for the same period, primarily due to the increase in net income and EBITDA.
We refer you to our ¡°Results of Operations¡± below for a calculation of Net Revenue, Net Yield, Adjusted Net Income, Adjusted EPS and Adjusted EBITDA.


| Shares Weighted Average Grant Date Fair Value (per share) | Nonvested at December 31, 2011(a) | Granted | Vested | Forfeited | Undistributed vested awards(b) | Nonvested at December 31, 2012(a) |


| Home Equity Residential Mortgage | December 31, | 2016 | Ending balance | Portfolio weighted-average LTV ratio -1 | Portfolio weighted-average FICO score -2 | Home Equity | Twelve months ended December 31, | 2016 | Originations | Origination weighted-average LTV ratio -1 | Origination weighted-average FICO score -2 |


| 2010 2009 2008 | Net income (loss) attributable to common shareholders | Less: Dividends on share-based awards expected to vest | Basic net income (loss) attributable to common shareholders | Noncontrolling interest in earnings of common unitholders | Diluted net income (loss) attributable to common shareholders | Weighted average number of common shares outstanding | Weighted average partnership Units outstanding | Other potential dilutive shares | Weighted average number of common shares and potential dilutive securities |


| December 31, | (dollars in millions) | Commercial | Commercial real estate | Total commercial | Residential mortgages | Home equity loans | Home equity lines of credit | Home equity loans serviced by others-1 | Home equity lines of credit serviced by others-1 | Automobile | Student | Credit cards | Other retail | Total retail | Total non-core loans | Other assets | Total non-core assets | December 31, | Balance at beginning of year | Increase to allowance | Release of allowance | Acquisitions and divestitures (F) | U.S. state tax apportionment and tax rate changes | Foreign currency translation | Balance at end of year |


| December 31, | 2010 | (In millions) | Fixed maturity securitiesavailable-for-sale: | ABS | U.S. corporate securities | RMBS | CMBS | Foreign corporate securities | U.S. Treasury, agency and government guaranteed securities | State and political subdivision securities | Foreign government securities | Cash and cash equivalents (including cash held in trust of less than $1 million for both years) | Total |


| Year Ended December 31 | 2007 | (In thousands) | Principal and interest payments on retained securities | Servicing fees received |


| Crude Oil & Condensate Natural Gas Liquids Natural Gas Total Barrels of Oil Equivalent (BOE) | 2017 | (Millions of bbls) | Developed | United States | Europe (a) | Africa | Asia and other | 401 | Undeveloped | United States | Europe (a) | Africa | Asia and other (b) | 258 | Total | United States | Europe (a) | Africa | Asia and other (b) | 659 | Expiration Date | (In millions) | Revolving credit facility - Hess Corporation (a) | Revolving credit facility - HIP (b) | Revolving credit facility - Hess Midstream Partners LP (HESM) (c) | Committed lines | Uncommitted lines | Total |


| In millions of dollars Netunrealizedgains (losses)on investment securities Debt valuation adjustment (DVA)(1) Cash flow hedges-2 Benefit plans-3 Foreigncurrencytranslationadjustment (CTA), net of hedges(4) Excluded component of fair value hedges-5 Accumulatedothercomprehensive income (loss) | Balance, December 31, 2015 | Adjustment to opening balance, netof taxes-1 | Adjusted balance, beginning of period | Other comprehensive income beforereclassifications | Increase (decrease) due to amountsreclassified from AOCI | Change, net of taxes | Balance, December 31, 2016 | Adjustment to opening balance, netof taxes-6 | Adjusted balance, beginning of period | Impact of Tax Reform-7 | Other comprehensive income before reclassifications | Increase (decrease) due to amounts reclassified from AOCI | Change, net of taxes | Balance at December 31, 2017 | Adjustment to opening balance, netof taxes-8 | Adjusted balance, beginning of period | Other comprehensive income beforereclassifications | Increase (decrease) due to amountsreclassified from AOCI(9) | Change, net of taxes | Balance at December 31, 2018 |


| December 31, 2018 December 31, 2017 | Deferred tax liabilities: | Fixed assets | Other | State deferred taxes | Total deferred tax liabilities | Deferred tax assets: | Captive insurance subsidiary | Accrued liabilities | Stock compensation | Solar credit | Other | SmartStop TRS | State deferred taxes | Total deferred tax assets | Valuation allowance | Net deferred income tax liabilities |


| Year Ended December 31, | 2014 | (In millions) | Energy revenue | Capacity revenue | Retail revenue | Mark-to-market for economic hedging activities | Contract amortization | Other revenues | Eliminations | Total operating revenues |


| Metric 2014 Grant 2013 Grant 2012 Grant | Average return on net assets -1 | Cumulative net income | Cumulative earnings per share -2 | Relative total shareholder return -3 |


| Years Ended December 31, | 2018 | Weighted- | Average | Grant Date | Restricted (non-vested) Shares | Outstanding at January 1, | Granted | Vested | Forfeited | Outstanding at December 31, |


| MSA Rank Deposits(in millions) Market Share | Columbus, OH | Cleveland, OH | Detroit, MI | Akron, OH | Indianapolis, IN | Cincinnati, OH | Pittsburgh, PA | Chicago, IL | Toledo, OH | Grand Rapids, MI | Source: FDIC.gov, based on June 30, 2017 survey. |


| (Dollars in millions) 2014 2013 | Sales and trading revenue | Fixed income, currencies and commodities | Equities | Total sales and trading revenue | Sales and trading revenue, excluding net DVA/FVA-3 | Fixed income, currencies and commodities | Equities | Total sales and trading revenue, excluding net DVA/FVA |


| Years Ended December 31, | (Millions, except percentages) | Revenues | Non-interest revenues | Interest income | Interest expense | Net interest income | Total revenues net of interest expense | Provisions for losses | Total revenues net of interest expense after provisions for losses | Expenses | Marketing, promotion, rewards, Card Member services and other | Salaries and employee benefits and other operating expenses | Total expenses | Pretax segment income | Income tax provision | Segment income | Effective tax rate |


Savings Plans.
CME maintains a defined contribution savings plan pursuant to Section 401(k) of the Internal Revenue Code, whereby all U. S.  employees are participants and have the option to contribute to this plan.
CME matches employee contributions up to 3% of the employee’s base salary and may make additional discretionary contributions of up to 2% of base salary.
In addition, certain CME London-based employees are eligible to participate in a defined contribution plan.
For CME London-based employees, the plan provides for company contributions of 10% of earnings and does not have any vesting requirements.
Salary and cash bonuses paid are included in the definition of earnings.
Aggregate expense for all of the defined contribution savings plans amounted to $6.3 million, $5.2 million and $5.8 million in 2010, 2009 and 2008, respectively.


| December 31 | 2009 | (In thousands) | Loans | Commercial, financial, agricultural, etc. | Real estate: | Residential | Commercial | Construction | Consumer | Total loans | Leases | Commercial | Total loans and leases |


| 2017 2016 | Vehicles | Aircraft | Buildings | Accumulated amortization | Property, plant and equipment subject to capital leases |


| 2014 2013 2012 2011 2010 | Summary of Operations: | Net revenues | Cost of sales | Excise taxes on products | Operating income | Interest and other debt expense, net | Earnings from equity investment in SABMiller | Earnings before income taxes | Pre-tax profit margin | Provision for income taxes | Net earnings | Net earnings attributable to Altria Group, Inc. | Basic and Diluted EPS — net earnings attributable to Altria Group, Inc. | Dividends declared per share | Weighted average shares (millions) — Basic | Weighted average shares (millions) — Diluted | Capital expenditures | Depreciation | Property, plant and equipment, net | Inventories | Total assets | Long-term debt | Total debt | Total stockholders’ equity | Common dividends declared as a % of Basic and Diluted EPS | Book value per common share outstanding | Market price per common share — high/low | Closing price per common share at year end | Price/earnings ratio at year end — Basic and Diluted | Number of common shares outstanding at year end (millions) | Approximate number of employees |


| December 31, | Company/Index | O'Reilly Automotive, Inc. | S&P 500 Retail Index | S&P 500 |


| (in millions) | 2011 | 2012 | 2013 | 2014 | 2015 | Thereafter | Total |


| For the Years Ended December 31, | 2009 | (In Millions, Except Per Share Data) | Basic earnings per average common share | Net income attributable toEntergy Corporation | Average dilutive effect of: | Stock options | Equity units | Deferred units | Diluted earnings per averagecommon share |


| Shares Repurchased Average Price per Share-1 Value of Shares Repurchased Remaining Amount Authorized | Balance at January 1, 2010 | Authorization of new plan in September 2010 | Repurchase of common stock | Balance at December 31, 2010 |


| (in millions) December 31, 2013 Realized and Unrealized Gains (Losses) in Earnings and OCI Purchases Sales and Maturities Issuances and Other Settlements -2 TransfersintoLevel 3-3 Transfers out of Level 3 December 31, 2014 Total Net Unrealized Gains (Losses) Included in Earnings (4) | Assets: | Investments | Consolidated sponsoredinvestment funds: | Hedge funds | Private equity | Assets of consolidated VIEs: | Bank loans | Bonds | Total assets ofconsolidated VIEs | Total assets | Liabilities: | Borrowings of consolidated VIEs | Other liabilities | Total liabilities |


| (Dollars in millions) Total Assets at Year End-1 Total Revenue, Net of Interest Expense-2 Income Before Income Taxes Net Income | U.S.-3 | 2016 | 2015 | Asia | 2016 | 2015 | Europe, Middle East and Africa | 2016 | 2015 | Latin America and the Caribbean | 2016 | 2015 | Total Non-U.S. | 2016 | 2015 | Total Consolidated | 2016 | 2015 |


year.
Beginning in 2013, the ventures pay dividends on a quarterly basis.
In 2013, 2012 and 2011, we received cash dividends of $92 million, $83 million and $78 million, respectively.
In 2012 our Nantong venture completed an expansion of its acetate flake and acetate tow capacity, each by 30,000 tons.
We made contributions of $29 million from 2009 through 2012 related to the capacity expansion in Nantong.
Similar expansions since the ventures were formed have led to earnings growth and increased dividends for the Company.
According to the Euromonitor database services, China is estimated to have had a 42% share of the world's 2012 cigarette consumption.
Cigarette consumption in China is expected to grow at a rate of 1.9% per year from 2012 through 2017.
Combined, these ventures are a leader in Chinese domestic acetate production and we believe we are well positioned to supply Chinese cigarette producers.
Although our ownership interest in each of our cellulose derivatives ventures exceeds 20%, we account for these investments using the cost method of accounting because we determined that we cannot exercise significant influence over these entities due to local government investment in and influence over these entities, limitations on our involvement in the day-to-day operations and the present inability of the entities to provide timely financial information prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP").  ?
Other Equity Method Investments InfraServs.
We hold indirect ownership interests in several German InfraServ Groups that own and develop industrial parks and provide on-site general and administrative support to tenants.
Our ownership interest in the equity investments in InfraServ affiliates are as follows:


| Coppera(billionpounds) Gold(millionounces) Molybdenum(billionpounds) | Consolidated reserves at December 31, 2011 | Net additions/revisions | Production | Consolidated reserves at December 31, 2012 | Net additions/revisions | Production | Consolidated reserves at December 31, 2013 |


During 2015, the Company fully repaid $750 million of 1.375% notes at maturity.
In May 2015, the Company issued ¬700 million of 1.25% senior unsecured notes maturing in May 2025.
Upon conversion to U. S.  dollars the Company designated the ¬700 million debt offering as a net investment hedge to offset its currency exposure relating to its net investment in certain euro functional currency operations.
For more information on CompanyÂ¡Â¯s borrowings, see Note 12, Borrowings, in the notes to the consolidated financial statements beginning on page F-1 of this Form 10-K.
Contractual Obligations, Commitments and Contingencies The following table sets forth contractual obligations, commitments and contingencies by year of payment at December 31, 2015: (1) The amount of contingent payments reflected for any year represents the expected payment amounts using foreign currency exchange rates as of December 31, 2015 under the terms of the business acquisitionÂ¡Â¯s agreement.
The fair value of the contingent obligations is not significant to the consolidated statement of financial condition and is recorded within other liabilities.
(2) At December 31, 2015, the Company had approximately $350 million of net unrecognized tax benefits.
Due to the uncertainty of timing and amounts that will ultimately be paid, this amount has been excluded from the table above.
Operating Leases.
The Company leases its primary office locations under agreements that expire on varying dates through 2035.
In connection with certain lease agreements, the Company is responsible for escalation payments.
The contractual obligations table above includes only guaranteed minimum lease payments for such leases and does not project potential escalation or other lease-related payments.
These leases are classified as operating leases and, as such, are not recorded as liabilities on the consolidated statements of financial condition.
Purchase Obligations.
In the ordinary course of business, BlackRock enters into contracts or purchase obligations with third parties whereby the third parties provide services to or on behalf of BlackRock.
Purchase obligations included in the contractual obligations table above represent executory contracts, which are either noncancelable or cancelable with a penalty.
At December 31, 2015, the CompanyÂ¡Â¯s obligations primarily reflected standard service contracts for portfolio services, market data, office-related services and thirdparty marketing and promotional services, and obligations for equipment.
Purchase obligations are recorded on the consolidated financial statements when services are provided and, as such, obligations for services and equipment not received are not included in the consolidated statement of financial condition at December 31, 2015.
Investment Commitments.
At December 31, 2015, the Company had $179 million of various capital commitments to fund sponsored investment funds, including consolidated VIEs.
These funds include private equity funds, real estate funds, infrastructure funds and opportunistic funds.
This amount excludes additional commitments made by consolidated funds of funds to underlying third-party funds as third-party noncontrolling interest holders have the legal obligation to fund the respective commitments of such funds of funds.
In addition to the capital commitments of $179 million, the Company had approximately $38 million of contingent commitments for certain funds which have investment periods that have expired.
Generally, the timing


Notes to Consolidated Financial Statements(Continued) (Amounts in Millions, Except Per Share Amounts) Guarantees We have certain contingent obligations under guarantees of certain of our subsidiaries (parent company guarantees) relating principally to credit facilities, guarantees of certain media payables and operating leases.
The amount of such parent company guarantees was $255.7 and $327.1 as of December 31, 2008 and 2007, respectively.
In the event of non-payment by the applicable subsidiary of the obligations covered by a guarantee, we would be obligated to pay the amounts covered by that guarantee.
As of December 31, 2008, there are no material assets pledged as security for such parent company guarantees.
Contingent Acquisition Obligations We have structured certain acquisitions with additional contingent purchase price obligations in order to reduce the potential risk associated with negative future performance of the acquired entity.
In addition, we have entered into agreements that may require us to purchase additional equity interests in certain consolidated and unconsolidated subsidiaries.
The amounts relating to these transactions are based on estimates of the future financial performance of the acquired entity, the timing of the exercise of these rights, changes in foreign currency exchange rates and other factors.
We have not recorded a liability for these items since the definitive amounts payable are not determinable or distributable.
When the contingent acquisition obligations have been met and consideration is determinable and distributable, we record the fair value of this consideration as an additional cost of the acquired entity.
However, certain acquisitions contain deferred payments that are fixed and determinable on the acquisition date.
In such cases, we record a liability for the payment and record this consideration as an additional cost of the acquired entity on the acquisition date.
If deferred payments and purchases of additional interests after the effective date of purchase are contingent upon the future employment of the former owners then we recognize these payments as compensation expense.
Compensation expense is determined based on the terms and conditions of the respective acquisition agreements and employment terms of the former owners of the acquired businesses.
This future expense will not be allocated to the assets and liabilities acquired and is amortized over the required employment terms of the former owners.
The following table details the estimated liability with respect to our contingent acquisition obligations and the estimated amount that would be paid in the event of exercise at the earliest exercise date.
We have certain put options that are exercisable at the discretion of the minority owners as of December 31, 2008.
As such, these estimated acquisition payments of $5.5 have been included within the total payments expected to be made in 2009 in the table below and, if not made in 2009, will continue to carry forward into 2010 or beyond until they are exercised or expire.
All payments are contingent upon achieving projected operating performance targets and satisfying other conditions specified in the related agreements and are subject to revisions as the earn-out periods progress.
As of December 31, 2008, our estimated future contingent acquisition obligations payable in cash are as follows:


Table 11 NONACCRETABLE BALANCE — PRINCIPAL


| Years Ended December 31, | 2011 | GAAP | (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 | Pretax income |


| Years Ended December 31, | 2008 | (In millions) | Operating Revenues | Premiums | Universal life and investment-type product policy fees | Net investment income | Other revenues | Total operating revenues | Operating Expenses | Policyholder benefits and claims and policyholder dividends | Interest credited to policyholder account balances | Capitalization of DAC | Amortization of DAC and VOBA | Interest expense | Other expenses | Total operating expenses | Provision for income tax expense (benefit) | Operating earnings | Years Ended December 31, | 2008 | (In millions) | Operating Revenues | Premiums | Universal life and investment-type product policy fees | Net investment income | Other revenues | Total operating revenues | Operating Expenses | Policyholder benefits and claims and policyholder dividends | Interest credited to policyholder account balances | Capitalization of DAC | Amortization of DAC and VOBA | Interest expense | Other expenses | Total operating expenses | Provision for income tax expense (benefit) | Operating earnings |


| December 31, | 2015 | Asset Retirement Obligations, beginning of the year | Liabilities Assumed | Liabilities Incurred | Liabilities Settled | Accretion Expense | Foreign Currency Translation Adjustments | Asset Retirement Obligations, end of the year |


| Home Equity Loans Home Equity Lines-of-Credit Residential   Mortgages | 12/31/09 | Ending balance (in millions) | Portfolio weighted average LTV ratio-1 | Portfolio weighted average FICO-2 |


| Number of Shares Weighted Average Grant Date Fair Value | Outstanding at December 31, 2009 | Granted | Vested | Cancelled | Outstanding at December 31, 2010 |


| Years Ended December 31,(in millions) Annual Average Investments(a) Net Investment Income Pre-tax Return on Average Investments(b) | AIG Property Casualty: | 2012 | 2011 | 2010 | AIG Life and Retirement: | 2012 | 2011 | 2010 |


| Year ended September 30, | 2014 | RJF return on average assets-1 | RJF return on average equity-2 | Average equity to average assets-3 | Dividend payout ratio-4 |


Consumer Foods net sales increased $303 million, or 5%, for the year to $6.8 billion.
Results reflect an increase of three percentage points from improved net pricing and product mix and two percentage points of improvement from higher volumes.
Net pricing and volume improvements were achieved in many of the Companys priority investment and enabler brands.
The impact of product recalls partially offset these improvements.
The Company implemented significant price increases for many Consumer Foods products during the fourth quarter of fiscal 2008.
Continued net sales improvements are expected into fiscal 2009 when the Company expects to receive the benefit of these pricing actions for full fiscal periods.
Sales of some of the Companys most significant brands, including Chef Boyardee?, DAVID?, Egg Beaters?, Healthy Choice?, Hebrew National?, Hunts?, Marie Callenders?, Manwich?, Orville Redenbachers?, PAM?, Ro*Tel?, Rosarita?, Snack Pack?, Swiss Miss?, Wesson?, and Wolf?
grew in fiscal 2008.
Sales of ACT II?, Andy Capp?, Banquet?, Crunch n Munch?, Kid Cuisine?, Parkay?, Pemmican?, Reddi-wip?, and Slim Jim?
declined in fiscal 2008.
Net sales in the Consumer Foods segment are not comparable across periods due to a variety of factors.
The Company initiated a peanut butter recall in the third quarter of fiscal 2007 and reintroduced Peter Pan?
peanut butter products in August 2007.
Sales of all peanut butter products, including both branded and private label, in fiscal 2008 were $14 million lower than comparable amounts in fiscal 2007.
Consumer Foods net sales were also adversely impacted by the recall of Banquet?
and private label pot pies in the second quarter of fiscal 2008.
Net sales of pot pies were lower by approximately $22 million in fiscal 2008, relative to fiscal 2007, primarily due to product returns and lost sales of Banquet?
and private label pot pies.
Sales from Alexia Foods and Lincoln Snacks, businesses acquired in fiscal 2008, totaled $66 million in fiscal 2008.
The Company divested a refrigerated pizza business during the first half of fiscal 2007.
Sales from this business were $17 million in fiscal 2007.
Food and Ingredients net sales were $4.1 billion in fiscal 2008, an increase of $706 million, or 21%.
Increased sales are reflective of higher sales prices in the Companys milling operations due to higher grain prices, and price and volume increases in the Companys potato and dehydrated vegetable operations.
The fiscal 2007 divestiture of an oat milling operation resulted in a reduction of sales of $27 million for fiscal 2008, partially offset by increased sales of $18 million from the acquisition of Watts Brothers in February 2008.  International Foods net sales increased $65 million to $678 million.
The strengthening of foreign currencies relative to the U. S.  dollar accounted for approximately $36 million of this increase.
The segment achieved a 5% increase in sales volume in fiscal 2008, primarily reflecting increased unit sales in Canada and Mexico, and modest increases in net pricing.