Partnering with Tax Professionals.
The H&R Block Preferred-Partner ProgramTM facilitates strategic, referral-based partnerships between tax professionals and financial advisors.
The program includes the Licensed Referral Tax Professional (LRTP) program and a non-licensed option, which allows non-licensed tax professionals to gain additional rewards and recognition when making qualified client referrals to financial advisor partners.
The LRTP program helps tax professionals obtain a securities license, teams them with a financial advisor and provides a commission to the LRTP for business referred to the financial advisors.
As of April 30, 2008, our Preferred-Partner Program had 9,510 active tax partners, of which 539 were licensed.
As a result of this initiative, we added more than 14,000 new customer accounts and assets totaling $847.8 million during fiscal year 2008.
We expect to continue to increase the number of tax partners in the coming year.


Table of Contents Acquisition and $17.0 million to fund the acquisition of certain finite-lived intellectual property rights.
In Fiscal 2010, we used $30.8 million primarily to fund the Asia-Pacific Licensed Operations Acquisition.
Net Cash Used in Financing Activities.
Net cash used in financing activities was $512.6 million in Fiscal 2011, as compared to $306.4 million in Fiscal 2010.
The increase in net cash used in financing activities was primarily driven by: ?
an increase in cash used in connection with repurchases of our Class A common stock.
In Fiscal 2011, 6.0 million shares of Class A common stock at a cost of $577.8 million were repurchased pursuant to our common stock repurchase program and 0.2 million shares of Class A common stock at a cost of $16.8 million were surrendered or withheld in satisfaction of withholding taxes in connection with the vesting of awards issued under the 1997 Long-Term Stock Incentive Plan, as amended (the
1997 Incentive Plan
).
On a comparative basis, in Fiscal 2010, 2.9 million shares of Class A common stock at a cost of $215.9 million were repurchased pursuant to our common stock repurchase program and 0.3 million shares of Class A common stock at a cost of $15.1 million were surrendered for tax withholdings; and ?
an increase in cash used to pay dividends.
In Fiscal 2011, we used $38.5 million to pay dividends as compared to $24.7 million in Fiscal 2010, largely due to the increases in the quarterly cash dividend on our common stock from $0.05 per share to $0.10 per share in November 2009.
The above increases in cash used were partially offset by: ?
a decrease in cash used in connection with our repayment of debt in July 2009.
In Fiscal 2010, we completed a cash tender offer Table of Contents Acquisition and $17.0 million to fund the acquisition of certain finite-lived intellectual property rights.
In Fiscal 2010, we used $30.8 million primarily to fund the Asia-Pacific Licensed Operations Acquisition.
Net Cash Used in Financing Activities.
Net cash used in financing activities was $512.6 million in Fiscal 2011, as compared to $306.4 million in Fiscal 2010.
The increase in net cash used in financing activities was primarily driven by: ?
an increase in cash used in connection with repurchases of our Class A common stock.
In Fiscal 2011, 6.0 million shares of Class A common stock at a cost of $577.8 million were repurchased pursuant to our common stock repurchase program and 0.2 million shares of Class A common stock at a cost of $16.8 million were surrendered or withheld in satisfaction of withholding taxes in connection with the vesting of awards issued under the 1997 Long-Term Stock Incentive Plan, as amended (the
1997 Incentive Plan
).
On a comparative basis, in Fiscal 2010, 2.9 million shares of Class A common stock at a cost of $215.9 million were repurchased pursuant to our common stock repurchase program and 0.3 million shares of Class A common stock at a cost of $15.1 million were surrendered for tax withholdings; and ?
an increase in cash used to pay dividends.
In Fiscal 2011, we used $38.5 million to pay dividends as compared to $24.7 million in Fiscal 2010, largely due to the increases in the quarterly cash dividend on our common stock from $0.05 per share to $0.10 per share in November 2009.
The above increases in cash used were partially offset by: ?
a decrease in cash used in connection with our repayment of debt in July 2009.
In Fiscal 2010, we completed a cash tender offer and used $121.0 million to repurchase €90.8 million of principal amount of our 4.5% notes due October 4, 2013.
There were no debt repurchases during Fiscal 2011; ?
an increase in cash received from the exercise of employee stock options.
In Fiscal 2011, we received $88.3 million from the exercise of employee stock options, as compared to $50.5 million in Fiscal 2010; and ?
an increase in excess tax benefits from stock-based compensation arrangements of $17.4 million in Fiscal 2011, as compared to the prior fiscal year.
Fiscal 2010 Compared to Fiscal 2009


offering proceeds, together with the 2015 Term Loan, were used to fund the AMS Portfolio Acquisition.
We recorded a charge of $45 million in interest expense, during the second quarter of 2015, for premiums, accelerated amortization of debt issuance costs, and investor discount costs net of interest rate hedge gains related to the early debt extinguishment.
Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to any sinking fund requirements.
Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other.
These notes are effectively junior to borrowings under our credit and security facility, to the extent if borrowed by our subsidiaries, and to liabilities of our subsidiaries (see Other Arrangements below).
On January 12, 2017, we used our existing credit facilities to repay the $250 million plus interest of our senior notes due in January 2017.
Our senior notes consist of the following as of December 31, 2016: Other Arrangements We maintained a $300 million credit and security facility secured by our U. S.  trade receivables maturing on June 9, 2017.
The credit and security facility required that we maintain a maximum leverage covenant consistent with our revolving credit facility.
The maximum leverage ratio requirement was 4.0 times and our actual leverage ratio as of December 31, 2016 was 2.4 times.
We had borrowings of $60 million outstanding under this facility as of December 31, 2016 and no borrowings outstanding as of December 31, 2015.
On February 7, 2017, we amended the terms of this credit and security facility, including increasing the facility size to $400 million.
This amendment retained a similar maximum leverage ratio requirement and extended the facility maturity to February 2019.
We have accounts receivable factoring programs in certain European countries that we account for as sales under FASB ASC Topic 860, Transfers and Servicing.
These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to approximately $391 million as of December 31, 2016.
We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy.
We de-recognized $152 million of receivables as of December 31, 2016 at an average interest rate of 1.8 percent, and $151 million as of December 31, 2015 at an average interest rate of 2.4 percent.
In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting and receivables factoring of up to 21.0 billion Japanese yen (approximately $180 million as of December 31, 2016).
We de-recognized $149 million of notes receivable as of December 31, 2016 at an average interest rate of 1.6 percent and $132 million of notes receivable as of December 31, 2015 at an average interest rate of 1.6 percent.
De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying consolidated balance sheets.
As of December 31, 2016 and December 31, 2015, we had outstanding letters of credit of $44 million which consisted primarily of bank guarantees and collateral for workers compensation insurance arrangements.
As of December 31, 2016 and 2015, none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we have not recognized a related liability for our outstanding letters of credit in our consolidated balance sheets as of December 31, 2016 or 2015.
We repurchased 10 million shares for $125 million during 2014.
No share repurchases were made in 2016 or 2015.
As of December 31, 2016, we had remaining approximately $535 million authorized under our 2013 share repurchase program.
There were approximately 248 million shares in treasury as of December 31, 2016 and December 31, 2015.
Stock-based compensation expense related to our stock ownership plans was $116 million in 2016, $107 million in 2015, and $103 million in 2014.
Stock-based compensation expense varies from period to period based upon, among other factors: the timing, number and fair value of awards granted during the period; forfeiture levels related to unvested awards; and employee contributions to our employee stock purchase plan.


discount to Brent was narrower in 2013 than in 2012 and 2011.
As a result of the significant increase in U. S.  production of light sweet crude oil, the historical relationship between WTI, Brent and LLS pricing may not be indicative of future periods.
Composition – The proportion of our liquid hydrocarbon sales volumes that are NGLs continues to increase due to our development of United States unconventional liquids-rich plays.
NGLs were 15 percent of our North America E&P liquid hydrocarbon sales volumes in 2013 compared to 10 percent in 2012 and 7 percent in 2011.
Natural gas – A significant portion of our natural gas production in the U. S.  is sold at bid-week prices, or first-of-month indices relative to our specific producing areas.
Average Henry Hub settlement prices for natural gas were 31 percent higher for 2013 than for 2012.  International E&P Liquid hydrocarbons – Our International E&P crude oil production is relatively sweet and has historically sold in relation to the Brent crude benchmark, which on average was 3 percent lower for 2013 than 2012.
Natural gas – Our major International E&P natural gas-producing regions are Europe and E. G.  Natural gas prices in Europe have been considerably higher than the U. S.  in recent years.
In the case of E. G. , our natural gas sales are subject to term contracts, making realized prices in these areas less volatile.
The natural gas sales from E. G.  are at fixed prices; therefore, our reported average International E&P natural gas realized prices may not fully track market price movements.


| -1(2) December 31, 2005 December 31, 2004 | NAIC Designation | (in millions) | 1 | 2 | Subtotal Investment Grade | 3 | 4 | 5 | 6 | Subtotal Below InvestmentGrade | Total Public Trading Account Assets Supporting Insurance Liabilities | -1(2) | NAIC Designation | (in millions) | 1 | 2 | Subtotal Investment Grade | 3 | 4 | 5 | 6 | Subtotal Below Investment Grade | Total Private Trading Account Assets Supporting Insurance Liabilities |


| At December 31, 2013 | Fair Values-1 | Receivable | (dollars in millions) | Banks and securities firms | Insurance and other financial institutions | Non-financial entities | Total |


Note 24 FINANCIAL INSTRUMENTS Financial instruments include cash and cash equivalents, marketable securities, receivables, accounts payable, debt instruments and derivatives.
Due to their short term maturity, the carrying amount of receivables and accounts payable approximate fair value.
There is exposure to market risk due to changes in currency exchange rates and interest rates.
As a result, certain derivative financial instruments are used when available on a cost-effective basis to hedge the underlying economic exposure.
These instruments qualify as cash flow, net investment and fair value hedges upon meeting certain criteria, including effectiveness of offsetting hedged exposures.
Changes in fair value of derivatives that do not qualify for hedge accounting are recognized in earnings as they occur.
All financial instruments, including derivatives, are subject to counterparty credit risk which is considered as part of the overall fair value measurement.
Derivative financial instruments are not used for trading purposes.
Foreign currency forward contracts are used to manage cash flow exposures.
The primary net foreign currency exposures hedged are the Euro, Japanese yen, Canadian dollar, British pound, Australian dollar and Mexican peso.
Fixed-to-floating interest rate swaps are used as part of the interest rate risk management strategy.
These swaps qualify for fair-value hedge accounting treatment.
Certain net asset changes due to foreign exchange volatility are hedged through non-U.
S.  dollar borrowings which qualify as a net investment hedge.
Derivative financial instruments present certain market and counterparty risks; however, concentration of counterparty risk is mitigated by limiting amounts with any individual counterparty and using banks worldwide with Standard & Poor's and Moody's long-term debt ratings of A or higher.
In addition, only conventional derivative financial instruments are utilized.
The consolidated financial statements would not be materially impacted if any counterparties failed to perform according to the terms of its agreement.
Currently, collateral or any other form of securitization is not required to be furnished by the counterparties to derivative financial instruments.


To implement the investment strategy, plan assets are invested in funds that primarily invest in securities that correspond to one of the asset categories under the investment guidelines.
However, at any point in time, some of the assets in a fund may be of a different nature than the specified asset category
PRUDENTIAL FINANCIAL, INC.  Notes to Consolidated Financial Statements 14.
SHORT-TERM AND LONG-TERM DEBT Short-term Debt The table below presents the Company’s short-term debt at December 31, for the years indicated as follows:


| Years Ended December 31, | 2009 | Income (loss) from continuing operations, net of income tax | Less: Net investment gains (losses) | Less: Other adjustments to continuing operations | Less: Provision for income tax (expense) benefit | Operating earnings | Less: Preferred stock dividends | Operating earnings available to common shareholders |


The FASB issued Statement of Financial Accounting Standards No.149 “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” on April 30, 2003.
The Statement is effective for derivative contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003.
The adoption of this Statement did not have an effect on Marathon’s financial position, cash flows or results of operations.


| (Dollars in millions) 2004 2003 | Personnel | Occupancy | Equipment | Marketing | Professional fees | Amortization of intangibles | Data processing | Telecommunications | Other general operating | Merger and restructuring charges | Total noninterest expense |


| In millions of dollars U.S. Outside ofU.S. December 31,2018 December 31, 2017 | Commercial and similar letters of credit | One- to four-family residential mortgages | Revolving open-end loans secured by one- to four-family residential properties | Commercial real estate, construction and land development | Credit card lines | Commercial and other consumer loan commitments | Other commitments and contingencies | Total |


| Fiscal Year Future Minimum Lease Payments Future Minimum Sublease Income | 2004 | 2005 | 2006 | 2007 | 2008 | Thereafter | Total | Remaining Life | One Year or   Less | (In millions) | Interest rate swaps | Interest rate floors | Interest rate caps | Interest rate futures | Interest rate options | Interest rate forwards | Synthetic GICs | Foreign currency swaps | Foreign currency forwards | Currency futures | Currency options | Non-derivative hedging instruments | Credit default swaps | Credit forwards | Equity futures | Equity options | Variance swaps | Total rate of return swaps | Total |


| Preliminary Purchase Price Allocation | Non-current assets | Property and equipment | Intangible assets -1 | Other non-current liabilities | Fair value of net assets acquired | Goodwill -2 | Tier 1 Common | Stated minimum ratio | Plus: Capital conservation | buffer requirement | Effective minimum ratio |


| For the Year Ended December 31 | ($ in millions) | Sales | Selling, general and administrative (“SG&A”) expenses | Research and development (“R&D”) expenses | SG&A as a % of sales | R&D as a % of sales |


INTEREST RATE RISK In the normal course of business, we are exposed to market risk from changes in interest rates that could affect our results of operations and financial condition.
We manage our exposure to interest rate risks through our regular operations and financing activities.
We invest our cash and cash equivalents primarily in highly-rated corporate commercial paper and bank deposits.
We also have short-term and long-term investments in highlyrated corporate debt securities, U. S.  government and agency debt securities, U. S.  government treasury funds, municipal bonds, foreign government debt securities, commercial paper and certificates of deposit.
The primary investment objective is to ensure capital preservation of our invested principal funds.
Currently, we do not use derivative financial instruments in our investment portfolio.
We are exposed to interest rate risk on our debt obligations and our cash and cash equivalents.
We have multiple fixed-to-variable interest rate swap agreements that we have designated as fair value hedges of the fixed interest rate obligations on our Senior Notes due 2019 and 2021.
The total notional amounts are $250 million and $300 million for the Senior Notes due 2019 and 2021, respectively.
On the interest rate swap agreements for the Senior Notes due 2019, we receive a fixed interest rate of 4.625 percent and pay variable interest equal to the three-month LIBOR plus an average of 133 basis points.
On the interest rate swap agreements for the Senior Notes due 2021, we receive a fixed interest rate of 3.375 percent and pay variable interest equal to the three-month LIBOR plus an average of 99 basis points.
The interest rate swap agreements are intended to manage our exposure to interest rate movements by converting fixed-rate debt into variable-rate debt.
The objective of the instruments is to more closely align interest expense with interest income received on cash and cash equivalents.
These derivative instruments are designated as fair value hedges under GAAP.
Changes in the fair value of the derivative instrument are recorded in earnings and are offset by gains or losses on the underlying debt instrument.
Based upon our overall interest rate exposure as of December 31, 2013, a change of 10 percent in interest rates, assuming the principal amount outstanding remains constant, would not have a material effect on net interest expense.
This analysis does not consider the effect of the change in the level of overall economic activity that could exist in such an environment.


Table of Contents Printed circuit boards are then mated to the head-disc assembly and the completed unit is tested prior to packaging and shipment.
Final assembly and test operations of our disc drives occur primarily at facilities located in China, Singapore and Thailand.
We perform subassembly and component manufacturing operations at our facilities in China, Malaysia, Northern Ireland, Singapore, Thailand, and in the United States, in California and Minnesota.
In addition, third parties manufacture and assemble components for us in various Asian countries, including China, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam, and in Europe and the United States.
Products We offer a broad range of disc drive products for the enterprise, desktop, mobile computing and consumer electronics sectors of the disc drive industry.
During fiscal year 2005, we introduced and shipped in volume 12 new disc drive products, including: ?
our first 1-inch form factor disc drive, the ST1, which is primarily used in hand-held consumer electronics devices such as digital music players and digital cameras; ?
larger capacity 3.5-inch form factor disc drives to address the market for larger capacity digital video recorders and home media storage devices and near-line enterprise applications; ?
additional capacity models of our 2.5-inch form factor Momentus mobile computing disc drive which will more completely address our customers’ mobile computing disc drive requirements; and We offer more than one product within each product family, and differentiate products on the basis of price/performance and form factor, or the dimensions of the disc drive.
Historically, our industry has been characterized by continuous and significant advances in technology, which contributed to rapid product life cycles; however, based upon the recent pace of new product introductions, we believe that our industry is currently in a period in which the rate of increases in areal density, which is the storage capacity per square inch on a disc, is lower than the rate of the last several years, resulting in longer product life cycles.
We list in the table below our main current product offerings.


Note 9.
Loans Receivable Loans receivable is comprised of loans held for investment that are accounted for at amortized cost net of allowance for loan losses.
Interest on loans receivable is recognized over the life of the loan and is recorded on an accrual basis.
The table below presents details about loans receivable.


| Financial Instrument Fair Value Level 1 Level 2 Level 3 | Marketable debt securities | Marketable equity securities | Interest-rate swap assets-1 | Interest-rate swap liabilities-1 | Warrants-1 | $178,137 |


| 2016 2015 2014 | Balance at January 1 | Extensions and Discoveries | Revisions | Acquisition of Reserves | Sale of Reserves | Conversion to Proved Developed Reserves | Balance at December 31 |


ITEM 3.
Legal Proceedings.
See discussion of legal proceedings in note “7.
Legal Proceedings” in Part II, Item 8 of this report, which is incorporated by reference herein.


| (Dollar amounts in millions) 2017 Percent change 2016 Percent change 2015 | Salaries and employee benefits | Occupancy, net | Furniture, equipment and software | Other real estate expense | Credit-related expense | Provision for unfunded lending commitments | Professional and legal services | Advertising | FDIC premiums | Amortization of core deposit and other intangibles | Other | Total noninterest expense |


Financing Activities Net cash used in financing activities was $362.5 million and $733.8 million in the years ended December 31, 2017 and 2016, respectively, and net cash provided by financing activities was $736.6 million in the year ended December 31, 2015.
The decrease in the year ended December 31, 2017 compared with the year ended December 31, 2016 was primarily due to lower debt repayments and treasury stock purchases.
The decrease in the year ended December 31, 2016 compared with the year ended December 31, 2015 was primarily driven by lower debt borrowings and higher debt repayments, partially offset by lower treasury stock purchases.


| 2010 2009 | (in thousands) | Long-term debt: | Senior notes: | $500 million, 6.45% due June 1, 2016 | $500 million, 7.20% due June 15, 2018 | $300 million, 6.30% due August 1, 2018 | $250 million, 8.15% due June 15, 2038 | Total senior notes | Other long-term borrowings | Total long-term debt |


| December 31 – dollars in millions 2015 2014 2013 2012 2011 | Nonperforming loans | Commercial | Commercial real estate | Equipment lease financing | Total commercial lending | Consumer lending (a) | Home equity (b) (c) | Residential real estate (b) | Credit card (d) | Other consumer (b) | Total consumer lending (e) | Total nonperforming loans (f) | OREO and foreclosed assets | Other real estate owned (OREO) | Foreclosed and other assets | Total OREO and foreclosed assets | Total nonperforming assets | Nonperforming loans to total loans | Nonperforming assets to total loans, OREO and foreclosed assets | Nonperforming assets to total assets | Interest on nonperforming loans | Computed on original terms | Recognized prior to nonperforming status | Troubled Debt Restructurings | Nonperforming | Performing | Past due loans | Accruing loans past due 90 days or more (g) | As a percentage of total loans | Past due loans held for sale | Accruing loans held for sale past due 90 days or more (h) | As a percentage of total loans held for sale |


| Years ended December 31, % change | 2009 | North America: | Recurring revenues | Non-recurring revenues | 535,489 | Europe: | Recurring revenues | Non-recurring revenues | 228,136 | Asia-Pacific: | Recurring revenues | Non-recurring revenues | 118,884 | Total: | Recurring revenues | Non-recurring revenues | $882,509 |


| (In millions) 2004 2003 2002 | E&P | RM&T | IG | Segment revenues | Elimination of intersegment revenues | Total revenues | Items included in both revenues and costs and expenses: | Consumer excise taxes on petroleum products and merchandise | Matching crude oil and refined product buy/sell transactions settled in cash: | E&P | RM&T | Total buy/sell transactions |


| (in millions) December 31,2015 Net inflows (outflows) Marketchange FX impact December 31,2016 | Asset allocation and balanced | Target date/risk | Fiduciary | FutureAdvisor-1 | Total |


During the year ended December 31, 2014 , the company invested in and consolidated eight new VIEs and one VOE ( December 31, 2013 : the company invested in and consolidated five VIEs and one VOE).
The tables below illustrate the summary balance sheet amounts related to these products before each entity's initial consolidation into the company.
The balances below are reflective of the balances existing at each entity's respective consolidation date after the initial funding of the investments by the company and unrelated third-party investors.
The current period activity for the consolidated funds, including the initial funding and subsequent investment of initial cash balances into underlying investments of CIP, is reflected in the company’s Consolidated Financial Statements.
Balance Sheet


| Amount (In Millions) | 2014 net revenue | Nuclear realized price changes | Vermont Yankee shutdown in December 2014 | Nuclear volume, excluding Vermont Yankee effect | Other | 2015 net revenue |


| 2018 2019 2020 2021 2022 Thereafter Total | Deferred acquisition payments | Redeemable noncontrolling interests and call options with affiliates1 | Total contingent acquisition payments |


value policies at the underlying fund generally require the fund to utilize pricing/valuation information from third-party sources, including independent appraisals.
However, in some instances, current valuation information for illiquid securities or securities in markets that are not active may not be available from any third-party source or fund management may conclude that the valuations that are available from third-party sources are not reliable.
In these instances, fund management may perform model-based analytical valuations that could be used as an input to value these investments.
Derivative Instruments and Hedging Activities.
The Company does not use derivative financial instruments for trading or speculative purposes.
The Company uses derivative financial instruments primarily for purposes of hedging exposures to fluctuations in foreign currency exchange rates of certain assets and liabilities, and market exposures for certain seed investments.
However, certain consolidated sponsored investment funds may also utilize derivatives as a part of their investment strategy.
Changes in the fair value of the Companys derivative financial instruments are recognized in earnings and, where applicable, are offset by the corresponding gain or loss on the related foreign-denominated assets or liabilities or hedged investments, on the consolidated statements of income.
The Company may also use financial instruments designated as net investment hedges for accounting purposes to hedge net investments in international subsidiaries whose functional currency is not U. S.  dollars.
The gain or loss from revaluing accounting hedges of net investments in foreign operations at the spot rate is deferred and reported within accumulated other comprehensive income on the consolidated statements of financial condition.
The Company reassesses the effectiveness of its net investment hedge on a quarterly basis.


| September 29, 2007 September 30, 2006 September 24, 2005 | Net sales | Cost of sales | Gross margin | Gross margin percentage |


| December 31, 2010 | (Dollars in millions) | Long-term debt and capital leases | Operating lease obligations | Purchase obligations | Time deposits | Other long-term liabilities | Total long-term debt and other obligations |


| Payments due by period | Total | Property and casualty obligations [1] | Life, annuity and disability obligations [2] | Operating lease obligations [3] | Long-term debt obligations [4] | Purchase obligations [5] | Other liabilities reflected on the balance sheet [6] | Total |


| (In millions) 2007 2006 2005 | Net sales | Operating profit | Backlog at year-end |


The increase in property operating expenses from our large market same store group is primarily the result of increases in real estate taxes of $3.2 million, personnel expenses of $1.9 million, water expenses of approximately $1.0 million, cable expenses of $0.5 million, and waste removal expenses of $0.2 million.
The increase in property operating expenses from our secondary market same store group is primarily a result of increases in other operating expenses of $1.5 million, real estate taxes of $1.1 million, and personnel expenses of $1.2 million.
The decrease in property operating expenses from our non-same store and other group is primarily the result of decreases in personnel expenses of $2.4 million and utility expenses of $1.7 million.


while $7.2 million in aggregate grant date fair value of new equity warrant assets was added to the portfolio.
Additionally, the decrease in fair value of our equity warrant assets attributable to cancellations and expirations was $2.4 million.
Lastly, a $0.9 million increase was related to an increase in the fair value of the remaining equity warrant assets.
The fair value of foreign exchange forward and option contracts decreased by $0.4 million.
At December 31, 2004 and 2003, the aggregate notional amounts of client related foreign exchange forward contracts totaled $525.4 million and $155.8 million, respectively.
The maximum credit exposure for counterparty nonperformance for foreign exchange forward contracts with both clients and correspondent banks amounted to $10.0 million at December 31, 2004 and $3.5 million at December 31, 2003.
We have not experienced nonperformance by a counterparty and therefore have not incurred related losses.
Further, we anticipate performance by all counterparties to such foreign exchange forward contracts.
At December 31, 2004 and 2003, the notional amounts of client related foreign currency contracts totaled $13.5 million and $21.1 million, respectively.
We have not experienced nonperformance by a counterparty and therefore have not incurred related losses.
Further, we anticipate performance by all counterparties.
These contracts typically expire in less than one year.
Convertible Note Hedge On May 15, 2003, we entered into a convertible note hedge agreement (purchased call option) with a counterparty, with respect to our common stock, to limit our exposure to potential dilution from conversion of our $150.0 million principal amount of zero coupon convertible notes.
For information on the our $150.0 million principal amount of zero coupon convertible notes, see Borrowings below.
Upon the occurrence of conversion events, we have the right to purchase up to approximately 4,460,610 shares of its common stock from the counterparty at a price of $33.6277 per common share.
The convertible note hedge agreement will expire on June 15, 2008.
We have the option to settle any amounts due under the convertible hedge either in cash or net shares of our common stock.
The cost of the convertible note hedge is included in stockholders’ equity in accordance with the guidance in EITF No.00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock.
Also see Item 8.
Consolidated Financial Statements and Supplementary Data—Note 13.
Derivative Financial Instruments for additional discussion.
Deposits Our deposits are largely obtained from clients within our technology, life science, private equity, and premium wine industry sectors and, to a lesser extent, from individuals served by private client services.
We do not obtain deposits from conventional retail sources and have no brokered deposits.
The following table presents the composition of our deposits for the last five years ended December 31:


| Month Total Numberof SharesPurchased-1 Average Price Paid Per Share Total Number of SharesPurchased as Part ofPublicly Announced Plans or Programs-2 Approximate DollarValue of Shares thatMay Yet Be PurchasedUnder the Plansor Programs-2(millions) | October 1 - 31, 2015 | November 1 - 30, 2015 | December 1 - 31, 2015 | 6,651,317 |


UNITED PARCEL SERVICE, INC.  AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) comprised of corporate and government bonds, hedge funds, real estate investments and private equity funds.
The commingled funds are valued using net asset values, adjusted, as appropriate, for investment fund specific inputs determined to be significant to the valuation.
Investments in hedge funds are valued using reported net asset values as of December 31.
These assets are primarily invested in a portfolio of diversified, direct investments and funds of hedge funds.
Real estate investments and private equity funds are valued using fair values per the most recent partnership audited financial reports, adjusted as appropriate for any lag between the date of the financial reports and December 31.
The real estate investments consist of U. S.  and non-U.
S.  real estate investments and are broadly diversified.
The fair values may, due to the inherent uncertainty of valuation for those alternative investments, differ significantly from the values that would have been used had a ready market for the alternative investments existed, and the differences could be material.
At December 31, 2010 approximately $3.766 billion of the plan assets are held in comingled stock funds that each hold U. S.  and international public market securities.
The plan held the right to liquidate its positions in these commingled stock funds at any time, subject only to a brief notification period.
No unfunded commitment existed with respect to these commingled stock funds at December 31, 2010.
The plan holds approximately $2.098 billion of its investments in limited partnership interests in various private equity and real estate funds.
Limited provision exists for the redemption of these interests by the general partners that invest these funds until the end of the term of the partnerships, typically ranging between 12 and 18 years from the date of inception.
An active secondary market exists for similar partnership interests, although no particular value (discount or premium) can be guaranteed.
At December 31, 2010, unfunded commitments to such limited partnerships totaling approximately $585 million are expected to be contributed over the remaining investment period, typically ranging between three and six years.
Approximately $2.023 billion of the plan investments are held in hedge funds that pursue multiple strategies to diversify risk and reduce volatility.
Most of these funds require two to three months notice for redemptions and allow them to occur either quarterly or semi-annually, while others allow for redemption after only a brief notification period with no restriction on redemption frequency.
No unfunded commitments existed with respect to these hedge funds.
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2010 due to the following (in millions):


| 2003 2002 | Carrying amount | (Thousands) | Notes payable to banks | Long-term debt and capital leases: | Capital leases | Long-term debt (excluding capital leases) | Total long-term debt and capital leases | Less: current portion | Total long-term debt and capital leases, less current portion |


Purchases of Equity Securities – During 2012, we repurchased 13,804,709 shares of our common stock at an average price of $115.33.
The following table presents common stock repurchases during each month for the fourth quarter of 2012:
[a] Total number of shares purchased during the quarter includes approximately 105,978 shares delivered or attested to UPC by employees to pay stock option exercise prices, satisfy excess tax withholding obligations for stock option exercises or vesting of retention units, and pay withholding obligations for vesting of retention shares.
[b] On April 1, 2011, our Board of Directors authorized the repurchase of up to 40 million shares of our common stock by March 31, 2014.
These repurchases may be made on the open market or through other transactions.
Our management has sole discretion with respect to determining the timing and amount of these transactions.


Table of Contents Share-Based Compensation Expense The following table summarizes the total share-based compensation expense that we recorded for continuing operations for the periods shown.
The share-based compensation expense that we recorded for discontinued operations for these periods was nominal.


Derivative Financial Instruments The Company uses derivative financial instruments for purposes of hedging exposures to fluctuations in interest rates.
These derivative contracts are entered into for periods consistent with the related underlying
NOTE 20.
DERIVATIVES We are exposed to financial risk resulting from volatility in foreign exchange rates, commodity prices and interest rates.
This risk is closely monitored and managed through the use of financial derivative instruments including foreign currency forward contracts, commodity swap contracts and interest rate swaps.
As stated in our policies and procedures, financial derivatives are used expressly for hedging purposes, and under no circumstances are they used for speculative purposes.
When material, we adjust the value of our derivative contracts for counterparty or our credit risk.
Foreign Exchange Rates As a result of our international business presence, we are exposed to foreign currency exchange risks.
We transact business in foreign currencies and, as a result, our income experiences some volatility related to movements in foreign currency exchange rates.
To help manage our exposure to exchange rate volatility, we use foreign exchange forward contracts on a regular basis to hedge forecasted intercompany and third-party sales and purchases denominated in non-functional currencies.
Our internal policy allows for managing anticipated foreign currency cash flows for up to one year.
These foreign currency forward contracts are designated and qualify as foreign currency cash flow hedges under GAAP.
The effective portion of the unrealized gain or loss on the forward contract is deferred and reported as a component of Accumulated other comprehensive loss (AOCL).
When the hedged forecasted transaction (sale or purchase) occurs, the unrealized gain or loss is reclassified into income in the same line item associated with the hedged transaction in the same period or periods during which the hedged transaction affects income.
The ineffective portion of the hedge, unrealized gain or loss, if any, is recognized in current income during the period of change.
As of December 31, 2011, the amount we expect to reclassify from AOCL to income over the next year is an unrealized net loss of $6 million.
For the years ended December 31, 2011 and 2010, there were no circumstances that would have resulted in the discontinuance of a foreign currency cash flow hedge.
To minimize the income volatility resulting from the remeasurement of net monetary assets and payables denominated in a currency other than the functional currency, we enter into foreign currency forward contracts, which are considered economic hedges.
The objective is to offset the gain or loss from remeasurement with the gain or loss from the fair market valuation of the forward contract.
These derivative instruments are not designated as hedges under GAAP.
The table below summarizes our outstanding foreign currency forward contracts.
Only the U. S.  dollar forward contracts are designated and qualify for hedge accounting as of each period presented below.
The currencies in this table represent 98 percent and 97 percent of the notional amounts of contracts outstanding as of December 31, 2011 and 2010.


Treasury’s net income increased $51.7 million in 2015 compared to 2014.
The $53.7 million improvement in net interest income primarily reflects lower net FTP funding costs and an increase in securities income, partially offset by an increase in interest expense.
The decrease in non-interest income primarily reflects a decrease in net security gains and BOLI income.
The increase in non-interest expense primarily reflects increases in both direct and allocated expenses.
Average total assets increased $1.1 billion in 2015 compared to 2014, primarily reflecting an increase in average securities and average short-term investments.
The $1.8 billion increase in average total liabilities in 2015 compared to 2014 reflects increases in average deposits and average notes and debentures partially offset by a decrease in average borrowings.


CREDIT RISK Financial instruments, which potentially subject us to concentrations of credit risk, are primarily cash and cash


Notes to Consolidated Financial Statements In June 2009, we acquired an operating sub- leasehold position at 420?Lexington Avenue for approximately $7.7?million.
These sub- leasehold positions were scheduled to mature in December?2029.
In October 2009, we acquired the remaining sub- leasehold position for $7.6?million.
The property located at 711?Third Avenue operates under an operating sub- lease, which expires in 2083.
Under the sub- lease, we were responsible for ground rent payments of $1.55?million annually through July 2011 on the 50% portion of the fee we do not own.
The ground rent was reset in July 2011.
Following the reset, we are responsible for ground rent payments of $5.25?million annually through July 2016 and then $5.5?million annually thereafter on the 50% portion of the fee we do not own.
The property located at 461?Fifth Avenue operates under a ground lease (approximately $2.1?million annually) with a term expiration date of 2027 and with two options to renew for an additional


| For the Year Ended or as of December | 2013 | Income statement data(in millions) | Non-interest revenues | Interest income | Interest expense | Net interest income | Net revenues, including net interest income | Compensation and benefits | U.K. bank payroll tax | Non-compensation expenses | Pre-tax earnings | Balance sheet data(in millions) | Total assets | Other secured financings (long-term) | Unsecured long-term borrowings | Total liabilities | Total shareholders’ equity | Common share data(in millions, except per share amounts) | Earnings per common share | Basic | Diluted | Dividends declared per common share | Book value per commonshare1 | Average common shares outstanding | Basic | Diluted | Selected data(unaudited) | Total staff | Americas | Non-Americas | Total staff | Assets under supervision(in billions) | Asset class | Alternative investments | Equity | Fixed income | Long-term assets under supervision | Liquidity products | Total assets under supervision | As of December 2013  Type of Deposit | in millions | Private bank deposits3 | Certificates of deposit | Deposit sweep programs4 | Institutional | Total5 |


Rental and Management Operations Expenses.
Direct operating expenses incurred by our domestic and international rental and management segments include direct site level expenses and consist primarily of ground rent and power and fuel costs, some of which may be passed through to our tenants, as well as property taxes, repairs and maintenance.
These segment direct operating expenses exclude all segment and corporate selling, general, administrative and development expenses, which are aggregated into one line item entitled Selling, general, administrative and development expense in our consolidated statements of operations.
In general, our domestic and international rental and management segments’ selling, general, administrative and development expenses do not significantly increase as a result of adding incremental tenants to our legacy sites and typically increase only modestly year-over-year.
As a result, leasing additional space to new tenants on our legacy sites provides significant incremental cash flow.
We may, however, incur additional segment selling, general, administrative and development expenses as we increase our presence in geographic areas where we have recently launched operations or are focused on expanding our portfolio.
Our profit margin growth is therefore positively impacted by the addition of new tenants to our legacy sites and can be temporarily diluted by our development activities.


| (in millions) CollateralPosted as ofDecember 31, 2009 AdditionalPostings,Netted byCounterparty CollateralReturned byCounterparties CollateralPosted as ofDecember 31, 2010 | Collateralized GIAs (Direct Investment business) | Super senior credit default swap (CDS) portfolio | All other derivatives | Total |


| Average Balance-1 | At December 31, 2014 | (dollars in billions) | Bank legal entities: | Domestic | Foreign | Total Bank legal entities | Non-Bank legal entities: | Domestic-2 | Foreign | Total Non-Bank legal entities | Total |


| Net Undeveloped Acres Expiring | (In thousands) | U.S. | Canada | Total North America | E.G. | Other Africa | Total Africa | Total Europe | Other International | Worldwide |


| 2005 2004 2003 | Sales (millions) | Sales change analysis: | Local currency (volume and price) | Translation | Total sales change | Operating income (millions) | Percent change | Percent of sales |


| In billions 2015 | January 1 | Maturities | Other | December 31 |


BRAZILIAN PAPER net sales for 2006 of $496 million were higher than the $465 million in 2005 and the $417 million in 2004.
The sales increase in 2006 reflects higher sales volumes than in 2005, particularly for uncoated freesheet paper, and a strengthening of the Brazilian currency versus the U. S.  dollar.
Average sales price realizations improved in 2006, primarily for uncoated freesheet paper and wood chips.
Despite higher net sales, operating profits for 2006 of $122 million were down from $134 million in 2005 and $166 million in 2004, due principally to incremental costs associated with an extended mill outage in Mogi Guacu to convert to an elemental-chlorine-free bleaching process, to rebuild the primary recovery boiler, and for other environmental upgrades.


| Payments Due by Period | Total | (in thousands) | Debt | Interest-1 | Operating leases-2 | Purchase and other obligations-3 | Total | Completion Factor(a): | (Decrease) Increase in Factor | -3% | -2% | -1% | 1% | 2% | 3% |


PRUDENTIAL FINANCIAL, INC.  Notes to Consolidated Financial Statements The Company’s liability for future policy benefits is also inclusive of liabilities for guaranteed benefits related to certain long-duration life and annuity contracts.
Liabilities for guaranteed benefits with embedded derivative features are primarily in “other contract liabilities” in the table above.
The remaining liabilities for guaranteed benefits are primarily reflected with the underlying contract.
See Note 11 for additional information regarding liabilities for guaranteed benefits related to certain long-duration life and annuity contracts.
Premium deficiency reserves included in “Future policy benefits” are established, if necessary, when the liability for future policy benefits plus the present value of expected future gross premiums are determined to be insufficient to provide for expected future policy benefits and expenses.
Premium deficiency reserves have been recorded for the group single premium annuity business, which consists of limited-payment, long-duration traditional, non-participating annuities; structured settlements; single premium immediate annuities with life contingencies; long-term care; and for certain individual health policies.
Additionally, in certain instances the policyholder liability for a particular line of business may not be deficient in the aggregate to trigger loss recognition, but the pattern of earnings may be such that profits are expected to be recognized in earlier years followed by losses in later years.
In these situations, accounting standards require that an additional PFL liability be recognized by an amount necessary to sufficiently offset the losses that would be recognized in later years.
A PFL liability is included in “Future policy benefits” and is predominately associated with certain interest-sensitive life contracts.
Unpaid claims and claim adjustment expenses primarily reflect the Company’s estimate of future disability claim payments and expenses as well as estimates of claims incurred but not yet reported as of the balance sheet dates related to group disability products.
Unpaid claim liabilities that are discounted use interest rates ranging from 2.6% to 6.4%.


| December 31, | 2013 | Water | Residential | Commercial | Industrial | Public & other | Total |


Environmental Matters Environmental remediation liabilities are recognized when a loss is probable and can be reasonably estimated.
Such liabilities generally are not subject to insurance coverage.
The cost of each environmental remediation is estimated by engineering, financial, and legal specialists based on current law and considers the estimated cost of investigation and remediation required and the likelihood that, where applicable, other responsible parties will be able to fulfill their legal obligations and commitments.
The process of estimating environmental remediation liabilities is complex and dependent primarily on the nature and extent of historical information and physical data relating to a contaminated site, the complexity of the site, the uncertainty as to what remediation and technology will be required, and the outcome of discussions with regulatory agencies and, if applicable, other responsible parties.
In future periods, new laws or regulations, advances in remediation technologies and additional information about the ultimate remediation methodology to be used could significantly change our estimates.
Refer to Note 13.
Commitments and Contingencies to the audited consolidated financial statements included herein for additional details.
We cannot ensure that environmental requirements will not change or become more stringent over time or that our eventual environmental costs and liabilities will not exceed the amount of current reserves.
In the event that such liabilities were to significantly exceed the amounts recorded, our results of operations could be materially affected.


| 2011 2012 2013 2014 2015 Thereafter Total | Property Mortgages | Revolving Credit Facility | Trust Preferred Securities | Senior Unsecured Notes | Capital lease | Ground leases | Estimated interest expense | Joint venture debt | Total |


Commercial  Foreign The commercial  foreign loan portfolio is managed primarily in Global Banking.
Outstanding loans, excluding loans accounted for under the fair value option, decreased due to repayments as borrowers accessed the capital markets to refinance bank debt and aggressively managed working capital and investment spending, partially offset by the acquisition of Merrill Lynch.
Reduced merger and acquisition activity was also a factor contributing to modest new loan origination.
Net charge-offs increased primarily due to deterioration in the portfolio, particularly in financial services, consumer dependent and housing-related sectors.
For additional information on the commercial  foreign portfolio, refer to the Foreign Portfolio discussion beginning on page 86.


| Wireless licenses 5 years | Marketing-related | Technology-based | Customer-related | Other | Total intangible assets |


| In millions of dollars December 31,2018 December 31, 2017 | Carrying amount reported on the Consolidated Balance Sheet | Aggregate fair value in excess of (less than) unpaid principal balance | Balance of non-accrual loans or loans more than 90 days past due | Aggregate unpaid principal balance in excess of fair value for non-accrual loans or loans more than 90 days past due |


| Percentage Increase (Decrease) from | 2013 | (In millions) | NOW accounts | Savings deposits | Time deposits | Noninterest-bearing deposits | Total |


| Location Approximate Square Feet Operation LeaseExpiration Dates | San Diego, CA | San Francisco Bay Area, CA | Singapore | Cambridge, United Kingdom | Madison, WI | Eindhoven, the Netherlands | Other* |


| 2009 2008 | Balance at January 1 | Additions for tax positions related to prior years | Reductions for tax positions related to prior years | Additions for tax positions related to current year | Settlements | Lapses in statutes of limitations | Balance at December 31 |


| 2016 $1,785 | 2017 | 2018 | 2019 | 2020 |


| For the Year Ended December 31, | (in millions, except per-share and ratio data) | OPERATING DATA: | Net interest income | Noninterest income | Total revenue | Provision for credit losses | Noninterest expense | Income before income tax expense | Income tax expense-1 | Net income | Net income available to common stockholders | Net income per average common share - basic-2 | Net income per average common share - diluted-2 | Dividends declared and paid per common share | OTHER OPERATING DATA: | Return on average common equity-3 | Return on average tangible common equity-3 | Return on average total assets-3 | Return on average total tangible assets-3 | Efficiency ratio-3 | Operating leverage-3 (4) | Net interest margin-3 | Effective income tax rate-1 |


| 2017 2016 | Quarter Ended | March 31 | June 30 | September 30 | December 31 |


| Year Ended December 31, | 2005 | (In thousands) | Rental and other income | Net income (loss) | HCP’s equity income (loss) | Fees earned by HCP | Distributions received |


| 2017 2016 2015 2014 | $11,173 |


Payments Payments cost of net revenues increased $272.5 million, or 22%, in 2010 compared to 2009.
The increase in cost of net revenues was primarily due to the impact from our growth in net TPV.
Payments cost of net revenues as a percentage of Payments net revenues decreased slightly in 2010 compared to 2009 due primarily to improved leverage of our customer support infrastructure and existing site operations.
expect that these credit rating agencies will continue to monitor developments in our planned separation of PayPal, including the capital structure for each company after separation, which could result in additional downgrades.
Our borrowing costs depend, in part, on our credit ratings and because downgrades would likely increase our borrowing costs we disclose these ratings to enhance the understanding of the effects of our ratings on our costs of funds.
In addition, to assist PayPal in our planned separation we are currently working with credit rating agencies to obtain separate credit ratings for PayPal and we believe that immediately following separation both eBay and PayPal will be rated investment grade.


| 2013 2012 2011 | Net sales | Operating profit | Operating margins | Backlog at year-end |


| Price Collar Contracts Price Swap Contracts | Floor Price | Weighted | Floor | Volume | Period | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | 2008 Average |


| Cash $45,826 | Customer-related intangible assets | Acquired technology | Trade name | Other assets | Deferred income tax assets (liabilities) | Other liabilities | Total identifiable net assets | Goodwill | Total purchase consideration |


Significant Customers Centene receives the majority of its revenues under contracts or subcontracts with state Medicaid managed care programs.
The contracts, which expire on various dates between June 30, 2006 and August 31, 2008, are expected to be renewed.
Contracts with the states of Indiana, Kansas, Texas and Wisconsin each accounted for 18%, 12%, 22% and 23%, respectively, of the Companys revenues for the year ended December 31, 2005.
Reinsurance Centene has purchased reinsurance from third parties to cover eligible healthcare services.
The current reinsurance program covers 90% of inpatient healthcare expenses in excess of annual deductibles of $300 per member, up to a lifetime maximum of $2,000.
Centenes Medicaid Managed Care subsidiaries are responsible for inpatient charges in excess of an average daily per diem.
Reinsurance recoveries were $4,014, $3,730, and $5,345, in 2005, 2004, and 2003, respectively.
Reinsurance expenses were approximately $4,105, $6,724, and $6,185 in 2005, 2004, and 2003, respectively.
Reinsurance recoveries, net of expenses, are included in medical costs.
Other Income (Expense) Other income (expense) consists principally of investment income and interest expense.
Investment income is derived from the Companys cash, cash equivalents, restricted deposits and investments.
Interest expense relates to borrowings under our credit facility, mortgage interest, interest on capital leases and credit facility fees.
Income Taxes Deferred tax assets and liabilities are recorded for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of the tax rate change.
Valuation allowances are provided when it is considered more likely than not that deferred tax assets will not be realized.
In determining if a deductible temporary difference or net operating loss can be realized, the Company considers future reversals of


| In millions of dollars, except as otherwise noted 2018 2017 2016 % Change2018 vs. 2017 % Change2017 vs. 2016 | Net interest revenue | Non-interest revenue | Total revenues, net of interest expense | Total operating expenses | Net credit losses | Credit reserve build (release) | Provision (release) for unfunded lending commitments | Provision for benefits and claims | Provisions for credit losses and for benefits and claims(LLR & PBC) | Income from continuing operations before taxes | Income taxes | Income from continuing operations | Noncontrolling interests | Net income | Balance Sheet data and ratios(in billions of dollars) | Total EOP assets | Average assets | Return on average assets | Efficiency ratio | Average deposits | Net credit losses as a percentage of average loans | Revenue by business | Retail banking | Cards-1 | Total | Income from continuing operations by business | Retail banking | Cards-1 | Total |


| 2015 2014 2013 | Pension expense | Special terminations, settlements, and curtailments (included above) | Weighted average discount rate | Weighted average expected rate of return on plan assets | Weighted average expected rate of compensation increase |


| Year ended December 31, | (Dollars in thousands) | Net interest income | Provision for loan losses | Noninterest income | Noninterest expense | Income before income tax expense | Total average loans | Total average assets | Total average deposits |


| Other liability occurrence $18,116 | Other liability claims made | Workers compensation | Auto liability | Property | International | Reinsurance | Medical malpractice | Aircraft | Products liability | Commercial multiple peril | Accident and health | Fidelity/ surety | Other | Total | DBG(a) | Personal Lines(b) | Transatlantic | Mortgage Guaranty | Foreign General(c) | Total Net Loss Reserve |


Business Realignment and Reorganization On 18 September 2014, we announced plans to reorganize the Company, including realignment of our businesses in new reporting segments and other organizational changes, effective as of 1 October 2014.
As a result of this reorganization, we incurred severance and other charges.
In fiscal year 2015, we recognized an expense of $207.7 ($153.2 after-tax, or $.71 per share).
Severance and other benefits totaled $151.9 and related to the elimination of approximately 2,000 positions.
Asset and associated contract actions totaled $55.8 and related primarily to a plant shutdown in the Corporate and other segment and the exit of product lines within the Industrial Gases – Global and Materials Technologies segments.
The 2015 charges related to the segments as follows: $31.7 in Industrial Gases – Americas, $52.2 in Industrial Gases – EMEA, $10.3 in Industrial Gases – Asia, $37.0 in Industrial Gases – Global, $27.6 in Materials Technologies, and $48.9 in Corporate and other.
During the fourth quarter of 2014, an expense of $12.7 ($8.2 after-tax, or $.04 per share) was incurred relating to the elimination of approximately 50 positions.
The 2014 charge related to the segments as follows: $2.9 in Industrial Gases – Americas, $3.1 in Industrial Gases – EMEA, $1.5 in Industrial Gases – Asia, $1.5 in Industrial Gases – Global, $1.6 in Materials Technologies, and $2.1 in Corporate and other.


| 2004 2003 2002 | Amortization | Royalties | Research and product development | Advertising | Selling, distribution and administration |


| Target Allocation Range Percentage of Plan Assets by Strategy at December 31 | PNC Pension Plan | Asset Category | Domestic Equity | International Equity | Private Equity | Total Equity | Domestic Fixed Income | High Yield Fixed Income | Total Fixed Income | Real estate | Other | Total |


| Currency 2016 2015 2014 | Pound Sterling | Euro | Real | Indian Rupee | Total impact |


| Year Ended Operating Premises Leases | 2014 | 2015 | 2016 | 2017 | 2018 | Thereafter |


Other consumer  Other consumer loans primarily consists of consumer loans not secured by real estate, including personal unsecured loans, overdraft balances, and credit cards.


| Type Date Issued Amount Repaid Interest Rate Maturity Date Date Paid | MTN | Senior Note | MTN | Senior Note | Senior Note |


| December 31, 2011 | (Dollars in millions) | U.S. commercial | U.S. commercial real estate | Non-U.S. and other-3 | Total selected loans | Percent of total | Sensitivity of selected loans to changes in interest rates for loans due after one year: | Fixed interest rates | Floating or adjustable interest rates | Total |


Stock-based Compensation Arconic has a stock-based compensation plan under which stock options and stock awards are granted in January each year to eligible employees.
Most plan participants can choose whether to receive their award in the form of stock options, restricted stock unit awards, or a combination of both.
This choice is made before the grant is issued and is irrevocable.
Stock options are granted at the closing market price of Arconics common stock on the date of grant and vest over a three-year service period (1/3 each year) with a ten-year contractual term.
Restricted stock unit awards also vest over a three-year service period from the date of grant and certain of these awards also include performance conditions.
For the majority of performance stock awards issued in 2016, 2015, and 2014, the final number of shares earned will be based on Arconics achievement of sales and profitability targets over the respective three-year performance periods.
One-third of the award will be earned each year based on the performance against the preestablished targets for that year.
The performance stock awards earned over the three-year period vest at the end of the third year.
In 2016, 2015, and 2014, Arconic recognized stock-based compensation expense of $76 ($51 after-tax), $77 ($51 aftertax), and $70 ($47 after-tax), respectively.
For each of 2016, 2015, and 2014, approximately 80% of the stock-based compensation expense recognized related to restricted stock unit awards and no stock-based compensation expense was capitalized in any of those years.
At December 31, 2016, there was $45 (pretax) of unrecognized compensation


| In millions of dollars 2009 2008 | Balance, beginning of the year | Additions for new sales | Change in estimate | Utilizations | Balance, end of the year |


Pension and Other Postretirement Benefit Plans The Company has defined benefit pension plans covering eligible employees in the United States and in certain of its international subsidiaries.
As a result of plan design changes approved in 2011, beginning on January 1, 2013, active participants in Merck’s primary U. S.  defined benefit pension plans are accruing pension benefits using new cash balance formulas based on age, service, pay and interest.
However, during a transition period from January 1, 2013 through December 31, 2019, participants will earn the greater of the benefit as calculated under the employee’s legacy final average pay formula or their new cash balance formula.
For all years of service after December 31, 2019, participants will earn future benefits under only the cash balance formula.
In addition, the Company provides medical benefits, principally to its eligible U. S.  retirees and their dependents, through its other postretirement benefit plans.
The Company uses December 31 as the year-end measurement date for all of its pension plans and other postretirement benefit plans.
Net Periodic Benefit Cost The net periodic benefit cost for pension and other postretirement benefit plans consisted of the following components


| (In millions) 2015 Budget Percent of Total | North America E&P | International E&P | Oil Sands Mining(a) | Segment total | Corporate and other | Total capital, investment and exploration spending budget |


A class action arising out of the processing system intrusion was filed against us on April 4, 2012 by Natalie Willingham (individually and on behalf of a putative nationwide class) (the “Plaintiff”).
Specifically, Ms.  Willingham alleged that we failed to maintain reasonable and adequate procedures to protect her personally identifiable information (“PII”) which she claims resulted in two fraudulent charges on her credit card in March 2012.
Further, Ms.  Willingham asserted that we failed to timely notify the public of the data breach.
Based on these allegations, Ms.  Willingham asserted claims for negligence, violation of the Federal Stored Communications Act, willful violation of the Fair Credit Reporting Act, negligent violation of the Fair Credit Reporting Act, violation of Georgia’s Unfair and Deceptive Trade Practices Act, negligence per se, breach of third-party beneficiary contract, and breach of implied contract.
Ms.  Willingham sought an unspecified amount of damages and injunctive relief.
The lawsuit was filed in the United States District Court for the Northern District of Georgia.
On May 14, 2012, we filed a motion to dismiss.
On July 11, 2012, Plaintiff filed a motion for leave to amend her complaint, and on July 16, 2012, the Court granted that motion.
She then filed an amended complaint on July 16, 2012.
The amended complaint did not add any new causes of action.
Instead, it added two new named Plaintiffs (Nadine and Robert Hielscher) (together with Plaintiff, the “Plaintiffs”) and dropped Plaintiff’s claim for negligence per se.
On August 16, 2012, we filed a motion to dismiss the Plaintiffs’ amended complaint.
The Plaintiffs filed their response in opposition to our motion to dismiss on October 5, 2012, and we subsequently filed our reply brief on October 22, 2012.
The magistrate judge issued a report and recommendation recommending dismissal of all of Plaintiffs’ claims with prejudice.
The Plaintiffs subsequently agreed to voluntarily dismiss the lawsuit with prejudice, with each party bearing its own fees and costs.
This was the only consideration exchanged by the parties in connection with Plaintiffs’ voluntary dismissal with prejudice of the lawsuit.
The lawsuit was dismissed with prejudice on March 6, 2013.


(a) Revenues from electric sales are subject to a revenue decoupling mechanism, as a result of which, delivery revenues generally are not affected by changes in delivery volumes from levels assumed when rates were approved.
(b) Residential/Religious generally includes single-family dwellings, individual apartments in multi-family dwellings, religious organizations and certain other not-for-profit organizations.
(c) Other electric operating revenues generally reflect changes in regulatory assets and liabilities in accordance with the revenue decoupling mechanism and other provisions of the companys rate plans.
See Note B to the financial statements in Item 8.
(d) After adjusting for variations, principally weather and billing days, electric delivery volumes in CECONYs service area were the same in 2016 compared with 2015.
Operating revenues decreased $66 million in 2016 compared with 2015 due primarily to lower purchased power expenses ($151 million) and lower fuel expenses ($14 million), offset in part by higher revenues from the electric rate plan ($122 million) and changes in regulatory charges ($20 million) .
Purchased power expenses decreased $151 million in 2016 compared with 2015 due to lower unit costs ($111 million) and purchased volumes ($40 million)


| Ozark Automotive Distributors, Inc. Missouri | Greene County Realty Co. | O’Reilly II Aviation, Inc. | Ozark Services, Inc. | Hi-LO Investment Company | Hi-LO Management Company |


| -1(2) December 31, 2010 December 31, 2009 | NAIC Designation | (in millions) | 1 | 2 | Subtotal High or Highest Quality Securities | 3 | 4 | 5 | 6 | Subtotal Other Securities-4 | Total Private Fixed Maturities | -1 | NAIC Designation | (in millions) | 1 | 2 | Subtotal High or Highest Quality Securities | 3 | 4 | 5 | 6 | Subtotal Other Securities-2 | Total Private Fixed Maturities |


| Gross Carrying Amount Accumulated Amortization | 2014 | (Dollars in thousands) | Customer lists | In-process research and development | Intellectual property | Distribution rights | Trade names | Noncompete agreements | $1,573,043 |


| Payments Due by Fiscal Year | In Millions | Long-term debt (a) | Accrued interest | Operating leases (b) | Capital leases | Purchase obligations (c) | Total contractual obligations | Other long-term obligations (d) | Total long-term obligations |


The cost of services received from employees in exchange for the issuance of stock options and restricted stock awards is measured based on the grant date fair value of the awards issued.
The value of stock options and restricted stock unit awards at the date of the grant is amortized through expense over the three-year service period.
All awards granted in 2013, 2012 and 2011 are classified as equity.
The Company receives a tax deduction based on the intrinsic value of the award at the exercise date for stock options and the distribution date for restricted stock units.
For each award, throughout the requisite service period, the Company recognizes the tax benefits, which have been included in deferred tax assets, related to compensation costs.
The tax deductions in excess of the benefits recorded throughout the requisite service period are recorded to shareholders equity or the income statement and are included in the financing section of the statement of cash flows.
The Company stratified its grant populations and used historic employee turnover rates to estimate employee forfeitures.
The estimated rate is compared to the actual forfeitures at the end of the period and adjusted as necessary.
Stock Options In 2013, 2012 and 2011, the Company granted non-qualified stock options to certain employees under the Plan.
The stock options vest ratably over the three-year service period beginning on January 1 of the year of grant.
These awards have no performance vesting conditions and the grant date fair value is amortized through expense over the requisite service period using the straight-line method.
The following table presents the weighted-average assumptions used in the Black-Scholes option-pricing model for grants and the resulting weighted-average grant date fair value per share of stock options granted in the years ended December 31, 2013, 2012 and 2011:


| Program | 737 | 2012 | Program accounting quantities | Undelivered units under firm orders | Cumulative firm orders | 2011 | Program accounting quantities | Undelivered units under firm orders | Cumulative firm orders | 2010 | Program accounting quantities | Undelivered units under firm orders | Cumulative firm orders |


[1] The following points are significant to understanding the cash flows estimated for obligations under property and casualty contracts: ?
Reserves for Property & Casualty unpaid losses and loss adjustment expenses include IBNR and case reserves.
While payments due on claim reserves are considered contractual obligations because they relate to insurance policies issued by the Company, the ultimate amount to be paid to settle both case reserves and IBNR is an estimate, subject to significant uncertainty.
The actual amount to be paid is not finally determined until the Company reaches a settlement with the claimant.
Final claim settlements may vary significantly from the present estimates, particularly since many claims will not be settled until well into the future.  ?
In estimating the timing of future payments by year, the Company has assumed that its historical payment patterns will continue.
However, the actual timing of future payments could vary materially from these estimates due to, among other things, changes in claim reporting and payment patterns and large unanticipated settlements.
In particular, there is significant uncertainty over the claim payment patterns of asbestos and environmental claims.
In addition, the table does not include future cash flows related to the receipt of premiums that may be used, in part, to fund loss payments.  ?
Under U. S.  GAAP, the Company is only permitted to discount reserves for losses and loss adjustment expenses in cases where the payment pattern and ultimate loss costs are fixed and determinable on an individual claim basis.
For the Company, these include claim settlements with permanently disabled claimants.
As of December 31, 2014, the total property and casualty reserves in the above table are gross of a reserve discount of $556.


| Year Ended December 31, | 2017 | (In thousands, except per share data) | Net income | Net income attributable to noncontrolling interests | Gain on sale of real estate and change in control of interests, net | Depreciation and amortization of real estate assets | Amortization of initial direct costs of leases | Funds from operations | Dividends on preferred shares -1 | Income attributable to operating partnership units | Income attributable to unvested shares | Funds from operations available for common shareholders -2 | Weighted average number of common shares, diluted -1 | Funds from operations available for common shareholders, per diluted share -2 |


| December 31, 2009  Debt Service Coverage Ratio | Greater than  2.0x | Loan-to-Value Ratio | 0%—50% | 50%—60% | 60%—70% | 70%—80% | 80%—90% | 90%—100% | Greater than 100% | Total commercial mortgage loans |


CBOE HOLDINGS, INC.  AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the years ended December 31, 2016, 2015 and 2014 15.
COMMITMENTS AND CONTINGENCIES (Continued) Other As a self-regulatory organization under the jurisdiction of the SEC, with respect to CBOE and C2, and as a designated contract market under the jurisdiction of the CFTC, with respect to CFE, we are subject to routine reviews and inspections by the SEC and the CFTC.
We are also currently a party to various other legal proceedings in addition to those already mentioned.
Management does not believe that the outcome of any of these other reviews, inspections or other legal proceedings will have a material impact on our consolidated financial position, results of operations or cash flows.
Leases and Other Obligations The Company currently leases additional office space, a data center and remote network operations center, with lease terms remaining from 3 months to 103 months as of December 31, 2016.
Total rent expense related to these lease obligations, reflected in technology support services and facilities costs line items on the Consolidated Statements of Income, for the years ended December 31, 2016, 2015 and 2014 were $4.4 million, $4.1 million and $3.8 million, respectively.
Future minimum payments for our operating leases, contractual obligations and other liabilities are as follows at December 31, 2016 (in thousands):


The following table presents estimated future benefit payments, using the same assumptions used in determining the Company’s benefit obligations as of December 31, 2011.
Benefit payments depend on future employment and compensation levels, years of service, and mortality.
Changes in any of these factors could significantly affect these estimated amounts.


Managements discussion and analysis J. P.  Morgan Chase & C Nonperforming assets decreased by $1.7 billion, or 35%, during the year ended December 31, 2003, to $3.1 billion.
The decrease was due to activity in the commercial portfolio: total reductions, including repayments, loan sales and net charge-offs exceeded new additions, resulting in net reductions of $1.7 billion.
By contrast, there were commercial net additions during 2002.
A decline in exposure to the Telecom services, Utilities and Media industries accounted for more than half of the overall $1.7 bil- lion decrease.
Commercial Commercial nonperforming loans decreased by 45%, to $2.0 billion as of December 31, 2003, from $3.7 billion at year- end 2002.
Over the same period, nonperforming commercial loans as a percentage of total commercial loans fell to 2.42% from 4.01%.
Commercial loan net charge-offs in 2003 were $816 million, compared with $1.9 billion in 2002, the result of improved credit quality in the portfolio and increased recoveries resulting from restructurings.
There were no net charge-offs of commercial lendingrelated commitments in 2003, compared with $212 million in 2002.
The average annual net charge-off rate for commercial loans improved significantly, to 0.91% in 2003 from 1.93% in 2002.
Commercial net charge-offs in 2004 are expected to decline, but at a slower pace than in the second half of 2003 Consumer The $21 million decrease in consumer nonperforming loans reflected improved credit quality in the portfolio.
While net charge-offs increased by $92 million during the year reflecting a 10% growth in the portfolio, the average annual net charge-off rate declined to 1.96% from 2.30% during 2002.
In 2004, the amount of gross charge-offs is expected to increase due to growth in outstandings, but net charge-off rates are expected to remain stable.
Allowance for credit losses JPMorgan Chases Allowance for credit losses is intended to cover probable credit losses, including losses where the asset is not specifically identified or the size of the loss has not been determined.
At least quarterly, the Firms Risk Management Committee reviews the Allowance for credit losses relative to the risk profile of the Firms credit portfolio and current economic conditions.
The allowance is adjusted based on that review if, in managements judgment, changes are warranted.
The allowance includes specific and expected loss components and a residual component.
For further discussion of the components of the Allowance for credit losses, see Critical accounting estimates used by the Firm on pages 7576 and Note 12 on page 100 of this Annual Report.
At December 31, 2003, management deemed the allowance for credit losses to be appropriate to absorb losses that currently may exist but are not yet identifiable Summary of changes in the allowance


| Site Location Start Court orAgency % of TotalLiability | Metal Bank of America | Borne Chemical | Ellis Road |


| December 31, | 2012 | Senior secured credit agreement: | Term loans payable | Revolving credit facility | Receivables securitization facility | Notes payable through October 2018 at weighted average interest rates of 1.7% and 2.0%, respectively | Other long-term debt at weighted average interest rates of 3.3% and 3.2%, respectively | 1,118,478 | Less current maturities | $1,046,762 |


| Year ended December 31, 2018 2017 2016 | Statutory U.S. federal tax rate | Increase/(decrease) in tax rate resulting from: | U.S. state and local income taxes, net of U.S. federal income tax benefit | Tax-exempt income | Non-U.S. subsidiary earnings | Business tax credits | Impact of the TCJA | Other, net | Effective tax rate | Year ended December 31,(in millions, except rates) | Net interest income – managed basis(a)(b) | Less: CIB Markets net interest income(c) | Net interest income excluding CIB Markets(a) | Average interest-earning assets | Less: Average CIB Markets interest-earning assets(c) | Average interest-earning assets excluding CIB Markets | Net interest yield on average interest-earning assets – managed basis | Net interest yield on average CIB Markets interest-earning assets(c) | Net interest yield on average interest-earning assets excluding CIB Markets |


| December 31, 2015 | Non-agency-sponsored mortgages-1 | U.S. agency-sponsored mortgages | Discount rate | Weighted average discount rate | Constant prepayment rate | Weighted average constant prepayment rate | Anticipated net credit losses-2 | Weighted average anticipated net credit losses | Weighted average life |


| (in millions) Amortized Cost or Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Other-Than- Temporary Impairments in AOCI (a) | December 31, 2010 | Bonds available for sale: | U.S. government and government sponsored entities | Obligations of states, municipalities and political subdivisions | Non-U.S. governments | Corporate debt | Mortgage-backed, asset-backed and collateralized: | RMBS | CMBS | CDO/ABS | Total mortgage-backed, asset-backed and collateralized | Total bonds available for sale(b) | Equity securities available for sale: | Common stock | Preferred stock | Mutual funds | Total equity securities available for sale | Total(c) | December 31, 2009 | Bonds available for sale: | U.S. government and government sponsored entities | Obligations of states, municipalities and political subdivisions | Non-U.S. governments | Corporate debt | Mortgage-backed, asset-backed and collateralized: | RMBS | CMBS | CDO/ABS | Total mortgage-backed, asset-backed and collateralized | Total bonds available for sale(b) | Equity securities available for sale: | Common stock | Preferred stock | Mutual funds | Total equity securities available for sale | Total(c) |


Operating Activities Cash flows from operating activities for the year ended December 31, 2017 primarily consisted of payments received from our clients and interest earned on funds held for clients.
Cash used in operating activities primarily consisted of cash we invested in personnel and expenditures made to support the growth and infrastructure of our business.
These payments included costs of operations, advertising and other sales and marketing efforts, IT infrastructure development, product research and development and security and administrative costs.
Compared to the year ended December 31, 2016, our operating cash flows for the year ended December 31, 2017 were positively impacted by the growth of our business.
Cash flows from operating activities for the year ended December 31, 2016 primarily consisted of payments received from our clients and interest earned on funds held for clients.
Cash used in operating activities primarily consisted of cash we invested in personnel and expenditures made to support the growth and infrastructure of our business.
These payments included costs of operations, sales and marketing efforts, IT infrastructure development and security and administrative costs.
Compared to the year ended December 31, 2015, our operating cash flows for the year ended December 31, 2016 were positively impacted by the growth of our business.
Investing Activities Cash flows from investing activities for the year ended December 31, 2017 changed by $85.3 million due to the impact of changes in funds held for clients and a $15.6 million increase in cash used for purchases of property and equipment, primarily as a result of the ongoing construction of our fourth headquarters building.
Cash flows from investing activities for the year ended December 31, 2016 changed by $152.7 million due to the impact of changes in funds held for clients and a $27.3 million increase in cash used for purchases of property and equipment, primarily as a result of the construction of our third headquarters building.
Financing Activities Cash flows from financing activities for the year ended December 31, 2017 changed by $30.1 million due to the impact of changes in client funds obligation, which is due to the timing of receipts from our clients and payments to our client’s employees.
Financing cash flows were also impacted by the $35.9 million increase in proceeds from the issuance of long-term debt.
These cash flows provided by financing activities were partially offset by the $34.3 million increase in payments on long-term debt related to our previous loan agreements, a $21.3 million increase in open market purchases of common stock, an $18.5 million increase in withholding taxes paid related to net share settlements, $0.8 million in debt extinguishment costs and a $0.3 million increase in the payment of debt issuance costs.


?
tax benefit of $36.7 million from the effective settlement of the State of California FTBs examination of our tax returns from 2001 through 2003; ?
tax benefit from the release of $14.8 million of valuation allowance against our United States deferred tax assets due to the acquisition of intangible assets held by Sigrity during fiscal 2012; which were partially offset by; ?
tax expense related to certain of our foreign subsidiaries; and ?
excess tax benefit from employee stock compensation that was allocated to equity.
Our future effective tax rates may be materially impacted by tax amounts associated with our foreign earnings at rates different from the United States federal statutory rate, research credits, the tax impact of stockbased compensation, accounting for uncertain tax positions, business combinations, closure of statute of limitations or settlement of tax audits, changes in valuation allowance and changes in tax law.
A significant amount of our foreign earnings is generated by our subsidiaries organized in Ireland and Hungary.
Our future effective tax rates may be adversely affected if our earnings were to be lower in countries where we have lower statutory tax rates or if we were to repatriate certain foreign earnings on which United States taxes have not been previously accrued.
The law that authorized the United States federal research tax credit expired on December 31, 2014.
Unless a new law reinstates the federal research tax credit, we will not include the potential benefit of the federal research tax credit in our tax provision calculations for fiscal 2015.
We currently expect that our fiscal 2015 effective tax rate will be higher than our fiscal 2014 effective tax rate.
For further discussion regarding our income taxes, see Note 6 in the notes to consolidated financial statements.


Integrated Gas Our IG operations include production and marketing of products manufactured from natural gas, such as LNG and methanol, in E. G.  World LNG trade in 2012 has been estimated to be 240 mmt.
Long-term, LNG continues to be in demand as markets seek the benefits of clean burning natural gas.
Market prices for LNG are not reported or posted.
In general, LNG delivered to the U. S.  is tied to Henry Hub prices and will track with changes in U. S.  natural gas prices, while LNG sold in Europe and Asia is indexed to crude oil prices and will track the movement of those prices.
We have a 60 percent ownership in an LNG production facility in E. G. , which sells LNG under a long-term contract at prices tied to Henry Hub natural gas prices.
Gross sales from the plant were 3.8 mmt, 4.1 mmt and 3.7 mmt in 2012, 2011 and 2010.
We own a 45 percent interest in a methanol plant located in E. G.  through our investment in AMPCO.
Gross sales of methanol from the plant totaled 1.1 mmt, 1.0 mmt and 0.9 mmt in 2012, 2011 and 2010.
Methanol demand has a direct impact on AMPCO’s earnings.
Because global demand for methanol is rather limited, changes in the supply-demand balance can have a significant impact on sales prices.
World demand for methanol in 2012 has been estimated to be 49 mmt.
Our plant capacity of 1.1 mmt is about 2 percent of world demand.


| 2014 2013 2012 | Balance as of January 1 | Current year increases | Write-offs, net of recoveries and other | Balance as of December 31 |


The following discussion and analysis of results of operations should be read in conjunction with the Consolidated Financial Statements.
Fourth Quarter 2012 Results Product Groups


Income Taxes American Water and its subsidiaries participate in a consolidated federal income tax return for U. S.  tax purposes.
Members of the consolidated group are charged with the amount of federal income tax expense determined as if they filed separate returns.
Certain income and expense items are accounted for in different time periods for financial reporting than for income tax reporting purposes.
The Company provides deferred income taxes on the difference between the tax basis of assets and liabilities and the amounts at which they are carried in the financial statements.
These deferred income taxes are based on the enacted tax rates expected to be in effect when these temporary differences are projected to reverse.
In addition, the regulated utility subsidiaries recognize regulatory assets and liabilities for the effect on revenues expected to be realized as the tax effects of temporary differences, previously flowed through to customers, reverse.
Investment tax credits have been deferred by the regulated utility subsidiaries and are being amortized to income over the average estimated service lives of the related assets.
The Company recognizes accrued interest and penalties related to tax positions as a component of income tax expense and accounts for sales tax collected from customers and remitted to taxing authorities on a net basis.
See Note 13Income Taxes.
Allowance for Funds Used During Construction AFUDC is a non-cash credit to income with a corresponding charge to utility plant that represents the cost of borrowed funds or a return on equity funds devoted to plant under construction.
The regulated utility subsidiaries record AFUDC to the extent permitted by the PUCs.
The portion of AFUDC attributable to borrowed funds is shown as a reduction of interest, net in the accompanying Consolidated Statements of Operations.
Any portion of AFUDC attributable to equity funds would be included in other income (expenses) in the accompanying Consolidated Statements of Operations.


| ($ in millions) 2010 2009 2008 | Cash from operations | Depreciation expense | Amortization expense | December 31, | 2009 | (in millions) | Fixed maturity securities, available-for-sale | Fixed maturity securities, trading | Equity securities, trading | Cash and other assets | Total assets pledged as collateral | Long-term debt and other obligations |


Net sales in Japan remained flat during 2002 versus 2001, with a slight decline in unit sales of 2%.
Consistent with the Company’s other geographic operating segments, during 2002 Japan showed growth in unit sales of consumer systems and a decline in unit sales of Power Macintosh systems.
Japan’s iMac unit sales increased 85% in 2002.
However, in the case of Japan the increase in iMac unit shipments in 2002 versus 2001 was primarily the result of the unusually depressed level of net sales experienced by the Company in the first quarter of 2001 as discussed above.
Additionally, net sales in Japan on a sequential and year-over-year comparative basis generally worsened as 2002 progressed reflecting particularly poor economic conditions in Japan.


| As of December | in millions | Property, leasehold improvements andequipment1 | Goodwill and identifiable intangibleassets2 | Income tax-related assets3 | Equity-method investments4 | Miscellaneous receivables and other5 | Total | At December 31, | ASSETS | Derivatives designated under hedge accounting: | Interest-rate contracts: | Financial Services: | Other assets | Deferred taxes and other liabilities | Foreign-exchange contracts: | Truck, Parts and Other: | Other current assets | Accounts payable, accrued expenses and other | $57.1 | Economic hedges: | Interest-rate contracts: | Financial Services: | Deferred taxes and other liabilities | Foreign-exchange contracts: | Truck, Parts and Other: | Other current assets | Accounts payable, accrued expenses and other | Financial Services: | Other assets | Deferred taxes and other liabilities | $.7 | Gross amounts recognized in Balance Sheet | Less amounts not offset in financial instruments: | Truck, Parts and Other: | Foreign-exchange contracts | Financial Services: | Interest-rate contracts | Foreign-exchange contracts | Pro forma net amount |


| Issued In Treasury Shares Outstanding | Balance, January 1, 2009 | Shares sold to optionees less shares exchanged | Vesting of restricted stock | Shares issued under employee stock purchase plan | Stock repurchase program | Balance, December 31, 2009 | Acquisition of Smith International, Inc. | Shares sold to optionees less shares exchanged | Shares issued under employee stock purchase plan | Stock repurchase program | Issued on conversions of debentures | Balance, December 31, 2010 | Shares sold to optionees less shares exchanged | Vesting of restricted stock | Shares issued under employee stock purchase plan | Stock repurchase program | Balance, December 31, 2011 | (Stated in millions ) | 2013 | Revenue | North America | Latin America | Europe/CIS/Africa | Middle East & Asia | Eliminations & other | Pretax operating income | Corporate & other-1 | Interest income-2 | Interest expense-3 | Charges & credits-4 | $45,266 |