| Quarter Ended Operating Revenues Operating Income (Loss) Net Income (Loss) Net Income (Loss) Available to Common Stockholder | CILCO | March 31, 2008 | March 31, 2007 | June 30, 2008 | June 30, 2007 | September 30, 2008 | September 30, 2007 | December 31, 2008 | December 31, 2007 | IP | March 31, 2008 | March 31, 2007 | June 30, 2008 | June 30, 2007 | September 30, 2008 | September 30, 2007 | December 31, 2008 | December 31, 2007 |


| December 31, 2013 | (Dollars in millions) | Securities borrowed or purchased under agreements to resell | Securities loaned or sold under agreements to repurchase | Other | Total | December 31, 2012 | Securities borrowed or purchased under agreements to resell | Securities loaned or sold under agreements to repurchase | Other | Total |


Competition.
The worldwide reinsurance and insurance businesses are highly competitive, as well as cyclical by product and market.
As such, financial results tend to fluctuate with periods of constrained availability, high rates and strong profits followed by periods of abundant capacity, low rates and constrained profitability.
Competition in the types of reinsurance and insurance business that the Company underwrites is based on many factors, including the perceived overall financial strength of the reinsurer or insurer, ratings of the reinsurer or insurer by A. M.  Best and/or Standard & Poor’s, underwriting expertise, the jurisdictions where the reinsurer or insurer is licensed or otherwise authorized, capacity and coverages offered, premiums charged, other terms and conditions of the reinsurance and insurance business offered, services offered, speed of claims payment and reputation and experience in lines written.
Furthermore, the market impact from these competitive factors related to reinsurance and insurance is generally not consistent across lines of business, domestic and international geographical areas and distribution channels.
The Company competes in the U. S. , Bermuda and international reinsurance and insurance markets with numerous global competitors.
The Company’s competitors include independent reinsurance and insurance companies, subsidiaries or affiliates of established worldwide insurance companies, reinsurance departments of certain insurance companies and domestic and international underwriting operations, including underwriting syndicates at Lloyd’s.
Some of these competitors have greater financial resources than the Company and have established long term and continuing business relationships, which can be a significant competitive advantage.
In addition, the lack of strong barriers to entry into the reinsurance business and the potential for securitization of reinsurance and insurance risks through capital markets provide additional sources of potential reinsurance and insurance capacity and competition.
Worldwide insurance and reinsurance market conditions continued to be very competitive, particularly in the casualty lines of business.
Generally, there was ample insurance and reinsurance capacity relative to demand.
Competition and its effect on rates, terms and conditions vary widely by market and coverage yet continued to be most prevalent in the U. S.  casualty insurance and reinsurance markets.


| December 31, | 2012 | Balance at beginning of period | Increases as a result of tax positions taken during a prior year | Decreases as a result of tax positions taken during a prior year | Settlements with taxing authorities | Lapse of statutes of limitation | Increases as a result of tax positions taken during the current year | Balance at end of period |


| 2012 2011 | Notes with rates from 2.13% to 6.15%, due 2016 to 2042 | Notes with rates from 7.00% to 7.75%, due 2013 to 2036 | Other debt | Total long-term debt | Less: unamortized discounts | Total long-term debt, net of unamortized discounts | Less: current maturities of long-term debt | Total long-term debt, net |


| Investment Objective Value in Billions Percentage of Total AUM | Equity | Growth potential, income potential, value or various combinations thereof | Multi-Asset/Balanced | Asset allocation, balanced, flexible, alternative and income-mixed funds | Fixed Income | Global/international, U.S. tax-free and U.S. taxable | Cash Management | Short-term liquid assets | Total | As of and for the Year Ended December 31, 2013 | (in millions) | Net interest income (expense) | Noninterest income | Total revenue | Noninterest expense | Profit (loss) before provision for credit losses | Provision for credit losses | Income (loss) before income tax expense (benefit) | Income tax expense (benefit) | Net income (loss) | Total Average Assets |


The provision for losses on receivables included within operating expenses decreased by $39.7 million in fiscal 2010 over fiscal 2009.
The decrease in our provision for losses on receivables in fiscal 2010 reflects fewer customer accounts exceeding our threshold for write-off in fiscal 2010 as compared to fiscal 2009.
Customer accounts written off, net of recoveries, were $37.8 million, or 0.10% of sales, $34.3 million, or 0.10% of sales, and $71.9 million, or 0.20% of sales, for fiscal 2011, 2010 and 2009, respectively.
Our provision for losses on receivables will fluctuate with general market conditions, as well as the circumstances of our customers.


| In millions 2013 2012 2011 | Sales | Operating Profit |


| December 31, 2013 December 31, 2012 | Dollars in millions | Home equity | Temporary Modifications | Permanent Modifications | Total home equity | Residential Mortgages | Permanent Modifications (a) | Non-Prime Mortgages | Permanent Modifications | Residential Construction | Permanent Modifications (a) | Total Consumer Real Estate Related Loan Modifications |


Commodity Transactions  Con Edison guarantees payments on behalf of its competitive energy businesses in order to facilitate physical and financial transactions in gas, pipeline capacity, transportation, oil, electricity and related commodity services.
In addition, a Con Edison Development subsidiary has guaranteed payment for fuel oil purchases by a 42 MW foreign generating project in which it has an equity interest.
To the extent that liabilities exist under the contracts subject to these guarantees, such liabilities are included in Con Edisons consolidated balance sheet.
Affordable Housing Program  Con Edison Development guarantees the repurchase and remarketing obligations of one of its subsidiaries for debt relating to moderate-income rental apartment properties eligible for tax credits under Section 42 of the Internal Revenue Code.
In accordance with Emerging Issues Task Force (EITF) No.94-01, Accounting for Tax Benefits Resulting from Investments in Affordable Housing Projects, neither the rental apartment properties nor the related indebtedness is included on Con Edisons consolidated balance sheet.
Intra-company Guarantees  Con Edison guarantees electricity sales made by Con Edison Energy and Con Edison Solutions to O&R and Con Edison of New York.
Other Guarantees  Con Edison, Con Edison Development and its subsidiaries also guarantee the following:  $47 million relates to a guarantee issued by Con Edison covering RCN Corporations lease payment to use Con Edison of New Yorks conduit system in accordance with a tariff approved by the PSC and rent payment obligations under various lease agreements for office buildings (see Note T);  $25 million for a parental guarantee provided by Con Edison on Con Edison Solutions indemnity agreement for surety bonds; and  $14 million for guarantees and standby financial letters of credit in connection with investments in energy infrastructure, power and cogeneration projects.


MetLife, Inc.  Notes to the Consolidated Financial Statements  (Continued) Credit Risk on Freestanding Derivatives The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments.
Generally, the current credit exposure of the Companys derivative contracts is limited to the net positive estimated fair value of derivative contracts at the reporting date after taking into consideration the existence of netting agreements and any collateral received pursuant to credit support annexes.
The Company manages its credit risk related to OTC derivatives by entering into transactions with creditworthy counterparties, maintaining collateral arrangements and through the use of master agreements that provide for a single net payment to be made by one counterparty to another at each due date and upon termination.
Because exchange-traded futures and options are effected through regulated exchanges, and positions are marked to market on a daily basis, the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivative instruments.
See Note 5 for a description of the impact of credit risk on the valuation of derivative instruments.
The Company enters into various collateral arrangements which require both the pledging and accepting of collateral in connection with its OTC derivative instruments.
At December 31, 2011 and 2010, the Company was obligated to return cash collateral under its control of $9.5 billion and $2.6 billion, respectively.
This cash collateral is included in cash and cash equivalents or in short-term investments and the obligation to return it is included in payables for collateral under securities loaned and other transactions in the consolidated balance sheets.
At December 31, 2011 and 2010, the Company had received collateral consisting of various securities with a fair market value of $2.5 billion and $984 million, respectively, which were held in separate custodial accounts.
Subject to certain constraints, the Company is permitted by contract to sell or repledge this collateral, but at December 31, 2011, none of the collateral had been sold or repledged.
The Companys collateral arrangements for its OTC derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the fair value of that counterpartys derivatives reaches a pre-determined threshold.
Certain of these arrangements also include credit-contingent provisions that provide for a reduction of these thresholds (on a sliding scale that converges toward zero) in the event of downgrades in the credit ratings of the Company and/or the counterparty.
In addition, certain of the Companys netting agreements for derivative instruments contain provisions that require the Company to maintain a specific investment grade credit rating from at least one of the major credit rating agencies.
If the Companys credit ratings were to fall below that specific investment grade credit rating, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments that are in a net liability position after considering the effect of netting agreements.
The following table presents the estimated fair value of the Companys OTC derivatives that are in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged.
The table also presents the incremental collateral that the Company would be required to provide if there was a one notch downgrade in the Companys credit rating at the reporting date or if the Companys credit rating sustained a downgrade to a level that triggered full overnight collateralization or termination of the derivative position at the reporting date.


| Fourth Quarter 2007 Third Quarter 2007 | (Dollars in millions) | Earning assets | Time deposits placed and other short-term investments | Federal funds sold and securities purchased under agreements to resell | Trading account assets | Debt securities-1 | Loans and leases-2: | Residential mortgage | Credit card – domestic | Credit card – foreign | Home equity-3 | Direct/Indirect consumer-4 | Other consumer-5 | Total consumer | Commercial – domestic | Commercial real estate-6 | Commercial lease financing | Commercial – foreign | Total commercial | Total loans and leases | Other earning assets | Total earning assets-7 | Cash and cash equivalents | Other assets, less allowance for loan and lease losses | Total assets | Interest-bearing liabilities | Domestic interest-bearing deposits: | Savings | NOW and money market deposit accounts | Consumer CDs and IRAs | Negotiable CDs, public funds and other time deposits | Total domestic interest-bearing deposits | Foreign interest-bearing deposits: | Banks located in foreign countries | Governments and official institutions | Time, savings and other | Total foreign interest-bearing deposits | Total interest-bearing deposits | Federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings | Trading account liabilities | Long-term debt | Total interest-bearing liabilities-7 | Noninterest-bearing sources: | Noninterest-bearing deposits | Other liabilities | Shareholders’ equity | Total liabilities and shareholders’ equity | Net interest spread | Impact of noninterest-bearing sources | Net interest income/yield on earning assets |


maintenance and contract expenses incurred by our subsidiaries for external transportation services); materials used to maintain the Railroads lines, structures, and equipment; costs of operating facilities jointly used by UPRR and other railroads; transportation and lodging for train crew employees; trucking and contracting costs for intermodal containers; leased automobile maintenance expenses; and tools and supplies.
Expenses for contract services increased $103 million in 2012 versus 2011, primarily due to increased demand for transportation services purchased by our logistics subsidiaries for their customers and additional costs for repair and maintenance of locomotives and freight cars.
Expenses for contract services increased $106 million in 2011 versus 2010, driven by volume-related external transportation services incurred by our subsidiaries, and various other types of contractual services, including flood-related repairs, mitigation and improvements.
Volume-related crew transportation and lodging costs, as well as expenses associated with jointly owned operating facilities, also increased costs compared to 2010.
In addition, an increase in locomotive maintenance materials used to prepare a portion of our locomotive fleet for return to active service due to increased volume and additional capacity for weather related issues and warranty expirations increased expenses in 2011.
Depreciation  The majority of depreciation relates to road property, including rail, ties, ballast, and other track material.
A higher depreciable asset base, reflecting ongoing capital spending, increased depreciation expense in 2012 compared to 2011.
A higher depreciable asset base, reflecting ongoing capital spending, increased depreciation expense in 2011 compared to 2010.
Higher depreciation rates for rail and other track material also contributed to the increase.
The higher rates, which became effective January 1, 2011, resulted primarily from increased track usage (based on higher gross ton-miles in 2010).
Equipment and Other Rents  Equipment and other rents expense primarily includes rental expense that the Railroad pays for freight cars owned by other railroads or private companies; freight car, intermodal, and locomotive leases; and office and other rent expenses.
Increased automotive and intermodal shipments, partially offset by improved car-cycle times, drove an increase in our short-term freight car rental expense in 2012.
Conversely, lower locomotive lease expense partially offset the higher freight car rental expense.
Costs increased in 2011 versus 2010 as higher short-term freight car rental expense and container lease expense offset lower freight car and locomotive lease expense.
Other  Other expenses include personal injury, freight and property damage, destruction of equipment, insurance, environmental, bad debt, state and local taxes, utilities, telephone and cellular, employee travel, computer software, and other general expenses.
Other costs in 2012 were slightly higher than 2011 primarily due to higher property taxes.
Despite continual improvement in our safety experience and lower estimated annual costs, personal injury expense increased in 2012 compared to 2011, as the liability reduction resulting from historical claim experience was less than the reduction in 2011.
Higher property taxes, casualty costs associated with destroyed equipment, damaged freight and property and environmental costs increased other costs in 2011 compared to 2010.
A one-time payment of $45 million in the first quarter of 2010 related to a transaction with CSXI and continued improvement in our safety performance and lower estimated liability for personal injury, which reduced our personal injury expense year-over-year, partially offset increases in other costs.


| 2017 - Current maturities $416 | 2018 | 2019 | 2020 | 2021 | Thereafter |


Supplemental Pro-forma Information The following unaudited pro forma information presents the consolidated results of operations of the Company, R2 and Suros as if the acquisitions had occurred at the beginning of each of fiscal 2006 and 2005,
GAIN INCOME AND LOANS SOLD
(1) Beginning in fiscal 2008, the effects of changes in valuation assumptions or funding costs related to loans originated and sold during previous quarters of the same fiscal year are presented in gain on sales of loans originated and sold.
Previously, these adjustments were reported in other losses or gains.
These adjustments totaled $(35.9) million in fiscal 2008.
As a result, the sum of amounts previously reported for interim quarters will not equal the total reported for fiscal 2008.
The impact of similar adjustments for prior fiscal years was not material.
The gain on sales of loans originated and sold includes both the gain income recorded at the time of securitization and the effect of any subsequent changes in valuation assumptions or funding costs that are incurred in the same fiscal year that the loans were originated.
Other losses or gains include the effects of changes in valuation assumptions or funding costs related to loans originated and sold during previous fiscal years.
In addition, other losses or gains could include the effects of new public securitizations, changes in the valuation of retained subordinated bonds and the resale of receivables in existing public securitizations, as applicable.
In the 2008-1 public securitization, we held $44.7 million of subordinated bonds, because the economics of doing so were more favorable than selling them in the public market.
Our public securitizations typically contain an option to repurchase the securitized receivables when the outstanding balance in the pool of auto loan receivables falls below 10% of the original pool balance.
This option was exercised two times in each of fiscal 2008, 2007 and 2006.
In each case, the remaining eligible receivables were subsequently resold into the warehouse facility.
These transactions did not have a material effect on CAF income in fiscal 2008, 2007 or 2006.
Fiscal 2008 Versus Fiscal 2007.
CAF income declined 35% to $85.9 million in fiscal 2008, reflecting the disruption in the global credit markets and worsening economic conditions.
The gain on sales of loans originated and sold decreased 33% to $58.1 million in fiscal 2008.
In the second half of the fiscal year, credit spreads in the asset-backed securities market widened, resulting in a substantial increase in CAF’s funding costs.
In addition, we increased the discount rate assumption used to calculate our gain on sales of loans to 17% from 12%, and we increased our cumulative net loss assumptions on loans originated and sold during fiscal 2008 to a range of 2.7% to 3.0%, which was significantly higher than the cumulative net loss assumptions used on loans originated in fiscal 2007.
As a result, the gain percentage declined to 2.4% in fiscal 2008 compared with 3.9% in fiscal 2007.
We recognized other losses of $9.6 million, or $0.03 per share, in fiscal 2008, which included the effects of the increase in the discount rate and cumulative net loss assumptions on loans originated and sold in previous years.
Other losses also included a $2.7 million reduction in the carrying value of the retained subordinated bonds.
In fiscal 2007, we recognized other gains of $13.0 million, or $0.04 per share, which included the effects of reducing cumulative net loss assumptions on loans originated and sold in previous years.
The increases in other CAF income and other direct CAF expenses in fiscal 2008 were proportionate to the growth in managed receivables during the year.
Fiscal 2007 Versus Fiscal 2006.
CAF income rose 27% to $132.6 million in fiscal 2007.
CAF income benefited from the growth in retail vehicle unit sales, increases in the gain percentage, average amount financed and total managed receivables.
The gain percentage increased to 3.9% in fiscal 2007 from 3.5% in fiscal 2006, reflecting


The net unrealized amounts presented above excluded the remaining net unrealized losses related to reclassifications of securities available for sale to securities held to maturity.
These unrealized losses related to reclassifications totaled $303 million, or $189 million after-tax, and $523 million, or $317 million after-tax, as of December 31, 2011 and 2010, respectively, and were recorded in accumulated other comprehensive income, or OCI.
Refer to note 12 to the consolidated financial statements included under Item 8.
The decline in these remaining after-tax unrealized losses related to reclassifications from December 31, 2010 to December 31, 2011 resulted primarily from amortization.
We conduct periodic reviews of individual securities to assess whether other-than-temporary impairment exists.
To the extent that other-than-temporary impairment is identified, the impairment is broken into a credit component and a non-credit component.
The credit component is recorded in our consolidated statement of income, and the non-credit component is recorded in OCI to the extent that we do not intend to sell the security.
Our assessment of other-than-temporary impairment involves an evaluation, more fully described in note 3, of economic and security-specific factors.
Such factors are based on estimates, derived by management, which contemplate current market conditions and security-specific performance.
To the extent that market conditions are worse than managements expectations, other-than-temporary impairment could increase, in particular, the credit component that would be recorded in our consolidated statement of income.
Given the exposure of our investment securities portfolio, particularly mortgage- and asset-backed securities, to residential mortgage and other consumer credit risks, the performance of the U. S.  housing market is a significant driver of the portfolios credit performance.
As such, our assessment of other-than-temporary impairment relies to a significant extent on our estimates of trends in national housing prices.
Generally, indices that measure trends in national housing prices are published in arrears.
As of September 30, 2011, national housing prices, according to the Case-Shiller National Home Price Index, had declined by approximately 31.3% peak-to-current.
Overall, managements expectation, for purposes of its evaluation of other-than-temporary impairment as of December 31, 2011, was that housing prices would decline by approximately 35% peak-to-trough.
The performance of certain mortgage products and vintages of securities continues to deteriorate.
In addition, management continues to believe that housing prices will decline further as indicated above.
The combination of these factors has led to an increase in managements overall loss expectations.
Our investment portfolio continues to be sensitive to managements estimates of future cumulative losses.
Ultimately, other-thantemporary impairment is based on specific CUSIP-level detailed analysis of the unique characteristics of each security.
In addition, we perform sensitivity analysis across each significant product type within the non-agency U. S.  residential mortgage-backed portfolio.
We estimate, for example, that other-than-temporary impairment of the investment portfolio could increase by approximately $10 million to $50 million, if national housing prices were to decline by 37% to 39% peak-to-trough, compared to managements expectation of 35% described above.
This sensitivity estimate is based on a number of factors, including, but not limited to, the level of housing prices and the timing of defaults.
To the extent that such factors differ substantially from managements current expectations, resulting loss estimates may differ materially from those stated.
Excluding the securities for which other-than-temporary impairment was recorded in 2011, management considers the aggregate decline in fair value of the remaining


| In billions of dollars at year end 2008 2007 | Tier 1 Capital | Total Capital (Tier 1 and Tier 2) | Tier 1 Capital Ratio | Total Capital Ratio (Tier 1 and Tier 2) | Leverage Ratio(1) | Unvested stock awards | Unvested at January 1, 2008 | Awards | Cancellations | Deletions | Vestings-1 | Unvested at December 31, 2008 |


| Assumptions Pension OPEB | Discount rate | Expected return on plan assets | Compensation increase | Health care cost trend rate: | Pre-65 current | Pre-65 level in 2028 |


| $ in millions 2009 2008 $ Change %Change | Investment management fees | Service and distribution fees | Performance fees | Other | Total operating revenues | Third-party distribution, service and advisory expenses | Proportional share of revenues, net of third-partydistribution expenses, from joint venture investments | Net revenues |


| Year ended April 30, 2014 2013 2012 | AverageBalance | Money market and savings | Interest-bearing checking accounts | IRAs | Certificates of deposit | 607,623 | Non-interest-bearing deposits | $970,429 |


| Sales Order Cancellations Fiscal Year Ended September 30, | Cancelled Sales Orders | 2017 | East | Midwest | Southeast | South Central | Southwest | West | 13,050 |


| Effect on U.S. Postretirement Health Care Benefits Plans | Increase in | Assumption | (millions) | Discount rate | Expected return on assets |


(1) Previously reported volumes, which included only U. S.  trading, have been adjusted to reflect both U. S.  and Europe volumes traded.
Entergy accounts for its 50% share in Entergy-Koch under the equity method of accounting.
Certain terms of the partnership arrangement allocate income from various sources, and the taxes on that income, on a significantly disproportionate basis through 2003.
Losses and distributions from operations are allocated to the partners equally.
Substantially all of Entergy-Koch's profits were allocated to Entergy in 2002.
Effective January 1, 2004, a revaluation of Entergy-Koch's assets for legal capital account purposes will occur, and future profit allocations will change after the revaluation.
The profit allocations other than for weather trading and international trading are expected to become equal, unless special allocations are necessary to equalize the partners' legal capital accounts.
Profit allocations for weather trading and international trading remain disproportionate to the ownership interests.
Earnings allocated under the terms of the partnership agreement constitute equity, not subject to reallocation, for the partners.2001 Compared to 2000 The increase in earnings for Energy Commodity Services in 2001 was primarily due to:  the gain on the sale of the Saltend plant discussed below;  the favorable results from Entergy-Koch discussed below;  the $33.5 million ($23.5 million net of tax) cumulative effect of an accounting change marking to market the Damhead Creek gas contract;  liquidated damages of $13.9 million ($9.7 million net of tax) received in 2001 from the Damhead Creek construction contractor as compensation for lost operating margin from the plant due to construction
Part I Item 1 Entergy Corporation, Domestic utility companies, and System Energy 146 Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) Entergy Corporation and the domestic utility companies are defendants in numerous lawsuits that have been filed by former employees alleging that they were wrongfully terminated and/or discriminated against on the basis of age, race, sex, and/or other protected characteristics.
Entergy Corporation and the domestic utility companies are vigorously defending these suits and deny any liability to the plaintiffs.
However, no assurance can be given as to the outcome of these cases, and at this time management cannot estimate the total amount of damages sought.
Included in the employment litigation are two cases filed in state court in Claiborne County, Mississippi in December 2002.
The two cases were filed by former employees of Entergy Operations who were based at Grand Gulf.
Entergy Operations and Entergy employees are named as defendants.
The cases make employment-related claims, and seek in total $53 million in alleged actual damages and $168 million in punitive damages.
Entergy subsequently removed both proceedings to the federal district in Jackson, Mississippi.
Entergy cannot predict the ultimate outcome of this proceeding.
Research Spending Entergy is a member of the Electric Power Research Institute (EPRI).
EPRI conducts a broad range of research in major technical fields related to the electric utility industry.
Entergy participates in various EPRI projects based on Entergy's needs and available resources.
The domestic utility companies contributed $1.6 million in 2004, $1.5 million in 2003, and $2.1 million in 2002 to EPRI.
The Non-Utility Nuclear business contributed $3.2 million in 2004 and $3 million in both 2003 and 2002 to EPRI.
Employees Employees are an integral part of Entergy's commitment to serving its customers.


he fair value of a financial instrument to changes in interest rates.
Convexity measures the rate of change of duration with respect to changes in interest rates.
We seek to manage our interest rate exposure by legal entity by matching the relative sensitivity of asset and liability values to interest rate changes, or controlling duration mismatch of assets and liabilities.
We have target duration mismatch constraints for each entity.
In certain markets, primarily outside the U. S. , capital market limitations that hinder our ability to closely approximate the duration of some of our liabilities are considered in setting the constraint limits.
As of December 31, 2007 and 2006, the difference between the pre-tax duration of assets and the target duration of liabilities in our duration managed portfolios was within our constraint limits.
We consider risk-based capital implications in our asset/liability management strategies.
We also perform portfolio stress testing as part of our U. S.  regulatory cash flow testing for major product lines that are subject to risk from changes in interest rates.
In this testing, we evaluate the impact of altering our interest-sensitive assumptions under various moderately adverse interest rate environments.
These interest-sensitive assumptions relate to the timing and amount of redemptions and prepayments of fixed-income securities and lapses and surrenders of insurance products and the potential impact of any guaranteed minimum interest rates.
We evaluate any shortfalls that this cash flow testing reveals to determine if we need to increase statutory reserves or adjust portfolio management strategies.
Market Risk Related to Interest Rates Our other than trading assets that subject us to interest rate risk include primarily fixed maturity securities, commercial loans and policy loans.
In the aggregate, the carrying value of these assets represented 76% of our consolidated assets, other than assets that we held in separate accounts, as of December 31, 2007 and 77% as of December 31, 2006.
With respect to other than trading liabilities, we are exposed to interest rate risk through policyholder account balances relating to interest-sensitive life insurance, annuity and other investment-type contracts, collectively referred to as investment contracts, and through outstanding short-term and long-term debt.
We assess interest rate sensitivity for other than trading financial assets, financial liabilities and derivatives using hypothetical test scenarios that assume either upward or downward 100 basis point parallel shifts in the yield curve from prevailing interest rates.
The following tables set forth the net estimated potential loss in fair value from a hypothetical 100 basis point upward shift as of December 31, 2007 and 2006, because this scenario results in the greatest net exposure to interest rate risk of the hypothetical scenarios tested at those dates.
While the test scenario is for illustrative purposes only and does not reflect our expectations regarding future interest rates or the performance of fixed-income markets, it is a near-term, reasonably possible hypothetical change that illustrates the potential impact of such events.
These test scenarios do not measure the changes in value that could result from non-parallel shifts in the yield curve, which we would expect to produce different changes in discount rates for different maturities.
As a result, the actual loss in fair value from a 100 basis point change in interest rates could be different from that indicated by these calculations.


| Argentina Egypt Italy Peru Sweden | Australia | Austria | Belgium | Brazil | Canada | Chile | China | Colombia | Costa Rica | Czech Republic | Denmark |


| December 31, 2018 | Less ThanTwelve Months | FairValue | (in millions) | Fixed maturities-1: | U.S. Treasury securities and obligations of U.S. government authorities and agencies | Obligations of U.S. states and their political subdivisions | Foreign government bonds | U.S. corporate public securities | U.S. corporate private securities | Foreign corporate public securities | Foreign corporate private securities | Asset-backed securities | Commercial mortgage-backed securities | Residential mortgage-backed securities | Total | December 31, 2017 | Less ThanTwelve Months | FairValue | (in millions) | Fixed maturities-1: | U.S. Treasury securities and obligations of U.S. government authorities and agencies | Obligations of U.S. states and their political subdivisions | Foreign government bonds | U.S. corporate public securities | U.S. corporate private securities | Foreign corporate public securities | Foreign corporate private securities | Asset-backed securities | Commercial mortgage-backed securities | Residential mortgage-backed securities | Total |


In connection with our base rate increases on January 2, 2012 and January 3, 2011, we modified the fuel surcharge on air and ground services by reducing the index used to determine the fuel surcharge by 2% and 1%, respectively, each year.
In 2012, these index reductions offset the increase in jet and diesel fuel prices, resulting in a small decrease in the average air fuel surcharge rate and no change in the average ground surcharge rate.
The 2011 increases in the air and ground fuel surcharge rates were due to the significant increases in jet and diesel fuel prices, but partially offset by the reductions in the index on both the air and ground surcharges.
Total domestic fuel surcharge revenue increased $54 and $884 million in 2012 and 2011, respectively, primarily due to volume growth in 2012 and the higher fuel surcharge rates in 2011.


US Superfund Sites In the US, the Company may be subject to substantial claims brought by US federal or state regulatory agencies or private individuals pursuant to statutory authority or common law.
In particular, the Company has a potential liability under the US Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and related state laws (collectively referred to as "Superfund") for investigation and cleanup costs at certain sites.
At most of these sites, numerous companies, including the Company, or one of its predecessor companies, have been notified that the Environmental Protection Agency, state governing bodies or private individuals consider such companies to be potentially responsible parties ("PRP") under Superfund or related laws.
The proceedings relating to these sites are in various stages.
The cleanup process has not been completed at most sites and the status of the insurance coverage for some of these proceedings is uncertain.
Consequently, the Company cannot accurately determine its ultimate liability for investigation or cleanup costs at these sites.
As events progress at each site for which it has been named a PRP, the Company accrues, as appropriate, a liability for site cleanup.
Such liabilities include all costs that are probable and can be reasonably estimated.
In establishing these liabilities, the Company considers its shipment of waste to a site, its percentage of total waste shipped to the site, the types of wastes


Financial Expectations  We are cautious about the economic environment, but, assuming that industrial production grows approximately 3% as projected, volume should exceed 2013 levels.
Even with no volume growth, we expect earnings to exceed 2013 earnings, generated by core pricing gains, on-going network improvements and productivity initiatives.
We expect that free cash flow for 2014 will be lower than 2013 as higher cash from operations will be more than offset by additional cash of approximately $400 million that will be used to pay income taxes that were previously deferred through bonus depreciation, increased capital spend and higher dividend payments.


Our Digital Media business consists of our websites and mobile and video-on-demand (“VOD”) services.
Our websites include network branded websites such as Discovery.
com, TLC.
com and AnimalPlanet.
com, and other websites such as HowStuffWorks.
com, an online source of explanations of how the world actually works; Treehugger.
com, a comprehensive source for “green” news, solutions and product information; and Petfinder.
com, a leading pet adoption destination.
Together, these websites attracted an average of 24 million cumulative unique monthly visitors, according to comScore, Inc.  in 2011.  INTERNATIONAL NETWORKS Our International Networks segment principally consists of national and pan-regional television networks.
This segment generates revenues primarily from fees charged to operators who distribute our networks, which primarily include cable and DTH satellite service providers, and from advertising sold on our television networks and websites.
Discovery Channel, Animal Planet and TLC lead the International Networks’ portfolio of television networks, which are distributed in virtually every pay-television market in the world through an infrastructure that includes operational centers in London, Singapore and Miami.
International Networks has one of the largest international distribution platforms of networks with one to twelve networks in more than 200 countries and territories around the world.
At December 31, 2011, International Networks operated over 150 unique distribution feeds in over 40 languages with channel feeds customized according to language needs and advertising sales opportunities.
Our International Networks segment owns and operates the following television networks which reached the following number of subscribers as of December 31, 2011:


| Year Ended December 31, | (as a % of revenue, except customer data) | Revenue from channel partners | Largest channel partner | 2ndlargest channel partner | Direct sale customers exceeding 5% of revenue |


| Preliminary Purchase Price Allocation | Current assets | Non-current assets | Property and equipment | Intangible assets -1 | Other non-current liabilities | Fair value of net assets acquired | Goodwill -2 |


| Con Edison CECONY | (Millions of Dollars) | CHANGE IN PROJECTED BENEFIT OBLIGATION | Projected benefit obligation at beginning of year | Service cost – excluding administrative expenses | Interest cost on projected benefit obligation | Net actuarial (gain)/loss | Benefits paid | PROJECTED BENEFIT OBLIGATION AT END OF YEAR | CHANGE IN PLAN ASSETS | Fair value of plan assets at beginning of year | Actual return on plan assets | Employer contributions | Benefits paid | Administrative expenses | FAIR VALUE OF PLAN ASSETS AT END OF YEAR | FUNDED STATUS | Unrecognized net loss | Unrecognized prior service costs | Accumulated benefit obligation |


| 2014 Quarters 2013 Quarters | (In millions, except per share information) | Income statement | Net interest income | Noninterest income | Total revenue, net of interest expense | Provision for credit losses | Noninterest expense | Income (loss) before income taxes | Income tax expense (benefit) | Net income (loss) | Net income (loss) applicable to common shareholders | Average common shares issued and outstanding | Average diluted common shares issued and outstanding-1 | Performance ratios | Return on average assets | Four quarter trailing return on average assets-2 | Return on average common shareholders’ equity | Return on average tangible common shareholders’ equity-3 | Return on average tangible shareholders’ equity-3 | Total ending equity to total ending assets | Total average equity to total average assets | Dividend payout | Per common share data | Earnings (loss) | Diluted earnings (loss)(1) | Dividends paid | Book value | Tangible book value-3 | Market price per share of common stock | Closing | High closing | Low closing | Market capitalization |


| March 31, 2009 | Number of Shares (in thousands) | Restricted stock awards at March 31, 2008 | Granted | Vested | Forfeited | Restricted stock awards at March 31, 2009 |


| (In millions) 2003 2002 2001 | Capital | Compliance | Operating & maintenance | Remediation(b) | Total |


| Year Ended December 31, Year Ended December 31, | 2014 | (In $ millions, except percentages) | Net sales | Net Sales Variance | Volume | Price | Currency | Other | Other (charges) gains, net | Operating profit (loss) | Operating margin | Depreciation and amortization |


| 2008 2007 2006 | New Developments | Renovations and Expansions | Tenant Allowances | Operational Capital Expenditures | Total |


PRUDENTIAL FINANCIAL, INC.  Notes to Consolidated Financial Statements chief operating decision maker to evaluate segment performance and allocate resources, and consistent with authoritative guidance, is the measure of segment performance presented below.
Adjusted operating income is calculated by adjusting each segment’s “Income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures” for the following items, which are described in greater detail below: ?
realized investment gains (losses), net, and related charges and adjustments; ?
net investment gains (losses) on trading account assets supporting insurance liabilities and changes in experience-rated contractholder liabilities due to asset value changes; ?
the contribution to income (loss) of divested businesses that have been or will be sold or exited, including businesses that have been placed in wind down status, but that did not qualify for “discontinued operations” accounting treatment under U. S.  GAAP; and ?
equity in earnings of operating joint ventures and earnings attributable to noncontrolling interests.
These items are important to an understanding of overall results of operations.
Adjusted operating income is not a substitute for income determined in accordance with U. S.  GAAP, and the Company’s definition of adjusted operating income may differ from that used by other companies.
However, the Company believes that the presentation of adjusted operating income as measured for management purposes enhances the understanding of results of operations by highlighting the results from ongoing operations and the underlying profitability factors of its businesses.
As discussed in Note 1, during 2016, the Company recorded out of period adjustments resulting in an aggregate net decrease of $134 million to “Income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures” for the year ended December 31, 2016.
These adjustments resulted in a decrease in pre-tax adjusted operating income of $114 million for the year ended December 31, 2016, principally consisting of a net decrease of $153 million for the Individual Life Insurance segment.
In addition, as previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2014, during 2014, the Company recorded out of period adjustments resulting in an aggregate net decrease of $193 million to “Income (loss) from continuing operations before income taxes and equity in earnings of operating joint ventures.
” Subsequent to 2014, the Company identified and recorded additional out of period adjustments of $41 million related to 2014, primarily reflecting a benefit from the release of reserves related to certain variable annuities products with optional living benefit guarantees, net of a related decrease in DAC, offset by the increase in reserves, net of a related increase in DAC, for certain universal life products within the Individual Life business.
The impact of these items resulted in a decrease in pre-tax adjusted operating income of $155 million for the year ended December 31, 2014, principally consisting of a net decrease of $77 million for the Group Insurance segment and $72 million for the International Insurance segment.
Realized investment gains (losses), net, and related charges and adjustments Realized investment gains (losses), net Adjusted operating income excludes “Realized investment gains (losses), net,” except for certain items described below.
Significant activity excluded from adjusted operating income includes impairments and credit-related gains (losses) from sales of securities, the timing of which depends largely on market credit cycles and can vary considerably across periods, and interest rate-related gains (losses) from sales of securities, which are largely subject to the Company’s discretion and influenced by market opportunities, as well as the Company’s tax and capital profile.
Additionally, adjusted operating income generally excludes realized investment gains and losses from products that contain embedded derivatives, and from associated derivative portfolios that are part of an asset liability management program related to the risk of those products.
However, the effectiveness of the hedging program will ultimately be reflected in adjusted operating income over time.
Trends in the underlying profitability of the Company’s businesses can be more clearly identified without the fluctuating effects of these transactions.
The following table sets forth the significant components of “Realized investment gains (losses), net” that are included in adjusted operating income and, as a result, are reflected as adjustments to “Realized investment gains (losses), net” for purposes of calculating adjusted operating income:


Sales Order Backlog Sales order backlog represents homes under contract but not yet closed at the end of the period.
Many of the contracts in our sales order backlog are subject to contingencies, including mortgage loan approval and buyers selling their existing homes, which can result in cancellations.
A portion of the contracts in backlog will not result in closings due to cancellations.
The largest percentage increase in our sales order backlog occurred in our East region, reflecting the positive impact of our recent acquisitions of the homebuilding operations of Regent Homes and Crown Communities, which contributed 377 homes to our East region backlog at September 30, 2014.
Crown Communities also contributed 305 homes to our Southeast region backlog at September 30, 2014.


| As of or for the year ended December 31, Credit exposure Nonperforming assets(f) Net charge-offs Average annual net charge-off rate(g) | (in millions, except ratios) | Consumer loans – reported(a) | Home equity | Mortgage | Auto loans and leases(b) | Credit card – reported(c) | All other loans | Loans held-for-sale | Total consumer loans – reported | Credit card – securitized(c)(d) | Total consumer loans – managed(c) | Assets acquired in loan satisfactions | Total consumer-related assets – managed | Consumer lending-related commitments: | Home equity(e) | Mortgage | Auto loans and leases | Credit card(e) | All other loans | Total lending-related commitments | Total consumer credit portfolio | Memo: Credit card – managed |


| Year Ended December 31, | 2018 | Revenue | Costs and expenses: | Operating, administrative and other | Depreciation and amortization | Operating income | Equity income from unconsolidated subsidiaries | Other (loss) income | Less: Net income attributable to non-controllingInterests | Add-back: Depreciation and amortization | EBITDA | Adjusted EBITDA |


Note 4  Effect of Gulf Coast Hurricanes 2005 Hurricane Activity  In August 2005 Hurricane Katrina moved through the Gulf of Mexico and caused the loss of the Main Pass 306D platform.
The net book value of the platform was $14.5 million.
Clean-up costs associated with the damage resulted in an increase to the Main Pass asset retirement obligation of $66.0 million.
The Company has accounted for the net book value of the destroyed platform and the increase in asset retirement costs as a loss on involuntary conversion.
Main Pass clean-up and redevelopment costs are recoverable from insurance proceeds.
However, the insurer has indicated that its maximum exposure limit has been reached and consequently the final
The Company does not consider interest income and expense or income tax benefit or expense in its evaluation of the performance of geographical segments.


For further discussion of the companys electric operating revenues and its electric results, see Results of Operations in Item 7.
For additional segment information, see Note N to the financial statements in Item 8.


| Preferred Shares | December 31Shares in thousands | Authorized | $1 par value | Issued and outstanding | Series B | Series K | Series L | Series O | Total issued and outstanding |


| At December 31, 2008 S&P   Rating(a) A.M.   Best   Rating(a) Gross   Reinsurance   Assets Percent of Reinsurance Assets, Net Collateral   Held(b) Uncollateralized   Reinsurance   Assets | (In millions) | Reinsurer: | Swiss Reinsurance Group of Companies | Berkshire Hathaway Group of Companies | Munich Reinsurance Group of Companies | Lloyd’s Syndicates — Lloyd’s of London(c) |


ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no disagreements or reportable events requiring disclosure pursuant to Item 304(b) of Regulation S-K ITEM 9A.
CONTROLS AND PROCEDURES (a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES  We have established disclosure controls and procedures (Disclosure Controls) to ensure that information required to be disclosed in the Companys reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the U. S.  Securities and Exchange Commissions rules and forms.
Disclosure Controls are also designed to ensure that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Our Disclosure Controls were designed to provide reasonable assurance that the controls and procedures would meet their objectives.
Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our Disclosure Controls will prevent all error and all fraud.
A control system, no matter how well designed and operated, can provide only reasonable assurance of achieving the designed control objectives and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusions of two or more people or by management override of the control.
Because of the inherent limitations in a cost-effective, maturing control system, misstatements due to error or fraud may occur and not be detected.


Threadneedle retail fund net inflows for the year ended December 31, 2013 were driven by recovering consumer confidence and good sales in key areas such as Europe.
Threadneedle institutional AUM increased $8.5 billion, or 10%, during the year ended December 31, 2013 primarily due to market appreciation of $6.7 billion and a $1.6 billion positive impact of foreign currency translation, partially offset by net outflows.
Threadneedle institutional net outflows of $2.6 billion for the year ended December 31, 2013 primarily reflected $3.7 billion of outflows from legacy insurance assets, partially offset by funding of new mandates and additional flows into existing funds.
In January 2014, we lost part of our U. S.  equities team at Threadneedle.
A veteran member of the team, who has directly managed about one-third of the fund’s assets and who has had strong investment performance, has taken over the management of these funds.
We generally expect some level of outflows when this type of change occurs and we are monitoring it closely.


| Investment Objective Value in Billions Percentage of Total AUM | Equity | Growth potential, income potential, value or various combinations thereof | Hybrid | Asset allocation, balanced, flexible, alternative and income-mixed funds | Fixed Income | Global/international, U.S. tax-free and U.S. taxable | Cash Management | Short-term liquid assets | Total |


| Total United States Equatorial Guinea North Sea Israel-2 Corporate & Other Int'l-3 | (in thousands) | Year Ended December 31, 2005 | Lease operating-1 | Workover expense | Total operations expense | Production and ad valorem | Transportation expense | Total production costs | Year Ended December 31, 2004 | Lease operating-1 | Workover expense | Total operations expense | Production and ad valorem | Transportation expense | Total production costs | Year Ended December 31, 2003 | Lease operating-1 | Workover expense | Total operations expense | Production and ad valorem | Transportation expense | Total production costs | Year Ended December 31, | (millions, except unit rate) | United States | Israel | Equatorial Guinea | Other International, and Corporate | Total DD&A Expense-1 | Unit Rate per BOE-2 |


conditions and changes to regulatory capital requirements under Basel III capital standards.
Beginning in 2014, other comprehensive income related to available for sale securities (as well as pension and other post-retirement plans) are included in PNC’s regulatory capital (subject to a phase-in schedule) and, therefore will affect PNC’s regulatory capital ratios.
For additional information, see the Supervision and Regulation section in Item 1 – Business and the Capital portion of the Balance Sheet Review section in this Item 7 of this Report.
The duration of investment securities was 2.9 years at December 31, 2013.
We estimate that, at December 31, 2013, the effective duration of investment securities was 3.0 years for an immediate 50 basis points parallel increase in interest rates and 2.8 years for an immediate 50 basis points parallel decrease in interest rates.
Comparable amounts at December 31, 2012 were 2.3 years and 2.2 years, respectively.
We conduct a quarterly comprehensive security-level impairment assessment on all securities.
For securities in an unrealized loss position, we determine whether the loss represents OTTI.
For debt securities that we neither intend to sell nor believe we will be required to sell prior to expected recovery, we recognize the credit portion of OTTI charges in current earnings and include the noncredit portion of OTTI in Net unrealized gains (losses) on OTTI securities on our Consolidated Statement of Comprehensive Income and net of tax in Accumulated other comprehensive income (loss) on our Consolidated Balance Sheet.
During 2013 and 2012 we recognized OTTI credit losses of $16 million and $111 million, respectively.
Substantially all of the credit losses related to residential mortgage-backed and asset-backed securities collateralized by non-agency residential loans.
If current housing and economic conditions were to deteriorate from current levels, and if market volatility and illiquidity were to deteriorate from current levels, or if market interest rates were to increase or credit spreads were to widen appreciably, the valuation of our investment securities portfolio could be adversely affected and we could incur additional OTTI credit losses that would impact our Consolidated Income Statement.
Additional information regarding our investment securities is included in Note 8 Investment Securities and Note 9 Fair Value in the Notes To Consolidated Financial Statements included in Item 8 of this Report.


| Con Edison* Con Edison of New York O&R Competitive Businesses and Other** | (Millions of Dollars) | Operating revenues | Purchased power | Fuel | Gas purchased for resale | Operating revenues less purchased power, fuel and gas purchased for resale (net revenues) | Other operations and maintenance | Impairment charges | Depreciation and amortization | Taxes, other than income taxes | Income taxes | Operating income | Other income less deductions and related federal income tax | Net interest charges | Income from continuing operations | Discontinued operations | Cumulative effect of changes in accounting principles | Net income |


| Year Ended December 31 2008 2009 2010 | Aircraft manufacturing and outfitting | Aircraft services | Pre-owned aircraft | Total Aerospace |


| (Dollars in millions) Fiscal2013 Fiscal2012 Fiscal2011 2013-2012% Change 2012-2011% Change | Product revenue | Service and other revenue | Total segment revenue | % of total revenue | Segment operating income | % of related revenue |


| 2009 2008 | (in billions) | Balance at January 1 | Net flows | Market appreciation/(depreciation) | Other | Balance at December 31 |


Sales and client service expenses as a percent of total revenues were 42% in 2015, compared to 41% in 2014.
These expenses increased 32% to $1.8 billion in 2015, from $1.4 billion in 2014.
The increase was primarily driven by the addition of the Cerner Health Services business.  ?
Software development expenses as a percent of total revenues were 12% in both 2015 and 2014.
Expenditures for software development reflect ongoing development and enhancement of the Cerner Millennium and HealtheIntent platforms, with a focus on supporting key initiatives to enhance physician experience, revenue cycle, and population health solutions.
Software development expenses in 2015 also include expenditures related to the Cerner Health Services solutions.
A summary of our total software development expense in 2015 and 2014 is as follows:


| Year ended December 31 Change | Dollars in millions | Commercial lending | Commercial | Retail/wholesale trade | Manufacturing | Service providers | Real estate related (a) | Financial services | Health care | Other industries | Total commercial (b) | Commercial real estate | Real estate projects (c) | Commercial mortgage | Total commercial real estate | Equipment lease financing | Total commercial lending (d) | Consumer lending | Home equity | Lines of credit | Installment | Total home equity | Residential real estate | Residential mortgage | Residential construction | Total residential real estate | Credit card | Other consumer | Education | Automobile | Other | Total consumer lending | Total loans |


| CECONY O&R Competitive EnergyBusinesses Other (a) Con Edison (b) | (Millions of Dollars) | Operating revenues | Purchased power | Fuel | Gas purchased for resale | Other operations and maintenance | Depreciation and amortization | Taxes, other than income taxes | Gain on sale of solar electric production projects | Operating income (loss) | Other income less deductions | Net interest expense | Income before income tax expense | Income tax expense | Net income |


| Actual Minimum Required to be Well Capitalized Under PromptCorrective Action Provisions | Amount | December 31, 2012: | Total capital | Tier 1 capital | Tier 1 leverage-1 | December 31, 2011: | Total capital to risk-weighted assets | Tier 1 capital to risk-weighted assets | Tier 1 capital to adjusted total assets |


Investments.
The board of directors of each of the Companys operating subsidiaries is responsible for establishing investment policy and guidelines and, together with senior management, for overseeing their execution.
The Companys principal investment objectives are to ensure funds are available to meet its insurance and reinsurance obligations and to maximize after-tax investment income while maintaining a high quality diversified investment portfolio.
Considering these objectives, the Company views its investment portfolio as having two components: 1) the investments needed to satisfy outstanding liabilities (its core fixed maturities portfolio) and 2) investments funded by the Companys shareholders equity.
For the portion needed to satisfy global outstanding liabilities, the Company generally invests in taxable and tax-preferenced fixed income securities with an average credit quality of Aa2, as rated by Moodys Investors Service, Inc.  (Moodys).
For the U. S.  portion of this portfolio, the Companys mix of taxable and taxpreferenced investments is adjusted periodically, consistent with the Companys current and projected U. S.  operating results, market conditions and the Companys tax position.
This global fixed maturity securities portfolio is externally managed by an independent, professional investment manager using portfolio guidelines approved by the Company.
Over the past few years and particularly in 2010, the Company expanded the allocation of its investments funded by shareholders equity to include: 1) a greater percentage of publicly traded equity securities, 2) emerging market fixed maturities through mutual fund structures, 3) high yield fixed maturities, 4) bank loan securities and 5) private equity limited partnership investments.
The objective of this portfolio diversification is to enhance the risk-adjusted total return of the investment portfolio by allocating a prudent portion of the portfolio to higher return asset classes, which are also less subject to changes in value with movements in interest rates.
The Company limits its allocation to these asset classes because of 1) the potential for volatility in their values and 2) the impact of these investments on regulatory and rating agency capital adequacy models.
The Company use investment managers experienced in these markets and adjusts its allocation to these investments based upon market conditions.
At December 31, 2010, the market value of investments in these investment market sectors, carried at both market and fair value, approximated 36% of shareholders equity.
The duration of an investment is based on the maturity of the security but also reflects the payment of interest and the possibility of early prepayments.
The Companys fixed income investment guidelines include a general duration guideline.
This investment duration guideline is established and periodically revised by management, which considers economic and business factors, as well as the Companys average duration of potential liabilities, which, at December 31, 2010, is estimated at approximately 3.8 years, based on the estimated payouts of underwriting liabilities using standard duration calculations.


| As of December 31, | 2016 | Consolidated Balance Sheet Data | Cash and cash equivalents-1 | Margin deposits and guaranty fund assets-2 | Total current assets | Goodwill and other intangible assets, net-1 | Total assets | Margin deposits and guaranty fund liabilities-2 | Total current liabilities | Short-term and long-term debt-1 | Equity-1 |


AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The valuation allowance increased from $47.8 million as of December 31, 2009 to $48.2 million as of December 31, 2010.
The increase was primarily due to valuation allowances on foreign loss carryforwards.
At December 31, 2010, the Company has provided a valuation allowance of approximately $48.2 million which primarily relates to state net operating loss carryforwards, equity investments and foreign items.
The Company has not provided a valuation allowance for the remaining deferred tax assets, primarily its federal net operating loss carryforwards, as management believes the Company will have sufficient taxable income to realize these federal net operating loss carryforwards during the twenty-year tax carryforward period.
Valuation allowances may be reversed if related deferred tax assets are deemed realizable based on changes in facts and circumstances relevant to the assets recoverability.
The recoverability of the Companys remaining net deferred tax asset has been assessed utilizing projections based on its current operations.
The projections show a significant decrease in depreciation in the later years of the carryforward period as a result of a significant portion of its assets being fully depreciated during the first fifteen years of the carryforward period.
Accordingly, the recoverability of the net deferred tax asset is not dependent on material improvements to operations, material asset sales or other non-routine transactions.
Based on its current outlook of future taxable income during the carryforward period, management believes that the net deferred tax asset will be realized.
The Companys deferred tax assets as of December 31, 2010 and 2009 in the table above do not include $122.1 million and $113.9 million, respectively, of excess tax benefits from the exercises of employee stock options that are a component of net operating losses.
Total stockholders equity as of December 31, 2010 will be increased by $122.1 million if and when any such excess tax benefits are ultimately realized.
At December 31, 2010, the Company had net federal and state operating loss carryforwards available to reduce future federal and state taxable income of approximately $1.2 billion, including losses related to employee stock options of $0.3 billion.
If not utilized, the Companys net operating loss carryforwards expire as follows (in thousands):


Recent Accounting Pronouncements – In May 2014, the FASB issued a new standard that will change the way we recognize revenue and significantly expand the disclosure requirements for revenue arrangements.
On July 9, 2015, the FASB approved a one-year deferral of the effective date of the standard to 2018 for public companies, with an option that would permit companies to adopt the standard in 2017.
Early adoption prior to 2017 is not permitted.
The new standard may be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up adjustment recorded to beginning retained earnings at the effective date for existing contracts with remaining performance obligations.
In addition, the FASB is contemplating making additional changes to certain elements of the new standard.
We are currently evaluating the methods of adoption allowed by the new standard and the effect the standard is expected to have on our consolidated financial statements and related disclosures.
As the new standard will supersede substantially all existing revenue guidance affecting us under GAAP, it could impact revenue and cost recognition on thousands of contracts across all our business segments, in addition to our business processes and our information technology systems.
As a result, our evaluation of the effect of the new standard will extend over future periods.
In September 2015, the FASB issued a new standard that simplifies the accounting for adjustments made to preliminary amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments.
Instead, adjustments will be recognized in the period in which the adjustments are determined, including the effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at the acquisition date.
We adopted the standard on January 1, 2016 and will prospectively apply the standard to business combination adjustments identified after the date of adoption.
In November 2015, the FASB issued a new standard that simplifies the presentation of deferred income taxes and requires that deferred tax assets and liabilities, as well as any related valuation allowance, be classified as noncurrent in our consolidated balance sheets.
The standard is effective January 1, 2017, with early adoption permitted.
The standard may be applied either prospectively from the date of adoption or retrospectively to all prior periods presented.
We are currently evaluating when we will adopt the standard and the method of adoption.
Note 2 – Earnings Per Share The weighted average number of shares outstanding used to compute earnings per common share were as follows (in millions):


Financial Instruments - The following information represents the carrying amounts and estimated fair values of our financial instruments for the periods indicated, excluding energy marketing and risk management assets and liabilities, which are listed in the table above.
The approximate fair value of cash and cash equivalents, short-term investments, accounts and notes receivable and accounts and notes payable is equal to book value due to their short-term nature.
The estimated fair value of long-term debt has been determined using quoted market prices of the same or similar issues, discounted cash flows, and/or rates currently available to us for debt with similar terms and remaining maturities.
The book value of our long-term debt was $4.64 billion and $4.05 billion at December 31, 2007 and 2006, respectively.
The approximate fair value of our long-term debt was $4.75 billion and $4.09 billion at December 31, 2007 and 2006, respectively.
At December 31, 2007, our investment securities classified as available for sale had an aggregate fair value of $24.2 million.
We reported $13.7 million and $12.6 million in accumulated other comprehensive income (loss) for net unrealized holding gains on available-for-sale securities in 2007 and 2006, respectively.
For 2007 and 2006, no gains or losses related to available-for-sale securities were reclassified to earnings from other comprehensive income (loss).
We had no material securities classified as available for sale at December 31, 2005.


The increases in interest expense over the last two years are primarily due to an increase in the overall amount of debt outstanding during each of the periods, primarily relating to debt incurred for and from the NYSE acquisition.
See “- Debt” below.
We recognized interest and investment income of $7 million, $3 million and $2 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Interest and investment income is recorded in other income and the increase primarily relates to an increase in our short-term investments during the year ended December 31, 2014.
We account for our investment in Cetip as an available-for-sale investment and it is classified as a long-term investment in our consolidated balance sheet.
During the year ended December 31, 2013, we recorded an impairment of our Cetip investment for $190 million, which was recorded as other expense.
Refer to Note 5 to our consolidation financial statements and related notes, which are included elsewhere in this Annual Report on Form 10-K, for more information on this impairment.
We recognized dividend income received relating to our Cetip investment in other income, which was $23 million, $8 million and $5 million for the years ended December 31, 2014, 2013 and 2012, respectively.
On October 16, 2013, following the issuance of $1.4 billion in Senior Notes (as defined below), we prepaid our Private Senior Notes (as defined below) representing $400 million aggregate principal amount.
In connection with the early payoff of the Private Senior Notes, we incurred $51 million in expenses, which was recorded as other expense during the year ended December 31, 2013.
See “- Debt” below.
In connection with our acquisition of NYSE, we obtained a 40% ownership in OCC and we recorded our investment in OCC as an equity method investment.
We recognized $25 million in equity income related to this investment during the year ended December 31, 2014 as other income.
For a description of this investment, see note 15 to our consolidated financial statements and related notes, which are included elsewhere is this Annual Report on Form 10-K and see "- Future Capital Requirements" below.
We incurred foreign currency transaction losses of $2 million, $2 million and $4 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Foreign currency gains and losses are recorded in other income (expense) and relate to the settlement of foreign currency assets, liabilities and payables that occur through our foreign operations that are received in non-functional currencies due to the increase or decrease in the period-end foreign currency exchange rates between periods.
On June 24, 2014, we sold 94% of all outstanding shares of Euronext in an IPO.


Based on the analysis described above, for the reporting units for which we performed the first step of the quantitative impairment test, we concluded that our goodwill was not impaired as of October 1, 2013, because these reporting units passed the first step of the test as the fair values of each of the reporting units were substantially in excess of their respective net book values.
We review intangible assets with definite lives subject to amortization whenever events or circumstances indicate that a carrying amount of an asset may not be recoverable.
Recoverability of these assets is determined by comparing the carrying value of these assets to the estimated undiscounted future cash flows expected to be generated by these assets.
These assets


| Year Ended December 31, 2013 to 2014 % Change 2012 to 2013 % Change | 2014 | (in thousands) | Sales and marketing | Sales and marketing as a percentage of revenue |


| Change | 2010 | (in thousands) | IBNR -1 | Military services benefits payable -2 | Reported claims in process -3 | Other benefits payable -4 | Total benefits payable |


| Cash and short-term investments $266 | Other current assets | Fixed income investments, held to maturity | Vessels under construction | Accounts payable and accrued liabilities | Long-term debt | Total purchase price |


Note M  Stock-Based Compensation The Companies may compensate employees and directors with, among other things, stock options, stock units, restricted stock units and contributions to the stock purchase plan.
The
Notes to the Financial Statements  Continued The income tax benefit Con Edison realized from stock options exercised in the years ended December 31, 2014, 2013 and 2012 was $1 million, $10 million and an immaterial amount, respectively.
Restricted Stock and Stock Units Restricted stock and stock unit awards under the LTIP have been made as follows: (i) awards that provide for adjustment of the number of units (performance-restricted stock units or Performance RSUs) to certain officers and employees; (ii) timebased awards to certain employees; and (iii) awards to nonemployee directors.
Restricted stock and stock units awarded represents the right to receive, upon vesting, shares of Con Edison common stock, or, except for units awarded under the directors plan, the cash value of shares or a combination thereof.
The number of units in each annual Performance RSU award is subject to adjustment as follows: (i) 50 percent of the units awarded will be multiplied by a factor that may range from 0 to 200 percent, based on Con Edisons total shareholder return relative to a specified peer group during a specified performance period (the TSR portion); and (ii) 50 percent of the units awarded will be multiplied by a factor that may range from 0 to 120 percent for management employees and from 0 to 200 percent, based on determinations made in connection with the Companies annual incentive plans or, for certain executive officers, actual performance as compared to certain performance measures during a specified performance period (the non-TSR portion).
Performance RSU awards generally vest upon completion of the performance period.
Performance against the established targets is recomputed each reporting period as of the earlier of the reporting date and the vesting date.
The TSR portion applies a Monte Carlo simulation model, and the non-TSR portion is the product of the market price at the end of the period multiplied by the average non-TSR determination over the vesting period.
Performance RSUs are liability awards because each Performance RSU represents the right to receive, upon vesting, one share of Con Edison common stock, the cash value of a share or a combination thereof.
As such, changes in the fair value of the Performance RSUs are reflected in net income.
The following table illustrates the assumptions used to calculate the fair value of the awards:


| (Dollars in millions) Multi-Seller Conduits Asset Acquisition Conduits Municipal Bond Trusts CDOs Leveraged Lease Trusts Other Vehicles Total | Consolidated VIEs, December 31, 2008-1 | Maximum loss exposure-2 | Consolidated Assets-3 | Trading account assets | Derivative assets | Available-for-sale debt securities | Held-to-maturity debt securities | Loans and leases | All other assets | Total | Consolidated Liabilities | Commercial paper and other short-term borrowings | All other liabilities | Total | Consolidated VIEs, December 31, 2007-1 | Maximum loss exposure-2 | Total assets-3 |


Offsetting of Securities Financing Agreements Substantially all of the Corporation’s securities financing activities are transacted under legally enforceable master repurchase agreements or legally enforceable master securities lending agreements that give the Corporation, in the event of default by the counterparty, the right to liquidate securities held and to offset receivables and payables with the same counterparty.
The Corporation offsets securities financing transactions with the same counterparty on the Consolidated Balance Sheet where it has such a legally enforceable master netting agreement and the transactions have the same maturity date.
The Securities Financing Agreements table presents securities financing agreements included on the Consolidated Balance Sheet in federal funds sold and securities borrowed or purchased under agreements to resell, and in federal funds purchased and securities loaned or sold under agreements to repurchase at December 31, 2015 and 2014.
Balances are presented on a gross basis, prior to the application of counterparty netting.
Gross assets and liabilities are adjusted on an aggregate basis to take into consideration the effects of legally enforceable master netting agreements.
For more information on the offsetting of derivatives, see Note 2 – Derivatives.
The “Other” amount in the table, which is included on the Consolidated Balance Sheet in accrued expenses and other liabilities, relates to transactions where the Corporation acts as the lender in a securities lending agreement and receives securities that can be pledged as collateral or sold.
In these transactions, the Corporation recognizes an asset at fair value, representing the securities received, and a liability, representing the obligation to return those securities.
Gross assets and liabilities in the table include activity where uncertainty exists as to the enforceability of certain master netting agreements under bankruptcy laws in some countries or industries and, accordingly, these are reported on a gross basis.
The column titled “Financial Instruments” in the table includes securities collateral received or pledged under repurchase or securities lending agreements where there is a legally enforceable master netting agreement.
These amounts are not offset on the Consolidated Balance Sheet, but are shown as a reduction to the net balance sheet amount in this table to derive a net asset or liability.
Securities collateral received or pledged where the legal enforceability of the master netting agreements is not certain is not included.


?
Operating income, as adjusted, includes non-GAAP expense adjustments.
The portion of compensation expense associated with certain long-term incentive plans (LTIP) funded, or to be funded, through share distributions to participants of BlackRock stock held by PNC has been excluded because it ultimately does not impact BlackRocks book value.
In 2016, a restructuring charge primarily comprised of severance and accelerated amortization expense of previously granted deferred compensation awards has been excluded to provide an analysis of BlackRocks ongoing operations and to ensure comparability among periods presented.
In 2015, compensation expense associated with appreciation (depreciation) on investments related to certain BlackRock deferred compensation plans has been excluded, as returns on investments set aside for these plans, which substantially offset this expense, are reported in nonoperating income (expense).  ?
Operating income used for measuring operating margin, as adjusted, is equal to operating income, as adjusted, excluding the impact of product launch costs (e. g.  closed-end fund launch costs) and related commissions.
Management believes the exclusion of such costs and related commissions is useful because these costs can fluctuate considerably and revenue associated with the expenditure of these costs will not fully impact BlackRocks results until future periods.
Revenue used for operating margin, as adjusted, excludes distribution and servicing costs paid to related parties and other third parties.
Management believes such costs represent a benchmark for the amount of revenue passed through to external parties who distribute the Companys products.
In addition, management believes the exclusion of such costs is useful because it creates consistency in the treatment for certain contracts for similar services, which due to the terms of the contracts, are accounted for under GAAP on a net basis within investment advisory, administration fees and securities lending revenue.
Amortization of deferred sales commissions is excluded from revenue used for operating margin measurement, as adjusted, because such costs, over time, substantially offset distribution fee revenue the Company earns.
For each of these items, BlackRock excludes from revenue used for operating margin, as adjusted, the costs related to each of these items as a proxy for such offsetting revenue.


| December 31, | 2009 | (in millions) | Liabilities for investment-type insurance contracts: | GICs | Funding agreements | Other investment-type insurance contracts | Total liabilities for investment-type insurance contracts | Liabilities for individual annuities | Universal life and other reserves | Total contractholder funds | For the year ended December 31, | 2009 | (in billions) | Account values, beginning of period | Net cash flow -1 | Credited investment performance | Other | Account values, end of period |


As of December 31, 2013 and 2012, our liabilities associated with unrecognized tax benefits are not material.
We and our subsidiaries file income tax returns in the U. S.  federal jurisdiction and various foreign jurisdictions.
With few exceptions, the statute of limitations is no longer open for U. S.  federal or non-U.
S.  income tax examinations for the years before 2010, other than with respect to refunds.
U. S.  income taxes and foreign withholding taxes have not been provided on earnings of $222 million, $211 million, and $193 million that have not been distributed by our non-U.
S.  companies as of December 31, 2013, 2012, and 2011.
Our intention is to permanently reinvest these earnings, thereby indefinitely postponing their remittance to the U. S.  If these earnings were remitted, we estimate that the additional income taxes after foreign tax credits would have been approximately $50 million in 2013, $45 million in 2012, and $41 million in 2011.
Our federal and foreign income tax payments, net of refunds received, were $787 million in 2013, $890 million in 2012, and $722 million in 2011.
Our 2013 net payments reflect a $550 million refund from the IRS primarily attributable to our tax-deductible discretionary pension contributions during the fourth quarter of 2012; our 2012 net payments reflect a $153 million refund from the IRS related to a 2011 capital loss carryback claim; and our 2011 net payments reflect a $250 million refund from the IRS related to estimated taxes paid for 2010.
As of December 31, 2013 and 2012, we had federal and foreign taxes receivable of $313 million and $662 million recorded within other current assets on our Balance Sheet, primarily attributable to our tax-deductible discretionary pension contributions in the fourth quarter of 2013 and 2012 and our debt exchange transaction in the fourth quarter of 2012.


We use a measurement date of December 31 for plan assets and benefit obligations.
A reconciliation of the changes in the projected benefit obligation for qualified pension, nonqualified pension and postretirement benefit plans as well as the change in plan assets for the qualified pension plan follows:


| Payments due by period | Total | (In thousands) | Long-term debt obligations | Capital lease obligations | Interest expense on long-term debt and capital lease obligations | Satellite-related obligations | Operating lease obligations | Purchase obligations | Total |


Rate Matters NSP-Minnesota Pending and Recently Concluded Regulatory Proceedings  MPUC Base Rate NSP-Minnesota Electric Rate Case  On Nov.  3, 2008, NSP-Minnesota filed a request with the MPUC to increase Minnesota electric rates by $156 million annually, or 6.05 percent.
The request is based on a 2009 forecast test year, an electric rate base of $4.1 billion, a requested ROE of 11.0 percent and an equity ratio of 52.5 percent.
In December 2008, the MPUC approved an interim rate increase of $132 million, or 5.12 percent, effective Jan.  2, 2009.
The primary difference between interim rate levels approved and NSP-Minnesotas request of $156 million is due to a previously authorized ROE of 10.54 percent and NSP-Minnesotas requested ROE of 11.0 percent.
A final decision from the MPUC is expected in the third quarter of 2009.
The following procedural schedule has been established: ?
Staff and intervenor direct testimony on April 7, 2009; ?
NSP-Minnesota rebuttal testimony on May 5, 2009; ?
Staff and intervenor surrebuttal testimony on May 26, 2009; and ?
Evidentiary hearings are scheduled for June 2-9, 2009.
Electric, Purchased Gas and Resource Adjustment Clauses TCR Rider  In November 2006, the MPUC approved a TCR rider pursuant to legislation, which allows annual adjustments to retail electric rates to provide recovery of incremental transmission investments between rate cases.
In December 2007, NSP-Minnesota filed adjustments to the TCR rate factors and implemented a rider to recover $18.5 million beginning Jan.  1, 2008.
In March 2008, the MPUC approved the 2008 rider, but required certain procedural changes for future TCR filings if costs are disputed.
On Oct.  30, 2008, NSP-Minnesota submitted its proposed TCR rate factors for proposed recovery in 2009, seeking to recover $14 million beginning Jan.  1, 2009.
A portion of amounts previously collected through the TCR rider prior to 2009 has been included for recovery in the electric rate case described above.
MPUC approval is pending.
RES Rider  In March 2008, the MPUC approved an RES rider to recover the costs for utility-owned projects implemented in compliance with the RES, and the RES rider was implemented on April 1, 2008.
Under the rider, NSP-Minnesota could recover up to approximately $14.5 million in 2008 attributable to the Grand Meadow wind farm, a 100 MW wind project, subject to true-up.
In 2008, NSP-Minnesota submitted the RES rider for recovery of approximately $22 million in 2009 attributable to the Grand Meadow wind farm.
On Feb.  12, 2009, the MPUC


Marketable securities and receivables related to derivative instruments are valued at current market value.
Other assets are recorded at cost.
Goodwill Goodwill represents the excess of the cost of an acquired entity over the net amounts assigned to assets acquired and liabilities assumed.
The Company accounts for goodwill in accordance with SFAS No.142, Goodwill and Other Intangible Assets.
 Goodwill is not amortized to earnings but is tested annually during the fourth quarter or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Income Taxes Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return.
Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements.
Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years.
Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements.
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.
Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair values for each class of financial instruments.
The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between two willing parties.
Deferred Income Taxes  The amount allocated to deferred income taxes results from differences between the assigned values and the tax bases of the assets acquired and liabilities assumed in accordance with SFAS No.109, Accounting for Income Taxes.
 The Company is reviewing the historical deferred tax balances as well as the adjustment for the difference in book and tax basis for the fair value of the assets.
Any future adjustments, if necessary, will be reflected as a final purchase price adjustment.
Goodwill  The preliminary allocation of purchase price included approximately $874.8 million of goodwill.
The significant factors that contributed to the recognition of goodwill include, but are not limited to, economies of scale in connection with the Companys existing domestic operations, and the ability to acquire an established business with an assembled workforce with technological and operational expertise in tight gas sand formations.
The goodwill was assigned to the Companys domestic reporting unit.
In accordance with SFAS No.142, Goodwill and Other Intangible Assets, goodwill is not amortized to earnings but is tested, at least annually, for impairment at the reporting unit level.
The Company conducted its goodwill impairment test as of December 31, 2005.
Other events and changes in circumstances, such as a sale of domestic properties, may also require goodwill to be tested for impairment between annual measurement dates.
If the carrying value of goodwill is determined to be impaired, the amount of goodwill is reduced and a corresponding charge is made to earnings in the period in which the goodwill is determined to be impaired.
The Company does not expect the goodwill to be deductible for income tax purposes.
No goodwill impairment was recognized as of December 31, 2005.
In accordance with Emerging Issues Task Force (EITF) Abstract Issue No.00-23, Issues Related to the Accounting for Stock Compensation under APB Opinion No.25 and FASB Interpretation No.44, the Company has reduced the amount of goodwill originally recorded by $12.0 million for deferred tax assets associated with the exercise of fully-vested stock options assumed in conjunction with the Patina Merger to the extent that the stock-based compensation expense reported for tax purposes did not exceed the fair value of the awards recognized as part of the total purchase price.
Pro Forma Financial Information  The following pro forma condensed combined financial information for the years ended December 31, 2005 and 2004 was derived from the historical financial statements of Noble Energy and Patina and gives effect to the merger as if it had occurred on January 1, 2004.
The pro forma condensed combined financial information has been included for comparative purposes and is not necessarily indicative of the results that might have occurred had the merger taken place as of the dates indicated and is not intended to be a projection of future results.


SEGMENT DATA We design, develop, manufacture and market reconstructive orthopaedic implants, including joint and dental, spinal implants, trauma products and related orthopaedic surgical products which include surgical supplies and instruments designed to aid in orthopaedic surgical procedures and post-operation rehabilitation.
We also provide other healthcare related services.
Revenue related to these services currently represents less than 1 percent of our total net sales.
We manage operations through three major geographic segments  the Americas, which is comprised principally of the United States and includes other North, Central and South American markets; Europe, which is comprised principally of Europe and includes the Middle East and Africa; and Asia Pacific, which is comprised primarily of Japan and includes other Asian and Pacific markets.
This structure is the basis for our reportable segment information discussed below.
Management evaluates operating segment performance based upon segment operating profit exclusive of operating expenses pertaining to global operations and corporate expenses, share-based compensation expense, settlement, acquisition, integration and other expenses, inventory step-up, in-process research and development writeoffs and intangible asset amortization expense.
Global operations include research, development engineering, medical education, brand management, corporate legal, finance, and human resource functions, and U. S.  and Puerto Rico based manufacturing operations and logistics.
Intercompany transactions have been eliminated from segment operating profit.
Management reviews accounts receivable, inventory, property, plant and equipment, goodwill and intangible assets by reportable segment exclusive of U.
S and Puerto Rico based manufacturing operations and logistics and corporate assets.


| (Millions of barrels) 2008 | Beginning of year | Revisions(a) | Extensions, discoveries and additions | Production | End of year |


Model Risk Management The use of financial models is widespread throughout the banking and financial services industry, with larger and more complex organizations employing dozens of sophisticated models on a daily basis to measure risk exposures, determine economic and regulatory capital levels, and guide investment decisions, among other things.
However, even as models represent a significant advancement in financial management, the models themselves represent a new source of risk, i. e. , the potential for adverse consequences or financial loss from decisions based on incorrect, misused or misinterpreted model outputs and reports.
In large banking organizations like State Street, where financial models and their outputs exert significant influence on business decisions, and where model failure could have a particularly harmful effect on our financial strength and performance, model risk is managed within an extensive and rigorous risk management framework.
This framework is documented in our Model Risk Governance Policy Statement and accompanying Model Risk Governance Guidelines.
Our model risk management program has three principal components: A model risk governance program supports risk management by defining roles and responsibilities, by providing policies and guidance that define relevant model risk management activities, and by describing procedures that implement those policies; A model development process facilitates the appropriate design and accuracy of models; the development process also includes ongoing model integrity activities designed to test for robustness and stability and to evaluate a model's limitations and assumptions; and A set of model validation processes and activities is designed to validate that models are theoretically sound, are performing as expected, and are in line with their design objectives; model validation also checks that a model's key assumptions and limitations are identified and clearly communicated to the model's end users and to senior management.
The MAC, chaired by the head of the Model Validation Group, was established to provide recommendations on technical modeling issues to the corporate oversight committees.
The MAC includes members with expertise in modeling methodologies, and has representation from the various business units throughout State Street.


| 2014 2013 | U.S. life insurance subsidiaries, includes domestic captive insurance subsidiaries in 2013 | Property and casualty insurance subsidiaries | Total |


| December 31, 2009 | (Dollars in millions) | Commercial – domestic | Commercial real estate – domestic | Foreign 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 |