Income Taxes.
The company calculates its provision for federal, international and state income taxes based on current tax law.
The reported tax provision differs from the amounts currently receivable or payable because some income and expense items are recognized in different time periods for financial reporting purposes than for income tax purposes.
General Dynamics periodically assesses its liabilities and contingencies for all periods open to examination by tax authorities based on the latest available information.
Where it is not probable that the companys tax position will be sustained, the company records its best estimate of the resulting tax liability and interest in the Consolidated Financial Statements.
Cash and Equivalents and Investments in Debt and Equity Securities.
General Dynamics classifies its securities in accordance with Statement of Financial Accounting Standards (SFAS) No.115, Accounting for Certain Investments in Debt and Equity Securities.
The company considers securities with a maturity of three months or less to be cash equivalents.
The company adjusts all investments in debt and equity securities to fair value.
For trading securities, the adjustments are recognized in the Consolidated Statement of Earnings.
Adjustments for available-for-sale securities are recognized as a component of accumulated other comprehensive income in the Consolidated Balance Sheet.
The company had available-for-sale investments of $79 at December 31, 2006, and $57 at December 31, 2005.
The company had no trading securities at the end of either period.
The contractual arrangements with some of the companys international customers require the company to maintain certain advance payments made by these customers and apply them only to the companys activities associated with these contracts.
These advances totaled approximately $190 as of December 31, 2006.
Accounts Receivable and Contracts in Process.
Accounts receivable are amounts billed and currently due from customers.
Contracts in process represent recoverable costs incurred and, where applicable, accrued profit related to long-term government contracts for which the customer has not yet been billed (unbilled receivables).
Inventories.
Inventories are stated at the lower of cost or net realizable value.
Cost for work-in-process inventories, which consist of aircraft components, is based on the estimated average unit cost of the units in a production lot, or specific identification.
Cost for raw materials inventories is based on the first-in, first-out method, or specific identification.
The company records pre-owned aircraft acquired in connection with the sale of new aircraft at the lower of the trade-in value or the estimated net realizable value, determined at the time of trade and based on estimated fair value.
Property, Plant and Equipment, Net.
Property, plant and equipment are carried at historical cost, net of accumulated depreciation and amortization.
The company depreciates most of its assets using the straight-line method and the remainder using accelerated methods.
Buildings and improvements are depreciated over periods up to 50 years.
Machinery and equipment are depreciated over periods up to 28 years.
Impairment of Long-Lived Assets.
The company reviews long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Impairment losses, where identified, are determined as the excess of the carrying value over the estimated fair value of the long-lived asset.
The company assesses the recoverability of the carrying value of assets held for use based on a review of projected undiscounted cash flows.
If an asset is held for sale, the company reviews its estimated fair value less cost to sell.
The company reviews goodwill and indefinite-lived intangible assets for impairment annually by applying a fair-value-based test.
The company completed the required annual goodwill impairment test during the fourth quarter of 2006 and did not identify any impairment.
Environmental Liabilities.
The company accrues environmental costs when it is probable that a liability has been incurred and the amount can be reasonably estimated.
To the extent the U. S.  government has agreed to pay the ongoing maintenance and monitoring costs at sites currently used to conduct the companys government contracting business, General Dynamics treats these costs as contract costs and recognizes the costs as paid.


| Expiration Date Total Capacity Outstanding Borrowings Unused Available Capacity | ($ in millions) | Long-term debt | Term loan facility | Senior notes | Revolving credit facility | $824.1 |


Non Duration-Managed.
We also have a block of participating general account pension business that passes most of the actual investment performance of the assets to the customer.
The investment strategy of this block is to maximize investment return to the customer on a ‘‘best efforts’’ basis, and there is little or no attempt to manage the duration of this portfolio since there is little or no interest rate risk.
The value of the assets in these portfolios was $5,234.0 million as of December 31, 2007.
Using the assumptions and data in effect as of December 31, 2007, we estimate that a 100 basis point immediate, parallel increase in interest rates decreases the net fair value of our portfolio by approximately $36.3 million.


| 2004 2003 2002 | Weighted Average Allocation Date Fair Market Value of Common Stock | Dividend Yield | Weighted Average Expected Life (years) | Weighted Average Risk Free Interest Rate | Expected Volatility |


| December 31, | 2011 | (in millions) | Variable annuity variable sub-accounts | VUL insurance variable sub-accounts | Other insurance variable sub-accounts | Threadneedle investment liabilities | Total |


Item 1A.
Risk Factors.
M&T and its subsidiaries could be adversely impacted by various risks and uncertainties which are difficult to predict.
As a financial institution, the Company has significant exposure to market risk, including interest-rate risk, liquidity risk and credit risk, among others.
Adverse experience with these or other risks could have a material impact on the Companys financial condition and results of operations, as well as on the value of the Companys financial instruments in general, and M&Ts common stock, in particular.


| Hardboard Omniwood Woodruf | In thousands | December 31, 2006 | December 31, 2005 | December 31, 2004 |


| (Amounts in thousands) 2008 2007 2006 | Net income applicable to common shares | Book to tax differences (unaudited): | Depreciation and amortization | Reversal of deferred tax liability | Straight-line rent adjustments | Stock options expense | Derivatives | Earnings of partially owned entities | Net gains on sale of real estate | Compensation deduction for units held in Rabbi Trust | Sears Canada dividend | Other, net | Estimated taxable income |


[3] Includes future minimum lease payments on operating lease agreements.
See Note 14 of Notes to Consolidated Financial Statements for additional discussion on lease commitments.
[4] Includes contractual principal and interest payments.
See Note 12 of Notes to Consolidated Financial Statements for additional discussion of long-term debt obligations.
[5] Includes $865 in commitments to purchase investments including approximately $604 of limited partnership and other alternative investments, $15 of private placements, and $246 of mortgage loans.
Outstanding commitments under these limited partnerships and mortgage loans are included in payments due in less than 1 year since the timing of funding these commitments cannot be reliably estimated.
The remaining commitments to purchase investments primarily represent payables for securities purchased which are reflected on the Companys Consolidated Balance Sheets.
Also included in purchase obligations is $980 relating to contractual commitments to purchase various goods and services such as maintenance, human resources, and information technology in the normal course of business.
Purchase obligations exclude contracts that are cancelable without penalty or contracts that do not specify minimum levels of goods or services to be purchased.
[6] Includes cash collateral of $327 which the Company has accepted in connection with the Companys derivative instruments.
Since the timing of the return of the collateral is uncertain, the return of the collateral has been included in the payments due in less than 1 year.
Also included in other long-term liabilities are net unrecognized tax benefits of $48, retained Japan fixed payout annuity liabilities of $886, and consumer notes of $74.
Consumer notes include principal payments and contractual interest for fixed rate notes and interest based on current rates for floating rate notes.


| 2003 2004 2005 2006-2007 after 2007 | (In Millions) | Planned construction and | capital investment | Long-term debt maturities | Capital and operating lease payments -1 | Unconditional fuel and purchased | power obligations -2 | Nuclear fuel lease obligations -1(3) |


| for the fiscal years ended September 30, 2019 2018 2017 | Current expense | Federal | State | Non-U.S. | Deferred expense (benefit) | Total |


| (Dollars in millions) 2001 2000 1999 Change 00-01 Adjusted Change 00-01-1 | Salaries and employee benefits | Information systems and communications | Transaction processing services | Occupancy | Other | Total operating expenses | Number of employees |


| 2014 2013 2012 | Functional Verification, including Emulation Hardware | Digital IC Design and Signoff | Custom IC Design | System Interconnect and Analysis | IP | Total |


| 2015 2014 | Land and buildings | Machinery, equipment and internal-use software | Leasehold improvements | Gross property, plant and equipment | Accumulated depreciation and amortization | Total property, plant and equipment, net |


Results of Operations Comparison of the year ended December 31, 2005 to the year ended December 31, 2004 Rental and other revenue.
MOB rental revenue increased 35% to $126.9 million for the year ended December 31, 2005.
The increase in MOB rental revenue of $33.2 million primarily relates to the additive effect of our acquisitions in 2005 and 2004, which contributed $26.7 million to rental revenues year over year.
Triple-net lease rental revenues increased 13% to $325.3 million for the year ended December 31, 2005.
The increase in triple-net lease rental revenue of $37.7 million primarily relates to the additive effect of our acquisitions in 2005 and 2004, as detailed below:


Annuities The following table presents the results of operations of our Annuities segment on an operating basis:
NM Not Meaningful.
Our Annuities segment pretax operating income, which excludes net realized gains or losses and the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization), decreased $58 million, or 9%, to $567 million for the year ended December 31, 2012 compared to $625 million for the prior year primarily due to a decline in net investment income and an unfavorable impact from unlocking and model changes, partially offset by the market impact on DAC and DSIC, lower interest credited to fixed accounts and higher fee revenues.
Results for 2011 included $34 million of additional bond discount accretion investment income related to prior periods resulting from revisions to the accounting classification of certain structured securities, net of DAC and DSIC amortization.
The impact of unlocking and model changes was a decrease to pretax operating income of $11 million in 2012 compared to an increase of $1 million in the prior year.
The impact of unlocking and model changes for 2012 included a $43 million benefit, net of DAC and DSIC amortization, from an adjustment to the model which values the reserves related to living benefit guarantees primarily attributable to prior periods.
This revision aligns the model to more accurately reflect best estimate assumptions for living benefit utilization going forward.
The market impact on DAC and DSIC was a benefit of $29 million in 2012 compared to an expense of $10 million in the prior year.
RiverSource variable annuity account balances increased 9% to $68.1 billion at December 31, 2012 compared to the prior year driven by market appreciation.
Variable annuity net outflows of $457 million in 2012 reflected the closed book of annuities previously sold through third parties and $511 million of net inflows in the Ameriprise channel.
RiverSource fixed annuity account balances declined 3% to $13.8 billion due to net outflows given the interest rate environment.
Net Revenues Net revenues, which exclude net realized gains or losses, decreased $106 million, or 4%, to $2.5 billion for the year ended December 31, 2012 compared to $2.6 billion for the prior year primarily due to decreases in net investment income and premiums, partially offset by higher management fees and higher fees from variable annuity guarantees.
Management and financial advice fees increased $26 million, or 4%, to $648 million for the year ended December 31, 2012 compared to $622 million for the prior year due to higher fees on variable annuities driven by higher separate account balances.
Average variable annuities contract accumulation values increased $2.9 billion, or 5%, from the prior year due to market appreciation.
Net investment income, which excludes net realized gains or losses, decreased $147 million, or 11%, to $1.1 billion for the year ended December 31, 2012 compared to $1.3 billion for the prior year due to a decrease in investment income on fixed maturities driven by low interest rates impacting both the variable and fixed businesses and $37 million of additional bond discount accretion investment income recognized in 2011 related to prior periods resulting from revisions to the accounting classification of certain structured securities.


TDRs on accrual status, which are current and have made six or more consecutive payments, were $950.0 million and $981.4 million at December 31, 2013 and 2012, respectively.


PART II ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations Year Ended December 31, 2014 Compared to the Year Ended December 31, 2013 Net Loss Segment net loss decreased $25,510 or 25%, to $74,731 for Twelve Months 2014 compared with a net loss of $100,241 for Twelve Months 2013.
The decrease is primarily due to a $20,753 one-time tax benefi t related to the conversion of the Canadian branch operations of certain U. S.  subsidiaries to foreign corporate entities, a $17,068 (after-tax) change in net realized gains on investments, lower employee-related costs and impact of expense reduction initiatives.
These items were partially offset by a $19,400 (after-tax) loss on an asset held for sale.
Total Revenues Total revenues increased $7,189 or 10%, to $79,282 for Twelve Months 2014 compared with $72,093 for Twelve Months 2013.
The increase in revenues is mainly due to an $26,258 increase in net realized gains on investments partially offset by a decrease of $17,816 in amortization of deferred gain on disposal of businesses (“amortization of deferred gain”).
The reduction in the amortization of deferred gain is related to a change in estimate for the recognition of a deferred gain associated with FFG that we previously sold through reinsurance.


| Period Total Number of   Shares Purchased Average Price Paid   per Share Total Number of Shares   Purchased as Part of   Publicly Announced   Plans or Programs-1 Maximum   Number of Shares   that May Yet Be   Purchased Under   the Plans or   Programs-1 | October 1-31, 2008 | November 1-30, 2008 | December 1-31, 2008 | Total |


| Years Ended December 31, | 2012 | (in millions) | Revenues | Management and financial advice fees | Distribution fees | Net investment income | Premiums | Other revenues | Total revenues | Banking and deposit interest expense | Total net revenues | Expenses | Distribution expenses | Interest credited to fixed accounts | Benefits, claims, losses and settlement expenses | Amortization of deferred acquisition costs | Interest and debt expense | General and administrative expense | Total expenses | Operating earnings |


Wawa, Ontario.
The fair values of the assets were determined using significant other observable inputs (Level 2) based on market quotes and significant unobservable inputs (Level 3) based on discounted cash flow models.
?2009 — charges for Wood Products facilities included $74 million related to engineered wood products facilities in Hazard, Kentucky and Valdosta, Georgia.
In addition, charges included $30 million related to corporate-region buildings and $11 million related to a lumber mill in Brazil.
The fair values of the assets were determined using significant other observable inputs (Level 2) based on market quotes and significant unobservable inputs (Level 3) based on discounted cash flow models.
?2008 — charges for Wood Products facilities included a $27 million charge related to the assets of the Trust Joist?
Commercial division and $37 million related to oriented strand board facilities in Drayton Valley, Alberta and Miramichi, New Brunswick.
Real Estate Impairments and Charges We review homebuilding long-lived assets and investments within our Real Estate segment for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
These assets are stated at cost unless events or circumstances trigger an impairment review.
If a triggering event occurs and the asset’s carrying amount is not recoverable, we record an impairment loss, which is the difference between the asset’s book value and fair value.
The determination of fair value is based on appraisals and market pricing of comparable assets when that information is available, or the discounted value of estimated future net cash flows from these assets.
During 2008 and 2009, unfavorable market conditions caused us to re-evaluate our strategy to develop certain projects, reduce sales prices, and increase customer incentives.
Asset impairments are recorded as adjustments to the cost basis of inventory and investments.
Because of such changes, we reassessed the recoverability of several of our investments, which triggered impairment charges.
The number of real estate projects owned or operated by us ranged from approximately 100 to 125 during 2009 and 2010.
This includes communities where we were actively building homes or developing land and land positions held for future development.
The table below provides, for each period indicated: ?the number of projects that were tested for recoverability as a result of triggering events that occurred during the period, ?the number of projects for which impairment charges were recognized in the period, ?the amount of real estate impairment charges attributable to Weyerhaeuser shareholders that were recognized in the period and ?additional information about the fair value of assets impaired in the period.
Real estate impairments relate primarily to projects, or communities, held for development.
Within a community that is held for development, there may be individual homes or parcels of land that are currently held for sale.
Impairment charges recognized as a result of adjusting individual held-for-sale assets within a community to estimated fair value less cost to sell are also included in the total impairment charges below.
An individual project or held-for-sale asset may have been tested for recoverability and impairment charges may have been recognized in more than one quarter.
DOLLAR AMOUNTS IN MILLIONS Fai


The following table summarizes the ratings profile of the Firms derivative receivables, including credit derivatives, net of all collateral, at the dates indicated.
The ratings scale is based on the Firms internal ratings, which generally correspond to the ratings as assigned by S&P and Moodys.
Ratings profile of derivative receivables
As previously noted, the Firm uses collateral agreements to mitigate counterparty credit risk.
The percentage of the Firms over-the-counter derivative transactions subject to collateral agreements  excluding foreign exchange spot trades, which are not typically covered by collateral agreements due to their short maturity and centrally cleared trades that are settled daily  was approximately 90% at both December 31, 2018, and December 31, 2017.


HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Investing Activities Net cash used in investing activities increased by $1.6 billion in fiscal 2019 as compared to fiscal 2018.
The increase was due primarily to an increase of $1.3 billion of cash used for payments made in connection with business acquisitions, an increase of $0.4 billion of cash used for investments in property, plant and equipment, net of proceeds from sales, partially offset by an increase of $0.2 billion of cash received from net financial collateral activities in the current period.
Net cash used in investing activities decreased by $3.5 billion in fiscal 2018 as compared to fiscal 2017 due primarily to lower payments by $2.0 billion for business acquisitions, in addition to an increase in cash of $0.8 billion from net financial collateral activities and a decrease of $0.6 billion of cash used for investments in property, plant and equipment, net of proceeds from sales.
Financing Activities Net cash used in financing activities decreased by $4.0 billion in fiscal 2019 as compared to fiscal 2018.
The decrease was due primarily to the impact of a higher debt redemption by $1.9 billion in the prior period, an increase in cash proceeds from the issuance of debt of $1.1 billion and a lower utilization of cash for share repurchase activity by $1.3 billion in the current period.
These amounts were partially offset by a net transfer of cash from Seattle of $0.2 billion in the prior period.
Net cash used in financing activities increased by $5.8 billion in fiscal 2018 as compared to fiscal 2017 due primarily to cash dividends of $3.0 billion and $2.5 billion from Everett and Seattle, respectively, in fiscal 2017, higher cash used for share repurchase activity by $1.0 billion and higher debt redemption by $0.4 billion in fiscal 2018, partially offset by $1.1 billion of net transfers of cash and cash equivalents to Everett and Seattle.


NOTE 7 Securitizations and Other Variable Interest Entities The Corporation utilizes VIEs in the ordinary course of business to support its own and its customers financing and investing needs.
The Corporation routinely securitizes loans and debt securities using VIEs as a source of funding for the Corporation and as a means of transferring the economic risk of the loans or debt securities to third parties.
The assets are transferred into a trust or other securitization vehicle such that the assets are legally isolated from the creditors of the Corporation and are not available to satisfy its obligations.
These assets can only be used to settle obligations of the trust or other securitization vehicle.
The Corporation also administers, structures or invests in other VIEs including CDOs, investment vehicles and other entities.
For additional information on the Corporations utilization of VIEs, see Note 1  Summary of Significant Accounting Principles.
The tables within this Note present the assets and liabilities of consolidated and unconsolidated VIEs at December 31, 2012 and 2011, in situations where the Corporation has continuing involvement with transferred assets or if the Corporation otherwise has a variable interest in the VIE.
The tables also present the Corporations maximum loss exposure at December 31, 2012 and 2011 resulting from its involvement with consolidated VIEs and unconsolidated VIEs in which the Corporation holds a variable interest.
The Corporations maximum loss exposure is based on the unlikely event that all of the assets in the VIEs become worthless and incorporates not only potential losses associated with assets recorded on the Corporations Consolidated Balance Sheet but also potential losses associated with off-balance sheet commitments such as unfunded liquidity commitments and other contractual arrangements.
The Corporations maximum loss exposure does not include losses previously recognized through write-downs of assets.
The Corporation invests in ABS issued by third-party VIEs with which it has no other form of involvement.
These securities are included in Note 2  Trading Account Assets and Liabilities and Note 4  Securities.
In addition, the Corporation uses VIEs such as trust preferred securities trusts in connection with its funding activities.
For additional information, see Note 12  Long-term Debt.
The Corporation also uses VIEs in the form of synthetic securitization vehicles to mitigate a portion of the credit risk on its residential mortgage loan portfolio, as described in Note 5  Outstanding Loans and Leases.
The Corporation uses VIEs, such as cash funds managed within Global Wealth & Investment Management (GWIM), to provide investment opportunities for clients.
These VIEs, which are not consolidated by the Corporation, are not included in the tables within this Note.
Except as described below, the Corporation did not provide financial support to consolidated or unconsolidated VIEs during 2012 or 2011 that it was not previously contractually required to provide, nor does it intend to do so.


| Year ended December 31, 2006 Year ended December 31, 2005 | Yield-1 | ($ in millions) | Fixed maturities | Trading account assets supporting insurance liabilities | Equity securities | Commercial loans | Policy loans | Short-term investments and cash equivalents | Other investments | Gross investment income before investment expenses | Investment expenses | Investment income after investment expenses | Investment results of other entities and operations-2 | Total investment income | Year ended December 31, 2006 | Yield-1 | ($ in millions) | Fixed maturities | Trading account assets supporting insurance liabilities | Equity securities | Commercial loans | Policy loans | Short-term investments and cash equivalents | Other investments | Gross investment income before investment expenses | Investment expenses | Total investment income |


| Revised - See Note 1 | 2005 | Automotive | Cash flows from operating activities of continuing operations | Net cash flows from operating activities (Note 21) | Cash flows from investing activities of continuing operations | Capital expenditures | Acquisitions of retail and other finance receivables and operating leases | Collections of retail and other finance receivables and operating leases | Net (increase)/decrease in wholesale receivables | Net acquisitions of daily rental vehicles | Purchases of securities | Sales and maturities of securities | Proceeds from sales of retail and other finance receivables and operating leases | Proceeds from sale of wholesale receivables | Proceeds from sale of businesses | Transfer of cash balances upon disposition of discontinued/held-for-sale operations | Net investing activity with Financial Services | Cash paid for acquisitions | Cash recognized on initial consolidation of joint ventures | Other | Net cash (used in)/provided by investing activities | Cash flows from financing activities of continuing operations | Cash dividends | Net sales/(purchases) of Common Stock | Changes in short-term debt | Proceeds from issuance of other debt | Principal payments on other debt | Net financing activity with Automotive | Other | Net cash (used in)/provided by financing activities | Effect of exchange rate changes on cash | Net change in intersector receivables/payables and other liabilities | Net increase/(decrease) in cash and cash equivalents from continuing operations | Cash from discontinued operations | Cash flows from operating activities of discontinued operations | Cash flows from investing activities of discontinued operations | Cash flows from financing activities of discontinued operations | Net increase/(decrease) in cash and cash equivalents | Cash and cash equivalents at January 1 | Cash and cash equivalents of discontinued/held-for-sale operations at January 1 | Net increase/(decrease) in cash and cash equivalents | Less: cash and cash equivalents of discontinued/held-for-sale operations at December 31 | Cash and cash equivalents at December 31 | Years Ended December 31, | 2016 | United States - Financing Share | Retail installment and lease share of Ford retail sales (excl. Fleet) | Wholesale | Europe - Financing Share(incl. Fleet) | Retail installment and lease share of total Ford sales | Wholesale |


EUROPEAN PAPERS net sales in 2006 were $1.5 billion, compared with $1.4 billion in 2005 and $1.5 billion in 2004.
Sales volumes in 2006 were higher than in 2005 at our Eastern European mills due to stronger market demand.
Average sales price realizations increased in 2006 in both Eastern and Western European markets.
Operating earnings in 2006 rose 20% from 2005, but were 15% below 2004 levels.
The improvement in 2006 compared with 2005


| Land $257,717 | Acquired in-place leases | Assets acquired | Mortgage notes payable | Other liabilities, net of other assets | Liabilities assumed | 198,615 | Investments in unconsolidated joint ventures | Net assets acquired |


For the U. S.  pension plans we use a market-related valuation of assets approach to determine the expected return on assets, which is a component of net periodic benefit cost recognized in the Consolidated Statements of Income.
This approach recognizes 20% of any gains or losses in the current year's value of market-related assets, with the remaining 80% spread over the next four years.
As this approach recognizes gains or losses over a five-year period, the future value of assets and therefore, our net periodic benefit cost will be impacted as previously deferred gains or losses are recorded.
As of December 31, 2013, the market-related value of assets was $1.8 billion.
We do not use the market-related valuation approach to determine the funded status of the U. S.  plans recorded in the Consolidated Statements of Financial Position.
Instead, we record and present the funded status in the Consolidated Statements of Financial Position based on the fair value of the plan assets.
As of December 31, 2013, the fair value of plan assets was $1.9 billion.
Our non-U. S.  plans use fair value to determine expected return on assets.


| Contractual Obligations Total Less Than   One Year More Than   One Year and   Less Than   Three Years More Than   Three Years   and Less   Than Five   Years More Than   Five Years | (In millions) | Future policy benefits | Policyholder account balances | Other policyholder liabilities | Payables for collateral under securities loaned and other transactions | Bank deposits | Short-term debt | Long-term debt | Collateral financing arrangements | Junior subordinated debt securities | Commitments to lend funds | Operating leases | Other | Total |


?
level and volatility of interest or capitalization rates or capital market conditions; ?
loss of hedge accounting treatment for interest rate swaps; ?
the continuation of the good credit of our interest rate swap providers; ?
price volatility, dislocations and liquidity disruptions in the financial markets and the resulting impact on financing; ?
the effect of any rating agency actions on the cost and availability of new debt financing; ?
significant decline in market value of real estate serving as collateral for mortgage obligations; ?
significant change in the mortgage financing market that would cause single-family housing, either as an owned or rental product, to become a more significant competitive product; ?
our ability to continue to satisfy complex rules in order to maintain our status as a REIT for federal income tax purposes, the ability of the Operating Partnership to satisfy the rules to maintain its status as a partnership for federal income tax purposes, the ability of our taxable REIT subsidiaries to maintain their status as such for federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules; ?
inability to attract and retain qualified personnel; ?
cyber liability or potential liability for breaches of our privacy or information security systems; ?
potential liability for environmental contamination; ?
adverse legislative or regulatory tax changes; ?
legal proceedings relating to various issues, which, among other things, could result in a class action lawsuit; ?
compliance costs associated with laws requiring access for disabled persons; and ?
other risks identified in this Annual Report on Form 10-K including under the caption "Item 1A.
Risk Factors" and, from time to time, in other reports we file with the Securities and Exchange Commission, or the SEC, or in other documents that we publicly disseminate.
New factors may also emerge from time to time that could have a material adverse effect on our business.
Except as required by law, we undertake no obligation to publicly update or revise forward-looking statements contained in this Annual Report on Form 10-K to reflect events, circumstances or changes in expectations after the date on which this Annual Report on Form 10-K is filed.


| 2009 2008 2007 | (in millions) | Balance at January 1 | Additions (reductions) based on tax positions related to the current year | Additions for tax positions of prior years | Reductions for tax positions of prior years | Settlements | Balance at December 31 |


| Level 3 | Balance as of January 1, 2015 | Actual return on assets | Purchases, issuances and settlements, net | Balance as of December 31, 2015 |


Principal Financial Group, Inc.  Notes to Consolidated Financial Statements — (continued) 1.
Nature of Operations and Significant Accounting Policies — (continued) revenue associated with the new contract are deferred and amortized over the lifetime of the new contract.
In addition, the existing DPAC, sales inducement costs and unearned revenue balances associated with the replaced contract are written off.
If an internal replacement results in a substantially unchanged contract, the acquisition costs, sales inducements and unearned revenue associated with the new contract are immediately recognized in the period incurred.
In addition, the existing DPAC, sales inducement costs or unearned revenue balance associated with the replaced contract is not written off, but instead is carried over to the new contract.
Long-Term Debt Long-term debt includes notes payable, nonrecourse mortgages and other debt with a maturity date greater than one year at the date of issuance.
Current maturities of long-term debt are classified as long-term debt in our statement of financial position.
Reinsurance We enter into reinsurance agreements with other companies in the normal course of business.
We may assume reinsurance from or cede reinsurance to other companies.
Assets and liabilities related to reinsurance ceded are reported on a gross basis.
Premiums and expenses are reported net of reinsurance ceded.
The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies.
We are contingently liable with respect to reinsurance ceded to other companies in the event the reinsurer is unable to meet the obligations it has assumed.
At December 31, 2009 and 2008, our largest exposures to a single third-party reinsurer in our individual life insurance business was $22.0 billion and $18.5 billion of life insurance in force, representing 14% and 11% of total net individual life insurance in force, respectively.
The financial statement exposure is limited to the reinsurance recoverable related to this single third party reinsurer, which was $26.8 million and $18.1 million at December 31, 2009 and 2008, respectively.
The effects of reinsurance on premiums and other considerations and policy and contract benefits were as follows:


Table 4 COMMON SHAREHOLDER DATA


an adverse development with respect to one claim in 2008 and favorable developments in three cases in 2009.
Other costs were also lower in 2009 compared to 2008, driven by a decrease in expenses for freight and property damages, employee travel, and utilities.
In addition, higher bad debt expense in 2008 due to the uncertain impact of the recessionary economy drove a favorable year-over-year comparison.
Conversely, an additional expense of $30 million related to a transaction with Pacer International, Inc.  and higher property taxes partially offset lower costs in 2009.
Other costs were higher in 2008 compared to 2007 due to an increase in bad debts, state and local taxes, loss and damage expenses, utility costs, and other miscellaneous expenses totaling $122 million.
Conversely, personal injury costs (including asbestos-related claims) were $8 million lower in 2008 compared to 2007.
The reduction reflects improvements in our safety experience and lower estimated costs to resolve claims as indicated in the actuarial studies of our personal injury expense and annual reviews of asbestos-related claims in both 2008 and 2007.
The year-over-year comparison also includes the negative impact of adverse development associated with one claim in 2008.
In addition, environmental and toxic tort expenses were $7 million lower in 2008 compared to 2007.
Non-Operating Items


Table of Contents corporate bond fee plan.
CDS trading volume data are included in Other.
Trading volume data related to DealerAxess ?
bond trading between broker-dealer clients are included in either U. S.  high-grade or Other trading volumes, as appropriate.
The increase in U. S.  high-grade volume was due primarily to an increase in overall market volume as measured by FINRA TRACE, offset by a decline in the Companys estimated market share of total U. S.  high-grade corporate bond volume as reported by FINRA TRACE from 6.6% for the year ended December 31, 2008 to 6.2% for the year ended December 31, 2009.
Estimated FINRA TRACE U. S.  high-grade volume increased by 41.3% from $2,028 billion for the year ended December 31, 2008 to $2,865 billion for the year ended December 31, 2009.
Eurobond volumes increased by 58.7% for the year ended December 31, 2009 compared to the year ended December 31, 2008, primarily due to the improvement in market conditions.
Other volume increased by 16.6% for the year ended December 31, 2009 compared to the year ended December 31, 2008, primarily due to higher highyield and agencies volume, offset by lower credit default swap volume.
Our average variable transaction fee per million for the years ended December 31, 2009 and 2008 was as follows:


| Balance at May 31, 2013 $-28,464 | Utilization of foreign net operating loss carryforwards | Allowance for foreign tax credit carryforward | Other | Balance at May 31, 2014 | Utilization of foreign net operating loss carryforwards | Other | Balance at May 31, 2015 |


| Years Ended December 31, | (in millions) | Weighted-average shares - basic | Effect of dilutive securities | Weighted-average shares - diluted |


| In millions of dollars 2010 2009 2008 % Change 2010 vs. 2009 % Change 2009 vs. 2008 | Commissions and fees | Administration and other fiduciary fees | Investment banking | Principal transactions | Other | Total non-interest revenue | Net interest revenue (including dividends) | Total revenues, net of interest expense | Total operating expenses | Net credit losses | Provision (release) for unfunded lending commitments | Credit reserve build (release) | Provisions for loan losses and benefits and claims | Income from continuing operations before taxes | Income taxes | Income from continuing operations | Net income attributable to noncontrolling interests | Net income | Average assets(in billions of dollars) | Return on assets | Revenues by region | North America | EMEA | Latin America | Asia | Total | Income from continuing operations by region | North America | EMEA | Latin America | Asia | Total | Average loans by region(in billions of dollars) | North America | EMEA | Latin America | Asia | Total |


| Location Property Interest Size (Sq. Ft.) Use | Canonsburg, PA | Houston, TX | Sydney, Australia |


| Benchmark 2009 2008 2007 | WTI crude oil (Dollars per barrel) | Western Canadian Select (Dollars per barrel)(a) | AECO natural gas sales index (Dollars per mmbtu)(b) |


| Price Range | High | 2009 | Quarter ended March 31, 2009 | Quarter ended June 30, 2009 | Quarter ended September 30, 2009 | Quarter ended December 31, 2009 | 2008 | Quarter ended March 31, 2008 | Quarter ended June 30, 2008 | Quarter ended September 30, 2008 | Quarter ended December 31, 2008 |


| Preferred Shares Authorized Par Value Preferred Shares Outstanding | SPS | PSCo |


Notes to the Consolidated Financial Statements On March 18, 2008, PPG completed a public offering of $600 million in aggregate principal amount of its 5.75% Notes due 2013 (the 2013 Notes), $700 million in aggregate principal amount of its 6.65% Notes due 2018 (the 2018 Notes) and $250 million in aggregate principal amount of its 7.70% Notes due 2038 (the 2038 Notes and, together with the 2013 Notes and the 2018 Notes, the Notes).
The Notes were offered by the Company pursuant to its existing shelf registration.
The proceeds of this offering of $1,538 million (net of discount and issuance costs) and additional borrowings of Notes to the Consolidated Financial Statements On March 18, 2008, PPG completed a public offering of $600 million in aggregate principal amount of its 5.75% Notes due 2013 (the Â¡Â°2013 NotesÂ¡Â±), $700 million in aggregate principal amount of its 6.65% Notes due 2018 (the Â¡Â°2018 NotesÂ¡Â±) and $250 million in aggregate principal amount of its 7.70% Notes due 2038 (the Â¡Â°2038 NotesÂ¡Â± and, together with the 2013 Notes and the 2018 Notes, the Â¡Â°NotesÂ¡Â±).
The Notes were offered by the Company pursuant to its existing shelf registration.
The proceeds of this offering of $1,538 million (net of discount and issuance costs) and additional borrowings of $195 million under the ¬650 million revolving credit facility were used to repay existing debt, including certain short-term debt and the amounts outstanding under the ¬1 billion bridge loan.
No further amounts can be borrowed under the ¬1 billion bridge loan.
The discount and issuance costs related to the Notes, which totaled $12 million, will be amortized to interest expense over the respective lives of the Notes.
Short-term debt outstanding as of December 31, 2008 and 2007, was as follows:


dealers on transactional pricing in the marketplace.
The company also agrees to defend its intellectual property and to provide warranty and technical support to the dealer.
The agreement further grants the dealer a non-exclusive license to use the company’s trademarks, service marks and brand names.
In some instances, a separate trademark agreement exists between the company and a dealer.
In exchange for these rights, the agreement obligates the dealer to develop and promote the sale of the company’s products to current and prospective customers in the dealer’s service territory.
Each dealer agrees to employ adequate sales and support personnel to market, sell and promote the company’s products, demonstrate and exhibit the products, perform the company’s product improvement programs, inform the company concerning any features that might affect the safe operation of any of the company’s products and maintain detailed books and records of the dealer’s financial condition, sales and inventories and make these books and records available at the company’s reasonable request.
These sales and service agreements are terminable at will by either party primarily upon 90 days written notice.
Research and Development We place strong emphasis on product-oriented research and development relating to the development of new or improved machines, engines and major components.
In 2017, 2016 and 2015, we spent $1,905 million, $1,951 million and $2,119 million, or 4.2, 5.1 and 4.5 percent of our sales and revenues, respectively, on our research and development programs.
Employment As of December 31, 2017, we employed about 98,400 full-time persons of whom approximately 56,200 were located outside the United States.
In the United States, we employed approximately 42,200 employees, most of whom are at-will employees and, therefore, not subject to any type of employment contract or agreement.
At select business units, certain highly specialized employees have been hired under employment contracts that specify a term of employment, pay and other benefits.


| December 31, 2009In millions 1 Yearor Less 1 Through5 Years After 5Years GrossLoans | Commercial | Real estate projects | Total | Loans with Predetermined rate | Floating or adjustable rate | Total | December 31, 2009 – in millions | Three months or less | Over three through six months | Over six through twelve months | Over twelve months | Total |


| GlobalPayments S&P500 S&PInformationTechnology | May 31, 2011 | May 31, 2012 | May 31, 2013 | May 31, 2014 | May 31, 2015 | May 31, 2016 |


| (dollar amounts in millions) December 31,2018 December 31,2017 | Commercial loans and leases: | Real estate and rental and leasing | Retail trade -1 | Manufacturing | Finance and insurance | Wholesale trade | Health care and social assistance | Accommodation and food services | Professional, scientific, and technical services | Transportation and warehousing | Other services | Mining, quarrying, and oil and gas extraction | Construction | Admin./Support/Waste Mgmt. and Remediation Services | Arts, entertainment, and recreation | Educational services | Utilities | Information | Public administration | Unclassified/Other | Agriculture, forestry, fishing and hunting | Management of companies and enterprises | Total commercial loans and leases by industry category | Automobile | Home Equity | Residential mortgage | RV and marine finance | Other consumer loans | Total loans and leases |


| Fair Value Measurements Using: | In millions | Cash | Money market funds | US government securities | Corporate debt | Common and preferred stocks | Mutual funds | Interest in Collective Funds (a) | Limited partnerships | Other | Total |


| (Dollars in millions) 2012 2011 2010 2009 2008 | Allowance for loan and lease losses, January 1-1 | Loans and leases charged off | Residential mortgage | Home equity | Discontinued real estate | U.S. credit card | Non-U.S. credit card | Direct/Indirect consumer | Other consumer | Total consumer charge-offs | U.S. commercial-2 | Commercial real estate | Commercial lease financing | Non-U.S. commercial | Total commercial charge-offs | Total loans and leases charged off | Recoveries of loans and leases previously charged off | Residential mortgage | Home equity | Discontinued real estate | U.S. credit card | Non-U.S. credit card | Direct/Indirect consumer | Other consumer | Total consumer recoveries | U.S. commercial-3 | Commercial real estate | Commercial lease financing | Non-U.S. commercial | Total commercial recoveries | Total recoveries of loans and leases previously charged off | Net charge-offs | Provision for loan and lease losses | Write-offs of home equity PCI loans | Other-4 | Allowance for loan and lease losses, December 31 | Reserve for unfunded lending commitments, January 1 | Provision for unfunded lending commitments | Other-5 | Reserve for unfunded lending commitments, December 31 | Allowance for credit losses, December 31 |


| December 31, 2011 | Less than 12 months | Description of Securities | (in millions, except number of securities) | Corporate debt securities | Residential mortgage backed securities | Commercial mortgage backed securities | Asset backed securities | State and municipal obligations | Foreign government bonds and obligations | Total | December 31, 2010 | Less than 12 months | Description of Securities | (in millions, except number of securities) | Corporate debt securities | Residential mortgage backed securities | Commercial mortgage backed securities | Asset backed securities | State and municipal obligations | Total | Year Ended December 31, | 2010 | (Amounts in thousands except share and per share amounts) | Shares issued | Issuance price ranges | Issuance proceeds |


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


Safety – Operating a safe railroad benefits our employees, our customers, our shareholders, and the communities we serve.
We will continue using a multi-faceted approach to safety, utilizing technology, risk assessment, quality control, training and employee engagement, and targeted capital investments.
We will continue using and expanding the deployment of Total Safety Culture throughout our operations, which allows us to identify and implement best practices for employee and operational safety.
Derailment prevention and the reduction of grade crossing incidents are critical aspects of our safety programs.
We will continue our efforts to increase rail defect detection; improve or close crossings; and educate the public and law enforcement agencies about crossing safety through a combination of our own programs (including risk assessment strategies), various industry programs and local community activities across our network.  ?
Network Operations – We will continue focusing on our six critical initiatives to improve safety, service and productivity during 2013.
We are seeing solid contributions from reducing variability, continuous improvements, and standard work.
Resource agility allows us to respond quickly to changing market conditions and network disruptions from weather or other events.
The Railroad continues to benefit from capital investments that allow us to build capacity for growth and harden our infrastructure to reduce failure.  ?
Fuel Prices – Uncertainty about the economy makes projections of fuel prices difficult.
We again could see volatile fuel prices during the year, as they are sensitive to global and U. S.  domestic demand, refining capacity, geopolitical events, weather conditions and other factors.
To reduce the impact of fuel price on earnings, we will continue seeking cost recovery from our customers through our fuel surcharge programs and expanding our fuel conservation efforts.  ?
Capital Plan – In 2013, we plan to make total capital investments of approximately $3.6 billion, including expenditures for Positive Train Control (PTC), which may be revised if business conditions warrant or if new laws or regulations affect our ability to generate sufficient returns on these investments.
(See further discussion in this Item 7 under Liquidity and Capital Resources – Capital Plan. )


| 2008 2007 -1 | Deferred tax liabilities relating to: | Difference between book and tax basis of property | Accruals currently deductible | Total liabilities | Deferred tax assets relating to: | Difference between book and tax basis of property | Accruals not currently deductible | Deferred taxes on FIN 48 state tax and interest impact | Net operating loss carryforwards, state taxes | Other credits and carryforwards | Capital loss carryforwards | Total assets | Valuation allowance | Net deferred tax asset | Net deferred tax assets (liabilities) |


Note 5.
Fair Value Measurements The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Financial assets are marked to bid prices and financial liabilities are marked to offer prices.
Fair value measurements do not include transaction costs.
The firm measures certain financial assets and financial liabilities as a portfolio (i. e. , based on its net exposure to market and/or credit risks).
The best evidence of fair value is a quoted price in an active market.
If quoted prices in active markets are not available, fair value is determined by reference to prices for similar instruments, quoted prices or recent transactions in less active markets, or internally developed models that primarily use market-based or independently sourced parameters as inputs including, but not limited to, interest rates, volatilities, equity or debt prices, foreign exchange rates, commodity prices, credit spreads and funding spreads (i. e. , the spread, or difference, between the interest rate at which a borrower could finance a given financial instrument relative to a benchmark interest rate).
U. S.  GAAP has a three-level fair value hierarchy for disclosure of fair value measurements.
The fair value hierarchy prioritizes inputs to the valuation techniques used to measure fair value, giving the highest priority to level 1 inputs and the lowest priority to level 3 inputs.
A financial instruments level in the fair value hierarchy is based on the lowest level of input that is significant to its fair value measurement.
The fair value hierarchy is as follows: Level 1.
Inputs are unadjusted quoted prices in active markets to which the firm had access at the measurement date for identical, unrestricted assets or liabilities.
Level 2.
Inputs to valuation techniques are observable, either directly or indirectly.
Level 3.
One or more inputs to valuation techniques are significant and unobservable.


| Years Ended March 31, Change | (Dollars in millions) | Distribution Solutions | Direct distribution & services | Sales to customers’ warehouses | Total U.S. pharmaceutical distribution & services | Canada pharmaceutical distribution & services | Medical-Surgical distribution & services | Total Distribution Solutions | Technology Solutions | Services | Software & software systems | Hardware | Total Technology Solutions | Total Revenues |


| Total Less Than 1 Year 1 - 3 Years 4 - 5 Years After 5 Years | Long-term debt (including interest) | Customer deposits | FHLB borrowings | Retirement plan contribution | Acquisition payments | Contingent acquisition payments | Media advertising purchase obligation | Capital lease obligations | Operating leases | Total contractual cash obligations |


| Fiscal Year Ended | October 28, 2018 | Perishable | Poultry | Shelf-stable | Miscellaneous | Total |


| 2016 2015 2014 | Number ofShares andUnits | Outstanding at January 1 | Granted | Released-1 | Forfeited | Outstanding at December 31-2 |


| Basel III Regulatory Capital Levels | January 1,2015 | Common equity tier 1 risk-based capital ratio | Tier 1 risk-based capital ratio | Total risk-based capital ratio |


| Accruals atJanuary 1,2006 2006AdditionalCharges 2006 -1 Adjustments 2006 Amount Used Accruals atDecember 31,2006 | Exit costs—lease terminations | Employee separation costs | $103 |


Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis 4 combination.
Consistent with the terms of the stipulated settlement in the business combination proceeding, electric customers of Entergy Louisiana will realize customer credits associated with the business combination; accordingly, in October 2015, Entergy recorded a regulatory liability of $107 million ($66 million net-of-tax).
These costs are being amortized over a nine-year period beginning December 2015.
See Note 2 to the financial statements for further discussion of the business combination and customer credits.
The volume/weather variance is primarily due to the effect of more favorable weather during the unbilled period and an increase in industrial usage, partially offset by the effect of less favorable weather on residential sales.
The increase in industrial usage is primarily due to expansion projects, primarily in the chemicals industry, and increased demand from new customers, primarily in the industrial gases industry.
The Louisiana Act 55 financing savings obligation variance results from a regulatory charge for tax savings to be shared with customers per an agreement approved by the LPSC.
The tax savings results from the 2010-2011 IRS audit settlement on the treatment of the Louisiana Act 55 financing of storm costs for Hurricane Gustav and Hurricane Ike.
See Note 3 to the financial statements for additional discussion of the settlement and benefit sharing.
Included in Other is a provision of $23 million recorded in 2016 related to the settlement of the Waterford 3 replacement steam generator prudence review proceeding, offset by a provision of $32 million recorded in 2015 related to the uncertainty at that time associated with the resolution of the Waterford 3 replacement steam generator prudence review proceeding.
See Note 2 to the financial statements for a discussion of the Waterford 3 replacement steam generator prudence review proceeding.
Entergy Wholesale Commodities Following is an analysis of the change in net revenue comparing 2016 to 2015.


| Year Ended December 31, | (in thousands) | Oil and gas mineral interests, equipment and facilities | Proved property acquisition costs | Unproved property acquisition costs | Downstream projects |


The combined amount of accrued interest and penalties related to tax positions taken on our tax returns were approximately $24.6 million and $23.6 million for fiscal 2018 and 2017, respectively.
These amounts were included in long-term income taxes payable in their respective years.
We file income tax returns in the United States on a federal basis and in many U. S.  state and foreign jurisdictions.
We are subject to the continual examination of our income tax returns by the IRS and other domestic and foreign tax authorities.
Our major tax jurisdictions are Ireland, California and the United States.
For Ireland, California and the United States, the earliest fiscal years open for examination are 2008, 2014 and 2015, respectively.
We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from these examinations.
We believe such estimates to be reasonable; however, there can be no assurance that the final determination of any of these examinations will not have an adverse effect on our operating results and financial position.
The timing of the resolution of income tax examinations is highly uncertain as are the amounts and timing of tax payments that are part of any audit settlement process.
These events could cause large fluctuations in the balance of short-term and longterm assets, liabilities and income taxes payable.
We believe that within the next 12 months, it is reasonably possible that either certain audits will conclude or statutes of limitations on certain income tax examination periods will expire, or both.
Given the uncertainties described above, we can only determine a range of estimated potential effect in underlying unrecognized tax benefits ranging from $0 to approximately $45 million.


| Maximum Loss | VIE Type | CCRC OpCo | VIE tenants—operating leases | VIE tenants—DFLs | Loan—senior secured | CMBS |


International Networks


| Year Ended December 31, 2008 | (Dollars in millions) | Card income | Equity investment income | Trading account profits (losses) | Mortgage banking income (loss)(2) | Other income (loss) | Total | Year Ended December 31, 2007 | Card income | Equity investment income | Trading account profits (losses) | Mortgage banking income (loss)(2) | Other income (loss) | Total |


| GMWB Macro | Equity Market Return | Potential Net Fair Value Impact | Interest Rates | Potential Net Fair Value Impact | Implied Volatilities | Potential Net Fair Value Impact |


| In millions of dollars 2011 2012 2013 2014 2015 Thereafter | Bank | Non-bank | Parent company | Total |


| 2005 2004 2003 | Beginning balance as of January 1, | Additions and revisions in estimated cash flows, net of settlements | Accretion expense | Liability assumed in merger with SpectraSite, Inc. | Increase due to change in accounting principle | Balance as of December 31, |


| As of December 31, 2015 As of December 31, 2014 | (in millions) | Executive Retirement Plan | Guidant Retirement Plan (frozen) | Guidant Supplemental Retirement Plan (frozen) | International Retirement Plans | $131 |


| Type of Case Number of Cases Pending as of February 4, 2019 Number of Cases Pending as of February 9, 2018 Number of Cases Pending as of December 31, 2016 | Individual Smoking and Health Cases | Smoking and Health Class Actions | Health Care Cost Recovery Actions | Label-Related Class Actions | Individual Label-Related Cases | Public Civil Actions | Date | December 31, 2013 | December 31, 2014 | December 31, 2015 | December 31, 2016 | December 31, 2017 | December 31, 2018 | Payments Due | (in millions) | Long-term debt-1 | Interest on borrowings-2 | Operating leases-3 | Purchase obligations-4: | Inventory and production costs | Other | 6,846 | Other long-term liabilities-5 | $51,162 | For the Years Ended December 31, | (in millions) | Net revenues: | European Union | Eastern Europe | Middle East & Africa | South & Southeast Asia | East Asia & Australia | Latin America & Canada | Net revenues |


D. R.  HORTON, INC.  AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company’s revolving credit facility imposes restrictions on its operations and activities, including requiring the maintenance of a maximum allowable ratio of debt to tangible net worth and a borrowing base restriction if the Company’s ratio of debt to tangible net worth exceeds a certain level.
These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly.
A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.
The credit agreement governing the facility and the indenture governing the senior notes also impose restrictions on the creation of secured debt and liens.
At September 30, 2017, the Company was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and public debt obligations.
The Company has an automatically effective universal shelf registration statement filed with the Securities and Exchange Commission (SEC) in August 2015, registering debt and equity securities that the Company may issue from time to time in amounts to be determined.
On May 15, 2017, the Company repaid $350 million principal amount of its 4.75% senior notes, which were due on that date.
The key terms of the Company’s senior notes outstanding as of September 30, 2017 are summarized below.


| Years ended December 31, | 2012 | Stock-Settled Awards: | Awards granted | Weighted-average grant-date fair value (per award) | Total fair value of vested awards distributed | Cash-Settled Awards: | Awards granted | Weighted-average grant-date fair value (per award) | Total fair value of vested awards distributed | Performance-Based Awards: | Awards granted | Weighted-average grant-date fair value (per award) | Total fair value of vested awards distributed |


| January 1, 2019 -December 31, 2019 January 1, 2018 -December 31, 2018 January 1, 2017 -December 31, 2017 January 1, 2016 -December 31, 2016 | Total Board authorized share repurchase amount ($ in billions) | Total number of shares repurchased under this authorization as of the period end (in millions) |


Principal Financial Group, Inc.  Notes to Consolidated Financial Statements  (continued) 6.
Investments  (continued) consist primarily of $2,192.3 million in unrealized losses within the mortgage-backed and other asset-backed securities sector at December 31, 2008.
The average price of the mortgage-backed and other asset-backed securities sector is 52 and the average credit rating is AA-.
The losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.
Because we have the ability and intent to hold the available-for-sale securities with unrealized losses until a recovery of fair value, which may be maturity, we do not consider these investments to be other-than-temporarily impaired at December 31, 2008.


PART III ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information regarding our Code of Conduct, The Spirit and The Letter, and Code of Ethical Conduct Certificates for our principal executive officer, principal financial officer and principal accounting officer are described in Item 1.  Business of this Annual Report.
Information concerning our directors is set forth in the sections entitled "Proposal No.1, Election of Directors - Board Nominees for Directors," and "Corporate Governance - Committees of the Board" in our Definitive Proxy Statement for the 2018 Annual Meeting of Stockholders to be filed with the SEC pursuant to the Exchange Act within 120 days of the end of our fiscal year on December 31, 2017 ("Proxy Statement"), which sections are incorporated herein by reference.
For information regarding our executive officers, see "Item 1.  Business - Executive Officers of Baker Hughes" in this annual report on Form 10-K.  Additional information regarding compliance by directors and executive officers with Section 16(a) of the Exchange Act is set forth under the section entitled "Section 16(a) Beneficial Ownership Reporting Compliance" in our Proxy Statement, which section is incorporated herein by reference.
ITEM 11.
EXECUTIVE COMPENSATION Information for this item is set forth in the following sections of our Proxy Statement, which sections are incorporated herein by reference: "Compensation Discussion and Analysis," "Director Compensation," "Compensation Committee Interlocks and Insider Participation" and "Compensation Committee Report. "
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information concerning security ownership of certain beneficial owners and our management is set forth in the sections entitled "Stock Ownership of Certain Beneficial Owners" and “Stock Ownership of Section 16(a) Director and Executive Officers”) in our Proxy Statement, which sections are incorporated herein by reference.
We permit our employees, officers and directors to enter into written trading plans complying with Rule 10b5-1 under the Exchange Act.
Rule 10b5-1 provides criteria under which such an individual may establish a prearranged plan to buy or sell a specified number of shares of a company's stock over a set period of time.
Any such plan must be entered into in good faith at a time when the individual is not in possession of material, nonpublic information.
If an individual establishes a plan satisfying the requirements of Rule 10b5-1, such individual's subsequent receipt of material, nonpublic information will not prevent transactions under the plan from being executed.
Certain of our officers have advised us that they have and may enter into stock sales plans for the sale of shares of our Class A common stock which are intended to comply with the requirements of Rule 10b5-1 of the Exchange Act.
In addition, the Company has and may in the future enter into repurchases of our Class A common stock under a plan that complies with Rule 10b5-1 or Rule 10b-18 of the Exchange Act.
Equity Compensation Plan Information The information in the following table is presented as of December 31, 2017 with respect to shares of our Class A common stock that may be issued under our LTI Plan which has been approved by our stockholders (in millions, except per share prices).


NOTE 2: BUSINESS COMBINATIONS AND DISPOSALS We periodically acquire the businesses of franchisees and account for the transaction as a business combination.
We also periodically sell company-owned offices to franchisees and record a gain if the sale qualifies as a divestiture for accounting purposes and upon determination that collection of the sales proceeds is reasonably assured.
Gains are reported in operating income because the transactions are considered a recurring part of our business, and are included as a reduction of selling, general and administrative expenses in our consolidated income statements.
During fiscal years 2010 and 2009, we sold certain offices to existing franchisees for cash proceeds of $65.7 million and $16.9 million, respectively, and recorded gains on these sales of $49.0 million and $14.9 million, respectively.
Effective November 3, 2008, we acquired the assets and franchise rights of our last major independent franchise operator for an aggregate purchase price of $279.2 million.
Goodwill recognized on this transaction is included in the Tax Services segment and is deductible for tax purposes.
During fiscal years 2010, 2009 and 2008, we made other acquisitions, which were accounted for as purchases with cash payments totaling $10.3 million, $12.6 million and $21.4 million, respectively.
Operating results of the acquired businesses, which are not material, are included in the consolidated income statements since the date of acquisition.
During fiscal years 2010, 2009 and 2008 we also paid $0.2 million, $1.9 million and $3.6 million, respectively, for contingent payments on prior acquisitions.


| December 31, | 2006 | Amount | (In millions) | Office | Apartments | Retail | Developmental joint ventures | Real estate investment funds | Industrial | Land | Agriculture | Other | Total |


| December 31,2008 December 31,2009 December 31,2010 December 31,2011 December 31,2012 December 31,2013 | DISCA | DISCB | DISCK | S&P 500 | Peer Group |


| Measurement PointDecember 31 Booking Holdings Inc. NASDAQComposite Index S&P 500Index RDG InternetComposite | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 |


Components of income tax expense are presented below:


| December 31, Change from 2016-2015 | (dollars in millions) | Commercial | Commercial real estate | Leases | Total commercial | Residential mortgages | Home equity loans | Home equity lines of credit | Home equity loans serviced by others | Home equity lines of credit serviced by others | Automobile | Student | Credit cards | Other retail | Total retail | Total loans and leases | December 31, 2016 | (in millions) | Commercial | Commercial real estate | Leases | Total commercial | Residential mortgages | Home equity loans | Home equity lines of credit | Home equity loans serviced by others | Home equity lines of credit serviced by others | Automobile | Student | Credit cards | Other retail | Total retail | Total loans and leases | Loans and leases due after one year at fixed interest rates | Loans and leases due after one year at variable interest rates |


| Year ended December 31, | (Dollars in thousands) | Average cash and due from banks | Average federal funds sold, securities purchased under agreements to resell and other short-term investmentsecurities | Average cash and cash equivalents | Percentage of total average assets | Net cash provided by operating activities | Net cash used for investing activities | Net cash provided by financing activities | Net (decrease) increase in cash and cash equivalents | December 31, | 2010 | SVB Financial: | Total risk-based capital ratio | Tier 1 risk-based capital ratio | Tier 1 leverage ratio | Tangible common equity to tangible assets ratio -1 | Tangible common equity to risk-weighted assets ratio -1 | Bank: | Total risk-based capital ratio | Tier 1 risk-based capital ratio | Tier 1 leverage ratio | Tangible common equity to tangible assets ratio -1 | Tangible common equity to risk-weighted assets ratio -1 |


In September and October 2008, Lehman Brothers Holdings Inc. , or Lehman Brothers, and certain of its affiliates filed for bankruptcy or other insolvency proceedings.
While we had no unsecured financial exposure to Lehman Brothers or its affiliates, we indemnified certain customers in connection with these and other collateralized repurchase agreements with Lehman Brothers entities.
In the then current market environment, the market value of the underlying collateral had declined.
During the third quarter of 2008, to the extent these declines resulted in collateral value falling below the indemnification obligation, we recorded a reserve to provide for our estimated net exposure.
The reserve, which totaled $200 million, was based on the cost of satisfying the indemnification obligation net of the fair value of the collateral, which we purchased during the fourth quarter of 2008.
The collateral, composed of commercial real estate loans which are discussed in note 5, is recorded in loans and leases in our consolidated statement of condition.


Net cash used in investing activities of $211.7 million in 2016 consisted primarily of capital expenditures of $176.1 million and $41.3 million for the acquisition of intangible assets.
Net cash used in investing activities of $316.1 million in 2015 consisted primarily of a $320.1 million net payment associated with the acquisition of CardiAQ, and capital expenditures of $102.7 million, partially offset by net proceeds from investments of $119.6 million.
Net cash used in investing activities of $633.0 million in 2014 consisted primarily of net purchases of investments of $527.4 million and capital expenditures of $82.9 million.


WESTROCK COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ?
(Continued) 97 In the normal course of business, we evaluate our potential exposure to MEPPs, including with respect to potential withdrawal liabilities.
During fiscal 2018, we submitted formal notification to withdraw from PIUMPF and recorded an estimated withdrawal liability of $180.0 million.
The estimated withdrawal liability assumes payment over 20 years, discounted at a credit adjusted risk-free rate of 3.83%.
We expect PIUMPF?s demand related to the withdrawal to include both a payment for withdrawal liability and for our proportionate share of PIUMPF?s accumulated funding deficiency.
We reserve the right to challenge any portion of the demand, including any portion related to the accumulated funding deficiency.
The estimated withdrawal liability noted above excludes the potential impact of a future mass withdrawal of other employers from PIUMPF, which is not considered probable or reasonably estimable at this time.
Due to the absence of specific information regarding matters such as PIUMPF?s current financial situation, our estimate is subject to revision.
In addition, in fiscal 2018, we submitted formal notification to withdraw from Central States and recorded an estimated withdrawal liability of $4.2 million on a discounted basis.
It is reasonably possible that we may incur withdrawal liabilities with respect to certain other MEPPs in connection with such withdrawals.
Our estimate of any such withdrawal liability, both individually and in the aggregate, is not material for the remaining plans in which we participate.
At September 30, 2018 and September 30, 2017, we had withdrawal liabilities recorded of $247.8 million and $60.1 million, respectively.
In addition to the contributions presented in the table below, for fiscal 2018, 2017 and 2016 we accrued $6.0 million, $1.9 million and $2.1 million, respectively, related to withdrawal liabilities.
The impact of future withdrawal liabilities, future funding obligations or increased contributions may be material to our results of operations, cash flows and financial condition and the trading price of our Common Stock.
Approximately 43% of our employees are covered by CBAs or similar agreements, of which approximately 8% are covered by CBAs or similar agreements that have expired and another 6% are covered by CBAs or similar agreements that expire within one year.
The following table lists our participation in our multiemployer and other plans that are individually significant for the years ended September 30 (in millions):


Price Range of Common Stock Our common stock trades on the New York Stock Exchange under the ticker symbol “ICE”.
On February 3, 2015, our common stock traded at a high of $211.57 per share and a low of $208.59 per share.
The following table sets forth the quarterly high and low sale prices for the periods indicated for our common stock on the New York Stock Exchange.


| Years ended December 31, 2012 2011 2010 | Revenues | % of total company revenues | Earnings from operations | Operating margins | Contractual backlog | Unobligated backlog |


| 2014 2013 | Notional Amount | Instruments designated as accounting hedges: | Foreign exchange contracts | Interest rate contracts | Instruments not designated as accounting hedges: | Foreign exchange contracts | Year ended December 31In millions | Net interest income | Noninterest income | Total customer-related trading revenue | Securities underwriting and trading (a) | Foreign exchange | Financial derivatives and other | Total customer-related trading revenue |


THE INTERPUBLIC GROUP OF COMPANIES, INC.  AND SUBSIDIARIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — (Continued) (Amounts in Millions, Except Per Share Amounts) 2006 Compared to 2005 Salaries and related expenses decreased during 2006 due to net divestitures, primarily from the sale of several businesses at IAN during 2005, partially offset by changes in foreign currency exchange rates and a slight organic increase.
Total salaries and related expenses as a percentage of revenue remained flat as a result of the decline in revenue.
Key factors behind the change in salaries and related expenses from the prior year were a significant reduction in severance expense of $63.7, offset by an increase in long-term incentive awards and bonus awards of $67.2.
Expenses related to incentive awards increased in 2006 due to long-term equity based awards granted in June 2006 and the full year impact of awards granted in August 2005, while expenses related to bonus awards increased primarily due to performance.
The slight organic increase reflected in CMG and Corporate was offset by a decrease at IAN and was primarily the result of higher salary costs to upgrade our talent and to support revenue initiatives and technology-related projects, increased incentive awards and bonus awards.
This was partially offset by a decrease in severance expense, primarily at international locations within IAN, which we incurred in 2005 due to client losses.2005 Compared to 2004 Salaries and related expenses increased primarily due to an organic increase and changes in foreign currency exchange rates, partially offset by net divestitures, primarily at McCann during 2005 and the sale of the Motorsports business during 2004.
The organic increase was primarily the result of higher severance expense, largely recorded in the fourth quarter of 2005 for international headcount reductions within IAN as a result of client losses, the hiring of additional creative talent to enable future revenue growth, additional staff to address weaknesses in our accounting and control environment, and to develop shared services at certain locations.
Office and General Expenses Office and general expenses include rent expense, professional fees, expenses attributable to the support of client service professional staff, depreciation and amortization costs, bad debt expense relating to accounts receivable, the costs associated with the development of a shared services center and implementation costs associated with upgrading our information technology infrastructure.
Office and general expenses also include costs directly attributable to client engagements.


| (Amounts in millions) 2012 2011 Change | External net sales | Intersegment net sales | Segment net sales | Cost of goods sold | Gross profit | Operating expenses | Segment operating earnings |


| Year Ended December 31, | (dollars in millions) | Operating Data: | Net interest income | Noninterest income | Total revenue | Provision for credit losses | Noninterest expense | Noninterest expense, excluding goodwill impairment-1 | (Loss) income before income tax (benefit) expense | Income tax (benefit) expense | Net (loss) income | Net income, excluding goodwill impairment-1 | Return on average tangible common equity-1 | Return on average tangible common equity, excluding goodwill impairment-1 |


| Year ended December 31,(in millions) 2013 2012 2011 | Repurchase liability at beginning of period | Net realized losses(a)(b) | Reclassification tolitigation reserve(c) | Provision for repurchase losses(d) | Repurchase liability at end of period |


| (dollar amounts in thousands) Rate Principal amount of subordinatednote/ debenture issued to trust-1 Investment in unconsolidated subsidiary | Huntington Capital I | Huntington Capital II | Huntington Capital III | BancFirst Ohio Trust Preferred | Sky Financial Capital Trust I | Sky Financial Capital Trust II | Sky Financial Capital Trust III | Sky Financial Capital Trust IV | Prospect Trust I | Total |


On October 5, 2015, we paid €6.7 million ($7.5 million equivalent as of October 5, 2015) to acquire the remaining shares of Realex after which we own 100% of the outstanding shares.
Ezidebit On October 10, 2014, we completed the acquisition of 100% of the outstanding stock of Ezi Holdings Pty Ltd (¡°Ezidebit¡±) for AUD302.6 million in cash ($266.0 million equivalent as of the acquisition date).
This acquisition was funded by a combination of cash on hand and borrowings on our revolving credit facility.
Ezidebit is a leading integrated payments company focused on recurring payments verticals in Australia and New Zealand.
Ezidebit markets its services through a network of integrated software vendors and direct channels to numerous vertical markets.
We acquired Ezidebit to establish a direct distribution channel in Australia and New Zealand and to further enhance our existing integrated solutions offerings.
This transaction was accounted for as a business combination.
We recorded the assets acquired and liabilities assumed at their estimated fair values as of the acquisition date.
Certain adjustments to estimated fair value were recorded during the year ended May 31, 2016 based on new information obtained that existed as of the acquisition date.
During the measurement period, management determined that deferred income taxes should be reflected for certain nondeductible intangible assets.
Measurement-period adjustments, which are reflected in the table below, had no material effect on earnings or other comprehensive income for the current or prior periods.
The revenue and earnings of Ezidebit
for which $92 million of the fees are offset in incentive compensation expense in accordance with the terms of the contractual agreements.
Certain of these incentive fees are subject to positive or negative future adjustment based on cumulative fund performance in relation to specified benchmarks.
The increase also reflects $68 million greater revenues from proprietary investing mainly due to appreciation and gains on sale of real estate related investments, including income of $12 million relating to a single investment in the current period and $58 million relating to two sale transactions in the prior year.
Asset management fees increased $88 million mainly from institutional and retail customer assets as a result of increased asset values due to market appreciation and net asset flows.


The other intangible assets, which primarily consist of customer relationships and trade name, have a weighted average useful life of 13.7 years.
Approximately $57.9 million of the acquired goodwill is deductible for tax purposes.
The purchase price allocation is preliminary, subject to completion of valuation analyses, including, for example, refining assumptions used to calculate the fair value of other intangible assets.
The purchase agreement contains provisions under which there may be future consideration paid or received related to the subsequent determination of working capital that existed at the acquisition date.
Any payments or receipts for provisional amounts for working capital will be recorded as an adjustment to goodwill when paid or received.
The results of operations and financial condition of Concentra have been included in our consolidated statements of income and consolidated balance sheets from the acquisition date.
In connection with the acquisition, we recognized approximately $14.9 million of acquisition-related costs, primarily banker and other professional fees, in selling, general and administrative expense.
The proforma financial information assuming the acquisition had occurred as of January 1, 2009 was not material to our results of operations.


| Average Seating  Capacity Average  Age  (Years) Owned Leased Total | Airbus A319 | Airbus A320 | Airbus A321 | AirbusA330-200 | AirbusA330-300 | Boeing737-800 | Boeing757-200 | Boeing767-300ER | Boeing777-200ER | Boeing777-300ER | Boeing787-8 | Boeing787-9 | Embraer 190 | McDonnell DouglasMD-80 | Total |


At December 31, 2011, total assets were $2.1 trillion, a decrease of $136 billion, or six percent, from December 31, 2010.
Average total assets decreased $143 billion in 2011.
At December 31, 2011, total liabilities were $1.9 trillion, a decrease of $138 billion, or seven percent, from December 31, 2010.
Average total liabilities decreased $139 billion in 2011.
Period-end balance sheet amounts may vary from average balance sheet amounts due to liquidity and balance sheet management activities, primarily involving our portfolios of highly liquid assets, that are designed to ensure the adequacy of capital while enhancing our ability to manage liquidity requirements for the Corporation and for our customers, and to position the balance sheet in accordance with the Corporation’s risk appetite.
The execution of these activities requires the use of balance sheet and capital-related limits including spot, average and risk-weighted asset limits, particularly in our trading businesses.
One of our key metrics, Tier 1 leverage ratio, is calculated based on adjusted quarterly average total assets.
(R) Income Taxes We file a consolidated federal income tax return for a majority of our subsidiaries.
Certain subsidiaries are required to file separate partnership or corporate federal income tax returns.
Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax purposes, measured by applying currently enacted tax laws.
A deferred tax asset is recognized if it is more likely than not that a benefit will be realized.
Changes in tax laws and tax rates are reflected in the income tax provision in the period in which the changes are enacted.
We recognize tax liabilities when, despite our belief that our tax return positions are supportable, we believe that certain positions may not be fully sustained upon review by tax authorities.
Benefits from tax positions are measured at the highest tax benefit that is greater than 50% likely of being realized upon settlement.
The current portion of tax liabilities is included in accrued income taxes and any noncurrent portion of tax liabilities is included in deferred revenue and other liabilities.
To the extent that the final tax outcome of these matters is different from the amounts recorded, the differences impact income tax expense in the period in which the determination is made.
Interest and penalties related to income tax matters are included in selling, general and administrative expenses.
(S) Net Earnings Per Share Basic net earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding.
Diluted net earnings per share is computed by dividing net earnings by the sum of the weighted average number of shares of common stock outstanding and dilutive potential common stock.
(T) Risks and Uncertainties We sell used and new vehicles.
The diversity of our customers and suppliers and the highly fragmented nature of the U. S.  automotive retail market reduce the risk that near term changes in our customer base, sources of supply or competition will have a severe impact on our business.
However, unanticipated events could have an adverse effect on our business, results of operations and financial condition.
(U) Reclassifications Certain prior year amounts have been reclassified to conform to the current year’s presentation.3.
CARMAX AUTO FINANCE INCOME


| 2014 2013 2012 | Provision for income taxes | Effective tax rate |


| Less than 12 Months 12 Months or Greater Fair Value Total | Fair Value | Debt securities | Equity securities | Total |


| Reporting Unit($ inmillions) Fair Value as a % of Allocated Book Value Goodwill(post-impairment) | North America Cards | International Cards | Asia Consumer Banking | Securities & Banking | Global Transaction Services | North America GWM | International GWM |


| Total cost of shares purchased Total number of shares purchased Average price paid per share | 2009 | 2008 | 2007 | Number of shares of Smith common stock outstanding as of the acquisition date | Number of Smith unvested restricted stock units outstanding as of the acquisition date | 252 | Multiplied by the exchange ratio | Equivalent Schlumberger shares of common stock issued | Schlumberger closing stock price on August 27, 2010 | Common stock equity consideration | Fair value of Schlumberger equivalent stock options issued | Total fair value of the consideration transferred | Cash | Accounts receivable | Inventory-1 | Fixed assets | Intangible assets: | Tradenames (weighted-average life of 25 years) | Technology (weighted-average life of 16 years) | Customer relationships (weighted average life of 23 years) | Other assets | Accounts payable and accrued liabilities | Long-term debt-2 | Deferred taxes-3 | Other liabilities | sub-total | Less: | Investment in M-I SWACO-4 | Noncontrolling interests | Total identifiable net assets | Gain on investment in M-I SWACO-4 | Goodwill-5 | Total consideration transferred |


| Year Ended December 31, | 2015 | Yield-1 | ($ in millions) | Fixed maturities | Trading account assets supporting insurance liabilities | Equity securities | Commercial mortgage and other loans | Policy loans | Short-term investments and cash equivalents | Other investments | Gross investment income before investment expenses | Investment expenses | Investment income after investment expenses | Investment results of other entities and operations-2 | Total investment income |


Automobile Within auto loans, $11.4 billion resided in the indirect auto portfolio, $1.4 billion in the direct auto portfolio and $.1 billion in securitized portfolios as of December 31, 2017.
Comparable amounts as of December 31, 2016 were $10.8 billion, $1.3 billion and $.3 billion, respectively.
The indirect auto portfolio relates to loan applications generated from franchised automobile dealers.
This business is strategically aligned with our core retail business.
We continue to focus on a strong origination profile as evidenced by a weighted-average loan origination FICO score during 2017 of 745 for indirect auto loans and 767 for direct auto loans.
The weighted-average term of loan originations during 2017 was 72 months for indirect auto loans and 62 months for direct auto loans.
We offer both new and used automobile financing to customers through our various channels.
The portfolio was composed of 54% new vehicle loans and 46% used vehicle loans at December 31, 2017.
The auto loan portfolio's performance is measured monthly, including updated collateral values that are obtained monthly and updated FICO scores that are obtained at least quarterly.
For internal reporting and risk management, we analyze the portfolio by product channel and product type and regularly evaluate default and delinquency experience.
As part of our overall risk analysis and monitoring, we segment the portfolio by loan structure, collateral attributes and credit metrics which include FICO score, LTV and term.
Nonperforming Assets and Loan Delinquencies Nonperforming Assets Nonperforming assets include nonperforming loans and leases for which ultimate collectability of the full amount of contractual principal and interest is not probable and include nonperforming troubled debt restructurings (TDRs), other real estate owned (OREO), foreclosed and other assets.
Loans held for sale, certain government insured or guaranteed loans, purchased impaired loans and loans accounted for under the fair value option are excluded from nonperforming loans.
Additional information regarding our nonperforming loans and nonaccrual policies is included in Note 1 Accounting Policies in the Notes To Consolidated Financial Statements in Item 8 of this report.
A summary of the major categories of nonperforming assets are presented in Table 18.
See Note 3 Asset Quality in the Notes To Consolidated Financial Statements in Item 8 of this Report for further detail of nonperforming asset categories.


| As of December | $ in millions | Additional collateral or termination payments for a one-notch downgrade | Additional collateral or termination payments for a two-notch downgrade |


| December 31, 2006 December 31, 2005 | Industry-1 | (in millions) | Corporate Securities: | Manufacturing | Finance | Utilities | Services | Energy | Retail and Wholesale | Transportation | Other | Total Corporate Securities | Asset-Backed Securities | U.S. Government | Mortgage Backed | Foreign Government | Total |


Table of Contents The Company may also enter into non-designated foreign currency contracts to partially offset the foreign currency exchange gains and losses generated by the re-measurement of certain assets and liabilities denominated in non-functional currencies.
The Company may enter into interest rate swaps, options, or other instruments to manage interest rate risk.
These instruments may offset a portion of changes in income or expense, or changes in fair value of the Company’s term debt or investments.
The Company designates these instruments as either cash flow or fair value hedges.
The Company’s hedged interest rate transactions as of September 26, 2015 are expected to be recognized within 10 years.
Cash Flow Hedges The effective portions of cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings.
Deferred gains and losses associated with cash flow hedges of foreign currency revenue are recognized as a component of net sales in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of inventory purchases are recognized as a component of cost of sales in the same period as the related costs are recognized.
Deferred gains and losses associated with cash flow hedges of interest income or expense are recognized in other income/(expense), net in the same period as the related income or expense is recognized.
The ineffective portions and amounts excluded from the effectiveness testing of cash flow hedges are recognized in other income/(expense), net.
Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period.
Deferred gains and losses in AOCI associated with such derivative instruments are reclassified immediately into other income/(expense), net.
Any subsequent changes in fair value of such derivative instruments are reflected in other income/(expense), net unless they are re-designated as hedges of other transactions.


| Year Ended December 31, | 2004 | $ | ($ in thousands) | Expenses | Employee compensation and benefits | Depreciation and amortization | Technology and communications | Professional and consulting fees | Warrant-related expense | Marketing and advertising | Moneyline revenue share | General and administrative | Total expenses |


| As of December 31, 2014 | $ in millions | Cash and cash equivalents | Fund investments | Equity securities | Government debt securities | Other assets | Guaranteed investment contracts | Total |


| Increase/(Decrease)in Fair Market Value | As of December 31, | 2013 | 2012 |


Depreciation expense for the years ended December 31, 2005, 2004 and 2003 was $26,307,000, $28,353,000 and $27,988,000 respectively.
In 2005 and 2004, the Company wrote off certain assets that were fully depreciated and no longer utilized.
There was no effect on the Company's net property and equipment.
Additionally, the Company wrote off or sold certain assets that were not fully depreciated.
The net loss on disposal of those assets was $344,000 for 2005 and $43,000 for 2004.


| 2015 2014 2013 | Aluminum production (kmt) | Third-party aluminum shipments (kmt) | Alcoa’s average realized price per metric ton of aluminum* | Alcoa’s average cost per metric ton of aluminum** | Third-party sales | Intersegment sales | Total sales | ATOI |