The volume of natural gas produced and electric power generated in Ecuador are related to thermal electricity demand in Ecuador which typically declines at the onset of the rainy season.
When Ecuador has sufficient rainfall to allow hydroelectric power producers to provide base load power, we provide electricity only to meet peak demand.
As seasonal rains subside, we experience increasing demand for thermal electricity.
Electricity generation expense includes all operating and non-operating expenses associated with the plant, including DD&A expense and changes in the allowance for doubtful accounts.
The allowance is necessary to cover potentially uncollectible balances related to the Ecuador power operations, as certain entities purchasing electricity in Ecuador have been slow to pay amounts due us.
In 2009, we reduced the allowance for doubtful accounts by $46 million and included the amount as a reduction in electricity generation expense as a result of amounts received related to a settlement.
We charged additions to the allowance of $14 million in 2009, $11 million in 2008, and $14 million in 2007.
See Item 8.
Financial Statements and Supplementary Data – Note 2.
Summary of Significant Accounting Policies.
At both December 31, 2009 and 2008, we assessed the recoverability of our Ecuador investment.
As a result of these analyses, we determined that our investment was impaired and recorded pre-tax (non-cash) impairments of $100 million and $70 million, respectively.
See Critical Accounting Policies and Estimates – Impairment of Proved Oil and Gas Properties and Other Investments and Item 8.
Financial Statements – Note 3.
Asset Impairments.
(Gain) Loss on Involuntary Conversion In 2009, we recorded a net gain of $9 million related to receipt of insurance claims for damage caused by Hurricanes Katrina and Rita.
We recorded losses on involuntary conversion of $9 million in 2008 and $51 million in 2007 related to hurricane damage to our Gulf of Mexico Main Pass assets.
The amounts are included in other operating expense, net in the consolidated statements of operations.
See Item 8.
Financial Statements and Supplementary Data – Note 2.
Summary of Significant Accounting Policies.
Other Other operating expense, net includes reductions in the carrying value of a receivable from SemCrude, L. P. , a crude oil purchaser.
Reductions totaled $12 million in 2009 and $38 million in 2008.
See Item 8.
Financial Statements and Supplementary Data – Note 17.
Commitments and Contingencies.
(Gain) Loss on Commodity Derivative Instruments Gain (loss) on commodity derivative instruments was as follows:


| (millions of dollars) 2012 2011 | Balance, January 1 | Additions based on tax positions related to current year | Additions for tax positions of prior years | Reductions for closure of tax audits and settlements | Reductions for lapse in statute of limitations | Translation adjustment | Balance, December 31 |


| Millions of Dollars 2009 2008 2007 % Change 2009 v 2008 % Change 2008 v 2007 | Compensation and benefits | Fuel | Purchased services and materials | Depreciation | Equipment and other rents | Other | Total |


ACQUISITIONS AND DISPOSITIONS ACQUISITIONS The Duke Energy Registrants consolidate assets and liabilities from acquisitions as of the purchase date and include earnings from acquisitions in consolidated earnings after the purchase date.2016 Acquisition of Piedmont Natural Gas On October 3, 2016, Duke Energy acquired all outstanding common stock of Piedmont for a total cash purchase price of $5.0 billion and assumed Piedmonts existing long-term debt, which had a fair value of approximately $2.0 billion at the time of the acquisition.
The acquisition provides a foundation for Duke Energy to establish a broader, long-term strategic natural gas infrastructure platform to complement its existing natural gas pipeline investments and regulated natural gas business in the Midwest.
In connection with the closing of the acquisition, Piedmont became a wholly owned subsidiary of Duke Energy.
Purchase Price Allocation The purchase price allocation of the Piedmont acquisition is as follows:


| Actual - Fiscal 2019 Projected - Fiscal 2020 New Restaurant Openings Pro-Forma New Restaurants | Restaurant Openings | Olive Garden | LongHorn Steakhouse | Cheddar’s Scratch Kitchen | Yard House | The Capital Grille -1 | Seasons 52 | Bahama Breeze | Eddie V’s | Totals |


| At December 31, | 2010 | (In thousands) | Balance Sheet Data | Unrestricted and restricted cash, cash equivalents, and | marketable securities (current and non-current) | Total assets | Notes payable (current and non-current) | Facility lease obligations (current and non-current) | Capital lease obligations (current and non-current) | Stockholders’ equity |


| 2016 | (Dollars in millions) | Allowance for loan and lease losses, January 1 | Loans and leases charged off | Recoveries of loans and leases previously charged off | Net charge-offs | Write-offs of PCI loans | Provision for loan and lease losses | Other-1 | Allowance for loan and lease losses, December 31 | Less: Allowance included in assets of business held for sale-2 | Total allowance for loan and lease losses, December 31 | Reserve for unfunded lending commitments, January 1 | Provision for unfunded lending commitments | Other-1 | Reserve for unfunded lending commitments, December 31 | Allowance for credit losses, December 31 |


| Year ended December 31 Change | Dollars in millions | Average assets | Interest-earning assets | Investment securities | Loans | Interest-earning deposits with banks | Other | Total interest-earning assets | Noninterest-earning assets | Total average assets | Average liabilities and equity | Interest-bearing liabilities | Interest-bearing deposits | Borrowed funds | Total interest-bearing liabilities | Noninterest-bearing deposits | Other liabilities | Equity | Total average liabilities and equity |


policies regarding other-than-temporary impairments, including our assertions regarding our ability and intent to hold equity securities to recovery and any intention or requirement to sell debt securities before anticipated recovery, see Fixed Maturity SecuritiesOtherthan-Temporary Impairments of Fixed Maturity Securities and Equity SecuritiesOther-than-Temporary Impairments of Equity Securities, below.
Management of Investments We design asset mix strategies and derivative strategies for our general account to match the characteristics of our products and other obligations and seek to closely approximate the interest rate sensitivity, but not necessarily the exact cash flow characteristics, of the assets with the estimated interest rate sensitivity of the product liabilities.
In certain markets, primarily outside the U. S. , capital market limitations hinder our ability to acquire assets that closely approximate the duration of some of our liabilities.
We achieve income objectives through asset/liability management, strategic and tactical asset allocations and derivative strategies within a disciplined risk management framework.
Derivative strategies are employed within our risk management framework to help manage duration gaps, currency, and other risks between assets and liabilities.
For a discussion of our risk management process see Quantitative and Qualitative Disclosures About Market RiskRisk Management, Market Risk and Derivative Instruments, and Other Than Trading ActivitiesInsurance and Annuity Products Asset/Liability Management.
 Our asset allocation also reflects our desire for broad diversification across asset classes, sectors and issuers.
The Asset Management segment manages virtually all of our investments, other than those managed by our International Insurance segment, under the direction and oversight of the Asset Liability Management and Risk Management groups.
Our International Insurance segment manages the majority of its investments locally, within enterprise risk constraints, in most cases using the international and domestic asset management capabilities of our International Investments or Asset Management segments.
The Investment Committee of our Board of Directors oversees our proprietary investments.
It also reviews performance and risk positions periodically.
Our Asset Liability Management and Risk Management groups develop the investment policy for the general account assets of our insurance subsidiaries, oversee the investment process for our general account and have the authority to initiate tactical shifts within exposure ranges approved annually by the Investment Committee.
The Asset Liability Management and Risk Management groups work closely with each of our business units to ensure that the specific characteristics of our products are incorporated into their processes and to develop investment objectives, including performance factors and measures and asset allocation ranges.
We adjust this dynamic process as products change, as customer behavior changes and as changes in the market environment occur.
We develop asset strategies for specific classes of product liabilities and attributed or accumulated surplus, each with distinct risk characteristics.
Most of our products can be categorized into the following three classes: ?
interest-crediting products for which the rates credited to customers are periodically adjusted to reflect market and competitive forces and actual investment experience, such as fixed annuities and universal life insurance; ?
participating individual and experience-rated group products in which customers participate in actual investment and business results through annual dividends, interest or return of premium; and ?
guaranteed products for which there are price or rate guarantees for the life of the contract, such as GICs and funding agreements.
We determine a target asset mix for each product class, which we reflect in our investment policies.
Our asset/liability management process has permitted us to manage interest-sensitive products successfully through several market cycles.
Portfolio Composition Our investment portfolio consists of public and private fixed maturity securities, commercial mortgage and other loans, equity securities and other invested assets.
The composition of our general account reflects, within the discipline provided by our risk management approach, our need for competitive results and the selection of diverse investment alternatives available primarily through our Asset Management segment.
The size of our portfolio enables us to invest in asset classes that may be unavailable to the typical investor.


| 2011 2010 | (In millions) | Balance at beginning of year | Transfer from loans | Valuation adjustments | Foreclosed property sold | Payments and other | -158 | Balance at end of year |


Consumer Purchased Impaired Loan Class Estimates of the expected cash flows primarily determine the valuation of consumer purchased impaired loans.
Consumer cash flow estimates are influenced by a number of credit related items, which include, but are not limited to: estimated real estate values, payment patterns, updated FICO scores, the current economic environment, updated LTV ratios and the date of origination.
These key factors are monitored to help ensure that concentrations of risk are managed and cash flows are maximized.
See Note 4 Purchased Loans for additional information.
Table 57: Home Equity and Residential Real Estate Balances


| Year ended December 31, (in millions) 2010 2009 | Balance, beginning of period | Additions: | Newly credit-impaired securities | Increase in losses on previously credit-impairedsecurities | Losses reclassified from other comprehensiveincome on previously credit-impaired securities | Reductions: | Sales of credit-impaired securities | Impact of new accounting guidance relatedto VIEs | Balance, end of period |


| Year Ended December 31, % Point Change | 2016 | Next Day Air / Deferred | Ground |


OFF-BALANCE SHEET ARRANGEMENTS Our off-balance sheet arrangements as of December 31, 2017 included letters of credit of $41 million and performance guarantees with possible cash outlays of approximately $79 million, for which we accrued $21 million as of December 31, 2017 for estimated probable exposure.
See Note 20: Commitments and Contingencies in our consolidated financial statements for additional information.


Table of Contents The following table discloses purchases of shares of our common stock made by us or on our behalf during the fourth quarter of 2015.


EUROPEAN INDUSTRIAL PACKAGING net sales for 2007 were $1.1 billion, up from $1.0 billion in 2006 and $880 million in 2005.
Sales volumes were about flat as early stronger demand in the industrial segment weakened in the second half of the year.
Operating profits in 2007 were $88 million compared with $69 million in 2006 and $53 million in 2005.
Sales margins improved reflecting increased sales prices for boxes.
Conversion costs were favorable as the result of manufacturing improvement programs.
Entering the first quarter of 2008, sales volumes should be strong seasonally across all regions as the winter fruit and vegetable season continues.
Profit margins, however, are expected to be somewhat lower.


For the years ended December 31, 2017, 2016 and 2015, the Company repurchased a total of 9.9 million shares, 17.6 million shares and 13.9 million shares, respectively, of its common stock for an aggregate cost of $1.3 billion, $1.7 billion and $1.7 billion, respectively.
In December 2015, the Company’s Board of Directors authorized additional expenditures of up to $2.5 billion for the repurchase of shares of the Company’s common stock through December 31, 2017, which was exhausted in the third quarter of 2017.
In April 2017, the Company’s Board of Directors authorized an expenditure of up to $2.5 billion for the repurchase of shares of the Company’s common stock through June 30, 2019.
As of December 31, 2017, the Company had $2.1 billion remaining under its share repurchase authorizations.
The Company may also reacquire shares of its common stock under its share-based compensation plans related to restricted stock awards and certain option exercises.
The holders of restricted shares may elect to surrender a portion of their shares on the vesting date to cover their income tax obligation.
These vested restricted shares are reacquired by the Company and the Company’s payment of the holders’ income tax obligations are recorded as a treasury share purchase.
For the years ended December 31, 2017, 2016 and 2015, the Company reacquired 0.3 million shares, 0.3 million shares and 0.4 million shares, respectively, of its common stock through the surrender of shares upon vesting and paid in the aggregate $33 million, $29 million and $49 million, respectively, related to the holders’ income tax obligations on the vesting date.
Option holders may elect to net settle their vested awards resulting in the surrender of the number of shares required to cover the strike price and tax obligation of the options exercised.
These shares are reacquired by the Company and recorded as treasury shares.
For the years ended December 31, 2017, 2016 and 2015, the Company reacquired 2.2 million shares, 0.5 million shares and 0.7 million shares, respectively, of its common stock through the net settlement of options for an aggregate value of $298 million, $48 million and $92 million, respectively.
For the years ended December 31, 2017, 2016 and 2015, respectively, the Company reissued 0.8 million, 0.9 million and 1.0 million treasury shares, respectively, for restricted stock award grants, PSUs, and issuance of shares vested under advisor deferred compensation plans.19.


| Twelve Months Ended | (Millions of Dollars) | Operating revenues | Gas purchased for resale | Other operations and maintenance | Depreciation and amortization | Taxes, other than income taxes | Gas operating income |


| (Millions of Dollars) 2005 2004 2003 | Nonregulated and other revenue | Nonregulated cost of goods sold | Nonregulated margin |


| December 31, 2008 Net Flows Market Appreciation/ (Depreciation) & Other ForeignExchange December 31, 2009 | (in billions) | Columbia Managed Assets:-1 | Retail Funds | Institutional Funds | Alternative Funds | Less: Eliminations | Total Columbia Managed Assets | Threadneedle Managed Assets: | Retail Funds | Institutional Funds | Alternative Funds | Total Threadneedle Managed Assets | Less: Sub-Advised Eliminations | Total Managed Assets |


Dispositions We sell apartment communities and other assets that no longer meet our long-term strategy or when market conditions are favorable, and we redeploy the proceeds from those sales to acquire, develop and redevelop additional apartment communities and rebalance our portfolio across or within geographic regions.
Dispositions also allow us to realize a portion of the value created through our investments and provide additional liquidity.
We are then able to redeploy the net proceeds from our dispositions in lieu of raising additional capital.
In deciding to sell an apartment community, we consider current market conditions and generally solicit competing bids from unrelated parties for these individual assets, considering the sales price and other key terms of each proposal.
We also consider portfolio dispositions when such a structure is useful to maximize proceeds and efficiency of execution.
During the year ended December 31, 2017, we disposed of five multifamily properties totaling 1,760 units and four land parcels totaling approximately 23 acres.
Development As another part of our growth strategy, we invest in a limited number of development projects.
Development activities may be conducted through wholly-owned affiliated companies or through joint ventures with unaffiliated parties.
Fixed price construction contracts are signed with unrelated parties to minimize construction risk.
We typically manage the leasing portion of the project as units become available for lease.
We may also engage in limited expansion development opportunities on existing communities in which we typically serve as the developer.
While we seek opportunistic new development investments offering attractive long-term investment returns, we intend to maintain a total development commitment that we consider modest in relation to our total balance sheet and investment portfolio.
During the year ended December 31, 2017, we incurred $170.1 million in development costs and completed 7 development projects.


| Income Statements Retail & Business Banking Regional & Commercial Banking Former Regional Banking AFCRE WGH Treasury/ Other Huntington Consolidated | (dollar amounts in thousands) | 2011 | Net interest income | Provision for credit losses | Noninterest income | Noninterest expense | Provision for income taxes | Operating/reported net income | 2010 | Net interest income | Provision for credit losses | Noninterest income | Noninterest expense | Provision (benefit) for income taxes | Operating/reported net income (loss) | 2009 | Net interest income | Provision for credit losses | Noninterest income | Noninterest expense, | excluding goodwill impairment | Goodwill impairment | Provision (benefit) for income taxes | Operating/reported net income (loss) |


| For the years ended December 31, 2010, 2009, and 2008(in millions of U.S. dollars, except for percentages) DirectAmount Ceded To Other Companies Assumed From Other Companies Net Amount Percentage of Amount Assumed to Net | 2010 | 2009 | 2008 |


| AAG December 31, American December 31, | 2013 | Cash | Short-term investments | Restricted cash and short-term investments1 | Total cash, short-term investments and restricted cash and short-term investments | Year Ended December 31, | 2014 | (In millions) | Operating income (loss) – GAAP | Operating special items, net -1 | Operating income (loss) excluding special items | Net income (loss) – GAAP | Operating special items, net -1 | Nonoperating special items, net -2 | Reorganization items, net -3 | Income tax special items -4 | Net income (loss) excluding special items |


Capital and liquidity management JPMorgan Chase increased capital during 2003.
At December 31, 2003, the Firms Tier 1 capital was $43.2 billion, $5.6 billion higher than at December 31, 2002.
The Tier 1 capital ratio of 8.5% was well in excess of the minimum regulatory guidelines, it was 8.2% at year-end 2002.
The Firm maintained the quarterly dividend of $0.34 per share on its common stock.
JPMorgan Chase did not repur- chase shares of its common stock in 2003.
Management expects to recommend to the Board of Directors that the Firm resume its share repurchase program after the completion of the pending merger with Bank One Corporation (see Business events below).
The Firms liquidity management is designed to ensure sufficient liquidity resources to meet all its obligations, both on- and offbalance sheet, in a wide range of market environments.
The Firms access to the unsecured funding markets is dependent upon its credit rating.
During 2003, the Firm maintained senior debt ratings of AA-/Aa3/A+ at JPMorgan Chase Bank and A+/A1/A+ at the parent holding company.
Upon the announce- ment of the proposed merger with Bank One Corporation, Moodys and Fitch placed the Firms ratings on review for an


| 3.01* Restated Articles of Incorporation of Xcel Energy, as amended on May 21, 2008. (Exhibit 3.01 to Form 10-Q for the quarter ended June 30, 2008 (file no. 001-03034)). Restated By-Laws of Xcel Energy (Exhibit 3.01 to Form 8-K dated Aug. 12, 2008 (file no. 001-03034)). | 4.01* | 4.02* | 4.03* | 4.04+* | 4.05+* | 4.06* | 4.07* | 4.08* | 4.09* | 4.10* | 4.11* | 4.12* | Supplemental Indenture dated Oct. 1, 1992 (Exhibit 4.01 to Form 8-K (file no. 001-03034) dated Oct. 13, 1992, Rider A). | Supplemental Indenture dated April 1, 1993 (Exhibit 4.01 to Form 8-K (file no. 001-03034) dated March 30, 1993, Rider A). | Supplemental Indenture dated Dec. 1, 1993 (Exhibit 4.01 to Form 8-K (file no. 001-03034) dated Dec. 7, 1993, Rider A). | Supplemental Indenture dated June 1, 1995 (Exhibit 4.01 to Form 8-K (file no. 001-03034) dated June 28, 1995, Rider A). | Supplemental Indenture dated March 1, 1998 (Exhibit 4.01 to Form 8-K (file no. 001-03034) dated March 11, 1998, Rider A). | Supplemental Indenture dated May 1, 1999 (Exhibit 4.49 to NSP-Minnesota Form 10-12G (file no. 000-31709) dated Oct. 5, 2000, Rider A). | Supplemental Indenture dated June 1, 2000 (Exhibit 4.50 to NSP-Minnesota Form 10-12G (file no. 000-31709) dated Oct. 5, 2000, Rider A). | 4.13* | 4.14* | 4.15* |


Pretax Results ?
Employer Group segment pretax income decreased $46 million, or 16%, to $242 million in 2011 primarily due to the impact of minimum benefit ratios required under the Health Insurance Reform Legislation which became effective in 2011.
Enrollment ?
Fully-insured commercial group medical membership decreased 72,000 members, or 5.7%, from December 31, 2010 to December 31, 2011 primarily due to continued pricing discipline in a highly competitive environment for large group business partially offset by small group business membership gains.  ?
Group ASO commercial medical membership decreased 161,300 members, or 11.1%, from December 31, 2010 to December 31, 2011 primarily due to continued pricing discipline in a highly competitive environment for self-funded accounts.
Premiums revenue ?
Employer Group segment premiums decreased by $203 million, or 2.2%, from 2010 to $8.9 billion for 2011 primarily due to lower average commercial group medical membership year-over-year and rebates associated with minimum benefit ratios required under the Health Insurance Reform Legislation which became effective in 2011, partially offset by an increase in group Medicare Advantage membership.
Rebates result in the recognition of lower premiums revenue, as amounts are set aside for payments to commercial customers during the following year.
Benefits expense ?
The Employer Group segment benefit ratio of 82.4% for 2011 was unchanged from 2010 due to offsetting factors.
Factors increasing the 2011 ratio compared to the 2010 ratio include growth in our group Medicare Advantage products which generally carry a higher benefit ratio than our fully-insured commercial group products and the effect of rebates accrued in 2011 associated with the minimum benefit ratios required under the Health Insurance Reform Legislation.
Factors decreasing the 2011 ratio compared to the 2010 ratio include the beneficial effect of higher favorable prior-period medical claims reserve development in 2011 versus 2010 and lower utilization of benefits in our commercial group


| Asset Categories 10% Sensitivity Amount as of December | in millions | ICBC | Equity (excluding ICBC)1 | Debt2 |


| Real Estate | Commercial, Financial, Leasing, etc | (In thousands) | December 31, 2014 | Pass | Criticized accrual | Criticized nonaccrual | Total | December 31, 2013 | Pass | Criticized accrual | Criticized nonaccrual | Total |


| Consolidated Statement of Operations Data Fiscal | (In millions, except per share amounts) | Total net revenue | Total costs and expenses | Operating income from continuing operations | Total share-based compensation expense included in total costs and expenses | Net income from continuing operations | Net income (loss) from discontinued operations | Net income | Net income per common share: | Basic net income per share from continuing operations | Basic net income (loss) per share from discontinued operations | Basic net income per share | Diluted net income per share from continuing operations | Diluted net income(loss) per share from discontinued operations | Diluted net income per share | Dividends declared per common share | (Dollars in millions) | Net cash provided by (used in): | Operating activities | Investing activities | Financing activities | Effect of exchange rate changes on cash | Increase (decrease) in cash and cash equivalents |


| In billions of dollars Non-bank Bank -1 Total Citigroup | Commercial paper |


2007 to 2006 Annual Comparison.
Total new annualized premiums decreased $152 million, or 30%, from $504 million in 2006 to $352 million in 2007.
This decrease is primarily due to lower large case sales in the group life business during 2007, reflective of highly competitive pricing in the marketplace and the pricing discipline we apply in writing business.
Partially offsetting this decrease were higher large case and middle-market sales in the group disability business during 2007.2006 to 2005 Annual Comparison.
Total new annualized premiums decreased $20 million, from $524 million in 2005 to $504 million in 2006.
This decrease was primarily attributable to lower sales in our group disability business, as 2005 reflects higher premiums relating to our assumption of existing liabilities from a third party.
Group life sales were relatively unchanged, as a significant large case sale in the first quarter of 2005 was offset by several large case sales during 2006.


See Note 1 to the Consolidated Financial Statements for further information on our revenue recognition accounting policies.
Clients Our large and diverse client base includes many of the most recognizable companies and brands throughout the world.
Our holding company structure allows us to maintain a diversified client base across and within a full range of industry sectors.
In the aggregate, our top ten clients based on revenue accounted for approximately 19% and 20% of revenue in 2015 and 2014, respectively.
Our largest client accounted for approximately 4% and 5% of revenue for 2015 and 2014, respectively.
Based on revenue for the year ended December 31, 2015, our largest client sectors (in alphabetical order) were auto and transportation, healthcare and tech and telecom.
We represent several different clients, brands or divisions within each of these sectors in a number of geographic markets, as well as provide services across multiple advertising and


| (In thousands) | Year ending December 31, | 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | 171,435 | Less amount representing interest | Present value |


| December 31, 2011 December 31, 2010 | $ in millions | Unsecured Senior Notes*: | 5.625% - due April 17, 2012 | 5.375% - due February 27, 2013 | 5.375% - due December 15, 2014 | Floating rate credit facility expiring June 3, 2016 | Total debt | Less: current maturities of total debt | Long-term debt |


Segment Performance Summary


| 2014 2013 | Deferred tax assets: | Tax/GAAP basis differences | Net operating losses | Related party deferred losses | Tax credit carryforwards | Capital loss carryforwards | Charitable contribution carryforwards | Non-U.S. tax/GAAP basis differences | Valuation allowance – U.S. | Valuation allowance – Non-U.S. | Total deferred tax assets | Deferred tax liabilities – U.S. | Deferred tax liabilities – Non-U.S. | Net deferred tax assets |


Gains and Losses on Financial Assets and Financial Liabilities Accounted for at Fair Value Under the Fair Value Option The table below presents the gains and losses recognized in earnings as a result of the firm electing to apply the fair value option to certain financial assets and financial liabilities.
In the table above: ° Gains/(losses) are included in market making and other principal transactions.
° Gains/(losses) exclude contractual interest, which is included in interest income and interest expense, for all instruments other than hybrid financial instruments.
See Note 23 for further information about interest income and interest expense.
° Gains/(losses) included in unsecured short-term borrowings are substantially all related to the embedded derivative component of hybrid financial instruments for 2017, 2016 and 2015.
Gains/(losses) included in unsecured long-term borrowings are primarily related to the embedded derivative component of hybrid financial instruments for 2017, 2016 and 2015.
These gains and losses would have been recognized under other U. S.  GAAP even if the firm had not elected to account for the entire hybrid financial instrument at fair value.
° Other liabilities and accrued expenses includes gains/ (losses) on certain subordinated liabilities of consolidated VIEs.
° Other primarily consists of gains/(losses) on receivables from customers and counterparties, deposits and other secured financings.
Excluding the gains and losses on the instruments accounted for under the fair value option described above, market making and other principal transactions primarily represent gains and losses on financial instruments owned and financial instruments sold, but not yet purchased.


| 2006 % Change 2005 % Change 2004 | Net Revenues | North America | International | Operating Profit | North America | International |


| 2009 | Fourth | Interest income | Interest expense | Net interest income | Provision for credit losses | Net interest (loss) income after provision for credit losses | Total noninterest income | Total noninterest expense | Loss before income taxes | Benefit for income taxes | Net loss | Dividends on preferred shares | Net loss applicable to common shares | Common shares outstanding | Average — basic | Average — diluted-2 | Ending | Book value per share | Tangible book value per share-3 | Per common share | Net loss- basic | Net loss — diluted | Cash dividends declared | Common stock price, per share | High-4 | Low-4 | Close | Average closing price | Return on average total assets | Return on average common shareholders’ equity | Return on average tangible common shareholders’ equity-5 | Efficiency ratio-6 | Effective tax rate (benefit) | Margin analysis-as a % of average earning assets-7 | Interest income-7 | Interest expense | Net interest margin-7 | Revenue — FTE | Net interest income | FTE adjustment | Net interest income-7 | Noninterest income | Total revenue-7 | Continued |


On October 22, 2004, the American Jobs Creation Act of 2004 (the
Act) was signed into law.
The Act creates a temporary incentive for U. S.  companies to repatriate accumulated foreign earnings at a substantially reduced U. S.  effective tax rate by providing a dividends received deduction on the repatriation of certain foreign earnings to the U. S.  taxpayer (the repatriation provision).
The new deduction is subject to a number of limitations and requirements.
In the fourth quarter of 2005, the Firm applied the repatriation provision to $1.9 billion of cash from foreign earnings, resulting in a net tax benefit of $55 million.
The $1.9 billion of cash will be used in accordance with the Firm’s domestic reinvestment plan pursuant to the guidelines set forth in the Act.
The tax expense (benefit) applicable to securities gains and losses for the years 2005, 2004 and 2003 was $(536) million, $126 million and $477 million, respectively.


| Wholesale Retail Licensing Total | (millions) | Balance at March 28, 2009 | Acquisition-related activity(a) | Other adjustments(b) | Balance at April 3, 2010 | Acquisition-related activity(a) | Other adjustments(b) | Balance at April 2, 2011 |


| Years Ended | September 29, 2012 | Amount | Operating Expenses | Research and development | Selling and marketing | General and administrative | Amortization of intangible assets | Contingent consideration—compensation expense | Contingent consideration—fair value adjustments | Impairment of goodwill | Gain on sale of intellectual property, net | Litigation settlement charges, net | Acquired in-process research and development | Restructuring and divestiture charges, net | $880,720 |


Impact of Currency Volatility Currency volatility remains acute.
Such volatility affected line item components of income for those businesses with substantial international operations.
In particular, growth trends in net premiums written reported in U. S.  dollars can differ significantly from those measured in original currencies.
The net effect on underwriting results, however, is significantly mitigated, as both revenues and expenses are similarly affected.
These currencies may continue to fluctuate, in either direction, especially as a result of the UKs announced exit from the EU, and such fluctuations will affect net premiums written growth trends reported in U. S.  dollars, as well as financial statement line item comparability.
General Insurance businesses are transacted in most major foreign currencies.
The following table presents the average of the quarterly weighted average exchange rates of the Major Currencies, which have the most significant impact on our businesses:


| Year Ended December 31, | 2006 | Reconstructive | Knees | Hips | Extremities | Dental | Total | Trauma | Spine | OSP and other | Total |


| 2011 2010 2009 | Balance at beginning of year | Granted | Cancelled | Balance at end of year | Vested during the year | Compensation expense recorded | Weighted average fair value of restricted stock granted during the year |


| 2012 2011 2010 | (In millions) | Sales and other operating revenues—Unaffiliated customers | Costs and expenses | Production expenses, including related taxes | Exploration expenses, including dry holes and lease impairment | General, administrative and other expenses | Depreciation, depletion and amortization | Total costs and expenses | Results of operations before income taxes | Provision for income taxes | Results of operations |


| Name of Project Location So. San Francisco, CA So. San Francisco, CA So. San Francisco, CA Redwood City, CA So. San Francisco, CA San Diego, CA Sacramento, CA Estimated Completion Date-14Q 2008 4Q 2008 4Q 2008 4Q 2009 3Q 2010 3Q 2010 3Q 2010 Estimated Total Investment $97,448 103,293 60,660 45,813 43,231 34,272 31,605 Total Investment To Date $79,744 84,546 47,761 29,277 7,300 20,272 23,626 | $416,322 | 2008 | Core price | Fuel surcharges | Environmental fees | Recycling commodities | Total price | Core volume-1 | Non-core volume | Total volume | Total internal growth | Acquisitions, net of divestitures-2 | Taxes-3 | Total revenue growth |


Our broad range of services generates fee revenue and net interest revenue.
Fee revenue generated by our investment servicing and investment management businesses is augmented by trading services, securities finance and processing fees and other revenue.
We earn net interest revenue from client deposits and short-term investment activities by providing deposit services and short-term investment vehicles, such as repurchase agreements and commercial paper, to meet clients needs for high-grade liquid investments, and investing these sources of funds and additional borrowings in assets yielding a higher rate.
Fee Revenue Servicing and management fees collectively composed approximately 74% of our total fee revenue for 2011 and 73% for 2010.
The level of these fees is influenced by several factors, including the mix and volume of assets under custody and administration and assets under management, securities positions held and the volume of portfolio transactions, and the types of products and services used by clients, and are generally affected by changes in worldwide equity and fixed-income security valuations.
With respect to our business operations, we are standardizing certain core business processes, primarily through our execution of the State Street LEAN methodology, and driving automation of these business processes.
We are currently creating a new technology platform, including transferring certain core software applications to a private cloud, and have expanded our use of service providers associated with components of our technology infrastructure and application maintenance and support.
We expect the transfer of core software applications to a private cloud to occur primarily in 2013 and 2014.
To implement this program, we expect to incur aggregate pre-tax restructuring charges of approximately $400 million to $450 million over the four-year period ending December 31, 2014.
To date, we have recorded aggregate restructuring charges of $289 million in our consolidated statement of income, composed of $156 million in 2010 and $133 million in 2011.
The following table presents the charges by type of cost:


UNITED PARCEL SERVICE, INC.  AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 28 Revenue The change in overall revenue was impacted by the following factors for the years ended December 31, 2013 and 2012, compared with the corresponding prior year periods:


| Period-to-Period Change 2008 vs. 2007 Period-to-Period Change 2007 vs. 2006 | As a% of | Related | Amount | Average yield: | Solid waste | Waste-to-energy | Base business | Commodity | Electricity (IPPs) | Fuel surcharges and mandated fees | Total | Volume | Internal revenue growth | Acquisition | Divestitures | Foreign currency translation | $78 |


| Years ended December 31, 2009 2006 Incremental change | NUMERATOR: | Operating income | Depreciation and amortization-4 | Currency translation-5 | Incremental adjusted operating income plus depreciation and amortization (atconstant foreign exchange rates) | DENOMINATOR: | Weighted–average adjusted cash used for investing activities-6 | Currency translation-5 | Weighted–average adjusted cash used for investing activities (at constant foreign exchange rates) | Three-year ROIIC-7 |


| 2016 2015 | (Millions of Dollars) | Con Edison | Derivative assets: | Commodity (a)(b)(c) | Commodity held for sale (f) | Other (a)(b)(d) | Total assets | Derivative liabilities: | Commodity (a)(b)(c) | Interest Rate Swap (a)(b)(c)(g) | Commodity held for sale (f) | Total liabilities | CECONY | Derivative assets: | Commodity (a)(b)(c) | Other (a)(b)(d) | Total assets | Derivative liabilities: | Commodity (a)(b)(c) |


| Return Periods (in years) 1 in 20 1 in 50 1 in 100 1 in 250 1 in 500 1 in 1,000 | Exceeding Probability | Zone/Area, Peril | Southeast U.S., Wind | Europe, Wind | California, Earthquake |


| (Dollar amounts in thousands) Rate Principal Amount of   Subordinated Note/   Debenture Issued to Trust -1 Investment in   Unconsolidated   Subsidiary -2 | 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 |


| December 31, (in millions) 2013 2012 | Residential real estate – excluding PCI | Home equity: | Senior lien | Junior lien | Mortgages: | Prime, including option ARMs | Subprime | Other consumer loans | Auto | Business banking | Student and other | Residential real estate – PCI | Home equity | Prime mortgage | Subprime mortgage | Option ARMs | Total retained loans |


| 2011 2010 | Revenue | Oilfield Services | North America | Latin America | Europe/CIS/Africa | Middle East & Asia | Eliminations & other | 36,959 | Distribution | Eliminations | 2,581 | Corporate & other-1 | Interest income-2 | Interest expense-3 | Charges & credits-4 | $39,540 |


Guidant.
In exchange, we made aggregate payments totaling $600 million to Johnson & Johnson during 2015.
The 2014 net charges also include amounts related to transvaginal surgical mesh product liability cases and claims and certain other items.
Litigation related charges and credits are excluded by management for purposes of evaluating operating performance.
We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/ or our ability to comply with our debt covenants.
Refer to Note KCommitments and Contingencies to our consolidated financial statements contained in Item 8 of this Annual Report for additional discussion of our material legal proceedings.
Pension Termination Charges We recorded pension termination charges of $44 million during 2015 associated with the termination of the Guidant Retirement Plan, a frozen defined benefit plan.
We do not expect to incur any additional charges in the future related to the termination of the Guidant Retirement Plan.
The pension termination charges are excluded by management for purposes of evaluating operating performance.
Gain on Divestiture In January 2011, we closed the sale of our Neurovascular business to Stryker Corporation.
We recorded a pre-tax gain of $12 million during 2014 associated with the transaction.
These divestiture-related gains are excluded by management for purposes of evaluating operating performance.
Interest Expense Our interest expense was $233 million in 2016 with an average borrowing rate of 4.0 percent, as compared to $284 million in 2015, with an average borrowing rate of 5.2 percent.
Interest expense in 2015 included a pre-tax charge of approximately $45 million associated with debt extinguishment charges, representing premiums, accelerated amortization of debt issuance costs and investor discount costs net of interest rate hedge gains related to the early extinguishment of $1.000 billion of debt during the second quarter of 2015.
Our interest expense was $284 million in 2015, with an average borrowing rate of 5.2 percent, as compared to $216 million in 2014, with an average borrowing rates of 4.8 percent.
The increase was primarily due to the pre-tax charge of approximately $45 million associated with debt extinguishment charges, along with incremental debt to finance the AMS Portfolio Acquisition offset by savings from refinancing our senior notes.
Debt extinguishment charges are excluded by management for purposes of evaluating operating performance.
Refer to Liquidity and Capital Resources, Note EFair Value Measurements and Note FBorrowings and Credit Arrangements to our consolidated financial statements contained in Item 8 of this Annual Report for information regarding our debt obligations.
Other, net Our other, net reflected expense of $37 million in 2016, expense of $39 million in 2015, and income of $8 million in 2014.
The following are the components of other, net:


| Years Ended December 31, 2010/2009 2009/2008 | (Dollars in millions) | Gross written premiums | Net written premiums | Premiums earned | Incurred losses and LAE | Commission and brokerage | Other underwriting expenses | Underwriting gain (loss) | Point Chg | Loss ratio | Commission and brokerage ratio | Other underwriting expense ratio | Combined ratio | (NM, not meaningful) | (Some amounts may not reconcile due to rounding.) |


| General and administrative expenses - 2010 $41.3 | Increase to overall pool of overhead costs -1 | Increased absorption of costs by wholly-owned development and leasing activities -2 | Increased allocation of costs to Service Operations and Rental Operations | General and administrative expenses - 2011 |


| March 29,2014 March 30,2013 | Stores: | Freestanding stores | Concession shops | Total stores | E-commerce Sites: | North American sites(a) | European sites(b) | Asian sites(c) | Total e-commerce sites |


| (Square feet in thousands) United States Other Countries Total | Owned | Leased | Total |


Notes to the Financial Statements — Continued government.
See, Fifth Third Bancorp & Subsidiaries v.  United States, 1:05-CV-350 (S. D.  Ohio April 18, 2008).
In December 2008, this case was conditionally dismissed without prejudice to the parties until June 2, 2009, for the purpose of pursuing a settlement.
In the event a settlement is not reached, the case will be reinstated to the Court calendar.
The IRS has completed the pre-filing Compliance Assurance Process for the 2007 tax year and the company and the IRS did not reach agreement on the treatment of the LILO transactions within the 2007 tax return, a net tax deduction of $41 million.
In connection with its audit of Con Edison’s federal income tax return for the tax year 2006, the IRS disallowed $43 million of net tax deductions taken with respect to both of the LILO transactions for the tax year.
Con Edison filed an appeal of this audit level disallowance with the Appeals Office of the IRS, where consideration of this matter is pending.
In connection with its audit of Con Edison’s federal income tax returns for the tax years 1998 through 2005, the IRS indicated that it intends to disallow $332 million of net tax deductions taken with respect to both of the LILO transactions for the tax years.
If and when these audit level disallowances become appealable, Con Edison intends to file appeals of the disallowances with the Appeals Office of the IRS.
Con Edison believes that its LILO transactions have been correctly reported, and has not recorded any reserve with respect to the disallowance of tax losses, or related interest, in connection with its LILO transactions.
Con Edison’s estimated tax savings, reflected in its financial statements, from the two Note L – Income Tax The components of income tax are as follows LILO transactions through December 31, 2008, in the aggregate, was $188 million.
If Con Edison were required to repay all or a portion of these amounts, it would also be required to pay interest of up to $78 million at December 31, 2008.
In July 2006, the FASB issued FSP No.
FAS 13-2, “Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction,” which became effective for fiscal years beginning after December 15, 2006.
This FSP requires the expected timing of income tax cash flows generated by Con Edison’s LILO transactions to be reviewed at least annually.
If the expected timing of the cash flows is revised, the rate of return and the allocation of income would be recalculated from the inception of the LILO transactions, and the company would be required to recalculate the accounting effect of the LILO transactions, which would result in a charge to earnings that could have a material adverse effect on the company’s results of operations.
Note K – Goodwill In 2008 and 2007, Con Edison completed impairment tests for its goodwill of $406 million related to the O&R merger, and determined that it was not impaired.
For the impairment test, $245 million and $161 million of the goodwill were allocated to Con Edison of New York and O&R, respectively.
In 2008, Con Edison completed impairment tests for the goodwill of $5 million related to two energy services companies acquired by Con Edison Solutions, and determined that it was not impaired.


| Year Ended December 27, 2008 Year Ended December 29, 2007 Year Ended December 31, 2006 | Number of Shares | (In thousands except share price) | Nonvested balance at beginning of period | Granted | Forfeited | Vested | Nonvested balance at end of period |


| December 31, 2009 – In millions 2009 | Unrecognized tax benefits related to: | Acquired companies within measurement period: | Permanent differences | Other: | Temporary differences | Permanent differences | Total |


| Millions 2012 2011 2010 | Agricultural | Automotive | Chemicals | Coal | Industrial Products | Intermodal | Total freight revenues | Other revenues | Total operatingrevenues |


| Pension Benefits Post-Retirement Benefits | 2013 | Weighted-average assumptions used to determine benefit obligations | Discount rate | Rate of compensation increase | Weighted-average assumptions used to determine net periodic benefit cost | Discount rate -1 | Expected return on plan assets | Rate of compensation increase | N/A—Not Applicable |


| December 31, 2007 | Risk Management Strategy | Primary duration-managed | Duration-monitored | Non duration-managed | Total |


| Six Months Ended June 30 | 2005 | (Dollars in millions) | Operating activities | Net income | Reconciliation of net income to net cash provided by (used in) operating activities: | Provision for credit losses | Gains on sales of debt securities | Depreciation and premises improvements amortization | Amortization of intangibles | Deferred income tax expense (benefit) | Net increase in trading and derivative instruments | Net increase in other assets | Net decrease in accrued expenses and other liabilities | Other operating activities, net | Net cash used in operating activities | Investing activities | Net decrease in time deposits placed and other short-term investments | Net (increase) decrease in federal funds sold and securities purchased under agreements to resell | Proceeds from sales of available-for-sale securities | Proceeds from maturities of available-for-sale securities | Purchases of available-for-sale securities | Proceeds from maturities of held-to-maturity securities | Proceeds from sales of loans and leases | Other changes in loans and leases, net | Additions to mortgage servicing rights, net | Net purchases of premises and equipment | Proceeds from sales of foreclosed properties | Net cash (paid for) acquired in business acquisitions | Other investing activities, net | Net cash used in investing activities | Financing activities | Net increase in deposits | Net increase in federal funds purchased and securities sold under agreements to repurchase | Net increase in commercial paper and other short-term borrowings | Proceeds from issuance of long-term debt | Retirement of long-term debt | Proceeds from issuance of common stock | Common stock repurchased | Cash dividends paid | Other financing activities, net | Net cash provided by financing activities | Effect of exchange rate changes on cash and cash equivalents | Net increase in cash and cash equivalents | Cash and cash equivalents at January 1 | Cash and cash equivalents at June 30 | GlobalPayments | May 31, 2012 | May 31, 2013 | May 31, 2014 | May 31, 2015 | May 31, 2016 | December 31, 2016 | December 31, 2017 |


| Year Ended October 31, $ Change % Change $ Change % Change | 2014 | (dollars in millions) | Interest income | Interest expense | Gain (loss) on assets related to executive deferred compensation plan | Foreign currency exchange gain (loss) | Other, net | Total |


| International Plan Assets | 2012 | Total | Asset Catergory: | Cash and Cash Equivalents | Equity Securities: | US(a) | International(b) | Debt Securities: | Corporate bonds(c) | Government and government-related debt securities(d) | Government agency collateralized mortgage obligations and mortgage backed securities(e) | Other collateralized mortgage obligations and mortgage-backed securities(f) | Alternative Investments: | Private equity(g) | Real estate(h) | Other | Total |


| Amount Ratios | December 31Dollars in millions | Risk-based capital | Tier 1 | PNC | PNC Bank, N.A. | Total | PNC | PNC Bank, N.A. | Leverage | PNC | PNC Bank, N.A. |


| Year Ended December 31, | 2012 | $ | (In millions, except percentages) | North America | Europe and Africa | Asia-Pacific | South America | Total-1 |


In particular, we have received commitments for $30.0 billion in debt financing to fund the Transactions which is comprised of (i) a $4.0 billion secured revolving credit facility, (ii) a $7.0 billion term loan credit facility and (iii) a $19.0 billion secured bridge loan facility.
Our reliance on the financing from the $19.0 billion secured bridge loan facility commitment is intended to be reduced through one or more secured note offerings or other long-term financings prior to the merger closing.
However, there can be no assurance that we will be able to issue any such secured notes or other long-term financings on terms we find acceptable or at all, especially in light of the recent debt market volatility, in which case we may have to exercise some or all of the commitments under the secured bridge facility to fund the Transactions.
Accordingly, the costs of financing for the Transactions may be higher than expected.
Credit rating downgrades could adversely affect the businesses, cash flows, financial condition and operating results of T-Mobile and, following the Transactions, the combined company.
Credit ratings impact the cost and availability of future borrowings, and, as a result, cost of capital.
Our current ratings reflect each rating agencys opinion of our financial strength, operating performance and ability to meet our debt obligations or, following the completion of the Transactions, obligations to the combined companys obligors.
Each rating agency reviews these ratings periodically and there can be no assurance that such ratings will be maintained in the future.
A downgrade in the rating of us and/or Sprint could adversely affect the businesses, cash flows, financial condition and operating results of TMobile and, following the Transactions, the combined company.
We have incurred, and will incur, direct and indirect costs as a result of the Transactions.
We have incurred, and will incur, substantial expenses in connection with and as a result of completing the Transactions, and over a period of time following the completion of the Transactions, the combined company also expects to incur substantial expenses in connection with integrating and coordinating our and Sprints businesses, operations, policies and procedures.
A portion of the transaction costs related to the Transactions will be incurred regardless of whether the Transactions are completed.
While we have assumed that a certain level of transaction expenses will be incurred, factors beyond our control could affect the total amount or the timing of these expenses.
Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately.
These expenses will exceed the costs historically borne by us.
These costs could adversely affect our financial condition and results of operations prior to the Transactions and the financial condition and results of operations of the combined company following the Transactions.
Item 1B.
Unresolved Staff Comments None.
Item 2.
Properties As of December 31, 2018, our significant properties that we primarily lease and use in connection with switching centers, data centers, call centers and warehouses were as follows:


| Awards Weighted-AverageGrant DateFair Value | Unvested at December 31, 2008 | Granted | Vested | Forfeited | Unvested at December 31, 2009 |


| (In millions) Fiscal 2017 Fiscal 2016 Fiscal 2015 | Interest income-1 | Net gain (loss) on executive deferred compensation plan assets(2) | Other | Total interest and other income (expense), net |


Gross operating revenues, fuel and purchased power expenses, and other regulatory charges Gross operating revenues decreased primarily due to a decrease of $179 million in fuel cost recovery revenues due to lower fuel rates and fuel refunds.
The decrease was partially offset by the $39 million increase in net revenue described above and an increase of $44 million in wholesale revenues, including $30 million from the System Agreement cost equalization payments from Entergy Arkansas.
The receipt of such payments is being


| Exit Cost Reserves Restructuring Reserves | (Dollars in millions) | Balance, January 1 | Exit costs and restructuring charges: | Merrill Lynch | Countrywide | LaSalle | U.S. Trust Corporation | MBNA | Cash payments | Balance, December 31 |


| Operating Results | Americas | Year Ended December 31, 2012 | (In millions) | Revenues | Premiums | Universal life and investment-type product policy fees | Net investment income | Other revenues | Net investment gains (losses) | Net derivative gains (losses) | Total revenues | Expenses | Policyholder benefits and claims and policyholder dividends | Interest credited to policyholder account balances | Goodwill impairment | Capitalization of DAC | Amortization of DAC and VOBA | Amortization of negative VOBA | Interest expense on debt | Other expenses | Total expenses | Provision for income tax expense (benefit) | Operating earnings | Adjustments to: | Total revenues | Total expenses | Provision for income tax (expense) benefit | Income (loss) from continuing operations, net of income tax |


| Noninvestment-grade Collateral held against | As of December 31, 2005 | (in millions, except ratios) | Top 10 industries(a) | Banks and finance companies | Real estate | Consumer products | Healthcare | State and municipal governments(b) | Utilities | Retail and consumer services(b) | Oil and gas | Asset managers | Securities firms and exchanges | All other | Total excluding HFS | Held-for-sale(c) | Total exposure |


| December 31, (in millions) 2014 2013 | Derivative receivables balance(a) | Derivative payables balance(a) | Derivatives CVA(b) | Derivatives DVA and FVA(b)(c) | Structured notes balance(a)(d) | Structured notes DVA and FVA(b)(e) |


| December 31, | 2012 | (in millions) | Income taxes receivable—current | Income taxes receivable—noncurrent | Total income taxes receivable | Income taxes payable—current | Income taxes payable—noncurrent | Total income taxes payable |


| In millions of dollars 2008 2007 2006 | Total revenues, net of interest expense | Income from discontinued operations | Gain on sale | Provision for income taxes and minority interest, net of taxes | Income from discontinued operations, net of taxes | In millions of dollars | Cash flows from operating activities | Cash flows from investing activities | Cash flows from financing activities | Net cash provided by (used in) discontinued operations |


| 2016 2015 2014 | Third-party sales | ATOI |


| 2003 $28.7 | 2004 | 2005 | 2006 | 2007 | Later years | $90.4 |


| Years Ended March 31, Change | (Dollars in millions) | Other Income, Net | Distribution Solutions | Technology Solutions | Corporate | Total |


OPERATIONAL RISK MANAGEMENT Operational risk is the risk of loss resulting from inadequate or failed internal processes or systems, human factors, or external events.
This includes losses that may arise as a result of noncompliance with laws or regulations, failure to fulfill fiduciary responsibilities, as well as litigation or other legal actions.
Operational risk may occur in any of our business activities and manifests itself in various ways, including but not limited to: ?
Transaction processing errors, ?
Unauthorized transactions and fraud by employees or third parties, ?
Material disruption in business activities, ?
System breaches and misuse of sensitive information, ?
Regulatory or governmental actions, fines or penalties, and ?
Significant legal expenses, judgments or settlements.
PNCs Operational Risk Management is inclusive of Technology Risk Management, Compliance and Business Continuity Risk.
Operational Risk Management focuses on balancing business needs, regulatory expectations and risk management priorities through an adaptive and proactive program that is designed to provide a strong governance model, sound and consistent risk management processes and transparent operational risk reporting across the enterprise.
The PNC Board determines the strategic approach to operational risk via establishment of the operational risk appetite and appropriate risk management structure.
This includes establishment of risk metrics and limits and a reporting structure to identify, understand and manage operational risks.
Executive Management has responsibility for operational risk management.
The executive management team is responsible for monitoring significant risks, key controls and related issues through management reporting and a governance structure of risk committees and sub-committees.
Within Risk Management, Operational Risk Management functions are responsible for developing and maintaining the


the defined benefit pension plans’ trust and $130 million to our retiree medical plans which will reduce our cash funding requirements for 2007 and 2008.
In 2007, we expect to make no contributions to the defined benefit pension plans and expect to contribute $175 million to the retiree medical and life insurance plans, after giving consideration to the 2006 prepayments.
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:


| Pension Benefits-1 Other Retiree Benefits-2 | 2012 | CHANGE IN PLAN ASSETS | Fair value of plan assets at beginning of year | Actual return on plan assets | Employer contributions | Participants' contributions | Currency translation and other | ESOP debt impacts-4 | Benefit payments | FAIR VALUE OF PLAN ASSETS AT END OF YEAR | FUNDED STATUS |


The construction of the building was completed in December 2003.
Due to lower than expected financing and construction costs, the final lease balance was lowered to $103.0 million.
As part of the agreement, we entered into a five-year lease that began upon the completion of the building.
At the end of the lease term, we can purchase the building for the lease balance, remarket or relinquish the building.
If we choose to remarket or are required to do so upon relinquishing the building, we are bound to arrange the sale of the building to an unrelated party and will be required to pay the lessor any shortfall between the net remarketing proceeds and the lease balance, up to the maximum recourse amount of $90.8 million (“residual value guarantee”).
See Note 14 in our Notes to Consolidated Financial Statements for further information.


| Three months ended | Average amount(in millions) | HQLA | Eligible cash(a) | Eligible securities(b)(c) | Total HQLA(d) | Net cash outflows | LCR | Net excess HQLA(d) | December 31, (in millions) | Total, net of cash collateral | Liquid securities and other cash collateral held against derivative receivables(a) | Total, net of all collateral |


Defined Contribution Plans We maintain a number of defined contribution plans, most with 401(k) features, that cover substantially all of our employees.
Under the provisions of our 401(k) plans, we match most employees’ eligible contributions at rates specified in the plan documents.
Our contributions were $617 million in 2016, $393 million in 2015 and $385 million in 2014, the majority of which were funded in our common stock.
Our defined contribution plans held approximately 36.9 million and 40.0 million shares of our common stock as of December 31, 2016 and 2015.


| Year ended December 31, | 2005 | Benefits ratio-1: | Group life | Group disability | Administrative operating expense ratio-2: | Group life | Group disability |


Obligations Arising Out of a Variable Interest in an Unconsolidated Entity Variable interest in Equity investments  As of December 31, 2007, NRG had not entered into any financing structure that was designed to be off-balance sheet that would create liquidity, financing or incremental market risk or credit risk to the Company.
However, NRG has several investments with an ownership interest percentage of 50% or less in energy and energy-related entities that are accounted for under the equity method of accounting.
NRGs pro-rata share of non-recourse debt held by unconsolidated affiliates was approximately $122 million as of December 31, 2007.
This indebtedness may restrict the ability of these subsidiaries to issue dividends or distributions to NRG.
Synthetic Letter of Credit Facility and Revolver Facility  Under NRGs amended Senior Credit Facility which the company entered in to on June 8, 2007, the Company has a $1.3 billion synthetic Letter of Credit Facility which is secured by a $1.3 billion cash deposit at Deutsche Bank AG, New York Branch, the Issuing Bank.
This deposit was funded using proceeds from the Term B loan investors who participated in the facility syndication.
Under the Synthetic Letter of Credit Facility, NRG is allowed to issue letters of credit for general corporate purposes including posting collateral to support the Companys commercial operations activities.
On August 6, 2007, NRG entered into an agreement with BNP Paribas, or BNP, whereby BNP has agreed to be an issuing bank under the revolver portion of the Companys Senior Credit Facility.
BNP has agreed to issue up to $350 million of letters of credit.
In addition, on January 30, 2008, NRG entered into an agreement with Bank of America, whereby Bank of America has also agreed to be an issuing bank under the revolver portion of the Companys Senior Credit Facility.
Bank of America has agreed to issue up to $250 million of letters of credit under the revolver.
This increases the amount of unfunded letters of credit the Company can issue under its Revolving Credit Facility to $900 million for ongoing working capital requirements and for general corporate purposes, including acquisitions that are permitted under the Senior Credit Facility.
In addition, NRG is permitted to issue additional letters of credit of up $100 million under the Senior Credit facility through other financial institutions.
As of December 31, 2007, the Company had issued $743 million in letters of credit under the Synthetic Letter of Credit Facility.
In addition, as of December 31, 2007, the Company had issued $3 million in letters of credit under the Revolving Credit Facility.
A portion of these letters of credit supports non-commercial letter of credit obligations.


| Year Return Year Return | 2006 | 2005 | 2004 | 2003 | 2002 |


Average interest-earning assets decreased 2% to $41.0 billion for the year ended December 31, 2015, compared to the same period in 2014.
Average interest-bearing liabilities decreased 3% to $38.9 billion for the year ended December 31, 2015, compared to the same period in 2014.
Net interest margin increased 20 basis points to 2.50% for the year ended December 31, 2015, compared to the same period in 2014.
The increase was primarily due to lower borrowing costs resulting from the termination of legacy wholesale funding obligations and the refinancing and reduction of corporate debt during 2015.


| 2009 | (Dollars in millions) | Trading account assets: | Corporate securities, trading loans and other | Equity securities | Foreign sovereign debt | Mortgage trading loans and asset-backed securities | Total trading account assets | Net derivative assets | Available-for-sale debt securities: | Non-agency MBS: | Residential | Commercial | Foreign securities | Corporate/Agency bonds | Other taxable securities | Tax-exempt securities | Total available-for-sale debt securities | Loans and leases-2 | Mortgage servicing rights | Loans held-for-sale-2 | Other assets | Trading account liabilities – Foreign sovereign debt | Accrued expenses and other liabilities-2 | Long-term debt-2 | Total | 2008 | Trading account assets | Net derivative assets | Available-for-sale debt securities | Loans and leases-2 | Mortgage servicing rights | Loans held-for-sale-2 | Other assets | Accrued expenses and other liabilities-2 | Total | 2007 | Trading account assets-3 | Net derivative assets-3 | Available-for-sale debt securities-3, 4 | Loans and leases-2 | Mortgage servicing rights-3 | Loans held-for-sale-2 | Other assets-5 | Accrued expenses and other liabilities-2 | Total |


| Coca-Cola Minute Maid Aquarius Bonaqua/Bonaqa | Diet Coke/Coca-Cola Light | Coca-Cola Zero | Fanta | Sprite |


| Year Ended December 31, 2012 2011 2010 | Eurasia & Africa | Europe | Latin America | North America | Pacific | Bottling Investments | Corporate | Total |


The pension and other postretirement plans may be amended or terminated at any time.
Any revisions could result in significant changes to our obligations and our obligation to fund the plans.
We report unrecognized pension and other postretirement benefit cost in the Consolidated Statements of Financial Position as a component of accumulated other comprehensive income in shareholders’ equity.
It represents the after-tax differences between the fair value of plan assets and the projected benefit obligation (‘‘PBO’’) for pension plans and the accumulated postretirement benefit obligation for other postretirement plans that have not yet been recognized as a component of net periodic cost.
The measurement of the unrecognized pension and other postretirement benefit cost can vary based upon the fluctuations in the fair value of plan assets and the actuarial assumptions used for the plans as discussed below.
The unrecognized pension and other postretirement benefit cost as of December 31, 2012 was $1.73 billion, an increase of $302 million from $1.43 billion as of December 31, 2011.
The increase was the result of updated actuarial assumptions primarily the discount rates.
As of December 31, 2012, $1.88 billion related to pension benefits and $(150) million related to other postretirement benefits.
The components of net periodic pension cost for all pension plans for the years ended December 31 are as follows:


| Freight cars Owned Leased Total AverageAge (yrs.) | Covered hopper | Open hoppers | Gondolas | Boxcars | Mechanical refrigerated | Flat cars | Other | Total freight cars |


($113 million) also supported Measurement & Analytical Instrumentation sales.
Valves, Actuators & Regulators increased $1.1 billion, or 41 percent, led by the valves & controls acquisition ($771 million) and broad-based demand across end markets, including energy, power and life sciences.
Industrial Solutions sales increased $267 million, or 16 percent, driven by favorable global trends in general industrial end markets.
Underlying sales increased 14 percent in the U. S. , 1 percent in Europe and 11 percent in Asia (China up 21 percent).
Latin America increased 4 percent, Canada increased 14 percent and Middle East/Africa was up 9 percent.
Earnings of $1.9 billion increased $364 million from the prior year on higher volume and leverage, cost reduction savings and lower restructuring expense of $22 million, partially offset by higher investment spending.
Margin increased 0.3 percentage points to 16.5 percent.
These results reflect a dilutive impact on comparisons from the valves & controls acquisition of 1.2 percentage points, which included an impact from higher intangibles amortization of 0.4 percentage points, or $45 million.
In 2019, growth in Automation Solutions will continue to be driven by MRO activity, as well as brownfield capital investments in existing assets to expand capacity or to improve the efficiency, safety and uptime of those facilities.
Steady progress in greenfield capital projects across upstream, midstream infrastructure, natural gas, chemical and hybrid markets, including life sciences and food and beverage, is also expected with orders weighted toward the second half of 2019.2017 vs.  2016  Automation Solutions reported sales of $9.4 billion in 2017, an increase of $441 million or 5 percent.
Underlying sales decreased 1 percent ($128 million) on lower volume and slightly lower price.
The valves & controls acquisition added 7 percent ($603 million), while foreign currency translation subtracted 1 percent ($34 million).
Sales for Measurement & Analytical Instrumentation decreased 2 percent and Process Control Systems & Solutions decreased 4 percent due to weakness in energy-related markets, but began to improve in the second half of the year as oil prices stabilized.
Valves, Actuators & Regulators increased $531 million, or 25 percent, due to the valves & controls acquisition.
Industrial Solutions sales increased $59 million, or 4 percent, on improving economic conditions and industrial end markets, especially automotive.
Chemical, power and life sciences were favorable.
Underlying sales increased 1 percent in the U. S. , were down 2 percent in Europe and increased 1 percent in Asia (China up 9 percent).
Latin America decreased 20 percent, Canada decreased 6 percent and Middle East/Africa was down 6 percent.
Earnings of $1.5 billion increased $66 million from the prior year.
Savings from cost reduction actions and favorable foreign currency transactions comparisons of $64 million (unfavorable in the prior year) were partially offset by lower volume, and $25 million of restructuring expense and $29 million of intangibles amortization related to the valves & controls acquisition.
Materials cost containment offset lower price.
Margin was flat, primarily reflecting the benefit from cost reduction actions offset by dilution from the valves & controls acquisition of 1.5 percentage points.


| 2015 2014 2013 | Risk-free interest rate (a) | Expected term (b) | Expected share price volatility (c) |


| 2011 2010 2009 2008 2007 | (In thousands) | Net income | Net income attributable to noncontrolling interests | Gain on sale of real estate | Gain on deconsolidation of VIE | Depreciation and amortization of real estate assets | Amortization of initial direct costs of leases | Depreciation of joint venture real estate assets | Funds from operations | Dividends on preferred shares | Income attributable to operating partnership units | Income attributable to unvested shares | Funds from operations available for common shareholders |


| Severance and Benefits Asset- Related Excess Facilities Total | (In millions) | 2007 | 2006 | 2005 |


| December 31, 2018 2017 | (in thousands) | Balance at Beginning of Year | Additions/(reductions) for tax positions of prior years | Balance at End of Year |


| April 30, 2011 2010 2009 | U.S. OFFICES: | Company-owned offices | Company-owned shared locations-1 | Total company-owned offices | Franchise offices | Franchise shared locations-1 | Total franchise offices | 11,068 | INTERNATIONAL OFFICES: | Canada | Australia | 1,708 |


| JPMorgan Chase & Co. JPMorgan Chase Bank, N.A.Chase Bank USA, N.A. J.P. Morgan Securities LLCJ.P. Morgan Securities plc | December 31, 2018 | Moody’s Investors Service | Standard & Poor’s | Fitch Ratings |


| Year Ended December 31, | 2008 | (in millions) | Total cash provided by (used in): | Operating activities | Investing activities | Financing activities | Increase in cash and cash equivalents | Crude Oil Wells | Gross | United States | Equatorial Guinea | Israel | North Sea | China | Total |


As of December 31, 2017, the Company had gross state income tax credit carry-forwards of approximately $20 million, which expire from 2018 through 2020.
A deferred tax asset of approximately $16 million (net of federal benefit) has been established related to these state income tax credit carry-forwards, with a valuation allowance of $7 million against such deferred tax asset as of December 31, 2017.
The Company had a gross state net operating loss carry-forward of $39 million, which expires in 2027.
A deferred tax asset of approximately $3 million (net of federal benefit) has been established for the net operating loss carry-forward, with a full valuation allowance as of December 31, 2017.
Other state and foreign net operating loss carry-forwards are separately and cumulatively immaterial to the Company’s deferred tax balances and expire between 2026 and 2036.14.


| Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term  (in years) Aggregate  Intrinsic  Value | Outstanding at December 31, 2010 | Exercised | Forfeited and expired | Granted | Outstanding at December 31, 2011 | Vested and expected to vest at December 31, 2011 | Eligible for exercise at December 31, 2011 |


ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) includes the following sections: ?
Executive Overview that discusses at a high level our operating results and some of the trends that affect our business.  ?
Critical Accounting Policies and Estimates that we believe are important to understanding the assumptions and judgments underlying our financial statements.  ?
Results of Operations that includes a more detailed discussion of our revenue and expenses.  ?
Liquidity and Capital Resources which discusses key aspects of our statements of cash flows, changes in our balance sheets and our financial commitments.
You should note that this MD&A discussion contains forward-looking statements that involve risks and uncertainties.
Please see the section entitled “Forward-Looking Statements and Risk Factors” at the beginning of Item 1A for important information to consider when evaluating such statements.
You should read this MD&A in conjunction with the financial statements and related notes in Item 8 of this Annual Report.
In fiscal 2014 we acquired Check Inc.  and in fiscal 2012 we acquired Demandforce, Inc.  We have included their results of operations in our consolidated results of operations from the dates of acquisition.
In fiscal 2013 we completed the sale of our Intuit Websites business and in fiscal 2014 we completed the sales of our Intuit Financial Services (IFS) and Intuit Health businesses.
We accounted for all of these businesses as discontinued operations and have therefore reclassified our statements of operations for all periods presented to reflect them as such.
We have also reclassified our balance sheets for all periods presented to reflect IFS as discontinued operations.
The net assets of Intuit Websites and Intuit Health were not significant, so we have not reclassified our balance sheets for any period presented to reflect them as discontinued operations.
Because the cash flows of our Intuit Websites, IFS, and Intuit Health discontinued operations were not material for any period presented, we have not segregated the cash flows of those businesses from continuing operations on our statements of cash flows.
See “Results of Operations – Non-Operating Income and Expense – Discontinued Operations” later in this Item 7 for more information.
Unless otherwise noted, the following discussion pertains to our continuing operations.
Executive Overview This overview provides a high level discussion of our operating results and some of the trends that affect our business.
We believe that an understanding of these trends is important in order to understand our financial results for fiscal 2014 as well as our future prospects.
This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this Annual Report on Form 10-K.
See the table later in this Note 7 for more information on the IFS operating results.
The carrying amounts of the major classes of assets and liabilities of IFS at July 31, 2013 were as shown in the following table.
These carrying amounts approximated fair value.


| Crude Oil &Condensate NaturalGas NGLs Total | (millions) | 2014 Sales Revenues | Changes due to | Increase in Sales Volumes | Decrease in Sales Prices | 2015 Sales Revenues | Changes due to | Increase in Sales Volumes | Increase (Decrease) in Sales Prices | 2016 Sales Revenues |


| (Dollars in millions) 2017 2016 2015 | Interest rate risk on mortgage banking income-1 | Credit risk on loans-2 | Interest rate and foreign currency risk on ALM activities-3 | Price risk on certain restricted stock awards-4 |


RV and marine finance  RV and marine finance loans are loans provided to consumers for the purpose of financing recreational vehicles and boats.
Loans are originated on an indirect basis through a series of dealerships across 26 states.
The loans are underwritten centrally using an application and decisioning system similar to automobile loans.
The current portfolio includes 60% of the balances within our core footprint states.


| In millions 2015 2014 2013 | Revenue (a) | Expense (a) | Cash receipts (b) | Cash payments (c) |


| Accumulated Other Comprehensive Income (Loss) | Preferred   Stock | Balance at January 1, 2006 | Treasury stock transactions, net | Dividends on preferred stock | Dividends on common stock | Comprehensive income: | Net income | Other comprehensive income (loss): | Unrealized gains (losses) on derivative instruments, net of income tax | Unrealized investment gains (losses), net of related offsets and income tax | Foreign currency translation adjustments, net of income tax | Additional minimum pension liability adjustment, net of income tax | Other comprehensive income (loss) | Comprehensive income | Adoption of SFAS 158, net of income tax | Balance at December 31, 2006 | Cumulative effect of changes in accounting principles, net of income tax (Note 1) | Balance at January 1, 2007 | Treasury stock transactions, net | Obligation under accelerated common stock repurchase agreement (Note 18) | Dividends on preferred stock | Dividends on common stock | Comprehensive income: | Net income | Other comprehensive income (loss): | Unrealized gains (losses) on derivative instruments, net of income tax | Unrealized investment gains (losses), net of related offsets and income tax | Foreign currency translation adjustments, net of income tax | Defined benefit plans adjustment, net of income tax | Other comprehensive income (loss) | Comprehensive income | Balance at December 31, 2007 | Cumulative effect of changes in accounting principles, net of income tax (Note 1) | Balance at January 1, 2008 | Common stock issuance — newly issued shares | Treasury stock transactions: | Acquired in connection with share repurchase agreements (Note 18) | Issued in connection with common stock issuance | Issued to settle stock forward contracts | Acquired in connection with split-off of subsidiary | Other, net | Deferral of stock-based compensation | Dividends on preferred stock | Dividends on common stock | Comprehensive income: | Net income | Other comprehensive income (loss): | Unrealized gains (losses) on derivative instruments, net of income tax | Unrealized investment gains (losses), net of related offsets and income tax | Foreign currency translation adjustments, net of income tax | Defined benefit plans adjustment, net of income tax | Other comprehensive income (loss) | Comprehensive income (loss) | Balance at December 31, 2008 |


| Years Ended December 31, | 2009 | GAAP | (in millions, except percentages) | 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 | General and administrative expense | Total expenses | Pretax income (loss) |


Results of Operations - Other The following table presents consolidated financial information for the Other segment for the years indicated:


| Year ended December 31,(in millions) 2018 2017 2016 | Underwriting | Equity | Debt | Total underwriting | Advisory | Total investment banking fees |


| December 31, (in millions) 2007 2006 | Deferred tax assets | Allowance for loan losses | Allowance for other than loan losses | Employee benefits | Non-U.S. operations | Fair value adjustments | Gross deferred tax assets | Deferred tax liabilities | Depreciation and amortization | Leasing transactions | Non-U.S. operations | Fair value adjustments | Fee income | Other, net | Gross deferred tax liabilities | Valuation allowance | Net deferred tax asset |


| Year ended December 31, Increase | Project Costs | (In millions) | ARCALYST® | VEGF Trap-Eye | Aflibercept | REGN88 | REGN727 | Other antibody candidates in clinical development | Other research programs & unallocated costs | Total research and development expenses |


(1) The hypothetical change in fair value related to our mortgage bank-loan inventory reflects only the gross fair value change on the mortgage loan assets, and excludes any offsetting impact of derivatives and other instruments purchased to hedge such changes in fair value.
The tables above do not include approximately $129 billion of insurance reserve and deposit liabilities as of December 31, 2007 and $123 billion as of December 31, 2006.
We believe that the interest rate sensitivities of these insurance liabilities offset, in large measure, the interest rate risk of the financial assets set forth in these tables.
Our net estimated potential loss in fair value as of December 31, 2007 increased $293 million from December 31, 2006, primarily reflecting an increase in the level of investments in 2007.
The estimated changes in fair values of our financial assets shown above relate primarily to assets invested to support our insurance liabilities, but do not include separate account assets associated with products for which investment risk is borne primarily by the separate account contractholders rather than by us.
Market Risk Related to Equity Prices We actively manage investment equity price risk against benchmarks in respective markets.
We benchmark our return on equity holdings against a blend of market indices, mainly the S&P 500 and Russell 2000, and we target price sensitivities that approximate those of the benchmark indices.
We estimate our investment equity price risk from a hypothetical 10% decline in equity benchmark market levels and measure this risk in terms of the decline in fair market value of equity securities we hold.
Using this methodology, our estimated investment equity price risk as of December 31, 2007 was $958 million, representing a hypothetical decline in fair market value of equity securities we held at that date from $9.580 billion to $8.622 billion.
Our estimated investment equity price risk using this methodology as of December 31, 2006 was $916 million, representing a hypothetical decline in fair market value of equity securities we held at that date from $9.160 billion to $8.244 billion.
In calculating these amounts, we exclude separate account equity securities related to products for which the investment risk is borne primarily by the separate account contractholder rather than by us.
In addition to equity securities, as indicated above, we hold equity-based derivatives primarily to hedge the equity price risk embedded in the living benefit features in some of our variable annuity products.
As of December 31, 2007, our equity-based derivatives had notional values of $4.6 billion, and were reported at fair value as a $617 million asset, and the living benefit features accounted for as derivatives were reported at fair value as a $168 million liability.
As of December 31, 2006, our equity-based derivatives had notional values of $2.9 billion, and were reported at fair value as a $230 million asset, and the living benefits features accounted for as derivatives were reported at fair value as a $38 million asset.
Our estimated equity price risk associated with the equity-based derivatives, net of the related living benefit features, was less than $10 million as of both December 31, 2007 and 2006, estimated based on a hypothetical 10% decline in equity benchmark market levels.
While these scenarios are for illustrative purposes only and do not reflect our expectations regarding future performance of equity markets or of our equity portfolio, they represent near term reasonably possible hypothetical changes that illustrate the potential impact of such events.
These scenarios consider only the direct impact on fair value of declines in equity benchmark market levels and not changes in asset based fees recognized as revenue, changes in our estimates of total gross profits used as a basis for amortizing deferred policy acquisition and other costs, or changes in any other assumptions such as mortality, utilization or persistency rates in our variable annuity contracts that could also impact the fair value of our living benefit features.


| 2008 2007 2006 | Total cash provided by (used in): | Operating activities | Investing activities | Financing activities | Effect of exchange rate changes on cash | Increase in cash and cash equivalents | Principal Concentrate and/or Syrup Plants | Owned | Europe, Middle East & Africa | Latin America | North America | Asia Pacific | Bottling Investments | Corporate | Total1 |


Card income This revenue category includes interchange income from credit and debit cards and net fees earned from processing credit card transactions for merchants.
Card income is recognized as earned.
Annual fees and direct loan origination costs are deferred and recognized on a straightline basis over a 12-month period.
Expense related to rewards programs is recorded when the rewards are earned by the customer and netted against interchange income.
Credit card revenue sharing agreements The Firm has contractual agreements with numerous affinity organizations and co-brand partners (collectively, partners), which grant the Firm exclusive rights to market to the members or customers of such partners.
These partners endorse the credit card programs and provide their mailing lists to the Firm, and they may also conduct marketing activities and provide awards under the various credit card programs.
The terms of these agreements generally range from three to 10 years.
The Firm typically makes incentive payments to the partners based on new account originations, charge volumes and the cost of the partners marketing activities and awards.
Payments based on new account originations are accounted for as direct loan origination costs.
Payments to partners based on charge volumes are deducted from interchange income as the related revenue is earned.
Payments based on marketing efforts undertaken by the partners are expensed by the Firm as incurred and reported as noninterest expense.


Model review Some of the Firms financial instruments cannot be valued based on quoted market prices but are instead valued using pricing models.
These pricing models and VaR models are used for management of risk positions, such as reporting against limits, as well as for valuation.
The Model Risk Group, which is independent of the businesses and market risk management, reviews the models the Firm uses and assesses model appropriateness and consistency.
The model reviews consider a number of factors about the models suitability for valuation and risk management of a particular product.
These factors include whether the model accurately reflects the characteristics of the transaction and its significant risks, the suitability and convergence properties of numerical algorithms, reliability of data sources, consistency of the treatment with models for similar products, and sensitivity to input parameters and assumptions that cannot be priced from the market.
Reviews are conducted of new or changed models, as well as previously accepted models, to assess whether there have been any changes in the product or market that may affect the models validity and whether there are theoretical or competitive developments that may require reassessment of the models adequacy.
For a summary of valuations based on models, see Critical Accounting Estimates Used by the Firm on pages 149154 of this Annual Report.


[1] As a result of the net loss for the year ended December 31, 2003, SFAS No.128,
Earnings Per Share
, requires the Company to use basic weighted average common shares outstanding in the calculation of the year ended December 31, 2003 diluted earnings (loss) per share, since the inclusion of options of 1.8 would have been antidilutive to the earnings per share calculation.
In the absence of the net loss, weighted average common shares outstanding and dilutive potential common shares would have totaled 274.2.
LIFE Executive Overview The Company provides investment and retirement products such as variable and fixed annuities, mutual funds and retirement plan services and other institutional products; individual and corporate owned life insurance; and, group benefit products, such as group life and group disability insurance.
The Company derives its revenues principally from: (a) fee income, including asset management fees, on separate account and mutual fund assets and mortality and expense fees, as well as cost of insurance charges; (b) net investment income on general account assets; (c) fully insured premiums; and (d) certain other fees.
Asset management fees and mortality and expense fees are primarily generated from separate account assets, which are deposited with the Company through the sale of variable annuity and variable universal life products and from mutual funds.
Cost of insurance charges are assessed on the net amount at risk for investment-oriented life insurance products.
Premium revenues are derived primarily from the sale of group life, and group disability and individual term insurance products.
The Company’s expenses essentially consist of interest credited to policyholders on general account liabilities, insurance benefits provided, amortization of the deferred policy acquisition costs, expenses related to the selling and servicing the various products offered by the Company, dividends to policyholders, and other general business expenses.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.  Notes to Consolidated Financial Statements (continued)


| Year Ended December 31, 2015 Specialty Commercial International Total | (In millions, except %) | Net written premiums | Net earned premiums | Net investment income | Net operating income | Net realized investment (losses) gains | Net income | Other performance metrics: | Loss and loss adjustment expense ratio | Expense ratio | Dividend ratio | Combined ratio | Rate | Retention | New Business (a) | Year Ended December 31, 2014 | Net written premiums | Net earned premiums | Net investment income | Net operating income | Net realized investment gains (losses) | Net income | Other performance metrics: | Loss and loss adjustment expense ratio | Expense ratio | Dividend ratio | Combined ratio | Rate | Retention | New Business (a) |


| (Stated in millions) | 2014 | Revenue | North America | Latin America | Europe/CIS/Africa | Middle East & Asia | Eliminations & other | Pretax operating income | Corporate & other-1 | Interest income-2 | Interest expense-3 | Charges & credits-4 | $48,580 | (Stated in millions) Payment Period | Total | Debt-1 | Interest on fixed rate debt obligations-2 | Operating leases | Purchase obligations-3 | $18,860 |


| Increase/(Decrease) in: | Percentage | Point | Assumption | Discount rate | Actual return on assets | Expected return on assets |


| Acquisition of Best Buy Europe 8.1% | Net new stores | Comparable store sales decline | Unfavorable effect of foreign currency | Total revenue increase |


EMPLOYEE STOCK PURCHASE PLAN As of December 31, 2009, our ESPP has approximately 1.8 million shares available for issuance.
Full-time employees with six months and part-time employees with 12 months of continuous employment with us are eligible to participate in the ESPP at the commencement of the next six-month offering period.
Eligible participants may purchase our common stock at 95% of the fair market value on the last day of each six-month offering period.
No charge to earnings is recorded with respect to the ESPP.
Shares issued pursuant to the ESPP were as follows:


performance and revenue growth depends, in part, on the reliability and functionality of this infrastructure as a means of delivering human resources services.
The internet is a key mechanism for delivering our human resources services to our HR Solutions clients efficiently and cost effectively.
Our clients may not be receptive to human resource services delivered over the internet due to concerns regarding transaction security, user privacy, the reliability and quality of internet service and other reasons.
Our clients’ concerns may be heightened by the fact we use the internet to transmit extremely confidential information about our clients and their employees, such as compensation, medical information and other personally identifiable information.
In order to maintain the level of security, service and reliability that our clients require, we may be required to make significant investments in our online methods of delivering human resources services.
In addition, websites and proprietary online services have experienced service interruptions and other delays occurring throughout their infrastructure.
The adoption of additional laws or regulations with respect to the internet may impede the efficiency of the internet as a medium of exchange of information and decrease the demand for our services.
If we cannot use the internet effectively to deliver our services, our revenue growth and results of operation may be impaired.
We may lose client data as a result of major catastrophes and other similar problems that may materially adversely impact our operations.
We have multiple processing centers around the world that use various commercial methods for disaster recovery capabilities.
Our main data processing center is located near the Aon Hewitt headquarters in Lincolnshire, Illinois.
In the event of a disaster, our business continuity may not be sufficient, and the data recovered may not be sufficient for the administration of our clients’ human resources programs and processes.
Item 1B.
Unresolved Staff Comments.
None.
Item 2.
Properties.
We have offices in various locations throughout the world.
Substantially all of our offices are located in leased premises.
We maintain our corporate headquarters at 200 E.  Randolph Street in Chicago, Illinois, where we occupy approximately 327,000 square feet of space under an operating lease agreement that expires in 2013.
There are two five-year renewal options at current market rates.
We own one building at Pallbergweg 2-4, Amsterdam, the Netherlands (150,000 square feet).
The following are additional significant leased properties, along with the occupied square footage and expiration.