NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fifth Third Bancorp 97 26.
CERTAIN REGULATORY REQUIREMENTS AND CAPITAL RATIOS The principal source of income and funds for the Bancorp (parent company) are dividends from its subsidiaries.
During 2008, the amount of dividends the bank subsidiaries could pay to the Bancorp without prior approval of regulatory agencies was limited to their 2008 eligible net profits, as defined, and the adjusted retained 2007 and 2006 net income of those subsidiaries.
The Bancorps subsidiary banks must maintain cash reserve balances when total reservable deposit liabilities are greater than the regulatory exemption.
These reserve requirements may be satisfied with vault cash and noninterest-bearing cash balances on reserve with a Federal Reserve Bank.
In 2008 and 2007, the subsidiary banks were required to maintain average cash reserve balances of $403 million and $330 million, respectively.
The FRB adopted guidelines pursuant to which it assesses the adequacy of capital in examining and supervising a bank holding company and in analyzing applications to it under the Bank Holding Company Act of 1956, as amended.
These guidelines include quantitative measures that assign risk weightings to assets and off-balance sheet items, as well as define and set minimum regulatory capital requirements.
All bank holding companies are required to maintain core capital (Tier I) of at least 4% of riskweighted assets and off-balance sheet items (Tier I capital ratio), total capital of at least 8% of risk-weighted assets and off-balance sheet items (Total risk-based capital ratio) and Tier I capital of at least 3% of adjusted quarterly average assets (Tier I leverage ratio).
Failure to meet the minimum capital requirements can initiate certain actions by regulators that could have a direct material effect on the Consolidated Financial Statements of the Bancorp.
Tier I capital consists principally of shareholders equity including Tier I qualifying trust preferred securities or notes payable pertaining to unconsolidated special purpose entities that issue trust preferred securities.
It excludes unrealized gains and losses on available-for-sale securities and unrecognized pension actuarial gains and losses and prior service cost, less goodwill and certain other intangibles.
Tier II capital consists principally of perpetual and trust preferred stock that is not eligible to be included as Tier I capital, term subordinated debt, intermediate-term preferred stock and, subject to limitations, general allowances for loan and lease losses.
Assets are adjusted under the risk-based guidelines to take into account different risk characteristics.
Average assets for this purpose does not include goodwill and any other intangible assets and investments that the FRB determines should be deducted from Tier I capital.
Both the FRB and the OCC have issued regulations regarding the capital adequacy of subsidiary banks.
These requirements are substantially similar to those adopted by the FRB regarding bank holding companies, as described above.
In addition, the federal banking agencies have issued substantially similar regulations to implement the system of prompt corrective action established by Section 38 of the Federal Deposit Insurance Act.
Under the regulations, a bank generally shall be deemed to be well-capitalized if it has a Total risk-based capital ratio of 10% or more, a Tier I capital ratio of 6% or more, a Tier I leverage ratio of 5% or more and is not subject to any written capital order or directive.
If an institution becomes undercapitalized, it would become subject to significant additional oversight, regulations and requirements as mandated by the Federal Deposit Insurance Act.
The Bancorp and each of its subsidiary banks had Tier I, Total risk-based capital and Tier I leverage ratios above the well-capitalized levels at December 31, 2008 and 2007.
As of December 31, 2008, the most recent notification from the FRB categorized the Bancorp and each of its subsidiary banks as well-capitalized under the regulatory framework for prompt corrective action.
To continue to qualify for financial holding company status pursuant to the GrammLeach-Bliley Act of 1999, the Bancorps subsidiary banks must, among other things, maintain well-capitalized capital ratios.
U. S.  bank regulatory authorities and international bank supervisory organizations, principally the Basel Committee on Banking Supervision, are currently considering changes to the riskbased capital adequacy framework for banks, including emphasis on credit, market and operational risk components, which ultimately could affect the appropriate capital guidelines for bank holding companies such as the Bancorp.
Capital and risk-based capital and leverage ratios for the Bancorp and its significant subsidiary banks at December 31:


| As of or for the year ended December 31, (in millions) 2013 2012 2011 | Securities gains | Investment securities portfolio (average) | Investment securities portfolio (period–end)(a) | Mortgage loans (average) | Mortgage loans (period-end) | 2013 | December 31, (in millions) | Securities purchased under resale agreements | Securities purchased under resale agreements with an appropriate legal opinion | Securities purchased under resale agreements where an appropriate legal opinion has not been either sought or obtained | Total securities purchased under resale agreements | Securities borrowed |


| Qualified Defined Benefit Pension Plans(a) Retiree Medical and Life Insurance Plans | 2015 | Service cost | Interest cost | Expected return on plan assets | Recognized net actuarial losses | Amortization of net prior service (credit) cost | Total net periodic benefit cost |


| Year ended December 31, Provision for loan losses Provision for lending-related commitments Total provision for credit losses | (in millions) | Investment Bank | Commercial Banking | Treasury & SecuritiesServices | Asset Management | Corporate/PrivateEquity(a)(b) | Total Wholesale | Retail Financial Services | Card Services – reported | Corporate/PrivateEquity(a)(c)(d) | Total Consumer | Total provision for credit losses – reported | Credit card – securitized | Total provision for credit losses – managed |


3.
DISCONTINUED OPERATIONS Sale of Nikko Cordial On October 1, 2009 the Company announced the successful completion of the sale of Nikko Cordial Securities to Sumitomo Mitsui Banking Corporation.
The transaction had a total cash value to Citi of 776 billion yen (U. S.  $8.7 billion at an exchange rate of 89.60 yen to U. S.  $1.00 as of September 30, 2009).
The cash value is composed of the purchase price for the transferred business of 545 billion yen, the purchase price for certain Japanese-listed equity securities held by Nikko Cordial Securities of 30 billion yen, and 201 billion yen of excess cash derived through the repayment of outstanding indebtedness to Citi.
After considering the impact of foreign exchange hedges of the proceeds of the transaction, the sale resulted an immaterial gain in 2009.
A total of about 7,800 employees are included in the transaction.
The Nikko Cordial operations had total assets and total liabilities of approximately $24 billion and $16 billion, respectively, at the time of sale, which were reflected in Citi Holdings prior to the sale.
Results for all of the Nikko Cordial businesses sold are reported as Discontinued operations for all periods presented.
Summarized financial information for Discontinued operations, including cash flows, related to the sale of Nikko Cordial is as follows:


| December 31, 2014 December 31, 2013 | In millions | Derivatives designated as hedging instruments under GAAP | Derivatives not designated as hedging instruments under GAAP | Total gross derivatives |


| (In millions) 2012 2011 | E&P | OSM | IG | Segment revenues | Elimination of intersegment revenues | Unrealized gain on crude oil derivative instruments | Total revenues | China | Fiscal Year | Balance forward | 2015 | 2016 | 2017 | 2018 | 2019 | Geographic Market | Africa-3 | Argentina | Canada | Central America-4 | Chile | China | India | Japan | Mexico | United Kingdom | International total | Plus Membership | Annual Membership Fee | Number of Add-on Memberships ($40 each) | Eligible for Cash Rewards | Fiscal Year | Balance forward | 2015 | 2016 | 2017 | 2018 | 2019 |


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) UCS.
As of May 31, 2009, $55.0 million of the purchase price was held in escrow (the “escrow account”).
Prior to our acquisition of UCS, the former parent company of UCS pledged the company’s stock as collateral for a third party loan (“the loan”) that matures on September 24, 2009.
Upon repayment of this loan, the stock will be released to us and $35.0 million of the purchase price will be released to the seller.
The remaining $20.0 million will remain in escrow until January 1, 2013, to satisfy any liabilities discovered post-closing that existed at the purchase date.
The purpose of this acquisition was to establish an acquiring presence in the Russian market and a foundation for other direct acquiring opportunities in Central and Eastern Europe.
The purchase price was determined by analyzing the historical and prospective financial statements and applying relevant purchase price multiples.
This business acquisition was not significant to our consolidated financial statements and accordingly, we have not provided pro forma information relating to this acquisition.
Upon acquisition of UCS Global Payments assumed an indirect guarantee of the loan.
In the event of a default by the third-party debtor, we would be required to transfer all of the shares of UCS to the trustee or pay the amount outstanding under the loan.
At May 31, 2009 the maximum potential amount of future payments under the guarantee was $44.1 million which represents the total outstanding under the loan, consisting of $21.8 million due and paid on June 24, 2009 and $22.3 million due on September 24, 2009.
Should the third-party debtor default on the final payment, Global Payments would pay the total amount outstanding and seek to be reimbursed for any payments made from the $55 million held in the escrow account.
We did not record an obligation for this guarantee because we determined that the fair value of the guarantee is de minimis.
The following table summarizes the preliminary purchase price allocation (in thousands):


| Company/Index January 3, 2009 January 2, 2010 January 1, 2011 December 31, 2011 December 29, 2012 December 28, 2013 | Advance Auto Parts | S&P 500 Index | S&P Retail Index |


| For the Year Ended March 31, | 2017 | Net cash provided by operating activities | Net cash used for investing activities | Net cash provided by financing activities | Effect of exchange rate changes on cash | Net (decrease) increase in cash and cash equivalents |


Closed Block On April 7, 2000, (the Demutualization Date), MLIC converted from a mutual life insurance company to a stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc.
The conversion was pursuant to an order by the New York Superintendent of Insurance (the Superintendent) approving MLICs plan of reorganization, as amended (the Plan).
On the Demutualization Date, MLIC established a closed block for the benefit of holders of certain individual life insurance policies of MLIC.
Assets have been allocated to the closed block in an amount that has been determined to produce cash flows which, together with anticipated revenues from the policies included in the closed block, are reasonably expected to be sufficient to support obligations and liabilities relating to these policies, including, but not limited to, provisions for the payment of claims and certain expenses and taxes, and to provide for the continuation of policyholder dividend scales in effect for 1999, if the experience underlying such dividend scales continues, and for appropriate adjustments in such scales if the experience changes.
At least annually, the Company compares actual and projected experience against the experience assumed in the then-current dividend scales.
Dividend scales are adjusted periodically to give effect to changes in experience.
The closed block assets, the cash flows generated by the closed block assets and the anticipated revenues from the policies in the closed block will benefit only the holders of the policies in the closed block.
To the extent that, over time, cash flows from the assets allocated to the closed block and claims and other experience related to the closed block are, in the aggregate, more or less favorable than what was assumed when the closed block was established, total dividends paid to closed block policyholders in the future may be greater than or less than the total dividends that would have been paid to these policyholders if the policyholder dividend scales in effect for 1999 had been continued.
Any cash flows in excess of amounts assumed will be available for distribution over time to closed block policyholders and will not be available to stockholders.
If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside of the closed block.
The closed block will continue in effect as long as any policy in the closed block remains in-force.
The expected life of the closed block is over 100 years.
The Company uses the same accounting principles to account for the participating policies included in the closed block as it used prior to the Demutualization Date.
However, the Company establishes a policyholder dividend obligation for earnings that will be paid to policyholders as additional dividends as described below.
The excess of closed block liabilities over closed block assets at the effective date of the demutualization (adjusted to eliminate the impact of related amounts in accumulated other comprehensive income) represents the estimated maximum future earnings from the closed block expected to result from operations attributed to the closed block after income taxes.
Earnings of the closed block are recognized in income over the period the policies and contracts in the closed block remain in-force.
Management believes that over time the actual cumulative earnings of the closed block will approximately equal the expected cumulative earnings due to the effect of dividend changes.
If, over the period the closed block remains in existence, the actual cumulative


| Year Ended December 31 2008 2007 2006 | (In millions, except %) | Net written premiums | Net earned premiums | Net investment income | Net operating income | Net realized investment gains (losses) | Net income | Ratios: | Loss and loss adjustment expense | Expense | Dividend | Combined |


Employee Benefit Plans In October 2006, effective upon consummation of the Disposition, the Company adopted the Chipotle Mexican Grill 401(k) plan (the 401(k) plan).
Prior to October 2006, eligible Chipotle employees were participants of a 401(k) plan sponsored by McDonalds.
The Company matches 100% of the first 3% of pay contributed by each eligible employee and 50% on the next 2% of pay contributed.
Employees become eligible to receive matching contributions after one year of service with the Company.
For the years ended December 31, 2008, 2007 and 2006, Company matching contributions totaled approximately $1,402, $1,234 and $1,070, respectively.
As a result of the Disposition, the Company adopted the Chipotle Mexican Grill, Inc.
Supplemental Deferred Investment Plan (the Deferred Plan) which covers eligible employees of the Company.
The Deferred Plan is a non-qualified, unfunded plan that allows participants to make tax-deferred contributions that cannot be made under the 401(k) plan because of Internal Revenue Service limitations.
Participants earnings on contributions made to the Deferred Plan fluctuate with the actual earnings and losses of a variety of available investment choices selected by the participant.
Total liabilities under the Deferred Plan as of December 31, 2008 and 2007 were $1,790 and $800, respectively, and are included in other long-term liabilities in the consolidated balance sheet.
The Company matches 100% of the first 3% of pay contributed by each eligible employee and 50% on the next 2% of pay contributed once the 401(k) contribution limits are reached.
For the years ended December 31, 2008, 2007 and 2006, the Company made deferred compensation matches of $252, $137 and $25 respectively, to the Deferred Plan.
Prior to October 2006, eligible Chipotle employees were participants of a deferred compensation plan sponsored by McDonalds.7.


| Facility Drawn* Available Cash Liquidity Maturity | (Millions of Dollars) | NSP-Minnesota | PSCo | SPS | Xcel Energy — holding company | Total |


Incurred losses increased by 17.2% to $954.5 million in 2014 compared to $814.7 million in 2013, primarily due to the increase in current year attritional losses of $151.5 million resulting primarily from the impact of the increase in premiums earned and less favorable development of $61.2 million on prior years attritional losses in 2014 compared to 2013, mainly related to an increase in A&E reserves.
This increase was partially offset by a decrease of $39.3 million in current year catastrophe losses and favorable development of $33.5 million on prior year catastrophe losses in 2014 compared to 2013, mainly related to Superstorm Sandy.
The $12.5 million of current year catastrophe losses in 2014 related to the Japan snowstorm ($7.8 million) and Hurricane Odile ($4.7 million).
The $51.8 million of current year catastrophe losses in 2013 were mainly due to U. S.  Storms ($44.8 million), the European floods ($5.0 million) and the Canadian Floods ($2.0 million).
Incurred losses decreased by 22.4% to $814.7 million in 2013 compared to $1,050.4 million in 2012, primarily due to the decrease in current year catastrophe losses for 2013 (outlined above), partially offset by an increase of $75.0 million in current year attritional losses due to the impact of the increase in premiums earned.
The $372.6 million of current year catastrophe losses for 2012 related to Superstorm Sandy ($289.0 million), U. S.  storms ($59.8 million) and Hurricane Isaac ($23.8 million).
Despite the increase in current year attritional losses, the current year attritional loss ratio decreased 3.2 points due to the continued shift in business to excess of loss contracts which generally have lower attritional losses than pro rata contracts.


| Change in Basic Earnings Per Share From Prior Year 2009 2008 | Basic Earnings Per Share – Prior Year | Non-core asset sales/impairments | Litigation settlement | Trust securities impairment | Saxton decommissioning regulatory asset – 2007 | Regulatory charges | Derivative mark-to-market adjustment | Organizational restructuring | Debt redemption premiums | Income tax resolution | Revenues | Fuel and purchased power | Amortization of regulatory assets, net | Investment income | Interest expense | Reduced common shares outstanding | Transmission expenses | Other expenses | Basic Earnings Per Share |


| Year Ended December 31, | 2011 | Net Income (in millions) | AMPCO and Affiliates | Alba Plant | CONE | Dividends (in millions) | AMPCO and Affiliates | Alba Plant | Sales Volumes | Methanol (MMgal) | Condensate (MBbl/d) | LPG (MBbl/d) | Average Realized Prices | Methanol (per gallon) | Condensate (per Bbl) | LPG (per Bbl) |


Gross margin Gross margin increased $307 million, or 15%, to $2.3 billion in 2001 from $2.0 billion in 2000.
Gross margin as a percentage of revenues decreased to 25% in 2000 from 26% in 2001.
The increase in gross margin is due to acquisition of new businesses and new operations from greenfield projects offset by lower market prices in the United Kingdom.
The decrease in gross margin as a percentage of revenues is due to a decline in the competitive supply and contract generation gross margin percentages offset slightly by increased gross margin percentages from large utilities and growth distribution.
Excluding businesses acquired or that commenced commercial operations in 2001 or 2000, gross margin decreased 2% to $1.8 billion in 2001.


| Year ended December 31, | 2005 | (in millions) | Cash value of surrenders | Cash value of surrenders as a percentage of mean future benefit reserves, policyholders’ account balances, and separate accountbalances |


| December 31, | 2011 | (In millions) | U.S. Business: | Guaranteed minimum accumulation benefit | Guaranteed minimum withdrawal benefit | Guaranteed minimum income benefit | International: | Guaranteed minimum accumulation benefit | Guaranteed minimum withdrawal benefit | Total |


Other expenses were $484 million, up $53 million from $431 million in 2004, primarily due to increases in professional services related to compliance, including costs related to implementation of BASEL II and the restructuring of our treasury function, as well as growth initiatives.
Income Taxes Income tax expense from continuing operations was $487 million for 2005, compared to $394 million a year ago, with the additional expense the result of increased pre-tax earnings.
The effective tax rate for continuing operations for 2005 was 34.0%.
The effective tax rate for 2004 was 33.1%, including the impact of a cumulative benefit of $18 million resulting from a change in the effective state tax rate applied to leveraged leasing transactions.
Excluding this item, the effective rate for 2004 was 34.0%.
The income tax benefit attributable to the loss from discontinued operations of $165 million was $58 million.
Line of Business Information We report two lines of business: Investment Servicing and Investment Management.
Given our services and management organization, the results of operations for these lines of business are not necessarily comparable with those of other companies, including companies in the financial services industry.
Information about revenue, expense and capital allocation methodologies is in Note 23 of the Notes to Consolidated Financial Statements included in this Form 10-K under Item 8.
The following is a summary of line of business results.
These results exclude the loss from discontinued operations related to the planned divestiture of our investment interest in Bel Air as described in the Financial Highlights section of this Discussion and Analysis.
The Business Divestiture column includes the revenue and expenses of the divested PAM business for 2003 prior to its divestiture.
The Other/One-Time column for 2005 includes the additional gain from the sale of the PAM business.
For 2004, this column includes merger and integration costs related to the acquisition of the GSS business.
For 2003, the Other/One-Time column includes the gains from the sales of the PAM and Corporate Trust businesses, the loss on certain real estate sold, and restructuring and merger, integration and divestiture charges.
Certain previously reported amounts have been reclassified to conform to current year presentation.


Note G – Environmental Matters Superfund Sites Hazardous substances, such as asbestos, polychlorinated biphenyls (PCBs) and coal tar, have been used or generated in the course of operations of the Utilities and their predecessors and are present at sites and in facilities and equipment they currently or previously owned, including sites at which gas was manufactured or stored.
The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and similar state statutes (Superfund) impose joint and several liability, regardless of fault, upon generators of hazardous substances for investigation and remediation costs (which includes costs of demolition, removal, disposal, storage, replacement, containment and monitoring) and environmental damages.
Liability under these laws can be material and may be imposed for contamination from past acts, even though such past acts may have been lawful at the time they occurred.
The sites at which the Utilities have been asserted to have liability under these laws, including their manufactured gas sites, are referred to herein as “Superfund Sites.
” For Superfund Sites where there are other potentially responsible parties and the Utilities are not managing the site investigation and remediation, the accrued liability represents an estimate of the amount the Utilities will need to pay to discharge their related obligations.
For Superfund Sites (including the manufactured gas sites) for which one of the Utilities is managing the investigation and remediation, the accrued liability represents an estimate of the undiscounted cost to investigate the sites and, for sites that have been investigated in whole or in part, the cost to remediate the sites in light of the information available, applicable remediation standards and experience with similar sites.
For the 12 months ended December 31, 2003, Con Edison of New York and O&R incurred approximately $21 million and $5 million, respectively, for environmental remediation costs.
No insurance recoveries were received.
For the 12 months ended December 31, 2002, Con Edison of New York and O&R incurred approximately $22 million and $2 million, respectively, for environmental remediation costs, and O&R received insurance recoveries of $7 million.
The accrued liabilities and regulatory assets related to Superfund Sites for each of the Companies at December 31, 2003 and December 31, 2002 were as follows:


| Rental   Income Sublease   Income Gross   Rental   Payments | (In millions) | 2011 | 2012 | 2013 | 2014 | 2015 | Thereafter |


Separate Account Business  Separate account assets and liabilities represent contract holder funds related to investment and annuity products for which the policyholder assumes substantially all the risk and reward.
The assets are segregated into accounts with specific underlying investment objectives and are legally segregated from CNA.
All assets of the separate account business are carried at fair value with an equal amount recorded for separate account liabilities.
Certain of the separate account investment contracts related to CNAs pension deposit business
Stock performance graph:The graph below shows the cumulative total shareholder return assuming the investment of $100, on December 31, 2011, and the reinvestment of dividends thereafter, if any, in the Companys common stock versus the Standard and Poors S&P 500 Retail Index (S&P 500 Retail Index) and the Standard and Poors S&P 500 Index (S&P 500).


| As of December 31, | 2009 | (In thousands) | Notional value | Fair value of notional | Gross and net fair value (liability) asset |


Productivity and Reinvestment Program In February 2012, the Company announced a four-year productivity and reinvestment program.
This program is designed to assist us in strengthening our brands and reinvesting our resources to drive long-term profitable growth.
The first component of this program is a global productivity initiative that will target annualized productivity of $350 million to $400 million.
This initiative will be focused on four primary areas: global supply chain optimization; global marketing and innovation effectiveness; operating expense leverage and operational excellence; and data and information technology systems standardization.
The second component of our productivity and reinvestment program relates to additional integration initiatives in North America as a result of our acquisition of CCE’s former North America business.
The Company has identified incremental synergies, primarily in the area of our North American product supply operations, which will better


| Gains/(Losses) Recognized in OCI - Effective Portion (c) Gains/(Losses)  Reclassified from AOCI into Income - Effective Portion (c) Gains/(Losses) Recognized –Ineffective Portion and Amount Excluded from Effectiveness Testing | September 25, 2010 | Cash flow hedges: | Foreign exchange contracts | Net investment hedges: | Foreign exchange contracts | Total |


| Year Ended December 31, 2011 | in millions, except per share data | GAAP results | Non-GAAP adjustments: | Goodwill and other intangible asset impairment charges | Acquisition- and divestiture-related net credits | Restructuring-related charges | Litigation-related charges | Discrete tax items | Amortization expense | Adjusted results |


Beginning on January 1, 2016, the pay-based component of the formula used to determine retirement benefits was frozen so that future pay increases, annual incentive bonuses or other amounts earned for or related to periods after December 31, 2015 are not used to calculate retirement benefits.
On January 1, 2020, the service-based component of the formula used to determine retirement benefits will also be frozen so that participants will no longer earn further credited service for any period after December 31, 2019.
When the freeze is complete, the majority of our salaried employees will have transitioned to an enhanced defined contribution retirement savings plan.
As part of the November 6, 2015 acquisition of Sikorsky, we established a new defined benefit pension plan for Sikorskys union workforce that provides benefits for their prospective service with us.
The Sikorsky salaried employees participate in a defined contribution plan.
We did not assume any legacy pension liability from UTC.
We have made contributions to trusts established to pay future benefits to eligible retirees and dependents, including Voluntary Employees Beneficiary Association trusts and 401(h) accounts, the assets of which will be used to pay expenses of certain retiree medical plans.
We use December 31 as the measurement date.
Benefit obligations as of the end of each year reflect assumptions in effect as of those dates.
Net periodic benefit cost is based on assumptions in effect at the end of the respective preceding year.
The rules related to accounting for postretirement benefit plans under GAAP require us to recognize on a plan-by-plan basis the funded status of our postretirement benefit plans as either an asset or a liability on our consolidated balance sheets.
There is a corresponding non-cash adjustment to accumulated other comprehensive loss, net of tax benefits recorded as deferred tax assets, in stockholders equity.
The funded status is measured as the difference between the fair value of the plans assets and the benefit obligation of the plan.
The net periodic benefit cost recognized each year included the following (in millions):


| % Change2014-2013 % Change2013-2012 | Data center cost | Compensation cost and related benefits associated with headcount | Depreciation expense | Royalty cost | Amortization of purchased intangibles | Various individually insignificant items | Total change |


| 2014 2013 2012 | Net sales | Operating profit | Operating margins | Backlog at year-end |


| 2013 2012 | December 31, (in millions) | U.S. GAAP nettable derivative receivables | Interest rate contracts: | Over–the–counter (“OTC”)(a) | OTC–cleared | Exchange traded(b) | Total interest rate contracts | Credit contracts: | OTC | OTC–cleared | Total credit contracts | Foreign exchange contracts: | OTC(a) | OTC–cleared | Exchange traded(b) | Total foreign exchange contracts | Equity contracts: | OTC(a) | OTC–cleared | Exchange traded(b) | Total equity contracts | Commodity contracts: | OTC(a) | OTC–cleared | Exchange traded(b) | Total commodity contracts | Derivative receivables with appropriate legal opinion | Derivative receivables where an appropriate legal opinion has not been either sought or obtained | Total derivative receivables recognized on the Consolidated Balance Sheets |


| 2006 2005 2004 | Revenue | Income (loss) from discontinued operations | Income tax (provision) benefit on income (loss) from discontinued operations | Net loss on disposal of discontinued operations, net of tax benefit of $444, $1,042 and $337, respectively | Loss from discontinued operations, net |


| $ in millions Before Consolidation-1 Consolidated Investment Products Adjustments-2 Total | As of December 31, 2011 | Current assets | Non-current assets | Total assets | Current liabilities | Long-term debt of consolidated investment products | Other non-current liabilities | Total liabilities | Retained earnings appropriated for investors in consolidated investment products | Other equity attributable to common shareholders | Equity attributable to noncontrolling interests in consolidated entities | Total liabilities and equity |


ENVIRONMENTAL COMPLIANCE Our environmental compliance costs are undiscounted and include the cost of ongoing monitoring programs, the cost of remediation efforts and other similar costs.
We accrue costs for environmental assessment and remediation efforts when we determine that a liability is probable and we can reasonably estimate the cost.
At the early stages of a remediation effort, environmental remediation liabilities are not easily quantified due to the uncertainties of various factors.
The range of an estimated remediation liability is defined and redefined as events in the remediation effort occur, but generally liabilities are recognized no later than completion of the remedial feasibility study.
When we can estimate a range of probable loss, we accrue the most likely amount.
In the event that no amount in the range of probable loss is considered most likely, the minimum loss in the range is accrued.
As of December 31, 2015, the spread between the amount accrued and the maximum loss in the range for all sites for which a range can be reasonably estimated was $3,154,000.
Accrual amounts may be based on technical cost estimations or the professional judgment of experienced environmental managers.
Our Safety, Health and Environmental Affairs Management Committee routinely reviews cost estimates and key assumptions in response to new information, such as the kinds and quantities of hazardous substances, available technologies and changes to the parties participating in the remediation efforts.
However, a number of factors, including adverse agency rulings and encountering unanticipated conditions as remediation efforts progress, may cause actual results to differ materially from accrued costs.
For additional information regarding environmental compliance costs see Note 8.
CLAIMS AND LITIGATION INCLUDING SELF-INSURANCE We are involved with claims and litigation, including items covered under our self-insurance program.
We are self-insured for losses related to workers' compensation up to $2,000,000 per occurrence and automotive and general/product liability up to $3,000,000 per occurrence.
We have excess coverage on a per occurrence basis beyond these retention levels.
Under our self-insurance program, we aggregate certain claims and litigation costs that are reasonably predictable based on our historical loss experience and accrue losses, including future legal defense costs, based on actuarial studies.
Certain claims and litigation costs, due to their unique nature, are not included in our actuarial studies.
We use both internal and outside legal counsel to assess the probability of loss, and establish an accrual when the claims and litigation represent a probable loss and the cost can be reasonably estimated.
For matters not included in our actuarial studies, legal defense costs are accrued when incurred.
The following table outlines our self-insurance program at December 31:


| 2010 2009 2008 | Balance at beginning of year | Provision | Amounts written off | Balance at end of year |


Other Risk Management Derivatives Other risk management derivatives are used by the Corporation to reduce certain risk exposures.
These derivatives are not qualifying accounting hedges because either they did not qualify for or were not designated as accounting hedges.
The table below presents gains (losses) on these derivatives for 2013, 2012 and 2011.
These gains (losses) are largely offset by the income or expense that is recorded on the hedged item.


Dispositions of Depreciable Real Estate Assets Excluded from Discontinued Operations We recorded a gain on sale of depreciable assets excluded from discontinued operations of $190.0 million for the year ended December 31, 2015, an increase of approximately $147.3 million from the $42.6 million gain on sale of depreciable assets recorded for the year ended December 31, 2014.
The increase was primarily the result of increased disposition activity.
Dispositions increased from eight multifamily properties for the year ended December 31, 2014, to 21 multifamily properties for the year ended December 31, 2015.
Gain from Real Estate Joint Ventures We recorded a gain from real estate joint ventures of $6.0 million during the year ended December 31, 2014 as opposed to no material gain or loss being recorded during the year ended December 31, 2015.
The decrease was primarily a result of recording a $3.4 million gain for the disposition of Ansley Village by Mid-America Multifamily Fund II, or Fund II, as well as a $2.8 million gain for the promote fee received from our Fund II partner during 2014.
The promote fee was received as a result of MAA achieving certain performance metrics in its management of the Fund II properties over the life of the joint venture.
There were no such gains recorded during the year ended December 31, 2015.
Discontinued Operations We recorded a gain on sale of discontinued operations of $5.4 million for the year ended December 31, 2014.
We did not record a gain or loss on sale of discontinued operations during the year ended December 31, 2015, due to the adoption of ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which resulted in dispositions being included in the gain on sale of depreciable real estate assets excluded from discontinued operations and is discussed further below.
Net Income Attributable to Noncontrolling Interests Net income attributable to noncontrolling interests for the year ended December 31, 2015 was approximately $18.5 million, an increase of $10.2 million from the year ended December 31, 2014.
This increase is consistent with the increase to overall net income and is primarily a result of the items discussed above.
Net Income Attributable to MAA Primarily as a result of the items discussed above, net income attributable to MAA increased by approximately $184.3 million in the year ended December 31, 2015 from the year ended December 31, 2014.
Comparison of the Year Ended December 31, 2014 to the Year Ended December 31, 2013 The comparison of the year ended December 31, 2014 to the year ended December 31, 2013 shows the segment break down based on the 2014 same store portfolios.
A comparison using the 2015 same store portfolio would not be comparative due to the nature of the classifications as a result of the Merger.
Property Revenues The following table shows our property revenues by segment for the years ended December 31, 2014 and December 31, 2013 (dollars in thousands):


| 2007 2006 2005 | Taxable-equivalent basis Dollars in millions | Assets | Interest-earning assets | Securities available for sale | Residential mortgage-backed | Commercial mortgage-backed | Asset-backed | U.S. Treasury and government agencies | State and municipal | Other debt | Corporate stocks and other | Total securities available for sale | Loans, net of unearned income | Commercial | Commercial real estate | Lease financing | Consumer | Residential mortgage | Other | Total loans, net of unearned income | Loans held for sale | Federal funds sold and resale agreements | Other | Total interest-earning assets/interest income | Noninterest-earning assets | Allowance for loan and lease losses | Cash and due from banks | Other | Total assets | Liabilities, Minority and Noncontrolling Interests, and Shareholders' Equity | Interest-bearing liabilities | Interest-bearing deposits | Money market | Demand | Savings | Retail certificates of deposit | Other time | Time deposits in foreign offices | Total interest-bearing deposits | Borrowed funds | Federal funds purchased | Repurchase agreements | Federal Home Loan Bank borrowings | Bank notes and senior debt | Subordinated debt | Other | Total borrowed funds | Total interest-bearing liabilities/interest expense | Noninterest-bearing liabilities, minority and noncontrolling interests, and shareholders' equity | Demand and other noninterest-bearing deposits | Allowance for unfunded loan commitments and letters of credit | Accrued expenses and other liabilities | Minority and noncontrolling interests in consolidated entities | Shareholders' equity | Total liabilities, minority and noncontrolling interests, and shareholders' equity | Interest rate spread | Impact of noninterest-bearing sources | Net interest income/margin | 2012 | Numerator: | Net income | Denominator: | Weighted-average shares outstanding | Effect of dilutive securities | Weighted-average diluted shares | Basic earnings per share | Diluted earnings per share |


COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*


| Global Banking Total Corporation | (Dollars in millions) | Products | Advisory | Debt issuance | Equity issuance | Gross investment banking fees | Self-led | Total investment banking fees |


| (in millions) 2007 2006 | Rating: | AAA | AA | A | BBB | Below investment grade | Total |


| ($ in millions) 2016 2015 2014 | Research and development – total | Less depreciation on research facilities | Research and development, net |


| (Millions of Dollars) Level 1 Level 2 Level 3 Total | U.S. Equity(a) | International Equity(b) | U.S. Government Issues(c) | Corporate Bonds(d) | Structured Assets(e) | Other Fixed Income(f) | Real Estate(g) | Cash and Cash Equivalents(h) | Futures(i) | Total investments | Funds for retiree health benefits(j) | Investments (excluding funds for retiree health benefits) | Pending activities(k) | Total fair value of plan net assets |


| Year ended December 31 (in millions) 2015 2014 2013 | Cable distribution system | Customer premise equipment | Other equipment | Buildings and building improvements | Total |


| 2015 2014 2013 | Balance, beginning of year | Additions charged to costs and expenses | Deductions | Other | Balance, end of year |


| 2009 2008 2007 Amount | Dollars in millions, except per share data | Revenues | Sales by Company-operated restaurants | Revenues from franchised restaurants | Total revenues | Operating costs and expenses | Company-operated restaurant expenses | Franchised restaurants—occupancy expenses | Selling, general & administrative expenses | Impairment and other charges (credits), net | Other operating (income) expense, net | Total operating costs and expenses | Operating income | Interest expense | Nonoperating (income) expense, net | Gain on sale of investment | Income from continuing operations before provision for income taxes | Provision for income taxes | Income from continuing operations | Income from discontinued operations (net of taxes of $35) | Net income | Income per common share—diluted | Continuing operations | Discontinued operations | Net income | Weighted-average common shares outstanding—diluted |


| Fiscal Years Operating Leases | 2016 | 2017 | 2018 | 2019 | 2020 | Later Years | Total |


Ã¿Ã¾impact pretax income.
 The net income (loss) of the CIEs is reflected in net income (loss) attributable to noncontrolling  interests.
 The results of operations of the CIEs are reflected in the Corporate & Other segment.
 On a consolidated basis,  the management fees we earn for the services we provide to the CIEs and the related general and administrative expenses  are eliminated and the changes in the assets and liabilities related to the CIEs, primarily debt and underlying syndicated  loans, are reflected in net investment income.
 We continue to include the fees in the management and financial advice  fees line within our Asset Management segment.
  While our consolidated financial statements are prepared in accordance with U.
S.
 generally accepted accounting principles  (  GAAP  ), management believes that operating measures, which exclude net realized gains or losses; the market impact  on variable annuity guaranteed benefits, net of hedges and the related DSIC and DAC amortization; the market impact on  indexed universal life benefits, net of hedges and the related DAC amortization, unearned revenue amortization and the  reinsurance accrual; integration and restructuring charges; income (loss) from discontinued operations; and the impact of  consolidating CIEs, best reflect the underlying performance of our core operations and facilitate a more meaningful trend  analysis.
 While the consolidation of the CIEs impacts our balance sheet and income statement, our exposure to these  entities is unchanged and there is no impact to the underlying business results.
 Management uses certain of these  non-GAAP measures to evaluate our financial perfor


| ALICO’s Operations   Included in MetLife’s   Results for the   Year Ended December 31, 2010  (In millions) | Total revenues | Income (loss) from continuing operations, net of income tax |


| Fixed Maturity Securities Years Ended December 31, Equity Securities Years Ended December 31, Total Years Ended December 31, | 2009 | (In millions) | Proceeds | Gross investment gains | Gross investment losses | Total OTTI losses recognized in earnings: | Credit-related | Other -1 | Total OTTI losses recognized in earnings | Net investment gains (losses) |


The Companys Regional Affiliates include carriers with which it has capacity purchase agreements: AMR Eagle and two independent carriers, Trans States Airlines, Inc.  (Trans States) and Chautauqua Airlines, Inc.  (Chautauqua).
In 2003, American had capacity purchase agreements with AMR Eagle, Chautauqua and Trans States for the full year.
In 2002, American had a capacity purchase agreement with Chautauqua for the full year and a capacity purchase agreement with Trans States beginning in November 2002.
Prior to entering into capacity purchase agreements with these carriers, American had revenue proration agreements with the carriers, whereby revenues were allocated to the carriers based on industry standard mileage proration agreements and were not recorded as Regional Affiliates revenue.
Regional Affiliates passenger revenues, which are based on industry standard mileage proration agreements for flights connecting to American flights, increased $1.4 billion to $1.5 billion primarily as a result of Americans capacity purchase agreement with AMR Eagle.
See Note 13 to the consolidated financial statements for more information.
Other revenues increased 10.8 percent, or $97 million, to $994 million due to increases in (i) airfreight service fees due primarily to fuel surcharges, (ii) AAdvantage program fees, (iii) employee travel service charges, (iv) excess baggage fees and (v) ticket change fees coupled with changes to the Companys change fee arrangements with travel agencies.
These increases were offset somewhat by decreases in contract maintenance work that American performs for other airlines.


Year Ended December 31, 2014


| Total perBOE Total UnitedStates EquatorialGuinea Israel NorthSea Other Int'l,Corporate-1 | (millions, except per unit) | Year Ended December 31, 2011 | Lease Operating Expense-2 | Production and Ad Valorem Taxes | Transportation Expense | Total Production Expense-3 | Total Production Expense per BOE | Year Ended December 31, 2010 | Lease Operating Expense-2 | Production and Ad Valorem Taxes | Transportation Expense | Total Production Expense-3 | Total Production Expense per BOE | Year Ended December 31, 2009 | Lease Operating Expense-2 | Production and Ad Valorem Taxes | Transportation Expense | Total Production Expense-3 | Total Production Expense per BOE |


| Year ended December 31, | $ in millions | Equity in earnings of unconsolidated affiliates | Interest and dividend income | Interest income of consolidated investment products | Gains/(losses) of consolidated investment products, net | Interest expense | Interest expense of consolidated investment products | Other gains and losses, net | Total other income and expenses |


| Year Ended December | in millions | Management and other fees | Incentive fees | Transaction revenues | Total net revenues | Operating expenses | Pre-tax earnings | 2005 | Discount rate | Assets: | Expected rate of return | Actual rate of return | Actual 10 year average annual compounded rate of return |


(1) On October 1, 2014, FIA Card Services, N. A.  was merged into Bank of America, N. A.
(2) Represents the total long-term debt included in the liabilities of consolidated VIEs on the Consolidated Balance Sheet.
Trust Preferred and Hybrid Securities Trust preferred securities (Trust Securities) are primarily issued by trust companies (the Trusts) that are not consolidated.
These Trust Securities are mandatorily redeemable preferred security obligations of the Trusts.
The sole assets of the Trusts generally are junior subordinated deferrable interest notes of the Corporation or its subsidiaries (the Notes).
The Trusts generally are 100 percent-owned finance subsidiaries of the Corporation.
Obligations associated with the Notes are included in the longterm debt table on page 208.
Certain of the Trust Securities were issued at a discount and may be redeemed prior to maturity at the option of the Corporation.
The Trusts generally have invested the proceeds of such Trust Securities in the Notes.
Each issue of the Notes has an interest rate equal to the corresponding Trust Securities distribution rate.
The Corporation has the right to defer payment of interest on the Notes at any time or from time to time for a period not exceeding five years provided that no extension period may extend beyond the stated maturity of the relevant Notes.
During any such extension period, distributions on the Trust Securities will also be deferred and the Corporations ability to pay dividends on its common and preferred stock will be restricted.
The Trust Securities generally are subject to mandatory redemption upon repayment of the related Notes at their stated maturity dates or their earlier redemption at a redemption price equal to their liquidation amount plus accrued distributions to the date fixed for redemption and the premium, if any, paid by the Corporation upon concurrent repayment of the related Notes.
Periodic cash payments and payments upon liquidation or redemption with respect to Trust Securities are guaranteed by the Corporation or its subsidiaries to the extent of funds held by the Trusts (the Preferred Securities Guarantee).
The Preferred Securities Guarantee, when taken together with the Corporations other obligations including its obligations under the Notes, generally will constitute a full and unconditional guarantee, on a subordinated basis, by the Corporation of payments due on the Trust Securities.
In 2013, the Corporation entered into various agreements with certain Trust Securities holders pursuant to which the Corporation paid $933 million in cash in exchange for $934 million aggregate liquidation amount of previously issued Trust Securities.
Upon the exchange, the Corporation immediately surrendered the Trust Securities to the unconsolidated Trusts for cancellation, resulting in the cancellation of an equal amount of junior subordinated notes that had a carrying value of $934 million, resulting in an insignificant gain.


In addition, the Company has created a trust that is a VIE, to facilitate Prudential Insurance’s Funding Agreement Notes Issuance Program (“FANIP”).
The trust issues medium-term notes secured by funding agreements issued to the trust by Prudential Insurance with the proceeds of such notes.
The Company is the primary beneficiary of the trust, which is therefore consolidated.
The funding agreements represent an intercompany transaction that is eliminated upon consolidation.
However, in recognition of the security interest in such funding agreements, the trust’s medium-term note liability of $8,535 million and $6,537 million at December 31, 2007 and 2006, respectively, is classified on the Consolidated Statements of Financial Position within “Policyholders’ account balances.
” See Note 8 for more information on FANIP.
Significant Variable Interests in Unconsolidated Variable Interest Entities The Company is the collateral manager for certain asset backed investment vehicles (commonly referred to as collateralized debt obligations, or “CDOs”), for which the Company earns fee income.
Additionally, the Company may invest in debt or equity securities issued by these CDOs.
CDOs raise capital by issuing debt and equity securities, and use the proceeds to purchase investments, typically interest-bearing financial instruments.
The Company has determined that it is the primary beneficiary of two CDOs it manages at December 31, 2007 and one CDO it managed at December 31, 2006, which are consolidated and reflected in the table above.
The Company’s maximum exposure to loss resulting from its relationship with unconsolidated CDOs it manages is limited to its investment in the CDOs, which was $143 million and $122 million at December 31, 2007 and 2006, respectively.
These investments are reflected in “Fixed maturities, available for sale.
” In addition, in the normal course of its activities, the Company will invest in structured investments, some of which are VIEs.
These structured investments typically invest in fixed income investments and are managed by third parties.
The Company’s maximum exposure to loss on these structured investments, both VIEs and non-VIEs, is limited to the amount of its investment.
Included among these structured investments are asset-backed securities issued by VIEs that manage investments in the European market.
In addition to a stated coupon, each investment provides a return based on the VIE’s portfolio of assets and related investment activity.
The Company accounts for these investments as available for sale fixed maturities containing embedded derivatives that are
trading.
These trading investments are reflected on the balance sheet as “Trading account assets supporting insurance liabilities, at fair value.
” Realized and unrealized gains and losses for these investments are reported in “Asset management fees and other income.
” Investment income for these investments is reported in “Net investment income.
” The following table sets forth the composition of this portfolio as of the dates indicated.


Stock-Based and Other Management Compensation Plans In April 2009, the Company approved a global incentive plan which replaces the Companys 2004 stock incentive plan.
The 2009 Global Incentive Plan (GIP) enables the compensation committee of the Board of Directors to award incentive and nonqualified stock options, stock appreciation rights, shares of Series A common stock, restricted stock, restricted stock units (RSUs) and incentive bonuses (which may be paid in cash or stock or a combination thereof), any of which may be performance-based, with vesting and other award provisions that provide effective incentive to Company employees (including officers), non-management directors and other service providers.
Under the 2009 GIP, the Company no longer can grant RSUs with the right to participate in dividends or dividend equivalents.
The maximum number of shares that may be issued under the 2009 GIP is equal to 5,350,000 shares plus (a) any shares of Series A common stock that remain available for issuance under the 2004 Stock Incentive Plan (SIP) (not including any shares of Series A common stock that are subject to outstanding awards under the 2004 SIP or any shares of Series A common stock that were issued pursuant to awards under the 2004 SIP) and (b) any awards under the 2004 stock incentive plan that remain outstanding that cease for any reason to be subject to such awards (other than by reason of exercise or settlement of the award to the extent that such award is exercised for or settled in vested and non-forfeitable shares).
As of December 31, 2010, total shares available for awards and total shares subject to outstanding awards are as follows:


Notes to the Consolidated Financial Statements Other Acquisitions In 2018, 2017, and 2016, the Company completed several smaller business acquisitions.
The total consideration paid for these acquisitions, net of cash acquired, debt assumed and other post closing adjustments, was $108 million, $74 million and $43 million, respectively.
In January 2018, PPG acquired ProCoatings, a leading architectural paint and coatings wholesaler located in The Netherlands.
ProCoatings, established in 2001, distributes a large portfolio of well-known professional paint brands through its network of 23 multi-brand stores.
The company employs nearly 100 people.
The results of this business since the date of acquisition have been reported within the architectural coatings Americas and Asia Pacific business within the Performance Coatings reportable segment.
In January 2017, PPG acquired certain assets of automotive refinish coatings company Futian Xinshi (Futian), based in the Guangdong province of China.
Futian distributes its products in China through a network of more than 200 distributors.
In January 2017, PPG completed the acquisition of DEUTEK S. A. , a leading Romanian paint and architectural coatings manufacturer, from the Emerging Europe Accession Fund.
DEUTEK, established in 1993, manufactures and markets a large portfolio of well-known professional and consumer paint brands, including OSKAR and Danke!.
The companys products are sold in more than 120 do-it-yourself stores and 3,500 independent retail outlets in Romania.
Divestitures Glass Segment In 2017, PPG completed a multi-year strategic shift in the Company's business portfolio, resulting in the exit of all glass operations which consisted of the global fiber glass business, PPG's ownership interest in two Asian fiber glass joint ventures and the flat glass business.
Accordingly, the results of operations, including the gains on the divestitures, and cash flows have been recast as discontinued operations for all periods presented.
PPG now has two reportable business segments.


| Amount Percent of Total Outstandings | Dollars in millions | Commercial | Commercial real estate | Equipment lease financing | Consumer | Residential real estate | Other | Total |


The preliminary purchase price allocation resulted in goodwill, included in the North America merchant services segment, of $271.6 million.
Such goodwill is attributable primarily to synergies with the services offered and markets served by PayPros.
The goodwill associated with the acquisition is not deductible for tax purposes.
The customer-related intangible assets and the contract-based intangible assets have an estimated amortization period of 13 years.
The acquired technology has an estimated amortization period of 7 years.


Financial Condition At December 31, 2015, our net assets were $6.2 billion, representing total assets minus total liabilities, a decrease from $6.6 billion at December 31, 2014.
The decrease was due primarily to share repurchases of $1.6 billion, dividends of $323 million, and an increase in Accumulated other comprehensive loss of $289 million related primarily to an increase in the postretirement benefit obligation, partially offset by Net income of $1.4 billion for the year ended December 31, 2015.
Working capital increased by $77 million from $809 million at December 31, 2014 to $886 million at December 31, 2015.
Accumulated other comprehensive loss increased $289 million at December 31, 2015 as compared to December 31, 2014, which was primarily driven by the following: ?
negative net foreign currency translation adjustments of $436 million, which are attributable to the strengthening of the U. S.  dollar against certain foreign currencies, ?
a decrease of $155 million in net post-retirement benefit obligations, and ?
net financial instrument losses of $8 million.


| Years Ended December 31, | 2011 | (in millions) | Current income tax: | Federal | State and local | Foreign | Total current income tax | Deferred income tax: | Federal | State and local | Foreign | Total deferred income tax | Total income tax provision |


| July 31, | (In thousands) | Current deferred income taxes | Long-term deferred income taxes | Total net deferred tax assets, net of valuation allowance |


| 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 |


Loans and Lending Commitments The table below presents the difference between the aggregate fair value and the aggregate contractual principal amount for loans and long-term receivables for which the fair value option was elected.
In the table above, the aggregate contractual principal amount of loans on nonaccrual status and/or more than 90 days past due (which excludes loans carried at zero fair value and considered uncollectible) exceeds the related fair value primarily because the firm regularly purchases loans, such as distressed loans, at values significantly below the contractual principal amounts.
As of December 2017 and December 2016, the fair value of unfunded lending commitments for which the fair value option was elected was a liability of $31 million and $80 million, respectively, and the related total contractual amount of these lending commitments was $9.94 billion and $7.19 billion, respectively.
See Note 18 for further information about lending commitments.


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


Position.
At December 31, 2014, and 2013, receivables classified as other assets were reduced by allowances of $16 million and $22 million, respectively.
Receivables Securitization Facility – On July 29, 2014, we completed the renewal of our receivables securitization facility.
The new $650 million, 3-year facility replaces the prior $600 million, 364-day facility.
Under the facility, the Railroad sells most of its eligible third-party receivables to Union Pacific Receivables, Inc.  (UPRI), a wholly-owned, bankruptcy-remote subsidiary that may subsequently transfer, without recourse, an undivided interest in accounts receivable to investors.
The investors have no recourse to the Railroad’s other assets except for customary warranty and indemnity claims.
Creditors of the Railroad do not have recourse to the assets of UPRI.
The amount outstanding under the facility was $400 million and $0 at December 31, 2014, and December 31, 2013, respectively.
The facility was supported by $1.2 billion and $1.1 billion of accounts receivable as collateral at December 31, 2014, and December 31, 2013, respectively, which, as a retained interest, is included in accounts receivable, net in our Consolidated Statements of Financial Position.
The outstanding amount the Railroad is allowed to maintain under the facility, with a maximum of $650 million, may fluctuate based on the availability of eligible receivables and is directly affected by business volumes and credit risks, including receivables payment quality measures such as default and dilution ratios.
If default or dilution ratios increase one percent, the allowable outstanding amount under the facility would not materially change.
The costs of the receivables securitization facility include interest, which will vary based on prevailing benchmark and commercial paper rates, program fees paid to participating banks, commercial paper issuing costs, and fees of participating banks for unused commitment availability.
The costs of the receivables securitization facility are included in interest expense and were $4 million, $5 million and $3 million for 2014, 2013, and 2012, respectively.12.


| Years Ended December 31, | (Dollars in millions) | 2013 | Attritional | Catastrophes | Total segment | 2012 | Attritional | Catastrophes | Total segment | 2011 | Attritional | Catastrophes | Total segment | Variance 2013/2012 | Attritional | Catastrophes | Total segment | Variance 2012/2011 | Attritional | Catastrophes | Total segment | (Some amounts may not reconcile due to rounding.) |


expects to have sufficient liquidity to finance its announced capital growth projects.
ONEOK Partners believes that its available credit and cash and cash equivalents are adequate to meet liquidity requirements associated with commodity price volatility.
See discussion under “Commodity Price Risk” in Part I, Item 7A, Quantitative and Qualitative Disclosures about Market Risk in our Annual Report, for information on ONEOK Partners’ hedging activities.
Pension and Postretirement Benefit Plans - Information about our pension and postretirement benefits plans, including anticipated contributions, is included under Note N of the Notes to Consolidated Financial Statements in this Annual Report.
During 2014, we made no contributions to our defined benefit pension plans, and $2.0 million in contributions to our postretirement benefit plans for both continuing and discontinued operations.
The contributions to our postretirement benefit plans were attributable to the 2014 plan year.
We expect to make $1.5 million in contributions to our defined benefit pension and postretirement plans in 2015.


Our long-term debt, including the current portion, was $31.1 billion at December 30, 2017 and $31.8 billion at December 31, 2016.
The decrease in long- term debt was primarily due to our June 2017 repayment of approximately $2.0 billion aggregate principal amount of senior notes that matured in the period and our August 2017 repayment of the $600 million aggregate principal amount Term Loan Facility.
The decrease was partially offset by approximately $1.5 billion aggregate principal amount of long-term debt issued in August 2017.
Our long-term debt contains customary representations, covenants, and events of default.
We were in compliance with all such covenants at December 30, 2017.
See Note 16, Debt, to the consolidated financial statements for additional information.
We have approximately $2.5 billion aggregate principal amount and $C200 million aggregate principal amount of senior notes that will mature in the third quarter of 2018.
We expect to fund these long-term debt repayments primarily with new long-term debt issuances, cash on hand, and cash generated from our operating activities.


| Years Ended | September 27, 2008 | Amount | Service and Other Revenues |


| As of February 28 or 29 | (In millions) | Warehouse facility | Term securitizations | Loans held for investment | Loans held for sale | Total ending managed receivables |


| For the Year Ended December 31 | ($ in millions) | Sales | Cost of sales | Gross profit | Gross profit margin |


| Number of Units (In thousands) Weighted   Average   Fair Value  (In $) | Nonvested at December 31, 2008 | Granted | Vested | Forfeited | Nonvested at December 31, 2009 |


In the normal course of business, we offer products that provide book value protection primarily to plan participants in stable value funds of postretirement defined contribution benefit plans, particularly 401(k) plans.
The book value protection is provided on portfolios of intermediate, investment grade fixed-income securities, and is intended to provide safety and stable growth of principal invested.
The protection is intended to cover any shortfall in the event that a significant number of plan participants
Approximately 61% of the $1.4 billion increase in total fee revenue over 2006 was generated from servicing and management fees.
Servicing Fees Servicing fees include fee revenue from U. S.  mutual funds, collective investment funds worldwide, corporate and public retirement plans, insurance companies, foundations, endowments, and other investment pools.
Products and services include custody; product- and participant-level accounting; daily pricing and administration; recordkeeping; investment manager and hedge fund manager operations outsourcing services; master trust and master custody; and performance, risk and compliance analytics.
The increase in servicing fees of $665 million from 2006 primarily resulted from the inclusion of $304 million of servicing fee revenue from the acquired Investors Financial business, net new business from existing and new customers, higher average equity market valuations and higher customer transaction volumes.
Net new business is defined as new business net of lost business.
For 2007, servicing fees generated from customers outside the U. S.  were approximately 41% of total servicing fees, down from 44% in 2006.
The decrease in the non-U.
S.  proportion reflected the contribution of servicing fees from the acquired Investors Financial business, which are generated predominantly in the U. S.  We are the largest provider of mutual fund custody and accounting services in the United States.
We distinguish ourselves from other mutual fund service providers by offering customers a broad array of integrated products and services, including accounting, daily pricing and fund administration.
We calculate more than 34% of the U. S.  mutual fund prices provided to NASDAQ that appear daily in The Wall Street Journal and other publications with an accuracy rate of 99.9%.
We have a leading position for servicing U. S.  tax-exempt assets for corporate and public pension funds.
We provide trust and valuation services for more than 4,000 daily-priced portfolios, making us a leader for both monthly and daily valuation services.
We are a leading service provider outside of the U. S.  as well.
In Germany, we provide Depotbank services for approximately 16% of retail and institutional fund assets.
In the United Kingdom, we provide custody services for 18% of pension fund assets and provide administration services to more than 24% of mutual fund assets.
We service approximately 23% of the hedge fund market and more than $650 billion of offshore assets, primarily domiciled in Ireland and Luxembourg.
We have more than $1 trillion in assets under administration in the Asia/Pacific region, and are the largest nondomestic trust bank in Japan.
At year-end 2007, our total assets under custody were $15.30 trillion, compared to $11.85 trillion a year earlier.
The value of assets under custody is a broad measure of the relative size of various markets served.
Changes in the value of assets under custody do not necessarily result in proportional changes in revenue.
Assets under custody consisted of the following at December 31: ASSETS UNDER CUSTODY


MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 42 Fifth Third Bancorp of two risk grading systems.
The risk grading system currently utilized for reserve analysis purposes encompasses ten categories.
The Bancorp also maintains a dual risk rating system that provides for thirteen probabilities of default grade categories and an additional six grade categories for estimating actual losses given an event of default.
The probability of default and loss given default evaluations are not separated in the ten-grade risk rating system.
The Bancorp has completed significant validation and testing of the dual risk rating system.
Scoring systems, various analytical tools and delinquency monitoring are used to assess the credit risk in the Bancorps homogenous consumer loan portfolios.
Overview During 2008, general economic conditions continued to deteriorate which had an adverse impact across the majority of the Bancorps loan and lease products.
Geographically, the Bancorp experienced the most stress in the states of Michigan and Florida due to the decline in real estate prices.
Real estate price deterioration, as measured by the Home Price Index, was most prevalent in Florida due to past real estate price appreciation and related over-development, and in Michigan due in part to cutbacks by automobile manufacturers.
The year-over-year deterioration in home prices has been as high as 20% in some of the Bancorps hardest hit geographies.
Among portfolios, the commercial homebuilder and developer, non-owner occupied residential mortgage and brokered home equity portfolios exhibited the most stress.
Management suspended new lending to homebuilders and to commercial non-owner occupied real estate, discontinued the origination of brokered home equity products and raised underwriting standards on non-owner occupied residential mortgages.
During the fourth quarter, in an effort to reduce loan exposure to the real estate and construction industries and obtain the highest realizable value, the Bancorp sold or moved to heldfor-sale $1.3 billion in commercial loan balances.
The Bancorp recognized $800 million in net charge-offs on these loans with approximately 49% of the losses representing real estate secured loans in Florida and 44% of the losses representing real estate secured loans in Michigan.
Throughout 2008, the Bancorp aggressively engaged in other loss mitigation techniques such as reducing lines of credit, restructuring certain consumer loans, tightening certain underwriting standards and expanding commercial and consumer loan workout teams.
The following credit information presents the Bancorps loan portfolio diversification, an analysis of nonperforming loans and loans charged-off and a discussion of the allowance for credit losses.
Commercial Portfolio The Bancorps credit risk management strategy includes minimizing concentrations of risk through diversification.
Table 27 provides breakouts of the total commercial loan and lease portfolio, including held for sale, by major industry classification (as defined by the North American Industry Classification System), by loan size and by state, illustrating the diversity and granularity of the Bancorps commercial portfolio.
The Bancorp has commercial loan concentration limits based on industry, lines of business within the commercial segment and real estate project type.
As of December 31, 2008, the Bancorp had homebuilder exposure of $4.0 billion and outstanding loans of $2.7 billion with $366 million of portfolio commercial loans and $215 million in held-for-sale commercial loans in nonaccrual loans.
As of December 31, 2008, approximately 41% of the outstanding loans to homebuilders are located in the states of Michigan and Florida and represent approximately 58% of the nonaccrual loans.
As of December 31, 2007, the Bancorp had homebuilder exposure of $4.4 billion, outstanding loans of $2.9 billion with $176 million in nonaccrual loans.
The risk within the commercial real estate portfolio is managed and monitored through an underwriting process utilizing detailed origination policies, continuous loan level reviews, the monitoring of industry concentration and product type limits and continuous portfolio risk management reporting.
The origination policies for commercial real estate outline the risks and underwriting requirements for owner occupied, non-owner occupied and construction lending.
Included in the policies are maturity and amortization terms, maximum loan-to-values (LTV), minimum debt service coverage ratios, construction loan monitoring procedures, appraisal requirements, pre-leasing requirements (as applicable) and sensitivity and proforma analysis requirements.
The commercial real estate portfolio is diversified by product type, loan size and geographical location with concentration levels established to manage the exposure.
Appraisals are obtained from qualified appraisers and are reviewed by an independent appraisal review group to ensure independence and consistency in the valuation process.
Appraisal values are updated on an as needed basis, in conformity with market conditions and regulatory requirements.
Table 26 provides further information on the location of commercial real estate and construction industry loans and leases.
The commercial portfolio has minimal direct exposure to auto manufactures and their suppliers, although any further deterioration of those industries would have negative impacts across the Bancorps lending products.
As of December 31, 2008, the Bancorp had automobile dealer exposure, included within the retail trade industry, of $3.1 billion and outstanding loans of $2.0 billion with $113 million in nonaccrual loans.


The December 31, 2016 and 2015 pension actuarial (gain) loss primarily relates to weighted average discount rate assumption changes and changes to our mortality assumptions.
The December 31, 2016 and 2015 retiree medical and other postretirement benefits actuarial gain primarily relates to medical trend and cost assumption changes, favorable plan experience adjustments and weighted average discount rate assumption changes.
At December 31, 2015, certain trust assets totaling approximately $24 million, were added to the retiree medical and other postretirement benefits plans asset values that were previously offset against the benefit obligation.


CASH FLOW ANALYSIS We use the indirect method to prepare our Consolidated Statements of Cash Flows.
Under this method, we reconcile net income to cash flows provided by operating activities by adjusting net income for those items that impact net income but do not result in actual cash receipts or payments during the period and for operating cash items that do not impact net income.
These reconciling items include depreciation and amortization, allowance for equity funds used during construction, gain or loss on sale of assets, equity earnings from investments, distributions received from unconsolidated affiliates, deferred income taxes, share-based compensation expense, other amounts, and changes in our assets and liabilities not classified as investing or financing activities.
The following table sets forth the changes in cash flows by operating, investing and financing activities for the periods indicated:


| 2004 2003 2002 | Changes in Contingent Stock Plan shares: | Number of shares available, beginning of year | Shares issued for new awards | Contingent stock forfeited | Number of shares available, end of year | Weighted average per share market value of stock on grant date | Changes in Directors Stock Plan shares: | Number of shares available, beginning of year | Shares no longer available under the 1998 Directors Stock Plan | Shares available under the 2002 Directors Stock Plan | Shares granted and issued | Shares granted and deferred | Number of shares available, end of year | Weighted average per share market value of stock on grant date | 2004 | (In millions of dollars, except per share data) | Consolidated Statement of Operations Data: | Net sales | Gross profit | Operating profit-2(3) | Earnings (loss) before income taxes | Net earnings (loss) | Series A convertible preferred stock dividends-4 | Earnings (loss) per common share | Basic | Diluted-5 | Consolidated Balance Sheet Data: | Working capital net asset (net liability)(6) | Total assets-6 | Long-term debt, less current portion-4(6) | Series A convertible preferred stock-4 | Total shareholders' equity | Other Data: | EBIT-7 | Depreciation and amortization-2 | EBITDA-7 | Capital expenditures | Americas | Argentina | Brazil | Canada | Chile | Colombia | Costa Rica | Ecuador | Guatemala | Mexico | Peru | Uruguay | Venezuela | Netherlands |


| As of February 28, 2014 | Options Outstanding | Weighted | Average | Remaining | (Shares in thousands) | Range of Exercise Prices | $11.43 | $13.19 | $19.98 | $25.67 | $32.69 | Total |


| Operating Leases | 2009 | 2010 | 2011 | 2012 | 2013 | Thereafter | Total future minimum lease payments |


| 2012: High Low | January 1, 2012 to March 31, 2012 | April 1, 2012 to June 30, 2012 | July 1, 2012 to September 30, 2012 | October 1, 2012 to December 31, 2012 | 2011: | January 1, 2011 to March 31, 2011 | April 1, 2011 to June 30, 2011 | July 1, 2011 to September 30, 2011 | October 1, 2011 to December 31, 2011 |


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2015 Annual Report / Northern Trust Corporation 64 Corporation Liquidity The liquidity of the Corporation is managed separately from that of the Bank.
The primary sources of cash for the Corporation are issuances of debt or equity, dividend payments from the Bank and interest earned on investment securities and money market assets.
In 2015, the Corporation received $600.0 million of dividends from the Bank.
Dividends from the Bank are subject to certain restrictions, as discussed in further detail in Note 30, “Restrictions on Subsidiary Dividends and Loans or Advances,” to the consolidated financial statements provided in Item 8, “Financial Statements and Supplementary Data.
” The Corporation’s uses of cash consist mainly of dividend payments to the Corporation’s stockholders; the payment of principal and interest to note holders; repurchases of its common stock; and investments in, or loans to, its subsidiaries.
The most significant uses of cash by the Corporation during 2015 were $496.9 million of common stock repurchases and $321.4 million of common stock dividends.
The Corporation’s liquidity, defined as the amount of cash and highly marketable assets, was $757.5 million and $869.4 million at December 31, 2015 and 2014, respectively.
During, and at year-end, 2015 and 2014, these assets were comprised almost entirely of cash in a demand deposit account at the Bank or overnight money market placements, both of which were fully available to the Corporation to support its own cash flow requirements or those of its subsidiaries, as needed.
Average liquidity during 2015 and 2014 was $846.2 million and $1.1 billion, respectively.
The cash flows of the Corporation are shown in Note 33, “Northern Trust Corporation (Corporation only),” to the consolidated financial statements provided in Item 8, “Financial Statements and Supplementary Data.
” A significant source of liquidity for both the Corporation and the Bank is the ability to draw funding from capital markets globally.
The credit ratings of the Corporation and the Bank as of December 31, 2015, provided below, allow Northern Trust to access capital markets on favorable terms.
TABLE 35: NORTHERN TRUST CREDIT RATINGS AS OF DECEMBER 31, 2015


| 2008 2007 | December 31 | (In millions) | Redeemable and non-redeemable preferred stocks: | 0-6 months | 7-11 months | 12-24 months | Total redeemable and non-redeemable preferred stocks | available-for-sale | Available-for-sale equity securities: | 0-6 months | 7-11 months | 12-24 months | Greater than 24 months | Total equity securities available-for-sale | Total fixed maturity and equity securities | available-for-sale |


Table 38: Nonperforming Assets
(a) Excludes most consumer loans and lines of credit not secured by residential real estate, which are charged off after 120 to 180 days past due and are not placed on nonperforming status.
(b) The recorded investment of loans collateralized by residential real estate property that are in process of foreclosure was $.4 billion and $.6 billion at December 31, 2016 and December 31, 2015, which included $.2 billion and $.3 billion, respectively, of loans that are government insured/guaranteed.
Nonperforming loans also include certain loans whose terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties.
In accordance with applicable accounting guidance, these loans are considered TDRs.
See Note 1 Accounting Policies and the TDR section within this Note.
Total nonperforming loans in Table 38 include TDRs of $1.1 billion at both December 31, 2016 and December 31, 2015.
TDRs that are performing, including consumer credit card TDR loans, totaled $1.1 billion at December 31, 2016 and $1.2 billion at December 31, 2015, and are excluded from nonperforming loans.
Nonperforming TDRs are returned to accrual status and classified as performing after demonstrating a period of at least six months of consecutive performance under the restructured terms.
Loans where borrowers have been discharged from personal liability through Chapter 7 bankruptcy and have not formally reaffirmed their loan obligations to us and loans to borrowers not currently obligated to make both principal and interest payments under the restructured terms are not returned to accrual status.
See the TDRs section of this Note 3 for more information on TDRs.
Additional Asset Quality Indicators We have two overall portfolio segments  Commercial Lending and Consumer Lending.
Each of these two segments comprises multiple loan classes.
Classes are characterized by similarities in initial measurement, risk attributes and the manner in which we monitor and assess credit risk.
The Commercial Lending segment is composed of the commercial, commercial real estate and equipment lease financing loan classes.
The Consumer Lending segment is composed of the home equity, residential real estate, credit card and other consumer loan classes.
Commercial Lending Asset Classes Commercial Loan Class For commercial loans, we monitor the performance of the borrower in a disciplined and regular manner based upon the level of credit risk inherent in the loan.
To evaluate the level of credit risk, we assign an internal risk rating reflecting the borrowers PD and LGD.
This two-dimensional credit risk rating methodology provides granularity in the risk monitoring process on an ongoing basis.
These ratings are reviewed and updated, generally at least once per year.
Additionally, no less frequently than on an annual basis, we review PD rates related to each rating grade based upon internal historical data.
These rates are updated as needed and augmented by market data as deemed necessary.
For small balance homogeneous pools of commercial loans, mortgages and leases, we apply statistical modeling to assist in determining the probability of default within these pools.
Further, on a periodic basis, we update our LGD estimates associated with each rating grade based upon historical data.
The combination of the PD and LGD ratings assigned to commercial loans, capturing both the combination of expectations of default and loss severity in event of default, reflects the relative estimated likelihood of loss at the reporting date.
In general, loans with better PD and LGD


| (dollar amounts in millions) At December 31, 2018 | Less than 1 Year | Deposits without a stated maturity | Certificates of deposit and other time deposits | Short-term borrowings | Long-term debt | Operating lease obligations | Purchase commitments |


| 2012 2011 | (In millions) | Time deposits of $100,000 or more, maturing in: | 3 months or less | Over 3 through 6 months | Over 6 through 12 months | Over 12 months | $5,019 |


| (dollar amounts in millions) At December 31, 2015 | One Yearor Less | Deposits without a stated maturity | Certificates of deposit and other time deposits | Short-term borrowings | Long-term debt | Operating lease obligations | Purchase commitments |


Notes to Consolidated Financial Statements (continued) March 31, 2003 (I) Intellectual Property The Company capitalizes as intellectual property costs incurred, excluding costs associated with Company personnel, relating to patenting its technology.
Capitalized costs, the majority of which represent legal costs, reflect the cost of both awarded patents and patents pending.
The Company amortizes the cost of these patents on a straight-line basis over a period of seven years.
If the Company elects to stop pursuing a particular patent application or determines that a patent application is not likely to be awarded for a particular patent or elects to discontinue payment of required maintenance fees for a particular patent, the Company at that time records as expense the net capitalized amount of such patent application or patent.
The Company does not capitalize maintenance fees for patents.


General, Administrative and Other General, administrative and other operating expenses primarily consist of fund administration services and shareholder servicing fees payable to external parties, corporate travel and entertainment, advertising and promotion costs, professional fees, and other miscellaneous expenses.
General, administrative and other operating expenses increased $34.0 million in fiscal year 2013 primarily due to the acquisition of K2 and higher levels of general business activity.
The K2 acquisition resulted in a $9.5 million increase in amortization of intangible assets and a $7.7 million increase in the contingent consideration liability.
Higher business activity levels resulted in increases of $5.1 million in corporate travel expenses, $4.5 million in advertising and promotion expenses and $3.4 million in professional fees.


Table of Contents Index to Financial Statements Income before taxes increased by $27.8 million or 54.7% to $78.7 million for the year ended December 31, 2011 from $50.9 million for the year ended December 31, 2010.
Net income increased by $16.3 million or 51.8% to $47.7 million for the year ended December 31, 2011 from $31.4 million for the year ended December 31, 2010.
Revenues Our revenues for the years ended December 31, 2011 and 2010, and the resulting dollar and percentage changes, were as follows:


| Year ended December 31, (in millions)(a) 2005 2004 2003 | U.S. | Non-U.S.(b) | Income before income tax expense |


Long Canyon, USA.
Long Canyon achieved commercial production in November 2016.


| For the Years Ended December 31, | (Millions of Dollars) | Operating revenues | Purchased power | Gas purchased for resale | Other operations and maintenance | Depreciation and amortization | Taxes, other than income taxes | Gain on sale of retail electric supply business | Operating income |


Table of Contents During the year ended December 31, 2004, we reduced the valuation allowance by $46.2 million to $18.1 million based on management’s reassessment of the factors impacting the valuation allowance previously recorded.
Such factors include seven consecutive quarters of profitable operations in the U. S.  and six consecutive quarters of profitable operations in the U. K. , management’s expectation of our continuing profitable future operations, management’s anticipation that we would be able to utilize certain net operating loss carryforwards in 2004 and our ability to utilize certain of the net operating loss carryforwards in future years prior to expiration.
We believe it is likely, but subject to some uncertainty, that approximately 76% of the net operating losses will be utilized prior to their expiration in 2017.
In addition, we have temporary differences (defined as the tax effect of the difference between the financial reporting basis and the tax reporting basis of certain balance sheet items) of $13.5 million available as of December 31, 2004.
As of December 31, 2003, the gross deferred tax asset was $64.3 million, reduced to a net deferred tax asset of zero by recording a valuation allowance of $64.3 million.
Our first profitable quarter was the second quarter of 2003.
While we were forecasting increasing revenues and net income for 2004 and 2005, as evidenced by the projections used for the valuations of our common stock as of December 31, 2002 and 2003, management exercised judgment in assessing the positive evidence of the three quarters of profitability and the forecast future year earnings against the negative evidence of accumulated losses, the uncertainty of attainment of forecast future year earnings and the potential likelihood of the realization of the utilization of net operating loss carryforwards.
For the year ended December 31, 2003, net income was $4.2 million, bringing the accumulated losses to $113.8 million.
Additionally, $40.6 million of our net operating loss carryforward for financial income tax purposes of $137.0 million was subject to Section 382 limitations.
Accordingly, a 100% valuation allowance against the deferred income tax assets was deemed appropriate as of December 31, 2003.
The net operating losses will be carried forward to future years.
In addition, we had temporary differences of $13.4 million available as of December 31, 2003.
As of December 31, 2002, the gross deferred tax asset was $68.0 million, reduced to a net deferred tax asset of zero by recording a valuation allowance of $68.0 million.
While we were forecasting increasing revenues and a reduced loss for 2003, as well as net income for 2004, as evidenced by the projections used for the valuation of our common stock as of December 31, 2002, management exercised judgment in assessing the positive evidence of the forecast future year earnings against the negative evidence of accumulated losses, the uncertainty of attainment of forecast future year earnings and the potential likelihood of the realization of the utilization of net operating loss carryforwards.
For the year ended December 31, 2002, the net loss was $36.1 million, bringing the accumulated losses to $118.0 million.
Additionally, $40.6 million of our net operating loss carryforward for financial income tax purposes of $131.5 million was subject to Section 382 limitations.
Accordingly, a 100% valuation allowance against the deferred tax assets was deemed appropriate as of December 31, 2002.


A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in millions):


| Effect on U.S. Pension Plans | (millions) | Discount rate | Expected return on assets |


Table of Contents Contractual Obligations The following table summarizes our contractual obligations and commitments as of September 24, 2011:


AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) As of December 31, 2006, the Company held a total of ten interest rate swap agreements to manage exposure to variable rate interest obligations under its AMT OpCo and SpectraSite credit facilities and four forward starting interest rate swap agreements to manage exposure to variability in cash flows relating to forecasted interest payments in connection with the Securitization which the Company designated as cash flow hedges.
The eight American Tower swaps had an aggregate notional amount of $450.0 million and fixed rates ranging between 4.63% and 4.88% and the two SpectraSite swaps have an aggregate notional amount of $100.0 million and a fixed rate of 4.95%.
The four forward starting interest rate swap agreements had an aggregate notional amount of $900.0 million, fixed rates ranging between 4.73% and 5.10%.
As of December 31, 2006, the Company also held three interest rate swap instruments and one interest rate cap instrument that were acquired in the SpectraSite, Inc.  merger in August 2005 and were not designated as cash flow hedges.
The three interest rate swaps, which had a fair value of $6.7 million at the date of acquisition, have an aggregate notional amount of $300.0 million, a fixed rate of 3.88%.
The interest rate cap had a notional amount of $175.0 million, a fixed rate of 7.0%, and expired in February 2006.
As of December 31, 2006, other comprehensive income includes unrealized gains on short term available-for-sale securities of $10.4 million and unrealized gains related to the interest rate swap agreements in the table above of $5.7 million, net of tax.
During the year ended December 31, 2006, the Company recorded a net unrealized gain of approximately $6.5 million (net of a tax provision of approximately $3.5 million) in other comprehensive loss for the change in fair value of interest rate swaps designated as cash flow hedges and reclassified $0.7 million (net of an income tax benefit of $0.2 million) into results of operations during the year ended December 31, 2006.9.


The decrease in 2008 revenues of $5,478 million compared with 2007, is primarily due to lower revenues at Commercial Airplanes.
Commercial Airplanes revenues decreased by $5,123 million, primarily as a result of decreases in new airplane deliveries reflecting the effects of the labor strike, partially offset by higher intercompany revenues and higher pre-strike deliveries and model mix.
We delivered 104 fewer airplanes than expected during 2008 due to the strike.
This reduced revenue by approximately $6.4 billion for the twelve months ended December 31, 2008.
BDS revenues were unchanged as revenue growth in GS&S was offset by decreases in BMA and N&SS.
BCC revenues decreased by $112 million primarily due to lower interest income on financing receivables and notes and a decrease in the customer financing portfolio.
Other segment revenues increased by $259 million primarily due to the sale of four C-17 aircraft during 2008, that were held under an operating lease.
Unallocated items and eliminations changed by $497 million, primarily due to the intercompany elimination of P-8A revenues recognized by Commercial Airplanes.


| Years ended December 31, Change | 2014 | Segment operating income1 | Operating margin1 |


| December 31, 2017 2016 2015 | Health care cost trend rate assumed next year | Ultimate trend rate | Year that trend reached ultimate rate |