ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that involve expectations, plans or intentions (such as those relating to future business, future results of operations or financial condition, new or planned features or services, or management strategies).
You can identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan” and other similar expressions.
These forwardlooking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements.
Such risks and uncertainties include, among others, those discussed in “Item 1A: Risk Factors” of this Annual Report on Form 10-K, as well as in our consolidated financial statements, related notes, and the other information appearing elsewhere in this report and our other filings with the Securities and Exchange Commission.
We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this report to reflect actual results or future events or circumstances.
Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
You should read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with the consolidated financial statements and the related notes included in this report.
OVERVIEW Business eBay Inc.  is a global commerce leader, which includes our Marketplace, StubHub and Classifieds platforms.
Our Marketplace platforms include our online marketplace located at www.
ebay.
com, its localized counterparts and the eBay suite of mobile apps.
Our StubHub platforms include our online ticket platform located at www.
stubhub.
com, its localized counterparts and the StubHub mobile apps.
Our Classifieds platforms include a collection of brands such as Mobile.
de, Kijiji, Gumtree, Marktplaats, eBay Kleinanzeigen and others.
Seasonality We expect transaction activity patterns on our platforms to mirror general consumer buying patterns and expect that these trends will continue.
The following table sets forth, for the periods presented, our total net revenues and the sequential quarterly movements of these net revenues (in millions, except percentages):
## Table 0 ##
Loans under the credit agreement bear interest at either (i) LIBOR plus a margin (based on our public debt credit ratings) ranging from 0.875 percent to 1.5 percent or (ii) a formula based on the agent bank’s prime rate, the federal funds effective rate plus 0.5 percent or LIBOR plus 1.0 percent, plus a margin (based on our public debt credit ratings) ranging from zero percent to 0.5 percent.
The credit agreement will terminate and all amounts owing thereunder will be due and payable on November 9, 2020, unless (a) the commitments are terminated earlier, either at our request or, if an event of default occurs, by the lenders (or automatically in the case of certain bankruptcy-related events of default), or (b) the maturity date is extended upon our request, subject to the agreement of the lenders.
The credit agreement includes customary representations, warranties, affirmative and negative covenants, including financial covenants, events of default and indemnification provisions in favor of the banks.
The negative covenants include restrictions regarding the incurrence of liens and subsidiary indebtedness, in each case, subject to certain exceptions.
The financial covenants require us to meet a quarterly financial test with respect to a minimum consolidated interest coverage ratio and a maximum consolidated leverage ratio.
The events of default include the occurrence of a change of control (as defined in the credit agreement) with respect to us.
We were in compliance with all covenants in our outstanding debt instruments for the period ended December 31, 2018.  Credit Ratings As of December 31, 2018, we were rated investment grade by Standard and Poor’s Financial Services, LLC (long-term rated BBB+, short-term rated A-2, with a stable outlook), Moody’s Investor Service (long-term rated Baa1, short-term rated P-2, with a stable outlook), and Fitch Ratings, Inc.  (long-term rated BBB, short-term rated F-2, with a stable outlook).
We disclose these ratings to enhance the understanding of our sources of liquidity and the effects of our ratings on our costs of funds.
Our borrowing costs depend, in part, on our credit ratings and any further actions taken by these credit rating agencies to lower our credit ratings, as described above, will likely increase our borrowing costs.
Commitments and Contingencies We have certain fixed contractual obligations and commitments that include future estimated payments for general operating purposes.
Changes in our business needs, contractual cancellation provisions, fluctuating interest rates, and other factors may result in actual payments differing from the estimates.
We cannot provide certainty regarding the timing and amounts of these payments.
The following table summarizes our fixed contractual obligations and commitments (in millions):
## Table 1 ##
The significant assumptions used in our determination of amounts presented in the above table are as follows: ?
Debt amounts include the principal and interest amounts of the respective debt instruments.
For additional details related to our debt, please see “Note 10 – Debt” to the consolidated financial statements included in this report.
This table does not reflect any amounts payable under our $2 billion revolving credit facility or $1.5 billion commercial paper program, for which no borrowings were outstanding as of December 31, 2018.
UNITED PARCEL SERVICE, INC.  AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) A discount rate is used to determine the present value of our future benefit obligations.
In 2008 and prior years, the discount rate for U. S.  plans was determined by matching the expected cash flows to a yield curve based on long-term, high quality fixed income debt instruments available as of the measurement date.
In 2008, we reduced the population of bonds from which the yield curve was developed to better reflect bonds we would more likely consider to settle our obligations.
In 2009, we further enhanced this process for plans in the U. S.  by using a bond matching approach to select specific bonds that would satisfy our projected benefit payments.
We believe the bond matching approach more closely reflects the process we would employ to settle our pension and postretirement benefit obligations.
These modifications had an impact of increasing the pension benefits and postretirement medical benefits discount rate on average 31 and 51 basis points for 2009 and 25 and 17 basis points for 2008.
For 2009, each basis point increase in the discount rate decreases the projected benefit obligation by approximately $25 million and $3 million for pension and postretirement medical benefits, respectively.
For our international plans, the discount rate is selected based on high quality fixed income indices available in the country in which the plan is domiciled.
These assumptions are updated annually.
An assumption for expected return on plan assets is used to determine a component of net periodic benefit cost for the fiscal year.
This assumption for our U. S.  plans was developed using a long-term projection of returns for each asset class, and taking into consideration our target asset allocation.
The expected return for each asset class is a function of passive, long-term capital market assumptions and excess returns generated from active management.
The capital market assumptions used are provided by independent investment advisors, while excess return assumptions are supported by historical performance, fund mandates and investment expectations.
In addition, we compare the expected return on asset assumption with the average historical rate of return these plans have been able to generate.
For the UPS Retirement Plan, we use a market-related valuation method for recognizing investment gains or losses.
Investment gains or losses are the difference between the expected and actual return based on the marketrelated value of assets.
This method recognizes investment gains or losses over a five year period from the year in which they occur, which reduces year-to-year volatility in pension expense.
Our expense in future periods will be impacted as gains or losses are recognized in the market-related value of assets.
For plans outside the U. S. , consideration is given to local market expectations of long-term returns.
Strategic asset allocations are determined by country, based on the nature of liabilities and considering the demographic composition of the plan participants.
Health care cost trends are used to project future postretirement benefits payable from our plans.
For year-end 2009 U. S.  plan obligations, future postretirement medical benefit costs were forecasted assuming an initial annual increase of 8.0%, decreasing to 5.0% by the year 2016 and with consistent annual increases at those ultimate levels thereafter.
Assumed health care cost trends have a significant effect on the amounts reported for the U. S.  postretirement medical plans.
A one-percent change in assumed health care cost trend rates would have the following effects (in millions):
## Table 2 ##
For the year ended December 31, 2010, the valuation allowance increased by $51 million consisting of: (a) income tax expense, net, of $39 million, (b) a decrease of $13 million related to foreign currency translation adjustments and (c) $25 million of other increases related to unrecognized tax benefits and other adjustments to deferred taxes.
The change in valuation allowance associated with foreign currency translation adjustments is related to changes in deferred tax assets for unrealized foreign exchange gains and losses on effective hedges and on foreign income previously taxed but not yet received in the US.
The benefit also relates to foreign currency translation adjustments for deferred tax assets recorded in various foreign jurisdictions.
The increase related to unrecognized tax benefits and other adjustments to deferred taxes includes adjustments to temporary differences and net operating loss carryforwards due to changes in uncertain tax positions.
A reconciliation of the significant differences between the US federal statutory tax rate of 35% and the effective income tax rate on income from continuing operations is as follows:
## Table 3 ##
(1) Includes impact of earnings from China and Singapore subject to tax holidays which expire between 2008 and 2013 and favorable tax rates in other jurisdictions.
Federal and state income taxes have not been provided on accumulated but undistributed earnings of $2.9 billion as of December 31, 2010 as such earnings have been permanently reinvested in the business.
The determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings is not practicable.
The effective tax rate for continuing operations for the year ended December 31, 2010 was 21% compared to (97)% for the year ended December 31, 2009.
The effective tax rate for 2009 was favorably impacted by the release of the US valuation allowance on net deferred tax assets, partially offset by increases in valuation allowances on certain foreign net deferred tax assets and the effect of new tax legislation in Mexico.
The effective rate for the year ended December 31, 2010 was favorably impacted by amendments to tax legislation in Mexico.
The Company operates under tax holidays in various countries which are effective through December 2013.
In China, one of the Company’s entities has a tax holiday that provided for a zero percent tax rate in 2008.
For 2009 through 2011, the Company’s tax rate is 50% of the statutory rate, or 12.5% based on the 2010 statutory rate of 25%.
In Singapore, one of the Company’s entities has a tax holiday that provides for a zero percent tax rate through 2011.
The Company realized no material benefits from tax holidays for the year ended December 31, 2010.
Mexico enacted the 2008 Fiscal Reform Bill on October 1, 2007.
Effective January 1, 2008, the bill repealed the existing asset-based tax and established a dual income tax system consisting of a new minimum flat tax (the “IETU”) and the existing regular income tax system.
The IETU system taxes companies on cash basis net income, consisting only of certain specified items of revenue and expense, at a rate of 16.5%, 17% and 17.5% for 2008, 2009 and 2010 forward, respectively.
In general, companies must pay the higher of the income tax or the IETU, although the IETU is not creditable against future income tax liabilities.
The Company has determined that it will primarily
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in thousands except per share data) Note 14—Business Segments (continued) Torchmark markets its insurance products through a number of distribution channels, each of which sells the products of one or more of Torchmark’s insurance segments.
The tables below present segment premium revenue by each of Torchmark’s marketing groups.
Torchmark Corporation Premium Income By Distribution Channel
## Table 4 ##
Because of the nature of the life insurance industry, Torchmark has no individual or group which would be considered a major customer.
Substantially all of Torchmark’s business is conducted in the United States, primarily in the Southeastern and Southwestern regions.
The measure of profitability established by the chief operating decision maker for insurance segments is underwriting margin before other income and administrative expenses, in accordance with the manner the segments are managed.
It essentially represents gross profit margin on insurance products before insurance administrative expenses and consists of premium, less net policy obligations, acquisition expenses, and commissions.
Interest credited to net policy liabilities (reserves less deferred acquisition costs and value of insurance purchased) is reflected as a component of the Investment segment in order to match this cost to the investment earnings from the assets supporting the net policy liabilities.

<table><tr><td></td><td colspan="4">Quarter Ended</td></tr><tr><td></td><td>March 31</td><td>June 30</td><td>September 30</td><td>December 31</td></tr><tr><td>2016</td><td></td><td></td><td></td><td></td></tr><tr><td>Net revenues</td><td>$2,216</td><td>$2,309</td><td>$2,299</td><td>$2,474</td></tr><tr><td>Percent change from prior quarter</td><td>-5%</td><td>4%</td><td>0%</td><td>8%</td></tr><tr><td>2017</td><td></td><td></td><td></td><td></td></tr><tr><td>Net revenues</td><td>$2,303</td><td>$2,419</td><td>$2,498</td><td>$2,707</td></tr><tr><td>Percent change from prior quarter</td><td>-7%</td><td>5%</td><td>3%</td><td>8%</td></tr><tr><td>2018</td><td></td><td></td><td></td><td></td></tr><tr><td>Net revenues</td><td>$2,580</td><td>$2,640</td><td>$2,649</td><td>$2,877</td></tr><tr><td>Percent change from prior quarter</td><td>-5%</td><td>2%</td><td>0%</td><td>9%</td></tr></table>
<table><tr><td>Payments Due During the Year Ending December 31,</td><td>Debt</td><td>Leases</td><td>Purchase Obligations</td><td>Total</td></tr><tr><td>2019</td><td>$1,841</td><td>$136</td><td>$209</td><td>$2,186</td></tr><tr><td>2020</td><td>1,259</td><td>104</td><td>147</td><td>1,510</td></tr><tr><td>2021</td><td>983</td><td>91</td><td>128</td><td>1,202</td></tr><tr><td>2022</td><td>1,935</td><td>76</td><td>116</td><td>2,127</td></tr><tr><td>2023</td><td>1,284</td><td>51</td><td>38</td><td>1,373</td></tr><tr><td>Thereafter</td><td>5,220</td><td>119</td><td>—</td><td>5,339</td></tr><tr><td></td><td>$12,522</td><td>$577</td><td>$638</td><td>$13,737</td></tr></table>
<table><tr><td></td><td>1% Increase</td><td>1% Decrease</td></tr><tr><td>Effect on total of service cost and interest cost</td><td>$10</td><td>$-10</td></tr><tr><td>Effect on postretirement benefit obligation</td><td>$83</td><td>$-87</td></tr></table>
<table><tr><td></td><td colspan="3">Year Ended December 31,</td></tr><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In $ millions)</td></tr><tr><td>Income tax provision computed at US federal statutory tax rate</td><td>188</td><td>88</td><td>152</td></tr><tr><td>Change in valuation allowance</td><td>39</td><td>-314</td><td>-5</td></tr><tr><td>Equity income and dividends</td><td>-41</td><td>-20</td><td>-17</td></tr><tr><td>(Income) expense not resulting in tax impact</td><td>8</td><td>4</td><td>18</td></tr><tr><td>US tax effect of foreign earnings and dividends</td><td>28</td><td>10</td><td>-5</td></tr><tr><td>Other foreign tax rate differentials<sup>-1</sup></td><td>-48</td><td>-15</td><td>-84</td></tr><tr><td>Legislative changes</td><td>-71</td><td>71</td><td>3</td></tr><tr><td>Tax-deductible interest on foreign equity investments and other related items</td><td>-3</td><td>-76</td><td>-</td></tr><tr><td>State income taxes and other</td><td>12</td><td>9</td><td>1</td></tr><tr><td>Income tax provision (benefit)</td><td>112</td><td>-243</td><td>63</td></tr></table>
<table><tr><td></td><td colspan="8"> For the Year 2010</td></tr><tr><td></td><td colspan="2"> Life</td><td colspan="2"> Health</td><td colspan="2"> Annuity</td><td colspan="2"> Total</td></tr><tr><td> Distribution Channel</td><td> Amount</td><td> % of Total</td><td> Amount</td><td> % of Total</td><td> Amount</td><td> % of Total</td><td> Amount</td><td> % of Total</td></tr><tr><td>United American Independent</td><td>$25,534</td><td>1</td><td>$314,524</td><td>32</td><td>$638</td><td>100</td><td>$340,696</td><td>13</td></tr><tr><td>Liberty National Exclusive</td><td>294,587</td><td>18</td><td>331,056</td><td>34</td><td></td><td></td><td>625,643</td><td>24</td></tr><tr><td>American Income Exclusive</td><td>560,649</td><td>34</td><td>79,059</td><td>8</td><td></td><td></td><td>639,708</td><td>24</td></tr><tr><td>Direct Response</td><td>566,604</td><td>34</td><td>54,328</td><td>5</td><td></td><td></td><td>620,932</td><td>23</td></tr><tr><td>Medicare Part D</td><td></td><td></td><td>208,970</td><td>21</td><td></td><td></td><td>208,970</td><td>8</td></tr><tr><td>Other</td><td>216,325</td><td>13</td><td></td><td></td><td></td><td></td><td>216,325</td><td>8</td></tr><tr><td></td><td>$1,663,699</td><td>100</td><td>$987,937</td><td>100</td><td>$638</td><td>100</td><td>$2,652,274</td><td>100</td></tr><tr><td></td><td colspan="8"> For the Year 2009</td></tr><tr><td></td><td colspan="2"> Life</td><td colspan="2"> Health</td><td colspan="2"> Annuity</td><td colspan="2"> Total</td></tr><tr><td> Distribution Channel</td><td> Amount</td><td> % of Total</td><td> Amount</td><td> % of Total</td><td> Amount</td><td> % of Total</td><td> Amount</td><td> % of Total</td></tr><tr><td>United American Independent</td><td>$28,498</td><td>2</td><td>$326,442</td><td>32</td><td>$541</td><td>100</td><td>$355,481</td><td>14</td></tr><tr><td>Liberty National Exclusive</td><td>298,485</td><td>19</td><td>388,522</td><td>38</td><td></td><td></td><td>687,007</td><td>26</td></tr><tr><td>American Income Exclusive</td><td>507,899</td><td>32</td><td>75,097</td><td>7</td><td></td><td></td><td>582,996</td><td>22</td></tr><tr><td>Direct Response</td><td>536,878</td><td>33</td><td>46,555</td><td>5</td><td></td><td></td><td>583,433</td><td>22</td></tr><tr><td>Medicare Part D</td><td></td><td></td><td>183,586</td><td>18</td><td></td><td></td><td>183,586</td><td>7</td></tr><tr><td>Other</td><td>220,093</td><td>14</td><td></td><td></td><td></td><td></td><td>220,093</td><td>9</td></tr><tr><td></td><td>$1,591,853</td><td>100</td><td>$1,020,202</td><td>100</td><td>$541</td><td>100</td><td>$2,612,596</td><td>100</td></tr><tr><td></td><td colspan="8"> For the Year 2008</td></tr><tr><td></td><td colspan="2"> Life</td><td colspan="2"> Health</td><td colspan="2"> Annuity</td><td colspan="2"> Total</td></tr><tr><td> Distribution Channel</td><td> Amount</td><td> % of Total</td><td> Amount</td><td> % of Total</td><td> Amount</td><td> % of Total</td><td> Amount</td><td> % of Total</td></tr><tr><td>United American Independent</td><td>$31,855</td><td>2</td><td>$356,853</td><td>32</td><td>$622</td><td>100</td><td>$389,330</td><td>15</td></tr><tr><td>Liberty National Exclusive</td><td>304,262</td><td>20</td><td>475,905</td><td>42</td><td></td><td></td><td>780,167</td><td>29</td></tr><tr><td>American Income Exclusive</td><td>473,784</td><td>31</td><td>73,423</td><td>6</td><td></td><td></td><td>547,207</td><td>20</td></tr><tr><td>Direct Response</td><td>511,165</td><td>33</td><td>45,123</td><td>4</td><td></td><td></td><td>556,288</td><td>21</td></tr><tr><td>Medicare Part D</td><td></td><td></td><td>175,633</td><td>16</td><td></td><td></td><td>175,633</td><td>7</td></tr><tr><td>Other</td><td>223,153</td><td>14</td><td></td><td></td><td></td><td></td><td>223,153</td><td>8</td></tr><tr><td></td><td>$1,544,219</td><td>100</td><td>$1,126,937</td><td>100</td><td>$622</td><td>100</td><td>$2,671,778</td><td>100</td></tr></table>

Question: In which section the sum of Health has the highest value?