Entergy Corporation and Subsidiaries Notes to Financial Statements 114 (a) Consists of pollution control revenue bonds and environmental revenue bonds.
(b) The bonds are secured by a series of collateral first mortgage bonds.
(c) In December 2005, Entergy Corporation sold 10 million equity units with a stated amount of $50 each.
An equity unit consisted of (1) a note, initially due February 2011 and initially bearing interest at an annual rate of 5.75%, and (2) a purchase contract that obligated the holder of the equity unit to purchase for $50 between 0.5705 and 0.7074 shares of Entergy Corporation common stock on or before February 17, 2009.
Entergy paid the holders quarterly contract adjustment payments of 1.875% per year on the stated amount of $50 per equity unit.
Under the terms of the purchase contracts, Entergy attempted to remarket the notes in February 2009 but was unsuccessful, the note holders put the notes to Entergy, Entergy retired the notes, and Entergy issued 6,598,000 shares of common stock in the settlement of the purchase contracts.
(d) Pursuant to the Nuclear Waste Policy Act of 1982, Entergy's nuclear owner/licensee subsidiaries have contracts with the DOE for spent nuclear fuel disposal service.
The contracts include a one-time fee for generation prior to April 7, 1983.
Entergy Arkansas is the only Entergy company that generated electric power with nuclear fuel prior to that date and includes the one-time fee, plus accrued interest, in long-term debt.
(e) The fair value excludes lease obligations, long-term DOE obligations, and the note payable to NYPA, and includes debt due within one year.
It is determined using bid prices reported by dealer markets and by nationally recognized investment banking firms.
(f) Entergy Gulf States Louisiana remains primarily liable for all of the long-term debt issued by Entergy Gulf States, Inc.  that was outstanding on December 31, 2008 and 2007.
Under a debt assumption agreement with Entergy Gulf States Louisiana, Entergy Texas assumed approximately 46% of this long-term debt.
The annual long-term debt maturities (excluding lease obligations) for debt outstanding as of December 31, 2008, for the next five years are as follows:
## Table 0 ##
In November 2000, Entergy's Non-Utility Nuclear business purchased the FitzPatrick and Indian Point 3 power plants in a seller-financed transaction.
Entergy issued notes to NYPA with seven annual installments of approximately $108 million commencing one year from the date of the closing, and eight annual installments of $20 million commencing eight years from the date of the closing.
These notes do not have a stated interest rate, but have an implicit interest rate of 4.8%.
In accordance with the purchase agreement with NYPA, the purchase of Indian Point 2 in 2001 resulted in Entergy's Non-Utility Nuclear business becoming liable to NYPA for an additional $10 million per year for 10 years, beginning in September 2003.
This liability was recorded upon the purchase of Indian Point 2 in September 2001, and is included in the note payable to NYPA balance above.
In July 2003, a payment of $102 million was made prior to maturity on the note payable to NYPA.
Under a provision in a letter of credit supporting these notes, if certain of the Utility operating companies or System Energy were to default on other indebtedness, Entergy could be required to post collateral to support the letter of credit.
Covenants in the Entergy Corporation notes require it to maintain a consolidated debt ratio of 65% or less of its total capitalization.
If Entergy's debt ratio exceeds this limit, or if Entergy or certain of the Utility operating companies default on other indebtedness or are in bankruptcy or insolvency proceedings, an acceleration of the notes' maturity dates may occur.
Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy Texas, and System Energy have received FERC long-term financing orders authorizing long-term securities issuances.
Entergy Arkansas has
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) interest rates; and management actions taken in response to the preceding conditions.
Economic Value of Equity EVE sensitivity measures changes in the market value of equity to quantify potential losses to shareholders due to an immediate +/-200-basis-point rate shock compared to current interest-rate levels if the balance sheet were liquidated immediately.
Management compares the change in EVE sensitivity against State Street's aggregate tier 1 and tier 2 riskbased capital, calculated in conformity with currently applicable regulatory requirements, to evaluate whether the magnitude of the exposure to interest rates is acceptable.
Generally, a change resulting from a +/-200-basis-point rate shock that is less than 20% of aggregate tier 1 and tier 2 capital is an exposure that management deems acceptable.
To the extent that we manage changes in EVE sensitivity within the 20% threshold, we would seek to take action to remain below the threshold if the magnitude of our exposure to interest rates approached that limit.
Similar to NIR-at-risk measures, the timing of cash flows affects EVE sensitivity, as changes in asset and liability values under different rate scenarios are dependent on when interest and principal payments are received.
In contrast to NIR simulations, however, EVE sensitivity does not incorporate assumptions regarding reinvestment of these cash flows.
In addition, our ability to price client deposits has a much smaller impact on EVE sensitivity, as EVE sensitivity does not consider the ongoing benefit of investing client deposits.
The following table presents estimated EVE exposures, calculated as of the dates indicated, assuming an immediate and prolonged shift in global interest rates, the impact of which would be spread over a number of years.
TABLE 43: ESTIMATED EVE EXPOSURES
## Table 1 ##
The dollar measure of EVE sensitivity to an upward-200-basis-point shock as of December 31, 2014 improved compared to December 31, 2013, and the dollar measure of EVE sensitivity to a downward-200-basis-point shock as of December 31, 2014 declined compared to December 31, 2013, with both comparisons due primarily to portfolio decay and lower rates as of December 31, 2014 compared to December 31, 2013.
EVE sensitivity to an upward-200-basis-point shock as of December 31, 2014, as a percentage of the total of tier 1 and tier 2 regulatory capital, declined compared to December 31, 2013.
EVE sensitivity to a downward-200-basis-point shock as of December 31, 2014, as a percentage of the total of tier 1 and tier 2 regulatory capital, declined compared to December 31, 2013.
These improvements were primarily due to the above changes in the dollar measures of EVE sensitivity as well as an increase in the total of tier 1 and tier 2 capital as of December 31, 2014 compared to December 31, 2013 (refer to the "Capital - Regulatory Capital" section of this Management's Discussion and Analysis).
Business Risk Management We define business risk as the risk of adverse changes in our earnings related to business factors, including changes in the competitive environment, changes in the operational economics of our business activities and the potential effect of strategic and reputation risks, not already captured as trading market, interest-rate, credit, operational or liquidity risks.
We incorporate business risk into our assessment of our strategic plans and capital management processes.
Active management of business risk is an integral component of all aspects of our business, and responsibility for the management of business risk lies with every employee at State Street.
Separating the effects of a potential material adverse event into operational and business risk is sometimes difficult.
For instance, the direct financial impact of an unfavorable event in the form of fines or penalties would be classified as an operational risk loss, while the impact on our reputation and consequently the potential loss of clients and corresponding decline in revenue would be classified as a business risk loss.
An additional example of business risk is the integration of a major acquisition.
Failure to successfully integrate the operations of an
STATE STREET CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Other Expenses: Other expenses of $751 million in 2014 included a legal accrual of $185 million in connection with management's intention to seek to resolve some, but not all, of the outstanding and potential claims arising out of our indirect FX client activities.
These matters are more fully discussed under "Legal and Regulatory Matters" in note 11 to the consolidated financial statements.
As a result of the 2008 Lehman Brothers bankruptcy, we had various claims against Lehman Brothers entities in bankruptcy proceedings in the U. S.  and the U. K.  We also had amounts asserted as owed, or return obligations, to Lehman Brothers entities.
The various claims and amounts owed arose from transactions that existed at the time Lehman Brothers entered bankruptcy, including prime brokerage arrangements, foreign exchange transactions, securities lending arrangements and repurchase agreements.
In 2011, we reached an agreement with certain Lehman Brothers estates in the U. S.  to resolve the value of deficiency claims arising out of indemnified repurchase transactions in the U. S. , and the bankruptcy court allowed those claims in the amount of $400 million.
In 2012, we reached an agreement to settle the claims against the Lehman Brothers estate in the U. K.  related to the close-out of securities lending and repurchase arrangements.
In connection with our resolution of the indemnified repurchase and securities lending claims in the U. S.  and the U. K. , we recognized a credit of approximately $362 million in our consolidated statement of income in 2012.
Both certified claims retained as part of the settlement agreements were subsequently sold at their respective fair values, resulting in an additional gain of approximately $10 million, which was also recorded in our consolidated statement of income in 2012.
In 2014, we received aggregate distributions totaling approximately $21 million from the Lehman Brothers estates, compared to approximately $186 million from the Lehman Brothers estates in 2013.
Of the aggregate distributions received in both 2014 and 2013, approximately $11 million and $101 million was applied to reduce remaining Lehman Brothers-related assets, primarily prime brokerage claim-related receivables, recorded in our consolidated statement of condition; the remaining $10 million and $85 million, respectively, was recorded as an aggregate credit to other expenses in our consolidated statement of income.
Note 22.
Income Taxes We use an asset-and-liability approach to account for income taxes.
Our objective is to recognize the amount of taxes payable or refundable for the current year through charges or credits to the current tax provision, and to recognize deferred tax assets and deferred tax liabilities for the future tax consequences resulting from temporary differences between the amounts reported in our consolidated financial statements and their respective tax bases.
The measurement of tax assets and liabilities is based on enacted tax laws and applicable tax rates.
The effects of a tax position on our consolidated financial statements are recognized when we believe it is more likely than not that the position will be sustained.
A deferred-tax-asset valuation allowance is established if it is considered more likely than not that all or a portion of the deferred tax assets will not be realized.
Deferred tax assets and deferred tax liabilities recorded in our consolidated statement of condition are netted within the same tax jurisdiction.
The following table presents the components of income tax expense for the years ended December 31:
## Table 2 ##
In 2014 we expanded our municipal securities portfolio, increased our investments in alternative energy projects and realized greater benefits from our non-U.
S.  operations.
In 2013, we completed a multi-year tax data enhancement process, the final stages of which identified a reconciliation difference in our deferred tax accounts, and we determined that our deferred tax liabilities were overstated by $50 million and our deferred tax assets were understated by $21 million, which resulted in an out-of-period income tax benefit of $71 million.
This income tax benefit is reflected in the table above as a reduction of total deferred income tax expense for 2013.
STATE STREET CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table presents activity related to unrecognized tax benefits as of December 31:
## Table 3 ##
The amount of unrecognized tax benefits that, if recognized, would reduce income tax expense and our effective tax rate was $96 million as of December 31, 2014.
Unrecognized tax benefits do not include accrued interest of approximately $9 million and $7 million as of December 31, 2014 and 2013, respectively.
We recorded interest and penalties related to income taxes as a component of income tax expense.
Income tax expense included related interest and penalties of approximately $3 million for the years ended December 31, 2014 and 2013.
It is reasonably possible that the unrecognized tax benefits could decrease by up to $120 million within the next 12 months due to the resolution of an audit, of which $61 million would reduce our income tax expense and our effective tax rate.
Management believes that we have sufficient accrued liabilities as of December 31, 2014 for tax exposures and related interest expense.
Note 23.
Earnings Per Common Share Basic earnings per share, or EPS, is calculated pursuant to the “two-class” method, by dividing net income available to common shareholders by the weighted-average common shares outstanding during the period.
Diluted EPS is calculated pursuant to the two-class method, by dividing net income available to common shareholders by the total weighted-average number of common shares outstanding for the period plus the shares representing the dilutive effect of common stock options and other equity-based awards.
The effect of common stock options and other equity-based awards is excluded from the calculation of diluted EPS in periods in which their effect would be anti-dilutive.
The two-class method requires the allocation of undistributed net income between common and participating shareholders.
Net income available to common shareholders, presented separately in our consolidated statement of income, is the basis for the calculation of both basic and diluted EPS.
Participating securities are composed of unvested restricted stock and fully vested deferred director stock awards, which are equity-based awards that contain non-forfeitable rights to dividends, and are considered to participate with common shareholders in undistributed earnings.
The following tables present the computation of basic and diluted earnings per common share for the years ended December 31:
## Table 4 ##
(1) Represents the portion of net income available to common equity allocated to participating securities, composed of fully vested deferred director stock and unvested restricted stock that contain non-forfeitable rights to dividends during the vesting period on a basis equivalent to dividends paid to common shareholders.
(2) Represents common stock options and other equity-based awards outstanding but not included in the computation of diluted average common shares, because their effect was anti-dilutive.
(3) Calculations reflect allocation of earnings to participating securities using the two-class method, as this computation is more dilutive than the treasury stock method.
Note 24.
Line of Business Information We have 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.
Investment Servicing provides services for U. S.  mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations and endowments worldwide.
Products include custody; product- and participant-level accounting; daily pricing and administration; master trust and master custody; record-keeping; cash management; foreign exchange, brokerage and other trading services;
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Gains (Losses) Related to Investment Securities, Net We regularly review our investment securities portfolio to identify other-than-temporary impairment of individual securities.
Additional information about investment securities, the gross gains and losses that compose the net gains from sales of securities and other-than-temporary impairment is provided in note 3 to the consolidated financial statements under Item 8 of this Form 10-K.
## Table 5 ##
From time to time, in connection with our ongoing management of our investment securities portfolio, we sell available-for-sale securities to manage risk, to take advantage of favorable market conditions, or for other reasons.
In 2014, we sold approximately $9.77 billion of such investment securities, compared to approximately $10.26 billion in 2013, and recorded net realized gains of $15 million and $14 million, respectively, as presented in the preceding table.
PROVISION FOR LOAN LOSSES We recorded a provision for loan losses of $10 million in 2014, compared to $6 million in 2013 and a negative provision of $3 million in 2012.
The provisions in 2014 and 2013 were recorded in connection with our exposure to non-investmentgrade borrowers composed of senior secured bank loans, which we purchased in connection with our participation in loan syndications in the noninvestment-grade lending market.
The increase in the provision in the year-to-year comparison reflected growth of the portfolio.
Additional information about these senior secured bank loans is provided under “Financial Condition - Loans and Leases” in this Management's Discussion and Analysis, and in note 4 to the consolidated financial statements included under Item 8 of this Form 10-K.
EXPENSES TABLE 15: EXPENSES
## Table 6 ##
(1) Included in other for the year ended December 31, 2014 was a $185 million legal accrual in connection with management's intention to seek to resolve some, but not all, of the outstanding and potential claims arising out of our indirect FX client activities.
For additional information, refer to note 21 to the consolidated financial statements included under Item 8 of this Form 10-K.
Compensation and employee benefits expenses increased 7% in 2014 compared to 2013.
The increase was primarily the result of costs for additional staffing to support new business, higher incentive compensation, the impact of merit increases and promotions, and higher regulatory compliance costs, partially offset by savings generated from the completion of our Business Operations and Information Technology Transformation program.
Compensation and employee benefits expenses in 2014 included approximately $53 million of costs related to our Business Operations and Information

<table><tr><td></td><td>Amount (In Thousands)</td></tr><tr><td>2009</td><td>$516,019</td></tr><tr><td>2010</td><td>$763,036</td></tr><tr><td>2011</td><td>$897,367</td></tr><tr><td>2012</td><td>$3,625,459</td></tr><tr><td>2013</td><td>$579,461</td></tr></table>
<table><tr><td></td><td colspan="4">Estimated Sensitivity ofEconomic Value of Equity</td></tr><tr><td>(Dollars in millions)</td><td colspan="2">December 31,2014</td><td colspan="2">December 31,2013</td></tr><tr><td>Rate change:</td><td>Exposure</td><td>% of Tier 1/Tier 2 Capital</td><td>Exposure</td><td>% of Tier 1/Tier 2 Capital</td></tr><tr><td>+200 bps shock</td><td>$-2,291</td><td>-12.8%</td><td>$-2,359</td><td>-14.9%</td></tr><tr><td>–200 bps shock</td><td>942</td><td>5.3</td><td>1,149</td><td>7.2</td></tr></table>
<table><tr><td>(In millions)</td><td>2014</td><td>2013</td><td>2012</td></tr><tr><td>Current:</td><td></td><td></td><td></td></tr><tr><td>Federal</td><td>$59</td><td>$193</td><td>$148</td></tr><tr><td>State</td><td>39</td><td>47</td><td>64</td></tr><tr><td>Non-U.S.</td><td>257</td><td>248</td><td>262</td></tr><tr><td>Total current expense</td><td>355</td><td>488</td><td>474</td></tr><tr><td>Deferred:</td><td></td><td></td><td></td></tr><tr><td>Federal</td><td>42</td><td>28</td><td>267</td></tr><tr><td>State</td><td>11</td><td>17</td><td>27</td></tr><tr><td>Non-U.S.</td><td>13</td><td>17</td><td>-63</td></tr><tr><td>Total deferred expense</td><td>66</td><td>62</td><td>231</td></tr><tr><td>Total income tax expense</td><td>$421</td><td>$550</td><td>$705</td></tr></table>
<table><tr><td>(In millions)</td><td>2014</td><td>2013</td></tr><tr><td>Beginning balance</td><td>$158</td><td>$95</td></tr><tr><td>Decrease related to agreements with tax authorities</td><td>-9</td><td>-4</td></tr><tr><td>Increase related to tax positions taken during current year</td><td>8</td><td>10</td></tr><tr><td>Increase related to tax positions taken during prior year</td><td>6</td><td>57</td></tr><tr><td>Ending balance</td><td>$163</td><td>$158</td></tr></table>
<table><tr><td>(Dollars in millions, except per share amounts)</td><td>2014</td><td>2013</td><td>2012</td></tr><tr><td>Net income</td><td>$2,037</td><td>$2,136</td><td>$2,061</td></tr><tr><td>Less:</td><td></td><td></td><td></td></tr><tr><td>Preferred stock dividends</td><td>-61</td><td>-26</td><td>-29</td></tr><tr><td>Dividends and undistributed earnings allocated to participating securities<sup>-1</sup></td><td>-3</td><td>-8</td><td>-13</td></tr><tr><td>Net income available to common shareholders</td><td>$1,973</td><td>$2,102</td><td>$2,019</td></tr><tr><td>Average common shares outstanding (in thousands):</td><td></td><td></td><td></td></tr><tr><td>Basic average common shares</td><td>424,223</td><td>446,245</td><td>474,458</td></tr><tr><td>Effect of dilutive securities: common stock options and common stock awards</td><td>7,784</td><td>8,910</td><td>6,671</td></tr><tr><td>Diluted average common shares</td><td>432,007</td><td>455,155</td><td>481,129</td></tr><tr><td>Anti-dilutive securities<sup>-2</sup></td><td>1,498</td><td>1,855</td><td>5,619</td></tr><tr><td>Earnings per Common Share:</td><td></td><td></td><td></td></tr><tr><td>Basic</td><td>$4.65</td><td>$4.71</td><td>$4.25</td></tr><tr><td>Diluted<sup>-3</sup></td><td>4.57</td><td>4.62</td><td>4.20</td></tr></table>
<table><tr><td>Years Ended December 31,</td><td>2014</td><td>2013</td><td>2012</td></tr><tr><td>(In millions)</td><td></td><td></td><td></td></tr><tr><td>Net realized gains from sales of available-for-sale securities</td><td>$15</td><td>$14</td><td>$55</td></tr><tr><td>Net impairment losses:</td><td></td><td></td><td></td></tr><tr><td>Gross losses from other-than-temporary impairment</td><td>-1</td><td>-21</td><td>-53</td></tr><tr><td>Losses reclassified (from) to other comprehensive income</td><td>-10</td><td>-2</td><td>21</td></tr><tr><td>Net impairment losses<sup>-1</sup></td><td>-11</td><td>-23</td><td>-32</td></tr><tr><td>Gains (losses) related to investment securities, net</td><td>$4</td><td>$-9</td><td>$23</td></tr><tr><td><sup>-1</sup>Net impairment losses, recognized in our consolidated statement of income, were composed of the following:</td><td></td><td></td><td></td></tr><tr><td>Impairment associated with expected credit losses</td><td>$-10</td><td>$-11</td><td>$-16</td></tr><tr><td>Impairment associated with management’s intent to sell impaired securities prior to recovery in value</td><td>—</td><td>-6</td><td>—</td></tr><tr><td>Impairment associated with adverse changes in timing of expected future cash flows</td><td>-1</td><td>-6</td><td>-16</td></tr><tr><td>Net impairment losses</td><td>$-11</td><td>$-23</td><td>$-32</td></tr></table>
<table><tr><td>Years Ended December 31,</td><td>2014</td><td>2013</td><td>2012</td><td>% Change 2014 vs. 2013</td><td>% Change 2013 vs. 2012</td></tr><tr><td>(Dollars in millions)</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Compensation and employee benefits</td><td>$4,060</td><td>$3,800</td><td>$3,837</td><td>7%</td><td>-1%</td></tr><tr><td>Information systems and communications</td><td>976</td><td>935</td><td>844</td><td>4</td><td>11</td></tr><tr><td>Transaction processing services</td><td>784</td><td>733</td><td>702</td><td>7</td><td>4</td></tr><tr><td>Occupancy</td><td>461</td><td>467</td><td>470</td><td>-1</td><td>-1</td></tr><tr><td>Claims resolution</td><td>—</td><td>—</td><td>-362</td><td></td><td></td></tr><tr><td>Acquisition costs</td><td>58</td><td>76</td><td>26</td><td></td><td></td></tr><tr><td>Restructuring charges, net</td><td>75</td><td>28</td><td>199</td><td></td><td></td></tr><tr><td>Other:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Professional services</td><td>440</td><td>392</td><td>381</td><td>12</td><td>3</td></tr><tr><td>Amortization of other intangible assets</td><td>222</td><td>214</td><td>198</td><td>4</td><td>8</td></tr><tr><td>Securities processing costs</td><td>68</td><td>52</td><td>24</td><td></td><td></td></tr><tr><td>Regulatory fees and assessments</td><td>74</td><td>72</td><td>61</td><td></td><td></td></tr><tr><td>Other<sup>-1</sup></td><td>609</td><td>423</td><td>506</td><td>44</td><td>-16</td></tr><tr><td>Total other</td><td>1,413</td><td>1,153</td><td>1,170</td><td>23</td><td>-1</td></tr><tr><td>Total expenses</td><td>$7,827</td><td>$7,192</td><td>$6,886</td><td>9</td><td>4</td></tr><tr><td>Number of employees at year-end</td><td>29,970</td><td>29,430</td><td>29,660</td><td></td><td></td></tr></table>

Question: What will Net realized gains from sales of available-for-sale securities be like in 2015 if it develops with the same increasing rate as current? (in million)
Answer: 16.07143