3.
The following exhibits are filed as part of this Annual Report on Form 10-K pursuant to Item 601 of SEC Regulation S-K and Item 15(b) of Form 10-K:
## Table 0 ##
Part II Item 8 — Financial Statements and Supplementary Data foreign subsidiaries due to implementation of a territorial tax system, $2.9 million related to re-measurement of deferred tax assets to the 21% tax rate, and $0.7 million related to reductions in tax benefits on stock compensation.
During 2018 the Company completed the analysis the earnings and profits of foreign investments.
This resulted in the recognition at year ended December 31, 2018 of an additional $1.2 million related to the imposition of a tax on deemed repatriated earnings of foreign subsidiaries.
The Company has elected to include the global intangible low-taxed income (GILTI) as part of tax expense in the year incurred.
The Provision for Income Taxes resulted in an effective tax rate of 25.4% on Income Before Income Taxes for the year ended December 31, 2018.
The effective rate differs from the annual federal statutory rate primarily because of state and foreign income taxes and adjustments due to the TCJA.
For 2017 and 2016 the effective tax rate was 39.2% and 35.8%, respectively.
The effective income tax rate differs from the annual federal statutory tax rate primarily because of state and foreign income taxes, adjustments due to the TCJA partially offset by tax benefits associated with restricted stock, and the increase of available foreign tax credits.
During 2018, 2017 and 2016, the Company paid income taxes of $77.3 million, $90.7 million and $88.8 million, respectively, net of refunds.
Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes.
Significant components of the Company’s deferred tax assets and liabilities at December 31, 2018 and 2017 are as follows:
## Table 1 ##
As of December 31, 2018, the Company has net operating loss carryforwards for foreign and state income tax purposes of approximately $111.6 million, which will be available to offset future taxable income.
If not used, these carryforwards will expire between 2019 and 2031.
Management believes that it is unlikely to be able to utilize approximately $0.4 million of foreign net operating losses before they expire and has included a valuation allowance for the effect of these unrealizable operating loss carryforwards.
The valuation allowance increased by $0.1 million due to foreign net operating leases.
Earnings from continuing operations before income tax included foreign income of $22.7 million in 2018, $22.1 million in 2017 and $6.4 million in 2016.
The Company’s international business is expanding and we intend to continue to grow the business in foreign markets in the future through reinvestment of foreign deposits and future earnings as well as acquisition of unrelated companies.
Repatriation of cash from the Company’s foreign subsidiaries is not part of the Company’s current business plan.
The total amount of unrecognized tax benefits at December 31, 2018 that, if recognized, would affect the effective tax rate is $0.0 million.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
## Table 2 ##
Analysis of the valuation allowance:
## Table 3 ##
loss carryforwards for foreign and state income tax purposes of approximately $111.6 million, which will be available to offset future taxable income.
If not used, these carryforwards will expire between 2019 and 2031.
Management believes that it is unlikely to be able to utilize approximately $0.4 million of foreign net operating losses before they expire and has included a valuation allowance for the effect of these unrealizable operating loss carryforwards.
The valuation allowance increased by $0.1 million due to foreign net operating leases.
Earnings from continuing operations before income tax included foreign income of $22.7 million in 2018, $22.1 million in 2017 and $6.4 million in 2016.
The Company’s international business is expanding and we intend to continue to grow the business in foreign markets in the future through reinvestment of foreign deposits and future earnings as well as acquisition of unrelated companies.
Repatriation of cash from the Company’s foreign subsidiaries is not part of the Company’s current business plan.
The total amount of unrecognized tax benefits at December 31, 2018 that, if recognized, would affect the effective tax rate is $0.0 million.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
The Company and its subsidiaries are subject to U. S.  federal income tax as well as income tax of multiple state and foreign jurisdictions.
In addition, the Company has subsidiaries in various state and international jurisdictions that are currently under audit for years ranging from 2012 through 2015.
With few exceptions, we are no longer subject to U. S.  federal, state and local, or non-U.
S. , income tax examinations for years prior to 2012.
It is reasonably possible that the amount of unrecognized tax benefits will decrease in the next 12 months.
The Company’s policy is to record interest and penalties related to income tax matters in income tax expense.
Accrued interest and penalties were $1.0 million and $0.9 million as of December 31, 2018 and December 31, 2017,
Part II Item 8 — Financial Statements and Supplementary Data Some of our assets, primarily our private equity, real estate, and hedge funds, do not have readily determinable market values given the specific investment structures involved and the nature of the underlying investments.
For the December 31, 2018 plan asset reporting, publicly traded asset pricing was used where possible.
For assets without readily determinable values, estimates were derived from investment manager statements combined with discussions focusing on underlying fundamentals and significant events.
Additionally, these investments are categorized as NAV investments and are valued using significant non-observable inputs which do not have a readily determinable fair value.
In accordance with ASU No.2011-12 “Investments In Certain Entities That Calculate Net Asset Value per Share (Or Its Equivalent),” these investments are valued based on the net asset value per share calculated by the funds in which the plan has invested.
These valuations are subject to judgments and assumptions of the funds which may prove to be incorrect, resulting in risks of incorrect valuation of these investments.
The Company seeks to mitigate against these risks by evaluating the appropriateness of the funds’ judgments and assumptions by reviewing the financial data included in the funds’ financial statements for reasonableness.
Fair Value Measurements Given the funded status of the Rollins, Inc.  Plan, the Company has modified the overall investment strategy to mitigate risk related to volatility with asset types by transitioning to a higher percentage of fixed income securities.
As such, the Company’s overall investment strategy is to achieve a mix of approximately 50 percent of investments to match long-term pension obligations and 50 percent for near term benefits payments, with a diversification of assets types, fund strategies and fund managers.
With the modification of investment strategy, the Company has transitioned the majority of its assets to Fixed-income securities.
Fixed-income securities include corporate bonds, mortgage-backed securities, sovereign bonds, and U. S.  Treasuries.
Equity securities primarily include investments in large-cap and small-cap companies domiciled domestically and internationally.
Other types of investments include real estate funds and private equity funds that follow several different investment strategies.
For each of the asset categories in the pension plan, the investment strategy is identical – maximize the long-term rate of return on plan assets with an acceptable level of risk in order to minimize the cost of providing pension benefits.
The investment policy establishes a target allocation for each asset class which is rebalanced as required.
The plans utilize a number of investment approaches, including but not limited to individual market securities, equity and fixed income funds in which the underlying securities are marketable, and debt funds to achieve this target allocation.
The Company has initiated the process to transition its Pension Plan to an Insurance provider and does not expect to amortize a net loss in 2019.
The timeline will take approximately 6-9 months from December 31, 2018.
The Company’s Pension Plan is currently more than 100% funded.
Discount rates of 3.90% per year for participants in pay status and 4.11% per year for participants with deferred benefits were selected by the Plan Sponsor to determine the benefit obligation resulting from plan termination annuity purchases.
The discount rates reflect the single effective interest rate that produces the same present value as that produced when the expected future cash flows for participants expected to elect an annuity are discounted with the FTSE Yield Curve (formerly Citigroup) as of the measurement date.
To determine the benefit obligation resulting from plan termination lump sum payments, the expected future cash flows for lump sum eligible participants, determined with the IRC 417(e) Mortality Table for 2019, were discounted with the IRC 417(e) segment interest rates for the month of November 2018 (3.43%, 4.46%, and 4.88%).
The following table presents our plan assets using the fair value hierarchy as of December 31, 2018.
The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.
See Note 8 for a brief description of the three levels under the fair value hierarchy
## Table 4 ##
The following table presents our plan assets using the fair value hierarchy as of December 31, 2017.
The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.
## Table 5 ##
(1) Cash and cash equivalents, which are used to pay benefits and plan administrative expenses, are held in Rule 2a-7 money market funds.
(2) Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades.
(3) International equity securities are valued using a market approach based on the quoted market prices of identical instruments in their respective markets.
(4) Real estate fund values are primarily reported by the fund manager and are based on valuation of the underlying investments, which include inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data.
(5) Alternative/Opportunistic/Special funds can invest across the capital structure in both liquid and illiquid securities that are valued using a market approach based on the quoted market prices of identical instruments, or if no market price is available, instruments will be held at their fair market value (which may be cost) as reasonably determined by the investment manager, independent dealers, or pricing services.
There were no purchases, sales or transfers of assets classified as Level 3 in 2018 or 2017.
The estimated future benefit payments over the next five years are as follows:

<table><tr><td>Exhibit No.</td><td>Document</td></tr><tr><td>3.1</td><td>Form of Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to the Registration Statement on Form S-4, SEC File No. 333-151586(“Amendment No. 2”))</td></tr><tr><td>3.2</td><td>Bylaws (incorporated by reference to Exhibit 3.2 to the 8-K filed on November 16, 2009 (SEC File No. 1-34177))</td></tr><tr><td>4.1</td><td>Specimen certificate for shares of the Registrant’s Series A common stock, par value $.01 per share (incorporated by reference to Exhibit 4.1 to the Registration Statement onForm S-4, SEC File No. 333-151586 (the “Registration Statement”))</td></tr><tr><td>4.2</td><td>Specimen certificate for shares of the Registrant’s Series B common stock, par value $.01 per share (incorporated by reference to Exhibit 4.2 to the Registration Statement)</td></tr><tr><td>4.3</td><td>Specimen certificate for shares of the Registrant’s Series C common stock, par value $.01 per share (incorporated by reference to Exhibit 4.3 to the Registration Statement)</td></tr><tr><td>4.4</td><td>Form of Registration Rights Agreement, by and between Discovery Communications, Inc. and Advance/Newhouse Programming Partnership (incorporated by reference to Exhibit 4.4 to theRegistration Statement)</td></tr><tr><td>4.5</td><td>Form of Rights Agreement, by and between Discovery Communications, Inc. and Computershare Trust Company, N.A., as rights agent (incorporated by reference to Exhibit 4.5 to theRegistration Statement)</td></tr><tr><td>4.6</td><td>Amendment No. 1 to Rights Agreement between Discovery Communications, Inc. and Computershare Trust Company, N.A. dated December 10, 2008 (incorporated by reference to Exhibit 4.1 tothe 8-K filed on December 11, 2008)</td></tr><tr><td>4.7</td><td>Amendment and Restatement Agreement regarding $700,000,000 Senior Unsecured Notes, dated as of November 4, 2005, between Discovery Communications, Inc. and the Holders of Noteslisted therein, and attached thereto, the Amended and Restated Note Purchase Agreement, dated as of November 4, 2005, between Discovery Communications, Inc. and the Holders of Notes listed therein as Purchasers (the “2001 Note PurchaseAgreement”) (incorporated by reference to Exhibit 4.7 to the Registration Statement)</td></tr><tr><td>4.8</td><td>First Amendment to 2001 Note Purchase Agreement, dated as of April 11, 2007, between Discovery Communications, Inc. and the Holders of Notes listed therein as Noteholders(incorporated by reference to Exhibit 4.8 to the Registration Statement)</td></tr><tr><td>4.9</td><td>Amendment and Restatement Agreement regarding $290,000,000 Senior Unsecured Notes, dated as of November 4, 2005, between Discovery Communications, Inc. and the Holders of Noteslisted therein, and attached thereto, the Amended and Restated Note Purchase Agreement dated as of November 4, 2005, between Discovery Communications, Inc. and the Holders of Notes listed therein as Purchasers (the “2002 Note PurchaseAgreement”) (incorporated by reference to Exhibit 4.9 to the Registration Statement)</td></tr><tr><td>4.10</td><td>First Amendment to 2002 Note Purchase Agreement dated as of April 11, 2007, between Discovery Communications, Inc. and the Holders of Notes listed therein as Noteholders(incorporated by reference to Exhibit 4.10 to the Registration Statement)</td></tr><tr><td>4.11</td><td>Note Purchase Agreement, dated as of December 1, 2005, between Discovery Communications, Inc. and the Holders of Notes listed therein as Purchasers (the “2005 Note PurchaseAgreement”) (incorporated by reference to Exhibit 4.11 to the Registration Statement)</td></tr><tr><td>4.12</td><td>First Amendment to 2005 Note Purchase Agreement, dated as of April 11, 2007, between Discovery Communications, Inc. and the Holders of Notes listed therein as Noteholders(incorporated by reference to Exhibit 4.12 to the Registration Statement)</td></tr></table>
<table><tr><td>December 31,</td><td>2018</td><td>2017</td></tr><tr><td>(in thousands)</td><td></td><td></td></tr><tr><td>Deferred tax assets:</td><td></td><td></td></tr><tr><td>Termite accrual</td><td>$812</td><td>$1,241</td></tr><tr><td>Insurance and contingencies</td><td>18,136</td><td>18,374</td></tr><tr><td>Unearned revenues</td><td>11,091</td><td>11,152</td></tr><tr><td>Compensation and benefits</td><td>11,238</td><td>11,157</td></tr><tr><td>State and foreign operating loss carryforwards</td><td>5,346</td><td>7,035</td></tr><tr><td>Bad debt reserve</td><td>3,687</td><td>3,203</td></tr><tr><td>Foreign tax credit</td><td>6,664</td><td>7,842</td></tr><tr><td>Other</td><td>2,060</td><td>1,861</td></tr><tr><td>Valuation allowance</td><td>-76</td><td>-24</td></tr><tr><td>Total deferred tax assets</td><td>58,958</td><td>61,841</td></tr><tr><td>Deferred tax liabilities:</td><td></td><td></td></tr><tr><td>Depreciation and amortization</td><td>-21,237</td><td>-18,453</td></tr><tr><td>NetPension liability</td><td>-1,340</td><td>-3,709</td></tr><tr><td>Intangibles and other</td><td>-29,467</td><td>-21,259</td></tr><tr><td>Total deferred tax liabilities</td><td>-52,043</td><td>-43,421</td></tr><tr><td>Net deferred tax assets</td><td>6,915</td><td>18,420</td></tr></table>
<table><tr><td>December 31,</td><td>2018</td><td>2017</td></tr><tr><td>(in thousands)</td><td></td><td></td></tr><tr><td>Valuation allowance at beginning of year</td><td>$24</td><td>$6,507</td></tr><tr><td>Change in valuation allowance</td><td>52</td><td>-6,483</td></tr><tr><td>Valuation allowance at end of year</td><td>$76</td><td>$24</td></tr></table>
<table><tr><td>December 31,</td><td>2018</td><td>2017</td></tr><tr><td>(in thousands)</td><td></td><td></td></tr><tr><td>Balance at Beginning of Year</td><td>$3,148</td><td>$2,554</td></tr><tr><td>Additions/(reductions) for tax positions of prior years</td><td>-594</td><td>594</td></tr><tr><td>Balance at End of Year</td><td>$2,554</td><td>$3,148</td></tr></table>
<table><tr><td>(in thousands)</td><td>Total</td><td>Level 1</td><td>Level 2</td><td>NAV</td></tr><tr><td>-1 Cash and cash equivalents</td><td>$7,438</td><td>$7,438</td><td>—</td><td>—</td></tr><tr><td>-2 Fixed income securities</td><td>194,739</td><td>170,249</td><td>474</td><td>24,490</td></tr><tr><td>Domestic equity securities</td><td></td><td></td><td></td><td></td></tr><tr><td>Rollins, Inc. stock</td><td>1,582</td><td>1,582</td><td>—</td><td>—</td></tr><tr><td>Other securities</td><td>789</td><td>—</td><td>789</td><td>—</td></tr><tr><td>-3 International equity securities</td><td>363</td><td>—</td><td>363</td><td>—</td></tr><tr><td>-4 Real estate</td><td>4,204</td><td>—</td><td>—</td><td>4,204</td></tr><tr><td>-5 Alternative/opportunistic/special</td><td>4,574</td><td>—</td><td>—</td><td>4,574</td></tr><tr><td>Total</td><td>$213,689</td><td>$203,285</td><td>$1,626</td><td>$8,778</td></tr></table>
<table><tr><td>(in thousands)</td><td>Total</td><td>Level 1</td><td>Level 2</td><td>NAV</td></tr><tr><td>-1 Cash and cash equivalents</td><td>$5,432</td><td>$5,432</td><td>—</td><td>—</td></tr><tr><td>-2 Fixed income securities</td><td>77,214</td><td>—</td><td>77,214</td><td>—</td></tr><tr><td>Domestic equity securities</td><td></td><td></td><td></td><td></td></tr><tr><td>Rollins, Inc. stock</td><td>32,049</td><td>32,049</td><td>—</td><td>—</td></tr><tr><td>Other securities</td><td>48,511</td><td>16,243</td><td>32,268</td><td>—</td></tr><tr><td>-3 International equity securities</td><td>36,156</td><td>—</td><td>36,156</td><td>—</td></tr><tr><td>-4 Real estate</td><td>14,074</td><td>—</td><td>—</td><td>14,074</td></tr><tr><td>-5 Alternative/opportunistic/special</td><td>6,469</td><td>—</td><td>—</td><td>6,469</td></tr><tr><td>Total</td><td>$219,905</td><td>$53,724</td><td>$145,638</td><td>$20,543</td></tr></table>

Question: As As the chart 4 shows,what is the value of the International equity securities in the Level where the value of Fixed income securities is the lowest? (in thousand)
Answer: 363