Table of Contents Potentially dilutive securities include outstanding stock options, shares to be purchased under the employee stock purchase plan and unvested RSUs.
The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury stock method.
Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities.
The following table sets forth the computation of basic and diluted earnings per common share for the three years ended September 25, 2010 (in thousands, except net income in millions and per share amounts):
## Table 0 ##
Potentially dilutive securities representing 1.6 million, 12.6 million and 10.3 million shares of common stock for 2010, 2009 and 2008, respectively, were excluded from the computation of diluted earnings per common share for these periods because their effect would have been antidilutive.
Financial Instruments Cash Equivalents and Marketable Securities All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents.
The Company’s debt and marketable equity securities have been classified and accounted for as available-for-sale.
Management determines the appropriate classification of its investments in debt securities at the time of purchase and reevaluates the available-for-sale designations as of each balance sheet date.
The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date.
Marketable securities with maturities of less than 12 months are classified as short-term and marketable securities with maturities greater than 12 months are classified as long-term.
These securities are carried at fair value, with the unrealized gains and losses, net of taxes, reported as a component of shareholders’ equity.
The cost of securities sold is based upon the specific identification method.
Derivative Financial Instruments The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value.
Derivatives that are not defined as hedges must be adjusted to fair value through earnings.
For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income in shareholders’ equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
The ineffective portion of the gain or loss on the derivative instrument is recognized in current earnings.
To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions.
For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings.
For derivative instruments that hedge the exposure to changes in the fair value of an asset or a liability and that are designated as fair value hedges, the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item attributable to
Management’s Discussion and Analysis of Results of Operations and Financial Condition (continued) (approximately $7 million).
In 2007, the increase reflected an estimated $510 million in sales from the Paxar acquisition and the favorable impact of foreign currency translation (approximately $17 million).
On an organic basis, sales declined 6% in 2008 reflecting continued weakness in the domestic retail apparel markets and weakness experienced in the European retail markets.
Organic sales growth of approximately 1% in 2007 reflected increased sales for the European retail market, partially offset by a decline in orders related to apparel shipped to North American retailers and brand owners.
Operating Income Increased operating income in 2008 reflected higher sales, incremental synergies and lower transition costs related to the Paxar integration, and savings from restructuring and productivity improvement initiatives, partially offset by raw material and other cost inflation, and incremental amortization of acquisition intangibles.
Operating loss in 2007 reflected transition costs and integrationrelated asset impairment charges associated with the Paxar acquisition, amortization of acquisition intangibles and higher expenses due to investments for growth in Asia, including higher employee-related costs.
Higher operating costs were partially offset by higher sales and savings from restructuring and productivity improvement initiatives.
Restructuring costs, asset impairment and lease cancellation charges were incurred in all three years.
Office and Consumer Products Segment
## Table 1 ##
Net Sales Sales in our Office and Consumer Products segment decreased 8% in 2008 and 5% in 2007.
The decline in reported sales in both years reflected lower sales on an organic basis, partially offset by the favorable impact of foreign currency translation (approximately $12 million in 2008 and $25 million in 2007).
In 2007, the decline included the negative impact of product line divestitures (approximately $9 million).
On an organic basis, sales declined approximately 9% in 2008 and 7% in 2007.
These declines reflected a combination of weak end market demand and tighter inventory controls by customers.
Operating Income Decreased operating income in 2008 reflected lower sales and cost inflation, partially offset by price increases and savings from restructuring actions and other productivity improvement initiatives.
Decreased operating income in 2007 reflected lower sales and higher raw material costs, partially offset by savings from restructuring actions and productivity improvement initiatives.
Restructuring costs were incurred in all three years and asset impairment charges were incurred in 2008 and 2006.
Operating income in 2007 included lease cancellation costs and expense related to a divestiture.
In 2006, operating income included a gain from sale of assets, a gain from curtailment and settlement of a pension obligation, and a net gain from a product line divestiture.
Other specialty converting businesses
## Table 2 ##
Net Sales Sales in our other specialty converting businesses decreased 6% in 2008 and increased 3% in 2007.
In 2008, the decrease reflected lower sales on an organic basis, partially offset by the favorable impact of foreign currency translation (approximately $17 million).
In 2007, the increase reflected the favorable impact of foreign currency translation (approximately $16 million), partially offset by the impact of a product line divestiture, net of a small acquisition (approximately $2 million).
On an organic basis, sales declined 8% in 2008, reflecting lower volume in products sold to the automotive and housing construction industries, and the negative effect of exiting certain low-margin products in our specialty tape business, partially offset by growth in our radiofrequency identification (“RFID”) division.
In 2007, sales grew 1% on an organic basis, as the loss of sales from exiting certain low-margin products in our specialty tape business was more than offset by solid growth in other parts of the specialty tape business, as well as growth of the RFID division.
Operating Income Decreased operating income for these businesses in 2008 reflected lower sales and cost inflation, partially offset by the benefit of productivity improvement initiatives and a reduction in operating loss in our RFID division.
Increased operating income for these businesses in 2007 reflected higher sales, savings from restructuring and productivity improvement initiatives, and a reduction in operating loss from the RFID division.
Operating income for all years included restructuring costs and asset impairment charges.
Table 8 AVERAGE CORE DEPOSITS
## Table 3 ##
Additional funding sources for the Company included branch-related time deposits over $250,000, deposits associated with the Company’s Cayman Islands office, and brokered deposits.
Time deposits over $250,000, excluding brokered certificates of deposit, averaged $325 million in 2013, $410 million in 2012 and $491 million in 2011.
Cayman Islands office deposits averaged $496 million in 2013, $605 million in 2012 and $779 million in 2011.
Average brokered time deposits totaled $279 million in 2013, compared with $741 million in 2012 and $1.1 billion in 2011, and at December 31, 2013 and 2012 totaled $26 million and $462 million, respectively.
Brokered time deposits obtained in the acquisition of Wilmington Trust totaled $1.4 billion as of May 16, 2011.
The Company also had brokered NOW and brokered money-market deposit accounts, which in the aggregate averaged $1.1 billion in each of 2013 and 2012 and $1.3 billion in 2011.
The levels of brokered NOW and brokered money-market deposit accounts reflect the demand for such deposits, largely resulting from the desire of brokerage firms to earn reasonable yields while ensuring that customer deposits are fully insured.
The level of Cayman Islands office deposits and brokered deposits are also reflective of customer demand.
Additional amounts of such deposits may be added in the future depending on market conditions, including demand by customers and other investors for those deposits, and the cost of funds available from alternative sources at the time.
The Company also uses borrowings from banks, securities dealers, various Federal Home Loan Banks (“FHLBs”), the Federal Reserve Bank and others as sources of funding.
Average short-term borrowings totaled $390 million in 2013, $839 million in 2012 and $827 million in 2011.
Included in short-term borrowings were unsecured federal funds borrowings, which generally mature on the next business day, that averaged $284 million, $669 million and $593 million in 2013, 2012 and 2011, respectively.
Overnight federal funds borrowings represented the largest component of average short-term borrowings and totaled $169 million at December 31, 2013 and $939 million at December 31, 2012.
Long-term borrowings averaged $4.9 billion in 2013, $5.5 billion in 2012 and $7.0 billion in 2011.
Included in average long-term borrowings were amounts borrowed from FHLBs of $30 million in 2013, $768 million in 2012 and $1.9 billion in 2011, and subordinated capital notes of $1.6 billion in 2013 and $2.0 billion in each of 2012 and 2011.
On April 15, 2013, $250 million of 4.875% subordinated notes of the Company matured and were redeemed.
On July 2, 2012, M&T Bank redeemed $400 million of subordinated capital notes that were due to mature in 2013, as such notes ceased to qualify as regulatory capital during the one-year period before their contractual maturity date.
Junior subordinated debentures associated with trust preferred securities that were included in average long-term borrowings were $1.2 billion in each of 2013, 2012 and 2011.
However, M&T expects to redeem $350 million of 8.50% junior subordinated debentures associated with trust preferred securities in the first quarter of 2014.
Additional information regarding junior subordinated debentures, as well as information regarding contractual maturities of long-term borrowings, is provided in note 9 of Notes to Financial Statements.
Also included in long-term borrowings were agreements to repurchase securities, which averaged $1.4 billion during each of 2013 and 2012, and $1.5 billion during 2011.
The agreements have various repurchase dates through 2017, however, the contractual maturities of the underlying securities extend beyond such repurchase dates.
During the first quarter of 2013, M&T Bank initiated a Bank Note Program whereby M&T Bank may offer up to $5 billion of unsecured senior and subordinated notes.
During March 2013, three-year floating rate senior notes due March 2016 were issued for $300 million and five-year 1.45% fixed rate senior notes due March 2018 were issued for $500 million.
Average balances of those senior notes in 2013 were $657 million.
During January 2014, M&T Bank issued an additional $1.5 billion of senior notes of which $750 million are due in 2017 and
Gains on Derivative Instruments, Net Gains on derivative instruments, net, totaled $17.9 million for the year ended December 31, 2006, compared to $6.8 million for 2005 and $3.4 million for 2004.
The increase of $11.1 million for 2006, compared to 2005, was primarily due to favorable changes in the fair value of equity warrant assets, which was partially offset by an unfavorable change in the fair value hedge agreement for our junior subordinated debentures and a decrease in gains from foreign exchange forwards used to reduce our exposure to foreign currency denominated loans.
A summary of gains on derivative instruments, net, for the years ended December 31, 2006, 2005 and 2004 is as follows:
## Table 4 ##
(1) Represents (a) the income differential between foreign exchange forward contracts/non-deliverable foreign exchange forward contracts with clients and opposite way foreign exchange forward contracts/non-deliverable foreign exchange forward contracts with correspondent banks; and (b) the change in the fair value of foreign exchange forward contracts with correspondent banks to economically reduce foreign exchange exposure risk related to certain foreign currency denominated loans.
Revaluations of foreign currency denominated loans are recorded on the line item “Other” as part of noninterest income, a component of consolidated net income.
(2) Represents the change in the fair value hedge agreement.
For the year ended December 31, 2006, the amount is comprised of a $3.3 million loss for the interest rate swap agreement prior to its designation as a fair value hedge and a $0.3 million loss for the fair value hedge agreement.
(3) As of December 31, 2006, the Company held warrants in 1,287 companies, compared to 1,281 companies in 2005 and 1,362 companies in 2004.
(4) Includes net gains on equity warrant assets held by consolidated investment affiliates.
Relevant amounts attributable to minority interests are reflected in the interim consolidated statements of income under the caption “Minority Interest in Net (Income) Losses of Consolidated Affiliates”.
The change in fair value of equity warrant assets is primarily attributable to changes in the value of the underlying assumptions used to value the equity warrant assets including: changes in the risk-free interest rate, changes in the underlying value of the client companies’ stock, changes in the volatility of market comparable public companies and changes in the expected life.
The methodology used to calculate the fair value of equity warrant assets has been applied consistently.

<table><tr><td></td><td> 2010</td><td> 2009</td><td> 2008</td></tr><tr><td>Numerator:</td><td></td><td></td><td></td></tr><tr><td>Net income</td><td>$14,013</td><td>$8,235</td><td>$6,119</td></tr><tr><td>Denominator:</td><td></td><td></td><td></td></tr><tr><td>Weighted-average shares outstanding</td><td>909,461</td><td>893,016</td><td>881,592</td></tr><tr><td>Effect of dilutive securities</td><td>15,251</td><td>13,989</td><td>20,547</td></tr><tr><td>Weighted-average diluted shares</td><td>924,712</td><td>907,005</td><td>902,139</td></tr><tr><td>Basic earnings per common share</td><td>$15.41</td><td>$9.22</td><td>$6.94</td></tr><tr><td>Diluted earnings per common share</td><td>$15.15</td><td>$9.08</td><td>$6.78</td></tr></table>
<table><tr><td><i>(In millions)</i></td><td>2008</td><td>2007</td><td>2006</td></tr><tr><td>Net sales including intersegment sales</td><td>$937.0</td><td>$1,017.8</td><td>$1,073.8</td></tr><tr><td>Less intersegment sales</td><td>-1.2</td><td>-1.6</td><td>-1.8</td></tr><tr><td>Net sales</td><td>$935.8</td><td>$1,016.2</td><td>$1,072.0</td></tr><tr><td>Operating income<sup>-1</sup></td><td>144.5</td><td>173.6</td><td>187.4</td></tr><tr><td><sup>-1</sup>Includes restructuring costs for all years, asset impairment charges in 2008 and 2006, lease cancellation costs in 2007, and other items in 2007 and 2006</td><td>$12.2</td><td>$4.8</td><td>$-2.3</td></tr></table>
<table><tr><td><i>(In millions)</i></td><td>2008</td><td>2007</td><td>2006</td></tr><tr><td>Net sales including intersegment sales</td><td>$608.5</td><td>$638.4</td><td>$614.0</td></tr><tr><td>Less intersegment sales</td><td>-26.4</td><td>-19.9</td><td>-14.4</td></tr><tr><td>Net sales</td><td>$582.1</td><td>$618.5</td><td>$599.6</td></tr><tr><td>Operating income<sup>-1</sup></td><td>6.0</td><td>27.1</td><td>17.8</td></tr><tr><td><sup>-1</sup>Includes restructuring and asset impairment charges for all years presented</td><td>$2.8</td><td>$4.2</td><td>$3.7</td></tr></table>
<table><tr><td></td><td></td><td colspan="2">Percentage Increase (Decrease) from</td></tr><tr><td></td><td> 2013</td><td>2012 to 2013</td><td>2011 to 2012</td></tr><tr><td></td><td> (In millions)</td><td colspan="2"></td></tr><tr><td>NOW accounts</td><td>$899</td><td>8%</td><td>15%</td></tr><tr><td>Savings deposits</td><td>35,711</td><td>10</td><td>11</td></tr><tr><td>Time deposits</td><td>3,441</td><td>-18</td><td>-14</td></tr><tr><td>Noninterest-bearing deposits</td><td>23,721</td><td>9</td><td>26</td></tr><tr><td>Total</td><td>$63,772</td><td>8%</td><td>14%</td></tr></table>
<table><tr><td> </td><td colspan="5"> Year Ended December 31,</td></tr><tr><td> (Dollars in thousands)</td><td>2006</td><td>2005</td><td>% Change 2006/2005</td><td>2004</td><td>% Change 2005/2004</td></tr><tr><td>Total gains (losses) on foreign exchange forwards, net(1)</td><td>$-219</td><td>$3,410</td><td>-106.4%</td><td>$679</td><td>402.2%</td></tr><tr><td>Change in fair value of interest rate swap-2</td><td>-3,630</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Equity warrant assets:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Gains on exercise, net</td><td>11,495</td><td>9,010</td><td>27.6</td><td>4,245</td><td>112.2</td></tr><tr><td>Change in fair value-3:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Cancellations and expirations</td><td>-3,963</td><td>-2,952</td><td>34.2</td><td>-2,424</td><td>21.8</td></tr><tr><td>Other changes in fair value</td><td>14,266</td><td>-2,718</td><td>-624.9</td><td>928</td><td>-392.9</td></tr><tr><td>Total net gains on equity warrant assets-4</td><td>21,798</td><td>3,340</td><td>552.6</td><td>2,749</td><td>21.5</td></tr><tr><td>Total gains on derivative instruments, net</td><td>$17,949</td><td>$6,750</td><td>165.9%</td><td>$3,428</td><td>96.9%</td></tr></table>

Question: When is Total gains (losses) on foreign exchange forwards, net(1) the largest?