Table of Contents Earnings Per Share Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period.
Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued.
Potentially dilutive securities include outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan and unvested RSUs.
The dilutive effect of potentially dilutive securities is reflected in diluted earnings per 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 shows the computation of basic and diluted earnings per share for 2013, 2012, and 2011 (in thousands, except net income in millions and per share amounts):
## Table 0 ##
Potentially dilutive securities representing 4.2 million, 1.0 million and 1.7 million shares of common stock for 2013, 2012 and 2011, respectively, were excluded from the computation of diluted earnings per 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 marketable debt and equity securities have been classified and accounted for as available-for-sale.
Management determines the appropriate classification of its investments at the time of purchase and reevaluates the designations at 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 debt securities with maturities of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term.
The Company classifies its marketable equity securities, including mutual funds, as either short-term or long-term based on the nature of each security and its availability for use in current operations.
The Company’s marketable debt and equity 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.
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 (“AOCI”) in shareholders’ equity and reclassified into income in the same period or periods during which the hedged transaction affects earnings.
The ineffective portion of the gain or
We also record an inventory obsolescence reserve, which represents the difference between the cost of the inventory and its estimated realizable value, based on various product sales projections.
This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age, historical trends and requirements to support forecasted sales.
In addition, and as necessary, we may establish specific reserves for future known or anticipated events.
PENSION AND OTHER POST-RETIREMENT BENEFIT COSTS We offer the following benefits to some or all of our employees: a domestic trust-based noncontributory qualified defined benefit pension plan (“U.
S.  Qualified Plan”) and an unfunded, non-qualified domestic noncontributory pension plan to provide benefits in excess of statutory limitations (collectively with the U. S.  Qualified Plan, the “Domestic Plans”); a domestic contributory defined contribution plan; international pension plans, which vary by country, consisting of both defined benefit and defined contribution pension plans; deferred compensation arrangements; and certain other postretirement benefit plans.
The amounts needed to fund future payouts under our defined benefit pension and post-retirement benefit plans are subject to numerous assumptions and variables.
Certain significant variables require us to make assumptions that are within our control such as an anticipated discount rate, expected rate of return on plan assets and future compensation levels.
We evaluate these assumptions with our actuarial advisors and select assumptions that we believe reflect the economics underlying our pension and post-retirement obligations.
While we believe these assumptions are within accepted industry ranges, an increase or decrease in the assumptions or economic events outside our control could have a direct impact on reported net earnings.
The discount rate for each plan used for determining future net periodic benefit cost is based on a review of highly rated long-term bonds.
For fiscal 2013, we used a discount rate for our Domestic Plans of 3.90% and varying rates on our international plans of between 1.00% and 7.00%.
The discount rate for our Domestic Plans is based on a bond portfolio that includes only long-term bonds with an Aa rating, or equivalent, from a major rating agency.
As of June 30, 2013, we used an above-mean yield curve, rather than the broad-based yield curve we used before, because we believe it represents a better estimate of an effective settlement rate of the obligation, and the timing and amount of cash flows related to the bonds included in this portfolio are expected to match the estimated defined benefit payment streams of our Domestic Plans.
The benefit obligation of our Domestic Plans would have been higher by approximately $34 million at June 30, 2013 had we not used the above-mean yield curve.
For our international plans, the discount rate in a particular country was principally determined based on a yield curve constructed from high quality corporate bonds in each country, with the resulting portfolio having a duration matching that particular plan.
For fiscal 2013, we used an expected return on plan assets of 7.50% for our U. S.  Qualified Plan and varying rates of between 2.25% and 7.00% for our international plans.
In determining the long-term rate of return for a plan, we consider the historical rates of return, the nature of the plan’s investments and an expectation for the plan’s investment strategies.
See “Note 12 — Pension, Deferred Compensation and Post-retirement Benefit Plans” of Notes to Consolidated Financial Statements for details regarding the nature of our pension and post-retirement plan investments.
The difference between actual and expected return on plan assets is reported as a component of accumulated other comprehensive income.
Those gains/losses that are subject to amortization over future periods will be recognized as a component of the net periodic benefit cost in such future periods.
For fiscal 2013, our pension plans had actual return on assets of approximately $74 million as compared with expected return on assets of approximately $64 million.
The resulting net deferred gain of approximately $10 million, when combined with gains and losses from previous years, will be amortized over periods ranging from approximately 7 to 22 years.
The actual return on plan assets from our international pension plans exceeded expectations, primarily reflecting a strong performance from fixed income and equity investments.
The lower than expected return on assets from our U. S.  Qualified Plan was primarily due to weakness in our fixed income investments, partially offset by our strong equity returns.
A 25 basis-point change in the discount rate or the expected rate of return on plan assets would have had the following effect on fiscal 2013 pension expense:
## Table 1 ##
Our post-retirement plans are comprised of health care plans that could be impacted by health care cost trend rates, which may have a significant effect on the amounts
The following table is derived from the Ten Year GAAP Loss Development Table above and summarizes the effect of reserve re-estimates, net of reinsurance, on calendar year operations by accident year for the same ten year period ended December 31, 2013.
Each column represents the amount of net reserve re-estimates made in the indicated calendar year and shows the accident years to which the re-estimates are applicable.
The amounts in the total accident year column on the far right represent the cumulative reserve re-estimates for the indicated accident years.
Since the Company has operations in many countries, part of the Company’s loss and LAE reserves are in foreign currencies and translated to U. S.  dollars for each reporting period.
Fluctuations in the exchange rates for the currencies, period over period, affect the U. S.  dollar amount of outstanding reserves.
The translation adjustment line at the bottom of the table eliminates the impact of the exchange fluctuations from the reserve re-estimates.
## Table 2 ##
The reserve development by accident year reflected in the above table was generally the result of the same factors described above that caused the deficiencies shown in the Ten Year GAAP Loss Development Table.
The unfavorable development experienced in the 2003 and prior accident years relate principally to the previously discussed asbestos development.
Other business areas contributing to adverse development were casualty reinsurance, including professional liability classes, and workers’ compensation insurance, where, in retrospect, the Company’s initial estimates of losses were underestimated principally as the result of unanticipated variability in the underlying exposures.
The favorable development for accident year 2004 relates primarily to favorable experience with respect to property reinsurance business.
In addition, casualty reinsurance has reflected favorable development for accident years 2004 to 2006.
The Company’s loss reserving methodologies continuously monitor the emergence of loss and loss development trends, seeking, on a timely basis, to both adjust reserves for the impact of trend shifts and to factor the impact of such shifts into the Company’s underwriting and pricing on a prospective basis.

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2013	2012	2011
Numerator:
Net income	$37,037	$41,733	$25,922
Denominator:
Weighted-average shares outstanding	925,331	934,818	924,258
Effect of dilutive securities	6,331	10,537	12,387
Weighted-average diluted shares	931,662	945,355	936,645
Basic earnings per share	$40.03	$44.64	$28.05
Diluted earnings per share	$39.75	$44.15	$27.68

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(In millions)	25 Basis-Point Increase	25 Basis-Point Decrease
Discount rate	$-3.5	$3.9
Expected return on assets	$-2.5	$2.7

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(Dollars in millions)	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	Cumulative Re-estimates for Each Accident Year
Accident Years
2003 and prior	$-312.0	$63.4	$-247.5	$-418.6	$-20.3	$-133.5	$-102.2	$-7.4	$-3.1	$-39.1	$-1,220.0
2004	69.9	140.7	99.2	83.5	-32.1	18.1	-3.2	-12.3	-12.5	351.1
2005	-137.6	130.1	56.3	-28.6	38.2	-12.1	17.4	-27.8	35.8
2006	-88.4	50.9	-18.3	42.8	-3.0	25.7	11.9	21.5
2007	41.5	17.6	43.6	-5.7	-1.8	22.3	117.6
2008	-52.5	38.6	-12.4	-7.7	37.0	3.0
2009	7.4	-0.8	-18.5	34.4	22.6
2010	47.1	-8.9	-32.1	6.1
2011	-10.2	19.6	9.3
2012	26.9	26.9
Total calendar year effect	$-312.0	$133.3	$-244.4	$-277.8	$211.8	$-247.2	$86.5	$2.5	$-19.4	$40.5
Canada-1	-16.3	-6.6	-0.5	-49.6	63.7	-39.4	-21.2	9.7	-9.9	26.4
Translation adjustment	78.9	-100.3	109.3	120.9	-310.4	157.8	-34.5	-15.9	32.9	-48.6
Re-estimate of net reserve after translation adjustment	$-249.4	$26.4	$-135.6	$-206.5	$-34.9	$-128.8	$30.9	$-3.7	$3.7	$18.2
-1 This adjustment converts Canadian dollars to U.S. dollars.
(Some amounts may not reconcile due to rounding.)

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Question: Which year is Total calendar year effect the most?
Answer: 2008