Change in unrealized net capital gains and losses The change in unrealized net capital gains and losses for the years ended December 31 is as follows:
## Table 0 ##
Portfolio monitoring The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income and equity security whose carrying value may be other-than-temporarily impaired.
For each fixed income security in an unrealized loss position, the Company assesses whether management with the appropriate authority has made a decision to sell or whether it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes.
If a security meets either of these criteria, the security’s decline in fair value is deemed other than temporary and is recorded in earnings.
If the Company has not made the decision to sell the fixed income security and it is not more likely than not the Company will be required to sell the fixed income security before recovery of its amortized cost basis, the Company evaluates if it expects to receive cash flows sufficient to recover the entire amortized cost basis of the security by comparing the estimated recovery value calculated by discounting the best estimate of future cash flows at the security’s original or current effective rate, as appropriate, with the amortized cost of the security.
If the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed income security, the credit loss component of the impairment is recorded in earnings, with the remaining amount of the unrealized loss deemed to be related to other factors and recognized in OCI.
For equity securities, the Company considers various factors, including whether the Company has the intent and ability to hold the equity security for a period of time sufficient to recover its cost basis.
Where the Company lacks the intent and ability to hold to recovery, or believes the recovery period is extended, the equity security’s decline in fair value is considered other than temporary and is recorded in earnings.
For equity securities managed by a third party, the Company has contractually retained its decision making authority as it pertains to selling equity securities that are in an unrealized loss position.
The Company’s portfolio monitoring process includes a quarterly review of all securities through a screening process which identifies instances where the fair value compared to amortized cost for fixed income securities and cost for equity securities is below established thresholds, and also includes the monitoring of other criteria such as ratings, ratings downgrades or payment defaults.
The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential other-than-temporary impairment using all reasonably available information relevant to the collectability or recovery of the security.
Inherent in the Company’s evaluation of other-than-temporary impairment for these fixed income and equity securities are assumptions and estimates about the financial condition of the issue or issuer and its future earnings potential.
Some of the factors considered in evaluating whether a decline in fair value is other than temporary are: 1) the length of time and extent to which the fair value has been less than amortized cost for fixed income securities, or cost for equity securities; 2) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; and 3) the specific reasons that a security is in a significant unrealized loss position, including overall market conditions which could affect liquidity.
In total, these expenses were recorded to the consolidated statements of operations as follows:
## Table 1 ##
Cost of sales primarily consists of purchased materials, labor, manufacturing overheads and other inventoryrelated costs such as obsolescence.
Cost of sales increased to $1,672,901, or 41.0% of net revenues, for the year ended December 29, 2013 from $1,671,980, or 40.9% of net revenues, for the year ended December 30, 2012.
Absent the impact of aforementioned charges, cost of sales decreased to $1,662,747, or 40.7% of net revenues, for the year ended December 29, 2013 from $1,669,216, or 40.8% of net revenues, for the year ended December 30, 2012 as a result of favorable product mix partially offset by the impact on net revenues of higher sales promotions.
Cost of sales decreased to 40.8% of net revenues, absent charges, for the year ended December 30, 2012 from 42.8% in 2011.
Cost of sales as a percentage of net revenues in 2012 was positively impacted by product mix, which included higher MAGIC: THE GATHERING and Entertainment and Licensing segment net revenues, which typically have lower costs of sales as a percentage of net revenues.
Further, the impact of closeout sales improved in 2012 compared to 2011.
In addition, cost of sales was positively impacted by lower inventory obsolescence costs in 2012 compared to 2011.
Royalty expense of $338,919, or 8.3% of net revenues, for the year ended December 29, 2013 compared to $302,066, or 7.4% of net revenues, for the year ended December 30, 2012 and $339,217, or 7.9% of net revenues, for the year ended December 25, 2011.
Excluding the impact of the arbitration award settlement and amendment of the Zynga agreement summarized above, royalty expense decreased to $275,118, or 6.7% of net revenues, in 2013.
Fluctuations in royalty expense are generally related to the volume of entertainment-driven products sold in a given year, especially if there is a major motion picture release.
Significant sales of MARVEL products, particularly those related to MARVEL’S THE AVENGERS and THE AMAZING SPIDER-MAN, in 2012 and BEYBLADE and TRANSFORMERS movie-related products in 2011 resulted in higher royalty expenses in those years compared to 2013.
Product development expense in 2013 totaled $207,591, or 5.1% of net revenues, compared to $201,197, or 4.9% of net revenues, in 2012 and $197,638, or 4.6% of net revenues, in 2011.
Product development expense for 2013, 2012 and 2011 includes restructuring charges of $4,101, $10,949 and $6,744, respectively.
Excluding the impact of these charges, product development expense increased to $203,490 in 2013 compared to $190,248 in 2012 and $190,894 in 2011.
The increase in 2013 reflects the addition of Backflip as well as investments in certain brands, including MAGIC: THE GATHERING, partially offset by cost savings related to reduction in headcount.
Advertising expense in 2013 decreased to $398,098, or 9.8% of net revenues, compared to $422,239, or 10.3% of net revenues, in 2012 and $413,951, or 9.7% of net revenues, in 2011.
The level of the Company’s advertising expense can generally be impacted by revenue mix, the amount and type of theatrical releases, and television programming.
The decrease in advertising expense in 2013 was the result of the mix of 2013 net revenues as well as a higher portion of our spending in digital formats.
Increased advertising in 2012 compared to 2011 in both dollars and as a percentage of net revenue is, in part, due to the Company’s strategy to increase its spend in consumer-facing marketing and advertising.
Amortization of intangibles increased to $78,186, or 1.9% of net revenues, compared to $50,569, or 1.3% of net revenues, in 2012 and $46,647, or 1.1% of net revenues, in 2011.
Amortization of intangibles in 2013 includes $19,736 related to impairment of definite-lived intangibles based on the Company’s decision to exit the related product lines.
Absent the impact of these charges, amortization of intangibles increased to $58,450, or
Average Consolidated Balance Sheet And Net Interest Analysis
## Table 2 ##
Nonaccrual loans are included in loans, net of unearned income.
The impact of financial derivatives used in interest rate risk management is included in the interest income/expense and average yields/rates of the related assets and liabilities.
Basis adjustments related to hedged items are included in noninterest-earning assets and noninterest-bearing liabilities.
Average balances of securities are based on amortized historical cost (excluding SFAS 115 adjustments to fair value which are included in other assets).
Average balances for certain loans and borrowed funds accounted for at fair value, with changes in fair value recorded in trading noninterest income, are included in noninterest-earning assets and noninterest-bearing liabilities.
Loan fees for the years ended December 31, 2007, 2006 and 2005 were $39 million, $35 million and $91 million, respectively.
Interest income includes the effects of taxable-equivalent adjustments using a marginal federal income tax rate of 35% to increase tax-exempt interest income to a taxable-equivalent basis.
The taxable-equivalent adjustments to interest income for the years ended December 31, 2007, 2006 and 2005 were $27 million, $25 million and $33 million, respectively
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 2012, 2011, and 2010 (in thousands, except net income in millions and per share amounts):
## Table 3 ##
Potentially dilutive securities representing 1.0 million, 1.7 million and 1.6 million shares of common stock for 2012, 2011 and 2010, 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 loss on the derivative instrument, if any, is recognized in current income.
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 income.
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, both the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in earnings in the current period.
The Company had no fair value
At the end of 2015, the Company changed the approach used to measure service and interest costs for its U. S.  and material international pension and other postretirement benefits.
For 2016, the Company elected to measure service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows.
The Company believes this approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve.
For 2015, the Company measured service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations.
The change in approach did not affect the measurement of the Company’s plan obligations or the funded status.
The Company has accounted for this change as a change in accounting estimate and, accordingly, has accounted for it on a prospective basis.
The expected long-term rate of return used for the U. S.  plans is based on the pension plan’s asset mix.
The Company considers expected long-term real returns on asset categories, expectations for inflation, and estimates of the impact of active management of the assets in coming to the final rate to use.
The Company also considers actual historical returns.
The expected long-term rate of return used for the Company’s international plans is determined in each local jurisdiction and is based on the assets held in that jurisdiction, the expected rate of returns for the type of assets held and any guaranteed rate of return provided by the investment.
The other assumptions used to measure the international pension obligations, including discount rate, vary by country based on specific local requirements and information.
As previously noted, the measurement date for these plans is November 30.
The Company uses most recently available mortality tables as of the respective U. S.  and international measurement dates.
For postretirement benefit measurement purposes as of December 31, 2016, the annual rates of increase in the per capita cost of covered health care were assumed to be 6.75% for pre-65 costs and 7.25% for post-65 costs.
The rates are assumed to decrease each year until they reach 5% in 2023 and remain at those levels thereafter.
Health care costs for certain employees which are eligible for subsidy by the Company are limited by a cap on the subsidy.
During the third quarter of 2016, the Compensation Committee of the Company’s Board of Directors approved moving the U. S.  postretirement healthcare plans to a Retiree Exchange approach, rather than the Employee Group Waiver Plan plus Wrap program, for post-65 retiree medical coverage beginning in 2018, and the Company informed all eligible legacy Ecolab and legacy Nalco retirees of the change.
As a result of the approval and communication to the beneficiaries, the Ecolab and Nalco plans were re-measured, resulting in a $50 million reduction of postretirement benefit obligations, with a corresponding impact to AOCI of $31 million, net of tax.
The remeasurement was completed using discount rates of 3.29% and 3.60%, respectively.
Additionally, at the time of this remeasurement, the Nalco U. S.  postretirement health care plan was merged with the Ecolab U. S.  postretirement health care plan.
As a result of these actions, the Company’s U. S.  postretirement health care costs decreased by $5 million in 2016.
Assumed health care cost trend rates have an effect on the amounts reported for the Company’s U. S.  postretirement health care benefits plan.
A one-percentage point change in the assumed health care cost trend rates would have the following effects:
## Table 4 ##
Plan Asset Management The Company’s U. S.  investment strategy and policies are designed to maximize the possibility of having sufficient funds to meet the long-term liabilities of the pension fund, while achieving a balance between the goals of asset growth of the plan and keeping risk at a reasonable level.
Current income is not a key goal of the policy.
The asset allocation position reflects the Company’s ability and willingness to accept relatively more short-term variability in the performance of the pension plan portfolio in exchange for the expectation of better long-term returns, lower pension costs and better funded status in the long run.
The pension fund is diversified across a number of asset classes and securities.
Selected individual portfolios within the asset classes may be undiversified while maintaining the diversified nature of total plan assets.
The Company has no significant concentration of risk in its U. S.  plan assets.
Assets of funded retirement plans outside the U. S.  are managed in each local jurisdiction and asset allocation strategy is set in accordance with local rules, regulations and practice.
Therefore, no overall target asset allocation is presented.
Although non-U.
S.  equity securities are all considered international for the Company, some equity securities are considered domestic for the local plan.
The funds are invested in a variety of equities, bonds and real estate investments and, in some cases, the assets are managed by insurance companies which may offer a guaranteed rate of return.
The Company has no significant concentration of risk in its international plan assets.
The fair value hierarchy is used to categorize investments measured at fair value in one of three levels in the fair value hierarchy.
This categorization is based on the observability of the inputs used in valuing the investments.
See Note 7 for definitions of these levels.
ended December 31, 2003 is a $3.3 million charge for fees and expenses related to the Company’s debt refinancing which was completed in July 2003, and a fourth quarter charge of $16.0 million to settle certain benefits related matters with Pactiv Corporation dating back to April 12, 1999 when PCA became a stand-alone company.
The remaining $29.1 million decrease in income before interest and taxes was primarily attributable to decreased sales prices ($13.4 million), and increased costs of energy ($7.9 million) and wood costs ($4.8 million).
Gross profit decreased $26.8 million, or 8.2%, for the year ended December 31, 2003 from the year ended December 31, 2002.
Gross profit as a percentage of sales declined from 18.7% of sales in 2002 to 17.2% of sales in the current year primarily due to the sales price decreases and energy and wood cost increases described above.
Corporate overhead for the year ended December 31, 2003, increased by $5.5 million, or 13.5%, from the year ended December 31, 2002.
The increase was primarily attributable to the fees and expenses related to the debt refinancing ($3.3 million), increased depreciation and amortization expense ($ 0.8 million) and an increase in pension costs ($0.7 million).
Selling and administrative expenses decreased $2.9 million, or 2.2%, for the year ended December 31, 2003 from the comparable period in 2002.
The decrease was primarily the result of decreased travel and meeting costs ($1.3 million), lower recruiting and relocation expenses ($0.7 million), reduced salary costs ($0.5 million) and a reduction in training costs ($0.5 million).
Other expense, net, increased $1.9 million, or 18.4%, for the year ended December 31, 2003 compared to the year ended December 31, 2002, primarily due to a $1.6 million increase in the Company’s legal reserve.
Interest Expense and Income Taxes Interest expense increased in 2003 by $54.1 million, or 79.9%, from the comparable period in 2002.
This increase included $73.3 million of expenses related to the Company’s debt refinancing, which was completed in July 2003.
The $73.3 million of expenses consisted of $55.9 million paid in premiums for the tender of the 95?8% senior subordinated notes, and a $17.4 million non-cash charge for the write-off of deferred financing fees related to the 95?8% notes and PCA’s original revolving credit facility dated as of April 12, 1999 and amended and restated as of June 29, 2000.
Excluding the $73.3 million charge, interest expense was $19.2 million lower than in 2002 as a result of lower interest rates attributable to the Company’s July 2003 refinancing and lower debt levels.
PCA’s effective tax rate was 42.3% for the year ended December 31, 2003 and 37.9% for the year ended December 31, 2002.
The 2003 increase in the tax rate is due to stable permanent items over lower book income (loss).
The tax rates are higher than the federal statutory rate of 35.0% due to state income taxes.
Liquidity and Capital Resources
## Table 5 ##
PRUDENTIAL FINANCIAL, INC.  Notes to Consolidated Financial Statements Separate Account Assets—In addition to the significant internally-priced Level 3 assets and liabilities presented and described above, the Company also has internally-priced separate account assets reported within Level 3.
Changes in the fair value of separate account assets are borne by customers and thus are offset by changes in separate account liabilities on the Company’s Consolidated Statements of Financial Position.
As a result, changes in value associated with these investments are not reflected in the Company’s Consolidated Statements of Operations.
Quantitative information about significant internally-priced Level 3 separate account assets is as follows: Commercial Mortgage Loans—Separate account assets include $971 million and $960 million of commercial mortgage loans as of December 31, 2016 and 2015, respectively, that are classified as Level 3 and reported at fair value.
Commercial mortgage loans are primarily valued internally using discounted cash flow techniques, as described further under “—Fair Value of Financial Instruments.
” The primary unobservable input used is the spread to discount cash flows, which ranged from 1.19% to 2.90% (1.37% weighted average) as of December 31, 2016, and 1.49% to 4.81% (1.79% weighted average) as of December 31, 2015.
In isolation, an increase (decrease) in the value of this input would result in a lower (higher) fair value measurement.
Valuation Process for Fair Value Measurements Categorized within Level 3—The Company has established an internal control infrastructure over the valuation of financial instruments that requires ongoing oversight by its various business groups.
These management control functions are segregated from the trading and investing functions.
For invested assets, the Company has established oversight teams, often in the form of pricing committees within each asset management group.
The teams, which typically include representation from investment, accounting, operations, legal and other disciplines are responsible for overseeing and monitoring the pricing of the Company’s investments and performing periodic due diligence reviews of independent pricing services.
An actuarial valuation team oversees the valuation of living benefit features of the Company’s variable annuity contracts.
The Company has also established policies and guidelines that require the establishment of valuation methodologies and consistent application of such methodologies.
These policies and guidelines govern the use of inputs and price source hierarchies and provide controls around the valuation processes.
These controls include appropriate review and analysis of investment prices against market activity or indicators of reasonableness, analysis of portfolio returns to corresponding benchmark returns, back-testing, review of bid-ask spreads to assess activity, approval of price source changes, price overrides, methodology changes and classification of fair value hierarchy levels.
For living benefit features of the Company’s variable annuity products, the actuarial valuation unit periodically tests contract input data and actuarial assumptions are reviewed at least annually, and updated based upon emerging experience, future expectations and other data, including any observable market data.
The valuation policies and guidelines are reviewed and updated as appropriate.
Within the trading and investing functions, the Company has established policies and procedures that relate to the approval of all new transaction types, transaction pricing sources and fair value hierarchy coding within the financial reporting system.
For variable annuity product changes or new launches of living benefit features, the actuarial valuation unit validates input logic and new product features and agrees new input data directly to source documents.
Changes in Level 3 Assets and Liabilities—The following tables provide summaries of the changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods.
## Table 6 ##

Tables referenced above, in order (Table 0 first):
<table><tr><td> ($ in millions) </td><td>2009</td><td>2008</td><td>2007</td></tr><tr><td>Fixed income securities</td><td>$6,019</td><td>$-9,452</td><td>$-1,584</td></tr><tr><td>Equity securities</td><td>511</td><td>-1,322</td><td>-761</td></tr><tr><td>Short-term investments</td><td>-3</td><td>3</td><td>—</td></tr><tr><td>Derivative instruments</td><td>-34</td><td>44</td><td>-16</td></tr><tr><td>Total</td><td>6,493</td><td>-10,727</td><td>-2,361</td></tr><tr><td>Amounts recognized for:</td><td></td><td></td><td></td></tr><tr><td>Insurance reserves</td><td>378</td><td>681</td><td>70</td></tr><tr><td>DAC and DSI</td><td>-2,510</td><td>2,988</td><td>467</td></tr><tr><td>(Decrease) increase in amounts recognized</td><td>-2,132</td><td>3,669</td><td>537</td></tr><tr><td>Deferred income taxes</td><td>-1,493</td><td>2,432</td><td>638</td></tr><tr><td>Increase (decrease) in unrealized net capital gains and losses</td><td>$2,868</td><td>$-4,626</td><td>$-1,186</td></tr></table>
<table><tr><td></td><td> 2013</td><td> 2012</td><td> 2011</td></tr><tr><td>Cost of sales</td><td>$10,154</td><td>2,764</td><td>—</td></tr><tr><td>Royalties</td><td>63,801</td><td>—</td><td>—</td></tr><tr><td>Product development</td><td>4,101</td><td>10,949</td><td>6,744</td></tr><tr><td>Amortization of intangibles</td><td>19,736</td><td>—</td><td>—</td></tr><tr><td>Selling, distribution and administration</td><td>32,547</td><td>33,463</td><td>7,641</td></tr><tr><td>Total</td><td>$130,339</td><td>47,176</td><td>14,385</td></tr></table>
<table><tr><td></td><td colspan="3">2007</td><td colspan="3">2006</td><td colspan="3">2005</td></tr><tr><td>Taxable-equivalent basis Dollars in millions</td><td>Average Balances</td><td>Interest Income/Expense</td><td>Average Yields/Rates</td><td>Average Balances</td><td>Interest Income/Expense</td><td>Average Yields/Rates</td><td>Average Balances</td><td>Interest Income/Expense</td><td>Average Yields/Rates</td></tr><tr><td> Assets</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Interest-earning assets</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Securities available for sale</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Residential mortgage-backed</td><td>$19,163</td><td>$1,041</td><td>5.43%</td><td>$14,881</td><td>$740</td><td>4.97%</td><td>$11,922</td><td>$525</td><td>4.40%</td></tr><tr><td>Commercial mortgage-backed</td><td>4,025</td><td>222</td><td>5.52</td><td>2,305</td><td>110</td><td>4.77</td><td>1,394</td><td>55</td><td>3.95</td></tr><tr><td>Asset-backed</td><td>2,394</td><td>122</td><td>5.10</td><td>1,312</td><td>70</td><td>5.34</td><td>1,238</td><td>47</td><td>3.80</td></tr><tr><td>U.S. Treasury and government agencies</td><td>293</td><td>13</td><td>4.44</td><td>2,334</td><td>102</td><td>4.37</td><td>4,308</td><td>173</td><td>4.02</td></tr><tr><td>State and municipal</td><td>227</td><td>11</td><td>4.85</td><td>148</td><td>8</td><td>5.41</td><td>167</td><td>9</td><td>5.39</td></tr><tr><td>Other debt</td><td>47</td><td>4</td><td>8.51</td><td>89</td><td>6</td><td>6.74</td><td>73</td><td>4</td><td>5.48</td></tr><tr><td>Corporate stocks and other</td><td>392</td><td>18</td><td>4.59</td><td>246</td><td>14</td><td>5.69</td><td>173</td><td>12</td><td>6.94</td></tr><tr><td>Total securities available for sale</td><td>26,541</td><td>1,431</td><td>5.39</td><td>21,315</td><td>1,050</td><td>4.93</td><td>19,275</td><td>825</td><td>4.28</td></tr><tr><td>Loans, net of unearned income</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Commercial</td><td>25,509</td><td>1,859</td><td>7.29</td><td>20,201</td><td>1,451</td><td>7.18</td><td>19,007</td><td>1,142</td><td>6.01</td></tr><tr><td>Commercial real estate</td><td>7,671</td><td>603</td><td>7.86</td><td>3,212</td><td>232</td><td>7.22</td><td>2,609</td><td>158</td><td>6.06</td></tr><tr><td>Lease financing</td><td>2,559</td><td>76</td><td>2.97</td><td>2,777</td><td>123</td><td>4.43</td><td>2,944</td><td>132</td><td>4.48</td></tr><tr><td>Consumer</td><td>17,718</td><td>1,167</td><td>6.59</td><td>16,125</td><td>1,009</td><td>6.26</td><td>16,208</td><td>905</td><td>5.58</td></tr><tr><td>Residential mortgage</td><td>8,564</td><td>512</td><td>5.98</td><td>6,888</td><td>375</td><td>5.44</td><td>6,136</td><td>321</td><td>5.23</td></tr><tr><td>Other</td><td>432</td><td>31</td><td>7.18</td><td>363</td><td>26</td><td>7.16</td><td>453</td><td>22</td><td>4.86</td></tr><tr><td>Total loans, net of unearned income</td><td>62,453</td><td>4,248</td><td>6.80</td><td>49,566</td><td>3,216</td><td>6.49</td><td>47,357</td><td>2,680</td><td>5.66</td></tr><tr><td>Loans held for sale</td><td>2,955</td><td>184</td><td>6.23</td><td>2,683</td><td>157</td><td>5.85</td><td>2,301</td><td>104</td><td>4.52</td></tr><tr><td>Federal funds sold and resale agreements</td><td>2,152</td><td>104</td><td>4.83</td><td>1,143</td><td>58</td><td>5.07</td><td>985</td><td>25</td><td>2.54</td></tr><tr><td>Other</td><td>3,909</td><td>226</td><td>5.78</td><td>2,985</td><td>156</td><td>5.23</td><td>3,083</td><td>133</td><td>4.31</td></tr><tr><td>Total interest-earning assets/interest income</td><td>98,010</td><td>6,193</td><td>6.32</td><td>77,692</td><td>4,637</td><td>5.97</td><td>73,001</td><td>3,767</td><td>5.16</td></tr><tr><td>Noninterest-earning assets</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Allowance for loan and lease losses</td><td>-690</td><td></td><td></td><td>-591</td><td></td><td></td><td>-632</td><td></td><td></td></tr><tr><td>Cash and due from banks</td><td>3,018</td><td></td><td></td><td>3,121</td><td></td><td></td><td>3,164</td><td></td><td></td></tr><tr><td>Other</td><td>23,080</td><td></td><td></td><td>14,790</td><td></td><td></td><td>13,015</td><td></td><td></td></tr><tr><td>Total assets</td><td>$123,418</td><td></td><td></td><td>$95,012</td><td></td><td></td><td>$88,548</td><td></td><td></td></tr><tr><td colspan="5">Liabilities, Minority and Noncontrolling Interests, and Shareholders' Equity</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Interest-bearing liabilities</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Interest-bearing deposits</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Money market</td><td>$23,840</td><td>827</td><td>3.47</td><td>$19,745</td><td>663</td><td>3.36</td><td>$17,930</td><td>403</td><td>2.25</td></tr><tr><td>Demand</td><td>9,259</td><td>103</td><td>1.11</td><td>8,187</td><td>88</td><td>1.07</td><td>8,224</td><td>56</td><td>.68</td></tr><tr><td>Savings</td><td>2,687</td><td>12</td><td>.45</td><td>2,081</td><td>10</td><td>.48</td><td>2,645</td><td>16</td><td>.60</td></tr><tr><td>Retail certificates of deposit</td><td>16,690</td><td>776</td><td>4.65</td><td>13,999</td><td>582</td><td>4.16</td><td>11,623</td><td>371</td><td>3.19</td></tr><tr><td>Other time</td><td>2,119</td><td>110</td><td>5.19</td><td>1,364</td><td>66</td><td>4.84</td><td>1,559</td><td>59</td><td>3.78</td></tr><tr><td>Time deposits in foreign offices</td><td>4,623</td><td>225</td><td>4.87</td><td>3,613</td><td>181</td><td>5.01</td><td>2,347</td><td>76</td><td>3.24</td></tr><tr><td>Total interest-bearing deposits</td><td>59,218</td><td>2,053</td><td>3.47</td><td>48,989</td><td>1,590</td><td>3.25</td><td>44,328</td><td>981</td><td>2.21</td></tr><tr><td>Borrowed funds</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Federal funds purchased</td><td>5,533</td><td>284</td><td>5.13</td><td>3,081</td><td>157</td><td>5.10</td><td>2,098</td><td>71</td><td>3.38</td></tr><tr><td>Repurchase agreements</td><td>2,450</td><td>110</td><td>4.49</td><td>2,205</td><td>101</td><td>4.58</td><td>2,189</td><td>65</td><td>2.97</td></tr><tr><td>Federal Home Loan Bank borrowings</td><td>2,168</td><td>109</td><td>5.03</td><td>623</td><td>25</td><td>4.01</td><td>714</td><td>27</td><td>3.78</td></tr><tr><td>Bank notes and senior debt</td><td>6,282</td><td>337</td><td>5.36</td><td>3,128</td><td>159</td><td>5.08</td><td>3,198</td><td>114</td><td>3.56</td></tr><tr><td>Subordinated debt</td><td>4,247</td><td>251</td><td>5.91</td><td>4,417</td><td>269</td><td>6.09</td><td>4,044</td><td>197</td><td>4.87</td></tr><tr><td>Other</td><td>2,344</td><td>107</td><td>4.56</td><td>1,589</td><td>66</td><td>4.15</td><td>3,956</td><td>125</td><td>3.16</td></tr><tr><td>Total borrowed funds</td><td>23,024</td><td>1,198</td><td>5.20</td><td>15,043</td><td>777</td><td>5.17</td><td>16,199</td><td>599</td><td>3.70</td></tr><tr><td>Total interest-bearing liabilities/interest expense</td><td>82,242</td><td>3,251</td><td>3.95</td><td>64,032</td><td>2,367</td><td>3.70</td><td>60,527</td><td>1,580</td><td>2.61</td></tr><tr><td>Noninterest-bearing liabilities, minority and noncontrolling interests, and shareholders' equity</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Demand and other noninterest-bearing deposits</td><td>17,587</td><td></td><td></td><td>14,320</td><td></td><td></td><td>13,309</td><td></td><td></td></tr><tr><td>Allowance for unfunded loan commitments and letters of credit</td><td>125</td><td></td><td></td><td>106</td><td></td><td></td><td>80</td><td></td><td></td></tr><tr><td>Accrued expenses and other liabilities</td><td>8,195</td><td></td><td></td><td>6,672</td><td></td><td></td><td>6,098</td><td></td><td></td></tr><tr><td>Minority and noncontrolling interests in consolidated entities</td><td>1,335</td><td></td><td></td><td>600</td><td></td><td></td><td>542</td><td></td><td></td></tr><tr><td>Shareholders' equity</td><td>13,934</td><td></td><td></td><td>9,282</td><td></td><td></td><td>7,992</td><td></td><td></td></tr><tr><td>Total liabilities, minority and noncontrolling interests, and shareholders' equity</td><td>$123,418</td><td></td><td></td><td>$95,012</td><td></td><td></td><td>$88,548</td><td></td><td></td></tr><tr><td>Interest rate spread</td><td></td><td></td><td>2.37</td><td></td><td></td><td>2.27</td><td></td><td></td><td>2.55</td></tr><tr><td>Impact of noninterest-bearing sources</td><td></td><td></td><td>.63</td><td></td><td></td><td>.65</td><td></td><td></td><td>.45</td></tr><tr><td>Net interest income/margin</td><td></td><td>$2,942</td><td>3.00%</td><td></td><td>$2,270</td><td>2.92%</td><td></td><td>$2,187</td><td>3.00%</td></tr></table>
<table><tr><td></td><td> 2012</td><td> 2011</td><td> 2010</td></tr><tr><td>Numerator:</td><td></td><td></td><td></td></tr><tr><td>Net income</td><td>$41,733</td><td>$25,922</td><td>$14,013</td></tr><tr><td>Denominator:</td><td></td><td></td><td></td></tr><tr><td>Weighted-average shares outstanding</td><td>934,818</td><td>924,258</td><td>909,461</td></tr><tr><td>Effect of dilutive securities</td><td>10,537</td><td>12,387</td><td>15,251</td></tr><tr><td>Weighted-average diluted shares</td><td>945,355</td><td>936,645</td><td>924,712</td></tr><tr><td>Basic earnings per share</td><td>$44.64</td><td>$28.05</td><td>$15.41</td></tr><tr><td>Diluted earnings per share</td><td>$44.15</td><td>$27.68</td><td>$15.15</td></tr></table>
<table><tr><td></td><td>1-Percentage Point</td></tr><tr><td>(millions)</td><td>Increase</td><td>Decrease</td></tr><tr><td>Effect on total of service and interest cost components</td><td>$ -</td><td>$ -</td></tr><tr><td>Effect on postretirement benefit obligation</td><td>0.7</td><td>-0.7</td></tr></table>
<table><tr><td> </td><td colspan="3">For the Years Ended December 31,</td></tr><tr><td> <i>(In millions)</i></td><td>2004</td><td>2003</td><td>2002</td></tr><tr><td>Net cash provided by (used for):</td><td></td><td></td><td></td></tr><tr><td>Operating activities</td><td>$215.3</td><td>$244.8</td><td>$240.0</td></tr><tr><td>Investing activities</td><td>-116.8</td><td>-117.9</td><td>-109.6</td></tr><tr><td>Financing activities</td><td>-57.2</td><td>-86.2</td><td>-81.6</td></tr><tr><td>Net increase in cash</td><td>$41.3</td><td>$40.7</td><td>$48.8</td></tr></table>
<table><tr><td></td><td colspan="6">Year Ended December 31, 2016 Fixed Maturities Available-For-Sale</td></tr><tr><td></td><td>U.S.States</td><td>ForeignGovernment</td><td>U.S. Corporate Public Securities</td><td>U.S. Corporate Private Securities</td><td>Foreign Corporate Public Securities</td><td>Foreign Corporate Private Securities</td></tr><tr><td></td><td colspan="6">(in millions)</td></tr><tr><td>Fair Value, beginning of period</td><td>$6</td><td>$123</td><td>$205</td><td>$694</td><td>$44</td><td>$279</td></tr><tr><td>Total gains (losses) (realized/unrealized):</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Included in earnings:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Realized investment gains (losses), net</td><td>0</td><td>0</td><td>0</td><td>-129</td><td>0</td><td>-2</td></tr><tr><td>Included in other comprehensive income (loss)</td><td>0</td><td>-3</td><td>17</td><td>64</td><td>4</td><td>-9</td></tr><tr><td>Net investment income</td><td>0</td><td>0</td><td>1</td><td>9</td><td>0</td><td>1</td></tr><tr><td>Purchases</td><td>0</td><td>0</td><td>24</td><td>144</td><td>44</td><td>106</td></tr><tr><td>Sales</td><td>0</td><td>0</td><td>-1</td><td>-5</td><td>-1</td><td>-11</td></tr><tr><td>Issuances</td><td>0</td><td>0</td><td>0</td><td>0</td><td>0</td><td>0</td></tr><tr><td>Settlements</td><td>-1</td><td>0</td><td>-3</td><td>-88</td><td>-4</td><td>-228</td></tr><tr><td>Foreign currency translation</td><td>0</td><td>3</td><td>2</td><td>1</td><td>3</td><td>-1</td></tr><tr><td>Other-1</td><td>0</td><td>0</td><td>-13</td><td>0</td><td>13</td><td>0</td></tr><tr><td>Transfers into Level 3-2</td><td>0</td><td>1</td><td>73</td><td>775</td><td>88</td><td>550</td></tr><tr><td>Transfers out of Level 3-2</td><td>0</td><td>0</td><td>-44</td><td>-111</td><td>-120</td><td>-198</td></tr><tr><td>Fair Value, end of period</td><td>$5</td><td>$124</td><td>$261</td><td>$1,354</td><td>$71</td><td>$487</td></tr><tr><td>Unrealized gains (losses) for assets still held(3):</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Included in earnings:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Realized investment gains (losses), net</td><td>$0</td><td>$0</td><td>$0</td><td>$-109</td><td>$0</td><td>$-1</td></tr></table>

Question: As As the chart 2 shows,which year is the Interest Income for Total securities available for sale the lowest?
Answer: 2005