Table of Contents ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES We recorded net earnings of $35.4 million or $1.18 per share in 2004, compared with $52.2 million or $1.76 per share recorded in 2003 and $51.3 million or $1.86 per share in 2002.
Net earnings recorded in 2004 were negatively impacted by cost increases to steel and freight, as well as manufacturing inefficiencies during the first nine months of the year in our Ashland City plant and higher selling, general and administrative expense (SG&A).
While net earnings were flat in 2003 compared with 2002, the lower earnings per share amount in 2003 as compared with 2002 reflected the full-year impact of our stock offering in May 2002.
Our individual segment performance will be discussed later in this section.
Our working capital, excluding short-term debt, was $339.8 million at December 31, 2004, compared with $305.9 million and $225.1 million at December 31, 2003, and December 31, 2002, respectively.
The $33.9 million increase in 2004 reflects $44.9 million higher receivable balances due to longer payment terms experienced by both of our businesses as well as higher sales levels in the fourth quarter.
Offsetting the increase in receivable balances were $13.5 million lower inventory levels split about equally between Water Systems and Electrical Products and $14.3 million higher accounts payable balances.
The $80.8 million increase in 2003 reflects $46.6 million higher inventory balances due primarily to extensive manufacturing repositioning in our electric motor business and several new product introductions and manufacturing consolidation in our water systems business.
Additionally, receivable balances were $21.2 million higher due to price increases associated with new product introductions in our water systems business and an increase in international sales, which tend to have longer payment terms.
Finally, a $13.1 million increase in accounts payable balances was largely offset by $9.4 million in restructuring expenses paid out in 2003.
Reducing working capital is one of our major initiatives in 2005.
Cash provided by operating activities during 2004 was $67.2 million compared with $29.0 million during 2003 and $116.0 million during 2002.
Despite lower earnings in 2004, a smaller investment in working capital explains the majority of the improvement in cash flow compared with 2003.
The higher investment in working capital in 2003 (as discussed above), explains the majority of the difference between 2003 and 2002.
Our capital expenditures were $48.5 million in 2004, essentially the same as in 2003 and approximately $2.2 million higher than in 2002.
The increase in 2003 was associated with new product launches in our water systems business.
We are projecting 2005 capital expenditures to be approximately $55 million, essentially the same as our projected 2005 depreciation expense.
We believe that our present facilities and planned capital expenditures are sufficient to provide adequate capacity for our operations in 2005.
In June 2004, we completed a $265 million, five-year revolving credit facility with a group of eight banks.
The new facility expires on June 10, 2009, and it replaced a $250 million credit facility which expired on August 2, 2004, and was terminated on June 10, 2004.
The new facility backs up commercial paper and credit line borrowings.
As a result of the long-term nature of this facility, the commercial paper and credit line borrowings are now classified as long-term debt.
At December 31, 2004, we had available borrowing capacity of $153.9 million under this facility.
We believe that the combination of available borrowing capacity and operating cash flow will provide sufficient funds to finance our existing operations for the foreseeable future.
To take advantage of historically low long-term borrowing rates, we issued $50.0 million in senior notes with two insurance companies in June 2003.
The notes range in maturity between 2013 and 2016 and carry a weighted average interest rate of slightly less than 4.5 percent.
The proceeds of the notes were used to repay commercial paper and borrowing under the credit facility.
Our leverage, as measured by the ratio of total debt to total capitalization, was 32 percent at the end of 2004 and the end of 2003.
Aggregate Contractual Obligations A summary of our contractual obligations as of December 31, 2004, is as follows:
## Table 0 ##
Average Balance Sheet, Interest and Yield/Rate Analysis
## Table 1 ##
(1) Includes securities purchased under agreements to resell.
(2) Average balances and yields for securities available for sale are based on amortized cost.
(3) Includes commercial and industrial loans and equipment financing loans.
(4) Interest income for the year ended December 31, 2012 includes $8.0 million of cost recovery income; yield of 5.08% without cost recovery income.
(5) The FTE adjustment was $17.2 million, $11.7 million and $7.8 million for the years ended December 31, 2013, 2012 and 2011, respectively.
(6) See Non-GAAP financial measures and reconciliation to GAAP.
Commercial Banking consists principally of commercial real estate lending, commercial and industrial lending, and commercial deposit gathering activities.
This segment also includes the equipment financing operations of PCLC and PUEFC, as well as cash management, correspondent banking, municipal banking, institutional trust services, corporate trust, insurance services provided through PUIA and private banking.
## Table 2 ##
Commercial Banking’s net income increased $12.6 million in 2016 compared to 2015, reflecting an increase in net interest income, partially offset by a decrease in non-interest income and an increase in non-interest expense.
The $14.9 million increase in net interest income primarily reflects the benefit from an increase in average commercial loans, partially offset by increases in interest expense and net FTP funding charges, and continued pricing pressure within the loan portfolio, which includes the pay-off of higher-yielding loans, partially mitigated by new originations at rates higher than the existing portfolio.
Non-interest income decreased $5.6 million, primarily reflecting decreases in commercial banking lending fees and operating lease income, partially offset by increases in institutional and corporate trust fees, and insurance revenue.
The $9.6 million increase in non-interest expense reflects a higher level of direct expenses.
Average total assets increased $1.2 billion and average total liabilities increased $1.3 billion compared to 2015, reflecting loan and deposit growth, respectively.
Commercial Banking’s net income increased $13.8 million in 2015 compared to 2014, reflecting increases in net interest income and non-interest income, partially offset by an increase in non-interest expense.
The $35.6 million increase in net interest income primarily reflects the benefit from an increase in average commercial loans and lower net FTP funding charges, partially offset by continued pricing pressure within the loan portfolio, which includes the pay-off of higher-yielding loans and new originations at rates lower than the existing portfolio, and declining interest income on acquired loans.
Included in non-interest income in 2015 and 2014 are net gains (losses) on sales of acquired loans totaling $1.7 million and $(0.9) million, respectively.
Excluding these net gains (losses), non-interest income increased $18.0 million in 2015, primarily reflecting increases in commercial banking lending fees, customer interest rate swap income and operating lease income resulting from a higher level of equipment leases to PCLC customers.
The $37.5 million increase in non-interest expense in 2015 reflects higher levels of direct (including operating lease expense) and allocated expenses.
Average total assets increased $2.1 billion and average total liabilities increased $1.2 billion compared to 2014, reflecting loan and deposit growth, respectively.
In addition, during the quarter ended March 31, 2015, certain customer loans and deposits were transferred from Retail Banking to Commercial Banking to better align with the Bank’s customer relationship management approach.

Tables referenced above, in order (Table 0 first):
<table><tr><td>(dollars in millions)</td><td>Payments due by period</td></tr><tr><td>Contractual Obligation</td><td>Total</td><td>Less Than 1 year</td><td>1 - 3 Years</td><td>3 - 5 Years</td><td>More than 5 years</td></tr><tr><td>Long-term Debt</td><td>$275.1</td><td>$8.6</td><td>$13.8</td><td>$138.2</td><td>$114.5</td></tr><tr><td>Capital Leases</td><td>6.0</td><td>—</td><td>—</td><td>6.0</td><td>—</td></tr><tr><td>Operating Leases</td><td>62.9</td><td>14.4</td><td>20.7</td><td>11.6</td><td>16.2</td></tr><tr><td>Purchase Obligations</td><td>177.3</td><td>176.6</td><td>0.7</td><td>—</td><td>—</td></tr><tr><td>Total</td><td>$521.3</td><td>$199.6</td><td>$35.2</td><td>$155.8</td><td>$130.7</td></tr></table>
<table><tr><td></td><td colspan="3">2013</td><td colspan="3">2012</td><td colspan="3">2011</td></tr><tr><td>Years ended December 31(dollars in millions)</td><td>AverageBalance</td><td>Interest</td><td>Yield/ Rate</td><td>AverageBalance</td><td>Interest</td><td>Yield/ Rate</td><td>AverageBalance</td><td>Interest</td><td>Yield/Rate</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>Short-term investments -1</td><td>$156.1</td><td>$0.3</td><td>0.22%</td><td>$332.0</td><td>$0.8</td><td>0.24%</td><td>$770.4</td><td>$2.1</td><td>0.27%</td></tr><tr><td>Securities -2</td><td>4,545.9</td><td>97.7</td><td>2.15</td><td>3,299.8</td><td>81.5</td><td>2.47</td><td>2,933.3</td><td>85.1</td><td>2.90</td></tr><tr><td>Loans:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Commercial -3</td><td>8,421.5</td><td>356.2</td><td>4.23</td><td>7,672.8</td><td>373.4</td><td>4.87</td><td>6,465.4</td><td>354.7</td><td>5.49</td></tr><tr><td>Commercial real estate -4</td><td>7,965.0</td><td>351.2</td><td>4.41</td><td>7,031.5</td><td>365.4</td><td>5.20</td><td>6,971.8</td><td>392.4</td><td>5.63</td></tr><tr><td>Residential mortgage</td><td>4,126.1</td><td>141.4</td><td>3.42</td><td>3,854.7</td><td>145.5</td><td>3.77</td><td>3,165.6</td><td>131.2</td><td>4.14</td></tr><tr><td>Consumer</td><td>2,145.4</td><td>74.8</td><td>3.49</td><td>2,174.9</td><td>80.0</td><td>3.68</td><td>2,190.1</td><td>84.2</td><td>3.85</td></tr><tr><td>Total loans</td><td>22,658.0</td><td>923.6</td><td>4.08</td><td>20,733.9</td><td>964.3</td><td>4.65</td><td>18,792.9</td><td>962.5</td><td>5.12</td></tr><tr><td>Total earning assets</td><td>27,360.0</td><td>$1,021.6</td><td>3.73%</td><td>24,365.7</td><td>$1,046.6</td><td>4.30%</td><td>22,496.6</td><td>$1,049.7</td><td>4.67%</td></tr><tr><td>Other assets</td><td>3,648.9</td><td></td><td></td><td>3,747.2</td><td></td><td></td><td>3,531.6</td><td></td><td></td></tr><tr><td>Total assets</td><td>$31,008.9</td><td></td><td></td><td>$28,112.9</td><td></td><td></td><td>$26,028.2</td><td></td><td></td></tr><tr><td>Liabilities and stockholders’ equity:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Deposits:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Non-interest-bearing</td><td>$5,020.3</td><td>$—</td><td>—%</td><td>$4,656.8</td><td>$—</td><td>—%</td><td>$4,032.8</td><td>$—</td><td>—%</td></tr><tr><td>Savings, interest-bearing checking and money market</td><td>12,417.3</td><td>33.0</td><td>0.27</td><td>11,556.8</td><td>38.7</td><td>0.33</td><td>9,970.1</td><td>51.0</td><td>0.51</td></tr><tr><td>Time</td><td>4,524.7</td><td>48.1</td><td>1.06</td><td>5,028.2</td><td>52.1</td><td>1.04</td><td>5,276.6</td><td>56.4</td><td>1.07</td></tr><tr><td>Total deposits</td><td>21,962.3</td><td>81.1</td><td>0.37</td><td>21,241.8</td><td>90.8</td><td>0.43</td><td>19,279.5</td><td>107.4</td><td>0.56</td></tr><tr><td>Borrowings:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>FHLB advances</td><td>2,043.9</td><td>8.2</td><td>0.40</td><td>419.5</td><td>5.1</td><td>1.23</td><td>456.1</td><td>6.7</td><td>1.48</td></tr><tr><td>Federal funds purchased</td><td>641.2</td><td>1.2</td><td>0.19</td><td>195.3</td><td>0.5</td><td>0.24</td><td>8.6</td><td>—</td><td>0.13</td></tr><tr><td>Retail repurchase agreements</td><td>522.7</td><td>1.1</td><td>0.20</td><td>494.7</td><td>1.3</td><td>0.26</td><td>486.6</td><td>2.0</td><td>0.41</td></tr><tr><td>Other borrowings</td><td>3.9</td><td>—</td><td>0.51</td><td>16.4</td><td>0.1</td><td>1.00</td><td>28.0</td><td>0.3</td><td>0.94</td></tr><tr><td>Total borrowings</td><td>3,211.7</td><td>10.5</td><td>0.33</td><td>1,125.9</td><td>7.0</td><td>0.63</td><td>979.3</td><td>9.0</td><td>0.92</td></tr><tr><td>Notes and debentures</td><td>647.5</td><td>24.2</td><td>3.74</td><td>195.5</td><td>8.4</td><td>4.28</td><td>170.4</td><td>12.1</td><td>7.08</td></tr><tr><td>Total funding liabilities</td><td>25,821.5</td><td>$115.8</td><td>0.45%</td><td>22,563.2</td><td>$106.2</td><td>0.47%</td><td>20,429.2</td><td>$128.5</td><td>0.63%</td></tr><tr><td>Other liabilities</td><td>432.6</td><td></td><td></td><td>381.8</td><td></td><td></td><td>327.7</td><td></td><td></td></tr><tr><td>Total liabilities</td><td>26,254.1</td><td></td><td></td><td>22,945.0</td><td></td><td></td><td>20,756.9</td><td></td><td></td></tr><tr><td>Stockholders’ equity</td><td>4,754.8</td><td></td><td></td><td>5,167.9</td><td></td><td></td><td>5,271.3</td><td></td><td></td></tr><tr><td>Total liabilities and stockholders’ equity</td><td>$31,008.9</td><td></td><td></td><td>$28,112.9</td><td></td><td></td><td>$26,028.2</td><td></td><td></td></tr><tr><td>Net interest income/spread -5</td><td></td><td>$905.8</td><td>3.28%</td><td></td><td>$940.4</td><td>3.83%</td><td></td><td>$921.2</td><td>4.04%</td></tr><tr><td>Net interest margin</td><td></td><td></td><td>3.31%</td><td></td><td></td><td>3.86%</td><td></td><td></td><td>4.10%</td></tr><tr><td>Operating net interest margin -6</td><td></td><td></td><td>3.31%</td><td></td><td></td><td>3.82%</td><td></td><td></td><td>4.03%</td></tr></table>
<table><tr><td>Years ended December 31 (in millions)</td><td>2016</td><td>2015</td><td>2014</td></tr><tr><td>Net interest income</td><td>$566.5</td><td>$551.6</td><td>$516.0</td></tr><tr><td>Provision for loan losses</td><td>39.3</td><td>47.7</td><td>47.6</td></tr><tr><td>Totalnon-interestincome</td><td>156.4</td><td>162.0</td><td>141.4</td></tr><tr><td>Totalnon-interestexpense</td><td>322.8</td><td>313.2</td><td>275.7</td></tr><tr><td>Income before income tax expense</td><td>360.8</td><td>352.7</td><td>334.1</td></tr><tr><td>Income tax expense</td><td>113.4</td><td>117.9</td><td>113.1</td></tr><tr><td>Net income</td><td>$247.4</td><td>$234.8</td><td>$221.0</td></tr><tr><td>Average total assets</td><td>$22,691.1</td><td>$21,465.7</td><td>$19,338.5</td></tr><tr><td>Average total liabilities</td><td>6,733.7</td><td>5,483.2</td><td>4,275.1</td></tr></table>

Question: What is the average value of Short-term investments -1 for AverageBalance in 2013 and Net interest income in 2016?
Answer: 361.3
Reasoning program: add(156.1,566.5), divide(#0,2)