Stock options
The following tables summarize our stock option activities and related information:
(1) The aggregate intrinsic value represents the excess of the closing price of our common stock of $6.87 as of December 31, 2019 over theexercise price of the outstanding in-the-money options.

                                               | Number of Shares (thousands) | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (years) | Aggregate Intrinsic Value(1) (thousands)
---------------------------------------------- | ---------------------------- | ------------------------------- | --------------------------------------------------- | ----------------------------------------
Outstanding as of December 31, 2018            | 4,674                        | $5.19                           |                                                     |
Granted                                        | —                            | $ —                             |                                                     |
Exercised                                      | (842)                        | $2.84                           |                                                     |
Canceled                                       | (130)                        | $9.41                           |                                                     |
Outstanding as of December 31, 2019            | 3,702                        | $5.57                           | 3.52                                                | $6,395
Vested and exercisable as of December 31, 2019 | 3,427                        | $5.49                           | 3.56                                                | $6,210


The fair value of options granted in the respective fiscal years are estimated on the date of grant using the Black-Scholes optionpricing model, acceptable under ASC 718, with the following weighted average assumptions:
Expected volatilities are based on the Company’s historical common stock volatility, derived from historical stock price data for periods commensurate with the options’ expected life. The expected life of options granted represents the period of time options are expected to be outstanding, based primarily on historical employee option exercise behavior. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero coupon bonds issued with a term equal to the expected life at the date of grant of the options. The expected dividend yield is zero, as the Company has historically paid no dividends and does not anticipate dividends to be paid in the future.

                        | Years Ended December 31, |
----------------------- | ------------------------ | -----
                        | 2018                     | 2017
Expected life (years)   | 5.6                      | 5.6
Risk-free interest rate | 2.7%                     | 1.9%
Expected volatility     | 26.4%                    | 29.4%
Expected dividend yield | —                        | —


Issuer Purchases of Equity Securities
(a) During the fourth quarter of 2015, Lifeway publicly announced a share repurchase program. On November 1, 2017, the our Board of Directors amended the 2015 stock repurchase program (the “2017 amendment”), by adding to (i.e., exclusive of the shares previously authorized under the 2015 stock program repurchase) the authorization the lesser of $5,185 or 625 shares. The program has no expiration date.

Period                | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of a publicly announced program (a) | Approximate Dollar Value of Shares that may yet be Purchased under the Plans or Programs ($ in thousands)
--------------------- | -------------------------------- | ---------------------------- | ---------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------
1/1/2018 to 1/31/2018 | 106,441                          | $ 8.22                       | 106,441                                                                      | $ 5,007
2/1/2018 to 2/28/2018 | 24,486                           | $ 7.21                       | 24,486                                                                       | $ 4,830
4/1/2018 to 4/30/2018 | 15,433                           | $ 6.09                       | 15,433                                                                       | $ 4,736
6/1/2018 to 6/30/2018 | 4,143                            | $ 5.46                       | 4,143                                                                        | $ 4,714
8/1/2018 to 8/31/2018 | 1,332                            | $ 3.96                       | 1,332                                                                        | $ 4,709
9/1/2018 to 9/30/18   | 40,364                           | $ 3.35                       | 40,364                                                                       | $ 4,573
11/1/2018 to 11/30/18 | 17,228                           | $ 2.99                       | 17,228                                                                       | $ 4,522
12/1/2018 to 12/31/18 | 8,305                            | $ 2.25                       | 8,305                                                                        | $ 4,503
Fiscal Year 2018      | 217,732                          | $ 6.33                       | 217,732                                                                      | $ 4,503
1/1/2019 to 1/31/2019 | 46,743                           | $ 2.54                       | 46,743                                                                       | $ 4,384
2/1/2019 to 2/28/2019 | 9,100                            | $ 2.75                       | 9,100                                                                        | $ 4,358
3/1/2019 to 3/31/2019 | 26,932                           | $ 2.24                       | 26,932                                                                       | $ 4,298
4/1/2019 to 4/30/2019 | 4,300                            | $ 2.24                       | 4,300                                                                        | $ 4,288
5/1/2019 to 5/31/2019 | 57,817                           | $ 2.49                       | 57,817                                                                       | $ 4,145
6/1/2019 to 6/30/2019 | 11,146                           | $ 2.32                       | 11,146                                                                       | $ 4,119
8/1/2019 to 8/31/2019 | 37,567                           | $ 2.69                       | 37,567                                                                       | $ 4,018
9/1/2019 to 9/30/2019 | 17,531                           | $ 2.98                       | 17,531                                                                       | $ 3,965
Fiscal Year 2019      | 211,136                          | $ 2.55                       | 211,136                                                                      | $ 3,965


Other Expense, Net
Other expense, net decreased by $4.3 million in 2018 compared to 2017 as a result of an increase in interest expense of $5.7 million related to interest expense due under our convertible senior notes. This increase was offset by an increase of $1.4 million of interest income earned on our short-term investments.

                   | Year Ended December 31, |                        | Change  |
------------------ | ----------------------- | ---------------------- | ------- | -------
                   | 2018                    | 2017                   | $       | %
                   |                         | (dollars in thousands) |         |
Other expense, net | $ 4,628                 | $ 302                  | $ 4,326 | 1432.5%
% of revenue       | 3%                      | 0%                     |         |


Backlog
As reflected in the table above, total backlog decreased $663.5 million from September 30, 2018 to September 30, 2019. The decrease in backlog is primarily due to progression of work in 2019 on four large contracts awarded to CTS in fiscal 2018. In addition, we recorded a net decrease to backlog of $104.5 million on October 1, 2018 for the impact of the adoption of ASC 606. Changes in exchange rates between the prevailing currency in our foreign operations and the U.S. dollar as of September 30, 2019 decreased backlog by $79.7 million compared to September 30, 2018.

                             | September 30,    | September 30,
---------------------------- | ---------------- | -----------------
                             | 2019             | 2018
                             |                  | (in millions)
Total backlog                |                  |
Cubic Transportation Systems | $  2,953.3       | $  3,544.9
Cubic Mission Solutions      | 103.7            | 77.0
Cubic Global Defense         | 344.0            | 442.6
Total                        | $  3,401.0       | $  4,064.5


Cash Flow
Cash flow provided by operating activities. Cash flows provided by operating activities were $7.2 million in fiscal 2019. The provision of cash was due primarily to our operating loss of $13.2 million adjusted for $22.4 million in non-cash expense including depreciation, amortization, and share based compensation and an increase of approximately $2 million in net operating assets and liabilities.
Cash flows provided by operating activities were $6.9 million in fiscal 2018. The provision of cash was due primarily to our operating loss of $12.1 million adjusted for $19.2 million in non-cash expense including depreciation, amortization, and share based compensation.
Cash flows provided by operating activities were $3.4 million in fiscal 2017. The provision of cash included $6.4 million in increased collections on accounts receivable.
Cash flow used in investing activities. Cash flows used in investing activities in fiscal 2019 were $5.5 million. This is primarily attributed to $2.2 million in development of proprietary software and $3.3 million for purchase of property and equipment, including internal use software.
Cash flows used in investing activities in fiscal 2018 were $15.1 million. This is primarily attributed to $8.9 million in development of proprietary software and $6.1 million for purchase of property and equipment, including internal use software.
Cash flows used in investing activities in fiscal 2017 were $13.9 million. This is primarily attributed to $11.9 million in development of proprietary software and $4.2 million for purchase of property and equipment, including internal use software offset by $2.2 million in proceeds from corporate owned life insurance policies.
Cash flow used in financing activities. Respectively, in fiscal 2019, 2018, and 2017, the $0.8 million, $1.3 million, and $0.8 million cash flows used in financing activities were primarily comprised of the repurchase of shares to satisfy employee tax withholding and to cover the exercise price of the options, and payments on capital lease obligations.

                                            |         | Year ended March 31, |
------------------------------------------- | ------- | -------------------- | ---------
(In thousands)                              | 2019    | 2018                 | 2017
Net cash provided by (used in):             |         |                      |
Operating activities                        | $7,241  | $6,874               | $3,433
Investing activities                        | (5,534) | (15,085)             | (13,865)
Financing activities                        | (767)   | (1,295)              | (847)
Effect of exchange rate changes on cash     | (112)   | 194                  | (74)
Cash flows provided by (used in) operations | $828    | $(9,312)             | $(11,353)


Applying the German group tax rate to the reported pre-tax result would result in an income tax expense of €216 million (2017/18: €176 million). The deviation of €81 million (2017/18: €40 million) from the reported tax expense of €298 million (2017/18: €216 million) can be reconciled as follows:
1 Adjustment of previous year according to explanation in notes.
The item ‘effects of differing national tax rates’ includes a deferred tax revenue of €6 million (2017/18: €23 million) from tax rate changes.
Tax expenses and income relating to other periods of the previous year include a repayment of approximately €20 million because of a retrospective change in foreign law in 2018.
Tax holidays for the current year include effects from real estate transactions in the amount of €30 million (2017/18: €2 million).

€ million                                             | 2017/2018 | 2018/2019
----------------------------------------------------- | --------- | ---------
EBT (earnings before taxes)                           | 576       | 709
Expected income tax expenses (30.53%)                 | 176       | 216
Effects of differing national tax rates               | −58       | −62
Tax expenses and income relating to other periods     | −21       | −6
Non-deductible business expenses for tax purposes     | 41        | 51
Effects of not recognised or impaired deferred taxes  | 79        | 114
Additions and reductions for local taxes              | 11        | 13
Tax holidays                                          | −14       | −39
Other deviations                                      | 3         | 5
Income tax expenses according to the income statement | 216       | 298
Group tax rate                                        | 37.6%     | 42.0%


Our net sales by market sector for the indicated fiscal years were as follows (in millions):
Healthcare/Life Sciences. Net sales for fiscal 2019 in the Healthcare/Life Sciences sector increased $180.1 million, or 17.3%, as compared to fiscal 2018. The increase was driven by overall net increased customer end-market demand, a $32.7 million increase in production ramps of new products for existing customers and a $26.9 million increase in production ramps for new customers.
Industrial/Commercial. Net sales for fiscal 2019 in the Industrial/Commercial sector increased $63.5 million, or 6.9%, as compared to fiscal 2018. The increase was driven by a $64.8 million increase in production ramps of new products for existing customers and a $33.2 million increase in production ramps for new customers. The increase was partially offset by a $7.3 million decrease due to end-of-life products, a $4.2 million decrease due to a disengagement with a customer and overall net decreased customer end-market demand.
Aerospace/Defense. Net sales for fiscal 2019 in the Aerospace/Defense sector increased $143.5 million, or 32.2%, as compared to fiscal 2018. The increase was driven by a $120.2 million increase in production ramps of new products for existing customers, a $9.9 million increase in production ramps for new customers and overall net increased customer end-market demand.
Communications. Net sales for fiscal 2019 in the Communications sector decreased $96.2 million, or 20.4%, as compared to fiscal 2018. The decrease was driven by a $37.3 million reduction due to disengagements with customers, a $15.3 million decrease due to end-of-life products and overall net decreased customer endmarket demand. The decrease was partially offset by an $18.1 million increase in production ramps of new products for existing customers and a $4.5 million increase in production ramps for new customers.

Market Sector             | 2019     | 2018
------------------------- | -------- | --------
Healthcare/Life Sciences  | $1,220.0 | $1,039.9
Industrial/Commercial     | 981.2    | 917.7
Aerospace/Defense         | 588.6    | 445.1
Communications            | 374.6    | 470.8
Total net sales           | 3,164.4  | 2,873.5


Supplemental balance sheet information related to operating and finance leases as of the period presented was as follows (table in millions):
(1) ROU assets for operating leases are included in other assets and ROU assets for finance leases are included in property and equipment, net on the consolidated balance sheets
(2) Current lease liabilities are included primarily in accrued expenses and other on the consolidated balance sheets. An immaterial amount is presented in due from related parties, net on the consolidated balance sheets.
(3) Operating lease liabilities are presented as operating lease liabilities on the consolidated balance sheets. Finance lease liabilities are included in other liabilities on the consolidated balance sheets.

                                   | January 31, 2020 |
---------------------------------- | ---------------- | --------------
                                   | Operating Leases | Finance Leases
ROU assets, non-current (1)        | $886             | $58
Lease liabilities, current (2)     | $109             | $4
Lease liabilities, non-current (3) | 746              | 55
Total lease liabilities            | $855             | $59


A.3.8 Financial Services
Financial Services supports its customers’ investments with leasing solutions and equipment, project and structured financing in the form of debt and equity investments. Based on its comprehensive financing know-how and specialist technology expertise in
the areas of Siemens businesses, Financial Services provides financial
solutions for Siemens customers as well as other companies.
Financial Services again delivered strong earnings before taxes. While the equity business recorded higher results, the result from the debt business declined, amongst others due to higher credit hits. Total assets increased along with a growth in debt business and in part due to positive currency translation effects.
Financial Services is geared to Siemens’ industrial businesses and its markets. As such Financial Services is influenced by the business development of the markets served by our industrial businesses, among other factors. Financial Services will continue to focus its business scope on areas of intense domain know-how.

                            |        | Fiscal year
--------------------------- | ------ | -----------
(in millions of €)          | 2019   | 2018
Earnings before taxes (EBT) | 632    | 633
ROE (after taxes)           | 19.1 % | 19.7 %
                            |        | Sep 30,
(in millions of €)          | 2019   | 2018
Total assets                | 29,901 | 27,628


Capital stock 2019
Capital stock at December 31, 2019, consisted of the following:
The capital stock of the Parent Company is divided into two classes: Class A shares (quota value SEK 5.00) and Class B shares (quota value SEK 5.00). Both classes have the same rights of participation in the net assets and earnings.Class A shares, however, are entitled to one vote per share while Class B shares are entitled to one tenth of one vote per share.
At December 31, 2019, the total number of treasury shares was 19,853,247 (37,057,039 in 2018 and 50,265,499 in 2017) Class B shares.

Capital stock  |                  |
-------------- | ---------------- | ---------------------------
Parent Company | Number of shares | Capital stock (SEK million)
Class A shares | 261,755,983      | 1,309
Class B shares | 3,072,395,752    | 15,363
Total          | 3,334,151,735    | 16,672


Restricted Stock Awards
We present below a summary of changes in unvested units of restricted stock during 2019:
The Company recorded equity-based compensation expense related to restricted stock and RSUs (collectively “restricted stock awards”) of $31.8 million, $19.9 million, and $16.2 million in 2019, 2018 and 2017, respectively. The total fair value of restricted stock awards vested in 2019, 2018 and 2017, based on market value at the vesting dates was $18.2 million, $18.1 million, and $18.8 million, respectively. The weighted average grant-date fair value of RSUs granted during fiscal year 2019, 2018 and 2017 was $49.48, $51.72 and $49.01, respectively. As of December 31, 2019, unrecognized compensation cost related to unvested RSU totaled $47.5 million and is expected to be recognized over a weighted average period of approximately 2.5 years. In January 2017, we elected to recognize forfeitures of equity-based payments as they occur.
awards”) of $31.8 million, $19.9 million, and $16.2 million in 2019, 2018 and 2017, respectively. The total fair value of restricted
stock awards vested in 2019, 2018 and 2017, based on market value at the vesting dates was $18.2 million, $18.1 million, and $18.8
million, respectively. The weighted average grant-date fair value of RSUs granted during fiscal year 2019, 2018 and 2017 was $49.48,
$51.72 and $49.01, respectively. As of December 31, 2019, unrecognized compensation cost related to unvested RSU totaled $47.5
million and is expected to be recognized over a weighted average period of approximately 2.5 years. In January 2017, we elected to
recognize forfeitures of equity-based payments as they occur.
Included in RSU grants for the year ended December 31, 2019 are 282,327 units that have performance-based vesting criteria. The
performance criteria are tied to our financial performance. As of December 31, 2019, the associated equity-based compensation
expense has been recognized for the portion of the award attributable to the 2019 performance criteria.

                                    | Number of Units | Grant Date Fair Value
----------------------------------- | --------------- | ---------------------
Outstanding at January 1, 2019      | 997,173         | $52.22
Granted                             | 945,159         | 49.48
Vested                              | (386,060)       | 51.79
Forfeited                           | (59,579)        | 50.56
Outstanding at December 31, 2019    | 1,496,693       | $50.67


4. Other Current Assets
Other current assets consist of (in thousands):

                                                                        | December 31, |
----------------------------------------------------------------------- | ------------ | ------
                                                                        | 2019         | 2018
Indemnification receivable from SSL for pre-closing taxes (see Note 13) | $598         | $2,410
Due from affiliates                                                     | 186          | 161
Prepaid expenses                                                        | 164          | 151
Other                                                                   | 374          | 510
                                                                        | $1,322       | $3,232


On a sequential basis, ADG revenues were up 3.3%, driven by an increase in volumes of approximately 8%, partially offset by a decrease in average selling prices of approximately 5%, mostly attributable to product mix.
AMS revenues increased 12.1% driven by Analog and Imaging products. AMS increase was due to an increase of approximately 5% in average selling prices, entirely due to product mix, and to higher volumes of approximately of 7%.
MDG revenues increased by 7.9%, mainly driven by Microcontrollers, due to both higher average selling prices of approximately 6%, entirely due to product mix, and higher volumes of approximately 2%.
On a year-over-year basis, fourth quarter net revenues increased by 4.0%. ADG revenues decreased 4.5% compared to the year-ago quarter on lower revenues in both Automotive and Power Discrete. The decrease was entirely due to lower average selling prices of approximately 4%, while volumes remained substantially flat. The decrease in average selling prices was a combination of less favorable product mix and lower selling prices.
AMS fourth quarter revenues grew 9.9% year-over-year, mainly driven by Analog and Imaging. The increase was entirely due to higher average selling prices of approximately 18%, entirely attributable to product mix,
partially offset by lower volumes of approximately 8%. MDG fourth quarter revenues increased by 7.6%, mainly driven by Microcontrollers. The increase was due to higher average selling prices of approximately 9%,
entirely due to improved product mix.

                                             |                   | Three Months Ended |                          | % Variation |
-------------------------------------------- | ----------------- | ------------------ | ------------------------ | ----------- | --------------
                                             | December 31, 2019 | September 29, 2019 | December 31, 2018        | Sequential  | Year-Over-Year
                                             |                   |                    | (Unaudited, in millions) |             |
Automotive and Discrete Group (ADG)          | $924              | $894               | $967                     | 3.3%        | (4.5)%
Analog, MEMS and Sensors Group (AMS)         | 1,085             | 968                | 988                      | 12.1        | 9.9
Microcontrollers and Digital ICs Group (MDG) | 742               | 688                | 689                      | 7.9         | 7.6
Others                                       | 3                 | 3                  | 4                        | —           | —
Total consolidated net revenues              | $2,754            | $2,553             | $2,648                   | 7.9%        | 4.0%


Construction: Net income from our Construction segment for the year ended December 31, 2019 decreased $3.0 million to $24.7 million from $27.7 million for the year ended December 31, 2018. Adjusted EBITDA from our Construction segment for the year ended December 31, 2019 increased $14.8 million to $75.7 million from $60.9 million for the year ended December 31, 2018. The increase in Adjusted EBITDA was driven by the acquisition of GrayWolf.
Marine Services: Net income (loss) from our Marine Services segment for the year ended December 31, 2019 decreased $2.9 million to a loss of $2.6 million from income of $0.3 million for the year ended December 31, 2018. Adjusted EBITDA from our Marine Services segment for the year ended December 31, 2019 decreased $2.0 million to $30.7 million from $32.7 million for the year ended December 31, 2018.
The decrease in Adjusted EBITDA was driven by a decline in income from equity method investees, due to HMN driven by lower revenues on large turnkey projects underway than in the comparable period, and losses at SBSS from a loss contingency related to ongoing legal disputes and lower vessel utilization.
Largely offsetting these losses was higher gross profit as a result of improved profitability from telecom maintenance zones and project work in the offshore power and offshore renewables end markets, as well as the benefit of improved vessel utilization. Additionally, the comparable period was impacted by higher than expected costs on a certain offshore power construction project that were not repeated in the current period.
Energy: Net income (loss) from our Energy segment for the year ended December 31, 2019 increased by $5.1 million to income of $4.2 million from a loss of $0.9 million for the year ended December 31, 2018. Adjusted EBITDA from our Energy segment for the year ended December 31, 2019 increased $11.5 million to $17.0 million from $5.5 million for the year ended December 31, 2018.
The increase in Adjusted EBITDA was primarily driven by the AFTC recognized in the fourth quarter of 2019 attributable to 2018 and 2019 and higher volume-related revenues from the recent acquisition of the ampCNG stations and growth in CNG sales volumes. The increase was also driven by Partially offsetting these increases were higher selling, general and administrative expenses as a result of the acquisition of the ampCNG stations.
Telecommunications: Net income (loss) from our Telecommunications segment for the year ended December 31, 2019 decreased by $6.0 million to a loss of $1.4 million from income of $4.6 million for the year ended December 31, 2018. Adjusted EBITDA from our Telecommunications segment for the year ended December 31, 2019 decreased $1.9 million to $3.4 million from $5.3 million for the year ended December 31, 2018.
The decrease in Adjusted EBITDA was primarily due to both a decline in revenue and the contracting of call termination margin as a result of the continued decline in the international long distance market, partially offset by a decrease in compensation expense due to headcount decreases and reductions in bad debt expense.
Life Sciences: Net income (loss) from our Life Sciences segment for the year ended December 31, 2019 decreased $65.4 million to a loss of $0.2 million from income of $65.2 million for the year ended December 31, 2018. Adjusted EBITDA loss from our Life Sciences segment for the year ended December 31, 2019 decreased $3.1 million to $11.8 million from $14.9 million for the year ended December 31, 2018.
The decrease in Adjusted EBITDA loss was primarily driven by comparably fewer expenses at the Pansend holding company, which incurred additional compensation expense in the prior period related to the performance of the segment. The decrease was also due to a reduction in costs associated BeneVir, which was sold in the second quarter of 2018.
Broadcasting: Net loss from our Broadcasting segment for the year ended December 31, 2019 decreased $16.0 million to $18.5 million from $34.5 million for the year ended December 31, 2018. Adjusted EBITDA loss from our Broadcasting segment for the year ended December 31, 2019 decreased $10.6 million to $6.3 million from $16.9 million for the year ended December 31, 2018.
The decrease in Adjusted EBITDA loss was primarily driven by the reduction in costs as the segment exited certain local markets which were unprofitable at Network, partially offset by higher overhead expenses associated with the growth of the Broadcast stations subsequent to the prior year.
Non-operating Corporate: Net loss from our Non-operating Corporate segment for the year ended December 31, 2019 increased $5.7 million to $87.6 million from $81.9 million for the year ended December 31, 2018. Adjusted EBITDA loss from our Non-operating Corporate segment for the year ended December 31, 2019 decreased $8.0 million to $17.9 million from $25.9 million for the year ended December 31, 2018.
The decrease in Adjusted EBITDA loss was primarily attributable to reductions in bonus expense and other general and administrative expenses as previously described.

(in millions):                    |        | Year ended December 31, |
--------------------------------- | ------ | ----------------------- | ---------------------
                                  | 2019   | 2018                    | Increase / (Decrease)
Construction                      | $ 75.7 | $ 60.9                  | $  14.8
Marine Services                   | 30.7   | 32.7                    | (2.0)
Energy                            | 17.0   | 5.5                     | 11.5
Telecommunications                | 3.4    | 5.3                     | (1.9)
Total Core Operating Subsidiaries | 126.8  | 104.4                   | 22.4
Life Sciences                     | (11.8) | (14.9)                  | 3.1
Broadcasting                      | (6.3)  | (16.9)                  | 10.6
Other and Eliminations            | —      | (2.2)                   | 2.2
Total Early Stage and Other       | (18.1) | (34.0)                  | 15.9
Non-Operating Corporate           | (17.9) | (25.9)                  | 8.0
Adjusted EBITDA                   | $ 90.8 | $ 44.5                  | $ 46.3


B. Liquidity and Capital Resources
Our operations and strategic objectives require continuing capital investment, and our resources include cash on hand and cash provided by operations, as well as access to capital from bank borrowings and access to capital markets. Management believes that cash generated by or available to us should be sufficient to fund our capital and liquidity needs for at least the next 12 months.
Our future financial and operating performance, ability to service or refinance debt and ability to comply with covenants and restrictions contained in our debt agreements will be subject to future economic conditions, the financial health of our customers and suppliers and to financial, business and other factors, many of which are beyond our control. Furthermore, management believes that working capital is sufficient for our present requirements.
(*) including trade receivables classified as current asset based on operating cycle of two years.
The decrease in working capital as at March 31, 2019 as compared to March 31, 2018 was primarily the result of an increase in short-term borrowings amounting to $208.9 million as at March 31, 2019 from $152 million as at March 31, 2018 due to overdraft against restricted deposits and loan installments due within 12 months.
For additional information, please see Note 2(a) and Note 32 to our audited Consolidated Financial Statements appearing elsewhere in this annual report.

                    |          | Year ended March 31, |
------------------- | -------- | -------------------- | --------
                    | 2019     | 2018                 | 2017
                    |          | (in thousands)       |
Current assets(*)   | $351,597 | $339,562             | $362,477
Current liabilities | 318,672  | 239,327              | 316,101
Working capital     | $32,925  | $100,235             | $46,376


Foreign Currencies
As a multinational business, the Company's transactions are denominated in a variety of currencies. When appropriate, the Company uses forward foreign currency contracts to reduce its overall exposure to the effects of currency fluctuations on its results of operations and cash flows. The Company's policy prohibits trading in currencies for which there are no underlying exposures and entering into trades for any currency to intentionally increase the underlying exposure.
The Company primarily hedges existing assets and liabilities associated with transactions currently on its balance sheet, which are undesignated hedges for accounting purposes.
As of December 31, 2019 and 2018, the Company had net outstanding foreign exchange contracts with net notional amounts of $183.3 million and $157.3 million, respectively. Such contracts were obtained through financial institutions and were scheduled to mature within one to three months from the time of purchase.
Management believes that these financial instruments should not subject the Company to increased risks from foreign exchange movements because gains and losses on these contracts should offset losses and gains on the underlying assets, liabilities and transactions to which they are related.
The following schedule summarizes the Company's net foreign exchange positions in U.S. dollars (in millions):
Amounts receivable or payable under the contracts are included in other current assets or accrued expenses in the accompanying Consolidated Balance Sheets. For the years ended December 31, 2019, 2018 and 2017, realized and unrealized foreign currency transactions totaled a loss of $5.0 million, $8.0 million and $6.3 million, respectively. The realized and unrealized foreign currency transactions are included in other income and expenses in the Company's Consolidated Statements of Operations and Comprehensive Income.

                        |            | As of December 31, |            |
----------------------- | ---------- | ------------------ | ---------- | ----------------
                        | 2019       |                    | 2018       |
                        | Buy (Sell) | Notional Amount    | Buy (Sell) |  Notional Amount
Japanese Yen            | $49.8      | $49.8              | $29.9      | $29.9
Philippine Peso         | 36.4       | 36.4               | 30.1       | 30.1
Malaysian Ringgit       | 20.4       | 20.4               | —          | —
Chinese Yuan            | 20.2       | 20.2               | 20.4       | 20.4
Korean Won              | 18.1       | 18.1               | 20.8       | 20.8
Czech Koruna            | 11.9       | 11.9               | 9.2        | 9.2
Euro                    | —          | —                  | 13.1       | 13.1
Other currencies - Buy  | 21.9       | 21.9               | 26.3       | 26.3
Other currencies - Sell | (4.6)      | 4.6                | (7.5)      | 7.5
                        | $174.1     | $183.3             | $142.3     | $157.3


GreenSky, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (United States Dollars in thousands, except per share data, unless otherwise stated)
Note 18. Quarterly Consolidated Results of Operations Data (Unaudited)
The following table sets forth our quarterly consolidated results of operations data for each of the eight quarters in the period ended December 31, 2019. GS Holdings is our predecessor for accounting purposes and, accordingly, amounts prior to the Reorganization Transactions and IPO represent the historical consolidated operations of GS Holdings and its subsidiaries. The amounts during the period from May 24, 2018 through December 31, 2018 represent those of consolidated GreenSky, Inc. and its subsidiaries. Basic and diluted earnings per share of Class A common stock is applicable only for the period from May 24, 2018 through December 31, 2018, which is the period following the Reorganization Transactions and IPO. Prior to the Reorganization Transactions and IPO, GreenSky, Inc. did not engage in any business or other activities except in connection with its formation and initial capitalization. See Note 1 for further information on our organization and see Note 2 for further information on our earnings per share.
(1) Year-to-date results may not agree to the sum of individual quarterly results due to rounding.

                                                             |               |                | Year Ended December 31, 2018 |                |
------------------------------------------------------------ | ------------- | -------------- | ---------------------------- | -------------- | --------
                                                             | First
Quarter | Second
Quarter | Third Quarter                | Fourth
Quarter | Total
Total revenue                                                | $85,326       | $105,704       | $113,912                     | $109,731       | $414,673
Cost of revenue (exclusive of depreciation
and amortization) | 36,130        | 33,765         | 35,374                       | 55,170         | 160,439
Total costs and expenses                                     | 61,749        | 58,896         | 59,655                       | 81,583         | 261,883
Operating profit                                             | 23,577        | 46,808         | 54,257                       | 28,148         | 152,790
Total other income (expense), net                            | (4,973)       | (4,398)        | (5,170)                      | (4,735)        | (19,276)
Income before income tax expense (benefit)                   | 18,604        | 42,410         | 49,087                       | 23,413         | 133,514
Net income                                                   | 18,604        | 40,816         | 45,712                       | 22,848         | 127,980
Less: Net income attributable to
noncontrolling interests    | 18,604        | 35,266         | 33,711                       | 16,143         | 103,724
Net income attributable to GreenSky, Inc.                    | N/A           | 5,550          | 12,001                       | 6,705          | 24,256
Earnings per share of Class A common stock:                  |               |                |                              |                |
Basic                                                        | N/A           | $0.10          | $0.21                        | $0.12          | $0.43
Diluted(1)                                                   | N/A           | $0.09          | $0.20                        | $0.11          | $0.41


17. SEGMENT AND GEOGRAPHIC INFORMATION (Continued)
Sales to unaffiliated customers are as follows (in thousands):

                              |            | Fiscal     |
----------------------------- | ---------- | ---------- | ----------
SALES                         | 2019       | 2018       | 2017
United States                 | $339,585   | $309,495   | $297,699
Foreign countries:            |            |            |
South Korea                   | 313,461    | 652,313    | 628,369
China                         | 194,653    | 235,568    | 162,316
Japan                         | 138,028    | 180,223    | 154,985
Asia-Pacific, other           | 93,389     | 124,733    | 107,713
Germany                       | 145,285    | 166,926    | 145,835
Europe, other                 | 148,680    | 171,936    | 162,162
Rest of World                 | 57,559     | 61,379     | 64,232
Total foreign countries sales | 1,091,055  | 1,593,078  | 1,425,612
Total sales                   | $1,430,640 | $1,902,573 | $1,723,311


17. Earnings Per Share
Basic earnings per share is computed by dividing the net income attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by giving effect to all potential weighted-average dilutive shares. The dilutive effect of outstanding awards is reflected in diluted earnings per share by application of the treasury stock method.
A reconciliation of the calculation of basic and diluted loss per share is as follows:
* As adjusted to reflect the impact of the full retrospective adoption of IFRS 15. See Note 2 for further details.
For fiscal years ended June 30, 2019, 2018 and 2017 , 9.6 million, 12.8 million and 13.8 million, respectively of potentially anti-dilutive shares were excluded from the computation of net loss per share.

                                                          | Fiscal Year Ended June 30, |                                              |
--------------------------------------------------------- | -------------------------- | -------------------------------------------- | ------------
                                                          | 2019                       | 2018                                         | 2017
                                                          |                            | (U.S. $ in thousands, except per share data) |
                                                          |                            | *As Adjusted                                 | *As Adjusted
Numerator:                                                |                            |                                              |
Net loss attributable to ordinary shareholders            | $(637,621)                 | $(113,432)                                   | $(37,449)
Denominator:                                              |                            |                                              |
Weighted-average ordinary shares outstanding—basic        | 238,611                    | 231,184                                      | 222,224
Weighted-average ordinary shares outstanding—diluted      | 238,611                    | 231,184                                      | 222,224
Net loss per share attributable to ordinary shareholders: |                            |                                              |
Basic net loss per share                                  | $(2.67)                    | $(0.49)                                      | $(0.17)
Diluted net loss per share                                | $(2.67)                    | $(0.49)                                      | $(0.17)


Gross Profit and Gross Margin (exclusive of amortization of acquisition-related intangible assets described below)
Our gross profit by reportable segment was as follows (dollars in millions):
(1) Certain of the amounts may not total due to rounding of individual amounts. (2) Unallocated manufacturing costs are presented as a percentage of total revenue (includes expensing of the fair market value step-up of inventory of $19.6 million during 2019 and $1.0 million during 2018).
The decrease in gross profit of $265.1 million, or approximately 12%, was primarily due to the impact of the decrease in sales volume, higher fixed costs due to the expansion in our manufacturing capacity as well as the expensing of $19.6 million excess over book value of inventory, commonly referred to as the fair market value step-up, from the Quantenna acquisition.
Gross margin decreased to 35.8% during 2019 compared to 38.1% during 2018. The decrease was due to a competitive pricing environment resulting in a decline in average selling prices, higher demand for lower margin products, increased manufacturing costs due to a higher mix of external manufacturing and decreased demand for our products, as explained in the revenue section.

                                    | 2019      | As a % of Segment Revenue (1) | 2018      | As a % of Segment Revenue (1)
----------------------------------- | --------- | ----------------------------- | --------- | -----------------------------
PSG                                 | $976.0    | 35.0 %                        | $ 1,110.1 | 36.5 %
ASG                                 | 794.8     | 40.3 %                        | 878.3     | 42.4 %
ISG                                 | 275.4     | 36.4 %                        | 317.1     | 41.2 %
Gross profit for all segments       | $ 2,046.2 |                               | $ 2,305.5 |
Unallocated manufacturing costs (2) | (72.6)    | (1.3) %                       | (66.8)    | (1.1) %
Total gross profit                  | $ 1,973.6 | 35.8 %                        | $ 2,238.7 | 38.1 %


14. Share-based Compensation
We may grant non-qualified stock options, incentive stock options, SSARs, restricted shares, and restricted share units under our shareholder-approved 2016 Stock Incentive Plan (the 2016 Plan) for up to 2.0 million common shares, plus 957,575 common shares, the number of shares that were remaining for grant under the 2011 Stock Incentive Plan (the 2011 Plan) as of the effective date of the 2016 Plan, plus the number of shares remaining for grant under the 2011 Plan that are forfeited, settled in cash, canceled or expired.
The maximum aggregate number of restricted shares or restricted share units that may be granted under the 2016 Plan is 1.25 million. We may distribute authorized but unissued shares or treasury shares to satisfy share option and appreciation right exercises or restricted share and performance share awards.
For stock options and SSARs, the exercise price must be set at least equal to the closing market price of our common shares on the date of grant. For stock options and SSARs, the exercise price must be stock options and SSARs. The maximum term of stock option and SSAR awards is seven years from the date of grant. Stock option and SSARs awards vest over a period established by the Compensation Committee of the Board of Directors.
SSARs may be granted in conjunction with, or independently from, stock option grants. SSARs granted in connection with a stock option are exercisable only to the extent that the stock option to which it relates is exercisable and the SSARs terminate upon the termination or exercise of the related stock option grants.
Restricted shares and restricted share units, whether time-vested or performance-based, may be issued at no cost or at a purchase price that may be below their fair market value, but are subject to forfeiture and restrictions on their sale or other transfer. Performance-based awards may be conditioned upon the attainment of specified performance objectives and other conditions, restrictions, and contingencies.
Restricted shares and restricted share units have the right to receive dividends, or dividend equivalents in the case of restricted share units, if any, upon vesting, subject to the same forfeiture provisions that apply to the underlying awards. Subject to certain exceptions set forth in the 2016 Plan, for awards to employees, no performance-based restricted shares or restricted share units shall be based on a restriction period of less than one year, and any time-based restricted shares or restricted share units shall have a minimum restriction period of three years.
We record compensation expense related to stock options, stock-settled stock appreciation rights, restricted shares, and performance shares granted to certain employees and non-employee directors based on the fair value of the awards on the grant date. The fair value of restricted share and performance share awards is based on the closing price of our common shares on the grant date.
The fair value of stock option and stock-settled appreciation right awards is estimated on the grant date using the Black-Scholes-Merton option pricing model, which includes assumptions regarding the risk-free interest rate, dividend yield, life of the award, and the volatility of our common shares.
The following table summarizes the share-based compensation expense for options, SSARs, restricted and performance awards included in the Consolidated Statements of Operations for fiscal 2019, 2018 and 2017:

                                       |        | Year ended March 31, |
-------------------------------------- | ------ | -------------------- | ------
(In thousands)                         | 2019   | 2018                 | 2017
Product development                    | $1,478 | $1,306               | $1,545
Sales and marketing                    | 469    | 371                  | 360
General and administrative             | 2,429  | 3,011                | 522
Total share-based compensation expense | $4,376 | $4,688               | $2,427


Note 4 – Property, Plant and Equipment, net
Property, plant and equipment consisted of the following:

                                         |           | December 31,
---------------------------------------- | --------- | ------------
                                         | 2019      | 2018
Land                                     | $ 1,565   | $ 1,747
Buildings and improvements               | 17,332    | 17,520
Machinery and equipment                  | 30,670    | 29,692
Vehicles                                 | 778       | 937
Office equipment                         | 851       | 838
Construction in process                  | 362       | 546
                                         | 51,558    | 51,280
Less accumulated depreciation            | (29,284 ) | (26,707 )
Total property, plant and equipment, net | $ 22,274  | $ 24,573


Retirement-Related Plans
The following table provides the total pre-tax cost for all retirement-related plans. Total operating costs/(income) are included in the Consolidated Income Statement within the caption (e.g., Cost, SG&A, RD&E) relating to the job function of the plan participants.
Total pre-tax retirement-related plan cost decreased by $994 million compared to 2018, primarily driven by a decrease in recognized actuarial losses ($1,123 million), primarily due to the change in the amortization period in the U.S. Qualified Personal Pension Plan and higher expected return on plan assets ($143 million), partially offset by higher interest costs ($203 million).
As discussed in the “Operating (non-GAAP) Earnings” section, we characterize certain retirement-related costs as operating and others as non-operating. Utilizing this characterization, operating retirement-related costs in 2019 were $1,457 million, a decrease of $37 million compared to 2018. Non-operating costs of $615 million in 2019 decreased $957 million year to year, driven primarily by the same factors as above.

($ in millions)                               |         |         |
--------------------------------------------- | ------- | ------- | -------------------------
For the year ended December 31:               | 2019    | 2018    | Yr.-to-Yr. Percent Change
Retirement-related plans—cost                 |         |         |
Service cost                                  | $385    | $431    | (10.7)%
Multi-employer plans                          | 32      | 38      | (16.9)
Cost of defined contribution plans            | 1,040   | 1,024   | 1.5
Total operating costs/ (income)               | $1,457  | $1,494  | (2.5)%
Interest cost                                 | $2,929  | $2,726  | 7.4%
Expected return on plan assets                | (4,192) | (4,049) | 3.5
Recognized actuarial losses                   | 1,819   | 2,941   | (38.2)
Amortization of prior service costs/(credits) | (9)     | (73)    | (87.6)
Curtailments/settlements                      | 41      | 11      | 262.2
Other costs                                   | 28      | 16      | 76.2
Total non-operating costs/(income)            | $615    | $1,572  | (60.9)%
Total retirement-related plans—cost           | $2,072  | $3,066  | (32.4)%


Uncertain Tax Positions
As of fiscal year end 2019, we had total unrecognized income tax benefits of $542 million. If recognized in future years, $397 million of these currently unrecognized income tax benefits would impact income tax expense (benefit) and the effective tax rate. As of fiscal year end 2018, we had total unrecognized income tax benefits of $566 million. If recognized in future years, $467 million of these currently unrecognized income tax benefits would impact income tax expense (benefit) and the effective tax rate. The following table summarizes the activity related to unrecognized income tax benefits:
We record accrued interest and penalties related to uncertain tax positions as part of income tax expense (benefit). As of fiscal year end 2019 and 2018, we had $42 million and $60 million, respectively, of accrued interest and penalties related to uncertain tax positions on the Consolidated Balance Sheets, recorded primarily in income taxes. During fiscal 2019, 2018, and 2017, we recognized income tax benefits of $14 million, expense of $5 million, and benefits of $5 million, respectively, related to interest and penalties on the Consolidated Statements of Operations.
We file income tax returns on a unitary, consolidated, or stand-alone basis in multiple state and local jurisdictions, which generally have statutes of limitations ranging from 3 to 4 years. Various state and local income tax returns are currently in the process of examination or administrative appeal.
Our non-U.S. subsidiaries file income tax returns in the countries in which they have operations. Generally, these countries have statutes of limitations ranging from 3 to 10 years. Various non-U.S. subsidiary income tax returns are currently in the process of examination by taxing authorities.

                                                             |       | Fiscal        |
------------------------------------------------------------ | ----- | ------------- | -----
                                                             | 2019  | 2018          | 2017
                                                             |       | (in millions) |
Balance at beginning of fiscal year                          | $ 566 | $  501        | $ 490
Additions related to prior years tax positions               | 13    | 14            | 40
Reductions related to prior years tax positions              | (101) | (11)          | (9)
Additions related to current year tax positions              | 98    | 105           | 70
Settlements                                                  | (2)   | (7)           | (4)
Reductions due to lapse of applicable statute of limitations | (32)  | (36)          | (86)
Balance at end of fiscal year                                | $ 542 | $  566        | $ 501


Financial Statement Impact of Adoption on Previously Reported Results
We adopted Topic 606 using the modified retrospective method. The cumulative impact of applying the new guidance to all contracts with customers that were not completed as of April 1, 2018 was recorded as an adjustment to retained earnings as of the adoption date. As a result of applying the modified retrospective method to adopt the new standard, the following adjustments were made to noted accounts on the Consolidated Balance Sheet as of April 1, 2018:
The acceleration of revenue that was deferred under prior guidance as of the adoption date was primarily attributable to the requirement of Topic 606 to allocate the transaction price to the performance obligations in the contract on a relative basis using SSP rather than allocating under the residual method, which allocates the entire arrangement discount to the delivered performance obligations.
Due to the Company's full valuation allowance as of the adoption date, there is no tax impact associated with the adoption of Topic 606.
We made certain presentation changes to our Consolidated Balance Sheet on April 1, 2018 to comply with Topic 606. Prior to adoption of the new standard, we offset accounts receivable and contract liabilities (previously presented as deferred revenue on our Consolidated Balance Sheet) for unpaid deferred performance obligations included in contract liabilities.
Under the new standard, we record accounts receivable and related contract liabilities for non-cancelable contracts with customers when the right to consideration is unconditional. Upon adoption, the right to consideration in exchange for goods or services that have been transferred to a customer when that right is conditional on something other than the passage of time were reclassified from accounts receivable to contract assets.

(In thousands)                            | March 31, 2018 | Adjustment from Topic 606 | April 1, 2018
----------------------------------------- | -------------- | ------------------------- | -------------
Assets:                                   |                |                           |
Accounts receivable, net                  | 16,389         | 3,124                     | 19,513
Contract assets                           | —              | 4,583                     | 4,583
Prepaid expenses and other current assets | 5,593          | (496)                     | 5,097
Other non-current assets                  | 2,484          | 2,409                     | 4,893
Liabilities:                              |                |                           |
Contract liabilities                      | 26,820         | 7,006                     | 33,826
Shareholders' equity:                     |                |                           |
Retained earnings                         | 103,601        | 2,614                     | 106,215


OPERATING COSTS AND ADJUSTED EBITDA
Bell Wireline operating costs were essentially stable year over year, decreasing by 0.1% in 2019, compared to 2018, resulting from: • The favourable impact from the adoption of IFRS 16 in 2019 • Continued effective cost containment • Lower pension expenses reflecting reduced DB costs
These factors were partly offset by: • Higher cost of goods sold related to the growth in product sales • Increased costs from the acquisition of Axia • Greater payments to other carriers from increased sales of international wholesale long distance minutes
Bell Wireline adjusted EBITDA grew by 1.7% in 2019, compared to last year, reflecting the growth in revenues as operating expenses were relatively stable year over year. Adjusted EBITDA margin increased to 43.8% in 2019, compared to the 43.4% achieved last year, resulting from the favourable impact of the adoption of IFRS 16 in 2019 and the flow-through of the service revenue growth, offset in part by higher low-margin product sales in our total revenue base.

                       | 2019    | 2018    | $ CHANGE | % CHANGE
---------------------- | ------- | ------- | -------- | --------
Operating costs        | (6,942) | (6,946) | 4        | 0.1%
Adjusted EBITDA        | 5,414   | 5,321   | 93       | 1.7%
Adjusted EBITDA margin | 43.8%   | 43.4%   |          | 0.4 pts


The total available market is defined as the “TAM”, while the serviceable available market, the “SAM”, is defined as the market for products sold by us (which consists of the TAM and excludes major devices such as Microprocessors (“MPUs”), Dynamic random-access memories (“DRAMs”), optoelectronics devices, Flash Memories and the Wireless Application Specific market products such as Baseband and Application Processor).
Based on industry data published by WSTS, semiconductor industry revenues in 2019 decreased on a year-over-year basis by approximately 12% for the TAM, while it remains substantially flat for the SAM, to reach approximately $412 billion and $194 billion, respectively. In the fourth quarter of 2019, on a year-overyear basis, the TAM decreased by approximately 6%, while the SAM increased by approximately 2%. Sequentially, the TAM increased by approximately 1%, while the SAM decreased by approximately 3%.
Our 2019 financial performance, with net revenues of $9.56 billion, gross margin of 38.7% and operating margin of 12.6% is aligned with the full year expectations we provided in April 2019.
We closed 2019 with a solid fourth quarter sales and financial performance. In the fourth quarter, net revenues were up 4.0% year-over-year, gross margin reached 39.3%, and operating margin was 16.7%. On a sequential basis, fourth quarter revenues grew by 7.9%, with all product group contributing to the growth, and 290 basis points above the mid-point of our guidance. Our quarterly performance was above the SAM both sequentially and on a year-over-year basis.
Our effective average exchange rate was $1.14 for €1.00 for the full year 2019, as compared to $1.18 for €1.00 for the full year 2018. Our effective average exchange rate for the fourth quarter of 2019 was $1.12 for €1.00, compared to $1.14 for €1.00 for the third quarter of 2019 and $1.17 for €1.00 in the fourth quarter of 2018. For a more detailed discussion of our hedging arrangements and the impact of fluctuations in exchange rates, see “Impact of Changes in Exchange Rates”.
Our 2019 gross margin decreased 130 basis points to 38.7% from 40.0% in 2018 mainly due to normal price pressure and increased unsaturation charges, partially offset by improved manufacturing efficiencies, better product mix, and favorable currency effects, net of hedging.
Our fourth quarter 2019 gross margin was 39.3%, 110 basis points above the mid-point of our guidance, improving sequentially by 140 basis points, mainly driven by improved product mix and better manufacturing efficiencies. Our gross margin decreased 70 basis points year-over-year, mainly impacted by price pressure and unsaturation charges, partially offset by improved manufacturing efficiencies, better product mix and favorable currency effects, net of hedging.
Our operating expenses, comprised of SG&A and R&D expenses, amounted to $2,591 million in 2019, increasing by about 3.9% from $2,493 million in the prior year, mainly due to salary dynamic, increased spending in certain R&D programs and higher share-based compensation cost, partially offset by favorable currency effects, net of hedging. Combined R&D and SG&A expenses were $672 million for the fourth quarter of 2019, compared to $629 million and $630 million in the prior and year-ago quarters, respectively. The sequential increase was mainly due to seasonality and salary dynamic. The year-over-year increase of operating expenses was mainly due to salary dynamic and increased activity on certain R&D programs, and was partially offset by favorable currency effects, net of hedging.
Other income and expenses, net, was $103 million in 2019 compared to $53 million in 2018, mainly due to a higher level of R&D grants, mainly benefitting from the grants associated with the programs part of the European Commission IPCEI in Italy and in France. Fourth quarter other income and expenses, net, was $54 million compared to negative $2 million in the prior quarter and $16 million in the year-ago quarter, reflecting higher R&D grants in Italy associated with the IPCEI program.
In 2019, impairment and restructuring charges were $5 million compared to $21 million in 2018. Impairment and restructuring charges in the fourth quarter were $3 million compared to nil in the prior quarter and $2 million in the year-ago quarters.
Operating income in 2019 was $1,203 million, decreasing by $197 million compared to 2018, mainly driven by normal price pressure, increased unsaturation charges and higher R&D spending, partially offset by higher level of grants and favorable currency effects, net of hedging. Operating income in the fourth quarter grew on a sequential and year-over-year basis to $460 million compared to $336 million and $443 million in the prior quarter and year-ago quarters, respectively, mainly driven by higher revenues, improved product mix and a higher level of grants.

                                            | Year ended December 31,                 |        | Three Months Ended |                                                    |
------------------------------------------- | --------------------------------------- | ------ | ------------------ | -------------------------------------------------- | -----------------
                                            | 2019                                    | 2018   | December 31, 2019  | September 29, 2019                                 | December 31, 2018
                                            | (In millions, except per share amounts) |        |                    | (Unaudited, in millions, except per share amounts) |
Net revenues                                | $9,556                                  | $9,664 | $2,754             | $2,553                                             | $2,648
Gross profit                                | 3,696                                   | 3,861  | 1,081              | 967                                                | 1,059
Gross margin as percentage of net revenues. | 38.7%                                   | 40.0%  | 39.3%              | 37.9%                                              | 40.0%
Operating income                            | 1,203                                   | 1,400  | 460                | 336                                                | 443
Net income attributable to parent company   | 1,032                                   | 1,287  | 392                | 302                                                | 418
Diluted earnings per share                  | $1.14                                   | $1.41  | $0.43              | $0.34                                              | $0.46


Other non-current assets (in millions):
During fiscal 2019, we formed a joint venture with Lenovo (Beijing) Information Technology Ltd. (“Lenovo”) in China and, in February 2019, contributed assets to the newly formed entity, Lenovo NetApp Technology Limited (“LNTL”), in exchange for a non-controlling 49% equity interest. The group of assets we contributed and derecognized met the definition of a business and included cash, fixed assets, customer relationships and an allocation of goodwill, with an aggregate book value of $7 million. The fair value of our equity interest in LNTL was determined using discounted cash flow techniques to be $80 million, resulting in a non-cash gain of $73 million. We accounted for our ownership interest as an equity method investment and have presented it in Other non-current assets on our consolidated balance sheet as of April 26, 2019. LNTL will be integral to our sales channels strategy in China, acting as a distributor of our offerings to customers headquartered there, and involved in certain OEM sales to Lenovo. It will also endeavor to localize our products and services, and to develop new joint offerings for the China market by leveraging NetApp and Lenovo technologies.

                         | April 26, 2019 | April 26, 2018
------------------------ | -------------- | --------------
Deferred tax assets      | $201           | $229
Other assets             | 389            | 221
Other non-current assets | $ 590          | $ 450


Services Business
We offer services to customers and partners to help to maximize the performance of their investments in Oracle applications and infrastructure technologies. Services revenues are generally recognized as the services are performed. The cost of providing our services consists primarily of personnel related expenses, technology infrastructure expenditures, facilities expenses and external contractor expenses.
(1) Excludes stock-based compensation and certain expense allocations. Also excludes amortization of intangible assets and certain other GAAP-based expenses, which were not allocated to our operating segment results for purposes of reporting to and review by our CODMs, as further described under “Presentation of Operating Segments and Other Financial Information” above.
Excluding the effects of currency rate fluctuations, our total services revenues decreased in fiscal 2019 relative to fiscal 2018 primarily due to revenue declines in our education services and, to a lesser extent, our consulting services. During fiscal 2019, constant currency increases in our EMEA-based services revenues were offset by constant currency services revenue decreases in the Americas and the Asia Pacific regions.
In constant currency, total services expenses increased in fiscal 2019 compared to fiscal 2018 primarily due to an increase in employee related expenses and external contractor expenses associated with investments in our consulting services that support our cloud offerings. In constant currency, total margin and total margin as a percentage of total services revenues decreased during fiscal 2019 relative to fiscal 2018 due to decreased revenues and increased expenses for this business.

                         |        |        | Percent Change |
------------------------ | ------ | ------ | -------------- | ------
(Dollars in millions)    | 2019   | Actual | Constant       | 2018
Services Revenues:       |        |        |                |
Americas                 | $1,576 | -5%    | -3%            | $1,654
EMEA                     | 1,021  | -2%    | 2%             | 1,046
Asia Pacific             | 643    | -7%    | -4%            | 695
Total revenues           | 3,240  | -5%    | -2%            | 3,395
Total Expenses (1)       | 2,703  | -1%    | 2%             | 2,729
Total Margin             | $537   | -19%   | -18%           | $666
Total Margin %           | 17%    |        |                | 20%
% Revenues by Geography: |        |        |                |
Americas                 | 49%    |        |                | 49%
EMEA                     | 31%    |        |                | 31%
Asia Pacific             | 20%    |        |                | 20%


OUTSTANDING COMMON SHARES
1 Holders of our Class B Non-Voting Shares are entitled to receive notice of and to attend shareholder meetings; however, they are not entitled to vote at these meetings except as required by law or stipulated by stock exchanges. If an offer is made to purchase outstanding Class A Shares, there is no requirement under applicable law or our constating documents that an offer be made for the outstanding Class B Non-Voting Shares, and there is no other protection available to shareholders under our constating documents. If an offer is made to purchase both classes of shares, the offer for the Class A Shares may be made on different terms than the offer to the holders of Class B Non-Voting Shares.
As at February 29, 2020, 111,154,811 Class A Shares, 393,770,507
Class B Non-Voting Shares, and 3,145,274 options to purchase
Class B Non-Voting Shares were outstanding.

                                | As at December 31 |
------------------------------- | ----------------- | -----------
                                | 2019              | 2018
Common shares outstanding 1     |                   |
Class A Voting                  | 111,154,811       | 111,155,637
Class B Non-Voting              | 393,770,507       | 403,657,038
Total common shares             | 504,925,318       | 514,812,675
Options to purchase Class B     |                   |
Non-Voting Shares               |                   |
Outstanding options             | 3,154,795         | 2,719,612
Outstanding options exercisable | 993,645           | 1,059,590


GAAP Results of Operations
Key Performance Indicators* (in millions):
* excludes discontinued operations (See Note 5 of Notes to Consolidated Financial Statements).
** excludes special charges, net (See Note 5 of Notes to Consolidated Financial Statements).
1 Includes $20.0 million of income tax benefits primarily related to the reversal of valuation allowances against the Company's deferred tax assets and the
impacts of U.S. tax reform enacted in Q4 of 2017.

                                                         |        | Years Ended December 31, |          | Change       |
-------------------------------------------------------- | ------ | ------------------------ | -------- | ------------ | ------------
                                                         | 2019   | 2018                     | 2017     | 2019 vs 2018 | 2018 vs 2017
Net sales of continuing operations                       |        |                          |          |              |
Consolidated net sales                                   | $946.9 | $896.9                   | $791.8   | 5.6%         | 13.3%
Consolidated gross profits                               | $325.7 | $307.7                   | $273.2   | 5.8%         | 12.6%
Consolidated gross margin                                | 34.4%  | 34.3%                    | 34.5%    | 0.1%         | (0.2)%
Consolidated SD&A costs **                               | $260.4 | $245.2                   | $227.2   | 6.2%         | 7.9%
Consolidated SD&A costs ** as % of sales                 | 27.5%  | 27.3%                    | 28.7%    | 0.2%         | (1.4)%
Consolidated operating income                            | $66.1  | $61.7                    | $45.7    | 7.1%         | 35.0%
Consolidated operating margin from continuing operations | 7.0%   | 6.9%                     | 5.8%     | 0.1%         | 1.1%
Effective income tax rate                                | 24.4%  | 21.3%                    | (44.0)%  | 3.1%         | 65.3%
Net income from continuing operations                    | $50.0  | $49.5                    | 65.5 (1) | 1.0%         | (24.4)%
Net margin from continuing operations                    | 5.3%   | 5.5%                     | 8.3%     | (0.2)%       | (2.8)%
Income (loss) from discontinued operations, net of tax $ | $(1.5) | $175.2                   | $(25.1)  | (100.9)%     | 798.0%


Industry Overview
According to WSTS (an industry research firm), worldwide semiconductor industry sales were $412.1 billion in 2019, a decrease of approximately 12.1% from $468.8 billion in 2018. We participate in unit and revenue surveys and use data summarized by WSTS to evaluate overall semiconductor market trends and to track our progress against the market in the areas we provide semiconductor components. The following table sets forth total worldwide semiconductor industry revenue since 2015:
(1) Based on shipment information published by WSTS. We believe the data provided by WSTS is reliable, but we have not independently verified it. WSTS periodically revises its information. We assume no obligation to update such information.
As indicated above, worldwide semiconductor sales increased from $335.2 billion in 2015 to $412.1 billion in 2019. The decrease of 12.1% from 2018 to 2019 was the result of decreased demand for semiconductor products. Our revenue decreased by $360.4 million, or 6.1%, from 2018 to 2019.

Year Ended December 31, | Worldwide Semiconductor Industry Sales (1) | Percentage Change
----------------------- | ------------------------------------------ | -----------------
                        | (in billions)                              |
2019                    | $412.1                                     | (12.1)%
2018                    | $468.8                                     | 13.7%
2017                    | $412.2                                     | 21.6%
2016                    | $338.9                                     | 1.1%
2015                    | $335.2                                     | (0.2)%


Note 9 – Leases
We have operating leases for office space, automobiles and various other equipment in the U.S. and in certain international locations. We also reviewed other contracts, such as manufacturing agreements and service agreements, for potential embedded leases. We specifically reviewed these other contracts to determine whether we have the right to substantially all of the economic benefit from the use of any specified assets or the right to direct the use of any specified assets, either of which would indicate the existence of a lease.
As of December 31, 2019, our operating leases had remaining lease terms of one month to six years, some of which included options to extend the leases for up to nine years, and some of which included options to terminate the leases within three months. For those leases that are reasonably assured to be renewed, we have included the option to extend as part of our right of use asset and lease liability. Leases with an initial term of 12 months or less were not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term. Lease expense related to these short-term leases was $0.4 million for the twelve months ended December 31, 2019, and is included in cost of sales, selling, general and administrative expenses and research and development expenses in the Consolidated Statements of Income. Lease expense related to variable lease payments that do not depend on an index or rate, such as real estate taxes and insurance reimbursements, was $0.9 million for the twelve months ended December 31, 2019. For lease agreements entered into or reassessed after the adoption of Topic 842, we elected to not separate lease and nonlease components. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Supplemental balance sheet information related to operating leases is as follows:
(1) Reflects the adoption of the new lease accounting standard on January 1, 2019.

(In thousands)              | Classification                | December 31, 2019 | January 1, 2019 (1)
--------------------------- | ----------------------------- | ----------------- | -------------------
Assets                      |                               |                   |
Right of use lease assets   | Other Assets                  | $8,452            | $10,322
Total lease asset           |                               | $8,452            | $10,322
Liabilities                 |                               |                   |
Current lease liability     | Accrued expenses              | $2,676            | $2,948
Non-current lease liability | Other non-current liabilities | 5,818             | 7,374
Total lease liability       |                               | $8,494            | $10,322


Significant Suppliers
We purchase a significant amount of our inventory from certain manufacturers or suppliers including components, assemblies and electronic manufacturing parts. The inventory is purchased under standard supply agreements that outline the terms of the product delivery. The title and risk of loss of the product generally pass to us upon shipment from the manufacturers’ plant or warehouse. Some of these manufacturers accounted for more than 10% of our purchases and accounts payable as follows:
We are currently reliant upon these suppliers for products. Although we believe that we can obtain products from other sources, the loss of a significant supplier could have a material impact on our financial condition and results of operations as the products that are being purchased may not be available on the same terms from another supplier.

                     |      | Year Ended February 28, |
-------------------- | ---- | ----------------------- | ----
                     | 2019 | 2018                    | 2017
Inventory purchases: |      |                         |
Supplier A           | 31%  | 33%                     | 34%
Supplier B           | 20%  | 16%                     | 14%
Supplier C           | 6%   | 9%                      | 11%
                     |      | As of February 28,      |
2017                 | 2019 | 2018                    |
Accounts Payable:    |      |                         |
Supplier A           | 30%  | 40%                     | 33%
Supplier B           | 18%  | 16%                     | 18%


Net profit/(loss) after tax was $(9.8) million (2018: $6.6 million). Non-statutory underlying earnings before interest, tax, depreciation and amortisation (EBITDA) improved from $62.6 million in FY18 to $85.1 million in FY19.
Reconciliation of statutory profit to EBITDA and underlying EBITDA is as follows:

                                                       | 30 June 2019 | 30 June 2018 | Change
------------------------------------------------------ | ------------ | ------------ | ------
                                                       | $’000        | $’000        | %
Net profit/(loss) after tax                            | (9,819)      | 6,639        | (248%)
Add: finance costs                                     | 54,897       | 25,803       | 113%
Less: interest income                                  | (8,220)      | (5,778)      | 42%
Add/(less): income tax expense/(benefit)               | (6,254)      | 4,252        | (247%)
Add: depreciation and amortisation                     | 48,442       | 33,038       | 47%
EBITDA                                                 | 79,046       | 63,954       | 24%
Less: gain on extinguishment of B1 lease               | (1,068)      | -            |
Less: gain on extinguishment of APDC leases            | (1,291)      | -            |
Less: distribution income                              | (1,344)      | (3,191)      | (58%)
Add: APDC transaction costs                            | 5,459        | 1,812        | 201%
Add: landholder duty on acquisition of APDC properties | 3,498        | -            |
Add: Singapore and Japan costs                         | 823          | -            |
Underlying EBITDA                                      | 85,123       | 62,575       | 36%


Key Balance Sheet Information
Total assets increased $1,234.7 million as at December 31, 2019 compared to December 31, 2018, principally due to a $485.5 million increase in cash, cash equivalents and marketable securities mainly as a result of the public offering in September 2019, which resulted in net proceeds of $688.0 million. Business acquisitions during the year, largely due to the acquisition of 6RS, further impacted total assets through an increase in goodwill of $273.8 million, a $141.2 million increase in intangible assets and a resulting decrease in cash due to the consideration paid. The remainder of the increase is due to: the adoption of the new lease accounting standard, further discussed in the "Critical Accounting Policies and Estimates" section below, which resulted in the addition of right-of-use assets totaling $134.8 million as at December 31, 2019; a $58.3 million increase in merchant cash advances and loans receivable; a $49.8 million increase in property and equipment, largely related to leaseholds for our offices; a $49.2 million increase in trade and other receivables largely due to an increase in indirect taxes receivable, unbilled revenue related to subscription fees for Plus merchants, transaction fees and shipping charges; and a $19.4 million increase in deferred tax assets. Total liabilities increased by $309.7 million, principally as a result of the adoption of the new leasing standard, which resulted in $126.8 million of additional lease liabilities related to obtaining right-of-use assets. Accounts payable and accrued liabilities increased by $84.2 million, which was due to an increase in indirect taxes payable, payroll liabilities, and payment processing and interchange fees, partly offset by a decrease in foreign exchange forward contract liabilities. The increase was also due to income taxes payable of $69.4 million driven largely by the one-time capital gain recognized in the period. Deferred tax liabilities increased by $7.6 million, due to the acquisition of 6RS. The growth in sales of our subscription solutions offering, along with the acquisition of 6RS, resulted in an increase of deferred revenue of $21.6 million.

                                                 | December 31, 2019 | December 31, 2018
------------------------------------------------ | ----------------- | -----------------
                                                 | (in thousands)    |
Cash, cash equivalents and marketable securities | $2,455,194        | $1,969,670
Total assets                                     | 3,489,479         | 2,254,785
Total liabilities                                | 473,745           | 164,017
Total non-current liabilities                    | 157,363           | 25,329


Non-GAAP Results
Management uses non-GAAP operating income and non-GAAP EPS to evaluate business performance without the impacts of certain non-cash charges and other charges which are not part of our usual operations. We use these non- GAAP measures to assess performance against business objectives, make business decisions, including developing budgets and forecasting future periods. In addition, management’s incentive plans include these non-GAAP measures as criteria for achievements. These non-GAAP measures are not in accordance with U.S. GAAP and may differ from non- GAAP methods of accounting and reporting used by other companies. However, we believe these non-GAAP measures provide additional information that enables readers to evaluate our business from the perspective of management. The presentation of this additional information should not be considered a substitute for results prepared in accordance with U.S. GAAP.
The non-GAAP results presented below exclude the impact of non-cash related charges, such as stock-based compensation and amortization of intangible assets. In addition, they exclude discontinued operations and other nonrecurring items such as acquisition-related costs and restructuring expenses, as they are not indicative of future performance. The tax effect of our non-GAAP adjustments represents the anticipated annual tax rate applied to each non-GAAP adjustment after consideration of their respective book and tax treatments and effect of adoption of the Tax Act.

Reconciliation of Non-GAAP measure - operating expenses and operating income from continuing operations, excluding certain items (in thousands) | Years Ended December 31, |
----------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | ----------
                                                                                | 2019                     | 2018
Gross profit from continuing operations, as reported                                                                                | $ 315,652                | $365,607
Adjustments to gross profit:                                                                                |                          |
Stock-based compensation                                                                                | 525                      | 742
Facility expansion and relocation costs                                                                                | 3,891                    | 1,328
Acquisition-related costs                                                                                | 8,290                    | 569
Non-GAAP gross profit                                                                                | 328,358                  | 368,246
Non-GAAP gross margin                                                                                | 41.6%                    | 51.2%
Operating expenses from continuing operations, as reported                                                                                | 261,264                  | 194,054
Adjustments:                                                                                |                          |
Amortization of intangible assets                                                                                | (12,168)                 | (5,774)
Stock-based compensation                                                                                | (6,803)                  | (8,961)
Acquisition-related costs                                                                                | (12,002)                 | (1,726)
Facility expansion and relocation costs                                                                                | (948)                    | (518)
Restructuring charges                                                                                | (5,038)                  | (4,239)
Non-GAAP operating expenses                                                                                | 224,305                  | 172,836
Non-GAAP operating income                                                                                | $  104,053               | $  195,410


15. Revenue from Contracts with Customers
Impact of Adopting Topic 606
The effects of the adoption on the Company's Consolidated Financial Statements for the fiscal year ended September 28, 2019 was as follows (in thousands):

                                     | September 28, 2019
As Reported | Adjustments due to Topic 606 | September 28, 2019
As Adjusted - Without
Adoption of Topic 606
------------------------------------ | ------------------------------ | ---------------------------- | --------------------------------------------------------------
ASSETS                               |                                |                              |
   Contract assets                   | $90,841                        | $90,841                      | $—
Inventories                          | 700,938                        | (81,895)                     | 782,833
LIABILITIES AND SHAREHOLDERS' EQUITY |                                |                              |
Other accrued liabilities            | $106,461                       | $(375)                       | $106,836
Retained earnings                    | 1,178,677                      | 9,321                        | 1,169,356


Quarterly Results (Unaudited)
The following table sets forth certain unaudited quarterly financial information for the 2019 and 2018 fiscal years. In the opinion of management, this information has been presented on the same basis as the audited consolidated financial statements appearing elsewhere, and all necessary adjustments (consisting primarily of normal recurring accruals) have been included in the amounts stated below to present fairly the unaudited quarterly results when read in conjunction with the audited consolidated financial statements and related notes thereto. The operating results for any quarter are not necessarily indicative of results for any future period.
(1) Includes acquisition and integration charges related to our strategic collaboration with JJMD of $17.6 million, $13.4 million, $12.8 million, $8.9 million and $8.1 million for the three months ended August 31, 2019, May 31, 2019, February 28, 2019, November 30, 2018 and August 31, 2018, respectively.
(2) Includes ($13.3 million), $111.4 million and $30.9 million of income tax (benefit) expense for the three months ended November 30, 2018, August 31, 2018 and February 28, 2018, respectively, related to the Tax Act.
(3) Includes a restructuring of securities loss of $29.6 million for the three months ended August 31, 2019.
(4) Includes a distressed customer charge of $6.2 million, $18.0 million and $14.7 million during the three months ended August 31, 2019, August 31, 2018 and February 28, 2018, respectively.

Fiscal Year 2019                                                  |                |             |                    |
----------------------------------------------------------------- | -------------- | ----------- | ------------------ | ----------------
                                                                  |                |             | Three Months Ended |
(in thousands, except for per share data)                         | August 31,2019 | May 31,2019 | February 28,2019   | November 30,2018
Net revenue                                                       | $6,573,453     | $6,135,602  | $6,066,990         | $6,506,275
Gross profit(4)                                                   | 495,078        | 443,799     | 454,874            | 519,650
Operating income(1)(4)                                            | 189,745        | 140,918     | 153,983            | 216,710
Net income(2)(3)(4)                                               | 53,761         | 44,032      | 67,607             | 124,074
Net income attributable to Jabil Inc.(2)(3)(4)                    | $52,675        | $43,482     | $67,354            | $123,600
Earnings per share attributable to the stockholders of Jabil Inc. |                |             |                    |
Basic                                                             | $0.34          | $0.28       | $0.44              | $0.77
Diluted                                                           | $0.34          | $0.28       | $0.43              | $0.76


In 2019 and 2018, we had pre-tax losses of $19,573 and $25,403 respectively, which are available for carry forward to offset future taxable income. We made determinations to provide full valuation allowances for our net deferred tax assets at the end of 2019 and 2018, including NOL carryforwards generated during the years, based on our evaluation of positive and negative evidence, including our history of operating losses and the uncertainty of generating future taxable income that would enable us to realize our deferred tax assets.
Deferred tax assets (liabilities) consist of the following:
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that a portion of the net deferred assets will not be realized. The ultimate realization of the net deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based on the available objective evidence, management believes it is more likely than not that the net deferred tax assets at December 31, 2019 will not be realizable. Accordingly, management has maintained a full valuation allowance against its net deferred tax assets at December 31, 2019. The net change in the total valuation allowance for the 12 months ended December 31, 2019 was an increase of $1,816.

                                                   | As of             | As of
-------------------------------------------------- | ----------------- | -----------------
                                                   | December 31, 2019 | December 31, 2018
Deferred tax assets:                               |                   |
Reserves and accruals                              | $62               | $45
Research and development credits and other credits | 1,730             | 1,635
Net operating loss carry forward                   | 27,907            | 25,733
Stock based compensation                           | 8,402             | 8,857
Other                                              | 11                | 26
Total deferred tax assets                          | 38,112            | 36,296
Valuation allowance                                | (38,112)          | (36,296)
Deferred tax assets after valuation allowance      | —                 | —
Total deferred tax liability                       | —                 | —
Net deferred tax assets (liabilities)              | $—                | $—