ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated statements of operations data for the years ended December 31, 2019, 2018 and 2017 and the selected consolidated balance sheet data as of December 31, 2019 and 2018 are derived from our audited consolidated financial statements included elsewhere in this Annual Report. The selected consolidated statements of operations data for the years ended December 31, 2016 and 2015 and the selected consolidated balance sheet data as of December 31, 2017, 2016 and 2015 are derived from our audited consolidated financial statements not included in this Annual Report. Our historical results are not necessarily indicative of the results to be expected in the future. The selected financial data should be read together with Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and in conjunction with our consolidated financial statements, related notes, and other financial information included elsewhere in this Annual Report. The following tables set forth our selected consolidated financial and other data for the years ended and as of December 31, 2019, 2018, 2017, 2016 and 2015 (in thousands, except share and per share data).
Information about prior period acquisitions that may affect the comparability of the selected financial information presented below is included in Item 1. Business. Information about the $28.0 million expense recorded in general and administrative expense in 2018, which relates to the agreement reached to settle the legal matter alleging violations of the Telephone Consumer Protection Act, or TCPA, and may affect the comparability of the selected financial information presented below, is disclosed in Item 3. “Legal Proceedings.” Information about the $1.7 million of interest recorded within interest income and the $6.9 million of gain recorded within other income, net, in 2019, which relates to promissory note proceeds received from one of our hardware suppliers and proceeds from an acquired promissory note, and may affect the comparability of the selected financial information presented below, is disclosed in Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations."
Certain previously reported amounts in the consolidated statements of operations for the years ended December 31, 2018, 2017, 2016 and 2015 have been reclassified to conform to our current presentation to reflect interest income as a separate line item, which was previously included in other income, net.
(3) We measure our SaaS and license revenue renewal rate on a trailing 12-month basis by dividing (a) the total SaaS and license revenue recognized during the trailing 12-month period from subscribers on our Alarm.com platform who were subscribers on the first day of the period, by (b) total SaaS and license revenue we would have recognized during the period from those same subscribers assuming no terminations, or service level upgrades or downgrades. The SaaS and license revenue renewal rate represents both residential and commercial properties. Our SaaS and license revenue renewal rate is expressed as an annualized percentage. Our service provider partners, who resell our services to our subscribers, have indicated that they typically have three to five-year service contracts with our subscribers. Our SaaS and license revenue renewal rate is calculated across our entire subscriber base on the Alarm.com platform, including subscribers whose contract with their service provider reached the end of its contractual term during the measurement period, as well as subscribers whose contract with their service provider has not reached the end of its contractual term during the measurement period, and is not intended to estimate the rate at which our subscribers renew their contracts with our service provider partners. We believe that our SaaS and license revenue renewal rate allows us to measure our ability to retain and grow our SaaS and license revenue and serves as an indicator of the lifetime value of our subscriber base.
(4) We define Adjusted EBITDA as our net income before interest expense, interest income, other income, net, provision for / (benefit from) income taxes, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense and legal costs and settlement fees incurred in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation. We do not consider these items to be indicative of our core operating performance. The non-cash items include amortization and depreciation expense and stock-based compensation expense. Included in 2015 stock-based compensation expense is $0.8 million related to the repurchase of an employee's stock awards. We do not adjust for ordinary course legal expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements. Adjusted EBITDA is not a measure calculated in accordance with accounting principles generally accepted in the United States, or GAAP. See the table below for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

                                         |          |         | Year Ended December 31, |         |
---------------------------------------- | -------- | ------- | ----------------------- | ------- | -------
                                         | 2019     | 2018    | 2017                    | 2016    | 2015
Other Financial and Operating Data:      |          |         |                         |         |
SaaS and license revenue renewal rate(3) | 94%      | 93%     | 93%                     | 94%     | 93%
Adjusted EBITDA(4)                       | $108,307 | $93,081 | $71,628                 | $49,034 | $34,370


SHARE-BASED PAYMENTS (continued)
(a) Share option schemes (continued) (iii) Fair value of option
The directors of the Company have used the Binomial Model to determine the fair value of the options as at the respective grant dates, which is to be expensed over the relevant vesting period. The weighted average fair value of options granted during the year ended 31 December 2019 was HKD123.82 per share (equivalent to approximately RMB106.09 per share) (2018: HKD127.43 per share (equivalent to approximately RMB103.46 per share)).
Other than the exercise price mentioned above, significant judgment on parameters, such as risk free rate, dividend yield and expected volatility, are required to be made by the directors in applying the Binomial Model, which are summarised as below.
Note: The expected volatility, measured as the standard deviation of expected share price returns, is determined based on the average daily trading price volatility of the shares of the Company.

                                               | 2019        | 2018
---------------------------------------------- | ----------- | -----------
Weighted average share price at the grant date | HKD373.33   | HKD405.00
Risk free rate                                 | 1.08%~2.07% | 1.77%~2.27%
Dividend yield                                 | 0.23%       | 0.24%~0.25%
Expected volatility (Note)                     | 30.00%      | 30.00%


Note 17 – Earnings (Loss) per Share
A summary of the calculation of basic and diluted earnings (loss) per share for the years ended December 31, 2019, 2018 and 2017 is as follows:
For each of the years ended December 31, 2019 and 2018, 5.7 million and 2.5 million, respectively, shares of unvested stock options, PSUs, RSUs and restricted stock were excluded from the calculation of diluted EPS due to their anti-dilutive effect.
For the year ended December 31, 2017, 3.2 million stock options were outstanding but were not included in the computation of diluted earnings (loss) per share because the options’ exercise prices were greater than the average market price of the common shares, therefore making them anti-dilutive under the treasury stock method.

(In thousands, except for per share amounts) | 2019      | 2018      | 2017
-------------------------------------------- | --------- | --------- | -------
Numerator                                    |           |           |
Net Income (Loss)                            | $(52,982) | $(19,342) | $23,840
Denominator                                  |           |           |
Weighted average number of shares—basic      | 47,836    | 47,880    | 48,153
Effect of dilutive securities:               |           |           |
Stock options                                | —         | —         | 406
Restricted stock and restricted stock units  | —         | —         | 140
Weighted average number of shares—diluted    | 47,836    | 47,880    | 48,699
Earnings (loss) per share—basic              | $(1.11)   | $(0.40)   | $0.50
Earnings (loss) per share—diluted            | $(1.11)   | $(0.40)   | $0.49


Summarized financial information concerning our segments is shown in the tables below (in millions):
(1) Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.
(2) Operating expenses for Corporate and Other includes equity-based compensation, including certain related payroll taxes, of $51.7 million, $51.4 million and $19.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.
(4) Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.
(5) Transition and integration costs primarily consists of costs associated with executive transition, transition-related costs as we transferred certain corporate functions from FNF and acquisitions.
(6) Receivables from related parties are included in Corporate and Other.

                                 |                    |                    | Year ended December 31, 2018 |     |
-------------------------------- | ------------------ | ------------------ | ---------------------------- | --- | --------
                                 | Software Solutions | Data and Analytics | Corporate and Other          |     | Total
Revenues                         | $962.0             | $154.5             | $(2.5)                       | (1) | $1,114.0
Expenses:                        |                    |                    |                              |     |
Operating expenses               | 394.8              | 115.0              | 115.6                        | (2) | 625.4
Transition and integration costs | —                  | —                  | 6.6                          | (5) | 6.6
EBITDA                           | 567.2              | 39.5               | (124.7)                      |     | 482.0
Depreciation and amortization    | 112.9              | 14.1               | 90.0                         | (4) | 217.0
Operating income (loss)          | 454.3              | 25.4               | (214.7)                      |     | 265.0
Interest expense, net            |                    |                    |                              |     | (51.7)
Other expense, net               |                    |                    |                              |     | (7.1)
Earnings before income taxes     |                    |                    |                              |     | 206.2
Income tax expense               |                    |                    |                              |     | 37.7
Net earnings                     |                    |                    |                              |     | $168.5
Balance sheet data:              |                    |                    |                              |     |
Total assets                     | $3,227.8           | $310.2             | $115.4                       | (6) | $3,653.4
Goodwill                         | $2,157.6           | $172.1             | $—                           |     | $2,329.7


12. Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss, net of taxes, consisted of the following:
Reclassifications related to gains and losses on available-for-sale debt securities are included in "Interest and other expense, net". Refer to Note 3, "Financial Instruments" for the amount and location of reclassifications related to derivative instruments. Reclassifications of the defined benefit pension components of net periodic benefit cost are included in "Interest and other expense, net". Refer to Note 15, "Retirement Benefit Plans."

                                                                                | Net Unrealized Gains (Losses) on Derivative Instruments | Net Unrealized Gains (Losses) on Available for Sale Securities | Defined Benefit Pension Components | Foreign Currency Translation Adjustments | Total
------------------------------------------------------------------------------- | ------------------------------------------------------- | -------------------------------------------------------------- | ---------------------------------- | ---------------------------------------- | --------
Balances, January 31, 2017                                                      | $14.6                                                   | $1.5                                                           | $(33.8)                            | $(160.8)                                 | $(178.5)
Other comprehensive (loss) income before reclassifications                      | (24.5)                                                  | (0.6)                                                          | 4.3                                | 86.3                                     | 65.5
Pre-tax losses (gains) reclassified from accumulated other comprehensive income | (9.9)                                                   | 0.3                                                            | 0.9                                | 0.1                                      | (8.6)
Tax effects                                                                     | 3.2                                                     | 0.1                                                            | (0.7)                              | (4.8)                                    | (2.2)
Net current period other comprehensive (loss) income                            | (31.2)                                                  | (0.2)                                                          | 4.5                                | 81.6                                     | 54.7
Balances, January 31, 2018                                                      | (16.6)                                                  | 1.3                                                            | (29.3)                             | (79.2)                                   | (123.8)
Other comprehensive income (loss) before reclassifications                      | 20.6                                                    | 0.7                                                            | 14.7                               | (58.3)                                   | (22.3)
Pre-tax gains reclassified from accumulated other comprehensive income          | 12.1                                                    | 1.3                                                            | 0.3                                | —                                        | 13.7
Tax effects                                                                     | (1.1)                                                   | —                                                              | (2.0)                              | 0.5                                      | (2.6)
Net current period other comprehensive income (loss)                            | 31.6                                                    | 2.0                                                            | 13.0                               | (57.8)                                   | (11.2)
Balances, January 31, 2019                                                      | $15.0                                                   | $3.3                                                           | $(16.3)                            | $(137.0)                                 | $(135.0)


Effect of ASC 606 as of December 31, 2018 and for the Year Ended December 31, 2018
The following table summarizes the effect of adopting ASC 606 on our Consolidated Balance Sheet (in millions):

                                          | As reported December 31, 2018 | Effect of ASC 606 adoption | Amounts without adoption of ASC 606 December 31, 2018
----------------------------------------- | ----------------------------- | -------------------------- | -----------------------------------------------------
Trade receivables, net                    | $172.3                        | $6.9                       | $179.2
Prepaid expenses and other current assets | 67.3                          | (14.4)                     | 52.9
Receivables from related parties          | 6.2                           | 4.8                        | 11.0
Computer software, net                    | 405.6                         | (3.7)                      | 401.9
Deferred contract costs, net              | 161.3                         | (17.2)                     | 144.1
Other non-current assets                  | 125.6                         | (7.0)                      | 118.6
Total assets                              | 3,653.4                       | (30.6)                     | 3,622.8
Deferred revenues (current)               | 52.9                          | 4.1                        | 57.0
Deferred revenues (non-current)           | 106.8                         | (4.3)                      | 102.5
Deferred income taxes                     | 220.9                         | (8.1)                      | 212.8
Total liabilities                         | 1,866.9                       | (8.3)                      | 1,858.6
Retained earnings                         | 381.1                         | (22.3)                     | 358.8
Total equity                              | 1,786.5                       | (22.3)                     | 1,764.2
Total liabilities and equity              | 3,653.4                       | (30.6)                     | 3,622.8


Original Equipment Manufacturers (“OEM”) are the end-customers to which we provide direct marketing application engineering support, while Distribution customers refers to the distributors and representatives that we engage to distribute our products around the world.
By market channel, our fourth quarter revenues in Distribution amounted to 28% of our total revenues, flat compared to the previous quarter and decreasing on a year-over-year basis.

             |                   | Three Months Ended |
------------ | ----------------- | ------------------ | -----------------
             | December 31, 2019 | September 29, 2019 | December 31, 2018
             |                   | (Unaudited, in %)  |
OEM          | 72%               | 72%                | 69%
Distribution | 28                | 28                 | 31
Total        | 100%              | 100%               | 100%


Earnings per share ("EPS") is calculated using the two-class method, which allocates earnings among common stock and participating securities to calculate EPS when an entity's capital structure includes either two or more classes of common stock or common stock and participating securities. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities.
As such, shares of any unvested restricted stock of the Company are considered participating securities. The dilutive effect of options and their equivalents (including non-vested stock issued under stock-based compensation plans), is computed using the "treasury" method as this measurement was determined to be more dilutive between the two available methods in each period.
The Company had no dilutive common share equivalents during the year ended December 31, 2019, due to the results of operations being a loss from continuing operations, net of tax. The following potential weighted common shares were excluded from diluted EPS for the year ended December 31, 2018 as the shares were antidilutive: 2,168,454 for outstanding warrants to purchase the Company's stock, 353,960 for unvested restricted stock awards, and 4,919,760 for convertible preferred stock.
The following table presents a reconciliation of net income (loss) used in basic and diluted EPS calculations (in millions, except per share amounts):

                                                                                | Years Ended December 31, | Years Ended December 31,
------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------ | ------------------------
                                                                                | 2019                     | 2018
Net (loss) income attributable to common stock and participating preferred stockholders                                                          | $(31.5)                  | $155.6
Earnings allocable to common shares:                                                                                |                          |
Numerator for basic and diluted earnings per share                                                                                |                          |
Participating shares at end of period:                                                                                |                          |
Weighted-average common stock outstanding                                                                                | 44.8                     | 44.3
Unvested restricted stock                                                                                | 0.6                      | 0.4
Preferred stock (as-converted basis)                                                                                | 2.1                      | 4.9
Total                                                                                | 47.5                     | 49.6
Percentage of loss allocated to:                                                                                |                          |
Common stock                                                                                | 94.3 %                   | 89.3 %
Unvested restricted stock                                                                                | 1.3 %                    | 0.8 %
Preferred stock                                                                                | 4.4 %                    | 9.9 %
Net (loss) income attributable to common stock, basic                                                                                | $(29.7)                  | $139.0
Distributed and Undistributed earnings to Common Shareholders:                                                                                |                          |
Effect of assumed shares under treasury stock method for stock options and restricted shares and if-converted method for convertible instruments | —                        | (3.3)
Income from the dilutive impact of subsidiary securities                                                                                | —                        | —
Net (loss) income attributable to common stock, diluted                                                                                | $ (29.7)                 | $ 135.7
Denominator for basic and dilutive earnings per share                                                                                |                          |
Weighted average common shares outstanding - basic                                                                                | 44.8                     | 44.3
Effect of assumed shares under treasury stock method for stock options and restricted shares and if-converted method for convertible instruments | —                        | 2.5
Weighted average common shares outstanding - diluted                                                                                | 44.8                     | 46.8
Net (loss) income attributable to participating security holders - Basic                                                                         | $ (0.66)                 | $ 3.14
Net (loss) income attributable to participating security holders - Diluted                                                                       | $ (0.66)                 | $ 2.90


In fiscal 2019, 2018, and 2017, the Company recorded charges of $5.1 million, $3.4 million, and $1.2 million, respectively, reflecting the year-end write-off of actuarial losses in excess of 10% of our pension liability.
The Company recorded an expense of $0.3 million (primarily within restructuring activities), $0.6 million (primarily within restructuring activities), and $4.0 million ($2.1 million was recorded in discontinued operations and $1.9 million was recorded in restructuring activities) during fiscal 2019, 2018, and 2017, respectively, related to our expected incurrence of certain multi-employer plan withdrawal costs.
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) were:
Notes to Consolidated Financial Statements - (Continued) Fiscal Years Ended May 26, 2019, May 27, 2018, and May 28, 2017 (columnar dollars in millions except per share amounts)

                                               | Pension Benefits |        | Other Benefits |
---------------------------------------------- | ---------------- | ------ | -------------- | -----
                                               | 2019             | 2018   | 2019           | 2018
Net actuarial gain (loss)                      | $(72.1)          | $120.0 | $25.1          | $16.8
Amendments                                     | (1.4)            | (0.6)  | 0.8            | 17.2
Amortization of prior service cost (benefit) . | 3.1              | 2.9    | (2.2)          | (3.4)
Settlement and curtailment loss (gain) .       | —                | 2.0    | (1.6)          | —
Recognized net actuarial loss (gain)           | 5.1              | 3.4    | (1.4)          | —
Net amount recognized .                        | $(65.3)          | $127.7 | $20.7          | $30.6


GasLog Ltd. and its Subsidiaries
Notes to the consolidated financial statements (Continued)
For the years ended December 31, 2017, 2018 and 2019
(All amounts expressed in thousands of U.S. Dollars, except share and per share data)
8. Cash and Cash Equivalents
Cash and cash equivalents consist of the following:
Ship management client accounts represent amounts provided by the clients of GasLog LNG Services Ltd. in order to enable the Group to cover obligations of vessels under management. A compensating balance is held as a current liability.

                                                                  | As of December 31, |
----------------------------------------------------------------- | ------------------ | -------
                                                                  | 2018               | 2019
Current accounts                                                  | 220,089            | 113,655
Time deposits (with original maturities of three months or less). | 121,925            | 149,491
Ship management client accounts                                   | 580                | 601
Total                                                             | 342,594            | 263,747


Return on invested capital
Return on invested capital (ROIC) is a measure of the return generated on capital invested by the Group. The measure provides a guide rail for longterm value creation and encourages compounding reinvestment within the business and discipline around acquisitions with low returns and long payback. ROIC is calculated as underlying operating profit after tax divided by the annual average of: goodwill, intangible assets, property, plant and equipment, net assets held for sale, inventories, trade and other current receivables, and trade payables and other current liabilities.
(a) Restated following adoption of IFRS 16. See note 1 and note 24 for further details.
(b) See reconciliation of operating profit to underlying operating profit on page 30.
(c) Tax on underlying operating profit is calculated as underlying operating profit before tax multiplied by underlying effective tax rate of 25.5% (2018: 25.7%) which is shown on page 30.

                                             | € million 2019 | € million 2018
-------------------------------------------- | -------------- | --------------
                                             |                | (Restated)(a)
Underlying operating profit before tax(b)    | 9,947          | 9,463
Tax on underlying operating profit(c)        | (2,536)        | (2,432)
Operating profit after tax                   | 7,411          | 7,031
Goodwill                                     | 18,067         | 17,341
Intangible assets                            | 12,962         | 12,152
Property, plant and equipment                | 12,062         | 12,088
Net assets held for sale                     | 81             | 108
Inventories                                  | 4,164          | 4,301
Trade and other current receivables          | 6,695          | 6,482
Trade payables and other current liabilities | (14,768)       | (14,457)
Period-end invested capital                  | 39,263         | 38,015
Average invested capital for the period      | 38,639         | 38,749
Return on average invested capital           | 19.2%          | 18.1%


(c) Summary of Share-Based Compensation Expense
Share-based compensation expense consists primarily of expenses for stock options, stock purchase rights, restricted stock, and RSUs granted to employees. The following table summarizes share-based compensation expense (in millions):
As of July 27, 2019, the total compensation cost related to unvested share-based awards not yet recognized was $3.3 billion, which is expected to be recognized over approximately 2.8 years on a weighted-average basis.

Years Ended                                            | July 27, 2019 | July 28, 2018 | July 29, 2017
------------------------------------------------------ | ------------- | ------------- | -------------
Cost of sales—product                                  | $90           | $94           | $85
Cost of sales—service                                  | 130           | 133           | 134
Share-based compensation expense in cost of sales .    | 220           | 227           | 219
Research and development .                             | 540           | 538           | 529
Sales and marketing                                    | 519           | 555           | 542
General and administrative                             | 250           | 246           | 236
Restructuring and other charges                        | 62            | 33            | 3
Share-based compensation expense in operating expenses | 1,371         | 1,372         | 1,310
Total share-based compensation expense                 | $1,591        | $1,599        | $1,529
Income tax benefit for share-based compensation .      | $542          | $558          | $451


Segment Results of Operations In the Company's Consolidated Financial Statements, other operating (income) expense includes (i) (gain) loss on sale or disposal of assets, (ii) lease termination costs, (iii) asset impairment expense, (iv) accretion of asset retirement obligations, and (v) FCC reimbursements. Each table summarizes the results of operations of our operating segments and compares the amount of the change between the periods presented (in millions).
Net revenue: Net revenue from our Construction segment for the year ended December 31, 2019 decreased $3.1 million to $713.3 million from $716.4 million for the year ended December 31, 2018. The decrease was primarily driven by lower revenues from our structural steel fabrication and erection business, which had increased activity in the comparable period on certain large commercial construction projects that are now at or near completion in the current period. This was largely offset by DBMG’s acquisition of GrayWolf, which was acquired late in the fourth quarter of 2018, and from higher revenues from our construction modeling and detailing business as a result of an increase in project work.
Cost of revenue: Cost of revenue from our Construction segment for the year ended December 31, 2019 decreased $28.1 million to $572.3 million from $600.4 million for the year ended December 31, 2018. The decrease was primarily driven by the timing of project activity on certain large commercial construction projects that are now at or near completion in the current period. This was partially offset by costs associated with the construction modeling and detailing business as a result of an increase in project work and increases as a result of the acquisition of GrayWolf, which was acquired late in the fourth quarter of 2018.
Selling, general and administrative: Selling, general and administrative expenses from our Construction segment for the year ended December 31, 2019 increased $12.9 million to $79.8 million from $66.9 million for the year ended December 31, 2018. The increase was primarily due to headcount-driven increases in salary and benefits and an increase in operating expenses as a result of the acquisition of GrayWolf, which was acquired late in the fourth quarter of 2018.
Depreciation and amortization: Depreciation and amortization from our Construction segment for the year ended December 31, 2019 increased $8.1 million to $15.5 million from $7.4 million for the year ended December 31, 2018. The increase was due to amortization of intangibles obtained through the acquisition of GrayWolf and assets placed into service in 2019.
Other operating (income) expense: Other operating (income) expense from our Construction segment for the year ended December 31, 2019 decreased by $0.8 million to a loss of $0.6 million from income of $0.2 million for the year ended December 31, 2018. The change was primarily due to the gains and losses on the sale of land and assets in the comparable periods.

                                    |        | Years Ended December 31, |
----------------------------------- | ------ | ------------------------ | ---------------------
                                    | 2019   | 2018                     | Increase / (Decrease)
Net revenue                         | $713.3 | $716.4                   | $(3.1)
Cost of revenue                     | 572.3  | 600.4                    | (28.1)
Selling, general and administrative | 79.8   | 66.9                     | 12.9
Depreciation and amortization       | 15.5   | 7.4                      | 8.1
Other operating (income) expense    | 0.6    | (0.2)                    | 0.8
Income from operations              | 45.1   | $41.9                    | $3.2


Comprehensive Income — Comprehensive income includes net income, currency translation adjustments, certain derivative-related activity, changes in the value of available-for-sale investments (prior to the adoption of Accounting Standards Update ("ASU") 2016-01), and changes in prior service cost and net actuarial gains (losses) from pension (for amounts not in excess of the 10% "corridor") and postretirement health care plans. On foreign investments we deem to be essentially permanent in nature, we do not provide for taxes on currency translation adjustments arising from converting an investment denominated in a foreign currency to U.S. dollars. When we determine that a foreign investment, as well as undistributed earnings, are no longer permanent in nature, estimated taxes will be provided for the related deferred tax liability (asset), if any, resulting from currency translation adjustments.
The following table details the accumulated balances for each component of other comprehensive income, net of tax:
1 Net of unrealized gains on available-for-sale securities reclassified to retained earnings as a result of the adoption of ASU 2016-01 in fiscal 2019 and net of stranded tax effects from change in tax rate as a result of the early adoption of ASU 2018-02 in fiscal 2018 in the amount of $0.6 million and $17.4 million, respectively.
Notes to Consolidated Financial Statements - (Continued) Fiscal Years Ended May 26, 2019, May 27, 2018, and May 28, 2017 (columnar dollars in millions except per share amounts)

                                                                                | 2019     | 2018     | 2017
------------------------------------------------------------------------------------ | -------- | -------- | --------
Currency translation losses, net of reclassification adjustments                     | $(90.9)  | $(94.7)  | $(98.6)
Derivative adjustments, net of reclassification adjustments                          | 34.0     | 1.0      | (1.1)
Unrealized gains (losses) on available-for-sale securities                           | —        | 0.6      | (0.3)
Pension and post-employment benefit obligations, net of reclassification adjustments | (53.4)   | (17.4)   | (112.9)
Accumulated other comprehensive loss 1                                               | $(110.3) | $(110.5) | $(212.9)


Non-marketable investments
Non-marketable equity securities are measured at fair value using market data, such as publicly available financing round valuations. Financial information of private companies may not be available and consequently we will estimate the fair value based on the best available information at the measurement date.
The following table presents the reconciliations of Level 3 financial instrument fair values:
There were transfers out from Level 3 due to initial public offerings of the respective investees during fiscal year 2019. There were no transfers between levels during fiscal year 2018.

                                                                                | Capped Call | Embedded exchange feature of Notes | Non-marketable investments
----------------------------------------------------------------------------------------------- | ----------- | ---------------------------------- | --------------------------
                                                                                |             | (U.S. $ in thousands)              |
Balance as of June 30, 2017                                                                     | $—          | $—                                 | $—
Purchases                                                                                | 87,700      | (177,907)                          | —
Gains (losses)                                                                                |             |                                    |
Recognized in other non-operating (expense) income, net                                         | 12,232      | (24,646)                           |
Balance as of June 30, 2018                                                                     | 99,932      | (202,553)                          | —
Change in unrealized gains (losses) relating to assets and liabilities held as of June 30, 2018 |             |                                    |
Recognized in other non-operating income (expense), net                                         | 12,232      | (24,646)                           | —
Balance as of June 30, 2018                                                                     | $99,932     | $(202,553)                         | $—
Purchases                                                                                | —           | —                                  | 23,000
Transfer out                                                                                | —           | —                                  | (20,942)
Gains (losses)                                                                                |             |                                    |
Recognized in finance income                                                                    | —           | —                                  | 270
Recognized in other non-operating (expense) income, net                                         | 114,665     | (648,573)                          | —
Recognized in other comprehensive income                                                        | —           | —                                  | 672
Balance as of June 30, 2019                                                                     | $214,597    | $(851,126)                         | $3,000
Change in unrealized gains (losses) relating to assets and liabilities held as of June 30, 2019 |             |                                    |
Recognized in other non-operating income (expense), net                                         | 114,665     | (648,573)                          | —


Consolidated statement of comprehensive income
For the year ended 31 March 2019
1 The Group has adopted IFRS 9 ‘Financial Instruments’, IFRS 15 ‘Revenue from Contracts with Customers’, and IFRS 16 ‘Leases’ from 1 April 2018. The year ended 31 March 2018 has been restated for IFRS 16 which was implemented using the fully retrospective method. For further information on the impact of the change in accounting policies, see note 2 of these consolidated financial statements.

                                                                                |      | 2019  | 2018 (Restated)1
------------------------------------------------------------------------------------ | ---- | ----- | ----------------
                                                                                | Note | £m    | £m
Profit for the year                                                                  |      | 197.7 | 171.1
Other comprehensive income                                                           |      |       |
Items that may be subsequently reclassified to profit or loss                        |      |       |
Exchange differences on translation of foreign operations                            |      | (0.1) | 0.2
Items that will not be reclassified to profit or loss                                |      |       |
Remeasurements of post-employment benefit obligations                                | 24   | 0.2   | –
Other comprehensive income for the year, net of tax                                  |      | 0.1   | 0.2
Total comprehensive income for the year attributable to equity holders of the parent |      | 197.8 | 171.3


A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
The provision for uncertain tax positions relates to business in territories outside of the US.
The Company’s policy is to classify interest and penalties on uncertain tax positions as a component of tax expense. The Company does not expect the change in uncertain tax positions to have a material impact on its financial position, results of operations, or liquidity.
The Company is subject to US federal income tax as well as to income tax in multiple state and foreign jurisdictions, including the UK. Federal income tax returns of the Company are subject to IRS examination for the 2016 through 2019 tax years. State income tax returns are subject to examination for the 2015 through 2019 tax years.
Currently, an audit is occurring in the United Kingdom for the year ended December 31, 2017. There are no ongoing audits in any other significant foreign tax jurisdictions.

                                                        |         | Year Ended December 31, |
------------------------------------------------------- | ------- | ----------------------- | ------
                                                        | 2019    | 2018                    | 2017
Balance at January 1                                    | $1,402  | $1,271                  | $276
Increases for tax positions related to the current year | —       | 131                     | 995
Decreases for tax positions related to the current year | (1,402) | —                       | —
Balance at December 31                                  | $—      | $1,402                  | $1,271


Cash flow and treasury
Adjusted cash from operations is a measure of the cash flow generated from our companies over which the local management have control. A reconciliation between this and statutory operating cash flow can be found in Note 2 to the Financial Statements.
Adjusted cash from operations fell by £4.8 million to £238.1 million (2018: £242.9 million) representing 84% cash conversion. If we exclude the capital spend on the new Aflex facility this would rise to 90%.
Movements in working capital are discussed above.
Capital additions increased by £19.0 million. The most significant addition in the year was the £15.7 million spend on the construction of a new purpose-built factory in the UK for Aflex Hose, which will consolidate the existing four locations into a single facility, giving capacity for future growth while increasing efficiencies and providing a dedicated production line for Pharmaceutical products.
It is estimated that a further £6 million will be spent in 2020 in completing the project.
Looking forward, we would expect capital expenditure in 2020 to be at a similar level of approximately £65 million as we finish the Aflex facility but increase spending on project OPAL, the implementation of a global IT system for the Steam Specialties business. We generate significant cash and our first priority is to reinvest in the business, taking opportunities to generate good returns from increased efficiency, reduced costs and flexibility.
Tax paid in the year increased by £16.8 million to £78.4 million as tax rates rose and the Group grew. Free cash flow, defined in the table below, fell to £154.3 million (2018: £174.6 million) as a result of the increase in capital expenditure and tax.
Dividend payments were £76.3 million, including payments to minorities (2018: £67.3 million) and represent the final dividend for 2018 and the interim dividend for 2019.
There was a cash outflow, including fees, of £137.6 million on the acquisition of Thermocoax, as well as an additional £0.9 million outflow relating to the acquisition of various distribution rights. The net of share purchases and new shares issued for the Group’s various employee share schemes gave a cash outflow of £12.5 million (2018: £5.0 million) reflecting the move to acquire shares on the open market rather than issue new equity.
Due to the acquisition of Thermocoax, net debt increased from £235.8 million to £295.2 million at 31st December 2019, an expansion of £59.4 million. This equates to a net debt to EBITDA ratio of 0.9 times (2018: 0.8 times) excluding IFRS 16. EBITDA is defined in Note 2 and the components of net debt are disclosed in Note 24.
The Group’s Income Statement and Statement of Financial Position are exposed to movements in a wide range of different currencies.
This stems from our direct sales business model, with a large number of local operating units. These currency exposures and risks are managed through a rigorously applied Treasury Policy, typically using centrally managed and approved simple forward contracts to mitigate exposures to known cash flows and avoiding the use of complex derivative transactions. The largest exposures are to the euro, US dollar, Chinese renminbi and Korean won. Whilst currency effects can be significant, the structure of the Group provides some mitigation through our regional manufacturing presence, diverse spread of geographic locations and through the natural hedge of having a high proportion of our overhead costs in the local currencies of our direct sales operating units.
Capital structure
The Board keeps the capital requirements of the Group under regular review, maintaining a strong financial position to protect the business and provide flexibility of funding for growth. The Group earns a high return on capital, which is reflected in strong cash generation over time. Our capital allocation policy remains unchanged. Our first priority is to maximise investment in the business to generate further good returns in the future, aligned with our strategy for growth and targeting improvement in our key performance indicators. Next, we prioritise finding suitable acquisitions that can expand our addressable market through increasing our geographic reach, deepening our market penetration or broadening our product range. Acquisition targets need to exhibit a good strategic fit and meet strict commercial, economic and return on investment criteria. When cash resources significantly exceed expected future requirements, we would look to return capital to shareholders, as evidenced by special dividends declared in respect of 2010, 2012 and 2014. However, in the near term, we will look to reduce our financial leverage prior to considering new returns of capital to shareholders.

                                                                                | 2019    | 2018
---------------------------------------------------------------------------------- | ------- | -------
Cash flow                                                                          | £m      | £m
Adjusted operating profit                                                          | 282.7   | 264.9
Depreciation and amortisation (excluding IFRS 16)                                  | 34.3    | 32.9
Depreciation of leased assets                                                      | 11.3    | –
Cash payments to pension schemes more than the charge to adjusted operating profit | (5.2)   | (4.6)
Equity settled share plans                                                         | 6.2     | 5.7
Working capital changes                                                            | (21.4)  | (22.5)
Repayments of principal under lease liabilities                                    | (11.2)  | –
Capital additions (including software and development)                             | (62.4)  | (43.4)
Capital disposals                                                                  | 3.8     | 9.9
Adjusted cash from operations                                                      | 238.1   | 242.9
Net interest                                                                       | (5.4)   | (6.7)
Income taxes paid                                                                  | (78.4)  | (61.6)
Free cash flow                                                                     | 154.3   | 174.6
Net dividends paid                                                                 | (76.3)  | (67.3)
Purchase of employee benefit trust shares/Proceeds from issue of shares            | (12.5)  | (5.0)
(Acquisitions)/Disposals of subsidiaries (including costs)                         | (138.5) | 48.8
Cash flow for the year                                                             | (73.0)  | 151.1
Exchange movements                                                                 | 13.6    | (13.3)
Opening net debt                                                                   | (235.8) | (373.6)
Net debt at 31st December (excluding IFRS 16)                                      | (295.2) | (235.8)
IFRS 16 lease liability                                                            | (38.9)  | –
Net debt and lease liability at 31st December                                      | (334.1) | (235.8)


28 Derivatives and other financial instruments continued
Interest rate risk profile of financial assets
The interest rate profile of the financial assets of the Group as at 31st December was as follows:
Financial assets on which no interest is earned comprise trade and other receivables and cash at bank.
Floating and fixed rate financial assets comprise cash at bank or cash placed on deposit.

            | Total | Fixed rate financial assets | Floating rate financial assets | Financial assets on which no interest is earned
----------- | ----- | --------------------------- | ------------------------------ | -----------------------------------------------
2019        | £m    | £m                          | £m                             | £m
Sterling    | 29.1  | –                           | 0.2                            | 28.9
Euro        | 115.9 | 1.4                         | 16.6                           | 97.9
US dollar   | 98.4  | 0.1                         | 16.7                           | 81.6
Renminbi    | 42.0  | –                           | 11.9                           | 30.1
Other       | 146.5 | 5.3                         | 10.5                           | 130.7
Group total | 431.9 | 6.8                         | 55.9                           | 369.2


Cash Flow
Cash flow from operating activities was up by €1.0 billion mainly driven by working capital improvement in 2019 compared to the prior year which was impacted by the disposal of spreads. Gross margin improvement had a favourable contribution a result of strong delivery from 5-S savings programmes. Overheads and brand and marketing efficiencies also had a favourable contribution as a result of our zero-based-budgeting programme.
(a) Restated following adoption of IFRS 16. See note 1 and note 24 for further details.
* Certain measures used in our reporting are not defined under IFRS. For further
information about these measures, please refer to the commentary on non-GAAP
measures on pages 27 to 32.
Net cash outflow as a result of investing activities was €2.2 billion compared to an inflow of €4.6 billion in the prior year which included €7.1 billion from the disposal of spreads business.
Net outflow from financing activities was €4.7 billion compared to €12.1
billion in the prior year. 2018 included €6.0 billion relating to repurchase of
shares. In 2019 borrowings net of repayments was €1.4 billion higher than
the prior year.

                                                  | € million | € million
------------------------------------------------- | --------- | -------------
                                                  | 2019      | 2018
                                                  |           | (Restated)(a)
Operating profit                                  | 8,708     | 12,639
Depreciation, amortisation and impairment         | 1,982     | 2,216
Changes in working capital                        | (9)       | (793)
Pensions and similar obligations less Payments    | (260)     | (128)
Provision less payments                           | 7         | 55
Elimination of (profits)/losses on disposals      | 60        | (4,313)
Non-cash charge for share-based compensation      | 151       | 196
Other adjustments                                 | 2         | (260)
Cash flow from operating activities               | 10,641    | 9,612
Income tax paid                                   | (2,532)   | (2,294)
Net capital expenditure                           | (1,429)   | (1,424)
Net interest and preference dividends paid        | (548)     | (461)
Free cash flow*                                   | 6,132     | 5,433
Net cash flow (used in)/from investing activities | (2,237)   | 4,644
Net cash flow (used in)/from financing activities | (4,667)   | (12,113)


NAVIOS MARITIME HOLDINGS INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. dollars — except share data)
Amounts recorded in respect of discontinued operations in the years ended December 31, 2019 and 2018, respectively are as follows:
Navios Containers accounted for the control obtained in November 2018 as a business combination which resulted in the application of the “acquisition method”, as defined under ASC 805 Business Combinations, as well as the recalculation of Navios Holdings’ equity interest in Navios Containers to its fair value at the date of obtaining control and the recognition of a gain in the consolidated statements of comprehensive (loss)/income. The excess of the fair value of Navios Containers’ identifiable net assets of $229,865 over the total fair value of Navios Containers’ total shares outstanding as of November 30, 2018 of $171,743, resulted in a bargain gain upon obtaining control in the amount of $58,122. The fair value of the 34,603,100 total Navios Container’s shares outstanding as of November 30, 2018 was determined by using the closing share price of $4.96, as of that date.
As of November 30, 2018, Navios Holdings’ interest in Navios Containers with a carrying value of $6,078 was remeasured to fair value of $6,269, resulting in a gain on obtaining control in the amount of $191 and is presented within “Bargain gain upon obtaining control” in the consolidated statements of comprehensive (loss)/income.
The results of operations of Navios Containers are included in Navios Holdings’ consolidated statements of comprehensive (loss)/income following the completion of the conversion of Navios Maritime Containers Inc. into a limited partnership on November 30, 2018.

                                                                      | Period from January 1 to August 30, 2019 | Period from November 30 to December 31, 2018
--------------------------------------------------------------------- | ---------------------------------------- | --------------------------------------------
Revenue                                                               | $89,925                                  | $12,053
Time charter, voyage and port terminal expenses                       | (3,976)                                  | (546)
Direct vessel expenses                                                | (44,088)                                 | (5,282)
General and administrative expenses                                   | (6,706)                                  | (873)
Depreciation and amortization                                         | (22,858)                                 | (3,060)
Interest expense and finance cost                                     | (10,519)                                 | (1,204)
Other expense, net                                                    | (5,896)                                  | (336)
Net (loss)/income from discontinued operations                        | $(4,118)                                 | $752
Less: Net loss/(income) attributable to the noncontrolling interest   | $3,968                                   | $(725)
Net (loss)/income attributable to Navios Holdings common stockholders | $(150)                                   | $27


Assets are not allocated to segments for internal reporting presentations. A portion of amortization and depreciation is included with various other costs in an overhead allocation to each segment; it is impracticable for us to separately identify the amount of amortization and depreciation by segment that is included in the measure of segment profit or loss.
Long-lived assets, excluding financial instruments and tax assets, classified by the location of the controlling statutory company and with countries over 10% of the total shown separately, were as follows:

(In millions)   |           |           |
--------------- | --------- | --------- | ---------
June 30,        | 2019      | 2018      | 2017
United States   | $ 55,252  | $ 44,501  | $ 42,730
Ireland         | 12,958    | 12,843    | 12,889
Other countries | 25,422    | 22,538    | 19,898
Total           | $  93,632 | $  79,882 | $  75,517


DEVELOPMENT OF EMPLOYEE NUMBERS BY SEGMENTS
Full-time equivalents1 as of the closing date of 30/9
1 Excluding METRO China.

                                    | 2018   | 2019
----------------------------------- | ------ | ------
METRO                               | 86,239 | 82,979
METRO Germany                       | 11,816 | 11,760
METRO Western Europe (excl.Germany) | 24,073 | 24,044
METRO Russia                        | 13,884 | 12,288
METRO Eastern Europe (excl.Russia)  | 28,264 | 27,589
METRO Asia                          | 8,202  | 7,298
Others                              | 6,916  | 7,067
METROAG                             | 863    | 837
Total                               | 94,018 | 90,883


NOTE 6 – OTHER LIABILITIES
As described in Note 4, the Company and Finjan Blue entered into a Patent Assignment Agreement with IBM.The components of other liabilities are as presented below:

As of December 31,             |                |
------------------------------ | -------------- | ------
                               | 2019           | 2018
                               | (In thousands) |
Other liabilities, current     | $2,000         | $1,500
Other liabilities, non-current | 1,799          | 3,463
                               | $3,799         | $4,963


Depreciation and Amortization
The following table sets forth depreciation and amortization by segment for the periods presented (in millions):
(1) Depreciation and amortization for Corporate and Other primarily represents net incremental depreciation and amortization adjustments associated with the application of purchase accounting recorded in accordance with GAAP.
The increase in Depreciation and Amortization is primarily driven by implementation of new clients, accelerated amortization of deferred contract costs and hardware and software placed in service.

                       | Year ended December 31, |        | Variance |
---------------------- | ----------------------- | ------ | -------- | ---
                       | 2019                    | 2018   | $        | %
Software Solutions     | $123.9                  | $112.9 | $11.0    | 10%
Data and Analytics     | 15.9                    | 14.1   | 1.8      | 13%
Corporate and Other(1) | 96.4                    | 90.0   | 6.4      | 7%
Total                  | $236.2                  | $217.0 | 19.2     | 9%


A summary of the changes in common shares available for awards under the Omnibus Incentive Plan and Predecessor Plans
follows:
(1) As of December 31, 2018, there were 1,478 restricted stock shares issued for new awards under the Omnibus Incentive Plan and (5,024) restricted stock shares forfeited that were not yet reflected by our Recordkeeper. The table above (shares available under the Omnibus Incentive Plan) reflects this activity as occurred, creating a reconciling difference between shares issued and number of shares available under the Omnibus Plan.
(2) Director units granted and deferred include the impact of share-settled dividends earned and deferred on deferred shares.
(3) The Omnibus Incentive Plan and 2005 Contingent Stock Plan permit withholding of taxes and other charges that may be required by law to be paid attributable to awards by withholding a portion of the shares attributable to such awards.
(4) The above table excludes approximately1.2 million contingently issuable shares under the PSU awards and SLO awards, which represents the maximum number of shares that could be issued under those plans as of December 31, 2019.
We record share-based incentive compensation expense in selling, general and administrative expenses and cost of sales on our Consolidated Statements of Operations for both equity-classified awards and liability-classified awards. We record a corresponding credit to additional paid-in capital within stockholders’ deficit for equity-classified awards, and to either a current or non-current liability for liability-classified awards based on the fair value of the share-based incentive compensation awards at the date of grant. Total expense for the liability-classified awards continues to be remeasured to fair value at the end of each reporting period. We recognize an expense or credit reflecting the straight-line recognition, net of estimated forfeitures, of the expected cost of the program. The number of PSUs earned may equal, exceed or be less than the targeted number of shares depending on whether the performance criteria are met, surpassed or not met.

                                                     | 2019      | 2018       | 2017
---------------------------------------------------- | --------- | ---------- | ---------
Number of shares available, beginning of year        | 4,489,347 | 3,668,954  | 5,385,870
Newly Registered Shares under Omnibus Incentive Plan | —         | 2,199,114  | —
Restricted stock shares issued for new awards(1)     | —         | (571,438 ) | (480,283)
Restricted stock shares forfeited(1)                 | 105,960   | 91,542     | 184,235
Restricted stock units awarded                       | (819,808) | (219,923 ) | (351,946)
Restricted stock units forfeited                     | 96,534    | 64,122     | 288,801
Shares issued for 2014 Special PSU Awards            | —         | (658,783 ) | (749,653)
Shares issued for 2015 Three-Year PSU Awards         | —         | (129,139 ) | —
Shares issued for 2014 Three-Year PSU Awards         | —         | —          | (636,723)
Restricted stock units awarded for SLO Awards        | (46,195)  | (23,478 )  | (44,254)
SLO units forfeited                                  | 1,580     | 817        | 3,639
Director shares granted and issued                   | (22,015)  | (10,560 )  | (15,491)
Director units granted and deferred(2)               | (6,262)   | (16,505 )  | (17,008)
Shares withheld for taxes(3)                         | 249,368   | 94,624     | 101,767
Number of shares available, end of year(4)           | 4,048,509 | 4,489,347  | 3,668,954


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.
(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.
(5) Includes $32.4 million of stock-based compensation expense for the modification of certain performancebased restricted stock units and a one-time cash settled award during the three months ended November 30, 2017.

                                                                         |                 |              | Fiscal Year 2018   |
------------------------------------------------------------------------ | --------------- | ------------ | ------------------ | -----------------
                                                                         |                 |              | Three Months Ended |
(in thousands, except for per share data)                                | August 31, 2018 | May 31, 2018 | February 28, 2018  | November 30, 2017
Net revenue                                                              | $5,771,831      | $5,436,952   | $5,301,101         | $5,585,532
Gross profit(4)                                                          | 442,147         | 398,227      | 397,133            | 469,285
Operating income(1)(4)(5)                                                | 153,896         | 112,971      | 129,532            | 145,754
Net (loss) income(2)(4)(5)                                               | (56,608)        | 42,702       | 37,528             | 63,919
Net (loss) income attributable to Jabil Inc.(2)(4)(5)                    | $(57,314)       | $42,541      | $37,308            | $63,795
(Loss) earnings per share attributable to the stockholders of Jabil Inc. |                 |              |                    |
Basic                                                                    | $(0.34)         | $0.25        | $0.21              | $0.36
Diluted                                                                  | $(0.34)         | $0.25        | $0.21              | $0.35


Disaggregation of Revenue
The following table presents the Company's revenue disaggregated by major product category (amounts in thousands):
Software and hardware revenue is generated from on premise software license sales, as well as sales of hardware scanner boxes and on premise appliance products. Service and other revenue is generated from the sale of transactional SaaS products and services, maintenance associated with the sale of software and hardware, and consulting and professional services.

                                            |         | Twelve Months Ended September 30, |
------------------------------------------- | ------- | --------------------------------- | -------
                                            | 2019    | 2018                              | 2017
Major product category                      |         |                                   |
Deposits software and hardware              | $41,860 | $33,071                           | $25,407
Deposits service and other                  | 15,170  | 8,437                             | 6,963
Deposits revenue                            | 57,030  | 41,508                            | 32,370
Identity verification software and hardware | 4,985   | 7,627                             | 4,240
Identity verification service and other     | 22,575  | 14,424                            | 8,780
Identity verification revenue               | 27,560  | 22,051                            | 13,020
Total revenue                               | $84,590 | $63,559                           | $45,390


NOTE 22. INCOME TAXES
Amounts recognized in profit or loss
The income tax expense consists of:

                   | Year ended December 31, |
------------------ | ----------------------- | --------
                   | 2018                    | 2019
Current:           |                         |
The Netherlands    | (4,128)                 | (28,409)
Other countries    | (6,374)                 | (9,011)
                   | (10,502)                | (37,420)
Deferred:          |                         |
The Netherlands    | 1,944                   | (6,860)
Other countries    | (6,878)                 | (9,370)
Income tax expense | (15,436)                | (53,650)


The reconciliation of the Company’s effective tax rate to the statutory federal rate is as follows:
(1) For the years ended December 31, 2019 and December 31, 2018, this is inclusive of (3.4%) and (3.8%) impact, respectively, that is primarily related to the change in uncertain tax positions.
For 2019, the Company recorded an expense for income taxes of $11.6 million, resulting in an effective tax rate of (3.8)%. The effective tax rate is different than the U.S. statutory federal tax rate primarily due to stock-based compensation expense following the decision in Altera Corp v. Commissioner by the U.S. Court of Appeals for the Ninth Circuit discussed below, the full valuation allowance on the Company's U.S. deferred tax assets, the mix of income/losses among the Company’s foreign jurisdictions, and pretax losses in jurisdictions for which no tax benefit will be recognized.

                                            |        | Year Ended December 31, |
------------------------------------------- | ------ | ----------------------- | -------
                                            | 2019   | 2018                    | 2017
Tax at federal statutory rate               | 21.0 % | 21.0 %                  | 35.0 %
State taxes, net of federal effect          | (0.3)  | (0.1)                   | (5.4)
Foreign rate differential                   | (6.0)  | (3.9)                   | (9.3)
Tax credits                                 | 1.6    | 6.3                     | 4.1
Domestic production activities deduction    | —      | —                       | (3.5)
Stock-based compensation                    | (1.0)  | (4.9)                   | (5.3)
Change in prior year reserves               | (1.5)  | (0.1)                   | (2.0)
Change in valuation allowance               | (13.4) | (15.2)                  | (35.2)
Effect of change in tax rate due to Tax Act | —      | —                       | (23.4)
Other (1)                                   | (4.2)  | (4.0)                   | 2.6
Effective tax rate                          | (3.8)% | (0.9)%                  | (42.4)%


ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Consolidated Performance Summary. The following table presents selected consolidated financial data for the indicated fiscal years (dollars in millions, except per share data):
*Non-GAAP metric; refer to "Return on Invested Capital ("ROIC") and Economic Return" below for more information and Exhibit 99.1 for a reconciliation.
Net sales. Fiscal 2019 net sales increased $290.9 million, or 10.1%, as compared to fiscal 2018.
Net sales are analyzed by management by geographic segment, which reflects the Company's reportable segments, and by market sector. Management measures operational performance and allocates resources on a geographic segment basis. The Company’s global business development strategy is based on our targeted market sectors.

                             | 2019     | 2018
---------------------------- | -------- | --------
Net sales                    | $3,164.4 | $2,873.5
Cost of sales                | 2,872.6  | 2,615.9
Gross profit                 | 291.8    | 257.6
Gross margin                 | 9.2%     | 9.0%
Operating income             | 142.1    | 118.3
Operating margin             | 4.5%     | 4.1%
Other expense                | 16.1     | 10.7
Income tax expense           | 17.3     | 94.6
Net income                   | 108.6    | 13.0
Diluted earnings per share   | $3.50    | $0.38
Return on invested capital*  | 13.1%    | 16.1%
Economic return*             | 4.1%     | 6.6%


Geographic and Other Information
Revenue by geographic region, based on ship-to destinations, was as follows (in thousands):
The United States represented 56%, 58% and 58% of revenue for 2019, 2018 and 2017, respectively. Revenue in the United Kingdom was $159.9 million in 2019 and $196.0 million in 2017, representing 11% of revenue in 2019 and 12% of revenue for 2017. Revenue in the United Kingdom was less than 10% of revenue in 2018. No other single country represented more than 10% of revenue during these periods. As of December 31, 2019 and 2018, long-lived assets, which represent property and equipment, located outside the United States were $27.9 million and $36.9 million, respectively.

                                 |            | December 31, |
-------------------------------- | ---------- | ------------ | ----------
                                 | 2019       | 2018         | 2017
United States                    | $799,016   | $880,534     | $944,052
Americas excluding United States | 94,961     | 101,282      | 116,330
Europe, Middle East, and Africa  | 410,485    | 384,196      | 440,135
Asia Pacific                     | 130,326    | 145,971      | 115,002
Total                            | $1,434,788 | $1,511,983   | $1,615,519


Operating income in 2019 was $1,203 million, decreasing by $197 million compared to 2018, reflecting 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 2018 was $1,400 million, improved by $395 million compared to 2017, reflecting higher volumes, improved manufacturing efficiencies and product mix and lower restructuring charges, partially offset by unfavorable currency effects, net of hedging, normal price pressure and higher operating expenses.

                              |        | Year Ended December 31, |
----------------------------- | ------ | ----------------------- | ------
                              | 2019   | 2018                    | 2017
                              |        | (In millions)           |
Operating income              | $1,203 | $1,400                  | $1,005
As percentage of net revenues | 12.6%  | 14.5%                   | 12.0%


The following table presents franchise revenues and costs in each fiscal year and other information we believe is useful in analyzing the change in franchise operating results (dollars in thousands):
Franchise rental revenues increased $13.8 million, or 5.3%, in 2019 versus a year ago due primarily to an increase in the number of franchised restaurants and, to a lesser extent, an increase in franchise same-store sales. The increase in the number of restaurants leased or subleased from the Company due to our refranchising strategy, contributed additional rental revenues of $12.4 million in 2019.

                                                                       | 2019       | 2018
---------------------------------------------------------------------- | ---------- | ----------
Franchise rental revenues                                              | $272,815   | $259,047
Royalties                                                              | 163,047    | 155,939
Franchise fees and other                                               | 6,764      | 6,646
Franchise royalties and other                                          | 169,811    | 162,585
Franchise contributions for advertising and other services             | 170,674    | —
Total franchise revenues                                               | $613,300   | $421,632
                                                                       |            |
Franchise occupancy expenses (excluding depreciation and amortization) | $166,584   | $158,319
Franchise support and other costs                                      | 12,110     | 11,593
Franchise advertising and other services expenses                      | 178,093    | —
Total franchise costs                                                  | $356,787   | $169,912
Franchise costs as a % of total franchise revenues                     | 58.2%      | 40.3%
                                                                       |            |
Average number of franchise restaurants                                | 2,081      | 2,028
% increase                                                             | 2.6%       |
Franchised restaurant sales                                            | $3,167,920 | $3,018,067
Franchise restaurant AUV                                               | $1,523     | $1,488
Increase in franchise-operated same-store sales                        | 1.3%       | 0.1%
Royalties as a percentage of total franchise restaurant sales          | 5.1%       | 5.2%


Hardware
Hardware sales, net decreased $1.5 million, or -10% in 2019 compared to 2018. We adopted the new ASC 606 standard as of January 1, 2018 and elected to use the modified retrospective method. Historical hardware sales prior to the adoption of ASC 606 were recorded on a gross basis, as we were the principal in the transaction in accordance with the previous standard, ASC 605-45. Under the new standard, we are an agent in the transaction as we do not physically control the hardware which we sell. Accordingly, starting January 1, 2018, we recognize our hardware revenue net of related cost which reduces both hardware revenue and cost of sales as compared to our accounting prior to 2018. For comparison purposes only, had we implemented ASC 606 using the full retrospective method, we would have also presented hardware revenue net of cost for prior periods as shown below.
The majority of hardware sales are derived from our Americas segment. Sales of hardware are largely dependent upon customer- specific desires, which fluctuate.

                                              |         |         |          | Year Ended December 31, |
--------------------------------------------- | ------- | ------- | -------- | ----------------------- | ----
                                              |         |         |          | % Change vs.Prior Year  |
2019                                          | 2019    | 2018    | 2017     | 2019                    | 2018
Hardware Revenue (Pre ASC 606 Adoption)       | $44,972 | $49,914 | $43,190  | -10%                    | 16%
Cost of hardware                              | -32,455 | -35,947 | - 32,205 | -10%                    | 12%
Hardware Revenue, net (Post ASC 606 Adoption) | $12,517 | $13,967 | $ 10,985 | -10%                    | 27%


32. Provisions for post-employment benefits plans and similar obligations
Provisions for post-employment benefits plans are recognised in accordance with IAS 19 (Employee Benefits).
Provisions for post-employment benefits plans consist of commitments primarily related to benefits defined by the provisions of company pension plans. These take the form of defined benefit plans directly from the employer (employer’s commitments) and defined benefit plans from external pension providers (benevolent funds in Germany and international pension funds). The external providers’ assets serve exclusively to finance the pension entitlements and qualify as plan assets. The benefits under the different plans are based on performance and length of service.
The most important performance-based pension plans are described in the following.

€ million                                                              | 30/9/2018 | 30/9/2019
---------------------------------------------------------------------- | --------- | ---------
Provisions for post-employment benefits plans (employer’s commitments) | 344       | 414
Provisions for indirect commitments                                    | 12        | 17
Provisions for voluntary pension benefits                              | 0         | 0
Provisions for post-employment benefit plans                           | 71        | 78
                                                                       | 427       | 509
Provisions for obligations similar to pensions                         | 41        | 34
                                                                       | 468       | 543


Earnings Per Share
Calculations of net income per common share attributable to ON Semiconductor Corporation are as follows (in millions, except per share data):
Basic income per common share is computed by dividing net income attributable to ON Semiconductor Corporation by the weighted average number of common shares outstanding during the period.
To calculate the diluted weighted-average common shares outstanding, the number of incremental shares from the assumed exercise of stock options and assumed issuance of shares relating to RSUs is calculated by applying the treasury stock method. Share-based awards whose impact is considered to be anti-dilutive under the treasury stock method were excluded from the diluted net income per share calculation.
The excluded number of anti-dilutive share-based awards was approximately 0.8 million, 0.6 million and 0.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.
The dilutive impact related to the Company’s 1.00% Notes and 1.625% Notes is determined in accordance with the net share settlement requirements, under which the Company’s convertible notes are assumed to be convertible into cash up to the par value, with the excess of par value being convertible into common stock.
Additionally, if the average price of the Company’s common stock exceeds $ 25.96 per share, with respect to the 1.00% Notes, or $30.70 per share, with respect to the 1.625% Notes, during the relevant reporting period, the effect of the additional potential shares that may be issued related to the warrants that were issued concurrently with the issuance of the convertible notes will also be included in the calculation of diluted weighted-average common shares outstanding.
Prior to conversion, the convertible note hedges are not considered for purposes of the earnings per share calculations, as their effect would be anti-dilutive. Upon conversion, the convertible note hedges are expected to offset the dilutive effect of the 1.00% Notes and 1.625% Notes, respectively, when the stock price is above $18.50 per share, with respect to the 1.00% Notes, and $20.72 per share, with respect to the 1.625% Notes.

                                                                          |        | Year ended December 31, |
------------------------------------------------------------------------- | ------ | ----------------------- | ------
                                                                          | 2019   | 2018                    | 2017
Net income attributable to ON Semiconductor Corporation                   | $211.7 | $627.4                  | $810.7
Basic weighted average common shares outstanding                          | 410.9  | 423.8                   | 421.9
Add: Incremental shares for:                                              |        |                         |
Dilutive effect of share-based awards                                     | 1.9    | 4.3                     | 5.5
Dilutive effect of convertible notes                                      | 3.2    | 7.8                     | 0.9
Diluted weighted average common shares outstanding                        | 416.0  | 435.9                   | 428.3
Net income per common share attributable to ON Semiconductor Corporation: |        |                         |
Basic                                                                     | $0.52  | $1.48                   | $1.92
Diluted                                                                   | $0.51  | $1.44                   | $1.89


6.4 Deed of cross guarantee
Pursuant to the iSelect Deed of Cross Guarantee (“the Deed”) and in accordance with ASIC Class Order 98/1418, the subsidiaries identified with a ‘2’ in note 6.2 are relieved from the requirements of the Corporations Act 2001 relating to the preparation, audit and lodgment of their financial reports.
iSelect Limited and the subsidiaries identified with a ‘2’ in note 6.2 together are referred to as the “Closed Group”. The Closed Group, with the exception of General Brokerage Services Pty Ltd, Energy Watch Trading Pty Ltd, Procure Power Pty Ltd, Energy Watch Services Pty Ltd and iSelect International Pty Ltd entered into the Deed on 26 June 2013.
General Brokerage Services Pty Ltd, Energy Watch Trading Pty Ltd, Procure Power Pty Ltd and Energy Watch Services Pty Ltd entered into the Deed on 1 July 2014, the date they were acquired as part of the Energy Watch Group acquisition. iSelect International entered the Deed on 8 September 2014. The effect of the Deed is that iSelect Limited guarantees to each creditor payment in full of any debt in the event of winding up any of the entities in the Closed Group.
The consolidated income statement of the entities that are members of the Closed Group is as follows:

                                                  | CONSOLIDATED |
------------------------------------------------- | ------------ | ----------
                                                  | 2019 $’000   | 2018 $’000
Consolidated income statement                     |              |
Loss from continuing operations before income tax | (20,111)     | (21,033)
Income tax benefit                                | 5,949        | 6,734
Net loss for the year                             | (14,162)     | (14,299)
Retained earnings at the beginning of the period  | 4,101        | 30,790
Transferred in from divested subsidiary           | (8,676)      | -
Net loss for the year                             | (14,162)     | (14,299)
Dividends paid                                    | -            | (12,390)
Retained earnings at the end of the year          | (18,737)     | 4,101


CONTRACTUAL OBLIGATIONS, COMMITMENTS AND OFF-BALANCE SHEET OBLIGATIONS
Our disclosures regarding contractual obligations and commercial commitments are located in various parts of our regulatory filings. Information in the following table provides a summary of our contractual obligations and commercial commitments as of September 28, 2019 (dollars in millions):
1) Includes $150.0 million in principal amount of 2018 Notes as well as interest; see Note 4, "Debt, Capital Lease Obligations and Other Financing," in Notes to Consolidated Financial Statements for further information.
2) As of September 28, 2019, capital lease obligations consists of capital lease payments and interest as well as the non-cash financing obligation related to the failed sale-leasebacks in Guadalajara, Mexico; see Note 4, "Debt, Capital Lease Obligations and Other Financing," in Notes to Consolidated Financial Statements for further information.
3) As of September 28, 2019, purchase obligations consist primarily of purchases of inventory and equipment in the ordinary course of business.
4) Consists of U.S. federal income taxes on the deemed repatriation of undistributed foreign earnings due to Tax Reform. Refer to "Liquidity and Capital Resources" above for further detail.
5) As of September 28, 2019, other obligations on the balance sheet included deferred compensation obligations to certain of our former and current executive officers, as well as other key employees, and an asset retirement obligation. We have excluded from the above table the impact of approximately $2.3 million, as of September 28, 2019, related to unrecognized income tax benefits. The Company cannot make reliable estimates of the future cash flows by period related to these obligations.
6) As of September 28, 2019, other obligations not on the balance sheet consist of guarantees and a commitment for salary continuation and certain benefits in the event employment of one executive officer of the Company is terminated without cause. Excluded from the amounts disclosed are certain bonus and incentive compensation amounts, which would be paid on a prorated basis in the year of termination.
7) Includes future minimum lease payments for two facilities in Guadalajara, Mexico, leased under 10-year and 15-year base lease agreements, both of which include two 5-year renewal options; see Note 4, "Debt, Capital Lease Obligations and Other Financing," in Notes to Consolidated Financial Statements for further information.

                                                       |          | Payments Due by Fiscal Year |            |            |
------------------------------------------------------ | -------- | --------------------------- | ---------- | ---------- | -------------------
Contractual Obligations                                | Total    | 2020                        | 2021-2022  | 2023-2024  | 2025 and
thereafter
Debt Obligations (1)                                   | $288.3   | $101.2                      | $12.4      | $12.2      | $162.5
Capital Lease Obligations (2)                          | 49.8     | 6.7                         | 6.4        | 2.5        | 34.2
Operating Lease Obligations                            | 40.8     | 10.4                        | 12.2       | 8.8        | 9.4
Purchase Obligations (3)                               | 620.0    | 598.8                       | 20.7       | 0.4        | 0.1
Repatriation Tax on Undistributed Foreign Earnings (4) | 65.1     | 5.5                         | 11.4       | 16.3       | 31.9
Other Liabilities on the Balance Sheet (5)             | 15.0     | 3.3                         | 4.0        | 0.6        | 7.1
Other Liabilities not on the Balance Sheet (6)         | 8.6      | 1.8                         | —          | 1.3        | 5.5
Other Financing Obligations (7)                        | 119.0    | 4.3                         | 9.0        | 9.4        | 96.3
Total Contractual Cash Obligations                     | $1,206.6 | $732.0                      | $76.1      | $51.5      | $347.0


No deferred tax assets were capitalised for the following tax loss carry-forwards and interest carry-forwards or temporary differences because realisation of the assets in the short-to-medium term is not expected:
The loss carry-forwards as of the closing date predominantly concern the German consolidation group. They can be carried forward without limitation.

€ million               | 30/9/2018 | 30/9/2019
----------------------- | --------- | ---------
Corporate tax losses    | 4,320     | 4,883
Trade tax losses        | 3,296     | 3,679
Interest carry-forwards | 57        | 83
Temporary differences   | 104       | 120


Section D: People
This section provides information about our employee benefit obligations, including annual leave, long service leave and post-employment benefits. It also includes details about our share plans and the compensation paid to Key Management Personnel.
15. EMPLOYEE BENEFITS.
1. Included within current provisions in the statement of financial position.
2. Included within non-current provisions in the statement of financial position.
Employee benefits liability
Employee benefits liability represents amounts provided for annual leave and long service leave. The current portion for this provision includes the total amount accrued for annual leave entitlements and the amounts accrued for long service leave entitlements that have vested due to employees having completed the required period of service.
Based on past experience, the Group does not expect the full amount of annual leave or long service leave balances classified as current liabilities to be settled within the next 12 months. These amounts are presented as current liabilities since the Group does not have an unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement.

                                  | 2019   | 2018
--------------------------------- | ------ | ------
                                  | $’000  | $’000
Current employee benefits1        | 13,859 | 12,710
Non-current employee benefits2    | 189    | 675
Total employee benefits liability | 14,048 | 13,385


9.4. Trade and other payables
Trade payables are unsecured and are usually paid within 30 days of recognition. Other payables and accruals are paid when amounts fall due. The carrying amounts of trade and other payables are assumed to be the same as their fair values, due to their short-term nature.

                                 | 2019   | 2018
-------------------------------- | ------ | ------
                                 | $'000  | $'000
Current                          |        |
Trade payables                   | 3,486  | 4,184
Accrued expenses                 | 6,706  | 2,717
GST and employment taxes payable | 2,644  | 1,256
Other payables                   | 6,157  | 4,161
Total                            | 18,993 | 12,318


Restricted Share Awards
Restricted share awards, which are generally in the form of restricted share units, are granted subject to certain restrictions. Conditions of vesting are determined at the time of grant. All restrictions on an award will lapse upon death or disability of the employee. If the employee satisfies retirement requirements, a portion of the award may vest, depending on the terms and conditions of the particular grant. Recipients of restricted share units have no voting rights, but do receive dividend equivalents. For grants that vest through passage of time, the fair value of the award at the time of the grant is amortized to expense over the period of vesting. The fair value of restricted share awards is determined based on the closing value of our shares on the grant date. Restricted share awards generally vest in increments over a period of four years as determined by the management development and compensation committee.
Restricted share award activity was as follows:
The weighted-average grant-date fair value of restricted share awards granted during fiscal 2019, 2018, and 2017 was $77.77, $93.45, and $67.72, respectively.
The total fair value of restricted share awards that vested during fiscal 2019, 2018, and 2017 was $48 million, $50 million, and $50 million, respectively.
As of fiscal year end 2019, there was $64 million of unrecognized compensation expense related to nonvested restricted share awards, which is expected to be recognized over a weighted-average period of 1.7 years.

                                  | Shares    | Weighted-Average Grant-Date Fair Value
--------------------------------- | --------- | --------------------------------------
Nonvested at fiscal year end 2018 | 1,631,470 | $  75.39
Granted                           | 692,899   | 77.77
Vested                            | (689,040) | 70.31
Forfeited                         | (232,910) | 78.80
Nonvested at fiscal year end 2019 | 1,402,419 | $  78.36