Note 13 Contract costs
The table below provides a reconciliation of the contract costs balance.
Contract costs are amortized over a period ranging from 12 to 84 months.

FOR THE YEAR ENDED DECEMBER 31                                           | 2019  | 2018
------------------------------------------------------------------------ | ----- | -----
Opening balance, January 1                                               | 707   | 636
Incremental costs of obtaining a contract and contract fulfillment costs | 602   | 567
Amortization included in operating costs                                 | (523) | (477)
Impairment charges included in operating costs                           | (3)   | (19)
Ending balance, December 31                                              | 783   | 707


5. PROPERTY AND EQUIPMENT, NET
Property and equipment, at cost, consisted of the following at December 31, 2019 and 2018 (in thousands):
Depreciation expense related to property and equipment was approximately $0.04 million and $0.13 million in 2019 and 2018, respectively. Depreciation expense includes depreciation related to finance leases of approximately $0.001 million and $0.002 million for the periods ended December 31, 2019 and 2018, respectively. Our finance leases have original terms of one to three years. The principal payments for these finance leases are reflected as cash outflows from financing activities in the accompanying consolidated statements of cash flows. Future minimum lease payments under our capital leases that have initial terms in excess of one year are included in “Leases” in Note 8.     Depreciation expense related to property and equipment was approximately $0.04 million and $0.13 million in 2019 and 2018, respectively. Depreciation expense includes depreciation related to finance leases of approximately $0.001 million and $0.002 million for the periods ended December 31, 2019 and 2018, respectively. Our finance leases have original terms of one to three years. The principal payments
In connection with the relocation of our corporate headquarters in July 2019, we disposed of a number of assets that were no longer in use. For each of the years ended December 31, 2019 and 2018, we recorded a loss on disposal of fixed assets of approximately $0.01 million.  In connection with the relocation of our corporate headquarters in July 2019, we disposed of a number of assets that were no longer in use. For each of the years ended December 31, 2019 and 2018, we recorded a loss on disposal of fixed assets of approximately $0.01 million.
In connection with the closure of our Lake Mary facility in 2018, we reclassified equipment with a net book value of approximately $0.07 million to assets held for sale. We contracted with a third party for the consignment sale of these assets and completed sales for several assets in 2018 and 2019. For the year ended December 31, 2019, we recognized a net loss of approximately $0.04 million on the sale and/or impairment of assets held for sale. For the year ended December 31, 2018, we recognized a gain of approximately $0.01 million on assets held for sale. The gains and losses on the sale or impairment of held for sale assets is included in selling, general and administrative expenses in the accompanying statements of comprehensive loss.

                                                                                | 2019  | 2018
------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----- | -------
Equipment and software, including equipment purchased under capital leases of $6 and $17 at December 31, 2019 and 2018, respectively                                     | $260  | $1,555
Leasehold improvements                                                                                | 33    | 786
Furniture and fixtures                                                                                | 43    | 182
                                                                                | 336   | 2,523
Less accumulated depreciation, including accumulated depreciation for equipment purchased under capital leases of $3 and $13 at December 31, 2019 and 2018, respectively | (266) | (2,394)
                                                                                | $70   | $129


NOTE 14-INFORMATION CONCERNING PRODUCT LINES, GEOGRAPHIC INFORMATION, ACCOUNTS RECEIVABLE AND REVENUE CONCENTRATION
The Company identifies its business segments based on business activities, management responsibility and geographic location. For all periods presented, the Company operated in a single reportable business segment.
The following is a breakdown of revenue by product family (in thousands):
(1) New products include all products manufactured on 180 nanometer or smaller semiconductor processes, eFPGA IP license, QuickAI and SensiML AI software as a service (SaaS) revenues. Mature products include all products produced on semiconductor processes larger than 180 nanometer.

                              |         | Fiscal Years |
----------------------------- | ------- | ------------ | -------
                              | 2019    | 2018         | 2017
Revenue by product line (1) : |         |              |
New products                  | $3,123  | $5,735       | $5,853
Mature products               | 7,187   | 6,894        | 6,296
Total revenue                 | $10,310 | $12,629      | $12,149


Other Operating (Income) Expense, Net
Restructure and asset impairments primarily relate to our continued emphasis to centralize certain key functions. In addition, in 2019, we finalized the sale of our 200mm fabrication facility in Singapore and recognized restructure gains of $128 million. In 2017, we recognized net restructure gains of $15 million related to the sale of our Lexar assets; our assets associated with our 200mm fabrication facility in Singapore; and our 40% ownership interest in Tera Probe, Inc and assembly and test facility located in Akita, Japan.

For the year ended                                           | 2019 | 2018  | 2017
------------------------------------------------------------ | ---- | ----- | -----
(Gain) loss on disposition of property, plant, and equipment | $43  | $(96) | $(22)
Restructure and asset impairments                            | (29) | 28    | 18
Other                                                        | 35   | 11    | 5
                                                             | $49  | $(57) | $1


FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)
Movement of FVPL is analysed as follows:
Note: During the year ended 31 December 2019, the Group’s additions to FVPL mainly comprised the following:
an investment in a retail company of approximately USD500 million (equivalent to approximately RMB3,550 million) to subscribe for approximately 21% of its equity interests in form of preferred shares, on an outstanding basis;
an additional investment in a real estate O2O platform in the PRC of approximately USD320 million (equivalent to approximately RMB2,258 million). As at 31 December 2019, the Group’s equity interests in this investee company are approximately 9% on an outstanding basis; and
new investments and additional investments with an aggregate amount of approximately RMB38,810 million in listed and unlisted entities mainly operating in the United States, the PRC and other Asian countries. These companies are principally engaged in social networks, Internet platform, technology and other Internet-related business. None of the above investment was individually significant that triggers any disclosure requirements pursuant to Chapter 14 of the Listing Rules at the time of inception.
During the year ended 31 December 2019, except as described in Note 21(b), transfers also mainly comprised an equity investment designated as FVOCI due to the conversion of the redeemable instruments into ordinary shares amounting to RMB1,395 million upon its IPO.
During the year ended 31 December 2019, the Group disposed of certain investments with an aggregate amount of RMB16,664 million, which are mainly engaged in the provision of Internet-related services.
Management has assessed the level of influence that the Group exercises on certain FVPL with shareholding exceeding 20%. Since these investments are either held in form of redeemable instruments or interests in limited life partnership without significant influence, these investments have been classified as FVPL.

                                  | 2019        | 2018
--------------------------------- | ----------- | -----------
                                  | RMB’Million | RMB’Million
At beginning of the year          | 97,877      | –
Adjustment on adoption of IFRS 9  | –           | 95,497
Additions (Note (a))              | 44,618      | 60,807
Transfers (Note (b))              | (1,421)     | (78,816)
Changes in fair value (Note 7(b)) | 9,511       | 28,738
Disposals (Note (c))              | (16,664)    | (14,805)
Currency translation differences  | 2,015       | 6,456
At end of the year                | 135,936     | 97,877


18. Revenue
Effective September 1, 2018, the Company adopted ASU 2014-09, Revenue Recognition (Topic 606). The new standard is a comprehensive new revenue recognition model that requires the Company to recognize revenue in a manner which depicts the transfer of goods or services to its customers at an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.
Prior to the adoption of the new standard, the Company recognized substantially all of its revenue from contracts with customers at a point in time, which was generally when the goods were shipped to or received by the customer, title and risk of ownership had passed, the price to the buyer was fixed or determinable and collectability was reasonably assured (net of estimated returns). Under the new standard, the Company recognizes revenue over time for the majority of its contracts with customers which results in revenue for those customers being recognized earlier than under the previous guidance. Revenue for all other contracts with customers continues to be recognized at a point in time, similar to recognition prior to the adoption of the standard.
Additionally, the new standard impacts the Company’s accounting for certain fulfillment costs, which include upfront costs to prepare for manufacturing activities that are expected to be recovered. Under the new standard, such upfront costs are recognized as an asset and amortized on a systematic basis consistent with the pattern of the transfer of control of the products or services to which to the asset relates.
The Company adopted ASU 2014-09 using the modified retrospective method by applying the guidance to all open contracts upon adoption and recorded a cumulative effect adjustment as of September 1, 2018, net of tax,  effect adjustment (in thousands):
(1) Differences primarily relate to the timing of revenue recognition for over time customers and certain balance sheet reclassifications.
(2) Differences primarily relate to the timing of recognition and recovery of fulfillment costs and certain balance sheet reclassifications.
(3) Included within accrued expenses on the Consolidated Balance Sheets.
(4) Differences included in contract liabilities as of September 1, 2018.

                                                | Balance as of August 31, 2018 | Adjustments due to adoption of ASU 2014-09 | Balance as of September 1, 2018
----------------------------------------------- | ----------------------------- | ------------------------------------------ | -------------------------------
Assets                                          |                               |                                            |
Contract assets(1)                              | $—                            | $591,616                                   | $591,616
Inventories, net(1)                             | $3,457,706                    | $(461,271)                                 | $2,996,435
Prepaid expenses and other current assets(1)(2) | $1,141,000                    | $(37,271)                                  | $1,103,729
Deferred income taxes(1)(2)                     | $218,252                      | $(8,325)                                   | $209,927
Liabilities                                     |                               |                                            |
Contract liabilities(2)(3)                      | $—                            | $690,142                                   | $690,142
Deferred income(2)(3)(4)                        | $691,365                      | $(691,365)                                 | $—
Other accrued expenses(3)(4)                    | $1,000,979                    | $40,392                                    | $1,041,371
Deferred income taxes(1)                        | $114,385                      | $2,977                                     | $117,362
Equity                                          |                               |                                            |
Retained earnings(1)(2)                         | $1,760,097                    | $42,602                                    | $1,802,699


Stock Compensation Expense
The following table shows total stock-based compensation expense and related tax benefits included in the Consolidated Statements of Operations for fiscal 2019, 2018 and 2017 (in thousands):
As a result of our acquisition of Rofin on November 7, 2016, we made a payment of $15.3 million due to the cancellation of options held by employees of Rofin. The payment was allocated between total estimated merger consideration of $11.1 million and post-merger stock-based compensation expense of $4.2 million, recorded in the first quarter of fiscal 2017, based on the portion of the total service period of the underlying options that have not been completed by the merger date.
During fiscal 2019, $4.8 million of stock-based compensation cost was capitalized as part of inventory for all stock plans, $4.8 million was amortized into cost of sales and $1.5 million remained in inventory at September 28, 2019. During fiscal 2018, $4.7 million of stock-based compensation cost was capitalized as part of inventory for all stock plans, $4.4 million was amortized into cost of sales and $1.5 million remained in inventory at September 29, 2018.
At fiscal 2019 year-end, the total compensation cost related to unvested stock-based awards granted to employees under our stock plans but not yet recognized was approximately $33.1 million. We do not estimate forfeitures. This cost will be amortized on a straight-line basis over a weighted-average period of approximately 1.5 years.

                                    |         | Fiscal  |
----------------------------------- | ------- | ------- | -------
                                    | 2019    | 2018    | 2017
Cost of sales                       | $4,880  | $4,403  | $3,541
Research and development            | 2,990   | 3,247   | 2,973
Selling, general and administrative | 28,596  | 25,088  | 23,911
Income tax benefit                  | (4,946) | (5,073) | (7,073)
                                    | $31,520 | $27,665 | $23,352


Trading profit
The Group reported Trading profit of £128.5m in the year, growth of £5.5m, up +4.5% compared to 2017/18. Divisional contribution increased by £6.1m to £161.9m. The Grocery business recorded Divisional contribution growth of £8.3m to £138.3m while Sweet Treats Divisional contribution was £2.2m lower than the prior year at £23.6m. Group & corporate costs were £0.6m higher than the prior year.
In the first half of the year, Grocery Divisional contribution benefitted from previous changes in the promotional strategy of Ambrosia. The business reduced the depth of promotional deals it offered which resulted in lower volumes and revenue in the period but growth in Divisional contribution.
Additionally, Divisional contribution margins in the Grocery business grew 2.1 percentage points in the first half compared to the prior year. This is in line with margins two years ago, whereby margins in the prior year were impacted by a longer than expected process to recover input cost inflation seen across the Group’s categories.

£m                       | 2018/19 | 2017/18 | Change
------------------------ | ------- | ------- | ------
Divisional contribution2 |         |         |
Grocery                  | 138.3   | 130.0   | +6.3%
Sweet Treats             | 23.6    | 25.8    | (8.4%)
Total                    | 161.9   | 155.8   | +3.9%
Group & corporate costs  | (33.4)  | (32.8)  | (1.8%)
Trading profit           | 128.5   | 123.0   | +4.5%


Under Article 35 of our Articles of Association, our financial year extends from January 1 to December 31, which is the period end of each fiscal year. In 2019, the first quarter ended on March 30, the second quarter ended on June 29, the third quarter ended on September 28 and the fourth quarter ended on December 31.
In 2020, the first quarter will end on March 28, the second quarter will end on June 27, the third quarter will end on September 26 and the fourth quarter will end on December 31.
Based on our fiscal calendar, the distribution of our revenues and expenses by quarter may be unbalanced due to a different number of days in the various quarters of the fiscal year and can also differ from equivalent prior years’ periods, as illustrated in the below table for the years 2018, 2019 and 2020.

     | Q1   | Q2   | Q3   | Q4
---- | ---- | ---- | ---- | ----
     | Days | Days | Days | Days
2018 | 90   | 91   | 91   | 93
2019 | 89   | 91   | 91   | 94
2020 | 88   | 91   | 91   | 96


Note 8. Goodwill and Intangible Assets, Net
The changes in goodwill by reportable segment are outlined below (in thousands):
On October 21, 2019, we acquired 85% of the issued and outstanding capital stock of OpenEye and recorded $41.4 million of goodwill in the Alarm.com segment. There were no impairments of goodwill recorded during the years ended December 31, 2019, 2018 or 2017. As of December 31, 2019, the accumulated balance of goodwill impairments was $4.8 million, which is related to our acquisition of EnergyHub in 2013.

                                | Alarm.com | Other | Total
------------------------------- | --------- | ----- | --------
Balance as of January 1, 2018   | $63,591   | $—    | $63,591
Goodwill acquired               | —         | —     | —
Balance as of December 31, 2018 | 63,591    | —     | 63,591
Goodwill acquired               | 41,372    | —     | 41,372
Balance as of December 31, 2019 | $104,963  | $—    | $104,963


Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
(a) Cisco common stock is traded on the Nasdaq Global Select Market under the symbol CSCO. Information regarding quarterly cash dividends declared on Cisco’s common stock during fiscal 2019 and 2018 may be found in Supplementary Financial Data on page 106 of this report. There were 39,216 registered shareholders as of August 30, 2019.
(b) Not applicable.
(c) Issuer purchases of equity securities (in millions, except per-share amounts):
On September 13, 2001, we announced that our Board of Directors had authorized a stock repurchase program. On February 13, 2019, our Board of Directors authorized a $15 billion increase to the stock repurchase program. As of July 27, 2019, the remaining authorized amount for stock repurchases under this program, including the additional authorization, is approximately $13.5 billion with no termination date.
For the majority of restricted stock units granted, the number of shares issued on the date the restricted stock units vest is net of shares withheld to meet applicable tax withholding requirements. Although these withheld shares are not issued or considered common stock repurchases under our stock repurchase program and therefore are not included in the preceding table, they are treated as common stock repurchases in our financial statements as they reduce the number of shares that would have been issued upon vesting (see Note 14 to the Consolidated Financial Statements).

Period                         | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
------------------------------ | -------------------------------- | ---------------------------- | -------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------
April 28, 2019 to May 25, 2019 | 42                               | $54.33                       | 42                                                                               | $15,700
May 26, 2019 to June 22, 2019  | 22                               | $55.07                       | 22                                                                               | $14,465
June 23, 2019 to July 27, 2019 | 18                               | $56.46                       | 18                                                                               | $13,460
Total                          | 82                               | $54.99                       | 82                                                                               |


The Company maintains liabilities for uncertain tax positions. These liabilities involve considerable judgment and estimation and are continuously monitored by management based on the best information available, including changes in tax regulations, the outcome of relevant court cases, and other information. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):
The unrecognized tax benefits relate primarily to federal and state research and development credits and intercompany profit on the transfer of certain IP rights to one of the Company’s foreign subsidiaries as part of the Company’s tax reorganization completed in 2015. The Company’s policy is to account for interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2019, the Company accrued interest or penalties related to uncertain tax positions in the amount of $25,000. As of December 31, 2019, the total amount of unrecognized tax benefits that would affect the Company’s effective tax rate, if recognized, is $97,000.
Because the Company has net operating loss and credit carryforwards, there are open statutes of limitations in which federal, state and foreign taxing authorities may examine the Company’s tax returns for all years from 2000 through the current period.

                                                                             |        | Years Ended December 31, |
---------------------------------------------------------------------------- | ------ | ------------------------ | -------
                                                                             | 2019   | 2018                     | 2017
Balance at beginning of year                                                 | $4,611 | $4,672                   | $6,232
Gross increases for tax positions of prior years                             | 394    | —                        | —
Gross decreases for federal tax rate change for tax positions of prior years | —      | —                        | (1,670)
Gross increases for tax positions of current year                            | 34     | 45                       | 110
Lapse of statute of limitations                                              | (213)  | (106)                    | —
Balance at end of year                                                       | $4,826 | 4,611                    | 4,672


15. Revenue from Contracts with Customers
Impact of Adopting Topic 606
The Company adopted Topic 606 at the beginning of fiscal 2019 using the modified retrospective method. The new standard resulted in a change to the timing of revenue recognition for a significant portion of the Company's revenue, whereby revenue is recognized over time, as products are produced, as opposed to at a point in time based upon shipping terms. As a result of the adoption of Topic 606, the following adjustments were made to the opening balances of the Company's Consolidated Balance Sheets (in thousands):
The cumulative effect of applying the new guidance in Topic 606 resulted in the Company increasing its fiscal 2019 opening Retained earnings balance by$ 7.8 million due to certain customer contracts requiring revenue recognition over time. Contract assets in the amount of$ 76.4 million were recognized due to the recognition of revenue on an over time basis for some customers rather than at a specific point in time. Inventory declined $69.0 million primarily due to earlier recognition of costs related to the contracts for which revenue was recognized on an over time basis. The decline in other accrued liabilities is primarily due to the reclassification of deferred revenue to contract assets for prepayments associated with revenue recognized over time, partially offset by an increase in taxes payable associated with the increase in revenue recognized over time.

                                     | Balance at September 29, 2018  | Impacts due to adoption of Topic
606 | Balance at September 30, 2018
------------------------------------ | ------------------------------ | ------------------------------------ | -----------------------------
ASSETS                               |                                |                                      |
   Contract assets                   | $—                             | $76,417                              | $76,417
   Inventories                       | 794,346                        | (68,959)                             | 725,387
LIABILITIES AND SHAREHOLDERS' EQUITY |                                |                                      |
   Other accrued liabilities         | $68,163                        | $(357)                               | $67,806
   Retained earnings                 | 1,062,246                      | 7,815                                | 1,070,061


Cost of revenues. Cost of revenues increased by 20% to RMB59,659 million for the fourth quarter of 2019 on a year-on-year basis. The increase was mainly due to greater costs of FinTech services, channel costs and content costs. As a percentage of revenues, cost of revenues decreased to 56% for the fourth quarter of 2019 from 59% for the fourth quarter of 2018. The following table sets forth our cost of revenues by line of business for the fourth quarter of 2019 and the fourth quarter of 2018:
Cost of revenues for VAS increased by 28% to RMB26,120 million for the fourth quarter of 2019 on a year-on-year basis. The increase mainly reflected greater channel costs for smart phone games due to increased revenues, including the channel costs attributable to Supercell, as well as higher content costs for services and products such as live broadcast services, online games and music streaming.
Cost of revenues for FinTech and Business Services increased by 32% to RMB21,520 million for the fourth quarter of 2019 on a year-on-year basis. The increase was primarily driven by scale expansion of our payment-related services and cloud business.
Cost of revenues for Online Advertising decreased by 14% to RMB9,241 million for the fourth quarter of 2019 on a year-on-year basis. The decrease was mainly due to lower content costs for video advertising as a result of fewer major content releases, and to cost management.

                              | Unaudited                           |          |                  |
----------------------------- | ----------------------------------- | -------- | ---------------- | ----------
                              | Three months ended                  |          |                  |
                              | 31 December 2019                    |          | 31 December 2018 |
                              |                                     | % of     |                  | % of
                              |                                     | segment  |                  | segment
                              | Amount                              | revenues | Amount           | revenues
                              |                                     |          | (Restated)       | (Restated)
                              | (RMB in millions, unless specified) |          |                  |
VAS                           | 26,120                              | 50%      | 20,330           | 47%
FinTech and Business Services | 21,520                              | 72%      | 16,310           | 76%
Online Advertising            | 9,241                               | 46%      | 10,800           | 63%
Others                        | 2,778                               | 84%      | 2,304            | 88%
Total cost of revenues        | 59,659                              |          | 49,744           |


15. Net Income per Share
The following is a calculation of basic and diluted net income per share (in millions, except per share amounts):
Potential shares from outstanding employee equity awards totaling 1 million, 1 million and 6 million for fiscal 2019, 2018 and 2017, respectively, were excluded from the diluted net income per share calculations as their inclusion would have been anti-dilutive.

                                               |                | Year Ended     |
---------------------------------------------- | -------------- | -------------- | --------------
                                               | April 26, 2019 | April 27, 2018 | April 28, 2017
Numerator:                                     |                |                |
Net income                                     | $ 1,169        | $ 116          | $ 481
Denominator:                                   |                |                |
Shares used in basic computation               | 254            | 268            | 275
Dilutive impact of employee equity award plans | 5              | 8              | 6
Shares used in diluted computation             | 259            | 276            | 281
Net Income per Share:                          |                |                |
Basic                                          | $ 4.60         | $ 0.43         | $ 1.75
Diluted                                        | $ 4.51         | $ 0.42         | $ 1.71


Note 24 Post-employment benefit plans
POST-EMPLOYMENT BENEFIT PLANS COST
We provide pension and other benefits for most of our employees. These include DB pension plans, DC pension plans and OPEBs.
We operate our DB and DC pension plans under applicable Canadian and provincial pension legislation, which prescribes minimum and maximum DB funding requirements. Plan assets are held in trust, and the oversight of governance of the plans, including investment decisions, contributions to DB plans and the selection of the DC plans investment options offered to plan participants, lies with the Pension Fund Committee, a committee of our board of directors.
The interest rate risk is managed using a liability matching approach, which reduces the exposure of the DB plans to a mismatch between investment growth and obligation growth.
The longevity risk is managed using a longevity swap, which reduces the exposure of the DB plans to an increase in life expectancy.
COMPONENTS OF POST-EMPLOYMENT BENEFIT PLANS SERVICE COST

FOR THE YEAR ENDED DECEMBER 31                                               | 2019  | 2018
---------------------------------------------------------------------------- | ----- | -----
DB pension                                                                   | (193) | (213)
DC pension                                                                   | (110) | (106)
OPEBs                                                                        | (3)   | (3)
Less:                                                                        |       |
Capitalized benefit plans cost                                               | 59    | 56
Total post-employment benefit plans service cost included in operating costs | (247) | (266)
Other costs recognized in severance, acquisition and other costs             | –     | (4)
Total post-employment benefit plans service cost                             | (247) | (270)


Note 16. Share-Based Compensation
Share-Based Compensation Expense
The following table presents the details of the Company's share-based compensation expense (in millions):
(1) During the year ended March 31, 2019, $17.2 million of share-based compensation expense was capitalized to inventory, and $14.9 million of previously capitalized share-based compensation expense in inventory was sold. During the year ended March 31, 2018, $11.9 million of share-based compensation expense was capitalized to inventory and $13.8 million of previously capitalized share-based compensation expense in inventory that was sold. During the year ended March 31, 2017, $11.3 million of share-based compensation expense was capitalized to inventory. The amount of sharebased compensation included in cost of sales during fiscal 2017 included $14.5 million of previously capitalized sharebased compensation expense in inventory was sold and $4.2 million of share-based compensation expense related to the Company's acquisition of Atmel that was not previously capitalized into inventory.
The amount of unearned share-based compensation currently estimated to be expensed in the remainder of fiscal 2020 through fiscal 2024 related to unvested share-based payment awards at March 31, 2019 is $253.4 million. The weighted average period over which the unearned share-based compensation is expected to be recognized is approximately 1.88 years.

                                              |        | Year Ended March 31, |
--------------------------------------------- | ------ | -------------------- | -----
                                              | 2019   | 2018                 | 2017
Cost of sales (1)                             | $14.9  | $13.8                | $18.7
Research and development                      | 72.0   | 42.5                 | 46.8
Selling, general and administrative           | 62.3   | 36.9                 | 62.6
Special (income) charges and other, net       | 17.2   | —                    | —
Pre-tax effect of share-based compensation    | 166.4  | 93.2                 | 128.1
Income tax benefit                            | 35.5   | 28.3                 | 44.2
Net income effect of share-based compensation | $130.9 | $64.9                | $83.9


Cash Flows
The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated.
Net cash provided by/(used in) operating activities
Cash provided by operating activities decreased by $10.2 million to $106.5 million in 2019 compared to $116.7 million in 2018. The decrease was primarily due to:
• lower contribution recognized from our participation in the Cool Pool due to lower utilization and a higher number of drydocking days for our vessels for the year ended December 31, 2019;
• $24.9 million of drydocking costs as the majority of our fleet was scheduled for dry-dock during 2019;
• $9.3 million in cash receipts in connection with arbitration proceedings with a former charterer of the Golar Tundra, compared to $50.7 million recovered in 2018; and
• the reduction in the general timing of working capital in 2019 compared to the same period in 2018.
This was partially offset by receipts of $4.0 million in relation to a loss of hire insurance claim on the Golar Viking. There were no comparable receipts in 2018.
Cash provided by operating activities increased by $151.8 million to $116.7 million in 2018 compared to cash utilized of $35.1 million in 2017. The increase in cash utilized in 2018 was primarily due to: • higher contributions recognized from our participation in the Cool Pool as a result of improved utilization and daily hire rates from the Cool Pool vessels; • lower charterhire payments as a result of the expiry of the charter-back arrangement of the Golar Grand from Golar Partners in November 2017; • $50.7 million in cash receipts in connection with arbitration proceedings with a former charterer of the Golar Tundra; and • the improvement on the general timing of working capital in 2018 compared to the same period in 2017.
Net cash used in investing activities
Net cash used in investing activities of $264.4 million in 2019 comprised mainly of:
• $376.3 million of payments made in respect of the conversion of the Gimi into a FLNG;
• $21.0 million additional investments in Golar Power and Avenir; and
• $24.4 million of payments predominately for the installation of the ballast water treatment systems on eight of our vessels.
This was partially offset by receipts of:
• $115.2 million of proceeds from Keppel's initial subscription and subsequent cash calls in relation to its 30% equity interest in Gimi MS;
• $29.2 million of dividends received from Golar Partners; and
• $9.7 million of cash consideration received from Golar Partners in respect of the remaining net purchase price less working capital adjustments in connection with the Hilli acquisition.
Net cash used in investing activities of $202.5 million in 2018 comprised mainly of:
• the addition of $116.7 million to asset under development relating to payments made in respect of the conversion of the Hilli into a FLNG; and
• additions of $95.5 million to investments in affiliates, which relates principally to capital contributions made to Golar Power of $55.0 million and our investment in Avenir of $24.8 million; and
• additions to vessels and equipment of $33.1 million.
This was partially offset by: • receipt of $9.7 million from Golar Partners in relation to the Hilli Disposal; and • $33.2 million of dividends received from Golar Partners.
Net cash (used in)/provided by financing activities
Net cash used in financing activities is principally generated from funds from new debt, debt refinancings, debt repayments and cash dividends. Net cash used in financing activities of $136.0 million in 2019 arose primarily due to: • scheduled debt repayments of $443.1 million; • $100.0 million repayment of the Margin Loan following refinancing; • $9.1 million repayment upon the extension of the Golar Arctic facility; • payment of dividends of $65.0 million; • financing costs of $24.5 million predominately in relation to the Gimi debt facility; and • payment of $18.6 million in relation to the 1.5 million treasury shares repurchased on our equity swap in November 2019.
This was partially offset by debt proceeds drawn down of:
• $100.0 million on the new Margin Loan facility;
• $150.0 million on the term loan facility;
• $130.0 million on the Gimi facility; and
• $144.3 million in relation to our lessor VIE's.
Net cash provided by financing activities of $177.4 million in 2018 arose primarily due to proceeds of $1.2 billion from our debt facilities, including:
• $115.0 million further drawdown on the pre-delivery financing in relation to the conversion of the Hilli into a FLNG;
• $960.0 million drawdown on the post-acceptance Hilli sale and leaseback financing in relation to the Hilli Facility; and
• $101.0 million of debt proceeds drawn down by the lessor VIE, which owns the Golar Crystal, upon refinancing of its debt into a long-term loan facility. See note 5 "Variable Interest Entities" of our consolidated financial statements included herein.
This was partially offset by:
• loan repayments of $994.9 million, which includes (i) the repayment of $640.0 million on the pre-delivery financing in relation to the conversion of the Hilli into a FLNG, (ii) payment of $105.0 million in connection with the refinancing of the Golar Crystal facility mentioned above, (iii) payments of $76.9 million in connection with the Golar Tundra financing arrangement and (iv) scheduled repayments on our remaining debt facilities; and
• payment of dividends of $42.9 million.

                                                                      | 2019    | 2018    | 2017
--------------------------------------------------------------------- | ------- | ------- | -------
(in millions of $)                                                    |         |         |
Net cash provided by/(used in) operating activities                   | 106.5   | 116.7   | (35.1)
Net cash used in investing activities                                 | (264.4) | (202.5) | (419.9)
Net cash (used in)/provided by financing activities                   | (136.0) | 177.4   | 427.4
Net (decrease) increase in cash, cash equivalents and restricted cash | (293.9) | 91.6    | (27.5)
Cash, cash equivalents and restricted cash at beginning of year       | 704.3   | 612.7   | 640.2
Cash, cash equivalents and restricted cash at end of year             | 410.4   | 704.3   | 612.7


Note 3: Recent Accounting Pronouncements
Recently Adopted
In May 2014, the FASB released ASU 2014-09, “Revenue from Contracts with Customers,” to supersede nearly all existing revenue recognition guidance under GAAP. The FASB issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015–14, ASU 2016–08, ASU 2016–10, ASU 2016–12 and ASU 2016–20, respectively; all of which in combination with ASU 2014-09 were codified as Accounting Standard Codification Topic 606 (“ASC 606”). The core principle of the standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The Company adopted ASC 606 on the first day of the current fiscal year, June 25, 2018, under the modified retrospective approach, applying the amendments to prospective reporting periods. Results for reporting periods beginning on or after June 25, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under ASC 605. In connection with the adoption of ASC 606, the Company’s revenue recognition policy has been amended, refer to Note 2—Summary of Significant Accounting Policies for a description of the policy.
The cumulative effect of the changes made to the Company’s Consolidated Balance Sheet as of June 25, 2018 for the adoption of ASC 606 to all contracts with customers that were not completed as of June 24, 2018 was recorded as an adjustment to retained earnings as of the adoption date as follows:

                     | June 24, 2018 As Reported | Adjustments    | Jun e25, 2018 As Adjusted
-------------------- | ------------------------- | -------------- | -------------------------
                     |                           | (in thousands) |
Total assets         | $12,479,478               | $12,955        | $12,492,433
Deferred profit      | $720,086                  | $(160,695)     | $559,391
Total liabilities    | $5,899,435                | $(126,400)     | $5,773,035
Stockholder’s equity | $6,501,851                | $139,355       | $6,641,206


4. Income Taxes
Provision for Income Taxes
Income (loss) before income tax expense is summarized below (in thousands):
(1) Includes the elimination of intercompany foreign dividends paid to the U.S.

             |            | Fiscal Year Ended August 31, |
------------ | ---------- | ---------------------------- | ----------
             | 2019       | 2018                         | 2017
Domestic (1) | $(415,707) | $(426,897)                   | $(373,690)
Foreign (1)  | 866,411    | 800,298                      | 629,923
             | $450,704   | $373,401                     | $256,233


Discontinued Operations
Year Ended December 31, 2019 Compared with the Years Ended December 31, 2018 and 2017
On December 31, 2018, we sold all of the Class A Common Units of Netsmart owned by the Company. Prior to the sale, Netsmart comprised a separate reportable segment, which due to its significance to our historical consolidated financial statements and results of operations, is now reported as a discontinued operation as a result of the sale for all periods presented. The loss from discontinued operations represents the net of losses incurred by Netsmart for the years ended December 31, 2018 and 2017 partly offset by earnings attributable to two solutions acquired during the fourth quarter of 2017 as part of the EIS Business that we no longer support effective as of March 31, 2018. Refer to Note 17, “Discontinued Operations” to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for additional information regarding discontinued operations.

                                                       | Year Ended December 31, |           |           | 2019 %           | 2018 %
------------------------------------------------------ | ----------------------- | --------- | --------- | ---------------- | ----------------
(In thousands)                                         | 2019                    | 2018      | 2017      | Change from 2018 | Change from 2017
Loss from discontinued operations                      | $ 0                     | $(72,836) | $(11,915) | (100.0%)         | NM
Gain on sale of Netsmart                               | $ 0                     | 500,471   | 0         | (100.0%)         | NM
Income tax effect on discontinued operations           | $ 0                     | (32,497)  | 42,263    | (100.0%)         | (176.9%)
Income (loss) from discontinued operations, net of tax | $ 0                     | $395,138  | $30,348   | (100.0%)         | NM


Selected Current Liabilities
Current liabilities reflected in our consolidated balance sheets include accounts payable and other current liabilities as follows:
Included in accounts payable at December 31, 2019 and 2018, were (i) $106 million and $86 million, respectively, representing book overdrafts and (ii) $469 million and $434 million, respectively, associated with capital expenditures.

                                | As of December 31,    |
------------------------------- | --------------------- | -----
                                | 2019                  | 2018
                                | (Dollars in millions) |
Accounts payable                | $1,724                | 1,933
Other current liabilities:      |                       |
Accrued rent                    | $75                   | 45
Legal contingencies             | 88                    | 30
Other                           | 223                   | 282
Total other current liabilities | $386                  | 357


20. Borrowings and capital resources
The Group’s sources of borrowing for funding and liquidity purposes come from a range of committed bank facilities and through short-term and long-term issuances in the capital markets including bond and commercial paper issues and bank loans. We manage the basis on which we incur interest on debt between fixed interest rates and floating interest rates depending on market conditions using interest rate derivatives. The Group enters into foreign exchange contracts to mitigate the impact of exchange rate movements on certain monetary items.
This section includes an analysis of net debt, which is used to manage capital
Accounting policies
Interest-bearing loans and overdrafts are initially measured at fair value (which is equal to cost at inception), and are subsequently measured at amortised cost, using the effective interest rate method. Where they are identified as a hedged item in a designated fair value hedge relationship, fair value adjustments are recognised in accordance with policy (see note 21 “Capital and financial risk management”). Any difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowings is recognised over the term of the borrowing. Where bonds issued with certain conversion rights are identified as compound instruments they are initially measured at fair value with the nominal amounts recognised as a component in equity and the fair value of future coupons included in borrowings. These are subsequently measured at amortised cost using the effective interest rate method.
Net debt
At 31 March 2019 net debt represented 58% of our market capitalisation (2018: 46%). Average net debt at month end accounting dates over the 12-month period ended 31 March 2019 was €30.9 billion and ranged between net debt of €27.0 billion and €34.1 billion. Our consolidated net debt position at 31 March was as follows:
Notes: 1 Liabilities for payments due to holders of the equity shares in Kabel Deutschland AG under the terms of a domination and profit and loss transfer agreement are now separately disclosed in the consolidated statement of financial position and are no longer presented within short-term borrowings; gross short-term borrowings at 31 March 2018 have therefore been revised to exclude €1,838 million in respect of such liabilities.
2 At 31 March 2019 the amount includes €2,011 million (2018: €1,070 million) in relation to cash received under collateral support agreements
3 Includes €1,919 million (2018: €nil) of spectrum licence payables following the completion of recent auctions in Italy and Spain.
The fair value of the Group’s financial assets and financial liabilities held at amortised cost approximate to fair value with the exception of long-term bonds with a carrying value of €44,439 million (2018: €30,473 million) and a fair value of €43,616 million (2018: €29,724 million). Fair value is based on level 1 of the fair value hierarchy using quoted market prices.

                                                                                | 2019 €m  | Restated1 2018 €m
---------------------------------------------------------------------------------- | -------- | -----------------
Short-term borrowings                                                              |          |
Bonds                                                                              | (53)     | (3,477)
Commercial paper                                                                   | (873)    | (2,712)
Bank loans                                                                         | (1,220)  | (1,159)
Other short-term borrowings2                                                       | (2,124)  | (1,165)
                                                                                | (4,270)  | (8,513)
Long-term borrowings                                                               |          |
Bonds                                                                              | (44,439) | (30,473)
Bank loans                                                                         | (1,780)  | (2,157)
Other long-term borrowings3                                                        | (2,466)  | (278)
                                                                                | (48,685) | (32,908)
Cash and cash equivalents                                                          | 13,637   | 4,674
Other financial instruments                                                        |          |
Derivative financial instruments included in trade and other receivables (note 14) | 3,634    | 2,629
Derivative financial instruments included in trade and other payables (note 15)    | (2,444)  | (2,383)
Short-term investments (note 13)                                                   | 11,095   | 6,870
                                                                                | 12,285   | 7,116
Net debt                                                                           | (27,033) | (29,631)


20. Geographic Information
The Group’s non-current operating assets by geographic regions are as follows:
Non-current operating assets for this purpose consist of property and equipment, goodwill, intangible assets and other non-current assets.

                             | Fiscal Year Ended June 30, |
---------------------------- | -------------------------- | --------
                             | 2019                       | 2018
                             | (U.S. $ in thousands)      |
Non-current operating assets |                            |
United States                | $819,227                   | $412,112
Australia                    | 18,842                     | 16,730
India                        | 9,286                      | —
                             | $847,355                   | $428,842


Note 7 – Inventory
As of December 31, 2019 and 2018, inventory was comprised of the following:
Inventory reserves are established for estimated excess and obsolete inventory equal to the difference between the cost of the inventory and the estimated net realizable value of the inventory based on estimated reserve percentages, which consider historical usage, known trends, inventory age and market conditions. As of December 31, 2019 and 2018, our inventory reserve was $34.1 million and $30.0 million, respectively.

(In thousands)       | 2019    | 2018
-------------------- | ------- | -------
Raw materials        | $36,987 | $45,333
Work in process      | 1,085   | 1,638
Finished goods       | 60,233  | 52,877
Total Inventory, net | $98,305 | $99,848


2019 vs 2018
Net revenue in Connected Home segment decreased for the year ended December 31, 2019 compared to the prior year. Net revenue from service provider customers fell $27.8 million compared with the prior year. In addition, the North American home WiFi market contracted in fiscal 2019 affecting net revenue from non-service provider customers. The lower revenue was primarily due to declined net revenue of our home wireless, mobile and broadband modem and gateway products. Within home wireless, we experienced declines in net revenue from AC router products, WiFi mesh systems and extenders, partially offset by net revenue generated from the introduction of WiFi 6 routers. On a geographic basis, we experience net revenue declines across all three regions.
Contribution income decreased for the year ended December 31, 2019 compared to the prior year, primarily due to lower net revenue and lower gross margin attainment. Contribution margin decreased for the year ended December 31, 2019 compare to the prior year primarily due to higher product acquisition costs resulting from the burden of Section 301 tariffs and inefficiencies associated with commencing manufacturing in new locations, increased channel promotion activities and foreign exchange headwinds due to the strengthening of the U.S. dollar.
2018 vs 2017
2018 vs 2017 Connected Home segment net revenue increased for the year ended December 31, 2018 compared to the prior year. The increase in Connected Home net revenue was primarily due to home wireless and broadband modem and modem gateway products, partially offset by decreased net revenue from mobile products. The growth in home wireless was experienced across both service provider and non-service provider channels, while the increase in broadband and gateway related solely to non-service provider customers. In total, net revenue from service provider customers fell $33.5 million compared to the prior year period. Geographically, net revenue increased in Americas and EMEA, but decreased in APAC.
Contribution income increased for the year ended December 31, 2018 compared to the prior year, primarily due to higher net revenue and gross margin attainment, mainly due to favorable product mix and lower warranty expense, partially offset by higher operating expenses as a proportion of net revenue.

                          |          |          | Year Ended December 31,                |          |
------------------------- | -------- | -------- | -------------------------------------- | -------- | --------
                          | 2019     | % Change | 2018                                   | % Change | 2017
                          |          |          | (in thousands, except percentage data) |          |
Net revenue               | $711,391 | (7.7)%   | $771,060                               | 0.4%     | $768,261
Percentage of net revenue | 71.2%    |          | 72.8%                                  |          | 73.9%
Contribution income       | $67,775  | (29.7)%  | $96,340                                | 14.9%    | $83,870
Contribution margin       | 9.5%     |          | 12.5%                                  |          | 10.9%


5. Software Development and Intellectual Property Licenses
The following table summarizes the components of our capitalized software development costs (amounts in millions):
As of both December 31, 2019 and December 31, 2018, capitalized intellectual property licenses were not material.

                                                 | At December 31, |
------------------------------------------------ | --------------- | ----
                                                 | 2019            | 2018
Internally-developed software costs              | $345            | $291
Payments made to third-party software developers | 31              | 38
Total software development costs                 | $376            | $329


N. NET INCOME PER COMMON SHARE
The following table sets forth the computation of basic and diluted net income per common share:
(1) Incremental shares from the assumed conversion of the convertible notes was calculated using the difference between the average Teradyne stock price for the period and the conversion price of $31.62, multiplied by 14.5 million shares. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period.
(2) Convertible notes hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrant price of $39.68, multiplied by 14.5 million shares. The result of this calculation, representing the total intrinsic value of the warrant, was divided by the average Teradyne stock price for the period.
The computation of diluted net income per common share for 2018 excludes the effect of the potential exercise of stock options to purchase approximately 0.1 million shares and restricted stock units to purchase approximately 0.5 million shares because the effect would have been anti-dilutive.
The computation of diluted net income per common share for 2017 excludes the effect of the potential exercise of stock options to purchase approximately 0.1 million shares because the effect would have been antidilutive.

                                                                    | 2019     | 2018                                     | 2017
------------------------------------------------------------------- | -------- | ---------------------------------------- | --------
                                                                    |          | (in thousands, except per share amounts) |
Net income for basic and diluted net income per share               | $467,468 | $451,779                                 | $257,692
Weighted average common shares-basic                                | 170,425  | 187,672                                  | 198,069
Effect of dilutive potential common shares:                         |          |                                          |
Incremental shares from assumed conversion of convertible notes (1) | 4,909    | 2,749                                    | 1,298
Convertible note hedge warrant shares (2)                           | 2,698    | 485                                      | 112
Restricted stock units                                              | 1,236    | 1,385                                    | 1,800
Stock options                                                       | 178      | 278                                      | 335
Employee stock purchase rights                                      | 13       | 36                                       | 27
Dilutive potential common shares                                    | 9,034    | 4,933                                    | 3,572
Weighted average common shares-diluted                              | 179,459  | 192,605                                  | 201,641
Net income per common share-basic                                   | $2.74    | $2.41                                    | $1.30
Net income per common share-diluted                                 | $2.60    | $2.35                                    | $1.28


Cash and Cash Equivalents
Cash and cash equivalents consist of cash, checking accounts, money market accounts and temporary investments with maturities of three months or less when purchased. As of December 31, 2019 and 2018, the Company had no cash equivalents.
Restricted Cash
In connection with certain transactions, the Company may be required to deposit assets, including cash or investment shares, in escrow accounts. The assets held in escrow are subject to various contingencies that may exist with respect to such transactions. Upon resolution of those contingencies or the expiration of the escrow period, some or all the escrow amounts may be used and the balance released to the Company. As of December 31, 2019 and 2018, the Company had $72,000 and $140,000, respectively, deposited in escrow as restricted cash for the Shoom acquisition, of which any amounts not subject to claims shall be released to the pre-acquisition stockholders of Shoom pro-rata on the next anniversary dates of the closing date of the Shoom acquisition. As of December 31, 2019 and 2018, $72,000 and $70,000, respectively, was current and included in Prepaid Assets and Other Current Assets on the consolidated balance sheets. As of December 31, 2019 and 2018, $0 and $70,000 was non-current and included in Other Assets on the consolidated balance sheet.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the balance sheets that sum to the total of the same amounts show in the statement of cash flows.

                                                                        | For the Years Ended December 31, |
----------------------------------------------------------------------- | -------------------------------- | ------
(in thousands)                                                          | 2019                             | 2018
Cash and cash equivalents                                               | $4,777                           | $1,008
Restricted cash                                                         | 72                               | 70
Restricted cash included in other assets, noncurrent                    | --                               | 70
Total cash, cash equivalents, and restricted cash in the balance sheet  | 4,849                            | $1,148


3) Customer Support:
Customer support revenues consist of revenues from our customer support and maintenance agreements. These agreements allow our customers to receive technical support, enhancements and upgrades to new versions of our software products when and if available. Customer support revenues are generated from support and maintenance relating to current year sales of software products and from the renewal of existing maintenance agreements for software licenses sold in prior periods. Therefore, changes in Customer support revenues do not always correlate directly to the changes in license revenues from period to period. The terms of support and maintenance agreements are typically twelve months, and are renewable, generally on an annual basis, at the option of the customer. Our management reviews our Customer support renewal rates on a quarterly basis and we use these rates as a method of monitoring our customer service performance. For the quarter ended June 30, 2019, our Customer support renewal rate was approximately 91%, stable compared with the Customer support renewal rate during the quarter ended June 30, 2018.
Cost of Customer support revenues is comprised primarily of technical support personnel and related costs, as well as third party royalty costs.
Customer support revenues increased by $15.4 million or 1.3% during the year ended June 30, 2019 as compared to the prior fiscal year; up 3.1% after factoring the impact of $23.2 million of foreign exchange rate changes. Geographically, the overall change was attributable to an increase in Americas of $12.9 million, an increase in EMEA of $3.9 million, partially offset by a decrease in Asia Pacific of $1.5 million.
Cost of Customer support revenues decreased by $9.5 million during the year ended June 30, 2019 as compared to the prior fiscal year, due to a decrease in labour-related costs of approximately $9.9 million, partially offset by an increase in other miscellaneous costs of $0.4 million. Overall, the gross margin percentage on Customer support revenues increased to approximately 90% from approximately 89%.
For illustrative purposes only, had we accounted for revenues under proforma Topic 605, customer support revenues would have been $1,246.3 million for the year ended June 30, 2019, which would have been higher by approximately $13.8 million or 1.1% as compared to the prior fiscal year; and would have been up 3.0% after factoring the impact of $23.3 million of foreign exchange rate changes. Geographically, the overall change would have been attributable to an increase in Americas of $13.0 million and an increase in EMEA of $2.7 million, partially offset by a decrease in Asia Pacific of $1.9 million.

                                           |            |                            | Year Ended June 30, |                            |
------------------------------------------ | ---------- | -------------------------- | ------------------- | -------------------------- | --------
(In thousands)                             | 2019       | Change increase (decrease) | 2018                | Change increase (decrease) | 2017
Customer Support Revenues:                 |            |                            |                     |                            |
Americas                                   | $718,209   | $12,924                    | $705,285            | $122,870                   | $582,415
EMEA                                       | 427,712    | 3,939                      | 423,773             | 103,145                    | 320,628
Asia Pacific                               | 101,994    | (1,452)                    | 103,446             | 25,387                     | 78,059
Total Customer Support Revenues            | 1,247,915  | 15,411                     | 1,232,504           | 251,402                    | 981,102
Cost of Customer Support Revenues          | 124,343    | (9,546)                    | 133,889             | 11,324                     | 122,565
GAAP-based Customer Support Gross Profit   | $1,123,572 | $24,957                    | $1,098,615          | $240,078                   | $858,537
GAAP-based Customer Support Gross Margin % | 90.0%      |                            | 89.1%               |                            | 87.5%
% Customer Support Revenues by Geography:  |            |                            |                     |                            |
Americas                                   | 57.6%      |                            | 57.2%               |                            | 59.4%
EMEA                                       | 34.3%      |                            | 34.4%               |                            | 32.7%
Asia Pacific                               | 8.1%       |                            | 8.4%                |                            | 7.9%


(C.5) Income Taxes
Judgments and Estimates
We are subject to changing tax laws in multiple jurisdictions within the countries in which we operate. Our ordinary business activities also include transactions where the ultimate tax outcome is uncertain due to different interpretations of tax laws, such as those involving revenue sharing and cost reimbursement arrangements between SAP Group entities. In addition, the amount of income taxes we pay is generally subject to ongoing audits by domestic and foreign tax authorities. In determining our worldwide income tax provisions, judgment is involved in assessing whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments and whether to reflect the respective effect of uncertainty based on the most likely amount or the expected value. In applying these judgments, we consider the nature and the individual facts and circumstances of each uncertain tax treatment as well as the specifics of the respective jurisdiction, including applicable tax laws and our interpretation thereof.
The assessment whether a deferred tax asset is impaired requires judgment, as we need to estimate future taxable profits to determine whether the utilization of the deferred tax asset is probable. In evaluating our ability to utilize our deferred tax assets, we consider all available positive and negative evidence, including the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable. Our judgment regarding future taxable income is based on assumptions about future market conditions and future profits of SAP.
Judgment is also required in evaluating whether interest or penalties related to income taxes meet the definition of income taxes, and, if not, whether it is of financial nature. In this judgment, we particularly consider applicable local tax laws and interpretations on IFRS by national standard setters in the area of group financial reporting.
Tax Expense by Geographic Location

€ millions                  | 2019  | 2018  | 2017
--------------------------- | ----- | ----- | -----
Current tax expense         |       |       |
Germany                     | 625   | 733   | 935
Foreign                     | 1,153 | 1,019 | 716
Total current tax expense   | 1,778 | 1,752 | 1,651
Deferred tax expense/income |       |       |
Germany                     | –3    | 57    | –584
Foreign                     | –549  | –298  | –84
Total deferred tax income   | –552  | –241  | –668
Total income tax expense    | 1,226 | 1,511 | 983


14. DEFINED BENEFIT PLANS (Continued)
The information for plans with an accumulated benefit obligation in excess of plan assets is as follows (in thousands):

                               | Fiscal year-end |
------------------------------ | --------------- | -------
                               | 2019            | 2018
Projected benefit obligation   | $60,437         | $51,499
Accumulated benefit obligation | 55,941          | 47,713
Fair value of plan assets      | 12,997          | 12,486


NantHealth, Inc
Consolidated Statements of Comprehensive Loss
(Dollars in thousands)
The accompanying notes are an integral part of these Consolidated Financial Statements.

Year Ended December 31,                                             |           |
------------------------------------------------------------------- | --------- | ----------
                                                                    | 2019      | 2018
Net loss                                                            | $(62,762) | (192,152)
Other comprehensive income (loss) from foreign currency translation | 129       | (203)
Total other comprehensive income (loss)                             | 129       | (203)
Comprehensive loss                                                  | $(62,633) | $(192,355)


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (United States Dollars in thousands, except per share data and unless otherwise indicated)
Contractual Obligations
Our principal commitments consisted of obligations under our outstanding term loan and operating leases for office facilities. The following table summarizes our commitments to settle contractual obligations in cash as of December 31, 2019.
(1) The principal balance of the term loan is repaid on a quarterly basis at an amortization rate of 0.25% per quarter, with the balance due at maturity
(2) Variable interest payments on our term loan are calculated based on the interest rate as of December 31, 2019 and the scheduled maturity of the underlying term loan.
(3) Amounts presented reflect a quarterly commitment fee rate of 0.375% per annum, and assume that the entire $100 million revolving loan facility is unused (the conditions that existed as of period end) for the duration of the agreement, which matures on March 29, 2023.
(4) Our operating leases are for office space. Certain of these leases contain provisions for rent escalations and/or lease concessions. Rental payments, as well as any step rent provisions specified in the lease agreements, are aggregated and charged evenly to expense over the lease term. However, amounts included herein do not reflect this accounting treatment, as they represent the future contractual lease cash obligations.
The payments that we may be required to make under the TRA to the TRA Parties may be significant and are not reflected in the contractual obligations table set forth above. Refer to Part I, Item 1A "Risk Factors–Risks Related to Our Organizational Structure" and to Note 13 to the Notes to Consolidated Financial Statements in Item 8 for additional detail.
The payments that we may be required to make under the TRA to the TRA Parties may be significant and are not reflected in the contractual obligations table set forth above. Refer to Part I, Item 1A "Risk Factors–Risks Related to Our Organizational Structure" and to Note 13 to the Notes to Consolidated Financial Statements in Item 8 for additional detail.

                                  | Total    | Less than 1 year | 1-3 years | 3-5 years | More than 5 years
--------------------------------- | -------- | ---------------- | --------- | --------- | -----------------
Term loan(1)                      | $393,000 | $4,000           | $8,000    | $8,000    | $373,000
Interest payments on term loan(2) | 100,382  | 19,575           | 38,550    | 37,750    | 4,507
Revolving loan facility fees(3)   | 1,310    | 375              | 750       | 185       | —
Operating leases(4)               | 15,398   | 4,491            | 8,596     | 2,311     | —
Total contractual obligations     | $510,090 | $28,441          | $55,896   | $48,246   | $377,507


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data)
NOTE 8 — Costs Associated with Exit and Restructuring Activities
2016 Plan
In June 2016, we announced plans to restructure operations by phasing out production at our Elkhart, IN facility and transitioning it into a research and development center supporting our global operations ("June 2016 Plan"). Additional organizational changes were also implemented in various other locations. In 2017, we revised this plan to include an additional $1,100 in planned costs related to the relocation of our corporate headquarters in Lisle, IL and our plant in Bolingbrook, IL, both of which have now been consolidated into a single facility. Restructuring charges under this plan, which is substantially complete, were $4,284, $4,559, and $4,139 during the years ended December 31, 2019, 2018, and 2017, respectively. The total restructuring liability related to the June 2016 Plan was $233 and $668 at December 31, 2019 and 2018, respectively. Any additional costs related to line movements, equipment charges, and other costs will be expensed as incurred.
The following table displays the restructuring charges associated with the June 2016 Plan as well as a summary of the actual costs incurred through December 31, 2019:
(1) Other charges include the effects of currency translation, travel, legal and other charges.

June 2016 Plan                    | Planned Costs | Actual costs incurred through December 31, 2019
--------------------------------- | ------------- | -----------------------------------------------
Workforce reduction               | $3,075        | $3,340
Building and equipment relocation | 9,025         | 10,534
Asset impairment charge           | —             | 1,168
Other charges (1)                 | 1,300         | 988
Restructuring charges             | $13,400       | $16,030


General and Administrative Expenses
General and administrative expenses increased $38 million, or 36%, in 2019 compared to 2018. The overall increase was primarily due to increased employee compensation-related costs of $15 million, driven by headcount growth, and a one-time termination-related charge of $3 million during 2019. The overall increase was also driven by costs associated with our acquisition of Smooch in 2019 including transaction costs of $3 million and a one-time share-based compensation charge of $3 million related to accelerated stock options of Smooch. Further contributing to the overall increase was an increase in allocated shared costs of $3 million
General and administrative expenses increased $22 million, or 27%, in 2018 compared to 2017. The overall increase was primarily due to increased employee compensation-related costs of $15 million, driven by headcount growth, and increased allocated shared costs of $3 million.

                           |           | Year Ended December 31 |                                    |                       |
-------------------------- | --------- | ---------------------- | ---------------------------------- | --------------------- | ---------------------
                           | 2019      | 2018                   |                                    | 2018 to 2019 % change | 2017 to 2018 % change
                           |           |                        | (In thousands, except percentages) |                       |
General and Administrative | $ 141,076 | $ 103,491              | $ 81,680                           | 36%                   | 27%


Outstanding Indebtedness
At December 31, 2019 and 2018, our total debt outstanding consisted of the amounts set forth in the following table.
(1) Amounts are net of unamortized discounts and debt issuance costs of $25 million and $24 million as of December 31, 2019 and 2018, respectively. See Note 14, “Debt and Credit Facilities,” of the Notes to Consolidated Financial Statements for further details.

                                              | December 31, |
--------------------------------------------- | ------------ | ---------
(In millions)                                 | 2019         | 2018
Short-term borrowings                         | $ 98.9       | $ 232.8
Current portion of long-term debt             | 16.7         | 4.9
Total current debt                            | 115.6        | 237.7
Total long-term debt, less current portion(1) | 3,698.6      | 3,236.5
Total debt                                    | 3,814.2      | 3,474.2
Less: Cash and cash equivalents               | (262.4)      | (271.7)
Net debt                                      | $ 3,551.8    | $ 3,202.5


Property and Equipment
Property and equipment are as follows (in thousands):
(1) In the fourth quarter 2019, the Company announced its decision to exit the San Jose California facility (“SJ Facility”) by March 31, 2020. The Company accelerated the amortization of its SJ Facility leasehold improvements over the remaining estimated life which is estimated to be through March 31, 2020. As of December 31, 2019, the net book value of the SJ Facility leasehold improvements was $0.9 million and will be fully amortized by March 31, 2020.

December 31,                                       |         |
-------------------------------------------------- | ------- | -------
                                                   | 2019    | 2018
Computer equipment and purchased software          | $3,011  | $3,167
Machinery and equipment                            | 699     | 821
Furniture and fixtures                             | 1,115   | 1,113
Leasehold improvements (1)                         | 3,897   | 3,897
Total                                              | 8,722   | 8,998
Less accumulated depreciation and amortization (1) | (7,496) | (6,655)
Property and equipment, net                        | $1,226  | $2,343


Item 6. Selected Financial and Other Data
The following table sets forth selected historical consolidated financial data as of the dates and for the periods indicated. The selected consolidated statement of operations data for the years ended December 31, 2019, 2018 and 2017, and selected consolidated balance sheet data as of December 31, 2019 and 2018 have been derived from our audited consolidated financial statements and related notes appearing elsewhere in this Form 10-K. The selected consolidated statement of operations data for the years ended December 31, 2016 and 2015 and selected consolidated balance sheet data as of December 31, 2017, 2016 and 2015 have been derived from our audited consolidated financial statements, which are not included in this annual report on Form 10-K.
The results of operations for any period are not necessarily indicative of the results to be expected for any future period. The audited consolidated financial statements, from which the historical financial information for the periods set forth below have been derived, were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The selected historical consolidated financial data set forth below should be read in conjunction with, and are qualified by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and related notes thereto appearing elsewhere in this annual report on Form 10-K.
(1) Loss for the year ended December 31, 2019 included $1,004 million in impairment charges associated with our Connect reporting unit, a non-cash expense of $170 for the settlement of certain pension plans and $80 million in restructuring charges. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Goodwill and Indefinite-Lived Intangible Asset”. See Note 11 “Pensions and Other Post-Retirement Benefits” for further discussion on the pension settlement charge.
(2) Loss for the year ended December 31, 2018 included $1,411 million in impairment charges associated with our Connect reporting unit and $139 million in restructuring charges. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Goodwill and Indefinite- Lived Intangible Assets”.
(3) Income for the year ended December 31, 2017 included $80 million in restructuring charges.
(4) Income for the year ended December 31, 2016 included $105 million in restructuring charges.
(5) Income for the year ended December 31, 2015 included $51 million in restructuring charges, a gain of $158 million recorded from the step acquisition of Nielsen Catalina Solutions and an $8 million charge associated with the change to the Venezuelan currency exchange rate mechanism.
(6) Depreciation and amortization expense included charges for the depreciation and amortization of tangible and intangible assets acquired in business combinations of $205 million, $220 million, $219 million, $210 million and $205 million for the years ended December 31, 2019, 2018, 2017, 2016 and 2015, respectively.

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)                             | Year Ended December 31, |         |         |         |
------------------------------------------------------------------- | ----------------------- | ------- | ------- | ------- | -------
                                                                    | 2019(1)                 | 2018(2) | 2017(3) | 2016(4) | 2015(5)
Statement of Operations Data:                                       |                         |         |         |         |
Revenues                                                            | $6,498                  | $6,515  | $6,572  | $6,309  | $6,172
Depreciation and amortization(6)                                    | 756                     | 675     | 640     | 603     | 574
Operating income/(loss)                                             | (93)                    | (475)   | 1,214   | 1,130   | 1,098
Interest expense                                                    | 397                     | 394     | 374     | 333     | 311
Income/(loss) from continuing operations                            | (403)                   | (700)   | 440     | 507     | 575
Income/(loss) from continuing operations per common share (basic)   | (1.17)                  | (2.00)  | 1.20    | 1.40    | 1.55
Income/(loss) from continuing operations per common share (diluted) | (1.17)                  | (2.00)  | 1.20    | 1.39    | 1.54
Cash dividends declared per common share                            | 1.11                    | 1.39    | 1.33    | 1.21    | 1.09
                                                                    | December 31,            |         |         |         |
(IN MILLIONS)                                                       | 2019                    | 2018    | 2017    | 2016    | 2015
Balance Sheet Data:                                                 |                         |         |         |         |
Total assets                                                        | $14,319                 | $15,179 | $16,866 | $15,730 | $15,303
Long-term debt including finance leases                             | 8,309                   | 8,387   | 8,441   | 7,926   | 7,338


Deferred contract costs are classified as current or non-current within prepaid expenses and other, and other assets – net, respectively. The balances of deferred contract costs as of December 31, 2019 and 2018, included in the balance sheet were as follows:
For the years ended December 31, 2019 and 2018, the Partnership recognized expense of $3,757 and $2,740, respectively associated with the amortization of deferred contract costs, primarily within selling, general and administrative expenses in the statements of income.
Deferred contract costs are assessed for impairment on an annual basis. An impairment charge is recognized to the extent the carrying amount of a deferred cost exceeds the remaining amount of consideration expected to be received in exchange for the goods and services related to the cost, less the expected costs related directly to providing those goods and services that have not yet been recognized as expenses. There have been no impairment charges recognized for the year ended December 31, 2019 and 2018.

                           | 2019    | 2018
-------------------------- | ------- | -------
Assets                     |         |
Prepaid expenses and other | $ 3,481 | $ 2,921
Other assets - net         | 2,016   | 2,193
Total                      | $ 5,497 | $ 5,114


7. ACCRUED LIABILITIES
Other accrued expenses consisted of the following at December 31, 2019 and 2018 (in thousands):
Advances are amounts received from litigation counsel as advanced reimbursement of out-of-pocket expenses expected to be incurred by us. Board compensation of $0.4 million at December 31, 2019 and 2018 represents accrued and unpaid board and committee fees from prior periods. In the first quarter of 2020, current and prior board members agreed to waive unpaid cash fees in exchange for share-based compensation awards with an aggregate grant-date fair value of approximately $0.1 million (see Note 18).

                       | 2019   | 2018
---------------------- | ------ | ----
Advances               | 500    | -
Board compensation     | 413    | 413
Other accrued expenses | 168    | 150
                       | $1,081 | $563


Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Operating revenues. Operating revenues decreased by 2.0% from NT$151,253 million in 2018 to NT$148,202 million (US$4,955 million) in
2019, primarily due to decreased other operating revenues, decreased foundry wafer sale, and 2.5% depreciation of the NTD in 2019 from 2018. The decreased foundry wafer sale came from a decline of 2.9% in average selling price from 2018 to 2019, partially offset by a 1.1% increase in foundry wafer shipment from 7,108 thousand 8-inch equivalent wafers in 2018 to 7,189 thousand 8-inch equivalent wafers in 2019.
Operating costs. Operating costs decreased by 1.2% from NT$128,413 million in 2018 to NT$126,887 million (US$4,242 million) in 2019, primarily due to the decreased depreciation expense and other operating costs, which was partially offset by the increased direct material costs.
Gross profit and gross margin. Gross profit decreased from NT$22,840 million in 2018 to NT$21,315 million (US$713 million) in 2019. Our gross margin decreased from 15.1% in 2018 to 14.4% in 2019, primarily due to an annual decline of 2.9% in average selling price.

                                                    |        | Years Ended December 31, |
--------------------------------------------------- | ------ | ------------------------ | ------
                                                    | 2017   | 2018                     | 2019
                                                    | %      | %                        | %
Operating revenues                                  | 100.0  | 100.0                    | 100.0
Operating costs                                     | (81.9) | (84.9)                   | (85.6)
Gross profit                                        | 18.1   | 15.1                     | 14.4
Operating expenses                                  |        |                          |
Sales and marketing                                 | (2.8)  | (2.6)                    | (2.6)
General and administrative                          | (2.8)  | (3.2)                    | (3.6)
Research and development                            | (9.2)  | (8.6)                    | (8.0)
Expected credit losses                              | —      | (0.3)                    | (0.4)
Subtotal                                            | (14.8) | (14.7)                   | (14.6)
Net other operating income and expenses             | 1.1    | 3.4                      | 3.5
Operating income                                    | 4.4    | 3.8                      | 3.3
Non-operating income and expenses                   | 0.7    | (2.4)                    | (0.1)
Income from continuing operations before income tax | 5.1    | 1.4                      | 3.2
Income tax benefit (expense)                        | (0.6)  | 0.7                      | (0.1)
Net income                                          | 4.5    | 2.1                      | 3.1
Total other comprehensive income (loss), net of tax | (3.2)  | 0.6                      | 1.9
Total comprehensive income                          | 1.3    | 2.7                      | 5.0
Net income attributable to:                         |        |                          |
Stockholders of the parent                          | 6.5    | 5.1                      | 5.5
Non-controlling interests                           | (2.0)  | (3.0)                    | (2.4)
Total comprehensive income attributable to:         |        |                          |
Stockholders of the parent                          | 3.3    | 5.7                      | 7.4
Non-controlling interests                           | (2.0)  | (3.0)                    | (2.4)


(a) Revenue and Gross Margin by Segment
We conduct business globally and are managed on a geographic basis consisting of three segments: the Americas, EMEA, and APJC. Our management makes financial decisions and allocates resources based on the information it receives from our internal management system. Sales are attributed to a segment based on the ordering location of the customer. We do not allocate research and development, sales and marketing, or general and administrative expenses to our segments in this internal management system because management does not include the information in our measurement of the performance of the operating segments. In addition, we do not allocate amortization and impairment of acquisition-related intangible assets, sharebased compensation expense, significant litigation settlements and other contingencies, charges related to asset impairments and restructurings, and certain other charges to the gross margin for each segment because management does not include this information in our measurement of the performance of the operating segments.
Summarized financial information by segment for fiscal 2019, 2018, and 2017, based on our internal management system and as utilized by our Chief Operating Decision Maker (CODM), is as follows (in millions):
Amounts may not sum and percentages may not recalculate due to rounding.
Revenue in the United States was $27.4 billion, $25.5 billion, and $25.0 billion for fiscal 2019, 2018, and 2017, respectively.

Years Ended                   | July 27, 2019 | July 28, 2018 | July 29, 2017
----------------------------- | ------------- | ------------- | -------------
Revenue:                      |               |               |
Americas  .                   | $30,927       | $29,070       | $28,351
EMEA  .                       | 13,100        | 12,425        | 12,004
APJC .                        | 7,877         | 7,834         | 7,650
Total                         | $51,904       | $49,330       | $48,005
Gross margin:                 |               |               |
Americas .                    | $20,338       | $18,792       | $18,284
EMEA  .                       | 8,457         | 7,945         | 7,855
APJC .                        | 4,683         | 4,726         | 4,741
Segment total .               | 33,479        | 31,463        | 30,880
Unallocated corporate items . | (813)         | (857)         | (656)
Total                         | $32,666       | $30,606       | $30,224


By region of shipment, in the 2019 fourth quarter, Asia Pacific revenues grew sequentially by 10.6%, principally in Imaging, Analog and Microcontrollers, Americas was up by 10.5%, mainly driven by Digital and Power Discrete, and EMEA decreased by 2.0%.
On a year-over-year basis, revenues grew 9.9% in Asia Pacific, mainly due to Analog, Microcontrollers and Imaging. In Americas, revenues grew 5.4%, mainly driven by Digital and Power Discrete, while it decreased by 12.8% in EMEA, mainly due to lower sales in Automotive, Power Discrete and  analog.

             |                   | Three Months Ended |                          | % Variation |
------------ | ----------------- | ------------------ | ------------------------ | ----------- | --------------
             | December 31, 2019 | September 29, 2019 | December 31, 2018        | Sequential  | Year-Over-Year
             |                   |                    | (Unaudited, in millions) |             |
EMEA         | $538              | $549               | $617                     | (2.0)%      | (12.8)%
Americas     | 360               | 326                | 342                      | 10.5        | 5.4
Asia Pacific | 1,856             | 1,678              | 1,689                    | 10.6        | 9.9
Total        | $2,754            | $2,553             | $2,648                   | 7.9%        | 4.0%


Note 18 Other Post-Employment Benefits and Other Employee Benefit Plans
In addition to providing pension benefits, we maintain two Other Post-Employment Benefit Plans which provide a portion of healthcare, dental, vision and life insurance benefits for certain retired legacy employees. These plans are in the U.S. and Canada. Covered employees who retired on or after attaining age 55 and who had rendered at least 10 years of service were entitled to post-retirement healthcare, dental and life insurance benefits. These benefits are subject to deductibles, co-payment provisions and other limitations. The information below relates to these two plans.
Contributions made by us, net of Medicare Part D subsidies received in the U.S., are reported below as benefits paid. We may change the benefits at any time. The status of these plans, including a reconciliation of benefit obligations, a reconciliation of plan assets and the funded status of the plans, follows:

                                                                       | December 31, |
---------------------------------------------------------------------- | ------------ | --------
(In millions)                                                          | 2019         | 2018
Change in benefit obligations:                                         |              |
Benefit obligation at beginning of period                              | $ 46.4       | $ 51.3
Service cost                                                           | —            | 0.1
Interest cost                                                          | 1.6          | 1.4
Actuarial (gain) loss                                                  | (1.2)        | (1.7)
Benefits paid, net                                                     | (3.3)        | (4.5)
Plan amendments                                                        | —            | (0.2)
Benefit obligation at end of period                                    | $ 43.5       | $ 46.4
Change in plan assets:                                                 |              |
Fair value of plan assets at beginning of period                       | $ —          | $ —
Employer contribution                                                  | 3.3          | 4.5
Benefits paid, net                                                     | (3.3)        | (4.5)
Fair value of plan assets at end of period                             | $ —          | $ —
Net amount recognized:                                                 |              |
Underfunded status                                                     | $ (43.5)     | $ (46.4)
Accumulated benefit obligation at end of year                          | $ 43.5       | $ 46.4
Net amount recognized in consolidated balance sheets consists of:      |              |
Current liability                                                      | $ (5.3)      | $ (5.3)
Non-current liability                                                  | (38.2)       | (41.1)
Net amount recognized                                                  | $ (43.5)     | $ (46.4)
Amounts recognized in accumulated other comprehensive loss consist of: |              |
Net actuarial (gain) loss                                              | $ (0.6)      | $ 0.4
Prior service credit                                                   | (2.6)        | (3.0)
Total                                                                  | $ (3.2)      | $ (2.6)