AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts in millions, unless otherwise disclosed)
17. OTHER OPERATING EXPENSE
Other operating expense consists primarily of impairment charges, net losses on sales or disposals of assets and other operating expense items. The Company records impairment charges to write down certain assets to their net realizable value after an indicator of impairment is identified and subsequent analysis determines that the asset is either partially recoverable or not recoverable. These assets consisted primarily of towers and related assets, which are typically assessed on an individual basis, network location intangibles, which relate directly to towers, and tenant-related intangibles, which are assessed on a tenant basis. Net losses on sales or disposals of assets primarily relate to certain non-core towers, other assets and miscellaneous items. Other operating expenses includes acquisition-related costs and integration costs.
Other operating expenses included the following for the years ended December 31,:

                                           | 2019 (1) | 2018   | 2017 (2)
------------------------------------------ | -------- | ------ | --------
Impairment charges                         | $94.2    | $394.0 | $211.4
Net losses on sales or disposals of assets | 45.1     | 85.6   | 32.8
Other operating expenses                   | 27.0     | 33.7   | 11.8
Total Other operating expenses             | $166.3   | $513.3 | $256.0


6. Income Taxes
Income tax expense (benefit) for fiscal 2019, 2018 and 2017 were as follows (in thousands):

          | 2019    | 2018    | 2017
--------- | ------- | ------- | ------
Current:  |         |         |
Federal   | $15,160 | $63,814 | $78
State     | —       | 234     | 33
Foreign   | 11,943  | 10,134  | 10,016
          | 27,103  | 74,182  | 10,127
Deferred: |         |         |
Federal   | (3,498) | (2,958) | 77
State     | 827     | (447)   | 38
Foreign   | (7,093) | 23,793  | (481)
          | (9,764) | 20,388  | (366)
          | $17,339 | $94,570 | $9,761


Consolidated Statements of Earnings and Comprehensive Earnings
A detail of related party items included in Revenues is as follows (in millions):
(1) Transactions with FNF are summarized through November 30, 2019, the date after which FNF is no longer considered a related party.

                             |          | Year ended December 31, |
---------------------------- | -------- | ----------------------- | -----
                             | 2019 (1) | 2018                    | 2017
Software services            | $40.2    | $35.9                   | $32.8
Data and analytics services  | 19.3     | 21.7                    | 24.0
Total related party revenues | $59.5    | $57.6                   | $56.8


Personnel expenses for employees were as follows:
Personnel expenses are included in cost of sales and in operating expenses in the consolidated statement of profit or loss.

                             | December 31, |
---------------------------- | ------------ | -------
                             | 2018         | 2019
Wages and salaries           | 158,371      | 191,459
Social security              | 14,802       | 17,214
Pension expenses             | 6,937        | 8,408
Share-based payment expenses | 8,215        | 10,538
Restructuring expenses       | 178          | 108
Total                        | 188,503      | 227,727


Global Business Services
* Recast to reflect segment changes.
Global Business Services revenue increased compared to 2017 driven by strong growth in Consulting, led by key offerings in digital Global Business Services revenue increased compared to 2017 driven by strong growth in Consulting, led by key offerings in digital and cloud application, where the business has brought together technology and industry expertise to help clients on their digital journey. GPS grew year to year, while Application Management revenue was flat as reported and declined adjusted for currency compared to 2017.
While we continued to help clients move to the cloud with offerings such as Cloud Migration Factory and cloud application development, there were continued declines in the more traditional application management engagements. Within GBS, cloud revenue of $4.7 billion grew 20 percent as reported and 19 percent adjusted for currency compared to the prior year.

($ in millions)                           |          |          |                           |
----------------------------------------- | -------- | -------- | ------------------------- | -----------------------------------------------
For the year ended December 31:           | 2018     | 2017     | Yr.-to-Yr. Percent Change | Yr.-to-Yr. Percent Change Adjusted for Currency
Global Business Services external revenue | $16,595* | $16,073* | 3.2%                      | 2.3%
Consulting                                | $7,705   | $7,262   | 6.1%                      | 5.1%
Application Management                    | 7,852    | 7,821    | 0.4                       | (0.5)
Global Process Services                   | 1,037*   | 990*     | 4.8                       | 4.7


* Recast to reflect segment changes.
The 2018 GTS gross profit margin was essentially flat year to year and reflected benefits from productivity initiatives, including automation of delivery processes infused with AI and global workforce optimization.
Pre-tax income performance reflected continued investment to expand go-to-market capabilities and develop new offerings for the hybrid market.

($ in millions)                    |         |         |
---------------------------------- | ------- | ------- | ---------------------------------
For the year ended December 31:    | 2018*   | 2017*   | Yr.-to-Yr. Percent/ Margin Change
Global Technology Services         |         |         |
External total gross profit        | $10,035 | $10,022 | 0.1%
External total gross profit margin | 34.4%   | 34.3%   | 0.1 pts
Pre-tax income                     | $ 1,781 | $ 2,618 | (32.0)%
Pre-tax margin                     | 5.9%    | 8.8%    | (2.8) pts


Other intangible assets were comprised of:
Amortization expense of other intangible assets was $364.7, $316.5, and $294.3 during the years ended December 31, 2019, 2018 and 2017, respectively. Amortization expense is expected to be $400 in 2020, $383 in 2021, $379 in 2022, $347 in 2023 and $321 in 2024.

                                    | Cost       | Accum. amort. | Net book value
----------------------------------- | ---------- | ------------- | --------------
Assets subject to amortization:     |            |               |
Customer related intangibles        | $3,926.8   | $(1,083.6)    | $  2,843.2
Unpatented technology               | 504.0      | (199.5)       | 304.5
Software                            | 172.0      | (93.2)        | 78.8
Patents and other protective rights | 9.7        | (7.5)         | 2.2
Trade names                         | 7.3        | (2.8)         | 4.5
Assets not subject to amortization: |            |               |
Trade names                         | 608.9      | —             | 608.9
Balances at December 31, 2018       | $  5,228.7 | $(1,386.6)    | $  3,842.1
Assets subject to amortization:     |            |               |
Customer related intangibles        | $  4,955.4 | $(1,349.4)    | $  3,606.0
Unpatented technology               | 613.0      | (279.6)       | 333.4
Software                            | 172.2      | (111.5)       | 60.7
Patents and other protective rights | 12.0       | (8.0)         | 4.0
Trade names                         | 7.9        | (4.1)         | 3.8
Assets not subject to amortization: |            |               |
Trade names                         | 659.8      | —             | 659.8
Balances at December 31, 2019       | $ 6,420.3  | $(1,752.6)    | $ 4,667.7


Consolidated Net Revenues
The key drivers of changes in our consolidated net revenues, operating segment results, consolidated results, and sources of liquidity are presented in the order of significance.
The following table summarizes our consolidated net revenues, increase (decrease) in associated deferred net revenues recognized, and in-game net revenues (amounts in millions):
(1) In-game net revenues primarily includes the net amount of revenue recognized for downloadable content and microtransactions during the period.
Consolidated net revenues
The decrease in consolidated net revenues for 2019, as compared to 2018, was primarily driven by a decrease in revenues of $1.1 billion due to: • lower revenues recognized from the Destiny franchise (reflecting our sale of the publishing rights for Destiny to Bungie in December 2018); • lower revenues recognized from Hearthstone; • lower revenues recognized from Call of Duty franchise catalog titles; and • lower revenues recognized from Overwatch.
The decrease was partially offset by an increase in revenues of $236 million due to: • revenues from Sekiro: Shadows Die Twice, which was released in March 2019; and • revenues recognized from Crash Team Racing Nitro-Fueled, which was released in June 2019.
The remaining net decrease of $131 million was driven by various other franchises and titles.

                                                                |        | For the Years Ended December 31, |                     |
--------------------------------------------------------------- | ------ | -------------------------------- | ------------------- | --------
                                                                | 2019   | 2018                             | Increase/(decrease) | % Change
Consolidated net revenues                                       | $6,489 | $7,500                           | $(1,011)            | (13)%
Net effect from recognition (deferral) of deferred net revenues | 101    | 238                              | (137)               |
In-game net revenues (1)                                        | 3,376  | 4,249                            | (873)               | (21)%


6. Inventories
Inventories consisted of the following components at June 30, 2019 and 2018:
If the FIFO method of inventory had been used instead of the LIFO method, inventories would have been $178.4 million and $210.3 million higher as of June 30, 2019 and 2018, respectively. Current cost of LIFO-valued inventories was $793.0 million at June 30, 2019 and $760.8 million at June 30, 2018. The reductions in LIFO-valued inventories decreased cost of sales by $0.0 million during fiscal year 2019 and $0.6 million during fiscal year 2018 and $0.0 million during fiscal year 2017.

                                | June 30, |
------------------------------- | -------- | ------
($ in millions)                 | 2019     | 2018
Raw materials and supplies      | $169.8   | $157.5
Work in process                 | 425.7    | 372.5
Finished and purchased products | 192.2    | 159.2
Total inventory                 | $787.7   | $689.2


8. Other income, net
Other income, net consists of the following (in millions):

                  |                | Year Ended     |
----------------- | -------------- | -------------- | --------------
                  | April 26, 2019 | April 27, 2018 | April 28, 2017
Interest income   | $ 88           | $ 79           | $ 44
Interest expense  | (58)           | (62)           | (52)
Other income, net | 17             | 24             | 8
Other income, net | $ 47           | $ 41           | $ —


Common Stock
The following is a summary of changes during the years ended December 31, in shares of our common stock and common stock in treasury:
(1) Restricted stock shares issued for new awards under the Omnibus Incentive Plan and restricted stock shares, forfeited as shown above for the year ended December 31, 2019 includes 1,478 restricted stock shares issued and (5,024) restricted stock shares forfeited related to 2018 that were not yet reflected by our Recordkeeper as of December 31, 2018. The table above and our Consolidated Balance Sheets reflect the number of shares issued per our Recordkeeper.
(2) In connection with the acquisition of B+ Equipment in the third quarter of 2015, the Company issued 20,000 shares of restricted common stock on September 26, 2018 to certain former equity holders of B+ Equipment. These shares were issued in offshore transactions with no direct selling efforts in the United States and without registration under the Securities Act of 1933, as amended, in reliance upon the issuer safe harbor provided by Regulation S.
(3) Effective January 1, 2019, new share issuances for vested awards are netted by the number of shares required to cover the recipients' portion of income tax. The portion withheld for taxes are canceled. Prior to January 1, 2019, the shares required to cover the recipients' portion of income tax were issued and recorded to treasury stock. Shares netted for taxes in 2019 primarily relates to vesting activity for restricted stock shares issued in prior years.
(4) Other activity in 2018 primarily relates to prior period adjustment related to years not contained within the table.
(5) Repurchase of common stock for the year ended December 31, 2019 as shown above includes 71,530 shares of common stock that had been repurchased by the Company in 2018 but not yet reflected by the Recordkeeper as of December 31, 2018. The table above and our Consolidated Balance Sheets reflect the number of shares held in treasury per our Recordkeeper.

                                                                                | 2019        | 2018        | 2017
------------------------------------------------------------------------------------------------ | ----------- | ----------- | -----------
Changes in common stock:                                                                         |             |             |
Number of shares, beginning of year                                                              | 231,619,037 | 230,080,944 | 227,638,738
Restricted stock shares issued for new awards(1)                                                 | 1,478       | 569,960     | 480,283
Restricted stock shares, forfeited(1)                                                            | (110,984)   | (86,518 )   | (184,235)
Shares issued for vested restricted stock units                                                  | 164,347     | 151,280     | 607,231
Shares issued as part of acquisition(2)                                                          | —           | 20,000      | —
Shares issued for 2014 Special Performance Stock Units (PSU) Awards                              | —           | 658,783     | 749,653
Shares issued for 2015 Three-Year PSU Awards                                                     | —           | 129,139     | —
Shares issued for 2014 Three-Year PSU Awards                                                     | —           | —           | 636,723
Shares issued for Stock Leverage Opportunity Awards (SLO)                                        | 6,321       | 109,841     | 136,783
Shares granted and issued under the Omnibus Incentive Plan and Directors Stock Plan to Directors | 123,824     | 10,841      | 15,768
Canceled shares for tax netting(3)                                                               | (181,488)   | —           | —
Other activity(4)                                                                                | —           | (25,233 )   | —
Number of shares issued, end of year(1)                                                          | 231,622,535 | 231,619,037 | 230,080,944
Changes in common stock in treasury:                                                             |             |             |
Number of shares held, beginning of year                                                         | 75,964,667  | 61,485,423  | 34,156,355
Repurchase of common stock(5)                                                                    | 1,632,163   | 14,826,924  | 27,320,816
Profit sharing contribution paid in stock                                                        | (487,108)   | (538,524 )  | (502,519)
Shares withheld for taxes(3)                                                                     | —           | 190,844     | 510,771
Number of shares held, end of year(5)                                                            | 77,109,722  | 75,964,667  | 61,485,423
Number of common stock outstanding, end of year                                                  | 154,512,813 | 155,654,370 | 168,595,521


Contractual Obligations
Our contractual obligations as of August 31, 2019 are summarized below. As disclosed below, while we have certain non-cancelable purchase order obligations for property, plant and equipment, we generally do not enter into non-cancelable purchase orders for materials until we receive a corresponding purchase commitment from our customer. Non-cancelable purchase orders do not typically extend beyond the normal lead time of several weeks, at most. Purchase orders beyond this time frame are typically cancelable.
(1) Consists of interest on notes payable and long-term debt outstanding as of August 31, 2019. Certain of our notes payable and long-term debt pay interest at variable rates. We have applied estimated interest rates to determine the value of these expected future interest payments.
(2) Consists of purchase commitments entered into as of August 31, 2019 primarily for property, plant and equipment and software pursuant to legally enforceable and binding agreements.
(3) Includes the estimated company contributions to funded pension plans during fiscal year 2020 and the expected benefit payments for unfunded pension and postretirement plans from fiscal years 2020 through 2029. These future payments are not recorded on the Consolidated Balance Sheets but will be recorded as incurred.
(4) Includes (i) a $28.5 million capital commitment, (ii) a $16.2 million obligation related to a new human resource system and (iii) $33.0 million related to the one-time transition tax as a result of the Tax Act that will be paid in annual installments through fiscal year 2026.
(5) As of August 31, 2019, we have $1.5 million and $103.7 million recorded as a current and a long-term liability, respectively, for uncertain tax positions. We are not able to reasonably estimate the timing of payments, or the amount by which our liability for these uncertain tax positions will increase or decrease over time, and accordingly, this liability has been excluded from the above table.

                                                          |            |                  | Payments due by period (in thousands) |            |
--------------------------------------------------------- | ---------- | ---------------- | ------------------------------------- | ---------- | -------------
                                                          | Total      | Less than 1 year | 1-3 years                             | 3-5 years  | After 5 years
Notes payable and long-term debt                          | $2,496,465 | $375,181         | $491,655                              | $1,134,733 | $494,896
Future interest on notes payable and long-term debt(1)    | 373,762    | 109,506          | 142,082                               | 55,463     | 66,711
Operating lease obligations                               | 603,185    | 118,312          | 187,644                               | 114,297    | 182,932
Capital lease obligations                                 | 77,829     | 6,038            | 11,726                                | 10,928     | 49,137
Non-cancelable purchase order obligations(2)              | 351,230    | 289,516          | 61,537                                | 177        | —
Pension and post retirement contributions and payments(3) | 14,618     | 1,135            | 1,904                                 | 2,396      | 9,183
Other(4)                                                  | 77,669     | 17,922           | 27,863                                | 14,214     | 17,670
Total contractual obligations(5)                          | $3,994,758 | $917,610         | $924,411                              | $1,332,208 | $820,529


Results of Operations
Year Ended December 31, 2018 Compared to Year Ended December 31, 2019
During the year ended December 31, 2019, we had an average of 27.2 ships operating in our owned and bareboat fleet (including ships owned by the Partnership), having 9,518 revenue operating days and an average of 27.2 ships operating under our technical management (including 27.0 of our owned and bareboat ships). During the year ended December 31, 2018, we had an average of 26.0 ships operating in our owned and bareboat fleet (including ships owned by the Partnership), having 9,030 revenue operating days and an average of 25.5 ships operating under our technical management (including 25.0 of our owned and bareboat ships).
Revenues: Revenues increased by 8.1%, or $50.3 million, from $618.3 million during the year ended December 31, 2018 to $668.6 million during the year ended December 31, 2019. The increase in revenues is mainly attributable to an increase of $63.4 million deriving from the full operation of the GasLog Houston, the GasLog Hong Kong and the GasLog Gladstone which were delivered on January 8, 2018, March 20, 2018 and March 29, 2018, respectively and the deliveries of the GasLog Gladstone on March 15, 2019 and the GasLog Warsaw on July 31, 2019. These deliveries resulted in an increase in revenue operating days. In addition, there was an increase of $11.0 million from our vessels trading in the spot and short-term market including the impact of the unscheduled dry-dockings of the GasLog Savannah, the GasLog Singapore and the GasLog Chelsea and an increase of $2.7 million from the remaining fleet. The above increases were partially offset by a decrease of $26.1 million from the expiration of the initial time charters of the GasLog Shanghai, the GasLog Santiago, the GasLog Sydney, the GasLog Skagen, the GasLog Saratoga and the Methane Jane Elizabeth and a decrease of $0.7 million due to increased off-hire days from the remaining vessels. The average daily hire rate increased from $68,392 for the year ended December 31, 2018 to $70,167 for the year ended December 31, 2019.

                                                  |           | Year ended December 31, |
------------------------------------------------- | --------- | ----------------------- | ----------
                                                  | 2018      | 2019                    | Change
Amounts are in thousands of U.S. Dollars          |           |                         |
Revenues                                          | $618,344  | $668,637                | $50,293
Net pool allocation                               | 17,818    | (4,264)                 | (22,082)
Voyage expenses and commissions                   | (20,374)  | (23,772)                | (3,398)
Vessel operating and supervision costs            | (128,084) | (139,662)               | (11,578)
Depreciation                                      | (153,193) | (168,041)               | (14,848)
General and administrative expenses               | (41,993)  | (47,385)                | (5,392)
Impairment loss on vessels                        | —         | (162,149)               | (162,149)
Profit from operations                            | 292,518   | 123,364                 | (169,154)
Financial costs                                   | (166,627) | (190,481)               | (23,854)
Financial income                                  | 4,784     | 5,318                   | 534
Loss on derivatives                               | (6,077)   | (55,441)                | (49,364)
Share of profit of associates                     | 1,800     | 1,627                   | (173)
Total other expenses, net                         | (166,120) | (238,977)               | (72,857)
Profit/(loss) for the year                        | 126,398   | (115,613)               | (242,011)
Non-controlling interests                         | 78,715    | (14,952)                | (93,667)
Profit/(loss) attributable to owners of the Group | $47,683   | $(100,661)              | $(148,344)


Share-based payments
Disclosures of the share-based payments offered to employees are set out below. More detail on each scheme is given in the Annual Report on Remuneration 2019 on pages 102 to 132. The charge to the Income Statement in respect of share-based payments is made up as follows:

                                             | 2019 | 2018
-------------------------------------------- | ---- | ----
                                             | £m   | £m
Performance Share Plan                       | 5.1  | 4.7
Employee Share Ownership Plan                | 1.1  | 1.0
Total expense recognised in Income Statement | 6.2  | 5.7


Investing Activities. Cash flows (used in) provided by investing activities changed from a source of$65.7 million in 2018 to a use of $13.8 million in 2019. This change of$79.5 million primarily resulted from a decrease of$62.9 million in cash proceeds from the sale of company-operated restaurants, including repayments of notes issued in connection with 2018 refranchising transactions, and an increase of $9.8 million in capital expenditures.
Capital Expenditures — The composition of capital expenditures in each fiscal year is summarized in the table below (in thousands):
Our capital expenditure program includes, among other things, restaurant remodeling, information technology enhancements, and investments in new locations and equipment. In 2019, capital expenditures increased by $9.8 million primarily due to an increase of $16.2 million in purchases of assets intended for sale or sale and leaseback, partially offset by a $8.7 million decrease in restaurant capital maintenance and facility improvement spending mainly from a decrease in the average number of company-operated restaurants compared to the prior year. The increase in purchases of assets intended for sale or sale and leaseback was primarily due to the Company’s purchase of a commercial property in Los Angeles, California, on which an existing company restaurant and another retail tenant are located. The purchase price was $17.3 million, and we currently intend to sell the entire property and lease back the parcel on which our company operated restaurant is located within the next 12 months.

                                                            | 2019    | 2018
----------------------------------------------------------- | ------- | -------
Restaurants:                                                |         |
Restaurant facility expenditures                            | $9,202  | $17,949
Purchases of assets intended for sale or sale and leaseback | 21,660  | 5,497
New restaurants                                             | 1,381   | 2,088
Other, including information technology                     | 3,597   | 7,572
                                                            | 35,840  | 33,106
Corporate Services:                                         |         |
Information technology                                      | 9,405   | 4,584
Other, including facility improvements                      | 2,404   | 152
                                                            | 11,809  | 4,736
Total capital expenditures                                  | $47,649 | $37,842


The table below shows the annual pension entitlement earned during the Executive Board membership of each member of the Executive Board on reaching the scheduled retirement age of 62, based on entitlements from SAP under performance-based and salary-linked plans.
Annual Pension Entitlement
1) The rights shown here for Bill McDermott refer solely to rights under the pension plan for SAP America.
These are vested entitlements. To the extent that members continue to serve on the Executive Board and that therefore more contributions are made for them in the future, pensions actually payable at the scheduled retirement age will be higher than the amounts shown in the table.

€ thousands                                                                      | Vested on 12/31/2019 | Vested on 12/31/2018
-------------------------------------------------------------------------------- | -------------------- | --------------------
Christian Klein (Co-CEO from 10/11/2019)                                         | 8.2                  | 4.1
Adaire Fox-Martin                                                                | 11.8                 | 7.3
Michael Kleinemeier                                                              | 20.0                 | 14.8
Bernd Leukert (until 3/31/2019)                                                  | 34.7                 | 24.6
Bill McDermott (CEO until 10/10/2019, Executive Board Member until 11/15/2019)1) | 90.8                 | 105.1
Luka Mucic                                                                       | 27.6                 | 23.2
Jürgen Müller (from 1/1/2019)                                                    | 4.8                  | -
Stefan Ries                                                                      | 16.8                 | 12.6
Thomas Saueressig (from 11/1/2019)                                               | 0.2                  | -


Other Non-current Liabilities
Other non-current liabilities consisted of the following (in thousands):

                                    | 2019    | 2018
----------------------------------- | ------- | ----
Lease liabilities                   | $28,046 | $—
Other                               | 708     | 534
Total other non-current liabilities | $28,754 | $534


STOCK OPTIONS
Under BCE’s long-term incentive plans, BCE may grant options to executives to buy BCE common shares. The subscription price of a grant is based on the higher of: • the volume-weighted average of the trading price on the trading day immediately prior to the effective date of the grant • the volume-weighted average of the trading price for the last five consecutive trading days ending on the trading day immediately prior to the effective date of the grant
At December 31, 2019, 7,524,891 common shares were authorized for issuance under these plans. Options vest fully after three years of continuous employment from the date of grant. All options become exercisable when they vest and can be exercised for a period of seven years from the date of grant for options granted prior to 2019 and ten years from the date of grant for options granted in 2019.
The following table summarizes BCE’s outstanding stock options at December 31, 2019 and 2018.
(1) The weighted average market share price for options exercised was $62 in 2019 and $55 in 2018.

                         |      | 2019              |                                     | 2018              |
------------------------ | ---- | ----------------- | ----------------------------------- | ----------------- | -----------------------------------
                         | NOTE | NUMBER OF OPTIONS | WEIGHTED AVERAGE EXERCISE PRICE ($) | NUMBER OF OPTIONS | WEIGHTED AVERAGE EXERCISE PRICE ($)
Outstanding, January 1   |      | 14,072,332        | 56                                  | 10,490,249        | 55
Granted                  |      | 3,357,303         | 58                                  | 3,888,693         | 56
Exercised (1)            | 27   | (4,459,559)       | 54                                  | (266,941)         | 42
Forfeited                |      | (144,535)         | 58                                  | (39,669)          | 58
Outstanding, December 31 |      | 12,825,541        | 57                                  | 14,072,332        | 56
Exercisable, December 31 |      | 2,786,043         | 56                                  | 4,399,588         | 52


Senior Notes
On March 4, 2019, the company completed a public offering of $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2026 (the “2026 Notes”), $1.0 billion aggregate principal amount of the Company’s Senior Notes due March 15, 2029 (the “2029 Notes”), and $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2049 (the “2049 Notes”). The Company will pay interest at an annual rate of 3.75%, 4.00%, and 4.875%, on the 2026, 2029, and 2049 Notes, respectively, on a semi-annual basis on March 15 and September 15 of each year beginning September 15, 2019.
On March 12, 2015, the Company completed a public offering of $500 million aggregate principal amount of the Company’s Senior Notes due March 15, 2020 (the “2020 Notes”) and $500 million aggregate principal amount of the Company’s Senior Notes due March 15, 2025 (the “2025 Notes”). The Company pays interest at an annual rate of 2.75% and 3.80% on the 2020 Notes and 2025 Notes, respectively, on a semi-annual basis on March 15 and September 15 of each year. During the year ended June 26, 2016, the Company entered into a series of interest rate contracts hedging the fair value of a portion of the 2025 Notes par value, whereby the Company receives a fixed rate and pays a variable rate based on a certain benchmark interest rate. Refer to Note 9— Financial Instruments for additional information regarding these interest rate contracts.
On June 7, 2016, the Company completed a public offering of $800 million aggregate principal amount of Senior Notes due June 2021 (the “2021 Notes”). The Company pays interest at an annual rate of 2.80% on the 2021 Notes on a semi-annual basis on June 15 and December 15 of each year.
The Company may redeem the 2020, 2021, 2025, 2026, 2029 and 2049 Notes (collectively the “Senior Notes”) at a redemption price equal to 100% of the principal amount of such series (“par”), plus a “make whole” premium as described in the indenture in respect to the Senior Notes and accrued and unpaid interest before February 15, 2020, for the 2020 Notes, before May 15, 2021 for the 2021 Notes, before December 15, 2024 for the 2025 Notes, before January 15, 2026 for the 2026 Notes, before December 15, 2028 for the 2029 Notes, and before September 15, 2048 for the 2049 Notes. The Company may redeem the Senior Notes at par, plus accrued and unpaid interest at any time on or after February 15, 2020, for the 2020 Notes, on or after May 15, 2021 for the 2021 Notes, on or after December 24, 2024, for the 2025 Notes, on or after January 15, 2026 for the 2026 Notes, on or after December 15, 2028 for the 2029 Notes, and on or after September 15, 2048 for the 2049 Notes. In addition, upon the occurrence of certain events, as described in the indenture, the Company will be required to make an offer to repurchase the Senior Notes at a price equal to 101% of the principal amount of the respective note, plus accrued and unpaid interest.
Selected additional information regarding the Senior Notes outstanding as of June 30, 2019, is as follows:

           | Remaining Amortization period | Fair Value of Notes (Level2)
---------- | ----------------------------- | ----------------------------
           | (years)                       | (in thousands)
2020 Notes | 0.7                           | $500,855
2021 Notes | 2.0                           | $806,232
2025 Notes | 5.7                           | $528,895
2026 Notes | 6.7                           | $786,915
2029 Notes | 9.7                           | $1,063,670
2049 Notes | 29.7                          | $828,188


19. INCOME TAXES
Deferred income taxes reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. The components of our deferred tax assets and liabilities are as follows (in thousands):
As of September 27, 2019, we had $923.4 million of gross federal net operating loss ("NOL") carryforwards consisting of $479.2 million relating to the AppliedMicro Acquisition, $158.9 million relating to our acquisition of Mindspeed Technologies, Inc. in 2013, $26.2 million relating to our acquisition of BinOptics Corporation in 2014 and $259.1 million relating to losses generated by MACOM.
The federal NOL carryforwards will expire at various dates through 2037 for losses generated prior to the tax period ended September 28, 2018. For losses generated during the tax period ended September 28, 2018 and future years, the NOL carryforward period is infinite. The reported net operating loss carryforward includes any limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, which applies to an ownership change as defined under Section 382.

                                                     | September 27, 2019 | September 28, 2018
---------------------------------------------------- | ------------------ | ------------------
Deferred tax assets (liabilities):                   |                    |
Federal and foreign net operating losses and credits | $263,199           | $321,982
  Intangible assets                                  | 9,887              | (94,929)
  Property and equipment                             | (1,473)            | (6,293)
Other non-current deferred tax assets                | 16,933             | 13,850
Deferred compensation                                | —                  | 3,810
Deferred gain                                        | —                  | 6,575
Interest                                             | 7,170              | —
  Valuation allowance                                | (252,536)          | (243,112)
Total deferred tax asset                             | $43,180            | $1,883


Taxes
At €298 million (2017/18: €216 million), recognised income tax expenses are €81 million higher than the previous year’s figures.
During the reporting period, the group tax rate for the continuing segment is 42.0% (2017/18: 37.6%). The group tax rate represents the relationship between recognised income tax expenses and earnings before taxes. The increase in the ratio in the current financial year is mainly attributable to impairments on deferred taxes on loss carry-forwards in Germany. The comparatively low ratio in the previous year includes positive one-off tax effects such as tax rate changes abroad and the reduction for risk provisions.
For more information about income taxes, see the notes to the consolidated financial statements in no. 12 – income taxes page 206 .
1 Adjustment of previous year according to explanation in notes.

€ million                                          | 2017/2018 | 2018/2019
-------------------------------------------------- | --------- | ---------
Actual taxes                                       | 173       | 215
thereof Germany                                    | (14)      | (9)
thereof international                              | (159)     | (206)
thereof tax expenses/income for the current period | (194)     | (221)
thereof tax expenses/income of previous periods    | (−21)     | (−6)
Deferred taxes                                     | 43        | 83
thereof Germany                                    | (39)      | (104)
thereof international                              | (4)       | (−21)
                                                   | 216       | 298


Cash Conversion Cycle
The following table presents the components of our cash conversion cycle for the fourth quarter of each of the past three fiscal years:
(1) Days sales outstanding, referred to as DSO, calculates the average collection period of our receivables. DSO is based on ending accounts receivable and net revenue for each period. DSO is calculated by dividing accounts receivable by average net revenue per day for the current quarter (91 days for each of the fourth quarters presented above). The year over year increases in DSO in the fourth quarter of fiscal 2019 and fiscal 2018 were primarily due to less favorable shipping linearity and, in the case of fiscal 2019, one of our major distributors choosing not to take advantage of an early payment discount.
(2) Days inventory outstanding, referred to as DIO, measures the average number of days from procurement to sale of our products. DIO is based on ending inventory and cost of revenues for each period. DIO is calculated by dividing ending inventory by average cost of revenues per day for the current quarter. The increase in DIO in the fourth quarter of fiscal 2019 compared to the corresponding period of fiscal 2018 was primarily due to higher levels of finished goods on hand at the end of fiscal 2019. Compared to the corresponding period in fiscal 2017, the decrease in DIO in the fourth quarter of fiscal 2018 was due primarily to strong product sales towards the end of the fourth quarter of fiscal 2018.
(3) Days payables outstanding, referred to as DPO, calculates the average number of days our payables remain outstanding before payment. DPO is based on ending accounts payable and cost of revenues for each period. DPO is calculated by dividing accounts payable by average cost of revenues per day for the current quarter. DPO for the fourth quarter of fiscal 2019 was relatively unchanged compared to the fourth quarter of fiscal 2018, while it increased compared to the corresponding period in fiscal 2017 was primarily the result of improved vendor payables management and extensions of payment terms with our suppliers.
(4) The cash conversion cycle is the sum of DSO and DIO less DPO. Items which may cause the cash conversion cycle in a particular period to differ include, but are not limited to, changes in business mix, changes in payment terms (including extended payment terms from suppliers), the extent of shipment linearity, seasonal trends and the timing of revenue recognition and inventory purchases within the period.

                                 | Three Months Ended |                |
-------------------------------- | ------------------ | -------------- | --------------
(in days)                        |                    |                |
Three Months Ended               | April 26, 2019     | April 27, 2018 | April 28, 2017
Days sales outstanding (1)       | 70                 | 58             | 45
Days inventory outstanding (2)   | 21                 | 18             | 26
Days payables outstanding (3)    | (87)               | (90)           | (56)
Cash conversion cycle (4)        | 3                  | (14 )          | 15
Days may not add due to rounding |                    |                |


Common Stock Reserved for Issuance
As of July 31, 2019 and 2018, the Company was authorized to issue 500,000,000 shares of common stock with a par value of $0.0001 per share and, of these, 82,140,883 and 80,611,698 shares of common stock were issued and outstanding, respectively. Per the terms of the Company’s 2011 Stock Plan, on January first of each year, an additional number of shares equal to up to 5% of the number of shares of common stock issued and outstanding on the preceding December 31st is added to the Company’s 2011 Stock Plan reserve.
As of July 31, 2019 and 2018, the Company had reserved shares of common stock for future issuance as follows:
In March 2018, the Company completed a public offering of 2,628,571 shares of its common stock. The public offering price of the shares sold in the offering was $87.50 per share. No shares were sold by the Company’s stockholders in this public offering.

                                                   | July 31, 2019  | July 31, 2018
-------------------------------------------------- | -------------- | -------------
Exercise of stock options to purchase common stock | 216,727        | 537,064
Vesting of restricted stock awards                 | 2,384,673      | 2,932,155
Shares available for grant under stock plans       | 24,776,361     | 21,592,494
Total common stock reserved for issuance           | 27,377,761     | 25,061,713


NOTE 5 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized as follows (in thousands):
We do not have leasehold improvements nor do we have capitalized leases. Costs of betterments are capitalized while maintenance costs and repair costs are charged to operations as incurred. When a depreciable asset is retired from service, the cost and accumulated depreciation will be removed from the respective accounts.
Depreciation expense was $66 thousand and $73 thousand for each of the years ended December 31, 2019 and 2018, respectively.

                                         | December 31, |
---------------------------------------- | ------------ | -------
                                         | 2019         | 2018
Building and improvements                | $1,273       | $1,273
Scientific equipment                     | 597          | 598
Computer hardware and software           | 106          | 107
Machinery and equipment                  | 274          | 275
Land and improvements                    | 162          | 162
Other personal property                  | 70           | 70
Office equipment                         | 27           | 27
                                         | 2,509        | 2,512
Less: accumulated depreciation           | (1,969)      | (1,906)
Total property, plant and equipment, net | $ 540        | $ 606


16. INCOME TAXES
The components of (loss) income before (benefit from) income taxes are:

(in thousands)                                   | 2019       | 2018      | 2017
------------------------------------------------ | ---------- | --------- | -------
Domestic                                         | $(51,396)  | (27,494)  | 57,493
Foreign                                          | (83,450)   | 15,951    | 28,742
(Loss) income before (benefit from) income taxes | $(134,846) | $(11,543) | $86,235


AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts in millions, unless otherwise disclosed)
Other Redeemable Noncontrolling Interests—During the year ended December 31, 2019, the Company entered into an agreement with MTN to acquire MTN’s noncontrolling interests in each of the Company’s joint ventures in Ghana and Uganda for total consideration of approximately $523.0 million. The transaction is expected to close in the first quarter of 2020, subject to regulatory approval and other closing conditions. In addition, the Company, through a subsidiary of ATC Europe, entered into an agreement with its local partners in France to form Eure-et-Loir Réseaux Mobiles SAS (“Eure-et-Loir”), a telecommunications infrastructure company that owns and operates wireless communications towers in France. The Company’s controlling interest in Eure-et-Loir is 51% with local partners holding a 49% noncontrolling interest. The agreement provides the local partners with put options, which allow them to sell outstanding shares of Eure-et-Loir to the Company, and the Company with call options, which allow it to buy the noncontrolling shares of Eure-et-Loir. The put options, which are not under the Company’s control, cannot be separated from the noncontrolling interests. As a result, the combination of the noncontrolling interests and the redemption feature requires classification as redeemable noncontrolling interests in the consolidated balance sheet, separate from equity. The value of the Eure-et-Loir interests as of December 31, 2019 was $2.7 million.
The changes in Redeemable noncontrolling interests for the years ended December 31, 2019, 2018 and 2017 were as follows:

                                                                                |          | Year Ended December 31, |
-------------------------------------------------------------------------------- | -------- | ----------------------- | --------
                                                                                | 2019     | 2018                    | 2017
Balance as of January 1,                                                         | $1,004.8 | $1,126.2                | $1,091.3
Additions to redeemable noncontrolling interests                                 | 525.7    | —                       | —
Net income (loss) attributable to noncontrolling interests                       | 35.8     | (87.9)                  | (33.4)
Adjustment to noncontrolling interest redemption value                           | (35.8)   | 86.7                    | —
Adjustment to noncontrolling interest due to merger                              | —        | (28.1)                  | —
Purchase of redeemable noncontrolling interest                                   | (425.7)  | —                       | —
Foreign currency translation adjustment attributable to noncontrolling interests | (8.3)    | (92.1)                  | 68.3
Balance as of December 31,                                                       | $1,096.5 | $1,004.8                | $1,126.2


xii. Shareholding as on March 31, 2019:
a. Distribution of equity shareholding as on March 31, 2019:

Number of shares | Holding       | Percentage to capital | Number of accounts | Percentage to total accounts
---------------- | ------------- | --------------------- | ------------------ | ----------------------------
1 - 100          | 18,402,438    | 0.5                   | 528,148            | 70.3
101 - 500        | 37,550,103    | 1.0                   | 185,200            | 24.6
501 - 1000       | 14,900,327    | 0.4                   | 20,749             | 2.8
1001 - 5000      | 27,199,737    | 0.7                   | 13,897             | 1.9
5001 - 10000     | 9,150,929     | 0.2                   | 1,292              | 0.2
10001 - 20000    | 8,811,580     | 0.2                   | 622                | 0.1
20001 - 30000    | 5,636,878     | 0.2                   | 230                | -
30001 - 40000    | 5,424,479     | 0.1                   | 154                | -
40001- 50000     | 4,808,196     | 0.1                   | 106                | -
50001 -100000    | 21,790,964    | 0.6                   | 304                | -
100001 - above   | 3,598,709,075 | 96.0                  | 903                | 0.1
GRAND TOTAL      | 3,752,384,706 | 100.0                 | 751,605            | 100.0


19. Cash and cash equivalents
Cash at bank and in hand is denominated in the following currencies:
Cash balances with an original maturity of less than three months were held in current accounts during the year and attracted interest at a weighted average rate of 0.3% (2018: 0.3%).

                         | 2019 | 2018
------------------------ | ---- | ----
                         | £m   | £m
Sterling                 | 5.8  | 4.1
Euro                     | 0.1  | 0.2
Cash at bank and in hand | 5.9  | 4.3


AMERICAN TOWER CORPORATION AND SUBSIDIARIES SCHEDULE III—SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION (dollars in millions)
(7) Primarily includes foreign currency exchange rate fluctuations and other deductions.

                                                               | 2019       | 2018       | 2017
-------------------------------------------------------------- | ---------- | ---------- | ----------
Gross amount of accumulated depreciation at beginning          | $(5,724.7) | $(5,181.2) | $(4,548.1)
Additions during period:                                       |            |            |
Depreciation                                                   | (768.4)    | (751.4)    | (718.7)
Other                                                          | —          | —          | —
Total additions                                                | (768.4)    | (751.4)    | (718.7)
Deductions during period:                                      |            |            |
Amount of accumulated depreciation for assets sold or disposed | 121.4      | 129.3      | 100.7
Other (7)                                                      | (10.5)     | 78.6       | (15.1)
Total deductions                                               | 110.9      | 207.9      | 85.6
Balance at end                                                 | $(6,382.2) | $(5,724.7) | $(5,181.2)


Note 11: Income Taxes
The provision for income tax expense (benefit) is as follows (amounts in thousands):
(1) Fiscal years ended March 31, 2018 and 2017 adjusted due to the adoption of ASC 606.
The Company realized a deferred tax expense (benefit) for fiscal years ended 2019, 2018 and 2017 of ($50.1) million, $0.6 million and $1.2 million, respectively, in U.S. and certain foreign jurisdictions based on changes in judgment about the realizability of deferred tax assets in future years.

                                                              |           | Fiscal Years Ended March 31, |
------------------------------------------------------------- | --------- | ---------------------------- | ------
                                                              | 2019      | 2018                         | 2017
Current:                                                      |           |                              |
Federal                                                       | $170      | $223                         | $—
State and local                                               | 161       | 50                           | 62
Foreign                                                       | 9,966     | 8,295                        | 4,247
Total current income tax expense from continuing operations   | 10,297    | 8,568                        | 4,309
Deferred:                                                     |           |                              |
Federal                                                       | (43,804)  | (807)                        | (6)
State and local                                               | (773)     | (96)                         | (97)
Foreign (1)                                                   | (5,180)   | 1,467                        | 88
Deferred tax expense (benefit) from continuing operations (1) | (49,757)  | 564                          | (15)
Provision for income tax expense (benefit) (1)                | $(39,460) | $9,132                       | $4,294


Amounts recognized in Accumulated other comprehensive income (loss) at March 31, 2019 and 2018 consist of the following (amounts in thousands):
Although not reflected in the table above, the tax effect on the pension balances was $2.4 million and $2.3 million as of March 31, 2019 and 2018, respectively.

                                              | Pension |         | Other Benefits |
--------------------------------------------- | ------- | ------- | -------------- | ------
                                              | 2019    | 2018    | 2019           | 2018
Net actuarial loss (gain)                     | $16,864 | $15,691 | $(793)         | $(879)
Prior service cost                            | 1,325   | 1,413   | —              | —
Accumulated other comprehensive (income) loss | $18,189 | $17,104 | $(793)         | $(879)


Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017
Our management reviews and analyzes several key financial measures in order to manage our business and assess the quality of and variability of our service revenue, operating results and cash flows. The following summary tables present a comparison of our results of operations with respect to certain key financial measures. The comparisons illustrated in the tables are discussed in greater detail below.

                                   | Year Ended December 31, |         |
---------------------------------- | ----------------------- | ------- | -------
                                   | 2018                    | 2017    | Change
Other Operating Data               |                         |         |
Average Revenue Per Unit (ARPU)    |                         |         |
ARPU—on-net                        | $ 480                   | $ 506   | (5.1)%
ARPU—off-net                       | $ 1,155                 | $ 1,239 | (6.8)%
Average price per megabit          | $ 0.82                  | $ 1.11  | (25.9)%
Customer Connections—end of period |                         |         |
On-net                             | 68,770                  | 61,334  | 12.1%
Off-net                            | 10,974                  | 9,953   | 10.3%


Consolidated
The table below presents a summary of our results of operations for fiscal years 2019 and 2018. See Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2018, filed with the SEC on May 21, 2018, for Management’s Discussions and Analysis of Financial Condition and Results of Operations for the fiscal year ended April 1, 2017.
REVENUE
Our overall revenue increased $116.8 million in fiscal 2019, compared to fiscal 2018, primarily due to higher demand for our mobile products in support of customers based in China as well as higher demand for our base station products, partially offset by a decrease in revenue due to weakness in marquee smartphone demand experienced by our largest end customer.
We provided our products to our largest end customer (Apple) through sales to multiple contract manufacturers, which in the aggregate accounted for 32% and 36% of total revenue in fiscal years 2019 and 2018, respectively. Huawei accounted for approximately 13% and 8% of our total revenue in fiscal years 2019 and 2018, respectively. These customers primarily purchase RF and Wi-Fi solutions for cellular base stations and a variety of mobile devices, including smartphones, wearables, laptops, tablets and cellular-based applications for the IoT. In May 2019, the U.S. government imposed restrictions on the sales of products to Huawei (see Note 2 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report).
International shipments amounted to $2,610.0 million in fiscal 2019 (approximately 84% of revenue) compared to $2,449.1 million in fiscal 2018 (approximately 82% of revenue). Shipments to Asia totaled $2,446.3 million in fiscal 2019 (approximately 79% of revenue) compared to $2,329.3 million in fiscal 2018 (approximately 78% of revenue).
GROSS MARGIN
Gross margin was relatively flat for fiscal 2019 as compared to fiscal 2018, with average selling price erosion offset by favorable changes in product mix.
OPERATING EXPENSES
Research and Development
In fiscal 2019, R&D spending increased $5.4 million, compared to fiscal 2018, primarily due to higher personnel related costs, partially offset by lower product development spend driven by R&D efficiency initiatives.
Selling, General and Administrative
In fiscal 2019, selling, general and administrative expense decreased $51.7 million, or 9.8%, compared to fiscal 2018, primarily due to lower intangible amortization, partially offset by higher personnel related costs.
Other Operating Expense
In fiscal 2019, other operating expense was $52.2 million. In fiscal 2019, we recognized $15.9 million of asset impairment charges (to adjust the carrying value of certain property and equipment to reflect fair value) and $11.6 million of employee termination benefits as a result of restructuring actions (see Note 11 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this report for information on restructuring actions). In fiscal 2019, we also recorded $18.0 million of start-up costs related to new processes and operations in existing facilities.
In fiscal 2018, other operating expense was $103.8 million. In fiscal 2018, we initiated restructuring actions to improve operating efficiencies, and, as a result of these actions, we recorded approximately $18.3 million of employee termination benefits and adjusted the carrying value of certain held for sale assets located in China and the U.S. to fair market value (resulting in impairment charges totaling approximately $46.3 million). In fiscal 2018, we also recorded integration costs and restructuring costs of $6.2 million and $2.6 million, respectively, associated with the Business Combination, as well as $24.3 million of start-up costs related to new processes and operations in both existing and new facilities.
OPERATING INCOME
Our overall operating income was $216.5 million for fiscal 2019, compared to $70.3 million for fiscal 2018. This increase was primarily due to lower intangible amortization, higher revenue, and lower impairment charges on property and equipment.

                                     | 2019       |              | 2018       |
------------------------------------ | ---------- | ------------ | ---------- | ------------
(In thousands, except percentages)   | Dollars    | % of Revenue | Dollars    | % of Revenue
Revenue                              | $3,090,325 | 100.0%       | $2,973,536 | 100.0%
Cost of goods sold                   | 1,895,142  | 61.3         | 1,826,570  | 61.4
Gross profit                         | 1,195,183  | 38.7         | 1,146,966  | 38.6
Research and development             | 450,482    | 14.6         | 445,103    | 15.0
Selling, general, and administrative | 476,074    | 15.4         | 527,751    | 17.7
Other operating expense              | 52,161     | 1.7          | 103,830    | 3.5
Operatingincome                      | $216,466   | 7.0%         | $70,282    | 2.4%


Total Revenues and Operating Expenses
Excluding the effects of currency rate fluctuations, our total revenues increased in fiscal 2019 relative to fiscal 2018 due to growth in our cloud and license revenues, partially offset by decreases in our hardware revenues and services revenues. The constant currency increase in our cloud and license revenues during fiscal 2019 relative to fiscal 2018 was attributable to growth in our cloud services and license support revenues as customers purchased our applications and infrastructure technologies via cloud deployment models and license deployment models and renewed their related cloud and license support contracts to continue to gain access to our latest technology and support services, and was also attributable to growth in our cloud license and on-premise license revenues. The constant currency decreases in our hardware revenues during fiscal 2019 relative to fiscal 2018 were due to a reduction in our hardware products revenues and hardware support revenues primarily due to the emphasis we placed on the marketing and sale of our cloud-based infrastructure technologies, which resulted in reduced sales volumes of certain of our hardware product lines and also impacted the volume of customers that purchased hardware support contracts. The constant currency decrease in our services revenues during fiscal 2019 relative to fiscal 2018 was attributable to declines in our consulting and education services revenues. In constant currency, the Americas, EMEA and Asia Pacific regions contributed 40%, 33% and 27%, respectively, to the growth in our fiscal 2019 total revenues.
Excluding the effects of currency rate fluctuations, our total operating expenses increased during fiscal 2019 relative to fiscal 2018 primarily due to higher expenses related to our cloud and license business, which resulted primarily from increased headcount and infrastructure expenses to support the increase in our cloud and license business’ revenues. This constant currency expense increase was partially offset by certain expense decreases in fiscal 2019 relative to fiscal 2018, primarily lower expenses related to our hardware business and lower restructuring expenses.
In constant currency, our total operating margin increased during fiscal 2019 relative to fiscal 2018 primarily due to the increase in revenues and total operating margin as a percentage of total revenues remained flat.
(1) Comprised of Europe, the Middle East and Africa

Year Ended May 31,                              |         |        |                |
----------------------------------------------- | ------- | ------ | -------------- | -------
                                                |         |        | Percent Change |
(Dollars in millions)                           | 2019    | Actual | Constant       | 2018
Total Revenues by Geography:                    |         |        |                |
Americas                                        | $21,856 | 1%     | 2%             | $21,648
EMEA (1)                                        | 11,270  | -1%    | 3%             | 11,409
Asia Pacific                                    | 6,380   | 1%     | 5%             | 6,326
Total revenues                                  | 39,506  | 0%     | 3%             | 39,383
Total Operating Expenses                        | 25,971  | -1%    | 2%             | 26,119
Total Operating Margin                          | $13,535 | 2%     | 5%             | $13,264
Total Operating Margin %                        | 34%     |        |                | 34%
% Revenues by Geography:                        |         |        |                |
Americas                                        | 55%     |        |                | 55%
EMEA                                            | 29%     |        |                | 29%
Asia Pacific                                    | 16%     |        |                | 16%
Total Revenues by Business:                     |         |        |                |
Cloud and license                               | $32,562 | 2%     | 4%             | $31,994
Hardware                                        | 3,704   | -7%    | -5%            | 3,994
Services                                        | 3,240   | -5%    | -2%            | 3,395
Total revenues                                  | $39,506 | 0%     | 3%             | $39,383
% Revenues by Business:                         |         |        |                |
Cloud and license                               | 83%     |        |                | 81%
Hardware                                        | 9%      |        |                | 10%
Services                                        | 8%      |        |                | 9%
(1)                                             |         |        |                |
Comprised of Europe, the Middle East and Africa |         |        |                |


16. FINANCIAL INSTRUMENTS AND OTHER FAIR VALUE DISCLOSURES
The majority of NAT and its subsidiaries’ transactions, assets and liabilities are denominated in United States dollars, the functional currency of the Company. There is no significant risk that currency fluctuations will have a negative effect on the value of the Company’s cash flows.
The Company categorizes its fair value estimates using a fair value hierarchy based on the inputs used to measure fair value for those assets that are recorded on the Balance Sheet at fair value. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value as follows:
Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments and other financial assets.
-  The carrying value of cash and cash equivalents and marketable securities, is a reasonable estimate of fair value.
-  The estimated fair value for the long-term debt is considered to be equal to the carrying values since it bears spreads and variable interest rates which approximate market rates.
The carrying value and estimated fair value of the Company`s financial instruments at December 31, 2019 and 2018, are as follows:
* The 2019 Senior Secured Credit Facility and Vessel financing 2018 Newbuildings carry a floating LIBOR interest rate, plus a margin and the fair value is assumed to equal the carrying value.

All figures in USD ‘000                | Fair Value
Hierarchy
Level | 2019
Fair
Value | 2019
Carrying
Value | 2018
Fair
Value | 2018
Carrying
Value
-------------------------------------- | -------------------------- | --------------- | ------------------- | --------------- | -------------------
Recurring:                             |                            |                 |                     |                 |
Cash and Cash Equivalents              | 1                          | 48,847          | 48,847              | 49,327          | 49,327
Restricted Cash                        | 1                          | 12,791          | 12,791              | -               | -
Credit Facility                        | 2                          | -               | -                   | (313,400)       | (313,400)
2019 Senior Secured Credit Facility*   | 2                          | (291,798)       | (291,798)           | -               | -
Investment Securities                  | 1                          | 825             | 825                 | 4,197           | 4,197
Vessel financing 2018 Newbuildings*    | 2                          | (119,867)       | (119,867)           | (127,140)       | (127,140)


Movements in ordinary share capital
Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

              |                  |             | Issue price |
------------- | ---------------- | ----------- | ----------- | -------
Details       | Date             | Shares      | AU$US       | $’000
Balance       | 1 July 2017      | 130,215,813 |             | 125,177
Shares issued | 23 February 2018 | 69,129      | $8.52       | 458
Balance       | 30 June 2018     | 130,284,942 |             | 125,635
Shares issued | 24 August 2018   | 69,129      | $8.46       | 423
Share issued  | 24 August 2018   | 28,407      | $0.00       | -
Share issued  | 21 December 2018 | 129,044     | $0.00       | -
Balance       | 30 June 2019     | 130,511,522 |             | 126,058


Uncertain Tax Positions
As of June 30, 2019, 2018, and 2017, we had accrued interest expense related to uncertain tax positions of $3.4 billion, $3.0 billion, and $2.3 billion, respectively, net of income tax benefits. The provision for (benefit from) income taxes for fiscal years 2019, 2018, and 2017 included interest expense related to uncertain tax positions of $515 million, $688 million, and $399 million, respectively, net of income tax benefits.
The aggregate changes in the gross unrecognized tax benefits related to uncertain tax positions were as follows:
We settled a portion of the Internal Revenue Service (“IRS”) audit for tax years 2004 to 2006 in fiscal year 2011. In February 2012, the IRS withdrew its 2011 Revenue Agents Report related to unresolved issues for tax years 2004 to 2006 and reopened the audit phase of the examination. We also settled a portion of the IRS audit for tax years 2007 to 2009 in fiscal year 2016, and a portion of the IRS audit for tax years 2010 to 2013 in fiscal year 2018. We remain under audit for tax years 2004 to 2013. We expect the IRS to begin an examination of tax years 2014 to 2017 within the next 12 months.
As of June 30, 2019, the primary unresolved issues for the IRS audits relate to transfer pricing, which could have a material impact on our consolidated financial statements when the matters are resolved. We believe our allowances for income tax contingencies are adequate. We have not received a proposed assessment for the unresolved issues and do not expect a final resolution of these issues in the next 12 months. Based on the information currently available, we do not anticipate a significant increase or decrease to our tax contingencies for these issues within the next 12 months.
We are subject to income tax in many jurisdictions outside the U.S. Our operations in certain jurisdictions remain subject to examination for tax years 1996 to 2018, some of which are currently under audit by local tax authorities. The resolution of each of these audits is not expected to be material to our consolidated financial statements.

(In millions)                                           |           |           |
------------------------------------------------------- | --------- | --------- | ---------
Year Ended June 30,                                     | 2019      | 2018      | 2017
Beginning unrecognized tax benefits                     | $ 11,961  | $ 11,737  | $ 10,164
Decreases related to settlements                        | (316)     | (193)     | (4)
Increases for tax positions related to the current year | 2,106     | 1,445     | 1,277
Increases for tax positions related to prior years      | 508       | 151       | 397
Decreases for tax positions related to prior years      | (1,113)   | (1,176)   | (49)
Decreases due to lapsed statutes of limitations         | 0         | (3)       | (48)
Ending unrecognized tax benefits                        | $  13,146 | $  11,961 | $  11,737


Other non-operating results
The following details our other consolidated results for the years ended December 31, 2019 and 2018:
Interest expense: Interest expense increased by $1.2 million to $103.1 million for the year ended December 31, 2019 compared to $101.9 million for the same period in 2018. The increase in interest expense was primarily due to:
• $28.9 million lower capitalized interest on borrowing costs in relation to our investment in the Hilli FLNG conversion following acceptance of the vessel by the charterer in May 2018; and
• $1.5 million interest on the term loan facility, drawn in September 2019.
This was partially offset by reduced interest costs due to lower LIBOR rates, resulting in:
• $12.4 million decrease in interest expense arising on the loan facilities of our consolidated lessor VIEs;
• $8.7 million capitalized interest on borrowing costs in relation to our investments;
• $6.5 million decrease in interest expense incurred on the deposits received from Golar Partners following application of the deposit to the Hilli acquisition price and the conversion of the Hilli shareholder loans to equity following the Hilli Disposal in July 2018; and
• $1.0 million decrease in interest expense on the Hilli letter of credit, due to a contractual step down in the Hilli letter of credit from $300 million to $250 million in May 2019, and a further step down to $125 million in November 2019.
Losses on derivative instruments: Losses on derivative instruments increased by $7.5 million to a loss of $38.0 million for the year ended December 31, 2019 compared to a loss of $30.5 million for the same period in 2018. The movement was primarily due to:
Net unrealized and realized (losses)/gains on interest rate swap agreements: As of December 31, 2019, we have an interest rate swap portfolio with a notional amount of $737.5 million, none of which are designated as hedges for accounting purposes. Net unrealized losses on the interest rate swaps increased to a loss of $16.5 million for the year ended December 31, 2019 compared to a gain of $0.6 million for the same period in 2018, due to a decline in the long-term swap rates, partially offset by the decreased notional value of our swap portfolio over the period. Realized gains on our interest rate swaps decreased to a gain of $6.4 million for the year ended December 31, 2019, compared to a gain of $8.1 million for the same period in 2018. The decrease was primarily due to lower LIBOR rates for the year ended December 31, 2019.
Unrealized losses on Total Return Swap: In December 2014, we established a three month facility for a Stock Indexed Total Return Swap Programme or Equity Swap Line with DNB Bank ASA in connection with a share buyback scheme. In November 2019, we repurchased 1.5 million shares underlying the equity swap. The remaining facility has been extended to March 2020. The equity swap derivatives mark-to-market adjustment resulted in a net loss of $30.5 million recognized in the year ended December 31, 2019 compared to a loss of $30.7 million for the same period in 2018. The losses in 2019 and 2018 are due to the decline in our share price.
Unrealized mark-to-market losses on Earn-Out Units: This relates to the mark-to-market movement on the Earn-Out Units issuable in connection with the IDR reset transaction in October 2016, which we recognize as a derivative asset in our consolidated financial statements. The decrease in Golar Partners' quarterly distribution to $0.4042 per common unit on October 24, 2018 resulted in the contingent Earn-Out Units arising out of the IDR reset transaction in October 2016 not crystallizing and, accordingly, we recognized a mark-to-market loss of $7.4 million for the year ended December 31, 2018, effectively reducing the derivative asset to $nil at December 31, 2018. There was no comparative movement for the year ended December 31, 2019.
Other financial items, net: Other financial items, net decreased by $4.0 million to a loss of $5.5 million for the year ended December 31, 2019 compared to $1.5 million for the same period in 2018 primarily as a result of consolidating our lessor VIEs.
Net income attributable to non-controlling interests: Net income attributable to non-controlling interests increased by $26.4 million to $89.6 million for the year ended December 31, 2019 compared to $63.2 million for the same period in 2018 mainly due to the completion of the Hilli Disposal in July 2018. The non-controlling interest in relation to the Hilli Disposal for the year ended December 31, 2019 amounted to $61.7 million, compared to $31.3 million for the same period in 2018.
The net income attributable to non-controlling interests comprises of: • $36.5 million and $19.7 million in relation to the non-controlling shareholders who hold interests in Hilli LLC for the year ended December 31, 2019 and 2018, respectively; • $0.5 million in relation to the non-controlling shareholders who hold interests in Gimi MS Corporation for the year ended December 31, 2019, following the subscription of 30% equity interest by First FLNG Holdings in April 2019; and • $28.3 million and $31.9 million in relation to the equity interests in our remaining lessor VIEs for the year ended December 31, 2019 and 2018, respectively.

                                                     |           | December 31, |          |
---------------------------------------------------- | --------- | ------------ | -------- | --------
(in thousands of $)                                  | 2019      | 2018         | Change   | % Change
Interest income                                      | 10,479    | 10,133       | 346      | 3%
Interest expense                                     | (103,124) | (101,908)    | (1,216)  | 1%
Losses on derivative instruments                     | (38,044)  | (30,541)     | (7,503)  | 25%
Other financial items, net                           | (5,522)   | (1,481)      | (4,041)  | 100%
Income taxes                                         | (1,024)   | (1,267)      | 243      | (19)%
Net income attributable to non-controlling interests | (89,581)  | (63,214)     | (26,367) | 42%


TOTAL BCE CUSTOMER CONNECTIONS
(1) At the beginning of Q1 2019, we adjusted our wireless subscriber base to remove 167,929 subscribers (72,231 postpaid and 95,698 prepaid) as follows: (A) 65,798 subscribers (19,195 postpaid and 46,603 prepaid), due to the completion of the shutdown of the CDMA network on April 30, 2019, (B) 49,095 prepaid subscribers as a result of a change to our deactivation policy, mainly from 120 days for Bell/Virgin Mobile and 150 days for Lucky Mobile to 90 days, (C) 43,670 postpaid subscribers relating to IoT due to the further refinement of our subscriber definition as a result of technology evolution, and (D) 9,366 postpaid fixed wireless Internet subscribers which were transferred to our retail high-speed Internet subscriber base.
(2) At the beginning of Q4 2018, we adjusted our postpaid wireless subscriber base to remove 20,000 subscribers that we divested to Xplornet as a result of BCE’s acquisition of MTS in 2017.
(3) As of January 1, 2019, we are no longer reporting wholesale subscribers in our Internet, TV and residential NAS subscriber bases reflecting our focus on the retail market. Consequently, we restated previously reported 2018 subscribers for comparability.
BCE added 657,323 net new retail customer connections to its retail growth services in 2019, representing a 6.4% increase over 2018. This consisted of: • 401,955 postpaid wireless customers, and 113,454 prepaid wireless customers • 135,861 retail high-speed Internet customers • 6,053 retail TV customers comprised of 91,476 retail IPTV net customer additions and 85,423 retail satellite TV net customer losses
Retail residential NAS net losses were 263,325 in 2019, increasing by 1.7% over 2018.
Total BCE retail customer connections across all retail services grew by 1.3% in 2019, compared to last year, driven by an increase in our retail growth services customer base, offset in part by continued erosion in traditional retail residential NAS lines.
At the end of 2019, BCE retail customer connections totaled 18,983,510, and were comprised of the following: • 9,957,962 wireless subscribers, up 3.6% compared to 2018, comprised of 9,159,940 postpaid subscribers, an increase of 3.7% over last year, and 798,022 prepaid subscribers, up 2.3% year over year • 3,555,601 retail high-speed Internet subscribers, 4.3% higher than last year • 2,772,464 total retail TV subscribers, up 0.2% compared to 2018, comprised of 1,767,182 retail IPTV customers, up 5.5% year over year, and 1,005,282 retail satellite TV subscribers, down 7.8% year over year • 2,697,483 retail residential NAS lines, a decline of 8.9% compared to 2018

                                              | 2019       | 2018       | % CHANGE
--------------------------------------------- | ---------- | ---------- | --------
Wireless subscribers [1][2]                   | 9,957,962  | 9,610,482  | 3.6%
Postpaid [1][2]                               | 9,159,940  | 8,830,216  | 3.7%
Prepaid [1]                                   | 798,022    | 780,266    | 2.3%
Retail high-speed Internet subscribers [1][3] | 3,555,601  | 3,410,374  | 4.3%
Retail TV subscribers [3]                     | 2,772,464  | 2,766,411  | 0.2%
IPTV                                          | 1,767,182  | 1,675,706  | 5.5%
Satellite                                     | 1,005,282  | 1,090,705  | (7.8%)
Total growth services subscribers             | 16,286,027 | 15,787,267 | 3.2%
Wireline retail residential NAS lines [3]     | 2,697,483  | 2,960,808  | (8.9%)
Total services subscribers                    | 18,983,510 | 18,748,075 | 1.3%


Operating Segments
The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s chief executive officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates the Company’s financial information for the purpose of allocating resources and assessing the performance of these resources on a consolidated basis. The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s chief executive officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates the Company’s financial information for the purpose of allocating resources and assessing the performance of these resources on a consolidated basis.
Revenue by geographic country, based on ship-to destinations, which in certain instances may be the location of a contract manufacturer rather than the Company’s end customer, was as follows (in thousands):

              |          | Year Ended December 31, |
------------- | -------- | ----------------------- | -------
              | 2019     | 2018                    | 2017
United States | $70,702  | $56,839                 | $60,723
China         | 159,637  | 98,906                  | 148,431
Germany       | 57,657   | 58,711                  | 57,051
Thailand      | 82,413   | 68,217                  | 48,016
Other         | 94,254   | 57,218                  | 70,945
Total revenue | $464,663 | 339,891                 | 385,166


NOTE 15 – INCOME TAXES (CONTINUED)
The cumulative tax effect of significant items comprising our net deferred tax amount at the expected rate of 21% is as follows as of December 31, 2019 and 2018:
The ultimate realization of deferred tax assets is dependent upon the Company’s ability to generate sufficient taxable income during the periods in which the net operating losses expire and the temporary differences become deductible. The Company has determined that there is significant uncertainty that the results of future operations and the reversals of existing taxable temporary differences will generate sufficient taxable income to realize the deferred tax assets; therefore, a valuation allowance has been recorded. In making this determination, the Company considered historical levels of income as well as projections for future periods.
The tax years 2016 to 2019 remain open for potential audit by the Internal Revenue Service. There are no uncertain tax positions as of December 31, 2018 or December 31, 2019, and none are expected in the next 12 months. The Company’s foreign subsidiaries are cost centers that are reimbursed for expenses, so generate no income or loss. Pretax book income (loss) is all from domestic operations. Up to four years of returns remain open for potential audit in foreign jurisdictions, however any audits for periods prior to ownership by the Company are the responsibility of the previous owners.
Under certain circumstances issuance of common shares can result in an ownership change under Internal Revenue Code Section 382, which limits the Company’s ability to utilize carry-forwards from prior to the ownership change. Any such ownership change resulting from stock issuances and redemptions could limit the Company’s ability to utilize any net operating loss carry-forwards or credits generated before this change in ownership. These limitations can limit both the timing of usage of these laws, as well as the loss of the ability to use these net operating losses. It is likely that fundraising activities have resulted in such an ownership change.

                                                  | 2019         | 2018
------------------------------------------------- | ------------ | ------------
Deferred tax asset attributable to:               |              |
Net operating loss carryover                      | $3,839,000   | $2,290,000
Stock compensation                                | 320,000      | 535,000
Intangible Assets                                 | -            | 124,000
Other                                             | 36,000       | 3,000
Deferred tax asset                                | 4,195,000    | $2,952,000
Deferred tax liabilities attributable to:         |              |
Fixed assets                                      | $(13,000)    | $(5,000)
Intangibles                                       | (2,438,000)  | -
Other                                             | (16,000)     | (9,000)
Valuation allowance                               | (1,728,000)  | (2,938,000)
Deferred tax liability                            | $(4,195,000) | $(2,952,000)
Net deferred tax asset                            | $-           | $-


Cash, Cash Equivalents and Restricted cash — Cash and cash equivalents consist of cash and highly liquid shortterm investments, primarily held in non-interest-bearing investments which have original maturities of less than 90 days. Cash and cash equivalents in the amount of $127.2 million and $128.7 million at December 31, 2019 and 2018, respectively, were primarily held in non-interest-bearing accounts. Cash and cash equivalents of $125.3 million and $115.7 million at December 31, 2019 and 2018, respectively, were held in international operations. Most of these funds will not be subject to additional taxes if repatriated to the United States. There are circumstances where the Company may be unable to repatriate some of the cash and cash equivalents held by its international operations due to country restrictions.
Restricted cash includes cash whereby the Company’s ability to use the funds at any time is contractually limited or is generally designated for specific purposes arising out of certain contractual or other obligations.
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the Consolidated Balance Sheets that sum to the amounts reported in the Consolidated Statements of Cash Flows (in thousands):

                                                                |          | December 31, |          |
--------------------------------------------------------------- | -------- | ------------ | -------- | --------
                                                                | 2019     | 2018         | 2017     | 2016
Cash and cash equivalents                                       | $127,246 | $128,697     | $343,734 | $266,675
Restricted cash included in "Other current assets"              | 568      | 149          | 154      | 160
Restricted cash included in "Deferred charges and other assets" | 1,371    | 1,385        | 917      | 759
                                                                | $129,185 | $130,231     | $344,805 | $267,594


Operating Revenue
Notes: (1) Includes revenues from subscription (prepaid/postpaid), interconnect, outbound and inbound roaming, wholesale revenue from MVNOs (Mobile Virtual Network Operators) and mobile content services such as music and video.
(2) Includes equipment sales related to ICT services.
(3) Mainly from provisions of digital marketing and advertising services and regional premium OTT video.
(4) Includes energy reselling fees.
As at 31 March 2019, the transaction price attributable to unsatisfied performance obligations for ICT services rendered by NCS Pte. Ltd. is approximately S$3 billion which will be recognised as operating revenue mostly over the next 5 years.
As at 31 March 2019, the transaction price attributable to unsatisfied performance obligations for ICT services rendered by NCS Pte. Ltd. is approximately S$3 billion which will be recognised as operating revenue mostly over the next 5 years.
Service contracts with consumers typically range from a month to 2 years, and contracts with enterprises typically range from 1 to 3 years.

                                             | Group    |
-------------------------------------------- | -------- | --------
                                             | 2019     | 2018
                                             | S$ Mil   | S$ Mil
Mobile service (1)                           | 5,395.7  | 5,737.3
Sale of equipment                            | 2,876.7  | 2,414.5
Handset operating lease income               | 140.5    | 25.2
Mobile                                       | 8,412.9  | 8,177.0
Data and Internet                            | 3,340.9  | 3,435.7
Business solutions                           | 604.1    | 560.7
Cyber security                               | 548.7    | 527.1
Other managed services                       | 1,880.8  | 1,920.0
Infocomm Technology (“ICT”) (2)              | 3,033.6  | 3,007.8
Digital businesses (3)                       | 1,245.3  | 1,113.1
Fixed voice                                  | 899.0    | 1,084.3
Pay television                               | 372.7    | 369.4
Others (4)                                   | 67.3     | 80.7
Operating revenue                            | 17,371.7 | 17,268.0
Operating revenue                            | 17,371.7 | 17,268.0
Other income                                 | 224.7    | 258.8
Interest and investment income (see Note 10) | 38.1     | 45.5
Total                                        | 17,634.5 | 17,572.3


Cost of revenues. Cost of revenues increased by 23% year-on-year to RMB209.8 billion. The increase primarily reflected greater content costs, costs of FinTech services and channel costs. As a percentage of revenues, cost of revenues increased to 56% for the year ended 31 December 2019 from 55% for the year ended 31 December 2018. The following table sets forth our cost of revenues by line of business for the years ended 31 December 2019 and 2018:
Cost of revenues for VAS increased by 27% year-on-year to RMB94,086 million. The increase was mainly due to greater content costs for services and products such as live broadcast services, online games and video streaming subscriptions, as well as channel costs for smart phone games.
Cost of revenues for FinTech and Business Services increased by 35% year-on-year to RMB73,831 million. The increase primarily reflected greater costs of payment-related and cloud services due to the enhanced scale of our payment and cloud activities.
Cost of revenues for Online Advertising decreased by 6% year-on-year to RMB34,860 million. The decrease was mainly driven by lower content costs for our advertising-funded long form video service resulting from fewer content releases and improved cost efficiency, partly offset by other cost items.

                              | Year ended 31 December              |          |            |
----------------------------- | ----------------------------------- | -------- | ---------- | ----------
                              | 2019                                |          | 2018       |
                              |                                     | % of     |            | % of
                              |                                     | segment  |            | segment
                              | Amount                              | revenues | Amount     | revenues
                              |                                     |          | (Restated) | (Restated)
                              | (RMB in millions, unless specified) |          |            |
VAS                           | 94,086                              | 47%      | 73,961     | 42%
FinTech and Business Services | 73,831                              | 73%      | 54,598     | 75%
Online Advertising            | 34,860                              | 51%      | 37,273     | 64%
Others                        | 6,979                               | 92%      | 4,742      | 98%
Total cost of revenues        | 209,756                             |          | 170,574    |


Item 14. Principal Accounting Fees and Services
The following table sets forth the fees for services provided and reasonably expected to be billed by Malone Bailey LLP. The following is a summary of the fees billed to the Company for professional services rendered for the fiscal years ended December 31, 2019 and 2018.
Audit Fees: For the fiscal years ended December 31, 2019 and 2018, the aggregate audit fees billed by our independent auditors were for professional services rendered for
audits and quarterly reviews of our consolidated financial statements, and assistance with reviews of registration statements and documents filed with the SEC.
Audit-Related Fees: Audit-related fees are for assurance and other activities not explicitly related to the audit of our financial statements.
Tax Fees: For the fiscal years ended December 31, 2019 and 2018, there were no tax fees, respectively.
All Other Fees: For the fiscal years ended December 31, 2019 and 2018, there were $0 and $0, respectively.
Audit Committee Pre-Approval Policies and Procedures. The Audit Committee oversees and monitors our financial reporting process and internal control system, reviews and
evaluates the audit performed by our registered independent public accountants and reports to the Board any substantive issues found during the audit. The Audit Committee
is directly responsible for the appointment, compensation and oversight of the work of our registered independent public accountants. The Audit Committee convenes on a
quarterly basis to approve each quarterly filing, and an annual basis to review the engagement of the Company’s external auditor.
The Audit Committee has considered whether the provision of Audit-Related Fees, Tax Fees, and all other fees as described above is compatible with maintaining
Marcum LLP’s and Malone Bailey LLP’s independence and has determined that such services for fiscal years 2019 and 2018, respectively, were compatible. All such services
were approved by the Audit Committee pursuant to Rule 2-01 of Regulation S-X under the Exchange Act to the extent that rule was applicable.

                   | Fiscal Year | Fiscal Year
------------------ | ----------- | -----------
                   | 2019        | 2018
Audit fees         | $55,000     | $54,550
Audit-related fees | $-          | $-
Tax Fees           | $-          | $-
All other fees     | -           | $-
Total              | 55,000      | $54,550