Recently Adopted Accounting Pronouncements
On April 1, 2018, the Company adopted ASU 2014-09-Revenue from Contracts with Customers (ASC 606) and all related amendments (“New Revenue Standard”) using the modified retrospective method. The Company has applied the new revenue standard to all contracts that were entered into after adoption and to all contracts that were open as of the initial date of adoption. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The adoption of the new standard impacts the Company's net sales on an ongoing basis depending on the relative amount of revenue sold through its distributors, the change in inventory held by its distributors, and the changes in price concessions granted to its distributors. Previously, the Company deferred revenue and cost of sales on shipments to distributors until the distributor sold the product to their end customer. As required by the new revenue standard, the Company no longer defers revenue and cost of sales, but rather, estimates the effects of returns and allowances provided to distributors and records revenue at the time of sale to the distributor. Sales to non-distributor customers, under both the previous and new revenue standards, are generally recognized upon the Company’s shipment of the product. The cumulative effect of the changes made to the consolidated April 1, 2018 balance sheet for the adoption of the new revenue standard is summarized in the table of opening balance sheet adjustments below. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on the consolidated income statement and balance sheet for the period ended March 31, 2019 was as follows (in millions):
The significant changes in the financial statements noted in the table above are primarily due to the transition from sellthrough revenue recognition to sell-in revenue recognition as required by the New Revenue Standard, which eliminated the balance of deferred income on shipments to distributors, significantly reduced accounts receivable, and significantly increased retained earnings. Prior to the acquisition of Microsemi, Microsemi already recognized revenue on a sell-in basis, so the impact of the adoption of the New Revenue Standard was primarily driven by Microchip's historical business excluding Microsemi.

                                      |             | For the year ended March 31, 2019                 |
------------------------------------- | ----------- | ------------------------------------------------- | ---------------------------------
Income Statement                      | As reported | Balances without adoption of New Revenue Standard | Effect of Change Higher / (Lower)
Net sales                             | $5,349.5    | $5,380.1                                          | $(30.6)
Cost of sales                         | $2,418.2    | $2,434.0                                          | $(15.8)
Gross profit                          | $2,931.3    | $2,946.1                                          | $(14.8)
Income before income taxes            | $204.5      | $219.3                                            | $(14.8)
Income tax (benefit) provision        | $(151.4)    | $(149.0)                                          | $(2.4)
Net income from continuing operations | $355.9      | $368.3                                            | $(12.4)


A.4.2 Income
As a result of the development described for the segments, Income from continuing operations before income taxes declined 7 %. Severance charges for continuing operations were € 619 million, of which € 492 million were in Industrial Businesses. Accordingly, Adjusted EBITA margin Industrial Businesses excluding severance charges was 11.5 % in fiscal 2019. In fiscal 2018, severance charges for continuing operations were € 923 million, of which € 669 million were in Industrial Businesses.
The tax rate of 25% for fiscal 2019 was below the tax rate of 26% for the prior year, benefiting mainly from the reversal of income tax provisions outside Germany. As a result, Income from continuing operations declined 6%.
Income from discontinued operations, net of income taxes in the prior year included positive effects from the release of a provision related to former Communications activities.
The decline in basic earnings per share reflects the decrease of Net income attributable to Shareholders of Siemens AG, which was € 5,174 million in fiscal 2019 compared to € 5,807 million in fiscal 2018, partially offset by a lower number of weighted average shares outstanding. Basic earnings per share excluding severance charges was € 6.93.
As expected, ROCE at 11.1 % was below the target range set in our Siemens Financial Framework, reflecting in particular the effects from portfolio transactions in recent years, including the acquisitions of Mentor and Mendix at Digital Industries and the merger of Siemens’ wind power business with Gamesa Corporación Tecnológica, S. A. that created SGRE. The decline year-over-year was due both to lower income before interest after tax and to higher average capital employed.

                                                         |         | Fiscal year |
-------------------------------------------------------- | ------- | ----------- | --------
(in millions of €, earnings per share in €)              | 2019    | 2018        | % Change
Digital Industries                                       | 2,880   | 2,898       | (1) %
Smart Infrastructure                                     | 1,500   | 1,574       | (5) %
Gas and Power                                            | 679     | 722         | (6) %
Mobility                                                 | 983     | 958         | 3 %
Siemens Healthineers                                     | 2,461   | 2,221       | 11 %
Siemens Gamesa Renewable Energy                          | 482     | 483         | 0 %
Industrial Businesses                                    | 8,986   | 8,857       | 1 %
Adjusted EBITA margin Industrial Businesses              | 10.9 %  | 11.1 %      |
Financial Services                                       | 632     | 633         | 0 %
Portfolio Companies                                      | (71)    | (305)       | 77 %
Reconciliation to Consolidated Financial Statements      | (2,028) | (1,135)     | (79) %
Income from continuing operations before income taxes    | 7,518   | 8,050       | (7) %
Income tax expenses                                      | (1,872) | (2,054)     | 9 %
Income from continuing operations                        | 5,646   | 5,996       | (6) %
Income from discontinued operations, net of income taxes | 3       | 124         | (98) %
Net income                                               | 5,648   | 6,120       | (8) %
Basic earnings per share                                 | 6.41    | 7.12        | (10) %
ROCE                                                     | 11.1 %  | 12.6 %      |


Provision for Income Taxes
The effective income tax rate is calculated by dividing the provision for income taxes by income before income taxes. The effective income tax rate for 2019 was 13.0% compared to 18.3% for 2018.
The decrease in the effective income tax rate and the provision for income taxes was primarily due to the recognition of approximately $2.2 billion of a non-recurring tax benefit in connection with the disposition of preferred stock, representing a minority interest in a foreign affiliate in 2019 compared to the non-recurring deferred tax benefit of approximately $2.1 billion as a result of an internal reorganization of legal entities within the historical Wireless business, which was offset by a goodwill charge that is not deductible for tax purposes in 2018.
A reconciliation of the statutory federal income tax rate to the effective income tax rate for each period is included in Note 12 to the consolidated financial statements.

                           |        |         | (dollars in millions) Increase/ (Decrease) |
-------------------------- | ------ | ------- | ------------------------------------------ | -------
Years Ended December 31,   | 2019   | 2018    | 2019 vs. 2018                              |
Provision for income taxes | $2,945 | $ 3,584 | $ (639)                                    | (17.8)%
Effective income tax rate  | 13.0%  | 18.3%   |                                            |


16. Restructuring and other exit costs, net
During the fourth quarter of fiscal year 2018, the Board of Directors approved a world-wide restructuring plan (“Fiscal 2018 Plan”) to support the Company's strategic priorities of completing the subscription transition, digitizing the Company, and re-imagining manufacturing, construction, and production. Through the restructuring, Autodesk seeks to reduce its investments in areas not aligned with its strategic priorities, including in areas related to research and development and go-to-market activities. At the same time, Autodesk plans to further invest in strategic priority areas related to digital infrastructure, customer success, and construction. By re-balancing resources to better align with the Company’s strategic priorities, Autodesk is positioning itself to meet its long-term goals. This world-wide restructuring plan included a reduction in force of approximately 11% of the Company’s workforce, or 1,027 employees, and the consolidation of certain leased facilities. By January 31, 2019, the personnel and facilities related actions included in this restructuring plan were substantially complete.
During Fiscal 2019, restructuring charges under the Fiscal 2018 Plan included $39.2 million in employee termination benefits and $3.2 million in lease termination and other exit costs.
The following tables set forth the restructuring charges and other facility exit costs, net during the fiscal years ended January 31, 2019 and 2018:
(1) Adjustments primarily relate to the impact of foreign exchange rate changes, settlement of lease contracts, and certain write offs related to fixed assets.
(2) The current portions of the reserve are recorded in the Consolidated Balance Sheets under “Other accrued liabilities.” There was no non-current portion as of January 31, 2019.

                                           | Balances, January 31, 2018 | Additions | Payments | Adjustments (1) | Balances, January 31, 2019
------------------------------------------ | -------------------------- | --------- | -------- | --------------- | --------------------------
Fiscal 2018 Plan                           |                            |           |          |                 |
Employee terminations costs                | $53.0                      | $39.2     | $(89.7)  | $(0.5)          | $2.0
Facility terminations and other exit costs | 2.5                        | 3.2       | (5.7)    | 0.1             | 0.1
Total                                      | $55.5                      | $42.4     | $(95.4)  | $(0.4)          | $2.1
Current portion (2)                        | $55.5                      |           |          |                 | $2.1
Total                                      | $55.5                      |           |          |                 | $2.1


Expected Cash Flows
The Combined Pension Plan payments, post-retirement health care benefit payments and premiums, and life insurance premium payments are either distributed from plan assets or paid by us. The estimated benefit payments provided below are based on actuarial assumptions using the demographics of the employee and retiree populations and have been reduced by estimated participant contributions.

                                   | Combined Pension Plan | Post-Retirement Benefit Plans | Medicare Part D Subsidy Receipts
---------------------------------- | --------------------- | ----------------------------- | --------------------------------
                                   |                       | (Dollars in millions)         |
Estimated future benefit payments: |                       |                               |
2020                               | $971                  | 242                           | (6)
2021                               | 921                   | 238                           | (6)
2022                               | 893                   | 232                           | (6)
2023                               | 868                   | 226                           | (5)
2024                               | 842                   | 219                           | (5)
2025-2029                          | 3,813                 | 986                           | (20)


Unbilled receivables are client committed amounts for which revenue recognition precedes billing, and billing is solely subject to the passage of time.
Unbilled receivables are expected to be billed in the future as follows

(Dollars in thousands) | December 31, 2019 |
---------------------- | ----------------- | ----
1 year or less         | $180,219          | 60%
1-2 years              | 91,132            | 30%
2-5 years              | 30,604            | 10%
                       | $301,955          | 100%


LONG-TERM DEBT
In addition to the Facility, the Company also had the following long-term obligations at fiscal 2019 and fiscal 2018.

                                                                                | 2019        | 2018
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ------------
Note payable to a bank (“Real Estate Loan”), interest payable at a fixed rate of 2.99% with monthly installments of principal and interest of $38,344 through August 2021 with remaining principal due September 2021, collateralized by three distribution facilities | $ 2,263,040 | $  2,648,179
Note payable, interest payable at a fixed rate of 4.50% with quarterly installments of principal and interest of $49,114 through June 2023 with remaining principal due September 2023                                                                                | 1,395,351   | 1,476,772
Note payable, interest-free with varying installments during fiscal 2019                                                                                | —           | 629,746
                                                                                | 3,658,391   | 4,754,697
Less current maturities                                                                                | (532,747)   | (1,096,306)
                                                                                | $3,125,644  | $3,658,391


The fair value of the derivative feature of the 127,346 and 295,945 warrants issued to the placement agent of the Company’s 2016 private offering and to a holder of its debt for debt cancellation in connection with the Merger, respectively on the issuance dates and at the balance sheet date were calculated using a Black-Scholes option model valued with the following assumptions:
Risk-free interest rate: The Company uses the risk-free interest rate of a U.S. Treasury Note with a similar expected term on the date of measurement.
Dividend yield: The Company uses a 0% expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring dividends in the near future.
Volatility: The Company calculates the expected volatility of the stock price based on the corresponding volatility of the Company’s peer group stock price for a period consistent with the warrants’ expected term.
Expected term: The Company’s expected term is based on the remaining contractual maturity of the warrants.
During the year ended December 31, 2019 and 2018, the Company marked the derivative feature of the warrants to fair value and recorded a loss of $343,857 and a gain
of $250,241 relating to the change in fair value, respectively.

                        | December 31, 2018 | December 31, 2019
----------------------- | ----------------- | -----------------
Exercise price          | 1.25              | 1.25
Risk-free interest rate | 2.46%             | 1.59%
Dividend yield          | 0.00%             | 0.00%
Expected volatility     | 152%              | 133%
Contractual term        | 2.15 years        | 1.15 years


Cash Flows
The following table summarizes our cash flows for the years ended December 31, 2019, 2018 and 2017 (in thousands):
At December 31, 2019, $6.7 million of the $539.7 million of cash, cash equivalents and restricted cash was held by foreign subsidiaries. Our intention is to indefinitely reinvest foreign earnings in our foreign subsidiaries. If these earnings were used to fund domestic operations, they would be subject to additional income taxes upon repatriation.

                                                                        |          | Year Ended December 31, |
----------------------------------------------------------------------- | -------- | ----------------------- | --------
                                                                        | 2019     | 2018                    | 2017
Cash, cash equivalents and restricted cash at beginning of period       | $60,068  | $103,051                | $60,765
Cash provided by operating activities                                   | 10,317   | 3,295                   | 4,863
Cash used in investing activities                                       | (24,574) | (48,413)                | (70,972)
Cash provided by financing activities                                   | 494,101  | 3,099                   | 108,475
Effects of exchange rates on cash, cash equivalents and restricted cash | (250)    | (964)                   | (80)
Cash, cash equivalents and restricted cash at end of period             | $539,662 | $60,068                 | $103,051


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data)
We expect to make $493 of contributions to the U.S. plans and $261 of contributions to the non-U.S. plans during 2020.
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

          | U.S. Pension Plans | Non-U.S. Pension Plans | Post-Retirement Life Insurance Plan
--------- | ------------------ | ---------------------- | -----------------------------------
2020      | $15,514            | $46                    | $393
2021      | 15,399             | 54                     | 377
2022      | 15,218             | 82                     | 362
2023      | 14,983             | 69                     | 347
2024      | 14,706             | 84                     | 332
2025-2029 | 68,594             | 715                    | 1,468
Total     | $144,414           | $1,050                 | $3,279


The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within our consolidated balance sheets as of December 31, 2019 and 2018 to the total of such amounts as presented in the consolidated statements of cash flows (in thousands):
(1) See Note 7. “Restricted Cash and Investments” to our consolidated financial statements for discussion of our “Restricted cash” arrangements.
During the year ended December 31, 2019, we sold marketable securities for proceeds of $52.0 million and realized no gain or loss on such sales. During the years ended December 31, 2018 and 2017, we sold marketable securities for proceeds of $10.8 million and $118.3 million, respectively, and realized gains of less than $0.1 million on such sales in each respective period. See Note 11. “Fair Value Measurements” to our consolidated financial statements for information about the fair value of our marketable securities.

                                                  | Balance Sheet Line Item                   | 2019        | 2018
------------------------------------------------- | ----------------------------------------- | ----------- | -----------
Cash and cash equivalents                         | Cash and cash equivalents                 | $ 1,352,741 | $ 1,403,562
Restricted cash – current (1)                     | Prepaid expenses and other current assets | 13,697      | 19,671
Restricted cash – noncurrent (1) .                | Restricted cash and investments           | 80,072      | 139,390
Total cash, cash equivalents, and restricted cash |                                           | $ 1,446,510 | $ 1,562,623


The following table summarizes the components of the intangible assets acquired and their estimated useful lives by VMware in conjunction with the acquisition (amounts in table in millions):
The excess of the purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The estimated fair value assigned to the tangible assets, identifiable intangible assets, and assumed liabilities were based on management's estimates and assumptions. The initial allocation of the purchase price was based on preliminary valuations and assumptions and is subject to change within the measurement period, including current and non-current income taxes payable and deferred taxes as additional information is received and tax returns are finalized. VMware expects to finalize the allocation of the purchase price within the measurement period. Management expects that goodwill and identifiable intangible assets will not be deductible for tax purposes.

                                          | Weighted-Average Useful Lives (in years) | Fair Value Amount
----------------------------------------- | ---------------------------------------- | -----------------
Purchased technology                      | 4.2                                      | $232
Customer relationships and customer lists | 7.0                                      | 215
Trademarks and tradenames                 | 5.0                                      | 25
Other                                     | 2.0                                      | 20
Total definite-lived intangible assets    |                                          | $492


GasLog Ltd. and its Subsidiaries
Notes to the consolidated financial statements (Continued)
For the years ended December 31, 2017, 2018 and 2019
(All amounts expressed in thousands of U.S. Dollars, except share and per share data)
21. Related Party Transactions
The Group had the following balances with related parties which have been included in the consolidated statements of financial position:
Current Assets
Dividends receivable and other amounts due from related parties
On June 28, 2019, GasLog transferred to Golar its 100 shares of the common capital stock of the Cool Pool Limited (Note 1). As of December 31, 2019, the receivable balance from the Cool Pool is nil.

                                             | As of December 31, |
-------------------------------------------- | ------------------ | ----
                                             | 2018               | 2019
Dividends receivable from associate (Note 5) | 885                | 450
Due from The Cool Pool Limited               | 32,397             | —
Other receivables                            | 113                | 123
Total                                        | 33,395             | 573


5. Goodwill and Purchased Intangible Assets
(b) Purchased Intangible Assets
The following tables present details of our purchased intangible assets (in millions):
Purchased intangible assets include intangible assets acquired through acquisitions as well as through direct purchases or licenses.
Impairment charges related to purchased intangible assets were approximately $47 million for fiscal 2017. Impairment charges were as a result of declines in estimated fair value resulting from the reduction or elimination of expected future cash flows associated with certain of our technology and IPR&D intangible assets.

July 27, 2019                                                | Gross  | Accumulated Amortization | Net
------------------------------------------------------------ | ------ | ------------------------ | ------
Purchased intangible assets with finite lives:               |        |                          |
Technology  .                                                | $3,270 | $(1,933)                 | $1,337
Customer relationships .                                     | 840    | (331)                    | 509
Other                                                        | 41     | (22)                     | 19
Total purchased intangible assets with finite lives          | 4,151  | (2,286)                  | 1,865
In-process research and development, with indefinite lives . | 336    | —                        | 336
Total .                                                      | $4,487 | $(2,286)                 | $2,201


Restricted Stock and Restricted Stock Units ("Restricted Stock Awards")
As of August 29, 2019, there were 16 million shares of Restricted Stock Awards outstanding, 14 million of which contained only service conditions. For service-based Restricted Stock Awards, restrictions generally lapse in one-fourth or one-third increments during each year of employment after the grant date. Restrictions lapse on Restricted Stock granted in 2019 with performance or market conditions over a three-year period if conditions are met. At the end of the performance period, the number of actual shares to be awarded will vary between 0% and 200% of target amounts, depending upon the achievement level. Restricted Stock Awards activity for 2019 is summarized as follows:

                                  | Number of Shares | Weighted-Average Grant Date Fair Value Per Share
--------------------------------- | ---------------- | ------------------------------------------------
Outstanding as of August 30, 2018 | 15               | $25.18
Granted                           | 9                | 41.11
Restrictions lapsed               | (6)              | 24.22
Canceled                          | (2)              | 24.79
Outstanding as of August 29, 2019 | 16               | 34.72


Property and Equipment
Property and equipment is recorded at cost and consists of furniture, computers, other office equipment, and leasehold improvements. We depreciate the cost of furniture, computers, and other office equipment on a straight-line basis over their estimated useful lives (five years for office equipment, seven years for furniture and fixtures). Leasehold improvements are depreciated over the lesser of their useful lives or the term of the lease. Depreciation and amortization expense for 2019, 2018, and 2017 was approximately $8.0 million, $8.6 million, and $9.1 million, respectively, and was included in “Depreciation and amortization” in the Consolidated Statements of Income. Amortization expense on intangible assets in 2019, 2018 and 2017 was immaterial.
Property and equipment, at cost, consist of the following (in thousands):

                              | December 31 |
----------------------------- | ----------- | ---------
                              | 2019        | 2018
Office equipment              | $ 38,373    | $ 39,633
Furniture and fixtures        | 5,017       | 4,610
Leasehold improvement         | 23,534      | 19,430
Property and equipment, gross | 66,924      | 63,673
Less accumulated depreciation | (44,199 )   | (49,355 )
Property and equipment, net   | $ 22,725    | $ 14,318


Identifiable intangible assets
The Company's identifiable intangible assets represent intangible assets acquired in the Brink Acquisition, the Drive-Thru Acquisition, the Restaurant Magic Acquisition and software development costs. The Company capitalizes certain software development costs for software used in its Restaurant/Retail reporting segment. Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs.
The technological feasibility of a software product is established when the Company has completed all planning, designing, coding, and testing activities that are necessary to establish that the software product meets its design specifications, including functionality, features, and technical performance requirements.
Software development costs incurred after establishing technological feasibility for software sold as a perpetual license, (as defined within ASC 985-20, Software – "Costs of Software to be sold, Leased, or Marketed" - for software cost related to sold as a perpetual license) are capitalized and amortized on a product-by-product basis when the software product is available for general release to customers.
Included in "Acquired and internally developed software costs" in the table below are approximately $2.5 million and $3.0 million of costs related to software products that have not satisfied the general release threshold as of December 31, 2019 and December 31, 2018, respectively. These software products are expected to satisfy the general release threshold within the next 12 months.
Software development is also capitalized in accordance with ASC 350-40, “Intangibles - Goodwill and Other - Internal - Use Software,” and is amortized over the expected benefit period, which generally ranges from three to seven years. Long-lived assets are tested for impairment when events or conditions indicate that the carrying value of an asset may not be fully recoverable from future cash flows. Software costs capitalized during the years ended 2019 and 2018 were $4.1 million and $3.9 million, respectively.
Annual amortization charged to cost of sales when a product is available for general release to customers is computed using the greater of (a) the straight-line method over the remaining estimated economic life of the product, generally three to seven years or (b) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product. Amortization of capitalized software costs amounted to $3.3 million and $3.5 million, in 2019 and 2018, respectively.
The components of identifiable intangible assets, excluding discontinued operations, are:

                                                                          | December 31,   |          |
------------------------------------------------------------------------- | -------------- | -------- | ---------------------
                                                                          | (in thousands) |          |
                                                                          | 2019           | 2018     | Estimated Useful Life
Acquired and internally developed software costs                          | $36,137        | $18,972  | 3 - 7 years
Customer relationships                                                    | 4,860          | 160      | 7 years
Non-compete agreements                                                    | 30             | 30       | 1 year
                                                                          | 41,027         | 19,162   |
Less accumulated amortization                                             | (12,389)       | (11,708) |
                                                                          | $28,638        | $7,454   |
Internally developed software costs not meeting general release threshold | 2,500          | 3,005    |
Trademarks, trade names (non-amortizable)                                 | 1,810          | 400      | Indefinite
                                                                          | $32,948        | $10,859  |


Summary of Consolidated Cash Flows
The below table summarizes the cash provided or used in our activities and the amount of the respective changes between the periods (in millions):
Operating Activities Cash provided by operating activities was $110.5 million for the year ended December 31, 2019 as compared to cash provided by operating activities of $341.4 million for the year ended December 31, 2018. The $230.9 million decrease was the result of the recapture of reinsurance treaties by our Insurance segment in 2018 and was offset in part by improved performance of the Insurance segment subsequent to the KIC acquisition, significant reduction of losses at the Broadcasting segment driven by the cost cutting measures, and an increase in the working capital at our Telecommunications segments.
Investing Activities Cash used in investing activities was $263.7 million for the year ended December 31, 2019 as compared to cash used in investing activities of $224.6 million for the year ended December 31, 2018. The $39.1 million increase in cash used was a result of (i) an increase in net cash spent at our Insurance segment driven by purchases of investments from the residual cash received from the KIC acquisition and reinsurance recaptures in 2018, (ii) a decrease in cash proceeds received at our Life Sciences segment, from the 2018 upfront payment and 2019 escrow release related to the sale of BeneVir in the prior period, and (iii) an increase in cash used at our Energy segment to acquire ampCNG stations in 2019. These decreases were largely offset by a reduction in cash used by our Construction segment, driven by the acquisition of GrayWolf in 2018, and a reduction in cash used by our Broadcasting segment as less cash was used on its acquisitions in the current year compared to 2018.
This was largely offset by a reduction in net cash used by the Insurance segment's purchases of investments, as in the prior period the Insurance segment purchased investments from the cash received from the acquisition of KIC.
Financing Activities Cash provided by financing activities was $62.4 million for the year ended December 31, 2019 as compared to $115.2 million for the year ended December 31, 2018. The $52.8 million decrease was a result of a decrease in net borrowings by the Construction and Broadcasting segments, and offset in part by the increase in net borrowings by the Energy segment and Corporate segment, and a decline in cash paid to noncontrolling interest holders driven by the proceeds from our Life Sciences segment's sale of BeneVir in 2018.

Years Ended December 31,                                     |         |         |
------------------------------------------------------------ | ------- | ------- | ---------------------
                                                             | 2019    | 2018    | Increase / (Decrease)
Operating activities                                         | $110.5  | $341.4  | $(230.9)
Investing activities                                         | (263.7) | (224.6) | (39.1)
Financing activities                                         | 62.4    | 115.2   | (52.8)
Effect of exchange rate changes on cash and cash equivalents | 1.0     | (0.5)   | 1.5
Net decrease in cash,cash equivalents and restricted cash    | $(89.8) | $231.5  | $(321.3)


Share-based Compensation Our Board of Directors may grant share-based awards from our shareholder approved Amended and Restated Consolidated Communications Holdings, Inc. 2005 Long-Term Incentive Plan (the “Plan”). The Plan permits the issuance of awards in the form of stock options, stock appreciation rights, stock grants, stock unit grants and other equity-based awards to eligible directors and employees at the discretion of the Compensation Committee of the Board of Directors.
On April 30, 2018, the shareholders approved an amendment to the Plan to increase by 2,000,000 the number of shares of our common stock authorized for issuance under the Plan and extend the term of the Plan through April 30, 2028.
With the amendment, approximately 4,650,000 shares of our common stock are authorized for issuance under the Plan, provided that no more than 300,000 shares may be granted in the form of stock options or stock appreciation rights to any eligible employee or director in any calendar year. Unless terminated sooner, the Plan will continue in effect until April 30, 2028.
We measure the fair value of RSAs based on the market price of the underlying common stock on the date of grant. We recognize the expense associated with RSAs on a straight-line basis over the requisite service period, which generally ranges from immediate vesting to a four year vesting period.
We implemented an ongoing performance-based incentive program under the Plan. The performance-based incentive program provides for annual grants of PSAs. PSAs are restricted stock that are issued, to the extent earned, at the end of each performance cycle.
Under the performance-based incentive program, each participant is given a target award expressed as a number of shares, with a payout opportunity ranging from 0% to 120% of the target, depending on performance relative to predetermined goals. An estimate of the number of PSAs that are expected to vest is made, and the fair value of the PSAs is expensed utilizing the fair value on the date of grant over the requisite service period.
The following table summarizes grants of RSAs and PSAs under the Plan during the years ended December 31, 2019, 2018 and 2017:

             |         |                       | Year Ended December 31, |                       |         |
------------ | ------- | --------------------- | ----------------------- | --------------------- | ------- | ---------------------
             | 2019    | Grant Date Fair Value | 2018                    | Grant Date Fair Value | 2017    | Grant Date Fair Value
RSAs Granted | 551,214 | $ 9.87                | 478,210                 | $ 12.45               | 124,100 | $ 23.12
PSAs Granted | 371,672 | $ 12.45               | -                       | $ -                   | 36,982  | $ 23.27
Total        | 922,886 |                       | 478,210                 |                       | 161,082 |


MARKET PRICES OF COMMON STOCK
The common stock of the Company is listed on the NASDAQ Global Market under the symbol “FEIM.”

Fiscal Quarter | High Sale | Low Sale
-------------- | --------- | --------
2019           |           |
First Quarter  | $8.95     | $7.30
Second Quarter | 11.38     | 7.80
Third Quarter  | 13.38     | 9.60
Fourth Quarter | 13.52     | 10.80
2018           |           |
First Quarter  | $10.76    | $ 7.91
Second Quarter | 10.00     | 7.53
Third Quarter  | 9.94      | 8.66
Fourth Quarter | 10.59     | 8.55


12. Earnings per share How are earnings per share calculated?
Basic earnings per share is calculated by dividing the profit after tax attributable to equity shareholders by the weighted average number of shares in issue after deducting the own shares held by employee share ownership trusts and treasury shares.
In calculating the diluted earnings per share, share options outstanding and other potential shares have been taken into account where the impact of these is dilutive. Options over 36m shares (2017/18: 23m shares, 2016/17: 27m shares) were excluded from the calculation of the total diluted number of shares as the impact of these is antidilutive.
The earnings per share calculations are based on profit after tax attributable to equity shareholders of the parent company which excludes non-controlling interests. Profit after tax was £2,159m (2017/18: £2,032m, 2016/17: £1,908m) and profit after tax attributable to non-controlling interests was £3m (2017/18: £4m, 2016/17: £1m). Profit attributable to non-controlling interests is not presented separately in the financial statements as it is not material.

Year ended 31 March                                    | 2019  | 2018  | 2017
------------------------------------------------------ | ----- | ----- | -----
Basic weighted average number of shares (millions)     | 9,912 | 9,911 | 9,938
Dilutive shares from share options (millions)          | 6     | 2     | 27
Dilutive shares from executive share awards (millions) | 57    | 48    | 29
Diluted weighted average number of shares (millions)   | 9,975 | 9,961 | 9,994
Basic earnings per share                               | 21.8p | 20.5p | 19.2p
Diluted earnings per share                             | 21.6p | 20.4p | 19.1p


Geographic Information
The amounts for revenue by region in the following tables are based on the location of customers. The regions in the following table are EMEA (Europe, Middle East, and Africa), Americas (North America and Latin America), and APJ (Asia Pacific Japan).
Total Revenue by Region

€ millions       | 2019   | 2018   | 2017
---------------- | ------ | ------ | ------
Germany          | 3,948  | 3,658  | 3,352
Rest of EMEA     | 8,158  | 7,446  | 7,063
EMEA             | 12,105 | 11,104 | 10,415
United States    | 9,085  | 7,880  | 7,436
Rest of Americas | 2,109  | 1,832  | 1,911
Americas         | 11,194 | 9,713  | 9,347
Japan            | 1,180  | 963    | 885
Rest of APJ      | 3,074  | 2,928  | 2,814
APJ              | 4,254  | 3,891  | 3,699
SAP Group        | 27,553 | 24,708 | 23,461


Cost of Revenues
Cost of Subscription Solutions
Cost of subscription solutions increased $10.7 million, or 39.9%, for the three months ended December 31, 2019 compared to the same period in 2018. The increase was due to an increase in the costs necessary to support a greater number of merchants using our platform, resulting in an increase in: infrastructure and hosting costs, employee-related costs, credit card fees for processing merchant billings, amortization of technology related to enhancing our platform, payments to third-party partners for the registration of domain names, and payments to third-party theme developers. As a percentage of revenues, cost of subscription solutions decreased from 7.8% in the three months ended December 31, 2018 to 7.4% in the three months ended December 31, 2019 due to subscription solutions representing a smaller percentage of our total revenues.
Cost of Merchant Solutions
Cost of merchant solutions increased $72.5 million, or 55.2%, for the three months ended December 31, 2019 compared to the same period in 2018. The increase was primarily due to higher payment processing and interchange fees resulting from an increase in GMV facilitated through Shopify Payments. The increase was also due to an increase in amortization related to acquired intangibles from the acquisition of 6RS, employee-related costs associated with 6RS, product costs associated with expanding our product offerings, credit card fees for processing merchant billings, infrastructure and hosting costs, materials and third-party manufacturing costs associated with 6RS and cost of POS hardware units. Cost of merchant solutions as a percentage of revenues increased from 38.2% in the three months ended December 31, 2018 to 40.4% in the three months ended December 31, 2019, mainly as a result of Shopify Payments representing a larger percentage of total revenue.

                               | Three months ended December 31,    |           | 2019 vs. 2018
------------------------------ | ---------------------------------- | --------- | -------------
                               | 2019                               | 2018      | % Change
                               | (in thousands, except percentages) |           |
Cost of revenues:              |                                    |           |
Cost of subscription solutions | $ 37,369                           | $ 26,706  | 39.9 %
Cost of merchant solutions     | 203,900                            | 131,413   | 55.2 %
Total cost of revenues         | $ 241,269                          | $ 158,119 | 52.6 %
Percentage of revenues:        |                                    |           |
Cost of subscription solutions | 7.4 %                              | 7.8 %     |
Cost of merchant solutions     | 40.4 %                             | 38.2 %    |
                               | 47.8 %                             | 46.0 %    |


CAPITAL EXPENDITURES
BCE capital expenditures totaled $3,988  million for the year, up $17 million over 2018. This corresponded to a capital intensity ratio of 16.6%, down 0.3 pts compared to last year. Capital spending in the year reflected the following:
• Greater capital investments in our wireless segment of $33 million in 2019, compared to 2018, as we advanced the build-out of our LTE-A network, continued to deploy wireless small-cells to expand capacity to support subscriber growth and increase network speeds, coverage and signal quality, as well as to expand data fibre backhaul in preparation for 5G technology
• A modest reduction in capital spending in our wireline segment of $10 million in 2019, compared to last year, as we continued to focus our investments on the ongoing deployment of FTTP to more homes and businesses, the roll-out of fixed WTTP to rural locations in Ontario and Québec, the connection of fibre Internet and TV services to more homes and businesses and the execution of business customer contracts
• Lower capital expenditures at Bell Media of $6 million in 2019, compared to 2018, mainly due to production equipment and IT upgrades in 2018

                        | 2019  | 2018  | $ CHANGE | % CHANGE
----------------------- | ----- | ----- | -------- | ---------
Bell Wireless           | 697   | 664   | (33)     | (5.0%)
Capital intensity ratio | 7.6%  | 7.5%  |          | (0.1) pts
Bell Wireline           | 3,183 | 3,193 | 10       | 0.3%
Capital intensity ratio | 25.8% | 26.0% |          | 0.2 pts
Bell Media              | 108   | 114   | 6        | 5.3%
Capital intensity ratio | 3.4%  | 3.7%  |          | 0.3 pts
BCE                     | 3,988 | 3,971 | (17)     | (0.4%)
Capital intensity ratio | 16.6% | 16.9% |          | 0.3 pts


45. Contingent liabilities
Contingent liabilities from guarantee and warranty contracts are primarily rent guarantees with terms of up to 10 years if utilisation is not considered entirely unlikely.

€ million                                                                           | 30/9/2018 | 30/9/2019
----------------------------------------------------------------------------------- | --------- | ---------
Contingent liabilities from guarantee and warranty contracts                        | 18        | 17
Contingent liabilities from the provision of collateral for third-party liabilities | 9         | 12
Other contingent liabilities                                                        | 0         | 1
                                                                                | 27        | 30


17. OTHER NON-CURRENT ASSETS
(1) Following the adoption of ASC 842, the balance sheet presents right-of-use-assets which mainly comprise of our office leases. This standard has been adopted under a modified retrospective transition approach as of January 1, 2019.
(2) Investment in OLT-O refers to our investment in an Italian incorporated unlisted company which is involved in the construction, development, operation and maintenance of a FSRU terminal to be situated off the Livorno coast of Italy, representing a 2.7% interest in OLT-O’s issued share capital. In May 2019, a major shareholder sold its shareholding which triggered a re-assessment of the carrying value of our investment in OLT-O. This resulted in an impairment charge of $7.3 million for the write down of the carrying value in our investment in OLT-O in the year ended December 31, 2019.
(3) "Other non-current assets" as of December 31, 2019 includes payments made for long lead items ordered in preparation for the conversion of the Viking into an FSRU. As of December 31, 2019 the aggregate carrying value of Viking long lead items was $16.2 million.
"Other non-current assets" as of December 31, 2018 was mainly comprised of payments made relating to long lead items ordered in preparation for the conversion of the Gimi into a FLNG vessel. Subsequent to the receipt of a Limited Notice to Proceed from BP in relation to the Greater Tortue Ahmeyim project in December 31, 2018, initial works of the FLNG conversion commenced in January 2019. Consequently, as of December 31, 2019, the aggregate carrying value of $31.0 million has been reclassified to "Asset under development" (see note 15).

(in thousands of $)                                        | 2019   | 2018
---------------------------------------------------------- | ------ | -------
Oil derivative instrument (see note 24)                    | 45,640 | 84,730
Operating lease right-of-use-assets (1)                    | 9,847  | —
Foreign exchange swap (see note 24)                        | 214    | —
Mark-to-market interest rate swaps valuation (see note 24) | 8      | 6,298
Investment in OLT-O (2)                                    | —      | 7,347
Other non-current assets (3)                               | 24,700 | 40,729
                                                           | 80,409 | 139,104


The total remuneration of the Group’s auditors, PricewaterhouseCoopers LLP and other member firms of PricewaterhouseCoopers International Limited, for services provided to the Group during the year ended 31 March 2019 is analysed below
Notes: 1 Fees during the implementation phase of new accounting standards, notably preparations for IFRS 15 “Revenue from Contracts with Customers” in the year ended 31 March 2018 and preparations for IFRS 16 “Leases” in the year ended 31 March 2019.
2 Relates to fees for statutory and regulatory filings during the year. In addition, the amount for the year ended 31 March 2018 includes non-recurring fees that were incurred during the preparations for a potential IPO of Vodafone New Zealand and the merger of Vodafone India and Idea Cellular. The amount for the year ended 31 March 2017 primarily arose from work on regulatory filings prepared in anticipation of a potential IPO of Vodafone India that was under consideration prior to the agreement for the merger of Vodafone India and Idea Cellular.
A description of the work performed by the Audit and Risk Committee in order to safeguard auditor independence when non-audit services are provided is set out in the Audit and Risk Committee report on pages 71 to 76.

                                         | 2019 | 2018 | 2017
---------------------------------------- | ---- | ---- | ----
                                         | €m   | €m   | €m
Parent company                           | 2    | 2    | 2
Subsidiaries                             | 14   | 14   | 13
Subsidiaries – new accounting standards1 | 1    | 5    | 1
Audit fees:                              | 17   | 21   | 16
Audit-related fees2                      | 2    | 5    | 4
Non-audit fees:                          | 2    | 5    | 4
Total fees                               | 19   | 26   | 20


Supported by a recovery in commodity-related markets, orders and revenue showed broad-based growth year-over-year with strongest increases in the mechanical drives business. Overall, Portfolio Companies businesses made good progress in achieving their targets. Adjusted EBITA improved in all fully consolidated units and turned positive in total, mainly driven by the large drives applications business.
The result from equity investments in total also improved slightly, though it was negative in both periods under review. Severance charges decreased to € 14 million, from € 86 million in fiscal 2018. Portfolio Companies’ order backlog was € 5 billion at the end of the fiscal year, of which € 3 billion are expected to be converted into revenue in fiscal 2020. Regarding Portfolio Companies’ at-equity investments, volatile results are expected in coming quarters.
Markets for Portfolio Companies are generally impacted by rising uncertainties regarding geopolitical and economic developments, which weaken investment sentiment. Although the broad range of businesses are operating in diverse markets, overall, moderate growth is expected in the coming years for the main markets served by the Portfolio Companies.
Beginning with fiscal 2020, the equity investments Ethos Energy Group Limited and Voith Hydro Holding GmbH & Co. KG, the subsea business, and the majority of the process solutions business will be transferred to the Operating Company Gas and Power. If this organizational structure had already existed in fiscal 2019, Portfolio Companies would have posted orders of € 4.746 billion, revenue of € 4.558 billion and Adjusted EBITA of €(115) million.
Mitsubishi-Hitachi Metals Machinery (MHMM) and Siemens AG reached an agreement in September 2019, that MHMM will acquire Siemens’ stake in Primetals Technologies. Closing of the transaction is subject to customary conditions and is expected by the beginning of calendar 2020.

                      |         | Fiscal year |        | % Change
--------------------- | ------- | ----------- | ------ | --------
(in millions of €)    | 2019    | 2018        | Actual | Comp.
Orders                | 5,806   | 5,569       | 4 %    | 3 %
Revenue               | 5,526   | 4,930       | 12 %   | 11 %
Adjusted EBITA        | (71)    | (305)       | 77 %   |
Adjusted EBITA margin | (1.3) % | (6.2) %     |        |


Restricted Stock Units
During the fiscal years 2019, 2018, and 2017, the Company issued both service-based RSUs and market-based performance RSUs (“PRSUs”). Market-based PRSUs generally vest three years from the grant date if certain performance criteria are achieved and require continued employment. Based upon the terms of such awards, the number of shares that can be earned over the performance periods is based on the Company’s Common Stock price performance compared to the market price performance of the Philadelphia Semiconductor Sector Index (“SOX”), ranging from 0% to 150% of target. The stock price performance or market price performance is measured using the closing price for the 50-trading days prior to the dates the performance period begins and ends. The target number of shares represented by the market-based PRSUs is increased by 2% of target for each 1% that Common Stock price performance exceeds the market price performance of the SOX index. The result of the vesting formula is rounded down to the nearest whole number. Total stockholder return is a measure of stock price appreciation in this performance period.
The following table summarizes restricted stock activity:
The fair value of the Company’s service-based RSUs was calculated based on fair market value of the Company’s stock at the date of grant, discounted for dividends.

                      | Service-based RSUs Outstanding |                                        | Market-based RSUs Outstanding |
--------------------- | ------------------------------ | -------------------------------------- | ----------------------------- | --------------------------------------
                      | Number of Shares               | Weighted-Average Grant Date Fair Value | Number of Shares              | Weighted-Average Grant Date Fair Value
June 26, 2016         | 3,256,513                      | $71.34                                 | 1,078,591                     | $63.12
Granted               | 1,224,877                      | $114.13                                | 435,694                       | $111.75
Vested                | (1,677,318)                    | $69.10                                 | (592,321)                     | $46.67
Forfeited or canceled | (116,466)                      | $76.76                                 | (59,509)                      | $66.81
June 25, 2017         | 2,687,606                      | $92.01                                 | 862,455                       | $83.83
Granted               | 964,391                        | $183.97                                | 285,866                       | $170.15
Vested                | (1,362,369)                    | $87.80                                 | (407,024)                     | $76.88
Forfeited or canceled | (96,540)                       | $108.67                                | (47,571)                      | $91.36
June 24, 2018         | 2,193,088                      | $134.34                                | 693,726                       | $104.59
Granted               | 893,622                        | $161.64                                | 163,529                       | $165.78
Vested                | (1,135,284)                    | $115.23                                | (301,622)                     | $70.58
Forfeited or canceled | (154,541)                      | $141.38                                | (120,859)                     | $104.73
June 30, 2019         | 1,796,885                      | $159.36                                | 434,774                       | $144.57


Amortization of Purchased Intangible Assets
The following table presents the amortization of purchased intangible assets (in millions):
The decrease in amortization of purchased intangible assets was due largely to the purchased intangible assets related to the divestiture of SPVSS business on October 28, 2018, partially offset by amortization from our recent acquisitions.

Years Ended                                  | July 27, 2019 | July 28, 2018 | July 29, 2017
-------------------------------------------- | ------------- | ------------- | -------------
Amortization of purchased intangible assets: |               |               |
Cost of sales                                | $624          | $640          | $556
Operating expenses                           |               |               |
Amortization of purchased intangible assets  | 150           | 221           | 259
Restructuring and other charges              | —             | —             | 38
Total                                        | $774          | $861          | $853


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data)
NOTE 5 — Property, Plant and Equipment
Property, plant and equipment is comprised of the following:

                                   | As of December 31, |
---------------------------------- | ------------------ | ---------
                                   | 2019               | 2018
Land and land improvements         | $1,095             | $1,136
Buildings and improvements         | 68,350             | 70,522
Machinery and equipment            | 224,312            | 231,619
Less: Accumulated depreciation     | (188,719)          | (203,876)
Property, plant and equipment, net | $105,038           | $99,401


Interest expense, net includes the stated interest rate on our outstanding debt, as well as the net impact of capitalized interest, interest income, the effects of terminated interest rate swaps and the amortization of capitalized senior debt issuance costs and credit facility fees, bond discounts, and terminated treasury locks.
Interest expense, net for the years ended December 31, was as follows:
(1) We repaid the notes upon maturity in July 2017.
(2) On August 1, 2019, Sealed Air Corporation, on behalf of itself and certain of its subsidiaries, and Sealed Air Corporation (US) entered into an amendment to its existing senior secured credit facility with Bank of America, N.A., as agent, and the other financial institutions party thereto. The amendment provided for a new incremental term facility in an aggregate principal amount of up to $475 million, to be used, in part, to finance the acquisition of Automated. See Note 14, "Debt and Credit Facilities," of the Notes to Consolidated Financial Statements for further details.
(3) On July 12, 2018, the Company and certain of its subsidiaries entered into a third amended and restated credit agreement with respect to its existing senior secured credit facility. See Note 14, “Debt and Credit Facilities,” of the Notes to Consolidated Financial Statements for further details.
(4) In November 2019, the Company issued $425 million of 4.00% Senior Notes due 2027 and used the proceeds to retire the existing $425 million of 6.50% Senior Notes due 2020. See Note 14, "Debt and Credit Facilities," of the Notes to Consolidated Financial Statements for further details.

                                                  |         | Year Ended December 31, |         | 2019 vs. 2018 | 2018 vs. 2017
------------------------------------------------- | ------- | ----------------------- | ------- | ------------- | -------------
(In millions)                                     | 2019    | 2018                    | 2017    | Change        | Change
Interest expense on our various debt instruments: |         |                         |         |               |
Term Loan A due July 2017(1)                      | $ —     | $ —                     | $ 3.6   | $ —           | $ (3.6)
Term Loan A due July 2022(2)                      | 6.8     | —                       | —       | 6.8           | —
Term Loan A due July 2023(3)                      | 8.5     | 8.9                     | 18.6    | (0.4)         | (9.7)
Revolving credit facility due July 2023(3)        | 1.4     | 1.9                     | 2.4     | (0.5)         | (0.5)
6.50% Senior Notes due December 2020(4)           | 25.4    | 28.1                    | 28.1    | (2.7)         | —
4.875% Senior Notes due December 2022             | 21.5    | 21.5                    | 21.5    | —             | —
5.25% Senior Notes due April 2023                 | 23.1    | 23.1                    | 23.0    | —             | 0.1
4.50% Senior Notes due September 2023             | 20.7    | 21.8                    | 21.0    | (1.1)         | 0.8
5.125% Senior Notes due December 2024             | 22.4    | 22.4                    | 22.3    | —             | 0.1
5.50% Senior Notes due September 2025             | 22.4    | 22.4                    | 22.3    | —             | 0.1
4.00% Senior Notes due December 2027(4)           | 1.7     | —                       | —       | 1.7           | —
6.875% Senior Notes due July 2033                 | 31.1    | 31.0                    | 31.0    | 0.1           | —
Other interest expense                            | 19.4    | 18.2                    | 18.3    | 1.2           | (0.1)
Less: capitalized interest                        | (8.4)   | (6.3)                   | (10.3)  | (2.1)         | 4.0
Less: interest income                             | (11.9)  | (15.1)                  | (17.6)  | 3.2           | 2.5
Total                                             | $ 184.1 | $ 177.9                 | $ 184.2 | $ 6.2         | $ (6.3)


Stock-Based Compensation Award Activity
The following table summarizes the shares available for grant under the 2019 Plan and 2009 Plan (in thousands):

                             | Shares Available for Grant |
---------------------------- | -------------------------- | ---------
                             | 2019 Plan                  | 2009 Plan
Balance at December 30, 2018 | —                          | 483
Authorized                   | 357                        | —
Options granted              | —                          | —
Options forfeited or expired | 26                         | 2
RSUs granted                 | (113)                      | (240)
RSUs forfeited               | 2                          | 54
Plan Shares expired          | —                          | (299)
Balance at December 29, 2019 | 272                        | —


The following is a reconciliation of the beginning and ending amounts of unrecognized income tax benefits (in thousands):
The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $ 1.5 million and $4.6 million for the fiscal years ended September 28, 2019 and September 29, 2018, respectively.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The total accrued penalties and net accrued interest with respect to income taxes was approximately $0.2 million for each of the fiscal years ended September 28, 2019, September 29, 2018 and September 30, 2017. The Company recognized less than $0.1 million of expense for accrued penalties and net accrued interest in the Consolidated Statements of Comprehensive Income for each of the fiscal years ended September 28, 2019, September 29, 2018 and September 30, 2017.

                                                      | 2019    | 2018   | 2017
----------------------------------------------------- | ------- | ------ | ------
Balance at beginning of fiscal year                   | $5,841  | $3,115 | $2,799
Gross increases for tax positions of prior years      | 62      | 21     | 184
Gross increases for tax positions of the current year | 39      | 2,893  | 163
Gross decreases for tax positions of prior years      | (3,672) | (188)  | (31)
Balance at end of fiscal year                         | 2,270   | 5,841  | 3,115


Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on the Consolidated Balance Sheets to the amounts reported on the Consolidated Statements of Cash Flows (in thousands):
As of December 31, 2019 and 2018, restricted cash included a security deposit that is set aside in a bank account and cannot be withdrawn by the Company under the terms of a lease agreement. The restriction will end upon the expiration of the lease.

                                                                                | December 31, |
------------------------------------------------------------------------------------------------------ | ------------ | --------
                                                                                | 2019         | 2018
Cash and cash equivalents                                                                              | $172,960     | $172,704
Restricted cash included in other long-term assets                                                     | 116          | 114
Total cash, cash equivalents and restricted cash reported on the Consolidated Statements of Cash Flows | $173,076     | $172,818


NOTE F – STOCKHOLDERS’ EQUITY (CONTINUED)
A summary of restricted stock units granted during the year ended December 31, 2019 is as follows (each restricted stock unit represents the contingent right to receive one share of the Company’s common stock):
Restricted stock unit compensation expense was $567,000 for the year ended December 31, 2019 and $687,000 for the year ended December 31, 2018.
The Company has an aggregate of $232,000 of unrecognized restricted stock unit compensation expense as of December 31, 2019 to be expensed over a weighted average period of 1.2 years.

                                                                   | Number of Shares | Weighted-Average Grant Date Fair Value
------------------------------------------------------------------ | ---------------- | --------------------------------------
Balance of restricted stock units outstanding at December 31, 2018 | 505,000          | $2.17
Grants of restricted stock units                                   | 70,000           | 2.45
Vested restricted stock units                                      | (235,000)        | (2.29)
Balance of unvested restricted stock units at December 31, 2019    | 340,000          | 2.15


Share Options
The fair value of equity-settled share options granted is measured as at the date of grant using a Black-Scholes model, taking into account the terms and conditions upon which the options were granted.
The following table illustrates the weighted average inputs into the Black-Scholes model in the year:
The weighted average fair value of options granted during the year was $ cents 220.53 (2018: $ cents 185.33).
The expected volatility reflects the assumption that the historical share price volatility is indicative of future trends, which may not necessarily be the actual outcome. An increase in the expected volatility will increase the estimated fair value.
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected life used in the model has been adjusted, based on the Director’s best estimate, taking into account the effects of exercise restrictions, non-transferability and behavioural considerations. An increase in the expected life will increase the estimated fair value.

                                          | Year-ended    | Year-ended
----------------------------------------- | ------------- | -------------
                                          | 31 March 2019 | 31 March 2018
Weighted average share price ($ cents)    | 676.10        | 628.23
Weighted average exercise price ($ cents) | 558.54        | 516.70
Expected volatility                       | 54.91%        | 38.20%
Expected life of options (years)          | 1.69          | 2.08
Risk free rate                            | 1.56%         | 1.49%
Dividend yield                            | 0.81%         | 0.70%


B. Liquidity and Capital Resources
As of June 30, 2019, we had cash and cash equivalents totaling $1.3 billion, short-term investments totaling $445.0 million and trade receivables totaling $82.5 million. Since our inception, we have primarily financed our operations through cash flows generated by operations.
Our cash flows from operating activities, investing activities, and financing activities for the fiscal years ended 2019, 2018 and 2017 were as follows:
We believe that our existing cash and cash equivalents, together with cash generated from operations, will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our future capital requirements will depend on many factors including our growth rate, the timing and extent of spend on research and development efforts, employee headcount, marketing and sales activities, acquisitions of additional businesses and technologies, the timing and extent of exchange of the Notes for payments of cash, the introduction of new software and services offerings, enhancements to our existing software and services offerings and the continued market acceptance of our products.
Cash provided by operating activities has historically been affected by the amount of net income (loss) adjusted for non-cash expense items such as non-coupon impact related to the Notes and capped calls, depreciation and amortization and expense associated with share-based awards, the timing of employee-related costs such as bonus payments, collections from our customers, which is our largest source of operating cash flows, and changes in other working capital accounts.
Accounts impacting working capital consist of trade receivables, prepaid expenses and other current assets, current derivative assets, trade and other payables, provisions, current derivative liabilities, current portion of our Notes and other current liabilities. Our working capital may be impacted by various factors in future periods, such as billings to customers for subscriptions, licenses and maintenance services and the subsequent collection of those billings or the amount and timing of certain expenditures.
Net cash provided by operating activities was $466.3 million for the fiscal year ended June 30, 2019, as a result of $605.6 million in loss before income tax expense adjusted by non-cash charges including the loss of marking to fair value of the embedded exchange feature of the Notes and related capped call transactions of $533.9 million, depreciation and amortization of $70.2 million, share-based payment expense of $257.8 million and debt discount and issuance cost amortization of $33.9 million. The net increase of $169.0 million from our operating assets and liabilities was primarily attributable to a $122.5 million increase in our deferred revenue as a result of increased sales of subscriptions and renewals of maintenance contracts and a $75.6 million increase in trade and other payables, provisions and other non-current liabilities, offset by a $30.2 million increase in trade receivables. Net cash provided by operating activities was also impacted by tax refunds received, net of income tax paid of $7.0 million.
Net cash provided by operating activities was $311.5 million for the fiscal year ended June 30, 2018, as a result of $58.1 million in loss before income tax expense adjusted by non-cash charges including the loss of marking to fair value of the embedded exchange feature of the Notes and related capped call transactions of $12.4 million, depreciation and amortization of $79.4 million, share-based payment expense of $162.9 million and debt discount and issuance cost amortization of $7.5 million. The net increase of $113.1 million from our operating assets and liabilities was primarily attributable to a $97.7 million increase in our deferred revenue as a result of increased sales of subscriptions and renewals of maintenance contracts, a $43.5 million increase in trade and other payables, provisions and other noncurrent liabilities, offset by a $19.6 million increase in trade receivables and a $8.4 million increase in prepaid expenses and other current and non-current assets. Net cash provided by operating activities was also impacted by income taxes paid, net of refunds, of $4.2 million.
Net cash used in investing activities during the fiscal year ended June 30, 2019 was $604.2 million. This was primarily related to cash paid for business combinations, net of cash acquired, totaling $418.6 million, purchases of investments totaling $648.0 million and purchases of property and equipment totaling $44.2 million to support the growth of our business, including hardware, equipment and leasehold improvements, offset by cash received from the maturing of investments which totaled $485.0 million and proceeds from sales of investments of $20.5 million.
Net cash used in investing activities during the fiscal year ended June 30, 2018 was $51.7 million. This was primarily related to purchases of investments totaling $347.8 million and purchases of property and equipment totaling $30.2 million to support the growth of our business, including hardware, equipment and leasehold improvements, offset by cash received from the maturing of investments which totaled $206.1 million and proceeds from sales of investments of $123.9 million.
Net cash used in financing activities for the fiscal year ended June 30, 2019 was $3.2 million and was primarily related to coupon interest payments on the Notes of $6.3 million, offset by proceeds from exercises of employee share options of $3.5 million.
Net cash provided by financing activities for the fiscal year ended June 30, 2018 was $906.8 million and was primarily related to proceeds from the issuance of our Notes of $990.5 million offset by the purchase of the capped calls for $87.7 million.

                                                             |            | Fiscal Year Ended June 30, |
------------------------------------------------------------ | ---------- | -------------------------- | ---------
                                                             | 2019       | 2018                       | 2017
                                                             |            | (U.S. $ in thousands)      |
Net cash provided by operating activities                    | $466,342   | $311,456                   | 199,381
Net cash used in by investing activities                     | (604,198)  | (51,696)                   | (224,573)
Net cash (used in) provided by financing activities          | (3,187)    | 906,789                    | 9,438
Effect of exchange rate changes on cash and cash equivalents | (855)      | (630)                      | 465
Net (decrease) increase in cash and cash equivalents         | $(141,898) | $1,165,919                 | $(15,289)


The company has consistently generated strong cash flow from operations, providing a source of funds ranging between $14.8 billion and $16.7 billion per year over the past three years.
The company provides for additional liquidity through several sources: maintaining an adequate cash balance, access to global funding sources, committed global credit facilities and other committed and uncommitted lines of credit worldwide.
The following table provides a summary of the major sources of liquidity for the years ended December 31, 2017 through 2019.

($ in billions)                                            |       |       |
---------------------------------------------------------- | ----- | ----- | -----
                                                           | 2019  | 2018  | 2017
Net cash operating activities                              | $14.8 | $15.2 | $16.7
Cash, restricted cash and short-term marketable securities | $ 9.0 | $12.2 | $12.8
credit facilities                                          | $15.3 | $15.3 | $15.3


RSU Activity We grant RSUs, which represent the right to receive shares of our common stock. Vesting for RSUs is contingent upon the holders’ continued employment with us and may be subject to other conditions (which may include the satisfaction of a performance measure). Also, certain of our performance-based RSUs include a range of shares that may be released at vesting which are above or below the targeted number of RSUs based on actual performance relative to the grant date performance measure. If the vesting conditions are not met, unvested RSUs will be forfeited. Upon vesting of the RSUs, we may withhold shares otherwise deliverable to satisfy tax withholding requirements.
The following table summarizes our RSU activity with performance-based RSUs presented at the maximum potential shares that could be earned and issued at vesting (amounts in thousands except per share amounts):
Certain of our performance-based RSUs did not have an accounting grant date as of December 31, 2019, as there is not a mutual understanding between the Company and the employee of the performance terms. Generally, these performance terms relate to operating income performance for future years where the performance goals have not yet been set. As of December 31, 2019, there were 3.2 million performance-based RSUs outstanding for which the accounting grant date has not been set, of which 1.9 million were 2019 grants. Accordingly, no grant date fair value was established and the weighted average grant date fair value calculated above for 2019 grants excludes these RSUs.
At December 31, 2019, approximately $96 million of total unrecognized compensation cost was related to RSUs and is expected to be recognized over a weighted-average period of 1.64 years. Of the total unrecognized compensation cost, $50 million was related to performance-based RSUs, which is expected to be recognized over a weighted-average period of 1.63 years. The total grant date fair value of vested RSUs was $147 million, $120 million and $64 million for the years ended December 31, 2019, 2018, and 2017, respectively.
The income tax benefit from stock option exercises and RSU vestings was $47 million, $94 million, and $160 million for the years ended December 31, 2019, 2018, and 2017, respectively.

                                   | Number of shares | Weighted-Average Grant Date Fair Value
---------------------------------- | ---------------- | --------------------------------------
Unvested RSUs at December 31, 2018 | 10,623           | $40.39
Granted                            | 4,426            | 45.55
Vested                             | (2,758)          | 47.86
Forfeited                          | (2,963)          | 54.61
Unvested RSUs at December 31, 2019 | 9,328            | $32.60


The UK and Ireland business-to-business market remains challenging. The main headwind we face is the decline in traditional calls and lines where we have a relatively high market share. The IP Voice market is significantly more fragmented, with a large number of providers, and we are focused on expanding our share in this growing market.
The mobile market remains competitive and we continue to see pressure on pricing. While overall growth in the broadband market is limited, we are seeing good demand for our premium products such as fibre and 4G Assure. Newer areas such as the Internet of Things, Cloud, SDWAN and security remain good opportunities for us over the longer term.
Adjusted a revenue decreased 5% for the year mainly due to the ongoing decline of fixed voice revenue. We continue to see a steeper than expected reduction in calls per fixed line as usage moves to mobile and IP. We continue to sell less low margin equipment and also experienced ongoing declines in some of our other legacy products such as private circuits. This was partially offset by growth in IP, Mobile and Networking. We’re also continuing to see encouraging growth in messaging volumes in Ventures.
Adjusted a operating costs reduced 6%, helped by labour cost efficiencies from our cost transformation programmes. Adjusteda EBITDA decreased 4%, with our lower cost base more than offset by the reduction in revenue.
Capital expenditure increased 2% and normalised free cash flowb decreased 7%, reflecting the reduction in EBITDA and the higher capital expenditure.
The Retail order intake decreased 15% to £2.9bn for the year due to the signing of a large contract in Republic of Ireland in the prior year. The Wholesale order intake declined 22% to £1.0bn after 2017/18 benefitted from a number of large deals, including the timing of some contract renewals.
a Adjusted measures exclude specific items, as explained in the Additional Information on page 185. b Free cash flow after net interest paid, before pension deficit payments (including the cash tax benefit of pension deficit payments) and specific items. d Enterprise comparatives have been re-presented to reflect the bringing together of our Business and Public Sector and Wholesale and Ventures units into a single Enterprise unit, as well as the transfer of Northern Ireland Networks from Enterprise to Openreach.

Enterprise d                |                |               |                                    |
--------------------------- | -------------- | ------------- | ---------------------------------- | ---
Adjusteda revenue £6,292m   |                |               | Adjusteda operating profit £1,356m |
                            | 2019 (IFRS 15) | 2018 (IAS 18) | Change                             |
Year to 31 March            | £m             | £m            | £m                                 | %
Adjusted a revenue          | 6,292          | 6,647         | (355)                              | (5)
Adjusted a operating costs  | 4,302          | 4,570         | (268)                              | (6)
Adjusted a EBITDA           | 1,990          | 2,077         | (87)                               | (4)
Depreciation & amortisation | 634            | 635           | (1)                                | -
Adjusted a operating profit | 1,356          | 1,442         | (86)                               | (6)
Capital expenditure         | 501            | 492           | 9                                  | 2
Normalised free cash flow b | 1,483          | 1,587         | (104)                              | (7)


Legislation and regulations regarding our products and ingredients, including the nutritional content of our products, could impact customer preferences and negatively impact our financial results.
Changes in government regulation and consumer eating habits may impact the ingredients and nutritional content of our menu offerings, or require us to disclose the nutritional content of our menu offerings. For example, a number of states, counties, and cities have enacted menu labeling laws requiring multi-unit restaurant operators to disclose certain nutritional information to customers, or have enacted legislation restricting the use of certain types of ingredients in restaurants. Furthermore, the Affordable Care Act requires chain restaurants to publish calorie information on their menus and menu boards. These and other requirements may increase our expenses, slow customers’ ordering process, or negatively influence the demand for our offerings; all of which can impact sales and profitability.
Compliance with current and future laws and regulations in a number of areas, including with respect to ingredients, nutritional content of our products, and packaging and serviceware may be costly and time-consuming. Additionally, if consumer health regulations change significantly, we may be required to modify our menu offerings or packaging, and as a result, may experience higher costs or reduced demand associated with such changes. Some government authorities are increasing regulations regarding trans-fats and sodium. While we have removed all artificial or “added during manufacturing” trans fats from our ingredients, some ingredients have naturally occurring trans-fats. Future requirements limiting trans-fats or sodium content may require us to change our menu offerings or switch to higher cost ingredients. These actions may hinder our ability to operate in some markets or to offer our full menu in these markets, which could have a material adverse effect on our business. If we fail to comply with such laws and regulations, our business could also experience a material adverse effect.
Failure to obtain and maintain required licenses and permits or to comply with food control regulations could lead to the loss of our food service licenses and, thereby, harm our business.
We are required, as a restaurant business, under state and local government regulations to obtain and maintain licenses, permits, and approvals to operate our businesses. Such regulations are subject to change from time to time. Any failure by us or our franchisees to obtain and maintain these licenses, permits, and approvals could adversely affect our financial results.
The following table sets forth information regarding our operating restaurant properties as of September 29, 2019:

                                                                 | Company- |           |
---------------------------------------------------------------- | -------- | --------- | -----
                                                                 | Operated | Franchise | Total
Company-owned restaurant buildings:                              |          |           |
On company-owned land                                            | 9        | 200       | 209
On leased land                                                   | 54       | 581       | 635
Subtotal                                                         | 63       | 781       | 844
Company-leased restaurant buildings on leased land               | 74       | 1,054     | 1,128
Franchise directly-owned or directly-leased restaurant buildings | —        | 271       | 271
Total restaurant buildings                                       | 137      | 2,106     | 2,243


GreenSky, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (United States Dollars in thousands, except per share data, unless otherwise stated)
Note 13. Income Taxes
GreenSky, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from GS Holdings based upon GreenSky, Inc.’s economic interest held in GS Holdings. GS Holdings is treated as a pass-through partnership for income tax reporting purposes and not subject to federal income tax. Accordingly, the Company is not liable for income taxes on the portion of GS Holdings' earnings not allocated to it. The results for the year ended December 31, 2017 do not reflect income tax expense because, prior to the Reorganization Transactions, the consolidated GSLLC (and subsequently GS Holdings) pass-through entity was not subject to corporate tax.
The Company's income before income tax expense of $88,848, $133,514 and $138,668 during the years ended December 31, 2019, 2018 and 2017, respectively, consisted entirely of income earned in the United States.
Components of income tax expense consisted of the following for the years indicated: Year

                                       | Year Ended December 31, |
-------------------------------------- | ----------------------- | ------
                                       | 2019                    | 2018
Current income tax expense (benefit):  |                         |
Federal                                | $5                      | $4
State                                  | 10                      | 5
Deferred income tax expense (benefit): |                         |
Federal                                | 4,206                   | 4,860
State                                  | (11,346)                | 665
Income tax expense (benefit)           | $(7,125)                | $5,534


Indefinite-lived Intangible Assets
Indefinite-lived intangible assets consist entirely of acquired in-process research and development technology, or IPR&D. The following table sets forth the Company’s activities related to the indefinite-lived intangible assets:
The Company performs its annual assessment of indefinite-lived intangible assets on October 31 each year or more frequently if events or changes in circumstances indicate that the asset might be impaired utilizing a qualitative test as a precursor to the quantitative test comparing the fair value of the assets with their carrying amount. Based on the qualitative test, if it is more likely than not that indicators of impairment exists, the Company proceeds to perform a quantitative analysis. Based on the Company’s assessment as of October 31, 2019, no indicators of impairment were identified.
In the years ended December 31, 2019 and 2018, no IPR&D impairment losses were recorded. In the year ended December 31, 2017, the Company recognized impairment losses of $2.0 million related to the Company's abandonment of a single IPR&D project.

Years Ended December 31,                     |         |
-------------------------------------------- | ------- | ------
                                             | 2019    | 2018
(in thousands)                               |         |
Beginning balance                            | $4,400  | $4,400
Transfers to developed technology from IPR&D | (4,400) | —
Ending balance                               | $—      | $4,400


Capital Expenditures
Our 2020 capital program includes capital to fund advanced networks and services, including expanding our core networks, adding capacity and density to our 4G LTE network in order to stay ahead of our customers’ increasing data demands and deploying our 5G network, transforming our structure to deploy the Intelligent Edge Network while reducing the cost to deliver services to our customers, and pursuing other opportunities to drive operating efficiencies. We expect that the new network architecture will simplify operations by eliminating legacy network elements, improve our 4G LTE coverage, speed the deployment of 5G technology, and create new enterprise opportunities in the business market. The level and the timing of the Company’s capital expenditures within these broad categories can vary significantly as a result of a variety of factors outside of our control, such as material weather events, equipment availability from vendors and permits from local governments. Capital expenditures for 2020 are expected to be in the range of $17.0 billion to $18.0 billion, including the continued investment in our 5G network. Capital expenditures were $17.9 billion in 2019 and $16.7 billion in 2018. We believe that we have significant discretion over the amount and timing of our capital expenditures on a Company-wide basis as we are not subject to any agreement that would require significant capital expenditures on a designated schedule or upon the occurrence of designated events.
Consolidated Financial Condition
We use the net cash generated from our operations to fund expansion and modernization of our networks, service and repay external financing, pay dividends, invest in new businesses and spectrum and, when appropriate, buy back shares of our outstanding common stock. Our sources of funds, primarily from operations and, to the extent necessary, from external financing arrangements, are sufficient to meet ongoing operating and investing requirements.
We expect that our capital spending requirements will continue to be financed primarily through internally generated funds. Debt or equity financing may be needed to fund additional investments or development activities or to maintain an appropriate capital structure to ensure our financial flexibility. Our cash and cash equivalents are held both domestically and internationally, and are invested to maintain principal and provide liquidity. See “Market Risk” for additional information regarding our foreign currency risk management strategies.
Our available external financing arrangements include an active commercial paper program, credit available under credit facilities and other bank lines of credit, vendor financing arrangements, issuances of registered debt or equity securities, U.S. retail medium-term notes and other capital market securities that are privately-placed or offered overseas. In addition, we monetize our device payment plan agreement receivables through asset-backed debt transactions.

                                                       |          | (dollars in millions)
------------------------------------------------------ | -------- | ---------------------
Years Ended December 31,                               | 2019     | 2018
Cash flows provided by (used in)                       |          |
Operating activities                                   | $ 35,746 | $ 34,339
Investing activities                                   | (17,581) | (17,934)
Financing activities                                   | (18,164) | (15,377)
Increase in cash, cash equivalents and restricted cash | $1       | $ 1,028


Stock Repurchase Program
As of April 26, 2019, our Board of Directors has authorized the repurchase of up to $13.6 billion of our common stock under our stock repurchase program . Under this program, which we may suspend or discontinue at any time, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management.
The following table summarizes activity related to this program (in millions, except per share amounts):
The aggregate purchase price of our stock repurchases for fiscal 2019 consisted of $2.1 billion of open market purchases of which $1.0 billion and $1.1 billion were allocated to additional paid-in capital and retained earnings (accumulated deficit), respectively.
Since the May 13, 2003 inception of our stock repurchase program through April 26, 2019, we repurchased a total of 313 million shares of our common stock at an average price of $37.46 per share, for an aggregate purchase price of $11.7 billion.

                                         |                | Year Ended     |
---------------------------------------- | -------------- | -------------- | --------------
                                         | April 26, 2019 | April 27, 2018 | April 28, 2017
Number of shares repurchased             | 29             | 15             | 22
Average price per share                  | $ 72.87        | $ 51.57        | $ 32.72
Aggregate purchase price                 | $ 2,111        | $ 794          | $ 705
Remaining authorization at end of period | $ 1,889        | $ 4,000        | $ 794


Operating income in the Industrial Solutions segment increased $78 million in fiscal 2019 from fiscal 2018. The Industrial Solutions segment’s operating income included the following:
Excluding these items, operating income increased in fiscal 2019 primarily as a result of higher volume and improved manufacturing productivity.

                                                                                |       | Fiscal
-------------------------------------------------------------------------------------- | ----- | -------------
                                                                                | 2019  | 2018
                                                                                |       | (in millions)
Acquisition-related charges:                                                           |       |
Acquisition and integration costs                                                      | $  10 | $  6
Charges associated with the amortization of acquisition-related fair value adjustments | 3     | 4
                                                                                | 13    | 10
Restructuring and other charges, net                                                   | 63    | 80
Other items                                                                            | 2     | —
Total                                                                                | $  78 | $  90


Changes in the amounts of unrecognized tax benefits were as follows:
We had gross unrecognized tax benefits of $20.6 million and $19.8 million as of December 31, 2019 and 2018, respectively. If the current gross unrecognized tax benefits were recognized, the result would be an increase in our income tax benefit of $20.7 million and $19.6 million, respectively. These amounts are net of accrued interest and penalties relating to unrecognized tax benefits of $0.4 million and $0.2 million, respectively.
We believe that it is reasonably possible that $0.2 million of our currently remaining unrecognized tax benefits may be recognized by the end of 2020, as a result of a lapse of the applicable statute of limitations.

                                                          |          | Year Ended December 31, |
--------------------------------------------------------- | -------- | ----------------------- | --------
(In thousands)                                            | 2019     | 2018                    | 2017
Beginning balance as of January 1                         | $ 19,821 | $ 10,939                | $ 10,616
Increases for tax positions related to the current year   | 1,240    | 8,977                   | 640
Decreases for tax positions related to prior years        | 0        | 0                       | (146)
Increases for tax positions related to prior years        | 95       | 367                     | 153
Decreases relating to settlements with taxing authorities | 0        | 0                       | 0
Increases acquired in business acquisitions               | 0        | 540                     | 0
Foreign currency translation                              | 3        | (5)                     | 10
Reductions due to lapsed statute of limitations           | (555)    | (997)                   | (334)
Ending balance as of December 31                          | $ 20,604 | $ 19,821                | $ 10,939