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additionally , during 2018 , we delivered value to shareholders through our share repurchase program and initiation of a quarterly dividend of 5 cents per share . f-3 results of operations the trends and underlying economic conditions affecting operating performance and future prospects differ for each of our business segments . accordingly , you should read the following discussion of our consolidated results of operations in conjunction with the discussion of the operating performance of our individual business segments that follows . consolidated results of operations consolidated results of operations were as follows : replace_table_token_6_th triton , katz and cracked were acquired on november 30 , 2018 , october 2 , 2017 , and april 12 , 2016 , respectively , and the inclusion of operating results from these businesses for the periods subsequent to their acquisitions impacts the comparability of our consolidated and segment operating results . 2018 compared with 2017 operating revenues increased 37.8 % in 2018 . higher retransmission and political revenues in our local media group and the inclusion of a full year of katz revenues within our national media group were the main contributors to the year-over-year revenue increases . revenues from katz were $ 186 million in 2018 compared to $ 41.0 million in 2017 . revenues from triton for december 2018 were $ 3.3 million . employee compensation and benefits increased 7.2 % in 2018 , primarily driven by the expansion of our national media group , including a full year of katz expenses and one month of triton expenses . this increase was partially offset by employee cost savings attributed to restructuring activities initiated in the fourth quarter of 2017. programming expense increased 53.4 % in 2018 , primarily due to higher network affiliation fees reflecting contractual rate increases , as well as a full year of programming costs for katz . f-4 in the fourth quarter of 2018 , we incurred a non-cash impairment charge of $ 8.9 million related to our original programming show , pickler & ben , which will not be renewed for a third season . other expenses increased 32.6 % in 2018 compared to the prior year , most of which was driven by a full year of expenses for katz . increases in marketing and promotion costs for our national brands , mainly newsy and stitcher , also contributed to the increase in other expenses in 2018 . acquisition and related integration costs of $ 4.1 million in 2018 reflect professional service costs incurred to integrate triton and the former raycom stations , as well as costs incurred for the pending cordillera acquisition . restructuring costs of $ 8.9 million in 2018 and $ 4.4 million in 2017 reflect severance , outside consulting fees and other costs associated with our previously announced changes in management and operating structure . depreciation and amortization expense increased from $ 56 million in 2017 to $ 64 million in 2018 mainly due to the acquisition of katz in the fourth quarter of 2017. the slower development of our original revenue model for cracked created indications of impairment of goodwill as of september 30 , 2017. we concluded that the fair value of cracked did not exceed its carrying value as of september 30 , 2017. we recorded a $ 29.4 million non-cash impairment charge in the three months ended september 30 , 2017 to reduce the carrying value of goodwill and $ 6.3 million to reduce the carrying value of intangible assets . interest expense increased in 2018 due to the new debt issued to finance the katz acquisition , the higher interest rate on the senior secured notes that were issued in april 2017 and from increases throughout the year in london interbank offering rates ( `` libor `` ) , which is the benchmark upon which interest on our term loan b is based . interest expense in 2017 includes a $ 2.4 million write-off of loan fees associated with the refinancing of our term loan b in the second quarter 2017. defined benefit pension plan expense in 2018 includes a $ 1.8 million non-cash settlement charge related to lump-sum distributions from our supplemental executive retirement plans and an $ 11.7 million non-cash settlement charge in connection with the merger of our scripps pension plan into the journal communications , inc. plan and related transactions . miscellaneous , net in 2017 includes a $ 5.4 million gain on the change in control when we acquired katz , a $ 3.0 million gain from the sale of our newspaper syndication business and other income of $ 3.2 million resulting from an adjustment to the midroll media acquisition purchase price earn out . the effective income tax rate was 24.4 % and 62.5 % for 2018 and 2017 , respectively . state taxes , non-deductible expenses , excess tax benefits or expense on share-based compensation , tax settlements and changes in our reserves for uncertain tax positions impacted our effective rate . our 2018 provision includes $ 0.6 million of excess tax benefits from the exercise and vesting of share-based compensation awards . in 2017 , we had a provisional estimated benefit of $ 4.2 million from the change in federal income tax rates for the enactment of the tax cuts and jobs act which reduced the corporate income tax rate from 35 % to 21 % . 2017 compared with 2016 operating revenues were comparable year-over-year . we had higher retransmission and carriage revenues of $ 39 million and revenues in our national media group increased more than $ 58 million . the increase in our national media group revenues includes $ 41 million of revenues from katz . these increases were offset by $ 92 million of lower political revenues from our local media group in a non-political year . story_separator_special_tag f-15 contractual obligations a summary of our contractual cash commitments as of december 31 , 2018 is as follows : replace_table_token_13_th long-term debt — long-term debt includes the $ 400 million of unsecured senior notes and $ 296 million outstanding balance of our term loan b. the senior unsecured notes bear an interest rate of 5.125 % per annum . our term loan b bears interest at rates based on libor plus a fixed margin of 2.00 % . interest will reduce to a rate of libor plus a fixed margin of 1.75 % if the company 's total net leverage , as defined by the amended agreement , is below 2.75. the rate on our term loan b was 4.34 % at december 31 , 2018 . amounts included in the table may differ from amounts actually paid due to changes in libor . a 1 % increase in libor would result in an increase in annual interest payments of approximately $ 3 million . our financing agreement also includes a provision that in certain circumstances we must use a portion of excess cash flow to repay debt . principal payments included in the contractual obligations table reflect only scheduled principal payments and do not reflect any amounts that may be required to be paid under this provision . as of december 31 , 2018 , we were not required to make any additional principal payments for excess cash flow . other contractual obligations — in the ordinary course of business , we enter into long-term contracts to license or produce programming , to secure on-air talent , to lease office space and equipment and to purchase other goods and services . programming — program licenses generally require payments over the terms of the licenses . licensed programming includes both programs that have been delivered and are available for telecast and programs that have not yet been produced . it also includes payments for our network affiliation agreements . if the programs are not produced , our commitments would generally expire without obligation . fixed fee amounts payable under our network affiliation agreements are also included . variable amounts in excess of the contractual amounts payable to the networks are not included in the amounts above . other programming rights also include commitments for the purchase of podcast content rights . talent contracts — we secure on-air talent for our television stations through multi-year talent agreements . certain agreements may be terminated under certain circumstances or at certain dates prior to expiration . we expect our employment and talent contracts will be renewed or replaced with similar agreements upon their expiration . amounts due under the contracts , assuming the contracts are not terminated prior to their expiration , are included in the contractual obligations table . operating leases — we obtain certain office space under multi-year lease agreements . leases for office space are generally not cancelable prior to their expiration . f-16 leases for operating and office equipment are generally cancelable by either party with 30 to 90 days notice . however , we expect such contracts will remain in force throughout the terms of the leases . the amounts included in the table above represent the amounts due under the agreements assuming the agreements are not canceled prior to their expiration . we expect our operating leases will be renewed or replaced with similar agreements upon their expiration . pension funding — we sponsor noncontributory defined benefit pension plans and non-qualified supplemental executive retirement plans ( `` serps `` ) . contractual commitments summarized in the contractual obligations table include payments to meet minimum funding requirements of our defined benefit pension plans and estimated benefit payments for our unfunded serps . contractual pension obligations reflect anticipated minimum statutory pension contributions as of december 31 , 2018 , based upon pension funding regulations in effect at the time and our current pension assumptions regarding discount rates and returns on plan assets . actual funding requirements may differ from amounts presented due to changes in discount rates , returns on plan assets or pension funding regulations that are in effect at the time . payments for the serps have been estimated over a ten-year period . accordingly , the amounts in the “ over 5 years ” column include estimated payments for the periods of 2024 - 2028 . while benefit payments under these plans are expected to continue beyond 2028 , we do not believe it is practicable to estimate payments beyond this period . income tax obligations — the contractual obligations table does not include any reserves for income taxes recognized because we are unable to reasonably predict the ultimate amount or timing of settlement of our reserves for income taxes . as of december 31 , 2018 , our reserves for income taxes totaled $ 0.8 million , which is reflected as a long-term liability in our consolidated balance sheet . purchase commitments — we obtain audience ratings , market research and certain other services under multi-year agreements . these agreements are generally not cancelable prior to expiration of the service agreement . we expect such agreements will be renewed or replaced with similar agreements upon their expiration . katz has carriage agreements with local television broadcasters to carry one or more of the katz networks . these carriage agreements are generally for a five-year term . under these agreements , katz either pays a fixed fee or a portion of revenues for the carriage rights . we may also enter into contracts with certain vendors and suppliers . these contracts typically do not require the purchase of fixed or minimum quantities and generally may be terminated at any time without penalty . included in the table of contractual obligations are purchase orders placed as of december 31 , 2018 . purchase orders placed with vendors , including those with whom we maintain contractual relationships , are generally cancelable prior to shipment . while these	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources our primary source of liquidity is our available cash and borrowing capacity under our revolving credit facility . operating activities cash provided by operating activities for the years ended december 31 is as follows : replace_table_token_10_th 2018 to 2017 the $ 100 million increase in cash provided by continuing operating activities was primarily attributable to a $ 113.5 million year-over-year increase in segment profit and changes in working capital in 2018 compared to 2017. these items were partially offset by the year-over-year net cash impact from increased programming investment of $ 3.6 million , $ 5.3 million of additional cash outlay related to our previously discussed restructuring initiatives and $ 14.7 million of higher interest payments . additionally , in 2018 we made $ 3.5 million in payments to cable companies for agreeing to carry the newsy network compared to the $ 6 million we paid in 2017 . 2017 to 2016 the $ 106 million decrease in cash provided by continuing operating activities was primarily attributable to a $ 90 million year-over-year decrease in segment profit and changes in working capital in 2017 compared to 2016. additionally , in 2017 and 2016 , we contributed $ 21 million and $ 10 million , respectively , to our pension plans . in 2017 , we made $ 6 million in payments to cable companies for agreeing to carry the newsy network . f-12 investing activities cash used in investing activities for the years ended december 31 is as follows : replace_table_token_11_th in 2018 , 2017 and 2016 we used $ 207 million , $ 297 million and $ 71 million , respectively , in cash for investing activities from continuing operations . the primary factors affecting our cash flows from investing activities for the years presented are described below . in 2018 , we acquired triton for $ 150 million , net of cash acquired . in 2018 , capital expenditures increased $ 35 million . a significant portion of the increase was attributed to $ 17.9 million of capital expenditures incurred in 2018 related to the fcc repacking process . additionally , national media 's capital expenditures increased $ 14.4
in addition , we retain the right to manufacture a portion of both companies ' global clinical and commercial supply needs of mga012 , through utilization of our commercial-scale gmp facility , which is expected to be fully operational in 2018. finally , incyte will fund our activities related to our ongoing monotherapy clinical study until such time as we can transfer the investigational new drug application ( ind ) to incyte . servier . in september 2012 , we entered into an agreement with les laboratoires servier and institut de recherches servier ( servier ) to develop and commercialize three dart® molecules in all countries other than 44 the united states , canada , mexico , japan , south korea and india . we received a $ 20.0 million upfront option fee . in addition , we will be eligible to receive up to approximately $ 700 million in additional license fees and clinical , development , regulatory and sales milestone payments if servier exercises its remaining options and successfully develops , obtains regulatory approval for , and commercializes a product under each license . additionally , assuming exercise of its options , servier may share phase 2 and phase 3 development costs and would be obligated to pay us low double-digit to mid-teen royalties on product sales in its territories . in february 2014 , servier exercised its option to develop and commercialize flotetuzumab , for which we received a $ 15.0 million license option fee . we also received two $ 5.0 million milestone payments from servier in 2014 in connection with the ind applications for flotetuzumab and mgd007 clearing the 30-day review period by the u.s. food and drug administration ( fda ) . as of december 31 , 2017 , servier still retains an option to obtain a license for mgd007 , but has notified us that they have terminated their rights to license the third dart molecule . in addition , we have sought to complement our internal expertise and capabilities with collaborators that may help us advance our programs . for example , in december 2017 , we entered into a research collaboration and license agreement with f. hoffmann-la roche ltd. and hoffmann-la roche inc. ( collectively , roche ) to jointly discover and develop novel bispecific molecules to undisclosed targets . during the research term , both companies will leverage their respective platforms , including our dart platform and roche 's crossmab and dutafab technologies , to select a bispecific format and lead product candidate . roche would then further develop and commercialize any such product candidate . financial operations overview revenue our revenue consists primarily of collaboration revenue , including amounts recognized relating to upfront nonrefundable payments for licenses or options to obtain future licenses , research and development funding and milestone payments earned under our collaboration and license agreements with our strategic collaborators . in addition , we have earned revenues through several grants and or contracts with the u.s. government and other research institutions on behalf of the u.s. government , primarily with respect to research and development activities related to infectious disease product candidates . research and development expense research and development expense consists of expenses incurred in performing research and development activities . these expenses include conducting preclinical experiments and studies , clinical trials , manufacturing efforts and regulatory filings for all product candidates , and other indirect expenses in support of our research and development activities . we capture research and development expense on a program-by-program basis for our product candidates that are in clinical development and recognize these expenses as they are incurred . the following are items we include in research and development expense : employee-related expenses , such as salaries and benefits ; employee-related overhead expenses , such as facilities and other allocated items ; stock-based compensation expense to employees engaged in research and development activities ; depreciation of laboratory equipment , computers and leasehold improvements ; fees paid to consultants , subcontractors , clinical research organizations ( cros ) and other third party vendors for work performed under our preclinical and clinical trials including , but not limited to , investigator grants , laboratory work and analysis , database management , statistical analysis , and other items ; amounts paid to vendors and suppliers for laboratory supplies ; costs related to manufacturing clinical trial materials , including vialing , packaging and testing ; license fees and other third party vendor payments related to in-licensed product candidates and technology ; and costs related to compliance with regulatory requirements . it is difficult to determine with certainty the duration and completion costs of our current or future preclinical programs and clinical trials of our product candidates , or if , when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval . we may never succeed in 45 achieving regulatory approval for any of our product candidates . the duration , costs and timing of clinical trials and development of our product candidates will depend on a variety of factors , including the uncertainties of future clinical trials and preclinical studies , uncertainties in clinical trial enrollment rates and significant and changing government regulation . in addition , the probability of success for each product candidate will depend on numerous factors , including competition , manufacturing capability and commercial viability . we will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate , as well as an assessment of each product candidate 's commercial potential . general and administrative expenses general and administrative expenses consist of salaries and related benefit costs for employees in our executive , finance , legal and intellectual property , business development , human resources and other support functions , travel expenses and other legal and professional fees . story_separator_special_tag if the tax position meets this threshold , the benefit to be recognized is measured as the largest amount that is more than 50 % likely to be realized upon ultimate settlement . our policy is to record interest and penalties related to uncertain tax positions as a component of income tax expense . we recorded net deferred tax assets of $ 0.8 million as of december 31 , 2017 , which have been fully offset by a valuation allowance due to uncertainties surrounding our ability to realize these tax benefits . the deferred tax assets are primarily comprised of federal and state tax net operating loss ( nol ) carryforwards and research and development tax credit carryforwards . as of december 31 , 2017 , we had federal and state nol carryforwards of $ 239.7 million and research and development tax credit carryforwards of $ 42.8 million available . the federal nol carryforwards will begin to expire at various dates starting in 2025 . we are already subject to section 382 limitations due to acquisitions we made in 2002 and 2008. future changes in stock ownership may also trigger an ownership change and , consequently , another section 382 limitation . any limitation may result in expiration of a portion of the net operating loss or tax credit carryforwards before utilization which would reduce our gross deferred income tax assets and corresponding valuation allowance . as a result , if we earn net taxable income , our ability to use our pre-change net operating loss carryforwards and tax credit carryforwards to reduce united states federal income tax may be subject to limitations , which could potentially result in increased future cash tax liability to us . on december 22 , 2017 , the tax cuts and jobs act of 2017 ( the tax act ) was signed into law making significant changes to the internal revenue code , which included how the u.s. imposes income tax on multinational corporations . key changes in the tax act which are relevant to us , and generally effective january 1 , 2018 , include a flat corporate income tax rate of 21 % to replace the marginal rates that range from 15 % to 35 % and the elimination of the corporate alternative minimum tax . the tax act also imposes limits on executive compensations and interest expense deductions , while permitting the immediate expensing for the cost of new investments in certain property acquired after september 27 , 2017. on december 22 , 2017 , the sec issued staff accounting bulletin no . 118 ( sab 118 ) to address the application of u.s. gaap in situations when a registrant does not have the necessary information available , prepared , or analyzed ( including computations ) in reasonable detail to complete the accounting for certain income tax effects of the tax act . sab 118 allows registrants to include a provisional amount to account for the implications of the tax act where a reasonable estimate can be made and requires the completion of the accounting no later than one year from the date of the enactment of the tax act , or december 22 , 2018. asc 740 requires changes in tax rates and tax laws to be accounted for in the period of enactment in continuing operations . accordingly , of significance , we recorded a provisional estimate for the re-measurement of our u.s. deferred tax assets and liabilities to 21 % . this change in value of these deferred tax assets and liabilities , which is provisional , was offset by a corresponding change in our valuation allowance , thus no tax expense or benefit was recorded . the ultimate impact may 49 differ from these provisional amounts , possibly materially , due to , among other things , additional information necessary to complete the computation and analysis thereof , additional regulatory guidance that may be issued , and actions we may take as a result of the tax act . the accounting is expected to be complete by december 22 , 2018. stock-based compensation we recognize stock-based compensation expense in accordance with the provisions of asc topic 718 , compensation—stock compensation . the fair value of stock-based payments is estimated , on the date of grant , using a black-scholes model . the resulting fair value is recognized on a straight-line basis over the requisite service period , which is generally the vesting period of the option . the use of a black-scholes model requires us to apply judgment and make assumptions and estimates that include the following : fair value of common stock – before our entry into the public market on october 10 , 2013 , our board of directors determined the fair value of the common stock . the board of directors made determinations of fair value based , in part , upon contemporaneous valuations to determine fair value . the contemporaneous valuations were performed in accordance with applicable methodologies , approaches and assumptions of the technical practice-aid issued by the american institute of certified public accountants practice aid entitled valuation of privately-held company equity securities issued as compensation . expected volatility – volatility is a measure of the amount by which a financial variable such as a share price has fluctuated ( historical volatility ) or is expected to fluctuate ( expected volatility ) during a period . as we do not yet have sufficient history of our own volatility , we have identified several public entities of similar size , complexity and stage of development and estimate volatility based on the volatility of these companies . expected dividend yield – we have never declared or paid dividends and have no plans to do so in the foreseeable future . risk-free interest rate – this is the u.s. treasury rate for the week of each option grant during the year , having a term that most closely resembles the expected life of the option	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows the following table represents a summary of our cash flows for the years ended december 31 , 2017 , 2016 and 2015 : 53 replace_table_token_9_th operating activities net cash provided by or used in operating activities reflects , among other things , the amounts used to run our clinical trials and preclinical activities . net cash provided by operating activities during the year ended december 31 , 2017 is primarily due to cash received under the incyte agreement partially offset by an increase in the number of ongoing clinical trials and the expenses associated with increased enrollment in clinical trials . the increase in net cash used in operating activities for the year ended december 31 , 2016 compared to 2015 is primarily due to an increase in the number of ongoing clinical trials , the expenses associated with increased enrollment in clinical trials and an increase in the number of employees . investing activities net cash provided by investing activities during the year ended december 31 , 2017 is primarily due to maturities of marketable securities , partially offset by purchases of marketable securities and making leasehold improvements to our facilities , including the build out of a manufacturing suite at our headquarters building in rockville , maryland . net cash used in investing activities during the years ended december 31 , 2016 and 2015 is primarily due to investing our cash in marketable securities and making leasehold improvements to our facilities .
actual results may differ materially from the results discussed in the forward-looking statements . factors that might cause such a difference include , but are not limited to , those discussed in “ item 1a — risk factors . ” overview psychemedics corporation is the world 's largest provider of hair testing for drugs of abuse , utilizing a patented hair analysis method involving radioimmunoassay technology and confirmation by mass spectrometry to analyze human hair to detect abused substances . the company 's customers include fortune 500 companies , as well as small to mid-size corporations , schools and governmental entities located primarily in the united states . during the year ended december 31 , 2010 , the company generated $ 20.1 million in revenue , while maintaining a gross margin of 60 % and pre-tax margins of 22 % . at december 31 , 2010 , the company had $ 5.7 million of cash , cash equivalents and short-term investments . during 2010 , the company had operating cash flow of $ 3.3 million and it distributed approximately $ 2.5 million or $ 0.48 per share of cash dividends to its shareholders . to date , the company has paid fifty-eight consecutive quarterly cash dividends . 15 the following table sets forth , for the periods indicated , the selected statements of operations data as a percentage of total revenue : replace_table_token_4_th results for the year ended december 31 , 2010 compared to results for the year ended december 31 , 2009 revenue increased $ 3.2 million or 19 % to $ 20.1 million in 2010 compared to $ 17.0 million in 2009. this increase was due to an increase in volume from new and existing clients . average revenue per sample increased 2 % between 2010 and 2009. gross profit increased $ 2.4 million to $ 12.0 million in 2010 compared to $ 9.6 million in 2009. direct costs increased by 10 % from 2009 to 2010 , mainly associated with the direct cost of materials resulting from higher volumes . the gross profit margin increased from 57 % in 2009 to 60 % in 2010 as revenue increased more than direct costs . general and administrative ( “ g & a ” ) expenses were $ 4.2 million for the year ended december 31 , 2010 compared to $ 3.6 million for the year ended december 31 , 2009 , representing an increase of 17 % . as a percentage of revenue , g & a expenses were 20.9 % and 21.2 % for the years ended december 31 , 2010 and 2009 , respectively . the increase in general and administrative expenses in 2010 was due to several factors : an increase in salary expense due to the reinstatement of salaries in 2010 following a salary cut in the second half of 2009 , an increase in accounting and audit fees , an increase in legal fees defending our technology on behalf of our customers , and bonuses earned in 2010 and not in 2009. marketing and selling expenses were $ 2.9 million for the year ended december 31 , 2010 , compared to $ 3.0 million for the year ended december 31 , 2009 , a decrease of less than 1 % . total marketing and selling expenses represented 14.6 % and 17.5 % of revenue for the years ended december 31 , 2010 and 2009 , respectively . research and development ( “ r & d ” ) expenses for 2010 were $ 0.5 million compared to $ 0.5 million for 2009. r & d expenses represented 2.4 % and 2.8 % of revenue for the years ended december 31 , 2010 and 2009 , respectively . interest income decreased approximately $ 22,000 to approximately $ 23,000 for the year ended december 31 , 2010 compared to $ 45,000 for the year ended december 31 , 2009. interest income in both periods represented interest and dividends earned on cash equivalents and short-term investments . a decrease in the yield on investment balances in 2010 as compared to 2009 caused the decrease in interest income . during the year ended december 31 , 2010 , the company recorded a tax provision of $ 1.8 million , representing an effective tax rate of 41.1 % . during the year ended december 31 , 2009 , the company recorded a tax provision of $ 1.1 million , representing an effective tax rate of 41.9 % . we do not expect a significant change in our tax rate in the foreseeable future . 16 results for the year ended december 31 , 2009 compared to results for the year ended december 31 , 2008 revenue decreased $ 6.0 million or 26 % to $ 17.0 million in 2009 compared to $ 22.9 million in 2008. this decrease was due in part to decreased testing volume , which fell 26 % compared to 2008. average revenue per sample was unchanged between 2009 and 2008. revenue included the recognition of deferred revenue relating to the sale of pdt-90 products was $ 0.1 million for each of the years ended december 31 , 2009 and 2008. gross profit decreased $ 3.7 million to $ 9.6 million in 2009 compared to $ 13.4 million in 2008. direct costs decreased by 23 % from 2008 to 2009 , mainly due to lower labor and associated direct cost of materials . the gross profit margin fell from 58 % in 2008 to 57 % in 2009 as revenue declined more than direct costs . story_separator_special_tag the company routinely assesses the financial strength of its customers and , as a consequence , believes that its accounts receivable credit risk exposure is limited . the company maintains an allowance for potential credit losses but historically has not experienced any significant losses related to individual customers or groups of customers in any particular industry or geographic area . bad debt expense has been within management 's expectations . income taxes the company accounts for income taxes using the liability method , which requires the company to recognize a current tax liability or asset for current taxes payable or refundable and a deferred tax liability or asset for the estimated future tax effects of temporary differences between the financial statement and tax reporting bases of assets and liabilities to the extent that they are realizable . deferred tax expense ( benefit ) results from the net change in deferred tax assets and liabilities during the year . a deferred tax valuation allowance is required if it is more likely than not that all or a portion of the recorded deferred tax assets will not be realized . 19 the company had net deferred tax assets in the amount of $ 240,000 at december 31 , 2010 , which the company believes are fully realizable based upon expected future taxable income , which the company 's believes is reasonably attainable in light of previous operating results during the past three years . the company operates within multiple taxing jurisdictions and could be subject to audit in these jurisdictions . these audits may involve complex issues , which may require an extended period of time to resolve . the company has provided for its estimated taxes payable in the accompanying financial statements . interest and penalties related to income tax matters are recognized as a general and administrative expense . the company did not have any unrecognized tax benefits and did not have any interest or penalties accrued as of december 31 , 2010 or 2009. the company does not expect the unrecognized tax benefits to change significantly over the next twelve months . the above listing is not intended to be a comprehensive list of all of the company 's accounting policies . in many cases , the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the united states , with no need for management 's judgment in their application . there are also areas in which management 's judgment in selecting any available alternative would not produce a materially different result . recent accounting pronouncements in april 2010 , the fasb issued accounting standards update , or , asu , no . 2010-17 , revenue recognition — milestone method ( topic 605 ) : milestone method of revenue recognition , or asu 2010-17. asu 2010-17 allows the milestone method as an acceptable revenue recognition methodology when an arrangement includes substantive milestones . asu 2010-17 provides a definition of substantive milestone and should be applied regardless of whether the arrangement includes single or multiple deliverables or units of accounting . asu 2010-17 is limited to transactions involving milestones relating to research and development deliverables . asu 2010-17 also includes enhanced disclosure requirements about each arrangement , individual milestones and related contingent consideration , information about substantive milestones and factors considered in the determination . asu 2010-17 is effective on a prospective basis for milestones achieved in fiscal years , and interim periods within those years , beginning on or after june 15 , 2010 , with early adoption permitted . the adoption of this standard is not expected to have a material impact on the company 's financial position , results of operations or cash flows . in october 2009 , the fasb issued asu no . 2009-14 , software ( topic 985 ) : certain revenue arrangements that include software elements — a consensus of the fasb eitf , or asu 2009-14. asu 2009-14 changes the accounting model for revenue arrangements that include tangible products and software elements . the amendments of this update provide additional guidance on how to determine which software , if any , relating to the tangible product also would be excluded from the scope of the software revenue recognition guidance . the amendments in this update also provide guidance on how a vendor should allocate arrangement consideration to deliverables in an arrangement that includes both tangible products and software , as well as arrangements that have deliverables both included and excluded from the scope of software revenue recognition guidance . this standard is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after june 15 , 2010. the adoption of this standard is not expected to have a material impact on the company 's financial position , results of operations or cash flows . in october 2009 , the fasb issued asu no . 2009-13 , revenue recognition ( topic 605 ) : multiple-deliverable revenue arrangements — a consensus of the fasb eitf , or asu 2009-13. asu 2009-13 will separate multiple-deliverable revenue arrangements . this update establishes a selling price hierarchy for determining the selling price of a deliverable . the amendments of this update will replace the term “ fair value ” in the revenue allocation guidance with “ selling price ” to clarify that the allocation of revenue is based on entity-specific assumptions rather than assumptions of a marketplace participant . the amendments of this update will eliminate the residual method of allocation and require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method . the amendments in this update will require that a vendor determine its best estimated selling price in a manner consistent with that used to determine the price to sell the deliverable on a standalone basis . this standard is effective prospectively for revenue arrangements entered into or materially modified in fiscal	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources at december 31 , 2010 , the company had $ 5.7 million of cash , cash equivalents and short term investments , compared to $ 5.8 million at december 31 , 2009. the company 's operating activities generated net cash of $ 3.3 million in 2010 , $ 2.4 million in 2009 and $ 3.7 million in 2008. investing activities used $ 1.9 million in 2010 , used $ 1.1 million in 2009 and generated $ 3.5 million in 2008. financing activities used $ 2.6 million in 2010 , $ 3.1 million in 2009 and $ 6.7 million in 2008. operating cash flow of $ 3.3 million in 2010 primarily reflected net income of $ 2.6 million adjusted for depreciation and amortization of $ 0.3 million , stock compensation expense of $ 0.4 million , an increase in prepaid expenses and accounts receivable of $ 0.9 million and an increase in accounts payable of $ 0.5 million , and an increase in accrued expenses of $ 0.2 million . operating cash flow of $ 2.4 million in 2009 primarily reflected net income of $ 1.5 million adjusted for depreciation and amortization of $ 0.3 million , stock compensation expense of $ 0.4 million , a decrease in prepaid expenses and accounts receivable of $ 0.8 million and accounts payable of $ 0.5 million , and a decrease in accrued expenses of $ 0.2 million . operating cash flow of $ 3.7 million in 2008 primarily reflected net income of $ 3.0 million adjusted for depreciation and amortization of $ 0.3 million , stock compensation expense of $ 0.4 million and an increase in prepaid expenses of $ 0.6 million , offset by an increase in accrued expenses of $ 0.3 million .
in the fourth quarter of 2020 , increases in covid-19 cases and the implementation of heightened restrictions on in-person dining in many markets , as well as other factors , resulted in a slowdown in the total case volume recovery trend that we saw in the third quarter of 2020. total case volume decreased 11.0 % for the 53 weeks ended january 2 , 2021 compared to the 52 weeks ended december 28 , 2019. recent activity and sector perspectives we are optimistic about the long-term prospects for our business . us foods operates in a large and essential industry with a highly diversified set of end consumers . while some of our core customer groups ( such as restaurants , hospitality and education ) have been more significantly affected by the impacts of the covid-19 pandemic , other customer groups ( such as healthcare , government , retail and cash and carry ) have been less significantly affected . although the timetable for returning to normalcy is unknown , we believe that our case volumes will increase over time as vaccine distribution increases and the effects of the covid-19 pandemic dissipate , consumer demand for food prepared away from home increases , educational institutions resume in-person learning , and the hospitality industry recovers . as one of the largest companies in our industry , we believe we are well positioned for long-term success as the fragmented nature of our industry and the current environment create new opportunities for companies with the size and resources of us foods . we believe we are differentiated from many of our competitors on a number of fronts including our national footprint , diversified multi-channel 25 platform , strong technology capabilities and value-added service offerings , all of which have allowed us to continue to serve our customers during these unprecedented conditions . during these difficult times , we are proactively supporting our customers by helping our restaurant and hospitality customers adapt to social distancing restrictions with tools and resources to build and manage carryout and delivery capabilities . in light of the covid-19 pandemic , we have developed additional innovative services , such as customer education webinars on the coronavirus aid , relief and economic security act ( the “ cares act ” ) , assistance with recovery plans for location re-openings , and the creation of unique pantry kits to allow restaurants to continue servicing consumers . our product development efforts remain in full force and we continue to deliver product innovations that resonate with our customers . in response to the covid-19 pandemic and ensuing decrease in total case volume , we have evolved our business focus and cost structure . we have taken a number of steps to secure new customer relationships and expand our market share , reduce fixed and variable operating costs on a temporary and permanent basis , and strengthen our liquidity position . we also have the ability to take further cost reduction actions on a temporary basis depending upon the duration of the covid-19 pandemic and its impact on our business , results of operations and financial condition . even so , there is no certainty that such measures , or any additional actions that we may take in the future , will be successful in mitigating the impact of the pandemic on our business , results of operations or financial condition . on march 27 , 2020 , president trump signed into law the cares act . the cares act , among other things , includes provisions relating to deferment of employer-side social security payments , net operating loss carryback periods , modifications to the net interest deduction limitations , technical corrections to tax depreciation methods for qualified improvement property and federally backed loans to qualifying small-businesses . us foods has benefited from certain provisions under the cares act and many of our customers are benefiting from the federally backed small business loan program . in addition , on december 27 , 2020 , president trump signed into law the consolidated appropriations act , 2021 ( the “ december 2020 relief bill ” ) . the december 2020 relief bill , among other things , expands the federally backed small business loan program that was introduced as part of the cares act , which we expect will further benefit many of our customers . it is currently unclear if or how us foods may indirectly benefit from the december 2020 relief bill , but we continue to examine the impact of the december 2020 relief bill on our business , results of operations and financial condition . the impact of the covid-19 pandemic is fluid and continues to evolve , and therefore , we can not currently predict the extent to which our business , results of operations or financial condition will ultimately be impacted . in particular , we can not predict the extent to which the covid-19 pandemic will affect our business , results of operation or financial condition in the long term because the duration and severity of the pandemic and its negative impact on the economy ( including our customers ) is unclear . the impact of the covid-19 pandemic on us will also be dependent on : the resiliency of the restaurant and hospitality industry and consumer spending more broadly ; actions taken by national , state and local governments to contain the disease or treat its impact , including travel restrictions and bans , social distancing requirements , required closures of non-essential businesses and aid and economic stimulus efforts ; widespread vaccination of the american public resulting in increased willingness by consumers to consume food away from home , travel and attend sporting and other events ; and any prolonged economic recession resulting from the pandemic . story_separator_special_tag 31 operating expenses operating expenses , comprised of distribution , selling and administrative costs and restructuring costs and asset impairment charges , decreased $ 92 million , or 2.4 % , to $ 3,796 million in fiscal year 2020. operating expenses as a percentage of net sales were 16.6 % in fiscal year 2020 , compared to 15.0 % in fiscal year 2019. the decrease in operating expenses is primarily due to the negative impact of covid-19 on total case volume , the related impact of cost actions put into place , and a $ 17 million gain on the sale of excess land . these decreases were partially offset by operating expenses for the food group and smart foodservice of $ 514 million , a $ 47 million increase in the provision for doubtful accounts reflecting the collection risk associated with our customer base as a result of covid-19 , $ 30 million of restructuring costs associated with work force reductions , and $ 9 million of asset impairment charges . the $ 9 million of asset impairment charges relate to the decline in fair value of certain trade names acquired as part of the food group acquisition primarily due to the adverse impact of covid-19 on forecasted earnings and the discount rate utilized in our valuation models . operating ( loss ) income our operating loss was $ 77 million in fiscal year 2020 , compared to operating income of $ 699 million in fiscal year 2019. operating loss as a percentage of net sales was 0.3 % in fiscal year 2020 , while operating income as a percentage of net sales was 2.7 % in fiscal year 2019. the decrease in operating income was due to the factors discussed in the relevant sections above . other ( income ) expense—net other ( income ) expense—net includes components of net periodic benefit costs ( credits ) , exclusive of the service cost component associated with our defined benefit and other postretirement plans . we recognized other income—net of $ 21 million in fiscal year 2020 , primarily due to the improved funded status of our defined benefit pension plan as of december 28 , 2019. we recognized other expense—net of $ 4 million in fiscal year 2019 , including $ 12 million of non-cash settlement costs resulting from payments to settle benefit obligations with participants in our defined benefit pension plan . interest expense—net interest expense—net increased $ 54 million in fiscal year 2020 , primarily due to an increase in our indebtedness to finance the food group and smart foodservice acquisitions and to strengthen our liquidity position at the onset of the covid-19 pandemic , which were partially offset by a decrease in benchmark interest rates in fiscal year 2020 as compared to fiscal year 2019. income taxes our effective income tax rate for fiscal year 2020 of 23 % varied from the 21 % federal corporate income tax rate , primarily as a result of state income taxes and the recognition of various discrete tax items . these discrete tax items included a tax expense of $ 2 million primarily related to an increase in an unrecognized tax benefit and a tax expense of $ 1 million , primarily related to a tax benefit shortfall associated with share-based compensation . our effective income tax rate for fiscal year 2019 of 25 % varied from the 21 % federal corporate income tax rate , primarily as a result of state income taxes and the recognition of various discrete tax items . these discrete tax items included a tax benefit of $ 4 million primarily related to excess tax benefits associated with share-based compensation . net ( loss ) income our net loss was $ 226 million in fiscal year 2020 , compared to net income of $ 385 million in fiscal year 2019. the decrease in net income was due to the relevant factors discussed above . liquidity and capital resources our ongoing operations and strategic objectives require working capital and continuing capital investment . our primary sources of liquidity include cash provided by operations , as well as access to capital from bank borrowings and other types of debt and financing arrangements . in response to the impact of the covid-19 pandemic , in fiscal year 2020 and early 2021 , we took actions aimed at strengthening our liquidity by increasing cash on hand and preserving financial flexibility in light of the economic and business uncertainty resulting from the pandemic . in particular : in march 2020 , we borrowed an aggregate of $ 300 million under the former accounts receivable financing facility ( the “ abs facility ” ) and $ 700 million under the abl facility ; on april 24 , 2020 , we borrowed an aggregate principal amount of $ 700 million under the 2020 incremental term loan facility , the proceeds of which were used to finance , in part , the smart foodservice acquisition ; 32 on april 28 , 2020 , we issued $ 1.0 billion aggregate principal amount of 6.25 % senior secured notes due 2025 ( the “ secured notes ” ) , the proceeds of which were used to repay $ 400 million in principal amount of the 2020 incremental term loan facility and the balance of the net proceeds were used for general corporate purposes ; on may 1 , 2020 , we used $ 542 million of cash on hand to repay all of our outstanding borrowings under the abs facility in full and terminated the abs facility ; in connection with the repayment and termination of the abs facility , we transitioned the accounts receivable that secured the abs facility to the collateral pool that secures the abl facility ; on may 4 , 2020 , we entered into an amendment to the credit agreement governing the abl facility pursuant to which certain of our lenders agreed to increase their aggregate commitments by $	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows the following table presents condensed highlights from our consolidated statements of cash flows for fiscal years 2020 and 2019 : replace_table_token_7_th operating activities cash flows provided by operating activities decreased $ 347 million to $ 413 million in fiscal year 2020. the year-over-year decrease was primarily attributable to the decline in operating results driven by the impact of covid-19 on our results , and the associated impact on the company 's working capital requirements resulting from lower total case volume and lower inventories . investing activities cash flows used in investing activities in fiscal year 2020 included the $ 972 million cash purchase price for the acquisition of smart foodservice and cash expenditures of $ 189 million for fleet replacement and investments in information technology , as well as new construction and or expansion of distribution facilities . cash flows used in investing activities in fiscal year 2019 included the $ 1.8 billion cash purchase price for the acquisition of the food group and cash expenditures of $ 258 million for fleet replacement and investments in information technology , as well as new construction and expansion of distribution facilities . during fiscal year 2019 , we sold three food group distribution facilities for aggregate proceeds of $ 94 million and sold certain excess properties for aggregate proceeds of $ 6 million during fiscal year 2019. we expect total cash capital expenditures in fiscal year 2021 to be between $ 290 million and $ 305 million , exclusive of approximately $ 35 million to $ 45 million of capital expenditures under our fleet financing leases . we expect to fund our capital expenditures with available cash or cash generated from operations and through fleet financing .
the peer group is periodically reviewed , and was revised in the first quarter of 2020 after evaluating financial institutions that we believe better reflect our company , particularly in terms of market capitalization , asset size , employee headcount and loan portfolio composition . the company is in the middle of the group in terms of asset size . the group of 21 midwestern , publicly traded , peer financial institutions against which we compared our performance for 2020 consisted of bank first corporation , civista bancshares , inc. , crossfirst bankshares , inc. , equity bancshares , inc. , farmers national banc corp. , farmers & merchants bancorp , first business financial services , inc. , first financial corp. , first mid bancshares , inc. , german american bancorp , inc. , hills bancorporation , isabella bank corporation , lcnb corp. , level one bancorp , inc. , macatawa bank corporation , mackinac financial corporation , mercantile bank corporation , midwestone financial group , inc. , nicolet bankshares , inc. , peoples bancorp , inc. , and southern missouri bancorp , inc. the company 's goal is to perform at or near the top of this peer group relative to what we consider to be three key metrics : return on average equity , efficiency ratio and texas ratio . we believe these measures encompass the factors that define the performance of a community bank . company and peer results for the key financial performance measures are summarized below . replace_table_token_3_th ( 1 ) as presented , this is a non-gaap financial measure . for further information , refer to the section “ non-gaap financial measures ” of this item . ( 2 ) latest data available . our earnings outlook is positive , and we have strong capital resources . we anticipate the company will be profitable in 2021 at a level that compares with that of our peers . the amount of our future profit is dependent , in large part , on our ability to continue to grow the loan portfolio , the amount of loan losses we incur , fluctuations in market interest rates , the strength of the local and national economy , and the economic recovery from the covid-19 pandemic . the following discussion describes the consolidated operations and financial condition of the company , including its subsidiary west bank and west bank 's special purpose subsidiaries . results of operations for the year ended december 31 , 2020 are compared to the results for the year ended december 31 , 2019 and the consolidated financial condition of the company as of december 31 , 2020 is compared to december 31 , 2019. results of operations for the year ended december 31 , 2019 compared to the results for the year ended december 31 , 2018 can be found in item 7 - management 's discussion and analysis of financial condition and results of operations of the company 's 2019 annual report on form 10-k filed with the sec on february 27 , 2020. significant developments - impact of covid-19 the covid-19 pandemic , and efforts to contain it , have had a complex and significant adverse impact on the economy , the banking industry and the company . the impact on future fiscal periods is subject to a high degree of uncertainty . 32 ( dollars in thousands , except per share amounts ) effects on our market areas . our commercial and consumer banking products and services are offered primarily in iowa and minnesota , where individual and government responses to the covid-19 pandemic led to broad curtailment of economic activity beginning in march 2020. in iowa and minnesota , schools closed for the remainder of the school year , most retail establishments , including restaurants and entertainment venues , were ordered to close for varying lengths of time , and travel and non-critical healthcare services were significantly curtailed . since the initial shut down in march 2020 , phased reopening plans began in mid-may subject to public health reopening guidelines , including social distancing and limitations on capacity . schools and colleges have reopened under various in-person , online and hybrid learning models . recent increases in covid-19 transmission has lead to additional targeted closures and restrictions . these measures have had a lasting impact on the economies of and customers located in these states . the bank remained open during the closures as banks had been identified as essential services . initially , the bank continued to serve its customers through its drive-ups and video teller machines and inside its branch offices by appointment only . our full service branch lobbies reopened to walk-in customer activity in june 2020. both states in our market areas experienced increases in unemployment levels in 2020 as a result of the curtailment of business activities . unemployment in iowa was 3.1 percent in december 2020 , after peaking at 11.0 percent in april 2020 , according to the iowa workforce development . unemployment in minnesota was 4.4 percent in december 2020 , after peaking at 9.9 percent in may 2020 , according to the minnesota department of employment and economic development . policy and regulatory developments . federal , state and local governments and regulatory authorities have enacted and issued a range of policy responses to the covid-19 pandemic , including the following : the federal reserve decreased the range for the federal funds target rate by 0.5 percent on march 3 , 2020 , and by another 1.0 percent on march 16 , 2020 , reaching a current range of 0.0 - 0.25 percent . on march 27 , 2020 , president trump signed the cares act , which established a $ 2 trillion economic stimulus package , including cash payments to individuals , supplemental unemployment insurance benefits and a $ 349 billion loan program administered through the sba , referred to as the ppp . story_separator_special_tag management believes the presentation of this non-gaap measure provides supplemental useful information for proper understanding of the financial results , as it enhances the comparability of income arising from taxable and nontaxable sources . ( 2 ) the efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income , excluding specific noninterest income and expenses . management believes the presentation of this non-gaap measure provides supplemental useful information for proper understanding of the financial performance . it is a standard measure of comparison within the banking industry . 37 ( dollars in thousands , except per share amounts ) results of operations - 2020 compared to 2019 overview net income for the year ended december 31 , 2020 , was $ 32,712 , compared to $ 28,690 for the year ended december 31 , 2019. basic and diluted earnings per common share for 2020 were $ 1.99 and $ 1.98 , respectively , and were $ 1.75 and 1.74 , respectively for 2019. the increase in 2020 net income compared to 2019 was primarily the result of higher net interest income and noninterest income , partially offset by an increase in provision for loan losses . net interest income grew $ 16,403 , or 24.7 percent , in 2020 compared to 2019. the increase in net interest income was primarily due to the decrease in interest expense on deposits and other borrowings . interest expense decreased $ 14,845 , or 46.0 percent , compared to 2019 , primarily due to the federal reserve 's reductions in the targeted federal funds rate that occurred in march 2020 in response to the covid-19 pandemic . in response to the economic conditions and reduction in market interest rates , west bank lowered its interest rates in march 2020 in almost all deposit categories . the company recorded a provision for loan losses of $ 12,000 in 2020 compared to a provision for loan losses of $ 600 in 2019. the increase in the provision for loan losses was due to the uncertainty surrounding economic conditions as a result of the covid-19 pandemic and slow economic recovery in the hotel and entertainment industries , and an increase in specific reserves on impaired loans . noninterest income increased $ 1,284 , or 15.4 percent , in 2020 compared to 2019 , primarily due to loan swap fees earned on back-to-back interest rate swaps and realized investment securities gains in 2020 , compared to losses in 2019. noninterest expense grew $ 648 , or 1.7 percent , in 2020 compared to 2019 , primarily due to an increase in fdic insurance expense . the company has consistently used the efficiency ratio as one of its key financial metrics to measure expense control . for the year ended december 31 , 2020 , the company 's efficiency ratio decreased to 41.96 percent from the prior year 's ratio of 50.96 percent . this ratio is computed by dividing noninterest expense ( excluding other real estate owned expense and write-down of premises ) by the sum of tax-equivalent net interest income plus noninterest income ( excluding net investment securities gains or losses and gains or losses on disposition of premises and equipment ) , and a lower ratio is better . the higher efficiency ratio in 2019 was attributable to our expansion of operations in the three new minnesota markets of owatonna , mankato and st. cloud . in march 2019 , the company began operations in these three new minnesota markets . the financial results of 2019 included certain operational and business development costs directly related to the minnesota expansion totaling approximately $ 2.8 million on a pretax basis , while net interest income and fee income in these markets was approximately $ 1.1 million in 2019. the expense drag from the ramp up of these operations resulted in a higher than normal efficiency ratio in 2019. we entered 2020 with profitable operations in these new markets . the lower efficiency ratio in 2020 , compared to 2019 , was primarily the result of profitable operations in the new minnesota markets and the decrease in interest expense , which was attributable to the federal reserve 's reductions in the federal funds rate . the texas ratio , which is the ratio of nonperforming assets to tangible common equity plus the allowance for loan losses , increased to 6.40 percent as of december 31 , 2020 , compared to 0.23 percent as of december 31 , 2019. a lower texas ratio indicates a stronger credit quality condition . the increase in our texas ratio in 2020 was primarily due to an increase in nonaccrual loans resulting from the downgrade in the credit quality of one borrower due to the severe economic impact of covid-19 on its business . for more discussion on loan quality , see the “ loan portfolio ” and “ summary of the allowance for loan losses ” sections in this item of this form 10-k. 38 ( dollars in thousands , except per share amounts ) net interest income net interest income increased to $ 82,833 for 2020 from $ 66,430 for 2019 , as the impact of the growth of interest-earning assets and decrease in average rate paid on interest-bearing liabilities exceeded the effects of an increase in average balance of interest-bearing liabilities and decrease in average yields on interest-earning assets . the net interest margin for 2020 increased 25 basis points to 3.20 percent compared to 2.95 percent for 2019. the average yield on earning ass ets decreased by 51 basis points , while the rate paid on interest-bearing liabilitie s decreased by 91 basis points . the primary driver of the increase in the net interest margin was a decrease in interest rates paid on deposits and other borrowed funds and an increase in average loan balances , partially offset by a decrease in yield on loans and investments . the federal reserve	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources the objective of liquidity management is to ensure the availability of sufficient cash flows to meet all financial commitments and to capitalize on opportunities for profitable business expansion . the company 's principal source of funds is deposits . other sources include loan principal repayments , proceeds from the maturity and sale of investment securities , principal payments on amortizing securities , federal funds purchased , advances from the fhlb , and funds provided by operations . liquidity management is conducted on both a daily and a long-term basis . investments in liquid assets are adjusted based on expected loan demand , projected loan and investment securities maturities and payments , expected deposit flows and the objectives set by west bank 's asset-liability management policy . the company experienced a significant increase in deposits in the fourth quarter of 2020. those deposits resulted in a significant increase in liquidity and total assets as of december 31 , 2020 compared to december 31 , 2019. we believe that deposit levels could decrease in 2021 as a result of the distressed economic conditions in our market areas relating to the covid-19 pandemic , low interest rates and customers ' utilization of liquidity . the company believes there could be potential stresses on liquidity management on a longer-term basis as a direct result of the duration of the covid-19 pandemic . as customers manage their own liquidity needs , we could experience an increase in the utilization of existing lines of credit .
ba services include gogo biz , our in-flight broadband service that utilizes both our atg network and our atg spectrum , and satellite-based voice and data services through our strategic alliances with satellite companies . recent developments on april 4 , 2013 , we borrowed $ 113.0 million ( the new borrowing ) under an amendment to the credit agreement governing our existing senior term facility , dated as of june 21 , 2012 , among gogo intermediate holdings llc ( gih ) , aircell business aviation services llc ( abas ) and gogo llc , as borrowers , the lenders named therein , and morgan stanley senior funding , inc. , as administrative agent and collateral agent . we refer to our existing senior term facility , as so amended , as the amended senior term facility. the amendment increased the size of our senior term facility from $ 135.0 million to $ 248.0 million . we received net cash proceeds from the new borrowing of $ 103.0 million following the payment of debt issuance fees of 56 $ 10.0 million . we are using the proceeds from the new borrowing for general corporate purposes , including upgrading certain of our airline partners to atg-4 technology and funding our international expansion to the extent permitted by the amended senior term facility . see liquidity and capital resources for additional information regarding the amended senior term facility . on june 20 , 2013 , we priced our initial public offering ( ipo ) of 11,000,000 shares of our common stock , and such shares began trading on the nasdaq global select market on june 21 , 2013. the public offering price of the shares sold in the offering was $ 17.00 per share , which provided $ 173.9 million of proceeds , net of underwriter commissions and other costs associated with the ipo . in september 2013 , we amended our contract with virgin america inc. , pursuant to which we provide in-flight connectivity services on virgin america 's entire fleet of 53 aircraft , to extend the term of the contract to september 2018 and to provide for upgrades of certain aircraft from atg to atg-4 . in addition , the contract provides that virgin america will be our launch partner for the next step in our technology roadmap : a proprietary hybrid technology called gogo gto ( ground to orbit ) that uses satellite for receive only ( transmission to the aircraft ) and our atg network for the return link ( transmission to the ground ) . we expect gogo gto to be capable of delivering peak speeds of 70mbps to the aircraft and to be available in the second half of 2014. in october 2013 , we entered into a contract with japan airlines ( jal ) pursuant to which we will install our ku-satellite based equipment and provide in-flight connectivity services to passengers on jal 's entire domestic fleet of 77 aircraft . service to jal passengers is expected to begin in the summer of 2014. in early october 2013 , we launched a variety of new services and equipment for ba customers . these services include , among others : gogo text & talk , which allows passengers to place and receive voice calls and send and receive texts in-flight using their personal devices and their own mobile numbers , atg 2000 , which is a scaled-down version of our atg system that targets business aviation customers flying smaller jets and turbo-prop aircraft , gogo vision , the first turnkey inflight entertainment solution for business aviation , and ucs 5000 , business aviation 's first all-in-one smart router and media service . in december 2013 , we entered into a non-binding memorandum of understanding with aeromexico to provide in-flight connectivity service and gogo vision on at least 75 aircraft , with the first installation targeted for the fourth quarter of 2014. factors and trends affecting our results of operations we believe our operating and business performance is driven by various factors that affect the commercial airline and business aviation industries , including trends affecting the travel industry and trends affecting the customer bases that we target , as well as factors that affect wireless internet service providers and general macroeconomic factors . key factors that may affect our future performance include : the costs associated with implementing , and our ability to implement on a timely basis , our technology roadmap , including the need for additional cell sites in our atg network , upgrades and installation of our atg-4 technology , the roll-out of our satellite service , including hybrid technology solutions that are in part dependent on our satellite service , such as our gto offering , and the implementation of improvements to our network and operations as technology changes and we experience increased network capacity constraints ; the costs associated with and our ability to execute our international expansion , including modification to our network to accommodate satellite technology , compliance with applicable foreign regulations and expanded operations outside of the u.s. ; the pace and extent of adoption of the gogo service for use on international commercial aircraft by our current north american airline partners and new international airline partners ; 57 the number of aircraft in service in our markets , including consolidation of the airline industry or changes in fleet size by one or more of our airline partners ; the economic environment and other trends that affect both business and leisure travel ; the extent of customers ' , airline partners ' and other aircraft operators ' adoption of our products and services , which is affected by , among other things , willingness to pay for the services that we provide and changes in technology ; the continued demand for connectivity and proliferation of wi-fi enabled devices , including smartphones , tablets and laptops ; changes in laws , regulations , and interpretations affecting telecommunications services story_separator_special_tag depreciation and amortization : depreciation expense for both the ca-na and ba segments includes depreciation expense associated with our office equipment , furniture , fixtures and leasehold improvements . additionally , the depreciation expense for the ca-na segment includes depreciation of our airborne and ground network related equipment . we depreciate these assets on a straight-line method over their estimated useful lives that range from 3-25 years , depending on the assets being depreciated . amortization expense for both the ca-na and ba segments includes the amortization of our finite lived intangible assets on a straight-line basis over the estimated useful lives that range from 3 to 10 years , depending on the items being amortized . segment profit ( loss ) we measure our segments ' performance on the basis of segment profit ( loss ) , which is calculated internally as net income ( loss ) attributable to common stock before interest expense , interest income , income taxes , depreciation and amortization , and certain non-cash charges ( including amortization of deferred airborne lease incentives , stock compensation expense , the write off of deferred equity financing costs , and , for periods prior to the ipo : fair value derivative adjustments , class a and class b senior convertible preferred stock return , and accretion of preferred stock ) . critical accounting estimates our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states of america ( gaap ) . the preparation of our consolidated financial statements and related disclosures requires us to make estimates , assumptions and judgments that affect the reported amounts of assets , liabilities , revenue , costs and expenses , and related exposures . we base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances . in some instances , we could reasonably use different accounting estimates , and in some instances results could differ significantly from our estimates . we evaluate our estimates and assumptions on an ongoing basis . to the extent that there are differences between our estimates and actual results , our future financial statement presentation , financial condition , results of operations and cash flows will be affected . 63 we believe the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results , and they require our most difficult , subjective or complex judgments , resulting from the need to make estimates . for a discussion of our significant accounting policies to which many of these critical estimates relate , see note 2 , summary of significant accounting policies , to our consolidated financial statements for the year ended december 31 , 2013 included in this annual report on form 10-k. long-lived assets : our long-lived assets ( other than goodwill and indefinite-lived assets which are separately tested for impairment ) are evaluated for impairment whenever events indicate that the carrying amount of such assets may not be recoverable . we evaluate long-lived assets for impairment by comparing the carrying value of the long-lived assets with the estimated future net undiscounted cash flows expected to result from the use of the assets , including cash flows from disposition . if the future net undiscounted cash flows are less than the carrying value , we then calculate an impairment loss . the impairment loss is calculated by comparing the long-lived assets carrying value with the estimated fair value , which may be based on estimated future discounted cash flows . we would recognize an impairment loss by the amount the long-lived asset 's carrying value exceeds the estimated fair value . if we recognize an impairment loss , the adjusted balance becomes the new cost basis and is depreciated ( amortized ) over the remaining useful life of the asset . our impairment loss calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flows and long-lived asset fair values , including forecasting useful lives of the long-lived assets and selecting discount rates . we do not believe there is a reasonable likelihood that there will be a material change in the nature of the estimates or assumptions we use to calculate our potential long-lived asset impairment losses . however , if actual results are not consistent with our assumptions used , we could experience an impairment triggering event and be exposed to losses that could be material . indefinite-lived assets : we have two indefinite-lived intangible assets , our fcc spectrum licenses . indefinite-lived intangible assets are not amortized but are reviewed for impairment at least annually or whenever events indicate that the carrying amount of such assets may not be recoverable . we perform our annual impairment test during the fourth quarter of each fiscal year . in determining which approach was most appropriate , we considered the cost approach , market approach and income approach . we determined that the income approach , utilizing the greenfield method , is the most appropriate way to value our indefinite-lived assets . for the greenfield method we estimate the value of our fcc spectrum licenses by calculating the present value of the cash flows of a hypothetical new market participant whose only assets are such licenses to determine the enterprise value of the entire company . it includes all necessary costs and expenses to build the company 's infrastructure during the start-up period , projected revenue , and cash flows once the infrastructure is completed . since there are no corroborating data available in the market place that would demonstrate a market participant 's experience in setting up an air-to-ground business , we utilized our historic results and future projections as the basis for the application of the greenfield method . we followed the traditional	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows provided by financing activities : cash provided by financing activities for the year ended december 31 , 2013 was $ 271.1 million primarily due to net proceeds from the ipo of $ 170.1 million ( $ 173.9 million of proceeds , net of underwriter commissions , less the payment of $ 3.9 million of additional costs associated with the ipo ) , proceeds from the new borrowing of $ 113.0 million , partially offset by $ 7.0 million of related debt issuance costs and principal payments on the senior term facility and alaska facility of $ 4.5 million . cash provided by financing activities for the year ended december 31 , 2012 was $ 118.8 million primarily due to proceeds from the $ 135.0 million senior term facility , partially offset by debt issuance costs related to the senior term facility of $ 9.6 million , payment of professional fees of $ 4.3 million related to preparing for this initial public offering and principal payments on the senior term facility and alaska facility of $ 2.3 million . 88 cash provided by financing activities for the year ended december 31 , 2011 was $ 55.2 million primarily due to $ 55.4 million of proceeds from two issuances of class a preferred stock totaling 5,539 shares to existing investors on terms consistent with our prior issuances of class a preferred stock and $ 0.5 million from additional borrowings on our alaska facility . as noted above , all of the class a preferred stock was converted to common stock as part of the ipo in june 2013. capital expenditures our operations continue to require significant capital expenditures for technology , equipment , capacity expansion and upgrades . a substantial portion of the capital expenditures by the ca-na segment is associated with installation and the supply of airborne equipment to our airline partners , which correlates directly to the roll out and or upgrade of service to our airline partners ' fleets .
because we defaulted on repayment of loans from bank of china , we are experiencing and , we believe , will continue to experience significant difficulties to renew our credit facilities or refinance loans from banks . upon request of bank of china , shenzhen municipal intermediate court has ordered to freeze all of our properties in shenzhen bak industrial park and tianjin industrial park zone near the end of fiscal year 2013 whereby we may not transfer these assets or pledge these assets for any other borrowings . in order to extend the bank loans to various dates through may 2014 , we were required by bank of china to pledge 100 % equity interest in shenzhen bak and almost all of our assets in shenzhen and tianjin , including land use rights and property rights , equipment , accounts receivable and inventories . we repaid our defaulted loans from bank of china on january 9 , 2014 and we expect that our frozen properties will be released by the court shortly . as of september 30 , 2013 , we had access to $ 163.5 million in short-term credit facilities and $ 29.2 million in other lines of credit , all of which were utilized to the extent of short-term bank loans of $ 151.4 million and bills payable of $ 41.4 million . these factors raise substantial doubts about our ability to continue as a going concern . we intend to sell part of our low efficiency assets and appreciating land and properties to repay our short term debts and to provide cash for the development of more promising products such as high power batteries and electric vehicle batteries . we transferred our 100 % equity interest in tianjin meicai to an unrelated party on august 27 , 2013. we also have intention to sell 100 % equity interest in bak international and its subsidiaries ( including all their assets and liabilities ) , and the properties in tianjin . we are in negotiation with the potential buyers about contract terms and clauses . we intend to obtain the approval of our shareholders before we close the transactions . prior to the completion of these disposals , the potential buyers preliminarily agreed in november and december 2013 that they would lend sufficient money to us to help us repay past due and maturing bank loans , on the condition that we make certain pledges and guarantees , including pledging our 100 % equity interest in bak international . on december 17 , 2013 , shenzhen bak entered into a loan agreement , or the loan agreement , with mr. jinghui wang , the sole shareholder of a potential buyer , pursuant to which , mr. wang agreed to lend us in the aggregate amount of rmb370 million ( approximately $ 60.4 million ) initially . on january 14 , 2014 , bak international entered into a corporate guarantee with mr. wang , or bak international corporate guarantee , under which , bak international irrevocably and unconditionally guarantees to the lender timely performance by shenzhen bak of all its obligations under the loan agreement . on the same date , china bak battery , inc. entered into a corporate guarantee with mr. wang , or china bak corporate guarantee , to irrevocably and unconditionally guarantee timely performance by shenzhen bak of all its obligations under the loan agreement . in addition , on january 14 , 2014 , china bak battery , inc. and bak international entered into a share mortgage with mr. wang , or share mortgage , under which , china bak battery , inc. pledges 100 % equity interest in bak international to the lender as security for the performance of shenzhen bak 's obligations under the loan agreement . if shenzhen bak defaults on its repayment obligation under or in connection with the loan agreement , the lender , as the pledgee , will be entitled to dispose of the pledged equity interests . bak international corporate guarantee , china bak corporate guarantee and share mortgage are attached hereto as exhibits 10.13 , 10.14 and 10.15 , and are hereby incorporated by reference . up to the date of this form 10-k , we have received rmb370 million ( approximately $ 60.4 million ) pursuant to the loan agreement and an additional rmb150 million ( approximately $ 24.6 million ) from mr. wang . we also repaid rmb85 million ( approximately $ 13.9 million ) and renewed short term bank loans of rmb71 million ( approximately $ 11.6 million ) with ping an bank and repaid an amount of rmb445.9 million ( approximately of $ 72.8 million ) of bank loans of bank of china and agricultural bank of china and bills payable of rmb49.2 million ( approximately of $ 8.1 million ) to bank of china . in addition , we have entered a letter of intent with a potential buyer of bak tianjin for a consideration of rmb150 million , pursuant to which , we have received rmb50 million ( approximately $ 8.2 million ) in advance on november 19 , 2013 to repay the same amount of loan from bank of dalian matured on november 20 , 2013. after the disposal of these assets , we will retain bak asia and its subsidiary , bak dalian . it is our understanding that the dalian government will grant certain government subsidies to us , including but not limited to land use rights at a favorable price . as of september 30 , 2013 , we received a subsidy of rmb150 million ( approximately $ 24.5 million ) from the management committee of dalian economic zone , to finance our removal of operating assets from tianjin to dalian . story_separator_special_tag we repaid the $ 8.2 million loans on november 20 , 2013. on february 1 , 2013 , we entered into a comprehensive credit facility with bank of dalian , tianjin branch to provide a maximum loan amount of rmb 120.0 million ( approximately $ 19.6 million ) . loans may be drawn at any time over the period from january 28 , 2013 to january 27 , 2014 and will be due based on each loan agreement . this credit facility agreement was guaranteed by mr. xiangqian li and his wife ms. xiaoqiu yu . as of september 30 , 2013 , we had a loan of approximately $ 6.6 million , including a loan agreement that we obtained the loan on february 1 , 2013 in the amount of rmb 40,000,000 ( approximately $ 6.5 million ) , bearing annual interest at 115 % of the benchmark rate of the pboc on the date of the loan agreement and will be adjusted in line with any adjustment of the benchmark rate , repayable on january 27 , 2014. we had also borrowed $ 7.9 million of notes payable under this credit facility agreement . we have a comprehensive credit facility agreement with ping an bank ( previously known as shenzhen development bank ) , longgang branch to provide a maximum loan amount of rmb 180 million ( approximately $ 29.4 million ) . loans may be drawn at any time from june 5 , 2012 to may 31 , 2013 and will be due based on each loan agreement . this credit facility agreement was guaranteed by bak international , bak tianjin and mr. xiangqian li , and also was secured by $ 24.5 million of inventory and $ 22.4 million of equipment at cost with a carrying amount of $ 2.4 million as of september 30 , 2013. as of september 30 , 2013 , we had three outstanding loans of approximately $ 13.9 million . the first loan was obtained on april 10 , 2013 for a period of six months in the amount of approximately $ 5.7 million , of which $ 3.3 million had been paid as of september 30 , 2013. the second loan was obtained on april 19 , 2013 for a period of six months in the amount of approximately $ 6.5 million . the third loan was obtained april 25 , 2013 for a period of six months in the amount of approximately $ 4.9 million . each loan , carries an annual interest at 110 % of the benchmark rate of the pboc on the date of the loan agreement and is adjusted semi-annually , and is repayable on november 30 , 2013. we repaid $ 1.1 million on october 17 , 2013 and another $ 1.2 million on november 20 , 2013. we paid the remaining $ 11.6 million on december 2 , 2013 and renewed the same amount on december 20 , 2013 from ping an bank . 43 we have a comprehensive credit facility agreement with china citic bank , shenzhen branch to provide a maximum loan amount of rmb 75 million ( approximately $ 12.3 million ) . loans may be drawn at any time from june 20 , 2012 to june 20 , 2013 and will be due based on each loan agreement . this credit facility was guaranteed by bak international and mr. xiangqian li . as of september 30 , 2013 , we borrowed $ 5.6 million of notes payable under the other credit line . we have a six-year long-term loan agreement expiring on february 9 , 2016 of rmb 150 million ( approximately $ 24.4 million ) with shenzhen branch , china development bank . the loan proceeds must be used for the construction of our research and development test centre in shenzhen . the long-term loan is secured by shenzhen bak 's pledge of its land use rights certificates , property ownership and equipment built-up by use of this long-term loan pursuant to the loan agreement . the obligations of shenzhen bak under this loan agreement are guaranteed by mr. xiangqian li . as of june 30 , 2013 , we had borrowed approximately rmb118.7 million ( or approximately $ 19.3 million ) in ten loans under this agreement , and bearing annual interest of 6.878 % , adjusted monthly . as of september 30 , 2013 , we had repaid all of those loans to china development bank . as of september 30 , 2013 , we had also borrowed $ 5.3 million , $ 0.8 million , $ 0.5 million of notes payable and other lines of credit outside any credit facility from bank of east asia , bank of china , tianjin branch and icbc , respectively . we have established long-term relationships with our suppliers and we can pay them within 90-360 days from the respective invoice dates . as we have been suffering severe cash flow deficiencies , we intend to sell part of our low efficiency assets and appreciating land and properties to repay our short term debts and to provide cash for the development of more promising products such as high power batteries and electric vehicle batteries . we transferred our 100 % equity interest in tianjin meicai to an unrelated party on august 27 , 2013. we also have intention to sell 100 % equity interest in bak international and its subsidiaries ( including all their assets and liabilities ) , and the properties in tianjin . we are in negotiation with the potential buyers about contract terms and clauses . we intend to obtain the approval of our shareholders before we close the transaction . after the disposal of these assets , we will retain bak asia and its subsidiary , bak dalian . it is our understanding that the dalian government will grant certain government subsidies to us , including but not limited to land use rights at a	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources we have historically financed our liquidity requirements from a variety of sources , including short-term bank loans , other short-term loans , long-term bank loans and bills payable under bank credit agreements , factoring of bills receivable to banks and issuance of capital stock . due to the weak economic environment in china and stricter lending policy the chinese government placed on the china finance system , it is becoming more difficult for us to obtain new financing from banks . as of september 30 , 2013 , we had cash and cash equivalents of $ 14.0 million . in addition , we had pledged deposits amounting to $ 8.1 million . typically , banks will require borrowers to maintain deposits of approximately 18 % to 52 % of the outstanding bills payable . the individual bills have maturities ranging from six to twelve months which coincide with the periods the cash remains pledged to the banks . as of september 30 , 2013 , we had access to $ 163.5 million in short-term credit facilities and $ 29.2 million in other lines of credit , all of which were utilized . the following table sets forth a summary of our cash flows for the periods indicated : ( all amounts in thousands of u.s. dollars ) replace_table_token_8_th operating activities net cash provided by operating activities was $ 23.6 million in the year ended september 30 , 2013 , as compared with $ 5.2 million in fiscal year 2012. the increase of $ 18.4 million in net cash provided by operating activities was mainly attributable to a subsidy of $ 24.5 million from the management committee of dalian economic zone to finance moving of our production facilities from tianjin to dalian .
subject to certain preconditions , basf also will make a series of prepayments to us in the aggregate of $ 22 million during the construction of our planned manufacturing facility in statesboro , georgia . the prepayments will be either credited against amounts invoiced to basf for spaceloft a2 or repaid by us to basf after december 31 , 2023. as a result of our decision to temporarily delay construction of the statesboro facility , we have yet to fulfill the preconditions , and commencement of the prepayments from basf will be delayed until the preconditions are satisfied . our revenue for the year ended december 31 , 2016 was $ 117.7 million , which represented a decrease of 4 % from the year ended december 31 , 2015. net loss for the year ended december 31 , 2016 was $ 12.0 million and diluted loss per share was $ 0.52. key metrics and non-gaap financial measures we regularly review a number of metrics , including the following key metrics , to evaluate our business , measure our performance , identify trends affecting our business , formulate financial projections and make strategic decisions . square foot operating metric we price our product and measure our product shipments in square feet . we estimate our annual nameplate capacity was approximately 50 million square feet of aerogel blankets at december 31 , 2016. we believe the square foot operating metric allows us and our investors to measure the growth in our manufacturing capacity and product shipments on a uniform and consistent basis . the following chart sets forth product shipments associated with recognized revenue in square feet for the periods presented : replace_table_token_5_th adjusted ebitda we use adjusted ebitda , a non-gaap financial measure , as a means to assess our operating performance . we define adjusted ebitda as net income ( loss ) before interest expense , taxes , depreciation , amortization , stock-based compensation expense and other items , which occur from time to time , that we do not believe are indicative of our core operating performance , which included financing costs during the year ended december 31 , 2016. adjusted ebitda is a supplemental measure of our performance that is not presented in accordance with u.s. gaap . adjusted ebitda should not be considered as an alternative to net income ( loss ) or any other measure of financial performance calculated and presented in accordance with u.s. gaap . in addition , our definition and presentation of adjusted ebitda may not be comparable to similarly titled measures presented by other companies . we use adjusted ebitda : as a measure of operating performance because it does not include the impact of items that we do not consider indicative of our core operating performance ; for planning purposes , including the preparation of our annual operating budget , to allocate resources to enhance the financial performance of our business ; and as a performance measure used under our bonus plan . we also believe that the presentation of adjusted ebitda provides useful information to investors with respect to our results of operations and in assessing the performance and value of our business . various measures of ebitda are widely used by investors to measure a company 's operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods , book values of assets , capital structures and the methods by which assets were acquired . although measures similar to adjusted ebitda are frequently used by investors and securities analysts in their evaluation of companies , we understand that adjusted ebitda has limitations as an analytical tool , and you should not consider it in isolation or as 46 a substitute for net income , income from operations , net cash provided by operating activities or an analysis of our results of operations as reported under u.s. gaap . some of these limitations are : adjusted ebitda does not reflect our historical cash expenditures or future requirements for capital expenditures or other contractual commitments ; adjusted ebitda does not reflect changes in , or cash requirements for , our working capital needs ; adjusted ebitda does not reflect stock-based compensation expense ; adjusted ebitda does not reflect our tax expense or cash requirements to pay our income taxes ; adjusted ebitda does not reflect our interest expense , or the cash requirements necessary to service interest or principal payments on our debt ; although depreciation , amortization and impairment charges are non-cash charges , the assets being depreciated , amortized or impaired will often have to be replaced in the future , and adjusted ebitda does not reflect any cash requirements for these replacements ; and other companies in our industry may calculate ebitda or adjusted ebitda differently than we do , limiting their usefulness as a comparative measure . because of these limitations , our adjusted ebitda should not be considered as a measure of discretionary cash available to us to reinvest in the growth of our business or as a measure of cash available for us to meet our obligations . to properly and prudently evaluate our business , we encourage you to review the gaap financial statements included elsewhere in this annual report on form 10-k , and not to rely on any single financial measure to evaluate our business . the following table presents a reconciliation of net loss , the most directly comparable gaap measure , to adjusted ebitda for the years presented : replace_table_token_6_th ( 1 ) represents non-cash stock-based compensation related to vesting and modifications of stock option grants , vesting of restricted stock units and vesting of restricted common stock . ( 2 ) interest expense in 2014 consists primarily of fair market value adjustments and issuance costs related to our then outstanding subordinated notes , senior convertible notes and convertible notes and certain imputed interest on previously settled obligations . story_separator_special_tag the average selling price per square foot of our products decreased by an effective $ 0.24 , or 8 % , to $ 2.61 per square foot for the year ended december 31 , 2016 from $ 2.85 per square foot for the year ended december 31 , 2015. the decrease in average selling 52 price reflects a year-over-year decline in the mix of high- priced subsea products , combined with an increase in the mix of products sold to reliance industries limited with project-based pricing . this de crease in average selling price had the effect of decreasing product revenue by $ 10.7 million for the year ended december 31 , 2016. in volume terms , product shipments increased 2.0 million square feet , or 5 % , to 44.3 million square feet of aerogel products for the year ended december 31 , 2016 , as compared to 42.2 million square feet in the year ended december 31 , 2015. the increase in volume was supported by the increase in manufacturing capacity associated with the operation of the third production line in the east providence facility for a full year . the increase in product volume had the effect of increasing product revenue by approximately $ 5.7 million for the year ended december 31 , 2016. research services revenue increased by $ 0.3 million , or 13 % , to $ 2.2 million in 2016 from $ 2.0 million in 2015. the increase was primarily due to the timing and amount of funding available under research contracts during the year ended december 31 , 2016 from the comparable period in 2015. product revenue as a percentage of total revenue was 98 % of total revenue in 2016 and 2015 , respectively . research services revenue was 2 % of total revenue in 2016 and 2015 , respectively . we expect that product revenue will continue to comprise a significant and growing percentage of our total revenue in the long-term due to the anticipated demand growth from adoption of our products in the energy infrastructure market , particularly in the district energy and power markets , and through penetration of new and existing markets , including the building materials market . during 2017 , we expect a decrease in product revenue as a result of the conclusion of the major petrochemical project with reliance industries limited , which comprised 25 % of our product revenue during 2016 , in combination with the impact of constrained capital investment and low activity levels in the global energy infrastructure market . accordingly , we are projecting a decline in product revenue and total revenue in the year ending december 31 , 2017 versus the comparable period in 2016. cost of revenue replace_table_token_12_th total cost of revenue decreased by $ 3.4 million , or 4 % , to $ 94.4 million in 2016 from $ 97.9 million in 2015. the decrease in total cost of revenue was the result of a decrease of $ 6.0 million in material costs , offset , in part , by an increase of $ 2.3 million in manufacturing expense and an increase of $ 0.3 million in cost of research services . product cost of revenue decreased $ 3.7 million , or 4 % , to $ 93.1 million in 2016 from $ 96.9 million in 2015. the $ 3.7 million decrease was the result of a $ 6.0 million decrease in material costs , offset , in part , by a $ 2.3 million increase in manufacturing expense year over year . the increase in manufacturing expense included increases in compensation expense of $ 0.9 million , utility expenses of $ 0.3 million and maintenance and facility expense of $ 1.1 million . the increased level of manufacturing expense was driven by operation of the third production line in the east providence facility for a full year in 2016 versus three quarters in 2015. despite growth in product volume of 5 % during the year ended december 31 , 2016 , material costs declined due to strong improvement in manufacturing yields and a shift in mix to lower cost products versus the comparable period in 2015. product cost of revenue as a percentage of product revenue increased to 81 % during 2016 from 80 % in 2015. this increase was the result of the combination of the increase in manufacturing expense associated with operation of the third production line in the east providence facility for a full year in 2016 and the decline in product revenue associated with the impact of constrained capital investment and low activity levels in the global energy infrastructure market . the impact of the increase in manufacturing expense and decline in product revenue was offset , in part , by the improvement in manufacturing yields and the shift in mix to lower cost products during the year ended december 31 , 2016 versus the comparable period in 2015. we expect that cost of product revenue will decrease during 2017 versus 2016. the projected decrease in cost of product revenue reflects planned actions to reduce manufacturing spending and an expected decrease in material costs due to lower projected 53 sales volumes . however , we expect that cost of product revenue as a percentage of product revenue will increase during the year . this projected increase reflects our expectation that , given high fixed cost levels in our manufacturing facility , the expected percentage reduction in cost of product revenue will not fully offset the expected percentage reduction in revenue in 2017 . research services cost of revenue increased by $ 0.3 million , or 30 % , to $ 1.3 million in 2016 from $ 1.0 million in 2015. the increase in research services cost of revenue was due to the 13 % increase in research services revenue during 2016 and an unfavorable mix of labor and expense required to perform the contracted research . gross profit replace_table_token_13_th gross profit decreased $	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	primary sources of liquidity our principal sources of liquidity are currently our cash and cash equivalents and our revolving credit facility with silicon valley bank . cash and cash equivalents consist primarily of cash and money market accounts on deposit with banks . as of december 31 , 2016 , we had $ 18.1 million of cash and cash equivalents . at december 31 , 2016 , our debt obligations were limited to $ 0.1 million related to capital lease obligations . at december 31 , 2016 , we also had $ 2.7 million of outstanding letters of credit secured by our revolving credit facility with silicon valley bank . we have maintained a revolving credit facility with silicon valley bank since march 2011 , which has been amended from time to time . under our revolving credit facility , we are permitted to borrow a maximum of $ 20.0 million , subject to continued covenant compliance and borrowing base requirements . at our election , the interest rate applicable to borrowings under the amended revolving credit facility may be based on the prime rate or libor . prime rate-based rates vary from prime rate plus 0.75 % per annum to prime rate plus 1.75 % per annum , while libor-based rates vary from libor plus 3.75 % per annum to libor plus 4.25 % per annum . in addition , we are required to pay a monthly unused revolving line facility fee of 0.5 % per annum of the average unused portion of the revolving credit facility . the revolving credit facility matures on january 28 , 2018. due to the borrowing base limitations of the revolving credit facility , the effective amount available to us under the facility at december 31 , 2016 was $ 12.1 million after giving effect to the $ 2.7 million of letters of credit outstanding .
from cios and senior information technology ( it ) leaders in corporations and government agencies , to business leaders in high-tech and telecom enterprises and professional services firms , to supply chain professionals , marketing professionals and technology investors , we are the valuable partner to clients in 11,122 distinct enterprises . we work with clients to research , analyze , and interpret the business of it within the context of their individual roles . gartner is headquartered in stamford , connecticut , u.s.a. , and as of december 31 , 2016 , we had 8,813 employees , including 1,922 research analysts and consultants , and clients in over 90 countries . the foundation for all gartner products and services is our independent research on it , supply chain , and digital marketing initiatives . the findings from this research are delivered through our three business segments – research , consulting and events : research provides objective insight on critical and timely technology and supply chain initiatives for cios , other it professionals , supply chain leaders , marketing and other professionals , as well as technology companies and the institutional investment community , through reports , briefings , proprietary tools , access to our analysts , peer networking services and membership programs that enable our clients to make better decisions about their it , supply chain and marketing investments . consulting provides customized solutions to unique client needs through on-site , day-to-day support , as well as proprietary tools for measuring and improving it performance with a focus on cost , performance , efficiency , and quality . events provides it , supply chain , marketing and business professionals the opportunity to attend various symposia , conferences and exhibitions to learn , contribute and network with their peers . from our flagship event symposium/itxpo , to summits focused on specific technologies and industries , to experimental workshop-style seminars , our events distill the latest gartner research into applicable insight and advice . for more information regarding gartner and our products and services , visit gartner.com . 18 19 business measurements we believe the following business measurements are important performance indicators for our business segments : business segment business measurements research total contract value represents the value attributable to all of our subscription-related contracts . it is calculated as the annualized value of all contracts in effect at a specific point in time , without regard to the duration of the contract . total contract value primarily includes research deliverables for which revenue is recognized on a ratable basis , as well as other deliverables ( primarily events tickets ) for which revenue is recognized when the deliverable is utilized . research contract value represents the value attributable to all of our subscription-related research products that recognize revenue on a ratable basis . contract value is calculated as the annualized value of all subscription research contracts in effect at a specific point in time , without regard to the duration of the contract . client retention rate represents a measure of client satisfaction and renewed business relationships at a specific point in time . client retention is calculated on a percentage basis by dividing our current clients , who were also clients a year ago , by all clients from a year ago . client retention is calculated at an enterprise level , which represents a single company or customer . wallet retention rate represents a measure of the amount of contract value we have retained with clients over a 12-month period . wallet retention is calculated on a percentage basis by dividing the contract value of clients , who were clients one year ago , by the total contract value from a year ago , excluding the impact of foreign currency exchange . when wallet retention exceeds client retention , it is an indication of retention of higher-spending clients , or increased spending by retained clients , or both . wallet retention is calculated at an enterprise level , which represents a single company or customer . consulting consulting backlog represents future revenue to be derived from in-process consulting , measurement and strategic advisory services engagements . utilization rate represents a measure of productivity of our consultants . utilization rates are calculated for billable headcount on a percentage basis by dividing total hours billed by total hours available to bill . billing rate represents earned billable revenue divided by total billable hours . average annualized revenue per billable headcount represents a measure of the revenue generating ability of an average billable consultant and is calculated periodically by multiplying the average billing rate per hour times the utilization percentage times the billable hours available for one year . events number of events represents the total number of hosted events completed during the period . number of attendees represents the total number of people who attend events . 20 executive summary of operations and financial position we have executed a consistent growth strategy since 2005 to drive double-digit annual revenue and earnings growth . the fundamentals of our strategy include a focus on creating extraordinary research insight , delivering innovative and highly differentiated product offerings , building a strong sales capability , providing world class client service with a focus on client engagement and retention , and continuously improving our operational effectiveness . we had total revenues of $ 2.4 billion in 2016 , an increase of 13 % over 2015 on a reported basis and 14 % adjusted for the impact of foreign currency exchange . diluted earnings per share was $ 2.31 in 2016 compared to $ 2.06 in 2015 , a 12 % increase , primarily driven by higher net income , which increased 10 % in 2016 , and to a lesser extent , a lower weighted-average share count , which declined 1 % . story_separator_special_tag amortization of intangibles increased to $ 24.8 million in 2016 from $ 13.3 million in 2015 due to the additional intangibles resulting from our acquisitions . acquisition and integration charges was $ 42.6 million in 2016 compared to $ 26.2 million in 2015. these charges are directly-related to our acquisitions and primarily include amounts accrued for payments contingent on the achievement of certain employment conditions , legal , consulting and severance costs . operating income increased 6 % in 2016 compared to 2015 , to $ 305.1 million in 2016 from $ 288.0 million in 2015. operating income as a percentage of revenues was 12 % in 2016 and 13 % in 2015 with the decline due to a number of factors , to include lower gross contribution margins in our consulting and events segments and higher charges from acquisitions . interest expense , net increased 21 % year-over-year due to higher average borrowings in the 2016 period . other income ( expense ) , net was $ 8.4 million in 2016 , which included a gain of $ 2.5 million from the extinguishment of a portion of an economic development loan from the state of connecticut , the sale of certain state tax credits and the recognition of other tax incentives , and the net impact of gains and losses from our foreign currency hedging activities . other income ( expense ) , net was $ 5.0 million in 2015 , which consisted of a $ 6.8 million gain from the sale of certain state tax credits partially offset by a net loss from foreign currency hedging activities . provision for income taxes was $ 94.8 million in 2016 compared to $ 96.6 million in 2015 and the effective tax rate was 32.9 % in 2016 compared to 35.5 % in 2015. the decrease in the effective income tax rate was primarily attributable to the early adoption of asu no . 2016-09 in 2016 , partially offset by increases in non-deductible expenses relating to acquisitions . net income was $ 193.6 million in 2016 and $ 175.6 million in 2015 , an increase of 10 % . diluted earnings per share increased 12 % year-over-year , to $ 2.31 in 2016 compared to $ 2.06 in 2015 due to the higher net income and to a lesser extent , a decrease in the number of weighted-average shares in the 2016 period . 25 2015 versus 2014 the following table presents the changes in selected line items in our consolidated statements of operations for the two years ended december 31 , 2015 ( in thousands ) : replace_table_token_7_th total revenues for the year ended december 31 , 2015 increased $ 141.6 million , or 7 % , compared to the year ended december 31 , 2014. revenues increased by double-digits in our research and events businesses but declined 6 % in consulting . excluding the impact of foreign currency exchange , total revenues increased 13 % in 2015 compared to 2014. the following table presents total revenues by geographic region for the years ended ( in thousands ) : replace_table_token_8_th the following table presents our revenues by segment for the years ended ( in thousands ) : replace_table_token_9_th please refer to the section of this md & a below entitled “ segment results ” for a further discussion of revenues and results by segment . cost of services and product development ( “ cos `` ) expense increased $ 41.1 million , or 5 % , in 2015 compared to 2014 , to $ 839.1 million compared to $ 797.9 million in 2014. foreign exchange had a favorable impact on cos expense during 2015 , and adjusted for this impact , cos expense increased 11 % in 2015 when compared to 2014. the year-over-year increase in cos expense was due to $ 56.0 million in higher payroll and related benefits costs from additional headcount and merit salary increases , and $ 31.0 million in higher charges in 2015 for events costs , travel , and other corporate expenses . partially offsetting these increased expenses was approximately $ 46.0 million in favorable foreign exchange impact . the additional headcount was 26 primarily in our research business which includes the additional employees resulting from our 2015 acquisitions , and to a lesser extent , an increase in headcount in our consulting business . cos as a percentage of revenues was 39 % in both the 2015 and 2014 periods . selling , general and administrative ( “ sg & a ” ) expense increased by $ 86.6 million in 2015 , or 10 % , to $ 962.7 million compared to $ 876.1 million in 2014. excluding the impact of foreign currency exchange , sg & a expense increased 16 % year-over-year . the increase was primarily due to $ 111.0 million in higher payroll and related benefits costs from additional headcount , higher sales commissions , and merit salary increases , and we also had $ 27.0 million in additional travel and training , recruiting , and other costs . partially offsetting these additional charges was $ 51.0 million in foreign exchange impact . sg & a headcount increased 17 % overall , with the majority of the increase in additional quota-bearing sales associates and related support staff . quota-bearing sales associates increased 15 % year-over-year , to 2,171 at december 31 , 2015 from 1,881 at year-end 2014. depreciation expense increased 8 % in 2015 compared to 2014 , which reflects our additional investment in fixed assets . amortization of intangibles increased to $ 13.3 million in 2015 from $ 8.2 million 2014 , an increase of 62 % year-over-year due to the additional intangibles resulting from our acquisitions . acquisition and integration charges was $ 26.2 million in 2015 compared to $ 21.9 million in 2014. these charges are directly-related to our acquisitions and primarily include amounts accrued for payments contingent on the achievement of certain employment conditions ,	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources the company has a five-year credit arrangement that it entered into in june 2016 that provides for a $ 600.0 million term loan and a $ 1.2 billion revolving credit facility ( the “ 2016 credit agreement ” ) . as of december 31 , 2016 , the company had $ 585.0 million outstanding under the term loan and $ 115.0 million under the revolver and $ 1.1 billion of available revolver borrowing capacity under the 2016 credit agreement . we had $ 474.2 million of cash and cash equivalents at december 31 , 2016. the 2016 credit agreement was amended on january 20 , 2017 to permit the acquisition of ceb and the incurrence of an additional $ 1.375 billion senior secured term loan b facility , a $ 300.0 million 364-day senior unsecured bridge facility and a senior unsecured high-yield bridge facility of up to $ 600.0 million ( or the issuance of a corresponding amount of debt securities ) to finance , in part , the acquisition and repay certain debt of ceb and to modify certain covenants . we have historically generated significant cash flows from our operating activities . our operating cash flow has been continuously maintained and enhanced by the leverage characteristics of our subscription-based business model in our research segment , which is our largest business segment . revenues in our research segment increased 16 % in 2016 compared to 2015 , and constituted 75 % and 73 % of our total revenues in 2016 and 2015 , respectively . the majority of our research customer contracts are paid in advance , and combined with a strong customer retention rate and high incremental margins , has resulted in continuously strong operating cash flow . our cash flow generation has also benefited from our continuing efforts to improve the operating efficiencies of our businesses as well as a focus on the optimal management of our working capital as we increase our sales volume .
when we discuss revenues , we may , at times , refer to revenues summarized differently than the regulation s-x requirements . the terminology , definitions , and applications of terms that we use to describe revenues may be different from terms used by other companies . we use the following terms to describe revenues : revenues – our revenues are presented net of sales returns and allowances . product revenues – we define product revenues as revenues generated from sales of consumable and capital equipment products . service revenues – we define service revenues as revenues generated from parts and labor associated with the maintenance , repair , and installation of our capital equipment . service revenues also include hospital sterilization services , instrument and scope repairs , and linen management as well as revenues generated from contract sterilization and laboratory services offered through our applied sterilization technologies segment . capital equipment revenues – we define capital equipment revenues as revenues generated from sales of capital equipment , which includes steam sterilizers , low temperature liquid chemical sterilant processing systems , including system 1 and 1e , washing systems , vhp ® technology , water stills , and pure steam generators ; surgical lights and tables ; and integrated or . consumable revenues – we define consumable revenues as revenues generated from sales of the consumable family of products , which includes system 1 and 1e consumables , v-pro consumables , gastrointestinal endoscopy accessories , sterility assurance products , skin care products , cleaning consumables , barrier product solutions and surgical instruments . recurring revenues – we define recurring revenues as revenues generated from sales of consumable products and service revenues . general overview and executive summary steris plc is a leading provider of infection prevention and other procedural products and services . our mission is to help our customers create a healthier and safer world by providing innovative healthcare and life science product and service solutions around the globe . we offer our customers a unique mix of innovative consumable products , such as detergents , gastrointestinal ( `` gi `` ) endoscopy accessories , barrier product solutions , and other products and services , including : equipment installation and maintenance , microbial reduction of medical devices , instrument and scope repair solutions , laboratory testing services , on-site and off-site reprocessing , and capital equipment products , such as sterilizers and surgical tables , and connectivity solutions such as operating room ( “ or ” ) integration . on march 28 , 2019 , steris plc , a public limited company organized under the laws of england and wales ( “ steris uk ” ) , completed a redomiciliation from the united kingdom to ireland ( the “ redomiciliation ” ) . the redomiciliation was achieved through the insertion of a new irish public limited holding company ( “ steris ireland ” ) on top of steris uk pursuant to a court-approved scheme of arrangement under english law ( the “ scheme ” ) . following the scheme effectiveness , steris uk was re-registered as a private limited company with the name steris limited , and steris emerald ie limited , a company established in ireland and a wholly-owned direct subsidiary of steris ireland , was interposed as the direct parent company of steris uk . we operate and report in four reportable business segments : healthcare products , healthcare specialty services , life sciences , and applied sterilization technologies . we describe our business segments in note 11 to our consolidated financial statements , titled `` business segment information . `` the bulk of our revenues are derived from the healthcare , medical device and pharmaceutical industries . much of the growth in these industries is driven by the aging of the population throughout the world , as an increasing number of individuals are entering their prime healthcare consumption years , and is dependent upon advancement in healthcare delivery , acceptance of new technologies , government policies , and general economic conditions . the pharmaceutical industry has been impacted by increased regulatory scrutiny of cleaning and validation processes , mandating that manufacturers improve their processes . within healthcare , there is increased concern regarding the level of hospital acquired infections around the world ; increased demand for medical procedures , including preventive screenings such as endoscopies and colonoscopies ; and a desire by our customers to operate more efficiently , all which are driving increased demand for many of our products and services . the covid-19 pandemic is resulting in the deferral of certain elective medical procedures , which is negatively impacting the demand for some of our products and services . we completed several tuck in acquisitions and asset purchases in fiscal 2020 and 2019 that expanded our product and service offerings to our customers . 23 during fiscal 2020 , we sold the operations of our healthcare specialty services business that were located in china with annual revenues of approximately $ 5.0 million . we continue to invest in manufacturing in-sourcing projects and lean process improvements for the purpose of improving quality , cost and delivery of our products to our customers . u.s. tax reform . on december 22 , 2017 , the u.s. government enacted comprehensive tax legislation commonly referred to as the tax cuts and jobs act ( the “ tcja ” ) . story_separator_special_tag ( 5 ) covid-19 incremental costs includes the additional costs attributable to covid-19 such as enhanced cleaning protocols , personal protective equipment for our employees , event cancellation fees , and payroll costs associated with our response to covid-19 , net of any government subsidies available . healthcare products revenues increased 6.3 % in fiscal 2020 , as compared to fiscal 2019 , reflecting growth in consumable , service and capital equipment revenues of 9.5 % , 6.1 % and 4.2 % , respectively . the increase reflects organic growth , which was partially offset by unfavorable fluctuations in currencies . at march 31 , 2020 , the healthcare products segment 's backlog amounted to $ 170.1 million , increasing $ 15.6 million , or 10.1 % , as compared to the backlog of $ 154.5 million at march 31 , 2019. healthcare specialty services revenues increased 10.5 % in fiscal 2020 , as compared to fiscal 2019. the increase reflects organic growth , which was partially offset by the divestiture of our healthcare specialty services business in china and unfavorable fluctuations in currencies . life sciences revenues increased 10.1 % in fiscal 2020 , as compared to fiscal 2019 , reflecting growth in consumable , capital equipment and service revenues of 14.9 % , 9.8 % and 3.7 % , respectively . the increase reflects organic growth and favorable pricing , which were partially offset by unfavorable fluctuations in currencies . life sciences backlog at march 31 , 2020 amounted to $ 72.4 million , increasing $ 11.7 million , or 19.3 % , as compared to backlog of $ 60.7 million at march 31 , 2019. applied sterilization technologies revenues increased 13.0 % in fiscal 2020 , as compared to fiscal 2019. the increase reflects organic growth , which was primarily attributable to increased demand from medical device customers , which was partially offset by unfavorable fluctuations in currencies . 29 the healthcare products segment 's operating income increased $ 32.7 million to $ 356.4 million in fiscal year 2020 , as compared to $ 323.7 million in fiscal year 2019. the segment 's operating margins were 25.0 % for fiscal year 2020 and 24.2 % for fiscal year 2019. the increases in the fiscal 2020 period were primarily due to increased volumes and favorable product mix . the healthcare specialty services segment 's operating income was flat at $ 64.2 million in fiscal years 2020 and 2019. the segment 's operating margins were 11.4 % for fiscal year 2020 and 12.6 % for fiscal year 2019. the fiscal 2020 operating margin benefited from increased volumes , which were more than offset by investments being made to add capacity in anticipation of continuing demand . the life sciences business segment 's operating income increased $ 12.0 million to $ 144.1 million in fiscal year 2020 , as compared to $ 132.1 million in fiscal year 2019 , primarily due to increased volumes . the segment 's operating margins were 34.6 % for fiscal year 2020 and 34.9 % for fiscal year 2019. the decline in the fiscal 2020 operating margin was primarily due to unfavorable product mix . the applied sterilization technologies segment 's operating income increased $ 49.1 million to $ 270.9 million in fiscal year 2020 , as compared to $ 221.8 million in fiscal year 2019. the applied sterilization technologies segment 's operating margins were 43.2 % for fiscal year 2020 and 40.0 % for fiscal year 2019. the increases in the fiscal 2020 period were primarily due to increased volumes . effective april 1 , 2020 , and consistent with the way management will operate and view the business , the current healthcare products and healthcare specialty services segments will be combined and reported as one segment , simply called healthcare . going forward we will operate and report in three business segments : healthcare , life sciences and applied sterilization technologies . corporate will continue to be presented separately and contain the costs that are associated with being a publicly traded company and certain other corporate costs . liquidity and capital resources the following table summarizes significant components of our cash flows for the years ended march 31 , 2020 and 2019 : replace_table_token_11_th story_separator_special_tag style= `` font-family : inherit ; font-size:10pt ; `` > in fiscal 2019 . the increase in free cash flow is primarily due to the improvement in cash from operations . our debt-to-total capital ratio was 25.3 % at march 31 , 2020 and 27.1 % at march 31 , 2019 . cash requirements . we intend to use our existing cash and cash equivalent balances and cash generated from operations to fund capital expenditures and meet our other liquidity needs . our capital requirements depend on many uncertain factors , including our rate of sales growth , our customers ' acceptance of our products and services , the costs of obtaining adequate manufacturing capacities , the timing and extent of our research and development projects , changes in our operating expenses and other factors . to the extent that existing and anticipated sources of cash are not sufficient to fund our future activities , we may need to raise additional funds through additional borrowings or the sale of equity securities . there can be no assurance that our financing arrangements will provide us with sufficient funds or that we will be able to obtain any additional funds on terms favorable to us or at all . 31 sources of credit . our sources of credit as of march 31 , 2020 are summarized in the following table : replace_table_token_12_th ( 1 ) at march 31 , 2020 , there was $ 6.8 million of letters of credit outstanding under the credit agreement . our sources of funding from credit as of march 31 , 2020 are summarized below : on march 23 , 2018 , steris uk and certain of its subsidiaries entered into a credit agreement	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	net cash provided by operating activities – the net cash provided by our operating activities was $ 590.6 million for the year ended march 31 , 2020 compared to $ 539.5 million for the year ended march 31 , 2019 . the following discussion summarizes the significant changes in our operating cash flows for the years ended march 31 , 2020 and 2019 : net cash provided by operating activities increased in fiscal 2020 by 9.5 % , as compared to fiscal 2019 , primarily due to higher net income attainment in the fiscal 2020 period , which was partially offset by higher cash requirements to fund operating assets and liabilities . net cash used in investing activities – the net cash used in our investing activities was $ 319.7 million for the year ended march 31 , 2020 , compared to $ 213.2 million for the year ended march 31 , 2019 . the following discussion summarizes the significant changes in our investing cash flows for the years ended march 31 , 2020 and 2019 : purchases of property , plant , equipment , and intangibles , net – capital expenditures totaled $ 214.5 million and $ 189.7 million for fiscal 2020 and 2019 , respectively . the fiscal 2020 increase was primarily due to our previously announced expansion projects in the applied sterilization technologies and healthcare specialty services segments . proceeds from the sale of property , plant , equipment and intangibles – during fiscal 2020 and 2019 we received $ 4.2 million and $ 5.6 million respectively , for proceeds from the sale of property , plant , equipment and intangibles . the majority of the fiscal 2020 and fiscal 2019 proceeds were related to the sale of healthcare products facilities located in the u.k. proceeds from the sale of business – during fiscal 2020 and 2019 we received $ 0.4 million and $ 2.5 million , respectively , for proceeds from the sale of certain non-core businesses .
these include , the provision and allowance for loan losses , revenue recognition for insurance activities , stock based compensation , derivative financial instruments , goodwill 24 and intangible assets and investment securities other-than-temporary impairment evaluation . these discussions , analysis and disclosures identify and address key variables and other qualitative and quantitative factors that are necessary for an understanding and evaluation of the company and its results of operations . allowance for loan losses the provision for loan losses charged to operating expense reflects the amount deemed appropriate by management to provide for known and inherent losses in the existing loan portfolio . management 's judgment is based on the evaluation of individual loans past experience , the assessment of current economic conditions , and other relevant factors . loan losses are charged directly against the allowance for loan losses and recoveries on previously charged-off loans are added to the allowance . the allowance for loan losses has been established based on certain impaired loans where it is recognized that the cash flows are discounted or where the fair value of the collateral is lower than the carrying value of the loan . the company has also established an allowance on classified loans which are not impaired but are included in categories such as `` doubtful `` , `` substandard `` and `` special mention `` . though being classified to one of these categories does not necessarily mean that the loan is impaired , it does indicate that the loan has identified weaknesses that increase its credit risk of loss . the company has also established a general allowance on non-classified and non-impaired loans to recognize the probable losses that are associated with lending in general , though not due to a specific problem loan . management uses significant estimates to determine the allowance for loan losses . consideration is given to a variety of factors in establishing these estimates including current economic conditions , diversification of the loan portfolio , delinquency statistics , borrowers ' perceived financial and managerial strengths , the adequacy of underlying collateral , if collateral dependent , or present value of future cash flows , and other relevant factors . since the sufficiency of the allowance for loan losses is dependent , to a great extent , on conditions that may be beyond our control , it is possible that management 's estimates of the allowance for loan losses and actual results could differ in the near term . although we believe that we use the best information available to establish the allowance for loan losses , future additions to the allowance may be necessary if certain future events occur that may cause actual results to differ from the assumptions used in making the evaluation . for example , a downturn in the local economy could cause increases in non-performing loans . additionally , a decline in real estate values could cause some of our loans to become inadequately collateralized . in either case , this may require us to increase our provisions for loan losses , which would negatively impact earnings . additionally , a large loss could deplete the allowance and require increased provisions to replenish the allowance , which would negatively impact earnings . in addition , regulatory authorities , as an integral part of their examination , periodically review the allowance for loan losses . they may require additions to the allowance for loan losses based upon their judgments about information available to them at the time of examination . future increases to our allowance for loan losses , whether due to unexpected changes in economic conditions or otherwise , could adversely affect our future results of operations . revenue recognition for insurance activities insurance revenues are derived from commissions and fees . commission revenues , as well as the related premiums receivable and payable to insurance companies , are recognized the later of the effective date of the insurance policy or the date the client is billed , net of an allowance for estimated policy cancellations . the reserve for policy cancellations is periodically evaluated and adjusted as necessary . commission revenues related to installment premiums are recognized as billed . commissions on premiums billed directly by insurance companies are generally recognized as income when received . contingent commissions from insurance companies are generally recognized as revenue when the data necessary to reasonably estimate such amounts is obtained . a contingent commission is a commission paid by an insurance company that is based on the overall profit and or volume of the business placed with the insurance company . fee income is recognized as services are rendered . 25 stock-based compensation prior to 2006 , the company accounted for stock-based compensation in accordance with accounting principals board opinion ( `` apb `` ) no . 25 , as permitted by fasb asc 718. under apb no . 25 , no compensation expense was recognized in the statement of operations related to any option granted under the company 's stock option plans . fasb accounting standards codification ( `` asc `` ) 718 , `` share-based payment `` addresses the accounting for share-based payment transactions subsequent to 2006 in which an enterprise receives employee services in exchange for ( a ) equity instruments of the enterprise or ( b ) liabilities that are based on the fair value of the enterprise 's equity instruments or that may be settled by the issuance of such equity instruments . fasb asc 718 requires an entity to recognize the grant-date fair-value of stock options and its other equity-based compensation issued to the employees in the income statement . the revised statement generally requires that an entity account for those transactions using the fair-value-based method , and eliminates the intrinsic value method of accounting in apb opinion no . 25 . `` accounting for stock issued to employees , `` which was permitted under fasb asc 718 , as originally issued . story_separator_special_tag the decision of whether impairment exists is a matter of judgment that should reflect the investor 's view of fhlb pittsburgh 's long-term performance , which includes factors such as its operating performance , the severity and duration of declines in the market value of its net assets related to its capital stock amount , its commitment to make payments required by law or regulation and the level of such payments in relation to its operating performance , the impact of legislation and regulatory changes on fhlb pittsburgh , and accordingly , on the members of fhlb pittsburgh and its liquidity and funding position . after evaluating all of these considerations , the company believes the par value of its shares will be recovered . future evaluations of the above mentioned factors could result in the company recognizing an impairment charge . results of operations net loss available to common shareholders for 2009 was $ 1,042,000 or ( $ 0.18 ) per share diluted compared to net income available to common shareholders of $ 565,000 or $ 0.10 per share diluted for 2008 and net income available to common shareholders of $ 7.5 million or $ 1.31 per share diluted for 2007. these changes are a result of preferred stock dividends and discount accretion , increased provision for loan losses , decreased investment securities losses and by changes in other income each year , net of changes in other expenses . details regarding changes in net income and diluted earnings per share follows . return on average assets was 0.05 % for 2009 , 0.05 % for 2008 and 0.70 % for 2007. return on average shareholders ' equity was 0.51 % for 2009 , 0.54 % for 2008 , and 7.15 % for 2007. included in the operating results for the twelve months ended december 31 , 2009 was a pre-tax loss of $ 2.5 million , or $ 1.6 million after-tax , relating to other-than-temporary impairment ( `` otti `` ) in the company 's available for sale investment portfolio . included in the operating results for the twelve months ended december 31 , 2008 were realized losses of approximately $ 7.3 million , or $ 4.8 million after-tax , relating to the company 's perpetual preferred stock associated with the federal takeover of fannie mae and freddie mac . 30 net interest income net interest income is a primary source of revenue for the company . this income results from the difference between the interest and fees earned on loans and investments and the interest paid on deposits to customers and other non-deposit sources of funds , such as repurchase agreements and borrowings from the federal home loan bank and other correspondent banks . net interest margin is the difference between the gross ( tax-effected ) yield on earning assets and the cost of interest bearing funds as a percentage of earning assets . all discussion of net interest margin is on a fully taxable equivalent basis ( `` fte `` ) . both fte net interest income and fte net interest margin are influenced by the frequency , magnitude and direction of interest rate changes and by product concentrations and volumes of earning assets and funding sources . average balances , rates and net yield the following table sets forth the average daily balances of major categories of interest earning assets and interest bearing liabilities , the average rate paid thereon , and the net interest margin for each of the periods indicated . replace_table_token_6_th ( 1 ) interest income and rates on loans and investment securities are reported on a tax-equivalent basis using a tax rate of 34 % . ( 2 ) held for sale and non-accrual loans have been included in average loan balances . fte net interest income increased to $ 37.2 million , or 1.1 % , for the year ended december 31 , 2009 , compared to $ 36.7 million for 2008. the increase in fte interest income during 2009 was primarily the result of an increase in average earning assets , due mainly to strong commercial loan growth and an increase in available for sale investment security yields . average loans increased by $ 39.8 million , or 4.6 % , from 2008 to 2009. management attributes this increase in organic commercial loan growth to a well established market in the reading area and continued penetration into the philadelphia market through successful marketing initiatives . average available for sale investment securities increased by $ 39.3 million , or 19.4 % , from 2008 to 2009. the increase in fte interest income during 2009 was also the result of a decrease in rates on interest bearing liabilities , particularly time deposits , which more than offset the reduction in the rate earned on interest earning assets . time 31 deposit balances increased by $ 109.4 million , or 31.2 % , from 2008 to 2009. the decrease in both long and short-term borrowing interest rates also contributed to the decrease in interest expense on interest bearing liabilities . fte net interest income increased to $ 36.7 million or 6.7 % for the year ended december 31 , 2008 , compared to $ 34.4 million for 2007. the increase fte interest income during 2008 was primarily the result of an increase in average earning assets , due mainly to strong commercial loan growth and an increase in available for sale security investment yields as a result of the $ 64.1 million balance sheet restructuring in early 2007. average loans increased by $ 67.8 million or 8.6 % from 2007 to 2008. management attributes the increase in organic commercial loan growth to a well established market in the reading area and continued penetration into the philadelphia market through successful marketing initiatives . interest expense decreased during 2009 along with an increase in the overall growth in funding sources . the overall cost of funds decreased from 3.23 % in 2008 to 2.67	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and funds management liquidity management ensures that adequate funds will be available to meet anticipated and unanticipated deposit withdrawals , debt servicing payments , investment commitments , commercial and consumer loan demand and ongoing operating expenses . funding sources include principal repayments on loans and investment securities , sales of loans , growth in core deposits , short and long-term borrowings and repurchase agreements . regular loan payments are typically a dependable source of funds , while the sale of loans and investment securities , deposit flows , and loan prepayments are significantly influenced by general economic conditions and level of interest rates . in 2009 , the significant increase in impaired loans lessened the dependability of regular loan payments . at december 31 , 2009 , the company maintained $ 27.4 million in cash and cash equivalents primarily consisting of cash and due from banks . in addition , the company had $ 268.0 million in available for sale securities and $ 3.0 million in held to maturity securities . cash and investment securities totaled $ 298.4 million which represented 22.8 % of total assets at december 31 , 2009 compared to 20.3 % at december 31 , 2008. the company considers its primary source of liquidity to be its core deposit base , which includes non-interest-bearing and interest-bearing demand deposits , savings , and time deposits under $ 100,000. this funding source has grown steadily over the years through organic growth and acquisitions and consists of deposits from customers throughout the financial center network . the company will continue to promote the growth of deposits through its financial center offices . at december 31 , 2009 , a portion of the company 's assets were funded by core deposits acquired within its market area and by the company 's equity . these two components provide a substantial and stable source of funds . 46 off-balance sheet arrangements the company 's financial statements do not reflect various off-balance sheet arrangements that are made in the normal course of business , which may involve some liquidity risk . these commitments consist mainly of unfunded loans and letters of credit made under the same standards as on-balance sheet instruments .
57 2016 form 10-k our kfc restaurants are the leading qsr brand in the prc in terms of system sales and number of restaurants . as of december 31 , 2016 , kfc operated over 5 , 2 00 restaurants in over 1,100 cities across china . measured by number of restaurants , we believe kfc has a two-to-one lead over the nearest western qsr competitor in china and kfc continues to grow in both large and small cities . similarly , pizza hut casual dining is the leading cdr concept in china as measured by system sales and number of restaurants . we believe pizza hut casual dining , with over 1 , 7 00 restaurants in over 400 cities as of december 31 , 2016 , has an approximately six-to-one lead in terms of restaurants over its nearest western cdr competitor in china . the operations of each of the concept represent an operating segment of the company within these consolidated and combined financial statements . we have two reportable segments : kfc and pizza hut casual dining . our remaining operating segments , including the operations of pizza hut home service , east dawning , little sheep and taco bell , are combined and referred to as all other segments , as those operating segments are insignificant both individually and in the aggregate . we intend for this md & a to provide the reader with information that will assist in understanding our results of operations , including metrics that management uses to assess the company 's performance . throughout this md & a , we discuss the following performance metrics : the company provides certain percentage changes excluding the impact of foreign currency translation ( “ f/x ” ) . these amounts are derived by translating current year results at prior year average exchange rates . we believe the elimination of the f/x impact provides better year-to-year comparability without the distortion of foreign currency fluctuations . system sales growth includes the results of all restaurants regardless of ownership , including company-owned , franchise and unconsolidated affiliate restaurants that operate our concepts , except for non-company-owned restaurants for which we do not receive a sales-based royalty . sales of franchise and unconsolidated affiliate restaurants typically generate ongoing franchise fees for the company at a rate of approximately 6 % of system sales . franchise and unconsolidated affiliate restaurant sales are not included in company sales on the consolidated and combined statements of income ; however , the franchise fees are included in the company 's revenues . we believe system sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all of our revenue drivers , company and franchise same-store sales as well as net unit growth . same-store sales growth is the estimated percentage change in sales of all restaurants that have been open and in the company system one year or more . company restaurant profit ( “ restaurant profit ” ) is defined as company sales less expenses incurred directly by our company-owned restaurants in generating company sales . company restaurant margin as a percentage of sales is defined as restaurant profit divided by company sales . within the company sales and restaurant profit analysis , store portfolio actions represent the net impact of new unit openings , acquisitions , refranchising and store closures , and other primarily represents the impact of same-store sales as well as the impact of changes in costs such as inflation/deflation . 58 2016 form 10-k in addition to the results provided in accordance with gaap throughout this md & a , the company provides non-gaap measurements which present operating profit before special items , diluted earnings ( loss ) per common share before special items , effective tax rate before special items and adjusted ebitda . included in special items are r eversal of ( provision for ) losses associated with sales of aircraft , incremental restaurant-level impairment upon separation , c hange s in fair value of financial instruments and impact of the redemption of the little sheep noncontrolling interest . the company excludes impact from special items for the purpose of evaluating performance internally . special items are not included in any of our segment results . these non-gaap measures are not intended to replace the presentation of our financial results in accordance with gaap . rather , the company believes that the presentation of these non-gaap measures provides additional information to investors to facilitate the comparison of past and present results , excluding those items that the company does not believe are indicative of our ongoing operations due to their nature . results of operations summary all comparisons within this summary are versus the same period a year ago and exclude the impact of special items . all system sales growth , same-store sales growth and operating profit comparisons exclude the impact of foreign currency . refer to item 1. business for a discussion on the seasonality of our operations . in 2014 , the company 's sales and profits were significantly impacted by adverse publicity surrounding improper food handling practices by a former supplier . specifically , on july 20 , 2014 , an undercover report was televised in china depicting improper food handling practices by supplier shanghai husi , a division of osi , which is a large , global supplier to many in the restaurant industry . this triggered extensive news coverage in china that shook consumer confidence and impacted brand usage . immediately following the incident , we experienced a significant , negative impact to sales and profits at both kfc and pizza hut casual dining . for further information about the potential impact of food safety risks on our business , see “ item 1a . risk factors—risks related to our business and industry—food safety and food-borne illness concerns may have an adverse effect on our reputation and business . story_separator_special_tag consolidated and combined cash flows net cash provided by operating activities was $ 864 million in 2016 as compared to $ 910 million in 2015. the decrease was primarily driven by increased inventory procurement and timing of payments for inventory , and a related increase in accounts receivable driven by amounts due from franchisees and unconsolidated affiliates as the company adopted a central procurement model in august 2016 , and an increase in vat credit asset associated with the benefit from the retail tax structure reform , partially offset by higher operating profit . in 2015 , net cash provided by operating activities was $ 910 million as compared to $ 775 million in 2014. the increase was primarily due to the timing of payments for inventory , lower tax payments and higher operating profit . story_separator_special_tag cellpadding= `` 0 `` cellspacing= `` 0 `` style= `` border-collapse : collapse ; width:100 % ; `` > ( b ) purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms , including : fixed or minimum quantities to be purchased ; fixed , minimum or variable price provisions ; and the approximate timing of the transaction . we have excluded agreements that are cancelable without penalty . purchase obligations relate primarily to supply agreements . we have not included in the contractual obligations table approximately $ 31 million of liabilities for unrecognized tax benefits relating to various tax positions we have taken . these liabilities may increase or decrease over time as a result of tax examinations , and given the status of the examinations , we can not reliably estimate the period of any cash settlement with the respective taxing authorities . these liabilities exclude amounts that are temporary in nature and for which we anticipate that over time there will be no net cash outflow . off-balance sheet arrangements see the unconsolidated affiliates guarantees sections of note 19 for discussion of our off-balance sheet arrangements . 72 2016 form 10-k recently adopted accounting pronouncements and new accounting pronouncements not yet adopted in may 2014 , the financial accounting standards board ( “ fasb ” ) issued asu no . 2014-09 , revenue from contracts with customers ( topic 606 ) ( asu 2014-09 ) , to provide principles within a single framework for revenue recognition of transactions involving contracts with customers across all industries . in july 2015 , the fasb approved a one-year deferral of the effective date of the new revenue standard . asu 2014-09 is now effective for the company in our first quarter of fiscal 2018 with early adoption permitted in the first quarter of 2017. the standard allows for either a full retrospective or modified retrospective transition method . in march and april 2016 , the fasb issued the following amendments to clarify the implementation guidance : asu no . 2016-08 , revenue from contracts with customers ( topic 606 ) : principal versus agent considerations ( reporting revenue gross versus net ) and asu no . 2016-10 revenue from contracts with customers ( topic 606 ) : identifying performance obligations and licensing . we do not believe these standards will impact our recognition of revenue from company-owned restaurants or our recognition of continuing fees from franchisees , which are based on a percentage of franchise sales . however , the initial fees from franchisees , which are currently recognized as revenue when we have performed substantially all initial services required by the franchise agreement , generally upon the opening of a store , will be recognized over the term of the franchise agreement because the franchise rights will be accounted for as rights to access our symbolic intellectual property . our initial fees , including renewal fees , of $ 6 million were recognized as revenue during the year ended december 31 , 2016. in addition , we are continuing to evaluate the impact the adoption of these standards will have on the recognition and presentation of other revenue transactions with unconsolidated affiliates and franchisees . in july 2015 , the fasb issued asu no . 2015-11 , inventory ( topic 330 ) ( asu 2015-11 ) , which requires inventory within the scope of the standard to be measured at the lower of cost and net realizable value . net realizable value is defined as the estimated selling prices in the ordinary course of business , less reasonably predictable costs of completion , disposal , and transportation . asu 2015-10 is effective for the company in our first quarter of fiscal 2017 with early adoption permitted . we do not expect the adoption of this standard to have a material impact on our consolidated and combined financial statements . in february 2016 , the fasb issued asu no . 2016-02 , leases ( topic 842 ) ( asu 2016-02 ) , which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements . asu 2016-02 is effective for the company in our first quarter of fiscal 2019 with early adoption permitted . the standard must be adopted using a modified retrospective transition approach for leases existing at , or entered into after , the beginning of the earliest comparative period presented in the financial statements . we expect that this standard will have a material effect on our financial statements . while we are continuing to assess the effect of adoption , we currently believe the most significant changes relate to the recognition of right-of-use ( “ rou ” ) assets and lease liabilities on our balance sheet for operating leases of the land and or building of our restaurants and office space . at december 31 , 2016 , we operated more than 6,000 restaurants , leasing the underlying land and or building , with our commitments expiring within 20 years from the inception	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	net cash used in investing activities was $ 471 million in 2016 as compared to $ 493 million in 2015. the decrease was primarily driven by lower capital spending , partially offset by increased purchases of short-term investments . in 2015 , net cash used in investing activities was $ 493 million as compared to $ 512 million in 2014. the decrease was primarily driven by lower capital spending . net cash provided by financing activities was $ 95 million in 2016 as compared to net cash used in financing activities of $ 213 million in 2015. the increase was primarily driven by proceeds from issuance of common stock and warrants , partially offset by changes in net parent investment . in 2015 , net cash used in financing activities was $ 213 million in 2015 as compared to $ 319 million in 2014. the decrease was primarily driven by changes in net parent investment . liquidity and capital resources historically we have funded our operations through cash generated from the operation of our company-owned stores and from our franchise operations and dividend payments from our unconsolidated affiliates . excess cash has historically been repatriated to yum through intercompany loans or dividends . 70 2016 form 10-k our ability to fund our future operations and capital needs will depend on our ongoing ability to generate cash from operations . we believe our principal uses of cash in the future will be primarily to fund our operations , capital expenditures and any distributions to our stockholders or share repurchases we may make . we believe that our future cash from operations , together with our access to funds on hand and capital markets , will provide adequate resources to fund these uses of cash and that our existing cash and net cash from operations will be sufficient to fund our operations and anticipated capital expenditures for the next 12 months . our balance sheet may reflect a working capital deficit , which is not uncommon in our industry and is also historically common for yum .
performance solutions ' adjusted ebitda for 2017 increased 8 % on a reported and constant currency basis . the increase was primarily driven by growth of our assembly , industrial and electronic solutions businesses resulting in higher gross profits , as well as cost savings from integration synergies , partially offset by the impact of volume declines in our graphics solutions business . agricultural solutions ' adjusted ebitda for 2017 increased 5 % ( 6 % at constant currency ) . the constant currency increase was primarily driven by an increase from market expansion in europe and new product launches in asia and latin america , volume growth in higher-margin products and cost reduction initiatives in europe and latin america . these increases were partially offset by a change in our selling strategy of certain lower-margin businesses in west africa , and investments made in stg & a , as noted above . year ended december 31 , 2016 compared to year ended december 31 , 2015 net sales replace_table_token_15_th performance solutions ' net sales for 2016 increased by 121 % ( 123 % on a constant currency and 1 % on an organic basis ) compared to the prior period . the increase in organic net sales was driven by growth in global paste solder product demand in assembly solutions , share gains in industrial product offerings sold into the automotive supply chain in asia , specifically in china , and a recovery of product demand in electronic solutions in the second half of 2016. organic sales growth in these businesses was partially offset by under-performance in offshore solutions due to softness in the oil and gas end market as declines in oil prices resulted in reduced capital investment and project startup delays . the impact of oil prices was twofold : ( 1 ) reduced demand for offshore production control and drilling fluids , and ( 2 ) reduced demand for plating chemistry sold into the supply chain for onshore oil production rigs and stripping/cleaning chemistry utilized in polyethylene terephthalate recycling . agricultural solutions ' net sales for 2016 increased by 4 % ( 6 % on a constant currency and 3 % on an organic basis ) compared to the prior period . the increase in organic net sales was driven by volume growth in our insecticide and herbicide businesses in latin america and europe , our anti-malarial insecticides in africa , and our biosolutions business . the volume growth was primarily boosted by several new product launches and continued focus on promoting proprietary brands . these effects were partially offset by lower volumes in north america , mainly due to low commodity prices , declining farmer incomes and soft demand for crop protection products , as well as our continued integration efforts to reduce volumes related to low-margin products across geographic markets . additionally , although generic competition and low commodity prices led to some pricing pressure , overall agricultural solutions achieved an improvement in pricing driven primarily by latin america and europe . 53 gross profit replace_table_token_16_th performance solutions ' gross profit for 2016 increased by 100 % ( 103 % at constant currency and 1 % on an organic basis ) . the organic gross profit increase was driven by gross margin expansion resulting from lower raw material costs , some of which were achieved through synergies , as well as favorable product mix , partially offset by lower sales volume from offshore solutions . the most significant growth came from our higher-margin advanced electronics solutions and industrials solutions product lines , particularly in asia . agricultural solutions ' gross profit for 2016 increased by 21 % ( 23 % at constant currency and 19 % on an organic basis ) . the increase was largely a result of $ 58.0 million of inventory step-up amortization in 2015 which did not recur in 2016. the gross profit increase was also driven by a broad increase in sales volumes , including higher relative growth in our biosolutions products , which generate , on average , higher margins , as well as procurement savings , driven by our ongoing integration and synergy efforts . we continued to see favorable effects from improved procurement trends , product mix , the impact of our proprietary product portfolio , and growth in the niche markets in which we operate . selling , technical , general and administrative expense ( stg & a ) replace_table_token_17_th performance solutions ' stg & a for 2016 increased by 108 % ( 110 % at constant currency and 13 % on an organic basis ) . the organic increase was driven by charges associated with integration activities and higher debt refinancing costs . agricultural solutions ' stg & a for 2016 increased by 6 % ( 9 % at constant currency and 3 % on an organic basis ) . the increase was driven primarily by a modest increase due to price inflation related to wages in developing markets , investments in infrastructure in support of growth in the business , continued integration expenses , and higher costs associated with non-recourse factoring programs . the increase was partially offset by savings from headcount reductions associated with synergies achieved in our operations in africa and europe and a decline in restructuring expenses related to the acquisitions within this segment . corporate stg & a for 2016 decreased by 20 % on a reported , constant currency and organic basis . story_separator_special_tag the increase in working capital was due , in part , to the buildup of inventory in connection with performance solution 's facility rationalization initiatives , as well as increases due to stronger fourth quarter sales in our agricultural solutions business in 2017 , partially offset by the impact of a new factoring program in europe . investing activities net cash flows used in investing activities for 2017 totaled $ 92.6 million , compared to $ 74.7 million for 2016 . the increase was driven primarily by capital expenditures related to our performance solutions ' facility integration initiatives and agricultural solutions ' investments in products registration rights , which , combined , increased by $ 7.2 million over 2016 . the increase was also driven by higher restricted cash balances of $ 4.7 million . financing activities net cash flows used in financing activities for 2017 totaled $ 67.4 million , compared to $ 102 million for 2016 . the decrease was driven primarily by the settlement of our make-whole obligation in 2016 related to our series b convertible preferred stock with a cash payment of $ 460 million to the series b convertible preferred stockholders , offset , in part , by the september 2016 equity offering which raised net proceeds of $ 392 million . in addition , for 2017 , net payments on our various lines of credit , short-term debt facilities and overdraft facilities totaled $ 58.8 million , as compared to net draws totaling $ 54.0 million in 2016 . our decreased on-balance sheet factoring activity increased financing cash flows year-over-year by $ 40.6 million , as did the net change in our long-term debt balance , which impacted financing cash flows by $ 59.8 million . 58 year ended december 31 , 2016 compared to year ended december 31 , 2015 operating activities for 2016 , we generated cash flows from operating activities of $ 185 million , compared to $ 321 million in cash for 2015 . this year-over-year change was driven primarily by higher cash operating profits ( net loss adjusted for non-cash items ) , partially offset by an increased use of cash in working capital as well as higher interest and tax payments . the increase in working capital , largely due to accounts payable , was primarily due to the timing of the close of the arysta acquisition in february 2015 and the working capital seasonality in the agricultural solutions segment . typically , the segment 's working capital is a use of cash at the beginning of the year and a source of cash at the end of the year . investing activities net cash flows used in investing activities for 2016 totaled $ 74.7 million , compared to $ 4.26 billion for 2015 . during 2015 , we used net cash of $ 4.60 billion to fund the arysta , alent and omg acquisitions . additional acquisition-related activity during 2015 included a $ 600 million release of restricted cash , partially offset by a note in the amount of $ 125 million issued to an unrelated third-party and an unfavorable settlement of foreign exchange contracts for $ 73.7 million , which effectively increased the purchase price of alent . there was no significant , comparable acquisition-related activity during 2016. capital expenditures increased by approximately $ 8.4 million during 2016 compared to 2015 , primarily in support of operational expansion , and there was a $ 2.0 million decline in investments in , and renewals of , product registrations . financing activities net cash flows used in financing activities for 2016 totaled $ 102 million , compared to $ 4.00 billion of cash generated for 2015 . the primary sources of cash from financing activity during 2016 were proceeds from amendments no . 5 and 6 to our amended and restated credit agreement of $ 3.30 billion and the september 2016 equity offering of 48,787,878 shares of our common stock which raised net proceeds of $ 392 million . these proceeds were used for the refinancing of our term loans of $ 3.31 billion and for the settlement of our previously-disclosed make-whole obligation related to our series b convertible preferred stock with a cash payment of $ 460 million to the series b convertible preferred stock holders . the primary sources of cash from financing activity during 2015 were $ 3.92 billion from the extension of new term loans and the issuance of our senior notes , and $ 470 million as net proceeds from the june 2015 equity offering of 18,226,414 shares of our common stock , offset in part by $ 87.0 million of financing fees paid . these proceeds were used to fund our 2015 acquisition activity . additionally , for 2016 , we had net draws on our various lines of credit , short-term debt facilities , and overdraft facilities of $ 54.0 million , compared to net payments of $ 12.4 million in 2015. pension plans we maintain `` domestic pension plans , `` which consist of a non-contributory domestic defined benefit pension plan and a serp plan . these plans are closed to new participants and plan benefits associated with all current participants have been frozen . we also maintain `` foreign pension plans , `` which consist retirement and death benefit plans covering employees in taiwan and certain former employees in germany , as well as longevity plans covering employees in france , which have been deemed immaterial , individually and in the aggregate . the expected long-term rate of return on assets assumption is developed with reference to historical returns , forward-looking return expectations , the domestic and foreign pension plans ' investment allocations , and peer comparisons . we used a long-term rate of return on plan assets of 5.9 % and 2.3 % for our domestic and foreign pension plans , respectively to determine our net periodic pension expense for 2017 . the discount rate used to value	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash at december 31 , 2017 . the domestic pension plans were underfunded by $ 26.6 million at december 31 , 2017 compared to $ 36.9 million at december 31 , 2016 . the improved funding position of $ 10.3 million was primarily driven by a $ 29.8 million gain on plan assets and a $ 3.1 million employer contribution , partially offset by $ 13.8 million of actuarial loss due to plan experience and $ 8.8 million of interest costs . the foreign pension plans were underfunded by $ 21.2 million at december 31 , 2017 compared to $ 18.0 million at december 31 , 2016 , representing a decrease in funding status of $ 3.2 million . contributions to the pension plans during 2018 are not expected to be material . while we do not currently anticipate any , additional future material contributions may be required in order to maintain appropriate funding levels within our plans . financial borrowings credit facilities at december 31 , 2017 , we had $ 5.48 billion of indebtedness , which primarily included : $ 2.28 billion of senior notes ; $ 3.15 billion of term debt arrangements outstanding under our first lien credit facility ; and $ 28.5 million of borrowings under local and revolving lines of credit . availability under our revolving credit facility and various lines of credit and overdraft facilities totaled $ 606 million at december 31 , 2017 ( including $ 18.6 million of stand-by letters of credit which reduced the borrowings available under our revolving credit facility ) . covenants our credit facilities contain various affirmative and negative covenants , including limitations on additional indebtedness , dividends and other distributions , entry into new lines of business , use of loan proceeds , capital expenditures , restricted payments , restrictions on liens , transactions with affiliates , amendments to organizational documents , accounting changes , sale and leaseback transactions , and dispositions .
we have structured our business and our business development efforts around four related but separate approaches to deploying our technology . in our most basic approach , we act as a supplier , selling our equipment , software , and related technology to a customer . as an example , in ghana , we sold a complete ueps to the central bank , which owns and operates the resulting transaction settlement system . the revenue and costs associated with this approach are reflected in our hardware , software and related technology sales segment . 36 we have found that we have greater revenue and profit opportunities , however , by acting as a service provider instead of a supplier . in this approach we own and operate the ueps ourselves , charging one-time and on-going fees for the use of the system either on a fixed or ad valorem basis . this is the case in south africa , where we distribute welfare grants on behalf of the south african government and wages on behalf of employers on a fixed fee basis , but charge a fee on an ad valorem basis for goods and services purchased using our smart card . the revenue and costs associated with this approach are reflected in our smart card accounts , south african transaction-based activities and financial services segments . because our smart cards are designed to enable the delivery of more advanced services and products , we are also willing to supply those services and products directly where the business case is compelling . for instance , we provide short-term ueps-based loans to our smart card holders . this is an example of the third approach that we have taken . here we can act as the principal in operating a business that can be better delivered through our ueps . we can also act as an agent , for instance , in the provision of insurance policies . in both cases , the revenue and costs associated with this approach are reflected in our financial services segment . through ksnet , we earn most of our revenue from payment processing services we provide to approximately 220,000 merchants and to card issuers in korea through our value-added-network . in the us , we earn transaction fees from our customers utilizing our xeorules on-line real-time management system for healthcare transactions . we also generate fees from our customers who utilize our vcpay technology to generate a unique , one-time use prepaid virtual card number to securely purchase goods and services or perform bill payments in any card-not-present environment . the revenue and costs at ksnet , xeohealth and vcpay as well as those from our expired iraqi contracts to february 2013 , are reflected in our international transaction-based activities segment . in south africa , we also generate fees from debit and credit card transaction processing , the provision of value-added services such as bill payments , mobile top-up and pre-paid utility sales , transaction processing for both funders and providers of healthcare and from providing a payroll transaction management service . the revenue and costs associated with these services are reflected in our south african transaction-based activities segment . finally , we have entered into business partnerships or joint ventures to introduce our ueps and vtu solutions to new markets such as namibia and colombia . in these situations , we take an equity position in the business while also acting as a supplier of technology . in evaluating these types of opportunities , we seek to maintain a highly disciplined approach , carefully selecting partners , participating closely in the development of the business plan and remaining actively engaged in the management of the new business . in most instances , the joint venture or partnership has a license to use the ueps in the specific territory , including the back-end system . we account for our equity investments using the equity method . when we equity-account these investments , we are required under us gaap to eliminate our share of the net income generated from sales of hardware and software to the investee . we recognize this net income from these equity-accounted investments during the period in which the hardware and software is utilized in the investee 's operations , or has been sold to third-party customers , as the case may be . we believe that this flexible approach enables us to drive adoption of our solution while capturing the value created by the implementation of our technology . business developments during fiscal 2013 south africa sassa we commenced the second phase of the enrollment process in early july 2012 and completed the bulk enrollment by april 30 , 2013 , in accordance with the implementation plan agreed with sassa . under our agreement with sassa , we have to enroll both the grant recipient cardholders ( those individuals who receive the actual payment and are issued with our ueps/emv smart card ) , as well as the grant beneficiaries ( those individuals who have qualified for the social grant , but are not necessarily the recipient cardholder of the grant ) . by way of example , a parent who has three children and receives a grant for all three children is the grant recipient cardholder , while the three children are each classified individually as grant beneficiaries . in this case , we capture the personal and biometric information of the parent and three children , but only the parent is issued with an ueps/emv smart card . our monthly service fee is calculated on the number of grant recipient cardholders . while the number of grant recipient cardholders on a national basis has consistently been quantified by sassa at approximately 9.4 million individuals , the number of beneficiaries was revised higher by sassa from an initial estimate of approximately 15.5 million , to the revised estimate of approximately 21.6 million . story_separator_special_tag the fair value of stock options is affected by the assumptions selected . net stock-based compensation expense from continuing operations was $ 3.9 million , $ 2.8 million and $ 1.7 million for fiscal 2013 , 2012 and 2011 , respectively . net stock-based compensation expense for fiscal 2011 , includes a reversal of $ 3.5 million related to a portion of the restricted stock granted in august 2007 that did not vest as the performance condition prescribed in the terms of the awards was not met . equity instrument we recorded $ 14.2 million of expense associated with the issuance of equity instruments as part of the bee transaction during fiscal 2012 as such awards were fully vested during the period . the option expired unexercised in fiscal 2013 , however , the expense recorded during fiscal 2012 was not reversed during fiscal 2013 because the option had vested in full on the grant date in 2012. accounts receivable and allowance for doubtful accounts receivable we maintain an allowance for doubtful accounts receivable related to our hardware , software and related technology sales and international transaction-based activities segments as a result of sales or rental of hardware , support and maintenance services provided ; or sale of licenses to customers ; or the provision of transaction processing services to our customers . 41 our policy is to regularly review the aging of outstanding amounts due from customers and adjust the provision based on management 's estimate of the recoverability of the amounts outstanding . management considers factors including period outstanding , creditworthiness of the customers , past payment history and the results of discussions by our credit department with the customer . we consider this policy to be appropriate taking into account factors such as historical bad debts , current economic trends and changes in our customer payment patterns . additional provisions may be required should the ability of our customers to make payments when due deteriorate in the future . a significant amount of judgment is required to assess the ultimate recoverability of these receivables , including on-going evaluation of the creditworthiness of each customer . research and development accounting standards require product development costs to be charged to expenses as incurred until technological feasibility is attained . technological feasibility is attained when our software has completed system testing and has been determined viable for its intended use . the time between the attainment of technological feasibility and completion of software development has been short . accordingly , we did not capitalize any development costs during the years ended june 30 , 2013 , 2012 or 2011 , particularly because the main part of our development is the enhancement and upgrading of existing products . costs to develop software for our internal use is expensed as incurred , except to the extent that these costs are incurred during the application development stage . all other costs including those incurred in the project development and post-implementation stages are expensed as incurred . a significant amount of judgment is required to separate research costs , new development costs and ongoing development costs based as the transition between these stages . a multitude of factors need to be considered by management , including an assessment of the state of readiness of the software and the existence of markets for the software . the possibility of capitalizing development costs in the future may have a material impact on the group 's profitability in the period when the costs are capitalized , and in subsequent periods when the capitalized costs are amortized . recent accounting pronouncements recent accounting pronouncements adopted refer to note 2 of our consolidated financial statements for a full description of recent accounting pronouncements , including the expected dates of adoption and effects on financial condition , results of operations and cash flows . recent accounting pronouncements not yet adopted as of june 30 , 2013 refer to note 2 of our consolidated financial statements for a full description of recent accounting pronouncements not yet adopted as of june 30 , 2013 , including the expected dates of adoption and effects on financial condition , results of operations and cash flows . currency exchange rate information actual exchange rates the actual exchange rates for and at the end of the periods presented were as follows : replace_table_token_5_th ( 1 ) krw : $ average , highest and lowest exchange rates are from november 1 , 2010 ( ksnet acquisition date ) to june 30 , 2011 . 42 43 translation exchange rates we are required to translate our results of operations from zar to us dollars on a monthly basis . thus , the average rates used to translate this data for the years ended june 30 , 2013 , 2012 and 2011 , vary slightly from the averages shown in the table above . the translation rates we use in presenting our results of operations are the rates shown in the following table : replace_table_token_6_th results of operations the discussion of our consolidated overall results of operations is based on amounts as reflected in our audited consolidated financial statements which are prepared in accordance with us gaap . we analyze our results of operations both in us dollars , as presented in the consolidated financial statements , and supplementally in zar , because zar is the functional currency of the entities which contribute the majority of our profits and is the currency in which the majority of our transactions are initially incurred and measured . due to the significant impact of currency fluctuations between the us dollar and zar on our reported results and because we use the us dollar as our reporting currency , we believe that the supplemental presentation of our results of operations in zar is useful to investors to understand the changes in the underlying trends of our business . fiscal 2013 results include smartswitch botswana from december 1 , 2012 and pbel from	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows from operating activities cash flows from operating activities for fiscal 2013 increased to $ 55.9 million ( zar 513.7 million ) from $ 20.4 million ( zar 157.5 million ) for fiscal 2012. excluding the impact of interest paid under our korean debt facility and taxes presented in the table below , the increase in cash provided by operating activities resulted from a more favorable trading environment , notwithstanding the significant implementation costs paid in fiscal 2013 , an increase in accounts payable and a decrease in prefunding to merchants participating in our merchant acquiring system . these increases to operating cash flows were offset by a moderate increase in accounts receivable and inventory and lower other payables and taxes which all decrease operating cash flow . during fiscal 2013 , we paid interest of $ 7.1 million under our korean debt facility . cash flows from operating activities for fiscal 2012 decreased to $ 20.4 million ( zar 157.5 million ) from $ 66.2 million ( zar 463.4 million ) for fiscal 2011. excluding the impact of interest paid under our korean debt and taxes , the decrease in cash provided by operating activities resulted from the timing of receipts of accounts receivable in our south african transaction-based activities operating segment and an increase in prefunding to merchants participating in our merchant acquiring system . we also incurred implementation costs related to our sassa contract and , due to the timing of the opening of the july 2012 pay cycle , we did not have any significant amounts due to non-prefunded merchants participating in our merchant acquiring system as of june 30 , 2012. during fiscal 2012 , we paid interest of $ 8.7 million under our korean debt facility . during fiscal 2013 , we made a first provisional tax payment of $ 6.8 million ( zar 58.7 million ) , a second provisional tax payment of $ 7.2 million ( zar 72.5 million ) related to our 2013 tax year in south africa and paid dividend withholding taxes of $ 1.6 million ( zar 14.9 million ) related to cross-border intercompany dividends paid .
” see note 22 of the notes to consolidated financial statements included in this report for further information on this change in our segment alignment and for more information about our segments . to conform to the new alignment of our segments , we have revised our prior period segment disclosures . how we assess our business performance we closely monitor the primary drivers of pretax operating income , which consist of the following : net interest income we track the spread between the interest income earned on our finance receivables and the interest expense incurred on our debt , and continually monitor the components of our yield and our cost of funds . net credit losses the credit quality of our loans is driven by our long-standing underwriting philosophy , which takes into account the prospective customer 's household budget , and his or her willingness and capacity to repay the proposed loan . we closely analyze credit performance because the profitability of our loan portfolio is directly connected to net credit losses . we define net credit losses as gross charge-offs minus recoveries in the portfolio . additionally , because delinquencies are an early indicator of future net credit losses , we analyze delinquency trends , adjusting for seasonality , to determine whether or not our loans are performing in line with our original estimates . we also monitor recovery rates because of their contribution to the reduction in the severity of our charge-offs . operating expenses we assess our operational efficiency using various metrics and conduct extensive analysis to determine whether fluctuations in cost and expense levels indicate operational trends that need to be addressed . our operating expense analysis also includes a review of origination and servicing costs to assist us in managing overall profitability . because loan volume and portfolio size determine the magnitude of the impact of each of the above factors on our earnings , we also closely monitor origination volume and annual percentage rate . 46 recent developments and outlook initial stockholder share sales on november 7 , 2017 , we entered into an underwriting agreement among the company , the initial stockholder and morgan stanley & co. llc ( the “ underwriter ” ) , for the sale by the initial stockholder of 10,000,000 shares of the company 's common stock , par value $ 0.01 per share ( the “ common stock ” ) , plus an option for the underwriter to purchase up to an additional 1,500,000 shares of common stock within 30 days after the date of the underwriting agreement . the shares sold by the initial stockholder were beneficially owned by fortress . the company did not receive any proceeds from the sale of the shares by the initial stockholder . the transaction closed on november 10 , 2017 and the underwriter purchased 1,000,000 shares under its over-allotment option on december 7 , 2017. on december 13 , 2017 , we entered into an underwriting agreement among the company , the initial stockholder and the underwriter , for the sale by the initial stockholder of 7,500,000 additional shares of the company 's common stock , par value $ 0.01 per share . the shares sold by the initial stockholder were beneficially owned by fortress . the company did not receive any proceeds from the sale of the shares by the initial stockholder . the transaction closed on december 18 , 2017. at december 31 , 2017 , the initial stockholder owned approximately 44 % of omh 's common stock . the initial stockholder is owned primarily by a private equity fund managed by an affiliate of fortress . on december 27 , 2017 , softbank acquired fortress and fortress now operates within softbank as an independent business headquartered in new york . there can be no assurance that the initial stockholder will not offer or sell in the future any of its remaining shares beneficially owned by american international group and its affiliates . apollo-värde transaction on january 3 , 2018 , the apollo-värde group entered into a share purchase agreement with the initial stockholder and the company to acquire from the initial stockholder 54,937,500 shares ( representing approximately 40.6 % of the outstanding shares of our common stock as of such date ) , representing the entire holdings of our stock beneficially owned by fortress . the apollo-värde transaction is expected to close in the second quarter of 2018 and is subject to regulatory approvals and other customary closing conditions . the share purchase agreement is filed as exhibit 10.1 to our current report on form 8-k filed with the sec on january 4 , 2018 , and such current report on form 8-k , including exhibit 10.1 thereto , is incorporated by reference herein in its entirety . upon closing of the apollo-värde transaction , we expect to enter into an amended and restated stockholders ' agreement , the expected terms of which are described in such current report on form 8-k. further , upon closing of the apollo-värde transaction , we expect to recognize non-cash incentive compensation expense of approximately $ 108 million along with a capital contribution offset such that the overall impact to our shareholders ' equity will be neutral . see note 24 of the notes to consolidated financial statements included in this report for further information . sfc 's medium-term note issuances 6.125 % sfc notes on may 15 , 2017 , sfc issued $ 500 million aggregate principal amount of 6.125 % senior notes due 2022 ( the “ 2022 sfc notes ” ) under an indenture dated as of december 3 , 2014 ( the “ sfc base indenture ” ) , as supplemented by a third supplemental indenture , dated as of may 15 , 2017 ( the “ sfc third supplemental indenture ” ) , pursuant to which omh provided a guarantee of the 2022 sfc notes on an unsecured basis . story_separator_special_tag interest income on finance receivables held for sale increased $ 14 million primarily due to ( i ) the transfer of $ 608 million of our personal loans to held for sale on september 30 , 2015 , which were sold in the lendmark sale on may 2 , 2016 , and ( ii ) the transfers of $ 307 million of real estate loans to finance receivables held for sale during 2016 , which were sold in the august 2016 real estate loan sale and december 2016 real estate loan sale . interest expense increased $ 141 million in 2016 when compared to 2015 due to the net of the following : average debt increased primarily due to ( i ) debt acquired in the onemain acquisition and ( ii ) net unsecured debt issued during the 2016 period . this increase was partially offset by ( i ) the elimination of the debt associated with the springcastle interests sale and ( ii ) net repayments under our conduit facilities . see notes 12 and 13 of the notes to consolidated financial statements included in this report for further information on our long-term debt , consumer loan securitization transactions , and our conduit facilities . weighted average interest rate on our debt decreased primarily due to ( i ) debt acquired from the onemain acquisition , which generally has a lower weighted average interest rate relative to sfc 's weighted average interest 52 rate , and ( ii ) the repurchase of $ 600 million unsecured notes , which had a higher interest rate relative to our other indebtedness , in connection with sfc 's offering of the 8.25 % sfc notes , as defined in “ liquidity and capital resources ” included in this report . the decrease was partially offset by ( i ) sfc 's offering of the 8.25 % sfc notes in april of 2016 and ( ii ) the elimination of debt associated with the springcastle interests sale , which generally had a lower interest rate relative to our other indebtedness . provision for finance receivable losses increased $ 216 million in 2016 when compared to 2015 primarily due to ( i ) provision for finance receivable losses of $ 229 million resulting from the onemain acquisition , which reflected net charge-offs of $ 477 million , partially offset by the re-establishment of the allowance for finance receivable losses of $ 248 million in 2015 and ( ii ) higher net charge-offs on springleaf personal loans reflecting growth during the past 12 months . this increase was partially offset by ( i ) lower net charge-offs on the previously owned springcastle portfolio reflecting the springcastle interests sale and the improved central servicing performance as the acquired portfolio matured under our ownership and ( ii ) the continued refinement of our estimates of allowance for finance receivable losses and their related assumptions based on ongoing integration and alignment of collection and charge-off practices . net gain on sale of springcastle interests of $ 167 million in 2016 reflected the net gain associated with the sale of our equity interest in the springcastle joint venture on march 31 , 2016. see note 2 of the notes to consolidated financial statements included in this report for further information on this sale . other revenues increased $ 344 million in 2016 when compared to 2015 primarily due to ( i ) other revenues of $ 319 million resulting from the onemain acquisition , which consisted of insurance revenues of $ 236 million , investment revenues of $ 54 million , and remaining other revenues of $ 29 million , including $ 25 million of revenues from our ancillary products , ( ii ) servicing charge income for the springcastle portfolio of $ 33 million in 2016 , ( iii ) net gain on sales of personal and real estate loans of $ 18 million in 2016 , ( iv ) servicing charge income for the receivables related to the lendmark sale of $ 6 million in 2016 , and ( v ) foreign currency translation adjustment gain of $ 4 million in 2016 resulting from the liquidation of our united kingdom subsidiary . this increase was partially offset by ( i ) a decrease in springleaf investment revenues of $ 20 million during 2016 primarily due to a decrease in invested assets and lower realized gains on the sale of investment securities and ( ii ) net loss on repurchases and repayments of debt of $ 17 million in 2016. acquisition-related transaction and integration costs of $ 108 million and $ 62 million in 2016 and 2015 , respectively , reflected increased costs relating to the onemain acquisition and the lendmark sale , including branch and system conversions , information technology costs , certain compensation and benefit related costs , and other costs and fees that would not have been incurred in the ordinary course of business . see “ non-gaap financial measures ” below for further information regarding these costs . other expenses increased $ 706 million in 2016 when compared to 2015 due to the following : salaries and benefits increased $ 303 million primarily due to salaries and benefits of $ 317 million resulting from the onemain acquisition . this increase was partially offset by non-cash incentive compensation expense of $ 15 million recorded in 2015 relating to the rights of certain executives to receive a portion of the cash proceeds from the sale of omh 's common stock by the initial stockholder . other operating expenses increased $ 332 million primarily due to ( i ) other operating expenses of $ 306 million resulting from the onemain acquisition , which consisted primarily of advertising expenses of $ 74 million , occupancy costs of $ 66 million , amortization on other intangible assets of $ 57 million , and information technology expenses of $ 53 million , ( ii ) a decrease in springleaf deferred	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources sources of funds we finance the majority of our operating liquidity and capital needs through a combination of cash flows from operations , securitization debt , borrowings from conduit facilities , unsecured debt and equity , and may also utilize other corporate debt facilities in the future . as a holding company , all of the funds generated from our operations are earned by our operating subsidiaries . 63 sfc issuance of 5.625 % senior notes due 2023 on december 8 , 2017 , sfc issued $ 875 million aggregate principal amount of the 5.625 % sfc notes under the sfc fourth supplemental indenture , pursuant to which omh provided a guarantee of the 5.625 % sfc notes on an unsecured basis . sfc used a portion of the net proceeds from the sale of the 5.625 % sfc notes to repay at maturity approximately $ 557 million aggregate principal amount of sfc 's existing 6.90 % medium-term notes and for general corporate purposes . see note 12 of the notes to consolidated financial statements included in this report for further information on the issuance . sfc issuance of 6.125 % senior notes due 2022 on may 15 , 2017 , sfc issued $ 500 million aggregate principal amount of the 6.125 % sfc notes under the sfc third supplemental indenture , pursuant to which omh provided a guarantee of the 6.125 % sfc notes on an unsecured basis . on may 30 , 2017 , sfc issued and sold $ 500 million aggregate principal amount of the additional sfc notes in an add-on offering . sfc used a portion of the net proceeds from the sale of the additional sfc notes to repurchase approximately $ 466 million aggregate principal amount of its existing 6.90 % senior notes due 2017 at a premium to par . sfc used the remaining net proceeds from the sale of the 6.125 % sfc notes for general corporate purposes . see note 12 of the notes to consolidated financial statements included in this report for further information on the issuance .
under this authorization the company repurchased 121,168 shares of common stock for an aggregate purchase price of $ 1.4 million in 2015. in the fourth quarter of 2015 , the company offered an employee voluntary separation program ( “ evsp ” ) , which provided enhanced separation benefits to eligible non-union employees with more than one year of service . the total charge expected to be recognized is $ 55.8 million with $ 45.6 million recognized in the year ended december 27 , 2015 . on february 3 , 2016 , the company completed a $ 44.4 million private placement of the company 's common stock to merrick media . 29 2016 private placement on february 3 , 2016 , the company completed a $ 44.4 million private placement , pursuant to which the company sold to merrick media 5,220,000 shares of the company 's common stock at a purchase price of $ 8.50 per share . the company intends to use the $ 42.5 million net proceeds from the sale to execute further on its growth strategy , including acquisitions and digital initiatives . the shares of common stock acquired by merrick media ( the “ shares ” ) are subject to certain lockup provisions that , subject to the terms and conditions set out in the purchase agreement dated february 3 , 2016 among the company , merrick media and michael w. ferro , jr. ( the “ purchase agreement ” ) , prohibit certain transfers of the shares for the first three years following the date of issuance and , thereafter , any transfers of the shares that would result in a transfer of more than 25 % of the shares purchased under the purchase agreement in any 12-month period . the purchase agreement also includes covenants prohibiting the transfer of the shares if the transfer would result in a person beneficially owning more than 4.9 % of the company 's then outstanding shares of common stock following the transfer , as well as transfers to a material competitor of the company in any of the company 's then-existing primary geographical markets . merrick media and mr. ferro and their respective affiliates , are also prohibited from acquiring additional equity if the acquisition could result in their beneficial ownership of more than 25 % of the company 's then outstanding shares of common stock . in connection with the private placement , mr. ferro was elected to fill a newly-created vacancy on the company 's board of directors and was named non-executive chairman of the board . the company granted merrick media the right to designate a replacement individual for election as a director at each annual and special meeting of stockholders at which directors are to be elected as part of the slate of nominees recommended by the board of directors , subject to the reasonable prior approval of the board 's nominating and corporate governance committee , in the event that mr. ferro is unable to continue to serve as a director . merrick media 's right to appoint a replacement director representative will expire either ( a ) on the date that mr. ferro or his replacement is not nominated for reelection as a director , is removed as a director , or is not reelected as a director if the company has not recommended his or his replacement 's reelection or ( b ) at such time as merrick media , mr. ferro and their respective affiliates no longer beneficially own at least 75 % of the shares originally acquired pursuant to the purchase agreement . the company has agreed to use its reasonable best efforts to cause a registration statement with respect to the shares to be declared effective by the earlier of ( a ) february 3 , 2019 and ( b ) 60 days after the termination of certain voting covenants made by merrick media and mr. ferro and their respective affiliates in the purchase agreement . 2015 acquisitions on may 21 , 2015 , the company purchased the san diego union-tribune ( f/k/a the u-t san diego ) and nine community weeklies and related digital properties in san diego county , california . the stated purchase price was $ 85 million , consisting of $ 73 million in cash , subject to a working capital adjustment , and $ 12 million in tribune publishing common stock ( 700,869 shares ) . the company financed the $ 73 million cash portion of the purchase price , less a $ 2 million preliminary working capital adjustment at close , with a combination of cash-on-hand and funds available under the company 's existing senior abl facility as well as the net proceeds of the senior term loan facility increase described below . in the year ended december 27 , 2015 , the company received the final working capital adjustment of $ 2.6 million in cash from the seller and the purchase price has been adjusted . as part of the acquisition , the company became the sponsor of a single employer defined benefit plan that will require approximately $ 10.8 million in contributions in 2016. evsp in the fourth quarter of 2015 , the company offered an evsp , which provided enhanced separation benefits to eligible non-union employees with more than one year of service . of the employees offered the evsp , 780 accepted . of the 780 who accepted , 275 of the positions are expected to be replaced leaving a net reduction of 505 positions . the total charge expected to be recognized is $ 55.8 million with $ 45.6 million recognized in the year ended december 27 , 2015 . the company plans to fund the evsp ratably over the payout period through salary continuation that started immediately and continues through the first half of 2018 instead of lump sum severance payments . see note 4 of the consolidated and combined financial statements for additional information . story_separator_special_tag preprint revenues , which are primarily included in retail advertising , decreased 8.9 % , or $ 31.3 million , due to declines at all daily newspapers . national advertising revenues fell 13.1 % , or $ 28.2 million , due to declines in several categories , most notably movies , wireless/telecom , financial , and packaged goods which together declined by a total of $ 27.1 million . classified advertising revenues decreased 1.8 % , or $ 5.2 million , compared to the prior year period , primarily due to a decrease of $ 12.2 million related to the careerbuilder contract amendment and a decrease of $ 3.3 million related to the classified ventures sale of apartments.com in april 2014 , which resulted in the termination of the apartments.com contract . these declines also resulted in the decrease in digital advertising revenues , which are included in the above categories and decreased 1.7 % , or $ 3.5 million , in the year ended december 28 , 2014 compared to the prior year period . the declines in advertising revenues were partially offset by year-to-date-contributions of $ 18.5 million from the baltimore and chicago properties acquired during 2014. circulation revenues —circulation revenues increased 1.4 % , or $ 6.0 million , in the year ended december 28 , 2014 compared to the prior year due largely to an increase of $ 7.8 million from acquisitions . this increase was partially offset by decreases in print edition sales . though total daily net paid circulation , including digital editions , averaged 1.8 million copies for the year ended december 28 , 2014 , up 5.6 % from the prior year period , total sunday net paid circulations , including digital editions , for the year ended december 28 , 2014 averaged 2.9 million copies , down 0.7 % from the prior year period . other revenues —other revenues are derived from commercial printing and delivery services provided to other newspapers ; distribution of syndicated content ; direct mail advertising and other related activities . other revenues decreased 3.6 % , or $ 10.6 million , in year ended december 28 , 2014 primarily due to declines in commercial print and delivery revenues of $ 17.8 million for third-party publications , including certain publications of the sun-times media group , the wall street journal , the new york times and the orange county register . these declines were partially offset by a $ 9.1 million contribution from mct , a partnership in which the company purchased the remaining 50 % interest during the second quarter 2014. operating costs and expenses — total operating expenses , by classification , for the years ended december 28 , 2014 and december 29 , 2013 were as follows ( in thousands ) : replace_table_token_9_th tribune publishing operating expenses decreased 0.4 % , or $ 7.3 million , in the year ended december 28 , 2014 compared to the prior year period . the decrease was due primarily to lower corporate allocations , newsprint and ink and circulation distribution expense , partially offset by higher occupancy , outside services and affiliate fees . compensation expense —compensation expense decreased 0.3 % , or $ 1.5 million , in the year ended december 28 , 2014 due primarily to a decrease in direct pay and benefits realized from continued declines in staffing levels at the newspapers . these declines were partially offset by increases associated with the businesses acquired during the year and a decrease in the pension credit . before the distribution date , tribune publishing recorded the portion of tco 's pension credit that related to 37 the company 's employees . subsequent to the distribution date , the pension plan remained with tco and therefore no further credits were recorded by the company related to the tco plans . circulation and distribution expense —circulation and distribution expense decreased 5.9 % , or $ 18.3 million , primarily due to lower print circulation volumes for the daily newspapers and commercial delivery of third party publications . total daily net paid print circulation in the year ended december 28 , 2014 averaged 1.3 million copies , down 11.5 % . total sunday net paid print circulation in the year ended december 28 , 2014 averaged 2.4 million copies , down 10.8 % . newsprint and ink expense —newsprint and ink expense declined 13.9 % , or $ 22.6 million , in the year ended december 28 , 2014 due mainly to a 13.8 % decrease in newsprint consumption as a result of lower print circulation volumes , which decreased 11.5 % for daily and 10.8 % for sunday copies of the company 's newspapers , a 9.1 % decline in commercial printing revenue and a 1.2 % decrease in the average cost per ton of newsprint . outside services expense —outside services expense increased 26.2 % , or $ 26.2 million , in the year ended december 28 , 2014 due primarily to inclusion of technology costs subsequent to the distribution date that were previously included in corporate allocations . corporate allocations —corporate allocations comprise allocated charges from tco for certain corporate support services . the allocated charges include corporate management fees , technology support costs , general insurance costs and occupancy costs , among others . corporate allocations decreased 35.7 % , or $ 50.3 million , in the year ended december 28 , 2014 . corporate allocations comprise allocated charges from tco for certain corporate support services . subsequent to the distribution date , no additional charges were allocated from tco . the allocated charges include corporate management fees , technology support costs , general insurance costs and occupancy costs , among others . subsequent to the distribution date , these expenses are reflected in outside services and other general and administrative . occupancy expense —occupancy expense increased 84.6 % , or $ 28.0 million , in the year ended december 28 , 2014 ,	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	net cash used for investing activities totaled $ 91.0 million in the year ended december 27 , 2015 primarily due to acquisitions and capital expenditures . net cash used for the acquisition of the san diego union-tribune totaled $ 67.8 million ( see note 6 to the consolidated and combined financial statements included elsewhere in this report for further information ) . tribune publishing 's capital expenditures in the year ended december 27 , 2015 totaled $ 32.3 million . net cash used for investing in the year ended december 27 , 2015 was partially offset by $ 10.5 million provided by a reduction in restricted cash . net cash used for investing activities totaled $ 102.9 million in the year ended december 28 , 2014 primarily due to acquisitions , restricted cash and capital expenditures . net cash used for the acquisitions totaled $ 52.3 million in 2014. the restricted cash of $ 27.5 million is in connection with the letter of credit agreement described below . tribune publishing 's capital expenditures in the year ended december 28 , 2014 totaled $ 22.3 million . net cash used for investing activities totaled $ 19.9 million in the year ended december 29 , 2013 and was comprised almost entirely of capital expenditures . we anticipate that capital expenditures for the year ended december 25 , 2016 will be approximately $ 30 million to $ 35 million . net cash provided by financing activities totaled $ 32.2 million in the year ended december 27 , 2015 and included proceeds of $ 69.0 million from the issuance of senior debt , net of discount , $ 19.8 million used for loan payments on senior debt , $ 13.7 million used for payment of stockholder dividends and $ 2.8 million used for payment of financing costs related to the issuance of senior debt .
we are investing to increase our capabilities and capacity to help device manufacturers build custom applications , to increase the capacity of our data centers , to increase the number , kinds and capacity of network services , to enable developers to access our technology , and to expand both awareness and channels for our direct-to-consumer products . enterprise . trends in our enterprise business include increasing interest in the use of mobile applications and web sites to access customer care systems and records , voice-based authentication of users , increasing interest in coordinating actions and data across customer care channels , and the ability of a broader set of hardware providers and systems integrators to serve the market . in fiscal 2014 , revenues and bookings from on-demand solutions increased significantly , as a growing proportion of customers chose our cloud-based solutions for call center , web and mobile customer care solutions . we expect these trends to continue in fiscal 2015. we are investing to expand our product set to address these opportunities , to increase efficiency of our hosted applications , expand our capabilities and capacity to help customers build custom applications , and broaden our relationships with new hardware and systems integrator partners serving the market . imaging . the imaging market is evolving to include more networked solutions , mobile access to networked solutions , multi-function devices , and away from packaged software . we expect to expand our traditional packaged software sales with subscription versions . we are investing to improve mobile access to our networked products , expand our distribution channels and embedding relationships , and expand our language coverage . confronted by dramatic increases in electronic information , consumers , business personnel and healthcare professionals must use a variety of resources to retrieve information , transcribe patient records , conduct transactions and perform other job-related functions . we believe that the power of our solutions can transform the way people use the internet , telecommunications systems , electronic medical records , wireless and mobile networks and related corporate infrastructure to conduct business . strategy in fiscal 2015 , we will continue to focus on growth by providing market-leading , value-added solutions for our customers and partners through a broad set of technologies , service offerings and channel capabilities . we have increased our focus on operating efficiencies , expense and hiring discipline and acquisition synergies to improve gross margins and operating margins . we intend to continue to pursue growth through the following key elements of our strategy : 18 extend technology leadership . our solutions are recognized as among the best in their respective categories . we intend to leverage our global research and development organization , and our broad portfolio of technologies , applications and intellectual property to foster technological innovation and to maintain customer preference for our solutions . we also intend to continue to invest in our engineering resources and to seek new technological advancements that further expand the addressable markets for our solutions . broaden expertise in vertical markets . businesses are increasingly turning to us for comprehensive solutions rather than for a single technology product . we intend to broaden our expertise and capabilities to continue to deliver targeted solutions for a range of industries including mobile device manufacturers , healthcare , telecommunications , financial services and government administration . we also intend to expand our global sales and professional services capabilities to help our customers and partners design , integrate and deploy innovative solutions . increase subscription and transaction based recurring revenue . we intend to increase our subscription and transaction based offerings in all of our segments . this will enable us to deliver applications that our customers use , and pay for , on a repeat basis , providing us with the opportunity to enjoy the benefits of recurring revenue streams . expand global presence . we intend to further expand our international resources to better serve our global customers and partners and to leverage opportunities in established markets such as europe , and also emerging markets within asia and latin america . we continue to add regional sales employees across geographic regions to better address demand for voice and language based solutions and services . pursue strategic acquisitions and partnerships . we have selectively pursued strategic acquisitions to expand our technology , solutions and resources , and to complement our organic growth . we use these acquisitions to deliver enhanced value to our customers , partners , employees and shareholders . we intend to continue to pursue acquisitions that enhance our solutions , serve specific vertical markets and strengthen our technology portfolio . we have , however , recently slowed the pace and reduced the size of acquisitions to focus our resources more on driving organic growth . we also have formed key partnerships with other important companies in our markets of interest , and intend to continue to do so in the future where it will enhance the value of our business . key metrics in evaluating the financial condition and operating performance of our business , management focuses on revenue , net ( loss ) income , gross margins , operating margins , cash flow from operations and deferred revenue . a summary of these key financial metrics for the fiscal year ended september 30 , 2014 , as compared to the fiscal year ended september 30 , 2013 , is as follows : total revenue increased by $ 68.2 million to $ 1,923.5 million ; net loss increased by $ 35.1 million to a loss of $ 150.3 million ; gross margins decreased by 2.6 percentage points to 56.1 % ; operating margins decreased by 3.7 percentage points to ( 1.1 ) % ; cash provided by operating activities for the fiscal year ended september 30 , 2014 was $ 358.1 million , a decrease of $ 36.9 million from the prior fiscal year ; deferred revenue increased 32.2 story_separator_special_tag sales and marketing expense sales and marketing expense includes salaries and benefits , commissions , advertising , direct mail , public relations , tradeshow costs and other costs of marketing programs , travel expenses associated with our sales organization and overhead . the following table shows sales and marketing expense , in dollars and as a percentage of total revenues ( dollars in millions ) : replace_table_token_10_th fiscal 2014 compared to fiscal 2013 sales and marketing expense for fiscal 2014 increased $ 4.8 million , as compared to fiscal 2013. the increase in sales and marketing expense was primarily attributable to a $ 14.5 million increase in compensation expense , including commission expense . the increase in compensation expense was driven primarily by headcount growth , including additional headcount from our recent acquisitions . the increase was offset by a decrease of $ 4.5 million in stock-based compensation expense , a decrease of $ 3.5 million in marketing and channel program spending and a decrease of $ 1.5 million in travel expenses . fiscal 2013 compared to fiscal 2012 sales and marketing expense for fiscal 2013 increased $ 50.5 million , as compared to fiscal 2012. the increase was primarily attributable to a $ 34.2 million increase in compensation expense , including commission expense , driven primarily by headcount growth , including additional headcount from our acquisitions during the period , together with a $ 3.7 million increase in stock-based compensation expense . additionally , marketing and channel program spending increased $ 6.9 million to drive revenue 24 growth as part of demand generation activities during the holiday season in the first quarter of fiscal 2013. general and administrative expense general and administrative expense primarily consists of personnel costs for administration , finance , human resources , general management , fees for external professional advisers including accountants and attorneys , and provisions for doubtful accounts . the following table shows general and administrative expense , in dollars and as a percentage of total revenues ( dollars in millions ) : replace_table_token_11_th fiscal 2014 compared to fiscal 2013 general and administrative expense for fiscal 2014 increased $ 4.7 million , as compared to fiscal 2013. the increase was primarily attributable to a $ 12.1 million increase in stock-based compensation expense offset by lower expense of $ 5.5 million in professional services fees and $ 5.0 million in charitable contribution expense . performance-based awards and annual bonuses were lower in the prior year as a result of weaker than planned operating results . fiscal 2013 compared to fiscal 2012 general and administrative expense for fiscal 2013 increased $ 16.7 million , as compared to fiscal 2012. the increase was primarily attributable to a $ 12.9 million increase in compensation expense , driven primarily by headcount growth including additional headcount from our acquisitions during the period . in addition , legal expense increased $ 11.6 million as a result of increased spending on patent litigation and patent prosecution activities . these increases were offset by a $ 16.1 million decrease in stock-based compensation due to less expense related to performance-based awards and bonuses resulting from lower than expected results in fiscal 2013. amortization of intangible assets amortization of acquired patents and core and completed technology are included in cost of revenue and the amortization of acquired customer and contractual relationships , non-compete agreements , acquired trade names and trademarks , and other intangibles are included in operating expenses . customer relationships are amortized on an accelerated basis based upon the pattern in which the economic benefits of the customer relationships are being realized . other identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives . amortization expense was recorded as follows ( dollars in millions ) : replace_table_token_12_th fiscal 2014 compared to fiscal 2013 amortization of intangible assets expense for fiscal 2014 increased $ 1.2 million , as compared to fiscal 2013. the increase was primarily attributable to the amortization of acquired intangible assets from our acquisitions during the period that have higher relative allocations of fair value to customer relationships . the decrease in amortization of intangible assets in our cost of revenue for the year ended september 30 , 2014 was primarily attributable to certain intangible assets becoming fully amortized in the period . 25 fiscal 2013 compared to fiscal 2012 amortization of intangible assets expense for fiscal 2013 increased $ 13.5 million , as compared to fiscal 2012. the increase was primarily attributable to the amortization of acquired customer relationships from our business acquisitions during fiscal 2013 and the second half of fiscal 2012. based on our balance of amortizable intangible assets as of september 30 , 2014 , and assuming no impairment or change in useful lives , we expect amortization of intangible assets for fiscal 2015 to be approximately $ 162.0 million . acquisition-related costs , net acquisition-related costs include those costs related to business and other acquisitions , including potential acquisitions . these costs consist of ( i ) transition and integration costs , including retention payments , transitional employee costs and earn-out payments treated as compensation expense , as well as the costs of integration-related services provided by third-parties ; ( ii ) professional service fees , including third-party costs related to the acquisition , and legal and other professional service fees associated with disputes and regulatory matters related to acquired entities ; and ( iii ) adjustments to acquisition-related items that are required to be marked to fair value each reporting period , such as contingent consideration , and other items related to acquisitions for which the measurement period has ended . acquisition-related costs were recorded as follows ( dollars in millions ) : replace_table_token_13_th fiscal 2014 compared to fiscal 2013 acquisition-related costs , net for fiscal 2014 decreased $ 5.5 million , as compared to fiscal 2013. professional service fees decreased $ 10.5 million as a result of our strategy to slow the pace and reduce the size of	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash used in financing activities fiscal 2014 compared to fiscal 2013 cash used in financing activities for fiscal 2014 was $ 307.2 million , an increase of $ 286.5 million , or 1,387 % , as compared to cash used in financing activities of $ 20.7 million for fiscal 2013. the net increase was primarily driven by the following factors : a decrease in cash inflows of $ 625.2 million from proceeds of debt issuances . fiscal 2013 activities included proceeds of $ 351.7 million of senior notes due in 2020 issued in the first quarter of fiscal 2013 together with $ 277.1 million related to the amendment of our credit facility in august 2013 ; offset by a decrease in cash outflows of $ 170.6 million for the payment of long-term debt . the fiscal 2014 activity included the redemption of the 2027 debentures for $ 250.0 million . fiscal 2013 activities included payments of $ 277.1 million related to the amendment of our credit facility in august 2013 and $ 143.5 million related to on our term loan in october 2012 ; a decrease in cash outflows of $ 157.9 million related to our share repurchase program . we repurchased 1.6 million shares of our common stock for total cash outflows of $ 26.5 million in fiscal 2014 as compared to 9.8 million shares of our common stock for total cash outflows of $ 184.4 million in fiscal 2013. a decrease in cash outflows of $ 20.4 million as a result of lower cash payments required to net share settle employee equity awards , due to our lower stock price during fiscal 2014 as compared to fiscal 2013. fiscal 2013 compared to fiscal 2012 cash used in financing activities for fiscal 2013 was $ 20.7 million , a decrease of $ 1,153.7 million , or 102 % , as compared to cash provided by financing activities of $ 1,133.0 million for fiscal 2012. the net decrease was primarily driven by the following factors : a decrease in cash inflows of $ 739.8 million from proceeds of debt issuances .
we sell our products to the largest auto parts retail and traditional warehouse chains and to major automobile manufacturers for both their aftermarket programs and their oes program . demand and replacement rates for aftermarket remanufactured automobile parts generally increase with the age of vehicles and increases in miles driven . 20 historically , the largest share of our business was in the diy market . while that is still the case , our difm business is now a significant part of our business . in difficult economic times , we believe consumers are more likely to purchase lower cost replacement parts in both the diy and difm markets . we focus on supplying both these channels with the most cost efficient replacement parts for the consumer to purchase . within the rotating electrical segment , the difm market is an attractive opportunity for growth . we are positioned to benefit from this market opportunity in two ways : ( 1 ) our auto parts retail customers are expanding their efforts to target the difm market and ( 2 ) we sell our products under private label and our own brand names directly to suppliers that focus on professional installers . in addition , we sell our products to oe manufacturers for distribution to the professional installer both for warranty replacement and their general aftermarket channels . we have been successful in growing sales in our rotating electrical segment to this market . recent developments since our acquisition of fenco on may 6 , 2011 , we have been implementing our undercar product line turnaround plan and our top priority continued to be improvement of the financial performance of our undercar product line business . the implementation of our undercar product line turnaround plan has taken longer and cost more than initially anticipated . revenues generated by our undercar product line segment have not been sufficient to enable us to meet our operating expenses and otherwise implement our undercar product line turnaround plan . fenco has incurred net losses of $ 135,260,000 and $ 62,814,000 for the years ended march 31 , 2013 and 2012 , respectively , and has an accumulated deficit of approximately $ 198,074,000 at march 31 , 2013. fenco continues to face capital and liquidity concerns . the parent company financing agreement only permitted the company to invest up to an additional $ 20,000,000 in fenco , which it had done as of december 31 , 2012. as of march 31 , 2013 , the company had invested in fenco $ 4,946,000 of equity , $ 52,631,000 of debt , $ 27,382,000 of accounts receivable in connection with our march 2011 consignment arrangement to provide goods in order to maintain the service levels for fenco 's customers , and $ 1,782,000 of net inter-company balances . at march 31 , 2013 , the company has established a specific charge-off accrual for the debt , accounts receivable and inter-company balances . fenco has been unable to refinance its credit agreement or obtain additional sufficient capital to implement its turnaround plan . the report of our independent registered public accounting firm on our financial statements for the year ended march 31 , 2013 contains an explanatory paragraph raising substantial doubt as to our ability to continue as a going concern . during may 2013 , fenco appointed a new board of independent directors , hired an independent chief restructuring officer and all its previously existing officers resigned from fapl . as a result of the loss of control of fenco , we will likely deconsolidate the financial statements of fenco from our consolidated financial statements during the first quarter of fiscal 2014. on june 10 , 2013 , each of fapl , introcan and introcan 's subsidiaries , flo-pro inc. , lh distribution inc. , rafko logistics inc. , rafko holdings inc. and rafko enterprises inc. , filed a voluntary petition for relief under chapter 7 of the bankruptcy code in the u.s. bankruptcy court for the district of delaware . as of march 31 , 2013 , fenco 's financial statements are included in the consolidated financial statements of the company . our consolidated financial statements are prepared assuming we will continue as a going concern . the financial statements do not include any adjustments to reflect future adverse effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from the outcome of this uncertainty . as a result of these challenges with fenco , management has adjusted its focus . going forward mpa 's focus will not include fenco but will continue to be on its rotating electrical business and evaluating other opportunities . the outlook for rotating electrical continues to be strong with over 240 million vehicles on the road with an average age of over 10 years . vehicles older than 7 years generally experience higher replacement rates for the alternators and starters . as such these metrics indicate an ongoing growth opportunity for rotating electrical . mpa 's rotating electrical business has continued to have strong liquidity which will be further enhanced by the tax benefits associated with the write-off of the fenco investments . 21 critical accounting policies we prepare our consolidated financial statements in accordance with generally accepted accounting principles , or gaap , in the united states . our significant accounting policies are discussed in detail below and in note 2 in the notes to consolidated financial statements . in preparing our consolidated financial statements , we use estimates and assumptions for matters that are inherently uncertain . we base our estimates on historical experiences and reasonable assumptions . our use of estimates and assumptions affect the reported amounts of assets , liabilities and the amount and timing of revenues and expenses we recognize for and during the reporting period . actual results may differ from our estimates . story_separator_special_tag we seek to limit the aggregate of customer returns , including warranty and stock adjustment returns , to less than 20 % of unit sales . in some instances , we allow a higher level of returns in connection with a significant update order . we provide for such anticipated returns of inventory by reducing revenue and the related cost of sales for the units estimated to be returned . our allowance for warranty returns is established based on a historical analysis of the level of this type of return as a percentage of total unit sales . stock adjustment returns do not occur at any specific time during the year , and the expected level of these returns can not be reasonably estimated based on a historical analysis . our allowance for stock adjustment returns is based on specific customer inventory levels , inventory movements and information on the estimated timing of stock adjustment returns provided by our customers . 26 sales incentives we provide various marketing allowances to our customers , including sales incentives and concessions . marketing allowances related to a single exchange of product are recorded as a reduction of revenues at the time the related revenues are recorded or when such incentives are offered . other marketing allowances , which may only be applied against future purchases , are recorded as a reduction to revenues in accordance with a schedule set forth in the relevant contract . sales incentive amounts are recorded based on the value of the incentive provided . goodwill goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations . goodwill is not amortized , but rather is tested for impairment at least annually or more frequently if there are indicators of impairment present . we perform the annual goodwill impairment analysis in the fourth quarter of each fiscal year . we evaluate whether goodwill has been impaired at the reporting unit level by first determining whether the estimated fair value of the reporting unit is less than its carrying value and , if so , by determining whether the implied fair value of goodwill within the reporting unit is less than the carrying value . as of march 31 , 2013 , we identified the following impairment indicators in our undercar product line segment : ( i ) continued losses from fenco operations , ( ii ) lower forecasted future revenues , ( iii ) negative working capital position , ( iv ) additional financing needs , and ( v ) the anticipated filing for bankruptcy . we determined the fair value of the undercar product line reporting unit using a liquidation scenario . for determining the fair value under the liquidation scenario , we used total assets minus estimated liquidation expenses to arrive to the proceeds available for senior secured creditors . based on the results of the goodwill impairment test , the reporting unit 's carrying value exceeded its fair value , indicating an impairment of goodwill at march 31 , 2013. we determined that goodwill was fully impaired as the implied fair value of goodwill within the reporting unit was zero and recorded a non-cash goodwill impairment charge of $ 68,356,000 as disclosed in the consolidated statement of operations . after recording the impairment charge , the undercar product line segment had no goodwill remaining in the consolidated balance sheet at march 31 , 2013. intangible assets our intangible assets other than goodwill are finite–lived and amortized on a straight line basis over their respective useful lives , and are analyzed for impairment when and if indicators of impairment exist . as of march 31 , 2013 , there were no indicators of impairment for our rotating electrical product line . however , we noted impairment indicators for our undercar product line segment as described above . therefore , we performed an impairment test of the undercar product line segment 's intangible assets and concluded that such intangible assets were fully impaired as of march 31 , 2013. income taxes we account for income taxes using the liability method , which measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts in the financial statements . the resulting asset or liability is adjusted to reflect changes in the tax laws as they occur . a valuation allowance is provided to reduce deferred tax assets when it is more likely than not that a portion of the deferred tax asset will not be realized . the primary components of our income tax provision ( benefit ) are ( i ) the current liability or refund due for federal , state and foreign income taxes and ( ii ) the change in the amount of the net deferred income tax asset , including the effect of any change in the valuation allowance . 27 realization of deferred tax assets is dependent upon our ability to generate sufficient future taxable income . management reviews the company 's deferred tax assets on a jurisdiction by jurisdiction basis to determine whether it is more likely than not that the deferred tax assets will be realized . as a result of fenco 's cumulative losses in certain jurisdictions , a determination was made to establish a valuation allowance against the related deferred tax assets as it is not more likely than not that such assets will be realized . for all other jurisdictions , management believes that it is more likely than not that future taxable income will be sufficient to realize the recorded deferred tax assets . in evaluating this ability , management considers long-term agreements and remanufactured core purchase obligations with our major customers that expire at various dates through march 2019. management also periodically compares the forecasts to actual results . even though there can be no assurance that the	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources the following is a discussion of the company on a consolidated basis , including fenco . however , the company has separate loan agreements and accounts payable and manages its cash for its rotating electrical segment separately from fenco . overview at march 31 , 2013 , we had consolidated negative working capital of $ 67,142,000 , a ratio of current assets to current liabilities of 0.7:1 , and cash of $ 19,434,000 , compared to negative working capital of $ 2,188,000 , a ratio of current assets to current liabilities of 1:1 , and cash of $ 32,617,000 at march 31 , 2012. at march 31 , 2013 , our rotating electrical segment had working capital of $ 32,676,000 , a ratio of current assets to current liabilities of 1.5:1 , and cash of $ 19,346,000 compared to working capital of $ 15,332,000 , a ratio of current assets to current liabilities of 1.2:1 , and cash of $ 32,379,000 at march 31 , 2012 . 38 during fiscal 2013 , we used cash generated from the use of our receivable discount programs with certain of our major customers , from the private placement of our common stock , and our loans as our primary sources of liquidity . these sources were primarily used to pay down our accounts payable balances , towards the integration of our fenco acquisition , and pay for the capital expenditure obligations . for our rotating electrical business , we believe our cash on hand , short-term investments , use of receivable discount programs with certain of our major customers , amounts available under our credit agreement , and other sources are sufficient to satisfy our expected future working capital needs , repayment of the current portion of our term loans , capital lease commitments , and capital expenditure obligations over the next twelve months . recent developments since our acquisition of fenco on may 6 , 2011 , we have been implementing our undercar product line turnaround plan and our top priority continued to be improvement of the financial performance of our undercar product line business .
to support the commercial launch of prosigna , we added a team of experienced oncology sales , marketing , market access and medical affairs professionals , resulting in increased operating expenses . in february 2015 , we combined our two separate sales teams into a single organization selling our entire suite of products , targeted primarily toward major academic medical centers and biopharmaceutical companies . we expect prosigna sales growth to be dependent on the installation of more systems , inclusion of prosigna in important breast cancer treatment guidelines and reimbursement by third-party payors becoming more broadly available . we use third-party contract manufacturers to produce the two instruments comprising the ncounter analysis system . we manufacture consumables at our seattle , washington facility . this operating model is designed to be capital efficient and to scale efficiently as our product volumes grow . we focus a substantial portion of our resources on developing new technologies , products and solutions . we invested $ 21.4 million , $ 15.0 million and $ 11.6 million in 2014 , 2013 and 2012 , respectively , in research and development and intend to continue to make significant investments in research and development . in march 2014 , we entered into a collaboration agreement with celgene corporation pursuant to which we are working collaboratively with celgene to develop , seek regulatory approval for , and commercialize a companion diagnostic assay for use in screening patients with diffuse large b-cell lymphoma . we received an upfront payment of $ 5.8 million in june 2014 upon our delivery of certain information to celgene . we also achieved and were paid for certain development-related milestones totaling $ 6.0 million during 2014 and recognized the related revenue according to the proportional performance model . we are eligible to receive up to $ 11.0 million in additional success-based payments related to regulatory milestones . we will retain all commercial rights to the diagnostic test developed under this collaboration and , assuming success in the clinical trial process , and subject to regulatory approval , expect to generate revenues from the sale of the resulting in vitro diagnostic kits . our total revenue increased to $ 47.6 million in 2014 from $ 31.4 million in 2013 and $ 23.0 million in 2012 , which was driven primarily by the sale of additional ncounter analysis systems and consumables for use on our growing installed base of instruments . historically , we have generated a substantial majority of our revenue from sales to customers in north america ; however , recently , sales revenue has been growing more rapidly outside north america and we believe this trend may continue . we have never been profitable and had net losses of $ 50.0 million , $ 29.3 million , and $ 17.7 million in 2014 , 2013 and 2012 , respectively . as of december 31 , 2014 , our accumulated deficit was $ 176.9 million . key financial metrics we are organized as , and operate in , one reportable segment , which is the development , manufacture and commercialization of instruments , consumables and services for efficiently profiling the activity of hundreds of genes simultaneously from a single tissue sample . our chief operating decision maker is the chief executive officer , who manages our operations and evaluates our financial performance on a total company basis . our principal operations and decision-making functions are located at our corporate headquarters in the united states . until the fourth quarter of 2013 , we operated in two reportable segments , our life sciences business and our diagnostics business . in november 2013 , our ncounter dx analysis system with flex configuration was launched , enabling customers to perform both research and diagnostic testing on the same instrument . we have one sales force that now sells these systems to both research and clinical testing labs , and we launched our first product that can be used for both research and diagnostic testing , ncounter elements reagents . as a result of these fundamental changes to our business , we began operating the company as a single reportable segment during the fourth quarter of 2013 . -55- revenue we generate revenue from the sale of our products and related services . for a description of our revenue recognition policies , see the section of this report captioned critical accounting policies and significant estimatesrevenue recognition. product revenue our products consist of our ncounter analysis system and related consumables , including prosigna in vitro diagnostic kits . our ncounter analysis system typically consists of one ncounter digital analyzer and one ncounter prep station . the u.s. list price of one research use only ncounter analysis system flex is $ 265,000. outside the united states , depending on the country , the list price is generally higher . the u.s. list price of one ncounter dx analysis system is $ 285,000. systems are sold to distributors at a discount to list price . our customer base is primarily composed of academic institutions , government laboratories , biopharmaceutical companies and clinical laboratories that perform analyses or testing using our ncounter analysis system and purchase related consumables , potentially including prosigna kits . for our research customers , related consumables include ( 1 ) custom codesets , which we manufacture to the specific requirements of an individual researcher , ( 2 ) panels , which are standard pre-manufactured codesets , ( 3 ) ncounter elements reagents , and ( 4 ) master kits , which are ancillary reagents , cartridges , tips and reagent plates required to setup and process samples in our instruments . product revenue also includes payments for instrument installation . since 2010 , our average consumables revenue per installed system has exceeded $ 100,000 per year . for our clinical laboratory customers , related consumables include prosigna in vitro diagnostic kits and ncounter elements reagents . story_separator_special_tag the average 2014 sales price for direct sales was approximately 6 % greater than the average sales price to distributors in the same period . the increase in consumables revenue was primarily driven by growth in our installed base of instruments as the annualized pull-through remained over $ 100,000 per installed system in 2014 and 2013. the increase in service revenue was primarily related to an increase in the number of instruments covered by service contracts . cost of product and service revenue ; gross profit ; and gross margin replace_table_token_7_th the increase in cost of product and service revenue for 2014 was related to the increased volume of instruments , consumables , in vitro diagnostic kits and services sold . product and service gross margin was -61- approximately the same for both periods . although gross margin for instrument revenues in 2014 improved slightly by 1.7 percentage points over 2013 , this was largely offset by a 1.0 percentage point reduction in gross margin for consumables , in vitro diagnostic kits and service . research and development expense replace_table_token_8_th the increases in research and development expense in 2014 reflected a $ 4.1 million increase in personnel-related expenses primarily to support the advancement of our ncounter technology . in addition , there was a $ 1.5 million increase in engineering costs for development of the next generation of our ncounter system and an increase in costs to support the celgene collaboration agreement . partially offsetting the increase was a reduction of $ 0.4 million in clinical study costs . the remaining $ 1.2 million change was due to various other operating expense fluctuations that were individually immaterial . selling , general and administrative expense replace_table_token_9_th the increases in selling , general and administration expense in 2014 were primarily attributable to a $ 17.3 million increase in staffing and personnel-related costs to support sales and marketing and administration ; and increased external marketing and other consulting costs of $ 3.2 million . partially offsetting the increase was a reduction of $ 1.8 million in external legal costs . the remaining $ 3.0 million change was due to various other operating expense fluctuations that were individually immaterial . other income ( expense ) replace_table_token_10_th the increase in interest expense in 2014 was related to the costs incurred to pay off our former credit facility in april 2014 and an overall increase in borrowing . in 2014 , we incurred and recorded $ 1.4 million of interest expense related to the repayment of our former credit facility , including a loss on extinguishment of debt of $ 0.6 million . long-term debt outstanding increased to $ 30.9 million as of december 31 , 2014 as compared to $ 18.3 million as of december 31 , 2013. the average net debt balance was $ 22.5 million in 2014 compared to $ 16.7 million in 2013. the revaluation of the preferred stock warrant liability in 2013 resulted from a re-measurement of the fair value of preferred stock warrants using the black-scholes option pricing model , which was primarily impacted -62- by a decrease in the valuation of the underlying stock . upon closing of our initial public offering in july 2013 , all outstanding warrants to purchase preferred stock converted into warrants to purchase common stock . as a result , the preferred stock warrant liability was reclassified to stockholders ' equity . comparison of years ended december 31 , 2013 and 2012 revenue replace_table_token_11_th instrument revenue increased significantly for the year ended december 31 , 2013 due to an increase in the number of instruments sold , including from the launch of our ncounter dx analysis system . this increase was partially offset by a reduction in average selling price attributable to increased sales to distributors , which are priced lower than direct sales , and increased customer incentives . the increase in consumables revenue was driven by growth in our installed base of instruments . the increase in service revenue was primarily related to an increase in the number of instruments covered by service contracts . cost of product and service revenue ; gross profit ; and gross margin replace_table_token_12_th the increase in cost of revenue in 2013 was related to the increased volume of both instruments and consumables sold . gross margin improved due to cost efficiencies associated with increased consumables production volume and several large custom consumable orders with unusually low per unit manufacturing costs . these improvements were partially offset by a shift in product mix toward instruments . research and development expense replace_table_token_13_th the increase reflected a $ 2.9 million increase in personnel-related expenses to support the advancement of our ncounter technology and clinical development of prosigna and a $ 1.5 million increase in engineering costs for the development of the next generation of our ncounter system . decreases in prosigna clinical study costs of $ 1.0 million , after completion of the abcsg8 study in late 2012 , partially offset the increases . -63- selling , general and administrative expense replace_table_token_14_th the increase in 2013 was primarily attributable to $ 6.8 million of increased staffing and personnel-related costs to support sales and marketing and administration ; $ 2.8 million of increased external marketing and other consulting costs related to the commercial launch of prosigna ; $ 2.5 million of increased legal costs , $ 0.5 million of increased facility-related costs , and $ 1.1 million of increased corporate professional fees and other public company costs . other income ( expense ) replace_table_token_15_th the increase in interest expense in 2013 was driven by increased borrowing under our credit facility during 2012 and 2013 , from $ 1.5 million as of december 31 , 2011 to $ 13.0 million as of december 31 , 2012 and to $ 18.0 million as of december 31 , 2013. the increase in other income from the revaluation of the preferred stock warrant liability resulted from a re-measurement of the fair value of preferred	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources as of december 31 , 2014 , we had cash , cash equivalents and short-term investments of $ 72.2 million , compared to $ 42.7 million as of december 31 , 2013. we believe our existing cash , cash equivalents and short-term investments will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months . however , we may need to raise additional capital to expand the commercialization of our products , fund our operations and further our research and development activities . our future funding requirements will depend on many factors , including : market acceptance of our products ; the cost and timing of establishing additional sales , marketing and distribution capabilities ; the cost of our research and development activities ; the cost and timing of regulatory clearances or approvals ; the effect of competing technological and market developments ; the nature and timing of any additional companion diagnostic development collaborations we may establish ; and the extent to which we acquire or invest in businesses , products and technologies , although we currently have no commitments or agreements relating to any of these types of transactions . if we require additional funds in the future , we may not be able to obtain such funds on acceptable terms , or at all . if we raise additional funds by issuing equity or equity-linked securities , our stockholders may experience dilution . debt financing , if available , may involve covenants restricting our operations or our ability to incur additional debt . any debt or additional equity financing that we raise may contain terms that are not favorable to us or our stockholders . if we raise additional funds through collaboration and licensing arrangements with third -64- parties , it may be necessary to relinquish some rights to our technologies or our products , or grant licenses on terms that are not favorable to us . if we are unable to raise adequate funds , we may have to liquidate some or all of our assets , or delay , reduce the scope of or eliminate some or all of our development programs .
we had a working capital deficiency , accumulated deficit from recurring net losses incurred for the current and prior years as at september 30 , 2011 and significant short-term debt obligations maturing in less than one year . these factors raise substantial doubts about our ability to continue as a going concern . accordingly , we have continued to develop a strategic plan to continue to generate a positive cash flow from operating activities for the fiscal years ending september 30 , 2012 and 2013. under this plan , we will continue to increase our presence in the oem market both domestically and internationally with more aggressive marketing strategies expand and secure our market base . we will also continue to implement reductions of both manufacturing costs and operating expenses to improve profit margins as well as reduce receivable turnover days through stronger credit controls . financial statement presentation net revenues . our net revenues represent the invoiced value of our products sold , net of value added taxes , or vat , sales returns , trade discounts and allowances . we are subject to vat , which is levied on most of our products at the rate of 17 % on the invoiced value of our products . provision for sales returns are recorded as a reduction of revenue in the same period that revenue is recognized . the provision for sales returns represents our best estimate of the amount of goods that will be returned from our customers based on historical sales returns data . cost of revenues . cost of revenues consists primarily of material costs , employee remuneration for staff engaged in production activity , share-based compensation , depreciation and related expenses that are directly attributable to the production of products . cost of revenues also includes write-downs of inventory to lower of cost or market . cost of revenues from the sales of battery packs includes the fees we pay to pack manufacturers for assembling our prismatic cells into battery packs . research and development expenses . research and development expenses primarily comprise of remuneration for r & d staff , share-based compensation , depreciation and maintenance expenses relating to r & d equipment , and r & d material costs . sales and marketing expenses . sales and marketing expenses consist primarily of remuneration for staff involved in selling and marketing efforts , including staff engaged in the packaging of goods for shipment , advertising cost , depreciation , share-based compensation and travel and entertainment expenses . we do not pay slotting fees to retail companies for displaying our products , engage in cooperative advertising programs , participate in buy-down programs or similar arrangements . no material estimates are required by management to determine our actual marketing or advertising costs for any period . 43 general and administrative expenses . general and administrative expenses consist primarily of employee remuneration , share-based compensation , professional fees , insurance , benefits , general office expenses , depreciation , liquidated damage charge and bad debt expenses . property , plant and equipment impairment charges . impairment charges consist primarily of impairment losses for long-lived assets . these losses reflect the amounts by which the carrying values of these assets exceed their estimated fair value as determined by their estimated future discounted cash flows . government grant income . government grant income for the year ended september 30 , 2011 mainly consisted of receipt of grants to fund certain lithium battery research projects and to subsidize the payment for land use rights of bak industrial park . no present or future obligation arises from the receipt of such amount . finance costs , net . finance costs consist primarily of interest income , interest on bank loans , net of capitalized interest , and bank charges . income taxes . under prc income tax laws and regulations , before january 1 , 2008 , a fie , such as each of our wholly-owned prc subsidiaries , was generally subject to an enterprise income tax rate of 33.0 % , which included a 30.0 % state income tax and a 3.0 % local income tax . however , from at least calendar year 2002 through calendar year 2007 , an enterprise recognized as a manufacturing enterprise located in special economic zone under prc tax laws was entitled to a preferential income tax rate of 15 % . moreover , a foreign-invested manufacturing enterprise , starting from its first profitable calendar year after offset of accumulated tax losses , was entitled to a two-year exemption from enterprise income tax followed by a three-year 50 % reduction in its enterprise income tax rate , also referred to herein as the tax holiday. an enterprise qualified for such treatment may receive a further tax rate reduction related to the size of qualified capital contributions received . in addition , from at least calendar year 2002 through calendar year 2007 , an enterprise qualified as an advanced technology enterprise under prc tax law also was entitled to a 50 % reduction of income taxes . on march 16 , 2007 , the national people 's congress of china passed the eit law , and on november 28 , 2007 , the state council of china passed its implementing rules , both of which took effect on january 1 , 2008. the eit law unifies the application scope , tax rate , tax deduction and preferential policy for both domestic enterprises and fies . according to the eit law , the applicable income tax rate for shenzhen bak , bak electronics and bak tianjin will be 25 % after their preferential tax holidays and the transition period have ended . story_separator_special_tag net revenues from sales of cylindrical cells decreased to $ 43.2 million in the year ended september 30 , 2010 , from $ 55.3 million in fiscal year 2009 , a decrease of $ 12.2 million , or 22.0 % , due to a decrease in our average selling prices of 18.6 % due to implementing a temporary pricing competition strategy to maintain and increase our market share in the oem market , and a decrease in sales volume of 4.2 % as result of fierce competition . we sold $ 689,000 in steel-case cells in the year ended september 30 , 2010 as compared to $ 5.0 million in the year ended september 30 , 2009. this change was attributable primarily to our long-term strategic reduction and suspension of steel-case cell production in january 2009 which was designed to increase our production capacity of aluminum-case cells for sale to the oem market and to take advantage of the greater sales prospects and lower costs of aluminum-case cells . we sold $ 10.1 million in lithium polymer cells for the year ended september 30 , 2010 , compared to $ 14.3 million in lithium polymer cells in fiscal year 2009 , a decrease of $ 4.1 million , or 28.9 % , resulting from a 27.0 % decrease in sales volume and a 2.6 % decrease in average selling price as result of fierce competition . we also sold approximately $ 1.8 million in high-power lithium battery cells for the year ended september 30 , 2010 , as compared to $ 180,000 in high-power lithium battery cells in fiscal year 2009 , due to our sale of sample products used in electric buses , electric vehicles , electric bicycles , power tools , ups , and other applications from our tianjin facility . 48 cost of revenues . cost of revenues increased to $ 192.1 million for the year ended september 30 , 2010 , as compared to $ 184.4 million for fiscal year 2009 , an increase of $ 7.8 million , or 4.2 % . the increase in cost of revenues correlates to an increase in sales volume over the year ended september 30 , 2010 , and a significant write down of obsolete inventory . gross profit . gross profit for the year ended september 30 , 2010 was $ 22.7 million , or 10.6 % of net revenues , as compared to gross profit of $ 26.8 million , or 12.7 % of net revenues , for fiscal year 2009. our decrease in gross profit as a percentage of net revenues primarily was due to the decrease in average selling price of prismatic battery cells and cylindrical battery cells resulting in lower gross margin during the year ended september 30 , 2010 , because we adopted a temporary competitive pricing strategy for cylindrical battery cells to increase their market share in the oem market and sold slow-moving inventories at discount to improve our operating cash flow . research and development expenses . research and development expenses increased to $ 7.4 million for the year ended september 30 , 2010 , as compared to $ 5.6 million for fiscal year 2009 , an increase of $ 1.7 million , or 31.1 % . salaries and welfare related to r & d staffs increased $ 1.4 million primarily due to increased basic salaries and benefits in response to guidance issued to shenzhen-based companies by relevant local government authorities during the three months ended june 30 , 2010 and effective july 1 , 2010. the cost of research materials also increased by $ 398,000 , due to increased research projects required to support the development of high-power lithium battery cells . sales and marketing expenses . sales and marketing expenses increased to $ 8.9 million for the year ended september 30 , 2010 as compared to $ 6.2 million for fiscal year 2009 , an increase of $ 2.7 million , or 43.4 % , primarily due to increased packing expenses of $ 148,000 and advertising expenses of $ 95,000 , resulting from more intensive sales effort during the year ended september 30 , 2010. salaries and welfare increased $ 1.3 million primarily due to increased basic salaries and benefits in response to guidance issued to shenzhen-based companies by relevant local government authorities during the three months ended june 30 , 2010 and effective july 1 , 2010. equity-based compensation included in sales and marketing expenses increased by $ 275,000 due to compensation charges applied to the grant of stock options to employees in our sales department . as a percentage of revenues , sales and marketing expenses have increased to 4.1 % for the year ended september 30 , 2010 , from 2.9 % for fiscal year 2009 , primarily due to the significant increase in revenues supported by marketing and sales . general and administrative expenses . general and administrative expenses increased to $ 27.1 million , or 12.6 % of revenues , for the year ended september 30 , 2010 as compared to $ 22.0 million , or 10.4 % of revenues , for fiscal year 2009 , an increase of $ 5.1 million , or 23.4 % . bad debt expenses increased by $ 2.7 million due to the provision charged following an assessment of account collectability in the fourth quarter of 2010. salaries and welfare increased $ 554,000 primarily due to increased basic salaries and benefits under guidance from the relevant local governments during the year ended september 30 , 2010. we also recognized an exchange loss of $ 1.3 million for the year ended september 30 , 2010 , compared with exchange loss of $ 49,000 for the year ended september 30 , 2009. as described under item 3. legal proceedings make good settlements we have entered into settlement agreements pursuant to which we have issued shares to certain shareholders that purchased shares in a january 20 , 2005 private placement transaction	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources we have historically financed our liquidity requirements from a variety of sources , including short-term bank loans , long-term bank loans and bills payable under bank credit agreements , sale of bills receivable and issuance of capital stock . as of september 30 , 2011 , we had cash and cash equivalents of $ 24.9 million . in addition , we had pledged deposits amounting to $ 5.7 million . typically , banks will require borrowers to maintain deposits of approximately 10 % to 100 % of the outstanding loan balances and bills payable . the individual bank loans have maturities ranging from three to twelve months which coincides with the periods the cash remains pledged to the banks . as of september 30 , 2011 , we had access to $ 242.4 million in short-term credit facilities and $ 31.3 million in long-term credit facilities . as of september 30 , 2011 , the principal outstanding amounts included short-term bank loans of $ 139.7 million under credit facilities , long-term bank loans of $ 23.5 million maturing within one year and long-term bank loans of $ 15.0 million maturing in over one year , and bills payable of $ 50.2 million under credit facilities , leaving $ 59.5 million of short-term funds available under our credit facilities for additional cash needs . in july 2008 , a $ 60.0 million shelf registration statement was declared effective by the sec , pursuant to which we raised $ 36.6 million in gross proceeds from sales of common stock and issued common stock warrants exercisable for up to $ 21.6 million in additional gross proceeds . none of these warrants were exercised before their expiration . this shelf registration statement has expired .
even though wood costs moderated in the second half of 2019 , they had a negative impact on earnings in 2019. equity earnings decreased in 2019 due to lower ilim earnings , driven by the challenging global pulp market dynamics . looking ahead to the first quarter 2020 , as compared to the fourth quarter of 2019 , in our industrial packaging business , we expect lower price and mix on the flow-through of prior price index movements . volume is expected to be seasonally lower in north america . operations and costs are expected to be negatively impacted by the non-repeat of a favorable inventory valuation adjustment recognized in the fourth quarter , as well as higher unabsorbed fixed costs associated with the riverdale mill conversion . maintenance outage expense is expected to be higher , and input costs are expected to be higher seasonally . in our global cellulose fibers business , we expect lower price and mix on the impact of prior price index movements . volume is expected to improve driven by higher fluff pulp shipments . operations and costs are expected to negatively impact earnings due to the non-repeat of favorable items recognized in the fourth quarter . maintenance outage expenses are expected to increase while input costs are expected to remain stable . in our printing papers business , flow-through of prior negative price movement is expected to be offset by improved geographic mix . volume is expected to be down mostly due to seasonally lower volumes in brazil . operations and costs are 19 expected to have a favorable impact on earnings mostly due to the non-repeat of an unfavorable inventory valuation adjustment recognized in the fourth quarter , as well as improved fixed cost absorption in north america . maintenance outage expenses are expected to increase while input costs should remain stable . lastly , we expect lower equity earnings from our ilim joint venture on the non-repeat of the fourth quarter foreign exchange gain . looking ahead to the full-year 2020 , we expect to generate solid cash flows despite earnings headwinds , by continuing to leverage the flexibility of the company to manage costs , capital spending and working capital . earnings are expected to be negatively impacted by price carryover from 2019 , as well as the impact of the january 2020 containerboard index movement . earnings are also expected to be negatively impacted by higher planned maintenance outage expense and costs related to the riverdale conversion , including unabsorbed fixed costs during the conversion process . we plan to offset anticipated inflation through deliberate improvement initiatives . the fundamentals of our packaging and fluff pulp businesses are solid - we believe we are well positioned to capture growth while continuing to optimize the company 's value chain to position us with positive momentum as we navigate through 2020. lastly , we intend to continue to make choices for the use of the company 's strong cash generation that are consistent with our capital allocation framework in order to drive long-term value creation . adjusted operating earnings and adjusted operating earnings per share are non-gaap measures and are defined as net earnings from continuing operations ( a gaap measure ) excluding special items and non-operating pension expense . net earnings ( loss ) and diluted earnings ( loss ) per share attributable to common shareholders are the most directly comparable gaap measures . the company calculates adjusted operating earnings by excluding the after-tax effect of non-operating pension expense , items considered by management to be unusual ( special items ) and discontinued operations from the earnings reported under gaap . adjusted operating earnings per share is calculated by dividing adjusted operating earnings by diluted average shares of common stock outstanding . management uses this measure to focus on on-going operations , and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present consolidated operating results . the company believes that using this information , along with the most direct comparable gaap measure , provides for a more complete analysis of the results of operations . the following are reconciliations of earnings ( loss ) attributable to common shareholders to adjusted operating earnings ( loss ) attributable to common shareholders . additional detail is provided later in this form 10-k regarding the special items referenced in the charts below . replace_table_token_10_th replace_table_token_11_th replace_table_token_12_th 20 replace_table_token_13_th cash provided by operations totaled $ 3.6 billion and $ 3.2 billion for 2019 and 2018 , respectively . the company generated free cash flow of approximately $ 2.3 billion and $ 1.7 billion in 2019 and 2018 , respectively . free cash flow is a non-gaap measure and the most directly comparable gaap measure is cash provided by operations . management believes that free cash flow is useful to investors as a liquidity measure because it measures the amount of cash generated that is available , after reinvesting in the business , to maintain a strong balance sheet , pay dividends , repurchase stock , service debt and make investments for future growth . it should not be inferred that the entire free cash flow amount is available for discretionary expenditures . by adjusting for certain items that are not indicative of the company 's ongoing underlying operational performance , we believe that free cash flow also enables investors to perform meaningful comparisons between past and present periods . the following are reconciliations of free cash flow to cash provided by operations : replace_table_token_14_th replace_table_token_15_th the non-gaap financial measures presented in this form 10-k as referenced above have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results calculated in accordance with gaap . story_separator_special_tag ilim 's facilities include three paper mills located in bratsk , ust-ilimsk , and koryazhma , russia , with combined total pulp and paper capacity of over 3.5 million metric tons . ilim has exclusive harvesting rights on timberland and forest areas exceeding 19.5 million acres ( 7.88 million hectares ) . gpip on january 1 , 2018 , the company completed the transfer of its north american consumer packaging business , which includes its north american coated paperboard and foodservice businesses , to graphic packaging international partners , llc ( gpip ) , a subsidiary of graphic packaging holding company , in exchange for a 20.5 % ownership interest in gpip . gpip subsequently transferred the north american consumer packaging business to graphic packaging international , llc ( gpi ) , a wholly-owned subsidiary of gpip that holds the assets of the combined business . on january 29 , 2020 , the company exchanged approximately 19.0 % of the aggregate units owned by the company for an aggregated price of $ 250 million . after this transaction , the company 's ownership percentage in gpip is approximately 18.3 % . the company expects to record a gain on the exchange in the first quarter of 2020. products and brand designations appearing in italics are trademarks of international paper or a related company . business segment results the following tables present net sales and operating profit ( loss ) which is the company 's measure of segment profitability . industrial packaging demand for industrial packaging products is closely correlated with non-durable industrial goods production , as well as with demand for processed foods , poultry , meat and agricultural products . in addition to prices and volumes , major factors affecting the profitability of industrial packaging are raw material and energy costs , freight costs , mill outage costs , manufacturing efficiency and product mix . industrial packaging in millions 2019 2018 net sales $ 15,326 $ 15,900 operating profit ( loss ) $ 2,076 $ 2,277 industrial packaging net sales for 2019 decreased 4 % to $ 15.3 billion compared with $ 15.9 billion in 2018 . operating profits in 2019 were 9 % lower than in 2018 . comparing 2019 with 2018 , benefits from lower input costs ( $ 124 million ) and lower maintenance outage costs ( $ 22 million ) were more than offset by lower average sales price and an unfavorable mix ( $ 61 million ) , lower sales volumes ( $ 107 million ) and higher operating costs ( $ 179 million ) . north american industrial packaging in millions 2019 2018 net sales ( a ) $ 13,509 $ 14,187 operating profit ( loss ) $ 2,043 $ 2,307 ( a ) includes intra-segment sales of $ 118 million for 2019 and $ 233 million for 2018. north american industrial packaging 's sales volumes decreased in 2019 compared with 2018 for export containerboard , primarily due to customer destocking as customers exited 2018 with high inventory levels which persisted through the first half of 2019. box shipments were also lower , reflecting weaker demand and the impact of customer gains and losses . in 2019 , the business took about 1.4 million tons of total maintenance and economic downtime compared with 0.5 million tons of total downtime in 2018. average sales prices were significantly lower primarily due to lower export containerboard prices , which were partially offset by higher sales prices for boxes . input costs were substantially lower , primarily for recycled fiber . planned maintenance downtime costs were $ 23 million lower in 2019 than in 2018. operating costs increased due to inflation , but were mostly offset by strong mill manufacturing operations . earnings benefited from a favorable inventory valuation adjustment in 2019 , compared with an unfavorable inventory valuation adjustment in 2018 . 26 looking ahead to the first quarter of 2020 , compared with the fourth quarter of 2019 , sales volumes for boxes are expected to be seasonally lower . shipments of containerboard to export markets are also expected to be lower . average sales margins for boxes are expected to be lower , reflecting the recent price index movements . input costs , primarily for wood and energy , are expected to be relatively flat . planned maintenance downtime costs are expected to be about $ 90 million higher as we move into a high maintenance outage quarter . operating costs are anticipated to be higher , reflecting the impact of unabsorbed fixed costs related to the riverdale conversion . emea industrial packaging in millions 2019 2018 net sales $ 1,335 $ 1,355 operating profit ( loss ) $ ( 17 ) $ ( 73 ) emea industrial packaging 's sales volumes in 2019 were lower than in 2018 , reflecting weaker economic conditions in turkey and a slower fruit and vegetable season in morocco . average sales margins improved significantly in all regions driven by lower containerboard costs and stable sales prices for boxes . other input costs were flat . planned maintenance downtime costs were also flat . operating costs were lower due to the ramp-up of the madrid , spain mill and the benefits of our optimization initiatives , partially offset by inflation in turkey . earnings also benefited from the box plant acquisitions completed in the first half of 2019. earnings were negatively affected by unfavorable foreign currency impacts , primarily in turkey . entering the first quarter of 2020 , compared with the fourth quarter of 2019 , sales volumes are expected to be seasonally higher . average sales margins are expected to be slightly higher reflecting lower containerboard costs . planned maintenance downtime costs are expected to be about $ 3 million higher . input costs should be stable . operating costs are expected to be higher , driven by inflation . replace_table_token_20_th brazilian industrial packaging 's sales volumes increased in 2019 compared with 2018 for boxes and	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash provided by operating activities cash provided by operations , including discontinued operations , totaled $ 3.6 billion in 2019 , compared with $ 3.2 billion for 2018 . cash provided by working capital components ( accounts receivable , contract assets and inventory less accounts payable and accrued liabilities , interest payable and other ) totaled $ 342 million in 2019 , compared with cash used by working capital components of $ 439 million in 2018 . cash dividends received from equity investments were $ 273 million in 2019 , compared with $ 153 million in 2018 . investment activities including discontinued operations , the cash outflow from investment activities in 2019 decreased from 2018 , as 2018 included higher capital spending . the company maintains an average capital spending target around depreciation and amortization levels , or modestly above , due to strategic plans over the course of an economic cycle . capital spending was $ 1.3 billion in 2019 , or 98 % of depreciation and amortization , compared with $ 1.6 billion in 2018 , or 118 % of depreciation and amortization . across our segments , capital spending as a percentage of depreciation and amortization ranged from 61.6 % to 116.1 % in 2019 . the following table shows capital spending by business segment for the years ended december 31 , 2019 and 2018 . replace_table_token_24_th capital spending in 2020 is expected to be approximately $ 1.0 billion , or 74 % of depreciation and amortization , including approximately $ 250 million of strategic investments .
and hedging plans ; benefits from resolution of tax matters ( 8 ) ; ceo transition remuneration ( 9 ) ; incremental expenses related to the malware incident and the u.s. tax reform discrete impacts ( 10 ) . similarly , within adjusted eps , our equity method investment net earnings exclude our proportionate share of our investees ' unusual or infrequent items ( 11 ) . we also evaluate growth in our adjusted eps on a constant currency basis ( 4 ) . 52 ( 1 ) when items no longer impact our current or future presentation of non-gaap operating results , we remove these items from our non-gaap definitions . during 2017 , we added to the non-gaap definitions the exclusion of : benefits from the resolution of tax matters ( see footnote ( 8 ) below ) , ceo transition remuneration ( see footnote ( 9 ) below ) , incremental expenses related to the malware incident ( discussed under malware incident ) and the u.s. tax reform discrete impacts ( see footnote ( 10 ) below ) . ( 2 ) divestitures include completed sales of businesses and exits of major product lines upon completion of a sale or licensing agreement . ( 3 ) we continue to have an ongoing interest in the legacy coffee business we deconsolidated in 2015 as part of the jde coffee business transactions . for historical periods prior to the july 15 , 2015 coffee business deconsolidation , we have reclassified any net revenue or operating income from the historical coffee business and included them where the coffee equity method investment earnings are presented within adjusted eps . as such , organic net revenue and adjusted operating income in all periods do not include the results of our legacy coffee businesses , which are shown within adjusted eps . ( 4 ) constant currency operating results are calculated by dividing or multiplying , as appropriate , the current-period local currency operating results by the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period u.s. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period . ( 5 ) non-gaap adjustments related to the 2014-2018 restructuring program reflect costs incurred that relate to the objectives of our program to transform our supply chain network and organizational structure . costs that do not meet the program objectives are not reflected in the non-gaap adjustments . refer to our annual report on form 10-k for the year ended december 31 , 2016 for more information on the 2012-2014 restructuring program . ( 6 ) during the third quarter of 2016 , we began to exclude unrealized gains and losses ( mark-to-market impacts ) from outstanding commodity and forecasted currency transaction derivatives from our non-gaap earnings measures until such time that the related exposures impact our operating results . since we purchase commodity and forecasted currency transaction contracts to mitigate price volatility primarily for inventory requirements in future periods , we made this adjustment to remove the volatility of these future inventory purchases on current operating results to facilitate comparisons of our underlying operating performance across periods . we also discontinued designating commodity and forecasted currency transaction derivatives for hedge accounting treatment . to facilitate comparisons of our underlying operating results , we have recast all historical non-gaap earnings measures to exclude the mark-to-market impacts . ( 7 ) historically , we have recorded income from equity method investments within our operating income as these investments operated as extensions of our base business . beginning in the third quarter of 2015 , we began to record the earnings from our equity method investments in after-tax equity method investment earnings outside of operating income following the deconsolidation of our coffee business . refer to note 1 , summary of significant accounting policies , in our annual report on form 10-k for the year ended december 31 , 2016 for more information . ( 8 ) during 2017 , we recorded benefits from the reversal of tax liabilities in connection with the resolution of a brazilian indirect tax matter and settlement of pre-acquisition cadbury tax matters . see note 12 , commitments and contingenciestax matters , for additional information . ( 9 ) on november 20 , 2017 , dirk van de put succeeded irene rosenfeld as ceo of mondelēz international in advance of her retirement at the end of march 2018. in order to incent mr. van de put to join us , we provided him compensation with a total combined target value of $ 42.5 million to make him whole for incentive awards he forfeited or grants that were not made to him when he left his former employer . the compensation we granted took the form of cash , deferred stock units , performance share units and stock options . in connection with irene rosenfeld 's retirement , we made her outstanding grants of performance share units for the 2016-2018 and 2017-2019 performance cycles eligible for continued vesting and approved a $ 0.5 million salary for her service as chairman from january through march 2018. we refer to these elements of mr. van de put 's and ms. rosenfeld 's compensation arrangements together as ceo transition remuneration. we are excluding amounts we expense as ceo transition remuneration from our 2017 and future non-gaap results because those amounts are not part of our regular compensation program and are incremental to amounts we would have incurred as ongoing ceo compensation . as a result , in 2017 , we excluded amounts expensed for the cash payment to mr. van de put and partial vesting of his equity grants . story_separator_special_tag ( 2 ) refer to note 2 , divestitures and acquisitions , and note 5 , goodwill and intangible assets , for more information on trademark impairments . ( 3 ) refer to note 8 , financial instruments , note 16 , segment reporting , and non-gaap financial measures appearing earlier in this section for more information on these unrealized losses/gains on commodity and forecasted currency transaction derivatives . ( 4 ) refer to note 2 , divestitures and acquisitions , for more information on the acquisition of a biscuit business in vietnam . ( 5 ) refer to note 2 , divestitures and acquisitions , for more information on the 2017 sales of a confectionery business in france , a grocery business in australia and new zealand , certain licenses of khc-owned brands used in our grocery business within our europe region , sale of one of our equity method investments and sale of a confectionary business in japan . additionally , the 2016 amount includes a sale of a confectionery business in costa rica . ( 6 ) refer to note 2 , divestitures and acquisitions , for more information on the 2016 intangible asset sale in finland . ( 7 ) refer to note 12 , commitments and contingencies tax matters , for more information . primarily includes the reversal of tax liabilities in connection with the resolution of a brazilian indirect tax matter and settlement of pre-acquisition cadbury tax matters . ( 8 ) includes the historical results of our venezuelan subsidiaries prior to the december 31 , 2015 deconsolidation . refer to note 1 , summary of significant accounting policies currency translation and highly inflationary accounting : venezuela , for more information on the deconsolidation and remeasurement loss in 2015 . ( 9 ) refer to note 2 , divestitures and acquisitions , for more information on the jde coffee business transactions . ( 10 ) includes our historical global coffee business prior to the july 2 , 2015 deconsolidation . we reclassified the results of our historical coffee business from adjusted operating income and included them with equity method investment earnings in adjusted eps to facilitate comparisons of past and future coffee operating results . refer to note 2 , divestitures and acquisitions , and non-gaap financial measures appearing later in this section for more information . ( 11 ) historically , we have recorded income from equity method investments within our operating income as these investments operated as extensions of our base business . beginning in the third quarter of 2015 , to align with the accounting for jde earnings , we began to record the earnings from our equity method investments in equity method investment earnings outside of operating income . in periods prior to july 2 , 2015 , we have reclassified the equity method earnings from adjusted operating income to evaluate our operating results on a consistent basis . 56 adjusted eps : applying the definition of adjusted eps ( 1 ) , the adjustments made to diluted eps attributable to mondelēz international ( the most comparable u.s. gaap financial measure ) were to exclude 2014-2018 restructuring program costs ; impairment charges related to intangible assets ; mark-to-market impacts from commodity and forecasted currency transaction derivative contracts ; incremental expenses related to the malware incident ; acquisition integration costs ; divestiture-related costs ; net earnings from divestitures ; after-tax gains/losses on divestitures ; gain on sale of intangible assets ; benefits from the resolution of tax matters ; ceo transition remuneration ; losses on interest rate swaps no longer designated as accounting cash flow hedges due to changed financing and hedging plans ; losses on debt extinguishment and related expenses ; u.s. tax reform discrete net tax benefit ; venezuela historical operating results and remeasurement and deconsolidation losses ; the jde coffee business transactions gain , hedging gains and net incremental costs ; operating income from our historical coffee business ; equity method investment earnings reclassified to after-tax earnings in q3 2015 in connection with the coffee business transactions ; gain on equity method investment transactions ; and our proportionate share of unusual or infrequent items recorded by our jde and keurig equity method investees . we also evaluate adjusted eps on a constant currency basis . we believe adjusted eps provides improved comparability of underlying operating results . replace_table_token_29_th 57 replace_table_token_30_th ( 1 ) the tax expense/ ( benefit ) of each of the pre-tax items excluded from our gaap results was computed based on the facts and tax assumptions associated with each item , and such impacts have also been excluded from adjusted eps . for the year ended december 31 , 2017 , taxes for the : 2014-2018 restructuring program costs were $ ( 190 ) million , intangible asset impairment charges were $ ( 30 ) million , acquisition integration costs were zero , gain on equity method investment transactions were $ 15 million , net gain on divestitures were $ 7 million , net earnings on divestitures were $ 15 million , divestiture-related costs were $ 8 million , loss on debt extinguishment and related costs were $ ( 4 ) million , malware incident incremental costs were $ ( 27 ) million , benefits from resolution of tax matters were $ 75 million , equity method investee acquisition-related and other adjustments were $ 35 million , ceo transition remuneration were $ ( 5 ) million , mark-to-market gains/ ( losses ) from derivatives were $ ( 6 ) million and u.s. tax reform were $ ( 59 ) million . for the year ended december 31 , 2016 , taxes for the : 2014-2018 restructuring program costs were $ ( 288 ) million , intangible asset impairment charges were $ ( 37 ) million , gain on sale of intangible assets were $ 3 million , acquisition integration costs were zero , net earnings from divestitures were $ 40 million , divestiture-related	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	debt and borrowing arrangements , for more information on our loss on debt extinguishment and related expenses in connection with our debt discharge . ( 5 ) refer to note 14 , income taxes , for more information on the impact of the u.s. tax reform . ( 6 ) refer to note 2 , divestitures and acquisitions , for more information on the 2017 sale of one of our equity method investments and the 2016 acquisition of an interest in keurig . ( 7 ) includes our proportionate share of unusual or infrequent items , such as acquisition and divestiture-related costs , restructuring program costs and discrete u.s. tax reform impacts recorded by our jde and keurig equity method investees . ( 8 ) includes the historical results of our venezuelan subsidiaries prior to the december 31 , 2015 deconsolidation . refer to note 1 , summary of significant accounting policies currency translation and highly inflationary accounting : venezuela , for more information on the deconsolidation and remeasurement loss in 2015 . ( 9 ) refer to note 2 , divestitures and acquisitions , for more information on the jde coffee business transactions . net gains of $ 436 million in 2015 on the currency hedges related to the jde coffee business transactions were recorded in interest and other expense , net and are included in ( income ) /costs associated with the jde coffee business transactions of $ ( 0.01 ) in the table above .
our products and services are sold either directly or through designated channels to more than 10,000 companies , including some of the world 's leading engineering , procurement and construction ( `` epc `` ) firms , original equipment manufacturers , distributors and end users . we continue to build on our geographic breadth through our qrc network with the goal to be positioned as near to customers as possible for service and support in order to capture valuable aftermarket business . along with ensuring that we have the local capability to sell , install and service our equipment in remote regions , it is equally imperative to continuously 28 improve our global operations . we continue to expand our global supply chain capability to meet global customer demands and ensure the quality and timely delivery of our products . we continue to devote resources to improving the supply chain processes across our business segments to find areas of synergy and cost reduction and to improve our supply chain management capability to ensure it can meet global customer demands . we also remain focused on improving on-time delivery and quality , while managing warranty costs as a percentage of sales across our global operations , through the assistance of a focused continuous improvement process ( `` cip `` ) initiative . the goal of the cip initiative , which includes lean manufacturing , six sigma business management strategy and value engineering , is to maximize service fulfillment to customers through on-time delivery , reduced cycle time and quality at the highest internal productivity . in 2015 , we were challenged by broad-based capital spending declines , originating in the oil and gas industry , heightened pricing pressures and negative currency impacts caused by a stronger u.s. dollar . this was further compounded by economic and geo-political conditions in latin america , the middle east and china . in addition , we experienced lower than expected activity levels in our aftermarket business due to deferred spending of our customers ' repair and maintenance budgets . we expect that the current environment will persist into 2016 . to better align costs and improve long-term efficiency , we initiated realignment programs , inclusive of those associated with the sihi acquisition , to accelerate both short- and long-term strategic plans , including targeted manufacturing optimization through the consolidation of facilities , sg & a efficiency initiatives and transfer of activities from high-cost regions to lower-cost facilities . we currently estimate an approximate 18 % reduction in our global workforce from these realignment programs . with an expected total investment of approximately $ 400 million , including projects still under final evaluation , we expect the results of these realignment programs will deliver annualized run-rate savings of approximately $ 230 million with a portion realized in 2015 and an increasingly larger amount realized in 2016 and 2017. in addition , we are continuing to focus on our ongoing low-cost sourcing , including greater use of third-party suppliers and increasing our lower-cost , emerging market capabilities . for further discussion of our realignment programs see note 18 to our consolidated financial statements included in item 8 of this annual report . our markets the following discussion should be read in conjunction with the `` outlook for 2016 `` section included below in this md & a . our products and services are used in several distinct industries : oil and gas , chemical , power generation , water management , and a number of other industries that are collectively referred to as `` general industries . `` demand for most of our products depends on the level of new capital investment and planned and unplanned maintenance expenditures by our customers . the level of new capital investment depends , in turn , on capital infrastructure projects driven by the need for oil and gas , chemicals , power generation and water management , as well as general economic conditions . these drivers are generally related to the phase of the business cycle in their respective industries and the expectations of future market behavior . the levels of maintenance expenditures are additionally driven by the reliability of equipment , planned and unplanned downtime for maintenance and the required capacity utilization of the process . sales to epc firms and original equipment manufacturers are typically for large project orders and critical applications , as are certain sales to distributors . project orders are typically procured for customers either directly from us or indirectly through contractors for new construction projects or facility enhancement projects . the quick turnaround business , which we also refer to as `` short-cycle , `` is defined as orders that are received from the customer ( booked ) and shipped generally within six months of receipt . these orders are typically for more standardized , general purpose products , parts or services . each of our three business segments generate certain levels of this type of business . in the sale of aftermarket products and services , we benefit from a large installed base of our original equipment , which requires periodic maintenance , repair and replacement parts . we use our manufacturing platform and global network of qrcs to offer a broad array of aftermarket equipment services , such as installation , advanced diagnostics , repair and retrofitting . in geographic regions where we are positioned to provide quick response , we believe customers have traditionally relied on us , rather than our competitors , for aftermarket products due to our highly engineered and customized products . however , the aftermarket for standard products is competitive , as the existence of common standards allows for easier replacement of the installed products . as proximity of service centers , timeliness of delivery and quality are important considerations for all aftermarket products and services , we continue to selectively expand our global qrc capabilities to improve our ability to capture this important aftermarket business . story_separator_special_tag the decrease was primarily attributable to the 2014 gains noted below and decreased selling-related expenses . sg & a as a percentage of sales in 2014 decreased 30 basis points as compared with the same period in 2013 due primarily to a $ 13.4 million gain from the sale of the naval business in the first quarter of 2014 and a gain from certain legal matters in the fourth quarter of 2014 . 33 net earnings from affiliates replace_table_token_14_th net earnings from affiliates represents our net income from investments in eight joint ventures ( one located in each of chile , japan , saudi arabia , south korea , the united arab emirates , and india and two in china ) that are accounted for using the equity method of accounting . net earnings from affiliates in 2015 decrease d by $ 2.2 million primarily as a result of decreased earnings of our epd joint venture in south korea . net earnings from affiliates in 2014 decreased by $ 26.9 million as compared with 2013 primarily as a result of the ail transactions , which resulted in total pre-tax gains of $ 28.3 million recorded in net earnings from affiliates in 2013. operating income replace_table_token_15_th operating income in 2015 decrease d by $ 264.2 million , or 33.5 % , as compared with 2014 . the decrease was primarily a result of the $ 227.3 million decrease in gross profit and the $ 34.7 million increase in sg & a discussed above . the decrease included negative currency effects of approximately $ 46 million and $ 108.1 million of realignment expense . operating income in 2014 increased by $ 29.5 million , or 3.9 % , as compared with 2013. the increase included negative currency effects of approximately $ 23 million . the increase was primarily a result of the $ 26.5 million increase in gross profit and the $ 29.9 million decrease in sg & a discussed above , partially offset by the $ 28.3 million in pre-tax gains in 2013 from the ail transactions that did not recur in 2014. interest expense and interest income replace_table_token_16_th interest expense in 2015 increase d by $ 5.0 million as compared with 2014 . the increase was primarily attributable to interest expense associated with increased borrowings in 2015 related to our public offering of 500.0 million of euro senior notes in aggregate principal amount due march 17 , 2022 ( the `` 2022 eur senior notes `` ) issued on march 17 , 2015. interest expense in 2014 increased by $ 5.9 million as compared with 2013. the increase was attributable to interest expense associated with the senior notes issued in the fourth quarter of 2013. see note 10 to our consolidated financial statements included in item 8 of this annual report for definition and discussion of our various credit resources . interest income in 2015 increase d by $ 0.4 million as compared with 2014 . the increase was primarily attributable to higher average cash balances in 2015 as compared with 2014 . interest income in 2014 increase d by $ 0.3 million compared to 2013. the increase was primarily attributable to higher average cash balances in 2014 as compared with 2013. other ( expense ) income , net replace_table_token_17_th other expense , net increased $ 42.2 million from income of $ 2.0 million in 2014 to a loss of $ 40.2 million in 2015 . the increase was primarily due to a $ 57.0 million increase in losses arising from transactions in currencies other than our sites ' functional currencies , including the impact of the $ 18.5 million loss as a result of the first quarter of 2015 remeasurement of our bolivar-denominated venezuelan net monetary assets , partially offset by a $ 15.4 million increase in gains from foreign 34 exchange contracts . the changes are primarily due to the foreign currency exchange rate movements of the brazilian real , mexican peso and euro in relation to the u.s. dollar as compared with the same period in 2014. other income , net increased $ 16.3 million from a loss of $ 14.3 million in 2013 to a gain of $ 2.0 million in 2014. the increase was primarily due to a $ 12.8 million increase in gains from foreign exchange contracts and a $ 2.7 million decrease in losses arising from transactions in currencies other than our sites ' functional currencies . the change is primarily due to the foreign currency exchange rate movements of the mexican peso , japanese yen and euro in relation to the u.s. dollar . tax expense and tax rate replace_table_token_18_th the 2015 tax rate differed from the federal statutory rate of 35 % primarily due to tax impacts of the realignment programs , the non-deductible venezuelan exchange rate remeasurement loss and the establishment of a valuation allowance against our deferred tax assets in brazil in the amount of $ 12.6 million ( due to deteriorating economic conditions in brazil ) , substantially offset by the net impact of foreign operations , which included the impacts of lower foreign tax rates and changes in our reserves established for uncertain tax positions . our effective tax rate of 35.3 % for the year ended december 31 , 2015 increased from 28.4 % in 2014 due primarily to the unfavorable tax impacts described above . the 2014 and 2013 effective tax rates differed from the federal statutory rate of 35 % primarily due to the net impact of foreign operations , which included the impacts of lower foreign tax rates and changes in our reserves established for uncertain tax positions . on may 17 , 2006 , the tax increase prevention and reconciliation act of 2005 was signed into law , creating an exclusion from u.s. taxable income for certain types of foreign related party payments of dividends , interest , rents and royalties that , prior to 2006 , had been subject to u.s.	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flow analysis replace_table_token_24_th existing cash , cash generated by operations and borrowings available under our existing revolving credit facility are our primary sources of short-term liquidity . we monitor the depository institutions that hold our cash and cash equivalents on a regular basis , and we believe that we have placed our deposits with creditworthy financial institutions . our sources of operating cash generally include the sale of our products and services and the conversion of our working capital , particularly accounts receivable and inventories . our total cash balance at december 31 , 2015 was $ 366.4 million , compared with $ 450.4 million at december 31 , 2014 and $ 363.8 million at december 31 , 2013 . our cash provided by operating activities was $ 417.1 million , $ 571.0 million and $ 487.8 million in 2015 , 2014 and 2013 , respectively , which provided cash to support short-term working capital needs . working capital increased in 2015 due primarily to lower accounts payable of $ 113.6 million and higher inventory of $ 26.2 million , partially offset by lower accounts receivable of $ 50.4 million . during 2015 , we contributed $ 43.8 million to our defined benefit pension plans . working capital increased in 2014 due primarily to higher accounts receivable of $ 79.7 million , higher inventory of $ 35.5 million and lower accrued liabilities of $ 22.7 million , partially offset by higher accounts payable of $ 50.8 million . during 2014 , we contributed $ 43.5 million to our defined benefit pension plans . decreases in accounts receivable provided $ 50.4 million of cash flow in 2015 , as compared with uses of $ 79.7 million in 2014 and $ 53.8 million in 2013 . the decrease in accounts receivable in 2015 was partially attributable to lower sales during the period . we have experienced delays in collecting payment on our accounts receivable from the national oil company in venezuela , our primary venezuelan customer . these accounts receivable are primarily u.s. dollar-denominated and are not disputed , and we have not historically had write-offs relating to this customer .
under the original terms of the credit facility , borrowings bore interest at a per annum rate equal to , at the option of the company , either ( i ) a london interbank offered rate ( “ libor ” ) , subject to a 0 % libor floor plus a margin of 1.75 % to 2.75 % , based on the utilization of the credit facility ( the “ eurodollar rate ” ) or ( ii ) a fluctuating interest rate per annum equal to the greatest of ( a ) the rate of interest publicly announced by jpmorgan chase bank , n.a . as its prime rate , ( b ) the rate of interest published by the federal reserve bank of new york as the federal funds effective rate , ( c ) the rate of interest published by the federal reserve bank of new york as the overnight bank funding rate , or ( d ) a libor offered rate for a one month interest period , subject to a 0 % libor floor plus a margin of 0.75 % to 1.75 % , based on the utilization of the credit facility ( the “ reference rate ” ) . interest on borrowings that bear interest at the eurodollar rate shall be payable on the last day of the applicable interest period selected by the company , which shall be one , two , three , or six months , and interest on borrowings that bear interest at the reference rate shall be payable quarterly in arrears . the credit facility contains customary representations and affirmative covenants . the credit facility also contains customary negative covenants , which , among other things , and subject to certain exceptions , include restrictions on ( i ) liens , ( ii ) indebtedness , guarantees and other obligations , ( iii ) restrictions in agreements on liens and distributions , ( iv ) mergers or consolidations , ( v ) asset sales , ( vi ) restricted payments , ( vii ) investments , ( viii ) affiliate transactions , ( ix ) change of business , ( x ) foreign operations or subsidiaries , ( xi ) name changes , ( xii ) use of proceeds , letters of credit , ( xiii ) gas imbalances , ( xiv ) hedging transactions , ( xv ) additional subsidiaries , ( xvi ) changes in fiscal year or fiscal quarter , ( xvii ) operating leases , ( xviii ) prepayments of certain debt and other obligations , ( xix ) sales or discounts of receivables , and ( xx ) dividend payments . the credit parties are subject to certain financial covenants under the credit facility , as tested on the last day of each fiscal quarter , including , without limitation , ( i ) a maximum ratio of the company 's consolidated indebtedness ( subject to certain exclusions ) to earnings before interest , income taxes , depreciation , depletion , and amortization , exploration expense , and other non-cash charges ( “ ebitdax ” ) and ( ii ) a current ratio , as defined in the agreement , inclusive of the unused commitments then available to be borrowed , to not be less than 1.00 to 1.00 . 68 table of contents on june 18 , 2020 , in conjunction with the borrowing base redetermination , the company , together with certain of its subsidiaries , entered into the first amendment ( the “ first amendment ” ) to the credit facility ( as amended , restated , supplemented or otherwise modified ) to , among other things : ( i ) implement certain anti-cash hoarding provisions , including a weekly mandatory prepayment requirement with respect to the excess of the company 's consolidated cash balance over $ 35.0 million ; ( ii ) require that , in order to borrow or issue a letter of credit under the credit agreement , the consolidated cash balance not exceed the greater of $ 35.0 million ( both before and after giving effect to such borrowing or letter of credit issuance ) , or expenditures in respect of oil and gas properties in the ordinary course of business ( as agreed to by the administrative agent ) ; ( iii ) decrease the maximum permitted net leverage ratio from 4.00 to 3.50 and the maximum permitted leverage ratio for purposes of making a restricted payment , restricted investment or optional or voluntary redemption from 3.25 to 2.75 ; ( iv ) increase the eurodollar rate margin to 2.00 % to 3.00 % ; ( v ) increase the reference rate margin to 1.00 % to 2.00 % ; and ( vi ) amend certain other covenants and provisions . the company was in compliance with all covenants as of december 31 , 2020 and through the filing date of this report . our weighted-average interest rates on borrowings from the credit facility were 3.1 % and 4.4 % for the years ended december 31 , 2020 and 2019 , respectively . as of december 31 , 2020 and as of the date of filing , we had a zero balance on our credit facility . non-gaap financial measures adjusted ebitdax represents earnings before interest , income taxes , depreciation , depletion , and amortization , exploration expense , and other non-cash and non-recurring charges . adjusted ebitdax excludes certain items that we believe affect the comparability of operating results and can exclude items that are generally non-recurring in nature or whose timing and or amount can not be reasonably estimated . adjusted ebitdax is a non-gaap measure that we present because we believe it provides useful additional information to investors and analysts , as a performance measure , for analysis of our ability to internally generate funds for exploration , development , acquisitions , and to service debt . story_separator_special_tag for sales of entire working interests in unproved properties , gain or loss is recognized to the extent of the difference between the proceeds received and the net carrying value of the property . proceeds from sales of partial interests in unproved properties are accounted for as a recovery of costs unless the proceeds exceed the entire cost of the property . oil and natural gas reserve quantities and standardized measure our third-party petroleum consultant prepared our estimates of oil and natural gas reserves and associated future net revenues . while the sec has adopted rules which allow us to disclose proved , probable , and possible reserves , we have elected to disclose only proved reserves in this annual report on form 10-k. the sec 's revised rules define proved reserves as the quantities of oil and gas , which , by analysis of geoscience and engineering data , can be estimated with reasonable certainty to be economically producible - from a given date forward , from known reservoirs , and under existing economic conditions , operating methods , and government regulations - prior to the time at which contracts providing the right to operate expire , unless evidence indicates that renewal is reasonably certain , regardless of whether deterministic or probabilistic methods are used for the estimation . the project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time . our third party petroleum engineering consultant must make a number of subjective assumptions based on their professional judgment in developing reserve estimates . reserve estimates are updated annually and consider recent production levels and other technical information about each field . oil and natural gas reserve engineering is a subjective process of estimating underground accumulations of oil and natural gas that can not be precisely measured . the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment . periodic revisions to the estimated reserves and future cash flows may be necessary as a result of a number of factors , including reservoir performance , oil and natural gas prices , cost changes , technological advances , new geological or geophysical data , or other economic factors . accordingly , reserve estimates are generally different from the quantities of oil and natural gas that are ultimately recovered . we can not predict the amounts or timing of future reserve revisions . if such revisions are significant , they could significantly affect future amortization of capitalized costs and result in impairment of assets that may be material . revenue recognition sales of oil , natural gas , and ngls are recognized when performance obligations are satisfied at the point control of the product is transferred to the customer . the company 's contracts ' pricing provisions are tied to a market index , with certain adjustments based on , among other factors , whether a well delivers to a gathering or transmission line , quality of the oil or natural gas , and prevailing supply and demand conditions . as a result , the price of the oil , natural gas , and ngls fluctuates to remain competitive with other available oil , natural gas , and ngls supplies . please refer to part ii , item 8 , note 1 - summary of significant accounting policies for more information . we record revenue in the month production is delivered to the purchaser . payment is generally received within 30 to 60 days after the date of production . however , settlement statements for certain natural gas and ngls sales may not be received for 30 to 60 days after the date production is delivered , and as a result , we are required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product . we record the differences between our estimates and the actual amounts received for product sales in the month in which payment is received from the purchaser . for the period from january 1 , 2020 through december 31 , 2020 , revenue recognized in the reporting period related to performance obligations satisfied in prior reporting periods was not material . the company has interests with other producers in certain properties , in which case the company uses the entitlement method to account for gas imbalances . the company had no material gas imbalances as of december 31 , 2020 and 2019 . 71 table of contents impairment of proved properties we review our proved oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred and at least annually . we estimate the expected undiscounted future cash flows of our oil and natural gas properties and compare such undiscounted future cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable . if the carrying amount exceeds the estimated undiscounted future cash flows , we will adjust the carrying amount of the oil and natural gas properties to fair value . the factors used to determine fair value are subject to our judgment and expertise and include , but are not limited to , recent sales prices of comparable properties , the present value of future cash flows , net of estimated operating and development costs , using estimates of proved reserves , future commodity pricing , future production estimates , anticipated capital expenditures , and various discount rates commensurate with the risk and current market conditions associated with realizing the expected cash flows projected . because of the uncertainty inherent in these factors , we can not predict when or if future impairment charges for proved properties will be recorded . impairment of unproved properties the unproved property balance	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources below for additional discussion ; cash flows provided by operating activities for the year ended december 31 , 2020 was $ 158.8 million , as compared to cash flows provided by operating activities of $ 224.6 million during the year ended december 31 , 2019. please refer to liquidity and capital resources below for additional discussion ; proved reserves of 118.2 mmboe as of december 31 , 2020 decreased by 3 % when compared to proved reserves as of december 31 , 2019 ; and capital expenditures , inclusive of accruals , were $ 67.7 million during the year ended december 31 , 2020 , which was within guidance . 62 table of contents rocky mountain infrastructure the company 's gathering , treating , and production facilities , maintained under its rocky mountain infrastructure , llc ( “ rmi ” ) subsidiary , provide many operational benefits to the company and provide cost economies of a centralized system . the rmi facilities reduce gathering system pressures at the wellhead , thereby improving hydrocarbon recovery . additionally , with eleven interconnects to four different natural gas processors , rmi helps ensure that the company 's production is not constrained by any single midstream service provider . furthermore , in 2019 , the company installed a new oil gathering line to riverside terminal ( on the grand mesa pipeline ) , which resulted in a corresponding $ 1.25 to $ 1.50 per barrel reduction to our oil differentials for barrels transported on such gathering line . the total value of reduced oil differentials during the year ended december 31 , 2020 was approximately $ 6.2 million .
this is the lowest annual proportion of unprofitable institutions for the industry since 2004. loan loss provisions of $ 37.0 billion in 2015 were -59- $ 7.3 billion or 24.6 percent more than banks set aside in 2014. this is the first time in the last six years that loan loss provisions have been higher than the preceding year , and the total allocation for 2015 was the largest amount since 2012. net interest income increased for the second year in a row , by $ 9.4 billion or 2.2 percent . noninterest income was $ 5.5 billion or 2.2 percent above the level of 2014 , as servicing fee income increased by $ 1.5 billion or 16.8 percent . realized gains on sales of loans were $ 1.4 billion or 7.7 percent higher than a year ago . total noninterest expense decreased $ 5.5 billion or 1.3 percent comparing 2015 and 2014. the average return on average assets for 2015 was 1.04 percent , up from 1.02 percent in 2014. the united states economy continued on an upward path in 2015. this could affect interest rates which may adversely impact bank earnings as net interest margins compress from the inability of management to keep fund costs low . continuous expense control , sound balance sheet management and lower loan loss provisions could offset some of the negative impact of the reduction in net interest margins . review of financial position : total assets , loans and deposits were $ 1.8 billion , $ 1.3 billion and $ 1.5 billion , respectively , at december 31 , 2015. total assets , loans and deposits grew 4.4 percent , 10.8 percent and 2.1 percent , respectively , compared to 2014 year-end balances . the loan portfolio consisted of $ 933.0 million of business loans , including commercial and commercial real estate loans , and $ 407.8 million in retail loans , including residential mortgage and consumer loans at december 31 , 2015. total investment securities were $ 297.0 million at december 31 , 2015 , including $ 284.9 million of investment securities classified as available-for sale and $ 12.1 million classified as held-to-maturity . total deposits consisted of $ 321.0 million in noninterest-bearing deposits and $ 1.1 billion in interest-bearing deposits at december 31 , 2015. stockholders ' equity equaled $ 248.8 million , or $ 33.57 per share , at december 31 , 2015 , and $ 246.8 million , or $ 32.69 per share , at december 31 , 2014. dividends declared for the 2015 amounted to $ 1.24 per share representing 52.5 percent of net income . nonperforming assets equaled $ 12.5 million or 0.93 percent of loans , net and foreclosed assets at december 31 , 2015 , up from $ 10.9 million or 0.90 percent at december 31 , 2014. the allowance for loan losses equaled $ 13.0 million or 0.97 percent of loans , net , at december 31 , 2015 , compared to $ 10.3 million or 0.85 percent at year-end 2014. loans charged-off , net of recoveries equaled $ 1.1 million or 0.08 percent of average loans in 2015 , compared to $ 1.8 million or 0.15 percent of average loans in 2014. investment portfolio : primarily , our investment portfolio provides a source of liquidity needed to meet expected loan demand and generates a reasonable return in order to increase our profitability . additionally , we utilize the investment portfolio to meet pledging requirements and reduce income taxes . at december 31 , 2015 , our portfolio consisted primarily of short-term u.s. treasury and government agency securities , which provide a source of liquidity and intermediate-term , tax-exempt state and municipal obligations , which mitigate our tax burden . investment securities decreased $ 57.3 million , to $ 297.0 million at december 31 , 2015 , from $ 354.3 million at december 31 , 2014. at december 31 , 2015 , the investment portfolio consisted of $ 284.9 million of investment securities classified as available-for-sale and $ 12.1 million classified as held-to-maturity . loan demand accelerated in the second half of 2015 which resulted in using a portion of the investment cash flow to fund loans . excess cash flow from investment payments and repayments was directed back into the investment portfolio in the first half of 2015. security purchases totaled $ 90.4 million in 2015 , with the majority of the purchases consisting of short-term u.s. treasury securities and intermediate- term tax-exempt municipal securities . investment purchases in 2014 amounted to $ 102.3 million . -60- repayments of investment securities totaled $ 60.8 million in 2015 and $ 49.7 million in 2014. we received proceeds of $ 82.0 million from the sale of investment securities in 2015 and $ 15.4 million in 2014. net gains recognized on the sale of investment securities available-for-sale totaled $ 1,189 in 2015 and $ 861 in 2014. the 2015 sales consisted of $ 80.2 million of short-term u.s. treasury securities and $ 1.8 million of tax-exempt municipal securities . we continually analyze the investment portfolio with respect to its exposure to various risk elements . as a result of such analysis , we sold the tax-exempt municipal securities due to credit risk concerns . investment securities averaged $ 311.2 million and equaled 19.7 percent of average earning assets in 2015 , compared to $ 338.5 million and equaled 21.7 percent of average earning assets in 2014. the tax-equivalent yield on the investment portfolio increased four basis points to 2.71 percent in 2015 from 2.67 percent in 2014. loan portfolio : loans , net increased $ 131.0 million or 10.8 percent in 2015 to $ 1.3 billion at december 31 , 2015. business loans , including commercial loans and commercial real estate loans , were $ 933.0 million or 69.6 percent of loans , net at december 31 , 2015 , and $ 813.1 million or 67.2 percent at year-end 2014. residential mortgages and consumer loans story_separator_special_tag as a result , tax-equivalent net interest income decreased $ 3,536 comparing 2015 and 2014. the tax-equivalent yield on earning assets decreased 9 basis points to 4.19 percent in 2015 from 4.28 percent in 2014 , resulting in a reduction in interest income of $ 3,884. while the tax-equivalent yield on the investment portfolio increased 4 basis points to 2.71 percent in 2015 from 2.67 percent in 2014 , interest income decreased $ 499 due to changes in the mix of investments . the tax-equivalent yield on the loan portfolio decreased 28 basis points to 4.59 percent in 2015 from 4.87 percent in 2014 and resulted in a reduction in interest income of $ 3,408. the impact that lower reinvestment rates had on the tax-equivalent yield on the loan portfolio was partially mitigated by the recognition of loan fair value accretion resulting in an increase in the tax-equivalent net interest margin of 4 basis points in 2015. the unfavorable rate variance caused by changes in the earning asset yields was partially offset by a decrease of $ 348 in interest expense , which primarily resulted from a decrease of 6 basis points in fund costs to 0.51 percent in 2015 from 0.57 percent in 2014. we experienced decreases in the rates paid on all major categories of interest-bearing liabilities with the exception of now accounts and time deposits of less than $ 100. specifically , the cost of money market and savings accounts decreased 6 basis points and 7 basis points comparing 2015 and 2014. these decreases resulted in a decrease in interest expense of $ 372. the cost of now accounts increased 2 basis points which resulted in an increase of $ 35 in interest expense . with regard to time deposits , the average rate paid for time deposits less than $ 100 increased 8 basis points while time deposits $ 100 or more decreased 9 basis points , which together resulted in a $ 68 increase in interest expense . the average rate paid on short-term borrowings decreased 9 basis points for 2015 when compared to 2014 , causing a $ 12 decrease in interest expense . interest expense was reduced $ 67 from a 20 basis point decline in the average rate paid on long-term debt . provision for loan losses : we evaluate the adequacy of the allowance for loan losses account on a quarterly basis utilizing our systematic analysis in accordance with procedural discipline . we take into consideration certain factors such as composition of the loan portfolio , volume of nonperforming loans , volumes of net charge-offs , prevailing economic conditions and other relevant factors when determining the adequacy of the allowance for loan losses account . we make monthly provisions to the allowance for loan losses account in order to maintain the allowance at an appropriate level . the provision for loan losses equaled $ 3,700 in 2015 and $ 3,524 in 2014. the primary cause for the increase in the provision was an increase in the volume of loans originated . commercial , commercial real estate and consumer loans experienced increases in the qualitative factor related to changes in the volume of these loans . partially offsetting these increases were decreases in the qualitative factors for commercial and commercial real estate related to loan review . additionally , the qualitative factor for residential real estate related to loan balances decreased . based on our most recent evaluation at december 31 , 2015 , we believe that the allowance was adequate to absorb any known or potential losses in our portfolio . -66- noninterest income : our noninterest income increased $ 468 or 3.1 percent to $ 15.7 million in 2015 from $ 15.3 million in 2014. net gains on sale of investment securities were $ 1.2 million in 2015 compared to $ 861 in 2014 an increase of $ 328 or 38.1 percent as we took advantage of the significant improvement in the value of our u.s. treasury securities brought on by the reduction in market yields . revenue received from merchant services increased $ 306 or 8.6 percent to $ 3,855 in 2015 from $ 3,549 in 2014 due to an increase in the number of merchants serviced whom transact higher volumes . wealth management income increased $ 93 or 12.4 percent comparing 2015 to 2014 as a comprehensive plan to accelerate growth began to be implemented.in 2015. mortgage banking income increased $ 224 or 34.6 percent in 2015 compared to 2014 due to higher volumes driven by the continued low interest rate environment . revenue received from service charges , fees and commissions decreased $ 239 or 3.7 percent comparing 2015 and 2014 due to lower overdraft and deposit fees . commissions and fees on fiduciary activities decreased $ 233 or 10.7 percent comparing 2015 and 2014 due to a decrease in executor fees . income from investment in life insurance decreased $ 11 or 1.4 percent to $ 767 in 2015 from $ 778 in 2014 due to slightly higher mortality factors . in 2015 , we hired a seasoned professional with significant experience to manage our trust and wealth management divisions in order to increase the volume of assets under management and the amount of noninterest income . this individual has a comprehensive plan to accelerate growth in the near term through employing a network of representatives and affiliated companies . noninterest expense : noninterest expense was $ 46.8 million for the year ended december 31 , 2015 compared to $ 45.9 million for the year ended december 31 , 2014. salaries and employee benefits expense constitute the majority of our noninterest expenses accounting for 46.0 percent of the total non interest expense . salaries and employee benefits expense increased $ 881 thousand or 4.3 percent to $ 21.5 million in 2015 from $ 20.7 million in 2014. salaries and payroll taxes increased $ 1,758 or 10.7 percent , while employee benefits expense decreased $ 877 or	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity : we employ a number of analytical techniques in assessing the adequacy of our liquidity position . one such technique is the use of ratio analysis to illustrate our reliance on noncore funds to fund our investments and loans maturing after 2015. at december 31 , 2015 , our noncore funds consisted of time deposits in denominations of $ 100 or more , repurchase agreements , short-term borrowings and long-term debt . large denomination time deposits are particularly not considered to be a strong source of liquidity since they are very interest rate sensitive and are considered to be highly volatile . at december 31 , 2015 , our net noncore funding dependence ratio , the difference between noncore funds and short-term investments to long-term assets , was 11.3 percent . our net short-term noncore funding dependence ratio , noncore funds maturing within one year , less short-term investments to long-term assets equaled 4.1 percent . comparatively , our ratios equaled 8.5 percent and 3.0 percent at the end of 2014 , which indicated an increase in our reliance on noncore funds . moreover , our basis liquidity surplus ratio , defined as liquid assets less short-term potentially volatile liabilities as a percentage of total assets , declined to 1.6 percent at december 31 , 2015 , from 4.8 percent at december 31 , 2014. we believe that by supplying adequate volumes of short-term investments and implementing competitive pricing strategies on deposits , we can ensure adequate liquidity to support future growth . the consolidated statements of cash flows present the change in cash and cash equivalents from operating , investing and financing activities . cash and cash equivalents consist of cash on hand , cash items in the process of collection , noninterest-bearing and interest-bearing deposits with other banks and federal funds sold . cash and cash equivalents increased $ 1.5 million for the year ended december 31 , 2015. conversely , for the year ended december 31 , 2014 , cash and cash equivalents decreased $ 19.9 million . during 2015 , cash provided by operating and financing activities was partially offset by cash used in investing activities .
in addition , and effective as of the closing , thomas w. d'alonzo , barry i. feinberg , samuel p. sears , jr. and timothy c. tyson have each resigned and retired from the board . on july 20 , 2018 , we extended an offer to dr. thomas smith , as our chief medical officer and member of our executive leadership team effective july 30 , 2018. on august 2 , 2018 , in connection with our 2018 annual meeting of stockholders , our stockholders approved , among other matters , ( i ) amending our certificate of incorporation to increase the number of authorized shares of common stock from 75,000,000 to 125,000,000 ; and ( ii ) to ratify the issuance and sale of our series b preferred stock , par value $ .001 per share , and to approve the issuance of common stock issuable upon the conversion of the series b preferred stock as required by and in accordance with nasdaq marketplace rule 5635 ( d ) . on october 29 , 2018 , we announced the appointment of james vollins as general counsel and member of our executive leadership team effective november 5 , 2018. mr. vollins serves as our chief compliance officer and corporate secretary . we also announced the enhanced title of scott plesha to president and chief commercial officer of the company . 37 on november 9 , 2018 , we filed a shelf registration statement ( as amended on january 18 , 2019 ) which registered up to $ 150 million of our securities for potential future issuance and such registration statement was became effective on february 7 , 2019. on january 15 , 2019 , we announced the appointment of terry coelho as chief financial officer . ms. coelho will also serve as our principal financial officer and principal accounting officer . ms. coelho replaced ernest de paolantonio in these positions effective as of january 15 , 2019. mr. de paolantonio will remain at our company past such date in order to allow for an orderly transition . on february 4 , 2019 we announced that a leading national managed care organization has moved belbuca into preferred status across all its commercial formularies from its previous position of not-covered effective february 1 , 2019. in addition , patients will no longer require a prior authorization to receive their belbuca script . this significant improvement in access for more than 7 million covered lives brings the total of americans with preferred access for belbuca to more than 115 million . our products and related trends our product portfolio currently consists of four products . as of the date of this report , three products are approved by the fda ; the fourth product , while we are not actively studying it at this time , we are evaluating further development opportunities . the three approved products utilize our patented bema thin film drug delivery technology . belbuca is indicated for the management of chronic pain severe enough to require daily , around-the-clock , long-term opioid treatment and for which alternative treatment options are inadequate . this product was originally licensed on a worldwide basis to endo . on october 26 , 2015 , we announced with endo that the fda approved belbuca . belbuca was launched by endo in february 2016. on december 7 , 2016 , we entered into an agreement with endo terminating endo 's licensing of rights for belbuca . this followed a strategic decision made by endo to discontinue commercial efforts in the branded pain business . on january 6 , 2017 , we announced the closing of the transaction to reacquire the license to belbuca from endo . as a result , the worldwide rights to belbuca were transferred back to us . behind a revised commercialization plan , we are leveraging our existing sales force to capitalize on commercial synergies with bunavail . this effort is a focused commercial approach targeting identified healthcare providers which we believe create the potential to incrementally grow belbuca sales without the requirement for significant resources . we also will explore other options for longer-term growth for belbuca . since the initial launch in february 2017 , we further expanded our sales force beginning in january 2018 and again in september to support the commercialization efforts . belbuca and bunavail are currently supported by a field force of approximately 113 sales representatives , thirteen regional sales managers and two area directors . as previously disclosed , the launch has been more challenging because of the increased scrutiny over the prescribing of opioids that is driven by the centers for disease control and prevention guidelines issued in march 2016. the difference that belbuca as schedule iii offers over schedule ii opioids , such as oxycodone , hydrocodone , morphine , etc . , include higher safety index , lower addiction , diversion and abuse risks accompanied by a dose-ceiling effect on respiratory depression , but not on analgesia . the approval of belbuca carries a standard post-approval requirement by the fda to conduct a study to determine the effect of belbuca on qt prolongation ( i.e . an abnormal lengthening of the heartbeat ) . also required is a study assessing the safety and efficacy of belbuca in pediatric patients and participation in a consortium with other holders of ndas for long-acting opioids to assess and better understand the risk of abuse , misuse , addiction and overdose with opioids . both studies are pending . prescription sales of belbuca have significantly increased since promotion began . bunavail was approved by the fda in june 2014 and is indicated for the treatment of opioid dependence . bunavail uses our bema technology combined with buprenorphine in tandem with naloxone , an opioid antagonist . story_separator_special_tag monthly for each product line , we prepare an internal estimate of ending inventory units in the distribution channel by adding estimated inventory in the channel at the beginning of the period , plus net product shipments for the period , less estimated prescriptions written for the period . this is done for each product line by applying a rate of historical activity for rebates , chargebacks and product returns , adjusted for relevant quantitative and qualitative factors discussed above , to the potential exposed product estimated to be in the distribution channel . in addition , we receive daily information from the wholesalers regarding their sales and actual on hand inventory levels of our products . this enables us to execute accurate provisioning procedures . product returns -consistent with industry practice , we offer contractual return rights that allow our customers to return our products within an 18-month period that begins six months prior to and ends twelve months after expiration of the products . rebates - the liability for government program rebates is calculated based on historical and current rebate redemption and utilization rates contractually submitted by each program 's administrator . price adjustments and chargebacks -our estimate of price adjustments and chargebacks are based on its estimated mix of sales to various third-party payers , which are entitled either contractually or statutorily to discounts from our listed prices of our products . if the sales mix to third-party payers is different from our estimates , we may be required to pay higher or lower total price adjustments and or chargebacks than it had estimated , and such differences may be significant . from time to time , we offer certain promotional product-related incentives to our customers . these programs include certain product incentives to pharmacy customers and other sales stocking allowances . we have voucher programs for belbuca and bunavail whereby we offer a point-of-sale subsidy to retail consumers . we estimate our liabilities for these voucher programs based on the actual redemption rates as reported to us by a third-party claims processing organization . we account for the costs of these special promotional programs as price adjustments , which are a reduction of gross revenue . prompt payment discounts -we typically offers our wholesale customers a prompt payment discount of 2 % as an incentive to remit payments within the first 30 to 37 days after the invoice date depending on the customer and the products purchased . gross to net accruals a significant majority of our gross to net adjustments to gross product revenues are the result of accruals for our voucher program and rebates related to medicare part d , the part d coverage gap , medicaid , and commercial contracts with most of those programs having an accrual to payment cycle of anywhere from one to three months . in addition to this relatively short accrual to payment cycle , we receive daily information from the wholesalers regarding their sales of our products and actual on hand inventory levels of its products . this enables us to execute accurate provisioning procedures . consistent with the pharmaceutical industry , the accrual to payment cycle for returns is longer and can take several years depending on the expiration of the related products . prior to january 2017 , we were recording sales when prescriptions were filled . however , beginning in january 1 , 2017 , we began recording revenue based on a sell-in method , as we now have achieved the ability to record sales ex-factory . license and development agreements we periodically enter into license and development agreements to develop and commercialize our products . the arrangements typically are multi-deliverable arrangements that are funded through upfront payments , milestone payments and other forms of payment . depending on the nature of the contract these revenues are classified as research and development reimbursements or contract revenue . 42 product royalty revenues product royalty revenue amounts are based on a percentage of net sales revenue of the onsolis product under our license agreement with mylan . product royalty revenues are computed on a quarterly basis when revenues are fixed or determinable , collectability is reasonably assured , and all other revenue recognition criteria are met . mylan has the right to reject products that do not comply with product , packaging , or regulatory specifications . defective product must be identified by mylan within 10 days after inspection at mylan 's distribution site . we bill mylan immediately upon receipt by mylan of product ( fob manufacturer ) . on a quarterly basis , a reconciliation is prepared that reflects the difference between actual net sales by mylan multiplied by the royalty percentage , and the actual royalty payments made during the quarter ( which is based on a transfer price at the time we invoice mylan ) . the parties true-up the differences within 45 days of each quarter-end . cost of sales cost of sales includes direct costs attributable to the production of belbuca , bunavail , breakyl and painkyl . cost of sales also includes royalty expenses owed to third parties . for belbuca and bunavail , cost of sales includes raw materials , production costs at our contract manufacturing sites , quality testing directly related to the product , lower of cost of market and depreciation on equipment that we have purchased to produce belbuca and bunavail . it also includes any batches not meeting specifications and raw material yield loss . beginning january 1 , 2017 , cost of sales for belbuca and bunavail were recognized when sold to the wholesaler from our distribution center . there was no deferred cost of sales for the years ended december 31 , 2017 nor 2018. yield losses and batches not meeting specifications are expensed as incurred . for breakyl and painkyl , we do not take ownership of the subject product as we do not have inventory . accordingly , raw material	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources since inception , we have financed our operations principally from the sale of equity securities , proceeds from borrowings , convertible notes , and notes payable , funded research arrangements , revenue generated as a result of our worldwide license and 47 development agreements , the commercialization of our belbuca and bunavail products . we intend to finance our commercialization and working capital needs from existing cash , earnings from the commercialization of belbuca and bunavail , royalty revenue , new sources of debt and equity financing , existing and new licensing and commercial partnership agreements and , potentially , through the exercise of outstanding common stock options and warrants to purchase common stock . on may 11 , 2016 , we and collegium executed a definitive license and development agreement under which we granted to collegium the exclusive rights to develop and commercialize onsolis in the u.s , resulting in a milestone of $ 2.5 million paid to us in june 2016. during 2016 , we received cumulative payments totaling $ 1.3 million which related to royalties based on product purchased in europe by mylan of breakyl . during 2016 , we received cumulative payments totaling $ 0.9 which related to royalties based on product purchased in taiwan by tty of painkyl . on december 8 , 2016 , we announced that we had entered into an agreement endo terminating endo 's licensing of rights for belbuca . the closing of the termination agreement , and the formal termination of the belbuca license to endo and closing of the transactions occurred on january 6 , 2017. on july 12 , 2017 , we , along with purdue pharma ( canada ) announced that we had signed an exclusive agreement for the licensing , distribution , marketing and sale of belbuca in canada . in return for the licensing and distribution rights to belbuca in canada , we were eligible to receive upfront and potential milestones of up to cad 4.5 million as well as royalties on net sales , including approximately cad 1.5 million ( 0.5 million cad and 1.0 million cad received august 2017 and october 2017 , respectfully ) . during 2017 , we received cumulative payments totaling $ 2.2
on december 31 , 2019 , we divested substantially all of the assets relating to vilex 's adult product offerings to a wholly-owned subsidiary of squadron capital llc ( `` squadron `` ) in exchange for a $ 25.0 million reduction in a term note owed to squadron in connection with the initial acquisition . as part of the sale , we also executed an exclusive license arrangement with squadron providing for perpetual access to certain intellectual property and a mutual distribution agreement . on march 9 , 2020 , we purchased all the issued and outstanding membership interest of telos partners , llc ( `` telos `` ) for $ 3.3 million in total consideration . telos is a boutique regulatory consulting firm formed in colorado . on april 1 , 2020 , we purchased all the issued and outstanding membership interest of apifix , ltd. ( `` apifix `` ) for ( a ) $ 2.0 million in cash , and ( b ) 934,783 shares of the company 's common stock , $ 0.00025 par value per share , representing approximately $ 35.0 million ( based on a closing share price of $ 37.63 on april 1 , 2020. apifix , a corporation organized under the laws of israel , has developed a minimally invasive deformity correction system for patients with adolescent idiopathic scoliosis ( `` apifix system `` ) . in addition , we have also agreed to pay as part of the purchase price the following anniversary payments , subject to certain limitations and adjustments : ( i ) approximately $ 13.0 million on the second anniversary of the closing date , provided that such payment will be paid earlier if 150 clinical procedures using the apifix system are completed in the united states before such anniversary date , ( ii ) $ 8.0 million on the third anniversary of the closing date ; and ( iii ) $ 9.0 million on the fourth anniversary of the closing date . in addition , to the extent that the product of our revenues from the apifix system for the twelve months ended june 30 , 2024 multiplied by 2.25 exceeds the anniversary payments actually made for the third and fourth years , we have agreed to pay the selling shareholders a system sales payment in the amount of such excess . the anniversary payments and system sales payment may each be made in cash or cash and common stock . on june 10 , 2020 , we purchased certain intellectual property assets from band-lok , llc , a north carolina limited liability company ( `` band-lok `` ) , related to its tether clamp and implantation system ( `` tether clamp system `` ) for approximately $ 3.4 million in total consideration . we use the tether clamp system in connection with our bandloc 5.5/6.0 system . we were previously the sole licensee of the purchased assets under a license agreement with band-lok . we market and sell our products internationally in 44 countries through independent stocking distributors and sales agencies . our independent stocking distributors manage the billing relationship with each hospital in their respective territories and are responsible for servicing the product needs of their surgeon customers . in 2017 , we began to supplement our international stocking distributors with sales agencies using direct sales programs in the united kingdom , ireland , australia and new zealand where we sell directly to the hospitals . we began selling direct to canada in september 2018 , belgium and the netherlands in january 2019 , italy in march 2020 and germany , switzerland and austria in january 2021. additionally , in march 2019 , we established an operating company in the netherlands in order to enhance our operations in europe . in these markets , we work through sales agencies that are paid a commission , similar to our u.s. sales model . these arrangements have generated an increase in revenue and gross margin . for the years ended december 31 , 2020 , 2019 and 2018 , international sales accounted for approximately 11 % , 24 % and 24 % of our revenue , respectively . we believe there are significant opportunities for us to strengthen our position in u.s. and international markets by increasing investments in consigned implant and instrument sets , strengthening our global sales and distribution infrastructure and expanding our product offering . we have grown our revenue from approximately $ 10.2 million for the year ended december 31 , 2011 to $ 71.1 million for the year ended december 31 , 2020. the average annual growth rate for the company exceeded 20 % from 2009 through 2019 , partially obtained through strategic acquisitions . for the years ended december 31 , 74 2020 , 2019 and 2018 , our revenue was $ 71.1 million , $ 72.6 million and $ 57.6 million , respectively , and our net loss was $ 32.9 million , $ 13.7 million and $ 12.0 million , respectively . our net loss for the year ended december 31 , 2018 included $ 2.0 million of non-cash accelerated vesting of restricted stock compensation expense related to our october 2017 ipo . impact of covid-19 on our business a novel strain of the coronavirus disease ( `` covid-19 `` ) was first identified in wuhan , china in december 2019 , and the related outbreak was subsequently declared a pandemic by the world health organization and a national emergency by the president of the united states . as a result of the pandemic , we have experienced significant business disruption . for example , in order to meet the demand for covid-19-related hospitalizations , various governments , governmental agencies and hospital administrators required certain hospitals to postpone some elective procedures . story_separator_special_tag depreciation and amortization expenses increased $ 3.4 million , or 74 % , from $ 4.6 million for the year ended december 31 , 2019 to $ 8.0 million for the year ended december 31 , 2020. the increase was primarily due to the amortization on intangible assets acquired through the orthex , telos and apifix acquisitions and the purchase of the band-lok intellectual property and increased investments in consigned surgical instrument sets . research and development expenses research and development expenses decreased $ 0.4 million , or 8 % , from $ 5.7 million for the year ended december 31 , 2019 to $ 5.3 million for the year ended december 31 , 2020. the decrease was driven by a reduced investment in research and development project expenses as a result of the sales decline related to the covid-19 pandemic . total other expenses total other expenses increased $ 3.3 million , or 92 % , from $ 3.6 million for the year ended december 31 , 2018 to $ 6.9 million for the year ended december 31 , 2020. the increase in other expense is due to the fair value adjustment of $ 3.5 million related to the apifix contingent consideration payment . 79 comparison of the years ended december 31 , 2019 and 2018 the following table sets for the our results of operations for the years ended december 31 , 2019 and 2018 : replace_table_token_6_th revenue the following tables set forth our revenue by geography and product category for the years ended december 31 , 2019 and 2018 : replace_table_token_7_th replace_table_token_8_th revenue increased $ 15.0 million , or 26 % , from $ 57.6 million for the year ended december 31 , 2018 to $ 72.6 million for the year ended december 31 , 2019. the increase was due primarily to trauma and deformity sales growth of $ 9.7 million , or 24 % , primarily driven by sales of our pediatric nailing platform \| femur , pediplate , and orthex hexapod system , and scoliosis sales growth of $ 4.8 million , or 29 % , primarily driven by sales of our response tm and other licensed products . nearly all of the increase in each of the trauma and deformity and scoliosis categories was due to the increase in unit volume sold and not a result of price changes . cost of revenue and gross margin cost of revenue was $ 17.9 million and $ 14.9 million for the years ended december 31 , 2019 and 2018 , respectively . gross margin was 75 % for the year ended december 31 , 2019 and 74 % for the year ended december 31 , 2018. the increase in gross margin was due primarily to a decrease in cost of goods sold related to the addition of sales agents in our international markets along with increase sales . sales and marketing expenses sales and marketing expenses increased $ 4.7 million , or 18 % , from $ 26.6 million for the year ended december 31 , 2018 to $ 31.3 million for the year ended december 31 , 2019. the increase was due primarily to increased sales commission expenses , driven by the increase in unit volume sold , and marketing expenses . 80 general and administrative expenses general and administrative expenses increased $ 5.7 million , or 27 % , from $ 20.9 million for the year ended december 31 , 2018 to $ 26.7 million for the year ended december 31 , 2019. the increase was due primarily to the addition of personnel and resources to support the growth of our business as well as increased quality and regulatory resources and consultants to comply with new fda and eu regulatory requirements . depreciation and amortization expenses increased $ 1.7 million , or 59 % , from $ 2.9 million for the year ended december 31 , 2018 to $ 4.6 million for the year ended december 31 , 2019. the increase was primarily due to prior increased investments in consigned surgical instrument sets and amortization on intangible licenses . we also purchased $ 13.2 million in amortizable intangibles associated with the acquisition of orthex on june 4 , 2019 , which increased amortization expense in the current year . research and development expenses research and development expenses increased $ 1.0 million , or 21 % , from $ 4.7 million for the year ended december 31 , 2018 to $ 5.7 million for the year ended december 31 , 2019. the increase was due to the addition of personnel to support our product pipeline and the growth of our business . other expenses other expenses were $ 3.6 million for each of the years ended december 31 , 2019 and 2018 , respectively . the expense in both of these periods consisted primarily of interest expense on long-term debt . liquidity and capital resources we have incurred operating losses since inception and negative cash flows from operating activities of $ 18.4 million , $ 17.8 million and $ 15.6 million for the years ended december 31 , 2020 , 2019 and 2018 , respectively . as of december 31 , 2020 , we had an accumulated deficit of $ 161.8 million . we anticipate that our losses will continue in the near term as we continue to expand our product portfolio and invest in additional consigned implant and instrument sets to support our expansion into existing and new markets . since inception , we have funded our operations primarily with proceeds from the sales of our common and preferred stock , convertible securities and debt , as well as through sales of our products . as of december 31 , 2020 we had cash , cash equivalents and restricted cash of $ 30.1 million and short-term investments of $ 55.1 million . we believe our existing cash and cash equivalents , amounts available under the loan agreement , cash receipts from sales of our	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash used in operating activities net cash used in operating activities was $ 18.4 million , $ 17.8 million and $ 15.6 million for the years ended december 31 , 2020 , 2019 and 2018 , respectively . the primary use of this cash was to fund our operations related to the development and commercialization of our products in each of these years . net cash used for working capital was $ ( 5.0 ) million , $ ( 11.4 ) million and $ ( 9.6 ) million for the years ended december 31 , 2020 , 2019 and 2018 , respectively . during 2020 , we increased inventory by $ 12.1 million as we deployed additional inventory , including $ 1.6 million due to the repurchase of inventory from a stocking distributor in germany , austria and switzerland that we converted to a sales agency , and accounts receivable increased by $ 0.5 million . these uses of cash for working capital were offset by our legal settlement accrual of $ 6.3 million and an increase in accounts payable of $ 3.1 million as we purchased inventory on account for deployment into the field . during 2019 , we increased inventory by $ 9.8 million as we deployed additional inventory and accounts receivable increased by $ 5.8 million as our sales increased . during 2018 , we increased inventory by $ 4.8 million as we deployed additional inventory following our ipo and accounts receivable increased by $ 3.8 million as our sales increased . we had a net loss of $ 32.9 million , $ 13.7 million and $ 12.0 million for the years ended december 31 , 2020 , 2019 and 2018 , respectively , which drove a difference in the use of operating cash between the periods . our net loss for the year ended december 31 , 2018 included a $ 2.0 million non-cash expense associated with the accelerated vesting of our restricted stock related to our ipo . cash used in investing activities net cash used in investing activities was $ 69.8 million , $ 61.9 million and $ 6.0 million for the years ended december 31 , 2020 , 2019 and 2018 , respectively .
critical accounting policies revenue recognitionthe company recognizes revenue for sales and billing for freight charges upon delivery of the product to the customer at a fixed or determinable price with a reasonable assurance of collection , passage of title to the customer as indicated by shipping terms and fulfillment of all significant obligations , pursuant to the guidance provided by accounting standards codification topic 605. for sales to all customers , 17 including manufacturer representatives , distributors or their third-party customers , these criteria are met at the time product is shipped . when other significant obligations remain after products are delivered , revenue is recognized only after such obligations are fulfilled . in addition , judgments are required in evaluating the credit worthiness of our customers . credit is not extended to customers and revenue is not recognized until we have determined that collectability is reasonably assured . allowance for doubtful accountsour policy is to maintain allowances for estimated losses resulting from the inability of our customers to make required payments . credit limits for all customers are established based upon several factors , including but not limited to financial condition and stability , payment history , published credit reports and use of credit references . on a monthly basis , management performs various analyses to evaluate accounts receivable balances to ensure recorded amounts reflect estimated net realizable value . this review includes accounts receivable agings , other operating trends and relevant business conditions , including general economic factors , as they relate to the company 's domestic and international customers . when a customer 's account balance becomes past due , we initiate dialogue with the customer to determine the cause . if it is determined that the customer will be unable to meet its financial obligation to us , such as in the case of a bankruptcy filing , we record a specific allowance to reduce the related receivable to the amount we expect to recover given all of the information presently available . inventoriesas a designer and manufacturer of high technology systems , we are exposed to a number of economic and industry factors that could result in portions of our inventories becoming either obsolete or in excess of anticipated usage . these factors include , but are not limited to , technological changes in our markets , our ability to meet changing customer requirements , competitive pressures in products and prices , and the availability of key components from our suppliers . our policy is to record inventory write-downs when conditions exist that suggest our inventories may be in excess of anticipated demand for our products and market conditions . we regularly evaluate the ability to realize the value of our inventories based upon a combination of factors including the following : historical usage rates , forecasted sales or usage , product end of life dates , estimated current and future market values and new product introductions . purchasing requirements and alternative usage avenues are explored within these processes to mitigate inventory exposure . when recorded , our write-downs are intended to reduce the carrying value of our inventories to their net realizable value and establish a new cost basis . deferred taxesthe company applies the asset and liability method in recording income taxes , under which deferred income tax assets and liabilities are determined , based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using currently enacted tax rates and laws . additionally , deferred tax assets are evaluated and a valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized . management continues to review the level of the valuation allowance on a quarterly basis . there can be no assurance that the company 's future operations will produce sufficient earnings so that the deferred tax assets can be fully utilized . intangible assetsthere is a periodic review of intangible and other long-lived assets for impairment . this review consists of the analysis of events or changes in circumstances that would indicate the carrying amount of the assets may not be recoverable . recoverability is determined by comparing the forecasted future undiscounted net cash flows from the operations to which the assets relate , based on management 's best estimates using the appropriate assumptions and projections at the time , to the carrying amount of the assets . if the carrying value is determined to be in excess of future operating cash flows , the asset is considered impaired and a loss is recognized equal to the amount by which the carrying amount exceeds the estimated fair value of the assets . 18 recently issued accounting pronouncements refer to note 1 of the notes to consolidated financial statements for a discussion of recently issued accounting pronouncements . discussion of operating results replace_table_token_3_th sales sales in the balancer segment increased $ 3.3 million , or 71.5 % , to $ 8.0 million for fiscal 2011 compared to $ 4.7 million for fiscal 2010. this increase is primarily due to higher unit sales volumes in asia , north america and europe during the year . asia sales increased $ 1.8 million , or 93.5 % , in fiscal 2011 compared to fiscal 2010. north american sales increased $ 1.4 million , or 77.9 % , in fiscal 2011 compared to the prior year . european sales increased $ 108,000 , or 13.5 % , in fiscal 2011 compared to fiscal 2010. the increases across all geographies are primarily due to higher volumes of shipments as the worldwide automotive and industrial markets in these regions have begun to recover from the previous low levels due to the global economic downturn . story_separator_special_tag sales in the measurement segment increased $ 1.3 million , or 63.1 % , to $ 3.5 million in fiscal 2011 compared to $ 2.1 million in fiscal 2010. sales of laser-based distance measurement and dimensional sizing products increased $ 1.1 million , or 67.1 % , primarily due to the higher volume of shipments in the current fiscal year resulting from the economic recovery in the commercial and industrial markets . sales of laser-based surface measurement products increased $ 160,000 , or 32.3 % , primarily due to the sale of a casi scatterometer and the september 30 , 2009 acquisition of optical dimensions which resulted in product sales of $ 202,000 during fiscal 2011. during fiscal 2011 , we started to ship our xact ultrasonic measurement product which resulted in $ 102,000 of revenues . sales in the balancer segment decreased $ 2.3 million , or 33.0 % , to $ 4.7 million for fiscal 2010 compared to $ 7.0 million for fiscal 2009. this decrease is primarily due to lower unit sales volumes in asia , north america and europe during the year . north american sales decreased $ 1.2 million , or 40.6 % , in fiscal 2010 compared to the prior year . asia sales decreased $ 601,000 , or 23.3 % , in fiscal 2010 compared to fiscal 2009. european sales decreased $ 372,000 , or 31.7 % , in fiscal 2010 compared to fiscal 2009. the decreases across all geographies are primarily due to lower volumes of shipments caused by continuing weaknesses in the global economy and the 19 softening of the worldwide automotive , bearing and aircraft industries which has impacted the machine tool industry . the levels of demand in our geographic markets can not be forecasted with any certainty given the recent weaknesses in the global economy . sales in the measurement segment decreased $ 395,000 , or 15.6 % , to $ 2.1 million in fiscal 2010 compared to $ 2.5 million in fiscal 2009. sales of laser-based dimensional sizing products decreased $ 455,000 , or 21.8 % , primarily due to the lower unit sales volumes in north america . sales of laser-based surface measurement products increased $ 50,000 , or 11.3 % , primarily due to the september 30 , 2009 acquisition of optical dimensions which resulted in product sales of $ 114,000 ; these sales were partially offset by a decrease in sales to disk drive and silicon wafer manufacturers of $ 64,000. gross margin gross margin in fiscal 2011 increased to 48.8 % compared to 44.7 % in fiscal 2010. this increase is primarily due to a shift in product sales mix with sales increasing in the measurement segment , which typically have higher gross margins than the balancer segment , and sales in the balancer segment rebounding positively in the north american markets , which generally have slightly higher margins than asia due the channel and distributor discounts required in asia . gross margin for fiscal 2010 increased to 44.7 % compared to 43.6 % for fiscal 2009. this increase is primarily due to lower increases to reserves for excess and obsolete inventory in the current year offset by a shift in the sales product mix to lower margin products and the impact of significantly lower sales volumes . operating expenses operating expenses increased $ 1.0 million , or 21.7 % , to $ 5.8 million for fiscal 2011 compared to $ 4.8 million in fiscal 2010. general , administrative and sales expenses increased $ 1.1 million , or 26.6 % , to $ 5.3 million in fiscal 2011 compared to $ 4.2 million in the prior year . this increase is due primarily to higher commissions related to the increase in sales , higher stock-based compensation and higher expenses associated with an international trade show that occurs every two years . research and development expenses decreased $ 80,000 , or 13.7 % , to $ 504,000 in fiscal 2011 as compared to $ 585,000 in fiscal 2010. research and development expenses decreased primarily due to lower material costs associated with new product development . operating expenses decreased $ 1.3 million , or 21.2 % , to $ 4.8 million for fiscal 2010 compared to $ 6.1 million in fiscal 2009. general , administrative and sales expenses decreased $ 850,000 , or 16.9 % , to $ 4.2 million in fiscal 2010 compared to $ 5.0 million in the prior year . this decrease is due primarily to lower personnel costs resulting from both salary reductions and mandatory furloughs and lower stock-based compensation , lower commissions related to the decrease in sales and the expense and spending controls put in place due to the significant decline in revenue , offset by higher bad debt expense in the current year . research and development expenses decreased $ 435,000 , or 42.7 % , to $ 585,000 in fiscal 2010 compared to $ 1.0 million in fiscal 2009. the decrease in research and development expense is primarily due to lower material costs associated with new product development related to technologies acquired from xtero and to existing product lines and lower personnel costs associated with salary reductions . other income other income consists of interest income , foreign currency exchange gain ( loss ) and other income ( expense ) . interest income was $ 4,000 , $ 11,000 and $ 74,000 in fiscal 2011 , 2010 and 2009 , respectively . interest income has decreased due to lower cash and investment balances and lower interest rates . foreign currency exchange loss was $ 10,000 and $ 24,000 in fiscal 2011 and 2009 , respectively . foreign currency exchange gain was $ 19,000 in fiscal 2010. income tax provision the effective tax rate on consolidated net loss was ( 0.8 ) % for fiscal 2011. the company 's effective tax rate on consolidated net loss differs from the federal statutory rate primarily due to the amount of	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources the company 's working capital increased $ 152,000 to $ 7.5 million as of may 31 , 2011 compared to $ 7.3 million as of may 31 , 2010. cash and cash equivalents decreased $ 785,000 to $ 2.8 million as of may 31 , 2011 from $ 3.5 million as of may 31 , 2010. cash used in operating activities was $ 559,000 in fiscal 2011 as compared to $ 417,000 in fiscal 2010. the increase is primarily due to decreases in net loss , income taxes receivable , and accounts payable , offset by increases in stock-based compensation , accounts receivable and inventories . at may 31 , 2011 , accounts receivable increased $ 687,000 to $ 1.8 million compared to $ 1.1 million as of may 31 , 2010. the increase in accounts receivable is due to the increase in sales during fiscal 2011. inventories increased $ 501,000 to $ 4.1 million as of may 31 , 2011 compared to $ 3.6 million at may 31 , 2010 due to higher purchasing levels necessary to support the higher sales volumes . at may 31 , 2011 , total current liabilities increased $ 204,000 to $ 1.4 million as compared to $ 1.2 million at may 31 , 2010. the increase is primarily due to increases in accounts payable associated with the increased inventories and accrued commissionsrelated to higher sales volumes offset by lower accrued payroll liabilities as compared to the prior year .
( 2 ) adjusted ebitda margin , a non-gaap measure of earnings , is calculated by dividing adjusted ebitda by total revenue . ( 3 ) we have computed average assets under management by averaging assets under management at the beginning of the applicable period and assets under management at the end of the applicable period . 38 revenue we generate revenue from management and advisory fees , performance fees and family office services fees . our management and advisory fees are generated by managing assets on behalf of separate accounts and acting as investment adviser for various investment funds . our performance fees relate to assets managed in external investment strategies in which we have a revenue sharing arrangement and in funds in which we have no partnership interest . our management and advisory fees and family office services fees income is recognized through the course of the period in which these services are provided . income from performance fees is recorded at the conclusion of the contractual performance period when all contingencies are resolved . in certain arrangements , we are only entitled to receive performance fees and allocations when the return on assets under management exceeds certain benchmark returns or other performance targets . the discretionary investment management agreements for our separately managed accounts do not have a specified term . rather , each agreement may be terminated by either party at any time , unless otherwise agreed with the client , upon written notice of termination to the other party . the investment management agreements for our private funds are generally in effect from year to year , and may be terminated at the end of any year ( or , in certain cases , on the anniversary of execution of the agreement ) ( i ) by us upon 30 or 90 days ' prior written notice and ( ii ) after receiving the affirmative vote of a specified percentage of the investors in the private funds that are not affiliated with us , by the private fund on 60 or 90 days ' prior written notice . the investment management agreements for our private funds may also generally be terminated effective immediately by either party where the non-terminating party ( i ) commits a material breach of the terms subject , in certain cases , to a cure period , ( ii ) is found to have committed fraud , gross negligence or willful misconduct or ( iii ) becomes bankrupt , becomes insolvent or dissolves . each of our investment management agreements contains customary indemnification obligations from us to our clients . the tables below set forth the amount of assets under management , the percentage of management and advisory fees revenues , the amount of revenue recognized , and the average assets under management for discretionary managed accounts and for private funds for each period presented . discretionary managed accounts replace_table_token_4_th private funds replace_table_token_5_th our management and advisory fees are primarily driven by the level of our assets under management . our assets under management increase or decrease based on the net inflows or outflows of funds into our various investment strategies and the investment performance of our clients ' accounts . in order to increase our assets under management and expand our business , we must develop and market investment strategies that suit the investment needs of our target clients and provide attractive returns over the long term . our ability to continue to attract clients will depend on a variety of factors including , among others : our ability to educate our target clients about our classic value investment strategies and provide them with exceptional client service ; the relative investment performance of our investment strategies , as compared to competing products and market indices ; competitive conditions in the investment management and broader financial services sectors ; investor sentiment and confidence ; and our decision to close strategies when we deem it to be in the best interests of our clients . 39 the majority of management and advisory fees that we earn on separately managed accounts are based on the value of assets under management on the last day of each calendar quarter . most of our management and advisory fees are billed quarterly in advance on the first day of each calendar quarter . our basic annual fee schedule for management of clients ' assets in separately managed accounts is : ( i ) for managed equity or balanced portfolios , 1 % of the first $ 10 million and 0.60 % on the balance , ( ii ) for managed fixed income only portfolios , 0.40 % on the first $ 10 million and 0.30 % on the balance , ( iii ) for the municipal value strategy , 0.65 % , ( iv ) for cortina equity po rtfolios , 1.0 % on the first $ 25 million , 0.90 % on the next $ 25 million and 0.80 % on the balance and ( v ) for outsourced chief investment officer portfolios , 0.40 % on the first $ 50 million , 0.32 % on the next $ 50 million and 0.24 % on the balance . our fee for monitoring non-discretionary assets can range from 0.05 % to 0.01 % , but can also be incorporated into an agreed-upon fixed family office service fee . the majority of our client relationships pay a blended fee rate since they are invested in multiple strateg ies . management fees earned on investment funds that we advise are calculated primarily based on the net assets of the funds . some funds calculate investment fees based on the net assets of the funds as of the last business day of each calendar quarter , whereas other funds calculate investment fees based on the value of net assets on the first business day of the month . story_separator_special_tag year ended december 31 , 2018 versus year ended december 31 , 2017 our total revenue increased by $ 7.3 million , or 8.0 % , to $ 98.7 million for year ended december 31 , 2018 , from $ 91.4 million for year ended december 31 , 2017. this increase was driven primarily by growth in our management and advisory fees as a result of an increase in average management fees partially offset by a decrease in performance fees . 44 assets under management declined by $ 2.3 billion , or 10.8 % , to $ 19.0 billion at december 31 , 201 8 from $ 21.3 billion at december 31 , 201 7 . our decline in assets under management for the year ended decem ber 31 , 201 8 was attributable to a decline in discretionary assets under management of $ 1.8 billion and a decline of $ 0.5 billion in non-discretionary assets under management . the decline in our discretionary assets under management was driven by market de preciation and net client out flows . with respect to our discretionary assets under management , equity assets declined by 13.5 % during the year ended december 31 , 201 8 and fixed income assets declined by 5.8 % during the same period . with respect to our dis cretionary assets under management , most of our decline came from our small cap value , smid cap value , small cap concentrated and multi cap value strategies with composite negative returns of -15.7 % , -12.4 % , -12.2 % and -10.6 % , respectively , for the year ended december 31 , 201 8 . compared to the year ended december 31 , 201 7 , there was an increase of $ 1.0 billion of client inflows , an increase of $ 2.8 billion in client outflows , and an increase of $ 3.2 billion in market de preciation . our market de preciation during the year ended december 31 , 201 8 constituted a 5.8 % rate of de crease in our total assets under management compared to december 31 , 201 7 , as compared to our market appreciation during the year ended december 31 , 201 7 which constituted a 9.9 % rate of increase in our total assets under management compared to december 31 , 201 6 . sub-advised fund management revenue increased by $ 0.4 million for the year ended december 31 , 201 8 as compared to the prior year . proprietary fund management revenue remained f lat for the year ended december 31 , 201 8 as compared to the prior year . as of december 31 , 201 8 , the composition of our assets under management was 75 % in discretionary assets , which includes both separately managed accounts and proprietary and sub-advise d funds , and 25 % in non-discretionary assets which represent assets on which we provide portfolio reporting but do not have investment discretion . family office services revenue remained flat at $ 4.0 million for the years ended december 31 , 2018 and 2017. performance fee revenue decreased by $ 0.8 million to $ 25 thousand for the year ended december 31 , 2018 from $ 0.8 million for the year ended december 31 , 2017. these performance fees are primarily related to external investment strategies in which we have a revenue sharing arrangement . the following table represents a further breakdown of our assets under management for the years ended december 31 , 2019 , 2018 and 2017 : replace_table_token_11_th ( 1 ) represents new account flows from both new and existing client relationships ( 2 ) represents closed accounts of existing client relationships and those that terminated ( 3 ) represents periodic cash flows related to existing accounts ( 4 ) represents client assets that converted to discretionary aum from non-discretionary aum ( 5 ) represents the net change to non-discretionary aum 45 expenses our expenses for the years ended december 31 , 2019 , 2018 and 2017 are set forth below : replace_table_token_12_th replace_table_token_13_th ( 1 ) for the years ended december 31 , 2019 and 2018 , $ 27,229 and $ 27,197 , respectively , of partner incentive payments was included in compensation and benefits expense . our expenses are driven primarily by our compensation costs . the table included in “ —expenses—compensation and benefits expense ” describes the components of our compensation expense for the three years ended december 31 , 2019. other expenses , such as rent , professional service fees , data-related costs , and sub-advisory fees incurred are included in our general and administrative expenses in the consolidated statement of operations . year ended december 31 , 2019 versus year ended december 31 , 2018 total expenses increased by $ 5.8 million , or 7.4 % , to $ 83.3 million for the year ended december 31 , 2019 from $ 77.5 million for the year ended december 31 , 2018. this increase was primarily attributable to increases in compensation and benefits expense of $ 2.1 million and an increase in general and administrative expenses of $ 3.7 million . compensation and benefits expense increased by $ 2.1 million , or 3.6 % , to $ 60.0 million for the year ended december 31 , 2019 from $ 57.9 million for the year ended december 31 , 2018. the increase was primarily attributable to an increase in salaries and benefits expenses of $ 2.5 million primarily as a result of merit-based increases and newly-hired staff , including the addition of cortina staff , and an increase in the accrual for bonuses of $ 0.6 million partially offset by a decrease in equity based compensation expense of $ 1.0 million due to a decrease in the number of unvested restricted stock units and unvested non-qualified stock options outstanding . general and administrative expenses increased by $ 3.6 million , or 18.7 % , to $ 23.2 million	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows the following table sets forth our cash flows for the years ended december 31 , 2019 , 2018 and 2017. operating activities consist of net income subject to adjustments for changes in operating assets and liabilities , depreciation , and equity-based compensation expense . investing activities consist primarily of acquiring and selling property and equipment , distributions received from investments in investment funds , and cash paid as part of business acquisitions . financing activities consist primarily of contributions from partners , distributions to partners , the issuance and payments on partner notes , other financings , and earnout payments related to business acquisitions . replace_table_token_19_th operating activities year ended december 31 , 2019 versus year ended december 31 , 2018 operating activities provided $ 18.8 million and $ 28.9 million for the years ended december 31 , 2019 and 2018 , respectively . this difference is primarily the result of a reduction in net income of $ 2.0 million , a decrease in accrued compensation of $ 2.4 million , an increase in equity income from investments related to performance fees of $ 0.3 million , a change in the fair value adjustment to the tax receivable agreement of $ 0.2 million , a decrease in equity based compensation of $ 1.0 million due to a decrease in the number of unvested restricted stock units and unvested non-qualified stock options outstanding , a decrease in deferred rent of $ 3.8 million as a result of adopting asc 842 , and an increase in accounts receivable and due from silvercrest funds of $ 4.9 million due to the timing of collections .
we also consider trends related to certain key financial data , including gross profit margin , selling and administrative expense , investment in research and development , return on invested capital , and cash flows . on october 5 , 2014 , we announced a definitive agreement under which bd will acquire 100 % of carefusion corporation ( carefusion ) for $ 58.00 per share in cash and stock , or a total of approximately $ 12.2 billion , to create a global leader in medication management and patient safety solutions . the transaction is expected to close in the first half of calendar year 2015. under the terms of the transaction , carefusion stockholders will receive $ 49.00 in cash , without interest , and 0.0777 of a share of bd for each share of carefusion . using bd 's closing price as of october 3 , 2014 of $ 115.84 would result in a total cost of $ 58.00 per carefusion share . the value of the consideration transferred for accounting purposes will ultimately be based on the closing share price of bd 's stock on the last trading day prior to the closing date of the transaction , and could materially change . carefusion will operate as part of our medical segment . additional discussion regarding this agreement is provided in note 17 to the consolidated financial statements contained in item 8. financial statements and supplementary data . summary of financial results worldwide revenues in 2014 of $ 8.446 billion increased 4.9 % from the prior year , compared with an increase of 4.5 % in 2013. the components of the total worldwide revenue growth in 2014 and 2013 were as follows : replace_table_token_6_th significant drivers of worldwide revenue growth in 2014 included new product sales and sales in emerging markets . strong medical segment revenue growth in 2014 was driven by emerging market and international safety sales , as well as by sales of insulin pen needles . diagnostics revenue growth in 2014 reflected strong sales of safety-engineered products , as well as solid sales of automated diagnostic platforms and automated microbiology systems . diagnostics revenue growth continues to be unfavorably impacted by continued weaker sales of our women 's health and cancer platform . our biosciences segment 's revenue growth in 2014 was driven primarily by double-digit growth of sales in emerging markets and strong clinical reagent sales in all regions . 22 revenues in the united states of $ 3.417 billion in 2014 increased 1.9 % from 2013. international revenues in 2014 grew 7.0 % to $ 5.029 billion , which reflected an estimated unfavorable foreign exchange translation impact of 0.6 % . u.s. revenue growth in 2014 reflected strong medical and biosciences revenue growth , which was partially offset by the ongoing weaker demand in the diagnostics segment 's women 's health and cancer platform . sales of safety-engineered products in the united states were $ 1.2 billion . international revenues for 2014 reflected growth from all segments , including growth attributable to emerging markets , as well as strong sales of safety-engineered products . international safety-engineered products revenues of $ 1.016 billion grew 10.8 % , including an estimated unfavorable impact of foreign currency translation of 1.5 % , reflecting strong performance in western europe and emerging markets . we continue to invest in research and development , geographic expansion , and new product promotions to drive further revenue and profit growth . our ability to sustain our long-term growth will depend on a number of factors , including our ability to expand our core business ( including geographical expansion ) , develop innovative new products , and continue to improve operating efficiency and organizational effectiveness . while the economic environment for the healthcare industry has stabilized , pricing pressures continue for some of our products . healthcare utilization has continued to stabilize in the united states ; however , any destabilization could adversely impact our u.s. businesses . additionally , macroeconomic challenges in europe continue to constrain healthcare utilization , although we currently view the environment as stable . in emerging markets , the company 's growth is dependent on government funding for healthcare systems . in addition to the economic conditions in the united states and elsewhere , numerous other factors can affect our ability to achieve our goals including , without limitation , increased competition and healthcare reform initiatives . for example , the u.s. patient protection affordable care act contains the medical device excise tax that imposed a 2.3 % tax on certain u.s. sales of medical devices . this tax became effective at the beginning of bd 's second quarter of fiscal year 2013. as a result , this tax incrementally increased selling and administrative expense by $ 14 million in 2014 compared with 2013 , and by $ 40 million in 2013 compared with 2012. our financial position remains strong , with cash flows from operating activities totaling $ 1.75 billion in 2014. at september 30 , 2014 , we had $ 2.74 billion in cash and equivalents and short-term investments . also , we continued to return value to our shareholders in the form of share repurchases and dividends . during 2014 , we repurchased $ 400 million of our common stock and paid cash dividends of $ 421 million . no share repurchases are planned in 2015 , as our share repurchase program has been suspended in connection with the announced agreement to acquire carefusion . each reporting period , we face currency exposure that arises from translating the results of our worldwide operations to the u.s. dollar at exchange rates that fluctuate from the beginning of such period . we evaluate our results of operations on both a reported and a foreign currency-neutral basis , which excludes the impact of fluctuations in foreign currency exchange rates . story_separator_special_tag research and development expense in 2014 additionally reflected ongoing investment in new products and platforms within the medical segment . expenses in 2013 reflected increased investment in new products and platforms in all three segments . net interest expense replace_table_token_13_th the decrease in interest expense in 2014 compared with 2013 primarily reflected lower levels of long-term fixed-rate debt and a reduction of interest payments through fixed-to-floating interest rate swap agreements . for further discussion regarding these swap arrangements , refer to note 12 to the consolidated financial statements contained in item 8. financial statements and supplementary data . the increase in interest expense in 2013 compared with 2012 primarily reflected higher average levels of long-term fixed-rate debt . the increase in interest income in 2014 compared with 2013 reflected higher interest rates on investments outside the united states , partially offset by the impact of lower investment gains on assets related to our deferred compensation plan . the decrease in interest income in 2013 compared with 2012 reflected the impact of lower interest rates on investments outside the u.s. and lower investment gains on assets related to our deferred compensation plan . the offsetting movements in the deferred compensation plan liability were recorded in selling and administrative expense . income taxes the effective tax rate in 2014 was 22.1 % as compared with the 2013 rate of 20.2 % . the effective income tax rate in 2013 would have been higher by 430 basis points excluding the impact on bd 's income mix of the 28 previously discussed litigation matters and pension settlement . the effective income tax rate in 2014 reflected our decision to change our position of permanent reinvestment , with respect to the unremitted earnings of brazil and certain other latin american jurisdictions , the impact of which was more than offset by the benefits resulting from discrete one-time items and geographic mix . the effective income tax rate in 2013 also reflected the favorable impact from various tax settlements in multiple jurisdictions and the reinstatement of the u.s. research and development tax credit , partially offset by a lower benefit on foreign earnings . the effective income tax rate of 24.6 % in 2012 , which was reduced by 20 basis points due to the 2012 pension settlement charge , reflected the favorable impact of various tax settlements in multiple jurisdictions . income and diluted earnings per share from continuing operations income from continuing operations and diluted earnings per share from continuing operations in 2014 were $ 1.185 billion and $ 5.99 , respectively . the previously discussed specified items recorded in 2014 decreased diluted earnings per share from continuing operations by $ 0.25. in addition , the medical device excise tax was in effect for an additional quarter in 2014 compared with 2013 , the impact of which was $ 0.05. the current year 's earnings additionally reflected an estimated $ 0.22 unfavorable impact compared with 2013 from foreign currency translation . income from continuing operations and diluted earnings per share from continuing operations in 2013 were $ 929 million and $ 4.67 , respectively . the previously discussed specified items recorded in 2013 decreased diluted earnings per share from continuing operations in 2013 by $ 1.15. earnings in 2013 also reflected an estimated net unfavorable impact compared with 2012 of foreign currency fluctuations of $ 0.06 per share and an unfavorable impact from the medical device excise tax of $ 0.13 per share . income from continuing operations and diluted earnings per share from continuing operations in 2012 were $ 1.1 billion and $ 5.30 , respectively . the specified items recorded in 2012 unfavorably impacted diluted earnings per share from continuing operations by $ 0.06 per share . financial instrument market risk we selectively use financial instruments to manage market risk , primarily foreign currency exchange risk and interest rate risk relating to our ongoing business operations . the counterparties to these contracts are highly rated financial institutions . we do not enter into financial instruments for trading or speculative purposes . foreign exchange risk bd and its subsidiaries transact business in various foreign currencies throughout europe , asia pacific , canada , japan and latin america . we face foreign currency exposure from the effect of fluctuating exchange rates on payables and receivables relating to transactions that are denominated in currencies other than our functional currency . these payables and receivables primarily arise from intercompany transactions . we hedge substantially all such exposures , primarily through the use of forward contracts . we also face currency exposure that arises from translating the results of our worldwide operations , including sales , to the u.s. dollar at exchange rates that have fluctuated from the beginning of a reporting period . from time to time , we may purchase forward contracts and options to hedge certain forecasted transactions that are denominated in foreign currencies in order to partially protect against a reduction in the value of future earnings resulting from adverse foreign exchange rate movements . gains or losses on derivative instruments are largely offset by the gains or losses on the underlying hedged transactions . we did not enter into contracts to hedge cash flows in fiscal year 2014 or 2013. derivative financial instruments are recorded on our balance sheet at fair value . for foreign currency derivatives , market risk is determined by calculating the impact on fair value of an assumed change in foreign exchange rates relative to the u.s. dollar . fair values were estimated based upon observable inputs , specifically spot currency rates and foreign currency prices for similar assets and liabilities . with respect to the derivative instruments outstanding at september 30 , 2014 and 2013 , the impact changes in the u.s. dollar would have on pre-tax earnings was estimated as follows : replace_table_token_14_th 29 these calculations do not reflect the impact of exchange gains or losses on the underlying transactions that would substantially offset the results	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	net cash flows from continuing operating activities net cash provided by continuing operating activities was $ 1.75 billion , $ 1.72 billion and $ 1.69 billion in 2014 , 2013 and 2012 , respectively , and was primarily attributable to income from continuing operations , as adjusted for depreciation and amortization . the 2014 change in operating assets and liabilities was a net use of cash and primarily reflected higher levels of inventory and prepaid expenses , partially offset by higher levels of accounts payable and accrued expenses . the 2014 change in operating liabilities included the payment of $ 22 million under a settlement agreement related to indirect purchaser antitrust class action cases . for further discussion regarding this matter , refer to note 5 to the consolidated financial statements contained in item 8. financial statements and supplementary data . the change in accounts receivable includes a $ 36 million payment of government receivables balances in spain . further discussion regarding government receivables is provided in note 13 to the consolidated financial statements contained in item 8. financial statements and supplementary data . net cash provided by continuing operating activities in 2014 was reduced by changes in the pension obligation resulting primarily from discretionary cash contributions of $ 75 million . an additional discretionary contribution of $ 40 million was made to the u.s. pension plan in october 2014. the net change in working capital in 2013 was primarily driven by an increase in accrued payables , reflecting the charge from the rti litigation verdict , partially offset by higher inventory levels and prepaid expenses . net cash provided by continuing operating activities in 2013 was reduced by changes in the pension obligation resulting primarily from discretionary cash contributions of approximately $ 138 million . net cash flows from continuing investing activities capital expenditures our investments in capital expenditures are focused on projects that enhance our cost structure and manufacturing capabilities , and support our strategy of geographic expansion with select investments in growing markets .
the corporate partnerships program which now represents approximately 19 % of ctu 's total student enrollments ; and our refined advising model which differentiates outreach based on a student 's previous education level and academic needs . new student enrollments within aiu increased 26.6 % for the year as compared to the prior year , contributing to total student enrollments growth of 10.2 % as of december 31 , 2019 as compared to december 31 , 2018. the new student enrollment growth for 38 the year was positively impacted by approximately 8.2 % more enrollment days during the year as compared to the prior year . enrollment days attributable to any given period are the available days in the period during which a prospective student may apply to start school during that period . the number of enrollment days within the period impacts the new student enrollments for that period . excluding the variability resulting from aiu 's academic calendar , enrollment trends at aiu have been positively impacted by aiu 's graduate teams and their effectiveness in serving prospective students . we believe the graduate teams provide a more holistic student support process by collectively cultivating a student-first mindset acro ss admissions , student advising and financial aid functions . these teams are also becoming more efficient and effective in their student outreach and support as they gain experience . additionally , we have made incremental operating changes across various student support processes that focus on enhancing student experiences throughout their academic life cycle by providing coordinated and customized outreach using data analytics and more effective communication between our admissions , student advisi ng and financial aid functions . lastly , aiu 's academic teams have continued to optimize course sequencing and redesign course content to create a learner-centric model where there is a focus on step by step learning versus assignment completion . we believe these measures have had a positive impact on student experiences and retention . technology continues to be a key focus and important competitive advantage for the universities and our investments have enhanced student-serving processes and initiatives within both ctu and aiu . our faculty and student mobile applications are fully operational and are increasingly being used as a communication tool for students , with an over 89 % adoption rate by students for the student mobile application . we have deployed a two-way messaging application which is used across all student support functions , including admissions , academics , student advising and financial aid . during the year we rolled out an artificial intelligence powered chatbot within aiu named lucy that addresses questions from prospective students . we are experiencing efficiencies within our admissions function as a result of the chatbot and therefore are able to reallocate resources to student support functions for our continuing students . we also continue to research and develop different ways to use data analytics to expand the use of artificial intelligence across a student 's academic life cycle , from initial prospective student inquiry and starting classes to ongoing advising . our goal is to provide ongoing support to students whenever they need it while also providing a better user experience that is more personalized in nature . we expect to continue investing in technology initiatives and expect our capital expenditures to be approximately 2 % of revenue for 2020. machine learning and data analytics have also enhanced the functionality and effectiveness of our marketing outreach efforts to prospective students . as a result , our marketing efforts are more focused based on a students ' propensity to be successful in our academic programs . lastly , we are testing a new orientation framework which is designed to streamline navigation and content to increase the relevance to each student . finally , we are now working through the final regulatory approval with the department of education to acquire trident university international . we expect the transaction to close in early march 2020 depending on when the department of education adds trident 's programs to aiu 's authorization . we are working towards a smooth transition for trident into aiu and our focus will be on maintaining and further enhancing academic experiences for students from both universities . financial highlights revenue for the year ended december 31 , 2019 increased $ 46.4 million or 8.0 % as compared to the prior year , driven by revenue growth at both ctu and aiu as a result of the positive enrollment trends discussed above and approximately 4.2 % more revenue-earning days within aiu as compared to the prior year due to its academic calendar which varies each year . we reported operating income of $ 86.5 million as compared to operating income of $ 71.3 million for the prior year , an improvement of 21.3 % . this improvement was driven by revenue growth within our universities , operating and cost efficiencies and reduced operating losses at our closed campuses . lastly , we reported cash provided by operations for the current year of $ 73.1 million as compared to $ 57.0 million in the prior year . the current year cash usage included payments of $ 35.0 million for legal settlements as compared to $ 17.1 million in the prior year . revenue within our ctu segment increased $ 16.5 million or 4.4 % while aiu 's revenue increased by $ 30.5 million or 14.9 % driven by an increase in new and total student enrollments for both universities . operating income for ctu decreased $ 3.0 million or 2.7 % as compared to the prior year , with the decrease driven by $ 18.6 million of legal settlement expense related to the ftc matter . excluding this legal settlement , ctu 's operating income would have increased as compared to the prior year . story_separator_special_tag impact from the company 's stock repurchase program is excluded , and ( viii ) any results of operations from trident university are excluded . although these estimates and assumptions are based upon management 's good faith beliefs regarding current and future circumstances and actions that may be undertaken , actual results could differ materially from these estimates . in addition , decisions we make in the future as we continue to evaluate diverse strategies to enhance shareholder value may impact the outlook provided above . 42 consolidated results of operations the summary of selected financial data table below should be referenced in connection with a review of the following discussion of our results of operations for the years ended december 31 , 2019 and 2018 ( dollars in thousands ) , including comparisons of our year-over-year performance between these years . please refer to item 7 , “ management 's discussion and analysis of financial condition and results of operation ” in our annual report on form 10-k for the year ended december 31 , 2018 for a discussion of our results for the year ended december 31 , 2017 , as well as the year-over-year comparison of our 2018 financial performance to 2017. replace_table_token_11_th _ ( 1 ) educational services and facilities expense includes costs attributable to the educational activities of our institutions , including : salaries and benefits of faculty , academic administrators and student support personnel , and costs of educational supplies and facilities , such as rents on campus leases and certain costs of establishing and maintaining computer laboratories . also included in educational services and facilities expense are costs of other goods and services provided by our campuses , including costs of textbooks and laptop computers . ( 2 ) general and administrative expense includes salaries and benefits of personnel in corporate and campus administration , marketing , admissions , information technology , financial aid , accounting , human resources , legal and compliance . other expenses within this expense category include costs of advertising and production of marketing materials , bad debt expense and , for the years ended december 31 , 2018 and 2017 , occupancy of the corporate offices . beginning january 1 , 2019 all occupancy expenses are recorded within educational services and facilities . year ended december 31 , 2019 as compared to the year ended december 31 , 2018 revenue current year revenue increased 8.0 % or $ 46.4 million supported by a 6.4 % increase in total student enrollments for the university group as well as various operating initiatives that contributed to the increase of 14.6 % in new student enrollments . the current year revenue increase was also benefitted by 4.2 % more revenue-earning days within aiu as compared to the prior year due to its academic calendar which varies each year . 43 educational services and facilities expense ( dollars in thousands ) replace_table_token_12_th the educational services and facilities expense for the current year improved by 7.2 % or $ 8.0 million as compared to the prior year . academics and student related costs improved by 6.6 % or $ 5.6 million for the current year as compared to the prior year , driven by efficiencies attained through our restructuring and re-engineering actions implemented primarily within non student-facing operations during the third quarter of 2018. we have maintained the level of staffing through 2 019 and as our total student enrollments increase , academics and student related costs as a percent of revenue should decrease . occupancy expenses for the current year improved by 9.2 % or $ 2.4 million as compared to the prior year , primarily driven by the termination of leases for our closed campuses . during 2019 , we began recording occupancy expenses for the corporate offices within educational services and facilities . previously , these expenses were recorded within administrative expenses . the amount of occupancy expenses for the corporate offices that was recorded within general and administrative expense in the prior year was $ 6.3 mil lion . the increase in occupancy expenses for the current year related to our corporate offices now being recorded within educational services and facilities expense was more than offset with the decreases associated with our closed campuses . educational services and facilities expense as a percentage of revenue improved by 2.7 % as compared to prior year . general and administrative expense ( dollars in thousands ) replace_table_token_13_th the general and administrative expense for the current year increased by 10.1 % or $ 39.4 million as compared to the prior year . the current year increase as compared to the prior year was primarily driven by increases in administrative , advertising and bad debt expenses . the increased administrative expense for the current year is primarily due to legal reserves recorded of $ 37.1 million related to the ftc and oregon arbitrations matters as well as increased investments in technology . the prior year included legal settlements of $ 14.6 million related to the surret and multi-state ag matters . the advertising expense for the current year increased by 3.5 % or $ 4.5 million as compared to prior year . this increase is aligned with our prospective student interest and supports the positive total student enrollment growth within both ctu and aiu . admissions expense remained relative flat for the current year as compared to the prior year , with improvement within ctu of 2.2 % or $ 1.0 million partially off by increases within aiu 's admissions expense of 2.1 % or $ 0.9 million . bad debt expense incurred by each of our segments during the years ended december 31 , 2019 , 2018 and 2017 was as follows ( dollars in thousands ) : replace_table_token_14_th 44 bad debt expense increased by 35.7 % or $ 11.4 million for the current year as compared to the prior year , primarily driven by an increase in reserve rates due to recent	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	sources and uses of cash operating cash flows during the years ended december 31 , 2019 and 2018 , net cash flows provided by operating activities totaled $ 73.1 million and $ 57.0 million , respectively . the improvement in cash flow from operations as compared to the prior year is primarily driven by improved operating performance within ctu and aiu and reduction of losses at our closed campuses . the improved operating performance during the current year was primarily driven by increased revenue as compared to the prior year , which more than offset the increases in current year legal settlement payments as compared to the prior year . additionally , the current year operating cash flows were impacted by the timing of receipt of approximately $ 39.3 million of title iv funds . these funds were received in january 2020 instead of the fourth quarter of 2019. in the prior year , title iv funds for the similar time period were received in the fourth quarter of 2018 . 51 our primary source of cash flows from operating activities is tuition collected from our students . our students derive the ability to pay tuition costs through the use of a variety of funding sources , including , among others , federal loan and grant programs , state grant programs , private loans and grants , institution payment plans , private and institutional scholarships and cash payments .
in addition , in october 2016 , the fda granted fast track designation to blu-285 for the treatment of patients with unresectable or metastatic gist that progressed following treatment with imatinib and a second tyrosine kinase inhibitor and for the treatment of patients with unresectable or metastatic gist with the pdgfrα d842v mutation regardless of prior therapy . we have worldwide development and commercialization rights to blu-285 , blu-554 and blu-667 . we also have initiated a discovery program targeting protein kinase camp-activated catalytic subunit alpha , or prkaca , fusions for the treatment of fibrolamellar carcinoma , or flc , a rare and distinct subtype of liver cancer that typically arises in young adults . prkaca fusions are the only known recurrent genomic events in flc and are considered to be the driver gene of the disease . currently , there are no approved therapies for flc , and surgery is the only available treatment option for some patients , but most patients inevitably progress . we will continue to leverage our discovery platform to systematically and reproducibly identify kinases that are drivers of diseases in genomically defined patient populations and craft drug candidates that potently and selectively target these kinases . we anticipate nominating at least one additional discovery program in 2017. in addition to our wholly-owned clinical and pre-clinical programs , we have leveraged our discovery platform to enter into collaboration programs with alexion pharma holding , or alexion , and f. hoffmann-la roche ltd and hoffmann-la roche inc. , which we refer to collectively as roche . since inception , our operations have focused on organizing and staffing our company , business planning , raising capital , establishing our intellectual property , building our discovery platform , including our proprietary compound library and new target discovery engine , identifying kinase drug targets and potential drug candidates , producing drug substance and drug product material for use in pre-clinical studies and clinical trials , conducting pre-clinical studies , including glp toxicology studies and commencing clinical development activities . we do not have any drugs approved for sale and have not generated any revenue from drug sales . to date , we have financed our operations primarily through public offerings of our common stock , private placements of our convertible preferred stock , collaborations and a debt financing . through december 31 , 2016 , we have received an aggregate of $ 501.3 million from such transactions , including $ 312.4 million in aggregate gross proceeds from the sale of common stock in our may 2015 initial public offering , or ipo , and december 2016 follow-on underwritten public offering , $ 115.1 million in gross proceeds from the issuance of convertible preferred stock , $ 18.8 million of upfront and milestone payments from alexion , a $ 45.0 million upfront payment from roche and $ 10.0 million in gross proceeds from the debt financing . since inception , we have incurred significant operating losses . our net losses were $ 72.5 million , $ 52.8 million and $ 40.3 million for the years ended december 31 , 2016 , 2015 and 2014. as of december 31 , 2016 , we had an accumulated deficit of $ 207.5 million . we expect to continue to incur significant expenses and operating losses over the next several years . we anticipate that our expenses will increase significantly in connection with our ongoing activities , particularly as we : · continue the planned clinical development activities for two of our lead drug candidates , blu-285 and blu-554 , commence the planned clinical development activities for our other lead drug candidate , blu-667 ; · continue to produce drug substance and drug product material for use in pre-clinical studies and clinical trials ; · continue to discover , validate and develop additional drug candidates ; · conduct research and development activities under our collaborations with alexion and roche ; 87 · conduct development and commercialization activities for companion diagnostic tests , including our companion diagnostic tests with ventana medical systems , inc. , or ventana , for blu-554 and with qiagen manchester limited , or qiagen , for blu-285 ; · maintain , expand and protect our intellectual property portfolio ; · hire additional research , development and business personnel ; and · incur additional costs associated with operating as a public company . financial operations overview revenue to date , we have not generated any revenue from drug sales and do not expect to generate any revenue from the sale of drugs in the near future . our revenue consists of collaboration revenue under the alexion agreement and roche agreement , including amounts that are recognized related to upfront payments , milestone payments and amounts due to us for research and development services . in the future , revenue may include additional milestone payments and royalties on any net product sales under the respective collaboration agreements . we expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing and amount of license fees , research and development reimbursements , payments for manufacturing services , and milestone and other payments . in the future , we will seek to generate revenue from a combination of drug sales and additional strategic relationships we may enter into . expenses research and development expenses research and development expenses consist primarily of costs incurred for our research activities , including our drug discovery efforts , and the development of our drug candidates , which include : · employee‑related expenses including salaries , benefits , and stock‑based compensation expense ; · expenses incurred under agreements with third parties that conduct research and development , pre-clinical activities , clinical activities and manufacturing on our behalf ; · the cost of consultants ; · the cost of lab supplies and acquiring , developing and manufacturing pre-clinical study and clinical trial materials ; and · facilities , depreciation , and other expenses story_separator_special_tag payments or reimbursements resulting from our research and development efforts are recognized as the services are performed and presented on a gross basis because we are the principal for such efforts , so long as there is persuasive evidence of an arrangement , the fee is fixed or determinable , and collection of the related amount is reasonably assured . milestone revenue our collaboration agreements may include contingent milestone payments related to specified pre-clinical milestones , development milestones and sales-based commercial milestones . at the inception of an arrangement that includes milestone payments , we evaluate whether each milestone is substantive and at risk to both parties on the basis of the contingent nature of the milestone . this evaluation includes an assessment of whether : · the consideration is commensurate with either our performance to achieve the milestone or the enhancement of the value of the delivered item ( s ) as a result of a specific outcome resulting from the our performance to achieve the milestone ; · the consideration relates solely to past performance ; and · the consideration is reasonable relative to all of the deliverables and payment terms within the arrangement . we evaluate factors such as the scientific , clinical , regulatory , commercial and other risks that must be overcome to achieve the respective milestone and the level of effort and investment required to achieve the respective milestone in making this assessment . there is considerable judgment involved in determining whether a milestone satisfies all of the criteria required to conclude that a milestone is substantive . milestones that are not considered substantive are accounted for as license payments and recognized over the remaining period of performance from the date of achievement of the milestone . milestones that are considered substantive will be recognized in their entirety upon successful accomplishment of the milestone , assuming all other revenue recognition criteria are met . royalty revenue we will recognize royalty revenue in the period of sale of the related product ( s ) , based on the underlying contract terms , provided that the reported sales are reliably measurable , and we have no remaining performance obligations , assuming all other revenue recognition criteria are met . accrued research and development expenses as part of the process of preparing our consolidated financial statements , we are required to estimate our accrued expenses as of each balance sheet date . this process involves reviewing open contracts and purchase orders , communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost . the majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met . we make estimates of our accrued expenses as of each balance sheet date based on facts and circumstances known to us at that time . we periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary . the significant estimates in our accrued research and development expenses include the costs incurred for services performed by our vendors in connection with research and development activities for which we have not yet been invoiced . we base our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development on our behalf . the financial terms of these agreements are subject to negotiation , vary from contract to contract and may result in uneven payment flows . there may be instances in which payments made to our vendors will exceed the level of 93 services provided and result in a prepayment of the research and development expense . in accruing service fees , we estimate the time period over which services will be performed and the level of effort to be expended in each period . if the actual timing of the performance of services or the level of effort varies from our estimate , we adjust the accrual or prepaid accordingly . non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made . although we do not expect our estimates to be materially different from amounts actually incurred , if our estimates of the status and timing of services performed differ from the actual status and timing of services performed , it could result in us reporting amounts that are too high or too low in any particular period . to date , there have been no material differences between our estimates of such expenses and the amounts actually incurred . stock-based compensation we expense the fair value of employee stock awards , net of estimated forfeitures , adjusted to reflect actual forfeitures , over the requisite service period , which is typically the vesting period . compensation cost for restricted stock awards issued to employees is measured using the grant date intrinsic value of the award , net of estimated forfeitures , and is adjusted to reflect actual forfeitures . we estimate the fair value of options granted to employees at the date of grant using the black‑scholes option‑pricing model that requires management to apply judgment and make estimates , including : · expected volatility , which is calculated based on reported volatility data for a representative group of publicly traded companies for which historical information is available . prior to april 30 , 2015 , we were a privately-held company and lacked company-specific historical and implied volatility information . as such , we have used an average of expected volatility based on the volatilities of a representative group of publicly traded biopharmaceutical companies for a period	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	sources of liquidity to date , we have financed our operations primarily through public offerings of our common stock , private placements of our convertible preferred stock , collaborations and a debt financing . through december 31 , 2016 , we have received an aggregate of $ 501.3 million from such transactions , including $ 312.4 million in aggregate gross proceeds from the sale of common stock in our may 2015 ipo and december 2016 follow-on underwritten public offering , $ 115.1 million in gross proceeds from the issuance of convertible preferred stock , $ 18.8 million of upfront and milestone payments from alexion , a $ 45.0 million upfront payment from roche and $ 10.0 million in gross proceeds from the debt financing . as of december 31 , 2016 , we had cash , cash equivalents and investments of $ 268.2 million . cash flows the following table provides information regarding our cash flows for the years ended december 31 , 2016 , 2015 and 2014 : replace_table_token_12_th net cash used in operating activities . net cash used in operating activities was $ 24.5 million during the year ended december 31 , 2016 compared to net cash used in operating activities of $ 31.7 million during year ended december 31 , 2015. the decrease in net cash used in operating activities was primarily due to changes in deferred 99 revenue related to the timing and amount of upfront payments from alexion and roche , partially offset by an increase in net loss of $ 19.7 million for the year end december 31 , 2016 as compared to the year ended december 31 , 2015. in the year ended december 31 , 2016 , we received a $ 45.0 million upfront payment from roche , and in the year ended december 31 , 2015 , we received a $ 15.0 million upfront payment from alexion .
we are also developing mgl-3196 for dyslipidemia , particularly genetic dyslipidemias such as familial hypercholesterolemia , or fh , including both homozygous and heterozygous forms of the disease . we have completed a phase 2 clinical trial in heterozygous fh , or hefh , patients . mgl-3196 is a once-daily oral pill that has been studied in six completed phase 1 trials in a total of 183 subjects . mgl-3196 appeared to be safe and well-tolerated in these trials , which included a single ascending dose trial , a multiple ascending dose trial , two drug interaction trials with statins , a multiple dose mass balance study , and a single dose relative bioavailability study of tablet formulations versus capsule formulation . key developments clinical trials in october 2016 , we initiated a phase 2 clinical trial in nash ( [ nct02912260 ] at www.clinicaltrials.gov ) . the randomized , double-blind , placebo-controlled , multi-center phase 2 study enrolled 125 patients 18 years of age and older with biopsy-confirmed nash . patients are randomized to receive either placebo or mgl-3196 , twice as many receiving mgl-3196 as placebo . efficacy will be confirmed at the end of the trial ( 36 weeks ) by repeat magnetic resonance imagingproton density fat fraction ( mri-pdff ) and conventional liver biopsy to examine histological evidence for the resolution of nash . recent published data show a high correlation of reduction of liver fat measured by mri-pdff to nash scoring on liver biopsy . other secondary endpoints include changes in clinically relevant biomarkers at 12 and 36 weeks , improvement in fibrosis by at least one stage with no worsening of steatohepatitis , and safety and tolerability . we reached our top-line analysis of the primary endpoint in december 2017 , and we expect to reach our top-line analysis of the secondary endpoint ( nash assessment on liver biopsy ) by spring of 2018. in february 2017 , we initiated a phase 2 clinical trial in hefh ( [ nct03038022 ] at www.clinicaltrials.gov ) . the 12-week , randomized , double-blind , placebo-controlled , multi-center phase 2 clinical trial enrolled 116 patients with hefh in several european countries . patients were randomized in a 2:1 ratio to receive either mgl-3196 or placebo , in addition to their current drug regimen ( including high dose statins and or ezetimibe ) . the primary endpoint of the study was 52 reduction of ldl cholesterol , with secondary endpoints including reductions in tgs , lp ( a ) , and apob , as well as safety . lp ( a ) is a severely atherogenic lipid particle , commonly elevated in familial hypercholesterolemia patients , the levels of which are not adequately reduced by existing lipid lowering therapies . thr- b agonism is one of the few therapeutic approaches that can substantially lower lp ( a ) . in february 2018 , we announced positive results from the 12 week phase 2 clinical trial in hefh . reverse merger on july 22 , 2016 , synta completed its business combination with private madrigal in accordance with the terms of an agreement and plan of merger and reorganization , dated as of april 13 , 2016 , or the merger agreement . pursuant to the merger agreement , synta formed a wholly-owned subsidiary that merged with and into private madrigal , with private madrigal surviving the merger and becoming a wholly-owned subsidiary of synta , or the merger . in connection with , and prior to the consummation of , the merger , synta effected a 1-for-35 reverse stock split of its common stock , or the reverse stock split , and , following the merger , changed its name to `` madrigal pharmaceuticals , inc. `` all shares and per share amounts have been retrospectively adjusted to give effect to the reverse stock split , except as otherwise disclosed . following the consummation of the merger , our business became the business conducted by private madrigal prior to the consummation of the merger . basis of presentation research and development expenses research and development expenses primarily consist of costs associated with our research activities , including the preclinical and clinical development of our product candidates . we expense our research and development expenses as incurred . we contract with clinical research organizations to manage our clinical trials under agreed upon budgets for each study , with oversight by our clinical program managers . we account for nonrefundable advance payments for goods and services that will be used in future research and development activities as expenses when the service has been performed or when the goods have been received . manufacturing expense includes costs associated with drug formulation development and clinical drug production . we do not track employee and facility related research and development costs by project , as we typically use our employee and infrastructure resources across multiple research and development programs . we believe that the allocation of such costs would be arbitrary and not be meaningful . our research and development expenses consist primarily of : salaries and related expense , including stock-based compensation ; external expenses paid to clinical trial sites , contract research organizations , laboratories , database software and consultants that conduct clinical trials ; expenses related to development and the production of nonclinical and clinical trial supplies , including fees paid to contract manufacturers ; expenses related to preclinical studies ; expenses related to compliance with drug development regulatory requirements ; and other allocated expenses , which include direct and allocated expenses for depreciation of equipment and other supplies . we expect to continue to incur substantial expenses related to our development activities for the foreseeable future as we conduct our phase 2 clinical program , manufacturing and toxicology studies . story_separator_special_tag product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development , primarily due to the increased size and duration of later- 53 stage clinical trials , additional drug manufacturing requirements , and later stage toxicology studies such as carcinogenicity studies . our research and development expenses have increased year over year in each of 2016 and 2017 and we expect that our research and development expenses will increase substantially in the future . the process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming . the probability of success for each product candidate is affected by numerous factors , including preclinical data , clinical data , competition , manufacturing capability and commercial viability . accordingly , we may never succeed in achieving marketing approval for any of our product candidates completion dates and costs for our clinical development programs as well as our research program can vary significantly for each current and future product candidate and are difficult to predict . as a result , we can not estimate with any degree of certainty the costs we will incur in connection with the development of our product candidates at this point in time . we expect that we will make determinations as to which programs and product candidates to pursue and how much funding to direct to each program and product candidate on an ongoing basis in response to the scientific success of early research programs , results of ongoing and future clinical trials , our ability to enter into collaborative agreements with respect to programs or potential product candidates , as well as ongoing assessments as to each current or future product candidate 's commercial potential . general and administrative expenses general and administrative expenses consist primarily of salaries , benefits and stock-based compensation expenses for employees , management costs , costs associated with obtaining and maintaining our patent portfolio , professional fees for accounting , auditing , consulting and legal services , and allocated overhead expenses . we expect that our general and administrative expenses may increase in the future as we expand our operating activities , maintain and expand our patent portfolio and incur additional costs associated with being a public company and maintaining compliance with exchange listing and sec requirements . we expect these potential increases will likely include management costs , legal fees , accounting fees , directors ' and officers ' liability insurance premiums and expenses associated with investor relations . critical accounting policies and estimates our management 's discussion and analysis of our financial condition and results of operations are based on our financial statements which have been prepared in accordance with gaap . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities , and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements . on an ongoing basis , we evaluate our estimates and judgments , including those related to accrued research and development expenses . we base our estimates on historical experience , known trends and events , and various other factors that are believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources . actual results may differ materially from these estimates under different assumptions or conditions . research and development costs research and development costs are expensed as incurred . research and development costs are comprised of costs incurred in performing research and development activities , including internal costs ( including stock-based compensation ) , costs for consultants , and other costs associated with the company 's preclinical and clinical programs . in particular , madrigal has conducted safety studies in animals , optimized and implemented the api manufacturing , and conducted phase 1 & 2 clinical trials , all of which are considered research and development expenditures . 54 stock-based compensation we recognize stock-based compensation expense based on the grant date fair value of stock options granted to employees , officers and directors . we use the black-scholes option pricing model to determine the grant date fair value as our management believes it is the most appropriate valuation method for its option grants . the black-scholes model requires inputs for risk-free interest rate , dividend yield , volatility and expected lives of the options . certain of the employee stock options granted by us are structured to qualify as incentive stock options , or isos . under current tax regulations , we do not receive a tax deduction for the issuance , exercise or disposition of isos if the employee meets certain holding requirements . if the employee does not meet the holding requirements , a disqualifying disposition occurs , at which time we may receive a tax deduction . we do not record tax benefits related to isos unless and until a disqualifying disposition is reported . in the event of a disqualifying disposition , the entire tax benefit is recorded as a reduction of income tax expense . we have not recognized any income tax benefit for its share-based compensation arrangements due to the fact that we do not believe it is more likely than not it will realize the related deferred tax assets . results of operations comparison years ended december 31 , 2017 and 2016 the following table provides comparative results of operations for the years ended december 31 , 2017 and 2016 ( in thousands ) : replace_table_token_4_th research and development expense comparison of years ended december 31 , 2017 and 2016 our research and development expenses were $ 24.4 million for the year ended december 31 , 2017 compared to $ 15.9 million for the year ended december 31 , 2016. research and development expenses increased by $ 8.5	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources as of december 31 , 2017 , we had cash , cash equivalents and marketable securities of $ 191.5 million . to date , we have funded our operations primarily through the issuance of convertible debt , the issuance of shares of common stock and preferred stock , and the proceeds from the merger . we believe our cash and cash equivalents and marketable securities will be sufficient to fund our operations past one year from the issuance of these financial statements . our primary uses of capital are , and we expect will continue to be , funding research efforts and the development of our product candidates , compensation and related expenses , hiring additional staff , including clinical , scientific , operational , financial and management personnel , and costs associated with operating as a public company . we expect to incur substantial expenditures in the foreseeable future for the development and potential commercialization of our product candidates . we plan to continue to fund losses from operations and capital funding needs through future equity and or debt financings , as well as potential additional collaborations or strategic partnerships with other companies . the sale of additional equity or convertible debt could result in additional dilution to our stockholders .
as described further below , over the last year , we have shifted our licensing model , and as of january 31 , 2020 , a substantial majority of our license revenues consist of revenues from term licenses , and to a much lesser extent , perpetual licenses , under which we generally recognize the license fee portion of these arrangements upfront . as a result , the timing of when we enter into large term and perpetual licenses may lead to fluctuations in our revenues and operating results because our expenses are largely fixed in the short-term . splunk cloud delivers the core capabilities of splunk enterprise as a scalable , reliable cloud service . we typically base our splunk cloud annual subscription fees on either the volume of data indexed per day including a fixed amount of data storage , or purchased infrastructure and data storage our customers require . we recognize the revenues associated with our cloud services ratably over the associated subscription term . splunk enterprise security ( “ es ” ) addresses emerging security threats and security information and event management ( “ siem ” ) use cases through monitoring , alerts and analytics . splunk it service intelligence ( “ itsi ” ) is a machine learning powered monitoring and analytics solution that correlates nearly any kind of data across it and the business to provide monitoring and troubleshooting support and predict problems before they have an impact . splunk phantom automates and orchestrates incident response workflows to take immediate action the moment an incident is detected . victorops is a cloud-based collaborative incident response system that delivers context-rich alerts , reducing the time required to react to and address incidents . signalfx is a cloud-based service that provides real-time monitoring and metrics for cloud infrastructure , microservices and applications observability , as well as application performance management ( “ apm ” ) for organizations . during fiscal 2020 , we rapidly shifted our revenue mix from sales of perpetual licenses to sales of term licenses and cloud subscriptions , and we have substantially completed our transition to a renewable model as of january 31 , 2020. as part of this transition , we discontinued offering new perpetual licenses effective november 1 , 2019. we have also shifted from generally invoicing our multi-year term license contracts upfront to invoicing on an annual basis . accordingly , we have seen the timing of our cash collections extend over a longer period of time than it has been historically , and expect this to negatively impact operating cash flows through at least fiscal 2022. we also expect our business model transition to impact the timing of our recognition of revenue , as well as impact our operating margins as cloud services become a larger percentage of our sales . we use total annual recurring revenue ( “ total arr ” ) and subscription annual recurring revenue ( “ subscription arr ” ) to identify the annual recurring value of customer contracts at the end of a reporting period . total arr represents the annualized revenue run-rate of active term license , maintenance , and subscription contracts at the end of a reporting period . subscription arr represents the annualized revenue run-rate of active subscription contracts at the end of a reporting period . total arr was $ 1.68 billion and subscription arr was $ 442.0 million as of january 31 , 2020 . we intend to continue investing for long-term growth . we have invested and intend to continue to invest heavily in product development to deliver additional features and performance enhancements , deployment models and solutions that can address new end markets . for example , during fiscal 2020 , we released new versions of existing offerings such as splunk itsi and splunk es and introduced splunk data fabric search ( “ dfs ” ) and splunk data stream processor ( “ dsp ” ) . we also introduced splunk business flow , a process mining solution that enables process improvement and business operations professionals to discover , investigate , and check conformance of any business process . we expect to continue to aggressively expand our sales and marketing organizations to market and sell our software both in the united states and internationally . we have utilized and expect to continue to utilize acquisitions to contribute to our long-term growth objectives . during fiscal 2020 , we completed the acquisitions of signalfx , inc. ( “ signalfx ” ) , a developer of real-time monitoring and metrics for 44 cloud infrastructure , microservices and applications , cloud native labs , inc. ( “ omnition ” ) , which develops a platform for distributed tracing and application monitoring and streamlio , inc. , which specializes in designing and operating streaming data solutions . refer to note 6 of our accompanying notes to consolidated financial statements included elsewhere in this annual report on form 10-k for further information . our goal is to make our software the platform for delivering real-time business insights from data . the key elements of our growth strategy are to : extend our technological capabilities . continue to expand our direct and indirect sales organization , including our partner relationships , to increase our sales capacity and enable greater market presence . further penetrate our existing customer base and drive enterprise-wide adoption . enhance our value proposition through a focus on solutions which address core and expanded use cases . grow our user communities and partner ecosystem to increase awareness of our brand , target new use cases , drive operational leverage and deliver more targeted , higher value solutions . continue to deliver a rich developer environment to enable rapid development of enterprise applications that leverage data and the splunk platform . story_separator_special_tag we expect that sales and marketing expenses will continue to increase , in absolute dollars , as we continue to hire additional personnel and invest in marketing programs . general and administrative . general and administrative expenses primarily consist of personnel and facility-related costs for our executive , finance , legal , human resources and administrative personnel ; our legal , accounting and other professional services fees ; and other corporate expenses . we anticipate continuing to incur additional expenses due to growing our operations , including higher legal , corporate insurance and accounting expenses . interest and other income ( expense ) , net interest and other income ( expense ) , net consists primarily of interest expense related to our convertible senior notes , foreign exchange gains and losses , interest income on our investments and cash and cash equivalents balances and changes in the fair value of forward exchange contracts . income tax provision ( benefit ) the income tax provision ( benefit ) consists of federal , state and foreign income taxes . we recognize deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts using enacted tax rates in effect for the year in which we expect the differences to reverse . to the extent that we believe any amounts are not more-likely-than-not to be realized , we record a valuation allowance to reduce the deferred income tax assets . because of our history of u.s. net operating losses , we have established a full valuation allowance against potential future benefits for u.s. deferred tax assets , including loss carryforwards and research and development and other tax credits . we regularly assess the need for the valuation allowance on our deferred tax assets , and to the extent that we determine that an adjustment is needed , such adjustment will be recorded in the period that the determination is made . critical accounting policies and estimates we prepare our consolidated financial statements in accordance with generally accepted accounting principles in the united states ( “ u.s . gaap ” ) . the preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets , liabilities , revenues , costs and expenses and related disclosures . we base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances . actual results could differ significantly from the estimates made by our management . to the extent that there are differences between our estimates and actual results , our future financial statement presentation , financial condition , results of operations and cash flows will be affected . we believe that the assumptions and estimates associated with revenue recognition , deferred sales commissions and business combinations have the greatest potential impact on our consolidated financial statements . therefore , we consider these to be our critical accounting policies and estimates . accordingly , we believe these are the most critical to fully understand and evaluate our financial condition and results of operations . revenue recognition 51 our contracts with customers often contain multiple performance obligations . for these contracts , we account for individual performance obligations separately if they are distinct . we apply significant judgment in identifying and accounting for each performance obligation , as a result of evaluating the terms and conditions in contracts . the transaction price is allocated to the separate performance obligations on a relative standalone selling price ( “ ssp ” ) basis . we determine the ssp based on an observable standalone selling price when it is available , as well as other factors , including the price charged to customers , our discounting practices , and our overall pricing objectives , while maximizing observable inputs . in situations where pricing is highly variable , we estimate the ssp using the residual approach . deferred sales commissions sales commissions paid to our sales force and the related payroll taxes are considered incremental and recoverable costs of obtaining a contract with a customer . we generally amortize these costs over the remaining contractual term of our customer contracts , consistent with the pattern of revenue recognition of each performance obligation , for contracts in which the commissions paid on the initial and renewal contracts are commensurate . for certain contracts in which the commissions paid on the initial and renewal contracts are not commensurate , we amortize the commissions paid on the initial contract over an expected period of benefit , which we have determined to be approximately five years . we have determined the period of benefit by taking into consideration our customer contracts , the duration of our relationships with our customers and our technology . in capitalizing and amortizing deferred commissions , we have elected to apply a portfolio approach . business combinations we use our best estimates and assumptions to allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values . the excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill . we apply significant judgment in determining the fair value of the intangible assets acquired , which involves the use of significant estimates and assumptions with respect to revenue growth rates , royalty rate and technology migration curve . while we use our best estimates and judgments , our estimates are inherently uncertain and subject to refinement . during the measurement period , which may be up to one year from the acquisition date , we may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed , with the corresponding offset to goodwill . in addition , uncertain tax positions and tax-related valuation allowances are initially established in connection with a business	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	net cash used in investing activities was $ 708.0 million for the year ended january 31 , 2020 compared to $ 779.3 million for the prior year . the net decrease in cash used in investing activities was primarily due to the following : + decrease of $ 350.2 million in purchases of investments , net of maturities - increase of $ 200.0 million in cash purchase price paid , net of cash acquired , from our acquisitions of streamlio , signalfx and omnition - increase of $ 78.0 million in purchases of property and equipment financing activities fiscal 2020 - 2019 net cash used in financing activities was $ 100.2 million for the year ended january 31 , 2020 compared to net cash provided by financing activities of $ 1.81 billion for the prior year . the net increase in cash used in financing activities was primarily due to the following : - absence of the issuance of $ 2.11 billion in convertible senior notes , net of initial purchase discounts and issuance costs , partially offset by the absence of $ 274.3 million in cash used to purchase capped calls in connection with the issuance of our convertible senior notes from the prior year - increase in taxes paid related to net share settlement of equity awards contractual obligations operating lease commitments and contractual obligations we lease our office spaces under non-cancelable leases . operating lease costs were $ 49.6 million , excluding short-term leases , variable lease costs and sublease income , which were immaterial , during fiscal 2020 . rent expense recognized 62 prior to our adoption of topic 842 was $ 26.2 million and $ 16.8 million during fiscal 2019 and 2018 , respectively .
our deep water port facilities on both the east and west coasts of the u.s. ( in everett , massachusetts ; providence , rhode island ; oakland , california ; portland , oregon ; and tacoma , washington ) and access to public deep water port facilities ( in kapolei , hawaii ; and salinas , puerto rico ) allow us to efficiently meet the global demand for recycled ferrous metal by shipping bulk cargoes to steel manufacturers located in asia , europe , africa , the middle east ( “ eame ” ) , and central america . our exports of nonferrous recycled metal are shipped in containers through various public docks to specialty steelmakers , foundries , aluminum sheet and ingot manufacturers , copper refineries and smelters , brass and bronze ingot manufacturers and wire and cable producers globally . we also transport both ferrous and nonferrous metals by truck , rail and barge in order to transfer scrap metal between our facilities for further processing , to load shipments at our export facilities and to meet regional domestic demand . key economic factors and trends affecting the industries in which we operate we sell recycled metals to the global steel industry for the production of finished steel . our financial results largely depend on supply of raw materials in the u.s. and western canada and demand for recycled metal in foreign and domestic markets and for finished steel products in the western u.s. and canada . changes in supply and demand conditions affect market prices for and volumes of recycled ferrous and nonferrous metal in global markets and for steel products in the western u.s. and canada and can have a significant impact on the results of operations for all three reporting segments . weak export demand and limited availability of raw materials has contributed to lower sales volumes for recycled metals in recent years . beginning in early fiscal 2012 , our markets were impacted by a slowdown of economic activity globally . macroeconomic uncertainty resulted in deteriorating market conditions for global steel manufacturers and volatile pricing swings with an overall downward trend in commodity prices and export selling prices of recycled materials . the persistently low economic growth in the u.s. contributed to constrained scrap flows in our mrb and apb domestic supply markets which , combined with increased 24 / schnitzer steel industries , inc. form 10-k 2014 schnitzer steel industries , inc. scrap recycling capacity and competition in certain regional markets , led to margin compression . in addition , a relatively stronger u.s. dollar value increased competitive pressure on mrb 's export activity . strategic factors as we continue to closely monitor economic conditions , we remain focused on the following core strategies to meet our business objectives : use of our seven deep water ports and ground-based transportation to directly access customers around the world and to meet demand wherever it is greatest ; synergistic growth and continuous productivity improvement and cost reduction initiatives which further integrate our operations and drive significant cost savings and efficiencies ; growth through acquisitions and greenfield development in existing and new geographic regions that generate attractive returns ; and continued investment in and benefit from technologies and process improvements which increase the separation and recovery of recycled materials from our shredding process . our strategy is focused on enhancing the inherent synergies within our integrated operations while continuing to improve productivity and grow our operations in core regions where we have a significant market presence and competitively advantageous port access . apb is a key supplier to mrb , and we opportunistically look to enhance the geographic proximity of operations within the two businesses . mrb and apb historically have had an integrated presence in the northwestern u.s. and in northern california , near mrb 's export facilities in tacoma , washington , portland , oregon and oakland , california , which benefit from the synergies of this enhanced access to supply . in early fiscal 2014 , we completed multi-year strategic investments in western canada , which enabled mrb and apb 's synergistic expansion into british columbia and alberta with seven metals collection and processing facilities , including a new shredder , as well as eight auto parts stores . apb 's facilities in western canada provide crushed autobodies to mrb 's new franchise in western canada in addition to shipping to its tacoma , washington facility . in fiscal 2014 , we opened our first greenfield auto parts store in johnston , rhode island , which , combined with three stores in massachusetts and rhode island acquired in fiscal 2013 , expands apb 's presence in the northeastern u.s. and enables a new source of supply for mrb 's northeastern regional operations which include 13 metals recycling and processing facilities . during fiscal 2014 we continued to implement enhancements to the synergies between these businesses by integrating certain operational processes . executive overview of financial results we generated consolidated revenues of $ 2.5 billion in fiscal 2014 , a decrease of 3 % from the $ 2.6 billion of consolidated revenues in the prior year . overall consolidated revenues decreased primarily due to lower average net selling prices for ferrous and nonferrous metal and reduced sales volumes of export ferrous metal as a result of continued weak economic conditions globally that adversely impacted export demand for recycled metal , which was only partially offset by higher volumes for domestic sales of recycled ferrous metal , nonferrous metal , and finished steel products . story_separator_special_tag fiscal 2013 also included $ 5 million of operating losses at apb , including transaction , integration and startup costs , related to the eleven store locations acquired or opened during fiscal 2013. these decreases were offset by an increase in operating income at smb of $ 9 million compared to fiscal 2012 primarily as a result of slightly improved demand leading to higher sales volumes and increased utilization levels . operating results in fiscal 2013 benefited from a reduction in sg & a expense of $ 12 million , or 6 % , from fiscal 2012 , primarily as a result of the restructuring initiatives and other operating efficiencies announced in the fourth quarter of fiscal 2012 and implemented in fiscal 2013. the decrease compared to fiscal 2012 was driven primarily by a reduction of $ 5 million in employee compensation expense and $ 4 million in professional and outside services . the reduction in consolidated sg & a expense was achieved despite the incremental expense attributable to the eleven store locations acquired or opened by apb during fiscal 2013. in the fourth quarter of fiscal 2013 , we identified the combination of the continued challenging market conditions , the constrained supply of raw materials , our recent financial performance and the lack of recovery of our market capitalization as a triggering event requiring an interim impairment test of goodwill allocated to our reporting units . for the apb reporting unit , the calculated fair value using the income approach substantially exceeded its carrying value . for the mrb reporting unit , the first step of the impairment test showed that the reporting unit 's fair value was less than its carrying amount , indicating a potential impairment . based on the second step of the impairment test , we recorded a non-cash goodwill impairment charge of $ 321 million at mrb . see critical accounting policies and estimates in part ii , item 7 of this report . during the fourth quarter of fiscal 2013 , we also recorded impairment charges of $ 13 million on various other assets at mrb , including the impairment of a contractual receivable of $ 8 million as a result of the debtor 's inability to repay the amount owed under agreements entered into for the extraction of scrap metal through demolition activities . we also identified impairments of $ 5 million on a combination of assets held for sale , a joint venture investment and other long-lived assets . interest expense interest expense was $ 11 million , $ 10 million and $ 12 million for fiscal 2014 , 2013 and 2012 , respectively . the decrease from fiscal 2012 to fiscal 2013 was primarily due to decreased average borrowings and lower average interest rates under our bank credit facilities compared to the prior year period . for more information about our outstanding debt balances , see note 9 – long-term debt in the notes to the consolidated financial statements in part ii , item 8 of this report . income tax expense ( benefit ) income tax expense ( benefit ) was $ 2 million , $ ( 57 ) million and $ 14 million for fiscal 2014 , 2013 and 2012 , respectively . our effective tax rate in fiscal 2014 was an expense of 19 % and was lower than the u.s. federal statutory rate of 35 % . the effective tax rate benefited from a fixed asset tax basis study performed during fiscal 2014 which resulted in the recognition of a tax benefit of $ 2 million , as well as the aggregate impact of excluding income associated with noncontrolling interests , foreign income taxed at different rates , and certain deductions and credits . other significant items impacting the effective tax rate included the recognition of a valuation allowance against certain foreign and state deferred tax assets and the recognition of a liability for unrecognized tax benefits of $ 2 million . the valuation allowance on deferred tax assets of certain foreign and state tax jurisdictions increased by $ 2 million compared to the prior year and was recognized as a result of negative evidence , including recent losses in certain foreign and state jurisdictions , outweighing the more subjective positive evidence , indicating that it is more likely than not that the associated tax benefit will not be realized . realization of the foreign subsidiaries ' deferred tax assets is dependent upon generating sufficient taxable income in the foreign tax jurisdiction in future years to benefit from the reversal of net deductible temporary differences and from the utilization of net operating losses . our effective tax rate for fiscal 2013 was a benefit of 17 % and differed from the u.s. federal statutory rate of 35 % primarily due to the recognition of an expense of $ 29 million to record a valuation allowance on deferred tax assets mainly related to a foreign subsidiary , the impact of the non-deductible portion of the goodwill impairment charge and the impact of the foreign tax rate differential on operating losses recorded by our foreign subsidiaries . the deferred tax assets at the foreign subsidiary for which a valuation allowance was recorded were related primarily to deductible temporary differences created in fiscal 2013 by the goodwill impairment charge and by net operating losses at the subsidiary . 30 / schnitzer steel industries , inc. form 10-k 2014 schnitzer steel industries , inc. in fiscal 2012 the effective tax rate was an expense of 33 % and differed from the u.s. federal statutory rate of 35 % primarily due to state tax benefits and research and development credits , partially offset by the adverse impact of foreign subsidiaries ' results taxed at different tax rates . we will continue to regularly assess the realizability of deferred tax assets . changes in historical earnings performance and future earnings projections , among other factors , may cause us to adjust our	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	sources and uses of cash we had cash balances of $ 26 million and $ 13 million as of august 31 , 2014 and 2013 , respectively . cash balances are intended to be used primarily for working capital , capital expenditures , acquisitions , dividends and share repurchases . we also use excess cash on hand to reduce amounts outstanding under our credit facilities . as of august 31 , 2014 , debt , net of cash , was $ 294 million compared to $ 368 million as of august 31 , 2013 ( refer to non-gaap financial measures below ) , a decrease of $ 75 million primarily as a result of the positive cash flows generated by operating activities . our cash balances as of august 31 , 2014 and 2013 include $ 4 million and $ 7 million , respectively , which are indefinitely reinvested in puerto rico and canada . operating activities net cash provided by operating activities in fiscal 2014 was $ 141 million , compared to $ 39 million in fiscal 2013 and $ 245 million in fiscal 2012 . cash provided by operating activities in fiscal 2014 included a decrease in inventories of $ 36 million due to the timing of shipments . uses of cash included an increase of $ 16 million in accounts receivable due to the timing of shipments and collections . cash provided by operating activities in fiscal 2013 included a decrease in inventories of $ 47 million due to lower volumes of material purchases . uses of cash included an increase of $ 79 million in accounts receivable due to the timing of shipments and collections and a decrease in accounts payable of $ 11 million due to lower levels of material purchases and timing of payments . cash provided by operating activities in fiscal 2012 included a decrease in inventories of $ 94 million due to lower volumes of material purchases and a decrease of $ 82 million in accounts receivable due to lower sales volumes and the timing of collections .
as a result of the spin-out of novacopper from novagold , the interim consolidated financial statements have been presented under the continuity of interest basis of accounting whereby the amounts are based on the amounts originally recorded by novagold as if we had held the property from inception . bornite project on october 19 , 2011 , novacopper us and nana signed a collaborative agreement to explore and develop the ambler mining district . under the exploration agreement and option to lease ( the nana agreement ) , novacopper us acquired the exclusive right to explore the bornite property and lands deeded to nana through the alaska native claims settlement act ( ancsa ) , located adjacent to the arctic project , and the non-exclusive right to access and entry onto nana 's lands . the agreement establishes a framework for any future development of either the bornite project or the arctic project . both projects are included as part of a larger area of interest set forth in the nana agreement . as consideration , novacopper paid $ 4.0 million to nana upon signing the nana agreement and gave nana the right to appoint a member to novacopper 's board of directors within a five year period following our public listing on a stock exchange . nana has not exercised their right to appoint a board member at this time . upon the decision to proceed with development of a mine within the area of interest , nana has a 120 day one time right to purchase an ownership interest in the mine equal to between 16 % -25 % or retain a 15 % net proceeds royalty which is payable after novacopper has recovered certain historical costs , capital and cost of capital . should nana elect to purchase an ownership interest in the mine , consideration will be payable based on the elected percentage purchased and the costs incurred on the properties less $ 40.0 million , not to be less than zero . the parties would form a joint venture and be responsible for all future costs incurred in connection with the mine , including capital costs of the mine , based on each party 's pro-rata share . the completion of the agreement with nana creates a total land package which incorporates our ambler lands with the adjacent bornite and ancsa lands for a total of approximately 352,900 acres ( 142,831 hectares ) . nana would also be granted a net smelter return royalty between 1 % and 2.5 % upon the execution of a mining lease or a surface use agreement , the amount of which is determined by the particular area of land from which production originates . we have accounted for the bornite property as a mineral property with acquisition costs capitalized and exploration costs expensed . corporate developments financing on july 7 , 2014 , we completed a non-brokered private placement with our three largest shareholders for $ 7.5 million in units . each unit was priced at $ 1.15 per unit and consisted of one common share and one common share purchase warrant . each common share purchase warrant entitles the holder to purchase one common share at a price of $ 1.60 per share for a period of five years from the closing date . net proceeds from the private placement were approximately $ 7.2 million . the gross proceeds raised were allocated for the 12 months following closing to fund a minimum of $ 2.7 million on program expenditures , $ 4.0 million on general and administrative expenses including costs associated with the offering , and $ 0.8 million on one-time expenses incurred in reducing annual general and administrative expenses . we are currently on track to meet our budgeted expenditures . long-term incentives on september 9 , 2014 , the board of directors approved a grant of 1,620,000 stock options to employees and directors . 66 share issuances under the plan of arrangement , we committed to issue common shares to satisfy holders of novagold performance share units ( psus ) and deferred shares units on record as of the close of business on april 27 , 2012. when a share unit vests , we committed to deliver one common share to such holder for every six shares of novagold the holder is entitled to receive , pursuant to the warrant and share unit terms , rounded down to the nearest whole number . during the year ended november 30 , 2014 , we issued 14,166 psus . as of november 30 , 2014 , no novagold psus remain outstanding and 20,685 novagold dsus remain outstanding , which will settle upon the novagold directors ' retirement . project activities on march 18 , 2014 , we announced the release of an updated ni 43-101 compliant resource estimate for the bornite deposit and on april 1 , 2014 , we filed a ni 43-101 compliant technical report titled ni 43-101 technical report on the bornite project , northwest alaska , usa dated effective march 18 , 2014. this updated bornite project resource estimation included the results of drilling completed and the re-logging and re-assaying program undertaken during the 2013 field season . at a base case 0.50 % copper cutoff grade , the bornite project is estimated to contain in-pit indicated resources of 14.1 million tonnes at an average grade of 1.08 % copper or 334 million lbs of contained copper and in-pit inferred resources of 109.6 million tonnes at an average grade of 0.94 % copper or 2.3 billion lbs of contained copper . resources are stated as contained within a pit shell developed using a metal price of $ 3.00/lb copper , mining costs of $ 2.00/tonne , milling costs of $ 11/tonne , general and administrative cost of $ 5.00/tonne , 87 % metallurgical recoveries and an average pit slope of 43 degrees . story_separator_special_tag we do not expect the adoption to have significant changes to our disclosure of going concern as we currently comply with appropriate guidance issued by the u.s. securities and exchange commission and guidance under u.s. auditing standards . critical accounting estimates the most critical accounting estimates upon which our financial status depends are those requiring estimates of the recoverability of our capitalized mineral properties , impairment of long-lived assets and valuation of stock-based compensation . mineral properties and development costs all direct costs related to the acquisition of mineral property interests are capitalized . the acquisition of title to mineral properties is a complicated and uncertain process . the company has taken steps , in accordance with industry standards , to verify the title to mineral properties in which it has an interest . although the company has made efforts to ensure that legal title to its mining assets are properly recorded , there can be no assurance that such title will be secured indefinitely . impairment of long-lived assets management assesses the possibility of impairment in the carrying value of its long-lived assets whenever events or circumstances indicate that the carrying amounts of the asset or asset group may not be recoverable . significant estimates are made in assessing the possibility of impairment . management considers several factors in considering if an indicator of impairment has occurred , including but not limited to , indications of value from external sources , significant changes in the legal , business or regulatory environment , and adverse changes in the use or physical condition of the asset . these factors are subjective and require consideration at each period end . if an indicator of impairment is determined to exist , management calculates the estimated undiscounted future net cash flows relating to the asset or asset group using estimated future prices , mineral resources , and operating , capital and reclamation costs . when the carrying value of an asset exceeds the related undiscounted cash flows , the asset is written down to its estimated fair value , which is usually determined using discounted future cash flows . management 's estimates of mineral prices , mineral resources , foreign exchange , production levels and operating capital and reclamation costs are subject to risk and uncertainties that may affect the determination of the recoverability of the long-lived asset . stock-based compensation compensation expense for options granted to employees , directors and certain service providers is determined based on estimated fair values of the options at the time of grant using the black-scholes option pricing model , which takes into account , as of the grant date , the fair market value of the shares , expected volatility , expected life , expected forfeiture rate , expected dividend yield and the risk-free interest rate over the expected life of the option . the use of the black-scholes option pricing model requires input estimation of the expected life of the option , volatility , and forfeiture rate which can have a significant impact on the valuation model , and resulting expense recorded . risk factors novacopper and its future business , operations and financial condition are subject to various risks and uncertainties due to the nature of its business and the present stage of exploration of its mineral properties . certain of these risks and uncertainties are under the heading risk factors under novacopper 's form 10-k dated february 5 , 2015 available on sedar at www.sedar.com and edgar at www.sec.gov and on our website at www.novacopper.com . 73 additional information additional information regarding the company , including our annual report on form 10-k , is available on sedar at www.sedar.com and edgar at www.sec.gov and on our website at www.novacopper.com . cautionary notes forward-looking statements this management 's discussion and analysis contains forward-looking information and forward-looking statements within the meaning of section 27a of the u.s. securities act of 1933 , as amended , section 21e of the u.s. securities exchange act of 1934 , as amended ( the exchange act ) , and other applicable securities laws . these forward-looking statements may include statements regarding perceived merit of properties , exploration results and budgets , mineral reserves and resource estimates , work programs , capital expenditures , operating costs , cash flow estimates , production estimates and similar statements relating to the economic viability of a project , timelines , strategic plans , including the company 's plans and expectations relating to its upper kobuk mineral projects , completion of transactions , market prices for precious and base metals , or other statements that are not statements of fact . these statements relate to analyses and other information that are based on forecasts of future results , estimates of amounts not yet determinable and assumptions of management . statements concerning mineral resource estimates may also be deemed to constitute forward-looking statements to the extent that they involve estimates of the mineralization that will be encountered if the property is developed . any statements that express or involve discussions with respect to predictions , expectations , beliefs , plans , projections , objectives , assumptions or future events or performance ( often , but not always , identified by words or phrases such as expects , is expected , anticipates , believes , plans , projects , estimates , assumes , intends , strategy , goals , objectives , potential , possible or variations thereof or stating that certain actions , events , conditions or results may , could , would , should , might or will be taken , occur or be achieved , or the negative of any of these terms and similar expressions ) are not statements of historical fact and may be forward-looking statements . forward-looking statements are based on a number of material assumptions , including those listed below , which could prove to be significantly incorrect : assumptions made in the interpretation of drill results , the geology ,	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources at november 30 , 2014 , we had $ 5.1 million in cash and cash equivalents . we expended $ 8.6 million on operating activities compared with $ 15.2 million for operating activities for the same period in 2013 , and expenditures of $ 19.9 million for operating activities for the same period in 2012. a majority of cash spent on operating activities during all periods was expended on mineral property expenses , salaries and general and administrative expenses , which also accounts for the corresponding decrease . as the exploration field season in the ambler district is between may and early october of each year , a significant portion of the mineral property expenses and operating activities are incurred during this time frame . the decrease is also somewhat offset by an adjustment for non-cash working capital in 2012 as accounts payable and accrued liabilities were higher at $ 2.0 million at november 30 , 2012 compared to $ 1.7 million at november 30 , 2013 and $ 0.9 million at november 30 , 2014. this difference relates mainly to earlier settlement of mineral property expenses in the year and reduced spending in 2013 and 2014 compared to 2012. during the year ended november 30 , 2014 , we generated $ 7.2 million from financing activities compared to expenditures of $ 0.3 million on financing activities in the year ended november 30 , 2013 and $ 43.8 million from financing activities generated in the same period in 2012. the generation of cash in 2014 was raised from the completion of a private placement of $ 7.2 million in july 2014. cash was expended in 2013 to settle vested rsus which were not able to be settled in shares due to an insider participation limit in our rsu plan . cash of $ 40.0 million was received from novagold in april 2012 with the completion of the plan of arrangement .
in march 2010 , we entered into an agreement with space exploration technologies corp. , or spacex , to secure spacex as the primary launch services provider for iridium next , which we refer to as the spacex agreement . the spacex agreement , as amended , has a maximum price of $ 492.0 million for eight launches , each of which can carry nine satellites . as of december 31 , 2011 , we had made total payments of $ 43.9 million to spacex , which were classified within property and equipment , net , in the accompanying consolidated balance sheet as of december 31 , 2011 . 38 in june 2011 , we entered into an agreement with international space company kosmotras , or kosmotras , as a supplemental launch services provider for iridium next . the agreement provides for the purchase of up to six launches and six additional launch options . each launch can carry two satellites . if we purchase all six launches , we will pay kosmotras a total of approximately $ 184.3 million . if we do not purchase any launches by march 31 , 2013 , the agreement will terminate , and our payments to kosmotras , including in respect of pre-launch development work , non-recurring milestone payments already completed at that time and termination fees , would be approximately $ 15.1 million . as of december 31 , 2011 , we had made aggregate payments of $ 11.2 million to kosmotras which were capitalized as construction in progress within property and equipment , net in the accompanying consolidated balance sheet . credit facility on october 4 , 2010 , we entered into a $ 1.8 billion loan facility , or the credit facility , with a syndicate of bank lenders . ninety-five percent of our obligations under the credit facility are insured by compagnie française d'assurance pour le commerce extérieur , or coface . the credit facility consists of two tranches , with draws and repayments applied pro rata in respect of each tranche : tranche a $ 1,537,500,000 at a fixed rate of 4.96 % ; and tranche b $ 262,500,000 at a floating rate equal to the london interbank offer rate , or libor , plus 1.95 % . in connection with each draw made under the credit facility , we borrow an additional amount equal to 6.49 % of such draw to cover the premium for the coface insurance . we also pay a commitment fee of 0.80 % per year , in semi-annual installments , on any undrawn portion of the credit facility . funds drawn under the credit facility will be used for ( i ) 85 % of the costs under the fsd for the design and manufacture of iridium next , ( ii ) the premium for the coface insurance and ( iii ) the payment of a portion of interest during a portion of the construction and launch phase of iridium next . scheduled semi-annual principal repayments will begin six months after the earlier of ( i ) the successful deployment of a specified number of iridium next satellites or ( ii ) september 30 , 2017. during this repayment period , interest will be paid on the same date as the principal repayments . prior to the repayment period , interest payments are due on a semi-annual basis in april and october . interest expense incurred during the year ended december 31 , 2011 was $ 11.9 million . all interest costs incurred related to the credit facility are capitalized during the construction period of the assets ; accordingly we capitalized $ 11.9 million related to interest incurred in 2011. we pay interest on each semi-annual due date through a combination of a cash payment and a deemed additional loan . the $ 11.9 million in interest incurred during the year ended december 31 , 2011 consisted of $ 3.6 million payable in cash , of which $ 2.7 million was paid during the year and $ 0.9 million was accrued at year end , and $ 8.3 million payable by deemed loans , of which $ 6.3 million was paid during the year and $ 2.0 million was accrued at year end . the credit facility will mature seven years after the start of the principal repayment period . in addition , we are required to maintain minimum cash reserve levels for debt service , which are classified as restricted cash on the accompanying consolidated balance sheet . minimum debt service reserve levels are estimated as follows ( in millions ) : replace_table_token_9_th the required minimum debt service reserve level at december 31 , 2011 was $ 27.0 million . obligations under the credit facility are guaranteed by us and our subsidiaries that are obligors under the credit facility . our obligations are secured on a senior basis by a lien on substantially all of our assets and those of the other obligors . we may not prepay any borrowings prior to december 31 , 2015. if , on that date , a specified number of iridium next satellites have been successfully launched and we have adequate time and resources to complete the iridium next constellation on schedule , we may prepay the borrowings without penalty . in addition , following the completion of the iridium next constellation , we may prepay the borrowings without penalty . any amounts repaid may not be reborrowed . we must repay the loans in full upon ( i ) a delisting of our common stock , ( ii ) a change in control of our company or our ceasing to own 100 % of any of the other obligors or ( iii ) the sale of all or substantially all of our assets . we must apply all or a portion of specified capital raising proceeds , insurance proceeds and condemnation proceeds to the prepayment of the loans . story_separator_special_tag deferred financing costs direct and incremental costs incurred in connection with securing debt financing are deferred on our balance sheet and then are amortized as additional interest expense using an effective interest method over the term of the related debt . the effective interest rate calculation requires us to make assumptions and estimates in determining estimated periodic interest expense . the calculation includes assumptions and estimates with respect to future borrowing dates and amounts , repayment dates and amounts , and periodic libor . if actual borrowing amounts and dates , repayment amounts and dates , and libor rates are not consistent with our estimates or assumptions , we may be exposed to changes that could be material to our property and equipment , net balance ( since we are capitalizing interest expense as part of the cost of iridium next ) , deferred financing costs balance , depreciation expense , interest expense , income from operations and net income . 43 comparison of our results of operations for the year ended december 31 , 2011 and the year ended december 31 , 2010 replace_table_token_10_th revenue total revenue increased by 10 % for the year ended december 31 , 2011 , compared to the prior year , principally due to growth in billable subscribers , which drove growth in both commercial and government services revenue as well as increased sales of subscriber equipment . billable subscribers at december 31 , 2011 were approximately 523,000 , an increase of 22 % from december 31 , 2010. service revenue replace_table_token_11_th ( 1 ) billable subscriber numbers shown are at the end of the respective period . ( 2 ) average monthly revenue per unit , or arpu , is calculated by dividing revenue in the respective period by the average of the number of billable subscribers at the beginning of the period and the number of billable subscribers at the end of the period and then dividing the result by the number of months in the period . service revenue was $ 262.3 million for the year ended december 31 , 2011 , an increase of 11 % from the prior year , primarily due to growth in billable subscribers in commercial and government services . 44 the increase in commercial voice revenue was principally due to billable subscriber growth , including growth related to iridium openport , our broadband data maritime service , and an increase in usage of pre-paid minutes , partially offset by a decrease in arpu . commercial voice arpu decreased by $ 3 over the comparative period due to a decline in average minutes of use per postpaid subscriber , partially offset by growth in the higher arpu iridium openport service . in 2012 , we expect continued growth in commercial voice subscribers and revenue . commercial m2m data revenue growth was driven principally by an increase in the billable subscriber base . commercial m2m data arpu decreased by $ 2 over the comparative period due to the growth in subscribers using plans that generate lower revenue per unit . we anticipate an increase in m2m data revenues and a decrease in m2m data arpu in 2012 as we expect to continue to experience further growth in our subscriber base with many subscribers utilizing lower arpu plans . the increase in government voice revenue was principally due to billable subscriber growth , including growth related to netted iridium , a service that provides beyond-line-of-sight , push-to-talk capability for user-defined groups . the increase in government m2m data revenue was driven primarily by billable subscriber growth . government voice arpu decreased by $ 5 over the comparative period due to a higher proportion of billable subscribers on the lower priced netted iridium plan . government m2m data arpu was flat year over year . future growth in government voice and m2m data billable subscribers and revenue may be negatively affected by reductions in u.s. defense spending and deployed troop levels , and a corresponding decrease in subscribers under our agreements with the u.s. government , which account for a majority of our government services revenue and are subject to annual renewals . subscriber equipment revenue subscriber equipment revenue increased to $ 94.7 million for the year ended december 31 , 2011 , an increase of 5 % from the prior year . the increase in subscriber equipment revenue was primarily due to increased volume in m2m data device and handset sales . these increases were partially offset by decreases in handset unit prices and the lower selling price of the iridium 9602 full-duplex short-burst data transceiver , introduced in may 2010 , which is less expensive than its predecessor , the iridium 9601. future subscriber equipment sales to the u.s. government , including sales through non-government distributors , may be negatively affected by reductions in u.s. defense spending and deployed troop levels . engineering and support service revenue replace_table_token_12_th engineering and support service revenue increased by $ 5.7 million , or 26 % , from the prior year primarily due to an increase in the level of effort for a gateway upgrade project for the u.s. government , partially offset by decreases in government sponsored research and development contracts . operating expenses total operating expenses decreased by 1 % to $ 307.3 million for the year ended december 31 , 2011 from $ 310.8 million for the prior year . this decrease was due to decreased cost of subscriber equipment , decreased cost of services and decreased selling , general and administrative expenses . the decrease was partially offset by increased depreciation and amortization . cost of services ( exclusive of depreciation and amortization ) cost of services ( exclusive of depreciation and amortization ) includes the cost of network engineering and operations staff , including contractors , software maintenance , product support services and cost of services for government and commercial engineering and support service revenue . cost of services ( exclusive of depreciation and amortization )	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash and indebtedness at december 31 , 2011 , our total cash and cash equivalents was $ 136.4 million , and we had an aggregate of $ 417.1 million of external indebtedness related to borrowings under the credit facility . 50 cash flows comparison of the year ended december 31 , 2011 and the year ended december 31 , 2010 the following table shows our consolidated cash flows from operating , investing and financing activities for the years ended december 31 , ( in millions ) : replace_table_token_16_th cash flows from operating activities net cash provided by operating activities for the year ended december 31 , 2011 increased primarily due to a $ 36.0 million increase in net income including adjustments for non-cash items of $ 19.0 million . the increase in net income was driven by our revenue growth and operating expense savings . these two favorable trends to operating cash flow were partially offset by the $ 11.2 million increase in the commitment fee on the undrawn portion of our credit facility for the year ended december 31 , 2011 as a result of the credit facility being in place for the entire year . we incurred a commitment fee for only a portion of the prior year . cash flows from investing activities net cash used in investing activities for the year ended december 31 , 2011 increased primarily due to $ 122.0 million of increased capital expenditures related to iridium next , including payments related to the purchase of equipment and software for our satellite , network and gateway operations . cash flows from financing activities net cash provided by financing activities for the year ended december 31 , 2011 increased primarily due to a $ 139.8 million increase in borrowings under the credit facility .
on may 9 , 2019 , c3j completed a reverse merger with ampliphi , where ceres merger sub , inc. , a wholly-owned subsidiary of ampliphi , merged with and into c3j . following the completion of the merger , and a $ 10.0 million concurrent private placement financing , the former c3j stockholders owned approximately 76 % of our common stock and the former ampliphi stockholders owned approximately 24 % of our common stock . immediately prior to the merger , ampliphi completed a 1-for-14 reverse stock split and changed its name to armata pharmaceuticals , inc. our common stock is traded on the nyse american exchange under the symbol “ armp . ” we are headquartered in marina del rey , ca , in a 35,500 square-foot research and development facility built for product development with capabilities spanning from bench to clinic . in addition to microbiology , synthetic biology , formulation , chemistry and analytical laboratories , the facility is equipped with two licensed gmp drug manufacturing suites enabling the production , testing and release of clinical material . statements contained in this annual report that are not statements of historical fact are forward-looking statements within the meaning of the u.s. private securities litigation reform act of 1995. such forward-looking statements include , without limitation , statements concerning product development plans , commercialization of our products , the expected market opportunity for our products , the use of bacteriophages and synthetic phages to kill bacterial pathogens , having resources sufficient to fund our operations into the second quarter of 2021 , future funding sources , general and administrative expenses , clinical trial and other research and development expenses , costs of manufacturing , costs relating to our intellectual property , capital expenditures , the expected benefits of our targeted phage therapies strategy , the potential market for our products , tax credits and carry-forwards , and litigation-related matters . words such as “ believe , ” “ anticipate , ” “ plan , ” “ expect , ” “ intend , ” “ will , ” “ goal , ” “ potential ” and similar expressions are intended to identify forward-looking statements , though not all forward-looking statements necessarily contain these identifying words . these statements are subject to risks and uncertainties . our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors , including those set forth below under item 1a , “ risk factors ” and elsewhere in this annual report on form 10-k. these forward-looking statements speak only as of the date on which they were made , and we undertake no obligation to update any forward-looking statements . overview we are a clinical-stage biotechnology company focused on the development of precisely targeted bacteriophage therapeutics for the treatment of antibiotic-resistant infections using our proprietary bacteriophage-based technology . bacteriophages or “ phages ” have a powerful and highly differentiated mechanism of action that enables binding to and killing specific bacteria , in contrast to traditional broad-spectrum antibiotics . we believe that phages represent a promising means to treat bacterial infections , especially those that have developed resistance to current standard of care therapies , including the so-called multidrug-resistant or “ superbug ” strains of bacteria . we are a leading developer of phage therapeutics , which are uniquely positioned to address the growing worldwide threat of antibiotic-resistant bacterial infections . we are combining our proprietary approach and expertise in identifying , characterizing and developing both naturally-occurring and engineered ( synthetic ) bacteriophages with our proprietary phage-specific good manufacturing practice compliance ( “ cgmp ” ) manufacturing capabilities to advance a broad pipeline of high-quality bacteriophage product candidates . we believe that synthetic phage , engineered using advances in sequencing and synthetic biology techniques , represent a promising means to advance phage therapy , including phage-based diagnostics and improving upon the ability of natural phage to treat bacterial infections , especially those that have developed resistance to current antibiotic therapies , including the multidrug-resistant or “ superbug ” bacterial pathogens . our phage product candidates aim to address areas of significant unmet clinical need , by targeting key antibiotic-resistant bacteria including those on the world health organization 's global priority pathogens list . 66 we are developing and advancing our second-generation phage product candidate for pseudomonas aeruginosa ( “ p. aeruginosa ” ) , known as ap-pa02 . we anticipate initiating a phase 1b/2 , multi-center , double-blind , randomized , placebo-controlled , single and multiple ascending dose study to evaluate the safety , tolerability , and preliminary efficacy of ap-pa02 in subjects with cystic fibrosis ( “ cf ” ) and chronic pulmonary p. aeruginosa infection in the first half of 2020. we are also developing a second-generation phage product candidate for staphylococcus aureus ( “ s. aureus ” ) , known as ap-sa02 , for the treatment of s. aureus bacteremia . we intend to file an ind application with the fda to initiate a phase 1/2 , multi-center , randomized , double-blind , placebo- controlled dose escalation study that will assess the safety , tolerability , and efficacy of ap-sa02 in the second half of 2020. in partnership with merck & co. , known as merck sharp & dohme outside of the united states and canada ( “ merck ” ) , we are developing proprietary synthetic phage candidates to target undisclosed infectious disease agents . our proprietary phage engineering platform serves to enhance the clinical and commercial prospects of phage therapy . story_separator_special_tag in february 2020 , we completed the first closing of the private placement and raised gross proceeds of $ 2.8 million . considering our current cash resources and the assumed proceeds from the second closing of the private placement with innoviva , management believes our cash resources will be sufficient to fund our planned operations into the second quarter of 2021. for the foreseeable future , our ability to continue its operations is dependent upon our ability to obtain additional capital . future capital requirements we will need to raise additional capital in the future to continue to fund our operations . our future funding requirements will depend on many factors , including : · the costs and timing of our research and development activities ; · the progress and cost of our clinical trials and other research and development activities ; · manufacturing costs associated with our targeted phage therapies strategy and other research and development activities ; · the terms and timing of any collaborative , licensing , acquisition or other arrangements that we may establish ; · whether and when we receive future australian tax rebates , if any ; · the costs and timing of seeking regulatory approvals ; · the costs of filing , prosecuting and enforcing any patent applications , claims , patents and other intellectual property rights ; and · the costs of potential lawsuits involving us or our product candidates . we may seek to raise capital through a variety of sources , including : · the public equity market ; · private equity financings ; · collaborative arrangements , government grants or strategic financings ; · licensing arrangements ; and · story_separator_special_tag potential impairment , or comparing a reporting unit 's estimated fair value to its carrying amount . if a quantitative assessment is performed the evaluation includes management estimates of cash flow projections based on internal future projections and or use of a market approach by looking at market values of comparable companies . our market capitalization is also considered as a part of this analysis . 71 in accordance with our accounting policy , we completed the annual evaluation for impairment of goodwill as of december 31 , 2019 using the qualitative method and determined that no impairment existed . impairment review of in-process research and development ( “ ipr & d ” ) we test our ipr & d asset for impairment as of december 31 of each year or more frequently if indicators of impairment are present . the authoritative accounting guidance provides an optional qualitative assessment for any indicators that indefinite-lived intangible assets are impaired . if it is determined that it is more likely than not that the indefinite-lived intangible assets , including ipr & d , are impaired , the fair value of the indefinite-lived intangible assets is compared with the carrying amount and impairment is recorded for any excess of the carrying amount over the fair value of the indefinite-lived intangible assets . if and when a quantitative analysis of ipr & d assets is required based on the result of the optional qualitative assessment , the estimated fair value of ipr & d assets is calculated based on the income approach , which includes discounting expected future net cash flows associated with the assets to a net present value . the fair value measurements utilized to perform the impairment analysis are categorized within level 3 of the fair value hierarchy . significant management judgment is required in the forecast of future operating results that are used in our impairment analysis . the estimates management use are consistent with the plans and estimates that it uses to manage its business . significant assumptions utilized the income approach model include the timing of clinical studies and regulatory approvals , the probability of success of its research and development programs , timing of commercialization of these programs , forecasted sales , gross margin , selling , general and administrative expenses , capital expenditures , as well as anticipated growth rates . our analysis indicated no impairment existed . valuation of derivatives in connection with the synthetic phage platform , we provided sgi with the right to receive additional payments upon the occurrence of specified events related to 1 ) the initial public offering of shares of c3j 's common stock pursuant to an effective registration statement under the securities act , 2 ) the sale of all or substantially all the assets of c3j to a third party , or 3 ) a consolidation or merger into a third party . we determined that these contingent rights are required to be accounted for as derivatives in accordance with asc 815 — derivatives and hedging . we estimate the fair value of this derivative by forecasting the timing and likelihood of the events occurring and discounting the probability adjusted payments using an appropriate discount based on market interest rates and our own non-performance risk as required by asc 820 — fair value measurement . stock-based compensation compensation expense related to stock options granted is measured at the grant date based on the estimated fair value of the award and is recognized on an accelerated attribution method over the requisite service period . we determine the estimated fair value of each stock option on the date of grant using the black-scholes valuation model which uses assumptions regarding a number of complex and subjective variables . the risk-free interest rate is based on the u.s. treasury yield for a period consistent with the expected term of the option in effect at the time of the grant . expected volatility is based on the historical volatility of our common stock . the expected term represents the period that we expect our stock options to be outstanding . the expected term assumption is estimated using the simplified method set forth in the u.s. securities and exchange ( the “ sec ” ) staff accounting bulletin 110 , which is the	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	public or private debt . any additional fundraising efforts may divert our management team from their day to day activities , which may adversely affect our ability to develop and commercialize our product candidates . our ability to raise additional funds will depend , in part , on the success of our product development activities , including our targeted phage therapies strategy and any clinical trials we initiate , regulatory events , our ability to identify and enter into in-licensing or other strategic arrangements , and other events or conditions that may affect our value or prospects , as well as factors related to financial , economic and market conditions , many of which are beyond our control . we can not be certain that sufficient 70 funds will be available to us when required or on acceptable terms . if we are unable to secure additional funds on a timely basis or on acceptable terms , we may be required to defer , reduce or eliminate significant planned expenditures , restructure , curtail or eliminate some or all of our development programs or other operations , dispose of technology or assets , pursue an acquisition of our company by a third party at a price that may result in a loss on investment for our stockholders , enter into arrangements that may require us to relinquish rights to certain of our product candidates , technologies or potential markets , file for bankruptcy or cease operations altogether . any of these events could have a material adverse effect on our business , financial condition and results of operations .
the divestiture of american reliable insurance company ( `` aric `` ) also contributed to the decrease in net income . total revenues decreased $ 365,948 to $ 2,543,105 for twelve months 2015 from $ 2,909,053 for twelve months 2014. the decrease was primarily due to the divestiture of aric , combined with lower lender-placed homeowners insurance net earned premiums . the decline in lender-placed homeowners insurance net earned premiums is primarily due to a decline in placement rates , lower premium rates and previously disclosed loss of client business . these items were partially offset by an increase in fees and other income reflecting contributions from mortgage solutions businesses . the twelve months 2015 expense ratio increased 620 basis points compared with twelve months 2014. the increase was primarily due to lower net earned premiums and higher legal costs related to outstanding matters . in addition , growth in fee-based businesses , which have higher expense ratios than our insurance products , contributed to the increase . for 2016 , we expect assurant specialty property net income and net earned premiums to decrease compared with twelve months 2015 reflecting the ongoing normalization of lender-placed insurance business partially offset by increased efficiencies , including the implementation of new technology , and other expense savings initiatives . contributions from multi-family housing and mortgage solutions businesses are expected to partially offset the decline . in addition , catastrophe losses may affect overall results . 36 as previously announced , the company concluded a comprehensive review of strategic alternatives for its health business and expects to substantially complete the process to exit the health insurance market in 2016. during the remainder of the exit process , we expect to incur up to $ 50,000 of additional exit-related charges , as well as certain overhead expenses that are excluded from the premium deficiency reserve accrual . in addition , the company signed a definitive agreement to sell its assurant employee benefits segment to sun life . the transaction is expected to close by the end of first quarter 2016. for more information , see notes 3 and 4 of the notes to the consolidated financial statements included elsewhere in this report . critical factors affecting results our results depend on the appropriateness of our product pricing , underwriting and the accuracy of our methodology for the establishment of reserves for future policyholder benefits and claims , returns on and values of invested assets and our ability to manage our expenses . factors affecting these items , including unemployment , difficult conditions in financial markets and the global economy , may have a material adverse effect on our results of operations or financial condition . for more information on these factors , see “ item 1a – risk factors . ” management believes the company will have sufficient liquidity to satisfy its needs over the next twelve months including the ability to pay interest on our senior notes and dividends on our common stock . for twelve months 2015 , net cash provided by operating activities , including the effect of exchange rate changes and the reclassification of assets held for sale on cash and cash equivalents , totaled $ 192,483 ; net cash provided by investing activities totaled $ 264,293 and net cash used in financing activities totaled $ 487,127 . we had $ 1,288,305 in cash and cash equivalents as of december 31 , 2015. please see “ – liquidity and capital resources , ” below for further details . revenues we generate revenues primarily from the sale of our insurance policies and service contracts and from investment income earned on our investments . sales of insurance policies are recognized in revenue as earned premiums while sales of administrative services are recognized as fee income . under the universal life insurance guidance , income earned on preneed life insurance policies sold after january 1 , 2009 are presented within policy fee income net of policyholder benefits . under the limited pay insurance guidance , the consideration received on preneed policies sold prior to january 1 , 2009 is presented separately as net earned premiums , with policyholder benefits expense being shown separately . our premium and fee income is supplemented by income earned from our investment portfolio . we recognize revenue from interest payments , dividends and sales of investments . currently , our investment portfolio is primarily invested in fixed maturity securities . both investment income and realized capital gains on these investments can be significantly affected by changes in interest rates . interest rate volatility can increase or reduce unrealized gains or losses in our investment portfolios . interest rates are highly sensitive to many factors , including governmental monetary policies , domestic and international economic and political conditions and other factors beyond our control . fluctuations in interest rates affect our returns on , and the market value of , fixed maturity and short-term investments . the fair market value of the fixed maturity securities in our investment portfolio and the investment income from these securities fluctuate depending on general economic and market conditions . the fair market value generally increases or decreases in an inverse relationship with fluctuations in interest rates , while net investment income realized by us from future investments in fixed maturity securities will generally increase or decrease with interest rates . we also have investments that carry pre-payment risk , such as mortgage-backed and asset-backed securities . interest rate fluctuations may cause actual net investment income and or cash flows from such investments to differ from estimates made at the time of investment . in periods of declining interest rates , mortgage prepayments generally increase and mortgage-backed securities , commercial mortgage obligations and bonds are more likely to be prepaid or redeemed as borrowers seek to borrow at lower interest rates . therefore , in these circumstances we may be required to reinvest those funds in lower-interest earning investments . story_separator_special_tag thus , any adjustment to prior years ' incurred claims is partially offset by a change in commission expense , which is included in the underwriting , general and administrative expenses line in our consolidated statements of operations . while management has used its best judgment in establishing its estimate of required reserves , different assumptions and variables could lead to significantly different reserve estimates . two key measures of loss activity are loss frequency , which is a measure of the number of claims per unit of insured exposure , and loss severity , which is a measure of the average size of claims . factors affecting loss frequency include the effectiveness of loss controls and safety programs and changes in economic activity or weather patterns . factors affecting loss severity include changes in policy limits , retentions , rate of inflation and judicial interpretations . if the actual level of loss frequency and severity are higher or lower than expected , the ultimate reserves required will be different than management 's estimate . the effect of higher and lower levels of loss frequency and severity levels on our ultimate costs for claims occurring in 2015 would be as follows : replace_table_token_11_th reserving for asbestos and other claims 42 our property and warranty line of business includes exposure to asbestos , environmental and other general liability claims arising from our participation in various reinsurance pools from 1971 through 1985. this exposure arose from a contract that we discontinued writing many years ago . we carry case reserves , as recommended by the various pool managers , and ibnr reserves totaling $ 30,519 ( before reinsurance ) and $ 27,721 ( net of reinsurance ) at december 31 , 2015. we believe the balance of case and ibnr reserves for these liabilities are adequate . however , any estimation of these liabilities is subject to greater than normal variation and uncertainty due to the general lack of sufficiently detailed data , reporting delays and absence of a generally accepted actuarial methodology for those exposures . there are significant unresolved industry legal issues , including such items as whether coverage exists and what constitutes a claim . in addition , the determination of ultimate damages and the final allocation of losses to financially responsible parties are highly uncertain . however , based on information currently available , and after consideration of the reserves reflected in the consolidated financial statements , we do not believe that changes in reserve estimates for these claims are likely to be material . deferred acquisition costs only direct incremental costs associated with the successful acquisition of new or renewal insurance contracts are deferred , to the extent that such costs are deemed recoverable from future premiums or gross profits . acquisition costs primarily consist of commissions and premium taxes . certain direct response advertising expenses are deferred when the primary purpose of the advertising is to elicit sales to customers who can be shown to have specifically responded to the advertising and the direct response advertising results in probable future benefits . the deferred acquisition costs ( “ dac ” ) asset is tested annually to ensure that future premiums or gross profits are sufficient to support the amortization of the asset . such testing involves the use of best estimate assumptions to determine if anticipated future policy premiums and investment income are adequate to cover all dac and related claims , benefits and expenses . to the extent a deficiency exists , it is recognized immediately by a charge to the consolidated statements of operations and a corresponding reduction in the dac asset . if the deficiency is greater than unamortized dac , a liability will be accrued for the excess deficiency . long duration contracts acquisition costs for preneed life insurance policies issued prior to january 1 , 2009 and certain discontinued life insurance policies have been deferred and amortized in proportion to anticipated premiums over the premium-paying period . these acquisition costs consist primarily of first year commissions paid to agents . for preneed investment-type annuities , preneed life insurance policies with discretionary death benefit growth issued after january 1 , 2009 , universal life insurance policies and investment-type annuity contracts that are no longer offered , dac is amortized in proportion to the present value of estimated gross profits from investment , mortality , expense margins and surrender charges over the estimated life of the policy or contract . estimated gross profits include the impact of unrealized gains or losses on investments as if these gains or losses had been realized , with corresponding credits or charges included in aoci . the assumptions used for the estimates are consistent with those used in computing the policy or contract liabilities . acquisition costs relating to group worksite products , which typically have high front-end costs and are expected to remain in force for an extended period of time , consist primarily of first year commissions to brokers , costs of issuing new certificates and compensation to sales representatives . these acquisition costs are front-end loaded , thus they are deferred and amortized over the estimated terms of the underlying contracts . short duration contracts acquisition costs relating to property contracts , warranty and extended service contracts and single premium credit insurance contracts are amortized over the term of the contracts in relation to premiums earned . acquisition costs relating to monthly pay credit insurance business consist mainly of direct response advertising costs and are deferred and amortized over the estimated average terms and balances of the underlying contracts . acquisition costs relating to group term life , group disability , group dental and group vision consist primarily of compensation to sales representatives . these acquisition costs are front-end loaded ; thus , they are deferred and amortized over the estimated terms of the underlying contracts . investments we regularly monitor our investment portfolio to ensure investments that may be other-than-temporarily impaired are identified	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	net cash provided by operating activities was $ 192,483 and $ 313,782 for the years ended december 31 , 2015 and 2014 , respectively . the decrease in cash provided by operating activities was primarily due to changes in the timing of payments and higher payments made on 2015 individual major medical policies . net cash provided by operating activities was $ 313,782 and $ 1,003,819 for the years ended december 31 , 2014 and 2013 , respectively . the decrease in cash provided by operating activities was primarily due to changes in the timing of payments and by amounts yet to be recovered under the 3r 's program , partially offset by increased net written premiums in assurant solutions , assurant health and assurant employee benefits . for more information on the 3r 's , please refer to assurant health 's results of operations section in this item 7. investing activities : net cash provided by investing activities was $ 264,293 and $ 63,889 for the years ended december 31 , 2015 and 2014 , respectively . the change in investing activities is primarily due to higher sales of fixed maturity securities , less cash spent on acquisitions and equity interests and the sale of aric to global indemnity group inc. during 2015. for more information on the aric sale , please see note 4 to the consolidated financial statements contained elsewhere in this report.
gross profit and gross profit margin decreased in 2018 compared to 2017. the decrease was primarily due to the 2017 contribution of the core mts business to the change healthcare joint venture , significant government reimbursement reductions in the u.k. , the competitive sell-side environment and weaker pharmaceutical manufacturer pricing trends . these decreases in 2018 were partially offset by market growth , procurement benefits realized through the joint sourcing entity , clarusone sourcing services llp ( “ clarusone ” ) , higher lifo credits and our business acquisitions . gross profit for 2019 , 2018 and 2017 included lifo credits of $ 210 million , $ 99 million and $ 7 million . gross profit for 2017 benefited from $ 144 million of cash receipts representing our share of antitrust legal settlements . operating expenses : operating expenses , and operating expenses as a percentage of revenues increased in 2019 and 2018. operating expenses for 2019 , 2018 and 2017 were affected by the following significant items : 2019 non-cash pre-tax goodwill impairment charges of $ 1,776 million ( $ 1,756 million after-tax ) in our consumer solutions ( “ cs ” ) and pharmacy solutions ( “ ps ” ) reporting units within the european pharmaceutical solutions segment . of these impairment charges , $ 238 million was recognized upon the 2019 first quarter segment changes , which resulted in two new reporting units . the remaining charges were primarily due to declines in the reporting units ' estimated future cash flows and the selection of higher discount rates . these impairment charges were generally not deductible for income tax purposes . the declines in estimated future cash flows were primarily attributed to additional government reimbursement reductions and competitive pressures within the u.k. the risk of successfully achieving certain business initiatives was the primary factor in the use of a higher discount rate . at march 31 , 2019 , both cs and ps reporting units had no remaining goodwill balances ; pre-tax restructuring and asset impairment charges of $ 331 million ( $ 273 million after-tax ) , primarily representing employee severance and exit-related costs related to the 2019 restructuring initiatives , as further discussed below ; non-cash pre-tax long-lived asset impairment charges of $ 245 million ( $ 207 million after-tax ) primarily for our u.k. business ( mainly pharmacy licenses ) driven by additional government reimbursement reductions and competitive pressures in the u.k. ; 33 mckesson corporation financial review ( continued ) higher opioid-related costs of $ 151 million ( $ 122 million after-tax ) primarily related to litigation expenses . the company is a defendant in many cases alleging claims related to the distribution of controlled substances to pharmacies , often together with other pharmaceutical wholesale distributors and pharmaceutical manufacturers and retail pharmacy chains named as defendants . in addition , the state of new york has recently adopted a tax on sales of opioids in the state , and other states are considering legislation that could require us to pay taxes , licensing fees , or assessments on the distribution of opioid medications in those states . liabilities for taxes or assessments under any such laws will likely have an adverse impact on our results of operations , unless we are able to mitigate them through operational changes or commercial arrangements where permitted . refer to financial note 24 , “ commitments and contingent liabilities , ” to the accompanying consolidated financial statements appearing in this annual report on form 10-k for more information ; gain from an escrow settlement of $ 97 million ( pre-tax and after-tax ) representing certain indemnity and other claims related to our 2017 acquisition of rexall health ; pre-tax credit of $ 90 million ( $ 66 million after-tax ) related to the derecognition of a tax receivable agreement ( “ tra ” ) payable to the shareholders of change healthcare inc. ( “ change ” ) ; and higher operating expenses due to our business acquisitions and to support growth 2018 non-cash goodwill impairment charges of $ 1,283 million ( pre-tax and after-tax ) for the european pharmaceutical solutions segment and $ 455 million ( pre-tax and after-tax ) for our rexall health reporting unit in other . there were no tax benefits associated with these goodwill impairment charges . the impairments for europe were triggered primarily by government reimbursement reductions in our retail business in the u.k. and a more competitive environment in france . the impairments for rexall health were primarily driven by significant generics reimbursement reductions across canada and minimum wage increases in multiple provinces . at march 31 , 2018 , the rexall health reporting unit had no remaining goodwill related to our acquisition of rexall health ; non-cash pre-tax long-lived asset impairment charges of $ 446 million ( $ 410 million after-tax ) primarily due to the declines in estimated future cash flows in our european business including those declines in our u.k. retail business driven by government reimbursement reductions ; pre-tax restructuring charges of $ 74 million ( $ 67 million after-tax ) primarily representing employee severance and lease exit costs related to the 2018 restructuring plan for our mckesson europe business . under this plan , we expect to record total pre-tax charges of approximately $ 90 million to $ 130 million , of which $ 92 million of pre-tax charges were recorded to date ; higher expenses due to our business acquisitions ; pre-tax charitable contribution expense of $ 100 million ( $ 64 million after-tax ) to a public benefit california foundation ; and pre-tax gain of $ 109 million ( $ 30 million after-tax ) recognized from the sale of our eis business within other 2017 pre-tax gain of $ 3,947 million ( $ 3,018 million after-tax ) related to the 2017 contribution of the core mts business to the change healthcare joint venture ; and non-cash pre-tax goodwill impairment charge of $ 290 million ( story_separator_special_tag 2018 lower operating profit due to the 2017 contribution of the core mts business to the change healthcare joint venture ; pre-tax goodwill charges of $ 455 million and long-lived asset impairment charges of $ 33 million recognized for our rexall health retail business ; market growth in our mrxts business ; our proportionate share of losses from our equity method investment in change healthcare during 2018 ; $ 109 million pre-tax gain from the sale of our eis business in 2018 ; $ 46 million pre-tax credit representing a reduction of our tra liability related to the adoption of the 2017 tax act ; and pre-tax gain of $ 37 million resulting from the finalization of net working capital and other adjustments related to the contribution of the core mts business to change healthcare . 2017 pre-tax gain of $ 3,947 million related to the 2017 contribution of the core mts business to the change healthcare joint venture ; and non-cash pre-tax goodwill impairment charge of $ 290 million related to our eis reporting unit . 39 mckesson corporation financial review ( continued ) corporate : corporate expenses , net , increased for 2019 primarily due to an increase in opioid-related costs , higher restructuring-related charges and costs for technology initiatives . corporate expenses , net , increased for 2018 primarily due to a charitable contribution expense of $ 100 million and higher professional fees incurred for corporate initiatives . loss on debt extinguishment : in 2018 , we recognized a pre-tax loss on debt extinguishment of $ 122 million ( $ 78 million after-tax ) primarily representing premiums related to our february 2018 tender offers to redeem a portion of our existing outstanding long-term debt . interest expense : interest expense decreased over the last two years primarily due to the refinancing of debt at lower interest rates , partially offset by an increase in the issuance of commercial paper . interest expense fluctuates based on timing , amounts and interest rates of term debt repaid and new term debt issued , as well as amounts incurred associated with financing fees . foreign operations our foreign operations represented approximately 18 % , 18 % and 17 % of our consolidated revenues in 2019 , 2018 and 2017 . foreign operations are subject to certain risks , including currency fluctuations . we monitor our operations and adopt strategies responsive to changes in the economic and political environment in each of the countries in which we operate . we conduct our business worldwide in local currencies including euro , british pound sterling and canadian dollar . as a result , the comparability of our results reported in u.s. dollars can be affected by changes in foreign currency exchange rates . in discussing our operating results , we may use the term “ foreign currency effect ” , which refers to the effect of changes in foreign currency exchange rates used to convert the local currency results of foreign countries where the functional currency is not the u.s. dollar . we present this information to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations . in computing foreign currency effect , we translate our current year results in local currencies into u.s dollars by applying average foreign exchange rates of the corresponding prior year periods , and we subsequently compare those results to the previously reported results of the comparable prior year periods in u.s. dollars . additional information regarding our foreign operations is included in financial note 28 , “ segments of business , ” to the consolidated financial statements appearing in this annual report on form 10-k. business combinations refer to financial note 4 , “ business combinations , ” to the consolidated financial statements appearing in this annual report on form 10-k for additional information . fiscal 2020 outlook information regarding the company 's fiscal 2020 outlook is contained in our forms 8-k and 8-k/a dated may 8 , 2019. these forms should be read in conjunction with the sections item 1 - business - forward-looking statements and item 1a - risk factors in part i of this annual report on form 10-k. critical accounting policies and estimates we consider an accounting estimate to be critical if the estimate requires us to make assumptions about matters that were uncertain at the time the accounting estimate was made and if different estimates that we reasonably could have used in the current period , or changes in the accounting estimate that are reasonably likely to occur from period to period , could have a material impact on our financial condition or results from operations . below are the estimates that we believe are critical to the understanding of our operating results and financial condition . other accounting policies are described in financial note 1 , “ significant accounting policies , ” to the consolidated financial statements appearing in this annual report on form 10-k. because of the uncertainty inherent in such estimates , actual results may differ from these estimates . 40 mckesson corporation financial review ( continued ) allowance for doubtful accounts : we provide short-term credit and other customer financing arrangements to customers who purchase our products and services . other customer financing primarily relates to guarantees provided to our customers , or their creditors , regarding the repurchase of inventories . we also provide financing to certain customers related to the purchase of pharmacies , which serve as collateral for the loans . we estimate the receivables for which we do not expect full collection based on historical collection rates and specific knowledge regarding the current creditworthiness of our customers and record an allowance in our consolidated financial statements for these amounts . in determining the appropriate allowance for doubtful accounts , which includes general and specific reserves , the company reviews accounts receivable aging , industry trends , customer financial strength , credit standing , historical write-off trends	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	net cash used in investing activities was $ 1,381 million in 2019 compared to $ 2,993 million in 2018 and $ 3,269 million in 2017 . investing activities for 2019 include $ 905 million of net cash payments for acquisitions , including $ 784 million for our acquisition of msd , $ 426 million and $ 131 million in capital expenditures for property , plant and equipment , and capitalized software , and $ 101 million of net cash proceeds from sales of businesses and investments . investing activities for 2018 include $ 2,893 million of net cash payments for acquisitions , including $ 1.3 billion and $ 720 million for our acquisitions of covermymeds , llc and rxcrossroads , $ 405 million and $ 175 million in capital expenditures for property , plant and equipment , and capitalized software , $ 374 million of net cash proceeds from sales of businesses and investments and $ 126 million cash payment received related to the healthcare technology net asset exchange . investing activities for 2017 included $ 4,212 million of net cash payments for acquisitions including $ 2.1 billion for our acquisition of rexall health , $ 1,226 million of net payments received on the healthcare technology net asset exchange , $ 404 million and $ 158 million in capital expenditures for property , plant and equipment , and capitalized software , and $ 206 million of net cash proceeds from sales of businesses and investments . financing activities utilized $ 2,227 million , $ 3,084 million and $ 2,069 million of cash in 2019 , 2018 and 2017 . financing activities for 2019 include cash receipts of $ 37,265 million and payments of $ 37,268 million from short-term borrowings ( primarily commercial paper ) . we received cash from long-term debt issuances of $ 1,099 million and made repayments on long-term debt of $ 1,112 million in 2019. financing activities in 2019 also include $ 1,627 million of cash paid for stock repurchases and $ 292 million of dividends paid .
we believe we have identified key factors that contributed to the differences observed in the results from stride 2 compared to those of stride 1 and the phase 2 trial , and that changes made to the inclusion/exclusion criteria of stride 3 based on these analyses will improve the probability of success . if approved , kpi-121 0.25 % could be the first fda-approved product for the temporary relief of the signs and symptoms of dry eye disease . inveltys is the first and only fda‑approved ocular corticosteroid product with a twice-a-day dosing regimen for the treatment of post‑operative inflammation and pain . other approved topical ocular corticosteroid products for this indication are dosed four times a day . in clinical trials , inveltys showed statistical significance in the primary efficacy endpoints of complete resolution of inflammation at day eight maintained through day 15 with no need for rescue medication compared to placebo and complete resolution of pain at day eight maintained through day 15 with no need for rescue medications compared to placebo . we are evaluating opportunities for mpp nanosuspensions of le with less frequent daily dosing regimens for the temporary relief of signs and symptoms of dry eye disease and potential chronic treatment of dry eye disease . we also are evaluating compounds in our receptor tyrosine kinase inhibitor program , or rtki program , that inhibit the vascular endothelial growth factor , or vegf , pathway , for the potential treatment of a number of retinal diseases . inveltys received fda approval under section 505 ( b ) ( 2 ) of the u.s. federal food , drug and cosmetic act , or the fdca , which is the pathway we plan to rely on for the approval of kpi‑121 0.25 % as well . we have retained worldwide commercial rights for inveltys and our current product candidates . since fda approval of inveltys , we have built a commercial infrastructure with our own focused , specialty sales force which includes 57 territory sales managers , 7 regional sales leaders and 3 directors of national accounts . if kpi-121 0.25 % is approved for the temporary treatment of dry eye disease , we expect to further expand our sales force by up to an additional 100 personnel . we expect to commercialize in the united states any of our other product candidates that receive marketing approval as well . in anticipation of the potential to commercialize our product candidates in other global markets , we are evaluating a variety of collaboration , distribution and other marketing arrangements with one or more third parties . on july 25 , 2017 , we completed our initial public offering of our common stock , or ipo , pursuant to which we issued and sold 6,900,000 shares of our common stock at a price of $ 15.00 per share , which included 900,000 shares sold pursuant to the exercise of the underwriters ' option to purchase additional shares . we received net proceeds of $ 94.0 million , after deducting underwriting discounts and commissions and offering expenses . on august 9 , 2018 , we filed a shelf registration statement on form s-3 , or shelf registration , with the sec , which was declared effective on august 27 , 2018. under the shelf registration , we may offer and sell up to $ 250.0 million of a variety of securities including common stock , preferred stock , warrants , depositary shares , debt securities , purchase contracts , purchase units or any combination of such securities during the three-year period that commenced upon the shelf registration becoming effective . under the shelf registration , we may periodically offer one or more types of securities in amounts , at prices and on terms announced , if and when the securities are ever offered . on october 5 , 2018 , we sold 7,500,000 shares of our common stock in an underwritten offering pursuant to the shelf registration at a public offering price of $ 8.25 per share , before underwriting discounts and commissions . in addition , the underwriters were granted an option to purchase an additional 1,125,000 shares of the common stock at the same public offering price , less underwriting discounts and commissions . on october 11 , 2018 , the underwriters exercised in full their option to purchase the additional shares . the total number of shares sold by us in the offering was 8,625,000 shares , resulting in net proceeds to us , after underwriting discounts and offering expenses , of approximately $ 66.1 million . in connection with the filing of the shelf registration , we entered into a sales agreement with jefferies , llc pursuant to which we may issue and sell , from time to time , up to an aggregate of $ 50.0 million of our common stock in at-the-market equity offerings , or the atm offering , through jefferies , llc , as sales agent . as of december 31 , 2018 , we had issued 518,135 shares of our common stock under the atm offering resulting in net proceeds to us of approximately $ 4.6 million . 104 on october 1 , 2018 , we entered into a $ 110 million credit agreement with athyrium opportunities iii acquisition lp , or the athyrium credit facility . the athyrium credit facility provides for a term loan a in the aggregate principal amount of $ 75.0 million , or the term loan a , and a term loan b in the aggregate principal amount of $ 35.0 million , or the athyrium term loan b. on october 1 , 2018 , we borrowed the entire principal amount of the term a loan . story_separator_special_tag the following table summarizes our stock‑based compensation expenses for employees and non‑employee consultants ' incurred during the years ended december 31 , 2018 and 2017 ( in thousands ) : replace_table_token_4_th as of december 31 , 2018 and 2017 , we had $ 21.1 million and $ 15.4 million of total unrecognized compensation expense , which is expected to be recognized over a weighted average remaining vesting period of approximately 2.84 years and 3.11 years . we expect the impact of our stock‑based compensation expense for stock 109 options to employees and non‑employee consultants to grow in future periods due to the potential increases in the value of our common stock and headcount . emerging growth company status in april 2012 , the jumpstart our business startup act , or jobs act , was enacted by the federal government . section 107 of the jobs act provides that an emerging growth company can take advantage of the extended transition period for complying with new or revised accounting standards . thus , an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies . we have irrevocably elected not to avail ourselves of this extended transition period and , as a result , we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies . results of operations comparison of the years ended december 31 , 2018 and 2017 the followi ng table summarizes the results of our operations for the years ended december 31 , 2018 and 2017 : replace_table_token_5_th research and development expenses replace_table_token_6_th research and development expenses were $ 29.3 million for the year ended december 31 , 2018 compared to $ 29.0 million for the year ended december 31 , 2017. significant changes within research and development were a $ 4.3 million decrease in kpi ‑ 121 development costs due to the decrease in external costs associated with the completion of our phase 3 clinical trials of stride 1 and stride 2 , our phase 3 clinical trials of kpi-121 0.25 % for the treatment of dry eye disease in 2017 , partially offset by costs incurred for stride 3 , our additional phase 3 clinical trial of kpi-121 0.25 % which began during the year ended december 31 2018 and the prescription drug user fee act ( pdufa ) fee paid in connection with the filing of our nda for kpi-121 0.25 % . employee-related costs increased by $ 4.8 million , comprised of a $ 3.4 million increase related to additional clinical and regulatory and quality operations headcount , overall merit increases and a $ 1.4 million increase in stock compensation expense from stock option grants . other 110 research and development costs decreased by $ 0.2 million primarily associated with an $ 0.5 million increase clinical consulting services and a $ 0.7 million reduction in facility costs related to research and development . selling , general and administrative expenses selling , general and administrative expenses were $ 35.4 million for the year ended december 31 , 2018 compared to $ 10.9 million for the year ended december 31 , 2017 , an increase of $ 24.6 million . this increase was primarily due to a $ 12.2 million increase in employee ‑ related costs comprised of a $ 8.6 million increase in selling , general and administrative salaries and benefits expenses due to the hiring of additional employees and overall merit increases , and a $ 3.6 million increase in stock compensation expense related to increased stock options being granted during the year . professional services associated with accounting and legal fees and other general administrative costs increased by $ 2.0 million as a result of operating as a public company for the full year ended december 31 , 2018. costs associated with the building of our commercial organization in advance of the launch of inveltys in early 2019 increased by $ 9.3 million and our facility costs increased by $ 1.1 million due to additional leased space , commencement of our watertown lease and a larger allocation of our overall facility-related costs . interest income interest income was $ 1.7 million for the year ended december 31 , 2018 compared to $ 0.5 million for the year ended december 31 , 2017 an increase of $ 1.2 million . interest income consists of interest earned on our cash balance held in an interest bearing deposit account . the increase was attributable to a higher interest rate and higher average cash balance during the year ended december 31 , 2018 due to receipt of the proceeds from the sale of our common stock in at-the-market equity offerings in the fourth quarter of 2018 , from the sale of shares of our common stock in an underwritten offering in october 2018 and from our athyrium credit facility in october 2018. interest expense interest expense was $ 3.3 million for the year ended december 31 , 2018 compared to $ 1.0 million for the year ended december 31 , 2017 , an increase of $ 2.3 million . the interest expense was comprised of the contractual coupon interest and the amortization of the debt discount associated with our 2014 debt facility and our athyrium credit facility . the increase was primarily due to the october 2018 draw down of $ 75.0 million under the athyrium credit facility . loss on extinguishment of debt the loss of extinguishment of debt was $ 0.4 million for the year ended december 31 , 2018. there was no loss on extinguishment of debt for the year ended december 31 , 2017. upon the repayment in full of the principal balance and related outstanding interest under the 2014 debt facility , the unamortized debt discount and prepayment penalty was recorded as loss on extinguishment of debt for the year ended december 31 , 2018. change in fair value	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows as of december 31 , 2018 and 2017 , we had $ 170.9 million and $ 114.6 million in cash on hand and $ 75.0 million and $ 18.9 million in indebtedness , respectively . the indebtedness represents the aggregate outstanding principal amount under the athyrium credit facility and 2014 debt facility , respectively . the following table summarizes our sources and uses of cash for each of the periods presented : replace_table_token_7_th operating activities during the year ended december 31 , 2018 , our cash used in operating activities was primarily due to our net loss of $ 66.7 million as we incurred external research and development costs associated with our clinical trials and selling , general and administrative costs partially offset by non‑cash charges of $ 10.2 million , consisting primarily of a $ 1.2 million related to amortization of the right-of-use assets , debt discount and depreciation , $ 8.6 million in stock‑based compensation , $ 0.4 million in loss for extinguishment of the 2014 debt facility and net cash provided by changes in our operating assets and liabilities of $ 2.4 million . the changes in our operating assets and liabilities of $ 2.4 million primarily due to an increase of $ 8.6 million in accrued expenses and accounts payable partially offset by a decrease of $ 0.4 million in lease liabilities and other long-term liabilities primarily due to principal lease payments , and an increase of $ 5.8 million primarily driven by inventory related to inveltys and receivable related to the construction of our watertown facility .
cautionary note regarding forward-looking statements this report and other documents that we file with the securities and exchange commission contain forward-looking statements that are based on current expectations , estimates , forecasts and projections about our future performance , our business , our beliefs and our management 's assumptions . statements that are not historical facts are forward-looking statements . words such as “ expect , ” “ outlook , ” “ forecast , ” “ would , ” “ could , ” “ should , ” “ project , ” “ intend , ” “ plan , ” “ continue , ” “ sustain ” , “ on track ” , “ believe , ” “ seek , ” “ estimate , ” “ anticipate , ” “ may , ” “ assume , ” and variations of such words and similar expressions are often used to identify such forward-looking statements , which are made pursuant to the safe harbor provisions of the private securities litigation reform act of 1995. these forward- looking statements are not guarantees of future performance and involve risks , assumptions and uncertainties , including , but not limited to , those described in our reports that we file or furnish with the securities and exchange commission . should one or more of these risks or uncertainties materialize , or should underlying assumptions prove incorrect , actual results may vary materially from those indicated or anticipated by such forward-looking statements . accordingly , you are cautioned not to place undue reliance on these forward-looking statements , which speak only as of the date they are made . except to the extent required by law , we undertake no obligation to update publicly any forward-looking statements after the date they are made , whether as a result of new information , future events , changes in assumptions or otherwise . business of the company we were incorporated in the state of nevada on february 23 , 2010 under the name verve ventures , inc. on december 7 , 2011 , we changed our name to american strategic minerals corporation and were engaged in exploration and potential development of uranium and vanadium minerals business . in june 2012 , we discontinued our minerals business and began to invest in real estate properties in southern california . in october 2012 , we discontinued our real estate business when our former ceo joined the firm and we commenced our ip licensing operations , at which time the company 's name was changed to marathon patent group , inc. on november 1 , 2017 , we entered into a merger agreement with global bit ventures , inc. ( “ gbv ” ) , which is focused on mining digital assets . we have since purchased our cryptocurrency mining machines and established a data center in canada to mine digital assets . following the merger , we intended to add gbv 's existing technical capabilities and digital asset miners and expand our activities in the mining of new digital assets , while at the same time harvesting the value of our remaining ip assets . on june 28 , 2018 , the board has determined that it is in the best interests of the company and its shareholders to allow the amended merger agreement to expire on its current termination date of june 28 , 2018 without further negotiation or extension . the board approved to issue 3,000,000 shares of our common stock to gbv as a termination fee for canceling the proposed merger between the two companies . the fair value of the common stocks was $ 2,850,000. recent developments patent purchase on january 11 , 2018 , the company entered into a patent rights purchase and assignment agreement ( the “ agreement ” ) , with xpresspa group , inc. , a delaware corporation ( the “ seller ” ) and crypto currency patent holdings company llc , a delaware limited liability company and wholly owned subsidiary of the company ( “ ccphc ” ) . pursuant to the agreement , the seller agreed to irrevocably assign , sell , grant , transfer and convey , and ccphc agreed to accept and acquire , the exclusive right , title and interest in and to certain patents owned by the seller ( “ assigned ip ” ) , subject to the terms and conditions set forth in the agreement . as consideration for the assigned ip , the seller shall receive ( i ) payment in the amount of $ 250,000 from ccphc and ( ii ) 250,000 shares of common stock of the company , par value $ 0.0001 per share ( the “ consideration shares ” ) , with piggyback registration rights . the consideration shares were issued by the company to the seller , subject to the terms and conditions of a lock-up agreement . the fair value of the 250,000 shares was $ 960,000 and was based upon the closing price of the company 's common stock . 30 as a condition to the agreement , the seller agreed to enter into a lock-up agreement with the company , which lock-up agreement is included as an exhibit to the agreement ( the “ lock-up agreement ” ) . pursuant to the lock-up agreement , the seller shall not directly or indirectly offer , sell , pledge or transfer , or otherwise dispose of , the consideration shares for a period of 180 days commencing on january 11 , 2018 and ending on july 11 , 2018 ; provided , however , upon the effective date of the registration for resale of the consideration shares , and on each day thereafter , one twentieth ( 1/20 ) of the consideration shares shall bereleased from the restrictions contained in the lock-up agreement and may be freely sold , transferred , traded or otherwise disposed of . story_separator_special_tag fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date , essentially an exit price , based on the highest and best use of the asset or liability . the levels of the fair value hierarchy are : level 1 : observable inputs such as quoted market prices in active markets for identical assets or liabilities level 2 : observable market-based inputs or unobservable inputs that are corroborated by market data level 3 : unobservable inputs for which there is little or no market data , which require the use of the reporting entity 's own assumptions . the carrying amounts reported in the consolidated balance sheet for cash , accounts receivable , accounts payable , and accrued expenses , approximate their estimated fair market value based on the short-term maturity of these instruments . the carrying value of notes payable and other long-term liabilities approximate fair value as the related interest rates approximate rates currently available to the company . financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to their fair value measurement . the company measures the fair value of its marketable securities by taking into consideration valuations obtained from third-party pricing sources . the pricing services utilize industry standard valuation models , including both income and market-based approaches , for which all significant inputs are observable , either directly or indirectly , to estimate fair value . these inputs included reported trades of and broker-dealer quotes on the same or similar securities , issuer credit spreads , benchmark securities and other observable inputs . stock-based compensation the company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards and forfeiture rates . for stock-based compensation awards to non-employees , the company remeasures the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award . changes in the estimated fair value of these non-employee awards are recognized as compensation expense in the period of change . the company estimates the fair value of stock options grants using the black-scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management 's best estimates and involve inherent uncertainties and the application of management 's judgment . recent issued accounting standards see note 2 to our consolidated financial statements . results of operations for the years ended december 31 , 2018 and december 31 , 2017 we generated revenues of $ 1.6 million during the year ended december 31 , 2018 as compared to $ 0.5 million during the year ended december 31 , 2017. for the year ended december 31 , 2018 , this represented an increase of $ 1.0 million or 201 % . revenue for the year ended december 31 , 2018 were derived primarily from cryptocurrency mining . direct cost of revenues during the year ended december 31 , 2018 and 2017 amounted to approximately $ 3.4 million and $ 3.5 million , respectively . for the year ended december 31 , 2018 , this represented a decrease of $ 0.1 million or 3 % . direct costs of revenue include depreciation and amortization expenses of the cryptocurrency mining machines and patents , contingent payments to patent enforcement legal costs , patent enforcement advisors and inventors as well as various non-contingent costs associated with enforcing the company 's patent rights and otherwise in developing and entering into settlement and licensing agreements that generate the company 's revenue . we incurred other operating expenses of $ 10.3 million for the year ended december 31 , 2018 and $ 11.2 million for the year ended december 31 , 2017. for the year ended december 31 , 2018 , this represented a decrease of $ 945,315 or 8 % . these expenses primarily consisted of compensation to our officers , directors and employees , professional fees , impairment of the patent and long-lived assets and consulting incurred in connection with the day-to-day operation of our business . 34 the operating expenses consisted of the following : replace_table_token_2_th non-cash other operating expenses for the year ended december 31 , 2018 include non-cash other operating expenses totaling $ 39,053. non-cash operating expenses consisted of the following : replace_table_token_3_th ( 1 ) compensation expense and related taxes : compensation expense includes cash compensation and related payroll taxes and benefits , and non-cash equity compensation expenses . for the year ended december 31 , 2018 and 2017 , compensation expense and related payroll taxes were $ 2.0 million and $ 4.4 million , a decrease of $ 2.4 million or 55 % over the comparable periods in 2017. during the year ended december 31 , 2018 , we recognized non-cash employee and board equity-based compensation of $ 39,053 and $ 2.1 million for year ended december 31 , 2017 , respectively . ( 2 ) consulting fees : for the year ended december 31 , 2018 and 2017 , we incurred consulting fees of $ 0.6 million and $ 0.5 million , respectively , an increase of $ 0.1 million or 19 % over the comparable periods in 2017. consulting fees include both cash and non-cash related consulting fees primarily for investor relations and public relations services as well as other consulting services . during the year ended december 31 , 2017 , we recognized non-cash equity-based consulting credit of $ 91,228 . ( 3 ) professional fees : for the year ended december 31 , 2018 and 2017 , professional fees were $ 1.2 million and $ 2.8 million , respectively , a decrease of $ 1.6 million or 57 % over the comparable periods in 2017. professional fees primarily reflect the costs of professional outside accounting fees	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources the company 's consolidated financial statements have been prepared assuming that it will continue as a going concern , which contemplates continuity of operations , realization of assets , and liquidation of liabilities in the normal course of business . as reflected in the consolidated financial statements , the company had and accumulated deficit of approximately $ 102.1 million at december 31 , 2018 , a net loss of approximately $ 12.8 million and approximately $ 8.2 million net cash used in operating activities for the year ended december 31 , 2018. these factors raise substantial doubt about the company 's ability to continue as a going concern . liquidity is the ability of a company to generate funds to support its current and future operations , satisfy its obligations , and otherwise operate on an ongoing basis . at december 31 , 2018 , the company 's cash and cash equivalents balances totaled $ 2.6 million compared to $ 14.9 million at december 31 , 2017. net working capital decreased by $ 6.6 million , to $ 0.7 million at december 31 , 2018 from $ 7.4 million at december 31 , 2017. cash used in operating activities was $ 8.2 million during the year ended december 31 , 2018 and cash used in operating activities of $ 10.8 million during the year ended december 31 , 2017. cash used in investing activities was $ 4.2 million during the year ended december 31 , 2018 and cash provided by investing activities of $
the following table provides selected financial data about our company for the years ended september 30 , 2013 and 2012. replace_table_token_1_th going concern we are a development stage company and currently has no operations . our independent auditor has issued an audit opinion for first american group inc. , which includes a statement raising substantial doubt as to our ability to continue as a going concern . story_separator_special_tag text-indent : 0pt ; display : block ; margin-left : 0pt ; margin-right : 0pt `` > we make the following assumptions in our projections above for year 2 : * we will earn $ 20 cpm ( $ 0.02 every time a customer views an item of advertising ) . we are estimating approximately 2,000,000 impressions , or approximately 167,000 impression per month . * we will earn $ 0.3 every time a customer clicks on advertising . we are projecting 200,000 clicks , or less than 16,700 click per month . * when a customer fills in a form or take a survey or clicks through and purchases a product , we will earn revenue . we are estimating $ 1 per action . we expect that we will have approximately 50,000 completions per year , or approximately 4,200 completions per month . * we estimate that many calls outside north america will incur cost to the customer . we are estimating approximately 750,000 minutes which translates to approximately 2000 customers making 300 chargeable minutes per month . since we endeavor to provide this service as cheaply as possible to customers , we are only assuming $ 0.005 ( half a cent ) per minute profit . while going to make a phone call via our website , multiple advertisements will be posted to the same webpage the customer is using , which will include a combination of banners and videos on our website , their portal and the software phone . we have made our estimated projections ourselves . we believe that our estimates are reasonable . by way of comparison , according to http : //www.reelseo.com/video- advertising-vs-banners-cpms/ : * the average ad network inventory is : $ 0.60 to $ 1.10 cpm ; * the publisher sold display advertising is : $ 10 to $ 20 cpm ; and * video advertising is : $ 40 to $ 50 cpm we may never achieve the revenues we are projecting because the basis upon which we are making our revenue projections is subjective , and our reliance on third-party data which is more than two years old may be unreliable because the veracity of the third-party data can not be verified . while we will be focusing on video advertising , we may have display advertising and network inventory . year 1 will be spent on developing our products and services and we expect zero revenue during that period . in year 2 , we anticipate revenues of $ 153,750. we anticipate that we will start generating revenue in month 13 after we have completed the share sale outline . we expect that revenue will continue to increase and exceed expenses by month 19. we anticipate that we will sustain $ 15,105 in losses between months 13-24. in year 3 , we anticipate revenues of $ 460,000 and a profit of $ 105,884 between months 25-36 , and only at this point will our revenues exceed our costs . 16 we make the following assumptions in our projections above for year 2 : * we anticipate we will earn $ 20 cpm ( $ 0.02 every time a customer views an advertising ) on the basis of estimating 2 million impressions , which represents approximately 167,000 impression per month . * we anticipate we will earn $ 0.3 every time a customer clicks on advertising , on the basis of estimating 200,000 clicks or approximately 16,700 clicks per month . * when a customer fills in a form or takes a survey or clicks through and purchases a product , we will earn revenue . we are estimating a $ 1 per action and assuming that we will have 50,000 completions per year or approximately 4,200 completions per month . * we anticipate that many calls outside north america will incur cost to the customer . we are estimating 750,000 minutes , which is approximately 2000 customers making 300 chargeable minutes per month . since we are planning to provide this service as cheaply as possible to customers , we are only assuming $ 0.005 ( half a cent ) per minute profit . while going to make a phone call , a customer is likely to see multiple advertisements which will include a combination of banners and videos on the web site , the advertiser 's portal and our software phone . as well , people investigating our service , but not necessarily register , will earn us revenue because they will be viewing advertising . we can offer no assurance that we will be successful in developing and offering our products and services . any number of factors may impact our ability to develop our products and services , including our ability to obtain financing if and when necessary ; the availability of skilled personnel ; market acceptance of our products , if they are developed ; and our ability to gain market share . our business will fail if we can not successfully implement our business plan or if we can not develop or successfully market our products and services . since there is no minimum amount of shares that must be sold by the company , we may receive no proceeds or very minimal proceeds from the offering and potential investors may end up holding shares in a company that : * has not received enough proceeds from the offering to begin operations ; and * has no market for its shares . our independent registered public accountant has issued a going concern opinion . story_separator_special_tag the following table provides selected financial data about our company for the years ended september 30 , 2013 and 2012. replace_table_token_1_th going concern we are a development stage company and currently has no operations . our independent auditor has issued an audit opinion for first american group inc. , which includes a statement raising substantial doubt as to our ability to continue as a going concern . story_separator_special_tag text-indent : 0pt ; display : block ; margin-left : 0pt ; margin-right : 0pt `` > we make the following assumptions in our projections above for year 2 : * we will earn $ 20 cpm ( $ 0.02 every time a customer views an item of advertising ) . we are estimating approximately 2,000,000 impressions , or approximately 167,000 impression per month . * we will earn $ 0.3 every time a customer clicks on advertising . we are projecting 200,000 clicks , or less than 16,700 click per month . * when a customer fills in a form or take a survey or clicks through and purchases a product , we will earn revenue . we are estimating $ 1 per action . we expect that we will have approximately 50,000 completions per year , or approximately 4,200 completions per month . * we estimate that many calls outside north america will incur cost to the customer . we are estimating approximately 750,000 minutes which translates to approximately 2000 customers making 300 chargeable minutes per month . since we endeavor to provide this service as cheaply as possible to customers , we are only assuming $ 0.005 ( half a cent ) per minute profit . while going to make a phone call via our website , multiple advertisements will be posted to the same webpage the customer is using , which will include a combination of banners and videos on our website , their portal and the software phone . we have made our estimated projections ourselves . we believe that our estimates are reasonable . by way of comparison , according to http : //www.reelseo.com/video- advertising-vs-banners-cpms/ : * the average ad network inventory is : $ 0.60 to $ 1.10 cpm ; * the publisher sold display advertising is : $ 10 to $ 20 cpm ; and * video advertising is : $ 40 to $ 50 cpm we may never achieve the revenues we are projecting because the basis upon which we are making our revenue projections is subjective , and our reliance on third-party data which is more than two years old may be unreliable because the veracity of the third-party data can not be verified . while we will be focusing on video advertising , we may have display advertising and network inventory . year 1 will be spent on developing our products and services and we expect zero revenue during that period . in year 2 , we anticipate revenues of $ 153,750. we anticipate that we will start generating revenue in month 13 after we have completed the share sale outline . we expect that revenue will continue to increase and exceed expenses by month 19. we anticipate that we will sustain $ 15,105 in losses between months 13-24. in year 3 , we anticipate revenues of $ 460,000 and a profit of $ 105,884 between months 25-36 , and only at this point will our revenues exceed our costs . 16 we make the following assumptions in our projections above for year 2 : * we anticipate we will earn $ 20 cpm ( $ 0.02 every time a customer views an advertising ) on the basis of estimating 2 million impressions , which represents approximately 167,000 impression per month . * we anticipate we will earn $ 0.3 every time a customer clicks on advertising , on the basis of estimating 200,000 clicks or approximately 16,700 clicks per month . * when a customer fills in a form or takes a survey or clicks through and purchases a product , we will earn revenue . we are estimating a $ 1 per action and assuming that we will have 50,000 completions per year or approximately 4,200 completions per month . * we anticipate that many calls outside north america will incur cost to the customer . we are estimating 750,000 minutes , which is approximately 2000 customers making 300 chargeable minutes per month . since we are planning to provide this service as cheaply as possible to customers , we are only assuming $ 0.005 ( half a cent ) per minute profit . while going to make a phone call , a customer is likely to see multiple advertisements which will include a combination of banners and videos on the web site , the advertiser 's portal and our software phone . as well , people investigating our service , but not necessarily register , will earn us revenue because they will be viewing advertising . we can offer no assurance that we will be successful in developing and offering our products and services . any number of factors may impact our ability to develop our products and services , including our ability to obtain financing if and when necessary ; the availability of skilled personnel ; market acceptance of our products , if they are developed ; and our ability to gain market share . our business will fail if we can not successfully implement our business plan or if we can not develop or successfully market our products and services . since there is no minimum amount of shares that must be sold by the company , we may receive no proceeds or very minimal proceeds from the offering and potential investors may end up holding shares in a company that : * has not received enough proceeds from the offering to begin operations ; and * has no market for its shares . our independent registered public accountant has issued a going concern opinion .	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources at september 30 , 2013 , we had a cash balance of $ 2,022. management believes this amount will satisfy our cash requirements for the next twelve months or until such time that additional proceeds are raised . we plan to satisfy our future cash requirements - primarily the working capital required for the development of our course guides and marketing campaign and to offset legal and accounting fees - by additional equity financing . this will likely be in the form of private placements of common stock . management believes that if subsequent private placements are successful , we will be able to generate sales revenue within the following twelve months thereof . however , additional equity financing may not be available to us on acceptable terms or at all , and thus we could fail to satisfy our future cash requirements . if we are unsuccessful in raising the additional proceeds through a private placement offering we will then have to seek additional funds through debt financing , which would be highly difficult for a new development stage company to secure . therefore , the company is highly dependent upon the success of the anticipated private placement offering and failure thereof would result in the company having to seek capital from other sources such as debt financing , which may not even be available to the company . however , if such financing were available , because we are a development stage company with no operations to date , it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate .
working at the top of client organizations also allows us to attract and retain high-caliber consultants . in addition to executive search , we provide consulting services including executive leadership assessment , leadership , team and board development , succession planning , talent strategy , people performance , inter-team collaboration , culture shaping and organizational transformation . we provide our services to a broad range of clients through the expertise of over 400 consultants located in major cities around the world . our executive search services are provided on a retained basis . revenue before reimbursements of out-of-pocket expenses ( “ net revenue ” ) consists of retainers and indirect expenses billed to clients . typically , we are paid a retainer for our executive search services equal to approximately one-third of the estimated first-year compensation for the position to be filled . in addition , if the actual compensation of a placed candidate exceeds the estimated compensation , we often are authorized to bill the client for one-third of the excess . indirect expenses are calculated as a percentage of the retainer with certain dollar limits per search . key performance indicators we manage and assess our performance through various means , with primary financial and operational measures including net revenue , operating income , operating margin , adjusted ebitda ( non-gaap ) and adjusted ebitda margin ( non-gaap ) . 17 executive search and heidrick consulting performance is also measured using consultant headcount . specific to executive search , confirmation trends , consultant productivity and average revenue per search are used to measure performance . revenue is driven by market conditions and a combination of the number of executive search engagements and leadership consulting and culture shaping projects and the average revenue per search or project . with the exception of compensation expense , incremental increases in revenue do not necessarily result in proportionate increases in costs , particularly operating and administrative expenses , thus creating the potential to improve operating margins . the number of consultants , confirmation trends , number of searches or projects completed , productivity levels and the average revenue per search or project will vary from quarter to quarter , affecting net revenue and operating margin . our compensation model at the executive search consultant level , there are fixed and variable components of compensation . individuals are rewarded for their performance based on a system that directly ties a portion of their compensation to the amount of net revenue for which they are responsible . a portion of the reward may be based upon individual performance against a series of non-financial measures . credit towards the variable portion of an executive search consultant 's compensation is earned by generating net revenue for winning and executing work . each quarter , we review and update the expected annual performance of all executive search consultants and accrue variable compensation accordingly . the amount of variable compensation that is accrued for each executive search consultant is based on a tiered payout model . overall company performance determines the amount available for total variable compensation . the more net revenue that is generated by the consultant , the higher the percentage credited towards the consultant 's variable compensation and thus accrued by our company as expense . at the heidrick consulting consultant level , there are also fixed and variable components of compensation . overall compensation is determined based on the total economic contribution of the heidrick consulting segment to the business as a whole . individual consultant compensation can vary , and is derived from credits earned for delivering client work plus credits earned for contributions of intellectual and human capital , client relationship development and consulting practice development . each quarter , we review and update the expected annual performance of all heidrick consulting consultants and accrue variable compensation accordingly . the mix of individual consultants who generate revenue in executive search and economic contributions in heidrick consulting can significantly affect the total amount of compensation expense recorded , which directly impacts operating margin . as a result , the variable portion of the compensation expense may fluctuate significantly from quarter to quarter . the total variable compensation is discretionary , and is based on company-wide financial targets approved by the human resources and compensation committee of the board of directors . a portion of our executive search consultants ' and management cash bonuses is deferred and paid over a three-year vesting period . the compensation expense related to the amounts being deferred is recognized on a graded vesting attribution method over the requisite service period . this service period begins on january 1 of the respective fiscal year and continues through the deferral date , which coincides with our bonus payments in the first quarter of the following year , and for an additional three year vesting period . the deferrals are recorded in accrued salaries and employee benefits in the consolidated balance sheets . 2018 overview consolidated net revenue was $ 716.0 million for the year ended december 31 , 2018 , an increase of $ 94.6 million , or 15.2 % , compared to 2017. executive search net revenue was $ 652.9 million in 2018 , an increase of $ 100.8 million compared to 2017. the increase in executive search net revenue was the result of growth in the americas , europe and asia pacific . our acquisition of amrop a/s ( `` amrop `` ) in january 2018 also contributed to the growth in executive search net revenue . the net impact of the new revenue recognition standard increased executive search net revenue by approximately $ 8.0 million . story_separator_special_tag variable compensation increased $ 5.9 million due to higher bonus accruals for consultant performance . the impact of the new revenue recognition standard increased salaries and benefits expense by approximately $ 2.1 million . 24 general and administrative expenses decreased $ 3.3 million , or 13.6 % from 2017 primarily due to decreases in bad debt , internal travel and office occupancy . restructuring charges were $ 2.0 million for the year ended december 31 , 2017. these charges include approximately $ 1.8 million in severance-related charges , $ 0.1 million in office-related charges and $ 0.1 million in professional fees and other expenses . the asia pacific segment reported operating income of $ 16.0 million in 2018 , an increase of $ 15.5 million compared to $ 0.5 million in 2017. excluding the impact of restructuring charges in 2017 , operating income increased $ 13.4 million from $ 2.6 million to $ 16.0 million . heidrick consulting the heidrick consulting segment reported net revenue of $ 63.1 million in 2018 , a decrease of 9.0 % compared to $ 69.4 million in 2017. the decline in revenue was primarily the result of the adoption of the new revenue recognition standard and its $ 3.8 million negative impact on revenue associated with enterprise agreements . enterprise agreements are now recognized over a longer term due to certain renewal options included in the contract . foreign exchange rate fluctuations positively impacted results by $ 0.7 million , or 1.1 % . there were 66 heidrick consulting partner and principal consultants as of december 31 , 2018 , compared to 64 as of december 31 , 2017. salaries and employee benefits expense increased $ 3.9 million , or 8.0 % , from 2017. fixed compensation increased $ 4.6 million primarily due to increases in talent acquisition and retention costs , and base salaries and payroll taxes , partially offset by a decrease in retirement and benefits . variable compensation decreased $ 0.7 million due to lower bonus accruals for consultant performance . the impact of the new revenue recognition standard decreased salaries and benefits expense by approximately $ 2.7 million . general and administrative expenses decreased $ 4.8 million , or 16.7 % , from 2017 primarily as a result of decreases in the use of external third-party consultants and intangible amortization as a result of impairment in the prior year , partially offset by an increase in professional services . impairment charges for the year ended december 31 , 2017 were $ 50.7 million due to the impairment of goodwill and amortizable intangible assets associated with our leadership consulting and culture shaping reporting units . the impairment charge is recorded within impairment charges in the condensed consolidated statement of comprehensive income ( loss ) for the year ended december 31 , 2017. in 2018 , the company completed the integration of its leadership consulting and culture shaping businesses into one combined service offering , heidrick consulting . restructuring charges were $ 3.4 million for the year ended december 31 , 2017. these charges included approximately $ 2.1 million in severance-related charges , $ 1.2 million in professional fees and other expenses and $ 0.1 million in office-related charges . the heidrick consulting segment reported an operating loss of $ 13.6 million in 2018 , an increase of $ 48.7 million , compared to an operating loss of $ 62.4 million in 2017. excluding the impact of impairment and restructuring charges in 2017 , operating loss decreased $ 5.4 million from a loss of $ 8.3 million to a loss of $ 13.6 million . global operations support global operations support expenses decreased $ 3.8 million , or 9.5 % , to $ 36.3 million from $ 40.0 million in 2017. salaries and employee benefits expense increased $ 2.8 million , or 15.4 % , due to increases in management and support bonuses , stock compensation and separation costs , partially offset by a decrease in the deferred compensation plan due to market fluctuations . general and administrative expense decreased $ 1.2 million due to decreases in internal travel , professional fees , hiring fees and communications services , partially offset by an increase in office occupancy . restructuring charges were $ 5.5 million for the year ended december 31 , 2017. these charges included approximately $ 4.5 million of severance-related charges and $ 0.9 million of professional fees and other costs . excluding the impact of restructuring charges in 2017 , expenses increased $ 1.7 million from $ 34.6 million in 2017 to $ 36.3 million in 2018 . 25 year ended december 31 , 2017 compared to year ended december 31 , 2016 total revenue . consolidated total revenue increased $ 39.2 million , or 6.5 % , to $ 640.1 million for the year ended december 31 , 2017 from $ 600.9 million for the year ended december 31 , 2016. the increase in total revenue was primarily due to the increase in revenue before reimbursements ( net revenue ) . revenue before reimbursements ( net revenue ) . consolidated net revenue increased $ 39.0 million or 6.7 % , to $ 621.4 million in 2017 , from $ 582.4 million in 2016. foreign exchange rate fluctuations negatively impacted results by $ 1.4 million , or 0.2 % . executive search net revenue was $ 552.0 million in 2017 , an increase of $ 44.7 million from 2016. the increase in executive search net revenue was the result of growth in the americas , europe and asia pacific . heidrick consulting net revenue decreased $ 5.7 million , or 7.6 % , to $ 69.4 million in 2017 from $ 75.0 million in 2016. the number of executive search and heidrick consulting consultants was 346 and 64 , respectively , as of december 31 , 2017 compared to 335 and 62 , respectively , as of december 31 , 2016. specific to executive search , productivity as measured by	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash and cash equivalents . cash and cash equivalents at december 31 , 2018 were $ 279.9 million , an increase of $ 72.4 million compared to $ 207.5 million at december 31 , 2017 . the $ 279.9 million of cash and cash equivalents at december 31 , 2018 includes $ 112.1 million held by our foreign subsidiaries . a portion of the $ 112.1 million is considered permanently reinvested in these foreign subsidiaries . if these funds were required to satisfy obligations in the united states , the repatriation of these funds could cause us to incur additional foreign withholding taxes . we expect to pay approximately $ 202.0 million in variable compensation related to 2018 performance in march and april 2019 . in january 2019 , we paid approximately $ 14.0 million in variable compensation that was deferred in prior years . 29 cash flows provided by operating activities . in 2018 , cash provided by operating activities was $ 102.9 million , principally reflecting net income net of non-cash charges of $ 68.6 million , an increase in accrued expenses of $ 71.5 million , partially offset by an increase in accounts receivable of $ 16.8 million and restructuring payments of $ 11.6 million . the increase in accrued expenses primarily reflects approximately $ 202.0 million of current year bonus accruals , partially offset by $ 148.0 million of bonus payments for 2017 made in early 2018. in 2017 , cash provided by operating activities was $ 67.0 million , principally reflecting net income net of non-cash charges of $ 21.1 million , an increase in accrued expenses of $ 18.3 million and a restructuring accrual of $ 13.0 million .
examples of smart devices include set-top boxes , home gateways , point-of-sale terminals , kiosks , voting machines , gaming platforms , tablets , handheld data collection devices , personal media players , smart phones and devices targeted at automotive applications . we focus on smart devices that utilize embedded versions of the microsoft windows family of operating systems , specifically windows embedded compact , windows embedded standard and windows mobile as well as devices running other popular operating systems such as android , linux , and qnx . we have been providing software solutions to the smart device marketplace since our inception . our customers include world class original equipment manufacturers ( oems ) , original design manufacturers ( odms ) and enterprises , as well as silicon vendors ( svs ) and peripheral vendors which purchase our software solutions for purposes of facilitating processor and peripheral sales to the aforementioned customer categories . in the case of enterprises , our customers include those which develop , market and distribute smart devices on their own behalf as well as those that purchase devices from oems or odms and require additional device software or testing . the software solutions we provide are utilized and deployed throughout various phases of our customers ' device life cycle , including design , development , customization , quality assurance and deployment . critical accounting judgments use of estimates the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the united states requires us to make estimates and assumptions that affect the amounts reported and disclosed in our financial statements and the accompanying notes . actual results could differ materially from these estimates . on an ongoing basis , we evaluate our estimates , including those related to the allowance for doubtful accounts , percentage of completion on fixed-price service contracts , fair values of financial instruments , deferred tax asset allowances , useful lives and fair value of intangible assets and property and equipment , fair values of stock-based awards , income tax accruals , fair values of acquired assets and liabilities and the fair value of contingent purchase consideration , among other estimates . we base our estimates on historical experience and on various other assumptions that we believe to be reasonable , the results of which form the basis for making judgments about the carrying value of our assets and liabilities . revenue recognition we recognize revenue from software and engineering service sales when the following four revenue recognition criteria are met : persuasive evidence of an arrangement exists ; delivery has occurred or services have been rendered ; the selling price is fixed or determinable ; and collectability is reasonably assured . contracts and customer purchase orders are generally used to determine the existence of an arrangement . shipping documents 25 and time records are generally used to verify delivery . we assess whether the selling price is fixed or determinable based on the contract and or customer purchase order and payment terms associated with the transaction and whether the sales price is subject to refund or adjustment . we assess collectability based primarily on the creditworthiness of the customer as determined by credit checks and analysis , as well as the customer 's payment history . periodically , we will begin work on engineering service engagements prior to having a signed contract and , in some cases , the contract is signed in a quarter after which service delivery costs are incurred . we do not defer costs associated with such engagements before we have received a signed contract . we recognize software revenue upon shipment provided that no significant obligations remain on our part , substantive acceptance conditions , if any , have been met and the other revenue recognition criteria have been met . service revenue from time and materials contracts , and training service agreements , is recognized as services are performed . fixed-price service agreements , and certain time and materials service agreements with capped fee structures , are accounted for using the percentage-of-completion method . we use the percentage-of-completion method of accounting because we believe it is the most accurate method to recognize revenue based on the nature and scope of these engineering service contracts ; we believe it is a better measure of periodic income results than other methods and better matches revenue recognized with the costs incurred . percentage of completion is measured based primarily on input measures such as hours incurred to date compared to total estimated hours to complete , with consideration given to output measures , such as contract milestones , when applicable . significant judgment is required when estimating total hours and progress to completion on these arrangements which determines the amount of revenue we recognize as well as whether a loss is recognized if one is expected to be incurred for the remainder of the project . revisions to hour and cost estimates are incorporated in the period in which the facts that give rise to the revision become known . we also enter into arrangements in which a customer purchases a combination of software licenses , engineering services and post-contract customer support and or maintenance ( pcs ) . as a result , contract interpretation is sometimes required to determine the appropriate accounting , including how the price should be allocated among the deliverable elements if there are multiple elements . pcs may include rights to upgrades , when and if available , telephone support , updates and enhancements . when vendor specific objective evidence ( vsoe ) of fair value exists for all elements in a multiple element arrangement , revenue is allocated to each element based on the relative fair value of each of the elements . story_separator_special_tag ford contributed $ 9.7 million in service revenue in 2011 , a decline of $ 3.2 million from 2010. the number of engineers working on the myford touch declined since initial project completion in the third quarter of 2010 as we are no longer in the development stage of the myford touch platform . total service revenue increased $ 818,000 , or 3 % , in 2011 compared to 2010 due to growth inside and outside of north america from non-ford customers . north american service revenue declined $ 1.4 million , or 6 % , to $ 23.6 million in 2011 , primarily due to the $ 3.2 million decline related to ford offset in part by revenue increases related to other customers . service revenue in europe , the middle east , and africa ( the emea region ) increased by $ 1.3 million , to $ 1.7 million in 2011 , primarily driven by mpc which contributed $ 1.4 million to emea revenue in 2011 since its acquisition in september 2011. service revenue from the apac region increased $ 880,000 , or 37 % , to $ 3.3 million in 2011 from $ 2.4 million in 2010 , primarily related to a new customer in japan as well as contributions from china and korea resulting from our sales expansion in those areas . gross profit and gross margin cost of revenue related to software revenue consists primarily of the cost of third-party software products payable to third-party vendors . cost of revenue related to service revenue consists primarily of salaries and benefits , contractor costs and re-billable expenses , related facilities and depreciation costs , and amortization of certain intangible assets related to acquisitions . gross profit on the sale of third-party software products was also positively affected by rebate credits of $ 746,000 in 2011 and $ 804,000 in 2010 from microsoft which we earned through the achievement of defined objectives . the following table outlines software , services and total gross profit ( dollars in thousands ) : replace_table_token_9_th 31 software gross profit and gross margin software gross profit decreased by $ 652,000 , or 5 % , in 2011 , compared to 2010 , while software gross margin decreased by one percentage point to 19 % . this decline was primarily due to a $ 518,000 impairment charge related to the acquired technology from testquest in 2008 which we recognized in the fourth quarter of 2011 as software cost of revenue . the intangible assets associated with the acquired technology were deemed to be impaired as this technology is no longer used in any of our product offerings . during the fourth quarter of 2011 , we completed development of tq10 , the next generation of our automated testing software . tq10 replaces both of our legacy testquest products , countdown and tq pro , in what we will offer to our customers and provide technical support for in the future . although tq10 is similar in concept to countdown and tq pro , tq10 was developed on a new code base and architecture . as no significant future cash flows are expected to be generated from these legacy technologies , we deemed the intangible assets associated with them to be impaired . without the impairment charge , software gross margin would have been consistent with the 20 % gross margin in the prior year . service gross profit and gross margin service gross profit decreased by $ 418,000 , or 6 % , in 2011 as compared to 2010 , while service gross margin decreased by two percentage points to 22 % in 2011 , from 24 % in 2010. the decline in service gross margin was primarily the result of higher engineering headcount in the current year largely resulting from our international expansion which resulted in a 10 % increase in available hours and increased our cost of sales by $ 1.2 million compared to 2010. however , our actual billable hours only increased 2 % year-over-year as our utilization fell by eight percentage points in 2011 compared to 2010 , most of which resulted from start-up time associated with new personnel and new development centers . this decline in service margin was partially offset by a 4 % increase in our realized rate per hour in 2011 compared to 2010. operating expenses selling , general and administrative selling , general and administrative expenses consist primarily of salaries and related benefits , commissions and bonuses for our sales , marketing and administrative personnel and related facilities and depreciation costs , as well as professional services fees ( e.g . , consulting , legal and audit ) . selling , general and administrative expenses increased $ 3.8 million , or 30 % , to $ 16.7 million in 2011 , from $ 12.9 million in 2010. selling , general and administrative expenses represented 17 % of our total revenue in 2011 compared to 13 % of revenue in 2010. the increase was due in part to $ 934,000 higher stock compensation expense in the current year , as well as a $ 1.8 million increase in sales and marketing expenses , which was driven by growth in our sales capacity in asia and europe , as well as our corporate rebranding in the current year . general and administrative expenses were also higher in the current year as we added headcount to support our international growth . the current period was also negatively affected by higher employee fringe rates as health insurance premiums increased during the year , and $ 193,000 in transaction-related expenses associated with the mpc acquisition . research and development research and development expenses consist primarily of salaries and benefits for software development and quality assurance personnel , contractor and consultant costs and related facilities and depreciation costs . research and development expenses increased $ 454,000 , or 13 % , to $ 3.8 million in 2011 , from $	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources as of december 31 , 2011 , we had $ 19.0 million of cash , cash equivalents , short-term and long-term investments and restricted cash , compared to $ 23.1 million at december 31 , 2010. this $ 4.1 million decline was primarily the result of our mpc acquisition which utilized $ 4.8 million of cash , net of cash acquired . restricted cash is classified as long term and was $ 875,000 at both december 31 , 2011 and 2010. this cash is restricted under the terms of our headquarters operating lease which will continue to secure that obligation through its expiration in 2014. our working capital was $ 18.0 million at december 31 , 2011 , compared to $ 20.0 million at december 31 , 2010. cash and cash equivalents were $ 8.5 million at december 31 , 2011 , a decrease of $ 2.3 million from $ 10.8 million at december 31 , 2010. net cash provided by operating activities was $ 1.1 million in 2011 , primarily due to $ 3.1 million of non-cash expenses , a $ 1.8 million decrease in our accounts receivable , and a $ 518,000 impairment charge on our intangible assets associated with testquest acquired technology .
respect to the quantities and costs of refined petroleum products supplied to our pipelines and or held in our terminals ; operating hazards , natural disasters , casualty losses and other matters beyond our control ; increases in our debt levels or costs ; changes in our ability to continue to access the credit markets ; compliance , or failure to comply , with restrictive and financial covenants in our various debt agreements ; the inability of our subsidiaries to freely make dividends , loans or other cash distributions to us ; seasonality ; 56 management 's discussion and analysis acts of terrorism ( including cyber-terrorism ) aimed at either our facilities or other facilities that could impair our ability to produce or transport refined products or receive feedstocks ; disruption , failure , or cybersecurity breaches affecting or targeting our it systems and controls , our infrastructure , or the infrastructure of our cloud-based it service providers ; changes in the cost or availability of transportation for feedstocks and refined products ; and other factors discussed under item 1a , risk factors and item 7 , management 's discussion and analysis of financial condition and results of operations and in our other filings with the sec . in light of these risks , uncertainties and assumptions , our actual results of operations and execution of our business strategy could differ materially from those expressed in , or implied by , the forward-looking statements , and you should not place undue reliance upon them . in addition , past financial and or operating performance is not necessarily a reliable indicator of future performance , and you should not use our historical performance to anticipate future results or period trends . we can give no assurances that any of the events anticipated by any forward-looking statements will occur or , if any of them do , what impact they will have on our results of operations and financial condition . all forward-looking statements included in this report are based on information available to us on the date of this report . we undertake no obligation to revise or update any forward-looking statements as a result of new information , future events or otherwise . executive summary and strategic overview business overview we are an integrated downstream energy business focused on petroleum refining , the transportation , storage and wholesale distribution of crude oil , intermediate and refined products and convenience store retailing . effective july 1 , 2017 , we acquired through the delek/alon the operations and net assets of alon , as discussed in the 'recent strategic developments ' section of item 1 , business , and as discussed in note 3 of our consolidated financial statements included in item 8 , financial statements and supplementary data , of this annual report on form 10-k. the delek/alon merger continues to have a significant impact on our revenue and profitability as well as earnings per share , our net asset position , our purchasing position in the marketplace , our footprint in the refining industry , especially in the gulf coast region/permian basin , and our ability to go to market and secure financing , and we continue to realize synergies from our combined operations . refining overview the refining segment processes crude oil and other purchased feedstocks for the manufacture of transportation motor fuels , including various grades of gasoline , diesel fuel , aviation fuel , asphalt and other petroleum-based products that are distributed through owned and third-party product terminals . it had a combined nameplate capacity of 302,000 barrels per day as of december 31 , 2018 . prior to the delek/alon merger , the refining segment operated refineries in tyler , texas ( the `` tyler refinery `` ) and el dorado , arkansas ( the `` el dorado refinery `` ) with a combined design crude throughput ( nameplate ) capacity of 155,000 barrels per day ( `` bpd `` ) , including the 75,000 bpd tyler refinery and the 80,000 bpd el dorado refinery . effective with the delek/alon merger , our refining segment now also includes a crude oil refinery located in big spring , texas ( the `` big spring refinery `` ) with a nameplate capacity of 73,000 bpd , a crude oil refinery located in krotz springs , louisiana ( the `` krotz springs refinery `` ) with a nameplate capacity of 74,000 bpd . our refining segment also included two biodiesel facilities we own and operate that are engaged in the production of biodiesel fuels and related activities , located in crossett , arkansas and cleburne , texas . our profitability in the refining segment is substantially determined by the difference between the cost of the crude oil feedstocks we purchase and the price of the refined products we sell , referred to as the `` crack spread `` , `` refining margin `` or `` refined product margin `` . the cost to acquire feedstocks and the price of the refined petroleum products we ultimately sell from our refineries depend on numerous factors beyond our control , including the supply of , and demand for , crude oil , gasoline and other refined petroleum products which , in turn , depend on , among other factors , changes in domestic and foreign economies , weather conditions such as hurricanes or tornadoes , local , domestic and foreign political affairs , global conflict , production levels , the availability of imports , the marketing of competitive fuels and government regulation . other significant factors that influence our results in the refining segment include operating costs ( particularly the cost of natural gas used for fuel and the cost of electricity ) , seasonal factors , refinery utilization rates and planned or unplanned maintenance activities or turnarounds . story_separator_special_tag these significant developments were intentionally implemented to align with some of our most critical strategic initiatives for both 2018 and 2019 which include managing our risk and enhancing shareholder value by focusing on the following : growing our business through new lines of business and investment in our existing businesses including capital improvements and new technology , and identifying and managing operational and financial risks to improve operational decision-making and increase profitability . in addition to the significant initiatives/developments described above , we entered into several other strategic transactions in order to improve our financial position or enhance shareholder value since december 31 , 2017 , some of the most significant of which are described below . transactions designed to maximize shareholder return 2018 and 2019 share repurchases on january 23 , 2018 , delek repurchased 2.0 million shares of its common stock from alon israel in connection with delek 's rights pursuant to a stock purchase agreement dated april 14 , 2015 by and between delek and alon israel . alon israel delivered a right of first offer notice to delek on january 16 , 2018 , informing delek of alon israel 's intention to sell the 2.0 million shares , and delek accepted such offer on january 17 , 2018. the total purchase price was approximately $ 75.3 million , or $ 37.64 per share . in the aggregate , pursuant to various share repurchase programs approved by our board of directors , we have repurchased 9,022,386 shares for a total of approximately $ 365.3 million since december 31 , 2017. as of february 22 , 2019 , there is approximately $ 409.7 million of authorization remaining under delek 's aggregate stock repurchase program ( based on repurchases that had settled as of february 22 , 2019 ) . see further discussion in note 5 of our consolidated financial statements included in item 8 , financial statements and supplementary data , of this annual report on form 10-k. february 2018 acquisition of non-controlling interest in alon partnership on november 8 , 2017 , delek and the alon partnership ( as defined in note 6 of our consolidated financial statements included in item 8 , financial statements and supplementary data , of this annual report on form 10-k ) entered into a definitive merger agreement under which delek agreed to acquire all of the outstanding limited partner units which delek did not already own in an all-equity transaction . this transaction was approved by all voting members of the board of directors of the general partner of the alon partnership upon the recommendation from its conflicts committee and by the board of directors of delek . this transaction closed on february 7 , 2018 ( the `` merger date `` ) . delek owned approximately 51.0 million limited partner units of the alon partnership , or approximately 81.6 % of the outstanding units immediately prior to the merger date . under terms of the merger agreement , the owners of the remaining outstanding units in the alon partnership that delek did not currently own immediately prior to the merger date received a fixed exchange ratio of 0.49 shares of new delek common stock for each limited partner unit of the alon partnership , resulting in the issuance of approximately 5.6 million shares of new delek common stock to the public unitholders of the alon partnership . the limited partner interests of the alon partnership prior to this acquisition were represented as common units outstanding . because the transaction represented a combination of ownership interests under common control , the transfer of equity from non-controlling interest 60 management 's discussion and analysis to owned interest was recorded at carrying value and no gain or loss was recognized in connection with the transaction . see further discussion in note 6 of our consolidated financial statements included in item 8 , financial statements and supplementary data , of this annual report on form 10-k. the acquisition of the non-controlling interest in the alon partnership enabled us to refocus the efforts being expended for that separate master limited partnership on a more synergistic and cohesive strategy where both the tactical operational and growth objectives of the big spring refinery ( owned by the alon partnership ) are fully integrated and aligned within our refining segment . additionally , the elimination of the non-controlling public ownership allows us to channel 100 % of the alon partnership 's operational , market and financial contributions to the benefit of delek and its shareholders . september 2018 settlement of convertible debt and related call options on september 17 , 2018 , delek settled its convertible notes ( as defined in note 11 of our consolidated financial statements included in item 8 , financial statements and supplementary data , of this annual report on form 10-k ) for a combination of cash and shares of new delek common stock . the maturity settlement in respect of the convertible notes consisted of ( i ) cash payments totaling approximately $ 152.5 million which included a cash payment for outstanding principal of $ 150.0 million , a cash payment for accrued interest of approximately $ 2.2 million , a cash payment for dividends of approximately $ 0.3 million and a nominal cash payment in lieu of fractional shares , and ( ii ) the issuance of approximately 2.7 million shares of new delek common stock to holders of the convertible notes ( the “ conversion shares ” ) . the issuance of the conversion shares was made in exchange for the convertible notes pursuant to an exemption from the registration requirements provided by section 3 ( a ) ( 9 ) of the securities act of 1933 , as amended . on september 17 , 2018 , we exercised the call options ( as defined in note 11 of our consolidated financial statements included in item 8 , financial statements and supplementary data , of this annual report on form	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	net cash provided by investing activities was $ 37.6 million for the year ended december 31 , 2017 , compared to $ 200.7 million in 2016 . this decrease in cash flows from investing activities was primarily due to an increase in cash purchases of property , plant and equipment , which increased from $ 46.3 million in 2016 to $ 172.0 million in 2017 . additionally , the disposed retail segment provided $ 288.9 million of cash flows from investing activities in 2016 that was not recurring in 2017 , while the california discontinued entities provided $ 12.2 million of cash flows from investing activities in 2017 . this decrease was partially offset by the the cash acquired in the delek/alon merger of $ 200.5 million ( excluding the cash acquired attributable to the california discontinued entities ) and a decrease in equity method contributions of $ 55.8 million . cash flows from financing activities ytd 2018 vs. ytd 2017 net cash provided by financing activities was $ 297.6 million for the year ended december 31 , 2018 , compared to cash used of $ 104.6 million in the comparable 2017 period . we completed the refinancing transaction as well as extinguished the convertible notes during the year ended december 31 , 2018 . the increase in net cash flows from financing activities was primarily attributable to proceeds from long-term revolvers of $ 2,124.6 million and proceeds from term debt of $ 690.6 million , offset by payments on long-term revolvers of $ 1,679.8 million , payment on term debt of $ 826.3 million , deferred financing costs paid of $ 13.8 million , repayment of product financing agreements of $ 72.4 million , repurchase of common stock of $ 365.3 million and increases in dividends paid to $ 80.1 million compared to $ 44.0 million in the comparable 2017 period .
the decline in the asp appears to be a result of the economic slowdown throughout china , as manufacturing activities contracted due to the debt and fiscal crisis in europe as well as the chinese government 's effort to cool off the domestic construction activities . we believe the asp for the corrugating medium paper may not fundamentally improve until the chinese government announces new economic policies to stimulate domestic economy and consumer spending . we launched the new 360,000 tonnes/year corrugating medium pm6 in december 2011. we are in the process of ramping up the new production line pm6 . for the year of 2012 , we sold 175,758 tonnes of corrugating medium produced by the new production line . quantities sold from the commencement to december 2012 are as follows . 35 offset printing paper revenue from offset printing paper amounted to $ 49,100,091 ( or 33.88 % of total offset printing paper and corrugating medium paper revenue ) for the year ended december 31 , 2012 , which represents a $ 49,384,251 ( or 50.14 % ) decrease from the offset printing paper revenue of $ 98,484,342 for the comparable period in 2011. we sold 67,564 tonnes of offset printing paper in the year ended december 31 , 2012 compared to 122,320 tonnes of offset printing paper in the comparable period in year 2011 , a decrease of 54,756 tonnes or 44.76 % . we believe that the factors contributing to the decrease in both total quantity and dollar amount sold in the year ended december 31 , 2012 include ( 1 ) a softening demand for printing paper in our region , possibly due to a slowdown of the economy , ( 2 ) the decrease in asp for offset printing paper products from $ 805/tonne in the year ended december 31 , 2011 to $ 727/tonne in the year ended december 31 , 2012 , representing a decrease of 9.69 % , ( 3 ) the suspension of offset printing paper trading activities due to shrinking profit margin since january 2012 , as explained above , and ( 4 ) production interruption in the second and third quarters of 2012 because of the water treatment plant malfunction and the installation of new boilers . gross revenue from trading of offset printing paper finished goods is $ 121,618 ( or 157 tonnes ) for the year ended december 31 , 2012 , representing 0.25 % of total sales revenue of offset print paper for the current year , while gross revenue from trading of offset printing paper finished goods was $ 25,625,731 ( or 31,795 tonnes ) for the previous year in 2011 and accounted for 26.02 % of the gross revenue of offset printing paper for 2011. revenue of digital photo paper revenue generated from selling digital photo paper was $ 6,188,014 ( or 4.09 % of total revenue ) for the year ended december 31 , 2012 , a decrease of $ 2,061,186 or 24.99 % from $ 8,249,200 ( or 5.47 % of total revenue ) for the year ended december 31 , 2011. when comparing to the year ended december 31 , 2011 , the asp of our digital photo paper decreased from $ 4,026/tonne to $ 3,858/tonne . we sold 1,604 tonnes of digital photo paper in the year ended december 31 , 2012 , as compared to 2,049 tonnes in the same period a year ago . as there are increasingly more residential buildings and residents living in the surrounding areas of our digital photo paper plant , we have been under increasing pressure since october 2012 by local residents and from government urban planning officials to minimize our operations during night time , which resulted in a curtailment of our production schedule . digital photo paper produced in the fourth quarter of 2012 was 229.07 tonnes , versus 486.31 tonnes in the comparable quarter in 2011 , representing a 52.90 % quarterly decline . besides the reduced production in the fourth quarter of 2012 , the 21.72 % year-over-year decline in quantity sold and the 4.17 % year-over-year decline in asp , which appears to be a result of softening customer demand due to the slowdown in the economy . we believe the market demand and the asp may not fully recover until the first half of year 2013 , or until fundamental changes in the prc domestic economy take place . we currently produce glossy and semi-matte photo paper in various weights ( from 120g/m 2 to 260g/m 2 ) . because of the depressed domestic economy , we believe there will still be market pricing pressure on digital photo paper in the near future . digital photo paper products ' monthly asps , monthly sales quantity ( in tonnes ) and monthly sales revenue for the 24 months from january 2011 to december 2012 are summarized as follows : 36 cost of sales corrugating medium paper and offset printing paper total cost of sales for corrugating medium paper and offset printing paper for the year ended december 31 , 2012 was $ 119,312,122 , an increase of $ 7,005,486 or 6.24 % from $ 112,306,636 for the comparable period in 2011. the net increase in total corrugating medium and offset printing paper cost of sales in 2012 appears to be primarily due to the increase in the total quantity of paper sold in 2012 ( 322,064 tonnes ) versus in 2011 ( 230,494 tonnes ) . as explained above , total sales revenue ( excluding revenue from sales of digital photo paper ) increased from $ 142,498,116 in the year ended december 31 , 2011 to $ 144,928,792 in the comparable period in year 2012 , representing a 1.71 % year-over-year increase . story_separator_special_tag there is currently no binding agreement between us and hebei fangsheng in connection with the potential sale . in november 2012 , hebei fangsheng provided us with a payment of $ 1,075,606 earnest money deposit payment to proceed with discussion . the earnest money deposit would be refunded to hebei fangsheng in the event that the parties fail to reach an agreement on the terms of the potential sale . we intend to pursue negotiations with respect to the potential sale on an arm 's length basis with hebei fangsheng , and will only consummate such potential sale on terms that will be not less advantageous to us than as if hebei fangsheng were an independent , unaffiliated party . we will only enter into legally binding agreements with hebei fangsheng in connection with the potential sale upon appraisals by independent appraisal firms , and a finding by our audit committee that these conditions have been met . we have not identified new locations for the office and the digital photo paper workshop but are exploring the possibility of moving the headquarters office to near our xushui paper mill . we may also consider moving the digital photo paper operations to the new industrial park in wei county . 42 wei county tissue paper pm8 and pm9 in november 2012 we entered into a 15-year land lease with a land investment company in wei county for the purpose of developing the 49.4 acres of land into the base of our next capacity expansion . in december 2012 we signed a contract with an equipment contractor in shanghai to build the first of our two tissue paper production lines in wei county . the two production lines , each having 15,000 tonnes/year capacity , will be designated as pm8 and pm9 upon completion . total estimated cost of the tissue paper project may be up to $ 43.5 million in the next two years . renovation of pm1 to expand to 250,000 tonnes/year corrugating medium capacity we have decided to take voluntary action to renovate our 150,000 tonnes/year corrugating medium pm1 in anticipation of increased regulatory concerns on energy efficiencies and to further upgrade the quality of our corrugating medium products . the renovation is set to start before the end of the first quarter of 2013 and there will be no production output from pm1 during renovation . the company expects the renovated pm1 will cost approximately $ 20 million and will come online in the third quarter of 2014 with an expanded capacity of 250,000 tonnes/year . the company currently does not have any plans for equity financing in the next 12 months . story_separator_special_tag 0pt 0 ; text-align : justify `` > on august 18 , 2011 , the company obtained from the industrial & commercial bank of china an accounts receivable factoring facility with a maximum credit limit of $ 787,116 as of december 31 , 2011. under the factoring agreement , the bank has recourse against the company if the receivables , which remain in the company 's books at all times , are not fully collected . the term of the factoring facility expired on august 15 , 2012 and carried an interest rate of 8.528 % per annum . the company paid off the 2011 factoring outstanding balance on august 15 , 2012 and subsequently refinanced with the industrial & commercial bank of china on september 4 , 2012 under similar terms , except carries an interest rate of 6.6 % per annum . the unpaid balance of the factoring facility was $ 792,568 as of december 31 , 2012. this new factoring facility will expire on august 28 , 2013 . ( c ) on march 13 , 2012 , the company obtained from the industrial & commercial bank of china another accounts receivable factoring facility with a maximum credit limit of $ 1,975,816 as of september 30 , 2012. under the factoring agreement , the bank has recourse against the company if the receivables , which remain in the company 's books at all times , are not fully collected . the term of the factoring facility expires on january 4 , 2013 and carries an interest rate of 8.856 % per annum , or 3.5 % plus the prime rate for the loan set forth by the people 's bank of china at the time of funding . the company paid off the entire balance and accrued interest of the loan on october 23 , 2012 . ( d ) on november 9 , 2012 , the company obtained from the industrial & commercial bank of china another accounts receivable factoring facility with a maximum credit limit of $ 1,585,138 as of december 31 , 2012. under the factoring agreement , the bank has recourse against the company if the receivables , which remain in the company 's books at all times , are not fully collected . the term of the factoring facility expires on november 8 , 2013 and carries an interest rate of 6.6 % per annum , or 1.0 % plus the prime rate for the loan set forth by the people 's bank of china at the time of funding . the unpaid balance of the loan was in the amount of $ 1,585,138 as of december 31 , 2012 . ( e ) on september 19 , 2012 , the company obtained from the bank of hebei a new banking facility with maximum credit limit on bank loans of $ 1,585,138 and on notes payable of $ 1,585,138 , respectively . the facility is guaranteed by an independent third party . on the same day , the company drew down from this banking facility a new working capital loan of $ 1,585,138 as of december 31 , 2012. the loan bears interest at the rate of 6.6 % per annum . both the term of the banking facility and loan are for one year and	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash and cash equivalents our cash and cash equivalents as of december 31 , 2012 was $ 13,140,288 , an increase of $ 8,974,842 from $ 4,165,446 as of december 31 , 2011. the year-over-year increase of cash and cash equivalents was primarily attributable to a number of factors , including the following : i. net cash provided by operating activities net cash provided by operating activities was $ 22,231,966 for the year ended december 31 , 2012 , representing an increase of $ 3,601,917 or 19.33 % from $ 18,630,049 for the previous year in 2011. the net income for the year ended december 31 , 2012 in the amount of $ 14,672,663 represented a decrease of $ 6,976,001 or 32.22 % from $ 21,648,664 for the previous year in 2011. in addition to the decrease in net income , non cash item of deferred tax of $ 941,208 , net increase in inventories for $ 5,024,459 , net decrease in accounts payable of $ 1,771,968 and decrease in income taxes payable of $ 500,641 during the 2012 year also decreased cash balance as of december 31 , 2012. these major net cash outflows are offset by non cash item of depreciation and amortization in the amount of $ 8,382,859 ( an increase over the depreciation and amortization for the last year of 2011 by $ 3,958,328 ) , loss from impairment and disposal of assets for $ 2,717,060 , net decrease in accounts receivable of $ 1,029,978 , net increase in notes payable of $ 3,168,769 and net increase in other payables and accrued liabilities of $ 453,548. ii . net cash used in investing activities we incurred $ 11,915,693 in cash expenditures for investing activities during the year ended december 31 , 2012 , compared to $ 27,451,405 for the previous year in 2011 when the construction of the new corrugating medium pm6 was in progress .
our 2017 and 2020 term loans converted to series 1 common stock in connection with the ipo , resulting in a $ 53.9 million reduction of our outstanding long-term debt . on november 12 , 2020 , we completed our secondary offering , in which we issued and sold 1,000,000 shares of our series 1 common stock at $ 68.00 per share . the secondary offering resulted in net proceeds of $ 65.1 million after deducting underwriting discounts , commissions and other offering costs . existing stockholders sold an additional 4,750,000 shares of series 1 common stock , including 750,000 shares of series 1 common stock that were sold pursuant to the exercise in full of the underwriters ' option to purchase additional shares of series 1 common stock at $ 68.00 per share . we did not receive any proceeds from the sale of shares by the selling stockholders in the secondary offering . additionally , upon completion of the secondary offering , we fully repaid approximately $ 22 million of our outstanding indebtedness under our credit facility . key factors affecting our performance we believe our future performance will depend on many factors , including the following : 33 continued growth of ecommerce domestically and globally ecommerce is rapidly transforming global b2c and b2b commerce . b2c ecommerce was nonexistent in the early-1990s and grew to approximately 10 % of all global retail spending in 2017 , according to emarketer . emarketer estimates that it will take just six years for this percentage to more than double to 21 % of global retail spending in 2023. the rapid growth in ecommerce is prompting companies to adopt ecommerce platforms like bigcommerce to create compelling branded ecommerce stores and power cross-channel connections to online marketplaces , social networks , and offline pos systems . we believe we have a substantial opportunity to serve a larger number of customers as ecommerce continues to grow around the world by extending into new and emerging segments within ecommerce . the following segments are significant areas of potential growth and strategic focus for us : headless commerce . this refers to businesses whose technology strategy is to decouple their front-end customer experience technology from their back-end commerce platform . in terms of online strategy , these companies are typically brand- , marketing- , or experience-led . we serve headless use cases better than most of our competitors due to years of investment in our platform apis and integration capabilities . pre-built integrations connect our platform with leading cmss such as acquia , adobe , bloomreach , drupal , sitecore , and wordpress . b2b . as of december 31 , 2020 , approximately 10 % of our customers use bigcommerce primarily for b2b sales . in many cases , these customers ' needs are met using our native functionality , including b2b features like customer groups and price lists . in other cases , these customers complement bigcommerce with purpose-built b2b extensions and applications in the bigcommerce apps marketplace . over time , we intend to add more b2b functionality to both the bigcommerce apps marketplace and our native feature set . large enterprise . increasingly , we are successfully competing for large enterprise sites selling more than $ 50 million annually online , with our enterprise plan product feature set , along with our sales , marketing , solutioning , and service capabilities . efficient acquisition of new customers the growth of our customer base is important to our continued revenue growth . we believe we are positioned to grow significantly through a combination of our own marketing and sales initiatives , customer referrals from our agency and technology partners , and word-of-mouth referrals from existing customers . we measure the efficiency of new customer acquisition by comparing the lifetime value ( “ ltv ” ) of newly-acquired customers to the customer acquisition costs ( “ cac ” ) of the associated time period to get an “ ltv : cac ratio . ” we calculate ltv as gross profit from new sales during the four quarters of any given year divided by the estimated future subscription churn rate . we calculate cac as total sales and marketing expense incurred during the associated preceding four quarters . new smb , mid-market and enterprise customers were added at an estimated ltv to cac ratio of 4.9:1 , up from 4.4:1 in 2019. retention and growth of our existing customers we believe our long-term revenue growth is correlated with the growth of our existing customers ' ecommerce businesses . we strive to maintain industry-leading service levels and platform capabilities to maximize customer success and retention . our revenue grows with that of our customers . as they generate more online sales , we generate more subscription revenue through automated sales-based upgrades on our essentials plans and order adjustments on our enterprise plans . typical enterprise contracts have terms ranging from 12 to 36 months and do not include the ability to terminate for convenience . as our customers ' online sales increase , our partner and services revenue generated by revenue-sharing agreements with our strategic technology partners increases as well . our ability to retain and grow our customers ' ecommerce businesses often depends on the continued expansion of our platform and the capabilities of our strategic technology partners to provide revenue generating services to our customers . we continually evaluate prospective and existing partners ' abilities to enhance the capabilities of our customers ' ecommerce businesses . we add new partners and expand existing partner relationships to enhance the utility of our platform , while creating new opportunities to expand our revenue share in partner and services revenue . as we continue to grow as a platform , we believe our ability to realize more favorable and expansive revenue share agreements will grow as well . we also grow by selling additional stores to existing customers . story_separator_special_tag revenue increased $ 20.2 million , or 22 % , to $ 112.1 million in 2019 from $ 91.9 million in 2018 , as a result of increases in both subscription solutions and partner and services revenue . subscription solutions revenue increased $ 12.2 million , or 17.3 % , to $ 82.7 million in 2019 from $ 70.5 million in 2018 , primarily due to the increase in mid-market and large enterprise customers and our international expansion efforts . partner and services revenue increased $ 8.0 million , or 37.6 % , to $ 29.4 million in 2019 from $ 21.4 million in 2018 , primarily as a result of increases in revenue-sharing activity with our technology partners . cost of revenue , gross profit , and gross margin the following table presents our cost of revenue , gross profit , and gross margin for each of the periods indicated : replace_table_token_12_th cost of revenue increased $ 7.1 million , or 26.3 % , to $ 34.1 million for the year ended december 31 , 2020 from $ 27.0 million for the year ended december 31 , 2019 , primarily as a result of higher hosting costs of $ 2.4 million as a result of increased transactions processed and higher personnel costs of $ 4.5 million , including stock-based compensation expense . gross margin increased to 77.6 % during the year ended december 31 , 2020 from 75.9 % during the year ended december 31 , 2019. cost of revenue increased $ 5.1 million , or 23.2 % , to $ 27.0 million in 2019 from $ 21.9 million in 2018 , primarily as a result of higher hosting costs of $ 1.3 million as a result of increased transactions processed and increases in personnel-related costs of $ 3.6 million , including stock-based compensation expense , for personnel involved in providing customer support and professional services . headcount for such personnel as of december 31 , 2019 was 180 compared to 145 as of december 31 , 2018. gross margin decreased to 75.9 % during 2019 from 76.1 % during 2018 . 39 operating expenses the following tables present our operating expenses for each of the periods indicated : sales and marketing replace_table_token_13_th sales and marketing expenses increased $ 11.7 million , or 19.3 % , to $ 72.5 million for the year ended december 31 , 2020 from $ 60.7 million for the year ended december 31 , 2019 , primarily due to higher staffing costs of $ 13.7 million , including stock-based compensation expense and bonuses , offset by a reduction in travel and marketing related expenditures of $ 2.4 million due to shifts in event timing due to the covid-19 pandemic . as a percentage of total revenue , sales and marketing expenses decreased to 47.6 % during the year ended december 31 , 2020 from 54.2 % during the year ended december 31 , 2019 , primarily due to increased operating leverage from revenue growth . sales and marketing expenses increased $ 14.8 million , or 32.3 % , to $ 60.7 million in 2019 from $ 45.9 million in 2018 , primarily due to an increase of $ 11.1 million in personnel-related costs , including stock-based compensation expense , for personnel engaged in acquiring new customers and marketing our products and services . total sales and marketing headcount as of december 31 , 2019 was 181 compared to 155 as of december 31 , 2018. the increase was also attributed to a $ 3.3 million increase in marketing program spend to continue the promotion of our products and services globally . as a percentage of total revenue , sales and marketing expenses increased to 54.2 % during 2019 from 50.0 % during 2018 , primarily due to investments in sales and marketing teams in london , uk and sydney , australia . research and development replace_table_token_14_th research and development expenses increased $ 5.2 million , or 12.1 % , to $ 48.3 million for the year ended december 31 , 2020 from $ 43.1 million for the year ended december 31 , 2019 , primarily due to higher staffing costs of $ 5.4 million including stock-based compensation and bonuses , however declined as a percentage of revenue . this decline reflects our leverage of previous enhancements to our platform capabilities and prior development of new product offerings . research and development expenses were relatively unchanged in absolute dollars for the year ended december 31 , 2019 compared to december 31 , 2018 , however declined as a percentage of revenue , which is reflective of our efforts to leverage the previous enhancements to our platform capabilities and prior development of new product offerings . by opening and expanding an engineering center in kyiv , ukraine in 2019 , we increased our lower-cost development capacity , further driving leverage in research and development spend as a percentage of revenue . total research and development headcount as of december 31 , 2019 was 190 compared to 191 as of december 31 , 2018. general and administrative replace_table_token_15_th general and administrative expenses increased $ 13.9 million , or 62.7 % , to $ 36.1 million for the year ended december 31 , 2020 from $ 22.2 million for the year ended december 31 , 2019. the increase was primarily due to increased staffing costs of $ 11.0 million , including stock-based compensation expense and bonuses , and additional public company compliance costs including , but not limited to director and officer insurance amounting to $ 2.3 million . general and administrative expenses increased $ 2.7 million , or 13.9 % , to $ 22.2 million in 2019 from $ 19.5 million in 2018. the increase was primarily due to an increase of $ 2.4 million in personnel-related expense , including stock-based compensation expense , resulting from the hiring of 40 additional general and administrative personnel . total general and administrative headcount as of december 31 , 2019	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows the following table sets forth a summary of our cash flows for the periods indicated . replace_table_token_16_th as of december 31 , 2020 , we had $ 220.6 million in cash , cash equivalents , and restricted cash , an increase of $ 211.4 million compared to $ 9.2 million in 2019. cash and cash equivalents consist of highly-liquid investments with original maturities of less than three months . restricted cash consists of security deposits for future chargebacks and amounts on deposit with certain financial institutions . we maintain cash account balances in excess of fdic-insured limits . operating activities net cash used in operating activities for the years ended december 31 , 2020 , 2019 and 2018 was $ 26.5 million , $ 40.0 million and $ 30.6 million , respectively . this consisted primarily of our net losses adjusted for certain non-cash items including depreciation and amortization , stock-based compensation , debt discount amortization , bad debt expense , and the effect of changes in working capital . investing activities net cash used in investing activities during the year ended december 31 , 2020 was $ 2.0 million . it consisted primarily of purchases of property and equipment of $ 2.0 million . net cash provided by investing activities during the year ended december 31 , 2019 was $ 17.9 million . it consisted primarily of proceeds from the sale and maturity of marketable securities of $ 23.5 million , partially offset by purchases of property and equipment of $ 5.6 million . net cash used in investing activities during the year ended december 31 , 2018 was $ 26.5 million .
number of clinical sites included in the trials ; the length of time required to enroll suitable patient subjects ; and the efficacy and safety profile of the drug candidate . we test potential drug candidates in numerous preclinical studies for safety , toxicology and immunogenicity . we may then conduct multiple clinical trials for each drug candidate . as we obtain results from trials , we may elect to discontinue or delay clinical trials for certain drug candidates in order to focus our resources on more promising drug candidates . an element of our business strategy is to pursue the research and development of a broad portfolio of drug candidates . this is intended to allow us to diversify the risks associated with our research and development expenditures . to the extent we are unable to maintain a broad range of drug candidates , our dependence on the success of one or a few drug candidates increases . regulatory approval is required before we can market our drug candidates as therapeutic products . in order to proceed to subsequent clinical trial stages and to ultimately achieve regulatory approval , the regulatory agency must conclude that our clinical data are safe and effective . historically , the results from preclinical testing and early clinical trials ( through phase 2 ) have often not been predictive of results obtained in later clinical trials . a number of new drugs and biologics have shown promising results in early clinical trials but subsequently failed to establish sufficient safety and efficacy data to obtain necessary regulatory approvals . 63 furthermore , our business strategy includes the option of entering into collaborative arrangements with third parties to complete the development and commercialization of our drug candidates . in the event that third parties take over the clinical trial process for one of our drug candidates , the estimated completion date would largely be under control of that third party rather than us . we can not forecast with any degree of certainty which proprietary products , if any , will be subject to future collaborative arrangements , in whole or in part , and how such arrangements would affect our development plan or capital requirements . our programs may also benefit from subsidies , grants , contracts or government or agency-sponsored studies that could reduce our development costs . as a result of the uncertainties discussed above , among others , it is difficult to accurately estimate the duration and completion costs of our research and development projects or when , if ever , and to what extent we will receive cash inflows from the commercialization and sale of a product . our inability to complete our research and development projects in a timely manner or our failure to enter into collaborative agreements , when appropriate , could significantly increase our capital requirements and could adversely impact our liquidity . these uncertainties could force us to seek additional , external sources of financing from time to time in order to continue with our business strategy . our inability to raise additional capital , or to do so on terms reasonably acceptable to us , would jeopardize the future success of our business . during the past five years through december 31 , 2017 , we incurred an aggregate of $ 470.9 million in research and development expenses . the following table indicates the amount incurred for each of our significant research programs and for other identified research and development activities during the years ended december 31 , 2017 , 2016 and 2015. the amounts disclosed in the following table reflect direct research and development costs , license fees associated with the underlying technology and an allocation of indirect research and development costs to each program . replace_table_token_10_th clinical development programs glembatumumab vedotin glembatumumab vedotin is an antibody-drug conjugate , or adc , that consists of a fully human monoclonal antibody , cr011 , linked to a potent cell-killing drug , monomethyl auristatin e , or mmae . the cr011 antibody specifically targets glycoprotein nmb , referred to as gpnmb , that is over-expressed in a variety of cancers including breast cancer , melanoma , non-small cell lung cancer , uveal melanoma and osteosarcoma , among others . the adc technology , comprised of mmae and a stable linker system for attaching it to cr011 , was licensed from seattle genetics , inc. and is the same 64 as that used in the marketed product adcetris® . the adc is designed to be stable in the bloodstream . following intravenous administration , glembatumumab vedotin targets and binds to gpnmb , and upon internalization into the targeted cell , glembatumumab vedotin is designed to release mmae from cr011 to produce a cell-killing effect . glembatumumab vedotin is being studied across multiple indications in company-sponsored trials and in collaborative studies with external parties . the u.s. food and drug administration , or fda , has granted fast track designation to glembatumumab vedotin for the treatment of advanced , refractory/resistant gpnmb-expressing breast cancer . a companion diagnostic is in development for certain indications , and we expect that , if necessary , such a companion diagnostic must be approved by the fda or certain other foreign regulatory agencies before glembatumumab vedotin may be commercialized in those indications . treatment of metastatic breast cancer : glembatumumab vedotin has been evaluated for the treatment of metastatic breast cancer ( mbc ) in multiple studies including a single-arm phase 1/2 study ( journal of clinical oncology , september 2014 ) ; a randomized , controlled phase 2b study compared to investigator 's choice chemotherapy in patients with gpnmb-positive mbc called emerge ( journal of clinical oncology , april 2015 ) ; and the ongoing randomized , controlled phase 2b study in patients with triple negative , gpnmb overexpressing breast cancer , called metric . we expect to report topline primary endpoint data from the metric study during the second quarter of 2018. story_separator_special_tag data ( n=36 ) from the phase 1 dose-escalation portion of the study were presented in an oral presentation at the american society of clinical oncology annual meeting in june 2017. the majority of patients had pd-l1 negative tumor at baseline and presented with stage iv , heavily pre-treated disease . 80 % of patients enrolled presented with refractory or recurrent colorectal ( n=21 ) or ovarian cancer ( n=8 ) , a population expected to have minimal response to checkpoint blockade . the primary objective of the phase 1 portion of the study was to evaluate the safety and tolerability of the combination . the combination was well tolerated at all varlilumab dose levels tested without any evidence of increased autoimmunity or inappropriate immune activation . marked changes in the tumor microenvironment including increased infiltrating cd8+ t cells and increased pd-l1 expression , which have been shown to correlate with a greater magnitude of treatment effect from checkpoint inhibitors in other clinical studies , were observed . additional evidence of immune activity , such as increase in inflammatory chemokines and decrease in t regulatory cells , was also noted . notable disease control was also observed ( stable disease or better for at least 3 months ) , considering the stage iv patient population contained mostly ( 80 % ) colorectal and ovarian cases : 0.1 mg/kg varlilumab + 240 mg opdivo : 1/5 ( 20 % ) , 1 mg/kg varlilumab + 240 mg opdivo : 5/15 ( 33 % ) and 10 mg/kg varlilumab + 240 mg opdivo : 6/15 ( 40 % ) . 69 three partial responses ( pr ) were observed . a patient with pd-l1 negative , mmr proficient ( msi-low ) colorectal cancer , typically unlikely to respond to checkpoint blockade monotherapy , achieved a confirmed pr ( 95 % decrease in target lesions ) and following completion of combination treatment , continues to receive treatment with opdivo monotherapy at 31+ months . a patient with low pd-l1 ( 5 % expression ) squamous cell head and neck cancer achieved a confirmed pr ( 59 % shrinkage ) and experienced pfs of 6.7 months . a patient with pd-l1 negative ovarian cancer experienced a single timepoint pr ( 49 % shrinkage ) but discontinued treatment to a dose-limiting toxicity ( immune hepatitis , an event known to be associated with checkpoint inhibition therapy ) . a subgroup analysis was conducted in patients with ovarian cancer based on an observed increase of pd-l1 and tumor-infiltrating lymphocytes in this patient population . in patients with paired baseline and on-treatment biopsies ( n=13 ) , only 15 % were pd-l1 positive ( ³ 1 % tumor cells ) at baseline compared to 77 % during treatment ( p=0.015 ) . patients with increased tumor pd-l1 expression and tumor cd8 t cells correlated with better clinical outcome with treatment ( stable disease or better ) . the phase 2 portion of the study opened to enrollment in april 2016 and completed enrollment in january 2018 with cohorts in colorectal cancer ( n=21 ) , ovarian cancer ( n=58 ) , head and neck squamous cell carcinoma ( n=24 ) , renal cell carcinoma ( n=14 ) and glioblastoma ( n=22 ) . the primary objective of the phase 2 cohorts is orr , except glioblastoma , where the primary objective is the rate of 12-month os . secondary objectives include pharmacokinetic assessments , determining the immunogenicity of varlilumab when given in combination with opdivo , evaluating alternate dosing schedules of varlilumab and further assessing the anti-tumor activity of combination treatment . we plan to work with bms to present data from the study at future medical meetings in 2018. third-party sponsored studies : we have also entered into a crada with the nci under which nci is sponsoring a phase 2 study of varlilumab in combination with nivolumab in relapsed or refractory aggressive b-cell lymphomas . patients receive either nivolumab alone or the combination . the primary outcome measure is orr . secondary outcome measures include dor , safety , pfs and os . the study opened to enrollment in january 2018 and is expected to enroll 106 patients . cdx-3379 cdx-3379 is a human monoclonal antibody with half-life extension designed to block the activity of erbb3 ( her3 ) . we believe erbb3 may be an important receptor regulating cancer cell growth and survival as well as resistance to targeted therapies and is expressed in many cancers , including head and neck , thyroid , breast , lung and gastric cancers , as well as melanoma . we believe the proposed mechanism of action for cdx-3379 sets it apart from other drugs in development in this class due to its ability to block both ligand-independent and ligand-dependent erbb3 signaling by binding to a unique epitope . it has a favorable pharmacologic profile , including a longer half-life and slower clearance relative to other drug candidates in this class . we believe cdx-3379 also has potential to enhance anti-tumor activity and or overcome resistance in combination with other targeted and cytotoxic therapies to directly kill tumor cells . tumor cell death and the ensuing release of new tumor antigens has the potential to serve as a focus for combination therapy with immuno-oncology approaches , even in refractory patients . cdx-3379 has been evaluated in three phase 1 studies for the treatment of multiple solid tumors that express erbb3 and is currently being evaluated is a phase 2 study in combination with cetuximab in cetuximab-resistant , advanced head and neck squamous cell carcinoma . the most recent data for cdx-3379 were reported from a phase 1a/1b study conducted in solid tumors . the study included a single-agent , dose-escalation portion and combination expansion cohorts . the single-agent , dose-escalation portion of the study did not identify an mtd , and there were no dose limiting toxicities . the most common adverse events included rash and diarrhea and	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources our cash equivalents are highly liquid investments with a maturity of three months or less at the date of purchase and consist primarily of investments in money market mutual funds with commercial banks and financial institutions . we maintain cash balances with financial institutions in excess of insured limits . we do not anticipate any losses with respect to such cash balances . we invest our excess cash balances in marketable securities , including municipal bond securities , u.s. government agency securities and high-grade corporate bonds that meet high credit quality standards , as specified in our investment policy . our investment policy seeks to manage these assets to achieve our goals of preserving principal and maintaining adequate liquidity . the use of our cash flows for operations has primarily consisted of salaries and wages for our employees ; facility and facility-related costs for our offices , laboratories and manufacturing facility ; fees paid in connection with preclinical studies , clinical studies , contract manufacturing , laboratory supplies and services ; and consulting , legal and other professional fees . to date , the primary sources of cash flows from operations have been payments received from our collaborative partners and from government entities . the timing of any new collaboration agreements , government contracts or grants and any payments under these agreements , contracts or grants can not be easily predicted and may vary significantly from quarter to quarter . at december 31 , 2017 , our principal sources of liquidity consisted of cash , cash equivalents and marketable securities of $ 139.4 million . we have had recurring losses and incurred a loss of $ 93.0 million for the year ended december 31 , 2017. net cash used in operations for the year ended december 31 , 2017 was $ 99.9 million .
these market conditions also had an unfavorable impact on our gross margin as well as our operating margin compared to 2012. we responded to these conditions by flexing down our operating levels , in particular , our melting levels at both our bridgeville and north jackson operations , especially during the third quarter of 2013. in addition to lower operating levels negatively impacting our margins , lower raw material prices caused a misalignment with steel surcharges as we were selling higher cost inventory melted in early 2013 and prior throughout the year as a result of longer manufacturing cycles . we also made a conscious decision to maintain our newly trained workforce at our north jackson facility as we continued to focus our efforts on gaining additional customer acceptances for our new products being produced from this location in anticipation of improved 2014 business conditions . although 2013 was a challenging year for the metals industry , we made several positive strides throughout 2013 . 1. in april 2013 , we were awarded our first contract with rolls royce , which officially began on january 1 , 2014 ; however , we did make our initial shipment in december 2013. this is a five-year contract that required an extensive effort to meet demanding requirements for qualifying our entire manufacturing system , including vacuum induction melting ( “ vim ” ) and forge production at north jackson . 2. in august 2013 , we announced the early signing of a new five-year labor contract with our hourly workforce at our bridgeville facility as we maintain a productive relationship with our workforce . 3. in october 2013 , we announced a long-term agreement with haynes international , inc. ( “ haynes ” ) whereby we will provide vim capacity as well as forging services on a conversion basis to haynes . 4. throughout 2013 , we achieved customer approvals and developed new products for major customers in our aerospace , power generation and oil and gas markets as we introduced 15 new products in 2013 , defined by grade and shape . 5. during 2013 , we generated $ 28.6 million in cash flow from operating activities primarily by focusing our efforts to reduce inventory levels in response to market conditions . in addition , we lowered our capital expenditures and in turn , repaid $ 16.9 million in debt while improving our debt to capitalization to 31.4 % from 35.1 % at the end of 2012. we amended our credit facility in november 2013 which also provides us with sufficient working capital to meet our cash requirements moving into 2014 . 6. lastly , we attained a number of industry certifications in 2013 , and nine altogether since 2012 , as we moved toward the more technically advanced and higher margin products that we anticipated with our acquisition of our north jackson facility . 10 although we have seen an uptick in our bookings in the fourth quarter of 2013 and at the start of 2014 , we anticipate our first quarter results could be similar to our results for the third and fourth quarters of 2013 , in terms of top line growth and gross margin compression as some of our older higher cost materials make their way through the sales cycle and customers remain cautious in their buying patterns . however , indications from the marketplace suggest that 2014 will provide progressive demand improvement and with our development and integration of north jackson adding to market opportunities , we remain optimistic that the second half of 2014 will provide us with improved financial results . as a result of the north jackson acquisition , our operating facilities have become more integrated , resulting in our chief operating decision maker ( “ codm ” ) viewing the company as one unit . our codm sets performance goals , assesses performance and makes decisions about resource allocations on a consolidated basis . as a result of these factors , as well as the nature of the financial information available which is reviewed by the codm , we commenced reporting as one reportable segment beginning january 1 , 2013. results of operations 2013 results as compared to 2012 replace_table_token_6_th 11 market segment information : replace_table_token_7_th melt type information : replace_table_token_8_th we do not sell the majority of our products directly to end markets . the end market information in this annual report is our estimate based upon our customers and the grade of material sold that they will in-turn sell to the ultimate end market customer . end market information : replace_table_token_9_th net sales : net sales for the year ended december 31 , 2013 decreased $ 70.2 million or 28.0 % , as compared to the similar period in 2012 . the decrease in our sales primarily reflects a 23.7 % decrease in consolidated shipments in 2013 compared to the same prior year period . our product sales to all of our end markets decreased as noted in the above table . the reduction in our net sales is also the result of a lower priced product mix as well as lower overall selling prices in the current year . for the most part , our raw material costs have decreased over last year , which has resulted in lower raw material surcharges in the current year compared to the same prior year period . these unfavorable variances are partially offset by a higher percentage of our premium alloy sales recognized in the current 12 year . our premium alloy sales increased from 4.3 % of total sales for the year ended december 31 , 2012 to 5.9 % in the current year . story_separator_special_tag in october 1998 , we initiated a stock repurchase program to repurchase up to 315,000 shares of our outstanding common s tock in open market transactions at market prices . we h ave not repurchased any shares under the program sinc e 2001. we are authorized to repurch ase 45,100 remaining shares of c ommon s tock under this program as of december 31 , 2013 . 17 contractual obligations . at december 31 , 2013 , we had the following contractual principal , interest and purchase obligations : replace_table_token_13_th ( a ) amounts include interest expense , which was estimated based upon the december 31 , 2013 interest rate for our debt and assumes that debt will not be repaid until its maturity . ( b ) purchase obligations include the value of all open purchase orders with established quantities and purchase prices as well as minimum purchase commitments . contingent items product claims . we are subject to various claims and legal actions that arise in the normal course of conducting business . there were no material product claims outstanding at december 31 , 2013 . environmental matters . we , as well as other steel companies , are subject to demanding environmental standards imposed by federal , state and local environmental laws and regulations . we are not aware of any environmental condition that currently exists at any of our facilities that are probable or reasonably possible of having a material impact on our results of operations or liquidity . we are aware of energy usage concerns relating to climate change ; however , we are not aware of any pending regulations that are expected to have a material impact on our results of operations or liquidity . legal matters . from time to time , various lawsuits and claims have been or may be asserted against us relating to the conduct of our business , including routine litigation relating to commercial and employment matters . the ultimate cost and outcome of any litigation or claim can not be predicted with certainty . management believes , based on information presently available , that the likelihood that the ultimate outcome of any such pending matter will have a material adverse effect on its financial condition , or liquidity or a material impact to its results of operations is remote , although the resolution of one or more of these matters may have a material adverse effect on its results of operations for the period in which the resolution occurs . critical accounting policies and new accounting pronouncements critical accounting policies revenue from the sale of products is recognized when both risk of loss and title have transferred to the customer , which in most cases coincides with shipment of the related products , and collection is reasonably assured . we manufacture specialty steel products to customer purchase order specifications and in recognition of requirements for product acceptance . material certification forms are executed , indicating compliance with the customer purchase orders , before the specialty steel products are packed and shipped to the customer . revenue from conversion services is recognized when the performance of the service is complete . invoiced shipping and handling costs are also accounted for as revenue . customer claims , which are not material , are accounted for primarily as a reduction to gross sales after the matter has been researched and an acceptable resolution has been reached . in addition , management constantly monitors the ability to collect its unpaid sales invoices and the valuation of its receivables . the allowance for doubtful accounts includes specific reserves for the value of outstanding invoices issued to customers that are deemed potentially not collectible . inventories are stated at the lower of cost or market . the cost of inventory is principally determined by the weighted average cost method for material and operation costs . an inventory reserve is provided for material on hand for which management believes cost exceeds net realizable value and for slow moving inventory based upon management 's expected method of disposition . long-lived assets , including property , plant and equipment and identifiable intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in relation to the operating performance and future undiscounted cash flows of the underlying assets . adjustments are made if the sum of expected future cash flows is less than book value . no impairment reserve was deemed necessary as of december 31 , 2013 , 2012 and 2011 . 18 deferred income taxes are provided for temporary differences between amounts of assets and liabilities for financial reporting purposes and the basis of such assets and liabilities as measured by tax laws and regulations . our deferred tax assets include net operating loss carry forwards that can be used to offset taxable income in future periods and reduce income taxes payable in those future periods . these deferred tax assets will expire , if unused , at various times through 20 33 . deferred tax liabilities primarily relate to book / tax depreciation differences . management assesses the need to record a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized . identifiable i ntangible assets are recorded at fair value and are amortized over their useful lives using the straight-line method . goodwill , which represents the excess of cost over net tangible and identifiable intangible assets of acquired businesses , is stated at fair value at the date of acquisition . goodwill is not amortized , but is tested or evaluated in accordance with accounting standards update 2011-08 , “ intangibles – goodwill and other ( topic 350 ) : testing goodwill for impairment , ” annually for impairment or more frequently if any event indicates that the carrying amount of goodwill may be impaired . we perform our annual	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources historically , we have financed our operating activities through cash provided by operations and cash provided through our credit facilities . during 2013 , our managed working capital , defined as net account receivable plus net inventory minus accounts payable decreased by $ 20.1 million to $ 89.8 million at december 31 , 2013 compared to $ 109.9 million at december 31 , 2012 primarily due to unfavorable market conditions in most of our end markets . our net accounts receivable balances decreased $ 3.3 million primarily as a result of a 15.0 % decrease in net sales for the three-month period ended december 31 , 2013 compared to the same time period in 2012. over the second half of 2013 , we made a concerted effort to reduce our inventory levels , and as such , we decreased our overall inventory balance by $ 13.1 million to $ 82.6 million from $ 95.7 million as of december 31 , 2012. our accounts payable balance increased by $ 3.7 million from december 31 , 2012 to december 31 , 2013 primarily as a result of timing of vendor payments at year-end . net cash provided by operating activities : during 2013 , we generated net cash from operating activities of $ 28.6 million , which was largely the result of improvements in our working capital . the decrease in our net inventory and net accounts receivable provided $ 11.9 million and $ 3.3 million of cash , respectively . the net increase in our accounts payable and other accruals provided an additional $ 2.2 million in cash .
31 our catalyst dx ® analyzer is our latest g eneration chemistry analyzer , which was launched in 2008. we place our catalyst dx ® analyzer through sales , leases , rental and other programs . in addition , we continue to place vettest ® instruments through sales , lease , rental and other programs , with substantially all of our revenues from that product line currently derived from consumable sales . as of december 31 , 2012 , these two chemistry analyzers provided for a combined active installed base of approximately 33,000 units . a substantial portion of 2012 catalyst dx ® analyzer placements were to customers who had been using instruments from one of our competitors , sometimes referred to as competitive accounts . generally , placement of an instrument with a competitive account is more attractive as the entire consumable stream associated with that placement represents incremental revenue , whereas the consumable stream associated with a catalyst dx ® placement at a vettest ® customer substitutes a catalyst dx ® consumable stream for a vettest ® consumable stream . nonetheless , we have found that the consumables revenues increase when a customer upgrades from a vettest ® analyzer to a catalyst dx ® analyzer due to the superior capability and flexibility of the catalyst dx ® , which leads to additional testing by the customer . the procyte dx ® analyzer is our latest generation hematology analyzer , which we launched in the third quarter of 2010. in addition we sell the lasercyte ® analyzer and vetautoread analyzer . as of december 31 , 2012 these three hematology analyzers provided for a combined active installed base of approximately 24,000 units . a substantial portion of procyte dx ® analyzer placements continue to be made at veterinary clinics that elect to upgrade from their lasercyte ® analyzer to a procyte dx ® analyzer . however , an increasing number of placements have been made at competitive accounts since the launch of this instrument in 2010. while customers continue to upgrade from their lasercyte ® analyzer to a procyte dx ® analyzer , we continue to place a substantial number of lasercyte ® instruments , both new and refurbished , as trade-ups from the vetautoread analyzer and at new and competitive accounts . in 2012 , a significant number of lasercyte ® instruments that were placed were refurbished instruments that had been received in trade in the sale of a procyte dx ® analyzer . as we continue to experience growth in placements of procyte dx ® analyzers and in sales of related consumables , we expect this growth to be partly offset by a decline in placements of lasercyte ® and vetautoread analyzers and in sales of related consumables . our long-term success in this area of our business is dependent upon new customer acquisition , customer loyalty and retention and customer utilization of existing and new assays introduced for use on our analyzers . we continuously seek opportunities to enhance the care that veterinary professionals give to their patients and clients through supporting the implementation of real-time care testing workflows , which is performing tests and sharing test results with the client at the time of the patient visit . our latest generation of chemistry and hematology instruments demonstrates this commitment by offering enhanced ease of use , faster time to results , greater sample throughput , broader test menu and connectivity to various information technology platforms that enhance the value of the diagnostic information generated by the instruments . utilization can increase due to a greater number of patient samples being run or to an increase in the number of tests being run per patient sample . our strategy is to increase both drivers . to increase utilization , we seek to educate veterinarians about best medical practices that emphasize the importance of chemistry and hematology testing at the point-of-care for a variety of diagnostic purposes . in connection with the purchase of instruments , we also offer protocol-based rebate incentives when customers utilize the broad testing functionality of our analyzers . in addition , we provide marketing tools and consultative services that help drive efficiencies in veterinary practice processes and allow practices to increase the number of clients they see on a daily basis . with all of our instrument product lines , we seek to differentiate our products from our competitors ' products based on time-to-result , ease-of-use , throughput , breadth of diagnostic menu , flexibility of menu selection , accuracy , reliability , ability to handle compromised samples , analytical capability of software , integration with the idexx vetlab ® station , client communications capabilities , education and training , and superior sales and customer service . our success depends , in part , on our ability to differentiate our products in a way that justifies a premium price . 32 rapid assay products . our rapid assay strategy is to develop , manufacture , market and sell proprietary tests that address important medical needs for particular diseases prevalent in the companion animal population . we seek to differentiate our tests from those of other in-clinic test providers and reference laboratory diagnostic service providers through ease-of-use and superior performance , including by providing our customers with combination tests that test a single sample for multiple analytes . we further augment our product development and customer service efforts with sales and marketing programs that enhance medical awareness and understanding regarding certain diseases and the importance of diagnostic testing . we also seek to enhance the attractiveness of our tests by providing the snapshot dx ® analyzer , which automatically reads certain snap ® test results , and records those results in the electronic medical record . this promotes practice efficiency by eliminating manual entry of test results in patient records and also helps ensure that the services are recorded and accurately invoiced . story_separator_special_tag if these up-front incentives are subsequently utilized to purchase idexx vetlab ® instruments , digital radiography systems or cornerstone ® practice management systems , product revenue and cost is deferred and recognized over the term of the customer agreement as products and services are provided to the customer . we monitor customer purchases over the term of their agreement to assess the realizability of our capitalized customer acquisition costs . for the years ended december 31 , 2012 , 2011 and 2010 , impairments of customer acquisition costs were immaterial . idexx vetlab ® instrument marketing programs . our instrument marketing programs require the customer to enroll at the time of instrument purchase and offer customers the opportunity to earn incentives in future periods based on the volume of the products they purchase and utilize over the term of the program . these arrangements are considered meas in accordance with our revenue recognition policy stated above . revenue reductions related to instrument marketing programs are recorded based on an estimate of customer purchase and utilization levels and the incentive the customer will earn over the term of the program . our estimates are based on historical experience and the specific terms and conditions of the marketing program and require us to apply judgment to approximate future product purchases and utilization . differences between our estimates and actual incentives earned are accounted for as a change in estimate . these differences were not material for the years ended december 31 , 2012 , 2011 and 2010. at 36 december 31 , 2012 , a 5 % change in our estimate of future customer utilization would increase or reduce revenue by approximately $ 0.3 million . reagent rental programs . our reagent rental programs provide our customers the right to use our instruments in consideration for multi-year agreements to purchase annual minimum amounts of consumables . no instrument revenue is recognized at the time of instrument installation . we recognize a portion of the revenue allocated to the instrument concurrent with the future sale of consumables . we determine the amount of revenue allocated from the consumable to the instrument based on vsoe and determine the rate of instrument revenue recognition in proportion to the customer 's minimum volume commitment . the cost of the instrument is reclassified from inventory to equipment and charged to cost of product revenue on a straight-line basis over the term of the rental agreement . idexx points may be applied against the purchase price of idexx products and services purchased in the future or applied to trade receivables due to us . idexx points that have not yet been used by customers are classified as a liability until use or expiration occurs . we estimate the amount of idexx points expected to expire , or breakage , based on historical expirations and we recognize the estimated benefit of breakage as idexx points are issued to customers . on november 30 of each year , unused idexx points earned before january 1 of the prior year generally expire and any variance from the breakage estimate is accounted for as a change in estimate . this variance was not material for the years ended december 31 , 2012 , 2011 and 2010. future market conditions and changes in product offerings may cause us to change marketing strategies to increase or decrease customer incentive offerings , possibly resulting in incremental reductions of revenue in future periods as compared to reductions in the current or prior periods . additionally , certain customer programs require us to estimate , based on historical experience , and apply judgment to approximate the number of customers who will actually redeem the incentive . in determining estimated revenue reductions we utilize data supplied from distributors and collected directly from end-users , which includes the volume of qualifying products purchased and the number of qualifying tests run as reported to us by end-users via idexx smartservice tm , a secure i nternet link that enables us to extract data and provide diagnostic service and support for certain idexx vetlab ® instruments through remote access . differences between estimated and actual customer participation in programs may impact the amount and timing of revenue recognition . following is a summary of revenue reductions , net recorded in connection with our customer programs for the years ended december 31 , 2012 , 2011 and 2010 ( in thousands ) : replace_table_token_4_th 37 at december 31 , 2012 , 2011 and 2010 , the total accrued revenue reductions were $ 36.6 million , $ 37.8 million and $ 23.3 million , respectively . accrued customer programs are included within accrued liabilities and other long-term liabilities , depending on the anticipated settlement date , in the consolidated balance sheets included in this annual report on form 10-k. following is a summary of changes in the accrual for estimated revenue reductions attributable to customer marketing and incentive programs and the ending accrued customer programs balance for the years ended december 31 , 2012 , 2011 and 2010 ( in thousands ) : replace_table_token_5_th inventory valuation we write down the carrying value of inventory for estimated obsolescence by an amount equal to the difference between the cost of inventory and the estimated market value when warranted based on assumptions of future demand , market conditions , remaining shelf life , or product functionality . if actual market conditions or results of estimated functionality are less favorable than those we estimated , additional inventory write-downs may be required , which would have a negative effect on results of operations . valuation of goodwill and other intangible assets a significant portion of the purchase price for acquired businesses is generally assigned to intangible assets . intangible assets other than goodwill are initially valued at fair value . if a quoted price in an active market for the identical asset is not readily available at the measurement date , the fair value of the intangible asset	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources we fund the capital needs of our business through cash on hand , funds generated from operations , and amounts available under our credit facility . at december 31 , 2012 and december 31 , 2011 , we had $ 224.0 million and $ 183.9 million , respectively , of cash and cash equivalents , and working capital of $ 163.2 million and $ 87.3 million , respectively . additionally , at december 31 , 2012 , we had remaining borrowing availability of $ 87 million under our $ 300 million credit facility . we believe that , if necessary , we could obtain additional borrowings at prevailing market interest rates to fund our growth objectives . we further believe that current cash and cash equivalents , funds generated from operations , and available borrowings will be sufficient to fund our operations , capital purchase requirements , and strategic growth needs for the next twelve months , and that these resources will be sufficient in the long term to fund our business as currently conducted . we consider the majority of the operating earnings of certain non-u.s. subsidiaries to be indefinitely invested outside the u.s. changes to this position could have adverse tax consequences . we manage our worldwide cash requirements considering available funds among all of our subsidiaries . our foreign cash balances are generally available without restrictions to fund ordinary business operations outside the u.s. of our total cash and cash equivalents at december 31 , 2012 , approximately $ 222.4 million was held by our foreign subsidiaries and was subject to material repatriation tax effects .
this may represent an attractive source of occupancy if the company can convert renters to new homebuyers in the future . the company is also focusing on smaller , more energy efficient and more affordable homes in its manufactured home properties . the company 's manufactured home rental operations have been increasing since 2007. for the year ended december 31 , 2011 , occupied manufactured home rentals increased to 4,423 , or 387.7 % , from 907 for the year ended december 31 , 2007. net operating income increased to approximately $ 23.1 million in 2011 from approximately $ 5.9 million in 2007. the company believes that unlike the home sales business , at this time the company competes effectively with other types of rentals ( i.e . apartments ) . the company is currently evaluating whether it wants to continue to invest in additional rental units . in the company 's resort properties , the company continues to work on extending customer stays . the company has had success lengthening customer stays . the company has introduced low-cost membership products that focus on the installed base of almost eight million rv owners . such products may include right-to-use contracts that entitle the customer to use certain properties ( the agreements ) . the company is offering a zone park pass ( zpp ) , which can be purchased for one to four zones of the united states and requires annual payments of $ 499. this replaces high cost products that were sold at properties after tours and lengthy sales presentations . the company historically incurred significant costs to generate leads , conduct tours and make the sales presentations . a single zone pass requires no upfront payment while passes for additional zones require modest upfront payments . for the year ended december 31 , 2011 , the company sold approximately 7,500 zpp 's . existing customers may be offered an upgrade agreement from time-to-time . the upgrade agreement is currently distinguishable from a new agreement that a customer would enter into by ( 1 ) increased length of consecutive stay by 50 % ( i.e . up to 21 days ) ; ( 2 ) ability to make earlier advance reservations ; ( 3 ) discounts on rental units and ( 4 ) access to additional properties , which may include discounts at non-membership rv properties . each upgrade requires a nonrefundable upfront payment . the company may finance the nonrefundable upfront payment under any agreement . 34 property acquisitions , joint ventures and dispositions the following chart lists the properties or portfolios acquired , invested in , or sold since january 1 , 2010 : replace_table_token_14_th since january 1 , 2010 the gross investment in real estate increased from $ 2,538 million to $ 4,079 million as of december 31 , 2011 , due primarily to the aforementioned acquisitions and dispositions of properties during the period . markets the following table identifies the company 's largest markets by number of sites and provides information regarding the company 's properties ( excluding five properties owned through joint ventures ) . replace_table_token_15_th ( 1 ) property operating revenues for this calculation excludes approximately $ 19.1 million of property operating revenue not allocated to properties , which consists primarily of upfront payments from right-to-use contracts . 35 2011 acquisition disclosure on may 31 , 2011 , the company 's operating partnership entered into purchase and other agreements ( the purchase agreements ) to acquire a portfolio of 75 manufactured home communities and one rv resort ( the acquisition properties ) containing 31,167 sites on approximately 6,500 acres located in 16 states ( primarily located in florida and the northeastern region of the united states ) and certain manufactured homes and loans secured by manufactured homes located at the acquisition properties which the company refers to as the home related assets and collectively with the acquisition properties , as the acquisition portfolio , for a stated purchase price of $ 1.43 billion ( the acquisition ) . the company completed the acquisition of 75 acquisition properties , containing 30,129 sites , during the six months ended december 31 , 2011. total transaction costs associated with the acquisition for the year ended december 31 , 2011 were approximately $ 18.5 million . the purchase price of the acquisition was funded primarily through : the net proceeds of approximately $ 344.0 million from the company 's june 2011 public offering of 6,037,500 shares of common stock ; the assumption by the company of fixed-rate , non-recourse mortgage indebtedness secured by 35 of the acquisition properties of approximately $ 515.0 million , with stated interest rates ranging from 4.65 % to 8.87 % per annum and maturity dates ranging from 2012 to 2023 ; the company 's issuance to the seller of : ( i ) 1,708,276 shares of the company 's common stock , and ( ii ) 1,740,000 shares of series b preferred stock which in the purchase agreements have a stipulated aggregate value of $ 200.0 million ; $ 200.0 million of mortgage notes payable through two 10-year secured financings the company entered into during the three months ended september 30 , 2011 with a weighted average interest rate of approximately 5.02 % per annum ( see note 8 in the notes to the consolidated financial statements contained in this form 10-k for a description of the mortgage notes payable . ) story_separator_special_tag the provisions of asu 2011-08 are effective for reporting periods beginning after december 15 , 2011. the adoption of this update did not have an impact on the company 's consolidated financial statements as the company has chosen not to adopt this guidance early . 40 results of operations comparison of year ended december 31 , 2011 to year ended december 31 , 2010 the following table summarizes certain financial and statistical data for the property operations for all properties owned and operated for the same period in both years ( core portfolio ) and the total portfolio for the years ended december 31 , 2011 and 2010 ( amounts in thousands ) . the core portfolio may change from time-to-time depending on acquisitions , dispositions and significant transactions or unique situations . the core portfolio in this comparison of the year ended december 31 , 2011 to december 31 , 2010 includes all properties acquired on or prior to december 31 , 2009 and which were owned and operated by the company during the years ended december 31 , 2011 and december 31 , 2010. growth percentages exclude the impact of gaap deferrals of up-front payments from right-to-use contracts entered and related commissions . replace_table_token_16_th property operating revenues the 1.3 % increase in the core portfolio property operating revenues primarily reflects ( i ) a 2.2 % increase in rates in community base rental income and a 0.6 % increase in occupancy ( ii ) a 0.6 % increase in revenues in core resort base income , as described in the table below and ( iii ) a decrease of 8.4 % in right-to-use contracts . the reduction in entry of right-to-use contracts is due to the company 's introduction of low-cost membership products in 2010 and the phase-out of memberships with higher initial upfront payments . resort base rental income is comprised of the following ( amounts in thousands ) : replace_table_token_17_th 41 property operating expenses the 0.3 % decrease in property operating expenses in the core portfolio reflects ( i ) a 0.4 % increase in property operating and maintenance expenses and ( ii ) and a 11.0 % decrease in sales and marketing expenses . sales and marketing expenses are all related to the costs incurred for the entry or upgrade of right-to-use contracts . the decrease in sales and marketing expenses is due to reduced commissions as a result of reduced high-cost right-to-use contracts activity . the increase in total portfolio income from property operations is primarily due to the acquisition of 75 acquisition properties during the year ended december 31 , 2011 . ( see note 19 in the notes to the consolidated financial statements contained in this form 10-k for details regarding these closings . ) home sales operations the following table summarizes certain financial and statistical data for the home sales operations for the years ended december 31 , 2011 and 2010 ( amounts in thousands , except sales volumes ) . replace_table_token_18_th ( 1 ) includes third party home sales of three and 19 for the years ended december 31 , 2011 and 2010 , respectively . ( 2 ) includes third party home sales of one and 10 for the years ended december 31 , 2011 and 2010 , respectively . income from home sales operations decreased primarily as a result of decreased profit on used home sales and a decrease in ancillary revenues . 42 rental operations the following table summarizes certain financial and statistical data for manufactured home rental operations for the years ended december 31 , 2011 and 2010 ( dollars in thousands ) . the amounts below are included in ancillary services revenue , net , in the home sales operations table in the previous section , unless otherwise noted . replace_table_token_19_th ( 1 ) approximately $ 23.9 million and $ 15.4 million as of december 31 , 2011 and 2010 , respectively , are included in community base rental income in the property operations table . the increase in income from rental operations and depreciation expense is primarily due to the increase in the number of rental units resulting from the acquisition of 75 acquisition properties during the year ended december 31 , 2011. in the ordinary course of business , the company acquires used homes from customers through purchase , lien , sale or abandonment . in a vibrant new home sale market older homes may be removed from sites and replaced with new homes . in other cases , due to the nature of tenancy rights afforded to purchasers , used homes are rented in order to control the site either in the condition received or after warranted rehabilitation . other income and expenses the following table summarizes other income and expenses for the years ended december 31 , 2011 and 2010 ( amounts in thousands ) . replace_table_token_20_th 43 depreciation on real estate and other costs , amortization of in-place leases , interest income and interest expense increased primarily due to the purchase of 75 acquisition properties during the year ended december 31 , 2011. transaction costs consist primarily of the following costs incurred related to the acquisition : seller 's debt defeasance costs , transfer tax , professional fees , and costs related to due diligence items such as title , survey , zoning and environmental . impairment decreased due to a non-cash write-off of $ 3.6 million in the year ended december 31 , 2010 of goodwill associated with a 2009 acquisition of a florida internet and media based advertising business . comparison of year ended december 31 , 2010 to year ended december 31 , 2009 the following table summarizes certain financial and statistical data for the property operations for all properties owned and operated for the same period in both years ( core portfolio ) and the total portfolio for the years ended december 31 , 2010 and 2009 ( amounts in thousands ) . the core portfolio	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources liquidity as of december 31 , 2011 the company had $ 70.5 million in cash and cash equivalents and $ 380.0 million available on its line of credit . the company expects to meet its short-term liquidity requirements , including its distributions , generally through its working capital , net cash provided by operating activities and availability under its existing line of credit . the company expects to meet certain long-term liquidity requirements such as scheduled debt maturities , property acquisitions and capital improvements by use of its current cash balance , long-term collateralized and uncollateralized borrowings including borrowings under its existing line of credit and the issuance of debt securities or additional equity securities in the company , in addition to net cash provided by operating activities . the company has approximately $ 34.6 million of scheduled debt maturities in 2012 ( excluding scheduled principal payments on debt maturing in 2012 and beyond ) . the company expects to satisfy its 2012 maturities with its existing cash balance . the table below summarizes cash flow activity for the years ended december 31 , 2011 , 2010 , and 2009 ( amounts in thousands ) . replace_table_token_26_th operating activities net cash provided by operating activities increased $ 10.8 million for the year ended december 31 , 2011 from $ 163.3 million for the year ended december 31 , 2010. the increase in 2011 was primarily due an increase in net income net of depreciation expense and amortization of in-place leases . net cash provided by operating activities increased $ 12.8 million for the year ended december 31 , 2010 from $ 150.5 million for the year ended december 31 , 2009. the increase in 2010 was primarily due to a $ 9.2 million increase in consolidated income from continuing operations and an increase in rents received in advance . investing activities net cash used in investing activities reflects the impact of the following investing activities : acquisitions 2011 acquisitions during the year ended december 31 , 2011 , the company closed on 75 of the acquisition properties and certain home related assets associated with such 75 acquisition properties for a purchase price of 47 approximately $ 1.5 billion .
such agencies may require us to make additional provisions for loan losses based upon information available to them at the time of their examination . all of the factors considered in the analysis of the adequacy of the allowance for loan losses may be subject to change . to the extent actual outcomes differ from management estimates , additional provisions for loan losses may be required that could materially adversely impact earnings in future periods . additional information can be found in note 1 of the notes to consolidated financial statements . income taxes the objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity 's financial statements or tax returns . judgment is required in assessing the future tax consequences of events that have been recognized in the company 's consolidated financial statements or tax returns . fluctuations in the actual outcome of these future tax consequences could impact the company 's consolidated financial condition or results of operations . note 1 ( under the caption “ use of estimates ” ) and note 12 of the notes to consolidated financial statements include additional discussion on the accounting for income taxes . - 28 - goodwill the company has adopted the provisions of fasb asc 350-10-05 , which requires that goodwill be reported separate from other intangible assets in the consolidated statements of condition and not be amortized but tested for impairment annually or more frequently if indicators arise for impairment . no impairment charge was deemed necessary for the years ended december 31 , 2018 , 2017 and 2016. overview and strategy we serve as a holding company for the bank , which is our primary asset and only operating subsidiary . we follow a business plan that emphasizes the delivery of customized banking services in our market area to customers who desire a high level of personalized service and responsiveness . the bank conducts a traditional banking business , making commercial loans , consumer loans and residential and commercial real estate loans . in addition , the bank offers various non-deposit products through non-proprietary relationships with third party vendors . the bank relies upon deposits as the primary funding source for its assets . the bank offers traditional deposit products . many of our customer relationships start with referrals from existing customers . we then seek to cross sell our products to customers to grow the customer relationship . for example , we will frequently offer an interest rate concession on credit products for customers that maintain a noninterest-bearing deposit account at the bank . this strategy has helped maintain our funding costs and the growth of our interest expense even as we have substantially increased our total deposits . it has also helped fuel our significant loan growth . we believe that the bank 's significant growth and increasing profitability demonstrate the need for and success of our brand of banking . our results of operations depend primarily on our net interest income , which is the difference between the interest earned on our interest-earning assets and the interest paid on funds borrowed to support those assets , primarily deposits . net interest margin is the difference between the weighted average rate received on interest-earning assets and the weighted average rate paid to fund those interest-earning assets , which is also affected by the average level of interest-earning assets as compared with that of interest-bearing liabilities . net income is also affected by the amount of noninterest income and noninterest expenses . general the following discussion and analysis presents the more significant factors affecting the company 's financial condition as of december 31 , 2018 and 2017 and results of operations for each of the years in the three-year period ended december 31 , 2018. the md & a should be read in conjunction with the consolidated financial statements , notes to consolidated financial statements and other information contained in this report . - 29 - operating results overview net income for the year ended december 31 , 2018 was $ 60.4 million , an increase of $ 17.1 million , or 39.6 % , compared to net income of $ 43.2 million for 2017. diluted earnings per share were $ 1.86 for 2018 , a 38.8 % increase from $ 1.34 for 2017. the change in net income from 2017 to 2018 was attributable to the following : · increased net interest income of $ 12.1 million primarily due to organic growth . · increased provision for loan losses of $ 15.1 million primarily due to $ 17.0 million increase in specific reserves ( then concurrently charged-off ) within the taxi medallion loan portfolio , offset by a decrease in provision on the remaining loan portfolio due to slower loan growth . · decrease in noninterest income of $ 2.5 million primarily resulting from lower net gains on the sale of investment securities ( $ 1.6 million ) and lower net gains on the sale of loans held-for-sale in 2018 ( $ 0.6 million ) . · decrease in noninterest expense of approximately $ 8.0 million primarily due to a $ 15.6 million increase in valuation allowance for loans held-for-sale related to the company 's taxi medallion loans in 2017 , offset by increase in salaries and employee benefits ( $ 4.7 million ) , merger expenses ( $ 1.3 million ) and other expenses ( $ 1.5 million ) . story_separator_special_tag interest income is not accrued on these loans until the borrower 's financial condition and payment record demonstrate an ability to service the debt . real estate acquired as a result of foreclosure is classified as other real estate owned ( “ oreo ” ) until sold . oreo is recorded at the lower of cost or fair value less estimated selling costs . costs associated with acquiring and improving a foreclosed property are usually capitalized to the extent that the carrying value does not exceed fair value less estimated selling costs . holding costs are charged to expense . gains and losses on the sale of oreo are charged to operations , as incurred . a loan is considered impaired when , based on current information and events , it is probable that the bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement . factors considered by management in determining impairment include payment status and the probability of collecting scheduled principal and interest payments when due . loans for which the terms have been modified as a concession to the borrower due to the borrower experiencing financial difficulties are considered troubled debt restructurings ( “ tdr ” ) and are classified as impaired . loans considered to be tdrs can be categorized as nonaccrual or performing . the impairment of a loan can be measured at ( 1 ) the fair value of the collateral less costs to sell , if the loan is collateral dependent , ( 2 ) at the value of expected future cash flows using the loan 's effective interest rate , or ( 3 ) at the loan 's observable market price . generally , the bank measures impairment of such loans by reference to the fair value of the collateral less costs to sell . loans that experience minor payment delays and payment shortfall generally are not classified as impaired . generally , impaired loans consist of nonaccrual loans and performing troubled debt restructurings . of this group of impaired loans , loans of $ 250,000 and over are individually evaluated for impairment , while loans with balances less than $ 250,000 are collectively evaluated for impairment , and , accordingly , are not separately identified for impairment disclosures . asset classification . federal regulations and our policies require that we utilize an internal asset classification system as a means of reporting problem and potential problem assets . we have incorporated an internal asset classification system , substantially consistent with federal banking regulations , as a part of our credit monitoring system . federal banking regulations set forth a classification scheme for problem and potential problem assets as “ substandard , ” “ doubtful ” or “ loss ” assets . an asset is considered “ substandard ” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged , if any . “ substandard ” assets include those characterized by the “ distinct possibility ” that the insured institution will sustain “ some loss ” if the deficiencies are not corrected . assets classified as “ doubtful ” have all of the weaknesses inherent in those classified “ substandard ” with the added characteristic that the weaknesses present make “ collection or liquidation in full , ” on the basis of currently existing facts , conditions , and values , “ highly questionable and improbable . ” assets classified as “ loss ” are those considered “ uncollectible ” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted . assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated “ special mention . ” when an insured institution classifies one or more assets , or portions thereof , as “ substandard ” or “ doubtful , ” it is required that a general valuation allowance for loan losses must be established for loan losses in an amount deemed prudent by management . general valuation allowances represent loss allowances which have been established to recognize the inherent losses associated with lending activities , but which , unlike specific allowances , have not been allocated to particular problem assets . when an insured institution classifies one or more assets , or portions thereof , as “ loss , ” it is required either to establish a specific allowance for losses equal to 100 % of the amount of the asset so classified or to charge off such amount . a bank 's determination as to the classification of its assets and the amount of its valuation allowances is subject to review by federal bank regulators which can order the establishment of additional general or specific loss allowances . the federal banking agencies have adopted an interagency policy statement on the allowance for loan losses . the policy statement provides guidance for financial institutions on both the responsibilities of management for the assessment and establishment of allowances and guidance for banking agency examiners to use in determining the adequacy of general valuation guidelines . generally , the policy statement recommends that institutions have effective systems and controls to identify , monitor and address asset quality problems ; that management analyze all significant factors that affect the collectability of the portfolio in a reasonable manner ; and that management establish acceptable allowance evaluation processes that meet the objectives set forth in the policy statement . our management believes that , based on information currently available , our allowance for loan losses is maintained at a level which covers all known and probable incurred losses in the portfolio at each reporting date . however , actual losses are dependent upon future events and , as such , further additions to the	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity liquidity is a measure of a bank 's ability to fund loans , withdrawals or maturities of deposits , and other cash outflows in a cost-effective manner . our principal sources of funds are deposits , scheduled amortization and prepayments of loan principal , maturities of investment securities , and funds provided by operations . while scheduled loan payments and maturing investments are relatively predictable sources of funds , deposit flow and loan prepayments are greatly influenced by general interest rates , economic conditions and competition . at december 31 , 2018 , the amount of liquid assets remained at a level management deemed adequate to ensure that , on a short and long-term basis , contractual liabilities , depositors ' withdrawal requirements , and other operational and client credit needs could be satisfied . as of december 31 , 2018 , liquid assets ( cash and due from banks , interest-bearing deposits with banks and unencumbered investment securities ) were $ 441.4 million , which represented 8.1 % of total assets and 9.4 % of total deposits and borrowings , compared to $ 423.4 million at december 31 , 2017 , which represented 8.3 % of total assets and 9.5 % of total deposits and borrowings on such date . the bank is a member of the federal home loan bank of new york and , based on available qualified collateral as of december 31 , 2018 , had the ability to borrow $ 1.7 billion . in addition , at december 31 , 2018 , the bank had in place borrowing capacity of $ 25 million through correspondent banks .
tc2 ku and lg & e constructed a 732 mw summer capacity coal-fired unit , tc2 , which is jointly owned by ku ( 60.75 % ) and lg & e ( 14.25 % ) , together with the illinois municipal electric agency and the indiana municipal power agency ( combined 25 % ) . with limited exceptions , ku and lg & e took care , custody and control of tc2 in january 2011. ku and lg & e and the construction contractor further amended the construction agreement to provide that the contractor will complete certain actions to identify and complete any necessary modifications to allow operation of tc2 on all fuels in accordance with initial specifications prior to certain dates , and amending the provisions relating to liquidated damages . a number of remaining issues regarding these matters are still under discussion with the contractor . see notes 8 and 15 to the financial statements for additional information . registered debt exchange offer by ku in april 2011 , ku filed a registration statement with the sec , related to an offer to exchange certain first mortgage bonds issued in november 2010 , in transactions not subject to registration under the securities act of 1933 , with similar but registered securities . the 2011 registration statement became effective in june 2011 , and the exchange was completed in july 2011 with substantially all of the first mortgage bonds being exchanged . see note 7 to the financial statements and ku 's 2011 registration statement for additional information . csapr in july 2011 , the epa signed the csapr , which finalizes and renames the clean air transport rule ( transport rule ) proposed in august 2010 , and made revisions to the rule on february 7 , 2012. this rule applies to the kentucky coal plants . the csapr is meant to facilitate attainment of ambient air quality standards for ozone and fine particulates by requiring reductions in sulfur dioxide and nitrogen oxide emissions . in december 2011 , the u.s. court of appeals for the district of columbia ( court ) stayed implementation of the csapr and left cair in effect pending a final resolution on the merits of the validity of the rule . oral argument on the various challenges to the csapr is scheduled for april 2012 , and a final decision on the validity of the rule could be issued as early as may 2012. with respect to ku 's kentucky coal-fired generating plants , the stay of the csapr will initially only impact the unit dispatch order . with the return of the cair and ku 's significant number of sulfur dioxide allowances , those units will be dispatched with lower operating cost , but slightly higher sulfur dioxide and nitrogen oxide emissions . however , a key component of the court 's final decision , even if the csapr is upheld , will be whether the ruling delays the implementation of the csapr by one year for both phases i and ii , or instead still requires the significant sulfur dioxide and nitrogen oxide reductions associated with phase ii to begin in 2014. ku 's csapr compliance strategy is based on over-compliance during phase i to generate allowances sufficient to cover the expected shortage during the first two years of phase ii ( 2014 and 2015 ) when additional pollution control equipment will be installed . should phase i of the csapr be shortened to one year , it will be more difficult and costly to provide enough excess allowances in one year to meet the shortage projected for 2014 and 2015. see note 15 to the financial statements for additional information on the csapr . 175 pending bluegrass cts acquisition and ngcc construction in september 2011 , ku and lg & e filed a cpcn with the kpsc requesting approval to build a 640 mw ngcc at the existing cane run plant site . in conjunction with this request and to meet new , stricter epa regulations , ku anticipates retiring three older coal-fired electric generating units . these units are located at the green river and tyrone plants , which have a combined summer rating of 234 mw . ku and lg & e also requested approval to purchase the bluegrass cts , which are expected to provide up to 495 mw of peak generation supply . ku anticipates that its share of the ngcc construction and the acquisition of the bluegrass cts could require up to $ 500 million in capital costs including related transmission projects . formal requests for recovery of the costs associated with the ngcc construction and the acquisition of the bluegrass cts were not included in the cpcn filing with the kpsc but are expected to be included in future rate proceedings . the kpsc issued an order on the procedural schedule in the cpcn filing that has discovery , scheduled through early february 2012. a kpsc order on the cpcn filing is anticipated in the second quarter of 2012. see note 8 to the financial statements for additional information . ecr filing - environmental upgrades in june 2011 , in order to achieve compliance with new and pending mandated federal epa regulations , ku filed an ecr plan with the kpsc requesting approval to install environmental upgrades for certain of its coal-fired plants along with the recovery of the expected $ 1.1 billion in associated capital costs , as well as operating expenses incurred . the ecr plan detailed upgrades that will be made to certain of ku 's coal-fired generating plants to continue to be compliant with epa regulations . in november 2011 , ku filed a unanimous settlement agreement , stipulation and recommendation with the kpsc . in december 2011 , ku received kpsc approval in its proceedings relating to the ecr plan . story_separator_special_tag ( b ) in april 2011 , ku entered into a new $ 198 million letter of credit facility that has been used to issue letters of credit to support outstanding tax-exempt bonds . ku pays customary commitment and letter of credit fees under the new facility . the facility matures in april 2014. in august 2011 , ku amended its letter of credit facility such that the fees depend upon ku 's senior secured long-term debt rating rather than the senior unsecured debt rating . ( c ) in october 2011 , ku amended its syndicated credit facility . the amendment included extending the expiration date from december 2014 to october 2016. under this facility ku continues to have the ability to make cash borrowings and to request the lenders to issue letters of credit . the commitments under ku 's credit facilities are provided by a diverse bank group , with no one bank and its affiliates providing an aggregate commitment of more than 19 % of the total committed capacity available to ku . ku participates in an intercompany money pool agreement whereby lke and or lg & e make available to ku funds up to $ 500 million at an interest rate based on a market index of commercial paper issues . at december 31 , 2011 , there was no balance outstanding . at december 31 , 2010 , $ 10 million was outstanding . the interest rate for the period ended december 31 , 2010 was 0.25 % . see note 7 to the financial statements for further discussion of ku 's credit facilities . operating leases ku also has available funding sources that are provided through operating leases . ku leases office space and certain equipment . these leasing structures provide ku additional operating and financing flexibility . the operating leases contain covenants that are typical for these agreements , such as maintaining insurance , maintaining corporate existence and timely payment of rent and other fees . see note 11 to the financial statements for further discussion of the operating leases . forecasted uses of cash in addition to expenditures required for normal operating activities , such as purchased power , payroll , fuel and taxes , ku currently expects to incur future cash outflows for capital expenditures , various contractual obligations , payment of dividends on its common securities and possibly the purchase or redemption of a portion of debt securities . 183 capital expenditures the table below shows ku 's current capital expenditure projections for the years 2012 through 2016. replace_table_token_145_th ( a ) construction expenditures include afudc , which is not expected to be significant for the years 2012 through 2016 . ( b ) includes approximately $ 500 million of currently estimable costs related to replacement generation units due to epa regulations not recoverable through the ecr mechanism . ku expects to recover these costs over a period equivalent to the related depreciable lives of the assets through future rate proceedings . ( c ) includes approximately $ 30 million of currently estimable transmission costs related to replacement generation units . ku expects to recover these costs over a period equivalent to the related depreciable lives of the assets through future rate proceedings . ku 's capital expenditure projections for the years 2012 through 2016 total approximately $ 3.1 billion . capital expenditure plans are revised periodically to reflect changes in operational , market and regulatory conditions . this table includes current estimates for ku 's environmental projects related to new and anticipated epa compliance standards . actual costs may be significantly lower or higher depending on the final requirements and market conditions . certain environmental compliance costs incurred by ku in serving kpsc jurisdictional customers are generally eligible for recovery through the ecr mechanism . ku plans to fund its capital expenditures in 2012 with cash on hand , cash from operations and short-term debt . contractual obligations ku has assumed various financial obligations and commitments in the ordinary course of conducting its business . at december 31 , 2011 , the estimated contractual cash obligations of ku were : replace_table_token_146_th ( a ) reflects principal maturities only based on stated maturity dates . see note 7 to the financial statements for a discussion of variable-rate remarketable bonds issued on behalf of ku . ku does not have any significant capital lease obligations . ( b ) assumes interest payments through stated maturity . the payments herein are subject to change , as payments for debt that is or becomes variable-rate debt have been estimated . ( c ) see note 11 to the financial statements for additional information . ( d ) represents contracts to purchase coal , natural gas and natural gas transportation . see note 15 to the financial statements for additional information . ( e ) represents future minimum payments under ovec power purchase agreements through june 2040. see note 15 to the financial statements for additional information . ( f ) represents construction commitments , including commitments for the ghent landfill and brown scr construction including associated material transport systems for coal combustion residuals , which are also reflected in the capital expenditures table presented above . ( g ) based on the current funded status of lke 's qualified pension plan , which covers ku employees , no cash contributions are required . see note 13 to the financial statements for a discussion of expected contributions . ( h ) represents other contractual obligations . purchase orders made in the ordinary course of business are excluded from the amounts presented . dividends from time to time , as determined by its board of directors , ku pays dividends to its sole shareholder , lke . 184 as discussed in note 7 to the financial statements , ku 's ability to pay dividends is limited under a covenant in its $ 400 million revolving line of credit facility . this covenant restricts the	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources ku expects to continue to have adequate liquidity available through operating cash flows , cash and cash equivalents and its credit facilities . ku currently has no plans to access capital markets in 2012. ku 's cash flows from operations and access to cost-effective bank and capital markets are subject to risks and uncertainties including , but not limited to : · changes in market prices for electricity ; · changes in commodity prices that may increase the cost of producing power or decrease the amount ku receives from selling power ; · operational and credit risks associated with selling and marketing products in the wholesale power markets ; · unusual or extreme weather that may damage ku 's transmission and distribution facilities or affect energy sales to customers ; · reliance on transmission and distribution facilities that ku does not own or control to deliver its electricity and natural gas ; · unavailability of generating units ( due to unscheduled or longer-than-anticipated generation outages , weather and natural disasters ) and the resulting loss of revenues and additional costs of replacement electricity ; · the ability to recover and the timeliness and adequacy of recovery of costs associated with regulated utility businesses ; · costs of compliance with existing and new environmental laws ; · any adverse outcome of legal proceedings and investigations with respect to ku 's current and past business activities ; · deterioration in the financial markets that could make obtaining new sources ofbank and capital markets funding more difficult and more costly ; and · a downgrade in ku 's credit ratings that could adversely affect its ability to access capital and increase the cost of credit facilities and any new debt .
27 , 2011 , our board of directors authorized a repurchase of up to $ 30 million of jbt common shares through december 31 , 2014. as we evaluate our operating results , we consider performance indicators like segment revenue and operating profit in addition to the level of inbound orders and order backlog . 25 consolidated results of operations replace_table_token_5_th 2011 compared with 2010 total revenue increased by $ 75.4 million in 2011 compared to 2010. the increase in revenue was driven by $ 27.7 million of higher product sales , $ 12.3 million of higher aftermarket parts and services sales and $ 25.3 million of higher revenue due to the favorable impact of foreign currency translation . operating income decreased by $ 13.9 million in 2011 compared to 2010 , while operating income margin decreased from 7.6 % to 5.6 % . the decrease in operating income resulted from the following : · gross profit remained unchanged but decreased by $ 6.9 million in constant currency . gross profit decreased by $ 20.2 million due to lower gross profit margin , which resulted from the strengthening of the swedish krona and brazilian real , higher costs in certain jbt foodtech product lines and an unfavorable mix of products sold as compared to the prior year . this decrease was partially offset by $ 13.3 million of higher profit due to higher sales volume in the jbt aerotech segment . · selling , general and administrative expenses increased by $ 5.1 million , but only by $ 0.5 million in constant currencies , and decreased as a percentage of revenue from 16.8 % to 16.0 % . · research and development expense increased by $ 1.0 million , primarily due to expenditures on developing new gate equipment products . · restructuring expense was $ 7.9 million higher than in prior year . net interest expense was $ 1.4 million lower in 2011 compared to 2010 primarily as a result of a lower overall interest rate on our variable rate debt , which was 1.5 % in 2011 and 2.5 % in 2010. income tax expense for 2011 reflects an income tax rate of 34.1 % compared to 36.1 % in the same period in 2010. the difference in the rate is attributable to the release of $ 1.2 million in valuation allowance for certain foreign deferred tax assets . 2010 compared with 2009 total revenue increased by $ 38.8 million in 2010 compared to 2009 as a result of higher product sales . jbt aerotech 's revenue increased by $ 30.5 million as a result of higher demand for our ground support equipment and gate equipment products . jbt foodtech 's revenue in constant currency remained relatively unchanged as higher sales of freezing and chilling products and protein processing products were offset by lower sales of fruit processing products and in-container processing products . favorable impact of foreign currency translation resulted in $ 5.8 million of higher revenue . 26 operating income increased by $ 9.4 million in 2010 compared to 2009 while operating income margins improved from 6.9 % to 7.6 % . the increase in operating income resulted from the following : · gross profit increased by $ 10.3 million in 2010 compared to 2009. higher sales volume and a slight improvement in gross profit margins resulted in an increase in gross profit of $ 8.8 million and $ 0.5 million , respectively . savings in retirement benefit costs due to the freeze of the u.s. pension plan at the end of 2009 were partially offset by higher healthcare costs . the remaining increase in gross profit was primarily due to the favorable impact of foreign currency translation . · selling , general and administrative expenses remained flat and decreased as a percentage of revenue from 17.6 % to 16.8 % . · research and development expenses remained relatively unchanged as a percentage of revenue . · gains on investments in our non-qualified deferred compensation plan , which are reported in other ( income ) expense , net , were $ 0.6 million lower in 2010 compared to 2009. net interest expense was $ 1.0 million lower in 2010 compared to 2009. the decrease in net interest expense was a result of a lower overall interest rate on our variable rate debt due to maturity of a $ 25 million interest rate swap on january 30 , 2010. the interest rate swap previously fixed the interest rate on a portion of our borrowings under the credit facility at 4.9 % . income tax expense for 2010 reflects an income tax rate of 36.1 % compared to 32.9 % for 2009. the difference in the rate is attributable to higher earnings in higher tax jurisdictions relative to the prior year and the absence of a comparable reversal of a valuation allowance on deferred tax assets recorded in 2009. operating results of business segments replace_table_token_6_th segment operating profit is defined as total segment revenue less segment operating expenses . the following items have been excluded in computing segment operating profit : corporate staff expense , foreign currency related gains and losses , lifo provisions , restructuring costs , certain employee benefit expenses , interest income and expense and income taxes . restructuring costs included in other expense , net were : replace_table_token_7_th 27 jbt foodtech 2011 compared with 2010 jbt foodtech 's revenue increased by $ 21.8 million in 2011 compared to 2010. excluding the favorable impact of foreign currency translation , revenue decreased by $ 1.5 million . the decrease in revenue was driven by $ 28.9 million of lower sales of freezing and chilling products and protein processing products primarily in the north american region . story_separator_special_tag if an entity concludes that it is more likely than not that a reporting unit 's fair value is less than its carrying amount , then a quantitative test is required . in performing the quantitative test , we determine the fair value of a reporting unit using the “ income approach ” valuation method . we use a discounted cash flow model in which cash flows anticipated over several periods , plus a terminal value at the end of that time horizon , are discounted to their present value using an appropriate rate of return . the cash flows are derived from internal forecasts for the reporting unit . forecasting future income requires us to use a significant amount of judgment . in estimating future income , we use our internal operating budgets and long-range planning projections . we develop our budgets and long-range projections based on recent results , trends , economic and industry forecasts influencing our performance , our backlog , planned timing of new product launches , and customer sales commitments . we also apply judgment when selecting appropriate discount rates , identifying relevant market comparables , incorporating general economic and market conditions and selecting an appropriate control premium . we completed our annual goodwill impairment test as of october 31 , 2011. due to restructuring charges recorded in our food processing systems division ( fpsd ) , which includes the in-container processing and fruit processing product lines , we chose to bypass the qualitative assessment and perform the quantitative goodwill impairment test for fpsd . goodwill for the fpsd operating segment is tested at the reporting unit level , which is also the operating segment level . the results of our impairment test indicated that the fair value of the reporting unit exceeded its book value by a significant amount . a discount rate of 10.5 % was used . increasing the discount rate to 13 % would not have affected our conclusion . as a result of the assessment of the qualitative factors , we have determined it is not necessary to perform the quantitative goodwill impairment test on any of our other reporting units . self-insurance reserves we purchase third-party insurance for workers ' compensation , automobile , product and general liability claims that exceed a certain level . we are responsible for the payment of claims under these insured limits as well as claims under our self-insured healthcare plans . the obligations associated with the incurred losses are determined using actuarial estimates . these estimates are based on historical information along with certain assumptions about future events . changes in assumptions for medical costs , environmental hazards , and legal actions , as well as changes in actual experience could cause these estimates to change which could potentially be material to our results of operation and financial condition . accounting for income taxes in determining our current income tax provision , we assess temporary differences resulting from differing treatments of items for tax and accounting purposes . these differences result in deferred tax assets and liabilities , which are recorded in our consolidated balance sheets . when we maintain deferred tax assets , we must assess the likelihood that these assets will be recovered through adjustments to future taxable income . to the extent we believe recovery is not likely , we establish a valuation allowance . we record an allowance reducing the asset to a value we believe will be recoverable based on our expectation of future taxable income . we believe the accounting estimate related to the valuation allowance is a critical accounting estimate because it is highly susceptible to change from period to period as it requires management to make assumptions about our future income over the lives of the deferred tax assets , and the impact of increasing or decreasing the valuation allowance is potentially material to our results of operations . forecasting future income requires us to use a significant amount of judgment . in estimating future income , we use our internal operating budgets and long-range planning projections . we develop our budgets and long-range projections based on recent results , trends , economic and industry forecasts influencing our segments ' performance , our backlog , planned timing of new product launches , and customer sales commitments . significant changes in the expected realizability of the net deferred tax assets would require that we adjust the valuation allowance , resulting in a change to net income . as of december 31 , 2011 , we estimated that it is not likely that we will realize income tax deductions for certain uncollectible receivables and , therefore , we have provided a valuation allowance against the related deferred tax assets . we have estimated that it is likely that we will generate future taxable income in the u.s. and most foreign jurisdictions , and have therefore not provided a valuation allowance against most of our deferred tax assets . defined benefit pension and other postretirement plans pension and other postretirement plans ' costs require the use of assumptions for discount rates , investment returns , employee turnover rates , retirement rates , mortality rates and other factors . the actuarial assumptions used in our pension and postretirement benefit reporting are reviewed annually and compared with external benchmarks to ensure that they appropriately account for our future pension and postretirement benefit obligations . while we believe that the assumptions used are appropriate , differences between assumed and actual experience may affect our operating results . our pension and other postretirement benefits expense is typically sensitive to changes in our estimate of discount rate . however , holding other assumptions constant , a change of 0.5 percentage points in the discount rate would not significantly change the annual expense for 2011. our pension expense is sensitive to changes in our estimate of expected rate of return on plan assets . the expected return on assets used in calculating the pension	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows cash flows for each of the years in the three-year period ended on december 31 , 2011 were as follows : replace_table_token_10_th cash flows provided by continuing operating activities in 2011 were $ 37.0 million , representing a $ 19.4 million increase compared to 2010. the change in the cash flows is primarily attributable to a much higher collection of receivables during 2011 than during 2010. additionally , during 2011 and 2010 we contributed $ 10.4 million and $ 13.1 million , respectively , to our pension and other postretirement benefit plans . the majority of our investing activities support the maintenance and upgrading of our installed base of leased equipment . our annual capital spending typically ranges from $ 20.0 million to $ 25.0 million . cash flows required by financing activities in 2011 were $ 18.5 million compared to cash flows provided by financing activities of $ 4.9 million in 2010. during 2011 , we reduced our debt by $ 6.8 million compared to an increase in debt of $ 14.7 million in 2010. tax withheld on restricted stock granted in the year of our spin-off from fmc technologies , inc. and vested in 2011 was $ 1.3 million higher in 2011 compared to 2010. financing arrangements we have a $ 225 million revolving credit facility that expires on july 31, 2013. borrowings under the credit facility bear interest , at our option , at libor or an alternative base rate , which is the greater of jpmorgan chase , n.a .
given the changing nature of the covid-19 outbreak and the responses to curb its spread , management can not predict the full impact of the covid-19 pandemic on the company 's results of operations . the ultimate extent of the effects of the covid-19 pandemic on the company is highly uncertain and will depend on future developments , and such effects could exist for an extended period of time even after the pandemic ends . water division artesian water , artesian water maryland and artesian water pennsylvania provide water service to residential , commercial , industrial , governmental , municipal and utility customers . increases in the number of customers contribute to increases , or help to offset any intermittent decreases , in our operating revenue . as of december 31 , 2020 , we had approximately 90,300 metered water customers in delaware , an increase of approximately 2,500 compared to december 31 , 2019. the number of metered water customers in maryland totaled approximately 2,500 as of december 31 , 2020 , a slight increase compared to december 31 , 2019. the number of metered water customers in pennsylvania remained consistent compared to december 31 , 2019. for the year ended december 31 , 2020 , approximately 8.2 billion gallons of water were distributed in our delaware systems and approximately 135.0 million gallons of water were distributed in our maryland systems . 18 wastewater division artesian wastewater owns wastewater collection and treatment infrastructure and began providing regulated wastewater services to customers in delaware in july 2005. artesian wastewater maryland was incorporated on june 3 , 2008 and is able to provide regulated wastewater services to customers in maryland . it is not currently providing these services in maryland . our residential and commercial wastewater customers are billed a flat monthly fee , which contributes to providing a revenue stream unaffected by weather . the number of delaware wastewater customers totaled approximately 2,800 as of december 31 , 2020 , an increase of approximately 400 , or 14.9 % , compared to december 31 , 2019. in addition , artesian wastewater entered into wastewater services agreements with a large industrial customer . the wastewater services agreements with this customer are discussed further in the “ strategic direction ” section below . non-regulated division artesian utility provides contract water and wastewater operation services to private , municipal and governmental institutions . artesian utility also offers three protection plans to customers , the wslp plan , the sslp plan , and the islp plan . slp plan customers are billed a flat monthly or quarterly rate , which contributes to providing a revenue stream unaffected by weather . there has been consistent customer growth over the years . as of december 31 , 2020 , approximately 20,900 , or 24.3 % , of our eligible water customers enrolled in the wslp plan , approximately 16,100 , or 18.8 % , of our eligible customers enrolled in the sslp plan , and approximately 7,600 , or 8.9 % , of our eligible customers enrolled in the islp plan . approximately 1,900 non-utility customers enrolled in one of our three protection plans . strategic direction and recent developments our strategy is to increase customer growth , revenues , earnings and dividends by expanding our water , wastewater and slp plan services across the delmarva peninsula . we remain focused on providing superior service to our customers and continuously seek ways to improve our efficiency and performance . our strategy has included a focus on building strategic partnerships with county governments , municipalities and developers . by providing water and wastewater services , we believe we are positioned as the primary resource for developers and communities throughout the delmarva peninsula seeking to fill both needs simultaneously . we believe we have a proven ability to acquire and integrate high growth , reputable entities , through which we have captured additional service territories that will serve as a base for future revenue . we believe this experience presents a strong platform for further expansion and that our success to date also produces positive relationships and credibility with regulators , municipalities , developers and customers in both existing and prospective service areas . in our regulated water division , our strategy is to focus on a wide spectrum of activities , which include strategic acquisitions of existing systems , expanding certificated service area , identifying new and dependable sources of supply , developing the wells , treatment plants and delivery systems to supply water to customers and educating customers on the wise use of water . our strategy includes focused efforts to expand through strategic acquisitions and in new regions added to our delaware service territory over the last 10 years . we plan to expand our regulated water service area in the cecil county designated growth corridor and to expand our business through the design , construction , operation , management and acquisition of additional water systems . the expansion of our exclusive franchise areas elsewhere in maryland and the award of contracts will similarly enhance our operations within the state . our ability to develop partnerships with various county governments , municipalities and developers has provided a number of opportunities . in the last three years , we completed seven acquisitions including asset purchase agreements with municipal and developer/homeowner association operated systems . some recent acquisitions are noted below . on august 3 , 2020 , artesian water completed the purchase of substantially all of the water system operating assets from the city of delaware city , a delaware municipality , or delaware city , including the right to provide water service to delaware city 's existing customers . the total purchase price was $ 2.1 million . artesian water had previously acquired the water assets of an area annexed by delaware city , known as fort dupont , which was earmarked for growth and expansion of delaware city . story_separator_special_tag allowance for funds used during construction , or afudc , decreased $ 0.2 million , as a result of lower long-term construction activity subject to afudc for the twelve months ended december 31 , 2020 compared to the same period in 2019. interest charges interest expense increased $ 0.6 million , primarily due to an increase in long-term debt interest related to the series v first mortgage bond issued on december 17 , 2019. this increase is partially offset by a decrease in short-term debt interest , primarily related to lower interest rates and short-term borrowing levels in 2020. customer deposit interest decreased $ 0.1 million from the 2019 customer refund amount held in reserve related to the tax cuts and jobs act . net income our net income applicable to common stock increased $ 1.9 million . operating revenues increased $ 4.5 million and other income , net increased $ 0.1 million , while operating expenses increased $ 2.2 million and interest expense increased $ 0.6 million . part i , item 7 . “ management 's discussion and analysis of financial condition and results of operations ” in our 2019 annual report on form 10-k includes a comparative discussion of the years ended december 31 , 2019 and 2018 and is incorporated herein by reference . 24 story_separator_special_tag term debt at december 31 , 2020 , artesian resources had a $ 40 million line of credit with citizens bank , or citizens , which is available to all subsidiaries of artesian resources . as of december 31 , 2020 , there was $ 31.2 million of available funds under this line of credit . the interest rate for borrowings under this line is the london interbank offered rate , or libor , plus 1.25 % . this is a demand line of credit and therefore the financial institution may demand payment for any outstanding amounts at any time . the term of this line of credit expires on the earlier of may 31 , 2021 or any date on which citizens demands payment . the company expects to renew this line of credit . at december 31 , 2020 , artesian water had a $ 20 million line of credit with cobank , acb , or cobank , that allows for the financing of operations for artesian water , with up to $ 10 million of this line available for the operations of artesian water maryland . as of december 31 , 2020 , there was $ 2.0 million of available funds under this line of credit . the interest rate for borrowings under this line allows the company to select either libor plus 1.50 % or a weekly variable rate established by cobank ; the company has historically used the weekly variable interest rate . the patronage refunds earned by artesian water for 2020 and 2019 were $ 1.0 million and $ 0.9 million respectively . the term of this line of credit expires on july 30 , 2021. artesian water expects to renew this line of credit . line of credit commitments commitment due by period in thousands less than 1 year 1-3 years 4-5 years over 5 years lines of credit $ 26,813 $ - $ - $ - replace_table_token_5_th artesian 's long-term debt agreements and revolving lines of credit contain customary affirmative and negative covenants that are binding on us ( which are in some cases subject to certain exceptions ) , including , but not limited to , restrictions on our ability to make certain loans and investments , guarantee certain obligations , enter into , or undertake , certain mergers , consolidations or acquisitions , transfer certain assets or change our business . in addition , we are required to abide by certain financial covenants and ratios . as of december 31 , 2020 , we were in compliance with these covenants . long-term debt obligations reflect the maturities of certain series of our first mortgage bonds , which we intend to refinance when due if not refinanced earlier . one first mortgage bond is subject to redemption in a principal amount equal to $ 150,000 plus interest per calendar quarter . the state revolving fund loan obligation has an amortizing mortgage payment payable over a 20-year period . the promissory note obligation has an amortizing payment payable over a 20-year period . the first mortgage bonds , the state revolving fund loan and the promissory note have certain financial covenant provisions , the violation of which could result in default and require the obligation to be immediately repaid , including all interest . we have not experienced conditions that would result in our default under these agreements . on december 17 , 2019 , artesian water company entered into a bond purchase agreement relating to the issue and sale by artesian water to cobank of a $ 30 million principal amount first mortgage bond , series v , or the series v bond , due october 31 , 2049 , or the maturity date . the series v bond was issued pursuant to artesian water 's indenture of mortgage dated as of july 1 , 1961 , as amended and supplemented by supplemental indentures , including the twenty-fourth supplemental indenture dated as of december 17 , 2019 from artesian water to wilmington trust company , as trustee . the indenture is a first mortgage lien against substantially all of artesian water 's utility plant . the proceeds from the sale of the series v bond were used to pay down outstanding lines of credit of the company and a loan payable to artesian resources . the depsc approved the issuance of the series v bond on november 14 , 2019 . 26 the series v bond carries an annual interest rate of 4.42 % through but excluding the maturity date . interest is payable on january 30th , april 30th , july 30th and october 30th in each year and on	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources overview the company 's primary sources of liquidity for the year ended december 31 , 2020 were $ 20.3 million of cash provided by operating activities , $ 9.3 million in net contributions and advances from developers , $ 19.3 million from lines of credit borrowings and $ 1.5 million in net proceeds from the issuance of common stock . these funds were used to invest $ 40.0 million in capital expenditures and to pay dividends of approximately $ 9.4 million . we depend on the availability of capital for expansion , construction and maintenance . we rely on our sources of liquidity for investments in our utility plant and to meet our various payment obligations . we expect that our net investments in utility plant in 2021 will be approximately $ 48.1 million . our total obligations related to interest and principal payments on indebtedness , rental payments and water service interconnection agreements for 2021 are anticipated to be approximately $ 12.6 million . we expect to fund our activities for the next year using our available cash balances , bank credit lines , projected cash generated from operations and capital market financings . we believe that internally generated funds along with existing credit facilities will be adequate to provide sufficient working capital to maintain normal operations and to meet our financing requirements . however , because part of our business strategy is to expand through strategic acquisitions , we may seek additional debt financing or issue additional equity securities to finance future acquisitions or for other purposes . there is no assurance that we will be able to secure funding on terms acceptable to us , or at all . operating activities our primary source of liquidity for the year ended december 31 , 2020 was $ 20.3 million provided by cash flow from operating activities . cash flow from operating activities is primarily provided by our utility operations , and is impacted by the timeliness and adequacy of rate increases and changes in water consumption as a result of year-to-year variations in weather conditions , particularly during the summer .
we believe we are competitively positioned in the market with the strongest product portfolio that we have offered in several years . 25 we increased sales traction with the var channel during fiscal 2011 as evidenced by an increase in our branded revenue for the year . this was the result of both increased sales by certain existing partners and expanding our partner base . our sales and marketing teams implemented a number of initiatives and efforts to provide our channel partners with support ranging from lead generation to customer references as well as product education and other training programs . we have noted those partners that are more closely technically aligned with regard to our product portfolio are the partners with stronger results . in addition , we continued to work with our channel partners to take advantage of opportunities to reach end customers that have historically chosen competitor products , but due to consolidation in the market and resulting actions by competitors , purchased quantum products . we continued to improve our capital structure in fiscal 2011 by significantly reducing our senior term debt , making the final payment on the convertible subordinated debt issued in 2003 and refinancing the 12 % subordinated term debt with proceeds from the issuance of 3.5 % convertible subordinated debt . at march 31 , 2011 , we had $ 104.3 million of senior term debt and $ 135 million of convertible subordinated debt . we plan to continue making principal prepayments on the senior term debt during fiscal 2012. we view fiscal 2011 as a year that we shifted our focus from repositioning and restructuring quantum to a focus on growth . we had expected revenue declines in oem and royalty revenue this year ; however , we delivered revenue growth in those areas where we were focused , which were total branded revenue and both branded disk systems and branded software solutions revenue . we made significant progress adding new customers that sell our disk systems and software solutions as well as tape automation systems and increased our alignment with existing and new channel partners . we focused our development efforts on launching quantum branded products that provide end user customers with unique solutions and value to meet their backup , recovery and archive needs . evaluating the growth in the markets for our products and their associated impact to our fiscal 2012 plans , we participate in a tape market that is mature , a disk backup market that is growing and a file system and archive market that is also growing with significant potential for innovation and new solutions . as a result , in fiscal 2012 we expect total revenue to increase due to growth in branded disk systems and software solutions revenue , and we expect branded tape automation systems revenue to remain similar in fiscal 2012 compared to fiscal 2011 due to our continued efforts to increase market share by acquiring new customers in this declining market . we anticipate declines in oem , royalty and branded devices and media revenue consistent with overall market expectations for the tape market . although our strategy , opportunity and goals for fiscal 2012 are not significantly different than fiscal 2011 , we believe we are better positioned to execute on our growth plan . we have made changes in our sales and marketing organization to support growth in fiscal 2012 , including restructuring our sales resources based on end user requirements , increasing our efforts to achieve tighter technical alignment on our complete product portfolio with our channel partners as well as actively pursuing opportunities to expand the market reach for our products . another key area of focus for fiscal 2012 is continuing to expand and improve our products and solutions , with emphasis on branded disk systems and software solutions as well as introducing our initial stornext appliance and expanding professional services and custom engineering . we believe our current tape automation systems , disk systems and software solutions provide excellent value propositions for customers and we plan to continue to expand the breadth and depth of our product and service offerings in fiscal 2012. we are focused on advancing these objectives to take advantage of our improved position in the markets in which we participate to grow revenue in fiscal 2012 and create shareholder value . results in fiscal 2011 , we saw improved revenue momentum with our partners , especially for midrange disk systems , and our continued efforts to increase revenue from disk systems and software solutions resulted in a 33 % increase in disk systems and software solutions revenue in fiscal 2011 compared to a 5 % decrease in fiscal 2010 from fiscal 2009. in fiscal 2011 , we invested significantly in our product portfolio and continued to develop new technologies that will be the framework for future new product introductions . we had our second consecutive fiscal year of net income and continued to improve gross margins . in addition , we generated $ 52.3 million in cash from operations . we had total revenue of $ 672.3 million in fiscal 2011 , a 1 % decrease from fiscal 2010 primarily due to expected reductions in oem revenue , including devices and media and tape automation systems . our product revenue from oem customers decreased 16 % while revenue from branded products increased 7 % from fiscal 2010 primarily due to increased disk systems and software solutions revenue . service revenue decreased primarily due to lower oem repair revenue . our focus on growing the branded business during the fiscal year is reflected in the greater proportion of non-royalty revenue from our branded business , at 79 % in fiscal 2011 compared to 74 % in fiscal 2010 and 67 % in fiscal 2009. royalty revenue decreased 7 % primarily due to declining royalties from older dlt media , partially offset by growth in lto royalties . story_separator_special_tag in addition , branded service revenue comprised a larger proportion of service revenue in fiscal 2011 than in fiscal 2010 primarily due to declines in repairs for oem customers . product repairs and service for oem customers typically have a lower service margin than similar services for branded products . we have reduced expense in our service delivery model by repairing certain product lines in our facilities at a lower cost in fiscal 2011 than we incurred with external service providers in prior years . fiscal 2010 compared to fiscal 2009 service gross margin dollars increased $ 16.1 million , or approximately 41 % , despite a 5 % reduction in service revenue in fiscal 2010 compared to the prior year . additionally , our service gross margin percentage increased to 35.6 % in fiscal 2010 from 24.0 % in fiscal 2009. these increases were primarily due to cost reductions in our service delivery model and reduced lower-margin oem repair activities . efficiencies in our service delivery model that contributed to the increased service gross margin percentage included streamlining processes , consolidating service inventory locations , reducing headcount and decreasing third party external service providers and freight vendors as well as related expenses . in addition , we had decreased lower of cost or market inventory charges related to imminent end of service life dates on certain product families and planned product roadmap transitions compared to fiscal 2009. looking forward in fiscal 2012 , we expect the projected growth in overall revenue to increase the gross margin rate due to the increased percentage of revenue from branded sales which typically have a higher gross margin . tempering this anticipated increase is the absence of the majority of the oem deduplication software revenue that was included in our fiscal 2011 results as well as expected declines in royalty revenue in fiscal 2012. oem deduplication software revenue and royalty revenue both provide some of our highest gross margins . in addition , we continue to closely manage our manufacturing , service and repair costs . research and development expenses replace_table_token_2_th fiscal 2011 compared to fiscal 2010 the increase in research and development expenses for fiscal 2011 was primarily due to a $ 3.7 million increase in salaries and benefits from investment in our disk systems and software engineering teams to support new product development efforts . partially offsetting this increase was a $ 0.8 million decrease in project materials due to the types of products under development and related testing material requirements compared to the prior year . 31 fiscal 2010 compared to fiscal 2009 research and development expenses decreased slightly during fiscal 2010 compared to fiscal 2009 largely due to cost-cutting initiatives and efforts to streamline processes that reduced expenses . these cost reductions were largely offset by increased research and development activities in strategic areas of our business , including the release of several new products in fiscal 2010. depreciation expense decreased $ 1.0 million due to a number of assets supporting our research and development efforts becoming fully depreciated during fiscal 2010. salaries and benefits decreased $ 0.4 million primarily due to lower headcount compared to fiscal 2009. a $ 0.3 million decrease in project materials was primarily due to reduced tape automation system development material needs compared to fiscal 2009. these decreases were partially offset by a $ 1.2 million increase in external service provider expense in support of a number of new products under development in fiscal 2010. looking forward in fiscal 2012 , we anticipate increased research and development expenses from additional investments in development efforts to expand our disk systems and software solutions offerings , including the launch of our initial stornext appliance . sales and marketing expenses replace_table_token_3_th fiscal 2011 compared to fiscal 2010 sales and marketing expenses increased in fiscal 2011 primarily due to a $ 5.4 million increase in salaries and benefits from growing our branded sales force and marketing team . in addition , advertising and marketing expenditures increased by $ 1.8 million from supporting new product introductions and efforts to expand our position with existing and new channel partners to drive future growth . fiscal 2010 compared to fiscal 2009 sales and marketing expenses decreased during fiscal 2010 compared to fiscal 2009 due to continued cost-saving initiatives and efforts to continue to align our sales and marketing resources with market conditions and opportunities . salaries and benefits decreased $ 13.6 million due to reduced headcount in fiscal 2010. marketing-related expenses , such as marketing materials and trade shows , decreased $ 4.7 million , travel expenses decreased $ 3.1 million and external service provider expense decreased $ 1.1 million in fiscal 2010 compared to the prior year . in addition , amortization expense decreased $ 1.5 million during fiscal 2010 compared to fiscal 2009 due to certain intangible assets becoming fully amortized during fiscal 2009. looking forward in fiscal 2012 , we anticipate similar sales and marketing expenses as in fiscal 2011 ; however , we have implemented changes to our sales and marketing organization to apply sales resources based on end user requirements and to deploy our marketing resources with increased emphasis on expanding technical alignment across our product portfolio with our existing and new channel partners , including increasing the breadth and depth of technical resources and training for our partners . 32 general and administrative expenses replace_table_token_4_th fiscal 2011 compared to fiscal 2010 the decrease in general and administrative expenses was primarily due to a $ 1.0 million decrease in net vat expense primarily due to provisions for vat audits during fiscal 2010 that were not repeated in fiscal 2011. in addition , we had a $ 0.8 million decrease in legal expenses compared to fiscal 2010. fiscal 2010 compared to fiscal 2009 the $ 15.3 million decrease in general and administrative expenses during fiscal 2010 compared to fiscal 2009 was primarily due to decreases of $ 6.1 million in legal expenses , $ 3.4 million in	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources replace_table_token_11_th 37 fiscal 2011 the $ 47.8 million difference between reported net income and cash provided by operating activities in fiscal 2011 was primarily due to $ 67.5 million of non-cash expenses , including $ 30.3 million in amortization , $ 13.8 million in service parts lower of cost or market adjustment , $ 11.7 million in depreciation and $ 10.4 million in share-based compensation . these noncash expenses were partially offset by a $ 14.9 million increase in accounts receivable primarily due to increased sales of products and service billings in the fourth quarter of fiscal 2011 compared to the fourth quarter of fiscal 2010. cash used in investing activities during fiscal 2011 was primarily due to $ 12.3 million in purchases of property and equipment . equipment purchases were primarily for engineering test equipment to support product development activities . cash used in financing activities during fiscal 2011 was primarily due to net debt repayments of $ 95.5 million , including $ 81.7 million of principal on the senior secured term debt . we refinanced the subordinated term loans with 3.50 % convertible subordinated debt in fiscal 2011 , and the repayment of this long-term debt was offset by borrowings of convertible subordinated debt , net . for additional information regarding this refinancing , see note 7 “ convertible subordinated debt and long-term debt ” to the consolidated financial statements . in addition , we received $ 16.5 million from the issuance of common stock . fiscal 2010 the $ 83.5 million difference between reported net income and cash provided by operating activities in fiscal 2010 was primarily due to $ 71.3 million of non-cash expenses comprised of $ 38.5 million in amortization , $ 12.1 million in depreciation , $ 11.4 million in service parts lower of cost or market adjustment and $ 9.8 million in share-based compensation . these non-cash expenses were partially offset by a $ 15.6 million non-cash gain on debt extinguishment .
our primary market has been the healthcare industry , particularly hospitals . we have identified hospitals with 200 or more beds as the primary targets for our software and wireless solutions . 27 revenue generated by wireless messaging services ( including voice mail , personalized greetings , message storage and retrieval ) and equipment loss and or maintenance protection to both one-way and two-way messaging subscribers is presented as wireless revenue in our statements of operations . revenue generated by the sale of our software solutions , which includes software license , professional services ( installation , consulting and training ) , equipment procured by us from third parties ( to be used in conjunction with our software ) and post-contract support ( on-going maintenance ) , is presented as software revenue in our statements of operations . our software is licensed to end users under an industry standard software license agreement . 2019 highlights total revenue declined by 5.4 % or $ 9.2 million during 2019 compared to 2018 , primarily as a result of the continued and expected decline in wireless revenue along with a decrease in license revenues . the rate of decline in wireless revenues continues to trend favorably over the last several years as we saw the lowest level of erosion in the last five years , declining at a rate of only 6.5 % . in the fourth quarter of 2019 , we recognized non-cash pre-tax goodwill impairment charges of $ 8.8 million . excluding the goodwill impairment , our operating expenses decreased by 3.1 % or $ 5.4 million during 2019 compared to 2018 , driven primarily by savings in cost of revenue and general and administrative . while we continued investment in our development of spok go , we anticipate costs will begin to normalize in 2020. we saw growth in development costs decline from 30.8 % between 2017 and 2018 to 12.6 % from 2018 to 2019. we anticipate the rate of growth will continue to decline through 2020 as we balance the mix of staffing and outside service resources with internal development needs . we made significant progress in our development efforts related to spok go and expect to have a product ready for public release in 2020. we returned approximately $ 16.4 million of capital to stockholders in the form of cash dividends and share repurchases . 2018 highlights total revenue declined by 1.0 % or $ 1.7 million during 2018 compared to 2017 , primarily as a result of moderate growth in software revenue , offset by the continued and expected decline in wireless revenue . this represents a $ 6.7 million improvement in the decrease of consolidated revenues period over period as compared to the year ended december 31 , 2017 and brings us closer to consolidated revenue growth as we continue our transition into a software company . the anticipated rate of decline in wireless revenues has trended favorably over the last several years continuing in 2018 as we saw the lowest level of erosion in the last five years , declining at a rate of only 6.8 % . our operating expenses increased by 7.6 % or $ 12.2 million during 2018 compared to 2017 , driven primarily by our continued investment in the development of spok go and the related research and development costs . we returned approximately $ 23.6 million of capital to stockholders in the form of cash dividends and share repurchases . wireless revenue wireless revenue consists of two primary components : paging revenue and product and other revenue . paging revenue consists primarily of recurring fees associated with the provision of messaging services and fees for paging devices and is net of a provision for service credits . product and other revenue reflects system sales , the sale of devices and charges for paging devices that are not returned and are net of anticipated credits . our core offering includes subscriptions to one-way or two-way messaging services for a periodic ( monthly , quarterly , semiannual , or annual ) service fee . this is generally based upon the type of service provided , the geographic area covered , the number of devices provided to the customer and the period of commitment . a subscriber to one-way messaging services may select coverage on a local , regional or nationwide basis to best meet their messaging needs . two-way messaging is generally offered on a nationwide basis . in addition , subscribers either contract for a messaging device from us for an additional fixed monthly fee or they own a device , having purchased it either from us or from another vendor . we also sell devices to resellers who lease or resell devices to their subscribers and then sell messaging services utilizing our networks . we offer ancillary services , such as voicemail and equipment loss or maintenance protection , which help increase the monthly recurring revenue we receive along with these traditional messaging services . we offer exclusive one-way ( t5 ) and two-way ( t52 ) alphanumeric pagers , which are configurable to support un-encrypted or encrypted operation . when configured for encryption , they utilize aes-128 bit encryption , screen locking and remote wipe capabilities . with encryption enabled , these new secure paging devices enhance our service offerings to the healthcare community by adding hipaa security capabilities to the low cost , highly reliable and availability benefits of paging ( see item 1 . “ business ” for more details ) . 28 software revenue software revenue consists of two primary components : operations revenue and maintenance revenue . story_separator_special_tag despite the impairment of goodwill , our outlook for the business continues to remain strong . we believe the launch of spok go is set to meet a significant need in the healthcare marketplace and will create significant value for shareholders in the coming years . refer to note 1 , `` organization and significant accounting policies `` , and note 6 , `` goodwill and intangible assets , net `` , for further discussion . 34 interest income , other income ( expense ) , and income tax ( benefit ) expense interest income . interest income increased slightly for the year ended december 31 , 2019 , compared to the same periods in 2018 and 2017 , respectively , primarily due to interest earned on the company 's cash balances and short term investments due to increased investments in short-term treasury bonds . other income ( expense ) . for the year ended december 31 , 2019 compared to the same period in 2018 , other income ( expense ) increased by $ 1.4 million primarily as a result of various immaterial expenses incurred in 2018 that were not subsequently incurred during 2019 and an increase in gains on foreign currency . the decrease of $ 0.8 million in other income ( expense ) for the year ended december 31 , 2018 compared to the same period in 2017 was primarily a result of legal and other expenses related to the lawsuit previously reported in the 2017 annual report and our quarterly report on form 10-q for the quarterly period ended march 31 , 2018. benefit from ( provision for ) income taxes . the effects of foreign taxes are immaterial for all periods presented . the following is the effective tax rate reconciliation for the years ended december 31 , 2019 , 2018 and 2017 , respectively ( see note 9 , `` income taxes `` , for further discussion on our income taxes ) : replace_table_token_13_th benefit from income taxes increased by $ 2.0 million for the year ended december 31 , 2019 compared to the same period in 2018 due primarily to an overall increase in pretax book loss partially offset by the add back of goodwill that was impaired and an increase in research and development and other tax credits . our investment in research and development qualifies for the research and development income tax credit under section 41 of the internal revenue code . unused research and development tax credits have a 20-year carryover and will provide future tax benefits once spok 's net operating losses are fully utilized . liquidity and capital resources cash and cash equivalents at december 31 , 2019 , we had cash and cash equivalents of $ 47.4 million . the available cash and cash equivalents are held in accounts managed by third-party financial institutions and consist of invested cash and cash in our operating accounts . the invested cash is invested in interest bearing funds managed by third-party financial institutions . these funds invest in direct obligations of the government of the united states . to date , we have experienced no loss or lack of access to our invested cash or cash equivalents ; however , we can provide no assurance that access to our invested cash and cash equivalents will not be impacted by adverse market conditions . we maintain a level of liquidity sufficient to allow us to meet our cash needs in both the short-term and long-term . at any point in time , we have approximately $ 7.0 to $ 12.0 million in our operating accounts that are with third-party financial institutions . while we monitor daily the cash balances in our operating accounts and adjust the cash balances as appropriate , these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets . to date , we have experienced no loss or lack of access to cash in our operating accounts . we intend to use our cash on hand to provide working capital , to support operations , to invest in our business and to return value to stockholders through cash dividends and possible repurchases of our common stock . we may also consider using cash to fund or complete opportunistic investments and acquisitions that we believe will provide a measure of growth or revenue stability while supporting our existing operations . because we intend to increase substantially our investment in developing the spok go platform over the next two or three years , commensurate with declining revenues from our wireless business , we anticipate that our cash on hand will decrease significantly during that period and possibly longer until revenues from spok go begins to be realized . 35 cash flows overview in the event that net cash provided by operating activities and cash on hand are not sufficient to meet future cash requirements , we may be required to reduce planned capital expenses , reduce or eliminate our cash dividends to stockholders , not resume our common stock repurchase program , and or sell assets or seek additional financing . we can provide no assurance that reductions in planned capital expenses or proceeds from asset sales would be sufficient to cover shortfalls in available cash or that additional financing would be available on acceptable terms . based on current and anticipated levels of operations , we anticipate net cash provided by operating activities , together with the available cash on hand at december 31 , 2019 , should be adequate to meet anticipated cash requirements for the foreseeable future . the following table sets forth information on our net cash flows from operating , investing , and financing activities for the periods stated : replace_table_token_14_th story_separator_special_tag that we may be able to negotiate lower payments if we choose to exit these contracts before their expiration date . refer to note 10 , `` commitments and contingencies	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash provided by operating activities . as discussed above , we are dependent on cash flows from operating activities to meet our cash requirements . cash from operations varies depending on changes in various working capital items , including deferred revenues , accounts payable , accounts receivable , prepaid expenses and various accrued expenses . cash provided by operating activities in 2019 was $ 11.7 million , due primarily to non-cash items such as goodwill impairment of $ 8.8 million , depreciation , amortization and accretion of $ 9.2 million , stock-based compensation of $ 3.6 million , and other non-cash items of $ 0.7 million , partially offset by the 2019 net loss of $ 10.8 million and deferred income benefit of $ 3.2 million . cash provided by operating activities also increased resulting from changes in prepaids and other assets of $ 2.9 million and accounts receivable of $ 1.0 million and deferred revenue of $ 0.1 million , partially offset by a change in accounts payable , accrued liabilities and other of $ 0.6 million . cash provided by operating activities in 2018 was $ 10.3 million , due primarily to non-cash items such as depreciation , amortization and accretion of $ 10.8 million , stock-based compensation of $ 4.9 million and other non-cash items of $ 1.9 million , partially offset by the 2018 net loss of $ 1.5 million and deferred income benefit of $ 1.7 million . cash provided by operating activities was partially offset resulting from changes in accounts receivable of $ 0.9 million , prepaids and other assets of $ 0.6 million , accounts payable , accrued liabilities and other of $ 1.7 million and deferred revenue of $ 0.9 million .
our management and advisory fees and family office services fees income is recognized through the course of the period in which these services are provided . income from performance fees is recorded at the conclusion of the contractual performance period when all contingencies are resolved . in certain arrangements , we are only entitled to receive performance fees and allocations when the return on assets under management exceeds certain benchmark returns or other performance targets . 38 the discretionary investment management agreements for our separately managed accounts do not have a specified term . rather , each agreement may be terminated by either party at any time , unless otherwise agreed with the client , upon written notice of termination to the other party . the investment management agreements for our private funds are generally in effect from year to year , and may be terminated at the end of any year ( or , in certain cases , on the anniversary of execution of the agreement ) ( i ) by us upon 30 or 90 days ' prior written notice and ( ii ) after receiving the affirmative vote of a specified percentage of the investors in the private fund that are not affiliated with us , by the private fund on 60 or 90 days ' prior written notice . the investment management agreements for our private funds may also generally be terminated effective immediately by either party where the non-terminating party ( i ) commits a material breach of the terms subject , in certain cases , to a cure period , ( ii ) is found to have committed fraud , gross negligence or willful misconduct or ( iii ) terminates , becomes bankrupt , becomes insolvent or dissolves . each of our investment management agreements contains customary indemnification obligations from us to our clients . the tables below set forth the amount of assets under management , the percentage of management and advisory fees revenues , the amount of revenue recognized , and the average assets under management for discretionary managed accounts and for private funds for each period presented . discretionary managed accounts replace_table_token_8_th private funds replace_table_token_9_th our advisory fees are primarily driven by the level of our assets under management . our assets under management increase or decrease based on the net inflows or outflows of funds into our various investment strategies and the investment performance of our clients ' accounts . in order to increase our assets under management and expand our business , we must develop and market investment strategies that suit the investment needs of our target clients and provide attractive returns over the long term . our abilit y to continue to attract clients will depend on a variety of factors including , among others : · our ability to educate our target clients about our classic value investment strategies and provide them with exceptional client service ; · the relative investment performance of our investment strategies , as compared to competing products and market indices ; · competitive conditions in the investment management and broader financial services sectors ; · investor sentiment and confidence ; and · our decision to close strategies when we deem it to be in the best interests of our clients . the majority of advisory fees that we earn on separately-managed accounts are based on the value of assets under management on the last day of each calendar quarter . most of our advisory fees are billed quarterly in advance on the first day of each calendar quarter . our basic annual fee schedule for management of clients ' assets in separately managed accounts is : ( i ) for managed equity or balanced portfolios , 1 % of the first $ 10 million a nd 0.60 % on the balance , ( ii ) for managed fixed income only portfolios , 0.40 % on the first $ 10 million and 0.30 % on the balance and ( iii ) for the municipal value strategy , 0.65 % . our fee for monitoring non-discretionary assets can range from 0.05 % to 0.01 % , but can also be incorporated into an agreed-upon fixed family office service fee . the majority of our client relationships pay a blended fee rate since they are invested in multiple strategies . management fees earned on investment funds that we advise are calculated primarily based on the net assets of the funds . some funds calculate investment fees based on the net assets of the funds as of the last business day of each calendar quarter , whereas other funds calculate investment fees based on the value o f net assets on the first business day of the month . depending on the investment fund , fees are paid either quarterly in advance or quarterly in arrears . for our private funds , the fees range from 0.25 % to 1.5 % 39 annually . certain management fees earned on investment funds for which we perform risk management and due diligence services are based on flat fee agreements customized for each engagement . average management fee is calculated by dividing our actual revenue earned over a period by our average assets under management during the same period ( which is calculated by averaging quarter-end assets under management for the applicable period ) . our average management fee was 0.44 % , 0.43 % and 0.39 % for the years ended december 31 , 2013 , 2012 and 2011 , respectiv ely . changes in our total average management fee rates are typically the result of changes in the mix of our assets under management and increased concentration in our equities strategies whose fee rates are higher than those of other investment strategies . advisory fees are also adjusted for any cash flows into or out of a portfolio , where the cash flow represents greater than 10 % of the value of the portfolio . story_separator_special_tag the increase in performance fee revenue is directly attributable to higher returns 43 achieved at our external investment strategies . the balance of our performance fees are earned from proprietary funds and are included in equity income from investments , which is discussed below in “ —other income ( expense ) . ” expenses our expenses for the years ended december 31 , 2013 , 2012 and 2011 are set forth below : replace_table_token_14_th replace_table_token_15_th ( 3 ) for the year ended december 31 , 2013 , $ 8,236 of partner incentive payments was included in compensation and benefits expense . our expenses are driven primarily by our compensation costs . the table included in “ —expenses—compensation and benefits expense ” describes the components of our compensation expense for the three years ended december 31 , 2013. other expenses , such as rent , professional service fees , data-related costs , and sub-advisory fees incurred are included in our general and administrative expenses . year ended december 31 , 2013 versus year ended december 31 , 2012 total expenses increased by $ 10.7 million , or 32.7 % , to $ 43.5 million for the year ended december 31 , 2013 from $ 32.8 million for the year ended december 31 , 2012. this increase was primarily attributable to increases in compensation and benefits expense of $ 11.2 million partially offset by a decrease in general and administrative expenses of $ 0.5 million . compensation and benefits expense increased by $ 11.2 million , or 58.7 % , to $ 30.3 million for the year ended december 31 , 2013 from $ 19.1 million for the year ended december 31 , 2012. the increase was primarily attributable to an increase in the accrual for bonuses of $ 8.2 million as a result of the recognition of partner incentive payments as compensation expense , special non-principal bonuses of $ 0.8 million that were paid in july 2013 upon consummation of our initial public offering , an increase in salaries and benefits expense of $ 0.8 million and $ 0.2 million , respectively , as a result of both merit increases and increased headcount , and increased equity-based compensation expense of $ 0.8 million primarily due to an increase in the fair value of the deferred equity units in addition to the acceleration of vesting of deferred equity units as a result of the death of our former chief executive officer . general and administrative expenses decreased by $ 0.5 million , or 3.5 % , to $ 13.2 million for the year ended december 31 , 2013 from $ 13.7 million for the year ended december 31 , 2012. this decrease was primarily due to a reduction in professional fees of $ 2.5 million as a result of incurring fees for services rendered in the prior year in connection with a planned initial public offering that was withdrawn in 2012 and acquisition transactions . furthermore , our sub-advisory fees decreased by $ 0.3 million as a result of the ten-sixty asset management , llc acquisition . partially offsetting these decreases was a $ 0.8 million charge for payments to be made through november 2014 to a relative of our former chief executive officer , an increase in occupancy expense of $ 0.6 million due to the reversal of a lease abandonment liability in 2012 that was originally recorded in 2009 in connection with reoccupying space in our headquarters resulting in reduced occupancy expenses in 2012 , an increase in investor relation costs of $ 0.2 million , an increase in recruiting costs of $ 0.1 million , an increase in client promotion costs of $ 0.2 million , delaware franchise taxes of $ 0.1 million , and a fair value adjustment of $ 0.2 million to the milbank acquisition . year ended december 31 , 2012 versus year ended december 31 , 2011 total expenses increased by $ 4.5 million , or 15.7 % , to $ 32.8 million for the year ended december 31 , 2012 from $ 28.3 million for the year ended december 31 , 2011. this increase was primarily attributable to increases in compensation and benefits expense and general and administrative expenses of $ 1.6 million and $ 2.8 million , respectively . compensation and benefits expense increased by $ 1.6 million , or 9.2 % , to $ 19.1 million for the year ended december 31 , 2012 from $ 17.5 million for the year ended december 31 , 2011. the increase was primarily attributable to an increase in salaries of $ 0.9 million as a result of both merit increases and in creased headcount primarily as a result of the milbank acquisition , increased incentive 44 compensation expense of $ 0.3 million , and increased equity-based compensation expense of $ 0.3 million due to the grant of additional deferred equity units to employees and an increase in the fair value of the deferred equity units . general and administrative expenses increased by $ 2.8 million , or 26.1 % , to $ 13.7 million for the year ended december 31 , 2012 from $ 10.9 million for the year ended december 31 , 2011. this increase was primarily due to an increase in professional fees of $ 2.3 million for services rendered in connection with a planned initial public offering that was withdrawn in november 2012 and acquisition transactions and depreciation and amortization expen se of $ 0.4 million primarily related to amortization of intangible assets as part of the milbank transaction . on may 1 , 2012 , we reoccupied space at our headquarters that we had previously abandoned in 2009. as a result , this released the remaining abandonment-related liability of $ 0.7 million . this reversal was partially offset by increased operating cost escalations of $ 0.2 million and lower sub-tenant rent of $ 0.2 million . other income ( expense ) , net replace_table_token_16_th replace_table_token_17_th year ended december 31 , 2013	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows the following table sets forth our cash flows for the years ended december 31 , 2013 , 2012 and 2011. operating activities consist of net income subject to adjustments for changes in operating assets and liabilities , depreciation , and equity-based compensation expense . investing activities consist primarily of acquiring and selling property an d equipment , distributions received from investments in investment funds , and cash paid as part of business acquisitions . financing activities consist primarily of contributions from partners , distributions to partners , the issuance and payments on partner notes , other financings , and earnout payments related to business acquisitions . replace_table_token_21_th operating activities year ended december 31 , 2013 versus year ended december 31 , 2012 operating activities provided $ 26.4 million and $ 20.8 million for years ended december 31 , 2013 and 2012 , respectively . this difference is partially the result of increased distributions from investment funds of $ 0.9 million for the same period . our working capital increased by approximately $ 3.7 million primarily as a result of increased revenue and increased accrued compensation due to the recognition of partner incentive payment compensati on expense beginning in the third quarter .
however , the combined demand for low carb products and cortislim ® began to decline in the fourth quarter of 2004 , which we believe was due to a change in demand for low carb products and the wider availability of cortislim ® in the marketplace . accordingly , we launched new weight management products in fiscal 2005 , and continued to launch them into fiscal 2007 , leading to an increase in sales of weight management products , while consistently experiencing a decrease in sales of low carb products since the beginning of fiscal 2006 , compared to fiscal 2005. moreover , as the rate of obesity increases and as the general public becomes increasingly more health conscious , we expect the demand for weight management products , albeit volatile , to continue to be strong in the near term . accordingly , we will continue to offer the highest quality products available in this segment . 22 in addition to the weight management product lines , we intend to continue our focus in meeting the demands of an increasingly aging population , the effects of increasing costs of traditional healthcare and a rapidly growing fitness conscious public . we believe that the aging of the population provides us with an area of opportunity . the u.s. census bureau reports that the number of individuals in the 65 and over age group is expected to double in the next 25 years . the increase in the population of this age group , coupled with the need for increased supplementation as digestive abilities wane , provides us with an enhanced sales opportunity . for example , anti-degenerative supplements , such as chondroitin sulfate , have demonstrated consistent increases in sales growth . we will continue to offer products such as chondroitin sulfate to meet the demands of this market segment . we believe that as the costs of healthcare continue to rise , lower-cost alternatives to prescription drugs and preventative supplementation will continue to be an option for the american consumer . according to the national coalition on health care and a study by harvard medical school , medical spending as a percentage of gdp increased from 5 % to 16 % between 1950 and 2004 , and is projected to reach 17.7 % of gdp by 2012. as an increasing number of the population seeks to avoid costly medical issues and focuses on prevention through diet , supplementation and exercise , we expect the demand in this market segment to provide us with continued opportunities . for example , lower-cost alternatives to expensive cholesterol lowering medications such as fish oil ( essential fatty acids ) , are experiencing increasing popularity . according to the new journal delaware online , more than 50 million adults are involved in either some sort of regular fitness program or sports activity , with over 25 % of current health-club members being over the age of 55. according to the international health , racquet and sportsclub association , there has been a 3.3 % increase in health club participation from 2005 to 2006 , which is continuing the trend from 2001 through 2005 where there was a 20 % to 25 % increase in wellness program participants . moreover , studies by the british heart foundation found that adults over 40 who exercise are at less than half the risk of experiencing heart disease compared to their sedentary peers , which is information we believe will further fuel this growth . we believe that the increase in our sales of sports supplements , which help with recovery and performance , is an indication of this growth , and that this will continue as fitness programs become an accepted lifestyle rather than a trend . when taken in context of the rising costs of healthcare , we believe the vms industry as a whole stands to benefit . our historical results have also been significantly influenced by our new store openings . since the beginning of 2003 , we have opened 223 stores and operate 348 stores located in 32 states and the district of columbia as of march 15 , 2008. our stores typically require three to four years to mature , generating lower store level sales and store contribution in the initial years than our mature stores . as a result , new stores generally have a negative impact on our overall operating margin and sales per square foot . as our recently opened stores mature , we expect them to contribute meaningfully to our sales and store contribution . critical accounting policies the preparation of financial statements in conformity with accounting principles generally accepted in the united states of america requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements , and the reported amounts of revenue and expenses during the reporting period . critical accounting policies are those that are the most important portrayal of our financial condition and results of operations , and require our most difficult , subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain . while our significant accounting policies are described in more detail in the notes to our financial statements , our most critical accounting policies , discussed below , pertain to revenue recognition , inventories , impairment of long-lived assets , goodwill and other intangible assets , deferred sales for our healthy awards program , stock-based compensation , and income taxes . in applying such policies , we must use some amounts that are based upon our informed judgments and best estimates . estimates , by their nature , are based on judgments and available information . the estimates that we make are based upon historical factors , current circumstances and the experience and judgment of management . story_separator_special_tag the supplements category , which is among the largest selling product categories in our mix , experienced significant growth in sales of essential fatty acids , or efas , which were responsible for most of the increase in the supplement category in fiscal 2007. given the current trend in efa consumption , and the growing number of publications and recommendations regarding the heart-health benefits of fish oils ( such as by the american heart association and us national institutes of health ) , we expect continued 27 strength in sales of efas for the next fiscal year . product sales in the sports nutrition category increased at a greater rate than the overall increase in net sales during the fiscal 2007 , and have done so since early fiscal 2006. we believe this is due largely to the growth in the fitness-conscious market as well as the diversity of new product introductions . direct net sales to our direct customers decreased $ 2.6 million , or 3.3 % , to $ 75.9 million for fiscal 2007 compared to $ 78.5 million for fiscal 2006. this decrease was due to a decrease in our catalog sales , which we believe is the result of our continued expansion of our retail store locations and online stores , as well as the general decline in effectiveness of catalogs as a merchandising medium . this overall decrease was largely offset by an increase in our internet based sales of $ 4.7 million during fiscal 2007 , which was primarily due to improvements to our e-commerce platform and customer experience , as well as continued improvements in our online customer prospecting efforts . cost of goods sold cost of goods sold , which includes product , warehouse and distribution and store occupancy costs , increased $ 33.8 million , or 10.4 % , to $ 360.3 million for fiscal 2007 compared to $ 326.5 million for fiscal 2006. the components of cost of goods sold are explained below . cost of goods sold as a percentage of net sales was 67.0 % for fiscal 2007 compared to 67.2 % for fiscal 2006. product costs increased $ 23.7 million , or 9.3 % , to $ 279.8 million during fiscal 2007 compared to $ 256.1 million for fiscal 2006. product costs as a percentage of net sales decreased to 52.0 % in fiscal 2007 compared to 52.7 % for fiscal 2006. the percentage decrease was largely a result of a decrease in price promotions for our products of approximately 1.2 % , offset in part , by an increase in product costs of approximately 0.6 % as a percentage of sales in fiscal 2007 versus fiscal 2006. warehouse and distribution costs increased $ 2.1 million , or 12.4 % , to $ 18.6 million for fiscal 2007 compared to $ 16.6 million for fiscal 2006. warehouse and distribution costs as a percentage of net sales increased to 3.5 % for fiscal 2007 compared to 3.4 % in fiscal 2006. the increase was mainly attributable to increases in shipping costs in fiscal 2007 as compared to fiscal 2006 , as a result of rising fuel costs and shipments to greater distances as we continue to expand our geographic store base . occupancy costs increased $ 8.1 million , or 15.0 % , to $ 61.9 million for fiscal 2007 compared to $ 53.9 million for fiscal 2006. occupancy costs as a percentage of net sales increased to 11.5 % during fiscal 2007 compared to 11.1 % for fiscal 2006. this increase as a percentage of sales is mainly attributable to the increases in utilities and real estate tax expenses as well as a lower ratio of direct net sales , as a component of total net sales , to occupancy expenses . gross profit as a result of the foregoing , gross profit increased $ 18.0 million , or 11.3 % , to $ 177.5 million for fiscal 2007 compared to $ 159.5 million for fiscal 2006. selling , general and administrative expenses selling , general and administrative expenses , including operating payroll and related benefits , advertising and promotion expense , and other selling , general and administrative expenses , increased $ 14.8 million , or 11.5 % , to $ 143.5 million during fiscal 2007 , compared to $ 128.6 million for fiscal 2006. the components of selling , general and administrative expenses are explained below . selling , general and administrative expenses as a percentage of net sales for fiscal 2007 was 26.7 % compared to 26.5 % for fiscal 2006. operating payroll and related benefits increased $ 5.2 million , or 10.9 % , to $ 53.5 million for fiscal 2007 compared to $ 48.2 million for fiscal 2006. the increase is due mainly to our increase in retail locations throughout fiscal 2007. operating payroll and related benefits expenses as a percentage of net sales remained level at 9.9 % during fiscal 2007 compared to 9.9 % for fiscal 2006. advertising and promotion expenses increased $ 0.6 million , or 4.9 % , to $ 13.7 million for fiscal 2007 compared to $ 13.1 million for fiscal 2006. advertising and promotion expenses as a percentage of net sales decreased to 2.6 % during fiscal 2007 compared to 2.7 % for fiscal 2006 , primarily as a result of web-based advertising initiatives , such as broadening our web platform , which began in early fiscal 2006 and generated expenses throughout that year , but were completed well before fiscal 2007 year-end . 28 other selling , general and administrative expenses , which include depreciation and amortization expense , increased $ 9.0 million , or 13.4 % , to $ 76.3 million in fiscal 2007 compared to $ 67.3 million for fiscal 2006. the increase was due to an increase in depreciation and amortization of approximately $ 1.2 million , reflecting our expanding operation , and a increase in professional fees of $ 1.5 million	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	key indicators of liquidity and capital resources the following table sets forth key indicators of our liquidity and capital resources ( in thousands ) : replace_table_token_11_th replace_table_token_12_th liquidity and capital resources our primary uses of cash are to fund working capital , operating expenses , debt service and capital expenditures related primarily to the construction of new stores . historically , we have financed these requirements from internally generated cash flow . we believe that the cash generated by operations , together with the borrowing availability under the new credit facility ( described below ) , will be sufficient to meet our working capital needs for the next twelve months , including investments made and expenses incurred in connection with our store growth plans , systems development and store improvements . during fiscal 2007 we spent approximately $ 12 million , out of the $ 14.1 million of total capital expenditures , in connection with our store growth and improvement plans . we opened 36 new stores during fiscal 2007 , and closed one store . our working capital requirements for merchandise inventory will continue to increase as we continue to open additional stores . currently , our practice is to establish an inventory level of $ 165,000 to $ 200,000 in cost for each of our stores , a portion of which is vendor-financed based upon agreed credit terms , with the remainder being purchased in cash . in addition , 60 day payment terms have been extended to us by some of our suppliers allowing us to effectively manage our inventory and working capital .
results of operations the following discussion is intended to provide the reader with information that will be helpful in understanding our financial statements including the changes in certain key items in comparing financial statements period to period . we also intend to provide the primary factors that accounted for those changes , as well as a summary of how certain accounting principles affect our financial statements . in addition , we are providing information about the financial results of our two operating segments to further assist in understanding how these segments and their results affect our consolidated results of operations . this discussion should be read in conjunction with our financial statements as of december 31 , 2011 and the year then ended and the notes accompanying those financial statements contained herein under item 8. as disclosed in note 2 of the notes to the consolidated financial statements , contract environmental services , inc. ( ces ' ) was acquired may 1 , 2009. the ces results of operations , for the period may 1 , 2009 to december 31 , 2009 are included in our 2009 consolidated results of operations and financial information presented below . such impact , when material and quantifiable , is discussed where we believe it would contribute to the reader 's understanding of our financial statements . during 2011 , we acquired a small regional provider of housekeeping and laundry services , which are included in our 2011 consolidated results of operations and financial information , for the period september 1 , 2011 to december 31 , 2011 , presented below . the impact of this acquisition did not have a material impact on the overall operations of company 's financial results from a consolidated or segment perspective . overview we provide management , administrative and operating expertise and services to the housekeeping , laundry , linen , facility maintenance and dietary service departments of the health care industry , including nursing homes , retirement complexes , rehabilitation centers and hospitals located throughout the united states . we believe that we are the largest provider of housekeeping and laundry management services to the long-term care industry in the united states , rendering such services to approximately 2,900 facilities in 47 states as of december 31 , 2011. although we do not directly participate in any government reimbursement programs , our clients ' reimbursements are subject to government regulation . therefore , they are directly affected by any legislation relating to medicare and medicaid reimbursement programs . 18 we provide our services primarily pursuant to full service agreements with our clients . in such agreements , we are responsible for the day to day management of the department managers and hourly employees located at our clients ' facilities . we also provide services on the basis of a management-only agreement for a very limited number of clients . our agreements with clients typically provide for renewable one year service terms , cancelable by either party upon 30 to 90 days ' notice after the initial 90-day period . we are organized into two reportable segments ; housekeeping , laundry , linen and other services ( housekeeping ) , and dietary department services ( dietary ) . at december 31 , 2011 , housekeeping is being provided at essentially all of our approximately 2,900 client facilities , generating approximating 74 % or $ 654,886,000 of 2011 total revenues . dietary is being provided to approximately 600 client facilities at december 31 , 2011 and contributed approximately 26 % or $ 234,247,000 of 2011 total revenues . housekeeping consists of managing the client 's housekeeping department which is principally responsible for the cleaning , disinfecting and sanitizing of patient rooms and common areas of a client 's facility , as well as laundering and processing of the personal clothing belonging to the facility 's patients . also within the scope of this segment 's service is the responsibility for laundering and processing of the bed linens , uniforms and other assorted linen items utilized by a client facility . dietary consists of managing the client 's dietary department which is principally responsible for food purchasing , meal preparation and providing dietician consulting professional services , which includes the development of a menu that meets the patient 's dietary needs . our ability to acquire new clients and increase revenues is affected by many factors . competitive factors consist primarily of competing with the potential client utilizing an in-house support staff to provide services similar to ours , as well as local companies which provide services similar to ours . we are unaware of any other companies , on a national or local level , which have a significant presence or impact on our procurement of new clients in our market . we believe the primary revenue drivers of our business are our ability to obtain new clients and to pass through , by means of service billing increases , increases in our cost of providing the services . in addition to the recoupment of costs increases , we endeavor to obtain modest annual revenue increases from our existing clients to preserve current profit margins at the facility level . the primary economic factor in acquiring new clients is our ability to demonstrate the cost-effectiveness of our services . this is because many of our clients ' revenues are generally highly reliant on medicare and medicaid reimbursement funding rates and mechanisms . therefore , their economic decision-making process in engaging us is driven significantly by their reimbursement funding rate structure in relation to how their costs are currently being reimbursed and the financial impact on their reimbursement as a result of engaging us for the respective services . another factor is our ability to demonstrate to potential clients the benefit of being relieved of the administrative and operational challenges related to the day-to-day management of their respective department services for which they contract with us . story_separator_special_tag consolidated investment and interest income investment and interest income , as a percentage of consolidated revenues , decreased to 0.1 % for the year ended december 31 , 2011 compared to 0.3 % for the comparable period in 2010. the decrease in investment and interest income was primarily attributable to the decrease in interest earned , and realized and unrealized net gains on our marketable securities portfolio during this period . additionally , we recognized a decrease in the market value of the investments held in our deferred compensation fund compared to an increase in the market value in the prior year . the decrease in interest income derived from our marketable securities resulted partially from a reduction in the amount of change in our marketable securities portfolio during 2011. from time to time in 2011 , we sold securities to increase cash and cash equivalents to fund our growth . additionally , we realized lower rates of return on our marketable securities and on cash and cash equivalents during the year . 24 income before income taxes consolidated as a result of the discussion above related to revenues and expenses , consolidated income before income taxes for 2011 decreased to 6.5 % , as a percentage of consolidated revenues , compared to 7.0 % in 2010. reportable segments housekeeping 's 13.0 % increase in income before income taxes is primarily attributable to the gross profit earned on the 9.9 % increase in organic reportable segment revenues along with the factors discussed above in housekeeping 's cost of services key indicators . dietary 's income before income taxes increase of 54.0 % on a reportable segment basis is primarily attributable to the 31.6 % increase in dietary revenues from 2010 along with the factors discussed above within dietary 's cost of services key indicators . consolidated income taxes our effective tax rate was 34.0 % for the year ended december 31 , 2011 and 36.4 % for 2010. the decrease in the effective tax rate was primarily the result of increased tax credits realized in 2011. the company realized tax credits from , in addition to other tax credits available , the new hire retention credit ( the nhr credit ) . the nhr credit is a one-time general business credit at the federal level that was authorized by the hiring incentives to restore employment act ( hire act ) of 2010. the nhr credit allows an employer a credit of up to $ 1,000 for each eligible worker that was retained for at least 52 consecutive weeks of qualified employment . this program ended december 31 , 2010 but the impact of the nhr credit is accordingly reflected in our income tax provision for 2011. additionally , there was a slight decrease in the effective tax rate resulting from changes in the apportionment of our income among the states within which we do business that have positively impacted our combined state income taxes . absent any significant change in federal , or state and local tax laws , we expect our effective tax rate for 2012 to approximate a rate between our 2010 rate of 36.4 % and our 2009 rate of 38.5 % . our actual 2012 rate will be impacted by the expiration of the tax credits related to the hire act and the uncertainty surrounding the renewal of the work opportunity tax credit ( wotc ) program . due to the expiration of current tax credits and the uncertainty regarding the availability of tax credits under new or potentially extended programs , the effect on our 2012 effective tax rate can not be reasonably estimated at this time . our effective tax rate differs from the federal income tax statutory rate principally because of the effect of state and local income taxes . consolidated net income as a result of the matters discussed above , consolidated net income as a percentage of revenue for 2011 decreased to 4.3 % compared to 4.5 % for 2010 . 2010 compared with 2009 the following table sets forth 2010 income statement key components that we use to evaluate our financial performance on a consolidated and reportable segment basis , as well as the percentage increases of each compared 25 to 2009 amounts . the differences between the reportable segments ' operating results and other disclosed data and our consolidated financial statements relate primarily to corporate level transactions and recording of transactions at the reportable segment level which use methods other than generally accepted accounting principles . replace_table_token_10_th revenues consolidated consolidated revenues increased 11.7 % to $ 773,956,000 in 2010 compared to $ 692,695,000 in 2009 as a result of the factors discussed below under reportable segments . our major client in 2010 and 2009 accounted for 11 % and 12 % , respectively , of consolidated revenues . at both december 31 , 2010 and 2009 amounts due from such client represented less than 1 % of our accounts receivable balance . although we expect to continue the relationship with this client , there can be no assurance thereof , and the loss of such client , or a significant reduction in the revenues we receive from this client , would have a material adverse effect on the results of operations of our two operating segments . in addition , if such client changes its payment terms it would increase our accounts receivable balance and have a material adverse effect on our cash flows and cash and cash equivalents . reportable segments housekeeping 's 11.9 % net growth in reportable segment revenues resulted primarily from an increase in revenues attributable to service agreements entered into with new clients . excluding revenue from ces operations , housekeeping segment revenue would have increased 11.0 % . dietary 's 11.4 % net growth in reportable segment revenues is primarily a result of providing this service to an increasing number of existing housekeeping clients . excluding revenue from ces operations , dietary segment	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources at december 31 , 2011 , we had cash and cash equivalents , and marketable securities of $ 69,976,000 and working capital of $ 186,734,000 compared to december 31 , 2010 cash , cash equivalents and marketable securities of $ 83,129,000 and working capital of $ 181,244,000. we view our cash and cash equivalents and marketable securities as our principal measure of liquidity . our current ratio at december 31 , 2011 decreased to 5.1 to 1 from 5.5 to 1 at december 31 , 2010. this decrease resulted primarily from declines in our cash , cash equivalents and marketable securities and increases in accrued payroll , withheld payroll taxes expense primarily resulting from the timing of such payments at december 31 , 2011 from december 31 , 2010. our cash , cash equivalents and marketable securities declined at december 31 , 2011 from december 31 , 2010 , primarily due to the working capital investment required to support our 2011 revenue growth of 14.9 % and the payment of dividends to shareholders . the decrease was positively impacted by the increase in accounts and notes receivable resulting from our increase in revenues . the growth in accounts and notes receivable , net , exceeded the annual growth in revenues based on the revenue growth experienced in the latter portion of the year . on an historical basis , our operations have generally produced consistent cash flow and have required limited capital resources . we believe our current and near term cash flow positions will enable us to fund our continued anticipated growth . operating activities the net cash provided by our operating activities was $ 32,948,000 for the year ended december 31 , 2011. the principal sources of net cash flows from operating activities for 2011 were net income adjusted for non-cash charges to operations for bad debt provisions , stock-based compensation , depreciation and amortization .
% increase in the number of homes delivered to 8,000 homes . the increase in the number of homes delivered was partly attributable to the acquisition of wade jurney homes in june 2018. the increase in homes delivered , offset by the decrease in our average sales price , resulted in an increase in our home sales revenues of 17.6 % to $ 2.5 billion . for the year ended december 31 , 2019 , we generated income before income tax of $ 132.6 million and net income of $ 113.0 million . subject to deteriorating market conditions , we believe our operations are well positioned for future growth as a result of the markets in which we operate , our product offerings which span the home buying segment , our focus on affordable price points , as well as current and future inventories of attractive land positions . as we have grown , we have continued to focus on maintaining prudent leverage , and , as a result , we believe we are well positioned to execute on our growth strategy in order to optimize our stockholder returns . we anticipate the homebuilding markets in each of our operating segments to continue to be tied to both the local economy and the macro-economic environment . accordingly , our net sales , home deliveries , and average sales price in future years could be negatively affected by economic conditions such as decreases in employment and median household incomes , as well as decreases in household formations and increasing supply of inventories . additionally , our results could be impacted by a decrease in home affordability as a result of price appreciation or increases in mortgage interest rates or tightening of mortgage lending standards . on june 14 , 2018 , we acquired the remaining 50 % ownership interest in wjh , llc for $ 37.5 million . wade jurney homes specializes in providing single family homes for first time buyers . on the acquisition date , wjh had operations in alabama , florida , georgia , north carolina and south carolina . the 2018 results of wjh are included in our financial statements from june 14 through december 31 , 2018 and consisted of $ 210.1 million in revenue related to 1,377 home deliveries . strategy our strategy is focused on increasing the returns on our inventory while generating strong profitability . in general , we are focused on the following initiatives :  maintaining a strong balance sheet and prudent use of leverage as we grow ;  offering products that appeal to a broad range of entry-level , move-up and , lifestyle homebuyers based on each local market in which we operate . given the significant increases in average home sales prices across our markets , we have continued to enhance our focus on offering affordable housing options in each of our homebuyer segments ;  maintaining a strong pipeline of future land holdings , including utilizing lot option contracts to manage our risk to land holdings ; 39  increasing our market share within our existing markets through organic growth and or acquisitions of other homebuilders already operating in the market ;  expanding into new markets that meet our underwriting criteria either through organic start-up operations or through acquisitions of existing homebuilders ; and  controlling costs , including costs of home sales revenue and selling and general administrative expenses , and generating efficiencies to achieve increased profitability . our operating strategy has resulted in growth in revenue and income before income taxes over the last five years , and we believe it will continue to produce positive results . our operating strategy will continue to evolve to market changes , and we can not provide any assurances that our strategies will continue to be successful . 40 the following table summarizes our results of operations for the years ended december 31 , 2019 and 2018. replace_table_token_2_th nm – not meaningful ( 1 ) this is a non-gaap financial measure and should not be used as a substitute for the company 's operating results prepared in accordance with gaap . see the reconciliations to the most comparable gaap measure and other information within our homebuilding gross margin section in this management 's discussion and analysis of financial condition and results of operations . an analysis of any non-gaap financial measure should be used in conjunction with results presented in accordance with gaap . ( 2 ) homebuilding gross margin percentage is inclusive of a $ 2.0 million inventory impairment included within inventory impairment and other on our consolidated statements of operations . see note 14 – fair value disclosures in the notes to the consolidated financial statements for further detail . ‎ 41 results of operations by segment replace_table_token_3_th west in our west segment , for the year ended december 31 , 2019 , our income before income tax increased by $ 4.6 million to $ 43.0 million . our income before income tax included no purchase accounting adjustments during the year ended december 31 , 2019 and $ 14.3 million during the year ended december 31 , 2018. during the year ended december 31 , 2019 , we delivered 1,029 homes with an average sales price of $ 519.3 thousand and generated $ 534.4 million in home sales revenue in the west . the decrease in average sales price of homes delivered was primarily due to our shift towards more affordable product offerings . mountain in our mountain segment , for the year ended december 31 , 2019 , our income before income tax increased by $ 0.2 million to $ 89.2 million , as compared to $ 89.0 million for the same period in 2018 , primarily due to nominal increases in number of homes delivered and average sales price of homes delivered . story_separator_special_tag replace_table_token_13_th for the year ended december 31 , 2019 , we recorded impairment charges on five communities totaling $ 2.0 million . during the years ended december 31 , 2018 and 2017 , we recorded impairment charges on one and five communities , respectively , of which the amounts were nominal . the impairment charges are included in inventory impairments and other in our consolidated statement of operations . warranties estimated future direct warranty costs are accrued and charged to cost of sales in the period when the related homebuilding revenues are recognized . amounts accrued , which are included in accrued expenses and other liabilities on the consolidated balance sheet , are based upon historical experience rates . we subsequently assess the adequacy of our warranty accrual on a quarterly basis through an internally developed analysis that incorporates historical payment trends and adjust the amounts recorded if necessary . mortgage loans held for sale mortgage loans held-for-sale , including the rights to service the mortgage loans , as well as the derivative instrument used to economically hedge our interest rate risk , which are typically forward commitments on mortgage backed securities , are carried at fair value and changes in fair value are reflected in financial services revenue on the consolidated statement of operations . management believes carrying loans held-for-sale at fair value improves financial reporting by mitigating volatility in reported earnings caused by measuring the fair value of the loans and the derivative instruments used to economically hedge them . our net gains on the sale of mortgage loans were $ 32.2 million , $ 22.0 million and $ 5.8 million for the years ended december 31 , 2019 , 2018 , and 2017 , respectively , and are included in the financial services revenue on the consolidated statements of operations . stock-based compensation we estimate the grant date fair value of stock-based compensation awards and recognize the fair value as compensation costs over the requisite service period , which is generally three years , for all awards that vest . we value the fair value our restricted stock awards and restricted stock units equal to the closing price of our common stock on the new york stock exchange on the date of grant . stock-based compensation expense associated with outstanding performance share units is measured using the grant date fair value and is based on the estimated achievement of the established performance criteria at the end of each reporting period until the performance period ends , recognized on a straight-line basis over the performance period . stock-based compensation expense is only recognized for performance share units that we expect to vest , which we estimate based upon an assessment of the probability that the performance criteria will be achieved . the performance share units granted during the fiscal years ended december 31 , 2019 and 2018 have a three-year performance-based metric measured over performance periods from january 1 , 2019 to december 31 , 2021 and from january 1 , 2018 to december 31 , 2020 , respectively . stock-based compensation expense associated with outstanding performance share units is updated for actual forfeitures . income taxes we account for income taxes in accordance with asc 740 , income taxes , which requires recognition of deferred tax assets and liabilities at enacted income tax rates for the temporary differences between the financial reporting bases and the tax bases of its assets and liabilities . any effects of changes in income tax rates or tax laws are included in the provision for income taxes in the period of enactment . when it is more likely than not that a portion or all of a deferred tax asset will not be realized in the future , we provide a corresponding valuation allowance against the deferred tax asset . in addition , when it is more likely than not that a tax position will be sustained upon examination by a tax authority that has full knowledge of all relevant information , we measure the amount of tax benefit from the position and record the largest amount of tax benefit that is more likely than not of being realized after settlement with a tax authority . our policy is to recognize interest to be paid on an underpayment of income taxes in interest expense and any related statutory penalties in the provision for income taxes on our consolidated statements of operations . 48 goodwill we evaluate goodwill for possible impairment in accordance with accounting standards codification ( which we refer to as “ asc ” ) topic 350 , intangibles–goodwill and other , on an annual basis , or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable . we use a three step process to assess whether or not goodwill can be realized . the first step is a qualitative assessment that analyzes current economic indicators associated with a particular reporting unit . for example , we analyze changes in economic , market and industry conditions , business strategy , cost factors , and financial performance , among others , to determine if there would be a significant decline in the fair value of a particular reporting unit . if the qualitative assessment indicates a stable or improved fair value , no further testing is required . if a qualitative assessment indicates that a significant decline to fair value of a reporting unit is more likely than not , or if a reporting unit 's fair value has historically been closer to its carrying value , we will proceed to the second step where we calculate the fair value of a reporting unit based on discounted future cash flows . if this step indicates that the carrying value of a reporting unit is in excess of its fair value , we will proceed to the third step where the fair value of the reporting unit will be allocated to assets	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources overview our principal uses of capital for the year ended december 31 , 2019 were our land purchases , land development , home construction , and the payment of routine liabilities . we use funds generated by operations , available borrowings under our revolving credit facility , and proceeds from sales of common stock , including our current at-the-market facility , to fund our short term working capital obligations and fund our purchases of land , as well as land development and home construction activities . cash flows for each of our communities depend on the stage in the development cycle , and can differ substantially from reported earnings . early stages of development or expansion require significant cash outlays for land acquisitions , entitlements and other approvals , and construction of model homes , roads , utilities , general landscaping and other amenities . because these costs are a component of our inventory and not recognized in our statements of operations until a home closes , we incur significant cash outlays prior to our recognition of earnings . in the later stages of community development , cash inflows may significantly exceed earnings reported for financial statement purposes , as the cash outflow associated with home and land construction was previously incurred . from a liquidity standpoint , we are actively acquiring and developing lots in our markets to maintain and grow our lot supply and active selling communities . as we continue to expand our business , we expect that our cash outlays for land purchases and land development to grow our lot inventory will continue to exceed our cash generated by operations . our financial services operations use funds generated from operations , and availability under our mortgage repurchase facilities to finance its operations including originations of mortgage loans to our homebuyers . under our shelf registration statement , which we filed with the sec in july 2018 and was automatically effective upon filing , we have the ability to access the debt and equity capital markets in an aggregate offering amount of up to $ 869 million , as needed as part of our ongoing financing strategy and subject to market conditions .
consistent with industry practices , we require payment from most customers within 30 days of the invoice date . we have an estimation procedure , based on historical data , current economic conditions and recent changes in the aging of the receivables , which we use to record reserves throughout the year . in the last five years , write-offs against our allowance for doubtful accounts have averaged $ 0.1 million per year . a 20 % change in our estimate at december 31 , 2011 would have resulted in a change in income before income taxes of less than $ 0.1 million . 15 reserve for returns and allowances we estimate the gross profit impact of returns and allowances for previously recorded sales . this reserve is calculated on historical and statistical returns and allowances data and adjusted as trends in the variables change . a 20 % change in our estimate at december 31 , 2011 would have resulted in a change in income before income taxes of $ 0.1 million . inventories inventories are valued at the lower of cost , using the average cost method , or market . we continually monitor our inventory levels at each of our distribution centers . our reserve for inventory obsolescence is based on the age of the inventory , movements of our inventory over the prior twelve months and the experience of our purchasing and sales departments in estimating demand for the product in the succeeding year . our inventories are generally not susceptible to technological obsolescence . a 20 % change in our estimate at december 31 , 2011 would have resulted in a change in income before income taxes of $ 0.6 million . intangible assets the company 's intangible assets , excluding goodwill , represent purchased trade names , customer relationships , and non-compete agreements . trade names are not being amortized and are treated as indefinite lived assets . trade names are tested for recoverability on an annual basis in october of each year . this test was performed in october 2011 and no impairment was deemed necessary . the company assigns useful lives to its intangible assets based on the periods over which it expects the assets to contribute directly or indirectly to the future cash flows of the company . customer relationships are amortized over 6 or 7 year useful lives and non-compete agreements are amortized over a 1 year useful life . if events or circumstances were to indicate that any of the company 's definite-lived intangible assets might be impaired , the company would assess recoverability based on the estimated undiscounted future cash flows to be generated from the applicable intangible asset . vendor rebates many of our arrangements with our vendors entitle us to receive a rebate of a specified amount when we achieve any of a number of measures , generally related to the volume of purchases from the vendor . we account for such rebates as a reduction of the prices of the vendor 's products and therefore as a reduction of inventory until we sell the product , at which time such rebates reduce cost of sales . throughout the year , we estimate the amount of the rebates earned based on purchases to date relative to the total purchase levels expected to be achieved during the rebate period . we continually revise these estimates to reflect rebates expected to be earned based on actual purchase levels and forecasted purchase volumes for the remainder of the rebate period . a 20 % change in our estimate of total rebates earned during 2011 would have resulted in a change in income before income taxes of $ 1.5 million for the year ended december 31 , 2011. goodwill goodwill represents the excess of the amount we paid to acquire businesses over the estimated fair value of tangible assets and identifiable intangible assets acquired , less liabilities assumed . at december 31 , 2011 , our goodwill balance was $ 25.1 million , representing 14.0 % of our total assets . we test goodwill for impairment annually , or more frequently if indications of possible impairment exist , by applying a fair value-based test . our goodwill impairment test is performed annually in october . based on our 2011 goodwill impairment test , we believe the goodwill on our balance sheet is not impaired . if circumstances change or events occur to indicate that our fair market value has fallen below book value , we will compare the estimated fair value of the goodwill to its carrying value . if the carrying value of goodwill exceeds the estimated fair value of goodwill , we will recognize the difference as an impairment loss in operating income . the company is anticipating significant growth in the recently acquired businesses and if this growth is not achieved , a goodwill impairment may result . sales we generate most of our sales by providing wire and cable and related hardware to our customers , as well as billing for freight charges . we recognize revenue upon shipment of our products to customers from our distribution centers or directly from our suppliers . sales incentives earned by customers are accrued in the same month as the shipment is invoiced and are accounted for as a reduction in sales . 16 cost of sales cost of sales consists primarily of the average cost of the wire and cable and related hardware that we sell . we also incur shipping and handling costs in the normal course of business . cost of sales also reflects cash discounts for prompt payment to vendors and vendor rebates generally related to annual purchase targets , as well as inventory obsolescence charges . operating expenses operating expenses include all expenses , excluding freight , incurred to receive , sell and ship product and administer the operations of the company . salaries and commissions . story_separator_special_tag we believe that we will have adequate availability of capital to fund our present operations , meet our commitments on our existing debt , continue the stock repurchase program , continue to fund our dividend payments , and fund anticipated growth over the next twelve months , including expansion in existing and targeted market areas . we continually seek potential acquisitions and from time to time hold discussions with acquisition candidates . if further suitable acquisition opportunities or working capital needs arise that would require additional financing , we believe that our financial position and earnings history provide a solid base for obtaining additional financing resources at competitive rates and terms . additionally , based on market conditions , we may decide to issue additional shares of common or preferred stock to raise funds . 22 loan and security agreement on september 30 , 2011 , we entered into a third amended and restated loan and security agreement ( the “ 2011 loan agreement ” ) with certain lenders and bank of america , n.a . , as agent . the 2011 loan agreement provides for a $ 100 million revolving credit facility and expires on september 30 , 2016. availability under the 2011 loan agreement is limited to a borrowing base equal to 85 % of the value of eligible accounts receivable , plus 65 % of the value of eligible inventory , less certain reserves . the 2011 loan agreement is secured by a lien on substantially all our property , other than real estate . portions of the loan under the 2011 loan agreement may be converted to libor loans in minimum amounts of $ 1.0 million and integral multiples of $ 0.1 million . libor loans bear interest at the british bankers association libor rate plus 125 to 200 basis points based on availability , and loans not converted to libor loans bear interest at a fluctuating rate equal to the greatest of the agent 's prime rate , the federal funds rate plus 50 basis points , or 30-day libor plus 150 basis points . additionally , we are obligated to pay an unused facility fee on the unused portion of the loan commitment . unused commitment fees are 25 or 30 basis points , depending on the amount of the unused commitment . covenants in the 2011 loan agreement require us to maintain certain minimum financial ratios and availability levels . repaid amounts can be re-borrowed subject to the borrowing base . as of december 31 , 2011 , we were in compliance with all financial covenants . contractual obligations the following table describes our cash commitments to settle contractual obligations as of december 31 , 2011. replace_table_token_12_th ( 1 ) these obligations reflect purchase orders outstanding with manufacturers as of december 31 , 2011. we believe that some of these obligations may be cancellable upon negotiation with our vendors , but we are treating these as non-cancellable for this disclosure due to the absence of an express cancellation right . capital expenditures we made capital expenditures of $ 1.3 million in the year ended december 31 , 2011 and $ 0.5 million in each of the years ended december 31 , 2010 and 2009. off-balance sheet arrangements we have no off-balance sheet arrangements , other than operating leases . share repurchase program in 2007 , the board of directors approved a stock repurchase program , where the company is authorized to purchase up to $ 75 million of its outstanding shares of common stock , depending on market conditions , trading activity , business conditions and other factors . the program was scheduled to expire on december 31 , 2009 but was initially extended through december 31 , 2011 and on november 4 , 2011 was further extended through december 31 , 2012. shares of stock purchased under the program are currently being held as treasury stock and may be issued upon the exercise of options , as restricted stock , to fund acquisitions , or for other uses as authorized by the board of directors . there were no shares repurchased during 2011 and 2010 under the stock repurchase program . 23 financial derivatives we have no financial derivatives . market risk management we are exposed to market risks arising from changes in market prices , including movements in interest rates and commodity prices . interest rate risk borrowings under our 2011 loan agreement bear interest at variable interest rates and therefore are sensitive to changes in the general level of interest rates . at december 31 , 2011 , the weighted average interest rate on our $ 48.0 million of variable interest debt was approximately 2.29 % . while our variable rate debt obligations expose us to the risk of rising interest rates , management does not believe that the potential exposure is material to our overall financial performance or results of operations . based on december 31 , 2011 borrowing levels , a 1.0 % increase or decrease in the applicable interest rates would have a $ 0.5 million effect on our annual interest expense . commodity risk we are subject to periodic fluctuations in copper prices , as our products have varying levels of copper content in their construction . in addition , varying steel prices also impact certain products we purchase . profitability is influenced by these fluctuations as prices change between the time we buy and sell our products . foreign currency exchange rate risk our products are purchased and invoiced in u.s. dollars . accordingly , we do not believe we are exposed to foreign exchange rate risk . climate risk our operations are subject to inclement weather conditions including hurricanes , earthquakes and abnormal weather events . our previous experience from these events has had a minimal effect on our operations and results . factors affecting future results this annual report on form 10-k contains statements that may be considered forward-looking . these statements can	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources our primary capital needs are for working capital obligations , capital expenditures , dividend payments and other general corporate purposes , including acquisitions and the stock repurchase program . our primary sources of working capital are cash from operations supplemented by bank borrowings . liquidity is defined as the ability to generate adequate amounts of cash to meet the current need for cash . we assess our liquidity in terms of our ability to generate cash to fund our operating activities . significant factors which could affect liquidity include the following : · the adequacy of available bank lines of credit ; · the ability to attract long-term capital with satisfactory terms ; · cash flows generated from operating activities ; · capital expenditures ; · payment of dividends ; · acquisitions ; and · additional stock repurchases 21 comparison of years ended december 31 , 2011 and 2010 our net cash provided by operating activities was $ 14.3 million in 2011 compared to $ 19.3 million in 2010. our net income increased by $ 11.1 million or 128.3 % to $ 19.7 in 2011 million from $ 8.6 million in 2010. changes in our operating assets and liabilities resulted in cash used in operating activities of $ 8.8 million in 2011. trade accounts payable decreased $ 9.9 million primarily due to payment in early 2011 of $ 4.9 million of vendor invoices under dispute at december 31 , 2010 and a plannedslow down of inventory purchases for our legacy business in december 2011. inventory increased $ 2.8 million as a result of the acquired businesses .
in addition , if the actual compensation of a placed candidate exceeds the estimated compensation , we often are authorized to bill the client for one-third of the excess . indirect expenses are calculated as a percentage of the retainer with certain dollar limits per search . 18 key performance indicators we manage and assess heidrick & struggles ' performance through various means , with the primary financial and operational measures including net revenue , operating income , operating margin , adjusted ebitda ( non-gaap ) , and adjusted ebitda margin ( non-gaap ) . executive search and leadership consulting performance is also measured using consultant headcount . specific to executive search , confirmation trends , consultant productivity and average revenue per search are used to measure performance . revenue is driven by market conditions and a combination of the number of executive search engagements and leadership consulting and culture shaping projects and the average revenue per search or project . with the exception of compensation expense , incremental increases in revenue do not necessarily result in proportionate increases in costs , particularly operating and administrative expenses , thus potentially improving operating margins . the number of consultants , confirmation trends , number of searches or projects completed , productivity levels and the average revenue per search or project will vary from quarter to quarter , affecting net revenue and operating margin . our compensation model at the executive search consultant level there are fixed and variable components of compensation . individuals are rewarded for their performance based on a system that directly ties a portion of their compensation to the amount of net revenue for which they are responsible . a portion of the reward may be based upon individual performance against a series of non-financial measures . credit towards the variable portion of an executive search consultant 's compensation is earned by generating net revenue for winning and executing work . each quarter , we review and update the expected annual performance of all executive search consultants and accrue variable compensation accordingly . the amount of variable compensation that is accrued for each executive search consultant is based on a tiered payout model . overall company performance determines the amount available for total variable compensation . the more net revenue that is generated by the consultant , the higher the percentage credited towards the consultant 's variable compensation and thus accrued by our company as expense . the mix of individual consultants who generate the revenue can significantly affect the total amount of compensation expense recorded , which directly impacts operating margin . as a result , the variable portion of the compensation expense may fluctuate significantly from quarter to quarter . the total variable compensation is discretionary and is based on company-wide financial targets approved by the human resources and compensation committee of the board of directors . a portion of our executive search consultants ' and management cash bonuses is deferred and paid over a three-year vesting period . the compensation expense related to the amounts being deferred is recognized on a graded vesting attribution method over the requisite service period . this service period begins on january 1 of the respective fiscal year and continues through the deferral date , which coincides with our bonus payments in the first quarter of the following year , and for an additional three year vesting period . the deferrals are recorded in accrued salaries and employee benefits in the consolidated balance sheets . 2017 overview consolidated net revenue was $ 621.4 million for the year ended december 31 , 2017 , an increase of $ 39.0 million or 6.7 % compared to december 31 , 2016. specific to executive search , our largest business , consultant productivity measured by net executive search revenue per consultant was $ 1.6 million for each of the years ended december 31 , 2017 and 2016. average revenue per executive search was $ 120,300 for the year ended december 31 , 2017 compared to $ 117,700 for the year ended december 31 , 2016. operating loss as a percentage of net revenue was 4.3 % in 2017 compared to operating margin of 6.0 % in 2016. the change in operating income was primarily due to an increase in net revenue of $ 39.0 million , which was offset by an increase in salaries and employee benefits expense of $ 34.1 million , an increase in general and administrative expenses of $ 0.2 million , impairment charges of $ 50.7 million and restructuring charges of $ 15.7 million . salaries and employee benefits expense as a percentage of net revenue was 69.9 % in 2017 and 68.7 % in 2016. general and administrative expense as a percentage of net revenue was 23.7 % in 2017 and 25.3 % in 2016 we ended the year with combined cash and cash equivalents of $ 207.5 million , an increase of $ 42.5 million compared to $ 165.0 million at december 31 , 2016. the increase is primarily due increased cash collections and lower acquisition investments . these increases in cash were partially offset by cash paid for restructuring charges . we pay the majority of bonuses in the first quarter following the year in which they were earned . employee bonuses are accrued throughout the year and are based on the company 's performance and the performance of the individual employee . we expect to pay approximately 19 $ 148.0 million in bonuses related to 2017 performance in march and april 2018. in january 2018 , we paid approximately $ 13.0 million in cash bonuses deferred in prior years . 2018 outlook we are currently forecasting 2018 first quarter net revenue of between $ 150 million and $ 160 million . story_separator_special_tag the impairment charge is recorded within impairment charges in the condensed consolidated statement of comprehensive income ( loss ) for the year ended december 31 , 2017. leadership consulting incurred approximately $ 0.9 million in restructuring charges for the year ended december 31 , 2017. these charges include approximately $ 0.6 million in professional fees and other expenses , $ 0.2 million in severance related charges and $ 0.1 million in office related charges . the leadership consulting segment reported an operating loss of $ 15.6 million in 2017 , a decrease of $ 14.1 million , compared to an operating loss of $ 1.5 million in 2016. the increased operating loss primarily reflects $ 11.6 million of impairment charges for goodwill and intangible assets , as well as restructuring charges of $ 0.9 million . excluding the impact of impairment and restructuring charges , the leadership consulting segment reported an operating loss of $ 3.1 million . culture shaping the culture shaping segment reported net revenue of $ 28.1 million in 2017 , a decrease of 22.3 % compared to $ 36.2 million in 2016. net revenue decreased due to a decline in the volume of client work . excluding the impact of exchange rate fluctuations , which negatively impacted results by $ 0.2 million , or 0.8 % , net revenue decreased $ 7.9 million , or 21.7 % . 25 salaries and employee benefits expense decreased $ 5.9 million , primarily due to investments in new and existing consultants incurred in the prior year that did not reoccur in 2017. general and administrative expenses decreased $ 3.6 million primarily due to lower intangible amortization , earnout accretion and professional fees , partially offset by increases in internal travel and office occupancy costs . impairment charges for the year ended december 31 , 2017 were $ 39.2 million as a result of an interim impairment evaluation on the goodwill and amortizable intangible assets related to our culture shaping reporting unit . culture shaping incurred approximately $ 2.5 million in restructuring charges for the year ended december 31 , 2017. these charges include approximately $ 1.9 million in severance related charges and $ 0.6 million in professional fees and other expenses . the culture shaping segment reported an operating loss of $ 41.8 million in 2017 , a decrease of $ 40.3 million , compared to an operating loss of $ 1.6 million in 2016. the increase in operating loss is primarily attributed to goodwill and intangible impairment charges of $ 39.2 million and restructuring charges of $ 2.5 million . excluding the impact of impairment and restructuring charges , the culture shaping segment reported an operating loss of $ 0.2 million . global operations support global operations support expenses in 2017 increased $ 7.6 million , or 16.0 % , to $ 54.8 million from $ 47.2 million in 2016. salaries and employee benefits expense decreased $ 0.1 million due to lower stock compensation expense as a result of forfeitures during the year , separation costs , and management and support bonuses . these decreases were partially offset by increases in deferred compensation plan expenses and base salaries and payroll taxes . general and administrative expense increased $ 2.2 million due to increases in internal travel , audit fees and information technology costs that were partially offset by decreases in professional fees and hiring fees and temporary labor . global operations support incurred approximately $ 5.5 million in restructuring charges for the year ended december 31 , 2017. these charges include approximately $ 4.5 million of severance related charges and $ 0.9 million of professional fees and other costs . year ended december 31 , 2016 compared to year ended december 31 , 2015 total revenue . consolidated total revenue increased $ 52.6 million , or 9.6 % , to $ 600.9 million in 2016 from $ 548.3 million in 2015. the increase in total revenue was primarily due to the increase in revenue before reimbursements ( net revenue ) . revenue before reimbursements ( net revenue ) . consolidated net revenue increased $ 51.2 million or 9.6 % , to $ 582.4 million in 2016 from $ 531.1 million in 2015. excluding the impact of exchange rate fluctuations , which decreased revenue by $ 11.4 million , or 2.1 % , net revenue increased $ 62.6 million , or 11.8 % . executive search net revenue was $ 507.4 million in 2016 , an increase of $ 31.6 million compared to 2015. the increase in executive search net revenue was the result of growth in the americas and europe . leadership consulting net revenue increased $ 19.8 million , or 103.8 % , to $ 38.8 million in 2016 from $ 19.0 million in 2015. the increase in leadership consulting net revenue was primarily the result of the co company , dsi and philosophy ib acquisitions . culture shaping net revenue was $ 36.2 million in 2016 , a decrease of $ 0.1 million compared to 2015. the number of executive search and leadership consulting consultants was 335 and 22 , respectively , as of december 31 , 2016 compared to 308 and 26 , respectively , as of december 31 , 2015. specific to executive search , our largest business , productivity as measured by annualized net executive search revenue per consultant was $ 1.6 million and $ 1.5 million for the years ended december 31 , 2016 and 2015 , respectively . the number of confirmed searches increased 7.1 % compared to 2015. the average revenue per executive search increased to $ 117,700 for the year ended december 31 , 2016 compared to $ 115,300 for the year ended december 31 , 2015. salaries and employee benefits . consolidated salaries and employee benefits expense increased $ 30.7 million or 8.3 % , to $ 400.1 million in 2016 from $ 369.4 million in 2015. the increase was due to higher fixed compensation of $ 31.7	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash and cash equivalents . cash and cash equivalents at december 31 , 2017 were $ 207.5 million , an increase of $ 42.5 million compared to $ 165.0 million at december 31 , 2016 . the $ 207.5 million of cash and cash equivalents at december 31 , 29 2017 includes $ 103.0 million held by our foreign subsidiaries . a portion of the $ 103.0 million is considered permanently reinvested in these foreign subsidiaries . if these funds were required to satisfy obligations in the u.s. , the repatriation of these funds could cause us to incur additional foreign withholding taxes . we expect to pay approximately $ 148.0 million in variable compensation related to 2017 performance in march and april 2018 . in january 2018 , we paid approximately $ 13.0 million in variable compensation that was deferred in prior years . cash flows provided by operating activities . in 2017 , cash provided by operating activities was $ 70.0 million , principally reflecting net income net of non-cash charges of $ 21.1 million , an increase in accrued expenses of $ 18.3 million and a restructuring accrual of $ 13.0 million . the increae in accrued expenses primarily reflects approximately $ 148 million of current year bonus accruals partially offset by $ 128 million of bonus payments for 2016 made in early 2017. in 2016 , cash provided by operating activities was $ 24.8 million , primarily reflecting depreciation and amortization expense of $ 16.4 million , net income of $ 15.4 million , stock based compensation expense of $ 6.4 million and an increase in the net retirement and pension plan liability of $ 4.2 million , partially offset by an increase in accounts receivable of $ 14.4 million , a change in other assets and liabilities of $ 3.0 million and an increase in prepaid expenses of $ 2.3 million .
gasoline distribution and station operations as of december 31 , 2012 , we had a portfolio of approximately 1,000 owned , leased and or supplied gasoline stations primarily in the northeast . 48 in september 2010 , we completed the acquisition from exxonmobil corporation of 190 retail gasoline stations , together with the rights to ( i ) supply mobil-branded fuel to those stations as well as an additional 31 existing locations in massachusetts , new hampshire and rhode island , and ( ii ) expand supply opportunities for mobil-branded and exxon-branded fuel in certain other new england states . this acquisition expanded our wholesale supply business and added vertical integration to our transportation fuel business in new england . on march 1 , 2012 , we acquired alliance , a gasoline distributor and operator of gasoline stations and convenience stores . as of the date of the acquisition , alliance 's portfolio included approximately 540 gasoline stations in the northeast , of which it owned or held under long-term lease approximately 250 stations , and had supply contracts for the remaining stations . the alliance acquisition expanded our geographic footprint for gasoline stations to include connecticut , new jersey , new york , pennsylvania , maine and vermont . alliance is a top-tier distributor of multiple brands , including exxon , mobil , shell , sunoco , citgo and gulf . prior to the closing of the acquisition , alliance was wholly owned by ae holdings which is approximately 95 % owned by members of the slifka family . see note 3 of notes to consolidated financial statements for additional information . on april 26 , 2012 , we entered into an agreement with getty realty to supply and provide management services to more than 200 of its gasoline stations in new york and new jersey . on november 19 , 2012 , we signed a long-term lease agreement with getty realty for approximately 90 of those 200 sites , which enables us to supply gasoline to and operate gasoline stations in the new york city boroughs of queens , manhattan and the bronx as well as in long island and westchester county . the lease with getty realty significantly expands our retail gasoline and fuel distribution presence in the new york metro region . commercial this segment includes sales and deliveries to end user customers in the public sector and to commercial and industrial end users of unbranded gasoline , home heating oil , diesel , kerosene , residual oil , renewable fuels and natural gas . our commercial segment also includes sales of custom blended distillates and residual oil delivered by barge or from a terminal dock to ships through bunkering activity . products and operational structure our products primarily include gasoline , distillates , residual oil , renewable fuels , crude oil and natural gas . we sell gasoline to branded and unbranded gasoline stations and other resellers of transportation fuels , as well as to customers in the public sector . the distillates we sell are used primarily for fuel for trucks and off-road construction equipment and for space heating of residential and commercial buildings . we receive and move crude oil by rail from the mid-continent region of the united states and canada to the east coast and , as of february 2013 , the west coast and sell it to refiners . we sell residual oil to major housing units , such as public housing authorities , colleges and hospitals and large industrial facilities that use processed steam in their manufacturing processes . in addition , we sell bunker fuel , which we can custom blend , to cruise ships , bulk carriers and fishing fleets . we sell our natural gas to end users . we have increased our sales in the non-weather sensitive components of our business , such as transportation fuels ; however , we are still subject to the impact that warmer weather conditions may have on our home heating oil and residual oil sales . due to the nature of our business and our customers ' reliance , in part , on consumer travel and spending patterns , we may experience more demand for gasoline and gasoline blendstocks during the late spring and summer months than during the fall and winter . travel and recreational activities are typically higher in these months in the geographic areas in which we operate , increasing the demand for gasoline and gasoline blendstocks that we distribute . therefore , our volumes in gasoline and gasoline blendstocks are typically higher in the second and third quarters of the calendar year . as demand for some of our refined petroleum products , specifically home heating oil and residual oil for space heating purposes , is generally greater during the winter months , heating oil and residual oil sales are generally higher during the first and fourth quarters of the calendar year . these factors may result in significant fluctuations in our quarterly operating results . generally , our wholesale customers use their own vehicles or contract carriers to take delivery of the gasoline and distillate products at bulk terminals and inland storage facilities that we own or control or with which we have throughput or exchange arrangements . our crude oil is aggregated by truck or pipeline in the mid-continent , transported on land by train and shipped to refineries on the east coast in barges . ethanol is shipped primarily by rail and by barge . for our commercial customers , we generally arrange the delivery of the product to the customer 's designated location , typically hiring third-party common carriers to deliver the product . story_separator_special_tag distributable cash flow is a quantitative standard used by the investment community with respect to publicly traded partnerships . distributable cash flow should not be considered an alternative to net income , operating income , cash flow from operations , or any other measure of financial performance presented in accordance with gaap . in addition , our distributable cash flow may not be comparable to distributable cash flow or similarly titled measures of other companies . 53 selling , general and administrative expenses our sg & a expenses include , among other things , marketing costs , corporate overhead , employee salaries and benefits , pension and 401 ( k ) plan expenses , discretionary bonuses , non-interest financing costs , professional fees and information technology expenses . employee-related expenses including employee salaries , discretionary bonuses and related payroll taxes , benefits , and pension and 401 ( k ) plan expenses are paid by our general partner which , in turn , is reimbursed for these expenses by us . operating expenses operating expenses are costs associated with the operation of the terminals and gasoline stations used in our business . lease payments and storage expenses , maintenance and repair , utilities , taxes , labor and labor-related expenses comprise the most significant portion of our operating expenses . these expenses remain relatively stable independent of the volumes through our system but fluctuate slightly depending on the activities performed during a specific period . net income per diluted limited partner unit we use net income per diluted limited partner unit to measure our financial performance on a per-unit basis . net income per diluted limited partner unit is defined as net income , divided by the weighted average number of outstanding diluted common units , or limited partner units , during the period . degree day a `` degree day `` is an industry measurement of temperature designed to evaluate energy demand and consumption . degree days are based on how far the average temperature departs from a human comfort level of 65°f . each degree of temperature above 65°f is counted as one cooling degree day , and each degree of temperature below 65°f is counted as one heating degree day . degree days are accumulated each day over the course of a year and can be compared to a monthly or a long-term ( multi-year ) average , or normal , to see if a month or a year was warmer or cooler than usual . degree days are officially observed by the national weather service and officially archived by the national climatic data center . for purposes of evaluating our results of operations , we use the normal heating degree day amount as reported by the national weather service at its logan international airport station in boston , massachusetts . years ended december 31 , 2012 , 2011 and 2010 significant activities-2012 during 2012 , we continued to expand our gasoline distribution and station operations segment . on march 1 , 2012 , we acquired alliance , a gasoline distributor and operator of gasoline stations and convenience stores . as of the date of the acquisition , alliance 's portfolio included approximately 540 gasoline stations in the northeast , of which it owned or held under long-term lease approximately 250 stations , and had supply contracts for the remaining stations . the alliance acquisition expanded our geographic footprint for gasoline stations to include connecticut , new jersey , new york , pennsylvania , maine and vermont . alliance is a top-tier distributor of multiple brands , including exxon , mobil , shell , sunoco , citgo and gulf . on april 26 , 2012 , we entered into an agreement with getty realty to supply and provide management services to more than 200 of its gasoline stations in new york and new jersey . on november 19 , 2012 , we signed a long-term lease agreement with getty realty for approximately 90 of those 200 sites to supply and operate gasoline station in the new york city boroughs of queens , manhattan and the bronx as well as in long island and westchester county . the initial lease term for the locations is 15 years and includes multiple five-year renewal options . the lease with getty realty significantly expands our retail gasoline and fuel distribution presence in the new york metro region . 54 in our wholesale segment , we continued our expansion into crude oil logistics , including the gathering , storage , transportation and marketing of crude oil . we completed construction on our new 100,000 barrel tank and truck offloading facility in columbus , north dakota as part of the development of that location as a hub for the gathering , storage , transportation and marketing of crude oil and other products . in addition , in albany , new york , we completed a build-out project that increased rail receipts and throughput storage capacities of ethanol and crude oil and converted certain storage tanks for the handling of crude oil . this expansion increased our capacity to receive and distribute crude oil and other products from the mid-continent from 55,000 barrels per day to 160,000 barrels per day and allows the terminal to offload two 120-car unit trains in a 24-hour period . our rail expansion serves to enhance our `` virtual pipeline `` solution for the transportation of crude oil and other products from the mid-continent region to albany . our rail shipments to albany average four or five days , with some shipments completed in as little as two and a half days . from albany , it is then a one to one and a half day trip by barge to the east coast refineries . we continued the construction of a new rail-fed propane storage and distribution facility near our terminal in albany , new york . this will be a single line rail haul facility serviced by	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flow replace_table_token_10_th cash flow from operating activities generally reflects our net income , depreciation and amortization , balance sheet changes arising from inventory purchasing patterns , the timing of collections on our accounts receivable , the seasonality of part of our business , fluctuations in petroleum product prices , working capital requirements and general market conditions . net cash provided by operating activities was $ 232.4 million for 2012 compared to net cash used in operating activities of $ 17.4 million for 2011 , for a year-over-year increase in cash provided by operating activities of $ 249.8 million . net cash provided by operating activities includes $ 46.7 million in net income for 2012. exclusive of balances related to alliance as of the acquisition date ( see note 3 of notes to consolidated financial statements ) , we had an increase in the carrying value of accounts payable of $ 183.9 million due to higher prices year over year and to the expansion of our crude oil activities . we also had an increase in the carrying value of accrued expenses and other current liabilities of $ 30.1 million offset by an increase in accounts receivable of $ 75.1 million due to increased prices year over year and to the growth in our gasoline distribution business . inventories decreased by $ 29.5 million due to carrying lower levels of inventory . in addition , through the use of regulated exchanges or derivatives , we maintain a position that is substantially hedged with respect to our inventories . specifically , due to market direction , the contracts supporting our forward fixed price hedge program required margin payments to the nymex of $ 9.8 million and $ 10.9 million for 2012 and 2011 , respectively . net cash used in operating activities was $ 17.4 million for 2011 compared to $ 87.2 million for 2010 , for a year-over-year decrease in cash used in operating activities of $ 69.8 million .
as part of our continued efforts in environmental stewardship , we recently established our carbon reduction vision for montana , committing to reduce the carbon intensity of our montana electric energy portfolio 90 percent by 2045 , as compared with our 2010 carbon intensity baseline . over the last decade , we have already reduced the carbon intensity of our energy generation in montana by more than 50 percent . our vision for the future builds on the progress we have already made . already , the foundation of our energy generation is our hydroelectric system , which is 100 percent carbon free and is readily available capacity . for us , wind generation is a close second and continues to grow . while utility-scale solar energy is not a significant portion of our energy mix today , we expect it to evolve along with advances in energy storage . we are committed to working with our customers and communities to help them achieve their sustainability goals and add new technology on our system . how we performed in 2020 compared to our 2019 results replace_table_token_6_th consolidated net income in 2020 was $ 155.2 million as compared with $ 202.1 million in 2019. this decrease was primarily due to an income tax benefit in 2019 , lower gross margin in 2020 due primarily to warmer winter weather and impacts of the covid-19 pandemic , a disallowance of prior period supply costs , lower supply cost recovery , and higher depreciation and depletion expense , offset in part by a decrease in operating , general and administrative expenses . significant trends and regulation covid-19 pandemic we are one of many companies providing essential services during the national emergency related to the covid-19 pandemic . our level of service to our 743,000 customers remains uninterrupted . we implemented a comprehensive set of actions to help our customers , communities , and employees , while maintaining our commitments to provide reliable service and to continue to monitor and adapt our financial business plan for the evolving covid-19 pandemic challenges . in march , we voluntarily informed both our retail customers and state regulators that disconnections for non-payment would be temporarily suspended , and we have provided an incremental $ 400,000 in charitable contributions and aid to assist the communities we serve . our ceo made an official declaration of emergency in accordance with our continuity of operations plan and emergency standard operating procedures , implementing an incident command structure that remains in effect . we have taken extra 34 precautions for our employees who work in the field and for employees who continue to work in our facilities . this includes implementation of work from home policies , social-distancing protocols , face-covering directives , and travel restrictions where appropriate . currently , we do not anticipate any employee layoffs and are continuing to hire for critical positions to maintain our high level of reliability and customer service . we continue to implement strong physical and cyber-security measures to enable our systems to continue to serve our operational needs with a remote workforce and to keep our company running to provide high quality service to our customers . in august , we advised customers that we would resume the disconnection process for customers whose accounts are in arrears . however , beginning in november our normal winter disconnection procedures were in effect . 2020 impact - the covid-19 pandemic has impacted our financial results with a reduction in our commercial and industrial sales volumes , offset in part by an increase in usage by residential customers . we also experienced an increase in certain operating expenses including an increase in uncollectible accounts and interest expense offset in part by lower operating expenses as detailed below . covid-19 continues to be an evolving situation and we expect to continue to experience impacts to our financial results in 2021. replace_table_token_7_th ( 1 ) non-gaap financial measure . see `` non-gaap financial measure `` above . ( 2 ) income tax benefit calculated using a 25.3 % effective tax rate we submitted accounting order requests in montana and south dakota to allow for the deferral of uncollectible accounts expense in excess of amounts currently recovered from customers and to determine ratemaking treatment in a future proceeding . the sdpuc issued an order in august 2020 , authorizing deferral of costs for possible recovery through future rates . as of december 31 , 2020 we have deferred $ 0.2 million of uncollectible accounts expense into a regulatory asset in south dakota . the mpsc issued an order in november 2020 , declining to authorize establishment of a regulatory asset for the deferral of the incremental bad debt expense . we are working with customers who have been unable to pay during the covid-19 pandemic , including offering extended payment arrangements . in each of our jurisdictions , we resumed disconnection procedures for non-payment during the third quarter of 2020 , supporting our efforts to reduce past due customer balances . we are subject to certain annual winter disconnection procedures , which went into effect on november 1st and will remain in effect through march 31st . the continued progression of and global response to the covid-19 pandemic increases the risk of delays in construction activities and equipment deliveries related to our capital projects , including potential delays in obtaining permits from government agencies , resulting in a potential deferral of capital expenditures . while we have not experienced significant supply 35 chain challenges to date and were able to execute on over $ 400 million in planned capital investment projects during 2020 , we continue to closely manage and monitor developments in our supply chain . the ongoing impacts of the covid-19 pandemic remain uncertain . story_separator_special_tag due to actual price escalation , which was less than estimated ( $ 2.2 million in the current period compared with $ 3.3 million in the prior period ) ; and higher costs of approximately $ 2.2 million , due to a $ 0.9 million reduction in costs for the adjustment to actual output and pricing for the current contract year as compared with a $ 3.1 million reduction in costs in the prior period . the inclusion in the prior period of lower montana electric supply costs as a result of changes in the associated statute , offset in part by lower supply costs in 2020 ; lower demand to transmit energy across our transmission lines due to market conditions and pricing , including the closure of colstrip units 1 and 2 ; and an increase in montana electric rates . 44 the change in regulatory amortization revenue is due to timing differences between when we incur electric supply costs and when we recover these costs in rates from our customers , which has a minimal impact on gross margin . our wholesale and other revenues are largely gross margin neutral as they are offset by changes in cost of sales . 45 natural gas operations we have various classifications of natural gas revenues , defined as follows : retail : sales of natural gas to residential , commercial and industrial customers , and the impact of regulatory mechanisms . regulatory amortization : primarily represents timing differences for natural gas supply costs and property taxes between when we incur these costs and when we recover these costs in rates from our customers , which is also reflected in cost of sales and therefore has minimal impact on gross margin . the amortization of these amounts are offset in retail revenue . wholesale : primarily represents transportation and storage for others . year ended december 31 , 2020 compared with year ended december 31 , 2019 replace_table_token_19_th ( 1 ) non-gaap financial measure . see `` non-gaap financial measure `` above . replace_table_token_20_th replace_table_token_21_th 46 the following summarizes the components of the changes in natural gas gross margin for the years ended december 31 , 2020 and 2019 ( in millions ) : gross margin 2020 vs. 2019 gross margin items impacting net income retail volumes $ ( 10.6 ) montana rates ( 1.2 ) other 1.3 change in gross margin impacting net income ( 10.5 ) gross margin items offset within net income property taxes recovered in revenue , offset in property tax expense 0.5 operating expenses recovered in revenue , offset in operating expense 0.1 gas production taxes recovered in revenue , offset in property and other taxes ( 0.1 ) change in items offset within net income 0.5 decrease in gross margin ( 1 ) $ ( 10.0 ) ( 1 ) non-gaap financial measure . see `` non-gaap financial measure `` above . gross margin decreased $ 10.0 million , including a $ 10.5 million decrease from items impacting net income and a $ 0.5 million increase from items offset within net income . the change in gross margin for items impacting net income includes the following : a decrease in gas volumes due to warmer winter weather , offset in part by customer growth . in addition , impacts of the covid-19 pandemic drove a decline of approximately of $ 1- $ 2 million , as a result of lower customer usage ; and a reduction of rates due to the step down of our montana gas production assets . our wholesale and other revenues are largely gross margin neutral as they are offset by changes in cost of sales . 47 story_separator_special_tag style= `` color : # 000000 ; font-family : 'times new roman ' , sans-serif ; font-size:10pt ; font-weight:400 ; line-height:100 % `` > $ 305.0 minimum amount outstanding $ — as of february 5 , 2021 , our availability under our revolving credit facilities was approximately $ 231.0 million . credit ratings in general , less favorable credit ratings make debt financing more costly and more difficult to obtain on terms that are favorable to us and our customers , may impact our trade credit availability , and could result in the need to issue additional equity securities . fitch ratings ( fitch ) , moody 's investors service ( moody 's ) , and s & p global ratings ( s & p ) are independent credit-rating agencies that rate our debt securities . these ratings indicate the agencies ' assessment of our ability to pay interest and principal when due on our debt . as of february 5 , 2021 , our current ratings with these agencies are as follows : senior secured rating senior unsecured rating commercial paper outlook fitch a a- f2 stable moody 's a3 baa2 prime-2 stable s & p a- bbb a-2 stable _ a security rating is not a recommendation to buy , sell or hold securities . such rating may be subject to revision or withdrawal at any time by the credit rating agency and each rating should be evaluated independently of any other rating . capital requirements our capital expenditures program is subject to continuing review and modification . actual utility construction expenditures may vary from estimates due to changes in electric and natural gas projected load growth , changing business operating conditions and other business factors . we anticipate funding capital expenditures through cash flows from operations , available credit sources , debt and equity issuances and future rate increases . our estimated capital expenditures are discussed above in the `` significant infrastructure investments and initiatives `` section . 49 contractual obligations and other commitments we have a variety of contractual obligations and other commitments that require payment of cash at certain specified periods . the following table summarizes our contractual cash obligations and commitments as of december 31 , 2020. see additional discussion in note 18 - commitments and	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources we require liquidity to support and grow our business , and use our liquidity for working capital needs , capital expenditures , investments in or acquisitions of assets , and to repay debt . we believe our cash flows from operations and existing borrowing capacity should be sufficient to fund our operations , service existing debt , pay dividends , and fund capital expenditures ( excluding strategic growth opportunities ) . the amount of capital expenditures and dividends are subject to certain factors including the use of existing cash , cash equivalents and the receipt of cash from operations . in addition , a material change in operations or available financing could impact our current liquidity and ability to fund capital resource requirements , and we may defer a portion of our planned capital expenditures as necessary . we issue debt securities to refinance retiring maturities , reduce revolver debt , fund construction programs and for other general corporate purposes . to fund our strategic growth opportunities we utilize available cash flow , debt capacity and equity issuances that allows us to maintain investment grade ratings . we plan to maintain a 50 - 55 percent debt to total capital ratio excluding finance leases , and expect to continue targeting a long-term dividend payout ratio of 60 - 70 percent of earnings per share ; however , there can be no assurance that we will be able to meet these targets . based upon our current capital expenditure expectations , we anticipate initiating a 3-year $ 200 million at-the-market ( atm ) offering during 2021 and begin issuing equity under that program to help fund such capital expenditures . equity issuances will be sized to help maintain and protect current credit ratings . capital investment in response to montana electric supply resource planning would be incremental to these amounts .
our customers operate in diverse markets , such as automotive manufacturing , heavy industry , retail and wholesale distribution , transportation , aviation , aerospace and defense , homeland security and vehicle rental . we have incurred net losses of approximately $ 10.0 million , $ 6.4 million and $ 3.9 million for the years ended december 31 , 2015 , 2016 and 2017 respectively , and have incurred additional net losses since inception . as of december 31 , 2017 , we had cash , cash equivalents and marketable securities of $ 16.9 million , working capital of $ 10.1 million , and an accumulated deficit of $ 95.4 million . our primary sources of cash are cash flows from operating activities and the company 's holdings of cash , cash equivalents and investments from the sale of common stock . to date , the company has not generated sufficient cash flow solely from operating activities to fund our operations . during the year ended december 31 , 2017 , we generated revenues of $ 41.0 million with wal-mart stores , inc. accounting for 16 % of our revenues . during the year ended december 31 , 2016 , we generated revenues of $ 36.8 million with wal-mart stores , inc. accounting for 18 % of our revenues . during the year ended december 31 , 2015 , we generated revenues of $ 41.8 million with wal-mart stores , inc. accounting for 23 % of our revenues . on july 17 , 2017 , we closed an underwritten public offering consisting of 2,608,695 shares of common stock at a price per share of $ 5.75. in addition , the underwriters of the public offering exercised in full their option to purchase an additional 391,304 shares of common stock . including this option exercise , the aggregate gross proceeds from the offering of a total of 2,999,999 shares of common stock , before deducting discounts and commissions and offering expenses , were approximately $ 17.3 million . net proceeds from the public offering were approximately $ 16.1 million . we used a portion of the net proceeds from the offering to fund the keytroller acquisition ( as defined below ) and intends to use the remaining portion of the net proceeds for general corporate purposes . on july 31 , 2017 , the company , together with our wholly-owned subsidiary keytroller , llc , a delaware limited liability company ( “ keytroller ” ) , acquired substantially all of the assets of keytroller , llc , a florida limited liability company ( “ keytroller fl ” and such acquisition , the “ keytroller acquisition ” ) . the business we acquired in the keytroller acquisition develops and markets electronic products for managing forklifts and construction vehicles . the keytroller acquisition gives us a full suite of industrial fleet management product offerings capable of covering any sized fleet and budget and provides our industrial truck business more scale , both from a product and revenue standpoint and markets its line of forklift management devices mainly through a network of lift truck dealers , offering solutions for different fleet sizes at a wide range of price points . in 2017 , we improved our next generation vehicle management system on-vehicle platform and improved our product line of over-the-road asset management solutions , as described below : ● we increased the performance and reliability of our fourth-generation on-vehicle device , the vac4 , which we expect to provide benefits to both the company ( primarily through lower costs , fewer product sku 's , easier installation , integration with our hosted service offering , and expanded functional capabilities ) and end users ( including a simpler , universal interface with multiple vehicle types , reduced installation time , reduced upgrade time , compatibility with all known driver id cards , newer wireless networking protocols , a larger display for vehicle operators , and enhancements to the content and style of the information displayed ) ; we also upgraded our core processor and firmware platform to simplify ongoing development , testing and upgrade , as well as improve development quality and timeliness ; ● we increased the performance and reliability of three new transportation asset management products , the gsm-d400 , an intermodal container tracking system , the gsm-d150 , an intermodal chassis tracking device , and the gsm-d300 , a dry van management system with an advanced cargo sensor , which enables customers to perform full-function asset monitoring with either satellite or cellular communications ; ● we initiated two new product development projects for the transportation asset management product line that will enable the use of lte cellular communication as well as the incorporation of wireless sensors ; and ● we developed and delivered our next-generation motor-vehicle asset communicator , tailored to the needs of both on-lot and off-lot car rental - and for the connected car market in general , including lte cellular communication , improved , hardened , secure firmware and a more secure , scalable software platform ; and ● we improved the enterprise analysis capabilities of our analytics platform for multi-site , multi-region customers . 36 we are highly dependent upon sales of our system to a few customers . the loss of any of these key customers , or any material reduction in the amount of our products they purchase during a particular period , could materially and adversely affect our revenues for such period . conversely , a material increase in the amount of our products purchased by a key customer ( or customers ) during a particular period could result in a significant increase in our revenues for such period , and such increased revenues may not recur in subsequent periods . story_separator_special_tag revenues increased by approximately $ 4.1 million , or 11.2 % , to $ 41.0 million in 2017 from $ 36.8 million in 2016. the increase in revenue is attributable to an increase in total industrial truck asset management and connected vehicles revenue of approximately $ 5.7 million to $ 26.7 million in 2017 from $ 21.0 million in 2016 , partially offset by a decrease in total transportation asset management revenue of approximately $ 1.6 million to $ 14.3 million in 2017 from $ 15.8 million in 2016. revenues from products increased by approximately $ 2.2 million , or 10.2 % , to $ 23.6 million in 2017 from $ 21.4 million in 2016. industrial truck asset management and connected vehicles product revenue increased by approximately $ 3.2 million to $ 17.5 million in 2017 from $ 14.3 million in 2016. the increase in industrial truck asset management and connected vehicles product revenue resulted principally from increased product sales of approximately $ 3.5 million in product sales from keytroller . transportation asset management product revenue decreased by approximately $ 1.0 million to $ 6.0 million in 2017 from $ 7.1 million in 2016. the decrease in transportation asset management product revenue resulted principally from decreased spare parts sales . revenues from services increased by approximately $ 2.0 million , or 12.6 % , to $ 17.4 million in 2017 from $ 15.5 million in 2016. industrial truck asset management and connected vehicles service revenue increased by approximately $ 2.5 million to $ 9.2 million in 2017 from $ 6.7 million in 2016 , principally due to increased service revenue pursuant to a statement of work ( “ sow # 4 ” ) we entered into with avis budget car rental , llc ( “ abcr ” ) in march 2017. transportation asset management service revenue decreased by approximately $ 0.5 million to $ 8.3 million in 2017 from $ 8.8 million in 2016 principally due to a decrease in revenue per active units . the following table sets forth our cost of revenues by product line for the periods indicated : replace_table_token_7_th 42 cost of revenues . cost of revenues increased by approximately $ 1.5 million , or 8.1 % , to $ 20.0 million in 2017 from $ 18.5 million for the same period in 2016. gross profit was $ 20.9 million in 2017 compared to $ 18.3 million for the same period in 2016. as a percentage of revenues , gross profit increased to 51.1 % in 2017 from 49.7 % in 2016. cost of products decreased by approximately $ 0.6 million , or 4.2 % , to $ 13.5 million in 2016 from $ 14.0 million in the same period in 2016. gross profit for products was $ 10.1 million in 2017 compared to $ 7.3 million in 2016. the increase in gross profit was attributable to an increase of approximately $ 3.1 million in the industrial truck asset management and connected vehicles gross profit to $ 8.9 million in 2015 from $ 5.8 million in 2016. the transportation asset management gross profit decreased approximately $ 0.4 million to $ 1.2 million in 2017 from $ 1.6 in 2016. as a percentage of product revenues , gross profit increased to 42.9 % in 2017 from 34.3 % in 2016. the increase in gross profit as a percentage of product revenue was due to an increase in the industrial truck asset management and connected vehicles gross profit percentage to 50.8 % in 2017 from 40.3 % in 2016 , which was principally due to improved customer pricing . the transportation asset management product revenue gross profit percentage decreased to 19.9 % in 2017 from 22.2 % in 2016 principally due to an increase in warranty expense . cost of services increased by approximately $ 2.1 million , or 46.4 % , to $ 6.6 million in 2017 from $ 4.5 million in 2016. gross profit for services was $ 10.8 million in 2017 compared to $ 11.0 million in 2016. the decrease in gross profit was attributable to a decrease in the transportation asset management gross profit of approximately $ 0.3 million to $ 5.9 million in 2017 from $ 6.2 million in 2016 , partially offset by increase of approximately $ 0.2 million in the industrial truck asset management and connected vehicles gross profit to $ 4.9 million in 2017 from $ 4.7 million in 2016. as a percentage of service revenues , gross profit decreased to 62.2 % in 2017 from 70.9 % in 2016. the decrease in gross profit as a percentage of service revenue was principally due to a decrease in the industrial truck asset management and connected vehicles management gross profit percentage to 53.8 % in 2017 from 70.8 % in 2016 principally due to a lower gross margin on the development project portion of the sow # 4 we entered into with avis . the transportation asset management gross profit percentage of 71.5 % in 2017 remained generally consistent with the gross profit percentage of 71.0 % in 2016. selling , general and administrative expenses . selling , general and administrative expenses ( “ sg & a ” ) increased by approximately $ 0.9 million , or 4.6 % , to $ 21.1 million in 2017 compared to $ 20.1 million in the same period in 2016. the increase was principally due to approximately $ 1.0 million in in sg & a expenses from keytroller , $ 0.7 million increase in stock-based compensation and $ 0.4 in acquisition related fees , partially offset by a $ 0.7 million decrease in severance costs and $ 0.8 million decrease in foreign currency translation . as a percentage of revenues , selling , general and administrative expenses decreased to 51.4 % in 2017 from 54.7 % in the same period in 2016 , primarily due to the increase in revenues from 2016 to 2017. research and development expenses . research and development expenses decreased	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources historically , our capital requirements have been funded primarily from the net proceeds from the issuance of our securities , including any issuances of our common stock upon the exercise of options . as of december 31 , 2017 , we had cash , cash equivalents and marketable securities of $ 16.9 million and working capital of $ 10.1 million , compared to cash , cash equivalents and marketable securities of $ 6.9 million and working capital of $ 10.1 million as of december 31 , 2016. on may 12 , 2017 , we filed a shelf registration statement on form s-3 that was declared effective by the securities and exchange commission ( the “ sec ” ) on may 18 , 2017. pursuant to the shelf registration statement , we may offer to the public from time to time , in one or more offerings , up to $ 60.0 million of our common stock , preferred stock , warrants , debt securities , and units , or any combination of the foregoing , at prices and on terms to be determined at the time of any such offering . the specific terms of any future offering will be determined at the time of the offering and described in a prospectus supplement that will be filed with the sec in connection with such offering .
in december 2015 , checkpoint licensed the exclusive worldwide rights to develop and commercialize ck-102 ( formerly cep-9722 ) , a poly ( adp-ribose ) polymerase ( “ parp ” ) inhibitor , from teva pharmaceutical industries ltd. , through its subsidiary , cephalon , inc. ck-102 is an oral , small molecule selective inhibitor of parp-1 and parp-2 enzymes in early clinical development for solid tumors . checkpoint plans to develop ck-102 as both a monotherapy and in combination with other anti-cancer agents , including checkpoint 's novel immuno-oncology and checkpoint inhibitor antibodies currently in development . checkpoint expects clinical trials to start in the first half of 2016 for their egfr inhibitor and the second half of 2016 for their parp inhibitor and one or more of the dana-farber antibodies . also in december 2015 , checkpoint closed on gross proceeds of $ 57.8 million , before commissions and expenses , in a series of private placement equity financings . net proceeds from this offering was approximately $ 51.5 million . mustang bio , inc. in march 2015 , we formed mustang to develop immunotherapies based on chimeric antigen receptor t-cells ( “ car-t ” ) , which it licensed from city of hope ( “ coh ” ) . in connection with the license agreement , mustang also entered into a sponsored research agreement with coh in which mustang will fund continued research at coh related to car-t ( see note 6 of notes to consolidated financial statements ) . journey medical corporation in march 2015 , jmc , our dermatology focused subsidiary , entered into a license and supply agreement to acquire rights to distribute a dermatological product for the treatment of acne ( see note 7 of notes to consolidated financial statements ) . in october 2015 , jmc entered into a co-promote agreement to sell a 2 % topical lotion , dermasorb hc , for the treatment of corticosteroid-responsive dermatoses . in january 2016 , jmc entered into a product license and supply agreement with a third party . to distribute a topical cream to promote wound healing for surgical treatments such as cryosurgery , mohs surgery and biopsies . also in january 2016 , jmc entered into a distribution agreement with a third party to distribute an emollient for the treatment of eczema . 29 helocyte , inc. helocyte , formerly diavax , was formed to develop novel immunotherapies for the prevention and treatment of cytomegalovirus ( “ cmv ” ) , a common virus that affects people of all ages . on april 2 , 2015 , helocyte entered into an agreement with coh to secure exclusive worldwide rights for two t-cell immunotherapeutic vaccines for controlling cmv , known as triplex and pepvax in allogeneic hematopoietic stem cell transplant ( “ hsct ” ) and solid organ transplant ( “ sot ” ) recipients . triplex and pepvax have now both entered into phase 2 clinical studies , with pepvax expected to enroll patients later this year . both programs are supported by grants paid and payable to coh from the national cancer institute . in connection with the licensing of triplex and pepvax , helocyte further entered into an option agreement with coh for exclusive worldwide rights to pentamer , a universal immunotherapeutic vaccine being developed for the prevention of cmv transmission in utero , and exercised this option on april 28 , 2015 ( see note 6 of notes to consolidated financial statements ) . coronado so co. in january 2015 , coronado so , entered into an exclusive license agreement with a third party for a license for a phase 2 , uracil topical cream used in the treatment and prevention of hand-foot syndrome , a common painful side effect of chemotherapeutics . in june 2015 , the fda accepted specific components of a planned phase 2 study ( see note 6 of notes to consolidated financial statements ) . escala therapeutics , inc. on july 16 , 2015 , escala , formerly altamira , acquired from new zealand pharmaceuticals limited ( “ nzp ” ) a license from the national institutes of health ( “ nih ” ) and cooperative research and development agreements ( “ cradas ” ) for the development of oral n-acetyl-d-mannosamine ( “ mannac ” ) , a key compound in the sialic biosynthetic pathway for the treatment of hyposialylation disorders , including gne myopathy and various forms of nephropathy ( see note 6 of notes to consolidated financial statements ) . critical accounting policies and use of estimates our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states , or gaap . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements . on an ongoing basis , we evaluate our estimates and judgments , including those related to research and development , accrued expenses , stock-based compensation and fair value of investments . we base our estimates on historical experience , known trends and events and various other factors that are believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates under different assumptions or conditions . research and development expenses research and development costs are expensed as incurred . advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payments are made . story_separator_special_tag for the new york , ny lease that commences in 2016 , we have in place desk share agreements that reimburse us for $ 24.4 million , or 60 % , of the $ 40.7 million obligation through the term of our lease . ( 3 ) annual sublicense fees are projected through 2025 and include payments to ovamed , falk and university college of london business plc , or uclb and sponsored research agreement between coh and mustang . at december 31 , 2015 $ 4.3 million related to falk and ovamed are recorded in accrued expenses . ( 4 ) we have $ 14.9 million of open purchase orders of which $ 0.9 million are for avenue , $ 3.0 million for checkpoint , $ 0.7 million for escala , $ 0.2 million for helocyte , $ 2.3 million for fortress and $ 8.0 million for jmc . a majority of our purchase orders may be cancelled without significant penalty to us or our subsidiaries . in march 2015 , we closed the nsc note . the effective interest rate on the nsc note approximates 11.3 % . the nsc note was amended and restated on july 29 , 2015 to provide that any time a fortress company receives from us any proceeds from the nsc note , we may , in our sole discretion , cause the fortress company to issue to nsc biotech venture fund i llc a new promissory note ( the “ amended nsc note ” ) on identical terms as the nsc note , giving effect to the passage of time with respect to maturity . the amended nsc note will equal the dollar amount of the fortress company 's share of the nsc note and reduce our obligations under the nsc note by such amount . we will guarantee the amended nsc note until the fortress company either completes an initial public offering or raises sufficient equity capital so that it has cash equal to five times the amended nsc note . at december 31 , 2015 , the amount of debt outstanding under the nsc note was $ 10.0 million of which $ 2.8 million was transferred to checkpoint and $ 3.0 million was transferred to avenue . in february 2016 , checkpoint repaid its outstanding debt of $ 2.8 million ( see note 8 of notes to the consolidated financial statements ) . 36 in february 2014 , we repaid in full the hercules note and entered into the idb note , under which we can borrow up to $ 15.0 million . at december 31 , 2015 , the amount of debt outstanding under the idb note was $ 14.0 million ( see note 8 of notes to the consolidated financial statements ) . in october 2015 , we entered into a 5-year lease for approximately 6,100 square feet of office space in waltham , ma at an average annual rent of approximately $ 0.2 million . we took occupancy of this space in january 2016. in november 2014 , jmc entered into a two-year lease for 2,295 square feet of office space in scottsdale , az , at an average annual rent of approximately $ 39,000. total rent expense for the term of this lease will approximate $ 78,000. jmc took occupancy of this space in november 2014. on october 3 , 2014 , we entered into a 15-year lease for office space at 2 gansevoort street new york , ny 10014 , at an average annual rent of $ 2.7 million . we took possession of this space in december 2015 , which will constitute our principal executive office upon occupancy in the first half of 2016. also , on october 3 , 2014 , we entered into desk space agreements with each of oppm and tgtx , to occupy 20 % and 40 % , respectively , of the new york , ny office space that requires them to pay their share of the average annual rent of $ 0.5 million and $ 1.1 million , respectively . these initial rent allocations will be adjusted periodically for each party based upon actual percentage of the office space occupied . additionally , we have reserved the right to execute additional desk space agreements with other third parties and those arrangements will also affect the cost of the lease actually borne by us . the lease was executed to further our business strategy , which includes forming additional subsidiaries and or affiliate companies . mr. weiss is executive chairman , interim chief executive officer and a stockholder of tgtx . the lease is subject to early termination by us , or in circumstances including events of default , the landlord , and includes a five-year extension option in our favor . in april 2013 , we entered into a three-year lease for approximately 1,500 square feet of office space in new york , ny at an average annual rent of approximately $ 0.1 million . total rent expense for the term of this lease was approximately $ 0.4 million . we commenced occupancy of this space in may 2013. in march 2014 , we closed the new york , ny office and entered into a sub-lease with a third party to occupy the space conterminously with our lease agreement . in november 2014 , our sub-tenant vacated the space . as a result , we commenced activities to sub-lease this facility . in december 2012 , we assumed a lease from tso laboratories , inc. , a wholly owned subsidiary of ovamed gmbh , for approximately 8,700 square feet of space in woburn , ma for the purpose of establishing a manufacturing facility for tso . total rent expense for the lease term is approximate $ 0.6 million . annual rental payment is approximately $ 0.1 million . we intend to sublet this space . in july 2012 , we entered into a five-year lease for approximately 3,200	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources to date , we have funded our operations through cash on hand , the sale of debt , option exercises and a third party financing by checkpoint , aggregating $ 247.9 million of net proceeds . at december 31 , 2015 , we had cash and cash equivalents of $ 98.2 million of which $ 50.4 million relates to checkpoint , plus restricted cash of $ 14.6 million , of which $ 14.0 million is collateralizing the idb note and $ 0.6 million of which is securing a letter of credit used as a security deposit for the new york , ny lease that became effective on october 3 , 2014. in february 2014 , we paid off the hercules note and entered into the idb note . early payment of the hercules note approximated $ 14.0 million consisting of principal of $ 13.2 million , end of term charge of $ 0.4 million , a prepayment fee of $ 0.3 million and interest of $ 0.1 million . prior to repayment , in january 2014 , the company made a scheduled principal payment of $ 0.5 million on the hercules note . in march 2015 , we closed on the nsc note for $ 10.0 million , net of fees of $ 0.9 million . we used the proceeds from the nsc note to acquire medical technologies and products and create subsidiaries in which we can advance these technologies and products . we may require additional financing to fully develop and prepare regulatory filings and obtain regulatory approvals for our existing and new product candidates , fund operating losses , and , if deemed appropriate , establish or secure through third parties manufacturing for our potential products , sales and marketing capabilities . we have funded our operations to date primarily through the sale of equity and debt securities . we believe that our current cash and cash equivalents is sufficient to fund operations for at least the next twelve months .
to that end , we hit an important technology milestone in 2006 by moving all transactions to the phoenix platform and setting the stage for greater operating margins now and in the future . because of its scalability , we can easily multiply our current transaction volume without many additional resources . additionally , by storing all our data in one repository , we can continue to streamline operations and explore new opportunities because we access data with more efficiency and greater speed . see the advanced technology under industry trends below for more details on how our technology affects our financial condition . in an effort to create additional cost savings opportunities , we outsourced many of our ppo operations to ppoone , a fiserv company . this agreement , announced in november 2006 , is expected to improve operational efficiencies and generate an estimated annual savings in excess of $ 800,000 by reducing our selling , general and administrative expenses . these savings will be partially offset by a smaller direct cost during 2007 and forward . we also unveiled our premium revenue cycle management service in october 2006. providers pay an additional fee for the premium service ; however , it will be 2007 before the revenue it generates is evident in our consolidated financial statements . see liquidity , capital resources and financial position for a discussion of our going concern opinion and management 's plan to address such issues . industry trends and financial strategies we have identified the following trends in the healthcare industry and outlined our financial strategy in each : acquisitions advanced technology reduced payments to providers shifting responsibility for medical care increasing demand for data and analytics acquisitions the most observable trend in healthcare is the consolidation of technology companies and payers . in 2006 , for example , the carlyle group acquired multiplan and phcs . mckesson announced their intention to acquire per-se . per-se purchased ndc health the previous year . unitedhealth group purchased 11 other smaller plans , including pacificare and oxford . our strategy in this forum is to explore opportunities for acquiring assets , products or services . we have acquired three companies in the past five years . they include : on march 2 , 2004 , we acquired planvista , a company that provided ppo and business process outsourcing solutions for the medical insurance and managed care industries , as well as services for healthcare providers . we acquired planvista for 3,600,000 shares of our common stock issued to planvista shareholders valued at $ 59.8 million ( based on the average closing price of our common stock for the day of and the two days before and after december 8 , 2003 , the date of the announcement of the definitive agreement ) . we also assumed debt and other liabilities of planvista totaling $ 46.4 million and we paid $ 1.3 million in acquisition-related costs . additionally , we raised $ 24.1 million in a private placement sale of 1,691,227 shares of our common stock to investment entities affiliated with general atlantic llc , commonwealth associates and other parties to partially fund repayment of certain of planvista 's debts and other obligations outstanding at the time of the acquisition . on february 14 , 2006 , we acquired substantially all the assets and operations of zeneks , inc. , ( zeneks ) , a privately held company based in tampa , florida , for $ 225,000 plus assumed liabilities . zeneks was incorporated in 1998 and was established to contain medical costs for payers . on october 10 , 2006 , we acquired substantially all the assets and operations of medical resources , llc , and national provider network , inc. ( mrl ) , for $ 5.0 million in total consideration . the purchase price was comprised of 22 $ 3.0 million in cash , funded by medavant 's current credit facility , and a $ 2.0 million note payable that bears interest at 7 percent per annum . the note matures in two years and is payable in equal monthly installments of principal and interest . the planvista acquisition made us the only entity in healthcare that offers nationwide claims processing and a nationwide ppo . this means we can help our customers with any part of the insurance claim cycle . we refer to this as gateway solutions , and it allows payers to use one part of the full , integrated suite of services or choose a combination of services to address their needs . the zeneks acquisition complemented our services to payers by incorporating bill negotiation services for claims when a patient uses out-of-network providers . the mrl acquisition gave nppn more direct contracts with providers and additional contract providers in six states . advanced technology our customers increasingly expect technology to address their business issues and healthcare companies are responding with more advanced solutions . we believe we are leaders in this arena with our phoenix transaction processing platform . we created phoenix more than five years ago with multiple processing engines that can be monitored and programmed throughout all areas of our business . it handles real-time transactions which generate results in seconds , as well as the more traditional batch transactions for providers and payers who are not ready for real-time . most of our competition still uses multiple processing systems that can only handle batch transactions . between 1997 and 2006 , we acquired nine companies , each with its own technology systems . in 2006 , we began moving all transactions to phoenix and completed this migration by early 2007. phoenix currently operates at less than 40 percent of capacity , meaning we are in a position to increase the scale of new business without the added expense of building out our technology . story_separator_special_tag consolidated cost of sales decreased as a percentage of net revenues to 30 % in 2006 , from 35 % in 2005. cost of sales classified by our reportable segments are as follows : replace_table_token_3_th cost of sales in our transaction services segment consists of transaction fees , provider network outsourcing fees , services and license fees , third-party electronic transaction processing costs , certain telecommunication and co-location center costs , revenue sharing arrangements with our business partners , third-party database licenses , and certain travel expenses . cost of sales in this segment decreased by $ 6.9 million , or 33 % , in 2006 as compared to 2005 , directly associated with the revenue decreases for this segment . additionally , during late 2005 and into 2006 , we renegotiated many of our vendor and network contracts , thereby reducing our direct costs . this is reflected in our margins increasing from 69 % in 2005 to 75 % in 2006. this margin increase was also impacted by the $ 0.2 million of new revenue and $ 0.2 million of reduced direct costs from our acquisition of mrl . additionally , we had a reduction of direct costs of approximately $ 0.7 million due to our acquisition of zeneks in february 2006. cost of sales in our laboratory communication solutions segment includes hardware , third party software , consumable materials , direct manufacturing labor , and indirect manufacturing overhead . cost of sales for this segment decreased by $ 0.6 million , or 10 % , as compared to 2005. cost of sales as a percentage of revenues in this segment was 49 % in 2006 as compared to 55 % in 2005. this decrease in costs is related to the higher margins attributable to sales of pilot , the elimination of low margin business and a new service contract with our largest customer . selling , general and administrative expenses . consolidated sg & a decreased $ 6.2 million in 2006 to $ 41.8 million , as compared to $ 48.0 million in 2005. consolidated sg & a expenses as a percentage of consolidated revenues increased to 64 % in 2006 , from 62 % in 2005. sg & a expenses classified by our reportable segments are as follows : replace_table_token_4_th transaction services segment sg & a expenses for the year ended december 31 , 2006 decreased $ 6.2 million , or 14 % , to $ 39.1 million , compared to $ 45.3 million in 2005. this decrease is attributable to lower payroll expenses ( $ 6.0 million ) , lower commissions ( $ 0.5 million ) , lower rent ( $ 0.5 million ) and lower recruiting expenses ( $ 0.4 ) as compared to 2005. this decrease is significantly driven by the drop in our employee count , from 401 at december 31 , 2005 , compared to 340 as of december 31 , 2006. these reductions were partially offset by increased bonus expense ( $ 1.7 million ) , and stock option expenses ( $ 0.9 million ) related to our adoption of sfas no . 123r . the 2006 bonus was based upon the achievement of companywide goals . laboratory communication solutions segment sg & a expenses for 2006 remained consistent with 2005 and this segment 's sg & a expenses as a percentage of segment net revenues remained steady at approximately 23 % in 2006 from 2005. depreciation and amortization . consolidated depreciation and amortization expense decreased by $ 1.9 million to $ 7.4 million in 2006 from $ 9.3 million in 2005. depreciation and amortization classified by our reportable segments are as follows : replace_table_token_5_th the decrease in depreciation and amortization is primarily due to the impairment charge on certain of our long-lived intangible assets taken in 2005 ( see below ) . as a result , our amortization expense declined by $ 2.0 million , partially offset by approximately $ 0.2 million of amortization pertaining to our acquisition of mrl in october 2006 and additions of capitalized software . depreciation declined $ 0.1 million from 2005 to 2006 . 27 litigation settlement . during 2007 , pertaining to the 2006 fiscal year , we settled outstanding litigation related to our 2005 name change , for approximately $ 1.3 million , for which we have accrued $ 0.3 million , net of insurance reimbursement amount . additionally , we settled a non-compete agreement suit for approximately $ 0.1 million . these amounts are recorded in our transaction services segment for the fiscal year 2006. write-off of impaired assets . no impairment charges were incurred or recognized during 2006. as a result of our stock price decline during 2005 , a decrease in our revenues and a restructuring plan we initiated during the third quarter of 2005 , we performed an interim goodwill impairment test as of september 30 , 2005. in accordance with the provisions of sfas no . 142 , we performed a discounted cash flow analysis which indicated that the book value of the transaction services segment exceeded its estimated fair value . step 2 of this impairment test , led us to conclude that an impairment of our goodwill had occurred . in addition , as a result of our goodwill analysis , we also performed an impairment analysis of our long-lived assets in our transaction services segment . this impairment analysis indicated that the carrying value of certain finite-lived intangible assets was greater than their expected undiscounted future cash flows . as a result , we concluded that these intangible assets were impaired and adjusted the carrying value of such assets to fair value . in addition , we also reduced the remaining useful lives of these intangible assets based on the results of this analysis . accordingly , we recorded a non-cash impairment charge of $ 95.7 million at september 30 , 2005 , in our transaction services segment . the charges included $ 68.1	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	interest on senior and other debt 1,472 1,360 1,247 1,135 convertible notes ( 1 ) 13,137 senior debt 1,071 1,071 1,071 982 revolving credit line ( 4 ) 10,464 notes payable ( 2 ) 1,074 895 litigation settlements ( 3 ) 321 capital lease obligations ( 2 ) 1,155 891 474 56 operating leases 1,430 1,387 1,255 524 33 total $ 17,512 $ 19,266 $ 4,047 $ 2,697 $ 33 ( 1 ) assumes no conversion of convertible notes ( 2 ) includes principal and interest ( 3 ) net of insurance reimbursement ( 4 ) revolving credit line is categorized as current due to the subjective acceleration clause and lockbox arrangement with our senior lender we have to fund the liquidation of the convertible notes during december 2008 , and we believe that we will have to seek refinancing to settle these notes . the balance of the revolving credit facility on february 28 , 2007 , is approximately $ 12.5 million . we do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition , results of operations , liquidity , capital expenditures or capital resources , as defined under the rules of sec release no . fr-67 . the company 's independent registered public accounting firm has issued a going concern opinion with respect to 32 the company 's consolidated financial statements for the year ended december 31 , 2006. specifically , the independent public accountants have stated that because the company has , among other factors , experienced recurring losses from operations and limited access to additional capital they have substantial doubts about its ability to continue as a going concern . we believe that if we are not successful in increasing revenues , reducing costs , or obtaining additional financing , such inability may adversely impact our ability to successfully execute our business plan and may put us at a competitive disadvantage . the company is continuing its efforts to reduce costs and increase revenue through its new product launches and expanded relationships with certain customers .
● in october 2012 , pbi bank entered into a new consent order with the fdic and kdfi . under the new order , the bank agreed to maintain the capital levels required by the june 2011 order and also agreed should the capital levels not be reached , and if directed in writing by the fdic , the bank would develop a plan to immediately raise sufficient capital , or to sell or merge itself into another fdic insured institution . the new consent order also requires the bank to continue to adhere to the plans implemented in response to the june 2011 consent order , and includes the substantive provisions of the june 2011 order . ● in order to comply with the capital requirements of the consent order , management and the board of directors are evaluating appropriate strategies for increasing the company 's capital . these include , among other things , a possible public offering or private placement of common stock to new and existing shareholders . we have engaged sandler o'neill & partners , lp to act as our financial advisor and to assist our board in this evaluation and to assist in evaluating our options for the redemption of our series a preferred stock issued to the us treasury in 2008 under the capital purchase program . 26 ● total assets decreased 20.1 % to $ 1.2 billion at december 31 , 2012 compared with $ 1.5 billion at the 2011 year-end . ● loans decreased 20.9 % to $ 899.1 million compared with $ 1.1 billion at december 31 , 2011 . ● deposits declined 19.5 % to $ 1.1 billion compared with $ 1.3 billion at december 31 , 2011. certificate of deposit balances declined $ 263.8 million to $ 760.6 million at december 31 , 2012 , from $ 1.0 billion at december 31 , 2011. loan proceeds received from the repayment of our commercial real estate and construction and development loans were used primarily to redeem maturing certificates of deposit during the year . demand deposits increased 2.9 % to $ 114.3 million during 2012 compared with $ 111.1 million at december 31 , 2011 . ● net interest margin decreased to 3.31 % for 2012 compared with 3.40 % for 2011. the decrease in margin between periods was due primarily to a reduction in interest earning assets , primarily loans , coupled with lower rates on those assets and elevated non-accrual loan levels . average loans decreased 16.9 % to $ 1.0 billion in 2012 compared with $ 1.2 billion in 2011 . ● non-performing loans increased $ 1.2 million to $ 94.6 million at december 31 , 2012 , compared with $ 93.4 million at december 31 , 2011. the increase was primarily in the commercial real estate segment of our portfolio , partially offset by decreases in the construction and development , and 1-4 family residential real estate segments . non-performing assets increased from $ 134.8 million at december 31 , 2011 , to $ 138.3 million at december 31 , 2012 . ● provision for loan losses decreased $ 22.4 million in 2012 compared with 2011 as the result of shrinking the loan portfolio and lower net loan charge-offs of $ 36.1 million , or 3.50 % of average loans for 2012 , compared with $ 44.3 million , or 3.56 % of average loans for 2011. although lower than the prior year , our provision for loan losses was elevated in 2012 by a strategy change during the third quarter of 2012 related to classified loans which we expect to more quickly remediate by litigation or foreclosure . for loans subject to this expectation , we applied an additional fair value discount ranging from 10 % to 33 % to the underlying collateral in our impairment analysis estimates as resolution of this nature generally results in receiving lower values for real estate collateral in a more aggressive sales environment . this resulted in a provision for loan loss of approximately $ 5.1 million related to these loans . additionally , the provision for loan losses was negatively impacted by the high level of loan charge-offs in our historical loss experience factors , which we use to estimate the general component of our allowance for loan losses as well as additional downgrades within the loan portfolio . ● we continue to execute on our strategy to reduce our commercial real estate and construction and development loans . we reduced construction and development loans by $ 31.2 million to $ 70.3 million , or 82 % of total risk-based capital , at december 31 , 2012 compared with $ 101.5 million , or 85 % of total risk-based capital , at december 31 , 2011. non-owner occupied commercial real estate loans , construction and development loans , and multi-family residential real estate loans as a group were reduced by $ 103.5 million to $ 311.1 million , or 362 % of total risk-based capital , at december 31 , 2012 compared with $ 414.6 million , or 349 % of total risk-based capital , at december 31 , 2011 . ● loans past due 30-59 days increased from $ 17.3 million at december 31 , 2011 to $ 38.2 million at december 31 , 2012 and loans past due 60-89 days increased from $ 3.9 million at december 31 , 2011 , to $ 20.3 million at december 31 , 2012. these increases were primarily in the commercial real estate , construction and development , and multi-family residential real estate segments of our portfolio . story_separator_special_tag based on our annual review , management does not believe our intangible assets are impaired at december 31 , 2012 . 30 stock-based compensation – compensation cost is recognized for stock options and restricted stock awards issued to employees , based on the fair value of these awards at the date of grant . we utilize a black-scholes model , which requires the input of highly subjective assumptions , such as volatility , risk-free interest rates and dividend pay-out rates , to estimate the fair value of stock options , while the market price of the company 's common stock at the date of grant is used for restricted stock awards . compensation cost is recognized over the required service period , generally defined as the vesting period . for awards with graded vesting , compensation cost is recognized on a straight-line basis over the requisite service period for the entire award . valuation of deferred tax asset – we evaluate deferred tax assets for impairment on a quarterly basis . we established a 100 % deferred tax valuation allowance of $ 31.7 million in december 2011 based upon the analysis of our past performance and our expected future performance . we considered all evidence currently available , both positive and negative , in determining , based on the weight of that evidence , the likelihood that the deferred tax asset would be realized . during that review , we determined that the level of our recent historical losses , the level of our non-performing assets , our inability to meet our forecasted levels of earnings in 2011 , our intent to defer payment of dividends on our subordinated debentures and series a preferred stock , and our non-compliance with the capital requirements of our consent order outweighed our forecasted taxable earnings levels for the near and long term . as such , we established a 100 % deferred tax valuation allowance . when evaluating our deferred tax assets for realizability during 2012 , we concluded that a full valuation allowance was still necessary at december 31 , 2012 , due to the additional losses incurred during the year . a return to profitability would enable us to reduce the valuation allowance and thereby offset income tax expense that would otherwise be recognized . examinations of our income tax returns or changes in tax law may impact our deferred tax assets and liabilities as well as our provision for income taxes . contingencies – in the normal course of operations , we are defendants in various legal proceedings . we record contingent liabilities resulting from claims against us when a loss is assessed to be probable and the amount of the loss is reasonably estimable . assessing probability of loss and estimating probable losses requires analysis of multiple factors , including in some cases judgments about the potential actions of third party claimants and courts . recorded contingent liabilities are based on the best information available and actual losses in any future period are inherently uncertain . results of operations the following table summarizes components of income and expense and the change in those components for 2012 compared with 2011 : replace_table_token_5_th net loss of $ 32.9 million for the year ended december 31 , 2012 , decreased $ 74.4 million from net loss of $ 107.3 million for 2011. net loss to common shareholders of $ 33.4 million for the year ended december 31 , 2012 , decreased $ 71.7 million from net loss to common shareholders of $ 105.2 million for 2011. this decrease in net loss was attributable primarily to lower provision for loan losses expense , decreased non-interest expense associated with our oreo , and higher net gain on sales of securities , partially offset by lower net interest income . in addition , the 2011 results included a one-time goodwill impairment charge of $ 23.8 million . 31 the following table summarizes components of income and expense and the change in those components for 2011 compared with 2010 : replace_table_token_6_th net loss of $ 107.3 million for the year ended december 31 , 2011 , increased $ 102.9 million from net loss of $ 4.4 million for 2010. net loss to common shareholders of $ 105.2 million for the year ended december 31 , 2011 , increased $ 99.0 million from net loss to common shareholders of $ 6.2 million for 2010. this decrease in earnings was attributable primarily to a one-time goodwill impairment charge of $ 23.8 million , establishment of a deferred tax asset valuation allowance of $ 31.7 million , increased provision for loan losses expense , and non-interest expenses associated with our oreo . goodwill was determined to be impaired during the second quarter of 2011 as the result of operating losses and a significant drop in value of our common stock which trades on nasdaq . the deferred tax asset is dependent on future levels of income . given our net loss for the past two years , and evaluation of other positive and negative evidence , we established a 100 % valuation allowance for our deferred tax asset in the fourth quarter of 2011. provision for loan losses expense increased $ 32.5 million , or 108.0 % , in comparison with 2010 as a result of an increase in non-performing loans , and an increase in net loan charge-offs to $ 44.3 million , or 3.56 % of average loans for 2011 , compared with $ 22.2 million , or 1.64 % of average loans for 2010. non-interest income decreased $ 261,000 , or 3.7 % , in comparison with 2010 primarily as a result of decreased service charges on deposit accounts . gains on sales of investment securities decreased $ 4.0 million , or 78.5 % in comparison with 2010 due to fewer sales of securities during the year . non-interest expense increased $ 57.8 million , or 124.3 % , in comparison with 2010 primarily as a	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity liquidity risk arises from the possibility we may not be able to satisfy current or future financial commitments , or may become unduly reliant on alternative funding sources . the objective of liquidity risk management is to ensure that we meet the cash flow requirements of depositors and borrowers , as well as our operating cash needs , taking into account all on- and off-balance sheet funding demands . liquidity risk management also involves ensuring that we meet our cash flow needs at a reasonable cost . we maintain an investment and funds management policy , which identifies the primary sources of liquidity , establishes procedures for monitoring and measuring liquidity , and establishes minimum liquidity requirements in compliance with regulatory guidance . our asset liability committee continually monitors and reviews our liquidity position . funds are available from a number of sources , including the sale of securities in the available-for-sale portion of the investment portfolio , principal pay-downs on loans and mortgage-backed securities , customer deposit inflows , brokered deposits and other wholesale funding . during 2012 and 2011 , we utilized brokered deposits to supplement our funding strategy . at december 31 , 2012 , these deposits totaled $ 15.0 million compared with $ 118.4 million at december 31 , 2011. we are currently restricted from accepting , renewing , or rolling-over brokered deposits without the prior receipt of a waiver on a case-by-case basis from our regulators . the following table shows at december 31 , 2012 , the amount of our brokered certificates of deposit by time remaining to maturity ( in thousands ) : three months or less $ — three months through six months 15,000 six months through twelve months — over twelve months — total $ 15,000 traditionally , we have borrowed from the fhlb to supplement our funding requirements . at december 31 , 2012 , we had an unused borrowing capacity with the fhlb of $ 23.0 million . after december 31 , 2011 , as a result of our recent financial results , the fhlb changed our collateral arrangements from a blanket pledge of residential mortgage loans to a detailed loan listing requirement .
based on the valuation techniques used and the sensitivity of financial statement amounts to the methods , assumptions , and estimates underlying those amounts , management has determined that the accounting policies with respect to the allowance for credit losses , goodwill and other intangible assets , deferred tax assets , and fair value are critical accounting policies . these policies are considered critical because they relate to accounting areas that require the most subjective or complex judgments , and , as such , could be most subject to revision as new information becomes available . the allowance for credit losses represents management 's estimate of credit losses inherent in the loan portfolio as of the balance sheet date . determining the amount of the allowance for credit losses is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans , estimated losses on pools of homogeneous loans based on historical loss experience , and consideration of current economic trends and conditions , all of which may be susceptible to significant change . the loan portfolio also represents the largest asset type on the consolidated balance sheets . note 1 to the consolidated financial statements describes the methodology used to determine the allowance for credit losses . a discussion of the factors driving changes in the amount of the allowance for credit losses is included in the asset quality - provision for credit losses and risk management section below . goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired . other intangible assets represent purchased assets that also lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract , asset or liability . goodwill and other intangible assets are required to be recorded at fair value at inception . determining fair value is subjective , requiring the use of estimates , assumptions and management judgment . goodwill and other intangible assets with indefinite lives are tested at least annually for impairment , usually during the third quarter , or on an interim basis if circumstances dictate . intangible assets that have finite lives are amortized over their estimated useful lives and also are subject to impairment testing . impairment testing requires that the fair value of each of the company 's reporting units be compared to the carrying amount of its net assets , including goodwill . the company 's reporting units were identified based on an analysis of each of its individual operating segments ( i.e . , the bank and insurance subsidiaries ) . if the fair value of a reporting unit is less than book value , an expense may be required to write down the related goodwill or purchased intangibles to record an impairment loss . 32 deferred tax assets and liabilities are determined by applying the applicable federal and state income tax rates to cumulative temporary differences . these temporary differences represent differences between financial statement carrying amounts and the corresponding tax bases of certain assets and liabilities . deferred taxes result from such temporary differences . a valuation allowance , if needed , reduces deferred tax assets to the expected amount most likely to be realized . realization of deferred tax assets is dependent on the generation of a sufficient level of future taxable income , recoverable taxes paid in prior years and tax planning strategies . the company evaluates all positive and negative evidence before determining if a valuation allowance is deemed necessary regarding the realization of deferred tax assets . the company measures certain financial assets and liabilities at fair value , with the measurements made on a recurring or nonrecurring basis . significant financial instruments measured at fair value on a recurring basis are investment securities . impaired loans and other real estate owned are significant financial instruments measured at fair value on a nonrecurring basis . fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability ( an exit price ) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date . in determining fair value , the company is required to maximize the use of observable inputs and minimize the use of unobservable inputs , reducing subjectivity . recent accounting pronouncements and developments note 1 to the consolidated financial statements discusses new accounting policies that the company adopted during 2017 and the expected impact of accounting policies recently issued or proposed but not yet required to be adopted . to the extent the adoption of new accounting standards materially affects our financial condition , results of operations or liquidity , the impacts are discussed in the applicable section ( s ) of this discussion and notes to the consolidated financial statements . results of operations net interest income and net interest margin net interest income remains the most significant factor affecting our results of operations . net interest income represents the excess of interest and fees earned on total average earning assets ( loans , investment securities , federal funds sold and interest-bearing deposits with other banks ) over interest owed on average interest-bearing liabilities ( deposits and borrowings ) . tax-equivalent net interest income is net interest income adjusted for the tax-favored status of income from certain loans and investments . as shown in the table below , tax-equivalent net interest income for 2017 was $ 45.8 million . story_separator_special_tag the decrease in average investment securities of $ 36.1 million in 2016 from 2015 was due to funding new loan growth during 2016. investment securities available for sale were $ 197.0 million at the end of 2017 and $ 163.8 million at the end of 2016. investment activity for 2017 included purchases of $ 53.5 million in mortgage-backed securities and $ 31.0 million in u.s. government agencies , while investment activity for 2016 included purchases of $ 9.1 million in mortgage-backed securities and $ 9.0 million in u.s. government agencies . at year-end 2017 , 22.3 % of the securities in the portfolio were u.s. government agencies and 74.3 % of the securities were mortgage-backed securities , compared to 20.9 % and 78.7 % , respectively , at year-end 2016. as seen in the table below , 38 % of the available-for-sale portfolio will mature in over one through five years and 57 % will mature in over ten years based on contractual maturities . the comparable amounts for 2016 were 10 % and 73 % , respectively . our investments in mortgage-backed securities are issued or guaranteed by u.s. government agencies or government-sponsored agencies . investment securities held to maturity totaled $ 6.2 million at december 31 , 2017. the comparable amount was $ 6.8 million at december 31 , 2016. the following table sets forth the maturities and weighted average yields of the bond investment portfolio as of december 31 , 2017. replace_table_token_17_th 1 yields have been adjusted to reflect a tax equivalent basis using the statutory federal tax rate of 35 % . loans the loan portfolio is the primary source of our income . loans totaled $ 1.1 billion at december 31 , 2017 , an increase of $ 222.0 million , or 25.5 % , from 2016. loans significantly increased in 2017 when compared to 2016 due to organic loan growth of $ 113.9 million , or 13.1 % and acquired loans from the branch acquisition which contributed $ 108.1 million , or 12.4 % at december 31 , 2017. most of our loans are secured by real estate and are classified as construction , residential or commercial real estate loans . the increase in loans was comprised of increases in commercial real estate loans of $ 82.2 million , or 21.5 % , residential real estate loans of $ 73.4 million , or 22.5 % , construction loans of $ 41.7 million , or 49.7 % and commercial loans , which include financial and agricultural loans , of $ 24.8 million , or 34.3 % . consumer loans , which consist of a small percentage of the overall loan portfolio , decreased $ 232 thousand , or 3.5 % , at december 31 , 2017 compared to december 31 , 2016 . 38 at december 31 , 2017 , the real estate loan portfolio was comprised of 11.5 % construction , 36.5 % residential real estate and 42.5 % commercial real estate . that compares to 9.6 % , 37.4 % and 43.9 % , respectively , at december 31 , 2016. commercial and consumer loans were 8.9 % and 0.6 % , respectively , of the portfolio at december 31 , 2017 and 8.3 % and 0.8 % , respectively , at december 31 , 2016. at december 31 , 2017 , 74.2 % of the loan portfolio had fixed interest rates and 25.8 % had adjustable interest rates , compared to 74.8 % and 25.2 % , respectively , at december 31 , 2016. see the discussion below under the caption “ asset quality - provision for credit losses and risk management ” and note 4 , “ loans and allowance for credit losses ” , in the notes to consolidated financial statements for additional information . at december 31 , 2017 and 2016 , the company did not have any loans held for sale . we do not engage in foreign or subprime lending activities . the table below sets forth trends in the composition of the loan portfolio over the past five years ( including net deferred loan fees/costs ) . replace_table_token_18_th the table below sets forth the maturities and interest rate sensitivity of the loan portfolio at december 31 , 2017. replace_table_token_19_th liabilities deposits we use deposits primarily to fund loans and to purchase investment securities . total deposits increased from $ 997.5 million at december 31 , 2016 to $ 1.2 billion at december 31 , 2017. the increase was the direct result of the deposits acquired in the branch purchase which had a balance of $ 187.0 million at december 31 , 2017. excluding the acquisition , deposits increased $ 18.3 million . these increases were reflected in noninterest-bearing deposits of $ 66.7 million as well as an increase in interest-bearing transaction accounts of $ 136.0 million and an increase in certificates of deposit and other time deposits of $ 2.6 million . average interest-bearing deposits increased $ 90.7 million , or 19.7 % , in 2017 , compared to an increase of $ 34.8 million , or 8.2 % in 2016. average certificates of deposit and other time deposits decreased $ 4.5 million , or 1.6 % in 2017 , compared to a decrease of $ 37.3 million , or 11.9 % in 2016. average noninterest-bearing deposits increased $ 54.9 million , or 22.8 % , in 2017 , compared to an increase of $ 30.2 million , or 14.3 % in 2016. deposits provided funding for approximately 91.9 % , 90.5 % and 91.5 % of average earning assets for 2017 , 2016 and 2015 , respectively . average deposits increased for 2016 primarily in noninterest-bearing deposits and interest-bearing transaction accounts which increased $ 65.0 million , or 10.2 % , partially offset by decreases in certificates of deposit and other time deposits of $ 37.3 million , or 11.9 % . the increase in noninterest-bearing and interest-bearing transaction accounts reflected continued growth in our	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	capital resources management total stockholders ' equity for the company was $ 163.8 million at december 31 , 2017 , compared to $ 154.3 million at december 31 , 2016. the increase in stockholders ' equity in 2017 was primarily due to net income during the year which was offset by dividends paid to common stockholders . the ratio of period-end equity to total assets was 11.75 % for 2017 , as compared to 13.30 % for 2016. this ratio declined primarily due to the branch acquisition which significantly increased total assets and intangible assets . 40 we record unrealized holding gains ( losses ) , net of tax , on investment securities available for sale as accumulated other comprehensive income ( loss ) , a separate component of stockholders ' equity . at december 31 , 2017 , the portion of the investment portfolio designated as “ available for sale ” had net unrealized holding ( losses ) , net of tax , of ( $ 1.3 ) million compared to net unrealized holding ( losses ) , net of tax , of $ ( 993 ) thousand at december 31 , 2016. the following table compares the company 's capital ratios to the minimum regulatory requirements as of december 31 , 2017 , 2016 and 2015. replace_table_token_23_th * includes phased in capital conservation buffer for 2017 of 1.25 % see note 18 to the consolidated financial statements for further information about the regulatory capital positions of the company and the bank . in july 2013 , u.s. federal banking agencies published the basel iii capital rules establishing a new comprehensive capital framework for u.s. banking organizations .
a wholesale purchase order or retail sales invoice ) ; the sales arrangement specifies a fixed or determinable sales price ; title and risk of ownership has passed to the customer ; no specific performance obligations remain ; product is shipped or services are provided to the customer ; collectability is reasonably assured . as such , revenue recognition generally occurs upon the shipment of goods to independent retailers or , in the case of ethan allen operated retail design centers , upon delivery to the customer . if a shipping charge is billed to customers , this is included in revenue . recorded sales provide for estimated returns and allowances . we permit our customers to return defective products and incorrect shipments , and terms we offer are standard for the industry . 22 ethan allen interiors inc. and subsidiaries allowance for doubtful accounts – we maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments . the allowance for doubtful accounts is based on a review of specifically identified accounts in addition to an overall aging analysis . judgments are made with respect to the collectability of accounts receivable based on historical experience and current economic trends . actual losses could differ from those estimates . retail design center acquisitions - we account for the acquisition of retail design centers and related assets with the purchase method . accounting for these transactions as purchase business combinations requires the allocation of purchase price paid to the assets acquired and liabilities assumed based on their fair values as of the date of the acquisition . the amount paid in excess of the fair value of net assets acquired is accounted for as goodwill . impairment of long-lived assets and goodwill – goodwill and other indefinite-lived intangible assets are evaluated for impairment on an annual basis during the fourth quarter of each fiscal year , and between annual tests whenever events or circumstances indicate that the carrying value of the goodwill or other intangible asset may exceed its fair value . when testing goodwill for impairment , we may assess qualitative factors for some or all of our reporting units to determine whether it is more likely than not ( that is , a likelihood of more than 50 percent ) that the fair value of a reporting unit is less than its carrying amount , including goodwill . alternatively , we may bypass this qualitative assessment for some or all of our reporting units and determine whether the carrying value exceeds the fair value using a quantitative assessment as described below . the recoverability of long-lived assets are evaluated for impairment by determining whether the carrying value will be recovered through the expected undiscounted future cash flows resulting from the use of the asset . in the event the sum of the expected undiscounted future cash flows is less than the carrying value of the asset , an impairment loss equal to the excess of the asset 's carrying value over its fair value is recorded . the long-term nature of these assets requires the estimation of cash inflows and outflows several years into the future and only takes into consideration technological advances known at the time of the impairment test . to evaluate goodwill using a quantitative assessment , the company determines the current fair value of the reporting units using a combination of “ market ” and “ income ” approaches . in the market approach , the “ guideline company ” method is used , which focuses on comparing the company 's risk profile and growth prospects to reasonably similar publicly traded companies . key assumptions used for the guideline company method are total invested capital ( “ tic ” ) multiples for revenues and operating cash flows , as well as consideration of control premiums . the tic multiples are determined based on public furniture companies within our peer group , and if appropriate , recent comparable transactions are considered . control premiums are determined using recent comparable transactions in the open market . under the income approach , a discounted cash flow method is used , which includes a terminal value , and is based on external analyst financial projection estimates , as well as internal financial projection estimates prepared by management . the long-term terminal growth rate assumptions reflect our current long-term view of the market in which we compete . discount rates use the weighted average cost of capital for companies within our peer group , adjusted for specific company risk premium factors . 23 ethan allen interiors inc. and subsidiaries the fair value of our trade name , which is the company 's only indefinite-lived intangible asset other than goodwill , is valued using the relief-from-royalty method . significant factors used in trade name valuation are rates for royalties , future growth , and a discount factor . royalty rates are determined using an average of recent comparable values . future growth rates are based on the company 's perception of the long-term values in the market in which we compete , and the discount rate is determined using the weighted average cost of capital for companies within our peer group , adjusted for specific company risk premium factors . i n the fourth quarter of fiscal years 2015 , 2014 and 2013 , the company performed qualitative assessments of the fair value of the wholesale reporting unit and concluded that the fair value of its goodwill exceeded its carrying value . in fiscal year 2011 the company performed a quantitative assessment and determined the fair value of its wholesale reporting unit exceeded its carrying value by a substantial margin . story_separator_special_tag our consolidated gross margin decreased to 54.4 % for fiscal 2014 from 54.6 % in fiscal 2013 as a result , primarily , of the lower mix of retail net sales to consolidated net sales in the current year ( 77.8 % ) compared to the prior fiscal year ( 79.3 % ) . operating expenses decreased $ 1.1 million or 0.3 % to $ 336.9 million or 45.1 % of net sales in fiscal 2014 from $ 337.9 million or 46.3 % of net sales in fiscal 2013. the decrease in current year expenses is primarily due to operating efficiencies , partly offset by higher variable costs on increased sales . operating income for the year ended june 30 , 2014 totaled $ 69.6 million , or 9.3 % of net sales , compared to $ 60.4 million , or 8.3 % of net sales , in fiscal 2013. w holesale operating income for fiscal 2014 totaled $ 57.8 million , or 12.7 % of net sales , as compared to $ 50.8 million , or 11.7 % of net sales , in fiscal 2013. retail operating income was $ 10.5 million , or 1.8 % of sales , for fiscal 2014 , compared to $ 8.0 million , or 1.4 % of sales , for fiscal 2013 , an improvement of $ 2.5 million . the improvement in consolidated operating income was primarily attributable to an increase in sales volume for both the retail and wholesale segments and the improved gross profit in the wholesale segment leveraged against tightly controlled operating expenses . interest and other income , net was $ 0.3 million in fiscal 2014 compared to an expense of $ 1.5 million in fiscal 2013. the $ 1.8 million increase was primarily due to the loss incurred on the repurchase of $ 24 million of the senior notes during the fourth quarter of the prior fiscal year . interest and other related financing costs decreased $ 1.3 million to $ 7.5 million from $ 8.8 million in fiscal 2013. the decrease is primarily due to less interest expense throughout fiscal 2014 , from lower debt due to the senior note repurchases during fiscal 2013. income tax was an expense of $ 19.5 million for fiscal 2014 as compared to an expense of $ 17.7 million for fiscal 2013. our effective tax rate for fiscal 2014 was 31.2 % compared to 35.3 % in fiscal 2013. the fiscal year 2014 effective tax rate includes tax expense on income , the benefit from the reversal of valuation allowances against certain deferred tax assets in the retail segment , and the recognition of certain previously unrecognized tax benefits , partly offset by recording additional uncertain tax positions and interest expense on uncertain tax positions . the fiscal 2013 effective tax rate includes tax expense on income , interest expense on uncertain tax positions , and the recording of additional uncertain tax positions partially offset by the recognition of previously unrecognized tax benefits and the impact of maintaining certain valuation allowances . net income for fiscal 2014 was $ 42.9 million as compared to $ 32.5 million in fiscal 2013. net income per diluted share totaled $ 1.47 in the current year compared to $ 1.11 per diluted share in the prior year . 28 ethan allen interiors inc. and subsidiaries story_separator_special_tag the facility replaced a $ 50 million senior secured , asset-based revolving credit facility ( the “ prior facility ” ) which was in effect on june 30 , 2014 , and which would have expired march 25 , 2016 , or june 26 , 2015 if the senior notes had not been refinanced prior to that date . at june 30 , 2014 , there was $ 0.6 million of standby letters of credit outstanding under the prior facility . the prior facility was secured by all property owned , leased or operated by the company in the united states excluding any real property owned by the company and contained customary covenants limiting the company 's ability to incur debt , engage in mergers and consolidations , make restricted payments ( including dividends ) , sell certain assets , and make investments . remaining availability under the prior facility totaled $ 49.4 million at june 30 , 2014 and as a result , covenants and other restricted payment limitations did not apply . at both june 30 , 2015 and june 30 , 2014 , we were in compliance with all covenants of the senior notes and the credit facilities . a summary of net cash provided by ( used in ) operating , investing , and financing activities for each of the last three fiscal years is provided below ( in millions ) : replace_table_token_9_th 30 ethan allen interiors inc. and subsidiaries operating activities in fiscal 2015 , cash of $ 55.1 million was generated by operating activities , a decrease of $ 4.8 million over fiscal 2014. net income plus depreciation and amortization in the current fiscal year includes a $ 3.7 million expense for the early redemption of our senior notes . of this amount , $ 3.5 million is offset as a positive in other operating activities , as this is considered a financing activity and not an operating activity . working capital items consist of current assets ( accounts receivable , inventories , prepaid and other current assets ) less current liabilities ( customer deposits , accounts payable , and accrued expenses and other current liabilities ) . investing activities in fiscal 2015 , $ 3.4 million of cash was provided by investing activities , whereas $ 12.1 million was used in the prior year comparable period , resulting in a $ 15.5 million comparative increase in cash in this fiscal year . more cash was provided in fiscal 2015 primarily due to current fiscal year increases both in net sales of marketable securities and net proceeds on the sale of real	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources at june 30 , 2015 , we held unrestricted cash and equivalents of $ 76.2 million , marketable securities of $ 2.2 million , and restricted cash and investments of $ 8.0 million . at june 30 , 2014 , we held unrestricted cash and cash equivalents of $ 109.2 million , marketable securities of $ 18.2 million , and restricted cash and investments of $ 8.5 million . the decrease in unrestricted cash and cash equivalents was largely due to our early redemption of our senior notes . our principal sources of liquidity include cash and cash equivalents , marketable securities , cash flow from operations , amounts available under our credit facility , and other borrowings . in september 2005 , we issued $ 200.0 million in ten-year senior unsecured notes due october 1 , 2015 ( the `` senior notes '' ) . the senior notes were issued by ethan allen global inc. , bearing an annual coupon rate of 5.375 % with interest payable semi-annually in arrears on april 1 and october 1. we used the net proceeds of $ 198.4 million to improve our retail network , invest in our manufacturing and logistics operations , and for other general corporate purposes including dividend payments and share repurchases . in fiscal years 2011 through 2013 , the company repurchased an aggregate $ 70.6 million of the senior notes in several unsolicited transactions . on march 18 , 2015 , we repaid the remaining balance of $ 129.4 million , accrued interest of $ 3.2 million , and a “ make whole ” payment of $ 3.5 million , funded with $ 61.1 million from the company 's existing cash balances , and $ 75 million from our senior secured revolving credit and term loan facility . in connection with this early redemption , the company incurred a $ 3.7 million pre-tax charge , consisting of the “ make whole ” payment along with unamortized balances of bond discount and other costs . this charge is classified within the consolidated statements of comprehensive income under interest and other income ( expense ) .
we sell our products globally to a diverse array of customers that include the fortune 500 as well as start-ups , design houses , original design manufacturers , oems and universities . our technology has been deployed in the consumer electronics , industrial automation , automotive and medical markets . our global presence in the united states , china , hong kong , singapore and japan , allows us to provide local sales and engineering support services to our existing and future customers . our products are manufactured by our wholly-owned subsidiary in a state-of-the-art facility in shenzhen , china . we control 100 % of the manufacturing and shipping process which enables us to respond quickly to customer product demand and design requirements . we have invested significantly in the expansion of our technology platforms through our own internal development to ensure we provide the market with leading-edge hmi solutions that are seamless to deploy and perform flawlessly . we spent the last three years building a research and development ( r & d ) organization in singapore to develop new product offerings that will meet the market 's growing demand for touch technology and smart surfaces . we are now shifting a majority of r & d and product development efforts to camarillo , california , where we are establishing a global product development and materials science center . we believe an increased presence in the u.s. will allow us to grow our business and be more closely aligned with current and future large-tier customers . we also plan to explore potential strategic relationships with companies and technology institutes that will support our growth initiatives . 26 results of operations the following table sets forth certain consolidated statements of operations data for the periods indicated . the percentages in the tables are based on net revenues . replace_table_token_1_th impact of covid-19 on results of operations the covid-19 pandemic has adversely affected our operating results for the year ended december 31 , 2020 , with the impact of the pandemic being more significant in the second half of 2020. covid-19 has resulted in many of our customers delaying orders or cancelling them altogether due to disruptions in their supply chain and reduced demand for their products . revenues were lower in 2020 because of a significant reduction of shipments to our largest medical customer , which could not install the devices that use our products in hospitals due to covid-19 restrictions . this medical customer accounted for 15.5 % of revenue in 2020 and 36.8 % of revenue in 2019 , and thus its reduction in purchases resulted in a significant decline in revenue for 2020 when compared to the prior year . we experienced a similar decline in sales to other customers due to disruptions in their businesses . to mitigate the effects of covid-19 on our business , we have been working with key customers to reach agreement on the timing for shipment of products on orders previously delayed or cancelled . this has allowed us to accelerate into 2020 the shipment of certain orders previously delayed for shipment in 2021. these efforts have helped us to reduce the amount of lost revenue for 2020 from the pandemic . while the impact of covid-19 is by no means over , orders for our products have begun to stabilize and we do not anticipate further significant declines in product sales to continue . comparison of the years ended december 31 , 2020 and 2019 revenue , net by the markets we serve is as follows : replace_table_token_2_th 27 we sell our custom products into the industrial , medical and consumer markets . we previously sold custom products in the automotive market and continue to pursue opportunities in that sector . we sell our standard products through various distribution networks . the ultimate customer for standard products may come from different markets which are often unknown to us at the time of sale . each market has different product design cycles . products with longer design cycles often have much longer product life-cycles . industrial and medical products generally have longer design and life-cycles than consumer products . we currently have products with life-cycles that have exceeded twenty years and are ongoing . revenues were down in 2020 compared to 2019 in the industrial and medical markets , and were up in the consumer market and for our standard products . the decrease in revenue from our industrial market customers is due to decreased purchasing volume by these customers for use in their ongoing product lines resulting from changes in demand by their customers . the decrease in revenue from our medical market customers is primarily due to significant reduction of shipments to our largest medical customer , which could not install the devices that use our products in hospitals due to covid-19 restrictions . the increase in revenue from our consumer market customers is due to an increase in purchase levels on corresponding products and programs . the increase in revenue on our standard products is due to cyclical purchasing pattern of some of our larger customers who took delivery of bulk quantities during 2020. in the normal cycle , some of our larger customers purchase in bulk quantities and absorption of these products can straddle several financial reporting periods . in all markets , the timing of orders from our customers is not always predictable and can be concentrated in varying periods during the year to coincide with their project and building plans . replace_table_token_3_th our gross profit and gross margin are impacted by various factors including product mix , customer mix , volume , material costs , manufacturing efficiencies , facilities costs , compensation costs and provisions for excess and obsolete inventories . story_separator_special_tag the guidance defines a five-step process to achieve this core principle and , in doing so , judgment and estimates may be required within the revenue recognition process including identifying performance obligations in the contract , estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation . generally , we recognize revenue when there is persuasive evidence that an arrangement exists , title and risk of loss have passed , delivery has occurred or the services have been rendered , the sales price is fixed or determinable and collection of the related receivable is reasonably assured . title and risk of loss generally pass to our customers upon shipment . in limited circumstances where either title or risk of loss pass upon destination or acceptance or when collection is not reasonably assured , we defer revenue recognition until such events occur . we input orders based upon receipt of a customer purchase order , confirm pricing through the customer purchase order , validate credit worthiness through past payment history or other financial data and record revenue upon shipment of goods and when risk of loss and title transfer . all customers have warranty rights , and some customers have explicit or implicit rights of return . we record reserves for potential customer returns and warranty rights . inventory valuation inventories are stated at lower of cost or net realizable value ( “ nrv ” ) and consist of materials , labor and overhead . inventory costs are determined using standard costs which approximate actual costs under the first-in , first-out method . we evaluate inventories for excess quantities and obsolescence . our evaluation considers market and economic conditions , technology changes , new product introductions , and changes in strategic business direction , and requires estimates that may include elements that are uncertain . in order to state the inventory at lower of cost or nrv , we maintain reserves against individual stocking units . inventory write-downs , once established , are not reversed until the related inventories have been sold or scrapped . if future demand or market conditions are less favorable than our projections , a write-down of inventory may be required , and would be reflected in cost of goods sold in the period the revision is made . 31 accounts receivable and allowance for doubtful accounts accounts receivable are recorded at the invoice amount and presented net of the allowance for doubtful accounts . they do not bear interest . we evaluate the collectability of accounts receivable at each balance sheet date using a combination of factors , such as historical experience , credit quality , age of the accounts receivable balances , and economic conditions that may affect a customer 's ability to pay . we include any accounts receivable balances that are determined to be uncollectible in the overall allowance for doubtful accounts using the specific identification method . after all attempts to collect a receivable have failed , the receivable is written off against the allowance . stock-based compensation we account for stock-based compensation under asc topic 718 , compensation-stock compensation , which requires us to record related compensation costs in the statement of operations . calculating the fair value of stock-based compensation awards requires the input of highly subjective assumptions , including the expected life of the awards and expected volatility of our stock price . expected volatility is a statistical measure of the amount by which a stock price is expected to fluctuate during a period . our estimates of expected volatilities are based on weighted historical implied volatility . the expected forfeiture rate applied in calculating stock-based compensation cost is estimated using historical data and is updated annually . the assumptions used in calculating the fair value of stock-based awards involve estimates that require management judgment . if factors change and we use different assumptions , our stock-based compensation expense could change significantly in the future . in addition , if our actual forfeiture rate is different from our estimate , our stock-based compensation expense could change significantly in the future . income taxes we account for income taxes using the asset and liability method in accordance with asc topic 740 , income taxes , which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns . under this method , we must make estimates and judgments in determining the provision for taxes for financial statement purposes . these estimates and judgments occur in the calculation of tax credits , benefits , and deductions , and in the calculation of certain tax assets and liabilities that arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes , as well as the interest and penalties related to uncertain tax positions . in addition , the company operates within multiple tax jurisdictions and is subject to audit in these jurisdictions . significant changes in these estimates may result in an increase or decrease to our tax provision in a subsequent period . the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date . our foreign subsidiaries are subject to foreign income taxes on earnings in their respective jurisdictions . earnings of our foreign subsidiaries are generally included in our u.s. federal income tax return as they are earned . we assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not determinable beyond a “ more likely than not ” standard , we establish a valuation allowance . to the extent we establish a valuation allowance or increase or decrease this allowance in a period , we include an expense or benefit within the tax	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources cash requirements for working capital and capital expenditures have been funded from cash balances on hand and cash generated from operations . as of december 31 , 2020 , we had cash and cash equivalents of $ 6.125 million , working capital of $ 7.454 million and no indebtedness except for a loan of $ 0.186 million we received from silicon valley bank pursuant to the paycheck protection program . cash and cash equivalents consist of cash and money market funds . we did not have any short-term or long-term investments as of december 31 , 2020. of the $ 6.125 million of cash balances on hand , $ 1.754 million was held by foreign subsidiaries . if these funds are needed for our operations in the u.s. , we have several methods to repatriate the funds without significant tax effects , including repayment of intercompany loans or distributions of previously taxed income . other distributions may require us to incur u.s. or foreign taxes to repatriate these funds . however , our intent is to permanently reinvest these funds outside the u.s. and our current plans do not demonstrate a need to repatriate cash to fund our u.s. operations . the company received a loan from silicon valley bank in the aggregate principal amount of $ 0.186 million pursuant to the paycheck protection program ( the “ ppp ” ) under the coronavirus aid , relief , and economic security act ( the “ cares act ” ) , which was enacted in march 2020. the loan is evidenced by a promissory note , dated april 21 , 2020 , issued by us to the lender , which matures on april 20 , 2022 , and bears interest at a rate of 1.00 % per annum , payable monthly following an initial deferral period as specified under the ppp . we may prepay the note at any time prior to maturity with no prepayment penalties . proceeds from the loan were used to fund designated expenses , including certain payroll costs , group health care benefits and other permitted expenses , in accordance with the ppp .
23 nnn typically funds property acquisitions either through borrowings under nnn 's unsecured revolving credit facility ( the `` credit facility `` ) or by issuing its debt or equity securities in the capital markets . property dispositions . the following table summarizes the properties sold by nnn for each of the years ended december 31 ( dollars in thousands ) : replace_table_token_12_th nnn typically uses the proceeds from a property disposition to either pay down the credit facility or reinvest in real estate . analysis of revenue general . during the year ended december 31 , 2017 , nnn 's rental income increased primarily due to the increase in rental income from property acquisitions ( see `` results of operations – property analysis – property acquisitions `` ) . nnn anticipates increases in rental income will continue to come from additional property acquisitions and increases in rents pursuant to existing lease terms . the following summarizes nnn 's revenues ( dollars in thousands ) : replace_table_token_13_th ( 1 ) includes rental income from operating leases , earned income from direct financing leases and percentage rent ( `` rental income `` ) . comparison of revenues – 2017 versus 2016 rental income . rental income increased in amount and as a percent of the total revenues for the year ended december 31 , 2017 as compared to the same period in 2016. the increase for the year ended december 31 , 2017 is primarily due to a partial year of rental income received as a result of the acquisition of 276 properties with aggregate gross leasable area of approximately 2,243,000 during 2017 and a full year of rental income received as a result of the acquisition of 313 properties with a gross leasable area of approximately 2,734,000 square feet in 2016. comparison of revenues – 2016 versus 2015 rental income . rental income increased in amount and as a percent of the total revenues for the year ended december 31 , 2016 as compared to the same period in 2015. the increase for the year ended december 31 , 2016 is primarily due to a partial year of rental income received as a result of the acquisition of 313 properties with aggregate gross leasable area of approximately 2,734,000 during 2016 and a full year of rental income received as a result of the acquisition of 221 properties with a gross leasable area of approximately 2,706,000 square feet in 2015 . 24 analysis of expenses general . operating expenses increased primarily due to an increase in depreciation expense during the year ended december 31 , 2017 , as compared to the same period in 2016. the following summarizes nnn 's expenses for the year ended december 31 ( dollars in thousands ) : replace_table_token_14_th replace_table_token_15_th ( 1 ) not calculable ( `` n/c `` ) comparison of expenses – 2017 versus 2016 general and administrative expenses . general and administrative expenses decreased in amount for the year ended december 31 , 2017 , as compared to the same period in 2016 , as well as a percentage of total operating expenses and as a percentage of revenues . the decrease in general and administrative expenses for the year ended december 31 , 2017 , is primarily attributable to a decrease in compensation costs . real estate . real estate expenses increased for the year ended december 31 , 2017 , as compared to the same period in 2016 , but remained flat as a percentage of total operating expenses and as a percentage of revenues . the increase is primarily due to increases in reimbursable and non-reimbursable expenses from certain properties acquired during the year 25 ended december 31 , 2017 , and from certain properties acquired during the year ended december 31 , 2016 , as well as expenses on vacant properties . depreciation and amortization . depreciation and amortization expenses increased in amount , as a percentage of total operating expenses and as a percentage of revenues for the year ended december 31 , 2017 , as compared to the year ended december 31 , 2016. the increase in expenses is primarily due to the acquisition of 276 properties with an aggregate gross leasable area of approximately 2,243,000 square feet in 2017 and 313 properties with an aggregate gross leasable area of approximately 2,734,000 square feet during 2016. impairment losses – real estate and other charges , net of recoveries . nnn reviews long-lived assets for impairment whenever certain events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable . events or circumstances that may occur include changes in real estate market conditions , the ability of nnn to re-lease properties that are currently vacant or become vacant , and the ability to sell properties at a price that exceeds nnn 's carrying value . management evaluates whether an impairment in value has occurred by comparing the estimated future cash flows ( undiscounted and without interest charges ) , and the residual value of the real estate , with the carrying cost of the individual asset . if an impairment is indicated , a loss will be recorded for the amount by which the carrying value of the asset exceeds its fair value . during the years ended december 31 , 2017 and 2016 , nnn recorded $ 4,953,000 and $ 8,025,000 , respectively , of real estate impairments . nnn also recorded a $ 4,000,000 contract dispute settlement charge during the year ended december 31 , 2017 and a $ 3,269,000 loss on mortgages receivable for the year ended december 31 , 2016. retirement severance costs . story_separator_special_tag financing strategy . nnn 's financing objective is to manage its capital structure effectively in order to provide sufficient capital to execute its operating strategy while servicing its debt requirements , maintaining its investment grade credit rating , staggering debt maturities and providing value to nnn 's stockholders . nnn generally utilizes debt and equity security offerings , bank borrowings , proceeds from the disposition of certain properties , and to a lesser extent , internally generated funds to meet its capital needs . nnn typically funds its short-term liquidity requirements , including investments in additional properties , with cash from its credit facility . as of december 31 , 2017 , there was $ 120,500,000 outstanding balance and $ 779,500,000 was available for future borrowings under the credit facility , excluding undrawn letters of credit totaling $ 230,000 . as of december 31 , 2017 , nnn 's ratio of total debt to total gross assets ( before accumulated depreciation and amortization ) was approximately 35 percent and the ratio of secured indebtedness to total gross assets was less than one percent . the ratio of total debt to total market capitalization was approximately 27 percent . certain financial agreements to which nnn is a party contain covenants that limit nnn 's ability to incur additional debt under certain circumstances . the organizational documents of nnn do not limit the absolute amount or percentage of indebtedness that nnn may incur . additionally , nnn may change its financing strategy . contractual obligations and commercial commitments . the information in the following table summarizes nnn 's contractual obligations and commercial commitments outstanding as of december 31 , 2017 . the table presents principal cash flows by year-end of the expected maturity for debt obligations and commercial commitments outstanding as of december 31 , 2017 . replace_table_token_17_th ( 1 ) includes only principal amounts outstanding under mortgages payable and notes payable and excludes unamortized mortgage premiums , note discounts and note costs . ( 2 ) interest calculation based on stated rate of the principal amount . 29 in addition to the contractual obligations outlined above , nnn has committed to fund construction commitments on 27 properties . the improvements on such properties are estimated to be completed within 12 months on such properties . these construction commitments , at december 31 , 2017 , are outlined in the table below ( dollars in thousands ) : total commitment ( 1 ) $ 129,925 amount funded 67,719 remaining commitment 62,206 ( 1 ) includes land , construction costs , tenant improvements , lease costs and capitalized interest as of december 31 , 2017 , nnn did not have any other material contractual cash obligations , such as purchase obligations , financing lease obligations or other long-term liabilities other than those reflected in the table . in addition to items reflected in the table , nnn has issued preferred stock with cumulative preferential cash distributions , as described below under “ dividends . ” management anticipates satisfying these obligations with a combination of nnn 's cash provided from operations , current capital resources on hand , its credit facility , debt or equity financings and asset dispositions . generally the properties are leased under long-term net leases , which require the tenant to pay all property taxes and assessments , to maintain the interior and exterior of the property , and to carry property and liability insurance coverage . therefore , management anticipates that capital demands to meet obligations with respect to these properties will be modest for the foreseeable future and can be met with funds from operations and working capital . certain properties are subject to leases under which nnn retains responsibility for specific costs and expenses associated with the property . management anticipates the costs associated with these properties , nnn 's vacant properties or those properties that become vacant will also be met with funds from operations and working capital . nnn may be required to borrow under its credit facility or use other sources of capital in the event of significant capital expenditures or major repairs . the lost revenues and increased property expenses resulting from vacant properties or uncollectibility of lease revenues could have a material adverse effect on the liquidity and results of operations if nnn is unable to re-lease the properties at comparable rental rates and in a timely manner . as of december 31 , 2017 , nnn owned 24 vacant , un-leased properties which accounted for approximately one percent of total properties held in the property portfolio . additionally , as of january 31 , 2018 , less than one percent of total properties held in the property portfolio was leased to two tenants that each filed a voluntary petition for bankruptcy under chapter 11 of the u.s. bankruptcy code . as a result , these tenants have the right to reject or affirm their leases with nnn . dividends . nnn has made an election to be taxed as a reit under sections 856 through 860 of the code , as amended , and related regulations and intends to continue to operate so as to remain qualified as a reit for federal income tax purposes . nnn generally will not be subject to federal income tax on income that it distributes to its stockholders , provided that it distributes 100 percent of its reit taxable income and meets certain other requirements for qualifying as a reit . if nnn fails to qualify as a reit in any taxable year , it will be subject to federal income tax on its taxable income at regular corporate rates and will not be permitted to qualify for treatment as a reit for federal income tax purposes for the four years following the year during which qualification is lost . such an event could materially adversely affect nnn 's income and ability to pay dividends . nnn believes it has been structured as , and	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	debt the following is a summary of nnn 's total outstanding debt as of december 31 ( dollars in thousands ) : replace_table_token_20_th indebtedness . nnn expects to use indebtedness primarily for property acquisitions and development of single-tenant retail properties , either directly or through investment interests . additionally , indebtedness may be used to refinance existing indebtedness . 32 line of credit payable . in october 2017 , nnn amended its credit agreement to increase the borrowing capacity under its unsecured revolving credit facility from $ 650,000,000 to $ 900,000,000 and amend certain other terms under the former revolving credit facility ( as the context requires , the previous and new revolving credit facility , the `` credit facility '' ) . the credit facility had a weighted average outstanding balance of $ 98,277,000 and a weighted average interest rate of 2.2 % for the year ended december 31 , 2017 . the credit facility matures january 2022 , unless the company exercises its option to extend maturity to january 2023 . as of december 31 , 2017 , the credit facility bears interest at libor plus 87.5 basis points ; however , such interest rate may change pursuant to a tiered interest rate structure based on nnn 's debt rating . the credit facility also includes an accordion feature for nnn to increase the facility size up to $ 1,600,000,000 , subject to lender approval . as of december 31 , 2017 , there was a balance of $ 120,500,000 and $ 779,500,000 was available for future borrowings under the credit facility , excluding undrawn letters of credit totaling $ 230,000 . in accordance with the terms of the credit facility , nnn is required to meet certain restrictive financial covenants , which , among other things , require nnn to maintain certain ( i ) leverage ratios , ( ii ) debt service coverage , ( iii ) cash flow coverage , and ( iv ) investment limitations . at december 31 , 2017 , nnn was in compliance with those covenants .
the purposes of the 2016 equity incentive plan are to attract and retain qualified persons upon whom , in large measure , our sustained progress , growth and profitability depend , to motivate the participants to achieve long-term company goals and to more closely align the participants ' interests with those of our other stockholders by providing them with a proprietary interest in our growth and performance . a n aggregate of 414,504 long term incentive plan ( “ ltip ” ) units were granted during the year ended december 31 , 2016 pursuant to the 2016 equity incentive plan . in addition , an aggregate of 817,893 additional shares are available for future issuance under our 2016 equity incentive plan . as disclosed in note 12 – “ subsequent events , ” on february 28 , 2017 , the company 's board approved the recommendations of the compensation committee of the board with respect to the granting of 2017 annual performance-based ltip awards and long-term performance-based incentive ltip awards to the executive officers of the company and other employees of the advisor who perform services for the company . critical accounting policies the preparation of financial statements in conformity with gaap requires our management to use judgment in the application of accounting policies , including making estimates and assumptions . we base estimates on the best information available to us at the time , our experience and on various other assumptions believed to be reasonable under the circumstances . these estimates affect the reported amounts of assets and liabilities , disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods . if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different , it is possible that different accounting would have been applied , resulting in a different presentation of our financial statements . from time to time , we re-evaluate our estimates and assumptions . in the event estimates or assumptions prove to be different from actual results , adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain . for a more detailed discussion of our significant accounting policies , see note 2 – “ summary of significant accounting policies ” in the footnotes to the accompanying financial statements . below is a discussion of accounting policies that we consider critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain . 17 use of estimates the preparation of the financial statements in conformity with gaap requires us to make estimates and assumptions that affect the amounts reported in the company 's financial statements and accompanying notes . actual results could differ from those estimates . purchase of real estate transactions in which real estate assets are purchased that are not subject to an existing lease are treated as asset acquisitions and are recorded at their purchase price , including capitalized acquisition costs , which is allocated to land and building based upon their relative fair values at the date of acquisition . transactions in which real estate assets are acquired either subject to an existing lease or as part of a portfolio level transaction with significant leasing activity are treated as a business combination under accounting standards codification ( “ asc ” ) topic 805 , business combinations , and the assets acquired and liabilities assumed , including identified intangible assets and liabilities , are recorded at their fair value . fair value is determined based upon the guidance of asc topic 820 , fair value measurements and disclosures and generally are determined using level 2 inputs , such as rent comparables , sales comparables , and broker indications . although level 3 inputs are utilized , they are minor in comparison to the level 2 data used for the primary assumptions . the determination of fair value involves the use of significant judgment and estimates . we make estimates to determine the fair value of the tangible and intangible assets acquired and liabilities assumed using information obtained from multiple sources , including pre-acquisition due diligence , and we routinely utilize the assistance of a third party appraiser . initial valuations are subject to change until the information is finalized , no later than 12 months from the acquisition date . we expense transaction costs associated with acquisitions accounted for as business combinations in the period incurred . details regarding the valuation of tangible assets : the fair value of land is determined using the sales comparison approach whereby recent comparable land sales and listings are gathered and summarized . the available market data is analyzed and compared to the land being valued and adjustments are made for dissimilar characteristics such as market conditions , size , and location . we estimate the fair value of buildings acquired on an as-if-vacant basis and depreciate the building value over its estimated remaining life . we determine the fair value of site improvements ( non-building improvements that include paving and other ) using the cost approach , with a deduction for depreciation , and depreciate the site improvements over their estimated remaining useful lives . tenant improvements represent fixed improvements to tenant spaces , the fair value of which is estimated using prevailing market tenant improvement allowances that would be given to attract a new tenant , estimated based on the assumption that it is a necessary cost of leasing up a vacant building . tenant improvements are amortized over the remaining term of the lease . as of december 31 , 2016 , the company 's recorded site improvements of $ 1,465,273 and tenant improvement of $ 1,186,014 , resulting from the acquisitions of the healthsouth facilities and the ellijay facilities , respectively . story_separator_special_tag net cash used in investing activities for the year ended december 31 , 2016 was $ 150,357,587 , compared with $ 32,338,990 used in investing activities for the year ended december 31 , 2015. the increase during the current year was primarily derived from the completed acquisitions of ten facilities during 2016. cash flows used in investing activities are heavily dependent upon the investment in properties and real estate assets . we anticipate cash flows used in investing activities to increase as we acquire additional properties in the future . net cash provided by financing activities for the year ended december 31 , 2016 was $ 163,567,614 compared with $ 41,643,255 provided by financing activities for the year ended december 31 , 2015. the increase during the current year was primarily derived from the net proceeds received from the initial public offering of $ 137,288,016 , proceeds received from the revolving credit facility that was entered into and december 2016 , and proceeds of $ 32,097,400 received from the cantor loan . these financing cash inflows were partially offset by the full repayment of the omaha and asheville third party debt , a partial payment of the remaining convertible debenture balance , and payments of dividends , deferred debt issuance costs , and deferred public offering costs . dividends pursuant to a previously declared dividend approved by the board and in compliance with applicable provisions of the maryland general corporation law , the company has paid a monthly dividend of $ 0.0852 per share each month during the four-month period from january 2016 through april 2016 in the total amount of $ 285,703. additionally , on september 14 , 2016 , the company announced the declaration of a cash dividend of $ 0.20 per share of common stock to stockholders of record as of september 27 , 2016 and to the holders of the ltip units that were granted on july 1 , 2016. this dividend , in the amount of $ 3,592,786 , was paid on october 11 , 2016. on december 14 , 2016 , the company announced the declaration of a cash dividend of $ 0.20 per share of common stock to stockholders of record as of december 27 , 2016 and to the holders of the ltip units that were granted on july 1 , 2016 and december 21 , 2016. this dividend , in the amount of $ 3,604,037 , was accrued as of december 31 , 2016 and subsequently paid on january 10 , 2017. total dividends paid to holders of the company 's common stock was $ 3,878,489 during the year ended december 31 , 2016. the amount of the dividends paid to our stockholders is determined by our board and is dependent on a number of factors , including funds available for payment of dividends , our financial condition , capital expenditure requirements and annual dividend amount of offering proceeds that may be used to fund dividends , except that , in accordance with our organizational documents and maryland law , we may not make dividend distributions that would : ( i ) cause us to be unable to pay our debts as they become due in the usual course of business ; ( ii ) cause our total assets to be less than the sum of our total liabilities plus senior liquidation preferences ; or ( iii ) jeopardize our ability to maintain our qualification as a reit . 24 non-gaap financial measures funds from operations ( “ ffo ” ) and adjusted funds from operations ( “ affo ” ) are non-gaap financial measures within the meaning of the rules of the u.s. securities and exchange commission . the company considers ffo and affo to be important supplemental measures of its operating performance and believes ffo is frequently used by securities analysts , investors , and other interested parties in the evaluation of reits , many of which present ffo when reporting their results . in accordance with the national association of real estate investment trusts ' ( “ nareit ” ) definition , ffo means net income or loss [ computed in accordance with generally accepted accounting principles ( ” gaap ” ) ] before non-controlling interests of holders of operating partnership units , excluding gains ( or losses ) from sales of property and extraordinary items , plus real estate related depreciation and amortization ( excluding amortization of deferred financing costs ) , and after adjustments for unconsolidated partnerships and joint ventures . the company did not incur any gains or losses from the sales of property or record any adjustments for unconsolidated partnerships and joint ventures during the years ended december 31 , 2016 and december 31 , 2015. because ffo excludes real estate related depreciation and amortization ( other than amortization of deferred financing costs ) , the company believes that ffo provides a performance measure that , when compared period-over-period , reflects the impact to operations from trends in occupancy rates , rental rates , operating costs , development activities and interest costs , providing perspective not immediately apparent from the closest gaap measurement , net income or loss . management calculates affo , which is also a non-gaap financial measure , by modifying the nareit computation of ffo by adjusting it for certain non-cash and non-recurring items . for the company these items include acquisition and disposition costs , loss on the extinguishment of debt , straight line deferred rental revenue , stock-based compensation expense , amortization of deferred financing costs , recurring capital expenditures , recurring lease commissions , recurring tenant improvements and other non-cash and non-recurring items . management believes that reporting affo in addition to ffo is a useful supplemental measure for the investment community to use when evaluating the operating performance of the company on a comparative basis . the company 's ffo and affo computations may not be comparable to ffo and affo reported by other reits that do	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows from investing activities cash flows from investing activities primarily represent activities related to us acquiring healthcare facilities , plants , and equipment and making and collecting loans from other entities . cash flows from financing activities cash flows from financing activities primarily represent activities related to us borrowing and subsequently repaying funds from other entities as well as providing stockholders with a return on investment primarily in the form of a dividend payment . 21 consolidated results of operations the major factor that resulted in variances in our results of operations for each revenue and expense category for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 is due to the fact that as of december 31 , 2016 our portfolio consisted of facilities from a total of 14 acquisitions , whereas as of december 31 , 2015 only four of the 14 acquisitions had occurred . as of december 31 , 2016 the company had facilities in its portfolio from the following acquisitions : · healthsouth facilities ( acquired december 20 , 2016 ) · ellijay facilities ( acquired december 16 , 2016 ) · carson city facilities ( acquired october 31 , 2016 ) · sandusky facilities ( acquired october 7 , 2016 ) · watertown ( acquired september 30 , 2016 ) · east orange ( acquired september 29 , 2016 ) · reading ( acquired july 20 , 2016 ) · melbourne ( acquired march 31 , 2016 ) · westland ( acquired march 31 , 2016 ) · plano ( acquired january 28 , 2016 ) · tennessee facilities ( acquired december 31 , 2015 ) · west mifflin ( acquired september 25 , 2015 ) · asheville ( acquired september 19 , 2014 ) · omaha ( acquired june 5 , 2014 ) as of december 31 , 2015 the company had facilities in its portfolio from the following acquisitions : · tennessee facilities ( acquired december 31 , 2015 ) · west mifflin ( acquired september 25 , 2015 ) · asheville ( acquired september 19 , 2014 ) · omaha ( acquired june 5 , 2014 ) revenues total revenue for the year ended december 31 , 2016 was $ 8,210,330 ,
change in functional currency and reporting currency effective october 1 , 2011 , lone pine changed its functional currency and reporting currency from the u.s. dollar to the canadian dollar . the change in functional currency did not have a significant impact on our consolidated financial statements for either the fourth quarter of 2011 or the year ended december 31 , 2011 as lone pine 's operations are primarily carried out by its operating subsidiary , lpr canada . the functional currency of lpr canada has not changed and continues to be the canadian dollar . prior to the distribution , lone pine used the same reporting currency as forest , which was the u.s. dollar , in its consolidated financial statements . however , after the distribution , our management determined that our financial statements should be presented using the canadian dollar , in order to 54 present lone pine 's financial statements in the same currency as its functional currency , and to minimize the impact of changes in foreign currency exchange rates on our financial statements . the determination to change lone pine 's reporting currency was based on a number of factors , which included the following : ( 1 ) lone pine has no assets or operations in the united states , ( 2 ) substantially all of lone pine 's operations are conducted in a single functional currency , the canadian dollar , and ( 3 ) the reporting currency selected , the canadian dollar , is the same as the functional currency . prior to the change in reporting currency , our consolidated statements of operations were translated from canadian dollars using the weighted average exchange rate for the period . the resulting foreign currency translation adjustment was reported as a component of other comprehensive income and accumulated other comprehensive income . as a result of our change in reporting currency , all comparative financial information has been recast from u.s. dollars to canadian dollars to reflect our consolidated financial statements as if they had been historically reported in canadian dollars , consistent with asc 830 , foreign currency matters . the consolidated u.s. dollar balance sheet at december 31 , 2010 was translated into canadian dollars by translating assets and liabilities at the end-of-period exchange rate and translating equity balances at historical exchange rates . as a result of our change in functional currency and reporting currency , there is no difference between the reporting currency and the functional currency of lone pine resources inc. and any of its operating subsidiaries . following the changes in functional currency and reporting currency , we will be subject to foreign currency exchange rate risk relating to the senior notes , certain of our derivative instruments and our delivery commitment of approximately 21,000 mmbtu/d of natural gas under a long-term sales contract expiring in 2014. see `` critical accounting policies , estimates , judgments and assumptions change in reporting and functional currency `` for more information about our change in reporting currency , including the reasons for the change , the manner in which the change has been applied to recast prior period financial statements and the major financial statement categories that are denominated in u.s. dollars , and for certain u.s. dollar financial information as of and for the year ended december 31 , 2011. see also note 2 to our consolidated financial statements . financial and operating performance our financial and operating performance for 2011 included the following highlights : on june 1 , 2011 , we completed our ipo of 15 million shares of our common stock . in connection with our ipo and pursuant to our separation and distribution agreement with forest , forest contributed to us its ownership interest in lpr canada in exchange for 69,999,999 shares of our common stock and a cash distribution of $ 28.7 million . we received net proceeds from our ipo of approximately $ 173.1 million and used these net proceeds to pay $ 28.7 million to forest as partial consideration for forest 's contribution to us of forest 's direct and indirect interests in its canadian operations . we used the remaining net proceeds and borrowings under our bank credit facility to repay outstanding indebtedness owed to forest , including intercompany advances and accrued interest . our average daily net sales volumes for the fourth quarter of 2011 and for the year ended december 31 , 2011 were 99 mmcfe/d and 94 mmcfe/d respectively , and our average daily oil and ngls net sales volumes for the fourth quarter of 2011 increased 27 % to 4,499 bbls/d , compared to 3,544 bbls/d in the third quarter of 2011 as our average net liquids percentage increased from 22 % to 27 % . we drilled a total of 47 gross ( 47 net ) horizontal light oil wells at evi and 6 gross ( 5.5 net ) natural gas wells in the deep basin with a 100 % success rate . we generated adjusted ebitda of $ 128.2 million , a 27 % increase over 2010 and adjusted discretionary cash flow of $ 118.4 million , a 26 % increase over 2010 . 55 during february 2012 , lpr canada completed the senior notes offering . the net proceeds of approximately $ 192 million were used to partially repay borrowings outstanding under our bank credit facility . the senior notes are guaranteed by lone pine and all of lone pine 's wholly-owned subsidiaries ( other than lpr canada ) . recent trends and outlook for 2012 beginning in the second half of 2008 and continuing throughout 2011 , canada , the united states and other industrialized countries experienced a significant economic slowdown . during the same time period , north american natural gas supply increased as a result of increased domestic unconventional natural gas development and associated natural gas from oil development . story_separator_special_tag adjusted ebitda increased $ 27.0 million for the year ended december 31 , 2011 compared to the year ended december 31 , 2010 , due to an increase in oil and gas revenues that was partially offset by higher operating costs incurred during 2011 because of an increase in production volumes , workovers , maintenance costs , water hauling , higher utility and chemical costs and higher general and administrative costs related to our ipo and the distribution . net earnings ( loss ) for the years ended december 31 , 2010 and 2009 were primarily impacted by changes in oil and gas sales driven by oil , natural gas and ngl price fluctuations ; however , net earnings ( loss ) did not change proportionately to the changes in oil and gas sales due to ( 1 ) non-cash foreign currency gains and losses in each period presented and ( 2 ) a $ 251.0 million non-cash ceiling test write-down recorded in the first quarter of 2009 caused by a significant decline in natural gas prices as of march 31 , 2009 ( see `` critical accounting policies , estimates , judgments and assumptions full cost method of accounting `` for information on ceiling test write-downs ) . adjusted ebitda , which excludes the impact of these two non-cash items , was highly correlated with the changes in oil and gas sales for the year ended december 31 , 2010 and 2009. a discussion of the components of the changes in our results of operations follows . 61 oil and natural gas volumes and revenues oil , natural gas and ngl sales volumes and revenues ( which are reported net of royalties ) and average sales prices by product for the years ended december 31 , 2011 , 2010 and 2009 are set forth in the table below . replace_table_token_15_th ( 1 ) `` net sales volumes `` represents our working interest sales volumes less the amount of volumes attributable to royalties . net sales volumes for the year ended december 31 , 2011 increased 22 % to 94 mmcfe/d from 77 mmcfe/d for the year ended december 31 , 2010. excluding the volumes relating to properties sold in 2009 and 2010 , the increase would be 24 % for the year ended december 31 , 2011. the increases were primarily due to new drilling activity in our evi and narraway/ojay fields , as well as the acquisition of additional narraway/ojay producing properties in april 2011 , partially offset by natural declines in other areas . net sales volumes for the year ended december 31 , 2010 were 77 mmcfe/d compared to 78 mmcfe/d in 2009. the 1 mmcfe/d decrease was due to the divestiture of non-core oil and gas properties primarily in december 2009 and april 2010 that , at the time the divestitures occurred , had a combined net production rate of 16 mmcfe/d . the impact from the oil and gas property divestitures on our 2010 net sales volumes was nearly offset by production increases attributable to new wells drilled in 2010. oil and natural gas revenues were $ 191 million for the year ended december 31 , 2011 , a 26 % increase as compared to $ 151 million for the year ended december 31 , 2010. the increase in revenues was due to an increase in sales volumes of 22 % , as well as higher realized oil prices in each period . in addition , oil differentials widened in the second and third quarters of 2011 as a result of the shutdown of the pipeline used to transport oil from evi to market . this necessitated trucking the oil to market . the pipeline was back in operation in the fourth quarter of 2011. oil and natural gas revenues were $ 151 million and $ 127 million for the years ended december 31 , 2010 and 2009 , respectively . the 19 % increase in revenues was primarily due to a 19 % increase in the average sales price per unit . see `` how we evaluate our operations realized commodity prices `` 62 above for a comparison of our realized commodity prices compared to commonly used benchmark prices . oil and gas production expense the table below sets forth the detail of production expense for the periods indicated . replace_table_token_16_th lease operating expenses lease operating expenses in the year ended december 31 , 2011 were $ 38.8 million , or $ 1.13 per mcfe , compared to $ 26.5 million , or $ 0.94 per mcfe , in the year ended december 31 , 2010. the $ 12.2 million increase in lease operating expenses was primarily due to an increase in production volumes , workovers , maintenance costs , water hauling and utility and chemical costs . additional workover activity as noted above accounted for $ 3.2 million of the increase . maintenance costs increased $ 3.7 million due primarily to start-up costs associated with bringing a large number of wells on-line in late 2010 , which were previously shut-in due to infrastructure constraints . in conjunction with these wells coming on-line , a new remotely-located compressor facility was also placed in service . for several months after the initial start-up of the new wells and the new compressor facility , we incurred significant mechanical and electrical costs tied to the start-up , including troubleshooting costs related to the new facilities and the prolonged shut-in of the wells . maintenance costs at evi also increased due to the heightened activity in the area combined with some harsh operating conditions . costs of trucking and disposing of water increased by $ 1.3 million . utility costs increased $ 0.6 million primarily due to higher utility rates as well as an increase in usage . chemical costs , which primarily include methanol and glycol used to prevent the freezing of gas lines , increased $ 0.6 million for the year . other increases were	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources our exploration , development and acquisition activities require us to make significant operating and capital expenditures . historically , we have used cash flow from operating activities , our bank credit facility and borrowings from forest as our primary sources of liquidity . additionally , as market conditions have permitted , we have engaged in non-core asset divestitures . following the completion of our ipo and the distribution , we are no longer able to borrow from forest . changes in the market prices for oil , natural gas and ngls directly impact our level of cash flow from operating activities . natural gas has historically comprised approximately 80 % of our production ; as a result , our operations and cash flows have been more sensitive to fluctuations in the market price for natural gas than to fluctuations in the market price for oil . in 2011 , we entered into commodity swap derivative instruments to manage our exposure to commodity price risk caused by fluctuations in commodity prices , which protect and provide certainty on a portion of our cash flows . as of march 20 , 2012 , we had entered into commodity swaps to hedge approximately 16 bcfe of our projected 2012 production . this level of hedging will provide a measure of certainty of the cash flow that we will receive for a portion of our production in 2012. in the future , we may determine to increase or decrease our hedging positions . see part ii , `` item 7a . quantitative and qualitative disclosures about market risk commodity price risk `` for more information on our derivative contracts . as noted above , a primary source of liquidity is our bank credit facility , which has been used to fund daily operations as needed . our bank credit facility , which matures in march 2016 , is secured by a portion of our assets . our bank credit facility had a borrowing base of $ 425 million at december 31 , 2011 , which was subsequently reduced to $ 375 million in february 2012 upon the completion of our offering of the senior notes .
in collaborating with becton-dickinson and the university of california , san francisco , we are utilizing this technology platform of our majority-owned subsidiary , athelos corporation ( `` athelos `` ) , to restore immune balance by enhancing treg cell number and function . tregs are a natural part of the human immune system and regulate the activity of t effector cells , the cells that are responsible for protecting the body from viruses and other foreign antigen exposure . when tregs function properly , only foreign materials are attacked by t effector cells . in autoimmune disease it is thought that deficient treg activity permits the t effector cells to attack the body 's own tissues . we plan to initiate a phase 2 study of treg based therapeutics to treat type 1 diabetes in 2014. we also plan to initiate a phase 1 study in canada of treg based therapeutics in support of a steroid resistant asthma indication in 2014. pre-clinical assets include our vsel tm ( very small embryonic like ) technology regenerative medicine platform . regenerative medicine holds the promise of improving clinical outcomes and reducing overall healthcare costs . we are working on a department of defense funded study of vsels tm for the treatment of chronic wounds . other preclinical work with vsels tm includes exploring macular degeneration as a target indication . progenitor cell therapy , llc ( `` pct `` ) is a contract manufacturer that generates revenue . this wholly owned subsidiary , which we acquired in 2011 , is an industry leader in providing high quality manufacturing capabilities and support to developers of cell-based therapies to enable them to improve efficiencies and profitability and reduce capital investment for their own development activities . since its inception more than 15 years ago , pct has provided pre-clinical and clinical current good manufacturing practice ( “ cgmp ” ) development and manufacturing services to more than 100 clients . pct has experience advancing regenerative medicine product candidates from product inception through rigorous quality standards all the way through 50 index to human testing , biologic license application ( `` bla `` ) filing and fda product approval . pct 's core competencies in the cellular therapy industry include manufacturing of cell therapy-based products , engineering and innovation services , product and process development , cell and tissue processing , regulatory support , storage , distribution and delivery and consulting services . pct has two cgmp , state-of-the art cell therapy research , development , and manufacturing facilities in new jersey and california , serving the cell therapy community with integrated and regulatory compliant distribution capabilities . the company is pursuing commercial expansion of our manufacturing operations both in the u.s. and internationally . effective march 31 , 2012 , we no longer operated in the former regenerative medicine – china segment , which is now reported in discontinued operations ( see note 15 ) . on november 13 , 2012 , we completed the sale of our 51 % interest in suzhou erye , which represented the operations in our former pharmaceutical manufacturing - china segment , and is also reported in discontinued operations ( see note 15 ) . as a result , we currently operate in a single reporting segment - cell therapy , which will focus on contract development and manufacturing and cell therapy development programs . we believe that neostem is ideally positioned to lead the cell therapy industry . results of operations year ended december 31 , 2013 compared to year ended december 31 , 2012 net loss for the year ended december 31 , 2013 was approximately $ 39.5 million compared to $ 66.4 million for the year ended december 31 , 2012 . our net losses from continuing operations for the years ended december 31 , 2013 and 2012 were approximately $ 39.5 million and $ 36.1 million , respectively . the loss from discontinued operations - net for the year ended december 31 , 2012 was approximately $ 30.3 million , and represents the operations of our former regenerative medicine – china segment which was deconsolidated in the first quarter of 2012 , and the operations of our former pharmaceutical manufacturing - china segment , which related to the sale of our 51 % interest in suzhou erye pharmaceuticals company ltd. ( `` suzhu erye `` ) , in the fourth quarter of 2012. revenues for the year ended december 31 , 2013 , total revenues were approximately $ 14.7 million compared to $ 14.3 million for the year ended december 31 , 2012 , representing an increase of $ 0.3 million , or 2 % . revenues were comprised of the following ( in thousands ) : replace_table_token_4_th clinical services , representing process development and clinical manufacturing services provided at pct to its various clients , were approximately $ 9.1 million for the year ended december 31 , 2013 compared to $ 8.0 million for the year ended december 31 , 2012 , representing an increase of approximately $ 1.1 million or 14 % . the increase was primarily due to $ 2.3 million of higher clinical manufacturing revenue ( which is recognized as services are rendered ) , which was partially offset by $ 1.2 million lower process development revenue ( such revenue being recognized on a `` completed contract `` basis ) . overall , there were approximately 50 % more active clinical services clients as of december 31 , 2013 compared to december 31 , 2012 . ◦ clinical manufacturing revenue - clinical manufacturing revenues were approximately $ 7.0 million for the year ended december 31 , 2013 , compared to $ 4.7 million for the year ended december 31 , 2012 . the increase is primarily due to an increase in the number of patients our customers enrolled and were treating in clinical trials being conducted by our customers . story_separator_special_tag if we are unable to raise the funds necessary to meet our long-term liquidity needs , we may have to delay or discontinue the acquisition and development of cell therapies , and or the expansion of our business or raise funds on terms that we currently consider unfavorable . commitments and contingencies the following table summarizes our obligations to make future payments under current contracts as of december 31 , 2013 ( in thousands ) : replace_table_token_6_th 56 index under agreements with external clinical research organizations ( “ cros ” ) , we will incur expenses relating to our clinical trials for our therapeutic product candidates in development . the timing and amount of these expenses are based on performance of services rendered and expenses are incurred by the cros and therefore , we can not reasonably estimate the timing of these payments . seasonality neostem does not believe that its operations are seasonal in nature . off-balance sheet arrangements neostem does not have any off-balance sheet arrangements . critical accounting policies and estimates the preparation of financial statements in conformity with accounting principles generally accepted in the united states requires management to make estimates and judgments that affect the amounts reported in the financial statements . on an ongoing basis , the company evaluates its estimates and assumptions . the company bases its estimates on historical experience and other assumptions believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources . actual results could differ from these estimates . an accounting policy is considered to be critical if it is important to the company 's financial condition and results of operations and if it requires management 's most difficult , subjective and complex judgments in its application . for a summary of all of the company 's significant accounting policies , see note 2 to the company 's consolidated financial statements . revenue recognition clinical services : the company recognizes revenue for its ( i ) cell process development and ( ii ) cell manufacturing services based on the terms of individual contracts . revenues associated with cell process development services generally contain multiple stages that do not have stand-alone values and are dependent upon one another , and are recognized as revenue on a completed contract basis . we recognize revenues for cell development services when all of the following conditions are met : persuasive evidence of an arrangement exists ; delivery has occurred or the services have been rendered ; the fee is fixed or determinable ; and collectability is probable . the company considers signed contracts as evidence of an arrangement . the company assesses whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the payment terms are subject to refund or adjustment . the company assesses cash collectability based on a number of factors , including past collection history with the client and the client 's creditworthiness . if the company determines that collectability is not reasonably assured , it defers revenue recognition until collectability becomes reasonably assured , which is generally upon receipt of the cash . the company 's arrangements are generally non-cancellable , though clients typically have the right to terminate their agreement for cause if the company materially fails to perform . cell manufacturing services are generally distinct arrangements whereby the company is paid for time and materials or for fixed monthly amounts . revenue is recognized when efforts are expended or contractual terms have been met . some client agreements include multiple elements , comprised of cell process development and cell manufacturing services . the company believes that cell process development and cell manufacturing services each have stand-alone value because these services can be provided separately by other companies . in accordance with asc update no . 2009-13 , “ revenue recognition ( topic 605 ) : multiple-deliverable revenue arrangements , ” the company ( 1 ) separates deliverables into separate 57 index units of accounting when deliverables are sold in a bundled arrangement and ( 2 ) allocates the arrangement 's consideration to each unit in the arrangement based on its relative selling price . clinical services reimbursements : the company separately charges the customers for the expenses associated with certain consumable resources ( reimbursable expenses ) that are specified in each clinical services contract . on a monthly basis , the company bills customers for reimbursable expenses and immediately recognizes these billings as revenue , as the revenue is deemed earned as reimbursable expenses are incurred . processing and storage services : the company recognizes revenue related to the collection and cryopreservation of cord blood and autologous adult stem cells when the cryopreservation process is completed which is approximately twenty-four hours after cells have been collected . revenue related to advance payments of storage fees is deferred and recognized ratably over the period covered by the advance payments . share-based compensation the company expenses all share-based payment awards to employees , directors , advisors and consultants , including grants of stock options , warrants , and restricted stock , over the requisite service period based on the grant date fair value of the awards . advisor and consultant awards are remeasured each reporting period through vesting . for awards with performance-based vesting criteria , the company estimates the probability of achievement of the performance criteria and recognizes compensation expense related to those awards expected to vest . the company determines the fair value of certain share-based awards using the black-scholes option-pricing model which uses both historical and current market data to estimate the fair value . this method incorporates various assumptions such as the risk-free interest rate , expected volatility , expected dividend yield and expected life of the options or warrants . the fair value of the company 's restricted stock and restricted stock	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	analysis of liquidity and capital resources at december 31 , 2013 we had a cash balance of approximately $ 46.1 million , working capital of approximately $ 41.0 million , and stockholders ' equity of approximately $ 62.5 million . during the year ended december 31 , 2013 , we met our immediate cash requirements through revenue generated from our pct operations , existing cash balances , offerings of our common stock ( which raised an aggregate of approximately $ 58.7 million ) , warrant exercises ( which raised approximately $ 3.0 million ) , and the use of equity and equity-linked instruments to pay for services and compensation . net cash provided by or used in operating , financing and investing activities from continuing operations were as follows ( in thousands ) : 54 index replace_table_token_5_th operating activities - continuing operations our cash used in operating activities -continuing operations in the year ended december 31 , 2013 totaled approximately $ 27.1 million , which is the sum of ( i ) our net loss from continuing operations of $ 39.5 million , and adjusted for non-cash expenses totaling $ 10.8 million ( which includes adjustments for equity-based compensation , depreciation and amortization , and changes in acquisition-related contingent consideration ) , and ( ii ) changes in operating assets and liabilities providing approximately $ 1.6 million .
absence of drilling activities on the company 's o & g properties , unitization of existing wells , inability to explore for new reserves , declines in production rates and plugging and abandoning of existing wells ; ( x ) ongoing and possible new regulations , investigations , enforcement actions and costs , legal expenses , penalties , fines , assessments , litigation , judgments and settlements , taxes and disruptions and limitations of operations , including those related to climate change and health and safety and those that could impact the company 's ability to continue or renew its operating permits ; and ( xi ) other risks and uncertainties set forth in this report or indicated from time to time in the company 's filings with the sec , including the company 's quarterly reports on form 10-q . overview . general . we have identified two business segments based on the distinctness of their activities and products : lime and limestone operations and natural gas interests . all operations are in the united states . in evaluating the operating results of our segments , management primarily reviews revenues and gross profit . we do not allocate corporate overhead or interest costs to our business segments . our lime and limestone operations represent our principal business . our natural gas interests consist of royalty and non-operating working interests under the o & g lease and the drillsite agreement with two separate operators related to our johnson county , texas property , located in the barnett shale formation , on which texas lime conducts its lime and limestone operations . our principal management decisions related to our natural gas interests involve whether to participate as a non-operating working interest owner by contributing our proportional costs for drilling proposed wells or workovers of existing wells under the o & g lease and the drillsite agreement . while we intend to continue to participate in future natural gas wells drilled and workovers of existing wells on our o & g properties , if any , we are not in the business of drilling for or producing natural gas , and have no personnel expert in that field . revenues from our lime and limestone operations decreased 2.6 % in 2013 compared to 2012. the decreased sales volumes of our lime and limestone products , which accounted for a revenue decrease of approximately 3.8 % for 2013 compared to 2012 , resulted principally from reduced sales volumes to our steel customers , partially offset by increased sales volumes to our construction and environmental customers , although we had reduced demand from our construction customers in the fourth quarter 2013 due to inclement weather conditions compared to favorable weather conditions in the fourth quarter 2012. this decrease in sales volumes was partially offset by average product price increases of approximately 1.2 % for our lime and limestone products in 2013 compared to 2012. revenues from our natural gas interests decreased $ 1.4 million , or 19.1 % , to $ 5.8 million in 2013 from $ 7.1 million in 2012 primarily due to decreased production volumes resulting from the normal declines in production rates on the company 's existing natural gas wells . the decrease in revenues from our natural gas interests in 2013 resulted from lower production volumes in 2013 ( approximately 21.2 % ) , partially offset by price increases in 2013 ( approximately 2.1 % ) . our gross profit decreased 7.9 % in 2013 compared to 2012. gross profit from our lime and limestone operations in 2013 decreased 5.4 % compared to 2012 primarily due to the decreased revenues discussed above and increased cost of revenues in the fourth quarter 2013 resulting from production inefficiencies due to the inclement weather conditions , partially offset by a reduction in our 23 stripping costs of approximately $ 0.6 million in 2013 compared to 2012. the timing and amount of our stripping costs in the future will depend upon , among other things , the availability and cost-effective utilization of contractors and their equipment and our employees and equipment , but we believe the costs of our ongoing stripping will be at approximately the same rate to production as we incurred in 2013. our gross profit from our natural gas interests decreased 26.7 % in 2013 compared to 2012 due to the decreased revenues discussed above . these decreases in gross profit resulted in a $ 1.6 million , or 9.9 % , decrease in our net income in 2013 compared to 2012. cash flows from operations during 2012 enabled us to continue to service our bank debt , make $ 8.9 million of capital investments , and leave us with cash balances of $ 49.5 million at december 31 , 2013 compared to $ 29.8 million at december 31 , 2012. our significant cash flows and strong balance sheet enabled us to declare a quarterly cash dividend to our shareholders payable on march 20 , 2014. lime and limestone operations . in our lime and limestone operations , we produce and sell pls , quicklime , hydrated lime and lime slurry . the principal factors affecting our success are the level of demand and prices for our products and whether we are able to maintain sufficient production levels and product quality while controlling costs . inclement weather conditions generally reduce the demand for lime and limestone products supplied to construction-related customers that account for a significant amount of our revenues . inclement weather also interferes with our open-pit mining operations and can disrupt our plant production , as in the case of winter ice storms and freezing weather . in addition to weather , various maintenance , environmental , accident and other operational issues can also disrupt our operations and increase our operating expenses . story_separator_special_tag interest expense in 2013 included $ 1.1 million paid in quarterly settlement payments pursuant to our interest rate hedges , compared to $ 1.3 million paid in 2012. the decrease in interest expense in 2013 resulted from decreased average outstanding debt . income tax expense decreased to $ 5.0 million for 2013 from $ 5.7 million in 2012 , a decrease of $ 645 thousand , or 11.4 % . the decrease in income tax expense in 2013 compared to 2012 was primarily due to the decrease in our income before taxes . our effective income tax rate for 2013 decreased to 25.4 % compared to our 2012 rate of 25.7 % . net income decreased by $ 1.6 million , or 9.9 % , to $ 14.8 million ( $ 2.66 per share diluted ) , compared to net income of $ 16.4 million ( $ 2.87 per share diluted ) in 2012 . 2012 vs. 2011 revenues for 2012 decreased to $ 138.5 million from $ 142.6 million in 2011 , a decrease of $ 4.1 million , or 2.8 % . revenues from our lime and limestone operations for 2012 increased $ 1.7 million , or 1.3 % , to $ 131.4 million from $ 129.7 million in 2011. the increase in revenues from our lime and limestone operations was primarily due to increased prices realized for our lime and limestone products in 2012 , compared to 2011 , partially offset by decreased sales volumes of lime and limestone products principally due to decreased demand from our steel and oil and gas services customers . revenues from our natural gas interests for 2012 decreased $ 5.8 million , or 44.7 % , to $ 7.1 million from $ 12.9 million in 2011. the decrease in revenues from our natural gas interests resulted from decreased average prices received per mcf , principally as a result of decreased prices for both natural gas and liquids contained in our natural gas , and the normal declines in production rates on existing wells . natural gas interests revenues for 2011 also included $ 487 thousand from the final favorable resolution of certain royalty ownership issues on unitized natural gas wells . our gross profit decreased to $ 33.4 million for 2012 from $ 41.3 million for 2011 , a decrease of $ 7.9 million , or 19.1 % . gross profit from our lime and limestone operations for 2012 was $ 29.5 million , compared to $ 32.1 million in 2011 , a decrease of $ 2.6 million , or 8.2 % . the decrease in gross profit in 2012 compared to 2011 resulted primarily from contractor stripping costs of $ 2.6 million incurred principally in the second and third quarters 2012 , compared to no such contractor stripping costs in 2011. gross profit for 2012 also included $ 3.9 million from our natural gas interests , compared to $ 9.2 million in 2011 , a decrease of $ 5.3 million or 57.2 % . there were 39 producing wells at both december 31 , 2012 and 2011. production volumes for 2012 from our natural gas interests totaled 1.2 bcf , sold at an average price per mcf of $ 5.74 , compared to 2011 when 1.6 bcf was produced and sold at an average price of $ 8.27 per mcf . in addition , 2011 included a $ 463 thousand contribution to gross profit from the resolution of certain royalty ownership issues . sg & a increased to $ 9.2 million for 2012 from $ 8.8 million in 2011 , an increase of $ 347 thousand , or 3.9 % . as a percentage of revenues , sg & a increased to 6.6 % in 2012 from 6.2 % in 2011. the increase in sg & a in 2012 was primarily attributable to increased non-cash stock-based compensation costs , which increased $ 204 thousand , or 29.6 % , compared to 2011 , due to increases in the price per share of the company 's common stock on the most recent grant dates , compared to the prices per share on previous grant dates . 29 interest expense in 2012 decreased to $ 2.2 million from $ 2.5 million in 2011 , a decrease of $ 332 thousand , or 13.3 % . interest expense in 2012 and 2011 included $ 1.3 million and $ 1.6 million , respectively , paid in aggregate quarterly settlement payments pursuant to our interest rate hedges . the decrease in interest expense in 2012 resulted from decreased average outstanding debt . income tax expense decreased to $ 5.7 million in 2012 from $ 8.0 million in 2011 , a decrease of $ 2.3 million , or 28.6 % . the decrease in income tax expense in 2012 compared to 2011 was primarily due to the decrease in our income before taxes . our effective income tax rate for 2012 decreased to 25.7 % compared to our 2011 rate of 26.4 % primarily because of proportionately higher statutory depletion rates as a percentage of pretax income in 2012 compared to 2011. net income decreased to $ 16.4 million ( $ 2.87 per share diluted ) in 2012 , compared to $ 22.2 million ( $ 3.49 per share diluted ) in 2011 , a decrease of $ 5.8 million , or 26.0 % . earnings per share for 2012 was favorably impacted by $ 0.32 per share by the company 's repurchase of 200,000 shares of its common stock during the third quarter 2011 and 700,000 shares of common stock in the first quarter 2012. earnings per share for 2011 was favorably impacted by $ 0.04 per share by the 2011 repurchase of 200,000 shares of common stock . financial condition . capital requirements . we require capital primarily for seasonal working capital needs , normal recurring capital and re-equipping projects , modernization and expansion and development projects , drilling , completion and working over	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources . net cash provided by operations was $ 33.5 million for 2013 , compared to $ 31.7 million in 2012 , an increase of $ 1.8 million , or 5.8 % . our cash provided by operating activities is composed of net income , depreciation , depletion and amortization ( `` dd & a '' ) , other non-cash items included in net income and changes in working capital . in 2013 , cash provided by operating activities was principally composed of $ 14.8 million net income , $ 14.5 million dd & a , $ 1.7 million deferred income taxes , $ 0.9 million of stock-based compensation and $ 1.4 million from changes in operating assets and liabilities . the increase in 2013 compared to 2012 was primarily the result of the $ 0.4 million decrease in inventories in 2013 compared to a $ 3.4 million increase in 2012 , and the $ 0.6 million increase in accounts payable and accrued expenses in 2013 compared to a $ 1.1 million decrease in 2012. these increases were partially offset by the $ 1.6 million decrease in net income in 2013. net cash used in investing activities was $ 8.7 million for 2013 compared to $ 8.3 million in 2012 , primarily for normal recurring capital and re-equipping projects at our plants and facilities . net cash used in financing activities primarily consisted of $ 5.0 million to repay term loans in 2013 , compared to $ 6.25 million in 2012 , and $ 0.2 million to repurchase shares of our common stock in 2013 , compared to $ 40.8 million in 2012. our cash and cash equivalents at december 31 , 2013 increased to $ 49.5 million from $ 29.8 million at december 31 , 2012. banking facilities and other debt our credit agreement includes a ten-year $ 40 million term loan ( the `` term loan '' ) , a ten-year $ 20 million multiple draw term loan ( the `` draw term loan '' ) and a $ 30 million revolving credit facility ( the `` revolving facility '' ) ( collectively , the `` credit facilities '' ) .
segment financial information for prior years has been recast to align with this change in segment reporting . there was no impact to the consolidated financial statements of the company as a result of this change . additional details on our reportable operating segments are included in note17 . 60 2019 form 10-k we intend for this md & a to provide the reader with information that will assist in understanding our results of operations , including metrics that management uses to assess the company 's performance . throughout this md & a , we discuss the following performance metrics : the company provides certain percentage changes excluding the impact of foreign currency translation ( “ f/x ” ) . these amounts are derived by translating current year results at prior year average exchange rates . we believe the elimination of the f/x impact provides better year-to-year comparability without the distortion of foreign currency fluctuations . system sales growth reflects the results of all restaurants regardless of ownership , including company-owned , franchise and unconsolidated affiliate restaurants that operate our concepts , except for sales from non-company-owned restaurants , for which we do not receive a sales-based royalty . sales of franchise and unconsolidated affiliate restaurants typically generate ongoing franchise fees for the company at a rate of approximately 6 % of system sales . franchise and unconsolidated affiliate restaurant sales are not included in company sales in the consolidated statements of income ; however , the franchise fees are included in the company 's revenues . we believe system sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all of our revenue drivers , company and franchise same-store sales as well as net unit growth . effective january 1 , 2018 , the company revised its definition of same-store sales growth to represent the estimated percentage change in sales of food of all restaurants in the company system that have been open prior to the first day of our prior fiscal year . we refer to these as our “ base ” stores . previously , same-store sales growth represented the estimated percentage change in sales of all restaurants in the company system that have been open for one year or more , and the base stores changed on a rolling basis from month to month . this revision was made to align with how management measures performance internally and focuses on trends of a more stable base of stores . prior years have been adjusted accordingly . company restaurant profit ( “ restaurant profit ” ) is defined as company sales less expenses incurred directly by our company-owned restaurants in generating company sales . company restaurant margin percentage is defined as restaurant profit divided by company sales . within the company sales and restaurant profit analysis , store portfolio actions represent the net impact of new-unit openings , acquisitions , refranchising and store closures , and other primarily represents the impact of same-store sales as well as the impact of changes in restaurant operating costs such as inflation/deflation . in addition to the results provided in accordance with gaap throughout this md & a , the company provides measures adjusted for special items , which include adjusted operating profit , adjusted net income , adjusted earnings per common share , adjusted effective tax rate and adjusted ebitda , which we define as net income including noncontrolling interests adjusted for income tax , interest income , net , investment gain or loss , depreciation and amortization , and other items , including store impairment charges and special items . special items for the years ended december 31 , 2019 , 2018 and 2017 consist of impairment on intangible assets and goodwill attributable to the daojia business , impact from the u.s. tax cuts and jobs act ( the “ tax act ” ) , gain recognized from the re-measurement of our previously held equity interest in wuxi kfc at fair value upon acquisition , and income from the reversal of contingent consideration previously recorded for a business combination . the company excludes impact from special items for the purpose of evaluating performance internally . special items are not included in any of our segment results . in addition , the company provides adjusted ebitda because we believe that investors and analysts may find it useful in measuring operating performance without regard to items such as income tax , interest income , net , investment gain or loss , depreciation and amortization , and other items , including store impairment charges and special items . these adjusted measures are not intended to replace the presentation of our financial results in accordance with gaap . rather , the company believes that the presentation of these adjusted measures provides additional information to investors to facilitate the comparison of past and present results , excluding those items that the company does not believe are indicative of our ongoing operations due to their nature . 61 2019 form 10-k results of operations summary all comparisons within this summary are versus the same period a year ago . all system sales growth , same-store sales growth , operating profit and net income comparisons exclude the impact of foreign currency . refer to item 1. business for a discussion on the seasonality of our operations . in 2017 , the company 's total revenues increased 10 % , or 12 % excluding the impact of f/x , attributable to solid sales performance at kfc with same-store sales growth of 5 % and 1 % same-store sales growth at pizza hut . the increase was also attributable to the increase in revenues from transactions with franchisees and unconsolidated affiliates , new-unit openings of 691 or 6 % net unit growth , bringing total store count to 7,983 across more than 1,200 cities . story_separator_special_tag starting january 2020 , the novel coronavirus outbreak originating in wuhan , china has significantly impacted the company 's operations , including the temporary closure of more than 30 % of its restaurants in china during the chinese new year holiday , and a significant decline in sales for restaurants that remained open , which is likely to have a materially adverse impact on the company 's results of operations , cash flows and financial condition for the first quarter of 2020 and full year 2020. at this time , the company can not forecast when ( and at what rate ) the closed restaurants will re-open , which is subject to the local governments ' requirements , and when restaurant guest traffic will be restored ( and at what level ) . the extent to which our operations continue to be impacted by the outbreak will depend largely on future developments , which are highly uncertain and can not be accurately predicted , including new information which may emerge concerning the severity of the outbreak and the actions by the government authorities to contain the outbreak or treat its impact , among other things . insurance may be unavailable to cover any losses we incur as a result of the outbreak . tax examination on transfer pricing we are subject to reviews , examinations and audits by chinese tax authorities , the irs and other taxing authorities with respect to income and non-income based taxes . since 2016 , we have been under a national audit on transfer pricing by the sta in china regarding our related party transactions for the period from 2006 to 2015. the information currently exchanged with tax authorities focuses on our franchise arrangement with yum . we have submitted information to the extent it is available to the company . it is reasonably possible that there could be significant developments , including expert review and assessment by the sta , within the next 12 months . the ultimate assessment will depend upon further review of the information provided and ongoing technical and other discussions with the sta and in-charge local tax authorities , and therefore it is not possible to reasonably estimate the potential impact . we will continue to defend our transfer pricing position . however , if the sta prevails in the assessment of additional tax due based on its ruling , the assessed tax , interest and penalties , if any , could have a material adverse impact on our financial position , results of operations and cash flows . prc value-added tax effective may 1 , 2016 , a 6 % output vat replaced the 5 % business tax ( “ bt ” ) previously applied to certain restaurant sales . input vat would be creditable to the aforementioned 6 % output vat . the latest vat rates imposed on our purchase of materials and services included 13 % , 9 % and 6 % , which were gradually changed from 17 % , 13 % , 11 % and 6 % since 2017. these rate changes impact our input vat on all materials and certain services , mainly including construction , transportation and leasing . however , the impact on our operating results is not expected to be significant . 74 2019 form 10-k entities that are vat general taxpayers are permitted to offset qualified input vat paid to suppliers against their output vat upon receipt of appropriate supplier vat invoices on an entity-by-entity basis . when the output vat exceeds the input vat , the difference is remitted to tax authorities , usually on a monthly basis ; whereas when the input vat exceeds the output vat , the difference is treated as an input vat credit asset which can be carried forward indefinitely to offset future net vat payables . vat related to purchases and sales which have not been settled at the balance sheet date is disclosed separately as an asset and liability , respectively , on the consolidated balance sheets . at each balance sheet date , the company reviews the outstanding balance of any input vat credit asset for recoverability , giving consideration to the indefinite life of the input vat credit assets as well as its forecasted operating results and capital spending , which inherently includes significant assumptions that are subject to change . as of december 31 , 2019 , an input vat credit asset of $ 243 million and payable of $ 5 million were recorded in other assets and accounts payable and other current liabilities , respectively , on the consolidated balance sheets . the company has not made an allowance for the recoverability of the input vat credit asset , as the balance is expected to be utilized to offset against vat payables more than one year from december 31 , 2019. any input vat credit asset would be classified as prepaid expenses and other current assets if the company expected to use the credit within one year . we have been benefiting from the retail tax structure reform since it was implemented on may 1 , 2016. however , the amount of our expected benefit from this vat regime depends on a number of factors , some of which are outside of our control . the interpretation and application of the new vat regime are not settled at some local governmental levels . in addition , the timetable for enacting the prevailing vat regulations into national vat law , including ultimate enacted vat rates , is not clear . as a result , for the foreseeable future , the benefit of this significant and complex vat reform has the potential to fluctuate from quarter to quarter . foreign currency exchange rate the reporting currency of the company is the us $ . most of the revenues , costs , assets and liabilities of the company are denominated in rmb . any significant change in the exchange rate between	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	net cash used in investing activities was $ 910 million in 2019 as compared to $ 552 million in 2018. the increase was primarily driven by the net impact on cash flow resulting from purchases and maturities of short-term investments , partially offset by lapping the impact from the acquisition of wuxi kfc and investment in meituan 's ordinary shares in 2018. in 2018 , net cash used in investing activities was $ 552 million as compared to $ 557 million in 2017. the decrease was primarily driven by the net impact on cash flow resulting from purchases and maturities of short-term investments , partially offset by the acquisition of wuxi kfc , investment in meituan 's ordinary shares and higher capital spending . 75 2019 form 10-k net cash used in financing activities was $ 480 million in 2019 as compared to $ 518 million in 2018. the decrease was primarily driven by a decrease in the number of shares repurchased , partially offset by an increase in cash dividends paid to stockholders . in 2018 , net cash used in financing activities was $ 518 million as compared to $ 185 million in 2017. the increase was mainly driven by an increase in the number of shares repurchased and cash dividends paid to stockholders in 2018. liquidity and capital resources historically we have funded our operations through cash generated from the operation of our company-owned stores and from our franchise operations and dividend payments from our unconsolidated affiliates . our ability to fund our future operations and capital needs will depend on our ongoing ability to generate cash from operations . we believe our principal uses of cash in the future will be primarily to fund our operations and to make capital expenditures , distributions to our stockholders and share repurchases as well as any acquisition or investment we may make .
as a result of our investment philosophy , we can not assure you that our newer products and services , or any other products and services we may introduce or acquire , will be integrated effectively into our business , achieve or sustain profitability or achieve market acceptance at levels sufficient to justify our investment . our strategy for achieving and maintaining profitability is centered upon our ability to expand the number of students using our products and services and increase student engagement with our connected learning platform . for the foreseeable future we expect to continue to invest in our print textbook business as a means of expanding student acquisition and generating operating cash flow . to deepen student engagement we will continue to invest in the expansion of our non-print products and digital services to provide a more compelling and personalized solution . we believe this expanded and deeper penetration of the student demographic will allow us to drive growth in our enrollment and brand marketing services . in addition , we believe that the investments we have made to achieve our current scale will allow us to drive increased operating margins over time that , together with increased contributions of higher margin non-print products and digital services , will enable us to accomplish profitability and become cash-flow positive for the long-term . our ability to accomplish these long-term objectives is subject to numerous risks and uncertainties , including our ability to attract , retain and increasingly engage the student population , intense competition in our markets , the ability to achieve sufficient contributions from our non-print products and digital services and other factors described in greater detail in risk factors. our print textbook business we were founded in 2005 to help students reduce the cost of college and we launched our online print textbook rental business in 2007. we saw that outside of tuition , fees , room and board , print textbooks are one of the most burdensome costs of higher education , and we worked to develop a sustainable business model that could solve this problem for students . our core idea was to purchase textbooks , rent them to students for the academic term at a substantial discount from list price to attract volume and realize return on our investment by renting the same book over multiple academic terms . we began to achieve substantial scale in 2010 when net revenues more than tripled compared to the prior year . leveraging the business intelligence we gained from operating at scale , in 2011 , we reduced our rental catalog to include only those titles with sufficient demand to support our economic model , contributing to the reduced revenue growth rate during the year . at the same time , in order to continue to offer students a comprehensive textbook selection at a substantial savings compared to retail prices available from other vendors , we made print textbooks lacking sufficient demand to support the rental model available for purchase on our website at a slight mark-up to our cost . this had the effect of shifting textbooks with a lower acquisition cost or lower demand from our rental catalog to our sales catalog . we also increasingly use our website to liquidate textbooks from our textbook library , which allows us to generate greater recovery on our textbooks compared to bulk liquidations , while at the same time providing students substantial savings over the retail price of a new book . we are able to adjust what we liquidate based on expected rental demand . as an example , in the second half of 2013 , we elected to optimize our textbook library more for rental than liquidation in anticipation of greater rental demand for the winter rush cycle . this decision led to less site liquidations in that quarter of the 46 books that typically have higher source cost recovery but also increased our available inventory of books for rent . we source both new and used print textbooks for rental or resale from wholesalers , publishers and students . purchasing used textbooks allows us to reduce the investments necessary to maintain our textbook library while at the same time attracting students to our website by offering them more for their textbooks than they could generally get by selling them back to their campus bookstore . through these refinements to our model , we have achieved greater overall efficiency , enabling us to lower our per unit rental rates , which has driven revenue growth and , to a greater extent , print textbook unit volumes beginning in 2012. our print textbook rental business is highly capital intensive . while we generate positive cash flows from operations on an annual basis , this has been more than offset by the cash we use for our investing activities , primarily due to the purchase of print textbooks . we expect this trend to continue in the foreseeable future . we capitalize the investment in our textbook library and record depreciation expense in cost of revenues over its useful life using an estimated liquidation value . in 2013 , our investment in print textbooks , net of proceeds from textbook liquidation , was $ 84.3 million . our non-print products and digital services business building on the rapid adoption and high engagement of students with our print textbook offerings , in 2010 we set out to offer digital content and solutions and create our student-first connected learning platform to address other critical aspects of the education process . with the advent of etextbooks , we developed a web-based , multiplatform etextbook reader and offer etextbooks and supplemental materials from approximately 120 publishers both as a rental-equivalent solution and for free for students awaiting the arrival of their print textbook rental . in the fourth quarter of 2010 , we purchased cramster , a company that provided online homework help for college students . story_separator_special_tag we anticipate that our non-print products and digital services will continue to grow at a rate greater than our overall revenue growth in future periods . net revenues in 2012 increased $ 41.3 million , or 24 % , compared to 2011. the increase in net revenues was due primarily to an increase in print textbook volumes of 22 % , resulting from an increase in rental units . non-print products and digital services represented 7 % of net revenues during 2011 and 13 % of net revenues during 2012 , increasing by 142 % in absolute dollars during 2012 due to a full year of enrollment marketing services as a result of our acquisition of zinch in october 2011 and growth in new memberships for our chegg study service . 52 cost of revenues the following table sets forth our cost of revenues for the periods shown ( dollars in thousands ) : replace_table_token_6_th cost of revenues in 2013 increased $ 29.4 million , or 20 % , compared to 2012. the increase was primarily due to an increase in order fulfillment and payment processing costs of $ 10.3 million , textbook depreciation of $ 7.6 million and cost of digital content of $ 2.5 million . the increase in order fulfillment costs , in particular etextbook fees and payment processing fees , is directly attributable to the increase in textbook unit volumes during 2013. textbook depreciation increased primarily due to our purchases of textbooks during the year . the cost of digital content increased during the year due to our expansion of digital content solutions made available to students . in addition , we experienced an increase in the cost of textbooks purchased on a just-in-time basis of approximately $ 5.3 million , which was primarily driven by an increase in the number of units sold . we also experienced increased costs of approximately $ 2.7 million associated with hiring temporary personnel to assist with higher transaction and textbook volumes during 2013 and higher write-offs of $ 1.3 million . cost of revenues as a percentage of net revenues was flat from 2013 to 2012. cost of revenues in 2012 increased $ 18.7 million , or 15 % , compared to 2011. the increase was primarily due to an increase in order fulfillment costs of $ 13.7 million , cost of digital content of $ 3.8 million and textbook depreciation of $ 1.0 million . the increase in order fulfillment costs is directly attributable to the increase in textbook unit volumes in 2012 compared to 2011. the cost of digital content increased in 2012 due to our expansion of digital content solutions we developed or licensed from publishers and made available to students . textbook depreciation increased primarily due to the expansion of our textbook library . cost of revenues as a percentage of net revenues decreased to 68 % for 2012 from 74 % for 2011 , primarily due to the increase in our net revenues from higher margin non-print products and digital services . operating expenses the following table sets forth our operating expenses for the periods shown ( dollars in thousands ) : replace_table_token_7_th 53 technology and development technology and development expenses during 2013 increased $ 2.6 million , or 7 % , compared to 2012. during 2013 our employee-related expenses increased $ 3.2 million compared to the prior year . in addition , stock-based compensation expense increased by $ 1.8 million primarily due to the grant of vested rsus and the vesting of previously outstanding rsus to officers and consultants , which resulted in additional stock-based compensation expense upon the completion of our ipo . these increases were partially offset by a decrease in amortization of intangible assets as intangibles acquired during 2011 became fully amortized . in addition , as we hired full-time employees we reduced our usage of contractors , resulting in savings of approximately $ 0.6 million during 2013 compared to 2012. technology and development as a percentage of net revenues decreased to 16 % of net revenues in 2013 compared to 18 % of net revenues in 2012. technology and development expenses in 2012 increased $ 9.7 million , or 33 % , compared to 2011. technology and development as a percentage of net revenues increased to 18 % of net revenues in 2012 compared to 17 % of net revenues in 2011. the increase in absolute dollars and as a percentage of net revenues was due to an increase in employee related compensation and benefits of approximately $ 5.5 million , primarily driven by increased headcount during 2012. this increase was partially offset by a decrease in outside services of $ 1.6 million as a result of hiring full-time employees . we also experienced an increase in stock-based compensation expense during 2012 of approximately $ 3.8 million . this increase is primarily the result of the full year impact of stock-based compensation expense as a result of the issuance of stock options and restricted shares of our common stock granted in conjunction with our acquisitions during prior years , as well as an increase in new grants . amortization of intangible assets increased $ 2.2 million due to a full year of amortization for technology acquired during 2011 through our acquisitions . sales and marketing sales and marketing expenses during 2013 decreased by $ 0.8 million , or 2 % , compared to 2012. sales and marketing expenses as a percentage of net revenues decreased to 20 % during 2013 compared to 24 % of net revenues during 2012. the decrease in absolute dollars and as a percentage of net revenues is primarily attributable to a decrease in advertising and marketing expenses of $ 5.1 million as a result of improved performance of search engine optimization and increased direct traffic resulting in decreased reliance on paid advertising , which were outperforming paid search advertising primarily utilized during 2012. there was a decrease of $ 0.9 million in amortization of	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows from operating activities although we incurred net losses in 2013 , 2012 and 2011 , we generated positive cash flows from operating activities in each period presented , which was primarily the result of our increased textbook revenue . cash flows from operating activities are also influenced by the increase in expenses we incur to support the growth in our business . the substantial majority of our net revenue is from e-commerce transactions with students , which are settled immediately through payment processors , and our accounts payable are settled based on contractual payment terms with our suppliers . as a result , changes in our operating accounts are generally a source of cash overall , although they can be a use of cash in the second and fourth quarters of each year as payables become due and new bookings are generally at their low point . in addition , we have significant non-cash operating expenses such as textbook library depreciation expense , other depreciation and amortization expense and stock-based compensation expense . in 2013 , 2012 and 2011 , our non-cash operating expenses and changes in operating assets and liabilities more than offset our net loss . net cash provided by operating activities in 2013 was $ 63.7 million . although we incurred a net loss of $ 55.9 million , our net loss was more than offset by significant non-cash operating expenses , including textbook library depreciation expense of $ 64.8 million , other depreciation and amortization expense of $ 11.6 million , stock-based compensation expense of $ 37.0 million and loss from write-offs of textbooks of $ 5.9 million . net cash provided by operating activities in 2012 was $ 54.7 million . although we incurred a net loss of $ 49.0 million , our net loss was offset by significant non-cash operating expenses , including textbook library depreciation expense of $ 57.2 million , other depreciation and amortization expense of $ 12.6 million , stock-based compensation expense of $ 18.0 million and loss from write-offs of textbooks of $ 4.6 million . net cash provided by operating activities in 2011 was $ 32.8
we generally compete for new business at the beginning of the development of a new vehicle platform and upon the redesign of existing programs . new platform development generally begins one to three years before the marketing of such models by our customers . contract durations for commercial vehicle products generally extend for the entire life of the platform . several of the major truck makers have upgraded their truck platforms and we believe we have maintained our share of content in these platforms . we continue to pursue opportunities to expand our content . demand for our heavy-duty ( or `` class 8 `` ) truck products is generally dependent on the number of new heavy-duty trucks manufactured in north america , which in turn is a function of general economic conditions , interest rates , changes in government regulations , consumer spending , fuel costs , freight costs , fleet operators ' financial health and access to capital , used truck prices and our customers ' inventory levels . new heavy-duty truck demand has historically been cyclical and is particularly sensitive to the industrial sector of the economy , which generates a significant portion of the freight tonnage hauled by commercial vehicles . according to a february 2019 report by act research , a publisher of industry market research , north american class 8 production levels are expected to increase to 335,000 units in 2019 , decrease to 243,000 units in 2020 , and then increase to 317,000 units in 2023. we believe the demand for north american class 8 vehicles in 2019 will be between 330,000 to 350,000 units . act research estimated that the average age of active north american class 8 trucks was 11.2 and 11.3 years in 2018 and 2017 , respectively . as vehicles age , their maintenance costs typically increase . act research forecasts that the vehicle age will decline as aging fleets are replaced . north american medium-duty ( or `` class 5-7 `` ) truck production steadily increased from 233,000 units in 2016 to 272,000 units in 2018. we believe the demand for class 5-7 vehicles in 2019 will be stable . according to a february 2019 report by act research , north american class 5-7 truck production is expected to gradually increase to 280,000 units in 2023 . 32 demand for our construction and agricultural equipment products is dependent on vehicle production . demand for new vehicles in the global construction and agricultural equipment market generally follows certain economic conditions around the world . our products are primarily used in the medium- and heavy-duty construction equipment markets ( vehicles weighing over 12 metric tons ) . demand in the medium- and heavy-duty construction equipment market is typically related to the level of large scale infrastructure development projects such as highways , dams , harbors , hospitals , airports and industrial development , as well as activity in the mining , forestry and commodities industries . we believe the construction markets we serve in europe , asia , and north america have improved . our long-term strategy our long-term strategy is to grow revenue by product , geography and end market . our products include electrical wire harnesses assemblies ; trim ; mirrors , wipers and controls ; cab structures and sleeper boxes ; and seats . we intend to allocate resources consistent with our strategy ; more specifically , consistent with our product portfolio , geographic region and end market diversification objectives . we periodically evaluate our long-term strategy in response to significant changes in our business environment and other factors . as part of our long-term strategy , we have considered and will consider acquisitions and divestitures to enhance our return to our shareholders and our service to customers . recently issued accounting pronouncements recently issued accounting pronouncements described in note 2 of the consolidated financial statements is incorporated in this section by reference . consolidated results of operations the table below sets forth certain operating data expressed as a percentage of revenues for the periods indicated ( dollars are in thousands ) : replace_table_token_6_th year ended december 31 , 2018 compared to year ended december 31 , 2017 c onsolidated r esults the table below sets forth certain consolidated operating data for the periods indicated ( dollars are in thousands ) : 33 replace_table_token_7_th revenues . the increase in revenues for the year ended december 31 , 2018 compared to the year ended december 31 , 2017 primarily resulted from increased heavy-duty truck production volumes in north america and an improvement in the global construction equipment markets . more specifically , the increase resulted from : a $ 106.4 million , or 33 % , increase in oem north american md/hd truck revenues ; a $ 24.9 million , or 15 % , increase in construction equipment revenues ; a $ 17.2 million , or 14 % , increase in aftermarket revenues ; and a $ 6.0 million , or 4 % , decrease in other revenues . 2018 revenues were favorably impacted by foreign currency exchange translation of $ 8.1 million , which is reflected in the change in revenue above . gross profit . the increase in gross profit is primarily attributable to an increase in sales volume . included in gross profit is cost of revenues , which consists primarily of raw materials and purchased components for our products , wages and benefits for our employees and overhead expenses such as manufacturing supplies , facility rent and utilities costs related to our operations . cost of revenues increased $ 105.4 million , or 15.9 % , resulting from an increase in raw material and purchased component costs of $ 82.5 million , wages and benefits of $ 9.7 million and overhead expenses of $ 13.2 million . commodity and other material inflationary pressures and difficult labor markets adversely affected cost of revenues . story_separator_special_tag this includes a $ 7.2 million provision for the decrease in value of our net deferred tax assets due to a reduction of the u.s. corporate tax rate from 35 % to 21 % effective january 1 , 2018 , and a $ 4.0 million provision related to the deemed repatriation of accumulated untaxed earnings of certain foreign subsidiaries . electrical systems segment results the table below sets forth certain electrical systems segment operating data for the periods indicated ( dollars are in thousands ) : replace_table_token_11_th revenues . the increase in electrical systems segment revenues in 2017 compared to 2016 is primarily a result of : a $ 25.6 million , or 42 % , increase in oem construction equipment revenues ; a $ 25.6 million , or 16 % , increase in oem north american md/hd truck revenues ; and a $ 7.1 million , or 5 % , increase in revenues from other markets . electrical systems segment 2017 revenues were favorably impacted by foreign currency exchange translation of $ 2.5 million , which is reflected in the changes in revenue above . gross profit . the decrease in gross profit is attributable to the na footprint adjustment . if not for the na footprint adjustment , gross profit would have increased as a result of the increased sales volume . included in gross profit is cost of revenues , which increased $ 60.9 million , or 18.9 % , as a result of an increase in raw material and purchased component parts of $ 43.7 million , wages and benefits of $ 7.7 million and overhead expenses of $ 9.5 million . commodity and other material inflationary pressures and difficult labor markets adversely affected cost of revenues . additionally , 2017 results included $ 1.8 million in charges relating to facility restructuring costs compared to $ 2.5 million in the prior year period . as a percentage of revenues , gross profit was 12.0 % for the year ended december 31 , 2017 compared to 14.5 % for the year ended december 31 , 2016 . selling , general and administrative expenses . electrical systems segment selling , general and administrative expenses decreased in 2017 compared to 2016 , notwithstanding the increase in revenues , reflecting a focus on cost discipline . global seating segment results the table below sets forth certain global seating segment operating data for the periods indicated ( dollars are in thousands ) : replace_table_token_12_th 37 revenues . the increase in global seating segment revenue is primarily a result of : a $ 16.8 million , or 26 % , increase in oem construction equipment revenues ; a $ 15.4 million , or 14 % , increase in oem north american md/hd truck revenues ; a $ 2.3 million , or 3 % , increase in aftermarket revenues ; and a $ 4.1 million , or 11 % , increase in revenues from various other markets . global seating segment 2017 revenues were adversely impacted by foreign currency exchange translation of $ 2.0 million , which is reflected in the changes in revenue above . gross profit . the increase in gross profit was primarily the result of the increase in sales volume . included in gross profit is cost of revenues , which increased $ 31.0 million , or 12.0 % , as a result of an increase in raw material and purchased component costs of $ 20.7 million , wages and benefits of $ 4.6 million and overhead expenses of $ 5.7 million . commodity and other material inflationary pressures and difficult labor markets adversely affected cost of revenues . additionally , 2017 results included $ 0.3 million in charges relating to facility restructuring and other related costs compared to $ 0.9 million in the prior year period . as a percentage of revenues , gross profit was 12.4 % for the year ended december 31 , 2017 compared to 11.4 % for the year ended december 31 , 2016 . selling , general and administrative expenses . global seating segment selling , general and administrative expenses decreased in 2017 compared to 2016 , notwithstanding the increase in revenues , reflecting a focus on cost discipline . story_separator_special_tag style= `` font-family : inherit ; font-size:10pt ; `` > we recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our financial statements or tax returns . deferred tax assets and liabilities are determined based on the difference between the financial statements and tax basis of assets and liabilities using enacted tax laws and rates expected to be in place when the deferred tax items are realized . we recognize tax positions initially in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities . we provide a valuation allowance for deferred tax assets when it is more likely than not that a portion of such deferred tax assets will not be realized . on december 22 , 2017 , the u.s. tax cuts and jobs act of 2017 was signed into law . the u.s. tax reform significantly revised the u.s. corporate income tax regime by , among other things , lowering the u.s. corporate tax rate from 35 % to 21 % effective january 1 , 2018 , establishing a quasi-territorial tax system and imposing a one-time tax on the deemed repatriation of earnings of foreign subsidiaries . the sec issued the staff accounting bulletin no . 118 ( `` sab 118 `` ) to address the accounting implications of the u.s. tax reform . the effects of the u.s. tax reform are recognized upon enactment , however , sab 118 permits a company to recognize provisional amounts when it does not have the necessary information available . the measurement period to finalize our calculations was one year from the enactment date . during the year ended december 31	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources during the year ended december 31 , 2018 , the company borrowed under its asset-based revolver ; however , as of year end the company did not have any outstanding borrowings . at december 31 , 2018 , the company had liquidity of $ 134 million ; $ 71 million of cash and $ 63 million availability from its asset-based revolver . we intend to allocate resources consistent with the following priorities : ( 1 ) to provide liquidity ; ( 2 ) to invest in growth ; ( 3 ) to reduce debt ; and ( 4 ) to return capital to our shareholders . cash flows our primary source of liquidity during the year ended december 31 , 2018 was cash and availability under our revolving credit facility . we believe that these sources of liquidity will provide adequate funds for our working capital needs , planned capital expenditures and servicing of our debt through the next twelve months . however , no assurance can be given that this will be the case . we had no borrowings under our revolving credit facility at december 31 , 2018. for the year ended december 31 , 2018 , cash provided by operations was $ 41.0 million compared to $ 2.3 million in the year ended december 31 , 2017 and $ 49.4 million in the year ended december 31 , 2016 . the increase in cash provided by operations for the year ended december 31 , 2018 compared to 2017 was primarily due to an increase in net income . the decrease in cash provided by operations for the year ended december 31 , 2017 compared to 2016 was primarily due to an increase in the investment in working capital in 2017. net cash used in investing activities was $ 14.1 million for the year ended december 31 , 2018 compared to $ 10.8 million for the year ended december 31 , 2017 , and $ 8.9 million for the year ended december 31 , 2016 .
the establishment of such a valuation allowance , or any increase in an existing valuation allowance , would be effectuated through a charge to the provision for income taxes or a reduction in any income tax credit for the period in which such valuation allowance is established or increased . allowance for loan and lease losses . our alll is established through a provision for loan losses charged to expense and may be reduced by a recapture of previously established loss reserves , which are also reflected in the statement of income . loans are charged against the alll when management believes that collectability of the principal is unlikely . the alll is an amount that management believes will be adequate to absorb estimated losses on existing loans that may become uncollectible based on an evaluation of the collectability of loans and prior loan loss experience . this evaluation also takes into consideration such factors as changes in the nature and volume of the loan portfolio , overall portfolio quality , review of specific problem loans , current economic conditions and certain other subjective factors that may affect the borrower 's ability to pay . while we use the best information available to make this evaluation , future adjustments to our alll may be necessary if there are significant changes in economic or other conditions that can affect the collectability in full of loans in our loan portfolio . adoption of new or revised accounting standards . we have elected to take advantage of the extended transition period afforded by the jobs act , for the implementation of new or revised accounting standards . as a result , we will not be required to comply with new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies or we cease to be an “ emerging growth ” company as defined in the jobs act . as a result of this election , our financial statements may not be comparable to the financials statements of companies that comply with public company effective dates . 41 we have two business segments , “ banking ” and “ investment management , wealth planning and consulting ” ( “ wealth management ” ) . banking includes the operations of ffb and ffis and wealth management includes the operations of ffa . the financial position and operating results of the stand-alone holding company , ffi , are included under the caption “ other ” in certain of the tables that follow , along with any consolidation elimination entries . recent developments and overview on july 1 , 2015 , the company filed a “ shelf ” registration statement with the sec on form s-3 for the purpose of registering , under the securities act of 1933 , as amended , an aggregate of $ 150 million of shares of its common stock that would be available for possible sale , in one or more transactions , in the future . the registration statement was declared effective on july 20 , 2015. pursuant to this registration statement , the company commenced a public offering in which it sold a total of 6,233,766 shares of its common stock , at a public offering price of $ 19.25 per share , on august 12 , 2015. the offering resulted in gross proceeds of $ 120.0 million and net proceeds of approximately $ 113.7 million , after underwriting discounts and estimated expenses of the offering . the company used a portion of the net proceeds from the offering to repay all of its $ 29 million of outstanding term debt and intends to use the remaining proceeds for general corporate purposes , including supporting organic growth and possible acquisitions . on august 14 , 2015 , the underwriters exercised their option to purchase an additional 935,065 shares of the company 's common stock , at a price of $ 19.25 per share , to cover any over-allotments in the public offering . as a result , the company received additional gross proceeds of $ 18.0 million and net proceeds of $ 17.1 million , after underwriting discounts . we have continued to grow our operations . comparing 2015 to 2014 , we have increased our revenues ( net interest income and noninterest income ) by 29 % . this growth in revenues is the result of the growth in banking 's total interest-earning assets . during 2015 , total loans in banking increased by $ 599 million or 51 % while securities available for sale increased by $ 427 million . wealth management 's aum increased by $ 250 million or 8 % during 2015 , and totaled $ 3.47 billion as of december 31 , 2015. the results of operations for banking and wealth management reflect the benefits of this growth . income before taxes for banking increased $ 6.3 million from $ 18.7 million in 2014 to $ 25.0 million in 2015. income before taxes for wealth management increased from $ 1.4 million in 2014 to $ 2.2 million in 2015. on a consolidated basis , income before taxes increased $ 8.0 million from $ 14.8 million in 2014 to $ 22.8 million in 2015. results of operations years ended december 31 , 2015 and 2014. our net income for 2015 was $ 13.4 million , as compared to $ 8.4 million for 2014. the primary sources of revenue for banking are net interest income , fees from its deposits , trust and insurance services , gains on sales of loans , certain loan fees , and , beginning in the second half of 2014 , fees charged for consulting and administrative services . the primary sources of revenue for wealth management are asset management fees assessed on the balance of aum and , up through the first half of 2014 , fees charged for consulting and administrative services . story_separator_special_tag the $ 0.8 million increase in occupancy and depreciation costs for banking in 2014 as compared to 2013 was due to an office opening and the expansion into additional space at the administrative office in the second quarter of 2013. the $ 0.7 million increase in professional services and marketing was due primarily to higher legal costs related to ongoing litigation matters and increased management fees related to the increased trust aum . the $ 1.0 million increase in other expenses in 2014 as compared to 2013 was primarily due to the $ 1.0 million provision related to contingent consideration to be paid to the former shareholders of dcb . noninterest expenses in wealth management increased $ 0.6 million in 2014 as compared to 2013 primarily due to increases in compensation and benefits . the increase in compensation and benefits reflects increased incentive compensation incurred as a result of the increase in aum . 50 financial condition the following table shows the financial position for each of our business segments , and of ffi and elimination entries used to arrive at our consolidated totals which are included in the column labeled other , at december 31 : replace_table_token_19_th 51 our consolidated balance sheet is primarily affected by changes occurring in our banking operations as our wealth management operations do not maintain significant levels of assets . banking has experienced and is expected to continue to experience increases in its total assets as a result of our growth strategy . during 2015 , total assets for the company and the bank increased by $ 1.2 billion . for the bank , during 2015 , loans increased by $ 599 million , deposits increased by $ 598 million , cash and cash equivalents increased by $ 186 million , securities afs increased by $ 427 million and fhlb advances increased by $ 533 million . borrowings at ffi decreased by $ 20 million during 2015. during 2014 , total assets for the company and the bank increased by $ 318 million . for the bank , during 2014 , loans increased by $ 263 million , deposits increased by $ 163 million , cash and cash equivalents decreased by $ 27 million , securities afs increased by $ 79 million and fhlb advances increased by $ 129 million . borrowings at ffi increased by $ 13 million during 2014. cash and cash equivalents , certificates of deposit and securities : cash and cash equivalents , which primarily consist of funds held at the federal reserve bank or at correspondent banks , including fed funds , increased by $ 186 million during 2015. changes in cash and cash equivalents are primarily affected by the funding of loans , investments in securities , and changes in our sources of funding : deposits , fhlb advances and ffi borrowings . during 2015 the company obtained net proceeds of $ 131 million from a public offering of shares of our common stock and used a portion of the net proceeds from the offering to repay all of its $ 29 million of outstanding term debt . securities available for sale : the following table provides a summary of the company 's afs securities portfolio at december 31 : replace_table_token_20_th the us treasury securities are pledged as collateral to the state of california to meet regulatory requirements related to ffb 's trust operations . the $ 427 million increase in afs securities in 2015 was the result of a capital leverage strategy under which the company utilized the capital raised in its public offering to leverage an increase in its afs securities portfolio through the use of fhlb advances . the purchases of securities under this strategy were limited to fifteen year term agency mortgage-backed securities . the $ 75 million increase in afs securities in 2014 reflected our actions to increase our on-balance sheet sources of liquidity . 52 the table below indicates , as of december 31 , 2015 , the gross unrealized losses and fair values of our investments , aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position . replace_table_token_21_th unrealized losses on agency notes and agency mortgage-backed securities have not been recognized into income because the issuer bonds are of high credit quality , management does not intend to sell and it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery , and the decline in fair value is largely due to changes in interest rates . the fair value is expected to recover as the bonds approach maturity . the scheduled maturities of securities afs , other than agency mortgage backed securities , and the related weighted average yield is as follows as of december 31 , 2015 : replace_table_token_22_th agency mortgage backed securities are excluded from the above table because such securities are not due at a single maturity date . the weighted average yield of the agency mortgage backed securities as of december 31 , 2015 was 2.24 % . loans . the following table sets forth our loans , by loan category , as of december 31 : replace_table_token_23_th the $ 599 million increase in loans during 2015 was the result of loan originations and funding of existing credit commitments of $ 944 million and $ 80 million of loans obtained in the acquisition of prb , which were partially offset by $ 426 million of payoffs , scheduled principal payments , and loans sold . the $ 263 million increase in loans during 2014 was the result of loan originations and funding of existing credit commitments of $ 504 million , offset by $ 241 million of payoffs and scheduled principal 53 payments . the scheduled maturities , as of december 31 , 2015 , of the performing loans categorized as land loans and as commercial and industrial loans , are as follows : replace_table_token_24_th	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows provided by operating activities . during the year ended december 31 , 2015 operating activities provided net cash of $ 13.9 million , comprised primarily of our net income of $ 13.4 million . in 2014 , operating activities provided net cash of $ 9.4 million , comprised primarily of our net income of $ 8.4 million . cash flows used in investing activities . during the year ended december 31 , 2015 , investing activities used net cash of $ 916.5 million , primarily to fund a $ 626.2 million net increase in loans and a $ 426.9 million net increase in securities afs , offset partially by $ 106.2 million in proceeds from loan sales and $ 38.1 million of cash in from the acquisition of prb . in 2014 , investing activities used net cash of $ 340.3 million , primarily to fund a $ 262.3 million net increase in loans and a $ 83.5 million net increase in securities afs . cash flow provided by financing activities . during the year ended december 31 , 2015 , financing activities provided net cash of $ 1.1 billion , consisting primarily of a net increase of $ 439.4 million in deposits and a net increase of $ 533.0 million in borrowings , and $ 136.2 million proceeds from the sale of stock . in 2014 , financing activities provided net cash of $ 303.7 million , consisting primarily of a net increase of $ 160.9 million in deposits and a net increase of $ 141.8 million in borrowings . ratio of loans to deposits . the relationship between gross loans and total deposits can provide a useful measure of a bank 's liquidity . since repayment of loans tends to be less predictable than the maturity of investments and other liquid resources , the higher the loan-to-deposit ratio the less liquid are our assets . on the other hand , since we realize greater yields on loans than we do on other interest-earning assets , a lower loan-to-deposit ratio can adversely affect interest income and earnings .
as a matter of prudent management , we also regularly evaluate each asset within our portfolio as well as our strategies . such review 67 may result in dispositions when an asset no longer fits our overall objectives or strategies or when our view of the market value of such asset is equal to or exceeds its intrinsic value . as a result of such review , we sold an office property in santa ana , california in november 2015 ; a hotel in oakland , california in february 2016 ; a hotel in los angeles , california in july 2016 ; an office property in san francisco , california in march 2017 ; two multifamily properties in dallas , texas in may 2017 ; an office property in charlotte , north carolina in june 2017 ; an office property and a parking garage in sacramento , california in june 2017 ; a multifamily property in dallas , texas in june 2017 ; an office property in washington , d.c. in august 2017 ; an office property in los angeles , california in september 2017 ; a multifamily property in new york , new york in september 2017 ; an office property in washington , d.c. in october 2017 ; and a multifamily property in houston , texas in december 2017. such review may result in additional dispositions from time to time . we used a substantial portion of the net proceeds of such dispositions to provide liquidity to our common stockholders in 2017 at prices reflecting our nav and cash flow prospects . properties as of december 31 , 2017 , our real estate portfolio consisted of 20 assets , all of which are fee-simple properties . as of december 31 , 2017 , our 18 office properties ( including one parking garage and two development sites , one of which is being used as a parking lot ) , totaling approximately 3.3 million rentable square feet , were 94.2 % occupied and one hotel with an ancillary parking garage , which has a total of 503 rooms , had revpar of $ 128.43 for the year ended december 31 , 2017 . strategy our strategy is to continue to primarily acquire class a and creative office assets in vibrant and improving urban communities throughout the united states in a manner that will allow us to increase our nav and cash flow per share of common stock . our strategy is centered around cim 's community qualification process . we believe this strategy provides us with a significant competitive advantage when making urban real estate acquisitions . the qualification process generally takes between six months and five years and is a critical component of cim 's evaluation . cim examines the characteristics of a market to determine whether the district justifies the extensive efforts cim undertakes in reviewing and making potential acquisitions in its qualified communities . qualified communities generally fall into one of two categories : ( i ) transitional urban districts that have dedicated resources to become vibrant urban communities and ( ii ) well-established , thriving urban areas ( typically major central business districts ) . qualified communities are distinct districts which have dedicated resources to become or are currently vibrant communities where people can live , work , shop and be entertained—all within walking distance or close proximity to public transportation . these areas also generally have high barriers to entry , high population density , improving demographic trends and a propensity for growth . cim believes that a vast majority of the risks associated with acquiring real assets are mitigated by accumulating local market knowledge of the community where the asset is located . cim typically spends significant time and resources qualifying targeted communities prior to making any acquisitions . since 1994 , cim group has qualified 110 communities and has deployed capital in 67 of these qualified communities . although we may not deploy capital exclusively in qualified communities , it is expected that most of our assets will be identified through this systematic process . our strategy may also include side-by-side acquisitions with one or more funds of cim including , without limitation , a side-by-side or direct deployment of capital in a perpetual-life real estate debt fund that principally originates loans secured directly or indirectly by commercial real estate properties . further , as part of our strategy , we may deploy capital in or originate loans that are secured directly or indirectly by properties primarily located in qualified communities that meet our strategy . such loans may include limited and or non-recourse junior ( mezzanine , b-note or 2nd lien ) and senior acquisition , bridge or repositioning loans . cim seeks to maximize the value of its holdings through active asset management . cim has extensive in-house research , acquisition , credit analysis , development , financing , leasing and asset management capabilities , which leverage its deep understanding of urban communities to position properties for multiple uses and to maximize operating income . as a fully integrated owner and operator , cim 's asset management capabilities are complemented by its in-house property management capabilities . property managers prepare annual capital and operating budgets and monthly operating reports , monitor results and oversee vendor services , maintenance and capital improvement schedules . in addition , they ensure that revenue objectives are met , lease terms are followed , receivables are collected , preventative maintenance programs are implemented , vendors are evaluated and expenses are controlled . the asset management committee reviews and approves strategic plans for each asset , including financial , leasing , marketing , property positioning and disposition plans . in addition , the asset management committee reviews and approves the annual business plan for each property , including its capital and operating budget . story_separator_special_tag of on office property in san francisco , california in december 2017 and an office property in beverly hills , california in january 2018. hotel expenses : hotel expenses decreased to $ 25,136,000 , or by 22.6 % , for the year ended december 31 , 2017 compared to $ 32,459,000 for the year ended december 31 , 2016 . the decrease is primarily due to the sale of two hotel properties in february and july 2016. multifamily expenses : multifamily expenses decreased to $ 8,118,000 , or by 34.3 % , for the year ended december 31 , 2017 compared to $ 12,357,000 for the year ended december 31 , 2016 . the decrease is primarily due to the sale of the three multifamily properties in dallas , texas in may and june 2017 , the sale of a multifamily property in new york , new york in september 2017 , and a decrease in legal fees at the same new york property . the aforementioned sales of our multifamily 73 properties , and the sale of the multifamily property in houston , texas in december 2017 , will result in no multifamily expenses in 2018. additionally , we have assessed the sale of our multifamily properties in accordance with asc 205-20 , discontinued operations and we concluded the disposals do not represent a strategic shift that will have a major effect on our operations and financial results and they should not be classified as discontinued operations on our consolidated financial statements . lending expenses : lending expenses represent expenses from our lending subsidiaries included in continuing operations , including general and administrative expenses and fees to related party , related to the operation of the lending business . lending expenses decreased to $ 4,888,000 , or by 7.0 % , for the year ended december 31 , 2017 compared to $ 5,258,000 for the year ended december 31 , 2016 , primarily due to a decrease in fees to related party and reductions in general and administrative costs associated with assets acquired in liquidation , partially offset by the recognition of a provision for loan losses during the year ended december 31 , 2017 compared to a recovery of loan losses during the year ended december 31 , 2016. asset management and other fees to related parties : asset management fees totaled $ 22,229,000 for the year ended december 31 , 2017 compared to $ 25,753,000 for the year ended december 31 , 2016 . asset management fees are calculated based on a percentage of the daily average adjusted fair value of cim urban 's assets , which are appraised in the fourth quarter of each year . the lower fees reflect a decrease in the adjusted fair value of cim urban 's assets due to the sale of a hotel property in february 2016 , the sale of a hotel property in july 2016 , the sale of an office property in march 2017 , the sale of two multifamily properties in may 2017 , the sale of two office properties , a parking garage , and one multifamily property in june 2017 , the sale of an office property in august 2017 , the sale of an office property and a multifamily property in september 2017 , the sale of an office property in october 2017 , and the sale of a multifamily property in december 2017 , partially offset by incremental capital expenditures during 2017 and the acquisition of an office property in december 2017. cim commercial also pays a base service fee to the administrator , a related party , which totaled $ 1,060,000 for the year ended december 31 , 2017 compared to $ 1,043,000 for the year ended december 31 , 2016 . in addition , the administrator received compensation and or reimbursement for performing certain services for cim commercial and its subsidiaries that are not covered under the base service fee . for the years ended december 31 , 2017 and 2016 , we expensed $ 3,065,000 and $ 3,120,000 for such services , respectively . for the years ended december 31 , 2017 and 2016 , we also expensed $ 433,000 and $ 411,000 , respectively , related to corporate services subject to reimbursement by us under the cim sba staffing and reimbursement agreement . asset management fees are expected to decrease materially in 2018 as a result of our completed sales , partially offset by an increase resulting from the acquisitions of two office properties in december 2017 and january 2018. interest expense : interest expense , which is not allocated to our operating segments , was $ 35,924,000 for the year ended december 31 , 2017 , an increase of $ 2,076,000 , compared to $ 33,848,000 for the year ended december 31 , 2016 . the increase is primarily due to interest expense on our $ 392,000,000 mortgage loans entered into in june 2016 , partially offset by a decrease in interest expense due to the payoff of a $ 25,331,000 mortgage in march 2017 in connection with the sale of an office property in san francisco , california , the payoff of mortgages with a combined balance of $ 38,781,000 in connection with the sale of our three multifamily properties in dallas , texas in may and june 2017 , and a decrease in interest expense , including the impact of interest rate swaps , and loan amortization expense under the unsecured credit and term loan facilities , primarily due to lower average outstanding loan balances under the unsecured credit and term loan facilities . our interest expense is expected to decrease in 2018 due to the payoffs and buyers ' assumptions of loans in connection with our sales of real estate totaling $ 114,372,000 in 2017 , and the repayment of $ 215,000,000 of outstanding borrowings on our unsecured term loan facility . however , the magnitude of any such decrease can not be predicted	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flow analysis comparison of the year ended december 31 , 2017 to the year ended december 31 , 2016 our cash and cash equivalents totaled $ 129,310,000 and $ 144,449,000 at december 31 , 2017 and 2016 , respectively . our cash flows from operating activities are primarily dependent upon the real estate assets owned , occupancy level of our real estate assets , the rental rates achieved through our leases , and the collectability of rent and recoveries from our tenants . our cash flows from operating activities are also impacted by fluctuations in operating expenses and other general and administrative costs . net cash used in operating activities totaled $ 1,145,000 for the year ended december 31 , 2017 compared to net cash provided by operating activities of $ 51,873,000 for the year ended december 31 , 2016 . the decrease is primarily due to a decrease of $ 31,562,000 resulting from a higher level of working capital used compared to the prior period , primarily due to a $ 20,000,000 deposit on an office property we acquired in january 2018 , a $ 17,382,000 decrease in net income adjusted for the gain on real estate , depreciation and amortization expense , and impairment of real estate , a $ 19,003,000 increase in loans funded , partially offset by an increase of $ 12,776,000 in proceeds from the sale of guaranteed loans . our cash flows from investing activities are primarily related to property acquisitions and sales , expenditures for development and redevelopment projects , capital expenditures and cash flows associated with loans originated at our lending segment . net cash provided by investing activities for the year ended december 31 , 2017 was $ 968,656,000 compared to $ 29,526,000 in the corresponding period in 2016 .
results of operations overview revenues were $ 41.8 million in 2015 , an 18 % increase from $ 35.3 million in 2014 . biocatalyst product sales revenues , which consist primarily of sales of biocatalyst intermediates , apis and codex® biocatalyst panels and kits , were $ 11.4 million in 2015 , a decrease of 13 % compared with $ 13.1 million in 2014 . the decrease was primarily due to the timing of customer demand in 2015 as compared to 2014. biocatalyst research and development revenues , which include license , technology access and exclusivity fees , research services , milestone payments , royalties , and optimization and screening fees , totaled $ 25.6 million in 2015 , an increase of 71 % , 39 compared with $ 14.9 million in 2014 . the increase was primarily due to the achievement of the first milestone under the merck license agreement of $ 5.0 million , $ 1.5 million increase in milestone related revenue recognized under the gsk license agreement ( $ 6.5 million in 2015 compared to $ 5.0 million in the prior year ) , $ 3.1 million settlement relating to past-due payments and settlement of future payments associated with our royalty business with a non-core customer , and $ 1.5 million in research and development revenues relating to the project we initiated with the leading biopharmaceutical company in 2015. revenue sharing arrangement sales were $ 4.8 million in 2015 , a decrease of 34 % , compared with $ 7.3 million in 2014 . the decline resulted following the expiration of the formulation patent for argatroban in june 2014 , allowing for increased generic competition in the subsequent quarters after the expiration of the patent . research and development expenses were $ 20.7 million in 2015 , a decrease of 9 % from $ 22.8 million in 2014 . the decrease was primarily due to lower depreciation expense resulting from the disposal and impairment of certain equipment previously used in discontinued research and development activities and the sale of our hungarian subsidiary in 2014 , partially offset by an increase in employee-related expenses . selling , general and administrative expenses were $ 22.3 million in 2015 , an increase of 2 % compared to $ 21.9 million in 2014 . the increase was primarily due to increases in personnel-related expenses , including an increase in stock-based compensation , partially offset by decreases in legal and contractor expenses . net loss was $ 7.6 million , or a loss of $ 0.19 per share , in 2015 . this compares favorably to a net loss of $ 19.1 million , or a loss of $ 0.50 per share , in 2014 . the reduced loss is primarily related to higher revenue , lower cost of product revenues due to a favorable product sales mix in 2015 as well as lower research and development expense as noted above . cash and cash equivalents decreased to $ 23.3 million as of december 31 , 2015 compared to $ 26.5 million as of december 31 , 2014 . in addition , net cash used in operations was $ 0.4 million in 2015 , as compared to net cash provided by operations of $ 0.3 million in 2014 . we are actively collaborating with new and existing customers in the pharmaceutical and other markets and we believe that we can utilize our products and services , and develop new products and services , to increase our revenue and gross margins in future periods . we believe that , based on our current level of operations , our existing cash , cash equivalents and marketable securities will provide adequate funds for ongoing operations , planned capital expenditures and working capital requirements for at least the next 12 months . gsk platform technology transfer , collaboration and license agreement in july 2014 , we entered into the gsk codeevolver ® agreement . pursuant to the terms of the agreement , we granted gsk a non-exclusive license to use the codeevolver ® platform technology to develop novel enzymes for use in the manufacture of gsk 's pharmaceutical and health care products . we received a $ 6.0 million up-front license fee upon execution of the gsk codeevolver ® agreement and subsequently a $ 5.0 million non-creditable , non-refundable milestone payment upon achievement of the first milestone in 2014. in september 2015 , we achieved the second milestone and recognized the related milestone payment of $ 6.5 million . we are eligible to receive an additional contingent payment of $ 7.5 million upon the completion of the three-year technology transfer period . we also have the potential to receive additional contingent payments that range from $ 5.75 million to $ 38.5 million per project based on gsk 's successful application of the licensed technology . the contingent payments are not deemed substantive milestones due to the fact that the achievement of the event underlying the payment predominantly relates to gsk 's performance of future development and commercialization activities . for up to three years following the end of the technology transfer period , gsk can exercise an option , upon payment of certain additional fees , that would extend gsk 's license to include certain improvements to the codeevolver ® protein engineering technology platform that arise during such additional period . in addition , we are eligible to receive royalties based on net sales , if any , of a limited set of products developed by gsk using the codeevolver ® protein engineering technology platform . the up-front license fee of $ 6.0 million is being recognized ratably over the three-year technology transfer period . we recognized license fees of $ 2.0 million and $ 1.0 million , respectively , in 2015 and 2014 , as biocatalyst research and development revenue . as of december 31 , 2015 and 2014 , we had deferred revenue from gsk related to the up-front license fee of $ 3.0 story_separator_special_tag if future financings involve the issuance of equity securities , our existing stockholders would suffer dilution . if we raise debt financing , we may be subject to restrictive covenants that limit our ability to conduct our business . we may not be able to raise sufficient additional funds on terms that are favorable to us , if at all . if we fail to raise sufficient funds and fail to generate sufficient revenue to achieve planned gross margins and to control operating costs , our ability to fund our operations , take advantage of strategic opportunities , develop products or technologies , or otherwise respond to competitive pressures could be significantly limited . if this happens , we may be forced to delay or terminate research or development programs or the commercialization of products resulting from our technologies , curtail or cease operations or obtain funds through collaborative and licensing arrangements that may require us to relinquish commercial rights , or grant licenses on terms that are not favorable to us . if adequate funds are not available , we will not be able to successfully execute our business plan or continue our business . story_separator_special_tag style= `` line-height:120 % ; padding-top:12px ; font-size:10pt ; `` > the following table summarizes our significant contractual obligations at december 31 , 2015 ( in thousands ) : replace_table_token_14_th ( 1 ) represents future minimum lease payments under non-cancelable operating leases in effect as of december 31 , 2015 for our facilities in redwood city , california . the minimum lease payments above do not include common area maintenance charges or real estate taxes . in addition , amounts have not been reduced by future minimum sublease rentals to be received under non-cancellable subleases . ( 2 ) excludes $ 0.7 million of uncertain tax liabilities for which we can not make a reasonably reliable estimate of the period of cash settlement . off-balance sheet arrangements as of december 31 , 2015 , we had no off-balance sheet arrangements as defined in item 303 ( a ) ( 4 ) of regulation s-k as promulgated by the sec . critical accounting policies and estimates management 's discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements . the consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the united states and include our accounts and the accounts of our wholly-owned subsidiaries . the preparation of our consolidated financial statements requires our management to make estimates , assumptions , and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements , and the reported amounts of revenues and expenses during the applicable periods . management bases its estimates , assumptions and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances . different assumptions and judgments would change the estimates used in the preparation of our consolidated financial statements , which , in turn , could change the results from those reported . our management evaluates its estimates , assumptions and judgments on an ongoing basis . the critical accounting policies requiring estimates , assumptions , and judgments that we believe have the most significant impact on our consolidated financial statements are described below . revenue recognition we recognize revenue from the sale of our biocatalyst products , biocatalyst research and development agreements and revenue sharing arrangements . revenue is recognized when the related costs are incurred and the four basic criteria of revenue recognition are met : ( 1 ) persuasive evidence of an arrangement exists ; ( 2 ) delivery has occurred or services have been rendered ; ( 3 ) the fee is fixed or determinable ; and ( 4 ) collectability is reasonably assured . where the revenue recognition criteria are not met , we defer the recognition of revenue by recording deferred revenue until such time that all criteria of revenue recognition are met . we account for revenues from multiple element arrangements , such as license and platform technology transfer agreements in which a licensee may purchase several deliverables , in accordance with financial accounting standards board ( “ fasb ” ) 47 accounting standards codification ( “ asc ” ) subtopic 605-25 , “ multiple element arrangements . ” for new or materially amended multiple element arrangements , we identify the deliverables at the inception of the arrangement and each deliverable within a multiple deliverable revenue arrangement is accounted for as a separate unit of accounting if both of the following criteria are met : ( 1 ) the delivered item or items have value to the customer on a standalone basis and ( 2 ) for an arrangement that includes a general right of return relative to the delivered item ( s ) , delivery or performance of the undelivered item ( s ) is considered probable and substantially in our control . revenue allocated to each element is then recognized based on when the basic four revenue recognition criteria are met for each element . where a portion of non-refundable up-front fees or other payments received are allocated to continuing performance obligations under the terms of a collaborative arrangement , they are recorded as deferred revenue and recognized as revenue ratably over the term of our estimated performance period under the agreement . we determine the estimated performance periods , and they are periodically reviewed based on the progress of the related program . the effect of any change made to an estimated performance period and , therefore , to revenue recognized , would occur on a prospective basis in the period that the change was made . biocatalyst product sales biocatalyst product sales consist of sales of biocatalyst intermediates , api and codex ® biocatalyst panels and kits . biocatalyst product sales are recognized once passage of title	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows the following is a summary of cash flows for the years ended december 31 , 2015 , 2014 and 2013 : replace_table_token_13_th cash flows from operating activities cash used in operating activities was $ 0.4 million in 2015 , which resulted from a net loss of $ 7.6 million adjusted for non-cash depreciation and amortization of $ 5.4 million and stock-based compensation of $ 5.1 million , as well as changes in operating assets and liabilities . the net change in operating assets and liabilities included increases in accounts receivable of $ 3.5 million due primarily to an accrual of a settlement payment from a customer relating to past-due payments and a buy-out of future payments , increases in deferred revenue of $ 1.9 million due mainly to the codeevolver ® technology transfer to merck , and decreases in accounts payable of $ 1.3 million due to timing of payment of invoices . cash provided by operating activities was $ 0.3 million in 2014 , which resulted from a net loss of $ 19.1 million adjusted for non-cash depreciation and amortization of $ 6.7 million , stock-based compensation of $ 4.6 million and impairment and changes in fair values for assets held for use charges totaling $ 2.5 million , partially offset by $ 4.2 million received in up-frontfees under a collaborative arrangement and a gain on the sale of the hungarian subsidiary of $ 0.8 million .
homer city is currently engaged in discussions with the owner-lessors regarding the potential for such funding . homer city expects that the outcome of any such discussions , if successful in providing funding for the homer city plant , will likely result in homer city 's loss of substantially all beneficial economic interest in and material control of the homer city plant . failure to resolve the source of funding of necessary capital expenditures for the homer city plant could result in homer city 's default under the lease agreements giving rise to remedies for the owner-lessors and secured lease obligation bondholders , which could include foreclosing on the leased assets , the general partner of homer city , or both . homer city is currently engaged in discussions with the owner-lessors through general electric capital corporation ( gecc ) , one of the owner participants , regarding the funding of capital improvements at the homer city plant . under the existing 17 homer city sale-leaseback documents , homer city would be obligated to reimburse gecc for any amount gecc ultimately agrees to fund for these capital improvements . if these discussions are successful , it is expected that an affiliate of gecc will obtain the economic benefit and majority ownership of all the operating assets of homer city . the transfer of ownership would be effected on a consensual basis . in addition , gecc is currently engaged in discussions with certain of the holders of the secured lease obligation bonds regarding amendments to the terms of the 8.137 % senior secured bonds due 2019 and the 8.734 % senior secured bonds due 2026 , each issued by homer city funding llc . there is no assurance that an agreement will be reached with the owner-lessors or the existing secured lease obligation bondholders on funding the capital improvements . homer city is not expected to meet the covenant requirements of its sale-leaseback documents relating to the payment of equity rent at april 1 , 2012 and homer city will be unable to make the required equity rent payment . there is no assurance that subsequent rent payments will be made . under the sale-leaseback documents , rent payments are comprised of two components , senior rent and equity rent . senior rent is used exclusively for debt service to secured lease obligation bondholders , while equity rent is paid to the owner-lessors . in order to pay equity rent , among other requirements , homer city must meet historical and projected senior rent service coverage ratios of 1.7 to 1 ( subject to reduction to 1.3 to 1 under certain circumstances ) . a failure to pay equity rent does not entitle the owner-lessors to foreclose upon homer city 's leasehold interest , but it does result in the suspension of homer city 's ability to make permitted distributions . moreover , homer city would be permanently restricted in its ability to make permitted distributions if a failure to pay equity rent when due was not cured within nine months , or even if cured , occurred more than one additional time during the term of the lease . homer city is not subject to any minimum historical and projected senior rent service coverage ratios except as conditions to distributions and equity rent payments . also , failure by homer city to pay equity rent when due in april 2012 could trigger termination of the $ 48 million senior rent reserve letter of credit . homer city would then be required to fund the senior rent reserve , and failure to do so could entitle counterparties to seek available remedies under the sale-leaseback documents , including termination or foreclosure upon the leasehold interest . as a result of the expectation that homer city is likely to lose substantially all beneficial economic interest in and material control of the homer city plant , homer city recorded an impairment charge of $ 478 million for the fourth quarter of 2011. for further discussion , see `` critical accounting estimates and policies—impairment of long-lived assets `` and `` item 8. eme homer city generation l.p. notes to financial statements—note 12. asset impairments and other charges . `` as a result of the financial outlook of homer city , emmt has ceased to enter into hedging activities related to future power sales , but continues to enter into spot market energy transactions on behalf of homer city pursuant to an intercompany agreement . those transactions are generally back-to-back transactions in which emmt enters into a transaction with a third party as a principal and then enters into an equivalent transaction with homer city . in the case of capacity , emmt has sold homer city capacity in the annual pjm base residual auctions through may 2015. if homer city were to default on its obligations to supply capacity , then homer city would be liable to emmt , and potentially also to pjm , to supply that capacity , and for refunds of capacity payments received and penalties ( equal to the greater of 20 % of the capacity payments or $ 20 per mw-day ) under the pjm tariffs if it failed to do so . environmental regulation developments for discussion of environmental regulation developments , see “ item 1. business—environmental matters and regulations `` and `` item 8 eme homer city generation l.p. notes to financial statements—note 9. environmental developments . `` 18 results of operations summary the table below summarizes total revenues as well as key performance measures related to the homer city plant . replace_table_token_7_th 1 effective april 1 , 2011 , emmt allocated to homer city the benefit of an arrangement that allows emmt to deliver a portion of homer city 's power into the nyiso . to the extent this arrangement is not utilized , homer city 's power is delivered into pjm . story_separator_special_tag forward market prices at the pjm west hub fluctuate as a result of a number of factors , including natural gas prices , transmission congestion , changes in market rules , electricity demand ( which in turn is affected by weather , economic growth , and other factors ) , plant outages in the region , and the amount of existing and planned power plant capacity . the actual spot prices for electricity delivered by the homer city plant into these markets may vary materially from the forward market prices set forth in the preceding table . emmt engages in hedging activities for the homer city plant to hedge the risk of future change in the price of electricity . the following table summarizes homer city 's hedge positions for transactions primarily entered into at the pjm west hub and to a lesser extent at other trading locations ( including forward contracts accounted for on the accrual basis ) at december 31 , 2011 for electricity expected to be generated in 2012 : replace_table_token_15_th 1 the above hedge positions include forward contracts for the sale of power and futures contracts during different periods of the year and the day . market prices tend to be higher during on-peak periods and during summer months , although there is significant variability of power prices during different periods of time . accordingly , the above hedge positions are not directly comparable to the 24-hour pjm west hub prices set forth above . 26 capacity price risk under the rpm , capacity commitments are made in advance to provide a long-term pricing signal for construction of capacity resources . the following table summarizes the status of capacity sales for homer city at december 31 , 2011 : replace_table_token_16_th 1 capacity not sold arises from : ( i ) capacity retained to meet forced outages under the rpm auction guidelines , and ( ii ) capacity that pjm does not purchase at the clearing price resulting from the rpm auction . 2 other capacity sales and purchases , net includes contracts executed in advance of the rpm base residual auction to hedge the price risk related to such auction , participation in rpm incremental auctions and other capacity transactions entered into to manage capacity risks . 3 includes the impact of a 100 mw capacity swap transaction executed prior to the base residual auction at $ 135 per mw-day . revenues from the sale of capacity from homer city beyond the periods set forth above will depend upon the amount of capacity available and future market prices either in pjm or nearby markets if homer city has an opportunity to capture a higher value associated with those markets . for additional information regarding capacity sold by homer city , see `` management 's overview—homer city lease . `` basis risk sales made from the homer city plant in the real-time or day-ahead market receive the actual real-time or day-ahead prices , as the case may be , at the homer city busbar . in order to mitigate price risk from changes in forward spot prices at the homer city busbar , homer city may enter into cash settled futures contracts as well as forward contracts with counterparties for energy to be delivered in future periods . currently , a liquid market for entering into these contracts at the homer city busbar does not exist . a liquid market does exist at the pjm west hub . homer city 's hedging activities use this settlement point to enter into hedging contracts . to the extent that , on the settlement date of a hedge contract , spot prices at the relevant busbar are lower than spot prices at the settlement point , the proceeds actually realized from the related hedge contract are effectively reduced by the difference . this is referred to as `` basis risk . `` during 2011 , day-ahead prices at the homer city busbar were lower than those at the pjm west hub by an average of 9 % , compared to 16 % during 2010 and 12 % during 2009 , due to transmission congestion in pjm . in order to mitigate basis risk , homer city may purchase financial transmission rights and basis swaps in pjm . a financial transmission right is a financial instrument that entitles the holder to receive the difference between actual day-ahead prices for two delivery points in exchange for a fixed amount . coal price risk the homer city plant purchases coal primarily from mines located near the facilities in pennsylvania . coal purchases are made under a variety of supply agreements . the following table summarizes the amount of coal under contract at december 31 , 2011 for the following two years : replace_table_token_17_th 1 the amount of coal under contract in equivalent tons is calculated based on contracted tons and applying a 13,000 btu equivalent . homer city is subject to price risk for purchases of coal that are not under contract . market prices of napp coal , which are related to the price of coal purchased for the homer city plant , increased during the past two years . the market price of napp coal based on 13,000 btu per pound heat content and < 3.0 pounds of so 2 per mmbtu sulfur content was $ 73.30 per ton at december 30 , 2011 , compared to a price of $ 70 per ton and $ 52.50 per ton at december 31 , 2010 and 2009 , respectively , as 27 reported by the eia . in 2011 , the price of napp coal ranged from $ 70 per ton to $ 78.20 per ton , as reported by the eia . the 2011 increase in napp coal prices was primarily driven by the export market demand and global coal pricing . based on homer city 's anticipated coal requirements in excess of the amount under contract , homer city expects	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flow at december 31 , 2011 , homer city had cash and cash equivalents of $ 84 million compared to $ 132 million at december 31 , 2010 . net cash provided by operating activities totaled $ 34 million , $ 106 million and $ 151 million in 2011 , 2010 and 2009 , respectively . the 2011 decrease in net cash provided by operating activities was primarily attributable to lower generation from outages at units 1 and 2 , lower energy and capacity prices , and the timing of cash receipts and disbursements related to working capital items , partially offset by an increase in interest payable to affiliate under the subordinated revolving loan agreement . the 2010 decrease was primarily due to lower net income in 2010 , partially offset by changes in derivative assets and liabilities . net cash used in financing activities totaled $ 68 million , $ 78 million and $ 74 million in 2011 , 2010 and 2009 , respectively . in 2011 , homer city borrowed $ 24 million , net more from its affiliate subordinated revolving loan , and lease financing payments were $ 14 million higher , as compared to 2010. in 2010 , homer city paid $ 4 million , net less on its affiliate subordinated revolving loan , and lease financing payments were $ 8 million higher , as compared to 2009 .
we had 945 employees in the philippines as of december 29 , 2012. in january 2013 , we laid off 163 employees in the philippines which reduced our workforce to 782 in the philippines ( for additional details , refer to note 16-subsequent events of the notes to consolidated financial statements , included in part iv , item 15 of this report ) . in addition to our operations in the philippines , we have a canadian subsidiary to facilitate sales of our products in canada ; the subsidiary has no distribution center or employees . we also ship parts directly to canada and through a freight forwarding partner throughout the world . in 2012 , we shipped auto parts to over 160 different countries . we believe that the cost advantages of our offshore operations provide us with the ability to grow our business in a cost-effective manner . acquisitions . from time to time , we may acquire certain businesses , websites , domain names , or other assets . in 2009 , we completed the acquisition of the assets of a small website and the related domain names which further expanded and enhanced our product offering and our ability to reach more customers . in the first quarter of 2010 , we completed two additional website and domain name asset acquisitions , which increased our net sales and internet traffic . in august 2010 , go fido , inc. , a wholly-owned subsidiary of ours , completed the purchase of all of the outstanding capital stock of automotive specialty accessories and parts , inc. and its wholly-owned subsidiary whitney automotive group , inc. ( referred to herein as wag ) . wag 's midwest facility expanded our distribution network and the merchandise wag offers extended our go-to market product-lines into all terrain vehicles , recreational vehicles and motorcycles , as well as provides us with deep product knowledge into niche segments like jeep , volkswagen and trucks . this expansion of our product line increased our customer reach in the diy automobile and off-road accessories market . related to the wag acquisition , the company has incurred acquisition and integration related costs of $ 7.4 million and $ 3.1 million for the fiscal year 2011 and 2010 , respectively . no significant integration costs were incurred subsequent to december 31 , 2011. for additional information , see note 5 business combination of the notes to consolidated financial statements , included in part iv , item 15 of this report . we may pursue additional acquisition opportunities in the future to increase our share of the aftermarket auto parts market or expand our product offerings . to understand revenue generation through our network of e-commerce websites , we monitor several key business metrics , including the following : replace_table_token_4_th 1 visitors do not include traffic from media properties ( e.g . automd ) . 2 fiscal year 2010 excluded metrics from wag ( acquired in august 2010 ) . unique visitors : a unique visitor to a particular website represents a user with a distinct ip address that visits that particular website . we define the total number of unique visitors in a given month as the sum of unique visitors to each of our websites during that month . we measure unique visitors to understand the volume of traffic to our websites and to track the effectiveness of our online marketing efforts . the number of unique visitors has historically varied based on a number of factors , including our marketing activities and seasonality . we believe an increase in unique visitors to our websites will result in an increase in the number of orders . we seek to increase the number of unique visitors to our websites by attracting repeat customers and improving search engine marketing and other internet marketing activities . during fiscal year 2012 , our unique visitors decreased by 7.1 % . we expect declines in our unique visitors to continue in the next twelve months as we address the challenges we are experiencing from changes search engines have made to the formulas , or algorithms , that they use to optimize their search results , as described in further detail under executive summary below . total number of orders : we monitor the total number of orders as an indicator of future revenue trends . during fiscal year 2012 , total number of orders was down by 10.7 % due to the decrease in unique visitors combined with overall increased competition . we expect the downward trend in the total number of orders to continue over the next twelve months due to continued declines in unique visitors and increased competition . we recognize revenue associated with an order when the products have been delivered , consistent with our revenue recognition policy . average order value : average order value represents our net sales on a placed orders basis for a given period of time divided by the total number of orders recorded during the same period of time . during fiscal year 2012 , our average order value decreased by 6.2 % . we expect this trend to continue in the next twelve months primarily due to increased competition , as described in further detail under executive summary below . we seek to increase the average order value as a means of increasing net sales . average order values vary depending upon a number of factors , including the components of our product offering , the order volume in certain online sales channels , macro-economic conditions , and the competition online . 23 revenue capture : revenue capture is the amount of actual dollars retained after taking into consideration returns , credit card declines and product fulfillment . story_separator_special_tag technology expense consists primarily of payroll and related expenses of our information technology personnel , the cost of hosting our servers , communications expenses and internet connectivity costs , computer support and software development . technology expense also includes share-based compensation expense . amortization of intangible assets . amortization of intangibles consists of the amortization expense associated with our definite-lived intangible assets . impairment loss . impairment loss recorded as a result of impairment testing performed for goodwill and indefinite-lived intangible assets in accordance with asc 350 intangibles goodwill and other , and long-lived assets , including intangible assets subject to amortization , in accordance with asc 360 property , plant and equipment . other income , net . other income , net consists of miscellaneous income or expense such as gains/losses from disposition of assets , and interest income comprised primarily of interest income on investments . interest expense . interest expense consists primarily of interest expense on our outstanding loan balances , deferred financing cost amortization and capital lease interest . results of operations the following table sets forth selected statement of operations data for the periods indicated , expressed as a percentage of net sales : replace_table_token_6_th 27 replace_table_token_7_th fifty-two weeks ended december 29 , 2012 compared to the fifty-two weeks ended december 31 , 2011 net sales and gross margin replace_table_token_8_th net sales decreased $ 23.1 million , or 7.0 % , for fiscal year 2012 compared to fiscal year 2011. our net sales consisted of online sales , representing 91.8 % of the total for fiscal year 2012 ( compared to 94.1 % in fiscal year 2011 ) , and offline sales , representing 8.2 % of the total for fiscal year 2012 ( compared to 5.9 % in fiscal year 2011 ) . the net sales decrease was due to a decline of $ 28.8 million , or 9.3 % , in online sales , partially offset by a $ 5.7 million , or 29.8 % , increase in offline sales . online sales decreased primarily due to a 7.1 % reduction in unique visitors and a decline in average order value by 6.2 % , partially offset by an increase of 2.2 % in revenue capture . the decrease in unique visitors was due to the negative impact from customer traffic losses as a result of changes search engines have made to the algorithms that they use to optimize their search results . also , our revenues were negatively impacted by the increased competition as described in further detail under executive summary above . our offline sales , which consist of our kool-vue and wholesale operations , continued to show solid growth . gross profit decreased $ 15.4 million , or 14.4 % , in fiscal year 2012 compared to fiscal year 2011. gross margin rate decreased 2.6 % to 30.1 % in fiscal year 2012 compared to 32.7 % in fiscal year 2011. gross margin decreased in fiscal year 2012 compared to fiscal year 2011 due to reduced margins from both online and offline sales . gross margin was unfavorably impacted by increased competition for fiscal year 2012 as certain of our suppliers are now selling directly to consumers online and an increase in inventory write downs of $ 1.0 million recorded in the fourth quarter of 2012. marketing expense replace_table_token_9_th total marketing expense decreased $ 4.4 million , or 7.8 % , for fiscal year 2012 compared to fiscal year 2011. online advertising expense , which includes catalog costs , was $ 21.1 million , or 7.5 % , of online sales compared to $ 28.5 million , or 9.2 % , of online sales for the prior year . marketing expense , excluding online advertising , was $ 30.3 million , or 10.0 % , of net sales compared to $ 27.3 million , or 8.4 % , of net sales for the prior year . online advertising expense decreased due to reduced catalog advertising costs of $ 3.5 million , and because our more substantial non-catalog online adverting expenses ( including listing and placement fees paid to commercial and search engine websites ) decreased by $ 3.9 million . marketing expenses , excluding online advertising , increased primarily due to higher depreciation and amortization expense related to software deployments of $ 2.4 million . 28 general and administrative expense replace_table_token_10_th general and administrative expense decreased $ 12.1 million , or 37.9 % , for fiscal year 2012 compared to fiscal year 2011. the decrease was primarily due to the acquisition and integration related costs of $ 7.4 million for fiscal year 2011 related to our wag acquisition , which were all recorded in general and administrative expense , compared to none in fiscal year 2012. additionally , depreciation and amortization expense decreased by $ 2.4 million compared to the prior year due to certain assets that were fully depreciated , and merchant fees decreased by $ 1.4 million due to lower online sales compared to the prior year . fulfillment expense replace_table_token_11_th fulfillment expense increased $ 3.1 million , or 16.2 % , for fiscal year 2012 compared to fiscal year 2011. the increase was primarily due to higher depreciation and amortization expense from software deployments of $ 2.7 million . technology expense replace_table_token_12_th technology expense decreased $ 1.0 million , or 13.7 % , for fiscal year 2012 compared to fiscal year 2011. technology expense as a percentage of net sales remained consistent compared to the prior year . the decrease was primarily due to lower telephone expenses of $ 0.7 million in fiscal year 2012 compared to fiscal year 2011. amortization of intangible assets replace_table_token_13_th amortization of intangibles decreased by $ 2.5 million , or 67.6 % , for fiscal year 2012 compared to fiscal year 2011. the decrease was primarily due to certain acquired intangible assets that were fully amortized . 29 impairment loss on goodwill fifty-two weeks ended $ change % change december 29	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash flows the following table summarizes the key cash flow metrics from our consolidated statements of cash flows for fiscal year 2012 , 2011 and 2010 , respectively ( in thousands ) : replace_table_token_27_th operating activities cash provided by operating activities is primarily comprised of net income ( loss ) , adjusted for non-cash activities such as depreciation and amortization expense , amortization of intangible assets , impairment losses and share-based compensation expense . these non-cash adjustments represent charges reflected in net income ( loss ) and , therefore , to the extent that non-cash items increase or decrease our operating results , there will be no corresponding impact on our cash flows . net loss adjusted for non-cash adjustments to operating activities was $ 8.2 million ( adjusted for non-cash charges primarily consisting of impairment losses of $ 26.4 million and depreciation and amortization expense of $ 15.2 million ) for the period ended december 29 , 2012 , compared to $ 7.6 million ( adjusted for non-cash charges primarily consisting of impairment losses of $ 5.1 million and depreciation and amortization expense of $ 12.7 million ) for the period ended december 31 , 2011. after excluding the effects of the non-cash charges , the primary changes in cash flows relating to operating activities resulted from changes in operating assets and liabilities . 35 inventory decreased to $ 42.7 million at december 29 , 2012 from $ 52.2 million at december 31 , 2011 , resulting in a decrease in operating assets and reflecting a cash inflow of $ 9.5 million for the fifty-two weeks ended december 29 , 2012. we expect the level of our inventory to continue to decrease over the next twelve months due to lower revenues over the same period . accounts payable and accrued expenses decreased to $ 38.5 million at december 29 , 2012 compared to $ 52.9 million at december 31 , 2011 resulting in a decrease in operating liabilities and reflecting a cash outflow of $ 14.9 million for the fifty-two weeks ended december 29 , 2012. accounts payable and accrued expenses decreased primarily due to the decrease in accounts payable of $ 13.3 million .
the interest rate environment that impact interest margins and may impact prepayments on the mortgage-backed securities ( “ mbs ” ) portfolio ; increases in our nonperforming assets ; our ability to maintain adequate liquidity to fund operations and growth ; the failure of our assumptions underlying allowance for loan losses and other estimates ; unexpected outcomes of , and the costs associated with , existing or new litigation involving us ; changes impacting our balance sheet and leverage strategy ; risks related to actual u.s. agency mbs prepayments exceeding projected prepayment levels ; risks related to u.s. agency mbs prepayments increasing due to u.s. government programs designed to assist homeowners to refinance their mortgage that might not otherwise have qualified ; our ability to monitor interest rate risk ; 30 risks related to the price per barrel of crude oil ; significant increases in competition in the banking and financial services industry ; changes in consumer spending , borrowing and saving habits ; technological changes ; our ability to increase market share and control expenses ; the effect of changes in federal or state tax laws ; the effect of compliance with legislation or regulatory changes ; the effect of changes in accounting policies and practices ; credit risks of borrowers , including any increase in those risks due to changing economic conditions ; and risks related to loans secured by real estate , including the risk that the value and marketability of collateral could decline . all written or oral forward-looking statements made by us or attributable to us are expressly qualified by this cautionary notice . we disclaim any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments , unless otherwise required by law . critical accounting estimates our accounting and reporting estimates conform with u.s. generally accepted accounting principles ( “ gaap ” ) and general practices within the financial services industry . the preparation of financial statements in conformity with gaap requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes . actual results could differ from those estimates . we consider our critical accounting policies to include the following : allowance for losses on loans . the allowance for losses on loans represents our best estimate of probable losses inherent in the existing loan portfolio . the allowance for losses on loans is increased by the provision for losses on loans charged to expense and reduced by loans charged-off , net of recoveries . the provision for losses on loans is determined based on our assessment of several factors : reviews and evaluations of specific loans , changes in the nature and volume of the loan portfolio , current economic conditions and the related impact on specific borrowers and industry groups , historical loan loss experience , the level of classified and nonperforming loans and the results of regulatory examinations . the allowance for loan loss is based on the most current review of the loan portfolio and is a result of multiple processes . the servicing officer has the primary responsibility for updating significant changes in a customer 's financial position . each officer prepares status updates on any credit deemed to be experiencing repayment difficulties which , in the officer 's opinion , would place the collection of principal or interest in doubt . our internal loan review department is responsible for an ongoing review of our loan portfolio with specific goals set for the loans to be reviewed on an annual basis . at each review , a subjective analysis methodology is used to grade the respective loan . categories of grading vary in severity from loans that do not appear to have a significant probability of loss at the time of review to loans that indicate a probability that the entire balance of the loan will be uncollectible . if full collection of the loan balance appears unlikely at the time of review , estimates of future expected cash flows or appraisals of the collateral securing the debt are used to determine the necessary allowances . the internal loan review department maintains a list of all loans or loan relationships that are graded as having more than the normal degree of risk associated with them . in addition , a list of specifically reserved loans or loan relationships of $ 150,000 or more is updated on a quarterly basis in order to properly determine the necessary allowance and keep management informed on the status of attempts to correct the deficiencies noted with respect to the loan . loans are considered impaired if , based on current information and events , it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement . the measurement of impaired loans is generally based on the present value of expected future cash flows discounted at the historical effective interest rate stipulated in the loan agreement , except that all collateral-dependent loans are measured for impairment based on fair value of the collateral . in measuring the fair value of the collateral , in addition to relying on third party appraisals , we use assumptions such as discount rates , and methodologies , such as comparison to the recent selling price of similar assets , consistent with those that would be utilized by unrelated third parties performing a valuation . changes in the financial condition of individual borrowers , economic conditions , historical loss experience and the conditions of the various markets in which collateral may be sold all may affect the required level of the allowance for losses on loans and the associated provision for loan losses . story_separator_special_tag the management of our securities portfolio as a percentage of earning assets is guided by the current economics associated with increasing the securities portfolio , changes in our overall loan and deposit levels , and changes in our wholesale funding levels . if adequate quality loan growth is not available to achieve our goal of enhancing profitability by maximizing the use of capital , as described above , then we may purchase additional securities , if appropriate , which may cause securities as a percentage of earning assets to increase . should we determine that increasing the securities portfolio or replacing the current securities maturities and principal payments is not an efficient use of capital , we may decrease the level of securities through proceeds from maturities , principal payments on mbs or sales . our balance sheet strategy is designed such that our securities portfolio should help mitigate financial performance associated with potential business cycles that include slower loan growth and higher credit costs . in the year ended december 31 , 2015 , we primarily sold collateralized mortgage obligations ( “ cmo ” ) along with some u.s. agency mortgage pass-throughs , u.s. agency commercial mortgage-backed securities ( “ cmbs ” ) , texas municipal securities and u.s. treasury securities that resulted in an overall gain on the sale of afs securities of $ 3.7 million . the cmos we sold during the year had a poor risk reward due to ongoing prepayment concerns as a result of the lower long term interest rate 34 environment and very low book yields . the cmbs that were sold were primarily shorter duration cmbs and were more than replaced by longer duration cmbs . the u.s. treasury securities sold were due to the low interest rates at that time . our investment securities and u.s. agency mbs increased from $ 2.09 billion at december 31 , 2014 , to $ 2.24 billion at december 31 , 2015 . the increase was primarily due to increased u.s. treasury securities and cmbs . most of the increase in the securities portfolio occurred during the second and fourth quarters when interest rates were higher on average than the other two quarters . at december 31 , 2015 , securities as a percentage of assets remained the same at 43.5 % , when compared to december 31 , 2014 . our balance sheet management strategy is dynamic and will be continually reevaluated as market conditions warrant . as interest rates , yield curves , mbs prepayments , funding costs , security spreads and loan and deposit portfolios change , our determination of the proper types , amount and maturities of securities to own , as well as funding needs and funding sources will continue to be reevaluated . should the economics of purchasing securities decrease , we may allow this part of the balance sheet to shrink through run-off or security sales . however , should the economics become more attractive , we may continue to strategically increase the securities portfolio and the balance sheet . with respect to liabilities , we continue to utilize a combination of fhlb advances and deposits to achieve our strategy of minimizing cost while achieving overall interest rate risk objectives as well as the liability management objectives of the alco . fhlb funding is the primary wholesale funding source we are currently utilizing . our fhlb borrowings increase d 27.9 % , or $ 250.3 million , to $ 1.15 billion at december 31 , 2015 from $ 897.4 million at december 31 , 2014 , due primarily to the increase in securities and loans . during the year ended december 31 , 2015 , our long-term fhlb advances decrease d $ 97.8 million , to $ 502.3 million from $ 600.1 million at december 31 , 2014 . our brokered deposits increased from $ 23.4 million at december 31 , 2014 to $ 86.3 million at december 31 , 2015 , or 268.2 % . at december 31 , 2015 , approximately $ 64.6 million of our brokered deposits were non-callable brokered cds with a weighted average cost of 56 basis points and remaining maturities of five to thirteen months . the remaining $ 20.7 million were long-term brokered cds that mature within five years and have short-term calls that we control . during the three months ended december 31 , 2015 , we issued approximately $ 1.0 million of brokered money market deposits and $ 21.5 million of brokered cds . during 2015 , increases in fhlb advances and brokered deposits resulted in an increase in our total wholesale funding as a percentage of deposits , not including brokered deposits , to 36.6 % at december 31 , 2015 from 27.5 % at december 31 , 2014 . results of operations our results of operations are dependent primarily on net interest income , which is the difference between the interest income earned on assets ( loans and investments ) and interest expense due on our funding sources ( deposits and borrowings ) during a particular period . results of operations are also affected by our noninterest income , provision for loan losses , noninterest expenses and income tax expense . general economic and competitive conditions , particularly changes in interest rates , changes in interest rate yield curves , prepayment rates of mbs and loans , repricing of loan relationships , government policies and actions of regulatory authorities , also significantly affect our results of operations . future changes in applicable law , regulations or government policies may also have a material impact on us . 35 net interest income net interest income is one of the principal sources of a financial institution 's earnings stream and represents the difference or spread between interest and fee income generated from interest earning assets and the interest expense paid on deposits and borrowed funds . fluctuations in interest rates or interest rate yield curves , as well as	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	capital resources our total shareholders ' equity at december 31 , 2015 of $ 444.1 million increase d 4.4 % , or $ 18.8 million , from december 31 , 2014 and represented 8.6 % of total assets at december 31 , 2015 compared to 8.8 % at december 31 , 2014 . the increase in shareholders ' equity at december 31 , 2015 primarily consisted of net income of $ 44.0 million , stock compensation expense of $ 1.4 million and the issuance of $ 1.4 million in common stock ( 49,908 shares ) through our dividend re-investment plan . these increases were partially offset by $ 25.1 million in cash dividends paid and accumulated other comprehensive loss of $ 3.1 million . the increase in accumulated other comprehensive loss is comprised of a decrease of $ 6.5 million , net of tax , in the unrealized gain on securities , net of reclassification adjustment ( see “ note 4 – accumulated other comprehensive ( loss ) income ” ) and an increase of $ 3.4 million , net of tax , related to the change in the funded status of our defined benefit plans . as a result of new regulations , we are now required to comply with higher minimum capital requirements ( the “ updated capital rules ” ) . the updated capital rules , which became applicable to the company and the bank on january 1 , 2015 , made substantial changes to these previous standards .
gross profit margins related to sales in our europe and asia businesses are historically higher than our americas business , primarily due to the following factors : ( i ) premiums charged in comparison to retail prices on products sold in the u.s. ; ( ii ) the product sales mix in our international businesses , in comparison to our americas business , is comprised more predominantly of watches and jewelry that generally produce higher gross profit margins than leather goods ; and ( iii ) the watch sales mix in our europe and asia businesses , in comparison to our americas business , are comprised more predominantly of higher priced licensed brands . our business is subject to the risks inherent in global sourcing supply . certain key components in our products come from limited sources of supply , which exposes us to potential supply shortages that could disrupt the manufacture and sale of our products . any interruption or delay in the supply of key components could significantly harm our ability to meet scheduled product deliveries to our customers and cause us to lose sales . interruptions or delays in supply may be caused by a number of factors that are outside of our and our contractor manufacturers ' control . effective for the fourth quarter of fiscal year 2018 , we made changes to the presentation of reportable segments to reflect changes in the way our chief operating decision maker evaluates the performance of our operations , develops strategy , and allocates capital resources . certain peripheral revenue generating activities related to our factories and intellectual property previously recorded within the americas , asia and europe segments have been reclassified to corporate . for comparison purposes , our historical segment disclosures have been recast to be consistent with the current presentation . this discussion should be read in conjunction with our consolidated financial statements and the related notes included therewith . 26 critical accounting policies and estimates the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the u.s. requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period . on an ongoing basis , we evaluate our estimates and judgments , including those related to product returns , bad debt , inventories , long-lived asset impairment , impairment of goodwill and trade names , income taxes , warranty costs and litigation liabilities . we base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances . our estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates under different assumptions or conditions . we believe the following critical accounting policies require the most significant estimates and judgments . product returns . we accept limited returns and may request that a customer return a product if we feel the customer has an excess of any style that we have identified as being a poor performer for that customer or geographic location . we monitor returns and maintain a provision for estimated returns based upon historical experience and any specific issues identified . while returns have historically been within our expectations and the provisions established , future return rates may differ from those experienced in the past . in the event that our products are performing poorly in the retail market and or we experience product damages or defects at a rate significantly higher than our historical rate , the resulting returns could have an adverse impact on the operating results for the period or periods in which such returns occur . if our allowance for product returns were to change by 10 % , the impact , excluding taxes , would have been an approximate $ 3.5 million change to net income ( loss ) . inventories . inventories are stated at the lower of cost and net realizable value , including any applicable duty and freight charges . we account for estimated obsolescence or unmarketable inventory equal to the difference between the average cost of inventory and the estimated net realizable value based upon assumptions about future demand , market conditions and available liquidation channels . if actual future demand or market conditions are less favorable than those projected by management , or if liquidation channels are not readily available , additional inventory valuation reductions may be required . we assess our off-price sales on an ongoing basis and update our estimates accordingly . revenue from sales of our products that are subject to inventory consignment agreements is recognized when title and risk of loss transfers , delivery has occurred and in an amount that reflects the consideration we expect to be entitled in exchange for the product . impairment of goodwill and trade names . in fiscal year 2017 , we determined goodwill was fully impaired and recognized a pre-tax impairment charge in operations of $ 202.3 million , $ 114.3 million and $ 42.9 million in the americas , europe and asia segments , respectively . we evaluate indefinite-lived trade names by comparing the fair value of the asset to its recorded value annually as of the end of the fiscal year and whenever events or conditions indicate that the carrying value of the trade name may not be recoverable . the fair value of the asset is estimated using discounted cash flow methodologies . for fiscal year 2018 , a discount rate of 12 % and a royalty rate of 3 % were used to estimate the skagen trade name fair value . story_separator_special_tag during fiscal year 2017 , our financial performance resulted in a loss of $ 9.87 per diluted share , including non-cash intangible asset impairment charges of $ 7.07 per diluted share , tax charges resulting from the tax act and valuation allowances of $ 2.20 per diluted share and restructuring charges of $ 0.65 per diluted share . currencies , including both the translation impact on operating earnings and the impact of foreign currency hedging contracts , favorably impacted the earnings comparison for fiscal year 2018 by $ 0.09 per diluted share . as we look at 2019 , our focus and priorities will remain consistent with the past year ; however , we will pivot appropriately to address the changing landscape . one priority that will not change is our focus on improving our profitability as well as strengthening our financial position to ensure the long-term success of the company . also , product innovation and differentiation are more important than ever , in both connected and traditional products . we will endeavor to maximize sales growth across multiple channels by adapting to the evolving shopping habits of our customers . while we are focused on driving sales through product innovation and sales channel optimization , we need to further transform our business model . part of that transformation has already taken place in our connected watch business . during the fourth quarter of fiscal year 2018 , we announced a strategic partnership with citizen watch co. , ltd. ( `` citizen `` ) to grow and expand the hybrid smartwatch category , an innovative product in our connected watch portfolio . under a licensing agreement , we provide citizen with our proprietary hybrid technology for use in both their brands and third-party watch brands . in january 2019 , we announced an agreement to transfer intellectual property related to smartwatch technology to google . both of these agreements are expected to drive innovation and reduce costs in our wearables business . we made significant progress on all fronts this year , but we continue to have further work ahead of us to address the structural changes in our categories and channels . we remain confident in our strategies and believe we have the talent , operating platform and balance sheet strength to achieve our goals . constant currency financial information as a multinational enterprise , we are exposed to changes in foreign currency exchange rates . the translation of the operations of our foreign-based entities from their local currencies into u.s. dollars is sensitive to changes in foreign currency exchange rates and can have a significant impact on our reported financial results . in general , our overall financial results are affected positively by a weaker u.s. dollar and are affected negatively by a stronger u.s. dollar as compared to the foreign currencies in which we conduct our business . as a result , in addition to presenting financial measures in accordance with accounting principles generally accepted in the united states of america ( “ gaap ” ) , our discussion contains references to constant currency financial information , which is a non-gaap financial measure . to calculate net sales on a constant currency basis , net sales for the current fiscal year for entities reporting in currencies other than the u.s. dollar are translated into u.s. dollars at the average rates during the comparable period of the prior fiscal year . we present constant currency information to provide investors with a basis to evaluate how our underlying business performed excluding the effects of foreign currency exchange rate fluctuations . the constant currency financial information presented herein should not be considered a substitute for , or superior to , the measures 30 of financial performance prepared in accordance with gaap . reconciliations between constant currency financial information and the most directly comparable gaap measure are included where applicable . fiscal year 2018 compared to fiscal year 2017 consolidated net sales . net sales decreased $ 246.7 million or 8.8 % ( 9.6 % in constant currency ) for fiscal year 2018 , as compared to fiscal year 2017 . global watch sales decreased $ 166.0 million or 7.5 % ( 8.2 % in constant currency ) , with increases in emporio armani and armani exchange more than offset by declines in most other brands in our portfolio . our jewelry category decreased $ 43.9 million or 20.7 % ( 22.3 % in constant currency ) , mostly as a result of a decrease in sales of michael kors and fossil branded products during fiscal year 2018 as compared to fiscal year 2017 . our leathers business decreased $ 36.1 million or 11.1 % ( 11.9 % in constant currency ) . net sales information by product category is summarized on a reported and constant currency basis as follows ( dollars in millions ) : replace_table_token_5_th the following table sets forth consolidated net sales by segment on a reported and constant currency basis ( dollars in millions ) : replace_table_token_6_th americas net sales . americas net sales decreased $ 139.9 million or 10.6 % ( 10.5 % in constant currency ) , largely driven by decreases in watches . during fiscal year 2018 , our multi-brand watch portfolio decreased $ 93.2 million or 9.0 % ( 8.9 % in constant currency ) , with declines across nearly all brands . the business exits of burberry and adidas , as well as store closures negatively impacted our watch performance . within fossil brand watches , connected watches nearly offset the declines in traditional watches . our leathers category decreased $ 26.4 million or 13.3 % ( 13.2 % in constant currency ) , mainly driven by fossil branded products and our jewelry business decreased $ 20.3 million or 28.8 % ( 28.9 % in constant currency ) , mostly driven by michael kors branded product . within the region , sales declined in the u.s. and canada , while sales	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	debt facilities on january 29 , 2018 , we and certain of our foreign subsidiaries entered into a second amended and restated credit agreement ( the `` credit agreement '' ) . the credit agreement provides for ( i ) revolving credit loans in the amount of $ 325 million , subject to a borrowing base ( as described below ) ( the `` revolving credit facility '' ) , with an up to $ 45.0 million subfacility for letters of credit , and ( ii ) a term loan in the amount of $ 425 million ( the `` term loan facility '' ) . the credit agreement expires and is due and payable on december 31 , 2020. availability under the revolving credit facility and any letters of credit are subject to a borrowing base equal to , ( a ) with respect to fossil group , inc. , the sum of ( i ) 85 % of eligible u.s. accounts receivable and 90 % of net u.s. credit card receivables ( less any dilution reserve ) , and ( ii ) the lesser of ( a ) 65 % of the lower of cost or market value of eligible u.s. finished good inventory and ( b ) 85 % of the appraised net orderly liquidation value of eligible u.s. finished goods inventory , minus ( iii ) the aggregate amount of reserves , if any , established by the administrative agent in good faith and in the exercise of reasonable business judgment from the perspective of a secured asset-based lender ; and ( b ) with respect to each non-u.s. borrower , the sum of ( i ) 85 % of eligible accounts receivable of the non-u.s. borrowers ( less any dilution reserve ) and ( ii ) the least of ( a ) 65 % of the lower of cost or market value of eligible foreign finished goods inventory of the non-u.s. borrowers , ( b ) 85 % of the appraised net orderly liquidation value of eligible foreign finished goods inventory of the non-u.s. borrowers , and ( c ) $ 185,000,000 minus ( iii ) the aggregate amount of reserves , if any , established by the administrative agent in good faith and in the exercise of reasonable business judgment from the perspective of a
we refine cto through a distillation process into four primary constituent fractions : tall oil fatty acids ( “ tofa ” ) ; tall oil rosin ( “ tor ” ) ; distilled tall oil ( “ dto ” ) ; and tall oil pitch . we further upgrade tofa and tor into derivatives such as dimer acids , polyamide resins , rosin resins , dispersions , and disproportionated resins . we refine cst into terpene fractions , which can be further upgraded into specialty terpene resins . the various fractions and derivatives resulting from our cto and cst refining process provide for distinct functionalities and properties , determining their respective applications and end markets . we focus our resources on three product groups : adhesives , performance chemicals , and tires . within our product groups , our products are sold into a diverse range of submarkets , including packaging , tapes and labels , pavement marking , high performance tires , fuel additives , oilfield and mining , coatings , metalworking fluids and lubricants , inks , and flavor and fragrances , among others . while this business is based predominantly on the refining and upgrading of cto and cst , we have the capacity to use both hydrocarbon-based raw materials , such as alpha-methyl-styrene , rosins , and gum rosins where appropriate and , accordingly , are able to offer tailored solutions for our customers . 33 recent developments and known trends our business is subject to a number of known risks and uncertainties , some of which are a result of recent developments . coronavirus . the recent emergence of the coronavirus in china , and other affected countries , has resulted in certain emergency measures to combat the spread of the virus , including extension of the lunar new year holidays , implementation of travel restrictions and extended shutdown of certain businesses in regions in which we operate and could also substantially interfere with general commercial activity related to our supply chain and customer base . while the full impact of the outbreak is unknown at this time , we have restricted employee travel to china , and other countries as appropriate , as a safety precaution . in addition , through the first two months of 2020 the coronavirus has resulted in further disruption of business activity and demand in china and broader asia . at this time , it is not possible to determine the full-year 2020 impact of the coronavirus . market conditions . market fundamentals and demand for our specialty polymer automotive and compounding applications saw continued deterioration within china and broader asia , and more recently in europe during the third quarter of 2019. in addition , results for performance polymers were affected by soft paving and roofing demand , due to the slow start of the 2019 paving and roofing season . this resulted in elevated customer inventories and ample supply availability from market participants , which contributed to intensified competitive market conditions . the chemical segment continues to see pressure on pricing in rosin end markets such as adhesives and road markings driven by weakness in gum rosin pricing and excess hydrocarbon supply . rosin prices remain under pressure and are not expected to recover through 2020. the crude sulfate turpentine refining product prices remain at a consistent level relative to the second half of 2019 , and are not expected to improve through 2020. strategic alternatives for cariflex business . in february 2019 , the company 's board of directors initiated a process to review strategic alternatives for our cariflex business . on october 30 , 2019 , we announced that we have agreed to a purchase and sale agreement with daelim industrial co. , ltd. for our cariflex business unit for a gross purchase price of $ 530 million . the transaction is expected to close in the first quarter of 2020 , subject to customary regulatory approvals and other closing conditions as set forth in the purchase and sale agreement . tariffs . effective september 24 , 2018 , the office of the u.s. trade representative enacted a 10.0 % tariff on certain goods imported from china under section 301 of the trade expansion act of 1974 , which increased up to 25.0 % in 2019 on raw material imports of ours . in addition , china enacted tariffs on certain goods imported into china from the united states of up to 25.0 % during 2018 , which increased up to 30.0 % in 2019 , impacting our sales into china . we have implemented certain mitigation efforts to minimize the effects of any pricing and supply conditions . these tariffs have impacted the chinese economy and thus demand for certain products of ours in china ; however , the direct financial impact of tariff costs to kraton is not material . results of operations factors affecting our results of operations raw materials . we use butadiene , styrene , and isoprene in our polymer segment and cto and cst in our chemical segment as our primary raw materials . the cost of these raw materials has generally correlated with changes in energy prices and is generally influenced by supply and demand factors , and for our isoprene monomers , the prices for natural and synthetic rubber . average purchase prices of our raw materials decreased during 2019 compared to 2018 for the polymer segment and increased during 2019 compared to 2018 for the chemical . we use the fifo basis of accounting for inventory and cost of goods sold , and therefore gross profit . in periods of raw material price volatility , reported results under fifo will differ from what the results would have been if cost of goods sold were based on ecrc . specifically , in periods of rising raw material costs , reported gross profit will be higher under fifo than under ecrc . story_separator_special_tag if the cost of the inventories exceeds their net realizable value , provisions are made for the difference between the cost and the net realizable value . impairment of long-lived assets . in accordance with the impairment or disposal of long-lived assets subsections of financial accounting standards board ( “ fasb ” ) asc subtopic 360-10 , property , plant , and equipment—overall , long-lived assets , such as property , plant , and equipment , and purchased intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable . if circumstances require a long-lived asset or asset group be tested for possible impairment , we first compare undiscounted cash flows expected to be generated by that asset or asset group to its carrying value . if the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis , impairment is recognized to the extent that the carrying value exceeds its fair value . fair value is determined through various valuation techniques including discounted cash flow models , quoted market values , and third-party independent appraisals , as considered necessary . goodwill . we record goodwill when the purchase price of an acquired business exceeds the fair value of the net identifiable assets acquired . goodwill is allocated to the reporting unit level based on the estimated fair value at the date of acquisition . goodwill was recorded as a result of the arizona chemical acquisition and is recorded in the chemical operating segment . goodwill is tested for impairment at the reporting unit level annually or more frequently as deemed necessary . our annual measurement date for testing impairment is october 1st . the assessment is performed in three steps . we assess qualitative factors , or step zero , to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount . if it is more likely than not that an impairment indicator exists utilizing the qualitative method , we then utilize step one to test for impairment via estimating the fair value of our reporting units utilizing a combination of market and income approaches . this step one provides a fair value to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value , including goodwill . the estimated fair value of our reporting units are subject to a number of estimates , including discount rates , revenue growth rates , cash flow assumptions , and market information . if potential impairments are identified , we perform step two to measure the impairment loss through a full fair value allocation of the assets and liabilities of the reporting unit utilizing the acquisition method of accounting . as of october 1 , 2019 , the company elected to bypass the qualitative assessment and performed a fair value assessment of the reporting unit utilizing a combination of the income and market approach . the company 's assessment concluded that the fair value of the reporting unit exceeded the book value of the reporting unit , including goodwill , and thus there was no impairment recognized . share-based compensation . share-based compensation cost is measured at the grant date based on the fair value of the award . we recognize these costs using the straight-line method over the requisite service period . upon adoption of asu 2016-09 , improvements to employee share-based payment accounting ( topic 817 ) , we now recognize actual forfeitures by reducing the employee share-based compensation expense in the same period as the forfeitures occur . we estimate the fair value of performance-based restricted share units using a combination of monte carlo simulations and internal metrics . the expected term represents the period of time that performance share units granted are expected to be outstanding . our expected volatilities are based on historical volatilities for kraton and the members of the peer group . the risk free interest rate for the periods within the contractual life of the performance-based restricted share units is equal to the yield , as of the valuation date , of the zero coupon u.s. treasury strips that have a remaining term equal to the length of the remaining performance period . the expected dividend yield is assumed to be zero , which is the equivalent of reinvesting dividends in the underlying company 's stock . forfeitures are recognized when they occur . see note 5 share-based compensation to the consolidated financial statements . 40 income taxes . we conduct operations in separate legal entities in different jurisdictions . as a result , income tax amounts are reflected in our consolidated financial statements for each of those jurisdictions . income taxes are recorded utilizing an asset and liability approach . this method gives consideration to the future tax consequences associated with the differences between the financial accounting and tax basis of the assets and liabilities as well as the ultimate realization of any deferred tax asset resulting from such differences . valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized . in determining whether a valuation allowance is required , the company evaluates primarily the impact of cumulative losses in past years and current and or recent losses . a recent trend in earnings despite cumulative losses is a prerequisite to considering not recording a valuation allowance . in assessing the realizability of deferred tax assets , we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized . the ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible . we consider	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	net cash provided by operating activities totaled $ 246.6 million for the year ended december 31 , 2018 and $ 255.4 million for the year ended december 31 , 2017 . this represents a net decrease of $ 8.9 million , which was primarily driven by increases in working capital , partially offset by increases in operating income . the period-over-period changes in working capital are as follows : $ 35.8 million decrease in cash flows associated with inventories of products , materials , and supplies , due to higher inventory volumes and higher raw material costs ; $ 32.2 million decrease in cash flows for other payables and accruals , primarily driven by timing of interest payments , employee related accruals , and customer rebates ; $ 27.1 million decrease in cash flows for accounts receivable , primarily related to higher selling prices , partially offset by lower sales volumes ; partially offset by $ 12.4 million increase in cash flows due to the timing of payments of other items , including related party transactions , pension costs , and transaction taxes ; and $ 12.0 million increase in cash flows associated with trade accounts payable due to timing of payments and higher raw material costs . investing cash flows net cash used in investing activities totaled $ 108.7 million , $ 111.1 million , and $ 122.6 million for the years ended december 31 , 2019 , 2018 , and 2017 , respectively . capital projects in 2019 included the following : $ 67.0 million related to infrastructure and maintenance , and health , safety , environmental , and security projects ; $ 22.0 million related to projects to optimize the production capabilities of our manufacturing assets ; and $ 14.0 million of capital expenditures related to information technology and research and development .
for the fiscal year ended march 31 , 2015 , we generated $ 467.3 million of cash flows from operating activities , used $ 67.9 million in investing activities and used $ 395.2 million in financing activities . cash flows from operating activities in fiscal year 2015 included $ 112.3 million in pension contributions versus $ 46.3 million in fiscal year 2014 . we continue to remain focused on growing our core businesses as well as growing through strategic acquisitions . our organic sales decreased in fiscal 2015 due to production rate cuts by our customers on the 747-8 , v-22 , g450/g550 and c-17 programs . our company has an aggressive but selective acquisition approach that adds capabilities and increases our capacity for strong and consistent internal growth . u.s. government appropriation levels remain subject to significant uncertainty . in august 2011 , the budget control act ( `` the act `` ) established limits on u.s. government discretionary spending , including a reduction of defense spending by approximately $ 490 billion between the 2012 and 2021 u.s. government fiscal years . the act also provided that the defense budget would face “ sequestration ” cuts of up to an additional $ 500 billion during that same period to the extent that discretionary spending limits are exceeded . while the impact of sequestration cuts was reduced with respect to fiscal 2014 and fiscal 2015 following the enactment of the bipartisan budget act in december 2013 , significant uncertainty remains with respect to overall levels of defense spending . it is likely that u.s. government discretionary spending levels for fiscal 2016 and beyond will continue to be subject to significant pressure , including risk of future sequestration cuts . significant uncertainty also continues with respect to program-level appropriations for the u.s. department of defense ( u.s. dod ) and other government agencies , within the overall budgetary framework described above . future budget cuts , including cuts mandated by sequestration , or future procurement decisions associated with the authorization and appropriations process could result in reductions , cancellations and or delays of existing contracts or programs . any of these impacts could have a material effect on the results of the company 's operations , financial position and or cash flows . in addition to the risks described above , if congress is unable to pass appropriations bills in a timely manner , a government shutdown could result which could have impacts above and beyond those resulting from budget cuts or sequestration impacts . for example , requirements to furlough employees in the u.s. dod or other government agencies could result in payment delays , impair our ability to perform work on existing contracts , and or negatively impact future orders . the consolidated and further continuing appropriations act , 2015 enacted december 2014 , funds most u.s. government agencies through september 2015 , including the u.s. dod , and the federal aviation administration ( faa ) . during the third quarter of the fiscal year ended march 31 , 2015 , we recognized a provision a provision of approximately $ 152.0 million for forward losses associated with our long-term contract on the 747-8 program . these forward losses are largely due to changes in future estimated production rates , labor and overhead costs , pension income and expedited delivery charges . in december 2014 , our customer , boeing , announced a future production rate reduction for the 747-8 program from 1.5 shipsets per month to 1.3 shipsets per month . this production rate cut will result in additional future disruption and overhead cost absorption across our related production facilities . while we have experienced improvements in labor performance metrics on our work associated with the 747-8 program in recent quarters , we have not recovered to the levels previously experienced or as quickly as expected , and no longer believe that we can recover to the level required to avoid future losses . our increased labor assumptions will also result in increased overhead cost absorption to the 747-8 program . in october 2014 , the society of actuaries released updated mortality tables to reflect recent improvements in longevity . the mortality tables are a key assumption in the valuation of our defined benefit obligations and related net period pension benefit income . these new mortality tables will lower estimated future pension benefit income amounts , thereby negatively impacting our future cost estimates associated with the 747-8 program . although we have made improvements on the quality and timeliness of deliveries as compared to the prior year , we continue to incur charges related to expedited delivery and have included estimates for additional costs in the future . while we have recognized a provision for forward losses during the fiscal year ended march 31 , 2015 , there is still risk with other programs , similar in nature to what we have experienced on the 747-8 program . particularly , our ability to manage risks related to supplier performance , execution of cost reduction strategies , hiring and retaining skilled production and management personnel , quality and manufacturing execution , program schedule delays and many other risks , will determine the ultimate performance of these programs . 23 the next twelve months will be a critical time for this program as we attempt to return to a baseline performance for the recurring cost structure . recognition of additional forward losses in the future periods continues to be a risk and will depend upon several factors , including our market forecast , possible airplane program delays , our ability to successfully perform under current design and manufacturing plans , achievement of forecasted cost reductions as we continue production and our ability to successfully resolve claims and assertions with our customers and suppliers . story_separator_special_tag interest expense and other for the fiscal year ended march 31 , 2015 decreased due to due to lower average debt outstanding during the period as compared to the fiscal year ended march 31 , 2014. interest expense and other for the fiscal year ended march 31 , 2015 included the redemption of the 2018 notes , which included $ 22.6 million for pre-tax losses associated with the 4.79 % redemption premium , and write-off of the remaining related unamortized discount and deferred financing fees . the fiscal year ended march 31 , 2014 included the redemption of the 2017 notes , which included $ 11.0 million of pre-tax losses associated with the 4 % redemption premium , and the write-off of the remaining related unamortized discount and deferred financing fees . the effective income tax rate was 31.7 % for the fiscal year ended march 31 , 2015 and 33.9 % for the fiscal year ended march 31 , 2014 . the income tax provision for the fiscal year ended march 31 , 2015 was reduced to reflect the release of previously reserved for unrecognized tax benefits of $ 1.1 million , the benefit of $ 2.8 million from a decrease of the state deferred tax rate and the benefit of $ 6.0 million from the retroactive reinstatement of the r & d tax credit to january 1 , 2014. for the fiscal year ended march 31 , 2014 , the income tax provision was reduced to reflect the release of previously reserved for unrecognized tax benefits of $ 0.7 million and additional research and development tax credit carryforward and nol carryforward of $ 2.3 million . in january 2014 , the company sold all of its shares of triumph aerospace systems-wichita , inc. for total cash proceeds of $ 23.0 million , which resulted in no gain or loss from the sale . in april 2013 , the company sold the assets and liabilities of triumph instruments-burbank and triumph instruments-ft. lauderdale for total proceeds of $ 11.2 million , resulting in a loss of $ 1.5 million . the company expects to have significant continuing involvement in the businesses and markets of the disposed entities and therefore the disposal groups did not meet the criteria to be classified as discontinued operations . 28 fiscal year ended march 31 , 2014 compared to fiscal year ended march 31 , 2013 replace_table_token_12_th net sales increased by $ 60.6 million , or 1.6 % , to $ 3.8 billion for the fiscal year ended march 31 , 2014 from $ 3.7 billion for the fiscal year ended march 31 , 2013. the fiscal 2014 and fiscal 2013 acquisitions , net of current year and prior year divestitures contributed $ 282.6 million . organic sales decreased $ 222.0 million , or 6.1 % , due to production rate cuts by our customers on the 747-8 program and , as it transitions from the commercial variant to the tanker , the 767 program , and a decrease in military sales . the prior fiscal year was positively impacted by our customers ' increased production rates on existing programs and new product introductions . cost of sales increased by $ 148.3 million , or 5.4 % , to $ 2.9 billion for the fiscal year ended march 31 , 2014 from $ 2.8 billion for the fiscal year ended march 31 , 2013. this increase in cost of sales was largely due to increased sales . gross margin for the fiscal year ended march 31 , 2014 was 22.6 % compared with 25.4 % for the fiscal year ended march 31 , 2013. this change was impacted by reductions in profitability estimates on the 747-8 program , driven largely by the identification of additional 747-8 program costs ( $ 85.0 million ) identified during the year , additional program costs resulting from disruption and accelerated depreciation associated with the relocation from our jefferson street facilities ( $ 38.4 million ) , price concessions ( $ 4.0 million ) and a non-recurring termination customer settlement ( $ 9.5 million ) which had a favorable impact on the prior year gross margin . gross margin included net unfavorable cumulative catch-up adjustments on long-term contracts ( $ 53.2 million ) resulting from changes in contract values and estimated costs that arose during the fiscal year . the unfavorable cumulative catch-up adjustments to operating income included gross favorable adjustments of $ 14.3 million and gross unfavorable adjustments of $ 67.5 million , of which $ 29.8 million was related to the additional 747-8 program costs from reductions to profitability estimates on the 747-8 production lots that were completed during the fiscal year discussed above and $ 15.6 million of disruption and accelerated depreciation costs related to our exit from the jefferson street facilities which reduced profitability estimates on production lots completed during the year . these decreases were offset by lower pension and other postretirement benefit expense of $ 12.7 million . gross margins for fiscal 2013 included net unfavorable cumulative catch-up adjustments of $ 14.6 million . segment operating income decreased by $ 173.5 million , or 28.1 % , to $ 444.9 million for the fiscal year ended march 31 , 2014 from $ 618.4 million for the fiscal year ended march 31 , 2013. the organic operating income decreased $ 173.7 million , or 30.2 % , and was a direct result of the decrease in organic sales , the decreased gross margins noted above , moving costs related to the relocation from our jefferson street facilities ( $ 31.3 million ) , and legal fees ( $ 4.3 million ) , offset by an insurance claim related to hurricane sandy ( $ 6.8 million ) . corporate expenses decreased by $ 42.3 million , or 48.5 % to $ 44.9 million for the fiscal year ended march 31 , 2014 from $ 87.2 million for the fiscal year ended march 31 , 2013. corporate	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources our working capital needs are generally funded through cash flow from operations and borrowings under our credit arrangements . during the year ended march 31 , 2015 , we generated approximately $ 467.3 million of cash flow from operating activities , used approximately $ 67.9 million in investing activities and used approximately $ 395.2 million in financing activities . cash flows from operating activities included $ 112.3 million in pension contributions in fiscal 2015 , compared to $ 46.3 million in fiscal 2014 . for the fiscal year ended march 31 , 2015 , we had a net cash inflow of $ 467.3 million from operating activities , an inflow increase of $ 332.2 million , compared to a net cash inflow of $ 135.1 million for the fiscal year ended march 31 , 2014 . during fiscal 2015 , the increase in net cash provided by operating activities was primarily due to the cash received from legal settlement ( $ 134.7 million ) , increased receipts from customers and others relating to additional sales from fiscal 2015 and fiscal 2014 acquisitions ( $ 110.4 million ) , an income tax refund ( $ 26.0 million ) , and decreased disbursements to employees , suppliers and others ( $ 114.9 million ) due to timing , offset by increased pension contributions ( $ 66.0 million ) .
the discussion of indications for use and representative or target procedures is intended solely to provide an understanding of the market for da vinci products but is not intended to promote for sale or use any intuitive surgical product outside of its licensed or cleared labeling and indications for use . the adoption of da vinci surgery has the potential to grow for those procedures that offer greater patient value than non- da vinci alternatives , within the prevailing economics of healthcare providers . da vinci surgical systems are used primarily in gynecologic surgery , general surgery , urologic surgery , cardiothoracic surgery , and head and neck surgery . we focus our organization and investments on developing , marketing , and training for those products and procedures where da vinci can bring greater patient value relative to alternative treatment options and or economic benefit to health care providers . target procedures in gynecology include da vinci hysterectomy ( “ dvh ” ) , for both cancer and benign procedures , and sacrocolpopexy . target procedures in general surgery include hernia repair ( both ventral and inguinal ) , colorectal procedures , and cholecystectomy . target procedures in urology 37 include da vinci prostatectomy ( “ dvp ” ) and partial nephrectomy . in cardiothoracic surgery , target procedures include da vinci lobectomy and da vinci mitral valve repair . in head and neck surgery , target procedures include certain procedures resecting benign and malignant tumors classified as t1 and t2 . not all the indications , procedures , or products described may be available in a given country or region or on all generations of da vinci surgical systems . patients need to consult the product labeling in a specific country and for each product in order to determine the actual authorized uses , as well as important limitations , restrictions , or contraindications . in 2015 , approximately 652,000 surgical procedures were performed with the da vinci surgical system , compared with approximately 570,000 and 523,000 procedures performed in 2014 and 2013 , respectively . the growth in our overall procedure volume in 2015 was driven by growth in u.s. general surgery procedures and worldwide urologic procedures . u.s. procedures overall u.s. procedure volume grew to approximately 499,000 in 2015 , compared with approximately 449,000 in 2014 , and approximately 422,000 in 2013 . gynecology is our largest u.s. surgical specialty and the procedure volume was approximately 238,000 in 2015 , compared with 235,000 in 2014 and 240,000 in 2013 . general surgery is our second largest and fastest growing specialty in the u.s. with procedure volume that grew to approximately 140,000 in 2015 , compared with approximately 107,000 in 2014 and 81,000 in 2013 . u.s. urology procedure volume was approximately 102,000 in 2015 , compared with approximately 91,000 in 2014 , and 85,000 in 2013 . procedures outside of the u.s. overall procedures outside of the u.s. ( “ ous ” ) grew to approximately 153,000 in 2015 , compared with approximately 121,000 in 2014 and approximately 101,000 in 2013 . ous procedure growth accelerated in 2015 , reflecting higher asian procedure volumes , most notably in china , japan , and south korea . procedure volume grew at a similar rate in 2015 as compared with 2014. procedure growth in most ous markets was driven largely by dvp volume , which grew to approximately 79,000 in 2015 , compared with approximately 65,000 in 2014 , and approximately 56,000 in 2013 . partial nephrectomy , general surgery , and gynecologic oncology procedures also contributed to ous procedure growth . see recent business events and trends for further discussion on u.s. and ous procedures . business model we generate revenue from both the initial capital sales of da vinci surgical systems and from subsequent sales of instruments , accessories and service , as recurring revenue . the da vinci surgical system generally sells for approximately between $ 0.6 million and $ 2.5 million , depending upon configuration and geography , and represents a significant capital equipment investment for our customers . we generate recurring revenue as our customers purchase our endowrist and single-site instrument and accessory products used in performing procedures with the da vinci surgical system . our instruments and accessories have a limited life and will either expire or wear out as they are used in surgery , at which point they are replaced . also , we generate recurring revenue from ongoing system service . we typically enter into service contracts at the time systems are sold at an annual rate of approximately $ 100,000 to $ 170,000 per year , depending upon the configuration of the underlying system and composition of the services offered under the contract . these service contracts have generally been renewed at the end of the initial contractual service periods . recurring revenue has generally grown at a faster rate than system revenue in the last few fiscal years . recurring revenue increased to $ 1.7 billion , or 70 % of total revenue in 2015 , compared with $ 1.5 billion , or 70 % of total revenue in 2014 and $ 1.4 billion , or 63 % of total revenue in 2013 . the growth of recurring revenue and its increasing proportion of total revenue largely reflect continued procedure adoption on a growing base of installed da vinci surgical systems . the installed base of da vinci surgical systems has grown to approximately 3,597 at december 31 , 2015 , compared with 3,266 at december 31 , 2014 , and 2,966 at december 31 , 2013 . we provide our products through direct sales organizations in the u.s. , japan , south korea , and europe , excluding spain , portugal , italy , greece , and eastern european countries . in the remainder of our ous markets , we provide our products through distributors . story_separator_special_tag u.s. dvp is the largest urology procedure in the u.s. with 66,000 dvps performed in 2015 , compared with 60,000 in 2014 , and 58,000 in 2013. we believe the 2011 u.s. preventive services task force ( “ usptf ” ) recommendation against prostate-specific antigen ( ( “ psa ” ) screening has impacted our u.s. dvp procedure volumes , as well as caused changes in treatment patterns for low risk prostate cancer away from definitive treatment , and contributed to an approximate 6 % decline in our dvp business in 2013. after continuing to decline during the first half of 2014 , u.s. dvp returned to growth during the second half of 2014 and accelerated to approximately 11 % growth in 2015. as the u.s. standard of care for the surgical treatment of prostate cancer , we expect that the number of dvp procedures performed in the u.s. will fluctuate with the overall prostatectomy market . we believe the return to growth in dvp reflects surgical procedures being performed for men who may have previously deferred psa testing or definitive treatment . dvp adoption in our markets outside of the u.s. is at earlier stages , with lower market penetration , and has continued to grow since the usptf recommendation and despite shifting patient treatment trends that have negatively impacted the overall prostatectomy volumes in certain countries . procedure seasonality . more than half of da vinci procedures performed are for benign conditions , most notably benign hysterectomies , hernia repairs , and cholecystectomies . the proportion of these benign procedures has grown over time in relation to the total number of procedures performed . hysterectomies for benign conditions , hernia repairs , cholecystectomies , and other short-term elective procedures tend to be more seasonal than cancer operations and surgeries for other life threatening conditions . seasonality for these benign procedures results in higher fourth quarter procedure volume when more patients have met annual deductibles and lower first quarter procedure volume when deductibles are reset . seasonality for 2015 was similar to years prior to 2014 , with higher procedure volumes in the fourth quarter , and less pronounced than in early 2014 , when we believe procedure volume was negatively impacted by transitional issues associated with the implementation of the affordable care act . procedure mix . our procedure business is primarily comprised of : ( 1 ) cancer and other highly complex procedures and ( 2 ) less complex benign procedures . cancer and other highly complex procedures tend to be reimbursed at higher rates than less complex benign procedures . thus , hospitals are more sensitive to the costs associated with treating less complex benign conditions . our strategy is to provide hospitals with attractive clinical and economic solutions in each of these procedure categories . more fully featured products , including 4-arm , dual console , firefly enabled systems , and advanced instruments including vessel sealing and stapler are targeted towards more complex procedures . lower priced products , including three-arm da vinci si-e systems , refurbished da vinci si , and lower priced single-site instruments are targeted towards less complex procedures . fda actions concerning morcellation . in april 2014 , the fda announced that it discourages the use of power morcellators in the surgical removal of assumed benign fibroids . this statement was followed in july 2014 by an fda panel discussion on the topic . in november 2014 , the fda issued specific contraindications for the use of laparoscopic power morcellation and required specific patient warning prior to its use in surgery . we do not manufacture or sell power morcellation products , and power morcellators do not attach to da vinci surgical systems . minimally invasive da vinci gynecologic surgeries are routinely performed without the use of power morcellators . however , we believe that these fda actions likely created some uncertainty for surgeons and patients when choosing among minimally invasive surgical methods for removing fibroids that may have adversely impacted the number of da vinci procedures performed . since the second quarter of 2014 , we have experienced a decline in myomectomies that we believe likely reflected the impact of the fda actions . myomectomies are not a significant portion of our business . it is difficult to gauge what impact the fda actions may have had on benign dvh procedures , although as indicated above , an increasing proportion of our hysterectomy procedures in recent quarters have been performed by gynecologic oncologists . system demand future demand for da vinci surgical systems will be impacted by factors including procedure growth rates , market response to our recently launched da vinci xi surgical system , hospitals consolidation trends , evolving system utilization and point of care dynamics , additional reimbursements in various global markets including japan , the timing around governmental tenders and authorizations , the timing of when we receive regulatory clearances in our other ous markets for our xi system and related instruments . future demand may also be impacted by anticipated robotic surgery competition , which is further described in the competition section included in part i , item 1. recent media and lawsuits in recent years , various print , television , and internet media have released pieces questioning the patient safety and efficacy associated with da vinci surgery , the cost of da vinci surgery relative to other disease management methods , and the adequacy of surgeon training and our sales and marketing practices . in addition , as further described in note 7 to the consolidated financial 42 statements included in part ii , item 8 , we are currently named as a defendant in approximately 92 individual product liability lawsuits and a multi-plaintiff product liability lawsuit filed on behalf of 55 patients who underwent da vinci surgery . plaintiffs ' attorneys have been engaged in well-funded national advertising campaigns soliciting clients who have undergone da vinci surgery and claim to have suffered an	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources sources and uses of cash our principal source of liquidity is cash provided by operations and issuance of common stock through exercise of stock options and our employee stock purchase program . cash and cash equivalents plus short and long-term investments increased by $ 0.8 billion to $ 3.3 billion at december 31 , 2015 , from $ 2.5 billion at december 31 , 2014 . cash and cash equivalents plus short and long-term investments decreased from $ 2.8 billion at december 31 , 2013 , to $ 2.5 billion at december 31 , 2014 , primarily due to the repurchase of $ 1.0 billion stock during 2014 . cash generation is one of our fundamental strengths and provides us with substantial financial flexibility in meeting our operating , investing , and financing needs . as of december 31 , 2015 , $ 987.2 million of our cash , cash equivalents and investments were held by foreign subsidiaries . amounts held by foreign subsidiaries are generally subject to u.s. income tax on repatriation to the u.s. we currently have no plans to repatriate any foreign earnings back to the u.s. as we believe our cash flows provided by our u.s. operations will meet our u.s. liquidity needs for the foreseeable future . see “ item 7a . quantitative and qualitative disclosures about market risk ” for discussion on the impact of interest rate risk and market risk on our investment portfolio . consolidated cash flow data replace_table_token_6_th operating activities for the year ended december 31 , 2015 , cash provided by our operating activities of $ 771.9 million exceeded our net income of $ 588.8 million for two primary reasons : 1. our net income included non-cash charges primarily in the form of share-based compensation of $ 167.9 million , depreciation and loss of disposal of property , plant , and equipment of $ 65.1 million , income tax benefits from employee stock plans of $ 21.5 million , amortization of intangible assets of $ 24.4 million , and accretion of discounts and amortization of premiums on investments of $ 26.4 million .
in an effort to combat the increased competition the company will continue to focus on the benefits of excellent customer service and the “ local ” face to face offering to the market in an effort to help customers succeed . the company has also focused additional attention on selling lower priced vehicles to increase affordability for customers , to address sales volume challenges and to improve credit performance in the future by improving the equity position of customers who may be tempted to default on their contracts especially when competition on the lending side is elevated as has been the case recently . the purchase price the company pays for its vehicles can also have a significant effect on revenues , liquidity and capital resources . because the company bases its selling price on the purchase cost of the vehicle , increases in purchase costs result in increased selling prices . as the selling price increases , it becomes more difficult to keep the gross margin percentage and contract term in line with historical results because the company 's customers have limited incomes and their car payments must remain affordable within their individual budgets . as we have seen in recent years , decreases in the overall volume of new car sales , particularly domestic brands , lead to decreased supply and generally increased prices in the used car market . also , expansions or constrictions in consumer credit , as well as general economic conditions , can have an overall effect on the demand and the resulting purchase cost of the types of vehicles the company purchases for resale . 21 the company 's primary focus is on collections . each dealership is responsible for its own collections with supervisory involvement of the corporate office . over the last five fiscal years , the company 's credit losses as a percentage of sales have ranged between approximately 20.2 % in fiscal 2010 and 27.4 % in fiscal 2014 ( 25.7 % excluding the effect of the increase in the allowance for credit losses made in in the third quarter ) ( average of 22.5 % ) . operational improvements during fiscal 2009 and fiscal 2010 led to improved credit losses in fiscal 2010 as the provision for credit losses was 20.2 % of sales for the year ended april 30 , 2010. the company experienced credit losses of 20.8 % of sales for fiscal 2011 and 21.1 % of sales for fiscal 2012. in fiscal 2011 the higher credit losses primarily related to credit losses during the second fiscal quarter as the company experienced some modest operational difficulties . in fiscal 2012 the company experienced slightly higher credit losses ; however , the losses were within the range of credit losses that the company targets annually . with the acceptable and consistent credit results over the previous years and the overall quality of the portfolio at april 30 , 2012 , management reduced the allowance for credit losses as a percentage of finance receivable at april 30 , 2012 to 21.5 % from 22.0 % . the allowance for credit losses had been 22 % of finance receivables since october 2006. credit losses as a percentage of sales in fiscal 2013 increased to 23.1 % primarily due to increased contract term lengths and lower down payments resulting from increased competitive pressures as well as higher charge-offs which resulted , to an extent , from negative macro-economic factors affecting the company 's customer base . these competitive pressures have intensified and , along with a continued negative macro-economic environment for our customers , further impacted the company 's credit losses in fiscal 2014. as a result of the increased credit losses and with the expectation that charge-offs will remain elevated , management increased the allowance for credit losses to 23.5 % at january 31 , 2014. credit losses as a percentage of sales for fiscal 2014 were 27.4 % ( 25.7 % excluding the effect of the increase in the allowance for credit losses ) compared to 23.1 % of sales for the prior year period , resulting from lower finance receivable collections and higher charge-offs along with the effect of lower wholesale sales . historically , credit losses , on a percentage basis , tend to be higher at new and developing dealerships than at mature dealerships . generally , this is the case because the management at new and developing dealerships tends to be less experienced in making credit decisions and collecting customer accounts and the customer base is less seasoned . normally the older , more mature dealerships have more repeat customers and on average , repeat customers are a better credit risk than non-repeat customers . negative macro-economic issues do not always lead to higher credit loss results for the company because the company provides basic affordable transportation which in many cases is not a discretionary expenditure for customers . however , the company does believe that general inflation , particularly within staple items such as groceries and gasoline , as well as overall unemployment levels and potentially lower or stagnant personal income levels affecting customers can have , and have had in recent quarters , a negative impact on collections . additionally , increased competition for used vehicle financing can have , and management believes it is currently having , a negative effect on collections and charge-offs . in an effort to offset the elevated credit losses and lower collection levels and to operate more efficiently , the company continues to look for improvements to its business practices , including better underwriting and better collection procedures . the company has a proprietary credit scoring system which enables the company to monitor the quality of contracts . corporate office personnel monitor proprietary credit scores and work with dealerships when the distribution of scores falls outside of prescribed thresholds . story_separator_special_tag in fiscal 2014 the company had a $ 2.5 million net decrease in total debt used to contribute to the funding of finance receivables growth of $ 16 million , net capital expenditures of $ 7.1 million and common stock repurchases of $ 12.8 million . 27 story_separator_special_tag as well as increased competitive pressures . management continues to focus on improved execution at the dealership level , specifically as related to working individually with its customers concerning collection issues . 29 the company has generally leased the majority of the properties where its dealerships are located . as of april 30 , 2014 , the company leased approximately 87 % of its dealership properties . the company expects to continue to lease the majority of the properties where its dealerships are located . the company 's revolving credit facilities generally limit distributions by the company to its shareholders in order to repurchase the company 's common stock . the distribution limitations under the agreement allow the company to repurchase the company 's stock so long as : either ( a ) the aggregate amount of such repurchases does not exceed $ 40 million and the sum of borrowing bases combined minus the principal balances of all revolver loans after giving effect to such repurchases is equal to or greater than 25 % of the sum of the borrowing bases , or ( b ) the aggregate amount of such repurchases does not exceed 75 % of the consolidated net income of the company measured on a trailing twelve month basis ; provided that immediately before and after giving effect to the stock repurchases , at least 12.5 % of the aggregate funds committed under the credit facilities remain available . thus , the company is limited in the amount of dividends or other distributions it can make to its shareholders without the consent of the company 's lenders . at april 30 , 2014 , the company had $ 289,000 of cash on hand and approximately $ 46 million of availability under its revolving credit facilities ( see note f to the consolidated financial statements in item 8 ) . on a short-term basis , the company 's principal sources of liquidity include income from operations and borrowings under its revolving credit facilities . on a longer-term basis , the company expects its principal sources of liquidity to consist of income from operations and borrowings under revolving credit facilities and or fixed interest term loans . the company 's revolving credit facilities mature in june 2016 and the company expects that it will be able to renew or refinance its revolving credit facilities on or before the date they mature . furthermore , while the company has no specific plans to issue debt or equity securities , the company believes , if necessary , it could raise additional capital through the issuance of such securities . the company expects to use cash from operations and or borrowings to ( i ) grow its finance receivables portfolio , ( ii ) purchase property and equipment of approximately $ 4.5 million in the next 12 months in connection with refurbishing existing dealerships and adding new dealerships , ( iii ) repurchase shares of common stock when favorable conditions exist and ( iv ) reduce debt to the extent excess cash is available . the company believes it will have adequate liquidity to continue to grow its revenues and to satisfy its capital needs for the foreseeable future . 30 contractual payment obligations the following is a summary of the company 's contractual payment obligations as of april 30 , 2014 , including renewal periods under operating leases that are reasonably assured ( in thousands ) : replace_table_token_10_th the above excludes estimated interest payments on the company 's revolving line of credit . the $ 39.2 million of operating lease commitments includes $ 7.2 million of non-cancelable lease commitments under the primary lease terms , and $ 32.0 million of lease commitments for renewal periods at the company 's option that are reasonably assured . off-balance sheet arrangements the company has entered into operating leases for approximately 87 % of its dealership and office facilities . generally these leases are for periods of three to five years and usually contain multiple renewal options . the company uses leasing arrangements to maintain flexibility in its dealership locations and to preserve capital . the company expects to continue to lease the majority of its dealership and office facilities under arrangements substantially consistent with the past . for the years ended april 30 , 2014 , 2013 and 2012 , rent expense for all operating leases amounted to approximately $ 5.2 million , $ 4.7 million and $ 4.2 million , respectively . other than its operating leases , the company is not a party to any off-balance sheet arrangement that management believes is reasonably likely to have a current or future effect on the company 's financial condition , revenues or expenses , results of operations , liquidity , capital expenditures or capital resources that are material to investors . related finance company contingency car-mart of arkansas and colonial do not meet the affiliation standard for filing consolidated income tax returns , and as such they file separate federal and state income tax returns . car-mart of arkansas routinely sells its finance receivables to colonial at what the company believes to be fair market value and is able to take a tax deduction at the time of sale for the difference between the tax basis of the receivables sold and the sales price . these types of transactions , based upon facts and circumstances , have been permissible under the provisions of the internal revenue code as described in the treasury regulations . for financial accounting purposes , these transactions are eliminated in consolidation and a deferred income tax liability has been recorded for this timing difference . the sale of finance receivables from car-mart	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources the following table sets forth certain historical information with respect to the company 's statements of cash flows ( in thousands ) : replace_table_token_9_th the primary drivers of operating profits and cash flows include ( i ) top line sales ( ii ) interest rates on finance receivables , ( iii ) gross margin percentages on vehicle sales , and ( iv ) credit losses , a significant portion of which relates to the collection of principal on finance receivables . the company generates cash flow from income from operations . historically , most or all of this cash is used to fund finance receivables growth , capital expenditures and common stock repurchases . to the extent finance receivables growth , capital expenditures and common stock repurchases exceed income from operations generally the company increases its borrowings under its revolving credit facilities . the majority of the company 's growth has been self-funded . cash flows from operations in fiscal 2014 compared to fiscal 2013 were negatively impacted by ( i ) lower net income , ( ii ) an increase in finance receivables , and ( iii ) a decrease in deferred income taxes , partially offset by ( iv ) higher non-cash charges including credit losses , depreciation , and losses on claims for payment protection plan , ( v ) an increase in income tax payable , net and ( vi ) higher values for inventory acquired in repossession and payment protection plan claims . finance receivables , net , increased by $ 5.3 million during fiscal 2014 . 28 cash flows from operations in fiscal 2013 compared to fiscal 2012 were negatively impacted by ( i ) lower collections as a percentage of finance receivables , ( ii ) increased inventory levels , and ( iii ) an increase in income taxes payable , net and in deferred income taxes , partially offset by ( iv ) higher non-cash charges including credit losses , depreciation , and losses on claims for payment protection plan and ( v ) higher values for inventory acquired in repossession and payment protection plan claims .
the increase from 2018 to 2019 was primarily the result of an increase of $ 11.7 million in broker-dealer fees and $ 6.1 million in banking and service fees due to increased fees from our trustee and fiduciary services , increased levels of prepayment penalty fee income of $ 2.0 million , partially offset by a mortgage banking income decrease of $ 8.5 million . non-interest expense for the fiscal year ended june 30 , 2020 was $ 275.8 million compared to $ 251.2 million and $ 173.9 million for the years ended june 30 , 2019 and 2018 , respectively . the increase was primarily due to an increase of $ 16.9 million in staffing for lending , information technology infrastructure development , clearing services , trustee and fiduciary services and regulatory compliance , an increase in depreciation and amortization of $ 8.0 million , an increase in data processing and internet of $ 6.5 million , and a decrease in other general and administrative costs of $ 11.2 million . our staffing rose to 1099 employees compared to 1007 and 801 at june 30 , 2020 , 2019 and 2018 , respectively . total assets were $ 13.9 billion at june 30 , 2020 compared to $ 11.2 billion at june 30 , 2019 . assets grew $ 2.6 billion or 23.5 % during the last fiscal year , primarily due to loan originations , primarily from c & i and income property lending and total cash from increased deposits . the loan growth was funded primarily with growth in deposits . covid-19 impact . we are closely monitoring the rapid developments of and uncertainties caused by the covid-19 pandemic . in response to the changes in economic and business conditions as a result of the covid-19 pandemic , we have taken the following actions to support customers , employees , partners and shareholders : 47 actively communicating with borrowers and partners to assess individual needs ; participating as a lender in the ppp and evaluating various components of the cares act applicability to the company ; provided secure and efficient remote work options for our team members ; increasing provisions for loan and lease losses as a result of a weakening economy and reduced business activities ; tightening underwriting standards ; reallocated personnel to increase resources for customer service and portfolio management ; and limiting business travel . for our borrowers who are one or less payments past due on april 1 , 2020 , based on our application under the guidelines set forth in the cares act , we delayed payments for an agreed upon timeframe , depending on each individual borrower 's characteristics . as of june 30 , 2020 we granted forbearance on $ 95.8 million of loans , primarily single family residential secured loans . additionally , we provided deferrals for $ 28.2 million and $ 2.7 million of auto and unsecured consumer loans during the year . lastly , we provided one commercial and industrial loan a period of three months of interest only payments . no other deferrals of payment obligations have been provided . there have been no loan modifications as a result of the covid-19 pandemic as of june 30 , 2020. these covid-19 payment deferrals are not categorized as a tdr as the cares act allows the bank to suspend the tdr requirements for certain short-term loan modifications . the extent to which these measures will impact our bank is uncertain , and any progression of loans receiving covid-19 payment deferrals into non-performing assets , during future periods is uncertain and will depend on future developments that can not be predicted . our future performance will depend on many factors in addition to the covid-19 pandemic : changes in interest rates , competition for deposits and quality loans , the credit performance of our assets , regulatory actions , strategic transactions , and our ability to improve operating efficiencies . see “ item 1a . risk factors . ” mergers and acquisitions from time to time we undertake acquisitions or similar transactions consistent with our company 's operating and growth strategies . we completed no business acquisitions or asset acquisitions during the fiscal year ended june 30 , 2020 and two business acquisitions and two asset acquisitions during the fiscal year ended june 30 , 2019 . mwabank deposit acquisition . on march 15 , 2019 , the bank closed the deposit assumption agreement with mwabank and acquired approximately $ 173 million of deposits , including approximately $ 151 million of checking , savings and money market accounts and $ 22 million of time deposits , from mwabank . axos did not acquire any assets , employees or branches in this transaction . the bank received cash equal to the book value of the deposit liabilities . wisebanyan . on february 26 , 2019 the company 's subsidiary , axos securities , llc , had completed the acquisition of wisebanyan holding , inc. and its subsidiaries ( collectively “ wisebanyan ” ) . headquartered in las vegas , nevada , wisebanyan is a provider of personal financial and investment management services through a proprietary technology platform . when acquired , wisebanyan served approximately 24,000 clients with approximately $ 150 million of assets under management . the company paid $ 3.2 million in cash to acquire the assets of wisebanyan and recorded $ 2.7 million in intangible assets.the company purchased the whole wisebanyan business and has the entire voting interest . goodwill is not expected to be deducted for tax purposes . cor securities holdings . on january 28 , 2019 ( “ acquisition date ” ) , axos clearing , llc and axos clarity mergeco . story_separator_special_tag tangible book value per common share , a non-gaap financial measure , is calculated by dividing tangible book value by the common shares outstanding at the end of the period . we believe tangible book value per common share is useful in evaluating the company 's capital strength , financial condition , and ability to manage potential losses . below is a reconciliation of total stockholders ' equity , the nearest compatible gaap measure , to tangible book value ( non-gaap ) as of the dates indicated : replace_table_token_17_th 52 average balances , net interest income , yields earned and rates paid the following tables set forth , for the periods indicated , information regarding ( i ) average balances ; ( ii ) the total amount of interest income from interest-earning assets and the weighted average yields on such assets ; ( iii ) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities ; ( iv ) net interest income ; ( v ) interest rate spread ; and ( vi ) net interest margin : replace_table_token_18_th 1 average balances are obtained from daily data . 2 loans and leases include loans held for sale , loan and lease premiums , discounts and unearned fees . 3 interest income includes reductions for amortization of loan and lease and investment securities premiums and earnings from accretion of discounts and loan and lease fees . loan and lease fee income is not significant . also includes $ 28.0 million as of june 30 , 2020 , $ 28.7 million as of june 30 , 2019 and $ 29.3 million as of june 30 , 2018 of loans that qualify for community reinvestment act credit which are taxed at a reduced rate . 4 interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities . 5 net interest margin represents net interest income as a percentage of average interest-earning assets . 53 results of operations our results of operations depend on our net interest income , which is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities . our net interest income has increased as a result of the growth in our interest earning assets and is subject to competitive factors in online banking and other markets . our net interest income is reduced by our estimate of loss provisions for our loan and lease portfolio . we also earn non-interest income primarily from mortgage banking activities , banking products and service activity , our securities business , prepaid card fee income , prepayment fee income from multifamily borrowers who repay their loans before maturity and from gains on sales of other loans and investment securities . losses on investment securities reduce non-interest income . the largest component of non-interest expense is salary and benefits , which is a function of the number of personnel , which increased to 1099 full-time equivalent employees at june 30 , 2020 , from 1007 full time employees at june 30 , 2019 . we are subject to federal and state income taxes , and our effective tax rates were 30.15 % , 27.10 % and 36.42 % for the fiscal years ended june 30 , 2020 , 2019 , and 2018 , respectively . other factors that affect our results of operations include expenses relating to data processing , advertising , depreciation , occupancy , professional services , and other miscellaneous expenses . comparison of the fiscal years ended june 30 , 2020 and june 30 , 2019 net interest income . net interest income totaled $ 477.6 million for the fiscal year ended june 30 , 2020 compared to $ 408.6 million for the fiscal year ended june 30 , 2019 . the following table sets forth the effects of changing rates and volumes on our net interest income . information is provided with respect to ( i ) effects on interest income and interest expense attributable to changes in volume ( changes in volume multiplied by prior rate ) ; and ( ii ) effects on interest income and interest expense attributable to changes in rate ( changes in rate multiplied by prior volume ) . the change in interest due to both volume and rate has been allocated proportionally to both , based on their relative absolute values . replace_table_token_19_th interest income . interest income for the fiscal year ended june 30 , 2020 totaled $ 622.8 million , an increase of $ 58.0 million , or 10.3 % , compared to $ 564.9 million in interest income for the fiscal year ended june 30 , 2019 primarily due to growth in volume of interest-earning assets from loan originations , primarily from commercial & industrial lending and a full year of securities borrowed and margin lending from our new securities segment . average interest-earning assets for the fiscal year ended june 30 , 2020 increased by $ 1,560.8 million compared to the fiscal year ended june 30 , 2019 primarily due to loan and lease originations for investment which totaled $ 6,798.0 million during the year ended june 30 , 2020 . yields on loans and leases decreased by 11 basis points to 5.74 % for the fiscal year ended june 30 , 2020 , primarily due to declines in market interest rates . for the fiscal year ended june 30 , 2020 , the growth in average balances contributed additional interest income of $ 79.4 million , which was partially offset by a $ 21.4 million decrease in interest income due to declines in market interest rates . the average yield earned on our interest-earning assets decreased to 5.37 % for the fiscal year ended june 30 , 2020 , compared to 5.63 % in 2019 primarily due to the decrease in rate from loans and leases . as a result of the federal	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources liquidity . for axos bank , our sources of liquidity include deposits , borrowings , payments and maturities of outstanding loans , sales of loans , maturities or gains on sales of investment securities and other short-term investments . while scheduled loan payments and maturing investment securities and short-term investments are relatively predictable sources of funds , deposit flows and loan prepayments are greatly influenced by general interest rates , economic conditions and competition . we generally invest excess funds in overnight deposits and other short-term interest-earning assets . we use cash generated through retail deposits , our largest funding source , to offset the cash utilized in lending and investing activities . our short-term interest-earning investment securities are also used to provide liquidity for lending and other operational requirements . as an additional source of funds , we have two credit agreements . axos bank can borrow up to 40 % of its total assets from the fhlb . borrowings are collateralized by pledging certain mortgage loans and investment securities to the fhlb . based on loans and securities pledged at june 30 , 2020 , we had a total borrowing availability of another $ 2.7 billion available immediately and an additional $ 1.9 billion available with additional collateral , for advances from the fhlb for terms up to ten years . the bank can also borrow from the discount window at the frbsf . frbsf borrowings are collateralized by commercial loans , consumer loans and mortgage-backed securities pledged to the frbsf . based on loans and securities pledged at june 30 , 2020 , we had a total borrowing capacity of approximately $ 1.8 billion , all of which was available for use .
the health & science technologies segment designs , produces and distributes a wide range of precision fluidics , rotary lobe pumps , centrifugal and positive displacement pumps , roll compaction and drying systems used in beverage , food processing , pharmaceutical and cosmetics , pneumatic components and sealing solutions , including very high precision , low-flow rate pumping solutions required in analytical instrumentation , clinical diagnostics and drug discovery , high performance molded and extruded , biocompatible medical devices and implantables , air compressors used in medical , dental and industrial applications , optical components and 14 coatings for applications in the fields of scientific research , defense , biotechnology , aerospace , telecommunications and electronics manufacturing , laboratory and commercial equipment used in the production of micro and nano scale materials , precision photonic solutions used in life sciences , research and defense markets , and precision gear and peristaltic pump technologies that meet exacting original equipment manufacturer specifications . the fire & safety/diversified products segment produces firefighting pumps and controls , rescue tools , lifting bags and other components and systems for the fire and rescue industry , and engineered stainless steel banding and clamping devices used in a variety of industrial and commercial applications , precision equipment for dispensing , metering and mixing colorants and paints used in a variety of retail and commercial businesses around the world . some of our 2012 financial results are as follows : sales of $ 1.95 billion rose 6 % ; organic sales excluding acquisitions and foreign currency translation were up 3 % . asset impairment charge recorded for $ 198.5 million . operating income of $ 128.2 million decreased 58 % . net income decreased 81 % to $ 37.6 million . diluted eps of $ 0.45 decreased $ 1.87 or 81 % compared to 2011. on a regional basis north america has remained strong , the asian markets are improving and we see stabilization in europe . for 2013 , based on the company 's current outlook , we are forecasting fully diluted eps of $ 2.85 to $ 2.95. results of operations the following is a discussion and analysis of our results of operations for each of the three years in the period ended december 31 , 2012. for purposes of this item , reference is made to the consolidated statements of operations in part ii , item 8 , financial statements and supplementary data. segment operating income excludes unallocated corporate operating expenses . certain prior year amounts have been revised to include the dispensing equipment segment as part of the fire & safety/diversified products segment and to reflect the movement of our trebor business unit from the health & science technologies segment to the fluid & metering technologies segment . in this report , references to organic sales , a non-gaap measure , refers to sales from continuing operations calculated according to generally accepted accounting principles in the united states but excludes ( 1 ) sales from acquired businesses during the first twelve months of ownership and ( 2 ) the impact of foreign currency translation . the portion of sales attributable to foreign currency translation is calculated as the difference between ( a ) the period-to-period change in organic sales and ( b ) the period-to-period change in organic sales after applying prior period foreign exchange rates to the current year period . management believes that reporting organic sales provides useful information to investors by helping identify underlying growth trends in our business and facilitating easier comparisons of our revenue performance with prior and future periods and to our peers . the company excludes the effect of foreign currency translation from organic sales because foreign currency translation is not under management 's control , is subject to volatility and can obscure underlying business trends . the company excludes the effect of acquisitions because the nature , size , and number of acquisitions can vary dramatically from period to period and between the company and its peers and can also obscure underlying business trends and make comparisons of long-term performance difficult . management 's primary measurements of segment performance are sales , operating income , and operating margin . in addition , due to the highly acquisitive nature of the company , the determination of operating income includes amortization of acquired intangible assets and , as a result , management reviews depreciation and 15 amortization as a percentage of sales . these measures are monitored by management and significant changes in operating results versus current trends in end markets and variances from forecasts are analyzed with segment management . performance in 2012 compared with 2011 replace_table_token_6_th sales in 2012 were $ 1,954.3 million , a 6 % increase from the comparable period last year . this increase reflects a 3 % increase in organic sales , 5 % from acquisitions ( at films january 2011 , microfluidics march 2011 , cvi mg june 2011 , erc april 2012 and matcon july 2012 ) and 2 % unfavorable foreign currency translation . organic sales to customers outside the u.s. represented approximately 50 % of total sales in the period compared with 52 % in 2011. in 2012 , fluid & metering technologies contributed 43 % of sales and 82 % of operating income ; health & science technologies accounted for 35 % of sales and ( 35 ) % of operating income ; and fire & safety/diversified products represented 22 % of sales and 53 % of operating income . story_separator_special_tag fire & safety/diversified products segment replace_table_token_13_th sales of $ 402.4 million increased $ 11.6 million , or 3 % , in 2011 compared with 2010. this change reflected 3 % favorable foreign currency translation , while organic sales were essentially flat . the change in organic sales reflected strength in rescue equipment , engineered band clamping systems and the dispensing group within 21 eastern europe and asia , partially offset by weakness in fire suppression and market softness in north america within our dispensing business . in 2011 , organic sales decreased 7 % domestically and increased 5 % internationally . organic sales to customers outside the u.s. were 63 % of total segment sales in 2011 and 59 % in 2010. operating income and operating margins in the fire & safety/diversified products segment of $ 85.9 million and 21.3 % , respectively , were higher than the $ 82.3 million and 21.1 % recorded in 2010 , primarily due to volume leverage , favorable product mix and a gain from the sale of a facility in italy , partially offset by restructuring related costs . story_separator_special_tag all the company 's assets . the terms of the 4.2 % senior notes also require the company to make an offer to repurchase the 4.2 % senior notes upon a change of control triggering event ( as defined in the indenture ) at a price equal to 101 % of their principal amount plus accrued and unpaid interest , if any . 23 on april 15 , 2010 , the company entered into a forward starting interest rate contract with a notional amount of $ 300.0 million and a settlement date in december 2010. this contract was entered into in anticipation of the issuance of the 4.5 % senior notes and was designed to lock in the market interest rate as of april 15 , 2010. in december 2010 , the company settled and paid this interest rate contract for $ 31.0 million . the $ 31.0 million is being amortized into interest expense over the 10 year term of the 4.5 % senior notes , which results in an effective interest rate of 5.8 % . on july 12 , 2011 , the company entered into a forward starting interest rate contract with a notional amount of $ 350.0 million and a settlement date of september 30 , 2011. this contract was entered into in anticipation of the issuance of the 4.2 % senior notes and was designed to lock in the market interest rate as of july 12 , 2011. on september 29 , 2011 , the company settled this interest rate contract for $ 34.7 million with a payment made on october 3 , 2011. simultaneously , the company entered into a separate interest rate contract with a notional amount of $ 350.0 million and a settlement date of february 28 , 2012. the contract was entered into in anticipation of the expected issuance of the 4.2 % senior notes and was designed to maintain the market rate as of july 12 , 2011. in december 2011 , the company settled and paid the september interest rate contract for $ 4.0 million , resulting in a total settlement of $ 38.7 million . of the $ 38.7 million , $ 0.8 was recognized as other expense in 2011 and the balance of $ 37.9 million is being amortized into interest expense over the 10 year term of the 4.2 % senior notes , which results in an effective interest rate of 5.3 % . there are two key financial covenants that the company is required to maintain in connection with the revolving facility and the 2.58 % senior euro notes . the key financial covenants require a minimum interest coverage ratio of 3.0 to 1 and a maximum leverage ratio of 3.25 to 1. at december 31 , 2012 , the company was in compliance with both of these financial covenants , as the company 's interest coverage ratio was 10.05 to 1 and the leverage ratio was 1.92 to 1. there are no financial covenants relating to the 4.5 % senior notes or 4.2 % senior notes . on october 22 , 2012 , the company 's board of directors approved an increase in the authorized level for repurchases of common stock by $ 200.0 million . repurchases under the program will be funded with future cash flow generation . during 2012 , 2.2 million shares were purchased at a cost of $ 89.6 million . the company believes current cash and cash that will be generated from operations will be sufficient to meet its operating cash requirements , planned capital expenditures , interest on all borrowings , pension and postretirement funding requirements , authorized share repurchases and annual dividend payments to holders of the company 's stock for the next twelve months . additionally , in the event that suitable businesses are available for acquisition upon acceptable terms , the company may obtain all or a portion of the financing for these acquisitions through the incurrence of additional borrowings . as of december 31 , 2012 , $ 21.0 million was outstanding under the revolving facility . contractual obligations our contractual obligations include pension and postretirement medical benefit plans , rental payments under operating leases , payments under capital leases , and other long-term obligations arising in the ordinary course of business . there are no identifiable events or uncertainties , including the lowering of our credit rating that would accelerate payment or maturity of any of these commitments or obligations . 24 the following table summarizes our significant contractual obligations and commercial commitments at december 31 , 2012 , and the future periods in which such obligations are expected to be settled in cash . in addition , the table reflects the timing of principal and interest payments on outstanding borrowings . additional detail regarding these obligations is provided in the notes to consolidated financial statements	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources at december 31 , 2012 , working capital was $ 590.4 million and the company 's current ratio was 3.0 to 1. cash flows from operating activities increased $ 108.9 million , or 50 % , to $ 326.2 million in 2012 , primarily due to higher operating income , excluding the non-cash asset impairment charge ; improved working capital ; and the settlement of an interest rate contract for $ 38.7 million in 2011. at december 31 , 2012 , the company 's cash and cash equivalents totaled $ 318.9 million , of which $ 201.9 million was held outside of the united states . the company has not provided an estimate for any u.s. or additional foreign taxes on undistributed earnings of foreign subsidiaries that might be payable if these earnings were repatriated since the company considers these amounts to be permanently invested . cash flows from operations were more than adequate to fund capital expenditures of $ 35.5 million and $ 34.5 million in 2012 and 2011 , respectively . capital expenditures were generally for machinery and equipment that improved productivity and tooling to support global sourcing initiatives , although a portion was for business system technology and replacement of equipment and facilities . management believes that the company has ample capacity in its plants and equipment to meet expected needs for future growth in the intermediate term . the company acquired precision photonics corporation ( ppc ) in april 2012 for cash consideration of $ 20.6 million , erc in april 2012 for cash consideration of $ 13.3 million and the assumption of approximately $ 4.7 million of debt , and matcon in july 2012 for cash consideration of $ 35.0 million , $ 2.4 million of working capital adjustments to be paid in the first quarter of 2013 , and contingent consideration valued at $ 8.4 million as of the opening balance sheet date . the cash payments for erc and matcon were financed with borrowings under the company 's credit facility , while the acquisition of ppc was funded with available cash on hand .
28 our network is comprised of in-building riser facilities , metropolitan optical fiber networks , metropolitan traffic aggregation points and inter-city transport facilities . our network is physically connected entirely through our facilities to 2,251 buildings in which we provide our on-net services , including 1,541 multi-tenant office buildings . we also provide on-net services in carrier-neutral data centers , cogent controlled data centers and single-tenant office buildings . we operate 51 cogent controlled data centers totaling 565,000 square feet . because of our integrated network architecture , we are not dependent on local telephone companies or cable companies to serve our on-net customers . we emphasize the sale of our on-net services because we believe we have a competitive advantage in providing these services and these services generate gross profit margins that are greater than the gross profit margins of our off-net services . we believe our key growth opportunity is provided by our high-capacity network , which provides us with the ability to add a significant number of customers to our network with minimal direct incremental costs . our focus is to add customers to our network in a way that maximizes its use and at the same time provides us with a profitable customer mix . we are responding to this opportunity by increasing our sales and marketing efforts including increasing our number of sales representatives and expanding our network to locations that we believe can be economically integrated and represent significant concentrations of internet traffic . one of our keys to developing a profitable business will be to carefully match the cost of extending our network to reach new customers with the revenue expected to be generated by those customers . in addition , we may add customers to our network through strategic acquisitions . we believe some of the most important trends in our industry are the continued long-term growth in internet traffic and a decline in internet access prices on a per megabit basis . the effective price per megabit for our corporate customers is declining as the bandwidth utilization and connection size of our corporate customer connections increases . as internet traffic continues to grow and prices per unit of traffic continue to decline , we believe we can continue to load our network and gain market share from less efficient network operators . however , continued erosion in internet access prices will likely have a negative impact on the rate at which we can increase our revenues and our profitability . our revenue may also be negatively affected if we are unable to grow our internet traffic or if the rate of growth of internet traffic does not offset an expected decline in our per unit pricing . we do not know if internet traffic will increase or decrease , or the rate at which it will increase or decrease . changes in internet traffic will be a function of the number of internet users , the amount of time users spend on the internet , the applications for which the internet is used , the bandwidth intensity of these applications and the pricing of internet services , and other factors . the growth in internet traffic has a more significant impact on our net-centric customers who represent the vast majority of the traffic on our network and who tend to consume the majority of their allocated bandwidth on their connections . net-centric customers tend to purchase their service on a price per megabit basis . our corporate customers tend to utilize a small portion of their allocated bandwidth on their connections and tend to purchase their service on a per connection basis . we are a facilities-based provider of internet access and communications services . facilities-based providers require significant physical assets , or network facilities , to provide their services . typically when a facilities-based network services provider begins providing its services in a new jurisdiction losses are incurred for several years until economies of scale have been achieved . our foreign operations are in europe , canada , mexico and asia . europe accounts for roughly 80 % of our foreign operations . our european operations have incurred losses and will continue to do so until our european customer base and revenues have grown enough to achieve sufficient economies of scale . due to our strategic acquisitions of network assets and equipment , we believe we are well positioned to grow our revenue base . we continue to purchase and deploy network equipment to parts of our network to maximize the utilization of our assets and to expand and increase the capacity of our 29 network . our future capital expenditures will be based primarily on the expansion of our network and the addition of on-net buildings . we plan to continue to expand our network and to increase the number of on-net buildings we serve including multi-tenant office buildings and carrier neutral data centers . many factors can affect our ability to add buildings to our network . these factors include the willingness of building owners to grant us access rights , the availability of optical fiber networks to serve those buildings , the cost to connect buildings to our network and equipment availability . results of operations year ended december 31 , 2015 compared to the year ended december 31 , 2014 our management reviews and analyzes several key financial measures in order to manage our business and assess the quality of and variability of our service revenue , operating results and cash flows . the following summary tables present a comparison of our results of operations with respect to certain key financial measures . the comparisons illustrated in the tables are discussed in greater detail below . replace_table_token_5_th nmnot meaningful ( 1 ) includes non-cash equity-based compensation expense of $ 584 and $ 488 for 2015 and 2014 , respectively . story_separator_special_tag our increase in interest expense is attributed to interest expense related to the issuance of our $ 200.0 million of senior unsecured notes outstanding since april 9 , 2014 and interest expense related to the issuance of our $ 65.0 million of senior secured notes outstanding since august 19 , 2013 , partly offset by the decline of interest expense from our convertible notes that we repaid in june 2014. income tax ( expense ) benefit . our income tax benefit was $ 49.7 million for 2013 and our income tax expense was $ 3.7 million for 2014. the net income tax expense for 2014 includes united states federal income taxes of $ 2.5 million and state income taxes of $ 1.1 million . the net income tax benefit for 2013 includes income tax benefits of approximately $ 50.2 million resulting primarily from the reduction of the valuation allowance on net deferred tax assets related to our operations in the united states , and $ 0.5 million of income tax expense related to our european and canadian operations . at each balance sheet date , we assess the likelihood that we will be able to realize our deferred tax assets . we consider all available positive and negative evidence in assessing the 35 need for a valuation allowance . as of december 31 , 2013 , we recorded an income tax benefit of $ 50.2 million ( including $ 49.3 million related to our us federal deferred tax assets ) since we determined that we no longer required a valuation allowance against our us deferred tax assets . we continue to maintain a valuation allowance against our european and other foreign deferred tax assets and our deferred tax assets limited under section 382 of the internal revenue code in the united states . section 382 limits the utilization of net operating losses when ownership changes , as defined by that section , occur . we have performed an analysis of our section 382 ownership changes and we have determined that the utilization of certain of our net operating loss carryforwards in the united states is limited . our net operating losses related to our foreign operations are generally not subject to similar limitations . of the $ 390.6 million of net operating losses available at december 31 , 2014 in the united states approximately $ 286 million are unavailable for use and approximately $ 81 million are limited for use under section 382. our net operating loss carryforwards outside of the united states totaling approximately $ 789 million are not subject to limitations similar to section 382. buildings on-net . as of december 31 , 2014 and 2013 we had a total of 2,125 and 1,990 on-net buildings connected to our network , respectively . liquidity and capital resources in assessing our liquidity , management reviews and analyzes our current cash balances , short-term investments , accounts receivable , accounts payable , accrued liabilities , capital expenditure and operating expense commitments , and required capital lease , interest and debt payments and other obligations . the following table sets forth our consolidated cash flows . replace_table_token_9_th net cash provided by operating activities . our primary source of operating cash is receipts from our customers who are billed on a monthly basis for our services . our primary uses of operating cash are payments made to our vendors , employees and interest payments made to our capital lease vendors and our note holders . our changes in cash provided by operating activities are primarily due to changes in our operating profit and changes in our interest payments . cash provided by operating activities for 2015 , 2014 and 2013 includes interest payments on our note obligations of $ 29.3 million , $ 26.3 million and $ 15.6 million , respectively . story_separator_special_tag the funds from the escrow account ( such date of release , the `` escrow release date `` ) and to group after the escrow release date . as a condition to releasing the funds from escrow we redeemed our remaining outstanding convertible notes on june 20 , 2014 ( the `` redemption transaction `` ) . after consummation of the redemption transaction , cogent finance merged with group , with group continuing as the surviving corporation ( the `` finance merger `` ) . at the time of consummation of the finance merger , group assumed the obligations of cogent finance under the 2021 notes and the indenture governing the 2021 notes ( the `` indenture `` ) and group and each of group 's domestic subsidiaries became party to the indenture pursuant to a supplemental indenture to the indenture and the obligations under the indenture became obligations solely of group and each of group 's domestic subsidiaries . holdings also provided a guarantee of the 2021 notes but holdings is not subject to any of the covenants under the indenture . after the conditions to the release of the escrow proceeds were satisfied , on june 25 , 2014 ( the `` escrow release date `` ) the proceeds from the 2021 notes were released . the net proceeds from the offering were $ 195.8 million after deducting discounts and commissions and offering expenses . the net proceeds from the offering are intended to be used for general corporate purposes . the 2021 notes were issued pursuant to , and are governed by the indenture between cogent finance and the trustee . the 2021 notes bear interest at a rate of 5.625 % per year and will mature on april 15 , 2021. interest began to accrue on the 2021 notes on april 9 , 2014 and will be paid semi-annually on april 15 and october 15 , commencing on october 15 , 2014. following the escrow release date , the 2021 notes became group 's senior unsecured obligations and are guaranteed on a senior unsecured basis by the company . the 2021 notes are effectively subordinated	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	net cash used in investing activities . our primary use of investing cash is for purchases of property and equipment . these amounts were $ 35.6 million , $ 60.0 million and $ 49.0 million for 2015 , 2014 and 2013 , respectively . the annual changes in purchases of property and equipment are primarily due to the timing and scope of our network expansion activities including geographic expansion and adding buildings to our network . in 2015 we obtained $ 21.9 million of network equipment and software in a non-cash exchange for a note payable under an installment payment agreement . net cash ( used in ) provided by financing activities . our primary uses of cash for financing activities are for dividend payments , stock purchases and principal payments under our capital lease obligations . in 2015 we redeemed our $ 240.0 million senior secured notes for a payment of 36 $ 251.3 million and in 2014 we repaid our senior convertible notes for $ 92.0 million . amounts paid under our stock buyback program were $ 39.4 million for 2015 and $ 58.6 million for 2014. there were no stock purchases in 2013. we began paying a quarterly dividend on our common stock in the third quarter of 2012. during 2015 , 2014 and 2013 we paid $ 66.3 million , $ 54.2 million and $ 35.4 million , respectively , for our dividend payments . our dividend payments have primarily increased from quarterly increases in our regular quarterly dividend per share amount . principal payments under our capital lease obligations were $ 20.2 million , $ 18.2 million and $ 11.2 million for 2015 , 2014 and 2013 , respectively , and are impacted by the timing and extent of our network expansion activities . our financing activities also include proceeds from and repayments of our debt offerings . in 2015 we received net proceeds of $ 248.6 million from the issuance of our $ 250.0 million senior secured notes . in 2014 we received net proceeds of $ 195.8 million from the issuance of our $ 200.0 million senior unsecured notes .
factors that could cause or contribute to such differences include , but are not limited to , those discussed in the “ risk factors ” section of this annual report on form 10-k overview we are a clinical stage biopharmaceutical company pioneering a novel disease-modifying therapeutic approach to treat what we believe to be a key underlying cause of alzheimer 's and other degenerative diseases . our approach is based on the seminal discovery of the presence of porphyromonas gingivalis , or p. gingivalis , and its secreted toxic virulence factor proteases , called gingipains , in the brains of greater than 90 % of more than 100 alzheimer 's patients observed across multiple studies to date . additionally , we have observed that p. gingivalis infection causes alzheimer 's pathology in animal models , and these effects have been successfully treated with a gingipain inhibitor in preclinical studies . our proprietary lead drug candidate , cor388 , is an orally administered , brain-penetrating small molecule gingipain inhibitor . cor388 was well-tolerated with no concerning safety signals in our phase 1a and phase 1b clinical trials conducted to date , which enrolled a total of 67 subjects , including nine patients with mild to moderate alzheimer 's disease . we initiated a global phase 2/3 clinical trial of cor388 , called the gain trial , in mild to moderate alzheimer 's patients in april 2019 in the united states and in september 2019 in europe and expect top-line results by the end of 2021. financial overview since commencing material operations in 2014 , we have devoted substantially all of our efforts and financial resources to building our research and development capabilities , establishing our corporate infrastructure and most recently , executing our phase 1a , phase 1b and phase 2/3 clinical trials of cor388 . to date , we have not generated any revenue and we have never been profitable . we have incurred net losses since the commencement of our operations . as of december 31 , 2019 , we had an accumulated deficit of $ 69.8 million . we incurred a net loss of $ 37.0 million in the year ended december 31 , 2019. we do not expect to generate product revenue unless and until we obtain marketing approval for and commercialize a drug candidate , and we can not assure you that we will ever generate significant revenue or profits . to date , we have financed our operations primarily through the issuance and sale of convertible promissory notes and redeemable convertible preferred stock and common stock . from inception through december 31 , 2019 , we received net proceeds of approximately $ 177.3 million from the issuance of redeemable convertible preferred stock , convertible promissory notes and common stock . in february 2020 , we also received net proceeds of approximately $ 117.6 million from the issuance and sale of common stock in a private placement to certain accredited investors as of december 31 , 2019 and 2018 , we had cash , cash equivalents and short-term investments of $ 99.9 million and $ 71.7 million , respectively . the balances exclude long-term investments of $ 16.8 million and $ 0 as of those same periods . our cash equivalents , short-term and long-term investments are held in money market funds , certificate of deposits , repurchase agreements , investments in corporate debt securities and government agency obligations . we believe that our existing cash , cash equivalents and short-term investments will be sufficient to fund our planned operations through 2021 , including through the completion and the announcement of the top-line results of our phase 2/3 gain trial . we have based this estimate on assumptions that may prove to be wrong , and we could utilize our available capital resources sooner than we expect . we expect to incur substantial expenditures in the foreseeable future as we expand our pipeline and advance our drug candidates through clinical development , the regulatory approval process and , if approved , commercial launch activities . specifically , in the near term we expect to incur substantial expenses relating to our ongoing and planned clinical trials , the development and validation of our manufacturing processes , and other development activities . 59 we will need substantial additional funding to support our continuing operations and pursue our development strategy . until such time as we can generate significant revenue from sales of an approved drug , if ever , we expect to finance our operations through the sale of equity , debt financings or other capital sources . adequate funding may not be available to us on acceptable terms , or at all . if we fail to raise capital or enter into such agreements as , and when , needed , we may have to significantly delay , scale back or discontinue the development and commercialization of our drug candidates or delay our efforts to expand our product pipeline . components of operating results operating expenses research and development expenses our research and development expenses consist of expenses incurred in connection with the research and development of our research programs . these expenses include payroll and personnel expenses , including stock-based compensation , for our research and product development employees , laboratory supplies , product licenses , consulting costs , contract research , preclinical and clinical expenses , allocated rent , facilities costs and depreciation . we expense both internal and external research and development costs as they are incurred . non-refundable advance payments and deposits for services that will be used or rendered for future research and development activities are recorded as prepaid expenses and recognized as an expense as the related services are performed . story_separator_special_tag our research and development activities ; the costs associated with securing and establishing commercialization and manufacturing capabilities ; the costs of acquiring , licensing or investing in businesses , drug candidates and technologies ; our ability to maintain , expand and defend the scope of our intellectual property portfolio , including the amount and timing of any payments we may be required to make , or that we may receive , in connection with the licensing , filing , prosecution , defense and enforcement of any patents or other intellectual property rights ; our need and ability to retain management and hire scientific and clinical personnel ; the effect of competing drugs and drug candidates and other market developments ; our need to implement additional internal systems and infrastructure , including financial and reporting systems ; and the economic and other terms , timing of and success of any collaboration , licensing or other arrangements into which we may enter in the future . if we raise additional funds by issuing equity securities , our stockholders will experience dilution . any future debt financing into which we enter may impose upon us additional covenants that restrict our operations , including limitations on our ability to incur liens or additional debt , pay dividends , repurchase our common stock , make certain investments and engage in certain merger , consolidation or asset sale transactions . any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders . if we are unable to raise additional funds when needed , we may be required to delay , reduce , or terminate some or all of our development programs and clinical trials . we may also be required to sell or license to others rights to our drug candidates in certain territories or indications that we would prefer to develop and commercialize ourselves . 64 summary statement of cash flows the following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below ( in thousands ) : replace_table_token_3_th story_separator_special_tag disclosure framework project . the disclosure framework project aims to improve the effectiveness of disclosures in the notes to the financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements . this guidance is effective for fiscal years beginning after december 15 , 2019 , with early adoption permitted . the company does not believe this pronouncement will have a material impact on its financial statements or disclosures . in june 2016 , the fasb issued asu no . 2016-13 , financial instruments – credit losses ( topic 326 ) : measurement of credit losses on financial instruments ( “ asu 2016-13 ” ) . asu 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates . asu 2016-13 is effective for public business entities that are sec filers , excluding smaller reporting companies for fiscal years beginning after december 15 , 2019 , including interim periods within those fiscal years . all other entities , including smaller reporting companies the effective date is for fiscal years beginning after december 15 , 2022. accordingly , as a smaller reporting company , we will adopt the standard effective january 1 , 2023. we are currently evaluating the impact that the adoption of this standard will have on our financial statements . in august 2018 , the fasb issued asu no . 2018-15 , intangibles—goodwill and other—internal-use software ( subtopic 350-40 ) : customer 's accounting for implementation costs incurred in a cloud computing arrangement that is a service contract ( “ asu 2018-15 ” ) , which clarifies the accounting for implementation costs in cloud computing arrangements . asu 2018-15 is effective for fiscal years beginning after december 15 , 2019 , including interim periods within those fiscal years . we will adopt the standard prospectively on january 1 , 2020. we do not expect the adoption of asu 2018-15 to result in a material change to our financial statements . 66 recently adopted accounting pronouncements in february 2016 , the fasb issued asu no . 2016-02 , leases ( topic 842 ) . this asu requires that substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability , including leases currently accounted for as operating leases . the asu is effective for interim and annual periods beginning after december 15 , 2018. additionally , the fasb issued asu no . 2018-11 , leases ( topic 842 ) : targeted improvements , which offers an additional transition method whereby entities may apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings rather than application of the new leases standard at the beginning of the earliest period presented in the financial statements . the company elected this transition method and adopted asc 842 on january 1 , 2019 and as a result , recorded a right-of-use asset of $ 0.9 million , a short-term lease liability of $ 0.3 million , and a long-term lease liability of $ 0.6 million and no cumulative effect adjustment was made to the retained earnings as of the adoption date . the company also elected the package of practical expedients under the transition guidance that will retain the historical lease classification and initial direct costs for any leases that exist prior to adoption of the new guidance and the practical expedient to not separate lease and nonlease components . see note 6 to our audited financial statements for further information . in july 2017 , the fasb issued asu no . 2017-11 , earnings per share ( topic 260 ) , distinguishing liabilities from equity ( topic 480 )	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	cash used in operating activities net cash used in operating activities was $ 33.3 million for the year ended december 31 , 2019 and $ 11.7 million for the year ended december 31 , 2018. cash used in operating activities in the year ended december 31 , 2019 was primarily due to our net loss for the period of $ 37.0 million , which included non-cash expenses of $ 2.6 million and changes to operating assets and liabilities of $ 1.9 million offset by non-cash interest income of $ 0.8 million . cash used in operating activities in the year ended december 31 , 2018 was primarily due to our net loss for the period of $ 12.5 million , and was also affected by changes to accrued interest , debt discount on conversion features , operating assets and liabilities , other current assets and long-term assets that totaled $ 1.5 million . cash used in operating activities was also affected by changes in operating assets and liabilities , a decrease in prepaids of $ 0.7 million and increase in accrued liabilities of $ 0.3 million , and non-cash charges relating to depreciation and amortization and stock-based compensation expense of $ 0.1 million . cash used in investing activities cash used in investing activities was $ 17.7 million in the year ended december 31 , 2019 , primarily related to the purchase of investments of $ 135.4 million and maturities of debt investments of $ 117.7 million .
subscription revenue , software revenue and total revenue were all up over fiscal 2017 , despite an 800 basis point increase in subscription mix year over year . recurring software revenue represented approximately 90 % of our software revenue in 2018 , up from 86 % a year ago . our revenue results also drove our operating margin improvements for the year . despite increases in sales and marketing and research and development expenses , operating margins and eps were up over the prior year . our cad and plm businesses performed well in the year , our iot business continued to grow as we added new customers and existing customers expanded their implementations , and interest in our augmented reality solutions increased . we made important strides in extending our market reach and further differentiating our technology with strategic relationships we entered into in 2018 , including those with rockwell automation , microsoft and ansys . 17 replace_table_token_1_th the increase in total revenue , subscription revenue and eps reflects our transformation into a subscription software company . as our mix of subscription sales relative to perpetual license sales has increased , perpetual license revenue and support revenue have declined . our 2018 revenue results include the impact of a settlement of a customer dispute concerning a professional services receivable . the settlement , reached in september 2018 , included partial payment of the receivable and new software purchases . the net revenue write-down recorded in the fourth quarter of 2018 was $ 9.3 million , comprised of a $ 14.5 million services revenue write-down , partially offset by subscription revenue of $ 5.2 million . additionally , professional services revenue has declined in accordance with our strategy to migrate more services engagements to our partners and to deliver products that require less consulting and training services . the increase in subscription revenue relative to perpetual license revenue has resulted in an increase in our recurring software revenue , with approximately 90 % of our software revenue and 79 % of our total revenue in 2018 from recurring software revenue streams , compared to 86 % and 73 % in 2017 and 82 % and 68 % in 2016 . 18 year ended september 30 , earnings measures 2018 2017 change operating margin 5.9 % 3.5 % 68 % earnings per share $ 0.44 $ 0.05 780 % non-gaap operating margin ( 1 ) 18.4 % 16.1 % 14 % non-gaap eps ( 1 ) $ 1.45 $ 1.17 24 % ( 1 ) non-gaap measures are reconciled to gaap results under results of operations - non-gaap measures below . gaap and non-gaap operating income in 2018 reflect maturity of our subscription program . an increase in gross margin is associated with higher subscription revenue and a lower mix of professional services revenue , which has lower margins than our software revenue . the increase in gross margins was partially offset by higher sales and marketing and research and development costs . our gaap and non-gaap earnings reflect a combination of revenue growth due to the strength of our subscription model and strong new bookings , as well as continued cost and expense discipline . we ended 2018 with cash , cash equivalents and marketable securities of $ 316 million , down from $ 330 million at the end of 2017. we generated $ 248 million of cash from operations in 2018 compared to $ 135 million in 2017. in the fourth quarter of 2018 , rockwell automation made a $ 1 billion equity investment in ptc as part of a strategic partnership . using the cash proceeds from this investment , ptc entered into a $ 1,000 million accelerated share repurchase . we also used cash from operations to repurchase another $ 100 million of common stock and to repay a net $ 70 million of borrowings under our credit facility in 2018. at september 30 , 2018 , the balance outstanding under our credit facility was $ 148 million and total debt outstanding was $ 648 million . operating measures we provide these measures to help investors understand the progress of our subscription transition . these measures are not necessarily indicative of revenue for the period or any future period . license and subscription bookings license and subscription bookings for 2018 were $ 466 million , up 11 % over 2017 ( up 9 % on a constant currency basis ) and up 16 % over 2016. over the past two years , cad , core plm and iot have delivered bookings cagrs at the high end of market growth rates , as cad and plm customers have converted existing license contracts to subscriptions and customers have adopted and expanded iot implementations . subscription acv s ubscription acv increased 24 % over 2017 to $ 177 million due to continued adoption of our subscription offerings around the globe . 19 annualized recurring revenue ( arr ) arr was approximat ely $ 1,012 m illion as of the fourth quarter of 2018 , an increase of 12 % compared to the fourth quarter of 2017 and the seventh consecutive quarter of double-digit year-over-year growth . deferred revenue and backlog ( unbilled deferred revenue ) deferred revenue primarily relates to software agreements invoiced to customers for which the revenue has not yet been recognized . unbilled deferred revenue ( backlog ) is the aggregate of booked orders for license , support and subscription ( including multi-year subscription contracts with start dates after october 1 , 2018 that are subject to a limited annual cancellation right , of which approximately $ 50 million was cancellable at september 30 , 2018 ) for which the associated revenue has not been recognized and the customer has not yet been invoiced . we do not record unbilled deferred revenue on our consolidated balance sheets ; such amounts are recorded as deferred revenue when we invoice the customer . story_separator_special_tag cost of license and subscription revenue replace_table_token_8_th our cost of license and subscription includes cost of license , which consists of fixed and variable costs associated with reproducing and distributing software and documentation , as well as royalties paid to third parties for technology embedded in or licensed with our software products , and amortization of intangible assets associated with acquired products , and cost of subscription , which includes our cost of cloud services and software as a service revenue , including hosting fees . costs associated with providing post-contract support such as providing software updates and technical support for both our subscription offerings and our perpetual licenses are included in cost of support revenue . cost of license and subscription revenue as a percent of license and subscription revenue can vary depending on the subscription mix percentage , the product mix sold , the effect of fixed and variable royalties , headcount and the level of amortization of acquired software intangible assets . costs in 2018 compared to 2017 increased primarily as a result of a $ 3.7 million increase in cloud services hosting costs and a $ 2.5 million increase in total compensation , benefit and travel expense due to increases in salaries . costs in 2017 compared to 2016 increased primarily as a result of a $ 15.0 million increase in total compensation , benefit and travel expense due to increased headcount , primarily associated with supporting our cloud products , and a $ 3.4 million increase in cloud services hosting costs . cost of support revenue replace_table_token_9_th cost of support revenue consists of costs such as salaries , benefits , and computer equipment and facilities associated with customer support and the release of support updates ( including related royalty costs ) associated with providing support for both our perpetual licenses and subscription licenses . costs and expense in 2018 compared to 2017 decreased primarily due to a decrease in headcount resulting in 3 % ( $ 1.9 million ) lower total compensation , benefit and travel costs . 29 costs and expense in 2017 compared to 2016 increased primarily due to a 5 % ( $ 3.1 million ) increase in total compensation , benefit and travel costs . cost of professional services revenue replace_table_token_10_th our cost of professional services revenue includes costs such as salaries , benefits , information technology costs and facilities expenses for our training and consulting personnel , and third-party subcontractor fees . in 2018 compared to 2017 , total compensation , benefit and travel expenses were decreased by $ 6.8 million primarily due to an 8 % decrease in headcount . in 2017 compared to 2016 , total compensation , benefit costs and travel expenses decreased by $ 18.8 million . the cost of third-party consulting services was $ 4.7 million lower in 2017 compared to 2016. as a result of decreases in professional services revenue in 2018 , 2017 and 2016 , we have reduced headcount , resulting in lower compensation-related costs . this is in line with our strategy to have our strategic services partners perform services for customers directly , which has decreased revenue and costs and improved services margins . sales and marketing replace_table_token_11_th our sales and marketing expenses primarily include salaries and benefits , sales commissions , advertising and marketing programs , travel , information technology costs and facility expenses . costs and expense in 2018 compared to 2017 increased primarily due to a $ 38.6 million increase in total compensation , benefit costs and travel expenses as a result of increases in headcount , salary increases , higher commissions costs and higher stock-based compensation . in 2017 compared to 2016 , event costs increased $ 3.1 million due to our liveworx event held in may 2017. our compensation , benefits and travel costs were $ 3.5 million lower in 2017 compared to 2016 primarily due to lower commissions , which were higher in 2016 as a result of significantly higher than planned subscription bookings . 30 research and development replace_table_token_12_th our research and development expenses consist principally of salaries and benefits , information technology costs and facility expenses . major research and development activities include developing new releases and updates of our software that enhance functionality and add features . in 2018 compared to 2017 , total compensation , benefit and travel expenses were higher by 6 % ( $ 12.0 million ) due to an increase in headcount and salary increases . in 2017 compared to 2016 , total compensation , benefit and travel expenses were higher by 3 % ( $ 5.0 million ) due to an increase in headcount and a $ 1.6 million increase in cloud services hosting costs as some product testing has moved to a cloud environment . general and administrative ( g & a ) replace_table_token_13_th our g & a expenses include the costs of our corporate , finance , information technology , human resources , legal and administrative functions , as well as acquisition-related and other transactional charges , bad debt expense and outside professional services , including accounting and legal fees . acquisition-related costs include direct costs of acquisitions and expenses related to acquisition integration activities , including transaction fees , due diligence costs , retention bonuses and severance , and professional fees , including legal and accounting costs , related to the acquisition . in addition , subsequent adjustments to our initial estimated amount of contingent consideration associated with specific acquisitions are included in acquisition-related charges . other transactional charges include third-party costs related to structuring unusual transactions . in 2018 compared to 2017 , the cost of professional fees decreased $ 3.3 million , offset by an increase of $ 2.1 million in compensation due to headcount and merit increases . in 2017 compared to 2016 , total compensation , benefit and travel costs increased by $ 7.0 million primarily because of merit increases and increased severance costs , as well as higher	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources replace_table_token_21_th cash and cash equivalents we invest our cash with highly rated financial institutions and in diversified domestic and international money market mutual funds . cash and cash equivalents include highly liquid investments with original 44 maturities of three months or less . in addition , we hold investments in marketable securities totaling approximately $ 56.0 million with an average maturity of 14 months . at september 30 , 2018 , cash and cash equivalents totaled $ 259.9 million , compared to $ 280.0 million at september 30 , 2017 , reflecting $ 247.8 million in operating cash flow , $ 1,015.7 million of proceeds from issuance of common stock , of which $ 1 billion was related to an investment in ptc by rockwell automation and the remainder of which relates to common stock issued under our employee stock purchase plan . the proceeds from the rockwell automation investment were used in part for repurchases of $ 1,100.0 million in common stock . in addition , we made $ 70.0 million of net repayments under our credit facility , $ 45.4 million was used to pay withholding taxes on stock-based awards that vested in the period , $ 36.0 million was used for capital expenditures , $ 8.9 million was used for the payment of contingent consideration , $ 6.0 million was used to purchase business and intangible assets , and $ 6.2 million was used to purchase marketable securities , net of proceeds from maturities . cash provided by operating activities cash provided by operating activities was $ 247.8 million in 2018 compared to $ 135.2 million in 2017 and $ 183.3 million in 2016 .
these revenues are recorded under revenues from assets under management ( `` aum `` ) or administration ( `` aua `` ) or collectively ( `` aum/a `` ) . our asset-based fees vary based on the types of investment solutions and services that financial advisors utilize . asset-based fees accounted for approximately 84 % , 83 % and 81 % of our total revenues for the years ended december 31 , 2014 , 2013 and 2012 , respectively . in future periods , the percentage of our total revenues attributable to asset-based fees is expected to vary based on fluctuations in securities markets , whether we enter into significant license agreements , the mix of aum or aua , and other factors . as of december 31 , 2014 , approximately $ 246 billion of investment assets subject to asset-based fees were managed or administered utilizing our technology platforms by approximately 29,000 financial advisors through approximately 978,000 investor accounts . we also generate revenues from recurring , contractual licensing fees for providing access to our technology platforms . these revenues are recorded under revenues from licensing and professional services . licensing fees are generally fixed in nature for the contract term and are based on the level of investment solutions and services provided , rather than on the amount of client assets on our technology platforms . licensing fees accounted for 14 % , 15 % and 15 % of our total revenues for the years ended december 31 , 2014 , 2013 and 2012 , respectively . fees received in connection with professional services and other revenue accounted for the remainder of our total revenues . as of december 31 , 2014 , approximately $ 467 billion of investment assets for which we receive licensing fees for utilizing our technology platforms were serviced by approximately 12,000 financial advisors through approximately 1,881,000 investor accounts . 39 the following table provides information regarding the amount of assets utilizing our platform technology , investor accounts and financial advisors in the periods indicated . replace_table_token_7_th revenues from assets under management or administration we generally charge our customers fees based on a higher percentage of the market value of aum than the fees we charge on the market value of aua , because we provide fiduciary oversight and or act as the investment advisor in connection with assets we categorize as aum . the level of fees varies based on the nature of the investment solutions and services we provide , as well as the specific investment manager , fund and or custodian chosen by the financial advisor . a portion of our revenues from assets under management or administration include costs paid by us to third parties for sub-advisory , clearing , custody and brokerage services . these expenses are recorded under cost of revenues . we do not have fiduciary responsibility in connection with aua and , therefore , generally charge lower fees on these assets . our fees for aua vary based on the nature of the investment solutions and services we provide . for over 85 % of our revenues from assets under management or administration , we bill customers at the beginning of each quarter based on the market value of customer assets on our platforms as of the end of the prior quarter . for example , revenues from assets under management or administration recognized during the fourth quarter of 2014 were primarily based on the market value of assets as of september 30 , 2014. our revenues from assets under management or administration are generally recognized ratably throughout the quarter based on the number of days in the quarter . our revenues from assets under management or administration are affected by the amount of new assets that are added to existing and new client accounts , which we refer to as gross sales . gross sales , from time to time , also include conversions of client assets to our technology platforms . the amount of assets that are withdrawn from client accounts are referred to as redemptions . we refer to the difference between gross sales and redemptions as net flows . positive net flows indicate that the market value of assets added to client accounts exceeds the market value of assets that have been withdrawn from client accounts . 40 our revenues from assets under management or administration are also affected by changes in the market values of securities held in client accounts due to fluctuations in the securities markets . certain types of securities have historically experienced greater market price fluctuations , such as equity securities , than other securities , such as fixed income securities , though in any given period the type of securities that experience the greatest fluctuations may vary . the following table provides information regarding the degree to which gross sales , redemptions , net flows and changes in the market values of assets contributed to changes in aum or aua in the periods indicated . replace_table_token_8_th the above aum/a gross sales figures include $ 28.2 billion in new client conversions . the company onboarded an additional $ 66.9 billion in licensing conversions during 2014 , bringing total conversions for the year to $ 95.1 billion . replace_table_token_9_th the above aum/a gross sales figures include $ 24.5 billion in new client conversions . the company onboarded an additional $ 33.6 billion in licensing conversions during 2013 , bringing total conversions for the year to $ 58.1 billion . the mix of assets under management and assets under administration was as follows as of the dates indicated : replace_table_token_10_th we expect the percentage of aum and aua will fluctuate in future periods . the nature and type of services requested by our customers are the key drivers in determining whether customer assets are classified as aum or aua . therefore , we do not have direct control over the mix of aum and aua . story_separator_special_tag in certain cases , management is required to determine whether revenues should be recognized in an amount equal to the gross fees we receive or net of payments of expenses to third-parties , such as third party investment managers and 46 custodians , that perform services for us in connection with certain of our financial advisors ' client accounts . generally , when fees are collected for investment management , clearing , custody or brokerage services in circumstances where we do not have a direct contract with the third-party provider , the fees are recorded as revenue on a net basis . fees we received in advance of the performance of services are recorded as deferred revenues on our consolidated balance sheet and are recognized as revenues when earned , generally over three months . the company derives licensing fees from recurring contractual fixed fee contracts with larger financial institutions or enterprise clients . licensing contracts allow the customer to provide a unique configuration of platform features and investment solutions for their advisors . the licensing fees vary based on the type of services provided and our revenues received under license agreements are recognized over the contractual term . the company 's license agreements do not generally provide its customers the ability to take possession of the software or host the software on the customers ' own systems or through a hosting arrangement with an unrelated party . when the company enters into arrangements with multiple deliverables , exclusive of arrangements with software deliverables , it applies the fasb 's guidance for revenue arrangements with multiple deliverables and evaluates each deliverable to determine whether it represents a separate unit of accounting based on the following criteria : ( i ) whether the delivered item has value to the customer on a stand-alone basis , and ( ii ) if the contract includes a general right of return relative to the delivered item , delivery or performance of the undelivered item ( s ) is considered probable and substantially in the control of the company . revenue is allocated to each unit of accounting or element based on relative selling prices . the company determines relative selling prices by using either ( a ) vendor-specific objective evidence ( `` vsoe `` ) if it exists ; or ( b ) third-party evidence ( `` tpe `` ) of selling price . when neither vsoe nor tpe of selling price exists for a deliverable , the company uses its best estimate of the selling price for that deliverable . after determining which deliverables represent a separate unit of accounting , each unit is then accounted for under the applicable revenue recognition guidance . in cases where elements can not be treated as separate units of accounting , the elements are combined into a single unit of accounting for revenue recognition purposes . if one of the elements that are combined into a single unit of accounting is fees from professional services , including implementation related services or customized service platform software development , the professional service fees are recognized over the course of the expected customer relationship . we have estimated the life of the customer relationship by considering both the historical retention rate of our customers while not exceeding the number of years over which we can accurately forecast future revenues . we currently estimate this term to be five years . the company also derives professional service fees from providing contractual customized platform software development and implementation services , which are recognized under a proportional-performance model utilizing an output-based approach . the company 's contracts generally have fixed prices , and generally specify or quantify deliverables . our revenue recognition is also affected by our judgment in determining whether collectability is reasonably assured . with regard to allowances for uncollectible receivables , we consider customer-specific information related to delinquent accounts and past loss experience , as well as current economic conditions in establishing the amount of the allowance . purchase accounting in 2012 , we completed the acquisitions of prima and tamarac for consideration totaling $ 13,925 and $ 48,427 , respectively . in 2013 , the company completed the acquisition of wms for total consideration of $ 24,730. in 2014 , ers , llc completed the acquisition of klein for total consideration of $ 5,588. in the fourth quarter of 2014 , the company completed the acquisition of placemark for total 47 consideration of $ 66,701. for more information on the acquisitions see note 3 to the notes to consolidated financial statements . assigning fair market values to the assets acquired and liabilities assumed at the date of an acquisition requires knowledge of current market values , and the values of assets in use , and often requires the application of judgment regarding estimates and assumptions . while the ultimate responsibility resides with management , for material acquisitions , we retain the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets and assumed liabilities , including intangible assets and contingent consideration . acquired intangible assets , excluding goodwill , are valued using a discounted cash flow methodology based on future cash flows specific to the type of intangible asset purchased . this methodology incorporates various estimates and assumptions , the most significant being projected revenue growth rates , margins , and forecasted cash flows based on the discount rate and terminal growth rate . management projects revenue growth rates , margins and cash flows based on the historical operating results of the acquired entity adjusted for synergies anticipated to be achieved through integration , expected future performance , operational strategies , and the general macroeconomic environment . we review finite-lived intangible assets for triggering events such as significant changes in operations , customers or future revenue that might indicate the need to impair the assets acquired or change the useful lives of the assets acquired . there was no impairment or change in	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources as of december 31 , 2014 , we had total cash and cash equivalents of $ 209,754 , compared to $ 49,942 as of december 31 , 2013. we plan to use existing cash as of december 31 , 2014 and cash generated in the ongoing operations of our business to fund our current operations , capital expenditures and possible acquisitions or other strategic activity . 60 cash flows the following table presents information regarding our cash flows and cash and cash equivalents for the periods indicated : replace_table_token_17_th operating activities net cash provided by operating activities in 2014 increased by $ 27,140 compared to 2013 , primarily due to an increase in net income of $ 10,319 in 2014 compared to the prior year period and an increase in the change in operating assets and liabilities totaling $ 18,559 offset by a decrease in non-cash adjustments totaling $ 2,364. net cash provided by operating activities in 2013 increased by $ 309 compared to 2012 , primarily due to an increase in net income of $ 3,195 in 2013 compared to the prior year period and an increase in non-cash adjustments totaling $ 2,612 , offset by an overall net decrease in the change in operating assets and liabilities of $ 5,498. investing activities net cash used in investing activities in 2014 increased by $ 50,869 compared to 2013 , primarily due to the increase in cash used in acquisitions of $ 50,578. in 2014 , the company acquired placemark and klein for net cash totaling $ 58,282 and $ 1,288 , respectively , and in 2013 , the company acquired wms for net cash totaling $ 8,992 ( see note 3 to the notes to consolidated financial statements ) .
the interface segment 's net sales decreased $ 13.4 million , or 9.5 % , to $ 127.4 million for fiscal 2017 , compared to $ 140.8 million for fiscal 2016 . the power products segment 's net sales increased $ 2.8 million , or 5.2 % , to $ 56.3 million for fiscal 2017 , compared to $ 53.5 million for fiscal 2016 . translation of foreign operations ' net sales for fiscal 2017 decreased net sales by $ 5.5 million , or 0.7 % , compared to the average currency rates in fiscal 2016 , primarily due to the strengthening of the u.s. dollar compared to the chinese yuan and the euro . cost of products sold . consolidated cost of products sold increased $ 2.0 million , or 0.3 % , to $ 598.2 million for the fiscal year ended april 29 , 2017 , compared to $ 596.2 million for the fiscal year ended april 30 , 2016 . consolidated cost of products sold as a percentage of net sales decreased to 73.3 % for fiscal 2017 , compared to 73.7 % for fiscal 2016 . the automotive , interface and power products segments were all favorably impacted by commodity pricing of raw materials and a favorable currency impact on material purchases and labor costs . the automotive segment was favorably impacted by both 14 commodity pricing adjustments of $ 1.0 million and $ 1.0 million for the reversal of accruals related to customer commercial issues resolved in fiscal 2017. the fiscal 2017 cost of goods sold was negatively impacted by $ 2.2 million due to exit costs for our connectivity and active energy solutions reporting units . both businesses were shuttered due to market conditions . the power products segment experienced favorable change in cost of goods sold as a percentage of sales , primarily due to implemented overhead cost reductions in the u.s. and china . in fiscal 2016 , the interface segment experienced additional costs of $ 1.0 million , as well as inefficiencies , related to the move of the radio remote control operation from the philippines to egypt . gross profit . consolidated gross profit increased $ 5.4 million , or 2.5 % , to $ 218.3 million for the fiscal year ended april 29 , 2017 , as compared to $ 212.9 million for the fiscal year ended april 30 , 2016 . gross margins as a percentage of net sales increased to 26.7 % for the fiscal year ended april 29 , 2017 , compared to 26.3 % for the fiscal year ended april 30 , 2016 . the automotive segment was favorably impacted by both commodity pricing adjustments of $ 1.0 million and $ 1.0 million for the reversal of accruals related to customer commercial issues resolved in fiscal 2017. the automotive , interface and power products segments were all favorably impacted by commodity pricing of raw materials and a favorable currency impact on material purchases and labor costs . the power products segment experienced favorable gross margins as a percentage of sales primarily due to implemented overhead cost reductions in the u.s. and china . the fiscal 2017 gross margins were negatively impacted by exit costs related to the closure of our connectivity and active energy solutions reporting units . in fiscal 2016 , the interface segment experienced additional costs of $ 1.0 million , as well as inefficiencies , related to the move of the radio remote control operation from the philippines to egypt . selling and administrative expenses . selling and administrative expenses increased $ 4.4 million , or 4.4 % , to $ 105.2 million for the fiscal year ended april 29 , 2017 , compared to $ 100.8 million for the fiscal year ended april 30 , 2016 . selling and administrative expenses as a percentage of net sales increased to 12.9 % for the fiscal year ended april 29 , 2017 , from 12.5 % for the fiscal year ended april 30 , 2016 . in fiscal 2017 , expenses increased for stock award amortization expenses by $ 5.0 million , legal and other professional fees by $ 1.6 million and fees related to acquisition activity , primarily for a potential acquisition we elected not to undertake , by $ 1.5 million , partially offset by selling and fringe related expenses of $ 2.3 million and lower travel expenses of $ 1.5 million . interest income , net . interest income , net decreased $ 0.3 million , to $ 0.4 million for the fiscal year ended april 29 , 2017 , compared to $ 0.7 million for the fiscal year ended april 30 , 2016 . the decrease is primarily due to increased average debt levels during fiscal 2017 as compared to fiscal 2016. other income , net . other income , net increased $ 4.2 million to $ 4.7 million for the fiscal year ended april 29 , 2017 , compared to $ 0.5 million for the fiscal year ended april 30 , 2016 . fiscal 2017 includes $ 4.5 million for an international government grant for maintaining certain employment levels during the period . all other amounts for both fiscal 2017 and fiscal 2016 relate to currency rate fluctuations . the functional currencies of these operations are the british pound , chinese yuan , euro , indian rupee , mexican peso , singapore dollar and swiss franc . some foreign operations have transactions denominated in currencies other than their functional currencies , primarily sales in u.s. dollars and euros , creating exchange rate sensitivities . income tax expense . income tax expense decreased $ 3.3 million , or 12.5 % , to $ 23.0 million for the fiscal year ended april 29 , 2017 , compared to $ 26.3 million for the fiscal year ended april 30 , 2016 . story_separator_special_tag results of operations for the fiscal year ended april 30 , 2016 , as compared to the fiscal year ended may 2 , 2015 . consolidated results below is a table summarizing results for the fiscal years ended : replace_table_token_9_th net sales . consolidated net sales decreased $ 72.0 million , or 8.2 % , to $ 809.1 million for the fiscal year ended april 30 , 2016 , from $ 881.1 million for the fiscal year ended may 2 , 2015. the automotive segment net sales decreased $ 14.1 20 million , or 2.2 % , to $ 614.3 million for fiscal 2016 , from $ 628.4 million for fiscal 2015 , primarily due to lower sales volumes of the ford center console program which substantially completed production at the end of fiscal 2015 , unfavorable currency rate fluctuations and higher pricing concessions on certain products , partially offset by increased sales volumes for the gm center console program . the interface segment net sales decreased $ 20.9 million , or 12.9 % , to $ 140.8 million for fiscal 2016 , compared to $ 161.7 million for fiscal 2015 , due to lower sales volumes of appliance and data solutions products , partially offset by increased sales volumes of radio remote control products . the power products segment net sales decreased $ 32.2 million , or 37.6 % , to $ 53.5 million for fiscal 2016 , compared to $ 85.7 million for fiscal 2015 , primarily due to lower sales volumes for powerrail , cabling and busbar products . the power products net sales for fiscal 2016 include a gain on the sale of a building of $ 1.0 million and $ 1.5 million of customer contractual adjustments for minimum purchases . the other segment had minimal sales for fiscal 2016 as the company sold its trace laboratories operating units in the fourth quarter of fiscal 2015 and the remaining operating units in this segment , medical devices , inverters and battery systems , had minimal net sales for fiscal 2016 or fiscal 2015. translation of foreign operations net sales for the fiscal year ended april 30 , 2016 decreased net sales by $ 10.5 million , or 1.3 % , compared to the average currency rates for the fiscal year ended may 2 , 2015 , primarily due to the strengthening of the u.s. dollar , compared to the euro and chinese yuan . cost of products sold . consolidated cost of products sold decreased $ 66.1 million , or 10.0 % , to $ 596.2 million for the fiscal year ended april 30 , 2016 , compared to $ 662.3 million for the fiscal year ended may 2 , 2015. consolidated cost of products sold as a percentage of net sales decreased to 73.7 % for fiscal 2016 , compared to 75.2 % for fiscal 2015. the automotive segment experienced a decrease in cost of products sold as a percentage of net sales substantially due to favorable commodity pricing of raw materials and favorable currency impact on both the purchase of certain raw materials and labor costs in our foreign operations . the automotive segment cost of goods sold for fiscal 2016 includes a one-time reversal of accruals of $ 2.1 million related to customer commercial issues . the interface segment experienced an increase in cost of products sold as a percentage of net sales primarily due to costs and inefficiencies experienced during the first quarter of fiscal 2016 related to the move of the radio remote control operation from the philippines to egypt . the company experienced moving costs and severance and redundant staffing costs of $ 1.0 million in fiscal 2016 in addition to the manufacturing inefficiencies . the increase in the interface segment was also due to lower sales volumes for appliance and data solutions products . the power products segment experienced an increase in cost of products sold as a percentage of net sales primarily due to decreased sales volumes . gross profit . consolidated gross profit decreased $ 5.9 million , or 2.7 % , to $ 212.9 million for the fiscal year ended april 30 , 2016 , as compared to $ 218.8 million for the fiscal year ended may 2 , 2015. gross margins as a percentage of net sales increased to 26.3 % for fiscal 2016 , compared to 24.8 % for fiscal 2015. during the fiscal year ended april 30 , 2016 , favorable commodity pricing and the favorable currency impact on the purchase of certain raw materials and labor costs in our foreign operations in the automotive segment was partially offset by higher pricing concessions on certain products in the automotive segment and decreased sales volumes for the interface and power products segments and additional costs and inefficiencies experienced during fiscal 2016 related to the move of the radio remote control operation from the philippines to egypt . gross profit for fiscal 2016 was favorably impacted by the gain on the sale of a building , the one-time reversal of accruals related to customer commercial issues and customer contractual adjustments for minimum purchases . impairment of goodwill . in fiscal 2015 , management performed the annual impairment analysis of goodwill for our touchsensor reporting unit and determined that the assets were impaired , resulting from a fourth quarter change in strategic direction . the company recorded an impairment charge of $ 11.1 million related to these assets . selling and administrative expenses . selling and administrative expenses increased $ 6.8 million , or 7.2 % , to $ 100.8 million for the fiscal year ended april 30 , 2016 , compared to $ 94.0 million for the fiscal year ended may 2 , 2015. selling and administrative expenses as a percentage of net sales increased to 12.5 % for fiscal 2016 from 10.7 % for fiscal 2015. in fiscal 2016 , expenses increased for legal and other professional fees by $ 8.9 million , wages	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	net cash provided by operating activities increased $ 34.5 million to $ 145.2 million for fiscal 2017 , compared to $ 110.7 million for fiscal 2016 , primarily due to higher net income , the changes in deferred income taxes and the changes in operating assets and liabilities . the net changes in assets and liabilities resulted in the decreased cash use of $ 32.0 million , to cash provided of $ 19.3 million in fiscal 2017 , compared to cash use of $ 12.7 million in fiscal 2016 . the decreased cash use in fiscal 2017 compared to fiscal 2016 is primarily driven by lower inventory balances and the timing of payments to suppliers . 27 operating activities — fiscal 2016 compared to fiscal 2015 net cash provided by operating activities decreased $ 12.2 million to $ 110.7 million for fiscal 2016 , compared to $ 122.9 million for fiscal 2015 , primarily due to lower net income , decreased cash use from deferred income taxes and the changes in operating assets and liabilities . the net changes in assets and liabilities resulted in the increased cash use of $ 3.8 million , to $ 12.7 million in fiscal 2016 , compared to cash use of $ 8.9 million in fiscal 2015. the increased cash use in fiscal 2016 compared to fiscal 2015 is primarily driven by the payment of bonuses and the timing of receivable collections , partially offset with a decrease in inventory levels . investing activities — fiscal 2017 compared to fiscal 2016 net cash used in investing activities increased by $ 0.1 million , to $ 21.7 million in fiscal 2017 , compared to $ 21.6 million in fiscal 2016 . purchases of property , plant and equipment decreased by $ 0.8 million , to $ 22.4 million in fiscal 2017 , compared to $ 23.2 million in fiscal 2016 . purchases for both periods primarily relate to equipment purchases for new product launches and the replacement of some older equipment . we sold buildings for $ 0.7 million and $ 1.6 million in fiscal 2017 and fiscal 2016 , respectively .
we anticipate that our gross profit margins will be favorably impacted by revenue from calcitriol once we obtain fda approval for manufacturing changes , but we do not expect to begin selling calcitriol until late in 2012. we may experience changes in our customer and product mix in future quarters that could impact gross profit , since we sell a wide range of products with varying profit margins and to customers with varying order patterns . these changes in mix may cause our gross profit and our gross profit margins to vary period to period . the majority of our business is with domestic clinics who order routinely . we renewed our supply agreement with our largest domestic chain customer through the end of 2013. certain major distributors of our products internationally have not ordered consistently , however , resulting in variation in our sales from period to period . we anticipate that we will realize substantial orders from time to time from our largest international distributors but we expect the size and frequency of these orders to fluctuate from period to period . these orders may increase in future periods or may not recur at all . 25 results of operations for the year ended december 31 , 2011 compared to the year ended december 31 , 2010 sales in 2011 , our sales were $ 49.0 million compared to $ 59.6 million in 2010. sales decreased $ 10.6 million or 17.8 % with $ 7.6 million due to lower international sales and $ 2.8 million due to lower domestic sales and $ 0.2 million due to a government research grant received in 2010 that did not recur in 2011. international sales decreased due to lower sales to a single international distributor . domestic sales decreased due to a change in product mix and due to lower sales volumes with approximately half of the sales decrease due to a loss of certain customers following their acquisition by competitors or by chains that buy product from our competitors . over the last year , customers have continued to convert to our dri-sate dry acid concentrate product line , which lowers providers ' cost per treatment and reduces our sales , but improves our gross profit margins due to a reduction in shipping costs . our dri-sate dry acid concentrate displaced liquid acid concentrate volume , increasing to 58 % of 2011 acid concentrate equivalent treatment gallons from 49 % in 2010. we also experienced some downward pricing pressure with the implementation of the bundled reimbursement program by cms ( medicare ) in 2011. gross profit our gross profit in 2011 was $ 5.6 million compared to $ 9.9 million in 2010. gross profit margins were 11.5 % in 2011 compared to 16.6 % in 2010. the decreases in gross profit and margin were primarily due to lower sales volumes , increased sales incentives and inflationary cost increases to fuel , material and labor costs . approximately $ 2.3 million of the decrease was due to the lower sales volumes generally and another $ 0.8 million was due to sales incentives net of other price changes and other product mix changes . cost increases for fuel , material and labor net of operating expense decreases reduced gross profit approximately $ 1.1 million . selling , general and administrative expenses selling , general and administrative expenses were $ 9.5 million in 2011 compared to $ 9.3 million in 2010. the increase of $ 0.2 million was primarily due to an increase in non-cash charges for equity compensation , partially offset by lower information technology costs and related depreciation . non-cash equity compensation aggregated $ 4.4 million in 2011 compared to $ 4.0 million in 2010. research and development we incurred product development and research costs related to the commercial development , patent approval and regulatory approval of new products , including sfp , aggregating approximately $ 17.8 million and $ 3.4 million in 2011 and 2010 , respectively . costs incurred in both 2011 and 2010 were primarily for conducting human clinical trials of sfp and other sfp testing and development activities . our spending increased considerably in 2011 as we initiated our phase iii clinical trial program which consists of several concurrent clinical studies . interest and investment income , net net interest and investment income in 2011 increased by $ 57,000 compared to 2010 primarily due to an increase in interest income from our cash investments net of realized losses on investments . income tax expense we have substantial tax loss carryforwards from our earlier losses . we have not recorded a federal income tax benefit from either our prior losses or our current year losses because we might not realize the carryforward benefit of the remaining losses . 26 for the year ended december 31 , 2010 compared to the year ended december 31 , 2009 sales in 2010 , our sales were $ 59.6 million , an increase of $ 4.8 million or 8.8 % over 2009. this increase was primarily due to increased international sales of $ 7.4 million or 113 % partially offset by a $ 2.8 million or 5.8 % decrease in domestic sales . our international sales in 2010 were 23 % of total sales compared to 12 % of sales in 2009. the increase in our international sales was primarily due to increased sales to a single distributor . our domestic sales were negatively impacted by customer conversions to lower cost formulations and conversions to dri-sate dry acid product line resulting in lower sales but at higher gross profit levels . customers continue to migrate from liquid to dry acid concentrate with unit volumes up 28 % in 2010 over 2009. in 2010 , we received a research grant of $ 0.25 million from the u.s. government for sfp related research and testing which was recorded in sales . story_separator_special_tag gross profit our gross profit in 2010 was $ 9.9 million , an increase of $ 2.0 million or 25 % over 2009. our gross profit margins increased to 16.6 % in 2010 compared to 14.4 % in 2009. the improvement in our gross profit was primarily due to significant changes to our product mix over the last two years coupled with lower operating and procurement costs along with higher selling prices . our product mix was favorably impacted by the continued conversion of customers to our dri-sate product line and to lower cost formulations of our dialysis concentrates . we also realized increased sales volumes in 2010 which contributed to the increase in our overall gross profit . these gains were partially offset by moderate increases in material , fuel and other operational costs over 2009. selling , general and administrative expenses selling , general and administrative expenses were $ 9.3 million in 2010 compared to $ 6.9 million in 2009 , an increase of $ 2.4 million , which was primarily due to increases in non-cash charges for equity compensation ( $ 1.7 million ) , compensation ( $ 0.5 million ) and other operating expenses ( $ 0.2 million ) . non-cash equity compensation aggregated $ 4.0 million in 2010 compared to $ 2.35 million in 2009 with approximately $ 0.25 million of the increase due to non-employee equity compensation . research and development we incurred product development and research costs related to the commercial development , patent approval and regulatory approval of new products , including sfp , aggregating approximately $ 3.4 million and $ 6.5 million in 2010 and 2009 , respectively . costs incurred in both 2010 and 2009 were primarily for conducting human clinical trials of sfp and other sfp testing and development activities . during 2009 , we conducted a phase iib study , which was completed in late 2009. our sfp phase iii clinical program commenced in early 2011. interest income and expense , net net interest income in 2010 increased by $ 205,000 compared to 2009 primarily due to a $ 190,000 increase in interest income from our cash investments as a result of higher investable funds resulting from the proceeds of the october 2009 equity offering . income tax expense we have substantial tax loss carryforwards from our earlier losses . we have not recorded a federal income tax benefit from either our prior losses or our current year losses because we might not realize the carryforward benefit of the remaining losses . 27 critical accounting estimates and judgments our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the united states of america . these accounting principles require us to make estimates , judgments and assumptions that affect the reported amounts of revenues , expenses , assets , liabilities , and contingencies . all significant estimates , judgments and assumptions are developed based on the best information available to us at the time made and are regularly reviewed and updated when necessary . actual results will generally differ from these estimates . changes in estimates are reflected in our financial statements in the period of change based upon on-going actual experience , trends , or subsequent realization depending on the nature and predictability of the estimates and contingencies . interim changes in estimates are generally applied prospectively within annual periods . certain accounting estimates , including those concerning revenue recognition , allowance for doubtful accounts , impairments of long-lived assets , and accounting for income taxes , are considered to be critical in evaluating and understanding our financial results because they involve inherently uncertain matters and their application requires the most difficult and complex judgments and estimates . these are described below . for further information on our accounting policies , see note 2 to our consolidated financial statements . revenue recognition we recognize revenue at the time we transfer title to our products to our customers consistent with generally accepted accounting principles . our products are generally sold domestically on a delivered basis and as a result we do not recognize revenue until delivered to the customer with title transferring upon completion of the delivery . for our international sales , we recognize revenue upon the transfer of title as defined by standard shipping terms and conventions uniformly recognized in international trade . allowance for doubtful accounts accounts receivable are stated at invoice amounts . the carrying amount of trade accounts receivable is reduced by an allowance for doubtful accounts that reflects our best estimate of accounts that may not be collected . we review outstanding trade account receivable balances and based on our assessment of expected collections , we estimate the portion , if any , of the balance that may not be collected as well as a general valuation allowance for other accounts receivable based primarily on historical experience . all accounts or portions thereof deemed to be uncollectible are written off to the allowance for doubtful accounts . if we underestimate the allowance , we would incur a current period expense which could have a material adverse effect on earnings . impairments of long-lived assets we account for impairment of long-lived assets , which include property and equipment , amortizable and non-amortizable intangible assets and goodwill , in accordance with authoritative accounting pronouncements . an impairment review is performed annually or whenever a change in condition occurs which indicates that the carrying amounts of assets may not be recoverable . such changes may include changes in our business strategies and plans , changes to our customer contracts , changes to our product lines and changes in our operating practices . we use a variety of factors to assess the realizable value of long-lived assets depending on their nature and use . goodwill is not amortized ; however , it must be tested for impairment at least annually . the goodwill impairment analysis is based on the fair	Write a concise summary of the following text delimited by triple quote marks. Return your response as a narrative which covers the key points highlighting the location, dates, entity names and account holder and financial information (when available) in chronological order of the text.	liquidity and capital resources our strategy is centered on obtaining regulatory approval to market sfp and developing other high potential drug candidates , while also expanding our dialysis products business . we expect to expend substantial amounts in support of our clinical development plan and regulatory approval of sfp and its extensions and other product development opportunities . these initiatives will require the expenditure of substantial cash resources . we expect our cash needs for research and development spending to be significant over the next two years as we execute our clinical development program for sfp . we will invest in our phase iii clinical development program for sfp as well as other development initiatives over the next two years . we are also required to make an additional cash payment of $ 550,000 in connection with our acquisition of the right to market calcitriol and funding will be necessary to obtain fda approval for our contract manufacturer to manufacture the product for us . however , these expenditures are not expected to have a material effect on our liquidity or financial position . our cash resources include cash generated from our business operations and from proceeds of equity offerings . as of december 31 , 2011 , we had $ 17.5 million in cash and investments . in february 2012 , we completed a common stock offering for $ 17.5 million in gross proceeds and approximately $ 16.2 million in net proceeds .