Datasets:

zxying
/

findsum-5k

Dataset card Viewer Files Files and versions Community

Split (1)

train · 5k rows

input stringlengths 8.4k 12.9k	instruction stringclasses 1 value	output stringlengths 353 2.44k
we may also realize gains and additional cash flows from the periodic divestiture of assets . recent developments drilling activity during 2012 , we drilled 5 international wells in colombia , as follows : ● 2 wells were drilled on the la cuerva concession in which we hold a 1.6 % working interest , of which 2 were completed and brought onto production ( both wells were sold in connection with the sale of our interest in hc , llc . see “ sale of la cuerva and lla 62 blocks ” ) . ● 3 wells were drilled on the cpo 4 block in colombia , each of which was determined to be non-commercial . at december 31 , 2012 , no wells were being drilled . during 2012 , no domestic wells were drilled . sale of la cuerva and lla 62 blocks during the first quarter of 2012 , we sold all of our interest in hupecol cuerva , llc ( “ hc , llc ” ) , which holds interests in the la cuerva block and , pending approval of the colombian authorities , the lla 62 block , together covering approximately 90,000 acres in the llanos basin in colombia . hc , llc sold for $ 75 million , adjusted for working capital . 13.3 % of the sales price of hc , llc will be held in escrow to fund potential claims arising from the sale . pursuant to our 1.6 % ownership interest in hc , llc , we received 1.6 % in the net sale proceeds after deduction of commissions , overriding royalty interest , and transaction expenses ; subject to the escrow holdback and a further contingency holdback by hupecol of 1.3 % of the sales price . following completion of the sale of hc , llc , we have no continuing interest in the la cuerva and lla 62 blocks . at december 31 , 2011 , our estimated proved reserves associated with the la cuerva and lla 62 blocks totaled 94,619 barrels of oil , which represented 82 % of our estimated proved oil and natural gas reserves . sales of oil and gas properties under the full cost method of accounting are accounted for as adjustments of capitalized costs with no gain or loss recognized , unless the adjustment significantly alters the relationship between capitalized costs and reserves . since the sale of these oil and gas properties would significantly alter the relationship , we recognized a gain on the sale of $ 315,119 during 2012 , computed as follows : 26 sales price $ 1,224,393 add : transfer of asset retirement and other obligations 34,471 less : transaction costs ( 30,330 ) less : prepaid deposits ( 54,857 ) less : carrying value of oil and gas properties , net ( 858,558 ) net gain on sale $ 315,119 the following table presents pro forma data that reflects revenue , income from continuing operations , net loss and loss per common share for 2011 and 2012 as if the hc , llc sale had occurred at the beginning of each period and excludes the gain on sale . replace_table_token_7_th 2012 capital expenditure program during 2012 , we invested $ 26,033,065 for the development of oil and gas properties , consisting of ( 1 ) drilling and drilling preparation costs on 5 wells in colombia of $ 25,915,741 and leasehold costs on u.s. properties of $ 117,324. cpo 4 developments during 2012 , we completed operations on three test wells on our cpo 4 block in colombia . each of the test wells was determined to be noncommercial and was plugged and abandoned . as a result of the determinations to plug and abandon each of those test wells , we included the costs related to those wells in the full cost pool for inclusion in the ceiling test . we recorded an impairment charge of $ 46,235,574 during 2012 to write off costs not being amortized that were attributable to the drilling of the test wells on the cpo 4 block as well as to write off seismic exploration and evaluation cost , general and administrative cost and environmental and governmental cost that were attributable to the test wells through december 31 , 2012. following drilling of the unsuccessful test wells on the cpo 4 prospect , in march 2013 , we entered into a settlement agreement with sk innovation , operator of the cpo 4 prospect , and terminated our interest in the prospect and were released from past and future funding and other obligations relating to the prospect , including our accrued cash call commitments of $ 3,219,128. serrania developments with respect to development of our serrania block , the national hydrocarbon agency of colombia ( the “ anh ” ) has granted extensions of required development commitments , including drilling of a first test well , until security conditions allow operations . based on those conditions , we anticipate that drilling of a first test well on the serrania block will occur in 2013. gulf united note receivable as a result of gulf united energy 's delinquency in satisfying its financial obligations with respect to the cpo 4 prospect , during 2012 , we wrote-off our receivable from gulf united for $ 3,951,370 . 27 financing activities on may 8 , 2012 , we sold to institutional investors 6,200,000 units , with each unit consisting of one of our common shares and one warrant to purchase one common share , for gross proceeds of approximately $ 13.14 million , before deducting placement agent fees and estimated offering expenses of $ 527,000 recorded as cost of capital , in a `` registered direct `` offering . story_separator_special_tag when leases are developed , expire or are abandoned , the related costs are transferred from unevaluated oil and gas properties to oil and gas properties subject to amortization . additionally , we review the carrying costs of unevaluated oil and gas properties for the purpose of determining probable future lease expirations and abandonments , and prospective discounted future economic benefit attributable to the leases . unevaluated oil and gas properties not subject to amortization include the following at december 31 , 2012 and 2011 : replace_table_token_8_th the carrying value of unevaluated oil and gas prospects includes $ 4,836,412 and $ 22,028,895 expended for properties in south america at december 31 , 2012 and december 31 , 2011 , respectively . we are maintaining our interest in these properties and development has or is anticipated to commence within the next twelve months . stock-based compensation . we use the black-scholes option-pricing model , which requires the input of highly subjective assumptions . these assumptions include estimating the volatility of our common stock price over the expected life of the options , dividend yield , an appropriate risk-free interest rate and the number of options that will ultimately not complete their vesting requirements . changes in the subjective assumptions can materially affect the estimated fair value of stock-based compensation and consequently , the related amount recognized on the statements of operations . results of operations year ended december 31 , 2012 compared to year ended december 31 , 2011 oil and gas revenues . total oil and gas revenues decreased 64.4 % , to $ 411,349 , in 2012 from $ 1,156,178 in 2011. the decrease in revenue was due to the 2012 sale of our interest in the la cuerva block . the following table sets forth the gross and net producing wells , net oil and gas production volumes and average hydrocarbon sales prices for 2012 and 2011 : replace_table_token_9_th the change in gross and net producing wells and production reflects the sale , during the first quarter of 2012 , of our interest in wells associated with the la cuerva block . the change in average sales prices realized reflects fluctuations in global commodity prices . 31 oil and gas sales revenues for 2012 and 2011 by region were as follows : replace_table_token_10_th lease operating expenses . lease operating expenses , excluding joint venture expenses relating to our colombian operations discussed below , decreased 77.1 % to $ 195,381 in 2012 from $ 854,319 in 2011. the decrease in total lease operating expenses was attributable to the 2012 sale of our interest in the la cuerva block . following is a summary comparison of lease operating expenses for the periods . replace_table_token_11_th consistent with our business model and operating history , we experience steep declines in lease operating expenses following strategic divestitures and anticipate lease operating expenses to ramp up to levels consistent with regional costs as new wells are brought on line . joint venture expenses . joint venture expenses totaled $ 3,244 in 2012 compared to $ 13,930 in 2011. the joint venture expenses represent our allocable share of the indirect field operating and region administrative expenses billed by hupecol . the decrease in joint venture expenses was attributable to reduced allocated administrative costs following the march 2012 divestiture of assets operated by hupecol . depreciation and depletion expense . depreciation and depletion expense decreased by 64 % to $ 66,971 in 2012 from $ 185,931 in 2011. the decrease in depreciation and depletion was due to the 2012 sale of assets discussed above . gain ( loss ) on sale of oil and gas properties . the sale of our indirect interests in hupecol cuerva , llc and post-closing price adjustments related to the sale resulted in a gain of $ 387,314 during 2012. post-closing purchase price adjustments relating to our 2010 sale of colombian assets and our prior 2008 sale of colombian assets resulted in a loss on sale of oil and gas properties of $ 1,026,608 in 2011. impairment expense . termination of our testing and completion efforts on , and abandonment of , three test wells on our cpo 4 block resulted in impairment expense of $ 46,235,574 during 2012. general and administrative expenses . general and administrative expense increased by 1.5 % to $ 5,027,024 in 2012 from $ 4,952,560 in 2011. the change in general and administrative expense reflects a combination of ( 1 ) an increase in legal fees and professional fees ( up $ 426,636 ) relating to litigation commenced during 2012 and the ongoing sec investigation , ( 2 ) a decrease in non-cash stock based compensation ( down $ 319,719 ) reflecting lower stock price and a resulting lower value of equity grants , and ( 3 ) decreased cash compensation ( down $ 66,093 ) attributable to reduced bonuses paid during 2012. bad debt expense . as a result of gulf united energy 's delinquency in satisfying its financial obligations with respect to the cpo 4 prospect , during 2012 , we wrote-down our receivable from gulf united for $ 3,951,370. foreign equity tax . during 2012 , we recorded an foreign equity tax expense of $ 1,689,039 relating to a newly enacted colombian equity tax measure based on the equity of our colombian branch as of january 1 , 2011. other income ( expense ) . other income ( expense ) consists of interest earned on cash balances net of other bank fees . net other expense totaled $ 73,319 in 2012 as compared to net other expense of $ 29,020 in 2011. the change was attributable to reduced interest income during 2012 reflecting lower interest rates and lower cash holdings . 32 income tax expense/benefit . we reported income tax expense of approximately $ 216,923 in 2012 as compared to an income tax benefit of approximately $ 1.6 million in 2011. during 2012 , we generated net operating losses , from which 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 . at december 31 , 2012 , we had a cash balance of $ 5,626,345 and working capital of $ 9,144,869 compared to a cash balance of $ 9,930,284 and working capital of $ 19,636,540 at december 31 , 2011. the decrease in cash and working capital during 2012 was primarily attributable to the operating losses incurred during 2012 , including the costs of drilling operations on the cpo 4 block which were written off during 2012 , partially offset by the receipt of approximately $ 23,144,000 from capital raising transactions during 2012. as a result of our settlement with sk innovation , subsequent to year-end , we received a release from our accrued capital call commitments on cpo 4 which totaled $ 3,219,128 at december 31 , 2012. as adjusted to reflect the release of such commitments , our pro forma working capital at december 31 , 2012 totaled $ 12,363,997. cash flows . operating activities used $ 2,620,837 of cash during 2012 compared to $ 4,633,032 of cash used during 2011. the decrease in cash used in operations was primarily attributable to changes in operating assets and liabilities and various non-cash expenses which more than offset the increase in net loss .
while the services we would provide are services that we currently provide as part of our business today , we have limited to no experience operating as a service provider to third parties . new gcu would be a separate non-profit entity under the control of an independent board of trustees and independent management . accordingly , our relationship with new gcu , both pursuant to the shared services arrangement and operationally , would no longer be as owner and operator , but as a third party contract party . while we believe this relationship would remain strong , new gcu 's board of trustees and management would have fiduciary and other duties that would require them to focus on the best interests of new gcu and over time those interests could diverge from ours . initially , all of our revenue would be derived pursuant to the shared services arrangement with new gcu . accordingly , new gcu 's ability to continue to increase its enrollment and tuition and fee revenue , and our ability to continue to perform the services necessary to enable new gcu to do so , would be critical to the success of our services business . it is anticipated that the consideration payable by new gcu for the acquired assets , which will be material , will be in the form of a long-term secured note . while the terms of this note remain subject to negotiation , our ability to realize the negotiated value of the acquired assets would be subject to new gcu 's performance and its ability to pay amounts due under the secured note as they come due . if the proposed transaction is consummated , our revenue and expenses would be materially reduced , while our operating margin would materially increase and we would recognize significant interest income on the long-term secured note . in addition , the proposed transaction would trigger an obligation to repay all amounts outstanding on our credit facility , which totaled $ 66.5 million at december 31 , 2017. if , however , we are unable to successfully re-focus our business to providing services to third parties , or if the contemplated shared services arrangement with new gcu fails to achieve the anticipated levels of performance , then our business , financial condition and results of operations , as well as our stock price , could be materially and adversely affected . evolving post-secondary education market . we believe that there is a large number of traditional-aged students looking for a residential experience at an affordable , private , christian university . as a result of state funding challenges , most state universities are receiving less state subsidies and therefore have been forced to increase tuition , decrease the number of students they can accept and or make other changes that impact the student experience . some private universities also are facing enrollment challenges as a result of their high tuition costs . we also believe the number of non-traditional students who work , are raising a family , or are doing both while trying to earn a college degree continues to grow . the continued economic environment in the u.s. , however , has caused an increased number of potential students and or their parents to consider the cost of education as a primary factor in choosing the school that they will attend . given these trends , we believe that many individuals will be attracted to our high quality academic programs at affordable tuition rates . we also believe that competition for students continues to increase . we compete primarily with traditional public and four-year degree-granting regionally accredited colleges and universities and other proprietary degree-granting regionally accredited schools . an increasing number of traditional colleges , universities and community colleges are offering distance learning and other online education programs , including programs that are geared towards the needs of working adult students . this trend has been accelerated by private companies that provide and or manage online learning platforms for traditional colleges and universities . as the proportion of traditional colleges and universities providing alternative learning modalities increases , we face increasing competition for students from such institutions , including those with well-established reputations for excellence . 45 regulation and oversight . we are subject to extensive regulation by federal and state governmental agencies and accrediting bodies . in particular , the higher education act of 1965 , as amended ( the higher education act ) , and the regulations promulgated thereunder by the department of education subject us to significant regulatory scrutiny on the basis of numerous standards that schools must satisfy in order to participate in the various federal student financial assistance programs under title iv of the higher education act . recent regulations have imposed new reporting and disclosure requirements that have caused increased administrative burden and costs and may have a negative effect on our growth and enrollments . in addition , in recent years , there has been increased focus by congress on the role that proprietary educational institutions play in higher education and various proposals to modify the laws to which proprietary educational institutions are subject . we can not predict what legislation , if any , may result from these congressional proposals or what impact any such legislation might have on the proprietary education sector generally or our business in particular . to the extent that any laws or regulations are adopted , or other administrative actions are taken , that limit our participation in title iv programs or the amount of student financial aid for which the students at our institutions are eligible , our enrollments , revenues and results of operation could be materially and adversely affected . new tax law . on december 22 , 2017 , the tax cuts and jobs act ( the act ) was signed into law . story_separator_special_tag we record an allowance for doubtful accounts for estimated losses resulting from the inability , failure or refusal of our students to make required payments , which includes the recovery of financial aid funds advanced to a student for amounts in excess of the student 's cost of tuition and related fees that we may have to return under title iv after a student drops . we determine the adequacy of our allowance for doubtful accounts based on an analysis of our historical bad debt experience , current economic trends , and the aging of the accounts receivable and student status . we apply a reserve to our receivables based upon an estimate of the risk presented by the age of the receivables and student status . we write off accounts receivable balances of active students at the earlier of the time the balance is deemed uncollectible , or one year after the revenue is generated . we reserve for receivables due from inactive students on a more accelerated basis than those due from active students and write off inactive student accounts at 150 days , as amounts due from inactive students are much more difficult to collect than amounts due from active students . we monitor our collections and write-off experience to assess whether adjustments to the estimated reserve are necessary . long-lived assets ( other than goodwill ) . we evaluate the recoverability of our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable . recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets . if such assets are considered to be impaired , the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets . income taxes . we recognize the amount of taxes payable or refundable for the current year and deferred tax assets and liabilities for future tax consequences of events that have been recognized in our consolidated financial statements or tax returns . deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the temporary differences are expect to be realized . our deferred tax assets are subject to periodic recoverability assessments . valuation allowances are established , when necessary , to reduce deferred tax assets to the amount that more likely than not will be realized . realization of the deferred tax assets is principally dependent upon achievement of projected future taxable income offset by deferred tax liabilities . we evaluate the realizability of the deferred tax assets annually . since becoming a taxable corporation in august 2005 , we have not recorded any valuation allowances to date on our deferred income tax assets . we evaluate and account for uncertain tax positions using a two-step approach . recognition occurs when we conclude that a tax position based solely on its technical merits , is more-likely-than-not to be sustained upon examination . measurement determines the amount of benefit that is greater than 50 % likely to be realized upon the ultimate settlement with a taxing authority that has full knowledge of the facts . derecognition of a tax position that was previously recognized occurs when we determine that a tax position no longer meets the more-likely-than-not threshold of being sustained upon examination . as of december 31 , 2017 and 2016 , the university has reserved approximately $ 2,008 and $ 1,981 , respectively , for uncertain tax positions , including interest and penalties . 49 results of operations the following table sets forth statements of operations data as a percentage of net revenue for each of the periods indicated : replace_table_token_9_th year ended december 31 , 2017 compared to year ended december 31 , 2016 net revenue . our net revenue for the year ended december 31 , 2017 was $ 974.1 million , an increase of $ 100.8 million , or 11.5 % , as compared to net revenue of $ 873.3 million for the year ended december 31 , 2016. this increase was primarily due to an increase in online and ground enrollment and , to a lesser extent , an increase in room and board and other student fees , partially offset by an increase in institutional scholarships . we have not raised our tuition for our traditional ground programs in nine years and we have not raised tuition for our working adult students since september 2015. end-of-period enrollment increased 10.2 % between december 31 , 2017 and 2016 , as ground enrollment increased 9.2 % and online enrollment increased 10.5 % over the prior year . the majority of the ground enrollment growth between years is due to an increase in the number of residential students at our ground traditional campus in phoenix , arizona . we attribute the growth in our enrollment between years to our increasing brand recognition and the value proposition we believe we provide to students and their parents . although our online enrollment continues to grow , as the proportion of traditional colleges and universities providing alternative learning modalities increases , we will face increasing competition for working adult students from such institutions , including those with well-established reputations for excellence . the increase in revenue per student between years is primarily due to the enrollment growth and due to an increase in ancillary revenues resulting from the increased traditional student enrollment ( e.g . housing , food , etc . ) . the increase in revenue per student between years is primarily due to a higher percentage of students residing on campus resulting in higher room and board related revenue as compared to the prior year . when factoring in room , board and fees , the revenue per student is higher for	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 . during 2017 , we financed our operating activities and capital expenditures primarily through cash provided by operating activities . our unrestricted cash , cash equivalents and investments were $ 242.7 million at december 31 , 2017 and our restricted cash and cash equivalents were $ 94.5 million . in december 2012 , we entered into a new credit agreement , which increased our term loan to $ 100 million with a maturity date of december 2019. additionally , this facility , as amended in january 2016 , provided a revolving line of credit in the amount of $ 150 million through december 2017 to be utilized for working capital , capital expenditures and other general corporate purposes . indebtedness under the credit facility is secured by our assets and is guaranteed by certain of our subsidiaries . we did not renew our revolving line of credit at december 31 , 2017 as we do not need this additional liquidity at this time . based on our current level of operations and anticipated growth , we believe that our cash flow from operations and other sources of liquidity , including cash , and cash equivalents , will provide adequate funds for ongoing operations , planned capital expenditures , and working capital requirements for at least the next 24 months . share repurchase program our board of directors has authorized the university to repurchase up to $ 175.0 million in aggregate of common stock , from time to time , depending on market conditions and other considerations . the current expiration date on the repurchase authorization by our board of directors is december 31 , 2018. repurchases occur at the university 's discretion . under our share purchase authorization , we may purchase shares in the open market or in privately negotiated transactions , pursuant to the applicable securities and exchange commission rules . the amount and timing of future share repurchases , if any , will be made as market and business conditions warrant .
please see “ information concerning forward-looking statements ” on page 4. results of operations comparison of the years ended march 31 , 2011 and 2010. total revenues our total revenues during the year ended march 31 , 2011 increased nearly 36 % to $ 8,033,926 from $ 5,912,350 during the year ended march 31 , 2010. increasing oil prices during the first half of our fiscal 2011 and the stabilizing worldwide economy increased revenues significantly during that period . the strong rebound in oil prices resulted in improved sales and increased production activity in oil and gas and continued through our entire fiscal year . we have worked to expand our operations by adding facilities in the united states . we expect to realize significant u.s. based revenues during the coming year . during fiscal 2011 , total sales increased 36 % and the service revenue increased 31 % . during the year ended march 31 , 2011 , product sales accounted for 89 % of total revenues and service sales accounted for 11 % of total revenue . during the year ended march 31 , 2010 the mix of product and service sales was the same , with product sales at 89 % of total revenues and service sales accounting for the remaining 11 % of total revenue . we expect total revenues will grow as we continue to expand our operations and due to higher oil prices . however with the general worldwide economic volatility , we expect revenue growth to be limited by macro-economic effects . cost of goods sold cost of goods sold during the year ended march 31 , 2011 was $ 2,812,323 for sales and $ 529,821 for service for a total of $ 3,342,144 compared to $ 1,867,823 for sales and $ 427,641 for service for a total of $ 2,295,464 during the year ended march 31 , 2010. while revenue increased 36 % , cost of goods sold increased by 46 % . our gross margin for 2011 was 58 % compared to 61 % in 2010. margins decreased and cost of goods sold increased due to higher material costs . we anticipate that as product sales increase in the coming year cost of goods sold will also increase . however , with anticipated volume discounts and improved efficiency we believe cost of goods sold , as a percentage of total revenues , will not be significantly higher in fiscal 2012. general and administrative expenses general and administrative expenses for the year ended march 31 , 2011 were $ 1,307,580 , a 30 % increase compared to the year ended march 31 , 2010. general and administrative expenses were 16 % of sales in 2011 compared to 17 % of sales in 2010. the decrease can be attributed to the general increase in operational activity . as sales and revenue increased during the year costs associated with increased sales and production increased at a slower rate . payroll expense payroll expense during the year ended march 31 , 2011 increased 17 % to $ 969,966 compared to $ 827,418 during the year ended march 31 , 2010. payroll expense increased as a result of hiring additional personnel , including a sales director and engineering personnel , in anticipation of expansion and growth in sales and the further development of the aforementioned 2100. we anticipate payroll expense will increase at a slower pace in the upcoming fiscal year as we continue efforts to expand our sales force and associated personnel in the us market . 15 depreciation expense depreciation expense during fiscal 2011 was $ 73,017 , or 21 % higher than fiscal 2010. depreciation expense increased in 2011 primarily due to addition of the lindon , utah location and some production equipment as we expanded our capacity . net income before income tax net income before income taxes during the 2011 fiscal year increased to $ 2,312,674 from $ 1,723,466 during fiscal 2010. this 34 % increase was the result of the 30 % increase in gross profit . income tax expense income tax expense increased from $ 444,191 to $ 686,211. we expect the rate to be close to the statutory rate in subsequent years . we anticipate that as revenues grow , our income tax expense will also be higher . we have exhausted our tax credits associated with the canadian small business deductions from prior years , thus we expect taxes as a percentage of revenue to be higher than in prior periods in which we made a profit . foreign currency translation gain ( loss ) our consolidated financial statements are presented in u.s. dollars . our functional currency is canadian dollars . our financial statements were translated to u.s. dollars using year-end exchange rates for the balance sheet and weighted average exchange rates for the statements of operations . equity transactions were translated using historical rates . foreign currency translation gains or losses as a result of fluctuations in the exchange rates are reflected in the statement of operations and comprehensive income . therefore , the translation adjustment in our consolidated financial statements represents the translation differences from translation of our financial statements . as a result , the translation adjustment is commonly , but not always , positive if the average exchange rates are lower than exchange rates on the date of the financial statements and negative if the average exchange rates are higher than exchange rates on the date of the financial statements . during the year ended march 31 , 2011 , we recognized a foreign currency translation gain of $ 365,863 compared to foreign currency translation gain of $ 488,803 during the year ended march 31 , 2010. this gain was the result of the strengthening of the canadian dollar versus the us dollar . total comprehensive income for the foregoing reasons , we realized a total comprehensive income of $ 1,988,246 , or $ 0.04 per share during the year ended march story_separator_special_tag please see “ information concerning forward-looking statements ” on page 4. results of operations comparison of the years ended march 31 , 2011 and 2010. total revenues our total revenues during the year ended march 31 , 2011 increased nearly 36 % to $ 8,033,926 from $ 5,912,350 during the year ended march 31 , 2010. increasing oil prices during the first half of our fiscal 2011 and the stabilizing worldwide economy increased revenues significantly during that period . the strong rebound in oil prices resulted in improved sales and increased production activity in oil and gas and continued through our entire fiscal year . we have worked to expand our operations by adding facilities in the united states . we expect to realize significant u.s. based revenues during the coming year . during fiscal 2011 , total sales increased 36 % and the service revenue increased 31 % . during the year ended march 31 , 2011 , product sales accounted for 89 % of total revenues and service sales accounted for 11 % of total revenue . during the year ended march 31 , 2010 the mix of product and service sales was the same , with product sales at 89 % of total revenues and service sales accounting for the remaining 11 % of total revenue . we expect total revenues will grow as we continue to expand our operations and due to higher oil prices . however with the general worldwide economic volatility , we expect revenue growth to be limited by macro-economic effects . cost of goods sold cost of goods sold during the year ended march 31 , 2011 was $ 2,812,323 for sales and $ 529,821 for service for a total of $ 3,342,144 compared to $ 1,867,823 for sales and $ 427,641 for service for a total of $ 2,295,464 during the year ended march 31 , 2010. while revenue increased 36 % , cost of goods sold increased by 46 % . our gross margin for 2011 was 58 % compared to 61 % in 2010. margins decreased and cost of goods sold increased due to higher material costs . we anticipate that as product sales increase in the coming year cost of goods sold will also increase . however , with anticipated volume discounts and improved efficiency we believe cost of goods sold , as a percentage of total revenues , will not be significantly higher in fiscal 2012. general and administrative expenses general and administrative expenses for the year ended march 31 , 2011 were $ 1,307,580 , a 30 % increase compared to the year ended march 31 , 2010. general and administrative expenses were 16 % of sales in 2011 compared to 17 % of sales in 2010. the decrease can be attributed to the general increase in operational activity . as sales and revenue increased during the year costs associated with increased sales and production increased at a slower rate . payroll expense payroll expense during the year ended march 31 , 2011 increased 17 % to $ 969,966 compared to $ 827,418 during the year ended march 31 , 2010. payroll expense increased as a result of hiring additional personnel , including a sales director and engineering personnel , in anticipation of expansion and growth in sales and the further development of the aforementioned 2100. we anticipate payroll expense will increase at a slower pace in the upcoming fiscal year as we continue efforts to expand our sales force and associated personnel in the us market . 15 depreciation expense depreciation expense during fiscal 2011 was $ 73,017 , or 21 % higher than fiscal 2010. depreciation expense increased in 2011 primarily due to addition of the lindon , utah location and some production equipment as we expanded our capacity . net income before income tax net income before income taxes during the 2011 fiscal year increased to $ 2,312,674 from $ 1,723,466 during fiscal 2010. this 34 % increase was the result of the 30 % increase in gross profit . income tax expense income tax expense increased from $ 444,191 to $ 686,211. we expect the rate to be close to the statutory rate in subsequent years . we anticipate that as revenues grow , our income tax expense will also be higher . we have exhausted our tax credits associated with the canadian small business deductions from prior years , thus we expect taxes as a percentage of revenue to be higher than in prior periods in which we made a profit . foreign currency translation gain ( loss ) our consolidated financial statements are presented in u.s. dollars . our functional currency is canadian dollars . our financial statements were translated to u.s. dollars using year-end exchange rates for the balance sheet and weighted average exchange rates for the statements of operations . equity transactions were translated using historical rates . foreign currency translation gains or losses as a result of fluctuations in the exchange rates are reflected in the statement of operations and comprehensive income . therefore , the translation adjustment in our consolidated financial statements represents the translation differences from translation of our financial statements . as a result , the translation adjustment is commonly , but not always , positive if the average exchange rates are lower than exchange rates on the date of the financial statements and negative if the average exchange rates are higher than exchange rates on the date of the financial statements . during the year ended march 31 , 2011 , we recognized a foreign currency translation gain of $ 365,863 compared to foreign currency translation gain of $ 488,803 during the year ended march 31 , 2010. this gain was the result of the strengthening of the canadian dollar versus the us dollar . total comprehensive income for the foregoing reasons , we realized a total comprehensive income of $ 1,988,246 , or $ 0.04 per share during the year ended march	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 , our operations have been financed primarily from cash flows from operations and loans from company executives . we have a $ 400,000 revolving credit line with a local banking institution that we also use from time to time to satisfy short-term fluctuations in cash flows . at march 31 , 2011 we had $ -0- outstanding on our line of credit . as of march 31 , 2011 we had current assets of $ 5,288,404 and total assets of $ 5,998,864 including cash and cash equivalents of $ 1,689,386. at march 31 , 2011 total liabilities were $ 486,083 , all of which were current liabilities . during the year ended march 31 , 2011 and 2010 cash was primarily used to fund operations . see below for additional discussion and analysis of cash flow . replace_table_token_3_th net cash used in our operating activities was $ 213,916. as discussed above , during the year ended march 31 , 2011 we realized a significant increase in net income which was partially offset by decreases in income taxes payable . as noted above , from time to time we may alsodraw down on our revolving credit line to meet short-term cash needs but have not in recent years .
equities net revenues from the jefferies loancore joint venture during 2015 include higher revenues from an increase in loan closings and securitizations by the joint venture over 2014. equities net revenues from the jefferies finance joint venture during 2015 include lower revenues as a result of syndicate costs associated with the sell down of commitments , as well as reserves taken on certain loans held for investment as compared with 2014. fixed income net revenues fixed income net revenues include commissions , principal transactions and net interest revenue generated by jefferies fixed income sales and trading businesses from investment grade corporate bonds , mortgage- and asset-backed securities , government and agency securities , interest rate derivatives , municipal bonds , emerging markets debt , high yield and distressed securities , bank loans , foreign exchange and commodities trading activities . jefferies recorded higher revenues in 2016 as compared to 2015 due to improved trading conditions across most core businesses , partially offset by lower revenues in its international rates business due to lower trading volumes . 2015 included $ 80.2 million of net revenues globally from the bache business activity . there were no meaningful revenues from the bache business during 2016 , as jefferies completed the exit of the bache business during the second quarter of 2016. excluding revenues from the bache business activity , revenues increased $ 451.2 million . revenues in jefferies leveraged credit business were strong on increased trading volumes within high yield and distressed , as a result of an improved credit environment , as well as strategic growth in the business , compared with mark-to-market write-downs in 2015. results in jefferies emerging markets business throughout 2016 were higher as compared to 2015 due to an upgraded sales and trading team and increased levels of volatility and improved market conditions . revenues in 2016 from jefferies corporates businesses increased as compared to 2015 due to increased client activity and higher demand for new issuances and higher yielding investments . jefferies mortgages businesses were positively impacted by increased demand for spread products compared with the negative impact of market volatility as credit spreads tightened for these asset classes and expectations of future rate increases in 2015. the municipal securities business performed well during 2016 as improved trading activity was driven by market technicals compared with net outflows in 2015. volatility during 2016 due to fluctuating expectations as to future federal reserve interest rate increases contributed to increased revenues in jefferies u.s. rates business as compared to the prior year . jefferies recorded lower revenues during the 2015 period as compared to 2014 , primarily due to tighter trading conditions across most core businesses and losses in jefferies high yield distressed sales and trading business and international mortgages business , partially offset by higher revenues in its u.s. and international rates businesses , as well as its u.s. investment grade corporate credit business . 2015 included $ 80.2 million of net revenues globally from the bache business activity compared with $ 202.8 million in 2014. excluding revenues from the bache business activity , revenues decreased $ 357.3 million . 32 the higher revenues in jefferies u.s. and international rates businesses , as well as its u.s. investment grade corporate credit business , resulted from higher transaction volumes in 2015 as compared to 2014 , as volatility caused attractive yields and interest in new issuances . however , that same volatility negatively impacted the municipal securities business as prices declined and the sector experienced overall net cash outflows . most of jefferies credit fixed income businesses were negatively impacted during 2015 by periods of extreme volatility and market conditions , as investors focused on liquidity , resulting in periods of low trading volume during the year . in addition , results in jefferies distressed trading businesses in 2015 were negatively impacted by its position in the energy sector and led to mark-to-market write-downs in its inventory and results in its emerging markets business were lower due to slower growth in the emerging markets during 2015 as compared to 2014. jefferies mortgages business was also negatively impacted in 2015 by market volatility as credit spreads tightened for these asset classes and expectations of future rate increases resulted in lower trading volumes and revenues . investment banking revenues jefferies provides a full range of capital markets and financial advisory services to its clients across most industry sectors in the americas , europe and asia . capital markets revenues include underwriting and placement revenues related to corporate debt , municipal bonds , mortgage- and asset-backed securities and equity and equity-linked securities . advisory revenues consist primarily of advisory and transaction fees generated in connection with merger , acquisition and restructuring transactions . total investment banking revenues were $ 1,194.0 million for 2016 , 17.0 % lower than 2015. lower investment banking results were attributable to lower new issue equity and leveraged finance capital markets revenues . this was primarily as a result of the capital markets slowdown , which began in the second half of 2015 and continued for much of 2016. from equity and debt capital raising activities , jefferies generated $ 235.2 million and $ 304.6 million in revenues , respectively , for 2016 , a decrease of 42.4 % and 23.5 % , respectively , from 2015. jefferies reduced capital markets activity for 2016 was partially offset by record advisory revenues . specifically , jefferies advisory revenues for 2016 increased 3.5 % compared to 2015 , primarily through an increase in the number of merger , acquisition and restructuring transactions , including closing a record number of merger and acquisition transactions in excess of $ 1 billion . story_separator_special_tag we accounted for our loan and rights at fair value . during 2016 and 2015 , we recognized $ ( 54.6 ) million and $ 491.3 million , respectively , of gains ( losses ) from our term loan and related rights . this includes the component related to interest income , which is recorded within principal transactions revenues . as more fully discussed in note 4 to our consolidated financial statements , on september 1 , 2016 , we , fxcm inc. and fxcm holdings entered into an agreement that amended the terms of our loan and associated rights . among other changes , the amendments extended the maturity of the term loan by one year to january 2018 and gave leucadia a 49.9 % common membership interest in fxcm . we gained the ability to significantly influence fxcm through the amendments and as a result , we now account for our equity interest in fxcm under the equity method of accounting . during 2016 , we recognized income related to associated companies of $ 1.9 million related to our common membership interest in fxcm . given recent events , including changes in leadership within fxcm , and planned divestitures , it is difficult to anticipate whether future pre-tax income will be more or less volatile . excluding the fxcm revenues in 2016 and 2015 discussed above , the net revenues in other financial services businesses and investments reflect revenues of $ 8.6 million in 2016 , $ 32.7 million in 2015 and $ 68.2 million in 2014. the year-over-year decrease in 2016 compared to 2015 primarily reflects losses on investments recorded at market value related to the leucadia asset management businesses partially offset by growth in our vehicle finance businesses and at our 54 madison real estate fund . the year-over-year decrease in 2015 compared to 2014 primarily reflects losses on investments recorded at market value related to the leucadia asset management businesses partially offset by growth in our vehicle finance businesses . all expense categories were impacted by the growth of our leucadia asset management businesses and vehicle finance businesses in 2016 and 2015 as compared to the prior years . selling , general and other expenses for 2015 also include $ 21.0 million of investment banking and advisory fees paid to jefferies in connection with our entering into the agreement with fxcm , and which jefferies recognized in net revenues . these intercompany fees have been eliminated in our consolidated results . for the years ended december 31 , 2016 , 2015 and 2014 , income related to associated companies attributable to berkadia was $ 94.2 million , $ 78.1 million and $ 101.2 million , respectively . berkadia 's results were impacted by reversals of mortgage service rights 36 impairments of $ 35.9 million in 2016 , and investment gains of $ 15.4 million in 2015 and $ 69.8 million in 2014 , of which we then recorded our applicable share . as our share of profits from berkadia are primarily taxed at the leucadia level , the income discussed above is pre-tax . income related to associated companies attributable to homefed was $ 23.9 million , $ 3.6 million and $ 3.2 million for the years ended december 31 , 2016 , 2015 and 2014 , respectively . the increase in 2016 primarily reflects a reversal of homefed 's deferred tax valuation allowance in 2016 as homefed concluded that it was more likely than not that they would have future taxable income sufficient to realize their net deferred tax asset . other merchant banking businesses and investments a summary of results for other merchant banking businesses and investments for the three years in the period ended december 31 , 2016 is as follows ( in thousands ) : replace_table_token_12_th our other merchant banking operations include the consolidated results of vitesse and juneau ( oil and gas exploration and development ) and conwed and idaho timber ( manufacturing companies ) . it also includes our equity investments in garcadia ( automobile dealerships ) , linkem ( fixed wireless broadband services in italy ) and golden queen ( a gold and silver mining project ) , as well as our ownership of hrg shares , which is accounted for at fair value , and impacts our results through its mark-to-market adjustment reflected within net revenues . other merchant banking operations also includes our real estate operations , substantially all of which were sold to homefed during march 2014 in exchange for homefed common shares . net revenues include principal transactions related to unrealized gains ( losses ) of $ 93.2 million , $ ( 28.0 ) million and $ 99.3 million for the years ended december 31 , 2016 , 2015 and 2014 , respectively , from the change in value of our investment in hrg . we classify hrg as a trading asset for which the fair value option was elected and we reflect mark-to-market adjustments through principal transactions revenues . in addition , net revenues for 2014 include a $ 22.7 million gain on the sale of an equity interest for cash proceeds of $ 33.0 million . for the years ended december 31 , 2016 , 2015 and 2014 , net revenues for manufacturing were $ 415.8 million , $ 392.1 million and $ 380.5 million , respectively . net revenues for the years ended december 31 , 2016 , 2015 and 2014 for our oil and gas exploration and development businesses were $ 53.5 million , $ 54.1 million and $ 19.9 million , respectively . as discussed further in note 4 to our consolidated financial statements , vitesse uses swaps and call and put options in order to reduce exposure to future oil price fluctuations . net unrealized gains ( losses ) of $ ( 11.8 ) million and $ 7.4 million were recorded related to these options in 2016 and 2015 , respectively . the increase in total expenses 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.	available liquidity $ 543,525 parent company debt ( see note 16 to our consolidated financial statements ) $ 987,891 ratio of parent company debt to stressed equity : maximum 0.50 x actual , equity in a stressed scenario 0.27 x actual , equity in a stressed scenario excluding net deferred tax asset 0.40 x liquidity reserve : minimum $ 426,000 actual $ 543,525 consolidated statements of cash flows as discussed above , we have historically relied on our available liquidity to meet short-term and long-term needs , and to make acquisitions of new businesses and investments . except as otherwise disclosed herein , our operating businesses do not generally require significant funds to support their operating activities , and we do not depend on positive cash flow from our operating segments to meet our liquidity needs . the mix of our operating businesses and investments can change frequently as a result of acquisitions or divestitures , the timing of which is impossible to predict but which often have a significant impact on our consolidated statements of cash flows in any one period . further , the timing and amounts of distributions from investments in associated companies may be outside our control . as a result , reported cash flows from operating , investing and financing activities do not generally follow any particular pattern or trend , and reported results in the most recent period should not be expected to recur in any subsequent period . 44 net cash of $ 608.8 million was provided by operating activities in 2016 and net cash of $ 761.8 million in 2015 and $ 987.2 million in 2014 was used for operating activities .
we believe that our innovative , cloud-based approach disrupts the large market for business communications and collaboration by providing flexible and cost-effective solutions that support distributed workforces , mobile employees , and the proliferation of smart phones and tablets . we enable convenient and effective communications for organizations across all their locations and employees , enabling them to be more productive and more responsive to their customers . our cloud-based business communications and collaboration solutions are designed to be easy to use , providing a single user identity across multiple locations and devices , including smartphones , tablets , pcs and desk phones . our solutions can be deployed rapidly and configured and managed easily . through our platform , we enable third-party developers and customers to integrate our solution with leading business applications to customize their own business workflows . we have a portfolio of cloud-based offerings that are subscription based , made available at different rates varying by the specific functionalities , services , and number of users . we primarily generate revenues from the sale of subscriptions to our offerings . our subscription plans have monthly , annual , or multi-year contractual terms . we believe that this flexibility in contract duration is important to meet the different needs of our customers . for the years ended december 31 , 2019 , 2018 , and 2017 , subscriptions revenues accounted for 90 % or more of our total revenues . the remainder of our revenues has historically been primarily comprised of product revenues from the sale of pre-configured phones and professional services . we do not develop , manufacture , or otherwise touch the delivery of physical phones and offer it as a convenience for a total solution to our customers in connection with subscriptions to our services . we rely on third-party providers to develop and manufacture these devices and fulfillment partners to successfully serve our customers . we continue to invest in our direct inside sales force while also developing indirect sales channels to market our brand and our subscription offerings . our indirect sales channel consists of a network of resellers who sell our solutions . we also sell our solutions through carriers including at & t , inc. ( “ at & t ” ) , telus communications company ( “ telus ” ) , and bt group plc ( “ bt ” ) . in october 2019 , we entered into a strategic partnership with avaya holdings corp. ( `` avaya `` ) , which includes the introduction of a new solution avaya cloud office by ringcentral ( `` aco `` ) , which will be marketed and sold by avaya and its subsidiaries . in december 2019 , we entered into a strategic partnerhip with atos se ( `` atos `` ) , which includes the introduction of a co-branded unified communications as a service ( `` ucaas `` ) solution . we intend to continue to foster this network and expand our network with other resellers . we also participate in more traditional forms of media advertising , such as radio and billboard advertising . since its launch , our revenue growth has primarily been driven by our flagship ringcentral office product offering , which has resulted in an increased number of customers , increased average subscription revenue per customer , and increased retention of our existing customer and user base . we define a “ customer ” as one individual billing relationship for the subscription to our services , which generally correlates to one company account per customer . as of december 31 , 2019 , we had customers from a range of industries , including financial services , education , healthcare , legal services , real estate , retail , technology , insurance , construction , hospitality , and state and local government , among others . for the years ended december 31 , 2019 , 2018 and 2017 , the vast majority of our total revenues were generated in the u.s. and canada , although we expect the percentage of our total revenues derived outside of the u.s. and canada to grow as we continue to expand internationally . 42 the growth of our business and our future success depend on many factors , including our ability to expand our customer base to larger customers , continue to innovate , grow revenues from our existing customer base , expand our distribution channels , and scale internationally . key business metrics in addition to united states generally accepted accounting principles ( “ u.s . gaap ” ) and financial measures such as total revenues , gross margin , and cash flows from operations , we regularly review a number of key business metrics to evaluate growth trends , measure our performance , and make strategic decisions . we discuss revenues and gross margin under “ results of operations ” and cash flow from operations under “ liquidity and capital resources . ” other key business metrics are discussed below . annualized exit monthly recurring subscriptions we believe that our annualized exit monthly recurring subscriptions ( “ arr ” ) is a leading indicator of our anticipated subscriptions revenues . we believe that trends in revenue are important to understanding the overall health of our business , and we use these trends in order to formulate financial projections and make strategic business decisions . our arr equals our monthly recurring subscriptions multiplied by 12. our monthly recurring subscriptions equals the monthly value of all customer recurring charges at the end of a given month . for example , our monthly recurring subscriptions at december 31 , 2019 was $ 80.0 million . story_separator_special_tag the increase in headcount and other expense categories described herein was driven primarily by investments in our infrastructure and capacity to improve the availability of our subscription offerings , while also supporting the growth in new customers and increased usage of our subscriptions by our existing customer base . we expect subscription gross margin to be within a relatively similar range in the future . other cost of revenues and gross margin . cost of other revenues increased by $ 23.0 million , or 48 % , during fiscal year 2019 as compared to fiscal year 2018 . this was primarily due to the increase in services personnel costs of $ 11.1 million including share-based compensation expense , cost of product sales of $ 10.6 million , and overhead costs of $ 1.3 million . other revenues gross margin fluctuates based on timing of completion of professional services projects and discounting on phones . research and development replace_table_token_8_th research and development expenses increased by $ 35.3 million , or 35 % , during fiscal year 2019 as compared to fiscal year 2018 , primarily due to increases in personnel and contractor costs of $ 30.3 million and overhead costs to support our research and development efforts of $ 4.8 million . of the total increase in personnel and contractor costs , approximately $ 20.0 million was primarily driven by headcount growth and $ 8.2 million was due to higher share-based compensation expense . the increases in research and development headcount and other expense categories were driven by continued investment in current and future software development projects for our applications . given the continued emphasis and focus on product innovation , we expect research and development expenses to continue to increase in absolute dollars . 47 sales and marketing replace_table_token_9_th sales and marketing expenses increased by $ 110.0 million , or 33 % , during fiscal year 2019 as compared to fiscal year 2018 , primarily due to increases in personnel and contractor costs of $ 45.2 million , third-party commissions of $ 27.5 million , amortization of deferred sales commission costs of $ 10.4 million , costs associated with strategic partnerships and acquisitions of $ 10.3 million , advertising and marketing costs of $ 6.6 million , overhead costs to support our marketing efforts of $ 6.5 million , and travel costs of $ 2.8 million . of the total increase in personnel and contractor costs , approximately $ 31.9 million was primarily due to headcount growth and $ 11.0 million was due to higher share-based compensation expense . the increases in sales and marketing headcount and other expense categories were necessary to support our growth strategy to acquire new customers with a focus on larger customers , and to establish brand recognition to achieve greater penetration into the north american and international markets . additionally , we expect sales and marketing expenses to continue to increase in absolute dollars as we continue to expand our presence in north america , europe , and other markets . general and administrative replace_table_token_10_th general and administrative expenses increased by $ 39.3 million , or 38 % , during fiscal year 2019 as compared to fiscal year 2018 , primarily due to increases in personnel and contractor costs of $ 31.6 million , business fees and taxes of $ 3.5 million , professional fees of $ 2.1 million , and acquisition related costs of $ 2.4 million , partially offset by a decrease in overhead costs of $ 1.2 million when compared to prior year . of the total increase in personnel and contractor cost , approximately $ 19.1 million was primarily driven by headcount growth and $ 10.3 million was due to higher share-based compensation expense . we expect general and administrative expenses to continue to increase in absolute dollars as we continue to make additional investments in processes , systems , and personnel to support our anticipated revenue growth . other income ( expense ) , net replace_table_token_11_th nm - not meaningful other expense , net increased by $ 1.6 million during fiscal year 2019 as compared to fiscal year 2018 , primarily driven by an increase in costs associated with strategic partnerships and acquisitions of $ 10.6 million , interest expense of $ 4.4 million resulting from the amortization of debt discount and issuance costs of our 0 % convertible senior notes due 2023 ( “ notes ” ) , offset in part by $ 8.3 million non-cash gains recognized from our long-term investments , increase of $ 3.0 million in interest income earned on our cash and cash equivalents , and gain on foreign exchange of $ 1.6 million . 48 net loss net loss increased by $ 27.4 million during fiscal year 2019 , mainly due to higher share-based compensation expense of $ 33.3 million and non-recurring acquisitions and strategic partnership related expenses of $ 24.1 million , offset by growth in continuing operations , as discussed above . liquidity and capital resources as of december 31 , 2019 and 2018 , we had cash and cash equivalents of $ 343.6 million and $ 566.3 million , respectively . we finance our operations primarily through sales to our customers and a majority of our customers are billed monthly . for customers with annual or multi-year contracts and those who opt for annual invoicing , we generally invoice only one annual period in advance and all invoicing occurs at the start of the respective subscription period . revenue is deferred for such advanced billings . we also finance our operations from proceeds from issuance of stock under our stock plans , and proceeds from issuance of debt . we believe that our operations and existing liquidity sources will satisfy our cash requirements for at least the next 12 months . our future capital requirements will depend on many factors , including revenue growth and costs incurred to support customer growth , acquisitions and expansions , sales and marketing ,	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 cash provided by operating activities is influenced by the timing of customer collections , as well as the amount and timing of disbursements to our vendors , the amount of cash we invest in personnel , marketing , and infrastructure costs to support the anticipated growth of our business , and the increase in the number of customers . net cash provided by operating activities was $ 64.8 million for the year ended december 31 , 2019 . this was driven by net loss of $ 53.6 million adjusted for impacts of non-cash adjustments of $ 205.5 million , partially offset by a net cash used for working capital of $ 87.0 million driven primarily by timing of cash payments to vendors and cash receipts and prepayments from customers and carriers . the non-cash adjustments resulted primarily from $ 101.4 million of share-based compensation , $ 37.9 million of depreciation and amortization , $ 30.1 million amortization of deferred sales commissions costs , $ 20.3 million amortization of debt discount and issuance costs related to our convertible notes , and $ 3.4 million loss and other related costs on investments . net cash provided by operating activities for the year ended december 31 , 2019 , decreased by $ 7.3 million as compared to the year ended december 31 , 2018 . this change reflects working capital benefits resulting from payments and collections timing , as well as approximately $ 37.0 million of one-time payments stemming from our recent partnerships . net cash used in investing activities our primary investing activities have consisted of our long-term investments , business acquisitions and purchase of intellectual properties , and capital expenditures and internal-use software . as our business grows , we expect our capital expenditures to continue to increase . 49 net cash used in investing activities was $ 296.8 million for the year ended december 31 , 2019 .
as of december 31 , 2020 , the company had 51 loans totaling $ 141.2 million in the hotel industry and 116 loans totaling $ 36.1 million in the restaurant industry , which make up 8.6 % and 2.2 % of our total loan portfolio , respectively . 43 as of december 31 , 2020 , our residential real estate loan portfolio made up 59.6 % of our total loan portfolio and had a weighted average amortized ltv of approximately 55.6 % . as of december 31 , 2020 , 1.0 % of our residential mortgages remain on hardship payment deferral covering principal and interest payments for three to six months . this is a significant decrease from the first round of payment deferrals granted during the second quarter of 2020 , which made up 19.2 % of our residential mortgage balances as of june 30 , 2020 , and a slight decrease from the second round of payment deferrals granted during the third quarter of 2020 , which made up 1.7 % of our residential mortgage balances as of september 30 , 2020. in addition , as a preferred sba lender , we are participating in the paycheck protection program created under the cares act and implemented by the sba to help provide loans to our business customers in need . as of december 31 , 2020 , the company approved and funded over 1,800 ppp loans totaling $ 96.9 million . these ppp loans were funded with our current cash balances and all ppp loans are fully guaranteed by the sba . as of march 9 , 2021 , the sba had granted forgiveness for ppp loans totaling $ 11.5 million . the economic aid act , signed into law on december 27 , 2020 , authorized an additional $ 284.5 billion in new ppp funding and extends the authority of lenders to make ppp loans through march 31 , 2021. we are participating in this new round of ppp loan funding by offering first and second draw loans . as of march 9 , 2021 , the company had approved and funded 635 ppp loans totaling $ 41.7 million under this new round of ppp loan funding . despite improvements in certain economic indicators , significant constraints to commerce remain in place , and significant uncertainty remains over the timing of an effective and widely available coronavirus vaccine and the timing and scope of additional government stimulus packages . the duration and extent of the downturn and speed of the related recovery on our business , customers , and the economy as a whole remains uncertain . overview we are metrocity bankshares , inc. , a bank holding company headquartered in the atlanta metropolitan area . we operate through our wholly-owned banking subsidiary , metro city bank , a georgia state-chartered commercial bank that was founded in 2006. we currently operate 19 full-service branch locations in multi-ethnic communities in alabama , florida , georgia , new york , new jersey , texas and virginia . we are focused on delivering full-service banking services in markets , predominantly asian-american communities in growing metropolitan markets in the eastern u.s. and texas . prior to december 2014 , we operated without a holding company , and in december 2014 , the bank formed metrocity bankshares , inc. as its holding company . on december 31 , 2014 , metrocity bankshares , inc. acquired all of the outstanding common stock of metro city bank as a part of the holding company formation transaction . we are a bank holding company and we conduct all of our material business operations through the bank . as a result , the discussion and analysis relates to activities primarily conducted at the bank level . critical accounting policies and estimates our accounting and reporting policies conform to accounting principles generally accepted in the united states of america ( “ gaap ” ) and conform to general practices within the industry in which we operate . to prepare financial statements in conformity with gaap , management makes estimates , assumptions and judgments based on available information . these estimates , assumptions and judgments affect the amounts reported in the financial statements and accompanying notes . these estimates , assumptions , and judgments are based on information available as of the date of the financial statements and , as this information changes , actual results could differ from the estimates , assumptions and judgments reflected in the financial statement . in particular , management has identified several accounting policies that , due to the estimates , assumptions and judgments inherent in those policies , are critical in understanding our financial statements . the following is a discussion of the critical accounting policies and significant estimates that require us to make complex and subjective judgments . additional information about these policies can be found in note 1 of our consolidated financial statements as of december 31 , 2020 , included elsewhere in this annual report on form 10-k. 44 allowance for loan losses the all is a valuation allowance for probable incurred credit losses . loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed . subsequent recoveries , if any , are credited to the allowance . management estimates the allowance balance required using past loan loss experience , the nature and volume of the portfolio , information about specific borrower situations and estimated collateral values , economic conditions , and other factors . allocations of the allowance may be made for specific loans , but the entire allowance is available for any loan that , in management 's judgment , should be charged off . the all is maintained at a level that management believes is appropriate to provide for known and inherent incurred loan losses as of the date of the consolidated balance sheet and we have established methodologies for the determination of its adequacy . story_separator_special_tag average interest-bearing liabilities increased by $ 113.5 million as average interest-bearing deposits increased by $ 126.8 million and average borrowings decreased by $ 13.3 million . 48 average balances , interest and yields the following tables present , for the years ended december 31 , 2020 , 2019 and 2018 , information about : ( i ) weighted average balances , the total dollar amount of interest income from interest-earning assets and the resultant average yields ; ( ii ) average balances , the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates ; ( iii ) net interest income ; ( iv ) the interest rate spread ; and ( v ) the net interest margin . replace_table_token_4_th ( 1 ) includes income and average balances for term federal funds , interest-earning cash accounts , and other miscellaneous earning assets . ( 2 ) average loan balances include nonaccrual loans and loans held for sale . 49 rate/volume analysis increases and decreases in interest income and interest expense result from changes in average balances ( volume ) of interest-earning assets and interest-bearing liabilities , as well as changes in average interest rates . the following table sets forth the effects of changing rates and volumes on our net interest income during the period shown . information is provided with respect to ( i ) effects on interest income attributable to changes in volume ( change in volume multiplied by prior rate ) and ( ii ) effects on interest income attributable to changes in rate ( changes in rate multiplied by prior volume ) . change applicable to both volumes and rate have been allocated to volume . replace_table_token_5_th ( 1 ) includes income and average balances for term federal funds , interest-earning cash accounts , and other miscellaneous earning assets . ( 2 ) loan balances include nonaccrual loans and loans held for sale . provision for loan losses credit risk is inherent in the business of making loans . we establish an all through charges to earnings , which are shown in the statements of operations as the provision for loan losses . specifically identifiable and quantifiable known losses are promptly charged off against the allowance for loan losses . the provision for loan losses is determined by conducting a quarterly evaluation of the adequacy of our all and charging the shortfall or excess , if any , to the current quarter 's expense . this has the effect of creating variability in the amount and frequency of charges to earnings . the provision for loan losses and level of all for each period are dependent upon many factors , including loan growth , net charge-offs , changes in the composition of the loan portfolio , delinquencies , management 's assessment of the quality of the loan portfolio , the valuation of problem loans and the general economic conditions in our market areas . the determination of the amount is complex and involves a high degree of judgment and subjectivity . 50 year ended december 31 , 2020 compared to year ended december 31 , 2019 we recorded provision for loan losses of $ 3.5 million during the year ended december 31 , 2020 compared to no provision for loan losses recorded during the year ended december 31 , 2019. the increase in our provision for loan losses during the year ended december 31 , 2020 was largely due to the unprecedented economic disruptions and uncertainty surrounding the covid-19 pandemic , as well as the growth in our loan portfolio . our allowance for loan losses as a percentage of gross loans for the periods ended december 31 , 2020 and 2019 was 0.62 % and 0.59 % , respectively . excluding outstanding ppp loans of $ 92.4 million as of december 31 , 2020 , the all as a percentage of total loans was 0.66 % . none of the all balance was allocated to our ppp loan portfolio at december 31 , 2020. our all as a percent of gross loans is relatively lower than our peers due to our high percentage of residential mortgage loans , which tend to have lower allowance for loan loss ratios compared to other commercial or consumer loans . year ended december 31 , 2019 compared to year ended december 31 , 2018 we recorded no provision for loan losses for the year ended december 31 , 2019 compared to $ 1.2 million for the year ended december 31 , 2018. the decrease in provision expense was partially due to lower net charge-offs of consumer loans , as well as a large recovery received on a commercial real estate loan . the consumer loans charged off represent auto pool loans which had poor performance . during 2016 , management elected to discontinue purchasing this product and is letting this portfolio paydown and provisioning for any calculated losses when necessary . our allowance for loan losses as a percentage of gross loans for the periods ended december 31 , 2019 and 2018 was 0.59 % and 0.58 % , respectively . noninterest income noninterest income is an important component of our total revenues . a significant portion of our noninterest income is associated with sba and residential mortgage lending activity , consisting of gains on the sale of loans sold in the secondary market and servicing income from loans sold with servicing rights retained . other sources of noninterest income include service charges on deposit accounts and other service charges , commissions and fees . the following table sets forth the major components of our noninterest income for the years ended december 31 , 2020 , 2019 and 2018 : replace_table_token_6_th year ended december 31 , 2020 compared to year ended december 31 , 2019 service charges on deposit accounts were $ 1.3 million for the year ended december 31 , 2020 compared to $ 1.5 million for the year ended	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 refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers , while at the same time meeting our operating , capital and strategic cash flow needs , all at a reasonable cost . we continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements . we manage our liquidity position to meet the daily cash flow needs of customers , while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders . our liquidity position is supported by management of liquid assets and access to alternative sources of funds . our liquid assets include cash , interest-bearing deposits in correspondent banks , federal funds sold , and fair value of unpledged investment securities . other available sources of liquidity include wholesale deposits , and additional borrowings from correspondent banks , fhlb advances , and the federal reserve discount window . our short-term and long-term liquidity requirements are primarily met through cash flow from operations , redeployment of prepaying and maturing balances in our loan and investment portfolios , and increases in customer deposits . other alternative sources of funds will supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis . as part of our liquidity management strategy , we open federal funds lines with our correspondent banks . as of december 31 , 2020 and 2019 , we had $ 47.5 million of unsecured federal funds lines with no amounts advanced .
our authorization with each oem or software publisher may include one or more of the following : product return privileges , price protection policies , purchase discounts and vendor incentive programs , such as volume rebates and cooperative advertising reimbursements . we market the cdw brand on a national basis through a variety of public and community relations and corporate communications efforts , and through brand advertising that includes the use of print , broadcast , online , social and other media . we also market to current and prospective customers through integrated marketing programs that include print and online media , events and sponsorships . as a result of our relationships with our vendors , a substantial portion of our advertising and marketing expenses are reimbursed through cooperative advertising reimbursement programs . such programs are at the discretion of our vendors and are typically tied to sales or purchasing volumes or other commitments to be met by us within a specified period of time . an important factor affecting our ability to generate sales and achieve our targeted operating results is the impact of general economic conditions on our customers ' willingness to spend on information technology . during the recent economic downturn beginning in late 2008 and into 2009 , we experienced significantly lower sales and gross profit as our customers generally reduced spending on information technology products and services . during 2010 , we experienced significant increases in sales , gross profit and operating income compared to 2009. while general economic conditions and our recent operating results have generally improved , competitive pricing pressures continue in the market . downturns in the global economy , declines in the availability of credit , weakening consumer and business confidence or increased unemployment could result in reduced spending 24 by our customers on information technology products and services and increased competitive pricing pressures . our public segment sales are impacted by government spending policies , budget priorities and revenue levels . although our sales to the federal government are diversified across multiple agencies and departments , they collectively accounted for 11.0 % of our net sales in 2010. further , our sales to state and local governments accounted for 4.6 % of our net sales in 2010. an adverse change in any of these factors could cause our public segment customers to reduce their purchases or to terminate or not renew contracts with us , which could adversely affect our business , results of operations or cash flows . see risk factors included elsewhere in this report for further discussion . our management monitors a number of financial and non-financial measures and ratios on a regular basis in order to track the progress of our business and make adjustments as necessary . we believe that the most important of these measures and ratios include average daily sales , gross margin , operating margin , ebitda and adjusted ebitda , cash and cash equivalents , net working capital , cash conversion cycle ( defined to be days of sales outstanding in accounts receivable plus days of supply in inventory minus days of purchases outstanding in accounts payable ) , debt levels including available credit and leverage ratios , sales per coworker and coworker turnover . these measures and ratios are compared to standards or objectives set by management , so that actions can be taken , as necessary , in order to achieve the standards and objectives . adjusted ebitda also provides helpful information as it is the primary measure used in certain financial covenants contained in our credit agreements . results of operations year ended december 31 , 2010 compared to year ended december 31 , 2009 the following table presents our results of operations , in dollars and as a percentage of net sales , for the years ended december 31 , 2010 and 2009 : replace_table_token_5_th 25 net sales the following table presents our net sales by segment , in dollars and as a percentage of total net sales , and the year-over-year percentage change in net sales for the years ended december 31 , 2010 and 2009 : replace_table_token_6_th ( 1 ) there were 254 selling days in both the years ended december 31 , 2010 and 2009. the following table presents our net sales by customer channel for our corporate and public segments and the dollar and percentage change between periods in net sales for the years ended december 31 , 2010 and 2009 : replace_table_token_7_th total net sales in 2010 increased $ 1,638.5 million , or 22.9 % , to $ 8,801.2 million , compared to $ 7,162.6 million in 2009. there were 254 selling days in both 2010 and 2009. the increase in total net sales was the result of general growth and increased demand in the information technology industry overall , in addition to our focus on growing our market share . the most significant driver of sales growth in 2010 was the rebound by our corporate segment , which was significantly impacted by the recent economic downturn . corporate segment net sales in 2010 increased $ 1,015.4 million , or 26.6 % , compared to 2009. within our corporate segment , net sales to medium / large customers increased 28.3 % between years , while net sales to small business customers increased 20.3 % . public segment net sales in 2010 increased $ 525.1 million , or 17.3 % , between years driven by growth across all customer channels . net sales to healthcare customers increased $ 267.1 million , or 36.9 % , between years driven by volume increases and additional sales resulting from an expanded relationship with a group purchasing organization beginning in the fourth quarter of 2009. gross profit gross profit increased $ 258.0 million , or 22.8 % , to $ 1,390.8 million in 2010 , compared to $ 1,132.9 million in 2009 , which reflected increased sales across our hardware , software and services categories . story_separator_special_tag on a sequential quarterly basis , gross profit margin declined each quarter as we progressed through the first three quarters of 2009 , and moderated at 15.4 % in the fourth quarter of 2009. selling and administrative expenses selling and administrative expenses decreased $ 73.7 million , or 8.2 % , to $ 821.1 million in 2009 , compared to $ 894.8 million in 2008. this was driven by a decrease of $ 61.7 million in payroll costs that resulted primarily from lower sales commissions and lower other variable incentive compensation , as well as a decrease in the number of sales and non-sales coworkers . our sales force decreased to 3,307 coworkers at december 31 , 2009 , compared to 3,593 coworkers at december 31 , 2008. in addition to implementing cost saving actions such as cancelling certain merit compensation increases and suspending the 401 ( k ) match for 2009 , we eliminated approximately 200 coworkers in mostly non-sales force positions in january 2009. selling and administrative expenses in 2009 also reflected reduced profit sharing/401 ( k ) expense . for 2008 , the amount charged to expense for the profit sharing/401 ( k ) plan totaled $ 11.9 million . of this amount , we reversed $ 8.0 million to income in the second quarter of 2009 , as the payout of this amount was partially based upon certain financial objectives in 2009 that were not achieved . this reversal was partially offset by $ 6.4 million of plan expense recorded in 2009 , resulting in a net credit of $ 1.6 million attributed to the profit sharing/401 ( k ) plan for 2009. these decreases were partially offset by an increase of $ 9.9 million in consulting and advisory fees and expenses in 2009 compared to 2008. advertising expense advertising expense decreased $ 39.4 million , or 27.9 % , to $ 101.9 million in 2009 , compared to $ 141.3 million in 2008. as a percentage of net sales , advertising expense decreased to 1.4 % in 2009 , compared to 1.8 % in 2008. the decrease in advertising expense was primarily the result of less national tv and magazine advertising . goodwill impairment we recorded goodwill impairment charges of $ 241.8 million in 2009 and $ 1,712.0 million in 2008. continued deterioration in macroeconomic conditions and the overall decline in our net sales during the first half of 2009 indicated that it was more likely than not that the fair value of certain of our reporting units was reduced to below the respective carrying amount . we considered this a triggering event under gaap and performed an interim evaluation of goodwill as of june 1 , 2009. as a result of that goodwill impairment evaluation , we recorded a goodwill impairment charge of $ 235.0 million in the second quarter of 2009. this charge was comprised of $ 207.0 million for our corporate segment and $ 28.0 million for the cdw advanced services business . for financial reporting purposes , the cdw advanced services business is combined with canada and shown as other. we performed our annual evaluation of goodwill for 2009 as of december 1. our public segment , canada and cdw advanced services reporting units passed the first step of the goodwill evaluation ( with the fair value exceeding the carrying value by 9 % , 30 % , and 35 % , respectively ) while our corporate segment reporting unit did not pass the first step . accordingly , we performed the second step of the goodwill evaluation for our corporate segment reporting unit , the results of which did not require us to record an impairment charge as the implied fair value of goodwill of this reporting unit exceeded the carrying value of goodwill by 10 % . in addition to the goodwill evaluations noted above , we recorded $ 6.8 million of goodwill in the fourth 32 quarter of 2009 for certain trade credits for periods prior to the acquisition which was immediately impaired upon recognition . the goodwill balances at december 31 , 2009 for our corporate , public and other segments were $ 1,223.0 million , $ 907.3 million and $ 77.1 million , respectively . the total goodwill impairment charge of $ 1,712.0 million in 2008 was comprised of $ 1,359.0 million for our corporate segment and $ 353.0 million for our public segment , and was primarily the result of deteriorating macroeconomic conditions during the fourth quarter of 2008. see note 4 to our consolidated financial statements for further information on goodwill and the related impairment charges . the goodwill balances at december 31 , 2008 for our corporate , public and other segments were $ 1,430.0 million , $ 907.3 million and $ 104.7 million , respectively . loss from operations the following table presents loss from operations by segment , in dollars and as a percentage of net sales , and the year-over-year percentage change in loss from operations for the years ended december 31 , 2009 and 2008 : replace_table_token_13_th ( 1 ) segment loss from operations includes the segment 's direct operating income ( loss ) and allocations for headquarters ' costs and expenses , allocations for logistics services , certain inventory adjustments and volume rebates and cooperative advertising from vendors . ( 2 ) includes headquarters ' function costs that are not allocated to the segments . the loss from operations was $ 31.9 million in 2009 , compared to a loss of $ 1,387.1 million in 2008. the operating losses were due to the previously discussed goodwill impairment charges of $ 241.8 million in 2009 and $ 1,712.0 million in 2008. excluding goodwill impairment charges , operating income decreased $ 115.0 million , or 35.4 % , in 2009 compared to 2008. this decrease was driven by lower gross profit from lower margins on the 11.3 % net sales decline for 2009 due to the economic slowdown , partially	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 from operating , investing and financing activities were as follows : replace_table_token_15_th operating activities net cash provided by operating activities for 2010 increased $ 328.4 million compared to 2009. this increase was driven primarily by changes in our investment in working capital between periods . for 2010 , the change in net working capital , excluding cash and cash equivalents , contributed $ 168.5 million to cash compared to a change in net working capital for 2009 that decreased cash by $ 27.1 million . our investment in working capital , excluding cash and cash equivalents , was lower at december 31 , 2010 compared to the prior year primarily due to an increase in accounts payable as we reduced the amount of 35 accelerated payments we made to in exchange for early pay discounts at december 31 , 2010 compared to the prior year end . accounts payable also increased more significantly in 2010 compared to the prior year to support the growth of the business and increased inventory levels . net income as adjusted for non-cash items also increased $ 132.8 million between years given the improved operating performance in 2010. net cash provided by operating activities for 2009 decreased $ 75.8 million compared to 2008. this decrease was the result of a $ 75.7 million decrease between years in net income as adjusted for non-cash items , as the 11.3 % decline in net sales for 2009 led to lower earnings in 2009 compared to 2008. the impact of our investment in working capital on cash was essentially flat between years ; however , there were significant changes in the relative levels of certain components . accounts receivable increased $ 131.3 million during 2009 which reflected the fourth quarter 2009 increase in net sales of 1.7 % between periods and an increase in days sales outstanding primarily for our public segment . accounts receivable decreased $ 116.7 million during 2008 primarily due to a fourth quarter 2008 decline in net sales of 9.4 % between periods , reflecting the slowdown in the economy .
ecu netbacks in the first quarter of 2014 are forecast to be lower than the fourth quarter of 2013 as a result of lower caustic soda prices partially offset by higher chlorine prices . chemical distribution segment income was $ 9.7 million in 2013 compared to $ 4.5 million in 2012. chemical distribution segment income was higher than the prior year as a result of the additional period of our ownership . depreciation and amortization expense included in segment income for the years ended december 31 , 2013 and 2012 of $ 15.4 million and $ 5.5 million , respectively , were primarily associated with the acquisition fair valuing of ka steel . as a result of acquiring ka steel in august of 2012 , we anticipate realizing approximately $ 35 million of annual synergies at the end of three years . these synergies include opportunities to sell additional volumes of products we produce such as caustic soda , bleach , hydrochloric acid and potassium hydroxide through ka steel and to optimize freight cost and logistics assets between our chlor alkali products segment and ka steel . winchester segment income was $ 143.2 million in 2013 , which represented the highest level of segment income in at least the last two decades , improved 159 % compared to 2012 segment income of $ 55.2 million . the increase in segment income compared to last year reflects the impact of increased volumes due to the continuation of the stronger than historical demand that began in the fourth quarter of 2012 , improved selling prices and decreased costs , including the impact of decreased costs associated with our new centerfire operation in oxford , ms. 21 other ( expense ) income in 2013 included a gain of $ 6.5 million on the sale of our equity interest in a limited liability company that owns a bleach related chemical manufacturing facility ( bleach joint venture ) . income tax expense for 2013 included $ 11.4 million of favorable adjustments associated with the expiration of the statutes of limitations in federal and state jurisdictions , $ 8.3 million of benefit associated with reductions in valuation allowances on our capital loss carryforwards and $ 1.9 million of benefit associated with the research credit under section 41 of the u.s. internal revenue code ( research credit ) , which were partially offset by $ 1.8 million of expense associated with changes in tax contingencies and $ 1.3 million of expense associated with increases in valuation allowances on certain state tax credits carryforwards . during 2013 , we entered into sale/leaseback agreements for chlorine , caustic soda and bleach railcars and bleach trailers . we received proceeds from the sales of $ 35.8 million . in december 2013 , we repaid $ 12.2 million due under the annual requirements of the sunbelt notes . in january 2013 , we also repaid the $ 11.4 million 6.5 % senior notes ( 2013 notes ) , which became due . these were redeemed using cash . during 2013 , we purchased and retired 1.5 million shares with a total value of $ 36.2 million under the share repurchase plan approved by our board of directors on july 21 , 2011. restructurings on december 9 , 2010 , our board of directors approved a plan to eliminate our use of mercury in the manufacture of chlor alkali products . under the plan , the 260,000 tons of mercury cell capacity at our charleston , tn facility was converted to 200,000 tons of membrane capacity capable of producing both potassium hydroxide and caustic soda . the board of directors also approved plans to reconfigure our augusta , ga facility to manufacture bleach and distribute caustic soda , while discontinuing chlor alkali manufacturing at this site . we based our decision to convert and reconfigure on several factors . first , during 2009 and 2010 we had experienced a steady increase in the number of customers unwilling to accept our products manufactured using mercury cell technology . second , there was federal legislation passed in 2008 governing the treatment of mercury that significantly limited our recycling options after december 31 , 2012. we concluded that exiting mercury cell technology production after 2012 represented an unacceptable future cost risk . further , the conversion of the charleston , tn plant to membrane technology reduced the electricity usage per ecu produced by approximately 25 % . the decision to reconfigure the augusta , ga facility to manufacture bleach and distribute caustic soda removed the highest cost production capacity from our system . mercury cell chlor alkali production at the augusta , ga facility was discontinued at the end of september 2012 and the conversion at charleston , tn was completed in the second half of 2012 with the successful start-up of two new membrane cell lines . these actions reduced chlor alkali capacity by 160,000 tons . the completion of these projects eliminated our chlor alkali production using mercury cell technology . on november 3 , 2010 , we announced that we had made the decision to relocate the winchester centerfire pistol and rifle ammunition manufacturing operations from east alton , il to oxford , ms. this relocation , when completed , is forecast to reduce winchester 's annual operating costs by approximately $ 35 million to $ 40 million . we expect the centerfire relocation project to generate winchester operating cost savings of $ 24 million to $ 26 million in 2014. consistent with this relocation decision in 2010 , we initiated an estimated $ 110 million five-year project , which includes approximately $ 80 million of capital spending . the capital spending was partially financed by $ 31 million of grants provided by the state of mississippi and local governments . story_separator_special_tag while the success of the first quarter 2014 chlorine price increase and the fourth quarter 2013 caustic soda price increase is not yet known , the majority of the benefit , if realized , would impact second quarter 2014 results . ecu netbacks in the first quarter of 2014 are forecast to be lower than the fourth quarter of 2013 as a result of lower caustic soda prices partially offset by higher chlorine prices . pension and postretirement benefits under asc 715 , we recorded an after-tax charge of $ 7.7 million ( $ 12.5 million pretax ) to shareholders ' equity as of december 31 , 2013 for our pension and other postretirement plans . this charge reflected unfavorable performance on plan assets during 2013 , partially offset by a 60 -basis point increase in the plans ' discount rate . in 2012 , we recorded an after-tax charge of $ 101.9 million ( $ 166.8 million pretax ) to shareholders ' equity as of december 31 , 2012 for our pension and other postretirement plans . this charge reflected a 100-basis point decrease in the plans ' discount rate , partially offset by the favorable performance on plan assets during 2012. in 2011 , we recorded an after-tax charge of $ 29.0 million ( $ 46.8 million pretax ) to shareholders ' equity as of december 31 , 2011 for our pension and other postretirement plans . this charge reflected a 40-basis point decrease in the plans ' discount rate and an unfavorable actuarial change related to mortality tables , partially offset by the favorable performance on plan assets during 2011. the non-cash charges to shareholders ' equity do not affect our ability to borrow under our senior revolving credit facility . during the third quarter of 2012 , the “ moving ahead for progress in the 21st century act ” became law . the new law changes the mechanism for determining interest rates to be used for calculating minimum defined benefit pension plan funding requirements . interest rates are determined using an average of rates for a 25-year period , which can have the effect of increasing the annual discount rate , reducing the defined benefit pension plan obligation , and potentially reducing or eliminating the minimum annual funding requirement . the new law also increased premiums paid to the pbgc . based on our plan assumptions and estimates , we will not be required to make any cash contributions to the domestic qualified defined benefit pension plan at least through 2014 and under the new law may not be required to make any additional contributions for at least the next five years . we do have a small canadian qualified defined benefit pension plan to which we made cash contributions of $ 1.0 million in 2013 and $ 0.9 million in both 2012 and 2011 , and we anticipate approximately $ 1 million of cash contributions in 2014. at december 31 , 2013 , the projected benefit obligation of $ 1,916.6 million exceeded the market value of assets in our qualified defined benefit pension plans by $ 55.9 million , as calculated under asc 715. as part of the acquisition of ka steel , as of december 31 , 2013 , we have recorded a contingent liability of $ 10.0 million for the withdrawal from a multi-employer defined benefit pension plan . as of december 31 , 2013 , we have a $ 0.9 million liability associated with an agreement to withdraw our henderson , nv chlor alkali hourly workforce from a multi-employer defined benefit pension plan . components of net periodic benefit ( income ) costs were : replace_table_token_6_th in june 2011 , we recorded a curtailment charge of $ 1.1 million related to the ratification of a new five and one half year winchester , east alton , il union labor agreement . this curtailment charge was included in restructuring charges . 26 the service cost and the amortization of prior service cost components of pension expense related to employees of the operating segments are allocated to the operating segments based on their respective estimated census data . consolidated results of operations replace_table_token_7_th 2013 compared 2012 sales for 2013 were $ 2,515.0 million compared to $ 2,184.7 million last year , an increase of $ 330.3 million , or 15 % . chemical distribution segment sales increased by $ 250.1 million due to the additional period of our ownership . winchester sales increased by $ 160.0 million , or 26 % , from 2012 primarily due to increased shipments to domestic commercial and law enforcement customers and higher selling prices , partially offset by lower shipments to military and international customers . these increases were partially offset by an increase in the elimination of intersegment sales between the chlor alkali products segment and the chemical distribution segment ( $ 63.2 million ) and a decrease in chlor alkali products ' sales of $ 16.6 million , or 1 % , primarily due to lower product prices , primarily hydrochloric acid and chlorine . our 2013 ecu netbacks decreased 3 % compared to 2012. gross margin increased $ 44.6 million , or 10 % , from 2012 , primarily as a result of increased winchester gross margin ( $ 91.6 million ) , primarily due to increased shipments to domestic commercial customers and improved selling prices , and additional gross margin contributed by the chemical distribution segment ( $ 12.2 million ) due to the additional period of our ownership . these increases were partially offset by lower chlor alkali gross margin ( $ 61.3 million ) , primarily due to lower product prices , primarily hydrochloric acid and chlorine , and higher operating costs associated with planned maintenance outages , higher electricity costs primarily due to increased natural gas prices and higher depreciation expense . these decreases were partially offset by a favorable contract settlement . gross margin as a percentage of sales was	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 other financing arrangements our principal sources of liquidity are from cash and cash equivalents , restricted cash , cash flow from operations and short-term borrowings under our senior revolving credit facility . additionally , we believe that we have access to the debt and equity markets . cash flow from operations is variable as a result of both the seasonal and the cyclical nature of our operating results , which have been affected by seasonal and economic cycles in many of the industries we serve , such as the vinyls , urethanes , bleach , ammunition and pulp and paper . the seasonality of the ammunition business , which is typically driven by the fall hunting season , and the seasonality of the vinyls and bleach businesses , which are stronger in periods of warmer weather , typically cause working capital to fluctuate between $ 50 million to $ 100 million over the course of the year . cash flow from operations is affected by changes in ecu selling prices caused by the changes in the supply/demand balance of chlorine and caustic soda , resulting in the chlor alkali business having significant leverage on our earnings and cash flow . for example , assuming all other costs remain constant and internal consumption remains approximately the same , a $ 10 per ecu selling price change equates to an approximate $ 15 million annual change in our revenues and pretax profit when we are operating at full capacity . for 2013 , cash provided by operating activities increased by $ 37.8 million from 2012 , primarily due to higher earnings and a larger decrease in working capital in 2013. for 2013 , working capital decreased $ 29.6 million compared to a decrease of $ 18.4 million in 2012. the decrease in 2013 was primarily due to decreased receivables of $ 18.9 million , primarily at chemical distribution , and decreased inventory of $ 8.6 million , primarily at chemical distribution and winchester .
except as otherwise required by the context , references in this annual report to : “ great american , ” “ the “ company , ” “ we , ” “ us ” or “ our ” refer to the combined business of great american group , inc. and all of its subsidiaries after giving effect to ( i ) the contribution to great american group , inc. of all of the membership interests of great american group , llc by the members of great american , which transaction is referred to herein as the “ contribution ” , and ( ii ) the merger of alternative asset management acquisition corp. ( “ aamac ” ) with and into its wholly-owned subsidiary , aamac merger sub , inc. , referred to herein as “ merger sub ” , in each case , which occurred on july 31 , 2009 , referred to herein as the “ merger ” . the contribution and merger are referred to herein collectively as the “ acquisition ” ; “ gag , llc ” refers to great american group , llc ; the “ great american members ” refers to the members of great american group , llc prior to the acquisition ; “ phantom equityholders ” refers to certain members of senior management of great american group , llc prior to the acquisition that were participants in a deferred compensation plan . 21 the acquisition on july 31 , 2009 , the company , gag , llc and aamac completed the acquisition . as a result of the acquisition , gag , llc and aamac became subsidiaries of the company . immediately following the consummation of the acquisition , the former shareholders of aamac had an approximate 63 % voting interest in the company and the great american members had an approximate 37 % voting interest in the company . we received net proceeds of $ 69.3 million from aamac as a result of the acquisition and issued 19,346,626 shares of our common stock to aamac shareholders . upon the closing of the acquisition , the great american members received 10,560,000 shares of our common stock and $ 82.4 million consisting of ( i ) cash distributions totaling $ 31.7 million from gag , llc and ( ii ) an aggregate of $ 50.7 million in unsecured subordinated promissory notes . unsecured subordinated promissory notes amounting to an aggregate of $ 9.3 million were issued to the phantom equityholders in settlement of accrued compensation payable pursuant to a deferred compensation plan . notes payable we have entered into multiple amendments to and waivers of our obligations under the unsecured subordinated promissory notes issued in connection with the acquisition . as a result of these amendments and waivers , in 2010 the interest rate was reduced to 3.75 % with respect to an aggregate of $ 52.4 million of the then-outstanding $ 55.6 million in promissory notes . in addition , the maturity date for the then-outstanding $ 47.0 million in notes payable to the great american members was extended to july 31 , 2018 , subject to annual prepayments based upon our cash flow , provided that we are not obligated to make such prepayments if our minimum adjusted cash balance is below $ 20.0 million . the 2010 amendments and waivers also permitted us to defer the payment of interest owed under $ 52.4 million of the notes until july 31 , 2011. effective july 31 , 2011 , we entered into individual amendments with the great american members that increased the principal amount of the promissory notes for the $ 1.8 million of accrued interest that was due to them on july 31 , 2011. the addition to the principal amount will accrue interest at the note rate of 3.75 % and continue to be subject to annual prepayments based upon our cash flow and the maintenance of a minimum adjusted cash balance as provided in the notes prior to the capitalization of the accrued interest . we are not required to make any principal prepayments under these notes for the fiscal years ended december 31 , 2010 and 2011. also effective july 31 , 2011 , we entered into agreements permitting us to defer payment of $ 1.4 million in interest owed to the phantom equityholders from july 31 , 2011 to the fourth quarter of 2011. as of december 31 , 2013 , there was $ 48.8 million in aggregate principal amount outstanding under the notes payable to the great american members and $ 1.7 million in aggregate principal amount outstanding under the notes payable to the phantom equityholders . of this amount , $ 49.8 million accrues interest at 3.75 % and $ 0.7 million accrues interest at 12.0 % . on january 31 , 2014 , the company paid in full the $ 0.7 million of principal balance for the notes to the phantom equityholders that had the 12.0 % interest rate . overview we are a leading provider of asset disposition , valuation and appraisal , and real estate consulting services to a wide range of retail , wholesale and industrial clients , as well as lenders , capital providers , private equity investors and professional service firms throughout the united states , canada and europe . we operate our business in two segments : auction and liquidation solutions and valuation and appraisal services . our auction and liquidation segment seeks to assist clients in maximizing return and recovery rates through the efficient disposition of assets and provide clients with capital advisory , financing and real estate services . such assets include multi-location retail inventory , wholesale inventory , trade fixtures , machinery and equipment , intellectual property and real property . our valuation and appraisal services segment provides our clients with independent appraisals in connection with asset-based loans , acquisitions , divestitures and other business needs . story_separator_special_tag the revenues from lending activities during year ended december 31 , 2012 included interest income and monitoring fees of $ 0.9 million and amortization of discount of $ 4.1 million on a loan receivable related to lending activities in the united kingdom . there were no lending activities in the united kingdom that generated financing revenues during the year ended december 31 , 2013. the decrease in services and fees revenue in the wholesale and industrial auction business was primarily due to a decrease in number of engagements during 2013 as compared to the same period in 2012. the decrease in revenues from our ga keen realty advisors division in 2013 was primarily due to a decrease in the number and size of real estate consulting engagements during 2013 as compared to the same period in 2012. revenues from services and fees during 2013 for retail liquidation engagements included revenues of $ 8.1 million from our participation in the joint venture involving the liquidation of inventory for the going-out-of-business sale of 568 stores of women 's clothing retailer fashion bug . the increase in revenues from our ga capital division was primarily due to an increase in fees earned on capital advisory engagements in 2013 as compared to the same period in 2012. revenues from the sale of goods increased $ 1.9 million , to $ 10.0 million during the year ended december 31 , 2013 , from $ 8.1 million during the year ended december 31 , 2012. in 2013 , revenues from sale of goods included $ 9.3 million of revenues related to the sale of four oil rigs in the third quarter of 2013 that was included in goods held for sale or auction at december 31 , 2012 as more fully discussed above and in note 2 to the consolidated financial statements . gross margin in the auction and liquidation segment for services and fees decreased to 65.7 % of revenues during the year ended december 31 , 2013 , as compared to 69.3 % of revenues during the year ended december 31 , 2012. the decrease in the gross margin during the year ended december 31 , 2013 was primarily due to an increase in revenues earned from lower-margin cost plus fee based liquidation engagements in 2013 as compared to higher margin liquidation engagements where we provided a minimum recovery value for goods sold at bankruptcy liquidation sales . we typically earn higher margins on these types of engagements where we provide a minimum recovery value for goods sold as compared to fee and commission engagements . gross margin from the sales of goods where we held title improved to 20.3 % during the year ended december 31 , 2013 as compared to a gross margin of 10.3 % during the year ended december 31 , 2012. the gross margin in 2013 was favorably impacted by the sale of four oil rigs under a sales-type lease . the gross margins from the sales of goods fluctuates widely from period to period based upon the volume and mix of goods that we take title to in our wholesale auction and liquidation business . these fluctuations make predictions regarding the expected trends in gross margin from the sales of goods inherently uncertain . 26 valuation and appraisal segment : replace_table_token_6_th revenues in the valuation and appraisal segment increased $ 2.1 million , or 8.1 % , to $ 27.6 million during the year ended december 31 , 2013 from $ 25.5 million during the year ended december 31 , 2012. the increase in revenues was primarily due to an increase in revenues of ( a ) $ 0.2 million related to appraisal engagements where we perform valuations for the monitoring of collateral for financial institutions , lenders , and private equity investors ; ( b ) $ 0.9 million for appraisals for machinery and equipment and intellectual property ; and ( c ) $ 1.0 million as a result of the expansion of the appraisal operations in the united kingdom . gross margins in the valuation and appraisal segment decreased to 52.7 % of revenues during the year ended december 31 , 2013 as compared to 54.6 % of revenues during the year ended december 31 , 2012. gross margins in 2013 were unfavorably impacted by an increase in headcount that resulted in an increase in salaries , wages and benefits in 2013 as compared to the same period in 2012. uk retail stores segment : replace_table_token_7_th revenues and cost of goods sold in the uk retail stores segment are from the operation of ten retail stores and internet operations of shoon in the united kingdom . revenues from the sale of retail goods from the shoon stores in 2013 included sales for seven months for the period from january 1 , 2013 through july 31 , 2013. in august 2013 , the shareholder agreement of shoon was amended and restated to eliminate our control rights which resulted in the deconsolidation of shoon . as such , the operating results of shoon are not consolidated with the company 's for any periods after july 31 , 2013. in 2012 , revenues from the sale of retail goods from the shoon included approximately eight months of sales for the period from may 4 , 2012 to december 31 , 2012 , as a result of our acquisition of shoon on may 4 , 2012. the decrease in revenues from the sale of retail goods is primarily due to fewer operating days of the shoon stores in 2013 as compared to the prior year . the decrease in revenues in 2013 was also due to an increase in promotions that resulted in a decrease in average selling prices as compared to the prior year . the decrease in average selling prices from the increase in promotions in 2013 resulted in a decrease in the gross margin to 42.5 % in 2013 , from the 46.4 % gross margin during	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 operations have been funded through a combination of our existing cash on hand , operating profits generated from operations , borrowings under our revolving credit facility , and special purpose financing arrangements . during the years ended december 31 , 2013 , 2012 and 2011 we generated net income of $ 1.1 million , $ 3.5 million and $ 0.6 million , respectively . our cash flows and profitability are impacted by the number and size of retail liquidation engagements we perform on a quarterly or annual basis . our cash flows are also impacted by our lending activities and interest expense on the $ 50.5 million of subordinated , unsecured promissory notes payable to the great american members and phantom equityholders . these factors have resulted in net cash used in operating activities of $ 3.2 million during the year ended december 31 , 2013 , net cash provided by operating activities of $ 16.2 million during the year ended december 31 , 2012 and net cash used in operating activities of $ 2.0 million during the year ended december 31 , 2011. as of december 31 , 2013 , we had $ 18.9 million in unrestricted cash , $ 0.3 million of restricted cash , $ 0.3 million of borrowings outstanding on our accounts receivable revolving credit facility and $ 5.7 million of borrowing outstanding under our $ 100.0 million asset based credit facility . we believe that our current cash and cash equivalents , funds available under our asset based credit facilities and cash expected to be generated from operating activities will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months . we continue to monitor our financial performance to ensure sufficient liquidity to fund operations . our principal sources of liquidity to finance our business is our existing cash on hand , cash flows generated from operating activities , funds available under revolving credit facilities and special purpose financing arrangements .
we intend for the following discussion of our financial condition and results of operations to provide information that will assist in understanding our consolidated financial statements , the changes in certain key items in those financial statements from period to period , and the primary factors that accounted for those changes , as well as how certain accounting principles , policies and estimates affect our consolidated financial statements . 26 critical accounting policies and estimates the preparation of financial statements in conformity with accounting principles generally accepted in the united states of america requires us to make estimates and judgments that 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 revenues and expenses during the reporting period . on an on-going basis , we evaluate our estimates and judgments , including those related to revenue recognition , allowances for sales returns and doubtful accounts , inventory valuation , our review for impairment of long-lived assets , intangible assets and goodwill , business combinations , income taxes and stock-based compensation expense . actual results may differ from these judgments and estimates , and they may be adjusted as more information becomes available . any adjustment may be significant and may have a material impact on our consolidated financial position or results of operations . an accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made , if different estimates reasonably may have been used , or if changes in the estimate that are reasonably likely to occur may materially impact the financial statements . management believes the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements . in addition to the accounting policies mentioned below , see `` item 8. financial statements and supplementary data — notes to consolidated financial statements — note 2 `` for other significant accounting policies . revenue recognition we recognize revenue on the sale of products when title of the goods has transferred , there is persuasive evidence of an arrangement ( such as a purchase order from the customer ) , the sales price is fixed or determinable and collectability is reasonably assured . a provision is recorded for estimated sales returns and allowances and is deducted from gross sales to arrive at net sales in the period the related revenue is recorded . these estimates are based on historical sales returns and allowances , analysis of credit memo data and other known factors . actual returns and claims in any future period are inherently uncertain and thus may differ from our estimates . if actual or expected future returns and claims are significantly greater or lower than the reserves that we have established , we will record a reduction or increase to net revenues in the period in which we make such a determination . we accrue for discounts and rebates based on historical experience and our expectations regarding future sales to our customers . these accruals are recorded as a reduction to sales in the same period as the related revenues . changes in such accruals may be required if future rebates and incentives differ from our estimates . revenue for the sale of tooling is recognized when the related tooling has been provided , customer acceptance documentation has been obtained , the sales price is fixed or determinable and collectability is reasonably assured . we generate service revenue , which is paid monthly , as a result of providing consumer support programs to some of our customers through our call centers . these service revenues are recognized when services are performed , persuasive evidence of an arrangement exists ( such as when a signed agreement is received from the customer ) , the sales price is fixed or determinable , and collectability is reasonably assured . we license our intellectual property including our patented technologies , trademarks , and database of infrared codes . when our license fees are paid on a per unit basis we record license revenue when our customers ship a product incorporating our intellectual property , persuasive evidence of an arrangement exists , the sales price is fixed or determinable , and collectability is reasonably assured . when a fixed upfront license fee is received in exchange for the delivery of a particular database of infrared codes that represents the culmination of the earnings process , we record revenues when delivery has occurred , persuasive evidence of an arrangement exists , the sales price is fixed or determinable and collectability is reasonably assured . revenue for term license fees is recognized on a straight-line basis over the effective term of the license when we can not reliably predict in which periods , within the term of the license , the licensee will benefit from the use of our patented inventions . allowance for doubtful accounts we maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make payments for products sold or services rendered . the allowance for doubtful accounts is estimated based on a variety of factors , including credit reviews , historical experience , length of time receivables are past due , current economic trends and changes in customer payment behavior . we also record specific provisions for individual accounts when we become aware of a customer 's inability to meet its financial obligations to us , such as in the case of bankruptcy filings or deterioration in the customer 's operating results or financial position . our historical reserves have been sufficient to cover losses from uncollectible accounts . story_separator_special_tag the decrease in our effective tax rate was due primarily to the recording of $ 0.5 million in tax refunds in 2015 related to tax incentives in china for the years 2012 through 2014. historically a significant portion of our foreign taxable income has been generated in the prc , and we expect this trend to continue . year ended december 31 , 2014 compared to year ended december 31 , 2013 ( `` 2013 `` ) net sales . net sales for 2014 were $ 562.3 million , an increase of 6.2 % compared to $ 529.4 million in 2013. net sales by our business and consumer lines were as follows : replace_table_token_8_th net sales in our business lines ( subscription broadcasting , oem , and computing companies ) were 90.2 % of net sales in 2014 compared to 89.9 % in 2013. net sales in our business lines in 2014 increased by 6.6 % to $ 507.1 million from $ 475.7 million in 2013. the increase was primarily due to an increase in remote control sales to consumer electronics companies in asia , an increase in licensing revenue , growth in sales of our embedded chip solutions to smart device manufacturers , and increased market share in european subscription broadcasting . net sales in our consumer lines ( one for all® retail and private label ) were 9.8 % of net sales in 2014 compared to 10.1 % in 2013. net sales in our consumer lines in 2014 increased by 2.8 % to $ 55.2 million from $ 53.7 million in 2013. international retail sales increased 3.8 % from $ 49.6 million in 2013 to $ 51.5 million in 2014 due primarily to increased distribution in southern european countries and latin america as well as increased demand resulting from the 2014 fifa world cup . gross profit . gross profit in 2014 was $ 166.9 million compared to $ 151.5 million in 2013. gross profit as a percent of sales increased to 29.7 % in 2014 from 28.6 % in 2013. the gross margin percentage was favorably impacted by an increase in licensing revenue associated with the smart device channel and , to a lesser extent , the strengthening of the british pound compared to the u.s. dollar . partially offsetting these favorable items was an increase in sales to certain large customers that yield a lower gross margin than our company 's average . research and development expenses . r & d expenses increased 3.2 % to $ 17.0 million in 2014 from $ 16.4 million in 2013. this increase was in line with our strategic initiatives and was primarily driven by additional r & d efforts dedicated to developing new product offerings for new and existing product categories . selling , general and administrative expenses . sg & a expenses increased 5.6 % to $ 108.6 million in 2014 from $ 102.9 million in 2013. this increase was driven primarily by increased incentive compensation costs as a result of our strong financial performance in the current year as well as an increase in external legal expenses related to patent litigation cases . in addition , in an effort to further support the smart device channel , we increased headcount within our global engineering team which resulted in higher payroll costs in 2014. interest income ( expense ) , net . net interest income was $ 11 thousand in 2014 compared net interest income of $ 51 thousand in 2013 . 32 other income ( expense ) , net . net other expense was $ 0.8 million in 2014 compared to net other expense of $ 3.2 million in 2013. this decrease was driven primarily by a decrease in foreign currency losses associated with fluctuations in foreign currency rates related to the chinese yuan renminbi , argentinian peso and brazilian real . income tax expense . income tax expense was $ 7.9 million in 2014 compared to $ 6.1 million in 2013 and our effective tax rate was 19.6 % in 2014 compared to 20.9 % in 2013. the decrease in our effective tax rate was due primarily to the recording of $ 0.4 million of additional tax reserves in the second quarter of 2013 resulting from a tax audit in hong kong for years preceding our 2010 acquisition of enson assets limited . story_separator_special_tag contractual obligations the following table summarizes our contractual obligations and the effect these obligations are expected to have on our liquidity and cash flow in future periods . replace_table_token_11_th ( 1 ) purchase obligations consist of contractual payments to purchase tooling and other fixed assets . ( 2 ) contingent consideration consists of contingent payments related to our purchase of the net assets of ecolink . liquidity historically , we have utilized cash provided from operations as our primary source of liquidity , as internally generated cash flows have been sufficient to support our business operations , capital expenditures and discretionary share repurchases . more recently we have utilized our revolving line of credit to fund an increased level of share repurchases and our recent acquisition of the net assets of ecolink . we anticipate that we will continue to utilize both cash flows from operations and our revolving line of credit to support ongoing business operations , capital expenditures and future discretionary share repurchases . our working capital needs have typically been greatest during the third and fourth quarters when accounts receivable and inventories increase in connection with the fourth quarter holiday selling season and when inventory levels increase in anticipation of factory closures in observance of chinese new year . we believe our current cash balances , anticipated cash flow to be generated from operations and available borrowing resources will be sufficient to cover expected cash outlays during the next twelve months ; however , because our cash is located in various jurisdictions throughout the world , we may at times need to increase borrowing from our revolving line 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 sources and uses of cash replace_table_token_9_th replace_table_token_10_th net cash provided by operating activities decreased $ 37.4 million in 2015 when compared to 2014 , primarily due to the net impact of changes in working capital needs associated with inventories , accounts receivable and accounts payable . in 2015 we deliberately increased our inventory levels in order to meet the strong demand for our higher end products in the subscription broadcast channel as well as prepare for the manufacturing transition of certain products from our southern china factory to our northern china factory . with respect to accounts receivable , we experienced a greater growth in outstanding accounts receivable in 2015 as a result of increased sales levels . additionally , days sales outstanding increased from 64 days at december 31 , 2014 to 68 days at december 31 , 2015 as a result of us extending longer payment terms to a couple of significant customers . increased cash inflows from accounts payable were largely attributable to the increase in inventories as well as an effort to extend payment terms with certain vendors . net cash provided by operating activities increased $ 32.8 million in 2014 when compared to 2013 , primarily due to a $ 20.8 million increase in cash flows associated with operating assets and liabilities and a $ 9.6 million increase in net income . with respect to operating assets and liabilities , improved vendor management helped drive a $ 17.7 million increase in cash flows associated with accounts payable and accrued expenses . additionally , cash flows associated with inventories improved by $ 7.2 million as our inventory turns increased to 4.1
we believe this methodology achieves a reliable measure of the revenue from the consulting services we provide to our customers under fixed-price contracts . management judgments and estimates must be made and used in connection with the revenues recognized in any accounting period . these judgments and estimates include an assessment of the estimate as to the total effort required to complete fixed-price projects . if we made different judgments or utilized different estimates , the amount and timing of our revenue for any period could be materially different . all contracts are subject to review by management , which requires a positive assessment of the collectability of contract amounts . if , during the course of the contract , we determine that collection of revenue is not reasonably assured , we do not recognize the revenue until its collection becomes reasonably assured , which in those situations would generally be upon receipt of cash . we assess collectability based on a number of factors , including past transaction history with the client , as well as the credit-worthiness of the client . losses on fixed-price contracts are recognized during the period in which the loss first becomes evident . contract losses are determined to be the amount by which the estimated total costs of the contract exceeds the total fixed price of the contract . estimating the allowance for contract losses and doubtful accounts . we make estimates of our ability to collect accounts receivable and our unbilled but recognized work-in-process . in circumstances where we are aware of a specific customer 's inability to meet its financial obligations to us or for disputes with customers that affect our ability to fully collect our accounts receivable and unbilled work-in-process , we record a specific allowance to reduce the net recognized receivable to the amount we reasonably believe will be collected . for all other customers we recognize allowances for contract losses and doubtful accounts taking into consideration factors such as historical write-offs , customer concentration , customer credit-worthiness , current economic conditions , and aging of amounts due . 21 the following table sets forth , for the periods indicated , the percentage of revenues of certain items in our consolidated statements of income and the percentage increase ( decrease ) in the dollar amount of such items year to year : replace_table_token_3_th executive summary revenues for 2017 increased 10 % and revenues before reimbursements also increased 10 % as compared to the prior year . the increase in revenues before reimbursements was due to an increase in billable hours and an increase in billing rates . we continue to see demand for our proactive services in the areas of design and regulatory consulting , specifically related to consumer electronics . we also continue to see demand for our reactive services in construction disputes , medical device litigations , consumer product and automobile recalls , and product liability claims . during 2017 , we had strong growth in our chemical regulation & food safety , construction consulting , human factors , mechanical engineering , and polymer science & materials chemistry practices . we have been engaged to perform human factors assessments by appliance manufacturers , consumer electronics companies , medical device firms , and video game developers , including work in augmented reality . during the year , we worked on a large human factors assessment for a client in the consumer products industry , driving increases in both revenue and profitability . this project represented approximately 6 % of our revenues before reimbursements for 2017 and leveraged staff across many of our practices and offices . during the year , we increased our international construction disputes work with current mining , gas terminal and power plant projects . we also experienced growth from lithium-ion battery consulting for clients in the consumer products , transportation , medical device , and utility industries . our interdisciplinary team of chemists , electrical engineers , materials scientists and mechanical engineers has guided clients with respect to the performance , reliability , and safety of new products , as well as with respect to recalls and litigation matters involving existing products with lithium-ion batteries . 22 net income decreased to $ 41,305,000 during 2017 as compared to $ 47,480,000 during 2016. diluted earnings per share decreased to $ 1.53 for 2017 as compared to $ 1.75 for 2016. the decrease in net income and diluted earnings per share was due to the impact of the new tax legislation . during the fourth quarter of 2017 , we recorded a tax expense of $ 16,507,000 related to the new tax legislation signed into law during the fourth quarter of 2017. we have domestic deferred tax assets primarily associated with our deferred compensation plan and stock-based compensation program , which were previously valued at the federal corporate income tax rate of 35 % . our deferred tax assets were re-measured at the lower enacted corporate tax rate of 21 % which contributed $ 15,137,000 to the increase in income tax associated with the new tax legislation . we also have foreign earnings that were subject to the mandatory repatriation tax . the total mandatory repatriation tax , net of the benefit of our foreign tax credits , contributed $ 1,370,000 to the increase in income tax expense associated with the tax legislation . income before income taxes increased 19 % to $ 82,509,000 during 2017 as compared to $ 69,122,000 during 2016. we were able to improve pre-tax income by effectively managing headcount to align our resources with demand and benefited from a large human factors assessment for a client in the consumer products industry , which resulted in improved utilization and increased leverage of our cost structure . story_separator_special_tag 25 the decrease in revenues from our environmental and health segment was due to a decrease in billable hours . during 2016 , billable hours for this segment decreased by 9.7 % to 262,000 as compared to 290,000 during 2015. utilization decreased to 63 % for 2016 as compared to 65 % for 2015. the decrease in billable hours and utilization was due to completion of a major project during the third quarter of 2015 and lower revenues from the oil and gas and industrial chemicals industries . technical full-time equivalents decreased 6.5 % to 200 during 2016 as compared to 214 for 2015 due to our efforts to align resources with anticipated demand . compensation and related expenses fiscal years percent ( in thousands except percentages ) 2016 2015 change compensation and related expenses $ 193,397 $ 184,502 4.8 % percentage of total revenues 61.4 % 59.0 % the increase in compensation and related expenses during 2016 was due to an increase in payroll and a change in the value of assets associated with our deferred compensation plan . during 2016 payroll increased $ 4,730,000 due to the increase in technical full-time equivalent employees and our annual salary increase . during 2016 , deferred compensation expense increased $ 4,186,000 with a corresponding increase to other income as compared with the prior year due to the change in value of assets associated with our deferred compensation plan . this increase consisted of an increase in the value of the plan assets of $ 3,861,000 during 2016 as compared to a decrease in the value of the plan assets of $ 325,000 during 2015. other operating expenses fiscal years percent ( in thousands except percentages ) 2016 2015 change other operating expenses $ 28,397 $ 26,975 5.3 % percentage of total revenues 9.0 % 8.6 % other operating expenses include facilities-related costs , technical materials , computer-related expenses and depreciation and amortization of property , equipment and leasehold improvements . the increase in other operating expenses was primarily due to an increase in depreciation expense of $ 652,000 , an increase in occupancy expense of $ 344,000 , an increase in computer expense of $ 250,000 , and several individually insignificant increases , which were associated with the increase in technical full-time equivalent employees and investments in our corporate infrastructure . reimbursable expenses fiscal years percent ( in thousands except percentages ) 2016 2015 change reimbursable expenses $ 15,879 $ 17,127 ( 7.3 ) % percentage of total revenues 5.0 % 5.5 % the decrease in reimbursable expenses was primarily due to a decrease in project-related costs in our materials & corrosion engineering , polymer science & materials chemistry , and mechanical engineering practices within our engineering and other scientific segment . the amount of reimbursable expenses will vary from year to year depending on the nature of our projects . general and administrative expenses fiscal years percent ( in thousands except percentages ) 2016 2015 change general and administrative expenses $ 15,492 $ 15,295 1.3 % percentage of total revenues 4.9 % 4.9 % the increase in general and administrative expenses during 2016 was primarily due to an increase in travel and meals and bad debt partially offset by a decrease in outside consulting . other income fiscal years percent ( in thousands except percentages ) 2016 2015 change other income $ 7,211 $ 2,200 227.8 % percentage of total revenues 2.3 % 0.7 % 26 other income consists primarily of interest income earned on available cash , cash equivalents and short-term investments , changes in the value of assets associated with our deferred compensation plan and rental income from leasing excess space in our silicon valley facility . the increase in other income was primarily due to the change in value of assets associated with our deferred compensation plan . during 2016 , other income increased $ 4,186,000 with a corresponding increase to deferred compensation expense as compared to 2015. this change consisted of an increase in the value of the plan assets of $ 3,861,000 during 2016 as compared to a decrease in the value of the plan assets of $ 325,000 during 2015. the increase in other income during 2016 was also due to an increase in interest income of $ 476,000 and an increase in rental income of $ 420,000. income taxes replace_table_token_7_th the decrease in income taxes and the decrease in our effective tax rate were primarily due to the early adoption of asu no . 2016-09 , on a prospective basis , during the first quarter of 2016. under asu no . 2016-09 , excess tax benefits are recorded as an income tax benefit in the consolidated statement of income . prior to the adoption of asu no . 2016-09 , excess tax benefits were recognized in additional paid-in capital . the tax benefit realized during 2016 was $ 4,827,000. excluding the excess tax benefit , the effective tax rate would have been 38.3 % for 2016. story_separator_special_tag 0pt 0 ; text-align : justify `` > as part of our ongoing business , we do not engage in transactions that generate relationships with unconsolidated entities or financial partnerships , such as entities often referred to as structured finance or special purpose entities . 28 non-gaap financial measures regulation g , conditions for use of non-generally accepted accounting principles ( “ non-gaap ” ) financial measures , and other sec regulations define and prescribe the conditions for use of certain non-gaap financial information . generally , a non-gaap financial measure is a numerical measure of a company 's performance , financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with gaap . we closely monitor two financial measures , ebitda and ebitdas , which meet the definition of non-gaap financial measures . we define ebitda as net income before income taxes , interest income ,	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_8_th we financed our business in 2017 through available cash and cash flows from operating activities . we invest our excess cash in cash equivalents and short-term investments . as of december 29 , 2017 , our cash , cash equivalents and short-term investments were $ 196,398,000 compared to $ 173,722,000 at december 30 , 2016. we believe our existing balances of cash , cash equivalents and short-term investments will be sufficient to satisfy our working capital needs , capital expenditures , outstanding commitments , stock repurchases , dividends and other liquidity requirements over at least the next 12 months . generally , our net cash provided by operating activities is used to fund our day-to-day operating activities . first quarter operating cash requirements are generally higher due to payment of our annual bonuses accrued during the prior year . our largest source of operating cash flows is cash collections from our clients . our primary uses of cash from operating activities are for employee-related expenditures , leased facilities , taxes , and general operating expenses including marketing and travel . net cash provided by operating activities was $ 67.8 million for 2017 as compared to $ 66.9 million and $ 60.5 million in 2016 and 2015 , respectively . the increase in net cash provided by operating activities during 2016 as compared to 2015 was primarily due to the early adoption of asu no . 2016-09. under asu no . 2016-09 , the excess tax benefit of $ 4,827,000 for 2016 was classified as an operating activity in the statement of cash flows . the excess tax benefit of $ 6,396,000 for 2015 was classified as a financing activity . during 2017 , 2016 and 2015 , net cash used in investing activities was primarily related to the purchase and sale or maturity of short-term investments .
we and actavis are also exploring development opportunities to enhance the clinical profile of linzess by seeking to expand its utility in its indicated populations , as well as studying linaclotide in additional indications and populations and in new formulations to assess its potential to treat various gi conditions . in november 2014 , as part of this strategy we and actavis initiated a phase iii clinical trial in the u.s. evaluating a 72 mcg dose of linaclotide in adult patients with cic to provide a broader range of treatment options to physicians and adult cic patients . in addition to linaclotide-based opportunities , we are advancing multiple gi development programs as well as further leveraging our pharmacological expertise in gc pathways that we established through the development of linaclotide , a guanylate cyclase type-c , or gc-c , agonists , to advance a second gc program targeting soluble guanylate cyclase , or sgc . sgc is a validated mechanism with the potential for broad therapeutic utility and multiple opportunities for product development in cardiovascular disease and other indications . 54 we were incorporated in delaware on january 5 , 1998 as microbia , inc. on april 7 , 2008 , we changed our name to ironwood pharmaceuticals , inc. we currently operate in one reportable business segmenthuman therapeutics . to date , we have dedicated substantially all of our activities to the research , development and commercialization of linaclotide , as well as to the research and development of our other product candidates . we have incurred significant operating losses since our inception in 1998. as of december 31 , 2014 , we had an accumulated deficit of approximately $ 967.5 million and we expect to continue to incur net losses for the foreseeable future . in february 2012 , we sold 6,037,500 shares of our class a common stock through a firm commitment , underwritten public offering at a price to the public of $ 15.09 per share . as a result of the offering , we received aggregate net proceeds , after underwriting discounts and commissions and other offering expenses , of approximately $ 85.2 million . on january 4 , 2013 , we closed a private placement of $ 175.0 million in aggregate principal amount of 11 % notes due on or before june 15 , 2024. as a result of the debt offering , we received aggregate net proceeds , after offering expenses , of approximately $ 167.3 million . during the second quarter of 2013 , we sold 11,204,948 shares of our class a common stock through a firm commitment , underwritten public offering at a price to the public of $ 13.00 per share . as a result of the offering , we received aggregate net proceeds , after underwriting discounts and commissions and other offering expenses , of approximately $ 137.8 million . in february 2014 , we sold 15,784,325 shares of our class a common stock through a firm commitment , underwritten public offering at a price to the public of $ 12.75 per share . as a result of this offering , we received aggregate net proceeds , after underwriting discounts and commissions and other offering expenses , of approximately $ 190.4 million . the net proceeds from this offering are being used to support the commercialization of linzess in the u.s. and to fund linaclotide and other development opportunities to advance our strategy to grow a leading gi company , in addition to general corporate purposes . on january 8 , 2014 , we announced a headcount reduction of approximately 10 % to align our workforce with our strategy to grow a leading gi therapeutics company . as maximizing linzess is core to our strategy , our field-based sales force and medical science liaison teams were excluded from this reduction in workforce . during the three months ended march 31 , 2014 , we substantially completed the implementation of this reduction in workforce and recorded approximately $ 4.3 million of costs in research and development and selling , general and administrative expenses , including employee severance , benefits and related costs . we did not record any additional charges associated with this workforce reduction during the year ended december 31 , 2014. all payments related to this reduction in workforce were made by the end of 2014. financial overview revenue . revenue to date has been generated primarily through our collaboration agreements with actavis and astrazeneca , and our license agreements with almirall and astellas . the terms of these agreements contain multiple deliverables which may include ( i ) licenses , ( ii ) research and development activities , and ( iii ) the manufacture of finished drug product , active pharmaceutical ingredient , or api , or development materials for the collaborative partners . payments to us may include one or more of the following : nonrefundable license fees , payments for research and development activities , payments for the manufacture of finished drug product , api or development materials , payments based upon the achievement of certain milestones and royalties on product sales . additionally , we receive our share of the net profits or bear our share of the net losses from the sale of linaclotide in the u.s. and china . linzess launched in the u.s. in december 2012 and constella became commercially available in certain european countries beginning in the second quarter of 2013. linaclotide is also approved in a number of other countries . 55 we record our share of the net profits and losses from the sales of linzess in the u.s. on a net basis and present the settlement payments as collaborative arrangements revenue or collaboration expense , as applicable . net profits or losses consist of net sales to third-party customers in the u.s. less the cost of goods sold as well as selling , general and administrative expenses . story_separator_special_tag we believe that our application of the following accounting policies , each of which require significant judgments and estimates on the part of management , are the most critical to aid in fully understanding and evaluating our reported financial results . our significant accounting policies are more fully described in note 2 , summary of significant accounting policies , to our consolidated financial statements appearing elsewhere in this annual report on form 10-k. 60 revenue recognition our revenue is generated primarily through collaborative research and development and licensing agreements . the terms of these agreements contain multiple deliverables which may include ( i ) licenses , ( ii ) research and development activities , including participation on joint steering committees , and ( iii ) the manufacture of finished drug product , api or development materials for the collaborative partner , which are reimbursed at a contractually determined rate . non-refundable payments to us under these agreements may include ( i ) up-front license fees , ( ii ) payments for research and development activities , ( iii ) payments for the manufacture of finished drug product , api or development materials , ( iv ) payments based upon the achievement of certain milestones and ( v ) royalties on product sales . additionally , we may receive our share of the net profits or bear our share of the net losses from the sale of linaclotide in the u.s. and china through our collaborations with actavis and astrazeneca , respectively . we evaluate revenue from new agreements that have multiple elements under the guidance of accounting standards update , or asu , no . 2009-13 , multiple-deliverable revenue arrangements , or asu 2009-13. we also evaluate whether amendments to our multiple element arrangements are considered material modifications that are subject to the application of asu 2009-13. this evaluation requires us to assess all relevant facts and circumstances and to make subjective determinations and judgments . as part of this assessment , we consider whether the modification results in a material change to the arrangement , including whether there is a change in total arrangement consideration that is more than insignificant , whether there are changes in the deliverables included in the arrangement , whether there is a change in the term of the arrangement and whether there is a significant modification to the delivery schedule for contracted deliverables . we identify the deliverables included within multiple element agreements and evaluate which deliverables represent separate units of accounting . we account for those components as separate elements when the following criteria are met : the delivered items have value to the customer on a stand-alone basis ; and if there is a general right of return relative to the delivered items , delivery or performance of the undelivered items is considered probable and within our control . this evaluation requires subjective determinations and requires us to make judgments about the individual deliverables and whether such deliverables are separable from the other aspects of the contractual relationship . in determining the units of accounting , we evaluate certain criteria , including whether the deliverables have standalone value , based on consideration of the relevant facts and circumstances for each arrangement . factors considered in this determination include the research , manufacturing and commercialization capabilities of the partner and the availability of peptide research and manufacturing expertise in the general marketplace . in addition , we consider whether the collaborator can use the license or other deliverables for their intended purpose without the receipt of the remaining elements , and whether the value of the deliverable is dependent on the undelivered items and whether there are other vendors that can provide the undelivered items . the consideration received is allocated among the separate units of accounting using the relative selling price method , and the applicable revenue recognition criteria are applied to each of the separate units . we determine the estimated selling price for deliverables using vendor-specific objective evidence , or vsoe , of selling price , if available , third-party evidence , or tpe , of selling price if vsoe is not available , or best estimate of selling price , or besp , if neither vsoe nor tpe is available . determining the besp for a deliverable requires significant judgment . we use besp to estimate the selling price for licenses to our proprietary technology , since we often do not have vsoe or tpe of selling price for these deliverables . in those circumstances where we utilize besp to determine the estimated selling 61 price of a license to our proprietary technology , we consider market conditions as well as entity-specific factors , including those factors contemplated in negotiating the agreements as well as internally developed models that include assumptions related to the market opportunity , estimated development costs , probability of success and the time needed to commercialize a product candidate pursuant to the license . in validating our besp , we evaluate whether changes in the key assumptions used to determine the besp will have a significant effect on the allocation of arrangement consideration between multiple deliverables . we recognize revenue when there is persuasive evidence that an arrangement exists , services have been rendered or delivery has occurred , the price is fixed or determinable , and collection is reasonably assured . for certain of our arrangements , particularly our license agreement with almirall , it is required that taxes be withheld on payments to us . we have adopted a policy to recognize revenue net of these tax withholdings . net profit or net loss sharing the determination of whether we should recognize revenue on a gross or net basis involves judgment based on the relevant facts and circumstances . in accordance with asc 808 topic , collaborative arrangements , and asc 605-45 , principal agent considerations , we consider the nature and contractual terms of the arrangement and the nature of our 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.	cash flows from operating activities net cash used in operating activities totaled approximately $ 155.6 million for the year ended december 31 , 2014. the primary uses of cash were our net loss of approximately $ 189.6 million and changes in assets and liabilities of approximately $ 30.1 million resulting primarily from an increase in related party accounts receivable principally due to higher amounts due from actavis due to increased profits on the sale of linzess , an increase in purchases of linaclotide api , an increase in prepaid expenses and other assets , and an increase in deferred rent . these uses of cash were partially offset by non-cash items of approximately $ 64.2 million , including approximately $ 26.2 million in share-based compensation expense , approximately $ 20.3 million due to the write-down of inventory to net realizable value , approximately $ 12.3 million in depreciation and amortization expense of property and equipment , approximately $ 2.6 million in losses on facility subleases , approximately $ 1.6 million in non-cash interest expense and approximately $ 1.1 million in accretion of discounts and premiums on available-for-sale securities . net cash used in operating activities totaled approximately $ 273.4 million for the year ended december 31 , 2013. the primary uses of cash were our net loss of approximately $ 272.8 million and changes in assets and liabilities of approximately $ 35.7 million resulting primarily from a decrease in accounts payable and accrued expenses , including accrued research and development costs due to timing of payments , an increase in inventory for linaclotide api , a decrease in deferred revenue associated with the astellas license agreement , a decrease in deferred rent and an increase accounts receivable .
the following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in part ii , item 8 of this form 10-k. all information presented herein is based on our fiscal calendar . unless otherwise stated , references to particular years or quarters refer to our fiscal years ended in april and the associated quarters of those fiscal years . we assume no obligation to revise or update any forward-looking statements for any reason , except as required by law . overview u.s. gold corp. , formerly known as dataram corporation ( the “ company ” ) , was originally incorporated in the state of new jersey in 1967 and was subsequently re-incorporated under the laws of the state of nevada in 2016. effective june 26 , 2017 , the company changed its legal name to u.s. gold corp. from dataram corporation . on may 23 , 2017 , the company merged with gold king corp. ( “ gold king ” ) , in a transaction treated as a reverse acquisition and recapitalization , and the business of gold king became the business of the company . we are a gold and precious metals exploration company pursuing exploration and development opportunities primarily in nevada and wyoming . none of our properties contain proven and probable reserves , and all of our activities on all of our properties are exploratory in nature . on july 6 , 2016 , the we filed a certificate of amendment to our articles of incorporation with the secretary of state of nevada in order to effectuate a reverse stock split of our issued and outstanding common stock per share on a one for three basis , effective on july 8 , 2016. subsequently , on may 3 , 2017 , we filed another certificate of amendment to our articles of incorporation , as amended , with the secretary of state of the state of nevada in order to effectuate a reverse stock split of our issued and outstanding common stock on a one for four basis . all share and per share values of our common stock for all periods presented in the accompanying consolidated financial statements are retroactively restated for the effect of the reverse stock splits . on july 31 , 2017 , our board of directors , or board , reviewed and approved the recommendation of management to consider strategic options for the legacy business ( “ dataram memory ” ) including the sale of the business , within the next 12 months . we sold the dataram memory business on october 13 , 2017 for a purchase price of $ 900,000. we received net proceeds from the sale of dataram memory business of $ 326,404 after payment of fees related to the sale such as legal and commission expenses and other liabilities assumed . on january 29 , 2018 , we paid a distribution of $ 251,316 to shareholders of record of dataram memory as of the close of business on may 8 , 2017 , or $ 0.2086 per share . as such , the legacy business transactions and operations are reflected on the balance sheet and statement of operations as “ discontinued operation ” . we are an exploration company that owns certain mining leases and other mineral rights comprising the copper king project in wyoming and the keystone and gold bar north projects in nevada . none of our properties contain any proven and probable reserves under sec industry guide 7 , and all of our activities on all of our properties are exploratory in nature . 39 summary of activities for the year ended april 30 , 2019 copper king project drill hole analysis at copper king property , wy on february 21 , 2019 , we announced that datamine of denver , co , completed a comprehensive drill hole analysis of our copper king gold-copper-silver-zinc deposit , located in southeast wyoming . see , item 1. business , copper king project - drill hole analysis at copper king property , wy , above . preliminary economic assessment – copper king property , wy a preliminary economic assessment ( pea ) for the historic copper king deposit was conducted by mine development associates ( mda ) and reported january 11 , 2018. see , item 1. business , copper king project - preliminary economic assessment – copper king property , wy , above . keystone project keystone plan of operations ( poo ) approval and fall 2018 drill program on september 7 , 2018 the u.s. federal government 's department of the interior , bureau of land management ( blm ) approved the previously filed environmental assessment ( ea ) and plan of operations ( poo ) for u.s. gold corp 's 100 % -owned keystone project on nevada 's cortez gold trend . see , item 1. business , keystone project , cortez trend , keystone plan of operations ( poo ) approval and fall 2018 drill program , above . master of science thesis – keystone property , nv during the quarter ended january 31 , 2019 , gabriel e. aliaga completed his master thesis in geology . see , item 1. business , keystone project , cortez trend , nevada - master of science thesis – keystone property , nv , above . drill results at keystone property , nv on march 6 , 2019 , we announced results of its 2018 drilling program and receipt of all the assay results from the 20 square mile , keystone project , in nevada 's cortez trend . see , item 1. business , keystone project , cortez trend , nevada - drill results at keystone property , nv , above . story_separator_special_tag financing activities during the year ended april 30 , 2019 , we sold 290,066 shares of common stock to several investors under our atm agreement with wainwright for aggregate net proceeds of approximately $ 220,000 between december 2018 and march 2019. subsequent to the year ended april 30 , 2019 , on june 19 , 2019 , we entered into a securities purchase agreement with certain purchasers relating to the offer and sale of 1,250 series f preferred units , for $ 2,000 per unit , for an aggregate purchase price of $ 2,500,000. we received net proceeds , after estimated expenses of the offering , of approximately $ 2.4 million . 43 cash flows from financing activities continued to provide the primary source of our liquidity . we are anticipating raising additional capital but there can be no assurance that it will be able to do so or if the terms will be favorable . the consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts of and classification of liabilities that might be necessary in the event we can not continue in existence . management has determined that additional capital will be required in the form of equity or debt securities . there are no assurances that management will be able to raise capital on terms acceptable to us . if we are unable to obtain sufficient amounts of additional capital , we may be required to reduce the scope of our planned exploration activities , which could harm our business , financial condition and operating results . if we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations , the percentage ownership of our stockholders will be reduced , stockholders may experience additional dilution , or the equity securities may have rights preferences or privileges senior to the common stock . if adequate funds are not available to us when needed on satisfactory terms , we may be required to cease operating or otherwise modify our business strategy . contractual obligations our contractual obligations at april 30 , 2019 are summarized as follows : replace_table_token_5_th financing transactions on november 2 , 2018 , we entered into an atm agreement with h.c. wainwright & co. , llc . for the year ended april 30 , 2019 , we sold 290,066 shares of common stock and raised a net proceeds of $ 219,796 , net of issuance costs including legal cost related to the sale of shares of common stock of $ 79,031 , through the atm agreement at prices per share averaging $ 1.03. see , summary of activities for the year ended april 30 , 2019 - atm sales - h.c. wainwright & co. , llc , above . subsequent to the year ended april 30 , 2019 , on june 19 , 2019 , we entered into a securities purchase agreement with certain purchasers relating to the offer and sale of 1,250 series f preferred units , for $ 2,000 per unit , for an aggregate purchase price of $ 2,500,000. we received net proceeds , after estimated expenses of the offering , of approximately $ 2.4 million . see , summary of activities for the year ended april 30 , 2019 - sale of series e preferred units , above . 44 summary cash flows for the years ended april 30 , 2019 and 2018 : for the year ended for the year ended april 30 , 2019 april 30 , 2018 story_separator_special_tag use of estimates and assumptions in preparing the consolidated financial statements , management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet , and revenues and expenses for the period then ended . actual results may differ significantly from those estimates . significant estimates made by management include , but are not limited to valuation of mineral rights , goodwill , stock-based compensation , the assumptions used to fair value of common stock issued and options granted , asset retirement obligation , and the valuation of deferred tax assets and liabilities . stock-based compensation share-based compensation is accounted for based on the requirements of asc 718 , “ compensation – stock compensation ' ( “ asc 718 ” ) which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award ( presumptively , the vesting period ) . asc 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award . pursuant to asc 505 , “ equity – equity based payments to non-employees ” ( “ asc 505-50 ” ) , for share-based payments to consultants and other third-parties , compensation expense is determined at the measurement date which is the grant date . until the measurement date is reached , the total amount of compensation expense remains uncertain . in june 2018 , the fasb issued asu 2018-07 , “ compensation — stock compensation ( topic 718 ) : improvements to nonemployee share-based payment accounting ” , which expands the scope of topic 718 to include all share-based payment transactions for acquiring goods and services from nonemployees . asu 2018-07 specifies that topic 718 applies to all share-based payment transactions in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-based payment awards . asu 2018-07 also clarifies that topic 718 does not apply to share-based payments used to effectively provide ( 1 ) financing to the issuer or ( 2 ) awards granted in conjunction with selling goods or services to customers as part of 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.	net cash used in operating activities $ ( 5,668,894 ) $ ( 6,986,393 ) net cash provided by ( used in ) investing activities $ - $ 305,925 net cash provided by financing activities $ 219,796 $ 7,506,124 cash used in operating activities net cash used in operating activities totaled approximately $ 5.7 million and $ 7.0 million for the years ended april 30 , 2019 and 2018 , respectively . net loss for the years ended april 30 , 2019 and 2018 totaled approximately $ 8.0 million and $ 13.7 million . the adjustments for the non-cash items decreased from the year ended april 30 , 2018 to april 30 , 2019 due primarily the non-recurrence of 2018 impairment expenses of approximately $ 6.1 million . additionally , we expensed a total of $ 2.3 million in stock-based compensation for options and shares issued to employees , consultants and suppliers earlier in fiscal year 2019. we also established a reserve for the entire balance of a $ 435,000 deferred tax asset due to the unlikelihood it will be utilized in the foreseeable future to offset tax liabilities . net changes in operating assets and liabilities are primarily due to net decreases in cash ofapproximately $ 5.4 million and net increases in reclamation of bond deposits of approximately $ 247,000 , offset by a decrease of $ 132,000 in trade accounts payable and an increase of $ 40,000 in accounts payable to related parties during the year ended april 30 , 2019. cash provided by ( used in ) investing activities net cash provided by investing activities totaled approximately $ 0 and $ 306,000 for the year ended april 30 , 2019 and 2018 , respectively .
the loss of any one of our large customers as a result of joint ventures , mergers , acquisitions or other cooperative agreements may result in a material decrease in our revenue . in april 2018 , t-mobile and sprint announced a proposed merger . for the year ended december 31 , 2019 , t-mobile and sprint represented approximately 8 % and 6 % , respectively , of rental revenue . how we evaluate our operations our management uses a variety of financial and operating metrics to analyze our performance . these metrics are significant factors in assessing our operating results and profitability and include : ( 1 ) occupancy ; ( 2 ) operating and maintenance expenses ; ( 3 ) ffo and affo ; and ( 4 ) adjusted ebitda . 55 occupancy the amount of revenue we generate primarily depends on our occupancy rate . as of december 31 , 2019 , we had a 95 % occupancy rate with 1,923 of our 2,025 available tenant sites leased . we believe the infrastructure assets at our tenant sites are essential to the ongoing operations and profitability of our tenants and will be a critical component for the rollout of future technologies such as 5g , internet of things ( iot ) and autonomous vehicles . combined with the challenges and costs of relocating the infrastructure , we believe that we will continue to enjoy high tenant retention and occupancy rates . there has been consolidation in the wireless communication industry historically that has led to certain lease terminations . we believe the impact of past consolidation is already reflected in our occupancy rates . additional consolidation among our tenants in the wireless communication industry ( or our tenants ' sub‑lessees ) may result in lease terminations for certain existing communication sites . any additional termination of leases in our portfolio would result in lower rental revenue , may lead to impairment of our real property interests , or other adverse effects to our business . operating and maintenance expenses substantially all of our tenant sites are subject to triple net or effectively triple net lease arrangements , which require the tenant or the underlying property owner to pay all utilities , property taxes , insurance and repair and maintenance costs . our overall financial results could be impacted to the extent the owners of the fee interest in the real property or our tenants do not satisfy their obligations . additionally , as we deploy smart enabled infrastructure solutions , including smart poles and digital outdoor advertising kiosks , and convert static billboards to digital billboards , we may incur additional operating expenses associated with ground lease payments and other operating expenses to maintain our infrastructure assets . ffo and affo ffo is a non-gaap financial measure of operating performance of an equity reit in order to recognize that income-producing real estate historically has not depreciated on the basis determined under gaap . we calculate ffo in accordance with the standards established by the national association of real estate investment trust ( “ nareit ” ) . ffo represents net income ( loss ) excluding real estate related depreciation and amortization expense , real estate related impairment charges , gains ( or losses ) on real estate transactions , adjustments for unconsolidated joint venture , and distributions to preferred unitholders and noncontrolling interests . ffo is generally considered by industry analysts to be the most appropriate measure of performance of real estate companies . ffo does not necessarily represent cash provided by operating activities in accordance with gaap and should not be considered an alternative to net earnings as an indication of the partnership 's performance or to cash flow as a measure of liquidity or ability to make distributions . management considers ffo an appropriate measure of performance of an equity reit because it primarily excludes the assumption that the value of the real estate assets diminishes predictably over time , and because industry analysts have accepted it as a performance measure . the partnership 's computation of ffo may differ from the methodology for calculating ffo used by other equity reits , and therefore , may not be comparable to such other reits . affo is a non-gaap financial measure of operating performance used by many companies in the reit industry . affo adjusts ffo for certain non-cash items that reduce or increase net income in accordance with gaap . affo should not be considered an alternative to net earnings , as an indication of the partnership 's performance or to cash flow as a measure of liquidity or ability to make distributions . management considers affo a useful supplemental measure of the partnership 's performance . the partnership 's computation of affo may differ from the methodology for calculating affo used by other equity reits , and therefore , may not be comparable to such other reits . we calculate affo by starting with ffo and adjusting for general and administrative expense reimbursement , acquisition-related expenses , unrealized gain ( loss ) on derivatives , straight line rent adjustments , unit-based compensation , amortization of deferred loan costs and discount on secured notes , deferred income tax expense , amortization of above and below market rents , loss on extinguishment of debt , repayments of receivables , adjustments for investment in unconsolidated joint venture , adjustments for drop-down assets and foreign currency transaction gain ( loss ) . the gaap measures most directly comparable to ffo and affo is net income . story_separator_special_tag factors that may influence future results of operations acquisitions and developments we intend to pursue acquisitions of real property interests from third parties , utilizing the expertise of our management and other landmark employees to identify and assess potential acquisitions , for which we may pay landmark mutually agreed reasonable fees . when acquiring real property interests , we will target infrastructure locations that are essential to the ongoing operations and profitability of our tenants , which we expect will result in continued high tenant occupancy and enhance our cash flow stability . we expect the vast majority of our acquisitions will include leases with our tier 1 tenants or tenants whose sub‑tenants are tier 1 companies . additionally , we will focus on infrastructure locations with characteristics that are difficult to replicate in their respective markets , and those with tenant assets that can not be easily moved to nearby alternative sites or replaced by new construction . although our initial portfolio is focused on wireless communication , outdoor advertising and renewable power generation assets in the united states , we intend to grow our initial portfolio of real property interests into other fragmented infrastructure asset classes and expect to continue to pursue acquisitions internationally . during 2017 , the partnership started developing an ecosystem of technologies that provides smart enabled infrastructure including smart poles and digital outdoor advertising kiosks across north america . smart poles are self-contained , neutral-host poles designed for wireless carrier and other wireless operator collocation . the smart poles are designed for macro , mini macro and small cell deployments and will support internet of things ( iot ) , carrier densification needs , private lte networks and other wireless solutions . 59 during the fourth quarter of fiscal year 2018 , the partnership entered into an agreement with dart to develop a smart media and communications platform which will include the deployment of content-rich kiosks and the partnership 's smart enabled infrastructure ecosystem solution on strategic high-traffic dart locations . during 2018 , the partnership entered into an agreement with an outdoor advertising company to convert static billboards to digital billboards . in 2019 , the partnership commenced conversion of certain outdoor advertising sites from static billboards to digital billboards in the u.k. as of december 31 , 2019 and 2018 , the partnership had $ 68.9 million and $ 29.6 million of construction in progress . during the years ended december 31 , 2019 and 2018 , the partnership deployed nine and four infrastructure sites totaling $ 1.0 million and $ 1.5 million , respectively . as we deploy these infrastructure assets , we may incur additional operating expenses associated with ground lease payments and other operating expenses to maintain our infrastructure assets . additionally , the partnership may pursue further development opportunities in the future . investment in unconsolidated joint venture on september 24 , 2018 , the partnership completed the formation of the unconsolidated jv . the partnership contributed 545 tenant site assets to the unconsolidated jv that secured the partnership 's 2018 securitization in exchange for a 50.01 % membership interest in the unconsolidated jv and $ 65.5 million in cash . the partnership does not control the unconsolidated jv and therefore , accounts for its investment in the unconsolidated jv using the equity method of accounting prospectively upon formation of the unconsolidated jv . mergers significant consolidation among our tenants in the wireless communication industry ( or our tenants ' sub‑lessees ) may result in the decommissioning of certain existing communications sites , because certain portions of these tenants ' ( or their sub‑lessees ' ) networks may be redundant . the loss of any one of our large customers as a result of joint ventures , mergers , acquisitions or other cooperative agreements may result in a material decrease in our revenue . in april 2018 , t-mobile and sprint announced a proposed merger . for the year ended december 31 , 2019 , t-mobile and sprint represented approximately 8 % and 6 % , respectively , of rental revenue . revolving credit facility on november 15 , 2018 , the partnership completed its third amended and restated credit facility and obtained commitments from a syndicate of banks with initial borrowing commitments of $ 450.0 million for five-years . additionally , borrowings up to $ 75.0 million may be denominated in gbp , euro , australian dollar and canadian dollar . as of november 1 , 2019 , the outstanding indebtedness under the revolving credit facility denominated in gbp was £40.5 million . loans under the revolving credit facility bear interest at a rate equal to libor , plus a spread ranging from 1.75 % to 2.25 % ( determined based on leverage levels ) . during the three months ended december 31 , 2019 , the applicable spread was 2.25 % . additionally , under the revolving credit facility we will be subject to an annual commitment fee ( determined based on leverage levels ) associated with the available undrawn capacity subject to certain restrictions . as of december 31 , 2019 , the applicable annual commitment rate used was 0.175 % . secured notes on january 15 , 2020 , certain subsidiaries of the partnership entered into a master note purchase and participation agreement pursuant to which such subsidiaries issued and sold an initial $ 170 million aggregate principal amount of 3.90 % series a senior secured notes in a private placement . the senior secured notes mature on january 14 , 2027 and include an interest-only initial term of three years . the net proceeds were used to repay in full the 2016 secured notes by $ 108 million and the revolving credit facility by $ 59 million . changing interest rates and foreign currency exchange rates interest rates have been at or near historic lows in recent years . if interest rates rise , this may impact the availability and terms of debt	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 excess cash flows generated from the operation of such assets are released to the partnership . as of december 31 , 2019 , $ 5.6 million was held in such reserve accounts which are classified as restricted cash on the accompanying consolidated balance sheets . certain information with respect to the secured notes is set forth in note 9 , debt . the dscr is generally calculated as the ratio of annualized net cash flow ( as defined in the applicable indenture ) to the amount of interest , servicing fees and trustee fees required to be paid over the succeeding 12 months on the principal amount of the secured notes , as applicable , that will be outstanding on the payment date following such date of determination . as of december 31 , 2019 , the dscr for the 2017 secured notes and 2016 secured notes is above 2.0 , respectively , and above 1.1 for the 4.38 % senior secured notes . each indenture includes covenants customary for notes issued in rated securitizations . among other things , the related obligors are prohibited from incurring other indebtedness for borrowed money or further encumbering their assets ( as defined in the applicable agreement ) and the organizational documents of the related obligors were amended to contain certain provisions consistent with rating agency securitization criteria for special purposes entities , including that the applicable issuer and guarantor maintain independent directors . as of december 31 , 2019 , the applicable obligors were in compliance with all financial covenants under the secured notes .
and operations as a public company . we do not expect to generate revenue from product sales unless and until we successfully complete development and obtain marketing approval for one or more of our product candidates , which we expect will take a number of years and is subject to significant uncertainty . accordingly , we anticipate that we will need to raise additional capital prior to the commercialization of brincidofovir or any of our other product candidates . until such time that we can generate substantial revenue from product sales , if ever , we expect to finance our operating activities through a combination of equity offerings , debt financings , government or other third-party funding , marketing and distribution arrangements and other collaborations , strategic alliances and licensing arrangements . however , we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all , which would have a negative impact on our financial condition and could force us to delay , limit , reduce or terminate our research and development programs or commercialization efforts . failure to receive additional funding could cause us to cease operations , in part or in full . 40 financial overview revenues to date , we have not generated any revenue from product sales . all of our revenue to date has been derived from government grants and contracts and the receipt of up-front proceeds under our collaboration and license agreement with merck . in february 2011 , we entered into a contract with barda , a u.s. governmental agency that supports the advanced research and development , manufacturing , acquisition , and stockpiling of medical countermeasures . the contract originally consisted of an initial performance period , referred to as the base performance segment , which ended on may 31 , 2013 , plus up to four extension periods of approximately one year each , referred to as option segments . subsequent option segments to the contract are not subject to automatic renewal and are not exercisable at chimerix 's discretion . the contract is a cost plus fixed fee development contract . under the contract as currently in effect , we may receive up to $ 75.8 million in expense reimbursement and $ 5.3 million in fees . in june 2013 , we began performing under the first option segment of the contract during which we may receive up to a total of $ 5.3 million in expense reimbursement and fees , which is planned to end on may 31 , 2014. as of december 31 , 2013 , we had recognized revenue in aggregate of $ 32.7 million with respect to the base performance segment and first extension period . in july 2012 , we entered into a collaboration and license agreement granting merck exclusive worldwide rights to cmx157 , our oral nucleotide compound currently being evaluated to treat hiv infection . under the terms of the agreement , merck receives an exclusive worldwide license for any human use of cmx157 and is responsible for future development and commercialization of cmx157 . following execution of the agreement , we received a $ 17.5 million upfront payment . in addition , we are eligible to receive payments up to $ 151.0 million upon the achievement of certain development and regulatory milestones , as well as tiered royalties on net sales escalating from high single digit to low double digits based on the volume of sales . such royalties continue through the later of expiration of our patent rights or ten years from the first commercial sale on a country-by-country basis . in the future , we may generate revenue from a combination of product sales , license fees , milestone payments and royalties from the sales of products developed under licenses of our intellectual property . we expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing and amount of license fees , milestone and other payments , and the amount and timing of payments that we receive upon the sale of our products , to the extent any are successfully commercialized . if we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval for them , our ability to generate future revenue , and our results of operations and financial position , would be materially adversely affected . research and development expenses since our inception , we have focused our resources on our research and development activities , including conducting preclinical studies and clinical trials , manufacturing development efforts and activities related to regulatory filings for our product candidates . we recognize research and development expenses as they are incurred . our research and development expenses consist primarily of : · salaries and related overhead expenses , which include stock option compensation and benefits , for personnel in research and development functions ; · fees paid to consultants and contract research organizations ( cros ) , including in connection with our preclinical and clinical trials , and other related clinical trial fees , such as for investigator grants , patient screening , laboratory work , clinical trial database management , clinical trial material management and statistical compilation and analysis ; · payments to third-party manufacturers , which produce , test and package our drug substance and drug product ( including continued testing of process validation and stability ) ; · costs related to legal and compliance with regulatory requirements ; and · license fees for and milestone payments related to licensed products and technologies . from our inception through december 31 , 2013 , we have incurred approximately $ 153.6 million in research and development expenses , of which $ 121.9 million relates to our development of brincidofovir . story_separator_special_tag the black-scholes option-pricing model requires the use of subjective assumptions , including volatility of our common stock , the expected term of our stock options , the risk free interest rate for a period that approximates the expected term of our stock options and the fair value of the underlying common stock on the date of grant . in applying these assumptions , we considered the following factors : we have limited operating history to estimate the volatility of our common stock price . we calculate expected volatility based on a blend of company specific historical data and a group of similar publicly traded companies for which the historical information is available . for the purpose of identifying peer companies , we consider characteristics such as industry , length of trading history , similar vesting terms and in-the-money option status . we plan to continue to use the guideline peer group volatility information until the historical volatility of our common stock is relevant to measure expected volatility for future option grants . the assumed dividend yield is based on our expectation of not paying dividends for the foreseeable future . prior to our ipo , we determined the average expected life of stock options based on the simplified method in accordance with sec staff accounting bulletin nos . 107 and 110. we expect to use the simplified method until we have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term . we determine the risk-free interest rate by reference to implied yields available from u.s. treasury securities with a remaining term equal to the expected life assumed at the date of grant . we estimate forfeitures based on our historical analysis of actual stock option forfeitures . the assumptions used in the black-scholes option-pricing model for the years ended december 31 , 2013 , 2012 , and 2011 are set forth below : employee stock options replace_table_token_5_th non-employee stock options replace_table_token_6_th common stock fair value prior to our ipo , the fair value of our common stock for purposes of determining the exercise price for stock option grants was determined on each grant date by our board of directors , or by a committee of our board of directors acting under delegated authority , with input from management . all options to purchase shares of our common stock were intended to be granted with an exercise price per share no less than the fair value per share of our common stock underlying those options on the date of grant , determined in good faith and based on the information known to us on the date of grant . in the absence of a public trading market for our common stock prior to our ipo , on each grant date , our board of directors , or a committee of our board of directors acting under delegated authority , considered various objective and subjective factors , along with input from management , to determine the fair value of our common stock , including : 45 external market conditions affecting the biotechnology industry ; trends within the biotechnology industry ; the prices at which we sold shares of preferred stock to third-party investors ; the superior rights and preferences of the preferred stock relative to our common stock at the time of each grant ; our results of operations , financial position , status of our research and development efforts , stage of development and business strategy ; the lack of an active public market for our common and our preferred stock ; and the likelihood of achieving a liquidity event in light of prevailing market conditions , such as an initial public offering or sale of our company . our board of directors , or a committee of our board of directors acting under delegated authority , also considered and relied upon appraisals of the value of our stock from an independent third-party valuation specialist who conducted a thorough analysis using methodologies , approaches and assumptions consistent with the american institute of certified public accountants ( aicpa ) audit and accounting practice aid series : valuation of privately held company equity securities issued as compensation ( aicpa practice guide ) . the independent third-party valuation specialist provided appraisals containing the valuation analyses to the fair value of our common stock . for all grants of stock options made following the completion of our ipo in april 2013 , we have determined , and will determine in the future , fair value based on the closing price of our common stock on the nasdaq global market on the date of determination . fair value adjustments to warrant liability we issued warrants to purchase shares of our series f preferred stock in connection with ( i ) a loan and security agreement entered into with svb and midcap in january 2012 , and ( ii ) an equity financing agreement with certain investors for the sale of series f preferred stock , which occurred in february 2011. as discussed in note 2 to our audited financial statements for the year ending december 31 , 2013 included in this annual report , the warrants to purchase shares of our series f preferred stock were classified as a liability and are required to be measured at fair value for the year ending december 31 , 2012. upon completion of our ipo , these warrants were adjusted to a fair value of $ 14.1 million . the warrant liability was reclassified as common stock warrants and therefore no longer requires revaluation for the year ending december 31 , 2013. the adjustment to the fair valuation of the warrants resulted in other expense of $ 6.6 million , $ 847,000 and $ 385,000 for the year ended december 31 , 2013 , 2012 and 2011 , respectively . the warrants were valued using a two stage process . using a contingent claims model , the fair value of total equity 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 have incurred losses since our inception in 2000 and , as of december 31 , 2013 , we had an accumulated deficit of $ 162.7 million . we anticipate that we will continue to incur losses for at least the next several years . we expect that our research and development and general and administrative expenses will continue to increase and , as a result , we will need additional capital to fund our operations , which we may obtain through one or more of equity offerings , debt financings , government or other third-party funding , strategic alliances and licensing or collaboration arrangements . since our inception through december 31 , 2013 , we have funded our operations principally with $ 209.5 million ( net of issuance costs of $ 10.3 million ) from the sale of common stock and preferred stock and the exercise of common stock warrants , including $ 107.6 million in net proceeds from our ipo in april 2013 , approximately $ 37.4 million of research funding from our various national institute of allergy and infectious diseases awards and approximately $ 32.7 million in revenue from our barda contract , debt financings totaling $ 21.0 million , and $ 17.5 million of licensing revenue under our collaboration agreement with merck . as of december 31 , 2013 , we had cash , cash equivalents and short-term investments of approximately $ 110.0 million . cash in excess of immediate requirements is invested in accordance with our investment policy , primarily with a view to liquidity and capital preservation . during 2012 , we entered into a loan and security agreement with svb and midcap allowing for borrowings up to $ 15.0 million . in january 2012 , we borrowed $ 3.0 million under this agreement which had an interest only period for twelve months , followed by a thirty month principal and interest period at a rate of 8.25 % .
prior to our initial public offering in february 2006 , our business was conducted through h & e llc . in connection with our initial public offering , we converted h & e llc into h & e equipment services , inc. in order to have an operating delaware corporation as the issuer for our initial public offering , h & e equipment services , inc. was formed as a delaware corporation and wholly-owned subsidiary of h & e holdings , and immediately prior to the closing of our initial public offering , on february 3 , 2006 , h & e llc and h & e holdings merged with and into h & e equipment services , inc. , which survived the reincorporation merger as the operating company . effective february 3 , 2006 , h & e llc and h & e holdings no longer existed under operation of law pursuant to the reincorporation merger . effective january 1 , 2018 , we completed the acquisition of cec , a privately-held company focused on non-residential construction equipment rentals serving the greater denver , colorado area out of three branch locations . effective april 1 , 2018 , we completed the acquisition of rental , inc. , a privately-held equipment rental and distribution company with five branch locations in alabama and florida . effective february 1 , 2019 , we completed the acquisition of wri , a privately-held equipment rental company with six branch locations in central texas . 28 business segments we have five reportable segments because we derive our revenues from five principal business activities : ( 1 ) equipment rentals ; ( 2 ) new equipment sales ; ( 3 ) used equipment sales ; ( 4 ) parts sales ; and ( 5 ) repair and maintenance services . these segments are based upon how we allocate resources and assess performance . in addition , we also have non-segmented revenues and costs that relate to equipment support activities . equipment rentals . our rental operation primarily rents our four core types of construction and industrial equipment . we have a well-maintained rental fleet and our own dedicated sales force , focused by equipment type . we actively manage the size , quality , age and composition of our rental fleet based on our analysis of key measures such as time utilization ( which we analyze as equipment usage based on : ( 1 ) a percentage of original equipment cost , and ( 2 ) the number of rental equipment units available for rent ) , rental rate trends and targets , rental equipment dollar utilization and maintenance and repair costs , which we closely monitor . we maintain fleet quality through regional quality control managers and our parts and services operations . new equipment sales . our new equipment sales operation sells new equipment in all of our four core product categories . we have a retail sales force focused by equipment type that is separate from our rental sales force . manufacturer purchase terms and pricing are managed by our product specialists . used equipment sales . our used equipment sales are generated primarily from sales of used equipment from our rental fleet , as well as from sales of inventoried equipment that we acquire through trade-ins from our equipment customers and through selective purchases of high quality used equipment . used equipment is sold by our dedicated retail sales force . our used equipment sales are an effective way for us to manage the size and composition of our rental fleet and provide a profitable distribution channel for disposal of rental equipment . parts sales . our parts business sells new and used parts for the equipment we sell and also provides parts to our own rental fleet . to a lesser degree , we also sell parts for equipment produced by manufacturers whose products we neither rent nor sell . in order to provide timely parts and services support to our customers as well as our own rental fleet , we maintain an extensive parts inventory . services . our services operation provides maintenance and repair services for our customers ' equipment and to our own rental fleet at our facilities as well as at our customers ' locations . as the authorized distributor for numerous equipment manufacturers , we are able to provide service to that equipment that will be covered under the manufacturer 's warranty . our non-segmented revenues and costs for the periods presented in the annual report on form 10-k relate to equipment support activities that we provide , such as transportation , hauling , parts freight and damage waivers , and are not generally allocated to reportable segments . you can read more about our business segments in note 18 of the consolidated financial statements in this annual report on form 10-k. revenue sources we generate all of our total revenues from our five business segments and our non-segmented equipment support activities . equipment rentals and new equipment sales account for more than half of our total revenues . 29 the pie charts below illustrate a breakdown of our revenues and gross profit for the year ended december 31 , 201 9 by business segment ( see note 18 to our consolidated financial statements for further information regarding our business segments ) : the equipment that we sell , rent and service is principally used in the construction industry , as well as by companies for commercial and industrial uses such as plant maintenance and turnarounds , as well as in the petrochemical and energy sectors . story_separator_special_tag million . additionally , a one-year decrease in the estimated life across all classes of our rental equipment ( with the exception of other equipment as discussed above ) will give rise to an approximate increase in our annual depreciation expense of approximately $ 27.4 million . another significant assumption used in our calculation of depreciation expense is the estimated salvage value assigned to our earthmoving equipment . based on our recent experience , we have used a 25 % factor of the equipment 's original cost to estimate its salvage value . this factor is subjective and subject to change in the future based upon actual results at the time we dispose of the equipment . a change of 5 % , either increase or decrease , in the estimated salvage value would result in a change in our annual depreciation expense of approximately $ 4.3 million . acquisition accounting . we have made significant acquisitions in the past and we intend to make additional acquisitions in the future that meet our selection criteria that solidify our presence in the contiguous regions where we operate with an objective of increasing our revenues , improving our profitability , entering additional attractive markets and strengthening our competitive position . pursuant to topic 350 , intangibles-goodwill and other , we record as goodwill the excess of the consideration transferred plus the fair value of any non-controlling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired . such fair market value assessments require judgments and estimates that can be affected by various factors over time , which may cause final amounts to differ materially from original estimates . with the exception of goodwill , long-lived fixed assets generally represent the largest component of our acquisitions . typically , the long-lived fixed assets that we acquire are primarily comprised of rental fleet equipment . historically , virtually all of the rental equipment that we have acquired through business combinations have been classified as “ to be used , ” rather than as “ to be sold . ” equipment that we acquire and classify as “ to be used ” is recorded at fair value . any significant inventories of new and used equipment acquired in the transaction are valued at fair value , which should approximate a market participant 's estimated selling price adjusted for ( 1 ) costs in the selling effort and ( 2 ) a reasonable profit allowance . in addition to long-lived fixed assets , we also acquire other assets and assume liabilities . these other assets and liabilities typically include , but are not limited to , parts inventory , accounts receivable , accounts payable and other working capital items . because of their short-term nature , the fair values of these assets and liabilities generally approximate the carrying values reflected on the acquired entities balance sheets . however , when appropriate , we adjust these carrying values for factors such as collectibility and existence . the intangible assets that we have acquired generally consist primarily of the goodwill recognized . depending upon the applicable purchase agreement and the particular facts and circumstances of the business acquired , we may identify other intangible assets , such as trade names or trademarks , non-compete agreements and customer-related intangibles ( specifically , customer relationships ) . a trademark has a fair value equal to the present value of the royalty income attributable to it . the royalty income attributable to a trademark represents the hypothetical cost savings that are derived from owning the trademark instead of paying royalties to license the trademark from another owner . when specifically negotiated by the parties in the applicable purchase agreements , we base the value of non-compete agreements on the amounts assigned to them in the purchase agreements as these amounts represent the amounts negotiated in an arm 's length transaction . when not negotiated by the parties in the applicable purchase agreements , the fair value of non-compete agreements is estimated based on an income approach since their values are representative of the current and future revenue and profit erosion protection they provide . customer relationships are generally valued based on an excess earnings or income approach with consideration to projected cash flows . goodwill . we have made acquisitions in the past that resulted in the recognition of goodwill . goodwill is the excess of the consideration transferred plus the fair value of any non-controlling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired . we evaluate goodwill for impairment annually or more frequently if triggering events occur or other impairment indicators arise which might impair recoverability . application of the goodwill impairment test requires judgment , including : the identification of reporting units ; assignment of assets and liabilities to reporting units ; assignment of goodwill to reporting units ; determination of the fair value of each reporting unit ; and an assumption as to the form of the transaction in which the reporting unit would be acquired by a market participant ( either a taxable or nontaxable transaction ) . impairment of goodwill is evaluated at the reporting unit level . a reporting unit is defined as an operating segment ( i.e . , before aggregation or combination ) , or one level below an operating segment ( i.e . , a component ) . a component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component . we have identified two components within our rental operating segment ( equipment rentals component 1 and equipment rentals component 2 ) and have determined 34 that each of our other four operating segments ( new equipment , used equipment , parts , and service segments ) represents a reporting unit ,	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 from operating activities . for the year ended december 31 , 2019 , the cash provided by our operating activities was $ 319.2 million . our reported net income of $ 87.2 million , when adjusted for non-cash income and expense items , such as depreciation and amortization ( including net amortization ( accretion ) of note discount ( premium ) ) , deferred income taxes , non-cash operating lease expense , amortization of finance lease right-of-use assets , provision for losses on accounts receivable , provision for inventory obsolescence , stock-based compensation expense , goodwill impairment and net gains on the sale of long-lived assets , provided positive cash flows of $ 375.5 million . these cash flows from operating activities were positively impacted by a $ 9.2 million decrease in receivables . also , prepaid expenses and other assets decreased $ 0.3 million . additionally , manufacturing flooring plans payable and deferred compensation increased $ 1.5 million and $ 0.1 million , respectfully . partially offsetting these positive cash flows were a $ 19.6 million increase in inventories , a $ 43.4 million decrease in accounts payable and a $ 4.4 million decrease in accrued expenses and other liabilities . for the year ended december 31 , 2018 , the cash provided by our operating activities was $ 247.2 million . our reported net income of $ 76.6 million , when adjusted for non-cash income and expense items , such as depreciation and amortization ( including net amortization ( accretion ) of note discount ( premium ) ) , deferred income taxes , provision for losses on accounts receivable , provision for inventory obsolescence , stock-based compensation expense and net gains on the sale of long-lived assets , provided positive cash flows of $ 302.9 million . these cash flows from operating activities were also positively impacted by a $ 7.0 increase in accounts payable and a $ 2.8 million increase in accrued expenses and other liabilities . additionally , manufacturing flooring plans payable and deferred compensation increased $ 1.7 million and $ 0.1 million , respectfully . partially offsetting these positive cash flows were a $ 48.2 million increase in inventories and a $ 17.8 million increase in receivables .
therefore , we anticipate that our quarterly results of operations will fluctuate significantly for the foreseeable future . readers are cautioned that period-to-period comparisons of our operating results should not be relied upon as predictive of future performance . our prospects must be considered in light of the risks , expenses and difficulties normally encountered by companies that are involved in the development and commercialization of their technologies , particularly companies in new and rapidly changing markets such as pharmaceuticals , drug delivery and biotechnology . for the foreseeable future , we must , among other things , invest in non-clinical and clinical trials of , and seek regulatory approval for and commercialization of , our product candidates , the outcomes of which are subject to numerous risks , many of which are beyond our control . we must also maintain our relationships with our key commercial partners and address regulatory , legal and or commercial issues and risks that relate our business from time to time , many of which could impact , perhaps negatively , our planned operations . we may not be able to appropriately address these risks and difficulties . critical accounting policies and estimates impairment testing our goodwill impairment testing is calculated at the reporting unit level . we performed an evaluation and determined that there is only one reporting unit . our annual impairment test has two steps . the first identifies potential impairments by comparing the fair value of the reporting unit with its carrying value . if the fair value exceeds the carrying amount , goodwill is not impaired and the second step is not necessary . if the carrying value exceeds the fair value , the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying amount . if the implied fair value of goodwill is less than the carrying amount , a write-down is recorded . the determination of goodwill impairment is highly subjective . it considers many factors both internal and external and is subject to significant changes from period to period . no goodwill impairment charges have resulted from this analysis for 2011 , 2010 or 2009. in accordance with generally accepted accounting principles ( referred to herein as gaap ) related to impairment of long-lived assets other than goodwill ( our other amortizing intangibles ) , impairment exists if the sum of the future estimated undiscounted cash flow related to the asset is less than the carrying amount of the intangible asset or to its related group of assets . in that circumstance , then an impairment charge is recorded for the excess of the carrying amount of the intangible over the estimated undiscounted future cash flow related to the intangible asset . in making this impairment assessment , we predominately use an undiscounted cash flow model derived from internal forecasts . factors that could change the result of our impairment test include , but are not limited to , different assumptions used to forecast future net sales , expenses , capital expenditures , and working capital requirements used in our cash flow models . in the event that our management determines that the value of intangible assets have become impaired using this approach , we will record an accounting charge for the amount of the impairment . no impairment charges have been recorded for other amortizing intangibles in 2009 or 2011. we did , however , record a $ 0.2 million impairment charge during the twelve months ended december 31 , 2010. the impairment charge removed the remaining intangible asset related to bioral ® . we have previously determined not to pursue bioral ® amphotericin b for the treatment of cutaneous leishmaniasis ( see note 12 to the accompanying financial statements ) . 47 fair market value accounting ( derivative liability ) the most significant estimate that could have a material effect on net ( loss ) gain is the fair market value accounting for our derivative liability . our derivative liability consists of free standing warrants that are recorded as liabilities due to the registration rights agreements and the requirement for continued effectiveness of the warrants . as a result , the warrants must be recorded at fair value . the changes in fair value are posted to the derivative gain ( loss ) in other income ( loss ) . we utilize the black scholes method to estimate the fair value of our warrants . the most significant factor in the black scholes calculation is our stock price . an increase in the stock price consequently increases the value of our liability and causes a loss . the opposite occurs with a decrease in our stock price . during the year ending december 31 , 2011 , a $ 2.74 decline in the value of our stock was the primary cause of the $ 3.5 million derivative gain . our stock price is a major component of the valuation of our free standing warrant liabilities . a stock price decline lowers the derivative liability , resulting in a gain . the relationship between the gain or loss and our stock price will change from year-to-year based on other black scholes factors , including the remaining warrant term and volatility of our stock . stock-based compensation and other stock based valuation issues ( derivative accounting ) we account for stock-based awards to employees and non-employees using financial accounting standards board accounting standards codification ( fasb ) ( asc ) fasb asc topic 718 accounting for share-based payments , which provides for the use of the fair value based method to determine compensation for all arrangements where shares of stock or equity instruments are issued for compensation . fair values of equity securities issued are determined by management based predominantly on the trading price of our common stock . the values of these awards are based upon their grant-date fair value . story_separator_special_tag we had federal and state net operating loss carryforwards ( nol ) of approximately $ 51 million and $ 45.4 million at december 31 , 2011 as compared to federal and state nols of $ 27 million and $ 21.1 million as of december 31 , 2010. these loss carryforwards expire principally beginning in 2020 through 2026 for federal and 2028 for state purposes . in accordance with gaap , it is required that a deferred tax asset be reduced by a valuation allowance if , based on the weight of available evidence it is more likely than not ( a likelihood of more than 50 percent ) that some portion or all of the deferred tax assets will not be realized . the valuation allowance should be sufficient to reduce the deferred tax asset to the amount which is more likely than not to be realized . as a result , we recorded a valuation allowance with respect to all of our deferred tax assets . under section 382 and 383 of the internal revenue code , if an ownership change occurs with respect to a loss corporation ( as defined in the internal revenue code ) , there are annual limitations on the amount of the net operating loss and other deductions which are available to us . for the year ended december 31 , 2010 compared to the year ended december 31 , 2009 product royalty revenues . we recognized $ 1.9 million and $ 2.8 million in product royalty revenue during the years ended 2010 and 2009 , respectively , under our license agreement with meda . product royalties , related party . we recognized $ 0.02 million in product royalties , related party , during the year ended 2009 under our license agreement with accentia relating to crs . there were no product royalties , related party in 2010. research revenues . we recognized $ 0.7 million and $ 0.2 million of revenue related to a research and development agreement with meda during the years ended 2010 and 2009 , respectively . sponsored research revenues . we recognized $ 0.2 million in sponsored research revenue from the u.s. government 's qualifying therapeutic discovery project during the year ended 2010. there was no sponsored research revenue received in 2009. contract revenues . we recognized $ 0.5 million in contract revenue during the year ended 2010 which related to license agreements with tty and kunwha . contract revenue of $ 59.8 million during the year ended 2009 was related to previously deferred revenue under our license agreement with meda . cost of product royalties . we recognized $ 0.8 million and $ 2.0 million in cost of product royalties during the years ended 2010 and 2009 , respectively , related to direct costs attributable to the production of our product onsolis ® . this includes both manufacturing costs and royalties owed to cdc and athyrium . we are required to pay royalties to cdc and athyrium under a clinical development and license agreement entered into in 2005 , and most recently amended in may 2011. research and development expenses . during the years ended december 31 , 2010 and 2009 , research and development expenses totaled $ 10.6 million and $ 10.4 million , respectively . our scientific staff continued to work toward increased development and application of our bema ® technologies , but particularly with respect to bema ® buprenorphine , bema ® buprenorphine/naloxone and onsolis ® . funding of this research in 2010 and 2009 was obtained through deferred license revenue , shelf financing , sponsored research revenue , exercise of options by employees and directors and sales of securities . research and development expenses generally include compensation for scientific personnel , research supplies , facility rent , lab equipment depreciation and a portion of overhead operating expenses and other costs directly related to the development and application of the our drug delivery technologies . 52 general and administrative expenses . during the years ended december 31 , 2010 and 2009 , general and administrative expenses totaled $ 8 million and $ 10.3 million , respectively . general and administrative costs include legal and professional fees , office supplies , travel costs , compensation costs , consulting fees and business development costs . the decrease in general and administrative expenses in 2010 relates principally to a dispute settlement of $ 1.9 million and the legal costs associated with the settlement between us and accentia that were recorded in 2009. this amount is shown in related party , general and administrative . impairment of intangible license . during the year ended december 31 , 2010 we had an impairment of intangible license and associated charge of $ 0.2 million . this represented 100 % of the remaining unamortized carrying value , related to the bioral ® drug delivery technology . there was no impairment charge during the year ended december 31 , 2009. interest income , net . during the year ended december 31 , 2010 we had interest income of $ 0.13 million compared to $ 0.04 million for the corresponding period in 2009. we had a higher average cash balance during the year ended december 31 , 2010 as compared to 2009. during the first half of 2009 , we averaged only $ 3 million in cash until the receipt of $ 26.8 million from meda upon fda approval of onsolis ® and delivery of product to support the product launch . we maintained a $ 22 million average cash balance during 2010 , allowing higher dividends and interest to be earned . derivative gain ( loss ) . derivative gain ( loss ) in 2010 and 2009 is related to the adjustment of derivative liabilities to fair value as of december 31 , 2010 and 2009 , respectively . derivatives are primarily free-standing warrants . the warrants are measured using black scholes calculations . a major component of the calculation is our 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.	liquidity and capital resources since inception , we have financed our operations principally from the sale of equity securities , proceeds from short-term borrowings or convertible notes , the sale of a royalty stream asset , sponsored research , funded research arrangements and from various strategic and licensing agreements , including a clinical development agreement with cdc iv , llc and commercialization agreements with meda relating to onsolis ® and , more recently , with our commercialization agreement with endo for bema ® buprenorphine . we intend to finance our research and development programs , commercialization efforts and our working capital needs from existing cash , product royalty revenue , new sources of financing , licensing and commercial partnership agreements and , potentially , through the exercise of outstanding common stock options and warrants to purchase common stock . 54 we have always been sensitive to the dilution caused by the sale of our equity in order to maintain business operations . as such , since our initial public offering in 2002 through the signing of the endo agreement in january 2012 , approximately two-thirds of all operational funding come from partnering dollars and royalty revenue . the other one-third has come from equity and debt offerings . we began calendar year 2011 with $ 18.2 million in cash . a factor in this relatively high starting cash balance was a result of receiving significant 2009 milestone payments from meda .
the allowance for loan losses is the estimated amount considered necessary to cover probable and reasonably estimable incurred losses inherent in the loan portfolio at the balance sheet date . the allowance is established through the provision for loan losses that is charged against income . in determining the allowance for loan losses , we make significant estimates and judgments . the determination of the allowance for loan losses is considered a critical accounting policy by management because of the high degree of judgment involved , the subjectivity of the assumptions used , and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses . the allowance for loan losses has been determined in accordance with u.s. gaap . we are responsible for the timely and periodic determination of the amount of the allowance required . we believe that our allowance for loan losses is adequate to cover identifiable losses , as well as estimated losses inherent in our portfolio for which certain losses are probable but not specifically identifiable . management performs a formal quarterly evaluation of the adequacy of the allowance for loan losses . this quarterly process is performed by the accounting department , in conjunction with the credit administration department , and approved by the director of financial reporting . the chief financial officer performs a final review of the calculation . all supporting documentation with regard to the evaluation process is maintained by the accounting department . each quarter a summary of the allowance for loan losses is presented by the chief financial officer to the audit committee of the board of directors . 47 the analysis of the allowance for loan losses has a component for impaired loans held-for-investment and pci loans , and a component for loans collectively evaluated for impairment . prior to december 31 , 2016 , we maintained an amount identified as the unallocated component within the allowance for loan losses related to indicators of loan losses not fully captured in other components of the allowance for loan losses methodology , as well as the inherent imprecision of the loss estimation process . during the fourth quarter of 2016 , the company enhanced the allowance for loan losses qualitative framework to more fully capture the risks related to certain loan loss factors . these enhancements are meant to increase the level of precision in the allowance for loan losses . as a result , subsequent to 2015 , the company no longer has an unallocated reserve in its allowance for loan losses , as the risks and uncertainties meant to be captured by the unallocated allowance have been included in the qualitative framework for the respective loan portfolios . management has defined an impaired loan ( excluding pci loans ) to be a loan for which it is probable , based on current information , that we will not collect all amounts due in accordance with the contractual terms of the loan agreement . we have defined the population of impaired loans to be all non-accrual loans with an outstanding balance of $ 500,000 or greater , and all loans identified as a tdr . impaired loans are individually evaluated for impairment to determine that the loan 's carrying value is not in excess of the estimated fair value of the collateral ( less cost to sell ) , if the loan is collateral dependent , or the present value of the expected future cash flows , if the loan is not collateral dependent . management performs a detailed evaluation of each impaired loan and generally obtains updated appraisals as part of the evaluation . in addition , management adjusts estimated fair values down to appropriately consider recent market conditions , our willingness to accept , when appropriate , a lower sales price to effect a quick sale , and costs to dispose of any supporting collateral . determining the estimated fair value of underlying collateral ( and related costs to sell ) can be difficult in illiquid real estate markets and is subject to significant assumptions and estimates . management employs an independent third-party expert in appraisal preparation and review to ascertain the reasonableness of all appraisals . projecting the expected cash flows under tdrs is inherently subjective and requires , among other things , an evaluation of the borrower 's current and projected financial condition . actual results may be significantly different than our projections , and our established allowance for loan losses on these loans , and could have a material effect on our financial results . the second component of the allowance for loan losses is the allowance for loans collectively evaluated for impairment . this evaluation excludes impaired , trouble-debt restructured , and pci loans , with the remaining loans being placed into groups with similar risk characteristics , primarily loan type , loan-to-value ( if collateral dependent ) and internal credit risk rating . we apply an estimated loss rate to each loan group . the loss rates applied are based on our net loss experience ( using appropriate look-back and loss emergence periods ) as adjusted , if appropriate , for our qualitative assessment of factors which may not be fully captured in our historical quantitative net loss rates applied to : changes in lending policies and procedures ; changes in local , regional , national , and international economic and business conditions and developments that affect the collectability of our portfolio , including the condition of various market segments ; changes in the nature and volume of our portfolio and in the terms of our loans ; changes in the experience , ability and depth of lending management and other relevant staff ; changes in the volume and severity of past due loans , the volume of non-accrual loans , and the volume and severity of adversely classified or graded loans ; changes in the quality of our loan story_separator_special_tag the effective tax rate for the year ended december 31 , 2018 , reflects the reduction of the federal corporate tax rate to 21 % from 35 % effective january 1 , 2018 , and excess tax benefits of $ 2.7 million related to the exercise or vesting of equity awards . the effective tax rate for the year ended december 31 , 2017 reflects : ( i ) a tax charge of $ 10.5 million related to the enactment of the tax reform act in the fourth quarter of 2017 , as discussed above ; ( ii ) excess tax benefits of $ 2.3 million related to the exercise or vesting of equity awards ; and ( iii ) $ 1.5 million of tax-exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies . excess tax benefits will fluctuate throughout the year based on the company 's stock price and timing of employee stock option exercises and vesting of other share-based awards . on july 1 , 2018 , the state of new jersey enacted new legislation that created a temporary surtax effective for tax years 2018 through 2021 and will require companies to file combined tax returns beginning in 2019. the new legislation did not result in a material change to our net deferred tax asset or state tax expense . management continues to evaluate the effect of this new legislation , including the issuance of regulations by the new jersey division of taxation , on our net deferred tax asset and future tax expense . 53 comparison of operating results for the years ended december 31 , 2017 and 2016 net income . net income was $ 24.8 million and $ 26.1 million for the years ended december 31 , 2017 and 2016 , respectively . significant variances from the prior year are as follows : a $ 5.6 million increase in net interest income , a $ 776,000 increase in the provision for loan losses , a $ 1.6 million increase in non-interest income , a $ 5.6 million decrease in non-interest expense , and a $ 13.3 million increase in income tax expense . net income for the year ended december 31 , 2017 includes a tax charge of $ 10.5 million related to the tax act , a $ 2.3 million reduction in income tax expense as a result of the adoption of accounting standards update no . 2016-09 , compensation - stock compensation ( topic 718 ) ( “ asu 2016-09 ” ) related to the accounting of stock compensation , and $ 1.5 million of tax-exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies . net income for the year ended december 31 , 2016 included merger-related expenses of $ 4.0 million ( $ 2.4 million , after tax ) associated with the acquisition of hopewell valley . interest income . interest income increased by $ 7.9 million , or 6.3 % , to $ 132.9 million for the year ended december 31 , 2017 , as compared to $ 125.0 million for the year ended december 31 , 2016 , due to an increase in the average balance of interest-earning assets of $ 182.5 million , or 5.3 % , and a three basis point increase in the yields earned to 3.64 % from 3.61 % for the prior year . the increase in the average balance of interest-earning assets was primarily attributable to increases in average loans of $ 271.1 million and other securities of $ 11.9 million , partially offset by decreases in average mortgage-backed securities of $ 91.2 million and interest-earning deposits in financial institutions of $ 10.0 million . the company accreted interest income related to its pci loans of $ 5.5 million for the year ended december 31 , 2017 , as compared to $ 5.2 million for the year ended december 31 , 2016. interest income for the year ended december 31 , 2017 , included loan prepayment income of $ 1.4 million , compared to $ 1.9 million for the year ended december 31 , 2016. interest expense . interest expense increased $ 2.3 million , or 10.7 % , to $ 24.0 million for the year ended december 31 , 2017 , from $ 21.7 million for the year ended december 31 , 2016. the increase was due primarily to an increase of $ 2.1 million in interest expense on deposits . the increase in interest expense on deposits was attributable to an increase in the average balance of interest-bearing deposits of $ 138.7 million , or 6.3 % , to $ 2.34 billion for the year ended december 31 , 2017 , from $ 2.20 billion for the year ended december 31 , 2016 , and a five basis point increase in the cost of interest-bearing deposits to 0.70 % from 0.65 % . net interest income . net interest income for the year ended december 31 , 2017 , increased $ 5.6 million , or 5.4 % , to $ 108.9 million , from $ 103.3 million for the prior year , primarily due to a $ 182.5 million , or 5.3 % , increase in our average interest-earning assets and a one basis point increase in our net interest margin to 2.99 % . yields earned on interest-earning assets increased three basis points to 3.64 % for the year ended december 31 , 2017 , from 3.61 % for the year ended december 31 , 2016. the cost of interest-bearing liabilities increased five basis points to 0.85 % for the year ended december 31 , 2017 , as compared to 0.80 % for the prior year . provision for loan losses . the provision for loan losses increased $ 776,000 to $ 1.4 million for the year ended december 31 , 2017 , from $ 635,000 for 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.	cash and cash equivalents increase d by $ 19.9 million , or 34.4 % , to $ 77.8 million at december 31 , 2018 , from $ 57.8 million at december 31 , 2017 . balances fluctuate based on the timing of receipt of security and loan repayments and the redeployment of cash into higher-yielding assets such as loans and securities , or the funding of deposit or borrowing obligations . bank owned life insurance increased $ 3.5 million , or 2.3 % , to $ 154.1 million at december 31 , 2018 , from $ 150.6 million at december 31 , 2017 . the increase resulted from income earned on bank owned life insurance for the year ended december 31 , 2018 . other real estate owned ( “ oreo ” ) decreased $ 850,000 to $ 0 at december 31 , 2018 , due to the sale of the company 's single oreo property . other assets decreased by $ 1.3 million , or 4.0 % , to $ 31.6 million at december 31 , 2018 , from $ 32.9 million at december 31 , 2017 . the decrease in other assets was primarily attributable to a decrease in net deferred tax assets . 51 total liabilities increase d $ 389.5 million , or 11.6 % , to $ 3.74 billion at december 31 , 2018 , from $ 3.35 billion at december 31 , 2017 . the increase was primarily attributable to increase s in deposits of $ 449.5 million and advance payments by borrowers for taxes and insurance of $ 3.2 million , partially offset by a decrease in other borrowings of $ 62.7 million .
the small number of order cancellations is attributable in part to the fact that a large portion of our solutions are ordered and installed toward the end of greenfield project construction . our backlog at march 31 , 2018 was $ 159.6 million , inclusive of $ 31.7 million for ths , as compared to $ 106.9 million at march 31 , 2017 . the timing of recognition of revenue out of backlog is not always certain , as it is subject to a variety of factors that may cause delays , many of which are beyond our control ( such as customers ' delivery schedules and levels of capital and maintenance expenditures ) . when delays occur , the recognition of revenue associated with the delayed project is likewise deferred . cost of sales . our cost of sales includes primarily the cost of raw material items used in the manufacture of our products , cost of ancillary products that are sourced from external suppliers and construction labor cost . additional costs of revenue include contract engineering cost directly associated to projects , direct labor cost , shipping and handling costs , and other costs associated with our manufacturing/fabrication operations . the other costs associated with our manufacturing/fabrication operations are primarily indirect production costs , including depreciation , indirect labor costs , and the costs of manufacturing support functions such as logistics and quality assurance . key raw material costs include polymers , copper , stainless steel , insulating material , and other miscellaneous parts related to products manufactured or assembled as part of our heat tracing solutions . historically , our primary raw materials have been readily available from multiple suppliers and raw material costs have been stable , and we have been generally successful with passing along raw material cost increases to our customers . therefore , increases in the cost of key raw materials of our products have not generally affected our gross margins . we can not provide any assurance that we may be able to pass along such cost increases to our customers in the future , and if we are unable to do so , our results of operations may be adversely affected . operating expenses . our marketing , general and administrative and engineering expenses are primarily comprised of compensation and related costs for sales , marketing , pre-sales engineering and administrative personnel , as well as other sales related expenses and other costs related to research and development , insurance , professional fees , the global integrated business information system , provisions for bad debts and warranty expense . 29 key drivers affecting our results of operations . our results of operations and financial condition are affected by numerous factors , including those described above under item 1a , `` risk factors `` and elsewhere in this annual report and those described below : timing of greenfield projects . our results of operations in recent years have been impacted by the various construction phases of large greenfield projects . on very large projects , we are typically designated as the heat tracing provider of choice by the project owner . we then engage with multiple contractors to address incorporating various heat tracing solutions throughout the overall project . our largest greenfield projects may generate revenue for several quarters . in the early stages of a greenfield project , our revenues are typically realized from the provision of engineering services . in the middle stages , or the material requirements phase , we typically experience the greatest demand for our heat tracing cable , at which point our revenues tend to accelerate . revenues tend to decrease gradually in the final stages of a project and are generally derived from installation services and demand for electrical panels and other miscellaneous electronic components used in the final installation of heat tracing cable , which we frequently outsource from third-party manufacturers . therefore , we typically provide a mix of products and services during each phase of a greenfield project , and our margins fluctuate accordingly . cyclicality of end-users ' markets . demand for our products and services depends in large part upon the level of capital and maintenance expenditures of our customers and end users , in particular those in the energy , chemical processing and power generation industries , and firms that design and construct facilities for these industries . these customers ' expenditures historically have been cyclical in nature and vulnerable to economic downturns . greenfield projects , and in particular large greenfield projects ( i.e . , new facility construction projects generating in excess of $ 5 million in annual sales ) , historically have been a substantial source of revenue growth , and greenfield revenues tend to be more cyclical than mro/ue revenues . in recent years we have experienced particular cyclicality in capital spending for new facilities in canada , eastern europe and the middle east . revenues derived from europe , including the middle east and africa , accounted for 22 % , 27 % and 23 % of our total revenue during fiscal 2018 , fiscal 2017 and fiscal 2016 , respectively , and revenue derived from the canada segment accounted for 31 % , 16 % and 20 % of our total revenue during fiscal 2018 , fiscal 2017 and fiscal 2016 , respectively . in fiscal 2018 , our canadian operations experienced a revenue increase of 126.3 % as compared to fiscal 2017 due to an increase in mro/ue demand and the ths transaction . a sustained decrease in capital and maintenance spending or in new facility construction by our customers could have a material adverse effect on the demand for our products and services and our business , financial condition and results of operations . acquisition strategy . story_separator_special_tag on december 22 , 2017 , the united states enacted significant changes to the u.s. tax law following the passage and signing of h.r.1 , “ an act to provide for reconciliation pursuant to titles ii and v of the concurrent resolution on the budget for fiscal year 2018 ” ( the “ tax act ” ) ( previously known as “ the tax cuts and jobs act ” ) . the tax act included significant changes to existing tax law , including a permanent reduction to the u.s. federal corporate income tax rate from 35 % to 21 % , a one-time repatriation tax on deferred foreign income ( “ transition tax ” ) , deductions , credits and business-related exclusions . we estimate that $ 5.7 million is payable to the united states treasury in transition taxes over the next eight years . after accounting for the reduction of certain non-cash tax liabilities , the net impact to our tax provision for the effects of the tax act was $ 0.8 million expense for fiscal 2018. see note 16 , `` income taxes , `` to our consolidated financial statements , included elsewhere in this annual report , for further detail on income taxes . we are in the process of evaluating the impact of the tax act to our expected tax rate in fiscal 2019. while the statutory u.s. corporate tax rate has decreased , we have also increased our interest expense in the united states in connection with the ths transaction , which reduces taxable income . as a result , we currently expect our fiscal 2019 effective tax rate to be similar to our fiscal 2018 rate after discrete events . net income available to thermon group holdings , inc. net income available to the company , after non-controlling interest , was $ 11.9 million in fiscal 2018 as compared to $ 14.6 million in fiscal 2017 , a decrease of $ 2.7 million or 19 % . the decrease in fiscal 2018 net income is primarily due to a $ 16.8 million increase in marketing , general and administrative and engineering expense primarily due to the ths operations and ths acquisition-related expenses . in addition , in fiscal 2018 , ths-acquired intangible assets contributed $ 4.4 million in increased amortization expense , and we experienced increases in interest expense , net and other expense of $ 5.8 million and $ 5.2 million , respectively , primarily due to interest expense on our new credit facility indebtedness and losses on foreign currency related hedges we entered into in fiscal 2018 , respectively . these decreases were offset in part by a $ 31.9 million increase in gross profit and $ 1.0 million increase in income attributable to non-controlling interests due to an increase in sumac 's net income . year ended march 31 , 2017 ( `` fiscal 2017 `` ) compared to the year ended march 31 , 2016 ( `` fiscal 2016 `` ) revenue . revenue for fiscal 2017 were $ 264.1 million , compared to $ 281.9 million for fiscal 2016 , a decrease of $ 17.8 million , or 6 % , mostly attributable to decreases in canada , the united states and asia , offset in part by increased sales in europe . our sales mix in fiscal 2017 was 39 % greenfield and 61 % mro/ue compared to 34 % greenfield and 66 % mro/ue in fiscal 2016. in fiscal 2017 , revenue grew in our europe segment and declined in our canada , united states and asia segments . we are experiencing continued pricing pressure within most industries we serve . while there have been some recent increases in the price of oil , we are experiencing a continued deferral of capital and maintenance spending from our customers , particularly in the united states and canada . europe has been the recent exception to this trend . fiscal 2017 revenue increased by $ 5.8 million in our europe segment or 9 % as compared to fiscal 2016. within our europe segment , we are beginning to see increased demand in the downstream energy market , particularly in russia , eastern europe and the middle east . fiscal 2017 revenue in canada declined $ 15.2 million or 27 % . canadian revenue continues to be impacted by low crude oil prices , which has resulted in the postponement or suspension of upstream exploration and production projects , particularly in the canadian oil sands region , where the cost to extract oil is high . to a lesser degree , our fiscal 2017 canada segment 's revenues were also negatively impacted by the evacuation of fort mcmurray and the related suspension of oil sands facility projects . fiscal 2017 revenue in the united states declined by $ 6.2 million or 5 % . our ipi business contributed revenue of $ 12.9 million and $ 8.9 34 million in revenue in fiscal 2017 and fiscal 2016 , respectively , representing an increase of $ 4.0 million . we acquired ipi on july 31 , 2015 ; therefore , fiscal 2016 only contains nine months of ipi revenue , whereas fiscal 2017 contains twelve months of ipi revenue . within the united states segment , excluding ipi , our revenue declined $ 10.3 million or 9 % in fiscal 2017 as compared to fiscal 2016. greenfield and upgrade and expansion ( “ ue ” ) demand in the u.s. gulf coast region remains relatively strong . however , we have encountered weakening demand in mro sales related to the cycle of deferred maintenance spending we see in north america . our asia segment revenue declined by $ 2.1 million or 6 % in fiscal 2017 as compared to fiscal 2016 , which is primarily attributable to a slow fourth quarter due to customer project timing . gross profit and margin . gross profit totaled $ 111.9 million in fiscal 2017 ,	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 totaled $ 166.5 million for fiscal 2018 compared to $ 52.0 million for fiscal 2017 , an increase of $ 114.5 million . in fiscal 2018 , we acquired ths which resulted in a use of cash of $ 202.7 million . partially offsetting cash used to fund the ths acquisition was a comparative $ 36.7 million source of cash from the decrease in purchases of investments and a comparative $ 53.4 million source of cash from the increase in the sale of investments in fiscal 2018. net cash provided by ( used in ) financing activities totaled $ 133.9 million in fiscal 2018 , compared to $ ( 14.7 ) million for fiscal 2017 , an increase of $ 148.6 million cash provided by financing activities . the increase in the source of cash is primarily attributable to the funding of the new term loan b credit facility which was a source of cash of $ 250.0 million , offset in part by the repayment of the extinguished credit facility of $ 91.0 million , and an unscheduled repayment of $ 25.0 million on the term loan b in fiscal 2018. additionally , the company had borrowings of $ 10.0 million from the revolving credit facility during fiscal 2018 which were repaid in full at the end of the reporting period and paid $ 9.7 million of debt issuance and debt discounts related to the new term loan b credit facility . see note 10 , “ long-term debt ” for additional information on our term loan b credit facility . year ended march 31 , 2017 ( `` fiscal 2017 '' ) compared to the year ended march 31 , 2016 ( `` fiscal 2016 '' ) net cash provided by operating activities totaled $ 26.4 million for fiscal 2017 compared to $ 47.9 million for fiscal 2016 , a decrease of $ 21.5 million .
the company 's financial statements as of june 30 , 2012 and for the fiscal years ended june 30 , 2012 and 2011 are on a combined basis and presented as carve-out financial statements as the company was not a separate consolidated group prior to the distribution date . these statements reflect the combined historical results of operations , financial position and cash flows of 21st century fox 's publishing businesses , its education division and other australian assets . subsequent to the distribution date , the company 's financial statements as of and for the year ended june 30 , 2013 are presented on a consolidated basis as the company became a separate consolidated group . 38 the company 's consolidated and combined statements of operations ( the statements of operations ) for the fiscal years ended june 30 , 2013 , 2012 and 2011 include allocations of general corporate expenses for certain support functions that were provided on a centralized basis by 21st century fox and not recorded at the business unit level , such as expenses related to finance , human resources , information technology , facilities , and legal , among others . these expenses have been allocated to the company on the basis of direct usage when identifiable , with the remainder allocated on a pro rata basis of combined or consolidated revenues , operating income , headcount or other measures of the company . management believes the assumptions underlying the combined and consolidated financial statements ( the financial statements ) , including the assumptions regarding allocating general corporate expenses from 21st century fox are reasonable . nevertheless , the financial statements may not include all of the actual expenses that would have been incurred by the company and may not reflect the company 's consolidated and combined results of operations , financial position and cash flows had it been a stand-alone company during the periods presented . actual costs that would have been incurred if the company had been a stand-alone company would depend on multiple factors , including organizational structure and strategic decisions made in various areas , including information technology and infrastructure . the company 's consolidated balance sheet as of june 30 , 2013 consists of the company 's consolidated balances , subsequent to the separation . the balances reflect the assets and liabilities that were historically included in 21st century fox 's publishing business , its education division and other australian assets , as well as assets and liabilities transferred to the company as part of the internal reorganization . all assets and liabilities included in the company 's consolidated balance sheet are recorded on a historical cost basis . the company 's combined balance sheet as of june 30 , 2012 consists of the combined balances of 21st century fox 's publishing businesses , its education division and other australian assets . the consolidated and combined balance sheets will be referred to as the balance sheets herein . the financial statements have been prepared in accordance with generally accepted accounting principles in the united states of america ( gaap ) . all intracompany transactions and accounts within news corporation have been eliminated for the financial statements . for purposes of the company 's financial statements for periods prior to the separation , income tax expense has been recorded as if the company filed tax returns on a stand-alone basis separate from 21st century fox . this separate return methodology applies the accounting guidance for income taxes to the stand-alone financial statements as if the company was a stand-alone enterprise for the periods prior to the distribution date . therefore , cash tax payments and items of current and deferred taxes may not be reflective of the company 's actual tax balances prior to or subsequent to the separation . prior to the distribution date , the company 's operating results were included in 21st century fox 's consolidated u.s. federal and state income tax returns . pursuant to rules promulgated by the internal revenue service and various state taxing authorities , the company will file its initial u.s. income tax returns for the period june 29 , 2013 , through june 30 , 2013. the income tax accounts reflected in the balance sheets as of june 30 , 2013 include income taxes payable and deferred taxes allocated to the company at the time of the separation . the calculation of the company 's income taxes involves considerable judgment and the use of both estimates and allocations . management 's discussion and analysis of financial condition and results of operations is intended to help provide an understanding of the company 's financial condition , changes in financial condition and results of operations for the fiscal periods presented . this discussion is organized as follows : overview of the company 's business this section provides a general description of the company 's businesses , as well as developments that occurred during fiscal 2012 , fiscal 2013 or early fiscal 2014 that the company believes are important in understanding its results of operations and financial condition or to disclose known trends . results of operations this section provides an analysis of the company 's results of operations for the three fiscal years ended june 30 , 2013 , respectively . this analysis is presented on both a consolidated or 39 combined basis and a segment basis . in addition , a brief description is provided of significant transactions and events that impact the comparability of the results being analyzed . story_separator_special_tag in march 2013 , the company sold its 44 % equity interest in sky network television ltd. for approximately $ 675 million . in april 2013 , the company sold its remaining 10 % investment in the dow jones indexes business to cme . since 2010 , the company has divested all of its interests in the dow jones indexes business and stoxx and received cumulative proceeds of approximately $ 1 billion . in september 2013 , the company sold the dow jones local media group , which operates eight daily and 15 weekly newspapers in seven states . results of operations results of operationsfiscal 2013 versus fiscal 2012 the following table sets forth the company 's operating results for fiscal 2013 as compared to fiscal 2012. replace_table_token_3_th * * not meaningful 44 revenues revenues increased 3 % for the fiscal year ended june 30 , 2013 as compared to fiscal 2012 , primarily due to the inclusion of revenues resulting from the consolidation of fox sports australia and the acquisition of thomas nelson ( the acquisitions ) of approximately $ 324 million and $ 172 million , respectively , and higher u.k. newspaper revenues of approximately $ 89 million principally due to the inclusion of revenues from the launch of the sunday edition of the sun in february 2012. also contributing to the revenue increase was higher advertising revenues at the digital real estate services segment of $ 59 million . these increases were partially offset by lower revenues at the australian newspapers of $ 350 million , primarily reflecting lower newspaper advertising revenues principally due to the continued challenging economic environment in australia , and lower revenues at dow jones of $ 76 million reflecting lower advertising revenues . operating expenses operating expenses increased 6 % for the fiscal year ended june 30 , 2013 as compared to fiscal 2012 , primarily due to the inclusion of operating expenses related to the acquisitions of $ 370 million , partially offset by a $ 96 million decrease in operating expenses at the news and information services segment primarily due to lower printing , production and distribution expenses resulting from decreased revenues . selling , general and administrative expenses selling , general and administrative expenses increased 1 % for the fiscal year ended june 30 , 2013 as compared to fiscal 2012 , primarily due to a $ 99 million increase at the other segment , the inclusion of $ 35 million in expenses resulting from the acquisitions and higher expenses of $ 20 million in the digital real estate services segment directly relating to revenue growth supporting innovation , development and the sale of real estate advertising products . these increases were partially offset by lower expenses of $ 87 million at the news and information services segment principally resulting from the positive impact of cost savings initiatives and lower litigation settlement costs at the book publishing segment of approximately $ 25 million related to an e-books antitrust action that settled in fiscal 2012. depreciation and amortization depreciation and amortization increased 13 % for the fiscal year ended june 30 , 2013 as compared to fiscal 2012 , primarily due to the inclusion of expenses resulting from the acquisitions of approximately $ 32 million and higher depreciation expense at the news and information services segment of $ 25 million . impairment and restructuring charges during the fourth quarter of fiscal 2013 , as part of the company 's long-range planning process in preparation for the separation , the company adjusted its future outlook and related strategy principally with respect to the news and information services business in australia and secondarily with respect to the news and information services businesses in the u.s. these adjustments reflect adverse trends affecting the company 's news and information services segment , including declines in advertising revenue and continued declines in the economic environment in australia , and resulted in a reduction in expected future cash flows . as a result , the company determined that the fair value of these reporting units declined below their respective carrying values and recorded non-cash impairment charges of approximately $ 1.4 billion ( $ 1.1 billion , net of tax ) in the fiscal year ended june 30 , 2013. the charges primarily consisted of a write-down of the company 's goodwill of $ 494 million , a write-down of intangible assets ( primarily newspaper mastheads ) of $ 862 million , and a write-down of fixed assets of $ 46 million . the impairment charges also include $ 42 million for the potential sale of assets at values below their carrying values . during the fourth quarter of fiscal 2012 , the company completed its annual impairment review of goodwill and indefinite-lived intangible assets . as a result of the impairment review performed , the company recorded non-cash impairment charges of approximately $ 2.6 billion ( $ 2.2 billion , net of tax ) for the fiscal year ended june 30 , 2012. the charges consisted of a write-down of goodwill of approximately $ 1.3 billion and a write-down of the indefinite-lived intangible assets ( primarily newspaper mastheads and distribution networks ) of approximately $ 1.3 billion . these impairment charges were primarily the result of adverse trends affecting several businesses in the company 's news and information services segment , including secular declines in the economic environment in australia , a decline in in-store advertising spend by consumer packaged goods manufacturers in the u.s. and lower forecasted revenues from certain businesses utilizing various trade names owned by the company 's newspaper operations . the charges also reflected the expected sale of certain assets at a value below their carrying value . 45 in fiscal 2013 , the company recorded restructuring charges of $ 293 million , of which $ 276 million related to the newspaper businesses . the restructuring charges primarily related to the reorganization of the australian newspaper businesses	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 current financial condition the company 's principal source of liquidity is internally generated funds and cash and cash equivalents on hand . in accordance with the separation and distribution agreement , 21st century fox made a cash contribution to the company such that at the distribution date , the company had approximately $ 2.4 billion of cash on hand and will receive the remaining $ 0.2 billion from 21st century fox during the first quarter of fiscal 2014. the company expects these elements of liquidity will enable it to meet its liquidity needs in the foreseeable future . in addition , the company expects to establish a revolving credit facility during fiscal 2014 and expects to have access to the worldwide capital markets , subject to market conditions , in order to issue debt if required . although the company believes that its future cash from operations , together with its access to the capital markets , will provide adequate resources to fund its operating and financing needs , its access to , and the availability of , financing on acceptable terms in the future will be affected by many factors , including : ( i ) its credit rating , ( ii ) the liquidity of the overall capital markets and ( iii ) the current state of the economy . there can be no assurances that the company will continue to have access to the capital markets on acceptable terms . see item 1a . risk factors for a further discussion . as of june 30 , 2013 , the company 's consolidated assets included $ 644 million in cash and cash equivalents that was held by its foreign subsidiaries . $ 235 million of this amount is cash held at the digital real estate services segment which is not readily accessible by the company as it is held by rea group , a majority owned but separately listed public company . rea group must declare a dividend in order for the company to have access to its share of rea group 's cash balance .
bempedoic acid and our lead product candidate , the bempedoic acid / ezetimibe combination pill , are targeted therapies that have been shown to significantly reduce elevated ldl-c levels in patients with hypercholesterolemia , including patients inadequately treated with current lipid-modifying therapies . the clinical development program for the bempedoic acid / ezetimibe combination pill consists of a single pivotal phase 3 clinical study ( 1002fdc-053 ) in patients with hypercholesterolemia and with atherosclerotic cardiovascular disease , or ascvd , and or heterozygous familial hypercholesterolemia , or hefh , including high cvd risk primary prevention patients , whose ldl-c is not adequately controlled despite receiving maximally tolerated lipid-modifying background therapy . 1002fdc-053 initiated in november 2017 and we expect to report top-line results in august 2018. the global pivotal phase 3 clinical development program for bempedoic acid , consisting of four clinical studies , fully enrolled approximately 3,600 high cvd risk patients with hypercholesterolemia and ascvd and or hefh , or who are high cvd risk primary prevention , on optimized background lipid-modifying therapy and with elevated levels of ldl-c. these patients are on two distinct types of background lipid-modifying therapy : 1 ) patients on their maximally tolerated statin therapy , and 2 ) patients who are only able to tolerate less than the lowest approved daily starting dose of a statin , and can be considered statin intolerant . in march 2018 , we expect to report top-line results from the first of the phase 3 studies , study 4 ( 1002-048 ) . in may 2018 , we expect to report top-line results from the 52-week long-term safety study , study 1 ( 1002-040 ) and top-line results from study 3 ( 1002-046 ) . in september 2018 , top-line results are expected from study 2 ( 1002-047 ) . we intend to use positive results from our phase 3 bempedoic acid / ezetimibe combination pill and bempedoic acid programs with a total of 4,000 patients to support our global regulatory submissions for tandem ldl-c lowering indications in the u.s. by the first quarter of 2019 and in europe by the second quarter of 2019. we are also conducting a global cardiovascular outcomes trial , or cvot , known as c holesterol l owering via b e mpedoic acid , an a cl-inhibiting r egimen ( clear ) outcomes , for bempedoic acid in patients with hypercholesterolemia and high cvd risk and who can be considered statin intolerant . we initiated the clear outcomes cvot in december 2016 , and intend to use positive results from this cvot to support our submissions for a cv risk reduction indication in the u.s. and europe by 2022 . 64 in december 2017 , we submitted an investigational new drug , or ind , application to the food and drug administration , or fda , for a reformulated tablet of bempedoic acid for a nonalcoholic steatohepatitis , or nash , indication , which was accepted in january 2018. we were incorporated in delaware in january 2008 , and commenced our operations in april 2008. since our inception , we have focused substantially all of our efforts and financial resources on developing bempedoic acid . we have funded our operations to date primarily through proceeds from sales of preferred stock , convertible promissory notes and warrants , public offerings of common stock and the incurrence of indebtedness , and we have incurred losses in each year since our inception . we own the exclusive worldwide rights to bempedoic acid . on august 15 , 2017 , we completed an underwritten public offering of 3,100,000 shares of common stock . we also granted the underwriters a 30-day option to purchase up to 465,000 additional shares of our common stock , which was exercised in full in september 2017. all the shares were offered by us at a price to the public of $ 49.00 per share . the aggregate net proceeds received by us from the offering were $ 164.0 million , net of underwriting discounts and commissions and expenses payable by us . we have not commenced principal operations and do not have any products approved for sale . to date , we have not generated any revenue . we have never been profitable and our net losses were $ 167.0 million , $ 75.0 million , and $ 49.8 million for the years ended december 31 , 2017 , 2016 and 2015 , respectively . substantially all of our net losses resulted from costs incurred in connection with research and development programs , general and administrative costs associated with our operations . we expect to incur significant additional research and development expenses and operating losses for the foreseeable future . we expect our expenses to increase in connection with our ongoing activities , including , among others : completing the clinical development activities for bempedoic acid , including the completion of the global pivotal phase 3 ldl-c lowering program and the clear outcomes cvot ; completing the clinical development activities for the bempedoic acid / ezetimibe combination pill ; seeking regulatory approval for the bempedoic acid / ezetimibe combination pill and bempedoic acid ; commercializing the bempedoic acid / ezetimibe combination pill and bempedoic acid ; and operating as a public company . accordingly , we will need additional financing to support our continuing operations . we will seek to fund our operations through public or private equity or debt financings or through other sources , which may include collaborations with third parties . adequate additional financing may not be available to us on acceptable terms , or at all . story_separator_special_tag additionally , under the updated guidance companies have to elect whether to account for forfeitures of share-based payments by ( 1 ) recognizing forfeitures as they occur or ( 2 ) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change , as was previously required . we adopted asu 2016-09 effective january 1 , 2017 , and recognized approximately $ 4.5 million of deferred tax assets that were not previously recognized on our balance sheet under the prior accounting guidance . the increase in the deferred tax assets was fully offset by an increase in the company 's valuation allowance . in addition , we made a policy election to account for forfeitures as they occur . the cumulative effect of adoption was an increase of $ 0.1 million to both additional paid-in capital and accumulated deficit as of january 1 , 2017. the remaining provisions adopted in asu 2016-09 did not have a material impact to our balance sheets , statements of operations or statements of cash flows . results of operations comparison of the years ended december 31 , 2017 and 2016 the following table summarizes our results of operations for the years ended december 31 , 2017 and 2016 : replace_table_token_9_th research and development expenses research and development expenses for the year ended december 31 , 2017 , were $ 147.6 million compared to $ 57.9 million for the year ended december 31 , 2016 , an increase of $ 89.7 million . the increase in research and development expenses was primarily related to the further clinical development of the bempedoic acid / ezetimibe combination pill and bempedoic acid , including costs to support the global pivotal phase 3 studies , the cvot , and increases in our headcount and stock-based compensation expense . general and administrative expenses general and administrative expenses for the year ended december 31 , 2017 , were $ 21.4 million compared to $ 18.3 million for the year ended december 31 , 2016 , an increase of approximately $ 3.1 million . the increase in general and administrative expenses was primarily attributable to costs to support public company operations , further increases in our headcount and stock-based compensation expense , and other costs to support our growth . 70 interest expense interest expense for the year ended december 31 , 2017 , was $ 0.2 million compared to $ 0.4 million for the year ended december 31 , 2016. interest expense was related to our credit facility with oxford finance llc . other income , net other income , net for the year ended december 31 , 2017 , was $ 2.2 million compared to $ 1.5 million for the year ended december 31 , 2016. this increase was primarily related to a reduction in expense for the amortization of premiums and discounts on our investments . results of operations comparison of the years ended december 31 , 2016 and 2015 the following table summarizes our results of operations for the years ended december 31 , 2016 and 2015 : replace_table_token_10_th research and development expenses research and development expenses for the year ended december 31 , 2016 , were $ 57.9 million compared to $ 29.8 million for the year ended december 31 , 2015 , an increase of $ 28.1 million . the increase in research and development expenses was primarily related to the further clinical development of bempedoic acid , including costs to support the initiation of the three global pivotal phase 3 studies and the cvot , and further increases in our headcount and stock-based compensation expense . general and administrative expenses general and administrative expenses for the year ended december 31 , 2016 , were $ 18.3 million compared to $ 20.2 million for the year ended december 31 , 2015 , a decrease of approximately $ 1.9 million . the decrease in general and administrative expenses was primarily related to a reduction in pre-commercialization activities , partially offset by increases in costs to support public company operations , increases in our headcount , and other costs to support our growth . interest expense interest expense for the year ended december 31 , 2016 , was $ 0.4 million compared to $ 0.5 million for the year ended december 31 , 2015. interest expense was related to our credit facility with oxford finance llc . 71 other income , net other income , net for the year ended december 31 , 2016 , was $ 1.5 million compared to $ 0.8 million for the year ended december 31 , 2015. this increase was primarily related to an increase in interest income earned on our cash , cash equivalents and investment securities . story_separator_special_tag href= `` https : //www.sec.gov/archives/edgar/data/0001434868/000104746918000899/ # bg19001a_main_toc `` > interest of our stockholders will be diluted , and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder . debt financing , if available , may involve agreements that include covenants limiting or restricting our ability to take specific actions , such as incurring additional debt , making capital expenditures or declaring dividends . if we raise additional funds through collaborations , strategic alliances or licensing arrangements with pharmaceutical partners or royalty-based financing arrangements , we may have to relinquish valuable rights to our technologies , future revenue streams or grant licenses on terms that may not be favorable to us . if we are unable to raise additional funds through equity or debt financings or through collaborations , strategic alliances or licensing arrangements or royalty-based financing arrangements when needed , we may be required to delay , limit , reduce or terminate our product development or future commercialization efforts or grant rights to develop and market the bempedoic acid / ezetimibe combination pill or bempedoic acid that we would otherwise prefer to develop and market ourselves . contractual obligations and commitments in february 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.	liquidity and capital resources we have funded our operations to date primarily through proceeds from sales of preferred stock , convertible promissory notes and warrants , public offerings of common stock and the incurrence of indebtedness . in june 2014 , we entered into a loan and security agreement ( the credit facility ) with oxford finance llc whereby we received net proceeds of $ 4.9 million from the issuance of secured promissory notes under a term loan as part of the facility . in october 2014 , we sold 4,887,500 shares of common stock at a price of $ 20.00 per share , less underwriting discounts and commissions , for net proceeds of $ 91.6 million . in march 2015 , we sold 2,012,500 shares of common stock at a price of $ 100.00 per share , less underwriting discounts and commissions , for net proceeds of $ 190.0 million . in august 2017 , we completed an underwritten public offering of 3,100,000 shares of common stock . we also granted the underwriters a 30-day option to purchase up to 465,000 additional shares of our common stock , which was exercised in full in september 2017. all of the shares were offered by us at a price to the public of $ 49.00 per share for net proceeds of $ 164.0 million . to date , we have not generated any revenue and we anticipate that we will continue to incur losses for the foreseeable future . as of december 31 , 2017 , our primary sources of liquidity were our cash and cash equivalents and available-for-sale investments , which totaled $ 34.5 million and $ 239.2 million , respectively . we invest our cash equivalents and investments in highly liquid , interest-bearing investment-grade and government securities to preserve principal .
in exchange for the contribution of the mandalay bay real estate assets , the operating partnership received consideration of $ 2.1 billion , which was comprised of $ 1.3 billion of the operating partnership 's secured indebtedness assumed by mgm breit venture , the operating partnership 's 50.1 % equity interest in the mgp breit venture , and the remainder in cash . in addition , mgm received $ 2.4 billion of cash distributed from the mgp breit venture as consideration for its contribution of the mgm grand las vegas real estate assets , and , additionally , the operating partnership issued 2.6 million operating partnership units to mgm representing 5 % of the equity value of mgp breit venture . in connection with the transactions , mgm provided a shortfall guaranty of the principal amount of indebtedness of the mgp breit venture ( and any interest accrued and unpaid thereto ) . on the closing date , breit also purchased 4.9 million class a common shares of mgp for $ 150 million . in connection with the transactions , mgp breit venture entered into a lease with a subsidiary of mgm for the real estate assets of mandalay bay and mgm grand las vegas . the lease provides for a term of thirty years with two ten-year renewal options and has an initial annual base rent of $ 292 million , escalating annually at a rate of 2 % per annum for the first fifteen years and thereafter equal to the greater of 2 % and the cpi increase during the prior year subject to a cap of 3 % . in addition , the lease will require the tenant to spend 3.5 % of net revenues over a rolling five-year period at the properties on capital expenditures and for the tenant and mgm to comply with certain financial covenants , which , if not met , will require the tenant to maintain cash security or provide one or more letters of credit in favor of the landlord in an amount equal to the rent for the succeeding one-year period . mgm provided a guarantee of tenant 's obligations under the lease . in connection with the mgp breit venture transaction , the mgm-mgp master lease was modified to remove the mandalay bay property and the rent under the mgm-mgp master lease was reduced by $ 133 million . also , on january 14 , 2020 , the operating partnership , mgp , and mgm entered into an agreement for the operating partnership to waive its right to issue mgp class a shares , in lieu of cash , to mgm in connection with mgm exercising its right to require the operating partnership to redeem the operating partnership units it holds . the waiver provides that the units will be purchased at a price per unit equal to a 3 % discount to the applicable cash amount as calculated in accordance with the operating agreement . the waiver terminates on the earlier of 24 months following the closing of the mgp breit venture transaction and mgm receiving cash proceeds of $ 1.4 billion as consideration for the redemption of its operating partnership units . combined results of operations for mgp and the operating partnership the following is a comparative discussion of results of operations for the years ended december 31 , 2019 and 2018 . refer to the audited consolidated financial statements and notes for the fiscal year ended december 31 , 2018 , which were included in our annual report on form 10-k , filed with the sec on february 27 , 2019 , and the audited and consolidated financial statements and notes for the fiscal year ended december 31 , 2018 , as retrospectively recasted for discontinued operations , which were filed on current report on form 8-k filed with the sec on august 16 , 2019 , for the comparative discussion of the results of operations for the years ended december 31 , 2018 and 2017 . 34 overview the following table summarizes our financial results for the years ended december 31 , 2019 , 2018 and 2017 : replace_table_token_10_th revenues rental revenue . rental revenues , including tenant reimbursements and other , for the years ended december 31 , 2019 and 2018 were $ 881.1 million and $ 869.5 million , respectively . the $ 11.6 million , or 1 % , increase for 2019 compared to 2018 was primarily due to an increase in rental revenues , excluding the lease incentive amortization , of $ 126.5 million as a result of the empire city transaction in january 2019 , the park mgm transaction in march 2019 , and the addition of mgm northfield park to the mgm-mgp master lease in april 2019. the increase was offset by a $ 93.7 million decrease in reimbursed revenues as we no longer recognize reimbursed revenue for property taxes in accordance with the adoption of asc 842 on january 1 , 2019 and a $ 16.4 million decrease in revenues for the amortization of the lease incentive asset recorded as part of the park mgm transaction . expenses depreciation . depreciation expense was $ 294.7 million and $ 266.6 million for the years ended december 31 , 2019 and 2018 , respectively . the $ 28.1 million , or 11 % , increase for 2019 as compared to 2018 was primarily due to the full year of depreciation recorded in 2019 for the acquisitions of mgm northfield park in july 2018 and empire city in january 2019. property transactions , net . property transactions , net were $ 10.8 million in 2019 compared to $ 20.3 million in 2018 . story_separator_special_tag significant estimates , judgments , and assumptions are required in a number of areas , including , but not limited to , reit qualification , lease accounting , determining the useful lives of real estate investments and property and equipment used in operations and evaluating the impairment of such assets , and purchase price allocations . the judgment on such estimates and underlying assumptions is based on our experience and various other factors that we believe are reasonable under the circumstances . these form the basis of our judgment on matters that may not be apparent from other available sources of information . in many instances changes in the accounting estimates are likely to occur from period to period . actual results may differ from the estimates . the future financial statement presentation , financial condition , results of operations and cash flows may be affected to the extent that the actual results differ materially from our estimates . income taxes - reit qualification we have elected to be taxed as a reit for u.s. federal income tax purposes commencing with our taxable year ended december 31 , 2016 , and intend to continue to be organized and to operate in a manner that will permit us to continue to qualify as a reit . to qualify as a reit , we must meet certain organizational and operational requirements , including a requirement to distribute at least 90 % of our annual reit taxable income to shareholders , determined without regard to the dividends paid deduction and excluding any net capital gains . as a reit , we generally will not be subject to federal income tax on income that we pay as distributions to our shareholders . if we fail to qualify as a reit in any taxable year , we will for that year and subsequent years be subject to u.s. federal and state income tax , including any applicable alternative minimum tax , on our taxable income at regular corporate income tax rates , and distributions paid to our shareholders would not be deductible by us in computing taxable income . any resulting corporate liability could be substantial and could materially and adversely affect our net income and net cash available for distribution to shareholders . unless we were entitled to relief under certain code provisions , we also would be disqualified from re-electing to be taxed as a reit for the four taxable years following the year in which we failed to qualify to be taxed as a reit . leases the lease accounting guidance under asc 842 is complex and requires the use of judgments and assumptions by management to determine the proper accounting treatment of a lease . upon entry into a lease agreement or amendment , we assess whether such agreements are accounted for as a separate or combined contract and or a lease modification or a new lease . this further determines whether the extent to which we need to perform lease classification testing to determine if the agreement is a finance or operating lease . the lease classification test may require judgments which may include , among other things , the fair value of the assets , the residual value of the assets at the end of the lease term , the estimated remaining economic life of the assets , and the likelihood of the tenant exercising renewal options . 40 real estate investments , property and equipment used in operations , and depreciation real estate costs related to the acquisition and improvement of our properties are capitalized and include expenditures that materially extend the useful lives of existing assets . property and equipment used in operations represents the assets acquired in the northfield acquisition and was therefore recognized at fair value at the acquisition date . depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets . we consider the period of future benefit of an asset to determine its appropriate useful life . depreciation on our buildings , improvements and integral equipment is computed using the straight-line method over an estimated useful life of 3 to 40 years . if we use a shorter or longer estimated useful life , it could have a material impact on our results of operations . we believe that 3 to 40 years is an appropriate estimate of useful life . property and equipment used in operations that related to the operations of northfield are classified as assets held for sale . refer to note 3 for further information . impairment of real estate investments we continually monitor events and changes in circumstances that could indicate that the carrying amount of our real estate investments may not be recoverable or realized . in accordance with accounting standards governing the impairment or disposal of long-lived assets , the carrying value of long-lived assets , including land , buildings and improvements , land improvements , and equipment is evaluated whenever events or changes in circumstances indicate that a potential impairment has occurred relative to a given asset or assets . factors that could result in an impairment review include , but are not limited to , a current period cash flow loss combined with a history of cash flow losses , current cash flows that may be insufficient to recover the investment in a property over its remaining useful life , a projection that demonstrates continuing losses associated with the use of a long-lived asset , significant changes in the manner of use of the assets , or significant changes in business strategies . if such circumstances arise , we use an estimate of the undiscounted value of expected future operating cash flows to determine whether the long-lived assets are impaired . if the aggregate undiscounted cash flows plus net proceeds expected from disposition of the asset ( if any ) are less than the carrying amount of the assets , the resulting impairment charge to be recorded	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 rental revenues and , subsequent to the close of the mgp breit venture transaction in february 2020 , distributions from the mgp breit venture are our primary sources of cash from operations and are dependent on the tenant 's ability to pay rent and the mgp breit venture 's ability to pay distributions . all of our indebtedness is held by the operating partnership and mgp does not guarantee any of the operating partnership 's indebtedness . mgp 's principal funding requirement is the payment of dividends and distributions on its class a shares , and its principal source of funding for these dividends and distributions is the distributions it receives from the operating partnership . mgp 's liquidity is therefore dependent upon the operating partnership 's ability to make sufficient distributions to it . the operating partnership 's primary uses of cash include payment of operating expenses , debt service and distributions to mgp and mgm . we believe that the operating partnership currently has sufficient liquidity to satisfy all of its commitments , including its distributions to mgp , and in turn , that we currently have sufficient liquidity to satisfy all our commitments in the form of $ 202.1 million in cash and cash equivalents held by the operating partnership as of december 31 , 2019 , expected cash flows from operations , and $ 1.4 billion of borrowing capacity under the operating partnership 's revolving credit facility as of december 31 , 2019 .
our revenues are difficult to predict and depend on numerous factors , including the prevalence and severity of influenza in regions for which peramivir has received regulatory approval , seasonality of influenza , ongoing discussions with government agencies regarding future rapivab and or bcx4430 development and stockpiling procurement , as well as entering into , or modifying , licensing agreements for our product candidates . furthermore , revenues related to our collaborative development activities are dependent upon the progress toward and the achievement of developmental milestones by us or our collaborative partners . our operating expenses are also difficult to predict and depend on several factors , including research and development expenses ( and whether these expenses are reimbursable under government contracts ) , drug manufacturing , and clinical research activities , the ongoing requirements of our development programs , and the availability of capital and direction from regulatory agencies , which are difficult to predict . management may be able to control the timing and level of research and development and general and administrative expenses , but many of these expenditures will occur irrespective of our actions due to contractually committed activities and or payments . as a result of these factors , we believe that period to period comparisons are not necessarily meaningful and you should not rely on them as an indication of future performance . due to all of the foregoing factors , it is possible that our operating results will be below the expectations of market analysts and investors . in such event , the prevailing market price of our common stock could be materially adversely affected . overview we are a biotechnology company that designs , optimizes and develops novel small molecule drugs that block key enzymes involved in the pathogenesis of diseases . we focus on the treatment of rare diseases in which significant unmet medical needs exist and align with our capabilities and expertise . we integrate the disciplines of biology , crystallography , medicinal chemistry and computer modeling to discover and develop small molecule pharmaceuticals through the process known as structure-guided drug design . critical accounting policies and estimates the accompanying discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements and the related disclosures , which have been prepared in accordance with u.s. gaap . the preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues , expenses and related disclosure of contingent assets and liabilities . we evaluate our estimates , judgments and the policies underlying these estimates on a periodic basis , as situations change , and regularly discuss financial events , policies , and issues with members of our audit committee and our independent registered public accounting firm . we routinely evaluate our estimates and policies regarding revenue recognition , administration , inventory and manufacturing , taxes , stock-based compensation , research and development , consulting and other expenses and any associated liabilities . 40 recent corporate highlights rapivab ( peramivir injection ) rapivab was approved by the fda on december 19 , 2014 for the treatment of acute uncomplicated influenza in adult patients who have been symptomatic for no more than two days . we have elected the “ sell-through ” revenue recognition methodology and recognized approximately $ 0.6 million of rapivab product sales in 2015. with the approval , commercial availability and out-licensing collaboration of rapivab , we have moved our focus to : ( 1 ) obtaining a stockpiling procurement contract with the u.s. government to realize the strategic value of this program ; ( 2 ) fulfilling our post-approval development requirements , including conducting a pediatric trial ; and ( 3 ) submitting a maa and a nds in the european union and canada , respectively , to allow sul ( defined below ) the ability to commercialize the drug in those regions . on june 16 , 2015 , we and seqirus uk limited , a limited company organized under the laws of the uk ( `` sul `` ) and a subsidiary of csl , entered into a license agreement ( the `` sul agreement `` ) granting sul and its affiliates worldwide rights to develop , manufacture and commercialize rapivab ( peramivir injection ) for the treatment of influenza except for the rights to conduct such activities in israel , japan , korea and taiwan ( the permitted geographies together constituting the `` territory `` ) . rapivab is an intravenous treatment for acute uncomplicated influenza and is currently licensed for use in the united states , japan and korea . rapivab is the first and only intravenous influenza treatment in the world . we retain all rights and associated economics to procure pandemic stockpiling orders for rapivab from the u.s. government , while sul has the right to pursue government stockpiling outside the u.s. pursuant to the sul agreement , rapivab will be commercialized by csl 's subsidiary , sul , which specializes in influenza prevention through the supply of seasonal and pandemic vaccine to global markets . sul will manufacture , commercialize and exercise decision-making authority with respect to the development and commercialization of rapivab within the territory and be responsible for all related costs , including sales and promotion . we will exercise sole decision-making authority with regard to the development and commercialization of rapivab outside of the territory and are responsible for all associated costs . under the terms of the sul agreement , we are responsible for fulfilling all post-marketing approval commitments in connection with the fda 's approval of the nda , and upon fulfillment we will transfer ownership of and financial responsibility for the nda to sul . story_separator_special_tag although we can not predict the future yen/dollar exchange rate , the applicable foreign currency rates moved such that we currently have no collateral posted ; however , it is possible that collateral will be required in 2016 or the future . we are unable to predict future changes in the yen/dollar exchange rate or increases/decreases in our hedge loss associated with the currency hedge agreement . year ended december 31 , 2014 compared to 2013 total 2014 revenues decreased to $ 13.6 million as compared to 2013 revenues of $ 17.3 million . the 2014 revenue consisted of $ 3.0 million of royalty revenue from shionogi and green cross associated with sales of peramivir in japan and korea , $ 9.4 million of reimbursement of collaborative expenses from barda/hhs and niaid/hhs related to the development of peramivir and bcx4430 , and $ 1.2 million associated with collaborative revenue amortization from other corporate partnerships . in addition , we recorded approximately $ 33,000 of rapivab revenue under the “ sell-through ” revenue recognition methodology . rapivab was available for commercial sale on december 26 , 2014. the decrease in total revenues was primarily the result of the june 2014 barda/hhs peramivir contract expiration associated with completion of development activities under this contract . the 2013 revenue consisted of $ 2.6 million of royalty revenue from shionogi and green cross associated with sales of peramivir in japan and korea , $ 13.5 million of reimbursement of collaborative expenses from barda/hhs related to the development of peramivir and $ 1.2 million associated with collaborative revenue amortization from other corporate partnerships . with the expiration of barda/hhs peramivir contract , unless we enter into new government contracts , all significant and future reimbursement of collaborative expenses will be under the niaid/hhs bcx4430 development contract . in addition , we expect rapivab product sales to increase in future years when the product is available prior to the beginning of the influenza season and for a longer period of time within a fiscal year . however , our rapivab product revenue will be difficult to predict because of volatility in prevalence , timing and severity of influenza season to season in the united states and because we will not incur substantial commercialization expenses to promote it . r & d expenses increased to $ 51.8 million in 2014 from $ 41.9 million in 2013 . 2014 r & d expenses , compared with 2013 , reflect increased spending on our hae and bcx4430 programs which were partially offset by the wind-down of peramivir development activities and the expiration of the barda/hhs development contract . in addition , our 2014 equity compensation expense allocated to r & d increased due to the vesting of two underlying milestones under previously issued performance-based stock options for the successful outcome of opus-1 and rapivab approval in the u.s. in 2013 , we recognized approximately $ 5.0 million of r & d costs related to a write-off of deferred collaboration costs associated with our pnp licensing agreement with aecom/irl . this write-off , and related r & d expenses , was allocated to the ulodesine program and represents the majority of 2013 ulodesine expense represented in the table below . 44 sg & a expenses increased to $ 7.5 million in 2014 compared to $ 6.0 million in 2013. the increase of $ 1.5 million is primarily due to rapivab distribution expenses and unrestricted grants awarded to u.s. and international hae patient advocacy groups . we expect our future sg & a expenses to increase due to increases in administrative expenses associated with corporate growth in preparation for future nda and other regulatory filings and for product commercialization . interest expense , related to the non-recourse notes issued in conjunction with the peramivir royalty monetization transaction in march 2011 , increased slightly to $ 5.0 million in 2014 as compared to $ 4.8 million in 2013. in addition , a mark to market gain of $ 5.5 million was recognized in 2014 related to the foreign currency hedge entered into in conjunction with the royalty monetization transaction , compared to a mark to market gain of $ 5.3 million in 2013 , both resulting from changes in the u.s. dollar/japanese yen exchange rate during the respective years . story_separator_special_tag future . in order to continue our operations substantially beyond mid-2017 , we will need to : ( 1 ) successfully secure or increase u.s. government funding of our programs , including procurement contracts ; ( 2 ) out-license rights to certain of our products or product candidates , pursuant to which we would receive cash milestones ; ( 3 ) raise additional capital through equity or debt financings or from other sources ; ( 4 ) obtain additional product candidate regulatory approvals , which would generate revenue and cash flow ; ( 5 ) reduce spending on one or more research and development programs ; and or ( 6 ) restructure operations . we may issue securities through private placement transactions or registered public offerings pursuant to a registration statement filed with the sec . our long-term capital requirements and the adequacy of our available funds will depend upon many factors , including : our ability to perform under our government contracts and receive reimbursement , and receive stockpiling procurement contracts ; the magnitude of work under our government contracts ; the progress and magnitude of our research , drug discovery and development programs ; changes in existing collaborative relationships or government contracts ; our ability to establish additional collaborative relationships with academic institutions , biotechnology or pharmaceutical companies and governmental agencies or other third parties ; the extent to which our partners , including governmental agencies , will share in the costs associated with the development of our programs or run the development programs themselves ; our ability to negotiate favorable development and marketing strategic alliances for certain product candidates or a decision to build or expand internal development	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 expenditures have exceeded revenues since our inception and we expect our 2016 operating expenses to exceed our 2016 revenues . our operations have principally been funded through public offerings and private placements of equity securities ; cash from collaborative and other research and development agreements , including u.s. government contracts for peramivir and bcx4430 ; and to a lesser extent , the pharma notes financing . to date , we have been awarded a barda/hhs peramivir development contract totaling $ 234.8 million , which expired on june 30 , 2014 , a niaid/hhs bcx4430 development contract totaling $ 34.0 million , which is ongoing , and a barda/hhs bcx4430 development contract totaling $ 36.2 million , which is also ongoing . the total amount of niaid/hhs and barda/hhs funding obligated under awarded options in the active contracts is $ 29.9 million and $ 16.3 million , respectively . most recently , we completed a successful public offering in june 2014 of 11.5 million shares of common stock at a price of $ 10.00 per share , which provided net proceeds to us of approximately $ 107.8 million . this financing and the recently completed sul out-licensing transaction provides us liquidity through mid-2017 . we may issue securities through private placement transactions or registered public offerings pursuant to a registration statement filed with the sec . in addition to the above , we have received funding from other sources , including other collaborative and other research and development agreements ; government grants ; equipment lease financing ; facility leases ; research grants ; and interest income on our investments .
the price of oil decreased to $ 51.69 per barrel and gas decreased to $ 2.63 per mmbtu at february 6 , 2015 , representing a 3 % decrease in oil prices and a 12 % decrease in gas prices from the end of 2014 . 33 executive summary during 2014 national oilwell varco , inc. earned $ 2.5 billion in income from continuing operations , or $ 5.70 per fully diluted share . earnings from continuing operations per diluted share increased 12 % from prior year levels of $ 2.2 billion or $ 5.09 per fully diluted share . excluding other items ( as defined in the non-gaap financial measures and reconciliations in results of operations ) from both years , diluted earnings per share of $ 6.07 in 2014 increased 17 % from $ 5.17 per share in 2013. during 2014 revenue grew 12 % from 2013 , to $ 21.4 billion , and operating profit increased 13 % from 2013 , to $ 3.6 billion . generally , 2014 benefitted from higher international drilling activity , which saw international rig counts ( as measured by baker hughes ) increase 3 % from 2013. this enabled all four of the company 's reporting segments to post higher year-over-year revenues in 2014. for its fourth quarter ended december 31 , 2014 , the company generated $ 597 million in net income from continuing operations , or $ 1.39 per fully diluted share , on $ 5.7 billion in revenue . compared to the third quarter of 2014 revenue increased $ 122 million or 2 % and net income from continuing operations decreased $ 104 million . compared to the fourth quarter of 2013 , revenue increased $ 407 million or 8 % , and net income from continuing operations decreased $ 33 million or 5 % . during the fourth quarter of 2014 , third quarter of 2014 , and fourth quarter of 2013 , pre-tax other items were $ 105 million , $ 1 million and $ 16 million , respectively . excluding the other items from all periods , fourth quarter 2014 earnings were $ 1.69 per fully diluted share , compared to $ 1.62 per fully diluted share in the third quarter of 2014 and $ 1.49 per fully diluted share in the fourth quarter of 2013. operating profit excluding other items was $ 1,018 million or 17.8 % of sales in the fourth quarter of 2014 , compared to $ 989 million or 17.7 % of sales in the third quarter of 2014 , and $ 925 million or 17.4 % of sales in the fourth quarter of 2013. on may 30 , 2014 , the company completed the previously announced spin-off of its distribution business into an independent public company named now inc. , which trades on the new york stock exchange under the symbol dnow . after the close of the new york stock exchange on may 30 , 2014 , the stockholders of record as of may 22 , 2014 ( the record date ) received one share of now inc. common stock for every four shares of nov common stock they held as of the record date . no fractional shares of now inc. common stock were distributed . the transfer agent aggregated any fractional shares into whole shares , sold those whole shares in the open market at prevailing rates and distributed the net cash proceeds , after deducting any taxes required to be withheld and brokerage charges and commissions , pro rata to each holder who would otherwise have been entitled to receive fractional shares in the distribution . our operating segments were realigned upon separation of now inc. , and as a result , all prior periods are presented on this basis . results of operations related to now inc. have been classified as discontinued operations in all periods presented on form 10-k. oil & gas equipment and services market rising oil and gas prices seen between 2003 and 2008 led to high levels of exploration and development drilling in many oil and gas basins around the globe . by late 2008 and into 2009 , the availability of credit tightened as major financial institutions wrote-down significant housing-related assets , leading to a credit-driven worldwide economic recession . developed economies struggled to recover throughout 2010 and 2011 , facing additional economic hardships related to potential sovereign debt defaults in europe . as a result , commodity prices , including oil and gas prices , were volatile . as the global economy began to improve , oil prices strengthened enabling a steady increase in worldwide drilling activity during the past three years . while natural gas prices initially recovered as well , prices fell to recent lows in 2012 as supply increased due in part to higher production of unconventional shale reservoir developments in north america . drillers then redirected their efforts towards unconventional shale plays targeting oil , rather than gas , further contributing to the rise in oil-drilling activity . for the fourth quarter of 2014 , oil-directed drilling accounted for over 80 % of the total domestic drilling effort . for the majority of 2014 oil prices and the number of rigs actively drilling worldwide , continued their upward trend . increased global demand had helped sustain relatively high oil prices and worldwide drilling activity . within the same time frame , technological improvements in drilling and extraction had unlocked formations that were previously unproduceable , especially in north america . global supply started to catch up to demand , creating a relatively balanced market . in the second half of 2014 , demand in areas such as asia , europe and the u.s. weakened , while drilling and production activity held steady . as opposed to limiting supply to stabilize prices , opec responded by maintaining similar production levels . as a result , oil prices fell significantly to levels not seen since 2009 . story_separator_special_tag other items included in operating profit for rig systems were $ 21 million for the year ended december 31 , 2013 and nil for the year ended december 31 , 2012. the rig systems segment monitors its capital equipment backlog to plan its business . new orders are added to backlog only when the company receives a firm written order for major drilling rig components or a signed contract related to a construction project . the capital equipment backlog was $ 15.0 billion at december 31 , 2013 , an increase of $ 4.1 billion ( 38 % ) from backlog of $ 10.9 billion at december 31 , 2012 . 39 rig aftermarket revenue from rig aftermarket for the year ended december 31 , 2013 was $ 2,692 million , an increase of $ 554 million ( 25.9 % ) compared to the year ended december 31 , 2012. a growing installed base of nov equipped rigs needing replacement parts and repair work , a fleet that continues to require re-certifications and additional aftermarket work required to comply with post macondo regulations were the primary driving forces for the increase in revenue for this segment during 2013. north american markets continue to see a decrease in demand for land drilling equipment . this is evidenced by a decrease in rig count in north america from 2012 and has resulted in a steady decline in sales of land rigs in the u.s. and canada . the average rig count in the u.s. for the year ended 2013 decreased over 8 % compared to the year ended 2012 and decreased 3 % in canada over the same period . operating profit from rig aftermarket was $ 729 million for the year ended december 31 , 2013 , an increase of $ 135 million ( 22.7 % ) compared to 2012. operating profit percentage decreased to 27.1 % , from 27.8 % in 2013. this decrease is attributed to the overall decline in the north america market activity which has led to pricing pressures and reduced operating profit percentage for the repair business . operating profit percentage was also impacted in the north america with the integration of the robbins & myers repair business . wellbore technologies revenue from wellbore technologies for the year ended december 31 , 2013 was $ 5,211 million , an increase of $ 27 million ( 0.5 % ) compared to the year ended december 31 , 2012. a nonrecurring gain of $ 102 million was recognized in the third quarter of 2013 related to a legal settlement . offsetting this gain was lower revenue primarily due to lower north american drilling activity . operating profit from wellbore technologies was $ 915 million for the year ended december 31 , 2013 compared to $ 983 million for 2012 , a decrease of $ 68 million ( 6.9 % ) . operating profit percentage decreased to 17.6 % from 19.0 % in 2013. this decrease is primarily due to the overall decline in north american market activity which has led to pricing pressures across a number of products in the north american land market , as well as volume declines . expenses associated with integrating recently acquired companies also contributed to the decrease in operating profit percentages . included in operating profit are certain other items which include items such as transaction costs and the amortization of inventory that was stepped up during purchase accounting . other items included in operating profit for wellbore technologies were $ 41 million for the year ended december 31 , 2013 and nil for the year ended december 31 , 2012. completion & production solutions revenue from completion & production solutions for the year ended december 31 , 2013 was $ 4,309 million , an increase of $ 315 million ( 7.9 % ) compared to the year ended december 31 , 2012. the increase is primarily due to the acquisition of robbins & myers during the first quarter of 2013 , as well as having a full year of nov flexibles which was acquired in june of 2012. this was offset by the decline in pressure pumping equipment resulting from reduced capital spending by service companies . operating profit from completion & production solutions was $ 613 million for the year ended december 31 , 2013 compared to $ 684 million for 2012 , a decrease of $ 71 million ( 10.4 % ) . operating profit percentage decreased to 14.2 % from 17.1 % in 2013. this decrease is primarily due to the overall decline in north american market activity which led to pricing pressures across a number of product lines , as well as volume declines affecting efficiencies . expenses associated with integrating recently acquired companies as well as start-up expenses for our nov flexibles brazil plant also contributed to the decrease in operating profit percentages . included in operating profit are certain other items which include items such as transaction costs and the amortization of assets that were stepped up during purchase accounting . other items included in operating profit for completion & production solutions were $ 82 million for the year ended december 31 , 2013 and $ 90 million for the year ended december 31 , 2012. the completion & production solutions segment monitors its capital equipment backlog to plan its business . new orders are added to backlog only when the company receives a firm written order for major components or a signed contract related to a construction project . the capital equipment backlog was $ 1.6 billion at december 31 , 2013 , an increase of $ 0.3 million ( 23 % ) from backlog of $ 1.3 billion at december 31 , 2012 . 40 eliminations eliminations in operating profit were $ 652 million for the year ended december 31 , 2013 compared to $ 557 million for the year ended december 31 , 2012. this increase was primarily due to increased intercompany	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 assesses liquidity in terms of its ability to generate cash to fund operating , investing and financing activities . the company remains in a strong financial position , with resources available to reinvest in existing businesses , strategic acquisitions and capital expenditures to meet short- and long-term objectives . the company believes that cash on hand , cash generated from expected results of operations and amounts available under its revolving credit facility will be sufficient to fund operations , anticipated working capital needs and other cash requirements including capital expenditures , debt and interest payments and dividend payments for the foreseeable future . at december 31 , 2014 , the company had cash and cash equivalents of $ 3,536 million , and total debt of $ 3,166 million . at december 31 , 2013 , cash and cash equivalents were $ 3,436 million and total debt was $ 3,150 million . a significant portion of the consolidated cash balances are maintained in accounts in various foreign subsidiaries and , if such amounts were transferred among countries or repatriated to the u.s. , such amounts may be subject to additional tax obligations . of the $ 3,536 million of cash and cash equivalents at december 31 , 2014 , approximately $ 2,979 million is held outside the u.s. if opportunities to invest in the u.s. are greater than available cash balances , the company may choose to borrow against its $ 3.5 billion revolving credit facility . in august 2013 , the company initiated a commercial paper program , supported by its revolving credit facility . the company 's outstanding debt at december 31 , 2014 was $ 3,166 million and consisted of $ 151 million in 6.125 % senior notes , $ 500 million in 1.35 % senior notes , $ 1,396 million in 2.60 % senior notes , $ 1,096 million in 3.95 % senior notes , and other debt of $ 23 million .
we have an accumulated deficit of $ 179.7 million as of december 31 , 2015. our net loss was $ 74.3 million , $ 36.5 million and $ 14.0 million for the years ended december 31 , 2015 , 2014 and 2013 , respectively . these losses have resulted principally from costs incurred in connection with in-licensing our product candidates , research and 77 development activities and general and administrative costs associated with our operations . we expect to incur significant expenses and increasing operating losses for the foreseeable future . we expect that our expenses will continue to increase in connection with our ongoing activities , as we : advance the clinical development of beloranib as a treatment for obesity and hyperphagia in patients with pws following resolution of the full clinical hold on the beloranib ind ; advance the clinical development of beloranib as a treatment for patients with hiao following resolution of the full clinical hold on the beloranib ind ; conduct ind enabling studies and clinical development of zgn-839 and our second-generation metap2 inhibitors ; seek to identify additional indications for our product candidates ; seek to obtain regulatory approvals for our product candidates ; add operational , financial and management information systems ; add personnel , including personnel to support our product development and future commercialization ; and maintain , leverage and expand our intellectual property portfolio . as a result , we will need additional financing to support our continuing operations . until such time that we can generate significant revenue from product sales , if ever , we expect to finance our operations through a combination of public or private equity or debt financings or other sources , which may include collaborations with third parties . arrangements with collaborators or others may require us to relinquish rights to certain of our technologies or product candidates . in addition , we may never successfully complete development of any of our product candidates , obtain adequate patent protection for our technology , obtain necessary regulatory approval for our product candidates or achieve commercial viability for any approved product candidates . adequate additional financing may not be available to us on acceptable terms , or at all . our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy . we will need to generate significant revenue to achieve profitability , and we may never do so . we expect that our existing cash and cash equivalents and marketable securities as of december 31 , 2015 , will enable us to fund our operating expenses and capital expenditure requirements for at least the next 18 months . see liquidity and capital resources. financial operations overview revenue we have not generated any revenue from product sales since our inception , and do not expect to generate any revenue from the sale of products in the near future . if our development efforts result in clinical success and regulatory approval or collaboration agreements with third parties for our product candidates , we may generate revenue from those product candidates or collaborations . operating expenses the majority of our operating expenses since inception have consisted primarily of in-licensing costs of our product candidate beloranib , research and development activities , and general and administrative costs . research and development expenses research and development expenses , which consist primarily of costs associated with our product research and development efforts , are expensed as incurred . research and development expenses consist primarily of : personnel costs , including salaries , related benefits and stock-based compensation for employees engaged in scientific research and development functions ; 78 third-party contract costs relating to research , formulation , manufacturing , pre-clinical studies and clinical trial activities ; external costs of outside consultants ; payments made under our third-party licensing agreements ; laboratory consumables ; and allocated facility-related costs . we have been developing beloranib , zgn-839 , and our second-generation metap2 inhibitors , and typically use our employee , consultant and infrastructure resources across our development programs . we track outsourced development costs by product candidate or development program , but we do not allocate personnel costs , external consultant costs , payments made under our licensing agreements or other internal costs to specific development programs or product candidates unless the payments are specifically identifiable to a development program or product candidate . we record our research and development expenses net of any research and development tax incentives we are entitled to receive from government authorities . the following table summarizes our research and development expenses by program : replace_table_token_10_th research and development activities are central to our business . 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-stage clinical trials . we expect that our research and development expenses will continue to increase in the foreseeable future as we pursue later stages of clinical development of our product candidates . we can not determine with certainty the duration and completion costs of the current or future clinical trials of our product candidates or if , when , or to what extent we will generate revenue from the commercialization and sale of any of our product candidates that obtain regulatory approval . we may never succeed in achieving regulatory approval for any of our product candidates . story_separator_special_tag personnel related and non-cash stock-based compensation expenses increases resulted primarily from an increase in hiring . during 2015 , we hired 17 new employees in research and development . non-cash stock-based compensation was also impacted by our first annual stock option grant to employees during 2015. other unallocated expenses are also driven by the increase in new hires , primarily travel expenses and facilities expenses . 84 costs related to both zgn-839 and second-generation metap2 inhibitors increased as a result of our increased focus on our early-stage programs in 2015 , including work in chemistry , toxicology , pharmacology and contract manufacturing costs . additionally we worked to submit an ind in the fourth quarter of 2015 for zgn-839 . general and administrative expenses replace_table_token_15_th general and administrative expenses for the year ended december 31 , 2015 increased $ 11.1 million compared to the year ended december 31 , 2014. the increase was primarily due to increased non-cash stock-based compensation of $ 4.6 million , increased professional and consulting fees of $ 3.7 million , personnel related costs of $ 2.0 million and increased travel and other related costs of $ 0.7 million period over period . the increase in non-cash stock-based compensation was due to granting additional stock-based awards to new hires and existing employees as well as an increase in the value of the awards . professional and consulting fees increased primarily due to increased accounting and legal fees to support our operating as a public company and costs incurred for commercial-readiness activities related to pws . personnel related costs increased period over period primarily due to hiring additional employees . during 2015 , we hired eight new employees in general and administrative roles . travel and other costs increased primarily due to increased insurance expense , travel , and information technology-related expenses to support our operating as a public company . other income ( expense ) , net interest expense . interest expense for the years ended december 31 , 2015 and 2014 of $ 0.8 million and $ 0.9 million , respectively , was related to interest expense on our outstanding borrowings under the credit facility that we entered into in march 2014. interest expense consists primarily of the stated interest of 8.1 % per year due on outstanding borrowings . it also includes expense related to the final payment of 6 % of amounts drawn down that is being recorded over the term through the maturity date using the effective-interest method and the amortization of deferred financing costs and debt discount relating to the credit facility . the 2014 expense includes a $ 0.2 million fee which was due to the lenders upon the completion of our ipo in june 2014. interest income . interest income of $ 0.4 million for the year ended december 31 , 2015 was related to interest earned on our marketable securities balances . foreign currency transaction gains ( losses ) , net . we had foreign currency transaction losses of $ 0.1 million for the years ended december 31 , 2015 and 2014. foreign currency transactions gains and losses consisted of the realized and unrealized gains and losses from foreign currency-denominated cash balances , vendor payables and tax-related receivables from the australian government , generally reflecting the weakening of the australian dollar relative to the u.s. dollar . 85 comparison of years ended december 31 , 2014 and 2013 the following table summarizes our results of operations for the years ended december 31 , 2014 and 2013 : replace_table_token_16_th research and development expenses replace_table_token_17_th research and development expenses for the year ended december 31 , 2014 increased $ 17.8 million compared to the year ended december 31 , 2013. the increase was primarily due to increased costs of $ 13.9 million associated with our beloranib program , $ 2.7 million in our unallocated expenses , $ 0.8 million associated with zgn-839 and $ 0.5 million associated with other early-stage development programs , consisting of our second-generation metap2 inhibitors . of the increase in our beloranib program , pre-clinical and manufacturing 86 costs increased by $ 5.2 million period over period as a result of our focus on drug manufacturing and other pre-clinical activities related to beloranib in order to prepare for clinical trials , as well as toxicology studies required for our nda submission . additionally , clinical trial expenses for beloranib increased by $ 1.7 million period over period as a result of timing of our clinical trials in 2014 and 2013. clinical trial activities undertaken by our australian subsidiary are recorded net of a 45 % research and development tax incentive from the australian government . lastly , licensing , milestone and licensing maintenance fees increased $ 7.0 million due to the achievement of a milestone related to the initiation of a first phase 3 clinical trial in beloranib , which we initiated in september 2014. unallocated expenses increased period over period primarily due to an increase in personnel related costs of $ 1.7 million and an increase in consultant expenses of $ 0.4 million . personnel costs increased due to 11 new employees in 2014 , which resulted in a $ 1.3 million increase in salaries and a $ 0.4 million increase in bonuses . consultant expenses increased due to additional activity with regard to fda meetings , initiation of clinical trials , and nonclinical activity . additionally due to the increase in employees , as well as an increase in the value of the awards , there was a $ 0.3 million increase in non-cash stock-based compensation . costs related to zgn-839 and other early-stage development programs increased in 2014 as a result of our increased focus on our early-stage programs in 2014. general and administrative expenses replace_table_token_18_th general and administrative expenses for the year ended december 31 , 2014 increased $ 3.9 million compared to the year ended december 31 , 2013. the increase was primarily due to increased personnel related costs 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 as of december 31 , 2015 , we had cash and cash equivalents and marketable securities totaling $ 185.1 million . we invest our cash in money market funds , u.s. government securities , corporate bonds , and commercial paper , with the primary objectives to preserve principal , provide liquidity and maximize income without significantly increasing risk . since our inception in november 2005 , we have not generated any revenue and have incurred recurring net losses . as of december 31 , 2015 , we had an accumulated deficit of $ 179.7 million . prior to our ipo in june 2014 , we funded our operations primarily through sales of redeemable convertible preferred stock and , to a lesser extent , through the issuances of convertible promissory notes . from our inception through our ipo in june 2014 , we have received gross proceeds of $ 104.0 million from such transactions . during june 2014 , we completed our ipo with net proceeds of $ 102.7 million after deducting underwriting discounts and commissions paid by us . we also incurred offering costs of $ 2.5 million related to the ipo . on january 28 , 2015 , we completed a follow-on offering of our common stock , which resulted in the sale of 3,942,200 shares at a price of $ 35.00 per share . we received net proceeds from the follow-on offering of approximately $ 129.6 million based upon the price of $ 35.00 per share and after deducting underwriting discounts and commissions , and estimated offering expenses . on march 31 , 2014 , we entered into a loan and security agreement , or the 2014 credit facility , which provided for initial borrowings of $ 7.5 million and additional borrowings of up to $ 12.5 million . on that same date , we received proceeds of $ 7.5 million from the issuance of promissory notes under a term loan as part of the 2014 credit facility .
we purchased our first property and commenced active operations in october 2012. as of december 31 , 2013 , we owned 37 properties located in the united states , the united kingdom and the commonwealth of puerto rico consisting of 1.4 million rentable square feet , which were 100 % leased , with a weighted average remaining lease term of 10.2 years . substantially all of our business is conducted through american realty capital global operating partnership , l.p. ( the `` op `` ) , a delaware limited partnership . we are the sole general partner and hold substantially all of the units of limited partner interests in the op ( `` op units `` ) . american realty capital global special limited partner , llc ( the `` special limited partner `` ) , an entity wholly owned by ar capital global holdings , llc ( the `` sponsor `` ) , contributed $ 200 to the op in exchange for 22 op units , which represents a nominal percentage of the aggregate op ownership . a holder of op units has the right to convert op units for the cash value of a corresponding number of shares of common stock or , at the option of the op , a corresponding number of shares of common stock , in accordance with the limited partnership agreement of the op . the remaining rights of the limited partner interests are limited , however , and do not include the ability to replace the general partner or to approve the sale , purchase or refinancing of the op 's assets . we have no employees . american realty capital global advisors , llc ( the `` advisor `` ) is our affiliated advisor , which has been retained to manage our affairs on a day-to-day basis . the properties are managed and leased by american realty capital global properties , llc ( the `` property manager `` ) . realty capital securities , llc ( the `` dealer manager `` ) serves as the dealer manager of the ipo . the advisor , property manager and dealer manager are affiliates of the sponsor and special limited partner . these related parties have received or will receive compensation and fees for services related to the ipo and for the investment and management of our assets . the advisor and property manager have entered into a service provider agreement with a third party , moor park capital partners llp ( the `` service provider `` ) , pursuant to which the service provider has agreed to provide , subject to the advisor 's and property manager 's oversight , certain real estate related services , as well as sourcing and structuring of investment opportunities , performance of due diligence , and arranging debt financing and equity investment syndicates , solely with respect to our properties in europe . pursuant to the service provider agreement , 50 % of the fees payable by us to the advisor and a percentage of the fees paid to the property manager will be assigned to the service provider , solely with respect to our investment activities in europe . such fees will be deducted from fees paid to the advisor . 56 significant accounting estimates and critical accounting policies set forth below is a summary of the significant accounting estimates and critical accounting policies that management believes are important to the preparation of our financial statements . certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management . as a result , these estimates are subject to a degree of uncertainty . these significant accounting estimates and critical accounting policies include : offering and related costs offering and related costs include all expenses incurred in connection with our ipo . offering costs ( other than selling commissions and the dealer manager fees ) include costs that may be paid by the advisor , the dealer manager or their affiliates on our behalf . these costs include but are not limited to ( i ) legal , accounting , printing , mailing , and filing fees ; ( ii ) escrow service related fees ; ( iii ) reimbursement of the dealer manager for amounts it may pay to reimburse the bona fide diligence expenses of broker-dealers ; and ( iv ) reimbursement to the advisor for a portion of the costs of its employees and other costs in connection with preparing supplemental sales materials and related offering activities . we are obligated to reimburse the advisor or its affiliates , as applicable , for organization and offering costs paid by them on our behalf , provided that the advisor is obligated to reimburse us to the extent organization and offering costs ( excluding selling commissions and the dealer manager fee ) incurred by us in our offering exceed 1.5 % of gross offering proceeds in the ipo . as a result , these costs are only our liability to the extent aggregate selling commissions , the dealer manager fee and other organization and offering costs do not exceed 11.5 % of the gross proceeds determined at the end of the ipo . revenue recognition our revenues , which are derived primarily from rental income , include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease . because many of our leases provide for rental increases at specified intervals , straight-line basis accounting requires us to record a receivable , and include in revenues unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease . story_separator_special_tag prior to this change , during the year ended december 31 , 2012 approximately $ 3,000 of asset management fees were waived . our property manager is entitled to fees for the management of our properties . property management fees are calculated as a percentage of gross revenues . during the years ended december 31 , 2013 and 2012 , property management fees were $ 50,000 and $ 1,000 , respectively . the property manager elected to waive a portion of the property management fees for the years ended december 31 , 2013 and 2012 . had these fees not been waived , we would have incurred additional property management fees of $ 25,000 and $ 1,000 for the years ended december 31 , 2013 and 2012 , respectively . acquisition and transaction related expenses acquisition and transaction related expenses of $ 7.7 million for the year ended december 31 , 2013 related to our acquisition of 36 properties since december 31 , 2012 for an aggregate purchase price of $ 182.3 million , as of the respective acquisition dates . acquisition and transaction related expense of $ 0.2 million related to the one property we purchased during the year ended december 31 , 2012 for an aggregate base purchase price of $ 2.6 million , as of the acquisition date . 60 general and administrative expenses general and administrative expenses decreased $ 0.1 million to $ 0.1 million for the year ended december 31 , 2013 , compared to $ 0.2 million for the year ended december 31 , 2012 . the decrease related to an increase in general and administrative expenses absorbed by the advisor of $ 1.2 million to $ 1.3 million for the year ended december 31 , 2013 , compared to $ 0.1 million for the year ended december 31 , 2012 . this decrease was partially offset by a $ 1.1 million increase in general and administrative expenses during the year ended december 31 , 2013 , primarily driven by higher costs to maintain our larger real estate portfolio , such as higher professional fees , including strategic advisory fees from our dealer manager , taxes on foreign operations , board compensation and insurance costs . depreciation and amortization expense depreciation and amortization expense was $ 2.1 million for the year ended december 31 , 2013 , compared to $ 21,000 for the year ended december 31 , 2012 . the increase in depreciation and amortization expense related to our acquisition of 36 properties since december 31 , 2012 for an aggregate purchase price of $ 182.3 million , as of the respective acquisition dates , which resulted in additional depreciation and amortization of $ 1.9 million as well as a full year of depreciation for the one property held as of december 31 , 2012 . the purchase price of acquired properties is allocated to tangible and identifiable intangible assets and depreciated or amortized over the estimated useful lives . interest expense interest expense was $ 1.0 million for the year ended december 31 , 2013 , compared to $ 10,000 for the year ended december 31 , 2012 . interest expense related to mortgage notes payable increased by $ 0.8 million as a result of a higher average balance outstanding of $ 19.9 million during the year ended december 31 , 2013 , compared to the $ 0.3 million during the year ended december 31 , 2012 , as well as the associated increased amortization of deferred financing costs . in july 2013 , we entered into a credit agreement which allows for total borrowings of up to $ 50.0 million . interest expense related to our credit facility was $ 0.2 million during the year ended december 31 , 2013 , primarily due to unused facility fees , as well as the associated amortization of deferred financing costs . we had no credit facility in place and therefore no credit facility interest expense during the year ended december 31 , 2012 . we view a mix of secured and unsecured financing sources as an efficient and accretive means to acquire properties and manage working capital . our interest expense in future periods will vary based on our level of future borrowings , which will depend on the level of proceeds raised in our ipo , the cost of borrowings , and the opportunity to acquire real estate assets which meet our investment objectives . gains on foreign currency gains on foreign currency was $ 35,000 for the year ended december 31 , 2013 . we had no gain or loss on foreign currency for the year ended december 31 , 2012 . gains on foreign currency reflect the effect of changes in foreign currency exchange rates , primarily between the time deposits related to acquisitions were made and the time the related transactions were consummated . comparison of the year ended december 31 , 2012 to the period from july 13 , 2011 ( date of inception ) to december 31 , 2011 rental income rental income for the year ended december 31 , 2012 was $ 30,000 . rental income was driven by our acquisition of one property in october 2012 , for a purchase price of $ 2.6 million , which was 100 % leased . we did not own any properties and therefore had no revenues for the period from july 13 , 2011 ( date of inception ) to december 31 , 2011. operating fees to affiliates our advisor and property manager are entitled to fees for the management of our properties . our advisor and property manager elected to waive a portion of these fees for the year ended december 31 , 2012 . for the year ended december 31 , 2012 , we incurred $ 1,000 and would have incurred additional aggregate asset management and property management fees of $ 3,000 had these fees not been waived . we did not own any properties 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.	cash flows for the year ended december 31 , 2013 during the year ended december 31 , 2013 , net cash used in operating activities was $ 2.7 million . the level of cash flows used in or provided by operating activities is affected by the volume of acquisition activity , the timing of interest payments and the amount of borrowings outstanding during the period , as well as the receipt of scheduled rent payments . cash flows used in operating activities during the year ended december 31 , 2013 included $ 7.7 million of acquisition and transaction related costs . cash outflows included a net loss adjusted for non-cash items of $ 4.6 million ( net loss of $ 7.0 million adjusted for non-cash items including depreciation and amortization of tangible and intangible real estate assets , amortization of deferred financing costs and share based compensation of $ 2.4 million ) , an increase in prepaid expenses of $ 1.8 million primarily related to prepaid professional fees due to strategic advisory services from our dealer manager and receivables due from our advisor related to absorbed costs . these cash outflows were partially offset by an increase in accounts payable and accrued expenses of $ 1.9 million primarily related to accrued interest payable , local taxes and a roof repair credit received from a seller at acquisition as well as an increase in deferred rent of $ 1.9 million . net cash used in investing activities during the year ended december 31 , 2013 of $ 112.4 million , primarily related to our acquisition of 36 properties which were partially funded with mortgage notes payable . net cash used in investing activities also includes a deposit of $ 1.5 million on a potential future acquisition .
extension of coherent modules into metro networks will be driven by substantially lower costs achieved through elimination of network equipment proprietary chassis , and the reduction in the number of roadms required , compared to current network architectures . with 400g as a fulcrum in the path of growth in the market at the highest speeds , we believe we are well positioned to take advantage of this rapidly developing , high growth market . our high speed products for data rates of 100g and above , including 800g , were 92 % of our 2020 revenues and were 91 % of our 2019 revenues . our sales concentration in high speed products has been increasing each year for more than 10 years . products capable of data rates of 400g and above have accounted for more than 10 percent of our revenue since 2018 and have nearly doubled from $ 44 million in 2019 to $ 86 million in 2020 , such that revenue from products for 400g and above applications have now reached 46 % of revenues in the fourth quarter of 2020. we believe that the market for 400g and above 35 products will grow at a 5-year compound annual growth rate of 70 percent through 2024. we therefore expect our 400g and above revenues will continue to grow at an accelerated rate over the immediate and longer term . with adoption of coherent transmission using pluggable high speed optical modules in cloud and hyperscale data centers , we believe our total addressable market is rapidly expanding . the covid-19 pandemic is impacting our business , the business of our customers and suppliers and how we execute our business . however , despite the lasting impact , our global operations including our china-based supply chain partners have executed well and have largely recovered . our priorities to address the impacts of the global pandemic on our operations are as follows : the health and well-being of our employees and supply chain partners is our top priority . we have implemented strict measures to ensure and maintain safety , including working remotely where possible , social distancing and enhanced protocols in each of our global facilities . we closely monitor evolving conditions and adhere to local and federal guidelines in each location in which we operate . business continuity our operations and products support essential communications networks globally . we have implemented and continue to adjust comprehensive business continuity plans in response to the global pandemic to ensure that we are able to deliver for our customers . we are working closely with our supply chain partners globally to ensure we have enough inventory and to support the health and safety of their employees . we have seen strong demand for products that facilitate increasing network bandwidth ; we are working to ensure continuity between us , our supply partners and forward to our customers and their contract manufacturing partners around the world . financial structure we believe our balance sheet and liquidity position provide the flexibility needed to support our operations during this pandemic . our solutions three critical optical components are required to make a coherent transceiver : ( 1 ) a laser with a very narrow linewidth for very pure light ; ( 2 ) a coherent modulator capable of changing both the intensity and phase of the optical signal to code data onto it ; and ( 3 ) a coherent receiver capable of detecting both the intensity and phase of the received optical signal to “ understand ” its content , plus an electronic digital signal processor ic ( dsp ) . we have been a leading volume supplier of these optical components since coherent systems were first deployed in volume for telecommunications networks a decade ago , in 2010. we are now the leading supplier of narrow linewidth tunable lasers and coherent receivers to the coherent market , and we have introduced new high speed coherent modulators for 400g , 600g and above applications . the capabilities of coherent optics continue to grow with increasing photonic integration for higher performance and smaller size . these are core capabilities of neophotonics and therefore open further opportunities for us in adjacent markets . outside of communications , coherent technology improves sensitivity and performance for a variety of applications including inter-satellite communication links including for low earth orbit ( leo ) satellites , plus industrial applications , 3d sensing for autonomous vehicle navigation , and medical imaging . we have invested and expect to continue to invest significant time and capital into our research and development operations . our research and development activities continue to push the performance leadership boundaries in high speed digital optics , silicon photonics and hybrid photonic integration , optoelectronics control and in signal processing . research and development expenses were $ 56.1 million , $ 57.6 million and $ 53.8 million in 2020 , 2019 and 2018 , respectively . we have research and development and wafer fabrication facilities in san jose and fremont , california and in tokyo , japan that coordinate with our research and development and manufacturing facilities in dongguan , shenzhen and wuhan , 36 china and ottawa , canada . we use proprietary design tools and design-for-manufacturing techniques to align our design process with our precision nanoscale , vertically integrated manufacturing and testing . we believe we are one of the highest volume manufacturers of photonic integrated circuits ( `` pic `` ) in the world and that we can further expand our manufacturing capacity to meet market needs . demand for certain of our high speed products that are used in metro and dci applications in north america and europe is increasing rapidly . dci deployments in north america have been strong over the past two years , and our products for these applications generally ship to contract manufacturers for our system manufacturer customers . story_separator_special_tag when bis announced additional restrictions on huawei in august 2020 , we took decisive actions to better align capacity and production infrastructure with future expected demand levels , resulting in a $ 9.3 million restructuring and other related costs charge to cost of goods sold in the third quarter and $ 0.7 million in the fourth quarter of 2020. the restructuring and other related charges , includes severance , inventory and equipment accelerated depreciation . we have made significant operational improvements with solid progress on cost reductions , yield improvement and effective cost absorption through higher volume in addition to reducing depreciation costs . despite a restructuring and other related charges of $ 9.9 million , or 3 % of revenue , gross margin increased 3 % to 28 % in 2020 from 25 % in 2019. gross profit increased $ 14.3 million , or 16 % , to $ 103.1 million , driven by approximately 4 % from cost reductions , volume and favorable product mix net of year-over-year declines in average selling prices , offset by approximately 1 % increase in inventory write-downs and accelerated depreciation expenses . in 2019 , gross profit increased $ 22.6 million , or 34 % , to $ 88.8 million while gross margin increased 4 % to 25 % from 21 % in 2018 , mostly from cost reductions and favorable product mix net of year-over-year declines in average selling prices . 40 operating expenses personnel costs are the most significant component of operating expenses and consist of costs such as salaries , benefits , bonuses , stock-based compensation and other variable compensation . replace_table_token_11_th research and development we focus our research and development efforts to continue pushing the performance leadership boundaries . research and development expense of $ 56.1 million , or 15 % of revenue , decreased $ 1.5 million , or 3 % , in 2020 compared to 2019 mainly from higher engineering service costs and variable compensation expenses . research and development expense increased $ 3.8 million , or 7 % , to $ 57.6 million in 2019 compared to 2018 primarily due to an increase in product development investment and variable compensation expenses . we believe that investments in research and development are important to help meet our strategic objectives . we plan to continue to invest in research and development activities , including new products that we believe will further enhance our competitive position and expand our revenue stream . research and development expense consists of personnel costs , including stock-based compensation , for our research and development personnel , and product development costs , including engineering services , development software and hardware tools , depreciation of equipment and facility costs . we record all research and development expense as incurred . as a percentage of total revenue , our research and development expense may vary as our investment and revenue levels change over time . sales and marketing sales and marketing expense decreased by $ 0.5 million , or 3 % , in 2020 compared to 2019 , mainly from lower levels of travel and fewer marketing events due to the covid-19 pandemic . sales and marketing expense decreased by $ 0.6 million , or 4 % , in 2019 compared to 2018 , primarily due to a $ 0.6 million decrease in personnel costs and decrease in traveling expenses of $ 0.4 million , offset by an increase of $ 0.4 million due to the absence of a bad debt recovery . we expect to continue to expand our high speed market focus and increase sales and marketing coverage of the dci , cloud and hyperscale data center markets , particularly the 400zr and 400zr+ products as well as the 64 gbaud and 96 gbaud component suites . sales and marketing expense consists primarily of personnel costs , including stock-based compensation and sales commissions , costs related to sales and marketing programs and services and facility costs . as a percentage of total revenue , our sales and marketing expense may vary as our revenue changes over time . general and administrative general and administrative expense consists of personnel costs , including stock-based compensation , for our finance , human resources and information technology personnel and certain executive officers , as well as professional services costs related to accounting , tax , banking , legal and information technology services , depreciation and facility costs . general and administrative expense increased by $ 0.8 million , or 3 % , in 2020 , compared to 2019 , primarily from an increase in personnel costs from both headcount and higher variable compensation expenses , offset by decreases in consulting fees , depreciation and amortization and travel expenses . general and administrative expense decreased by $ 0.6 million , or 2 % , in 2019 compared to 2018 , primarily due to decreases in depreciation and amortization , city and local taxes and a decrease from completion of the sale of 100 % interest in our manufacturing operations subsidiary in russia , offset by increases in variable compensation expenses . 41 amortization of purchased intangible assets our intangible assets are being amortized over their estimated useful lives . amortization expense relating to technology and patents and leasehold interests are included within cost of goods sold , while customer relationships and non-compete agreements are recorded within operating expenses . in 2020 , amortization of purchased intangible assets was $ 0.7 million included in the cost of goods sold . the decrease of $ 0.1 million from 2019 was due to certain intangible assets that have become fully amortized . in 2019 , amortization of purchased intangible assets was $ 0.8 million , comprising of $ 0.7 million in cost of goods sold and $ 0.1 million in operating expenses . the decrease of $ 0.3 million from 2018 due to certain intangible assets have become fully amortized during 2019. in 2018 , amortization of purchased intangible assets was	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 , 2020 , we had working capital of $ 146.8 million , including total cash , cash equivalents , short-term investments and restricted cash of $ 123.3 million . approximately 26 % of our total cash , cash equivalents , short-term investments and restricted cash were held by our foreign entities , including approximately $ 25.3 million in accounts held by our subsidiaries in china , of which $ 0.5 million was in restricted cash , and approximately $ 6.4 million in accounts held by our subsidiary in japan . cash , cash equivalents , investments and restricted cash held outside of the u.s. may be subject to taxes if repatriated and may not be immediately available for our working capital needs . approximately $ 10.0 million of our retained earnings within our total accumulated deficit as of december 31 , 2020 was subject to restrictions due to the fact that our subsidiaries in china are required to set aside at least 10 % of their respective accumulated profits each year end to fund statutory common reserves as well as allocate a discretionary portion of their after-tax profits to their staff welfare and bonus fund . this restricted amount is not distributable as cash dividends , except in the event of liquidation . in september 2017 we entered into a revolving line of credit agreement with wells fargo bank , national association ( `` wells fargo '' ) as the administrative agent for a lender group ( the `` wells fargo credit facility '' or `` credit facility '' ) . the wells fargo credit facility provides for borrowings equal to the lower of ( a ) a maximum revolver amount of $ 50.0 million , or ( b ) an amount equal to 80 % - 85 % of eligible accounts receivable plus 100 % of qualified cash balances up to $ 15.0 million , less certain discretionary adjustments ( `` borrowing base '' ) . the maximum revolver amount may be increased by up to $ 25.0 million , subject to certain conditions . at closing , $ 50.0 million was available , of which $ 30.0 million was drawn .
to comply with government regulations , including environmental remediations ; the availability of cash for distribution and debt service and exposure to risk of default under debt obligations ; 56 increases in interest rates and our ability to manage interest rate exposure ; the availability of financing on attractive terms or at all , which may adversely impact our future interest expense and our ability to pursue development , redevelopment and acquisition opportunities and refinance existing debt ; a decline in real estate asset valuations , which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing , and which may result in write-offs or impairment charges ; significant competition , which may decrease the occupancy and rental rates of properties ; potential losses that may not be covered by insurance ; the ability to successfully complete acquisitions and dispositions on announced terms ; the ability to successfully operate acquired , developed and redeveloped properties ; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts ; delays or refusals in obtaining all necessary zoning , land use and other required entitlements , governmental permits and authorizations for our development and redevelopment properties ; increases in anticipated capital expenditures , tenant improvement and or leasing costs ; defaults on leases for land on which some of our properties are located ; adverse changes to , or enactment or implementations of , tax laws or other applicable laws , regulations or legislation , as well as business and consumer reactions to such changes ; risks associated with joint venture investments , including our lack of sole decision-making authority , our reliance on co-venturers ' financial condition and disputes between us and our co-venturers ; environmental uncertainties and risks related to natural disasters ; our ability to maintain our status as a reit ; and uncertainties regarding the impact of the covid-19 pandemic , and restrictions intended to prevent its spread , on our business and the economy generally . the factors included in this report are not exhaustive and additional factors could adversely affect our business and financial performance . for a discussion of additional factors that could materially adversely affect the company 's and the operating partnership 's business and financial performance , see the discussion below as well as “ item 1a . risk factors , ” and in our other filings with the sec . all forward-looking statements are based on information that was available and speak only as of the dates on which they were made . we assume no obligation to update any forward-looking statement that becomes untrue because of subsequent events , new information or otherwise , except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws . 57 company overview we are a self-administered reit active in premier office and mixed-use submarkets along the west coast . we own , develop , acquire and manage real estate assets , consisting primarily of class a properties in the coastal regions of greater los angeles , san diego county , the san francisco bay area and greater seattle , which we believe have strategic advantages and strong barriers to entry . we own our interests in all of our real properties through the operating partnership and generally conduct substantially all of our operations through the operating partnership . we owned an approximate 99.0 % and 98.1 % general partnership interest in the operating partnership as of december 31 , 2020 and 2019 , respectively . all of our properties are held in fee except for the fourteen office buildings that are held subject to long-term ground leases for the land ( see note 18 “ commitments and contingencies ” to our consolidated financial statements included in this report for additional information regarding our ground lease obligations ) . 2020 operating and development highlights we entered 2020 in a very strong financial position and drew on our strengths to manage through the pandemic . we achieved a record year in development by completing construction on $ 1.2 billion in projects that were turned over to our tenants for the construction of tenant improvements and 371 residential units and continued to create value that we believe will drive future earnings and dividend growth . development . we continued to execute on our development program during 2020. we added four completed development projects to our stabilized portfolio totaling 1.2 million rentable square feet of office and retail space and 608 residential units , had three development projects progress from the under construction phase to the tenant improvement phase and commenced revenue recognition on two development projects currently in the tenant improvement phase . see “ —factors that may influence future operations ” for additional information regarding our development program . capital recycling program . we have continued to utilize our capital recycling program to provide additional capital to finance development expenditures , fund potential acquisitions , repay long-term debt and for other general corporate purposes . our general strategy , depending on market conditions , is to target the disposition of non-core properties or those that have limited upside for us and redeploy the capital into acquisitions and or development projects where we can create additional value to generate higher returns ( see “ —factors that may influence future operations ” for additional information ) . in connection with this strategy , during 2020 , we generated gross sales proceeds of approximately $ 75.9 million through the sale of one office building . leasing . during 2020 , we executed new and renewal leases totaling 0.7 million square feet within our stabilized portfolio with an increase in gaap rents of 36.5 % and an increase in cash rents of 18.4 % . our stabilized office portfolio was 91.2 % occupied and 94.3 % leased as of december 31 , 2020 . story_separator_special_tag for residential properties , we commence revenue recognition upon lease commencement . residential rental revenue is recognized on a straight-line basis over the term of the related lease , net of any concessions . additional rent - reimbursements from tenants additional rent , consisting of amounts due from tenants for common area maintenance , real estate taxes , and other recoverable costs , are recognized in rental income in the period the recoverable costs are incurred . prior to the adoption of financial accounting standards board ( “ fasb ” ) accounting standards update ( “ asu ” ) no . 2016-02 “ leases ( topic 842 ) ” ( “ topic 842 ” ) on january 1 , 2019 , such amounts were recognized in revenue as tenant reimbursements . additional rent where we pay the associated costs directly to third-party vendors and are reimbursed by our tenants are recognized and recorded on a gross basis , with the corresponding expense recognized in property expenses or real estate taxes . prior to the adoption of topic 842 , recoverable costs were generally recognized and recorded on a gross basis when we were the primary obligor with respect to purchasing goods and services from third-party suppliers , had discretion in selecting the supplier , and had credit risk . calculating additional rent requires an in-depth analysis of the complex terms of each underlying lease . examples of judgments and estimates used when determining the amounts recoverable include : estimating the final expenses , net of accruals , that are recoverable ; estimating the fixed and variable components of operating expenses for each building ; 62 conforming recoverable expense pools to those used in establishing the base year or base allowance for the applicable underlying lease ; and concluding whether an expense or capital expenditure is recoverable pursuant to the terms of the underlying lease . during the year , we accrue estimated additional rent in the period in which the recoverable costs are incurred based on our best estimate of the amounts to be recovered . throughout the year , we perform analyses to properly match additional rent with reimbursable costs incurred to date . additionally , during the fourth quarter of each year , we perform preliminary reconciliations and accrue additional rent or refunds . subsequent to year end , we perform final detailed reconciliations and analyses on a lease-by-lease basis and bill or refund each tenant for any cumulative annual adjustments in the first and second quarters of each year for the previous year 's activity . our historical experience for the years ended december 31 , 2019 and 2018 has been that our final reconciliation and billing process resulted in final amounts that approximated the total annual additional rent recognized . uncollectible lease receivables and allowances for tenant and deferred rent receivables we carry our current and deferred rent receivables net of allowances for amounts that may not be collected . prior to the adoption of topic 842 on january 1 , 2019 , the allowances were increased or decreased through provision for bad debts on our consolidated statements of operations . upon the adoption of topic 842 on january 1 , 2019 , the allowances are increased or decreased through rental income , and our determination of the adequacy of the company 's allowances for tenant receivables includes a binary assessment of whether or not substantially all of the amounts due under a tenant 's lease agreement are probable of collection . such assessment involves using a methodology that incorporates a specific identification analysis and an aging analysis and considers the current economic and business environment . this determination requires significant judgment and estimates about matters that are uncertain at the time the estimates are made , including the creditworthiness of specific tenants , specific industry trends and conditions , and general economic trends and conditions . since these factors are beyond our control , actual results can differ from our estimates , and such differences could be material . for leases that are deemed probable of collection , revenue continues to be recorded on a straight-line basis over the lease term . for leases that are deemed not probable of collection , revenue is recorded as the lesser of ( i ) the amount which would be recognized on a straight-line basis or ( ii ) cash that has been received from the tenant , including deferred revenue , with any tenant and deferred rent receivable balances charged as a direct write-off against rental income in the period of the change in the collectability determination . for tenant and deferred rent receivables associated with leases whose rents are deemed probable of collection , we may record an allowance under other authoritative gaap using a methodology that incorporates a specific identification analysis and an aging analysis and considers the current economic and business environment . this determination requires significant judgment and estimates about matters that are uncertain at the time the estimates are made , including the creditworthiness of specific tenants , specific industry trends and conditions , and general economic trends and conditions . since these factors are beyond our control , actual results can differ from our estimates , and such differences could be material . tenant and deferred rent receivables deemed probable of collection are carried net of allowances for uncollectible accounts , with increases or decreases in the allowances recorded through rental income on our consolidated statements of operations . prior to the adoption of topic 842 on january 1 , 2019 , the allowances were increased or decreased through provision for bad debts on our consolidated statements of operations . current tenant receivables consist primarily of amounts due for contractual lease payments and reimbursements of common area maintenance expenses , property taxes , and other costs recoverable from tenants . with respect to the allowance for uncollectible tenant receivables , the specific identification methodology analysis relies on factors such as 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 uses development and redevelopment costs ; operating property or undeveloped land acquisitions ; property operating and corporate expenses ; capital expenditures , tenant improvement and leasing costs ; debt service and principal payments , including debt maturities ; distributions to common security holders ; repurchases and redemptions of outstanding common stock of the company ; and outstanding debt repurchases , redemptions and repayments . general strategy our general strategy is to maintain a conservative balance sheet with a strong credit profile and to maintain a capital structure that allows for financial flexibility and diversification of capital resources . we manage our capital structure to reflect a long-term investment approach and utilize multiple sources of capital to meet our long-term capital requirements . we believe that our current projected liquidity requirements for the next twelve-month period , as set forth above under the caption “ —liquidity uses , ” will be satisfied using a combination of the liquidity sources listed above , although there can be no assurance in this regard . we believe our conservative leverage and staggered debt maturities provide us with financial flexibility and enhance our ability to obtain additional sources of liquidity if necessary , and , therefore , we are well-positioned to refinance or repay maturing debt and to pursue our strategy of seeking attractive acquisition opportunities , which we may finance , as necessary , with future public and private issuances of debt and equity securities . 2020 capital and financing transactions we continue to be active in the capital markets and our capital recycling program to finance potential acquisitions and our development activity , as well as our continued desire to extend our debt maturities . this was primarily a result of the following activity : 85 capital recycling program during the year ended december 31 , 2020 , we completed the sale of one office building to an unaffiliated third party for gross sales proceeds totaling approximately $ 75.9 million . capital markets / debt transactions in addition to obtaining funding from our capital recycling program during 2020 , we successfully completed the following financing and capital raising activities to fund our continued growth .
our net sales are affected by the level of industrial production , which tends to decline in the fourth quarter of each year . certain of our end markets also experience seasonal fluctuations , which also affect our net sales and results of operations . for example , our sales to the agricultural end market , particularly in canada , tend to peak in the second and third quarters in each year , depending in part on weather-related variations in demand for agricultural chemicals . sales to other end markets such as paints and coatings or water treatment may also be affected by changing seasonal weather conditions . 43 results of operations executive summary during 2016 , we strengthened our management team , reduced our leverage strengthening our financial condition , and began the process of implementing our key strategic initiatives of commercial greatness , operational excellence , and one univar . from an operations standpoint , we advanced on each of our strategic priorities which form the framework for our strategy to grow the long-term value of univar for our equity and debt holders . as a result , in 2016 we : expanded our consolidated adjusted ebitda margins ; grew adjusted ebitda outside the us by double digits ; completed a series of productivity projects in our usa segment , including phased reductions in resource allocation to upstream oil and gas production , which lowered our cost structure and raised the level of operational excellence in our facilities and branch offices ; and generated significant cash flow and improved our net working capital productivity which helped fund two acquisitions - bodine services of the midwest , which broadens our service capabilities in our chemcare waste management business , and nexus ag , a micronutrients distributor to the agriculture industry in canada . however , the advances in our business were offset by : the substantial strengthening of the us dollar which had the effect of lowering the translated us dollar value of our sales and earnings in europe , canada , mexico and brazil , in particular ; the historic decline in oil prices continued which depressed demand for chemicals from the hydraulic fracturing segment of the upstream oil and gas market ; and sluggish demand for chemicals from the industrial production sectors of the economies we serve . the following tables set forth , for the periods indicated , certain statements of operations data first on the basis of reported data and then as a percentage of total net sales for the relevant period . the financial data set forth below is not necessarily indicative of the results of future operations and should be read in conjunction with our historical consolidated financial statements and accompanying notes included elsewhere herein . 44 year ended december 31 , 2016 compared to year ended december 31 , 2015 replace_table_token_3_th * foreign currency translation is included in the percentage change . unfavorable impacts from foreign currency translation are designated with parentheses . net sales net sales percentage change due to : acquisitions 1.3 % reported sales volumes ( 4.1 ) % sales pricing and product mix ( 5.9 ) % foreign currency translation ( 1.4 ) % total ( 10.1 ) % net sales were $ 8,073.7 million in the year ended december 31 , 2016 , a decrease of $ 908.1 million , or 10.1 % , from the year ended december 31 , 2015 . the increase in net sales from acquisitions was primarily driven by the november 2015 weavertown , march 2016 bodine , and july 2015 chemical associates acquisitions in the us and the october 2015 future/bluestar and march 2016 nexus ag acquisitions in canada . the decrease in net sales from reported sales volumes primarily resulted from reductions in sales of upstream oil and gas products driven by reduced market demand . the decrease in net sales from changes in sales pricing and product mix was driven by lower average selling prices in all segments . foreign currency translation decreased net sales , due to the us dollar strengthening against all major currencies . refer to the “ segment results ” for the year ended december 31 , 2016 discussion for additional information . 45 gross profit gross profit percentage change due to : acquisitions 2.0 % reported sales volumes ( 4.1 ) % sales pricing , product costs and other adjustments ( 0.6 ) % foreign currency translation ( 1.3 ) % total ( 4.0 ) % gross profit decreased $ 72.0 million , or 4.0 % , to $ 1,727.1 million for the year ended december 31 , 2016 . the increase in gross profit from acquisitions was primarily driven by the november 2015 weavertown , march 2016 bodine , and july 2015 chemical associates acquisitions in the us ; and the october 2015 future/bluestar and march 2016 nexus ag acquisitions in canada . the decrease in gross profit from reported sales volumes primarily resulted from reductions in upstream oil and gas products driven by reduced market demand . the decrease in gross profit from changes in sales pricing , product costs and other adjustments was primarily driven by the usa segment , partially offset by increases in the canada , emea , and rest of world segments . foreign currency translation decreased gross profit due to the us dollar strengthening against all major currencies . gross margin , which we define as gross profit divided by net sales , increased to 21.4 % in the year ended december 31 , 2016 from 20.0 % in the year ended december 31 , 2015 . refer to the “ segment results ” for the year ended december 31 , 2016 discussion for additional information . outbound freight and handling outbound freight and handling expenses decreased $ 38.0 million , or 11.7 % , to $ 286.6 million for the year ended december 31 , 2016 . story_separator_special_tag gross profit decreased $ 1.4 million , or 0.4 % , to $ 384.1 million in the year ended december 31 , 2016 . gross profit increased due to changes in sales pricing , product costs and other adjustments primarily due to increased sales of higher margin pharmaceutical finished goods as well as the continued impacts of our product mix enrichment strategy . gross margin increased from 21.7 % in the year ended december 31 , 2015 to 22.5 % in the year ended december 31 , 2016 primarily due to the factors impacting gross profit discussed above . outbound freight and handling expenses decreased $ 4.7 million , or 7.9 % , to $ 54.9 million primarily due to lower reported sales volumes and reduced common carrier costs . operating expenses decreased $ 15.5 million , or 6.9 % , to $ 210.5 million in the year ended december 31 , 2016 , and decreased as a percentage of external sales from 12.7 % in the year ended december 31 , 2015 to 12.4 % in the year ended december 31 , 2016 . foreign currency translation decreased operating expenses by 0.7 % or $ 1.5 million . on a constant currency basis , operating expenses decreased $ 14.0 million , or 6.2 % , which was primarily related to lower information technology expenses of $ 1.9 million , lower bad debt expenses of $ 1.5 million driven by a large recovery on previously reserved aged receivables , lower lease expense of $ 1.0 million due to certain operating leases being replaced by capital leases , and lower pension expenses of $ 0.8 million . the remaining $ 8.8 million decrease related to cost savings from site closures . adjusted ebitda increased by $ 18.8 million , or 18.8 % , to $ 118.7 million in the year ended december 31 , 2016 . foreign currency translation decreased adjusted ebitda by 4.2 % or $ 4.2 million . on a constant currency basis , adjusted ebitda increased $ 23.0 million , or 23.0 % , primarily due to sales of pharmaceutical finished goods contributing approximately 65.0 % of the increase as well as continuing to benefit from reductions in operating expenses resulting from our previous restructuring activities . sales of pharmaceutical finished goods represent approximately 29.9 % of adjusted ebitda for the year ended december 31 , 2016 . adjusted ebitda margin increased from 5.6 % in the year ended december 31 , 2015 to 7.0 % in the year ended december 31 , 2016 primarily as a result of product mix , reductions in operating expenses and lower outbound freight and handling expenses . rest of world . replace_table_token_9_th external sales in the rest of world segment were $ 401.8 million , a decrease of $ 71.8 million , or 15.2 % , in the year ended december 31 , 2016 . foreign currency translation decreased external sales dollars primarily due to the stronger us dollar position in the year ended december 31 , 2016 as compared to the year ended december 31 , 2015 against the mexican peso and the brazilian real . the decrease in external net sales from reported sales volumes was due to weak industrial demand and in particular lower demand for oil and gas products . the decrease in external net sales from changes in sales pricing and product mix was due to lower average selling prices driven by deflationary pressures . gross profit decreased $ 11.4 million , or 12.5 % , to $ 79.7 million in the year ended december 31 , 2016 . gross profit decreased primarily due to foreign currency translation , which was partially offset by the increase in gross profit due to shift in product mix towards higher margin products and services . gross margin increased 51 from 19.2 % in the year ended december 31 , 2015 to 19.8 % in the year ended december 31 , 2016 primarily due to the factors impacting gross profit discussed above . outbound freight and handling expenses decreased $ 2.7 million , or 30.7 % , to $ 6.1 million in the year ended december 31 , 2016 . foreign currency translation decreased outbound freight and handling expenses by 8.0 % or $ 0.7 million . on a constant currency basis , outbound freight and handling expenses decreased $ 2.0 million or 22.7 % , which was primarily due to lower volumes as well as incremental cost savings . operating expenses decreased $ 7.3 million , or 13.5 % , to $ 46.8 million in the year ended december 31 , 2016 but increased as a percentage of external sales from 11.4 % in the year ended december 31 , 2015 to 11.6 % in the year ended december 31 , 2016 . foreign currency translation decreased operating expenses by 9.8 % or $ 5.3 million . on constant currency basis , operating expenses decreased $ 2.0 million , or 3.7 % . adjusted ebitda decreased by $ 1.4 million , or 5.0 % , to $ 26.8 million in the year ended december 31 , 2016 . foreign currency translation decreased adjusted ebitda by 11.4 % or $ 3.2 million . on a constant currency basis , adjusted ebitda increased $ 1.8 million , or 6.4 % , primarily due to lower operating expenses . adjusted ebitda margin increased from 6.0 % in the year ended december 31 , 2015 to 6.7 % in the year ended december 31 , 2016 primarily as a result of higher gross margin . year ended december 31 , 2015 compared to year ended december 31 , 2014 replace_table_token_10_th * foreign currency translation is included in the percentage change . unfavorable impacts from foreign currency translation are designated with parentheses . 52 net sales net sales percentage change due to : acquisitions 0.9 % reported sales volumes ( 7.0 ) % sales pricing and product mix ( 1.0 ) % foreign currency	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.	loss on extinguishment of debt loss on extinguishment of debt increased $ 10.9 million to $ 12.1 million for the year ended december 31 , 2015 . the $ 12.1 million loss in the year ended december 31 , 2015 related to the july 2015 debt refinancing transactions and the write off of unamortized debt issuance costs and debt discount related to the payment of the principal balance related to the senior subordinated notes during june 2015. the $ 1.2 million loss in the year ended december 31 , 2014 related to the write off of unamortized debt 54 issuance costs related to the closure of then-existing european abl facility during march 2014. refer to “ note 15 : debt ” in item 8 of this annual report on form 10-k for additional information . other ( expense ) income , net other ( expense ) income , net increased $ 24.3 million from income of $ 1.1 million for the year ended december 31 , 2014 to an expense of $ 23.2 million for the year ended december 31 , 2015 . the increase was primarily driven by debt refinancing costs of $ 16.5 million and the discontinuance of cash flow hedges of $ 7.5 million . refer to “ note 15 : debt ” and “ note 17 : derivatives ” in item 8 of this annual report on form 10-k for additional information , respectively . refer to “ note 6 : other ( expense ) income , net ” in item 8 of this annual report on form 10-k for additional information . income tax expense ( benefit ) income tax expense increased $ 26.0 million from an income tax benefit of $ 15.8 million in the year ended december 31 , 2014 to an income tax expense of $ 10.2 million in the year ended december 31 , 2015 .
the impact of purchase price accounting adjustments attributable to acquired subscriber deferred revenues will continue to decline in absolute amount and as a percentage of reported total subscriber revenues through 2013 as balances are earned over the acquired subscription period . advertising revenue includes the sale of advertising on our non-music channels , net of agency fees . agency fees are based on a contractual percentage of the gross advertising billing revenue . 2010 vs. 2009 : for the years ended december 31 , 2010 and 2009 , advertising revenue was $ 64,517 and $ 51,754 , respectively , an increase of 25 % , or $ 12,763. the increase was primarily due to more effective sales efforts and improvements in the national market for advertising . 2009 vs. 2008 : for the years ended december 31 , 2009 and 2008 , net advertising revenue was $ 51,754 and $ 47,190 , respectively , an increase of 10 % , or $ 4,564. the increase was due to the inclusion of xm revenue from the merger , which was offset by a decrease in advertising revenue due to the economic environment in 2009. our advertising revenue is subject to fluctuation based on the effectiveness of our sales efforts and the national economic environment . we expect advertising revenue to grow as our subscribers increase and national advertising spend continues to increase . equipment revenue includes revenue and royalties from the sale of satellite radios , components and accessories . 2010 vs. 2009 : for the years ended december 31 , 2010 and 2009 , equipment revenue was $ 71,355 and $ 50,352 , respectively , an increase of 42 % , or $ 21,003. the increase was driven by royalties from increased oem installations and aftermarket radios and accessories . 2009 vs. 2008 : for the years ended december 31 , 2009 and 2008 , equipment revenue was $ 50,352 and $ 56,001 , respectively , a decrease of 10 % , or $ 5,649. the decrease was primarily due to a decline in sales through our direct to consumer distribution channel and lower product royalties , partially offset by the inclusion of xm revenue for a full year . we expect equipment revenue to fluctuate based on oem installations for which we receive royalty payments for our technology and , to a lesser extent , on the volume and mix of equipment sales in our direct to consumer business . 27 other revenue includes the u.s. music royalty fee , revenue from affiliates , content licensing fees and syndication fees . 2010 vs. 2009 : for the years ended december 31 , 2010 and 2009 , other revenue was $ 266,946 and $ 83,029 , respectively . the $ 183,917 increase was primarily due to the full year impact of the u.s. music royalty fee introduced in the third quarter of 2009 . 2009 vs. 2008 : for the years ended december 31 , 2009 and 2008 , other revenue was $ 83,029 and $ 11,882 , respectively , an increase of 599 % , or $ 71,147. the increase was primarily due to the introduction of the u.s. music royalty fee in the third quarter of 2009 and the inclusion of xm revenue for a full year . future other revenues will be dependent upon revenues from affiliates , content and syndication fees , and the monthly fee assessed for the u.s. music royalty fee . the fcc 's order approving the merger allows us to pass through cost increases incurred since the filing of our fcc merger application as a result of statutorily or contractually required payments to the music , recording and publishing industries for the performance of musical works and sound recordings or for device recording fees . operating expenses revenue share and royalties include distribution and content provider revenue share , advertising revenue share , residuals and broadcast and web streaming royalties . residuals are monthly fees paid based upon the number of subscribers using satellite radios purchased from retailers . advertising revenue share is recognized as a component of revenue share and royalties in the period in which the advertising is broadcast . 2010 vs. 2009 : for the years ended december 31 , 2010 and 2009 , revenue share and royalties were $ 435,410 and $ 397,210 , respectively , an increase of 10 % , or $ 38,200. for the year ended december 31 , 2010 , revenue share and royalties decreased as a percentage of total revenue . the increase was primarily attributable to a 12 % increase in our revenues subject to royalty and or revenue sharing arrangements and an 8 % increase in the statutory royalty rate for the performance of sound recordings , partially offset by a decrease in the revenue sharing rate with an automaker and a $ 18,187 increase in the benefit to earnings from the amortization of deferred credits on executory contracts initially recognized in purchase price accounting associated with the merger . 2009 vs. 2008 : for the years ended december 31 , 2009 and 2008 , revenue share and royalties were $ 397,210 and $ 280,852 , respectively , an increase of 41 % , or $ 116,358. the increase was primarily attributable to the inclusion of xm 's revenue share and royalty expense as a result of the merger and an 8 % increase in the statutory royalty rate for the performance of sound recordings . we expect our revenue sharing and royalty costs to increase as our revenues grow , as we expand our distribution of satellite radios through automakers , and as a result of statutory increases in the royalty rate for the performance of sound recordings . story_separator_special_tag 2009 vs. 2008 : for the years ended december 31 , 2009 and 2008 , interest expense was $ 315,668 and $ 148,455 , respectively , an increase of 113 % , or $ 167,213. interest expense increased significantly as a result of the merger , due to additional debt and higher interest rates . increases in interest expense were partially offset by the capitalized interest associated with satellite construction and related launch vehicles . loss on extinguishment of debt and credit facilities , net , includes losses incurred as a result of the conversion and retirement of certain debt . 2010 vs. 2009 : for the years ended december 31 , 2010 and 2009 , loss on extinguishment of debt and credit facilities , net , was $ 120,120 and $ 267,646 , respectively , a decrease of 55 % , or $ 147,526. during the year ended december 31 , 2010 , the loss was incurred on the repayment of our senior secured term loan due 2012 and 9.625 % senior notes due 2013 and xm 's 10 % senior pik secured notes due 2011 and 9.75 % senior notes due 2014 , as well as the partial repayment of xm 's 11.25 % senior secured notes due 2013 and our 3.25 % convertible notes due 2011. during the year ended december 31 , 2009 , the loss was incurred on the retirement of our 2.5 % convertible notes due 2009 , the extinguishment of our term loan and purchase money loan with liberty media , the repayment of the xm 's amended and restated credit agreement due 2011 , the partial repayment of xm 's 10 % convertible senior notes due 2009 and the termination of xm 's second lien credit agreement . 2009 vs. 2008 : for the years ended december 31 , 2009 and 2008 , loss on extinguishment of debt and credit facilities , net , was $ 267,646 and $ 98,203 , respectively , an increase of 173 % , or $ 169,443. during the year ended december 31 , 2009 , the loss was incurred on the retirement of our 2.5 % convertible notes due 2009 , the extinguishment of our term loan and purchase money loan with liberty media , the repayment of xm 's amended and restated credit agreement due 2011 , the partial repayment of xm 's 10 % convertible senior notes due 2009 and the termination of xm 's second lien credit agreement . during the year ended 32 december 31 , 2008 , the loss was incurred on the partial induced conversion of our 2.5 % convertible notes due 2009. interest and investment income ( loss ) includes realized gains and losses , dividends , interest income , our share of sirius canada 's and xm canada 's net losses and losses recorded from investments in those entities , as well as debt instruments issued by xm canada , when the fair value of those instruments falls below carrying value and the decline is determined to be other than temporary . 2010 vs. 2009 : for the years ended december 31 , 2010 and 2009 , interest and investment ( loss ) income was ( $ 5,375 ) and $ 5,576 , respectively , a decrease of 196 % , or $ 10,951. the decrease in income was primarily attributable to higher net losses at xm canada and sirius canada and a decrease in payments received from sirius canada in excess of the carrying value of our investments , partially offset by the gain on sale of auction rate securities during the year ended december 31 , 2010. in addition , we recorded an impairment charge on our investment in xm canada during the year ended december 31 , 2009 . 2009 vs. 2008 : for the years ended december 31 , 2009 and 2008 , interest and investment ( loss ) income was $ 5,576 and ( $ 21,428 ) , respectively , an increase of 126 % , or $ 27,004. the increase was attributable to payments received from sirius canada in excess of the carrying value of our investment , decreases in our share of xm canada 's net loss and decreases in impairment charges related to our investment in xm canada for the year ended december 31 , 2009 compared to the year ended december 31 , 2008 , partially offset by increases in our share of sirius canada 's net loss , lower interest rates in 2009 and a lower average cash balance . income taxes income tax expense primarily represents the deferred tax liability related to the difference in accounting for our fcc licenses , which are amortized over 15 years for tax purposes but not amortized for book purposes in accordance with gaap and foreign withholding taxes on royalty income . 2010 vs. 2009 : for the years ended december 31 , 2010 and 2009 , income tax expense was $ 4,620 and $ 5,981 , respectively , a decrease of 23 % , or $ 1,361 primarily related to a decrease in the applicable tax rate and foreign withholding taxes on royalty income . 2009 vs. 2008 : for the years ended december 31 , 2009 and 2008 , income tax expense was $ 5,981 and $ 2,476 , respectively , an increase of 142 % , or $ 3,505 primarily related to the inclusion of xm . 33 subscriber data the following table contains actual subscriber data for the years ended december 31 , 2010 and 2009 , respectively , and adjusted subscriber data for the year ended december 31 , 2008. the subscriber data for the year ended december 31 , 2008 has been adjusted to include xm results : replace_table_token_7_th note : see pages 46 through 53 for footnotes . subscribers . at december 31 , 2010 , we had 20,190,964 subscribers , an increase of 1,418,206 subscribers , or 8 % , from the 18,772,758	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 flows for the year ended december 31 , 2010 compared with the year ended december 31 , 2009 and year ended december 31 , 2009 compared with the year ended december 31 , 2008 as of december 31 , 2010 and 2009 , we had $ 586,691 and $ 383,489 , respectively , in cash and cash equivalents . the following table presents a summary of our cash flow activity for the periods set forth below : replace_table_token_11_th cash flows provided by ( used in ) operating activities cash provided by operating activities increased by $ 79,065 , or 18 % , to $ 512,895 for the year ended december 31 , 2010 from $ 433,830 for the year ended december 31 , 2009. cash provided by operating activities increased by $ 586,627 , or 384 % , to $ 433,830 for the year ended december 31 , 2009 from cash used in operating activities of $ 152,797 for the year ended december 31 , 2008. the primary drivers of our operating cash flow growth have been improvements in profitability and changes in operating assets and liabilities . our net income ( loss ) was $ 43,055 , ( $ 352,038 ) and ( $ 5,316,910 ) for the years ended december 31 , 2010 , 2009 and 2008 , respectively . our revenue growth has been primarily due to growth in our subscriber revenues which increased by $ 126,671 , or 6 % , and $ 738,584 , or 48 % ( including the impact of the merger ) , for the years ended december 31 , 2010 and 2009 , respectively .
as part of our solution , we also develop cloud-based , real-time telematics performance monitoring systems that enable fleet operators to optimize energy and route efficiency . although we operate as a single unit through our subsidiaries , we approach our development through two divisions , automotive and aviation . we are currently focused on our core competency of bringing the n-gen electric cargo van to market and fulfilling our existing backlog of orders . we are also exploring other opportunities in monetizing our intellectual property which could include a sale , license or other arrangement of assets that are outside of our core focus . workhorse electric delivery vans are currently in production and are in use by our customers on u.s. roads . our delivery customers include companies such as ups , fedex express , alpha baking and w.b . mason . data from our in-house developed telematics system demonstrates our vehicles on the road are averaging approximately a 500 % increase in fuel economy as compared to conventional gasoline-based trucks of the same size and duty cycle . in addition to improved fuel economy , we anticipate that the performance of our vehicles on-route will reduce long-term vehicle maintenance expense by approximately 50 % as compared to fossil-fueled trucks . we are an oem capable of manufacturing class 3-6 commercial-grade , medium-duty truck chassis at our union city , indiana facility , marketed under the workhorse® brand . all workhorse last mile delivery vans are assembled in the union city assembly facility . from our development modeling and the existing performance of our electric vehicles on american roads , we estimate that our e-gen range-extended electric delivery vans will save over $ 150,000 in fuel and maintenance savings over the 20-year life of the vehicle . due to the positive return-on-investment , we place a premium price for our vehicles when selling to major fleet buyers . we expect that fleet buyers will be able to achieve a four-year or better return-on-investment ( without government incentives ) , which we believe justifies the higher acquisition cost of our vehicles . our goal is to continue to increase sales and production , while executing on our cost-down strategy to a point that will enable us to achieve gross margin profitability of the last mile-delivery van platform . as a key strategy , we have developed the workhorse n-gen platform , which has been accelerated from our development efforts on the usps ngdv program . 27 the workhorse n-gen electric cargo van platform will be available in multiple size configurations , 450 , 700 and 1,000 cubic feet . we intend to initiate the launch with the 450 cubic foot configuration where it is designed to compete with the sprinter , transit and ram gasoline/diesel trucks in the commercial sector with an emphasis on last-mile delivery and other service-oriented businesses , such as telecom . this ultra-low floor platform incorporates state-of-the-art safety features , economy and performance : we expect these vehicles to achieve a fuel economy of approximately 60 mpge and offer fleet operators the most favorable total cost-of-ownership of any comparable vehicle available today . we believe we are the first american oem to market a u.s. built electric cargo van , and early indications of fleet interest are significant . we expect the n-gen trucks will be supported by our ryder systems partnership . using n-gen light duty prototypes , we delivered over 100,000 packages in san francisco and ohio during our testing . during the period we achieved 50 mpge and successfully demonstrated the role the vehicle can have in last mile delivery . as a direct result of the usps award and development efforts , workhorse has begun development on the workhorse w-15 , a medium- and light-duty pickup truck platform aimed at commercial fleets . the w-15 pickup truck powertrain is a smaller version of its sister vehicle , the medium-duty battery electric powertrain , and will have two purpose-built variants , a w-15 work truck ( pickup ) and an n-gen cargo van . either of these two variants will appeal to delivery fleets , utility companies , telecom companies , municipalities and more . our horsefly delivery drone is a custom designed , purpose-built drone that is fully integrated in our electric trucks . horsefly is an octocopter designed with a maximum gross weight of 30 lbs . , a 10 lb . payload and a maximum air speed of 50 mph . it is designed and built to be rugged and consisting of redundant systems to further meet the faa 's required rules and regulations . surefly is our entry into the emerging vtol market . it is designed to be a two-person , 400-pound payload aircraft with a hybrid internal combustion/electric power generation system . our approach in the design is to build the safest and simplest way to fly rotary wing aircraft in the world . we believe it is a practical answer to personal flight , as well as , commercial transportation segments , including air taxi series , agriculture and beyond . the faa to-date has granted 14 separate experimental airworthiness certifications , registered as n834lw , for the aircraft . these certifications come after an extensive design review and inspection of the aircraft with each renewed certificate . in november 2018 , workhorse signed cooperative research and development agreement with a branch of the u.s. military to test surefly with a specific focus on military applications . this further expands the potential market for the aircraft . story_separator_special_tag the increase during 2018 was primarily due to cash interest and the amortization of debt issuance costs and discounts associated with the arosa loan as well as the amortization of the discount associated with the senior secured notes . story_separator_special_tag the foreseeable future . unless we are able to generate a sufficient amount of revenue and reduce our costs , we expect to finance future cash needs through public and or private offerings of equity securities and or debt financings . with the exception of contingent and royalty payments that we may receive under our existing collaborations , we do not currently have any committed future funding . to the extent we raise additional capital by issuing equity securities , our stockholders could at that time experience substantial dilution . any debt financing that we are able to obtain may involve operating covenants that restrict our business . our future funding requirements will depend upon many factors , including , but not limited to : ● our ability to acquire or license other technologies or compounds that we may seek to pursue ; ● our ability to manage our growth ; ● competing technological and market developments ; ● the costs and timing of obtaining , enforcing and defending our patent and other intellectual property rights ; and ● expenses associated with any unforeseen litigation . insufficient funds have required a reduction in business activity . additional delay in funding will continue to defer , scale back or eliminate some or all of our research or development programs , limit our sales activities , limit or cease production or negatively impact our operations . for the years ended december 31 , 2018 and 2017 , we maintained an investment in a bank money market fund . cash in excess of immediate requirements is invested with regard to liquidity and capital preservation . wherever possible , we seek to minimize the potential effects of concentration and degrees of risk . we will continue to monitor the impact of the changes in the conditions of the credit and financial markets to our investment portfolio and assess if future changes in our investment strategy are necessary . summary of cash flows replace_table_token_4_th cash flows from operating activities our cash flows from operating activities are affected by our cash investments to support the business in research and development , manufacturing , selling , general and administration . our operating cash flows are also affected by our working capital needs to support fluctuations in inventory , personnel expenses , accounts payable and other current assets and liabilities . during the year ended december 31 , 2018 and 2017 , cash used in operating activities was $ 21.8 million and $ 38.7 million , respectively . the decrease in net cash used in operations in 2018 as compared to 2017 was mainly due to a lower net loss for the period as well as increases in inventory and warranty reserves and accrued liabilities . cash flows from financing activities during the years ended december 31 , 2018 and 2017 , net cash provided by financing activities was $ 19.2 million and $ 42.4 million , respectively . cash flows from financing activities during the year ended december 31 , 2018 consisted primarily of shares issued related to the company 's august 2018 offering with national securities , the cowen agreement , the april 2018 closed subscription agreements and the marathon credit facility . cash flows from financing activities for the period ended december 31 , 2017 consisted primarily of a net $ 37.0 million from a public stock offering . the company may seek to raise additional capital through public or private debt or equity financings in order to fund its operations . off-balance sheet arrangements the company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the company 's financial condition , changes in financial condition , revenues or expenses , results of operations , liquidity , capital expenditures or capital resources that are material to investors . federal tax credit qualification by the irs the company has been qualified by the irs for a vehicle federal tax credit of up to $ 7,500 on vehicles whose gross vehicle rate weighting is less than 14,000 lbs . the company joins a list of plug-in electric drive motor vehicle manufacturers , including ford motor company , general motors corporation , tesla , toyota , and 13 ev manufacturers in all , qualifying purchasers for up to a $ 7,500 tax credit when purchasing an electric vehicle . additionally , many states offer additional sales tax exemptions and zero emission tax credits of up to $ 5,000 that can also be applied to the purchase . 32 california air resources board approval on february 20 , 2013 , carb approved the company 's e-100 all-electric commercial truck for sale in the state of california . most other states use this approval for sale of vehicles in their state . critical accounting policies and estimates the following accounting principles and practices of the company are set forth to facilitate the understanding of data presented in the consolidated financial statements : nature of operations we are a technology company focused on providing sustainable and cost-effective solutions to the commercial transportation sector . as an american manufacturer we design and build high performance battery-electric electric vehicles and aircraft that make movement of people and goods more efficient and less harmful to the environment . as part of our solution , we also develop cloud-based , real-time telematics performance monitoring systems that enable fleet operators to optimize energy and route efficiency . although we operate as a single unit through our subsidiaries , we approach our development through two divisions , automotive and aviation . our core products , under development and or in manufacture , are the medium duty step van , the light duty pickup , 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 cash requirements from inception , we have financed our operations primarily through sales of equity securities . we have utilized this capital in our research and development of five truck-based platforms ( i.e. , e-gen , e-100 , w-15 pickup truck , usps prototype and n-gen ) and two aviation platforms ( horsefly and surefly ) and to fund designing , building and delivering our vehicles to our customer base and for working capital purposes . as of december 31 , 2018 , we had approximately $ 1.5 million in cash , cash equivalents and short-term investments , compared to approximately $ 4.1 million as of december 31 , 2017 , a decrease of $ 2.6 million . the decrease in cash and cash equivalents was primarily attributable to the operating loss for the period partially offset by the issuance of common stock during the period . on december 31 , 2018 , the company entered into a credit agreement ( the “ credit agreement ” ) , among the company , as borrower , marathon asset management , lp , on behalf of certain entities it manages , as lenders ( collectively , with their permitted successors and assignees , the “ lenders ” ) , and wilmington trust , national association , as the agent ( “ wilmington ” ) . the credit agreement provided the company with a $ 10 million tranche of term loans ( the “ tranche one loans ” ) which may not be re-borrowed following repayment and ( ii ) a $ 25 million tranche of term loans which may be re-borrowed following repayment ( the “ tranche two loans ” together with the tranche one loans , the “ loans ” ) . the company used the proceeds for the tranche one loans ( x ) to pay off a loan provided by arosa opportunistic fund lp ( “ arosa ” ) in the principal amount of $ 7.8 million plus interest and ( y ) for working capital purposes . draws from the tranche two loans will be used in connection with vehicle production and are subject to the company 's receipt of purchase orders .
we will incur some additional expenses in 2021 for personnel , marketing and technology to support these credit , business deposit and noninterest income generation activities , but will seek to offset these costs as much as possible within our consistent operating expense discipline . in anticipation of the gradual dissipation of covid-19-stimulus related deposits , we will also increase our focus on the origination of core business deposit accounts balances and related noninterest income as part of our investment in treasury services capabilities for equipment finance , commercial finance and nonresidential real estate borrowers . with cautious optimism concerning recovery in both public health and economic condition in 2021 , we look forward to building upon the company 's manifest strengths and achieving its potential in 2021 and future years . financial results of operations we recorded net income of $ 9.2 million for the year ended december 31 , 2020 and basic and diluted earnings per common share for the year ended december 31 , 2020 were $ 0.61. total loans declined by $ 165.4 million for the year ended december 31 , 2020 , primarily due to a $ 111.5 million decline in multi-family mortgage loans and a $ 56.3 million decline in commercial line of credit balances resulting from covid-19 fiscal stimulus payments to healthcare providers . total deposits increased by $ 108.8 million , primarily due to a $ 257.8 million increase in core retail and business deposits , partially offset by a $ 93.9 million decrease in retail certificates of deposit , and a $ 55.2 million decrease in wholesale certificates of deposits . as a result of the changes in the loan and deposit portfolios , the company 's liquid assets were 31.5 % of total assets at december 31 , 2020. asset quality and capital adequacy our asset quality remained stable in 2020. the ratio of nonperforming loans to total loans was 0.12 % and the ratio of nonperforming assets to total assets was 0.09 % at december 31 , 2020. nonperforming commercial-related loans represented 0.03 % of total commercial-related loans at december 31 , 2020. our allowance for losses on loans and leases increased to 0.77 % of total loans as of december 31 , 2020 , compared to 0.65 % at december 31 , 2019 , reflecting the increased inherent credit risks arising from the covid-19 pandemic . our capital position remained strong with a tier 1 leverage ratio of 10.79 % . throughout 2020 , the company maintained its quarterly dividend rate at $ 0.10 per common share . the company repurchased 508,699 common shares during the year ended december 31 , 2020 , which represented 3.3 % of the company 's common shares that were outstanding on december 31 , 2019. the company 's book value per share increased in 2020 by 2.6 % to $ 11.71 per share at december 31 , 2020 . 18 results of operations net income we recorded net income of $ 9.2 million for the year ended december 31 , 2020 , compared to net income of $ 11.7 million for 2019. the decrease in net income was primarily due to decreased net interest income and noninterest income . our basic and diluted earnings per share of common stock was $ 0.61 for the year ended december 31 , 2020 , compared to $ 0.75 per share of common stock for the year ended december 31 , 2019. net interest income net interest income is our primary source of revenue . net interest income equals the excess of interest income plus fees earned on interest-earning assets over interest expense incurred on interest-bearing liabilities . the level of interest rates and the volume and mix of interest-earning assets and interest-bearing liabilities impact net interest income . interest rate spread and net interest margin are utilized to measure and explain changes in net interest income . interest rate spread is the difference between the yield on interest-earning assets and the rate paid for interest-bearing liabilities that fund those assets . the net interest margin is expressed as the percentage of net interest income to average interest-earning assets . the net interest margin exceeds the interest rate spread because noninterest-bearing sources of funds , principally noninterest-bearing demand deposits and stockholders ' equity , also support interest-earning assets . the accounting policies underlying the recognition of interest income on loans , securities , and other interest-earning assets are included in note 1 of “ notes to consolidated financial statements ” in item 8 of this annual report on form 10-k. average balance sheets the following table sets forth average balance sheets , average yields and costs , and certain other information . no tax-equivalent yield adjustments were made , as the effect of these adjustments would not be material . average balances are daily average balances . nonaccrual loans are included in the computation of average balances , but have been reflected in the table as loans carrying a zero yield . the yields set forth below include the effect of deferred fees and expenses , and discounts and premiums that are amortized or accreted to interest income or expense . replace_table_token_2_th ( 1 ) net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities . ( 2 ) net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities . ( 3 ) net interest margin represents net interest income divided by average total interest-earning assets . net interest income decreased by $ 6.3 million , or 12.1 % , to $ 45.9 million for the year ended december 31 , 2020 , from $ 52.2 million for the year ended december 31 , 2019. loan interest income for the year ended december 31 , 2020 includes amortized fees of $ 162,000 from paycheck protection program loans . story_separator_special_tag one year or less more than one year through five years more than five years through ten years more than ten years amortized cost weighted average yield amortized cost weighted average yield amortized cost weighted average yield amortized cost weighted average yield ( dollars in thousands ) securities : certificates of deposit $ 14,869 0.54 % $ 248 0.35 % $ — — % $ — — % municipal securities 402 4.00 — — — — — — 15,271 0.63 248 0.35 — — — — mortgage-backed securities : pass-through securities : fannie mae — — 904 2.75 366 3.77 1,961 3.15 freddie mac — — — — 9 2.22 345 3.17 ginnie mae — — 10 2.25 — — 2,231 3.26 cmos and remics — — 161 1.79 — — 2,032 0.46 — — 1,075 2.60 375 3.73 6,569 2.36 total securities $ 15,271 0.63 % $ 1,323 2.18 % $ 375 3.73 % $ 6,569 2.36 % the bank is a member of the federal reserve system as a result of its conversion to a national bank charter in 2016. the aggregate cost of our frb common stock as of december 31 , 2020 was $ 4.7 million based on its par value . the bank is also a member of the fhlb system . members of the fhlb system are required to hold a certain amount of common stock to qualify for membership in the fhlb system and to be eligible to borrow funds under the fhlb 's advance program . the aggregate cost of our fhlb common stock as of december 31 , 2020 was $ 2.8 million based on its par value . there is no market for frb and fhlb common stock . we purchased 4,100 shares of fhlb capital stock during 2019 and none in 2020. we redeemed no shares of fhlb capital stock in 2020 and 2019. we purchased no shares of frb common stock in 2020 and 2019. we redeemed 540,000 shares of frb common stock in 2019 and none in 2020. as a member of the fhlb , we are required to own a certain amount of stock based on the level of borrowings and other factors , at december 31 , 2020 , we owned 293,100 shares of excess fhlb common stock . the bank , as a member of visa usa , received 51,404 unrestricted shares of visa , inc. class b common stock in connection with visa , inc. 's initial public offering in 2007 and a related retroactive responsibility plan . the retroactive responsibility plan obligates all former visa usa members to indemnify visa usa , in proportion to their equity interests in visa usa , for certain litigation losses and expenses , including settlement expenses , for the lawsuits covered by the retrospective responsibility plan . due to the restrictions that the retrospective responsibility plan imposes on the company 's visa , inc. class b shares , the company had not recorded the class b shares as an asset . the bank sold 25,702 shares of visa class b common stock in the fourth quarter of 2018 and recorded a gain of $ 3.6 million . for equity investments without readily determinable fair values , when an orderly transaction for the identical or similar investment of the same issuer is identified , we use the valuation techniques permitted under asc 820 fair value to evaluate the observed transaction ( s ) and adjust the fair value of the equity investment . based on the existing transfer restriction and the uncertainty of the outcome of the visa litigation mentioned above , the 25,702 visa class b shares that the company owned as of december 31 , 2018 were recorded at $ 3.4 million in other assets with a corresponding gain . the bank sold its remaining 25,702 shares of visa class b common stock in the first quarter of 2019 and recorded a gain of $ 295,000. loan portfolio we originate multi-family mortgage loans , nonresidential real estate loans , commercial loans and commercial equipment leases . in addition , we also originate consumer loans , and purchase and sell loan participations from time-to-time . our principal loan products are discussed in note 4 of the `` notes to consolidated financial statements `` in item 8 of this annual report on form 10-k. the following table sets forth the composition of our loan portfolio by type of loan . replace_table_token_7_th 23 we engage in multi-family lending activities in the chicago metropolitan statistical areas and in other carefully selected metropolitan statistical areas outside of our primary lending area . at december 31 , 2020 , $ 219.9 million , or 48.6 % , of our multi-family loans were in the metropolitan statistical area for chicago , illinois , while $ 63.0 million , or 13.9 % , were in the metropolitan statistical area for dallas , texas ; $ 44.8 million , or 9.9 % , were in the metropolitan statistical area for denver , colorado ; $ 15.3 million , or 3.4 % , were in the metropolitan statistical area for tampa , florida ; and $ 15.8 million , or 3.5 % , were in the metropolitan statistical area for greenville-spartanburg , south carolina . we engage in commercial lending and commercial equipment finance activities on a nationwide basis loan portfolio maturities the following table summarizes the scheduled repayments of our loan portfolio at december 31 , 2020. demand loans , loans having no stated repayment schedule or maturity and overdraft loans are reported as being due in one year or less . replace_table_token_8_th total loans maturing after one year : predetermined ( fixed ) interest rates $ 321,894 adjustable interest rates 455,551 $ 777,445 nonperforming loans and assets we review loans on a regular basis , and generally place loans on nonaccrual status when either principal or interest is 90 days or more past due . in addition , the company places loans 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 management liquidity management – bank . the overall objective of our liquidity management is to ensure the availability of sufficient cash funds to meet all financial commitments and to take advantage of investment opportunities . we manage liquidity in order to meet deposit withdrawals on demand or at contractual maturity , to repay borrowings as they mature , and to fund new loans and investments as opportunities arise . our primary sources of funds are deposits , principal and interest payments on loans and securities , and , to a lesser extent , wholesale borrowings , the proceeds from maturing securities and short-term investments , and the proceeds from the sales of loans and securities . the scheduled amortizations of loans and securities , as well as proceeds from borrowings , are predictable sources of funds . other funding sources , however , such as deposit inflows , mortgage prepayments and mortgage loan sales are greatly influenced by market interest rates , economic conditions and competition . our cash flows are derived from operating activities , investing activities and financing activities as reported in the consolidated statements of cash flows in our consolidated financial statements . our primary investing activities are the origination for investment of multi-family mortgage loans , nonresidential real estate loans , commercial loans and leases and the purchase of investment securities and mortgage-backed securities . during the years ended december 31 , 2020 and 2019 , our loans originated or purchased for investment totaled $ 651.9 million and $ 793.7 million , respectively . purchases of securities totaled $ 44.1 million and $ 83.1 million for the years ended december 31 , 2020 and 2019 , respectively . these activities were funded primarily by principal repayments on loans and securities , and the sale of securities . during the years ended december 31 , 2020 and 2019 , principal repayments on loans totaled $ 817.4 million and $ 942.7 million , respectively . during the years ended december 31 , 2020 and 2019 , principal repayments on securities totaled $ 2.7 million and $ 3.1 million , respectively .
with regard to additional potential clinical activity , we submitted in october 2017 a request for clinical trial authorization ( “ cta ” ) in poland which , if allowed , will enable a phase i/ii clinical trial to study annamycin for the treatment of relapsed or refractory aml in poland . this will be in addition to the previously announced allowance of our ind in the united states . in december 2017 , the ethics committee in poland approved our phase i/ii clinical trial of annamycin . the cta remains subject to final approval by the polish national office . furthermore , in september 2017 we engaged a contract research organization ( “ cro ” ) to prepare for a proof-of-concept clinical trial in poland to study our drug candidate wp1220 , a part of the wp1066 portfolio , for the treatment of cutaneous t-cell lymphoma ( “ ctcl ” ) . our drug candidates annamycin 44 our lead product candidate is annamycin , for which fda has allowed an ind for a phase i/ii trial for the treatment of relapsed or refractory aml and granted orphan drug designation for the treatment of aml . we intend to conduct phase i/ii clinical trials for annamycin as a monotherapy for the treatment of relapsed or refractory aml in the united states and in poland . planned clinical trials for annamycin in october 2016 , we adjusted our clinical strategy for annamycin by adding in a phase i arm to our trial , which will add expense to our development effort . we believe this change in strategy will add several months to the eventual final approval of the drug , if the drug is approved . because the prior developer of annamycin allowed their ind to lapse , we were required to submit a new ind for continued clinical trials with annamycin . we filed our ind application for annamycin , with the clinical strategy of increasing the mtd mentioned above , on february 10 , 2017. in subsequent discussions with us , fda requested certain revisions to the protocol , additional information , and additional data related to chemistry , manufacturing and controls ( “ cmc ” ) . we made the requested revisions to the protocol and included the cmc data in our re-submission of the ind in august 2017 and the fda allowed this ind in september 2017. in august 2017 , we met with the european medicines agency ( “ ema ” ) to discuss a cta in europe for the study of annamycin for the treatment of aml . as a result of that meeting , we decided to proceed with an application in october 2017 for a cta for annamycin in poland . unlike in the united states , the process for beginning a clinical trial in poland requires a hospital contract before a request for cta can be made . we obtained the required hospital contract , which allowed the formal request for polish approval . in december 2017 , the ethics committee in poland approved our phase i/ii trial of annamycin for the treatment of relapsed or refractory aml . a final approval is required by the polish national office . in march we received requests for and provided additional information to the polish national office . we expect a response from the polish national office in the first half of 2018 and at the earliest mid-april 2018. the start of clinical trials in poland remains subject to confirmation and approval of the cta by the polish national office . we can provide no assurance that we will receive such confirmation on a timely basis , if at all . we have appointed a cro in both the united states and poland . in addition , we continue to recruit and contract clinics both in the united states and poland . in the us , we have one site - university hospitals cleveland medical center ( “ uhcmc ” ) - recruiting patients and active with drug ready to provide treatments . a patient has been enrolled with anticipated treatment to occur in the near term . we can provide no assurance treatment will occur on a timely basis , if at all . one of the key dose-limiting toxicities associated with currently available anthracyclines is their propensity to induce life-threatening heart damage . in our current phase i/ii trial for annamycin , we will collect data to further validate the design intent of annamycin to have little or no cardiotoxicity . unless otherwise noted , all of our references to annamycin refer to the liposomal form ( l-annamycin ) . on march 21 , 2017 , we received notice that fda had granted orphan drug designation for annamycin for the treatment of aml , effective march 20 , 2017. the wp1066 portfolio we have a license agreement with md anderson pursuant to which we have been granted a royalty-bearing , worldwide , exclusive license for the patent and technology rights related to our wp1066 portfolio and its close analogs , molecules targeting the modulation of key oncogenic transcription factors . planned clinical testing of wp1066 portfolio in vitro testing has shown a high level of activity for wp1066 against a wide range of solid tumors , and in vivo testing has shown significant activity against head and neck , pancreatic , stomach , and renal cancers , as well as metastatic melanoma and glioblastoma , among others . in vivo testing in mouse tumor models has shown that wp1066 inhibits tumor growth , blocks angiogenesis ( a process that leads to the formation of blood vasculature needed for tumor growth ) and increases survival . with respect to our wp1066 portfolio , we collaborated with a clinician at md anderson who submitted an ind for wp1066 treatment of brain tumors to the fda . story_separator_special_tag 50 we estimate the amount of work completed through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services . we make significant judgments and estimates in determining the accrued balance in each reporting period . as actual costs become known , we adjust our accrued estimates . although we do not expect our estimates to be materially different from amounts actually incurred , our understanding of the status and timing of services performed may vary from our estimates and could result in us reporting amounts that are too high or too low in any particular period . our accrued expenses are dependent , in part , upon the receipt of timely and accurate reporting from clinical research organizations and other third-party service providers . to date , there have been no material differences from our accrued expenses to actual expenses . impairment of long-lived assets management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be realizable or at a minimum annually during the fourth quarter of the year . if an evaluation is required , the estimated future undiscounted cash flows associated with the asset are compared to the asset 's carrying value to determine if an impairment of such asset is necessary . the effect of any impairment would be to expense the difference between the fair value of such asset and its carrying value . components of our results of operations and financial condition operating expenses we classify our operating expenses into three categories : research and development , general and administrative and depreciation . research and development . research and development expenses consist primarily of : costs incurred to conduct research , such as the discovery and development of our product candidates ; costs related to production of clinical supplies , including fees paid to contract manufacturers ; fees paid to clinical consultants , clinical trial sites and vendors , including clinical research organizations , in preparation for clinical trials and our ind and orphan drug applications with the fda ; and costs related to compliance with drug development regulatory requirements . we recognize all research and development costs as they are incurred . pre-clinical costs , contract manufacturing and other development costs incurred by third parties are expensed as the contracted work is performed . we expect our research and development expenses to increase in the future as we advance our product candidates into and through clinical trials and pursue regulatory approval of our product candidates in the united states and europe . the process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming . the actual probability of success for our product candidates may be affected by a variety of factors including : the quality of our product candidates , early clinical data , investment in our clinical program , competition , manufacturing capability and commercial viability . we may never succeed in achieving regulatory approval for any of our product candidates . as a result of the uncertainties discussed above , we are unable to determine the duration and completion costs of our research and development projects or when and to what extent , if any , we will generate revenue from the commercialization and sale of our product candidates . general and administrative general and administrative expense consists of personnel related costs , which include salaries , as well as the costs of professional services , such as accounting and legal , facilities , information technology and other administrative expenses . we expect our general and administrative expense to increase due to the anticipated growth of our business and related infrastructure as well as accounting , insurance , investor relations and other costs associated with becoming a public company . depreciation . depreciation expense consists of depreciation on our property and equipment . we depreciate our assets over their estimated useful life . we estimate leasehold improvements to have a 1-year life ; computer equipment to have a 2-year life ; machinery and equipment to have a 5-year life and furniture and office equipment to have a 7-year life . property and 51 equipment assets acquired as a result of the acquisition of moleculin , llc were given a 2-year life given the assessment at acquisition of their age and condition and expected useful remaining life . other income ( expense ) , net other income ( expense ) , net consists of interest expense associated with our notes payable and interest income . accounting for warrants we issued warrants to purchase shares of common stock related to equity transactions in 2016. we account for our warrants issued in accordance with accounting standards codification ( asc ) topic 815 , derivatives and hedging , guidance applicable to derivative instruments , which requires every derivative instrument within its scope to be recorded on the balance sheet as either an asset or liability measured at its fair value , with changes in fair value recognized in earnings for liability classified warrants . based on this guidance , we determined that our warrants meet the criteria for classification as equity . accordingly , the warrants were classified as equity and are not subject to remeasurement at each balance sheet date . the fair value was estimated using the black-scholes option pricing model , based on the market value of the underlying common stock at the measurement date , the contractual term of the warrant , risk-free interest rates , expected dividends and expected volatility of the price of the underlying common stock . the warrants issued in the february 2017 offering generated a warrant liability . our financial instruments consist primarily of account payables , accrued expenses , and a warrant liability . the carrying amount of accounts payables and accrued expenses approximates their fair value because of the short-term maturity	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 $ 7.7 million in cash . during 2017 , via the february 2017 offering , our at-the- market issuance agreement ( “ atm ” ) , and the exercise of warrants associated with the february 2017 offering , we issued 7.2 million shares of common stock and received $ 10.1 million in net proceeds . as mentioned above , subsequent to year-end in february 2018 we entered into the purchase agreement with certain investors for the sale of 4,290,000 shares of our common stock , at a purchase price of $ 2.10 per share . concurrently with the sale of the common shares , pursuant to the purchase agreement , we also sold warrants to purchase 2,145,000 shares of common stock , which have an exercise price of $ 2.80 per share . we sold the common shares and warrants for aggregate gross proceeds of approximately $ 9.0 million with net proceeds approximating $ 8.3 million ( the “ february 2018 offering ” ) . we believe that our existing cash and cash equivalents as of december 31 , 2017 along with the cash generated by the february 2018 offering , will be sufficient to fund our planned operations into the first quarter of 2019. such plans are subject to change depending on clinical enrollment and regulatory progress and the use and supply of drug product . 48 we will not generate revenue from product sales unless and until we successfully complete development of , obtain regulatory approval for and begin to commercialize one or more of our product candidates , which we expect will take a number of years and is subject to significant uncertainty . accordingly , we will need to raise additional capital to fund our future operations .
we continue to respond to expected near-term decreases in capital spending by our customers by reducing our own discretionary and capital spending . we have adjusted the level of our workforce , based on expected near-term work in our facilities . as we work through existing backlog , depending on the duration of the downturn , we may need to make additional reductions in labor commensurate with the level of fabrication activity . we have recently undertaken additional efforts to reduce our overall cost structure and will continue to pursue opportunities to eliminate unnecessary spending . we continually evaluate opportunities to dispose of assets that are not expected to provide sufficient long-term value . in addition , our recent acquisition of leevac , as further discussed below , has provided assets and operations that are complementary to our existing marine fabrication business , at an attractive value . the transaction provides us with more diversified product offerings and adds approximately $ 112.0 million in additional backlog . 23 from a marketing perspective , we are increasing our focus on obtaining marine fabrication and repair work , certain petrochemical plant work , alternative energy fabrication projects , and other projects that are less susceptible to fluctuations in oil prices . we believe that our strong balance sheet , levels of cash , and access to capital provides us with the strength to persevere throughout this cycle . leevac acquisition on january 1 , 2016 , we acquired substantially all of the assets and assumed certain specified liabilities of leevac shipyards , l.l.c . and its affiliates ( `` leevac `` ) . the purchase price for the acquisition was $ 20.0 million , subject to a working capital adjustment whereby we received at closing a dollar for dollar reduction for the assumption of certain net liabilities of leevac and settlement payments from sureties on certain ongoing fabrication projects that were assigned to us in the acquisition . after taking into account these adjustments , we received approximately $ 1.6 million in cash at closing and added approximately $ 112.0 million of incremental contract backlog primarily for four new build construction projects to be delivered in 2016 and 2017. strategically , the acquisition expands our marine fabrication and repair and maintenance presence in the gulf south market and further diversifies our fabrication capabilities . backlog our backlog is based on management 's estimate of the direct labor hours required to complete , and the remaining revenue to be recognized with respect to those projects a customer has authorized us to begin work or purchase materials or services pursuant to written contracts , letters of intent or other forms of authorization . as engineering and design plans are finalized or changes to existing plans are made , management 's estimate of the direct labor hours required to complete a project and the price of a project at completion is likely to change . all projects currently included in our backlog generally are subject to suspension , termination , or a reduction in scope at the option of the customer , although the customer is generally required to pay us for work performed and materials purchased through the date of termination , suspension , or reduction in scope . in addition , customers have the ability to delay the execution of projects . a comparison of our backlog as of december 31 , 2015 , september 30 , 2015 and as of december 31 , 2014 is as follows ( amounts in thousands , except for percentages ) : replace_table_token_6_th 24 1 ) backlog as of december 31 , 2015 includes commitments received through february 19 , 2016. we exclude suspended projects from contract backlog that are expected to be suspended more than twelve months because resumption of work and timing of revenue recognition for these projects are difficult to predict . our backlog also includes approximately $ 112.0 million of new build construction that was acquired in the leevac acquisition on january 1 , 2016. our amount of backlog that was acquired in the leevac acquisition does not include any adjustments that could arise from purchase price accounting which has not been finalized . because purchase price accounting could result in different market values of the backlog acquired , the value assigned to the leevac backlog acquired in the leevac acquisition could potentially impact future margin , however , it is not expected to impact future cash flow . 2 ) projects for our five largest customers consist of the following : ( i ) tendon support buoys for a deepwater gulf of mexico project for one customer , which commenced in the fourth quarter of 2015 and will be completed during the fourth quarter of 2016 ; ( ii ) two large multi-purpose service vessels for one customer , which commenced in the first quarter of 2014 and will be completed during the first quarter of 2017 ; ( iii ) two large petroleum supply vessels for one customer , which commenced in the second quarter of 2013 and will be completed during the first quarter of 2017 ; ( iv ) one jacket and piles for a foreign customer , which commenced in the third quarter of 2015 and will be completed during the fourth quarter of 2016 ; and ( v ) offshore support and construction services related to a deepwater gulf of mexico project which commenced in the fourth quarter of 2015 and will be completed in the fourth quarter of 2016 . 3 ) the timing of our recognition of the revenue backlog as presented above is based on management estimates of the application of the direct labor hours during the current projected timelines to complete the projects in our backlog . certain factors and circumstances , as mentioned above , could cause changes in the period when the backlog is recognized as revenue . story_separator_special_tag comparison of the years ended december 31 , 2014 and 2013 ( in thousands , except for percentages ) : replace_table_token_8_th revenues - for the twelve-month period ended december 31 , 2014 , our revenue was $ 506.6 million compared to $ 608.3 million for the twelve-month period ended december 31 , 2013 , a decrease of 16.7 % . the following factors contributed to the decrease in revenues for the year ended december 31 , 2014 compared to the year ended december 31 , 2013 : pass-through costs , as a percentage of revenue , for the twelve-month period ended december 31 , 2014 were 48.2 % compared to 58.5 % for the twelve-month period ended december 31 , 2013 ; and overall decreased levels of activity as a result of the completion of topsides for two large deepwater customers in 2013 , and a spar hull for a large deepwater customer in the first quarter of 2014. a decrease in pass-through costs for the twelve months ended december 31 , 2014 primarily relates to higher levels of sub-contracted service costs on our major deepwater projects in 2013. pass-through costs , as described in note 2 in the notes to consolidated financial statements , are included in revenue , but have no impact on the gross profit recognized for that particular period . the decrease in revenue was offset by lower estimated contract losses of $ 6.6 million for december 31 , 2014 compared to $ 30.8 million for december 31 , 2013. gross profit - for the twelve-month periods ended december 31 , 2014 and 2013 , gross profit was $ 44.6 million ( 8.8 % of revenue ) and $ 23.7 million ( 3.9 % of revenue ) , respectively . factors contributing to the overall increase in gross profit for the twelve-month period ended december 31 , 2014 compared to the twelve-month period ended december 31 , 2013 include : 29 lower contract losses of $ 6.6 million during the twelve month period ended december 31 , 2014 compared to $ 30.8 million during the twelve-month period ended december 31 , 2013 ; a return to traditional jacket and smaller topside shallow water projects during 2014 as compared to 2013 ; and a higher level of offshore commissioning and hook-up activity performed on a time and material basis . both the offshore connection and hook-up work and execution of the 2014 shallow water projects garnered higher profit margins as compared to our mix of projects performed during 2013 , primarily due to ( i ) certain project improvement initiatives undertaken in 2014 , and ( ii ) the fact that we historically have been able to more effectively control costs associated with these projects as compared to larger , more complex deepwater projects . general and administrative expenses - our general and administrative expenses were $ 17.4 million for the twelve-month period ended december 31 , 2014 compared to $ 11.6 million for the twelve-month period ended december 31 , 2013. factors that contributed to the increase in general and administrative expenses for the twelve months ended december 31 , 2014 include : a net increase of $ 2.7 million in bad debt expense ; bad debt expense for 2014 included a $ 3.6 million increase in the fourth quarter related to negotiations of an outstanding contract receivable balance with a customer for a deepwater hull project completed during the first quarter of 2014. at december 31 , 2013 , the company included an allowance for bad debt in the amount of $ 0.9 million in connection with a vessel upgrade and outfitting project . increases in expenses related to the relocation of our corporate headquarters to houston , texas and hiring of additional corporate staff members to support operations ; the addition of three consultants to assist with the marketing efforts for assets held for sale and potential flng opportunities ; and increases in expenses associated with an increase in the numbers of directors serving on our board . asset impairment - as further discussed in “ assets held for sale , ” under critical accounting policies above , as of december 31 , 2014 , management determined that its previous estimate of $ 13.5 million for the fair value of assets held for sale had declined to $ 10.3 million . as a result , we included in general and administrative expenses in our income statement for the year ended december 31 , 2014 an impairment charge of $ 3.2 million . interest expenses - we had net interest expense of $ 24,000 for the twelve-month period ended december 31 , 2014 compared to net interest expense of $ 234,000 for the twelve-month period ended december 31 , 2013. net interest expense for the period ended december 31 , 2014 was lower as a result of decreased borrowings on the line of credit . other expenses - we had other expenses of $ 99,000 for the twelve-month period ended december 31 , 2014 , compared to other expenses of $ 337,000 for the twelve-month period ended december 31 , 2013. other expenses for both periods primarily represent losses on sales of miscellaneous equipment . income taxes - our effective income tax rate was 35.7 % for the twelve-month period ended december 31 , 2014 , compared to 37.3 % for the twelve-month period ended december 31 , 2013. the decrease in the effective rate for the period ended december 31 , 2014 is a result of ( a ) lower effective state income tax rate ; and ( b ) the fact that we were able to fully utilized net operating losses in 2014 , allowing the company to take the qualified production activities income deduction ( section 199 ) for taxable earnings in excess of net operating losses for the year ended december 31 , 2014. story_separator_special_tag with fabrication projects , capital expenditures and payment of dividends to our shareholders . we experienced	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 funded our business activities through cash generated from operations . at december 31 , 2015 cash and cash equivalents totaled $ 34.8 million , compared to $ 36.1 million at december 31 , 2014 with no borrowings outstanding under our credit facility . working capital was $ 78.0 million and our ratio of current assets to current liabilities was 3.1 to 1 at december 31 , 2015. our primary source of cash for the year ended december 31 , 2015 , was the collection of accounts receivable along with a reduction in costs associated with lower activity levels . at december 31 , 2015 , our contracts receivable balance was $ 47.0 million . we have subsequently collected $ 28.4 million through february 19 , 2016. during 2015 , we recorded contract losses of $ 24.5 million related to a decrease in the contract price due to final weight re-measurements and our inability to recover certain costs on disputed change orders related to a large deepwater project which was recently delivered . we are currently in negotiations with this customer concerning disputed change orders and no amounts with respect to these disputed change orders are included in contract revenues at december 31 , 2015. our intention is to resolve the disputed cost amounts and finalize the change orders with our customer as quickly as possible ; however , we can give no assurance that these negotiations will conclude in the near term or at all or that we will recover any of these contract 30 losses from our customer .
to determine the adequacy of the allowance in each of these two components , we employ two primary methodologies , the individual loan review analysis methodology and the classification migration methodology . these methodologies support the basis for determining allocations between the various loan categories and the overall adequacy of our allowance to provide for probable losses inherent in the loan portfolio . these methodologies are further supported by additional analysis of relevant factors such as the historical losses in the portfolio , and environmental factors which include trends in delinquency and non-accrual , and other significant factors , such as the national and local economy , the volume and composition of the portfolio , the strength of management and loan staff , underwriting standards , and the concentration of credit . the bank 's management allocates a specific allowance for “ impaired credits , ” in accordance with accounting standard codification ( “ asc ” ) section 310-10-35. for non-impaired credits , a general allowance is established for those loans internally classified and risk graded pass , minimally acceptable , special mention , or substandard based on historical losses in the specific loan portfolio and a reserve based on environmental factors determined for that loan group . the level of the general allowance is established to provide coverage for management 's estimate of the credit risk in the loan portfolio by various loan segments not covered by the specific allowance . the allowance for credit losses is discussed in more detail in “ risk elements of the loan portfolio — allowance for credit losses ” below . investment securities the classification and accounting for investment securities are discussed in detail in note 1 to the consolidated financial statements . under asc topic 320 , “ accounting for certain investments in debt and equity securities , ” investment securities must be classified as held-to-maturity , available-for-sale , or trading . the appropriate classification is based partially on our ability to hold the securities to maturity and largely on management 's intentions with respect to either holding or selling the securities . the classification of investment securities is significant since it directly impacts the accounting for unrealized gains and losses on securities . unrealized gains and losses on trading securities flow directly through earnings during the periods in which they arise , whereas available-for-sale securities are recorded as a separate component of stockholders ' equity ( accumulated other comprehensive income or loss ) and do not affect earnings until realized . the fair values of our investment securities are generally determined by reference to quoted market prices and reliable independent sources . we are obligated to assess , at each reporting date , whether there is an `` other-than-temporary `` impairment to our investment securities . asc topic 320 requires us to assess whether we have the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery . other-than-temporary impairment related to credit losses will be recognized in earnings . other-than-temporary impairment related to all other factors will be recognized in other comprehensive income . income taxes the provision for income taxes is based on income reported for financial statement purposes , and differs from the amount of taxes currently payable , since certain income and expense items are reported for financial statement purposes in different periods than those for tax reporting purposes . taxes are discussed in more detail in note 12 to the consolidated financial statements . accrued taxes represent the net estimated amount due or to be received from taxing authorities . in estimating accrued taxes , we assess the relative merits and risks of the appropriate tax treatment of transactions taking into account statutory , judicial , and regulatory guidance in the context of our tax position . we account for income taxes using the asset and liability approach , the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of our assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled . a valuation allowance is established for deferred tax assets if , based on the weight of available evidence , it is more likely than not that some portion or all of the deferred tax assets will not be realized . 41 goodwill and g oodwill i mpairment goodwill represents the excess of costs over fair value of assets of businesses acquired . asc topic 805 , “ business combinations ( revised 2007 ) , ” requires an entity to recognize the assets , liabilities , and any non-controlling interest at fair value as of the acquisition date . contingent consideration is required to be recognized and measured at fair value on the date of acquisition rather than at a later date when the amount of that consideration may be determinable beyond a reasonable doubt . asc topic 805 also requires an entity to expense acquisition-related costs as incurred rather than allocating such costs to the assets acquired and liabilities assumed . contingent considerations are to be recognized at fair value on the acquisition date in a business combination and would be subject to the probable and estimable recognition criteria of asc topic 450 , “ accounting for contingencies . ” goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized , but instead are tested for impairment at least annually in accordance with the provisions of asc topic 350. asc topic 350 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values , and reviewed for impairment in accordance with asc topic 360 , “ accounting for impairment or disposal of long-lived assets . story_separator_special_tag investment securities . 46 the following table sets forth information concerning average interest-earning assets , average interest-bearing liabilities , and the yields and rates paid on those assets and liabilities . average outstanding amounts included in the table are daily averages . interest-earning assets and interest-bearing liabilities replace_table_token_5_th ( 1 ) yields and amounts of interest earned include loan fees . non-accrual loans are included in the average balance . ( 2 ) calculated by dividing net interest income by average outstanding interest-earning assets . ( 3 ) the average yield has been adjusted to a fully taxable-equivalent basis for certain securities of states and political subdivisions and other securities held using a statutory federal income tax rate of 35 % . ( 4 ) net interest income , net interest spread , and net interest margin on interest-earning assets have been adjusted to a fully taxable-equivalent basis using a statutory federal income tax rate of 35 % . 47 taxable-equivalent net interest income — changes due to rate and volume ( 1 ) replace_table_token_6_th _ ( 1 ) changes in interest income and interest expense attributable to changes in both volume and rate have been allocated proportionately to changes due to volume and changes due to rate . ( 2 ) the amount of interest earned has been adjusted to a fully tax-equivalent basis for certain securities of states and political subdivisions and other securities held using a statutory federal income tax rate of 35 % . provision for credit losses the provision for credit losses represents the charge against current earnings that is determined by management , through a credit review process , as the amount needed to maintain an allowance for loan losses and an allowance for off-balance sheet unfunded credit commitments that management believes to be sufficient to absorb credit losses inherent in the bank 's loan portfolio and credit commitments . the bank recorded a negative $ 11.4 million provision for credit losses in 2015 compared with a negative $ 10.8 million in 2014 , and a negative $ 3.0 million in 2013. net charge-offs for 2015 were $ 11.1 million , or 0.12 % of average loans , compared to net charge-offs for 2014 of $ 1.3 million , or 0.02 % of average loans , and net charge-offs for 2013 of $ 6.4 million , or 0.08 % of average loans . non-interest income non-interest income decreased $ 7.8 million , or 19.4 % , to $ 32.7 million for 2015 , from $ 40.5 million for 2014 , compared to $ 60.3 million for 2013 . non-interest income includes depository service fees , letters of credit commissions , securities gains ( losses ) , gains ( losses ) from loan sales , gains from sale of premises and equipment , and other sources of fee income . these other fee-based services include wire transfer fees , safe deposit fees , fees on loan-related activities , fee income from our wealth management division , and foreign exchange fees . 48 the decrease in non-interest income from 2014 to 2015 was primarily due to a $ 10.1 million decrease in securities gains and a $ 1.1 million decrease in wealth management commissions offset by increases in venture capital gains of $ 1.9 million and in other fees and commissions of $ 1.6 million . we sold securities of $ 1.03 billion in 2015 compared to $ 859.0 million in 2014. in 2015 , gains of $ 2.4 million and losses of $ 1.9 million were realized on sales of investment securities compared with gains of $ 18.0 million and losses of $ 10.5 million realized in 2014. other-than-temporary write-downs on agency preferred stock were $ 3.9 million in 2015 compared to $ 0.8 million in 2014. the decrease in non-interest income from 2013 to 2014 was primarily due to a $ 20.6 million decrease in securities gains offset by a $ 1.4 million increase in wealth management commissions . we sold securities of $ 859.0 million in 2014 compared to $ 1.0 billion in 2013. in 2014 , gains of $ 18.0 million and losses of $ 10.5 million were realized on sales of investment securities compared with gains of $ 29.0 million and losses of $ 1.6 million realized in 2013. non-interest expense non-interest expense includes expenses related to salaries and benefits of employees , occupancy expenses , marketing expenses , computer and equipment expenses , amortization of core deposit intangibles , and other operating expenses . non-interest expense totaled $ 202.7 million in 2015 compared to $ 174.3 million in 2014. the increase of $ 28.4 million , or 16.3 % , in non-interest expense in 2015 compared to 2014 was primarily due to a combination of the following : ● amortization of investments in affordable housing and alternative energy partnerships increased $ 26.3 million to $ 33.3 million in 2015 from $ 7.0 million in 2014 primarily due to the investment in an alternative energy partnership in 2015 . ● occupancy expenses increased $ 1.3 million , or 8.2 % , due primarily to increases in higher rental expenses resulting from the acquisition of asia bank and from new branches . ● professional service expenses increased $ 2.4 million primarily due to increases in data processing expenses and expenses related to the conversion of asia bank customers to our data processing systems . ● marketing expenses increased $ 0.8 million primarily due to increases in media and promotion expenses . ● oreo expenses increased $ 0.5 million primarily due to decreases in gains on sale and transfer of oreo offset by decreases in the provision for oreo losses and expenses . ● offsetting the above increases were a decrease of $ 3.3 million in costs associated with debt redemptions during 2014 for prepayment penalties on securities sold under agreements to repurchase . the efficiency ratio , defined as non-interest expense divided by the sum of net interest income before provision for	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 stockholders ' equity total equity was $ 1.75 billion at december 31 , 2015 , an increase of $ 144.9 million , or 9.0 % , from $ 1.60 billion at december 31 , 2014 , primarily due to increases in net income of $ 161.1 million and equity consideration for the acquisition of asia bancshares , inc. of $ 82.8 million offset by purchases of treasury stock of $ 59.4 million and common stock cash dividends of $ 45.3 million . under the terms of the acquisition of asia bancshares , inc. which was completed on july 31 , 2015 , we issued 2.58 million shares of our common stock and paid $ 57.0 million in cash for all of the issued and outstanding stock of asia bancshares . the company paid cash dividends of $ 0.56 per common share in 2015 and $ 0.29 per common share in 2014. in november 2007 , the board of directors approved a stock repurchase program for the company to buy back up to one million shares of our common stock , and 377,500 shares were repurchased during 2007. repurchases of shares were suspended under this program between 2008 and july 2015. in august 2015 , the company resumed stock repurchases under the november 2007 repurchase program and repurchased the remaining 622,500 shares under the november 2007 repurchase program for $ 18.1 million , or an average price of $ 29.08 per share . on august 31 , 2015 , the board of directors approved a new stock repurchase program to buy back up to two million shares of our common stock . in 2015 , the company repurchased 1,366,750 shares for $ 41.3 million , or $ 30.22 per share under the august 2015 repurchase program .
trendmaker homes increased net new home orders by 3 % due to a 9 % increase in average selling communities offset by a 7 % decrease in monthly absorption rate , partly due to the loss of two weeks of selling due to the impact of hurricane harvey . the houston market continues to experience softer market conditions due to the volatility in oil prices in recent years and the related impact on job growth . tri pointe homes ' net new home orders increased by 36 % on a year over year basis due to an 18 % increase in monthly absorption rate and a 16 % increase in average selling communities . demand remains strong in the markets in which tri pointe homes operates , as evidenced by absorptions of 3.9 homes per community , per month , at average selling prices above the company average . winchester homes experienced a 14 % growth in net new home orders as a result of a 19 % increase in monthly absorption rate offset by a slight decrease in average selling communities . the increase in monthly absorption rate was due to strong customer demand in some of our larger master plan communities . backlog units , backlog dollar value and average sales price by segment ( dollars in thousands ) replace_table_token_16_th backlog units reflect the number of homes , net of actual cancellations experienced during the period , for which we have entered into a sales contract with a homebuyer but for which we have not yet delivered the home . homes in backlog are generally delivered within three to nine months from the time the sales contract is entered into , although we may experience cancellations of sales contracts prior to delivery . our cancellation rate of homebuyers who contracted to buy a home but did not close escrow ( as a percentage of overall orders ) remained consistent at 15 % for both years ended december 31 , 2017 and 2016. the dollar value of backlog was approximately $ 1.0 billion as of december 31 , 2017 , an increase of $ 371.6 million , or 56 % , compared to $ 661.1 million as of december 31 , 2016. this increase was due to an increase in backlog units of 378 , or 32 % , to 1,571 as of december 31 , 2017 , compared to 1,193 as of december 31 , 2016 , and a 19 % increase in the average sales price of homes in backlog to $ 657,000 as of december 31 , 2017 , compared to $ 554,000 as of december 31 , 2016. maracay homes ' backlog dollar value decreased 7 % compared to the prior year as a result of a 13 % decrease in backlog units partly offset by a 6 % increase in average sales price . the decrease in backlog units was related to the decrease in average selling communities , while the increase in average sales price was due to a product mix shift that included a greater proportion of move-up and luxury product compared to the prior year . pardee homes ' backlog dollar value increased 123 % due to a 57 % increase in backlog units and a 42 % increase in average sales price . the increase in backlog units was due to the 31 % increase in orders during the year while the increase in average selling price was due to increased pricing power in our markets and a higher end product mix with higher price points . quadrant homes ' backlog dollar value increased 57 % as a result of a 43 % increase in backlog units and a 10 % increase in average sales price . the increase in backlog units was directly related to the increase in net new home orders during the year as result of a 22 % increase in monthly absorption rate . the increase in average - 48 - sales prices was related to a higher mix of homes in backlog from core seattle markets of king and snohomish counties which have higher price points . trendmaker homes ' backlog dollar value increased 10 % largely due to a 6 % increase in backlog units . the increase in backlog units was related to the increase in net new home orders resulting from an increase in average selling communities . tri pointe homes ' backlog dollar value increased 84 % due to a 60 % increase in backlog units and 15 % increase in average sales price . the increase in backlog units was primarily due to the strong monthly absorption rate in the current year , particularly impacted by a 40 % increase in the fourth quarter of 2017 compared to the fourth quarter of 2016. winchester homes ' backlog dollar value increased 20 % due primarily to a 23 % increase in backlog units . the increase in backlog units was due to the 14 % increase in net new home orders in the year compared to the prior year . new homes delivered , homes sales revenue and average sales price by segment ( dollars in thousands ) replace_table_token_17_th home sales revenue increased $ 403.0 million , or 17 % to $ 2.7 billion for the year ended december 31 , 2017 . the increase was comprised of : ( i ) $ 268.8 million due to an increase in homes delivered to 4,697 for the year ended december 31 , 2017 from 4,211 in the prior year , and ( ii ) $ 134.2 million related to a $ 29,000 or 5 % increase in the average sales price of homes delivered to $ 582,000 for the year ended december 31 , 2017 from $ 553,000 in the prior year . maracay homes reported a 16 % increase in home sales revenue due to a 16 % increase in average sales price . story_separator_special_tag maracay homes reported a 37 % increase in home sales revenue due to a 30 % increase in new homes delivered and a 5 % increase in average sales price . the increase in new homes delivered was largely driven by the large order and backlog growth experienced in 2015 , which resulted in higher new homes delivered in 2016. further , net new home orders continued to grow in 2016 as a result of strong market demand while the increase in average sales price was due to increased pricing during the year and product mix . pardee homes increased home sales revenue by 10 % largely due to an increase in new homes delivered and a slight increase in average sales price . the increase in new home deliveries at pardee homes was the result of an increase in net new home orders in both the current and prior year due to strong market demand . quadrant homes increased home sales revenue by 15 % driven by increased average sales prices , slightly offset by a decrease in new home deliveries . the 23 % increase in average sales price was the result of delivery more units in the core seattle markets of king and snohomish counties which have higher price points . the 7 % decrease in new home deliveries was due to the decrease in net new home orders as a result of decreased average selling communities . home sales revenue decreased 13 % at trendmaker homes mainly due to a decrease in new homes delivered . the decrease in new homes delivered was a result of the lower backlog to start the year due to the decrease in net new home order volume experienced in 2015. tri pointe homes reported a 7 % decrease in home sales revenue as a result of a 9 % decrease in average sales price slightly offset by a 3 % increase in new homes delivered . average - 54 - sales prices declined due to a higher mix of projects in inland empire in 2016 compared to the prior year where the mix was more heavily weighted to higher priced , coastal communities in orange county , california . in 2017 we expect average sales prices to increase slightly with new community openings in orange county , california . home sales revenue decreased at winchester homes by 13 % due to a decrease in both average sales prices and new homes delivered . the decrease in average sales prices was a product mix shift to more attached product during the year that sells at lower price points . homebuilding gross margins ( dollars in thousands ) replace_table_token_25_th _ ( 1 ) non-gaap financial measure ( as discussed below ) . our homebuilding gross margin percentage increased to 21.2 % for the year ended december 31 , 2016 , as compared to 21.1 % for the year ended december 31 , 2015 . excluding interest and impairment and lot option abandonments in cost of home sales , adjusted homebuilding gross margin percentage was 23.4 % for the year ended december 31 , 2016 compared to 23.1 % for the prior year period , with the slight increase attributable to higher interest in cost of home sales . this higher interest cost was due primarily to the higher fixed rate debt we obtained in may of 2016 with the issuance of new $ 300 million senior notes . adjusted homebuilding gross margin is a non-gaap financial measure . we believe this information is meaningful as it isolates the impact that leverage and noncash charges have on homebuilding gross margin and permits investors to make better comparisons with our competitors , who adjust gross margins in a similar fashion . see the table above reconciling this non-gaap financial measure to homebuilding gross margin , the nearest gaap equivalent . land and lot gross margins ( dollars in thousands ) replace_table_token_26_th our land and lot gross margin percentage increased to 76.0 % for the year ended december 31 , 2016 as compared to 65.4 % for the prior year period , in part , owing to the following . in june of 2016 , pardee homes sold two parcels , totaling 102 homebuilding lots , located in the pacific highlands ranch community in san diego , california . pardee homes received $ 61.6 million in cash proceeds from the sales . in june of 2015 pardee homes sold a commercial site in the pacific highlands ranch community for $ 53.0 million in cash proceeds . these transactions involving the pacific highlands ranch community included significant gross margins due to the low land basis of the community which was acquired in 1981. land and lot sales gross margin percentage can vary significantly due to the type of land and its related cost basis . - 55 - sales and marketing , general and administrative expense ( dollars in thousands ) replace_table_token_27_th sales and marketing expense as a percentage of home sales revenue increased to 5.5 % for the year ended december 31 , 2016 from 5.1 % for the year ended december 31 , 2015 . sales and marketing expense increased $ 11.7 million , or 10 % , to $ 127.9 million for the year ended december 31 , 2016 from $ 116.2 million for the prior year period . the increase was due primarily to increased deliveries associated with increased average selling communities , along with an increase in outside commission costs for the year ended december 31 , 2016 , compared to the prior year period . additionally , our expansion into the austin , texas and los angeles , california markets contributed to higher upfront sales and marketing costs in 2016. general and administrative expense as a percentage of home sales revenue remained flat at 5.3 % for both years ended december 31 , 2016 and 2015 , respectively . general and administrative expense increased by $ 3.3 million to $	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 $ 3.6 million in 2017 compared to $ 4.0 million in 2016. the decrease in 2017 was due primarily to decreased purchases of property and equipment . net cash used in financing activities increased to $ 23.8 million in 2017 from cash provided of $ 156.5 million in 2016. the change was primarily a result of a net decrease in debt borrowings of $ 123.9 million in 2017 compared to 2016. in addition , share repurchase activity increased by $ 70.1 million in 2017 compared to the prior year . as of december 31 , 2017 , our cash and cash equivalents balance was $ 282.9 million . cash flows—year ended december 31 , 2016 compared to year ended december 31 , 2015 the comparison of cash flows for the years ended december 31 , 2016 and 2015 is as follows : net cash used in operating activities increased by $ 189.3 million to $ 158.3 million in 2016 from cash provided of $ 31.0 million in 2015. the change was primarily composed of an increase in cash outflow related to real estate inventories of $ 153.1 million in 2016 as we increased our land acquisition and development spending to grow our community count to 124 active communities as of december 31 , 2016 , compared to 104 as of december 31 , 2015. other activity included ( i ) a decrease in net income to $ 196.1 million in 2016 compared to $ 207.2 million in - 59 - 2015 and ( ii ) other offsetting activity including changes in other assets , receivables , accrued expenses and other liabilities and deferred income taxes . net cash used in investing activities was $ 4.0 million in 2016 compared to $ 862,000 in 2015. the increase in 2016 was due primarily to increased purchases of property and equipment .
45 legacy – we manage the operations of , and supply inventory and laboratory processing services to , 227 vision centers in walmart retail locations as of fiscal year end 2018 . under our management & services agreement with walmart , our responsibilities include ordering and maintaining merchandise inventory , arranging the provision of optometry services , providing managers and staff at each location , training personnel , providing sales receipts to customers , maintaining necessary insurance , obtaining and holding required licenses , permits and accreditations , owning and maintaining store furniture , fixtures and equipment and developing annual operating budgets and reporting . we earn management fees as a result of providing such services and therefore we record revenue related to sales of products and product protection plans to our legacy partner 's customers on a net basis . our management & services agreement also allows our legacy partner to collect penalties if the vision centers do not generate a requisite amount of revenues . no such penalties have been assessed under our current arrangement , which began in 2012. we also sell to our legacy partner merchandise that is stocked in retail locations we manage pursuant to a separate supplier agreement , and provide centralized laboratory services for the finished eyeglasses for our legacy partner 's customers in stores that we manage . we lease space from walmart within or adjacent to each of the locations we manage and use this space for the provision of optometric examination services . during the fiscal year 2018 , sales associated with our legacy partner arrangement represented 10.0 % of consolidated net revenue . this exposes us to concentration of customer risk . our agreements with our legacy partner expire on august 23 , 2020 , and will automatically renew for a three-year period unless a party elects not to renew . our consolidated results also include the following activity recorded in our corporate/other category : our e-commerce platform of 16 dedicated websites managed by our wholly-owned subsidiary , arlington contact lens service , inc. ( “ ac lens ” ) . our e-commerce business consists of six proprietary branded websites , including aclens.com , discountglasses.com and discountcontactlenses.com , and 10 third-party websites with established retailers , such as walmart , sam 's club and giant eagle , and mid-sized vision insurance providers . ac lens handles site management , customer relationship management and order fulfillment and also sells a wide variety of contact lenses , eyeglasses and eyecare accessories . ac lens also distributes contact lenses to walmart and sam 's club under fee for service arrangements . we record revenue for these activities and we incur costs at a higher percentage of sales than other product categories , given the wholesale nature of the business . managed care business conducted by firstsight vision services , inc. ( “ firstsight ” ) , our wholly-owned subsidiary that is licensed as a single-service health plan under california law , which arranges for the provision of optometric services at the offices next to certain walmart stores throughout california , and also issues individual vision care benefit plans in connection with our america 's best operations in california . unallocated corporate overhead expenses , which are a component of selling , general and administrative expenses and are comprised of various home office expenses such as payroll , occupancy costs and consulting and professional fees . corporate overhead expenses also include field supervision for stores included in our two reportable segments . reportable segment information is presented on the same basis as our consolidated financial statements , except reportable segment sales are presented on a cash basis , including point of sales for managed care payors and excluding the effects of unearned and deferred revenue , consistent with what our chief operating decision maker ( “ codm ” ) regularly reviews . reconciliations of segment results to consolidated results include financial information necessary to adjust reportable segment revenues to a consolidated basis in accordance with accounting principles generally accepted in the united states of america ( “ gaap ” ) , specifically the change in unearned and deferred revenues during the period . there are no revenue transactions between reportable segments , and there are no other items in the reconciliations other than the effects of unearned and deferred revenue . see note 15 . `` segment reporting `` in our consolidated financial statements included in part ii . item 8. of this form 10-k. deferred revenue represents cash basis sales of product protection plans and club memberships at the point of sale , and is the timing difference of when we collect the cash from the customer and when those services are performed . the increases or decreases in deferred revenue represent cash collections in the reporting period in excess of or below the recognition of previous deferrals . a roll-forward of deferred revenue is presented in note 11 . “ deferred revenue . ” in our consolidated financial statements included in part ii . item 8. of this form 10-k. unearned revenue represents cash basis sales of prescription eyewear only for approximately the last week of the reporting period and is the result of the timing difference of when we collect the cash from the customer and the delivery/customer acceptance of the product . trends and other factors affecting our business various trends and other factors affect or have affected our operating results , including : 46 new store openings we expect that new stores will be a key driver of growth in our net revenue and operating profit in the future . our results of operations have been and will continue to be materially affected by the timing and number of new store openings . as stores mature , profitability typically increases significantly . story_separator_special_tag accordingly , we believe that adjusted comparable store sales growth provides timely and accurate information relating to the operational health and overall performance of each brand . we also believe that , for the same reasons , investors find our calculation of adjusted comparable stores sales growth to be meaningful . 50 adjusted ebitda , adjusted ebitda margin and adjusted net income we define adjusted ebitda as net income , plus interest expense , income tax provision ( benefit ) and depreciation and amortization , as further adjusted to exclude stock compensation expense , costs associated with debt refinancing , asset impairment , non-cash inventory write-offs , management fees , new store pre-opening expenses , non-cash rent , litigation settlements , secondary offering expenses , long-term incentive plan expenses and other expenses . we define adjusted ebitda margin as adjusted ebitda as a percentage of total net revenue . we define adjusted net income as net income , further adjusted to exclude stock compensation expense , costs associated with debt refinancing , asset impairment , non-cash inventory write-offs , management fees , new store pre-opening expenses , non-cash rent , litigation settlement , secondary offering expenses , long-term incentive plan expenses , amortization of acquisition intangibles and deferred financing costs , other expenses , the tax benefit of stock option exercises , effect of tax cuts and jobs act ( “ tax legislation ” ) , and the tax effect of adjustments recorded during fiscal year 2018. adjusted ebitda , adjusted ebitda margin and adjusted net income are key metrics used by management to assess our financial performance . adjusted ebitda , adjusted ebitda margin and adjusted net income are also frequently used by analysts , investors and other interested parties . we use adjusted ebitda , adjusted ebitda margin and adjusted net income to supplement gaap measures of performance to evaluate the effectiveness of our business strategies , to make budgeting decisions , to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures . see “ non-gaap financial measures ” for additional information . 51 results of operations the following table summarizes key components of our results of operations for the periods indicated , both in dollars and as a percentage of our net revenue . replace_table_token_2_th replace_table_token_3_th 52 fiscal year 2018 compared to fiscal year 2017 net revenue the following presents , by segment and by brand , comparable store sales growth , stores open at the end of the period and net revenue for fiscal year 2018 compared to fiscal year 2017 . replace_table_token_4_th _ ( 1 ) we calculate total comparable store sales based on consolidated net revenue excluding the impact of ( i ) corporate/other segment net revenue , ( ii ) sales from stores opened less than 13 months , ( iii ) stores closed in the periods presented , ( iv ) sales from partial months of operation when stores do not open or close on the first day of the month and ( v ) if applicable , the impact of a 53rd week in a fiscal year . brand-level comparable store sales growth is calculated based on cash basis revenues consistent with what the codm reviews , and consistent with reportable segment revenues presented in note 15 . `` segment reporting `` in our consolidated financial statements included in part ii . item 8. of this form 10-k , with the exception of the legacy segment , which is adjusted as noted in clause ( ii ) of footnote ( 3 ) below . ( 2 ) percentages reflect line item as a percentage of net revenue . ( 3 ) there are two differences between total comparable store sales growth based on consolidated net revenue and adjusted comparable store sales growth : ( i ) adjusted comparable store sales growth includes the effect of deferred and unearned revenue as if such revenues were earned at the point of sale , resulting in a decrease of 0.8 % and 0.7 % from total comparable store sales growth based on consolidated net revenue for fiscal year 2018 and fiscal year 2017 , respectively , and ( ii ) adjusted comparable store sales growth includes retail sales to the legacy partner 's customers ( rather than the revenues recognized consistent with the management & services agreement ) , resulting in a decrease of 0.2 % from total comparable store sales growth based on consolidated net revenue for each of the fiscal years 2018 and 2017 . total net revenue of $ 1,536.9 million for fiscal year 2018 increased $ 161.5 million , or 11.7 % , from $ 1,375.3 million for fiscal year 2017 . this increase was driven approximately 45 % by comparable store sales growth , approximately 40 % by new stores and approximately 15 % by order volume in our ac lens business within the corporate/other segment . during fiscal year 2018 , we opened 74 new stores , including 65 new america 's best stores and nine new eyeglass world stores . additionally , we closed two america 's best stores , one eyeglass world store and two military locations . overall , store count grew 6.8 % from the end of fiscal year 2017 to the end of fiscal year 2018 . comparable store sales growth and adjusted comparable store sales growth was 6.7 % and 5.7 % for fiscal year 2018 , respectively . comparable store sales growth and adjusted comparable store sales growth were driven by increases in customer transactions and , to a lesser extent , average ticket . we believe the increases in net revenue and customer transactions were primarily due to execution of our key strategies , including new store openings and maturation , advertising and expansion of our participation in managed care programs . 53 net product sales comprised 82.6 % and 82.1 % of total net revenue for fiscal years 2018	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 net cash used for investing activities increased by $ 9.6 million , to $ 104.2 million , during fiscal year 2018 from $ 94.6 million during fiscal year 2017 . the change in cash used for investing activities included an increase of $ 11.3 million in purchases of property and equipment to support our store growth , including new stores , improvements to our optical laboratories and distribution centers and continued development of our it infrastructure . during fiscal year 2017 , we made an investment of $ 1.5 million in a secured convertible promissory note to our equity method investee as discussed in note 9 . “ equity in net assets of non-consolidated investee ” in our consolidated financial statements included in part ii . item 8. of this form 10-k. no investments were made during fiscal year 2018 . net cash used for investing activities increased by $ 3.6 million , to $ 94.6 million , during fiscal year ended 2017 from $ 91.0 million during fiscal year 2016 . the change in cash used for investing activities included an increase of $ 3.2 million in purchases of property and equipment . additionally , during fiscal year 2016 , we made an investment for $ 1.0 million , which was subsequently impaired in fiscal year 2017 . net cash provided by financing activities net cash provided by financing activities was $ 10.4 million and $ 3.8 million during fiscal years 2018 and 2017 , respectively . the change in cash provided by financing activities was primarily due to an increase of $ 18.7 million in proceeds primarily related to exercise of stock options during fiscal year 2018 . other drivers were quarterly principal payments required under our long-term credit agreements . fiscal years 2018 and 2017 included material debt and equity transactions . in 2017 , we used ipo proceeds of $ 370.9 million to pay down debt of $ 367.7 million . prior to the ipo , we used debt proceeds of $ 174.9 million ( net of debt issuance costs of $ 4.5 million ) to pay a recapitalization dividend of $ 171.0 million .
60 results of operations consolidated financial results the following tables summarize total revenues , net income ( loss ) and net income ( loss ) attributable to icahn enterprises for each of our reportable segments and our holding company for the years ended december 31 , 2011 , 2010 and 2009. we consolidated the results of our gaming segment effective as of november 15 , 2010 and , therefore , our consolidated results of operations for the year ended december 31 , 2010 includes the results of operations from our gaming segment for the period november 15 , 2010 through december 31 , 2010. eliminations relate to the unrealized gains recorded by our investment segment for its investment in tropicana from the date of its acquisition of a controlling interest in tropicana through the date that its investment in tropicana was transferred to us . refer to `` distributions-in-kind `` above and note 3 , “ operating units - gaming , ” to the consolidated financial statements for further discussion . replace_table_token_6_th overview our operating businesses are managed on a decentralized basis . due to the structure of our business , we discuss the results of operations below by individual reportable segments . please refer to note 14 , `` segment and geographic reporting , `` to the consolidated financial statements for a reconciliation of each of our reporting segment 's results of operations to our consolidated results . please refer to note 3 , “ operating units , ” to the consolidated financial statements for a description of each of our reportable segments . investment icahn onshore lp , or the onshore gp , and icahn offshore lp ( or the offshore gp and , together with the onshore gp , the general partners ) act as general partner of icahn partners lp , or the onshore fund , and the offshore master funds ( as defined herein ) , respectively . the general partners do not provide such services to any other entities , individuals or accounts . interests in the investment funds ( as defined below ) are not offered to outside investors . interests in the investment funds had been previously offered only to certain sophisticated and qualified investors on the basis of exemptions from the registration requirements of the federal securities laws and were not ( and still are not ) publicly available . the “ offshore master funds ” consist of ( i ) icahn partners master fund lp ( or master fund i ) , ( ii ) icahn partners master fund ii lp ( or master fund ii ) and ( iii ) icahn partners master fund iii lp ( or master fund iii ) . the onshore fund and the offshore master funds are collectively referred to herein as the “ investment funds . ” 61 incentive allocations and special profits interest allocations historically , our investment segment 's revenues were affected by the combination of fee-paying assets under management , or aum , and the investment performance of the investment funds . the general partners ' incentive allocations and special profits interest allocations earned from the investment funds were accrued on a quarterly basis and were allocated to the general partners at the end of the investment funds ' fiscal year ( or sooner on redemptions ) assuming there were sufficient net profits to cover such amounts . as more fully disclosed in a letter to investors in the investment funds filed with the sec on form 8-k on march 7 , 2011 , the investment funds returned all fee-paying capital to their investors during fiscal 2011. payments were funded through cash on hand and borrowings under existing credit lines . as a result , no further incentive allocations or special profits interest allocations will accrue for periods subsequent to march 31 , 2011. the general partners waived the special profits interest allocations and incentive allocations for our interests in the investment funds and mr. icahn 's direct and indirect holdings . all of the special profits interest allocations and incentive allocations are eliminated in consolidation ; however , our share of the net income from the investment funds includes the amounts of these allocations . we consolidate certain entities within our investment segment . as a result , in accordance with u.s. gaap , any special profits interest allocations , incentive allocations and earnings on investments in the investment funds are eliminated in consolidation . these eliminations have no impact on our net income ; however , as our allocated share of the net income from the investment funds includes the amount of these allocations and earnings . as a result of the return of fee-paying capital as described above , a special profits interest allocation of $ 9 million was allocated to the general partners at march 31 , 2011. no further special profits interest allocation accrued in periods subsequent to march 31 , 2011. a special profits interest allocation accrual of $ 45 million and $ 154 million was made for the years ended december 31 , 2010 and 2009 , respectively . as a result of the return of fee-paying capital as described above , an incentive allocation of $ 7 million was allocated to the general partners at march 31 , 2011. no further incentive allocation will accrue in periods subsequent to march 31 , 2011. incentive allocations for the year ended december 31 , 2010 was $ 5 million . there were no incentive allocations for the year ended december 31 , 2009. our interests in the investment funds during fiscal 2011 , icahn enterprises invested $ 100 million in the investment funds . in december 2011 , icahn enterprises redeemed $ 150 million from the investment funds . as of december 31 , 2011 , we had investments with a fair market value of approximately $ 3.1 billion in the investment funds . story_separator_special_tag gaming as a result of our acquisition of additional shares of tropicana common stock on november 15 , 2010 , we are required to consolidate the results of tropicana as of such date . therefore , our consolidated results from operations for fiscal 2010 include the results of our gaming segment from the period november 15 , 2010 through december 31 , 2010. gaming revenues and expenses are classified in other revenues from operations and other expenses from operations , respectively , in our consolidated financial statements . gaming revenues and expenses for our gaming segment for fiscal 2011 and for the period november 15 , 2010 through december 31 , 2010 are summarized as follows : replace_table_token_10_th tropicana 's annual report on form 10-k and quarterly reports on form 10-q contain a detailed description of its business , products , industry , operating strategy and associated risks . tropicana 's filings with the sec are available on the sec 's website at www.sec.gov . during fiscal 2011 , we acquired additional shares of tropicana common stock . as of december 31 , 2011 , we owned approximately 65.1 % of the total outstanding common stock of tropicana . 66 weak economic conditions continue to adversely impact the gaming industry and tropicana . we believe tropicana 's guests have reduced their discretionary spending as a result of uncertainty and instability relating to the employment and housing markets . we can not predict whether , or how long , current market conditions will continue to persist . in addition , tropicana ac 's revenues have been negatively impacted by the introduction of table games in pennsylvania in mid-2010 , increased marketing and promotional activity from competitors within the atlantic city market and the opening of a new casino in new york city in the fourth quarter of fiscal 2011. the atlantic city market experienced year-over-year declines in casino revenue of 7.8 % for fiscal 2011 as compared to fiscal 2010. tropicana 's financial results are highly dependent upon the number of customers that it attracts to its facilities and the amounts those customers spend per visit . additionally , tropicana 's operating results may be affected by , among other things , overall economic conditions affecting the discretionary income of its customers , competitive factors , gaming tax increases and other regulatory changes , the opening of new gaming operations , the negative impact that certain predecessors ' bankruptcy filings had on its facilities , tropicana 's ability to reinvest in its properties , potential future exposure for liabilities of its certain predecessors that it assumed , its limited operating history and general public sentiment regarding travel and gaming . historically , tropicana 's operating results are the strongest in the third quarter and the weakest in the fourth quarter . in addition , weather and long-weekend holidays affect its operating results . casino revenues are one of tropicana 's main performance indicators and account for a significant portion of its net revenues . casino revenues represent the difference between wins and losses from gaming activities such as slot machines and table games . key volume indicators include table game volumes and slot volumes , which refer to amounts wagered by tropicana 's customers . win or hold percentage represents the percentage of the amounts wagered that is won by the casino , which is not fully controllable by tropicana , and recorded as casino revenue . most of tropicana 's revenues are cash-based , through customers wagering with cash or chips or paying for non-gaming services with cash or credit cards , and therefore are not subject to any significant or complex estimation . as a result , fluctuations in net revenues have a direct impact on cash flows from operating activities . other performance indicators include hotel occupancy , which is a volume indicator for hotels , and the average daily rate , which is a price indicator for the amount customers paid for hotel rooms . casino revenues were $ 507 million for fiscal 2011. casino revenues are comprised primarily of slot machine and table game revenues . slot machine revenue was $ 400 million and table game revenue was $ 97 million for fiscal 2011. overall slot machine hold percentage was 9.0 % and table games hold percentages was 15.2 % for fiscal 2011. room , food and beverage revenues were $ 194 million for fiscal 2011. hotel room occupancy percentage for fiscal 2011 was 66 % . our average daily room rate was $ 72 for fiscal 2011. rooms , food and beverages are often offered to high-value guests on a complimentary basis . the retail value of rooms , food and beverage provided to guests on a complimentary basis is included in gross revenues and then deducted as promotional allowances to arrive at net revenues . in the fourth quarter of fiscal 2011 , tropicana impaired certain real property and equipment by $ 5 million . in recording impairment charges related to real and personal property , tropicana used both the cost and market approach . components of sg & a for our gaming segment are summarized as follows : replace_table_token_11_th tropicana continues to monitor and reduce its sg & a expenses to maintain profitability in response to declining revenues due to the current weak economic conditions . 67 railcar replace_table_token_12_th ari 's annual report on form 10-k and quarterly reports on form 10-q contain a detailed description of its business , products , industry , operating strategy and associated risks . ari 's filings with the sec are available on the sec 's website at www.sec.gov . during fiscal 2011 , we acquired additional shares of ari common stock . as of december 31 , 2011 , we owned approximately 55.5 % of the total outstanding common stock of ari . the north american railcar market has been , and ari anticipates it to continue to be highly cyclical . ari has seen consistent	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 holding company as of december 31 , 2011 , the holding company had $ 150 million invested in precious metals and $ 150 million invested in our real estate segment which remains on its balance sheet . in respect of the investment in precious metals , we have entered into certain commodity swap arrangements to hedge against market risk . in addition , we had investments in the investment funds with a total fair market value of approximately $ 3.1 billion as of december 31 , 2011 . as of december 31 , 2011 , we had cash and cash equivalents of $ 517 million and total debt of approximately $ 3.1 billion . as of december 31 , 2011 based on covenants in the indenture governing our senior notes , we could incur approximately $ 1.3 billion in additional indebtedness . see note 10 , “ debt , ” to the consolidated financial statements for additional information concerning credit facilities for us and our subsidiaries . on january 17 , 2012 and february 6 , 2012 , we issued an aggregate $ 700 million principal amount of the 2018 notes , or the additional 2018 notes . in connection with the issuance of the additional 2018 notes , we filed a registration statement on form s-4 with the sec on january 20 , 2012 , which has not yet been declared effective . the additional 2018 notes constitute the same series of securities as the 2018 notes for purposes of the indenture governing the notes and will vote together on all matters with such series . the additional 2018 notes have substantially identical terms as the 2018 notes . we are a holding company .
our results of operations for the years ended december 31 , 2011 , 2010 , and 2009 include the following elements of dsl silicon intellectual property revenue : i ) royalty revenue from lantiq and ikanos in 2011 , 2010 , and 2009 ; ii ) engineering services to ikanos in 2011 , 2010 , and 2009 ; and iii ) engineering services to lantiq in 2009. summary of financial results . for the year ended december 31 , 2011 , we had net income of $ 2.6 million , or $ 0.12 per share . for the year ended december 31 , 2010 , we had net income of net income of $ 180,000 , or $ 0.01 per share . for the year ended december 31 , 2009 , we had net income of $ 982,000 , or $ 0.05 per share . 2011 compared to 2010 . there was a significant improvement in operating income and net income in 2011 compared to 2010. operating income increased from a loss of $ 333,000 in 2010 to income of $ 2.5 million in 2011 ; and net income increased from $ 180,000 in 2010 to $ 2.6 million in 2011. higher earnings in 2011 were primarily a result of the following factors : i ) growth of our services business ; ii ) a greater proportion of software revenue versus hardware revenue in product sales during 2011 ; iii ) lower legal fees related to patents and patent monetization activities ; and iv ) lower director and officer compensation expenses . 2010 compared to 2009 . there was also a significant improvement in operating income in 2010 compared to 2009 , although net income declined . net income for the year ended december 31 , 2009 included a $ 6.2 million gain on the sale of assets , which was the primary reason for our profitability in 2009. however , operating losses were reduced from a loss of $ 5.5 million in 2009 to a loss of $ 333,000 in 2010. the $ 5.1 million improvement was primarily attributable to : i ) the cessation of operating losses from our dsl silicon ip product line as a result of the sale to lantiq in 2009 , and ii ) improved profitability in our dsl service assurance product line . these factors were partially offset by increased legal fees related to patents and patent monetization activities . product sales product sales consist primarily of revenue from the sale of hardware and software products . hardware products consist primarily of dsl service assurance modules . software products consist of software products , including maintenance contracts , for biometrics , medical imaging , and dsl service assurance applications . 26 product sales decreased 4 % from $ 18.9 million in 2010 to $ 18.1 million in 2011. as a percentage of total revenue , product sales decreased from 80 % in 2010 to 74 % in 2011. the dollar decrease in product sales was primarily due to a $ 1.4 million decrease in revenue from the sale of dsl service assurance hardware , and a $ 0.8 million decrease in revenue from the sale of dsl service assurance software . the decrease in dsl service assurance hardware and software revenue was partially offset by a $ 1.4 million increase in revenue from the sale of biometrics software . the $ 1.4 million decrease in dsl hardware revenue was mainly attributable to the lack of availability of our next generation hardware products . the $ 0.8 million decrease in dsl software revenue was primarily due to lower sales of our ldp software . the $ 1.4 million increase in revenue from the sale of biometrics software was primarily due to a number of larger-sized license transactions with oems , systems integrators and end users in 2011. product sales increased 23 % from $ 15.4 million in 2009 to $ 18.9 million in 2010. as a percentage of total revenue , product sales increased from 70 % in 2009 to 80 % in 2010. the dollar increase in product sales was primarily due to a $ 3.7 million increase in revenue from the sale of dsl service assurance hardware and software , which was partially offset by a $ 0.2 million decrease in revenue from the sale of biometrics software . the $ 3.7 million increase in revenue from the sale of dsl service assurance products was mainly attributable to : 1 ) a $ 1.2 million increase in software revenue as a result of the sale of our ldp software to two european telephone companies ; and 2 ) a $ 2.5 million increase in hardware revenue , which was driven by : i ) sales to an oem customer selling handheld test devices into large telephone companies , and ii ) the introduction of new products . the $ 0.2 million decrease in revenue from the sale of biometrics software was primarily due to fewer larger-sized sales to individual customers in 2010 as compared to the prior year . on january 18 , 2012 , our board of directors approved the shutdown of our dsl service assurance hardware product line . revenue attributable to this product line was $ 5.1 million , $ 6.4 million , and $ 3.9 million in the three years ended december 31 , 2011 , 2010 and 2009 , respectively . we will continue to build and ship dsl service assurance hardware products to fulfill customer orders that were received as of the date of the shutdown notice . we expect to conclude hardware shipments on or about june 30 , 2012. services services , which we previously called “ contract revenue , ” primarily consist of engineering service fees related to : i ) our biometrics product line ; and ii ) our dsl service assurance product line . story_separator_special_tag we recognize revenue when there is persuasive evidence of an arrangement , the sales price is fixed or determinable , collection of the related receivable is reasonably assured , and delivery has occurred or services have been rendered . as described below , we make significant judgments during the process of determining revenue for any particular accounting period . in determining revenue recognition , we assess whether fees associated with revenue transactions are fixed or determinable based on the terms of the contract and based on payment terms . if the fee is not fixed or determinable , we defer the fee and recognize revenue as amounts become due and payable . we assess whether collection is reasonably assured based on a number of factors , including past transaction history with the customer and the credit-worthiness of the customer . if we determine that collection of a fee is not reasonably assured , we defer the fee and recognize revenue at the time collection becomes reasonably assured . we must also make judgments with respect to the recognition of multiple element revenue arrangements in the following situations : o when software licenses and maintenance contracts are sold together , we generally recognize software license revenue upon delivery , provided we have vendor specific objective evidence ( “ vsoe ” ) for the fair value of the maintenance contract fee , and we generally recognize the fair value of maintenance contract revenue ratably over the related contract period . if we do not have vsoe for the fair value of the maintenance contract fee , we recognize software license and maintenance contract revenue ratably over the related contract period . o when engineering services and software licenses are sold together , the total fee is generally recognized by applying contract accounting . we have adopted the percentage-of-completion method of contract accounting , and we use an output method ( i.e . , contract milestones ) to determine our completion percentage . o when we sell services , software and maintenance together , revenue is recognized as follows : i ) maintenance revenue is separated from the other two elements and is recognized ratably over the related contract period ; provided we have vsoe for the fair value of the maintenance element ; and ii ) the total fee from the software license and engineering service elements is recognized by applying the contract accounting method described in the previous paragraph . if we do not have vsoe for the fair value of the maintenance element , we recognize revenue for the entire arrangement ratably over a period that begins at the start of the engineering services project and ends when all elements of the arrangement have been delivered . 33 our revenue recognition policies are described more fully in note 2 , summary of significant accounting policies , in the notes to our consolidated financial statements . stock-based compensation . we grant stock options and stock to our employees and directors . we measure stock-based compensation cost at the grant date based on the fair value of the award and recognize it as expense over the applicable vesting period of the award using the straight-line basis . we use the black-scholes valuation model to estimate the fair value of stock option awards . this valuation model takes into account the exercise price of the award , as well as a variety of significant assumptions . the assumptions used to estimate the fair value of stock options include the expected term , the expected volatility of our stock over the expected term , the risk-free interest rate over the expected term , and our expected annual dividend yield . for stock awards , we determine the fair value of the award by using the fair market value of our stock on the date of grant ; provided the number of shares in the grant is fixed on the grant date . income taxes . as part of the process of preparing our consolidated financial statements we are required to estimate our actual current tax expense . we must also estimate temporary and permanent differences that result from differing treatment of certain items for tax and accounting purposes . these differences result in deferred tax assets and liabilities , which are included in our consolidated balance sheet . we must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe recovery is not likely , we must establish a valuation allowance . to the extent we establish a valuation allowance or increase this allowance in a period for deferred tax assets , which have been recognized , we must include an expense with the tax provision in the statement of operations . significant management judgment is required in determining our provision for income taxes , our deferred tax assets , and any valuation allowance recorded against our net deferred tax assets . our deferred tax assets primarily relate to net operating losses and research and development tax credits that we are carrying forward into future tax periods . as of december 31 , 2011 , we had a total of $ 40.5 million of deferred tax assets for which we had recorded a full valuation allowance . based on all the available evidence , we continue to believe that it is more likely than not that our deferred tax assets are not currently realizable . in reaching this determination , we evaluated our three-year cumulative results as well as the impact that current economic conditions may have on our future results . as a result , we continue to provide a valuation allowance on our deferred tax assets . we will continue to assess the level of valuation allowance required in future periods . should more positive than negative evidence regarding the realizability of tax assets exist at a future point in time , the valuation allowance may be reduced or eliminated	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 from operating activities in the years ended december 31 , 2011 and 2010 , our operating activities provided net cash of $ 6.8 million and $ 0.7 million , respectively . in the year ended december 31 , 2009 , our operating activities used net cash of $ 3.4 million . a discussion of cash flow from operations for each of the last three years follows : year ended december 31 , 2011 . cash provided by operations of $ 6.8 million in 2011 was primarily the result of net income of $ 2.6 million , which was increased for non-cash items related to depreciation and amortization of $ 0.5 million and stock-based compensation expense of $ 1.3 million . cash provided by operations was also driven higher by a $ 2.7 million reduction in accounts receivable and inventory , which was partially offset by a $ 0.3 million reduction of liabilities . year ended december 31 , 2010. cash provided by operations of $ 0.7 million in 2010 was primarily the result of net income of $ 0.2 million , which was increased for non-cash items related to depreciation and amortization of $ 0.5 million , and stock-based compensation expense of $ 1.5 million . cash provided by operations from these sources was reduced by a $ 2.0 million net increase in accounts receivable , inventory , and prepaid expenses , which was partially offset by a $ 0.5 million increase in liabilities .
; the effect of demand for kcs 's services exceeding network capacity or traffic congestion on operating efficiencies and service reliability ; availability of qualified personnel ; 26 changes in labor costs and labor difficulties , including work stoppages affecting either operations or customers ' abilities to deliver goods for shipment ; credit risk of customers and counterparties and their failure to meet their financial obligations ; the outcome of claims and litigation , including those related to environmental contamination , personal injuries , and occupational illnesses arising from hearing loss , repetitive motion and exposure to asbestos and diesel fumes ; acts of terrorism , violence or crime or risk of such activities ; war or risk of war ; political and economic conditions in mexico and the level of trade between the united states and mexico ; and legislative , regulatory , or legal developments involving taxation , including enactment of new foreign , federal or state income or other tax rates , revisions of controlling authority , and the outcome of tax claims and litigation . forward-looking statements reflect the information only as of the date on which they are made . the company does not undertake any obligation to update any forward-looking statements to reflect future events , developments , or other information . if kcs does update one or more forward-looking statements , no inference should be drawn that additional updates will be made regarding that statement or any other forward-looking statements . corporate overview kansas city southern , a delaware corporation , is a transportation holding company that has railroad investments in the u.s. , mexico and panama . in the u.s. , the company serves the central and south central u.s. its international holdings serve northeastern and central mexico and the port cities of lazaro cardenas , tampico and veracruz , and a fifty percent interest in panama canal railway company provides ocean-to-ocean freight and passenger service along the panama canal . kcs 's north american rail holdings and strategic alliances are primary components of a nafta railway system , linking the commercial and industrial centers of the u.s. , canada and mexico . its principal subsidiaries and affiliates include the following : the kansas city southern railway company ( “ kcsr ” ) , a wholly-owned subsidiary ; kansas city southern de méxico , s.a. de c.v. ( “ kcsm ” ) , a wholly-owned subsidiary ; mexrail , inc. ( “ mexrail ” ) , a wholly-owned consolidated subsidiary ; which , in turn , wholly owns the texas mexican railway company ( “ tex-mex ” ) ; meridian speedway , llc ( “ msllc ” ) , a seventy percent-owned consolidated affiliate ; kcsm servicios , s.a. de c.v. ( “ kcsm servicios ” ) , a wholly-owned subsidiary ; panama canal railway company ( “ pcrc ” ) , a fifty percent-owned unconsolidated affiliate , that provides international container shipping companies with a railway transportation option in lieu of the panama canal and the operations of pcrc 's wholly-owned subsidiary , panarail tourism company ( “ panarail ” ) ; southern capital corporation , llc ( “ southern capital ” ) , a fifty percent-owned unconsolidated affiliate that owned and leased locomotives and other equipment ; ferrocarril y terminal del valle de méxico , s.a. de c.v. ( “ ftvm ” ) , a twenty-five percent-owned unconsolidated affiliate that provides railroad services as well as ancillary services in the greater mexico city area ; and ptc-220 , llc ( “ ptc-220 ” ) , a fourteen percent-owned unconsolidated affiliate that holds the licenses to large blocks of radio spectrum and other assets for the deployment of positive train control . executive summary 2014 financial overview in 2014 , the company generated record-high revenues and volumes . revenues of $ 2.6 billion were driven by strong growth in automotive , agriculture and minerals and intermodal business units . revenues in 2014 increased 9 % over 2013 , as a result of carload/unit volumes and positive pricing impacts . agriculture and minerals revenues increased $ 62.7 million for the year ended december 31 , 2014 , compared to the prior year , due to an increase of $ 57.4 million in grain revenues . during the first half of 2013 , grain volumes and average length of haul were adversely affected as a result of the severe drought conditions experienced in the midwest region of the u.s. during 2012 . 27 operating expenses increased 8 % compared to 2013 , due to higher carload/unit volumes and $ 38.3 million of lease termination costs . the company 's continued focus on operating expense control resulted in operating expenses as a percentage of revenues of 68.6 % . kcsm 's revenues and operating expenses are affected by fluctuations in the value of the mexican peso against the u.s. dollar . based on the volume of revenue and expense transactions denominated in mexican pesos , revenue and expense fluctuations generally offset , with insignificant net impacts to operating income . in 2014 , the company invested $ 702.7 million in capital expenditures . in addition , the company purchased $ 300.7 million of equipment under existing operating leases and replacement equipment as certain operating leases expired , which was primarily funded with proceeds from the senior notes issued during the fourth quarter of 2013. the company also recognized $ 38.3 million of lease termination costs during 2014 , which are included in operating expenses , due to the early termination of certain operating leases and the related purchase of the equipment . story_separator_special_tag automotive . revenues increased $ 27.1 million for the year ended december 31 , 2013 , compared to 2012 , due to a 9 % increase in revenue per carload/unit and a 6 % increase in carload/unit volumes . growth was driven by new business , strong year-over-year growth in north american automobile sales for original equipment manufacturers and increased import/export volume through the port of lazaro cardenas . 36 operating expenses operating expenses , as shown below ( in millions ) , increased $ 108.0 million for the year ended december 31 , 2013 , when compared to 2012 , due to the elimination of $ 43.0 million of deferred mexican statutory profit sharing liability as a result of the organizational restructuring in 2012 , higher fuel prices and depreciation and amortization expense and the strengthening of the mexican peso against the u.s. dollar . replace_table_token_10_th compensation and benefits . compensation and benefits increased $ 11.1 million for the year ended december 31 , 2013 , compared to 2012 , due to annual salary rate increases , benefit expenses and the strengthening of the mexican peso against the u.s. dollar , partially offset by a $ 7.3 million reduction in mexican deferred statutory profit sharing expense as a result of the organizational restructuring in 2012. purchased services . purchased services decreased $ 2.2 million for the year ended december 31 , 2013 , compared to 2012 , due to the termination of a maintenance contract as a result of in-sourcing of certain track maintenance activities and lower freight car repairs , partially offset by increases in security services , higher locomotive wireless monitoring service expense , corporate expenses and joint facilities expense . fuel . fuel expense increased $ 30.0 million for the year ended december 31 , 2013 , compared to 2012 , due to higher diesel fuel prices and consumption . the average price per gallon , including the effects of the strengthening of the mexican peso against the u.s. dollar , was $ 3.05 in 2013 , compared to $ 2.86 in 2012. equipment costs . equipment costs decreased $ 6.6 million for the year ended december 31 , 2013 , compared to 2012 , due to lower locomotive lease expense as a result of the purchase of 103 locomotives late in the second quarter of 2013 , which were previously leased by the company under operating lease agreements . depreciation and amortization . depreciation and amortization increased $ 24.5 million for the year ended december 31 , 2013 , compared to 2012 , due to a larger asset base , including the purchase of 103 locomotives late in the second quarter of 2013 , which were previously leased by the company under operating lease agreements . materials and other . materials and other increased $ 8.2 million for the year ended december 31 , 2013 , compared to 2012 , due to a $ 1.3 million increase in personal injury expense recognized in 2013 , compared to an $ 8.4 million reduction in personal injury expense recognized in 2012 , as a result of changes in estimates . in addition , materials and other expense increased due to a $ 4.9 million increase in concession duty expense . kcsm paid concession duty of 0.5 % of gross revenues for the first 15 years of the concession period , and on june 24 , 2012 , kcsm began paying 1.25 % of gross revenues , which is effective for the remaining years of the concession . these increases were partially offset by lower derailment expense , a recovery from a legal dispute in 2013 and the settlement of a legal dispute recognized in 2012. elimination of deferred statutory profit sharing liability , net . as a result of the organizational restructuring in the second quarter of 2012 , kcsm 's obligation to pay mexican statutory profit sharing terminated as of may 1 , 2012 , and accordingly , kcsm recognized a $ 43.0 million net reduction to operating expense . this reduction includes the elimination of $ 47.8 million of the deferred mexican statutory profit sharing liability , net of $ 4.8 million of transaction costs . 37 non-operating expenses equity in net earnings of unconsolidated affiliates . equity in net earnings from unconsolidated affiliates decreased $ 0.5 million for the year ended december 31 , 2013 , compared to 2012 , due to decreased net earnings from southern capital due to lower lease income . interest expense . interest expense decreased $ 19.8 million for the year ended december 31 , 2013 , compared to 2012 , due to lower average interest rates as a result of the company 's refinancing activities , partially offset by an increase in average debt balances . for the year ended december 31 , 2013 , the average debt balance and average interest rate were $ 1,852.3 million and 4.2 % , compared to $ 1,620.9 million and 6.0 % , respectively , in 2012 . debt retirement costs . story_separator_special_tag style= `` font-family : inherit ; font-size:10pt ; `` > 2014 increased $ 107.7 million to $ 906.0 million due to increased net income and distributions from unconsolidated affiliates . net operating cash flows for 2013 increased $ 125.1 million to $ 798.3 million due to increased net income and a decrease in cash used for working capital items , resulting mainly from the timing of certain payments and receipts . investing cash flows . net investing cash outflows were $ 982.9 million and $ 833.3 million during 2014 and 2013 , respectively . this $ 149.6 million increase was due to the purchase or replacement of equipment under operating leases and an increase in capital expenditures . net investing cash outflows for 2013 increased $ 281.4 million as compared to 2012 , primarily due to the purchase or replacement of equipment under operating leases and an increase in capital expenditures . financing cash flows . financing cash	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 retirement costs were $ 119.2 million and $ 20.1 million for the years ended december 31 , 2013 , and 2012 , respectively , related to the tender and call premiums , original issue discounts and write-off of unamortized debt issuance costs associated with the various debt refinancing and redemption activities . foreign exchange gain ( loss ) . for the year ended december 31 , 2013 , foreign exchange loss was $ 5.2 million , compared to a foreign exchange gain of $ 2.7 million in 2012 . foreign exchange gain ( loss ) includes the re-measurement and settlement of monetary assets and liabilities denominated in mexican pesos and the gain ( loss ) on foreign currency forward contracts . for the year ended december 31 , 2013 and 2012 , the re-measurement and settlement of monetary assets and liabilities denominated in mexican pesos resulted in a foreign exchange loss of $ 4.5 million , compared to a foreign exchange gain of $ 2.7 million , respectively . the company enters into foreign currency forward contracts to hedge its net exposure to fluctuations in the mexican cash tax obligation due to changes in the value of the mexican peso against the u.s. dollar . for the year ended december 31 , 2013 , foreign exchange loss on foreign currency forward contracts was $ 0.7 million . the company did not enter into foreign currency forward contracts in 2012. other expense , net . other expense , net , decreased $ 0.2 million for the year ended december 31 , 2013 , compared to 2012 , due to lower miscellaneous expense . income tax expense . income tax expense decreased $ 38.7 million for the year ended december 31 , 2013 , compared to 2012 , due to lower pre-tax income and a lower effective tax rate . the effective tax rate was 35.9 % and 38.4 % for the years ended december 31 , 2013 and 2012 , respectively .
we did not use our credit facility during the year and our total debt to total capital was 15.0 % at december 31 , 2015. management objectives management is focused on capturing more market share and increasing sales per square foot of showroom space . this organic growth will be driven by concentrating our efforts on our customers with improved interactions highlighted by new products , enhanced stores and better technology . the company 's strategies for profitability include targeted marketing initiatives , productivity and process improvements , and efficiency and cost-saving measures . our focus is to serve our customers better and distinguish ourselves in the marketplace . key performance indicators we evaluate our performance based on several key metrics which include net sales , comparable store sales , sales per square foot , gross profit , operating costs as a percentage of sales , cash flow , total debt to total capital , and earnings per share . the goal of utilizing these measurements is to provide tools in economic decision-making such as store growth , capital allocation and product pricing . we also employ metrics that are customer focused ( customer satisfaction score , on-time-delivery and quality ) , and internal effectiveness and efficiency metrics ( sales per employee , average sale per ticket , closing ratios per customer store visit , exceptions per deliveries , and lost time incident rate ) . these measurements aid us in determining areas of our operations that are in need of additional attention and in determining compensation . 15 operating results the following table provides selected data for the periods indicated and reconciles the non-gaap financial measures to their comparable gaap measures . see the additional discussion contained in this item 7 ( in thousands , except per share data ) : year ended december 31 , 2015 2014 2013 statement of operations data : net sales $ 804,870 $ 768,409 $ 746,090 gross profit 430,776 412,366 401,496 selling , general and administrative expenses 384,801 364,654 348,599 pension settlement expense — 21,623 — income before interest and income taxes 47,564 26,308 53,594 income before income taxes 45,275 25,257 52,487 net income $ 27,789 $ 8,589 $ 32,265 other financial data : ebit $ 47,564 $ 26,308 $ 53,594 pension settlement expenses — 21,623 — q-1 2013 gross profit out-of-period adjustment — — ( 835 ) adjusted ebit $ 47,564 $ 47,931 $ 52,759 adjusted ebit as a percent of net sales 5.9 % 6.2 % 7.1 % adjusted ebit $ 47,564 $ 47,931 $ 52,759 interest expense , net 2,289 1,051 1,107 adjusted income before income taxes $ 45,275 $ 46,880 $ 51,652 net income $ 27,789 $ 8,589 32,265 pension settlement expense , net of tax — 20,725 — out-of-period adjustment , net of tax — — ( 518 ) adjusted net income $ 27,789 $ 29,314 $ 31,747 earnings per diluted share $ 1.22 $ 0.37 $ 1.41 non-cash pension settlement expense — 0.90 — out-of-period adjustment — — ( 0.02 ) adjusted earnings per diluted share $ 1.22 $ 1.28 $ 1.39 due to rounding amounts may not add to the totals . 16 net sales comparable-store or `` comp-store `` sales is a measure which indicates the performance of our existing stores by comparing the growth in sales for these stores for a particular period over the corresponding period in the prior year . stores are considered non-comparable if open for less than 12 full calendar months or if the selling square footage has been changed significantly during the past 12 full calendar months . large clearance sales events from warehouses or temporary locations are also excluded from comparable store sales , as are periods when stores are closed or being remodeled . as a retailer , comp‑store sales is an indicator of relative customer spending and store performance . total sales increased $ 36.5 million or 4.7 % in 2015 and $ 22.3 million or 3.0 % in 2014. comparable store sales increased 2.5 % or $ 18.9 in 2015 and 3.6 % or $ 26.2 million in 2014. the remaining $ 17.6 in 2015 and $ 3.9 million in 2014 of the changes were from closed , new and otherwise non-comparable stores . the following outlines our sales and comp-store sales increases and decreases for the periods indicated . ( amounts and percentages may not always add to totals due to rounding . ) december 31 , 2015 2014 2013 net sales comp-store sales net sales comp-store sales net sales comp-store sales period ended dollars in millions % increase ( decrease ) over prior period % increase ( decrease ) over prior period dollars in millions % increase ( decrease ) over prior period % increase ( decrease ) over prior period dollars in millions % increase ( decrease ) over prior period % increase ( decrease ) over prior period q1 $ 191.3 5.3 % 3.8 % $ 181.7 ( 2.3 ) % ( 0.9 ) % $ 186.1 13.8 % 11.5 % q2 187.7 7.2 4.8 175.1 2.4 3.2 171.1 12.9 11.2 q3 209.9 5.7 3.0 198.5 3.0 3.5 192.7 11.6 11.8 q4 215.9 1.4 ( 0.9 ) 213.0 8.6 8.3 196.2 7.6 9.5 year $ 804.9 4.7 2.5 % $ 768.4 3.0 % 3.6 % $ 746.1 11.3 % 11.0 % sales in 2015 increased at a modest pace during the first nine months of the year . we did have some product availability issues during the first quarter resulting from the impact of the west coast port slowdown . we experienced a softening in our business in the fourth quarter , more prevalent in texas but also across many of our markets . story_separator_special_tag liquidity and capital resources story_separator_special_tag 0px ; color : # 000000 ; clear : both ; margin : 4px 0px ; border-top-width : 0px ; background-color : # 000000 `` / > ( 1 ) these amounts are for our lease obligations recorded in our consolidated balance sheets , including interest amounts . for additional information about our leases , refer to note 8 of the notes to the consolidated financial statements . ( 2 ) the contractual obligations do not include any amounts related to retirement benefits . for additional information about our plans , refer to note 10 of the notes to the consolidated financial statements . store expansion and capital expenditures we have entered new markets and made continued improvements and relocations of our store base . the following outlines the change in our selling square footage for each of the three years ended december 31 ( square footage in thousands ) : replace_table_token_10_th we also had major remodeling projects in a tampa , florida store in 2015 and in our knoxville , tennessee store in 2014 which increased selling square footage . the following table summarizes our store activity in 2015 and plans for 2016. our store in lubbock , texas sustained significant damage from a blizzard at the end of december 2015. we plan to operate in a temporary location during the rebuilding process . replace_table_token_11_th these plans and other changes should increase net selling space in 2016 by approximately 1.4 % assuming the new stores open and existing store close as planned . 22 our investing activities in stores and operations in 2015 , 2014 and 2013 and planned outlays for 2016 are categorized in the table below . capital expenditures for stores in the years noted do not necessarily coincide with the years in which the stores open . replace_table_token_12_th non-gaap financial measures and reconciliations - adjusted net income and adjusted earnings we have included financial measures that are not prepared in accordance with gaap . any analysis of non-gaap financial measures should be used only in conjunction with results presented in accordance with gaap . the non-gaap measures are not intended to be substitutes for gaap financial measures and should not be used as such . we use the non-gaap measures `` ebit , `` `` adjusted ebit , `` `` adjusted net income `` and `` adjusted earnings per diluted share . `` management believes these non-gaap financial measures provide our board of directors , investors , potential investors , analysts and others with useful information to evaluate the performance of the company because it excludes the impact of the pension settlement expense and another specific item that management believes are not indicative of the ongoing operating results of the business . the company and our board of directors use this information to evaluate the company 's performance relative to other periods . we believe that the most directly comparable gaap measures to ebit , adjusted net income and adjusted diluted earnings per share are `` income before interest and income taxes , `` `` net income `` and `` diluted earnings per share . `` set forth above in our discussion of operating results are reconciliations of adjusted net income to net income and adjusted diluted earnings per share to diluted earnings per share . ebit is equal to income before interest and income taxes and adjusted ebit is reconciled to ebit . critical accounting estimates and assumptions our discussion and analysis is based upon our consolidated financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles . 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 related disclosures . on an on-going basis , we evaluate our estimates , including those related to pension and retirement benefits and self-insurance . we base our estimates on historical experience and on various other assumptions 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 . an accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made , and if different estimates that reasonably could have been used or changes in the accounting estimate that are reasonably likely to occur could materially change the financial statements . we believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our consolidated financial statements : retirement benefits . our supplemental executive retirement plan ( `` serp `` ) costs require the use of assumptions for discount rates , projected salary increases and mortality rates . management is required to make certain critical estimates related to actuarial assumptions used to determine our expense and related obligation . we believe the most critical assumptions are related to ( 1 ) the discount rate used to determine the present value of the liabilities and ( 2 ) mortality rates . all of our actuarial assumptions are reviewed annually . changes in these assumptions could have a material impact on the measurement of our serp expense and related obligation . 23 the serp is not funded so we pay benefits directly to participants . the unfunded obligation increased by $ 0.4 million between december 31 , 2014 and december 31 , 2015. at each measurement date , we determine the discount rate by reference to rates of high quality , long-term corporate bonds that mature in a pattern similar to the future payments we anticipate making under the plan . the weighted-average discount rate used to compute our benefit obligation increased 49 basis points 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.	overview of liquidity our primary cash requirements include working capital needs , contractual obligations , benefit plan contributions , income tax obligations and capital expenditures . we have funded these requirements exclusively through cash generated from operations and have not used our credit facility since 2008. we believe funds generated from our expected results of operations and available cash and cash equivalents will be sufficient to fund our primary obligations and complete projects that we have underway or currently contemplate for the next fiscal and foreseeable future years . at december 31 , 2015 , our cash and cash equivalents balance was $ 70.7 million , an increase of $ 5.2 million compared to december 31 , 2014. this increase in cash primarily resulted from strong operating results offset by purchases of property and equipment , the acquisition of treasury stock and dividends paid to stockholders . additional discussion of our cash flow results , including the comparison of 2015 activity to 2014 , is set forth in the analysis of cash flows section . at december 31 , 2015 , our outstanding indebtedness was $ 53.1 million in lease obligations required to be recorded on our balance sheet . we had no amounts outstanding and $ 43.8 million available under our revolving credit facility . capital expenditures our primary capital requirements have been focused on our stores and the development of both proprietary and purchased information systems . our capital expenditures were $ 27.1 million in 2015 , $ 3.7 million less than in 2014. our future capital requirements will depend in large part on the number of and timing for new stores we open within a given year , the investments we make to the improvement and maintenance of our existing stores , and our investment in distribution improvements and new information systems to support our key strategies . in 2016 , we anticipate that our capital expenditures will be approximately $ 33.0 million , refer to our store expansion and capital expenditures discussion below .
our advisory fee income is recognized over the period in which investment management services are provided . following the preferred method identified in the revenue recognition topic of the financial accounting standards board accounting standards codification ( fasb asc ) , income from performance fees is recorded at the conclusion of the contractual performance period , when all contingencies are resolved . our advisory fees are primarily driven by the level of our aum . our aum increases or decreases with the net inflows or outflows of funds into our various investment strategies and with the investment performance thereof . in order to increase our aum 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 . the value and composition of our aum , and our ability to continue to attract clients , will depend on a variety of factors including , among other things : 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 ; 29 competitive conditions in the investment management and broader financial services sectors ; general economic conditions ; investor sentiment and confidence ; and our decision to close strategies when we deem it to be in the best interests of our clients . for our institutional accounts , we are paid fees according to a schedule , which varies by investment strategy . the substantial majority of these accounts pay us management fees pursuant to a schedule in which the rate we earn on the aum declines as the amount of aum increases . pursuant to our sub-investment advisory agreements with our retail clients , we are generally paid a management fee according to a schedule in which the rate we earn on the aum declines as the amount of aum increases . certain of these funds pay us fixed-rate management fees . due to the substantially larger account size of certain of these accounts , the average advisory fees we earn on them , as a percentage of aum , are lower than the advisory fees we earn on our institutional accounts . certain of our clients pay us fees according to the performance of their accounts relative to certain agreed-upon benchmarks , which results in a lower base fee , but allows us to earn higher fees if the relevant investment strategy outperforms the agreed-upon benchmark . the majority of advisory fees we earn on institutional accounts is based on the value of our aum at a specific date on a quarterly basis , either in arrears or advance . advisory fees on certain of our institutional accounts , and with respect to all of our retail accounts , are calculated based on the average of the monthly or daily market value . advisory fees are also generally 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 . while a specific group of accounts may use the same fee rate , the method used to calculate the fee according to the fee rate schedule may differ as described above . our advisory fees may fluctuate based on a number of factors , including the following : changes in aum due to appreciation or depreciation of our investment portfolios , and the levels of the contribution and withdrawal of assets by new and existing clients ; distribution of aum among our investment strategies , which have differing fee schedules ; distribution of aum between institutional accounts and retail accounts , for which we generally earn lower overall advisory fees ; and the level of our performance with respect to accounts on which we are paid performance fees . expenses our expenses consist primarily of compensation and benefits expense , as well as general and administrative expense . our largest expense is compensation and benefits , which includes the salaries , bonuses , equity-based compensation , and related benefits and payroll costs attributable to our employee members and employees . compensation and benefits packages are benchmarked against relevant industry and geographic peer groups in order to attract and retain qualified personnel . general and administrative expense includes office rent and other expenses , professional and outside services fees , depreciation , and the costs associated with operating and maintaining our research , trading , and portfolio accounting systems . our occupancy-related costs and professional services expenses , in particular , generally increase or decrease in relative proportion to the overall size and scale of our business operations . we incur additional expenses associated with being a public company for , among other things , director and officer insurance , director fees , sec reporting and compliance ( including sarbanes-oxley and dodd-frank compliance ) , professional fees , transfer agent fees , and other similar expenses . these additional expenses have and will continue to reduce our net income . 30 our expenses may fluctuate due to a number of factors , including the following : variations in the level of total compensation expense due to , among other things , bonuses , awards of equity to our employees and employee members of our operating company , changes in our employee count and mix , and competitive factors ; and general and administrative expenses , such as rent , professional service fees and data-related costs , incurred , as necessary , to run our business . other income/ ( expense ) other income/ ( expense ) is derived primarily from investment income or loss arising from our consolidated subsidiaries , income or loss generated by our investments in third-party mutual funds , and interest income generated on our cash balances . story_separator_special_tag year ended december 31 , 2011 versus december 31 , 2010 our total revenue increased $ 5.5 million , or 7.1 % , to $ 83.0 million for the year ended december 31 , 2011 , from $ 77.5 million for the year ended december 31 , 2010. this change was driven primarily by a $ 3.3 million increase in performance fees recognized , as well as increases in weighted average aum , which increased $ 0.7 billion , or 4.9 % , to $ 15.0 billion for the year ended december 31 , 2011 , from $ 14.3 billion for the year ended december 31 , 2010. our weighted average fees were 0.553 % and 0.541 % for the years ended december 31 , 2011 and 2010 , respectively . this increase was primarily due to performance fees recognized , as noted above . weighted average assets in institutional accounts increased $ 1.2 billion , or 10.9 % , to $ 12.2 billion for the year ended december 31 , 2011 , from $ 11.0 billion for the year ended december 31 , 2010 , and had weighted average fees of 0.591 % for each of the years ended december 31 , 2011 and 2010. weighted-average fee rates remained flat year-over-year , benefitting from performance fees recognized , as noted above , offset by a decrease related to larger average institutional account size . our tiered fee schedules typically charge lower rates as account size increases . weighted average assets in retail accounts decreased $ 0.5 billion , or 15.2 % , to $ 2.8 billion for the year ended december 31 , 2011 , from $ 3.3 billion for the year ended december 31 , 2010 , and had weighted average fees of 0.389 % and 0.372 % for the years ended december 31 , 2011 and 2010 , respectively . the increase in weighted average fees in retail accounts was due to the full-year effect of the expiration of a prior year voluntary partial fee waiver for the john hancock classic value fund , and a higher mix of assets in our retail emerging markets focused value strategy , which carries a higher fee rate . the timing of asset flows in our other retail accounts also contributed to the change in our retail weighted-average fee rate . 36 expenses our operating expense is driven primarily by our compensation costs . the table below describes the components of our operating expense for the years ended december 31 , 2012 , 2011 , and 2010. replace_table_token_11_th year ended december 31 , 2012 versus december 31 , 2011 total operating expense decreased by $ 6.1 million , or 13.5 % , to $ 39.1 million for the year ended december 31 , 2012 , from $ 45.2 million for the year ended december 31 , 2011. this decrease was primarily attributable to one-time charges associated with the sublease of excess real estate and a charge related to certain employee departures , both realized in the fourth quarter of 2011. compensation and benefits expense decreased by $ 2.8 million , or 8.1 % , to $ 31.8 million for the year ended december 31 , 2012 , from $ 34.6 million for the year ended december 31 , 2011. this decrease was primarily attributable to $ 2.2 million in charges related to certain employee departures recognized during the fourth quarter of 2011 and a decrease of $ 0.6 million in discretionary bonus amounts in 2012. the $ 0.8 decrease in cash compensation is primarily due to the one-time charges recognized during the fourth quarter of 2011 , partially offset by a shift in compensation mix . the $ 2.0 million decrease in other non-cash compensation was primarily due to a shift in compensation mix and a reduction in amortization associated with previously issued awards . we would expect non-cash compensation expense in subsequent years to depend on the size and composition of awards granted under our equity incentive plans . general and administrative expense decreased by $ 3.3 million , or 30.9 % , to $ 7.3 million for the year ended december 31 , 2012 , from $ 10.6 million for the year ended december 31 , 2011. this decrease is primarily due to a decrease in rent and real estate costs recognized during 2012. during the year ended december 31 , 2011 , we entered into a noncancelable sublease agreement for certain excess office space associated with our operating lease agreement . as discussed below , we recognized a $ 2.5 million loss associated with this operating sublease during 2011. no such loss was recognized during 2012. year ended december 31 , 2011 versus december 31 , 2010 total operating expense increased by $ 7.6 million , or 20.3 % , to $ 45.2 million for the year ended december 31 , 2011 , from $ 37.6 million for the year ended december 31 , 2010. this increase was primarily attributable to one-time charges associated with the sublease of excess real estate and a charge related to certain employee departures , as well as increases in the company 's discretionary bonus amounts . compensation and benefits expense increased by $ 5.1 million , or 17.0 % , to $ 34.6 million for the year ended december 31 , 2011 , from $ 29.5 million for the year ended december 31 , 2010. this increase was primarily attributable to $ 2.2 million in charges related to certain employee departures and an increase in discretionary bonus accruals . the $ 1.3 million increase in other non-cash compensation relates to annual equity awards to our members , and arose in part as a result of a shift in compensation mix and the amortization of previously issued awards . general and administrative expense increased by $ 2.6 million , or 32.7 % , to $ 10.6 million for the year ended december 31 , 2011 , from $ 8.0 million for 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.	cash flows year ended december 31 , 2012 versus december 31 , 2011 cash and cash equivalents decreased $ 2.4 million to $ 32.6 million in 2012 compared to $ 35.1 million in 2011. net cash provided by operating activities decreased $ 14.1 million in 2012 to $ 32.0 million from $ 46.1 million in 2011. the decrease was primarily due to payments made in association with our tax receivable agreement during 2012 , combined with 2011 one-time charges that were paid in 2012 and a higher mix of cash compensation paid during the year . net cash used in investing activities was $ 0.1 million in 2012 compared to $ 0.4 million used in 2011. the $ 0.3 million decrease was primarily attributable to a $ 1.0 million decrease in purchases from investments in deferred compensation partially offset by a $ 0.7 million decrease in proceeds from investments in our deferred compensation plan during 2012. net cash used in financing activities increased $ 7.2 million in 2012 to $ 34.3 million from $ 27.1 million in 2011. this increase is primarily due to the special dividend payments made in march of 2012 and the repurchase and retirement of class a common stock , class b units , and class b unit options during 2012. year ended december 31 , 2011 versus december 31 , 2010 cash and cash equivalents increased $ 18.7 million to $ 35.1 million in 2011 compared to $ 16.4 million in 2010. net cash provided by operating activities increased $ 4.0 million in 2011 compared to 2010 primarily reflecting changes in working capital , in addition to an increase in net income , exclusive of the effects of on-time charges in operating expense in 2011 .
increased by approximately 3 % to rmb387 million ( approximately us $ 56.2 million , translated using the average exchange rate of 2019 ) for the year ended december 31 , 2019 from rmb377 million ( approximately us $ 57.0 million , translated using the average exchange rate of 2018 ) for the year ended december 31 , 2018. we derive the majority of our revenues from distribution of the right to use the search engine marketing ( “ sem ” ) services , sale of advertising space on our internet ad portals , sales of effective sales lead information and provision of the related technical services , all of which management considers as one aggregate business operation and relies upon the consolidated results of all operations in this business unit to make decisions about allocating resources and evaluating performance . our advertising and marketing services to related parties were provided in the ordinary course of business on the same terms as those provided to our unrelated customers . for the year ended december 31 , 2019 , our service revenues from related parties was approximately 1.5 % of the total revenues for the reporting period , and we did not generate any revenue from related parties for the year ended december 31 , 2018 . · internet advertising revenues was approximately us $ 14.81 million for the year ended december 31 , 2019 , compared with approximately us $ 9.59 million for the year ended december 31 , 2018. due to the increase in other new form of self-media advertising channels in recent years , our clients intended to tighten their investment budget on advertising and marketing activities through traditional ad portal platforms . as a result , we experienced decline in revenues from this business category from fiscal 2017. in order to maintain the customer base for our own ad portals and thus maintain our overall industry competitive position , during the past two years , we increased our investment in cost consumption for effective sale lead generation to improve the ad effectiveness on our portals and thus improved the overall customers ' satisfaction of this service . as a result , although gross margin rate of this business decreased as compared with that in 2-3 years ago , advertising revenues of this business category started to recover from the second fiscal quarter of 2018 and further we achieved an increase in revenues of approximately 54 % for the year ended december 31 , 2019 , compared with that in the previous year . in future periods , we intend to strengthen our data analysis on visitors ' behavior , and thus continue optimize our cost control mechanism for our ad portals , which aiming to help our ad portals to achieve more accurate advertising and marketing results that will lead to increasing sales lead conversion rate for our customers at more affordable and lower costs , and thereby gradually improve the gross profit margin of this business category in future periods . 39 · revenue generated from distribution of the right to use search engine marketing service provided by key search engines for the year ended december 31 , 2019 was approximately us $ 41.36 million , compared with approximately us $ 47.42 million for the year ended december 31 , 2018 , representing a decrease of approximately 13 % . customers use this third-party search engine marketing service to increase exposure through attracting more visits to their websites and achieve higher sales lead conversion rate , through bidding selected effective key words on different search engines . given our penetration in the advertising industry , solid partnership relations with key search engines and relative large amount of purchase , we were able to offer our customers with search engine resource at a relatively lower rate compared with the market , as a result , since fiscal 2017 , our revenue from distribution of right to use search engine market service provided by key search engines contributed more than 70 % of our total revenues for each of our reporting periods . the decrease in our revenues from this business category for the year ended december 31 , 2019 was primarily due to that as compared with the prior year , our key suppliers tightened their credit policies to us , thus more working capital was required for the same volume of search engine resource compared with the prior year . on the other hand , although our collection of the accounts receivables was generally improved as compared with the prior year , the profitability of our core business and working capital available during the year was still limited . the aforesaid factors were attributable to a decrease in the volume of search engine resource that we were able to purchase and redistribute to our customers during the year , as compared with that in the prior year . in response to this situation , we plan to require our customers to pay more advances , further strengthen our account receivables management and actively negotiate with our key suppliers for more favorable credit policies to improve the situation . due to the covid-19 outbreak in the prc during the first fiscal quarter of 2020 , and the related epidemic control measures imposed by the local governments , most of the business entities , especially smes remained shut down after the chinese new year holiday and were unable to reopen until mid-march or early-april 2020. as a result , our measures to improve the working capital status for this business category were not be implemented during the business recovery period . story_separator_special_tag as a result , a gain of change in fair value of approximately us $ 0.50 million and us $ 1.67 million was recorded in earnings for the years ended december 31 , 2019 and 2018 , respectively . impairment on long-term investments : we recognized an approximately us $ 0.45 million other-than temporary impairment loss on our long-term investment to chinanet chuang tou for the year ended december 31 , 2018 , representing the amount not recoverable upon termination of the entity . interest expense , net : for each of the years ended december 31 , 2019 and 2018 , interest income we earned was approximately us $ 0.01 million . for the years ended december 31 , 2019 and 2018 , interest expense of approximately us $ 0.04 million and us $ 0.05 million , respectively , was primarily related to the short-term bank loans we borrowed from major financial institutions in the prc to supplement our short-term working capital needs . loss before income tax expense and noncontrolling interest : as a result of the foregoing , our loss before income tax expense and noncontrolling interest was approximately us $ 1.22 million and us $ 13.36 million for the years ended december 31 , 2019 and 2018 , respectively . 43 income tax expense : we recognized an income tax expense of approximately us $ 0.05 million and us0.76 million for the years ended december 31 , 2019 and 2018 , respectively . for the year ended december 31 , 2019 , we provided approximately us $ 0.22 million current income tax expense , related to profit generated by one of our operating subsidiaries , which amount was offset by the approximately us $ 0.17 million deferred income tax benefit related to additional deferred tax assets recognized during the year . for the year ended december 31 , 2018 , deferred income tax expense recorded was primarily related to the additional deferred tax assets valuation allowance provided during the year . net loss : as a result of the foregoing , for the years ended december 31 , 2019 and 2018 , we incurred a net loss of approximately us $ 1.27 million and us $ 14.13 million , respectively . loss attributable to noncontrolling interest : chuang fu tian xia was 51 % owned by business opportunity online upon incorporation and the company purchased the remaining 49 % equity interest in it in may 2018. in may 2018 , the company incorporated a new majority-owned subsidiary , business opportunity chain and beneficially owns 51 % equity interest in it . for the year ended december 31 , 2019 , net loss allocated to the noncontrolling interest of business opportunity chain was approximately us $ 0.01 million . for the year ended december 31 , 2018 , net loss allocated to the noncontrolling interest of beijing chuang fu tian xia before it became our wholly-owned subsidiary and the noncontrolling interest of business opportunity chain was approximately us $ 0.10 million in the aggregate . net loss attributable to chinanet online holdings , inc. : total net loss as adjusted by net loss attributable to the noncontrolling interest shareholders as discussed above yields the net loss attributable to chinanet online holdings , inc. net loss attributable to chinanet online holdings , inc. was approximately us $ 1.26 million and us $ 14.03 million for the years ended december 31 , 2019 and 2018 , respectively . b. liquidity and capital resources cash and cash equivalents represent cash on hand and deposits held at call with banks . we consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents . as of december 31 , 2019 , we had cash and cash equivalents of approximately us $ 1.60 million . our liquidity needs include ( i ) net cash used in operating activities that consists of ( a ) cash required to fund the initial build-out , continued expansion of our network and new services and ( b ) our working capital needs , which include deposits and advance payments to search engine resource and other advertising resource providers , payment of our operating expenses and financing of our accounts receivable ; and ( ii ) net cash used in investing activities that consist of the investment to expand technologies related to our existing and future business activities , investment to enhance the functionality of our current advertising portals for providing advertising , marketing and data services and to secure the safety of our general network . to date , we have financed our liquidity need primarily through proceeds we generated from financing activities . as discussed in note 3 ( b ) to our audited consolidated financial statements , there is substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued . we intend to improve our cashflow status through improving gross profit margin , strengthening receivables collection management , negotiating with vendors for more favorable payment terms and obtaining more credit facilities from banks or other form of financing . the following table provides detailed information about our net cash flow for the periods indicated : replace_table_token_8_th 44 story_separator_special_tag investors of approximately us $ 0.92 million guarantee payment and prepayment received upon entering the agreements during 2018 ; ( 3 ) we repaid in the aggregate of approximately us $ 0.76 million short-term bank loans in july and october 2018 ; and ( 4 ) we re-borrowed an approximately us $ 0.45 million short-term bank loan in july 2018 and borrowed another approximately us $ 0.45 million short-term bank loan in september 2018. in the aggregate , these transactions resulted in a net cash inflow from financing activities of approximately us $ 9.49 million for the year ended december 31 , 2018. restricted net assets as substantially all of our operations	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 operating activities : for the year ended december 31 , 2019 , our net cash used in operating activities of approximately us $ 4.31 million were primarily attributable to : ( 1 ) net loss excluding approximately us $ 0.17 million of non-cash expenses of depreciation and amortizations ; approximately us $ 0.09 million of amortization of operating lease right-of-use assets ; approximately us $ 2.34 million allowance for doubtful accounts ; approximately us $ 0.39 million share-based compensation ; approximately us $ 0.50 million gain from change in fair value of warrant liabilities and approximately us $ 0.17 million deferred tax benefit , yielded the non-cash items excluding net income of approximately us $ 1.05 million . ( 2 ) the receipt of cash from operations from changes in operating assets and liabilities , such as : - accounts receivable decreased by approximately us $ 0.70 million , primarily due to strengthening of the accounts receivable collection management to improve our operating cashflows during the year ; - advance from customers increased by approximately us $ 0.97 million , primarily due to the increase in advances received from customers for the use of search engine marketing service distributed by us ; - due from related parties decreased by approximately us $ 0.15 million , primarily due to collection of a us $ 0.2 million advance from an officer of our company ; - taxes payable and other current liabilities increased by approximately us $ 0.38 million in the aggregate ; - lease payment liabilities related to short-term leases of our office spaces increased by approximately us $ 0.14 million ; and - other current assets decreased by approximately us $ 0.01 million .
in january 2019 , we acquired substantially all of the laserlyte branded products and other assets , or laserlyte , from p & l industries inc. , for a purchase price of $ 2.0 million , subject to certain adjustments , utilizing cash on hand . p & l industries was a provider of laser training and sighting products for the consumer market . the laserlyte business has been fully integrated into our crimson trace business and operates out of our wilsonville , oregon facility . this acquisition did not have a material impact on our condensed consolidated financial statements for any period presented . we report our results of operations in two segments : ( 1 ) firearms and ( 2 ) outdoor products & accessories . 2019 highlights our operating results for fiscal 2019 included the following : total net sales of $ 638.3 million , was an increase of $ 31.4 million , or 5.2 % , over the prior fiscal year . firearms segment gross sales of $ 481.3 million , which included $ 2.9 million of intersegment revenue , an increase of $ 28.5 million , or 6.3 % , over the prior fiscal year . outdoor products & accessories segment gross sales of $ 177.3 million , which included $ 17.5 million of intersegment revenue , an increase of $ 5.6 million , or 3.3 % , over the prior fiscal . gross margin of 35.4 % increased 310 basis points over the prior fiscal year . 42 a combination of factors occurring in the firearms industry during the last few years , including changes in the political environment and reduced overall demand for both firearms and the accessories that are attached to firearms , such as laser sights , resulted in us lower ing our long-range sales volume , operating profit , and cash flow forecasts in our former electro-optics operating unit . based on those for ecasts , we felt it important to seek out efficiencies in that operating unit to increase operating performance and as a result decided to combine that operating unit with our outdoor products & accessories operating unit . the lowered forecasts and the deci sion to reorganize those operating units caused us to evaluate the fair value of our operating units . based on the results of this evaluation , we recorded a $ 10.4 million non-cash impairment of goodwill in our outdoor products & accessories segment . net income in fiscal 2019 was negatively impacted by a $ 10.4 million impairment of goodwill and in fiscal 2018 net income was positively impacted by a one-time tax reform benefit of $ 8.7 million . net income in fiscal 2019 was $ 18.4 million , a decrease of $ 1.7 million , or 8.5 % , from the prior fiscal year and net income per diluted share in fiscal 2019 was $ 0.33 , a decrease of $ 0.04 , or $ 10.8 % , from the prior fiscal year . key performance indicators we evaluate the performance of our business based upon operating profit , which includes net sales , cost of sales , selling and administrative expenses , and certain components of other income and expense . we also track our return on invested capital , and we use adjusted ebitdas ( earnings before interest , taxes , depreciation , amortization , and stock-based compensation expense , excluding certain non-operational items ) , which is a non-gaap financial metric , as a supplemental measure of our performance in order to provide investors with an improved understanding of underlying performance trends . we evaluate our firearm products by such measurements as gross margin per unit produced , units produced per day , revenue by trade channel , and incoming orders per day . we evaluate our outdoor products and accessories products by such measurements as incoming orders per day and sales and gross margin by customer and brand . external factors that impact the firearm industry the firearm industry has been subject to many external factors in the past that have significantly increased the volatility of revenue generated for all companies within the industry . these factors include , among others , fears surrounding crime and terrorism ; tragic news events ; potential restrictions on the sale or makeup of firearms ; actual and potential legislative , judicial , and regulatory actions ; economic changes ; and changes in the social and political environment , including presidential elections . see item ia , risk factors , for further discussion of external factors that impact the firearm industry . although these external factors have created demand surges and volatility in the firearms market , and often make it difficult to predict demand , we believe that those external factors have also likely contributed to a long-term increase in consumer interest in firearms . this increased consumer interest has helped the firearm industry generate a ten-year compound annual growth rate in units of approximately 7.6 % according to the u.s. bureau of alcohol , tobacco , firearms and explosives , or atf . we believe that this expanding base of consumers combined with our strong brand recognition and attractive price points are important factors in our goal to continue increasing our market share . based on data from calendar 2017 , we estimate that we have a 14.5 % share of the u.s. consumer market for handguns . story_separator_special_tag for fiscal 2019 , versus an income tax benefit of $ 2.5 million for fiscal 2018 , primarily because of the impact of tax reform in the prior year . the effective tax rates were 35.9 % and ( 14.3 % ) for fiscal 2019 and 2018 , respectively . the effective tax rate for the fiscal 2019 excludes a non-cash goodwill impairment charge as a discrete item . we recorded an income tax benefit of $ 2.5 million for fiscal 2018 , compared with a tax expense of $ 63.5 million for fiscal 2017 , primarily because of the impact of tax reform and lower operating profit . the effective tax rates were ( 14.3 % ) and 33.2 % for fiscal 2018 and 2017 , respectively . we estimated the impact of tax reform , based on currently available information and interpretations of the law , to be a benefit of $ 8.7 million . the majority of the tax benefit was due to re-measurement of deferred tax assets and liabilities at lower enacted corporate federal tax rates , which did not have a cash impact in fiscal 2018. excluding the impact of tax reform and other discrete items , our effective tax rate for the fiscal year ended april 30 , 2018 was 35.4 % . 49 net income the following table sets forth certain information regarding net income and the related per share data for the fiscal years ended april 30 , 2019 , 2018 , and 2017 ( dollars in thousands , except per share data ) : replace_table_token_12_th fiscal 2019 net income compared with fiscal 2018 excluding the impact of tax reform in the prior fiscal year and goodwill impairment in the current fiscal year , net income was $ 28.8 million in fiscal 2019 compared with $ 11.4 million in fiscal 2018 , an increase of $ 17.4 million , or 152.6 % . the increase in net income was primarily due to increased revenue , a combination of lower promotional product discounts , consumer rebates , lower manufacturing spending , decreased professional fees , and lower donations to the national rifle association . the favorable impacts to net income were partially offset by unfavorable inventory valuation adjustments and manufacturing fixed-cost absorption , increased compensation-related expenses , and increased depreciation expenses related to our national logistics facility . fiscal 2018 net income compared with fiscal 2017 net income of $ 20.1 million for fiscal 2018 was $ 107.7 million lower than net income of $ 127.9 million in fiscal 2017 , primarily because of lower firearm revenue , the negative impacts on gross margin discussed above , and increased operating expenses resulting from the 2017 acquisitions and 2018 acquisitions . acquisition-related expenses as a result of the 2018 acquisitions negatively impacted net income per diluted share by $ 0.01 per share . this was offset by the favorable impact of a lower effective tax rate as a result of tax reform , lower profit-related compensation expense , and lower acquisition-related expenses . story_separator_special_tag $ 158,000 in debt issuance costs related the issuance of the 2020 senior notes . as of february 28 , 2019 , we may , at our option , upon not less than 30 nor more than 60 days ' prior notice , redeem all or a portion of the 2020 senior notes at a redemption price of 100.000 % of the principal amount of the 2020 senior notes to be redeemed plus accrued and unpaid interest as of the applicable redemption date . subject to certain restrictions and conditions , we may be required to make an offer to repurchase the 2020 senior notes from the holders of the 2020 senior notes in connection with a change of control or disposition of assets . if not redeemed by us or repaid pursuant to the holders ' right to require repurchase , the 2020 senior notes mature on august 28 , 2020. the 2020 senior notes are general , unsecured obligations of our company . the 2020 senior notes indenture contains certain affirmative and negative covenants , including limitations on restricted payments ( such as share repurchases , dividends , and early payment of indebtedness ) , limitations on indebtedness , limitations on the sale of assets , and limitations on liens . payments that would otherwise be characterized as restricted payments are permitted under the 2020 senior notes indenture in an amount not to exceed 50 % of our consolidated net income for the period from the issue date to the date of the restricted payment , provided that at the time of making such payments , ( a ) no default has occurred or would result from the making of such payments , and ( b ) we are able to satisfy the debt incurrence test under the 2020 senior notes indenture , or the 2020 senior notes lifetime aggregate limit . in addition , the 2020 senior notes indenture provides for other exceptions to the restricted payments covenant , each of which are independent of the 2020 senior notes lifetime aggregate limit . among such exceptions are ( i ) the 52 ability to make share repurchases each fiscal year in an amount not to exceed the lesser of ( a ) $ 50.0 million in any fiscal year or ( b ) 75.0 % of our consolidated net income for the previous four consecutive published fiscal quarters prior to the date of the determination of such consolidated net income , and ( ii ) share repurchases over the life of the 2020 senior notes in an aggregate amount not to exc eed $ 75.0 million . the limitation on indebtedness in the 2020 senior notes indenture is only applicable at such time that the consolidated coverage ratio ( as set forth in the 2020 senior notes indenture ) for us and our restricted subsidiaries is less than 3.00 to 1.00. in general , as set forth	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 principal cash requirements are to ( 1 ) finance the growth of our operations , including working capital and capital expenditures , ( 2 ) service our existing debt , and ( 3 ) fund any potential acquisitions . capital expenditures for tooling for new product offerings , various information technology projects , and manufacturing machinery replacements and upgrades represent important cash needs . the following table sets forth certain cash flow information for the fiscal years ended april 30 , 2019 , 2018 , and 2017 ( dollars in thousands ) : replace_table_token_13_th operating activities operating activities represent the principal source of our cash flow . cash provided by operating activities was $ 57.5 million in fiscal 2019 , or $ 4.2 million lower than the prior fiscal year . cash generated by operating activities for fiscal 2019 was favorably impacted by net income of $ 72.3 million before depreciation and amortization , $ 11.0 million of increased payroll and incentives due to increased management incentive accruals , and a $ 10.4 million non-cash goodwill impairment charge in our outdoor products & accessories segment . cash provided by operating activities was negatively impacted by $ 29.0 million of 50 increased accounts receivable due to the timing of customer shipments , $ 10.5 million of increase d inventory primarily due to increased inventory purchases to mitigate tariff costs related to our outdoor products and accessories pro ducts , and an $ 7.2 million reduction in accrued expenses because of decreased promotional product discounts and consumer rebate accruals . we anticipate that inventory levels will increase in our first quarter of fiscal 20 20 due to seasonal trends , purchase s to mitigate additional tariff costs expected in early fiscal 2020 , and a planned inventory build to reduce the risk of shipping complications as we transition our outdoor products and accessories products to our national logistics facility in fiscal 2020 .
37 the historical results , discussion and presentation of our business segments as set forth in this report reflect the impact of these changes for all periods presented in order to present all segment information on a comparable basis . there is no impact on our previously reported consolidated statements of income , balance sheet or statements of cash flows resulting from these changes financial information with respect to all of our other activities , including corporate costs not allocated to our business segments or discontinued operations , is reported as part of the “ engineering , selling and administrative expenses , ” “ non-operating income ( loss ) , ” “ interest income , ” “ interest expense ” or “ discontinued operations , net of income taxes ” line items in our consolidated financial statements and accompanying notes . value drivers of our business in fiscal 2016 , our ability to drive our business ' performance in the near-term and position the company to create long-term value centered upon successfully integrating exelis to maximize the benefits of the transformative acquisition while continuing to focus on our core values of operational excellence and leading through innovation , both of which are embedded in everything we do at harris . our strategic focus includes : capture exelis synergies ; drive operational excellence ; optimize our portfolio to focus where technology differentiates ; grow our core franchises and extend into close adjacencies ; invest in research and development ( “ r & d ” ) to drive discriminating technology ; and balance capital deployment . our first priority is the successful integration of exelis and we are capturing synergy savings . as a result of our disciplined execution , our synergy savings are a full year ahead of our original plan . as our integration efforts focus on driving greater cost and operational efficiencies and capturing opportunities to drive revenue growth , we continue to execute against our strategic priorities and focus on maintaining our deep customer relationships , commercializing our technology and driving operational excellence . our operational excellence program , harris business excellence ( “ hbx ” ) , is focused on streamlining processes , optimizing program execution , and increasing customer satisfaction . hbx incorporates standardized , industry-proven processes and tools based on the principles of lean and six sigma . since implementation , we have made significant strides in customer satisfaction , productivity and asset velocity through our efforts to optimize processes , eliminate waste , reduce costs and enhance quality across our company , including in manufacturing , field operations , direct and indirect material sourcing and other supply chain areas , overhead functions and working capital initiatives . one method we use to drive continuous improvement is “ value engineering ” — continuously evaluating new materials , processes and technologies to insert into products already in production , helping to reduce costs and improve both quality and customer satisfaction . an important part of our strategy to drive shareholder value is optimizing our business portfolio by focusing on investments in which technology provides differentiation . we dispassionately , objectively and aggressively assess which businesses strategically fit and are a better value to harris , as well as which businesses may be a better value on their own or with a third party . as part of this continuous portfolio shaping in order to best position harris to capture value , we completed the divestitures of hcs in the fourth quarter of fiscal 2015 and of aerostructures ( part of our company as a result of our acquisition of exelis ) in the fourth quarter of fiscal 2016. we utilized proceeds from the aerostructures divestiture to pay down debt . going forward , we will continue to assess our portfolio with the goal of enhancing shareholder value creation . after the integration of exelis , we now have greater scale , complementary technologies and breadth in capabilities that enable our core franchises to enhance and expand our offerings across the value chain . we form close partnerships with our expanded customer base to enable us to deliver the highest quality products and solutions to solve our customers ' most complex challenges . we intend to grow our core franchises and capabilities by collaborating with our customers to address their evolving and growing needs through innovation . innovation is at the core of our success , and r & d investment represents the foundation for innovation . our r & d investments are focused on leveraging our existing technology portfolio to introduce new solutions or expand customer-centric features and functions on existing solutions . innovation also leads to natural extensions of our core capabilities for capturing new opportunities in adjacent markets . innovation provides differentiation and is a key competitive advantage for our business . in order to maximize efficiency while maintaining our technological edge , we have adopted a portfolio management approach to optimize investment in r & d at the company level rather than the business unit level and ensure our investment is cost-effective and supports innovation across the entire company . we introduced standardized processes and common metrics 38 to track progress and gauge success , and established core technology centers to more fully leverage r & d investment across our company . during fiscal 2016 , we succeeded in deleveraging our balance sheet with debt prepayments , retiring $ 650 million of debt , approximately one-third of our three-year debt reduction goal . story_separator_special_tag 42 fiscal 2015 compared with fiscal 2014 : non-operating loss in fiscal 2015 was primarily due to the same reasons as noted above for fiscal 2015 non-operating loss . non-operating income in fiscal 2014 was due to net income related to intellectual property matters . see note 21 : non-operating income ( loss ) in the notes for further information . net interest expense fiscal 2016 compared with fiscal 2015 : our net interest expense increased in fiscal 2016 compared with fiscal 2015 primarily due to higher average debt levels as a result of our issuance of $ 2.4 billion of debt securities and our borrowing of $ 1.3 billion under a term loan agreement to finance our acquisition of exelis in fourth quarter of fiscal 2015. fiscal 2015 compared with fiscal 2014 : our net interest expense increased in fiscal 2015 compared with fiscal 2014 primarily due to higher overall debt levels as a result of our issuance of $ 2.4 billion of debt securities and our borrowing of $ 1.3 billion under a term loan agreement to finance our acquisition of exelis in the fourth quarter of fiscal 2015. net interest expense in fiscal 2015 also included $ 18 million of debt issuance costs related to financing commitments for a senior unsecured bridge loan facility in connection with our acquisition of exelis and $ 3 million of interest expense on debt securities issued by exelis that remained outstanding . see note 18 : interest expense in the notes for further information . income taxes fiscal 2016 compared with fiscal 2015 : in fiscal 2016 , our effective tax rate ( income taxes as a percentage of income from continuing operations before income taxes ) was negatively impacted by the non-deductibility for tax purposes of portions of the impairment charge described in note 8 : goodwill in the notes . this negative impact was partially offset by the favorable impact of : settlement of several items for amounts that were lower than previously recorded estimates ; legislation enacted in the second quarter of fiscal 2016 that restored the u.s. federal income tax credit for qualifying r & d expenses for calendar year 2015 and made the credit permanent for the periods following december 31 , 2015 ; recognition of a tax loss , net of valuation allowances , upon the divestiture of aerostructures ; state tax reductions resulting from our integration of exelis operations ; and several differences between gaap and tax accounting related to investments . in fiscal 2015 , our effective tax rate benefited from foreign tax credits resulting from a dividend paid by a foreign subsidiary , finalizing issues with various foreign and domestic tax authorities for amounts lower than estimates previously recorded , additional deductions ( primarily related to manufacturing ) and additional research credits claimed on our fiscal 2014 tax return compared with our recorded estimates at the end of fiscal 2014. these benefits were partially offset in the fourth quarter by the tax cost of repatriating offshore funds , the impact of non-deductible goodwill on our divestiture of hcs and the non-deductibility of some acquisition-related costs . fiscal 2015 compared with fiscal 2014 : the major discrete items from which our fiscal 2015 effective tax rate benefited are those noted for fiscal 2015 in the discussion above regarding fiscal 2016 compared with fiscal 2015. in fiscal 2014 , our effective tax rate benefited from additional deductions ( primarily related to manufacturing ) and additional research credits claimed on our fiscal 2013 tax return compared with our recorded estimates at the end of fiscal 2013 , the settlement of a state tax audit and additional permanent deductions based on recent tax litigation unrelated to us . see note 23 : income taxes in the notes for further information . discontinued operations , net of income taxes fiscal 2016 compared with fiscal 2015 : discontinued operations in fiscal 2016 consisted of a $ 21 million after-tax increase in the loss on sale of broadcast communications from the final determination rendered in a dispute over the amount of the post-closing working capital adjustment to the purchase price and third-party costs related to the dispute . we did not have discontinued operations in fiscal 2015. fiscal 2015 compared with fiscal 2014 : we did not record any amounts in discontinued operations in fiscal 2015. discontinued operations in fiscal 2014 consisted of a $ 7 million after-tax increase in the loss on sale of broadcast communications from miscellaneous adjustments for contingencies related to the disposition , partially offset by a $ 2 million after-tax gain on sale of the remaining assets of cis . see note 3 : discontinued operations in the notes for further information . 43 income from continuing operations per diluted common share attributable to harris corporation common shareholders fiscal 2016 compared with fiscal 2015 : the decrease in income from continuing operations per diluted common share in fiscal 2016 compared with the fiscal 2015 was primarily due to the same reasons noted in the discussions above in this md & a regarding fiscal 2016 compared with fiscal 2015 and by the increase in average common shares outstanding as a result of the issuance of shares in connection with the acquisition of exelis . fiscal 2015 compared with fiscal 2014 : the decrease in income from continuing operations per diluted common share in fiscal 2015 compared with the fiscal 2014 was primarily due to the same reasons noted in the discussions above in this md & a regarding fiscal 2015 compared with fiscal 2014 and by the increase in average common shares outstanding as a result of shares issued related to the acquisition of exelis . see the “ common stock repurchases ” discussion and the “ common stock ” paragraph of the “ capital structure and resources ” discussion below in this md & a for further information . discussion of business segment results of operations communication systems segment replace_table_token_6_th fiscal 2016 compared with	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 : the $ 3.3 billion decrease in net cash used in investing activities in fiscal 2016 compared with fiscal 2015 was primarily due to $ 3.2 billion in net cash used to acquire exelis in fourth quarter of fiscal 2015. the $ 3.1 billion increase in net cash used in investing activities in fiscal 2015 compared with fiscal 2014 was primarily due to $ 3.2 billion in net cash used to acquire exelis . net cash provided by ( used in ) financing activities : the $ 3.3 billion increase in net cash flows used in financing activities in fiscal 2016 compared with fiscal 2015 was primarily due to $ 3.6 billion less proceeds from borrowings ( primarily reflecting the debt issued in connection of our acquisition of exelis in the fourth quarter of fiscal 2015 ) and $ 54 million more net cash used to pay dividends , partially offset by : ( i ) $ 224 million less net cash used to repay borrowings ( reflecting $ 730 million of net cash used to repay borrowings in fiscal 2016 compared with $ 954 million of net cash used to repay borrowings in fiscal 2015 including the redemption of two series of our notes ) , ( ii ) $ 150 million less net cash used to repurchase common stock , and ( iii ) $ 39 million less net cash used in other financing activities . net cash provided by financing activities in fiscal 2015 was $ 2.4 billion compared with $ 448 million of net cash used in financing activities in fiscal 2014. this difference of approximately $ 2.8 billion is primarily due to $ 3.7 billion in proceeds from debt issued in connection with our acquisition of exelis , less approximately $ 0.9 billion of cash used to redeem our notes ( as described above ) . funding of pension plans funding requirements under applicable laws and regulations are a major consideration in making contributions to our u.s. pension plans .
beginning in mid-march 2020 , the global pandemic associated with covid-19 and related economic conditions caused financial and mortgage-related asset markets to come under extreme duress , resulting in credit spread widening , a sharp decrease in interest rates and unprecedented illiquidity in repurchase agreement financing and mbs markets . the illiquidity was exacerbated by inadequate demand for mbs among primary dealers due to balance sheet constraints . these events , in turn , resulted in falling prices of our assets and increased margin calls from our repurchase agreement counterparties . to conserve capital , protect assets and to pause the escalating negative impacts caused by the market dislocation and allow the markets for many of our assets to stabilize , on march 20 , 2020 , we notified our repurchase agreement counterparties that we did not expect to fund the existing and anticipated future margin calls under our repurchase agreements and commenced discussions with our counterparties with regard to entering into forbearance agreements . we entered into three consecutive forbearance agreements , pursuant to which the forbearing counterparties agreed not to exercise any of their rights or remedies under their applicable financing arrangement with us through june 15 , 2020. on june 10 , 2020 , we exited forbearance , terminating the last remaining forbearance agreement , and entered into a reinstatement agreement , pursuant to which each participating counterparty agreed to permanently waive all existing and prior events of default under our financing agreements and reinstate our financing arrangements described in more detail below under the `` financing arrangements `` heading of this part ii , item 7 . 42 in an effort to manage our portfolio through this unprecedented turmoil in the financial markets , to improve liquidity , and preserve capital , we executed the following during the year ended december 31 , 2020. reduced gaap investment portfolio from $ 4.0 billion at december 31 , 2019 to $ 1.2 billion at december 31 , 2020 and investment portfolio on a non-gaap basis from $ 4.4 billion at december 31 , 2019 to $ 1.4 billion at december 31 , 2020 through sales , directly or as a result of financing counterparty seizures . reduced financing arrangement balance on a gaap basis from $ 3.2 billion at december 31 , 2019 to $ 564.0 million at december 31 , 2020 and financing arrangements on a non-gaap basis from $ 3.5 billion at december 31 , 2019 to $ 680.8 million at december 31 , 2020. reduced mark-to-market recourse financing from $ 3.5 billion at december 31 , 2019 to $ 580.1 million at december 31 , 2020 . ◦ increased non mark-to-market non-recourse financing from $ 224.3 million at december 31 , 2019 to $ 466.3 million at december 31 , 2020. reduced our gaap leverage ratio and economic leverage ratio from 4.1x and 4.1x at december 31 , 2019 , respectively , to 2.4x and 1.5x at december 31 , 2020 , respectively . unwound entire portfolio of pay-fixed , receive-variable interest rate swaps held directly and through investments in debt and equity of affiliates during the first quarter , recognizing net realized losses of $ ( 65.4 ) million on a gaap basis as a result of the market disruption caused by the pandemic . we also executed the following during the year ended december 31 , 2020 : we purchased $ 0.5 billion of agency rmbs and $ 60.2 million of residential mortgage loans . we participated in a non-rated securitization , in which residential mortgage loans with a fair value of $ 199.6 million were securitized , converting financing from recourse financing that was mark-to-market with respect to margin calls to non-recourse financing that is no longer mark-to-market with respect to margin calls . we , alongside private funds under the management of angelo gordon , participated through our unconsolidated ownership interest in matt in a rated non-qm loan securitization , in which non-qm loans with a fair value of $ 226.0 million were securitized . certain senior tranches in the securitization were sold to third-parties with us and private funds under the management of angelo gordon retaining the subordinate tranches , which had a fair value of $ 24.3 million as of september 30 , 2020. we have a 44.6 % interest in the retained subordinate tranches . reconciliations of gaap and non-gaap financial measures appear below . the full impact of covid-19 on the mortgage reit industry , the credit markets and , consequently , our financial condition and results of operations for future periods is uncertain and can not be predicted at the current time as it depends on several factors beyond our control including , but not limited to ( i ) the uncertainty around the severity , duration and spread of the outbreak , ( ii ) the effectiveness of the united states and global public health response , ( iii ) the pandemic 's impact on the u.s. and global economies , ( iv ) the timing , scope and effectiveness of additional governmental responses to the pandemic , including the availability of a treatment or vaccination for covid-19 , ( v ) the impact of government interventions , and ( vi ) the negative impact on our borrowers , asset values and cost of capital . market conditions while 2020 began with an improved interest rate environment for our business and industry as a whole , the impact of the global response to the covid-19 pandemic on the financial markets resulted in unprecedented market disruption in the first two quarters of the year . beginning in the middle of the first quarter of 2020 and continuing into the second quarter , financial and mortgage-related asset markets experienced significant volatility as a result of the spread of covid-19 . story_separator_special_tag 48 ( 2 ) for the years ended december 31 , 2020 and december 31 , 2019 , total transaction related expenses and deal related performance fees were $ ( 0.6 ) million and $ 4.5 million , respectively . for the year ended december 31 , 2020 , the $ ( 0.6 ) million was comprised of $ ( 1.2 ) million per the chart above as well as $ 0.6 million of deferred financing costs that are included within interest expense . for the year ended december 31 , 2019 , the $ 4.5 million consisted of $ 42.0 thousand and $ 4.5 million per the chart above as well as a de minimis amount of deferred financing costs that are included within interest expense . the decrease in transaction related expenses and deal related performance fees from the year ended december 31 , 2019 to the year ended december 31 , 2020 is primarily a result of accrued deal-related performance fees being reversed in the current period due to a decline in the price of the related assets , as well as the seizure of such assets by financing counterparties . restructuring related expenses restructuring related expenses relate to legal and consulting fees primarily incurred in connection with executing the forbearance agreement and subsequent reinstatement agreement . refer to the `` financing activities `` section below for more information regarding the forbearance agreement and the reinstatement agreement . equity based compensation to affiliate equity based compensation to affiliate represents amortization of the fair value of our restricted stock units issued to our manager , less the present value of dividends expected to be paid on the underlying shares through the requisite period . for the years ended december 31 , 2020 and december 31 , 2019 , our equity based compensation to affiliate decreased as a result of the remaining restricted stock units vesting during 2020. excise tax excise tax represents a four percent tax on the required amount of any ordinary income and net capital gains not distributed during the year . the expense is calculated in accordance with applicable tax regulations . for the years ended december 31 , 2020 and december 31 , 2019 our excise tax decreased primarily due to losses associated with covid-19 . servicing fees we incur servicing fee expenses in connection with the servicing of our residential mortgage loans . as of december 31 , 2020 , and december 31 , 2019 , we owned residential mortgage loans with a fair value of $ 435.4 million and $ 417.8 million , respectively . this increase in the fair value of the residential mortgage loans we own pertains to the net purchases of residential mortgage loan pools in 2019 and 2020. for the years ended december 31 , 2020 and december 31 , 2019 , our servicing fees increased primarily due to our net purchases of residential mortgage loans described above . equity in earnings/ ( loss ) from affiliates equity in earnings/ ( loss ) from affiliates represents our share of earnings and profits of investments held within affiliated entities . a majority of these investments comprise real estate securities , loans and our investment in ag arc . the decrease from the year ended december 31 , 2020 to the year ended december 31 , 2019 primarily pertains to unrealized losses on investments held within affiliated entities , offset by our share of income generated by arc home . during the year ended december 31 , 2020 , we recognized $ 23.3 million of equity in earnings from affiliates related to our investment in ag arc . the increase in earnings within ag arc was the result of elevated origination volumes and the related lending revenues experienced at arc home . see note 2 to the `` notes to consolidated financial statements `` for additional information on equity in earnings/ ( loss ) from affiliates . discontinued operations on november 15 , 2019 , we sold our portfolio of single-family rental properties to a third-party at a price of approximately $ 137 million . we recognized a gain of $ 0.2 million as a result of the transaction . we reclassified the operating results of the single-family rental properties segment to discontinued operations and excluded the income from continuing operations for all periods presented . 49 gain on exchange offers , net we completed a public exchange offer and two privately negotiated exchange offers ( collectively , the `` exchange offers `` ) during the the year ended december 31 , 2020. as a result of the exchange offers , we exchanged a total of 253,482 shares of our 8.25 % series a cumulative redeemable preferred stock ( `` series a preferred stock `` ) , 435,272 shares of our 8.00 % series b cumulative redeemable preferred stock ( `` series b preferred stock `` ) and 716,822 shares of our and 8.000 % series c fixed-to-floating rate cumulative redeemable preferred stock ( `` series c preferred stock `` ) for a total of 5,095,934 shares of common stock and cash consideration of $ 8.0 million . we recognized a gain of $ 10.6 million in connection with the exchange offers , which is net of related expenses . refer to the `` liquidity and capital resources `` section below for more information on the exchange offers . results of operations for fiscal year 2019 and 2018 for a comparison of our results of operations for the fiscal years ended december 31 , 2019 and december 31 , 2018 , see “ part ii , item 7. management 's discussion and analysis of financial condition and results of operations ” of our annual report on form 10-k for the fiscal year ended december 31 , 2019 , filed with the sec on february 28 , 2020. book value per share per share amounts for book value are calculated using all outstanding common shares in accordance with gaap , including	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 below details changes to our cash , cash equivalents , and restricted cash for the years ended december 31 , 2020 and december 31 , 2019 ( in thousands ) . replace_table_token_33_th ( 1 ) cash provided by operating activities is primarily attributable to net interest income less operating expenses for the years ended december 31 , 2020 and december 31 , 2019 , respectively . there was a significant reduction in our investment portfolio size in 2020 as a result of the global covid-19 pandemic and increased expenses primarily incurred in connection with executing the forbearance agreement and subsequent reinstatement agreement . ( 2 ) cash provided by investing activities for the year ended december 31 , 2020 was primarily attributable to sales of investments and principal repayments of investments less purchases of investments . cash used by investing activities for the year ended december 31 , 2019 was primarily attributable to purchases of investments less sales of investments and principal repayments of investments . the difference period over period is primarily due to significant sales in 2020 as a result of the global covid-19 pandemic . ( 3 ) cash used in financing activities for the year ended december 31 , 2020 was primarily attributable to repayments of financing arrangements and dividend payments offset by borrowings under financing arrangements . cash provided by financing activities for the year ended december 31 , 2019 was primarily attributable to borrowing of financing arrangements offset by offset by repayment of borrowings under financing arrangements and dividend payments . the difference period over period is primarily due to a reduction in financing arrangements as a result of significant sales in 2020 due to the global covid-19 pandemic .
under these agreements , we are paid a fixed fee based on the volume and thermal content of the natural gas we gather . we are party to eight long-term gas gathering agreements with producers in the barnett shale . in the piceance basin , we are a party to three long-term gas gathering agreements with encana and six gas gathering agreements with five other producers , three of which are long-term agreements . these agreements provide us with a revenue stream that is not subject to direct commodity price risk , with the exception of the natural gas that we retain in-kind to offset the power costs we incur to operate our electric-drive compression assets on the dfw midstream system . we also have indirect exposure to changes in commodity prices in that persistent low commodity prices may cause our customers to delay drilling or temporarily shut in production , which would reduce the volumes of natural gas that we gather . if our customers delay drilling or temporarily shut-in production due to persistently low commodity prices , our minimum volume commitments assure us that we will receive a certain amount of revenue from our customers . we gather gas from both dry gas and liquids-rich regions and we believe that our gathering systems are well positioned to capture additional volumes from increased producer activity in these regions in the future . dry gas regions contain natural gas reserves that are primarily composed of methane . liquids-rich regions include natural gas reserves that contain natural gas liquids in addition to methane . in the piceance basin , our grand river system benefits from its exposure to liquids-rich gas production from the mesaverde formation . the attractive economics associated with the production from this formation , combined with our minimum volume commitments from major producers in the area , provide us with stable cash flows and visible growth in the future . in addition , certain of our customers have joint venture agreements in place that provide for the development of portions of the piceance basin in our areas of mutual interest utilizing third-party funds . we believe the drilling activity from these joint ventures will benefit our grand river system . the grand river system also serves the emerging mancos and niobrara shale formations , which we expect will become more active to the extent that natural gas prices increase . the dfw midstream system benefits from its areas of mutual interest that cover the most prolific dry gas area of the barnett shale . we believe that this area offers our customers a compelling opportunity to maximize drilling economics due to the high estimated ultimate recovery of natural gas per well and relatively low drilling costs when compared with other dry gas resource basins . while recent market prices for natural gas have resulted in reduced drilling activity in the barnett shale , a significant number of wells remain in various stages of completion in our areas of mutual interest and on pad sites that have already been connected to the dfw midstream system . these wells represent an opportunity to increase throughput on the dfw midstream system at minimal incremental capital costs . in addition , because of the urban environment in which the dfw midstream system is located , we expect that this area will continue to be developed by our customers using a high-density pad site drilling strategy that is designed to support multiple wells from a single location . instead of constructing pipelines to multiple wells , we connect to an individual pad site , some of which can accommodate up to 30 wells , and gather all of the natural gas produced at that site , thus minimizing our future capital expenditures . this pad site strategy substantially increases the efficiency of both the producers ' drilling activities as well as our gathering activities and economics . 54 trends and outlook our business has been , and we expect our future business to continue to be , affected by the key trends discussed below . our expectations are based on assumptions made by us and information currently available to us . to the extent our underlying assumptions about , or interpretations of , available information prove to be incorrect , our actual results may vary materially from our expected results . natural gas supply and demand dynamics . natural gas continues to be a critical component of energy supply and demand in the united states . recently , the price of natural gas has been at historically low levels , with the prompt month nymex natural gas futures price at $ 3.43 per mmbtu as of december 28 , 2012 , compared with a high of $ 13.58 per mmbtu in july 2008. the lower price of natural gas is due in part to increased production , especially from unconventional sources , such as natural gas shale plays , high levels of natural gas in storage , warm winter weather and the effects of the economic downturn starting in 2008. according to the u.s. energy information administration ( the `` eia `` ) , average annual natural gas production in the united states increased 13.9 % from 55.2 bcf/d to 62.9 bcf/d from 2008 to 2011. over the same time period , natural gas consumption increased only 4.5 % to 66.6 bcf/d . story_separator_special_tag gas gathering revenue for the grand river system was approximately $ 63.1 million in 2012 , compared with $ 11.0 million in 2011. natural gas and condensate sales increased 31 % to $ 16.3 million in 2012 , compared with $ 12.4 million in 2011 , largely reflecting the contribution of the grand river system . revenue associated with condensate sales for the grand river system was approximately $ 3.5 million in 2012 , compared with $ 0.6 million in 2011. operations and maintenance expense . operations and maintenance expense increased $ 21.8 million to $ 51.7 million in 2012 , compared with $ 29.9 million in 2011. the 73 % increase was largely a result of grand river system expenses incurred in 2012 , partially offset by a decline in expenses for the dfw midstream system . the decrease in operations and maintenance expense for the dfw midstream system was primarily the result of a $ 1.3 million decline in compressor contractor services in 2012 due to the transition to in-house compressor services during the first quarter of 2012. this decrease was offset by an increase in property taxes as a result of the continued development of the dfw midstream system . operations and maintenance expense for the grand river system was $ 26.5 million in 2012 , compared with $ 3.9 million in 2011. general and administrative expense . general and administrative expense increased $ 3.9 million to $ 21.4 million in 2012 , compared with $ 17.5 million in 2011. the 22 % increase was largely driven by an increase of expenses due to the acquisition of the grand river system in october 2011. this increase primarily reflects an increase in salaries and benefits due to increased headcount , an increase in insurance expenses primarily as a result of our growth , and an increase in professional services expenses . these increases were partially offset by a decrease in non-cash unit-based compensation . transaction costs . transaction costs were $ 2.0 million for the year ended december 31 , 2012 , of which $ 1.7 million related to summit investments ' acquisition of red rock and $ 0.3 million related to the acquisition of the grand river system . red rock was not contributed to smlp in connection with the ipo and is not an asset of smlp . ebitda and adjusted ebitda in 2011 included $ 3.2 million in transaction costs related to the acquisition of the grand river system . 60 depreciation and amortization expense . depreciation and amortization expense increased to $ 35.3 million in 2012 from $ 11.4 million in 2011 largely due to the acquisition of the grand river system in october 2011 and additional assets placed into service in connection with the development of the dfw midstream system during 2011. depreciation and amortization expense for the grand river system was $ 23.1 million in 2012 , compared with $ 3.2 million in 2011. interest expense and affiliated interest expense . interest expense was $ 7.3 million in 2012 , compared with $ 1.0 million in 2011. the increase was primarily as a result of the higher 2012 balances on the revolving credit facility that we obtained in may 2011. affiliated interest expense was $ 5.4 million in 2012 , compared with $ 2.0 million in 2011 , and related to the $ 200.0 million promissory notes that we issued to the sponsors in connection with the acquisition of the grand river system in october 2011. the promissory notes were partially prepaid in may 2012 with the remaining balance prepaid in july 2012. year ended december 31 , 2011 compared with the year ended december 31 , 2010 volume . our revenues are primarily attributable to the volume of natural gas that we gather and compress and the rates we charge for those services . throughput volumes increased 296 mmcf/d , or 218 % , from 136 mmcf/d for the year ended december 31 , 2010 to 431 mmcf/d for the year ended december 31 , 2011. this increase was due to the continued development of the dfw midstream system . there were 276 wells and 58 drilling pad sites and 160 wells and 33 drilling pad sites connected to the dfw midstream system as of december 31 , 2011 and 2010 , respectively . the dfw midstream system included 104 miles and 83 miles of pipeline as of december 31 , 2011 and december 31 , 2010 , respectively . throughput volumes for the dfw midstream system averaged 333 mmcf/d for the year ended december 31 , 2011. we acquired the grand river system in october 2011. throughput volumes for the grand river system averaged 586 mmcf/d for the two months that the grand river system was included in our financial results for the year ended december 31 , 2011. revenue . total revenue increased $ 71.9 million , or 227 % , from $ 31.7 million for the year ended december 31 , 2010 to $ 103.6 million for the year ended december 31 , 2011. gathering services and other fees increased $ 62.1 million , or 211 % , from $ 29.4 million for the year ended december 31 , 2010 to $ 91.4 million for the year ended december 31 , 2011. this increase was primarily the result of increased throughput volumes on the dfw midstream system , offset by a decrease of $ 0.04 per mcf , or 7 % , in the average throughput rates from $ 0.56 per mcf for the year ended december 31 , 2010 to $ 0.52 per mcf for the year ended december 31 , 2011. this decrease is primarily due to the fact that the grand river system generates a lower average gathering fee per mcf than our dfw midstream system . gas gathering revenue for the grand river system was $ 11.0 million for the two months that the grand river system was included in our financial results for	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 components of the change in cash and cash equivalents were as follows : replace_table_token_11_th year ended december 31 , 2012 compared with the year ended december 31 , 2011. cash flows from operating activities increased by $ 49.5 million in 2012 largely as result of the increase in volumes on the dfw midstream system and the inclusion of a full year of grand river system operations in 2012. cash flows used in investing activities decreased in 2012 primarily as a result of the acquisition of the grand river system in 2011. capital expenditures on the dfw midstream system were $ 40.3 million in 2012 , compared with $ 78.2 million in 2011. capital expenditures for new projects on the grand river system were $ 32.6 million in 2012. cash flows from financing activities in 2012 reflect the may 2012 borrowing of $ 163.0 million under the revolving credit facility , of which we used $ 160.0 million to prepay principal amounts outstanding under certain unsecured promissory notes payable to the sponsors . in july 2012 , we borrowed $ 50.0 million under the revolving credit facility and used $ 49.2 million of the proceeds to repay the balance of the unsecured promissory notes payable to the sponsors . cash flows provided by financing activities also reflect proceeds of $ 263.1 million from the issuance of our common units in connection with our ipo ( including the proceeds from the exercise of the underwriters ' option to purchase additional common units ) . we used $ 140.0 million of the ipo proceeds to pay down our revolving credit facility .
on july 2 , 2013 , laclede gas and other parties to the case filed a unanimous stipulation and agreement with the mopsc that authorized laclede gas to complete the acquisition of mge , subject to certain conditions , including restrictions relative to the timing of filing for general rate increases and reporting requirements . this unanimous stipulation and agreement was approved by the mopsc on july 17 , 2013. effective september 1 , 2013 , laclede gas closed on the purchase of mge assets and liabilities . gas utility - alagasco on august 31 , 2014 , the company purchased from energen 100 % of the outstanding common stock of alagasco , with the purchase price for the alagasco acquisition remaining subject to certain customary post-closing adjustments , which at this time are not expected to be material . alagasco is the largest natural gas distribution utility in the state of alabama . 27 alagasco purchases natural gas through interstate and intrastate suppliers and distributes the purchased gas through its distribution facilities for sale to residential , commercial , and industrial customers and other end-users of natural gas . alagasco also provides transportation services to large industrial and commercial customers located on its distribution system . these transportation customers , using alagasco as their agent or acting on their own , purchase gas directly from marketers or suppliers and arrange for delivery of the gas into the alagasco distribution system . alagasco charges a fee to transport such customer-owned gas through its distribution system to the customers ' facilities . alagasco 's service territory is located in central and north alabama and includes 186 cities and communities in 32 counties . the aggregate population of the counties served by alagasco is estimated to be 3.0 million . among the cities served by alagasco are birmingham , the center of the largest metropolitan area in alabama , and montgomery , the state capital . during 2014 , alagasco served an average of 391,840 residential customers and 31,236 commercial , industrial and transportation customers . the alagasco distribution system includes approximately 23,000 miles of main , service lines , odorization regulation facilities , and customer meters . gas marketing laclede energy resources , inc. is engaged in the marketing of natural gas and related activities on a non-regulated basis and is reported in the gas marketing segment . ler markets natural gas to both on-system utility transportation customers and customers outside of laclede gas ' traditional service territory , including large retail and wholesale customers . ler 's operations and customer base are more subject to fluctuations in market conditions than the utilities . ler entered into a new 10 year contract for 1 bcf of natural gas storage effective august 1 , 2013 and has an additional 1 bcf storage contracted through january 2016. business evaluation factors based on the nature of the business of the company and its subsidiaries , as well as current economic conditions , management focuses on the following key variables in evaluating the financial condition and results of operations and managing the business : gas utility segment : the utilities ' ability to recover the costs of purchasing and distributing natural gas from their customers ; the impact of weather and other factors , such as customer conservation , on revenues and expenses ; changes in the regulatory environment at the federal , state , and local levels , as well as decisions by regulators , that impact the utilities ' ability to earn its authorized rate of return in all service territories they serve ; the utilities ' ability to access credit markets and maintain working capital sufficient to meet operating requirements ; the effect of natural gas price volatility on the business ; and the ability to integrate the operations of all acquisitions . gas marketing segment : the risks of competition ; fluctuations in natural gas prices ; new national pipeline infrastructure projects ; the ability to procure firm transportation and storage services at reasonable rates ; credit and or capital market access ; counterparty risks ; and the effect of natural gas price volatility on the business . further information regarding how management seeks to manage these key variables is discussed below . gas utility the utilities provide reliable natural gas services at a reasonable cost , while maintaining and building secure and dependable infrastructures . the utilities ' strategies focus on improving both performance and the ability to recover their authorized distribution costs and rates of return . the utilities ' distribution costs are the essential , primarily fixed , expenditures it must incur to operate and maintain more than 53,000 miles of mains and services comprising the natural gas distribution systems and related storage facilities for laclede gas and alagasco . 28 the utilities ' distribution costs include wages and employee benefit costs , depreciation and maintenance expenses , and other regulated utility operating expenses , excluding natural and propane gas expense . distribution costs are considered in the rate-making process , and recovery of these types of costs is included in revenues generated through the utilities ' tariff rates . laclede gas ' tariff rates are approved by the mopsc , whereas alagasco 's tariff rates are approved by the apsc . laclede gas also has an off-system sales and capacity release income stream that is regulated by tariff . laclede gas ' income from off-system sales and capacity release remains subject to fluctuations in market conditions . laclede gas is allowed to retain the following annual income ( shown by legacy business ) : replace_table_token_9_th some of the factors impacting the level of off-system sales include the availability and cost of laclede gas ' natural gas supply , the weather in its service area , and the weather in other markets . story_separator_special_tag the remaining increase in other operating expenses was due to the impact of colder weather reflected in the higher provision for uncollectible accounts , and higher maintenance and employee-related expenses . the remaining increase in depreciation and amortization was associated with capital spending in fiscal 2014. gas utility operating revenues - gas utility operating revenues for fiscal year 2014 increased $ 610.0 , compared to fiscal year 2013 , was primarily attributable to the following factors : replace_table_token_12_th temperatures experienced in laclede gas ' service area during 2014 were 13.3 % colder than the same period last year , and 11.4 % colder than normal . total system therms sold and transported were 1,876.6 million for fiscal year 2014 compared with 889.7 million for fiscal year 2013 . total off-system therms sold and transported outside of laclede gas ' service area were 125.8 million for fiscal year 2014 compared with 229.4 million for fiscal year 2013 . this decrease was due to colder temperatures and increased heating demand in our services areas , reducing the gas supply resources available for off-system sales or capacity release . operating margin - gas utility operating margin was $ 570.8 for fiscal year 2014 , a $ 222.3 increase over the same period last year . the increase was attributable to the following factors : ( $ millions ) operating margin from mge $ 186.5 operating margin from alagasco 14.8 cold weather impact - higher therms sold and transported 11.9 propane utility sales 6.1 gross receipts tax 3.0 total variation $ 222.3 the increase was primarily attributable to the acquisitions of mge and alagasco totaling $ 186.5 and $ 14.8 respectively . the higher system sales volume driven by the 13.3 % colder weather in the laclede gas service area contributed to $ 11.9 of the increase . $ 6.1 of the increase was the result of propane utility sales , with the remaining $ 3.0 the result of all other minor variations . operating expenses - gas utility other operating expenses in fiscal year 2014 increased $ 124.9 from fiscal year 2013 . of the $ 124.9 increase , $ 103.5 is attributable to the mge acquisition and $ 14.2 is the result of the alagasco acquisition . the remaining increase in other operating expenses was due to the impact of colder weather reflected in the higher provision for uncollectible accounts , higher maintenance costs and employee-related expenses . excluding the acquisition impact of $ 29.9 , depreciation and amortization expense increased $ 4.2 primarily due to additional depreciable property . 35 gas marketing operating revenues - gas marketing operating revenue for the twelve months ended september 30 , 2014 increased $ 57.2 from the same period last year due to higher volumes sold and higher per unit gas sales prices . higher gas sales prices were driven by the colder weather that resulted in a constrained pipeline infrastructure creating higher market volatility between differing regions . operating margin - gas marketing operating margin was $ 26.0 for fiscal year 2014 , an $ 8.3 increase compared to the same period last year . the increase in operating margin was primarily attributable to higher price volatility and basis differentials ( pricing differences between supply regions ) that stemmed from unusually cold winter . these higher weather-related margins offset lower run-rate margins versus the prior year , reflecting the expiration of two favorable gas supply contracts during 2013 and early 2014. other operating revenue and operating expenses - other operating revenue decreased $ 2.4 primarily due to the prior year having a one-time sale of propane inventory by laclede pipeline totaling $ 1.7. other operating expenses decreased $ 0.1 primarily due to the alagasco acquisition-related expenses discussed above being lower than the mge acquisition related expenses incurred in the comparative prior year period . interest charges interest charges during fiscal year 2014 increased $ 17.6 from fiscal year 2013 . the increase was primarily due to the december 2012 , march 2013 , august 2013 and august 2014 issuances of additional long-term debt of $ 25.0 , $ 100.0 , $ 450.0 and $ 625.0 , respectively , the june 2014 issuance of equity units totaling $ 143.8 , offset by the early bond redemption of $ 80.0 , 6.35 % first mortgage bonds on january 6 , 2014 , and the october 2012 maturity of $ 25.0 , 6.5 % first mortgage bonds . the assumption of alagasco debt contributed $ 1.3 to the increase in interest expense . average short-term interest rates were 0.5 % and 0.3 % for fiscal years 2014 and 2013 , respectively . average short-term borrowings were $ 82.3 and $ 34.2 for fiscal years 2014 and 2013 , respectively . income taxes income tax expense increased $ 14.7 in fiscal year 2014 from fiscal year 2013 primarily due to higher taxable income , slightly higher effective tax rates , and other minor variations . 2013 vs. 2012 consolidated laclede group 's net income was $ 52.8 in fiscal year 2013 , including net income of $ 1.8 related to mge , compared with $ 62.6 in fiscal year 2012 . basic and diluted earnings per share were $ 2.03 and $ 2.02 respectively for fiscal year 2013 compared with basic and diluted earnings per share of $ 2.80 and $ 2.79 respectively for fiscal year 2012 . net economic earnings were $ 65.0 in fiscal year 2013 , compared with $ 62.6 in fiscal year 2012 . net economic earnings per share were $ 2.87 in fiscal year 2013 , compared with $ 2.79 for fiscal year 2012 . earnings decreased in fiscal year 2013 compared to fiscal year 2012 primarily due to acquisition costs incurred during the period recorded in other partially offset by higher income reported by gas utility . additionally , earnings were impacted by decreased income from the gas marketing segment . the increase is primarily attributed to acquisition related items that are	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 laclede group had no temporary cash investments as of september 30 , 2014 . during fiscal year 2014 , short-term investments were diversified among highly-rated money market funds , interest-bearing deposits , commercial paper issues and us government or agency securities . the money market funds were accessible by the company on demand . these investments were used to support the working capital needs of the company 's subsidiaries and as a store of liquidity in advance of the alagasco acquisition . the balance of short-term investments ranged between $ 0.0 and $ 983.5 during fiscal year 2014 and ranged between $ 0.0 and $ 969.4 during fiscal year 2013 . due to lower yields available to laclede group on its short-term investments , laclede group elected to provide a portion of laclede gas ' short-term funding through intercompany lending during fiscal years 2014 and 2013 . short-term debt the company 's and the utilities ' short-term borrowing requirements typically peak during the colder months . these short-term cash requirements can be met through the sale of commercial paper supported by lines of credit with banks or through direct use of the lines of credit . at september 30 , 2014 , laclede gas had a syndicated line of credit in place of $ 450.0 from nine banks . the largest portion provided by a single bank under the line is 15.6 % .
we do not have any products approved for sale and have not generated any revenue from drug sales . from our inception through december 31 , 2015 , we ( including our predecessors ) have funded our operations primarily through : · a series of private placements of preferred equity from 1999 through 2006 totaling $ 109.3 million ; · the receipt of $ 23.4 million from completed research collaborations with novo nordisk , a/s merck and boehringher ingelheim from 2001 to 2006 ; · the receipt of $ 169.2 million of upfront , milestone and research fees during 2006 to 2010 under a license and research agreement with pfizer , inc. , which was terminated in 2011 ; · the receipt of $ 55.7 million of upfront , milestone and research expense reimbursements from 2010 to 2013 under a license agreement for our gka programs with an affiliate of forest laboratories , inc. , which was terminated in 2013 ; · various borrowings totaling $ 114.7 million from november 2011 through march 2014 from entities affiliated with macandrews & forbes incorporated ( “ macandrews ” ) , which were converted to series f and series b preferred units of ttp and hpp , our predecessors ; · borrowings of $ 46.6 million from april 2014 through june 2015 from entities affiliated with macandrews ; and · the completion of the ipo in august 2015 , which raised proceeds of $ 104.4 million from the sale of our class a common stock , par value $ 0.01 per share ( the “ class a common stock ” ) , net of offering costs . we expect to continue to incur significant expenses and increasing operating losses for at least the next several years . we anticipate that our expenses will increase substantially as we : · continue the development of our lead drug candidate , azeliragon , for the treatment of ad ; · seek to obtain regulatory approvals for azeliragon ; · prepare for the potential commercialization of azeliragon ; · begin outsourcing of the commercial manufacturing of azeliragon for any indications for which we receive regulatory approval ; · expand our research and development activities and advance our clinical programs , including our type 2 diabetes programs ttp399 and ttp273 ; · maintain , expand and protect our intellectual property portfolio ; and · add operational , financial and management systems and personnel , including personnel to support our obligations as a public company . 62 we do not expect to generate reven ue from drug sales unless and until we successfully complete development and obtain marketing approval for one or more of our drug candidates , which we expect will take a number of years and will be subject to significant uncertainty . accordingly , we antic ipate that we will need to raise additional capital in addition to the net proceeds of the ipo prior to the commercialization of azeliragon or any of our other drug candidates . until such time that we can generate substantial revenue from product sales , we expect to finance our operating activities through a combination of equity offerings , debt financings , marketing and distribution arrangements and other collaborations , strategic alliances and licensing arrangements . nevertheless , we may be unable to rais e additional funds or enter into such other arrangements when needed , on favorable terms or at all , which would have a negative impact on our liquidity and financial condition and could force us to delay , reduce the scope or eliminate one or more of our re search and development programs or commercialization efforts . failure to receive additional funding could cause us to cease operations , in part or in full . financial overview revenue to date , we have not generated any revenue from drug sales . all of our revenue to date has been primarily derived from up-front proceeds and research fees under collaboration and license agreements and government grants . in the future , we may generate revenue from a combination of product sales , license fees , milestone payments and royalties from the sales of products developed under licenses of our intellectual property . we expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing and amount of license fees , milestone and other payments , and the amount and timing of payments that we receive upon the sale of our products , to the extent any are successfully commercialized . if we fail to complete the development of our drug candidates in a timely manner or obtain regulatory approval for them , our ability to generate future revenue and our results of operations and financial position will be materially adversely affected . research and development expenses since our inception , we have focused our resources on our research and development activities , including conducting preclinical studies and clinical trials , manufacturing development efforts and activities related to regulatory filings for our drug candidates . we recognize research and development expenses as they are incurred . our direct research and development expenses consist primarily of external costs such as fees paid to investigators , consultants , central laboratories and cros , in connection with our clinical trials , and costs related to acquiring and manufacturing clinical trial materials . our indirect research and development costs consist primarily of salaries , benefits and related overhead expenses for personnel in research and development functions and depreciation of leasehold improvements , laboratory equipment and computers . since we typically use our employee and infrastructure resources across multiple research and development programs such costs are not allocated to the individual projects . from the inception of our predecessors , through december 31 , 2015 , we have incurred approximately $ 456.5 million in research and development expenses . story_separator_special_tag ” we recognize revenue when there is persuasive evidence of an arrangement , the service has been provided to the customer , the collection of the fee is reasonably assured and the amount of the fee to be paid by the customer is fixed or determinable . in determining the accounting for collaboration and alliance agreements , we follow the provisions of asc topic 605 , subtopic 25 , “ multiple element arrangements ” ( “ asc 605-25 ” ) . asc 605-25 provides guidance on whether an arrangement that involves multiple revenue-generating activities or deliverables should be divided into separate units of accounting for revenue recognition purposes and , if division is required , how the arrangement consideration should be allocated among the separate units of accounting . if a deliverable has value on a standalone basis , we treat the deliverable as a separate unit of accounting . if the arrangement constitutes separate units of accounting according to the separation criteria of asc 605-25 , the consideration received is allocated among the separate units of accounting and the applicable revenue recognition criteria must be applied to each unit . we determine how to allocate amounts received under agreements among the separate units based on the respective selling price of each unit . if the arrangement constitutes a single unit of accounting , the revenue recognition policy must be determined for the entire arrangement and the consideration received is recognized over the period of inception through the date the last deliverable within the single unit of accounting is expected to be delivered . collaboration research and development revenue is earned and recognized as research is performed and related expenses are incurred . non-refundable upfront fees are recorded as deferred revenue and recognized into revenue as license fees and milestones from collaborations on a straight-line basis over the estimated period of our substantive performance obligations . if we do not have 69 substantive performance obligations , we recognize non-refundable upfront fees into revenue through the d ate the deliverable is satisfied . revenue for non-refundable payments based on the achievement of milestone events under collaboration agreements is recognized in accordance with asc topic 605 , subtopic 28 , “ milestone method ” ( “ asc 605-28 ” ) . milestone events under our collaboration agreements may include research , development , regulatory , commercialization , or sales events . under asc 605-28 , a milestone payment is recognized as revenue when the applicable event is achieved if the event meets the definition of a milestone and the milestone is determined to be substantive . asc 605-28 defines a milestone event as an event having all of the following characteristics : ( 1 ) there is substantive uncertainty regarding achievement of the milestone event at the inception of the arrangement ; ( 2 ) the event can only be achieved based , in whole or in part , on either our performance or a specific outcome resulting from our performance ; and ( 3 ) if achieved , the event would result in additional payment due to us . we also treat events that can only be achieved based , in whole or in part , on either a third party 's performance or a specific outcome resulting from a third party 's performance as milestone events if the criteria of asc 605-28 are otherwise satisfied . research and development costs that are reimbursable under collaboration agreements are recorded in accordance with asc topic 605 , subtopic 45 , “ principal agent considerations . ” amounts reimbursed under a cost sharing arrangement are reflected as a reduction of research and development expense . we entered into contractual arrangements with sponsors wanting to conduct a trial on a drug and recognized study revenue when ( i ) the identified single subject visit has been completed or ( ii ) in some cases , all visits required in the trial by the subject matter have been completed , consistent with the requirements of the contractual arrangements . for the years ended december 31 , 2014 and 2013 , substantially all of our study revenues were from our wholly-owned subsidiary ( prior to december 31 , 2014 ) , hpctc . research and development major components of research and development costs include cash compensation , depreciation and amortization expense on research and development property and equipment , costs of preclinical studies , clinical trials and related clinical manufacturing , costs of drug development , costs of materials and supplies , facilities cost , overhead costs , regulatory and compliance costs , and fees paid to consultants and other entities that conduct certain research and development activities on our behalf . costs incurred in research and development are expensed as incurred . we record accruals based on estimates of the services received , efforts expended and amounts owed pursuant to contracts with numerous contract research organizations . in the normal course of business , we contract with third parties to perform various clinical study activities in the ongoing development of potential products . the financial terms of these agreements are subject to negotiation and variation from contract to contract and may result in uneven payment flows . payments under the contracts depend on factors such as the achievement of certain events and the completion of portions of the clinical study or similar conditions . the objective of our accrual policy is to match the recording of expenses in its financial statements to the actual services received and efforts expended . as such , expense accruals related to clinical studies are recognized based on our estimate of the degree of completion of the event or events specified in the specific clinical study . we record nonrefundable advance payments it makes for future research and development activities as prepaid expenses . prepaid expenses are recognized as expense in the statements of operations as we receive the related goods or services . income taxes in connection with 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 we believe that , with the proceeds from our ipo ( which we completed on august 4 , 2015 ) , we will continue to meet our liquidity requirements over at least the next 12 months . we anticipate that we will continue to incur losses for at least the next several years . we expect that our research and development and general and administrative expenses will continue to increase and , as a result , we may need additional capital to fund our operations , which we may obtain through one or more of equity offerings , debt financings , strategic alliances and licensing or collaboration arrangements . cash flows replace_table_token_9_th operating activities for the year ended december 31 , 2015 , our net cash used in operating activities increased $ 6.1 million from the prior year . the increased use of cash was primarily driven by the increased spending on our clinical trials and the related compound manufacturing costs for azeliragon , ttp399 and ttp273 as we initiated the related phase 3 and phase 2 studies . these increased uses of cash were offset by changes in working capital , which were primarily driven by increases in accounts payable balances due to the timing of payments related to our clinical trial expenses .
we also believe that international growth is an opportunity and are expanding our foothold in markets by establishing local community connections , distributing to strategic sales partners and opening showrooms where we believe our guests are shopping . fiscal 2014 will be an investment year , as we refocus on building a solid foundation to drive growth and expand our business . in addition to our plans for domestic and international expansion , we are also focused on initiatives related to rebuilding our brand experience , connecting with our guests and communities , and creating innovative , technical and beautiful product . we continue to invest in our product quality and supply chain , as we believe this is the foundation of our guest loyalty . 20 our focus on building foundation will also extend to our other categories , including our men 's and ivivva business , where we see potential for future expansion . we believe our strong cash flow generation , solid balance sheet and healthy liquidity provide us with the financial flexibility to execute the initiatives which will continue to lead our profitable growth . operating segment overview lululemon is a designer and retailer of technical athletic apparel operating primarily in north america and australia . our yoga-inspired apparel is marketed under the lululemon athletica and ivivva athletica brand names . we offer a comprehensive line of apparel and accessories including pants , shorts , tops and jackets designed for athletic pursuits such as yoga , running and general fitness , and dance-inspired apparel for female youth . as of february 2 , 2014 , our branded apparel was principally sold through 254 corporate-owned stores that are located in the united states , canada , australia and new zealand and via our e-commerce websites through our direct to consumer sales channel . we believe our vertical retail strategy allows us to interact more directly with and gain insights from our customers while providing us with greater control of our brand . in fiscal 2013 , 66 % of our net revenue was derived from sales of our products in the united states , 29 % of our net revenue was derived from sales of our products in canada and 5 % of our net revenue was derived from sales of our products outside of north america . in fiscal 2012 , 61 % of our net revenue was derived from sales of our products in the united states , 34 % of our net revenue was derived from sales of our products in canada and 5 % of our net revenue was derived from sales of our products outside of north america . in fiscal 2011 , 53 % of our net revenue was derived from sales of our products in the united states , 43 % of our net revenue was derived from sales of our products in canada and 4 % of our net revenue was derived from sales of our products outside of north america . our net revenue increased from $ 1.4 billion in fiscal 2012 to $ 1.6 billion in fiscal 2013 , representing an annual growth rate of 16 % . our increase in net revenue from fiscal 2012 to fiscal 2013 resulted from the addition of 43 net new retail locations , and comparable store sales growth of 2 % in fiscal 2013 , excluding the impact of the 53rd week in fiscal 2012. our total comparable sales , which includes comparable store sales and direct to consumer , were 7 % in fiscal 2013 , excluding the impact of the 53rd week in fiscal 2012. our ability to open new stores and grow sales in existing stores has been driven by increasing demand for our technical athletic apparel and a growing recognition of the lululemon athletica brand . we believe our superior products , strategic store locations , inviting store environment and distinctive corporate culture are responsible for our strong financial performance . we have three reportable segments : corporate-owned stores , direct to consumer and other . we report our segments based on the financial information we use in managing our businesses . while we receive financial information for each corporate-owned store , we have aggregated all of the corporate-owned stores into one reportable segment due to the similarities in the economic and other characteristics of these stores . as of february 2 , 2014 , we sold our products through 254 corporate-owned stores located in the united states , canada , australia , and new zealand . we plan to increase our net revenue in north america and australia by opening additional corporate-owned stores in new and existing markets . corporate-owned stores accounted for 77.3 % of total net revenue in fiscal 2013 , 79.6 % of total net revenue in fiscal 2012 and 81.6 % of total net revenue in fiscal 2011 . as of february 2 , 2014 , our direct to consumer segment included our lululemon and ivivva e-commerce websites . e-commerce sales are taken directly from retail customers through www.lululemon.com and www.ivivva.com and other country and region specific websites . our direct to consumer segment is an increasingly substantial part of our growth strategy , and now represents 16.5 % of our net revenue compared to 14.4 % in fiscal 2012 and 10.6 % in fiscal 2011 . in addition to deriving revenue from sales through our corporate-owned stores and direct to consumer , we also derive other net revenue , which includes outlet , wholesale , and warehouse sales and as well as sales through a number of company-operated showrooms and temporary locations . outlets as well as warehouse sales , which are typically held one or more times a year , are both to sell slow moving inventory or inventory from prior seasons to retail customers at discounted prices . wholesale customers include select premium yoga studios , health clubs and fitness centers . story_separator_special_tag income from operations from our corporate-owned stores segment decreased $ 2.8 million , or 1 % , to $ 372.6 million for fiscal 2013 from $ 375.5 million for fiscal 2012 primarily due to an increase in selling , general and administrative expenses related to employee costs as well as operating expenses associated with new stores and a $ 17.5 million charge related to the pull-back of black luon pants , which was partially offset by an increase of $ 36.9 million in gross profit . income from operations as a percentage of corporate-owned stores revenue decreased by 410 basis points primarily from a decrease in gross margin due to a lower mix of higher margin core items related to the pull-back of black luon pants . direct to consumer . income from operations from our direct to consumer segment increased $ 24.9 million , or 29 % , to $ 109.6 million in fiscal 2013 from $ 84.7 million in fiscal 2012 due to increased sales through our e-commerce website , with gross profit increasing $ 36.0 million over fiscal 2012 . income from operations as a percentage of direct to consumer revenue decreased by 130 basis points in fiscal 2013 compared to fiscal 2012 . other . income from operations from our other segment decreased $ 3.8 million , or 19 % , to $ 16.1 million in fiscal 2013 from $ 19.9 million in fiscal 2012 . we continue to employ our other segment strategy to increase interest in our product in markets we have not otherwise entered with corporate-owned stores . general corporate expense . general corporate expenses increased $ 3.3 million , or 3 % , to $ 107.0 million in fiscal 2013 from $ 103.6 million in fiscal 2012 . this increase was primarily due to an increase in expenses related to our head office growth of $ 28.9 million , which was largely related to the growth of our of our information technology and human resources departments as well as the overall growth of our business , and increased professional fees related to investment in strategic initiatives and projects . increased depreciation and amortization expense of $ 3.3 million also contributed to the increase in general corporate expense . the increase in general corporate expense was offset by an increase of $ 17.9 million in net foreign exchange gains which were primarily from our canadian operating entity as well as decreased management incentive-based compensation of $ 5.0 million and decreased stock-based compensation expense of $ 4.9 million . general corporate expenses are expected to continue to increase in future years as we grow our overall business and require increased efforts at our head office to support our corporate-owned stores , direct to consumer and other segments . other income ( expense ) , net other income ( expense ) , net increased $ 0.8 million , to $ 5.8 million in fiscal 2013 from $ 5.0 million in fiscal 2012 . the increase was primarily a result of increased interest income earned in fiscal 2013 compared to fiscal 2012 on our increased cash balances . provision for income taxes provision for income taxes increased $ 7.6 million , or 7 % , to $ 117.6 million in fiscal 2013 from $ 110.0 million in fiscal 2012 . in fiscal 2013 , our effective tax rate was 29.6 % compared to 28.8 % in fiscal 2012 . net income net income increased $ 9.0 million , or 3 % , to $ 279.5 million in fiscal 2013 from $ 270.6 million in fiscal 2012 . the increase in net income in fiscal 2013 was primarily due to a $ 77.2 million increase in gross profit resulting from sales growth at existing and additional corporate-owned stores opened during fiscal 2013 and increasing traffic on our e-commerce website and the addition of regional websites and a $ 0.8 million increase in other income ( expense ) , net , offset by an increase of $ 62.3 million in selling , general and administrative expenses , and an increase of $ 7.6 million in provision for income taxes . comparison of fiscal 2012 to fiscal 2011 net revenue net revenue increased $ 369.5 million , or 37 % , to $ 1,370.4 million in fiscal 2012 from $ 1,000.8 million in fiscal 2011 . assuming the average exchange rates in fiscal 2012 remained constant with the average exchange rates in fiscal 2011 , our net revenue would have increased $ 370.5 million , or 37 % . the net revenue increase was driven by increased sales at locations in our comparable stores base , sales from new stores opened , and the growth of our direct to consumer segment . the constant dollar increase in comparable store sales was driven primarily by the strength of our existing product lines , successful introduction of new products and increasing recognition of the lululemon athletica brand name , especially at our u.s. stores , that drove higher transactions per store . 27 our net revenue on a segment basis for fiscal 2012 and fiscal 2011 are expressed in dollar amounts as well as relevant percentages , presented as a percentage of total net revenue below . replace_table_token_13_th corporate-owned stores . net revenue from our corporate-owned stores segment increased $ 273.3 million , or 33 % , to $ 1,090.2 million in fiscal 2012 from $ 816.9 million in fiscal 2011 . the following contributed to the increase in net revenue from our corporate-owned stores segment : comparable store sales increase of 16 % in fiscal 2012 resulted in a $ 118.3 million increase to net revenue , including the effect of foreign currency fluctuations . excluding the effect of foreign currency fluctuations , comparable store sales increased 16 % , or $ 119.3 million , in fiscal 2012 ; net revenue from corporate-owned stores we opened during fiscal 2012 , and during fiscal 2011 prior to sales from such stores	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 sources of liquidity are our current balances of cash and cash equivalents , cash flows from operations and borrowings available under our revolving credit facility . our primary cash needs are capital expenditures for opening new stores and remodeling existing stores , making information technology system enhancements and funding working capital requirements . cash and cash equivalents in excess of our needs are held in interest bearing accounts with financial institutions . as of february 2 , 2014 , our working capital ( excluding cash and cash equivalents ) was $ 130.7 million and our cash and cash equivalents were $ 698.6 million . the following table summarizes our net cash flows provided by and used in operating , investing and financing activities for the periods indicated : 30 replace_table_token_15_th operating activities operating activities consist primarily of net income adjusted for certain non-cash items , including provision for inventories , depreciation and amortization , stock-based compensation expense and the effect of changes in non-cash working capital items , principally accounts payable , inventories , prepaid expenses , income taxes payable , and accrued compensation and related expenses . in fiscal 2013 , cash provided by operating activities decreased $ 1.8 million , to $ 278.3 million compared to cash provided by operating activities of $ 280.1 million in fiscal 2012 . the decrease was primarily a result of a decrease in income taxes payable and accrued compensation and related benefits , partially offset by increased accounts payable . the net increase in items not affecting cash was primarily due to an increase in depreciation related to our increased store base . depreciation and amortization relate almost entirely to leasehold improvements , furniture and fixtures , computer hardware and software , equipment and vehicles in our stores and other corporate buildings . depreciation and amortization increased $ 6.1 million to $ 49.1 million in fiscal 2013 from $ 43.0 million in fiscal 2012 .
we believe our customers value us for our focus on their needs , our expertise and flexibility , our global reach , our ability to provide access to hard-to-reach markets and opportunities , and our status as a well-capitalized and regulatory-compliant organization . we believe we are well positioned to capitalize on key trends impacting the financial services sector . among others , these trends include the impact of increased regulation on banking institutions and other financial services providers ; increased consolidation , especially of smaller sub-scale financial services providers and independent securities clearing firms ; the growing importance and complexity of conducting secure cross-border transactions ; and the demand among financial institutions to transact with well-capitalized counterparties . we focus on mitigating exposure to market risk , ensuring adequate liquidity to maintain daily operations and making non-interest expenses variable , to the greatest extent possible . we report our operating segments based on services provided to customers . our business activities are managed as operating segments and organized into reportable segments consisting of commercial hedging , global payments , securities , physical commodities , and clearing and execution services ( “ ces ” ) . see segment information for a listing of our operating segment components . recent events affecting the financial services industry the dodd-frank act created a comprehensive new regulatory regime governing the over-the-counter ( “ otc ” ) and listed derivatives markets . most of the rules related to this regime have came into effect , however some important rules , such as those setting capital and margin requirements , have not been finalized or fully implemented . effective september 2016 , cftc margin rules came into effect , imposing new requirements to exchange initial and variation margin , depending upon aggregate daily notional transactions outstanding , with an implementation period ending in 2020. cftc capital rules have not been finalized and therefore it is too early to predict with any degree of certainty how we will be affected . we will continue to monitor all applicable developments in the ongoing implementation of the dodd-frank act . the legislation and implementing regulations affect not only us , but also our customers and counterparties . the european markets infrastructure regulation ( “ emir ” ) is the european regulations on otc derivatives , central counterparties and trade repositories . the emir has been implemented across the european economic area member states by the european banking authority ( “ eba ” ) and markets authority ( “ esma ” ) . esma is continuing to evaluate and set clearing obligations for certain otc derivatives . we will continue to monitor all applicable developments in the ongoing implementation of emir . the emir has imposed new requirements on our european operations , including ( a ) reporting derivatives to a trade repository ; ( b ) putting in place certain risk management procedures for otc derivative transactions that are not cleared ; ( c ) changes to our clearing account models and increased central counterparty margin requirements . reporting requirements came into effect in february 2014 and most risk mitigation procedures were set at the end of 2013. implementation of collateral obligations applicable to non-cleared otc transactions came into force this year . contractual and operational changes have been implemented to accommodate the new requirements . esma is continuing to evaluate and set clearing obligations for certain otc derivatives . these obligations are due to be rolled out with some complementary markets in financial instruments directive ( “ mifid ” ) provisions in 2018 complies with the enacted provisions and will do so when pending emir provisions are finalized as relevant to its activities . in addition to the emir , the financial conduct authority ( “ fca ” ) will be enforcing additional european union issued regulations such as the mifid ii , and the markets in financial instruments regulation ( “ mifir ” ) for which implementation is scheduled for 2018. principal areas of impact related to these regulatory texts will involve emergence and oversight of organized trade facilities ( “ otf 's ” ) for trading otc non-equity products , customer type re-assessment , investor protection , enhanced conflict of interest and execution policies , transparency obligations and extended transaction reporting requirements . we will continue to monitor all applicable developments in the ongoing implementation of mifid ii . 29 fiscal 2017 highlights record annual operating revenues , grew 17 % to $ 784.0 million . acquired the icap plc europe , middle east and africa ( “ emea ” ) oil voice brokerage business in the first quarter . expanded our parent company syndicated committed loan facility to $ 262.0 million . redeemed our 8.5 % senior notes on october 15 , 2016. introduced automated clearing house ( ach ) connectivity in our global payments to enhance our solutions for high-volume , low-value cross-border payments . precious metals business became a direct participant to the london bullion market association ( lbma ) gold auction and launched its web-based gold trading platform , pmxecute+ . on august 1 , 2017 , we implemented the first phase of a new trade system related to our otc commodities business . executive summary we achieved operating revenues growth of 17 % , or $ 113.0 million , in fiscal 2017 compared to the prior year , with increases in our clearing and execution services ( “ ces ” ) , global payments , commercial hedging and physical commodities segments , partially offset by lower operating revenues in our securities segment . our ces segment increased operating revenues by $ 108.7 million , primarily related to contributions from our recent acquisitions of the correspondent securities clearing and independent wealth management businesses of sterne agee and icap plc 's london-based emea oil voice brokerage business of $ 75.3 million and $ 26.7 million , respectively . story_separator_special_tag the increase in expense is primarily related to the activity of the sterne agee correspondent clearing and independent wealth management businesses , acquired during the fourth quarter of fiscal 2016 and thus only three months of expenses were included in fiscal 2016 , resulting in higher expense of $ 4.7 million . additionally , increased activity across our exchange-traded futures & options and financial ag & energy components contributed to the higher costs , partially offset by lower adr conversion fees in our equity market-making component and lower debt trading transactional fees . the decrease in transaction-based clearing expenses as a percentage of operating revenue is primarily related to the impact of the incremental revenues from these acquired businesses , as well as the acquired oil voice brokerage business . introducing broker commissions : introducing broker commissions increase d 64 % to $ 113.0 million in fiscal 2017 compared to $ 68.9 million in fiscal 2016 , and were 14 % of operating revenues in fiscal 2017 compared to 10 % in fiscal 2016 . the increase in expense is primarily related to the activity of the sterne agee independent wealth management business , acquired during the fourth quarter of fiscal 2016 and thus only three months of expenses were included in fiscal 2016 , resulting in higher expense of $ 42.1 million . also , we experienced an increase in introducing broker commissions in our exchange-traded futures & options and financial ag & energy components , partially offset by decreased in our debt trading business in argentina , and lower broker commissions in our investment banking component as we exited the domestic investment banking business during fiscal 2016. interest expense : interest expense increase d 49 % to $ 42.1 million in fiscal 2017 compared to $ 28.3 million in fiscal 2016 . the increase in interest expense is primarily related to the trading activities of our institutional dealer in fixed income securities , which resulted in higher interest expense of $ 8.0 million . additionally , increased credit line capacity and higher average borrowings outstanding on our corporate credit facility , available for working capital needs , and our physical commodity financing facility resulted in increased expense . also , an increase in short-term rates resulted in higher costs in our exchange-traded futures & options component , as well as incremental interest related to our stock lending business started up during fiscal 2017 in our equity market-making component . year ended september 30 , 2016 compared to year ended september 30 , 2015 transaction-based clearing expenses : transaction-based clearing expenses increased 6 % to $ 129.9 million in fiscal 2016 compared to $ 122.7 million in fiscal 2015 , and were 19 % of operating revenues in fiscal 2016 compared to 20 % in fiscal 2015. the increase in expense is primarily related to increased activity across our exchange-traded futures & options , debt trading , lme metals and global payments components , as well as higher operational costs associated with required regulatory transactional reporting . introducing broker commissions : introducing broker commissions increased 31 % to $ 68.9 million in fiscal 2016 compared to $ 52.7 million in fiscal 2015 , and were 10 % of operating revenues in fiscal 2016 compared to 8 % in fiscal 2015. the increase in expense is primarily related to our acquisition of the independent wealth management business of sterne agee at the beginning of our fourth fiscal quarter , which added an incremental $ 14.7 million . also , introducing broker commissions increased in our debt trading business in argentina , and we had higher broker commissions in our investment banking component as we completed our exit of the domestic investment banking business . these increases were partially offset by lower costs in our global payments segment activity . interest expense : interest expense increased 65 % to $ 28.3 million in fiscal 2016 compared to $ 17.1 million in fiscal 2015. the increase in interest expense is primarily related to the fixed income trading activities from our institutional dealer in fixed income securities , acquired on january 1 , 2015 , which resulted in higher interest expense of $ 7.4 million . additionally , higher average borrowings outstanding on the credit facilities available for working capital needs and financing of physical commodities resulted in increased expense . 35 net operating revenues net operating revenues is one of the key measures used by management to assess the performance of our operating segments . net operating revenue is calculated as operating revenue less transaction-based clearing expenses , introducing broker commissions and interest expense . transaction-based clearing expenses represent variable expenses paid to executing brokers , exchanges , clearing organizations and banks in relation to our transactional volumes . introducing broker commissions include commission paid to non-employee third parties that have introduced customers to us . net operating revenues represent revenues available to pay variable compensation to risk management consultants and traders and direct non-variable expenses , as well as variable and non-variable expenses of operational and administrative employees . year ended september 30 , 2017 compared to year ended september 30 , 2016 net operating revenues increase d $ 48.7 million , or 11 % , to $ 492.6 million in fiscal 2017 compared to $ 443.9 million in fiscal 2016 . year ended september 30 , 2016 compared to year ended september 30 , 2015 net operating revenues increased $ 12.1 million , or 3 % , to $ 443.9 million in fiscal 2016 compared to $ 431.8 million in fiscal 2015. compensation and other expenses the following table shows a summary of expenses , other than interest and transactional expenses . replace_table_token_7_th year ended september 30 , 2017 compared to year ended september 30 , 2016 compensation and other expenses : compensation and other expenses increased $ 100.0 million , or 26 % , to $ 477.4 million in fiscal 2017 compared to $ 377.4 million in fiscal 2016	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 trading - physical ag & energy - fx prime brokerage - investment banking - correspondent clearing - asset management - independent wealth management - derivative voice brokerage we report our operating segments based on services provided to customers . net contribution is one of the key measures used by management to assess the performance of each segment and for decisions regarding the allocation of our resources . net contribution is calculated as revenues less direct cost of sales , transaction-based clearing expenses , introducing broker commissions , interest expense and variable compensation . variable compensation paid to risk management consultants and traders generally represents a fixed percentage of an amount equal to revenues generated , and in some cases , revenues generated less transaction-based clearing expense and related charges , base salaries and an overhead allocation . 40 segment income is calculated as net contribution less non-variable direct expenses of the segment . these non-variable direct expenses include trader base compensation and benefits , operational charges , communication and data services , business development , professional fees , bad debt expense , trade errors and direct marketing expenses . total segment results the following table shows summary information concerning all of our business segments combined .
risk factors ” and elsewhere in this report , as well as other factors that may affect our business , results of operations , or financial condition . forward looking statements in this report speak only as of the date hereof , and forward-looking statements in documents incorporated by reference speak only as of the date of those documents . unless otherwise required by law , we undertake no obligation to publicly update or revise these forward-looking statements , whether as a result of new information , future events or otherwise . in light of these risks and uncertainties , we can not assure you that the forward-looking statements contained in this report will , in fact , transpire . overview the management 's discussion and analysis is based on our financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states of america . the preparation of these financial statements requires us to make certain estimates and judgments that affect the reported amounts of assets , liabilities and expenses and related disclosure of contingent assets and liabilities . management bases its estimates on historical experience and on various other assumptions 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 and conditions . our business genius brands international , inc. ( “ we ” , “ us ” , “ our ” , or the “ company ” ) is a global content and brand management company that creates and licenses multimedia content . led by industry veterans , we distribute our content in all formats as well as a broad range of consumer products based on the characters that we have created or licensed . in the children 's media sector , our portfolio features “ content with a purpose ” for toddlers to tweens , which provides enrichment as well as entertainment including the award-winning baby genius ; new preschool property rainbow rangers ; preschool property llama llama that debuted on netflix ; tween music-driven brand spacepop ; adventure comedy thomas edison 's secret lab® available on public broadcast stations and our genius brands network on comcast 's xfinity on demand , roku , appletv , and amazon prime ; warren buffett 's secret millionaires club , created with and starring iconic investor warren buffett . we are also developing an all-new adult-themed animated series , stan lee 's cosmic crusaders , with stan lee 's pow ! entertainment and the hollywood reporter . 14 in addition to the wholly-owned or partially-owned properties listed above , we represent llama llama in the licensing and merchandising space . on november 4 , 2016 , we effected a reverse stock split on a one-to-three basis . the reverse stock split became effective on november 9 , 2016. the reverse stock split was implemented to facilitate our successful uplisting on the nasdaq capital market . unless otherwise noted , all share and per share data give effect to such reverse stock split of our common stock . recent developments january 2018 private placement on january 8 , 2018 , we entered into a securities purchase agreement with certain accredited investors pursuant to which we sold approximately $ 1,800,000 of common stock and warrants to such investors ( the “ january 2018 private placement ” ) . we issued and sold warrants to purchase 592,000 shares of common stock at an exercise price of $ 3.00 per share . in addition , we issued to chardan capital markets , llc , as placement agent , warrants to purchase 93,000 shares of common stock at an exercise price of $ 3.00 per share . results of operations years ended december 31 , 2017 and 2016 our summary results for the years ended december 31 , 2017 and 2016 are below . revenues replace_table_token_3_th television & home entertainment revenue is generated from distribution of our properties for broadcast on television , vod , or svod in domestic and international markets and the sale of dvds for home entertainment through our partners . fluctuations in television & home entertainment revenue occur period over period based on the achievement of revenue recognition criteria such as the start of a license period and the delivery of the content to the customer . during the year ended december 31 , 2017 compared to december 31 , 2016 , television & home entertainment revenue increased $ 4,459,341 or 1252 % due to the delivery of llama llama to netflix in december 2017 without comparable activity in the prior period . licensing and royalty revenue includes items for which we license the rights to our copyrights and trademarks of our brands and those of the brands for which we act as a licensing agent . during the year ended december 31 , 2017 compared to december 31 , 2016 , this category increased $ 8,921 or 2 % primarily due to increases in revenues from our spacepop property . the genius brands network generates revenue in the form of either flat rate promotions , advertising impressions served , or our share of subscriptions to our channels . revenues from the genius brands network increased 15 % over the prior year as the network 's household reach grew thus increasing the number of impressions served as well as the introduction of the svod platform on amazon prime . product sales represent physical products in which we hold intellectual property rights such as trademarks and copyrights to the characters and which are manufactured and sold by us directly . story_separator_special_tag in april 2016 , the fasb issued asu 2016-10 , “ revenue from contracts with customers ( topic 606 ) : identifying performance obligations and licensing ” , that amended the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property . in may 2016 , the fasb issued asu 2016-11 “ revenue recognition ( topic 605 ) and derivatives and hedging ( topic 805 ) : rescission of sec guidance because of accounting standards updates 2014-09 and 2014-16 pursuant to staff announcements at the march 3 , 2016 , eitf meeting ” , which rescinded from the fasb accounting standards codification certain sec paragraphs as a result of two sec staff announcements . the fasb also issued asu 2016-12 “ revenue from contracts with customers ( topic 606 ) : narrow-scope improvements and practical expedients ” , which clarified guidance on assessment of collectability , presentation of sale taxes , measurement of noncash consideration , and certain transition matters . during 2017 , the company initiated and executed a project to evaluate the impact of these changes , which included a review of existing contracts with customers , an evaluation of the specific terms of those contracts and the appropriate treatment under the new standards , and a comparison of that new treatment to the company 's existing accounting policies , to identify differences . the standard will be applied using the modified retrospective approach where the company will record a cumulative effect adjustment as of the date of adoption , january 1 , 2018. the company has completed its analysis of its existing revenue contracts and has substantially completed its new revenue accounting policy documentation under the new standard . the company has identified the following six material and distinct performance obligations : · license rights to exploit functional intellectual property ( functional intellectual property or “ functional ip ” is defined as intellectual property that has significant standalone functionality for example ability be played or aired . functional intellectual property derives a substantial portion of its utility from its significant standalone functionality . ) · license rights to exploit symbolic intellectual property ( symbolic intellectual property or “ symbolic ip ” is intellectual property that is not functional as it does not have significant standalone use and substantially all of the utility of symbolic ip is derived from its association with the entity 's past or ongoing activities , including its ordinary business activities for example the company 's licensing and merchandising programs associated with its animated content . ) · options to renew or extend a contract at fixed terms . ( while this performance obligation is not significant for the company 's current contracts , it could become significant in the future . ) · options on future seasons of content at fixed terms . ( while this performance obligation is not significant for the company 's current contracts , it could become significant in the future . ) · fixed fee advertising revenue generated from the genius brands network · variable fee advertising revenue generated from the genius brands network as a result of the change , beginning january 1 , 2018 , the company will begin recognizing revenue related to licensed rights to exploit functional ip in two ways . for minimum guarantees , the company will recognize fixed revenue upon delivery of content and the start of the license period . for functional ip contracts with a variable component , the company will estimate revenue such that it is probable there will not be a material reversal of revenue in future periods . revenue under these types of contracts was previously recognized when royalty statements were received . the company will begin recognizing revenue related to licensed rights to exploit symbolic ip substantially similarly to functional ip . although it has a different recognition pattern from functional ip , the valuation method is substantially the same , depending on the nature of the license . the company is in the process of preparing the transition adjustment that will be reflected in its march 31 , 2018 quarterly financial statements . the company expects that disclosure contained in the notes to the consolidated financial statements relating to revenue recognition will expand under the new standard . the company is evaluating the new disclosure requirements , including any necessary changes to business processes , systems , and controls to support the additional required disclosures . the company is also currently evaluating the potential impact on the company 's internal control over financial reporting to identify any necessary changes . 19 in february 2016 , the fasb issued accounting standards update 2016-02 , “ leases ” . the standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet . a lessee should recognize in the statement of financial position a liability to make lease payments ( the lease liability ) and a right-of-use asset representing its right to use the underlying asset for the lease term . the new guidance is effective for annual and interim reporting periods beginning after december 15 , 2018. the amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period . we are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements . in november 2016 , the fasb issued accounting standards update 2016-18 , “ statement of cash flows - restricted cash a consensus of the fasb emerging issues task force . ” this standard requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows under a retrospective transition approach . the guidance will become effective for fiscal years beginning after december 15 , 2017 , and interim periods within those fiscal years . early adoption is permitted . we have prospectively	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 working capital as of december 31 , 2017 , we had current assets of $ 10,834,926 , including cash , cash equivalents , and restricted cash of $ 7,498,072 , and current liabilities of $ 3,718,647 , including certain trade payables of $ 925,000 of which we dispute the claim , resulting in working capital of $ 7,116,279 , compared to a working capital deficit of $ 479,404 as of december 31 , 2016. increases in working capital were the result of three transactions : · on january 10 , 2017 , we entered into an amendment of our home entertainment distribution agreement with sony pursuant to which , among other things , sony paid dadc $ 1,489,583 which was the total sum owed and payable by us to dadc . · on february 9 , 2017 , we entered into a private transaction with certain of our existing warrant holders for which we received net proceeds of $ 3,401,924 , after deducting the placement agent fee and related offering expenses , from the exercise of the original warrants held by such warrant holders ( the “ private transaction ” ) . in connection with such transaction , we issued warrants to purchase an aggregate of 799,991 shares of our common stock with and exercise price of $ 3.30 per share and warrants to purchase an aggregate of 371,699 shares of our common stock with an exercise price of $ 5.30 per share .
bam in the primary and secondary markets in 2016 was 68 basis points , up from 52 basis points in 2015. as of december 31 , 2016 , bam 's total claims paying resources were $ 644 million on total par insured of $ 33 billion . total claims paying resources increased $ 43 million from december 31 , 2015 , reflecting positive cashflow building in the bam system . the gaap pre-tax total return on invested assets was 2.7 % for 2016 , compared to 3.6 % for 2015. in local currencies , the fixed income portfolio , excluding high yield investments , returned 2.1 % for 2016 , essentially in-line with the longer duration bloomberg barclays u.s. intermediate aggregate index . the portfolio of common equity securities , other long-term investments and high-yield fixed maturity investments returned 4.0 % for 2016 , underperforming the s & p 500 index return of 12.0 % . the underperformance versus the s & p 500 index return was primarily attributable to the overall conservative positioning of the risk asset portfolio , including the new high-yield mandate , which we do not expect to keep pace with strong up markets . the underperformance was also due to unfavorable results from publicly-traded common equity securities managed by third party investment advisers and pockets of poor performance in other long-term investments , including unfavorable results from private equity funds and non-controlling interests in private capital investments . 34 sirius group 's results inured to white mountains until april 18 , 2016 , the closing date of the sale to cmi . for the 2016 period , white mountains reported sirius group 's comprehensive income of $ 27 million and a combined ratio of 102 % , which was driven by $ 17 million of recorded losses from the ecuador earthquake that occurred on april 16 , 2016. in 2016 , white mountains returned approximately $ 900 million of capital to shareholders , primarily through share repurchases . overview—year ended december 31 , 2015 versus year ended december 31 , 2014 white mountains ended 2015 with book value per share of $ 696 and adjusted book value per share of $ 699 , an increase of 4.4 % and 5.3 % for the year , including dividends . during 2015 , white mountains signed an agreement to sell sirius group to cmi , and symetra announced that it entered into a merger agreement with sumitomo life pursuant to which sumitomo life will acquire all of the outstanding shares of symetra . substantially all of the benefit from the symetra transaction was recorded in 2015 , while the benefit from the sirius group transaction was recorded at closing in the second quarter of 2016. including dividends , symetra produced $ 264 million of adjusted comprehensive income for white mountains in 2015 , of which $ 241 million was recognized as an after-tax unrealized investment gain in the fourth quarter . white mountains reported comprehensive income attributable to common shareholders of $ 197 million and adjusted comprehensive income of $ 232 million in 2015 compared to comprehensive income attributable to common shareholders of $ 211 million and adjusted comprehensive income of $ 135 million in 2014. the increase in adjusted comprehensive income was driven by $ 264 million from symetra and lower foreign currency losses , partially offset by lower investment returns excluding symetra and increased incentive compensation expense recorded in connection with the agreements to sell sirius group and symetra . comprehensive income attributable to common shareholders was also affected by the change in net unrealized investment gains ( losses ) from white mountains 's share of symetra 's fixed maturity portfolio prior to the accounting change . net unrealized investment losses from symetra 's fixed maturity portfolio were $ 35 million in 2015 compared to net unrealized gains of $ 75 million in 2014. for the year ended december 31 , 2015 , white mountains repurchased and retired 387,495 of its common shares for $ 284 million at an average share price of $ 733 , approximately 105 % of white mountains 's december 31 , 2015 adjusted book value per share . the average share price paid was approximately 94 % of white mountains 's december 31 , 2015 adjusted book value per share including the estimated gain on the sirius group transaction , which was announced previous to when the vast majority of the 2015 share repurchases were completed but prior to the recording of the gain in adjusted book value per share , which occurred at closing on april 18 , 2016. onebeacon 's book value per share increased 3.8 % during 2015 , including dividends , compared to an increase of 2.1 % during 2014 , including dividends . onebeacon 's gaap combined ratio was 96 % for 2015 compared to 102 % for 2014. the lower combined ratio was primarily the result of the $ 109 million loss reserve charge in the fourth quarter of 2014 , partially offset by higher expense ratios driven by higher incentive compensation expense , changes in business mix and the impact of exiting the crop business . onebeacon 's net written premiums decreased 7 % to $ 1.1 billion in 2015 , primarily due to the exit from the crop business and lawyers liability business , a decrease in the healthcare business and the termination of an affiliated reinsurance treaty , partially offset by increases in onebeacon 's newer programs and surety businesses . sirius group 's gaap combined ratio was 85 % for 2015 compared to 76 % for 2014. the increase was primarily due to lower favorable net loss reserve development and a significantly higher frequency of non-catastrophe per risk and pro rata loss events , including $ 18 million in losses from the tianjin port explosions , partially offset by lower catastrophe losses . story_separator_special_tag improved underwriting results drove the increase in onebeacon 's book value per share growth for 2015. onebeacon 's gaap combined ratio decreased to 96 % for 2015 from 102 % for 2014. the decrease was primarily driven by a 9 point decrease in the loss ratio from non-recurrence of adverse prior accident year loss reserve development in 2015 , partially offset by an increase in the expense ratio and the impact of increasingly competitive markets on the current accident year loss ratio . there was no net loss reserve development in 2015 , primarily attributable to favorable net loss reserve development from the technology , collector cars and boats , specialty property and financial services lines of business , offset by unfavorable net loss reserve development from the entertainment and ocean marine lines of business . in 2014 , there was $ 90 million , or 8 points , of unfavorable net prior accident year adverse loss reserve development ( described below in “ 2014 fourth quarter loss and lae reserve increase . ” ) . the increase in the expense ratio for 2015 was primarily due to higher incentive compensation expense , higher acquisition costs due to changes in business mix and the impact of exiting the crop business . during 2015 , onebeacon recognized a loss of $ 4 million in other revenues in connection with an assessment from the michigan catastrophic claims association payable to markel corporation pursuant to the indemnification provisions in the stock purchase agreement governing the sale of essentia . onebeacon 's net written premiums decreased 7 % in 2015 to $ 1.1 billion , primarily due to the exit from the crop business ( $ 44 million ) and lawyers liability business ( $ 28 million ) , a decrease in the healthcare business ( $ 33 million ) and the termination of an affiliated reinsurance treaty ( $ 20 million ) , partially offset by increases in onebeacon 's newer programs and surety businesses ( $ 67 million ) . excluding the impact of onebeacon 's exit from the crop business and lawyers liability business and the affiliated reinsurance treaty termination , consolidated net written premiums increased $ 13 million , or 1.1 % . 2014 fourth quarter loss and lae reserve increase through the first nine months of 2014 , onebeacon recorded $ 14 million of net unfavorable loss and lae reserve development , driven by greater-than-expected large losses in several underwriting units , primarily in the professional and management liability lines within professional insurance . this large loss activity , which occurred mostly during the second and third quarters of 2014 , also impacted the current accident year loss and lae estimates . additionally , onebeacon incurred higher-than-usual claim coverage determination costs , a component of lae expenses , during the first nine months of 2014. other underwriting units also reported increased claim activity , including entertainment , government risks , and accident . since the increased level of loss and lae activity continued into the early part of the fourth quarter , the high level of activity in the second and third quarters no longer seemed to be isolated occurrences . as such , during the fourth quarter of 2014 , onebeacon enhanced its actuarial and claims review in several areas . onebeacon isolated the recent large loss activity in each of its underwriting units and examined the emergence of large losses relative to the timing and amounts of expected large losses . onebeacon also conducted additional analyses in the lawyers ' professional liability line within professional insurance . these new analyses included a claim level review and the application of additional actuarial methods and loss development assumptions . the results of these analyses indicated that the assumed tail risk included in the loss development patterns used to record ibnr reserves for this line were insufficient and needed to be increased for remaining long-tail exposures . onebeacon 's claims and actuarial staff also conducted an in-depth review of coverage determination , litigation and other claim-specific adjusting expenses as a result of an emerging trend of increased expenses in these areas over recent quarters , particularly coverage determination expenses . this review concluded that the ultimate costs of these loss adjustment expenses were larger than previously estimated , causing management to record an increase in estimated lae expenses , primarily in professional insurance . finally , onebeacon also recorded unfavorable prior year development in other underwriting units , including entertainment and government risks . the unfavorable loss development in entertainment and government risks resulted from heavier than expected claim activity during the fourth quarter , predominantly in the general liability and commercial auto liability lines . 41 in order to fully reflect these recent trends , onebeacon recorded a $ 109 million increase in loss and lae reserves , which included a $ 75 million increase in prior accident year loss and lae reserves and a $ 34 million increase in the current accident year loss and lae reserves recorded at september 30 , 2014. the components of the 2014 fourth quarter loss and lae reserve increase and the net loss and lae development for the full year are provided below : replace_table_token_21_th as noted above , onebeacon increased its provision for current accident year losses and lae by $ 34 million in the fourth quarter of 2014. in making its loss and lae reserve picks for the 2014 accident year , onebeacon considered the results of the enhanced actuarial and claim review and the fact that reported large claims were approaching estimated ultimate held reserves for large losses sooner than originally expected . $ 4 million of the increase was related to higher-than-expected reports of crop business losses that emerged in the fourth quarter . the remaining $ 30 million of the increase reflects an increase in management 's best estimate of current losses and lae as of december 31 , 2014 from those recorded in the first nine	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 dividend to its common shareholders . during 2016 , the company repurchased and retired 1,106,145 of its common shares for $ 887 million , which included 8,022 common shares repurchased under employee benefit plans . during 2016 , the company borrowed a total of $ 350 million and repaid a total of $ 400 million under the wtm bank facility . during 2016 , onebeacon ltd. declared and paid $ 79 million of cash dividends to its common shareholders . white mountains received a total of $ 60 million of these dividends . during 2016 , onebeacon ltd. repurchased and retired 850,349 shares of its class a common stock for $ 11 million . during 2016 , hg global raised $ 6 million of additional capital through the issuance of preferred shares , 97 % of which were purchased by white mountains . hg global used $ 3 million of the proceeds to repay and cancel an internal credit facility with white mountains . during 2016 , bam received $ 38 million in member surplus contributions . during 2016 , mediaalpha paid $ 3 million of dividends , of which $ 2 million was paid to white mountains . during 2016 , mediaalpha repaid $ 2 million of the term loan portion and borrowed $ 3 million and repaid $ 3 million under the revolving loan portion of the mediaalpha bank facility . during 2016 , star & shield borrowed a total of $ 4 million under an internal revolving credit facility from white mountains . during 2016 , white mountains contributed $ 15 million to wm advisors .
interest income is recorded on the accrual basis , adjusted for the amortization of premium and accretion of discount . 94 2020 annual report \| northern trust corporation notes to consolidated financial statements securities held to maturity consist of debt securities that management intends to , and northern trust has the ability to , hold until maturity . such securities are reported at cost , adjusted for amortization of premium and accretion of discount . interest income is recorded on the accrual basis adjusted for the amortization of premium and accretion of discount . securities held for trading are reported at fair value . realized and unrealized gains and losses on securities held for trading are reported within security commissions and trading income on the consolidated statements of income . nonmarketable securities primarily consist of federal reserve bank of chicago and federal home loan bank stock and community development investments , each of which are recorded in other assets on the consolidated balance sheets . federal reserve bank of chicago and federal home loan bank stock are reported at cost , which represents redemption value . community development investments are typically reported at amortized cost . those community development investments that are designed to generate a return primarily through realization of tax credits and other tax benefits , which are discussed in further detail in note 29 , “ variable interest entities , ” are amortized over the lives of the related tax credits and other tax benefits . f. securities purchased under agreements to resell and securities sold under agreements to repurchase . northern trust participates in the repurchase agreement market as a relatively low cost alternative for short-term funding . securities purchased under agreements to resell and securities sold under agreements to repurchase are accounted for as collateralized financings and recorded at the amounts at which the securities were acquired or sold plus accrued interest . to minimize any potential credit risk associated with these transactions , the fair value of the securities purchased or sold is monitored , limits are set on exposure with counterparties , and the financial condition of counterparties is regularly assessed . it is northern trust 's policy to take possession , either directly or via third-party custodians , of securities purchased under agreements to resell . securities sold under agreements to repurchase are held by the counterparty until the repurchase . g. derivative financial instruments . northern trust is a party to various derivative financial instruments that are used in the normal course of business to meet the needs of its clients , as part of its trading activity for its own account , and as part of its risk management activities . these instruments generally include foreign exchange contracts , interest rate contracts , total return swap contracts and credit default swap contracts . all derivative financial instruments , whether designated as hedges or not , are recorded at fair value within other assets and other liabilities on the consolidated balance sheets . derivative asset and liability positions with the same counterparty are reflected on a net basis on the consolidated balance sheets in cases where legally enforceable master netting arrangements or similar agreements exist . these derivative assets and liabilities are further reduced by cash collateral received from , and deposited with , derivative counterparties . the accounting for changes in the fair value of a derivative on the consolidated statements of income depends on whether or not the contract has been designated as a hedge and qualifies for hedge accounting under gaap . derivative financial instruments are recorded within the line item , other operating activities , net , on the consolidated statement of cash flows , except for net investment hedges which are recorded within other investing activities , net . changes in the fair value of client-related and trading derivative instruments , which are not designated hedges under gaap , are recognized currently in either foreign exchange trading income or security commissions and trading income on the consolidated statements of income . changes in the fair value of derivative instruments entered into for risk management purposes but not designated as hedges are recognized currently in other operating income on the consolidated statements of income . certain derivative instruments used by northern trust to manage risk are formally designated and qualify for hedge accounting as fair value , cash flow , or net investment hedges . derivatives designated as fair value hedges are used to limit northern trust 's exposure to changes in the fair value of assets and liabilities due to movements in interest rates . changes in the fair value of the derivative instrument and changes in the fair value of the hedged asset or liability attributable to the hedged risk are recognized currently in interest income or interest expense on the consolidated statements of income . for substantially all fair value hedges , northern trust applies the “ shortcut ” method of accounting , available under gaap . as a result , changes recorded in the fair value of the hedged item are assumed to equal the offsetting gain or loss on the derivative . for fair value hedges that do not qualify for the “ shortcut ” method of accounting , northern trust utilizes regression analysis in assessing whether these hedging relationships are highly effective at inception and quarterly thereafter . derivatives designated as cash flow hedges are used to minimize the variability in cash flows of earning assets or forecasted transactions caused by movements in interest or foreign exchange rates . story_separator_special_tag for disclosure purposes , loans that are 29 days past due or less are reported as current . at the time a loan is determined to be nonaccrual , interest accrued but not collected is reversed against interest income in the current period . interest collected on nonaccrual loans is applied to principal unless , in the opinion of management , collectability of principal is not in doubt . management 's assessment of indicators of loan and lease collectability , and its policies relative to the recognition of interest income , including the suspension and subsequent resumption of income recognition , do not meaningfully vary between loan and lease classes . nonaccrual loans are returned to performing status when factors indicating doubtful collectability no longer exist . factors considered in returning a loan to performing status are consistent across all classes of loans and leases and , in accordance with regulatory guidance , relate primarily to expected payment performance . a loan is eligible to be returned to performing status when : ( i ) no principal or interest that is due is unpaid and repayment of the remaining contractual principal and interest is expected or ( ii ) the loan has otherwise become well-secured ( possessing realizable value sufficient to discharge the debt , including accrued interest , in full ) and is in the process of collection ( through action reasonably expected to result in debt repayment or restoration to a current status in the near future ) . a loan that has not been brought fully current may be restored to performing status provided there has been a sustained period of repayment performance ( generally a minimum of six payment periods ) by the borrower in accordance with the contractual terms , and northern trust is reasonably assured of repayment within a reasonable period of time . additionally , a loan that has been formally restructured so as to be reasonably assured of repayment and performance according to its modified terms may be returned to accrual status , provided there was a well-documented credit evaluation of the borrower 's financial 96 2020 annual report \| northern trust corporation notes to consolidated financial statements condition and prospects of repayment under the revised terms , and there has been a sustained period of repayment performance ( generally a minimum of six payment periods ) under the revised terms . troubled debt restructurings ( tdrs ) . a loan that has been modified as a concession by northern trust or a bankruptcy court resulting from the debtor 's financial difficulties is referred to as a troubled debt restructuring ( tdr ) . all tdrs are reported as tdrs starting in the calendar year of their restructuring . in subsequent years , a tdr may cease being reported as a tdr if the loan was modified at a market rate and has performed according to the modified terms for at least six payment periods . a loan that has been modified at a below market rate will return to accrual status if it satisfies the six-payment-period performance requirement . the expected credit loss is measured based upon the present value of expected future cash flows , discounted at the effective interest rate based on the original contractual rate . if a loan 's contractual interest rate varies based on subsequent changes in an independent factor , such as an index or rate , the loan 's effective interest rate is calculated based on the factor as it changes over the life of the loan . northern trust elected not to project changes in the factor for purposes of estimating expected future cash flows . further , northern trust elected not to adjust the effective interest rate for prepayments . if the loan is collateral dependent , the expected loss is measured based on the fair value of the collateral at the reporting date . if the loan valuation is less than the recorded value of the loan , either an allowance is established , or a charge-off is recorded , for the difference . smaller balance ( individually less than $ 1 million ) homogeneous loans are collectively evaluated . northern trust 's accounting policies for material nonaccrual loans is consistent across all classes of loans and leases . all loans and leases with tdr modifications are evaluated for additional expected credit losses . the nature and extent of further deterioration in credit quality , including a subsequent default , is considered in the determination of an appropriate level of allowance for credit losses . collateral dependent financial assets . a financial asset is collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral . most of northern trust 's collateral dependent credit exposure relates to its residential real estate portfolio for which the collateral is usually the underlying real estate property . for collateral dependent financial assets , it is northern trust 's policy to reserve or charge-off the difference between the amortized cost basis of the loan and the value of the collateral . premium , discounts , origination costs and fees . premiums and discounts on loans are recognized as an adjustment of yield using the interest method based on the contractual terms of the loan . certain direct origination costs and fees are netted , deferred and amortized over the life of the related loan as an adjustment to the loan 's yield . direct financing and leveraged leases . unearned lease income from direct financing and leveraged leases is recognized using the interest method . this method provides a constant rate of return on the unrecovered investment over the life of the lease . the rate of return and the allocation of income over the lease term are recalculated from the inception of the lease if during the lease term assumptions regarding the amount or timing of estimated cash flows change .	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 securities available for sale . the following tables provide the amortized cost , fair values , and remaining maturities of debt securities available for sale . table 60 : reconciliation of amortized cost to fair value of debt securities available for sale replace_table_token_65_th replace_table_token_66_th table 61 : remaining maturity of debt securities available for sale replace_table_token_67_th note : mortgage-backed and asset-backed securities are included in the above table taking into account anticipated future prepayments . 110 2020 annual report \| northern trust corporation notes to consolidated financial statements debt securities available for sale with unrealized losses . the following table provides information regarding debt securities available for sale with no credit losses reported that had been in a continuous unrealized loss position for less than twelve months and for twelve months or longer as of december 31 , 2020 and 2019. table 62 : debt securities available for sale in unrealized loss position with no credit losses reported replace_table_token_68_th replace_table_token_69_th as of december 31 , 2020 , 412 debt securities available for sale with a combined fair value of $ 6.4 billion were in an unrealized loss position , with their unrealized losses totaling $ 31.3 million . unrealized losses related to debt securities available for sale of $ 26.9 million and $ 2.8 million related to government sponsored agency and other asset-backed securities , respectively , are primarily attributable to changes in market interest rates and credit spreads since their purchase . as of december 31 , 2020 , 16 % of the corporate debt securities available for sale portfolio were backed by guarantees provided by u.s. and non-u.s. governmental entities .
the study was discontinued early after review of safety and efficacy data demonstrated proof-of-concept for activity on cholestatic biomarkers and had identified the need to reduce the dose in order to optimize for clinical safety and efficacy . in october 2016 , seladelpar received european medicines agency ( ema ) priority medicines ( prime ) designation for the treatment of pbc . the u.s. food and drug administration ( fda ) granted orphan drug designation to seladelpar for the treatment of pbc in november 2016. in december 2016 , we initiated a dose-ranging phase 2 study of seladelpar at lower daily doses of 5 and 10 mg in patients with pbc . in march 2016 , we announced results from a phase 2 clinical study evaluating seladelpar in 13 patients with homozygous familial hypercholesterolemia ( hofh ) , a rare , life-threatening , genetic disease characterized by marked elevations in plasma levels of low density lipoprotein ( ldl-c ) leading to severe atherosclerosis and the development of premature cardiovascular diseases . five patients in this study experienced what we believe was a clinically meaningful maximal decrease in ldl-c of greater than 20 % with three of them having decreases greater than 30 % . however , given the variability in responses observed in this study , including a number of patients that did not experience a decrease in ldl-c , we believe additional proof-of-concept data would be warranted before determining whether or not to advance to a registration study of seladelpar in patients with hofh . arhalofenate is being developed for the treatment of gout . arhalofenate has been studied in five phase 2 clinical trials in patients with gout and consistently demonstrated the ability to reduce gout flares and reduce serum uric acid ( sua ) . gout flares are recurring and painful episodes of joint inflammation that are triggered by the presence of monosodium urate crystals that form because of elevated sua levels . we believe the potential for arhalofenate to prevent or reduce flares while also lowering sua could differentiate it from currently available treatments for gout and classify it as the first potential drug in what we believe could be a new class of gout therapy referred to as urate lowering anti-flare therapy ( ulaft ) . arhalofenate has established a favorable safety profile in clinical trials involving over 1,100 patients exposed to date . we have completed end of phase 2 discussions with the fda and scientific advice discussions with the ema . 61 index to financial statements in late december 2016 , we entered into an exclusive licensing agreement with kowa pharmaceuticals america , inc. ( kowa ) for the development and commercialization of arhalofenate in the u.s. ( including all its possessions and territories ) . under the terms of the agreement , we received an up-front payment of $ 5 million in january 2017 , and will receive potential milestone payments of up to $ 10 million based on the initiation of specific development activities , and are eligible to receive up to an additional $ 190 million in payments based upon the achievement of additional development and sales milestones . we are also eligible to receive tiered , double digit royalties on future sales of arhalofenate products . kowa will be responsible for all development and commercialization costs . we retain full development and commercialization rights for the rest of the world and intend to partner arhalofenate in geographies outside the u.s. and its possessions and territories . we are an emerging growth company , as defined in the jumpstart our business startups act of 2012 , or the jobs act . under the jobs act , emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the jobs act until such time as those standards apply to private companies . we have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards , and , therefore , are subject to the same new or revised accounting standards as other public companies that are not emerging growth companies . equity financings on july 25 , 2014 , we completed a public offering of 4.6 million shares of our common stock at $ 5.50 per share which we refer to as our 2014 public offering . net proceeds to us in connection with the 2014 public offering were approximately $ 23.0 million after deducting underwriting discounts , commissions and offering expenses . on november 7 , 2014 , we filed a $ 100 million registration statement on form s-3 with the sec , which registration statement includes an at-the-market facility ( atm ) to sell up to $ 25 million of common stock under the registration statement . as of december 31 , 2016 , we have sold shares of common stock under the atm with aggregate net proceeds to us of $ 4.3 million . on july 27 , 2015 , pursuant to our shelf registration statement on form s-3 , we completed the issuance of 8.2 million shares of our common stock at $ 2.81 per share which we refer to as our 2015 public offering . net proceeds to us in connection with the 2015 public offering were approximately $ 21.1 million after deducting underwriting discounts , commissions and other offering expenses . during january 2017 , we sold an additional 124,100 shares of our common stock for net proceeds of $ 158,000 under the atm . on february 2 , 2017 , pursuant to our shelf registration statement on form s-3 , we completed the issuance of 5.2 million shares of our common stock at $ 1.93 per share which we refer to as our 2017 public offering . story_separator_special_tag other income , net reflected a gain of $ 76,000 and $ 11.1 million for the years ended december 31 , 2016 and 2015 , respectively , in each case due to the remeasurement of our warrant liabilities at fair value . during the year ended december 31 , 2016 , the gain recognized was due primarily to a reduction in the expected term and volatility of our investor warrants which are approaching expiration in september 2018. the changes in these assumptions offset the impact to the model of an increase in the price of our common stock from $ 1.69 at december 31 , 2015 , to $ 1.73 at december 31 , 2016. during the year ended december 31 , 2015 , the gain recognized was due to a decrease in the price of our common stock from $ 9.83 at december 31 , 2014 , to $ 1.69 at december 31 , 2015. income taxes as of december 31 , 2016 , we had federal net operating loss carryforwards of $ 229.1 million and state net operating loss carryforwards of $ 175.1 million to offset future taxable income , if any . in addition , we had federal research and development tax credit carry forwards of $ 7.7 million and state research and development tax credit carryforwards of $ 6.3 million . if not utilized , the federal net operating loss and tax credit carryforwards will expire beginning in 2024 through 2036 and the state net operating loss carryforwards will expire beginning in 2017 through 2036. the state tax credit will carry forward indefinitely . current federal and state tax laws include substantial restrictions on the utilization of net operating losses and tax credits in the event of an ownership change . even if the carryforwards are available , they may be subject to annual limitations , lack of future taxable income , or future ownership changes that could result in the expiration of the carryforwards before they are utilized . at december 31 , 2016 , we recorded a 100 % valuation allowance against our deferred assets of approximately $ 121.6 million as our management believes it is more likely than not that they will not be fully realized . if we determine in the future that we will be able to realize all or a portion of our net operating loss carryforwards , an adjustment to our net operating loss carryforwards would increase net income in the period in which we make such a determination . 67 index to financial statements story_separator_special_tag new roman `` > net cash used in operating activities for the year ended december 31 , 2016 , was $ 23.4 million primarily due to a net loss of $ 26.7 million , offset by $ 2.5 million of stock-based compensation , changes in operating assets and liabilities of $ 0.3 million , and other noncash items of $ 0.5 million . 69 index to financial statements net cash used in operating activities for the year ended december 31 , 2015 , was $ 23.3 million primarily due to a net loss of $ 15.5 million and change in fair value of our warrant liability of $ 11.1 million as a results of a decline in on our stock price , offset by $ 2.5 million of stock-based compensation , changes in operating assets and liabilities of $ 0.1 million , and other noncash items of $ 0.7 million . cash flows from investing activities net cash provided by investing activities was $ 27.1 million for the year ended december 31 , 2016 , as a result of net maturities of marketable securities which were used to fund our ongoing drug development and other operating activities . net cash used in investing activities was $ 11.1 million for the year ended december 31 , 2015 , primarily due to net purchases of marketable securities as we sought to invest funds raised in our equity and debt financings . cash flows from financing activities net cash used in financing activities was $ 1.0 million for the year ended december 31 , 2016 , due to scheduled repayments of principal on our facility loan . net cash provided by financing activities was $ 30.5 million for the year ended december 31 , 2015 , primarily as a result of proceeds from the 2015 facility loan and from our 2015 public offering , net of issuance costs . these cash inflows were offset by repayment of loan principal . capital requirements we have incurred operating losses since inception and had an accumulated deficit of $ 423.0 million at december 31 , 2016. as of december 31 , 2016 , we had cash , cash equivalents and marketable securities of approximately $ 17.0 million . we believe that these funds , which were obtained through recent equity and debt financings , together with additional proceeds received from financings and license agreements in january and february of 2017 of approximately $ 14.4 million , will allow us to continue operation through at least the next twelve months . we expect to incur substantial expenditures in the future for the development and potential commercialization of our product candidates . because of this , we expect our future liquidity and capital resource needs will be impacted by numerous factors , including but not limited to , the extent to which we receive milestone payments under our licensing agreement with kowa , and the timing of initiation of planned clinical trials , such as our phase 2 trials to study the therapeutic benefits of seladelpar on patients with certain orphan diseases . we will therefore continue to require additional financing to develop our products and fund future operating losses and will seek funds through equity financings , debt , collaborative or other arrangements with corporate sources , or through other sources of financing . it is unclear if or when any such financing transactions will occur , on satisfactory terms	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 financed our operations primarily through the sale of equity securities , licensing fees , issuance of debt and collaborations with third parties . as of december 31 , 2016 , cash , cash equivalents and marketable securities totaled $ 17.0 million , a decrease of $ 24.5 million , from december 31 , 2015 , which is consistent with our expectation to finance our operations . on july 25 , 2014 , we completed a public offering of 4.6 million shares of our common stock at $ 5.50 per share . net proceeds to us in connection with the 2014 public offering were approximately $ 23.0 million after deducting underwriting discounts , commissions and offering expenses . on november 7 , 2014 , we filed a $ 100 million registration statement on form s-3 with the sec , which registration statement includes an at-the-market facility ( atm ) to sell up to $ 25 million of common stock under the registration statement . in january and february 2015 , we sold shares of our common stock under this facility for net proceeds to us of $ 4.3 million . on july 27 , 2015 , pursuant to our shelf registration statement on form s-3 , we completed the issuance of 8.2 million shares of our common stock at $ 2.81 per share in an underwritten public offering . net proceeds to us in connection with this offering were approximately $ 21.1 million after deducting underwriting discounts , commissions and other offering expenses . on january 12 , 2017 , we received a $ 5.0 million upfront payment pursuant to our exclusive licensing agreement with kowa . for the development and commercialization of arhalofenate in the u.s. during january 2017 , we sold an additional 124,100 shares of our common stock for net proceeds of $ 158,000 under our atm . on february 2 , 2017 , pursuant to our shelf registration statement on form s-3 , we completed the issuance of 5.2 million shares of our common stock at $ 1.93 per share which we refer to as our 2017 public offering .
the world economy has experienced significant economic and political upheavals in recent history . in addition , credit supply has been constrained and financial markets have been particularly turbulent . protectionist trends , global growth and demand for the seaborne transportation of goods , including oil and oil products and overcapacity and deliveries of newly-built vessels have affected , and may further affect , the tanker market and shipping industry in general and the business , financial condition , results of operations and cash flows of the company . some of the key factors that have affected our business , financial condition , results of operations and cash flows include the following : levels of oil product demand and inventories ; supply and demand for crude oil and oil products ; charter hire levels ( under time and bareboat charters ) and the ability to re-charter vessels at competitive rates as their current charters expire ; developments in vessel values , which may affect compliance with covenants under credit facilities and or debt refinancing ; compliance with covenants in credit facilities , including covenants relating to the maintenance of vessel value ratios ; the level of debt and the related interest expense and amortization of principal ; access to debt and equity and the cost of capital required to acquire additional vessels ; supply and order-book of tanker vessels ; the ability to increase the size of the fleet and make additional acquisitions that are accretive to earnings ; the ability of the commercial and chartering operations to successfully employ vessels at economically attractive rates , particularly as charters expire and the fleet expands ; the continuing demand for crude oil and oil products from china , india , brazil and russia and other emerging markets ; the ability to comply with new maritime regulations , the more restrictive regulations for the transport of certain products and cargoes and the increased costs associated therewith ; changes in fuel prices , including as a result of the imposition of sulfur oxide emissions limits in 2020 under new regulations adopted by the imo ( for those vessels that are not retrofitted with scrubbers ) ; the effective and efficient technical management of the vessels ; the costs associated with upcoming drydocking of vessels ; the ability to obtain and maintain major international oil company approvals and to satisfy technical , health , safety and compliance standards ; the strength of and growth in the number of the customer relationships , especially with major international oil companies and major commodity traders ; the prevailing spot market rates and the number of vessels operating in the spot market ; 69 changes in laws , treaties or regulations applicable to the company , including regulations relating to environmental compliance ; and the ability to acquire and sell vessels at satisfactory prices . year ended december 31 , 2020 compared to the year ended december 31 , 2019 operating data the following tables represent the operating data for the years ended december 31 , 2020 and 2019 on a consolidated basis . replace_table_token_7_th results of operations total revenue total revenue increased by $ 16.1 million to $ 595.9 million during the year ended december 31 , 2020 as compared to $ 579.8 million for the year ended december 31 , 2019. the $ 16.1 million increase was principally 70 driven by a 9.0 % increase in total revenue days due to an additional 1,963 revenue days during the year ended december 31 , 2020 , primarily due to the merger coupled with stronger prevailing market conditions in both the crude tanker and product carrier segments during the first half of 2020 , when compared with the market conditions during the first half of 2019. this is offset by a reduction of 513 revenue days as a result of the sale of the atlantic aquarius and atlantic leo in september 2019 , and entering the 28 vessels into the pool during the last half of 2020 , as under the pool arrangements , voyage related costs , such as the cost of bunkers and port expenses , are borne by the pool . we recognize revenue from pool arrangements based on our portion of the net distributions reported by the pool , which represents the net voyage revenue of the pool after voyage expenses and certain pool manager fees . voyage expenses voyage expenses primarily consist of bunkers , port expenses , canal dues and commissions . commissions were paid to shipbrokers for negotiating and arranging charter party agreements on the company 's behalf . voyage expenses incurred during time charters and while vessels are operating in pools are paid for by the charterer and pool , respectively , except for commissions to the initial brokers , which were paid for by the company . voyage expenses incurred during voyage charters were paid for by the company . voyage expenses decreased by $ 42.1 million to $ 188.6 million during the year ended december 31 , 2020 as compared to $ 230.7 million for the year ended december 31 , 2019. the $ 42.1 million decrease in voyage expenses was predominantly driven by a reduction in bunker and port costs incurred as a result of operating 28 vessels in the pool as of december 31 , 2020 , with all 28 of the vessels operating fully in the pool as of september 30 , 2020. vessel expenses vessel expenses include crew wages and associated costs , the cost of insurance premiums , expenses relating to repairs and maintenance , lubricants and spare parts , technical management fees and other miscellaneous expenses . story_separator_special_tag as of december 31 , 2020 and december 31 , 2019 , we had $ 60 million and $ 15 million available and undrawn under our credit facilities , respectively . generally , our primary sources of funds have been cash from operations , undrawn amounts under our credit facilities and vessel sales . on december 27 , 2019 , we refinanced ( i ) the $ 460 million facility , ( ii ) the $ 235 million facility , and ( iii ) the $ 75 million facility with the proceeds of the $ 525 million facility . at december 31 , 2020 , we were in compliance with all financial covenants under each of our credit facilities . passage of environmental legislation or other regulatory initiatives have in the past had , and may in the future may have , a significant impact on our operations . regulatory measures can increase required costs related to operating and maintaining our vessels and may require us to retrofit our vessels with new equipment to comply with new or existing regulations . among other capital expenditures , in connection with the international maritime organization 's new limits for sulfur oxide emissions effective january 1 , 2020 , we contracted for the purchase and installation of scrubbers on five of our suezmax vessels . as of december 31 , 2020 , four of these scrubbers have been installed and fully paid , with two of these scrubbers having been installed on the aias and amoureux , which were sold and delivered to the buyer in january and february 2021 , respectively . the installation of the fifth scrubber has been cancelled , effectuating a $ 3.3 million loss due to the cancelled project . we may , in the future , determine to purchase additional scrubbers for installation on other vessels that we own or operate . in addition , with respect to vessels that are not retrofitted with scrubbers , we expect to incur expenditures to ensure those vessels are capable of efficiently using low-sulfur fuel , which expenditures are not expected to be significant or which have not yet been determined . we have installed ballast water treatment systems on 22 of our 64 vessels . we expect to install 16 ballast water treatment systems in 2021 , of which we have 13 contracts currently in place with a total contract value of $ 11.4 million , where $ 1.9 million has been paid as of december 31 , 2020. in december 2020 , we contracted to sell two of our sold two of our 2008-built suezmax vessels , the aias and amoureux , and delivered the two vessels to the purchaser in january and february 2021 , respectively . the sale of these two vessels generated gross cash proceeds to us of $ 45.1 million before our repayment of the related debt of $ 25.3 million on the two vessels . cash flows the following table summarizes our cash and cash equivalents provided by or used in operating , financing and investing activities for the periods presented below ( presented in millions ) : 75 replace_table_token_9_th story_separator_special_tag statements included elsewhere in this annual report on form 10-k. critical accounting policies our consolidated financial statements are prepared in accordance with u.s. gaap . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities , revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements . actual results may differ from these estimates under different assumptions or conditions . critical accounting policies are those that reflect significant judgments or uncertainties , and which could potentially result in materially different results under different assumptions and conditions . we have described below what our management believes are our most critical accounting policies . for a description of all of our significant accounting policies , see note 2 — significant accounting policies in our consolidated financial statements . 77 revenue recognition during the years ended december 31 , 2020 and 2019 , and the nine months ended december 31 , 2018 , revenues were generated from time charters , pool arrangements and voyage charters . we recognize revenues over the term of the time charter when there is a time charter agreement , where the rate is fixed or determinable , service is provided and collection of the related revenue is reasonably assured . we do not recognize revenue during days the vessel is off-hire . revenues from pool arrangements are recognized based on our portion of the net distributions reported by the relevant pool , which represents the net voyage revenue of the pool after voyage expenses and pool manager fees . for the nine months ended december 31 , 2018 , under a voyage charter agreement , the revenues are recognized on a pro rata basis based on the relative transit time in each period . the period over which voyage revenues are recognized commences at the time the vessel departs from its last discharge port and ends at the time the discharge of cargo at the next discharge port is completed . we do not begin recognizing revenue until a charter has been agreed to by us and the customer , even if the vessel has discharged its cargo and is sailing to the anticipated load port on its next voyage . we do not recognize revenue when a vessel is off-hire . estimated losses on voyages are provided for in full at the time such losses become evident . for the years ended december 31 , 2020 and 2019 , pursuant to the new revenue recognition guidance , which was adopted as of january 1 , 2019 , revenue for spot market voyage charters is recognized ratably over the total transit time of each voyage , which commences at the time the vessel arrives at the loading port and ends	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 net cash provided by operating activities during the year ended december 31 , 2020 and 2019 was $ 213.0 million and $ 63.4 million , respectively . the increase of $ 149.6 million was mainly attributable to more revenue days and higher charter rates that increased our revenues and overall net income by $ 36.5 million for the year ended december 31 , 2020 , when compared to the year ended december 31 , 2019 , and an increase of $ 91.70 million in cash provided by the changes in assets and liabilities for the comparative periods . net cash provided by operating activities during the year ended december 31 , 2019 and the nine months ended december 31 , 2018 was $ 63.4 million and $ 23.5 million , respectively . the increase of $ 39.9 million was mainly attributable to , among other factors , higher charter rates increasing our revenues offset by the negative effect of the changes in our operating assets and liabilities of $ 61.7 million . the changes in operating assets and liabilities were driven mainly by increases in trade accounts receivable during the year ended december 31 , 2019. net cash ( used in ) provided by investing activities net cash used in investing activities refers primarily to cash used for vessel acquisitions or dispositions and improvements . net cash used in investing activities refers primarily to cash used for vessel acquisitions and improvements , and the merger . net cash used by investing activities during the years ended december 31 , 2020 and 2019 was $ 13.3 million and $ 294.5 million , respectively .
all of our manufacturing locations remain operational with enhanced safety measures to help keep our employees , contractors , customers , and communities safe . in compliance with government protocols , certain of the company 's employees were instructed to work from home until government mandated restrictions allow for a safe return to the workplace . those working at our sites are required to follow appropriate procedures , including completion of multiple training sessions and performance of self- and on-site screenings , as well as adhere to our personal protective equipment , social distancing , and personal hygiene protocols . we are committed to safely maintaining plant operations and focusing on business continuity , while reliably supplying critical products to our customers . during 2020 , the covid-19 pandemic resulted in a rapid decline in demand which impacted most of our end markets and geographies . we continue to experience end market volatility , however , orders have begun to return and stabilize in many of our end markets . our financial position remains strong , however , we continue to closely monitor our fixed costs , capital expenditure plans , inventory , and capital resources to respond to changing conditions and to ensure we have the resources to meet our future needs . we believe that we will emerge from these events well positioned for long-term growth , though we can not reasonably estimate the duration and severity of this global pandemic or its ultimate impact on the global economy and our business and results . please refer to `` risk factors `` , part i , item 1a of this form 10-k for more information . results of operations the following table sets forth net sales and income by reportable segment and on a consolidated basis : replace_table_token_6_th the following “ results of operations of the year ended december 31 , 2020 compared with the year ended december 31 , 2019 ” section presents an analysis of the company 's consolidated operating results displayed in the consolidated statement of income . a discussion regarding our financial condition and results of operations for the year ended december 31 , 2019 compared to the year ended december 31 , 2018 can be found under item 7 in our 23 annual report on form 10-k for the fiscal year ended december 31 , 2019 , filed with the securities and exchange commission on february 20 , 2020. results of operations for the year ended december 31 , 2020 compared with the year ended december 31 , 2019 net sales for 2020 were $ 4,540.0 million , a decrease of $ 618.6 million or 12.0 % , compared with net sales of $ 5,158.6 million in 2019. the decrease in net sales for 2019 was due to a 13 % organic sales decline driven by a weak economy as a result of the covid-19 pandemic , an unfavorable 3 % from the reading divestiture , partially offset by a 4 % increase from acquisitions . eig net sales were $ 2,989.9 million in 2020 , a decrease of 10.0 % , compared with $ 3,322.9 million in 2019. emg net sales were $ 1,550.1 million in 2020 , a decrease of 15.6 % , compared with $ 1,835.7 million in 2019. total international sales for 2020 were $ 2,209.9 million or 48.7 % of net sales , a decrease of $ 265.0 million or 10.7 % , compared with international sales of $ 2,474.9 million or 48.0 % of net sales in 2019. the decrease in international sales was primarily driven by lower sales in europe as a result of the covid-19 pandemic . export shipments from the united states , which are included in total international sales , were $ 1,196.4 million in 2020 , a decrease of $ 109.8 million or 8.4 % , compared with $ 1,306.2 million in 2019. orders for 2020 were $ 4,624.4 million , a decrease of $ 649.9 million or 12.3 % compared with $ 5,274.3 million in 2019. the decrease in orders was due to an 11 % organic order decline driven by a weak economy as a result of the covid-19 pandemic , an unfavorable 3 % from the reading divestiture , partially offset by a favorable 1 % from acquisitions , and a favorable 1 % effect of foreign currency translation . the company 's backlog of unfilled orders at december 31 , 2020 was a record $ 1,802.2 million , an increase of $ 84.3 million or 4.9 % , compared with $ 1,717.9 million at december 31 , 2019. the company recorded 2020 realignment costs totaling $ 43.9 million in the first quarter of 2020 ( the “ 2020 realignment costs ” ) . the 2020 realignment costs were composed of $ 35.5 million in severance costs for a reduction in workforce and $ 8.4 million of asset write-downs , primarily inventory , in response to the impact of a weak global economy as a result of the covid-19 pandemic . see note 18 to the consolidated financial statements included in part ii , item 8 of this annual report on form 10-k for further details . the 2020 realignment costs ( in millions ) reported in the consolidated statement of income as well as the impact on segment operating margins ( in basis points ) in 2020 are as follows : replace_table_token_7_th segment operating income for 2020 was $ 1,095.6 million , a decrease of $ 157.6 million or 12.6 % , compared with segment operating income of $ 1,253.2 million in 2019. the decrease in segment operating income was primarily due to the lower sales discussed above and the $ 43.7 million of 2020 realignment costs , partially offset by the benefits of the company 's operational excellence initiatives . segment operating income , as a percentage of net sales , decreased to 24.1 % in 2020 , compared with 24.3 % in 2019. story_separator_special_tag while there are always changes in assumptions to reflect changing business and market conditions , the company 's overall methodology and the population of assumptions used have remained unchanged . in order to evaluate the sensitivity of the goodwill impairment test to changes in the fair value calculations , the company applied a hypothetical 10 % decrease in fair values of each reporting unit . the 2020 results ( expressed as a percentage of carrying value for the respective reporting unit ) showed that , despite the hypothetical 10 % decrease in fair value , the fair values of the company 's reporting units still exceeded their respective carrying values by 40 % to 779 % . the impairment test for indefinite-lived intangibles other than goodwill ( primarily trademarks and trade names ) consists of a comparison of the fair value of the indefinite-lived intangible asset to the carrying value of the asset as of the impairment testing date . the company can elect to perform a qualitative analysis to determine if it is more likely than not that the fair values of its indefinite-lived intangible assets are less than the respective carrying values of those assets . the company elected to bypass performing the qualitative screen . the company may elect to perform the qualitative analysis in future periods . the company estimates the fair value of its indefinite-lived intangibles using the relief from royalty method using level 3 inputs , which is a widely used valuation technique for such assets . the fair value derived from the relief from royalty method is determined by applying a royalty rate to a projection of net revenues discounted using an appropriate discount rate . each royalty rate is determined based on the profitability of the trade name to which it relates and observed market royalty rates . certain impairment models have discount rates calculated based on a debt/equity cost of capital . while the company uses the best available information to prepare its cash flow and discount rate assumptions , actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded intangible balances . while there are always changes in assumptions to reflect changing business and market conditions , the company 's overall methodology and the population of assumptions used have remained unchanged . the company 's acquisitions have generally included a significant goodwill component and the company expects to continue to make acquisitions . at december 31 , 2020 , goodwill and other indefinite-lived intangible assets totaled $ 4,977.9 million or 48.1 % of the company 's total assets . the company completed its required annual impairment tests in the fourth quarter of 2020 and determined that the carrying values of the company 's goodwill and indefinite-lived intangibles were not impaired . there can be no assurance that goodwill or indefinite-lived intangibles impairment will not occur in the future . pensions . the company has u.s. and foreign defined benefit and defined contribution pension plans . the most significant elements in determining the company 's pension income or expense are the assumed pension liability discount rate and the expected return on plan assets . the pension discount rate reflects the current interest rate at which the pension liabilities could be settled at the valuation date . at the end of each year , the company determines the assumed discount rate to be used to discount plan liabilities . in 29 estimating this rate for 2020 , the company considered rates of return on high-quality , fixed-income investments that have maturities consistent with the anticipated funding requirements of the plan . in estimating the u.s. and foreign discount rates , the company 's actuaries developed a customized discount rate appropriate to the plans ' projected benefit cash flow based on yields derived from a database of long-term bonds at consistent maturity dates . the company determines the expected long-term rate of return based primarily on its expectation of future returns for the pension plans ' investments . additionally , the company considers historical returns on comparable fixed-income and equity investments and adjusts its estimate as deemed appropriate . income taxes . the process of providing for income taxes and determining the related balance sheet accounts requires management to assess uncertainties , make judgments regarding outcomes and utilize estimates . the company conducts a broad range of operations around the world and is therefore subject to complex tax regulations in numerous international taxing jurisdictions , resulting at times in tax audits , disputes and potential litigation , the outcome of which is uncertain . management must make judgments currently about such uncertainties and determine estimates of the company 's tax assets and liabilities . to the extent the final outcome differs , future adjustments to the company 's tax assets and liabilities may be necessary . the company assesses the realizability of its deferred tax assets , taking into consideration the company 's forecast of future taxable income , available net operating loss carryforwards and available tax planning strategies that could be implemented to realize the deferred tax assets . based on this assessment , management must evaluate the need for , and the amount of , valuation allowances against the company 's deferred tax assets . to the extent facts and circumstances change in the future , adjustments to the valuation allowances may be required . the company assesses the uncertainty in its tax positions , by applying a minimum recognition threshold which a tax position is required to meet before a tax benefit is recognized in the financial statements . once the minimum threshold is met , using a more likely than not standard , a series of probability estimates is made for each item to properly measure and record a tax benefit . the tax benefit recorded is generally equal to the highest probable outcome that is more than 50 % likely to be realized after full disclosure and resolution of 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 cash provided by operating activities totaled a record $ 1,281.0 million in 2020 , an increase of $ 166.6 million or 14.9 % , compared with $ 1,114.4 million in 2019. the increase in cash provided by operating activities for 2020 was primarily due to strong working capital management . free cash flow ( cash flow provided by operating activities less capital expenditures ) was a record $ 1,206.8 million in 2020 , compared with $ 1,012.1 million in 2019. ebitda ( earnings before interest , income taxes , depreciation and amortization ) was $ 1,421.6 million in 2020 , compared with $ 1,388.3 million in 2019. free cash flow and ebitda are presented because the company is aware that they are measures used by third parties in evaluating the company . ( see the “ notes to selected financial data ” included in item 6 in this annual report on form 10-k for a reconciliation of u.s. gaap measures to comparable non-gaap measures ) . cash provided by investing activities totaled $ 61.6 million in 2020 , compared with cash used by investing activities of $ 1,150.9 million in 2019. in 2020 , the company paid $ 116.5 million , net of cash acquired , to purchase intellipower in january 2020 and received proceeds of $ 245.3 million from the sale of its reading business . additions to property , plant and equipment totaled $ 74.2 million in 2020 , compared with $ 102.3 million in 2019. cash used by financing activities totaled $ 539.4 million in 2020 , compared with $ 72.9 million of cash provided by financing activities in 2019. at december 31 , 2020 , total debt , net was $ 2,413.7 million , compared with $ 2,768.7 million at december 31 , 2018. in 2020 , short-term borrowings decreased $ 328.0 million , compared with an increase of $ 130.7 million in 2019. long-term borrowings decreased $ 102.9 million in 2020 , compared to no change in long-term borrowings in 2019. in october 2018 , the company along with certain of its foreign subsidiaries amended and restated its credit agreement .
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 , 15 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 , benefits and stock award compensation expense by $ 4.4 million , selling and other general expenses of $ 2.5 million , partially offset by decreased long-term incentive bonus expense of $ 9.0 million . amortization of intangibles . amortization of intangibles increased $ 0.9 million , or 60.0 % , to $ 2.4 million for the fiscal year ended april 30 , 2016 , compared to $ 1.5 million for the fiscal year ended may 2 , 2015 . the increase relates to the company shortening the estimated useful lives of some specific patents due to business conditions at the end of fiscal 2015. gain on the sale of business . during fiscal 2015 , we sold our 100 % ownership interest in our trace laboratories businesses for $ 11.7 million . the net assets of the businesses had a book value of $ 4.0 million . story_separator_special_tag 21 selling and administrative expenses . selling and administrative expenses increased $ 0.2 million , or 4.3 % , to $ 4.8 million for the fiscal year ended april 30 , 2016 , compared to $ 4.6 million for the fiscal year ended may 2 , 2015 . the increase is primarily due to increased headcount and professional fees in our medical devices , inverters and battery systems operating units , partially offset by the sale of trace laboratories businesses . loss from operations the other segment loss from operations increased $ 2.4 million to $ 8.8 million for the fiscal year ended april 30 , 2016 , compared to $ 6.4 million for the fiscal year ended may 2 , 2015 . the increased loss was primarily due to the sale of trace laboratories business , increased development expenses , professional fees and headcount . results of operations for the fiscal year ended may 2 , 2015 , as compared to the fiscal year ended may 3 , 2014 . consolidated results below is a table summarizing results for the fiscal years ended : ( in millions ) ( `` n/m `` equals not meaningful ) replace_table_token_9_th 22 net sales . consolidated net sales increased $ 108.3 million , or 14.0 % , to $ 881.1 million for the fiscal year ended may 2 , 2015 , from $ 772.8 million for the fiscal year ended may 3 , 2014. the automotive segment net sales increased $ 106.0 million , or 20.3 % , to $ 628.4 million for fiscal 2015 , from $ 522.4 million for fiscal 2014 , due to higher sales volumes for the gm center console program . sales volumes also increased for transmission lead-frame assemblies , partially offset by currency rate fluctuations , lower tooling sales , lower sales volumes for the ford center console program and certain higher pricing concessions . the interface segment net sales decreased $ 9.1 million , or 5.3 % , to $ 161.7 million for fiscal 2015 , compared to $ 170.8 million for fiscal 2014 , primarily due to lower appliance and radio remote control sales volumes , partially offset with increased sales volumes of data solutions products . the power products segment net sales increased $ 13.2 million , or 18.2 % , to $ 85.7 million for fiscal 2015 , compared to $ 72.5 million for fiscal 2014 , primarily due to higher sales volumes of powerrail , cabling and busbar products , partially offset with lower sales volumes of a by-pass switch . translation of foreign operations net sales for the fiscal year ended may 2 , 2015 decreased net sales by $ 10.9 million , or 1.7 % , in fiscal 2015 , compared to the average currency rates in fiscal 2015 , primarily due to the strengthening of the u.s. dollar compared to the euro . cost of products sold . consolidated cost of products sold increased $ 46.2 million , or 7.5 % , to $ 662.3 million for the fiscal year ended may 2 , 2015 , compared to $ 616.1 million for the fiscal year ended may 3 , 2014. consolidated cost of products sold as a percentage of net sales decreased to 75.2 % for fiscal 2015 , compared to 79.7 % for fiscal 2014. the automotive and power products segments both experienced a decrease in cost of products sold as a percentage of net sales due to manufacturing efficiencies related to the increased sales volumes , primarily in north america and asia . in addition , cost of products sold was favorably impacted in the automotive segment in fiscal 2015 by the ramp-up of production in our lower cost manufacturing operation in egyp t and manufacturing improvements at the company 's captive molding business in mexico . the interface segment experienced a slightly higher cost of goods sold as a percentage of net sales primarily due to lower appliance sales volumes and increased development costs for the data solutions products . the other segment experienced an increase in cost of products sold as a percentage of net sales primarily due to increased development costs in our battery systems and medical products businesses . gross profit . consolidated gross profit increased $ 62.1 million , or 39.6 % , to $ 218.8 million for the fiscal year ended may 2 , 2015 , as compared to $ 156.7 million for the fiscal year ended may 3 , 2014. gross margins as a percentage of net sales increased to 24.8 % for the fiscal year ended april 30 , 2016 , compared to 20.3 % for the fiscal year ended may 2 , 2015. the increase is primarily due to the automotive and power products segments manufacturing efficiencies related to the higher sales volumes , other manufacturing improvements at the company 's captive molding business and the ramp-up of production in our lower cost manufacturing facility in egypt . the interface segment experienced a decrease in gross margins as a percentage of net sales primarily due to lower appliance sales volumes and increased development costs for our data solutions products . the other segment experienced a decrease in gross margins as a percentage of net sales primarily due to increased development costs in our battery systems and medical products businesses . impairment of goodwill and intangible assets . in fiscal 2015 management performed the annual impairment analysis of goodwill for our touchsensor reporting unit in our interface segment and determined that the asset was impaired , resulting from a fourth quarter change in strategic direction . the company recorded an impairment charge of $ 11.1 million related to these assets . in fiscal 2014 , due to market conditions , management performed an impairment analysis of the intangible asset for our eetrex reporting unit in our other segment and determined that the asset was impaired . the company recorded an impairment charge of $ 1.7 million related to 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.	net cash used in investing activities increased by $ 10.3 million , to $ 21.6 million in fiscal 2016 , compared to $ 11.3 million in fiscal 2015 . purchases of property , plant and equipment increased by $ 0.7 million , to $ 23.2 million in fiscal 2016 , compared to $ 22.5 million in fiscal 2015 . purchases for both periods primarily relate to equipment purchases for new product launches . in fiscal 2016 , we sold a building for $ 1.6 million . in addition , fiscal 2016 included a $ 1.1 million escrow payment related to the sale of our investment in lumidigm . in fiscal 2015 , we sold our interest in our trace laboratories businesses for $ 11.7 million . we received $ 11.2 million related to the sale , with the remaining $ 0.5 million held in escrow . the escrow amount is expected to be paid in fiscal 2017. investing activities — fiscal 2015 compared to fiscal 2014 net cash used in investing activities decreased by $ 11.6 million , to $ 11.3 million in fiscal 2015 , compared to $ 22.9 million in fiscal 2014. purchases of property , plant and equipment of decreased by $ 6.5 million , to $ 22.5 million in fiscal 2015 , compared to $ 29.0 million in fiscal 2014. purchases for both periods primarily relate to equipment purchases for new product launches .
however , we did benefit from a return to normal crop volumes in brazil , and the resultant gains from higher volumes and lower factory unit costs there . although our working capital requirements were higher in fiscal year 2018 , we maintained our strong balance sheet . our uncommitted inventory levels , at march 31 , 2018 , remained within our target range , and we are currently using some of our cash balances to fund the fiscal year 2019 crop . we expect our working capital requirements will be higher in fiscal year 2019 due to the recovery of the african burley crops and strong demand for wrapper tobacco , which has a longer life cycle . the next crop cycle , which will be reflected in our fiscal year 2019 results , has begun with green tobacco purchases in brazil . farmer deliveries there are a little slower this year , but the crop quality is very good . we are also seeing the recovery of african burley production volumes and improved north american shipments , and if the global leaf market remains stable , we expect higher total sales volumes for fiscal year 2019. on may 23 , 2018 , we announced a new capital allocation strategy that demonstrates our focus on sustainable shareholder value creation . the enhanced strategy is a result of an extensive review of our business , as well as the market environment , that began in november 2016. we believe the strategy capitalizes on our core competencies and ensures that we are well positioned for the future . in connection with this newly announced strategy , and as part of our commitment to shareholder returns , our board raised our quarterly dividend rate to $ 0.75 per share ( $ 3.00 per share annual equivalent ) , a 36 % increase from the prior quarterly dividend rate . we are celebrating the 100 th anniversary of our company this year . for one hundred years , we have had a rich history of adapting to change , finding innovative solutions to serve our customers and meet their leaf tobacco needs , and achieving results that benefit all of our stakeholders . although we operate in a mature industry , our mission is to remain the world 's leading independent 19 leaf tobacco supplier . in recent years , we have increased our market share and enhanced the range of services we provide to certain customers , including direct buying , agronomic support , and specialized processing services . we are continually exploring options to capitalize on the strengths of our core competencies and seek growth opportunities in and related to tobacco and our global operations . as we move into our next 100 years , we will continue our commitment to leadership in setting industry standards , operating with transparency , providing products that are responsibly-sourced , and investing in and strengthening the communities where we operate . results of operations amounts described as net income and earnings per diluted share in the following discussion are attributable to universal corporation and exclude earnings related to non-controlling interests in subsidiaries . the total for segment operating income referred to in the discussion below is a non-gaap financial measure . this measure is not a financial measure calculated in accordance with gaap and should not be considered as a substitute for net income , operating income , cash flows from operating activities or any other operating performance measure calculated in accordance with gaap , and it may not be comparable to similarly titled measures reported by other companies . we have provided a reconciliation of the total for segment operating income to consolidated operating income in note 14 . `` operating segments `` to the consolidated financial statements in item 8. we evaluate our segment performance excluding certain significant charges or credits . we believe this measure , which excludes these items that we believe are not indicative of our core operating results , provides investors with important information that is useful in understanding our business results and trends . fiscal year ended march 31 , 2018 , compared to the fiscal year ended march 31 , 2017 net income for the fiscal year ended march 31 , 2018 , was $ 105.7 million , or $ 4.14 per diluted share , compared with $ 106.3 million , or $ 0.88 per diluted share for the same period of the prior fiscal year . the fiscal year 2017 results included a one-time reduction of earnings available to common shareholders of $ 74.4 million , or $ 2.99 per diluted share , from the conversion for cash of the remaining outstanding shares of our series b 6.75 % convertible perpetual preferred stock under the mandatory conversion in january 2017. that reduction , the effect of a reduction in income tax expense from the enactment of the tax cuts and jobs act in december 2017 , and certain other non-recurring items are detailed in other items below . excluding those items , diluted earnings per share for fiscal year 2018 of $ 3.96 decreased by $ 0.01 compared to the same period last year . operating income of $ 171.5 million for the year ended march 31 , 2018 , decreased by $ 6.9 million compared to the year ended march 31 , 2017. segment operating income was $ 180.6 million for the year ended march 31 , 2018 , a decrease of $ 7.9 million , compared to the year ended march 31 , 2017 , as improved results in our other regions and other tobacco operations segments were offset by declines in our north america segment . revenues of $ 2.0 billion for fiscal year 2018 were down only 1.8 % compared to fiscal year 2017 , as lower volumes , primarily in africa , were largely offset by higher sales prices and processing revenues . story_separator_special_tag accounting pronouncements see `` accounting pronouncements `` in note 1 to the consolidated financial statements in item 8 of this annual report for a discussion of recent accounting pronouncements issued by the financial accounting standards board ( `` fasb `` ) that will become effective and be adopted by the company in future reporting periods . 23 liquidity and capital resources overview our working capital requirements in fiscal year 2018 were higher than those in fiscal year 2017 on higher green leaf purchase volumes in brazil and increased wrapper tobacco purchases to meet strong demand . the larger brazilian leaf volumes resulted from crop recoveries there following reduced crops in fiscal year 2017 , largely from el nino weather patterns . similar to the last several years , our shipments were heavily weighted to the second half of the fiscal year . in fiscal year 2018 , we generated $ 83.2 million in cash flows from our operating activities , and our liquidity was sufficient to meet our needs . we also continued our conservative financial policies , maintained our discipline on using our free cash flow , and returned funds to shareholders . our liquidity and capital resource requirements are predominately short-term in nature and primarily relate to working capital required for tobacco crop purchases . working capital needs are seasonal within each geographic region . the geographic dispersion and the timing of working capital needs permit us to predict our general level of cash requirements , although crop sizes , prices paid to farmers , shipment and delivery timing , and currency fluctuations affect requirements each year . peak working capital requirements are generally reached during the first and second fiscal quarters . each geographic area follows a cycle of buying , processing , and shipping tobacco , and in many regions we also provide agricultural materials to farmers during the growing season . the timing of the elements of each cycle is influenced by such factors as local weather conditions and individual customer shipping requirements , which may change the level or the duration of crop financing . despite a predominance of short-term needs , we maintain a portion of our total debt as long-term to reduce liquidity risk . we also periodically have large cash balances that we utilize to meet our working capital requirements . we believe that our financial resources are adequate to support our capital needs for at least the next twelve months . our seasonal borrowing requirements primarily relate to purchasing crops in south america and africa and can increase from march to september by more than $ 300 million . the funding required can vary significantly depending upon such factors as crop sizes , the price of leaf , the relative strength of the u.s. dollar , and the timing of shipments and customer payments . we deal with this uncertainty by maintaining substantial credit lines and cash balances . in addition to our operating requirements for working capital , we expect to spend around $ 35 to $ 45 million during fiscal year 2019 for capital expenditures to maintain our facilities and invest in opportunities to grow and improve our businesses . we also expect to provide about $ 15 million in funding to our pension plans . we have no long-term debt maturing before fiscal year 2020. story_separator_special_tag property , plant , and equipment . depreciation expense was approximately $ 34.8 million and $ 35.9 million , respectively , in fiscal years 2018 and 2017. generally , our capital spending on maintenance projects is at a level below depreciation expense in order to maintain strong cash flow . in addition , from time to time , we undertake projects that require capital expenditures when we identify opportunities to improve efficiencies , add value for our customers , and position ourselves for future growth . we currently plan to spend approximately $ 35 to $ 45 million in fiscal year 2019 on capital projects for maintenance of our facilities and other investments to grow and improve our businesses . we expect that about 25 % of those capital expenditures will be for non-maintenance investments in our businesses . outstanding debt and other financing arrangements we consider the sum of notes payable and overdrafts , long-term debt ( including any current portion ) , and customer advances and deposits , less cash , cash equivalents , and short-term investments on our balance sheet to be our net debt . we also consider our net debt plus shareholders ' equity to be our net capitalization . net debt increased by $ 32.5 million to $ 187.4 million during the fiscal year ended march 31 , 2018. the increase primarily reflects lower cash balances . net debt as a percentage of net capitalization was approximately 12 % at march 31 , 2018 , up from 11 % at march 31 , 2017 , and it remains lower than our target limit for peak seasonal borrowings of 30 % to 40 % of net capitalization . 25 as of march 31 , 2018 , we had $ 430 million available under a committed revolving credit facility that will mature in december 2019 , and we , together with our consolidated affiliates , had approximately $ 294 million in uncommitted lines of credit , of which approximately $ 247 million were unused and available to support seasonal working capital needs . the financial covenants under our committed revolving credit facility require us to maintain certain levels of tangible net worth and observe restrictions on debt levels . as of march 31 , 2018 , we were in compliance with all covenants of our debt agreements . we also have an active , undenominated universal shelf registration filed with the sec in november 2017 that provides for future issuance of additional debt or equity securities . we have no long-term debt maturing in fiscal year 2019. derivatives from time to time , we use interest rate	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 our operations generated about $ 83.2 million in operating cash flows in fiscal year 2018. that amount was about $ 167.1 million lower than the $ 250.3 million we generated in fiscal year 2017 , largely due to higher working capital requirements in fiscal year 2018. during the fiscal year ended march 31 , 2018 , we spent $ 34.0 million on capital projects and returned $ 76.3 million to shareholders in the form of dividends and share repurchases . at march 31 , 2018 , cash balances totaled $ 234.1 million . working capital working capital at march 31 , 2018 , was about $ 1.3 billion , up $ 27.9 million from last fiscal year 's level , largely due to increased purchase volumes in brazil and in our dark tobacco operations due to strong demand for wrapper style tobacco , and decreased trade payables and accrued expenses in brazil and africa in fiscal year 2018 compared to fiscal year 2017. tobacco inventories of $ 679.4 million at march 31 , 2018 , were up $ 113.5 million compared to inventory levels at the end of the prior fiscal year , largely on delayed north american shipments due to reduced transportation availability and increased wrapper inventories . we usually finance inventory with a mix of cash , notes payable , and customer deposits , depending on our borrowing capabilities , interest rates , and exchange rates , as well as those of our customers . we generally do not purchase material quantities of tobacco on a speculative basis . however , when we contract directly with farmers , we are obligated to buy all stalk positions , which may contain less marketable leaf styles .
for our gene therapy program , we have partnered with st. jude children 's research hospital ( “ st . jude ” ) in the development of a first-in-class ex vivo lentiviral treatment of x-linked severe combined immunodeficiency ( “ xscid ” ) and for our car t therapies we have partnered with the city of hope national medical center ( “ coh ” ) , fred hutchinson cancer research center ( “ fred hutch ” ) and nationwide children 's hospital ( “ nationwide ” ) . gene therapy in partnership with st. jude and the national institutes of health ( “ nih ” ) , our gene therapy program is being conducted under an exclusive license to develop a potentially curative treatment for xscid , a rare genetic immune system condition also known as bubble boy disease in which affected patients do not live beyond infancy without treatment . this first-in-class ex vivo lentiviral gene therapy is currently in two phase 1/2 clinical trials involving two different autologous cell products : a multicenter trial of the mb-107 product in newly diagnosed infants sponsored by st. jude and a single-center trial of the mb-207 product in previously transplanted patients sponsored by the nih . 61 in may 2020 , we submitted an investigational new drug ( “ ind ” ) application with the fda to initiate a registrational multicenter phase 2 clinical trial of mb-107 in newly diagnosed infants with xscid who are under the age of two . in response , the fda identified chemistry , manufacturing , and control ( “ cmc ” ) hold issues that mustang satisfactorily addressed in a december 2020 submission to the fda , and the cmc hold was removed in january 2021. the trial is expected to enroll 10 patients who , together with 15 patients enrolled in the current multicenter trial led by st. jude , will be compared with 25 matched historical control patients who have undergone hematopoietic stem cell transplant ( “ hsct ” ) . the primary efficacy endpoint will be event-free survival and we are targeting topline data from the trial in the second half of 2022 . we further expect to file an ind in the second quarter of 2021 for a registrational multicenter phase 2 clinical trial of lentiviral gene therapy in previously transplanted xscid patients ( mb-207 ) . we anticipate enrolling 20 patients , and we are targeting topline data for this trial in the first half of 2023 . car t therapies our pipeline of car t therapies is being developed under exclusive licenses from several world class research institutions . our strategy is to license these technologies , support preclinical and clinical research activities by our partners and transfer the underlying technology to our cell processing facility located in worcester , massachusetts , to conduct our own clinical trials . we are developing car t therapies for hematologic malignancies in partnership with coh targeting cd123 ( mb-102 ) and cs1 ( mb-104 ) and with fred hutch targeting cd20 ( mb-106 ) . phase 1 clinical trials sponsored by coh for mb-102 and mb-104 and by fred hutch for mb-106 are underway . in the third quarter of 2019 the fda approved our ind application to initiate a multi-center phase 1/2 clinical trial of mb-102 , and our clinical trial began enrollment in 2020 for the treatment of patients with blastic plasmacytoid dendritic cell neoplasm . we expect to file an ind for mb-106 in the first quarter of 2021 and to initiate our own phase 1/2 clinical trial shortly thereafter for the treatment of patients with non-hodgkin lymphoma and chronic lymphocytic leukemia . we plan to file an ind for a multicenter phase 1/2 trial for mb-104 for the treatment of patients with multiple myeloma once coh has established a safe and effective dose . we are also developing car t therapies for solid tumors in partnership with coh targeting il13r α 2 ( mb-101 ) , her2 ( mb-103 ) and psca ( mb-105 ) . in addition , we have partnered with nationwide for the c134 oncolytic virus ( mb-108 ) in order to enhance the activity of mb-101 for the treatment of patients with glioblastoma multiforme ( “ gbm ” ) . phase 1 clinical trials sponsored by coh for mb-101 , mb-103 and mb-105 are underway . a phase 1 clinical trial sponsored by the university of alabama at birmingham ( “ uab ” ) for mb-108 began during the third quarter of 2019 and , in the fourth quarter of 2021 , we plan to file an ind for the combination of mb-101 and mb-108 for the treatment of patients with gbm . we also plan to file inds and initiate our own clinical trials for mb-103 for the treatment of patients with metastatic breast cancer to brain and for mb-105 for the treatment of patients with prostate and pancreatic cancer . recent events mb-106 ( cd20 car t for non-hodgkin lymphoma and chronic lymphocytic leukemia ) in february 2020 , we announced that the first subject treated with the optimized mb-106 ( cd20-targeted , autologous car t cell therapy ) manufacturing process , developed in collaboration with fred hutch , achieved a complete response at the lowest starting dose in an ongoing phase 1/2 clinical trial . the trial is evaluating the safety and efficacy of mb-106 in subjects with relapsed or refractory b-cell non-hodgkin lymphomas and chronic lymphocytic leukemia . in december 2020 , at the 62 nd american society of hematology annual meeting , mustang and fred hutch announced interim data in patients with relapsed or refractory b-cell nhl from the ongoing phase 1/2 clinical trial of mb-106 at fred hutch . story_separator_special_tag public offering of common stock on june 11 , 2020 , we announced the pricing of an underwritten public offering , whereby we sold 10,769,231 shares of common stock , ( plus a 30-day option to purchase up to an additional 1,615,384 shares of common stock , which was partially exercised ) at a price of $ 3.25 per share for gross proceeds of approximately $ 37.2 million , before deducting underwriting discounts and commissions and offering expenses . in connection with the public offering , the company paid aggregate fees of approximately $ 2.4 million for net proceeds of approximately $ 34.8 million . 64 authorized shares on november 11 , 2020 , the company 's board adopted resolutions of the board to ratify , approve and recommend stockholder approval of an amendment to the company 's amended and restated certificate of incorporation , as amended , to revise article iv , section a thereof in order to effect an increase in the authorized number of shares of the company 's common stock , par value $ 0.0001 , from 85 million to 125 million ( the “ amendment ” ) . on november 11 , 2020 , the company received approval of the amendment by written consent in lieu of a meeting from the holders of a majority of issued and outstanding shares of the company 's common and preferred stock . the increase in authorized shares to 125 million became effective on december 4 , 2020. to date , we have not received approval for the sale of our product candidates in any market and , therefore , have not generated any product sales from our product candidates . in addition , we have incurred substantial operating losses since our inception , and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable . as of december 31 , 2020 , we have an accumulated deficit of $ 185.5 million . we are a majority-controlled subsidiary of fortress biotech , inc. ( “ fortress ” ) . as a “ controlled company ” we rely on the exemption provided by nasdaq listing rule 5615 ( c ) ( 2 ) , which permits us to maintain less than a majority of independent directors on our board . critical accounting policies and use of estimates see note 2 to our financial statements . results of operations comparison of the years ended december 31 , 2020 and 2019 replace_table_token_1_th research and development expenses research and development expenses primarily consist of personnel related expenses , including salaries , benefits , travel , and other related expenses , stock-based compensation , payments made to third parties for license , sponsored research and milestone costs related to in-licensed products and technology , payments made to third party contract research organizations for preclinical and clinical studies , investigative sites for clinical trials , consultants , the cost of acquiring and manufacturing clinical trial materials , costs associated with regulatory filings , laboratory costs and other supplies . research and development expense increased by approximately $ 7.2 million from $ 30.0 million for the year ended december 31 , 2019 to $ 37.2 million for the year ended december 31 , 2020. the increase in research and development expense for the year ended december 31 , 2020 was primarily attributable to the following : ● $ 2.9 million for increased research and development employee compensation costs , including stock compensation , as we continue to increase research and development headcount to support development of our clinical programs ; ● $ 2.5 million for increased lentiviral vector manufacturing to support mustang-sponsored clinical trials ; 65 ● $ 1.6 million for increased costs for sponsored research and clinical trial agreements with our academic partners ; ● approximately $ 1.4 million for increased other costs including consulting , outside services , laboratory supplies and depreciation ; and ● offset by approximately $ 1.2 million for decreased costs for third-party contract research organizations . research and development expenses - licenses acquired increased by $ 3.8 million from $ 6.3 million for the year ended december 31 , 2019 to $ 10.1 million for the year ended december 31 , 2020. the increase in research and development expenses - licenses acquired for the year ended december 31 , 2020 was primarily attributable to the following : ● approximately $ 2.7 million for the annual stock dividend to fortress ; ● $ 1.3 million related to our licenses with coh ; ● $ 0.3 million related to our cd20 license with fred hutch ; ● $ 0.1 million related to our lentiboost tm license with sirion ; and ● offset by approximately $ 0.5 million for decreased costs related to our licenses with nationwide , ucla and csl behring ( calimmune ) . we expect our research and development activities to increase as we develop our existing product candidates and potentially acquire new product candidates , reflecting increasing costs associated with the following : ● employee-related expenses , which include salaries and benefits ; ● license fees and milestone payments related to in-licensed products and technology ; ● expenses incurred under agreements with contract research organizations , investigative sites and consultants that conduct our clinical trials and our preclinical activities ; ● facility expenses , which include rent , utilities and maintenance costs ; ● the cost of acquiring and manufacturing clinical trial materials ; and ● costs associated with non-clinical activities , and regulatory approvals . general and administrative expenses general and administrative expenses consist primarily of salaries and related expenses , including stock-based compensation , for executives and other administrative personnel , recruitment expenses , professional fees and other corporate expenses , including investor relations , legal activities including patent fees , and facilities-related expenses . general and administrative expense decreased by approximately $ 0.1 million from $ 9.6 million for	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 incurred substantial operating losses and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable . as of december 31 , 2020 , the company had an accumulated deficit of $ 185.5 million . the company has funded its operations to date primarily through the sale of equity and its venture debt financing agreement ( the `` loan agreement '' ) with horizon technology finance corporation ( `` horizon '' ) , herein referred to as the `` horizon notes . '' in september 2020 , we repaid the horizon notes in full all amounts that were outstanding under the loan agreement , which was comprised of $ 15.0 million face value of the outstanding notes , $ 112,500 accrued and unpaid interest , a $ 750,000 loan termination fee and prepayment penalties of $ 550,000. the company expects to continue to use the proceeds from previous financing transactions primarily for general corporate purposes , including financing the company 's growth , developing new or existing product candidates , and funding capital expenditures , acquisitions and investments . the company currently anticipates that its cash and cash equivalents balances at december 31 , 2020 , are sufficient to fund its anticipated operating cash requirements for at least one year from the date of this form 10-k. from january 1 , 2021 through march 18 , 2021 , the company issued approximately 10.6 million shares of common stock at an average price of $ 4.24 per share for gross proceeds of $ 44.9 million under the atm agreement . the company will be required to expend significant funds in order to advance the development of its product candidates .
these solutions provide data-management and performance-measurement tools , as well as customizable accounting , reporting , and billing functions delivered through the commercial software application products known as portfoliocenter desktop , portfoliocenter hosted , portfolioservices and service bureau . tamarac acquired portfoliocenter to better serve small and mid-size ria firms . portfoliocenter has become a part of our envestnet wealth solutions segment . in connection with the portfoliocenter acquisition , tamarac paid $ 17,500 in cash and funded the acquisition with available cash resources . the pc seller is also entitled to an earn-out payment based on a percentage of portfoliocenter 's eligible revenue for the twelve-month period beginning april 1 , 2020. the discounted amount of the contingent consideration liability is estimated to be $ 8,200 and is included as a non-current liability in the consolidated balance sheets . 40 acquisition of pietech on may 1 , 2019 , we acquired all of the outstanding shares of capital stock of pietech , inc. , a virginia corporation ( “ pietech ” ) . pietech empowers financial advisors to use financial planning to efficiently motivate their clients to create , implement and maintain financial plans that best meet their lifetime financial goals . the technology and operations of pietech , which now operates as envestnet moneyguide , has been integrated into our envestnet wealth solutions segment . the acquisition of pietech ( the “ pietech acquisition ” ) establishes us as a leader in financial planning solutions , providing advisors and their clients with access to a full spectrum of financial planning capabilities , and offering a broad range of data-driven , financial plan-informed financial wellness solutions , both domestically and internationally over time . integration of pietech 's moneyguide software with our integrated technology platform is expected to reduce friction and enhance productivity for advisors . in connection with the pietech acquisition , we paid net cash consideration of $ 298,714 , subject to the working capital adjustments set forth in the merger agreement , and issued 3,184,713 shares of envestnet common stock to the sellers . we funded the pietech acquisition with available cash resources and borrowings under its revolving credit facility . in connection with the pietech acquisition , we established a retention bonus pool consisting of approximately $ 30,000 of cash and restricted stock units to be granted to employees and management of pietech as inducement grants . as a result , we adopted the envestnet , inc. 2019 acquisition equity incentive plan ( the “ 2019 equity plan ” ) in order to make inducement grants to certain pietech employees who will join envestnet \| moneyguide . we agreed to grant at future dates , not earlier than the sixty day anniversary of the pietech acquisition , up to 301,469 shares of envestnet common stock in the form of restricted stock units ( “ rsu s ” ) and performance stock units ( “ psu s ” ) pursuant to the 2019 equity plan and made cash retention payments of approximately $ 8,800 to certain legacy pietech employees who joined envestnet moneyguide . as of december 31 , 2019 , we have issued approximately 62,400 of rsu s and 24,900 of psu s under the equity plan to legacy pietech employees . at this time we expect to issue approximately 214,000 of additional rsu s and psu s and expect to pay approximately $ 5,300 in cash bonus payments over the next three years in connection with the pietech acquisition . we also granted membership interests in certain of our equity method investments to two legacy pietech executives with an estimated fair market value of $ 8,900 . these membership interests will vest and become exercisable in future periods . as of december 31 , 2019 , the company has recorded approximately $ 5,920 as a component of compensation and benefits in the consolidated statements of operations with a corresponding liability in other non-current liabilities in the consolidated balance sheets . death of chief executive officer on october 3 , 2019 , jud bergman , our chairman and chief executive officer , died in an automobile accident . bill crager , president of envestnet and chief executive of envestnet wealth solutions , has been named our interim chief executive officer . mr. crager has served as president of envestnet since 2002 and has been an employee of the company since 2000. ross chapin , has been named the interim non-executive chairman of our board of directors . mr. chapin has served as a director of the company since 2001. in connection with mr. bergman 's death , we modified certain of his existing outstanding equity awards . this resulted in additional non-cash compensation expense of $ 4,286 in 2019. key metrics key metrics beginning in 2018 include the addition of foliodynamix , the metrics of which are shown below as of january 2 , 2018 , the date of acquisition : replace_table_token_3_th 41 envestnet wealth solutions segment the following table provides information regarding the amount of assets utilizing our platforms , financial advisors and investor accounts in the periods indicated : replace_table_token_4_th 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_5_th the above aum/a gross sales figures include $ 31.5 billion in new client conversions . we onboarded an additional $ 297.9 billion in subscription conversions during 2019 , bringing total conversions for the year to $ 329.4 billion . 42 replace_table_token_6_th the above aum/a gross sales figures include $ 60.5 billion in new client conversions . we onboarded an additional $ 148.1 billion in subscription conversions during 2018 , bringing total conversions for the year to $ 208.6 billion . story_separator_special_tag year ended december 31 , 2018 compared to year ended december 31 , 2017 for a discussion of the 2018 results of operations compared to 2017 , see part ii , item 7 of our form 10-k filed with the sec on march 1 , 2019. business segments business segments are generally organized around our service offerings . financial information about each of our two business segments is contained in part ii , item 8 , “ note 19—segment information ” . our business segments are as follows : envestnet wealth solutions – a leading provider of unified wealth management software and services to empower financial advisors and institutions . envestnet data & analytics – a leading data aggregation and data intelligence platform powering dynamic , cloud-based innovation for digital financial services . we also incur expenses not directly attributable to the segments listed above . these nonsegment operating expenses include salary and benefits for certain corporate officers , certain types of professional service expenses and insurance , acquisition related transaction costs , restructuring charges and other non-recurring and or non-operationally related expenses . 48 the following table reconciles income ( loss ) from operations by segment to consolidated net income ( loss ) attributable to envestnet , inc. : replace_table_token_9_th envestnet wealth solutions the following table presents income from operations for the envestnet wealth solutions segment : replace_table_token_10_th * not meaningful year ended december 31 , 2019 compared to year ended december 31 , 2018 for the envestnet wealth solutions segment revenues asset-based recurring revenues asset-based recurring revenues increased 1 % from $ 481,233 in 2018 to $ 484,312 in 2019 . the increase was primarily due to an increase in asset values applicable to our quarterly billing cycle as a result of the upswing in the equity markets relative to the comparable 2018 period . in 2019 , revenues were also positively affected by new account growth and positive net flows of aum/a . the increase in revenues was partially offset by a change in classification of revenues to subscription-based 49 recurring revenues for certain customers . periodically clients have chosen to change the way they pay for our solution , whereby they switch from an asset-based pricing model to a subscription-based model . excluding the revenue impact from the acquisitions of portfoliocenter and pietech , asset-based recurring revenue decreased from 76 % of total revenue in 2018 to 68 % in 2019 . the number of financial advisors with aum or aua on our technology platforms increased from 40,103 as of december 31 , 2018 to 40,563 as of december 31 , 2019 and the number of aum or aua client accounts increased from approximately 2.0 million as of december 31 , 2018 to approximately 2.1 million as of december 31 , 2019 . subscription-based recurring revenues subscription-based recurring revenues increased 50 % from $ 138,372 in 2018 to $ 207,606 in 2019 . the acquisitions of portfoliocenter and pietech contributed revenues of $ 6,702 and $ 27,348 , respectively , to subscription-based recurring revenues in 2019 . excluding these revenues , the remaining increase of $ 35,184 , or 25 % , is a result of continuing to add clients , selling additional services to existing clients and a change in classification of revenues from asset-based recurring revenues for certain customers . professional services and other revenues professional services and other revenues increased 35 % from $ 13,000 in 2018 to $ 17,540 in 2019 , primarily due to an increase in revenues of $ 2,967 contributed from the pietech acquisition along with increases in revenues from both existing customers and onboarding of new customers . cost of revenues cost of revenues increased 4 % from $ 244,658 in 2018 to $ 255,108 in 2019 , primarily due to the corresponding increase in asset-based cost of revenues . the acquisitions of portfoliocenter and pietech had an immaterial impact to total cost of revenues in 2019 . as a percentage of segment revenues , cost of revenues decreased from 39 % in 2018 to 36 % in 2019 , primarily due to the growth in higher margin subscription-based revenues . compensation and benefits compensation and benefits increased 19 % from $ 191,893 in 2018 to $ 227,570 in 2019 , primarily due to increases in salaries , benefits and related payroll taxes of $ 20,324 and non-cash compensation expense of $ 14,626 , partially offset by a decrease in severance expense of $ 1,495. the acquisitions of portfoliocenter and pietech contributed $ 3,553 and $ 19,338 , respectively , to total compensation and benefits expense in 2019 . as a percentage of segment revenues , compensation and benefits increased from 30 % in 2018 to 32 % in 2019 . general and administration general and administration expenses increased 24 % from $ 75,424 in 2018 to $ 93,321 in 2019 , primarily due to increases in systems development expense of $ 4,988 , occupancy costs of $ 3,592 , other miscellaneous general and administration expenses of $ 3,459 , marketing expense of $ 1,736 , professional and legal fees of $ 1,557 , accretion on contingent consideration and purchase liabilities of $ 1,550 and bad debt expense of $ 1,018. the acquisitions of portfoliocenter and pietech contributed $ 4,238 and $ 4,463 , respectively , to total general and administration expense in 2019 . as a percentage of segment revenues , general and administration expenses increased from 12 % in 2018 to 13 % in 2019 . depreciation and amortization depreciation and amortization increased 46 % from $ 45,139 in 2018 to $ 65,746 in 2019 , primarily due to an increase in intangible asset amortization expense of $ 14,650 , driven by the recognition of additional intangible assets related to the acquisitions of portfoliocenter and pietech . also contributing to the increase was increased internally developed software amortization expense of $ 4,003 and property and equipment depreciation expense of $ 1,953. as a percentage of 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 as of december 31 , 2019 , we had total cash and cash equivalents of $ 82,505 , compared to $ 289,345 as of december 31 , 2018 . we plan to use existing cash as of december 31 , 2019 , cash generated in the ongoing operations of our business and amounts under our revolving credit facility to fund our current operations , capital expenditures and possible acquisitions or other strategic activity , and to meet our debt service obligations . if the cash generated in the ongoing operations of our business is insufficient to fund these requirements we may be required to borrow under our revolving credit facility or incur additional debt to fund our ongoing operations or to fund potential acquisitions or other strategic activities . we funded a portion of the may 1 , 2019 pietech acquisition and the december 2019 settlement of the convertible notes due 2019 through a combination of cash on hand and through additional borrowings under our revolving credit facility . as a result of these borrowings , we expect our cash interest payments to increase . amended credit agreement in 2014 , we and certain of our subsidiaries entered into a credit agreement with a group of banks ( the “ banks ” ) , for which bank of montreal acted as administrative agent . since 2014 , the credit agreement has been amended several times , the latest of which occurred in september 2019 ( the “ amended credit agreement ” ) . pursuant to the amended credit agreement , the banks agreed to provide to the company with a revolving credit facility of $ 500,000 , of which amount may be increased by $ 150,000 ( the “ revolving credit facility ” ) . the amended credit agreement also includes a $ 5,000 sub-facility for the issuance of letters of credit .
the global market for pain management drugs and devices alone was valued at $ 35 billion in 2012. the estimated incremental impact of chronic pain on health care costs in the united states is over $ 250 billion per year and lost productivity is estimated to exceed $ 300 billion per year . estimated out-of-pocket spending in the united states on chronic pain is $ 20 billion per year . the most common approach to chronic pain is pain medication . this includes over-the-counter drugs ( such as advil and motrin ) , and prescription drugs including anti-convulsants ( such as lyrica and neurontin ) and anti-depressants ( such as cymbalta and elavil ) . topical creams may also be used ( such as zostrix and bengay ) . with severe pain , narcotic pain medications may be prescribed ( such as codeine , fentanyl , morphine , and oxycodone ) . the approach to treatment is individualized , drug combinations may be employed , and the results are often hit or miss . side effects and the potential for addiction are real and the risks are substantial . reflecting the difficulty in treating chronic pain , we believe that inadequate relief leads 25 % to 50 % of pain sufferers to turn to the over-the-counter market for supplements or alternatives to prescription pain medications . these include non-prescription medications , topical creams , lotions , electrical stimulators , dietary products , braces , sleeves , pads and other items . in total they account for over $ 4 billion in annual spending in the united states on pain relief products . 33 high frequency nerve stimulation is an established treatment for chronic pain supported by numerous clinical studies demonstrating efficacy . in simplified outline , the mechanism of action involves intensive nerve stimulation to activate the body 's central pain inhibition system resulting in widespread analgesia , or pain relief . the nerve stimulation activates brainstem pain centers leading to the release of endogenous opioids that act primarily through the delta opioid receptor to reduce pain signal transmission through the central nervous system . this therapeutic approach is available through deep brain stimulation and through implantable spinal cord stimulation , both of which require surgery and have attendant risks . non-invasive approaches to neuro-stimulation ( transcutaneous electrical nerve stimulation , or tens ) have achieved limited efficacy in practice due to device limitations , ineffective dosing and low patient compliance . quell , our otc wearable device for pain relief , was unveiled at the january 2015 consumer electronics show ( ces ) and made commercially available in the united states during the second quarter of 2015. following commercial launch through the end of 2016 , approximately 59,500 quell devices plus electrodes and accessories were shipped to consumers with a total invoiced value of $ 13.7 million prior to the impact of product returns . quell utilizes optitherapy tm , our proprietary non-invasive neuro-stimulation technology to provide relief from chronic intractable pain , such as nerve pain due to diabetes , fibromyalgia , arthritic pain , and lower back and leg pain . this advanced wearable device is lightweight and can be worn during the day while active , and at night while sleeping . it has been cleared by the fda for treatment of chronic intractable pain without a doctor 's prescription . users of the device have the option of using their smartphones to control pain therapy and to track sleep and therapy parameters . quell is distributed in north america via e-commerce , including the company 's website ( www.quellrelief.com ) and amazon , via direct response television including qvc , via retail merchandisers including target , cvs and walgreens , and via health care professionals such as pain management physician practices and podiatry practices . distribution is supported by television promotion to expand product awareness . we believe there are significant opportunities to market quell outside of the united states , particularly in western europe , japan and china . in november 2016 , we received regulatory approval to market quell in the european union and we anticipate initiating marketing during 2017. dpncheck , our diagnostic test for peripheral neuropathies , was made commercially available in the fourth quarter of 2011. dpncheck revenues for 2016 , 2015 , and 2014 were approximately $ 2.5 million , $ 2.3 million , and $ 1.8 million , respectively . our u.s. sales efforts focus on medicare advantage providers who assume financial responsibility and the associated risks for the health care costs of their patients . we believe that dpncheck presents an attractive clinical case with early detection of neuropathy allowing for earlier clinical intervention to help mitigate the effects of neuropathy on both patient quality of life and cost of care . also , the diagnosis and documentation of neuropathy provided by dpncheck helps clarify the patient health profile which , in turn , may have a direct , positive effect on the medicare advantage premium received by the provider . we believe that attractive opportunities exist outside the united states , including japan where we launched dpncheck with our distribution partner omron healthcare in the third quarter of 2014 ; in china where we received regulatory approval and launched dpncheck with our distribution partner omron healthcare in the fourth quarter of 2016 ; and in mexico where our distributor scienta farma received regulatory approval and initiated sales in the fourth quarter of 2015. our products consist of a medical device used in conjunction with a consumable electrode or biosensor . other accessories and consumables are also available to customers . our goal for these devices is to build an installed base of active customer accounts and distributors that regularly order aftermarket products to meet their needs . we successfully implemented this model when we started our business with the nc-stat system and applied it to subsequent product generations including advance . story_separator_special_tag net loss per common share applicable to common stockholders , basic and diluted the net loss per common share applicable to common stockholders , basic and diluted , was $ 7.75 and $ 6.15 for 2015 and 2014 , respectively . net loss per common share applicable to common stockholders in 2015 of $ 7.75 included a deemed dividend attributable to preferred stockholders of $ 4.1 million , or $ 1.52 per share , related to our may 2015 equity offering ; a deemed dividend attributable to preferred stockholders of $ 8.3 million , or $ 3.06 per share , related to our december 2015 equity offering ; and a return of capital to common shareholders and related embedded beneficial conversion of $ 0.6 million , or $ 0.22 per share , related to our december 2015 equity offering ; and our 2015 net loss reported in our statement of operations of $ 9.2 million , or $ 3.38 per share . per share amounts are calculated using 2,719,285 weighted average number of shares outstanding as of december 31 , 2015. net loss per common share applicable to common stockholders in 2014 of $ 6.15 included a deemed dividend attributable to preferred stockholders of $ 3.0 million , or $ 1.70 per share , related to our 2014 equity offering ; and our 2014 net loss reported in our statement of operations of $ 7.8 million , or $ 4.45 per share . per share amounts are calculated using 1,743,494 weighted average number of shares outstanding at december 31 , 2014. liquidity and capital resources our principal source of liquidity is our cash and cash equivalents . as of december 31 , 2016 , cash and cash equivalents totaled $ 3.9 million . our ability to generate revenue to fund our operations will largely depend on the success of our wearable therapeutic products for chronic pain and our diagnostic products for 38 neuropathy . a low level of market interest in quell or dpncheck , an accelerated decline in our neurodiagnostics consumables sales , or unanticipated increases in our operating costs would have an adverse effect on our liquidity and cash generated from operations . the following table sets forth information relating to our cash and cash equivalents : december 31 , 2016 december 31 , 2015 change % change ( in thousands ) story_separator_special_tag state nols begin to expire in 2017. the federal and state research and development credits both begin to expire in 2018. a full valuation allowance has been provided against our nol carryforwards and research and development credit carryforwards and , if an adjustment is required , this adjustment would be offset by an adjustment to the valuation allowance . thus , there would be no impact to the balance sheet or statement of operations if an adjustment were required . off-balance sheet arrangements , contractual obligations , and contingent liabilities and commitments as of december 31 , 2016 , we did not have any off-balance sheet financing arrangements . the following table summarizes our principal contractual obligations as of december 31 , 2016 and the effects such obligations are expected to have on our liquidity and cash flows in future periods . replace_table_token_10_th critical accounting policies and estimates our financial statements are based on the selection and application of generally accepted accounting principles , which require us to make estimates and assumptions about future events that affect the amounts reported in our financial statements and the accompanying notes . future events and their effects can not be determined with certainty . therefore , the determination of estimates requires the exercise of judgment . actual results could differ significantly from those estimates , and any such differences may be material to our financial statements . we believe that the policies set forth below may involve a higher degree of judgment and complexity in their application than our other accounting policies and represent the critical accounting policies used in the preparation of our financial statements . if different assumptions or conditions were to prevail , the results could be materially different from our reported results . our significant accounting policies are presented within note 2 to our financial statements . revenue recognition and accounts receivable we recognize revenue when the following criteria have been met : persuasive evidence of an arrangement exists , delivery has occurred and risk of loss has passed , the seller 's price to the buyer is fixed or determinable , and collection is reasonably assured . revenues associated with our medical devices and consumables , including single use nerve specific electrodes and other accessories are generally recognized upon shipment , assuming all other revenue criteria have been met . revenue recognition involves judgments , including assessments of expected returns and expected customer relationship periods . we analyze various factors , including a review of specific transactions , its historical product returns , average customer relationship periods , customer usage , customer balances , and market and economic conditions . changes in judgments or estimates on these factors could materially impact the timing and amount of revenues and costs recognized . should market or economic conditions deteriorate , our actual return or bad debt experience could exceed its estimate . certain product sales are made with a 30-day or 60-day right of return . where we can reasonably estimate future returns , we recognize revenues 41 upon shipment and record as a reduction of revenue a provision for estimated returns . where we can not reasonably estimate future returns , we defer revenues until we gain sufficient experience to estimate returns or until the right of return lapses . trade accounts receivable are recorded at the invoiced amount and do not bear interest . accounts receivable are recorded net of the allowance for doubtful accounts receivable . the allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable . we review our allowance	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 $ 3,949.1 $ 12,462.9 $ ( 8,513.8 ) ( 68.3 ) % during 2016 our cash and cash equivalents decreased by $ 8.5 million reflecting the net proceeds provided by our 2016 equity offering , offset by $ 15.1 million of net cash used in operations and $ 0.1 million used in investing activities . in june 2016 , we completed a private equity offering providing for the issuance of ( i ) 21,300 shares of series d convertible preferred stock at a price of $ 1,000 per share , and ( ii ) warrants to purchase up to 11,800,554 shares of our common stock , at an exercise price of $ 1.69 per share . the offering resulted in approximately $ 6.7 million in net proceeds after deducting placement agent fees and expenses and the redemption of 13,800 shares of previously issued series c convertible preferred stock . on december 28 , 2016 , we entered into a $ 7 million private equity offering providing for the issuance of ( i ) 7,000 shares of series e convertible preferred stock at a price of $ 1,000 per share , and ( ii ) warrants to purchase 10 million shares of our common stock , at an initial exercise price of $ 0.92 per share . the equity offering is designed to be funded in two tranches : an initial tranche of $ 4.0 million , which closed on january 5 , 2017 contributing net proceeds of approximately $ 3.6 million after fees and expenses , and a second tranche , subject to shareholder approval , of $ 3.0 million and is expected to close late in the first quarter of 2017. in order to supplement our access to capital , we are party to an amended loan and security agreement , most recently amended on december 29 , 2016 , with a bank which provides us with a credit facility in the amount of $ 2.5 million on a revolving basis . the amended credit facility expires on january 15 , 2018. amounts borrowed under the credit facility will bear interest equal to the prime rate plus 0.5 % .
* * xbrl ( extensible business reporting language ) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the securities act of 1933 , as amended , is deemed not filed for purposes of section 18 of the securities exchange act of 1934 , as amended , and otherwise is not subject to liability under these sections . 33 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities exchange act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized . surf a movie solutions inc. ( name of registrant ) date : december 21 , 2012 by : fadi zeidan name : fadi zeidan title : president , secretary , treasurer and director ( and principal financial officer and principal accounting officer ) pursuant to the requirements of the securities exchange act of 1934 , this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated . date : december 21 , 2012 by : ufuk turk name : ufuk turk title : director 34 exhibit index replace_table_token_12_th 101.ins * * xbrl instance document 101.sch * * xbrl taxonomy extension schema document 101.cal * * xbrl taxonomy extension calculation linkbase document 101.def * * xbrl taxonomy extension definition linkbase document 101.lab * * xbrl taxonomy extension label linkbase document 101.pre * * xbrl taxonomy extension presentation linkbase document _ ( 1 ) incorporated by reference to the registrant 's form s-1 ( file no . 333-156480 ) , filed with the commission on december 29 , 2008 . * * xbrl ( extensible business reporting language ) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the securities act of 1933 , as amended , is deemed not filed for purposes of section 18 of the securities exchange act of 1934 , as amended , and otherwise is not subject to liability under these sections . 35 story_separator_special_tag results of operations we generated no revenues during the fiscal years ended september 30 , 2012 and 2011 , and we have generated no revenues since december 18 , 2007 ( inception ) . for the fiscal year ended september 30 , 2012 , we incurred expenses of $ 20,223 , consisting solely of general and administrative costs . during the fiscal year ended september 30 , 2011 , we incurred expenses of $ 15,592 consisting solely of general and administrative costs . we incurred net losses of $ 20,223 and $ 15,592 for the years ended september 30 , 2012 and 2011 , respectively . our net loss since inception ( september 25 , 2007 ) through september 30 , 2012 is $ 87,899. the following table provides selected financial data about our company for the years ended september 30 , 2012 and 2011. replace_table_token_2_th going concern surf a movie solutions inc. is a development stage company and currently has no operations . our independent auditor has issued an audit opinion for surf a movie solutions which includes a statement raising substantial doubt as to our ability to continue as a going concern . story_separator_special_tag new roman ; font-size : 8pt `` > * surf a movie administrative portal development : this portal will allow us to approve or suspend an online video store if necessary . it will enable us to append notes to document our relationship and correspondence with each individual store owner . in addition , this feature will automatically calculate the amount of rental revenue ( minus fees ) that we owe to a store owner . further , it will enable our directors and staff to access a wide range of reporting related to sales and where end users are coming from . we expect that development of this feature will take approximately one month to complete . * digital rights management : we will be implementing microsoft digital right management ( “ drm ” ) system to prevent the copying and exchange of copies of online movies between multiple persons , in an effort to protect the intellectual property of the video store owners and their revenue stream . we expect that it will take approximately one month to implement the drm with our site . expenditures the following chart provides an overview of our budgeted expenditures by significant area of activity over the twelve months : replace_table_token_3_th milestones below is a brief description of our planned activities over the next 12 months , beginning january 1 , 2013. months 1 to 3 * finalize corporate and marketing materials , such as brochures , letter heads , email and letter templates , and the like . * finalize the work on the web interfaces and the feel and look of the website ; * work with the contractor on the development of the website and software ; * review targeted “ milestones ” and adjust workloads , if necessary ; * commence the google adwords advertising campaign to attract potential video store owners ; * prepare marketing contracts for the video store owners ; and * monitor the hits on our web site and arrange for follow up with marketing contacts . months 4 to 6 * continue work on all development of all portals ; * evaluate online ads , increase the frequency and monitor results weekly ; * begin work on training documentation for the video store owners ; * review targeted “ milestones ” timetable and adjust workload , if necessary ; and * begin discussions with four to six prospective beta customers for testing . 14 months 7 to 9 * complete development of website , software and all intended features and functions ; * conduct our beta trial story_separator_special_tag * * xbrl ( extensible business reporting language ) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the securities act of 1933 , as amended , is deemed not filed for purposes of section 18 of the securities exchange act of 1934 , as amended , and otherwise is not subject to liability under these sections . 33 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities exchange act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized . surf a movie solutions inc. ( name of registrant ) date : december 21 , 2012 by : fadi zeidan name : fadi zeidan title : president , secretary , treasurer and director ( and principal financial officer and principal accounting officer ) pursuant to the requirements of the securities exchange act of 1934 , this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated . date : december 21 , 2012 by : ufuk turk name : ufuk turk title : director 34 exhibit index replace_table_token_12_th 101.ins * * xbrl instance document 101.sch * * xbrl taxonomy extension schema document 101.cal * * xbrl taxonomy extension calculation linkbase document 101.def * * xbrl taxonomy extension definition linkbase document 101.lab * * xbrl taxonomy extension label linkbase document 101.pre * * xbrl taxonomy extension presentation linkbase document _ ( 1 ) incorporated by reference to the registrant 's form s-1 ( file no . 333-156480 ) , filed with the commission on december 29 , 2008 . * * xbrl ( extensible business reporting language ) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the securities act of 1933 , as amended , is deemed not filed for purposes of section 18 of the securities exchange act of 1934 , as amended , and otherwise is not subject to liability under these sections . 35 story_separator_special_tag results of operations we generated no revenues during the fiscal years ended september 30 , 2012 and 2011 , and we have generated no revenues since december 18 , 2007 ( inception ) . for the fiscal year ended september 30 , 2012 , we incurred expenses of $ 20,223 , consisting solely of general and administrative costs . during the fiscal year ended september 30 , 2011 , we incurred expenses of $ 15,592 consisting solely of general and administrative costs . we incurred net losses of $ 20,223 and $ 15,592 for the years ended september 30 , 2012 and 2011 , respectively . our net loss since inception ( september 25 , 2007 ) through september 30 , 2012 is $ 87,899. the following table provides selected financial data about our company for the years ended september 30 , 2012 and 2011. replace_table_token_2_th going concern surf a movie solutions inc. is a development stage company and currently has no operations . our independent auditor has issued an audit opinion for surf a movie solutions which includes a statement raising substantial doubt as to our ability to continue as a going concern . story_separator_special_tag new roman ; font-size : 8pt `` > * surf a movie administrative portal development : this portal will allow us to approve or suspend an online video store if necessary . it will enable us to append notes to document our relationship and correspondence with each individual store owner . in addition , this feature will automatically calculate the amount of rental revenue ( minus fees ) that we owe to a store owner . further , it will enable our directors and staff to access a wide range of reporting related to sales and where end users are coming from . we expect that development of this feature will take approximately one month to complete . * digital rights management : we will be implementing microsoft digital right management ( “ drm ” ) system to prevent the copying and exchange of copies of online movies between multiple persons , in an effort to protect the intellectual property of the video store owners and their revenue stream . we expect that it will take approximately one month to implement the drm with our site . expenditures the following chart provides an overview of our budgeted expenditures by significant area of activity over the twelve months : replace_table_token_3_th milestones below is a brief description of our planned activities over the next 12 months , beginning january 1 , 2013. months 1 to 3 * finalize corporate and marketing materials , such as brochures , letter heads , email and letter templates , and the like . * finalize the work on the web interfaces and the feel and look of the website ; * work with the contractor on the development of the website and software ; * review targeted “ milestones ” and adjust workloads , if necessary ; * commence the google adwords advertising campaign to attract potential video store owners ; * prepare marketing contracts for the video store owners ; and * monitor the hits on our web site and arrange for follow up with marketing contacts . months 4 to 6 * continue work on all development of all portals ; * evaluate online ads , increase the frequency and monitor results weekly ; * begin work on training documentation for the video store owners ; * review targeted “ milestones ” timetable and adjust workload , if necessary ; and * begin discussions with four to six prospective beta customers for testing . 14 months 7 to 9 * complete development of website , software and all intended features and functions ; * conduct our beta trial	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 balance at september 30 , 2012 was $ 4,963 with $ 35,130 in outstanding liabilities . total expenditures over the next 12 months are expected to be approximately $ 46,390. if we experience a shortage of funds prior to generating revenues from operations we may utilize funds from our directors , who have informally agreed to advance funds to allow us to pay for operating costs , however they have no formal commitment , arrangement or legal obligation to advance or loan funds to us . management believes our current cash balance will not be sufficient to fund our operations for the next twelve months . 12 plan of operation we are in the formative phase of development . our plan is to develop a product that will allow us to offer a turn-key online video rental store to customers wishing to offer such services to their potential subscribers . our online service will give our customers a large level of control over the feel and look of their online video store and it will come with the supporting infrastructure to run the online video store . each of our customers will be able to customize their web site with brand name markings and icons to distinguish themselves in the marketplace . we also intend to provide our customers with training on the administrative and reporting functions during an orientation period , along with ongoing customer support . we are in the process of developing an “ information only ” web to promote our company and our product . the goal of this effort will be to create a presence on the internet and attract potential customers to inquire about our services . a preliminary web site is now available at www.surfamovie.com .
results of operations for the year ended december 31 , 2012 compared to the year ended december 31 , 2011 sales in 2012 , our sales were $ 49.8 million compared to $ 49.0 million in 2011. sales increased $ 0.8 million or 1.8 % in 2012 compared to 2011. domestic sales increased $ 1.7 million or 3.9 % to $ 44.2 million while international sales decreased by $ 0.8 million or 12.1 % to $ 5.6 million . international sales to a single international distributor decreased $ 1.4 million while all other international sales increased $ 0.6 million . domestic sales increased due to new business additions as well as changes in product mix to higher margin products including our citrapure product lines and due to higher volume of our dry acid concentrate product lines . dry acid concentrate lowers providers ' cost per treatment and reduces our sales , but improves our gross profit margins due to a reduction in shipping costs . gross profit our gross profit in 2012 was $ 6.7 million an increase of $ 1.1 million or 18.6 % compared to 2011. gross profit margins were 13.4 % in 2012 compared to 11.5 % in 2011. the increase in gross profit margins was due to increased sales of higher margin products and product lines including our citrapure product lines along with conversions to dry acid concentrates . margins also benefited from efforts to control operating costs in the face of inflationary cost increases for material , transportation operating costs and diesel fuel . selling , general and administrative expenses selling , general and administrative expenses were $ 12.7 million in 2012 compared to $ 9.5 million in 2011. the increase of $ 3.2 million was primarily due to an increase in non-cash charges for equity compensation of $ 2.9 million . employee non-cash equity compensation aggregated $ 5.0 million in 2012 compared to $ 4.1 million in 2011. in addition , share based compensation for services increased $ 2.0 million to $ 2.3 million in 2012. research and development we incurred product development and research costs related to the commercial development , patent approval and regulatory approval of new products , primarily sfp , aggregating approximately $ 48.3 million and $ 17.8 million in 2012 and 2011 , respectively . costs incurred in both 2012 and 2011 were primarily for conducting human clinical trials of sfp and other sfp testing and development activities . our spending increased considerably in 2012 for our phase 3 clinical program as enrollment efforts and related testing activities increased dramatically and were in effect for the full year . we completed enrollment in our pivotal clinical studies during 2012 and expect to have results from our clinical studies during the second half of 2013. interest and investment income , net net interest and investment income in 2012 was $ 242,000 compared to $ 244,000 in 2011. we earned higher rates of return on investable funds in 2012 compared to 2011 while overall investable funds were reduced throughout 2012 to fund our clinical development program . 28 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 . 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 . story_separator_special_tag 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 3 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 . 29 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 . 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 . going concern . due to our recurring losses and need for additional working capital , there is substantial doubt about our ability to continue as a going concern . management is taking steps to improve our financial condition . the financial statements and the accompanying footnotes have been prepared on a going concern basis , which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future , and do not include any adjustment to reflect the possible future effects of the company 's inability to raise the additional capital needed to continue as a going concern . 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 30 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 market value of our common shares . amortization continues to be recorded for other intangible assets with definite lives over the estimated useful lives . intangible assets subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable based on future cash flows . if we determine that goodwill has been impaired , the change in value will be accounted for as a current period expense and could have a material adverse effect on earnings . accounting for income taxes we estimate our income tax provision to recognize our tax expense and our deferred tax liabilities and assets for future tax consequences of events that have been recognized in our financial statements using current enacted	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 31 spending to be significant as we execute our clinical program and complete the process of seeking regulatory approval for sfp in the united states . our cash resources include cash generated from our business operations and from proceeds of equity offerings , including the receipt of a net $ 16.0 million from an equity offering in february 2012. as of december 31 , 2012 , our cash and investments were $ 4.7 million and our current liabilities exceeded our current assets by $ 13.8 million . based on our recurring losses , negative cash flows from operations and working capital levels , we will need to raise substantial additional funds to finance our operations . if we are unable to maintain sufficient financial resources , including by raising additional funds when needed , our business , financial condition and results of operations will be materially and adversely affected .
, credit card , auto lending , retail credit , mortgages ) and the utility and insurance industries . the technology services segment principally consists of our realsuite tm applications as well as our information technology ( it ) infrastructure services . the realsuite tm platform provides a fully integrated set of software applications and technologies that manage the end-to-end lifecycle for residential and commercial mortgage loan servicing including the automated management and payment of a distributed network of vendors . in addition , our corporate items and eliminations segment includes eliminations of transactions between the reporting segments and costs related to corporate support functions including executive , finance , legal , human resources , vendor management , risk and six sigma . further discussion regarding our business may be found under item 1 of part i , business . we classify revenue in three categories : service revenue , revenue from reimbursable expenses and non-controlling interests . in evaluating our performance , we focus on service revenue which consists of amounts attributable to our fee based services . reimbursable expenses and non-controlling interests are pass-through items for which we earn no margin . reimbursable expenses consist of amounts we incur on behalf of our customers in performing our fee based services , but we pass such costs directly on to our customers without any additional markup . non-controlling interests represent the earnings of lenders one , a consolidated entity not owned by altisource . it is included in revenue and reduced from net income to arrive at net income attributable to altisource . basis of presentation we have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the united states of america ( gaap ) . recent acquisitions by ocwen during 2012 , ocwen 's residential loan servicing portfolio grew from $ 102.2 billion in upb to $ 203.7 billion in upb . the 2012 growth is primarily from ocwen 's acquisition of homeward residential in the fourth quarter and the acquisition of mortgage servicing rights and related assets from saxon mortgage services , inc. and from jp morgan chase portfolios in the second quarter of 2012. additionally , in october 2012 , ocwen and walter investment management corporation presented the highest bid in the auction of rescap 's servicing portfolio . we expect ocwen to close the rescap transaction in the first quarter of 2013. excluding the approximately $ 120 billion of ally bank subservicing and master servicing , the rescap transaction will increase ocwen 's servicing portfolio upb by approximately $ 203.7 billion . with these servicing platform acquisitions , ocwen is now positioned as the fifth largest mortgage servicer in the united states . as the structured shift of servicing to non-banks continues , we expect ocwen to continue to grow . ocwen 's highly scalable platform and low cost operating structure positions it to be very competitive as additional mortgage servicing portfolios become available . in connection with ocwen 's acquisition of homeward residential and the anticipated acquisition of the rescap servicing platform , we intend to acquire the fee based businesses associated with these servicing portfolios from ocwen at a price that we believe will provide an unlevered pre-tax return of approximately 20 % . the fee based business acquisitions are strategically valuable as they will help us maintain our business model with ocwen , expand our footprint and provide us significant revenue and earnings growth . 22 separation of residential asset businesses on december 21 , 2012 , we completed the capitalization and distribution of residential and aamc to our shareholders . see separation of residential asset businesses in item 1 of part i , business . residential and aamc plan to enter the growing residential single-family rental market . because of the different capital considerations and the operating metrics associated with owning and renting single-family homes , we believe these businesses are best suited to operate as separate stand-alone companies . residential will acquire residential related assets , and aamc will provide asset management and advisory services to residential . we will provide property management , lease management and renovation management services to residential once it begins acquiring assets . with $ 100 million of initial equity , we believe residential is poised to execute on its strategy of achieving above market returns by ( 1 ) acquiring non-performing loans at a lower cost than directly acquiring reo and ( 2 ) operating at a lower cost than its competitors . on december 24 , 2012 , the shares of residential and aamc were distributed to our shareholders of record as of december 17 , 2012 , in the form of a taxable pro rata stock distribution ( the distribution ) . our shareholders received a pro rata distribution of : · one share of residential common stock for every three shares of altisource common stock held ; · one share of aamc common stock for every 10 shares of altisource common stock held and · received cash in lieu of fractional residential and aamc shares . there are contractual agreements between altisource , residential and aamc that govern certain ongoing relationships and provide for an orderly transition to the status of three independent companies . these agreements are described further in related parties at the end of this section . we did not report the historical operating results of residential and aamc as a discontinued operation because residential and aamc are development state companies that had not commenced operations as of the date of separation and because of the significance of the continuing involvement between these entities and altisource under these agreements . although residential and aamc are separate companies from altisource , these entities have the same chairman . as a result , our chairman has obligations to altisource as well as to residential and aamc . story_separator_special_tag more specifically , financial services asset recovery revenue tends to be higher in the first quarter and generally declines throughout the year . mortgage services revenue is impacted by reo sales which tend to be at their lowest level during the fall and winter months and highest during the spring and summer months . cost of revenue and gross profit cost of revenue principally includes payroll and employee benefits associated with personnel employed in customer service and operations roles , fees paid to external providers related to the provision of services , reimbursable expenses , technology and telephony expenses as well as depreciation and amortization of operating assets . we recognized cost of revenue of $ 366.2 million , $ 275.8 million and $ 189.1 million for the years ended december 31 , 2012 , 2011 and 2010 , respectively . the increase in cost of revenue over the three year period is directly attributable to compensation , technology and vendor costs associated with the growth in ocwen 's servicing portfolio and higher costs in our technology services segment as we continue to invest in the development of our next generation technology and infrastructure . gross profit as a percentage of service revenue was 43 % , 44 % and 45 % for the years ended december 31 , 2012 , 2011 and 2010 , respectively . our gross margins can vary significantly from period to period . the most significant factors contributing to variability include the mix of services delivered , timing of investments in new services , hiring of staff in advance of new business and the timing of when loans are boarded by our customers . gross profit as a percentage of service revenue decreased over the three year period primarily from higher costs in our technology services segment as we continue to invest in the development of our next generation technology . gross profit as a percentage of service revenue further declined in 2012 from the costs incurred to develop the rental property management business and the growth of the lower margin origination services business . selling , general and administrative expenses and income from operations sg & a includes payroll for personnel employed in executive , finance , legal , human resources , vendor management , risk and six sigma roles . this category also includes occupancy costs , professional fees , depreciation and amortization on non-operating assets . we recognized sg & a of $ 74.7 million , $ 62.1 million and $ 57.4 million for the years ended december 31 , 2012 , 2011 and 2010 , respectively . our operating margins were 27 % , 26 % and 22 % , respectively , as a percentage of each year 's service revenue . income from operations as a percentage of service revenue is improving as sg & a is growing at a slower pace than service revenue . the benefit was partially offset in 2012 by costs associated with the separation of residential and aamc . 29 on an absolute basis , the increase in sg & a for the year ended december 31 , 2012 compared to the year ended december 31 , 2011 was primarily due to a $ 6.2 million increase in occupancy related costs primarily from the addition of new leased facilities and equipment to support our growth . in addition , other sg & a increased $ 4.2 million from higher marketing costs related to hubzu , travel expenses primarily associated with the management of our global operations and higher bad debt expense . finally , professional services increased primarily from $ 2.2 million of expenses incurred in connection with the separation of the residential asset businesses . partially offsetting these increases was lower compensation expense of $ 1.2 million primarily due to the reversal in the first quarter of share-based compensation and incentive compensation expense related to the departure of an executive officer in march 2012. income tax provision ( benefit ) we recognized an income tax provision ( benefit ) of $ 8.7 million , $ 7.9 million and $ ( 0.4 ) million in 2012 , 2011 and 2010 , respectively . the effective tax rate in all three periods differs from the luxembourg statutory tax rate of 28.8 % primarily because of the effect of a favorable tax ruling in luxembourg in 2010 and the mix of income and losses and varying tax rates in multiple taxing jurisdictions . our effective tax rate was 7.0 % , 9.2 % and ( 0.7 ) % for 2012 , 2011 and 2010 , respectively . our consolidated effective income tax rate for financial reporting purposes may change periodically due to changes in enacted tax rates , fluctuations in the mix of income earned from our domestic and international operations which may be subject to differing tax rates and our ability to utilize net operating loss and tax credit carryforwards . recent accounting pronouncements there are no pending accounting pronouncements that are expected to have a material impact upon adoption . 30 segment results of operations the following section provides a discussion of pre-tax results of operations of our business segments for the years ended december 31 , 2012 , 2011 and 2010. transactions between segments are accounted for as third-party arrangements for purposes of presenting segment results of operations . intercompany transactions primarily consist of it infrastructure services and charges for the use of certain realsuite applications from our technology services segment to our other two segments . generally , we reflect these charges within technology and communications expense in the segment receiving the services , except for consulting services , which we reflect in professional services expense . financial information for our segments is as follows : replace_table_token_9_th n/m not meaningful . 31 replace_table_token_10_th n/m not meaningful . 32 replace_table_token_11_th n/m not meaningful . 33 mortgage services revenue revenue by service line was as follows for the years 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.	cash flows the following table presents our cash flows for the years ended december 31 : replace_table_token_18_th n/m not meaningful . cash flows from operating activities cash flows from operating activities are generally the cash effects of transactions and events that factor into the determination of net income . for the year ended december 31 , 2012 , we generated $ 116.5 million in cash flows from operations , or approximately $ 0.25 per dollar of service revenue , compared to $ 111.6 million of cash flows from operations , or approximately $ 0.33 per dollar of service revenue in 2011. the increase in cash flow from operating activities compared to 2011 is primarily due to the increase in net income substantially offset by a decline in working capital principally due to higher accounts receivable . the reduction in cash flow from operations per service revenue dollar when compared to 2011 is the result of higher growth in accounts receivable in 2012 compared to 2011. we anticipate a more normalized level of accounts receivable in the first quarter of 2013. in periods of growth , operating cash flow per service revenue dollar can be negatively impacted because of the nature of some of our services . certain services are performed immediately following or shortly after the referral , but the collection of the receivable does not occur until a specific event occurs ( i.e. , the foreclosure is complete , the reo asset is sold , etc. ) .
we expect the following set of core competencies to position us to execute on our growth strategies : anchor space repositioning / redevelopment / outparcel development expertise - we have been a top redeveloper over the past decade , according to chain store age magazine , having completed anchor space repositioning / redevelopment / outparcel development projects totaling over $ 1 billion since january 1 , 2003. expansive retailer relationships - we believe that given the scale of our asset base and our nationwide footprint , we have a competitive advantage in supporting the growth plans of the nation 's largest retailers . we believe that we are the largest landlord by gross leasable area ( “ gla ” ) to kroger and tjx companies , as well as a key landlord to all major grocers and most major retail category leaders . we believe that our strong relationships with leading retailers affords us insight into their strategies and priority access to their expansion plans , enabling us to efficiently provide these retailers with space in multiple locations . fully-integrated operating platform - we operate with a fully-integrated , comprehensive platform both leveraging our national presence and demonstrating our commitment to a regional and local presence . we provide our tenants with personalized service through our network of three regional offices in atlanta , chicago and philadelphia , as well as via 12 leasing and property management satellite offices throughout the country . we believe that this strategy enables us to obtain critical market intelligence and to benefit from the regional and local expertise of our workforce . experienced management - senior members of our management team are experienced real estate operators with deep industry expertise and retailer relationships . recent developments for a discussion of recent events related to a review conducted by our audit committee , related management changes , and the risks related thereto , see item 1 “ business-recent developments , ” item 1a “ risk factors-risks related to recent events , ” and item 9a “ controls and procedures . ” other factors that may influence our future results we derive our revenues primarily from rents ( including percentage rents based on tenants ' sales levels ) and expense reimbursements due to us from tenants under existing leases at each of our properties . expense reimbursements consist of payments made by tenants to us under contractual lease obligations for their proportional share of the property 's operating expenses , insurance and real estate taxes and certain capital expenditures related to maintenance of the properties . the amount of rental income and expense reimbursements we receive is primarily dependent on our ability to maintain or increase rental rates and on our ability to lease available space , including renewing expiring leases . factors that could affect our rental income include : ( 1 ) changes in national , regional or local economic climates ; ( 2 ) local conditions , including an oversupply of space in , or a reduction in demand for , properties similar to those in our portfolio ; ( 3 ) the attractiveness of properties in our portfolio to our tenants ; ( 4 ) the financial stability of tenants , including the ability of tenants to pay rents and expense reimbursements ; ( 5 ) in the case of percentage rents , our tenants ' sales volumes ; ( 6 ) competition from other available properties ; ( 7 ) changes in market rental rates ; and ( 8 ) changes in the regional demographics of our properties . our operating costs include property-related costs , including repairs and maintenance , roof repair , landscaping , parking lot repair , snow removal , utilities , property insurance costs , security , ground rent expense related to ground lease payments for which we are the lessee and various other property related costs . increases in our operating expenses , to the extent they are not offset by revenue increases , impact our overall performance . for a further discussion of these and other factors that could impact our future results , performance or transactions , see item 1a . “ risk factors . ” - 37 - portfolio and financial highlights as of december 31 , 2015 , we owned interests in 518 shopping centers ( the “ portfolio ” ) , including 517 wholly owned shopping centers and one shopping center held through an unconsolidated joint venture . billed occupancy for the portfolio was 91.0 % and 91.3 % as of december 31 , 2015 and 2014 , respectively . leased occupancy for the portfolio was 92.6 % and 92.8 % as of december 31 , 2015 and 2014 , respectively . during 2015 , we executed 2,018 leases in our portfolio totaling 13.4 million square feet of gla , including 664 new leases totaling 3.0 million square feet of gla and 1,354 renewals totaling 10.4 million square feet of gla . the average annualized cash base rent ( “ abr ” ) under the new leases increased 41.6 % from the prior tenant 's abr and increased 14.9 % for both new and renewal leases on comparable space from the abr under the prior leases . the average abr per leased square foot of these new leases in our portfolio is $ 15.86 and the average abr per leased square foot of these new and renewal leases in our portfolio is $ 12.78. the average cost per square foot for tenant improvements and leasing commissions for new leases was $ 21.20 and $ 3.31 , respectively . the average cost per square foot for tenant improvements and leasing commissions for renewal leases was $ 1.42 and $ 0.02 , respectively . story_separator_special_tag during the year ended december 31 , 2013 , we repaid $ 2.6 billion of mortgages and secured loans and $ 51.0 million of unsecured notes resulting in a $ 20.0 million loss on extinguishment of debt , net . other the decrease in other for the year ended december 31 , 2014 of $ 2.6 million , as compared to the corresponding period in 2013 , was primary due to expenses incurred in 2013 related to our ipo . in addition , during the year ended december 31 , 2014 , we had $ 2.6 million of income related to the settlement of a contingency associated with one of our properties , partially offset by $ 2.4 million of expense related to the termination of one of our corporate office leases . equity in income of unconsolidated joint ventures ( in thousands ) replace_table_token_18_th - 44 - equity in income of unconsolidated joint ventures the decrease in equity in income of unconsolidated joint ventures for the year ended december 31 , 2014 of $ 0.8 million , as compared to the corresponding period in 2013 , was primarily due to the acquisition of the interests of an unconsolidated joint venture in 2013 and the disposal of our interests in three unconsolidated joint ventures during 2014. gain on disposition of investments in unconsolidated joint ventures during the year ended december 31 , 2014 we disposed of our interests in three unconsolidated joint ventures resulting in a gain on disposal of $ 1.8 million . discontinued operations ( in thousands ) replace_table_token_19_th income ( loss ) from discontinued operations results from discontinued operations include the results from the following : ( i ) 34 shopping centers and ( ii ) 18 shopping centers disposed of during 2013. there were no properties classified as held for sale at december 31 , 2014. gain on disposition of operating properties during the year ended december 31 , 2014 , the gain on disposition of operating properties was attributable to the distribution of our interests in 32 properties to blackstone and the sale of one additional shopping center . during the year ended december 31 , 2013 , the gain on disposition of operating properties was attributable to the sale of four shopping centers . impairment of real estate held for sale during the year ended december 31 , 2013 , as a result of our strategy to dispose of certain shopping centers , we recognized provisions for impairment of $ 45.1 million relating to 14 shopping centers disposed of during 2013 and 14 properties disposed of during 2014. story_separator_special_tag style= `` font-family : inherit ; font-size:10pt ; font-style : italic ; `` > acquisitions of and proceeds from sales of real estate assets although we expect that the major drivers of our growth will come from our existing portfolio , we will continue to evaluate the market for available properties and may acquire properties when we believe strategic opportunities exist . during the year ended december 31 , 2015 , we acquired two properties and a retail building in one of our existing shopping centers . we may also dispose of properties when we feel growth has been maximized . during the year ended december 31 , 2015 , we disposed of five shopping centers and three outparcels . financing activities our net cash flow used in financing activities is impacted by the nature , timing and extent of issuances of debt and equity , principal and other payments associated with our outstanding indebtedness and prevailing market conditions associated with each source of capital . for the year ended december 31 , 2015 , the parent company 's net cash used in financing activities increased $ 4.3 million as compared to the corresponding period in 2014. the increase was primarily due to a $ 52.8 million net - 47 - increase in distributions to stockholders and non-controlling interests , partially offset by a $ 49.5 million decrease in debt repayments , net of borrowings . for the year ended december 31 , 2015 , the operating partnership 's net cash used in financing activities increased $ 5.0 million as compared to the corresponding period in 2014. the increase was primarily due to a $ 54.3 million increase in distributions to partners and non-controlling interests , partially offset by a $ 49.5 million decrease in debt repayments , net of borrowings . our current capital structure provides us with financial flexibility and capacity to fund our current capital needs as well as future growth opportunities . we have an unsecured credit facility consisting of a $ 1.5 billion term loan and a $ 1.25 billion revolving credit facility , with a lending group comprised of financial institutions under which we had $ 834.0 million of undrawn capacity as of december 31 , 2015. we believe we have access to multiple forms of capital , including unsecured corporate level debt , preferred equity and additional credit facilities . we currently have investment grade credit ratings from all three major credit rating agencies . we intend to continue to enhance our financial and operating flexibility through ongoing commitment to ladder and extend the duration of our debt , and further expand our unencumbered asset pool . during the year ended december 31 , 2015 , the operating partnership issued $ 700.0 million aggregate principal amount of 3.850 % senior notes due 2025 ( the “ 2025 notes ” ) and $ 500.0 million aggregate principal amount of 3.875 % senior notes due 2022 ( the “ 2022 notes ” ) , the proceeds of which were utilized to repay outstanding indebtedness , including borrowings under the company 's $ 1.25 billion unsecured revolving credit facility and $ 125.0 million aggregate principal amount of senior unsecured notes . during the year ended december 31 , 2015 , we repaid $ 868.9 million of mortgages and secured loans and $ 225.0 million of unsecured notes . these repayments 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 we anticipate that our cash flows from the sources listed below will provide adequate capital for the next 12 months for all anticipated uses , including all scheduled principal and interest payments on our outstanding indebtedness , current and anticipated tenant improvements , stockholder distributions to maintain bpg 's qualification as a reit and other capital obligations associated with conducting our business . for a discussion of recent events related to a review conducted by our audit committee , related management changes , and the risks related thereto , included with respect to our liquidity and capital resources , see item 1 “ business-recent developments , ” item 1a “ risk factors-risks related to recent events , ” and item 9a “ controls and procedures. ” our primary expected sources and uses and capital are as follows : sources cash and cash equivalent balances ; operating cash flow ; - 45 - available borrowings under our existing revolving credit facility ; issuance of long-term debt ; asset sales ; and issuance of equity securities . uses short term : leasing costs and tenant improvements allowances ; active anchor space repositioning/redevelopments ; recurring maintenance capital expenditures ; debt repayment requirements ; corporate and administrative costs ; and dividend/distribution payments . long term : major active redevelopments , renovation or expansion programs at individual properties ; acquisitions ; and debt maturities . our cash flow activities are summarized as follows ( dollars in thousands ) : brixmor property group inc . replace_table_token_20_th brixmor operating partnership lp replace_table_token_21_th operating activities cash and cash equivalents for the parent company were $ 69.5 million and $ 60.6 million as of december 31 , 2015 and 2014 , respectively . cash and cash equivalents for the operating partnership were $ 69.5 million and $ 60.5 million as of december 31 , 2015 and 2014 respectively . our net cash flow provided by operating activities primarily consist of cash inflows from tenant rental payments and tenant expense reimbursements and cash outflows for property operating expenses , real estate taxes , general and administrative expenses and interest payments .
4 million in 2018. our 2019 net income per share attributable to nl stockholders includes : a loss of $ .31 per share , net of income tax benefit , related to the litigation settlement expense , recognized mainly in the second quarter , income of $ .08 per share , net of income tax expense , related to insurance recoveries , recognized mainly in the second quarter , income of $ .07 per share , net of income tax expense , related to a gain from a sale of excess property , recognized in the third quarter , income of $ .05 per share , net of income tax expense , related to a gain from the sale of our insurance and risk management business , recognized in the fourth quarter , a loss of $ .03 per share related to kronos ' fourth quarter recognition of a non-cash deferred income tax expense primarily related to the revaluation of kronos ' net deferred income tax asset in germany as a result of a decrease in the german trade tax rate , income of $ .01 per share related to kronos ' fourth quarter recognition of an income tax benefit related to the favorable settlement of a prior year tax matter in germany , and income of $ .01 per share related to kronos ' insurance settlement gain recognized in the fourth quarter . our 2018 net loss per share attributable to nl stockholders includes : a loss of $ 1.01 per share related to the litigation settlement expense , recognized in the second quarter , a loss of $ .02 per share related to kronos ' tax on global intangible low-tax income , recognized in the fourth quarter , and a loss of $ .01 per share related to kronos ' reserve for uncertain tax positions , recognized in the first and fourth quarters . our 2017 net income per share attributable to nl stockholders includes : income of $ .77 per share related to a non-cash deferred income tax benefit related to the revaluation of our net deferred income tax liability resulting from the reduction in the u.s. federal corporate income tax rate enacted into law on december 22 , 2017 , income of $ .01 per share , net of income taxes , related to insurance recoveries we recognized , income of $ .76 per share related to kronos ' non-cash deferred income tax benefit recognized as the result of the reversal of its deferred income tax asset valuation allowances associated with its german and belgian operations , mostly recognized in the second quarter , income of $ .08 per share related to kronos ' fourth quarter non-cash deferred income tax benefit recognized as the result of the reversal of its deferred income tax asset valuation allowance related to certain u.s. deferred income tax assets of one of its non-u.s. subsidiaries ( which subsidiary is treated as a dual resident for u.s. income tax purposes ) , a loss of $ .31 per share related to kronos ' fourth quarter provisional current income tax expense as a result of a change in the 2017 tax act for the one-time repatriation tax imposed on the post-1986 undistributed earnings of kronos ' non-u.s. subsidiaries , income of $ .05 per share related to kronos ' income tax benefit related to the execution and finalization of an advance pricing agreement between the canada and germany , mostly recognized in the third quarter ( which includes an $ 8.6 million non-cash income tax benefit as a result of a net decrease in kronos ' reserve for uncertain tax positions ) , - 33 - a loss of $ .02 per share related to kronos ' fourth quarter provisional non-cash deferred income tax expense related to a change in its co nclusions regarding its permanent reinvestment assertion with respect to the post-1986 undistributed earnings of kronos ' european subsidiaries , and a loss of $ .02 per share related to kronos ' third quarter loss on prepayment of debt . outlook we currently expect our net income attributable to nl stockholders in 2020 to be lower than 2019 primarily due to lower expected equity in earnings from kronos partially offset by the net effects of the non-recurring items discussed above . income ( loss ) from operations the following table shows the components of our income ( loss ) from operations . replace_table_token_5_th the following table shows the components of our income ( loss ) before income taxes exclusive of our income ( loss ) from operations . replace_table_token_6_th - 34 - compx international inc. replace_table_token_7_th net sales - net sales increased approximately $ 6.0 million in 2019 compared to 2018 primarily due to higher marine components sales to the towboat market . relative changes in selling prices did not have a material impact on net sales comparisons . net sales increased approximately $ 6.2 million in 2018 compared to 2017 primarily due to higher marine components sales volumes to manufacturers of ski/wakeboard boats and larger center-console boats ; and to a lesser extent security products sales to certain markets , particularly transportation and office furniture . relative changes in selling prices did not have a material impact on net sales comparisons . cost of sales and gross margin – cost of sales increased from 2018 to 2019 due to the effects of increased sales volumes for both compx 's security products and marine components businesses and increased labor costs at security products . as a result , gross margin as a percentage of sales decreased over the same period . the decrease in gross margin percentage is the result of the decline in security products gross margin percentage in 2019 as compared to 2018. cost of sales increased from 2017 to 2018 primarily due to increased sales volumes for both compx 's security products and marine components businesses . story_separator_special_tag kronos ' sales volumes decreased 16 % in 2018 as compared to the record sales volumes of 2017 primarily due to a combination of factors including ( i ) lower sales in all major markets resulting from a controlled ramp-up in january 2018 as kronos brought the second phase of its new global enterprise resource planning system online ; ( ii ) inventory management to assure adequate supply to its customers during the spring and summer necessitated by the lower production volumes in the first three months of the year ( as discussed below ) ; ( iii ) product availability in the second quarter ; and ( iv ) customer inventory level changes in the second , third and fourth quarters as customer inventory levels returned to more normal levels . in addition to the impact of changes in average tio 2 selling prices and sales volumes , kronos estimates that changes in currency exchange rates increased its net sales by approximately $ 49 million , or 3 % , as compared to 2017. cost of sales and gross margin – kronos ' cost of sales increased $ 245.2 million or 22 % in 2019 compared to 2018 primarily due to the net impact of a 15 % increase in sales volumes , higher raw materials and other production costs of approximately $ 122 million ( including higher cost for third-party feedstock costs , energy and other raw materials ) and currency fluctuations ( primarily the euro relative to the u.s. dollar ) . kronos ' cost of sales as a percentage of net sales increased to 78 % in 2019 compared to 66 % in 2018 primarily due to the unfavorable effects of lower average selling prices and higher raw materials and other production costs , as discussed above . kronos ' gross margin as a percentage of net sales decreased to 22 % in 2019 compared to 34 % in 2018. as discussed and quantified above , kronos ' gross margin decreased primarily due to the net effect of lower average selling prices , higher sales volumes and higher raw materials and other production costs . - 40 - kronos ' cost of sales decreased $ 59.6 million or 5 % in 2018 compared to 2017 due to the net impact of a 16 % decrease in sales volumes , a 7 % decrease in tio 2 production volumes , higher raw materials and other production costs of approximately $ 103 million ( primarily caused by higher third-party feedstock ore costs ) and currency fluctuations ( primarily the euro ) . the decrease in tio 2 production volumes in 2018 compared to the production volumes in 2017 was primarily due to increased maintenance activities at certain facilities in 2018 , and the implementation of a pr oductivity-enhancing improvement project at its belgian facility in the first quarter of 2018. kronos ' cost of sales as a percentage of net sales decreased to 66 % in 2018 compared to 67 % in 2017 as the favorable effects of higher average selling prices mo re than offset the unfavorable effects related to lower production volumes and higher raw materials and other production costs , as discussed above . kronos ' gross margin as a percentage of net sales increased to 34 % in 2018 compared to 33 % in 2017. as discussed and quantified above , kronos ' gross margin increased primarily due to the net effect of higher average selling prices , lower sales and production volumes and higher raw materials and other production costs . other operating income and expense , net – kronos ' selling , general and administrative expenses were $ 228.2 million in 2019 , which were comparable to such expenses in 2018. kronos ' selling , general and administrative expense in 2018 was $ 228.3 million , an increase of $ 27.7 million compared to 2017 in part due to higher general and administrative costs related to the implementation of a new accounting and manufacturing software system of $ 11 million , higher shipping and handling costs of $ 4 million and higher sales support costs of $ 3 million to better serve its customers . selling , general and administrative expenses were approximately 14 % of net sales in 2018 and 12 % of net sales in 2017 . income from operations – kronos ' income from operations decreased by $ 184.3 million , from $ 330.1 million in 2018 to $ 145.8 million in 2019. income from operations as a percentage of net sales was 8 % in 2019 compared to 20 % in 2018. this decrease was driven by the decrease in gross margin discussed above for the comparable periods . kronos estimates that changes in currency exchange rates decreased income from operations by approximately $ 3 million in 2019 as compared to 2018. kronos ' income from operations decreased by $ 17.7 million , from $ 347.8 million in 2017 to $ 330.1 million in 2018. this decrease was due in part to the decrease in gross margin and the increase in selling , general and administrative expense noted above for the comparable periods . kronos ' income from operations as a percentage of net sales was 20 % in each of 2018 and 2017. kronos estimates that changes in currency exchange rates increased income from operations by approximately $ 33 million in 2018 as compared to 2017. other non-operating income ( expense ) – kronos ' loss on marketable equity securities was $ .1 million in 2019 and $ 7.3 million in 2018. other components of net periodic pension and postretirement benefits other than pensions , or opeb , cost in 2019 was comparable to 2018. interest expense in 2019 was comparable to 2018. beginning on january 1 , 2018 with the adoption of asu 2016-01 , all of kronos ' marketable equity securities continued to be carried at fair value , but kronos began recognizing any unrealized	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 our primary source of liquidity on an ongoing basis is our cash flow from operating activities and credit facilities with affiliates and banks as further discussed below . we generally use these amounts to fund capital expenditures ( substantially all of which relate to compx ) , pay ongoing environmental remediation and litigation costs , and provide for the payment of dividends ( if declared ) . at december 31 , 2019 , we had aggregate cash , cash equivalents and restricted cash of $ 157.9 million , substantially all of which was held in the u.s. a detail ( in millions ) by entity is presented in the table below . compx $ 63.3 nl parent and wholly-owned subsidiaries 94.6 total $ 157.9 in addition , at december 31 , 2019 we owned 14.4 million shares of valhi common stock with an aggregate market value of $ 26.9 million . see note 5 to our consolidated financial statements . we also owned 35.2 million shares of kronos common stock at december 31 , 2019 with an aggregate market value of $ 471.9 million . see note 6 to our consolidated financial statements . we routinely compare our liquidity requirements and alternative uses of capital against the estimated future cash flows we expect to receive from our subsidiaries and affiliates . as a result of this process , we have in the past and may in the future seek to raise additional capital , incur debt , repurchase indebtedness in the market or otherwise , modify our dividend policies , consider the sale of our interests in our subsidiaries , affiliates , business , marketable securities or other assets , or take a combination of these and other steps , to increase liquidity , reduce indebtedness and fund future activities . such activities have in the past and may in the future involve related companies . we periodically evaluate acquisitions of interests in or combinations with companies ( including related companies ) perceived by management to be undervalued in the marketplace . these companies may or may not be engaged in businesses related to our current businesses .
furthermore , because of the restrictions in place on travel in china during this period , many of our employees were unable to return from their holiday travel as planned , resulting in fewer than 90 % of our employees being able to return to work at our prc subsidiary before early march . our other global manufacturing facilities also have been affected by various government restrictions put in place to slow the spread of covid-19 . in thailand , the government declared a national state of emergency effective march 26 , 2020 and required the closure of various businesses , in particular retail establishments , and passed measures restricting movement and activities in thailand . while our operations in thailand have not been suspended , we have implemented a number of safety protocols to allow our operations in our facilities there to continue in accordance with government regulations . with the exception of our facility in santa clara , california , which closed for approximately one week beginning in late march before reopening in early april as a previously classified “ essential business , ” our facilities in the u.s. , including in new jersey , and in the u.k. have remained open while adhering to the local government restrictions and orders implemented in march 2020 , including “ shelter-in-place ” orders and social distancing guidelines . the health and well-being of our employees continues to be our top priority . over the past several months , we have implemented significant precautionary measures throughout our worldwide operations to ensure our employees and their families remain safe , such as mandatory temperature detection at building entrances , rigorous and regular facility and equipment disinfection , and mandatory personal protective equipment protocols , including ( 1 ) the wearing of face masks throughout our factories at all times , ( 2 ) distributing our employees across shifts to better maintain safe personal distances , ( 3 ) isolating incoming parts and materials for a week or more prior to unpacking , or applying extreme heat to them to kill potential viruses , ( 4 ) directing our non-factory personnel to work remotely , and ( 5 ) restricting all non-employee visits to our campuses . during the six months ended june 26 , 2020 , we also experienced a shift in the demand for our services , with some customers canceling , decreasing or delaying orders and other customers accelerating and increasing orders . however , the most significant effect of covid-19 on our operations has been the disruption of our supply chain , including significant fluctuations in the availability of parts and materials necessary to manufacture our products for our customers . while we were able to mitigate some of these issues by quickly identifying and securing alternative sources , these mitigation efforts , combined with our employee safety initiatives , negatively impacted our gross margins due to the associated costs and expenses . 40 given the unprecedented global , human , and economic impact of covid-19 , the extraordinary economic short-term uncertainty , and the evolving and differing national strategies for dealing with covid-19 , it is extremely challenging to provide forward-looking disclosure . despite the uncertainty and concern about the global economy and the health of various industries , we believe it important to share our considerations as we continue to assess the impacts of covid-19 as they relate to our business in the future : with work-from-home protocols in place around the world , global demand for internet bandwidth has grown and we believe it will continue to grow . because the next-generation telecom and datacom products we manufacture for our customers are important to expand network capacity , we believe this will have a positive impact on our business in the long-term . while we believe that the long-term growth outlook for the markets we serve has not been significantly impacted , in the short-term we are likely to continue to see regional downward demand adjustments for products we manufacture for our customers , especially if the covid-19 outbreak intensifies or returns in various geographic areas as happened at the end of our third fiscal quarter . moreover , we believe the markets for other products we manufacture , such as the industrial lasers and automotive markets , are likely to see reduced demand in a prolonged economic downturn . we expect we will continue to experience disruptions in our supply chain and the availability of parts and materials will continue to fluctuate , especially if the covid-19 outbreak intensifies or returns in various geographic areas . however , we believe we can mitigate these disruptions by continuing to identify and secure alternative sources . a significant portion of our costs are variable , and because of this , we can adjust manufacturing costs relatively quickly to respond to the changing demand of our customers . however , because parts and materials account for the largest portion of our costs , in combination with the supply chain issues noted above and , to a lesser extent , the expenses associated with our commitment to the safety and health protocols implemented across our global operations , our gross margins will continue to be negatively affected for the foreseeable future , and at least into the first half of fiscal year 2021. the safety and health of our employees is and will remain a key priority , and we will continue to follow robust safety protocols in all of our facilities . given our $ 488.1 million in cash , cash equivalents and short-term investments , and our total debt of approximately $ 51.8 million , as of june 26 , 2020 , we believe we are in a solid position from a capital and financial resources perspective . story_separator_special_tag our prc subsidiary has obligations to file documents related to employee share options with relevant tax authorities and withhold individual income taxes of those employees who exercise their share options . furthermore , our transfer of funds to our subsidiaries in thailand and the prc are each subject to approval by governmental authorities in case of an increase in registered capital , or subject to registration with governmental authorities in case of a shareholder loan . these limitations on the flow of funds between our subsidiaries and us could restrict our ability to act in response to changing market conditions . income tax our effective tax rate is a function of the mix of tax rates in the various jurisdictions in which we do business . we are domiciled in the cayman islands . under the current laws of the cayman islands , we are not subject to tax in the cayman islands on income or capital gains until march 6 , 2039. throughout the period of our operations in thailand , we have generally received income tax and other incentives from the thailand board of investment . preferential tax treatment from the thai government in the form of a corporate tax exemption on income generated from projects to manufacture certain products at our chonburi campus is currently available to us through june 2026. similar preferential tax treatment was available to us through june 2020 with respect to products manufactured at our pinehurst campus . after june 2020 , 50 % of our income generated from products manufactured at our pinehurst campus will be exempted from tax through june 2025. such preferential tax treatment is contingent on various factors , including the export of our customers ' products out of thailand and our agreement not to move our manufacturing facilities out of our current province in thailand for at least 15 years from the date on which preferential tax treatment was granted . currently , the corporate income tax rate for our thai subsidiary is 20 % . with respect to our u.s. subsidiaries , the tax cuts and jobs act ( “ tax reform act ” ) enacted on december 22 , 2017 provided for significant changes to u.s. tax law . among other provisions , the tax reform act reduced the u.s. corporate income tax rate to 21 % , which is the current rate for our u.s. subsidiaries . 46 during fiscal year 2019 , we completed our assessment of the income tax effects resulting from the tax reform act and concluded that no cumulative remeasurement adjustments were required . critical accounting policies and use of estimates we prepare our consolidated financial statements in conformity with u.s. gaap , which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities , the disclosure of contingent liabilities on the date of the consolidated financial statements and the reported amounts of revenues and expenses during the financial reporting period . we continually evaluate these estimates and assumptions based on the most recently available information , our own historical experience and on various other assumptions that we believe to be reasonable under the circumstances . the evaluation results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . because the use of estimates is an integral component of the financial reporting process , actual results could differ from those estimates . some of our accounting policies require higher degrees of judgment than others in their application . we consider the policies discussed below to be critical to an understanding of our consolidated financial statements , as their application places the most significant demands on our management 's judgment . a quantitative sensitivity analysis is provided where such information is reasonably available , can be reliably estimated , and provides material information to investors . the amounts used to assess sensitivity are included for illustrative purposes only and do not represent management 's predictions of variability . our critical accounting policies and the adoption of new accounting policies are disclosed in note 2 – summary of significant accounting policies . there were no changes to our accounting policies other than the adoption of leases ( topic 842 ) , derivatives and hedging ( topic 815 ) and goodwill impairment ( asu 2017-04 ) . revenue recognition on june 30 , 2018 , we adopted asc 606 using the modified retrospective method , which was applied to those contracts which were not completed as of june 29 , 2018. the modified retrospective method required us to recognize the cumulative effect of the adoption of asc 606 , for all contracts with customers , to the opening balance of equity at june 30 , 2018. we derive total revenues primarily from the assembly of products under supply agreements with our customers and the fabrication of customized optics and glass . we recognize revenue relating to contracts that depict the transfer of promised goods or services to customers in an amount reflecting the consideration to which we expect to be entitled in exchange for such goods or services . in order to meet this requirement , we apply the following five steps : ( 1 ) identify the contract with a customer , ( 2 ) identify the performance obligations in the contract , ( 3 ) determine the transaction price , ( 4 ) allocate the transaction price to the performance obligations in the contract , and ( 5 ) recognize revenue when a performance obligation is satisfied . revenue is recognized net of any taxes collected from customers , which is subsequently remitted to governmental authorities . a performance obligation is a contractual promise to transfer a distinct good or service to the customer . in contracts with multiple performance obligations , we identify each performance obligation and evaluate whether the performance obligation is distinct within the context of the contract at contract	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 and working capital we primarily finance our operations through cash flow from operating activities . as of june 26 , 2020 and june 28 , 2019 , we had cash , cash equivalents , and short-term investments of $ 488.1 million and $ 437.3 million , respectively , and outstanding debt of $ 51.7 million and $ 60.9 million , respectively . our cash and cash equivalents , which primarily consist of cash on hand , demand deposits and liquid investments with original maturities of three months or less , are placed with banks and other financial institutions . the weighted average interest rate on our cash and cash equivalents for fiscal year 2020 , fiscal year 2019 and fiscal year 2018 was 1.8 % , 1.9 % and 0.8 % , respectively . our cash investments are made in accordance with an investment policy approved by the audit committee of our board of directors . in general , our investment policy requires that securities purchased be rated a1 , p-1 , f1 or better . no security may have an effective maturity that exceeds three years . our investments in fixed income securities are primarily classified as available-for-sale and are recorded at fair value . the cost of securities sold is based on the specific identification method . unrealized gains and losses on these securities are recorded as other comprehensive income ( loss ) and are reported as a separate component of shareholders ' equity .
our customers include world-class original equipment manufacturers ( “ oems ” ) , original design manufacturers ( “ odms ” ) , corporate enterprises ( “ enterprises ” ) , silicon vendors ( “ svs ” ) and peripheral vendors . a significant portion of our business historically has also been focused on reselling software from microsoft , from which a majority of our revenue currently continues to be derived . beginning in early 2014 , we initiated development efforts focused on new proprietary software products addressing the industrial internet of things ( “ iiot ” ) market , by interconnecting of uniquely identifiable devices , extracting data from those devices and applying advanced analytics and machine learning to the data in order to derive meaningful and actionable insights . while iiot is a relatively new market , we believe the work we have engaged in since our inception—namely adding intelligence and connectivity to discrete standalone devices and systems—embodies much of what is central to the core functionality of iiot . these software development efforts have driven a new business initiative for bsquare , which we refer to as datav . our datav solution includes software products , applications and services that are designed to turn raw iiot device data into meaningful and actionable data for our customers . we launched datav late in the first quarter of 2016 and announced our first three major customer bookings later that year . these bookings comprised software licensing , software maintenance and related systems integration services and are , we believe , indicative of the potential customer demand for datav . during 2017 we began selling data analytics services and datav application pilots to major industrial customers primarily in the transportation , oil and gas and manufacturing vertical markets and signed four pilots in the first six months of 2017 and another fifteen pilots in the second half of 2017 , the majority of which are still ongoing . we believe that datav presents high growth opportunities in a large , expanding addressable market , at substantially higher gross margins as compared to our traditional business . developing , selling and implementing datav has become our primary focus , as approximately 65 % of our non-administrative employees are now working solely on datav , representing a transition away from dependence on resale software and professional engineering services toward increased reliance on our own proprietary software and related systems integration services . we intend to continue to run our legacy software resale business to maximize cash flow for the foreseeable future . our legacy professional engineering services business is now managed as a part of our overall services business , which increasingly serves datav customers and prospects . critical accounting judgments revenue recognition we recognize revenue when control of the promised goods or services is transferred to our customers , in an amount that reflects the consideration that we expect to receive in exchange for those goods or services . we generate all of our revenue from contracts with customers . third-party software we sell third-party software licenses based upon a customer purchase order , shipping a certificate of authenticity ( “ coa ” ) to satisfy this single performance obligation . these shipments are also subject to limited return rights ; historically , returns have averaged less than one-quarter of one percent . we recognize revenue from third-party products at the time of shipment when the customer accepts control of the coa . 22 proprietary software we sell our proprietary software products to customers under a contract or by purchase order . our datav software contracts generally include professional services , a perpetual or term license and support and maintenance . in contracts with multiple performance obligations , we identify each performance obligation and evaluate whether the performance obligations are distinct within the context of the contract at contract inception . performance obligations that are not distinct at contract inception are combined . contracts that include software customization may result in the combination of the customization services with the software license as one distinct performance obligation . the transaction price is generally in the form of a fixed fee at contract inception . certain datav contracts also include variable consideration in the form of royalties earned when customers meet contractual volume thresholds . we allocate the transaction price to each distinct performance obligation based on the estimated standalone selling price for each performance obligation . we then look to how control transfers to the customer in order to determine the timing of revenue recognition . in contracts that include customer acceptance , we recognize revenue when we have delivered the software and received customer acceptance . we recognize revenue from support and maintenance performance obligations over the service delivery period . we recognize revenue from royalties in the period of usage . our non-datav software products generally do not include customization or modification services and are sold in the form of term licenses . these software licenses represent only one distinct performance obligation . revenue is recognized when the software is delivered to the customer . there are two items involving revenue recognition on datav software contracts that require us to make more difficult and subjective judgments : the determination of which performance obligations are distinct within the context of the overall contract and the estimated standalone selling price of each performance obligation . in instances where our datav contracts include significant customization or modification services , the customization and modification services are generally combined with the software license and recorded as one distinct performance obligation . we estimate the standalone selling price of each performance obligation based on either a cost-plus-margin approach or an adjusted market assessment approach . story_separator_special_tag additional revenue details were as follows : replace_table_token_5_th 25 revenue total revenue consists of sales of third-party software and revenue realized from sales of our own proprietary software products , which include software license sales and support and maintenance revenue , and professional engineering services that support proprietary datav software customers and legacy service customers . third-party software revenue decreased in 2017 compared to 2016 , primarily due to lower sales of microsoft windows embedded operating systems , a portion of which is attributable to higher levels of buying activity late in 2016 as customers anticipated higher pricing following the cessation of microsoft 's volume purchase discount programs on december 31 , 2016. sales of microsoft operating systems represented approximately 80 % and 81 % of our total revenue and 54 % and 74 % of our total gross profit for 2017 and 2016 , respectively . proprietary software revenue increased in 2017 compared to 2016 , primarily due to approximately $ 3.0 million in datav software revenue recognized in 2017 , the vast majority of which was recognized in the first quarter of 2017 when we delivered and received customer acceptance on a datav software license . we expect that revenue from both datav and our other proprietary software will continue to fluctuate in timing and amount in future periods . we anticipate that our datav revenue will grow over time , but that other proprietary software product sales will decline over time as they approach the end of their respective life cycles . professional engineering service revenue decreased in 2017 compared to 2016 , due to declines in service revenue generated in north america , asia and europe with the completion in 2016 and early 2017 of several existing customer projects and a shift in our sales generation priorities and staffing to datav . our largest professional engineering customers in 2017 were coca-cola and google . we expect that professional engineering service revenue will grow over time as we continue our strategic focus on datav ; we will continue to serve our legacy services customers as long as our contracts are profitable and such revenue will continue to vary in timing and amounts . as we started to conclude those existing customer projects in 2016 and began to align our organizational structure with our increasing focus on datav , our board of directors approved a restructuring plan in july 2016 that included a workforce reduction in our professional engineering service group . we incurred pre-tax restructuring charges of approximately $ 1.0 million in 2016 , the vast majority of which was included in cost of service revenue . the staff reductions from this restructuring were completed in the fourth quarter of 2016. see also professional engineering service gross profit and gross margin discussion below . gross profit and gross margin cost of software revenue consists primarily of the cost of third-party software products payable to third-party vendors and support costs associated with our proprietary software products . cost of 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 and gross margin were as follows : year ended december 31 , ( in thousands , except percentages ) 2017 2016 $ change % change ( 1 ) third-party software gross profit $ 10,594 $ 12,378 $ ( 1,784 ) ( 14 ) % third-party software gross margin 16 % 15 % - 1 % proprietary software gross profit $ 4,483 $ 1,610 $ 2,873 178 % proprietary software gross margin 96 % 83 % - 13 % professional engineering service gross profit $ 3,045 $ 1,832 $ 1,213 66 % professional engineering service gross margin 29 % 12 % - 17 % total gross profit $ 18,122 $ 15,820 $ 2,302 15 % total gross margin 22 % 16 % - 6 % ( 1 ) for gross margin , amounts represent percentage point change . gross profit and gross margin third-party software gross profit declined in 2017 compared to 2016 , with lower levels of third-party software sales , but gross margins increased . we experienced increased competition in a number of larger third-party software accounts during 2017 as price protections under microsoft volume pricing agreements came to an end in 2016 ; revenues lost in these accounts were more heavily weighted to lower margin customers , enabling slightly improved gross margins in 2017. gross profit on third-party software was positively impacted by rebate credits we receive from microsoft for the sale of windows embedded operating systems earned through the achievement of defined objectives . under the microsoft rebate program , we recorded $ 499,000 and $ 345,000 of rebates in 2017 and 2016 , respectively , which were accounted for as reductions in cost of revenue . additionally , we recorded $ 0.7 26 million and $ 1.1 million in rebates in 2017 and 2016 , respectively , which were accounted for as reductions in marketing expenses . there was a balance of approximately $ 411,000 in outstanding rebates for which we qualified as of december 31 , 2017. if qualified program expenditures are made , these will be accounted for as reductions in marketing expense in the period in which such expenditures a re made . proprietary software gross profit and gross margin increased in 2017 compared to 2016 , due primarily to the recognition of approximately $ 3.0 million in datav software revenue recognized in 2017 , the vast majority of which was recognized in the first quarter of 2017 when we delivered and received customer acceptance on a datav software license sold to paccar . we anticipate that software gross profit and gross margin will continue to fluctuate in future periods due to the timing of datav software revenue recognition . professional engineering service gross profit and gross margin increased in 2017 compared to 2016 , resulting from higher utilization	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 $ 24.8 million of cash , cash equivalents and investments , compared to $ 33.2 million at december 31 , 2016 , reflecting a net use of approximately $ 8.4 million in cash , cash equivalents and investments . we generally invest our excess cash in high quality marketable investments . these investments generally include corporate notes and bonds , commercial paper and money market funds , although specific holdings can vary from period to period depending upon our cash requirements . our investments held at december 31 , 2017 had minimal default risk and short-term maturities . 27 operating activities used cash of approximately $ 8.2 million in 2017 , which included a net loss of $ 9.1 million , non-cash adjustments of $ 2.4 million , and a working capital usage of approximately $ 1.5 mil lion . operating activities provided cash of approximately $ 2.6 million in 2016 , which included net loss of approximately $ 1.1 million , non-cash adjustments of approximately $ 1.8
since our formation , we have focused our efforts on the development of our initial product candidates , engaging in preliminary discussions with the fda concerning the regulatory pathway for certain additional product candidates , registration filings of our initial product candidates and the licensing of late-stage product candidates . in december 2019 we launched our biorphen product and we have established a diversified pipeline of other product candidates in various stages of development , four of which have been submitted to the fda and are under review . we intend to focus on product candidates that are liquid in formulation , including injectables , oral liquids and ophthalmics , and qualify under the fda 's 505 ( b ) ( 2 ) regulatory pathway . our corporate strategy is to pursue what we perceive to be low-risk product candidates where existing published literature , historical clinical trials , or physician usage has established safety and or efficacy of the molecule , thereby reducing the incremental clinical burden required for us to bring the product to patients . we intend to pursue product candidates that require a single small phase 3 trial , a bioequivalence trial , or literature-based filings . prior to initiating significant development activities on a product candidate , we typically meet with the fda to establish a defined clinical and regulatory path to approval . we believe our product candidates can address situations where patient needs are not being met by current fda-approved pharmaceutical products . this may include products that are being supplied on an unapproved basis , products that are currently being compounded , and products that are approved and widely used internationally but not approved in the united states . results of operations to date we have realized only limited revenues from a licensing arrangement on our em-100 product and the launch of our biorphen product . we anticipate successfully completing development of additional product candidates in 2020 and beyond and growing our business . year ended december 31 , 2019 compared to year ended december 31 , 2018 for the years ended december 31 , 2019 and 2018 , we generated $ 1.0 and $ 0 in revenue , respectively . the revenue realized in 2019 was from a licensing arrangement for our em-100 product which is pending additional fda review and the launch of our biorphen product in december 2019. for the years 2019 and 2018 , we incurred $ 11.6 million and $ 5.6 million of research and development ( “ r & d ” ) expenses , respectively , and $ 7.6 million and $ 4.7 million of general and administrative ( “ g & a ” ) expenses , respectively . the comparative period detail of our r & d expense is listed in the table below . the $ 2.9 million increase in g & a expenses was primarily due to additional expenses related to becoming a public company , sales and marketing for the launch of our biorphen product , and the impact of personnel additions in the second half of 2018 and first half of 2019. this was partially offset by lower stock-based consulting expenses . in addition , the change in the fair value of our warrant liability reflected in other expense decreased by $ 2.6 million as this mark–to–market accounting treatment was terminated in conjunction with our november 2018 ipo . we incurred a net loss of $ 18.3 million and $ 12.7 million for the years ended december 31 , 2019 and 2018 , respectively . general and administrative expenses g & a expenses consist primarily of employee compensation expenses , stock-based consulting service fees , sales and marketing expenses , business insurance , legal and professional fees and travel expenses . 47 research and development expenses set forth below is our r & d spending for our current product candidates . we currently have ten employees that support our overall product development and we also have facility and operating costs for a laboratory that supports our product development . the laboratory personnel and related capital equipment additions were added in late 2018. we do not track internal costs by product for our employees and laboratory expenses and they are listed as indirect expenses in the table below ( amounts are in thousands ) . replace_table_token_2_th year ended december 31 , 2018 compared to period ended december 31 , 2017 for the periods ended december 31 , 2018 and 2017 , we incurred $ 5.6 million and $ 3.9 million of research and development ( “ r & d ” ) expenses , respectively , and $ 4.7 million and $ 3.2 million of general and administrative ( “ g & a ” ) expenses , respectively . the comparative period detail of our r & d expense is listed in the table below . the $ 1.5 million increase in g & a expenses was primarily due to the partial year start-up in late april 2017 as compared to a full year of operations in 2018 combined with personnel additions in the second half of 2018. our compensation-related costs increased by $ 1.1 million plus costs for our board of directors increased by $ 0.4 million . in addition , the fair value of our warrant liability reflected in other expense increased by $ 2.5 million as a result of the increase in our stock price up to the date of our ipo . we incurred a net loss of $ 12.7 million and $ 7.2 million for the periods ended december 31 , 2018 and 2017 , respectively . general and administrative expenses g & a expenses consist primarily of employee compensation expenses , stock-based consulting service fees , legal and professional fees and travel expenses . story_separator_special_tag they also have the ability to direct sales of product to their customers on terms and at prices they negotiate . although wholesalers have product return rights , we do not believe they have a significant incentive to return the product to us . upon recognition of revenue from product sales of biorphen , the estimated amounts of credit for product returns , chargebacks , distribution fees , prompt payment discounts , and gpo fees are included in sales reserves , accrued liabilities and net of accounts receivable . we monitor actual product returns , chargebacks , discounts and fees subsequent to the sale . if these amounts end up differing from our estimates , we will make adjustments to these allowances , which are applied to increase or reduce product sales revenue and earnings in the period of adjustment . 50 in addition , we anticipate we will receive revenues from product licensing agreements where we have contracted for milestone payments and royalties from products we have developed or for which we have acquired the rights to a product developed by a third party . stock-based compensation we account for stock-based compensation under the provisions of the financial accounting standards board ( the “ fasb ” ) accounting standards codification ( “ asc ” ) – 718 compensation – stock compensation . the guidance under asc 718 requires companies to estimate the fair value of the stock-based compensation awards on the date of grant for employees and directors and record expense over the related service periods , which are generally the vesting period of the equity awards . awards for consultants are accounted for under asc 505-50 - equity based payments to non-employees . compensation expense is recognized over the period during which services are rendered by such consultants and non-employees until completed . at the end of each financial reporting period prior to completion of the service , the fair value of these awards is remeasured using the then-current fair value of our common stock and updated assumption inputs in the black-scholes option-pricing model ( “ bsm ” ) . we estimate the fair value of stock-based option awards to our employees and directors using the bsm . the bsm requires the input of subjective assumptions , including the expected stock price volatility , the calculation of expected term , forfeitures and the fair value of the underlying common stock on the date of grant , among other inputs . the risk-free interest rate was determined from the implied yields for zero-coupon u.s. government issues with a remaining term approximating the expected life of the options or warrants . dividends on common stock are assumed to be zero for the bsm valuation of the stock options . the expected term of stock options granted is based on vesting periods and the contractual life of the options . expected volatilities are based on comparable companies ' historical volatility , which management believes represents the most accurate basis for estimating expected future volatility under the current conditions . we account for forfeitures as they occur . prior to our initial public offering in november 2018 ( the “ ipo ” ) , the fair value of the shares of common stock underlying our stock-based awards was determined by our board of directors , with input from management . because there had been no public market for our common stock prior to the ipo , our board of directors had determined the fair value of the common stock on the grant-date of the stock-based award by considering a number of objective and subjective factors , including enterprise valuations of our common stock performed by an unrelated third-party specialist , valuations of comparable companies , sales of our convertible preferred stock to unrelated third parties , operating and financial performance , the lack of liquidity of our capital stock , and general and industry-specific economic outlook . following our ipo , we use the closing stock price on the date of grant for the fair value of the common stock . research and development expenses r & d expenses include both internal r & d activities and external contracted services . internal r & d activity expenses include salaries , benefits and stock-based compensation and other costs to support our r & d operations . external contracted services include product development efforts including certain product licensor milestone payments , clinical trial activities , manufacturing and control-related activities and regulatory costs . r & d expenses are charged to operations as incurred . we review and accrue r & d expenses based on services performed and rely upon estimates of those costs applicable to the stage of completion of each project . significant judgments and estimates are made in determining the accrued balances at the end of any reporting period . actual results could differ from our estimates . upfront payments and milestone payments made for the licensing of technology for products that are not yet approved by the fda are expensed as r & d in the period in which they are incurred . nonrefundable advance payments for goods or services to be received in the future for use in r & d activities are recorded as prepaid expenses and are expensed as the related goods are delivered or the services are performed . 51 off balance sheet transactions we do not have any off-balance sheet transactions . jobs act transition period in april 2012 , the jumpstart our business startups act of 2012 ( the “ jobs act ” ) , was enacted . section 107 of the jobs act provides that an “ emerging growth company ” can take advantage of the extended transition period provided in section 7 ( a ) ( 2 ) ( b ) of the securities act 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	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 , 2019 , we had total assets of $ 17.1 million and working capital of $ 13.0 million . we had previously capitalized our operations primarily from the june 2017 private placement of approximately $ 20.1 million of series a preferred stock , par value $ 0.001 ( the “ series a preferred ” ) . our series a preferred accumulated dividends at the rate of 6 % per annum and those shares of stock plus all accrued but unpaid dividends automatically converted into shares of our common stock concurrent with our ipo in november 2018 at the conversion price of 50 % of the ipo price . the ipo provided us with net proceeds of $ 22.0 million and we also entered into a credit agreement with swk holdings in november 2019 which provides for up to $ 10 million in additional borrowing , $ 5.0 million of which was received at closing . we believe that our existing funding and the revenue from our biorphen product and potential milestones and royalty payments from em-100 will be sufficient for at least the next twelve months of our operations . however , our projected estimates for our product development spending , administrative expenses and our working capital requirements could be inaccurate , or we may experience growth more quickly or on a larger scale than we expect , any of which could result in the depletion of capital resources more rapidly than anticipated and could require us to seek additional financing earlier than we expect to supportour operations .
our results in 2013 showed significant improvement in the majority of our key operating metrics compared to 2012 , driven by the introduction of new home inventory and development activities , as compared to the fully developed , available for sale legacy inventories settled in 2012. sales trends in the first six months of 2013 were stronger than the last six months of the year . during the first half of 2013 , the homebuilding market experienced favorable sales and pricing trends compared to 2012 , driven by historically low mortgage interest rates and rising costs in the rental market which contributed to higher levels of housing affordability in the washington , d.c. market . sales trends in the second half of 2013 were strong compared to 2012 , though negatively impacted by increasing mortgage interest rates , higher home prices and buyer uncertainty . the housing market also continues to face challenges from tight mortgage underwriting standards . while we have benefited from generally improved market conditions , we continue to face gross margin pressure due to increasing land acquisition , land development and home construction costs . home closings , revenues , average selling price , gross margin , overhead leverage , and net income from continuing operations all improved in 2013 compared to 2012. our settlements for the year ended december 31 , 2013 totaled 107 units , compared to 45 units in 2012 , which represents an increase of 138 % . our consolidated homebuilding revenues for the year ended december 31 , 2013 totaled $ 53.8 million , an increase of 363 % from $ 11.6 million in 2012. our net new orders increased by 147 % in 2013 compared to 2012. an increase in the number of active communities with units available for sale contributed to the increase in net new orders as compared to 2012. the higher active community count resulted from our more disciplined land investment strategy and capital raising initiatives . we intend to continue to calibrate sales pace in each community to improve our gross margins and maximize returns on invested capital . we expect that this approach will continue to result in an expansion in our net new order volume in 2014 , as compared to 2013. while we believe higher mortgage interest rates are inevitable and may have a moderating effect on demand and pricing , we believe this impact will be outweighed in the long-term by other factors driving increased sales volume as overall new home sales in the washington , d.c. market remain low compared with historical levels . the significant improvements reported for 2013 , coupled with our successful capital raising initiatives , allowed us to continue to enhance our financial position . unrestricted cash at december 31 , 2013 totaled $ 11.9 million , an increase of $ 8.4 million from $ 3.5 million at december 31 , 2012. our improved financial position provided us additional flexibility to increase our pipeline and reduce our secured loan-to-inventory ratio to 57 % at december 31 , 2013 , as compared to 70 % at december 31 , 2012. in the short-term , we will continue to focus on maximizing our operating margins to enhance our balance sheet , despite the possibility of rising house cost pressures from increasing material prices and labor shortages , by using our existing land assets more effectively , allocating capital more effectively , and aggressively controlling unsold spec inventory . we believe we have positioned ourselves to deliver improved long-term returns . in planning for the longer term , we continue to maintain confidence that we are likely in the early stages of a broad , sustainable recovery in the u.s. new home market . while the u.s. macroeconomic environment continues to face challenges , we are continuing to pursue strategic land positions that meet our underwriting requirements in well-positioned locations and believe that sustained execution of our strategy will allow us to continue to improve our financial position and improve our returns on invested capital over the housing cycle . recent developments comstock maxwell square , l.c . on september 30 , 2013 , the company , through its subsidiary comstock maxwell square , l.c . the borrower , closed on its forty-five unit townhome condominium project located in downtown frederick , maryland ( the townes at maxwell square ) . in connection with the closing of the townes at maxwell square , the borrower entered into a loan agreement and related documents with eaglebank pursuant to which the borrower secured ( i ) a $ 2.1 million acquisition and development loan , ( ii ) a $ 3.4 million revolving construction loan and ( iii ) a $ 51 letter of credit facility ( collectively , the eagle maxwell loans ) to finance the development of the townes at maxwell square . the eagle maxwell loans provide for a variable interest rate of libor plus 3 % , subject to a minimum floor of 4.75 % . the eagle maxwell loans have a maturity date of 24 months , subject to meeting a minimum sales and settlement schedule on a quarterly basis . there is no prepayment penalty associated with the eagle maxwell loans , which are secured by a first deed of trust on the townes at maxwell square and fully guaranteed by the company . 17 comstock investors viii , l.c . in december 2013 , comstock investors viii , l.c . story_separator_special_tag excluding the impact of the release of the warranty reserve discussed in note 2 in the accompanying consolidated financial statements , gross margin percentage was 21.9 % for the year ended december 31 , 2013. revenue other revenue other decreased approximately $ 1.9 million to $ 0.8 million during the year ended december 31 , 2013 , as compared to $ 2.7 million for the year ended december 31 , 2012. the decrease primarily relates to revenue from rental operations , as the number of rental units at penderbrook and eclipse continued to decline until all units were sold in the second quarter of 2013. the completion of several of the general contracting projects in 2012 also contributed to the decline . we consider revenue to be from homebuilding when there is a structure built or being built on the lot when delivered . sales of lots occur , and are included in other revenues , when we sell raw land or finished home sites in advance of any home construction . cost of sales homebuilding cost of sales homebuilding for the year ended december 31 , 2013 increased by $ 31.9 million , to $ 41.6 million as compared to $ 9.7 million for the year ended december 31 , 2012. the number of units settled and mix of homes settled during the year ended december 31 , 2013 accounted for the increase in cost of sales . cost of sales other cost of sales other decreased approximately $ 2.7 million to $ 0.8 million during the year ended december 31 , 2013 as compared to $ 3.5 million for the year ended december 31 , 2012. as a result of the continued absorption and sale of the condominium units at penderbrook and eclipse , the decline in the number of units used in rental operations resulted in a significant decrease in cost of sales other . additionally , the completion of several general contracting projects in 2012 also contributed to the decline . impairment charges and write-offs we evaluate all of our projects to the extent of the existence of any impairment indicators requiring evaluation to determine if recorded carrying amounts were recoverable by evaluating discount rates , sales prices , absorption and our analysis of the best approach to marketing our projects for sale . based on this evaluation , we recorded an impairment charge of $ 2.4 million during the year ended december 31 , 2012 , to properly record our for sale project at fair market value less costs to sell based on the then current bulk sale strategy consistent with the provisions of asc 360 . 21 due to a change to an individual unit retail sale model from our previous bulk sale disposition strategy , we reversed a previously recorded impairment charge of $ 0.7 million during the year ended december 31 , 2013. additionally , during 2013 , we wrote-off $ 1.1 million in due diligence and entitlement pursuit costs related to the blvd newell project , which was controlled under a land purchase option contract . the write-off occurred in december 2013 due to the company 's unsuccessful attempt to obtain entitlement approvals . see real estate inventories in note 4 in the accompanying consolidated financial statements for further discussion and the basis for determining the impairment charges , reversals and write-offs . sales and marketing expenses sales and marketing expenses for the year ended december 31 , 2013 increased by $ 1.4 million to $ 2.0 million , as compared to $ 0.6 million for the year ended december 31 , 2012. the increase in sales and marketing expenses over the prior year period is directly attributable to increases in active developments and marketing efforts , which resulted in an increase in homes ordered and delivered . general and administrative expenses general and administrative expenses for the year ended december 31 , 2013 decreased by $ 1.3 million to $ 6.7 million , as compared to $ 8.0 million for the year ended december 31 , 2012. the decrease in general and administrative expenses over the prior year is attributable to increased utilization of operations employees which increased capitalization to specific projects as a result of the increase in active selling and developing communities . interest , real estate taxes and indirect costs related to inactive projects interest and real estate taxes incurred relating to the development of lots and parcels are capitalized to real estate inventories during the active development period , which generally commences when borrowings are used to acquire real estate assets and ends when the properties are substantially complete or the property becomes inactive which means that development and construction activities have been suspended indefinitely . interest is capitalized based on the interest rate applicable to specific borrowings or the weighted average of the rates applicable to other borrowings during the period . interest and real estate taxes capitalized to real estate inventories are expensed as a component of cost of sales as related units are sold . approximately , $ 1.9 million and $ 0.4 million of interest was capitalized to projects during the years ended december 31 , 2013 and 2012 , respectively . when a project becomes inactive , its interest , real estate taxes and indirect overhead costs are no longer capitalized but rather expensed in the period in which they are incurred . during the year ended december 31 , 2013 and 2012 , we recorded interest expense of $ 0.1 million and $ 1.9 million , respectively , related to inactive projects . refer to note 2 in the accompanying consolidated financial statements for the breakdown of the interest , real estate taxes and indirect costs related to inactive projects reported on the consolidated statement of operations . discontinued operations as described in note 14 to the consolidated financial statements , on march 7 , 2012 , the company 's subsidiary sold 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 we require capital to operate , to post deposits on new deals , to purchase and develop land , to construct homes , to fund related carrying costs and overhead and to fund various advertising and marketing programs to generate sales . these expenditures include payroll , community engineering , entitlement , architecture , advertising , utilities and interest as well as the construction costs of our homes . our sources of capital include , and will continue to include , funds derived from various secured and unsecured borrowings to finance acquisition , development and construction on acquired land , cash flow from operations , which includes the sale and delivery of constructed homes , rental multi-family projects , finished and raw building lots and the sale of equity and debt securities . the company is involved in ongoing discussions with lenders and equity sources in an effort to provide additional growth capital to fund 22 various new business opportunities . refer to note 8 in the accompanying consolidated financial statements for more details on our credit facilities and note 3 in the accompanying consolidated financial statements for details on private placement offerings in 2013. we are anticipating that through a combination of the capital raised through the aforementioned private placements , current available cash on hand and additional cash from settlement proceeds at existing and under development communities , the company will have sufficient financial resources to sustain our operations through the next 12 months , though no assurances can be made that we will be successful in our efforts . credit facilities we have outstanding borrowings with various financial institutions and other lenders that have been used to finance the acquisition , development and construction of real estate projects .
20 preparation of financial statements and use of estimates the preparation of consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues , and expenses and related disclosure of contingent liabilities . on an on-going basis , management evaluates its estimates , including those related to inventories , investments , goodwill , intangible and other long-lived assets , bad debts , income taxes , deferred tax assets , pensions , warranties , contingencies , and litigation . management bases its estimates on historical experience and on appropriate and customary assumptions 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 significantly from these estimates . revenue recognition we recognize revenues when there is persuasive evidence of an arrangement , 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 or at delivery destination point . in circumstances where either title or risk of loss pass upon destination , acceptance or cash payment , we defer revenue recognition until such events occur . our equipment has non-software and software components that function together to deliver the equipment 's essential functionality . revenue is recognized upon shipment or at delivery destination point , provided that customer acceptance criteria can be demonstrated prior to shipment . certain contracts require us to perform tests of the product to ensure that performance meets the published product specifications or customer requested specifications , which are generally conducted prior to shipment . where the criteria can not be demonstrated prior to shipment , revenue is deferred until customer acceptance has been received . we also defer the portion of the sales price that is not due until acceptance , which represents deferred profit . for multiple element arrangements , we allocate revenue to all deliverables based on their relative selling prices . in such circumstances , a hierarchy is used to determine the selling price for allocating revenue to deliverables as follows : ( i ) vendor-specific objective evidence of selling price ( vsoe ) , ( ii ) third-party evidence of selling price ( tpe ) , and ( iii ) best estimate of the selling price ( besp ) . for a delivered item to be considered a separate unit , the delivered item must have value to the customer on a standalone basis and the delivery or performance of the undelivered item must be considered probable and substantially in our control . our post-shipment obligations include installation , training services , one-year standard warranties , and extended warranties . installation does not alter the product capabilities , does not require specialized skills or tools and can be performed by the customers or other vendors . installation is typically provided within five days of product shipment and is completed within one to two days thereafter . training services are optional and do not affect the customers ' ability to use the product . we defer revenue for the selling price of installation and training . extended warranties constitute warranty obligations beyond one year and we defer revenue in accordance with financial accounting standards board ( fasb ) accounting standards codification ( asc ) 605-20 , separately priced extended warranty and product maintenance contracts and asc 605-25 , revenue recognition multiple-element arrangements. service revenue is recognized over the contractual period or as services are performed . our products are generally subject to warranty and the related costs of the warranty are provided for in cost of revenues when product revenue is recognized . we classify shipping and handling costs in cost of revenue . we generally do not provide our customers with contractual rights of return for any of our products . retirement and postretirement plans effective january 1 , 2012 , we changed the method of recognizing actuarial gains and losses for our defined benefit pension plans and postretirement benefit plan and calculating the expected return on plan assets for our 21 defined benefit pension plans . historically , we recognized net actuarial gains and losses in accumulated other comprehensive income within shareholders ' equity on our consolidated balance sheets on an annual basis and amortized them into operating results over the average remaining years of service of the plan participants , to the extent such gains and losses were outside of a range ( corridor ) . we elected to immediately recognize net actuarial gains and losses and the change in the fair value of the plan assets in our operating results in the year in which they occur or upon any interim remeasurement of the plans . in addition , we used to calculate the expected return on plan assets using a calculated market-related value of plan assets . effective january 1 , 2012 , we elected to calculate the expected return on plan assets using the fair value of the plan assets . we believe that this new method is preferable as it eliminates the delay in recognizing gains and losses in our operating results and it will improve the transparency by faster recognition of the effects of economic and interest rate trends on plan obligations and investments . these actuarial gains and losses are generally measured annually as of december 31 and , accordingly , will be recorded during the fourth quarter of each year or upon any interim remeasurement of the plans . story_separator_special_tag interest and other replace_table_token_18_th interest income decreased by $ 2.5 million , from $ 6.6 million in 2011 to $ 4.1 million in 2012 , due to a decrease in marketable securities used to fund the litepoint acquisition in 2011. interest income increased by $ 0.7 million , from $ 5.9 million in 2010 to $ 6.6 million in 2011 , due primarily to higher cash and marketable securities balances in 2011. interest expense and other increased by $ 1.8 million , from $ 23.7 million in 2011 to $ 25.5 million in 2012 , due primarily to higher interest expense from increased convertible debt discount amortization . 29 interest expense and other decreased by $ 0.8 million , from $ 24.5 million in 2010 to $ 23.7 million in 2011 , due primarily to a loss on the exercise of the auction rate securities related ubs put recorded in 2010 , partially offset by higher convertible debt discount amortization in 2011. income ( loss ) from continuing operations before income taxes replace_table_token_19_th the increase in income from continuing operations before income taxes from 2011 to 2012 was primarily due to higher revenue in 2012 compared to 2011 , a $ 14.5 million decrease in restructuring and other costs , partially offset by a $ 33.0 million increase in intangible assets amortization . the decrease in income from continuing operations before income taxes from 2010 to 2011 was primarily due to lower revenue in 2011 compared to 2010 , an $ 11.2 million increase in intangible assets amortization , a $ 12.2 million charge to adjust litepoint acquired inventory to fair value and a $ 10.5 million increase in restructuring and other costs . income taxes the income tax expense from continuing operations for 2012 totaled $ 48.9 million , primarily attributable to a u.s. federal tax provision and foreign taxes . the income tax benefit from continuing operations for 2011 totaled $ 129.5 million , primarily attributable to the reduction of our deferred income tax valuation allowance . we considered the weight of both the positive and negative evidence as of december 31 , 2011 and concluded that a substantial majority of the deferred tax assets will be realized . the income tax expense from continuing operations of $ 16.7 million for 2010 was related primarily to tax provisions for foreign taxes . contractual obligations the following table reflects our contractual obligations as of december 31 , 2012 : replace_table_token_20_th 30 ( 1 ) long-term debt obligations include current maturities . ( 2 ) included in other long-term liabilities are liabilities for customer advances , extended warranty , uncertain tax positions and other obligations . for certain long-term obligations , we are unable to provide a reasonably reliable estimate of the timing of future payments relating to these obligations and therefore we included these amounts in the column marked other . story_separator_special_tag their notes at a price equal to 100 % of the principal amount , plus accrued and unpaid interest , upon the occurrence of certain fundamental changes involving the company . we believe our cash , cash equivalents and marketable securities balance will be sufficient to meet working capital and expenditure needs for at least the next twelve months . the amount of cash , cash equivalents and marketable securities in the u.s. and our operations in the u.s. provide sufficient liquidity to fund our business activities in the u.s. we have approximately $ 300 million of cash outside the u.s. that if repatriated would incur additional taxes . inflation has not had a significant long-term impact on earnings . retirement plans asc 715-20 , compensation retirement benefits defined benefit plans requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by asc 715-20. the pension asset or liability represents the difference between the fair value of the pension plan 's assets and the projected benefit obligation as of december 31. for other postretirement benefit plans , the liability is the difference between the fair value of the plan 's assets and the accumulated postretirement benefit obligation as of december 31. our pension expense , which includes the u.s. qualified pension plan ( u.s . plan ) , certain qualified plans for non-u.s. subsidiaries , and a u.s. supplemental executive defined benefit plan , was approximately $ 26.0 million for the year ended december 31 , 2012. the largest portion of our 2012 pension expense was $ 9.0 million for our u.s. plan . pension expense is calculated based upon a number of actuarial assumptions , a significant input to the actuarial models that measure pension benefit obligations . discount rate and expected return on assets are two assumptions which are important elements of pension plan expense and asset/liability measurement . we evaluate these critical assumptions at least annually on a plan and country specific basis . we evaluate other assumptions related to demographic factors , such as retirement age , mortality and turnover periodically , and update them to reflect our experience and expectations for the future . in developing the expected return on u.s. plan assets assumption , we evaluated input from our investment managers and pension consultants , including their review of asset class return expectations . based on this review , we believe that 5.0 % was an appropriate rate to use for 2012. we will continue to evaluate the expected return on plan assets at least annually , and will adjust the rate as necessary . the december 31 , 2012 asset allocation for our u.s. plan is 86 % invested in fixed income securities , 13 % invested in equity securities , and 1 % invested in other securities . our investment managers regularly review the actual asset allocation and periodically rebalance the portfolio to ensure alignment with our targeted allocations . effective january 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.	liquidity and capital resources our cash , cash equivalents and marketable securities balance increased $ 251.7 million from 2011 to 2012 , to $ 1.0 billion . cash activity for 2012 , 2011 and 2010 was as follows : replace_table_token_21_th in 2012 , changes in operating assets and liabilities , net of businesses sold and acquired , used cash of $ 40.4 million . this was due to an $ 8.0 million increase in operating assets and a $ 32.4 million decrease in operating liabilities . the increase in operating assets was due to a $ 24.1 million increase in accounts receivable and a $ 1.5 million increase in prepayments due primarily to supplier prepayments , partially offset by a $ 17.6 million decrease in inventories . the decrease in operating liabilities was due to a $ 15.7 million decrease in accrued employee compensation due primarily to employee stock awards payroll taxes and variable compensation payments , a $ 14.6 million decrease in customer advance payments and deferred revenue , a $ 11.5 million decrease in accounts payable due to lower fourth quarter sales volume , a $ 5.6 million decrease in other accrued liabilities , and $ 4.8 million of retirement plans contributions , partially offset by a $ 19.8 million increase in accrued income taxes . investing activities during 2012 used cash of $ 603.9 million , due to $ 751.1 million used for purchases of marketable securities and $ 119.1 million used for purchases of property , plant and equipment , partially offset by proceeds from sales and maturities of marketable securities that provided cash of $ 95.2 million and $ 171.1 million , respectively .
kapstone is a leading north american producer and distributor of containerboard , corrugated products and specialty papers , including liner and medium containerboard , kraft papers and saturating kraft . kapstone also owns victory packaging , a packaging solutions 33 distribution company with facilities in the u.s. , canada and mexico . we have included the financial results of kapstone in our corrugated packaging segment since the date of the acquisition . on september 4 , 2018 , we completed the acquisition ( the “ schlüter acquisition ” ) of schlüter print pharma packaging ( “ schlüter ” ) . schlüter is a leading provider of differentiated paper and packaging solutions and a german-based supplier of a full range of leaflets and booklets . the schlüter acquisition allowed us to further enhance our pharmaceutical and automotive platform and expand our geographical footprint in europe to better serve our customers . we have included the financial results of the acquired operations in our consumer packaging segment since the date of the acquisition . on january 5 , 2018 , we completed the acquisition ( the “ plymouth packaging acquisition ” ) of substantially all of the assets of plymouth packaging , inc. ( “ plymouth ” ) . the assets we acquired included plymouth 's “ box on demand ” systems , which are manufactured by panotec , an italian manufacturer of packaging machines . the addition of the box on demand systems enhanced our platform , differentiation and innovation . these systems , which are located on customers ' sites under multi-year exclusive agreements , use fanfold corrugated to produce custom , on-demand corrugated packaging that is accurately sized for any product type according to the customer 's specifications . fanfold corrugated is continuous corrugated board , folded periodically to form an accordion-like stack of corrugated material . as part of the transaction , westrock acquired plymouth 's equity interest in panotec and plymouth 's exclusive right from panotec to distribute panotec 's equipment in the u.s. and canada . we have fully integrated the approximately 60,000 tons of containerboard used by plymouth annually . we have included the financial results of plymouth in our corrugated packaging segment since the date of the acquisition . see “ note 3. acquisitions and investment ” of the notes to consolidated financial statements for additional information . see also item 1a . “ risk factors — we may be unsuccessful in making and integrating mergers , acquisitions and investments , and completing divestitures ” . business year ended september 30 , ( in millions ) 2019 2018 net sales $ 18,289.0 $ 16,285.1 segment income $ 1,790.2 $ 1,707.6 in fiscal 2019 , we continued to pursue our strategy of offering differentiated paper and packaging solutions that help our customers win . we successfully executed this strategy in fiscal 2019 in a rapidly changing cost and price environment . net sales of $ 18,289.0 million for fiscal 2019 increased $ 2,003.9 million , or 12.3 % , compared to fiscal 2018. the increase was primarily due to the kapstone acquisition and higher selling price/mix in our corrugated packaging and consumer packaging segments . these increases were partially offset by the absence of recycling net sales in fiscal 2019 as a result of conducting the operations primarily as a procurement function beginning in the first quarter of fiscal 2019 , lower volumes , unfavorable foreign currency impacts across our segments compared to the prior year and decreased land and development net sales . segment income increased $ 82.6 million in fiscal 2019 compared to fiscal 2018 , primarily due to increased corrugated packaging segment income that was partially offset by lower consumer packaging and land and development segment income . the impact of the contribution from the acquired kapstone operations , higher selling price/mix across our segments and productivity improvements was largely offset by lower volumes across our segments , economic downtime , cost inflation , increased maintenance and scheduled strategic outage expense ( including projects at our mahrt , al and covington , va mills ) and lower land and development segment income due to the wind-down of sales . with respect to segment income , we experienced higher levels of cost inflation in both our corrugated packaging and consumer packaging segments during fiscal 2019 as compared to fiscal 2018 that were partially offset by recovered fiber deflation . the primary inflationary items were virgin fiber , freight , energy and wage and other costs . we generated $ 2,310.2 million of net cash provided by operating activities in fiscal 2019 , compared to $ 1,931.2 million in fiscal 2018. we remained committed to our disciplined capital allocation strategy during fiscal 2019 by investing $ 1,369.1 million in capital expenditures , deployed $ 3,374.2 million to strategic acquisitions ( excluding the 34 assumption of debt ) while returning $ 467.9 million in dividends and $ 88.6 million to our stockholders in share repurchases . in the nine months following december 2018 , the quarter that included the kapstone acquisition , we reduced total debt $ 757.4 million . we believe our strong balance sheet and cash flow provide us the flexibility to continue to invest to sustain and improve our operating performance . in fiscal 2020 , we expect capital expenditures to be approximately $ 1.1 billion . see “ liquidity and capital resources ” for more information . a detailed review of our fiscal 2019 and 2018 performance appears below under “ results of operations ( consolidated ) ” and “ results of operations — segment data ” . for fiscal 2020 , we expect to generate net sales of between $ 18.0 billion and $ 18.5 billion . story_separator_special_tag these increases were partially offset by the absence of $ 461.6 million of recycling net sales in fiscal 2019 as a result of conducting the operations primarily as a procurement function beginning in the first quarter of fiscal 2019 , $ 417.7 million of lower volumes as lower containerboard volumes were partially offset by increased corrugated container shipments and $ 65.4 million related to the impact of unfavorable foreign currency . segment income — corrugated packaging segment segment income attributable to the corrugated packaging segment in fiscal 2019 increased $ 159.6 million compared to fiscal 2018 , primarily due to a $ 231.0 million of contribution from the acquired kapstone operations before an estimated $ 23.1 million of economic downtime and net of a $ 24.7 million acquisition inventory step-up charge , an estimated $ 122.8 million of productivity improvements and $ 118.8 million of higher corrugated selling price/mix . these increases were partially offset by $ 126.5 million of lower volumes , unfavorable cost inflation of $ 90.9 million , an estimated $ 66.4 million of economic downtime ( including kapstone ) , $ 12.4 million of unfavorable foreign currency impacts , and other costs . the net impact of cost inflation was unfavorable compared to the prior year as lower recovered fiber costs were more than offset by higher wage and other costs , virgin fiber costs , freight costs , energy costs and chemical costs . in fiscal 2019 , corrugated packaging segment income included $ 11.3 million for a receivable established for the recovery of indirect taxes in brazil . see “ note 18. commitments and contingencies — indirect tax claim ” of the notes to consolidated financial statements for additional information . fiscal 2018 results were negatively affected by an estimated $ 20.7 million due to the impact of winter weather and $ 19.0 million of start-up issues following a major maintenance outage at our panama city , fl and tacoma , wa mills . fiscal 2019 results included an estimated $ 7.7 million and $ 5.9 million of expense due to the impact of hurricane dorian and start-up issues following a major maintenance outage , respectively . the full year impact of hurricane michael , net of recoveries on corrugated packaging segment income was not significant . consumer packaging segment consumer packaging shipments consumer packaging shipments are expressed as a tons equivalent , which includes external and intersegment tons shipped from our consumer packaging mills plus consumer packaging converting shipments converted from 42 bsf to tons . the fiscal 2018 shipment numbers below have been revised by an immaterial amount . the shipment data table excludes gypsum paperboard liner tons produced by seven hills since it is not consolidated . replace_table_token_12_th consumer packaging segment replace_table_token_13_th ( 1 ) net sales before intersegment eliminations net sales ( aggregate ) — consumer packaging segment net sales before intersegment eliminations for the consumer packaging segment decreased $ 11.5 million in fiscal 2019 compared to the prior year primarily due to $ 128.3 million of higher selling price/mix and $ 32.0 million from acquisitions , which were more than offset by $ 88.0 million of unfavorable foreign currency impacts and $ 83.7 million of lower volumes . lower volumes were primarily driven by a decline in mill volumes that were partially offset by a 3.7 % increase in north american food and beverage tons shipped . segment income — consumer packaging segment segment income attributable to the consumer packaging segment in fiscal 2019 decreased $ 57.0 million compared to the prior year . segment income in the period was reduced by an estimated $ 112.5 million due to the net impact of cost inflation compared to the prior year , an estimated $ 35.1 million of increased maintenance and scheduled strategic outage expense ( including the projects at the mahrt , al and covington , va mills ) , $ 44.5 million due to the impact of lower volumes , $ 14.5 million of unfavorable foreign currency impacts , $ 5.6 million of higher 43 depreciation and amortization , and other items . these items were partially offset by an estimated $ 107.9 million of higher selling price/mix and an estimated $ 84.9 million of productivity improvements . while the net impact of cost inflation was unfavorable compared to the prior year , recovered fiber costs and chemical costs were lower than the prior year but were more than offset by higher virgin fiber costs , freight costs and wage and other costs . fiscal 2018 results were negatively affected by an estimated $ 17.2 million due to the impact of winter weather that was more than offset by $ 20.1 million of favorable acquisition reserve adjustments . land and development segment replace_table_token_14_th ( 1 ) net sales before intersegment eliminations net sales ( aggregate ) — land and development segment net sales for the land and development segment in fiscal 2019 and 2018 were $ 23.4 million and $ 142.4 million , respectively . the decrease in fiscal 2019 was due to the wind-down of sales . we include the remainder of the real estate holdings in assets held for sale because we have met the held for sale criteria . segment income ( loss ) — land and development segment segment income attributable to the land and development segment was $ 2.5 million and $ 22.5 million in fiscal 2019 and 2018 , respectively . the pre-tax non-cash impairments of certain mineral rights and real estate discussed above under the caption “ land and development impairments ” are not included in segment income . story_separator_special_tag 30 , 2019 for various capital projects . see item 1a . “ risk factors — our capital expenditures may not achieve the desired outcomes or may be achieved at a higher cost than anticipated ” . at september 30 , 2019 , the u.s. federal , state and foreign net operating losses and state tax credits available to us aggregated	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 our working capital requirements , capital expenditures , mergers , acquisitions and investments , restructuring activities , dividends and stock repurchases from net cash provided by operating activities , borrowings under our credit facilities , proceeds from our a/r sales agreement ( as hereinafter defined ) , proceeds from the sale of property , plant and equipment removed from service and proceeds received in connection with the issuance of debt and equity securities . see “ note 13. debt ” of the notes to consolidated financial statements for additional information . funding for our domestic operations in the foreseeable future is expected to come from sources of liquidity within our domestic operations , including cash and cash equivalents , and available borrowings under our credit facilities . as such , our foreign cash and cash equivalents are not expected to be a key source of liquidity to our domestic operations . 44 at september 30 , 2019 , we had approximately $ 2.9 billion of availability under our committed credit facilities , primarily under our revolving credit facility , the majority of which matures on july 1 , 2022. this liquidity may be used to provide for ongoing working capital needs and for other general corporate purposes , including acquisitions , dividends and stock repurchases . certain restrictive covenants govern our maximum availability under the credit facilities . we test and report our compliance with these covenants as required and we were in compliance with all of these covenants at september 30 , 2019. at september 30 , 2019 , we had $ 129.8 million of outstanding letters of credit not drawn upon . cash and cash equivalents were $ 151.6 million at september 30 , 2019 and $ 636.8 million at september 30 , 2018. we used a significant portion of the cash and cash equivalents on hand at september 30 , 2018 in connection with the closing of the kapstone acquisition .
we define contribution profit as revenues less cost of revenues and marketing expenses . we believe this is an important measure of our operating segment performance . for the domestic and international streaming segments , content licensing expenses , which includes the amortization of the streaming content library and other expenses associated with the licensing of streaming content , represent the vast majority of cost of revenues . streaming content rights are generally specific to a geographic region and accordingly our international expansion will require us to obtain additional streaming content licenses to support new international markets . other cost of revenues such as content delivery expenses , customer service and payment card fees tend to be lower as a percentage of total cost of revenues . we utilize both our own and third-party content delivery networks to help us efficiently stream content in high volume to our subscribers over the internet . content delivery expenses therefore also include equipment costs related to open connect and all third-party costs associated with delivering streaming content over the internet . cost of revenues in the domestic dvd segment consists primarily of expenses related to the acquisition of content including amortization of dvd content library and revenue sharing expenses , content delivery and other expenses associated with our dvd processing and customer service centers . content delivery expenses for the domestic dvd segment consist of the postage costs to mail dvds to and from our paying subscribers and the packaging and label costs for the mailers . for the domestic and international streaming segments , marketing expenses consist primarily of advertising expenses and payments made to our affiliates and consumer electronics partners and also include payroll related expenses . advertising expenses include promotional activities such as television and online advertising as well as allocated costs of revenues relating to free trial periods . payments to our affiliates and consumer electronics partners may be in the form of a fixed fee or may be a revenue sharing payment . marketing costs as a percentage of revenues are higher for the domestic and international streaming segments given our focus on building consumer awareness of the streaming offerings . marketing costs are immaterial for the domestic dvd segment . as a result of our focus on growing the streaming segments , contribution margins for the domestic and international streaming segments are lower than for our domestic dvd segment . also impacting the domestic streaming segment was a loss of subscribers resulting from the negative consumer reaction to the pricing and plan changes announced in july 2011. we expect that the investments in content and marketing associated with the domestic and international streaming segments will slow relative to revenues to allow for contribution margin expansion over time . domestic segments 21 replace_table_token_7_th 2012 domestic segment results revenues in the domestic streaming segment , we derive revenues from services consisting solely of streaming content offered through a subscription plan priced at $ 7.99 per month . in the domestic dvd segment , we derive revenues from our dvds-by-mail subscription services . the price per plan for dvds-by-mail varies from $ 4.99 to $ 43.99 per month based on the number of dvds that a subscriber may have out at any given point . customers electing access to high definition blu-ray discs in addition to standard definition dvds pay a surcharge ranging from $ 2 to $ 4 per month for our most popular plans . 22 the $ 200.0 million increase in our domestic revenues in 2012 as compared to 2011 was primarily due to the 15 % growth in the domestic average number of unique paying subscribers driven by new streaming subscriptions . this increase was offset in part by an 8 % decline in domestic average monthly revenue per unique paying subscriber , resulting from the decline in dvd subscriptions . we expect streaming subscriptions domestically to continue to grow while dvd subscription declines continue to moderate . cost of revenues the $ 217.9 million increase in domestic cost of revenues in 2012 as compared to 2011 was primarily due to the following factors : content acquisition and licensing expenses increased by $ 397.7 million . this increase was primarily attributable to continued investments in existing and new streaming content available for viewing to our subscribers as compared to the prior year . content delivery expenses decreased by $ 162.0 million primarily due to a 41 % decrease in the number of dvds mailed to paying subscribers driven by a decline in the number of dvd subscriptions . other costs associated with content processing and customer service center expenses decreased by $ 13.9 million primarily due to a decrease in hub operation expenses resulting from the declines in dvd shipments , offset partially by increases in customer service center expenses to support our growth in domestic subscriptions . marketing marketing expenses decreased $ 40.7 million in 2012 as compared to 2011 primarily due to a decrease in marketing program spending in television , radio and direct mail advertising partially offset by increases in online advertising . contribution profit our domestic streaming segment had a contribution margin of 16 % for 2012 and our domestic dvd segment had a contribution margin of 47 % . the domestic segments collectively had a contribution margin of 27 % in 2012 down slightly from 28 % in 2011 with the decrease driven primarily by investments in our streaming content . story_separator_special_tag see note 4 of item 8 , financial statements and supplementary data for further details . on january 29 , 2013 , we announced the pricing of an offering of $ 500 million aggregate principal amount of 5.375 % notes due 2021 and plan to use the proceeds in part to fully redeem our 8.50 % notes . ( 3 ) the lease financing obligations of $ 15.1 million relate to our current los gatos , california headquarters for which we are the deemed owner for accounting purposes . operating lease obligations include other facilities under non-cancelable operating leases with various expiration dates through 2018. in the fourth quarter of 2012 , the company entered into a facilities lease agreement to expand its los gatos headquarters to a nearby site . the ten year lease term will commence after the construction of the buildings is complete . future minimum lease payments associated with this lease are $ 63.4 million as of december 31 , 2012 and are included in the operating lease obligations line in the above table . ( 4 ) other purchase obligations include all other non-cancelable contractual obligations . these contracts are primarily related to streaming content delivery , dvd content acquisition , and miscellaneous open purchase orders for which we have not received the related services or goods . as of december 31 , 2012 , the company had gross unrecognized tax benefits of $ 43.3 million and an additional $ 3.1 million for gross interest and penalties . at this time , the company is unable to make a reasonably reliable estimate of the timing of payments in individual years due to uncertainties in the timing of tax audit outcomes ; therefore , such amounts are not included in the above contractual obligation table . 31 off-balance sheet arrangements as part of our ongoing business , the company does not engage into any transactions with unconsolidated entities , such as entities often referred to as structured finance or special purpose entities , whereby the company has financial guarantees , subordinated retained interests , derivative instruments , or other contingent arrangements that expose the company to material continuing risks , contingent liabilities , or any other obligation under a variable interest in an unconsolidated entity that provides financing , liquidity , market risk , or credit risk support to the company . indemnifications the information set forth under note 6 of item 8 , financial statements and supplementary data under the caption “ guarantees—indemnification obligations ” is incorporated herein by reference . critical accounting policies and estimates the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the united states requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities , disclosures of contingent assets and liabilities at the date of the financial statements , and the reported amounts of revenues and expenses during the reported periods . the securities and exchange commission ( “ sec ” ) has defined a company 's critical accounting policies as the ones that are most important to the portrayal of a company 's financial condition and results of operations , and which require a company to make its most difficult and subjective judgments . based on this definition , we have identified the critical accounting policies and judgments addressed below . we base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances . actual results may differ from these estimates . streaming content accounting we obtain content distribution rights in order to stream tv shows , movies , original programming to subscribers ' tvs , computers and mobile devices . streaming content is generally licensed for a fixed fee for the term of the license agreement which may have multiple windows of availability . the license agreement may or may not be recognized in content library . when the streaming license fee is known or reasonably determinable for a specific title and the specific title is first available for streaming to subscribers , the title is recognized on the consolidated balance sheets as “ current content library , net ” for the portion available for streaming within one year and as “ non-current content library , net ” for the remaining portion . new titles recognized in the content library are classified in the line item “ additions to streaming content library ” within net cash provided by operating activities on the consolidated statements of cash flows . the streaming content library is reported at the lower of unamortized cost or estimated net realizable value . we amortize the content library on a straight-line basis over each title 's contractual window of availability , which typically ranges from six months to five years . the amortization of the streaming content library is classified in “ cost of revenues ” on the consolidated statements of operations and in the line item “ amortization of streaming content library ” within net cash provided by operating activities on the consolidated statements of cash flows . costs related to subtitles , dubbing , and closed captioning are capitalized in `` current content library , net `` on the consolidated balance sheets and amortized over the window of availability . payment terms for these license fees may extend over the term of the license window , which typically ranges from six months to five years . for the titles recognized in content library , the license fees due but not paid are classified on the consolidated balance sheets as `` current content liabilities `` for the amounts due within one year and as “ non-current content liabilities ” for the amounts due beyond one year . changes in these liabilities are classified in the line item “ change in streaming content liabilities ” within net cash provided by operating activities on the consolidated statements of cash flows . we record the streaming content library	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 , cash equivalents and short-term investments were $ 748.1 million and $ 797.8 million at december 31 , 2012 and 2011 , respectively . our primary uses of cash include the acquisition and licensing of content , content delivery expenses , marketing and payroll related expenses . we expect to continue to make significant investments to license streaming content both domestically and internationally and expect to obtain more original programs in 2013. these investments will impact our liquidity and we expect to have negative operating cash flows and or use of cash in future periods . on january 29 , 2013 we announced the pricing of an offering of $ 500 million aggregate principal amount of 5.375 % senior notes due 2021 ( the `` 5.375 % notes '' ) . we expect the sale of the 5.375 % notes to close on february 1 , 2013 and we intend to use approximately $ 225 million of the net proceeds to redeem our 8.50 % notes . although we currently anticipate that the remaining proceeds from the 5.375 % notes together with our available funds will be sufficient to meet our cash needs for the foreseeable future , we may be required or choose to obtain additional financing . our ability to obtain additional financing will depend on , among other things , our development efforts , business plans , operating performance , current and projected compliance with our debt covenants , and the condition of the capital markets at the time we seek financing . we may not be able to obtain such financing on terms acceptable to us or at all . if we raise additional funds through the issuance of equity , equity-linked or debt securities , those securities may have rights , preferences or privileges senior to the rights of our common stock , and our stockholders may experience dilution . in november 2011 , we issued $ 200.0 million of senior convertible notes ( the `` convertible notes '' ) and raised an additional $ 200.0 million through a public offering of common stock .
adjusted ebitda for the year was $ 167.3 million compared to $ 181.6 million reported in 2018. reductions in adjusted ebitda for the year ended december 31 , 2019 as compared to december 31 , 2018 were driven by improvements in price and mix with higher volumes due to our expansion at our shelby facility offset by higher maintenance expenses , input costs and operational disruptions . see discussion on segment level results regarding sales , operating results and adjusted ebitda in “ our operating results ” below . business drivers tissue industry overview the u.s. tissue market can be divided into two market segments : the at-home or consumer retail purchase segment , which represented approximately two-thirds of u.s. tissue sales in 2019 ; and afh segment , which represents the remaining one-third of u.s. tissue market sales and includes tissue for locations such as restaurants , hotels and office buildings . the u.s. at-home tissue segment consists of bath , paper towels , facial and napkin products categories . each category is further distinguished according to quality segments : ultra , premium , value and economy . as a result of manufacturing process improvements and consumer preferences , the majority of at-home tissue sold in the united states is ultra and premium quality . at-home tissue producers are comprised of companies that manufacture branded tissue products , private label tissue products , or both . branded tissue suppliers manufacture , market and sell tissue products under their own nationally branded labels . private label tissue producers manufacture tissue products for retailers to sell as their store brand . in the u.s. , at-home tissue is primarily sold through grocery stores , mass merchants , warehouse clubs , drug stores and discount dollar stores . tissue has historically been one of the strongest segments of the paper industry due to its steady demand growth largely due to population growth in the united states . in addition to economic and demographic drivers , tissue demand is affected by product innovations and shifts in distribution channels . the u.s. tissue industry has experienced an increase in ultra and premium tissue products as industry participants have added or improved through-air-dried , or tad , or equivalent production capacity as well as added conventional tissue capacity . demand and pricing for consumer tissue products is currently being affected by this increased capacity , as well as changing dynamics in the at-home tissue segment as a result of changing consumer purchasing habits , consolidations and new entrants in the consumer retail channel , and new and evolving sales and distribution channels . these changing conditions contributed to a very competitive environment for consumer tissue over the past several years , which has continued through 2019. pulp and paperboard industry overview sbs paperboard is a premium paperboard grade that is most frequently used to produce folding cartons , liquid packaging , cups and plates , blister and carded packaging , top sheet and commercial printing items . sbs paperboard is used for such products because it is manufactured using virgin fiber combined with the kraft bleaching process , which results in superior cleanliness , brightness and consistency . sbs paperboard is often manufactured with a clay coating to provide superior surface printing qualities . 21 in general , the process of making paperboard begins by chemically cooking wood fibers to make pulp . the pulp is bleached to provide a white , bright pulp , which is formed into paperboard . bleached pulp that is to be used as market pulp is dried and baled on a pulp drying machine , bypassing the paperboard machines . the various grades of paperboard are wound into rolls for converting to final end users . liquid packaging and cup stock grades are often coated with polyethylene , a plastic coating , in a separate operation to create a resistant and durable liquid barrier . folding carton category . folding carton is the largest portion of the sbs category of the u.s. paperboard industry , comprising approximately 40 % of the category in 2019 . within the folding carton segment there are varying qualities of sbs paperboard . the high end of the folding carton category in general requires a premium print surface and includes uses such as packaging for pharmaceuticals , cosmetics and other premium retail goods . sbs paperboard is also used in the packaging of frozen foods , beverages and baked goods . liquid packaging and cup category . sbs liquid packaging paperboard is primarily used in the united states for the packaging of juices . in japan and other asian countries , sbs liquid packaging paperboard is primarily used for the packaging of milk and a wide range of consumable liquids , including alcoholic beverages . the cup segment of the market consists primarily of hot and cold drink cups and food packaging . the hot and cold cups are primarily used to serve beverages in quick-service restaurants , while round food containers are often used for packaging premium ice-cream , hot noodle and dry food products . commercial printing category . commercial printing applications use bleached bristols , which are heavyweight paper grades , to produce postcards , signage and promotional literature . bristols can be clay coated on one side or both sides for applications such as brochures , presentation folders and paperback book covers . customers in this segment are accustomed to high-quality paper grades , which possess superior printability and brightness compared to most paperboard packaging grades . suppliers to this segment must be able to deliver small volumes , often within 24 hours . the pulp and paperboard industry is affected by macro-economic conditions around the world and has historically experienced cyclical market conditions . story_separator_special_tag our adjusted ebitda measures have material limitations as performance measures because they exclude interest expense , income tax ( benefit ) expense and depreciation and amortization which are necessary to operate our business or which we otherwise incur or experience in connection with the operation of our business . in addition , we exclude other income and expense items which are outside of our core operations . 23 the following table provides our adjusted ebitda reconciliation for the last three years : replace_table_token_3_th 1 other operating charges , net above excludes $ 4.6 million associated with accelerated depreciation related to our closures of the oklahoma facility and the long island facility in 2017 as this amount is already included in the depreciation and amortization amount . our operating results our operating results for each of our segments are discussed below . see note 16 `` segment information `` of the notes to consolidated financial statements included in item 8 of this report for further information regarding our segments . consumer products segment our consumer products segment sells and manufacturers a complete line of at-home tissue products as well as afh products . our integrated manufacturing and converting operations and geographic footprint enable us to deliver a broad range of cost-competitive products with brand equivalent quality to our customers . 24 segment sales , operating income and adjusted ebitda for the consumer products segment were as follows : replace_table_token_4_th net sales for the consumer products segment increased $ 22.0 million , or 2.5 % , compared to 2018 due to higher average net selling prices due to a price increase implemented in the second half of 2018 and a favorable mix shift resulting from a higher percentage of retail sales . this change was partially offset due to decreased non-retail sales volume resulting from the sale of our ladysmith , wisconsin facility in the third quarter of 2018. the segment had an operating loss of $ 6.6 million for 2019 compared to income of $ 0.3 million in 2018. overall , the decrease in operating results in this segment was due to higher pulp costs and ramp-up costs , increased depreciation expense and higher wage and benefit costs associated with the shelby expansion project , partially offset by lower transportation costs and higher shipments . pulp and paperboard segment our pulp and paperboard segment markets and produces bleached paperboard to quality-conscious printers and packaging converters , and offers services that include custom sheeting , slitting and cutting . 25 segment sales , operating profit and adjusted ebitda for the pulp and paperboard segment were as follows : replace_table_token_5_th net sales for pulp and paperboard segment increased $ 15.3 million , or 1.8 % , during 2019 as compared to 2018 due to favorable pricing resulting from a price increase implemented in the 2018 on slightly lower volumes . operating income for the segment decreased compared to 2018 due to the planned major maintenance at our idaho pulp and paperboard facility in the third quarter of 2019 and our arkansas facility in the fourth quarter of 2019 and as well as higher energy costs . partially offsetting these items was lower chemical costs and favorable pricing . corporate expenses corporate expenses were $ 57.0 million in 2019 as compared to $ 51.5 million in 2018. corporate expenses primarily consist of corporate overhead such as wages and benefits , professional fees , insurance and other expenses for corporate functions including certain executive officers , public company costs , information technology , financial services , environmental and safety , legal , supply management , human resources and other corporate functions not directly associated with the business operations . the increase in 2019 as compared to 2018 was primarily due to higher it related expenses and higher incentive pay . other operating charges see note 10 `` other operating charges , net `` included in item 8 of this report for additional information . interest expense , net interest expense increased during 2019 as compared to 2018 due to our higher debt balances , partially offset by lower interest rates . income taxes we recorded a tax benefit of $ 2.3 million in 2019. for 2019 , the primary differences between the u.s. statutory rate of 21 % and the effective rate applied to income ( loss ) before income taxes relates to a federal tax benefit for tax credits offset by increases in our valuation allowances . the estimated annual effective tax rate for 2020 is expected to be approximately 25 % . 26 liquidity and capital resources overview our principal sources of liquidity are existing cash , cash generated by our operations and our ability to borrow under such credit facilities as we may have in effect from time to time . at times , we may also issue equity , debt or hybrid securities or engage in other capital market transactions . due to the competitive and cyclical nature of the markets in which we operate , there is uncertainty regarding the amount of cash flows we will generate during the next twelve months . however , we believe that our cash flows from operations , our cash on hand and our borrowing capacity under our credit agreements will be adequate to fund debt service requirements and provide cash to support our ongoing operations , capital expenditures and working capital needs for the next twelve months . our principal uses of liquidity are paying the costs and expenses associated with our operations , servicing outstanding indebtedness and making capital expenditures . we may also from time to time prepay or repurchase outstanding indebtedness or shares or acquire assets or businesses that are complementary to our operations . any such repurchases may be commenced , suspended , discontinued or resumed , and the method or methods of effecting any such repurchases may be changed at any time or from time to time without prior notice . operating activities during 2019 , we generated	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 financing activities were $ 82.0 million for 2019 due to increased net borrowings . with the closing of our $ 300 million term loan credit agreement and the borrowing of $ 58 million under our $ 250 million abl credit agreement , we repaid the $ 200 million outstanding credit agreement balance with northwest farm credit services and the $ 135 million outstanding balance on the credit agreement with wells fargo . capital expenditures in addition to ongoing maintenance and repair costs , we make capital expenditures to increase our operating capacity and efficiency , improve safety at our facilities and comply with environmental laws . our strategic projects are intended to grow our business to meet customer demands and to reduce future manufacturing costs and provide a positive return on investment . in 2020 , we expect cash paid for capital expenditures to be approximately $ 45 to $ 50 million . credit agreements commencing march 31 , 2020 , we are required to make quarterly installment payments of approximately $ 0.8 million on the outstanding principal of our term loan credit agreement . in addition , we must make mandatory prepayments of principal under the term loan credit agreement upon the occurrence of certain specified events , including excess cash flow as defined by the credit agreement . the calculation of excess cash flow commences with the year ended december 31 , 2020. there is uncertainty regarding the amount of cash flow we will generate during the next twelve months , therefore , we are unable to estimate an excess cash flow payment that could be required in the first quarter of 2021. amounts repaid or prepaid can not be reborrowed .
we currently sell our products for research use only . for the years ended december 31 , 2019 and 2018 , sales within north america accounted for approximately 57 % and 58 % of our revenue , respectively . 78 revenue increased 68 % to $ 245.9 million in the year ended december 31 , 2019 as compared to $ 146.3 million in the year ended december 31 , 2018 , primarily due to the adoption of our instruments by customers and the associated consumables on those instruments . we focus a substantial portion of our resources on developing new products and solutions . our research and development efforts are centered around improving the performance of our existing assays and software , developing new chromium solutions such as multi-omics solutions , developing our visium platform , improving and developing new capabilities for our chromium platform , developing combined software and workflows across multiple solutions and investigating new technologies . we incurred research and development expenses of $ 83.1 million and $ 47.5 million for the years ended december 31 , 2019 and 2018 , respectively . we intend to make significant investments in this area for the foreseeable future . in addition , in 2018 , we made acquisitions for an aggregate purchase price of $ 62.4 million . there were no similar acquisitions in the year ended december 31 , 2019. our instrument manufacturing is contracted out to a third-party contract manufacturer and we manufacture the majority of our consumable products in-house , with a small amount of our components outsourced to key suppliers . we have designed our operating model to be capital efficient and to scale efficiently as our product volumes grow . historically , we have financed our operations primarily from the sale of our instruments and consumable products , the issuance and sale of our convertible preferred stock and common stock and the issuances of debt . on september 16 , 2019 , we completed an initial public offering ( ipo ) , in which we sold 11,500,000 shares of class a common stock ( which included 1,500,000 shares that were offered and sold pursuant to the full exercise of the ipo underwriters ' option to purchase additional shares ) at a price to the public of $ 39.00 per share . we received aggregate net proceeds of $ 410.8 million after deducting , offering costs , underwriting discounts and commissions of $ 37.7 million . since our inception in 2012 , we have incurred net losses in each year . our net losses were $ 31.3 million and $ 112.5 million for the years ended december 31 , 2019 and 2018 , respectively . as of december 31 , 2019 , we had an accumulated deficit of $ 262.4 million and cash and cash equivalents totaling $ 424.2 million . we expect to continue to incur significant expenses for the foreseeable future and to incur operating losses in the near term . we expect our expenses will increase substantially in connection with our ongoing activities , as we : attract , hire and retain qualified personnel ; scale our technology platforms and introduce new products and services ; protect and defend our intellectual property ; acquire businesses or technologies ; and invest in processes , tools and infrastructure to support the growth of our business . acquisitions in october 2019 , we completed the acquisition of a worldwide royalty-free , nonexclusive license to certain intellectual property as part of the 2019 becton dickinson settlement and patent cross license agreement . under the terms of this agreement , we are required to make aggregate payments of $ 25 million in annual amounts of $ 6.25 million over four years beginning in january 2020. in november 2018 , we completed the acquisition of spatial transcriptomics , a privately held company based in stockholm , sweden , for an all cash purchase price of $ 38.6 million . with the acquisition of spatial transcriptomics , we obtained intellectual property relating to the spatial interrogation of biological analytes , which we believe will open up the possibilities for discoveries in oncology , neuroscience and immunology , as 79 well as in the broader area of biology . pursuant to the spatial transcriptomics acquisition agreement , we are obligated to make contingent payments to the sellers through december 31 , 2022. aside from this obligation , all of our obligations under the spatial transcriptomics acquisition agreement have been fully performed . in november 2018 , we completed the acquisition of a worldwide exclusive license to foundational intellectual property relating to spatial analysis technologies from prognosys biosciences , inc. ( prognosys ) , for a combination of cash and common stock for a purchase price of $ 3.3 million . all of our obligations under the prognosys license agreement have been fully performed . in march 2018 , we completed the acquisition of epinomics , a privately held company based in california , for an all cash purchase price of $ 22.2 million . epinomics 's patent portfolio includes foundational intellectual property and a worldwide exclusive license relating to atac-seq , which supplements our existing patent portfolio and enables us to provide atac-seq solutions for single cell and other epigenetic applications . all of our obligations under the epinomics acquisition agreement have been fully performed . key business metrics we regularly review a number of operating and financial metrics , including the instrument installed base and consumable pull-through , to evaluate our business , measure our performance , identify trends affecting our business , formulate financial projections and make strategic decisions . we believe that these metrics are representative of our current business ; however , we anticipate these may change or may be substituted for additional or different metrics as our business grows and as we introduce new products . story_separator_special_tag revenue is recognized net of any sales incentive , distributor rebates and commissions and any taxes collected from customers . some of our recently announced products , such as our chromium connect instrument , may result in our recognizing revenue with respect to such products upon installation rather than upon shipment . instrument service agreements are typically entered into for a one-year term , with the coverage period beginning after the expiration of the standard one-year warranty period . revenue from the sale of instrument service agreements are recognized ratably over the coverage period . since its introduction in may 2019 , the revenue attributable to our next gem microfluidics chips and associated consumables has continued to increase . we expect the transition to next gem to have a minimal impact on our revenue since we intend to sell those products at prices similar to the gem products they are replacing . cost of revenue , gross profit and gross margin cost of revenue . cost of revenue primarily consists of manufacturing costs incurred in the production process including personnel and related costs , costs of component materials , manufacturing overhead , packaging and delivery costs and allocated costs including facilities and information technology . we plan to hire additional employees as well as expand our manufacturing , warehousing and product distribution facilities , including increasing manufacturing automation to support our growth . in addition , cost of revenue includes royalty costs for licensed technologies included in our products , warranty costs , provisions for slow-moving and obsolete inventory and personnel and related costs and component costs incurred in connection with our obligations under our instrument service agreements . beginning with the three months ended december 31 , 2018 , we began recording royalty accruals relating to sales of our gem microfluidic chips and associated consumables , which are the subject of the bio-rad litigation discussed in item i , part 3 above , as cost of revenue . 84 gross profit/gross margin . gross profit is calculated as revenue less cost of revenue . gross margin is gross profit expressed as a percentage of revenue . our gross profit and gross margins in future periods are expected to fluctuate from quarter to quarter and will depend on a variety of factors , including : market conditions that may impact our pricing ; sales mix changes among consumables , instruments and services ; product mix changes between established products and new products ; excess and obsolete inventories ; royalties ; our cost structure for manufacturing operations relative to volume ; and product warranty obligations . we currently anticipate that we will experience an increase in absolute dollars of both revenue and cost of revenue as we grow our business . additionally , we expect gross margins to be positively impacted through the end of 2020 by reduced accrued royalties related to the bio-rad litigation . we expect this positive impact to be reduced , at least partially , by expenses related to our planned increases in manufacturing and distribution capacity in our pleasanton , california headquarters as well as in certain locations outside the united states . as noted above , since next gem 's introduction in may 2019 , we experienced improved gross profit for the year ended december 31 , 2019 , as we sold more next gem microfluidic chips and associated consumables because these products are not subject to the royalty payments to bio-rad . however , consumables subject to the 15 % royalty accrual related to the bio-rad litigation still comprised a large percentage of our consumable sales for year ended december 31 , 2019. we expect our gross margins for 2020 will be positively impacted by the continued transition of our customers to our next gem microfluidic chips and associated consumables since these microfluidic chips and associated consumables are not subject to the 15 % royalty accrual ( see part i , item 3 legal proceedings ) and have similar selling prices to the gem products that they are replacing . further developments in our litigation with bio-rad could have a material impact on our gross margins , both in the near term and beyond . beginning on august 28 , 2019 , our cost of revenue no longer includes a 15 % royalty accrual related to the bio-rad litigation on our instruments , since all chromium instruments that have been sold since that date operate exclusively with our next gem solutions . as a result , we expect that this will continue to positively impact gross margins for those instrument sales in the near term . because the next gem product selling prices and product manufacturing costs are similar to the gem products they are replacing , we do not anticipate that next gem selling prices and product manufacturing costs will have a significant effect on our gross margins . operating expenses research and development . research and development expense primarily consists of personnel and related costs , independent contractor costs , laboratory supplies , equipment maintenance prototype and materials expenses , amortization of developed technology and intangibles and allocated costs including facilities and information technology . we plan to continue to invest significantly in our research and development efforts , including hiring additional employees , to enhance existing products and develop new products . we also expect allocated facilities and information technology costs to increase in future periods as a result of higher costs associated with the transition to our global headquarters and research and development center in pleasanton , california . as a result of these and other initiatives , we expect research and development expense will increase in absolute dollars in future periods and vary from period to period as a percentage of revenue . in-process research and development . in-process research and development consists of costs incurred to acquire intellectual property for research and development . we expect these costs to be recognized only in periods during which we	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 since our inception , we have financed our operations and capital expenditures primarily through sales of convertible preferred stock and common stock , revenue from sales and issuances of debt . in september 2019 , we completed our ipo for proceeds of $ 410.8 million , net of offering costs , underwriter discounts and commissions of $ 37.7 million . silicon valley bank loan and security agreement we are party to a second amended and restated loan and security agreement , dated february 9 , 2018 , with silicon valley bank ( as amended , restated or supplemented from time to time , the loan and security agreement ) , under which ( i ) $ 30.0 million of term loan borrowings were outstanding and ( ii ) no borrowings were outstanding under the $ 25.0 million revolving line of credit , in each case as of december 31 , 2019. the term loan borrowings were prepaid in full on february 20 , 2020. we were in compliance with all covenants under the loan and security agreement as of december 31 , 2019 , remained in compliance with such covenants at the time the term loan borrowings were prepaid in full on february 20 , 2020 and currently remain in compliance with such covenants . borrowings under the term loan were to mature on december 1 , 2022 and accrued interest at a floating rate equal to the greater of the wall street journal prime rate plus 2.0 % or 6.25 % per annum . monthly payments of interest were due on the term loan through december 31 , 2019 , after which equal monthly installments of principal and interest were to be due . the revolving line of credit matures on december 1 , 2022 and the amount available under the revolving line of credit is based on 80 % of eligible receivables and is subject to a borrowing base calculation . borrowings under the revolving line of credit accrue interest which is payable monthly at a floating rate equal to the greater of the wall street journal prime rate plus 0.25 % or 4.5
we believe that our customers choose among competing products on the basis of product performance , functionality , value and service . there is continued uncertainty regarding the u.s. federal government budget and the affordable care act , either of which 55 may impact hospital spending , third-party payer reimbursement and fees to be levied on certain medical device revenues , any of which could adversely affect our business and results of operations . in addition , hospital capital spending appears to have been impacted by strategic uncertainties surrounding the affordable care act and economic pressures . we also believe that global economic uncertainty has caused some hospitals and healthcare providers to delay purchases of our products and services . during this period of uncertainty , sales of our healthcare products may be negatively impacted . we can not predict when the markets will fully recover or when the uncertainties related to the u.s. federal government will be resolved and , therefore , when this period of delayed and diminished purchasing will end . a prolonged delay could have a material adverse effect on our business , financial condition and results of operations . optoelectronics and manufacturing division . through our optoelectronics and manufacturing division , we design , manufacture and market optoelectronic devices and provide electronics manufacturing services globally for use in a broad range of applications , including aerospace and defense electronics , security and inspection systems , medical imaging and diagnostics , telecommunications , office automation , computer peripherals , industrial automation , automotive diagnostic systems , and consumer products . we also provide our optoelectronic devices and electronics manufacturing services to oem customers , as well as our own security and healthcare divisions . revenues from external customers in our optoelectronics and manufacturing division accounted for 21 % of our total consolidated revenues for fiscal 2017. during fiscal 2017 , in conjunction with ongoing cost optimization efforts , we undertook an initiative to consolidate a manufacturing facility where we incurred approximately $ 0.3 million of employee termination costs and $ 0.4 million of other costs . this facility consolidation is expected to result in recurring annualized savings of approximately $ 1.0 million . consolidated results fiscal 2017 compared with fiscal 2016. we reported consolidated sales of $ 961.0 million in fiscal 2017 , a 16 % increase over the prior year , which drove a year-over-year increase in gross profit of $ 46.6 million . despite this increase in sales and gross profit , our income from operations decreased by 13 % from the prior year to $ 33.3 million in fiscal 2017. this decline in profitability was driven primarily by a 112 % increase in impairment , restructuring and other charges . such charges related to the abandonment of assets previously built or constructed for our turnkey scanning program in mexico and two product lines in our security division , facility consolidations among all three of our operating divisions , transaction costs for acquisition activity during the fiscal year and costs related to the integration of as & e® , which was acquired in september of 2016. fiscal 2016 compared with fiscal 2015. we reported consolidated sales of $ 829.7 million in fiscal 2016 , a 13 % decrease from the prior year . our operating profit decreased by 58 % from the prior year to $ 38.4 million in fiscal 2016. this decline in profitability was driven primarily by the decrease in sales , which was the primary driver of a $ 48.5 million decrease in gross profit , and a $ 12.1 million increase in impairment , restructuring and other charges . these factors were partially offset by a $ 5.1 million decrease in sg & a expenses and a $ 1.8 million decrease in r & d . acquisitions . in september 2016 , we acquired as & e® , a leading provider of detection solutions for advanced cargo , parcel and personnel inspection . as & e® 's operations are included in our security division . we financed the total estimated purchase price of $ 266 million with a combination of cash on hand and borrowing under our existing revolving bank line of credit , as well as issuance of osi systems , inc. restricted stock units ( `` rsus `` ) to replace rsus previously issued by as & e® . immediately following the close of the acquisition , we used $ 69 million of as & e® 's existing cash on hand to pay down the revolving bank line of credit . in conjunction with the integration of as & e® into our security division , we have incurred approximately $ 8 million of costs related to employee terminations , which we estimate , along with other integration activities , will result in recurring annualized savings from synergies of approximately $ 18 million . 56 subsequent to our fiscal year end , on july 7 , 2017 , we acquired the former morpho global explosive trace detection business from smiths group plc . we financed the total estimated purchase price of $ 80.5 million with a combination of cash on hand and borrowings under our existing revolving bank line of credit . trends and uncertainties the following is a discussion of certain trends and uncertainties that we believe have and may continue to influence our results of operations . global economic considerations . global economic uncertainty , coupled with the strength of the u.s. dollar , which may make our products and services less competitive in countries with currencies that have declined in value against the u.s. dollar , has continued to negatively impact demand for certain of our products and services in our security and healthcare divisions . additionally , weakness in the oil markets has led to delayed purchasing by certain customers generally within the security industry impacting our security division but also in other industries impacting our other two divisions . story_separator_special_tag if actual forfeiture rates differ materially from our estimates , stock-based compensation expense could differ significantly from the amounts we have recorded in the current period . we periodically review actual forfeiture experience and revise our estimates , as necessary . we recognize the cumulative effect of changes in the estimated forfeiture rate as compensation cost in earnings in the period of the revision . as a result , if we revise our assumptions and estimates , our stock-based compensation expense could change materially in the future . certain shares of restricted stock and restricted stock units vest based upon the achievement of pre-established performance criteria . we estimate the fair value of performance-based awards at the date of grant based upon the probability that the specified performance criteria will be met , adjusted for estimated forfeitures . each quarter we update our assessment of the probability that the specified performance criteria will be achieved and adjust our estimate of the fair value of the performance-based awards if necessary . we amortize the fair values of performance-based awards over the requisite service period adjusted for estimated forfeitures for each separately vesting tranche of the award . see note 8 to the consolidated financial statements for a further discussion of stock-based compensation . legal and other contingencies . we are subject to various claims and legal proceedings . we review the status of each significant legal dispute to which we are a party and assess our potential financial exposure , if any . if the potential financial exposure from any claim or legal proceeding is considered probable and the amount can be reasonably estimated , we record a liability and an expense for the estimated loss . significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable . because of uncertainties related to these matters , accruals are based only on the best information available at the time . as additional information becomes available , we reassess the potential liability related to our pending claims and litigation and revise our estimates accordingly . such revisions in the estimates of the potential liabilities could have a material impact on our results of operations and financial position . net revenues the table below and the discussion that follows are based upon the way we analyze our business . see note 14 to the consolidated financial statements for additional information about business segments . replace_table_token_9_th fiscal 2017 compared with fiscal 2016. revenues for the security division increased primarily as a result of increased sales of cargo and vehicle inspection systems , including related service , primarily driven by $ 94.0 million of revenue related to as & e® , which was acquired in september 2016 , a significant increase in sales of our rtt® hold baggage product to international customers ; and increased revenue from turnkey scanning operations as a result of a full year of operations in our albanian program , which commenced in the second quarter of fiscal 2016 , and our expanded operations within our mexican program , which added several sites in the fourth quarter of the current year . 61 the decrease in revenues in our healthcare division was largely driven by the sale of a non-core european-based cardiology business in the third quarter of the current fiscal year , which accounted for $ 8.0 of the change in net revenues . revenues from all other products and services decreased by less than 2 % , in fiscal 2017 , as strength in second half fiscal 2017 revenues could not overcome the declines experienced in the first half of the fiscal year . revenues for the optoelectronics and manufacturing division decreased in fiscal 2017 primarily as a result of a $ 13.3 million decrease in organic sales in our contract manufacturing business due to a reduction in unit volume purchases from our oem customers . this decrease was partially offset by $ 10.1 million of incremental revenues from two small contract manufacturing businesses that were acquired during the third quarter of fiscal 2016 and a $ 1.9 million increase within our commercial optoelectronics business . fiscal 2016 compared with fiscal 2015. revenues for the security division decreased primarily as a result of a $ 66.4 million reduction in revenues associated with a foreign military sale contract with the u.s. department of defense ( `` fms contract `` ) as compared to the prior year . the delivery of equipment under the fms contract was completed in fiscal 2015. this decrease was partially offset by revenues from the commencement of our turnkey scanning operation in albania during the year . revenues for the healthcare division decreased across the majority of our product lines and regions . we believe this contraction was due , in part , to a hospital spending environment adversely impacted by challenging economic environments in many of our markets and problems encountered with new product launches . revenues for the optoelectronics and manufacturing division decreased in fiscal 2016 primarily as a result of a $ 26.8 million decrease in organic sales in our contract manufacturing business due to a reduction in unit volume purchases from our oem customers , including an $ 11.5 million year-over-year reduction in sales to a single large customer to which we still sell . this decrease was partially offset by $ 8.8 million of revenues from two small contract manufacturing businesses that were acquired during the third quarter of fiscal 2016. gross profit replace_table_token_10_th fiscal 2017 compared with fiscal 2016. gross profit increased 17 % primarily as a result of the 16 % increase in sales . the overall gross margin was up slightly from fiscal 2016 due to customer mix , economies of scale , operational efficiencies and the strengthening u.s. dollar . fiscal 2016 compared with fiscal 2015. gross profit decreased 15 % primarily as a result of the 13 % decrease in sales . gross margin decreased due	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 principal sources of liquidity are our cash and cash equivalents , cash generated from operations and our credit facility . cash and cash equivalents totaled $ 169.7 million at june 30 , 2017 , an increase of $ 65.3 million , or 63 % , from $ 104.4 million at june 30 , 2016. during fiscal 2017 , we generated $ 62.8 million of cash flow from operations . in february 2017 , we issued $ 287.5 million of notes . ( see note 7 in the consolidated financial statements for further discussion . ) these proceeds , in addition to borrowings from our credit facility , were used for the following : $ 17.1 million invested in capital expenditures , $ 191.2 million for the acquisition of businesses and other assets and $ 58.5 million for the repurchase of our common stock , including net share settlement of equity awards . if we continue to net settle equity awards , we will use additional cash to pay our tax withholding obligations in connection with such settlements . we currently anticipate that our available funds , credit facilities and cash flow from operations will be sufficient to meet our operational cash needs for the next 12 months and foreseeable future . in addition , without repatriating earnings from non-u.s. subsidiaries , we anticipate that cash generated from operations will be able to satisfy our obligations in the u.s. , including our outstanding lines of credit , as accounting earnings in the u.s. are not necessarily indicative of cash flows since earnings are generally reduced by non-cash expenses including depreciation , amortization , and stock-based compensation . we have a five-year revolving credit facility that allows us to borrow up to $ 525 million at london interbank offered rate ( `` libor '' ) plus 1.25 % depending upon our leverage ratio . as of june 30 , 2017 , there was $ 103 million outstanding under the revolving credit facility and letters-of-credit outstanding totaled $ 18.3 million . cash provided by operating activities .
early in 2020 , a potential slowdown in economic growth is perceived to be a catalyst for lower oil prices , a factor which is exacerbated by continued growth in oil production , particularly in the united states . rpc believes that oil production in the united states has also become an increasingly important determinant of global oil prices , because the united states grew to be the world 's largest producer of oil during the second quarter of 2016. following its recent peak , u.s. oil production fell by 25 percent as of the third quarter of 2017. since that time , however , improving drilling and completion activity have caused u.s. domestic oil production to rise , and as of the most recent monthly reported statistics , current u.s. oil production has increased to a level that is 42 percent higher than the cyclical low production recorded during the third quarter of 2016. during the fourth quarter of 2018 , u.s. oil production rose to its highest level on record . we believe that record u.s. oil production is a catalyst for lower oil prices during the near term . customer activities directed towards natural gas drilling and production have been weak for several years , with the u.s. domestic natural gas rig count during the first quarter of 2017 falling to the lowest level ever recorded . the u.s. domestic natural gas rig count has increased from this historic low but is still low by historical standards . we believe that customer activities directed towards drilling for natural gas has been weak because of the high production of shale-directed natural gas wells , the high amount of natural gas production associated with oil-directed shale wells in the u.s. domestic market , and relatively constant consumption of natural gas in the united states . we believe that these factors will continue to depress natural gas-directed drilling during the near term . from a low of $ 1.72 per mcf during the second quarter of 2017 , the price of natural gas had risen to $ 1.95 per mcf early in the first quarter of 2020. while current natural gas prices are higher than at the recent cyclical trough , we believe that they are still too low to encourage our customers to conduct exploration and production activities directed exclusively towards natural gas . in 2019 , the company 's strategy of utilizing equipment in unconventional basins has continued . during 2019 , we made capital expenditures totaling $ 250.6 million primarily for new revenue-producing equipment and capitalized maintenance of our existing equipment . revenues during 2019 totaled $ 1.2 billion , a decrease of 29.0 percent compared to 2018 primarily as a result of lower activity levels and lower pricing for certain service lines . cost of revenues decreased $ 263.5 million in 2019 compared to the prior year due to lower employment costs , maintenance and repairs expenses , materials and supplies expense and other costs , all of which were driven by lower activity levels . as a percentage of revenues , cost of revenues increased to 75.2 percent in 2019 compared to 68.7 percent in 2018. selling , general and administrative expenses as a percentage of revenues increased to 13.8 percent in 2019 compared to 9.8 percent in 2018 due to lower revenues over primarily fixed expenses . impairment and other charges were $ 82.3 million in 2019 , primarily due to equipment disposals , closing operating locations and reducing employee staffing . loss before income taxes was $ 113.1 million for 2019 compared to income before income taxes of $ 221.3 million in 2018. net loss for 2019 was $ 87.1 million , or $ 0.41 loss per share compared to net income of $ 175.4 million , or $ 0.82 earnings per share in 2018. net income in 2019 and 2018 reflect the lower income tax rates as a result of the tax cuts and jobs act enacted in 2017. cash flows from operating activities decreased to $ 209.1 million in 2019 compared to $ 389.0 million in 2018 primarily due to lower earnings , partially offset by a favorable changes in working capital . as of december 31 , 2019 , there were no outstanding borrowings under our credit facility . outlook drilling activity in the u.s. domestic oilfields , as measured by the rotary drilling rig count , reached a cyclical peak of 1,931 during the third quarter of 2014. between the third quarter of 2014 and the second quarter of 2016 , the drilling rig count fell by 79 percent . during the second quarter of 2016 , the u.s. domestic drilling rig count reached the lowest level ever recorded . the principal catalyst for this steep rig count decline was the decrease in the price of oil in the world markets , which began in the third quarter of 2014. the price of oil began to fall at that time due to the perceived oversupply of oil , weak global demand growth , and the strength of the u.s. dollar on world currency markets . during the second quarter of 2016 , the price of oil and the u.s. domestic rig count began to increase , and increased steadily throughout the remainder of 2016 , 2017 and 2018. at the end of 2019 , the u.s. domestic rig count had fallen by approximately 26 percent compared with the end of 2018. rpc monitors rig count efficiencies and well completion trends because the majority of our services are directed toward well completions . improvements in drilling rig efficiencies have increased the number of potential well completions for a given drilling rig count ; therefore , we believe the statistics regarding well completions are more meaningful indicators of the outlook for rpc 's activity levels and revenues . story_separator_special_tag 25 contractual obligations the company 's obligations and commitments that require future payments include our credit facility , certain non-cancelable operating leases , purchase obligations and other long-term liabilities . the following table summarizes the company 's significant contractual obligations as of december 31 , 2019 : replace_table_token_4_th ( 1 ) operating leases include agreements for various office locations , office equipment , and certain operating equipment . ( 2 ) includes agreements to purchase raw materials , goods or services that have been approved and that specify all significant terms ( pricing , quantity , and timing ) . as part of the normal course of business the company occasionally enters into purchase commitments to manage its various operating needs . ( 3 ) includes expected cash payments for long-term liabilities reflected on the balance sheet where the timing of the payments is known . these amounts include incentive compensation , severance costs and estimated charges related to disposal of impaired assets . also includes amounts related to the usage of corporate aircraft . these amounts exclude pension obligations with uncertain funding requirements and deferred compensation liabilities . fair value measurements the company 's assets and liabilities measured at fair value are classified in the fair value hierarchy ( level 1 , 2 or 3 ) based on the inputs used for valuation . assets and liabilities that are traded on an exchange with a quoted price are classified as level 1. assets and liabilities that are valued using significant observable inputs in addition to quoted market prices are classified as level 2. the company currently has no assets or liabilities measured on a recurring basis that are valued using unobservable inputs and therefore no assets or liabilities measured on a recurring basis are classified as level 3. for defined benefit plan and supplemental executive retirement plan ( “ serp ” ) investments measured at net asset value , the values are computed using inputs such as cost , discounted future cash flows , independent appraisals and market based comparable data or on net asset values calculated by the fund when not publicly available . inflation the company purchases its equipment and materials from suppliers who provide competitive prices , and employs skilled workers from competitive labor markets . if inflation in the general economy increases , the company 's costs for equipment , materials and labor could increase as well . in addition , increases in activity in the domestic oilfield can cause upward wage pressures in the labor markets from which it hires employees , especially if employment in the general economy increases . also , activity increases can cause increases in the costs of certain materials and key equipment components used to provide services to the company 's customers . when oilfield activity began to increase in the third quarter of 2016 , the company experienced upward pressure on the price of labor due to the shortage of skilled employees as well as occasional increases in the prices of certain raw materials used in providing our services . during 2018 , however , prices for the raw material comprising the company 's single largest raw material purchase began to decline due to increased sources of supply of the material , particularly in geographic markets located close to the largest u.s. oil and gas basin . in addition , labor cost pressures during the fourth quarter of 2018 began to abate due to lower oilfield activity . these cost pressures continued to decline during 2019. off balance sheet arrangements the company does not have any material off balance sheet arrangements . 26 related party transactions marine products corporation effective in 2001 , the company spun off the business conducted through chaparral boats , inc. ( “ chaparral ” ) , rpc 's former powerboat manufacturing segment . rpc accomplished the spin-off by contributing 100 percent of the issued and outstanding stock of chaparral to marine products corporation ( a delaware corporation ) ( “ marine products ” ) , a newly formed wholly owned subsidiary of rpc , and then distributing the common stock of marine products to rpc stockholders . in conjunction with the spin-off , rpc and marine products entered into various agreements that define the companies ' relationship . in accordance with a transition support services agreement , which may be terminated by either party , rpc provides certain administrative services , including financial reporting and income tax administration , acquisition assistance , etc . , to marine products . charges from the company ( or from corporations that are subsidiaries of the company ) for such services were $ 865,000 in 2019 , $ 873,000 in 2018 , and $ 849,000 in 2017. the company 's receivable due from marine products for these services was $ 55,000 as of december 31 , 2019 and $ 28,000 as of december 31 , 2018. many of the company 's directors are also directors of marine products and all of the executive officers are employees of both the company and marine products . other the company periodically purchases in the ordinary course of business equipment or services from suppliers , who are owned by significant officers or stockholders , or affiliated with the directors of rpc . the total amounts paid to these affiliated parties were $ 1,625,000 in 2019 , $ 1,467,000 in 2018 and $ 1,372,000 in 2017. rpc receives certain administrative services and rents office space from rollins , inc. ( a company of which mr. r. randall rollins is also chairman and which is otherwise affiliated with rpc ) . the service agreements between rollins , inc. and the company provide for the provision of services on a cost reimbursement basis and are terminable on six months ' notice . the services covered by these agreements include office space , administration of certain employee benefit programs , and other administrative services . charges to the company ( 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.	cash and cash flows the company 's cash and cash equivalents were $ 50.0 million as of december 31 , 2019 , $ 116.3 million as of december 31 , 2018 and $ 91.1 million as of december 31 , 2017. the following table sets forth the historical cash flows for the years ended december 31 : replace_table_token_3_th 2019 cash provided by operating activities in 2019 decreased by $ 179.9 million compared to the prior year . this decrease is due primarily to a decrease in net income ( loss ) of $ 262.5 million , the deferred income tax benefit of $ 22.2 million and gains due to benefit plan financing arrangement in 2018. these decreases were partially offset by a net favorable change in working capital of $ 24.9 million . the net favorable change in working capital is primarily due to favorable changes of $ 27.1 million in accounts receivable due to lower activity levels and revenues in the third and fourth quarters of 2019 and $ 36.6 million in inventories due to lower activity levels . these favorable changes were partially offset by unfavorable working capital changes of $ 34.5 million in accounts payable and $ 8.3 million in accrued payroll and related expenses . cash used for investing activities in 2019 increased by $ 16.1 million compared to 2018 primarily because of higher capital expenditures in 2019 and property insurance proceeds in 2018. cash used for financing activities in 2019 decreased by $ 104.5 million primarily as a result of a reduction in cash dividends to common stockholders , partially offset by the lower cost of repurchases of the company 's shares on both the open market and for taxes related to the vesting of restricted shares . 2018 cash provided by operating activities in 2018 increased by $ 255.3 million compared to the prior year .
ahus is a severe and life-threatening genetic ultra-rare disease characterized by chronic uncontrolled complement activation and thrombotic microangiopathy ( tma ) , the formation of blood clots in small blood vessels throughout the body , causing a reduction in platelet count ( thrombocytopenia ) and life-threatening damage to the kidney , brain , heart and other vital organs . in addition , the fda and ec have granted soliris orphan drug designation for the treatment of patients with ahus . in addition to pnh and ahus , we believe that soliris may be useful in the treatment of a variety of other serious diseases and conditions resulting from uncontrolled complement activation . we are currently evaluating additional potential indications for soliris in severe and ultra-rare diseases in which uncontrolled complement activation is the underlying mechanism . we are also progressing in various stages of development with additional biotechnology product candidates that target severe and life-threatening ultra-rare diseases for which we believe current treatments are either non-existent or inadequate . these therapeutics focus on metabolic and inflammatory diseases . we are also involved in the research associated with the identification and development of new therapeutics pursuant to ongoing license and collaboration agreements . critical accounting policies and the use of estimates the significant accounting policies and basis of preparation of our consolidated financial statements are described in note 1 , “ business overview and summary of significant accounting policies ” of the consolidated financial statements included in this annual report on form 10-k. under accounting principles generally accepted in the united states , we are required to make 49 estimates and assumptions that affect the reported amounts of assets , liabilities , revenues , expenses and disclosure of contingent assets and liabilities in our financial statements . actual results could differ from those estimates . we believe the judgments , estimates and assumptions associated with the following critical accounting policies have the greatest potential impact on our consolidated financial statements : revenue recognition ; contingent liabilities ; inventories ; research and development expenses ; share-based compensation ; valuation of goodwill , acquired intangible assets and in-process research and development ( ipr & d ) ; valuation of contingent consideration ; and income taxes . revenue recognition net product sales our principal source of revenue is product sales . we recognize revenue from product sales when persuasive evidence of an arrangement exists , title to product and associated risk of loss has passed to the customer , the price is fixed or determinable , collection from the customer is reasonably assured , and we have no further performance obligations . revenue is recorded upon receipt of the product by the end customer , which is typically a hospital , physician 's office , private or government pharmacy or other health care facility . amounts collected from customers and remitted to governmental authorities , such as value-added taxes ( vat ) in foreign jurisdictions , are presented on a net basis in our consolidated statements of operations and do not impact net product sales . our customers are primarily comprised of distributors , pharmacies , hospitals , hospital buying groups , and other health care providers . in some cases , we may also sell soliris to governments and government agencies . because of factors such as the pricing of soliris , the limited number of patients , the short period from product sale to patient infusion and the lack of contractual return rights , soliris customers often carry limited inventory . we also monitor inventory within our sales channels to determine whether deferrals are appropriate based on factors such as inventory levels compared to demand , contractual terms and financial strength of distributors . in addition to sales in countries where soliris is commercially available , we have also recorded revenue on sales for patients receiving soliris treatment through named-patient programs . the relevant authorities or institutions in those countries have agreed to reimburse for product sold on a named-patient basis where soliris has not received final approval for commercial sale . we record estimated rebates payable under governmental programs , including medicaid in the united states and other programs outside the united states , as a reduction of revenue at the time of product sale . our calculations related to these rebate accruals require analysis of historical claim patterns and estimates of customer mix to determine which sales will be subject to rebates and the amount of such rebates . we update our estimates and assumptions each period and record any necessary adjustments , which may have an impact on revenue in the period in which the adjustment is made . generally , the length of time between product sale and the processing and reporting of the rebates is three to six months . we have entered into volume-based arrangements with governments in certain countries in which reimbursement is limited to a contractual amount . under this type of arrangement , amounts billed in excess of the contractual limitation are repaid to these governments as a rebate . we estimate incremental discounts resulting from these contractual limitations , based on estimated sales during the limitation period , and we apply the discount percentage to product shipments as a reduction of revenue . our calculations related to these arrangements require estimation of sales during the limitation period , and adjustments in these estimates may have a material impact in the period in which these estimates change . 50 we have provided balances and activity in the rebates payable account for the years ended december 31 , 2013 , 2012 and 2011 as follows : replace_table_token_4_th we record distribution and other fees paid to our customers as a reduction of revenue , unless we receive an identifiable and separate benefit for the consideration and we can reasonably estimate the fair value of the benefit received . story_separator_special_tag if our estimates are not representative of actual outcomes , our results of operations could be materially impacted . we continue to maintain a valuation allowance against certain deferred tax assets where realization is not certain . we periodically evaluate the likelihood of the realization of deferred tax assets and reduce the carrying amount of these deferred tax assets by a valuation allowance to the extent we believe a portion will not be realized . we consider many factors when assessing the likelihood of future realization of deferred tax assets , including our recent cumulative earnings experience by taxing jurisdiction , expectations of future taxable income , carryforward periods available to us for tax reporting purposes , various income tax strategies and other relevant factors . significant judgment is required in making this assessment and , to the extent future expectations change , we would assess the recoverability of our deferred tax assets at that time . if we determine that the 54 deferred tax assets are not realizable in a future period , we would record material adjustments to income tax expense in that period . new accounting pronouncements in january 2013 , the financial accounting standards board issued an update to clarify the scope of disclosures for offsetting assets and liabilities . the standard is effective for interim and annual periods beginning on or after january 1 , 2013 and requires disclosure for all comparative periods . we adopted the provisions of this guidance , including the additional disclosure noted above , in 2013. in february 2013 , the financial accounting standards board issued a new standard to improve the reporting of reclassifications out of accumulated other comprehensive income . the new standard requires the disclosure of significant amounts reclassified from each component of accumulated other comprehensive income and the income statement line items affected by the reclassification . the standard is effective prospectively for interim and annual periods beginning after december 15 , 2012. we adopted the provisions of this guidance , including the additional disclosure noted above , in 2013. results of operations the following table sets forth consolidated statements of operations data for the periods indicated . this information has been derived from the consolidated financial statements included elsewhere in this annual report on form 10-k. replace_table_token_5_th 55 comparison of the year ended december 31 , 2013 to the year ended december 31 , 2012 net product sales net product sales by significant geographic region are as follows : replace_table_token_6_th the increase in revenue for fiscal year 2013 versus 2012 was primarily due to an increased volume of unit shipments , partially offset by a negative impact of price and foreign exchange . the increase in revenue of 37 % for the year ended december 31 , 2013 was due to an increase in unit volumes of 40 % , offset by a negative price impact of 2 % , and a negative impact on foreign exchange of 1 % . the increase in volume was largely due to physicians globally requesting soliris therapy for additional patients . the negative price impact of 2 % for the year ended december 31 , 2013 was primarily due to increased rebates in certain countries in europe , offset by a price increase in the united states . the negative impact on foreign exchange of $ 15,876 , or 1 % , for the year ended december 31 , 2013 was due to changes in foreign currency exchange rates ( inclusive of hedging activity ) versus the u.s. dollar for the year ended december 31 , 2012 . the negative impact was primarily due to the weakening of the japanese yen . we recorded a gain in revenue of $ 20,569 and $ 12,869 related to our foreign currency cash flow hedging program , which is included in revenue from outside the united states , for the years ended december 31 , 2013 and 2012 , respectively . cost of sales in october 2013 , we entered into a settlement agreement and dismissal with novartis pursuant to which alexion was granted a non-exclusive , fully paid license and the case was dismissed with prejudice . as a result , we recorded expense of $ 9,181 in cost of sales in the third quarter 2013 related to this litigation settlement agreement . in the third quarter of 2012 , we reduced our estimate for probable contingent liabilities as of september 30 , 2012 due to the execution of a settlement and non-exclusive license agreement in october 2012 with a third party related to the third party 's intellectual property . the adjustment reflected the actual , negotiated royalty rate set forth in the agreement . this change in estimate resulted in a positive impact in cost of sales of $ 53,377 during the third quarter 2012. exclusive of the changes in estimates of contingent liabilities for the settlements noted above , cost of sales were $ 168,375 and $ 126,214 , or 11 % of product revenue , for the years ended december 31 , 2013 and 2012 , respectively . cost of sales includes manufacturing costs as well as actual and estimated royalty expenses associated with sales of soliris . included in cost of sales for the year ended december 31 , 2013 , was $ 14,277 or 1 % of product sales related to the expected disposal of inventory in 2014 associated with our voluntary recall announced in november 2013. offsetting this increase in cost of sales was a decrease in our ongoing royalty expense as a result of the settlement and non-exclusive license agreement we entered into in october 2012. research and development expense our research and development expense includes personnel , facility and external costs associated with the research and development of our product candidates , as well as product development costs . we group our research and development expenses into two major categories : external direct expenses and all other research and development (	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 summarizes our net change in cash and cash equivalents : replace_table_token_21_th the decrease in cash and cash equivalents was primarily attributable to the purchase of marketable securities and the repurchase of common stock , offset by cash generated from operations , proceeds from the maturity or sale of available-for-sale securities , net proceeds from the exercise of stock options and a reduction of income taxes payable due to excess tax benefits from stock options . operating activities the components of cash flows from operating activities , as reported in our consolidated statements of cash flows , are as follows : our reported net income was $ 252,895 and $ 254,822 for the years ended december 31 , 2013 and 2012 , respectively . non-cash items included depreciation and amortization , impairment of intangible assets , change in fair value of contingent consideration , share-based compensation expense , premium amortization of available-for-sale securities , deferred taxes , unrealized foreign currency gains and losses , and unrealized gains and losses on forward contracts , and were $ 240,529 and $ 177,072 for the years ended december 31 , 2013 and 2012 , respectively . 67 net cash outflow due to changes in operating assets and liabilities was $ 3,925 and $ 21,281 for the years ended december 31 , 2013 and 2012 , respectively .
in addition , rising exports of metallurgical coal from australia continue to have a negative effect on prices received for metallurgical coal produced in the united states . due to continued high global production levels and currently weak australian and canadian dollars , we do not anticipate metallurgical coal prices recovering in 2014. lessees move on and off of our properties over the course of any given year in accordance with their mine plans . our revenues are reduced when a lessee 's mine plan results in the mining of reserves adjacent to our properties that are not owned by us . these reductions are generally offset by other lessees moving their mining operations back on to our properties . during the fourth quarter of 2013 , we experienced a decline in coal production due to several high-volume lessees conducting their mining operations on adjacent properties in accordance with their mine plans . we expect that the volumes of coal produced by lessees moving off of our properties for 2014 will exceed the volumes produced as lessees move back on our properties during 2014. these reduced volumes , along with continued depressed coal prices , are expected to result in a significant decrease in our coal royalty revenues during 2014 as compared to prior years . oci wyoming 's soda ash business has performed as we projected during 2013 , but the increased liquidity associated with a refinancing transaction resulted in higher than expected cash distributions to nrp in 2013 , including a $ 44.8 million special distribution in july 2013. nrp anticipates receiving approximately $ 42.5 million of distributions from the oci wyoming investment in 2014. political , legal and regulatory environment the political , legal and regulatory environment continues to be difficult for the coal industry . the environmental protection agency ( epa ) has used its authority to create significant delays in the issuance of new permits and the modification of existing permits , which has led to substantial delays and increased costs for coal operators . furthermore , the federal courts have recently handed down several decisions that are adverse to the coal industry . in addition , the electric utility industry , which is the most significant end-user of domestic coal , is subject to extensive regulation regarding the environmental impact of its power generation activities . on january 8 , 2014 , epa published proposed new source performance standards for greenhouse gas emissions from new fossil fuel-fired electric generating units . the effect of the proposed rules would be to require partial carbon capture and sequestration on any new coal-fired power plants , which may amount to their effective prohibition . president obama has directed epa to issue proposed regulations on existing fossil fuel-fired power plants in june 2014. we expect that epa 's proposed regulations for both new and existing power plants will negatively affect the viability of coal-fired power generation , which will ultimately reduce coal consumption and the production of coal from our properties . 48 in addition to government action , private citizens ' groups have continued to be active in bringing lawsuits against operators and landowners . in 2012 and 2013 , several citizen suit group lawsuits were filed against mine operators for allegedly violating conditions in their npdes permits requiring compliance with west virginia 's water quality standards . some of the lawsuits allege violations of water quality standards for selenium , whereas others allege that discharges of conductivity and sulfate are causing violations of west virginia 's narrative water quality standards , which generally prohibit adverse effects to aquatic life . the citizen suit groups seek penalties as well as injunctive relief that would limit future discharges of selenium , conductivity or sulfate . while it is too early to determine the ultimate resolution of these lawsuits , any rulings requiring operators to reduce their discharges of selenium , conductivity or sulfate could result in large treatment expenses for our lessees . in 2013 , several citizen group lawsuits were filed against landowners alleging ongoing discharges of pollutants , including selenium , from valley fills located at reclaimed mountaintop removal mining sites in west virginia . in each case , the mine on the subject property has been closed , the property has been reclaimed , and the state reclamation bond has been released . while it is too early to determine the merits or predict the outcome of any of these lawsuits , any determination that a landowner or lessee has liability for discharges from a previously reclaimed mine site would result in uncertainty as to continuing liability for completed and reclaimed coal mine operations . recent acquisitions we are a growth-oriented company and have closed a number of acquisitions over the last several years . our most recent acquisitions are briefly described below . sundance . in december 2013 , we acquired non-operated working interests in oil and gas properties in the williston basin of north dakota , including properties producing from the bakken/three forks play , from sundance energy , inc. for $ 33.7 million , subject to post-closing purchase price adjustments . the properties , which are all held by production are located in mckenzie , mountrail and dunn counties and are actively being developed . abraxas . in august 2013 , we acquired non-operated working interests in producing oil and gas properties in the williston basin of north dakota and montana , including properties producing from the bakken/three forks play , from abraxas petroleum corporation for $ 38.3 million , subject to post-closing purchase price adjustments . oci wyoming . story_separator_special_tag production in northern appalachia increased by 1.0 million tons , but these increases were mainly on leases with a lower revenue per ton , and therefore still resulted in reduced revenue of $ 1.1 million . the tonnage decreases are partially offset by an increase in production in southern appalachia , primarily due to one of our lessees having more normal production for 2013 after it completed repairs to its preparation plant that was damaged by a tornado in 2011and restarted production in 2012. our lessees in southern appalachia realized generally lower prices in 2013 versus 2012 , resulting in lower revenue per ton and revenue decrease of $ 3.2 million . illinois basin . coal royalty revenues and production on our properties were both higher in 2013. coal royalty revenues increased by $ 6.5 million and production increased by 1.8 million tons . the increased production was mainly due to production from our hillsboro property that operated its longwall for the entire year of 2013 after beginning operations in the third quarter of 2012. the increased production and revenue from hillsboro was partially offset by lower production from the williamson mine , which had lower sales and lower production from the macoupin mine , which idled one of its producing units in early 2013. northern powder river basin . our coal royalty revenues decreased by $ 932,000 over last year despite a production increase of 401,000 tons on our western energy property . the higher production was due to the normal variations that occur due to the checkerboard nature of our ownership . the lower revenue per ton was due to the timing of revenue recognition by the lessee in the third quarter of 2012 that did not occur in 2013. gulf coast . coal royalty revenues and production were both higher in 2013. the increase in coal royalty revenue is primarily due to a mine having a greater proportion of its production on our property . aggregates royalty revenues and production for the year ended december 31 , 2013 , we recognized $ 7.6 million in royalty revenue from aggregates , which included bonus revenue of $ 0.6 million under one of our leases . for the same period for 2012 , we recognized royalty revenue from aggregates of $ 6.6 million and no bonus royalty . we had production of 6.2 million tons and 5.3 million tons for 2013 and 2012 , respectively . also , we do not include revenues from our frac sand properties in texas and wisconsin in aggregate royalties , but include those revenues in overriding royalties . we received revenues of $ 1.0 million and $ 1.5 million in 2013 and 2012 , respectively , from our texas property . we also received $ 2.1 million in override revenue in 2013 from our frac sand property in wisconsin , which was acquired during the fourth quarter of 2012 and did not start to contribute to revenue until 2013. oil and gas revenues oil and gas revenues for the years ended december 31 , 2013 and 2012 were $ 17.1 million and $ 9.2 million , respectively . the results for 2013 reflect our further diversification , with investments in oil and gas providing increased revenues from our oklahoma properties and revenue from recently acquired non-operated working interests in the bakken/three forks play in north dakota and montana during the second half of 2013. included in revenues for the years ended 2013 and 2012 were bonus payments of $ 0.3 million and $ 2.6 million , respectively . 53 year ended december 31 , 2012 compared to year ended december 31 , 2011 summary of 2012 and 2011 revenues and production ( in thousands , except percent and per ton data ) replace_table_token_13_th 54 coal royalty revenues and production coal royalty revenues comprised approximately 69 % of our total revenue for the year ended december 31 , 2012 and 74 % of our total revenue in 2011. the following is a discussion of the coal royalty revenues and production derived from our major coal producing regions : appalachia . the combination of lower production and lower prices in central appalachia , together with a lower royalty rate in northern appalachia , were the primary reasons coal royalty revenues decreased by $ 27.6 million in 2012. the 3.5 million ton decrease in production in central appalachia was the result of our lessees reducing production in response to the weaker coal market and the effect of some lessees having a lower proportion of production on our properties . production in northern appalachia increased by 5.2 million tons , but these increases were mainly on leases with a lower revenue per ton , and therefore still resulted in reduced revenue of $ 4.8 million . the decreases are partially offset by an increase in production and revenue in southern appalachia , due primarily to one of our lessees resuming production for the entire year after it completed repairs to its preparation plant that was damaged by a tornado in 2011. illinois basin . coal royalty revenues and production on our properties were both higher in 2012. coal royalty revenues increased by $ 8.2 million and production increased by 1.9 million tons . the increased production was mainly due to production from our hillsboro property that began longwall operations in the third quarter of 2012. in addition , we had increased production at the williamson mine . northern powder river basin . our coal royalty revenues increased by $ 843,000 over last year despite a production decrease of 305,000 tons on our western energy property . the lower production was due to the normal variations that occur due to the checkerboard nature of our ownership . the higher revenue per ton was due to the timing of revenue recognition by the lessee in the third quarter of 2012. gulf coast . primarily due to production from a lease with a higher revenue per ton starting on 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.	opco debt as of the date of this filing , opco 's debt consisted of : $ 20.0 million drawn under the floating rate revolving credit facility , due august 2016 ; $ 99.0 million floating rate term loan , due january 2016 ; $ 23.1 million of 4.91 % senior notes due 2018 ; $ 128.6 million of 8.38 % senior notes due 2019 ; $ 53.8 million of 5.05 % senior notes due 2020 ; $ 1.5 million of 5.31 % utility local improvement obligation due 2021 ; $ 27.0 million of 5.55 % senior notes due 2023 ; $ 75.0 million of 4.73 % senior notes due 2023 ; $ 165.0 million of 5.82 % senior notes due 2024 ; $ 50.0 million of 8.92 % senior notes due 2024 ; $ 175.0 million of 5.03 % senior notes due 2026 ; and $ 50.0 million of 5.18 % senior notes due 2026. senior notes . opco issued the senior notes listed below under a note purchase agreement as supplemented from time to time . the senior notes are unsecured but are guaranteed by opco 's subsidiaries . opco may prepay the senior notes at any time together with a make-whole amount ( as defined in the note purchase agreement ) . if any event of default exists under the note purchase agreement , the noteholders will be able to accelerate the maturity of the senior notes and exercise other rights and remedies . the senior note purchase agreement contains covenants requiring opco to : maintain a ratio of consolidated indebtedness to consolidated ebitdda ( as defined in the note purchase agreement ) of no more than 4.0 to 1.0 for the four most recent quarters ; not permit debt secured by certain liens and debt of subsidiaries to exceed 10 % of consolidated net tangible assets ( as defined in the note purchase agreement ) ; and maintain the ratio of consolidated ebitdda to consolidated fixed charges ( consisting of consolidated interest expense and consolidated operating lease expense ) at not less than 3.5 to 1.0. all of opco 's senior notes require annual principal payments in addition to semi-annual interest payments .
various preclinical models have demonstrated that increased expression of abcd2 can lead to normalization of vlcfa metabolism . preliminary data suggest that vk0214 stimulates abcd2 expression in an in vitro model and reduces vlcfa levels in an in vivo model of x-ald . pending completion of certain ongoing toxicology studies , we expect to file an ind to initiate a proof-of-concept study in patients with x-ald in 2019. on february 6 , 2018 , we completed an underwritten public offering of common stock , or the february 2018 offering , pursuant to a registration statement on form s-3 ( file no . 333-212134 ) , as amended , that was declared effective on july 26 , 2016 , or the shelf 55 registration statement . in the february 2018 offering , we sold 12,650,000 shares of our common stock at a public offering price of $ 5.00 per share of common stock . upon the closin g of the february 2018 offering , we received net proceeds of $ 58.7 million , after deducting underwriting discounts , commissions and other offering expenses . on june 11 , 2018 , we completed an underwritten public offering of common stock , or the june 2018 offering , pursuant to the shelf registration statement and a registration statement on form s-3mef ( file no . 333-225479 ) filed pursuant to rule 462 ( b ) of the securities act of 1933 , as amended , or the securities act . in the june 2018 offering , we sold 8,625,000 shares of our common stock at a public offering price of $ 9.00 per share of common stock . upon the closing of the june 2018 offering , we received net proceeds of $ 72.3 million , after deducting underwriting discounts , commissions and other offering expe nses . on september 25 , 2018 , we completed an underwritten public offering of common stock , or the september 2018 offering , pursuant to a universal shelf registration statement on form s-3 ( file no . 333-226133 ) that was filed with the sec on july 11 , 2018 and declared effective on july 19 , 2018. in the september 2018 offering , we sold 9,500,000 shares of our common stock at a public offering price of $ 18.50 per share . upon the closing of the september 2018 offering , we received net proceeds of $ 165.0 million , after deducting underwriting discounts , commissions and other offering expenses . we were incorporated under the laws of the state of delaware on september 24 , 2012. since our incorporation , we have devoted most of our efforts towards conducting certain clinical trials and preclinical studies related to our vk2809 , vk5211 and vk0214 programs , as well as efforts towards raising capital and building infrastructure . we obtained exclusive worldwide rights to our vk2809 , vk5211 and vk0214 programs and certain other assets pursuant to an exclusive license agreement with ligand pharmaceuticals incorporated , or ligand . the terms of this license agreement are detailed in the master license agreement which we entered into on may 21 , 2014 with ligand , as amended , or the master license agreement . a summary of the master license agreement can be found under the heading “ agreements with ligand— master license agreement ” under part i , “ item 1. business ” of this annual report on form 10-k. financial operations overview revenues to date , we have not generated any revenue . we do not expect to receive any revenue from any drug candidates that we develop unless and until we obtain regulatory approval for , and commercialize , our drug candidates or enter into collaborative agreements with third parties . research and development expenses during the year ended december 31 , 2018 , we charged $ 19.0 million to research and development expense related to our continued efforts to conduct our phase 2 clinical trial and certain toxicology studies for vk2809 and in vivo studies for vk0214 . during the year ended december 31 , 2017 , we charged $ 13.7 million to research and development expense related to our continued efforts to conduct phase 2 clinical trials for vk5211 and vk2809 and in vivo studies for vk0214 . we expect that our ongoing research and development expenses will consist of costs incurred for the development of our drug candidates , including , but not limited to : employee and consultant-related expenses , which will include salaries , benefits and stock-based compensation , and certain consultant fees and travel expenses ; expenses incurred under agreements with investigative sites and contract research organizations , or cros , which will conduct a substantial portion of our research and development activities , including studies in nash , on our behalf ; payments to third-party manufacturers , which will produce our active pharmaceutical ingredients and finished products ; license fees paid to third parties for use of their intellectual property ; and facilities , depreciation and other allocated expenses , which will include direct and allocated expenses for rent and maintenance of facilities and equipment , depreciation of leasehold improvements , equipment and laboratory and other supplies . we expense all research and development costs as incurred . 56 the process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming and the successful development of our drug candidates is highly uncertain . our futu re research and development expenses will depend on the clinical success of each of our drug candidates , as well as ongoing assessments of the commercial potential of such drug candidates . in addition , we can not forecast with any degree of certainty which drug candidates may be subject to future collaborations , when such arrangements will be secured , if at all , and to what degree such arrangements would affect our development plans and capital requirements . story_separator_special_tag year ended december 31 , $ change % change 2018 2017 other income ( expense ) $ 4,098 $ ( 1,508 ) $ 5,606 ( 371.8 ) % other income ( expense ) recognized during the year ended december 31 , 2018 consisted primarily of income of $ 1.4 million related to the decrease in fair value of the ligand note 's conversion feature and interest income of $ 3.3 million offset by $ 404,000 of expense related to the amortization of the ligand note discount , $ 38,000 of interest expense related to the ligand note , $ 120,000 of expense relating to the amortization of certain financing costs , and $ 12,000 of realized loss on sale of investment securities . other income ( expense ) recognized during the year ended december 31 , 2017 consisted primarily of expenses of $ 571,000 related to the amortization of financing costs , $ 1.3 million related to the amortization of the ligand note discount and $ 97,000 of interest expense related to the ligand note offset by income of $ 345,000 related to the change in fair value of the ligand note 's conversion feature and $ 98,000 of interest income related to our short-term investments . story_separator_special_tag approval . we will need to raise additional capital to fund our operations and complete our ongoing and planned clinical trials . although we expect to finance future cash needs through public or private equity or debt offerings , funding may not be available to us on acceptable terms , or at all . if we are unable to raise additional capital in sufficient amounts or on terms acceptable to us , we may be r equired to delay , limit , reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves . our future capital requirements will depend on many factors , including , but not limited to : the scope , rate of progress , results and costs of our clinical trials , preclinical studies and other related activities ; our ability to establish and maintain strategic collaborations , licensing or other arrangements and the financial terms of such agreements ; the timing of , and the costs involved in , obtaining regulatory approvals for any of our current or future drug candidates ; the number and characteristics of the drug candidates we seek to develop or commercialize ; the cost of manufacturing clinical supplies , and establishing commercial supplies , of our drug candidates ; the cost of commercialization activities if any of our current or future drug candidates are approved for sale , including marketing , sales and distribution costs ; the expenses needed to attract and retain skilled personnel ; the costs associated with being a public company ; the amount of revenue , if any , received from commercial sales of our drug candidates , should any of our drug candidates receive marketing approval ; and the costs involved in preparing , filing , prosecuting , maintaining , defending and enforcing possible patent claims , including litigation costs and the outcome of any such litigation . contractual obligations and commitments we are a smaller reporting company , as defined by rule 12b-2 of the securities exchange act of 1934 , as amended , and are not required to provide the information required under this item . off-balance sheet arrangements we do not have any off-balance sheet arrangements as defined in item 303 ( a ) ( 4 ) ( ii ) of regulation s-k promulgated by the sec . recent accounting pronouncements adopted accounting standards in may 2014 , the financial accounting standards board , or fasb , issued asu no . 2014-09 , revenue from contracts with customers ( topic 606 ) , or asu 2014-09 , which supersedes all existing revenue recognition requirements , including most industry-specific guidance . the new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services . the fasb has subsequently issued the following amendments to asu 2014-09 , which have the same effective date and transition date of january 1 , 2018 : in august 2015 , the fasb issued asu no . 2015-14 , revenue from contracts with customers ( topic 606 ) : deferral of the effective date , which delayed the effective date of the new standard from january 1 , 2017 to january 1 , 2018. the fasb also agreed to allow entities to choose to adopt the standard as of the original effective date . in march 2016 , the fasb issued asu no . 2016-08 , revenue from contracts with customers ( topic 606 ) : principal versus agent considerations , which clarifies the implementation guidance on principal versus agent considerations . in april 2016 , the fasb issued asu no . 2016-10 , revenue from contracts with customers ( topic 606 ) : identifying performance obligations and licensing , which clarifies certain aspects of identifying performance obligations and licensing implementation guidance . in may 2016 , the fasb issued asu no . 2016-12 , revenue from contracts with customers ( topic 606 ) : narrow-scope improvements and practical expedients , which relates to disclosures of remaining performance obligations , as well as other 62 amendments to guidance on collectability , non-cash consideration and the presentation of sales and other similar taxes collected from customers . in december 2016 , the fasb issued asu no . 2016-20 , technical corrections and improvements to topic 606 , revenue from contracts with customers , which amends certain narrow aspects of the guidance issued in asu no . 2014-09 including guidance related to the disclosure of remaining performance obligations and prior-period performance obligations , as well as other amendments to the guidance 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 we have incurred losses and negative cash flows from operations and have not generated any revenues since our inception . as of december 31 , 2018 , we had cash , cash equivalents and short term investments of $ 301.5 million . as such , we believe our cash , cash equivalents and short-term investments will be sufficient to fund our operations through at least the first quarter of 2020 , which is more than one year after the date our december 31 , 2018 financial statements were issued . our primary use of cash is to fund operating expenses , which to date have consisted of the cost to obtain the license of intellectual property from ligand , certain research and development expenses related to furthering the development of vk2809 , vk5211 and 60 vk0214 efforts and general and administrative expenses . since we have not generated any revenues to date , we have incurred operating losses since our inception . cash used to fund operating expenses is impacted by the timing of payment of these expenses , as reflected in the change in our outstanding accounts payable and accrued expenses . on july 11 , 2018 , we filed with the sec a universal shelf registration statement on form s-3 ( file no . 333-226133 ) , or the shelf registration statement . the shelf registration statement initially provided us with the ability to offer up to $ 450.0 million of securities , including equity , debt and other securities as described in the shelf registration statement . the shelf registration statement was declared effective by the sec on july 19 , 2018. pursuant to the shelf registration statement , we may offer additional securities from time to time and through one or more methods of distribution , subject to market conditions and our capital needs .
while we believe we will be successful in obtaining stockholders ' approval and executing the restructuring transactions , there can be no assurances regarding the ultimate success , timing or extent of any such funding , which are dependent upon a variety of factors , many of which are outside of our control . in addition , no assurance can be given that any funding from the restructuring transactions , if approved by stockholders and obtained at all , will be adequate to fulfill our obligations and operate our business . consequently , we may be required to obtain additional funding whether through private or public equity transactions , debt financing or other capital sources . we may not be able to take such actions , if necessary , on commercially reasonable terms or at all . if additional funding can not be obtained on a timely basis and on satisfactory terms , it will have an adverse effect on our business , financial condition and results of operations . 29 covid-19 business impact and response the covid-19 pandemic caused the global economy to enter a recessionary period , which may be prolonged and severe . during 2020 , the exploration and production ( “ e & p ” ) industry faced the dual impact of demand deterioration from covid-19 and market oversupply from increased production , which caused oil and natural gas prices to decline significantly for most of the year . brent crude oil prices , which are most relevant to our internationally focused business , dropped 66 % during the first quarter from $ 66 on january 1 , 2020 to $ 23 on march 31 , 2020. by the end of the second quarter , brent crude oil prices rebounded to $ 41 per barrel , benefiting from increased global demand as pandemic restrictions started to ease and decreased production . brent crude oil prices have remained relatively stable through the end of the year , increasing during the fourth quarter to end the year at $ 51 per barrel . brent crude oil prices further increased to approximately $ 60 per barrel at the beginning of february 2021 , which is consistent with prices a year ago . in an effort to stabilize oil prices by limiting supply , opec and other oil producing allies agreed to substantial production cuts throughout 2020 that were extended through march 2021. while commodity prices can be volatile , the sharp decline throughout 2020 triggered e & p companies to reduce budgets by approximately 25 % . exploration offerings and data purchases are often discretionary and , therefore , receive disproportionately higher reductions than overall budget cuts . consequently , there has been a material slowdown in offshore seismic spending since the second quarter of 2020 , and while we are seeing signs that could improve , we expect the market to remain challenging in 2021. however , the challenging market also serves as a catalyst to drive necessary cost restructuring and digital transformation of the e & p ecosystem . our management expects continued portfolio rationalization and high grading as e & p companies seek to find the best return on investment opportunities to meet oil and gas demand in the next decade . near-term , due to the impact of the covid-19 , project high grading will likely be more acute due to budget reductions . over the last several years , we strategically shifted our portfolio closer to the reservoir , where revenue tends to be higher and more consistent . new venture data acquisition offshore and software and related personnel-based offshore services are expected to continue to be most impacted by covid-19 travel restrictions . while offshore operations have been temporarily impacted by travel restrictions , we believe the demand for digitalization technologies will remain strong . in some cases , ion technology is expected to be more relevant and valuable in the current environment ( for instance , offerings that facilitate remote working ) . while 2020 revenues came in lower than prior year due to the repercussions of the oil price volatility in early 2020 and the ongoing uncertainty from the covid-19 pandemic , we made progress executing our strategy . we continue to work closely with our clients to understand their revised plans and to scale our business appropriately . we partially mitigated the impact of the current macroeconomic environment by fully benefiting from the structural changes and associated cost reductions through salary cuts , reduced capital expenditures , renegotiation of our current leases and application for various government assistance programs , among others , that were outlined in detail in part i , item 1 . “ business ” and footnote 1 `` summary of significant accounting policies `` of footnotes to consolidated financial statements . the management plan reflects our continued focus on preserving cash and managing liquidity in the current uncertain macroeconomic environment . in the event our customers experience more extensive budget reductions and capital constraints further reducing demand for our services and products , resulting in deterioration of our revenues below our current forecasted levels , management may be required to update its plan by implementing further cost reductions and delaying capital investments . see part i , item 1 . “ business ” and footnote 1 `` summary of significant accounting policies `` of footnotes to consolidated financial statements for further details . 30 impact to our business our 2020 results were consistent with our expectations of customer spend contraction related to covid-19 demand deterioration and oil oversupply weighing on the commodity price early this year . in addition , we are fully benefiting from our cost reduction measures taken during the first half of 2020. active priorities were further limited to improve focus and execution on strategic initiatives , and ultimately deliver better results to shareholders . story_separator_special_tag `` revolving credit facility on august 16 , 2018 , we and our material u.s. subsidiaries ; gx technology corporation , ion exploration products ( u.s.a. ) , inc. and i/o marine systems , inc. ( the “ material u.s. subsidiaries ” ) , along with gx geoscience corporation , s. de r.l . de c.v. , a limited liability company ( sociedad de responsibilidad limitada de capital variable ) organized under the laws of mexico , and a subsidiary of the company ( the “ mexican subsidiary , ” ) ( the material u.s. subsidiaries and the mexican subsidiary are collectively , the “ subsidiary borrowers ” , together with ion geophysical corporation are the “ borrowers ” ) , the financial institutions party thereto , as lenders , and pnc , as agent for the lenders , entered into that certain third amendment and joinder to revolving credit and security agreement ( the “ third amendment ” ) , amending the revolving credit and security agreement , dated as of august 22 , 2014 ( as previously amended by the first amendment to revolving credit and security agreement , dated as of august 4 , 2015 and the second amendment to revolving credit and security agreement , dated as of april 28 , 2016 , the “ credit agreement ” ) . the credit agreement , as amended by the first amendment , the second amendment and the third amendment is herein called , the “ credit facility ” ) . the credit facility matures on august 16 , 2023 and is subject to our retirement or extension of the maturity date of the existing second lien notes . if by september 15 , 2021 we have not ( 1 ) repaid the existing second lien notes , ( 2 ) extended the maturity of the existing second lien notes to a date not earlier than october 31 , 2023 , or ( 3 ) submitted a written proposal summarizing our plan to either repay or extend the notes to the agent for the lenders ( as defined in footnote 5 “ long-term debt ” of footnotes to consolidated financial statements ” ) of the credit facility that has been approved by the agent , then the credit facility shall immediately become due and payable on such date . we also entered into the pnc restructuring support agreement that will allow us , among others , to consummate and implement the restructuring transactions and waive any going concern event of default that would otherwise occur under our credit facility . the maximum amount available under the credit facility is the lesser of $ 50.0 million or a monthly borrowing base . the borrowing base under the credit facility will increase or decrease monthly using a formula based on certain eligible receivables , eligible inventory and other amounts , including a percentage of the net orderly liquidation value of our multi-client data library ( not to exceed $ 28.5 million for the multi-client data library component ) . at december 31 , 2020 , there was $ 22.5 million outstanding indebtedness under the credit facility and the undrawn remaining borrowing base capacity was $ 7.4 million . the credit facility requires us to maintain compliance with various covenants . at december 31 , 2020 , we are in compliance with all of the covenants under our credit facility . for further information regarding our credit facility see footnote 5 “ long-term debt ” of footnotes to consolidated financial statements . government relief funding on april 11 , 2020 , we entered into a note agreement with pnc amounting to $ 6.9 million pursuant to the coronavirus aid , relief , and economic security act 's ( “ cares act ” ) paycheck protection program ( the “ ppp loan ” ) . amounts outstanding under the ppp loan will bear interest at 1 % per annum beginning on the six-month anniversary of the date of the ppp loan . interest will be calculated based on the actual number of days that principal is outstanding over a year of 360 days . the ppp loan matures in two years after the receipt of the loan proceeds . during fourth quarter 2020 , we applied to pnc for forgiveness of the amount due on the ppp loan in an amount based on the sum of the following costs incurred by our u.s. operations during the 24-week period beginning on the date of first disbursement ( for payroll costs , beginning on the date of the first pay period following disbursement ; for non-payroll costs , beginning on the date of first disbursement ) of the ppp loan : ( a ) payroll costs ; ( b ) any payment on a covered rent obligation ; and ( c ) any covered utility payment . the amount of forgiveness shall be calculated ( and may be reduced ) in accordance with the requirements of the paycheck protection program , including the provisions of section 1106 of the cares act . the forgiveness amount will be subject to the small business administration 's review . any outstanding principal amount under the ppp loan that is not forgiven shall convert to an amortizing term loan . we recognized the ppp loan following the government grant accounting by analogy to international accounting standards ( “ ias ” ) 20 , “ accounting for government grants and disclosure of government assistance ” ( “ ias 20 ” ) . in accordance with ias 20 , a deferred income liability is recognized for the principal amount estimated to be forgiven and is amortized to other income on a systematic and rational basis . any outstanding principal amount not expected to be forgiven is recognized as other debt . as we expect that the full amount of the ppp loan will be forgiven , the entire $ 6.9 million was recognized as a deferred income liability during second	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 capital at december 31 , 2020 , we had total liquidity of $ 44.9 million , consisting of $ 37.5 million in cash on hand ( including net revolver borrowings of $ 22.5 million ) and $ 7.4 million of available borrowing capacity under our credit facility . in recent years , our primary sources of funds have been cash flows generated from operations , existing cash balances , debt and equity issuances and borrowings under our credit facility . our cash requirements include working capital requirements and cash required for our debt service payments , multi-client seismic data acquisition activities and capital expenditures . working capital requirements are primarily driven by our investment in our ( i ) multi-client data library ( $ 27.2 million in 2020 ) and ( ii ) royalty payments for multi-client sales . our multi-client data library investment in 2020 includes $ 10.6 million of payments to our acquisition partners for seismic acquisition costs incurred in prior years . approximately 30 % of our accounts payable balance as of december 31 , 2020 relates to amounts owed to our seismic acquisition partners . also , our headcount has traditionally been a significant driver of our working capital needs . as a significant portion of our business is involved in the planning , processing and interpretation of seismic data services , one of our largest investments is in our employees , which involves cash expenditures for their salaries , bonuses , payroll taxes and related compensation expenses , including stock appreciation rights awards , typically in advance of related revenue billings and collections . our working capital requirements may change from time to time depending upon many factors , including our operating results and adjustments in our operating plan in response to industry conditions , competition and unexpected events .
united states by credit rating agencies . the factors set forth under “ item 1a - risk factors ” in this report and other cautionary statements and information set forth in this report should be carefully considered and understood as being applicable to all related forward-looking statements contained in this report , when evaluating the business prospects of the company and its subsidiaries . forward-looking statements are not guarantees of performance . by their nature , they involve risks , uncertainties and assumptions . the future results and shareholder values may differ significantly from those expressed in these forward-looking statements . you are cautioned not to put undue reliance on any forward-looking statement . any such statement speaks only as of the date of this report , and in the case of any documents that may be incorporated by reference , as of the date of those documents . we do not undertake any obligation to update or release any revisions to any forward-looking statements , to report any new information , future event or other circumstances after the date of this report or to reflect the occurrence of unanticipated events , except as required by law . however , your attention is directed to any further disclosures made on related subjects in our subsequent reports filed with the securities and exchange commission ( the “ sec ” ) on forms 10-k , 10-q and 8-k. 33 critical accounting policies general the company 's financial statements are prepared in accordance with accounting principles generally accepted in the united states of america ( “ gaap ” ) . the financial information contained within our statements is , to a significant extent , financial information that is based on measures of the financial effects of transactions and events that have already occurred . we use historical loss data and the economic environment as factors , among others , in determining the inherent loss that may be present in our loan and lease portfolio . actual losses could differ significantly from the factors that we use . in addition , gaap itself may change from one previously acceptable method to another method . although the economics of our transactions would be the same , the timing of events that would impact our transactions could change . allowance for loan and lease losses the allowance for loan and lease losses is an estimate of probable credit losses inherent in the company 's credit portfolio that have been incurred as of the balance-sheet date . the allowance is based on two basic principles of accounting : ( 1 ) “ accounting for contingencies , ” which requires that losses be accrued when it is probable that a loss has occurred at the balance sheet date and such loss can be reasonably estimated ; and ( 2 ) the “ receivables ” topic , which requires that losses be accrued on impaired loans based on the differences between the value of collateral , present value of future cash flows or values that are observable in the secondary market and the loan balance . the allowance for loan and lease losses is determined based upon estimates that can and do change when the actual risk , loss events , or changes in other factors , occur . the analysis of the allowance uses an historical loss view as an indicator of future losses and as a result could differ from the actual losses incurred in the future . if the allowance for loan and lease losses falls below that deemed adequate ( by reason of loan and lease growth , actual losses , the effect of changes in risk factors , or some combination of these ) , the company has a strategy for supplementing the allowance for loan and lease losses , over the short-term . for further information regarding our allowance for loan and lease losses , see “ allowance for loan and lease losses activity . ” stock-based compensation the company recognizes compensation expense over the service period in an amount equal to the fair value of all share-based payments which consist of stock options and restricted stock awarded to directors and employees . the fair value of each stock option award is estimated on the date of grant and amortized over the service period using a black-scholes-merton based option valuation model that requires the use of assumptions . critical assumptions that affect the estimated fair value of each award include expected stock price volatility , dividend yields , option life and the risk-free interest rate . the fair value of each restricted award is estimated on the date of award and amortized over the service period . goodwill business combinations involving the company 's acquisition of equity interests or net assets of another enterprise or the assumption of net liabilities in an acquisition of branches constituting a business may give rise to goodwill . goodwill represents the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed . the value of goodwill is ultimately derived from the company 's ability to generate net earnings after the acquisition and is not deductible for tax purposes . a decline in net earnings could be indicative of a decline in the fair value of goodwill and result in impairment . for that reason , goodwill is assessed for impairment at least annually . impairment exists when a reporting unit 's carrying value of goodwill exceeds its fair value . at december 31 , 2014 , the company 's reporting unit had positive equity and the company elected to perform a qualitative assessment to determine if it was more likely than not that the fair value of the reporting unit exceeded its carrying value , including goodwill . story_separator_special_tag incentive accruals increased $ 54,000 , from $ 618,000 in 2013 to $ 672,000 in 2014 and other employee benefits increased $ 162,000 ( 11.9 % ) from $ 1,367,000 in 2013 to $ 1,529,000 in 2014. salaries decreased $ 66,000 ( 1.1 % ) from $ 6,048,000 in 2013 to $ 5,982,000 in 2014. the increase in incentive compensation was primarily due to an increase in the company 's net income in relationship to incentive targeted net income goals . the increase in other employee benefits , which includes health care related benefits , 401 ( k ) matching , and employee placement fees , was primarily related to higher employee placement fees paid in 2014 to attract lending officers and a chief credit officer . the decrease in salaries is related to a lower number of employees . average full-time equivalent employees ( “ fte ” ) decreased from 106 during 2013 to 102 during 2014. salaries and benefits were up $ 256,000 ( or 3.1 % ) for 2013 as compared to $ 8,260,000 in 2012. the increase in salary and benefits was due in part to increased incentive compensation expense partially offset by a decrease in core salaries . salaries decreased $ 221,000 ( 3.5 % ) from $ 6,269,000 in 2012 to $ 6,048,000 in 2013 and incentive accruals increased $ 579,000 , from $ 39,000 in 2012 to $ 618,000 in 2013. the decrease in salaries is related to a lower number of employees . average fte 's decreased from 114 during 2012 to 106 during 2013. the increase in incentive compensation was primarily due to an increase in the company 's net income in relationship to incentive targeted net income goals . the remaining decrease in salaries and benefits is related to a decrease in employee benefits , including employee health insurance and employer taxes . 40 other real estate owned the total other real estate owned ( “ oreo ” ) expense in 2014 was $ 364,000 ( down $ 572,000 or 61.1 % ) compared to $ 936,000 in 2013. the primary reason for the decrease in oreo related expenses is due to the sale of a number of properties , including office buildings which have high operating expenses and lower write-downs due to updated property valuations . in 2014 , the gains on sale , which offset the overall oreo expense , were higher than in 2013. in 2014 , write-downs were $ 165,000 compared to $ 293,000 in 2013. this decrease is related to a fewer number of owned properties and some stability in the real estate market . gains from properties sold in 2014 totaled $ 231,000 compared to $ 44,000 in 2013 and operating expenses on the properties held in 2014 totaled $ 430,000 compared to $ 686,000 in 2013. the total oreo expense in 2013 was $ 936,000 ( down $ 1,129,000 or 54.7 % ) compared to $ 2,065,000 in 2012. the primary reason for the decrease in oreo related expenses is due to the sale of a number of properties , including office buildings which have high operating expenses and lower write-downs due to updated property valuations . in 2013 , write-downs were $ 293,000 compared to $ 1,000,000 in 2012. this decrease is related to a fewer number of owned properties and some stability in the real estate market in 2013. occupancy , furniture and equipment occupancy expense decreased $ 24,000 ( 2.0 % ) during 2014 to $ 1,188,000 , compared to $ 1,212,000 in 2013. furniture and equipment expense decreased $ 34,000 ( 4.5 % ) during 2014 to $ 724,000 compared to $ 758,000 in 2013. the decrease in the furniture and equipment expense resulted from lower depreciation on the company 's furniture and equipment . occupancy expense increased $ 3,000 ( 0.2 % ) during 2013 to $ 1,212,000 , compared to $ 1,209,000 in 2012. furniture and equipment expense was $ 812,000 in 2012 compared to $ 758,000 in 2013 , representing a $ 54,000 ( 6.7 % ) decrease . the decrease in the furniture and equipment expense resulted from lower depreciation on the company 's furniture and equipment . regulatory assessments regulatory assessments include fees paid to the california department of business oversight ( the “ dbo ” ) , formerly the california department of financial institutions and the federal deposit insurance corporation ( the “ fdic ” ) . fdic assessments increased $ 51,000 ( 16.3 % ) during 2014 to $ 363,000 , compared to $ 312,000 in 2013. the majority of this increase relates to an adjustment to the accrual based upon an updated analysis performed in 2013 revealing that the accrual should be reduced . this adjustment occurred in 2013 and did not reoccur in 2014. the assessments paid to the dbo in 2014 were $ 70,000 , no change from 2013. fdic assessments decreased $ 252,000 ( 44.7 % ) during 2013 to $ 312,000 , compared to $ 564,000 in 2012. the majority of this decrease relates to lower fdic assessment methodology from a deposit based system to an asset risk-based system , the bank 's improved risk assessment category , and an adjustment to the accrual based upon an updated analysis revealing that the accrual should be reduced . the assessments paid to the dbo in 2013 were $ 70,000 compared to $ 69,000 in 2012 . 41 other expenses table five below provides a summary of the components of the other noninterest expenses for the periods indicated ( dollars in thousands ) : replace_table_token_7_th other expenses were $ 3,377,000 ( up $ 290,000 or 9.4 % ) for 2014 as compared to $ 3,087,000 for 2013. the increase in other expenses occurred primarily in the professional expense category . professional expenses , which include legal expenses , increased $ 249,000 ( 26.7 % ) , from $ 933,000 in 2013 to $ 1,182,000 in 2014. legal expenses increased	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 the current and projected capital position of the company and the impact of capital plans and long-term strategies are reviewed regularly by management . the company 's capital position represents the level of capital available to support continuing operations and expansion . on december 20 , 2012 , the company approved and authorized a stock repurchase program for 2013 ( the “ 2013 program ” ) . the 2013 program authorized the repurchase during 2013 of up to 10 % of the outstanding shares of the company 's common stock , or approximately 932,700 shares based on the 9,327,203 shares outstanding as of december 20 , 2012. during 2013 , the company repurchased 849,404 shares of its common stock at an average price of $ 8.24 per share . on january 17 , 2014 , the company approved and authorized a stock repurchase program for 2014 ( the “ 2014 program ” ) . the 2014 program authorized the repurchase during 2014 of up to 5 % of the outstanding shares of the company 's common stock , or approximately 424,462 shares based on the 8,489,247 shares outstanding as of december 20 , 2013. during 2014 , the company repurchased 424,462 shares of its common stock at an average price of $ 9.77 per share . on january 21 , 2015 , the company approved and authorized a stock repurchase program for 2015 ( the “ 2015 program ” ) . the 2015 program authorized the repurchase during 2015 of up to 5 % of the outstanding shares of the company 's common stock , or approximately 404,481 shares based on the 8,089,615 shares outstanding as of december 20 , 2014. any repurchases under the 2015 program will be made from time to time by the company in the open market as conditions allow . all such transactions will be structured to comply with sec rule 10b-18 and all shares repurchased under the 2015 program will be retired . the number , price and timing of the repurchases will be at the company 's sole discretion and the 2015 program may be re-evaluated depending on market conditions , capital and liquidity needs or other factors .
subject to input by the fda and other regulatory authorities we anticipate conducting two phase 3 clinical trials of aqx-1125 in ic/bps , with the first trial commencing in 2016 , and designed as a three-arm , randomized , double-blind , placebo-controlled phase 3 clinical trial , with 12 weeks dosing followed by an open label extension , to assess the efficacy and safety of aqx-1125 in both female and male ic/bps patients . patients will be randomized to receive one of two potential doses of aqx-1125 or placebo . the design and execution of the second phase 3 trial will be informed , in part , by the first trial upon receipt of top-line results once every patient has received 12 weeks of treatment . aqx-1125 is a ship1 activator that has demonstrated preliminary safety , broad anti-inflammatory potential and favorable drug properties in multiple preclinical studies . we have also completed seven clinical trials , exposing over 380 subjects to once daily oral administration of aqx-1125 . these trials have demonstrated a good tolerability profile , with over 200 patients receiving aqx-1125 in two phase 2 trials for periods of 12 weeks . we believe aqx-1125 is the only ship1 activator currently in clinical trials and that no ship1 activator has yet received marketing approval as a treatment for disease in humans . our longer-term strategy is to broaden our development activities for aqx-1125 and to advance next generation ship1 activators for the treatment of additional inflammatory diseases and cancer . we use a proprietary screening approach to discover new drug candidates that selectively target ship1 to modulate activated immune cells while minimizing their toxicity to normal cells . this approach has provided us with an extensive chemical library and several candidate lead compounds that target ship1 . these compounds have both similar and distinct properties from aqx-1125 . our intellectual property covers ship1 as a target , the c2 binding domain for screening and the composition of matter for our compounds . we commenced operations as 6175813 canada inc. , a corporation formed in december 2003 under the canada business corporations act . in may 2014 , after a corporate restructuring , we changed the name of such entity to aquinox pharmaceuticals ( canada ) inc. ( aqxp canada ) . we incorporated aquinox pharmaceuticals ( usa ) inc. , a corporation under the laws of the state of delaware , in may 2007. we subsequently changed the name of this corporation in january 2014 to aquinox pharmaceuticals , inc. ( aquinox usa ) . upon the completion of our initial public offering ( ipo ) in march 2014 , aqxp canada became a wholly owned subsidiary of aquinox usa . since commencing operations , we have dedicated a significant portion of our resources to development efforts for our clinical-stage product candidate aqx-1125 . we anticipate that we will continue to incur significant operating expenses related to research and development as we continue to advance our clinical-stage product candidates and preclinical programs . we have funded our operations primarily through the sale of common stock and preferred stock and through debt financing . in september 2015 , we completed a public offering of 6,325,000 shares of common stock at a price to the public of $ 15.50 per share for gross proceeds from the offering of $ 98.0 million before underwriting commissions and expenses of approximately $ 6.2 million . as of december 31 , 2015 , we had $ 112.9 million in cash , cash equivalents and short-term and long-term investments in liquid , high-quality securities . 68 since inception , we have incurred significant operating losses . our net loss for the year ended december 31 , 2015 was $ 21.9 million , compared to $ 24.0 million for the year ended december 31 , 2014. as of december 31 , 2015 , we had an accumulated deficit of $ 111.3 million , compared to $ 89.4 million for the year ended december 31 , 2014. we expect to incur significant expenses and operating losses for the foreseeable future as we continue the development and clinical trials of , and , if successful , to potentially seek regulatory approval for aqx-1125 and any future product candidates we advance to clinical development . if we are able to obtain regulatory approval for any of our product candidates , we expect to incur significant commercialization expenses . for example , we do not currently have the infrastructure for the sales , marketing , manufacture and distribution of any products . we may enter into licensing and co-promotion agreements with strategic or collaborative partners for the commercialization of our products in the united states and other territories , but have not currently entered into any such arrangements . to develop a commercial infrastructure , we would have to invest considerable financial and management resources , some of which would have to be deployed prior to having any certainty of marketing approval . unless and until we generate sufficient revenue to be profitable , we will seek to fund our operations primarily through public or private equity or debt financings or other sources . other additional financing may not be available to us on acceptable terms , or at all . our failure to raise capital as and when needed could have a material adverse effect on our business , results of operations , financial condition and cash flows and future prospects . results of operations revenue to date , we have not generated any revenue . in the future , we may generate revenue from a combination of product sales , license fees , milestone payments and royalties from the sale of products developed under licenses of our intellectual property . story_separator_special_tag 75 milestone , royalty-based and other commitments on august 19 , 2009 , aqxp canada entered into an asset purchase agreement with biolipox ab of sweden , or biolipox , for the purchase of all assets , including patent rights and know-how , relating exclusively or principally to a compound library from which we ultimately identified and selected aqx-1125 . under the terms of the agreement , aqxp canada paid biolipox cad $ 50,000 immediately upon closing . an additional cad $ 250,000 by way of issuance of our common stock was made in june 2014 upon the first submission to the fda of an ind for a compound from the acquired class . the terms of the agreement also require a one-time cad $ 3.0 million milestone payment upon the commitment of financial resources by the board of directors of aqxp canada to advance aqx-1125 into a phase 3 clinical trial . we will also be required to make certain other milestone payments totaling up to cad $ 1.5 million in the aggregate upon the first commercial sale of the first compound covered by the acquired patent rights ( which we expect will be triggered by the first commercial sale of aqx-1125 ) in each of the united states , europe and japan . there are no royalty payments due under this agreement . aqxp canada entered into an exclusive license agreement with the university of british columbia , or ubc , dated june 6 , 2006 , for certain patent rights and technology relating to small molecule compounds and pharmaceutical compositions as modulators of ship1 activity . this agreement was amended and restated on june 8 , 2007 , and subsequently amended in october 2006 , june 2007 , september 2008 and april 2010. this agreement will expire on the expiry of the last issued patent covering the licensed technology . the agreement will terminate automatically upon our insolvency or may be terminated by either party for material breach by the other party . the terms of the agreement required aqxp canada to pay an initial license fee of cad $ 50,000 all of which was paid by the issuance of 100,000 common exchangeable shares of aqxp canada . we do not currently have any product candidates under development that are covered by the agreement , nor have we sublicensed our rights under the licensed patents . however , if we develop products covered by the ubc technology in the future , we will be required to pay certain development and regulatory milestones up to an aggregate of cad $ 2.2 million for the first drug product developed under the license and up to cad $ 1.5 million for each subsequent drug product , which may be paid in cash or by issue of our shares . we must also pay ubc low single-digit royalties based on aggregate worldwide net sales of products covered by the licensed patents and a percentage of sublicensing revenue ranging from the low single digits to the mid double digits based on the stage of development at which such sublicense is granted . we are also required to reimburse costs incurred by ubc related to the prosecution and maintenance of the licensed patents , and to pay an annual license maintenance fee in the amount of cad $ 1,000. in may 2005 , aqxp canada entered into an assignment agreement , which was subsequently amended in december 2005 and march 2006 , with the british columbia cancer agency ( bcca ) and stemcell technologies , inc. ( sti ) , for the assignment to aqxp canada of the 2002 exclusive license agreement between bcca and sti to certain patents relating to technology relating to ship1 . the license agreement between aqxp canada and bcca was amended and restated in august 2006 and june 2007. this agreement has subsequently been amended in june 2008 to revise the schedule of the technology licensed under this agreement , and further amended in february 2013. pursuant to this agreement , as amended , bcca has granted us an exclusive worldwide license to certain of its intellectual property relating to core ship1 technology , and screening of compounds for activity using ship1 , including the c2 binding domain . the agreement is to expire at the later of 20 years from the effective date of the agreement or upon the expiration of the last patent covered by the license . the terms of the assignment agreement among sti , bcca and aqxp canada required aqxp canada to pay an assignment license fee of cad $ 150,000 paid in stages beginning may 2005 and ending march 2006. we do not currently have any product candidates under development that are covered by the bcca license agreement , nor have we sublicensed our rights under the licensed patents . however , if we develop products covered by the bcca technology in the future , we will be required to pay bcca low single-digit royalties based on aggregate worldwide net sales of products covered by the licensed patents , and if we sublicense any rights to the technology , a low double digit percentage of sublicensing revenue . we are also required to reimburse bcca 's patent costs incurred in relation to the licensed technology , and pay an annual maintenance fee in the amount of cad $ 5,000. our license with bcca will terminate automatically upon our insolvency , and may be terminated by either party for material breach by the other party . 76 critical accounting policies and significant judgments and estimates the preparation of these financial statements in accordance with u.s. gaap requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , revenue and expenses and the disclosure of contingent assets and liabilities . on an ongoing basis , we evaluate our estimates and judgments , including those related to accrued liabilities , stock-based compensation and derivative liabilities . we base 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.	liquidity and capital resources since our inception , we have incurred net losses and negative cash flows from our operations and relied upon the issuance of common and preferred stock to fund our operations . our operating activities used $ 20.3 million , $ 17.5 million and $ 7.8 million of cash flows during the years ended december 31 , 2015 , 2014 and 2013 , respectively . as of december 31 , 2015 , we had an accumulated deficit of $ 111.3 million , working capital of $ 70.0 million , and cash , cash equivalents , short and long-term investments of $ 112.9 million . we believe that our existing capital resources will be sufficient to fund our operations for at least the next 12 months . cash flows the following table summarizes our cash flows for the years ended december 31 , 2015 , 2014 and 2013 : replace_table_token_6_th cash used in operating activities cash used in operating activities for the year ended december 31 , 2015 increased compared to the year ended december 31 , 2014 despite decline in operating expenses in 2015 compared to 2014. this was primarily due to timing of accounts payables as certain expenses incurred in 2014 were paid in 2015. the increase in cash used in operating activities for the year ended december 31 , 2014 compared to the year ended december 31 , 2013 was driven by an increase in clinical development expenses as a result of the two large phase 2 clinical trials , the leadership and flagship trials , which were actively enrolling during 2014 .
we are bringing new science to the design and development of next generation retinal medicines . our abc platform tm uses molecular engineering to merge the fields of antibody-based and chemistry-based therapies and is at the core of kodiak 's discovery engine . our lead product candidate , ksi-301 , is a novel anti-vegf antibody biopolymer conjugate generating compelling data in treatment naïve patients with retinal vascular diseases . our pivotal program is exploring ksi-301 in wamd , dme , rvo and non-proliferative diabetic retinopathy . our hope with ksi-301 is to meaningfully change the treatment paradigm for all patients with retinal vascular diseases . our pipeline , including product candidates ksi-501 and ksi-601 , aims to bring a similar ethos of drug development to other unmet needs in retina such as dry amd and glaucoma . our goal is to prevent and treat the major causes of blindness by developing next-generation therapeutics for chronic , high-prevalence retinal diseases . our overall objective is to develop our product candidates , seek fda and worldwide health authority marketing authorization approvals , and ultimately commercialize our product candidates . product candidates ksi-301 kodiak 's lead product candidate , ksi-301 , is a novel anti-vegf antibody biopolymer conjugate being developed for the treatment of retinal vascular diseases including age-related macular degeneration , a leading cause of blindness in elderly patients , and diabetic eye diseases , a leading cause of blindness in working-age patients . we continue to observe promising safety , efficacy and clinical durability data through 52-weeks in our ongoing phase 1b study of ksi-301 in treatment-naïve patients with wet amd , dme or rvo . based on the encouraging data from our phase 1b study , we have expanded the ksi-301 clinical pivotal program in the third quarter of 2020 , and we have entered into the manufacturing-related commitments necessary for ksi-301 's commercial scale-up and bla submission . we successfully recruited patients into both of our paired pivotal studies in dme ( gleam and glimmer ) and into our pivotal study in rvo ( beacon ) in the third quarter of 2020. the pivotal study for wet amd ( dazzle ) began recruiting in the third quarter of 2019 and completed patient enrollment in the fourth quarter of 2020. approximately 2,000 ksi-301 injections have been administered to approximately 500 patients , representing approximately 350 patient-years of exposure . we believe the intersection of these clinical and manufacturing activities remain on track per our “ 2022 vision ” to submit a single bla for wet amd , dme and rvo in calendar year 2022. we believe that ksi-301 , if approved , has the potential to be an important therapy to treat patients with wet age-related macular degeneration , or wet amd , diabetic retinopathy , or dr , including diabetic macular edema , or dme , and macular edema due to retinal vein occlusion , or rvo . our pre-clinical pipeline kodiak has leveraged its abc platform to build a pipeline of product candidates in various stages of development including ksi-501 , our bispecific anti-il-6/vegf biopolymer conjugate for the treatment of neovascular retinal diseases with an inflammatory component , and we are expanding our early research pipeline to include abc platform based triplet inhibitors for multifactorial retinal diseases such as dry amd and glaucoma . the abc platform and ksi-301 were developed at kodiak , and we own worldwide rights to these assets . further details of our ongoing ksi-301 phase 1b trial , our accelerating development strategy , our manufacturing-related commitments , and our pipeline of retinal medicines based on the abc platform are described in the “ business ” section above . 110 financial operations overview since inception in june 2009 , we have devoted substantially all of our resources to discovering and developing product candidates and manufacturing processes , building our abc platform and assembling our core capabilities in drug development for ophthalmic disease . we plan to continue to use third-party contract research organizations , or cros , to carry out our preclinical and clinical development . we rely on third-party contract manufacturing organizations , or cmos , to manufacture and supply our preclinical and clinical materials to be used during the development of our product candidates . we are evaluating investments in commercial manufacturing capacity . we do not have any products approved for sale and have not generated any product revenue since inception . we have funded our operations primarily through the sale and issuance of equity securities . in october 2018 , we completed our initial public offering , or ipo . in december 2019 , we completed a follow-on offering . in november 2020 , we completed a second follow-on offering . we have incurred significant operating losses to date and expect that our operating losses will increase significantly as we advance our product candidates , particularly ksi-301 , through preclinical and clinical development , seek regulatory approval , prepare for and , if approved , proceed to commercialization ; broaden and improve our platform ; acquire , discover , validate and develop additional product candidates ; obtain , maintain , protect and enforce our intellectual property portfolio ; and hire additional personnel . in addition , we expect to incur additional costs associated with operating as a public company . our net loss was $ 133.1 million , $ 47.4 million and $ 41.4 million for the years ended december 31 , 2020 , 2019 and 2018 , respectively . as of december 31 , 2020 , we had an accumulated deficit of $ 291.2 million . story_separator_special_tag our estimates are based on our historical experience and on various other factors that we believe are 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 from these estimates under different assumptions or conditions . we believe that the accounting policies discussed below are critical to understanding our historical and future performance , as these policies relate to the more significant areas involving management 's judgments and estimates . accrued research and development our accrued research and development costs are estimated based on the level of services performed , including the phase or completion of events , and contracted costs . accrued clinical trial and related costs are estimated using data such as patient enrollment , clinical site activations or information provided by outside service providers regarding their actual costs incurred . management determined accrual estimates through reports from and discussions with clinical personnel and outside service providers as to the progress of trials , or the services completed . the estimated costs of research and development provided , but not yet invoiced , are included in accrued liabilities and other current liabilities on the consolidated balance sheets . if the actual timing of the performance of services or the level of effort varies from the original estimates , we will adjust the accrual accordingly . payments made to third parties under these arrangements in advance of the performance of the related services are recorded as prepaid expenses and other assets until the services are rendered . stock-based compensation expense we measure and recognize compensation expense for all stock‑based awards made to employees , directors and non‑employees , based on estimated fair values of the awards on the grant date and recognized using the straight‑line method over the requisite service period . the fair value of options is estimated on the grant date using the black‑scholes option valuation model . the calculation of stock‑based compensation expense requires that we make certain assumptions and judgments about a number of complex and subjective variables used in the black‑scholes model , including the expected term , expected volatility of the underlying common stock and risk‑free interest rate . our stock-based awards are subject to either service or performance-based vesting 116 conditions . we evaluate whether achievement of the performance conditions is probable and record expense over the appropriate service period based on this assessment . changes in these assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized . these inputs are subjective and generally require significant analysis and judgment to develop . income taxes we provide for income taxes under the asset and liability method . current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year . deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and net operating loss , or nols , and credit carryforwards , and are measured using the enacted tax rates and laws that will be in effect when such items are expected to reverse . deferred income tax assets are reduced , as necessary , by a valuation allowance when management determines it is more likely than not that some or all of the tax benefits will not be realized . we assess all material positions taken in any income tax return , including all significant uncertain positions , in all tax years that are still subject to assessment or challenge by relevant taxing authorities . assessing an uncertain tax position begins with the initial determination of the position 's sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement . as of each balance sheet date , unresolved uncertain tax positions must be reassessed , and we will determine whether ( 1 ) the factors underlying the sustainability assertion have changed and ( 2 ) the amount of the recognized tax benefit is still appropriate . the recognition and measurement of tax benefits requires significant judgment . judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available . our policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit . to date , there have been no interest or penalties charged in relation to the unrecognized tax benefits . nols and tax credit carryforwards are subject to review and possible adjustment by the internal revenue service , or irs , and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 % as defined under sections 382 and 383 in the internal revenue code , which could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities . the amount of the annual limitation is determined based on our value immediately prior to the ownership change . subsequent ownership changes may further affect the limitation in future years . we have completed a section 382 study through december 31 , 2020 which concluded no such ownership change had occurred through december 31 , 2020. as of december 31 , 2020 and 2019 , we had unrecognized tax benefits , all of which would affect income tax expense if recognized , before consideration of our valuation allowance . we do not expect that our uncertain tax positions will materially change in the next twelve months . off-balance sheet arrangements since our inception , we have not engaged in any off-balance sheet arrangements , as defined in the rules and regulations of the sec . recent accounting	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 we have funded our operations primarily through the sale and issuance of common stock , redeemable convertible preferred stock , convertible notes and warrants . as of december 31 , 2020 , we had cash , cash equivalents and marketable securities of $ 969.0 million . ipo in connection with our ipo in 2018 , we sold and issued 9,400,000 shares of common stock at a price to the public of $ 10.00 per share . the aggregate net proceeds from our ipo , inclusive of the partial over-allotment option exercise , were $ 83.5 million after deducting underwriting discounts and commissions and other offering costs . follow-on offering in december 2019 , we completed a follow-on offering pursuant to the shelf registration on form s-3 and issued and sold 6,900,000 shares of common stock at a price to the public of $ 46.00 per share . the gross proceeds from this offering were $ 317.4 million , resulting in aggregate net proceeds of $ 297.6 million after deducting underwriting discounts and commissions and other offering costs payable by us . in november 2020 , we completed a follow-on offering pursuant to the shelf registration on form s-3 and issued and sold 5,972,222 shares of common stock at a price to the public of $ 108.00 per share . the gross proceeds from this offering were $ 645.0 million , resulting in aggregate net proceeds of $ 612.0 million after deducting underwriting discounts and commissions and other offering costs . future funding requirements we have incurred net losses since our inception . for the years ended december 31 , 2020 , 2019 and 2018 , we had net losses of $ 133.1 million , $ 47.4 million , and $ 41.4 million , respectively , and we expect to continue to incur additional losses in future periods . as of december 31 , 2020 , we had an accumulated deficit of $ 291.2 million . we have based these estimates on assumptions that may prove to be wrong , and we could deplete our available capital resources sooner than we expect .
hedging and risk management activities we engage in hedging and risk management activities to reduce the effect of price volatility on our product costs and to ensure the availability of product during periods of short supply . we enter into propane forward and option agreements with third parties , and use futures and option contracts traded on the new york mercantile exchange ( nymex ) to purchase and sell propane , fuel oil and crude oil at fixed prices in the future . the majority of the futures , forward and option agreements are used to hedge price risk associated with propane and fuel oil physical inventory , as well as , in certain instances , forecasted purchases of propane or fuel oil . forward contracts are generally settled physically at the expiration of the contract whereas futures and option contracts are generally settled in cash at the expiration of the contract . although we use derivative instruments to reduce the effect of price volatility associated with priced physical inventory and forecasted transactions , we do not use derivative instruments for speculative trading purposes . risk management activities are monitored by an internal commodity risk management committee , made up of five members of management and reporting to our audit committee , through enforcement of our hedging and risk management policy . critical accounting policies and estimates our significant accounting policies are summarized in note 2 , summary of significant accounting policies , included within the notes to consolidated financial statements section elsewhere in this annual report . certain amounts included in or affecting our consolidated financial statements and related disclosures must be estimated , requiring management to make certain assumptions with respect to values or conditions that can not be known with certainty at the time the financial statements are prepared . the preparation of financial statements in conformity with accounting principles generally accepted in the united states of america ( us gaap ) 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 revenues and expenses during the reporting period . we are also subject to risks and uncertainties that may cause actual results to differ from estimated results . estimates are used when accounting for depreciation and amortization of long-lived assets , employee benefit plans , self-insurance and litigation reserves , environmental reserves , allowances for doubtful accounts , asset valuation assessments and valuation of derivative instruments . we base our estimates on historical experience and on various other assumptions 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 . any effects on our business , financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known to us . management has reviewed these critical accounting estimates and related disclosures with the audit committee of our board of supervisors . we believe that the following are our critical accounting estimates : allowances for doubtful accounts . we maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments . we estimate our allowances for doubtful accounts using a specific reserve for known or anticipated uncollectible accounts , as well as an estimated reserve for potential future uncollectible accounts taking into consideration our historical write-offs . if the financial condition of one or more of our customers were to deteriorate resulting in an impairment in their ability to make payments , additional allowances could be required . as a result of our large customer base , which is comprised of approximately 750,000 customers , no individual customer account is material . therefore , while some variation to actual results occurs , historically such variability has not been material . schedule ii , valuation and qualifying accounts , provides a summary of the changes in our allowances for doubtful accounts during the period . 27 pension and other postretirement benefits . we estimate the rate of return on plan assets , the discount rate used to estimate the present value of future benefit obligations and the expected cost of future health care benefits in determining our annual pension and other postretirement benefit costs . while we believe that our assumptions are appropriate , significant differences in our actual experience or significant changes in market conditions may materially affect our pension and other postretirement benefit obligations and our future expense . see liquidity and capital resources pension plan assets and obligations below for additional disclosure regarding pension benefits . with other assumptions held constant , an increase or decrease of 100 basis points in the discount rate would have an immaterial impact on net pension and postretirement benefit costs . self-insurance reserves . our accrued self-insurance reserves represent the estimated costs of known and anticipated or unasserted claims under our general and product , workers ' compensation and automobile insurance policies . accrued insurance provisions for unasserted claims arising from unreported incidents are based on an analysis of historical claims data . for each unasserted claim , we record a self-insurance provision up to the estimated amount of the probable claim utilizing actuarially determined loss development factors applied to actual claims data . our self-insurance provisions are susceptible to change to the extent that actual claims development differs from historical claims development . we maintain insurance coverage wherein our net exposure for insured claims is limited to the insurance deductible , claims above which are paid by our insurance carriers . story_separator_special_tag by comparison , net income and ebitda for fiscal 2010 were negatively impacted by certain items , including : ( i ) a loss on debt extinguishment of $ 9.5 million associated with the refinancing of senior notes ; ( ii ) a non-cash pension settlement charge of $ 2.8 million ; and ( iii ) a non-cash charge of $ 1.8 million to accelerate depreciation expense on assets taken out of service . adjusted ebitda represents ebitda excluding the unrealized net gain or loss from mark-to-market activity for derivative instruments , loss on debt extinguishment , pension settlement charge and severance charges . our management uses ebitda and adjusted ebitda as measures of liquidity and we are including them because we believe that they provide our investors and industry analysts with additional information to evaluate our ability to meet our debt service obligations and to pay our quarterly distributions to holders of our common units . in addition , certain of our incentive compensation plans covering executives and other employees utilize adjusted ebitda as the performance target . moreover , our revolving credit agreement requires us to use adjusted ebitda as a component in calculating our leverage and interest coverage ratios . ebitda and adjusted ebitda are not recognized terms under us gaap and should not be considered as an alternative to net income or net cash provided by operating activities determined in accordance with us gaap . because ebitda and adjusted ebitda as determined by us excludes some , but not all , items that affect net income , they may not be comparable to ebitda and adjusted ebitda or similarly titled measures used by other companies . 33 the following table sets forth ( i ) our calculations of ebitda and ( ii ) a reconciliation of ebitda , as so calculated , to our net cash provided by operating activities : replace_table_token_9_th fiscal year 2010 compared to fiscal year 2009 revenues replace_table_token_10_th 34 total revenues decreased $ 6.5 million , or 0.6 % , to $ 1,136.7 million for the year ended september 25 , 2010 compared to $ 1,143.2 million for the year ended september 26 , 2009 , due to lower volumes , partially offset by higher average selling prices associated with higher product costs . volumes for the fiscal 2010 were lower than the prior year due to the negative impact of adverse economic conditions , particularly on our commercial and industrial accounts , as well as the unfavorable impact of warmer average temperatures , particularly in our northeastern and western service territories , and ongoing residential customer conservation . from a weather perspective , average temperatures as measured in heating degree days , as reported by noaa , in our service territories during fiscal 2010 were 5 % warmer than normal and 4 % warmer than the prior year . in our northeastern territories , which is where we have a higher concentration of residential propane customers and all of our fuel oil customers , average temperatures during fiscal 2010 were 9 % warmer than both normal and the prior year . the unfavorable weather pattern occurred primarily during the peak heating months ( from october through march ) and therefore , contributed to the lower volumes sold . revenues from the distribution of propane and related activities of $ 885.5 million for the year ended september 25 , 2010 increased $ 21.4 million , or 2.5 % , compared to $ 864.0 million for the year ended september 26 , 2009 , primarily as a result of higher average selling prices associated with higher product costs , partially offset by lower volumes , particularly in our commercial and industrial accounts . average propane selling prices in fiscal 2010 increased 9.8 % compared to the prior year due to higher product costs , thereby having a positive impact on revenues . this increase was partially offset by lower retail propane gallons sold in fiscal 2010 which decreased 26.0 million gallons , or 7.6 % , to 317.9 million gallons from 343.9 million gallons in the prior year . the volume decline was primarily attributable to lower commercial and industrial volumes resulting from adverse economic conditions , an unfavorable weather pattern and , to a lesser extent , continued residential customer conservation . lower volumes sold in the non-residential customer base accounted for approximately 60 % of the decline in propane sales volume . additionally , included within the propane segment are revenues from wholesale and other propane activities of $ 52.7 million in fiscal 2010 , which increased $ 9.3 million compared to the prior year . revenues from the distribution of fuel oil and refined fuels of $ 135.1 million for the year ended september 25 , 2010 decreased $ 24.5 million , or 15.4 % , from $ 159.6 million in the prior year primarily due to lower volumes , partially offset by higher average selling prices . fuel oil and refined fuels gallons sold in fiscal 2010 decreased 14.2 million gallons , or 24.7 % , to 43.2 million gallons from 57.4 million gallons in the prior year . lower volumes in our fuel oil and refined fuels segment were attributable to the aforementioned warmer average temperatures in the northeast region , as well as the impact of ongoing residential customer conservation driven by adverse economic conditions . average selling prices in our fuel oil and refined fuels segment in fiscal 2010 increased 12.2 % compared to the prior year due to higher product costs , thereby having a positive impact on revenues . revenues in our natural gas and electricity segment increased $ 0.8 million , or 1.0 % , to $ 77.6 million for the year ended september 25 , 2010 compared to $ 76.8 million in the prior year as a result of higher electricity volumes , partially offset by lower natural gas volumes . revenues in our all other businesses decreased 9.7 % to $	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 analysis of cash flows operating activities . net cash provided by operating activities for fiscal 2011 amounted to $ 132.8 million , a decrease of $ 23.0 million compared to the prior year . the decrease was attributable to a $ 10.6 million decrease in earnings , after adjusting for non-cash items in both periods , coupled with a $ 12.4 million increase in our investment in working capital as a result of the increase in propane and fuel oil product costs . despite the year-over-year increase in working capital requirements , we continued to fund working capital through cash on hand without the need to access the revolving credit facility . investing activities . net cash used in investing activities of $ 19.5 million for fiscal 2011 consisted of capital expenditures of $ 22.3 million ( including $ 10.2 million for maintenance expenditures and $ 12.1 million to support the growth of operations ) and business acquisitions of $ 3.2 million , partially offset by the net proceeds from the sale of property , plant and equipment of $ 6.0 million . net cash used in investing activities of $ 30.1 million for fiscal 2010 consisted of capital expenditures of $ 19.1 million ( including $ 9.7 million for maintenance expenditures and $ 9.4 million to support the growth of operations ) , partially offset by the net proceeds from the sale of property , plant and equipment of $ 3.5 million . 39 financing activities .
see “ supervisory and formal agreements ” for more information . critical accounting policies and recent accounting pronouncements bancorp 's significant accounting policies and recent accounting pronouncements are set forth in note 1 of the consolidated financial statements which are included elsewhere in this form 10-k. of these significant accounting policies , bancorp considers the policies regarding the allowance for loan losses , the valuation of foreclosed real estate , the evaluation of other than temporary impairment of investment securities and the valuation of the deferred tax asset to be its most critical accounting policies , given the uncertainty in evaluating the level of the allowance required to cover credit losses inherent in the loan portfolio and the material effect that such judgments can have on the results of operations and future taxable income . in addition , changes in economic conditions can have a significant impact on real estate values of underlying collateral affecting the allowance for loan losses and therefore the provision for loan losses and results of operations as well as the valuation of foreclosed real estate . bancorp has developed policies and procedures for assessing the adequacy of the allowance for loan losses , recognizing that this process requires a number of assumptions and estimates with respect to its loan portfolio . bancorp 's assessments may be impacted in future periods by changes in economic conditions , the impact of regulatory examinations , and the discovery of information with respect to borrowers that is not known to management at the time of the issuance of the consolidated financial statements . recent accounting pronouncements – under asu 2014-04 , reclassification of residential real estate collateralized consumer mortgage loans upon foreclosure , a creditor will be considered to have physical possession of residential real estate property that is collateral for a residential mortgage loan and therefore should reclassify the loan to other real estate owned when either ( a ) the creditor obtains legal title to the property upon completion of a foreclosure , or ( b ) the borrower conveys all interest in the real estate property to the lender to satisfy that loan even though legal title may not have passed . the amendments are effective for public business entities for annual periods and interim periods within those annual periods , beginning after december 15 , 2014. bancorp adopted this guidance on january 1 , 2015 using a prospective transition method ; it did not have material impact on the consolidated financial statements . the guidance requires disclosure of both ( 1 ) the amount of foreclosed residential real estate property held by the creditor and ( 2 ) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure . bancorp has included these disclosures in note 16 fair values of financial instruments . under asu 2014-09 , revenue from contracts with customers , establishes a comprehensive revenue recognition standard for virtually all industries under u.s. gaap , including those that previously followed industry-specific guidance . the revenue standard 's core principal is built on the contract between a vendor and a customer for the provision of goods and services . it attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled . the new standard applies to all public entities for annual periods beginning after december 15 , 2017. early adoption is permitted only as of annual reporting periods beginning after december 15 , 2016 including interim periods within that year . bancorp has evaluated the effect of asu 2014-09 and believes adoption will not have a material effect on the consolidated financial statements . 49 under asu 2016-01 , amendment to the recognition and measurement guidance for financial instruments , an entity is required to : ( i ) measure equity investments at fair value through net income , with certain exceptions ; ( ii ) present in other comprehensive income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option ; ( iii ) present financial assets and financial liabilities by measurement category and form of financial asset ; ( iv ) calculate the fair value of financial instruments for disclosure purposes based on an exit price and ; ( v ) assess a valuation allowance on deferred tax assets related to unrealized losses of available for sale debt securities in combination with other deferred tax assets . the amendment provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes . the amendment also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements . the new standard takes effect in 2018 for public companies . early adoption is only permitted for the provision related to instrument-specific credit risk and the fair value disclosure exemption provided to nonpublic entities . bancorp has evaluated the effect of asu 2016-01 and believes adoption will not have a material effect on the consolidated financial statements . in february 2016 , the fasb issued asu 2016-02 , “ leases . ” the new standard establishes a right-to-use ( rou ) model that requires a lessee to record a rou asset and a lease liability on the balance sheet for all leases with terms longer than 12 months . leases will be classified as either finance or operating , with classification affecting the pattern of expense recognition in the income statement . the new standard is effective for fiscal years beginning after december 15 , 2018 , including interim periods within those fiscal years . a modified retrospective transition approach is required for lessees for capital and operating leases existing at , or entered into after , the beginning of the earliest comparative period presented in the financial statements , with certain practical expedients available . story_separator_special_tag professional fees decreased $ 34,000 , or 3.7 % , to $ 887,000 for the year ended december 31 , 2015 , compared to $ 921,000 for the year ended december 31 , 2014. this decrease was primarily the result of a decrease in accounting fees , partially offset by an increase in consulting fees for loan reviews , marketing and loan workouts in 2015 compared to 2014. advertising fees increased $ 73,000 , or 10.6 % , to $ 760,000 for the year ended december 31 , 2015 , compared to $ 687,000 for the year ended december 31 , 2014. this increase was primarily due a marketing campaign in 2015 for new online banking products offered by bancorp . online charges decreased $ 43,000 , or 4.7 % , to $ 864,000 for the year ended december 31 , 2015 , compared to $ 907,000 for the year ended december 31 , 2014. this decrease was due to cost savings realized by a newly negotiated contract for core processing in late 2014. credit report and appraisal fees decreased $ 117,000 , or 13.1 % , to $ 773,000 for the year ended december 31 , 2015 , compared to $ 890,000 for the year ended december 31 , 2014. this decrease was due to a lower level of appraisals ordered for fewer problem assets in 2015. other non-interest expense decreased $ 770,000 , or 33.7 % , to $ 1,518,000 for the year ended december 31 , 2015 , compared to $ 2,288,000 for the year ended december 31 , 2014. this decrease was primarily the result of a lower reserve required on the improved quality of standby letters of credit in 2015 and the increased fair value of interest rate lock commitments and mandatory forward contracts in 2015 , compared to 2014. income taxes . income taxes increased $ 59,000 , or 190.3 % , to $ 90,000 for the year ended december 31 , 2015 , compared to $ 31,000 for the year ended december 31 , 2014. this increase in the income tax provision in 2015 was due to higher net income and a higher provision calculated based on an alternative minimum tax calculation . liquidity and capital resources in 2015 , bancorp 's sources of liquidity were loan repayments , maturing investments , deposits , borrowed funds , and proceeds from loans sold on the secondary market . bancorp considers core deposits stable funding sources and includes all deposits , except time deposits of $ 100,000 or more . the bank 's experience has been that a substantial portion of certificates of deposit renew at time of maturity and remain on deposit with the bank . additionally , loan payments , maturities , deposit growth and earnings contributed to bancorp 's flow of funds . in addition to its ability to generate deposits , bancorp has external sources of funds , which may be drawn upon when desired . the primary source of external liquidity is an available line of credit with the fhlb-atlanta . the bank 's credit availability under the fhlb of atlanta 's credit availability program was $ 192,672,000 at december 31 , 2015 , of which $ 115,000,000 was outstanding . the bank 's credit availability is based on the level of collateral pledged up to 25 % of total assets . 55 the maturities of these long-term advances at december 31 , 2015 were as follows ( dollars in thousands ) : replace_table_token_18_th as of december 31 , 2015 , bancorp had outstanding an aggregate of $ 24,119,000 principal amount of subordinated debt , consisting of the 2035 debentures and the subordinated notes . the 2035 debentures total $ 20,619,000 in principal amount pay interest quarterly at a floating rate of interest of 3-month libor ( 0.32 % december 31 , 2015 ) plus 200 basis points , and mature on january 7 , 2035. the subordinated notes total $ 3,500,000 and pay interest at an annual rate of 8.0 % , payable quarterly in arrears on the last day of march , june , september and december commencing december 31 , 2008. the subordinated notes are redeemable in whole or in part at the option of bancorp at any time beginning on december 31 , 2009 until maturity , which is december 31 , 2018. as of december 31 , 2015 , bancorp had $ 3,233,000 outstanding in mortgage loan commitments , and unadvanced construction commitments of $ 21,101,000 which bancorp expects to fund from the sources of liquidity described above . these amounts do not include undisbursed lines of credit , home equity lines of credit and standby letters of credit , in the aggregate amount of $ 40,593,000 at december 31 , 2015 , which bancorp anticipates it will be able to fund , if required , from these liquidity sources in the regular course of business . in addition to the foregoing , the payment of dividends is a use of cash , but is not expected to have a material effect on liquidity . as of december 31 , 2015 , bancorp had no material commitments for capital expenditures . the bank is subject to various regulatory capital requirements administered by the federal banking agencies . failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary , actions by the regulators that , if undertaken , could have a direct material effect on the bank 's financial statements . under capital adequacy guidelines and the regulatory framework for prompt corrective action , the bank must meet specific capital guidelines that involve quantitative measures of the bank 's assets , liabilities , and certain off-balance sheet items as calculated under regulatory accounting practices . the bank 's capital amounts and classifications are also subject to qualitative judgments by the regulators about components , risk weightings , and other factors . management believes , as of december 31 , 2015 , that	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 cash and cash equivalents increased by $ 10,256,000 , or 30.8 % , to $ 43,591,000 at december 31 , 2015 , compared to $ 33,335,000 at december 31 , 2014. this increase was primarily due to proceeds received in 2015 from loan payoffs and higher proceeds from a larger portion of newly originated residential loans sold on the secondary market , partially offset by cash used in 2015 to purchase additional securities for the investment portfolio . investments investment securities held to maturity increased by $ 16,517,000 , or 27.7 % , to $ 76,133,000 at december 31 , 2015 , compared to $ 59,616,000 at december 31 , 2014. this increase was primarily due to management 's decision to purchase additional securities to gain higher yields than cash held in federal funds sold since loan demand was low . loans loans held for sale . loans held for sale increased by $ 6,038,000 , or 84.3 % , to $ 13,203,000 at december 31 , 2015 , compared to $ 7,165,000 at december 31 , 2014. this increase was primarily due to an increase in residential loans originated for sale on the secondary market and the timing of loans pending sale as of december 31 , 2015 compared to december 31 , 2014. loans receivable . total loans receivable , net decreased by $ 44,226,000 , or 7.0 % , to $ 589,656,000 at december 31 , 2015 , compared to $ 633,882,000 at december 31 , 2014. this decrease was primarily due to a decrease in portfolio loan demand and higher loan payoffs than expected in 2015. in addition , the allowance for loan losses decreased by $ 677,000 , or 7.2 % , at december 31 , 2015 to $ 8,758,000 , compared to $ 9,435,000 at december 31 , 2014. this decrease in the allowance was primarily due to a decreased loan portfolio , and an improvement in the level of problem loans at december 31 , 2015 compared to the level at december 31 , 2014 and management 's assessment of the collectability of the loans in bancorp 's portfolio .
the full year impact of the 2013 acquisitions and our continued focus on and implementation of operational excellence initiatives are expected to have a positive impact on our 2014 results . net sales for 2013 were $ 3,594.1 million , an increase of $ 259.9 million or 7.8 % , compared with net sales of $ 3,334.2 million in 2012. net sales for the electronic instruments group ( eig ) were $ 2,034.6 million in 2013 , an increase of 8.7 % from net sales of $ 1,872.6 million in 2012. net sales for the electromechanical group ( emg ) were $ 1,559.5 million in 2013 , an increase of 6.7 % from net sales of $ 1,461.7 million in 2012. the increase in net sales was attributable to higher order rates , as well as the impact of the acquisitions mentioned above . the net sales increase for 2013 included internal sales growth of approximately 2 % . foreign currency translation was flat period over period . 23 total international sales for 2013 were $ 1,984.5 million or 55.2 % of net sales , an increase of $ 276.9 million or 16.2 % , compared with international sales of $ 1,707.6 million or 51.2 % of net sales in 2012. the $ 276.9 million increase in international sales resulted from the acquisitions mentioned above , primarily driven by dunkermotoren and micro-poise , and includes the effect of foreign currency translation . both reportable segments of the company maintain strong international sales presences in europe and asia . export shipments from the united states , which are included in total international sales , were $ 1,037.0 million in 2013 , an increase of $ 174.4 million or 20.2 % , compared with $ 862.6 million in 2012. export shipments improved due to increased exports from the 2013 and 2012 acquisitions noted above , excluding creaform and dunkermotoren . new orders for 2013 were a record at $ 3,621.9 million , an increase of $ 86.8 million or 2.5 % , compared with $ 3,535.1 million in 2012. the increase in orders was primarily attributable to 2013 and 2012 acquisitions . as a result , the company 's backlog of unfilled orders at december 31 , 2013 was $ 1,140.0 million , an increase of $ 27.7 million or 2.5 % , compared with $ 1,112.3 million at december 31 , 2012. segment operating income for 2013 was $ 861.5 million , an increase of $ 72.2 million or 9.1 % , compared with segment operating income of $ 789.3 million in 2012. the increase in segment operating income resulted primarily from the acquisitions mentioned above , as well as the benefits of the company 's lower cost structure through operational excellence initiatives . segment operating income , as a percentage of net sales , increased to 24.0 % in 2013 , compared with 23.7 % in 2012. the increase in segment operating margins resulted primarily from the benefits of the company 's lower cost structure through operational excellence initiatives . selling , general and administrative ( sg & a ) expenses for 2013 were $ 398.2 million , an increase of $ 17.7 million or 4.7 % , compared with $ 380.5 million in 2012. as a percentage of net sales , sg & a expenses were 11.1 % for 2013 , compared with 11.4 % in 2012. selling expenses increased $ 14.8 million or 4.4 % for 2013 primarily driven by the increase in net sales noted above . selling expenses , as a percentage of net sales , decreased to 9.8 % for 2013 , compared with 10.1 % in 2012. base business selling expenses decreased approximately 2 % for 2013 compared to 2012 , primarily due to cost containment initiatives . corporate administrative expenses for 2013 were $ 46.0 million , an increase of $ 2.9 million or 6.7 % , compared with $ 43.1 million in 2012. the increase in corporate administrative expenses was primarily driven by higher consulting and professional fees . as a percentage of net sales , corporate administrative expenses were 1.3 % for both 2013 and 2012. consolidated operating income was $ 815.1 million or 22.7 % of net sales for 2013 , an increase of $ 69.2 million or 9.3 % , compared with $ 745.9 million or 22.4 % of net sales in 2012. interest expense was $ 73.6 million for 2013 , a decrease of $ 1.9 million or 2.5 % , compared with $ 75.5 million in 2012. the decrease was due to lower borrowings under revolving credit facilities . other expenses , net were $ 16.7 million for 2013 , an increase of $ 8.8 million , compared with $ 7.9 million in 2012. the increase was primarily driven by acquisition-related expenses and professional fees , and the unfavorable impact from foreign currency in 2013. the effective tax rate for 2013 was 28.7 % , compared with 30.7 % in 2012. the effective tax rate for 2013 reflects the higher proportion of foreign earnings , which are taxed at lower rates , as well as an improved state effective tax rate that reflects the ongoing benefit of favorable planning initiatives . in addition , the retroactive extension of the u.s. research and development ( r & d ) tax credit for calendar year 2012 was enacted on january 2 , 2013 , resulting in an incremental r & d tax credit in 2013. see note 8 to the consolidated financial statements included in part ii , item 8 of this annual report on form 10-k for further details . net income for 2013 was $ 517.0 million , an increase of $ 57.9 million or 12.6 % , compared with $ 459.1 million in 2012. diluted earnings per share for 2013 were $ 2.10 , an increase of $ 0.22 or 11.7 % , compared with $ 1.88 per diluted share in 2012 . story_separator_special_tag if the carrying amount exceeds the fair value , then the second step must be completed , which involves allocating the fair value of the reporting unit to each asset and liability , with the excess being implied goodwill . an impairment loss occurs if the amount of the recorded goodwill exceeds the implied goodwill . the company would be required to record any such impairment losses . the company identifies its reporting units at the component level , which is one level below our operating segments . generally , goodwill arises from acquisitions of specific operating companies and is assigned to the reporting unit in which a particular operating company resides . our reporting units are composed of the business units one level below our operating segment at which discrete financial information is prepared and regularly reviewed by segment management . the company principally relies on a discounted cash flow analysis to determine the fair value of each reporting unit , which considers forecasted cash flows discounted at an appropriate discount rate . the company believes that market participants would use a discounted cash flow analysis to determine the fair value of its reporting units in a sale transaction . the annual goodwill impairment test requires the company to make a number of assumptions and estimates concerning future levels of revenue growth , operating margins , depreciation , amortization and working capital requirements , which are based upon the company 's long-range plan . the company 's long-range plan is updated as part of its annual planning process and is reviewed and approved by management . the discount rate is an estimate of the overall after-tax rate of return required by a market participant whose weighted average cost of capital includes both equity and debt , including a risk premium . while the company uses the best available information to prepare its cash flow and discount rate assumptions , actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances . while 30 there are always changes in assumptions to reflect changing business and market conditions , the company 's overall methodology and the population of assumptions used have remained unchanged . in order to evaluate the sensitivity of the goodwill impairment test to changes in the fair value calculations , the company applied a hypothetical 10 % decrease in fair values of each reporting unit . the 2013 results ( expressed as a percentage of carrying value for the respective reporting unit ) showed that , despite the hypothetical 10 % decrease in fair value , the fair values of the company 's reporting units still exceeded their respective carrying values by 1 % to 555 % for each of the company 's reporting units . the impairment test for indefinite-lived intangibles other than goodwill ( primarily trademarks and trade names ) consists of a comparison of the fair value of the indefinite-lived intangible asset to the carrying value of the asset as of the impairment testing date . the company can elect to perform a qualitative analysis to determine if it is more likely than not that the fair values of its indefinite-lived intangible assets are less than the respective carrying values of those assets . the company elected to bypass performing the qualitative screen . the company may elect to perform the qualitative analysis in future periods . the company estimates the fair value of its indefinite-lived intangibles using the relief from royalty method . the company believes the relief from royalty method is a widely used valuation technique for such assets . the fair value derived from the relief from royalty method is measured as the discounted cash flow savings realized from owning such trademarks and trade names and not having to pay a royalty for their use . the company 's acquisitions have generally included a significant goodwill component and the company expects to continue to make acquisitions . at december 31 , 2013 , goodwill and other indefinite-lived intangible assets totaled $ 2,864.3 million or 48.7 % of the company 's total assets . the company performed its required annual impairment tests in the fourth quarter of 2013 and determined that the company 's goodwill and indefinite-lived intangibles were not impaired . there can be no assurance that goodwill or indefinite-lived intangibles impairment will not occur in the future . other intangible assets with finite lives are evaluated for impairment when events or changes in circumstances indicate the carrying value may not be recoverable . the carrying value of other intangible assets with finite lives is considered impaired when the total projected undiscounted cash flows from those assets are less than the carrying value . in that event , a loss is recognized based on the amount by which the carrying value exceeds the fair market value of those assets . fair market value is determined primarily using present value techniques based on projected cash flows from the asset group . pensions . the company has u.s. and foreign defined benefit and defined contribution pension plans . the most significant elements in determining the company 's pension income or expense are the assumed pension liability discount rate and the expected return on plan assets . the pension discount rate reflects the current interest rate at which the pension liabilities could be settled at the valuation date . at the end of each year , the company determines the assumed discount rate to be used to discount plan liabilities . in estimating this rate for 2013 , the company considered rates of return on high-quality , fixed-income investments that have maturities consistent with the anticipated funding requirements of the plan . the discount rate used in determining the 2013 pension cost was 4.1 % for u.s. defined benefit pension plans and 4.44 % for foreign plans . the discount rate used for determining the funded status of the plans at december 31 , 2013 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 cash provided by operating activities totaled $ 660.7 million in 2013 , an increase of $ 48.2 million or 7.9 % , compared with $ 612.5 million in 2012. the increase in cash provided by operating activities was primarily due to the $ 57.9 million increase in net income . free cash flow ( cash flow provided by operating activities less capital expenditures ) was $ 597.4 million in 2013 , compared with $ 555.1 million in 2012. ebitda ( earnings before interest , income taxes , depreciation and amortization ) was $ 916.3 million in 2013 , compared with $ 842.7 million in 2012. free cash flow and ebitda are presented because the company is aware that they are measures used by third parties in evaluating the company . ( see the notes to selected financial data included in item 6 in this annual report on form 10-k for a reconciliation of u.s. generally accepted accounting principles ( gaap ) measures to comparable non-gaap measures ) . cash used for investing activities totaled $ 460.3 million in 2013 , compared with $ 803.7 million in 2012. in 2013 , the company paid $ 414.3 million , net of cash acquired , to acquire csi in august 2013 , creaform in october 2013 and powervar in december 2013. in 2012 , the company paid $ 747.7 million , net of cash acquired , to acquire o'brien in january 2012 , dunkermotoren in may 2012 , micro-poise in october 2012 , and aci , avtech , sunpower and crystal engineering in december 2012. in 2013 , the company received $ 12.8 million for the sale of a facility .
primary factors we use to evaluate our business as a financial institution , we manage and evaluate various aspects of both our results of operations and our financial condition . we evaluate the comparative levels and trends of the line items in our consolidated balance sheet and income statement as well as various financial ratios that are commonly used in our industry . we analyze these ratios and financial trends against our own historical performance , our budgeted performance and the financial condition and performance of comparable financial institutions in our region . results of operations in addition to net income , the primary factors we use to evaluate and manage our results of operations include net interest income , noninterest income and noninterest expense . net interest income . net interest income represents interest income less interest expense . we generate interest income from interest ( net of any servicing fees paid or costs amortized over the expected life of the loans ) and fees received on interest‑earning assets , including loans and investment securities and dividends on fhlbi stock we own . we incur interest expense from interest paid on interest‑bearing liabilities , including interest‑bearing deposits and borrowings . since 2014 , net interest income has been the most significant contributor to our revenues and net income . to evaluate net interest income , we measure and monitor : ( a ) yields on our loans and other interest‑earning assets ; ( b ) the costs of our deposits and other funding sources ; ( c ) our net interest margin ; and ( d ) the regulatory risk weighting associated with the assets . net interest margin is calculated as the annualized net interest income divided by average interest‑earning assets . because noninterest‑bearing sources of funds , such as noninterest‑bearing deposits and shareholders ' equity , also fund interest‑earning assets , net interest margin includes the benefit of these noninterest‑bearing sources . changes in market interest rates , the slope of the yield curve , and interest we earn on interest‑earning assets or pay on interest‑bearing liabilities , as well as the volume and types of interest‑earning assets , interest‑bearing and noninterest‑bearing liabilities and shareholders ' equity , usually have the largest impact on changes in our net interest spread , net interest margin and net interest income during a reporting period . noninterest income . noninterest income consists of , among other things : ( a ) gain on sale of loans ; ( b ) loan servicing fees , ( c ) fair value adjustments to the value of mortgage servicing rights ; ( d ) mortgage warehouse fees ; and ( e ) other noninterest income . gain on sale of loans includes placement and origination fees , capitalized mortgage servicing rights , trading gains and losses , and other related income . loan servicing fees are collected as payments are received for loans in the servicing portfolio . fair value adjustments to the value of mortgage servicing rights are also included in noninterest income . mortgage warehouse fees are collected as the funded loans are sold in the secondary market . noninterest expense . noninterest expense includes , among other things : ( a ) salaries and employee benefits ; ( b ) loan origination expenses ; ( c ) occupancy and equipment expense ; ( d ) professional fees ; ( e ) fdic insurance expense ; ( f ) technology expense ; and ( g ) other general and administrative expenses . salaries and employee benefits includes compensation , employee benefits and employment tax expenses for our personnel . loan expenses include third party processing for mortgage warehouse financing activities and loan‑related origination expenses . occupancy expense includes depreciation expense on our owned properties , lease expense on our leased properties and other occupancy‑related expenses . equipment expense includes furniture , fixtures and equipment related expenses . professional fees include legal , accounting , consulting and other outsourcing arrangements . fdic insurance expense represents the assessments that we pay to the fdic for deposit insurance . technology expense includes data processing fees paid to our third‑party data processing system provider and other data service providers . other general and administrative expenses include expenses associated with travel , meals , training , supplies and postage . noninterest expenses generally increase as we grow our business . noninterest expenses have increased significantly over 36 the past few years as we have grown organically , and as we have built out and modernized our operational infrastructure and implemented our plan to build an efficient , technology‑driven mortgage banking operation with significant operational capacity for growth . in addition , staffing and administrative costs associated with our becoming a publicly-traded company in october 2017 have also contributed to this increase . financial condition the primary factors we use to evaluate and manage our financial condition are asset levels , liquidity , capital and asset quality . asset levels . we manage our asset levels based upon forecasted closings or fundings within our business segments to ensure we have the necessary liquidity and capital to meet the required regulatory capital ratios . each segment evaluates its funding needs by forecasting the fundings and sales of loans , communicating with customers on their projected funding needs , and reviewing its opportunities to add new customers . liquidity . story_separator_special_tag income tax expense increased $ 809,000 , or 4 % , to $ 22.5 million for the year ended december 31 , 2017 from $ 21.7 million for the year ended december 31 , 2016. the increase was due primarily to the increase in pretax income period to period , partially offset by a one-time $ 6.9 million tax benefit associated with changes to the company 's deferred tax liability , under the recent federal income tax reform legislation . the effective tax rate was 29.1 % for the year ended december 31 , 2017 and 39.5 % for the year ended december 31 , 2016. comparison of operating results for the years ended december 31 , 2016 and 2015 general . net income totaled $ 33.1 million for the year ended december 31 , 2016 , an increase of $ 4.7 million , or 17 % , compared to net income of $ 28.4 million for the year ended december 31 , 2015. the increase in net income for fiscal 2016 resulted primarily from an increase of $ 11.9 million in net interest income and an increase of $ 1.5 million in noninterest income , which were partially offset by an increase of $ 5.8 million in noninterest expenses and an increase of $ 2.9 million in the provision for income taxes . interest income . interest income increased $ 16.6 million , or 30 % , to $ 72.9 million for the year ended december 31 , 2016 from $ 56.3 million for the year ended december 31 , 2015. the increase resulted primarily from a $ 13.6 million , or 28 % , increase in interest on loans and loans held for sale , a $ 937,000 , or 26 % , increase in interest on trading securities , an $ 888,000 , or 38 % , increase in interest on available‑for‑sale securities and a $ 1.2 million , or 87 % increase in interest on other interest‑earning assets , and dividends on fhlbi stock . the increase in interest on loans and loans held for sale was due primarily to a $ 378.1 million , or 29 % , increase in the average balance of loans and loans held for sale outstanding year to year , partially offset by a three basis point decline in the average yield , to 3.68 % for 2016 from 3.71 % for 2015. the average balance increased primarily due to an increase in mortgage warehousing fundings of warehouse lines of credit and loan participations from $ 20.1 billion in 2015 to $ 24.8 billion in 2016 and a $ 213.1 million increase in the average balances in the banking segment due to higher residential and multi‑family originations . the increase in interest on trading securities was due primarily to a $ 40.6 million , or 38 % , increase in the average balance outstanding , to $ 147.8 million for 2016 from $ 107.2 million for 2015 , which was partially offset by a 28 basis point decrease in the average yield to 3.06 % for 2016 from 3.34 % for 2015. the increase in interest on available‑for‑sale securities was due primarily to a $ 64.6 million , or 28 % , increase in the average balance outstanding , to $ 297.9 million for 2016 from $ 233.3 million for 2015 , while the average yield increased by eight basis points to 1.09 % for both 2016 from 1.01 % for 2015. the increase in interest on other interest‑earning assets was due primarily to a $ 34.3 million , or 8 % , increase in the average balance outstanding , to $ 458.1 million for 2016 from $ 423.8 million for 2015 , and a 24 basis point increase in the average yield , to 0.57 % for 2016. interest expense . interest expense increased $ 4.7 million , or 33 % , to $ 19.0 million for the year ended december 31 , 2016 from $ 14.3 million for the year ended december 31 , 2015. interest expense on deposits increased $ 4.3 million , or 59 % , to $ 11.7 million for the year ended december 31 , 2016 from $ 7.3 million for the year ended december 31 , 2015. the increase was primarily due to an increase of $ 446.7 million , or 36 % , in the average balance of interest‑bearing deposits to $ 1.7 billion for 2016 from $ 1.2 billion for 2015 , and an increase of 10 basis points in the average cost of interest‑bearing deposits to 0.69 % for the year ended december 31 , 2016 from 0.59 % for the year ended december 31 , 2015. the increase in average deposits was primarily due to an increase in mortgage custodial deposits in 41 the mortgage warehousing segment . interest expense on borrowings increased $ 361,000 , or 5 % , to $ 7.3 million for the year ended december 31 , 2016 from $ 6.9 million for the year ended december 31 , 2015. the average balance of borrowings increased $ 1.8 million to $ 58.3 million for the year ended december 31 , 2016 from $ 56.6 million for the year ended december 31 , 2015 , while the average cost of these borrowings increased 25 basis points to 12.52 % from 12.27 % year to year . the terms of our $ 30.0 million subordinated debt include a variable interest rate equal to the one‑month libor rate plus an applicable margin . additionally , the debt agreement provides for payment by us of an amount equal to 49.0 % of the earnings of our wholly owned subsidiary , nmf . as a result of this payment , the effective cost of borrowings increased from 3.21 % and 2.86 % , to 12.52 % and 12.27 % for the years ended december 31 , 2016 and 2015 , respectively . net interest income . net interest income increased	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 sources of funds are deposits , including those that are escrow , custodial , and brokered in nature , principal and interest payments on loans , and proceeds from sale of loans . while maturities and scheduled amortization of loans are predictable sources of funds , deposit flows and mortgage prepayments are greatly influenced by market interest rates , economic conditions , and competition . our most liquid assets are cash , short‑term investments , including interest‑bearing demand deposits and trading securities . the levels of these assets are dependent on our operating , financing , lending , and investing activities during any given period . our cash flows are comprised of three primary classifications : cash flows from operating activities , investing activities , and financing activities . net cash used in operating activities was $ 175.9 million and $ 149.8 million for the years ended december 31 , 2017 and 2016 , respectively . net cash used in investing activities , which consists primarily of net change in loans receivable and purchases , sales and maturities of investment securities , was $ 523.1 million and $ 265.3 million for the years ended december 31 , 2017 and 2016 , respectively . net cash provided by financing activities , which is comprised primarily of net change in deposits , was $ 612.8 million and $ 414.0 million for the years ended december 31 , 2017 and 2016 , respectively . net cash provided by ( used in ) operating activities was $ ( 149.8 million ) and $ 118.3 million for the years ended december 31 , 2016 and 2015 , respectively .
in accordance with the regulatory system in japan , a ctn is equivalent to an ind , application under the regulatory system used in the u.s. this 220 patient randomized , double blind , placebo controlled clinical trial is being conducted in japan as part of a partnership and license agreement between healios and athersys . this partnership is focused on the development and commercialization of multistem in japan for the treatment of ischemic stroke , and potentially other indications . 38 our masters-2 clinical trial is a randomized , double-blind , placebo-controlled clinical trial designed to enroll 300 patients in north america and europe who have suffered moderate to moderate-severe ischemic stroke . the enrolled subjects will receive either a single intravenous dose of multistem cell therapy or placebo , administered within 18-36 hours of the occurrence of the stroke , in addition to the standard of care . the primary endpoint will evaluate disability using mrs scores at three months , comparing the distribution , or the shift between the multistem treatment and placebo groups . the mrs shift analyzes patient improvement across the full disability spectrum , enabling recognition of improvements in disability and differences in mortality and other serious outcomes , among strokes of different severities . the study will also assess excellent outcome ( the achievement of mrs £ 1 , nihss £ 1 , and barthel index ³ 95 ) at three months and one year as key secondary endpoints . additionally , the study will consider other measures of functional recovery , biomarker data and clinical outcomes , including hospitalization , mortality and life-threatening adverse events , and post-stroke complications such as infection . healios ' treasure study in japan is being conducted at hospitals in japan that have extensive experience at providing care for stroke victims . based on the experience from our b01-02 study , subjects enrolled in the trial will receive either a single dose of multistem or placebo , administered within 1836 hours of the occurrence of the stroke , in addition to standard of care . the study will evaluate patient recovery through approximately 90 days following initial treatment based on excellent outcome and other neurological , functional and clinical endpoints . the treasure study was initiated earlier in 2017 , though interruption in media supply at our contract manufacturer affected manufacturing of the multistem product and had slowed the launch of the japan study . the treasure study was reinitiated in november 2017 , following a brief interruption to resupply placebo that was out of specification , and is currently enrolling patients . further interruptions in material supply or product manufacturing could constrain product supply and slow the progress of the clinical study . we are preparing to launch our masters-2 clinical trial , including site selection and the manufacture of clinical product , and intend to initiate the study in the second quarter of 2018 beginning with specific high-enrolling sites . we look forward to launching the study and using the accelerated pathway afforded to us by the regulators in the u.s. , europe and japan upon study completion . acute myocardial infarction : we are conducting an ongoing phase 2 clinical study in the u.s. for the administration of multistem cell therapy to patients that have suffered an ami . in a previously completed phase 1 clinical study , we evaluated the administration of multistem to patients that suffered an ami . the results of this study demonstrated a favorable safety profile and encouraging signs of improvement in heart function among patients that exhibited severely compromised heart function prior to treatment . this data was published in a leading peer reviewed scientific journal , and one-year follow-up data suggested that the benefit observed was sustained over time . we were awarded a grant in support of the advancement of this clinical program , and we launched a double-blind , sham-controlled phase 2 clinical study , evaluating the safety and efficacy of multistem treatment in subjects who have experienced a myocardial infarction . the study is currently enrolling patients and is being conducted at leading cardiovascular centers . we continue to take steps to improve enrollment rates that have been below our expectations and will provide updates regarding the conduct and completion of the study , as appropriate . acute respiratory distress syndrome : we have also initiated a clinical study for the treatment of ards in the u k and in the u.s. we were awarded a grant from innovate uk as partial support of a phase 1/2 clinical study evaluating the administration of multistem cell therapy to ards patients . ards is a serious immunological and inflammatory condition characterized by widespread inflammation in the lungs that severely compromises pulmonary function , requiring patients to be placed on a ventilator and cared for in the icu . ards can be triggered by pneumonia , sepsis , trauma or for other reasons , and represents a major cause of morbidity and mortality in the critical care setting . the phase 1/2 clinical trial is ongoing , and our objective is to complete this study in 2018. hematopoietic stem cell transplant / gvhd : we completed a phase 1 clinical study of the administration of multistem cell therapy to patients suffering from leukemia or certain other blood-borne cancers , in which patients undergo radiation therapy and then receive a hematopoietic stem cell transplant . such patients are at significant risk for serious complications , including gvhd . data from the study suggested that the treatment may have a beneficial effect in reducing the incidence and severity of gvhd , as well as providing other benefits . we were granted orphan drug designation by the fda and the ema for multistem treatment in the prevention of gvhd , and the multistem product was granted fast track designation by the fda for prophylaxis therapy against gvhd following hematopoietic cell transplantation . story_separator_special_tag general and administrative expenses increased to $ 7.8 million in 2016 from $ 7.5 million in 2015. the $ 0.3 million increase in 2016 compared to 2015 was due primarily to an increase of $ 0.2 million in personnel costs and an $ 0.1 million increase in other outside services . depreciation . depreciation expense increased to $ 0.4 million in 2016 from $ 0.3 million in 2015 due to equipment purchases and assets placed in service following flood repairs . gain from insurance proceeds , net . the net insurance recovery gain of $ 0.7 million during 2016 included the loss associated with remediated flood damage ( e.g . , removal , clean-up ) , netted against the aggregate insurance proceeds received . the net amount resulted in a gain since most of the replaced assets were fully-depreciated leasehold improvements . 42 income ( expense ) from change in fair value of warrants . expense of $ 0.6 million and income of $ 0.8 million was recognized during the years ended december 31 , 2016 and 2015 , respectively , for the market value change in our warrant liabilities . the fluctuation is related to the impact of changes in warrant value , primarily affected by our stock price and the remaining lives of the issued warrants . other income ( expense ) , net . other income ( expense ) , net , for the years ended december 31 , 2016 and 2015 remained relatively consistent and was comprised of interest income and expense , refundable foreign tax credits and foreign currency gains and losses . story_separator_special_tag manufacturing process development . at december 31 , 2017 , we had available cash and cash equivalents of $ 29.3 million , and we intend to meet our short-term liquidity needs with available cash . over the longer term , we will make use of available cash , but will have to continue to generate additional funding to meet our needs , through business development , achievement of milestones under our collaborations , and grant-funding opportunities . additionally , we may raise capital from time to time through our equity purchase agreement , subject to its volume and price limitations . we also manage our cash by deferring certain discretionary costs and staging certain development costs to extend our operational runway , as needed . over time , we may consider the sale of additional equity securities , or possibly borrowing from financing institutions . our capital requirements over time depend on a number of factors , including progress in our clinical development programs , our clinical and preclinical pipeline of additional opportunities and their stage of development , additional external costs such as payments to contract research organizations and contract manufacturing organizations , additional personnel costs and the costs in filing and prosecuting patent applications and enforcing patent claims . the availability of funds impacts our ability to advance multiple clinical programs concurrently , and any shortfall in funding could result in our having to delay or curtail research and development efforts . further , these requirements may change at any time due to technological advances , business development activity or competition from other companies . we can not assure you that adequate funding will be available to us or , if available , that it will be available on acceptable terms . we expect to continue to incur substantial losses through at least the next several years and may incur losses in subsequent periods . the amount and timing of our future losses are highly uncertain . our ability to achieve and thereafter sustain profitability will be dependent upon , among other things , successfully developing , commercializing and obtaining regulatory approval or clearances for our technologies and products resulting from these technologies . cash flow analysis net cash used in operating activities was $ 24.0 million , $ 10.9 million and $ 13.8 million in 2017 , 2016 and 2015 , respectively , and represented the use of cash to fund operations , clinical trials , and preclinical and process development activities ; net of receipts from collaborative arrangements ( e.g . , healios in 2016 and chugai in 2015 ) . net cash used in operating activities may fluctuate significantly on a quarter-to-quarter basis , as it has over the past several years , primarily due to the receipt of collaboration fees and payment of specific clinical trial costs , such as clinical manufacturing campaigns , contract research organization costs , and manufacturing process development projects . net cash used in investing activities was $ 0.3 million , $ 1.1 million and $ 0.1 million in 2017 , 2016 and 2015 , respectively , related to the purchase of equipment for our manufacturing process development activities in 2016 , which was partially offset by proceeds from insurance related to a flood . we expect that our capital equipment expenditures will increase in 2018 compared to 2017 . 44 financing activities provided net cash of $ 38.9 million in 2017 , $ 3.7 million in 2016 and $ 10.8 million in 2015 related to the exercise of common stock warrants and equity sales to aspire capital , net of shares of common stock retained for withholding taxes on share-based awards . our contractual payment obligations as of december 31 , 2017 are as follows : payment due by period replace_table_token_3_th we lease office and laboratory space under operating leases . our lease for our corporate offices and laboratories began in 2000 and currently expires in march 2019 , and we intend to renew the agreement . our rent is $ 267,000 per year and our rental rate has not changed since the lease inception in 2000. also , we lease office and laboratory space for our belgian subsidiary that currently expires in july 2018 and includes options to renew annually through july 2022 , and the annual rent of approximately $ 185,000 is subject to adjustments based 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 our sources of liquidity include our cash balances . at december 31 , 2017 , we had $ 29.3 million in cash and cash equivalents . we have primarily financed our operations through business collaborations , grant funding and equity financings . we conduct all of our operations through our subsidiary , abt holding company . consequently , our ability to fund our operations depends on abt holding company 's financial condition and its ability to make dividend payments or other cash distributions to us . there are no restrictions such as government regulations or material contractual arrangements that restrict the ability of abt holding company to make dividend and other payments to us . we incurred losses since inception of operations in 1995 and had an accumulated deficit of $ 350.6 million at december 31 , 2017. our losses have resulted principally from costs incurred in research and development , clinical and preclinical product development , acquisition and licensing costs , and general and administrative costs associated with our operations . we used all of our sources of capital to develop our technologies , to discover and develop therapeutic product candidates , develop business collaborations and to acquire certain technologies and assets . in february 2017 , we completed a public offering generating net proceeds of approximately $ 20.9 million through the issuance of 22,772,300 shares of common stock at an offering price of $ 1.01 per share . we have had an equity purchase arrangement in place with aspire capital since 2011 , through two-to-three year equity facilities , each with similar terms . the most current facility with aspire capital was entered into in february 2018 and included aspire 's commitment to purchase up to an aggregate of $ 100.0 million of shares of our common stock over a new three-year period , and an investment in us of $ 1.0 million at $ 2.00 per share of common stock . furthermore , the prior facility that was entered into in december 2015 has approximately 2.0 million shares that remain available to us for issuance .
costs incurred in connection with the collection of used oil and other raw materials associated with the segment 's oil related products can also be volatile . our oilplus ® closed loop initiative , which results in the sale of our renewable oil products directly to our end customers , may also be impacted by changes in customer demand for high-quality , environmentally responsible recycled oil . highlights total revenues for 2019 increased 3.4 % to $ 3.4 billion , compared with $ 3.3 billion in 2018 . our environmental services segment increased direct revenues $ 95.9 million in 2019 compared with 2018 due to greater activity at our sales and service branches and improvements in average pricing which was driven by a more profitable mix of waste streams across our incinerator network . direct revenues recorded by safety-kleen increased $ 16.8 million in 2019 compared to 2018 as a result of continued growth across safety-kleen 's core service offerings and higher volumes of blended oil sales . foreign currency 28 translation of our canadian operations negatively impacted our consolidated direct revenues by $ 12.9 million in 2019 as compared to 2018 . income from operations in 2019 was $ 229.5 million , compared with $ 182.6 million in 2018 . we reported net income in 2019 and 2018 of $ 97.7 million and $ 65.6 million , respectively . adjusted ebitda , which is the primary financial measure by which our segments are evaluated , increased 10.0 % to $ 540.3 million in 2019 from $ 491.0 million in 2018 . the increased level of adjusted ebitda in 2019 was primarily attributable to higher revenue amounts as described above and improved operating margins . additional information regarding adjusted ebitda , which is a non-gaap measure , including a reconciliation of adjusted ebitda to net income , appears below under `` adjusted ebitda . `` story_separator_special_tag style= `` font-family : inherit ; font-size:10pt ; font-style : italic ; `` > environmental services replace_table_token_8_th environmental services cost of revenues increased $ 43.3 million for the year ended december 31 , 2019 , however these costs decreased as a percentage of direct revenue due to a mix of higher priced waste streams in our incineration network , which increased profitability , and the results of ongoing cost reduction projects , including site consolidations . the overall cost increase was due to compensation and benefits related costs , equipment and supply costs and transportation , outside disposal and fuel costs which increased $ 20.4 million , $ 11.4 million and $ 3.9 million , respectively . the incremental operating costs were commensurate with greater activity levels in 2019. environmental services cost of revenues for the year ended december 31 , 2018 increased $ 202.9 million from the comparable period in 2017 . the acquired veolia business had cost of revenues of $ 131.2 million in the year ended december 31 , 2018 . excluding these costs , environmental services cost of revenues for the year ended december 31 , 2018 increased $ 71.7 million , however these costs as a percentage of direct revenues decreased slightly over the comparable period of 2017 , due to a more favorable mix of waste streams in our incineration network which increased profitability . the overall cost increase was due to labor and benefit related costs , transportation , disposal and fuel costs , and equipment , supply and various other expenses of $ 45.4 million , $ 16.2 million and $ 10.0 million , respectively . the incremental operating costs were commensurate with greater activity levels in 2018 and overall inflationary pressure across several cost categories including certain commodity supplies such as fuel and other supplies . safety-kleen replace_table_token_9_th safety-kleen cost of revenues for the year ended december 31 , 2019 increased $ 23.7 million from the comparable period in 2018 . as a percentage of direct revenues , these costs increased as well mainly due to lower average pricing on the oil products sold leading to reduced leverage of our fixed cost base . increased logistics costs , largely due to weather at the beginning of the year , also negatively impacted costs as a percentage of direct revenues . the overall cost increase was due to higher compensation and benefits related costs of $ 8.5 million , raw material costs associated with blended oil products of $ 5.5 million and transportation , disposal and fuel costs of $ 2.7 million . these increases were in line with the overall growth of our core service offerings and blended oil sales . safety-kleen cost of revenues for the year ended december 31 , 2018 increased $ 35.4 million from the comparable period in 2017 , however these costs decreased as a percentage of revenue due to our effective management of the spread between used oil input costs and base oil pricing , as well as the implementation of new pricing strategies , which generated greater levels of direct revenue . the overall cost increase was primarily due to increased costs of raw materials associated with oil products of $ 15.8 million , increased transportation , disposal and fuel costs of $ 12.3 million and labor related costs of $ 6.3 million . these increases were in line with the overall growth of the business and increased costs of commodities . selling , general and administrative expenses we strive to manage our selling , general and administrative ( `` sg & a `` ) expenses commensurate with the overall performance of our segments and corresponding revenue levels . we believe that our ability to properly align these costs with business performance is reflective of our strong management of the businesses and further promotes our ability to remain competitive in the marketplace . story_separator_special_tag however , events not anticipated ( such as future changes in environmental laws and regulations ) could require that such payments be made earlier or in greater amounts than currently anticipated , which could adversely affect our results of operations , cash flow and financial condition . conversely , the development of new treatment technologies or other circumstances may arise in the future which may reduce amounts ultimately paid . 37 during 2019 , 2018 and 2017 , we recognized a net benefit of $ 0.3 million , net charge of $ 2.1 million and net benefit of $ 0.2 million , respectively , for changes in estimates of recorded environmental liabilities . generally , we recognize benefits primarily due to the successful introduction of new technology for remedial activities , favorable results from environmental studies of the on-going remediation , including favorable regulatory approvals and lower project costs realized by utilizing internal labor and equipment . in 2018 , the net increase in our environmental liabilities from changes in estimates recorded to the consolidated statement of operations was $ 2.1 million and primarily related to an increase in projected cleanup costs at third party superfund sites where we are a potentially responsible party . contractual obligations the following table has been included to assist in understanding our debt and similar obligations as of december 31 , 2019 and our ability to meet such contractual obligations ( in thousands ) : replace_table_token_22_th _ ( 1 ) the undiscounted value of closure , post-closure and remedial liabilities of $ 458.4 million is equivalent to the present value of $ 189.8 million based on discounting of $ 178.5 million and the undiscounted remainder of $ 90.1 million to be accrued for closure and post-closure liabilities over the remaining site lives . ( 2 ) interest on our variable-rate $ 734.7 million senior secured term loans was calculated based on the effective interest rate of that debt as of december 31 , 2019 . our interest rate swap agreements effectively fix the interest rate on $ 350.0 million of that variable rate debt at an annual rate of approximately 4.67 % , while the remaining balance pays interest based upon libor and an applicable margin . the assumed rate reflected in the table above for this variable rate debt after considering the swap agreements is 4.06 % . off-balance sheet arrangements we obtain standby letters of credit as security for financial assurances we have been required to provide to regulatory bodies for our hazardous waste facilities and which would be called only in the event that we fail to satisfy closure , post-closure and other obligations under the permits issued by those regulatory bodies for such licensed facilities . as of december 31 , 2019 , there were $ 146.9 million outstanding letters of credit . see note 12 , `` financing arrangements , `` to our consolidated financial statements included in item 8 of this report for further discussion of our standby letters of credit and other financing arrangements . except for our obligations under letters of credit described above and performance obligations incurred in the ordinary course of business , we are not party to any off-balance sheet arrangements involving guarantee , contingency or similar obligations to entities whose financial statements are not consolidated with our results , and that have or are reasonably likely to have a current or future effect on our financial condition , changes in financial condition , revenues or expenses , results of operations , liquidity , capital expenditures or capital resources that would be material to investors in our securities . capital expenditures in 2019 , our capital expenditures , net of disposals , were $ 204.7 million . we anticipate that 2020 capital spending , net of disposals , will be in the range of $ 215.0 million to $ 240.0 million , inclusive of $ 20.0 million to $ 25.0 million for the purchase of our corporate headquarters in january 2020 and some expected capital improvements to that facility during 2020. however , unanticipated changes in environmental regulations could require us to make significant capital expenditures for our facilities and adversely affect our results of operations and cash flow . 38 critical accounting policies and estimates the preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of our assets , liabilities , revenues and expenses and related disclosures of contingent liabilities . our significant accounting policies are discussed in note 2 , `` significant accounting policies , `` to our consolidated financial statements included in item 8 of this report . we believe that , of our significant accounting policies , the following contain estimates that involve a higher degree of complexity in their application : accounting for landfills , non-landfill closure and post-closure liabilities , remedial liabilities , goodwill , permits and other intangible assets and legal matters . our management reviews critical accounting estimates with the audit committee of our board of directors on an ongoing basis and as needed prior to the release of our annual financial statements . landfill accounting . we amortize landfill improvements and certain landfill-related permits over their estimated useful lives . the units-of-consumption method is used to amortize land , landfill cell construction , asset retirement costs and remaining landfill cells and sites . we also utilize the units-of-consumption method to record closure and post-closure obligations for landfill cells and sites . under the units-of-consumption method , we include future estimated construction and asset retirement costs , as well as costs incurred to date , in the amortization base of the landfill assets . additionally , where appropriate , as discussed below , we include probable expansion airspace yet to be permitted in the calculation of the total remaining useful life of the landfill . if we determine that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset , we may	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 from operating activities for 2019 was $ 413.2 million , an increase of $ 40.0 million from 2018 . adjusted free cash flow , which management uses to measure our financial strength and ability to generate cash , was $ 208.5 million in 2019 , which represented a $ 13.2 million increase over 2018 primarily due to greater levels of operating income and lower levels of working capital , which was due in part to a change in timing of interest payments associated with the debt refinancing completed in the third quarter of 2019. these increases were partially offset by increased capital and environmental spending . additional information regarding adjusted free cash flow , which is a non-gaap measure , including a reconciliation of adjusted free cash flow to net cash from operating activities , appears below under `` adjusted free cash flow . '' 29 segment performance the primary financial measure by which we evaluate the performance of our segments is adjusted ebitda . the following table sets forth certain financial information associated with our results of operations for the years ended december 31 , 2019 , 2018 and 2017 ( in thousands , except percentages ) . replace_table_token_5_th _ n/m = not meaningful ( 1 ) direct revenue is revenue allocated to the segment performing the provided service . ( 2 ) cost of revenue is shown exclusive of items presented separately on the consolidated statements of operations , which consist of ( i ) accretion of environmental liabilities and ( ii ) depreciation and amortization . direct revenues there are many factors which have impacted and continue to impact our revenues . these factors include , but are not limited to : overall industrial activity and growth in north america , existence or non-existence of large scale environmental waste and remediation projects , competitive industry pricing , impacts of acquisitions and divestitures , the level of emergency response projects , base and blended oil pricing , market changes relative to the collection of used oil , the number of parts washers placed at customer sites and foreign currency translation .
additionally , the act extends the reimbursement period for section 3610 of the cares act through march 31 , 2021. we are continuing to monitor the impacts of the pandemic and the rollout of the vaccine to the population . we can not predict the duration of the pandemic nor the timing and impact of the vaccine , however , an extended duration of the pandemic may have adverse impact on our results of operations . acquisitions we continually monitor u.s. government spending and budgetary priorities to align our investments in new capabilities to drive organic growth . we will selectively pursue acquisitions that broaden our domain expertise and service offerings and or establish relationships with new customers . in 2020 , we acquired minerva engineering and tapestry technologies . minerva engineering is a leading provider in advanced cybersecurity solutions focused on risk and vulnerability assessment , incident response , cyber intrusion detection , and wireless signal discovery . tapestry technologies provides unique insight and cybersecurity solutions to the u.s. defense information systems agency ( disa ) and the department of defense ( dod ) . since going public in 2002 , we have acquired and integrated 32 businesses into our operations . pricing our industry remains competitive on price . while there has been a trend away from the lowest-price technically acceptable procurement model for a majority of our customers , contracts continue to be awarded through a competitive bidding process ( including indefinite delivery , indefinite quantity and other multi-award contracts ) , which could increase pricing pressure . to ensure our cost structure remains competitive , we continually evaluate and adjust our levels of indirect spending to stay in line with the expected business opportunities . our industry also remains competitive with respect to attracting and retaining employees with the necessary skills and security clearances to perform certain services that are a priority for our customers . we classify indirect costs incurred as cost of services and general and administrative expenses in the same manner as such costs are defined in our disclosure statements under the government 's cost accounting standards . over time , we may change 18 how certain indirect costs are allocated based on organizational changes and to maintain competitive cost structures . these changes may result in certain costs shifting between cost of services and general and administrative expenses from year to year . revenues substantially all of our revenues are derived from services and solutions provided to the u.s. government or to prime contractors supporting the u.s. government , including services provided by our employees and our subcontractors , and solutions that include third-party hardware and software that we purchase and integrate as a part of our overall solutions . customer requirements may vary from period-to-period depending on specific contract and customer requirements . we provide our services and solutions under three types of contracts : cost-reimbursable ; time-and-materials ; and fixed-price . in general , cost-reimbursable contracts are the least profitable of our government contracts but offer the lowest risk of loss . under time-and-materials contracts , to the extent that our actual labor costs are higher or lower than the billing rates under the contract , our profit under the contract may either be greater or less than we anticipated or we may suffer a loss under the contract . in general , we realize a higher profit margin on work performed under time-and-materials contracts than cost-reimbursable contracts . fixed-price contracts generally offer higher profit margin opportunities but can involve greater financial risk because we bear the impact of cost overruns in return for the full benefit of any cost savings . cost of services cost of services primarily includes direct costs incurred to provide services and solutions to our customers . the most significant portion of these costs are direct labor costs , including salaries and wages , plus associated fringe benefits of our employees directly serving customers , in addition to the related management , facilities and infrastructure costs . cost of services also includes other direct costs , such as the costs of subcontractors and outside consultants and third-party materials , including hardware or software that we purchase and provide to the customer as part of an integrated solution . changes in the mix of services and equipment provided under our contracts can result in variability in the proportion that cost of services bears to revenues . as we typically earn higher profits on our own labor services , we expect the ratio of cost of services as a percentage of revenues to decline when our labor services mix increases relative to subcontracted labor or third-party materials . conversely , as subcontracted labor or third-party material purchases for customers increases relative to our own labor services , we expect the ratio of cost of services as a percentage of revenues to increase . general and administrative expenses general and administrative expenses include the salaries and wages , plus associated fringe benefits of our employees not performing work directly for customers , and associated facilities costs . among the functions covered by these costs are business development , bid and proposal , contracts administration , finance and accounting , legal , corporate governance and executive and senior management . in addition , we included stock-based compensation , as well as depreciation and amortization expenses related to the general and administrative function . depreciation and amortization expenses include the depreciation of computers , furniture and other equipment , the amortization of third-party software used internally , leasehold improvements and intangible assets . intangible assets include customer relationships and contract backlogs acquired in business combinations , and are amortized over their estimated useful lives . interest expense interest expense is primarily related to interest expense incurred or accrued under our outstanding borrowings on our debt and deferred financing charges . story_separator_special_tag the forecast used in our estimation of fair value was developed by management based on a contract basis , incorporating adjustments to reflect known contract and market considerations ( such as reductions and uncertainty in government spending , pricing pressure and opportunities ) . the discount rate utilizes a risk adjusted weighted average cost of capital . the market approach is a valuation technique in which the fair value is calculated based on market prices realized in an actual arm 's length transaction . the technique consists of undertaking a detailed market analysis of publicly traded companies that provides a reasonable basis for comparison to us . valuation ratios , which relate market prices to selected financial statistics derived from comparable companies , are selected and applied to us after consideration of adjustments for financial position , growth , market , profitability and other factors . the market transaction approach is a valuation technique in which the fair value is calculated based on market prices realized in actual arm 's length transactions . the technique consists of undertaking a detailed market analysis of merged and acquired companies that provides a reasonable basis for comparison to us . valuation ratios , which relate market prices to selected financial statistics derived from comparable companies , are selected and applied to us after consideration of adjustments for financial position , growth , market , profitability 24 and other factors . to assess the reasonableness of the calculated reporting unit fair values , we compare the sum of the reporting units ' fair values to our market capitalization ( per share stock price times the number of shares outstanding ) and calculate an implied control premium ( the excess of the sum of the reporting units ' fair values over the market capitalization ) , and then assess the reasonableness of our implied control premium . we have elected to perform our annual review as of october 31st of each calendar year . in addition , management monitors events and circumstances that could result in an impairment . a significant amount of judgment is involved in determining if an indicator of impairment has occurred between annual testing dates . events that could cause the fair value of our long-lived assets to decrease include : changes in our business environment or market conditions ; a material change in our financial outlook , including declines in expected revenue growth rates and operating margins ; or a material decline in the market price for our stock . if any impairment were indicated as a result of a review , we would recognize a loss based on the amount by which the carrying amount exceeds the estimated fair value . as a result of the internal reorganization , the composition of the carrying amount and the resulting carrying amount of net assets of our reporting units changed , which required us to reallocate goodwill across our reporting units based on the relative fair value as of july 1 , 2020. as of our annual test as of october 31 , 2020 , we performed a qualitative assessment to determine if it more likely than not that the estimated fair value of our reporting is less than the carrying amount . based on our the results of our qualitative assessment , we determined it was unnecessary to perform a quantitative impairment test . due to the many variables inherent in the estimation of a reporting unit 's fair value and the relative size of our recorded goodwill , differences in assumptions may have a material effect on the results of our goodwill impairment analysis . accounting for income taxes we account for income taxes in accordance with asc 740 , income taxes . under this method , deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws . deferred income tax provisions and benefits are based on changes to the assets or liabilities from year-to-year . in providing for deferred taxes , we consider tax regulations of the jurisdictions in which we operate , estimates of future taxable income and available tax planning strategies . if tax regulations , operating results or the ability to implement tax-planning strategies vary , adjustments to the carrying value of deferred tax assets and liabilities may be required . valuation allowances are recorded related to deferred tax assets based on the “ more likely than not ” criteria . we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would “ more likely than not ” sustain the position following an audit . for tax positions meeting the “ more likely than not ” threshold , the amount recognized in the financial statements is the largest benefit that has a greater than 50 % likelihood of being realized upon ultimate settlement with the relevant tax authority . the determination that a tax position meets the `` more likely than not `` criteria requires a significant amount of judgment , which may differ significantly from what is ultimately accepted by the relevant taxing authority . recently issued but not yet adopted accounting standards updates for information on the recently issued but not yet adopted accounting standards updates , see note 2 to our consolidated financial statements in item 8 . 25 contractual obligations our contractual obligations as of december 31 , 2020 are as follows ( in thousands ) : payments due by period contractual obligations total less than 1 year 1-3 years 3-5 years more than 5 years operating lease obligations ( 1 ) $ 118,311 $ 33,220 $ 59,820 $ 18,237 $ 7,034 debt obligations ( 2 ) 15,000 — 15,000 — — accrued defined benefit obligations ( 3 ) 674 73 138 126 337 finance lease obligations ( 1 ) 443 182 237 23 1 other long-term liabilities ( 4 )	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 primary liquidity needs have been the financing of acquisitions , working capital , payment under our cash dividend program and capital expenditures . our primary sources of liquidity are cash provided by operations and our revolving credit facility . on december 31 , 2020 , our cash and cash equivalents balance was $ 41.2 million . there were $ 15.0 million in outstanding borrowings under our revolving credit facility at december 31 , 2020. at december 31 , 2020 , we were contingently liable under letters of credit totaling $ 6.2 million , which reduced our ability to borrow under our revolving credit facility by that amount . the maximum available borrowings under our revolving credit facility at december 31 , 2020 were $ 478.8 million . generally , cash provided by operating activities is adequate to fund our operations , including payments under our regular cash dividend program . due to short-term fluctuations in our cash flows and level of operations , it may become necessary from time-to-time to increase borrowings under our revolving credit facility to meet cash demands . cash flows from operating activities our operating cash flow is primarily affected by our ability to invoice and collect from our clients in a timely manner , our ability to manage our vendor payments and the overall profitability of our contracts . we bill most of our customers monthly after services are rendered . our accounts receivable days sales outstanding ( dso ) were 56 and 59 for the quarters ended december 31 , 2020 and 2019 , respectively . for the years ended december 31 , 2020 and 2019 , our net cash flows from operating activities were $ 247.2 million and $ 221.4 million , respectively .
the majority of the changes in 2015 and 2014 are a result of the u.s. dollar strengthening on average versus the british pound sterling . the chart below summarizes what the effects on our revenue and expenses would be on a constant currency basis . the constant currency basis assumes that the exchange rate was constant for the periods presented ( in thousands ) . 21 replace_table_token_4_th the net effect of our foreign currency translations for the year ended december 31 , 2015 was a $ 1.0 million decrease in revenue and a $ 1.2 million decrease in operating expenses versus the year ended december 31 , 2014. the net effect of our foreign currency translations for the year ended december 31 , 2014 was a $ 0.4 million increase in revenue and a $ 0.5 million increase in operating expenses versus the year ended december 31 , 2013 due to a weaker u.s. dollar on average during the year 2014. results of operations the following table presents our consolidated statements of operations in comparative format . replace_table_token_5_th the following table presents our consolidated statements of operations reflected as a percentage of total revenue . 22 replace_table_token_6_th revenue revenue is comprised of license fees and services and customer support . license fees and services revenue represent the fees we receive from the licensing of our software products and those services directly related to the delivery of the licensed product as well as integration services , saas services and time and materials work . customer support revenue includes annual support fees , recurring maintenance fees , minor product upgrades and warranty fees . warranty fees are typically bundled with a license sale and the related revenue , based on vendor specific objective evidence ( vsoe ) , is deferred and recognized ratably over the warranty period . license fees and services license fees and services revenue decreased 21 % , or $ 4.1 million to $ 15.6 million for the year ended december 31 , 2015 compared to $ 19.7 million for the year ended december 31 , 2014. the decrease in license fee and services revenue is due to less mms revenue primarily related to decreased first user activations ( fuas ) and lower revenue from our tertio service activation ( tsa ) products . license fees and services revenue increased 23 % , or $ 3.7 million to $ 19.7 million for the year ended december 31 , 2014 compared to $ 16.0 million for the year ended december 31 , 2013. the increase in license fee and services revenue is due to an increase in dsa revenue primarily related to increased fuas and revenue generated from evolving systems labs , which we acquired in october 2013. customer support customer support revenue increased 1 % , or $ 50,000 , to $ 10.0 million for the year ended december 31 , 2015 from $ 9.9 million for the year ended december 31 , 2014. the increase in customer support revenue is primarily due to the acquisition of evolving systems nc in the third quarter of 2015 offset by a decline in our tsa customer support revenue . customer support revenue increased 9 % , or $ 0.8 million , to $ 9.9 million for the year ended december 31 , 2014 from $ 9.1 million for the year ended december 31 , 2013. the increase in customer support revenue is primarily due to an increase in our installed customer base for dsa . 23 costs of revenue , excluding depreciation and amortization costs of revenue consist primarily of personnel costs , facilities costs , the costs of third-party software and all other direct costs associated with these personnel . costs of revenue , excluding depreciation and amortization were $ 6.4 million , $ 7.6 million and $ 7.2 million for the years ended december 31 , 2015 , 2014 and 2013 , respectively . costs of license fees and services , excluding depreciation and amortization costs of revenue for license fees and services decreased 16 % , or $ 0.9 million , to $ 4.9 million for the year ended december 31 , 2015 from $ 5.8 million for the year ended december 31 , 2014. the decrease in costs was primarily the result of lower embedded software expense , fewer service project hours , incentive compensation and travel , all of which resulted from a decline in revenue partially offset by expenses related to evolving systems nc , which was acquired on september 30 , 2015. as a percentage of license fees and services revenue , costs of license fees and services , excluding depreciation and amortization , increased to 31 % for the year ended december 31 , 2015 from 29 % for the year ended december 31 , 2014. the increase in costs as a percentage of license fees and services revenue is primarily related to the decreased revenue during the period . costs of revenue for license fees and services increased 4 % , or $ 0.2 million , to $ 5.8 million for the year ended december 31 , 2014 from $ 5.6 million for the year ended december 31 , 2013. the increase in costs was primarily the result of increases in travel , subcontractor and incentive compensation , all of which resulted from revenue growth . as a percentage of license fees and services revenue , costs of license fees and services , excluding depreciation and amortization , decreased to 29 % for the year ended december 31 , 2014 from 35 % for the year ended december 31 , 2013. the decrease in costs as a percentage of license fees and services revenue is primarily related to the increased revenue during the period . story_separator_special_tag for those benefits to be recognized , a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities . as of december 31 , 2015 and 2014 , we had no liability for unrecognized tax benefits . we do not believe there will be any material changes to our unrecognized tax positions over the next twelve months . financial condition our working capital position of $ 3.7 million at december 31 , 2015 reflects a decrease of $ 12.1 million from our working capital position of $ 15.8 million at december 31 , 2014. the decrease is primarily related to the $ 10.0 million borrowed on our short term revolving line of credit to fund the initial payment of the acquisition of evolving systems nc and decreases in our accounts receivable and unbilled work-in-progress offset by a decrease in our deferred revenue and tax liabilities . story_separator_special_tag 0.0pt ; `` > off-balance sheet arrangements we have no off-balance sheet arrangements that have a material current effect , or that are reasonably likely to have a material future effect , on our financial condition , changes in financial condition , revenue or expenses , results of operations , liquidity , capital expenditures , or capital resources . contractual obligations and commercial commitments the following summarizes our significant contractual obligations as of december 31 , 2015 , which are comprised of a capital lease and operating leases ( in thousands ) . replace_table_token_7_th critical accounting policies our significant accounting policies are disclosed in note 1 of our consolidated financial statements included elsewhere in this annual report on form 10-k. the following discussion addresses our most critical accounting policies , which are those that are 28 both important to the portrayal of our financial condition and results of operations and that require significant judgment or use of complex estimates . revenue recognition we recognize revenue when an agreement is signed , the fee is fixed or determinable and collectability is reasonably assured . we recognize revenue from two primary sources : license fees and services , and customer support . the majority of our license fees and services revenue is generated from fixed-price contracts , which provide for licenses to our software products and services to customize such software to meet our customers ' use . when the customization services are determined to be essential to the functionality of the delivered software , we recognize revenue using the percentage-of-completion method of accounting . in these types of arrangements , we do not typically have vendor specific objective evidence ( vsoe ) of fair value on the license fee/services portion ( services are related to customizing the software ) of the arrangement due to the large amount of customization required by our customers ; however , we do have vsoe for the warranty/maintenance services based on the renewal rate of the first year of maintenance in the arrangement . the license/services portion is recognized using the percentage-of-completion method of accounting and the warranty/maintenance services are separated based on the renewal rate in the contract and recognized ratably over the warranty or maintenance period . we estimate the percentage-of-completion for each contract based on the ratio of direct labor hours incurred to total estimated direct labor hours and recognize revenue based on the percent complete multiplied by the contract amount allocated to the license fee/services . since estimated direct labor hours , and changes thereto , can have a significant impact on revenue recognition , these estimates are critical and we review them regularly . if the arrangement includes a customer acceptance provision , the hours to complete the acceptance testing are included in the total estimated direct labor hours ; therefore , the related revenue is recognized as the acceptance testing is performed . revenue is not recognized in full until the customer has provided proof of acceptance on the arrangement . generally , our contracts are accounted for individually . however , when certain criteria are met , it may be necessary to account for two or more contracts as one to reflect the substance of the group of contracts . we record amounts billed in advance of services being performed as unearned revenue . unbilled work-in-progress represents revenue earned but not yet billable under the terms of the fixed-price contracts . all such amounts are expected to be billed and collected within 12 months . we may encounter budget and schedule overruns on fixed-price contracts caused by increased labor or overhead costs . we make adjustments to cost estimates in the period in which the facts requiring such revisions become known . we record estimated losses , if any , in the period in which current estimates of total contract revenue and contract costs indicate a loss . if revisions to cost estimates are obtained after the balance sheet date but before the issuance of the interim or annual financial statements , we make adjustments to the interim or annual financial statements accordingly . in arrangements where the services are not essential to the functionality of the delivered software , we recognize license revenue when a license agreement has been signed , delivery and acceptance have occurred , the fee is fixed or determinable and collectability is reasonably assured . where applicable , we unbundle and record as revenue fees from multiple element arrangements as the elements are delivered to the extent that vsoe of fair value of the undelivered elements exist . if vsoe for the undelivered elements does not exist , we defer fees from such arrangements until the earlier of the date that vsoe does exist on the undelivered elements or all of the elements have been delivered . we recognize revenue from fixed-price service contracts using the proportional performance method of accounting , which is similar to the percentage-of-completion method described above . we recognize revenue from professional services provided pursuant to time-and-materials based contracts and training services as the services are performed , 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.	liquidity and capital resources we have historically financed operations through cash flows from operations as well as debt and equity transactions . at december 31 , 2015 , our principal sources of liquidity were $ 8.4 million in cash and cash equivalents and $ 7.7 million in contract receivables , net of allowances . net cash provided by ( used in ) operating activities for the year ended december 31 , 2015 , 2014 and 2013 was $ 2.2 million , ( $ 0.4 ) million and $ 8.6 million , respectively . the increase in cash provided by operating activities for the year ended december 31 , 2015 was primarily due to a decrease in contract receivables and unbilled work-in-progress partially offset by decreases in accounts payable and accrued liabilities and unearned revenue . the decrease in cash provided by operating activities for the year ended december 31 , 2014 compared to 2013 was primarily due to a decrease in unearned revenue and an increase unbilled work-in-progress and contract receivables . net cash used in investing activities was $ 9.2 million , $ 0.6 million and $ 0.6 million for the years ended december 31 , 2015 , 2014 and 2013 , respectively . cash used in investing activities for the year ended december 31 , 2015 was related to the acquisition of evolving systems nc and purchase of property and equipment . during 2015 , 2014 and 2013 , we purchased $ 0.2 million , $ 0.6 million and $ 0.3 million in property and equipment to support operations , respectively . historically , capital expenditures have been financed by cash from operating activities .
in february 2017 , we announced top-line results from the open-label , proof-of-concept portion ( part a ) of our phase 2 clinical trial of sage-217 in mdd which met our criteria for advancing sage-217 into the blinded , placebo-controlled portion of the phase 2 mdd clinical trial ( part b ) . we expect to initiate part b in the second quarter of 2017. we are also currently conducting the phase 2 clinical trials of sage-217 in ppd , essential tremor and parkinson 's disease . we expect to report top-line results from the open-label portion of the phase 2 clinical trial of sage-217 in parkinson 's disease in the first half of 2017. we anticipate reporting top-line results from the blinded , placebo-controlled phase 2 clinical trials of sage-217 in essential tremor and ppd in the second half of 2017. we also have a portfolio of other novel compounds that target the gaba a receptors , including sage-105 , sage-324 and sage-689 , which are at earlier stages of development with a focus on both acute and chronic cns disorders . our second area of focus is the development of novel compounds that target the nmda receptor . the first product candidate selected for development from this program is sage-718 , an oxysterol-based positive allosteric modulator of the nmda receptor . our initial areas of focus for development of sage-718 will be cerebrosterol deficit disorders , anti-nmda receptor encephalitis , and other indications involving nmda receptor hypofunction . we believe measuring levels of anti-nmda receptor antibodies or decreased levels of cerebrosterol , a naturally occurring oxysterol , may represent biomarkers to identify , for future study , broader patient populations characterized by cognitive dysfunction and neuropsychiatric symptoms resulting from nmda receptor dysfunction or hypofunction . examples of these potential areas for future evaluation include certain types , aspects or subpopulations of a number of diseases such as depression , alzheimer 's disease , attention deficit hyperactivity disorder , schizophrenia , huntington 's disease , and neuropathic pain . we have completed investigational new drug , or ind-enabling non-clinical studies of sage-718 , and plan to commence the phase 1 clinical program in the first half of 2017. we expect to continue our focus on allosteric modulation of the gaba a and nmda receptor systems in the brain . the gaba a and nmda receptor systems are broadly accepted as impacting many psychiatric and neurological disorders , spanning disorders of mood , seizure , cognition , anxiety , sleep , pain , epilepsy , and movement disorders , among others . we believe that we will have the opportunity to develop molecules from our internal portfolio with the goal of addressing a number of these disorders in the future . our ability to identify and develop such novel cns therapies is enabled by our proprietary chemistry platform that is centered , as a starting point , on knowledge of the chemical scaffolds of certain endogenous neuroactive steroids . we believe our knowledge of the chemistry and activity of allosteric modulators allows us to efficiently design molecules with different characteristics . this diversity enables us to regulate important properties such as half-life , brain penetration and receptor pharmacology to develop product candidates that have the potential for better selectivity , increased tolerability , and fewer off-target side effects than either current cns therapies or previous therapies which have failed in development . we have not generated any revenue to date . we have incurred net losses in each year since our inception , and we have an accumulated deficit of $ 320.3 million as of december 31 , 2016. our net losses were $ 159.0 million , $ 94.5 million and $ 33.8 million for the years ended december 31 , 2016 , 2015 and 2014 , respectively . these losses have resulted principally from costs incurred in connection with research and development activities and general and administrative costs associated with our operations . we expect to incur significant expenses and increasing operating losses for the foreseeable future . we expect that our expenses will increase substantially in connection with our ongoing activities , as we : complete the ongoing phase 3 clinical trials for sage-547 in srse and ppd , as well as additional clinical trials and non-clinical studies of sage-547 required for regulatory approval in srse and ppd ; complete the ongoing and planned phase 2 clinical trials of sage-217 in essential tremor , parkinson 's disease , ppd and mdd , and advance sage-217 further in development depending on the outcome of the ongoing trials ; continue to advance sage-718 , our early-stage novel allosteric modulator for nmda , including planned commencement of a phase 1 clinical program ; continue non-clinical studies of sage-105 and sage-324with a focus on orphan epilepsies and indications involving gaba hypofunction ; 64 continue our research and development efforts to evaluate the potential for our other existing product candidates in the treatment of additional indications or in new formulations , and the identification of new drug candidates in the treatment of cns disorders ; advancing regulatory activities focused on a potential filing of an nda and maa for sage-547 in srse and an nda in ppd ; continue initial preparations for a potential future commercial launch ; seek regulatory approvals for our product candidates that successfully complete clinical development ; add personnel , including personnel to support our product development and future commercialization efforts , and incur increases in stock compensation expense related to existing and new personnel with respect to both service-based and performance-based awards ; add operational , financial and management information systems ; and maintain , leverage and expand our intellectual property portfolio . as a result , in the future , we will need additional financing to support our continuing operations . story_separator_special_tag expenses related to payments to consultants and licensors upon achievement of certain clinical development milestones were $ 0.8 million and $ 2.7 million for the years ended december 31 , 2016 and 2015 , respectively ; an increase of $ 12.3 million in expenses related to our sage-217 program due to the conduct of the phase 1 clinical program ; the initiation of phase 2-enabling toxicology , formulation and manufacturing activities ; and commencement of phase 2 clinical trials ; a decrease of $ 1.4 million in expenses related to our sage-689 program due to the delay in commencement of a phase 1 clinical trial as a result of a request from the fda for additional non-clinical study data ; an increase of $ 3.1 million in expenses due to the progression of our sage-718 program to ind-enabling non-clinical development and cmc activities in preparation for ind filing ; an increase of $ 3.4 million in expenses related to research and development programs and discovery efforts focused on identifying new clinical candidates and additional indications of interest , and on our back-up programs ; and an increase of $ 17.7 million in unallocated expenses , mainly due to the hiring of additional full-time employees to support the growth in our operations , including an increase of $ 5.3 million of non-cash stock-based compensation expense and an increase of $ 10.9 million in other employee-related costs , mainly for salaries . the amount of non-cash stock-based compensation expense recorded to research and development expense related to the achievement of performance-based 69 vesting criteria was $ 2.3 million and $ 2.0 million for the years ended december 31 , 2016 and 2015 , respectively , an increase of $ 0.3 million . general and administrative expenses replace_table_token_8_th general and administrative expenses for the years ended december 31 , 2016 and 2015 were $ 39.4 million and $ 25.3 million , respectively . the increase of $ 14.1 million was primarily due to the following : an increase of $ 7.2 million in personnel-related costs due to the effects of hiring additional full-time employees to support operations , finance , human resources , legal and early commercial planning activities . non-cash stock-based compensation expense related to the achievement of performance-based vesting criteria was $ 2.7 million for the years ended december 31 , 2016 and 2015 ; an increase of $ 2.6 million in professional fees due to increased costs associated with expanding operations , including costs related to audit , legal , and tax-related services , as well as investor relations costs ; an increase of $ 2.2 million in commercial planning due to preparations for a potential commercial launch ; and an increase of $ 2.1 million in other due to increased costs associated with facilities , mainly due to the increase in the amount of rented square feet of office space to accommodate our increase in employees . interest income , net and other expense , net interest income , net , and other expense , net , for the years ended december 31 , 2016 and 2015 were $ 1.2 million and $ 0.2 million , respectively . the primary reason for the increase was the increase in interest income from the purchase of marketable securities during the year ended december 31 , 2016. comparison of the years ended december 31 , 2015 and 2014 the following table summarizes our results of operations for the years ended december 31 , 2015 and 2014 : replace_table_token_9_th 70 research and development expenses replace_table_token_10_th research and development expenses for the year ended december 31 , 2015 were $ 69.4 million , compared to $ 24.1 million for the year ended december 31 , 2014. the increase of $ 45.3 million was primarily due to the following : an increase of $ 29.0 million in expenses of our sage-547 program , due to the advancement of the program into clinical development , including the completion of the phase 1/2 clinical trial , commencement of activities for our phase 3 clinical trial , an increase in work related to cmc and toxicology . for the years ended december 31 , 2015 and 2014 , payments made to consultants and licensors in connection with the achievement of development milestones met by consultants and licensors were $ 2.7 million and $ 0.4 million , respectively ; an increase of $ 3.6 million in expenses of our sage-217 program with advancement of the lead optimization program through ind-enabling non-clinical development activities ( e.g . , toxicology studies , process development , and drug substance manufacturing ) , filing of the ind and initiation of the phase 1 clinical trial in october 2015 ; an increase of $ 3.3 million in expenses of our sage-718 program , which became a development program during the year ended december 31 , 2015 ; an increase of $ 1.4 million in expenses of our other research and development programs and discovery efforts for our next clinical candidates and back-up programs ; and an increase of $ 7.9 million in unallocated expenses , including an increase of $ 4.8 million of non-cash stock-based compensation expense , due to the hiring of additional full-time employees to support the growth in our activities . the amount of non-cash stock-based compensation expense recorded to research and development expense related to the achievement of performance-based vesting criteria was $ 2.0 million for the year ended december 31 , 2015. no stock-based compensation expense related to the achievement of performance-based vesting criteria was recorded to research and development expense for the year ended december 31 , 2014. general and administrative expenses replace_table_token_11_th general and administrative expenses for the years ended december 31 , 2015 and 2014 were $ 25.3 million and $ 9.7 million , respectively . the increase of $ 15.6 million in general and administrative expenses was primarily due to a $ 10.6 million increase in personnel-related costs due to the effects of hiring additional	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 our inception in april 2010 , we have not generated any revenue , and have incurred recurring net losses . as of december 31 , 2016 , we had an accumulated deficit of $ 320.3 million . from our inception through december 31 , 2016 , we received net proceeds of $ 643.3 million from the sales of redeemable convertible preferred stock , the issuance of convertible notes and the proceeds from our ipo in july 2014 and follow-on offerings in april 2015 , january 2016 and september 2016. on january 12 , 2016 , we completed the sale of 3,157,894 shares of our common stock in an underwritten public offering at a price to the public of $ 47.50 per share , resulting in net proceeds of $ 140.4 million after deducting commissions and underwriting discounts and offering costs paid by us . on september 14 , 2016 , we completed the sale of 5,062,892 shares of our common stock in an underwritten public offering at a price to the public of $ 39.75 per share , resulting in net proceeds of $ 189.2 million after deducting commissions and underwriting discounts and offering costs paid by us . as of december 31 , 2016 , our primary sources of liquidity were our cash , cash equivalents and marketable securities , which totaled $ 397.5 million . we invest our cash in money market funds , u.s. government securities , corporate bonds and commercial paper , with the primary objectives to preserve principal , provide liquidity and maximize income without significantly increasing risk .
the following table shows the company 's annualized performance ratios for the years ended december 31 , 2014 , 2013 and 2012 : replace_table_token_3_th total assets at december 31 , 2014 , 2013 and 2012 were $ 1.61 billion , $ 1.61 billion , and $ 1.58 billion , respectively . net loan balances increased to $ 1.05 billion at december 31 , 2014 , from $ 970 million at december 31 , 2013 , from $ 899 million at december 31 , 2012. of the increase in 2014 , $ 55.4 million or 32.9 % was due to increases in commercial and industrial loans and $ 19.8 million or 2.5 % was due to increases in loans secured by real estate . of the increase in 2013 , $ 61.4 million or 86 % was due to increases in loans secured by real estate . of the increase in 2012 , $ 46.9 million or 93 % was due to increases in loans secured by real estate . total deposit balances decreased to $ 1.27 billion at december 31 , 2014 from $ 1.29 billion at december 31 , 2013 and from $ 1.27 billion at december 31 , 2012. the decline in 2014 was due to declines in non-interest bearing deposits and higher rate cds that matured and were not replaced offset by an increase in interest bearing deposits . the increase in 2013 was due to increases in interest-bearing deposits offset by declines in savings account balances and non-interest bearing deposits . net interest margin , defined as net interest income divided by average interest-earning assets , was 3.43 % for 2014 , 3.38 % for 2013 and 3.44 % for 2012. the increase during 2014 was primarily due to the growth in loan balances . the decrease during 2013 was primarily due to a greater decrease in rates on earning assets compared to the decline in rates on interest bearing liabilities . net interest income increased to $ 51.5 million in 2014 from $ 49.9 million in 2013 and $ 49.6 million in 2012. the ability of the company to continue to grow net interest income is largely dependent on management 's ability to succeed in its overall business development efforts . management expects these efforts to continue but does not intend to compromise credit quality and prudent management of the maturities of interest-earning assets and interest-paying liabilities in order to achieve growth . non-interest income decreased to $ 18.4 million in 2014 compared to $ 19.3 million in 2013 and $ 18.3 million in 2012. the primary reason for the decrease of $ .9 million or 5 % from 2013 to 2014 was less gains on sales of securities and a decline in mortgage banking income as refinance and new purchase activity has slowed , offset by increases in revenue from brokerage and insurance commissions and deposit account service charges . the primary reason for the increase of $ 1 million or 5.6 % from 2012 to 2013 was more gains on the sale of securities primarily due to the sale of two trust preferred securities which resulted in a gain of $ 1.4 million . in addition to security gains , revenues from trust and wealth management also increased by $ 380,000 due to increased revenue from the retirement services area and more growth through the brokerage platform . these increases offset the decline in mortgage banking income during the year as refinances slowed with the increase in interest rates . non-interest expenses increased $ 1,003,000 , to $ 44.5 million in 2014 compared to $ 43.5 million in 2013 , and $ 42.8 million in 2012. the increase during 2014 of 2.3 % was primarily due to an increase in salary and benefits expense as a result of higher officer salary and insurance costs . the increase during 2013 of less than 2 % was primarily due to an increase in salaries and benefits expenses due to additions in sales staff and employees added for a new branch location . following is a summary of the factors that contributed to the changes in net income ( in thousands ) : replace_table_token_4_th credit quality is an area of importance to the company . year-end total nonperforming loans were $ 4.5 million at december 31 , 2014 compared to $ 6.5 million at december 31 , 2013 , and $ 7.6 million at december 31 , 2012. the decrease in 2014 and 2013 was the result of loans that paid off or became current during the year and loans transferred to other real estate owned . other real estate owned balances totaled $ 263,000 at december 31 , 2014 compared to $ 568,000 at december 31 , 2013 , and $ 1.2 million at december 31 , 2012. the decreases in 2014 and 2013 were due to more properties sold during the year than properties transferred in . the company 's provision for loan losses was $ 629,000 for 2014 , compared to $ 2.2 million for 2013 , and $ 2.6 million for 2012. at december 31 , 2014 , the composition of the loan portfolio remained similar to year-end 2013. loans secured by both commercial and residential real estate comprised 70 % , 74 % , and 73 % of the loan portfolio for 2014 , 2013 , and 2012 , respectively . the company also held an investment in one trust preferred security with a fair value of $ 364,000 and unrealized losses of $ 2.9 million at december 31 , 2014 compared to a fair value of $ 191,000 and unrealized losses of $ 3.5 million at december 31 , 2013. on july 22 , 2013 , the company sold its holding in pretsl i and ii . story_separator_special_tag the following table summarizes the approximate relative contribution of changes in average volume and interest rates to changes in net interest income for the past two years ( in thousands ) : 2014 compared to 2013 increase – ( decrease ) 2013 compared to 2012 increase – ( decrease ) total change volume ( 1 ) rate ( 1 ) total change volume ( 1 ) rate ( 1 ) earning assets : interest-bearing deposits $ 50 $ 47 $ 3 $ ( 7 ) $ ( 7 ) $ — federal funds sold ( 5 ) ( 6 ) 1 ( 31 ) ( 31 ) — certificates of deposit investments ( 14 ) ( 7 ) ( 7 ) ( 43 ) ( 45 ) 2 investment securities : taxable ( 1,654 ) ( 1,836 ) 182 ( 817 ) 175 ( 992 ) tax-exempt ( 2 ) 283 287 ( 4 ) 355 405 ( 50 ) loans ( 3 ) 2,615 4,328 ( 1,713 ) ( 1,765 ) 2,827 ( 4,592 ) total interest income 1,275 2,813 ( 1,538 ) ( 2,308 ) 3,324 ( 5,632 ) interest-bearing liabilities : deposits : demand deposits , interest-bearing ( 106 ) 27 ( 133 ) ( 648 ) 83 ( 731 ) savings deposits ( 77 ) ( 19 ) ( 58 ) ( 734 ) 52 ( 786 ) time deposits ( 169 ) 144 ( 313 ) ( 758 ) ( 155 ) ( 603 ) securities sold under agreements to repurchase 1 1 — ( 71 ) ( 22 ) ( 49 ) fhlb advances 85 26 59 ( 54 ) 66 ( 120 ) federal funds purchased ( 9 ) ( 8 ) ( 1 ) 9 9 — subordinated debentures ( 9 ) — ( 9 ) ( 40 ) — ( 40 ) story_separator_special_tag narrow ; font-size:9pt ; `` > 26 total non-interest income decreased to $ 18.4 million in 2014 compared to $ 19.3 million in 2014 and $ 18.3 million in 2012. the primary reasons for the more significant year-to-year changes in other income components are as follows : trust revenues increased $ 6,000 or .2 % in 2014 to $ 3,571,000 from $ 3,565,000 in 2013 and $ 3,330,000 in 2012. the increases during 2014 and 2013 in trust revenues were due primarily to an increase in revenues from investment management & advisory agency accounts and increases in market value related fees . trust assets were $ 757.3 million at december 31 , 2014 compared to $ 722.9 million at december 31 , 2013 and $ 633.8 million at december 31 , 2012. revenue from brokerage increased $ 206,000 or 24.7 % to $ 1,039,000 in 2014 from $ 833,000 in 2013 and $ 688,000 in 2012. the increase from 2013 to 2014 was due to an increase in the number of brokerage accounts from new business development efforts . insurance commissions increased $ 158,000 or 9.6 % to $ 1,796,000 in 2014 from $ 1,638,000 in 2013 compared to $ 1,813,000 in 2012. the increase from 2013 to 2014 was due to an increase in contingency income received from carriers based on claims experience . the decrease from 2012 to 2013 was due to a decrease in property and casualty insurance commissions . fees from service charges increased $ 399,000 or 8.2 % to $ 5,264,000 in 2014 from $ 4,865,000 in 2013 and $ 4,808,000 in 2012. the increase from 2013 to 2014 was primarily due to an increase in overdraft fees and transaction service charges . the increase from 2012 to 2013 was primarily due to an increase in commercial transaction account fees . net securities gains in 2013 were $ 715,000 down $ 1.6 million or 68.8 % from $ 2.3 million in 2013 and $ 934,000 in 2012. the decline in security gains from 2013 to 2014 and the increase during 2013 was primarily due to the sale of two trust preferred securities that resulted in net security gains of $ 1.4 million . mortgage banking income decreased $ 339,000 or 36.3 % to $ 596,000 in 2014 from $ 935,000 in 2013 and $ 1,509,000 in 2012. the decline during 2014 was due to an decrease in the volume of loans originated and sold by first mid bank due to less refinancing as interest rates rose on various loan types . loans sold balances are as follows : ▪ $ 44 million ( representing 368 loans ) in 2014 ▪ $ 65 million ( representing 552 loans ) in 2013 ▪ $ 101 million ( representing 796 loans ) in 2012 first mid bank generally releases the servicing rights on loans sold into the secondary market . revenue from atms and debit cards increased $ 143,000 or 3.8 % to $ 3,915,000 in 2014 from $ 3,772,000 in 2013 compared to $ 3,554,000 in 2012. the increase from 2013 to 2014 was primarily due to an increase in electronic transactions and incentives received from visa . the increase from 2012 to 2013 was primarily due to in increase in electronic transactions . other income increased $ 33,000 or 2.3 % in 2014 to $ 1,473,000 from $ 1,440,000 in 2013 compared to $ 1,547,000 in 2012. the increase from 2013 to 2014 was primarily due to an increase in merchant card processing fees . the decrease from 2012 to 2013 was primarily due to a decline in rental income from other real estate owned that was sold during the third quarter of 2013 and less loan closing fees compared to 2012. other expense the major categories of other expense include salaries and employee benefits , occupancy and equipment expenses and other operating expenses associated with day-to-day operations . the following table sets forth the major components of other expense for the last three years ( in thousands ) : replace_table_token_6_th 27 total non-interest expense increased to $ 44.5 million in 2014 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.	other debt 1 ( 326 ) 327 ( 326 ) ( 326 ) — total interest expense ( 283 ) ( 155 ) ( 128 ) ( 2,622 ) ( 293 ) ( 2,329 ) net interest income $ 1,558 $ 2,968 $ ( 1,410 ) $ 314 $ 3,617 $ ( 3,303 ) ( 1 ) changes attributable to the combined impact of volume and rate have been allocated proportionately to the change due to volume and the change due to rate . ( 2 ) the tax-exempt income is not recorded on a tax equivalent basis . ( 3 ) nonaccrual loans are not material and have been included in the average balances . net interest income increased $ 1.6 million or 3.1 % in 2014 compared to an increase of $ 314,000 or .6 % in 2013. the increase in 2014 is primarily due to growth in average earning assets and an increase in net interest margin . the net interest margin increased due to the shift in balances of investment securities to higher-yielding loans , an increase in yield on investments and the reduction in deposit costs . the increase in 2013 was primarily due to growth in investment security and loan balances offset by a decline in earning asset rates that was greater than the decline in rates of interest-bearing liabilities .
55 the fund and fund ii are eligible to issue debentures guaranteed by the sba to the capital markets at favorable interest rates and invest these funds in portfolio companies . we intend to continue to operate the fund and fund ii as sbics , subject to sba approval , and to utilize the proceeds of the issuance of sba-guaranteed debentures , referred to herein as sba leverage , to enhance returns to our stockholders . portfolio composition the total value of our investment portfolio was $ 326.0 million as of december 31 , 2010 , as compared to $ 201.3 million as of december 31 , 2009. as of december 31 , 2010 , we had investments in 48 portfolio companies with an aggregate cost of $ 324.0 million . as of december 31 , 2009 , we had investments in 37 portfolio companies with an aggregate cost of $ 209.9 million . as of both december 31 , 2010 and 2009 , none of our portfolio investments represented greater than 10 % of the total fair value of our investment portfolio . as of december 31 , 2010 and december 31 , 2009 , our investment portfolio consisted of the following investments : replace_table_token_10_th investment activity during the year ended december 31 , 2010 , we made sixteen new investments totaling $ 140.7 million , additional debt investments in ten existing portfolio companies totaling $ 32.3 million and five additional equity investments in existing portfolio companies totaling approximately $ 0.6 million . in addition , we sold three equity investments in portfolio companies for total proceeds of approximately $ 5.4 million , resulting in realized gains totaling approximately $ 4.1 million , and converted subordinated debt investments in two portfolio companies to equity , resulting in realized losses totaling approximately $ 10.4 million . we also sold a convertible note investment in a portfolio company for proceeds of approximately $ 2.3 million , resulting in a realized gain of approximately $ 0.9 million . we had nine portfolio company loans repaid at par totaling approximately $ 43.0 million and received normal principal repayments , partial loan prepayments and pik interest repayments totaling approximately $ 7.9 million in the year ended december 31 , 2010. during the year ended december 31 , 2009 , we made seven new investments totaling $ 43.0 million , additional debt investments in three existing portfolio companies totaling $ 4.1 million and five additional equity investments in existing portfolio companies totaling approximately $ 1.4 million . we also sold two investments in portfolio companies for approximately $ 1.9 million , resulting in realized gains totaling 56 $ 1.8 million and recognized realized losses related to restructurings of two portfolio companies totaling $ 1.3 million . we had four portfolio company loans repaid at par in the amount of $ 13.2 million . in addition , we received normal principal repayments , partial loan prepayments and pik interest repayments totaling approximately $ 9.2 million in the year ended december 31 , 2009. total portfolio investment activity for the years ended december 31 , 2010 and 2009 was as follows : replace_table_token_11_th ( 1 ) excludes non-accrual debt investments . non-accrual assets as of december 31 , 2010 , the fair value of our non-accrual assets was approximately $ 9.6 million , which comprised 3.0 % of the total fair value of our portfolio , and the cost of our non-accrual assets was approximately $ 17.4 million , which comprised 5.4 % of the total cost of our portfolio . our non-accrual assets as of december 31 , 2010 are as follows : gerli and company in november 2008 , we placed our debt investment in gerli and company , or gerli , on non-accrual status . as a result , under generally accepted accounting principles in the united states , or u.s. gaap , we no longer recognize interest income on our debt investment in gerli for financial reporting purposes . during 2008 , we recognized an unrealized loss on our debt investment in gerli of $ 1.2 million and in the year ended december 31 , 2009 , we recognized an additional unrealized loss on our debt investment in gerli of $ 0.5 million . in the year ended december 31 , 2010 , we recognized an unrealized gain on our debt investment in gerli of approximately $ 0.7 million . as of december 31 , 2010 , the cost of our debt investment in gerli was $ 3.3 million and the fair value of such investment was $ 2.3 million . fire sprinkler systems , inc. in october 2008 , we placed our debt investment in fire sprinkler systems , inc. , or fire sprinkler systems , on non-accrual status . as a result , under u.s. gaap , we no longer recognize interest income on our debt investment in fire sprinkler systems for financial reporting purposes . during 2008 , we recognized an unrealized loss of $ 1.4 million on our subordinated note investment in fire sprinkler systems . in the year 57 ended december 31 , 2009 , we recognized an additional unrealized loss on our debt investment in fire sprinkler systems of $ 0.3 million and in the year ended december 31 , 2010 , we recognized an additional unrealized loss on our debt investment in fire sprinkler systems of $ 0.3 million . as of december 31 , 2010 , the cost of our debt investment in fire sprinkler systems was $ 2.6 million and the fair value of such investment was $ 0.8 million . american de-rosa lamparts , llc and hallmark lighting in 2008 , we recognized an unrealized loss of $ 1.2 million on our subordinated note investment in american de-rosa lamparts , llc and hallmark lighting , or collectively , adl . story_separator_special_tag these estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances . actual results could differ materially from those estimates under different assumptions or conditions . a discussion of our critical accounting policies follows . investment valuation the most significant estimate inherent in the preparation of our financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded . we have established and documented processes and methodologies for determining the fair values of portfolio company investments on a recurring ( quarterly ) basis in accordance with fasb asc topic 820 , fair value measurements and disclosures , or asc topic 820. asc topic 820 defines fair value , establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements . as discussed below , we have engaged an independent valuation firm to assist us in our valuation process . asc topic 820 clarifies that the exchange price is the price in an orderly transaction between market participants to sell an asset or transfer a liability in the market in which the reporting entity would transact for the asset or liability , that is , the principal or most advantageous market for the asset or liability . the transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date , considered from the perspective of a market participant that holds the asset or owes the liability . asc topic 820 provides a consistent definition of fair value which focuses on exit price and prioritizes , within a measurement of fair value , the use of market-based inputs over entity-specific inputs . in addition , asc topic 820 provides a framework for measuring fair value and establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date . the three levels of valuation hierarchy established by asc topic 820 are defined as follows : level 1 inputs to the valuation methodology are quoted prices ( unadjusted ) for identical assets or liabilities in active markets . level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets , and inputs that are observable for the asset or liability , either directly or indirectly , for substantially the full term of the financial instrument . 63 level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement . a financial instrument 's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement . our investment portfolio is comprised of debt and equity instruments of privately held companies for which quoted prices falling within the categories of level 1 and level 2 inputs are not available . therefore , we value all of our investments at fair value , as determined in good faith by our board of directors , using level 3 inputs , as further described below . due to the inherent uncertainty in the valuation process , our board of directors ' estimate of fair value may differ significantly from the values that would have been used had a ready market for the securities existed , and the differences could be material . in addition , changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned . debt and equity securities that are not publicly traded and for which a limited market does not exist are valued at fair value as determined in good faith by our board of directors . there is no single standard for determining fair value in good faith , as fair value depends upon circumstances of each individual case . in general , fair value is the amount that we might reasonably expect to receive upon the current sale of the security . we evaluate the investments in portfolio companies using the most recently available portfolio company financial statements and forecasts . we also consult with the portfolio company 's senior management to obtain further updates on the portfolio company 's performance , including information such as industry trends , new product development and other operational issues . additionally , we consider some or all of the following factors : financial standing of the issuer of the security ; comparison of the business and financial plan of the issuer with actual results ; the size of the security held as it relates to the liquidity of the market for such security ; pending public offering of common stock by the issuer of the security ; pending reorganization activity affecting the issuer , such as merger or debt restructuring ; ability of the issuer to obtain needed financing ; changes in the economy affecting the issuer ; financial statements and reports from portfolio company senior management and ownership ; the type of security , the security 's cost at the date of purchase and any contractual restrictions on the disposition of the security ; discount from market value of unrestricted securities of the same class at the time of purchase ; special reports prepared by analysts ; information as to any transactions or offers with respect to the security and or sales to third parties of similar securities ; the issuer 's ability to make payments and the type of collateral ; the current and forecasted earnings of the issuer ; statistical ratios compared to lending standards and to other similar securities ; and other pertinent factors . in making the good faith determination of the value of debt securities , we start with the cost basis of 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.	cash flows for the year ended december 31 , 2010 , we experienced a net decrease in cash and cash equivalents in the amount of $ 0.4 million . during that period , our operating activities used $ 97.5 million in cash , consisting primarily of new portfolio investments of $ 173.6 million , partially offset by repayments of loans received and proceeds from sales of investments of $ 54.9 million . in addition , financing activities provided $ 97.1 million of cash , consisting primarily of proceeds from a public stock offering of $ 41.2 million , borrowings under sba guaranteed debentures payable of $ 102.8 million , offset by cash dividends paid in the amount of $ 20.9 million , repayments of sba guaranteed debentures of $ 22.3 million and financing fees paid in the amount of $ 3.5 million . at december 31 , 2010 , we had $ 54.8 million of cash and cash equivalents on hand . for the year ended december 31 , 2009 , we experienced a net increase in cash and cash equivalents in the amount of $ 28.0 million . during that period , our operating activities used $ 13.4 million in cash , consisting primarily of new portfolio investments of $ 48.5 million , partially offset by repayments of loans received and proceeds from sales of investments of $ 21.4 million . we generated $ 41.4 million of cash from financing activities , consisting of proceeds from public stock offerings of $ 47.3 million and proceeds from borrowings under sba guaranteed debentures payable of $ 6.8 million , offset by financing fees paid of $ 0.4 million and cash dividends paid of $ 12.3 million . at december 31 , 2009 , we had $ 55.2 million of cash and cash equivalents on hand . for the year ended december 31 , 2008 , we experienced a net increase in cash and cash equivalents in the amount of $ 5.4 million .
substantially offsetting these increases were ( i ) lower volumes which decreased our revenues by $ 188 million ; ( ii ) divestitures of our puerto rico operations and certain other collection and landfill assets as well as the december 2014 sale of our wheelabrator business , which decreased our revenues by $ 90 million and ( iii ) foreign currency translation of $ 61 million related to our canadian operations ; operating expenses of $ 9,002 million in 2014 , or 64.3 % of revenues , compared with $ 9,112 million , or 65.2 % of revenues , in 2013. this decrease of $ 110 million is largely driven by our decline in collection volumes and divestitures , both of which affect several of our operating expense categories , particularly labor costs , transfer and disposal costs , and fuel costs ; selling , general and administrative expenses of $ 1,481 million in 2014 , or 10.6 % of revenues , compared with $ 1,468 million , or 10.5 % of revenues , in 2013. this increase of $ 13 million is driven mainly by higher litigation settlements ; restructuring costs of $ 82 million in 2014 compared to $ 18 million in 2013. the 2014 restructuring charges relate to the consolidation and realignment of several corporate functions . we anticipate saving in excess of $ 100 million annually from these actions when fully implemented in 2015 ; income from operations of $ 2,299 million , or 16.4 % of revenues , in 2014 compared with $ 1,079 million , or 7.7 % of revenues , in 2013 , the increase of which is primarily attributable to the $ 519 million gain on the sale of our wheelabrator business in december 2014 and impairment charges of $ 355 million recognized in 2014 compared to impairment charges of $ 981 million recognized in 2013 discussed below ; net income attributable to waste management , inc. of $ 1,298 million , or $ 2.79 per diluted share for 2014 , as compared with $ 98 million , or $ 0.21 per diluted share for 2013 , the increase of which is primarily attributable to the increase in income from operations discussed above ; and in 2014 , we returned $ 1,293 million to our shareholders through dividends and share repurchases compared with $ 922 million in 2013. the following explanation of certain items that impacted the comparability of our 2014 results with 2013 has been provided to support investors ' understanding of our performance . our 2014 results were affected by the following : the recognition of net pre-tax gains of $ 515 million , which includes the $ 519 million gain on the sale of our wheelabrator business . these items had a positive impact of $ 1.10 on our diluted earnings per share ; net income was negatively impacted by the recognition of net pre-tax charges aggregating $ 420 million primarily related to ( i ) $ 272 million of charges to impair our oil and gas producing properties ; ( ii ) $ 69 million of charges to impair investments related to waste diversion technology companies ; ( iii ) $ 31 million of litigation settlements ; ( iv ) $ 10 million of goodwill impairment charges associated with our recycling operations ; and ( v ) other charges to write down the carrying value of assets to their estimated fair values related to certain of our operations . these items had a negative impact of $ 0.68 on our diluted earnings per share ; and the recognition of pre-tax restructuring charges of $ 82 million , which had a negative impact of $ 0.11 on our diluted earnings per share . the following explanation of certain items that impacted the comparability of our 2013 results with 2012 has been provided to support investors ' understanding of our performance . our 2013 results were affected by the following : the recognition of net pre-tax charges aggregating $ 1.0 billion , primarily related to ( i ) a $ 483 million charge to impair goodwill associated with our wheelabrator business ; ( ii ) $ 262 million of charges to 33 impair certain landfills , primarily in our eastern canada area ; ( iii ) $ 144 million of charges to write down the carrying value of three waste-to-energy facilities and ( iv ) $ 71 million of impairment charges relating to investments in waste diversion technology companies . these items had a negative impact of $ 1.91 on our diluted earnings per share ; and the recognition of pre-tax charges aggregating $ 23 million primarily related to our acquisitions of greenstar and rci as well as our 2012 restructuring and other charges . these items had a negative impact of $ 0.03 on our diluted earnings per share . our 2012 results were affected by the following : the recognition of pre-tax impairment charges aggregating $ 109 million attributable primarily to facilities in our medical waste services business and investments in waste diversion technologies . these items had a negative impact of $ 0.17 on our diluted earnings per share ; the recognition of pre-tax costs aggregating $ 82 million primarily related to our july 2012 restructuring as well as integration costs associated with our acquisition of oakleaf . these items had a negative impact of $ 0.11 on our diluted earnings per share ; the recognition of a pre-tax charge of $ 10 million related to the withdrawal from an underfunded multiemployer pension plan and a pre-tax charge of $ 6 million resulting from a labor union dispute . these items had a negative impact of $ 0.02 on our diluted earnings per share ; and the recognition of pre-tax charges aggregating $ 10 million related to an accrual for legal reserves and the impact of a decrease in the risk-free discount rate used to measure our environmental remediation liabilities . story_separator_special_tag for unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace , the expansion effort must meet all of the criteria listed above . these criteria are evaluated by our field-based engineers , accountants , managers and others to identify potential obstacles to obtaining the permits . once the unpermitted airspace is included , our policy provides that airspace may continue to be included in remaining permitted and expansion airspace even if certain of these criteria are no longer met as long as we continue to believe we will ultimately obtain the permit , based on the facts and circumstances of a specific landfill . in these circumstances , continued inclusion must be approved through a landfill-specific review process that includes approval by our chief financial officer and a review by the audit committee of our board of directors on a quarterly basis . of the 23 landfill sites with expansions included at december 31 , 2014 , five landfills required the 38 chief financial officer to approve the inclusion of the unpermitted airspace . two of these landfills required approval by our chief financial officer because of community or political opposition that could impede the expansion process . the remaining three landfills required approval due to local zoning restrictions or because the permit application processes do not meet the one- or five-year requirements . when we include the expansion airspace in our calculations of remaining permitted and expansion airspace , we also include the projected costs for development , as well as the projected asset retirement costs related to final capping , closure and post-closure of the expansion in the amortization basis of the landfill . once the remaining permitted and expansion airspace is determined in cubic yards , an airspace utilization factor ( auf ) is established to calculate the remaining permitted and expansion capacity in tons . the auf is established using the measured density obtained from previous annual surveys and is then adjusted to account for future settlement . the amount of settlement that is forecasted will take into account several site-specific factors including current and projected mix of waste type , initial and projected waste density , estimated number of years of life remaining , depth of underlying waste , anticipated access to moisture through precipitation or recirculation of landfill leachate , and operating practices . in addition , the initial selection of the auf is subject to a subsequent multi-level review by our engineering group , and the auf used is reviewed on a periodic basis and revised as necessary . our historical experience generally indicates that the impact of settlement at a landfill is greater later in the life of the landfill when the waste placed at the landfill approaches its highest point under the permit requirements . after determining the costs and remaining permitted and expansion capacity at each of our landfills , we determine the per ton rates that will be expensed as waste is received and deposited at the landfill by dividing the costs by the corresponding number of tons . we calculate per ton amortization rates for each landfill for assets associated with each final capping event , for assets related to closure and post-closure activities and for all other costs capitalized or to be capitalized in the future . these rates per ton are updated annually , or more often , as significant facts change . it is possible that actual results , including the amount of costs incurred , the timing of final capping , closure and post-closure activities , our airspace utilization or the success of our expansion efforts could ultimately turn out to be significantly different from our estimates and assumptions . to the extent that such estimates , or related assumptions , prove to be significantly different than actual results , lower profitability may be experienced due to higher amortization rates or higher expenses ; or higher profitability may result if the opposite occurs . most significantly , if it is determined that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset , we may be required to recognize an asset impairment or incur significantly higher amortization expense . if at any time management makes the decision to abandon the expansion effort , the capitalized costs related to the expansion effort are expensed immediately . environmental remediation liabilities we are subject to an array of laws and regulations relating to the protection of the environment . under current laws and regulations , we may have liabilities for environmental damage caused by operations , or for damage caused by conditions that existed before we acquired a site . these liabilities include potentially responsible party ( prp ) investigations , settlements , and certain legal and consultant fees , as well as costs directly associated with site investigation and clean up , such as materials , external contractor costs and incremental internal costs directly related to the remedy . we provide for expenses associated with environmental remediation obligations when such amounts are probable and can be reasonably estimated . we routinely review and evaluate sites that require remediation and determine our estimated cost for the likely remedy based on a number of estimates and assumptions . where it is probable that a liability has been incurred , we estimate costs required to remediate sites based on site-specific facts and circumstances . we routinely review and evaluate sites that require remediation , 39 considering whether we were an owner , operator , transporter , or generator at the site , the amount and type of waste hauled to the site and the number of years we were associated with the site . next , we review the same type of information with respect to other named and unnamed prps . estimates of the costs for the likely remedy are then either developed using our internal resources or by third-party environmental engineers or other service providers .	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.	provision for bad debts our provision for bad debts decreased in 2013 as compared to 2012 primarily as a result of ( i ) the collection of certain fully reserved receivables related to our puerto rico operations and ( ii ) resolution of billing delay issues experienced during 2012 in our wmsbs organization . other in 2014 , increased costs resulting principally from litigation settlements were partially offset by a decline in controllable costs associated with advertising and travel and entertainment costs . in 2013 , controllable costs associated with ( i ) building and equipment ; ( ii ) advertising ; ( iii ) computer and telecommunication ; ( iv ) travel and entertainment and ( v ) seminars and education declined primarily as a result of our july 2012 restructuring and focus on cost-control initiatives . depreciation and amortization depreciation and amortization includes ( i ) depreciation of property and equipment , including assets recorded for capital leases , on a straight-line basis from three to 50 years ; ( ii ) amortization of landfill costs , including those incurred and all estimated future costs for landfill development , construction and asset retirement costs arising from closure and post-closure , on a units-of-consumption method as landfill airspace is consumed over the total estimated remaining capacity of a site , which includes both permitted capacity and expansion capacity that meets our company-specific criteria for amortization purposes ; ( iii ) amortization of landfill asset retirement costs arising from final capping obligations on a units-of-consumption method as airspace is consumed over the estimated capacity associated with each final capping event and ( iv ) amortization of intangible assets with a definite life , using either a 150 % declining balance approach or a straight-line basis over the definitive terms of the related agreements , which are generally from two to 15 years depending on the type of asset .
in december 2014 , we acquired psp for $ 145.5 million , net of cash acquired , and entered the market for single wafer wet etch , clean , and surface preparation equipment targeting high growth segments in advanced packaging , mems , and compound semiconductor . for the period from the acquisition date through december 31 , 2014 , we generated $ 7.9 million of net sales 21 and incurred a loss from operations before tax of $ 3.0 million . the loss from operations was attributable to the write-up of existing inventory on the date of acquisition to fair value , which eliminated the gross margin on the sale of those systems . we are seeing some signs of improved conditions in our hdd market as cloud related expansion continues to demand higher capacity drives . and although we have started to see signs of capacity constraints in some process areas and there was an increase in orders for some of our equipment at the end of 2014 , low growth is expected to continue . future demand for our systems sold in the hdd industry is unclear and orders are expected to fluctuate from quarter to quarter . results of operations years ended december 31 , 2014 and 2013 the following table presents revenue and expense line items reported in our consolidated statements of operations for fiscal 2014 and 2013 and the period-over-period dollar and percentage changes for those line items . our results of operations are reported as one business segment . replace_table_token_6_th * not meaningful net sales the following is an analysis of sales by region : replace_table_token_7_th ( 1 ) consists of europe , the middle east , and africa 22 total sales increased in 2014 from 2013 primarily due to an increase in the volume of mocvd systems , largely due to customers increasing their manufacturing capacity . pricing was not a significant driver of the change in total sales . total sales also increased as a result of our acquisition of psp , which contributed $ 7.9 million to 2014 results . the increase in sales was partially offset by a decline in volume of our systems sold to data storage customers , primarily due to our customers ' unwillingness to make technology investments given the overcapacity in the hard drive industry . by region , sales decreased in the united states in 2014 primarily due to a decrease in purchases by our data storage customers . in asia pacific , sales increased as a result of mocvd sales growth in korea and china . in emea , sales increased as a result of growth in both mocvd and ion beam and other data storage system sales . we believe there will continue to be year-to-year variations in the geographic distribution of sales in the future . between 2014 and 2013 , total orders increased $ 178.8 million , or 54 % , to $ 510.0 million . the increase is primarily attributable to a 74 % increase in orders of our mocvd systems largely as customers in china , europe , and korea begin to add manufacturing capacity . ion beam and other data storage system and service orders increased 5 % between 2014 and 2013 , but given the slow growth and overcapacity in the hard drive industry , we expect demand to be weak as customers continue to only make select technology purchases . one of the performance measures we use as a leading indicator of the business is the book-to-bill ratio . the ratio is defined as orders recorded in a given period divided by revenue recognized in the same period . a ratio greater than one indicates we are adding orders faster than we are recognizing revenue . in 2014 , the ratio was 1.3 , an improvement over 2013 , when it was 1.0. our backlog as of december 31 , 2014 was $ 286.7 million , which was higher than the ending backlog as of december 31 , 2013 of $ 143.3 million . as of december 31 , 2014 , $ 23.4 million of the backlog was from our acquisition of psp . during the year ended december 31 , 2014 we recorded backlog adjustments of approximately $ 1.6 million relating to orders that no longer met our bookings criteria . for certain sales arrangements we require a deposit for a portion of the sales price prior to manufacturing a system for a customer . as of december 31 , 2014 and 2013 , we had customer deposits of $ 73.0 million and $ 27.5 million , respectively . gross profit replace_table_token_8_th gross margins increased from the prior year primarily due to higher mocvd sales volume , a favorable mix of products , and favorable warranty and service spending . this was partially offset by our acquisition of psp , whereby we wrote up existing inventory on the date of acquisition to fair value , unfavorable overhead rates , primarily driven by our ald business , and declines in margins from our ion beam and other data storage system sales that resulted from reduced sales volume , higher inventory reserves , and unfavorable overhead rates . selling , general , and administrative selling , general , and administrative expenses increased primarily due to an increase in personnel and personnel-related expenses , including an increase in share-based compensation of $ 3.5 million as well as additional costs from our ald business , which was acquired in the fourth quarter of 2013. our acquisition of psp in the fourth quarter of 2014 also contributed to the increase in selling , general , and administrative expenses , including $ 3.2 million of acquisition related costs . story_separator_special_tag warranty costs our warranties are typically valid for one year from the date of final acceptance . we estimate the costs that may be incurred under the warranty we provide and record a liability in the amount of such costs at the time the related revenue is recognized . estimated warranty costs are determined by analyzing specific product and historical configuration statistics and regional warranty support costs . our warranty obligation is affected by product failure rates , material usage , and labor costs incurred in correcting product failures during the warranty period . unforeseen component failures or exceptional component performance can also result in changes to warranty costs . if actual warranty costs differ substantially from our estimates , revisions to the estimated warranty liability would be required . goodwill and intangible assets goodwill is tested for impairment at least annually in the fourth quarter of our fiscal year . we may first perform a qualitative assessment of whether it is more likely than not that a reporting unit 's fair value is less than its carrying amount , and , if so , we then apply the two-step impairment test . the two-step impairment test first compares the fair value of our reporting units to their carrying amount ( i.e . , book value ) . if the fair value of the reporting unit exceeds its carrying amount , goodwill is not impaired and we are not required to perform further testing . if the carrying amount of the reporting unit exceeds its fair value , we determine the implied fair value of the reporting unit 's goodwill and if the carrying amount of the reporting unit 's goodwill exceeds its implied fair value , then we record an impairment loss equal to the difference . we determine the fair value of our reporting units based on a discounted future cash flow approach since market prices are not available for our reporting units . under this approach , we calculate the fair value of a reporting unit based on the present value of estimated future cash flows . determining the fair value of a reporting unit involves the use of significant estimates and assumptions . these estimates and assumptions include the revenue growth rates and operating profit margins that are used to project future cash flows , working capital requirements , residual growth rates , discount rates , and future economic and market conditions . we base our fair value estimates on assumptions that are consistent with information used by the business for planning purposes and that we believe to be reasonable ; however , actual future results could differ from those estimates . changes in judgments could materially affect the value of the reporting unit . we reconcile the aggregate fair value of our reporting units to our adjusted market capitalization as a supporting calculation . the adjusted market capitalization is calculated by multiplying the average share price of our common stock for the last ten trading days prior to the measurement date by the number of outstanding common shares and adding a control premium . the carrying values of indefinite-lived intangible assets are reviewed for recoverability on a quarterly basis . the facts and circumstances considered include the recoverability of the cost of other intangible assets from future cash flows to be derived from the use of the asset . it is not possible for us to predict the likelihood of any possible future impairments or , if such an impairment were to occur , the magnitude of any impairment . 30 intangible assets with finite useful lives , including purchased technology , customer-related intangible assets , patents , trademarks , covenants not-to-compete , and software licenses , are subject to amortization over the expected period of economic benefit to us . we evaluate whether events or circumstances have occurred that warrant a revision to the remaining useful lives of intangible assets . in cases where a revision is deemed appropriate , the remaining carrying amounts of the intangible assets are amortized over the revised remaining useful life . accounting for business combinations the allocation of the purchase price for acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired , including in-process research and development , and liabilities assumed based on their respective fair values . the estimates we make include expected cash flows , expected cost savings , and the appropriate weighted average cost of capital . we complete these assessments as soon as practical after the acquisition closing dates . any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill . fair value of financial instruments the measurement of fair value for our financial instruments is based on the authoritative guidance which establishes a fair value hierarchy that is based on three levels of inputs and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value . see note 3 , fair value measurements , in the notes to the consolidated financial statements for additional information . income taxes we are required to estimate our income taxes in each of the jurisdictions in which we operate . deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes , as well as the tax effect of carry forwards . we record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized . realization of our net deferred tax assets is dependent on future taxable income . we recognize the effect of income tax positions only if those positions are more likely than not of being sustained . we reflect changes in recognition or measurement in 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.	cash flows from operating activities replace_table_token_13_th net cash provided by operations was $ 42.1 million in fiscal year 2014 , and was due to the net loss of $ 66.9 million , adjustments for non-cash items of $ 54.3 million , and an increase in cash flow from operating activities due to changes in operating assets and liabilities of $ 54.7 million . the changes in operating assets and liabilities was largely attributable to an increase in customer deposits and deferred revenue and income taxes payable , net , offset by an increase in accounts receivable . net cash provided by operations was $ 0.7 million in fiscal year 2013 , and was due to the net loss of $ 42.3 million , adjustments for non-cash items of $ 22.5 million , and an increase in cash flow from operating activities due to changes in operating assets and liabilities of $ 20.5 million . the changes in operating assets and liabilities was largely attributable to decreases in accounts receivable offset by decreases in customer deposits and deferred revenue and income taxes payable , net . cash flows from investing activities replace_table_token_14_th the cash provided by investing activities in 2014 was primarily attributable to net sales of marketable securities and sales of lab tools , partially offset by our purchase of psp , net of cash acquired , and other capital expenditures . our cash used in investing activities in 2013 was primarily driven by our purchase of ald , net of cash acquired , net purchases of short-term investments , and other capital expenditures .
the physician receives no incremental fee for an enhancement procedure under the tlc lifetime commitment ® . accordingly , a portion of the professional fee paid at the time of the initial procedure to the attending surgeon relates to the future enhancement procedures to be performed under the separately-priced tlc lifetime commitment ® and qualifies for deferral as a direct and incremental cost . the company uses the same historical experience to amortize deferred professional fees that it uses to amortize deferred revenue . other costs expected to be incurred if a complication were to occur are accrued at the point of procedure as part of the company 's general enhancement accrual based on historical trend estimates . under the terms of management service agreements , the company provides non-clinical services , which include facilities , staffing , equipment lease and maintenance , marketing and administrative services to refractive and secondary care practices in return for management fees . for third-party payor programs and corporations with arrangements with tlc vision , the company 's management fee and the fee charged by the surgeon are both discounted in proportion to the discount afforded to these organizations . while the company does not direct the manner in which the surgeons practice medicine , the company does direct the day-to-day non-clinical operations of the centers . the management service agreements typically are for an extended period of time , ranging from five to 15 years . management fees are equal to the net revenue of the physician practice , less amounts retained by the physician groups . included in costs of revenue are the laser fees payable to laser manufacturers for royalties , doctors ' compensation , use and maintenance of the lasers , variable expenses for consumables and facility fees , as well as center costs associated with personnel , facilities and depreciation of center assets . marketing and sales and general and administrative expenses include expenses that are not directly related to the provision of laser correction services or cataract services . the company serves surgeons who performed approximately 193,300 procedures , including refractive and cataract procedures , at the company 's centers or using the company 's equipment during the year ended december 31 , 2009. during the year ended december 31 , 2009 , the company 's refractive center and access procedure volume , including minority owned centers , decreased to 112,600 from 149,200 in the year ended december 31 , 2008 , a decrease of 36,600 procedures ( 25 % ) . being an elective procedure , laser vision correction volumes fluctuate due to changes in economic and stock market conditions , unemployment rates , consumer confidence and political uncertainty , which management believes were the primary causes for the significant year over year decline . demand for laser vision correction also is affected by perceived safety and effectiveness concerns given the lack of long-term follow-up data . 32 below is a summary of selected operating data , including center locations and procedure volume , over the trailing five year period : replace_table_token_1_th developments during 2009 bankruptcy and reorganization on december 21 , 2009 , the company and two of its wholly owned subsidiaries , tlc vision ( usa ) corporation and tlc management services , inc. , filed the chapter 11 petitions in the u.s. court . the chapter 11 cases are being jointly administered under the caption in re tlc vision ( usa ) corporation , et al . , case no . 09-14473. on the same day , the company also filed the canadian petition under the ccaa in the canadian court . on december 23 , 2009 , the canadian court recognized the company 's chapter 11 case as a foreign main proceeding and granted the company certain other relief . no other operations of the company , its affiliates or subsidiaries were involved in the filings . see part i , item 1 , business bankruptcy proceedings , for additional information . restructuring activities during 2009 , the company accelerated its cost savings initiatives that focused on employee reductions , closures of refractive centers and the reduction in refractive access routes . the restructuring efforts during the year ended december 31 , 2009 resulted in the closure of three majority-owned refractive centers and an approximate 15 % reduction of the company 's workforce through involuntary employee separations . in addition to the cost savings initiatives , the restructuring efforts also included pre-petition financial and legal advisor fees associated with credit facility negotiations . as a result , the company incurred pre-petition restructuring charges included in other expenses totaling $ 25.9 million for the year ended december 31 , 2009 , which primarily included $ 15.6 million of financial and legal advisor costs , $ 2.6 million for employee severance and benefits , $ 4.5 million for the write-off of investments in and a receivable due from notal vision ® , $ 0.8 million of center restructuring and closing costs , and $ 1.6 million of losses on the divestitures of various ambulatory surgical center investments . see note 4 , restructuring , to the consolidated financial statements in part ii , item 8 , financial statements and supplementary data . all restructuring costs incurred subsequent to the december 21 , 2009 bankruptcy filings that are specifically associated with the company 's post-petition bankruptcy proceedings have been separately classified as reorganization items , net , on the consolidated statement of operations . 33 stock market compliance as of december 31 , 2009 , the company 's common shares were suspended from trading on both the nasdaq and the tsx . the company 's common shares were delisted from the nasdaq and the tsx effective january 18 , 2010 and january 21 , 2010 , respectively . the company 's common shares currently trade on the over-the-counter bulletin board under the ticker symbol tlcvq . story_separator_special_tag year ended december 31 , 2009 compared to the year ended december 31 , 2008 total revenues for the year ended december 31 , 2009 were $ 230.2 million , a decrease of $ 45.5 million ( 17 % ) from revenues of $ 275.7 million for the year ended december 31 , 2008. the decrease in revenue was primarily attributable to the decline in refractive centers and refractive access procedures , partially offset by higher cataract volume and growth in eye care . revenues from refractive centers for the year ended december 31 , 2009 were $ 107.3 million , a decrease of $ 44.1 million ( 29 % ) from revenues of $ 151.4 million for the year ended december 31 , 2008. the decrease in revenues from refractive centers resulted primarily from lower center procedure volume , which accounted for a decrease in revenues of approximately $ 39.9 million . the remaining revenue decline of $ 4.2 million was the result of decreased revenue per procedure . for the year ended december 31 , 2009 , majority-owned center procedures were approximately 63,600 , a decrease of 24,700 ( 28 % ) from 88,300 procedures for the year ended december 31 , 2008. the procedure decline was attributable to the weakened u.s. economy , which has negatively impacted consumer discretionary spending . revenues from doctor services for the year ended december 31 , 2009 were $ 91.9 million , a decrease of $ 3.7 million ( 4 % ) from revenues of $ 95.6 million for the year ended december 31 , 2008. the revenue decrease from doctor services was due principally to procedure shortfalls in refractive access , partially offset by increases in the company 's mobile cataract and other segments . revenues from the refractive access services segment for the year ended december 31 , 2009 were $ 24.0 million , a decrease of $ 5.2 million ( 18 % ) from revenues of $ 29.2 million for the year ended december 31 , 2008. for the year ended december 31 , 2009 , excimer procedures declined by 9,000 ( 20 % ) from the prior year period on lower customer demand , which accounted for a decrease in revenues of approximately $ 5.9 million . this decrease was partially offset by higher average pricing and mobile intralase revenues , which together increased revenues by approximately $ 0.7 million . revenues from the company 's mobile cataract segment for the year ended december 31 , 2009 were $ 41.8 million , an increase of $ 0.9 million ( 2 % ) from revenues of $ 40.9 million for the year ended december 31 , 2008. the increase in mobile cataract revenue was due to increased surgical procedure volume of 4 % and higher surgical average sales price of 3 % , partially offset by a $ 1.4 million ( 50 % ) decline in foresee php ® revenue on a 49 % unit volume reduction on weakened consumer spending and the 4 th quarter 2009 termination of the foresee php ® distribution agreement . revenues from the company 's businesses that manage cataract and secondary care centers for the year ended december 31 , 2009 were $ 26.1 million , an increase of $ 0.6 million ( 2 % ) from revenues of $ 25.5 million for the year ended december 31 , 2008. the revenue increase was primarily due to an increase in procedure volume and higher priced 37 product mix at the company 's remaining ambulatory surgical centers , partially offset by the early third quarter 2009 disposal of a majority-owned ambulatory surgical center , which contributed 1,900 procedures during the year ended december 31 , 2009 compared to 3,200 procedures during the year ended december 31 , 2008. revenues from eye care for the year ended december 31 , 2009 were $ 31.0 million , an increase of $ 2.4 million ( 8 % ) from revenues of $ 28.6 million for the year ended december 31 , 2008. this increase was primarily due to a 10 % increase in the total number of franchisees . total cost of revenues ( excluding amortization expense for all segments ) for the year ended december 31 , 2009 was $ 167.0 million , a decrease of $ 27.9 million ( 14 % ) from the cost of revenues of $ 194.9 million for the year ended december 31 , 2008. the cost of revenues from refractive centers for the year ended december 31 , 2009 was $ 83.8 million , a decrease of $ 27.0 million ( 24 % ) from cost of revenues of $ 110.8 million for the year ended december 31 , 2008. this decrease was attributable to a $ 13.7 million cost of revenue decline related to lower procedure volume , $ 12.7 million in fixed cost reductions and $ 0.6 million in decreased variable costs per procedure . gross margin for centers was 21.9 % during the year ended december 31 , 2009 , down from prior year gross margin of 26.8 % as the company 's cost saving initiatives could not outweigh the revenue decline caused by the refractive center procedure decline . the cost of revenues from doctor services for the year ended december 31 , 2009 was $ 68.3 million , a decrease of $ 2.8 million ( 4 % ) from cost of revenues of $ 71.1 million for the year ended december 31 , 2008. gross margins increased to 25.7 % during the year ended december 31 , 2009 from 25.6 % in the prior year period . the decrease in cost of revenues was due to the following : the cost of revenues from refractive access segment for the year ended december 31 , 2009 was $ 19.2 million , a decrease of $ 4.4 million ( 19 % ) from cost of revenues of $ 23.6 million for 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 since the bankruptcy petitions date , as further described in part i , item 1 , business - bankruptcy proceedings , our liquidity position has improved . at december 31 , 2009 , we had unrestricted cash and cash equivalents of $ 14.6 million compared to $ 4.5 million at december 31 , 2008. the improvement in liquidity primarily resulted from $ 17.4 million of additional net borrowings under the revolving portion of the company 's pre-petition credit facility , advances of $ 7.5 million under the senior dip credit agreement and general savings on various cost reduction initiatives implemented during 2009 , partially offset by restructuring and reorganization costs . 39 the following table presents a summary of our cash flows for the years ended december 31 : replace_table_token_2_th cash provided by operating activities net cash provided by operating activities was $ 4.8 million for the year ended december 31 , 2009. the cash flows provided by operating activities during the year ended december 31 , 2009 were primarily comprised of the ( $ 27.3 ) million net loss plus non-cash items including depreciation and amortization of $ 15.9 million , a $ 2.6 million loss on a post-petition rejection of an unexpired lease , a write-off of notal vision ® related assets of $ 4.5 million , intangible impairment charges of $ 1.0 million , loss on business divestitures of $ 1.6 million , non-cash compensation charges of $ 0.9 million , an inventory write-down of $ 0.8 million and a $ 5.5 million change in working capital , partially offset by earnings from equity investments of $ 1.3 million . our 2009 cash flow from operating activities was favorably impacted by the say of payment of liabilities subject to compromise , including accounts payable and interest payable , resulting from the bankruptcy filings . cash used in investing activities net cash used in investing activities was $ 2.3 million for the year ended december 31 , 2009. the cash used in investing activities included capital expenditures of $ 2.0 million and acquisitions and investments of $ 5.2 million .
the net profits interest is passive in nature and neither the trust nor the trustee has any management control over or responsibility for costs relating to the operation of the underlying properties . additionally , third parties operate substantially all of the wells on the underlying properties and , therefore , enduro is not in a position to control the timing of development efforts , associated costs , or the rate of production of the reserves . the trust is required to make monthly cash distributions of substantially all of its monthly cash receipts , after deducting the trust 's administrative expenses , to holders of record ( generally the last business day of each calendar month ) on or before the 10 th business day after the record date . the net profits interest is entitled to a share of the profits from and after july 1 , 2011 attributable to production occurring on or after june 1 , 2011. the amount of trust revenues and cash distributions to trust unitholders depends on , among other things : · oil and natural gas sales prices ; · volumes of oil and natural gas produced and sold attributable to the underlying properties ; · production and development costs ; · price differentials ; · potential reductions or suspensions of production ; · the amount and timing of trust administrative expenses ; and · the establishment , increase , or decrease of reserves for approved development expenses or future liabilities of the trust . generally , enduro receives cash payment for oil production 30 to 60 days after it is produced and for natural gas production 60 to 90 days after it is produced . 2016 recap and 2017 outlook oil and natural gas prices declined significantly in the second half of 2014 and have remained low , negatively impacting the fair value of the net profits interest as well as revenues and distributable income available to unitholders . further , depressed commodity pricing reduced development activity in 2015 and 2016 , thereby hindering the ability to abate natural production declines on the underlying properties . the average nymex oil price for the production months included in 2016 distributions decreased 31 % from the prior year , significantly decreasing the revenues and distributable income available to unitholders in 2016. although nymex oil prices have recovered to over $ 50 per bbl , the continued depressed commodity price environment has and will continue to negatively affect the amount of cash flow available for distribution to the trust unitholders in 2017. development activity was limited in 2016 , leading to oil and natural gas declines as there was no new production to offset natural declines . the trust 's oil and natural gas volumes are anticipated to decline again in 2017 due to continued minimal capital expenditures . additionally , continued low commodity prices or further price declines may reduce the amount of oil and natural gas that enduro and its third party operators can economically produce . in 2017 , development activity on the underlying properties is anticipated to be focused on the east texas / north louisiana area . operators have recently enhanced completion technology on haynesville wells , resulting in improved economics . enduro currently anticipates over 50 % of the capital expenditures to be focused on the east texas / north louisiana area , with 6 gross wells planned to be drilled during 2017. the operators of the properties underlying the trust continue to evaluate planned capital expenditures during 2017 , but based on currently available information , enduro anticipates 2017 capital expenditures to range from $ 5 to $ 8 million attributable to the properties in which the trust owns a net profits interest , or $ 4 to $ 6.4 million net to the trust 's 80 % net profits interest . 29 results of operations the following table displays oil and natural gas sales volumes and average prices ( excluding the effects of the hedging arrangements discussed in note 5 of the notes to financial statements in item 8 of this form 10-k ) from the underlying properties , representing the amounts included in the net profits calculation for the distributions paid during the years ended december 31 , 2016 , 2015 and 2014. replace_table_token_11_th 30 computation of income from net profits interest received by the trust in connection with the closing of the initial public offering in november 2011 , enduro contributed the net profits interest to the trust in exchange for 33,000,000 newly issued trust units . the net profits interest entitles the trust to receive 80 % of the net profits from the sale and production of oil and natural gas attributable to the underlying properties that are produced during the term of the conveyance , which commenced on july 1 , 2011. the trust 's income from net profits interest consists of monthly net profits attributable to the income from net profits interest . net profits income for the years ended december 31 , 2016 , 2015 , and 2014 was determined as shown in the following table : replace_table_token_12_th the following table displays oil and natural gas sales volumes and average prices ( excluding the effects of the hedging arrangements discussed in note 5 of the notes to financial statements in item 8 of this form 10-k ) from the underlying properties , representing the amounts included in the net profits calculation for distributions paid during the years ended december 31 , 2016 , 2015 , and 2014 : replace_table_token_13_th 31 years ended december 31 , 2016 and 2015 income from net profits interest for the year ended december 31 story_separator_special_tag monthly operating expenses and capital expenditures represent incurred expenses , and as a result , represent accrued expenses as well as expenses paid during the period . the financial statements of the trust are prepared on the following basis : ( a ) income from net profits interest is recorded when distributions are received by the trust ; ( b ) distributions to trust unitholders are recorded when paid by the trust ; ( c ) trust general and administrative expenses ( which includes the trustee 's fees as well as accounting , engineering , legal , and other professional fees ) are recorded when paid ; ( d ) cash reserves for trust expenses may be established by the trustee for certain future expenditures that would not be recorded as contingent liabilities under accounting principles generally accepted in the united states of america ( gaap ) ; ( e ) amortization of the net profits interest in oil and natural gas properties is calculated on a unit-of-production basis and is charged directly to the trust corpus . such amortization does not affect cash earnings of the trust ; and ( f ) the net profits interest in oil and natural gas properties is periodically assessed whenever events or circumstances indicate that the aggregate value may have been impaired below its total capitalized cost based on the underlying properties . if an impairment loss is indicated by the carrying amount of the assets exceeding the sum of the undiscounted expected future net cash flows of the net profits interest , then an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its estimated fair value determined using discounted cash flows . the financial statements of the trust differ from financial statements prepared in accordance with gaap because revenues are not accrued in the month of production ; certain cash reserves may be established for contingencies which would not be accrued in financial statements prepared in accordance with gaap ; general and administrative expenses are recorded when paid instead of when incurred ; and amortization of the net profits interest calculated on a unit-of-production basis is charged directly to trust corpus instead of as an expense . while these statements differ from financial statements prepared in accordance with gaap , the modified cash basis of reporting revenues , expenses , and distributions is considered to be the most meaningful because monthly distributions to the trust unitholders are based on net cash receipts . this comprehensive basis of accounting other than gaap corresponds to the accounting permitted for royalty trusts by the sec as specified by staff accounting bulletin topic 12 : e , financial statements of royalty trusts . the preparation of financial statements requires the trust to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period . actual results could differ from those estimates . oil and natural gas reserves . the proved oil and natural gas reserves for the underlying properties are estimated by independent petroleum engineers . reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof . estimates by different engineers often vary , sometimes significantly . in addition , physical factors such as the results of drilling , testing and production subsequent to the date of an estimate , as well as economic factors such as changes in product prices , may justify revision of such estimates . because proved reserves are required to be estimated using prices at the date of the evaluation , estimated reserve quantities can be significantly impacted by changes in product prices . accordingly , oil and natural gas quantities ultimately recovered and the timing of production may be substantially different from original estimates . the financial accounting standards board requires supplemental disclosures for oil and gas producers based on a standardized measure of discounted future net cash flows relating to proved oil and natural gas reserve quantities . under this disclosure , future cash inflows are computed by applying the average prices during the 12-month period prior to fiscal year-end , determined as an unweighted arithmetic average of the first-day-of-the-month benchmark price for each month within such period , unless prices are defined by contractual arrangements , excluding escalations based upon future conditions . future price changes are only considered to the extent provided by contractual arrangements in existence at year-end . the standardized measure of discounted future net cash flows is achieved by using a discount rate of 10 % a year to reflect the timing of future cash flows relating to proved oil and natural gas reserves . changes in any of these assumptions , including consideration of other factors , could have a significant impact on the standardized measure . the standardized measure does not necessarily result in an estimate of the current fair market value of proved reserves . amortization of net profits interest . the trust calculates amortization of the net profits interest in oil and natural gas properties on a unit-of-production basis based on the underlying properties ' production and reserves . the reserves upon which the amortization rate is based are quantity estimates which are subject to numerous uncertainties inherent in the estimation of proved reserves . the volumes considered to be commercially recoverable fluctuate with changes in prices and operating costs . these estimates are expected to change as additional information becomes available in the future . downward revisions in proved reserves may result in an increased rate of amortization . amortization is charged directly to the trust corpus balance and does not affect the cash earnings of the trust . impairment of net profits interest . the net profits interest in oil and natural gas properties is periodically assessed for impairment whenever events or circumstances indicate that the current fair value based on expected future cash flows of 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 trust 's principal sources of liquidity are cash flow generated from the net profits interest and borrowing capacity under the letter of credit described below . other than trust administrative expenses , including any reserves established by the trustee for future liabilities , the trust 's only use of cash is for distributions to trust unitholders . available funds are the excess cash , if any , received by the trust from the net profits interest and other sources ( such as interest earned on any amounts reserved by the trustee ) in any given month , over the trust 's expenses paid for that month . available funds are reduced by any cash the trustee determines to hold as a reserve against future expenses . the trustee may create a cash reserve to pay for future liabilities of the trust . if the trustee determines that the cash on hand and the cash to be received are , or will be , insufficient to cover the trust 's liabilities , the trustee may authorize the trust to borrow money to pay administrative or incidental expenses of the trust that exceed cash held by the trust . the trustee may authorize the trust to borrow from any person , including the trustee or the delaware trustee or an affiliate thereof , although none of the trustee , the delaware trustee or any affiliate thereof intends to lend funds to the trust . the trustee may also cause the trust to mortgage its assets to secure payment of the indebtedness . the terms of such indebtedness and security interest , if funds were to be loaned by the entity serving as trustee or delaware trustee or an affiliate thereof , would be similar to the terms which such entity would grant to a similarly situated commercial customer with whom it did not have a fiduciary relationship .