4. Link between Group performance and remuneration outcomes
The Altium Remuneration Framework is designed to align key employee remuneration to shareholder returns (in the form of capital appreciation and dividends). The table below shows the Group performance on key financial results and performance metrics over the last five years.
Altium’s remuneration strategy has evolved over the past seven years and we believe that it is linked intrinsically to the success of the Group. Strong payout results for STI and LTI have reflected the strong financial performance of the Group. In addition, STI and LTI hurdles have changed over time to better reflect what is most important for Group growth.
1 Normalised EPS and Profit for the year excludes deferred tax asset of US$77 million recognised on the transfer of core business assets to the USA.
2 The maximum STI payable based on the above performance hurdles is 100%, however based on achievement of individual personal goals, the overall achievement level may be modified up to 150% or down to 0%.

                             | 2019                   | 2018                   | 2017                   | 2016                   | 2015
---------------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                             | US$’000                | US$’000                | US$’000                | US$’000                | US$’000
Revenue                      | 171,819                | 140,176                | 110,865                | 93,597                 | 80,216
EBITDA                       | 62,721                 | 44,869                 | 33,254                 | 27,430                 | 22,697
EPS                          | 40.57                  | 28.86                  | 21.70                  | 17.89                  | 12.47 1
Profit for the year          | 52,893                 | 37,489                 | 28,077                 | 23,020                 | 15,398 1
Dividend declared - AU cents | 34                     | 27                     | 23                     | 20                     | 16
Share price - AU$            | $34.2                  | 22.51                  | 8.57                   | 6.46                   | 4.43
STI Achievement              | 100% - 150% 2          | 131%                   | 103%                   | 97%                    | 63%
STI performance hurdles      | 70% Revenue 30% EBITDA | 50% Revenue 50% EBITDA | 70% Revenue 30% EBITDA | 50% Revenue 50% EBITDA | Different metrics related to subscriber related to subscriber growth, EPS and Product development related to subscriber growth, EPS and Product development related to subscriber growth, EPS and Product development
LTI Achievement              | 100%                   | 100%                   | 100%                   | 100%                   | 50%
LTI performance hurdles      | 50% Revenue            | EPS                    | EPS                    | EPS                    | 50% Subscriber growth 50% EPS

. Link Group performance remuneration outcomes
 Altium Remuneration Framework employee remuneration shareholder returns capital appreciation dividends. table shows Group performance financial results metrics five years.
 remuneration strategy evolved linked success. Strong payout results STI LTI financial performance. STI LTI hurdles changed reflect growth.
 Normalised EPS Profit excludes deferred tax asset US$77 million transfer business.
 maximum STI payable 100% achievement to 150% 0%.
 Revenue 171,819  140,176  110,865  93,597  80,216
 EBITDA 62,721 44,869 33,254  27,430 22,697
 EPS 40. 57 28. 12.
 Profit 52,893  37,489  28,077  23,020  15,398
 Dividend declared 34 27 23 20
 Share price $34. 4.
STI Achievement 100% - 150% 131% 103% 97% 63%
 performance hurdles 70% Revenue 30% EBITDA metrics subscriber growth EPS Product development
 LTI Achievement 100% 50%
 LTI performance hurdles 50% Revenue EPS Subscriber growth 50% EPS


The following table shows summary financial performance for the Group:
Notes
1. Order intake represents commitments from customers to purchase goods and/or services that will ultimately result in recognised revenue.
2. Before exceptional items, acquisition related costs, acquired intangible asset amortisation and share-based payment amounting to $4.3 million in total (2018 $19.6 million).
3. Adjusted operating profit as a percentage of revenue in the period.
4. Effective tax rate is the adjusted tax charge, before tax on adjusting items, expressed as a percentage of adjusted profit before tax.
5. Adjusted basic earnings per share is based on adjusted earnings as set out in note 11 of Notes to the full year consolidated financial statements.
6. Cash flow generated from operations, less tax and net capital expenditure, interest paid and/or received, and payment of lease liabilities/sublease income.
7. Dividends are determined in US dollars and paid in sterling at the exchange rate prevailing when the dividend is proposed. The final dividend proposed for 2019 of 3.45 cents per Ordinary Share is equivalent to 2.70 pence per Ordinary Share.
Note on Alternative Performance Measures (APMs)
The performance of the Group is assessed using a variety of performance measures, including APMs which are presented to provide users with additional financial information that is regularly reviewed by management. These APMs are not defined under IFRS and therefore may not be directly comparable with similarly identified measures used by other companies.
The APMs adopted by the Group are defined on pages 190 and 191. The APMs which relate to adjusted income statement lines are presented and reconciled to GAAP measures using a columnar approach on the face of the income statement and can be identified by the prefix “adjusted” in the commentary. All APMs are clearly identified as such, with explanatory footnotes to the tables of financial information provided, and reconciled to reported GAAP measures in the Financial review or Notes to the consolidated financial statements.

$ million                                  | 2019  | 2018  | Change (%)
------------------------------------------ | ----- | ----- | ----------
Order intake1                              | 532.0 | 470.0 | 13.2
Revenue                                    | 503.6 | 476.9 | 5.6
Gross profit                               | 368.6 | 344.5 | 7.0
Gross margin (%)                           | 73.2  | 72.2  | 1.0
Adjusted operating costs2                  | 275.7 | 267.4 | 3.1
Adjusted operating profit2                 | 92.9  | 77.1  | 20.5
Adjusted operating margin3 (%)             | 18.4  | 16.2  | 2.2
Reported operating profit                  | 88.6  | 57.5  | 54.1
Effective tax rate4 (%)                    | 13.0  | 15.4  | (2.4)
Reported profit before tax                 | 89.6  | 61.2  | 46.4
Adjusted basic earnings per share5 (cents) | 13.40 | 10.86 | 23.4
Basic earnings per share (cents)           | 12.79 | 9.14  | 39.9
Free cash flow6                            | 100.1 | 50.9  | 96.7
Closing cash                               | 183.2 | 121.6 | 50.7
Final dividend per share7 (cents)          | 3.45  | 2.73  | 26.4

table shows financial performance Group
. Order intake represents commitments purchase goods services revenue.
. exceptional items acquisition costs intangible amortisation share-based payment $4. 3 million total (2018 $19. 6 million.
. Adjusted operating profit percentage revenue.
. Effective tax rate adjusted tax charge percentage profit.
. Adjusted earnings per share based note 11 financial statements.
. Cash flow from operations less tax net capital expenditure interest lease liabilities/sublease income.
. Dividends US dollars paid sterling rate. final dividend 2019 3. 45 cents per Share equivalent 2. 70 pence per Share.
 performance assessed measures APMs. not defined IFRS not comparable companies.
 APMs defined pages 190 191. adjusted income reconciled GAAP measures identified “adjusted”. APMs identified explanatory footnotes reconciled GAAP measures statements.
 million 2019 2018 Change (%)

 Order intake1 532. 470. 13.
 Revenue 503. 476. 5.
 profit 368. 344. 7.
 margin 73. 72. 1
 operating 275. 267. 3.
 92. 77. 20.
 18. 16.
 profit 88. 57. 54.
 tax rate4 13. 15.
 profit tax 89. 61. 46.
 earnings share5 13. 10. 23.
 earnings share 12. 79 9. 39.
 cash 100. 50. 96.
 Closing cash 183. 121. 50.
 dividend share7 3. 2. 73 26.


Liability Insurance
The Company carries property, general liability, vehicle liability, directors’ and officers’ liability and workers’ compensation insurance. Additionally, the Company carries an umbrella liability policy to provide excess coverage over the underlying limits of the aforementioned primary policies.
The Company’s insurance programs for workers’ compensation, general liability, and employee related health care benefits are provided through high deductible or self-insured programs. Claims in excess of self-insurance levels are fully insured subject to policy limits. Accruals are based on historical claims experience, actual claims filed, and estimates of claims incurred but not reported.
The Company’s liabilities for unpaid and incurred, but not reported claims, for workers’ compensation, general liability, and health insurance at September 2019 and September 2018 was $1.5 million and $1.6 million, respectively. These amounts are included in accrued expenses in the accompanying Consolidated Balance Sheets. While the ultimate amount of claims incurred is dependent on future developments, in the Company’s opinion, recorded reserves are adequate to cover the future payment of claims previously incurred. However, it is possible that recorded reserves may not be adequate to cover the future payment of claims.
Adjustments, if any, to claims estimates previously recorded, resulting from actual claim payments, are reflected in operations in the periods in which such adjustments are known.
A summary of the activity in the Company’s self-insured liabilities reserve is set forth below (in millions):

                   | 2019  | 2018
------------------ | ----- | -----
Beginning balance  | $1.6  | $1.5
Charged to expense | 5.4   | 5.8
Payments           | (5.5) | (5.7)
Ending balance     | $ 1.5 | $ 1.6

Liability Insurance
 Company carries property general vehicle directors’ officers’ workers’ compensation insurance. carries umbrella liability policy excess coverage.
 insurance programs compensation liability employee health care benefits high deductible self-insured programs. Claims self-insurance fully insured policy limits. Accruals based on historical actual claims estimates claims incurred reported.
 liabilities for unpaid claims workers’ compensation health insurance at September 2019 September 2018 $1. 5 million $1. 6 million. included in accrued expenses Consolidated Balance Sheets. developments recorded reserves future payment claims.
 Adjustments to claims estimates reflected in operations.
 summary activity self-insured liabilities reserve
 Beginning balance $1. $1.
.
.
 Ending balance $ 1. $ 1.


7. INCOME TAXES:
The components of income tax expense from operations for fiscal 2019 and fiscal 2018 consisted of the following:

                   | 2019       | 2018
------------------ | ---------- | ----------
Current: Federal   | $1,139,927 | $1,294,253
Current: State     | 428,501    | 423,209
                   | 1,568,428  | 1,717,462
Deferred: Federal  | 34,466     | (470,166)
Deferred: State    | 6,106      | (83,296)
                   | 40,572     | (553,462)
Income tax expense | $1,609,000 | $1,164,000

. INCOME TAXES
 2019 2018
 Federal $1,139,927 $1,294,253
 State 428,501 423,209
 1,568,428 1,717,462
 34,466 (470,166
 6
 40,572,462
 $1,609,000 $1,164,000


Share Repurchase Programs
On December 1, 2014, the Company announced the "Capital Allocation Policy" under which the Company intends to return to stockholders approximately 80 percent of free cash flow, less repayments of long-term debt, subject to a variety of factors, including the strategic plans, market and economic conditions and the discretion of the Company’s board of directors. For the purposes of the Capital Allocation Policy, the Company defines "free cash flow" as net cash provided by operating activities less purchases of property, plant and equipment.
On December 1, 2014, the Company announced the 2014 Share Repurchase Program (the "2014 Share Repurchase Program") pursuant to the Capital Allocation Policy. Under the Company’s 2014 Share Repurchase Program, the Company had the ability to repurchase up to $ 1.0 billion (exclusive of fees, commissions and other expenses) of the Company’s common stock over a period of four years from December 1, 2014, subject to certain contingencies.
The 2014 Share Repurchase Program, which did not require the Company to purchase any particular amount of common stock and was subject to the discretion of the board of directors, expired on November 30, 2018 with approximately $288.2 million remaining unutilized.
The Company repurchased common stock worth approximately $315.0 million and $25.0 million under the 2014 Share Repurchase Program during the years ended December 31, 2018 and December 31, 2017, respectively.
On November 15, 2018, the Company announced the 2018 Share Repurchase Program (the "2018 Share Repurchase Program") pursuant to the Capital Allocation Policy. Under the 2018 Share Repurchase Program, the Company is authorized to repurchase up to $ 1.5 billion of its common shares from December 1, 2018 through December 31, 2022, exclusive of any fees, commissions or other expenses.
The Company may repurchase its common stock from time to time in privately negotiated transactions or open market transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act, or by any combination of such methods or other methods.
The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including the Company’s stock price, corporate and regulatory requirements, restrictions under the Company’s debt obligations and other market and economic conditions. There were $138.9 million in repurchases of the Company's common stock under the 2018 Share Repurchase Program during the year ended December 31, 2019. As of December 31, 2019, the remaining authorized amount under the 2018 Share Repurchase Program was $1,361.1 million.
Information relating to the Company's 2018 and 2014 Share Repurchase Programs is as follows (in millions, except per share data):
(1) None of these shares had been reissued or retired as of December 31, 2019, but may be reissued or retired by the Company at a later date.

                                             |          | Year ended December 31, |
-------------------------------------------- | -------- | ----------------------- | ------
                                             | 2019     | 2018                    | 2017
Number of repurchased shares (1)             | 7.8      | 16.8                    | 1.6
Aggregate purchase price                     | $138.9   | $315.0                  | $25.0
Fees, commissions and other expenses         | 0.1      | 0.3                     | —
Total cash used for share repurchases        | $139.0   | $315.3                  | $25.0
Weighted-average purchase price per share    | $17.89   | $18.78                  | $15.35
Available for future purchases at period end | $1,361.1 | $1,500.0                | $603.2

Repurchase Programs
 December 1, 2014, Company announced Allocation Policy return stockholders 80 percent free cash flow less repayments long-term debt subject strategic plans market economic conditions discretion board directors. defines cash flow net cash operating activities less purchases property plant equipment.
 December 1, 2014, 2014 Share Repurchase Program. $ 1. 0 billion common stock four years contingencies.
 Program discretion expired November 30, 2018 $288. 2 million remaining unutilized.
 repurchased stock $315. 0 million $25. 0 million December 31, 2018 December 31, 2017.
 November 15, 2018 2018 Share Repurchase Program. authorized repurchase $ 1. 5 billion common shares December 1, 2018 through December 31, 2022 exclusive fees commissions expenses.
 repurchase stock privately negotiated open market transactions trading plan Rule 10b5-1 Rule 10b-18 Exchange Act.
timing repurchases number factors stock price corporate regulatory requirements debt obligations market economic conditions. $138. 9 million repurchases common stock 2018 Share Repurchase Program December 31, 2019. remaining authorized amount $1,361. 1 million.
 2018 2014 Share Repurchase Programs
 shares reissued retired December 31, 2019 may be.
 repurchased shares 7. 8 16.
 Aggregate purchase price $138. $315. $25.
 Fees commissions expenses.
 Total cash repurchases $139. $315. $25.
 Weighted-average purchase price per share $17. 89 $18. $15.
 future purchases end $1,361. $1,500. $603.


We completed our qualitative assessment of our indefinite-lived intangible assets other than goodwill as of December 31, 2019 and 2018 and concluded it is more likely than not that our indefinite-lived intangible assets are not impaired; thus, no impairment charge for these assets was recorded in 2019 or 2018.
The following tables show the rollforward of goodwill assigned to our reportable segments from December 31, 2017 through December 31, 2019.
(1) Goodwill is net of accumulated impairment losses of $1.1 billion that related to our former hosting segment now included in our business segment.
(2) We allocated $32 million of Level 3 goodwill to consumer as we expect the consumer segment to benefit from synergies resulting from the business combination. (2) We allocated $32 million of Level 3 goodwill to consumer as we expect the consumer segment to benefit from synergies resulting from the business combination.
(3) Includes $58 million decrease due to effect of foreign currency exchange rate change.

                                                | Business | Consumer              | Total
----------------------------------------------- | -------- | --------------------- | -------
                                                |          | (Dollars in millions) |
As of December 31, 2017(1)                      | $20,197  | 10,278                | 30,475
Purchase accounting and other adjustments(2)(3) | 250      | 32                    | 282
Impairment                                      | —        | (2,726)               | (2,726)
As of December 31, 2018                         | $20,447  | 7,584                 | 28,031

completed assessment indefinite-lived intangible assets December 31, 2019 2018 concluded impaired no impairment charge recorded 2019 2018.
 tables show rollforward goodwill segments December 31, 2017 31, 2019.
 Goodwill net accumulated impairment losses $1. 1 billion former hosting segment business segment.
 allocated $32 million Level 3 goodwill consumer.
 Includes $58 million decrease foreign currency exchange rate change.
 Business Consumer Total
 millions
 December 31, $20,197 10,278 30,475
 Purchase accounting 250 282
 Impairment (2,726)
 December 31, 2018 $20,447 7,584 28,031


ALTERNATIVE PERFORMANCE MEASURES
Net profit/(loss) for the year excluding impairment:
Net profit excluding impairment is net profit less impairment and reversals of impairment generated from impairment testing during the year (Please refer to Note 8). The Company reports Net profit excluding impairment because we believe it provides additional meaningful information to investors regarding the operational performance excluding fluctuations in the valuation of fixed assets.

USDm                                                | 2019   | 2018  | 2017
--------------------------------------------------- | ------ | ----- | ----
Reconciliation to net profit/(loss) for the year    |        |       |
Net profit/(loss) for the year                      | 166.0  | -34.8 | 2.4
Reversal of impairment losses on tangible assets    | -120.0 | -     | -
Net profit/(loss) for the year excluding impairment | 46.0   | -34.8 | 2.4

ALTERNATIVE PERFORMANCE MEASURES
 Net profit/(loss) excluding impairment
 less impairment reversals impairment testing refer Note 8). Company reports profit impairment information operational performance excluding fluctuations valuation fixed assets.
 2019 2018 2017
 Reconciliation net profit/(loss)
 166.
 Reversal impairment losses tangible assets -120.
 profit excluding impairment 46.


AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts in millions, unless otherwise disclosed) net foreign currency losses
(“AOCL”) in the consolidated balance sheets and included as a component of Comprehensive income in the consolidated
statements of comprehensive income.
Gains and losses on foreign currency transactions are reflected in Other expense in the consolidated statements of operations. However, the effect from fluctuations in foreign currency exchange rates on intercompany debt for which repayment is not anticipated in the foreseeable future is reflected in AOCL in the consolidated balance sheets and included as a component of Comprehensive income.
The Company recorded the following net foreign currency losses:

                                                          |       | Year Ended December 31, |
--------------------------------------------------------- | ----- | ----------------------- | ------
                                                          | 2019  | 2018                    | 2017
Foreign currency losses recorded in AOCL                  | $45.8 | $385.8                  | $51.6
Foreign currency (gains) losses recorded in Other expense | (6.1) | 4.5                     | (26.4)
Total foreign currency losses                             | $39.7 | $390.3                  | $25.2

AMERICAN TOWER CORPORATION SUBSIDIARIES FINANCIAL STATEMENTS amounts millions foreign currency losses
 balance sheets Comprehensive income
.
 Gains losses foreign currency transactions reflected expense. effect fluctuations foreign currency exchange rates intercompany debt reflected AOCL.
 Company net foreign currency losses
 Ended December 31,
 Foreign currency losses AOCL $45. 8 $385. $51.
 Foreign currency losses Other expense (6. 4.
 Total foreign currency losses $39. $390. $25.


The service cost component of net pension expense represents the estimated cost of future pension liabilities earned associated with active employees. The pension earnings, interest and deferrals (“pension EID”) is comprised of the expected return on plan assets, interest costs on the projected benefit obligations of the plans and amortization of actuarial gains and losses and prior service costs.
Net pension expense is recorded in accounts that are included in both the cost of sales and selling, general and administrative expenses based on the function of the associated employees and in other income (expense), net. The following is a summary of the classification of net pension expense for the years ended June 30, 2019, 2018 and 2017:
As of June 30, 2019 and 2018, amounts capitalized in gross inventory were $1.7 million and $1.7 million, respectively.

                                                   |       | Years Ended June 30, |
-------------------------------------------------- | ----- | -------------------- | -----
($ in millions)                                    | 2019  | 2018                 | 2017
Cost of sales                                      |       |                      |
Service cost                                       | $10.0 | $10.5                | $20.2
Total cost of sales                                | 10.0  | 10.5                 | 20.2
Selling, general and administrative expenses       |       |                      |
Service cost                                       | 1.5   | 1.6                  | 3.9
Total selling, general and administrative expenses | 1.5   | 1.6                  | 3.9
Other expense                                      |       |                      |
Pension earnings, interest and deferrals           | 0.1   | 2.1                  | 23.8
Curtailment charge                                 | —     | —                    | 0.5
Total other expense                                | 0.1   | 2.1                  | 24.3
Net pension expense                                | $11.6 | $14.2                | $48.4

service cost net pension expense estimated future pension liabilities active employees. pension earnings interest deferrals expected return plan assets interest costs projected benefit obligations amortization actuarial gains losses prior service costs.
 Net pension expense recorded accounts cost sales selling general administrative expenses. summary classification net pension expense years ended June 30 2019 2018 2017:
 June 30 2019 2018 capitalized gross inventory $1. 7 million $1. 7 million.
 Years Ended
 millions
 Cost sales
 Service cost $10. $20.
 Total cost sales 10.
 Selling general administrative expenses
 cost.
 expenses.
 Pension earnings interest deferrals.
 Curtailment charge.
.
 Net pension expense $11. $14. $48.


Contractual Obligations
Presented below is information about our material contractual obligations and the periods in which those future payments are due as of December 31, 2019. Future events could cause actual payments to differ from these estimates. As of December 31, 2019, the following table summarizes our contractual obligations and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in thousands):
(1) The 2017 Facility incurs interest at a variable rate. The projected variable interest payments assume no change in the Eurodollar Base Rate, or LIBOR, from December 31, 2019.
(2) Represents the current portion of our expected cash payments for our liability to repurchase subsidiary unit awards for our professional residential property management and vacation rental management subsidiary.
(3) Represents amounts due under multi-year, non-cancelable contracts with third-party vendors, as well as other commitments.
The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. The table does not include obligations under agreements that we can cancel without a significant penalty.
As of December 31, 2019, we had no outstanding letters of credit under our 2017 Facility.

Contractual Obligations            | 1 Year  | 2 to 3 Years | 4 to 5 Years | More Than 5 Years | Total
---------------------------------- | ------- | ------------ | ------------ | ----------------- | --------
Debt:                              |         |              |              |                   |
Principal payments                 | $—      | $63,000      | $—           | $—                | $63,000
Interest payments1                 | 2,206   | 3,876        | —            | —                 | 6,082
Unused line fee payments           | 126     | 222          | —            | —                 | 348
Operating lease commitments        | 9,818   | 18,823       | 15,840       | 10,893            | 55,374
Subsidiary unit award liabilities2 | 141     | —            | —            | —                 | 141
Other long-term liabilities        | —       | 4,375        | 2,513        | 601               | 7,489
Other commitments 3                | 624     | 290          | —            | —                 | 914
Total contractual obligations      | $12,915 | $90,586      | $18,353      | $11,494           | $133,348

Contractual Obligations
 obligations future payments due December 31, 2019. events payments differ. table summarizes contractual obligations effect liquidity cash flow
 2017 Facility incurs interest variable rate. payments no change Eurodollar Base Rate December 31, 2019.
 cash payments repurchase subsidiary unit awards residential property vacation rental.
 amounts due multi-year non contracts third-party vendors other commitments.
 commitment amounts associated contracts enforceable legally binding terms services price provisions timing. obligations penalty.
 December no outstanding letters of credit 2017 Facility.
 Contractual Obligations 1 Year 2 to 3 Years 4 to 5 Years More Than 5 Years Total
 Debt
 Principal payments $63,000
 Interest 2,206 3,876
 Unused line fee payments
 Operating lease commitments 9,818 18,823 15,840 55,374
unit
 long-term liabilities 4,375 2,513 7,489
 commitments 624
 contractual obligations $12,915 $90,586 $18,353 $11,494 $133,348


In relation to the oil derivative instrument (see note 24), the fair value was determined using the estimated discounted cash flows of the additional payments due to us as a result of oil prices moving above a contractual oil price floor over the term of the liquefaction tolling agreement ("LTA"). Significant inputs used in the valuation of the oil derivative instrument include management’s estimate of an appropriate discount rate and the length of time to blend the long-term and the short-term oil prices obtained from quoted prices in active markets. The changes in fair value of our oil derivative instrument is recognized in each period in current earnings in "Realized and unrealized gain on oil derivative instrument" as part of the consolidated statement of income.
The realized and unrealized (loss)/ gain on the oil derivative instrument is as follows:
The unrealized loss/gain results from movement in oil prices above a contractual floor price over term of the LTA; the realized gain results from monthly billings above the base tolling fee under the LTA. For further information on the nature of this derivative, refer to note 24.

                                                     |          | Year Ended December 31, |
---------------------------------------------------- | -------- | ----------------------- | ------
(in thousands of $)                                  | 2019     | 2018                    | 2017
Realized gain on oil derivative instrument           | 13,089   | 26,737                  | —
Unrealized (loss)/gain on oil derivative instrument  | (39,090) | (9,970)                 | 15,100
                                                     | (26,001) | 16,767                  | 15,100

oil derivative instrument note fair value determined estimated discounted cash flows additional payments oil prices above contractual floor liquefaction tolling agreement. inputs valuation include estimate discount rate time long-term short-term oil prices. changes fair value recognized earnings "Realized unrealized gain statement income.
 realized unrealized (loss gain
 unrealized loss/gain from oil prices above contractual floor price LTA gain monthly billings above base tolling fee. note 24.
 Year Ended December 31,
 2019 2018 2017
 Realized gain 13,089  26,737
 Unrealized (loss)/gain (39,090) (9,970) 15,100
 (26,001 16,767


Defined Benefit Pension Plans
The Company maintains defined benefit pension plans for employees of certain of its foreign subsidiaries. Such plans conform to local practice in terms of providing minimum benefits mandated by law, collective agreements or customary practice. The Company recognizes the aggregate amount of all overfunded plans as assets and the aggregate amount of all underfunded plans as liabilities in its financial statements.
The Company's expected long-term rate of return on plan assets is updated at least annually, taking into consideration its asset allocation, historical returns on similar types of assets and the current economic environment. For estimation purposes, the Company assumes its long-term asset mix will generally be consistent with the current mix. The Company determines its discount rates using highly rated corporate bond yields and government bond yields.
Benefits under all of the Company's plans are valued utilizing the projected unit credit cost method. The Company's policy is to fund its defined benefit plans in accordance with local requirements and regulations. The funding is primarily driven by the Company's current assessment of the economic environment and projected benefit payments of its foreign subsidiaries. The Company's measurement date for determining its defined benefit obligations for all plans is December 31 of each year.
The Company recognizes actuarial gains and losses in the period the Company's annual pension plan actuarial valuations are prepared, which generally occurs during the fourth quarter of each year, or during any interim period where a revaluation is deemed necessary.
The following is a summary of the status of the Company's foreign defined benefit pension plans and the net periodic pension cost (dollars in millions):
The long term rate of return on plan assets was determined using the weighted-average method, which incorporates factors that include the historical inflation rates, interest rate yield curve and current market conditions.

                                                   |        | Year Ended December 31, |
-------------------------------------------------- | ------ | ----------------------- | ------
                                                   | 2019   | 2018                    | 2017
Service cost                                       | $9.4   | $9.6                    | $10.0
Interest cost                                      | 5.0    | 4.7                     | 4.3
Expected return on plan assets                     | (6.0)  | (6.1)                   | (5.5)
Curtailment gain                                   | —      | (0.3)                   | —
Actuarial and other loss                           | 15.6   | 6.1                     | 1.9
Total net periodic pension cost                    | $24.0  | $14.0                   | $10.7
Weighted average assumptions                       |        |                         |
Discount rate used for net periodic pension costs  | 1.74 % | 1.66 %                  | 1.60 %
Discount rate used for pension benefit obligations | 1.43 % | 1.74 %                  | 1.66 %
Expected return on plan assets                     | 3.23 % | 3.18 %                  | 3.22 %
Rate of compensation increase                      | 3.07 % | 3.22 %                  | 3.22 %

Defined Benefit Pension Plans
 Company maintains pension plans for employees foreign subsidiaries. plans conform local practice minimum benefits. recognizes overfunded plans assets underfunded liabilities financial statements.
 expected long-term rate return on assets updated annually asset allocation historical returns current economic environment. assumes long-term asset mix consistent current mix. determines discount rates corporate bond government bond yields.
 Benefits valued projected unit credit cost method. plans local requirements regulations. funding driven by economic environment projected benefit payments foreign subsidiaries. measurement date defined benefit obligations December 31.
 recognizes actuarial gains losses annual pension plan valuations quarter.
 summary status foreign defined benefit pension plans net periodic pension cost
 long term rate return on assets determined weighted-average method historical inflation rates interest rate yield curve current market conditions.
 December
 Service cost.
 Interest cost.
return assets (6. (5.
 gain. 3)
 loss 15. 6 6. 9
 pension cost $24. $14. $10.
 assumptions
 Discount. 74 %. 66 %. 60 %
 obligations. 43 %. 74 %. 66 %
 return 3. 23 %. 18 %. 22 %
 compensation. 07 %. 22. 22


The following table illustrates the classification of pre-payroll tax and social contribution stock-based compensation expense included in the consolidated statements of income for the years ended December 31, 2019, December 31, 2018 and December 31, 2017:
The fair value of the shares vested in 2019 was $114 million compared to $68 million for 2018 and $38 million for 2017.
Compensation cost, excluding payroll tax and social contribution, capitalized as part of inventory was $6 million as of December 31, 2019, compared to $6 million as of December 31, 2018 and $3 million as of December 31, 2017. As of December 31, 2019, there was $138 million of total unrecognized compensation cost related to the grant of unvested shares, which is expected to be recognized over a weighted average period of approximately 9 months.
The total deferred income tax benefit recognized in the consolidated statements of income related to unvested share-based compensation expense amounted to $9 million, $7 million and $3 million for the years ended December 31, 2019, 2018 and 2017, respectively.

                                                           | December 31, 2019 | December 31, 2018 | December 31, 2017
---------------------------------------------------------- | ----------------- | ----------------- | -----------------
Cost of sales                                              | 22                | 23                | 12
Selling, general and administrative                        | 46                | 67                | 31
Research and development                                   | 77                | 35                | 18
Total pre-payroll tax and social contribution compensation | 145               | 125               | 61

table illustrates pre-payroll tax social contribution stock-based compensation expense statements income 2019 2018
 fair value shares vested 2019 $114 million $68 million 2018 $38 million 2017.
 Compensation cost excluding inventory $6 million December 31, 2019 $6 million 2018 $3 million 2017. $138 million unrecognized compensation cost unvested shares expected recognized 9 months.
 deferred income tax benefit unvested share-based compensation expense $9 million $7 million $3 million 2019 2018 2017.
 Cost sales 22
 Selling general administrative
 Research development
 pre-payroll tax social contribution compensation 145 125


Segment Operating Profit (Earnings before general corporate expenses, pension and postretirement non-service income, interest expense, net, income taxes, and equity method investment earnings)
Grocery & Snacks operating profit for fiscal 2019 was $689.2 million, a decrease of $35.6 million, or 5%, compared to fiscal 2018. Gross profits were $55.8 million lower in fiscal 2019 than in fiscal 2018. The lower gross profit was driven by higher input costs, transportation inflation, and a reduction in profit associated with the divestiture of the Wesson ® oil business, partially offset by profit contribution of acquisitions and supply chain realized productivity. The acquisition of Angie's Artisan Treats, LLC contributed $12.6 million to Grocery & Snacks gross profit in fiscal 2019, through the one-year anniversary of the acquisition. Advertising and promotion expenses for fiscal 2019 decreased by $31.3 million compared to fiscal 2018. Operating profit of the Grocery & Snacks segment was impacted by charges totaling $76.5 million in fiscal 2019 for the impairment of our Chef Boyardee® and Red Fork® brand assets and $4.0 million in fiscal 2018 for the impairment of our HK Anderson® , Red Fork® , and Salpica® brand assets. Grocery & Snacks also recognized a $33.1 million gain on the sale of our Wesson ® oil business in fiscal 2019. Operating profit of the Grocery & Snacks segment included $1.0 million and $11.4 million of expenses in fiscal 2019 and 2018, respectively, related to acquisitions and divestitures and charges of $4.6 million and $14.1 million in connection with our restructuring plans in fiscal 2019 and 2018, respectively. Grocery & Snacks operating profit for fiscal 2019 was $689.2 million, a decrease of $35.6 million, or 5%, compared to fiscal 2018. Gross profits were $55.8 million lower in fiscal 2019 than in fiscal 2018. The lower gross profit was driven by higher input costs, transportation inflation, and a reduction in profit associated with the divestiture of the Wesson ® oil business, partially offset by profit contribution of acquisitions and supply chain realized productivity. The acquisition of Angie's Artisan Treats, LLC contributed $12.6 million to Grocery & Snacks gross profit in fiscal 2019, through the one-year anniversary of the acquisition. Advertising and promotion expenses for fiscal 2019 decreased by $31.3 million compared to fiscal 2018. Operating profit of the Grocery & Snacks segment was impacted by charges totaling $76.5 million in fiscal 2019 for the impairment of our Chef Boyardee® and Red Fork® brand assets and $4.0 million in fiscal 2018 for the impairment of our HK Anderson® , Red Fork® , and Salpica® brand assets. Grocery & Snacks also recognized a $33.1 million gain on the sale of our Wesson ® oil business in fiscal 2019. Operating profit of the Grocery & Snacks segment included $1.0 million and $11.4 million of expenses in fiscal 2019 and 2018, respectively, related to acquisitions and divestitures and charges of $4.6 million and $14.1 million in connection with our restructuring plans in fiscal 2019 and 2018, respectively.
Refrigerated & Frozen operating profit for fiscal 2019 was $502.2 million, an increase of $22.8 million, or 5%, compared to fiscal 2018. Gross profits were $19.6 million lower in fiscal 2019 than in fiscal 2018, driven by increased input costs and transportation inflation, partially offset by supply chain realized productivity. Advertising and promotion expenses for fiscal 2019 decreased by $24.6 million compared to fiscal 2018. Operating profit of the Refrigerated & Frozen segment included a gain of $23.1 million in fiscal 2019 related to the sale of our Italian-based frozen pasta business, Gelit.
International operating profit for fiscal 2019 was $94.5 million, an increase of $8.0 million, or 9%, compared to fiscal 2018. Gross profits were flat in fiscal 2019 compared to fiscal 2018. Included in the International segment fiscal 2019 operating profit was a gain of $13.2 million related to the sale of our Del Monte® processed fruit and vegetable business in Canada, charges of $13.1 million for the impairment of our Aylmer® and Sundrop ® brand assets, and charges of $2.9 million related to divestitures. In addition, operating profit was impacted by charges of $1.9 million and $1.5 million in connection with our restructuring plans, in fiscal 2019 and 2018, respectively.
Foodservice operating profit for fiscal 2019 was $117.7 million, a decrease of $4.1 million, or 3%, compared to fiscal 2018. Gross profits were $8.5 million lower in fiscal 2019 than in fiscal 2018, due to lower volume (including the sale of our Trenton, Missouri production facility) and higher input costs, partially offset by supply chain realized productivity
Pinnacle Foods operating profit for fiscal 2019 (reflecting 213 days of Conagra Brands ownership) was $238.2 million. Operating profit for Pinnacle Foods during fiscal 2019 included incremental cost of goods sold of $53.0 million due to the impact of writing inventory to fair value as part of our acquisition accounting and the subsequent sale of that inventory, as well as charges of $5.9 million related to restructuring activities.

($ in millions)       |                              |                              |
--------------------- | ---------------------------- | ---------------------------- | -----------
Reporting Segment     | Fiscal 2019 Operating Profit | Fiscal 2018 Operating Profit | % Inc (Dec)
Grocery & Snacks      | $689.2                       | $724.8                       | (5)%
Refrigerated & Frozen | 502.2                        | 479.4                        | 5%
International         | 94.5                         | 86.5                         | 9%
Foodservice           | 117.7                        | 121.8                        | (3)%
Pinnacle Foods        | 238.2                        | —                            | 100%

Operating Profit before expenses pension income interest taxes equity investment earnings
 Grocery & Snacks profit 2019 $689. 2 million decrease $35. 6 million 5%. Gross profits $55. 8 million lower. driven input costs transportation inflation divestiture Wesson ® oil offset acquisitions supply chain productivity. acquisition Angie's Artisan Treats contributed $12. 6 million profit. Advertising promotion expenses decreased $31. 3 million. impacted charges $76. 5 million Chef Boyardee® Red Fork® $4. 0 million HK Salpica®. $33. 1 million gain sale Wesson ® oil business. $1. 0 million $11. 4 million expenses divestitures $4. 6 million $14. 1 million restructuring plans. profit $689. 2 million decrease $35. 6 million 5%. Gross profits $55. 8 million lower.lower profit driven input costs transportation inflation divestiture Wesson ® oil offset acquisitions supply chain productivity. acquisition Angie's Artisan Treats contributed $12. 6 million Grocery & Snacks profit. Advertising promotion expenses decreased $31. 3 million. impacted charges $76. 5 million Chef Boyardee® Red Fork® $4. million HK Red Salpica®. $33. 1 million gain sale Wesson ® oil business. $1. 0 million $11. 4 million expenses divestitures $4. 6 million $14. 1 million restructuring plans.
 Refrigerated Frozen profit $502. 2 million increase $22. 8 million 5%. profits $19. 6 million lower increased input costs transportation inflation offset supply chain productivity. Advertising promotion expenses decreased $24. 6 million. gain $23. 1 million sale Italian frozen pasta business.
 profit $94. 5 million increase $8. million 2018. Gross profits flat.International segment 2019 profit $13. 2 million sale Del Monte® processed fruit vegetable business Canada $13. 1 million Aylmer® Sundrop ® brand assets $2. 9 million divestitures. impacted $1. 9 million $1. 5 million restructuring plans 2019 2018.
 Foodservice profit 2019 $117. 7 million decrease $4. 1 million 3% 2018. Gross profits $8. 5 million lower lower volume sale Trenton Missouri production facility higher input costs offset supply chain productivity
 Pinnacle Foods profit $238. 2 million. incremental cost goods $53. 0 million inventory value acquisition sale charges $5. 9 million restructuring activities.
 2019 2018 Profit
 Grocery Snacks $689. $724.
 Refrigerated Frozen.
 International.
 Foodservice.
 Pinnacle Foods 238.


1. Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill for the years ended December 31, 2019 and 2018, are as follows:
Our 2019 acquisitions of DeliverySlip (as defined herein) and AppRiver (as defined herein) resulted in the addition to our goodwill balance in 2019. Our 2018 acquisition of Erado (as defined herein) resulted in the addition to our goodwill balance in 2018. Our 2018 acquisition adjustments to goodwill reflect the appropriate reallocation of excess purchase price from goodwill to acquired assets and liabilities related to our 2017 Greenview and EMS (as defined herein) purchases. We evaluate goodwill for impairment annually in the fourth quarter, or when there is reason to believe that the value has been diminished or impaired. There were no impairment indicators to the goodwill recorded as of December 31, 2019.

                                          | Year Ended December 31, |
----------------------------------------- | ----------------------- | --------
(In thousands)                            | 2019                    | 2018
Opening balance                           | $ 13,783                | $ 8,469
Additions                                 | 157,121                 | 6,215
Acquisition adjustments                   | —                       | (901 )
Effect of currency translation adjustment | 305                     | —
Goodwill                                  | $ 171,209               | $ 13,783

. Goodwill Intangible Assets
 changes 2019 2018
 2019 acquisitions DeliverySlip AppRiver goodwill balance. 2018 acquisition Erado goodwill balance. 2018 acquisition adjustments reflect reallocation excess purchase price acquired assets liabilities 2017 Greenview EMS purchases. evaluate goodwill impairment annually fourth quarter. no impairment indicators December 31, 2019.
 Ended December
 2018
 Opening balance $ 13,783 $ 8,469
 Additions 157,121 6,215
 Acquisition adjustments
 currency translation adjustment
 Goodwill $ 171,209 $ 13,783


Operating profit/loss
Our operating profit in 2019 was EUR 485 million, a change of EUR 544 million, compared to an operating loss of EUR 59 million in 2018. The change in operating result was primarily due to lower selling, general and administrative expenses, research and development expenses and a net positive fluctuation in other operating income and expenses, partially offset by lower gross profit. Our operating margin in 2019 was 2.1%, compared to approximately breakeven in 2018.
(1) Excludes costs related to the acquisition of Alcatel Lucent and related integration, goodwill impairment charges, intangible asset amortization and other purchase price fair value adjustments, restructuring and associated charges and certain other items.
The following table sets forth the impact of unallocated items on operating profit/loss:

EURm                                                                                | 2019  | 2018
-------------------------------------------------------------------------------------------------------- | ----- | -----
Total segment operating profit(1)                                                                        | 2,003 | 2,180
Amortization and depreciation of acquired intangible assets and property, plant and equipment            | (924) | (940)
Restructuring and associated charges                                                                     | (502) | (321)
Gain on defined benefit plan amendment                                                                   | 168   | -
Product portfolio strategy costs                                                                         | (163) | (583)
Transaction and related costs, including integration costs relating to the acquisition of Alcatel Lucent | (48)  | (220)
Impairment of assets, net of impairment reversals                                                        | (29)  | (48)
Operating model integration                                                                              | (12)  | -
Release of acquisition-related fair value adjustments to deferred revenue and inventory                  | (6)   | (16)
Divestment of businesses                                                                                | (2)   | (39)
Fair value changes of legacy IPR fund                                                                    | -     | (57)
Other                                                                                | -     | (15)
Total operating profit/(loss)                                                                            | 485   | (59)

profit/loss
 2019 EUR 485 million EUR 544 million EUR 59 million 2018. due lower selling administrative research development positive fluctuation income offset lower gross profit. margin 2019 2. 1% breakeven 2018.
 Excludes acquisition Alcatel Lucent goodwill impairment intangible amortization purchase price value adjustments restructuring charges.
 impact unallocated items profit/loss
 2019
 2,003,180
 Amortization depreciation acquired intangible assets property
 Restructuring charges
 Gain defined benefit plan amendment
 Product portfolio strategy costs
 Transaction costs acquisition Alcatel Lucent
 Impairment assets reversals
 Operating model integration
 acquisition-related fair value adjustments deferred revenue inventory
 Divestment businesses
 Fair value changes IPR fund
 Total profit/(loss 485


Unrecognized Tax Benefits
Reconciliation of the unrecognized tax benefits is summarized below (in thousands):
(1) The reductions for tax positions of prior years for the fiscal year ended August 31, 2019 are primarily related to a non-U.S. taxing authority ruling related to certain non-U.S. net operating loss carry forwards, offset with a valuation allowance and the impacts of the Tax Act.
(2) The additions for the fiscal years ended August 31, 2019 and 2018 are primarily related to the impacts of the Tax Act and taxation of certain intercompany transactions. The additions for the fiscal year ended August 31, 2017 are primarily related to certain non-U.S. net operating loss carry forwards, previously offset with a valuation allowance, that can no longer be recognized due to an internal restructuring.
(3) The reductions from settlements with taxing authorities for the fiscal year ended August 31, 2019 are primarily related to the settlement of a U.S. audit.
The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The Company’s accrued interest and penalties were approximately $18.9 million and $20.4 million as of August 31, 2019 and 2018, respectively. The Company recognized interest and penalties of approximately $(1.5) million, $(6.7) million and $5.2 million during the fiscal years ended August 31, 2019, 2018 and 2017, respectively.
It is reasonably possible that the August 31, 2019 unrecognized tax benefits could decrease during the next 12 months by $5.8 million, primarily related to a state settlement.
The Company is no longer subject to U.S. federal tax examinations for fiscal years before August 31, 2015. In major non-U.S. and state jurisdictions, the Company is no longer subject to income tax examinations for fiscal years before August 31, 2009.
The Internal Revenue Service (“IRS”) completed its field examination of the Company’s tax returns for fiscal years 2009 through 2011 and issued a Revenue Agent’s Report (“RAR”) on May 27, 2015, which was updated on June 22, 2016. The IRS completed its field examination of the Company’s tax returns for fiscal years 2012 through 2014 and issued an RAR on April 19, 2017. The proposed adjustments in the RAR from both examination periods relate primarily to U.S. taxation of certain intercompany transactions. On May 8, 2019, the tax return audits for fiscal years 2009 through 2014 were effectively settled when the Company agreed to the IRS Office of Appeals’ Form 870-AD (Offer to Waive Restrictions on Assessment and Collection of Tax Deficiency and to Accept Overassessment) adjustments, which were substantially lower than the initial RAR proposed adjustments. The settlement did not have a material effect on the Company’s financial position, results of operations, or cash flows and no additional tax liabilities were recorded.

                                                                                |           | Fiscal Year Ended August 31, |
---------------------------------------------------------------------------------- | --------- | ---------------------------- | --------
                                                                                | 2019      | 2018                         | 2017
Beginning balance                                                                  | $256,705  | $201,355                     | $149,898
Additions for tax positions of prior years                                         | 20,158    | 14,465                       | 2,155
Reductions for tax positions of prior years(1)                                     | (106,252) | (21,045)                     | (12,233)
Additions for tax positions related to current year(2)                             | 35,769    | 81,866                       | 77,807
Cash settlements                                                                   | —         | (1,659)                      | (2,298)
Reductions from lapses in statutes of limitations                                  | (2,570)   | (7,496)                      | (10,446)
Reductions from settlements with taxing authorities(3)                             | (35,582)  | (5,928)                      | (6,061)
Foreign exchange rate adjustment                                                   | (3,845)   | (4,853)                      | 2,533
Ending balance                                                                     | $164,383  | $256,705                     | $201,355
Unrecognized tax benefits that would affect the effective tax rate (if recognized) | $93,237   | $117,455                     | $75,223

Unrecognized Tax Benefits
 Reconciliation summarized
 reductions tax positions August 31, 2019 related non-U. taxing authority ruling. loss impacts Tax Act.
 additions years August 2019 2018 Tax Act intercompany transactions. additions 2017 non-U. operating loss forwards internal restructuring.
 reductions settlements taxing authorities August 2019. audit.
 Company recognizes interest penalties unrecognized tax benefits. accrued interest penalties $18. 9 million $20. 4 million August 31, 2019 2018. interest penalties. million. $5. 2 million August 2019 2018 2017.
 August 2019 unrecognized tax benefits decrease $5. 8 million state settlement.
 no subject. federal tax examinations before August 31, 2015. subject tax examinations before August 31, 2009.
 Internal Revenue Service examination tax returns 2009 2011 issued Revenue Agent’s Report May 27, 2015, updated June 22, 2016.IRS tax returns 2012 2014 issued RAR April 19, 2017. adjustments. taxation. May 8, 2019 tax audits 2009 2014 settled Form 870-AD adjustments lower initial adjustments. settlement financial position cash flows no additional tax liabilities.
 Fiscal Year Ended August 31,
 2018 2017
 Beginning balance $256,705 $201,355 $149,898
 Additions 20,158 14,465
 Reductions (106,252) (21,045)
 35,769 81,866 77,807
 Cash settlements (1,659)
 Reductions lapses statutes limitations (2,570)
 settlements taxing (35,582) (5,928)
 Foreign exchange rate adjustment (3,845) (4,853)
 Ending balance $164,383 $256,705 $201,355
 Unrecognized tax benefits rate $93,237 $117,455 $75,223


25. Loans and other borrowings continued
Net Debt
Net debt consists of loans and other borrowings (both current and non-current), less current asset investments and cash and cash equivalents. Loans and other borrowings are measured at the net proceeds raised, adjusted to amortise any discount over the term of the debt. For the purpose of this measure, current asset investments and cash and cash equivalents are measured at the lower of cost and net realisable value. Currency denominated balances within net debt are translated to sterling at swapped rates where hedged.
Net debt is considered to be an alternative performance measure as it is not defined in IFRS. The most directly comparable IFRS measure is the aggregate of loans and other borrowings (current and non-current), current asset investments and cash and cash equivalents. A reconciliation from the most directly comparable IFRS measure to net debt is given below.
A reconciliation from the most directly comparable IFRS measure to net debt is given below.

At 31 March                                                                                | 2019 £m | 2018 £m | 2017 £m
------------------------------------------------------------------------------------------------------ | ------- | ------- | -------
Loans and other borrowings                                                                             | 16,876  | 14,275  | 12,713
Less:                                                                                |         |         |
Cash and cash equivalents                                                                              | (1,666) | (528)   | (528)
Current asset investments                                                                              | (3,214) | (3,022) | (1,520)
                                                                                | 11,996  | 10,725  | 10,665
Adjustments:                                                                                |         |         |
To retranslate debt balances at swap rates where hedged by currency swaps                              | (701)   | (874)   | (1,419)
To remove accrued interest applied to reflect the effective interest method and fair value adjustments | (260)   | (224)   | (314)
Net debt                                                                                | 11,035  | 9,627   | 8,932

. Loans borrowings
 Net Debt
 loans less asset investments cash equivalents. measured net proceeds adjusted discount term. asset investments cash equivalents measured cost net realisable value. Currency balances translated to sterling swapped rates hedged.
 alternative performance measure not defined IFRS. comparable IFRS measure loans borrowings asset investments cash equivalents. reconciliation debt.
.
 31 March 2019 2018 2017
 Loans borrowings 16,876 14,275 12,713
 Cash equivalents (1,666)
 Current asset investments (3,214) (3,022) (1,520)
 11,996 10,725
 Adjustments
 retranslate debt balances swap rates hedged currency swaps
 remove accrued interest effective interest method fair value adjustments
 Net debt 11,035 9,627


Contract Balances
The following table provides information about contract assets and contract liabilities from contracts with customers (amounts in thousands):
Contract assets, reported within current assets and other long-term assets in the consolidated balance sheets, primarily result from revenue being recognized when a license is delivered and payments are made over time. Contract liabilities primarily relate to advance consideration received from customers, deferred revenue, for which transfer of control occurs, and therefore revenue is recognized, as services are provided. Contract balances are reported in a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period. The Company recognized $4.4 million of revenue during the year ended September 30, 2019 that was included in the contract liability balance at the beginning of the period.

                                  | September 30, 2019 | October 1, 2018
--------------------------------- | ------------------ | ---------------
Contract assets, current          | $2,350             | $169
Contract assets, non-current      | 581                | 507
Contract liabilities, current     | 5,612              | 4,281
Contract liabilities, non-current | 736                | 485

Contract Balances
 table assets liabilities contracts
 assets result from revenue license delivered payments time. liabilities relate advance consideration deferred revenue transfer control services provided. balances net asset-by-contract end reporting period. Company recognized $4. 4 million revenue September 30, 2019 contract liability balance.
 September 30, 2019 October 1, 2018
 Contract assets current $2,350 $169
 non-current 581 507
 liabilities current 5,612 4,281
 non-current 736


Consumer Cyber Safety segment
Revenue increased $616 million due to a $639 million increase in revenue from sales of our identity and information protection products acquired at the end of fiscal 2017, offset by a $23 million decrease in revenue related to our consumer security products. Our revenue growth reflects the benefit of the shift to subscription-based contracts and bundling of our consumer products, which is helping to mitigate the trend of declining revenues from sales of stand-alone security products. Operating income increased $272 million primarily due to sales of our identity and information protection products, partially offset by higher related cost of sales and operating expenses.

                                      | Fiscal Year |        | Variance in |
------------------------------------- | ----------- | ------ | ----------- | -------
(In millions, except for percentages) | 2018        | 2017   | Dollar      | Percent
Net revenues                          | $2,280      | $1,664 | $616        | 37%
Percentage of total net revenues      | 47%         | 41%    |             |
Operating income                      | $1,111      | $839   | $272        | 32%
Operating margin                      | 49%         | 50%    |             |

Consumer Cyber Safety
 Revenue increased $616 million $639 million increase identity information protection products 2017 offset $23 million decrease. growth shift subscription contracts bundling products declining stand-alone security. Operating income increased $272 million identity information products offset higher cost operating expenses.
 Fiscal Year Variance
 2017
 Net revenues $2,280 $1,664  $616  37%
 Operating income $1,111  $839  $272 32%
 Operating margin 49% 50%


Cubic Global Defense
Sales: CGD sales decreased 2% to $317.9 million in 2019 compared to $325.2 million in 2018. The timing of sales recognition was impacted by the adoption of ASC 606. Under ASC 606, a number of our CGD contracts, most significantly in air combat training and ground live training, for which revenue was historically recorded upon delivery of products to the customer, are now accounted for on the percentage-of-completion cost-to-cost method of revenue recognition. For fiscal 2019, sales were lower from air combat training systems, simulation product development contracts, and international services contracts, partially offset by higher sales from ground combat training systems. The average exchange rates between the prevailing currencies in our foreign operations and the U.S. dollar resulted in a decrease in CGD sales of $3.2 million for 2019 compared to 2018.
Amortization of Purchased Intangibles: Amortization of purchased intangibles included in the CGD results amounted to $0.6 million in 2019 and $1.1 million in 2018.
Operating Income: CGD operating income increased by 39% to $23.0 million in 2019 compared to $16.6 million in 2018. For fiscal 2019, operating profits improved primarily due to the results of cost reduction efforts, including headcount reductions designed to optimize our cost position, and reduced R&D expenditures. Operating profits were higher from increased sales of ground combat training system sales but were lower on decreased sales from air combat training systems, simulation product development contracts, and international services contracts. The average exchange rates between the prevailing currency in our foreign operations and the U.S. dollar had no significant impact on CGD operating income between 2018 and 2019.
Adjusted EBITDA: CGD Adjusted EBITDA was $32.8 million in 2019 compared to $26.3 million in 2018. The increase in Adjusted EBITDA was primarily driven by the same factors that drove the increase in operating income described above. Adjusted EBITDA for CGD increased by $3.1 million in 2019 as a result of the adoption of the new revenue recognition standard.

                 | Fiscal 2019 | Fiscal 2018   | % Change
---------------- | ----------- | ------------- | --------
                 |             | (in millions) |
Sales            | $  317.9    | $  325.2      | (2)%
Operating income | 23.0        | 16.6          | 39
Adjusted EBITDA  | 32.8        | 26.3          | 25

 Sales CGD sales decreased 2% to $317. 9 million 2019 $325. 2 million 2018. impacted ASC 606. CGD contracts air combat ground live training accounted percentage-of-completion cost-to. 2019 sales lower air combat training systems simulation development contracts international services contracts offset higher ground combat training systems. average exchange rates. sales $3. 2 million 2019 2018.
 Amortization Purchased Intangibles $0. 6 million 2019 $1. 1 million 2018.
 increased 39% to $23. 0 million 2019 $16. 6 million 2018. profits improved cost reduction headcount reductions reduced R&D expenditures. higher ground combat training lower decreased air combat training systems simulation development contracts international services contracts. average exchange rates. income.
 Adjusted EBITDA $32. 8 million 2019 $26. 3 million 2018. driven. increased $3. 1 million 2019 new revenue recognition standard.
 2018

 millions
 Sales $ 317. 325.
 Operating income 23. 16. 39
 Adjusted EBITDA 32. 26.


Credit risk
The carrying amount of financial assets, previously recognised as loans and receivables under IAS 39 now classified as amortised cost under IFRS 9, represents the maximum credit exposure. The maximum exposure to credit risk at 31 March 2019 was £59.1m (2018: £56.5m).
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:

        |      | 2019 | 2018
------- | ---- | ---- | ----
        | Note | £m   | £m
UK      |      | 24.5 | 24.9
Ireland |      | 0.4  | 0.5
Total   |      | 24.9 | 25.4

Credit risk
 carrying financial assets loans receivables IAS 39 amortised cost IFRS 9 maximum credit exposure. 31 March 2019 £59. 1m (2018 £56. 5m.
 maximum exposure trade receivables reporting date geographic region
 2019 2018
 24.
.
 24.


a. Analysis of revenue growth
On a reported basis, TCS’ revenue grew 19% in FY 2019, compared to 4.4% in the prior year. This was largely an outcome of greater demand for our services and solutions during the year, driven by expanding participation in our customers’ growth and transformation initiatives. In addition, there was some benefit from the movement in currency exchange rates.
FY 2019 saw volatility in USD-INR, ranging from `64.90 and `74.10, and averaging at `70.07. There was also significant volatility in exchange rates of emerging markets’ currencies. Average currency exchange rates during FY 2019 for the three major currencies are given below:
Movements in currency exchange rates through the year resulted in a positive impact of 7.6% on the reported revenue. The constant currency revenue growth for the year, which is the reported revenue growth stripped of the currency impact, was 11.4%.

Currency                  | Weightage (%) | FY 2019 `   | FY 2018 ` | % Change YoY
------------------------- | ------------- | ----------- | --------- | ------------
USD                       | 53.6          | 70.07       | 64.49     | 8.7
GBP                       | 13.9          | 91.60       | 86.05     | 6.5
EUR                       | 10.1          | 80.82       | 76.16     | 6.1
Breakup of revenue growth | FY 2019 (%)   | FY 2018 (%) |           |
Business growth           | 11.4          | 6.7         |           |
Impact of exchange rate   | 7.6           | (2.3)       |           |
Total growth              | 19.0          | 4.4         |           |

. Analysis revenue growth
 TCS’ revenue grew 19% FY 2019. 4% prior year. greater demand services solutions expanding participation growth transformation initiatives. benefit currency exchange rates.
 2019 volatility USD-INR. 90. 10 `70. 07. significant volatility emerging currencies. Average currency exchange rates three major currencies
 exchange positive 7. 6% revenue. constant currency revenue growth 11. 4%.
 Currency Weightage FY 2019 2018
 53. 70. 64. 8.
 13. 91. 86. 6.
 10. 80. 76.
 Breakup revenue growth FY 2019 2018
 Business growth 11. 4 6. 7
 Impact exchange rate 7.
 Total growth 19. 4.


Vessel operations segment
(1) TCE is a non-GAAP financial measure. For a reconciliation of TCE, please see “Item 3. Key Information-A. Selected Financial Data."
Total operating revenues: Operating revenues decreased by $72.3 million to $230.7 million for the year ended December 31, 2019 compared to $303.0 million in 2018. This was principally due to a decrease of:
• $90.4 million in revenue as a result of lower utilization, higher number of drydocking days and lower charterhire rates for our fleet for the year ended December 31, 2019 compared to the same period in 2018. During the year ended December 31, 2019, the majority of our fleet was scheduled for drydocking, resulting in 278 days of off-hire in aggregate, compared to 28 days of off-hire during the same period in 2018; and
• $2.3 million decrease in vessel and other management fees revenue for the year ended December 31, 2019 compared to the same period in 2018, mainly due to the wind down of OneLNG during 2018.
This was partially offset by the:
• $20.4 million increase in revenue from the Golar Viking as she was mostly on-hire during the year ended December 31, 2019, compared to being on commercial waiting time until December 2018.
Average daily TCE: As a result of lower voyage expenses offsetting the decrease in operating revenues, the average daily TCE for the year ended December 31, 2019 increased marginally to $44,400 compared to $43,700 for the same period in 2018.
Vessel operating expenses: Vessel operating expenses decreased by $2.9 million to $67.6 million for the year ended December 31, 2019, compared to $70.5 million for the same period in 2018, primarily due to a decrease of:
• $3.1 million in reactivation and operating costs of the Golar Viking as she was taken out of lay-up in January 2018;
• $1.8 million in expenses in relation to the Gandria as a result of the generic works in anticipation of her conversion into a FLNG at the start of 2018; and
• $1.1 million in expenses in relation to the Gimi in the year ended December 31, 2019, as we commenced capitalization of costs associated with her conversion to a FLNG following receipt of the Limited Notice to Proceed in December 2018 to service the Gimi GTA Project.
This was partially offset by an increase in non-capitalizable vessel operating costs of $2.8 million net increase as a result of the scheduled drydocking in the year ended December 31, 2019.
Voyage, charterhire and commission expenses: Largely relates to charterhire expenses, fuel costs associated with commercial waiting time and vessel positioning costs. While a vessel is on-hire, fuel costs are typically paid by the charterer, whereas during periods of commercial waiting time, fuel costs are paid by us. The decrease in voyage, charterhire and commission expenses of $66.1 million to $38.4 million for the year ended December 31, 2019 compared to $104.5 million for the same period in 2018, is principally due to a decrease of:
• $56.4 million reduction in voyage expenses as a result of decreased utilization of our vessels; and
• $15.2 million reduction in bunker consumption as the majority of our fleet underwent drydocking for a total of 278 days in aggregate, compared to 28 days during the same period in 2018.
This was partially offset by the $4.6 million increase in costs in relation to the Golar Arctic, as she was mostly on commercial waiting time for the year ended December 31, 2019, compared to full utilization during the same period in 2018.
Administrative expenses: Administrative expenses decreased by $0.9 million to $50.8 million for the year ended December 31, 2019 compared to $51.7 million for the same period in 2018, principally due to a decrease in corporate expenses and share options expenses.
Project development expenses: Project development expenses decreased by $3.1 million to $2.1 million for the year ended December 31, 2019 compared to $5.2 million for the same period in 2018, principally due to a decrease in non-capitalized project-related expenses comprising of legal, professional and consultancy costs.
Depreciation and amortization: Depreciation and amortization decreased by $0.6 million to $64.9 million for the year ended December 31, 2019 compared to $65.5 million for the same period in 2018, principally due to a decrease of $0.9 million in Golar Viking depreciation for the year ended December 31, 2019, compared to the same period in 2018, as a result of a $34.3 million impairment charge on the vessel and equipment recognized in March 2019.
Impairment of long-term assets: Impairment of long-term assets increased by $42.1 million for the year ended December 31,
2019 due to a:
• $34.3 million impairment charge on vessel and equipment associated with our LNG carrier, the Golar Viking. In March 2019, we signed an agreement with LNG Hrvatska for the future sale of the Golar Viking once converted into an FSRU, following the completion of its current charter lease term. Although the sale is not expected to close until the fourth quarter of 2020, the transaction triggered an immediate impairment test. As the current carrying value of the vessel exceeds the price that a market participant would pay for the vessel at the measurement date, a non-cash impairment charge of $34.3 million was recognized. The fair value was based on average broker valuations as of the measurement date and represents the exit price in the principal LNG carrier sales market; and
• $7.3 million impairment charge associated with our investment in OLT Offshore LNG Toscana S.P.A. ("OLT-O"). In May 2019, a major shareholder in OLT-O sold its shareholding which triggered an assessment of the recoverability of the carrying value of our 2.6% investment in OLT-O. As the carrying value of our investment exceeded the representative fair value, we wrote off our investment.
Other operating gains: Other operating gains comprised of:
• $9.3 million and $50.7 million recovered in connection with the ongoing arbitration proceedings arising from the delays and the termination of the Golar Tundra time charter with a former charterer, for the year ended December 31, 2019 and 2018, respectively. The amount for the year ended December 31, 2019 represents the final payment to settle these proceedings; and
• $4.0 million loss of hire insurance proceeds on the Golar Viking for the year ended December 31, 2019.

                                                                                |          | December 31, |          |
----------------------------------------------------------------------------------------------- | -------- | ------------ | -------- | --------
(in thousands of $, except average daily TCE)                                                   | 2019     | 2018         | Change   | % Change
Total operating revenues                                                                        | 230,654  | 302,979      | (72,325) | (24)%
Vessel operating expenses                                                                       | (67,601) | (70,543)     | 2,942    | (4)%
Voyage, charterhire and commission expenses (including expenses from collaborative arrangement) | (38,381) | (104,463)    | 66,082   | (63)%
Administrative expenses                                                                         | (50,801) | (51,716)     | 915      | (2)%
Project development expenses                                                                    | (2,050)  | (5,165)      | 3,115    | (60)%
Depreciation and amortization                                                                   | (64,945) | (65,496)     | 551      | (1)%
Impairment of long-term assets                                                                  | (42,098) | —            | (42,098) | 100%
Other operating gains                                                                           | 13,295   | 50,740       | (37,445) | (74)%
Operating (loss)/income                                                                         | (21,927) | 56,336       | (78,263) | (139)%
Equity in net losses of affiliates                                                              | (22,565) | (138,677)    | 116,112  | (84)%
Other Financial Data:                                                                           |          |              |          |
Average Daily TCE (1) (to the closest $100)                                                     | 44,400   | 43,700       | 700      | 2%
Calendar days less scheduled off-hire days                                                      | 3,840    | 3,987        | (147)    | (4)%

Vessel operations segment
 TCE non-GAAP financial measure. reconciliation see 3. Key Information. Selected Financial Data.
 Total operating revenues decreased $72. 3 million $230. 7 million December 31, 2019 $303. 0 million 2018. due
 $90. 4 million revenue lower utilization higher drydocking days lower charterhire rates. majority fleet scheduled drydocking days off-hire 28 2018
 $2. 3 million decrease vessel management fees revenue due wind down OneLNG 2018.
 offset
 $20. 4 million increase revenue Golar Viking on-hire.
 Average daily TCE lower voyage expenses increased $44,400 $43,700 2018.
 Vessel operating expenses decreased $2. 9 million to $67. 6 million December 2019 $70. 5 million 2018 due decrease
 $3. 1 million reactivation operating costs Golar Viking 2018
 $1. 8 million expenses Gandria conversion FLNG 2018
 $1.million expenses Gimi December 31, 2019 conversion FLNG Limited Notice Proceed 2018 GTA Project.
 offset non-capitalizable vessel operating costs $2. 8 million scheduled drydocking.
 Voyage charterhire commission expenses fuel costs commercial waiting time vessel positioning costs.-hire fuel paid charterer. decrease expenses $66. 1 million to $38. 4 million 2019 $104. 5 million 2018 due
 $56. 4 million reduction voyage expenses decreased utilization
 $15. 2 million reduction bunker consumption drydocking 278 days 28 days 2018.
 offset $4. 6 million increase Golar Arctic commercial waiting time 2018.
 Administrative expenses decreased $0. 9 million $50. 8 million $51. 7 million 2018 corporate expenses share options expenses.
 Project development expenses decreased $3. 1 million $2. 1 million 2019 $5. 2 million 2018 non-capitalized project-related expenses legal professional consultancy costs.
 Depreciation amortization decreased $0.million $64. 9 million December 31, 2019 $65. 5 million 2018 due decrease $0. 9 million Golar Viking depreciation $34. 3 million impairment charge vessel equipment March 2019.
 Impairment long-term assets increased $42. 1 million December
 due
 $34. 3 million impairment charge vessel equipment Golar Viking. March 2019 agreement LNG Hrvatska future sale Golar Viking. fourth quarter 2020 triggered impairment test. carrying value exceeds non-cash impairment charge $34. 3 million recognized. fair value broker valuations exit price LNG carrier sales market
 $7. 3 million impairment charge investment OLT Offshore LNG Toscana. May 2019 shareholder sold recoverability 2. 6% investment. exceeded fair value wrote off investment.
 operating gains
 $9. 3 million $50. 7 million recovered arbitration proceedings Golar Tundra time charter December 31, 2019 2018. final payment
 $4.million loss hire insurance Golar Viking December 31, 2019.
 TCE
 revenues 230,654 302,979 (72,325)
 Vessel expenses (67,601) (70,543) 2
 charterhire commission (38,381) (104,463) 66,082
 Administrative expenses (50,801) (51,716)
 Project development expenses (2,050) (5,165 3,115
 Depreciation amortization (64,945) (65,496)
 Impairment long-term assets (42,098)
 operating gains 13,295 50,740 (37,445)
 Operating/income (21,927) 56,336 (78,263)
 net losses (22,565 (138,677
 Financial Data
 Average Daily TCE 44,400,700
 off-hire days 3,840,987


16. Segment, Geographic, and Significant Customer Information
We operate in one industry segment: the design, manufacturing, marketing, and technical support of high-performance storage and data management solutions. We conduct business globally, and our sales and support activities are managed on a geographic basis. Our management reviews financial information presented on a consolidated basis, accompanied by disaggregated information it receives from our internal management system about revenues by geographic region, based on the location from which the customer relationship is managed, for purposes of allocating resources and evaluating financial performance. We do not allocate costs of revenues, research and development, sales and marketing, or general and administrative expenses to our geographic regions in this internal management reporting because management does not review operations or operating results, or make planning decisions, below the consolidated entity level.
The majority of our assets, excluding cash, cash equivalents, short-term investments and accounts receivable, were attributable to our domestic operations. The following table presents cash, cash equivalents and short-term investments held in the U.S. and internationally in various foreign subsidiaries (in millions):

              | April 26, 2019 | April 27, 2018
------------- | -------------- | --------------
U.S.          | $ 159          | $ 853
International | 3,740          | 4,538
Total         | $ 3,899        | $ 5,391

. Segment Geographic Customer Information
 operate industry segment design manufacturing marketing support high-performance storage data management solutions. conduct business globally sales support managed geographic. management reviews financial information disaggregated information geographic region resources evaluating financial performance. allocate research development sales marketing administrative expenses geographic regions consolidated entity.
 majority assets cash investments domestic operations. cash equivalents investments U. S. foreign subsidiaries
 April 26, 2019 April 27, 2018
. $ 159  $ 853
 International 3,740 4,538
 Total $ 3,899 $ 5,391


13. Income Taxes
On December 22, 2017, the legislation commonly known as the Tax Cuts and Jobs Act (the “TCJA” or the “Act”) was enacted into law. The Act made comprehensive changes to the U.S. tax code, including, but not limited to: (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) changing rules related to uses and limitations of net operating loss carry-forwards created in tax years beginning after December 31, 2017 as well as the repeal of the current carryback provisions for net operating losses arising in tax years ending after December 31, 2017; (3) immediate full expensing of certain qualified property; (4) creating a new limitation on deductible interest expense; (5) eliminating the corporate alternative minimum tax; (6) repeal of the deduction for income attributable to domestic production activities; and (7) changes in the manner in which international operations are taxed in the U.S. including a mandatory one- time transition tax on the accumulated untaxed earnings of foreign subsidiaries of U.S. shareholders.
In response to the TCJA, the U.S. Securities and Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of TCJA. The purpose of SAB 118 was to address any uncertainty or diversity of view in applying ASC Topic 740, Income Taxes in the reporting period in which the TCJA was enacted. SAB 118 addresses situations where the accounting is incomplete for certain income tax effects of the TJCA upon issuance of a company’s financial statements for the reporting period which include the enactment date. SAB 118 allows for a provisional amount to be recorded if it is a reasonable estimate of the impact of the TCJA. Additionally, SAB 118 allows for a measurement period to finalize the impacts of the TCJA, not to extend beyond one year from the date of enactment. For the year ended April 30, 2018, the Company recorded a provisional decrease in its deferred tax assets and liabilities for the reduction in the federal tax rate with a corresponding adjustment to the valuation allowance. During the year ended April 30, 2019, the Company completed the accounting for the tax effects of the TCJA with no material changes to the provisional estimate recorded in prior periods.
The TCJA also established the Global Intangible Low-Taxed Income (“GILTI”) provisions that impose a tax on foreign income in excess of a deemed return on tangible assets on foreign corporations. The Company does not anticipate being subject to GILTI due to the sale of Gillam in Fiscal 2018 and the treatment of FEI-Asia as a disregarded entity for U.S. tax purposes.
The provision for income taxes consisted of the following (in thousands):

                       | 2019   | 2018
---------------------- | ------ | -------
Current:               |        |
Federal                | $8     | $ (869)
Foreign                | 196    | -
State                  | 99     | (124)
Current provision      | 303    | (993)
Deferred:              |        |
Federal                | -      | 10,702
Foreign                | (247 ) | 267
State                  | -      | 1,200
Deferred (benefit) tax | (247 ) | 12,169
Total provision        | $56    | $11,176

. Income Taxes
 December 22, 2017 Tax Cuts and Jobs Act enacted law. Act U. S. tax code. federal corporate tax rate 35% to 21% changing rules net operating loss carry-forwards after 31, 2017 repeal carryback provisions expensing qualified property limitation deductible interest expense eliminating corporate alternative minimum tax repeal deduction income domestic production changes international operations. mandatory one- time transition tax untaxed earnings foreign subsidiaries. shareholders.
. Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 guidance accounting tax effects TCJA. uncertainty ASC Topic 740 Income Taxes TCJA. addresses accounting income tax effects financial statements enactment date. allows provisional amount impact TCJA. measurement period finalize impacts TCJA beyond one year enactment. year ended April 30, 2018 Company recorded provisional decrease deferred tax assets liabilities for reduction federal tax rate adjustment valuation allowance.year April 30, 2019 Company completed accounting tax effects TCJA no changes provisional estimate.
 TCJA established Global Intangible Low-Taxed Income provisions tax foreign income assets. Company GILTI sale Gillam 2018 FEI-Asia disregarded entity. tax.
 provision income taxes
 2019 2018
 Current
 Federal $8 (869)
 Foreign
 State
 303 (993)
 Deferred
 10,702
 Foreign 267
 State 1,200
 Deferred tax 12,169
 Total provision $11,176


6. Property and Equipment, Net
Property and equipment, net was comprised of the following (amounts in millions):
Depreciation expense for the years ended December 31, 2019, 2018, and 2017 was $124 million, $138 million, and $130 million, respectively.

                                     | At December 31, |
------------------------------------ | --------------- | -----
                                     | 2019            | 2018
Land                                 | $1              | $1
Buildings                            | 4               | 4
Leasehold improvements               | 252             | 248
Computer equipment                   | 654             | 700
Office furniture and other equipment | 91              | 99
Total cost of property and equipment | 1,002           | 1,052
Less accumulated depreciation        | (749)           | (770)
Property and equipment, net          | $253            | $282

. Property Equipment
 Depreciation expense years December 31, 2019 2018 2017 $124 million $138 million $130 million.
 December
 Land
 Buildings
 Leasehold improvements 252
 Computer equipment 654
 Office furniture equipment
 cost property equipment 1,002 1,052
 accumulated depreciation (749)
 $253 $282


Remaining Performance Obligation Associated with Non-Lease Arrangements
A majority of the Company’s revenue is provided over a contract term. When allocating the total contract transaction price to identified performance obligations, a portion of the total transaction price relates to performance obligations that are yet to be satisfied or are partially satisfied as of the end of the reporting period.
In determining the transaction price allocated to remaining performance obligations, the Company does not include non- recurring charges and estimates for usage.
Remaining performance obligations associated with the Company’s contracts reflect recurring charges billed, adjusted to reflect estimates for sales incentives and revenue adjustments.
The table below reflects an estimate of the remaining transaction price of fixed fee, non-lease revenue arrangements to be recognized in the future periods presented. The table below does not include estimated amounts to be recognized in future periods associated with variable usage-based consideration.

                   | Year Ended June 30, |        |        |       |       |            |
------------------ | ------------------- | ------ | ------ | ----- | ----- | ---------- | --------
                   | 2020                | 2021   | 2022   | 2023  | 2024  | Thereafter | Total
                   | (in millions)       |        |        |       |       |            |
Reportable Segment |                     |        |        |       |       |            |
Zayo Networks      | 621.4               | 295.9  | 117.4  | 36.7  | 14.1  | 17.5       | 1,103.0
zColo              | 21.7                | 11.0   | 6.2    | 3.5   | 2.5   | 2.0        | 46.9
Allstream          | 110.3               | 26.7   | 11.8   | 1.6   | 0.3   | —          | 150.7
Total              | $753.4              | $333.6 | $135.4 | $41.8 | $16.9 | $19.5      | $1,300.6

Performance Obligation Non-Lease Arrangements
 majority Company’s revenue contract term. allocating total contract transaction price performance obligations portion relates obligations end reporting period.
 price non- recurring charges estimates usage.
 performance obligations reflect recurring charges sales incentives revenue adjustments.
 table reflects estimate remaining transaction price fixed fee non revenue arrangements future periods. estimated amounts future variable usage-based consideration.
 Year Ended June 30
 2020 2021 2022 2023 2024 Total
 millions
 Reportable Segment
 Zayo Networks 621. 295. 117. 36. 14. 17. 1,103.
 21. 11. 6. 3. 2. 2. 46.
 110. 26. 11. 1. 0. 150.
 $753. $333. $135. $41. $16. $19. $1,300.


Note 11. Other Current Assets
Other current assets consisted of the following (in thousands):

                                | December 31, |
------------------------------- | ------------ | -------
                                | 2019         | 2018
Investments held in rabbi trust | $13,927      | $11,442
Financial derivatives           | 3,373        | 1,078
Deferred rent                   | 558          | 1,867
Other current assets            | 2,667        | 2,374
                                | $20,525      | $16,761

11. Assets
 December 31,
 Investments trust $13,927 $11,442
 Financial derivatives 3,373
 Deferred rent 1,867
 assets 2,667,374
 $20,525 $16,761


Year ended December 31, 2018 compared with the year ended December 31, 2017:
Revenue in 2018 is derived from multiple license agreements that we entered into with third-parties following negotiations pursuant to our patent licensing and enforcement program. The revenue increase is primarily due to licensing revenues, as further described in "Item 1. Business" - "Licensing and Enforcement - Current Activities, Post 2013".
Cost of revenues includes contingent legal fees directly associated with our licensing and enforcement programs. Cost of revenues increased largely in proportion to increase in revenues.
Selling, general and administrative expenses ("SG&A") consisted primarily of legal fees incurred in operations and employee headcount related expenses. These comprise approximately 74% of total SG&A expense. Litigation expenses increased $4.2 million to $16.5 million in 2018 compared to 2017 and are primarily due to the timing of various outstanding litigation actions. See "Item 3. Legal Proceedings". Employee headcount related expenses increased $1.8 million to $7.2 million in 2018 compared to 2017, and is primarily due to incentive bonuses earned during the year. The balance of SG&A expenses include consulting, other professional services, facilities and other administrative fees and expenses.
Research and Development expenses ("R&D") are primarily from our Finjan Mobile security business and increased by $0.6 million to $2.1 million in 2018 compared to 2017, as we continue to position this business for future growth.
Other income (expense) is primarily due to changes in the fair value of the warrant liability of $3.4 million in 2018 versus a benefit of $2.2 million in 2017, and interest expense of $0.6 million in 2018, net.
We recognized an income tax expense of $8.1 million on pre-tax income of $28.7 million in 2018 as compared to a benefit from the reduction in the valuation allowance of $6.2 million in 2017.

                                    |       | For the Year Ended December 31,   |        |
----------------------------------- | ----- | --------------------------------- | ------ | --------
                                    | 2018  | 2017                              | Change | % Change
                                    |       | (In millions, except percentages) |        |
Revenues                            | $82.3 | $50.5                             | $31.8  | 63%
Cost of revenues                    | 15.3  | 6.0                               | 9.3    | 155%
Gross profit                        | 67.0  | 44.5                              | 22.5   | 51%
Gross margin                        | 81%   | 88%                               |        |
Operating expenses:                 |       |                                   |        |
Selling, general and administrative | 32.2  | 28.6                              | 3.6    | 13%
Research and development            | 2.1   | 1.5                               | 0.6    | 40%
Total operating expenses            | 34.3  | 30.1                              | 4.2    | 14%
Other income (expense)              | (4.0) | 2.2                               | (6.2)  | (282)%
Income before income taxes          | 28.7  | 16.6                              | 12.1   | 73%
Income tax provision (benefit)      | 8.0   | (6.2)                             | 14.2   | (229)%
Net income                          | $20.7 | $22.8                             | $(2.1) | (9)%

December 31, 2018
 Revenue 2018 license agreements patent licensing enforcement program. revenue increase due licensing revenues. Enforcement Activities Post 2013.
 legal fees licensing enforcement. increased.
 expenses legal fees employee headcount expenses. 74% SG&A expense. Litigation expenses increased $4. 2 million to $16. 5 million 2018 due timing actions. Employee headcount expenses increased $1. 8 million to $7. 2 million due incentive bonuses. expenses consulting services facilities administrative fees.
 Research Development expenses Finjan Mobile security business increased $0. 6 million $2. 1 million 2018 future growth.
 due fair value warrant liability $3. 4 million 2018 $2. 2 million 2017 interest expense $0. 6 million.
 income tax expense $8. 1 million pre-tax income $28. 7 million reduction valuation allowance $6. 2 million 2017.
 Year Ended December
millions
 Revenues $82. $50. $31. 63%
 revenues 15. 6. 9. 155%
 profit 67. 44. 22. 51%
 margin 81%
 Operating expenses
 Selling administrative 32. 28. 3. 13%
 Research development 2. 40%
 operating expenses 34. 30. 4. 14%
 income. (282)%
 Income taxes 28. 16. 12. 73%
 Income tax 8. 14. (229)
 Net income $20. $22.