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

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

 table results fiscal 2019 2018. Part II Item 7 Annual Report Form 10-K March 31, 2018 SEC May 21, Analysis Financial Condition Results April 1, 2017.
 REVENUE
 increased $116. 8 million 2019 due higher demand mobile products base station products offset decrease smartphone demand.
 provided products contract manufacturers 32% 36% revenue 2019 2018. Huawei 13% 8% revenue. purchase RF Wi-Fi solutions cellular base stations mobile devices smartphones wearables tablets. May 2019 U. S. government imposed restrictions sales Huawei Note 2 Financial Statements Part II 8.
 International shipments $2,610. 0 million 2019 84% revenue $2,449. 1 million 2018 82%. Shipments Asia $2,446. 3 million 79% revenue $2,329. 3 million 2018 78%.
 GROSS MARGIN
 flat selling price erosion offset product mix.
 Research Development
 R spending increased $5.million 2018 higher personnel costs lower product development spend R&D.
 Selling General Administrative
 2019 expense decreased $51. 7 million 9. 8% lower intangible amortization higher personnel costs.
 Other Operating Expense
 $52. 2 million. recognized $15. 9 million impairment charges $11. 6 million employee termination benefits restructuring Note 11 Financial Statements II. recorded $18. 0 million start-up costs processes.
 operating expense $103. 8 million. initiated restructuring actions efficiencies recorded $18. 3 million employee termination benefits adjusted value assets China. fair market value charges $46. 3 million. recorded integration restructuring costs $6. 2 million $2. 6 million $24. 3 million start-up costs.
 OPERATING INCOME
 income $216. 5 million 2019 $70. 3 million 2018. due lower intangible amortization higher revenue lower impairment charges property equipment.
percentages Dollars % Revenue
 $3,090,325. $2,973,536.
 goods sold 1,895,142 61.
 profit 1,195,183. 1,146,966.
 Research development 450,482. 445,103.
 Selling 476,074. 527,751 17.
 operating expense 52,161. 103,830 3.
 Operatingincome $216,466. $70,282.


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

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

Revenues Operating Expenses
 Excluding currency fluctuations revenues increased 2019 due to growth cloud license revenues offset by decreases hardware services revenues. constant currency increase cloud license revenues attributable to growth cloud services license support revenues customers applications infrastructure contracts growth cloud license on-premise license revenues. constant currency decreases hardware revenues due to reduction hardware support revenues due to emphasis on marketing cloud-based infrastructure technologies reduced sales volumes support contracts. constant currency decrease services revenues to declines consulting education services revenues. Americas EMEA Asia Pacific regions contributed 40% 33% 27%, to growth 2019 total revenues.
 operating expenses increased 2019 due to higher expenses cloud license business increased headcount infrastructure expenses. expense increase offset by expense decreases 2019 lower expenses hardware business lower restructuring expenses.
 total operating margin increased 2019 due to increase revenues remained flat.
 Europe Middle East Africa
 Year Ended May 31,

 Percent Change
 2019 2018
 Revenues Geography
 Americas $21,856 1% 2% $21,648
 EMEA 11,270 -1% 3%
 Asia Pacific 6,380 1%
 revenues 39,506 0% 3% 39,383
 Operating Expenses 25,971 -1%
 Operating Margin $13,535 $13,264
 34%
 Revenues
 Americas 55%
 EMEA 29%
 Asia Pacific 16%
 Revenues Business
 Cloud license $32,562 2% 4% $31,994
 Hardware 3,704 -7% -5%
 Services 3,240 -5% 3
 revenues $39,506 0% 3% $39,383
 Revenues Business
 Cloud license 83%
 Hardware
 Services 8%
 Europe Middle East Africa


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

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

. FINANCIAL INSTRUMENTS FAIR VALUE DISCLOSURES
 majority subsidiaries’ transactions assets liabilities denominated in United States dollars. no risk currency fluctuations cash flows.
 Company categorizes fair value estimates hierarchy inputs Balance Sheet. hierarchy three levels
 Level 1. Quoted prices markets.
 Level 2. Inputs
 Level 3. Unobservable inputs little no market data assumptions.
 methods assumptions fair value financial instruments.
 carrying value of cash equivalents marketable securities estimate fair value.
 estimated value long-term debt equal carrying values spreads variable interest rates market rates.
 carrying value estimated fair value Company financial instruments at December 31, 2019 2018
 2019 Senior Secured Credit Facility Vessel financing 2018 Newbuildings carry floating LIBOR interest rate margin fair value equal carrying value.
 figures in USD Fair Value
 Hierarchy
 2019
 2018
Recurring
 Cash Equivalents 48,847 49,327
 Restricted Cash 12,791
 Credit Facility  (313,400)
 2019 Senior Secured Credit Facility (291,798)
 Investment Securities 825 4,197
 Vessel financing 2018 Newbuildings (119,867) (127,140)


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

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

ordinary share capital
 entitle participate dividends proceeds paid. fully paid shares no par value limited authorised capital.
 member one vote poll share one vote.
 Issue price
 Shares AU$US
 Balance 1 July 2017 130,215,813 125,177
 Shares 23 February 2018 69,129 $8. 52
 30 June 2018 130,284,942 125,635
 Shares 24 August 2018 69,129 $8.
 28,407 $0.
 21 December 2018 129,044 $0.
 Balance 30 June 2019 130,511,522 126,058


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

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

Uncertain Tax Positions
 June 30, 2019 2018 2017 accrued interest expense $3. 4 billion $3. 0 billion $2. 3 billion net income tax benefits. provision income taxes 2019 2018 2017 included interest expense positions $515 million $688 million $399 million.
 changes unrecognized tax benefits
 settled Internal audit 2004 to 2006 2011. 2012, withdrew 2011 Revenue Agents Report unresolved issues reopened audit. settled 2007 to 2009 2016, 2010 to 2013 2018. under audit 2004 to 2013. examination years 2014 to 2017 12 months.
 June 30, 2019 primary unresolved issues transfer pricing financial statements. allowances income tax contingencies adequate. proposed assessment expect final resolution 12 months. anticipate significant increase decrease tax contingencies.
 subject income tax jurisdictions outside U. S. operations examination years 1996 to 2018 under audit. resolution not consolidated financial statements.

 Ended June 30 2019
 tax benefits $ 11,961 11,737 10,164
 Decreases settlements (316) (193)
 current year 2,106 1,445 1,277
 prior years 508 151 397
 (1,113),176 (49)
 lapsed statutes limitations
 Ending tax benefits $ 13,146 11,961,737


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

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

non-operating results
 consolidated results December 2019 2018:
 Interest expense increased $1. 2 million $103. 1 million 2019 $101. 9 million 2018. due
 $28. 9 million lower interest borrowing costs Hilli FLNG conversion 2018
 $1. 5 million interest term loan facility 2019.
 offset reduced interest costs lower LIBOR rates
 $12. 4 million decrease interest expense
 $8. 7 million interest borrowing costs
 $6. 5 million decrease interest deposits Golar Partners conversion shareholder loans equity 2018
 $1. 0 million decrease interest expense Hilli letter credit $300 million to $250 million May 2019 $125 million November 2019.
 Losses derivative instruments increased $7. 5 million $38. 0 million December 31, 2019 $30. 5 million 2018. due
 unrealized interest rate swap agreements portfolio $737. 5 million hedges. unrealized losses $16. 5 million gain $0.million 2018 decline long-term swap rates decreased value swap portfolio. gains interest rate swaps decreased $6. 4 million December 31, 2019 $8. 1 million 2018. lower LIBOR rates.
 Unrealized losses Total Return Swap 2014, three month Stock Indexed Total Return Swap DNB Bank. November 2019 repurchased 1. 5 million shares. extended March 2020. net loss $30. 5 million December 31, 2019 $30. 7 million 2018. losses due decline share price.
 Unrealized mark-to-market losses Earn-Out Units IDR reset 2016, derivative asset. decrease Golar Partners quarterly distribution $0. 4042 per common unit October 24 2018 Units mark-to-market loss $7. 4 million derivative asset $nil December 31,. no comparative movement December 31, 2019.
 Other financial items decreased $4. 0 million loss $5. 5 million 2019 $1. 5 million 2018 consolidating VIEs.
income non-controlling interests increased $26. 4 million to $89. 6 million December 2019 $63. 2 million 2018 Hilli Disposal July 2018. non-controlling interest $61. 7 million $31. 3 million 2018.
 income $36. 5 million $19. 7 million Hilli LLC $0. 5 million Gimi MS Corporation 30% equity interest First FLNG Holdings 2019 $28. 3 million $31. 9 million equity interests remaining lessor VIEs.
 Interest income 10,479 3%
 Interest expense (103,124
 Losses on derivative instruments (38,044) (30,541) (7,503) 25%
 Other financial items (5,522) (1,481) (4,041) 100%
 Income taxes (1,024) (1,267)
 Net income non-controlling interests (89,581) (63,214) (26,367 42%


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

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

BCE CUSTOMER CONNECTIONS
 Q1 2019 adjusted wireless subscriber base 167,929 (72,231 postpaid 95,698 prepaid 65,798 subscribers (19,195 postpaid 46,603 shutdown CDMA network April 30, 2019 49,095 prepaid deactivation policy 90 43,670 postpaid 9,366 postpaid transferred retail high-speed Internet.
 Q4 2018 postpaid wireless base 20,000 subscribers Xplornet acquisition MTS 2017.
 January 1, 2019 reporting wholesale subscribers Internet TV residential NAS retail market. restated 2018 subscribers.
 added 657,323 retail connections 2019 6. 4% increase 2018. 401,955 postpaid wireless 113,454 prepaid 135,861 high-speed Internet TV 91,476 IPTV 85,423 satellite TV
 residential NAS losses 263,325 1. 7% 2018.
 BCE retail connections grew 1. 3% retail growth services base erosion residential NAS lines.
2019 BCE retail connections 18,983,510 9,957,962 wireless 3. 6% 9,159,940 postpaid 3. 7% 798,022 prepaid. 3% 3,555,601 high-speed Internet 4. 3% higher 2,772,464 retail TV. 2% 1,767,182 IPTV. 5% 1,005,282 satellite TV down 7. 8% 2,697,483 residential NAS decline 8. 9% 2018
 Wireless 9,957,962,482 3. 6%
 Postpaid 9,159,940,830,216. 7%
 Prepaid.
 high-speed Internet 3,555,601 3,410,374 4.
 2,772,464 2,766,411.
 1,767,182.
 1,005,282 1,090,705.
 16,286,027 15,787,267 3.
 NAS 2,697,483 2,960,808.
 18,983,510 18,748,075.


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

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

Operating Segments
 Company operates as one operating segment. components enterprise financial information evaluated by chief operating decision maker performance. CODM evaluates financial information performance. operates one operating segment. financial information evaluated by. evaluates financial information.
 Revenue by geographic country ship-to destinations contract thousands):
 Year Ended December 31,
 2019 2018 2017
 United States $70,702 | $56,839  $60,723
 China 159,637 | 98,906  148,431
 Germany 57,657  58,711  57,051
 Thailand 82,413  68,217  48,016
 Other 94,254 | 57,218 | 70,945
 Total revenue $464,663 | 339,891 |,166


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

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

NOTE 15 INCOME TAXES
 cumulative tax effect net deferred tax amount 21% December 31, 2019 2018:
 realization deferred tax assets taxable income net operating losses expire temporary differences deductible. uncertainty future operations reversals differences taxable income deferred tax assets valuation allowance recorded. considered historical income projections future.
 tax years 2016 to 2019 open for audit Internal Revenue Service. no uncertain tax positions December 31, 2018 31, 2019 none expected next 12 months. foreign subsidiaries cost centers reimbursed no income loss. Pretax income from domestic operations. four years returns open for audit foreign audits responsibility previous owners.
 issuance common shares ownership change Internal Revenue Code Section 382 limits carry-forwards. net operating loss carry-forwards credits. limitations limit timing loss ability losses. likely fundraising activities ownership change.
 Deferred tax asset
loss $3,839,000 $2,290,000
 Stock compensation 320,000 535,000
 Intangible Assets
 Deferred tax 4,195,000 $2,952,000
 Fixed assets
 Intangibles (2,438,000
 Valuation allowance,728,000
 Deferred tax,195,000
 deferred tax asset


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

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

Cash Equivalents Restricted cash equivalents liquid shortterm investments non-interest-bearing maturities less than 90 days. Cash equivalents $127. 2 million $128. 7 million December 31, 2019 2018 non-interest-bearing accounts. equivalents $125. 3 million $115. 7 million international operations. funds additional taxes repatriated United States. Company repatriate country restrictions.
 Restricted cash limited purposes.
 table reconciliation cash equivalents restricted cash Consolidated Balance Sheets Statements Cash Flows
 2019 2018 2017 2016
 Cash equivalents $127,246  $128,697  $343,734 $266,675
 Restricted cash "Other current assets 149 154 160
 "Deferred charges other assets 1,371 1,385 759
 $129,185 $130,231 $344,805 $267,594


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

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

Operating Revenue
 Includes subscription interconnect roaming wholesale revenue MVNOs mobile content services.
 equipment sales ICT services.
 digital marketing advertising video.
 energy reselling fees.
 31 March 2019 transaction price unsatisfied obligations ICT NCS Pte. approximately S$3 billion operating revenue next 5 years.
 transaction price. approximately S$3 billion operating revenue next 5 years.
 contracts consumers month to 2 years enterprises 1 to 3 years.
 Mobile service 5,395.,737.
 Sale equipment 2,876. 2,414
 Handset lease income.
 Mobile 8,412.
 Data Internet 3,340.
 Business solutions.
 Cyber security.
 Other managed services 1,880. 1,920.
 Infocomm Technology 3,033. 3,007.
 Digital businesses 1,245. 1,113
 Fixed voice.
 Pay television 372.
.
 Operating revenue 17,371. 17,268
 17,371. 17,268.
 224. 258.
 Interest investment 38. 45.
 17,634. 17,572.


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

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

revenues. increased 23%-on-year to RMB209. 8 billion. reflected content FinTech services channel costs. increased 31 December 2019 from 55% 2018. cost revenues line business 2019
 VAS increased 27% to RMB94,086 million. due content costs live broadcast online games video streaming channel costs smart phone games.
 FinTech Business Services increased 35% RMB73,831 million. reflected payment-related cloud services enhanced.
 Online Advertising decreased 6% RMB34,860 million. driven lower content costs advertising-funded video fewer content releases improved cost efficiency offset cost items.
 31 December
 VAS 94,086  47%  73,961 42%
 FinTech Business Services 73,831 73% 54,598 75%
 Online Advertising 34,860 51% 37,273  64%
 Others 6,979 92% 4,742 98%
revenues 209,756 170,574


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

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

14. Principal Accounting Fees Services
 table fees services Malone Bailey LLP. summary fees billed services fiscal years December 31, 2019 2018.
 Audit Fees audit fees auditors services
 audits quarterly reviews financial statements assistance registration statements documents SEC.
 Audit-Related Fees activities not related to audit financial statements.
 Tax Fees no tax fees.
 All Other Fees $0 $0.
 Audit Committee Pre-Approval Policies Procedures. oversees monitors financial reporting process internal control system reviews
 audit reports Board issues.
 responsible for appointment compensation oversight accountants. convenes
 quarterly annual review external auditor.
 considered Audit-Related Fees Tax Fees other fees
 Marcum LLP’s Malone Bailey LLP’s independence determined services 2019 2018 compatible. services
 approved Audit Committee Rule 2-01 Regulation S-X Exchange Act.
 Fiscal Year
 2019 2018
 Audit fees $55,000 $54,550
Audit fees $
 Tax Fees
 fees
 55,000 $54,550


The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at each fiscal year-end are presented below (in thousands):
The Tax Act was enacted into law on December 22, 2017. The Tax Act included a reduction in the U.S. federal statutory corporate income tax rate (the “Tax Rate”) from 35% to 21% and introduced new limitations on certain business deductions. As a result, for the fiscal year ended September 30, 2018, we recognized a year-to-date, non-cash $32.5 million tax provision expense impact primarily related to the re-measurement of our deferred tax assets and liabilities due to the reduced Tax Rate.
Deferred tax assets as of September 29, 2019 include state net operating loss carry-forwards of approximately$27.4 million expiring at various times between 2020 and 2038. At September 29, 2019, we recorded a valuation allowance of$2.5 million related to losses and state tax credits, which decreased from the$3.6 million at September 30, 2018 primarily due to the release of the valuation allowance on prior year net operating losses. We believe that it is more likely than not that these net operating loss and credit carry-forwards will not be realized and that all other deferred tax assets will be realized through future taxable income or alternative tax strategies.
The major jurisdictions in which the Company files income tax returns include the United States and states in which we operate that impose an income tax. The federal statutes of limitations have not expired for fiscal years 2016 and forward. The statutes of limitations for California and Texas, which constitute the Company’s major state tax jurisdictions, have not expired for fiscal years 2015 and forward.

                                                                       | 2019     | 2018
---------------------------------------------------------------------- | -------- | --------
Deferred tax assets:                                                   |          |
Accrued defined benefit pension and postretirement benefits            | $46,918  | $34,776
Deferred income                                                        | 13,803   | 1,535
Impairment                                                             | 9,981    | 11,388
Accrued insurance                                                      | 7,133    | 8,994
Share-based compensation                                               | 5,415    | 4,936
Tax loss and tax credit carryforwards                                  | 5,327    | 7,458
Lease commitments related to closed or refranchised locations          | 3,786    | 4,696
Deferred interest deduction                                            | 3,188    | —
Other reserves and allowances                                          | 2,965    | 851
Accrued incentive compensation                                         | 2,617    | 2,055
Accrued compensation expense                                           | 1,092    | 2,034
Interest rate swaps                                                    | —        | 181
Other, net                                                             | 868      | 2,206
Total gross deferred tax assets                                        | 103,093  | 81,110
Valuation allowance                                                    | (2,485)  | (3,554)
Total net deferred tax assets                                          | 100,608  | 77,556
Deferred tax liabilities:                                              |          |
Intangible assets                                                      | (10,520) | (10,492)
Leasing transactions                                                   | (3,822)  | (2,790)
Property and equipment, principally due to differences in depreciation | (128)    | (1,855)
Other                                                                  | (574)    | (279)
Total gross deferred tax liabilities                                   | (15,044) | (15,416)
Net deferred tax assets                                                | $85,564  | $62,140

tax effects differences deferred tax assets liabilities fiscal
 Tax Act enacted December 22, 2017. corporate income tax rate 35% to 21% limitations business deductions. year September 30, 2018 non-cash $32. 5 million tax expense impact re-measurement deferred tax assets liabilities reduced Tax Rate.
 Deferred tax assets September 29, 2019 net operating loss carry-forwards$27. 4 million expiring 2020 2038. valuation allowance$2. 5 million decreased$3. 6 million September 30 2018 due allowance net losses. loss carry-forwards deferred tax assets future income alternative tax strategies.
 jurisdictions United States states. federal statutes limitations not expired 2016. California Texas not expired 2015.
 Deferred tax assets
 Accrued defined benefit pension postretirement benefits $46,918 $34,776
 Deferred income 13,803 1,535
 Impairment 9,981
insurance 7,133
 compensation 5,415
 Tax 5,327
 Lease 3,786 4,696
 Deferred interest deduction 3,188
 reserves 2,965
 incentive compensation 2,617
 1,092
 Interest rate swaps
 deferred tax assets 103,093 81,110
 Valuation allowance (2,485
 deferred tax 100,608 77,556
 Intangible assets (10,520,492
 Leasing transactions (3,822) (2,790
 Property equipment depreciation
 deferred tax liabilities (15,044
 $85,564,140


B. Liquidity and Capital Resources
Navios Holdings has historically financed its capital requirements with cash flows from operations, issuances of debt securities and borrowings under bank credit facilities. Main uses of funds have been refinancings of outstanding debt, capital expenditures for the acquisition of new vessels, new construction and upgrades at the port terminals and expenditures incurred in connection with ensuring that the owned vessels comply with international and regulatory standards. Navios Holdings may from time to time, subject to restrictions under its debt and equity instruments, including limitations on dividends and repurchases under its preferred stock, depending upon market conditions and financing needs, use available funds to refinance or repurchase its debt in privately negotiated or open market transactions, by tender offer or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms Navios Holdings deems appropriate (which may be below par) and subject to Navios Holdings cash requirements for other purposes, compliance with the covenants under Navios Holdings’ debt agreements, and other factors management deems relevant. Generally, our sources of funds may be from cash flows from operations, long-term borrowings and other debt or equity financings, proceeds from asset sales and proceeds from sale of our stake in our investments. We cannot assure you that we will be able to secure adequate financing or obtain additional funds on favorable terms, to meet our liquidity needs.
See “Item 4.B Business Overview — Exercise of Vessel Purchase Options”, “Working Capital Position” and “Long-Term Debt Obligations and Credit Arrangements” for further discussion of Navios Holdings’ working capital position.
The following table presents cash flow information for each of the years ended December 31, 2019, 2018, and 2017 and were adjusted to reflect the adoption of ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash.
Cash provided by operating activities for the year ended December 31, 2019 as compared to the year ended December 31, 2018:
Net cash provided by operating activities increased by $40.5 million to $96.1 million for the year ended December 31, 2019, as compared to $55.6 million for the year ended December 31, 2018. In determining net cash provided by operating activities, net loss is adjusted for the effects of certain non-cash items, which may be analyzed in detail as follows:

(in thousands of U.S. dollars)                                       | Year Ended December 31, 2019 | Year Ended December 31, 2018 | Year Ended December 31, 2017
-------------------------------------------------------------------- | ---------------------------- | ---------------------------- | ----------------------------
Net cash provided by operating activities                            | $96,112                      | $55,637                      | $48,117
Net cash (used in)/ provided by investing activities                 | (56,467)                     | 27,863                       | (42,365)
Net cash used in financing activities                                | (111,692)                    | (66,916)                     | (12,940)
(Decrease)/Increase in cash and cash equivalents and restricted cash | (72,047)                     | 16,584                       | (7,188)
Cash and cash equivalents and restricted cash, beginning of year     | 150,774                      | 134,190                      | 141,378
Cash and cash equivalents and restricted cash, end of year           | $78,727                      | 150,774                      | $134,190

. Liquidity Capital Resources
 Navios Holdings financed capital with cash operations debt securities borrowings bank credit. Main uses funds refinancings debt capital expenditures new vessels construction upgrades port terminals vessels international standards. may market conditions financing needs use funds refinance repurchase debt market transactions compliance laws rules regulations prices terms covenants debt agreements factors. sources funds cash long-term borrowings debt equity financings sales sale stake investments. assure secure financing additional funds liquidity needs.
 See “Item 4. Business Overview Vessel Purchase “Working Capital “Long-Term Debt Obligations Credit Arrangements” Navios Holdings’ working capital position.
 table presents cash flow information years ended December 31, 2019 2018 2017 adjusted ASU 2016-18, Statement Cash Flows Restricted Cash.
 2019
 Net cash increased by $40. 5 million to $96.1 million December 31, 2019 $55. 6 million 31, 2018. net cash loss adjusted non-cash items
. dollars 2019 2018 2017
 Net cash operating activities $96,112 $55,637 $48,117
 investing activities (56,467) 27,863 (42,365)
 financing (111,692) (66,916) (12,940)
 cash equivalents restricted cash (72,047) 16,584 (7,188)
 year 150,774 134,190 141,378
 end year $78,727 150,774 $134,190


The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
Of the $2.8 billion and $2.4 billion net deferred tax liability at December 31, 2019 and 2018, respectively, $2.9 billion and $2.5 billion is reflected as a long-term liability and $118 million and $131 million is reflected as a net noncurrent deferred tax asset at December 31, 2019 and 2018, respectively.

                                                                         | As of December 31,    |
------------------------------------------------------------------------ | --------------------- | -------
                                                                         | 2019                  | 2018
                                                                         | (Dollars in millions) |
Deferred tax assets                                                      |                       |
Post-retirement and pension benefit costs                                | $1,169                | 1,111
Net operating loss carryforwards                                         | 3,167                 | 3,445
Other employee benefits                                                  | 134                   | 162
Other                                                                    | 577                   | 553
Gross deferred tax assets                                                | 5,047                 | 5,271
Less valuation allowance                                                 | (1,319)               | (1,331)
Net deferred tax assets                                                  | 3,728                 | 3,940
Deferred tax liabilities                                                 |                       |
Property, plant and equipment, primarily due to depreciation differences | (3,489)               | (3,011)
Goodwill and other intangible assets                                     | (3,019)               | (3,303)
Other                                                                    | —                     | (23)
Gross deferred tax liabilities                                           | (6,508)               | (6,337)
Net deferred tax liability                                               | $(2,780)              | (2,397)

tax effects differences deferred tax assets
 $2. 8 billion $2. 4 billion net deferred tax liability December $2. 9 billion. 5 billion long-term liability $118 million $131 million net noncurrent deferred tax asset.
 Deferred tax assets
 Post-retirement pension benefit costs $1,169
 Net operating loss carryforwards 3,167
 employee benefits
 deferred tax assets 5,047
 Less valuation allowance
 deferred tax assets 3
 liabilities
 Property plant equipment depreciation differences
 Goodwill intangible assets
 deferred tax liabilities (6,508)
 Net deferred tax liability,780


Option Exercises and Stock Vested in 2018
The following table sets forth the number of shares of common stock acquired during 2018 by our named executive officers upon the exercise of stock options or upon the vesting of RSUs or RSAs, as well as the value realized upon such equity award transactions.
(1) Calculated by multiplying (i) the fair market value of Class A common stock on the vesting date, which was determined using the closing price on the New York Stock Exchange of a share of Class A common stock on the date of vest, or if such day is a holiday, on the immediately preceding trading day less the option exercise price paid for such shares of common stock, by (ii) the number of shares of common stock acquired upon exercise.
(2) Reflects the aggregate number of shares of Class A common stock underlying RSUs and RSAs that vested in 2018. Of the amount shown for Messrs. Daswani and Murphy and Mses. Friar, Henry, Reses and Whiteley, 20,132, 6,741, 44,857, 59,014, 91,306 and 17,217 shares, respectively, of Class A common stock were withheld to cover tax withholding obligations upon vesting.
(3) Calculated by multiplying (i) the fair market value of Class A common stock on the vesting date, which was determined using the closing price on the New York Stock Exchange of a share of common stock on the date of vest, or if such day is a holiday, on the immediately preceding trading day, by (ii) the number of shares of common stock acquired upon vesting. Of the amount shown for Messrs. Daswani and Murphy and Mses. Friar, Henry, Reses and Whiteley, $1,389,704, $414,596, $2,782,628, $3,619,149, $5,502,076 and $1,114,287, respectively, represents the value of shares withheld to cover tax withholding obligations upon vesting.

             | Option Awards                             |                                             | Stock Awards                                        |
------------ | ----------------------------------------- | ------------------------------------------- | --------------------------------------------------- | --------------------------------------------------
Name         | Number of Shares Acquired on Exercise (#) | Number of Value Realized on Exercise ($)(1) | Shares Acquired on Vesting of RSUs and RSAs (#) (2) | Value Realized on Vesting of RSUs and RSAs ($) (3)
Mr. Dorsey   | —                                         | —                                           | —                                                   | —
Ms. Friar    | 1,082,343                                 | 54,631,297                                  | 95,889                                              | 5,788,657
Ms. Henry    | 200,000                                   | 13,187,645                                  | 124,498                                             | 7,475,787
Ms. Reses    | —                                         | —                                           | 189,577                                             | 11,284,454
Ms. Whiteley | 20,625                                    | 989,821                                     | 38,156                                              | 2,375,984
Mr. Daswani  | —                                         | —                                           | 45,310                                              | 3,106,268
Mr. Murphy   | —                                         | —                                           | 18,024                                              | 1,120,072

Option Exercises Stock Vested 2018
 table shares common stock acquired 2018 executive officers stock options vesting RSUs RSAs value realized transactions.
 Calculated multiplying fair market value Class A common stock vesting date closing price York Exchange option exercise price number shares acquired.
 Reflects number shares Class A common stock RSUs vested 2018. Daswani Murphy. Friar Henry Reses Whiteley 20,132 44,857 59,014 91,306 17,217 shares Class A stock withheld tax withholding obligations vesting.
 Calculated multiplying fair market value Class A common stock vesting date number shares acquired vesting. Daswani Murphy. Friar Henry Reses Whiteley $1,389,704 $414,596 $2,782,628 $3,619,149 $5,502,076 $1,114,287 value shares withheld tax withholding obligations vesting.
 Option Awards Stock Awards
Shares Acquired Exercise Value Realized RSUs
. Dorsey
. Friar 1,082,343 54,631,297 95,889 5,788,657
. Henry 200,000 13,187,645 124,498,787
. Reses 189,577 11,284,454
. Whiteley 20,625 989,821 38,156 2,375,984
. Daswani 45,310 3,106,268
. Murphy 18,024 1,120,072


A tax credit of £8.9m in the year compared to a £13.7m charge in the prior year. This included a deferred tax credit in the current year of £6.1m, largely reflecting the loss before tax reported of £42.7m and a credit of £1.7m relating to the adjustment of prior period losses and capital allowances. A current year tax credit of £1.1m was in respect of overseas tax.
A deferred tax liability at 30 March 2019 of £13.5m compared to a liability of £12.1m at 31 March 2018. This movement is primarily due to a slightly higher pensions surplus reported at 30 March 2019 compared to 31 March 2018 reflecting the allowability for tax on pensions contribution payments. Recognised and unrecognised deferred tax assets relating to brought forward losses were approximately £44m at 30 March 2019 and equate to around £250m of future taxable profits.
The corporation tax rate and deferred tax rate applied in calculations are 19.0% and 17.0% respectively.

£m                                                    | 2018/19 | 2017/18 | Change
----------------------------------------------------- | ------- | ------- | ------
Overseas current tax                                  |         |         |
Current year                                          | 1.1     | 0.8     | 0.3
Deferred tax                                          |         |         |
Current period                                        | 6.1     | (4.1)   | 10.2
Prior periods                                         | 1.7     | (8.1)   | 9.8
– Adjustment to restate opening deferred tax at 17.0% | –       | (2.3)   | 2.3
Income tax credit/ (charge)                           | 8.9     | (13.7)  | 22.6

tax credit £8. 9m compared £13. 7m prior year. deferred tax credit current £6. 1m loss tax £42. 7m credit £1. 7m prior period losses capital allowances. current year tax credit £1. 1m overseas tax.
 deferred tax liability 30 March 2019 £13. 5m £12. 1m 31 March 2018. due higher pensions surplus 30 March 2019 tax pensions. deferred tax assets losses £44m 30 March 2019 £250m future taxable profits.
 corporation tax rate deferred tax rate 19. 0% 17. 0%.
 2018/19
 current tax
.
 Deferred tax
.
.
 deferred tax 17. 0%.
 Income tax credit.


A reconciliation of the provision for income taxes to the amount computed by applying the statutory federal income tax rate to income before income taxes for the periods presented was as follows:
The Company's effective tax rate for fiscal 2019 was favorably impacted primarily by excess tax benefits related to employee stock-based payment transactions and federal research tax credits, partially offset by an increase in valuation allowances arising from foreign withholding tax and an increase in taxes related to the sale of the commercial cybersecurity business.
The Company's effective tax rate for fiscal 2018 was favorably impacted primarily by a decrease in valuation allowances arising from the taxable conversion of a subsidiary and the utilization of capital losses, an increase in deferred tax assets related to stock basis of a subsidiary held for sale, excess tax benefits related to employee stock-based payment transactions and federal research tax credits.
The Company's effective tax rate for fiscal 2017 was favorably impacted primarily by the Tax Act's reduction of the federal corporate tax rate from 35% to 21% applied to the Company's fiscal 2017 year-end deferred tax balances and excess tax benefits related to employee stock-based payment transactions.

                                                         |                 | Year Ended        |
-------------------------------------------------------- | --------------- | ----------------- | -----------------
                                                         | January 3, 2020 | December 28, 2018 | December 29, 2017
                                                         |                 | (in millions)     |
Amount computed at the statutory federal income tax rate | $182            | $128              | $138
State income taxes, net of federal tax benefit           | 22              | 10                | 31
Excess tax benefits from stock-based compensation        | (11)            | (9)               | (12)
Research and development credits                         | (11)            | (9)               | (7)
Change in valuation allowance for deferred tax assets    | 6               | (49)              | 7
Stock basis in subsidiary held for sale                  | 5               | (16)              | —
Change in accruals for uncertain tax positions           | 4               | 1                 | —
Dividends paid to employee stock ownership plan          | (2)             | (2)               | (4)
Impact of foreign operations                             | 2               | —                 | (4)
Taxable conversion of a subsidiary                       | —               | (17)              | —
Change in statutory federal tax rate                     | —               | (10)              | (125)
Capitalized transaction costs                            | —               | —                 | 9
Other                                                    | (1)             | 1                 | (4)
Total                                                    | $196            | $28               | $29
Effective income tax rate                                | 22.6%           | 4.6%              | 7.4%

reconciliation income taxes federal tax rate
 tax rate 2019 impacted by excess tax benefits employee stock-based payment transactions federal research tax credits offset valuation allowances foreign withholding tax taxes sale commercial cybersecurity business.
 tax rate 2018 impacted decrease valuation allowances conversion subsidiary utilization capital losses increase deferred tax assets stock subsidiary sale excess tax benefits.
 tax rate 2017 impacted reduction federal corporate tax rate 35% to 21% deferred tax excess tax benefits stock transactions.
 January 3, 2020 December 28, 2018 29, 2017
 statutory federal income tax rate
 State income taxes net federal tax benefit
 Excess tax benefits stock-based compensation
 Research development credits
 Change valuation allowance deferred tax assets
 Stock basis subsidiary sale
 Change accruals uncertain tax positions
 Dividends employee stock ownership plan
 Impact foreign operations
conversion subsidiary (17)
 federal tax rate
 Capitalized transaction costs
 $196 $28 $29
 income tax rate 22. 6%. 6% 7. 4%


Our revenues for 2019 include $1.9 million related to the acquired MGI business. Our net loss for 2019 includes $0.3 million of net loss from the acquired MGI business. The following table provides unaudited pro forma information for the periods presented as if the MGI acquisition had occurred January 1, 2018.
No adjustments have been made in the pro forma information for synergies that are resulting or planned from the MGI acquisition. The unaudited proforma information is not indicative of the results that may have been achieved had the companies been combined as of January 1, 2018, or of our future operating results.

                                                                         | Year Ended December 31 |
------------------------------------------------------------------------ | ---------------------- | ------------------
                                                                         | 2019                   | 2018
Revenues (in thousands)                                                  | $ 224,913              | $ 17,542
Loss from continuing operations (in thousands)                           | $ (13,432)             | $ ( 7,792)
Loss per share - continuing operations                                   | $           (0.42)     | $          ( 0.35)
Weighted average number of common shares outstanding - basic and diluted | 32,359,316             | 22,099,149

revenues 2019 include $1. 9 million acquired MGI business. net loss 2019 $0. 3 million. table unaudited pro forma information MGI acquisition January 1 2018.
 No adjustments synergies MGI acquisition. not indicative results future results.
 Year Ended December 31
 2019
 Revenues $ 224,913 $ 17,542
 Loss continuing operations $ (13,432) $ 7,792)
 Loss per share $.
 common shares 32,359,316 22,099,149


NOTE 8. PROPERTY AND EQUIPMENT
The following table details the components of property and equipment (amounts in thousands).
Amounts payable for property and equipment included in accounts payable totaled $0.1 million at December 31, 2019, and $0.2 million at December 31, 2018. During 2019, we financed the purchase of $0.3 million of property with finance leases and equipment notes. Assets which had not yet been placed in service, included in property and equipment, totaled $1.5 million at December 31, 2019, and $2.2 million at December 31, 2018.

                              | December 31   |              |
----------------------------- | ------------- | ------------ | ----------------------------
                              | 2019          | 2018         | Estimated Useful Lives
Land                          | $730          | $585         |
Furniture and fixtures        | 476           | 430          | 5-10 years
Plant                         | 9,667         | 8,613        | 20-40 years, or life of lea
Computer and software         | 1,317         | 1,295        | 3-5 years
Leasehold improvements        | 2,019         | 681          | 4-15 years, or life of lease
Machinery and equipment       | 16,864        | 13,528       | 5-15 years
Property and equipment, cost  | 31,073        | 25,132       |
Less accumulated depreciation | 11,996        | 10,122       |
Property and equipment, net   | $      19,077 | $     15,010 |

. PROPERTY EQUIPMENT
 table details.
 Amounts. 1 million 2019. 2 million 31, 2018. financed. 3 million property leases equipment. Assets $1. 5 million 2019 $2. 2 million 31, 2018.
 Land $730 $585
 Furniture fixtures 476 430 5-10 years
 Plant 9,667 8,613 20-40 years
 Computer software 1,317 1,295 3-5 years
 improvements 2,019 681 4-15 years
 Machinery equipment 16,864 13,528 5-15 years
 31,073 25,132
 depreciation 11,996
 $ 19,077 $ 15,010


The pension expenses of the direct and indirect company pension plan commitments can be broken down as follows:
1 Netted against employees’ contributions.
2 Included therein: Interest effect from the adjustment of the asset ceiling.
The entire loss to be recognised outside of profit or loss in the other comprehensive income amounts to €90 million in financial year 2018/19. This figure is comprised of the effect from the change in actuarial parameters in the amount of €+247 million and the experience-based adjustments of €+4 million. It was offset by income from plan assets of €103 million and a gain of €58 million resulting from the change in the effect of the asset ceiling in the Netherlands.
In addition to expenses from defined benefit commitments, expenses for payments to external pension providers relating to defined contribution pension commitments of €82 million in financial year 2018/19 (2017/18: €82 million) were recorded. These figures also include payments to statutory pension insurance.
The provisions for obligations similar to pensions essentially comprise commitments from employment anniversary allowances, death benefits and partial retirement plans. Provisions amounting to €34 million (30/9/2018: €41 million) were allocated for these commitments. The commitments are valued on the basis of actuarial expert opinions. The valuation parameters used for this purpose are generally determined in the same way as for the company pension plan.

€ million                                          | 2017/2018 | 2018/2019
-------------------------------------------------- | --------- | ---------
Current service cost1                              | 24        | 21
Net interest expenses2                             | 11        | 9
Past service cost (incl. curtailments and changes) | 0         | 0
Settlements                                        | 0         | 0
Other pension expenses                             | 1         | 1
Pension expenses                                   | 36        | 31

pension expenses company pension plan commitments
 Netted against contributions.
 Interest effect adjustment asset ceiling.
 loss €90 million 2018/19. effect actuarial parameters €+247 million experience-based adjustments €+4 million. offset income plan assets €103 million gain €58 million change asset ceiling Netherlands.
 benefit payments external pension providers pension €82 million 2018/19. payments statutory pension insurance.
 provisions obligations pensions employment anniversary allowances death benefits partial retirement plans. Provisions €34 million allocated. valued actuarial expert opinions. valuation parameters company pension plan.
 million 2017/2018 2018/2019
 Current service 24
 Net interest expenses2 11
 Past service cost. curtailments changes
 Settlements
 Other pension expenses


Item 14. Principal Accountant Fees and Services
Fees For Professional Audit Services
The following is a summary of fees billed by the Company’s independent registered public accountants, PricewaterhouseCoopers LLP, for the years ended December 31, 2019 and 2018:
(1) Represents the aggregate fees billed for the audit of the Company’s financial statements, review of the financial statements included in the Company’s quarterly reports and services in connection with the statutory and regulatory filings or engagements for those years.
(2)  Represents the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “audit fees.”
(3)  Represents the aggregate fees billed for tax compliance, advice and planning.
(4)  Represents the aggregate fees billed for all products and services provided that are not included under “audit fees,” “audit-related fees” or “tax fees.”

                      | Fiscal Year | Fiscal Year
--------------------- | ----------- | -----------
                      | 2019        | 2018
Audit Fees(1)         | $1,925,000  | $1,956,000
Audit-Related Fees(2) | —           | 14,000
Tax Fees(3)           | —           | —
All Other Fees(4)     | 222,000     | 157,000
Total Fees            | $2,147,000  | $2,127,000

. Principal Accountant Fees Services
 Professional Audit Services
 summary fees billed accountants PricewaterhouseCoopers LLP years ended December 31, 2019 2018:
 fees audit financial statements review reports services statutory regulatory filings.
 assurance related services related audit not fees.
 tax compliance advice planning.
 products services not fees.
 Fiscal Year
 2019
 Audit Fees(1) $1,925,000 $1,956,000
 Audit-Related Fees(2) 14,000
 Tax Fees(3)
 Other Fees(4) 222,000 157,000
 Total Fees $2,147,000 $2,127,000


(a) Description of segments and principal activities (continued)                                                                                The chief operating decision-makers assess the performance of the operating segments mainly based on segment revenue and gross profit of each operating segment. The selling and marketing expenses and general and administrative expenses are common costs incurred for these operating segments as a whole and therefore, they are not included in the measure of the segments’ performance which is used by the chief operating decisionmakers as a basis for the purpose of resource allocation and assessment of segment performance. Interest income, other gains/(losses), net, finance income/(costs), net, share of profit/(loss) of associates and joint ventures and income tax expense are also not allocated to individual operating segment.
There were no material inter-segment sales during the years ended 31 December 2019 and 2018. The revenues from external customers reported to the chief operating decision-makers are measured in a manner consistent with that applied in the consolidated income statement.
Other information, together with the segment information, provided to the chief operating decision-makers, is measured in a manner consistent with that applied in these consolidated financial statements. There were no segment assets and segment liabilities information provided to the chief operating decision-makers.
The segment information provided to the chief operating decision-makers for the reportable segments for the years ended 31 December 2019 and 2018 is as follows:

                 | VAS         | FinTech and Business Services | Online Advertising | Others      | Total
---------------- | ----------- | ----------------------------- | ------------------ | ----------- | -----------
                 | RMB’Million | RMB’Million                   | RMB’Million        | RMB’Million | RMB’Million
Segment revenues | 199,991     | 101,355                       | 68,377             | 7,566       | 377,289
Gross profit     | 105,905     | 27,524                        | 33,517             | 587         | 167,533
Depreciation     | 3,461       | 6,669                         | 2,065              | 108         | 12,303
Amortisation     | 14,710      | –                             | 9,977              | 3,115       | 27,802

Description of segments activities operating decision-makers assess performance based on revenue gross profit. selling marketing administrative expenses common not included in measure performance resource allocation. Interest income gains finance income profit income tax expense not allocated.
 no inter-segment sales 31 December 2019 2018. revenues from external customers measured consistent with consolidated income statement.
 with. no segment assets liabilities.
 segment information for reportable segments 31 December 2019 2018
  VAS  FinTech Business Services  Online Advertising  Others Total
 Segment revenues 199,991  101,355 | 68,377  7,566  377,289
 Gross profit 105,905  27,524  33,517  587  167,533
 Depreciation 3,461  6,669  2,065  108  12,303
 Amortisation 14,710 9,977  3,115  27,802


NOTE 17. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
FINANCIAL INSTRUMENTS
Financial instruments include:
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable equal their fair values because of the short-term nature of these instruments.

                          | December 31, |
------------------------- | ------------ | -------
                          | 2018         | 2019
Financial assets:         |              |
Cash and cash equivalents | 285,907      | 497,874
Accounts receivable       | 173,450      | 199,535
Financial liabilities:    |              |
Accounts payable          | 80,640       | 119,712

. FINANCIAL INSTRUMENTS RISK MANAGEMENT
 cash receivable payable equal values short-term.
 2019
 assets
 Cash equivalents 285,907 497,874
 Accounts receivable 173,450 199,535
 liabilities
 Accounts payable 80,640 119,712


NOTE 7 – PROPERTY AND EQUIPMENT
Property and equipment consist of the following (in thousands):
Depreciation expense was $8.6 million, $8.0 million, and $8.4 million in fiscal years ended February 28, 2019, 2018 and 2017, respectively.
Fixed assets not yet in service consist primarily of capitalized internal-use software and certain tooling and other equipment that have not been placed into service.

                                               | February 28, |
---------------------------------------------- | ------------ | --------
                                               | 2019         | 2018
Leasehold improvements                         | $3,522       | $3,157
LoJack system components and law enforcement   |              |
tracking units                                 | 20,326       | 20,558
Plant equipment and tooling                    | 13,078       | 16,842
Office equipment, computers and furniture      | 11,553       | 14,206
Software                                       | 31,349       | 31,427
                                               | 79,828       | 86,190
Less accumulated depreciation and amortization | (58,641)     | (69,585)
                                               | 21,187       | 16,605
Fixed assets not yet in service                | 5,836        | 4,657
                                               | $27,023      | $21,262

PROPERTY EQUIPMENT
 Depreciation expense $8. million. 4 million 2019 2018 2017.
 assets capitalized internal software tooling.
 Leasehold improvements $3,522 $3,157
 LoJack law enforcement
 tracking units 20,326
 Plant equipment tooling 13,078
 Office computers furniture 11,553
 Software 31,349 31,427
,828 86,190
 accumulated depreciation amortization (58,641
,605
 Fixed assets 5,836 4,657
 $27,023 $21,262


Opening Equity Balance Sheet Adjustments from Accounting Standards Adopted in 2018
On January 1, 2018, we adopted Topic 606, ASU 2018-02, Income Statement-Reporting Comprehensive Income and other ASUs. We adopted Topic 606 using the modified retrospective method. We early adopted ASU 2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act (TCJA).
The cumulative after-tax effect of the changes made to our consolidated balance sheet for the adoption of Topic 606, ASU 2018-02 and other ASUs was as follows:

                                       |                      | Adjustments due to | Adjustments due to | Adjustments due to |
-------------------------------------- | -------------------- | ------------------ | ------------------ | ------------------ | ------------------
(dollars in millions)                  | At December 31, 2017 | Topic 606          | ASU 2018-02        | Other ASUs         | At January 1, 2018
Retained earnings                      | 35,635               | 2,890              | (652)              | (6)                | 37,867
Accumulated other comprehensive income | 2,659                | —                  | 652                | (22)               | 3,289
Noncontrolling interests               | 1,591                | 44                 | —                  | —                  | 1,635

Equity Balance Sheet Adjustments Accounting Standards 2018
 January 1 adopted Topic 606 ASU 2018-02 Income Statement-Reporting Comprehensive Income. 606 modified retrospective method. ASU 2018-02 reclassification retained earnings tax Tax Cuts Jobs Act.
 cumulative after-tax effect balance sheet Topic 606 ASU 2018-02
 Adjustments
 December 31, 2017 Topic 606 ASU 2018-02 January 1 2018
 Retained earnings 35,635 2,890 37,867
 Accumulated income 2,659
 Noncontrolling interests 1,591


Share-Based Compensation Expense
The following table sets forth the total share-based compensation expense included in our consolidated statements of operations (amounts in millions):

                                                                                |      | For the Years Ended December 31, |
---------------------------------------------------------------------------------------------------------------------------------- | ---- | -------------------------------- | ----
                                                                                | 2019 | 2018                             | 2017
Cost of revenues—product sales: Software royalties, amortization, and intellectual property licenses                               | $19  | $13                              | $10
Cost of revenues—subscription, licensing, and other revenues: Game Operations and Distribution Costs                               | 1    | 2                                | 1
Cost of revenues—subscription, licensing, and other revenues: Software royalties, amortization, and intellectual property licenses | 1    | 3                                | 3
Product development                                                                                | 53   | 61                               | 57
Sales and marketing                                                                                | 10   | 15                               | 15
General and administrative                                                                                | 82   | 115                              | 92
Share-based compensation expense before income taxes                                                                               | 166  | 209                              | 178
Income tax benefit                                                                                | (29) | (46)                             | (34)
Total share-based compensation expense, net of income tax benefit                                                                  | $137 | $163                             | $144

Share-Based Compensation Expense
 expense consolidated statements
 Years Ended December 31,
 2019 2018 2017
 Software royalties amortization intellectual property licenses $19 $13 $10
 licensing Game Operations Distribution
 licensing Software royalties amortization intellectual property licenses
 Product development 53 61 57
 Sales marketing
 General administrative 82 115 92
 expense income taxes 166 209 178
 Income tax benefit (29)
 tax benefit $137 $163 $144