Notes to Consolidated Financial Statements - (Continued) Fiscal Years Ended May 26, 2019, May 27, 2018, and May 28, 2017 (columnar dollars in millions except per share amounts) 3. RESTRUCTURING ACTIVITIES
Pinnacle Integration Restructuring Plan
In December 2018, our Board of Directors (the "Board") approved a restructuring and integration plan related to the ongoing integration of the recently acquired operations of Pinnacle (the "Pinnacle Integration Restructuring Plan") for the purpose of achieving significant cost synergies between the companies. We expect to incur material charges for exit and disposal activities under U.S. GAAP. Although we remain unable to make good faith estimates relating to the entire Pinnacle Integration Restructuring Plan, we are reporting on actions initiated through the end of fiscal 2019, including the estimated amounts or range of amounts for each major type of costs expected to be incurred, and the charges that have resulted or will result in cash outflows. We expect to incur up to $360.0 million of operational expenditures ($285.0 million of cash charges and $75.0 million of non-cash charges) as well as $85.0 million of capital expenditures under the Pinnacle Integration Restructuring Plan. We have incurred or expect to incur approximately $260.1 million of charges ($254.0 million of cash charges and $6.1 million of non-cash charges) for actions identified to date under the Pinnacle Integration Restructuring Plan. We expect to incur costs related to the Pinnacle Integration Restructuring Plan over a three-year period.  In December 2018, our Board of Directors (the "Board") approved a restructuring and integration plan related to the ongoing integration of the recently acquired operations of Pinnacle (the "Pinnacle Integration Restructuring Plan") for the purpose of achieving significant cost synergies between the companies. We expect to incur material charges for exit and disposal activities under U.S. GAAP. Although we remain unable to make good faith estimates relating to the entire Pinnacle Integration Restructuring Plan, we are reporting on actions initiated through the end of fiscal 2019, including the estimated amounts or range of amounts for each major type of costs expected to be incurred, and the charges that have resulted or will result in cash outflows. We expect to incur up to $360.0 million of operational expenditures ($285.0 million of cash charges and $75.0 million of non-cash charges) as well as $85.0 million of capital expenditures under the Pinnacle Integration Restructuring Plan. We have incurred or expect to incur approximately $260.1 million of charges ($254.0 million of cash charges and $6.1 million of non-cash charges) for actions identified to date under the Pinnacle Integration Restructuring Plan. We expect to incur costs related to the Pinnacle Integration Restructuring Plan over a three-year period.  In December 2018, our Board of Directors (the "Board") approved a restructuring and integration plan related to the ongoing integration of the recently acquired operations of Pinnacle (the "Pinnacle Integration Restructuring Plan") for the purpose of achieving significant cost synergies between the companies. We expect to incur material charges for exit and disposal activities under U.S. GAAP. Although we remain unable to make good faith estimates relating to the entire Pinnacle Integration Restructuring Plan, we are reporting on actions initiated through the end of fiscal 2019, including the estimated amounts or range of amounts for each major type of costs expected to be incurred, and the charges that have resulted or will result in cash outflows. We expect to incur up to $360.0 million of operational expenditures ($285.0 million of cash charges and $75.0 million of non-cash charges) as well as $85.0 million of capital expenditures under the Pinnacle Integration Restructuring Plan. We have incurred or expect to incur approximately $260.1 million of charges ($254.0 million of cash charges and $6.1 million of non-cash charges) for actions identified to date under the Pinnacle Integration Restructuring Plan. We expect to incur costs related to the Pinnacle Integration Restructuring Plan over a three-year period.
We anticipate that we will recognize the following pre-tax expenses in association with the Pinnacle Integration Restructuring Plan (amounts include charges recognized from plan inception through the end of fiscal 2019):

                                                     | International | Pinnacle Foods | Corporate | Total
---------------------------------------------------- | ------------- | -------------- | --------- | ------
Other cost of goods sold                             | $—            | $5.7           | $—        | $5.7
Total cost of goods sold .                           | —             | 5.7            | —         | 5.7
Severance and related costs                          | 0.7           | 0.6            | 116.8     | 118.1
Accelerated depreciation                             | —             | —              | 6.1       | 6.1
Contract/lease termination .                         | —             | 0.8            | 19.8      | 20.6
Consulting/professional fees .                       | 0.2           | —              | 96.1      | 96.3
Other selling, general and administrative expenses . | 0.1           | —              | 13.2      | 13.3
Total selling, general and administrative expenses   | 1.0           | 1.4            | 252.0     | 254.4
Consolidated total                                   | $1.0          | $7.1           | $252.0    | $260.1

Consolidated Financial Statements Fiscal Years Ended May 26, 2019 27, 2018 May 28, 2017 dollars millions share amounts. RESTRUCTURING
 Pinnacle Integration Restructuring Plan
 December 2018 Board Directors approved restructuring integration plan operations Pinnacle cost synergies. incur charges exit disposal U. GAAP. reporting actions initiated end fiscal 2019 estimated costs cash outflows. expect incur $360. 0 million operational expenditures ($285. 0 million cash $75. 0 million non-cash charges $85. 0 million capital expenditures. incurred expect $260. 1 million charges ($254. million cash $6. 1 million non-cash actions. costs three-year period. December 2018 Board Directors approved restructuring integration plan acquired operations Pinnacle cost synergies. incur charges exit disposal activities U. GAAP.unable to make estimates Pinnacle Integration Restructuring Plan reporting on actions initiated through end fiscal 2019 estimated costs cash outflows. expect incur $360. million operational expenditures ($285. million cash $75. million non-cash $85. million capital expenditures. incurred approximately $260. million charges ($254. million cash $6. million non-cash for actions. costs over three-year period. December 2018 Board Directors approved restructuring integration plan acquired operations Pinnacle cost synergies. incur material charges for exit disposal activities under U. S. GAAP. unable to make estimates reporting on actions initiated through end fiscal 2019 estimated costs charges cash outflows. incur $360. million operational expenditures ($285. cash $75. million non-cash charges $85. million capital expenditures. incurred approximately $260. 1 million charges ($254. $6. million non-cash for actions Pinnacle.expect incur costs Pinnacle Integration Restructuring Plan three-year period.
 recognize pre-tax expenses include charges inception end fiscal 2019):
 International Pinnacle Foods Corporate
 cost goods sold $5.
 Total cost goods sold. 5.
 Severance related costs. 116. 118.
 Accelerated depreciation 6.
 Contract/lease termination. 19. 20.
 Consulting/professional fees. 96.
 selling general administrative expenses. 13. 13.
 Total selling general administrative expenses 1. 252. 254.
 Consolidated total $1. $7. $252. $260.


Amortization of Intangible Assets: Substantially all of our intangible assets were acquired through our business combinations. We amortize our intangible assets over, and monitor the appropriateness of, the estimated useful lives of these assets. We also periodically review these intangible assets for potential impairment based upon relevant facts and circumstances. Note 6 of Notes to Consolidated Financial Statements included elsewhere in this Annual report has additional information regarding our intangible assets and related amortization.
Amortization of intangible assets increased in fiscal 2019 compared to fiscal 2018 primarily due to additional amortization from intangible assets, which primarily included developed technology that we acquired in connection with our recent acquisitions, partially offset by a reduction in expenses associated with certain of our intangible assets that became fully amortized.

Year Ended May 31,                                                      |        |        |                |
----------------------------------------------------------------------- | ------ | ------ | -------------- | ------
                                                                        |        |        | Percent Change |
(Dollars in millions)                                                   | 2019   | Actual | Constant       | 2018
Developed technology                                                    | $857   | 13%    | 14%            | $758
Cloud services and license support agreements and related relationships | 712    | -3%    | -3%            | 731
Other                                                                   | 120    | -9%    | -9%            | 131
Total amortization of intangible assets                                 | $1,689 | 4%     | 4%             | $1,620

Amortization Intangible Assets intangible assets acquired business combinations. amortize monitor estimated useful lives. review impairment. Note 6 Consolidated Financial Statements information intangible assets amortization.
 Amortization increased 2019 2018 due additional amortization developed technology acquisitions offset reduction expenses amortized.
 Year Ended May 31,
 Percent Change
 millions) 2019 2018
 Developed technology $857  13%  14%  $758
 Cloud services license support agreements 712 -3%
 Other 120 -9%
 Total amortization intangible assets $1,689 4% $1,620


Unaudited Pro Forma Results of Acquirees
Autodesk has included the financial results of each of the acquirees in the consolidated financial statements from the respective dates of acquisition; the revenues and the results of each of the acquirees, except for PlanGrid, have not been material both individually or in the aggregate to Autodesk's fiscal 2019 and 2018 results.
The following unaudited pro forma financial information summarizes the combined results of operations for Autodesk and PlanGrid, as though the companies were combined as of the beginning of Autodesk's fiscal year 2018. The unaudited pro forma financial information was as follows (in millions):
The pro forma financial information for all periods presented includes the business combination accounting effects from the acquisition of PlanGrid including amortization expense from acquired intangible assets, compensation expense, and the interest expense and debt issuance costs related to the term loan agreement. The historical financial information has been adjusted to give effect to pro forma events that are directly attributable to the business combinations and factually supportable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the Company’s fiscal 2018.
The pro forma financial information for fiscal 2019 and 2018 combines the historical results of the Company, the adjusted historical results of PlanGrid for fiscal 2019 and 2018 considering the date the Company acquired PlanGrid and the effects of the pro forma adjustments described above

               | Fiscal Year ended January 31, |
-------------- | ----------------------------- | --------
               | 2019                          | 2018
Total revenues | $2,632.6                      | $2,099.2
Pretax loss    | (157.5)                       | (724.9)
Net loss       | (200.1)                       | (734.5)

Unaudited Pro Forma Results Acquirees
 Autodesk included financial results consolidated financial statements revenues results except PlanGrid not material Autodesk fiscal 2019 2018 results.
 unaudited pro forma financial information summarizes combined results Autodesk PlanGrid fiscal year 2018.
 includes effects acquisition PlanGrid amortization assets compensation expense interest debt issuance costs term loan agreement. historical financial information adjusted pro forma events attributable. informational purposes not indicative results acquisition fiscal 2018.
 financial information fiscal 2019 2018 combines historical results adjusted results PlanGrid effects pro forma adjustments
 Fiscal Year ended January 31,
 Total revenues $2,632. $2,099.
 Pretax loss (157. 5) (724. 9)
 Net loss (200. 1) (734. 5)


Jack in the Box restaurants offer a broad selection of distinctive products including classic burgers like our Jumbo Jack® and innovative product lines such as Buttery Jack® burgers. We also offer quality products such as breakfast sandwiches with freshly cracked eggs, and craveable favorites such as tacos and curly fries, along with specialty sandwiches, salads, and real ice cream shakes, among other items. We allow our guests to customize their meals to their tastes and order any product when they want it, including breakfast items any time of day (or night). We are known for variety and innovation, which has led to the development of four strong dayparts: breakfast, lunch, dinner, and late-night.
The Jack in the Box restaurant chain was the first major hamburger chain to develop and expand the concept of drive-thru restaurants. In addition to drive-thru windows, most of our restaurants have seating capacities ranging from 20 to 100 people and are open 18-24 hours a day. Drive-thru sales currently account for approximately 70% of sales at company-operated restaurants. The average check in fiscal year2019 was $8.34 for company-operated restaurants.
With a presence in only 21 states and one territory, we believe Jack in the Box is a brand with significant growth opportunities. In fiscal 2019, franchisees continued to expand in existing markets.
The following table summarizes the changes in the number of company-operated and franchise restaurants over the past five years:
Site selections for all new company-operated restaurants are made after an economic analysis and a review of demographic data and other information relating to population density, traffic, competition, restaurant visibility and access, available parking, surrounding businesses, and opportunities for market penetration. Restaurants developed by franchisees are built to brand specifications on sites we have approved.
Our company-operated restaurants have multiple restaurant models with different seating capacities to improve our flexibility in selecting locations. Management believes that this flexibility enables the Company to match the restaurant configuration with the specific economic, demographic, geographic, or physical characteristics of a particular site.
Typical costs to develop a traditional restaurant, excluding the land value, range from approximately$1.4 million to $2.0 million. The majority of our corporate restaurants are constructed on leased land or on land that we purchase and subsequently sell, along with the improvements, in sale and leaseback transactions. Upon completion of a sale and leaseback transaction, the Company’s initial cash investment is reduced to the cost of equipment, which ranges from approximately $0.4 million to $0.5 million.

                              |       |       | Fiscal Year |       |
----------------------------- | ----- | ----- | ----------- | ----- | -----
                              | 2019  | 2018  | 2017        | 2016  | 2015
Company-operated restaurants: |       |       |             |       |
Beginning of period           | 137   | 276   | 417         | 413   | 431
New                           | —     | 1     | 2           | 4     | 2
Refranchised                  | —     | (135) | (178)       | (1)   | (21)
Closed                        | —     | (5)   | (15)        | —     | (6)
Acquired from franchisees     | —     | —     | 50          | 1     | 7
End of period total           | 137   | 137   | 276         | 417   | 413
% of system                   | 6%    | 6%    | 12%         | 18%   | 18%
Franchise restaurants:        |       |       |             |       |
Beginning of period           | 2,100 | 1,975 | 1,838       | 1,836 | 1,819
New                           | 19    | 11    | 18          | 12    | 16
Refranchised                  | —     | 135   | 178         | 1     | 21
Closed                        | (13)  | (21)  | (9)         | (10)  | (13)
Sold to company               | —     | —     | (50)        | (1)   | (7)
End of period total           | 2,106 | 2,100 | 1,975       | 1,838 | 1,836
% of system                   | 94%   | 94%   | 88%         | 82%   | 82%
System end of period total    | 2,243 | 2,237 | 2,251       | 2,255 | 2,249

Jack in Box restaurants offer products classic burgers Jumbo Jack® Buttery Jack®. breakfast sandwiches eggs tacos curly fries specialty sandwiches salads cream shakes. guests customize meals order product breakfast. variety innovation four dayparts breakfast lunch dinner late-night.
 Jack in Box first hamburger drive-thru restaurants. seating capacities 20 to 100 people open 18-24 hours. Drive-thru sales 70% sales company-operated restaurants. average check $8. 34.
 presence 21 states one territory Jack in the Box growth opportunities. 2019 franchisees markets.
 changes company-operated franchise restaurants five years
 Site selections after economic analysis demographic data population density traffic competition visibility access parking businesses market penetration. Restaurants built to brand specifications on sites approved.
 multiple models seating capacities flexibility. economic demographic geographic characteristics site.
 costs develop traditional restaurant range$1. 4 million to $2. 0 million.corporate restaurants constructed leased or sale leaseback transactions. initial cash investment reduced to cost equipment $0. 4 million to $0. 5 million.
 Fiscal Year
 2019 2018 2017 2016 2015
 Company-operated restaurants
 Beginning period 137 | 276 | 417 | 413 | 431
 New
 Refranchised (135) (178)
 Closed
 Acquired from franchisees
 End period 137  276 | 417  413
 % system 6% 18%
 Franchise restaurants
 Beginning period 2,100 | 1,975 | 1,838 | 1,836
 New 19
 Refranchised 135 178 21
 Closed
 Sold to company
 End period 2,106  2,100 | 1,975  1,838  1,836
 % system 94%
 end period 2,243 | 2,237  2,251 2,255


Free cash flow
The Group reported an inflow of Free cash in the period of £29.2m. Trading profit of £128.5m was £5.5m ahead of the prior year for the reasons outlined above, while depreciation of £17.0m was slightly higher than 2017/18. Other non-cash items of £2.4m was predominantly due to share based payments.
Net interest paid was £7.9m lower in the year at £30.1m, reflecting the timing of interest payable on the £300m fixed rate notes due October 2023 which were issued in the first half of the year. This is a one-off benefit to cash interest paid; in 2019/20 cash interest is expected to be in the range of £35-39m. No taxation was paid in the period due to the availability of brought forward losses and capital allowances, however, a payment of £1.0m was received in the prior period from Irish tax authorities in respect of tax paid in prior years.
Pension contributions in the year were £41.9m, in line with expectations, and £2.1m higher than the prior year. Pension deficit contribution payments made to the Premier Foods pension schemes of £34.9m were the largest component of cash paid in the year; the balance being expenses connected to administering both the RHM and Premier Foods schemes and government levies. Pension deficit contribution payments in 2019/20 are expected to be £37m and administration and government levy costs approximately £6-8m.
Capital expenditure was £17.7m in the year, £1.5m lower than the prior year. In 2019/20, the Group expects to increase its capital expenditure to circa £25m to fund investment in both growth projects supporting the Group’s innovation strategy and cost release projects to deliver efficiency savings. For example, the Group is investing in one of its lines at its Stoke cake manufacturing site which will provide enhanced and varied product innovation capabilities.
Working capital investment was £7.7m in the year compared to £0.6m in 2017/18. Part of this movement reflected higher stock levels in anticipation of the original planned date to leave the European Union to protect the Company against the risk of delays at ports.
Restructuring costs were £18.1m compared to £12.5m in the comparative period. These were predominantly associated with implementation costs of the Group’s logistics transformation programme and also advisory costs connected with the potential disposal of the Ambrosia brand which has since concluded.
Financing fees of £12.2m relate to costs associated with the extension of the Group’s revolving credit facility and the issue of new £300m Senior secured fixed rate notes early in the financial year. This comprised £5.6m due to the early redemption of previously issued fixed rate notes due March 2021 and £6.6m of other fees associated with the issue of the new fixed rate notes and extension of the Group’s revolving credit facility.
The Group received a partial repayment of its loan note and associated interest from Hovis of £7.6m in the year. There is the possibility of the Group receiving a second tranche during 2019/20.
On a statutory basis, cash generated from operations was £80.2m compared to £89.4m in 2017/18. Cash generated from operating activities was £57.7m in the year after deducting net interest paid of £22.5m, which includes the partial repayment of the loan note from Hovis as described above. Cash used in investing activities was £17.7m in 2018/19 compared to £17.9m in the prior year. Cash used in financing activities was £35.8m in the year versus £7.2m cash generated in 2017/18. This was due to the repayment of the £325m fixed rate notes due March 2021, partly offset by proceeds received from the issue of £300m floating rate notes due October 2023 and the payment of financing fees as described above.
At 30 March 2019, the Group held cash and bank deposits of £27.8m compared to £23.6m at 31 March 2018 and the Group’s revolving credit facility was undrawn.

Adjusted earnings per share (£m)                   | 2018/19 | 2017/18
-------------------------------------------------- | ------- | -------
Trading profit                                     | 128.5   | 123.0
Depreciation                                       | 17.0    | 16.6
Other non-cash items                               | 2.4     | 2.8
Interest                                           | (30.1)  | (38.0)
Taxation                                           | –       | 1.0
Pension contributions                              | (41.9)  | (39.8)
Capital expenditure                                | (17.7)  | (19.2)
Working capital and other                          | (7.7)   | (0.6)
Restructuring costs                                | (18.1)  | (12.5)
Proceeds from share issue                          | 1.4     | 1.2
Sale of property, plant and equipment              | –       | 1.3
Hovis repayment of loan note                       | 7.6     | –
Financing fees                                     | (12.2)  | (7.0)
Free cash flow10                                   | 29.2    | 28.8
Statutory cash flow statement                      |         |
Cash generated from operating activities           | 57.7    | 52.4
Cash used in investing activities                  | (17.7)  | (17.9)
Cash (used in)/generated from financing activities | (35.8)  | 7.2
Net increase in cash and cash equivalents          | 4.2     | 41.7

cash flow
 Group reported £29. 2m. Trading profit £128. 5m £5. 5m ahead prior year depreciation £17. 0m higher 2017/18. non-cash items £2. 4m due share payments.
 Net interest £7. 9m lower £30. 1m £300m rate notes due October 2023. one-off benefit 2019/20 £35-39m. No taxation paid losses capital allowances payment £1. 0m received Irish tax.
 Pension contributions £41. 9m £2. 1m higher. Premier Foods pension schemes £34. 9m largest component cash balance expenses government levies. deficit payments 2019/20 £37m administration government levy costs £6-8m.
 Capital expenditure £17. 7m £1. 5m lower prior year. 2019/20 increase capital expenditure £25m growth projects. investing Stoke cake manufacturing site.
 Working capital investment £7. 7m £0. 6m 2017/18. higher stock levels leave European Union delays.
Restructuring costs £18. 1m £12. 5m. logistics transformation programme advisory costs disposal Ambrosia brand.
 Financing fees £12. 2m extension revolving credit facility £300m fixed rate notes. £5. 6m redemption notes 2021 £6. 6m extension.
 received partial repayment loan Hovis £7. 6m. possibility second tranche 2019/20.
 cash operations £80. 2m £89. 4m 2017/18. £57. 7m interest £22. 5m partial repayment loan. investing £17. 7m 2018/19 £17. 9m. financing £35. 8m £7. 2m 2017/18. due repayment £325m notes March 2021 offset £300m floating rate notes October 2023 financing fees.
 30 March 2019 cash deposits £27. 8m £23. 6m 31 March 2018 revolving credit facility undrawn.
 Adjusted earnings per share 2018/19
 Trading profit.
 Depreciation.
non-cash items 2. 4. 8
 (30.
 Taxation.
 Pension contributions.
 Capital expenditure (17. (19.
 Working capital (7.
 Restructuring costs (18. (12.
 Proceeds share issue 1.
 Sale property plant equipment.
 repayment loan 7. 6
 Financing fees (12.
 Free cash 29. 28.
 cash flow
 Cash operating activities 57. 52
 investing (17.
 financing activities.
 cash equivalents 4.


The following table reconciles total segment adjusted EBITDA to net (loss) income for the years ended December 31, 2019, 2018 and 2017:
We do not have any single customer that provides more than 10% of our consolidated total operating revenue.
The assets we hold outside of the U.S. represent less than 10% of our total assets. Revenue from sources outside of the U.S. is responsible for less than 10% of our total operating revenue.

                                  |          | Years Ended December 31, |
--------------------------------- | -------- | ------------------------ | -------
                                  | 2019     | 2018                     | 2017
                                  |          | (Dollars in millions)    |
Total segment adjusted EBITDA     | $15,987  | 16,647                   | 12,560
Depreciation and amortization     | (4,829)  | (5,120)                  | (3,936)
Goodwill impairment               | (6,506)  | (2,726)                  | —
Other operating expenses          | (7,216)  | (8,045)                  | (6,504)
Share-based compensation          | (162)    | (186)                    | (111)
Operating (loss) income           | (2,726)  | 570                      | 2,009
Total other expense, net          | (2,040)  | (2,133)                  | (1,469)
(Loss) income before income taxes | (4,766)  | (1,563)                  | 540
Income tax expense (benefit)      | 503      | 170                      | (849)
Net (loss) income                 | $(5,269) | (1,733)                  | 1,389

table reconciles EBITDA net income 2019 2018
 customer 10% operating revenue.
 assets outside. less 10%. Revenue. less 10% revenue.
 Years Ended
 2018
 EBITDA $15,987 16,647 12,560
 Depreciation amortization (4,829) (5,120)
 Goodwill impairment (6,506) (2,726)
 Other operating expenses (7,216) (8,045) (6,504)
 Share-based compensation
 Operating (loss income (2,726)
 expense (2,040) (2,133
 income before taxes (4,766) (1,563)
 Net (loss income $(5,269) (1,733)


7. INVESTMENTS IN JOINT VENTURES
The total carrying value of our equity method investments at the end of fiscal 2019 and 2018 was $796.3 million and $776.2 million, respectively. These amounts are included in other assets and reflect our 44% ownership interest in Ardent Mills and 50% ownership interests in other joint ventures. Due to differences in fiscal reporting periods, we recognized the equity method investment earnings on a lag of approximately one month.
In fiscal 2019, we had purchases from our equity method investees of $39.4 million. Total dividends received from equity method investments in fiscal 2019 were $55.0 million.
In fiscal 2018, we had purchases from our equity method investees of $34.9 million. Total dividends received from equity method investments in fiscal 2018 were $62.5 million.
In fiscal 2017, we had purchases from our equity method investees of $41.8 million. Total dividends received from equity method investments in fiscal 2017 were $68.2 million.
Notes to Consolidated Financial Statements - (Continued) Fiscal Years Ended May 26, 2019, May 27, 2018, and May 28, 2017 (columnar dollars in millions except per share amounts) Summarized combined financial information for our equity method investments on a 100% basis is as follows:

                                  | 2019     | 2018     | 2017
--------------------------------- | -------- | -------- | --------
Net Sales:                        |          |          |
Ardent Mills .                    | $3,476.0 | $3,344.1 | $3,180.0
Others                            | 195.4    | 198.8    | 177.7
Total net sales .                 | $3,671.4 | $3,542.9 | $3,357.7
Gross margin:                     |          |          |
Ardent Mills .                    | $281.9   | $386.5   | $340.3
Others                            | 45.5     | 34.8     | 34.6
Total gross margin                | $327.4   | $421.3   | $374.9
Earnings after income taxes:      |          |          |
Ardent Mills .                    | $151.9   | $197.0   | $152.0
Others                            | 18.1     | 10.1     | 10.1
Total earnings after income taxes | $170.0   | $207.1   | $162.1

. INVESTMENTS JOINT
 value equity method investments 2019 2018 $796. 3 million $776. 2 million. 44% Ardent Mills 50% joint ventures. differences recognized equity method earnings one month.
 2019 purchases $39. 4 million. dividends $55. million.
 2018 purchases $34. 9 million. dividends $62. 5 million.
 2017 purchases $41. 8 million. dividends $68. 2 million.
 Consolidated Financial Statements Fiscal Years Ended May 26, 2019 27, 2018 28, 2017 combined financial information equity method investments
 Net Sales
 Ardent Mills. $3,476. $3,344. $3,180.
.
 Total sales. $3,671. $3,542. $3,357.
 Gross margin
 Ardent Mills. $281. $386. $340.
.
 Total gross margin $327. $421. $374.
taxes
 Ardent Mills. $151. $197. $152.
 18. 10.
 earnings $170. $207. $162.


* Recast to reflect segment changes.
** 2019 results were impacted by Red Hat purchase accounting and acquisition-related activity.
The Cloud & Cognitive Software gross profit margin decreased 0.9 points to 76.7 percent in 2019 compared to the prior year. The gross profit margin decline was driven by the purchase price accounting impacts from the Red Hat acquisition.
Pre-tax income of $7,952 million decreased 10.5 percent compared to the prior year with a pre-tax margin decline of 4.4 points to 30.6 percent which reflects the acquisition of Red Hat, ongoing investments in key strategic areas and lower income from IP partnership agreements.

($ in millions)                  |         |         |
-------------------------------- | ------- | ------- | -----------------------------------
For thee year ended December 31: | 2019    | 2018*   | Yr.-to-Yr. Percent/ Margin Change**
Cloud & Cognitive Software       |         |         |
External gross profit            | $17,790 | $17,224 | 3.3%
External gross profit margin     | 76.7%   | 77.6%   | (0.9)pts.
Pre-tax income                   | $ 7,952 | $ 8,882 | (10.5)%
Pre-tax margin                   | 30.6%   | 35.0%   | (4.4)pts.

Recast segment changes.
 2019 results impacted Red Hat accounting acquisition activity.
 Cloud Cognitive Software profit margin decreased. points 76. 7 percent. decline driven Red Hat acquisition.
 Pre-tax income $7,952 million decreased. 5 percent margin decline. 6 percent Red Hat investments lower income IP partnership agreements.
 December.
 Cloud Cognitive Software
 gross profit $17,790 $17,224. 3%
 margin 76. 7% 77. 6%.
 Pre-tax income $ $ 8,882.
 margin 30. 6%.


14 Leases
Right-of-use assets
The vast majority of the right-of-use asset value relates to leased property where the Group leases a number of office and warehouse sites in a number of geographical locations. The remaining leases are largely made up of leased motor vehicles, where the Group makes use of leasing cars for sales and service engineers at a number of operating company locations. The average lease term is 4.3 years.

                                            | Leased land and buildings | Leased plants and machinery | Leased fixtures, fittings, tools and equipment | Total right-of-use assets
------------------------------------------- | ------------------------- | --------------------------- | ---------------------------------------------- | -------------------------
                                            | £m                        | £m                          | £m                                             | £m
Cost:                                       |                           |                             |                                                |
Transition adjustment at 1st January 2019   | 27.2                      | 7.0                         | 1.9                                            | 36.1
Reclassification from long-term prepayments | 5.1                       | –                           | –                                              | 5.1
Additions                                   | 7.2                       | 4.2                         | 0.3                                            | 11.7
Acquisitions                                | 0.8                       | 0.3                         | –                                              | 1.1
Disposals                                   | (0.2)                     | (0.1)                       | –                                              | (0.3)
Exchange adjustments                        | (1.5)                     | (0.4)                       | (0.1)                                          | (2.0)
At 31st December 2019                       | 38.6                      | 11.0                        | 2.1                                            | 51.7
Depreciation:                               |                           |                             |                                                |
Charged in the year                         | 7.0                       | 3.7                         | 0.6                                            | 11.3
Disposals                                   | (0.1)                     | –                           | –                                              | (0.1)
Exchange adjustments                        | (0.2)                     | (0.1)                       | –                                              | (0.3)
At 31st December 2019                       | 6.7                       | 3.6                         | 0.6                                            | 10.9
Net book value:                             |                           |                             |                                                |
At 31st December 2019                       | 31.9                      | 7.4                         | 1.5                                            | 40.8

Leases
 Right-of-use assets
 majority asset value leased property Group leases office warehouse sites geographical locations. remaining leases leased motor vehicles cars sales service engineers operating company locations. average lease term 4. 3 years.
 Leased land buildings plants machinery fixtures fittings tools equipment Total right-of-use assets
 Cost
 Transition adjustment 1st January 2019 27. 2 7. 1. 9 36. 1
 Reclassification long-term prepayments 5. 1 5. 1
 7. 4. 11.
. 1.
.
 Exchange adjustments (1. (2.
 31st December 2019 38. 6 11. 2. 51. 7
 Depreciation
 year 7. 3. 11. 3
.
 Exchange adjustments.
 31st December 2019 6. 7 3. 6. 10. 9
 Net book value
31st December 2019. 7. 40.


New Zealand Food’s sales for the year were NZ$6.7 billion, an increase of 4.3% on the prior year (6.0% increase in AUD) or 2.4% on a normalised basis.
Comparable sales increased 3.4% for the year, driven by positive core offer momentum with Countdown’s customer satisfaction and brand advocacy measures continuing to steadily improve. Highlights include increased Fruit & Vegetables VOC (H2: +6 pts) driven by a focus on direct‐to‐grower fresh quality, and improved community perceptions aided by the removal of single‐use plastic bags in the first half.
Digital momentum remained strong throughout the year, with F19 sales growth of 40% (normalised) driven by Pick up, Same day delivery, and capacity expansion. Customer advocacy for Online also remains strong with VOC NPS of 66 in Q4.
Sales growth improved in the second half (H1: 1.9%, normalised H2: 3.0%) driven by positive comparable transaction growth and aided by a recovery in market growth post Christmas. Sales per square metre increased by 6.4%(normalised 4.5%) due to strong sales growth and a 2.0% reduction in trading space following store closures. During the year, three stores were closed and two stores were opened with 180 Countdown supermarkets at the end of the year.
Stockloss improvements were maintained in the second half, contributing to an 18 bps increase in gross margin while remaining price competitive. Average prices declined 0.8% for the year, but with a lower rate of deflation for the second half.
CODB as a percentage of sales increased 25 bps (normalised) driven primarily by strategic investment into digital, IT and data capabilities.
EBIT increased 3.9% for the year (1.0% normalised), with H2 EBIT growth of 4.4% (normalised) aided by sales momentum and improved cost management.
On a normalised basis, ROFE increased by 5 bps.
(3) During the period, the management of the New Zealand Wine Cellars business transferred from Endeavour Drinks to New Zealand Food. The prior period has been re‑presented toconform with the current period presentation.

                              | F19      | F18 (3)  |         | CHANGE
----------------------------- | -------- | -------- | ------- | ----------
NZ$ MILLION                   | 53 WEEKS | 52 WEEKS | CHANGE  | NORMALISED
Sales                         | 6,712    | 6,433    | 4.3%    | 2.4%
EBITDA                        | 425      | 411      | 3.0%    | 1.0%
Depreciation and amortisation | (129)    | (127)    | 1.0%    | 1.0%
EBIT                          | 296      | 284      | 3.9%    | 1.0%
Gross margin (%)              | 24.4     | 24.2     | 18 bps  | 18 bps
Cost of doing business (%)    | 20.0     | 19.8     | 20 bps  | 25 bps
EBIT to sales (%)             | 4.4      | 4.4      | (2) bps | (6) bps
Sales per square metre ($)$)  | 16,626   | 15,621   | 6.4%    | 4.5%
Funds employed                | 3,210    | 2,998    | 7.1%    |
ROFE (%)                      | 9.6      | 9.5      | 15 bps  | 5 bps

New Zealand sales$6. 7 billion. 3%. 2. 4%.
 sales increased 3. 4% offer customer satisfaction brand advocacy. increased Fruit Vegetables VOC direct‐to‐grower fresh quality community perceptions removal single‐use plastic bags.
 Digital momentum F19 sales growth 40% Pick up Same day delivery capacity expansion. VOC NPS 66 Q4.
 Sales growth improved second half. 9%. transaction growth recovery market growth post Christmas. Sales square metre increased. 4%. 2. 0% reduction trading space closures. three closed two opened 180 supermarkets.
 Stockloss 18 bps increase gross margin. Average prices declined. 8% lower deflation.
 CODB increased 25 bps investment digital IT data.
 EBIT increased 3. 9%. H2 4. 4% sales improved cost management.
 ROFE increased 5 bps.
 New Zealand Wine Cellars transferred Endeavour Drinks New Zealand Food.
 F19 F18
$ MILLION 53 WEEKS 52 WEEKS
 Sales 6,712 6,433 4. 3% 2. 4%
 EBITDA 425.
 Depreciation amortisation (129).
 EBIT 296 284 3. 9%.
 Gross margin 24. 18
 Cost business 20.
 EBIT sales 4. 4.
 Sales per square metre 16,626 15,621. 4% 4. 5%
 Funds employed 3,210 2,998 7. 1%
 ROFE 9.


In assessing the ability to realize our deferred tax assets, we considered whether it is more likely than not that some portion or all the deferred tax assets will not be realized. We considered the following: we have historical cumulative book income, as measured by the current and prior two years; we have strong, consistent taxpaying history; we have substantial U.S. federal income tax carryback potential; and we have substantial amounts of scheduled future reversals of taxable temporary differences from our deferred tax liabilities. We have concluded that this positive evidence outweighs the negative evidence and, thus, that the deferred tax assets as of March 29, 2019 are realizable on a ‘‘more likely than not’’ basis.
The aggregate changes in the balance of gross unrecognized tax benefits were as follows:
There was a change of $68 million in gross unrecognized tax benefits during fiscal 2019. This gross liability does not include offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, interest deductions, and state income taxes.
Of the total unrecognized tax benefits at March 29, 2019, $361 million, if recognized, would favorably affect our effective tax rate.
We recognize interest and/or penalties related to uncertain tax positions in income tax expense. At March 29, 2019, before any tax benefits, we had $43 million of accrued interest and penalties on unrecognized tax benefits. Interest included in our provision for income taxes was an expense of approximately $17 million for fiscal 2019. If the accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced in the period that such determination is made and reflected as a reduction of the overall income tax provision.
We file income tax returns in the U.S. on a federal basis and in many U.S. state and foreign jurisdictions. Our most significant tax jurisdictions are the U.S., Ireland, and Singapore. Our tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. Our fiscal years 2014 through 2019 remain subject to examination by the IRS for U.S. federal tax purposes. Our fiscal years prior to 2014 have been settled and closed with the IRS. Our 2015 through 2019 fiscal years remain subject to examination by the appropriate governmental agencies for Irish tax purposes, and our 2014 through 2019 fiscal years remain subject to examination by the appropriate governmental agencies for Singapore tax purposes.
The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. Although potential resolution of uncertain tax positions involves multiple tax periods and jurisdictions, it is reasonably possible that the gross unrecognized tax benefits related to these audits could decrease (whether by payment, release, or a combination of both) in the next 12 months by $26 million. Depending on the nature of the settlement or expiration of statutes of limitations, we estimate $26 million could affect our income tax provision and therefore benefit the resulting effective tax rate.
We continue to monitor the progress of ongoing income tax controversies and the impact, if any, of the expected tolling of the statute of limitations in various taxing jurisdictions.

                                               |                | Year Ended     |
---------------------------------------------- | -------------- | -------------- | --------------
(In millions)                                  | March 29, 2019 | March 30, 2018 | March 31, 2017
Balance at beginning of year                   | $378           | $248           | $197
Settlements with tax authorities               | (3)            | (4)            | (23)
Lapse of statute of limitations                | (17)           | (3)            | (9)
Increase related to prior period tax positions | 16             | 35             | 21
Decrease related to prior period tax positions | (11)           | —              | (9)
Increase related to current year tax positions | 75             | 98             | 38
Increase due to acquisition                    | 8              | 4              | 33
Net increase                                   | 68             | 130            | 51
Balance at end of year                         | $446           | $378           | $248

assessing deferred tax assets considered. historical cumulative book income strong taxpaying history substantial. federal income tax carryback potential scheduled future reversals taxable differences. concluded positive evidence outweighs negative deferred tax assets March 29, 2019 realizable likely than.
 changes unrecognized tax benefits
 change $68 million fiscal 2019. offsetting tax benefits transfer pricing adjustments interest deductions state income taxes.
 unrecognized tax benefits March 2019 $361 million recognized affect effective tax rate.
 interest penalties uncertain tax positions tax expense. March 29, 2019 $43 million accrued interest penalties unrecognized tax benefits. $17 million fiscal 2019. If interest penalties payable income tax provision.
 file income tax returns. federal. state foreign jurisdictions. significant tax jurisdictions. Ireland Singapore. tax filings subject examination tax authorities tax year. fiscal years 2014 through 2019 subject examination IRS. federal tax purposes.fiscal years prior to 2014 settled closed with IRS. 2015 through 2019 Irish Singapore.
 timing resolution income tax examinations uncertain amounts paid may differ from accrued. resolution tax periods jurisdictions unrecognized tax benefits could decrease 12 months by $26 million. $26 million could affect income tax provision benefit effective tax rate.
 monitor income tax controversies impact statute of limitations jurisdictions.
 Year Ended
 March 29, 2019 March 30, 2018 March 31, 2017
 Balance beginning year $378  $248 | $197
 Settlements with tax authorities (3)
 Lapse of statute of limitations
 Increase prior period tax positions 16 35
 Decrease
 Increase current year tax positions 75
 Increase due to acquisition 8
 Net increase 68 130
 Balance end of year $446  $378 | $248


Non-operating income (expense), net
Non-operating income (expense), net, decreased primarily due to the absence of the fiscal 2018 $653 million gain on the divestiture of our WSS and PKI solutions. In addition, our loss from our equity interest received in connection with the divestiture of our WSS and PKI solutions increased $75 million, which was partially offset by a $48 million decrease in interest expense as a result of lower outstanding borrowings due to repayments.

                                  | Fiscal Year |        |
--------------------------------- | ----------- | ------ | -------------------
(In millions)                     | 2019        | 2018   | Variance in Dollars
Interest expense                  | $(208)      | $(256) | $48
Gain on divestiture               | —           | 653    | (653)
Interest income                   | 42          | 24     | 18
Loss from equity interest         | (101)       | (26)   | (75)
Foreign exchange loss             | (18)        | (28)   | 10
Other                             | 13          | 21     | (8)
Total other income (expense), net | $(272)      | $388   | $(660)

Non-operating income
 decreased 2018 $653 million gain divestiture WSS PKI. loss equity interest increased $75 million offset $48 million decrease interest expense lower borrowings.
 Fiscal Year
 2019 2018 Variance
 Interest expense $(208) $(256) $48
 Gain divestiture 653 (653)
 Interest income 42 24
 Loss equity interest (101) (26)
 Foreign exchange loss (18)
 Total income $(272) $388 $(660


Australian taxes paid summary
Tax payments made by iSelect for the 2019 and 2018 financial years are summarised below.

                           | CONSOLIDATED | 2018
-------------------------- | ------------ | ----------
                           | 2019 $'000   | 2018 $’000
Income tax (net of refund) | (2,327)      | 172
Payroll tax                | 2,657        | 3,035
Fringe benefits tax        | 205          | 247
Total taxes paid           | 535          | 3,454

Australian taxes
 iSelect 2019 2018.
 2019 2018
 Income tax refund (2,327)
 Payroll tax 2,657
 Fringe benefits tax 205
 taxes 535 3,454


We present below a summary of the items that cause recorded income taxes to differ from taxes computed using the statutory
federal income tax rate for the years ended December 31, 2019, 2018 and 2017:
On December 22, 2017, the United States enacted tax reform legislation commonly known as the Tax Cuts and Jobs Act (“the Act”), resulting in significant modifications to existing law. In December 2017, we recorded a provisional estimate of $3.3 million for the one-time deemed repatriation transition tax on unrepatriated foreign earnings. The provisional amount was based on information available at that time, including estimated tax earnings and profits from foreign investments. In the fourth quarter of 2018, we finalized our transition tax calculation and recorded additional tax expense of $0.3 million. In December 2017, we also recorded a provisional write-down to deferred tax assets of $0.7 million related to changes in Section 162(m), Internal Revenue Code of 1986, regarding deductions for excessive employee compensation. In 2018, we finalized our calculation under Section 162(m) and recorded a tax benefit of $0.5 million. We also recorded a one-time tax benefit in December 2017 of $1.2 million from the remeasurement of deferred tax assets and liabilities from 35% to 21%. As of December 31, 2018, we completed the accounting for all of the impacts of the Act. Act”), resulting in significant modifications to existing law. In December 2017, we recorded a provisional estimate of $3.3 million for the one-time deemed repatriation transition tax on unrepatriated foreign earnings. The provisional amount was based on information available at that time, including estimated tax earnings and profits from foreign investments. In the fourth quarter of 2018, we finalized our transition tax calculation and recorded additional tax expense of $0.3 million. In December 2017, we also recorded a provisional write-down to deferred tax assets of $0.7 million related to changes in Section 162(m), Internal Revenue Code of 1986, regarding deductions for excessive employee compensation. In 2018, we finalized our calculation under Section 162(m) and recorded a tax benefit of $0.5 million. We also recorded a one-time tax benefit in December 2017 of $1.2 million from the remeasurement of deferred tax assets and liabilities from 35% to 21%. As of December 31, 2018, we completed the accounting for all of the impacts of the Act.
Act”), resulting in significant modifications to existing law. In December 2017, we recorded a provisional estimate of $3.3 million for
the one-time deemed repatriation transition tax on unrepatriated foreign earnings. The provisional amount was based on information
available at that time, including estimated tax earnings and profits from foreign investments. In the fourth quarter of 2018, we
finalized our transition tax calculation and recorded additional tax expense of $0.3 million. In December 2017, we also recorded a
provisional write-down to deferred tax assets of $0.7 million related to changes in Section 162(m), Internal Revenue Code of 1986,
regarding deductions for excessive employee compensation. In 2018, we finalized our calculation under Section 162(m) and recorded
a tax benefit of $0.5 million. We also recorded a one-time tax benefit in December 2017 of $1.2 million from the remeasurement of
deferred tax assets and liabilities from 35% to 21%. As of December 31, 2018, we completed the accounting for all of the impacts of
the Act.
The Act provides for the global intangible low-taxed income (“GILTI”) provision which requires us in our U.S. income tax return, to include foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The FASB staff provided additional guidance to address the accounting for the effects of the provisions related to the taxation of GILTI, noting that companies should make an accounting policy election to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to include the tax expense in the year it is incurred. We have elected to include the tax expense in the year that we incur it.

                                              |             | Year Ended December 31, |
--------------------------------------------- | ----------- | ----------------------- | -------
                                              | 2019        | 2018                    | 2017
Statutory federal income tax rate             | 21.0 %      | 21.0 %                  | 35.0 %
Effect of:                                    |             |                         |
State income tax, net of federal benefit      | 3.5         | 3.4                     | 2.3
State credit carryforwards                    | 1.3         | 0.3                     | (0.1 )
U.S. federal R&D tax credit                   | (1.9 )      | (1.7 )                  | (0.8 )
Tax Reform                                    | -           | (0.1 )                  | 1.5
Excess benefit of equity compensation         | (0.1 )      | (0.6 )                  | (1.0 )
Foreign-derived intangible income (FDII)      |             |                         |
deduction                                     | (3.1 )      | (1.6 )                  | -
Foreign operations                            | 1.1         | 1.2                     | (0.1 )
Tax contingencies                             | 3.7         | 0.5                     | -
Other permanent differences                   | 1.5         | 1.0                     | 0.3
Change in valuation allowance                 | (0.9 )      | (0.2 )                  | (0.1 )
Income Tax                                    | 26.1%       | 23.2%                   | 37.0%

summary income taxes differ
 federal income tax rate years December 31, 2019 2018 2017:
 December 22, 2017 enacted tax Tax Cuts and Jobs Act law. December 2017 provisional estimate $3. 3 million transition tax foreign earnings. fourth quarter 2018 finalized recorded additional tax expense $0. 3 million. provisional write-down deferred tax assets $0. 7 million changes deductions excessive employee compensation. 2018 finalized recorded tax benefit $0. 5 million. one-time tax benefit $1. 2 million remeasurement deferred tax assets 35% to 21%. December 31, 2018 completed accounting impacts Act. modifications law. December 2017 estimate $3. 3 million tax foreign earnings. fourth quarter 2018 finalized calculation additional tax expense $0. 3 million. provisional write-down deferred tax assets. 7 million changes compensation. 2018 finalized calculation recorded tax benefit $0. 5 million.recorded one-time tax benefit 2017 $1. 2 million remeasurement deferred tax assets 35% to 21%. December 31, 2018 completed accounting impacts Act.
. December 2017 provisional estimate $3. 3 million
 transition tax unrepatriated foreign earnings. based
. fourth quarter 2018
 finalized transition tax calculation recorded additional tax expense $0. 3 million. December 2017
 provisional write-down deferred tax assets $0. 7 million changes Section 162 Internal Revenue Code 1986
 deductions employee compensation. 2018 finalized calculation recorded
 tax benefit $0. 5 million. one-time tax benefit December 2017 $1. 2 million remeasurement
 deferred tax assets 35% to 21%. December 31, 2018 completed accounting impacts
 Act.
 global intangible low-taxed income provision. foreign subsidiary earnings. FASB guidance recognize deferred taxes include tax expense year.
 Ended December 31,
2019 2018 2017
 federal income tax rate 21. %. 35. %
 State income tax federal benefit 3. 5. 4.
 credit carryforwards.
. federal R&D tax credit. 9. 7. 8
 Tax Reform. 5
 Excess benefit equity compensation. 6.
 Foreign-derived intangible income (FDII
 deduction. 6
 operations. 2.
 Tax contingencies. 7. 5
 differences. 5.
 valuation allowance. 9. 2.
 Income Tax 26. 1% 23. 2% 37.


16. SHARE-BASED PAYMENTS continued
c. Employee Share Option Plan
The Employee Share Option Plan (the Option Plan) was approved by shareholders at the Company’s AGM on 9 November 2001 and reaffirmed at the AGM on 24 November 2011.The Employee Share Option Plan (the Option Plan) was approved by shareholders at the Company’s AGM on 9 November 2001 and reaffirmed at the AGM on 24 November 2011. Under the Option Plan, awards are made to eligible executives and other management personnel who have an impact on the Group’s performance. Option Plan awards are delivered in the form of options over shares, which vest over a period of three years subject to meeting performance measures and continuous employment with the Company. Each option is to subscribe for one ordinary share when the option is exercised and, when issued, the shares will rank equally with other shares.
Unless the terms on which an option was offered specified otherwise, an option may be exercised at any time after the vesting date on satisfaction of the relevant performance criteria.
Options issued under the Employee Share Option Plan are valued on the same basis as those issued to KMP, which is described in Note 16(d).
There were no new options issued under the Option Plan during the 30 June 2019 and 30 June 2018 financial years, as the Option Plan was replaced with the Rights Plan as described in Note 16(b).
Movement of options during the year ended 30 June 2019:
1. The original expiry date for this tranche of options was 2 July 2018. However, due to extraordinary circumstances, the remaining 75,000 options could not be exercised during the prior financial year. Therefore, the Board had exercised its discretion during the year to extend the expiry date for the remaining options to 30 September 2018.
2. Options associated with an EPS hurdle are not expected to vest on 31 August 2019 as the minimum performance target will not be met. Options associated with a TSR hurdle will vest on 31 August 2019 in accordance with accounting standards. However, because the minimum target was not met, these options will be restricted and unexercisable. Refer to Section 3b) of the audited Remuneration Report for further details.

Grant Date                      | Vesting Date  | Expiry Date    | Exercise Price $ | No. of Options at Beg. of Year | Options Exercised or Lapsed | No. of Options at End of Year
------------------------------- | ------------- | -------------- | ---------------- | ------------------------------ | --------------------------- | -----------------------------
2 Jul 2013                      | 2 Jul 2016    | 30 Sept 2018 1 | 0.92             | 75,000                         | (75,000)                    | -
2 Jul 2014                      | 2 Jul 2017    | 2 Jul 2019     | 1.30             | 470,000                        | (205,000)                   | 265,000
2 Jul 2015                      | 2 Jul 2018    | 2 Jul 2020     | 2.67             | 1,000,000                      | (75,000)                    | 925,000
22 Dec 2016                     | 31 Aug 2019 2 | 22 Dec 2021    | 3.59             | 1,323,730                      | -                           | 1,323,730
Total                           |               |                |                  | 2,868,730                      | (355,000)                   | 2,513,730
Weighted average exercise price |               |                |                  |                                | $1.51                       | $3.01

. SHARE-BASED PAYMENTS
. Employee Share Option Plan
 approved AGM 9 November 2001 reaffirmed AGM 24 November 2011. 24 November 2011. awards to executives management personnel performance. awards options over shares vest three years performance measures continuous employment. Each option one ordinary share shares rank equally other shares.
 exercised after vesting date performance criteria.
 Options valued same basis as KMP Note 16(d).
 no new options 30 June 2019 30 June 2018 financial years replaced with Rights Plan Note 16(b).
 Movement options year ended 30 June 2019
. original expiry date 2 July 2018. extraordinary circumstances remaining 75,000 options. Board expiry date 30 September 2018.
. Options EPS hurdle not vest 31 August 2019 minimum performance target not met. Options TSR hurdle vest 31 August 2019. minimum target not met options restricted unexercisable. Refer Section 3b) audited Remuneration Report.
 Grant Date Vesting Expiry Date Exercise Price $ No. Options. Exercised. End Year
---------------------------
 2 Jul 2013 2 2016 30 Sept 2018. 75,000
 2 Jul 2014 2017 2019. 470,000
 2 Jul 2015 2 Jul 2018 2020. 1,000,000
 22 Dec 2016 31 Aug 2019 22 Dec 2021. 59 1,323,730
 2,868,730
 average exercise price $1. $3.


(4) Goodwill, Customer Relationships and Other Intangible Assets
Goodwill, customer relationships and other intangible assets consisted of the following:
Our goodwill was derived from numerous acquisitions where the purchase price exceeded the fair value of the net assets acquired (including the acquisition described in Note 2—Acquisition of Level 3). As of December 31, 2019, the weighted average remaining useful lives of the intangible assets were approximately 8 years in total, approximately 9 years for customer relationships, 4 years for capitalized software and 3 years for trade names.
Total amortization expense for intangible assets for the years ended December 31, 2019, 2018 and 2017 was $1.7 billion, $1.8 billion and $1.2 billion, respectively. As of December 31, 2019, the gross carrying amount of goodwill, customer relationships, indefinite-life and other intangible assets was $44.0 billion.

                                                                           | As of December 31    |
-------------------------------------------------------------------------- | -------------------- | ------
                                                                           | 2019                 | 2018
                                                                           | (Dollars in million) |
Goodwill                                                                   | $21,534              | 28,031
Customer relationships, less accumulated amortization of $9,809 and $8,492 | $7,596               | 8,911
Indefinite-life intangible assets                                          | $269                 | 269
Other intangible assets subject to amortization:                           |                      |
Capitalized software, less accumulated amortization of $2,957 and $2,616   | $1,599               | 1,468
Trade names, less accumulated amortization of $91 and $61                  | 103                  | 131
Total other intangible assets, net                                         | $1,971               | 1,868

Goodwill Customer Relationships Intangible Assets
 derived acquisitions exceeded assets Level 3). December 31, 2019 lives intangible assets 8 years 9 customer relationships 4 capitalized software 3 years trade names.
 amortization expense December 2019 2018 2017 $1. 7 billion $1. 8 billion $1. 2 billion. December 31, 2019 carrying goodwill-life assets $44. 0 billion.
 Goodwill $21,534 28,031
 Customer relationships amortization $9,809 $8,492
 Indefinite-life assets $269 269
 Other assets
 Capitalized software amortization $2,957 $2,616
 Trade names $91 $61
 intangible assets $1,971 1,868


2019 financial year guidance
The adjusted EBITDA and free cash flow guidance measures for the year ended 31 March 2019 were forward-looking alternative performance measures based on the Group’s assessment of the global macroeconomic outlook and foreign exchange rates of €1:£0.87, €1:ZAR 15.1, €1:TRY 5.1 and €1:EGP 22.1. These guidance measures exclude the impact of licence and spectrum payments, material one-off tax-related payments, restructuring payments, changes in shareholder recharges from India and any fundamental structural change to the Eurozone. They also assume no material change to the current structure of the Group. We believe it is both useful and necessary to report these guidance measures to give investors an indication of the Group’s expected future performance, the Group’s sensitivity to foreign exchange movements and to report actual performance against these guidance measures.
Reconciliations of adjusted EBITDA and free cash flow to the 2019 financial year guidance basis is shown below.

                                  |         | Adjusted EBITDA |        | Free cash flow (pre-spectrum)
--------------------------------- | ------- | --------------- | ------ | -----------------------------
                                  | 2019 €m | 2018 €m         | Growth | 2019 €m
Reported (IAS 18 basis)           | 14,139  | 14,737          | (4.1)% | 5,443
Other activity (including M&A)    | (95)    | (341)           |        | –
Foreign exchange                  | –       | (288)           |        | –
Handset financing and settlements | (198)   | (674)           |        | –
Guidance basis                    | 13,846  | 13,434          | 3.1%   | 5,443

2019 financial year guidance
 adjusted EBITDA free cash flow 31 March 2019 global macroeconomic outlook foreign exchange rates €1:£0. €1:ZAR 15. 5. €1:EGP 22. 1. exclude licence spectrum payments tax restructuring shareholder recharges India structural change Eurozone. no change current structure Group. report future performance sensitivity foreign exchange performance.
 Reconciliations adjusted EBITDA free cash flow 2019 guidance.
 Adjusted EBITDA Free cash flow
 2019 Growth
 Reported (IAS 18 basis 14,139,737 (4.% 5,443
 Other activity M&A)
 Foreign exchange
 Handset financing settlements
 Guidance basis 13,846 13,434. 5,443


Backlog
At December 31, 2019 and 2018, our backlog of unfilled orders in our four reportable segments was as follows:
Customers may delay delivery of products or cancel orders suddenly and without advanced notice, subject to possible cancellation penalties. Due to possible customer changes in delivery schedules and cancellation of orders, our backlog at any particular date is not necessarily indicative of the actual sales for any succeeding period. Delays in delivery schedules or cancellations of backlog during any particular period could have a material adverse effect on our business, financial condition or results of operations.

                      | 2019          | 2018
--------------------- | ------------- | ------
                      | (in millions) |
Semiconductor Test    | $543.2        | $367.5
System Test           | 206.0         | 149.5
Wireless Test         | 42.9          | 32.0
Industrial Automation | 17.9          | 19.7
                      | $810.0        | $568.7

Backlog
 December 31, 2019 2018 unfilled orders four segments
 Customers may delay delivery cancel orders cancellation penalties. changes backlog not indicative sales. Delays cancellations business financial condition results operations.
 2019 2018
-----------------
 millions
 Semiconductor Test $543. $367.
 System Test 206. 149.
 Wireless Test 42. 32.
 Industrial Automation 17. 19.
 $810. $568.


North America
North America net revenues increased $710,000 in 2019 compared to 2018 (see “Revenues” above). North America expenses decreased $2.2 million from 2018 to 2019 primarily due to a $1.7 million decrease in salary and employee related expenses, $742,000 decrease in professional service expenses, a $584,000 decrease in customer service costs and a $498,000 decrease in trade and brand marketing expenses, offset partially by a $1.2 million increase in member acquisition costs.

                                          | Year Ended December 31, |
----------------------------------------- | ----------------------- | -------
                                          | 2019                    | 2018
(In thousands)                            |                         |
Revenues                                  | $68,024                 | $67,314
Income from operations                    | $12,491                 | $9,587
Income from operations as a % of revenues | 18%                     | 14%

 revenues increased $710,000 2019 2018. expenses decreased $2. 2 million $1. 7 million decrease salary $742,000 professional service $584,000 customer service $498,000 trade brand marketing $1. 2 million member acquisition costs.
 Ended December
 Revenues $68,024 $67,314
 Income operations $12,491 $9,587


4. Discontinued Operations
In fiscal 2019, we sold our Subsea Communications (“SubCom”) business for net cash proceeds of $297 million and incurred a pre-tax loss on sale of $86 million, related primarily to the recognition of cumulative translation adjustment losses of $67 million and the guarantee liabilities discussed below. The definitive agreement provided that, if the purchaser sells the business within two years of the closing date, we will be entitled to 20% of the net proceeds of that future sale, as defined in the agreement, in excess of $325 million. The sale of the SubCom business, which was previously included in our Communications Solutions segment, represents our exit from the telecommunications market and was significant to our sales and profitability, both to the Communications Solutions segment and to the consolidated company. We concluded that the divestiture was a strategic shift that had a major effect on our operations and financial results. As a result, the SubCom business met the held for sale and discontinued operations criteria and has been reported as such in all periods presented on our Consolidated Financial Statements.
Upon entering into the definitive agreement, which we consider a level 2 observable input in the fair value hierarchy, we assessed the carrying value of the SubCom business and determined that it was in excess of its fair value. In fiscal 2018, we recorded a pre-tax impairment charge of $19 million, which was included in income (loss) from discontinued operations on the Consolidated Statement of Operations, to write the carrying value of the business down to its estimated fair value less costs to sell.
In connection with the sale, we contractually agreed to continue to honor performance guarantees and letters of credit related to the SubCom business’ projects that existed as of the date of sale. These guarantees had a combined value of approximately $1.55 billion as of fiscal year end 2019 and are expected to expire at various dates through fiscal 2025; however, the majority are expected to expire by fiscal year end 2020. At the time of sale, we determined that the fair value of these guarantees was $12 million, which we recognized by a charge to pre-tax loss on sale. Also, under the terms of the definitive agreement, we are required to issue up to $300 million of new performance guarantees, subject to certain limitations, for projects entered into by the SubCom business following the sale for a period of up to three years. At fiscal year end 2019, there were no such new performance guarantees outstanding. We have contractual recourse against the SubCom business if we are required to perform on any SubCom guarantees; however, based on historical experience, we do not anticipate having to perform.
The following table presents the summarized components of income (loss) from discontinued operations, net of income taxes, for the SubCom business and prior divestitures:
(1) Included a $19 million impairment charge recorded in connection with the sale of our SubCom business.
(2) Included a $19 million credit related to the SubCom business’ curtailment of a postretirement benefit plan.

                                                                |          | Fiscal        |
--------------------------------------------------------------- | -------- | ------------- | ------
                                                                | 2019     | 2018          | 2017
                                                                |          | (in millions) |
Net sales                                                       | $  41    | $  702        | $  928
Cost of sales                                                   | 50       | 602           | 653
Gross margin                                                    | (9)      | 100           | 275
Selling, general, and administrative expenses                   | 11       | 48            | 50
Research, development, and engineering expenses                 | 3        | 39            | 40
Restructuring and other charges (credits), net                  | 3        | 30 (1)        | (3)
Operating income (loss)                                         | (26)     | (17)          | 188
Non-operating income, net                                       | —        | —             | 22 (2)
Pre-tax income (loss) from discontinued operations              | (26)     | (17)          | 210
Pre-tax gain (loss) on sale of discontinued operations          | (86)     | (2)           | 3
Income tax (expense) benefit                                    | 10       | —             | (70)
Income (loss) from discontinued operations, net of income taxes | $  (102) | $  (19)       | $  143

. Discontinued Operations
 2019 sold Subsea Communications business for cash $297 million incurred pre-tax loss $86 million related to translation adjustment losses $67 million guarantee liabilities. agreement if purchaser sells business within two years entitled to 20% net proceeds future sale $325 million. sale SubCom exit from telecommunications market significant to sales profitability. divestiture strategic shift operations financial results. SubCom business met sale discontinued operations criteria reported in Consolidated Financial Statements.
 assessed carrying value SubCom in excess of fair value. fiscal 2018 recorded pre-tax impairment charge $19 million included in from discontinued operations Consolidated Statement Operations fair value less costs.
 agreed to honor performance guarantees letters of credit SubCom projects. guarantees value $1. 55 billion 2019 to expire through 2025 majority 2020. fair value guarantees was $12 million recognized by pre-tax loss on sale.agreement required issue $300 million new performance guarantees for projects SubCom three years. 2019 no new guarantees. contractual recourse against guarantees.
 table income (loss) from discontinued operations net taxes SubCom business prior divestitures
 $19 million impairment charge sale.
 $19 million credit postretirement benefit plan.
 Net sales $ 41  $ 702  $ 928
 Cost sales 50 602 653
 Gross margin 100 275
 Selling general administrative expenses 11 48 50
 Research development engineering expenses 3 39
 Restructuring charges
 Operating income (loss) (26) (17)  188
 Non-operating income 22
 Pre-tax income (loss) 210
 Pre-tax gain (loss) on sale (86) 3
 Income tax) benefit (70)
 Income (loss net taxes $ (102) (19) $ 143


7 OTHER GAINS, NET
Note: (a) The disposal and deemed disposal gains of approximately RMB8,492 million recognised during the year ended 31 December 2019 mainly comprised the following:
– net gains of approximately RMB4,859 million (2018: RMB1,661 million) on dilution of the Group’s equity interests in certain associates due to new equity interests being issued by these associates (Note 21). These investee companies are principally engaged in Internet-related business; and
– aggregate net gains of approximately RMB3,633 million (2018: RMB1,271 million) on disposals, partial disposals or deemed disposals of various investments of the Group.
(b) Net fair value gains on FVPL of approximately RMB9,511 million (Note 24) recognised during the year ended 31 December 2019 mainly comprised the following:
– aggregate gains of approximately RMB1,886 million (2018: RMB22,215 million) arising from reclassification of several investments principally engaged in Internet-related business from FVPL to investments in associates due to the conversion of the Group’s redeemable instruments or preferred shares of these investee companies into their ordinary shares and the Group has board representation upon their respective initial public offerings (“IPO”); and
– net gains of approximately RMB7,625 million (2018: RMB6,523 million) from fair value changes of FVPL.

                                                                                | 2019        | 2018
----------------------------------------------------------------------------------------------------------------- | ----------- | -----------
                                                                                | RMB’Million | RMB’Million
Net gains on disposals and deemed disposals of investee companies (Note (a))                                      | 8,492       | 2,932
Net fair value gains on FVPL (Note (b))                                                                           | 9,511       | 28,738
Subsidies and tax rebates                                                                                | 4,263       | 3,456
Impairment provision/(reversal) for investee companies and intangible assets arising from acquisitions (Note (c)) | (4,006)     | (17,577)
Net fair value gains on other financial instruments (Note 27 and Note 38)                                         | 1,647       | 1,019
Dividend income                                                                                | 1,014       | 686
Donations to Tencent Charity Funds                                                                                | (850)       | (730)
Others                                                                                | (382)       | (1,810)
                                                                                | 19,689      | 16,714

GAINS
 disposal gains RMB8,492 million 31 December 2019
 net gains RMB4,859 million (2018 RMB1,661 million dilution equity interests associates. Internet-related business
 net gains RMB3,633 million (2018 RMB1,271 million disposals investments.
 Net fair value gains FVPL RMB9,511 million 31 December 2019
 gains RMB1,886 million (2018 RMB22,215 million reclassification investments conversion redeemable instruments ordinary shares
 net gains RMB7,625 million (2018 RMB6,523 million fair value changes FVPL.
 Net gains disposals companies 8,492 2,932
 Net fair value gains FVPL 28,738
 Subsidies tax rebates 4,263 3,456
 Impairment provision) investee companies intangible assets acquisitions (4,006) (17,577)
gains 27 38 1,647 1,019
 Dividend 1,014
 Donations Charity Funds (850
 (382)
 19,689


Contractual Obligations
Our principal commitments consist of obligations for outstanding debt, leases for our office space, contractual commitments for professional service projects, and third-party consulting firms. The following table summarizes our contractual obligations at December 31, 2019 (in thousands):

                                                        |          |                  | Payment Due by period |           |
------------------------------------------------------- | -------- | ---------------- | --------------------- | --------- | -----------------
                                                        | Total    | Less than 1 Year | 1-3 Years             | 3-5 Years | More than 5 Years
Long-term debt obligations including interest           | $334,500 | $17,250          | $317,250              | $—        | $—
Operating lease obligations                             | 82,895   | 9,434            | 47,410                | 15,226    | 10,825
Software subscription and other contractual obligations | 18,726   | 12,371           | 6,355                 | —         | —
                                                        | $436,121 | $39,055          | $371,015              | $15,226   | $10,825

Obligations
 debt leases projects third-party consulting firms. obligations December 31, 2019
 Payment Due period
 Less 1 Year 1-3 3-5 5 Years
 Long-term debt interest $334,500 $17
 Operating lease obligations 82,895 9,434 47,410 15,226 10
 Software subscription obligations 18,726 12,371 6,355
 $436,121 $39,055 $371,015 $15,226


Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
ADTRAN’s common stock is traded on the NASDAQ Global Select Market under the symbol ADTN. As of February 19, 2020, ADTRAN had 163 stockholders of record and approximately 6,972 beneficial owners of shares held in street name. The following table shows the high and low closing prices per share for our common stock as reported by NASDAQ for the periods indicated.

COMMON STOCK PRICES |               |                |               |
------------------- | ------------- | -------------- | ------------- | --------------
2019                | First Quarter | Second Quarter | Third Quarter | Fourth Quarter
High                | $15.40        | $17.81         | $16.40        | $11.59
Low                 | $10.49        | $13.76         | $ 9.92        | $ 8.09

Registrant’s Common Equity Stockholder Matters Issuer Purchases Securities
 ADTRAN’s common stock traded NASDAQ Global Select Market ADTN. February 19, 2020 163 stockholders 6,972 owners. table high low closing prices share common stock.
 PRICES
 First Second Fourth
 $15. $17. $16. $11.
 $10. 49 $13. 76 9.


Intellectual Property and Custom Development Income
Licensing of intellectual property including royalty-based fees decreased 49.2 percent in 2019 compared to 2018. This was primarily due to a decline in new partnership agreements compared to the prior year. The timing and amount of licensing, sales or other transfers of IP may vary significantly from period to period depending upon the timing of licensing agreements, economic conditions, industry consolidation and the timing of new patents and know-how development.

($ in millions)                                                 |      |        | Percent
--------------------------------------------------------------- | ---- | ------ | -------------------------
For the year ended December 31:                                 | 2019 | 2018   | Yr.-to-Yr. Percent Change
Licensing of intellectual property including royalty-based fees | $367 | $723   | (43.2)%
Custom development income                                       | 246  | 275    | (10.5)
Sales/other transfers of intellectual property                  | 34   | 28     | 22.6
Total                                                           | $648 | $1,026 | (36.9)%

Intellectual Property Development Income
 Licensing royalty fees decreased. percent 2019 2018. due decline partnership agreements. timing licensing sales transfers vary economic conditions industry consolidation patents know-how development.
 year December 31 2019 2018. Percent Change
 Licensing royalty fees $367 $723  (43.
 Custom development income 246  275 (10.
 Sales transfers 34 28.
 $648 $1,026.


2017 Restructuring Plan
On September 15, 2016, the Company’s Board of Directors formally approved a restructuring plan to better align the Company’s global capacity and administrative support infrastructure to further optimize organizational effectiveness. This action includes headcount reductions across the Company’s selling, general and administrative cost base and capacity realignment in higher cost locations (the “2017 Restructuring Plan”).
The 2017 Restructuring Plan, totaling $195.0 million in restructuring and other related costs, is complete as of August 31, 2019.
The tables below summarize the Company’s liability activity, primarily associated with the 2017 Restructuring Plan (in thousands):

                                                   | Employee Severance and Benefit Costs | Lease Costs | Asset Write-off Costs | Other Related Costs | Total
-------------------------------------------------- | ------------------------------------ | ----------- | --------------------- | ------------------- | --------
Balance as of August 31, 2017                      | $ 33,580                             | $1,665      | $ —                   | $ 3,143             | $38,388
Restructuring related charges                      | 16,269                               | 1,596       | 16,264                | 2,773               | 36,902
Asset write-off charge and other non-cash activity | (127)                                | 525         | (16,264)              | 25                  | (15,841)
Cash payments                                      | (31,591)                             | (1,102)     | —                     | (5,419)             | (38,112)
Balance as of August 31, 2018                      | 18,131                               | 2,684       | —                     | 522                 | 21,337
Restructuring related charges                      | 16,029                               | (41)        | (3,566)               | 2,071               | 14,493
Asset write-off charge and other non-cash activity | (494)                                | —           | 3,566                 | (18)                | 3,054
Cash payments                                      | (30,504)                             | (663)       | —                     | (1,786)             | (32,953)
Balance as of August 31, 2019                      | $3,162                               | $1,980      | $—                    | $789                | $5,931

2017 Restructuring Plan
 September 15, 2016, Board Directors approved restructuring plan global capacity administrative infrastructure. headcount reductions administrative cost capacity realignment higher cost locations.
 $195. million complete August 31, 2019.
 tables liability activity Plan
 Employee Severance Benefit Lease Asset Write-off Other Related Costs
 Balance August 31, 2017 $ 33,580  $1,665  3,143 $38,388
 Restructuring charges 16,269
 Asset write-off charge non-cash activity (127)
 Cash payments (31,591)
 Balance August 31, 2018 18,131 2,684
 Restructuring charges 16,029 (3,566) 2,071 14,493
 Asset write-off charge non-cash activity (494)
 Cash payments (30,504)
 Balance August 31, 2019 $3,162  $1,980


12. Government grants
The following government grants are included within creditors:
A government grant has been received to accelerate and support research and development in the vulnerability of global navigation satellite systems.

            | 2019      | 2018
----------- | --------- | ---------
            | £ million | £ million
Current     | 0.7       | 0.3
Non-current | 0.1       | 0.8
            | 0.8       | 1.1

. Government grants
 creditors
 grant accelerate research development vulnerability global navigation satellite systems.
 2019 2018
 £ million
 Current. 7. 3
 Non-current. 1 8
.


30. RECONCILIATION OF LIABILITIES FROM FINANCING ACTIVITIES (Cont’d)
Note: (1) The cash flows comprise the net amount of proceeds from borrowings and repayments of borrowings, net interest paid on borrowings, and settlement of swaps for bonds repaid in the statement of cash flows.

                              | Bonds   | Bank loans | Finance lease liabilities | Interest payable | Derivative financial instruments
----------------------------- | ------- | ---------- | ------------------------- | ---------------- | --------------------------------
Group - 2018                  | S$ Mil  | S$ Mil     | S$ Mil                    | S$ Mil           | S$ Mil
As at 1 April 2017            | 8,726.6 | 2,306.3    | 198.2                     | 142.7            | (245.3)
Financing cash flows (1)      | (506.2) | 222.6      | (28.3)                    | (379.9)          | 61.4
Non-cash changes:             |         |            |                           |                  |
Fair value adjustments        | (65.4)  | -          | -                         | -                | 107.8
Amortisation of bond discount | 3.2     | -          | -                         | -                | -
Foreign exchange movements    | (273.3) | (58.5)     | (0.5)                     | (8.5)            | 11.5
Acquisition of subsidiary     | -       | 31.3       | 8.7                       | -                |
Additions of finance lease    | -       | -          | 4.8                       | -                | -
Interest expense              | -       | -          | -                         | 383.6            | -
Adjustment                    | -       | -          | (78.3)                    | -                | -
                              | (335.5) | (27.2)     | (65.3)                    | 375.1            | 119.3
As at 31 March 2018           | 7,884.9 | 2,501.7    | 104.6                     | 137.9            | (64.6)

. RECONCILIATION LIABILITIES FINANCING
 cash flows proceeds repayments interest settlement swaps bonds.
 Bonds Bank loans Finance lease liabilities Interest Derivative financial instruments
 S$
 1 April 2017 8,726. 6 2,306. 3 198. 2 142. 7 (245.
 Financing cash flows (506. 2) 222. 6 (28. (379. 9) 61. 4
 Non-cash changes
 value adjustments (65. 107.
 Amortisation bond discount 3.
 Foreign exchange movements (273. (58. 11.
 Acquisition subsidiary 31. 8.
 Additions finance lease 4.
 383. 6
 (78.
 (335. (27. (65. 375. 119.
 31 March 2018 7,884. 9 2,501. 7 104. 6 137. (64.


Revenue
Recurring revenue consists of subscription-based software sales, support and maintenance revenue, recurring transactions revenue and recurring revenue from managed services solutions, such as outsourcing, private cloud hosting and revenue cycle management. Non-recurring revenue consists of perpetual software licenses sales, hardware resale and non-recurring transactions revenue, and project-based client services revenue.
Year Ended December 31, 2019 Compared with the Year Ended December 31, 2018
Recurring revenue decreased during the year ended December 31, 2019 compared to prior year due to known attrition within the EIS and other businesses partially offset with growth in subscription revenue. The sale of the OneContent business on April 2, 2018 also contributed to the decline in recurring revenue. The OneContent business was acquired as part of the EIS Business acquisition on October 2, 2017, and it contributed $13 million of recurring revenue during the first quarter of 2018, including $1 million of amortization of acquisition-related deferred revenue adjustments. Non-recurring revenue increased due to higher sales of perpetual software licenses for our acute solutions and hardware in 2019 compared to 2018, partially offset by lower client services revenue related to the timing of software activations.
The percentage of recurring and non-recurring revenue of our total revenue was 79% and 21%, respectively, during the year ended December 31, 2019 and 81% and 19%, respectively, during the year ended December 31, 2018.
Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017
The increase in revenue for the year ended December 31, 2018 compared with the year ended December 31, 2017 was primarily driven by incremental revenue from the acquisitions of the EIS Business in the fourth quarter of 2017 and Practice Fusion in the first quarter of 2018. Total revenue includes the amortization of acquisition-related deferred revenue adjustments, which totaled $24 million and $29 million during the years ended December 31, 2018 and 2017, respectively. The growth in both recurring and non-recurring revenue for the year ended December 31, 2018 compared with the prior year was also largely driven by incremental revenue from the previously mentioned acquisitions.
The increase in revenue for the year ended December 31, 2018 compared with the year ended December 31, 2017 was primarily driven by incremental revenue from the acquisitions of the EIS Business in the fourth quarter of 2017 and Practice Fusion in the first quarter of 2018. Total revenue includes the amortization of acquisition-related deferred revenue adjustments, which totaled $24 million and $29 million during the years ended December 31, 2018 and 2017, respectively. The growth in both recurring and non-recurring revenue for the year ended December 31, 2018 compared with the prior year was also largely driven by incremental revenue from the previously mentioned acquisitions.

                      |            |            | Year Ended December 31, |                         |
--------------------- | ---------- | ---------- | ----------------------- | ----------------------- | -----------------------
(In thousands)        | 2019       | 2018       | 2017                    | 2019 % Change from 2018 | 2018 % Change from 2017
Revenue:              |            |            |                         |                         |
Recurring revenue     | $1,395,869 | $1,411,742 | $1,176,720              | (1.1%)                  | 20.0%
Non-recurring revenue | 375,808    | 338,220    | 320,988                 | 11.1%                   | 5.4%
Total revenue         | $1,771,677 | $1,749,962 | $1,497,708              | 1.2%                    | 16.8%

 Recurring revenue subscription software support maintenance transactions managed services. Non-recurring revenue software licenses hardware resale project client services.
 Year December 31, 2019
 Recurring revenue decreased December 31, 2019 due attrition EIS offset growth subscription revenue. sale OneContent business April 2, 2018 contributed decline. acquired EIS Business October 2, 2017 contributed $13 million recurring revenue first quarter 2018 $1 million amortization acquisition deferred revenue adjustments. Non-recurring revenue increased higher sales software licenses 2019 offset lower client services revenue.
 percentage recurring non-recurring revenue total revenue 79% 21% December 2019 81% 19% December 2018.
 2018
 increase revenue driven by incremental revenue acquisitions EIS Business Practice Fusion. Total revenue includes acquisition-related deferred revenue adjustments totaled $24 million $29 million. growth recurring non revenue driven by incremental revenue acquisitions.
increase revenue December 31, 2018 2017 driven by revenue EIS Business Practice Fusion first 2018. revenue includes amortization acquisition-related deferred revenue adjustments totaled $24 million $29 million. growth recurring non-recurring revenue driven by incremental revenue acquisitions.
 December
 2019 2018 2017 % Change
 Recurring revenue $1,395,869 $1,411,742  $1,176,720.
 Non-recurring revenue 375,808 338,220 320,988. 1% 5. 4%
 Total revenue $1,771,677 $1,749,962 $1,497,708. 2%.


Free Cash Flow
We monitor our free cash flow, as a key measure of our overall business performance, which enables us to analyze our financial performance without the effects of certain non-cash items such as depreciation, amortization, and stock-based compensation expenses. Additionally, free cash flow takes into account the impact of changes in deferred revenue, which reflects the receipt of cash payment for products before they are recognized as revenue, and unbilled accounts receivable, which reflects revenue that has been recognized that has yet to be invoiced to our customers.
Our net cash provided by (used in) operating activities is significantly impacted by the timing of invoicing and collections of accounts receivable, the timing and amount of annual bonus payments, as well as payroll and tax payments. Our capital expenditures consisted of purchases of property and equipment, most of which were computer hardware, software, capitalized software development costs, and leasehold improvements.
In fiscal year 2019, free cash flow was impacted by $23.6 million related to the build out and furnishing of our new corporate headquarters in San Mateo, California. For a further discussion of our operating cash flows, see “Liquidity and Capital Resources - Cash Flows.”(in thousands)

                                          | Fiscal years ended July 31, |
----------------------------------------- | --------------------------- | --------
                                          | 2019                        | 2018
Net cash provided by operating activities | $116,126                    | $140,459
Net cash used for capital expenditures    | (48,857)                    | (12,011)
Free cash flow                            | $67,269                     | $128,448

Free Cash Flow
 monitor key measure business performance financial performance without non-cash depreciation amortization stock-based compensation expenses. deferred revenue unbilled accounts receivable.
 net cash impacted by invoicing annual bonus payments payroll tax payments. capital expenditures purchases property equipment computer hardware software capitalized software development costs leasehold improvements.
 2019 cash flow impacted $23. 6 million new corporate headquarters San Mateo California. “Liquidity Capital Resources Cash Flows.
 Fiscal years ended July 31,
 Net cash operating activities $116,126 $140,459
 capital expenditures (48,857) (12,011
 Free cash flow $67,269 $128,448


Plans with projected benefit obligations in excess of plan assets are attributable to unfunded domestic supplemental retirement plans, and our U.K. retirement plan.
Accrued benefit liability reported as:
As of September 30, 2019 and 2018, the amounts included in accumulated other comprehensive income, consisted of
deferred net losses totaling approximately $6.3 million and $5.3 million, respectively.
The amount of net deferred loss expected to be recognized as a component of net periodic benefit cost for the year ending September 30, 2019, is approximately $229 thousand.

                                      | September 30,          |
------------------------------------- | ---------------------- | ------
                                      | 2019                   | 2018
                                      | (Amounts in thousands) |
Current accrued benefit liability     | $335                   | $340
Non-current accrued benefit liability | 6,904                  | 6,168
Total accrued benefit liability       | $7,239                 | $6,508

benefit obligations unfunded domestic retirement plans. retirement plan.
 Accrued benefit liability
 September 30, 2019 2018 income
 deferred net losses $6. 3 million $5. 3 million.
 net deferred loss benefit cost September 30 2019 $229 thousand.
 Current accrued benefit liability $335
 Non-current 6,168
 Total liability $7,239 $6,508