The following table presents the approximate amount of federal, foreign and state operating loss carryforwards and federal tax credit carryforwards available to
reduce future taxable income, along with the respective range of years that the operating loss and tax credit carryforwards would expired if not utilized:
At March 31, 2019, certain of our U.S. and foreign subsidiaries in Brazil, France, Germany, Israel, Japan, Mexico and Korea had tax operating loss and tax credit carry
forwards totaling approximately $263,836. There is a greater likelihood of not realizing the future tax benefits of these net operating losses and other deductible
temporary differences in Brazil, Israel, China, and Korea since these losses and other deductible temporary differences must be used to offset future taxable income of
those subsidiaries, which cannot be assured, and are not available to offset taxable income of other subsidiaries located in those countries. Accordingly, we have
recorded valuation allowances related to the net deferred tax assets in these jurisdictions. Valuation allowances decreased $(12,101), and increased $317 and $6,812
during the years ended March 31, 2017, 2018, and 2019, respectively, as a result of changes in the net operating losses of the subsidiaries or as a result of changes in
foreign currency exchange rates in the countries mentioned above
The decrease in valuation allowance during the year ended March 31, 2017 was also due to the reversal of valuation allowances of $5,530 related to the future
utilization of NOLs totaling $15,878 at a Japanese subsidiary. The related tax benefits upon utilization of the Japanese NOLs expire eight years after they are generated,
and they are not subject to annual utilization limitations. The realization of tax benefits due to the utilization of these NOLs could take an extended period of time to
realize and are dependent upon the Japanese subsidiary’s continuing profitability, and some could expire prior to utilization. The increase in valuation allowance during
the year ended March 31, 2019, was due to the addition of valuation allowances of $3,124 related to the Ethertronics acquisition and $1,763 related to capital and section
1231 losses at AVX Corporation.
The decrease in valuation allowance during the year ended March 31, 2017 was also due to the reversal of valuation allowances of $5,530 related to the future utilization of NOLs totaling $15,878 at a Japanese subsidiary. The related tax benefits upon utilization of the Japanese NOLs expire eight years after they are generated, and they are not subject to annual utilization limitations. The realization of tax benefits due to the utilization of these NOLs could take an extended period of time to realize and are dependent upon the Japanese subsidiary’s continuing profitability, and some could expire prior to utilization. The increase in valuation allowance during the year ended March 31, 2019, was due to the addition of valuation allowances of $3,124 related to the Ethertronics acquisition and $1,763 related to capital and section 1231 losses at AVX Corporation.
Income taxes paid totaled $55,642, $66,354 and $75,640 during the years ended March 31, 2017, 2018 and 2019, respectively

                                     | March 31, 2019 | Beginning expiration year | Ending expiration year
------------------------------------ | -------------- | ------------------------- | ----------------------
Federal operating loss carryforwards | $14,440        | 2026                      | 2036
Federal operating loss carryforwards | 11,895         | No Exp                    | No Exp
Foreign operating loss carryforwards | 178,784        | No Exp                    | No Exp
Foreign operating loss carryforwards | 25,792         | 2020                      | 2039
State operating loss carryforwards   | 3,279          | 2022                      | 2039
Federal tax credit carryforwards     | 17,373         | 2039                      | 2039
Foreign tax credit carryforward      | 4,187          | 2023                      | 2029
State tax credit carryforward        | 8,086          | 2020                      | 2029

table presents federal foreign state operating loss tax credit
 future taxable income not
 March 31, 2019 U. S. foreign subsidiaries in Brazil France Germany Israel Japan Mexico Korea had loss tax credit
 $263,836. likelihood not realizing future tax benefits losses
 differences in Brazil Israel China Korea future taxable income
.
 valuation allowances deferred tax assets jurisdictions. decreased $(12 increased $317 $6,812
 March 31, 2017 2018 2019 net operating losses
 foreign currency exchange rates
 decrease 2017 due to reversal of allowances $5,530 future
 utilization NOLs $15,878 at Japanese subsidiary. tax benefits NOLs expire eight years after
 not subject to annual utilization limitations. tax benefits
 Japanese profitability expire prior. increase valuation allowance
 March 31, 2019 due to allowances $3,124 Ethertronics acquisition $1,763 capital
 1231 losses at AVX Corporation.
decrease valuation allowance March 2017 due reversal $5,530 future utilization NOLs $15,878 Japanese subsidiary. tax benefits NOLs expire eight years after not annual limitations. tax benefits Japanese profitability expire. increase valuation allowance March 31, 2019 due addition $3,124 Ethertronics acquisition $1,763 capital section 1231 losses AVX Corporation.
 Income taxes totaled $55,642 $66,354 $75,640 March 2017 2018 2019
 Federal operating loss carryforwards $14,440 2026
 11,895
 Foreign 178,784
 25,792
 State loss 3,279
 Federal tax credit carryforwards 17,373 2039
 Foreign tax credit carryforward 4,187 2023
 State tax credit carryforward 8,086 2020


Note 13: Supplemental Balance Sheets and Statements of Operations Detail
(1) Fiscal year ended March 31, 2018 adjusted due to the adoption of ASC 606.

                                           | March 31, |
------------------------------------------ | --------- | --------
(amounts in thousands)                     | 2019      | 2018
Accounts receivable:                       |           |
Trade                                      | $176,715  | $166,459
Allowance for doubtful accounts reserve    | (1,206)   | (1,210)
Ship-from-stock and debit (“SFSD”) reserve | (18,862)  | (17,362)
Returns reserves (1)                       | (964)     | (131)
Rebates reserves                           | (967)     | (446)
Price protection reserves                  | (657)     | (420)
Other                                      | —         | (329)
Accounts receivable, net (1)               | $154,059  | $146,561

Supplemental Balance Sheets Statements Operations
 Fiscal year March 31, 2018 ASC 606.
 Accounts receivable
 $176,715 $166,459
 doubtful accounts reserve (1,206)
 Ship-from-stock debit (18,862)
 Returns reserves
 Rebates reserves
 Price protection reserves
 Accounts receivable net $154,059 $146,561


Capital reserve and reserves retained from earnings
Prior to the effective date of the reclassification and demerger of CECONOMY AG on 12 July 2017, METRO AG was not yet a group within the meaning of IFRS 10. Accordingly, combined financial statements of METRO Wholesale & Food Specialist GROUP (hereinafter: MWFS GROUP) were prepared for the IPO prospectus of METRO AG. Equity in the combined financial statements was the residual amount from the combined assets and liabilities of MWFS GROUP. Following the demerger, METRO became an independent group with METRO AG as the listed parent company. Therefore, the equity in the consolidated financial statements is subdivided according to legal requirements. The subscribed capital of €363 million and the capital reserve of €6,118 million were recognised at the carrying amounts from the METRO AG Annual Financial Statements as of 30 September 2017. For this purpose, a transfer was made from the equity item net assets, recognised as of 1 October 2016, attributable to the former METRO GROUP of the combined financial statements of MWFS GROUP. The remaining negative amount of this equity item was reclassified to reserves retained from earnings. It cannot be traced back to a history of loss.
Reserves retained from earnings can be broken down as follows:
1 Previous year: gains/losses on remeasuring financial instruments in the category ‘available for sale’.
2 Adjustment of previous year according to explanation in notes.

€ million                                                                                | 30/9/2018 | 30/9/2019
------------------------------------------------------------------------------------------------ | --------- | ---------
Effective portion of gains/losses from cash flow hedges                                          | 0         | 2
Equity and debt instruments1                                                                     | 9         | −3
Currency translation differences from translating the financial statements of foreign operations | −738      | −602
Remeasurement of defined benefit pension plans                                                   | −410      | −500
Income tax on components of other comprehensive income                                           | 91        | 106
Other reserves retained from earnings                                                            | −2,401 2  | −2,782
                                                                                | −3,449    | −3,778

Capital reserve reserves from earnings
 CECONOMY AG 12 July 2017 METRO AG not IFRS 10. financial statements METRO Wholesale Food Specialist GROUP prepared for IPO prospectus METRO AG. Equity residual from assets liabilities MWFS GROUP. demerger METRO independent AG parent. equity statements subdivided. subscribed capital €363 million capital reserve €6,118 million METRO AG Annual Financial Statements 30 September 2017. transfer from equity net assets. remaining negative reclassified to reserves from earnings.
 Reserves
 Previous year gains/losses remeasuring financial instruments.
 Adjustment.
 million 30/9/2018 30/9/2019
 gains/losses from cash flow hedges
 Equity debt
 Currency translation differences financial statements foreign operations
 Remeasurement defined benefit pension plans
 Income tax income
 Other reserves retained from earnings
,778


Note 13. Investments Held in Rabbi Trust
The mutual funds held in the rabbi trust were 66% equity-based and 34% debt-based as of December 31, 2019. Net investment income (losses), included in “Other income (expense), net” in the accompanying Consolidated Statements of Operations consisted of the following (in thousands):

                                                             |        | Years Ended December 31, |
------------------------------------------------------------ | ------ | ------------------------ | ------
                                                             | 2019   | 2018                     | 2017
Net realized gains (losses) from sales of trading securities | $143   | $10                      | $195
Dividend and interest income                                 | 419    | 635                      | 422
Net unrealized holding gains (losses)                        | 1,817  | (1,512)                  | 1,002
                                                             | $2,379 | $(867)                   | $1,619

. Investments Rabbi Trust
 mutual funds 66% equity 34% debt December 31, 2019. Net investment income Statements Operations
 Years Ended December 31,
 2019 2018 2017
 gains sales securities $143 $195
 Dividend interest income 419
 unrealized gains (losses 1,817
 $2,379 $ $1,619


Fees Paid to the Independent Registered Public Accounting Firm
The following table presents fees for professional audit services and other services rendered to our company by KPMG for our fiscal years ended December 31, 2017 and 2018.
(1) Audit Fees consist of professional services rendered in connection with the audit of our annual consolidated financial statements, including audited financial statements presented in our Annual Report on Form 10-K for the fiscal years ended December 31, 2017 and 2018 and services that are normally provided by the independent registered public accountants in connection with statutory and regulatory filings or engagements for those fiscal years.
(2) Audit-Related Fees consist of fees for professional services for assurance and related
services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services could include accounting consultations concerning financial accounting and reporting standards, due diligence procedures in connection with acquisition and procedures related to other attestation services.
(3) Tax Fees consist of fees for professional services for tax compliance, tax advice and tax planning. These services include consultation on tax matters and assistance regarding federal, state and international tax compliance.
(4) All Other Fees consist of license fees for the use of accounting research software.

                       | 2017           | 2018
---------------------- | -------------- | --------------
                       | (In Thousands) | (In Thousands)
Audit Fees (1)         | $3,747         | $4,476
Audit-Related Fees (2) | —              | —
Tax Fees (3)           | —              | —
All Other Fees (4)     | $3             | $3
Total Fees             | $3,750         | $4,479

Fees Paid Independent Registered Public Accounting Firm
 table presents fees audit services KPMG fiscal years December 2017 2018.
 Audit Fees audit annual consolidated financial statements Annual Report Form 10-K accountants.
 Audit-Related Fees assurance
 audit not Fees. include accounting consultations financial accounting reporting standards due diligence procedures acquisition attestation services.
 Tax Fees tax compliance advice planning. include consultation assistance federal state international tax compliance.
 Other Fees license fees accounting research software.
 2017 2018
 Thousands
 Audit Fees (1) $3,747 $4,476
 Audit-Related Fees (2)
 Tax Fees (3)
 All Other Fees (4)
 Total Fees $3,750 $4,479


Note 8 – Property, Plant and Equipment
As of December 31, 2019 and 2018, property, plant and equipment was comprised of the following:
Depreciation expense was $12.5 million, $12.7 million and $12.8 million for the years ended December 31, 2019, 2018 and 2017, respectively, which is recorded in cost of sales, selling, general and administrative expense and research and development expense in the consolidated statements of income.
We assess long-lived assets used in operations for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the undiscounted cash flows estimated to be generated by the asset are less than the asset’s carrying value. During the year ended December 31, 2019, the Company recognized impairment charges of $3.9 million related to the abandonment of certain information technology projects in which we had previously capitalized expenses related to these projects. The impairment charges were determined based on actual costs incurred as part of the projects. No impairment charges were recognized during the years ended December 31, 2018 and 2017.

(In thousands)                           | 2019      | 2018
---------------------------------------- | --------- | ---------
Land                                     | $4,575    | $4,575
Building and land improvements           | 34,797    | 34,379
Building                                 | 68,157    | 68,183
Furniture and fixtures                   | 19,959    | 19,831
Computer hardware and software           | 74,399    | 92,071
Engineering and other equipment          | 130,430   | 127,060
Total Property, Plant and Equipment      | 332,317   | 346,099
Less accumulated depreciation            | (258,609) | (265,464)
Total Property, Plant and Equipment, net | $73,708   | $80,635

Property Plant Equipment
 December 31, 2019 2018
 Depreciation expense $12. 5 million $12. 7 million $12. 8 million 2019 2018 2017 recorded sales selling research development statements.
 long-lived assets impairment undiscounted cash flows less than carrying value. 2019 recognized impairment charges $3. 9 million abandonment information technology projects. determined costs. No impairment charges December 31, 2018 2017.
 Land $4,575
 Building land improvements 34,797
 68,157
 Furniture fixtures 19,959
 Computer hardware software 74,399 92,071
 Engineering equipment 130,430 127,060
 Property Plant Equipment 332,317 346,099
 Less accumulated depreciation (258,609) (265,464
 $73,708 $80,635


AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts in millions, unless otherwise disclosed)
Accounts Receivable and Deferred Rent Asset—The Company derives the largest portion of its revenues and corresponding accounts receivable and the related deferred rent asset from a relatively small number of tenants in the telecommunications industry, and 54% of its current-year revenues are derived from four tenants.
The Company’s deferred rent asset is associated with non-cancellable tenant leases that contain fixed escalation clauses over the terms of the applicable lease in which revenue is recognized on a straight-line basis over the lease term.
The Company mitigates its concentrations of credit risk with respect to notes and trade receivables and the related deferred rent assets by actively monitoring the creditworthiness of its borrowers and tenants. In recognizing tenant revenue, the Company assesses the collectibility of both the amounts billed and the portion recognized in advance of billing on a straight-line basis. This assessment takes tenant credit risk and business and industry conditions into consideration to ultimately determine the collectibility of the amounts billed. To the extent the amounts, based on management’s estimates, may not be collectible, revenue recognition is deferred until such point as collectibility is determined to be reasonably assured. Any amounts that were previously recognized as revenue and subsequently determined to be uncollectible are charged to bad debt expense included in Selling, general, administrative and development expense in the accompanying consolidated statements of operations.
Accounts receivable is reported net of allowances for doubtful accounts related to estimated losses resulting from a tenant’s inability to make required payments and allowances for amounts invoiced whose collectibility is not reasonably assured. These allowances are generally estimated based on payment patterns, days past due and collection history, and incorporate changes in economic conditions that may not be reflected in historical trends, such as tenants in bankruptcy, liquidation or reorganization. Receivables are written-off against the allowances when they are determined to be uncollectible. Such determination includes analysis and consideration of the particular conditions of the account. Changes in the allowances were as follows:
(1) In 2019, write-offs are primarily related to uncollectible amounts in India. In 2018 and 2017, recoveries include recognition of revenue resulting from collections of previously reserved amounts.

                                     |         | Year Ended December 31, |
------------------------------------ | ------- | ----------------------- | ------
                                     | 2019    | 2018                    | 2017
Balance as of January 1,             | $282.4  | $131.0                  | $45.9
Current year increases               | 104.3   | 157.8                   | 87.2
Write-offs, recoveries and other (1) | (223.4) | (6.4)                   | (2.1)
Balance as of December 31,           | $163.3  | $282.4                  | $131.0

AMERICAN TOWER CORPORATION SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS amounts millions
 Accounts Receivable Deferred Rent Company derives revenues accounts receivable deferred rent asset from small tenants telecommunications industry 54% current-year revenues from four tenants.
 deferred rent asset associated with non-cancellable tenant leases fixed escalation clauses revenue recognized term.
 mitigates credit risk creditworthiness borrowers tenants. assesses collectibility amounts billed recognized. tenant credit risk business industry conditions. revenue recognition deferred until collectibility assured. amounts uncollectible charged to bad debt expense administrative development expense.
 Accounts receivable net of allowances for doubtful accounts estimated losses inability payments allowances amounts invoiced collectibility. allowances estimated based on payment patterns days past due collection history incorporate changes economic conditions bankruptcy liquidation reorganization.Receivables written-off against allowances uncollectible. determination conditions account. Changes allowances
 2019 write-offs related uncollectible amounts India. 2018 2017 recoveries revenue reserved amounts.
 Ended December 31,
 Balance January 1 $282. $131. $45.
 increases 104. 157. 87.
 Write-offs recoveries (223. (6.
 Balance December 31, $163. $282. $131.


CREDIT RISK
In many instances, trade receivables are written off directly to bad debt expense if the account has not been collected after a predetermined period of time.
The following table provides further details on trade receivables, net of allowance for doubtful accounts.

AT DECEMBER 31                                                     | 2019  | 2018
------------------------------------------------------------------ | ----- | -----
Trade receivables not past due                                     | 2,082 | 2,091
Trade receivables past due, net of allowance for doubtful accounts |       |
Under 60 days                                                      | 541   | 508
60 to 120 days                                                     | 232   | 304
Over 120 days                                                      | 64    | 72
Trade receivables, net of allowance for doubtful accounts          | 2,919 | 2,975

CREDIT RISK
 trade receivables bad debt collected.
 table details receivables doubtful accounts.
 DECEMBER 31 2019
 receivables not past due 2,082 2,091
 doubtful accounts
 Under 60 days 541
 60 to 120 days
 Over 120 days 64
 doubtful 2,919,975


Annual Recurring Revenue
Beginning with the fourth quarter of 2018, we began monitoring a new operating metric, total annual recurring revenue (“Total ARR”), which is defined as the annualized value of all recurring revenue contracts active at the end of a reporting period. Total ARR includes the annualized value of subscriptions (“Subscription ARR”) and the annualized value of software support contracts related to perpetual licenses (“Perpetual license support ARR”) active at the end of a reporting period and does not include revenue reported as perpetual license or professional services in our consolidated statement of operations. We are monitoring these metrics because they align with how our customers are increasingly purchasing our solutions and how we are managing our business. These ARR measures should be viewed independently of revenue, unearned revenue, and customer arrangements with termination rights as ARR is an operating metric and is not intended to be combined with or replace those items. ARR is not an indicator of future revenue and can be impacted by contract start and end dates and renewal rates.
ARR metrics as of December 31, 2019 and 2018 were as follows (unaudited):

                                              | December 31, |
--------------------------------------------- | ------------ | ------
(in millions, except percentages)             | 2019         | 2018
Total ARR                                     | $179.5       | $162.6
Year-over-year percentage increase            | 10%          | 20%
Subscription ARR                              | $113.9       | $95.9
Year-over-year percentage increase            | 19%          | 32%
Perpetual license support ARR                 | $65.6        | $66.7
Year-over-year percentage increase (decrease) | (2)%         | 6%

Annual Recurring Revenue
 fourth quarter 2018 monitoring new total annual recurring revenue recurring revenue contracts. includes subscriptions software contracts perpetual licenses perpetual license professional services consolidated statement operations. monitoring metrics align customers solutions managing business. ARR measures viewed independently revenue unearned revenue customer arrangements termination rights operating not. not indicator future revenue impacted contract start end dates renewal rates.
 ARR metrics December 31, 2019 2018
 Total ARR $179. $162.
 Year-over-year increase 10% 20%
 Subscription ARR $113. $95.
 Year-over-year increase 19% 32%
 Perpetual license support ARR $65. $66.
 Year-over-year increase 6%


Interest and Other Expense, Net
The following table sets forth the components of interest and other expense, net:
Interest and other expense, net, positively changed by $30.5 million during fiscal 2019, as compared to fiscal 2018, primarily driven by curtailment gains on our pension plans, mark-to-market gains on certain of our privately-held strategic investments, realized gains on sales of strategic investments, offset by an increase in interest expense resulting from our term loan entered into on December 17, 2018 in aggregate principal amount of $500 million and mark-to-market losses on marketable securities.
Interest and other expense, net, increased $24.0 million during fiscal 2018, as compared to fiscal 2017, primarily related to increases in impairment losses on certain of our privately-held strategic investments and interest expense resulting from our June 2017 issuance of $500.0 million aggregate principal amount of 3.5% notes due June 15, 2027.
Interest expense and investment income fluctuates based on average cash, marketable securities and debt balances, average maturities and interest rates.
Gains and losses on foreign currency are primarily due to the impact of re-measuring foreign currency transactions and net monetary assets into the functional currency of the corresponding entity. The amount of the gain or loss on foreign currency is driven by the volume of foreign currency transactions and the foreign currency exchange rates for the year

                                     |         | Fiscal year ended January 31, |
------------------------------------ | ------- | ----------------------------- | -------
                                     | 2019    | 2018                          | 2017
                                     |         | (in millions)                 |
Interest and investment expense, net | $(52.1) | $(34.5)                       | $(29.7)
Gain (loss) on foreign currency      | 5.1     | (3.3)                         | (3.3)
Gain (loss) on strategic investments | 12.5    | (16.4)                        | 0.3
Other income                         | 16.8    | 6.0                           | 8.5
Interest and other expense, net      | $(17.7) | $(48.2)                       | $(24.2)

Interest Expense Net
 table components interest expense
 changed $30. 5 million 2019 driven by gains pension plans mark-to-market gains strategic investments gains sales offset increase interest expense term loan December 17, 2018 $500 million mark-to losses securities.
 expense increased $24. million 2018 related to losses investments June 2017 issuance $500. million 3. 5% notes due June 15, 2027.
 Interest expense investment income fluctuates cash securities debt balances maturities interest rates.
 Gains losses foreign currency due re-measuring currency transactions assets. gain loss foreign currency driven by volume transactions exchange rates
 Fiscal year January
 millions
 Interest investment expense net $(52.(34.(29. 7)
 Gain (loss) on foreign currency 5.
 strategic investments 12.
 Other income.
 Interest expense net $(17. 7)(48.$(24.


Note 11: Share-Based Compensation
Total share-based compensation expense related to the Company's stock options, RSUs, stock grant awards and ESPP were recorded within the Consolidated Statements of Operations and Comprehensive Income as follows (in millions):
(1) Recognition of related income tax benefits are the result of the adoption of ASU 2016-09 during the first quarter of 2017 through a cumulative effect adjustment of $68.1 million recorded as a credit to retained earnings as of January 1, 2017. Tax benefit is calculated using the federal statutory rate of 21% during the years ended December 31, 2019 and December 31, 2018, and 35% for the year ended December 31, 2017.
At December 31, 2019, total unrecognized share-based compensation expense, net of estimated forfeitures, related to non-vested RSUs with service, performance and market conditions was $74.9 million, which is expected to be recognized over a weighted-average period of 1.3 years. The total intrinsic value of stock options exercised during the year ended December 31, 2019 was $3.9 million.
The Company received cash of $1.7 million and $26.2 million from the exercise of stock options and the issuance of shares under the ESPP, respectively. Upon option exercise, vesting of RSUs, stock grant awards, or completion of a purchase under the ESPP, the Company issues new shares of common stock.

                                                |        | Year Ended December 31, |
----------------------------------------------- | ------ | ----------------------- | ------
                                                | 2019   | 2018                    | 2017
Cost of revenue                                 | $10.6  | $7.0                    | $6.0
Research and development                        | 17.0   | 14.3                    | 12.5
Selling and marketing                           | 14.8   | 14.1                    | 11.7
General and administrative                      | 37.0   | 42.9                    | 39.6
Share-based compensation expense                | 79.4   | 78.3                    | 69.8
Related income tax benefits at federal rate (1) | (16.7) | (16.4)                  | (24.4)
Share-based compensation expense, net of taxes  | $62.7  | $61.9                   | $45.4

Share-Based Compensation
 Company stock options RSUs stock grant awards ESPP recorded Consolidated Statements of Operations Comprehensive Income
 tax benefits ASU 2016-09 first quarter 2017 adjustment $68. 1 million credit earnings January 1, 2017. calculated federal rate 21% December 31, 2019 2018 35% 2017.
 December 31, 2019 unrecognized share-based compensation expense non-vested RSUs $74. 9 million. 3 years. intrinsic value stock options 2019 $3. 9 million.
 Company received cash $1. 7 million $26. 2 million from stock options issuance shares ESPP. Company issues new shares common stock.
 December
 Cost revenue $10. $7. $6.
 Research development.
 Selling marketing.
 General administrative 37. 42. 39.
 Share-based compensation expense 79. 78. 69.
 income tax benefits federal rate (16.
Share compensation taxes $62. $45.


Group and business unit performance factors
The underlying values and weightings for each KPI are set and approved by the remuneration committee in advance of each year to determine parameters for the STI in the form of a balanced scorecard. Below is the group STI scorecard for FY19 that applied to the CEO, CFO, executive directors, prescribed officers and other participants:
* The actual targets have not been provided as they are linked to budget and considered commercially sensitive information.
** For the key performance indicators within the growth and efficiency strategic objectives, the targeted percentages for “threshold”, “on-target” and
“stretch” as set out above per key performance indicator represent the targeted percentage achievement of the underlying budgeted amounts.

Strategic objective        | Strategic objective weighting | Key performance indicator | Key performance indicator weighting | Score = 50%                                                          | Score = 100%         | Score = 200%
-------------------------- | ----------------------------- | ------------------------- | ----------------------------------- | -------------------------------------------------------------------- | -------------------- | ------------
Growth*,**                 | 60%                           | Sales volume growth       | 10%                                 | 40,0%                                                                | 100,0%               | 140,0%
                           |                               | Absolute gross margin     | 10%                                 | 96,8%                                                                | 100,0%               | 103,6%
                           |                               | PBIT                      | 40%                                 | 98,6%                                                                | 100,0%               | 103,6%
Efficiency*,**             | 10%                           | Cost savings initiatives  | 5%                                  | 98,6%                                                                | 100,0%               | 123,4%
                           |                               | Net working capital       | 5%                                  | 101,2%                                                               | 100,0%               | 97,7%
                           |                               |                           |                                     | Reduction in execution-related marketplace incidents year-on-year by |                      |
People and sustainability* | 30%                           | Quality                   | 10%                                 | 10%                                                                  | 15%                  | 20%
                           |                               | Safety (LTIFR)            | 10%                                 | 120,0%                                                               | 100,0%               | 80,0%
                           |                               | BBBEE score               | 10%                                 | Level 7 (60 to 61)                                                   | Level 7 (61.1 to 65) | Level 6

Group business unit performance factors
 values weightings remuneration committee balanced scorecard. group STI scorecard FY19 CEO CFO executive directors officers participants
 targets linked budget commercially sensitive.
 key performance indicators growth targeted percentages
 represent achievement budgeted amounts.
 Strategic objective Key performance indicator Score 50% 100% 200%
 Growth 60% Sales volume growth 10% 40,0% 100
 Absolute gross margin 10% 96,8% 103,6%
 PBIT 40% 98,6%
 Efficiency 10% Cost savings initiatives 5% 98,6% 100,0% 123,4%
 Net working capital 5% 101,2% 97,7%
 Reduction execution-related marketplace incidents year-on-year
 People sustainability 30% Quality 10% 20%
 Safety 10% 120,0% 100,0%
 BBBEE score 10% Level 7 (60 to 61.


Electro-Magnetic, Sensors, and Actuators
The following table sets forth net sales, operating income, and operating income as a percentage of net sales for our MSA reportable segment in fiscal years 2019 and 2018 (amounts in thousands, except percentages).
Net Sales MSA net sales of $240.7 million in fiscal year 2019 increased $13.8 million or 6.1% from $227.0 million in fiscal year 2018. The increase in net sales was primarily driven by a $15.0 million increase in OEM sales in the JPKO region. Also contributing to the increase in net sales was a $4.3 million increase in EMS sales across all regions and a $3.7 million increase in distributor sales across the Americas and EMEA regions. These increase in net sales were partially offset by a $5.5 million decrease in distributor sales across the APAC and JPKO regions and a $3.8 million decrease in OEM sales across the Americas, APAC, and JPKO regions.
Reportable Segment Operating Income
Segment operating income of $22.5 million in fiscal year 2019 increased $6.9 million from $15.7 million in fiscal year 2018. The increase in operating income was primarily due to a $6.6 million decrease in SG&A expenses resulting from a decrease in payroll expenses that was caused by a reduction in head count. Also contributing to the increase in operating income was a $2.9 million decrease in restructuring charges, a $1.3 million decrease in net loss on write down and disposal of long-lived assets, and a $0.2 million decrease in R&D expenses. Partially offsetting these improvements was a $4.1 million decrease in gross margin, which was primarily driven by a change in the sales mix to lower margin products.

                         |                | For the Fiscal Years Ended |                |
------------------------ | -------------- | -------------------------- | -------------- | --------------
                         | March 31, 2019 |                            | March 31, 2018 |
Sales                    | Amount         | % to Net Sales             | Amount         | % to Net Sales
Net sales                | $240,740       |                            | $226,964       |
Segment operating income | 22,546         | 9.4%                       | 15,694         | 6.9%

Electro-Magnetic Sensors Actuators
 table net sales operating income MSA segment 2019 2018.
 Net Sales $240. 7 million increased $13. 8 million 6. 1% from $227. 0 million 2018. driven $15. 0 million increase OEM sales JPKO. $4. 3 million EMS sales $3. 7 million distributor sales Americas EMEA. offset $5. 5 million decrease distributor sales APAC JPKO $3. 8 million decrease OEM sales.
 Segment Operating Income
 $22. 5 million 2019 increased $6. 9 million $15. 7 million 2018. due $6. 6 million SG&A expenses. $2. 9 million restructuring charges $1. 3 million net loss write disposal long-lived assets $0. 2 million decrease R&D expenses. $4. 1 million decrease gross margin sales mix lower margin products.
 March 2019 2018
 Sales %
 $240,740 $226,964
22,546. 4% 15,694 6.


Total Expense for Share-Based Payment
Total expense for the share-based payment plans of Executive Board members was determined in accordance with IFRS 2 (Share- Based Payments) and consists exclusively of obligations arising from Executive Board activities.

€ thousands                                                                    | 2019     | 2018
------------------------------------------------------------------------------ | -------- | -------
Christian Klein (Co-CEO from 10/10/2019)                                       | 1,925    | 442.2
Jennifer Morgan (Co-CEO from 10/10/2019)                                       | 2,894    | 796.1
Robert Enslin (until 4/5/2019)                                                 | 3,480    | 727.0
Adaire Fox-Martin                                                              | 2,667    | 796.1
Michael Kleinemeier                                                            | 3,253    | 914.2
Bernd Leukert (until 3/31/2019)                                                | 8,606    | 775.2
Bill McDermott (CEO until 10/10/2019, Executive Board member until 11/15/2019) | 14,689   | 2,155.8
Luka Mucic                                                                     | 3,391    | 675.8
Jürgen Müller (from 1/1/2019)                                                  | 768      | -
Stefan Ries                                                                    | 2,646    | 772.0
Thomas Saueressig (from 11/1/2019)                                             | 128      | -
Total                                                                          | 44,446.5 | 8,054.4

Expense Share
 Board IFRS 2 obligations.
 Christian Klein-CEO 1,925 442.
 Jennifer Morgan 2,894 796.
 Robert Enslin 3,480 727.
 Adaire Fox-Martin 2,667 796.
 Michael Kleinemeier 3,253 914.
 Bernd Leukert 8,606 775.
 Bill McDermott 11/15/2019 14,689 2,155.
 Luka Mucic 3,391 675.
 Jürgen Müller
 Stefan Ries 2,646 772.
 Thomas Saueressig
 44,446. 8,054.


Off-Balance Sheet Arrangements and Contractual Obligations
We have certain obligations to make future payments under various contracts, some of which are recorded on our balance sheet

and some of which are not. Obligations that are recorded on our balance sheet in accordance with GAAP include our long-term

debt which is outlined in the following table. Our off-balance sheet arrangements are presented as operating leases and purchase

obligations in the table. Our contractual obligations and commitments as of June 30, 2019, relating to these agreements and our

guarantees are included in the following table based on their contractual maturity date.
The amounts in the table below exclude $373 million of liabilities related to uncertain tax benefits as we are unable to reasonably

estimate the ultimate amount or time of settlement. See Note 7 of our Consolidated Financial Statements in Part II, Item 8 of this

2019 Form 10-K for further discussion. The amounts in the table below also exclude $10 million associated with funding

commitments related to non-marketable equity investments as we are unable to make a reasonable estimate regarding the timing

of capital calls.
The amounts in the table below exclude $373 million of liabilities related to uncertain tax benefits as we are unable to reasonably

estimate the ultimate amount or time of settlement. See Note 7 of our Consolidated Financial Statements in Part II, Item 8 of this

2019 Form 10-K for further discussion. The amounts in the table below also exclude $10 million associated with funding

commitments related to non-marketable equity investments as we are unable to make a reasonable estimate regarding the timing

of capital calls.
(1) Excludes $26.5 million associated with our build-to-suit lease arrangements that are classified as capital leases in the Consolidated Balance Sheets in Part II, Item 8 of this 2019 Form 10-K for which cash payment is not anticipated.
(2) The conversion period for the 2.625% Convertible Senior Notes due May 2041 (the “2041 Notes”) was open as of June 30, 2019, and as such the net carrying value of the 2041 Notes is included within current liabilities on our Consolidated Balance Sheet. The principal balances of the 2041 Notes are reflected in the payment period in the table above based on the contractual maturity assuming no conversion. See Note 14 of our Consolidated Financial Statements in Part II, Item 8 of this 2019 Form 10-K for additional information concerning the 2041 Notes and associated conversion features.
(3) We may choose to apply existing tax credits, thereby reducing the actual cash payment.
(4) Certain tax-related liabilities and post-retirement benefits classified as other non-current liabilities on the Consolidated Balance Sheet are included in the “More than 5 Years” category due to the uncertainty in the timing and amount of future payments. Additionally, the balance excludes contractual obligations recorded in our Consolidated Balance Sheet as current liabilities.
Operating Leases
We lease most of our administrative, R&D, and manufacturing facilities; regional sales/service offices; and certain equipment under non-cancelable operating leases. Certain of our facility leases for buildings located in Fremont and Livermore, California; Tualatin, Oregon; and certain other facility leases provide us with an option to extend the leases for additional periods or to purchase the facilities. Certain of our facility leases provide for periodic rent increases based on the general rate of inflation. In addition to amounts included in the table above, we have guaranteed residual values for certain of our Fremont and Livermore facility leases of up to $250 million. See Note 16 to our Consolidated Financial Statements in Part II, Item 8 of this 2019 Form 10-K for further discussion.
Capital Leases
Capital leases reflect building and office equipment lease obligations. The amounts in the table above include the interest portion of payment obligations.
Purchase Obligations
Purchase obligations consist of significant contractual obligations either on an annual basis or over multi-year periods related to our outsourcing activities or other material commitments, including vendor-consigned inventories. The contractual cash obligations and commitments table presented above contains our minimum obligations at June 30, 2019, under these arrangements and others. For obligations with cancellation provisions, the amounts included in the preceding table were limited to the non-cancelable portion of the agreement terms or the minimum cancellation fee. Actual expenditures will vary based on the volume of transactions and length of contractual service provided.
Income Taxes
During the December 2017 quarter, a one-time transition tax on accumulated unrepatriated foreign earnings, estimated at $991 million, was recognized associated with the December 2017 U.S. tax reform. In accordance with SAB 118, we finalized the amount of the transition tax during the period ended December 23, 2018. The final amount is $868.4 million. The Company elected
Long-Term Debt
In June 2012, with the acquisition of Novellus, we assumed $700 million in aggregate principal amount of 2.625% Convertible Senior Notes due May 2041. We pay cash interest on the 2041 Notes at an annual rate of 2.625%, on a semi-annual basis. The 2041 Notes may be converted, under certain circumstances, into our Common Stock.
During the quarter-ended June 30, 2019, the market value of our Common Stock was greater than or equal to 130% of the 2041 Notes conversion prices for 20 or more trading days of the 30 consecutive trading days preceding the quarter end. As a result, the 2041 Notes are convertible at the option of the holder and are classified as current liabilities in our Consolidated Balance Sheets for fiscal year 2019.
On March 12, 2015, we completed a public offering of $500 million aggregate principal amount of Senior Notes due March 15, 2020 (the “2020 Notes”) and $500 million aggregate principal amount of Senior Notes due March 15, 2025 (the “2025 Notes”). We pay interest at an annual rate of 2.75% and 3.80%, respectively, on the 2020 Notes and 2025 Notes, on a semi-annual basis on March 15 and September 15 of each year.
On June 7, 2016, we completed a public offering of $800.0 million aggregate principal amount of Senior Notes due June 15, 2021, (the “2021 Notes”), together with the 2020 Notes, and 2021 Notes, the “Senior Notes”, and collectively with the Convertible Notes, the “Notes”). We pay interest at an annual rate of 2.80% on the 2021 Notes on a semi-annual basis on June 15 and December 15 of each year.
On March 4, 2019, we completed a public offering of $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2026 (the “2026 Notes”), $1 billion aggregate principal amount of the Company’s Senior Notes due March 15, 2029 (the “2029 Notes”), and $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2049 (the “2049 Notes”, collectively with the 2026 and 2029 Notes, the “Senior Notes issued in 2019”). We will pay interest at an annual rate of 3.75%, 4.00%, and 4.875%, respectively on the 2026, 2029 and 2049 Notes, on a semi-annual basis on March 15 and September 15 of each year, beginning September 15, 2019.
We may redeem the 2020, 2021, 2025, 2026, 2029 and 2049 Notes (collectively the “Senior Notes”) at a redemption price equal to 100% of the principal amount of such series (“par”), plus a “make whole” premium as described in the indenture in respect to the Senior Notes and accrued and unpaid interest before February 15, 2020, for the 2020 Notes, before May 15, 2021 for the 2021 Notes, before December 15, 2024 for the 2025 Notes, before January 15, 2026 for the 2026 Notes, before December 15, 2028 for the 2029 Notes, and before September 15, 2048 for the 2049 Notes. We may redeem the Senior Notes at par, plus accrued and unpaid interest at any time on or after February 15, 2020, for the 2020 Notes, on or after May 15, 2021 for the 2021 Notes, on or after December 24, 2024, for the 2025 Notes, on or after January 15, 2026 for the 2026 Notes, on or after December 15, 2028 for the 2029 Notes, and on or after September 15, 2048 for the 2049 Notes. In addition, upon the occurrence of certain events, as described in the indenture, we will be required to make an offer to repurchase the Senior Notes at a price equal to 101% of the principal amount of the respective note, plus accrued and unpaid interest.
During fiscal year 2019, 2018, and 2017, we made $117 million, $753 million, and $1.7 billion, respectively, in principal payments on long-term debt and capital leases.

                                                                          | Total      | Less Than 1 Year | 1-3 Years     | Years3-5 | More Than 5 Years
------------------------------------------------------------------------- | ---------- | ---------------- | ------------- | -------- | -----------------
                                                                          |            |                  | (inthousands) |          |
Operating leases                                                          | $98,389    | $37,427          | $36,581       | $12,556  | $11,825
Capital leases (1)                                                        | 50,049     | 7,729            | 17,422        | 10,097   | 14,801
Purchase obligations                                                      | 424,561    | 345,498          | 28,946        | 13,442   | 36,675
Long-term debt and interest expense (2)                                   | 6,468,517  | 660,840          | 1,079,096     | 257,630  | 4,470,951
One-time transition tax on accumulated unrepatriated foreign earnings (3) | 798,892    | 69,469           | 138,938       | 199,723  | 390,762
Other long-term liabilities (4)                                           | 190,821    | 4,785            | 13,692        | 7,802    | 164,542
Total                                                                     | $8,031,229 | $1,125,748       | $1,314,675    | $501,250 | $5,089,556

Off-Balance Sheet Arrangements Contractual Obligations
 obligations future payments under contracts recorded on balance sheet
 not. Obligations include long-term
 debt outlined. off-balance sheet arrangements operating leases purchase
 obligations. contractual obligations commitments as of June 30, 2019
 contractual maturity date.
 exclude $373 million liabilities uncertain tax benefits unable
 amount settlement. Note 7 Consolidated Financial Statements Part II Item 8
 2019 Form 10-K. exclude $10 million funding
 non-marketable equity investments
.
 exclude $373 million liabilities uncertain tax benefits
 amount time settlement. Note 7 Consolidated Financial Statements Part II Item 8
 Form. exclude $10 million funding
 non-marketable equity investments
.
 Excludes $26. 5 million build-to-suit lease arrangements capital leases cash payment not anticipated.
 conversion period 2.625% Convertible Senior Notes due May 2041 open June 30, 2019 net carrying value current liabilities Consolidated Balance Sheet. principal balances 2041 Notes reflected payment period contractual maturity no conversion. Note 14 Consolidated Financial Statements Part II Item 8 2019 Form 10-K.
 apply tax credits cash payment.
 tax-related liabilities post-retirement benefits than 5 Years” uncertainty future payments. balance excludes contractual obligations liabilities.
 Operating Leases
 lease administrative R&D manufacturing facilities sales offices equipment non-cancelable leases. option extend purchase facilities. rent increases inflation. guaranteed residual values Fremont Livermore facility leases $250 million. Note 16 Consolidated Financial Statements Part II Item 8 2019 Form 10-K.
 Capital Leases
 building office equipment lease obligations. interest payment obligations.
 Purchase
Purchase obligations outsourcing vendor-consigned inventories. cash obligations table minimum obligations June 30, 2019. cancellation provisions limited non minimum cancellation fee. expenditures vary volume service.
 Income Taxes
 December 2017-time transition tax unrepatriated foreign earnings $991 million recognized. tax reform. finalized tax December 23, 2018. final amount $868. 4 million.
 Long-Term Debt
 2012, assumed $700 million 2. 625% Convertible Senior Notes due May 2041. pay interest 2041 Notes annual 2. 625%. Notes converted Common Stock.
 quarter-ended June 30, 2019 market value Common Stock greater 130% 2041 Notes conversion prices 20. 2041 Notes convertible current liabilities Consolidated Balance Sheets fiscal year 2019.
 March 12, 2015, public offering $500 million Notes due March 15, 2020 $500 March 15, 2025. interest annual rate 2. 75% 3.80% 2020 2025 Notes semi-annual March 15 September 15.
 June 7, 2016, public offering $800. million Senior Notes due June 15 2021 2020 2021 Notes Convertible. pay interest annual 2. 80% 2021 Notes semi-annual June 15 December 15.
 March 4, 2019 public offering $750 million Senior Notes March 15 2026 $1 billion March 15 2029 $750 million March 15 2049 2026 2029 Notes. pay interest annual 3. 75% 4. 4. 875% 2026 2029 2049 Notes semi-annual March 15 September 15 September 15 2019.
 redeem 2020 2021 2025 2026 2029 2049 Notes redemption price 100% principal premium February 15 2020 May 15 2021 December 15 2024 2025 January 15 2026 2026 December 15 2028 2029 September 15 2048 2049.redeem Senior Notes interest February 15 2020 May 15 2021 December 24 2024 January 2026 December 2028 September 15 2048. repurchase Senior Notes 101% principal accrued interest.
 2019 2018 2017 made $117 million $753 million $1. 7 billion payments long-term debt capital leases.
 1-3 Years 5
 Operating leases $98,389 $37,427 $36,581 $12,556
 Capital leases 50,049 7,729 17,422 10,097 14,801
 Purchase obligations 424,561 345,498 28,946 13,442,675
 Long-term debt interest expense 6,468,517 660,840 1,079,096 257,630 4,470,951
-time transition tax unrepatriated foreign earnings 798,892 69,469 138,938
 Other long-term liabilities 190,821 4,785 13,692 7,802 164,542
$8,031,229,125,748 $501,250,089,556


14. Trade and other receivables
Trade and other receivables mainly consist of amounts owed to us by customers and amounts that we pay to our suppliers in advance. Derivative financial instruments with a positive market value are reported within this note as are contract assets, which represent an asset for accrued revenue in respect of goods or services delivered to customers for which a trade receivable does not yet exist.
Accounting policies
Trade receivables represent amounts owed by customers where the right to payment is conditional only on the passage of time. Trade receivables that are recovered in instalments from customers over an extended period are discounted at market rates and interest revenue is accredited over the expected repayment period. Other trade receivables do not carry any interest and are stated at their nominal value. When the Group establishes a practice of selling portfolios of receivables from time to time these portfolios are recorded at fair value through other comprehensive income; all other trade receivables are recorded at amortised cost
The carrying value of all trade receivables, contract assets and finance lease receivables recorded at amortised cost is reduced by allowances for lifetime estimated credit losses. Estimated future credit losses are first recorded on the initial recognition of a receivable and are based on the ageing of the receivable balances, historical experience and forward looking considerations. Individual balances are written off when management deems them not to be collectible.
Notes: 1 Previously described as accrued income in the year ended 31 March 2018
2 Items are measured at fair value and the valuation basis is level 2 classification, which comprises items where fair value is determined from inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly
The Group’s trade receivables and contract assets are classified at amortised cost unless stated otherwise and are measured after allowances for future expected credit losses, see note 21 “Capital and financial risk management” for more information on credit risk.
The carrying amounts of trade and other receivables, which are measured at amortised cost, approximate their fair value and are predominantly non-interest bearing.
The Group’s contract-related costs comprise €1,433 million relating to costs incurred to obtain customer contracts and €74 million relating to costs incurred to fulfil customer contracts; an amortisation and impairment expense of €1,506 million was recognised in operating profit during the year.
In January and February 2019 €57 million and €70 million, respectively, of trade receivables were reclassified from amortised cost to fair value through other comprehensive income following changes to the Group’s business model under which the balances may be sold to a third party
The fair values of the derivative financial instruments are calculated by discounting the future cash flows to net present values using appropriate market interest rates and foreign currency rates prevailing at 31 March.

                                                                        | 2019   | 2018
----------------------------------------------------------------------- | ------ | -----
                                                                        | €m     | €m
Included within non-current assets:                                     |        |
Trade receivables                                                       | 197    | 435
Trade receivables held at fair value through other comprehensive income | 179    | –
Contract assets1                                                        | 531    | 350
Contract-related costs                                                  | 375    | –
Amounts owed by associates and joint ventures                           | 1      | 1
Other receivables                                                       | 77     | 194
Prepayments                                                             | 371    | 597
Derivative financial instruments2                                       | 3,439  | 2,449
                                                                        | 5,170  | 4,026
Included within current assets:                                         |        |
Trade receivables                                                       | 4,088  | 4,967
Trade receivables held at fair value through other comprehensive income | 613    | –
Contract assets1                                                        | 3,671  | 2,257
Contract-related costs                                                  | 1,132  | –
Amounts owed by associates and joint ventures                           | 388    | 524
Other receivables                                                       | 876    | 895
Prepayments                                                             | 1,227  | 1,152
Derivative financial instruments2                                       | 195    | 180
                                                                        | 12,190 | 9,975

. Trade receivables
 owed by customers suppliers advance. financial instruments positive market value contract assets accrued revenue goods services delivered trade receivable.
 receivables owed right payment conditional passage time. recovered instalments discounted at market rates interest revenue accredited over repayment period. Other receivables interest stated at nominal value. portfolios receivables recorded at fair value receivables at amortised cost
 carrying value reduced by lifetime estimated credit losses. credit losses recorded based on ageing historical experience considerations. balances written off not collectible.
 accrued income year ended 31 March 2018
 Items measured at fair value valuation basis level 2 classification
 trade receivables contract assets classified at amortised cost measured after allowances for future credit losses note 21 “Capital financial risk.
 carrying amounts trade receivables measured at amortised cost approximate fair value non-interest bearing.
contract-related costs €1,433 million €74 million amortisation impairment €1,506 million profit.
 January February 2019 €57 million €70 million trade receivables reclassified amortised fair value business model third
 fair values calculated future cash flows values market interest rates foreign currency rates 31 March.
 non-current assets
 Trade receivables 197 435
 value
 Contract 531
-related costs 375
 associates joint ventures
 Other receivables
 Prepayments 371 597
 Derivative financial instruments2 3,439 2,449
 5,170 4,026
 current assets
 Trade receivables 4,088,967
 Contract 3,671 2,257
-related costs 1,132
 owed associates joint ventures 388 524
 Other receivables 876 895
 Prepayments 1,227 1,152
 Derivative financial
 12,190


VALUATION AND QUALIFYING ACCOUNTS
(Amounts in millions)
(A) Includes increases and reversals of allowances for sales returns, price protection, and valuation allowance for deferred tax assets due to normal reserving terms.
(B) Includes actual write-offs and utilization of allowances for sales returns, price protection, and releases of income tax valuation allowances and foreign currency translation and other adjustments.

Col. A Description                                                     | Col B. Balance at Beginning of Period | Col. C Additions(A) | Col. D Deductions(B) | Col. E Balance at End of Period
---------------------------------------------------------------------- | ------------------------------------- | ------------------- | -------------------- | -------------------------------
At December 31, 2019                                                   |                                       |                     |                      |
Allowances for sales returns and price protection and other allowances | $186                                  | $11                 | $(79)                | $118
Valuation allowance for deferred tax assets                            | $61                                   | $127                | $(7)                 | $181
At December 31, 2018                                                   |                                       |                     |                      |
Allowances for sales returns and price protection and other allowances | $274                                  | $24                 | $(112)               | $186
Valuation allowance for deferred tax assets                            | $—                                    | $61                 | $—                   | $61
At December 31, 2017                                                   |                                       |                     |                      |
Allowances for sales returns and price protection and other allowances | $257                                  | $83                 | $(66)                | $274

VALUATION QUALIFYING ACCOUNTS
 millions
 Includes increases reversals sales returns price protection deferred tax assets reserving.
 Includes write-offs price protection releases income tax valuation foreign currency translation adjustments.
. Balance. C Additions. D Deductions. Balance End Period
 December 31, 2019
 Allowances sales returns price protection $186 $11
 deferred tax assets $61 $127
 December 31, 2018
 sales returns price protection $274 $24 $186
 deferred tax assets $61
 December 31, 2017
 price protection $257 $83(66)


4. PREPAID EXPENSES
Prepaid expenses consisted of the following at December 31, 2019 and 2018 (in thousands):  Prepaid expenses consisted of the following at December 31, 2019 and 2018 (in thousands):  Prepaid expenses consisted of the following at December 31, 2019 and 2018 (in thousands):
In 2018, we recorded impairment charges of approximately$0.4 million related to prepaid licenses and production tooling as a result of the restructuring of our operations. These charges are included in “Restructuring expenses” in the accompanying statements of comprehensive loss (see Note 15).

                                             | 2019 | 2018
-------------------------------------------- | ---- | ----
Prepaid services                             | $221 | $252
Prepaid bonds for German statutory costs     | 188  | 199
Prepaid insurance                            | 62   | 19
Prepaid licenses, software tools and support | 17   | 51
Other prepaid expenses                       | 17   | 17
                                             | $505 | $538

. PREPAID EXPENSES
 December 31, 2019 2018
 2018 impairment charges$0. 4 million prepaid licenses production tooling restructuring operations. “Restructuring comprehensive loss Note 15.
 2019 2018
 Prepaid services $221 $252
 Prepaid bonds German costs 188 199
 Prepaid insurance 62 19
 licenses software tools support 17 51
 Other prepaid expenses 17
 $505 $538


2017 ESPP
In May 2017, we adopted the 2017 Employee Stock Purchase Plan (the “2017 ESPP”). The 2017 ESPP grants employees the ability to designate a portion of their base-pay to purchase ordinary shares at a price equal to 85% of the fair market value of our ordinary shares on the first or last day of each 6 month purchase period. Purchase periods begin on January 1 or July 1 and end on June 30 or December 31, or the next business day if such date is not a business day. Shares are purchased on the last day of the purchase period.
The table below sets forth the weighted average assumptions used to measure the fair value of 2017 ESPP rights:
We recognize share-based compensation expense associated with the 2017 ESPP over the duration of the purchase period. We recognized$0.3 million, $0.3 million, and $0.1 million of share-based compensation expense associated with the 2017 ESPP during 2019, 2018, and 2017, respectively. At December 27, 2019, there was no unrecognized share-based compensation expense.

                               | Year Ended        |                   |
------------------------------ | ----------------- | ----------------- | -----------------
                               | December 27, 2019 | December 28, 2018 | December 29, 2017
Weighted average expected term | 0.5 years         | 0.5 years         | 0.4 years
Risk-free interest rate        | 2.3%              | 1.9%              | 1.1%
Dividend yield                 | 0.0%              | 0.0%              | 0.0%
Volatility                     | 56.0%             | 52.7%             | 47.8%

2017 ESPP
 May 2017 adopted Employee Stock Purchase Plan. grants employees base-pay purchase ordinary shares 85% fair market value first last 6 month purchase period. begin January 1 July 1 end June 30 December 31, next day. Shares purchased last day.
 table weighted average assumptions fair value 2017 ESPP rights
 share-based compensation expense 2017 ESPP.$0. 3 million. million. 1 million 2019 2018 2017. December 27, 2019 no unrecognized compensation expense.
 2018 29,
 average expected term. 5 years. 4 years
 Risk-free interest rate. 3%. 9%.
 Dividend yield.
 Volatility 56. 7%. 8%


R. Segment Information
VMware operates in one reportable operating segment, thus all required financial segment information is included in the consolidated financial statements. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. VMware’s chief operating decision maker allocates resources and assesses performance based upon discrete financial information at the consolidated level.
Revenue by type during the periods presented was as follows (table in millions):

                                        |                  | For the Year Ended |
--------------------------------------- | ---------------- | ------------------ | ----------------
                                        | January 31, 2020 | February 1, 2019   | February 2, 2018
Revenue:                                |                  |                    |
License                                 | $3,181           | $3,042             | $2,628
Subscription and SaaS                   | 1,877            | 1,303              | 927
Total license and subscription and SaaS | 5,058            | 4,345              | 3,555
Services:                               |                  |                    |
Software maintenance                    | 4,754            | 4,351              | 3,919
Professional services                   | 999              | 917                | 862
Total services                          | 5,753            | 5,268              | 4,781
Total revenue                           | $10,811          | $9,613             | $8,336

.
 VMware operates segment financial consolidated financial statements. segments components enterprise financial information evaluated chief maker. performance information.
 Revenue by type
 January 31, 2020 February 1, 2019 2, 2018
 Revenue
 License $3,181  $3,042  $2,628
 Subscription SaaS 1,877  1,303
 5,058  4,345  3,555
 Services
 Software maintenance 4,754 4,351  3,919
 Professional services 999 917
 5,268  4,781
 revenue $10,811  $9,613 $8,336


Accounts Receivable and Allowance for Doubtful Accounts
The majority of our accounts receivable are derived from sales to large multinational semiconductor manufacturers throughout the world, are recorded at their invoiced amount and do not bear interest.
In order to monitor potential credit losses, we perform ongoing credit evaluations of our customers' financial condition. An allowance for doubtful accounts is maintained based upon our assessment of the expected collectability of all accounts receivable. The allowance for doubtful accounts is reviewed and assessed for adequacy on a quarterly basis.
We take into consideration (1) any circumstances of which we are aware of a customer's inability to meet its financial obligations and (2) our judgments as to prevailing economic conditions in the industry and their impact on our customers. If circumstances change, and the financial condition of our customers is adversely affected and they are unable to meet their financial obligations, we may need to take additional allowances, which would result in an increase in our operating expense.
Activity related to our allowance for doubtful accounts receivable was as follows (in thousands):

                                          |                   | Fiscal Year Ended |
----------------------------------------- | ----------------- | ----------------- | -----------------
                                          | December 28, 2019 | December 29, 2018 | December 30, 2017
Balance at beginning of year              | $185              | $200              | $299
Charges (reversals) to costs and expenses | 37                | (15)              | (99)
Balance at end of year                    | $222              | $185              | $200

Accounts Receivable Allowance Doubtful Accounts
 majority from sales to large multinational semiconductor manufacturers recorded at invoiced amount bear interest.
 monitor credit losses perform credit evaluations financial condition. allowance for doubtful accounts maintained collectability. reviewed quarterly.
 inability financial economic conditions. If circumstances change need additional allowances operating expense.
 Activity allowance for doubtful accounts
 Fiscal Year Ended
 December 28, 2019 December 29, 2018 December 30, 2017
 Balance beginning year $185  $200  $299
 Charges (reversals) to costs expenses 37
 Balance end year $222  $185  $200


Other Income (Expense), Net
Other income (expense), net relates to certain non-operational charges primarily consisting of income or losses in our share of marketable equity securities accounted for under the equity method and of transactional foreign exchange gains (losses). The income (expense) from foreign exchange is dependent upon the change in foreign currency exchange rates vis-àvis the functional currency of the legal entity.
(1) Represents the release to income from other comprehensive income relating to the mark to market on shares we held in Guidance prior to our acquisition in the first quarter of Fiscal 2018.
(2) Represents a gain recognized in connection with the settlement of a certain breach of contractual arrangement in the second quarter of Fiscal 2018.

                                                                 |          |                             | Year Ended June 30, |                             |
---------------------------------------------------------------- | -------- | --------------------------- | ------------------- | --------------------------- | -------
(In thousands)                                                   | 2019     | Change increase (decrease)) | 2018                | Change increase (decrease)) | 2017
Foreign exchange gains (losses)                                  | $(4,330) | $(9,175)                    | $4,845              | $1,776                      | $3,069
OpenText share in net income (loss) of equity investees (note 8) | 13,668   | 7,703                       | 5,965               | 13                          | 5,952
Income from long-term other receivable                           | —        | (1,327)                     | 1,327               | (5,099)                     | 6,426
Gain on shares held in Guidance (1)                              | —        | (841)                       | 841                 | 841                         | —
Gain from contractual settlement (2)                             | —        | (5,000)                     | 5,000               | 5,000                       | —
Other miscellaneous income (expense)                             | 818      | 823                         | (5)                 | (301)                       | 296
Total other income (expense), net                                | $10,156  | $(7,817)                    | $17,973             | $2,230                      | $15,743

Income Net
 relates non-operational charges losses marketable equity securities transactional foreign exchange gains (losses. exchange currency exchange rates.
 release shares Guidance acquisition 2018.
 gain settlement breach contractual second quarter Fiscal 2018.
 Ended June 30,
 2019 2018 2017
 Foreign exchange gains (losses $(4,330) $(9,175) $4,845 $1,776 $3,069
 OpenText share net income (loss) equity investees 13,668 7,703 5,965
 Income from long-term receivable (1,327) 1,327 (5,099) 6,426
 Gain on shares Guidance (841) 841
 Gain from contractual settlement (5,000
 Other miscellaneous income (expense 818 823 (301)
 income net $10,156 $(7,817) $17,973 $2,230 $15,743


Contractual Obligations
The following table provides aggregate information regarding our contractual obligations as of March 31, 2019.
(1) Operating lease obligations are presented net of contractually binding sub-lease arrangements. Additional information regarding our operating lease obligations is contained in Note 12, Commitments and Contingencies.
(2) At March 31, 2019, we had a $1.1 million liability reserve for unrecognized income tax positions which is not reflected in the table above. The timing of potential cash outflows related to the unrecognized tax positions is not reasonably determinable and therefore, is not scheduled. Substantially all of this reserve is included in Other non-current liabilities. Additional information regarding unrecognized tax positions is provided in Note 10, Income Taxes.
We believe that cash on hand, funds from operations, and access to capital markets will provide adequate funds to finance capital spending and working capital needs and to service our obligations and other commitments arising during the foreseeable future.

(In thousands)                    | Total   | 2020   | 2021-2022 | 2023-2024 | Thereafter
--------------------------------- | ------- | ------ | --------- | --------- | ----------
Operating leases (1)              | $19,437 | $4,143 | $7,111    | $3,686    | $4,497
Capital leases                    | 65      | 27     | 38        | —         | —
Asset retirement obligation       | 400     | —      | 150       | 250       |
Total contractual obligations (2) | $19,902 | $4,170 | $7,299    | $3,936    | $4,497

Contractual Obligations
 table obligations March 31, 2019.
 Operating lease obligations net sub-lease arrangements. Note 12 Commitments Contingencies.
 March 31, 2019 $1. 1 million reserve unrecognized income tax positions not reflected. cash outflows not scheduled. reserve included non-current liabilities. Note 10 Income Taxes.
 cash funds operations capital markets capital spending service obligations commitments.
 2020 2021-2022 2023-2024
 Operating leases $19,437 $4,143 $7,111 $3,686 $4,497
 Capital leases 65
 Asset retirement obligation
 contractual obligations $19,902  $4,170 $7,299 $3,936 $4,497


Results of Operations
The following table sets forth our consolidated statement of operations for the years ended December 31, 2019, 2018, and 2017.
(1) Includes stock-based compensation expense and related payroll taxes as follows:

                                                                                |                                                 | Years ended December 31, |
--------------------------------------------------------------------------------------- | ----------------------------------------------- | ------------------------ | ----------
                                                                                | 2019                                            | 2018                     | 2017
                                                                                | (in thousands, except share and per share data) |                          |
Revenues:                                                                               |                                                 |                          |
Subscription solutions                                                                  | $642,241                                        | $464,996                 | $310,031
Merchant solutions                                                                      | 935,932                                         | 608,233                  | 363,273
                                                                                | 1,578,173                                       | 1,073,229                | 673,304
Cost of revenues(1)(2):                                                                 |                                                 |                          |
Subscription solutions                                                                  | 128,155                                         | 100,990                  | 61,267
Merchant solutions                                                                      | 584,375                                         | 375,972                  | 231,784
                                                                                | 712,530                                         | 476,962                  | 293,051
Gross profit                                                                            | 865,643                                         | 596,267                  | 380,253
Operating expenses:                                                                     |                                                 |                          |
Sales and marketing(1)(2)                                                               | 472,841                                         | 350,069                  | 225,694
Research and development(1)(2)                                                          | 355,015                                         | 230,674                  | 135,997
General and administrative(1)                                                           | 178,934                                         | 107,444                  | 67,719
Total operating expenses                                                                | 1,006,790                                       | 688,187                  | 429,410
Loss from operations                                                                    | (141,147)                                       | (91,920)                 | (49,157)
Other income                                                                            | 45,332                                          | 27,367                   | 9,162
Loss before income taxes                                                                | (95,815)                                        | (64,553)                 | (39,995)
Provision for income taxes                                                              | 29,027                                          | —                        | —
Net loss                                                                                | $(124,842)                                      | $(64,553)                | $(39,995)
Basic and diluted net loss per share attributable to shareholders                       | $(1.10)                                         | $(0.61)                  | $(0.42)
Weighted average shares used to compute net loss per share attributable to shareholders | 113,026,424                                     | 105,671,839              | 95,774,897

Operations
 table consolidated statement 2019 2018 2017.
 stock compensation payroll taxes
 Revenues
 Subscription solutions $642,241 $464,996 $310,031
 Merchant solutions 935,932,233
 1,578,173 1,073,229 673
 Cost
 Subscription 128,155 100,990 61,267
 Merchant 584,375 375,972 231,784
 476,962
 Gross profit 865,643 596,267 380,253
 Operating expenses
 Sales 472,841 350,069 225,694
 Research 355,015 230,674 135,997
 178,934 107,444 67,719
 operating expenses 1,006,790,187 429,410
 Loss operations (141,147 (91,920)
 Other income 45,332 27,367
 Loss taxes (95,815) (64,553)
 Net loss $(124,842
 loss share.. 61. 42
 Weighted shares loss 113,026,424 105,671,839 95,774,897


BELL WIRELESS RESULTS
REVENUES
Bell Wireless operating revenues increased by 3.7% in 2019, compared to 2018, driven by greater postpaid and prepaid service revenues and higher product revenues.
Service revenues increased by 2.5% in 2019, compared to last year, driven by: • Continued growth in our postpaid and prepaid subscriber base coupled with rate increases • A greater mix of customers subscribing to higher-value monthly plans including unlimited data plans launched in June 2019 • The favourable year-over-year impact from the 2018 CRTC retroactive decision on wireless domestic wholesale roaming rates
These factors were partly offset by: • Greater sales of premium handsets and more customers subscribing to higher-value monthly plans • Lower data and voice overages driven by increased customer adoption of monthly plans with higher data allotments and richer voice plans
Product revenues increased by 6.6% in 2019, compared to last year, driven by greater sales of premium handsets and the impact of higher-value rate plans in our sales mix.

                                 | 2019  | 2018  | $ CHANGE | % CHANGE
-------------------------------- | ----- | ----- | -------- | --------
External service revenues        | 6,427 | 6,269 | 158      | 2.5%
Inter-segment service revenues   | 49    | 48    | 1        | 2.1%
Total operating service revenues | 6,476 | 6,317 | 159      | 2.5%
External product revenues        | 2,660 | 2,497 | 163      | 6.5%
Inter-segment product revenues   | 6     | 4     | 2        | 50.0%
Total operating product revenues | 2,666 | 2,501 | 165      | 6.6%
Total Bell Wireless revenues     | 9,142 | 8,818 | 324      | 3.7%

BELL WIRELESS
 revenues increased. 7% 2019 2018 postpaid prepaid service higher product revenues.
 Service revenues increased 2. 5% growth postpaid prepaid subscriber base rate increases higher-value plans unlimited 2018 CRTC decision roaming rates
 offset Greater sales premium handsets higher-value plans Lower data voice overages
 Product revenues increased 6. 6% premium handsets higher-value rate plans.
 External service revenues 6,427  6,269  158. 5%
 Inter-segment revenues.
 Total operating service revenues 6,476 6,317  159. 5%
 External product revenues 2,660 2,497 163. 5%
-segment.
 Total operating product revenues 2,666  2,501  165. 6%
 Wireless revenues 9,142 8,818. 7%


Revenue
The following table presents the breakdown of revenue between product and service (in millions, except percentages):
(1) Total revenue, product revenue and service revenue not including the SPVSS business in the prior year increased 7%, 8% and 3%, respectively.

                      |                   | Years Ended   |               | 2019 vs. 2018       |
--------------------- | ----------------- | ------------- | ------------- | ------------------- | -------------------
                      | July 27, 2019 (1) | July 28, 2018 | July 29, 2017 | Variance in Dollars | Variance in Percent
Revenue:              |                   |               |               |                     |
Product               | $39,005           | $36,709       | $35,705       | $2,296              | 6%
Percentage of revenue | 75.1%             | 74.4%         | 74.4%         |                     |
Service               | 12,899            | 12,621        | 12,300        | 278                 | 2%
Percentage of revenue | 24.9%             | 25.6%         | 25.6%         |                     |
Total                 | $51,904           | $49,330       | $48,005       | $2,574              | 5%

 table breakdown revenue product service millions
 Total SPVSS increased 7% 8% 3%.
 2019. 2018
 July 27, 2019 July 28, 2018 29, 2017 Variance Dollars
 Revenue
 Product $39,005 $36,709 $2,296 6%
 Percentage 75. 1%. 4%.
 Service 12,899 12,621 12,300 2%
 Percentage 24. 9% 25. 6%.
 $51,904 $49,330 $48,005 $2,574


External auditor
Transition of external auditor
Deloitte was appointed as intu’s external auditor for the 2019 audit following approval at the 2019 AGM, succeeding PwC. Although it is still early into Deloitte’s tenure as intu’s external auditor, I am pleased that the transition of the external audit process has gone well. The Audit Committee has recommended that Deloitte be reappointed as external auditor at the 2020 AGM.
A key area of focus for the Audit Committee in 2019 was the effective transition of the external audit process from PwC to Deloitte. For this to be achieved, a detailed transition plan was put in place between management and Deloitte with the aim of familiarising Deloitte with intu. In addition to regular communication between the Group finance team and Deloitte, the key areas of the transition plan included:
—Deloitte shadowing PwC through the 2018 audit and attending the November 2018 and February 2019 Audit Committee meetings
—regular communication between management, Deloitte and PwC to agree and facilitate the handover process
—Deloitte’s review of PwC’s 2018 audit files
—meetings with senior management across intu to familiarise Deloitte with key business processes
—site visits to shopping centres to see how the assets are operated as well as meeting with centre management and leasing teams
—meetings with the Group’s thirdparty valuers to understand the valuation process
—detailed reviews of the Group’s cash flow, financing and covenant projections
External auditor effectiveness
The Audit Committee has assessed the effectiveness of the external auditor, Deloitte, in line with the approach set out in the FRC’s Audit Quality Practice Aid tailored to the fact that it is Deloitte’s first year as intu’s external auditor. In carrying out the evaluation for 2019 the Audit Committee has reviewed and challenged with the external auditor:
—the 2019 audit plan presented by Deloitte, including the risks identified and its audit approach
—the FRC’s audit quality inspection review of Deloitte
—the output of the audit, including reports to the Audit Committee and management
—performance of the audit team at meetings
The above was assessed through internal feedback, direct meetings, reviews of internal as well as independent reports.
Following this review, the Audit Committee has concluded that Deloitte has been effective in its role as external auditor for the 2019 audit. The Audit Committee will continue to review the effectiveness and independence of the external auditor each year.
Non-audit services
On 1 January 2017 the Group implemented the FRC’s Ethical Standard for Auditors which imposes restrictions on certain non-audit services. The FRC’s Revised Ethical Standard will become effective for the Group from 15 March 2020. The majority of non-audit related services are prohibited and others require approval by the Audit Committee. There is a statutory overall fee limit of 70 per cent of the average of audit fees charged in the past three years.
The Audit Committee has sole authority to approve contracts for non-audit services with the external auditor, subject to observing certain guidelines. In order to ensure that external auditor independence and objectivity is maintained, the Audit Committee considers whether the proposed arrangements will maintain external auditor independence. The external auditor must also satisfy the Company that it is acting independently.
The table below summarises the fees paid to the external auditor over the last three years (with 2019 being attributable to Deloitte, and 2018 and 2017 attributable to PwC).
Audit Committee effectiveness
As part of the Board evaluation process, the effectiveness of the Audit Committee was reviewed and this confirmed that the Committee remained effective at meeting its objectives.
Steve Barber Chairman of the Audit Committee 12 March 2020

                                      | 2019  | 2018  | 2017
------------------------------------- | ----- | ----- | ----
                                      | £000  | £000  | £000
Audit fees                            | 1,092 | 823   | 789
Non-audit fees                        | 598   | 281   | 49
Total fees paid to auditor            | 1,690 | 1,104 | 838
Ratio of non-audit fees to audit fees | 55%   | 34%   | 6%

External auditor
 Transition
 Deloitte intu’s external auditor 2019 audit approval 2019 AGM succeeding PwC. early tenure transition well. Audit Committee recommended Deloitte 2020 AGM.
 focus 2019 transition external audit process from PwC to Deloitte. detailed transition plan management Deloitte familiarising Deloitte intu. transition plan
 shadowing PwC 2018 audit November 2018 February 2019 Audit Committee meetings
 communication management Deloitte PwC
 review PwC’s 2018 audit files
 with senior management intu
 visits shopping centres
 thirdparty valuers
 reviews cash flow financing covenant projections
 External auditor effectiveness
 Audit Committee assessed effectiveness external Deloitte FRC’s Audit Quality Practice Aid first year external auditor. reviewed
 2019 audit plan risks
 FRC’s audit quality inspection review
 output audit reports Audit Committee management
 —performance audit team at meetings
 assessed through internal feedback direct meetings reviews independent reports.
Audit Committee concluded Deloitte effective external auditor 2019 audit. effectiveness independence external auditor.
 2017 Group implemented FRC’s Ethical Standard Auditors restrictions non-audit services. Revised Ethical Standard effective 15 March 2020. majority non-audit services prohibited require approval Audit Committee. fee limit 70 per cent average audit fees past three years.
 Audit Committee contracts non-audit services. proposed arrangements. satisfy Company.
 table summarises fees paid external auditor three years 2019 Deloitte 2018 2017 PwC.
 Audit Committee effectiveness
 effectiveness Audit Committee reviewed confirmed.
 Steve Barber Chairman Audit Committee March 2020
 Audit fees 1,092 823 789
 Non-audit fees 598 281
 Total fees 1,690  1,104  838
 Ratio audit fees 55% 34% 6%


REVENUES BY SERVICES AND PRODUCTS
The following table presents our revenues disaggregated by type of services and products.
(1) Our service revenues are generally recognized over time.
(2) Our product revenues are generally recognized at a point in time.

FOR THE YEAR ENDED DECEMBER 31 | 2019   | 2018
------------------------------ | ------ | ------
Services (1)                   |        |
Wireless                       | 6,427  | 6,269
Wireline data                  | 7,684  | 7,466
Wireline voice                 | 3,564  | 3,782
Media                          | 2,811  | 2,677
Other wireline services        | 251    | 247
Total services                 | 20,737 | 20,441
Products (2)                   |        |
Wireless                       | 2,660  | 2,497
Wireline data                  | 519    | 466
Wireline equipment and other   | 48     | 64
Total products                 | 3,227  | 3,027
Total operating revenues       | 23,964 | 23,468

REVENUES SERVICES PRODUCTS
 table presents revenues.
 service recognized.
 product revenues recognized.
 ENDED DECEMBER 31
 Wireless 6,427 6,269
 Wireline data 7,684,466
 voice 3,564 3,782
 Media 2,811 2,677
 wireline services
 20,737 20,441
 Products
 2,660 2,497
 519
 equipment
 3,227 3,027
 operating revenues 23,964


1 As defined by the International Monetary Fund.
Revenue related to external customers went up moderately yearover- year on growth in nearly all industrial businesses. SGRE and Siemens Healthineers posted the highest growth rates, while revenue at Gas and Power declined moderately in a difficult market environment. The revenue decline in emerging markets was due mainly to lower revenue in Egypt, where in fiscal 2018 Gas and Power recorded sharply higher revenue from large orders.
Revenue in Europe, C. I. S., Africa, Middle East increased moderately on growth in a majority of industrial businesses, driven by substantial growth at SGRE. Gas and Power posted a clear decline in a difficult market environment. In Germany, revenue was up moderately with significant growth in Mobility and Gas and Power, partly offset by a decline in SGRE.
In the Americas, revenue came in clearly higher year-over-year, benefiting from positive currency translation effects. Siemens Healthineers, Smart Infrastructure and Gas and Power recorded the largest increases, while SGRE posted clearly lower revenue in the region. In the U. S., all industrial businesses posted higher revenues year-over-year, with SGRE and Smart Infrastructure recording the strongest growth rates.
Revenue in Asia, Australia rose moderately year-over-year on growth in the majority of industrial businesses, led by Siemens Healthineers and Digital Industries. Gas and Power and SGRE posted lower revenue year-over-year. In China, revenue was also
up in the majority of industrial businesses, led by Siemens Healthineers. In contrast, SGRE posted substantially lower revenue year-over-year in that country.

                                      |        | Fiscal year |        | % Change
------------------------------------- | ------ | ----------- | ------ | --------
(in millions of €)                    | 2019   | 2018        | Actual | Comp.
Europe, C. I. S., Africa, Middle East | 44,360 | 42,782      | 4%     | 4%
therein: Germany                      | 12,282 | 11,729      | 5%     | 4 %
Americas                              | 23,796 | 22,115      | 8%     | 3%
therein: U. S.                        | 17,993 | 16,012      | 12%    | 6%
Asia, Australia                       | 18,693 | 18,147      | 3%     | 2%
therein: China                        | 8,405  | 8,102       | 4%     | 3%
Siemens                               | 86,849 | 83,044      | 5 %    | 3 %
therein: emerging markets1            | 27,607 | 28,272      | (2) %  | (2) %

defined International Monetary Fund.
 Revenue external customers moderately industrial businesses. SGRE Siemens Healthineers highest Gas Power declined difficult market. revenue decline emerging markets lower revenue Egypt Gas Power higher revenue.
 Revenue Europe. Africa Middle East increased SGRE. Gas and Power decline difficult. Germany revenue up moderately growth Mobility Gas Power offset decline SGRE.
 Americas revenue higher positive currency translation. Siemens Healthineers Smart Infrastructure Gas and Power largest increases SGRE lower revenue. industrial businesses higher revenues SGRE Smart Infrastructure strongest growth.
 Revenue Asia Australia rose moderately Siemens Healthineers Digital Industries. Gas and Power SGRE lower. China revenue
 Siemens Healthineers. SGRE lower revenue.
 Fiscal year
 millions.
 Europe. Africa Middle East 44,360 42,782 4%
 Germany 12,282 11,729
 Americas 23,796
.17,993 16,012 12%
 Australia 18,693,147 3%
 China 8,405,102 4%
 Siemens 86,849 83,044 5
 emerging 27,607 28,272


NAVIOS MARITIME HOLDINGS INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. dollars — except share data)
The Company entered into new lease liabilities amounting to $47,064 during the year ended December 31, 2019.
The table below provides the total amount of lease payments on an undiscounted basis on our chartered-in contracts, office lease agreements and land lease agreements as of December 31, 2019:
As of December 31, 2019, the weighted average remaining lease terms on our charter-in contracts, office lease agreements and land leases are 4.5 years, 1.9 years and 46.3 years, respectively.

                                                       | Charter-in vessels in operation | Land Leases | Office space
------------------------------------------------------ | ------------------------------- | ----------- | ------------
December 31, 2020                                      | $109,574                        | $556        | $753
December 31, 2021                                      | 85,399                          | 556         | 356
December 31, 2022                                      | 57,282                          | 556         | 101
December 31, 2023                                      | 47,603                          | 556         | 81
December 31, 2024                                      | 34,025                          | 556         | —
December 31, 2025 and thereafter                       | 33,481                          | 23,002      | —
Total                                                  | $367,364                        | $25,782     | $1,291
Operating lease liabilities, including current portion | $304,568                        | $7,660      | $1,204
Discount based on incremental borrowing rate           | $62,796                         | $18,122     | $87

NAVIOS MARITIME HOLDINGS. FINANCIAL STATEMENTS. S. dollars
 new lease liabilities $47,064 December 31, 2019.
 lease payments December 2019
 lease terms 4. 5 years. 9 years. 3 years.
 Charter-in vessels Land Leases Office space
 December 31, 2020 $109,574 $556
 31, 2021 85,399 556
 2022 57,282
 2023 47,603
 2024 34,025
 2025 33,481 23,002
 $367,364  $25,782 $1,291
 Operating lease liabilities $304,568 $7,660 $1,204
 Discount incremental borrowing rate $62,796 $18,122