The following table sets forth activity during the years ended December 31, 2019 and 2018 related to finite-lived intangible assets:
The Company regularly reviews the carrying amounts of its long-lived assets subject to depreciation and amortization, as well as the related useful lives, to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives. An impairment loss is recognized when the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset.
Should impairment exist, the impairment loss is measured based on the excess of the carrying amount of the asset over the asset’s fair value. During the years ended December 31, 2019 and 2017, no impairment losses related to finite-lived intangible assets were recognized. Impairment loss related to finite-lived intangible assets for the year ended December 31, 2018 was $2.2 million and related to acquired developed technology.

                                             | Years Ended December 31, |
-------------------------------------------- | ------------------------ | --------
                                             | 2019                     | 2018
                                             | (in thousands)           |
Beginning balance                            | $240,500                 | $310,645
Other additions                              | 86                       | —
Transfers to developed technology from IPR&D | 4,400                    | —
Amortization                                 | (57,015)                 | (67,947)
Impairment losses                            | —                        | (2,198)
Ending balance                               | $187,971                 | 240,500

table activity December 2019 2018 finite intangible assets
 Company reviews long-lived assets impairment adjustments. impairment loss expected future net cash flows less than carrying amount.
 loss measured excess carrying amount over fair value. 2019 2017 no impairment losses. Impairment loss 2018 $2. 2 million acquired technology.
 Years Ended December 31,
 2019 2018
 Beginning balance $240,500 $310,645
 additions 86
 Transfers technology IPR&D 4,400
 Amortization (57,015) (67,947)
 Impairment losses (2,198)
 Ending balance $187,971 240,500


Horizon Clinicals and Series2000 Revenue Cycle Discontinued Operation
Two of the product offerings acquired with the EIS Business in 2017, Horizon Clinicals and Series2000 Revenue Cycle, were sunset after March 31, 2018. The decision to discontinue maintaining and supporting these solutions was made prior to our acquisition of the EIS Business and, therefore, they are presented below as discontinued operations.
Until the end of the first quarter of 2018, we were involved in ongoing maintenance and support for these solutions until customers transitioned to other platforms. No disposal gains or losses were recognized during the year ended December 31, 2018 related to these discontinued solutions. We had $0.9 million of accrued expenses associated with the Horizon Clinicals and Series2000 Revenue Cycle businesses on the consolidated balance sheets as of December 31, 2018
The following table summarizes the major income and expense line items of these discontinued solutions, as reported in the consolidated statements of operations for the years ended December 31, 2018 and 2017:

(In thousands)                                                                                | 2018    | 2017
-------------------------------------------------------------------------------------------------------------------------------------------- | ------- | -------
Major classes of line items constituting pretax profit (loss) of discontinued operations for Horizon Clinicals and Series2000 Revenue Cycle: |         |
Revenue:                                                                                |         |
Software delivery, support and maintenance                                                                                | $9,441  | $10,949
Client services                                                                                | 404     | 1,044
Total revenue                                                                                | 9,845   | 11,993
Cost of revenue:                                                                                |         |
Software delivery, support and maintenance                                                                                | 2,322   | 2,918
Client services                                                                                | 830     | 261
Total cost of revenue                                                                                | 3,152   | 3,179
Gross profit                                                                                | 6,693   | 8,814
Research and development                                                                                | 1,651   | 1,148
Income from discontinued operations for Horizon Clinicals and Series2000 Revenue Cycle before income taxes                                   | 5,042   | 7,666
Income tax provision                                                                                | (1,311) | (2,990)
Income from discontinued operations, net of tax for Horizon Clinicals and Series2000 Revenue Cycle                                           | $3,731  | $4,676

Horizon Clinicals Series2000 Revenue Cycle Discontinued
 acquired 2017 sunset after March 31, 2018. decision discontinue prior acquisition presented discontinued operations.
 Until first quarter 2018 maintenance support customers transitioned platforms. No disposal gains losses December 31, 2018 discontinued. $0. 9 million accrued expenses Horizon Clinicals consolidated balance sheets December 31, 2018
 table summarizes income expense discontinued solutions December 31, 2018 2017:
 pretax profit (loss discontinued operations Horizon Clinicals Revenue Cycle
 Software delivery support maintenance $9,441 $10,949
 Client services
 9,845 11,993
 2,322
 3,152 3,179
 Gross profit 6,693 8,814
 Research development 1,651 1,148
 Income operations before income taxes 5,042 7,666
 tax provision (1
discontinued Horizon Clinicals $3,731 $4,676


Opening Balance Sheet Adjustments
The following summarizes the effect of adopting the above new accounting standards:
(1) The balance as of March 30, 2018, includes income tax receivable and prepaid income taxes of $107 million and short-term deferred commissions of $94 million. The opening balance as of March 31, 2018, includes income tax receivable and prepaid income taxes of $99 million and short-term deferred commissions of $86 million.
(2) The balance as of March 30, 2018, includes long-term deferred commissions of $35 million, long-term income tax receivable and prepaid income taxes of $61 million and deferred income tax assets of $46 million. The opening balance as of March 31, 2018, includes long-term deferred commissions of $92 million, long-term income tax receivable and prepaid income taxes of $29 million, and deferred income tax assets of $828 million.

(in millions)                   | Balance as of March 30, 2018 | Revenue Recognition Guidance | Accounting for Income Taxes Guidance | Opening Balance as of March 31, 2018
------------------------------- | ---------------------------- | ---------------------------- | ------------------------------------ | ------------------------------------
Accounts receivable, net        | $809                         | $24                          | $—                                   | $833
Other current assets (1)        | $522                         | $(8)                         | $(8)                                 | $506
Other long-term assets (2)      | $526                         | $57                          | $750                                 | $1,333
Total assets                    | $15,759                      | $73                          | $742                                 | $16,574
Short-term contract liabilities | $2,368                       | $(107)                       | $—                                   | $2,261
Other current liabilities       | $372                         | $(2)                         | $—                                   | $370
Long-term contract liabilities  | $735                         | $(62)                        | $—                                   | $673
Deferred income tax liabilities | $592                         | $47                          | $—                                   | $639
Total liabilities               | $10,736                      | $(124)                       | $—                                   | $10,612
Retained earnings               | $328                         | $197                         | $742                                 | $1,267

Balance Sheet Adjustments
 new accounting standards
 balance March 30, 2018 includes $107 million short-term deferred commissions $94 million. March 31, $99 million short-term deferred commissions $86 million.
 March long-term deferred commissions $35 million taxes $61 million deferred assets $46 million. balance 31, $92 million $29 million deferred assets $828 million.
 Balance March 30 2018 Revenue Recognition Guidance Accounting Income Taxes Guidance Opening Balance March 31, 2018
 Accounts receivable $809 $24 $833
 current assets $522
 long-term assets $526 $57
 Total assets $15,759
 Short-term contract liabilities $2,368,261
 current liabilities $372
 Long-term liabilities $735
 Deferred income tax liabilities $592 $639
 Total liabilities $10,736
earnings $328 $197,267


Results of Operations
Consolidated Results of Operations
The following tables present certain financial data for the periods indicated (dollars in millions):

                                                                               |          | Year ended December 31, |
------------------------------------------------------------------------------ | -------- | ----------------------- | --------
                                                                               | 2019     | 2018                    | 2017
Revenues                                                                       | $1,177.2 | $1,114.0                | $1,051.6
Expenses:                                                                      |          |                         |
Operating expenses                                                             | 646.0    | 625.4                   | 569.5
Depreciation and amortization                                                  | 236.2    | 217.0                   | 206.5
Transition and integration costs                                               | 5.4      | 6.6                     | 13.1
Total expenses                                                                 | 887.6    | 849.0                   | 789.1
Operating income                                                               | 289.6    | 265.0                   | 262.5
Operating margin                                                               | 24.6%    | 23.8%                   | 25.0%
Interest expense, net                                                          | (63.5)   | (51.7)                  | (57.5)
Other expense, net                                                             | (1.4)    | (7.1)                   | (12.6)
Earnings before income taxes and equity in losses of unconsolidated affiliates | 224.7    | 206.2                   | 192.4
Income tax expense (benefit)                                                   | 41.9     | 37.7                    | (61.8)
Earnings before equity in losses of unconsolidated affiliates                  | 182.8    | 168.5                   | 254.2
Equity in losses of unconsolidated affiliates, net of tax                      | (74.0)   | —                       | —
Net earnings                                                                   | $108.8   | $168.5                  | $254.2
Earnings per share:                                                            |          |                         |
Net earnings per share attributable to Black Knight common shareholders:       |          |                         |
Diluted                                                                        | $0.73    | $1.14                   | $1.47
Weighted average shares of common stock outstanding:                           |          |                         |
Diluted                                                                        | 148.6    | 148.2                   | 152.4

Operations
 tables financial data periods
 Year December 31,
 2019 2018 2017
 Revenues $1,177. $1,114. $1,051.
 Expenses
 Operating 646. 625. 569.
 Depreciation amortization 236. 217. 206.
 Transition integration costs 5. 6.
 expenses. 849.
 Operating income. 265. 262.
 Operating margin 24. 23.
 Interest expense (63.
 expense.
 Earnings income taxes equity losses unconsolidated affiliates 224. 206. 192.
 Income tax expense 41. 37.
 Earnings equity losses unconsolidated affiliates 182. 168. 254.
 Equity losses affiliates (74.
 earnings $108. $168. $254.
 Earnings share
 Black Knight shareholders
 $0. $1. $1.
 average shares common stock
148. 6. 152.


(b) Purchase Commitments with Contract Manufacturers and Suppliers
We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that either allow them to procure inventory based upon criteria as defined by us or establish the parameters defining our requirements. A significant portion of our reported purchase commitments arising from these agreements consists of firm, noncancelable, and unconditional commitments. Certain of these purchase commitments with contract manufacturers and suppliers relate to arrangements to secure long-term pricing for certain product components for multi-year periods. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed.
The following table summarizes our purchase commitments with contract manufacturers and suppliers (in millions):
We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. As of July 27, 2019 and July 28, 2018, the liability for these purchase commitments was $129 million and $159 million, respectively, and was included in other current liabilities.

Commitments by Period | July 27, 2019 | July 28, 2018
--------------------- | ------------- | -------------
Less than 1 year      | $4,239        | $5,407
1 to 3 years          | 728           | 710
3 to 5 years          | —             | 360
Total                 | $4,967        | $6,477

Purchase Commitments with Manufacturers Suppliers
 purchase components from services. lead times supply enter agreements with inventory parameters. purchase commitments firm noncancelable unconditional. long pricing for. agreements allow cancel reschedule adjust requirements.
 table summarizes purchase commitments with (in millions):
 record liability for firm noncancelable unconditional purchase commitments for future demand forecasts. July 27, 2019 July 28, 2018 liability for was $129 million and $159 million included in other current liabilities.
 Commitments by Period July 27, 2019 July 28, 2018
 Less than 1 year $4,239  $5,407
 1 to 3 years 728
 3 to 5 years
 Total $4,967  $6,477


Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table provides information with respect to the shares of common stock repurchased by us during the three months ended April 26, 2019:
In May 2003, our Board of Directors approved a stock repurchase program. As of April 26, 2019, our Board of Directors has authorized the repurchase of up to $13.6 billion of our common stock, including a $4.0 billion increase approved by our Board of Directors in April 2018. Since inception of the program through April 26, 2019, we repurchased a total of 313 million shares of our common stock for an aggregate purchase price of $11.7 billion. Under this program, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management. The stock repurchase program may be suspended or discontinued at any time.

Period                               | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares That May Yet Be Purchased Under The Repurchased Program
------------------------------------ | -------------------------------- | ---------------------------- | ---------------------------------------------------------------------- | ------------------------------------------------------------------------------------------
                                     | (Shares in thousands)            |                              | (Shares in thousands)                                                  | (Dollars in millions)
January 26, 2019 - February 22, 2019 | 262                              | $ 64.77                      | 306,255                                                                | $ 2,372
February 23, 2019 - March 22, 2019   | 3,380                            | $ 65.53                      | 309,635                                                                | $ 2,150
March 23, 2019 - April 26, 2019      | 3,608                            | $72.49                       | 313,244                                                                | $ 1,889
Total                                | 7,250                            | $68.97                       |                                                                        |

Equity Securities Issuer Affiliated Purchasers
 table common stock repurchased April 26, 2019
 May 2003, Board approved stock repurchase program. April 26, 2019 repurchase $13. 6 billion $4. 0 billion increase April 2018. repurchased 313 million shares price $11. 7 billion. open market privately accelerated repurchase programs Rule 10b5-1 plan. repurchase program discontinued.
 Period Shares Purchased Average Price Paid Share Program Approximate Dollar Value Shares Program
 millions
 January 26, 2019 - February 22, 2019 $ 64. 77 306,255 $ 2,372
 February 23, March 22, 2019 3,380 $ 65. 53 309,635 $ 2,150
 March April 26, 2019 3,608 $72. 49 313,244 $ 1,889
 7,250 $68. 97


The following table presents summary results for each of our three businesses for each of fiscal 2019 , 2018 and 2017 :
(1) Cloud and license revenues presented for management reporting included revenues related to cloud and license obligations that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our consolidated statements of operations for the periods presented due to business combination accounting requirements. See Note 9 for an explanation of these adjustments and the table below for a reconciliation of our total operating segment revenues to our total consolidated revenues as reported in our consolidated statements of operations
(2) The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, general and administrative and certain other allocable expenses, net. Additionally, the margins reported above do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or non-operating income, net. refer to the table below for a reconciliation of our total margin for operating segments to our income before provision for income taxes as reported per our consolidated statements of operations.

Year Ended May 31,                          |         |         |
------------------------------------------- | ------- | ------- | -------
(in millions)                               | 2019    | 2018    | 2017
Cloud and license:                          |         |         |
revenues (1)                                | $32,582 | $32,041 | $30,452
Cloud services and license support expenses | 3,597   | 3,441   | 2,881
Sales and marketing expenses                | 7,398   | 7,213   | 6,770
Margin (2)                                  | $21,587 | $21,387 | $20,801
Hardware:                                   |         |         |
revenues                                    | $3,704  | $3,994  | $4,152
Hardware products and support expenses      | 1,327   | 1,547   | 1,618
Sales and marketing expenses                | 520     | 643     | 825
Margin (2)                                  | $1,857  | $1,804  | $1,709
Services:                                   |         |         |
revenues                                    | $3,240  | $3,395  | $3,359
Services expenses                           | 2,703   | 2,729   | 2,661
Margin (2)                                  | $537    | $666    | $698
Totals:                                     |         |         |
revenues (1)                                | $39,526 | $39,430 | $37,963
Expenses                                    | 15,545  | 15,573  | 14,755
Margin (2)                                  | $23,981 | $23,857 | $23,208

table presents results three businesses fiscal 2019 2018 2017
 Cloud license revenues not recognized consolidated statements accounting requirements. See Note 9 reconciliation operating revenues consolidated revenues
 margins reflect direct costs include product development administrative expenses. reflect amortization acquisition restructuring stock-based compensation interest non-operating income. reconciliation margin income before taxes.
 Year Ended May 31,
 millions 2019 2018 2017
 Cloud license
 revenues $32,582  $32,041  $30,452
 services license support expenses 3,597 3,441 2,881
 Sales marketing expenses 7,398 7,213 6,770
 Margin $21,587 $21,387 $20,801
 Hardware
 revenues $3,704  $3,994  $4,152
 support expenses 1,327 1,547 1,618
 Sales marketing expenses 520 643 825
 Margin $1,857 $1,804 $1,709
 Services
$3,240,395
 expenses 2,703 2,661
 $537 $698
 revenues $39,526 $39,430 $37,963
 Expenses 15,545,573,755
 $23,981 $23,857


9. BALANCE SHEET DETAILS (Continued)
Other long-term liabilities consist of the following (in thousands):

                                                    | Fiscal year-end |
--------------------------------------------------- | --------------- | --------
                                                    | 2019            | 2018
Long-term taxes payable                             | $37,385         | $36,336
Deferred compensation (see Note 13)                 | 39,715          | 40,895
Deferred tax liabilities (see Note 16)              | 27,785          | 26,339
Deferred revenue                                    | 8,012           | 5,091
Asset retirement obligations liability (see Note 2) | 4,934           | 4,529
Defined benefit plan liabilities (see Note 14)      | 45,862          | 37,528
Other long-term liabilities                         | 2,188           | 1,238
Total other long-term liabilities                   | $165,881        | $151,956

. BALANCE
 long-term liabilities
-term taxes $37,385 $36,336
 Deferred compensation 39,715 40,895
 tax liabilities 27,785 26,339
 revenue 5,091
 Asset retirement obligations 4,529
 benefit plan liabilities 45,862 37,528
 liabilities 2,188 1,238
 $165,881 $151,956


15 Goodwill and other intangible assets continued
Impairment
In accordance with the requirements of IAS 36 (Impairment of Assets), goodwill is allocated to the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the business combination that gave rise to the goodwill.
During 2019, we performed a review on the basis of identification of our individual CGUs. As a result of this review, we have consolidated a number of our current individual CGUs into groups of CGUs that represent the lowest level to which goodwill is monitored for internal management purposes, being each operating segment as disclosed in Note 3. As a result, we performed an impairment review at an operating segment CGU level, the breakdown of the goodwill value at 31st December across these is shown below:
In order to complete the transition to performing goodwill impairment reviews at an operating segment level, we also performed a goodwill impairment review as at 31st December 2019 under the historical CGU basis. The result of this impairment review led to an impairment of £4.2m being recognised in respect of Watson-Marlow FlowSmart. No other impairment was recognised.
The goodwill balance has been tested for annual impairment on the following basis:
• the carrying values of goodwill have been assessed by reference to value in use. These have been estimated using cash flows based on forecast information for the next financial year which have been approved by the Board and then extended up to a further 9 years based on the most recent forecasts prepared by management; • pre-tax discount rates range from 11-12% (2018: 10-15%); • short to medium-term growth rates vary between 3-8% depending on detailed forecasts (2018: 2-8%). The range in rates excludes the annualised impact of owning Thermocoax for a first full year in 2020. The short to medium-term is defined as not more than 10 years; and • long-term growth rates are set using IMF forecasts and vary between 1.8-2.5% (2018: 0.8-3.0%).

                           | 2019 Goodwill | 2018 Goodwill
-------------------------- | ------------- | -------------
                           | £m            | £m
Steam Specialties          | 113.0         | 119.3
Electric Thermal Solutions | 244.7         | 183.0
Watson-Marlow              | 60.0          | 65.7
Total goodwill             | 417.7         | 368.0

Goodwill intangible assets
 Impairment
 IAS 36 (Impairment goodwill allocated cash-generating units synergies business combination goodwill.
 2019 review CGUs. consolidated CGUs lowest level goodwill monitored management segment Note 3. performed impairment review operating segment CGU level breakdown goodwill value 31st December
 transition goodwill impairment reviews operating segment review 31st December 2019 historical CGU basis. impairment £4. 2m recognised Watson-Marlow FlowSmart. No other impairment recognised.
 goodwill balance tested annual impairment
 carrying values assessed value use. estimated cash flows forecast year approved Board extended 9 years pre-tax discount rates 11-12% (2018: 10-15%) short medium-term growth rates vary 3-8% (2018 2-8%). excludes impact owning Thermocoax 2020. not more 10 years long-term growth rates IMF forecasts vary 1. 8-2. 5% (2018. 8-3.

 Steam Specialties 113. 119.
 Thermal Solutions 244. 183.
 Watson-Marlow 60. 65.
 417.


10.8. Non-financial assets fair value measurement
The Group has classified its non-financial assets held at fair value into the three levels prescribed in note 9.8 to provide an indication about the reliability of inputs used to determine fair value.
Recognised fair value measurements
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels at the end of the reporting period. There were no transfers between levels 1 and 2 for recurring fair value measurements during the year. During the year ended 30 June 2019 the Group transferred $2.1m from level 3 to level 2 following the reclassification of assets from freehold investment properties to assets held for sale, and $5.7m from level 2 to level 3 following the reclassification of assets from assets held for sale to freehold investment properties, as detailed in note 10.2.
In the prior year ended 30 June 2018 the Group transferred $4.4m from level 3 to level 2 following the reclassification of an asset from freehold investment properties to assets held for sale.
Fair value measurements using significant observable inputs (level 2)
The fair value of assets held for sale is determined using valuation techniques which maximise the use of observable market data. For the years ended 30 June 2019 and 30 June 2018, the Group has valued assets classified as held for sale at the contractually agreed sales price less estimated cost of sale or other observable evidence of market value.
Fair value measurements using significant unobservable inputs (level 3)
Valuation techniques used to determine level 3 fair values and valuation process Investment properties, principally storage buildings, are held for rental to customers requiring selfstorage facilities and are carried at fair value. Changes in fair values are presented in profit or loss as fair value adjustments.
Fair values are determined by a combination of independent valuations and Director valuations. The independent valuations are performed by an accredited independent valuer. Investment properties are independently valued on a rotational basis every three years unless the underlying financing requires a more frequent valuation cycle. For properties subject to an independent valuation report the Directors verify all major inputs to the valuation and review the results with the independent valuer. The Director valuations are completed by the NSH Group Board. The valuations are determined using the same techniques and similar estimates to those applied by the independent valuer.
The Group obtains the majority of its external independent valuations at each financial year end. The Group’s policy is to maintain the valuation of the investment property valued in the preceding year at external valuation, unless there is an indication of a significant change to the property’s valuation inputs.

                                |       | Level 1 | Level 2 | Level 3   | Total
------------------------------- | ----- | ------- | ------- | --------- | ---------
                                | Notes | $'000   | $'000   | $'000     | $'000
At 30 June 2019                 |       |         |         |           |
Assets held for sale            | 10.2  | -       | 1,107   | -         | 1,107
Leasehold investment properties | 10.4  | -       | -       | 215,279   | 215,279
Freehold investment properties  | 10.4  | -       | -       | 1,874,698 | 1,874,698
                                |       | -       | 1,107   | 2,089,977 | 2,091,084
At 30 June 2018                 |       |         |         |           |
Assets held for sale            | 10.2  | -       | 5,713   | -         | 5,713
Leasehold investment properties | 10.4  | -       | -       | 207,664   | 207,664
Freehold investment properties  | 10.4  | -       |         | 1,377,924 | 1,377,924

. Non-financial assets fair value measurement
 Group classified assets three levels note 9. 8 reliability.
 Recognised fair value measurements
 transfers fair value levels reporting period. no transfers between levels 1 2. 30 June 2019 transferred $2. 1m from level 3 to $5. 7m 2 to.
 prior year June 2018 transferred $4. 4m from level 3 to 2 reclassification.
 Fair value measurements observable inputs (level 2)
 value assets sale determined valuation techniques market data. 30 June 2019 2018 valued assets at agreed sales price less estimated cost sale market value.
 Fair value measurements unobservable inputs (level 3)
 Investment properties storage buildings for rental carried at fair value. Changes fair values presented profit loss as fair value adjustments.
 determined independent valuations Director valuations. accredited independent valuer. properties valued every three years. Directors verify inputs review results independent valuer.Director valuations completed by NSH Group Board. determined same techniques similar estimates independent valuer.
 Group obtains majority external valuations financial year. policy maintain valuation investment property valued preceding year unless significant change valuation.
 Level 1 2 3
 $'000
 30 June 2019
 Assets for sale 10. 2 1,107
 Leasehold investment properties. 4 215,279
 Freehold properties. 1,874,698
 2,089,977 2,091,084
 30 June 2018
 Assets for sale 10. 2 5,713
 Leasehold investment properties 10. 4 207,664
 Freehold investment properties. 1,377,924


Long-term obligations consist of the following (in thousands):
(1) Net of debt issuance costs of $6.4 million and $11.2 million at September 28, 2019 and September 29, 2018, respectively.

                                             | Fiscal year-end |
-------------------------------------------- | --------------- | --------
                                             | 2019            | 2018
Euro Term Loan due 2024(1)                   | $385,208        | $411,661
1.3% Term loan due 2024                      | 5,466           | 7,242
1.0% State of Connecticut term loan due 2023 | 1,028           | 1,406
Capital lease obligations                    | 536             | 402
Total long-term obligations                  | $392,238        | $420,711

Long-term obligations
 debt $6. 4 million $11. 2 million September 28, 2019 29, 2018.
 year-end
 Term Loan $385,208 $411,661
. loan 7
. Connecticut loan 2023
 Capital lease obligations
 long-term obligations $392,238 $420,711


Production start-up
Production start-up expense consists primarily of employee compensation and other costs associated with operating a production line before it is qualified for full production, including the cost of raw materials for solar modules run through the production line during the qualification phase and applicable facility related costs. Costs related to equipment upgrades and implementation of manufacturing process improvements are also included in production start-up expense as well as costs related to the selection of a new site, related legal and regulatory costs, and costs to maintain our plant replication program to the extent we cannot capitalize these expenditures. In general, we expect production start-up expense per production line to be higher when we build an entirely new manufacturing facility compared with the addition or replacement of production lines at an existing manufacturing facility, primarily due to the additional infrastructure investment required when building an entirely new facility.
The following table shows production start-up expense for the years ended December 31, 2019, 2018, and 2017:
During 2019, we incurred production start-up expense at our new facility in Lake Township, Ohio. We also incurred production start-up expense at our second facility in Ho Chi Minh City, Vietnam in early 2019. During 2018, we incurred production start-up expense for the transition to Series 6 module manufacturing at our facilities in Kulim, Malaysia and Ho Chi Minh City, Vietnam. We also incurred production start-up expense for the transition to Series 6 module manufacturing at our facility in Perrysburg, Ohio in early 2018.

                       |         | Years Ended |         |                | Change |                |
---------------------- | ------- | ----------- | ------- | -------------- | ------ | -------------- | ----
(Dollars in thousands) | 2019    | 2018        | 2017    | 2019 over 2018 |        | 2018 over 2017 |
Production start-up    | $45,915 | $90,735     | $42,643 | $(44,820)      | (49)%  | $48,092        | 113%
% of net sales         | 1.5%    | 4.0%        | 1.4%    |                |        |                |

Production start-up
 expense employee compensation costs operating production line before full production raw materials solar modules facility related costs. equipment upgrades manufacturing process improvements included new site legal regulatory costs plant replication program. expense per line higher new facility existing due additional infrastructure investment.
 table shows start-up expense years December 31, 2019 2018 2017:
 2019 incurred expense new facility Lake Township, Ohio. second facility Ho Chi Minh City, Vietnam. 2018 transition to Series 6 module manufacturing Kulim, Malaysia Ho Chi Minh City Vietnam. Perrysburg, Ohio.
 Years Ended
 (Dollars in thousands) 2019 2018 2017
 Production start-up  $45,915  $90,735  $42,643 $(44,820) (49)%  $48,092  113%
 % of net sales 1. 5%  4. 0% 1. 4%


30. EMPLOYEE BENEFIT PLANS (cont.)
The above sensitivities are hypothetical and should be used with caution. Changes in amounts based on a one percent variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in amounts may not be linear. The sensitivities have been calculated independently of changes in other key variables. Changes in one factor may result in changes in another, which could amplify or reduce certain sensitivities.
The Company expects to make contributions of $5.1 million to the defined benefit plans and $0.6 million to the defined contribution plan of Telesat Canada during the next fiscal year.

                               | Pension     |             | Other       |
------------------------------ | ----------- | ----------- | ----------- | -----------
As at December 31, 2018        | 1% increase | 1% decrease | 1% increase | 1% decrease
Discount rate                  | $(39,145)   | $49,361     | $(2,471)    | $3,224
Future salary growth           | $7,572      | $(6,919)    | N/A         | N/A
Medical and dental trend rates | N/A         | N/A         | $1,703      | $(1,280)

. EMPLOYEE BENEFIT PLANS.
 sensitivities hypothetical. percent variation. sensitivities calculated independently. Changes sensitivities.
 Company expects contributions $5. 1 million defined benefit plans $0. 6 million contribution plan Telesat Canada next fiscal year.
 Pension
 December 31, 2018 1% increase decrease
 Discount rate $(39,145) $49,361 $(2,471) $3,224
 Future salary growth $7,572 $(6,919)
 Medical dental trend rates $1,703 $(1,280)


12. Restructuring
In fiscal 2019, the Company initiated a restructuring plan to increase efficiency in its sales, marketing and distribution functions as well as reduce costs across all functional areas. During the year ended March 31, 2019, the Company incurred total restructuring charges of $14,765. These restructuring charges relate primarily to severance and related costs associated with headcount reductions and lease abandonment charges associated with two leases. These charges include $2,632 of stock- based compensation related to modifications of existing unvested awards granted to certain employees impacted by the restructuring plan.
The activity in the Company’s restructuring accruals for the year ended March 31, 2019 is summarized as follows:
As of March 31, 2019, the outstanding restructuring accruals primarily relate to future severance and lease payments.
(In thousands, except per share data)

                          | Lease abandonment charges | Severance & payroll related charges | Total
------------------------- | ------------------------- | ----------------------------------- | --------
Balance at March 31, 2018 | $—                        | $—                                  | $—
Restructuring charges     | 1,034                     | 14,606                              | 15,640
Payments                  | (540)                     | (12,642)                            | (13,182)
Accrual reversals         | —                         | (875)                               | (875)
Balance at March 31, 2019 | $494                      | $1,089                              | $1,583

. Restructuring
 2019 Company initiated restructuring plan efficiency sales marketing reduce costs. March 31, incurred restructuring charges $14,765. severance headcount reductions lease abandonment. include $2,632 stock compensation unvested awards.
 restructuring accruals
 accruals future severance lease payments.
 Lease abandonment charges Severance payroll charges
 Balance March 31, 2018 $—
 Restructuring charges 1,034 14,606 15,640
 Payments (540),642 (13,182)
 Accrual reversals (875)
 Balance March 31, 2019 $494 $1,089 $1,583


Other income (expense)
nm—not meaningful
Interest income increased $1.2 million primarily as a result of higher weighted-average balances of cash, cash equivalents and investments and higher yields on investments.
Interest expense increased $5.3 million primarily as a result of interest expense of $3.3 million associated with our long-term debt and our financing lease obligation of $2.0 million in connection with the construction of our Lexington, MA – U.S. headquarters.
Foreign exchange expense and other, net decreased by $3.1 million primarily as a result of a decrease in foreign exchange expense of $1.9 million, sublease income of $0.9 million and a gain on a previously held asset related to the Solebit acquisition of $0.3 million.

                                        | Year ended March 31, |                        | Period-to-period change |
--------------------------------------- | -------------------- | ---------------------- | ----------------------- | --------
                                        | 2019                 | 2018                   | Amount                  | % Change
                                        |                      | (dollars in thousands) |                         |
Other income (expense):                 |                      |                        |                         |
Interest income                         | $ 2,515              | $ 1,310                | $ 1,205                 | 92 %
Interest expense                        | (5,940)              | (598)                  | (5,342)                 | nm
Foreign exchange expense and other, net | (356)                | (3,439)                | 3,083                   | nm
Total other income (expense), net       | $ (3,781)            | $ (2,727)              | $ (1,054)               | nm

income
 Interest income increased $1. 2 million higher balances cash higher yields.
 Interest expense increased $5. 3 million $3. million long-term debt financing lease obligation $2. million construction Lexington MA. headquarters.
 exchange decreased $3. 1 million exchange expense $1. million sublease income $0. million gain asset Solebit acquisition. 3 million.
 Year ended March 31, Period-period change
 Interest income $ 2,515 $ 1,310 1,205
 Interest expense (5,940),342
 Foreign exchange expense (3,439) 3,083
 $ (3,781) $ (2,727) (1,054)


12 Directors’ Remuneration
Directors’ emoluments represent all earnings and aggregate contributions to pension schemes made during the year as a Director of Sophos Group plc and its subsidiaries. Further details can be found in the Group’s Remuneration Report on pages 91 to 101.

                                   | Year-ended 31 March 2019 | Year-ended 31 March 2018
---------------------------------- | ------------------------ | ------------------------
                                   | $M                       | $M
Directors’ emoluments              | 2.3                      | 3.3
Gains on exercise of share options | 3.6                      | 3.5
Gains on vesting of LTIP awards    | 14.5                     | 4.2
Total Directors’ remuneration      | 20.4                     | 11.0

Directors’ Remuneration
 emoluments earnings contributions pension schemes Sophos Group subsidiaries. details Remuneration Report pages 91 to 101.
 Year-ended 31 March 2019 31 March 2018
 emoluments.
 Gains share options.
 vesting LTIP awards.
 Directors’ remuneration 20.


Orders at Mobility grew to a record high on a sharp increase in volume from large orders, which the Strategic Company won across the businesses, most notably in the rolling stock and the customer services businesses. Among the major contract wins were a € 1.6 billion order for metro trains in the U. K., a € 1.2 billion contract for high-speed trains including maintenance in Russia, a € 0.8 billion order for trainsets including service in Canada, a € 0.7 billion contract for diesel-electric locomotives including a service agreement in the U. S. and two orders in Germany worth € 0.4 billion and € 0.3 billion, respectively, for regional multiple-unit trainsets. In fiscal 2018, Mobility also gained a number of significant contracts across the regions.
Revenue grew slightly as double-digit growth in the customer services business was largely offset by a decline in the rail infrastructure business. Revenue in the rolling stock business remained close to the prior-year level due to unfavorable timing effects related to the execution of large rail projects, which the business began to ramp up late in the fiscal year. Mobility continued to operate with high profitability in fiscal 2019, including a strong contribution to Adjusted EBITA from the services business. Severance charges were € 20 million, up from € 14 million in fiscal 2018. Mobility’s order backlog was € 33 billion at the end of the fiscal year, of which € 8 billion are expected to be converted into revenue in fiscal 2020.
Order growth reflected overall strong markets for Mobility in fiscal 2019, with different dynamics among the regions. Market development in Europe was characterized by continuing awards of mid-size and large orders, particularly in the U. K., Germany and Austria. Within the C. I. S., large projects for high-speed trains and services were awarded in Russia. Demand in the Middle East and Africa was held back by ongoing uncertainties related to budget constraints and political climates. In the Americas region, stable investment activities were driven by demand for mainline
and urban transport, especially in the U. S. and Canada.
Within the Asia, Australia region, Chinese markets saw ongoing investments in high-speed trains, urban transport, freight logistics and rail infrastructure, while India continues to invest in modernizing the country’s transportation infrastructure. For fiscal 2020, we expect markets served by Mobility to grow moderately with increasing demand for digital solutions. Overall, rail transport and intermodal mobility solutions are expected to remain a focus as urbanization continues to progress around the world. In emerging countries, rising incomes are expected to result in greater demand for public transport solutions.

                      |        | Fiscal year |        | % Change
--------------------- | ------ | ----------- | ------ | --------
(in millions of €)    | 2019   | 2018        | Actual | Comp.
Orders                | 12,894 | 11,025      | 17 %   | 16 %
Revenue               | 8,916  | 8,821       | 1 %    | 0 %
Adjusted EBITA        | 983    | 958         | 3 %    |
Adjusted EBITA margin | 11.0 % | 10.9 %      |        |

Orders Mobility grew high large orders rolling stock customer services. major contract wins € 1. 6 billion metro trains U. K € 1. 2 billion high-speed trains Russia € 0. 8 billion Canada € 0. 7 billion diesel-electric locomotives U. S orders Germany €. 4 billion €. 3 billion. 2018 Mobility gained contracts regions.
 Revenue grew slightly customer services offset decline infrastructure. rolling stock prior-year level unfavorable timing large projects. high profitability 2019 contribution EBITA services. Severance charges € 20 million € 14 million 2018. order backlog € 33 billion € 8 billion converted revenue 2020.
 Order growth strong markets 2019 regions. Europe mid-size large orders U. K. Germany Austria. large projects high-speed trains awarded Russia. Demand Middle East Africa uncertainties budget. Americas investment mainline
 urban transport U. S. Canada.
Chinese markets high-speed trains urban transport freight logistics rail infrastructure India transportation infrastructure. 2020 markets Mobility grow demand digital solutions. transport intermodal mobility urbanization. emerging countries rising incomes demand public transport.
 Fiscal year %
 millions € 2019.
 Orders 12,894  11,025 17 %
 Revenue 8,821 1 %
 Adjusted EBITA 983  958 3 %
 margin 11. %. 9 %


9. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:

                                                                           | December31, |
-------------------------------------------------------------------------- | ----------- | ------
                                                                           | 2019        | 2018
Accrued payroll and employee benefits                                      | $116.9      | $105.9
Derivative liabilities                                                     | 93.8        | 120.5
Current portion of operating lease liabilities                             | 39.5        | —
Tax-related accruals                                                       | 30.8        | 38.4
Accrued legal and professional                                             | 28.7        | 10.9
Accrued marketing and advertising expenses                                 | 14.7        | 19.4
Accrued acquisition-related expenses and acquisition consideration payable | 8.3         | 74.4
Accrued other                                                              | 33.3        | 44.8
                                                                           | $366.0      | $414.3

. Accrued Expenses Liabilities
 December31
 payroll employee benefits $116. $105.
 liabilities 93. 120.
 operating lease liabilities 39.
 Tax-related accruals 30. 38.
 legal 28. 10.
 marketing advertising expenses 14. 19.
 acquisition-related expenses consideration 8. 74.
 33. 44.
 $366. $414.


12. Derivative Instruments
(a) Summary of Derivative Instruments
We use derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and equity price risks. Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates, interest rates, and equity prices. Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We do, however, seek to mitigate such risks by limiting our counterparties to major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored. Management does not expect material losses as a result of defaults by counterparties.
The notional amounts of our outstanding derivatives are summarized as follows (in millions):

                                                   | July 27, 2019 | July 28, 2018
-------------------------------------------------- | ------------- | -------------
Derivatives designated as hedging instruments:     |               |
Foreign currency derivatives—cash flow hedges      | $663          | $147
Interest rate derivatives                          | 4,500         | 6,750
Net investment hedging instruments                 | 309           | 250
Derivatives not designated as hedging instruments: |               |
Foreign currency derivatives                       | 2,708         | 2,298
Total return swaps—deferred compensation           | 574           | 566
Total                                              | $8,754        | $10,011

. Derivative Instruments
 foreign currency interest equity price risks. reduce volatility earnings cash. derivatives expose credit risk. counterparties major financial institutions. loss monitored. material losses defaults.
 amounts outstanding derivatives millions):
 July 27, 2019 July 28, 2018
 Derivatives hedging instruments
 Foreign currency derivatives—cash flow hedges $663  $147
 Interest rate derivatives 4,500 6,750
 Net investment hedging instruments 309  250
 Derivatives not
 Foreign currency derivatives 2,708  2,298
 Total return swaps—deferred compensation 574 566
 $8,754 $10,011


Contractual Obligations and Commercial Commitments
The following table summarizes our non-cancelable contractual obligations and commercial commitments as of the end of 2019 and the effect such obligations and commitments are expected to have on our liquidity and cash flows in future fiscal periods (in thousands):
(1) Certain of our wafer manufacturers require us to forecast wafer starts several months in advance. We are committed to take delivery of and pay for a portion of forecasted wafer volume.
(2) Other commercial commitments are included as liabilities on our consolidated balance sheets as of the end of 2019.
(3) Does not include unrecognized tax benefits of $2.1 million as of the end of 2019. See Note 10 of the Consolidated Financial Statements.

                                                             |         |                  |           | Payments Due by Period |
------------------------------------------------------------ | ------- | ---------------- | --------- | ---------------------- | -----------------
                                                             | Total   | Less than 1 year | 1-3 Years | 4-5 Years              | More than 5 Years
Contractual cash obligations:                                |         |                  |           |                        |
Operating leases                                             | $2,040  | $611             | $902      | $527                   | $—
Finance software lease obligations                           | 514     | 214              | 300       | —                      | —
Wafer purchases (1)                                          | 57      | 57               | —         | —                      | —
Other purchase commitments                                   | 413     | 386              | 27        | —                      | —
Total contractual cash obligations                           | 3,024   | 1,268            | 1,229     | 527                    | —
Other commercial commitments (2):                            |         |                  |           |                        |
Revolving line of credit                                     | 15,000  | 15,000           | —         | —                      | —
Total commercial commitments                                 | 15,000  | 15,000           | —         | —                      | —
Total contractual obligations and commercial commitments (3) | $18,024 | $16,268          | $1,229    | $527                   | —

Contractual Obligations Commercial Commitments
 table summarizes non obligations commercial commitments end 2019 effect liquidity cash flows future
 wafer manufacturers forecast wafer starts. committed pay forecasted wafer volume.
 commercial commitments liabilities balance sheets 2019.
 unrecognized tax benefits $2. 1 million. Note 10 Consolidated Financial Statements.
 Payments Due Period
 Less than 1 year 1-3 Years 4-5 Years 5 Years
 Contractual cash obligations
 Operating leases $2,040 $611 $902 $527
 Finance software lease obligations 514
 Wafer purchases 57
 Other purchase commitments 413 386
 Total cash obligations 3,024  1,268 1,229
 commercial commitments
 Revolving line of credit 15,000
 commercial commitments
 $18,024 $16,268 $1,229 $527


2. Inventories
Inventories as of September 28, 2019 and September 29, 2018 consisted of the following (in thousands):
In certain circumstances, per contractual terms, customer deposits are received by the Company to offset obsolete and excess inventory risks. The total amount of customer deposits related to inventory and included within current liabilities on the accompanying Consolidated Balance Sheets as of September 28, 2019 and September 29, 2018 was $136.5 million and $87.7 million, respectively.
In fiscal 2019, the Company adopted and applied Topic 606 to all contracts using the modified retrospective method of adoption. The prior year comparative information has not been restated and continues to be reported under the accounting standards in effect for fiscal 2018. Refer to Note 15, "Revenue from Contracts with Customers," for further information.

                       | 2019     | 2018
---------------------- | -------- | --------
Raw materials          | $577,545 | $579,377
Work-in-process        | 49,315   | 102,337
Finished goods         | 74,078   | 112,632
Total inventories, net | $700,938 | $794,346

. Inventories
 September 28, 2019 29, 2018
 customer deposits offset obsolete excess inventory risks. total deposits Balance Sheets $136. 5 million $87. 7 million.
 2019 Topic 606 contracts retrospective method. prior year comparative information accounting standards 2018. Note 15 Contracts.
 2019 2018
 Raw materials $577,545 $579,377
 Work-in-process 49,315 102,337
 Finished goods 74,078 112,632
 Total inventories $700,938 $794,346


Liquidity and Capital Resources
Our cash, cash equivalents, and short-term investments consist primarily of money market funds and U.S. treasury bills. All of our short-term investments are classified as available-for-sale. The securities are stated at market value, with unrealized gains and losses reported as a component of accumulated other comprehensive income, within stockholders’ equity. As of December 31, 2019, our cash, cash equivalents, and short-term investments totaled $89.5 million, a decrease of $35.4 million from $124.9 million on December 31, 2018.
A summary of select cash flow information for the years ended December 31, 2019, 2018 and 2017 (in thousands):
2019 Compared to 2018
Cash provided by (used in) operating activities - Net cash used in operating activities was $34.1 million during 2019 compared to $69.9 million cash provided by operating activities during 2018, primarily due to a $74.4 million decrease in net income, a $25.6 million decrease in deferred revenue, a $4.2 million increase in other assets, a $2.1 million increase in accounts and other receivables and a $0.9 million decrease in accrued compensation partially offset by a $3.8 million increase in other long-term liabilities. The decrease in deferred revenue primarily reflects the effect of the adoption of ASC 606 on January 1, 2018. Cash used in operating activities was also affected by a $0.5 million decrease in non-cash charges primarily related to a $3.2 million decrease in stock-based compensation expense, partially offset by a $0.9 million impairment charge related to the SJ Facility right-of-use lease asset and a $1.3 million increase in depreciation and amortization expense. The increase in depreciation and amortization expense is due primarily to amortization of right-of-use lease assets and the shortened useful life of the SJ Facility leasehold improvements and a $0.3 million increase in deferred income taxes.
Cash provided by investing activities - Net cash provided by investing activities during 2019 was $10.9 million, a decrease of $2.7 million compared to $8.2 million cash provided by investing activities during 2018. Net cash provided by investing activities during 2019 consisted of maturities of short-term investments of $20.0 million. This was partially offset by purchases of short-term investments of $8.9 million and purchases of property, plant and equipment of $0.2 million. Net cash provided by investing activities during 2018 consisted of maturities of short-term investments of $26.0 million. This was partially offset by purchases of short-term investments of $17.7 million and purchases of property, plant, and equipment of $0.1 million.
Cash provided by financing activities — Net cash provided by financing activities during 2019 was $1.3 million, a decrease of $9.5 million compared to $8.2 million cash provided by financing activities during 2018. Net cash used in financing activities during 2019 consisted of $2.7 million used to purchase of treasury stock partially offset by $1.4 million in cash proceeds from stock option exercises and stock purchases under our employee stock purchase plan. Net cash provided by financing activities during 2018 consisted primarily of $8.2 million in proceeds from stock option exercises and stock purchases under our employee stock purchase plan.
2018 Compared to 2017
Cash provided by (used in) operating activities - Net cash provided by operating activities was $69.9 million during 2018 compared to $43.8 million cash used in operating activities during 2017. The $113.8 million change was primarily driven by $99.6 million increase in net income (loss), from $45.3 million net loss for 2017 to $54.3 million net income for 2018 and $27.0 million increase in deferred revenue, partially offset by $7.0 million increase in other assets, $4.2 million increase in prepaid expenses and other current assets, and $3.7 million decrease in accounts payable. The increases in deferred revenue and other non-current assets primarily reflected the effect of the adoption of ASC 606 on January 1, 2018. Cash provided by operating activities was also affected by an increase in non-cash charges of $2.6 million primarily related to higher stock-based compensation expense incurred for 2018 compared to 2017.
Cash provided by (used in) investing activities - Net cash provided by investing activities during 2018 was $8.2 million, a decrease of $2.8 million compared to $11.1 million cash provided by investing activities during 2017. Net cash provided by investing activities during 2018 consisted of maturities of short-term investments of $26.0 million partially offset by purchases of short-term investments of $17.7 million and purchases of property, plant and equipment of $0.1 million. Net cash provided by investing activities during 2017 consisted of maturities of short-term investments of $35.0 million partially offset by purchases of short-term investments of $23.8 million and purchases of property, plant, and equipment of $0.1 million.
Cash provided by (used in) financing activities - Net cash provided by financing activities during 2018 was $8.2 million an increase of $7.7 million compared to $0.5 million net cash provided by financing activities during 2017. Net cash provided by financing activities during 2018 consisted primarily of $8.2 million in proceeds from stock option exercises and stock purchases under our employee stock purchase plan. Net cash provided by financing activities during 2017 consisted primarily of $0.8 million proceeds from stock option exercises and stock purchases under our employee stock purchase plan partially offset by repurchases of treasury stock of $0.3 million.
We believe that our cash, cash equivalents, and short-term investments will be sufficient to meet our working capital needs for at least the next twelve months. Of our total cash, cash equivalents, and short-term investments of $89.5 million as of December 31, 2019, 5% was held by our foreign subsidiaries and subject to repatriation tax effects. Our intent is to permanently reinvest all of our earnings from foreign operations, and current plans do not anticipate that we will need funds generated from foreign operations to fund our domestic operations. We will continue to invest in, protect, and defend our extensive IP portfolio, which is expected to result in the continued use of cash. At December 31, 2019 there was $30.6 million remaining under our previously-approved share repurchase program. We anticipate that capital expenditures for property and equipment for the year ending December 31, 2020 will be less than $1.0 million. Cash from operations could also be affected by various risks and uncertainties, including, but not limited to the risks detailed in Part I, Item 1A, Risk Factors of this Annual Report on Form 10-K.

                                                    |           | Years Ended December 31, |
--------------------------------------------------- | --------- | ------------------------ | ---------
                                                    | 2019      | 2018                     | 2017
Net cash (used in) provided by operating activities | $(34,099) | $69,924                  | $(43,829)
Net cash provided by investing activities           | $10,920   | $8,237                   | $11,068
Net cash (used in) provided by financing activities | $(1,331)  | $8,205                   | $518

Capital
 cash equivalents short-term investments funds. treasury bills. available-for-sale. securities market value unrealized gains losses income equity. December 31, 2019 investments $89. 5 million decrease $35. 4 million $124. 9 million 2018.
 cash flow 2019 2018 2017
 $34. 1 million $69. 9 million 2018 $74. 4 million decrease income $25. 6 million deferred revenue $4. 2 million increase assets $2. 1 million increase accounts receivables $0. 9 million decrease accrued compensation offset $3. 8 million long-term liabilities. revenue ASC 606 2018. $0. 5 million decrease non-cash charges $3. 2 million stock-based compensation expense. 9 million impairment SJ Facility $1. 3 million depreciation amortization expense. shortened life SJ Facility leasehold. million increase deferred income taxes.
 $10. 9 million decrease $2. 7 million.million cash investing 2018. 2019 $20. 0 million. offset purchases $8. 9 million purchases property equipment $0. 2 million. 2018 $26. 0 million. offset purchases $17. 7 million purchases property equipment $0. 1 million.
 2019 $1. 3 million decrease $9. 5 million $8. 2 million 2018. $2. 7 million treasury stock offset $1. 4 million stock option exercises purchases. 2018 $8. 2 million stock purchases.
 $69. 9 million 2018 $43. 8 million 2017. $113. 8 million change $99. 6 million increase net income $45. 3 million 2017 $54. 3 million 2018 $27. 0 million increase deferred revenue offset $7. 0 million other assets $4. 2 million increase prepaid expenses current assets $3. 7 million accounts payable. ASC 606 January 1 2018. increase non-cash charges $2. 6 million higher stock-based compensation expense.
investing activities 2018 $8. 2 million decrease $2. 8 million compared $11. 1 million 2017. short-term $26. 0 million offset purchases $17. 7 million purchases property equipment $0. 1 million. 2017 $35. 0 million offset purchases $23. 8 million purchases property equipment $0. 1 million.
 financing 2018 $8. 2 million increase $7. 7 million compared $0. 5 million 2017. $8. 2 million stock option exercises purchases. 2017 $0. 8 million offset repurchases treasury stock $0. 3 million.
 cash short investments working capital needs next twelve months. total investments $89. 5 million December 31, 2019 5% held by foreign subsidiaries subject repatriation tax. intent reinvest earnings from foreign operations funds foreign domestic operations. continue invest protect IP portfolio continued use cash. December 31, 2019 $30. 6 million remaining share repurchase program.capital expenditures property equipment 2020 less $1. 0 million. Cash risks Part I Item 1A Risk Factors Annual Report Form 10-K.
 Years Ended December 31,
 2019 2018 2017
 operating $(34,099) $69,924(43,829)
 investing $10,920 $8,237 $11,068
 financing $(1,331) $8,205


Operating Revenues and Selected Operating Statistics
(1) As of end of period (2) Excluding acquisitions and adjustments.
Consumer’s total operating revenues increased $1.3 billion, or 1.4%, during 2019 compared to 2018, primarily as a result of increases in Service and Other revenues, partially offset by a decrease in Wireless equipment revenue.
Service Revenue Service revenue increased $1.2 billion, or 1.8%, during 2019 compared to 2018, primarily due to increases in wireless service and Fios revenues, partially offset by decreases in wireline voice and DSL services.
Wireless service revenue increased $1.3 billion, or 2.5%, during 2019 compared to 2018, due to increases in wireless access revenue, driven by customers shifting to higher access plans including unlimited plans and increases in the number of devices per account, the declining fixed-term subsidized plan base and growth from reseller accounts. Wireless retail postpaid ARPA increased 2.3%.
For the year ended December 31, 2019, Fios revenues totaled $10.4 billion and increased $92 million, or 0.9%, compared to 2018. This increase was due to a 2.5% increase in Fios Internet connections, reflecting increased demand in higher broadband speeds, partially offset by a 5.1% decrease in Fios video connections, reflecting the ongoing shift from traditional linear video to over-the-top (OTT) offerings.
Service revenue attributable to wireline voice and DSL broadband services declined during 2019, compared to 2018. The declines are primarily due to a decrease of 9.1% in voice connections resulting primarily from competition and technology substitution with wireless and competing Voice over Internet Protocol (VoIP) and cable telephony services.
Wireless Equipment Revenue Wireless equipment revenue decreased $827 million, or 4.4%, during 2019 compared to 2018, as a result of declines in wireless device sales primarily due to an elongation of the handset upgrade cycle and increased promotions. These decreases were partially offset by a shift to higher priced units in the mix of wireless devices sold.
Other Revenue Other revenue includes non-service revenues such as regulatory fees, cost recovery surcharges, revenues associated with our device protection package, leasing and interest on equipment financed under a device payment plan agreement when sold to the customer by an authorized agent. Other revenue increased $1.0 billion, or 14.4%, during 2019 compared to 2018, primarily due to pricing increases related to our wireless device protection plans, as well as regulatory fees.

                                                      |          |          | (dollars in millions, except ARPA) |
----------------------------------------------------- | -------- | -------- | ---------------------------------- | ------
                                                      |          |          | Increase/ (Decrease)               |
Years Ended December 31,                              | 2019     | 2018     | 2019 vs. 2018                      |
Service                                               | $65,383  | $ 64,223 | $ 1,160                            | 1.8%
Wireless equipment                                    | 18,048   | 18,875   | (827)                              | (4.4)
Other                                                 | 7,625    | 6,664    | 961                                | 14.4
Total Operating Revenues                              | $ 91,056 | $ 89,762 | $ 1,294                            | 1.4
Connections (‘000):(1)                                |          |          |                                    |
Wireless retail connections                           | 94,544   | 94,507   | 37                                 | —
Wireless retail postpaid connections                  | 90,481   | 89,861   | 620                                | 0.7
Fios Internet connections                             | 5,902    | 5,760    | 142                                | 2.5
Fios video connections                                | 4,152    | 4,377    | (225)                              | (5.1)
Broadband connections                                 | 6,467    | 6,460    | 7                                  | 0.1
Voice connections                                     | 5,754    | 6,332    | (578)                              | (9.1)
Net Additions in Period (‘000):(2)                    |          |          |                                    |
Wireless retail                                       | 379      | 372      | 7                                  | 1.9
Wireless retail postpaid                              | 970      | 1,129    | (159)                              | (14.1)
Wireless retail postpaid phones                       | 737      | 498      | 239                                | 48.0
Churn Rate:                                           |          |          |                                    |
Wireless retail                                       | 1.28%    | 1.25%    |                                    |
Wireless retail postpaid                              | 1.05%    | 1.00%    |                                    |
Wireless retail postpaid phones                       | 0.79%    | 0.76%    |                                    |
Account Statistics:                                   |          |          |                                    |
Wireless retail postpaid ARPA                         | $ 118.13 | $115.48  | $ 2.65                             | 2.3
Wireless retail postpaid accounts (‘000)(1)           | 33,875   | 34,086   | (211)                              | (0.6)
Wireless retail postpaid connections per account(1)   | 2.67     | 2.64     | 0.03                               | 1.1

Operating Revenues Statistics
.
 Consumer’s revenues increased $1. 3 billion 1. 4% 2019 Service Other revenues decrease Wireless equipment revenue.
 increased $1. 2 billion 1. 8% wireless service Fios revenues offset decreases wireline voice services.
 Wireless revenue increased $1. 3 billion 2. 5% access revenue higher plans devices declining fixed-term subsidized plan base reseller accounts. Wireless postpaid ARPA increased 2. 3%.
 Fios revenues $10. 4 billion increased $92 million 0. 9% 2018. 2. 5% increase Fios Internet connections offset 5. 1% decrease video connections.
 wireline voice broadband declined 2019. decrease 9. 1% voice connections competition substitution wireless cable telephony.
 Wireless Equipment Revenue decreased $827 million 4. 4% 2019 declines sales handset upgrade cycle promotions. offset higher priced units.
Revenue includes non-service regulatory fees cost recovery surcharges device protection package leasing interest equipment payment plan. increased $1. billion. 4% 2019 2018 due pricing increases wireless device protection plans regulatory fees.
 Ended December 31,.
 $65,383  $ 64,223 $ 1,160.
 Wireless equipment 18,048  18,875  (827).
 7,625 6,664 .
 Total Operating Revenues $ 91,056  $ 89,762  $ 1,294.
 Connections
 retail connections 94,544  94,507
 postpaid 90,481 89,861.
 Internet connections 5,902 5,760.
 video connections 4,152  4,377.
 Broadband connections 6,467  6,460.
 Voice connections 5,754 6,332.
 Additions
 379 372.
 postpaid 970 1,129.
Wireless retail postpaid phones 737 498 239 48.
 Churn Rate
. 28%. 25%
. 05%.%
. 79%. 76%
 Account Statistics
 $ 118. 13 $115. 48 2. 65.
 retail postpaid accounts 33,875 34,086 (211). 6)
 postpaid connections. 67. 64. 03.


Americas 2019 Exit Plan
During the first quarter of 2019, the Company initiated a restructuring plan to simplify and refine its operating model in the U.S. (the “Americas 2019 Exit Plan”), in part to improve agent attrition and absenteeism. The Americas 2019 Exit Plan included closing customer engagement centers, consolidating leased space in various locations in the U.S. and management reorganization. The Company finalized the actions as of September 30, 2019.
Americas 2018 Exit Plan
During the second quarter of 2018, the Company initiated a restructuring plan to manage and optimize capacity utilization, which included closing customer engagement centers and consolidating leased space in various locations in the U.S. and Canada (the “Americas 2018 Exit Plan”). The Company finalized the site closures under the Americas 2018 Exit Plan as of December 31, 2018, resulting in a reduction of 5,000 seats.
The Company’s actions under both the Americas 2018 and 2019 Exit Plans resulted in general and administrative cost savings and lower depreciation expense.
The cumulative costs incurred to date related to cash and non-cash expenditures resulting from the Americas 2018 and 2019 Exit Plans are outlined below as of December 31, 2019 (in thousands):
(1) Included in “General and administrative” costs in the accompanying Consolidated Statements of Operations.
(2) Included in “Direct salaries and related costs” in the accompanying Consolidated Statements of Operations.
The Company has paid a total of $12.3 million in cash through December 31, 2019, of which $10.4 million related to the Americas 2018 Exit Plan and $1.9 million related to the Americas 2019 Exit Plan.

                                              | Americas 2018 Exit Plan | Americas 2019 Exit Plan
--------------------------------------------- | ----------------------- | -----------------------
Lease obligations and facility exit costs (1) | $7,073                  | $—
Severance and related costs (2)               | 3,426                   | 191
Severance and related costs (1)               | 1,037                   | 2,155
Non-cash impairment charges                   | 5,875                   | 1,582
Other non-cash charges                        | —                       | 244
                                              | $17,411                 | $4,172

Americas 2019 Exit Plan
 first quarter 2019 Company initiated restructuring plan operating model U. agent attrition absenteeism. included closing centers consolidating leased space. management reorganization. finalized actions September 30, 2019.
 Americas 2018 Exit Plan
 second quarter 2018 initiated restructuring plan capacity utilization closing centers consolidating leased space U. Canada. finalized site closures December 31, 2018 reduction seats.
 actions Plans resulted cost savings lower depreciation expense.
 cumulative costs incurred cash non expenditures Plans December 31, 2019
 Included costs.
 salaries related.
 paid $12. 3 million cash December 31, 2019 $10. 4 million Americas 2018 Exit Plan $1. 9 million Americas 2019 Exit Plan.
 Americas 2018
 Lease obligations facility exit costs $7,073
 Severance 3,426
 Non-cash impairment charges 5,875
non-cash 244
 $17,411


iv. Details of the Remuneration for the year ended March 31, 2019:
a. Non-Executive Directors:
@ As a policy, N Chandrasekaran, Chairman, has abstained from receiving commission from the
Company.
@@ In line with the internal guidelines of the Company, no payment is made towards commission to
the Non-Executive Directors of the Company, who are in full time employment with any other Tata
company.
* Relinquished the position of Independent Director w.e.f. July 10, 2018.
** Relinquished the position of Independent Director w.e.f. September 28, 2018.
*** Appointed as an Additional and Independent Director w.e.f. December 18, 2018.
**** Appointed as an Additional and Independent Director w.e.f. January 10, 2019.

                             |            | (` lakh)
---------------------------- | ---------- | ------------
Name                         | Commission | Sitting Fees
N Chandrasekaran, Chairman@  | -          | 3.60
Aman Mehta                   | 315.00     | 4.80
V Thyagarajan*               | 100.00     | 3.00
Prof Clayton M Christensen** | 75.00      | 0.30
Dr Ron Sommer                | 220.00     | 5.10
O P Bhatt                    | 215.00     | 7.50
Aarthi Subramanian@@         | -          | 5.70
Dr Pradeep Kumar Khosla      | 150.00     | 2.10
Hanne Sorensen***            | 50.00      | 0.60
Keki Mistry***               | 50.00      | 0.60
Don Callahan****             | 35.00      | 0.30
Total                        | 1,210.00   | 33.60

. Remuneration year ended March 31, 2019
. Non-Executive Directors
 Chandrasekaran Chairman abstained receiving commission
 Company.
 no payment commission
 Non-Executive Directors full time employment
.
 Relinquished Independent Director. July 10, 2018.
 Relinquished Independent Director. September 28, 2018.
 Appointed Additional Independent Director. December 18, 2018.
 Additional Independent Director. January 10, 2019.
 Chandrasekaran Chairman.
 Aman Mehta 315.
 Thyagarajan 100.
 Clayton M 75.
 Ron Sommer 220.
 Bhatt 215.
 Aarthi Subramanian@@.
 Pradeep Kumar 150.
 Sorensen***.
 Keki Mistry***.
 Don Callahan**** 35.
 1,210.


Adjusted cash flow
A reconciliation showing the items that bridge between net cash from operating activities as reported under IFRS to an adjusted basis is given below. Adjusted cash from operations is used by the Board to monitor the performance of the Group, with a focus on elements of cashflow, such as Net capital expenditure, which are subject to day to day control by the business.
Adjusted cash conversion in 2019 is 84% (2018: 91%). Cash conversion is calculated as adjusted cash from operations divided by adjusted operating profit.
The adjusted cash flow is included in the Financial Review on page 58.

                                                                         | 2019   | 2018
------------------------------------------------------------------------ | ------ | ------
                                                                         | £m     | £m
Net cash from operating activities as reported under IFRS                | 227.4  | 212.6
Acquisition and disposal costs                                           | 2.5    | 0.2
Net capital expenditure excluding acquired intangibles from acquisitions | (59.0) | (31.5)
Tax paid                                                                 | 78.4   | 61.6
Repayments of principal under lease liabilities                          | (11.2) | –
Adjusted cash from operations                                            | 238.1  | 242.9

Adjusted cash flow
 reconciliation net cash operating activities IFRS adjusted basis. Board performance Group focus Net capital expenditure control business.
 cash conversion 2019 84% (2018 91%). divided profit.
 Financial Review page 58.
 Net cash operating activities IFRS 227. 212.
 Acquisition disposal costs 2.
 Net capital expenditure excluding acquired intangibles (59. (31.
 Tax paid 78. 61.
 Repayments principal lease liabilities.
 Adjusted cash operations 238. 242.


Cash Flows
The following table sets forth selected consolidated cash flow information (in thousands):
Operating Activities Net cash provided by operating activities during the fiscal year ended August 31, 2019 was primarily due to increased accounts payable, accrued expenses and other liabilities, decreased inventories and non-cash expenses, partially offset by increased contract assets and accounts receivable. The increase in accounts payable, accrued expenses and other liabilities is primarily due to the timing of collections on accounts receivable sold under the securitization programs and the timing of purchases and cash payments. The decrease in inventories is primarily due to the adoption of ASU 2014-09 and the reclassification to contract assets for revenue recognized for over time customers, partially offset by an increase in inventories to support expected sales levels in the first quarter of fiscal year 2020. The increase in contract assets is due to the adoption of ASU 2014-09 and the timing of revenue recognition for over time customers. The increase in accounts receivable is primarily driven by the amended and new securitization programs and higher sales and timing of collections.
Investing Activities Net cash used in investing activities during the fiscal year ended August 31, 2019 consisted primarily of capital expenditures principally to support ongoing business in the DMS and EMS segments and expenditures for assets acquired in connection with the initial and second closings of the acquisition of certain assets of JJMD, partially offset by proceeds and advances from the sale of property, plant and equipment and cash receipts on sold receivables under the asset-backed securitization programs.
Financing Activities Net cash used in financing activities during the fiscal year ended August 31, 2019 was primarily due to: (i) payments for debt agreements, (ii) the repurchase of our common stock, (iii) dividend payments and (iv) treasury stock minimum tax withholding related to vesting of restricted stock. Net cash used in financing activities was partially offset by: (i) borrowings under debt agreements and (ii) net proceeds from the exercise of stock options and issuance of common stock under the employee stock purchase plan.

                                                             |            | Fiscal Year Ended August 31, |
------------------------------------------------------------ | ---------- | ---------------------------- | ------------
                                                             | 2019       | 2018                         | 2017
Net cash provided by (used in) operating activities          | $1,193,066 | $(1,105,448)                 | $(1,464,085)
Net cash (used in) provided by investing activities          | (872,454)  | 1,240,914                    | 2,141,263
Net cash used in financing activities                        | (415,772)  | (47,044)                     | (404,546)
Effect of exchange rate changes on cash and cash equivalents | 554        | (20,392)                     | 5,228
Net (decrease) increase in cash and cash equivalents         | $(94,606)  | $68,030                      | $277,860

Cash Flows
 table consolidated cash flow information
 Operating Activities cash August 2019 due increased accounts payable accrued expenses liabilities decreased inventories non-cash expenses offset increased contract assets accounts receivable. increase due timing collections securitization programs purchases cash payments. decrease inventories due ASU 2014-09 reclassification contract assets offset increase inventories sales quarter 2020. increase contract assets due ASU 2014-09 timing revenue time. increase accounts receivable driven securitization programs higher sales timing collections.
 Investing Activities cash capital expenditures expenditures assets acquired offset proceeds sale property plant equipment cash receipts receivables-backed securitization programs.
 Financing Activities cash due to payments debt agreements repurchase common stock dividend payments treasury stock minimum tax withholding restricted stock. offset by borrowings debt agreements proceeds from stock options issuance common stock employee stock purchase plan.
Fiscal Year Ended August 31,
 cash operating $1,193,066 $(1,105,448,464,085)
 investing (872,454 1,240,914 2,141,263
 financing (415,772 (47,044 (404,546)
 exchange rate cash equivalents,392 5,228
 $(94,606 $68,030 $277,860


Autodesk applies fair value accounting for certain financial assets and liabilities, which consist of cash equivalents, marketable securities, and other financial instruments, on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and (Level 3) unobservable inputs for which there is little or no market data, which require Autodesk to develop its own assumptions. When determining fair value, Autodesk uses observable market data and relies on unobservable inputs only when observable market data is not available. Autodesk reviews for any potential changes on a quarterly basis, in conjunction with our fiscal quarter-end close.
Autodesk's cash equivalents, marketable securities, and financial instruments are primarily classified within Level 1 or Level 2 of the fair value hierarchy. Autodesk values its securities on pricing from pricing vendors, who may use quoted prices in active markets for identical assets (Level 1) or inputs other than quoted prices that are observable either directly or indirectly in determining fair value (Level 2). Autodesk's Level 2 securities are valued primarily using observable inputs other than quoted prices in active markets for identical assets and liabilities. Autodesk's Level 3 securities consist of investments held in convertible debt securities, and derivative contracts.
A reconciliation of the change in Autodesk’s Level 3 items for the fiscal year ended January 31, 2019 was as follows:
(1) Included in “Interest and other expense, net” in the accompanying Consolidated Statements of Operations.

                                        |                      | Fair Value Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
--------------------------------------- | -------------------- | ---------------------------------------------------------------------------------- | -----
                                        | Derivative Contracts | Convertible Debt Securities                                                        | Total
Balances, January 31, 2018              | $1.0                 | $7.8                                                                               | $8.8
Settlements                             | —                    | (3.5)                                                                              | (3.5)
(Losses) Gains included in earnings (1) | (0.2)                | 0.5                                                                                | 0.3
Losses included in OCI                  | —                    | (0.4)                                                                              | (0.4)
Balances, January 31, 2019              | $0.8                 | $4.4                                                                               | $5.2

Autodesk applies fair value accounting for financial assets liabilities cash equivalents marketable securities financial instruments recurring. defines fair value as price received from selling liability in transaction between market participants. Fair value estimated hierarchy prioritizes inputs into three levels lowest level input 1) observable inputs quoted prices in active markets 2) inputs other 3) unobservable inputs little no market data assumptions. uses observable market data relies on unobservable inputs when. reviews changes quarterly fiscal quarter-end.
 cash equivalents marketable securities financial instruments classified within Level 1 or 2 fair value hierarchy. values securities on pricing from vendors quoted prices. Level 2 securities valued using observable inputs active markets. Level 3 securities investments in convertible debt securities derivative contracts.
 reconciliation of change in Autodesk’s Level 3 items for fiscal year ended January 31, 2019
expense Consolidated Statements Operations.
 Fair Value Measurements Inputs 3)
 Contracts Convertible Debt Securities
 Balances January 31, 2018 $1. $7. 8 $8.
 Settlements (3.
 Gains earnings.
 Losses OCI.
 Balances January 31, 2019 $0. 8 $4. 4 $5.


Provision for Income Taxes: Our effective income tax rates for each of the periods presented were the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. In fiscal 2018, the Tax Act was signed into law. The more significant provisions of the Tax Act as applicable to us are described above under “Impacts of the U.S. Tax Cuts and Jobs Act of 2017”. refer to Note 14 of Notes to Consolidated Financial Statements included elsewhere in this Annual report for a discussion regarding the differences between the effective income tax rates as presented for the periods below and the U.S. federal statutory income tax rates that were in effect during these periods. Future effective income tax rates could be adversely affected by an unfavorable shift of earnings weighted to jurisdictions with higher tax rates, by unfavorable changes in tax laws and regulations, by adverse rulings in tax related litigation, or by shortfalls in stock-based compensation realized by employees relative to stock-based compensation that was recorded for book purposes, among others.
Provision for income taxes decreased in fiscal 2019 relative to fiscal 2018 primarily due to the absence of the initial accounting charges related to the Tax Act that were recorded in fiscal 2018. To a lesser extent, provision for income taxes also decreased in fiscal 2019 due to the net favorable impacts of our final accounting for the Tax Act in fiscal 2019; the net favorable impacts of the Tax Act on our tax profile during fiscal 2019; the favorable impact of a tax benefit arising from an increase in a deferred tax asset associated with a partial realignment of our legal structure in fiscal 2019; and lower income before provision for income taxes in fiscal 2019. These decreases to our provision for income taxes in fiscal 2019 relative to fiscal 2018 were partially offset both by lower excess tax benefits related to stock-based compensation expense in fiscal 2019, and by less favorable changes in net unrecognized tax benefits due to settlements with tax authorities and other events in fiscal 2019 relative to fiscal 2018.

                           |        |        | Year Ended May 31, |
-------------------------- | ------ | ------ | ------------------ | ------
                           |        |        | Percent Change     |
(Dollars in millions)      | 2019   | Actual | Constant           | 2018
Provision for income taxes | $1,185 | -87%   | -86%               | $8,837
Effective tax rate         | 9.7%   |        |                    | 71.1%

Income Taxes effective income tax rates income tax jurisdictions. fiscal 2018 Tax Act signed into law. significant provisions under “Impacts of U. S. Tax Cuts and Jobs Act of 2017”. refer to Note 14 Consolidated Financial Statements differences between effective income tax rates U. federal statutory income tax rates. Future income tax rates could affected by shift earnings higher tax rates unfavorable changes tax laws regulations adverse rulings tax litigation shortfalls stock-based compensation.
 Provision income taxes decreased fiscal 2019 due initial accounting charges Tax Act. decreased due to net favorable impacts final accounting Tax Act Tax Act tax profile tax benefit increase deferred tax asset realignment legal structure lower income before provision income taxes. decreases offset by lower excess tax benefits stock-based compensation expense less favorable changes in net unrecognized tax benefits due to settlements tax authorities events.
 Year Ended May 31,
 Percent Change
millions 2019
 income taxes $1,185 -87% $8,837
 tax rate. 7%. 1%


Original Equipment Manufacturers (“OEM”) are the end-customers to which we provide direct marketing application engineering support, while Distribution customers refers to the distributors and representatives that we engage to distribute our products around the world.
Our revenues weight in Distribution registered a decrease of 5 percentage point compared to 2018, reaching a 30% share of total revenues in 2019. In 2018 as compared to 2017, our revenues weight in Distribution registered an increase of 1 percentage point.

             | Year Ended December 31,         | Year Ended December 31,         | Year Ended December 31,
------------ | ------------------------------- | ------------------------------- | -------------------------------
             | 2019                            | 2018                            | 2017
             | (As percentage of net revenues) | (As percentage of net revenues) | (As percentage of net revenues)
OEM          | 70%                             | 65%                             | 66%
Distribution | 30                              | 35                              | 34
Total        | 100%                            | 100%                            | 100%

Original Equipment Manufacturers end-customers direct marketing engineering support Distribution customers distributors representatives products.
 revenues Distribution 5 2018 30% share total revenues 2019. 2018 2017 revenues Distribution increase 1 percentage point.
 Year Ended December 31,
 2019 2018 2017
 percentage net revenues
 OEM  70% 65%  66%
 Distribution 30  35  34
 Total 100%


Share-Based Payment Expense
The expense recognised for employee services received during the year is as follows:
The cash-settled expense comprises cash-based awards together with certain social security taxes. The carrying value of the liability as at 31 March 2019 was $1.6M (2018: $3.1M).

                                  | Year-ended 31 March 2019 | Year-ended 31 March 2018
--------------------------------- | ------------------------ | ------------------------
                                  | $M                       | $M
Cash-settled transactions         | 1.9                      | 2.7
Equity-settled transactions       | 35.0                     | 39.6
Total share-based payment expense | 36.9                     | 42.3

Share-Based Payment Expense
 employee services
 awards social security taxes. value liability 31 March 2019 $1. 6M $3. 1M.
 Year-ended 31 2019 2018
 Cash-settled transactions.
 Equity-settled transactions.
 share-based payment expense 36. 42.