Proofpoint, Inc. Notes to Consolidated Financial Statements (Continued) (dollars and share amounts in thousands, except per share amounts)
Per the terms of the share purchase agreement, unvested stock options and unvested restricted stock units held by Meta Networks employees were canceled and exchanged for the Company’s unvested stock options and unvested restricted stock units, respectively. The fair value of $184 of these unvested awards was attributed to pre-combination services and was included in consideration transferred. The fair value of $12,918 was allocated to post-combination services. The unvested awards are subject to the recipient’s continued service with the Company, and $12,918 will be recognized ratably as stock-based compensation expense over the required remaining service period.
Also, as part of the share purchase agreement, the unvested restricted shares of certain employees of Meta Networks were exchanged into the right to receive $7,827 of deferred cash consideration and 72 shares of the Company’s common stock that were deferred with the fair value of $8,599. The deferred cash consideration was presented as restricted cash on the Company’s consolidated balance sheet as of December 31, 2019. The deferred cash consideration of $7,596 and the deferred stock $8,338 (see Note 11 “Equity Award Plans”) were allocated to post-combination expense and were not included in the purchase price. The deferred cash consideration and deferred shares are subject to forfeiture if employment terminates prior to the lapse of the restrictions, and their fair value is expensed as compensation and stock-based compensation expense over the three-year vesting period.
The Cost to Recreate Method was used to value the acquired developed technology asset. Management applied judgment in estimating the fair value of this intangible asset, which involved the use of significant assumptions such as the cost and time to build the acquired technology, developer’s profit and rate of return.
The following table summarizes the fair values of tangible assets acquired, liabilities assumed, intangible assets and goodwill:

                            | Fair value | Estimated Useful Life
--------------------------- | ---------- | ---------------------
                            |            | (in years)
Current assets              | $356       | N/A
Fixed assets                | 68         | N/A
Core/developed technology   | 21,000     | 3
Deferred tax liability, net | (1,854)    | N/A
Other liabilities           | (671)      | N/A
Goodwill                    | 85,869     | Indefinite
                            | $104,768   |

Proofpoint, Inc. Financial Statements (dollars share amounts thousands
 share purchase agreement unvested stock options restricted stock units Meta Networks employees canceled exchanged for units. value $184 pre-combination services. $12,918 post-combination services. subject service $12,918 recognized stock-based compensation expense service.
 unvested shares exchanged into $7,827 deferred cash consideration 72 shares common stock deferred fair value $8,599. deferred cash restricted cash consolidated balance sheet December 31, 2019. $7,596 stock $8,338 post-combination expense not included purchase price. shares subject to forfeiture employment terminates fair value expensed as compensation stock-based compensation three-year vesting period.
 Cost to Recreate Method acquired technology asset. cost time developer’s profit rate return.
 table summarizes fair values assets acquired liabilities assumed intangible assets goodwill
value
 assets $356
 Fixed assets 68
 technology 21,000
 Deferred tax liability (1,854)
 liabilities (671)
 Goodwill 85,869 Indefinite
 $104,768


GasLog Ltd. and its Subsidiaries
Notes to the consolidated financial statements (Continued)
For the years ended December 31, 2017, 2018 and 2019
(All amounts expressed in thousands of U.S. Dollars, except share and per share data)
29. Earnings/(losses) per share (‘‘EPS’’)
Basic earnings/(losses) per share was calculated by dividing the profit/(loss) for the year attributable to the owners of the common shares after deducting the dividend on Preference Shares by the weighted average number of common shares issued and outstanding during the year.
Diluted EPS is calculated by dividing the profit/(loss) for the year attributable to the owners of the Group adjusted for the effects of all dilutive potential ordinary shares by the weighted average number of all potential ordinary shares assumed to have been converted into common shares, unless such potential ordinary shares have an antidilutive effect.
The following reflects the earnings/(losses) and share data used in the basic and diluted earnings/ (losses) per share computations:
The Group excluded the effect of 2,630,173 SARs and 367,162 RSUs in calculating diluted EPS for the year ended December 31, 2019, as they were anti-dilutive (December 31, 2018: 555,453 SARs and 0 RSUs, December 31, 2017: 998,502 SARs and 0 RSUs).

                                                                                |            | For the year ended December 31, |
-------------------------------------------------------------------------------------------------- | ---------- | ------------------------------- | ----------
                                                                                | 2017       | 2018                            | 2019
Basic earnings/(loss) per share                                                                    |            |                                 |
Profit/(loss) for the year attributable to owners of the Group                                     | 15,506     | 47,683                          | (100,661)
Less: Dividends on Preference Shares                                                               | (10,064)   | (10,063)                        | (10,063)
Profit/(loss) for the year available to owners of the Group                                        | 5,442      | 37,620                          | (110,724)
Weighted average number of shares outstanding, basic                                               | 80,622,788 | 80,792,837                      | 80,849,818
Basic earnings/(loss) per share                                                                    | 0.07       | 0.47                            | (1.37)
Diluted earnings/(loss) per share                                                                  |            |                                 |
Profit/(loss) for the year available to owners of the Group used in the calculation of diluted EPS | 5,442      | 37,620                          | (110,724)
Weighted average number of shares outstanding, basic                                               | 80,622,788 | 80,792,837                      | 80,849,818
Dilutive potential ordinary shares                                                                 | 643,342    | 844,185                         | —
Weighted average number of shares used in the calculation of diluted EPS                           | 81,266,130 | 81,637,022                      | 80,849,818
Diluted earnings/(loss) per share                                                                  | 0.07       | 0.46                            | (1.37)

GasLog Ltd. Subsidiaries
 consolidated financial statements
 years December 31, 2017 2018 2019
 amounts U. S. Dollars except data
. Earnings/(losses) per share
 calculated profit/(loss dividend Preference Shares average common shares issued.
 Diluted EPS calculated profit/(loss) adjusted dilutive shares average antidilutive.
 earnings data
 Group excluded 2,630,173 SARs,162 RSUs diluted EPS December 31, 2019 anti-dilutive 31, 2018: 555,453 SARs 0 RSUs December 31, 2017: 998,502 SARs 0 RSUs.
 year December 31,
 2017 2018 2019
 Basic earnings/(loss) per share
 owners Group 15,506 47,683 (100,661)
 Dividends Preference Shares (10,064)
 Profit/(loss) owners 5,442 37,620 (110,724)
shares 80,622,788 80,792,837 80,849,818
 earnings. 07. 47.
 Diluted earnings
 Profit owners EPS 5,442 37,620 (110,724)
 80,622,788 80,792,837 80,849,818
 ordinary shares 643,342 ,185
 81,266,130 81,637,022  80,849,818
 Diluted earnings(loss share. 07. 46. 37


16. Quarterly Financial Data: (unaudited, amount in thousands, except per share data):
During the Company's second quarter of fiscal 2019 and second quarter of fiscal 2018, we recorded $2.3 million and $80.8 million, respectively, primarily related to the legal settlement of several antitrust claims against the Company. Also during the second quarter of fiscal 2018, the Tax Cuts and Jobs Act of 2017 was enacted. This resulted in an initial revaluation of our deferred tax liabilities during the third quarter which favorably impacted our results by $35.0 million. In the fourth quarter of fiscal 2018, we completed our analysis of the Act and recorded additional tax benefit of $8.0 million.

                                                        | Fiscal Year 2019 |                |               |
------------------------------------------------------- | ---------------- | -------------- | ------------- | --------------
                                                        | First Quarter    | Second Quarter | Third Quarter | Fourth Quarter
Net sales                                               | $340,583         | $356,040       | $383,993      | $280,572
Gross profit                                            | 57,128           | 70,535         | 82,441        | 12,755
Net income (loss) attributable to Cal-Maine Foods, Inc. | 12,406           | 21,807         | 39,777        | (19,761)
Net income (loss) per share:                            |                  |                |               |
Basic                                                   | $0.26            | $0.45          | $0.82         | $(0.41)
Diluted                                                 | $0.26            | $0.45          | $0.82         | $(0.41)
                                                        | Fiscal Year 2018 |                |               |
                                                        | First Quarter    | Second Quarter | Third Quarter | Fourth Quarter
Net sales                                               | $262,845         | $361,172       | $435,820      | $443,095
Gross profit                                            | 17,336           | 82,396         | 120,098       | 141,216
Net income (loss) attributable to Cal-Maine Foods, Inc. | (15,993)         | (26,136)       | 96,294        | 71,767
Net income (loss) per share:                            |                  |                |               |
Basic                                                   | $(0.33)          | $(0.54)        | $1.99         | $1.48
Diluted                                                 | $(0.33)          | $(0.54)        | $1.99         | $1.48

. Quarterly Financial Data
 2019 2018 recorded $2. 3 million $80. 8 million settlement antitrust claims. Tax Cuts Jobs Act 2017 enacted. deferred tax liabilities impacted results $35. million. fourth quarter 2018 additional tax benefit $8. million.
 Fiscal Year 2019
 First Second Fourth Quarter
 Net sales $340,583 $356,040 $383,993 $280,572
 Gross profit 57,128 70,535 82,441 12,755
 Net income Cal-Maine Foods. 12,406 21,807 39,777 (19,761)
 per share
.
.
 Fiscal Year 2018
 First Second Third Fourth Quarter
 Net sales $262,845 $361,172 $435,820 $443,095
 Gross profit 17,336 82,396 120,098 141,216
 Cal-Maine Foods.(15,993) (26,136) 96,294 71,767
 Net income per share
. 33). 54) $1. 99.
. 33. 54.


FLNG segment
Total operating revenues: On May 31, 2018, the Hilli was accepted by the Customer and, accordingly, commenced operations. As a result, she generated $127.6 million total operating revenues in relation to her liquefaction services for the year ended December 31, 2018.
Vessel operating expenses: This represents the vessel operating expenses incurred by the Hilli since she commenced operations.
Project development expenses: This relates to non-capitalized project-related expenses comprising of legal, professional and consultancy costs. The increase for the twelve months ended December 31, 2018 was primarily as a result of increased engineering consultation fees and front-end engineering and design costs in relation to the Gimi GTA project.
Depreciation: Subsequent to the Customer's acceptance of the Hilli, we determined her to be operational and, therefore, depreciation commenced during the second quarter of 2018.
Other operating gains: Includes the realized and unrealized gain on the oil derivative instrument. In 2018, we recognized a realized gain of $26.7 million, and an unrealized fair value loss of $10.0 million, relating to the LTA oil derivative instrument as a result of the increased price of Brent Crude during the year. The derivative asset was recognized upon the LTA becoming effective in December 2017. In 2017, we recognized an unrealized fair value gain of $15.1 million.
For the year ended December 31, 2018, this is partially offset by a $1.3 million write off of capitalized conversion costs in relation to the Gandria. In addition, subsequent to the decision to wind down OneLNG, we wrote off $12.7 million of the trading balance with OneLNG as we deem it to be no longer recoverable.
Equity in net losses of affiliates: Pursuant to the formation of OneLNG in July 2016, we equity account for our share of net losses in OneLNG. Given the difficulties in finalizing an attractive debt financing package along with other capital and resource priorities, in April 2018, Golar and Schlumberger decided to wind down OneLNG and work on FLNG projects as required on a case-by-case basis. As a result, activity levels have been substantially reduced for the year ended December 31, 2018 and the carrying value of the investment was written down to $nil.

                                   |          | December 31, |          |
---------------------------------- | -------- | ------------ | -------- | ----------
(in thousands of $)                | 2018     | 2017         | Change   | % Change
Total operating revenues           | 127,625  | —            | 127,625  | 100%
Vessel operating expenses          | (26,317) | (2)          | (26,315) | 1,315,750%
Voyage expenses                    | (1,363)  | (121)        | (1,242)  | 1,026%
Administrative expenses            | 175      | (1,736)      | 1,911    | (110)%
Project development expenses       | (16,526) | (2,506)      | (14,020) | 559%
Depreciation and amortization      | (28,193) | —            | (28,193) | 100%
Other operating gains              | 2,749    | 15,100       | (12,351) | (82)%
Operating income                   | 58,150   | 10,735       | 47,415   | 442%
Equity in net losses of affiliates | (2,047)  | (8,153)      | 6,106    | (75)%

FLNG segment
 revenues May 31, 2018 Hilli accepted commenced operations. generated $127. 6 million revenues services December 31, 2018.
 Vessel operating expenses Hilli.
 Project development expenses non-capitalized expenses legal professional consultancy costs. increase 2018 increased engineering consultation design costs Gimi GTA project.
 Depreciation acceptance Hilli depreciation commenced second quarter 2018.
 operating gains realized unrealized gain oil derivative instrument. 2018 realized gain $26. 7 million unrealized fair value loss $10. 0 million oil derivative instrument increased price Brent Crude. December 2017. unrealized fair value gain $15. 1 million.
 December 31, 2018 offset $1. 3 million write off conversion costs Gandria. OneLNG wrote off $12. 7 million trading balance.
 Equity net losses affiliates net losses. April 2018 Golar Schlumberger down OneLNG FLNG projects.activity reduced December 31, 2018 carrying value investment $nil.
 December
 2018 2017
 operating revenues 127,625 100%
 Vessel operating expenses (26,317) 1,315,750%
 Voyage expenses (1,363 1,026%
 Administrative expenses
 Project development expenses (16,526) (2,506) 559%
 Depreciation amortization (28,193) 100%
 operating gains 2,749
 Operating income 58,150 10,735 47,415 442%
 Equity net losses affiliates (2,047)


9.2. Trade and other receivables
Classification as trade and other receivables
Trade receivables are amounts due from customers for rental income, goods sold or services performed in the ordinary course of business. Loans and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
The allowance for expected credit losses represents an estimate of receivables that are not considered to be recoverable. For the year ended 30 June 2019 the Group has recognised an expected loss provision following the adoption of AASB 9 Financial Instruments. The Group recognises a loss allowance based on lifetime expected credit losses at each reporting date.
The Group assesses this allowance based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors. At 30 June 2018, the Group recognised a provision for trade receivables relating to receivables acquired on the purchase of investment properties where there are specific risks around recoverability.

                                     |       | 2019   | 2018
------------------------------------ | ----- | ------ | ------
                                     | Notes | $'000  | $'000
Current                              |       |        |
Trade receivables                    |       | 3,770  | 3,054
Allowance for expected credit losses |       | (135)  | (23)
                                     |       | 3,635  | 3,031
Other receivables                    |       | 4,223  | 4,082
Receivables from related parties     | 17    | 11,880 | 8,039
                                     |       | 19,738 | 15,152
Non-current                          |       |        |
Other receivables                    |       | 118    | 601
Total current and non-current        |       | 19,856 | 15,753

. Trade receivables
 due rental income goods services. non assets fixed payments not quoted active market. collection expected one year or less current. non-current.
 allowance expected credit losses estimate receivables not recoverable. year 30 June 2019 Group recognised expected loss provision AASB 9 Financial Instruments. recognises loss allowance lifetime expected credit losses date.
 assesses allowance historical credit loss experience adjusted forward-looking factors. 30 June 2018 recognised provision trade receivables investment properties risks recoverability.
 Trade receivables 3,770 3,054
 Allowance expected credit losses
 3,635 3,031
 Other receivables 4,223,082
 11,880 8,039
 19,738 15,152
 Non-current
 Total current non-current 19,856 15,753


Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable consists primarily of amounts due to the Company from normal business activities. We maintain an allowance for doubtful accounts for estimated losses that result from the inability of our customers to make required payments.
The allowance for doubtful accounts is maintained based on customer payment levels, historical experience and management’s views on trends in the overall receivable agings. In addition, for larger accounts, we perform analyses of risks on a customer-specific basis. We perform ongoing credit evaluations of our customers’ financial condition and management believes that an adequate allowance for doubtful accounts has been provided.
Uncollectible accounts are removed from accounts receivable and are charged against the allowance for doubtful accounts when internal collection efforts have been unsuccessful. The following table summarizes the activity in allowance for doubtful accounts for the years ended December 31, 2019, 2018 and 2017:

                                         |         | Year Ended December 31, |
---------------------------------------- | ------- | ----------------------- | -------
(In thousands)                           | 2019    | 2018                    | 2017
Balance at beginning of year             | $4,421  | $6,667                  | $2,813
Provision charged to expense             | 9,347   | 8,793                   | 7,072
Write-offs, less recoveries              | (9,219) | (11,039)                | (6,516)
Acquired allowance for doubtful accounts | —       | —                       | 3,298
Balance at end of year                   | $4,549  | $4,421                  | $6,667

Accounts Receivable Allowance Doubtful Accounts
 due. allowance doubtful accounts losses payments.
 payment levels experience trends receivable. customer-specific. credit evaluations adequate allowance doubtful accounts.
 Uncollectible accounts removed charged against allowance collection unsuccessful. table activity allowance doubtful accounts years December 31, 2019 2018 2017:
 2017
 Balance beginning year $4,421 $6,667 $2,813
 Provision charged expense 9,347 8,793 7,072
 Write-offs less recoveries (9,219) (11,039) (6,516)
 Acquired allowance doubtful accounts 3,298
 Balance end year $4,549 $4,421 $6,667


Stock purchase warrants
Prior to the 2019 Brookfield Transaction, Teekay held 15.5 million common unit warrants (or the Brookfield Transaction Warrants) issued by Altera to Teekay in connection with the 2017 Brookfield Transaction (see Note 4) and 1,755,000 warrants to purchase common units of Altera issued to Teekay in connection with Altera's private placement of Series D Preferred Units in June 2016 (or the Series D Warrants). In May 2019, Teekay sold to Brookfield all of the Company’s remaining interests in Altera, which included, among other things, both the Brookfield Transaction Warrants and Series D Warrants.
Changes in fair value during the years ended December 31, 2019 and 2018 for the Company’s Brookfield Transaction Warrants and the Series D Warrants, which were measured at fair value using significant unobservable inputs (Level 3), are as follows:

                                            | Year Ended December 31, |
------------------------------------------- | ----------------------- | --------
                                            | 2019                    | 2018
                                            | $                       | $
Fair value at the beginning of the year     | 12,026                  | 30,749
Fair value on acquisition/issuance          | —                       | 2,330
Unrealized gain (loss) included in earnings | 26,900                  | (21,053)
Realized loss included in earnings          | (25,559)                | —
Settlements                                 | (13,367)                | —
Fair value at the end of the year           | —                       | 12,026

Stock purchase warrants
 2019 Brookfield Transaction Teekay held 15. 5 million unit warrants Altera 2017 Brookfield 1,755,000 warrants Altera Series D Preferred Units 2016. May 2019 Teekay sold Brookfield interests Altera Brookfield Transaction Warrants Series D Warrants.
 Changes fair value December 31, 2019 2018 Brookfield Transaction Warrants Series D Warrants
 December
 Fair value 12,026 30,749
 acquisition/issuance 2,330
 Unrealized gain earnings 26,900 (21,053)
 Realized loss (25,559
 Settlements (13,367)
 value end year 12,026


14. SHAREHOLDERS’ EQUITY
Authorized, issued and outstanding common shares roll-forward is as follows:
In December 2017, the Company completed an underwritten public offering of 40,000,000 common shares which increased its equity by $103.7 million.
In December 2018, the Annual General Meeting of the Company approved to increase the Company’s authorized share capital from $1.8 million to $3.6 million.
During 2019, the Company has issued 5,260,968 shares through the ATM program and raised net proceeds of $17.9 million.

                                                | Authorized
Shares | Issued and Out-
standing Shares | Common Stock
----------------------------------------------- | ----------------- | ------------------------------- | ------------
Balance as of January 1, 2017                   | 180,000,000       | 101,969,666                     | 1,020
Common Shares Issued in Follow-on Offering      | -                 | 40,000,000                      | 400
Balance as of December 31, 2017                 | 180,000,000       | 141,969,666                     | 1,420
Authorization of additional authorized shares   | 180,000,000       | -                               | -
Balance as of December 31, 2018                 | 360,000,000       | 141,969,666                     | 1,420
At-the-Market Offering                          | -                 | 5,260,968                       | 52
Balance as of December 31, 2019                 | 360,000,000       | 147,230,634                     | 1,472

. SHAREHOLDERS’ EQUITY
 shares
 2017 public offering 40,000,000 shares increased equity $103. million.
 2018 Annual General Meeting share capital $1. million $3. 6 million.
 issued 5,260,968 shares raised net proceeds $17. 9 million.
 Balance January 1 2017 180,000,000 101,969,666 1,020
 Shares
 December 31, 2017 180,000,000 141,969,666
 December 31, 2018 360,000,000 141,969,666
 Offering 5,260,968
 December 31, 2019 360,000,000 147,230,634


The income tax (benefit) provision was charged to continuing operations or accumulated other comprehensive income (loss) as follows:
Prior year balances related to deferred tax assets and liabilities have been recast to net the federal effect of state taxes with the specific deferred tax asset or liability to which it relates

Year Ended December 31,                       |         |      |
--------------------------------------------- | ------- | ---- | ------
(dollars in millions)                         | 2019    | 2018 | 2017
Income tax (benefit) provision related to:    |         |      |
Continuing operations                         | $(10.6) | $9.4 | $26.7
Accumulated other comprehensive income (loss) | 0.2     | 1.3  | (28.3)

income tax (benefit charged operations income
 Prior year balances deferred tax assets liabilities recast federal state taxes deferred tax asset
 Ended December 31,
 millions 2019 2018 2017
 Income tax (benefit
 operations $(10. 6) $9. $26.
 Accumulated income (loss.


ANG's revenues are principally derived from sales of compressed natural gas. ANG recognizes revenue from the sale of natural gas fuel primarily at the time the fuel is dispensed.
In December 2019, the U.S. Congress passed an alternative fuel tax credit ("AFTC") which will continue to support the use of natural gas. The AFTC is retroactive beginning January 2018 and extends through 2020.
The legislation extends the $0.50 per gallon fuel credit/payment for the use of natural gas as a transportation fuel, and the Alternative Fuel Vehicle Refueling Property Credit, which extends the 30 percent/$30,000 investment tax credit for alternative vehicle refueling property. Net revenue after customer rebates for such credits recognized in 2019 was $10.6 million.
As a result of the Bipartisan Budget Act of 2018, signed into law on February 9, 2018, all AFTC revenue for vehicle fuel ANG sold in 2017 was collected in the second quarter of 2018. Net revenue after customer rebates for such credits recognized in 2018 was $2.6 million.
Disaggregation of Revenues The following table disaggregates ANG's revenue by type (in millions):

                                            | Years Ended December 31, |
------------------------------------------- | ------------------------ | ------
                                            | 2019                     | 2018
Volume-related                              | $ 27.5                   | $ 16.5
Maintenance services                        | 0.1                      | 0.1
Total revenue from contracts with customers | 27.6                     | 16.6
RNG incentives                              | 0.5                      | 1.3
Alternative fuel tax credit                 | 10.6                     | 2.6
Other revenue                               | 0.3                      | 0.2
Total Energy segment revenue                | $ 39.0                   | $ 20.7

ANG revenues compressed natural gas. recognizes.
 December 2019. Congress passed alternative fuel tax credit. retroactive January 2018 extends 2020.
 extends $0. 50 per gallon fuel credit natural gas Alternative Fuel Vehicle Refueling Property Credit 30 percent/$30,000 investment tax credit. Net revenue after rebates 2019 $10. 6 million.
 Bipartisan Budget Act 2018 February 9 AFTC revenue fuel 2017 collected second quarter 2018. Net revenue after rebates 2018 $2. 6 million.
 ANG revenue by type
 December 31,
 Volume-related.
 Maintenance services.
 revenue contracts.
 RNG incentives.
 Alternative fuel tax credit.
 Other revenue.
 Energy segment revenue $ 39. $.


Revenue by Market The table below presents disaggregated net revenues by market (in thousands):
(1) Due to the adoption of ASC 606 on January 1, 2018 using the modified retrospective method, amounts prior to 2018 have not been adjusted to reflect the change to recognize certain distributor sales upon sale to the distributor, or the sell-in method, from recognition upon the Company's sale to the distributors' end customers, or the sellthrough method, which required the deferral of revenue and profit on such distributor sales.
Revenues from sales to the Company’s distributors accounted for 52%, 42% and 34% of net revenue for the years ended December 31, 2019, 2018 and 2017, respectively.

                            |          | Year Ended December 31, |
--------------------------- | -------- | ----------------------- | --------
                            | 2019     | 2018                    | 2017(1)
Connected home              | $152,674 | $207,336                | $288,610
% of net revenue            | 48%      | 54%                     | 69%
Infrastructure              | 85,369   | 82,388                  | 71,779
% of net revenue            | 27%      | 21%                     | 17%
Industrial and multi-market | 79,137   | 95,273                  | 59,929
% of net revenue            | 25%      | 25%                     | 14%
Total net revenue           | $317,180 | $384,997                | $420,318

Revenue Market table presents net revenues market
 adoption ASC 606 January 1, 2018 method amounts prior 2018 adjusted change distributor sales deferral revenue profit.
 Revenues distributors 52% 42% 34% net revenue years ended December 31, 2019 2018 2017.
 Connected home $152,674 $207,336 $288,610
 revenue 48% 54% 69%
 Infrastructure 85,369 82,388 71,779
 27% 21%
 Industrial multi-market 79,137 95,273 59,929
 25% 14%
 Total net revenue $317,180 $384,997 $420,318


Cash Flows
The following table summarizes our cash flows for the periods indicated:
Cash Flows from Operating Activities
Net cash used in operating activities of $156.8 million in 2019 was primarily due to a net loss of $320.7 million, as well as an increase in net operating assets and liabilities of $3.3 million, partially offset by total non-cash adjustments of $167.2 million. The increase in net operating assets and liabilities included a $21.3 million increase in accounts receivable primarily due to an increase in days sales outstanding, an $18.5 million increase in inventories primarily due to Fitbit Versa Lite Edition, Fitbit Inspire, Fitbit Inspire HR and Fitbit Versa 2, and a $22.9 million decrease in lease liabilities, partially offset by a $40.7 million net increase in accounts payable and accrued liabilities and other liabilities primarily related to higher rebates and promotional activities in the fourth quarter of 2019, a $15.1 million decrease in prepaid expenses and other assets, and a $4.0 million increase in deferred revenue. Our days sales outstanding in accounts receivable, calculated as the number of days represented by the accounts receivable balance as of period end, increased from 70 days as of December 31, 2018 to 74 days as of December 31, 2019, due to lower collections during the fourth quarter of 2019 compared to the fourth quarter of 2018. The $167.2 million total non-cash adjustments for 2019 included stock-based compensation expense of $77.7 million, depreciation and amortization expense of $62.8 million, and non-cash lease expense of $19.2 million.
Net cash used in operating activities was $156.8 million in 2019, compared to net cash provided by operating activities of $113.2 million in 2018, primarily due to a $134.9 million increase in net loss for 2019 compared to 2018, an increase of $126.0 million in change in net operating assets and liabilities compared to 2018 primarily related to a $72.2 million income tax refund received in 2018 and increases in accounts receivable and inventories in 2019, as well as a decrease of $9.1 million for non-cash adjustments to net loss in 2019 compared to 2018.
Cash Flows from Investing Activities
Net cash provided by investing activities for 2019 of $25.8 million was primarily due to maturities and sales of marketable securities of $414.7 million, partially offset by purchases of marketable securities of $347.6 million, purchases of property and equipment of $36.5 million, payment of $2.2 million for the cash portion of an acquisition, net of cash acquired, and acquisition-related holdback payments of $2.6 million.
Net cash provided by investing activities for 2018 of $17.5 million was primarily due to maturities and sales of marketable securities of $443.6 million, partially offset by purchases of marketable securities of $353.9 million, purchases of property and equipment of $52.9 million, payment of $13.6 million for the cash portion of an acquisition, net of cash acquired, and acquisition-related holdback payments of $5.6 million.
We may continue to use cash in the future to acquire businesses and technologies that enhance and expand our product offerings. Due to the nature of these transactions, it is difficult to predict the amount and timing of such cash requirements to complete such transactions. We may be required to raise additional funds to complete future acquisitions.
Cash Flows from Financing Activities
Net cash used in financing activities for 2019 of $8.4 million was primarily due to $18.2 million in net cash used for payment of taxes on common stock issued under our employee equity incentive plans and $2.7 million used for financing lease payments, offset in part by $13.0 million in proceeds from the exercise of stock options and from stock purchases made through our 2015 Employee Stock Purchase Plan, or 2015 ESPP.

                                        |            | Year Ended December 31, |
--------------------------------------- | ---------- | ----------------------- | --------
                                        | 2019       | 2018                    | 2017
                                        |            | (in thousands)          |
Net cash provided by (used in):         |            |                         |
Operating activities                    | $(156,832) | $113,207                | $64,241
Investing activities                    | 25,761     | 17,496                  | (28,718)
Financing activities                    | (8,406)    | 1,287                   | 4,635
Net change in cash and cash equivalents | $(139,477) | $131,990                | $40,158

Cash
 table summarizes cash flows
 Activities
 $156. 8 million 2019 due net loss $320. 7 million increase assets liabilities $3. 3 million offset non adjustments $167. 2 million. $21. 3 million increase accounts receivable sales $18. 5 million increase inventories Fitbit Versa Lite $22. 9 million decrease lease liabilities $40. 7 million increase accounts payable accrued liabilities rebates promotional activities $15. 1 million decrease prepaid expenses $4. million increase deferred revenue. sales increased 70 to 74 lower collections. $167. 2 million non-cash adjustments stock-based compensation expense $77. 7 million depreciation amortization expense $62. 8 million non-cash lease expense $19. 2 million.
 Net cash $156. 8 million 2019 $113. 2 million 2018 $134. 9 million increase net loss $126. million assets liabilities.2 million income tax refund 2018 increases accounts receivable inventories 2019 decrease $9. 1 million non-cash adjustments net loss.
 Cash Flows Investing Activities
 $25. 8 million due maturities sales $414. 7 million purchases $347. 6 million purchases property equipment $36. 5 million $2. 2 million-related holdback payments $2. 6 million.
 2018 $17. 5 million maturities sales $443. 6 million offset purchases $353. 9 million purchases property equipment $52. 9 million $13. 6 million acquisition holdback payments $5. 6 million.
 cash businesses. difficult predict. raise additional funds acquisitions.
 Cash Flows Financing Activities
 $8. 4 million $18. 2 million taxes common stock $2. 7 million financing lease payments offset $13. 0 million proceeds stock options purchases 2015 Employee Stock Purchase Plan.
 Ended December 31,
 2019 2018
cash
 Operating(156,832) $113,207 $64,241
 Investing 25,761 17,496 (28,718)
 Financing,406 4
(139,477 $131,990 $40,158


Expenditure on R&D
TCS Innovation Labs are located in India and other parts of the world. These R&D centers, as certified by Department of Scientific & Industrial Research (DSIR) function from Pune, Chennai, Bengaluru, Delhi- NCR, Hyderabad, Kolkata and Mumbai.
Expenditure incurred in the R&D centers and innovation centers during FY 2019 and FY 2018 are given below:

Expenditure on R&D and innovation                                   | Unconsolidated |         | Consolidated |
------------------------------------------------------------------- | -------------- | ------- | ------------ | -------
                                                                    | FY 2019        | FY 2018 | FY 2019      | FY 2018
a. Capital                                                          | 2              | -       | 2            | -
b. Recurring                                                        | 303            | 295     | 306          | 298
c. Total R&D expenditure (a+b)                                      | 305            | 295     | 308          | 298
d. Innovation center expenditure                                    | 1,285          | 1,079   | 1,352        | 1,202
e. Total R&D and innovation expenditure (c+d)                       | 1,590          | 1,374   | 1,660        | 1,500
f. R&D and innovation expenditure as a percentage of total turnover | 1.3%           | 1.4%    | 1.1%         | 1.2%

Expenditure R&D
 TCS Innovation Labs India. certified Pune Chennai Bengaluru Delhi Hyderabad Kolkata Mumbai.
 Expenditure R&D FY 2019 2018
 Expenditure R&D innovation Unconsolidated
 2019 2018
. Capital
. Recurring 303 295 306 298
. Total R&D expenditure 305 295 308 298
. Innovation center expenditure 1,285 1,079 1,352 1,202
. R&D innovation expenditure 1,590 1,374 1,660 1,500
. turnover. 3%. 4%.


Results of Operations
The following table sets forth the percentage of revenue for certain items in our statements of operations for the periods indicated:
Impact of inflation and product price changes on our revenue and on income was immaterial in 2019, 2018 and 2017.

Fiscal Years                           |        |        |
-------------------------------------- | ------ | ------ | ------
                                       | 2019   | 2018   | 2017
Statements of Operations:              |        |        |
Revenue                                | 100%   | 100%   | 100%
Cost of revenue                        | 43%    | 50%    | 55%
Gross profit                           | 57%    | 50%    | 45%
Operating expenses:                    |        |        |
Research and development               | 120%   | 79%    | 79%
Selling, general and administrative    | 86%    | 79%    | 81%
Loss from operations                   | (149)% | (108)% | (115)%
Interest expense                       | (3)%   | (1)%   | (1)%
Interest income and other expense, net | 2%     | 1%     | —%
Loss before income taxes               | (150)% | (108)% | (116)%
Provision for income taxes             | 1%     | 1%     | 1%
Net loss                               | (151)% | (109)% | (117)%

Results Operations
 table revenue items statements operations
 Impact inflation product price changes revenue income immaterial 2019 2018 2017.
 Fiscal Years
 Statements Operations
 Revenue 100%
 Cost revenue 43%
 Gross profit 57%
 Operating expenses
 Research development 120% 79%
 Selling general administrative 86%
 Loss operations (149)% (108) (115)
 Interest expense
 Loss before income taxes (150)% (108)
 Provision income taxes 1%
 Net loss (151)% (109)


Fair Value of Financial Instruments
The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis (in millions):
(1) Reported as other current assets in the consolidated balance sheets
(2) Reported as other non-current assets in the consolidated balance sheets
(3) Reported as accrued expenses in the consolidated balance sheets

                                                        |         | April 26, 2019                                  |
------------------------------------------------------- | ------- | ----------------------------------------------- | -------
                                                        |         | Fair Value Measurements at Reporting Date Using |
                                                        | Total   | Level 1                                         | Level 2
Cash                                                    | $ 2,216 | $  2,216                                        | $  —
Corporate bonds                                         | 1,353   | —                                               | 1,353
U.S. Treasury and government debt securities            | 213     | 131                                             | 82
Certificates of deposit                                 | 117     | —                                               | 117
Total cash, cash equivalents and short-term investments | $ 3,899 | $ 2,347                                         | $ 1,552
Other items:                                            |         |                                                 |
Mutual funds (1)                                        | $ 6     | $  6                                            | $  —
Mutual funds (2)                                        | $ 29    | $  29                                           | $  —
Foreign currency exchange contracts assets (1)          | $ 4     | $  —                                            | $ 4
Foreign currency exchange contracts liabilities (3)     | (1 )    | $  —                                            | (1 )

Fair Value Financial Instruments
 table summarizes financial assets liabilities measured fair value recurring
 current
 non-current assets
 accrued expenses
 April 26, 2019
 Fair Value Measurements Reporting Date
 Level 1 2
 Cash $ 2,216
 Corporate bonds 1,353
. Treasury government debt securities 213
 Certificates deposit 117
 cash equivalents short-term investments $ 3,899 $ 2,347  1,552
 Other items
 Mutual funds $ 6
 (2) $ 29
 Foreign currency exchange contracts assets $ 4
 currency exchange contracts liabilities


Sales and Marketing Expense
Sales and marketing expense increased by $22.6 million in 2018 compared to 2017. The increase was primarily due to a $20.0 million increase in employee- related costs, which includes stock-based compensation, associated with our increased headcount from 215 employees as of December 31, 2017 to 286 employees as of December 31, 2018. The remaining increase was principally the result of a $1.8 million increase in trade show and advertising costs and a $0.8 million increase attributed to office related expenses to support the sales team. The adoption of ASC 606 did not have a material impact on the change in commission expense when compared to year over year.

                    | Year Ended December 31, |                        | Change   |
------------------- | ----------------------- | ---------------------- | -------- | -----
                    | 2018                    | 2017                   | $        | %
                    |                         | (dollars in thousands) |          |
Sales and marketing | $ 69,608                | $ 46,998               | $ 22,610 | 48.1%
% of revenue        | 47%                     | 45%                    |          |

Sales Marketing Expense
 increased $22. 6 million 2018 2017. due $20. 0 million increase employee costs compensation increased headcount 215 286 2018. remaining increase $1. 8 million trade show advertising costs $0. 8 million office expenses. adoption ASC 606 commission expense.
 Ended December 31,
 2018 2017
 thousands
 Sales marketing $ 69,608 $ 46,998 $ 22,610 48. 1%
 % revenue 47% 45%


Deferred income taxes reflect the net tax effects of temporary differences between the bases of assets and liabilities for financial reporting and income tax purposes as well as carryforwards. Deferred tax assets and liabilities consist of the following:
We assess positive and negative evidence for each jurisdiction to determine whether it is more likely than not that existing deferred tax assets will be realized. As of August 29, 2019, and August 30, 2018, we had a valuation allowance of $277 million and $228 million, respectively, against our net deferred tax assets, primarily related to net operating loss carryforwards in Japan. Changes in 2019 in the valuation allowance were due to adjustments based on management's assessment of tax credits and net operating losses that are more likely than not to be realized.

As of                                                               | 2019   | 2018
------------------------------------------------------------------- | ------ | ------
Deferred tax assets                                                 |        |
Net operating loss and tax credit carryforwards                     | $1,045 | $1,417
Accrued salaries, wages, and benefits                               | 122    | 163
Property, plant, and equipment                                      | 80     | —
Other                                                               | 110    | 115
Gross deferred tax assets                                           | 1,357  | 1,695
Less valuation allowance                                            | (277)  | (228)
Deferred tax assets, net of valuation allowance                     | 1,080  | 1,467
Deferred tax liabilities                                            |        |
Product and process technology                                      | (138)  | (62)
Property, plant, and equipment                                      | —      | (173)
Other                                                               | (109)  | (213)
Deferred tax liabilities                                            | (247)  | (448)
Net deferred tax assets                                             | $833   | $1,019
Reported as                                                         |        |
Deferred tax assets                                                 | $837   | $1,022
Deferred tax liabilities (included in other noncurrent liabilities) | (4)    | (3)
Net deferred tax assets                                             | $833   | $1,019

Deferred income taxes reflect differences assets liabilities. assets
 assess positive evidence deferred tax assets. August 29, 2019 August 30, 2018 valuation allowance $277 million $228 million against net deferred tax assets operating loss carryforwards Japan. Changes 2019 adjustments tax credits operating losses.
 Deferred tax assets
 Net operating loss tax credit carryforwards $1,045 $1,417
 Accrued salaries wages benefits 122
 Property plant equipment
 Gross deferred tax assets 1,357 1,695
 Less valuation allowance (277)
 1,080 1,467
 Deferred tax liabilities
 Product process technology (138)
 Property plant equipment
 liabilities (247)
 Net deferred tax assets $833 $1,019
 $837 $1,022
 liabilities
 assets $833 $1,019


Operating income increased to SEK 2.3 (1.1) billion. Operating income excluding restructur- ing charges improved to SEK 2.4 (1.4) billion due to a positive effect from reversal of a provision for impairment of trade receivables made in Q1 2019, of SEK 0.7 billion, and higher gross margin.
Operating margin was 6.3%, excluding restructuring charges and the positive effect from reversal of a provision for impairment of trade receivables of SEK 0.7 billion in Q1 2019.
Restructuring charges amounted to SEK 0.0 (–0.3) billion.
Emerging Business and Other
Segment Emerging Business and Other represented 3% (4%) of Group net sales in 2019.
The segment includes:
–– Emerging Business, including IoT, iconectiv
and New businesses
–– Media businesses, including Red Bee
Media and a 49% ownership of MediaKind.
Net sales
Reported sales decreased by –19% in 2019 due to the 51% divestment of MediaKind in February 2019. Sales adjusted for comparable units and currency increased by 14% driven by growth in the iconectiv business through a multi-year number portability contract in the US.
Gross margin
Gross margin declined mainly due to the 51% divestment of MediaKind. The decline was partly offset by lower restructuring charges.
Operating income (loss)
Operating income was impacted by costs of SEK –10.7 billion related to the resolution of the US SEC and DOJ investigations, a refund of earlier paid social security costs in Sweden of SEK 0.9 billion and by costs of SEK –0.3
billion related to the wind-down of the ST-Ericsson legal structure.
Operating income in Emerging Business, iconectiv and common costs improved, driven by profitable growth in iconectiv. Red Bee Media income improved supported by profit improvement activities. Media Solutions income improved driven by the 51% divestment of Media Kind, including a capital gain from the transaction.

SEK billion                                                                      | Full year 2019 | Full year 2018
-------------------------------------------------------------------------------- | -------------- | --------------
Segment operating income                                                         | -12.5          | -5.4
income of which Emerging Business, iconective, media businesses and common costs | -2.4           | -5.4
of which SEC and DOJ
settlement costs                                            | –10.7          | –
of which costs for
ST-Ericsson wind-down                                         | –0.3           | –
of which a refund of social security costs in Sweden                             | 0.9            | -

income increased SEK 2. 3. billion. excluding charges improved SEK 2. 4. billion reversal impairment trade receivables Q1 2019 SEK. 7 billion higher gross margin.
 6. 3% excluding restructuring charges.
 Restructuring charges SEK. billion.
 Emerging Business
 3% (4%) Group net sales 2019.
 Media 49% ownership MediaKind.
 decreased –19% 2019 51% divestment MediaKind. increased 14% growth iconectiv business contract.
 declined due 51% divestment MediaKind. offset lower restructuring charges.
 Operating income
 impacted costs SEK. 7 billion US SEC DOJ investigations refund social security costs. billion SEK.
 billion wind-down ST-Ericsson legal structure.
 income costs improved growth. Red Bee Media income improved. Media Solutions income 51% divestment Media Kind capital gain transaction.
 billion Full year 2019 2018
 operating income.
Emerging Business media common costs. 4.
 SEC DOJ
 settlement costs. 7
 ST-Ericsson wind-down. 3
 refund social security costs Sweden.


Fiscal 2021 LTIP
Grants made in Fiscal 2019 under the Fiscal 2021 LTIP took effect on August 6, 2018 with the goal of measuring performance over the three year period starting July 1, 2018. The table below illustrates the target value of each element under the Fiscal 2021 LTIP for each Named Executive Officer.
Awards granted in Fiscal 2019 under the Fiscal 2021 LTIP were in addition to the awards granted in Fiscal 2018, Fiscal 2017, and prior years. For details of our previous LTIPs, see Item 11 of our Annual Report on Form 10-K for the appropriate year.

Named Executive Officer | Performance Share Units | Restricted Share Units | Stock Options | Total
----------------------- | ----------------------- | ---------------------- | ------------- | ----------
Mark J. Barrenechea     | $2,815,000              | $1,407,500             | $1,407,500    | $5,630,000
Madhu Ranganathan       | $500,000                | $250,000               | $250,000      | $1,000,000
Muhi Majzoub            | $550,000                | $275,000               | $275,000      | $1,100,000
Gordon A. Davies        | $500,000                | $250,000               | $250,000      | $1,000,000
Simon Harrison          | $218,750                | $109,375               | $109,375      | $437,500

2021 LTIP
 August 6, 2018 performance three July 1 2018. table target value Officer.
 Awards 2018 2017. Item 11 Annual Report Form 10-K.
 Executive Officer Performance Restricted Share Units Stock Options
 Mark J. Barrenechea $2,815,000 $1,407,500 $5,630,000
 Madhu Ranganathan $500,000 $250,000
 Muhi Majzoub $550,000 $275,000 $1,100,000
 Gordon A. Davies $500,000 $250,000 $1,000,000
 Simon Harrison $218,750 $109,375 $437,500


Return on Invested Capital ("ROIC") and Economic Return. We use a financial model that is aligned with our business strategy and includes a ROIC goal of 500 basis points over our weighted average cost of capital ("WACC"), which we refer to as "Economic Return." Our primary focus is on our Economic Return goal of 5.0%, which is designed to create shareholder value and generate sufficient cash to self-fund our targeted organic revenue growth rate of 12.0%. ROIC and Economic Return are non-GAAP financial measures.
Non-GAAP financial measures, including ROIC and Economic Return, are used for internal management goals and decision making because such measures provide management and investors additional insight into financial performance. In particular, we provide ROIC and Economic Return because we believe they offer insight into the metrics that are driving management decisions because we view ROIC and Economic Return as important measures in evaluating the efficiency and effectiveness of our long-term capital requirements. We also use a derivative measure of ROIC as a performance criteria in determining certain elements of compensation, and certain compensation incentives are based on Economic Return performance.
We define ROIC as tax-effected operating income before restructuring and other special items divided by average invested capital over a rolling five-quarter period for the fiscal year. Invested capital is defined as equity plus debt, less cash and cash equivalents. Other companies may not define or calculate ROIC in the same way. ROIC and other non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of our financial performance prepared in accordance with U.S. generally accepted accounting principles ("GAAP").
We review our internal calculation of WACC annually. Our WACC was 9.0% for fiscal year 2019 and 9.5% for fiscal year 2018. By exercising discipline to generate ROIC in excess of our WACC, our goal is to create value for our shareholders. Fiscal 2019 ROIC of 13.1% reflects an Economic Return of 4.1%, based on our weighted average cost of capital of 9.0%, and fiscal 2018 ROIC of 16.1% reflects an Economic Return of 6.6%, based on our weighted average cost of capital of 9.5% for that fiscal year.
For a reconciliation of ROIC, Economic Return and adjusted operating income (tax effected) to our financial statements that were prepared using GAAP, see Exhibit 99.1 to this annual report on Form 10-K, which exhibit is incorporated herein by reference.
Refer to the table below, which includes the calculation of ROIC and Economic Return (dollars in millions) for the indicated periods:

                                         | 2019   | 2018
---------------------------------------- | ------ | ------
Adjusted operating income (tax effected) | $120.7 | $118.6
Average invested capital                 | 923.1  | $735.6
After-tax ROIC                           | 13.1%  | 16.1%
WACC                                     | 9.0%   | 9.5%
Economic Return                          | 4.1%   | 6.6%

Return Invested Capital Economic Return. financial model business strategy ROIC goal 500 points over average cost capital Return. focus Economic Return goal 5. 0% shareholder value generate cash-fund revenue growth rate 12. 0%. ROIC Economic Return non-GAAP financial measures.
 management goals decision making insight financial performance. management decisions efficiency long capital requirements. derivative ROIC performance criteria compensation incentives based Economic Return performance.
 ROIC tax-effected operating income before restructuring divided by average invested capital five-quarter period. Invested capital equity plus debt less cash equivalents. ROIC.-GAAP financial performance. accounting principles.
 review calculation WACC annually. WACC 9. 0% 2019 9. 5% 2018. generate ROIC excess WACC goal create value shareholders. 2019 ROIC 13. 1% Economic Return 4. 1% average cost capital 9. 0% 2018 ROIC 16. 1% Economic Return 6. 6% average cost capital 9. 5%.
reconciliation ROIC Economic Return adjusted operating income financial statements GAAP Exhibit 99. annual report Form 10-K.
 table calculation ROIC Economic Return periods
 2019
 Adjusted operating income $120. $118.
 Average invested capital 923. $735.
 After-tax ROIC 13.
.
 Economic Return 4. 6.


CASH FLOW STATEMENT1
1 Abridged version. The complete version is shown in the consolidated financial statements.

€ million                                                        | 2017/18 | 2018/19
---------------------------------------------------------------- | ------- | -------
Cash flow from operating activities of continuing operations     | 766     | 796
Cash flow from operating activities of discontinued operations   | 139     | 157
Cash flow from operating activities                              | 905     | 953
Cash flow from investing activities of continuing operations     | −292    | 46
Cash flow from investing activities of discontinued operations   | −89     | −136
Cash flow from investing activities                              | −381    | −90
Cash flow before financing activities of continuing operations   | 474     | 842
Cash flow before financing activities of discontinued operations | 50      | 21
Cash flow before financing activities                            | 524     | 863
Cash flow from financing activities of continuing operations     | −587    | −1,122
Cash flow from financing activities of discontinued operations   | −74     | −109
Cash flow from financing activities                              | −661    | −1,231
Total cash flows                                                 | −137    | −368
Currency effects on cash and cash equivalents                    | −30     | 17
Total change in cash and cash equivalents                        | −167    | −351

CASH FLOW STATEMENT1
 Abridged version. complete consolidated financial statements.
 € million 2017/18 2018/19
 operating activities 766  796
 139  157
 905  953
 investing −292 46
 −89 −136
 −381 −90
 474  842
 50  21
 524  863
 −587 −1,122
 −74 −109
 −661  −1,231
 Total cash flows −137  −368
 Currency effects cash equivalents −30  17
 Total change cash equivalents −167  −351


19. Cash and cash equivalents
The majority of the Group’s cash is held in bank deposits or money market funds which have a maturity of three months or less to enable us to meet our short-term liquidity requirements.
Accounting policies
Cash and cash equivalents comprise cash in hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Assets in money market funds, whose contractual cash flows do not represent solely payments of interest and principal, are measured at fair value with gains and losses arising from changes in fair value included in net profit or loss for the period. All other cash and cash equivalents are measured at amortised cost.
Note: 1 Items are measured at fair value and the valuation basis is level 1 classification, which comprises financial instruments where fair value is determined by unadjusted quoted prices in active markets.
The carrying amount of balances at amortised cost approximates their fair value.
Cash and cash equivalents of €1,381 million (2018: €1,449 million) are held in countries with restrictions on remittances but where the balances could be used to repay subsidiaries’ third party liabilities.

                                                                              | 2019   | 2018
----------------------------------------------------------------------------- | ------ | -----
                                                                              | €m     | €m
Cash at bank and in hand                                                      | 2,434  | 2,197
Repurchase agreements and bank deposits                                       | 2,196  | –
Money market funds1                                                           | 9,007  | 2,477
Cash and cash equivalents as presented in the statement of financial position | 13,637 | 4,674
Bank overdrafts                                                               | (32)   | (7)
Cash and cash equivalents of discontinued operations                          | –      | 727
Cash and cash equivalents as presented in the statement of cash flows         | 13,605 | 5,394

. Cash equivalents
 majority Group’s cash bank deposits money market funds maturity three months less short-term liquidity requirements.
 Cash equivalents deposits short-term investments convertible cash insignificant risk changes value. Assets money market funds measured at fair value gains losses net profit loss. other cash equivalents measured amortised cost.
 Items measured fair value level 1 classification.
 carrying balances amortised cost approximates fair value.
 Cash equivalents €1,381 million (2018 €1,449 million) countries repay third party liabilities.
 Cash bank hand 2,434 2,197
 Repurchase agreements bank deposits 2,196
 Money market 9,007 2,477
 Cash equivalents financial position 13,637 4,674
 Bank overdrafts
 discontinued operations 727
 flows 13,605 5,394


Greenhouse gas emissions
In line with the Companies Act 2006, Sophos is required to measure and report on its Greenhouse Gas (“GHG”) emissions disclosures. These have been calculated for the year-ending 31 March 2019, in line with the Group’s financial year. The calculation of the disclosures has been performed in accordance with Greenhouse Gas Protocol Corporate Standard and using the UK government’s conversion factor guidance for the year reported.
The Group’s operations that primarily release GHG includes usage of electricity and gas of owned and leased offices, business travel and usage of vehicles. The Group keeps its data capture process under review, seeking to extend the availability of direct information wherever possible. Where direct information for certain sites is not available, estimates have been developed that enable reporting for them. These estimates are revised if new or improved data is obtained.
The Group will continue to build its GHG reporting capabilities. The Group’s chosen intensity ratio is ‘tonnes of CO2 equivalent per million US dollars of billings’ as it aligns with Sophos’ strategic growth ambitions.
Creating an environmentally friendly HQ
The Group commissioned a greening study of its global headquarters in Abingdon, Oxfordshire. The purpose of the study was to benchmark the current environmental, health and wellbeing performance of the building against current best practice and against direct and indirect competitors.
The findings of the study showed that the building performance was consistent with intermediate good practice and the building management was consistent with standard good practice. The study highlighted areas of future improvement. The findings and recommendations of this report will be a key driver for developing best practice in environmental sustainability to match the growth aspirations and objectives of the Company.
The Group is endeavouring to achieve the standards in environmental performance, health and wellbeing that is expected of a global technology organisation at the Group’s headquarters.

                         |                                                           | Year-ended 31 March 2019 | Year-ended 31 March 2018 | Year-ended 31 March 2017
------------------------ | --------------------------------------------------------- | ------------------------ | ------------------------ | ------------------------
                         |                                                           | tCO2e                    | tCO2e                    | tCO2e
Scope 1                  | Combustion of natural gas and operation of owned vehicles | 220.9                    | 320.0                    | 251.8
Scope 2                  | Electricity consumption in offices                        | 4,487.2                  | 4,457.3                  | 4,681.9
Scope 3                  | Business travel (air and car)                             | 3,260.9                  | 5,117.4                  | 4,510.9
Total                    |                                                           | 7,969.0                  | 9,894.7                  | 9,444.6
Intensity ratio          |                                                           |                          |                          |
tCO2e per $M of billings |                                                           | 10.5                     | 12.9                     | 14.9

Greenhouse gas emissions
 Companies Act 2006, Sophos report Greenhouse Gas emissions. calculated-ending 31 March 2019 financial year. calculation Greenhouse Gas Protocol Corporate Standard UK conversion factor guidance.
 operations release GHG electricity gas offices business travel vehicles. data capture direct information. estimates developed reporting. revised if new data obtained.
 GHG reporting capabilities. intensity ratio ‘tonnes CO2 equivalent per million US dollars billings’ aligns strategic growth ambitions.
 environmentally friendly HQ
 commissioned greening study global headquarters Abingdon Oxfordshire. environmental health wellbeing performance best practice competitors.
 performance intermediate management standard good practice. highlighted future improvement. findings recommendations best practice environmental sustainability growth aspirations objectives.
 Group standards environmental performance health wellbeing global technology organisation headquarters.
 Year-ended 31 March 2019 31 March 2018 31 March 2017
 tCO2e
1 Combustion gas vehicles 220. 320. 251.
 Electricity consumption offices 4,487. 4,681.
 Business travel car 3,260. 5,117. 4,510.
 7,969. 9,894. 9,444.
 tCO2e 10. 12. 14.


As of December 31, 2019, our required annual payments relating to these contractual obligations were as follows (in millions):
(1) Includes finance lease obligations.
(2) These calculations include the effect of our interest rate swaps and assume that (a) applicable margins remain constant; (b) our term A loan and revolving credit facility variable rate debt is priced at the one-month LIBOR rate in effect as of December 31, 2019; (c) only mandatory debt repayments are made; and (d) no refinancing occurs at debt maturity.
(3) Other includes commitment fees on our revolving credit facility and rating agencies fees.

                                            |          |        | Payments due by period |
------------------------------------------- | -------- | ------ | ---------------------- | ---------
                                            | Total    | 2020   | 2021-2022              | 2023-2024
Debt(1)                                     | $1,554.8 | $80.0  | $184.1                 | $1,290.7
Interest on debt (2)                        | 171.5    | 54.7   | 102.0                  | 14.8
Data processing and maintenance commitments | 103.4    | 44.5   | 46.5                   | 12.4
Operating lease payments                    | 27.5     | 12.6   | 11.5                   | 3.4
Other(3)                                    | 3.9      | 1.2    | 2.4                    | 0.3
Total                                       | $1,861.1 | $193.0 | $346.5                 | $1,321.6

December 31, 2019 annual payments contractual obligations
 Includes finance lease obligations.
 calculations interest rate swaps margins constant loan revolving credit rate debt priced one LIBOR rate mandatory debt repayments no refinancing maturity.
 commitment fees revolving credit facility rating agencies fees.
 Payments
 2021-2022 2023-2024
 $1,554. $80. $184. $1,290.
 Interest debt 171. 54. 102. 14.
 processing maintenance commitments 103. 44. 46. 12.
 Operating lease payments 27. 12. 11.
.
 $1,861. $193. $346. $1,321.


14. Income Taxes
Income before income taxes is as follows (in millions):

         |                | Year Ended     |
-------- | -------------- | -------------- | --------------
         | April 26, 2019 | April 27, 2018 | April 28, 2017
Domestic | $ 678          | $ 589          | $ 166
Foreign  | 590            | 610            | 455
Total    | $ 1,268        | $ 1,199        | $ 621

. Income Taxes
 before taxes
 April 26, 2019 27, 2018 28,
 Domestic $ 678 589
 Foreign
 $ 1,268 $ 1,199 $ 621


Net Income (Loss) Per Share: Basic net income (loss) per share (EPS) is computed by dividing the net income (loss) attributable to Cubic for the period by the weighted average number of common shares outstanding during the period, including vested RSUs.
In periods with a net income from continuing operations attributable to Cubic, diluted EPS is computed by dividing the net income for the period by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares consist of dilutive RSUs. Dilutive RSUs are calculated based on the average share price for each fiscal period using the treasury stock method. For RSUs with performance-based vesting, no common equivalent shares are included in the computation of diluted EPS until the related performance criteria have been met. For RSUs with performance and market-based vesting, no common equivalent shares are included in the computation of diluted EPS until the performance criteria have been met, and once the criteria are met the dilutive restricted stock units are calculated using the treasury stock method, modified by the multiplier that is calculated at the end of the accounting period as if the vesting date was at the end of the accounting period. The multiplier on RSUs with performance and market-based vesting is further described in Note 16.
In periods with a net loss from continuing operations attributable to Cubic, common equivalent shares are not included in the computation of diluted EPS, because to do so would be anti-dilutive.
The weighted-average number of shares outstanding used to compute net income (loss) per common share were as follows (in thousands):

                                   |        | Years Ended September 30, |
---------------------------------- | ------ | ------------------------- | ------
                                   | 2019   | 2018                      | 2017
Weighted average shares - basic    | 30,495 | 27,229                    | 27,106
Effect of dilutive securities      | 111    | 122                       | —
Weighted average shares - diluted  | 30,606 | 27,351                    | 27,106
Number of anti-dilutive securities | —      | —                         | 967

Net Income (Loss) Per Share computed Cubic by average common shares including vested RSUs.
 net income Cubic diluted EPS computed by common equivalent shares. shares dilutive RSUs. calculated average share price treasury stock method. RSUs performance-based vesting no common equivalent shares EPS until performance criteria met. RSUs performance market-based vesting no equivalent shares until dilutive stock units calculated treasury stock method modified by multiplier calculated end. multiplier on RSUs performance market-based vesting described in Note 16.
 net loss Cubic common equivalent shares not included diluted EPS anti-dilutive.
 weighted-average shares net income per share
 Years Ended September 30,
 2018 2017
 average shares - basic 30,495  27,229 27,106
 Effect dilutive securities
 shares diluted 30,606  27,351 27,106
anti-dilutive securities 967


Note 8 — Property, Plant and Equipment, net
The components of property, plant and equipment, net, are:
The estimated useful lives of buildings and improvements and rental property are twenty to twenty-five years. The estimated useful lives of furniture and equipment range from three to eight years. Depreciation expense from continuing operations was $1.5 million and $1.2 million for 2019 and 2018, respectively.
The Company leases a portion of its headquarters facility to various tenants. Net rent received from these leases totaled $0.3 million and $0.4 million for 2019 and 2018, respectively.

                              | December 31,   |
----------------------------- | -------------- | --------
                              | (in thousands) |
                              | 2019           | 2018
Land                          | $199           | $199
Building and improvements     | 6,983          | 6,983
Rental property               | 2,749          | 2,749
Software                      | 12,015         | 2,226
Furniture and equipment       | 11,755         | 10,274
Construction in process       | 480            | 8,519
                              | 34,181         | 30,950
Less accumulated depreciation | (19,830)       | (18,375)
                              | $ 14,351       | $ 12,575

8 Property Plant Equipment
 lives buildings improvements rental property twenty to-five years. furniture equipment three to eight years. Depreciation expense operations $1. 5 million $1. 2 million 2019 2018.
 Company leases headquarters tenants. rent $0. 3 million. 4 million 2019 2018.
 Land $199
 Building improvements
 Rental property 2,749
 Software 12,015
 Furniture equipment 11,755
 Construction
 34,181
 accumulated depreciation (19,830)
 14,351


Patents and Intangible Assets
The Company owns or possesses licenses to use its patents. The costs of maintaining the patents are expensed as incurred.
The Company and Finjan Blue entered into a Patent Assignment and Support Agreement (the “Patent Assignment Agreement”) with IBM effective as of August 24, 2017 (see "Note 7 - Commitments and Contingencies"). Pursuant to the Patent Assignment Agreement, Finjan Blue acquired select IBM patents in the security sector. In accordance with ASC 350-30-35-2 through 35-4, Intangibles-Goodwill and Other, the Company determined that the useful life of the patents acquired under the Patent Assignment and Support Agreement should be amortized over the four-year term of the agreement.
On May 15, 2018, Finjan Blue, entered into a second agreement with IBM (the “May 2018 Patent Assignment Agreement”). Pursuant to the May 2018 Patent Assignment Agreement, Finjan Blue acquired 56 select issued and pending IBM patents in the security sector. The terms of the May 2018 Patent Assignment Agreement are confidential. In accordance with ASC 350-30-35-2 through 35-4, Intangibles-Goodwill and Other, the Company determined that the useful life of the patents acquired under the May 2018 Patent Assignment Agreement should be amortized over five years as the covenants between the parties are effective for that period.
Management did not identify any triggering events which would have necessitated an impairment change.
The components of these intangible assets are as follows:
Amortization expense for the years ended December 31, 2019, 2018 and 2017 was approximately $2.0 million, $1.8 million, and $0.8 million, respectively.

As of December 31,            |          |
----------------------------- | -------- | --------------
                              | 2019     | 2018
                              |          | (in thousands)
Patents                       | $26,069  | $26,069
Less accumulated amortization | (22,517) | (20,562)
Intangible assets, net        | $3,552   | $5,507

Patents Intangible Assets
 Company owns licenses patents. costs maintaining patents expensed.
 Company Finjan Blue entered Patent Assignment Support Agreement with IBM August 24, 2017 7 - Commitments Contingencies"). Finjan Blue acquired IBM patents security sector. ASC 350-30-35-2 patents amortized over four-year term.
 May 15, 2018 Finjan Blue second agreement with IBM “May 2018 Patent Assignment. acquired 56 IBM patents security sector. terms confidential. patents amortized over five years.
 triggering events impairment change.
 components intangible assets
 Amortization expense years ended December 31, 2019 2018 2017 approximately $2. 0 million, $1. 8 million $0. 8 million.
 December 31,
 Patents $26,069
 Less accumulated amortization (22,517)
 Intangible assets net $3,552 $5,507


22. PENSIONS
Defined contribution scheme
We operate a defined contribution scheme. The pension cost for the period represents contributions payable by us to the scheme. The charge to net income for the years ended December 31, 2019, 2018 and 2017 was $2.4 million, $1.9 million and $1.7 million, respectively.
Defined benefit schemes
We have two defined benefit pension plans both of which are closed to new entrants but still cover certain of our employees. Benefits are based on the employee's years of service and compensation. Net periodic pension plan costs are determined using the Projected Unit Credit Cost method. Our plans are funded by us in conformity with the funding requirements of the applicable government regulations. Plan assets consist of both fixed income and equity funds managed by professional fund managers. We have two defined benefit pension plans both of which are closed to new entrants but still cover certain of our employees. Benefits are based on the employee's years of service and compensation. Net periodic pension plan costs are determined using the Projected Unit Credit Cost method. Our plans are funded by us in conformity with the funding requirements of the applicable government regulations. Plan assets consist of both fixed income and equity funds managed by professional fund managers.
We use December 31 as a measurement date for our pension plans.
The components of net periodic benefit costs are as follows:
The components of net periodic benefit costs are recognized in the income statement within administrative expenses and vessel operating expenses.
The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic pension benefit cost during the year ended December 31, 2019 is $0.8 million (2018: $1.4 million).

(in thousands of $)            | 2019  | 2018  | 2017
------------------------------ | ----- | ----- | -----
Service cost                   | 162   | 250   | 313
Interest cost                  | 1,740 | 1,687 | 1,901
Expected return on plan assets | (375) | (926) | (843)
Recognized actuarial loss      | 777   | 1,392 | 1,182
Net periodic benefit cost      | 2,304 | 2,403 | 2,553

. PENSIONS
 Defined contribution scheme
 operate. pension cost represents contributions. charge net income December 31, 2019 2018 2017 $2. 4 million $1. 9 million $1. 7 million.
 Defined benefit schemes
 two plans closed cover employees. Benefits based years service compensation. costs Projected Unit Credit Cost method. funded. assets fixed income equity funds. two plans closed cover employees. Benefits based years service compensation. costs Projected Unit Credit Cost method. funded. fixed income equity funds.
 December 31 measurement date.
 components net benefit costs
 recognized income statement administrative expenses operating expenses.
 estimated net loss amortized December 31, 2019 $0. 8 million (2018 $1. 4 million.
 2019
 Service cost 162
 Interest cost 1,740 1,687
 Expected return on plan assets (375) (926) (843)
 Recognized actuarial loss 777 1,392
 Net periodic benefit cost 2,304 2,403 2,553


Note 20. Income Taxes
The Company’s income before income taxes consisted of the following (in thousands):

                                 |         | Years Ended December31, |
-------------------------------- | ------- | ----------------------- | -------
                                 | 2019    | 2018                    | 2017
Domestic (U.S., state and local) | $38,672 | $6,971                  | $9,662
Foreign                          | 47,251  | 49,946                  | 71,645
                                 | $85,923 | $56,917                 | $81,307

.
 income before
 Ended December31
 2019 2018
 Domestic. local $38,672 $6,971 $9,662
 Foreign 47,251 49,946 71,645
 $85,923 $56,917 $81,307


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss related to adverse changes in market prices, including interest rates and foreign exchange rates, of financial instruments. We are exposed to various types of market risks, including changes in interest rates and foreign currency exchange rates, in the normal course of business.
We use financial instruments, including variable rate debt and swaps and foreign exchange spot transactions, to manage risks associated with our interest rate and foreign currency exposures through a controlled program of risk management in accordance with established policies. These policies are reviewed and approved by our board of directors and stockholders’ meeting. Our treasury operations are subject to internal audit on a regular basis. We do not hold or issue derivative financial instruments for speculatively purposes.
Since export sales are primarily conducted in U.S. dollars, we had U.S. dollar-denominated accounts receivable of US$626 million as of December 31, 2019. As of the same date, we also had Japanese Yen-denominated accounts receivable of ¥14,266 million attributable to our Japanese operations and Renminbi-denominated accounts receivable of RMB¥710 million attributable to our China operations. We had U.S. dollar-, Japanese Yen- and Renminbi-denominated accounts payables of US$128 million, ¥7,193 million and RMB¥262 million, respectively, as of December 31, 2019.
Our primary market risk exposures relate to interest rate movements on borrowings and exchange rate movements on foreign currency denominated accounts receivable, capital expenditures relating to equipment used in manufacturing processes (including lithography, etching and chemical vapor deposition) and purchased primarily from Europe, Japan and the United States.
The following table provides information as of December 31, 2019 on our market risk sensitive financial instruments.

                                      | As of December 31, 2019 |
------------------------------------- | ----------------------- | -----------
                                      | Carrying Amount         | Fair Amount
                                      | (in NT$ millions)       |
Time Deposits: Non-Trading Purpose    | 62,320                  | 62,320
Short-term Loans: Non-Trading Purpose | 12,015                  | 12,015
Bonds: Non-Trading Purpose            | 38,781                  | 39,572
Long-term Loans: Non-Trading Purpose  | 33,902                  | 33,902

MARKET RISK
 risk loss changes interest rates foreign exchange rates financial instruments. exposed to risks business.
 instruments variable rate debt swaps foreign exchange transactions manage risks interest currency risk management. policies reviewed approved board stockholders’ meeting. treasury operations subject internal audit. hold issue derivative financial instruments.
 export sales U. S. dollars. dollar accounts receivable US$626 million December 31, 2019. Japanese Yen accounts,266 million Renminbi RMB¥710 million. U. S. dollar Japanese Yen Renminbi accounts US$128 million,193 million RMB¥262 million.
 market risk exposures interest rate exchange rate movements foreign currency accounts capital expenditures equipment purchased from Europe Japan United States.
 table information December 31, 2019 market risk sensitive financial instruments.
 Carrying
$ millions
 Time Deposits Non-Trading Purpose 62,320
Loans Non 12,015
 Bonds 38,781
 Long-term Loans 33,902


Subsequent to origination, the delinquency and write-off experience is monitored as key credit quality indicators for the portfolio of device payment plan agreement receivables and fixed-term service plans. The extent of collection efforts with respect to a particular customer are based on the results of proprietary custom empirically derived internal behavioral-scoring models that analyze the customer’s past performance to predict the likelihood of the customer falling further delinquent.
These customer-scoring models assess a number of variables, including origination characteristics, customer account history and payment patterns. Based on the score derived from these models, accounts are grouped by risk category to determine the collection strategy to be applied to such accounts.
Collection performance results and the credit quality of device payment plan agreement receivables are continuously monitored based on a variety of metrics, including aging. An account is considered to be delinquent and in default status if there are unpaid charges remaining on the account on the day after the bill’s due date.
At December 31, 2019 and 2018, the balance and aging of the device payment plan agreement receivables on a gross basis was as follows:

                                                 | 2019     | 2018
------------------------------------------------ | -------- | --------
Unbilled                                         | $ 22,827 | $ 24,282
Billed:                                          |          |
Current                                          | 1,286    | 1,465
Past due                                         | 236      | 271
Device payment plan agreement receivables, gross | $ 24,349 | $ 26,018

origination delinquency write-off experience monitored credit quality indicators for device payment plan receivables fixed-term service plans. collection efforts based behavioral-scoring models performance.
 models assess variables origination characteristics account history payment patterns. accounts grouped by risk category collection strategy.
 Collection performance credit quality receivables monitored aging. account delinquent default unpaid charges remaining due date.
 December 31, 2019 2018 balance aging receivables
 2018
 Unbilled $ 22,827  $ 24,282
 Billed
 1,286 1,465
 Past due 236 271
 receivables gross $ 24,349  $ 26,018


b) Transactions with Golar Power and affiliates:
Net revenues: The transactions with Golar Power and its affiliates for the twelve months ended December 31, 2019, 2018 and 2017 consisted of the following:
(i) Debt guarantee compensation - In connection with the closing of the Golar Power and Stonepeak transaction, Golar Power entered into agreements to compensate Golar in relation to certain debt guarantees (as further described under the subheading "Guarantees and other") relating to Golar Power and subsidiaries.
(ii) Balances due to Golar Power and affiliates - Receivables and payables with Golar Power and its subsidiaries are comprised primarily of unpaid management fees, advisory and administrative services. In addition, certain receivables and payables arise when we pay an invoice on behalf of a related party and vice versa. Receivables and payables are generally settled quarterly in arrears. Balances owing to or due from Golar Power and its subsidiaries are unsecured, interest-free and intended to be settled in the ordinary course of business. In December 2019, we loaned $7.0 million to Golar Power, with interest of LIBOR plus 5.0%. The loan was fully repaid, including interest, in December 2019.

(in thousands of $)                            | 2019  | 2018  | 2017
---------------------------------------------- | ----- | ----- | -----
Management and administrative services revenue | 5,904 | 6,167 | 5,711
Ship management fees income                    | 1,210 | 1,400 | 824
Debt guarantee compensation (i)                | 693   | 861   | 775
Other (ii)                                     | (2)   | (247) | 135
Total                                          | 7,805 | 8,181 | 7,445

Transactions with Golar Power affiliates
 revenues transactions twelve months December 2019 2018 2017
 Debt guarantee compensation Golar Power Stonepeak Golar debt guarantees.
 Balances due to Golar Power affiliates Receivables payables unpaid management fees advisory administrative services. invoice. settled quarterly arrears. Balances unsecured interest-free settled business. December 2019 loaned $7. 0 million Golar Power interest LIBOR plus 5. 0%. loan repaid December 2019.
 2019 2018 2017
 Management administrative services revenue 5,904 6,167 5,711
 Ship management fees 1,210 1,400 824
 Debt guarantee compensation 693 861 775
 (247)
 Total 7,805 8,181 7,445


Stock repurchases
(1) On March 15, 2019, the Company announced that the Board of Directors extended the expiration date of the current stock repurchase program to June 30, 2020 and increased the amount of common stock the Company is authorized to repurchase by $60 million.

                   | 2019   |           | 2018    |           | 2017   |
------------------ | ------ | --------- | ------- | --------- | ------ | --------
(in thousands)     | Shares | Amount    | Shares  | Amount    | Shares | Amount
January 1,         |        | $6,620    |         | $34,892   |        | $39,385
Authorizations (1) |        | $60,000   |         | $27,003   |        | $ -
Repurchases        | (333)  | $(21,136) | (1,001) | $(55,275) | (99)   | $(4,493)
December 31,       |        | $45,484   |         | $6,620    |        | $34,892

Stock repurchases
 March 15, 2019 extended repurchase program June 30, 2020 increased common stock repurchase $60 million.
 2019 2018 2017
 thousands Shares
 January 1 $6,620 $34,892 $39,385
 Authorizations $60,000 $27,003
 Repurchases $(21,136) $(55,275) $(4,493)
 December 31, $45,484 $6,620 $34,892


Other gains, net. We recorded net other gains of RMB3,630 million for the fourth quarter of 2019, which mainly comprised of non-IFRS adjustment items such as fair value gains due to increases in valuations of certain investee companies in verticals such as social media and FinTech services.
Selling and marketing expenses. Selling and marketing expenses increased by 17% to RMB6,712 million for the fourth quarter of 2019 on a year-on-year basis. The increase was mainly driven by greater marketing spending on services and products such as FinTech and cloud services, smart phone games and digital content services, including expenses attributable to Supercell. As a percentage of revenues, selling and marketing expenses decreased to 6% for the fourth quarter of 2019 from 7% for the fourth quarter of 2018.
General and administrative expenses. General and administrative expenses increased by 41% to RMB16,002 million for the fourth quarter of 2019 on a year-on-year basis. The increase was mainly due to greater R&D expenses and staff costs, including expenses attributable to Supercell. As a percentage of revenues, general and administrative expenses increased to 15% for the fourth quarter of 2019 from 13% for the fourth quarter of 2018.
Finance costs, net. Net finance costs increased by 102% to RMB2,767 million for the fourth quarter of 2019 on a year-on-year basis. The increase was primarily driven by greater interest expenses as a result of higher amount of indebtedness.
Share of (loss)/profit of associates and joint ventures. We recorded share of losses of associates and joint ventures of RMB1,328 million for the fourth quarter of 2019, compared to share of profit of RMB16 million for the fourth quarter of 2018. The change was mainly due to share of losses arising from non-cash fair value changes of investment portfolios booked by certain associates in the fourth quarter of 2019, compared to share of profit recorded in the same quarter last year.
Income tax expense. Income tax expense increased by 12% to RMB2,137 million for the fourth quarter of 2019 on a year-on-year basis.
Profit attributable to equity holders of the Company. Profit attributable to equity holders of the Company increased by 52% to RMB21,582 million for the fourth quarter of 2019 on a year-on-year basis. Non-IFRS profit attributable to equity holders of the Company increased by 29% to RMB25,484 million for the fourth quarter of 2019.
FOURTH QUARTER OF 2019 COMPARED TO FOURTH QUARTER OF 2018
The following table sets forth the comparative figures for the fourth quarter of 2019 and the fourth quarter of 2018:

                                                              | Unaudited          |
------------------------------------------------------------- | ------------------ | -----------
                                                              | Three months ended |
                                                              | 31 December        | 31 December
                                                              | 2019               | 2018
                                                              | (RMB in millions)  |
Revenues                                                      | 105,767            | 84,896
Cost of revenues                                              | (59,659)           | (49,744)
Gross profit                                                  | 46,108             | 35,152
Interest income                                               | 1,580              | 1,350
Other gains/(losses), net                                     | 3,630              | (2,139)
Selling and marketing expenses                                | (6,712)            | (5,730)
General and administrative expenses                           | (16,002)           | (11,345)
Operating profit                                              | 28,604             | 17,288
Finance costs, net                                            | (2,767)            | (1,372)
Share of (loss)/profit of associates and joint ventures       | (1,328)            | 16
Profit before income tax                                      | 24,509             | 15,932
Income tax expense                                            | (2,137)            | (1,906)
Profit for the period                                         | 22,372             | 14,026
Attributable to:                                              |                    |
Equity holders of the Company                                 | 21,582             | 14,229
Non-controlling interests                                     | 790                | (203)
                                                              | 22,372             | 14,026
Non-IFRS profit attributable to equity holders of the Company | 25,484             | 19,730

gains net. recorded gains RMB3,630 million fourth quarter 2019 non-IFRS adjustment items fair value gains increases valuations companies social media FinTech.
 Selling marketing expenses. increased 17% RMB6,712 million fourth quarter 2019. increase driven marketing spending FinTech cloud services smart phone games digital content Supercell. expenses decreased 6% 2019 from 7% 2018.
 General administrative expenses. increased 41% RMB16,002 million. increase due R&D expenses staff costs Supercell. expenses increased 15% 2019 from 13% 2018.
 Finance costs. increased 102% RMB2,767 million 2019. increase driven greater interest expenses higher indebtedness.
 Share/profit associates joint ventures. losses RMB1,328 million fourth 2019 profit RMB16 million 2018. change due losses non-cash fair value changes investment portfolios.
 Income tax expense. increased 12% RMB2,137 million.
 Profit equity holders.Profit equity holders increased 52% RMB21,582 million fourth quarter 2019. Non-IFRS profit 29% RMB25,484 million.
 comparative figures
 months
 millions
 Revenues 105,767 84,896
 Cost (59,659) (49,744
 Gross profit 46,108 35,152
 Interest income 1,580 1,350
 Other gains 3,630
 Selling marketing expenses (6,712)
 General administrative expenses (16,002
 Operating profit 28,604 17,288
 Finance costs (2,767) (1,372
 associates ventures (1,328)
 Profit before income tax 24,509 15,932
 tax expense (2,137
 Profit 22,372 14,026
 Equity holders 21,582 14,229
 Non-controlling interests 790
 Non-IFRS profit 25,484


8. Stocks
Note
1. Finished goods in 2018 includes £2.2 million relating to deferred costs which has been reclassified from prepayments; see note 1 for further details.
There were no stock write-downs recognised in the period (2018 nil) and there were no reversals of prior period stock write-downs (2018 nil).
No stock is carried at fair value less costs to sell (2018 nil).

                 | 2019      | 2018
---------------- | --------- | ---------
                 | £ million | £ million
Work in progress | 0.7       | 0.6
Finished goods¹  | 3.2       | 3.9
                 | 3.9       | 4.5

. Stocks
. Finished goods 2018 includes £2. million deferred costs reclassified prepayments see note 1 details.
 no stock write-downs reversals prior-downs.
 No stock carried fair value less costs sell.
 2019 2018
 £ million
 Work progress.
 Finished.
.