Deferred Revenue The following table presents the breakdown of deferred revenue (in millions):
Deferred revenue decreased primarily due to the adoption of ASC 606 in the beginning of our first quarter of fiscal 2019. Of the total deferred revenue decrease related to the adoption of ASC 606 of $2.8 billion, $2.6 billion relates to deferred product revenue and $0.2 billion relates to deferred service revenue. Of the adjustment to deferred product revenue, $1.3 billion related to our recurring software and subscription offers, $0.6 billion related to two-tier distribution, and the remainder related to nonrecurring software and other adjustments. The decrease related to the adoption of ASC 606 was partially offset by an increase in product deferred revenue during the fiscal year. The increase in deferred service revenue was driven by the impact of contract renewals, partially offset by amortization of deferred service revenue.

             | July 27, 2019 | July 28, 2018 | Increase (Decrease)
------------ | ------------- | ------------- | -------------------
Service      | $11,709       | $11,431       | $ 278
Product      | 6,758         | 8,254         | (1,496)
Total        | $18,467       | $19,685       | $(1,218)
Reported as: |               |               |
Current      | $10,668       | $11,490       | $(822)
Noncurrent   | 7,799         | 8,195         | (396)
Total        | $18,467       | $19,685       | $(1,218)

Deferred Revenue deferred revenue
 decreased ASC 606 quarter 2019. $2. 8 billion $2. 6 billion product $0. 2 billion service revenue. $1. 3 billion recurring software subscription offers $0. 6 billion two-tier distribution remainder nonrecurring software adjustments. decrease offset increase product deferred revenue. increase service contract renewals offset amortization.
 July 27, 2019 July 28, 2018 Increase
 Service $11,709 $11,431
 Product 8,254
 Total $18,467 $19,685 $(1,218)
 Current $10,668 $11,490
 Noncurrent 7,799 8,195
 $18,467 $19,685 $


For purposes of reconciling the Company’s provision for income taxes at the statutory rate and the Company’s provision (benefit) for income taxes at the effective tax rate, a notional 26% tax rate was applied as follows (in thousands):
The difference between the statutory federal income tax rate and the Company’s effective tax rate in 2019, 2018 and 2017 is primarily attributable to the effect of state income taxes, difference between the U.S. and foreign tax rates, deferred tax state rate adjustment, share-based compensation, true up of deferred taxes, other non-deductible permanent items, and change in valuation allowance. In addition, the Company’s foreign subsidiaries are subject to varied applicable statutory income tax rates for the periods presented.

                                                                       |           | Year Ended December 31, |
---------------------------------------------------------------------- | --------- | ----------------------- | --------
                                                                       | 2019      | 2018                    | 2017
Income tax at federal statutory rate                                   | $(10,883) | $(9,811)                | $(6,659)
Increase (decrease) in tax resulting from:                             |           |                         |
State income tax expense, net of federal tax effect                    | (3,657)   | (2,749)                 | (421)
Nondeductible permanent items                                          | 3,522     | (1,522)                 | 1,506
Foreign rate differential                                              | (367)     | 552                     | 599
Tax rate change                                                        | —         | 134                     | 7,226
Adjustment to deferred taxes                                           | (1,904)   | 307                     | 37
Change in valuation allowance                                          | 22,481    | 15,805                  | (2,291)
Uncertain tax positions                                                | 128       | 143                     | 76
Nonqualified stock option and performance award windfall upon exercise | (9,128)   | (1,983)                 | —
Other                                                                  | 233       | (80)                    | (26)
Total                                                                  | $425      | $796                    | $47

26% tax rate applied
 difference federal effective tax rate 2019 2018 2017 state taxes U. S. foreign tax rates deferred tax adjustment share-based compensation deferred taxes non items valuation allowance. foreign subsidiaries varied tax rates.
 December 31,
 2019 2018 2017
 Income tax federal statutory rate $(10,883) $(9,811) $(6,659)
 Increase
 State income tax expense federal tax effect (3,657 (2,749
 Nondeductible permanent items 3,522
 Foreign rate differential (367)
 Tax rate change
 Adjustment deferred taxes
 Change valuation allowance 22,481,805
 Uncertain tax positions
 Nonqualified stock option performance award windfall (9,128 (1,983)
 233
 $425 $796 $47


Interest Expense and Interest Income and Other Expense, net
The table below sets forth the changes in interest expense and interest income and other expense, net, for the fiscal year ended December 29, 2019, as compared to fiscal year ended December 30, 2018 (in thousands, except percentage data):
The $242,000 increase in interest expense was attributable to higher line of credit balance in 2019 compared to 2018. The $112,000 increase in interest income and other expenses was attributable to increase in interest income from money market account with Heritage Bank.

                                       | Fiscal Years |        | Year-Over-Year Change |
-------------------------------------- | ------------ | ------ | --------------------- | ----------
                                       | 2019         | 2018   | Amount                | Percentage
Interest expense                       | $(350)       | $(108) | $(242)                | 224%
Interest income and other expense, net | 189          | 77     | 112                   | 145%
                                       | $(161)       | $(31)  | $(130)                | 419%

Interest Expense Income
 table changes expense December 2019 2018
 $242,000 increase expense higher line credit balance 2019. $112,000 increase money market account Heritage Bank.
 Fiscal Years Year-Over-Year Change
 2019 2018 Amount Percentage
 Interest expense $(350) $(108) $(242) 224%
 Interest income expense net 189  77  112 145%
 $(161) $(31) $(130) 419%


5.2 Key Management Personnel Compensation
Notes: (1) Comprise base salary, bonus, contributions to defined contribution plans and other benefits, but exclude performance share and share option expenses disclosed below.
(2) The Group Chief Executive Officer, an executive director of Singtel, was awarded up to 1,030,168 (2018: 1,712,538) ordinary shares of Singtel pursuant to Singtel performance share plans, subject to certain performance criteria including other terms and conditions being met. The performance share award in the previous financial year included a one-off Special Share Award (“SSA”). The performance share expense computed in accordance with SFRS(I) 2, Share-based Payment, was S$1.5 million (2018: S$3.3 million).
(3) The other key management personnel of the Group comprise the Chief Executive Officers of Consumer Singapore, Consumer Australia, Group Enterprise, Group Digital Life and International Group, as well as the Group Chief Corporate Officer, Group Chief Financial Officer, Group Chief Human Resources Officer, Group Chief Information Officer and Group Chief Technology Officer. The other key management personnel were awarded up to 3,537,119 (2018: 4,391,498) ordinary shares of Singtel pursuant to Singtel performance share plans, subject to certain performance criteria including other terms and conditions being met. The performance share award in the previous financial year included a one-off SSA. The performance share expense computed in accordance with SFRS(I) 2 was S$6.1 million (2018: S$8.5 million).
(4) Directors’ remuneration comprises the following: (i) Directors’ fees of S$2.7 million (2018: S$2.5 million), including fees paid to certain directors in their capacities as members of the Optus Advisory Committee and the Technology Advisory Panel, and as director of Singtel Innov8 Pte. Ltd. (ii) Car-related benefits of the Chairman of S$24,557 (2018: S$20,446). In addition to the Directors’ remuneration, Venkataraman Vishnampet Ganesan, a non-executive director of Singtel, was awarded 831,087 (2018: Nil) of share options pursuant to the Amobee Long-Term Incentive Plan during the financial year, subject to certain terms and conditions being met. The share option expense computed in accordance with SFRS(I) 2 was S$104,278 (2018: S$21,607).

                                          |        | Group
----------------------------------------- | ------ | ------
                                          | 2019   | 2018
                                          | S$ Mil | S$ Mil
Key management personnel compensation (1) |        |
Executive director (2)                    | 3.5    | 6.1
Other key management personnel (3)        | 15.9   | 22.4
                                          | 19.4   | 28.5
Directors' remuneration (4)               | 2.7    | 2.5
                                          | 22.1   | 31.0

. Management Personnel Compensation
 base salary bonus contributions plans benefits performance share option expenses.
 Group Chief Executive Officer Singtel awarded 1,030,168 (2018 1,712,538) shares Singtel. Special Share Award. expense S$1. 5 million (2018 S$3. 3 million).
 other Chief Executive Officers Consumer Singapore Australia Enterprise Digital Life International Group Corporate Officer Financial Officer Human Resources Officer Information Officer Technology Officer. awarded 3,537,119 (2018 4,391,498) shares Singtel criteria. one-off. expense S$6. 1 million (2018: S$8. 5 million).
 Directors’ remuneration Directors’ fees S$2. 7 million (2018 S$2. 5 Optus Advisory Committee Panel Singtel Innov8. Car-related benefits Chairman S$24,557 (2018: S$20,446).Directors’ remuneration Venkataraman Vishnampet Ganesan non director Singtel awarded 831,087 share options Amobee Long-Term Incentive Plan financial terms conditions. share option expense SFRS(I 2 S$104,278 (2018 S$21,607).
 management personnel compensation
 Executive director.
 management personnel 15. 22.
 19. 28.
 Directors' remuneration.
.


GreenSky, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (United States Dollars in thousands, except per share data, unless otherwise stated)
Disaggregated revenue
Revenue disaggregated by type of service was as follows for the periods presented:
(1) For the year ended December 31, 2019, includes a $30,459 change in fair value of our servicing asset primarily associated with increases to the contractually specified fixed servicing fees for certain Bank Partners. Refer to Note 3 for additional information.
(2) Other revenue includes miscellaneous revenue items that are individually immaterial. Other revenue is presented separately herein in order to clearly present merchant, interchange and servicing fees, which are more integral to our primary operations and better enable financial statement users to calculate metrics such as servicing and merchant fee yields.
No assets were recognized from the costs to obtain or fulfill a contract with a customer as of December 31,
2019 and 2018. We recognized bad debt expense arising from our contracts with customers of $950, $1,294 and
$817 during the years ended December 31, 2019, 2018 and 2017, respectively, which is recorded within general and
administrative expense in our Consolidated Statements of Operations.

                    |          | Year Ended December 31, |
------------------- | -------- | ----------------------- | --------
                    | 2019     | 2018                    | 2017
Merchant fees       | $361,755 | $297,776                | $234,548
Interchange fees    | 44,150   | 51,128                  | 44,410
Transaction fees    | 405,905  | 348,904                 | 278,958
Servicing fees(1)   | 123,697  | 65,597                  | 46,575
Other(2)            | 44       | 172                     | 354
Servicing and other | 123,741  | 65,769                  | 46,929
Total revenue       | $529,646 | $414,673                | $325,887

GreenSky Inc. NOTES FINANCIAL STATEMENTS States Dollars share data
 Disaggregated revenue
 service
 year ended December 31, 2019 $30,459 change value servicing increases servicing fees Bank Partners. Note 3.
 Other revenue miscellaneous. presented merchant interchange servicing fees.
 No assets recognized costs contract December 31,
 2018. recognized bad debt expense contracts $950 $1,294
 $817 December 31, 2019 2018 2017 recorded
 expense Consolidated Statements Operations.
 Ended December
 Merchant fees $361,755 $297,776 $234,548
 Interchange fees 44,150 51,128
 Transaction fees 405,905 348,904 278,958
 Servicing 123,697 65,597 46,575
 123,741 65,769 46,929
 Total revenue $529,646 $414,673 $325,887


Restricted Stock Units
The Company intends to settle all vested restricted stock unit payments held by United States-based participants in shares of the Company’s common stock and classifies these awards as equity awards in its Consolidated Balance Sheets. Awards held by participants who are based outside of the United States will be settled in cash and are classified within accrued and other current liabilities on the Consolidated Balance Sheets as of December 31, 2019 and 2018
The following table summarizes the activity related to the unvested restricted stock units during the years ended December 31, 2019 and 2018:
Unrecognized compensation expense related to unvested restricted stock units was $731 at December 31, 2019, which is expected to be recognized as expense over the weighted-average period of 0.7 years.
During the years ended December 31, 2019 and 2018, the Company issued 642,520 and 782,364 shares, respectively, of common stock to participants of the 2016 Plan based in the United States, after withholding approximately 261,335 and 472,965 shares, respectively, to satisfy tax withholding obligations. The Company made a cash payment of $181 and $1,495 to cover employee withholding taxes upon the settlement of these vested restricted stock units during the years ended December 31, 2019 and 2018, respectively. During the years ended December 31, 2019 and 2018, the Company also paid $0 and $300 to cash-settle 16 and 100,025 vested restricted stock units by agreement with the Chief Operating Officer in relation to certain grants made to him and to pay cash in lieu of fractional shares for vested units held by participants based in the United States.

                                                                | Number of Units | Weighted-Average Grant-Date Fair Value
--------------------------------------------------------------- | --------------- | --------------------------------------
Unvested restricted stock units outstanding - December 31, 2017 | 3,106,024       | $3.43
Granted                                                         | 853,736         | 1.46
Vested                                                          | (1,583,399)     | 3.18
Forfeited                                                       | (563,400)       | 3.39
Unvested restricted stock units outstanding - December 31, 2018 | 1,812,961       | $2.74
Granted                                                         | 60,000          | $0.98
Vested                                                          | (904,096)       | $2.67
Forfeited                                                       | (263,450)       | $2.71
Unvested restricted stock units outstanding - December 31, 2019 | 705,415         | $2.68

 Company vested stock payments United States participants common stock classifies equity Balance Sheets. outside settled cash classified accrued liabilities Balance Sheets December 31, 2019 2018
 table summarizes activity unvested stock units December 31, 2019
 Unrecognized compensation expense $731 at December 31, 2019 recognized 0. 7 years.
 2019 2018 issued 642,520 782,364 shares common stock participants 2016 Plan United States withholding 261,335 472,965 shares tax withholding obligations. cash payment $181 $1,495 employee withholding taxes settlement stock units. paid $0 $300 cash-settle 16 100,025 vested stock units cash shares vested units.
 Weighted-Average Grant-Date Value
 Unvested restricted stock units outstanding December 31, 2017 3,106,024. 43
 Granted 853,736.
 Vested (1,583,399).
 Forfeited (563,400.
stock units December 31, 2018 1,812,961.
 Granted.
 Vested (904,096).
 Forfeited (263,450.
 December 31, 2019,415.


Basic and Diluted Net Income Per Share
Basic net income per share is computed using net income divided by the weighted average number of shares of common stock
outstanding (“Weighted Shares”) for the period presented.
Diluted net income per share is computed using net income divided by Weighted Shares and the treasury stock method effect of common equivalent shares (“CESs”) outstanding for each period presented. In the following table, we present a reconciliation of earnings per share and the shares used in the computation of earnings per share for the years ended December 31, 2019, 2018 and 2017 (in thousands, except per share data):
common equivalent shares (“CESs”) outstanding for each period presented. In the following table, we present a reconciliation of
earnings per share and the shares used in the computation of earnings per share for the years ended December 31, 2019, 2018 and
2017 (in thousands, except per share data):
The number of anti-dilutive CESs in 2019, 2018 and 2017 was immaterial. See Note 2 for further information on those securities.

                                   |            | Year Ended December 31,                  |
---------------------------------- | ---------- | ---------------------------------------- | ---------
                                   | 2019       | 2018                                     | 2017
                                   |            | (in thousands, except per share data)    |
Net income                         | $ 85,762   | $ 104,690                                | $ 116,481
Earnings per share：                |            |                                          |
Basic                              | $ 1.33     | $ 1.58                                   | $ 1.68
Effect of CESs                     | (0.01 )    | -                                        | -
Diluted                            | $ 1.32     | $ 1.58                                   | $ 1.68
Weighted average number of shares: |            |                                          |
Basic                              | 64,397     | 66,201                                   | 69,175
Effect of CESs                     | 706        | 233                                      | 249
Diluted                            | 65,103     | 66,434                                   | 69,424

Basic Diluted Net Income Per Share
 computed divided weighted average shares common stock
.
 Diluted income computed divided by Weighted Shares treasury stock method effect common equivalent shares. reconciliation earnings per share shares years ended December 31, 2019 2018 2017
.
 years ended December 31, 2019 2018
 2017
 anti-dilutive CESs 2019 2018 2017 immaterial. See Note 2 information.
 Year Ended December 31,
 2019 2018 2017
 Net income $ 85,762  $ 104,690  $ 116,481
 Earnings per share
 $ 1. 33 1. 58 1. 68
 Effect of CESs.
.
 Weighted average number shares
 Basic 64,397 66,201  69,175
 Effect of CESs 233
 Diluted 65,103 66,434 69,424


Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017
Our management reviews and analyzes several key financial measures in order to manage our business and assess the quality of and variability of our service revenue, operating results and cash flows. The following summary tables present a comparison of our results of operations with respect to certain key financial measures. The comparisons illustrated in the tables are discussed in greater detail below.
(1) Includes non-cash equity-based compensation expense of $895 and $604 for 2018 and 2017, respectively.
(2) Includes non-cash equity-based compensation expense of $16,813 and $12,686 for 2018 and 2017, respectively.
Service Revenue. Our service revenue increased 7.2% from 2017 to 2018. Exchange rates positively impacted our increase in service revenue by approximately $4.0 million. All foreign currency comparisons herein reflect results for 2018 translated at the average foreign currency exchange rates for 2017. We increased our total service revenue by increasing the number of sales representatives selling our services, by expanding our network, by adding additional buildings to our network, by increasing our penetration into the buildings connected to our network and by gaining market share by offering our services at lower prices than our competitors.
Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes, Universal Service Fund fees and certain state regulatory fees. We record these taxes billed to our customers on a gross basis (as service revenue and network operations expense) in our consolidated statements of operations. The impact of these taxes including the Universal Service Fund resulted in an increase to our revenues from 2017 to 2018 of approximately $1.6 million.
Our net-centric customers tend to purchase their service on a price per megabit basis. Our corporate customers tend to utilize a small portion of their allocated bandwidth on their connections and tend to purchase their service on a per connection basis. Revenues from our corporate and net-centric customers represented 64.9% and 35.1% of total service revenue, respectively, for 2018 and represented 62.3% and 37.7% of total service revenue, respectively, for 2017. Revenues from corporate customers increased 11.8% to $337.8 million for 2018 from $302.1 million for 2017 primarily due to an increase in our number of our corporate customers. Revenues from our net-centric customers decreased by 0.4% to $182.3 million for 2018 from $183.1 million for 2017 primarily due to an increase in our number of net-centric customers being offset by a decline in our average price per megabit. Our revenue from our net- centric customers has declined as a percentage of our total revenue and grew at a slower rate than our corporate customer revenue because net-centric customers purchase our services based upon a price per megabit basis and our average price per megabit declined by 25.9% from 2017 to 2018. Additionally, the net-centric market experiences a greater level of pricing pressure than the corporate market and net-centric customers who renew their service with us expect their renewed service to be at a lower price than their current price. We expect that our average price per megabit will continue to decline at similar rates which would result in our corporate revenues continuing to represent a greater portion of our total revenues and our net-centric revenues continuing to grow at a lower rate than our corporate revenues. Additionally, the impact of foreign exchange rates has a more significant impact on our net- centric revenues.
Our on-net revenues increased 8.1% from 2017 to 2018. We increased the number of our on-net customer connections by 12.1% at December 31, 2018 from December 31, 2017. On-net customer connections increased at a greater rate than on-net revenues primarily due to the 5.1% decline in our on-net ARPU, primarily from a decline in ARPU for our net-centric customers. ARPU is determined by dividing revenue for the period by the average customer connections for that period. Our average price per megabit for our installed base of customers is determined by dividing the aggregate monthly recurring fixed charges for those customers by the aggregate committed data rate for the same customers. The decline in on-net ARPU is partly attributed to volume and term based pricing discounts. Additionally, on-net customers who cancel their service from our installed base of customers, in general, have an ARPU that is greater than the ARPU for our new customers due to declining prices primarily for our on-net services sold to our net-centric customers. These trends resulted in the reduction to our on-net ARPU and a 25.9% decline in our average price per megabit for our installed base of customers.
Our off-net revenues increased 5.2% from 2017 to 2018. Our off-net revenues increased as we increased the number of our off-net customer connections by 10.3% at December 31, 2018 from December 31, 2017. Our off-net customer connections increased at a greater rate than our off-net revenue primarily due to the 6.8% decrease in our off-net ARPU.
Network Operations Expenses. Network operations expenses include the costs of personnel associated with service delivery, network management, and customer support, network facilities costs, fiber and equipment maintenance fees, leased circuit costs, access and facilities fees paid to building owners and excise taxes billed to our customers and recorded on a gross basis. Non-cash equity-based compensation expense is included in network operations expenses consistent with the classification of the employee's salary and other compensation. Our network operations expenses, including non-cash equity-based compensation expense, increased 4.9% from 2017 to 2018 as we were connected to 11.9% more customer connections and we were connected to 170 more on-net buildings as of December 31, 2018 compared to December 31, 2017. The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilities expansion activities and the increase in our off- net revenues. When we provide off-net services we also assume the cost of the associated tail circuits.
Selling, General, and Administrative Expenses (“SG&A”). Our SG&A expenses, including non-cash equity- based compensation expense, increased 4.6% from 2017 to 2018. Non cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee's salary and other compensation and was $16.8 million for 2018 and $12.7 million for 2017. SG&A expenses increased primarily from an increase in salaries and related costs required to support our expansion and increases in our sales efforts and an increase in our headcount partly offset by a $1.1 million decrease in our legal fees primarily associated with U.S. net neutrality and interconnection regulatory matters and by the $1.3 million reduction in commission expense from the impact of the new revenue accounting standard which requires us to capitalize certain commissions paid to our sales agents and sales employees. Our sales force headcount increased by 7.8% from 574 at December 31, 2017 to 619 at December 31, 2018 and our total headcount increased by 4.8% from 929 at December 31, 2017 to 974 at December 31, 2018.
Depreciation and Amortization Expenses. Our depreciation and amortization expenses increased 7.0% from 2017 to 2018. The increase is primarily due to the depreciation expense associated with the increase related to newly deployed fixed assets more than offsetting the decline in depreciation expense from fully depreciated fixed assets.
Gains on Equipment Transactions. We exchanged certain used network equipment and cash consideration for new network equipment resulting in gains of $1.0 million for 2018 and $3.9 million for 2017. The gains are based upon the excess of the estimated fair value of the new network equipment over the carrying amount of the returned used network equipment and the cash paid. The reduction in gains from 2017 to 2018 was due to purchasing more equipment under the exchange program in 2017 than we purchased in 2018.
Interest Expense. Interest expense results from interest incurred on our $445.0 million of senior secured notes, interest incurred on our $189.2 million of senior unsecured notes, interest on our installment payment agreement and interest on our finance lease obligations. Our interest expense increased by 5.3% for 2018 from 2017 primarily due to the issuance of $70.0 million of senior secured notes in August 2018 and an increase in our finance lease obligations.
Income Tax Expense. Our income tax expense was $12.7 million for 2018 and $25.2 million for 2017. The decrease in our income tax expense was primarily related to an increase in deferred income tax expense for 2017 primarily due to the impact of the Tax Cuts and Jobs Act (the "Act"). On December 22, 2017, the President of the United States signed into law the Act. The Act amended the Internal Revenue Code and reduced the corporate tax rate from a maximum rate of 35% to a flat 21% rate. The rate reduction was effective on January 1, 2018 and may reduce our future income taxes payable once we become a cash taxpayer in the United States. As a result of the reduction in the corporate income tax rate and other provisions under the Act, we were required to revalue our net deferred tax asset at December 31, 2017 resulting in a reduction in our net deferred tax asset of $9.0 million and we also recorded a transition tax of $2.3 million related to our foreign operations for a total income tax expense of approximately $11.3 million, which was recorded as additional noncash income tax expense in 2017.
Buildings On-net. As of December 31, 2018 and 2017 we had a total of 2,676 and 2,506 on-net buildings connected to our network, respectively.

                                                 | Year Ended December 31, |          | Change
------------------------------------------------ | ----------------------- | -------- | -------
                                                 | 2018                    | 2017     | Percent
                                                 | (in thousands)          |          |
Service revenue                                  | $520,193                | $485,175 | 7.2%
On-net revenues                                  | 374,555                 | 346,445  | 8.1%
Off-net revenues                                 | 145,004                 | 137,892  | 5.2%
Network operations expenses(1)                   | 219,526                 | 209,278  | 4.9%
Selling, general, and administrative expenses(2) | 133,858                 | 127,915  | 4.6%
Depreciation and amortization expenses           | 81,233                  | 75,926   | 7.0%
Gains on equipment transactions                  | 982                     | 3,862    | (74.6)%
Interest expense                                 | 51,056                  | 48,467   | 5.3%
Income tax expense                               | 12,715                  | 25,242   | (49.6)%

Year Ended December 31, 2018 2017
 management reviews financial measures service revenue operating results cash flows. summary tables results financial measures.
 Includes non-cash equity compensation expense $895 $604 2018 2017.
 $16,813 $12,686 2018 2017.
 Service Revenue. increased 7. 2% 2017 to 2018. Exchange rates impacted revenue $4. 0 million. foreign currency comparisons reflect results 2018 average exchange rates 2017. increased service revenue increasing sales representatives expanding network adding buildings penetration gaining market share lower prices.
 Revenue recognition standards tax gross receipts taxes Universal Service Fund fees state regulatory fees. record taxes consolidated statements operations. taxes revenues 2017 to 2018 $1. 6 million.
 net-centric customers purchase service price per megabit. corporate customers utilize small bandwidth per connection. Revenues corporate net-centric customers represented 64. 35. 1% total service revenue 2018 62. 3% 37.7% service revenue 2017. Revenues corporate customers increased 11. 8% to $337. 8 million 2018 from $302. 1 million 2017 increase. net-centric customers decreased 0. 4% $182. 3 million 2018 from $183. 1 million 2017 increase offset decline average price per megabit. revenue net centric declined slower corporate declined 25. 9% 2017 to 2018. net-centric market pricing pressure expect lower price. average price per megabit decline corporate revenues greater portion total revenues net-centric revenues grow lower. foreign exchange rates net- centric revenues.
 on-net revenues increased 8. 1% 2017 to 2018. customer connections 12. 1% December 31, 2018. due 5. 1% decline on-net ARPU decline net-centric customers. ARPU determined revenue average customer connections. average price per megabit determined monthly charges rate. decline on-net ARPU attributed volume term based pricing discounts.on-net customers service have ARPU greater than new customers due to declining prices services. on-net ARPU 25. 9% decline average price per megabit.
 off-net revenues increased 5. 2% 2017 to 2018. increased connections by 10. 3% at December 31, 2018. due to 6. 8% decrease off-net ARPU.
 Network Operations Expenses. include personnel management support facilities costs fiber equipment maintenance fees leased circuit costs access facilities fees excise taxes. Non-cash equity-based compensation expense in. increased 4. 9% from 2017 to 2018 connected to 11. 9% more customer connections 170 more on-net buildings December 31, 2018. increase attributable to costs network facilities expansion increase off- net revenues. assume cost circuits.
 Administrative Expenses. non-cash increased 4. 6% 2017 to 2018. $16. 8 million for 2018 $12.million 2017. SG&A expenses increased salaries expansion sales headcount offset $1. 1 million legal fees. net neutrality $1. 3 million reduction commission expense new revenue accounting standard commissions. sales force headcount increased 7. 8% 619 2018 total headcount 4. 8% 929 974.
 Depreciation Amortization Expenses. increased 7. 0% 2017 2018. due newly deployed fixed assets.
 Gains Equipment Transactions. exchanged used network equipment cash new gains $1. million 2018 $3. 9 million 2017. gains estimated fair value new equipment. reduction gains purchasing more equipment 2017.
 Interest Expense. $445. million secured notes $189. 2 million unsecured notes installment payment agreement finance lease obligations. interest expense increased 5. 3% 2018 $70. million senior secured notes 2018 finance lease obligations.
 Income Tax Expense. $12. 7 million 2018 $25. 2 million 2017.decrease income tax expense related deferred 2017 Tax Cuts and Jobs Act. December 22, 2017 President signed. reduced corporate tax rate 35% to 21%. effective January 1, 2018 future taxes. net deferred tax asset December 31, 2017 $9. million transition tax $2. 3 million foreign operations total income tax expense $11. 3 million additional noncash income tax expense 2017.
. December 31, 2018 2017 2,676 2,506 on-net buildings.
 Service revenue $520,193  $485,175 7. 2%
 On-net revenues 374,555 346,445. 1%
 Off-net revenues 145,004 137,892. 2%
 Network operations 219,526 209,278. 9%
 133,858 127,915 4. 6%
 Depreciation amortization expenses 81,233 75,926.
 Gains equipment transactions 982 3,862.
 Interest expense 51,056 48,467. 3%
expense 12,715 25,242.


13. Income Taxes
On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into U.S. Law. As of December 31, 2018, the Company had completed its accounting for the tax effects related to the enactment of the Tax Act.
The Tax Act reduced the U.S. federal corporate income tax rate from 35% to 21%, effective January 1, 2018. During the year ended December 31, 2017, the Company remeasured certain deferred tax assets and liabilities and recorded a $15.0 million provisional tax charge. During the year ended December 31, 2018, the Company reduced the initial provisional tax charge by recording a $4.9 million benefit related to accelerated tax deductions claimed on the 2018 U.S. Federal Income Tax Return.
The Tax Act required U.S. companies to pay a one-time transition tax on certain unremitted foreign earnings. During the year ended December 31, 2017, the Company recorded a $20.9 million provisional tax charge based on post-1986 earnings and profits of foreign subsidiaries that were previously deferred from U.S. income taxes. Upon further analysis, the Company reduced the initial provisional tax charge by recording an $8.1 million benefit during the year ended December 31, 2018.
During the year ended December 31, 2018, the Company recorded a $15.5 million valuation allowance on its deferred tax asset related to U.S. foreign tax credits based upon business conditions and tax laws in effect at that time.
During the year ended December 31, 2019, following the acquisition of Speedpay, the Company determined it will more likely than not be able to utilize foreign tax credits in future years due to additional income generated by Speedpay; therefore, the Company released the $15.5 million valuation allowance that had been established on this deferred tax asset.
The Tax Act subjects a U.S. shareholder to tax on global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries. The Company has elected to account for GILTI in the year the tax is incurred.
Prior to 2018, the Company considered all earnings in foreign subsidiaries to be indefinitely reinvested, and accordingly, recorded no deferred income taxes related to unremitted earnings. As of December 31, 2019 and 2018, the Company considered only the earnings in its Indian subsidiaries to be indefinitely reinvested. The earnings of all other foreign subsidiaries are no longer considered indefinitely reinvested. The Company is also permanently reinvested for outside book/tax basis differences related to foreign subsidiaries.
For financial reporting purposes, income before income taxes includes the following components (in thousands):

              |         | Years Ended December 31, |
------------- | ------- | ------------------------ | -------
              | 2019    | 2018                     | 2017
United States | -16,317 | $16,312                  | -42,863
Foreign       | 88,527  | 75,487                   | 86,435
Total         | $72,210 | $91,799                  | $43,572

. Income Taxes
 December 22, 2017 Tax Cuts Jobs Act signed. Law. December 31, 2018 Company completed accounting tax effects.
 reduced. corporate income tax rate 35% to 21% January 1, 2018. 2017 Company remeasured deferred tax assets recorded $15. million tax charge. 2018 reduced tax $4. 9 million benefit accelerated tax deductions 2018. Federal Income Tax Return.
 Act. companies one-time transition tax unremitted foreign earnings. 2017 recorded $20. 9 million tax charge post-1986 earnings foreign subsidiaries deferred. reduced tax $8. 1 million benefit 2018.
 recorded $15. 5 million valuation allowance deferred tax. foreign tax credits.
 December 31, 2019 acquisition Speedpay tax credits income released $15. 5 million valuation allowance deferred tax.
 Tax Act subjects. shareholder tax low-taxed income foreign subsidiaries. GILTI.
2018 Company earnings foreign subsidiaries reinvested no deferred income taxes. December 31, 2019 2018 Indian subsidiaries reinvested. foreign subsidiaries reinvested. permanently reinvested differences.
 income before taxes
 Years Ended December 31,
 2018 2017
 United States,317 $16,312,863
 Foreign 88,527 75,487 86,435
 Total $72,210 $91,799 $43,572


Consolidated Comparison of Fiscal Year 2019 to Fiscal Year 2018
Net Sales
Net sales of $1.4 billion in fiscal year 2019 increased 15.2% from $1.2 billion in fiscal year 2018 primarily due to an increased in Solid Capacitor net sales $164.6 million. In addition, Film and Electrolytic net sales increased by $4.3 million, and MSA net sales increased by $13.8 million.
The increase in Solid Capacitors net sales was primarily driven by a $111.8 million increase in distributor sales across the Americas, APAC, and EMEA regions. The $111.8 million increase consisted of a $72.8 million increase in Ceramic product line sales and a $39.0 million increase in Tantalum product line sales. Also contributing to the increase in net sales was a $30.6 million increase in OEM sales across the APAC, EMEA, and JPKO regions, and a $28.0 million increase in EMS sales across all regions. These increases in net sales were partially offset by a $3.2 million decrease in distributor sales in the JPKO region and a $2.7 million decrease in OEM sales in the Americas region. In addition, Solid Capacitors net sales was unfavorably impacted by $0.5 million from foreign currency exchange due to the change in the value of the Euro compared to the U.S. dollar.
The increase in Film and Electrolytic net sales was primarily driven by a $10.5 million increase in distributor sales across the Americas and EMEA regions. Also contributing to the increase in net sales was $1.7 million increase in EMS sales in the Americas region and a $0.8 million increase in OEM sales in the JPKO region. These increases in net sales were partially offset by a $5.6 million decrease in OEM sales across the APAC and EMEA regions and a $3.1 million decrease in distributor sales across the APAC and JPKO regions. In addition, there was an unfavorable impact of $0.1 million from foreign currency exchange primarily due to the change in the value of the Euro compared to the U.S. dollar.
The increase in MSA net sales was primarily driven by a $15.0 million increase in OEM sales in the JPKO region. Also contributing to the increase in net sales was a $4.3 million increase in EMS sales across all regions and a $3.7 million increase in distributor sales across the Americas and EMEA regions. These increase in net sales were partially offset by a $5.5 million decrease in distributor sales across the APAC and JPKO regions and a $3.8 million decrease in OEM sales across the Americas, APAC, and JPKO regions.
In fiscal years 2019 and 2018, net sales by channel and the percentages of net sales by region to total net sales were as follows (dollars in thousands):

         | Fiscal Year 2019 |            | Fiscal Year 2018 |
-------- | ---------------- | ---------- | ---------------- | ----------
         | Net Sales        | % of Total | Net Sales        | % of Total
APAC     | $533,340         | 38.6%      | $479,987         | 40.0%
EMEA     | 315,535          | 22.8%      | 277,898          | 23.1%
Americas | 337,842          | 24.4%      | 259,105          | 21.6%
JPKO     | 196,101          | 14.2%      | 183,191          | 15.3%
Total    | $1,382,818       |            | $1,200,181       |

2019 2018
 Sales
 $1. 4 billion increased. 2% $1. 2 billion Solid Capacitor sales $164. 6 million. Film Electrolytic $4. 3 million MSA $13. 8 million.
 Solid Capacitors driven $111. 8 million increase distributor sales Americas APAC EMEA. $72. million Ceramic $39. million Tantalum. $30. 6 million OEM sales APAC EMEA JPKO $28. million EMS sales. offset $3. 2 million decrease distributor sales JPKO $2. 7 million decrease OEM sales Americas. impacted $0. 5 million exchange Euro.
 Film Electrolytic $10. 5 million increase sales Americas EMEA. $1. 7 million increase EMS sales $0. 8 million OEM sales JPKO. offset $5. 6 million decrease OEM sales APAC EMEA $3. 1 million decrease sales APAC JPKO. unfavorable impact $0. 1 million currency exchange Euro.
 MSA sales $15. million increase OEM sales JPKO.increase net sales $4. 3 million EMS $3. 7 million distributor sales Americas EMEA. offset $5. 5 million decrease distributor APAC JPKO $3. 8 million decrease OEM sales.
 fiscal years 2019 2018 net sales channel percentages
 APAC $533,340 38. 6% $479,987 40.
 EMEA 315,535 22. 8% 277,898 23.
 Americas 337,842 24. 4% 259,105 21.
 JPKO 196,101. 2% 183,191 15. 3%
 Total $1,382,818


BIG W’s Store‐controllable VOC and VOC NPS improved on the prior year with higher customer scores translating into sales, with an increase in F19 of 4.2% on a normalised basis to $3.8 billion. Comparable sales increased by 5.3% in F19 and 7.2% in Q4 (Easter‐adjusted) with growth in all customer universes.
BIG W’s growth continues to be driven by an increase in customer transactions (F19: 4.0%) and customers increasingly putting more items in their baskets with comparable items per basket growth of 4.4%. Together this drove comparable item growth of 8.6%. Excluding reusable bags, comparable items increased by 5.2%.
With BIG W’s turnaround gaining momentum, and to build a sustainable network for the future, a store and DC network review was announced in April. BIG W intends to close approximately 30 stores over the next three years and two distribution centres at the end of their leases. The review of the store network is ongoing, with three stores recently announced to be closed in F20.
BIG W has remained price competitive, improved ranges and built a convenient online and in‐store experience in F19.
Normalised Online sales increased by 128% in F19 with Pick up consistently delivering strong sales growth. Apparel, which has been more challenging, improved steadily through H2 due to a focus on range, stock flow and in‐store execution.
Normalised gross profit declined 49 bps for F19 reflecting continued challenges in stockloss as well as slow sell‐through of seasonal apparel in H1. Category mix improved in H2 with improved apparel sell‐through.
Normalised CODB declined 132 bps resulting from store efficiencies and sales growth fractionalising fixed costs.
The LBIT of $85 million before significant items excludes a $371 million charge identified as part of the network review.
Funds employed declined primarily due to significant items provisions. Inventory quality has improved as a result of solid sales and improved apparel sell‐through in H2.
In F20, BIG W will focus on creating a sustainable business that is simpler to operate, and continue providing customers with low prices and more convenient, connected solutions in‐store and online.

                              | F19      | F18      |           | CHANGE
----------------------------- | -------- | -------- | --------- | ----------
$ MILLION                     | 53 WEEKS | 52 WEEKS | CHANGE    | NORMALISED
Sales                         | 3,797    | 3,566    | 6.5%      | 4.2%
LBITDA before                 |          |          |           |
significant items             | (5)      | (30)     | (82.2)%   | (88.7)%
Depreciation and amortisation | (80)     | (80)     | 0.7%      | 0.7%
LBIT before significant items | (85)     | (110)    | (22.2)%   | (24.0)%
Significant items             | (371)    | –        | n.m.      | n.m.
LBIT after significant items  | (456)    | (110)    | 315.5%    | 313.7%
Gross margin (%)              | 31.1     | 31.7     | (59) bps  | (49) bps
Cost of doing business (%)    | 33.4     | 34.8     | (142) bps | (132) bps
LBIT 2 to sales (%)           | (2.3)    | (3.1)    | 83 bps    | 84 bps
Sales per square metre ($)$)  | 3,629    | 3,369    | 7.7%      | 5.4%
Funds employed                | 204      | 502      | (59.4)%   |
ROFE (%)                      | (23.0)   | (23.3)   | 24 bps    | 77 bps

BIG W’s NPS improved scores sales F19 4. 2% $3. 8 billion. sales increased 5. 3% F19 7. 2% Q4.
 customer transactions 4. more items baskets items basket growth 4. 4%. item growth 8. 6%. reusable bags increased 5. 2%.
 BIG network review April. 30 stores three years two distribution centres. review three stores F20.
 price competitive improved ranges convenient online in‐store experience.
 Online sales increased 128% F19 Pick. Apparel improved range stock flow in‐store execution.
 gross profit declined 49 bps F19 stockloss slow sell‐through seasonal apparel. Category mix improved H2 sell‐through.
 CODB declined 132 bps store efficiencies sales growth.
 LBIT $85 million $371 million charge network review.
 provisions. Inventory quality improved solid sales apparel sell‐through.
F20 BIG W sustainable business low prices connected solutions in‐store online.
 F19 F18
 $ MILLION 53 WEEKS 52 WEEKS
 Sales 3,797 3,566 6. 5% 4. 2%
 LBITDA
 significant items.
 Depreciation amortisation (80). 7%.
 LBIT before items (85) (110) (22. (24.
 Significant items (371).
 after (456) 315. 5% 313. 7%
 Gross margin 31.
 Cost business (%) 33. 4 34. 8 (142)
 LBIT sales.
 Sales square metre 3,629 3,369 7. 7% 5. 4%
 Funds 204 502 (59. 4)
 ROFE (23.


Summary Disclosures about Contractual Obligations and Commercial Commitments
Our material capital commitments consist of obligations under facilities and operating leases. Some of these leases have free or escalating rent payment provisions. We recognize rent expense under leases on a straight-line basis. We anticipate that we will experience an increase in our capital expenditures and lease commitments as a result of our anticipated growth in operations, infrastructure, personnel and resources devoted to building our brand name.
The following table summarizes our obligations as of March 31, 2019 (dollars in thousands):
We generally do not enter into binding purchase obligations. The purchase obligations above relate primarily to marketing and IT services. The contractual obligations table above excludes unrecognized tax benefits, plus related interest and penalties totaling $1.1 million because we cannot reasonably estimate in which future periods these amounts will ultimately be settled.
We have certain software royalty commitments associated with the shipment and licensing of certain products. Royalty expense is generally based on a fixed cost per unit shipped or a fixed fee for unlimited units shipped over a designated period. Royalty expense, included in cost of software and products revenues was $12.3 million in fiscal 2019 and $4.5 million million in fiscal 2018.
We offer a 90-day limited product warranty for our software. To date, costs relating to this product warranty have not been material.

                            |         |                  | Payments Due by Period |           |
--------------------------- | ------- | ---------------- | ---------------------- | --------- | -----------------
                            | Total   | Less Than 1 Year | 2-3 Years              | 4-5 Years | More Than 5 Years
Operating lease obligations | $23,673 | $9,008           | $10,907                | $2,827    | $931
Purchase obligations        | 20,520  | 16,748           | 3,669                  | 103       | —
Total                       | $44,193 | $25,756          | $14,576                | $2,930    | $931

Disclosures Contractual Obligations Commercial Commitments
 capital commitments facilities operating leases. leases free rent. rent expense. anticipate increase capital expenditures lease commitments growth infrastructure personnel brand name.
 table summarizes obligations as March 31, 2019
 purchase obligations. marketing IT services. excludes tax benefits interest penalties $1. 1 million.
 software royalty commitments shipment licensing. expense fixed cost unit fee units. expense $12. 3 million 2019 $4. 5 million 2018.
 90-day product warranty software. costs.
 Payments Due Period
 Less Than 1 Year 2-3 Years 4-5 Years More 5 Years
 Operating lease obligations $23,673 $9,008 $10,907 $2,827 $931
 Purchase obligations 20,520 16,748 3,669
 $44,193  $25,756 $14,576 $2,930 $931


NAVIOS MARITIME HOLDINGS INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. dollars — except share data)
NOTE 5: ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following:

                                         | December 31, 2019 | December 31,2018
---------------------------------------- | ----------------- | ----------------
Accounts receivable                      | $68,309           | $76,376
Less: provision for doubtful receivables | (16,377)          | (16,086)
Accounts receivable, net                 | $51,932           | $60,290

NAVIOS MARITIME HOLDINGS. FINANCIAL STATEMENTS. dollars share
 ACCOUNTS RECEIVABLE
 2019 31,2018
 $68,309 $76,376
 doubtful receivables (16,377 (16,086)
 $51,932 $60,290


Acquisition Related and Other Expenses: Acquisition related and other expenses consist of personnel related costs and stock-based compensation for transitional and certain other employees, integration related professional services, and certain business combination adjustments including certain adjustments after the measurement period has ended and certain other operating items, net. Stock-based compensation expenses included in acquisition related and other expenses resulted from unvested restricted stock-based awards and stock options assumed from acquisitions whereby vesting was accelerated generally upon termination of the employees pursuant to the original terms of those restricted stock-based awards and stock options.
* Not meaningful
On a constant currency basis, acquisition related and other expenses decreased in fiscal 2019 compared to fiscal 2018 primarily due to certain favorable business combination related adjustments that were recorded in fiscal 201 9 .

                                              |      |        | Year Ended May 31, |
--------------------------------------------- | ---- | ------ | ------------------ | ----
                                              |      |        | Percent Change     |
(Dollars in millions)                         | 2019 | Actual | Constant           | 2018
Transitional and other employee related costs | $49  | 3%     | 4%                 | $48
Stock-based compensation                      | —    | -100%  | -100%              | 1
Professional fees and other, net              | 16   | 373%   | 426%               | 3
Business combination adjustments, net         | (21) | *      | *                  | —
Total acquisition related and other expenses  | $44  | -15%   | -13%               | $52

Acquisition Related Expenses personnel costs stock-based compensation transitional employees integration professional services business combination adjustments after measurement period operating items. Stock-based compensation expenses from unvested restricted stock awards options vesting accelerated upon termination.
 acquisition expenses decreased fiscal 2019 due favorable business adjustments.
 Year Ended May 31,
 Percent Change
 millions 2019
 Transitional employee costs $49 3% 4%  $48
 Stock-based compensation -100%
 Professional fees 16 373%  426%  3
 Business combination adjustments net
 Total acquisition related expenses $44  -15%  -13%  $52


In accordance with the requirements of ASC 606, the disclosure of the impact of adoption on our consolidated
balance sheet as of the fiscal year ended February 28, 2019 is as follows:
(1) Deferred product costs included in Prepaid expenses and other current assets and Other assets amounted
to $6.2 million and $8.8 million, respectively, as of February 28, 2019.
(2) The balances as of February 28, 2019 also included deferred revenue of TRACKER, which was acquired
on February 25, 2019 (see Note 2).
The impact of adopting ASC 606 on our consolidated statements of comprehensive income (loss) for the fiscal year ended February 28, 2019 was immaterial.

                                              |                                      | As of February 28, 2019 |
--------------------------------------------- | ------------------------------------ | ----------------------- | ---------------
                                              |                                      | ASC 606                 | Without ASC 606
                                              | As reported                          | Adjustments             | Adoption
Assets                                        |                                      |                         |
Prepaid expenses and other current assets (1) | $19,373                              | (1,473)                 | $17,900
Deferred income tax assets                    | 22,626                               | (532)                   | 22,094
Other assets (1)                              | 22,510                               | (3,319)                 | 19,191
                                              | Liabilities and Stockholders' Equity |                         |
Deferred revenue (2)                          | $24,264                              | (1,945)                 | 22,319
Other non-current liabilities (2)             | 38,476                               | (5,353)                 | 33,123
Stockholders' equity:                         |                                      |                         |
Accumulated deficit                           | $(2,227)                             | 1,689                   | (538)

ASC 606 impact adoption
 balance sheet February 28, 2019
 Deferred product costs Prepaid expenses assets
 $6. 2 million $8. 8 million February.
 balances deferred revenue TRACKER acquired
 February 25, 2019.
 impact ASC 606 statements income).
 ASC 606
 Adjustments Adoption
 Assets
 Prepaid expenses assets $19,373 (1,473) $17,900
 Deferred income tax assets 22,626
 Other assets 22,510 (3,319)
 Liabilities Stockholders' Equity
 Deferred revenue $24,264 (1,945)
 non-current liabilities 38,476 (5,353) 33,123
 Stockholders' equity
 Accumulated deficit $(2,227) 1,689


23. Associates (Cont'd)
The summarised financial information of the Group’s significant associate namely Intouch Holdings Public Company Limited (“Intouch”), based on its financial statements and a reconciliation with the carrying amount of the investment in the consolidated financial statements was as follows –
Note: (1) Others include adjustments to align the respective local accounting standards to SFRS(I).

                                                  | 2019    | 2018    | 2017
------------------------------------------------- | ------- | ------- | -------
                                                  | S$ Mil  | S$ Mil  | S$ Mil
Statement of comprehensive income                 |         |         |
Revenue                                           | 250.1   | 353.9   | 144.1
Profit after tax                                  | 451.7   | 488.2   | 166.1
Other comprehensive (loss)/ income                | (0.9)   | 10.9    | (1.6)
Total comprehensive income                        | 450.8   | 499.1   | 164.5
Statement of financial position                   |         |         |
Current assets                                    | 743.1   | 720.0   | 701.9
Non-current assets                                | 1,532.5 | 1,554.3 | 1,629.3
Current liabilities                               | (305.1) | (444.4) | (483.6)
Non-current liabilities                           | (205.5) | (313.4) | (395.3)
Net assets                                        | 1,765.0 | 1,516.5 | 1,452.3
Less: Non-controlling interests                   | (304.6) | (342.2) | (411.6)
Net assets attributable to equity holders         | 1,460.4 | 1,174.3 | 1,040.7
Proportion of the Group’s ownership               | 21.0%   | 21.0%   | 21.0%
Group’s share of net assets                       | 306.7   | 246.6   | 218.5
Goodwill and other identifiable intangible assets | 1,441.7 | 1,417.6 | 1,371.7
Others (1)                                        | (46.8)  | (23.0)  | (8.4)
Carrying amount of the investment                 | 1,701.6 | 1,641.2 | 1,581.8
Other items                                       |         |         |
Group’s share of market value                     | 1,653.2 | 1,639.6 | 1,525.0
Dividends received during the year                | 78.5    | 77.8    | -

. Associates
 financial information Intouch Holdings reconciliation investment
 adjustments local accounting standards SFRS.
 Statement income
 Revenue 250. 9 144.
 Profit after tax 451. 7. 166.
. 10.
 income 450. 8 499. 164.
 financial position
 assets 743. 720. 701. 9
 Non-current assets 1,532. 5 1,554. 1,629.
 liabilities (305. (444. (483.
 (205. (313. (395.
 assets 1,765. 1,516. 1,452.
 Non-controlling interests (304. (342. (411.
 assets equity holders 1,460. 4 1,174. 3 1,040. 7
 Group’s ownership 21. 0% 21.
 share net assets 306. 7 246. 6 218.
 Goodwill intangible assets 1,441. 7 1,417. 6 1,371. 7
 (46..
 investment 1,701. 1,641. 1,581.
 market value 1,653. 1,639. 6 1,525.
 Dividends 78. 5 77. 8


Accumulated Other Comprehensive Loss-Recognition and Deferrals
The following table presents cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2018, items recognized as a component of net periodic benefits expense in 2019, additional items deferred during 2019 and cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2019. The items not recognized as a component of net periodic benefits expense have been recorded on our consolidated balance sheets in accumulated other comprehensive loss:

                                           |          |                                              | As of and for the Years Ended December 31, |                    |
------------------------------------------ | -------- | -------------------------------------------- | ------------------------------------------ | ------------------ | -------
                                           | 2018     | Recognition of Net Periodic Benefits Expense | Deferrals                                  | Net Change in AOCL | 2019
                                           |          |                                              | (Dollars in millions)                      |                    |
Accumulated other comprehensive loss:      |          |                                              |                                            |                    |
Pension plans:                             |          |                                              |                                            |                    |
Net actuarial (loss) gain                  | $(2,973) | 224                                          | (297)                                      | (73)               | (3,046)
Prior service benefit (cost)               | 46       | (8)                                          | 9                                          | 1                  | 47
Deferred income tax benefit (expense)      | 754      | (53)                                         | 69                                         | 16                 | 770
Total pension plans                        | (2,173)  | 163                                          | (219)                                      | (56)               | (2,229)
Post-retirement benefit plans:             |          |                                              |                                            |                    |
Net actuarial (loss) gain                  | 7        | —                                            | (182)                                      | (182)              | (175)
Prior service (cost) benefit               | (87)     | 16                                           | —                                          | 16                 | (71)
Deferred income tax benefit (expense)      | 22       | (4)                                          | 44                                         | 40                 | 62
Total post-retirement benefit plans        | (58)     | 12                                           | (138)                                      | (126)              | (184)
Total accumulated other comprehensive loss | $(2,231) | 175                                          | (357)                                      | (182)              | (2,413)

Accumulated Loss-Recognition Deferrals
 table presents items not recognized December 31, 2018 2019 deferred 2019 not 2019. items not recorded balance sheets loss
 December
 2018 Recognition Net Benefits Expense Deferrals Net Change AOCL 2019
 millions
 Accumulated loss
 Pension plans
 Net actuarial (loss gain $(2,973) 224  (297) (73) (3,046)
 Prior service benefit (cost 46
 Deferred income tax benefit (expense 754 (53)
 pension plans (2,173) 163  (219) (56),229
 Post-retirement benefit plans
 Net actuarial (loss) gain 7 (182)
 Prior service (cost benefit (87)
 Deferred income tax benefit (expense 22
 post-retirement benefit plans (58) 12 (138) (126) (184)
loss,231) (357) (182) (2,413)


Dividends are distributions of the Group’s profit after tax before significant items to its shareholders and represent one of the ways the Group distributes returns to its shareholders.
All dividends are fully franked at a 30% tax rate.
On 29 August 2019, the Board of Directors declared a final dividend in respect of the 2019 period of 57 cents per share, fully franked at a 30% tax rate. The amount will be paid on or around 30 September 2019 and is expected to be $717 million. As the dividend was declared subsequent to 30 June 2019, no provision had been made as at 30 June 2019.
The DRP remains active. Eligible shareholders may participate in the DRP in respect of all or part of their shareholding. There is currently no DRP discount applied and no limit on the number of shares that can participate in the DRP.
Shares will be allocated to shareholders under the DRP for the 2019 final dividend at an amount equal to the average of the daily volume weighted average market price of ordinary shares of the Company traded on the ASX over the period of 10 trading days commencing on 6 September 2019. The last date for receipt of election notices for the DRP is 5 September 2019. The Company may acquire shares on-market during this period to satisfy its obligations under the DRP.
During the period, 13.4% (2018: 39.9%) of the dividends paid were reinvested in shares of the Company. The change in the reinvestment participation rate reflects the removal of the discount with effect from the 2018 final dividend paid on 12 October 2018. The DRP in respect of the 2019 interim dividend was satisfied in full through the on-market purchase and transfer of $73 million of shares to participating shareholders.

                                          | 2019      |        |                 |           | 2018   |
----------------------------------------- | --------- | ------ | --------------- | --------- | ------ | --------------
                                          | CENTS PER | TOTAL  | DATE OF         | CENTS PER | TOTAL  | DATE OF
                                          | SHARE     | AMOUNT | PAYMENT         | SHARE     | AMOUNT | PAYMENT
                                          |           | $M     |                 |           | $M     |
Current year interim                      | 45        | 593    | 5 April 2019    | 43        | 561    | 6 April 2018
Prior year final                          | 50        | 657    | 12 October 2018 | 50        | 647    | 6 October 2017
Prior year special                        | 10        | 131    | 12 October 2018 | -         | –      |
Dividends paid during the period          | 105       | 1,381  |                 | 93        | 1,208  |
Issues of shares to satisfy the dividend  |           |        |                 |           |        |
reinvestment plan                         |           | (114)  |                 |           | (482)  |
Dividends received - shares held in trust |           | -      |                 |           | (2)    |
Dividends paid in cash                    |           | 1,267  |                 |           | 724    |

Dividends Group’s profit after tax to shareholders returns.
 All dividends franked 30% tax rate.
 29 August 2019 Board of Directors declared final dividend 2019 57 cents per share franked 30% tax rate. paid 30 September 2019 expected $717 million. no provision 2019.
 DRP active. shareholders participate. no DRP discount no limit shares.
 Shares allocated to 2019 final dividend equal to daily volume market price of ordinary shares ASX 10 trading days 6 September 2019. last date election notices DRP 5 September 2019. Company may acquire shares on-market obligations DRP.
 13. 4% (2018 39. 9%) dividends reinvested in shares. change reinvestment reflects removal discount 2018 final dividend 12 October 2018. DRP 2019 interim dividend satisfied through on-market purchase transfer $73 million shares to shareholders.
 2018

 Current year interim 45 593 5 April 2019 43 561 6 April 2018
 year 50 657 12 October 2018 647 6 October 2017
 131 12 October 2018
 Dividends 105 1,381 93 1,208
 shares dividend
 reinvestment plan (114)
 Dividends shares trust
 Dividends cash 1,267 724


Contractual Obligations
Following is a summary of our contractual cash obligations as of February 28, 2019 (in thousands):
Purchase obligations consist primarily of inventory purchase commitments.

                                         |           |          | Future Estimated Cash Payments Due by Period |           |
---------------------------------------- | --------- | -------- | -------------------------------------------- | --------- | --------
                                         | Less than | 1 - 3    | 3 - 5                                        |           |
Contractual Obligations                  | 1 year    | years    | years                                        | > 5 years | Total
Convertible senior notes principal       | $-        | $122,527 | $-                                           | $230,000  | $352,527
Convertible senior notes stated interest | 6,591     | 10,196   | 9,200                                        | 6,900     | 32,887
Operating leases                         | 7,565     | 12,628   | 12,325                                       | 7,659     | 40,177
Purchase obligations                     | 39,390    | -        | -                                            | -         | 39,390
Total contractual obligations            | $53,546   | $145,351 | $21,525                                      | $244,559  | $464,981

Contractual Obligations
 summary cash obligations February 28, 2019
 inventory commitments.
 Future Estimated Cash Payments
 1 - 3
 Obligations 5 years
 Convertible senior notes principal $122,527 $230,000
 interest 6,591 10,196
 Operating leases 7,565 12,628,325 7,659 40,177
 Purchase obligations 39,390
 contractual obligations $53,546 $145,351 $21,525 $244,559 $464,981


10. Other financial result
The other financial income and expenses from financial instruments are assigned to measurement categories according to IFRS 9 on the basis of the underlying transactions. Besides income and expenses from the measurement of financial instruments (except derivatives in hedging relationships in accordance with IAS 39), this also includes the measurement of foreign currency positions according to IAS 21.
The total comprehensive income from currency effects and measurement results from hedging transactions and hedging relationships totalled €17 million (2017/18: €−14 million). In addition, the other financial result reflects €−5 million (2017/18: €4 million) in currency effects resulting from the translation of the financial statements of foreign subsidiaries that are recognised through profit or loss in the year the subsidiary is deconsolidated or in the year business activities are discontinued. In addition, impairment losses on financial assets amounting to €2 million (2017/18: €0 million) were recognised in the reporting period.

€ million                                                                                | 2017/2018 | 2018/2019
------------------------------------------------------------------------------------------------------------ | --------- | ---------
Other financial income                                                                                | 182       | 159
thereof currency effects                                                                                | (126)     | (112)
thereof hedging transactions                                                                                | (16)      | (39)
Other financial expenses                                                                                | −184      | −158
thereof currency effects                                                                                | (−152)    | (−116)
thereof hedging transactions                                                                                | (−3)      | (−18)
Other financial result                                                                                | −2        | 1
thereof from financial instruments of the measurement categories according to IFRS 9 (previous year: IAS39): | (−16)     | (17)
thereof cash flow hedges:                                                                                |           |
ineffectiveness                                                                                | (7)       | (−1)

. financial result
 income expenses from instruments assigned categories IFRS 9. foreign currency positions IAS 21.
 income currency effects results hedging transactions €17 million (2017/18 €−14 million). reflects €−5 million (2017/18 €4 million currency effects translation financial statements foreign subsidiaries deconsolidated business activities discontinued. impairment losses on financial assets €2 million (2017/18 €0 million) recognised reporting period.
 million 2017/2018 2018/2019
 financial income 182 159
 currency effects
 hedging transactions
 financial expenses −184 −158
 currency effects (−152
 hedging transactions
 financial result −2
 financial instruments IFRS 9 (−16)
 cash flow hedges


Unaudited Pro Forma Financial Information
The unaudited pro forma financial information in the table below summarizes the combined results of operations for Oracle, Aconex and certain other companies that we acquired since the beginning of fiscal 2018 that were considered relevant for the purposes of unaudited pro forma financial information disclosure as if the companies were combined as of the beginning of fiscal 2018. The unaudited pro forma financial information for all periods presented included the business combination accounting effects resulting from these acquisitions, including amortization charges from acquired intangible assets (certain of which are preliminary), stock-based compensation charges for unvested restricted stock-based awards and stock options assumed, if any, and the related tax effects as though the aforementioned companies were combined as of the beginning of fiscal 2018. The unaudited pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of fiscal 2018 or 2019.
The unaudited pro forma financial information for fiscal 2019 presented the historical results of Oracle for fiscal 2019 and certain other companies that we acquired since the beginning of fiscal 2019 based upon their respective previous reporting periods and the dates these companies were acquired by us, and the effects of the pro forma adjustments listed above.
The unaudited pro forma financial information for fiscal 2018 combined the historical results of Oracle for fiscal 201 8 and the historical results of Aconex for the twelve month period ended December 31, 2017 (adjusted due to differences in reporting periods and considering the date we acquired Aconex) and certain other companies that we acquired since the beginning of fiscal 201 8 based upon their respective previous reporting periods and the dates these companies were acquired by us, and the effects of the pro forma adjustments listed above. The unaudited pro forma financial information was as follows:

                                     | Year Ended May 31, |
------------------------------------ | ------------------ | -------
(in millions, except per share data) | 2019               | 2018
Total revenues                       | $39,512            | $39,546
Net income                           | $11,076            | $3,500
Basic earnings per share             | $3.05              | $0.85
Diluted earnings per share           | $2.97              | $0.83

Unaudited Pro Forma Financial Information
 summarizes combined results for Oracle Aconex other companies acquired since 2018 relevant for disclosure. information included business combination accounting effects acquisitions amortization charges from acquired intangible assets stock-based compensation charges for unvested restricted stock awards stock options tax effects. information for informational purposes not indicative of results acquisitions fiscal 2018 or 2019.
 information for fiscal 2019 presented historical results of Oracle other companies previous reporting periods dates effects of pro forma adjustments.
 information for fiscal 2018 combined historical results Oracle Aconex for ended December 31, 2017 (adjusted due to differences reporting periods date Aconex other companies acquired since effects pro forma adjustments. unaudited pro forma financial information
 Year Ended May 31,
 millions share data 2019 2018
 Total revenues $39,512 $39,546
 Net income $11,076 $3,500
 Basic earnings per share $3.. 85
 earnings share $2. 83


Concentrations
The Company may be subject to concentration of credit risk as a result of certain financial instruments consisting of accounts receivable and short term investments. The Company performs ongoing credit evaluations of its customers and generally does not require collateral in exchange for credit.
The following table sets forth major customers accounting for 10% or more of the Company’s net revenue:

                      | Year Ended    |               |
--------------------- | ------------- | ------------- | -------------
                      | June 30,
2019 | June 30,
2018 | June 30, 2017
Tech Data Corporation | 18%           | 14%           | 16%
Jenne Corporation     | 17%           | 13%           | 15%
Westcon Group Inc.    | 12%           | 13%           | 12%

 Company credit risk financial instruments receivable short term investments. performs credit evaluations require collateral.
 table customers 10% net revenue
 Year Ended
 June
 2019
 2018 2017
 Tech Data Corporation 18% 14% 16%
 Jenne Corporation 17% 13% 15%
 Westcon Group. 12%


9. DEBT AND OTHER FINANCING ARRANGEMENTS
2021 Senior Convertible Notes
In 2017, the Company issued $300.0 million principal amount of 5.75% senior convertible notes (the “2021 Notes”) for a purchase price equal to 98% of the principal amount. The Company received net proceeds of $284.9 million, net of a discount of $6.0 million and issuance costs of $9.1 million. The debt discount is being accreted to interest expense over the term of the 2021 Notes using the interest method. The issuance costs were deferred and are being amortized to interest expense over the same term.
The 2021 Notes are governed by an Indenture, dated December 8, 2017 between the Company and US Bank National Association, as trustee (the “2017 Indenture”). The 2021 Notes mature on July 1, 2021, unless earlier repurchased or converted. Interest is payable semi-annually in arrears on January 1 and July 1, commencing January 1, 2018.
The 2021 Notes are convertible at an initial conversion rate of 23.8095 shares of the Company’s common stock per $1,000 principal amount of the 2021 Notes, which represents an initial conversion price of $42.00 per share, subject to adjustment for anti-dilutive issuances, voluntary increases in the conversion rate, and make-whole adjustments upon a fundamental change. A fundamental change includes a change in control, delisting of the Company’s common stock, and a liquidation of the Company. Upon conversion, the Company will deliver the applicable number of the Company’s common stock and cash in lieu of any fractional shares. Holders of the 2021 Notes may convert their 2021 Notes at any time prior to the close of business on the scheduled trading day immediately preceding the maturity date.
The holders of the 2021 Notes may require the Company to repurchase all or a portion of their 2021 Notes at a cash repurchase price equal to 100% of the principal amount of the 2021 Notes being repurchased, plus the remaining scheduled interest through and including the maturity date, upon a fundamental change and events of default, including non-payment of interest or principal and other obligations under the 2017 Indenture.
The net carrying amounts of the liability components of the 2021 Notes consist of the following (in thousands):
The effective interest rate of the liability component is 6.4% for the 2021 Notes.

                                                           | December 31, 2019 | December 31, 2018
---------------------------------------------------------- | ----------------- | -----------------
Principal amount                                           | $300,000          | $300,000
Unamortized debt discount                                  | (2,691)           | (4,348)
Net carrying amount before unamortized debt issuance costs | 297,309           | 295,652
Unamortized debt issuance costs                            | (4,135)           | (6,685)
Net carrying value                                         | $293,174          | $288,967

. DEBT FINANCING ARRANGEMENTS
 2021 Convertible Notes
 2017 Company issued $300. million. 75% convertible notes purchase 98%. proceeds $284. 9 million discount $6. million issuance costs $9. 1 million. debt discount accreted interest expense. issuance costs deferred amortized interest.
 Notes governed Indenture December 8, 2017 US Bank National Association. Notes mature July 1, 2021. Interest payable semi-annually January 1 July 1 January 1 2018.
 Notes convertible conversion rate 23. 8095 shares common stock $1,000 principal conversion price $42. 00 per share subject adjustment anti issuances increases conversion adjustments fundamental change. control delisting liquidation. common stock cash shares. Holders convert business maturity.
holders 2021 Notes require repurchase 100% principal remaining scheduled interest maturity date fundamental change default non-payment interest obligations 2017 Indenture.
 net carrying amounts
 effective interest rate 6. 4%.
 December 2019 31, 2018
 Principal amount $300,000
 Unamortized debt discount (2,691) (4,348)
 Net carrying before costs 297,309 295,652
 (4,135) (6,685)
 Net carrying value $293,174 $288,967


11. Reportable Segments, Geographic Information and Major Customers
Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in assessing performance and allocating resources. The Company uses an internal management reporting system, which provides important financial data to evaluate performance and allocate the Company’s resources on a regional basis. Net sales for the segments are attributed to the region in which the product is manufactured or the service is performed. The services provided, manufacturing processes used, class of customers serviced and order fulfillment processes used are similar and generally interchangeable across the segments. A segment’s performance is evaluated based upon its operating income (loss). A segment’s operating income (loss) includes its net sales less cost of sales and selling and administrative expenses, but excludes corporate and other expenses. Corporate and other expenses  fiscal 2019 and the $13.5 million one-time employee bonus paid to full-time, non-executive employees during fiscal 2018 due to the Company's ability to access overseas cash as a result of Tax Reform (the "one-time employee bonus"). These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Inter-segment transactions are generally recorded at amounts that approximate arm’s length transactions. The accounting policies for the segments are the same as for the Company taken as a whole.
Information about the Company’s three reportable segments for fiscal 2019, 2018 and 2017 is as follows (in thousands):

                      | 2019    | 2018    | 2017
--------------------- | ------- | ------- | -------
Depreciation:         |         |         |
AMER                  | $22,531 | $21,224 | $19,694
APAC                  | 16,905  | 15,954  | 15,588
EMEA                  | 6,105   | 6,054   | 5,467
Corporate             | 5,344   | 4,863   | 4,581
                      | 50,885  | 48,095  | 45,330
Capital expenditures: |         |         |
AMER                  | $42,459 | $17,690 | $18,111
APAC                  | 33,454  | 33,018  | 13,816
EMEA                  | 5,186   | 7,923   | 5,748
Corporate             | 9,501   | 4,149   | 863
                      | $90,600 | $62,780 | $38,538

. Reportable Segments Geographic Information Major Customers
 segments components enterprise financial information evaluated by chief decision maker performance resources. Company uses internal management reporting system financial data performance resources. Net sales attributed to region product manufactured service performed. services manufacturing processes customers order fulfillment processes similar interchangeable. performance evaluated operating income (loss). net sales cost administrative expenses excludes corporate other expenses. 2019 $13. 5 million-time employee bonus overseas cash Tax Reform. not allocated to segments. Inter-segment transactions recorded arm’s length. accounting policies same Company.
 three reportable segments for 2019 2018 2017
 Depreciation
 AMER $22,531 $21,224 $19,694
 APAC 16,905 15,954,588
 EMEA 6,105 6,054 5,467
 Corporate 5,344 4,863
 50,885 48,095,330
 Capital expenditures
,459 $17,690
 APAC 33,454 13,816
 EMEA 5,186
 4,149
 $90,600,780 $38,538


2. Earnings Per Share:
Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding for the period. Diluted
earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and
(b) the dilutive effect of potential common stock equivalents during the period. Stock options and unvested service-based RSU awards make up the common stock
equivalents and are computed using the treasury stock method.
The table below represents the basic and diluted earnings per share, calculated using the weighted average number of shares of common stock and potential
common stock equivalents outstanding for the years ended March 31, 2017, 2018, and 2019:
(1) Common stock equivalents not included in the computation of diluted earnings per share because the impact would have been anti-dilutive were 1,381 shares, 1,733
shares, and 4,375 shares for the fiscal years ended March 31, 2017, 2018, and 2019, respectively.

                                                                      |          | Fiscal Year Ended March 31, |
--------------------------------------------------------------------- | -------- | --------------------------- | --------
                                                                      | 2017     | 2018                        | 2019
Net income                                                            | $125,785 | $4,910                      | $271,813
Computation of Basic EPS:                                             |          |                             |
Weighted Average Shares Outstanding used in Computing Basic EPS       | 167,506  | 168,262                     | 168,713
Basic earnings per share                                              | $0.75    | $0.03                       | $1.61
Computation of Diluted EPS:                                           |          |                             |
Weighted Average Shares Outstanding used in Computing Basic EPS       | 167,506  | 168,262                     | 168,713
Effect of stock options                                               | 311      | 663                         | 609
Weighted Average Shares Outstanding used in Computing Diluted EPS (1) | 167,837  | 168,925                     | 169,322
Diluted earnings per share                                            | $0.75    | $0.03                       | $1.61

. Earnings Per Share
 Basic earnings computed net earnings weighted average shares common stock. Diluted
 earnings computed dividing net earnings weighted average shares
 dilutive effect potential common stock equivalents. Stock options unvested RSU awards common
 equivalents computed treasury stock method.
 table represents basic diluted earnings share calculated weighted average
 equivalents March 31, 2017 2018 2019
 Common stock equivalents not included anti-dilutive 1,381 1,733
 4,375 shares years 2017 2018 2019.
 March
 2018 2019
 Net income $125,785 $4,910  $271,813
 Basic EPS
 Weighted Average Shares 167,506 168,262 168,713
 earnings.
 Diluted EPS
 Weighted Average Shares 167,506 168,262 168,713
 stock options
 167,837 168,925 169,322
 earnings share.


Indefinite-lived Intangible Assets
The carrying amount of indefinite-lived intangible assets were as follows (in millions):
The Broadcasting segment strategically acquires assets across the United States, which results in the recording of FCC licenses. Providing the Company acts within the requirements and constraints of the regulatory authorities, the renewal and extension of these licenses is reasonably certain at minimal costs. Accordingly, we have concluded that the acquired FCC licenses are indefinite-lived intangible assets.
In 2019, FCC licenses increased $15.6 million, $18.2 million of which was through acquisitions, offset by $2.3 million of impairments and $0.3 million loss on the sale of licenses. Our Broadcasting segment recorded the impairment as a result of its decision to forfeit FCC licenses in certain lower-ranked markets, and does not expect any significant changes to future cash flows as a result of these forfeitures. The Company reports intangible impairment charges within the Asset impairment expense line of our Consolidated Statements of Operations.

               | December 31, |
-------------- | ------------ | -------
               | 2019         | 2018
FCC licenses   | $ 136.2      | $ 120.6
State licenses | 2.5          | 2.5
Total          | $ 138.7      | $ 123.1

Indefinite-lived Intangible Assets
 Broadcasting segment acquires assets FCC licenses. renewal extension minimal costs. acquired FCC licenses indefinite-lived.
 2019 FCC licenses increased $15. 6 million $18. 2 million offset $2. 3 million impairments $0. 3 million loss sale. Broadcasting segment recorded impairment FCC licenses changes future cash flows. reports impairment charges Asset impairment expense Consolidated Statements Operations.
 2018
 FCC licenses $ 136. 2 $ 120. 6
 State licenses.
 $ 138. $ 123.


Contract Balances
A contract asset will be recorded if we have recognized revenue but do not have an unconditional right to the related consideration from the customer. For example, this will be the case if implementation services offered in a cloud arrangement are identified as a separate performance obligation and are provided to a customer prior to us being able to bill the customer. In addition, a contract asset may arise in relation to subscription licenses if the license revenue that is recognized upfront exceeds the amount that we are able to invoice the customer at that time. Contract assets are reclassified to accounts receivable when the rights become unconditional.
The balance for our contract assets and contract liabilities (i.e. deferred revenues) for the periods indicated below were as follows:
The difference in the opening and closing balances of our contract assets and deferred revenues primarily results from the timing difference between our performance and the customer’s payments. We fulfill our obligations under a contract with a customer by transferring products and services in exchange for consideration from the customer. During the year ended June 30, 2019, we reclassified $19.2 million of contract assets to receivables as a result of the right to the transaction consideration becoming unconditional. During the year ended June 30, 2019, there was no significant impairment loss recognized related to contract assets.
We recognize deferred revenue when we have received consideration or an amount of consideration is due from the customer for future obligations to transfer products or services. Our deferred revenues primarily relate to customer support agreements which have been paid for by customers prior to the performance of those services. The amount of revenue that was recognized during the year ended June 30, 2019 that was included in the deferred revenue balances at July 1, 2018 was approximately $617 million.

                            | As of June 30, 2019 | As of July 1, 2018
--------------------------- | ------------------- | ------------------
Short-term contract assets  | $20,956             | $5,474
Long-term contract assets   | $15,386             | $12,382
Short-term deferred revenue | $641,656            | $618,197
Long-term deferred revenue  | $46,974             | $64,743

Contract Balances
 asset recorded if recognized revenue unconditional right to consideration customer. services cloud arrangement separate provided prior. contract asset subscription licenses if revenue exceeds. assets reclassified to receivable when rights unconditional.
 balance contract assets liabilities. deferred revenues
 difference in opening closing balances revenues from timing difference performance payments. fulfill obligations transferring products services for consideration. June 30 2019 reclassified $19. 2 million assets to receivables right unconditional. no significant impairment loss.
 deferred revenue consideration for future obligations. revenues relate to customer support agreements paid. revenue June 2019 deferred revenue balances at July 1, 2018 approximately $617 million.
 June 30, 2019 July 1, 2018
 Short-term contract assets $20,956 $5,474
 Long-term $15,386 $12,382
 Short-term deferred revenue $641,656 $618,197
 Long-term deferred $46,974  $64,743


Overview of the Markets We Serve
The U.S. mortgage loan servicing market is comprised of first and second lien mortgage loans. Even through housing downturns, the mortgage loan servicing market generally remains stable, as the total number of first lien mortgage loans outstanding tends to stay relatively constant. The number of second lien mortgage loans outstanding can vary based on a number of factors including loan-to-value ratios, interest rates and lenders' desire to own such loans.
While delinquent mortgage loans typically represent a small portion of the overall mortgage loan servicing market, the mortgage loan default process is long and complex and involves multiple parties, a significant exchange of data and documentation and extensive regulatory requirements. Providers in the default process must be able to meet strict regulatory guidelines, which we believe are best met through the use of proven technology.
The U.S. mortgage loan origination market consists of both purchase and refinance mortgage loan originations. The mortgage loan origination process is complex and involves multiple parties, significant data exchange and significant regulatory oversight, which requires a comprehensive, scalable solution developed by a company with substantial industry experience. According to the Mortgage Bankers Association ("MBA"), the U.S. mortgage loan origination market for purchase and refinance mortgage loan originations is estimated as follows (in billions):
Note: Amounts may not recalculate due to rounding.
(1) The 2019, 2018 and 2017 U.S. mortgage loan origination market for purchase and refinance originations is estimated by the MBA Mortgage Finance Forecast as of February 18, 2020, February 11, 2019 and October 16, 2018, respectively.

                               | 2019     | 2018     | 2017
------------------------------ | -------- | -------- | --------
Mortgage loan originations(1): |          |          |
Purchase                       | $1,272.0 | $1,185.0 | $1,143.0
Refinance                      | 796.0    | 458.0    | 616.0
Total                          | $2,068.0 | $1,643.0 | $1,760.0

Overview Markets
 U. S. mortgage loan market first second lien loans. housing downturns stable first lien loans constant. second lien loans loan-to ratios interest rates lenders desire.
 delinquent loans small portion default process long complex multiple parties exchange data regulatory requirements. Providers default meet strict regulatory guidelines proven technology.
 U. S. mortgage loan origination market purchase refinance. complex multiple parties data exchange regulatory oversight requires comprehensive scalable solution industry experience. Mortgage Bankers Association. market estimated billions):
 Amounts not recalculate rounding.
 2019 2018 2017. market estimated MBA Mortgage Finance Forecast February 18, 2020 February 11, 2019 October 16, 2018.
 Mortgage loan
 Purchase $1,272. $1,185. $1,143.
 Refinance 796. 616.
 Total $2,068. $1,643. $1,760.