NOTE 10—GOODWILL AND PURCHASED INTANGIBLE ASSETS
Changes in goodwill for the two years ended September 30, 2019 are as follows (in thousands):
As described in Note 18, we concluded that CMS became a separate operating segment beginning on October 1, 2017. In conjunction with the changes to reporting units, we reassigned goodwill between CGD and CMS based on their relative fair values on October 1, 2017.
In July 2017, we acquired Deltenna, a wireless infrastructure company specializing in the design and delivery of radio and antenna communication solutions. Deltenna’s operations were included in our CGD reporting unit upon its acquisition. On April 1, 2019, we reorganized our reporting structure to include Deltenna in our CMS reporting unit and reassigned $3.4 million of goodwill from CGD to CMS based upon its relative fair value. Since its acquisition, Deltenna’s sales, operating results, and cash flows have not been significant to our consolidated results. As such, reportable segment information has not been restated for this change in the composition of our reportable segments.
We complete our annual goodwill impairment test each year as of July 1 separately for our CTS, CGD and CMS reporting units.
The test for goodwill impairment is a two-step process. The first step of the test is performed by comparing the fair value of each reporting unit to its carrying amount, including recorded goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step is performed to measure the amount of the impairment, if any, by comparing the implied fair value of goodwill to its carrying amount. Any resulting impairment determined would be recorded in the current period.
For our 2019 impairment test, the estimated fair value of all three of our reporting units exceeded their respective carrying amounts. As such, there was no impairment of goodwill in 2019.
Significant management judgment is required in the forecast of future operating results that are used in our impairment analysis. The estimates we used are consistent with the plans and estimates that we use to manage our business. Although we believe our underlying assumptions supporting these assessments are reasonable, if our forecasted sales and margin growth rates, timing of growth, or the discount rate vary from our forecasts, we may be required to perform interim analyses in fiscal 2020 that could expose us to material impairment charges in the future.

                                       | Cubic Transportation Systems | Cubic Mission Solutions | Cubic Global Defense | Total
-------------------------------------- | ---------------------------- | ----------------------- | -------------------- | ----------
Net balances at September 30, 2017     | $  50,870                    | $  —                    | $  270,692           | $  321,562
Reassignment on October 1, 2017        | —                            | 125,321                 | (125,321)            | —
Acquisitions (see Note 2)              | —                            | 13,085                  | 665                  | 13,750
Foreign currency exchange rate changes | (1,084)                      | (279)                   | (323)                | (1,686)
Net balances at September 30, 2018     | 49,786                       | 138,127                 | 145,713              | 333,626
Reassignment on April 1, 2019          | —                            | 3,428                   | (3,428)              | —
Acquisitions                           | 206,988                      | 40,392                  | —                    | 247,380
Foreign currency exchange rate changes | (2,182)                      | (523)                   | (204)                | (2,909)
Net balances at September 30, 2019     | $ 254,592                    | $  181,424              | $  142,081           | $  578,097

NOTE 10—GOODWILL INTANGIBLE ASSETS
 Changes goodwill two years September 30, 2019
 CMS separate operating segment October 1, 2017. reassigned goodwill between CGD CMS fair values October 1, 2017.
 July 2017 acquired Deltenna wireless infrastructure company radio antenna communication solutions. operations CGD unit. April 1, 2019 reorganized reporting structure Deltenna CMS unit reassigned $3. 4 million goodwill CGD to CMS fair value. Deltenna’s sales operating results cash flows not significant consolidated results. reportable segment information restated.
 annual goodwill impairment test July 1 CTS CGD CMS reporting units.
 two-step process. fair value unit carrying amount. impairment. impairment recorded current period.
 2019 estimated fair value three units exceeded carrying amounts. no impairment goodwill 2019.
 management judgment required future operating results analysis. estimates consistent with plans business.assumptions sales discount vary interim analyses 2020 impairment charges.
 Transportation Systems Mission Solutions Global Defense
 Net balances September 30, 2017 $ 50,870 270,692 321,562
 Reassignment October 1, 2017 125,321
 Acquisitions 13,085
 Foreign currency rate changes (1,084)
 Net balances September 30, 2018 49,786 138,127 145,713 333,626
 Reassignment April 1, 2019 3,428
 Acquisitions 206,988,380
 Foreign currency exchange rate changes (2,182)
 Net balances September 30, 2019 $ 254,592 181,424 142,081 578,097


Note 20. Net Income Per Common Share From Continuing Operations
The following table sets forth the computation of basic and diluted net income per common share from continuing operations (in millions, except per share amounts):
The Company computed basic net income per common share from continuing operations based on the weighted average number of common shares outstanding during the period. The Company computed diluted net income per common share from continuing operations based on the weighted average number of common shares outstanding plus potentially dilutive common shares outstanding during the period.
Potentially dilutive common shares from employee equity incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of outstanding RSUs. Weighted average common shares exclude the effect of option shares which are not dilutive. There were no anti-dilutive option shares for the years ended March 31, 2019, 2018, and 2017.

                                                               |        | Year Ended March 31, |
-------------------------------------------------------------- | ------ | -------------------- | ------
                                                               | 2019   | 2018                 | 2017
Net income from continuing operations                          | $355.9 | $255.4               | $170.6
Basic weighted average common shares outstanding               | 236.2  | 232.9                | 217.2
Dilutive effect of stock options and RSUs                      | 3.8    | 4.4                  | 4.4
Dilutive effect of 2007 Junior Convertible Debt                | —      | 1.3                  | 12.7
Dilutive effect of 2015 Senior Convertible Debt                | 9.9    | 10.3                 | 0.5
Dilutive effect of 2017 Senior Convertible Debt                | —      | —                    | —
Dilutive effect of 2017 Junior Convertible Debt                | —      | —                    | —
Diluted weighted average common shares outstanding             | 249.9  | 248.9                | 234.8
Basic net income per common share from continuing operations   | $1.51  | $1.10                | $0.79
Diluted net income per common share from continuing operations | $1.42  | $1.03                | $0.73

. Net Income Per Share Operations
 table basic diluted net income per common share millions
 Company computed net income share average shares. diluted income potentially dilutive common shares.
 dilutive common shares equity incentive plans determined treasury stock method stock options vesting RSUs. common shares exclude option shares not dilutive. no anti-dilutive option shares years ended March 31, 2019 2018 2017.
 Net income operations $355. $255. $170.
 Basic weighted average common shares 236. 232. 217.
 Dilutive effect stock options RSUs.
 effect 2007 Junior Convertible Debt.
 2015 Senior Convertible Debt.
 2017 Senior Convertible Debt
 Diluted weighted average common shares 249. 248. 234.
 Basic net income per common share operations $1. 51 $1. $0.
 Diluted net income $1.42 $1.


Stock-Based Compensation
The Company recognized total stock-based compensation cost related to equity incentive awards as follows (in thousands):
A small portion of stock-based compensation cost above is capitalized in accordance with the accounting guidance for internal-use software. The Company uses the straight-line attribution method for recognizing stock-based compensation expense.

                                    |         | For the Year Ended December 31, |
----------------------------------- | ------- | ------------------------------- | -------
                                    | 2019    | 2018                            | 2017
Stock-based compensation cost:      |         |                                 |
Common stock warrants               | $—      | $512                            | $484
Stock options                       | 16,489  | 13,279                          | 11,295
Restricted stock units              | 14,585  | 90                              | —
Employee stock purchase plan        | 3,326   | 2,069                           | —
Total stock-based compensation cost | $34,400 | $15,950                         | $11,779

 recognized cost equity awards
 small portion capitalized accounting software. straight-line attribution.
 Year Ended December 31,
 2017
 compensation cost
 Common stock warrants $512 $484
 Stock options 16,489 13,279 11,295
 Restricted stock units 14,585
 Employee stock purchase plan 3,326 2,069
 Total cost $34,400 $15,950 $11,779


Financial and Operating Highlights
CONTINUING OPERATIONS
(1) See reconciliation of GAAP to non-GAAP financial measures tables in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-K.

(Amounts in thousands, except per share data and percentages)            | 2019       | 2018       | 2017
------------------------------------------------------------------------ | ---------- | ---------- | ----------
Bookings                                                                 | $1,002,320 | $2,779,782 | $1,234,013
Backlog                                                                  | $3,400,952 | $4,064,451 | $2,536,499
Sales                                                                    | $1,496,475 | $1,202,898 | $1,107,709
Sales growth %                                                           | 24%        | 9%         |
Research & development                                                   | $50,132    | $52,398    | $52,652
Operating income                                                         | $86,237    | $24,382    | $2,628
Net income (loss) per share, continuing operations attributable to Cubic | $1.67      | $0.29      | $(0.95)
Adjusted EBITDA (1)                                                      | $146,594   | $104,561   | $87,470
Adjusted EBITDA growth %                                                 | 40%        | 20%        |
Adjusted earnings per share (1)                                          | $3.13      | $2.19      | $1.62
Adjusted earnings per share growth %                                     | 43%        | 35%        |
Cash dividend per share                                                  | $0.27      | $0.27      | $0.27
Long-term debt, inclusive of current portion                             | $199,824   | $199,793   | $199,761

Financial Operating Highlights
 OPERATIONS
 GAAP non-GAAP Form 10-K.
 share 2019 2018
 Bookings $1,002,320 $2,779,782 $1,234,013
 Backlog $3,400,952 $4,064,451 $2,536,499
 Sales $1,496,475 $1,202,898 $1,107,709
 growth 24%
 Research development $50,132 $52,398 $52,652
 Operating income $86,237 $24,382 $2,628
 Net income share.
 EBITDA $146,594 $104,561 $87,470
 growth 40%
 earnings share.
 43%
 Cash dividend share.
 Long-term debt $199,824 $199,793 $199,761


Overview of 2019
Total revenues for 2019 were $36.0 million, a decrease of $75.0 million, or 68%, versus 2018. The decrease was primarily driven by the $70.9 million decrease in fixed fee license revenue and the $4.0 million decrease in per-unit royalty revenue.
For 2019, we had a net loss of $20.0 million as compared to $54.3 million of net income for 2018. The $74.4 million decrease in net income was mainly related to the $75.0 million decrease in total revenue partially offset by a $0.5 million decrease in cost and operating expenses for 2019 compared to 2018.
We adopted ASC 606, effective January 1, 2018. Consistent with the modified retrospective transaction method, our results of operations for periods prior to the adoption of ASC 606 remain unchanged. As a result, the change in total revenues from 2018 to 2019 included a component of accounting policy change arising from the adoption of ASC 606.
The following table sets forth our consolidated statements of income data as a percentage of total revenues:

                                                | Years Ended December 31, |         |
----------------------------------------------- | ------------------------ | ------- | --------
                                                | 2019                     | 2018    | 2017
Revenues:                                       |                          |         |
Fixed fee license revenue                       | 35.1 %                   | 75.3 %  | 36.0 %
Per-unit royalty revenue                        | 64.0                     | 24.3    | 61.4
Total royalty and license revenue               | 99.1                     | 99.6    | 97.4
Development, services, and other                | 0.9                      | 0.4     | 2.6
Total revenues                                  | 100.0                    | 100.0   | 100.0
Costs and expenses:                             |                          |         |
Cost of revenues                                | 0.5                      | 0.2     | 0.6
Sales and marketing                             | 17.9                     | 5.5     | 38.6
Research and development                        | 21.8                     | 8.8     | 33.6
General and administrative                      | 119.4                    | 37.7    | 152.4
Restructuring costs                             | —                        | —       | 4.6
Total costs and expenses                        | 159.6                    | 52.2    | 229.8
Operating income (loss)                         | (59.6)                   | 47.8    | (129.8)
Interest and other income                       | 5.0                      | 1.7     | 1.0
Other expense                                   | 0.2                      | (0.2)   | 0.9
Income (loss) before provision for income taxes | (54.4)                   | 49.3    | (127.9)
Provision for income taxes                      | (1.3)                    | (0.4)   | (1.4)
Net income (loss)                               | (55.7)%                  | 48.9 %  | (129.3)%

Overview 2019
 revenues $36. million decrease $75. million 68% versus 2018. decrease driven by $70. 9 million decrease fixed fee license revenue $4. million decrease per-unit royalty revenue.
 net loss $20. million $54. 3 million 2018. $74. 4 million decrease income related $75. million decrease revenue offset $0. 5 million decrease cost operating expenses.
 adopted ASC 606 January 1 2018. modified method results operations prior unchanged. change revenues 2018 2019 accounting policy change ASC 606.
 table consolidated statements income data total revenues
 December Revenues
 Fixed fee license revenue 35. 1 % 75. 3 % 36.
 Per-unit royalty revenue 64. 24. 61
 Total royalty license revenue.
 Development services.
.
 Costs expenses
.
 Sales marketing.
 Research development.
 General administrative.
Restructuring costs 4. 6
 expenses 159. 6 52. 8
 Operating income (loss. 6) 47. 8)
 Interest income 5. 7.
.
 Income before taxes. 4) 49. 9)
 Provision taxes. 3). 4).
 Net income (loss. 48. 9.


At the balance sheet date, the combined principal accounting assumptions were as follows:
For the smaller overseas schemes the discount rate used was 1.50% (2017/18: 1.80%) and future pension increases were 1.30% (2017/18: 1.45%).
At 30 March 2019 and 31 March 2018, the discount rate was derived based on a bond yield curve expanded to also include bonds rated AA by one credit agency (and which might for example be rated A or AAA by other agencies).

                          | At 30 Mar 2019  |             | At 31 Mar 2018  |
------------------------- | --------------- | ----------- | --------------- | -----------
                          | Premier schemes | RHM schemes | Premier schemes | RHM schemes
Discount rate             | 2.45%           | 2.45%       | 2.70%           | 2.70%
Inflation – RPI           | 3.25%           | 3.25%       | 3.15%           | 3.15%
Inflation – CPI           | 2.15%           | 2.15%       | 2.05%           | 2.05%
Expected salary increases | n/a             | n/a         | n/a             | n/a
Future pension increases  | 2.10%           | 2.10%       | 2.10%           | 2.10%

balance sheet accounting assumptions
 smaller overseas schemes discount rate 1. 50%. 80% future pension increases 1. 30%. 45%.
 30 March 2019 31 March 2018 discount rate bond yield curve bonds rated AA credit agency AAA.
 Premier schemes RHM
 Discount rate 2. 45% 2. 70%.
 Inflation RPI 3. 25% 3. 15%.
 Inflation CPI 2. 2. 05%.
 Expected salary increases n
 Future pension increases 2. 10% 2.


8. Marketable Securities
The cost, gross unrealized gains, gross unrealized losses and fair market value of available-for-sale securities at April 30, 2019 and 2018, respectively, were as follows (in thousands):

                        |        |                        | April 30, 2019          |
----------------------- | ------ | ---------------------- | ----------------------- | -----------------
                        | Cost   | Gross Unrealized Gains | Gross Unrealized Losses | Fair Market Value
Fixed income securities | $8,152 | $71                    | $(24)                   | $8,199
                        |        |                        | April 30, 2018          |
                        | Cost   | Gross Unrealized Gains | Gross Unrealized Losses | Fair Market Value
Fixed income securities | $6,274 | $10                    | $(135)                  | $6,149

. Marketable Securities
 cost gains losses fair market value-sale securities April 30, 2019 2018
 April 30, 2019
 Cost Gains Losses Market Value
 securities $8,152 $71 $8,199
 April 30, 2018
 Gains Losses Fair Market Value
 $6,274 $(135) $6,149


Revenue
The Company adopted ASC 606 effective January 1, 2018 using the modified retrospective method. The Company recognized the cumulative effect of initially applying ASC 606, which was immaterial, as an adjustment to the opening balance of retained earnings. The comparative prior period information is accounted for in accordance with the previous revenue guidance, ASC 605, and has not been restated. In accordance with ASC 606, the Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when a performance obligation is satisfied.
Revenue for product sales is recognized at the point in time when control transfers to the Company’s customers, which is generally when products are shipped from the Company’s manufacturing facilities or when delivered to the customer’s named location. When the Company performs shipping and handling activities after the transfer of control to the customer (e.g., when control transfers prior to delivery), they are considered to be fulfillment activities, and accordingly, the costs are accrued for when the related revenue is recognized. Taxes collected on behalf of customers relating to product sales and remitted to governmental authorities, principally sales taxes, are excluded from revenue.
The opening and closing balances of the Company’s accounts receivable and deferred revenue are as follows (in thousands):
The amount of revenue recognized in the period that was included in the opening deferred revenue balances was approximately$5.1 million for the year ended December 31, 2019. Generally, increases in current and non-current deferred revenue are related to billings to, or advance payments from, customers for which the Company has not yet fulfilled its performance obligations, and decreases are related to revenue recognized. Deferred revenue not expected to be recognized within the Company’s operating cycle of one year is presented as a component of “Other long-term liabilities” on the consolidated balance sheet.
At times, the Company receives orders for products that may be delivered over multiple dates that may extend across reporting periods. The Company invoices for each delivery upon shipment and recognizes revenues for each distinct product delivered, assuming transfer of control has occurred. Generally, scheduled delivery dates are within one year, and the Company has elected to use the optional exemption whereby revenues allocated to partially completed contracts with an expected duration of one year or less are not disclosed. As of December 31, 2019, the Company had no contracts with unsatisfied performance obligations with a duration of more than one year.

                               | Balance at Beginning of |                       |
------------------------------ | ----------------------- | --------------------- | ------------------------
                               | Period (1/1/19)         | Increase / (Decrease) | Balance at End of Period
Year Ended December 31, 2019   |                         |                       |
Accounts receivable            | $90,831                 | $7,117                | $97,948
Deferred revenue (current)     | $5,101                  | $(618)                | $4,483
Deferred revenue (non-current) | $3,707                  | $(263)                | $3,444

 Company adopted ASC 606 January 1, 2018 modified retrospective method. recognized cumulative effect ASC 606 adjustment to opening balance retained earnings. comparative prior period information accounted previous revenue guidance ASC 605 not restated. ASC 606 recognizes revenue transfer of control to customers consideration. applies five step approach identify contract performance obligations determine transaction price allocate recognize revenue when obligation satisfied.
 Revenue product sales recognized control transfers to customers shipped from manufacturing or delivered to customer’s named location. shipping handling activities after transfer control. fulfillment activities costs accrued revenue recognized. Taxes collected excluded from revenue.
 opening closing balances accounts receivable deferred revenue
 revenue recognized approximately$5. 1 million year ended December 31, 2019. increases in deferred revenue related to billings payments customers performance obligations decreases to revenue recognized.Deferred revenue not one year long-term liabilities” balance.
 receives orders. invoices delivery recognizes revenues. scheduled delivery dates within one year optional exemption revenues partially completed contracts one year or less not disclosed. December 31, 2019 no contracts unsatisfied obligations more than one year.
 Balance Beginning
 End Period
 December 31, 2019
 Accounts receivable $90,831 $7,117 $97,948
 Deferred revenue (current $5,101 $(618) $4,483
 Deferred revenue (non-current $3,707 $(263) $3,444


Stock-based Compensation Expense
The following table sets forth the total stock-based compensation expense resulting from stock options, RSUs, and ESPP included in the Company’s consolidated statements of operations (in thousands):
During the years ended December 31, 2019, 2018, and 2017 the Company capitalized stock-based compensation cost of $0.5 million, $0.1 million, and $0.3 million, respectively, in projects in process as part of property and equipment, net on the accompanying consolidated balance sheets.
As of December 31, 2019, there was $60.3 million unrecognized stock-based compensation expense of which $13.9 million is related to stock options and ESPP and $46.4 million is related to RSUs. The total unrecognized stock-based compensation expense related to stock options and ESPP as of December 31, 2019 will be amortized over a weighted-average period of 2.87 years. The total unrecognized stock-based compensation expense related to RSUs as of December 31, 2019 will be amortized over a weighted-average period of 2.69 years.

                                       |        | Year Ended December 31, |
-------------------------------------- | ------ | ----------------------- | ------
                                       | 2019   | 2018                    | 2017
Cost of revenues                       | 2,193  | 2,315                   | 2,000
Sales and marketing                    | 6,812  | 6,596                   | 6,621
Research and development               | 4,804  | 6,137                   | 7,949
General and administrative             | 18,328 | 16,338                  | 15,682
Total stock-based compensation expense | 32,137 | 31,386                  | 32,252

Stock-based Compensation Expense
 table total expense stock options RSUs ESPP consolidated statements operations
 2019 2018 2017 Company capitalized stock compensation cost $0. 5 million $0. 1 million $0. 3 million projects property equipment balance.
 December 31, 2019 $60. 3 million unrecognized stock-based compensation expense $13. 9 million stock options ESPP $46. 4 million RSUs. amortized 2. 87 years. RSUs amortized. 69 years.
 December
 2017
 Cost revenues 2,193 2,315
 Sales marketing 6,812
 Research development
 General administrative 18,328,338
 Total stock-based compensation expense 32,137 31,386


Interest Cost
The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, convertible notes, the term loan agreement, commercial paper, and the revolving credit facility during the fiscal years ended June 30, 2019, June 24, 2018, and June 25, 2017.
The increase in interest expense during the 12 months ended June 30, 2019, is primarily the result of the issuance of $2.5 billion of Senior Notes in March 2019.

                                       |               | YearEnded      |
-------------------------------------- | ------------- | -------------- | -------------
                                       | June 30, 2019 | June 24, 2018  | June 25, 2017
                                       |               | (in thousands) |
Contractual interest coupon            | $100,712      | $77,091        | $95,195
Amortization of interest discount      | 3,937         | 12,225         | 22,873
Amortization of issuance costs         | 1,426         | 2,034          | 2,414
Effect of interest rate contracts, net | 4,086         | 3              | (4,756)
Total interest cost recognized         | $110,161      | $91,353        | $115,726

Interest Cost
 interest cost coupon debt issuance contracts Senior Notes convertible notes term loan agreement commercial paper revolving credit facility 2018 2017.
 increase interest expense issuance $2. 5 billion Senior Notes March 2019.
 30 2019 24 2018 25 2017
 Contractual interest coupon $100,712 $77,091 $95,195
 Amortization interest discount 3,937
 issuance costs 1,426 2,034
 interest rate contracts 4,086
 Total interest cost $110,161 $91,353 $115,726


Employee Share Purchase Plan (ESPP)
The Company estimates the fair value of its ESPP share options on the date of grant using the Black-Scholes option-pricing model, which requires the use of highly subjective estimates and assumptions. The Company estimates the expected term of ESPP share options based on the length of each offering period, which is six months.
The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the ESPP share option. Expected volatility is based on the Company’s historical volatility. The Company uses an expected dividend rate of zero as it currently has no history or expectation of paying dividends on its ordinary shares.
The grant date fair value per ordinary share is based on the closing market value of its ordinary shares on the first day of each ESPP offering period. The first authorized offering period under the ESPP commenced on July 1, 2017.
The fair value of each ESPP option grant was estimated using the Black-Scholes option-pricing model that used the following weighted-average assumptions:
The weighted-average per share fair value of ESPP share options granted to employees during the years ended March 31, 2019 and 2018, was $9.58 and $6.41, respectively.

                                         | Year ended March 31, |
---------------------------------------- | -------------------- | ------
                                         | 2019                 | 2018
Expected term (in years)                 | 0.5                  | 0.5
Risk-free interest rate                  | 2.3%                 | 1.4%
Expected volatility                      | 39.1%                | 29.9%
Expected dividend yield                  | —%                   | —%
Grant date fair value per ordinary share | $36.69               | $27.15

Employee Share Purchase Plan
 Company estimates share options Black-Scholes option-pricing model subjective. term offering period six months.
 risk-free interest rate treasury instrument consistent life. volatility historical volatility. dividend rate zero no history dividends ordinary shares.
 grant date value share based closing market value first day offering period. first offering period commenced July 1, 2017.
 fair value option grant estimated Black-Scholes option-pricing model weighted-average assumptions
 per share fair value March 2019 2018 $9. 58 $6. 41.
 Expected term years.
 Risk-free interest rate. 3%.
 Expected volatility.
 Expected dividend yield%
 Grant date fair value per ordinary share $36. $27.


Note 11. Income Taxes
The income tax provision consists of the following (amounts in millions):
On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was enacted into law. The Act provides for numerous significant tax law changes and modifications including the reduction of the U.S. federal corporate income tax rate from 35.0% to 21.0%, the requirement for companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and the creation of new taxes on certain foreign-sourced earnings.
Accounting Standards Codification ("ASC") 740, Income Taxes, requires companies to recognize the effect of the tax law changes in the period of enactment. However, the SEC staff issued Staff Accounting Bulletin ("SAB") 118, which allowed companies to record provisional amounts during a measurement period that is similar to the measurement period used when accounting for business combinations. The Company recorded a reasonable estimate when measurable and with the understanding that the provisional amount was subject to further adjustments under SAB 118. In addition, for significant items for which the Company could not make a reasonable estimate, no provisional amounts were recorded. As of December 31, 2018, the Company completed its review of the previously recorded provisional amounts related to the Act, recorded necessary adjustments, and the amounts are now final under SAB 118.
As of March 31, 2018, the Company remeasured certain deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future (which was generally 21%), by recording a provisional income tax benefit of $136.7 million. Upon further analysis of certain aspects of the Act and refinement of its calculations during the period ended December 31, 2018, the Company did not make adjustments to the provisional amount
The one-time transition tax is based on the Company's total post-1986 earnings and profits (E&P), the tax on which the Company previously deferred from U.S. income taxes under U.S. law. The Company recorded a provisional amount for its one-time transition tax expense for each of its foreign subsidiaries, resulting in a transition tax expense of $644.7 million at March 31, 2018. Upon further analyses of the Act and notices and regulations issued and proposed by the U.S. Department of the Treasury and the Internal Revenue Service, the Company finalized its calculations of the transition tax expense during the period ended December 31, 2018. The Company increased its March 31, 2018 provisional amount by $13.1 million to $657.8 million, which is included as a component of income tax expense from continuing operations. The measurement period adjustment of $13.1 million decreased basic and diluted net income per common share by $0.06 and $0.05, respectively, for the year ended March 31, 2019.
The Company intends to invest substantially all of its foreign subsidiary earnings, as well as its capital in its foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which the Company would incur significant, additional costs upon repatriation of such amounts. It is not practical to estimate the additional tax that would be incurred, if any, if the permanently reinvested earnings were repatriated.

                                     |          | Year Ended March 31, |
------------------------------------ | -------- | -------------------- | --------
                                     | 2019     | 2018                 | 2017
Pretax (loss) income:                |          |                      |
U.S.                                 | $(593.4) | $(127.3)             | $(279.3)
Foreign                              | 797.9    | 864.6                | 369.1
                                     | $204.5   | $737.3               | $89.8
Current (benefit) expense:           |          |                      |
U.S. Federal                         | $(98.0)  | $369.4               | $21.3
State                                | (5.3)    | 0.5                  | 1.0
Foreign                              | 14.1     | 60.8                 | 23.8
Total current (benefit) expense      | $(89.2)  | $430.7               | $46.1
Deferred expense (benefit):          |          |                      |
U.S. Federal                         | $11.9    | $82.5                | $(114.7)
State                                | 0.6      | 0.1                  | (5.4)
Foreign                              | (74.7)   | (31.4)               | (6.8)
Total deferred (benefit) expense     | (62.2)   | 51.2                 | (126.9)
Total Income tax (benefit) provision | $(151.4) | $481.9               | $(80.8)

11. Income Taxes
 provision
 December 22, 2017 Tax Cuts and Jobs Act enacted law. tax law changes reduction. federal corporate income tax rate 35. 0% to 21. 0% requirement one-time transition tax earnings foreign subsidiaries new taxes foreign-sourced earnings.
 Accounting Standards Codification Income Taxes requires effect tax law changes. SEC staff issued Accounting Bulletin 118 provisional amounts. Company recorded reasonable estimate subject adjustments SAB 118. no provisional amounts recorded. December 31, 2018 review provisional amounts recorded adjustments amounts final under SAB 118.
 March 31, 2018 Company remeasured deferred tax assets liabilities rates provisional income tax benefit $136. 7 million. adjustments amount
 one-time transition tax based on Company post-1986 earnings profits deferred. income taxes. recorded provisional amount one-time transition tax expense foreign subsidiaries tax expense $644. 7 million at March 31, 2018.analyses Act regulations. Department Treasury Internal Revenue Service Company finalized calculations transition tax expense December 31, 2018. increased March 31, 2018 provisional amount $13. 1 million to $657. 8 million income tax expense. adjustment $13. million decreased diluted income per common share $0. 06 $0. 05 year March 31, 2019.
 intends invest foreign subsidiary earnings capital subsidiaries outside. jurisdictions additional costs repatriation. estimate additional tax reinvested earnings repatriated.
 Ended March 31,
 Pretax (loss) income
. $(593.(127. $(279.
 797. 864. 369.
 $204. $737. $89.
 Current (benefit expense
. $(98. $369. $21.
.
.
 Total current (benefit expense $(89. $430. $46.
 Deferred expense
. $11. $82.(114.
.. (5.
. 7) (31. (6. 8)
 deferred (benefit. 51. 9)
 Income tax (benefit(151. $481.(80.


NOTE 11—FINANCING ARRANGEMENTS
Long-term debt consists of the following (in thousands):
Maturities of long-term debt for each of the five years in the period ending September 30, 2024, are as follows: 2020 — $10.7 million; 2021 — $35.7 million; 2022 — $35.7 million; 2023 — $35.7 million; 2024 — $35.7 million.
In March 2013, we entered into a note purchase and private shelf agreement pursuant to which we issued $100.0 million of senior unsecured notes, bearing interest at a rate of 3.35% and maturing on March 12, 2025. Pursuant to the agreement, on July 17, 2015, we issued an additional $25.0 million of senior unsecured notes, bearing interest at a rate of 3.70% and maturing on March 12, 2025. Interest payments on the notes issued in 2013 and 2015 are due semi-annually and principal payments are due from 2021 through 2025. On February 2, 2016 we revised the note purchase agreement and we issued an additional $75.0 million of senior unsecured notes bearing interest at 3.93% and maturing on March 12, 2026. Interest payments on these notes are due semi-annually and principal payments are due from 2020 through 2026.
The agreement pertaining to the aforementioned notes also contained a provision that the coupon rate would increase by a further 0.50% should the company’s leverage ratio exceed a certain level.

September 30,                                                                                | 2019      | 2018
-------------------------------------------------------------------------------------------------- | --------- | ---------
Series A senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35% | $  50,000 | $  50,000
Series B senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35% | 50,000    | 50,000
Series C senior unsecured notes payable to a group of insurance companies, interest fixed at 3.70% | 25,000    | 25,000
Series D senior unsecured notes payable to a group of insurance companies, interest fixed at 3.93% | 75,000    | 75,000
                                                                                | 200,000   | 200,000
Less unamortized debt issuance costs                                                               | (175)     | (207)
Less current portion                                                                               | (10,714)  | —
                                                                                | $189,111  | $199,793

11—FINANCING
 Long-term debt
 Maturities five years September 30 2024 2020 $10. 7 million 2021 $35. 7 million 2022 $35. 7 million 2023 $35. 7 million 2024 $35. 7 million.
 March 2013, note purchase agreement issued $100. million unsecured notes 3. 35% maturing March 12, 2025. July 17, 2015, issued additional $25. million 3. 70% maturing March 12, 2025. Interest payments due semi-annually principal 2021 through 2025. February 2, 2016 revised issued additional $75. million interest 3. 93% maturing March 12, 2026. Interest semi-annually principal 2020 through 2026.
 coupon rate. 50% leverage ratio exceed.
 September 30 2019
 Series A notes interest 3. 35%
 Series B. 35% 50,000
 Series C interest 3. 70%
 Series D interest 3. 93% 75,000
200,000
 unamortized debt
 current portion
 $189,111 $199,793


(d) Share-Based Awards Available for Grant
A summary of share-based awards available for grant is as follows (in millions):
For each share awarded as restricted stock or a restricted stock unit award under the 2005 Plan, 1.5 shares was deducted from the available share-based award balance. For restricted stock units that were awarded with vesting contingent upon the achievement of future financial performance or market-based metrics, the maximum awards that can be achieved upon full vesting of such awards were reflected in the preceding table.

Years Ended                                                         | July 27, 2019 | July 28, 2018 | July 29, 2017
------------------------------------------------------------------- | ------------- | ------------- | -------------
Balance at beginning of fiscal year                                 | 245           | 272           | 242
Restricted stock, stock units, and other share-based awards granted | (67)          | (70)          | (76)
Share-based awards canceled/forfeited/expired                       | 18            | 18            | 78
Shares withheld for taxes and not issued                            | 23            | 25            | 28
Other                                                               | 1             | —             | —
Balance at end of fiscal year                                       | 220           | 245           | 272

Share-Based Awards
 restricted stock 2005 Plan 1. 5 shares deducted balance. stock units future financial performance maximum awards table.
 Years Ended July 27, 2019 July 28, 2018 July 29, 2017
 Balance fiscal year 245  272  242
 Restricted stock awards granted (67) (70) (76)
 awards canceled/forfeited/expired 18 78
 Shares withheld taxes not issued 23 25 28
 end fiscal year 220  245  272


2 Alternative performance measures continued
Return on capital employed (ROCE)
ROCE measures effective management of fixed assets and working capital relative to the profitability of the business. It is calculated as adjusted operating profit divided by average capital employed. More information on ROCE can be found in the Capital Employed and ROCE sections of the Financial Review on page 57.
An analysis of the components is as follows:

                                                        | 2019    | 2018
------------------------------------------------------- | ------- | -------
                                                        | £m      | £m
Property, plant and equipment                           | 251.2   | 230.8
Right-of-use assets (IFRS 16)                           | 40.8    | –
Prepayments                                             | 0.9     | 6.2
Inventories                                             | 185.9   | 160.6
Trade receivables                                       | 240.7   | 245.1
Other current assets                                    | 35.3    | 32.9
Tax recoverable                                         | 8.4     | 4.6
Trade, other payables and current provisions            | (178.3) | (172.0)
Current tax payable                                     | (26.7)  | (23.7)
Capital employed                                        | 558.2   | 484.5
Average capital employed                                | 521.4   | 482.2
Average capital employed (excluding IFRS 16)            | 501.0   | 482.2
Operating profit                                        | 245.0   | 299.1
Adjustments (see adjusted operating profit on page 160) | 37.7    | (34.2)
Adjusted operating profit                               | 282.7   | 264.9
Adjusted operating profit (excluding IFRS 16)           | 281.4   | 264.9
Return on capital employed                              | 54.2%   | 54.9%
Return on capital employed (excluding IFRS 16)          | 56.2%   | 54.9%

Alternative performance measures
 Return on capital employed (ROCE
 management fixed assets working capital profitability. calculated adjusted operating profit divided by average capital. information Capital Employed ROCE Financial Review page 57.
 analysis components
 Property plant equipment 251. 230.
 Right-of-use assets (IFRS 16 40.
 Prepayments. 6.
 Inventories 185. 160.
 receivables 240. 245.
 current assets 35. 32.
 Tax recoverable 8. 4
 payables provisions (178. (172.
 Current tax payable (26. (23.
. 484.
 521. 482.
 501. 482.
 Operating profit 245. 299.
 Adjustments 160 37.
 Adjusted 282. 264.
 281. 264
 Return capital 54.
 56.


(1) Represents accelerated vesting of 48,849 stock options. Pursuant to Mr. Dooley’s stock option agreements (dated January 17, 2019),
if Mr. Dooley’s employment is terminated without cause or for good reason within six months following a “change in control”, he will
become immediately vested in all outstanding unvested stock options, and all of Mr. Dooley’s outstanding options shall remain
exercisable in accordance with their terms, but in no event for less than 90 days after such termination.
(2) Represents accelerated vesting of 15,000 unvested restricted stock units. Pursuant to Mr. Dooley’s restricted stock unit agreement
(dated March 1, 2012), upon a “change in control” all non-vested units shall accelerate and be vested as of the date of the “change in
control” and if Mr. Dooley’s employment is terminated without cause or for good reason, all non-vested units shall accelerate and be
vested as of the date of termination
(3) Represents accelerated vesting of 7,500 unvested restricted stock units. Pursuant to Mr. Dooley’s restricted stock unit agreement
(dated March 1, 2012), on the event of Mr. Dooley’s death or total disability, 7,500 restricted stock units (50% of the unvested restricted
stock units granted under such agreement at December 31, 2018) would vest.
(4) Represents accelerated vesting of 10,630 unvested performance restricted stock units. Pursuant to Mr. Dooley's performance restricted
stock unit agreement (dated January 17, 2019), if Mr. Dooley’s employment is terminated without cause or for good reason within six
months following a “change in control” or if Mr. Dooley's employment is terminated due to death or total disability, all non-vested units
shall accelerate and be vested as of the date of termination.

Type of Payment                                                          | Termination by Systemax without “Cause” or Resignation by Employee for “good reason” ($) | Termination Due to Death or Total Disability ($) | Change In Control Only ($) | Termination by Systemax without “Cause” or Resignation by Employee for “good reason” within a certain period of time following a Change in Control ($)
------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------- | ------------------------------------------------ | -------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------
Cash Compensation (Salary & Non-Equity Incentive Compensation)           | -                                                                                | -                                                | -                          | -
Value of Accelerated Vesting of Stock Option Awards                      | -                                                                                | -                                                | -                          | 505,100 (1)
Value of Accelerated Vesting of Restricted Stock Unit Awards             | 377,400 (2)                                                                              | 188,700 (3)                                      | 377,400 (2)                | -
Value of Accelerated Vesting of Performance Restricted Stock Unit Awards | -                                                                                | 267,500 (4)                                      | -                          | 267,500 (4)
Medical and Other Benefits                                               | -                                                                                | -                                                | -                          | -
Total                                                                    | 377,400                                                                                | 456,200                                          | 377,400                    | 772,600

accelerated vesting 48,849 stock options. Mr. Dooley’s agreements January 17,
. employment terminated within six months “change in
 immediately vested outstanding unvested stock options. options
 exercisable less than 90 days after termination.
 accelerated vesting 15,000 unvested restricted stock units. agreement
 March 1, 2012) “change in control” non units accelerate vested date
 if. employment terminated
 vested date termination
 accelerated vesting 7,500 unvested restricted stock units.
. death or disability 7,500 units (50%
 December 31, 2018) vest.
 accelerated vesting 10,630 unvested performance restricted stock units.
 January 17, if. employment terminated within six
 months. death disability all non-vested units
 accelerate vested date termination.
Payment Termination Systemax Resignation$ Termination Death Disability$ Change Control Only ($ Termination Systemax Resignation Change Control$)
 Cash Compensation (Salary Non-Equity Incentive Compensation
 Accelerated Vesting Stock Option Awards 505,100 (1)
 Vesting Restricted Stock Unit Awards 377,400 (2) 188,700 (3)
 Accelerated Vesting Performance Restricted Stock Unit Awards 267,500 (4)
 Medical Other Benefits
 Total 377,400 456,200 772,600


NOTE 14 – OTHER LIABILITIES
The carrying amount is a reasonable approximation of fair value due to the short-term nature of the receivables. Please refer to note 21 for further information on fair value hierarchies.

USDm                                | 2019 | 2018
----------------------------------- | ---- | ----
Partners and commercial managements | 0.5  | 1.2
Accrued operating expenses          | 14.1 | 9.1
Accrued interest                    | 4.0  | 4.6
Wages and social expenses           | 14.3 | 16.1
Derivative financial instruments    | 12.3 | 3.4
Payables to joint ventures          | 0.1  | 0.1
Other                               | 2.0  | 2.0
Balance as of 31 December           | 47.3 | 36.5

NOTE 14 LIABILITIES
 carrying amount fair value short-term receivables. refer note 21 fair value hierarchies.
 Partners commercial managements.
 operating expenses 14. 9.
 interest 4.
 Wages social expenses 14. 16.
 financial instruments 12. 3.
 joint ventures.
 2.
 Balance 31 December 47. 36.


Historical Cash Flows
The following table sets forth our cash flows for the periods indicated (in thousands):

                                                 |          | Year Ended December 31, |
------------------------------------------------ | -------- | ----------------------- | ---------
                                                 | 2019     | 2018                    | 2017
Cash flows from operating activities             | $47,112  | $60,710                 | $57,187
Cash flows used in investing activities          | (73,414) | (13,377)                | (168,795)
Cash flows (used in) / from financing activities | (130)    | 2,399                   | 67,303

Cash Flows
 table flows
 Ended December 31,
 2019 2018 2017
 operating $47,112 $60,710 $57,187
 investing (73,414) (13,377 (168,795)
 financing (130) 2,399 67,303


A reconciliation of income tax expense provided at the federal statutory rate (21% in fiscal year 2019, 28.27% in fiscal year 2018, and 35% in fiscal year 2017) to actual income tax expense is as follows:
In July 2015, the U.S. Tax Court issued an opinion favorable to Altera with respect to Altera’s litigation with the IRS. The litigation related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement with Altera’s foreign subsidiary. In its opinion, the U.S. Tax Court accepted Altera’s position of excluding stock-based compensation from its intercompany cost-sharing arrangement. In June 2019, the Ninth Circuit, through a three-judge panel, reversed the 2015 decision of the U.S. Tax Court. Altera has petitioned the Ninth Circuit for an en banc rehearing of a larger panel of eleven Ninth Circuit judges. The Company will continue to monitor and evaluate the potential impact of this litigation on its fiscal year 2020 Consolidated Financial Statements. The estimated potential impact is in the range of $75 million, which may result in a decrease in deferred tax assets and an increase in tax expense.
Effective from fiscal year 2014 through 2017, the Company had a tax ruling in Switzerland for one of its foreign subsidiaries. The impact of the tax ruling decreased taxes by approximately $6.3 million for fiscal year 2017. The benefit of the tax ruling on diluted earnings per share was approximately $0.03 in fiscal year 2017. Effective fiscal year 2018, the Company has withdrawn its reduced tax rate ruling in Switzerland for this subsidiary due to the ruling being no longer necessary as the subsidiary meets the requirements to achieve the reduced tax rate under Swiss tax law.
Earnings of the Company’s foreign subsidiaries included in consolidated retained earnings that are indefinitely reinvested in foreign operations aggregated to approximately $458.4 million at June 30, 2019. If these earnings were remitted to the United States, they would be subject to foreign withholding taxes of approximately $73.1 million at current statutory rates.

                                                      |               | Year Ended     |
----------------------------------------------------- | ------------- | -------------- | -------------
                                                      | June 30, 2019 | June 24, 2018  | June 25, 2017
                                                      |               | (in thousands) |
Income tax expense computed at federal statutory rate | $513,780      | $891,011       | $634,086
State income taxes, net of federal tax benefit        | (17,565)      | (50,585)       | (11,973)
Foreign income taxed at different rates               | (260,344)     | (939,808)      | (352,860)
Settlements and reductions in uncertain tax positions | (31,291)      | (33,367)       | (144,519)
Tax credits                                           | (71,779)      | (69,301)       | (37,713)
State valuation allowance, net of federal tax benefit | 26,742        | 57,302         | 12,070
Equity-based compensation                             | (7,566)       | (35,875)       | 13,187
Other permanent differences and miscellaneous items   | 39,251        | 43,214         | 1,632
U.S. tax reform impacts                               | 63,913        | 908,517        | —
                                                      | $255,141      | $771,108       | $113,910

reconciliation income tax expense federal statutory rate (21% 2019. 27% 2018 35% 2017) actual
 July 2015, U. S. Tax Court Altera litigation IRS. litigation stock-based compensation expense intercompany foreign subsidiary. accepted excluding compensation. June 2019 Ninth Circuit reversed 2015 decision. Altera petitioned en banc rehearing. potential impact 2020 Consolidated Financial Statements. estimated potential impact $75 million decrease deferred tax assets increase tax expense.
 2014 2017 Company tax ruling Switzerland foreign. decreased taxes $6. 3 million 2017. benefit diluted earnings per share $0. 03 2017. 2018 Company withdrawn reduced tax rate ruling Switzerland subsidiary requirements tax rate Swiss tax law.
 Earnings foreign subsidiaries $458. 4 million at June 30, 2019. remitted United States subject to foreign withholding taxes approximately $73. 1 million current statutory rates.

 30 2019 24 2018 25 2017
 Income tax federal $513,780 $891,011 $634,086
 federal benefit (17,565
 Foreign income,344
 Settlements tax (31,291),367
 Tax credits (71,779),301
 State valuation federal tax 26,742 57,302,070
 Equity compensation (7,566) (35,875)
 differences 39,251 43,214
. tax reform 63,913 908,517
 $255,141 $771,108 $113,910


3 Segmental reporting continued
Capital additions, depreciation, amortisation and impairment
Capital additions include property, plant and equipment of £59.0m (2018: £33.5m), of which £8.1m (2018: £0.2m) was from acquisitions in the period, and other intangible assets of £72.0m (2018: £19.0m) of which £60.2m (2018: £9.1m) relates to acquired intangibles from acquisitions in the period. Right-of-use asset additions of £48.9m occurred during the 12 month period to 31st December 2019, of which £36.1m relates to additions on 1st January 2019 as a result of transition to IFRS 16, £11.7m relates to new leases entered into in 2019 and £1.1m from acquisitions. Capital additions split between the UK and rest of the world are UK £36.8m (2018: £20.1m) and rest of the world £143.1m (2018: £32.4m).

                           | 2019              | 2019                                      | 2018              | 2018
-------------------------- | ----------------- | ----------------------------------------- | ----------------- | -----------------------------
                           | Capital additions | Depreciation, amortisation and impairment | Capital additions | Depreciation and amortisation
                           | £m                | £m                                        | £m                | £m
Steam Specialties          | 57.7              | 35.8                                      | 27.9              | 30.1
Electric Thermal Solutions | 81.6              | 18.4                                      | 6.0               | 13.6
Watson-Marlow              | 40.6              | 22.4                                      | 18.6              | 14.4
Group total                | 179.9             | 76.6                                      | 52.5              | 58.1

Segmental reporting
 Capital additions depreciation amortisation impairment
 property plant equipment £59. £33. £8. 1m. 2m acquisitions intangible assets £72. £19. £60. 2m £9. 1m acquired intangibles. Right-of-use asset additions £48. 9m 31st December 2019 £36. 1m additions 1st January 2019 transition IFRS 16 £11. 7m new leases £1. 1m acquisitions. additions UK world £36. 8m £20. 1m world £143. 1m £32. 4m.
 Capital additions Depreciation amortisation
 Steam Specialties 57. 35.
 Electric Thermal Solutions 81. 18.
 Watson-Marlow 40.
 179. 76. 52. 58.


16. Income Taxes
The provisions (benefits) for income taxes differed from the amount computed by applying the federal statutory income tax rate to income (loss) before income taxes due to the following items for the years ended December 31, 2019 and 2018 (in millions):
The income tax benefit as of December 31, 2019 is $20.6 million. The benefit was primarily driven by a net valuation allowance release of $37.4 million related to the Insurance segment partially offset by an impairment of goodwill which is not deductible for tax purposes. The Insurance segment is profitable in 2019 and in a three-year overall cumulative income position as of December 31, 2019.
The profitability is driven by current year income associated with favorable claims and reserve development relative to expected. Further, unrealized gains from the investment portfolio continued to grow in 2019.
The amount recorded as of December 31, 2018 primarily relates to separate state filings that do not have net operating losses available to offset income. In the third quarter of 2018, the Insurance segment acquired Humana’s long-term care business, Kanawha Insurance Company. The combined insurance entity generated a net operating loss for the year due to additional tax deductions related to increases in policy holder reserves. In addition, the bargain purchase gain is not taxable. This net operating loss was carried forward but had a valuation allowance. Additionally, the income tax expense generated from the sale of BeneVir in the second quarter of 2018 is offset by tax attributes for which a valuation allowance had been recorded. Therefore, there is no net income tax expense recorded in the income statement for the sale.

                                                     | Years Ended December 31, |
---------------------------------------------------- | ------------------------ | ------
                                                     | 2019                     | 2018
Tax provision (benefit) at federal statutory rate    | $ (11.9)                 | $ 38.3
Permanent differences                                | 0.3                      | 1.5
State tax, net of federal benefit                    | (7.3)                    | 6.2
Foreign rate differential                            | 1.4                      | (0.9)
Minority interest                                    | 0.2                      | (4.6)
Executive and stock compensation                     | 2.5                      | 3.5
Increase (decrease) in valuation allowance           | (7.6)                    | (43.8)
Transaction costs                                    | 0.1                      | 1.5
Tax credits generated/utilized                       | (2.2)                    | —
Return to provision                                  | (6.0)                    | 15.6
ASU 2017-11 adoption                                 | (1.3)                    | —
Goodwill impairment                                  | 10.9                     | —
Gain/loss on sale or deconsolidation of a subsidiary | —                        | 5.7
Bargain purchase gain                                | —                        | (24.2)
Other                                                | (1.8)                    | 3.6
Warrant liability                                    | 2.1                      | —
Income tax (benefit) expense                         | $ (20.6)                 | $ 2.4

. Income Taxes
 differed federal tax rate years December 31, 2019 2018
 income tax benefit 2019 $20. 6 million. driven by net valuation allowance $37. 4 million Insurance segment offset by impairment goodwill not deductible. Insurance segment profitable 2019 three-year cumulative income.
 profitability driven by current year income favorable claims reserve development. unrealized gains investment portfolio 2019.
 December 31, 2018 relates state filings operating losses. 2018 Insurance segment acquired Kanawha Insurance Company. net operating loss additional tax deductions reserves. bargain purchase gain not taxable. loss valuation allowance. income tax expense sale BeneVir 2018 offset by tax attributes valuation allowance. no net income tax expense sale.
 Years Ended December
 Tax provision federal statutory rate.
 Permanent differences.
 State tax federal benefit.
 Foreign rate differential.
 Minority interest.
 stock compensation.3.
 Increase valuation allowance (7.
 Transaction costs.
 Tax credits (2.
 Return provision (6. 15.
 2017-11 adoption.
 Goodwill impairment 10.
 Gain sale deconsolidation subsidiary.
 Bargain purchase gain (24.
.
 Warrant liability.
 Income tax expense (20.


4. VESSELS
Vessels consists of the carrying value of 23 vessels for the year ended December 31, 2019 and December 31, 2018, respectively. Vessels includes capitalized drydocking costs.
Depreciation is calculated based on cost less estimated residual value of $8.0 million per vessel over the estimated useful life of the vessel using the straight-line method. The estimated useful life of a vessel is 25 years from the date the vessel is delivered from the shipyard.
*Depreciation charges of $497.0 million related to vessels disposed of in 2018 is excluded
** Impairment charges of $2.2 million and $110.5 million related to vessels disposed of in 2018 is excluded
The Company has taken three vessels through periodical maintenance surveys in 2019 and further two vessels were in drydock for periodical maintenance as at December 31, 2019.
Impairment Loss on Vessels
The Company has not recorded any impairment loss on vessels for the year ended December 31, 2019. The Company recorded an impairment loss of $2.2 million and $110.5 million for the years ended December 31, 2018 and December 31, 2017, respectively.
The Company reviewed its assets for impairment on an asset by asset basis. In determining whether the assets are recoverable, the Company compared the estimate of the undiscounted cash flows expected to be generated by the assets to its carrying value. As of December 31, 2019, it was determined that the sum of the undiscounted cash flows for each vessel exceeded its carrying value and no impairment was recorded.
In developing estimates of future undiscounted cash flows, we made assumptions and estimates based on historical trends as well as future expectations. The most important assumption in determining undiscounted cash flows are the estimated freight rates. Freight rates are volatile and the analysis is based on market rates obtained from third parties, in combination with historical achieved rates by the Company.

                                            | 2019      | 2018
------------------------------------------- | --------- | ----------
All figures in USD ‘000                     |           |
Vessels as of January 1                     | 1,307,087 | 1,769,967
Additions Vessels                           | 2,531     | 169,446
Disposals Vessels                           | -         | (632,326)
Drydocking as of January 1                  | 52,331    | 119,303
Additions Drydocking                        | 7,618     | 8,210
Disposals Drydocking                        | -         | (75,182)
Total Vessels and Drydocking                | 1,369,567 | 1,359,418
Less Accumulated Depreciation               | (469,570) | (405,660)*
Less Accumulated Impairment Loss on Vessels | -         | -**
Vessels                                     | 899,997   | 953,758

. VESSELS
 carrying value 23 vessels December 2019 2018. capitalized drydocking costs.
 Depreciation calculated cost less estimated residual value $8. 0 million per vessel estimated useful life. useful life 25 years.
 *Depreciation charges $497. 0 million 2018 excluded
 Impairment charges $2. 2 million $110. 5 million 2018 excluded
 three vessels maintenance surveys 2019 two drydock December 31, 2019.
 Impairment Loss Vessels
 impairment loss 2019. recorded loss $2. 2 million $110. 5 million 2018 2017.
 reviewed assets impairment. compared undiscounted cash flows carrying value. 2019 undiscounted cash flows exceeded carrying value no impairment recorded.
 future cash flows historical trends future expectations. estimated freight rates. volatile based market rates historical rates.
 figures in USD ‘000
 Vessels as January 1 1,307,087 1,769,967
2,531 169,446
 (632,326)
 January 1 52,331 119,303
 8,210
 (75,182)
 1,369,567 1,359,418
 Depreciation (469,570) (405,660)
 Impairment Loss
 899,997 953,758


15. Revenue from Contracts with Customers
Impact of Adopting Topic 606
The effects of the adoption on the Company's Consolidated Financial Statements for the fiscal year ended September 28, 2019 was as follows (in thousands):

                                  |                                | Fiscal Year Ended            |
--------------------------------- | ------------------------------ | ---------------------------- | --------------------------------------------------------------
                                  | September 28, 2019
As Reported | Adjustments due to Topic 606 | September 28, 2019
As Adjusted - Without
Adoption of Topic 606
Net sales                         | $3,164,434                     | $14,880                      | $3,149,554
Cost of sales                     | 2,872,596                      | 12,934                       | 2,859,662
       Gross profit               | 291,838                        | 1,946                        | 289,892
       Operating income           | 142,055                        | 1,946                        | 140,109
       Income before income taxes | 125,955                        | 1,946                        | 124,009
Income tax expense                | 17,339                         | 440                          | 16,899
           Net income             | $108,616                       | $1,506                       | $107,110

. Revenue Contracts
 Adopting Topic 606
 effects adoption Financial Statements fiscal year September 2019
 Adjustments Topic 606
 Net sales $3,164,434 $14,880 $3,149,554
 Cost sales 2,872,596,662
 Gross profit 291,838 1,946
 Operating income 142,055 140,109
 Income taxes 125,955
 tax expense 17,339
 Net income $108,616 $1,506 $107,110


Base Salary
Base salary for our named executive officers is the fixed component of our executive compensation program. We use base salary to compensate our named executive officers for services rendered during the year and to recognize the experience, skills, knowledge and responsibilities required of each named executive officer. We apply no specific formula to determine adjustments to base salary. Adjustments to base salary have been made to reflect our economic condition and future expected performance. We continue to provide base salaries that are conservative relative to competitive market pay levels.
In April 2018, our compensation committee reviewed the base salaries of Mses. Friar, Henry, Reses and Whiteley, taking into consideration a competitive market analysis performed by Compensia, the recommendations of our CEO and our then-current People Lead, the desire to retain our highly qualified executive team and the other factors described above. Following this review, our compensation committee approved an increase in the annual base salary levels for Mses. Friar, Henry, Reses and Whiteley to $400,000, in each case effective as of April 1, 2018, in order to improve competitive alignment with our peers. In addition, our compensation committee determined that it was appropriate to leave our CEO’s 2018 base salary level at $2.75 per year, at the request of our CEO and with compensation committee approval.
The annualized base salaries of our named executive officers as of December 31, 2018 compared to December 31, 2017 were:
(1) Ms. Friar resigned from her position as Chief Financial Officer, effective as of November 16, 2018, at which time her annual base salary was $400,000.
(2) Ms. Whiteley was appointed to General Counsel and Corporate Secretary effective March 18, 2018, and her salary was adjusted to reflect her promotion to this role.
(3) The base salaries of Messrs. Daswani and Murphy were not adjusted in conjunction with their service as interim co-CFOs. Salary adjustments for Messrs. Daswani and Murphy made in April 2018, prior to their becoming named executive officers, were made as part of the company-wide compensation review program. Their salary adjustments were recommended by their direct manager and approved by the then-current People Lead. Messrs. Daswani and Murphy’s annualized base salaries at the time of their appointment as interim co-CFOs were $300,000 and $295,000, respectively.

Named Executive Officer | Annual Base Salary as of December 31, 2017 | Annual Base Salary as of December 31, 2018 | Percentage Increase
----------------------- | ------------------------------------------ | ------------------------------------------ | -------------------
Mr. Dorsey              | $2.75                                      | $2.75                                      | 0%
Ms. Friar (1)           | $350,000                                   | $N/A                                       | N/A
Ms. Henry               | $350,000                                   | $400,000                                   | 14%
Ms. Reses               | $350,000                                   | $400,000                                   | 14%
Ms. Whiteley (2)        | $325,000                                   | $400,000                                   | 23%
Mr. Daswani (3)         | $280,000                                   | $300,000                                   | 7%
Mr. Murphy (3)          | $270,000                                   | $295,000                                   | 9%

Base Salary
 for named executive officers fixed executive compensation program. for services experience skills knowledge. no specific formula adjustments. Adjustments reflect economic condition future performance. conservative competitive market pay levels.
 April 2018 compensation committee reviewed base salaries. Friar Henry Reses Whiteley competitive market analysis recommendations CEO People Lead executive team. approved annual base salary. Friar Henry Reses Whiteley to $400,000 April 1, 2018 competitive alignment. CEO’s 2018 base salary level at $2. 75 per year.
 annualized base salaries officers December 31, 2018 to 2017
. Friar resigned Chief Financial Officer November 16, 2018 annual base salary $400,000.
. Whiteley General Counsel Corporate Secretary March 18, 2018 salary adjusted promotion.
 salaries. Daswani Murphy not adjusted interim co-CFOs. Salary adjustments for. Murphy April 2018 company-wide compensation review program. recommended by manager approved by People Lead.Daswani salaries co-CFOs $300,000 $295,000.
 Salary December 31, 2017 2018 Percentage Increase
. Dorsey $2. 75.
. Friar $350,000/A
. Henry $350,000 $400,000 14%
. $350,000
. Whiteley $325,000 $400 23%
. Daswani $280,000 $300,000 7%
. Murphy $270,000 $295,000


BOOKINGS
The following table shows new orders levels for 2019 and the backlog for 2018:
The backlog includes orders for which purchase orders or letters of intent have been accepted, typically for up to one year. Historically, orders have been subject to cancellation or rescheduling by customers. In addition, orders have been subject to price negotiations and changes in specifications as a result of changes in customers’ requirements. Due to possible customer changes in delivery schedules and requirements, and to cancellations of orders, our backlog at any particular date is not necessarily indicative of actual sales for any subsequent period.
For the year in total, our new bookings increased by 24% in 2019 to €1,170 million, excluding the proceeds from the settlements. The book-to-bill, as measured by orders divided by revenue, was 1.0 in 2019. Equipment bookings were led by the foundry segment, followed by logic and memory. Bookings strengthened in the course of the year, excluding the settlement gains, from €235 million in the first quarter to €270 million in the second quarter, €292 million in the third quarter and finished at a new record high of €373 million in the fourth quarter. We also finished the year with a record high order backlog of €351 million, an increase of 16% compared to the end of 2018.

                                                     |         | Year ended December 31, |
---------------------------------------------------- | ------- | ----------------------- | --------
(EUR million)                                        | 2018    | 2019                    | % Change
Backlog at the beginning of the year                 | 176.3   | 301.5                   | 71%
New orders                                           | 942.1   | 1,328.9                 | 41%
Revenue                                              | (818.1) | (1,283.9)               | 57%
FX-effect                                            | 6.3     | 4.7                     |
Adjustment IFRS 15                                   | (5.1)   | –                       |
Backlog as per reporting date                        | 301.5   | 351.2                   | 16%
Book-to-bill ratio (new orders divided by net sales) | 1.2     | 1.0                     |

 table shows new orders levels 2019 backlog 2018:
 backlog includes accepted one year. orders subject cancellation rescheduling. price negotiations changes specifications. backlog not indicative sales.
 new bookings increased 24% 2019 to €1,170 million excluding proceeds settlements. book-to-bill 1. 0 2019. Equipment bookings led foundry segment followed logic memory. Bookings strengthened gains €235 million first quarter to €270 million second €292 million third quarter €373 million fourth quarter. record high order backlog €351 million increase 16% 2018.
 Year ended December 31,
 Backlog 176. 3 301. 5 71%
 New orders 942. 1,328. 9 41%
 Revenue (818. (1,283. 57%
 FX-effect 6. 4.
.
 Backlog reporting date 301. 5 351. 2 16%
 Book-to-bill ratio orders 1.


Relative importance of the spend on pay
The following table shows the Group’s actual spend on pay for all employees compared to distributions to shareholders. The average number of employees has also been included for context. Revenue and Operating profit have also been disclosed as these are two key measures of Group performance.
1 2018 comparatives have been restated to reflect the adoption of IFRS 9, IFRS 15 and IFRS 16, and to include share buybacks.

                                                                                | 2019  | Restated 2018 |
------------------------------------------------------------------------------------------------------------- | ----- | ------------- | --------
                                                                                | £m    | £m            | % change
Employee costs (see note 7 to the consolidated financial statements)                                          | 56.0  | 54.5          | 3%
Average number of employees (see note 6 to the consolidated financial statements)                             | 802   | 822           | 3%
Revenue (see Consolidated income statement)                                                                   | 355.1 | 330.1         | 8%
Operating profit                                                                                | 243.7 | 221.3         | 10%
Dividends paid and proposed and share buybacks (see notes 26 and 27 to the consolidated financial statements) | 156.4 | 152.8¹        | 2%

importance spend on pay
 table shows Group’s spend pay employees compared distributions shareholders. average number included. Revenue Operating profit disclosed key measures Group performance.
 2018 comparatives restated IFRS 9 15 16 include share buybacks.
 2018
 £m
 Employee costs 7 56. 54. 3%
 Average 6 802 822 3%
 Revenue 355. 330. 8%
 Operating profit 243. 221. 3 10%
 Dividends share buybacks 26 27 156. 152.


Revenue and costs are generally directly attributed to our segments. However, due to the integrated structure of our business, certain revenue recognized and costs incurred by one segment may benefit other segments. Revenue from certain contracts is allocated among the segments based on the relative value of the underlying products and services, which can include allocation based on actual prices charged, prices when sold separately, or estimated costs plus a profit margin. Cost of revenue is allocated in certain cases based on a relative revenue methodology. Operating expenses that are allocated primarily include those relating to marketing of products and services from which multiple segments benefit and are generally allocated based on relative gross margin.
In addition, certain costs incurred at a corporate level that are identifiable and that benefit our segments are allocated to them. These allocated costs include costs of: legal, including settlements and fines; information technology; human resources; finance; excise taxes; field selling; shared facilities services; and customer service and support. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. Certain corporate-level activity is not allocated to our segments, including restructuring expenses.
Segment revenue and operating income were as follows during the periods presented:
Corporate and Other operating loss comprised restructuring expenses.

(In millions)                       |            |             |
----------------------------------- | ---------- | ----------- | ----------
Year Ended June 30,                 | 2019       | 2018        | 2017
Revenue                             |            |             |
Productivity and Business Processes | $ 41,160   | $ 35,865    | $ 29,870
Intelligent Cloud                   | 38,985     | 32,219      | 27,407
More Personal Computing             | 45,698     | 42,276      | 39,294
Total                               | $  125,843 | $   110,360 | $   96,571
Operating Income (Loss)             |            |             |
Productivity and Business Processes | $ 16,219   | $ 12,924    | $ 11,389
Intelligent Cloud                   | 13,920     | 11,524      | 9,127
More Personal Computing             | 12,820     | 10,610      | 8,815
Corporate and Other                 | 0          | 0           | (306)
Total                               | $ 42,959   | $ 35,058    | $ 29,025

Revenue costs attributed to segments. integrated structure revenue costs benefit segments. Revenue contracts allocated value products profit margin. allocated relative revenue methodology. Operating expenses include marketing gross margin.
 costs corporate level benefit segments allocated. legal information technology human resources finance excise taxes field selling shared facilities customer service support. allocation measured. corporate-level activity not allocated segments restructuring expenses.
 Segment revenue operating income
 loss restructuring expenses.
 June 30
 Revenue
 Productivity Business Processes $ 41,160 $ 35,865 $ 29,870
 Intelligent Cloud 38,985 32,219 27,407
 Personal Computing 45,698 42,276 39,294
 Total $ 125,843 $ 110,360 $ 96,571
 Operating Income (Loss
 Productivity Business Processes $ 16,219 $ 12,924 11,389
 Intelligent Cloud 13,920 11,524 9,127
Computing 12,820 10,610 8,815
 $ 42,959 35,058 29,025


Liquidity and Capital Resources
We fund our operations primarily through cash generated from operations. As of December 31, 2019, we had cash and cash equivalents totalling $36.6 million, marketable securities of $434.8 million and accounts receivable of $97.9 million.
We believe our existing cash balances and anticipated cash flow from future operations will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months and the foreseeable future. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, purchases of capital equipment to support our growth, the expansion of sales and marketing activities, any expansion of our business through acquisitions of or investments in complementary products, technologies or businesses, the use of working capital to purchase additional inventory, the timing of new product introductions, market acceptance of our products and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. In the event additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. We believe our existing cash balances and anticipated cash flow from future operations will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months and the foreseeable future. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, purchases of capital equipment to support our growth, the expansion of sales and marketing activities, any expansion of our business through acquisitions of or investments in complementary products, technologies or businesses, the use of working capital to purchase additional inventory, the timing of new product introductions, market acceptance of our products and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. In the event additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. We believe our existing cash balances and anticipated cash flow from future operations will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months and the foreseeable future. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, purchases of capital equipment to support our growth, the expansion of sales and marketing activities, any expansion of our business through acquisitions of or investments in complementary products, technologies or businesses, the use of working capital to purchase additional inventory, the timing of new product introductions, market acceptance of our products and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. In the event additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.
On April 30, 2018, our Board of Directors authorized a stock repurchase program for the repurchase of up to $60.0 million of our common stock, of which $39.7 million was used to repurchase shares in 2018 prior to the program’s expiration on December 31, 2018.

                                                    |           | Year Ended December 31, |
--------------------------------------------------- | --------- | ----------------------- | ---------
                                                    | 2019      | 2018                    | 2017
                                                    |           | (in thousands)          |
Cash and cash equivalents                           | $36,617   | $60,444                 | $67,495
Marketable securities                               | 434,761   | 339,424                 | 297,115
Working capital                                     | 368,912   | 370,445                 | 361,621
Net cash provided by operating activities           | 72,819    | 83,085                  | 61,893
Net cash used in investing activities               | (103,579) | (56,237)                | (207,907)
Net cash provided by (used in) financing activities | 6,933     | (33,899)                | 5,477

Liquidity Capital Resources
 fund operations through cash. As of December 31, 2019 cash equivalents $36. 6 million marketable securities $434. 8 million accounts receivable $97. 9 million.
 existing cash balances cash flow from future operations working capital capital expenditure needs next 12 months foreseeable future. future capital requirements may vary depend on factors revenue growth spending research development purchases capital equipment expansion sales marketing acquisitions timing new product introductions market acceptance economic conditions. current liquidity insufficient may seek additional equity or debt financing. additional financing required outside may raise terms. existing cash balances cash flow from future operations sufficient working capital expenditure needs next 12 months foreseeable future. future capital requirements may vary depend on revenue growth research development purchases equipment expansion sales marketing inventory timing new product introductions market acceptance economic conditions. current future liquidity insufficient future activities may seek additional equity or debt financing.additional financing required raise terms. existing cash balances cash flow future operations sufficient working capital expenditure needs next 12 months future. future capital requirements vary depend on factors revenue growth research development capital equipment expansion sales marketing working capital inventory new product introductions market acceptance economic conditions. current liquidity insufficient may seek additional equity debt financing. additional financing required raise terms.
 April 30, 2018 Board authorized stock repurchase program $60. 0 million common stock $39. 7 million used 2018 expiration December 31, 2018.
 Ended December 31,
 2019
 Cash equivalents $36,617  $60,444  $67,495
 Marketable securities 434,761 339,424 297,115
 Working capital 368,912  370,445 361,621
 Net cash operating activities 72,819  83,085  61,893
 cash investing activities (103,579) (56,237) (207,907)
cash financing 6,933,899 5,477


Cash Flow
Our cash flows from operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows on page 71 are summarized in the table below. These amounts include the cash flows associated with the Global Financing business.
Net cash provided by operating activities decreased $477 million in 2019 driven by the following key factors: • An increase in cash income tax payments of $346 million; • An increase in interest payments on debt of approximately $300 million, driven by incremental debt used to fund the acquisition of Red Hat; and • Performance-related declines within net income, including lower operating cash flows due to businesses divested in 2019; partially offset by • An increase of $836 million in cash provided by financing receivables.
Net cash used in investing activities increased $22,023 million driven by: • An increase in net cash used for acquisitions of $32,491 million, primarily driven by the acquisition of Red Hat; offset by • An increase of $7,223 million in cash provided by net non-operating finance receivables primarily driven by the wind down of OEM IT commercial financing operations; • A decrease in cash used for net capital expenditures of $1,346 million; and • An increase in cash provided by divestitures of $1,076 million.
Financing activities were a net source of cash of $9,042 million in 2019 compared to a net use of cash of $10,469 million in 2018. The year-to-year increase in cash flow of $19,512 million was driven by: • An increase in net cash sourced from debt transactions of $16,584 million primarily driven by net issuances to fund the Red Hat acquisition; and • A decrease in cash used for gross common share repurchases of $3,082 million.

($ in millions)                                                               |          |
----------------------------------------------------------------------------- | -------- | --------
For the year ended December 31:                                               | 2019     | 2018
Net cash provided by/(used in) continuing operations                          |          |
Operating activities                                                          | $14,770  | $15,247
Investing activities                                                          | (26,936) | (4,913)
Financing activities                                                          | 9,042    | (10,469)
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (167)    | (495)
Net change in cash, cash equivalents and restricted cash                      | $(3,290) | $(630)

Cash
 operating investing financing Consolidated Statement Cash Flows page 71 summarized table. Global Financing business.
 cash decreased $477 million 2019 income tax payments $346 million interest payments debt $300 million acquisition Red Hat Performance declines lower cash flows businesses divested offset increase $836 million financing receivables.
 investing increased $22,023 million increase $32,491 million acquisition Red Hat increase $7,223 million non-operating receivables OEM IT financing decrease capital expenditures $1,346 million increase divestitures $1,076 million.
 Financing cash $9,042 million 2019 $10,469 million 2018. year-to-year increase cash flow $19,512 million increase debt transactions $16,584 million Red Hat acquisition decrease cash common share repurchases $3,082 million.
 December 31
 cash operations
 Operating $14,770 $15,247
 Investing activities (26,936) (4,913)
Financing activities 9,042 (10,469
 exchange rate cash (167) (495)
 Net change,290


The defined benefit pension plan utilizes various investment securities. Generally, investment securities are exposed to various risks, such as interest rate risks, credit risk, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur and that such changes could materially affect the amounts reported.
The following table presents the Company’s target for the allocation of invested defined benefit pension plan assets at June 30, 2019 and June 30, 2018:

             | As of June 30 |
------------ | ------------- | ----
             | 2019          | 2018
Fixed income | 40%           | 40%
Equities     | 55%           | 55%
Other        | 5%            | 5%
Total        | 100%          | 100%

defined benefit pension plan utilizes investment securities. exposed to risks interest rate credit market volatility. changes values affect amounts reported.
 table target allocation benefit pension plan assets at June 30, 2019 June 2018:
 June
 2019 2018
 Fixed income 40%
 Equities 55%
 Other 5%
 Total 100%


NOTE 15. ACCRUED EXPENSES AND OTHER PAYABLES
Accrued expenses and other payables consist of the following:
Personnel-related items comprise accrued management bonuses, accrued vacation days, accrued wage tax, social securities and pension premiums. Deferred revenue consists of the revenue relating to the undelivered elements of the arrangements, see Note 21 for more information. This part of revenue is deferred at their relative selling prices until delivery of these elements. Other includes accruals for VAT, other taxes and invoices to be received for goods and services.

                                          | December 31, |
----------------------------------------- | ------------ | -------
                                          | 2018         | 2019
Personnel-related items                   | 32,636       | 45,318
Deferred revenue                          | 28,255       | 32,146
Financing related items                   | –            | 3,912
Current portion of lease liabilities      | –            | 7,002
Advanced payments from customers          | 25,382       | 47,601
Supplier related items                    | 1,828        | 2,175
Marketing related items                   | 1,049        | 1,365
R&D projects                              | 1,209        | 1,109
Other                                     | 8,634        | 9,215
Total accrued expenses and other payables | 98,993       | 149,843

. ACCRUED EXPENSES PAYABLES
 management bonuses vacation days wage tax social securities pension premiums. Deferred revenue undelivered 21. deferred delivery. VAT taxes invoices goods services.
 Personnel-related items 32,636 45,318
 Deferred revenue 28,255 32,146
 Financing
 lease liabilities 7,002
 Advanced payments 25,382 47,601
 Supplier 1,828 2,175
 Marketing 1,049
 R&D projects 1,209
 8,634 9,215
 accrued expenses payables 98,993 149,843


Note 3: Debt
A summary of debt is as follows (amounts in thousands):
(1) Amount shown is net of discount, bank issuance costs and other indirect issuance costs of $13.3 million as of March 31, 2018.
(2) Amount shown is net of discount, bank issuance costs and other indirect issuance costs of $8.7 million as of March 31, 2019.
(3) Amount shown is net of discount of $2.1 million as of March 31, 2019.
(4) Amounts shown are net of discounts of $0.6 million and $0.5 million as of March 31, 2019 and 2018, respectively.

                               | March 31, |
------------------------------ | --------- | --------
                               | 2019      | 2018
Term Loan Credit Agreement (1) | $—        | $318,782
TOKIN Term Loan Facility (2)   | 276,808   | —
Customer Advances (3)          | 11,270    | —
Other, net (4)                 | 6,393     | 5,841
Total debt                     | 294,471   | 324,623
Current maturities             | (28,430)  | (20,540)
Total long-term debt           | $266,041  | $304,083

Debt
 summary
 net discount $13. 3 million March 31, 2018.
 $8. 7 million March 31, 2019.
 discount $2. 1 million March 31, 2019.
 discounts $0. 6 million. 5 million March 31, 2019 2018.
 Term Loan Credit Agreement $318,782
 Term Loan Facility 276,808
 Customer Advances 11,270
 6,393
 Total debt 294,471 324,623
 Current maturities (28,430)
 long-term debt $266,041 $304,083