16. Net Loss Per Share
Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period, less shares subject to repurchase, and excludes any dilutive effects of options, warrants and unvested restricted stock. Dilutive earnings per share is calculated by dividing net income by the weighted average number of common shares used in the basic earnings per share calculation plus the dilutive effect of shares subject to options, warrants and unvested restricted stock.
The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):
Potentially dilutive common shares from employee incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, the assumed vesting of outstanding restricted stock units, and the assumed issuance of common stock under the ESPP. Weighted stock options outstanding with an exercise price higher than the Company's average stock price for the periods presented are excluded from the calculation of diluted net loss per share since the effect of including them would have been anti-dilutive due to the net loss position of the Company during the periods presented.

                                                                          |               | Year Ended    |
------------------------------------------------------------------------- | ------------- | ------------- | -------------
                                                                          | June 30,
2019 | June 30,
2018 | June 30,
2017
Net loss                                                                  | $(25,853)     | $(46,792)     | $(1,744)
Weighted-average shares used in per share calculation - basic and diluted | 117,954       | 114,221       | 108,273
Net loss per share - basic and diluted                                    | $(0.22)       | $(0.40)       | $(0.02)

. Net Loss Per Share
 earnings calculated income shares less repurchase excludes dilutive effects options warrants unvested restricted stock. Dilutive earnings income plus dilutive effect options warrants unvested restricted stock.
 table calculation basic diluted net loss per share
 dilutive shares from incentive plans determined treasury stock method exercise stock options vesting restricted stock units issuance common stock ESPP. stock options price higher average stock price excluded diluted net loss anti-dilutive.
 June
 2019
 2018
 2017
 Net loss $(25,853) $(46,792) $(1,744)
 Weighted-average shares basic diluted 117,954 114,221 108,273
 Net loss per share diluted. 22). 40).


A summary of the option activity as of May 26, 2019 and changes during the fiscal year then ended is presented below:
We recognize compensation expense using the straight-line method over the requisite service period, accounting for forfeitures as they occur. During fiscal 2017, we granted 1.1 million stock options with a weighted average grant date fair value of $6.12 per share. The total intrinsic value of stock options exercised was $7.9 million, $15.8 million, and $29.8 million for fiscal 2019, 2018, and 2017, respectively. The closing market price of our common stock on the last trading day of fiscal 2019 was $28.83 per share.
Compensation expense for stock option awards totaled $2.2 million, $4.2 million, and $6.2 million for fiscal 2019, 2018, and 2017, respectively, including discontinued operations of $0.2 million for fiscal 2017. Included in the compensation expense for stock option awards for fiscal 2019, 2018, and 2017 was $0.2 million, $0.4 million, and $0.9 million, respectively, related to stock options granted by a subsidiary in the subsidiary's shares to the subsidiary's employees. The tax benefit related to the stock option expense for fiscal 2019, 2018, and 2017 was $0.5 million, $1.4 million, and $2.4 million, respectively.
At May 26, 2019, we had $0.2 million of total unrecognized compensation expense related to stock options that will be recognized over a weighted average period of 0.1 years.
Cash received from stock option exercises for fiscal 2019, 2018, and 2017 was $12.4 million, $25.1 million, and $84.4 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $2.3 million, $5.3 million, and $19.5 million for fiscal 2019, 2018, and 2017, respectively.

Options                     | Number of Options (in Millions) | Weighted Average Exercise Price | Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in Millions)
--------------------------- | ------------------------------- | ------------------------------- | ------------------------------------------ | ---------------------------------------
Outstanding at May 27, 2018 | 5.1                             | $28.11                          |                                            |
Exercised                   | (0.6)                           | $20.75                          |                                            | $7.9
Expired                     | (0.1)                           | $29.84                          |                                            |
Outstanding at May 26, 2019 | 4.4                             | $29.00                          | 5.47                                       | $9.9
Exercisable at May 26, 2019 | 4.1                             | $28.38                          | 5.32                                       | $9.9

summary option activity May 26, 2019 changes
 compensation expense accounting forfeitures. 2017 granted. million stock options value $6. 12 per share. value $7. 9 million $15. 8 million $29. million 2019 2018 2017. closing market price common stock last day 2019 $28. 83 per share.
 Compensation expense $2. 2 million $4. 2 million $6. 2 million 2019 2018 2017 discontinued operations $0. million 2017. million. million. million. tax benefit $0. 5 million $1. 4 million $2. 4 million.
 May 26, 2019 $0. 2 million unrecognized compensation expense. years.
 Cash 2019 2018 2017 $12. 4 million $25. 1 million $84. 4 million. tax benefit $2. 3 million $5. 3 million $19. 5 million 2019 2018 2017.
 Exercise Price Contractual Term Intrinsic Value

 May 27, 2018 5. $28. 11
. $20. 75 $7.
 Expired. $29. 84
 May 26, 2019. $29. 47 $9.
 May 26, 2019. $28. 38. 32 $9.


Unallocated Amounts
In determining revenue, gross profit and income from operations for our segments, we do not include in revenue the amortization of acquisition related deferred revenue adjustments, which reflect the fair value adjustments to deferred revenues acquired in a business acquisition. We also exclude the amortization of intangible assets, stock-based compensation expense, expenses not reflective of our core business and transaction-related costs and non-cash asset impairment charges from the operating segment data provided to our Chief Operating Decision Maker.
Expenses not reflective of our core business relate to certain severance, product consolidation, legal, consulting and other charges. Accordingly, these amounts are not included in our reportable segment results and are included in the “Unallocated Amounts” category.
The “Unallocated Amounts” category also includes (i) corporate general and administrative expenses (including marketing expenses) and certain research and development expenses related to common solutions and resources that benefit all of our business units, all of which are centrally managed, and (ii) revenue and the associated cost from the resale of certain ancillary products, primarily hardware.
Year Ended December 31, 2019 Compared with the Year Ended December 31, 2018
Revenue from the resale of ancillary products, primarily consisting of hardware, is customer- and project-driven and, as a result, can fluctuate from period to period. The increase in revenue for the year ended December 31, 2019 compared to the prior year was primarily due to only $2 million in amortization of acquisition-related deferred revenue adjustments being recorded during 2019, compared to $24.3 million during 2018.
Gross unallocated expenses, which represent the unallocated loss from operations excluding the impact of revenue, totaled $478 million for the year ended December 31, 2019 compared to $533 million for the year ended December 31, 2018. The decrease was primarily the result of (i) lower asset impairment and goodwill charges of $35 million, (ii) lower net transaction-related severance and legal expenses of $16 million and (iii) lower acquisition related amortization of $1 million. These were partially offset with $3 million in additional stock-based compensation expense.
Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017
Revenue from the resale of ancillary products, primarily consisting of hardware, is customer and project driven and, as a result, can fluctuate from period to period. Revenue for the year ended December 31, 2018 compared with the prior year improved primarily due to lower recognition of amortization of acquisition-related deferred revenue adjustments, which reflect the fair value adjustments to deferred revenues acquired in the EIS Business, Practice Fusion, Health Grid and NantHealth provider/patient engagement acquisitions.
Such adjustments totaled $24 million for the year ended December 31, 2018 compared with $29 million for the year ended December 31, 2017.
Gross unallocated expenses, which represent the unallocated loss from operations excluding the impact of revenue, totaled $533 million for the year ended December 31, 2018 compared with $424 million for the prior year. The increase in the year ended December 31, 2018 compared with prior year was primarily driven by higher transaction-related, severance and legal expenses, primarily related to the acquisitions of the EIS Business, Practice Fusion and Health Grid,
which included higher (i) asset impairment charges of $58 million, (ii) goodwill impairment charges of $14 million, (iii) transaction-related, severance and legal expenses of $30 million, and (iv) amortization of intangible and acquisition-related asset of $9 million. The increase in amortization expense was primarily due to additional amortization expense associated with intangible assets acquired as part of business acquisitions completed since the third quarter of 2017.

                     |            |            | Year Ended December 31, |                         |
-------------------- | ---------- | ---------- | ----------------------- | ----------------------- | -----------------------
(In thousands)       | 2019       | 2018       | 2017                    | 2019 % Change from 2018 | 2018 % Change from 2017
Revenue              | $13,346    | $(6,386)   | $(13,383)               | NM                      | (52.3%)
Gross profit         | $(63,522)  | $(86,228)  | $(85,130)               | (26.3%)                 | 1.3%
Gross margin %       | NM         | NM         | NM                      |                         |
Loss from operations | $(465,176) | $(539,237) | $(437,431)              | (13.7%)                 | 23.3%
Operating margin %   | NM         | NM         | NM                      |                         |

Unallocated Amounts
 revenue profit income amortization acquisition deferred revenue adjustments. exclude amortization intangible assets stock-based compensation expenses not reflective core business transaction-related costs non asset impairment charges operating data Decision Maker.
 Expenses not reflective core business relate severance product consolidation legal consulting charges. not included reportable results “Unallocated Amounts” category.
 includes corporate administrative expenses research development expenses revenue resale ancillary products hardware.
 December 31, 2019 2018
 Revenue customer- project-driven. increase revenue 2019 due to $2 million amortization acquisition-related deferred revenue adjustments compared $24. 3 million 2018.
 Gross unallocated expenses totaled $478 million December 2019 compared $533 million 2018. decrease lower impairment goodwill charges $35 million lower transaction-related severance legal expenses $16 million lower acquisition amortization $1 million.offset with $3 million additional stock compensation expense.
 December 31, 2018 2017
 Revenue resale ancillary products hardware customer project driven. Revenue 2018 improved due lower amortization acquisition-related deferred revenue adjustments Business Practice Fusion Health Grid NantHealth acquisitions.
 adjustments totaled $24 million 2018 $29 million 2017.
 Gross unallocated expenses totaled $533 million $424 million prior year. increase driven by higher transaction-related severance legal expenses acquisitions EIS Business Practice Fusion Health Grid
 higher impairment charges $58 million goodwill impairment charges $14 million transaction-related severance legal expenses $30 million amortization intangible acquisition-related asset $9 million. increase amortization expense due additional intangible assets business acquisitions third quarter 2017.
 Year Ended December
 2019 2018 % Change
 Revenue $13,346 $(6. 3%
profit $(63,522)(86,228,130 (26. 3% 1. 3%
 Loss operations(465,176(539,237)(437,431 (13. 7% 23. 3%
 Operating margin


AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts in millions, unless otherwise disclosed)
Cash and Cash Equivalents—Cash and cash equivalents include cash on hand, demand deposits and short-term investments with original maturities of three months or less. The Company maintains its deposits at high-quality financial institutions and monitors the credit ratings of those institutions.
Restricted Cash—Restricted cash includes cash pledged as collateral to secure obligations and all cash whose use is otherwise limited by contractual provisions.
The reconciliation of cash and cash equivalents and restricted cash reported within the applicable balance sheet that sum to the total of the same such amounts shown in the statements of cash flows is as follows:

                                                 |          | Year Ended December 31, |
------------------------------------------------ | -------- | ----------------------- | ------
                                                 | 2019     | 2018                    | 2017
Cash and cash equivalents                        | $1,501.2 | $1,208.7                | $802.1
Restricted cash                                  | 76.8     | 96.2                    | 152.8
Total cash, cash equivalents and restricted cash | $1,578.0 | $1,304.9                | $954.9

AMERICAN TOWER CORPORATION SUBSIDIARIES FINANCIAL STATEMENTS amounts millions
 Cash demand deposits short-term investments maturities three months. maintains deposits monitors credit ratings.
 Restricted pledged limited contractual provisions.
 reconciliation cash equivalents restricted cash balance sheet
 Ended December 31,
 2019 2018 2017
 Cash equivalents $1,501. 2 $1,208. 7 $802.
 Restricted cash 76.
 Total cash equivalents restricted cash $1,578. $1,304. 9 $954.


Notes to Consolidated Financial Statements - (Continued) Fiscal Years Ended May 26, 2019, May 27, 2018, and May 28, 2017 (columnar dollars in millions except per share amounts) Private Brands Operations
On February 1, 2016, pursuant to the Stock Purchase Agreement, dated as of November 1, 2015, we completed the disposition of our Private Brands operations to TreeHouse Foods, Inc. ("TreeHouse").
The summary comparative financial results of the Private Brands business, included within discontinued operations, were as follows:
We entered into a transition services agreement with TreeHouse and recognized $2.2 million and $16.9 million of income for the performance of services during fiscal 2018 and 2017, respectively, classified within SG&A expenses.

                                                                                | 2019 | 2018   | 2017
--------------------------------------------------------------------------------------------- | ---- | ------ | ------
Loss on sale of business                                                                      | $—   | $—     | $(1.6)
Income from discontinued operations before income taxes and equity method investment earnings | 0.9  | 0.4    | 3.9
Income before income taxes and equity method investment earnings .                            | 0.9  | 0.4    | 2.3
Income tax expense (benefit) .                                                                | —    | 0.5    | (0.3)
Income (loss) from discontinued operations, net of tax                                        | $0.9 | $(0.1) | $2.6

Consolidated Financial Statements Fiscal Years Ended May 26, 2019 27, 2018 May 28, 2017 millions share amounts Private Brands Operations
 February 1, 2016, Stock Purchase Agreement disposition Private Brands operations TreeHouse Foods.
 financial results Private Brands
 transition services agreement TreeHouse recognized $2. 2 million $16. 9 million income fiscal 2018 2017 SG&A expenses.
 2018 2017
 Loss sale business.
 Income discontinued operations before income taxes equity investment earnings.
.
 tax expense (benefit.
 Income (loss discontinued operations net tax.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data)
NOTE 4 — Inventories
Inventories consist of the following:

                         | As of December 31, |
------------------------ | ------------------ | -------
                         | 2019               | 2018
Finished goods           | $9,447             | $10,995
Work-in-process          | 14,954             | 12,129
Raw materials            | 23,363             | 25,746
Less: Inventory reserves | (5,527)            | (5,384)
Inventories, net         | $42,237            | $43,486

FINANCIAL STATEMENTS thousands
 Inventories
 December 31,
 Finished goods $9,447 $10,995
 Work-in-process 14,954 12,129
 Raw materials 23,363 25,746
 reserves (5,527)
 $42,237 $43,486


AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts in millions, unless otherwise disclosed)
The domestic and foreign components of income from continuing operations before income taxes are as follows:

              |          | Year Ended December 31, |
------------- | -------- | ----------------------- | --------
              | 2019     | 2018                    | 2017
United States | $1,527.0 | $1,212.7                | $971.2
Foreign       | 389.4    | (58.1)                  | 284.9
Total         | $1,916.4 | $1,154.6                | $1,256.1

AMERICAN TOWER CORPORATION SUBSIDIARIES FINANCIAL STATEMENTS amounts millions
 domestic foreign income operations taxes
 Ended December 31,
 States $1,527. $1,212. $971.
 Foreign 389. 284.
 $1,916. $1,154. $1,256.


OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
At June 30, 2019, the Company’s total off-balance sheet contractual obligations were $665,107. This balance consists of $71,633 of long-term operating leases for various facilities and equipment which expire from 2020 to 2030 and $593,474 of purchase commitments. In fiscal 2017, JHA entered a strategic services agreement with First Data® and PSCU® to provide full-service debit and credit card processing on a single platform to all existing core bank and credit union customers, as well as expand its card processing platform to financial institutions outside our core customer base. This agreement includes a purchase commitment of $555,754 over the remaining term of the contract. The remainder of the purchase commitments relate mainly to open purchase orders. The contractual obligations table below excludes $12,009 of liabilities for uncertain tax positions as we are unable to reasonably estimate the ultimate amount or timing of settlement.
The operating lease obligations included on this table will be recorded on the balance sheet beginning in fiscal 2020 due to the Company’s adoption of ASU No. 2016-02, issued by the FASB in February 2016 and effective for the Company on July 1, 2019.

Contractual obligations by period as of June 30, 2019 | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | TOTAL
----------------------------------------------------- | ---------------- | --------- | --------- | ----------------- | --------
Operating lease obligations                           | $15,559          | $25,399   | $19,004   | $11,671           | $71,633
Purchase obligations                                  | 62,637           | 86,875    | 107,188   | 336,774           | 593,474
Total                                                 | $78,196          | $112,274  | $126,192  | $348,445          | $665,107

OFF-BALANCE OBLIGATIONS
 June 30, 2019 off-balance obligations $665,107. $71,633 long-term leases 2020 to 2030 $593,474 purchase commitments. 2017 JHA First full-service debit credit card processing. purchase commitment $555,754. purchase commitments open purchase orders. excludes $12,009 liabilities uncertain tax positions.
 operating lease obligations recorded balance fiscal 2020 ASU No. 2016-02 effective July 1, 2019.
 Contractual obligations June 30, 2019 Less 1 1-3 3-5 5 years
 Operating lease obligations $15,559 $25,399 $19,004 $11,671 $71,633
 Purchase obligations 62,637 86,875 107,188 336,774 593,474
 Total $78,196 $112,274 $126,192 $348,445 $665,107


The maximum exposure to credit risk for trade receivables at the reporting date by type of customer was:
The Group’s most significant customer accounts for £0.5m (2018: £0.6m) of net trade receivables as at 31 March 2019.

                        | 2019 | 2018
----------------------- | ---- | ----
                        | £m   | £m
Retailers               | 20.4 | 21.7
Manufacturer and Agency | 3.2  | 3.0
Other                   | 1.3  | 0.7
Total                   | 24.9 | 25.4

maximum exposure credit risk trade receivables reporting date customer
 Group’s significant accounts £0. 5m. 6m net trade receivables 31 March 2019.
 Retailers 20. 21.
 Manufacturer Agency.
.
 24. 25.


3.4 Trail commission asset
Recognition, measurement and classification
The Group has elected to account for trail commission revenue at the time of selling a product to which trail commission attaches, rather than on the basis of actual payments received from the relevant fund or providers involved. On initial recognition, trail commission revenue and assets are recognised at expected value. Subsequent to initial recognition and measurement, the carrying amount of the trail commission asset is adjusted to reflect actual and revised estimated cash flows. The resulting adjustment is recognised as revenue or against revenue in profit or loss.
Cash receipts that are expected to be received within 12 months of the reporting date are classified as current. All other expected cash receipts are classified as non-current.
Key estimates – trail commission revenue and asset
This method of revenue recognition and valuation of trail commission asset requires the Directors and management to make certain estimates and assumptions based on industry data and the historical experience of the Group.
Attrition rates in Health are particularly relevant to the overall trail commission asset considering the relative size of the Health trail commission asset. Attrition rates vary substantially by provider and also by the duration of time the policy has been in force, with rates generally higher in policies under two years old. The attrition rates used in the valuation of the Health portfolio at 30 June 2019 ranged from 7.5% and 26.5% (2018: 7.5% and 26.5%). The simple average duration band attrition increase was up to 0.2% during the period, with higher increases experienced for policies that have been in force for shorter periods of time.
In undertaking this responsibility, the Group engages Deloitte Actuaries and Consultants Limited, a firm of consulting actuaries, to assist in reviewing the accuracy of assumptions for health, mortgages and life trail revenue. These estimates and assumptions include, but are not limited to: termination or lapse rates, mortality rates, inflation, forecast fund premium increases and the estimated impact of known Australian Federal and State Government policies.
These variable considerations are constrained to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. In determining the extent of constraint necessary to ensure to a high probability that a significant reversal of revenue will not occur, the Group performs a detailed assessment of the accuracy of previously forecast assumptions against historical results.

                                                                       | CONSOLIDATED |
---------------------------------------------------------------------- | ------------ | ----------
                                                                       | 2019 $’000   | 2018 $’000
Current                                                                | 25,626       | 22,103
Non-current                                                            | 88,452       | 80,817
Total trail commission asset                                           | 114,078      | 102,920
Reconciliation of movement in trail commission asset:                  |              |
Opening balance                                                        | 102,920      | 93,564
Trail commission revenue – current period trail commission sales sales | 34,732       | 33,007
Cash receipts                                                          | (23,574)     | (23,651)
Closing balance                                                        | 114,078      | 102,920

. Trail commission asset
 Recognition measurement classification
 Group for revenue selling product payments. initial recognition revenue assets recognised at expected value. adjusted cash flows. adjustment recognised as revenue profit loss.
 Cash receipts expected within 12 months current. non-current.
 estimates trail commission revenue asset
 requires Directors management estimates assumptions based industry data historical experience Group.
 Attrition rates in Health relevant. vary by provider duration higher in policies under two years old. attrition rates Health portfolio at 30 June 2019 ranged 7. 5% 26. 5% (2018. average duration band attrition increase 0. 2% higher increases for policies shorter.
 Group engages Deloitte Actuaries and Consultants assumptions for health mortgages life trail revenue. estimates include termination lapse rates mortality rates inflation fund premium increases impact of Australian Federal State Government policies.
variable considerations constrained reversal cumulative revenue uncertainty resolved. Group forecast assumptions historical results.
 CONSOLIDATED
 2019 2018
 Current 25,626 22,103
 Non-current 88,452 80,817
 Total trail commission 114,078 102,920
 Reconciliation movement trail commission asset
 Opening balance 102,920 93,564
 revenue sales 34,732 33,007
 Cash receipts (23,574) (23,651)
 Closing balance 114,078 102,920


17 Impairment of Goodwill and Intangibles
Before recognition of impairment losses, the carrying amount of goodwill had been allocated as follows:
Impairment of goodwill and intangible assets is tested annually, or more frequently where there is indication of impairment.
Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately in the Consolidated Statement of Profit or Loss.
Goodwill is considered impaired if the carrying value of the cash-generating unit to which it relates is greater than the higher of fair value less costs of disposal and the value in use.
For the year-ended 31 March 2019, the Directors have reviewed the value of goodwill based on internal value in use calculations. The key assumptions for these calculations are discount rates, growth rates and expected changes to billings and direct costs during the period.
The Group prepares cash flow forecasts derived from the Directors’ most recent financial forecasts for the following five years. The growth rates for the five-year period are based on Directors’ expectations of the medium-term operating performance of the cash-generating unit, planned growth in market share, industry forecasts, growth in the market and specific regional considerations and are in line with past experience. Discount rates have been estimated based on rates that reflect current market assessments of the Group’s weighted average cost of capital.

         | 31 March 2019 | 31 March 2018
-------- | ------------- | -------------
         | $M            | $M
Americas | 273.6         | 288.2
EMEA     | 413.0         | 434.2
APJ      | 98.7          | 103.6
         | 785.3         | 826.0

Impairment Goodwill Intangibles
 Before impairment losses carrying goodwill allocated
 Impairment tested annually.
 Group estimates recoverable amount cash-generating unit. recoverable less than carrying reduced. impairment loss recognised expense in Consolidated Statement Profit Loss.
 Goodwill impaired if carrying value cash unit greater than fair value less costs disposal value use.
 31 March 2019 Directors reviewed value goodwill value use calculations. assumptions discount rates growth rates expected changes billings direct costs.
 Group prepares cash flow forecasts financial forecasts five years. growth rates based medium-term performance market share industry forecasts regional considerations past experience. Discount rates estimated market assessments weighted average cost capital.
 31 March 2019 31 March 2018
 Americas 273. 288.
 EMEA 413. 434.
 98. 103.
 785. 826.


6. Financial Instruments
The composition of financial instruments is as follows:
The fair values of the Company’s financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants and is recorded using a hierarchical disclosure framework based upon the level of subjectivity of the inputs used in measuring assets and liabilities. The levels are described below:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available.
The Company classifies its financial instrument within Level 2 of the fair value hierarchy on the basis of models utilizing market observable inputs. The interest rate swap has been valued on the basis of valuations provided by third-party pricing services, as derived from standard valuation or pricing models. Market-based observable inputs for the interest rate swap include one month LIBOR-based yield curves over the term of the swap. The Company reviews third-party pricing provider models, key inputs and assumptions and understands the pricing processes at its third-party providers in determining the overall reasonableness of the fair value of its Level 2 financial instruments. The Company also considers the risk of nonperformance by assessing the swap counterparty's credit risk in the estimate of fair value of the interest rate swap. As of December 31, 2019 and 2018, the Company has not made any adjustments to the valuations obtained from its third party pricing providers.

                   | December 31, 2019 | December 31, 2018
------------------ | ----------------- | -----------------
(in thousands)     |                   |
Assets             |                   |
Interest rate swap | $—                | $1,623
Liabilities        |                   |
Interest rate swap | $37               | $—

. Financial Instruments
 composition
 fair values Company’s financial instrument received asset sale or liability transaction market participants recorded hierarchical disclosure framework subjectivity inputs assets. levels
 Level 1: Quoted prices active markets. Level 2: Observable prices. Level 3: Unobservable inputs little no market data available.
 Company classifies financial instrument Level 2 fair value hierarchy market inputs. interest rate swap valued valuations third-party pricing services. inputs include one month LIBOR-based yield curves. reviews third-party pricing models inputs assumptions understands pricing processes value Level 2 financial instruments. considers risk of nonperformance counterparty's credit risk. December 31, 2019 2018 adjustments to valuations third party pricing providers.
 December 2019 2018
 thousands
 Assets
 Interest rate swap $1,623
 Liabilities
 Interest rate swap $37


The Company’s top ten clients accounted for 42.2%, 44.2% and 46.9% of its consolidated revenues during the years ended December 31, 2019, 2018 and 2017, respectively.
The following table represents a disaggregation of revenue from contracts with customers by delivery location (in thousands):

                |            | Years Ended December 31, |
--------------- | ---------- | ------------------------ | ----------
                | 2019       | 2018                     | 2017
Americas:       |            |                          |
United States   | $614,493   | $668,580                 | $644,870
The Philippines | 250,888    | 231,966                  | 241,211
Costa Rica      | 127,078    | 127,963                  | 132,542
Canada          | 99,037     | 102,353                  | 112,367
El Salvador     | 81,195     | 81,156                   | 75,800
Other           | 123,969    | 118,620                  | 118,853
Total Americas  | 1,296,660  | 1,330,638                | 1,325,643
EMEA:           |            |                          |
Germany         | 94,166     | 91,703                   | 81,634
Other           | 223,847    | 203,251                  | 178,649
Total EMEA      | 318,013    | 294,954                  | 260,283
Total Other     | 89         | 95                       | 82
                | $1,614,762 | $1,625,687               | $1,586,008

ten clients 42. 2%. 2%. 9% revenues 2017.
 United States $614,493 $668,580 $644,870
 Philippines 250,888 231,966 241,211
 Costa Rica 127,078 127,963 132
 Canada 99,037 102,353 112
 El Salvador 81 75,800
 123,969 118,853
 Americas 1,296,660 1,330,638 1,325,643
 Germany 94,166 91,703 81,634
 223,847 203,251 178,649
 318,013 294,954 260,283
 $1,614,762 $1,625,687 $1,586,008


OPERATING EXPENSES
(1) For the three-month period ended August 31, 2019, the average foreign exchange rate used for translation was 1.3222 USD/CDN.
(2) Fiscal 2018 was restated to comply with IFRS 15 and to reflect a change in accounting policy as well as to reclassify results from Cogeco Peer 1 as discontinued operations. For further details, please consult the "Accounting policies" and "Discontinued operations" sections.
(3) Fiscal 2019 actuals are translated at the average foreign exchange rate of the comparable period of fiscal 2018 which was 1.3100 USD/CDN.
Fiscal 2019 fourth-quarter operating expenses increased by 1.6% (1.1% in constant currency) mainly from: • additional costs in the American broadband services segment mainly due to higher programming costs, additional headcount to support growth, higher marketing initiatives to drive primary service units growth and the FiberLight acquisition;

Three months ended August 31,                 | 2019 (1) | 2018 (2) | Change | Change in constant currency (3) | Foreign exchange impact (3)
--------------------------------------------- | -------- | -------- | ------ | ------------------------------- | ---------------------------
(in thousands of dollars, except percentages) | $        | $        | %      | %                               | $
Canadian broadband services                   | 147,815  | 153,560  | (3.7)  | (3.8)                           | 73
American broadband services                   | 148,215  | 136,506  | 8.6    | 7.6                             | 1,370
Inter-segment eliminations and other          | 6,803    | 7,911    | (14.0) | (14.0)                          | (2)
                                              | 302,833  | 297,977  | 1.6    | 1.1                             | 1,441

OPERATING EXPENSES
 three-month period August 31, 2019 average foreign exchange rate translation. 3222 USD/CDN.
 Fiscal 2018 restated comply IFRS 15 change accounting policy reclassify results Cogeco Peer 1 discontinued operations. consult "Accounting policies "Discontinued operations sections.
 Fiscal 2019 translated average foreign exchange rate. 3100 USD/CDN.
 2019 fourth-quarter operating expenses increased. 6%. 1% additional costs American broadband services higher programming costs headcount marketing initiatives FiberLight acquisition
 Three months August 31, currency Foreign exchange impact
 Canadian broadband services 147,815 153,560.
 American broadband services 148,215 136,506.
 Inter-segment eliminations.
 302,833 297,977.


There was no material bad debt expense in 2019, 2018 and 2017. In 2019, 2018 and 2017, the Company’s largest customer, Apple represented 17.6%, 13.1% and 10.5% of consolidated net revenues, respectively, reported in the ADG, AMS and MDG segments.
In 2019, $75 million of trade accounts receivable were sold without recourse (nil in 2018).

                                | December 31, 2019 | December 31, 2018
------------------------------- | ----------------- | -----------------
Trade accounts receivable       | 1,396             | 1,292
Allowance for doubtful accounts | (16)              | (15)
Total                           | 1,380             | 1,277

no debt 2019 2018 2017. Apple represented 17. 6% 13. 1% 10. 5% net revenues ADG AMS MDG segments.
 $75 million trade accounts sold without recourse (nil 2018).
 accounts receivable 1,396 1,292
 doubtful accounts


Stock-based compensation expense is recognized in the Company’s consolidated statements of operations and includes compensation expense for the stock-based compensation awards granted or modified subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of the amended authoritative guidance. The impact on the Company’s results of operations of recording stock-based compensation expense for fiscal years 2019, 2018, and 2017 was as follows (in thousands):
No stock-based compensation was capitalized or included in inventories at the end of 2019, 2018 and 2017.

                                    |        | Fiscal Years |
----------------------------------- | ------ | ------------ | ------
                                    | 2019   | 2018         | 2017
Cost of revenue                     | $78    | $129         | $121
Research and development            | 2,242  | 760          | 614
Selling, general and administrative | 824    | 1,012        | 706
Total costs and expenses            | $3,144 | $1,901       | $1,441

Stock-based compensation expense recognized statements awards granted January 1, 2006, grant date value guidance. impact results 2019 2018 2017
 No stock-based compensation capitalized inventories 2019 2018 2017.
 2017
 Cost revenue $78  $129 $121
 Research development 2,242   614
 Selling general administrative 824 1,012 706
 Total costs expenses $3,144 $1,901,441


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (United States Dollars in thousands, except per share data and unless otherwise indicated)
Business Metrics
We review a number of operating and financial metrics to evaluate our business, measure our performance, identify trends, formulate plans and make strategic decisions, including the following.
Transaction Volume. We define transaction volume as the dollar value of loans facilitated on our platform
during a given period. Transaction volume is an indicator of revenue and overall platform profitability and has
grown substantially in the past several years.
Loan Servicing Portfolio. We define our loan servicing portfolio as the aggregate outstanding consumer loan balance (principal plus accrued interest and fees) serviced by our platform at the date of measurement. Our loan servicing portfolio is an indicator of our servicing activities. The average loan servicing portfolio for the years ended December 31, 2019, 2018 and 2017 was $8,213 million, $6,303 million and $4,501 million, respectively.
Active Merchants. We define active merchants as home improvement merchants and healthcare providers that have submitted at least one consumer application during the twelve months ended at the date of measurement. Because our transaction volume is a function of the size, engagement and growth of our merchant network, active merchants, in aggregate, are an indicator of future revenue and profitability, although they are not directly correlated. The comparative measures can also be impacted by disciplined corrective action taken by the Company to remove merchants from our program who do not meet our customer satisfaction standards.
Cumulative Consumer Accounts. We define cumulative consumer accounts as the aggregate number of consumer accounts approved on our platform since our inception, including accounts with both outstanding and zero balances. Although not directly correlated to revenue, cumulative consumer accounts is a measure of our brand awareness among consumers, as well as the value of the data we have been collecting from such consumers since our inception. We may use this data to support future growth by cross-marketing products and delivering potential additional customers to merchants that may not have been able to source those customers themselves.

                                        |        | Year Ended December 31, |
--------------------------------------- | ------ | ----------------------- | ------
                                        | 2019   | 2018                    | 2017
Transaction Volume                      |        |                         |
Dollars (in millions)                   | $5,954 | $5,030                  | $3,767
Percentage increase                     | 18%    | 34%                     |
Loan Servicing Portfolio                |        |                         |
Dollars (in millions, at end of period) | $9,150 | $7,341                  | $5,390
Percentage increase                     | 25%    | 36%                     |
Active Merchants                        |        |                         |
Number (at end of period)               | 17,216 | 14,907                  | 10,891
Percentage increase                     | 15%    | 37%                     |
Cumulative Consumer Accounts            |        |                         |
Number (in millions, at end of period)  | 3.03   | 2.24                    | 1.57
Percentage increase                     | 35%    | 43%                     |

ITEM 7. MANAGEMENT DISCUSSION ANALYSIS FINANCIAL CONDITION RESULTS OPERATIONS States Dollars thousands share data
 Business Metrics
 review operating financial metrics business performance identify trends formulate plans strategic decisions.
 Transaction Volume. dollar value loans facilitated platform
 period. indicator revenue profitability
 grown years.
 Loan Servicing Portfolio. outstanding consumer loan balance accrued interest fees serviced platform. indicator servicing activities. average portfolio years December 31, 2019 2018 2017 $8,213 million $6,303 million $4,501 million.
 Active Merchants. home improvement merchants healthcare providers submitted consumer application twelve months. transaction volume size engagement growth merchant network future revenue profitability not correlated. measures impacted corrective action merchants standards.
 Cumulative Consumer Accounts. number accounts approved platform inception outstanding zero balances. not correlated revenue brand awareness value data. data future growth cross products customers merchants.
Year Ended December 31,
 Transaction Volume
 Dollars $5,954 $5,030 $3,767
 Percentage 18% 34%
 Loan Servicing Portfolio
 Dollars $9,150 $7,341 $5,390
 Percentage increase 25% 36%
 Merchants
 17,216 14,907 10,891
 Percentage increase 15% 37%
 Consumer Accounts
.
 Percentage increase 35% 43%


1. THE BUSINESS
Maple Leaf Foods Inc. (“Maple Leaf Foods” or the "Company") is a producer of food products under leading brands including Maple
Leaf®, Maple Leaf Prime®, Schneiders®, Mina®, Greenfield Natural Meat Co.®, Swift®, Lightlife®, and Field Roast Grain Meat Co.™
The Company's portfolio includes prepared meats, ready-to-cook and ready-to-serve meals, valued-added fresh pork and poultry and
plant protein products. The address of the Company's registered office is 6985 Financial Dr. Mississauga, Ontario, L5N 0A1, Canada.
The Company employs approximately 13,000 people and does business primarily in Canada, the U.S. and Asia. The Company's shares trade on the Toronto Stock Exchange (MFI).
1. THE BUSINESS Maple Leaf Foods Inc. (“Maple Leaf Foods” or the "Company") is a producer of food products under leading brands including Maple Leaf®, Maple Leaf Prime®, Schneiders®, Mina®, Greenfield Natural Meat Co.®, Swift®, Lightlife®, and Field Roast Grain Meat Co.™ The Company's portfolio includes prepared meats, ready-to-cook and ready-to-serve meals, valued-added fresh pork and poultry and plant protein products. The address of the Company's registered office is 6985 Financial Dr. Mississauga, Ontario, L5N 0A1, Canada. The Company employs approximately 13,000 people and does business primarily in Canada, the U.S. and Asia. The Company's shares trade on the Toronto Stock Exchange (MFI).
Sales for 2019 were $3,941.5 million compared to $3,495.5 million last year, an increase of 12.8%. Excluding acquisitions, sales increased 5.2%, driven by favourable pricing, mix and volume in meat protein and accelerated growth in plant protein of 23.6%.
Net earnings for 2019 were $74.6 million ($0.60 per basic share) compared to $101.3 million ($0.81 per basic share) last year. Strong commercial performance and favourable resolution of income tax audits were more than offset by strategic investments in plant protein to drive top line growth and heightened volatility in hog prices. Net earnings were negatively impacted by $12.1 million due to non-cash fair value changes in biological assets and derivative contracts, which are excluded in the calculation of Adjusted Operating Earnings below.
Adjusted Operating Earnings for 2019 were $145.4 million compared to $215.6 million last year, and Adjusted Earnings per Share for
2019 were $0.68 compared to $1.22 last year due to similar factors as noted above.
For further discussion on key metrics and a discussion of results by operating segment, refer to the section titled Operating Review
starting on page 3 of this document.

                                       | Twelve months ended December 31, |          |
-------------------------------------- | -------------------------------- | -------- | --------
($ millions except earnings per share) | 2019                             | 2018     | % Change
Sales                                  | $3,941.5                         | $3,495.5 | 12.8 %
Net Earnings                           | $74.6                            | $101.3   | (26.4)%
Basic Earnings per Share               | $0.60                            | $0.81    | (25.9)%
Adjusted Operating Earnings(i)         | $145.4                           | $215.6   | (32.6)%
Adjusted Earnings per Share(i)         | $0.68                            | $1.22    | (44.3)%

.
 Maple Leaf Foods Inc. producer food products
 Greenfield Meat. Field Roast.
 portfolio includes prepared meats ready-cook meals fresh pork poultry
 plant protein products. 6985 Financial Dr. Mississauga Ontario.
 employs 13,000 Canada U. S. Asia. shares trade Toronto Stock Exchange.
. Leaf Foods. portfolio prepared meats meals fresh pork poultry plant protein products. 6985 Financial Dr. Mississauga Ontario. employs 13,000 Canada U. S. Asia. shares trade Toronto Stock Exchange.
 Sales 2019 $3,941. 5 million $3,495. 5 million last year increase 12. 8%. increased 5. 2% favourable pricing volume meat protein growth plant protein 23. 6%.
 Net earnings 2019 $74. 6 million ($0. per share $101. 3 million.share last year. commercial performance income tax offset investments plant protein volatility hog prices. Net earnings impacted $12. 1 million non-cash changes biological assets derivative contracts excluded Adjusted Operating Earnings.
 2019 $145. 4 million $215. 6 million last year Share
 $0. 68 $1. 22.
 Operating Review
 page 3.
 Twelve months ended December 31,
 earnings share 2019 2018
 Sales $3,941. $3,495.
 Net Earnings $74. $101. 3.
 Earnings Share $0. 60.
 Adjusted Operating Earnings $145. $215.
 Earnings Share $0. 68 $1.


Executive Officers of the Registrant
Our executive officers are appointed annually by our Board of Directors or, in some cases, appointed in accordance with our bylaws. Each officer holds office until
the next annual appointment of officers or until a successor has been duly appointed and qualified, or until the officer’s death or resignation, or until the officer has
otherwise been removed in accordance with our bylaws. The following table provides certain information regarding the current executive officers of the Company.
John Sarvis
Chief Executive Officer and President since April 2015. Chairman of the Board since 2016. Vice President of Ceramic Products from 2005 to 2015. Divisional Vice President
– Ceramics Division from 1998 to 2005. Prior to 1998, held various Marketing and Operational positions. Employed by the Company since 1973
Jeffrey Schmersal
Chief Operating Officer since April 2018. Senior Vice President since 2017. Divisional Vice President of Specialty Products from 2014 to 2017. Global Business Manager of
various product groups from 2006 to 2014. Prior to 2006, held various Quality and Supply Chain positions. Employed by the Company since 1994.
Michael Hufnagel
Chief Financial Officer since July 2018. Vice President of Corporate Finance since 2016. Director of Corporate Finance from 2015 to 2016. Director of Accounting and
Reporting from 2002 to 2015. Employed by the Company since 2002.
John Lawing
Senior Vice President and Chief Technology Officer since 2015. Vice President and Chief Technology Officer from April 2014 to 2015. President and Chief Operating
Officer from 2013 to March 2014. Vice President of Advanced Products from 2005 to April 2013. Divisional Vice President of Advanced Products from 2002 to 2005 and
Divisional Vice President of Leaded Products from 1997 to 2002. Prior to 1997, held positions in Engineering, Technical, Operational, and Plant management. Employed by
the Company since 1981.
S. Willing King
Senior Vice President of Tantalum Products since 2015. Vice President of Tantalum Products from 2013 to 2015. Deputy General Manager of Tantalum Products from 2012
to 2013. Vice President of Product Marketing from 2004 to 2012. Director of Product Marketing from 2000 to 2004. Prior to 2000, held positions in Technical Service, Sales,
and Marketing. Employed by the Company since 1984.

Name               | Age | Position
------------------ | --- | ---------------------------------------------------------------
John Sarvis        | 69  | Chief Executive Officer and President
Jeffrey Schmersal  | 50  | Chief Operating Officer
Michael Hufnagel   | 65  | Senior Vice President and Chief Financial Officer
John Lawing        | 68  | Senior Vice President and Chief Technology Officer
S. Willing King    | 56  | Senior Vice President of Tantalum Products
Eric Pratt         | 59  | Senior Vice President of Marketing
Evan Slavitt       | 61  | Senior Vice President, General Counsel, and Corporate Secretary
Steven Sturgeon    | 50  | Senior Vice President of Connector Products
Alexander Schenkel | 44  | Senior Vice President of Sales

 annually Board Directors. holds office
 appointment successor death resignation
. current executive officers.
 John Sarvis
 Chief Executive Officer President 2015. Chairman Board since 2016. Vice President Ceramic Products 2005 2015. Divisional Vice President
 1998. Marketing Operational. Employed since 1973
 Jeffrey Schmersal
 Chief Operating Officer. Senior Vice President 2017. Divisional Vice President Specialty Products 2014. Global Business Manager
 2006 2014. Quality Supply Chain. since 1994.
 Michael Hufnagel
 Chief Financial Officer 2018. Vice President Corporate Finance 2016. Director. Director Accounting
 Reporting.
 John Lawing
 Senior Vice President Chief Technology Officer.
. Vice President Advanced Products. Divisional Vice President 2002
. Engineering Technical Operational Plant management.
 since 1981.
. Willing King
 Senior Vice President Tantalum Products 2015. Deputy General Manager
. Vice President Product Marketing 2004. Director 2000 2004. Technical Service Sales
 Marketing. Employed since 1984.
Age Position
 John Sarvis 69 Executive
 Jeffrey Schmersal Operating
 Michael Hufnagel 65 Senior Vice President
 John Lawing 68
. Willing King 56 Tantalum
 Eric Pratt 59 Marketing
 Evan Slavitt 61 Secretary
 Steven Sturgeon Connector Products
 Alexander Schenkel 44 Sales


Note 10—Goodwill
The following table presents changes in the carrying amount of goodwill by reportable segment:
Effective the beginning of fiscal 2019, the Company changed the composition of its Defense Solutions reportable segment, which resulted in the identification of new operating segments and reporting units within Defense Solutions. In addition, certain contracts were reassigned between the Civil and Defense Solutions reportable segments (see "Note 24—Business Segments"). Consequently, the carrying amount of goodwill was re-allocated among the reporting units for the purpose of testing goodwill for impairment.
In conjunction with the changes mentioned above, the Company evaluated goodwill for impairment using a quantitative step one analysis, both before and after the changes were made, and determined that goodwill was not impaired.
In fiscal 2019, the Company performed a qualitative analysis for all reporting units and determined that it was more likely than not that the fair values of the reporting units were in excess of the individual reporting units carrying values, and as a result, a quantitative step one analysis was not necessary.
In fiscal 2018, the Company performed a qualitative and quantitative analysis on its reporting units. Based on the qualitative analysis performed during the Company's annual impairment evaluation for fiscal 2018 for certain of its reporting units, it was determined that it was more likely than not that the fair values of the reporting units were in excess of the individual reporting unit carrying values, and as a result, a quantitative step one analysis was not necessary.
Additionally, based on the results of the quantitative step one analysis for certain other of its reporting units, it was determined that the fair value was in excess of the individual reporting units carrying values. In fiscal 2017, the Company performed a quantitative analysis for all reporting units. It was determined that the fair values of all reporting units exceeded their carrying values.
As a result, no goodwill impairments were identified as part of the annual goodwill impairment evaluation for the periods mentioned above. During the year ended January 3, 2020 and December 28, 2018, the Company recorded an immaterial correction of $3 million and $6 million, respectively, with respect to fair value of assets and liabilities acquired from the IS&GS Transactions.
(1) Carrying amount includes accumulated impairment losses of $369 million and $117 million within the Health and Civil segments, respectively.

                                                  | Defense Solutions | Civil         | Health | Total
------------------------------------------------- | ----------------- | ------------- | ------ | ------
                                                  |                   | (in millions) |        |
Goodwill at December 29, 2017(1)                  | $2,055            | $1,998        | $921   | $4,974
Foreign currency translation adjustments          | (40)              | (11)          | —      | (51)
Transfers to assets held for sale                 | —                 | (57)          | —      | (57)
Adjustment to goodwill                            | —                 | (6)           | —      | (6)
Goodwill at December 28, 2018(1)                  | 2,015             | 1,924         | 921    | 4,860
Goodwill re-allocation                            | 25                | (25)          | —      | —
Acquisition of IMX                                | —                 | —             | 50     | 50
Divestiture of health staff augmentation business | —                 | —             | (5)    | (5)
Foreign currency translation adjustments          | (4)               | 8             | —      | 4
Adjustment to goodwill                            | 3                 | —             | —      | 3
Goodwill at January 3, 2020(1)                    | $2,039            | $1,907        | $966   | $4,912

Note 10—Goodwill
 table presents changes in carrying goodwill by reportable segment
 fiscal 2019 Company changed composition Defense Solutions segment resulted new operating segments units. contracts reassigned between Civil and Defense Solutions segments (see "Note 24—Business Segments"). carrying goodwill re-allocated among units for testing goodwill for impairment.
 Company evaluated goodwill for impairment quantitative step one analysis determined goodwill not impaired.
 fiscal 2019 performed qualitative analysis for all units fair values quantitative step one analysis not necessary.
 fiscal 2018 performed qualitative quantitative analysis on reporting units. fair values quantitative step one analysis not necessary.
 units fair value in excess of values. fiscal 2017 quantitative analysis for all units. fair values exceeded carrying values.
 no goodwill impairments identified annual goodwill impairment evaluation for periods.January 3 2020 December 28, 2018 Company recorded correction $3 million $6 million assets liabilities IS&GS Transactions.
 impairment losses $369 million $117 million Health Civil segments.
 Defense Solutions
 Goodwill December 29, $2,055 $1,998 $921 $4,974
 Foreign currency translation adjustments
 Transfers assets sale
 Adjustment goodwill
 Goodwill December 28, 2,015  1,924  921  4,860
 Goodwill re-allocation
 Acquisition IMX
 Divestiture health staff augmentation business
 Foreign currency translation adjustments
 Adjustment goodwill
 January 3, $2,039  $1,907  $966 $4,912


Adjusted Return on Invested Capital (Adjusted RoIC): TORM defines Adjusted RoIC as earnings before interest and tax (EBIT) less tax and impairment losses and reversals, divided by the average invested capital less average impairment for the period. Invested capital is defined below.
The Adjusted RoIC expresses the returns generated on capital invested in the Group adjusted for impacts related to the impairment of the fleet. The progression of RoIC is used by TORM to measure progress against our longer-term value creation goals outlined to investors. Adjusted RoIC is calculated as follows:
¹⁾ Average invested capital is calculated as the average of the opening and closing balance of invested capital.
²⁾ Average impairment is calculated as the average of the opening and closing balances of impairment charges on vessels and goodwill in the balance sheet.

USDm                                             | 2019    | 2018    | 2017
------------------------------------------------ | ------- | ------- | -------
EBIT less Tax                                    | 205.1   | 1.2     | 38.8
Impairment reversal                              | -120.0  | -       | -
EBIT less tax and impairment                     | 85.1    | 1.2     | 38.8
Average invested capital¹⁾                       | 1,627.7 | 1,437.7 | 1,396.9
Average impairment ²⁾                            | 98.2    | 185.0   | 185.0
Average invested capital less average impairment | 1,725.9 | 1,622.7 | 1,581.9
Adjusted RoIC                                    | 4.9%    | 0.1%    | 2.4%

Adjusted Return Invested Capital TORM defines RoIC earnings before interest tax less impairment losses reversals divided by average invested capital less impairment.
 Adjusted RoIC returns capital invested impacts impairment. RoIC longer-term value creation goals. RoIC calculated
 Average invested capital opening closing balance.
 impairment closing balances impairment vessels goodwill.
 EBIT less Tax 205. 38.
 Impairment -120.
 EBIT less tax impairment 85.
 Average invested 1,627. 1,437. 1,396.
 Average impairment 98. 185.
 capital less impairment 1,725. 1,622. 1,581.
 Adjusted RoIC 4.


ADOPTION OF IFRS 16
Upon adoption of IFRS 16 on January 1, 2019, we recognized right-of-use assets of $2,257 million within property, plant and equipment, and lease liabilities of $2,304 million within debt, with an increase to our deficit of $19 million. These amounts were recognized in addition to assets under finance leases of $1,947 million and the corresponding finance lease liabilities of $2,097 million at December 31, 2018 under IAS 17. As a result, on January 1, 2019, our total right-of-use assets and lease liabilities amounted to $4,204 million and $4,401 million, respectively. The table below shows the impacts of adopting IFRS 16 on our January 1, 2019 consolidated statement of financial position.
BCE’s operating lease commitments at December 31, 2018 were $1,612 million. The difference between operating lease commitments at December 31, 2018 and lease liabilities of $2,304 million upon adoption of IFRS 16 at January 1, 2019, is due mainly to an increase of $1,122 million related to renewal options reasonably certain to be exercised, an increase of $112 million mainly related to non-monetary transactions and a decrease of ($542) million as a result of discounting applied to future lease payments, which was determined using a weighted average incremental borrowing rate of 3.49% at January 1, 2019.

                                     | DECEMBER 31, 2018 AS REPORTED | IFRS 16 IMPACTS | JANUARY 1, 2019 UPON ADOPTION OF IFRS 16
------------------------------------ | ----------------------------- | --------------- | ----------------------------------------
Prepaid expenses                     | 244                           | (55)            | 189
Other current assets                 | 329                           | 9               | 338
Property, plant and equipment        | 24,844                        | 2,257           | 27,101
Other non-current assets             | 847                           | 17              | 864
Trade payables and other liabilities | 3,941                         | (10)            | 3,931
Debt due within one year             | 4,645                         | 293             | 4,938
Long-term debt                       | 19,760                        | 2,011           | 21,771
Deferred tax liabilities             | 3,163                         | (7)             | 3,156
Other non-current liabilities        | 997                           | (39)            | 958
Deficit                              | (4,937)                       | (19)            | (4,956)
Non-controlling interest             | 326                           | (1)             | 325

IFRS 16
 2019 recognized right-of-use assets $2,257 million lease liabilities $2,304 million deficit $19 million. finance leases $1,947 million liabilities $2,097 million December 31, 2018 IAS 17. January 1 2019 total right-use assets lease liabilities $4,204 million $4,401 million. impacts 16 January 1 2019.
 operating lease commitments December 31, 2018 $1,612 million. difference liabilities $2,304 million increase $1,122 million renewal options increase $112 million non-monetary transactions decrease$542) million discounting future lease payments borrowing rate 3. 49% January 1, 2019.
 16 IMPACTS JANUARY 1 2019
 Prepaid expenses 244
 current assets 329
 Property plant equipment 24,844
 non-current assets
 Trade payables liabilities 3,941
 Debt due one year 4,645
 Long-term debt 19,760
Deferred tax 3,163
 non-current liabilities 997
 Deficit (4,937)
 Non-controlling interest 326


The below tables represents the key components of Teradyne’s convertible senior notes:
As of December 31, 2019, the unamortized discount was $65.3 million, which will be amortized over four years using the effective interest rate method. The carrying amount of the equity component was $100.8 million. As of December 31, 2019, the conversion price was approximately $31.62 per share and if converted the value of the notes was $992.0 million.

                                        | December 31, 2019 | December 31, 2018
--------------------------------------- | ----------------- | -----------------
                                        | (in thousands)    |
Debt principal                          | $460,000          | $460,000
Unamortized discount                    | 65,313            | 80,019
Net carrying amount of convertible debt | $394,687          | $379,981

convertible notes
 December 31, 2019 unamortized discount $65. 3 million amortized four years. carrying equity $100. 8 million. conversion price $31. 62 per share value $992. million.
 December 2019 2018
 Debt principal $460,000
 Unamortized discount 65,313
 convertible debt $394,687,981


Company balance sheet
At 31 March 2019
The financial statements were approved by the Board of Directors on 6 June 2019 and authorised for issue.

                                               |      | 2019    | 2018
---------------------------------------------- | ---- | ------- | -------
                                               | Note | £m      | £m
Fixed assets                                   |      |         |
Investments                                    | 3    | 1,216.0 | 1,212.9
                                               |      | 1,216.0 | 1,212.9
Current assets                                 |      |         |
Debtors                                        | 4    | 415.9   | 440.7
Cash and cash equivalents                      | 5    | –       | 0.2
                                               |      | 415.9   | 440.9
Creditors: amounts falling due within one year | 6    | (411.4) | (288.4)
Net current assets                             |      | 4.5     | 152.5
Net assets                                     |      | 1,220.5 | 1,365.4
Capital and reserves                           |      |         |
Called-up share capital                        | 9    | 9.3     | 9.5
Own shares held                                | 10   | (16.5)  | (16.9)
Capital redemption reserve                     |      | 0.7     | 0.5
Retained earnings                              |      | 1,227.0 | 1,372.3
Total equity                                   |      | 1,220.5 | 1,365.4

balance sheet
 31 March 2019
 financial statements approved Board Directors 6 June 2019 authorised.
 2018
 Fixed assets
 Investments 1,216. 1,212.
.
 Current assets
 Debtors 415. 440.
 Cash cash equivalents.
 415. 440.
 Creditors amounts one year (411.
 current assets. 152.
 assets 1,220. 1,365.
 Capital reserves
 Called-up share capital.
 shares (16.
 Capital redemption reserve.
 Retained earnings 1,227. 1,372.
 Total equity 1,220. 1,365.


The company utilizes certain of its financing receivables as collateral for nonrecourse borrowings. Financing receivables pledged as collateral for borrowings were $1,062 million and $710 million at December 31, 2019 and 2018, respectively. These borrowings are included in note P, “Borrowings.”
The company did not have any financing receivables held for sale as of December 31, 2019 and 2018.

($ in millions)                  |                                                      |                                  |                                                          |
-------------------------------- | ---------------------------------------------------- | -------------------------------- | -------------------------------------------------------- | -------
At December 31, 2018:            | Investment in Sales-Type and Direct Financing Leases | Commercial Financing Receivables | Client Loan and Installment Payment Receivables/ (Loans) | Total
Financing receivables, gross     | $6,846                                               | $11,889                          | $13,614                                                  | $32,348
Unearned income                  | (526)                                                | (37)                             | (632)                                                    | (1,195)
Recorded investment              | $6,320                                               | $11,852                          | $12,981                                                  | $31,153
Allowance for credit losses      | (99)                                                 | (13)                             | (179)                                                    | (292)
Unguaranteed residual value      | 589                                                  | —                                | —                                                        | 589
Guaranteed residual value        | 85                                                   | —                                | —                                                        | 85
Total financing receivables, net | $6,895                                               | $11,838                          | $12,802                                                  | $31,536
Current portion                  | $2,834                                               | $11,838                          | $ 7,716                                                  | $22,388
Noncurrent portion               | $4,061                                               | $    —                           | $ 5,086                                                  | $ 9,148

company financing receivables nonrecourse borrowings. $1,062 million $710 million December 31, 2019 2018.
 sale December 31, 2019 2018.
 Investment Sales-Type Direct Financing Leases Commercial Financing Receivables Client Loan Installment Receivables
 receivables $6,846 $11,889 $13,614 $32,348
 Unearned income
 Recorded investment $6,320 $11,852 $12,981 $31,153
 Allowance credit losses
 Unguaranteed residual value
 financing receivables $6,895 $11,838 $12,802 $31,536
 Current portion $2,834 $11,838 $22,388
 Noncurrent portion $4,061 5,086 9,148


Contractual Obligations
The impact of contractual obligations on our liquidity and capital resources in future periods should be analyzed in conjunction with the factors that impact our cash flows from operations discussed previously. In addition, we plan for and measure our liquidity and capital resources through an annual budgeting process. The following table summarizes our contractual obligations at July 27, 2019 (in millions):
Operating Leases For more information on our operating leases, see Note 13 to the Consolidated Financial Statements
Purchase Commitments with Contract Manufacturers and Suppliers We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. Our purchase commitments are for shortterm product manufacturing requirements as well as for commitments to suppliers to secure manufacturing capacity. Certain of our purchase commitments with contract manufacturers and suppliers relate to arrangements to secure long-term pricing for certain product components for multi-year periods. A significant portion of our reported estimated purchase commitments arising from these agreements are firm, noncancelable, and unconditional commitments. We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. See further discussion in “Inventory Supply Chain.” As of July 27, 2019, the liability for these purchase commitments was $129 million and is recorded in other current liabilities and is not included in the preceding table.
Other Purchase Obligations Other purchase obligations represent an estimate of all contractual obligations in the ordinary course of business, other than operating leases and commitments with contract manufacturers and suppliers, for which we have not received the goods or services. Purchase orders are not included in the preceding table as they typically represent our authorization to purchase rather than binding contractual purchase obligations.
Long-Term Debt The amount of long-term debt in the preceding table represents the principal amount of the respective debt instruments. See Note 11 to the Consolidated Financial Statements.
Transition Tax Payable Transition tax payable represents future cash tax payments associated with the one-time U.S. transition tax on accumulated earnings of foreign subsidiaries as a result of the Tax Act. See Note 17 to the Consolidated Financial Statements.
Other Long-Term Liabilities Other long-term liabilities primarily include noncurrent income taxes payable, accrued liabilities for deferred compensation, deferred tax liabilities, and certain other long-term liabilities. Due to the uncertainty in the timing of future payments, our noncurrent income taxes payable of approximately $1.3 billion and deferred tax liabilities of $95 million were presented as one aggregated amount in the total column on a separate line in the preceding table. Noncurrent income taxes payable include uncertain tax positions. See Note 17 to the Consolidated Financial Statements.

                                                                           |         |                  | PAYMENTS DUE BY PERIOD |              |
-------------------------------------------------------------------------- | ------- | ---------------- | ---------------------- | ------------ | -----------------
July 27, 2019                                                              | Total   | Less than 1 Year | 1 to 3 Years           | 3 to 5 Years | More than 5 Years
Operating leases                                                           | $1,179  | $441             | $494                   | $190         | $54
Purchase commitments with contract manufacturers and suppliers             | 4,967   | 4,239            | 728                    | —            | —
Other purchase obligations                                                 | 1,490   | 676              | 622                    | 98           | 94
Senior notes                                                               | 20,500  | 6,000            | 5,500                  | 2,250        | 6,750
Transition tax payable                                                     | 8,343   | 749              | 1,498                  | 2,113        | 3,983
Other long-term liabilities .                                              | 1,214   | —                | 220                    | 136          | 858
Total by period                                                            | $37,693 | $12,105          | $9,062                 | $4,787       | $11,739
Other long-term liabilities (uncertainty in the timing of future payments) | 1,428   |                  |                        |              |
Total                                                                      | $39,121 |                  |                        |              |

Contractual Obligations
 impact on liquidity capital resources analyzed with cash flows. plan measure liquidity capital resources through annual budgeting. table summarizes contractual obligations at July 27, 2019 millions):
 Operating Leases Note 13 Consolidated Financial Statements
 Purchase Commitments with Contract Manufacturers Suppliers purchase components from use contract manufacturers manufacturing services. purchase commitments shortterm manufacturing manufacturing capacity. commitments long pricing multi-year. purchase commitments firm noncancelable unconditional commitments. liability for noncancelable unconditional commitments future demand forecasts excess inventory. July 27, 2019 liability for was $129 million recorded not included table.
 Other Purchase Obligations contractual obligations goods services. Purchase orders not included represent authorization to purchase obligations.
 Long-Term Debt represents principal amount debt instruments. Note 11 Consolidated Financial Statements.
 Transition Tax Payable future cash tax payments-time U. S.tax earnings foreign subsidiaries Tax Act. Note 17 Consolidated Financial Statements.
 Long-Term Liabilities noncurrent income taxes deferred compensation tax. uncertainty noncurrent income taxes $1. 3 billion deferred tax liabilities $95 million. uncertain tax positions. Note 17 Consolidated Financial Statements.
 PAYMENTS DUE PERIOD
 July 27, 2019 Less 1 Year 1 3 Years 5 Years
 Operating leases $1,179 $441 $494
 Purchase commitments manufacturers suppliers 4,967,239
 purchase obligations 1,490 676 622
 Senior notes 20,500
 Transition tax 8,343 749 1,498 2,113
 Other long-term liabilities. 1,214
 Total period $37,693 $12,105 $9,062 $4,787 $11,739
 1,428
Total ,121


The Systems gross profit margin decrease year to year was driven by the mix away from IBM Z and margin declines in Power Systems and Storage Systems.
The pre-tax income decline was driven by the strong performance in IBM Z in the prior year and the continued investment in innovation across the Systems portfolio.

($ in millions)                                         |        |        |
------------------------------------------------------- | ------ | ------ | ---------------------------------
For the year ended December 31:                         | 2018   | 2017   | Yr.-to-Yr. Percent/ Margin Change
Systems                                                 |        |        |
External Systems Hardware gross profit                  | $2,590 | $2,893 | (10.5)%
External Systems Hardware gross profit margin           | 40.7%  | 44.6%  | (3.8)pts
External Operating Systems Software gross profit        | $1,412 | $1,469 | (3.9)%
External Operating Systems Software gross profit margin | 84.5%  | 86.4%  | (1.9)pts.
External total gross profit                             | $4,002 | $4,362 | (8.2)%
External total gross profit margin                      | 49.8%  | 53.2%  | (3.4)pts.
Pre-tax income                                          | $ 904  | $1,128 | (19.9)%
Pre-tax margin                                          | 10.2%  | 12.6%  | (2.4)pts.

Systems profit margin driven IBM Z declines Power Storage Systems.
 pre-tax income decline strong performance IBM Z investment innovation portfolio.
 year December 31 2018 2017. Percent Margin Change
 External Systems Hardware gross profit $2,590 $2,893.
 40. 7% 44. 6%.
 Software profit $1,412 $1,469.
 84. 5% 86. 4%.
 profit $4,002 $4,362.
 49. 8% 53. 2% (3.
 Pre-tax income $ 904 $1,128 (19.
 10. 2% 12. 6%.


Selling, general and administrative ("SG&A") costs during fiscal 2019 were $211.1 million, a decrease of $10.8 million compared to the $222.0 million of SG&A during fiscal 2018. The following table shows the components of SG&A costs for the twelve months ended October 31, 2019 and 2018.
Regarding the table above, the decrease in advertising expense is the result of the Company's decision to scale back its television and radio advertising during fiscal 2019. The change in start-up expense in any particular period relates to the stage of the start-up process in which a facility under construction is in during the period. Non-construction related expenses, such as labor, training and office-related expenses for a facility under construction are recorded as start-up expense until the facility begins operations. As a facility moves closer to actual start-up, the expenses incurred for labor, training, etc. increase. As a result, amounts classified as start-up expenses will increase period over period until the facility begins production. Once production begins, the expenses from that point forward are recorded as costs of goods sold. The decrease in stock compensation expense is the result of the number of shares earned for the performance shares granted on November 1, 2017, being lower as compared to the number of shares earned for the performance shares granted on November 1, 2016. Stock compensation is further described in "Part II, Item 8, Notes to Consolidated Financial Statements, Note 9 - Stock Compensation Plans." The increase in legal expenses is primarily attributable to our ongoing defense of the litigation described in "Part I, Item 3. Legal Proceedings" of this Form 10-K. The increase in third-party sales commissions is attributable to the Company's adoption of ASU 2014-09, Revenue from Contracts with Customers. While adoption of the standard had no effect on the Company's net income during fiscal 2019, SG&A expenses were negatively impacted during the period, and the negative impact to SG&A expenses was offset by a corresponding increase to revenue. For more information regarding the Company's adoption of ASU 2014-09 and the relation to SG&A expenses, refer to "Part II, Item 8, Notes to Consolidated Financial Statements, Note 1 - Significant Accounting Policies."

Selling, General and Administrative Costs (in thousands) |                                      |                                      |
-------------------------------------------------------- | ------------------------------------ | ------------------------------------ | --------------------
Description                                              | Twelve months ended October 31, 2019 | Twelve months ended October 31, 2018 | Increase/(Decrease)
Advertising expense                                      | $11,071                              | $32,624                              | $ (21,553)
Trainee expense                                          | 16,254                               | 21,553                               | (5,299)
Start-up expense (Tyler, Texas complex)                  | 9,361                                | 13,394                               | (4,033)
Stock compensation expense                               | 11,786                               | 15,702                               | (3,916)
All other SG&A expenses                                  | 62,653                               | 64,705                               | (2,052)
Employee Stock Ownership Plan ("ESOP") expense           | 3,000                                | 2,000                                | 1,000
Depreciation expense - machinery and equipment           | 7,067                                | 5,801                                | 1,266
Sanderson Farms Championship expense                     | 8,817                                | 6,325                                | 2,492
Administrative salaries                                  | 45,108                               | 42,288                               | 2,820
Legal expense                                            | 25,102                               | 17,573                               | 7,529
Third-party sales commissions                            | 10,922                               | —                                    | 10,922
Total SG&A                                               | $211,141                             | $221,965                             | $ (10,824)

Selling administrative costs fiscal 2019 were $211. 1 million decrease $10. 8 million compared to $222. 0 million 2018. table shows costs twelve months October 31, 2019 2018.
 decrease advertising expense television radio advertising 2019. change start-up expense relates construction. Non-construction expenses labor training recorded as start-up expense until operations. closer start-up expenses. increase. expenses increase until production. production expenses recorded as costs goods sold. decrease stock compensation expense shares earned November 1, 2017 lower November 1 2016. Stock compensation described in II Item 8 Notes Consolidated Financial Statements Note 9 - Stock Compensation Plans. increase legal expenses attributable to defense. increase third-party sales commissions adoption ASU 2014-09 Revenue Contracts. net income 2019 SG&A expenses negatively impacted offset by increase revenue.ASU 2014-09 SG expenses II Item 8 Financial Statements 1 Accounting Policies.
 Selling Administrative Costs
 Twelve months 2019 2018
 Advertising $11,071 $32,624,553
 Trainee 16,254 21,553
 Start-up 9,361 13,394 (4
 Stock compensation 11,786 15,702 (3,916)
 SG&A expenses 62,653 64,705
 Employee Stock Ownership Plan
 Depreciation machinery equipment 7,067
 Sanderson Farms Championship 8,817,325
 Administrative salaries 45,108
 Legal expense 25,102 17,573
 Third-party sales commissions
 SG&A $211,141 $221,965


Consolidated Operating Expenses
Operating expenses for our segments are discussed separately below under the heading “Segment Results of Operations.”
Cost of Services Cost of services includes the following costs directly attributable to a service: salaries and wages, benefits, materials and supplies, content costs, contracted services, network access and transport costs, customer provisioning costs, computer systems support, and costs to support our outsourcing contracts and technical facilities. Aggregate customer care costs, which include billing and service provisioning, are allocated between Cost of services and Selling, general and administrative expense.
Cost of services decreased $413 million, or 1.3%, during 2019 compared to 2018, primarily due to decreases in network access costs, a product realignment charge in 2018 (see “Special Items”), decreases in employee-related costs resulting from the Voluntary Separation Program and decreases in digital content costs.
These decreases were partially offset by increases in rent expense as a result of adding capacity to the networks to support demand and the adoption of the new lease accounting standard in 2019, regulatory fees, and costs related to the device protection package offered to our wireless retail postpaid customers.
Cost of Wireless Equipment Cost of wireless equipment decreased $369 million, or 1.6%, during 2019 compared to 2018, primarily as a result of declines in the number of wireless devices sold as a result of an elongation of the handset upgrade cycle, partially offset by a shift to higher priced devices in the mix of wireless devices sold.
Selling, General and Administrative Expense Selling, general and administrative expense includes salaries and wages and benefits not directly attributable to a service or product, bad debt charges, taxes other than income taxes, advertising and sales commission costs, call center and information technology costs, regulatory fees, professional service fees, and rent and utilities for administrative space. Also included is a portion of the aggregate customer care costs as discussed above in “Cost of Services.”
Selling, general and administrative expense decreased $1.2 billion, or 3.8%, during 2019 compared to 2018, primarily due to decreases in employee-related costs primarily due to the Voluntary Separation Program, a decrease in severance, pension and benefits charges (see “Special Items”),
the acquisition and integration related charges in 2018 primarily related to the acquisition of Yahoo’s operating business (see “Special Items”) and a net gain from dispositions of assets and businesses in 2019 (see “Special Items”), partially offset by increases in advertising expenses, sales commission and bad debt expense. The increase in sales commission expense during 2019 compared to 2018, was primarily due to a lower net deferral of commission costs as a result of the adoption of Topic 606 on January 1, 2018, using a modified retrospective approach.
Depreciation and Amortization Expense Depreciation and amortization expense decreased $721 million, or 4.1%, during 2019 compared to 2018, primarily due to the change in the mix of net depreciable assets. Media Goodwill Impairment The goodwill impairment charges recorded in 2019 and 2018 for Verizon Media were a result of the Company’s annual impairment test performed in the fourth quarter (see “Critical Accounting Estimates”).
Media Goodwill Impairment The goodwill impairment charges recorded in 2019 and 2018 for Verizon Media were a result of the Company’s annual impairment test performed in the fourth quarter (see “Critical Accounting Estimates”).

                                            |          |           | (dollars in millions)  Increase/ (Decrease) |
------------------------------------------- | -------- | --------- | ------------------------------------------- | ------
Years Ended December 31,                    | 2019     | 2018      | 2019 vs. 2018                               |
Cost of services                            | $ 31,772 | $ 32,185  | $ (413)                                     | (1.3)%
Cost of wireless equipment                  | 22,954   | 23,323    | (369)                                       | (1.6)
Selling, general and administrative expense | 29,896   | 31,083    | (1,187)                                     | (3.8)
Depreciation and amortization expense       | 16,682   | 17,403    | (721)                                       | (4.1)
Media goodwill impairment                   | 186      | 4,591     | (4,405)                                     | (95.9)
Consolidated Operating Expenses             | $101,490 | $ 108,585 | $ (7,095)                                   | (6.5)

Consolidated Operating Expenses
 Results Operations.
 Cost of Services includes salaries wages benefits materials supplies content contracted services network access transport customer provisioning computer systems outsourcing contracts technical facilities. costs billing allocated between Cost services Selling general administrative expense.
 decreased $413 million. 3% 2019 due network access product realignment charge employee-related costs Voluntary Separation Program digital content costs.
 offset by rent expense new lease accounting standard regulatory fees device protection package.
 Cost Wireless Equipment decreased $369 million 1. 6% 2019 devices handset upgrade cycle higher priced devices.
 Selling General Administrative Expense includes salaries wages benefits bad debt charges taxes advertising sales commission costs call center information technology costs regulatory fees professional service fees rent utilities administrative space. customer care costs.
 decreased $1. 2 billion 3.8% 2019 compared 2018 due to employee-related costs Voluntary Separation Program decrease severance pension benefits charges
 acquisition integration charges Yahoo’s net gain dispositions assets offset increases advertising sales commission bad debt expense. increase sales commission due lower net deferral commission costs Topic 606 January 1, 2018 modified retrospective approach.
 Depreciation Amortization Expense decreased $721 million 4. 1% 2019 due change mix net depreciable assets. Media Goodwill Impairment charges 2019 Verizon annual impairment test fourth quarter.
 test.
 millions Increase (Decrease
 Ended December 31, 2019 2018.
 Cost services $ 31,772 $ 32,185 $ (413).
 Cost wireless equipment 22,954  23,323 (369).
 Selling general administrative expense 29,896 31,083 (1,187.
Depreciation amortization 16,682 17,403 (721).
 goodwill 4,591.
 Operating Expenses $101,490 108,585,095).


We recorded $14.2 million, $15.2 million and $12.3 million of amortization related to our intangible assets for the years ended December 31, 2019, 2018 and 2017, respectively. There were no impairments of long-lived assets during the years ended December 31, 2019, 2018 and 2017.
The following tables reflect the weighted-average remaining life and carrying value of finite-lived intangible assets (in thousands, except weighted-average remaining life):

                        |                       | December 31, 2019        |                    |
----------------------- | --------------------- | ------------------------ | ------------------ | --------------------------------
                        | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Weighted- Average Remaining Life
Customer relationships  | $123,731              | $(39,335)                | $84,396            | 9.8
Developed technology    | 30,542                | (13,722)                 | 16,820             | 8.7
Trade name              | 3,304                 | (1,082)                  | 2,222              | 4.8
Other                   | 234                   | (234)                    | —                  | —
Total intangible assets | $157,811              | $(54,373)                | $103,438           |

recorded $14. million $15. 2 million $12. 3 million amortization intangible December 2019 2018 2017. no impairments long-lived assets.
 tables weighted-average life carrying value-lived intangible assets
 December 2019
 Gross Carrying Amount Accumulated Amortization Net Carrying Value
 Customer relationships $123,731 $(39,335) $84,396.
 technology 30,542 16,820.
 3,304.
 intangible assets $157,811 $(54,373) $103,438


Deferred Compensation Plans
Under our deferred compensation plans (‘‘plans’’), eligible employees are permitted to make compensation deferrals up to established limits set under the plans and accrue income on these deferrals based on reference to changes in available investment options. While not required by the plan, we choose to invest in insurance contracts and mutual funds in order to approximate the changes in the liability to the employees. These investments and the liability to the employees were as follows (in thousands):
Life insurance premiums loads, policy fees and cost of insurance that are paid from the asset investments and gains and losses from the asset investments for these plans are recorded as components of other income or expense; such amounts were net gains of $1.1 million in fiscal 2019, $4.8 million in fiscal 2018 and $5.0 million (including a $1.3 million death benefit) in fiscal 2017. Changes in the obligation to plan participants are recorded as a component of operating expenses and cost of sales; such amounts were net losses of $1.5 million in fiscal 2019, $5.2 million in fiscal 2018 and $3.9 million in fiscal 2017. Liabilities associated with participant balances under our deferred compensation plans are affected by individual contributions and distributions made, as well as gains and losses on the participant’s investment allocation election.

                                                    | Fiscal year-end |
--------------------------------------------------- | --------------- | -------
                                                    | 2019            | 2018
Total deferred compensation liability, included in: |                 |
Other current liabilities                           | $3,233          | $844
Other long-term liabilities                         | 39,715          | 40,895
Total deferred compensation liability               | $42,948         | $41,739

Deferred Compensation Plans
 employees deferrals limits accrue income changes investment options. insurance contracts mutual funds liability. investments liability
 Life insurance premiums fees investments gains losses income net gains $1. 1 million 2019 $4. 8 million 2018 $5. 0 million $1. 3 million death benefit 2017. Changes obligation operating expenses cost sales net losses $1. 5 million 2019 $5. 2 million 2018 $3. 9 million 2017. Liabilities affected contributions distributions gains losses investment allocation.
 Fiscal year-end
 Total deferred compensation liability
 current liabilities $3,233 $844
 long-term liabilities 39,715 40,895
 Total deferred compensation liability $42,948 $41,739


The ESPP provides for annual increases in the number of shares available for issuance under the ESPP on the first day of each fiscal year beginning in fiscal 2014, equal to the least of: (i) 1% of the outstanding shares of all classes of common stock on the last day of the immediately preceding year; (ii) 1,250,000 shares; or (iii) such other amount as may be determined by the board of directors. During the year ended December 31, 2019, a total of 810,459 shares of Class A common stock were added to the ESPP Plan in connection with the annual increase provision. At December 31, 2019, a total of 3,918,712 shares were available for issuance under the ESPP.
The weighted-average assumptions used to value ESPP rights under the Black-Scholes-Merton option-pricing model and the resulting offering grant date fair value of ESPP rights granted in the periods presented were as follows:
As of December 31, 2019 and 2018, there was approximately $2.3 million and $1.5 million of unrecognized share-based compensation expense, net of estimated forfeitures, related to ESPP, which will be recognized on a straight-line basis over the remaining weighted-average vesting periods of approximately 0.4 years, respectively

                                              |        | Year ended December 31, |
--------------------------------------------- | ------ | ----------------------- | -----
                                              | 2019   | 2018                    | 2017
Expected term (in years)                      | 0.5    | 0.5                     | 0.5
Expected volatility                           | 47%    | 42%                     | 34%
Risk-free interest rate                       | 2.01%  | 2.31%                   | 1.20%
Expected dividend yield                       | 0%     | 0%                      | 0%
Offering grant date fair value of ESPP rights | $33.66 | $18.07                  | $9.52

ESPP provides annual increases shares fiscal year equal 1% outstanding shares common stock last day preceding year 1,250,000 shares other amount determined by board directors. December 31, 2019 810,459 shares Class A common stock added ESPP. December 31, 2019 3,918,712 shares available.
-average assumptions ESPP rights Black-Scholes-Merton option-pricing model fair value rights
 December 31, 2019 2018 $2. 3 million $1. 5 million unrecognized share-based compensation expense related ESPP recognized over vesting periods. 4 years
 Year ended December
 Expected term years.
 volatility 47% 42% 34%
 Risk-free interest rate 2. 01%.
 dividend yield 0%
 grant date fair value ESPP rights $33. $18. $9.