Adjusted Operating Income - Insurance
Adjusted Operating Income ("Insurance AOI") and Pre-tax Adjusted Operating Income (“Pre-tax Insurance AOI”) for the Insurance segment are non-U.S. GAAP financial measures frequently used throughout the insurance industry and are economic measures the Insurance segment uses to evaluate its financial performance. Management believes that Insurance AOI and Pretax Insurance AOI measures provide investors with meaningful information for gaining an understanding of certain results and provide insight into an organization’s operating trends and facilitates comparisons between peer companies. However, Insurance AOI and Pre-tax Insurance AOI have certain limitations, and we may not calculate it the same as other companies in our industry. It should, therefore, be read together with the Company's results calculated in accordance with U.S. GAAP.
Similarly to Adjusted EBITDA, using Insurance AOI and Pre-tax Insurance AOI as performance measures have inherent limitations as an analytical tool as compared to income (loss) from operations or other U.S. GAAP financial measures, as these non-U.S. GAAP measures exclude certain items, including items that are recurring in nature, which may be meaningful to investors. As a result of the exclusions, Insurance AOI and Pre-tax Insurance AOI should not be considered in isolation and do not purport to be an alternative to income (loss) from operations or other U.S. GAAP financial measures as measures of our operating performance.
Management defines Pre-tax Insurance AOI as Insurance AOI adjusted to exclude the impact of income tax (benefit) expense recognized during the current period. Management believes that Insurance AOI and Pre-tax Insurance AOI provide meaningful financial metrics that help investors understand certain results and profitability. While these adjustments are an integral part of the overall performance of the Insurance segment, market conditions impacting these items can overshadow the underlying performance of the business. Accordingly, we believe using a measure which excludes their impact is effective in analyzing the trends of our operations.
The table below shows the adjustments made to the reported Net income (loss) of the Insurance segment to calculate Insurance AOI and Pre-tax Insurance AOI (in millions). Refer to the analysis of the fluctuations within the results of operations section:
(1) The Insurance segment revenues are inclusive of realized and unrealized gains and net investment income for the year ended December 31, 2019 and 2018. Such adjustments are related to transactions between entities under common control which are eliminated or are reclassified in consolidation.
Net income for the year ended December 31, 2019 decreased $105.8 million to $59.4 million from $165.2 million for the year ended December 31, 2018. Pre-tax Insurance AOI for the year ended December 31, 2019 increased $85.1 million to $85.7 million from $0.6 million for year ended December 31, 2018. The increase was primarily driven by the incremental net investment income and policy premiums from the KIC block acquisition and higher net investment income from the legacy CGI block driven by both the growth and mix of the investment portfolio, including premium reinvestment and rotation into higher yield assets. In addition, there was a decrease in policy benefits, changes in reserves, and commissions related to current period reserve adjustments driven by higher mortality and policy terminations, an increase in contingent non-forfeiture option activity as a result of in-force rate actions approved and implemented, and favorable developments in claims activity. This was partially offset by an increase in selling, general and administrative expenses, primarily attributable to headcount additions related to the KIC acquisition.

                                 |        | Year ended December 31, |
-------------------------------- | ------ | ----------------------- | ----------
                                 |        |                         | Increase /
                                 | 2019   | 2018                    | (Decrease)
Net income - Insurance segment   | $59.4  | $165.2                  | $(105.8)
Effect of investment (gains) (1) | (1.9)  | (5.6)                   | 3.7
Asset impairment expense         | 47.3   | —                       | 47.3
Gain on bargain purchase         | (1.1)  | (115.4)                 | 114.3
Gain on reinsurance recaptures   | —      | (47.0)                  | 47.0
Acquisition costs                | 2.1    | 2.8                     | (0.7)
Insurance AOI                    | 105.8  | —                       | 105.8
Income tax expense (benefit)     | (20.1) | 0.6                     | (20.7)
Pre-tax Insurance AOI            | $85.7  | $0.6                    | $85.1

Adjusted Operating Income Insurance
 Pre-tax Insurance segment non-U. S. GAAP financial measures economic financial performance. Management believes Insurance AOI Pretax provide information results insight operating trends comparisons. limitations not calculate same other companies. read together with Company results calculated U. S. GAAP.
 Adjusted EBITDA Insurance AOI Pre-tax Insurance AOI performance measures limitations income (loss) operations other U. GAAP measures. exclude items recurring. Insurance AOI Pre-tax Insurance AOI not considered alternative to income (loss) operations other. GAAP measures.
 Management defines Pre-tax Insurance AOI as adjusted exclude impact income tax (benefit) expense current period. Insurance AOI Pre-tax provide meaningful financial metrics understand results profitability. adjustments integral part performance Insurance market conditions can overshadow performance. measure impact effective analyzing trends.
table shows adjustments Net income Insurance segment AOI Pre-tax Insurance AOI millions.
 Insurance segment revenues inclusive gains net investment income 2019 2018. adjustments related transactions entities eliminated consolidation.
 Net income 2019 decreased $105. 8 million to $59. 4 million from $165. 2 million 2018. Pre-tax Insurance AOI increased $85. 1 million to $85. 7 million from $0. 6 million. increase driven by net investment income policy premiums KIC block acquisition higher income CGI block growth investment portfolio premium reinvestment rotation higher yield assets. decrease policy benefits reserves commissions adjustments higher mortality policy terminations increase contingent non option activity claims activity. offset increase selling general administrative expenses headcount additions KIC acquisition.
 Net income Insurance segment $59. $165.
 Effect investment (gains.
 Asset impairment expense.
 Gain bargain purchase.
reinsurance recaptures.
 Acquisition costs 2. 8. 7)
 Insurance 105. 8.
 Income tax expense (20. 6.
 Pre-tax Insurance $85. 7. 6


Year Ended December 31, 2018 Compared to Year Ended December 31, 2017
Revenue
Total revenue for the year ended December 31, 2018 increased by $58.9 million, or 28%, compared to the year ended December 31, 2017. Subscription
and returns revenue for the year ended December 31, 2018 increased by $54.1 million, or 27%, compared to the year ended December 31, 2017. Professional
services revenue for the year ended December 31, 2018 increased by $4.8 million, or 37%, compared to the year ended December 31, 2017. Growth in total
revenue was due primarily to increased demand for our products and services from both new and existing customers. Of the increase in total revenue for the year
ended December 31, 2018 compared to 2017, approximately $29.6 million was attributable to existing customers, approximately $28.3 million was attributable to
new customers, and approximately $1.1 million was due to interest income on funds held for customers. Total subscription and returns revenue for 2018 included
$1.2 million related to our cross-border transactions technology acquired in May 2018.

                         | For the Year Ended December 31, |                        | Change  |
------------------------ | ------------------------------- | ---------------------- | ------- | ----------
                         | 2018                            | 2017                   | Amount  | Percentage
                         |                                 | (dollars in thousands) |         |
Revenue:                 |                                 |                        |         |
Subscription and returns | $254,056                        | $199,942               | $54,114 | 27%
Professional services    | 18,042                          | 13,217                 | 4,825   | 37%
Total revenue            | $272,098                        | $213,159               | $58,939 | 28%

December 31, 2018 2017
 increased $58. 9 million 28%,. Subscription
 returns revenue increased $54. 1 million 27%,. Professional
 services revenue increased $4. 8 million 37%. Growth
 due increased demand products new existing customers. increase
 $29. 6 million existing customers $28. 3 million
 new customers $1. 1 million interest income funds. subscription returns revenue 2018 included
 $1. 2 million cross-border transactions technology acquired May 2018.
 December
 2018 2017 Amount Percentage
 Revenue
 Subscription returns $254,056  $199,942 $54,114  27%
 Professional services 18,042 37%
 Total revenue $272,098  $213,159 $58,939 28%


B. Business Overview
Our Fleet
Our fleet currently consists of 23 Suezmax crude oil tankers, of which the vast majority have been built in Korea. The majority of our vessels are employed in the spot market, together with one vessel currently on a longer term time charter agreement expiring in 2021 or later. The vessels are considered homogenous and interchangeable as they have approximately the same freight capacity and ability to transport the same type of cargo.

Vessel          | Built in  | Deadweight Tons   | Delivered to NAT in
--------------- | --------- | ----------------- | -------------------
Nordic Freedom  | 2005      | 159,331           | 2005
Nordic Moon     | 2002      | 160,305           | 2006
Nordic Apollo   | 2003      | 159,998           | 2006
Nordic Cosmos   | 2003      | 159,999           | 2006
Nordic Grace    | 2002      | 149,921           | 2009
Nordic Mistral  | 2002      | 164,236           | 2009
Nordic Passat   | 2002      | 164,274           | 2010
Nordic Vega     | 2010      | 163,940           | 2010
Nordic Breeze   | 2011      | 158,597           | 2011
Nordic Zenith   | 2011      | 158,645           | 2011
Nordic Sprinter | 2005      | 159,089           | 2014
Nordic Skier    | 2005      | 159,089           | 2014
Nordic Light    | 2010      | 158,475           | 2015
Nordic Cross    | 2010      | 158,475           | 2015
Nordic Luna     | 2004      | 150,037           | 2016
Nordic Castor   | 2004      | 150,249           | 2016
Nordic Sirius   | 2000      | 150,183           | 2016
Nordic Pollux   | 2003      | 150,103           | 2016
Nordic Star     | 2016      | 159,000           | 2016
Nordic Space    | 2017      | 159,000           | 2017
Nordic Aquarius | 2018      | 157,000           | 2018
Nordic Cygnus   | 2018      | 157,000           | 2018
Nordic Tellus   | 2018      | 157,000           | 2018

. Business Overview
 Fleet
 23 Suezmax crude oil tankers majority built Korea. spot market one longer term charter agreement expiring 2021. vessels homogenous interchangeable same freight capacity cargo.
 Built Delivered NAT
 Nordic Freedom 159,331
 Nordic Moon 160,305
 Nordic Apollo 159,998
 Nordic Cosmos 159,999
 Nordic Grace 149,921
 Nordic Mistral 164,236
 Nordic Passat 164,274
 Nordic Vega 163,940
 Nordic Breeze 158,597
 Nordic Zenith 158,645
 Nordic Sprinter 159,089
 Nordic Skier
 Nordic Light 158,475
 Nordic Cross
 Luna 150,037
 Nordic Castor 150,249
 Sirius 150,183
 Nordic Pollux 150,103
 Nordic Star 159,000
 Nordic Space
 Aquarius
 Cygnus
 Tellus


The Company evaluates these assumptions on a periodic basis taking into consideration current market conditions and historical market data. The discount rate is used to calculate expected future cash flows at a present value on the measurement date, which is December 31. This rate represents the market rate for high-quality fixed income investments. A lower discount rate would increase the present value of benefit obligations. Other assumptions include demographic factors such as retirement, mortality and turnover.
The following table provides information about the net periodic benefit cost and other accumulated comprehensive income for the Pension Plans (in thousands):
In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715) – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). These amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit cost are required to be presented in the income statement separately from the service cost component outside of a subtotal of income from operations. If a separate line item is not used, the line items used in the income statement to present other components of net benefit cost must be disclosed. These amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. These amendments were applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The amendments allow a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements.

                                                                                |          | Years Ended December 31, |
------------------------------------------------------------------------------------------------------ | -------- | ------------------------ | -------
                                                                                | 2019     | 2018                     | 2017
Service cost                                                                                | $405     | $448                     | $443
Interest cost                                                                                | 254      | 196                      | 194
Recognized actuarial (gains)                                                                           | (86)     | (58)                     | (43)
Net periodic benefit cost                                                                              | 573      | 586                      | 594
Unrealized net actuarial (gains), net of tax                                                           | (2,324)  | (2,256)                  | (1,574)
Total amount recognized in net periodic benefit cost and accumulated other comprehensive income (loss) | $(1,751) | $(1,670)                 | $(980)

Company evaluates assumptions current market conditions historical data. discount rate future cash flows present December 31. represents market rate high-quality fixed income investments. lower discount rate present value benefit obligations. assumptions include demographic factors retirement mortality turnover.
 table provides net periodic benefit cost accumulated income for Pension Plans
 March 2017 FASB issued ASU 2017-07 Compensation Retirement Improving Presentation Net Pension Cost Postretirement Benefit Cost. amendments require service cost same other compensation costs. other components separately from cost. If. amendments effective for annual periods after December 15, 2017 interim periods. applied retrospectively for service cost pension cost postretirement benefit cost capitalization service cost component pension cost postretirement benefit. amendments allow use amounts pension postretirement benefit plan note estimation basis retrospective presentation requirements.
 Years Ended December 31,
 2019 2018 2017
Service $405 $448 $443
 Interest 254 196
 actuarial (86) (43)
 Net cost 573 586 594
 Unrealized tax (2,324) (2,256 (1,574)
 $(1,751)(1,670)(980


Irish SIP
The weighted average market value per ordinary share for Irish SIP options exercised in 2019 was 350.0p (2018: 387.5p). The SIP shares outstanding at 31 March 2018 have fully vested (2018: had a weighted average remaining vesting period of 0.1 years). Options exercised prior to the vesting date relate to those attributable to good leavers as defined by the scheme rules.

                                   | 2019     | 2018
---------------------------------- | -------- | -------
                                   | Number   | Number
Outstanding at 1 April             | 35,922   | 44,431
Dividend shares awarded            | –        | 788
Forfeited                          | –        | (7,950)
Exercised                          | (30,506) | (1,347)
Outstanding at 31 March            | 5,416    | 35,922
Vested and outstanding at 31 March | 5,416    | –

 average market value share 2019 350. (2018. shares 31 March 2018 fully vested vesting period. 1 years. Options vesting good leavers scheme rules.
 Outstanding 1 April 35,922 44,431
 Dividend shares awarded 788
 Forfeited (7,950
 (30,506) (1,347
 31 March 5,416 35,922
 Vested 31 March


Research and development
Research and development expense consists primarily of salaries and other personnel-related costs; the cost of products, materials, and outside services used in our R&D activities; and depreciation and amortization expense associated with R&D specific facilities and equipment. We maintain a number of programs and activities to improve our technology and processes in order to enhance the performance and reduce the costs of our solar modules.
The following table shows research and development expense for the years ended December 31, 2019, 2018, and 2017:
Research and development expense in 2019 increased compared to 2018 primarily due to increased material and module testing costs and higher employee compensation expense.

                         |         | Year Ended |         |                | Change |                |
------------------------ | ------- | ---------- | ------- | -------------- | ------ | -------------- | ----
(Dollars in thousands)   | 2019    | 2018       | 2017    | 2019 over 2018 |        | 2018 over 2017 |
Research and development | $96,611 | $84,472    | $88,573 | $12,139        | 14%    | $(4,101)       | (5)%
% of net sales .         | 3.2%    | 3.8%       | 3.0%    |                |        |                |

Research development
 expense salaries personnel costs products materials services depreciation amortization facilities equipment. maintain programs improve technology processes performance reduce costs solar modules.
 table shows research development expense 2019 2018 2017:
 2019 increased due material module testing costs higher employee compensation.
 Year Ended
 (Dollars thousands) 2019 2018 2017
 Research development $96,611  $84,472  $88,573 $12,139 14% $(4,101)
 net sales. 3. 2%. 8%. 0%


Restructuring and Related Charges
Following is a summary of our restructuring and related charges:
(1) Includes $21.5 million, $16.3 million and $51.3 million recorded in the EMS segment, $2.6 million, $16.6 million and $82.4 million recorded in the DMS segment and $1.8 million, $4.0 million and $26.7 million of non-allocated charges for the fiscal years ended August 31, 2019, 2018 and 2017, respectively. Except for asset write-off costs, all restructuring and related charges are cash settled.
(2) Fiscal year ended August 31, 2017, includes expenses related to the 2017 and 2013 Restructuring Plans.

                                            |       | Fiscal Year Ended August 31, |
------------------------------------------- | ----- | ---------------------------- | -------
(dollars in millions)                       | 2019  | 2018                         | 2017(2)
Employee severance and benefit costs        | $16.0 | $16.3                        | $56.8
Lease costs                                 | —     | 1.6                          | 4.0
Asset write-off costs                       | (3.6) | 16.2                         | 94.3
Other costs                                 | 13.5  | 2.8                          | 5.3
Total restructuring and related charges (1) | $25.9 | $36.9                        | $160.4

Restructuring Charges
 summary
 Includes $21. 5 million $16. 3 $51. million EMS $2. 6 million $16. $82. 4 million DMS $1. 8 million $4. $26. 7 million non-allocated charges years 2019 2018 2017. asset write-off charges cash settled.
 2017 expenses 2013 Restructuring Plans.
 Employee severance benefit costs $16. $16. $56.
 Lease costs.
 Asset write-off. 16. 94.
 Other costs 13.
 restructuring charges $25. 9 $36. $160.


(15) CONTRACT BALANCES
Contract balances at December 31 are set forth in the following table:
The change in our net contract assets/(liabilities) from December 31, 2018 to December 31, 2019 was due primarily to the timing of payments and invoicing relating to SaaS and PCS renewals, partially offset by revenues recognized in the year ended December 31, 2019 of $674.2, related to our contract liability balances at December 31, 2018. In addition, the impact of the 2019 business acquisitions increased net contract liabilities by $96.2.
In order to determine revenues recognized in the period from contract liabilities, we allocate revenue to the individual deferred revenue or BIE balance outstanding at the beginning of the year until the revenue exceeds that balance.
Impairment losses recognized on our accounts receivable and unbilled receivables were immaterial in the year ended December 31, 2019.
(1) Consists of “Deferred revenue,” and billings in-excess of revenues (“BIE”). BIE are reported in “Other accrued liabilities” in our Consolidated Balance Sheets.

Balance Sheet Account             | 2019      | 2018      | Change
--------------------------------- | --------- | --------- | ---------
Unbilled receivables              | $  183.5  | $  169.4  | $    14.1
Contract liabilities - current(1) | (840.8)   | (714.1)   | (126.7)
Deferred revenue - non-current    | (33.2)    | (29.8)    | (3.4)
Net contract assets/(liabilities) | $ (690.5) | $ (574.5) | $ (116.0)

CONTRACT BALANCES
 balances at December 31
 change contract assets 2018 to 2019 due to timing payments invoicing SaaS PCS renewals offset by revenues $674. 2. 2019 business acquisitions increased liabilities by $96. 2.
 allocate revenue to deferred revenue balance until exceeds.
 Impairment losses immaterial 2019.
 “Deferred revenue-excess. accrued Consolidated Balance Sheets.
 Unbilled receivables $ 183. 5 $ 169. 4 $ 14.
 Contract liabilities (840. 8) (714. (126.
 Deferred revenue non-current (33. (29. (3.
 Net contract assets(liabilities $ (690. 5) (574. 5) (116.


Grants of Plan-Based Awards in 2018
The following table sets forth information regarding grants of awards made to our named executive officers during 2018. We did not grant any plan-based cash awards during 2018.
(1) The amounts included in this column represent the aggregate grant date fair value of RSUs, RSAs and option awards calculated in accordance with ASC 718. The valuation assumptions used in determining the grant date fair value of the RSUs, RSAs and options reported in this column are described in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Name         | Grant Date | Number of Securities Underlying Restricted Stock Awards and Restricted Stock Units (#) | Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) (1)
------------ | ---------- | -------------------------------------------------------------------------------------- | ------------------------------------------- | ---------------------------------------------- | --------------------------------------------------------
Mr. Dorsey   | —          | —                                                                                | —                                           | —                                              | —
Ms. Friar    | 4/25/2018  | 38,159                                                                                | 109,026                                     | 44.75                                          | 3,479,299
Ms.Henry     | 4/25/2018  | 38,159                                                                                | 109,026                                     | 44.75                                          | 3,479,299
Ms. Reses    | 4/25/2018  | 38,159                                                                                | 109,026                                     | 44.75                                          | 3,479,299
Ms. Whiteley | 4/25/2018  | 16,695                                                                                | 47,699                                      | 44.75                                          | 1,522,215
Mr. Daswani  | 4/25/2018  | 4,198                                                                                | —                                           | —                                              | 187,861
Mr. Murphy   | 4/25/2018  | 4,962                                                                                | —                                           | —                                              | 222,050

Grants Plan-Based Awards 2018
 table grants executive officers 2018. plan-based cash awards 2018.
 amounts aggregate grant date value RSUs RSAs option awards calculated ASC 718. valuation assumptions Notes Consolidated Financial Statements Annual Report Form 10-K fiscal year December 31, 2018.
 Name Grant Date Securities Restricted Stock Awards Units Options Exercise Price Option Awards$ Grant Date Fair Value Stock Option$
. Dorsey
. Friar 4/25/2018 38,159 109,026 44. 75 3,479,299
. Henry,159 109,026. 3,479,299
. Reses,159 109,026. 3,479,299
. Whiteley 16,695 47,699 44. 75 1,522,215
. Daswani 4,198 187,861
. Murphy 222,050


The weighted-average grant date fair value of VMware stock options can fluctuate from period to period primarily due to higher valued options assumed through business combinations with exercise prices lower than the fair market value of VMware’s stock on the date of grant.
For equity awards granted under the VMware equity plan, volatility was based on an analysis of historical stock prices and implied volatilities of VMware’s Class A common stock. The expected term was based on historical exercise patterns and post-vesting termination behavior, the term of the option period for grants made under the ESPP, or the weighted-average remaining term for options assumed in acquisitions. VMware’s expected dividend yield input was zero as the Company has not historically paid, nor expects in the future to pay, regular dividends on its common stock. The risk-free interest rate was based on a U.S. Treasury instrument whose term is consistent with the expected term of the stock options.
For equity awards granted under the Pivotal equity plan, volatility was based on the volatility of a group of comparable public companies based on size, stage of life cycle, profitability, growth and other factors. The expected term was estimated using the simplified method and was determined based on the vesting terms, exercise terms and contractual lives of the options. Pivotal’s expected dividend yield input was zero as the Company has not historically paid regular dividends on its common stock. The risk-free interest rate was based on a U.S. Treasury instrument whose term was consistent with the expected term of the stock options.

                                          |                  | For the Year Ended |
----------------------------------------- | ---------------- | ------------------ | ----------------
VMware Employee Stock Purchase Plan       | January 31, 2020 | February 1, 2019   | February 2, 2018
Dividend yield                            | None             | None               | None
Expected volatility                       | 27.4%            | 33.5%              | 22.6%
Risk-free interest rate                   | 1.7%             | 2.0%               | 1.2%
Expected term (in years)                  | 0.6              | 0.8                | 0.9
Weighted-average fair value at grant date | $35.66           | $34.72             | $21.93

weighted-average grant date VMware stock options due higher valued options lower market value.
 equity awards VMware equity plan volatility based historical stock prices volatilities Class A common stock. expected term exercise patterns post-vesting termination behavior option period-average term. dividend yield zero regular dividends. risk-free interest rate based U. S. Treasury instrument consistent.
 equity Pivotal equity plan volatility based comparable public companies size stage life cycle profitability growth. expected term estimated simplified method vesting terms exercise terms contractual lives options. dividend yield zero regular dividends. risk-free interest rate based U. S. Treasury instrument.
 VMware Employee Stock Purchase Plan January 31, 2020 February 1, 2019 2 2018
 Dividend yield None
 Expected volatility 27. 4% 33. 5%. 6%
 Risk-free interest rate. 7%.
 Expected term years.
grant $35. 66 $34. $21.


The following table lists customers from which the Company derived revenues in excess of 10% of total revenues for the years ended years ended September 30, 2019 and 2018
In addition, accounts receivable from Customer A totaled approximately $0.3 million, or 1%, and approximately $1.1 million, or 9%, of total consolidated accounts receivable as of September 30, 2019 and September 30, 2018, respectively. Accounts receivable and long term receivable from Customer B totaled approximately $7.4 million, or 36%, and approximately $0.2 million, or 2%, of total consolidated accounts receivable as of September 30, 2019 and September 30, 2018, respectively. We believe that the Company is not exposed to any significant credit risk with respect to the accounts receivable with these customers as of September 30, 2019. No other customers accounted for 10% or more of total consolidated accounts receivable as
of September 30, 2019.

           |                    | For the years ended   |                    |
---------- | ------------------ | --------------------- | ------------------ | ------------
           | September 30, 2019 |                       | September 30, 2018 |
           | Amount             | % of Revenue          | Amount             | % of Revenue
           |                    | (Amounts in millions) |                    |
Customer A | $3.8               | 5%                    | $7.5               | 10%
Customer B | $10.2              | 13%                   | 1.1                | 3%

table lists customers Company derived revenues 10% years September, 2019 2018
 accounts receivable from Customer A totaled $0. 3 million 1% $1. 1 million consolidated accounts 2019 2018. from Customer B totaled $7. 4 million 36% $0. 2 million 2%. Company exposed credit risk. No other customers accounted 10% or more consolidated accounts receivable
 September 2019.
 years
 September 30 2019 September 2018
 % Revenue
 Customer A $3. 8  5% $7. 5  10%
 Customer B $10. 2  13%. 3%


Available Liquidity
The following table sets forth our available liquidity for the periods indicated (in thousands):
The decrease in total liquidity is primarily attributable to $239.0 million of outstanding revolving credit facility borrowings and $48.0 million of payments to purchase property and equipment and software and distribution rights, partially offset by positive operating cash flows.
The Company and Official Payments Corporation, a wholly owned subsidiary, maintain a $140.0 million uncommitted overdraft facility with Bank of America, N.A. The overdraft facility acts as a secured loan under the terms of the Credit Agreement to provide an additional funding mechanism for timing differences that can occur in the bill payment settlement process. As of December 31, 2019, $138.5 million was available.
Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. As of December 31, 2019, we had $121.4 million in cash and cash equivalents, of which $49.2 million was held by our foreign subsidiaries. If these funds were needed for our operations in the U.S., we may potentially be required to pay foreign and U.S. state income taxes to repatriate these funds. As of December 31, 2019, only the earnings in our Indian foreign subsidiaries are indefinitely reinvested. The earnings of all other foreign entities are no longer indefinitely reinvested. We are also permanently reinvested for outside book/tax basis differences related to foreign subsidiaries. These outside basis differences could reverse through sales of the foreign subsidiaries, as well as various other events, none of which are considered probable as of December 31, 2019.

                                             | December 31, |
-------------------------------------------- | ------------ | --------
                                             | 2019         | 2018
Cash and cash equivalents                    | $121,398     | $148,502
Availability under revolving credit facility | 261,000      | 500,000
Total liquidity                              | $382,398     | $648,502

Liquidity
 table liquidity
 decrease liquidity attributable to $239. 0 million revolving credit borrowings $48. 0 million payments property distribution rights offset positive operating cash flows.
 Company Official Payments Corporation $140. 0 million overdraft facility with Bank of America. secured loan timing differences bill payment settlement. December 31, 2019 $138. 5 million available.
 Cash equivalents liquid investments maturities three months or less. $121. 4 million cash equivalents $49. 2 million held foreign subsidiaries. funds. taxes. earnings Indian foreign subsidiaries indefinitely reinvested. reinvested. permanently reinvested outside book/tax differences foreign subsidiaries. could reverse through sales events.
 Cash equivalents $121,398 $148,502
 Availability revolving credit facility 261,000 500,000
 Total liquidity $382,398 $648,502


Cash flows for the year ended December 31, 2019, 2018 and 2017
Operating Activities: Net cash used in operating activities was $9.9 million for the year ended December 31, 2019 and is comprised of $16.5 million in net loss, $4.5 million change in deferred income taxes and $0.7 million loss from the sale of the investment in JVP offset by $1.0 million in stock based compensation, $2.0 million in depreciation and amortization and $7.1 million, primarily changes in net operating assets and liabilities.
Net cash provided by operating activities was $25.6 million for the year ended December 31, 2018 and is comprised of $20.7 million in net income, $1.6 million in stock-based compensation, $1.8 million in depreciation and amortization, $3.4 million change in warrant liability and a change in deferred income taxes of $2.5 million, offset by a $4.4 million change in net operating assets and liabilities.
Net cash provided by operating activities was $16.6 million for the year ended December 31, 2017 and is comprised of $22.8 million in net income, $0.8 million in stock-based compensation, $0.8 million in depreciation and amortization, $0.6 million change in net operating assets and liabilities, offset by $2.2 million change in the warrant liability and a change in deferred income taxes of $6.2 million.
Investing Activities: During the year ended December 31, 2019, cash used in investing activities of $3.8 million was related to purchases of marketable securities of $24.5 million, purchases of property and equipment of $0.4 million and purchase of additional investment in JVP of $0.7 million offset by redemptions of marketable securities of $18.3 million and $3.5 million from the sale of our interest in JVP.
During the year ended December 31, 2018, cash used in investing activities of $13.2 million was related to purchase of investments of $11.3 million, the purchase of assets under the May 2018 Patent Assignment Agreement of $1.0 million and a $0.9 million investment in the JVP fund.
During the year ended December 31, 2017, cash used in investing activities of $2.0 million was related to the purchase of assets under the first Patent Assignment Agreement, offset by $0.1 million in cash distribution received from our investment in the JVP fund.
Financing Activities: During the year ended December 31, 2019, we did not have any activity related to financing.
During the year ended December 31, 2018, net cash used in financing activities of $21.6 million was primarily from the redemption of Series A-1 Preferred Stock totaling $19.9 million, $2.0 million related to the share repurchase program, offset by $0.3 million of proceeds received from the exercise of stock options.
During the year ended December 31, 2017, net cash provided by financing activities of $12.8 million was primarily from the issuance of Series A-1 Preferred Stock totaling $14.4 million and a Common Share offering for $12.0 million, offset by redeeming and retiring Series A Preferred Stock Financing of $13.8 million.

                                                    |          | For the Years Ended December 31, |
--------------------------------------------------- | -------- | -------------------------------- | -------
                                                    | 2019     | 2018                             | 2017
                                                    |          | (in thousands)                   |
Net cash provided by (used in) operating activities | $(9,885) | $25,601                          | $16,586
Net cash used in investing activities               | $(3,822) | (13,203)                         | (1,873)
Net cash provided by (used in) financing activities | $—       | (21,556)                         | 12,778

Cash flows 2019 2018 2017
 $9. million 2019 $16. 5 million net loss $4. million deferred income taxes. 7 million loss sale investment JVP $1. stock compensation $2. depreciation amortization $7. million assets liabilities.
 cash $25. 6 million 2018 $20. 7 million net income $1. million compensation. depreciation amortization $3. 4 million warrant liability deferred income taxes $2. 5 million offset $4. million assets liabilities.
 $16. 6 million 2017 $22. 8 million net income. compensation. depreciation amortization. $2. 2 million warrant liability deferred income taxes.
 Investing Activities $3. 8 million purchases securities $24. 5 million property equipment. investment JVP. million redemptions $18. 3 $3. 5 million sale JVP.
 2018 $13. 2 million $11. 3 million 2018 Patent Assignment Agreement $1. 9 investment JVP.
December 31, 2017 $2. million purchase Patent Assignment Agreement offset. 1 million JVP fund.
 December 31, 2019 financing.
 December 2018 cash $21. 6 million redemption Series A-1 Preferred Stock $19. 9 million $2. million share repurchase offset $0. 3 million stock options.
 December 31, 2017 net cash $12. 8 million issuance Series A-1 Preferred Stock $14. 4 million Common Share offering $12. million offset redeeming retiring Series Preferred Stock Financing $13. 8 million.
 cash operating activities $(9,885) $25,601 $16,586
 investing $(3,822)
 financing (21,556 12


Asset position
In financial year 2018/19, total assets of continuing and discontinued operations decreased by €709 million to €14.5 billion (30/9/2018: €15.2 billion).
In financial year 2018/19, non-current assets from continuing operations decreased by €141 million to €6.7 billion (30/9/2018: €6.9 billion), primarily relating to property, plant and equipment. In addition to cost-efficient investment activities, this was mainly due to individual property sales, while currency effects increased the carrying amount.
1 Adjustment of previous year according to explanation in notes.
2 Adjusted for effects of the discontinued business segment.
For more information about the development of non-current assets, see the notes to the consolidated financial statements in the numbers listed in the table.

€ million                                         | Note no. | 30/9/2018 1 | 30/9/2018 adjusted2 | 30/9/2019
------------------------------------------------- | -------- | ----------- | ------------------- | ---------
Non-current assets                                |          | 7,503       | 6,877               | 6,736
Goodwill                                          | 19       | 797         | 778                 | 785
Other intangible assets                           | 20       | 499         | 496                 | 562
Property, plant and equipment                     | 21       | 5,314       | 4,892               | 4,760
Investment properties                             | 22       | 97          | 97                  | 82
Financial assets                                  | 23       | 88          | 88                  | 97
Investments accounted for using the equity method | 23       | 178         | 178                 | 179
Other financial and other non-financial assets    | 24       | 202         | 86                  | 80
Deferred tax assets                               | 25       | 329         | 262                 | 191

 year 2018/19 assets operations decreased €709 million €14. 5 billion (30/9/2018 €15. 2 billion.
 2018/19 non-current assets decreased €141 million €6. 7 billion (30/9/2018 €6. 9 property plant equipment. due property sales currency effects increased carrying amount.
 Adjustment previous year.
 Adjusted discontinued business segment.
-current consolidated financial statements.
. 30/9/2018 30/9/2019
 Non-current assets 6,877
 Goodwill 797
 Other intangible assets 499
 Property plant equipment 5,314
 Investment properties
 Financial assets 88
 Investments equity
 Other non assets 24 202 86
 Deferred tax assets 25 329 262


Income taxes. Income tax expense and effective annual income tax rates for fiscal 2019 and 2018, as well as information as to the effects of the U.S. Tax Reform in fiscal 2018, were as follows (dollars in millions):
(1) We believe the non-GAAP presentation of income tax expense and the effective annual tax rate excluding special tax items, the one-time employee bonus and restructuring charges provides additional insight over the change from the comparative reporting periods by isolating the impact of these significant, special items. In addition, the Company believes that its income tax expense, as adjusted, and effective tax rate, as adjusted, enhance the ability of investors to analyze the Company’s operating performance and supplement, but do not replace, its income tax expense and effective tax rate calculated in accordance with U.S. GAAP.
Income tax expense for fiscal 2019 was $17.3 million compared to $94.6 million for fiscal 2018. The decrease is primarily due to the $85.9 million impact of Tax
Reform that was recorded in fiscal 2018, which was partially offset by an increase in tax expense due to the global intangible low-taxed income provisions
("GILTI") of Tax Reform in fiscal 2019. Income tax expense also decreased by $10.5 million in fiscal 2019 as the Company reasserted that certain historical
undistributed earnings of two foreign subsidiaries will be permanently reinvested based on the expected working capital requirements of these two foreign
subsidiaries.
The $94.6 million of income tax expense recorded during fiscal 2018 included $85.9 million related to the enactment of Tax Reform. Included in the fiscal 2018 income tax expense was a $3.6 million benefit for the valuation allowance released against the net deferred tax assets in the U.S. as the Company is subject to GILTI.

                                               | 2019  | 2018
---------------------------------------------- | ----- | ------
Income tax expense, as reported (GAAP)         | $17.3 | $94.6
Accumulated foreign earnings assertion         | 10.5  | —
U.S. Tax Reform                                | (7.0) | (85.9)
Impact of other special tax items              | 0.2   | (1.1)
Impact of valuation allowance release          | —     | 3.6
Impact of one-time employee bonus              | —     | 0.3
Income tax expense, as adjusted (non-GAAP) (1) | $21.0 | $11.5

Income taxes. expense rates 2019 2018 effects U. S. Tax Reform 2018
 non-GAAP presentation tax expense annual tax rate excluding special tax items one-time employee bonus restructuring charges provides insight impact. Company believes income tax expense adjusted rate enhance investors analyze operating performance. GAAP.
 tax expense 2019 $17. 3 million $94. 6 million 2018. decrease due to $85. 9 million impact Tax
 Reform offset by increase tax expense global intangible low-taxed income provisions
 Reform. tax expense decreased by $10. 5 million 2019
 undistributed earnings foreign subsidiaries reinvested requirements
.
 $94. 6 million tax expense 2018 included $85. 9 million Tax Reform. $3. 6 million benefit valuation allowance net deferred tax assets. GILTI.
 Income tax expense (GAAP $17. $94.
 Accumulated foreign earnings assertion.
. Tax Reform.
special tax items.
 valuation allowance release.
 one-time employee bonus.
 Income tax expense adjusted-GAAP $21. $11.


The following table disaggregates our revenue by major source for the year ended December 31, 2018:
(1) Subscriber Solutions & Experience was formerly reported as Customer Devices. With the increasing focus on enhancing the customer experience for both our business and consumer broadband customers and the addition of SmartRG during the fourth quarter of 2018, Subscriber Solutions & Experience more accurately represents this revenue category.

(In thousands)                        | Network Solutions | Services & Support | Total
------------------------------------- | ----------------- | ------------------ | --------
Access & Aggregation                  | $301,801          | $57,069            | $358,870
Subscriber Solutions & Experience (1) | 129,067           | 5,393              | 134,460
Traditional & Other Products          | 27,364            | 8,583              | 35,947
Total                                 | $458,232          | $71,045            | $529,277

table revenue December 31,
 Subscriber Solutions Experience Customer Devices. SmartRG Subscriber Solutions Experience represents revenue category.
 Network Solutions Services Support
 Access Aggregation $301,801 $57,069  $358,870
 Subscriber Solutions Experience 129,067 5,393 134,460
 Traditional Other Products 27,364 8,583 35,947
 $458,232 $71,045 $529,277


Invested capital:
TORM defines invested capital as the sum of intangible assets, tangible fixed assets, investments in joint ventures, bunkers, accounts receivables, assets held-for-sale (when applicable), deferred tax liability, trade payables, current tax liabilities and deferred income. Invested capital measures the net investment used to achieve the Company’s operating profit. The Company believes that invested capital is a relevant measure that Management uses to measure the overall development of the assets and liabilities generating the net profit. Such measure may not be comparable to similarly titled measures of other companies. Invested capital is calculated as follows:
¹⁾ Accounts receivables includes Freight receivables, Other receivables and Prepayments.
²⁾ Trade payables includes Trade payables and Other liabilities.

USDm                                 | 2019    | 2018    | 2017
------------------------------------ | ------- | ------- | -------
Tangible and intangible fixed assets | 1,782.2 | 1,445.0 | 1,384.8
Investments in joint ventures        | 1.2     | 0.1     | 0.3
Bunkers                              | 34.8    | 39.4    | 33.2
Accounts receivables ¹⁾              | 99.5    | 96.3    | 87.5
Assets held-for-sale                 | 9.1     | 6.2     | 6.6
Deferred tax liability               | -44.9   | -44.9   | -44.9
Trade payables ²⁾                    | -94.4   | -71.6   | -60.0
Current tax liabilities              | -1.5    | -1.0    | -1.4
Deferred income                      | -       | -0.1    | -0.1
Invested capital                     | 1,786.0 | 1,469.4 | 1,406.0

capital
 TORM defines intangible fixed assets investments joint ventures bunkers accounts receivables assets held-for-sale deferred tax trade payables current tax liabilities deferred income. measures operating profit. development assets liabilities net profit. not comparable. calculated
 Accounts receivables includes Freight receivables Other receivables Prepayments.
 Trade payables liabilities.
 Tangible intangible fixed assets 1,782. 1,445. 1,384.
 Investments joint ventures 1.
 Bunkers 34. 39.
 Accounts receivables 99. 96. 87.
 Assets held-for-sale 9.
 Deferred tax liability.
 Trade payables -94.
 Current tax liabilities -1.
 Deferred income.
 Invested capital 1,786. 1,469. 1,406.


Property, Plant and Equipment
Property, plant and equipment consists of the following (in millions):
Depreciation expense attributed to property, plant and equipment was $180.6 million, $123.7 million and $122.9 million for the fiscal years ending March 31, 2019, 2018 and 2017, respectively.

                                               | March 31, |
---------------------------------------------- | --------- | -------
                                               | 2019      | 2018
Land                                           | $83.4     | $73.4
Building and building improvements             | 647.6     | 508.5
Machinery and equipment                        | 2,095.5   | 1,943.9
Projects in process                            | 119.2     | 118.3
Total property, plant and equipment, gross     | 2,945.7   | 2,644.1
Less accumulated depreciation and amortization | 1,949.0   | 1,876.2
Total property, plant and equipment, net       | $996.7    | $767.9

Property Plant Equipment
 Depreciation $180. 6 million $123. 7 million $122. 9 million years 2019 2018 2017.
 Land $83. $73.
 Building improvements 647. 508.
 Machinery equipment 2,095. 1,943.
 Projects 119. 118.
 property plant equipment 2,945. 2,644.
 depreciation amortization 1,949. 1,876.
 $996. $767.


MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)
Schedule of restricted cash:
(2) During the fiscal year ended March 31, 2019, the Company adopted ASU 2016-18 - Statement of Cash Flows: Restricted Cash. The following table presents the balance of restricted cash which consists of cash denominated in a foreign currency and restricted in use due to a foreign taxing authority requirement (in millions):

                                                                          |         | Year ended March 31, |
------------------------------------------------------------------------- | ------- | -------------------- | ---------
                                                                          | 2019    | 2018                 | 2017
Effect of foreign exchange rate changes on cash and cash equivalents      | —       | —                    | (1.0)
Net decrease in cash and cash equivalents                                 | (472.7) | (7.4)                | (1,184.0)
Cash and cash equivalents, and restricted cash at beginning of period (2) | 901.3   | 908.7                | 2,092.7
Cash and cash equivalents, and restricted cash at end of period (2)       | $428.6  | $901.3               | $908.7

SUBSIDIARIES STATEMENTS CASH FLOWS millions
 Schedule restricted cash
 fiscal year March 31, 2019 Company adopted ASU 2016-18 Statement Cash Flows Restricted Cash. balance restricted cash foreign currency foreign taxing authority
 Year ended March 31,
 Effect foreign exchange rate changes cash equivalents.
 decrease cash equivalents (472. (1,184.
 restricted cash beginning period 901. 908. 2,092.
 cash end period $428. $901. $908.


ADVANCED ENERGY INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (in thousands, except per share amounts)
The information provided below includes one pension plan which is part of discontinued operations. As such, all related liabilities and expenses are reported in discontinued operations in the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations for all periods presented.
The components of net periodic pension benefit cost recognized in our Consolidated Statements of Operations for the periods presented are as follows:

                                           |        | Years Ended December 31, |
------------------------------------------ | ------ | ------------------------ | -----
                                           | 2019   | 2018                     | 2017
Service cost                               | $272   | $841                     | $  —
Interest cost                              | 1,211  | 802                      | 809
Expected return on plan assets             | (615)  | (665)                    | (597)
Amortization of actuarial gains and losses | 411    | 478                      | 503
Net periodic pension cost                  | $1,279 | $1,456                   | $715

ADVANCED INDUSTRIES. FINANCIAL STATEMENTS share
 pension plan discontinued operations. liabilities expenses reported Consolidated Balance Sheets Statements.
 net pension benefit cost
 Ended December 31,
 Service cost $272 $841
 Interest cost 1,211 802 809
 Expected return plan assets (615) (665) (597)
 Amortization actuarial gains losses 411 478 503
 Net pension cost $1,279 $1,456 $715


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data)
We have also recorded the following amounts to accumulated other comprehensive loss for the U.S. and non-U.S. pension plans, net of tax:

                                                | U.S.Pension Plans | Non-U.S.Pension Plans
----------------------------------------------- | ----------------- | ---------------------
                                                | Unrecognized Loss | Unrecognized Loss
Balance at January 1, 2018                      | $75,740           | $1,898
Amortization of retirement benefits, net of tax | (4,538)           | (126)
Settlements                                     | —                 | —
Net actuarial gain                              | 6,732             | 196
Foreign exchange impact                         | —                 | (52)
Tax impact due to implementation of ASU 2018-02 | 17,560            | —
Balance at January 1, 2019                      | $95,494           | $1,916
Amortization of retirement benefits, net of tax | (4,060)           | (138)
Net actuarial (loss) gain                       | (2,604)           | 78
Foreign exchange impact                         | —                 | 44
Balance at December 31, 2019                    | $88,830           | $1,900

FINANCIAL STATEMENTS
 recorded loss. pension plans net tax
.
 Unrecognized
 Balance January 1 2018 $75,740 $1,898
 Amortization retirement benefits tax (4,538)
 actuarial gain
 Foreign exchange impact
 Tax impact ASU 2018-02 17,560
 Balance January 1, 2019 $95,494 $1,916
 Amortization retirement benefits tax (4,060)
 (2,604)
 Foreign exchange impact
 Balance December 31, 2019 $88,830 $1,900


NOTE 3—ACQUISITIONS AND DIVESTITURES
Sale of CGD Services
On April 18, 2018, we entered into a stock purchase agreement with Nova Global Supply & Services, LLC (Purchaser), an entity affiliated with GC Valiant, LP, under which we agreed to sell our CGD Services business to the Purchaser. We concluded that the sale of the CGD Services business met all of the required conditions for discontinued operations presentation in the second quarter of fiscal 2018. Consequently, in the second quarter of fiscal 2018, we recognized a $6.9 million loss within discontinued operations, which was calculated as the excess of the carrying value of the net assets of CGD Services less the estimated sales price in the stock purchase agreement less estimated selling costs.
The sale closed on May 31, 2018. In accordance with the terms of the stock purchase agreement, the Purchaser agreed to pay us $135.0 million in cash upon the closing of the transaction, adjusted for the estimated working capital of CGD Services at the date of the sale compared to a working capital target. In the third quarter of fiscal 2018, we received $133.8 million in connection with the sale and we recorded a receivable from the Purchaser for the estimated amount due related to the working capital settlement. The balance of this receivable was $3.7 million at September 30, 2018. During fiscal 2019, we worked with the Purchaser and revised certain estimates related to the working capital settlement. In connection with the revision of these estimates, we reduced the receivable from the Purchaser by $1.4 million and recognized a corresponding loss on the sale of CGD Services in fiscal 2019. Certain remaining working capital settlement estimates, primarily related to the fair value of accounts receivable, have not yet been settled with the Purchaser.
In addition to the amounts described above, we are eligible to receive an additional cash payment of $3.0 million based on the achievement of pre-determined earn-out conditions related to the award of certain government contracts. No amount has been recorded as a receivable related to the potential achievement of earn-out conditions based upon our assessment of the probability of achievement of the required conditions.
The operations and cash flows of CGD Services are reflected in our Consolidated Statements of Operations and Consolidated Statements of Cash Flows as discontinued operations through May 31, 2018, the date of the sale. The following table presents the composition of net income from discontinued operations, net of taxes (in thousands):

                                                          |            | Years Ended September 30, |
--------------------------------------------------------- | ---------- | ------------------------- | ----------
                                                          | 2019       | 2018                      | 2017
Net sales                                                 | $  —       | $  262,228                | $  378,152
Costs and expenses:                                       |            |                           |
Cost of sales                                             | —          | 235,279                   | 342,819
Selling, general and administrative expenses              | —          | 11,365                    | 17,487
Amortization of purchased intangibles                     | —          | 1,373                     | 2,752
Restructuring costs                                       | —          | 7                         | 208
Other income                                              | —          | (15)                      | (46)
Earnings from discontinued operations before income taxes | —          | 14,219                    | 14,932
Net loss on sale                                          | 1,423      | 6,131                     | —
Income tax provision                                      | —          | 3,845                     | 401
Net income (loss) from discontinued operations            | $  (1,423) | $  4,243                  | $  14,531

NOTE 3—ACQUISITIONS DIVESTITURES
 Sale CGD Services
 April 18, 2018 stock purchase agreement Nova Global Supply & Services Valiant agreed CGD Services business. sale met conditions discontinued operations second quarter fiscal 2018. recognized $6. 9 million loss discontinued operations calculated excess carrying value net assets CGD Services less estimated sales price less selling costs.
 sale closed May 31, 2018. Purchaser agreed $135. 0 million cash adjusted estimated working capital CGD Services. third quarter 2018 received $133. 8 million recorded receivable estimated working capital settlement. balance receivable $3. 7 million September 30, 2018. fiscal 2019 revised estimates. reduced receivable $1. 4 million recognized loss sale CGD Services 2019. remaining working capital settlement estimates not settled.
 eligible receive additional cash payment $3. 0 million earn-out conditions government contracts. No amount recorded receivable potential achievement earn-out conditions.
cash flows CGD Services Consolidated discontinued May 31, 2018. net income discontinued operations
 Ended September 30,
 Net sales 262,228 378,152
 Costs expenses
 Cost sales 235,279 342,819
 Selling administrative expenses 11,365 17,487
 Amortization purchased intangibles 1,373 2,752
 Restructuring costs
 Other income
 Earnings operations before taxes 14,219 14,932
 Net loss sale 1,423 6,131
 Income tax provision 3,845
 Net income discontinued operations 4,243 14,531


Restructuring Expense
In October 2019, we began implementing a restructuring plan in our ongoing efforts to reduce operating costs and focus on advanced technologies. The restructuring plan, when complete, is expected to result in a workforce reduction of approximately 5% of our workforce and the closure and consolidation of certain U.S. and international office facilities. We expect to complete the restructuring by the end of the second fiscal quarter of 2020. We recorded restructuring expenses of $2.5 million in the fourth quarter of 2019, which included the following (in thousands)
As of December 31, 2019, we had accrued but unpaid restructuring costs of $1.5 million included in accrued liabilities on the Consolidated Balance Sheets

                                             | Cost of revenue | Sales and marketing | Research and development | General and administrative | Total restructuring expense
-------------------------------------------- | --------------- | ------------------- | ------------------------ | -------------------------- | ---------------------------
Employee severance and related payroll taxes | $28             | $1,355              | $340                     | $194                       | $1,917
Facilities closure expenses                  | .               | 435                 | 89                       |                            | 524
Legal fees                                   | .               | .                   | .                        | 89                         | 89
                                             | $28             | $1,790              | $429                     | $283                       | $2,530

Restructuring Expense
 October 2019 restructuring plan reduce costs advanced technologies. workforce reduction 5% closure consolidation U. S. international office facilities. complete restructuring second fiscal quarter 2020. recorded restructuring expenses $2. 5 million fourth quarter 2019
 December 31, 2019 accrued unpaid restructuring costs $1. 5 million Consolidated Balance Sheets
 Cost revenue Sales marketing Research development General administrative restructuring expense
 Employee severance payroll taxes $1 $1,917
 Facilities closure expenses.
 Legal fees.


FINANCIAL EXPENSE
(1) Fiscal 2018 was restated to reclassify results from Cogeco Peer 1 as discontinued operations. For further details, please consult the "Discontinued operations" section.
Fiscal 2019 fourth-quarter financial expense decreased by 15.2% mainly due to: • the reimbursements of $65 million and US$35 million under the Canadian Revolving Facility during the second quarter of fiscal 2019 and of US$328 million during the third quarter of fiscal 2019 following the sale of Cogeco Peer 1; and • lower debt outstanding and interest rates on the First Lien Credit Facilities; party offset by • the appreciation of the US dollar against the Canadian dollar compared to same period of the prior year.

Three months ended August 31,                 | 2019   | 2018 (1) | Change
--------------------------------------------- | ------ | -------- | ------
(in thousands of dollars, except percentages) | $      | $        | %
Interest on long-term debt                    | 41,307 | 46,127   | (10.4)
Net foreign exchange losses (gains)           | (403)  | 482      | —
Amortization of deferred transaction costs    | 464    | 441      | 5.2
Capitalized borrowing costs                   | (168)  | (162)    | 3.7
Other                                         | (763)  | 821      | —
                                              | 40,437 | 47,709   | (15.2)

FINANCIAL EXPENSE
 2018 Cogeco Peer 1 discontinued operations. consult operations section.
 2019 fourth-quarter expense decreased. 2% reimbursements $65 million US$35 million Canadian Revolving Facility US$328 million third quarter sale Cogeco Peer 1 lower debt interest rates First Lien Credit Facilities appreciation US dollar Canadian dollar.
 Three months August 31,
 Interest long-term debt 41,307 46,127.
 Net foreign exchange losses (403) 482
 Amortization deferred transaction costs.
 Capitalized borrowing costs (168).
 40,437 47,709.


NOTE 11 - STOCK CAPITAL (Cont.)
Shares and warrants issued to service providers:
On August 17, 2017 the Company issued to Anthony Fiorino, the former CEO of the Company, for consulting services rendered, a grant of 4,327 shares of restricted stock under the 2014 U.S. Plan, which vests in eight equal quarterly installments (starting November 17, 2017) until fully vested on the second anniversary of the date of grant.
Compensation expense recorded by the Company in respect of its stock-based service provider compensation awards for the year ended December 31, 2019 and 2018 amounted to $25 and $102, respectively.
On March 26, 2019, the Company issued to its legal advisor 5,908 shares of Common Stock under the 2014 U.S. Plan for certain 2018 legal services. The related compensation expense was recorded as general and administrative expense in 2018.
On May 23, 2019, the Company granted to a former director, in consideration for services rendered to the Company, an option under the 2014 Global Plan to purchase up to 4,167 shares of Common Stock with an exercise price per share of $0.75. The option was fully vested and exercisable as of the date of grant.
Total Stock-Based Compensation Expense:
The total stock-based compensation expense, related to shares, options and warrants granted to employees, directors and service providers was comprised, at each period, as follows:

                                       | December 31 |
-------------------------------------- | ----------- | -------
                                       | 2019        | 2 0 1 8
U.S. $ in thousands                    |             |
Research and development               | 123         | 175
General and administrative             | 666         | 844
Total stock-based compensation expense | 789         | 1,019

11 CAPITAL.
 Shares warrants issued service providers
 August 17, 2017 issued Anthony Fiorino former CEO consulting services 4,327 shares restricted stock 2014 U. Plan eight quarterly installments November 17, 2017) vested second anniversary.
 Compensation December 31, 2019 2018 $25 $102.
 March 26, 2019 issued legal advisor shares Common Stock 2014. Plan 2018 legal services. compensation expense general administrative expense 2018.
 May 23, 2019 granted former director option 2014 Global Plan purchase 4,167 shares Common Stock price per share $0. 75. option fully vested exercisable grant.
 Total Stock-Based Compensation Expense
 directors providers
.
 Research development
 General administrative
 Total stock compensation expense


24. Cash and cash equivalents
Significant accounting policies that apply to cash and cash equivalents Cash and cash equivalents comprise cash in hand and current balances with banks and similar institutions, which are readily convertible to cash and are subject to insignificant risk of changes in value and have an original maturity of three months or less. All are held at amortised cost on the balance sheet, equating to fair value. For the purpose of the consolidated cash flow statement, cash and cash equivalents are as defined above net of outstanding bank overdrafts. Bank overdrafts are included within the current element of loans and other borrowings (note 25).
IFRS 9 was applied for the first time on 1 April 2018 and introduces new classifications for financial instruments. Cash and cash equivalents were classified as loans and receivables under IAS 39, and are now classified as financial assets held at amortised cost under IFRS 9. This has not had an impact on the accounting for these instruments, or on their carrying amounts.
Cash and cash equivalents include restricted cash of £44m (2017/18: £32m, 2016/17: £43m), of which £40m (2017/18: £29m, 2016/17: £41m) was held in countries where local capital or exchange controls currently prevent us from accessing cash balances. The remaining balance of £4m (2017/18: £3m, 2016/17: £2m) was held in escrow accounts, or in commercial arrangements akin to escrow.

                                                      | 2019  | 2018 | 2017
----------------------------------------------------- | ----- | ---- | ----
At 31 March                                           | £m    | £m   | £m
Cash at bank and in hand                              | 495   | 446  | 469
Cash equivalents                                      |       |      |
US deposits                                           | 3     | 26   | 32
UK deposits                                           | 1,132 | 31   | 1
Other deposits                                        | 36    | 25   | 26
Total cash equivalents                                | 1,171 | 82   | 59
Total cash and cash equivalents                       | 1,666 | 528  | 528
Bank overdrafts (note25)                              | (72)  | (29) | (17)
Cash and cash equivalents per the cash flow statement | 1,594 | 499  | 511

. Cash equivalents
 accounting policies apply hand balances banks convertible to cash subject insignificant risk changes value original maturity three months or. held at amortised cost balance fair value. consolidated cash flow statement equivalents defined above bank overdrafts. included loans borrowings.
 IFRS 9 applied 1 April 2018 new classifications financial instruments. Cash equivalents classified loans receivables IAS 39 now financial assets amortised cost IFRS 9. accounting carrying amounts.
 include restricted cash £44m £40m held countries controls. remaining balance £4m held in escrow accounts.
 31
 Cash bank hand 495   469
 Cash equivalents
 US deposits 3  26  32
 UK deposits 1,132  31
 Other deposits 36  25
 Total cash equivalents 1,171  82  59
 1,666  528
overdrafts (72) (29) (17)
 equivalents 1,594 499


The fair value of plan assets, summarized by level within the fair value hierarchy described in Note 20, as of May 27, 2018, was as follows:
Level 1 assets are valued based on quoted prices in active markets for identical securities. The majority of the Level 1 assets listed above include the common stock of both U.S. and international companies, mutual funds, master limited partnership units, and real estate investment trusts, all of which are actively traded and priced in the market.
Level 2 assets are valued based on other significant observable inputs including quoted prices for similar securities, yield curves, indices, etc. Level 2 assets consist primarily of individual fixed income securities where values are based on quoted prices of similar securities and observable market data.
Level 3 assets consist of investments where active market pricing is not readily available and, as such, fair value is estimated using significant unobservable inputs.
Certain assets that are measured at fair value using the NAV (net asset value) per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. Such investments are generally considered long-term in nature with varying redemption availability. For certain of these investments, with a fair value of approximately $51.0 million as of May 26, 2019, the asset managers have the ability to impose customary redemption gates which may further restrict or limit the redemption of invested funds therein. As of May 26, 2019, funds with a fair value of $4.2 million have imposed such gates.
As of May 26, 2019, we have unfunded commitments for additional investments of $48.3 million in private equity funds and $17.0 million in natural resources funds. We expect unfunded commitments to be funded from plan assets rather than the general assets of the Company.
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)

                                                                          | Level 1 | Level 2  | Level 3 | Total
------------------------------------------------------------------------- | ------- | -------- | ------- | --------
Cash and cash equivalents                                                 | $1.0    | $65.0    | $—      | $66.0
Equity securities:                                                        |         |          |         |
U.S. equity securities                                                    | 319.8   | 124.0    | —       | 443.8
International equity securities                                           | 256.5   | 1.0      | —       | 257.5
Fixed income securities:                                                  |         |          |         |
Government bonds                                                          | —       | 1,854.8  | —       | 1,854.8
Corporate bonds                                                           | —       | 4.7      | —       | 4.7
Mortgage-backed bonds                                                     | —       | 9.3      | —       | 9.3
Real estate funds                                                         | 7.7     | —        | —       | 7.7
Master limited partnerships                                               | 0.4     | —        | —       | 0.4
Net receivables for unsettled transactions                                | 10.9    | —        | —       | 10.9
Fair value measurement of pension plan assets in the fair value hierarchy | $596.3  | $2,058.8 | $—      | $2,655.1
Investments measured at net asset value                                   |         |          |         | 700.0
Total pension plan assets                                                 |         |          |         | $3,355.1

fair value plan assets Note 20 May 27, 2018
 Level 1 assets valued quoted prices securities. majority include common stock. international companies mutual funds partnership units real estate trusts traded priced.
 Level 2 assets valued inputs quoted prices yield curves indices. fixed income securities quoted prices market data.
 Level 3 investments market pricing estimated unobservable inputs.
 Certain assets measured NAV share not classified. investments long-term varying redemption availability. $51. 0 million May 26, 2019 managers impose redemption gates redemption. funds fair value $4. 2 million imposed gates.
 unfunded commitments investments $48. 3 million private equity funds $17. 0 million natural resources funds. unfunded commitments plan assets.
 Consolidated Financial Statements Fiscal Years Ended May 26, 2019 May 27, 2018 May 28, 2017
 Level 1 2 3

 Cash equivalents $1. $65. $66.
 Equity securities
. equity securities 319. 124. 443.
 International equity securities 256. 257.
 Fixed income securities
 Government bonds 1,854.
 Corporate bonds 4.
 Mortgage-backed bonds 9.
 Real estate funds 7.
 Master limited partnerships.
 Net receivables unsettled transactions 10.
 Fair value measurement pension plan assets $596. $2,058. $2,655.
 Investments net asset value 700.
 pension plan assets $3,355.


5 Alternative Performance Measures (“APM’s”) continued
Unlevered Free Cash Flow
Unlevered free cash flow represents net cash flow from operating activities adjusted for exceptional items and net capital expenditure. Unlevered free cash flow provides an understanding of the Group’s cash generation and is a supplemental measure of liquidity in respect of the Group’s operations without the distortions of exceptional and other non-operating items.

                                        | Year-ended 31 March 2019 | Year-ended 31 March 2018
--------------------------------------- | ------------------------ | ------------------------
                                        | $M                       | $M
Net cash flow from operating activities | 142.9                    | 147.7
Exceptional items                       | 3.1                      | 13.0
Net capital expenditure                 | (22.2)                   | (21.1)
Unlevered free cash flow                | 123.8                    | 139.6

Alternative Performance Measures
 Unlevered Free Cash Flow
 adjusted exceptional items capital expenditure. cash generation supplemental measure liquidity distortions-operating items.
 Year-ended 31 March 2019 31 March 2018
 Net cash flow 142. 147.
 Exceptional items.
 Net capital expenditure (22.
 Unlevered free cash flow 123. 139.


Security Ownership of Certain Beneficial Owners and Management
The following table summarizes the beneficial owners of more than 5% of the Company’s voting securities and the securities of the Company beneficially owned by the Company’s directors and officers as of April 27, 2020.

Name and address of Beneficial Owner                                           | Amount of Beneficial Ownership | Percent of Beneficial Ownership
------------------------------------------------------------------------------ | ------------------------------ | -------------------------------
Garo H. Armen (1)                                                              | 4,741,323 (2)                  | 36%
Robert B. Stein (1)                                                            | 502,500 (3)                    | 4%
Khalil Barrage (1)                                                             | 380,000 (4)                    | 3%
Alexander K. Arrow (1)                                                         | 671,799 (5)                    | 6%
Larry N. Feinberg 808 North St., Greenwich, CT 06831                           | 800,000 (6)                    | 7%
Brian J. Corvese (1)                                                           | 145,000 (7)                    | 1%
David A. Lovejoy                                                               | 668,037 (8)                    | 6%
Josh Silverman (1)                                                             | 140,000 (9)                    | 1%
Strategic Bio Partners LLC (10) 777 Third Avenue 30th Floor New York, NY 10017 | 1,895,945 (11)                 | 17%
All directors and executive officers as a group (6 persons)                    | 6,580,622 (12)                 | 44%

Ownership Owners
 table summarizes 5% voting securities directors officers April 27, 2020.
 Amount Percent
 Garo. Armen 4,741,323 36%
 Robert B. Stein 502,500
 Khalil Barrage 380,000
 Alexander K. Arrow 671,799 6%
 Larry N. Feinberg North. Greenwich 800,000
 Brian. Corvese 145,000
 David A. Lovejoy 668,037 6%
 Josh Silverman 140,000
 Strategic Bio Partners Third Avenue York 1,895,945 17%
 directors officers 6,580,622 44%


Note 8. Property, Plant and Equipment, net
Property, plant and equipment, net as of December 31, 2019 and 2018 consisted of the following:
(1) Useful lives for leasehold and building improvements represent the term of the lease or the estimated life of the related improvements, whichever is shorter.
Depreciation expense from continuing operations was $12,548 and $12,643 for the years ended December 31, 2019 and 2018, respectively, of which $9,028 and $9,189, respectively, related to internal use software costs.
Amounts capitalized to internal use software related to continuing operations for the years ended December 31, 2019 and 2018 were $3,800 and $6,690, respectively.

                                                                       |                        | December 31 |
---------------------------------------------------------------------- | ---------------------- | ----------- | --------
                                                                       | Useful life (in years) | 2019        | 2018
Computer equipment and software                                        | 3-5                    | 14,689      | 14,058
Furniture and equipment                                                | 5-7                    | 2,766       | 3,732
Leasehold and building improvements (1)                                |                        | 7,201       | 7,450
Construction in progress - PPE                                         |                        | 949         | —
Property, plant, and equipment, excluding internal use software        |                        | 25,605      | 25,240
Less: Accumulated depreciation and amortization                        |                        | (19,981)    | (17,884)
Property, plant and equipment, excluding internal use software, net    |                        | 5,624       | 7,356
Internal use software                                                  | 3                      | 33,351      | 31,565
Construction in progress - Internal use software                       |                        | 2,973       | 903
Less: Accumulated depreciation and amortization, internal use software |                        | (25,853)    | (16,846)
Internal use software, net                                             |                        | 10,471      | 15,622
Property, plant and equipment, net                                     |                        | $16,095     | $22,978

Note 8. Property Plant Equipment
 December 31, 2019 2018
 Useful lives leasehold building improvements term lease estimated life shorter.
 Depreciation expense operations $12,548 $12,643 2019 2018 $9,028 $9,189 internal use software costs.
 capitalized software $3,800 $6,690.
 Useful life 2019 2018
 Computer equipment software 14,689 14,058
 Furniture equipment 2,766 3,732
 Leasehold building improvements 7,201 7,450
 Construction progress 949
 Property plant equipment software 25,605 25,240
 Accumulated depreciation amortization (19,981 (17,884
 5,624 7,356
 33,351 31,565
 Construction 2,973
 depreciation (25,853) (16,846)
 10,471 15,622
 $16,095 $22,978


Our net sales by offering category for APAC for 2019 and 2018, were as follows (dollars in thousands):
Net sales in APAC decreased 4% (increased 2% excluding the effects of fluctuating foreign currency rates), or $6.7 million, in 2019 compared to 2018. In APAC, increases in hardware and services net sales year over year were offset by a decrease in software net sales during 2019 compared to 2018. The changes were the result of the following:
• Continued expansion of hardware offerings in the APAC market resulted in higher net sales in this category.
• Continued trend toward higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category resulted in declines in the software net sales category.
• Higher volume of net sales of cloud solution offerings and software referral fees that are recorded on a net sales recognition basis positively impacted services net sales. Additionally, there were contributions from Insight delivered services from increased net sales of our digital innovation solutions offering.

          | APAC     |          |
--------- | -------- | -------- | -------
Sales Mix | 2019     | 2018     | %Change
Hardware  | $34,965  | $29,496  | 19%
Software  | 92,988   | 107,363  | (13%)
Services  | 52,288   | 50,055   | 4%
          | $180,241 | $186,914 | (4%)

net sales APAC 2019 2018
 sales APAC decreased 4% 2% excluding foreign currency $6. 7 million 2019 2018. increases hardware services offset decrease software sales 2019. changes
 expansion hardware higher net sales.
 higher sales cloud solution declines software sales.
 Higher volume cloud software referral fees impacted services sales. contributions Insight increased net sales digital innovation solutions.
 APAC
 Sales Mix 2019 2018 %Change
 Hardware $34,965 $29,496 19%
 Software 92,988 107,363 (13%)
 Services 52,288 50,055 4%
 $180,241  $186,914


Employee Stock Purchase Plan
The maximum aggregate number of shares that are available for issuance under the 2011 Employee Stock Purchase Plan (the “ESPP”) is 12,000,000.
Employees are eligible to participate in the ESPP after 90 days of employment with the Company. The ESPP permits eligible employees to purchase common stock through payroll deductions, which may not exceed 10% of an employee’s compensation, as defined in the ESPP, at a price equal to 85% of the fair value of the common stock at the beginning or end of the offering period, whichever is lower. The ESPP is intended to qualify under Section 423 of the Internal Revenue Code. As of August 31, 2019, 3,397,019 shares remained available for issue under the 2011 ESPP.
The fair value of shares issued under the ESPP was estimated on the commencement date of each offering period using the Black-Scholes option pricing model. The following weighted-average assumptions were used in the model for each respective period:
(1) The expected volatility was estimated using the historical volatility derived from the Company’s common stock.

                        | Fiscal Year Ended August 31, |           |
----------------------- | ---------------------------- | --------- | ---------
                        | 2019                         | 2018      | 2017
Expected dividend yield | 0.6%                         | 0.6%      | 0.8%
Risk-free interest rate | 2.3%                         | 1.4%      | 0.5%
Expected volatility(1)  | 28.6%                        | 23.0%     | 33.0%
Expected life           | 0.5 years                    | 0.5 years | 0.5 years

Employee Stock Purchase Plan
 maximum shares 2011 12,000,000.
 Employees participate after 90 days employment. permits employees purchase common stock through payroll deductions not exceed 10% compensation price equal 85% fair value common stock or period lower. ESPP Section 423 Internal Revenue Code. August 31, 2019 3,397,019 shares available 2011 ESPP.
 fair value estimated Black-Scholes option pricing model. weighted-average assumptions
 expected volatility estimated historical volatility common stock.
 Fiscal Year Ended August 31,
 Expected dividend yield. 6%.
 Risk-free interest rate 2. 3%. 4%.
 28. 6%. 0%. 0%
 life. 5 years.


Total Expense and Other (Income)
* 2019 results were impacted by Red Hat purchase accounting and acquisition-related activity.
The following Red Hat-related expenses were included in 2019 total consolidated expense and other (income), with no corresponding expense in the prior-year: Red Hat operational spending, interest expense from debt issuances to fund the acquisition and other acquisition-related activity, including: amortization of acquired intangible assets, retention and legal and advisory fees associated with the transaction.
Total expense and other (income) increased 2.8 percent in 2019 versus the prior year primarily driven by higher spending including Red Hat operational spending and investments in software and systems innovation, higher interest expense, non-operating acquisition-related activity associated with the Red Hat transaction and lower IP income, partially offset by lower non-operating retirement-related costs, divesture-related activity (gains on divestitures and lower spending) and the effects of currency. Total operating (non-GAAP) expense and other (income) increased 4.1 percent year to year, driven primarily by the factors above excluding the higher non-operating acquisition related activity and lower non-operating retirement-related costs described above.

($ in millions)                                 |         |         |
----------------------------------------------- | ------- | ------- | ----------------------------------
For the year ended December 31:                 | 2019    | 2018    | Yr.-to-Yr. Percent/ Margin Change*
Total consolidated expense and other (income)   | $26,322 | $25,594 | 2.8%
Non-operating adjustments                       |         |         |
Amortization of acquired intangible assets      | (764)   | (437)   | 74.8
Acquisition-related charges                     | (409)   | (16)    | NM
Non-operating retirement related (costs)/income | (615)   | (1,572) | (60.9)
Operating (non-GAAP) expense and other (income) | $24,533 | $23,569 | 4.1%
Total consolidated expense-to-revenue ratio     | 34.1%   | 32.2%   | 2.0 pts.
Operating (non-GAAP) expense-to-revenue ratio   | 31.8%   | 29.6%   | 2.2 pts.

Expense
 2019 results impacted by Red Hat acquisition activity.
 expenses 2019 no prior-year operational spending interest debt amortization assets retention legal advisory fees.
 expense increased 2. 8 percent 2019 driven higher spending Red Hat operational investments software interest expense non acquisition activity lower IP income offset lower non retirement costs divesture activity currency. operating (non-GAAP expense increased 4. 1 percent driven higher non-operating acquisition activity lower retirement costs.
 year December 31 2018. Change
 consolidated expense $26,322 $25,594 2. 8%
 Non-operating adjustments
 Amortization acquired intangible assets (764).
 Acquisition-related charges
 Non-operating retirement (615).
 (non-GAAP expense $24,533 $23,569.
 consolidated expense-to-revenue ratio 34.32. 2%.
-GAAP expense-revenue 31. 8%. 6%.


Management Discussion and Analysis
Notes: (1) Assuming constant exchange rates for the Australian Dollar, United States Dollar and/or regional currencies (Indian Rupee, Indonesian Rupiah, Philippine Peso and Thai Baht) from the previous year ended 31 March 2018 (FY2018). (2) Underlying net profit refers to net profit before exceptional items.
The Group has executed well on its strategy amid challenging industry, business and economic conditions. The fundamentals of the core businesses remained strong and the Group gained market share in mobile across both Singapore and Australia led by product innovations, content and services. Amobee and Trustwave continued to scale and deepen their capabilities, while the regional associates further monetised the growth in data as smartphone adoption increased. Leveraging on the Group’s strengths and customer base, Singtel continued to build digital ecosystems in payments, gaming and esports.

The Group has executed well on its strategy amid challenging industry, business and economic conditions. The fundamentals of the core businesses remained strong and the Group gained market share in mobile across both Singapore and Australia led by product innovations, content and services. Amobee and Trustwave continued to scale and deepen their capabilities, while the regional associates further monetised the growth in data as smartphone adoption increased. Leveraging on the Group’s strengths and customer base, Singtel continued to build digital ecosystems in payments, gaming and esports.
In constant currency terms, operating revenue grew 3.7% driven by increases in ICT, digital services and equipment sales. However, EBITDA was down 3.9% mainly due to lower legacy carriage services especially voice, and price erosion. With 6% depreciation in the Australian Dollar, operating revenue was stable while EBITDA declined 7.1%.
Depreciation and amortisation charges fell 1.2% but rose 2.7% in constant currency terms, on increased investments in mobile infrastructure network, spectrum and project related capital spending.  Depreciation and amortisation charges fell 1.2% but rose 2.7% in constant currency terms, on increased investments in mobile infrastructure network, spectrum and project related capital spending.
Consequently, the Group’s EBIT (before the associates’ contributions) declined 12% and would have been down 9.2% in constant currency terms.

Consequently, the Group’s EBIT (before the associates’ contributions) declined 12% and would have been down 9.2% in constant currency terms.  Consequently, the Group’s EBIT (before the associates’ contributions) declined 12% and would have been down 9.2% in constant currency terms.
In the emerging markets, the regional associates continued to invest in network, spectrum and content to drive data usage. Pre-tax contributions from the associates declined a steep 38% mainly due to Airtel and Telkomsel, the Group’s two largest regional associates. Airtel recorded operating losses on sustained pricing pressures in the Indian mobile market. Telkomsel’s earnings fell on lower revenue due to fierce competition in Indonesia in the earlier part of the financial year when the mandatory SIM card registration exercise took effect. Including associates’ contributions, the Group’s EBIT was S$4.01 billion, down 24% from last year.
Net finance expense was up 2.9% on lower dividend income from the Southern Cross consortium and higher interest expense from increased borrowings.
With lower contributions from the associates, underlying net profit declined by 21%. Exceptional gain was lower as FY 2018 was boosted by a S$2.03 billion of gain on the divestment of units in NetLink Trust. Consequently, the Group recorded a net profit of S$3.10 billion, down 44% from last year.

With lower contributions from the associates, underlying net profit declined by 21%. Exceptional gain was lower as FY 2018 was boosted by a S$2.03 billion of gain on the divestment of units in NetLink Trust. Consequently, the Group recorded a net profit of S$3.10 billion, down 44% from last year.
The Group has successfully diversified its earnings base through its expansion and investments in overseas markets. On a proportionate basis if the associates are consolidated line-byline, operations outside Singapore accounted for three-quarters of both the Group’s proportionate revenue and EBITDA.
The Group’s financial position and cash flow generation remained strong as at 31 March 2019. Free cash flow for the year was up 1.2% to S$3.65 billion.

                                              | Financial Year ended 31 March |              |        |
--------------------------------------------- | ----------------------------- | ------------ | ------ | -------------------------------
                                              | 2019                          | 2018         | Change | Change in constant currency (1)
                                              | (S$ million)                  | (S$ million) | (%)    | (%)
Operating revenue                             | 17,372                        | 17,268       | 0.6    | 3.7
EBITDA                                        | 4,692                         | 5,051        | -7.1   | -3.9
EBITDA margin                                 | 27.0%                         | 29.2%        |        |
Share of associates’ pre-tax proﬁts           | 1,536                         | 2,461        | -37.6  | -36.2
EBIT                                          | 4,006                         | 5,261        | -23.9  | -21.8
(exclude share of associates’ pre-tax proﬁts) | 2,470                         | 2,801        | -11.8  | -9.2
Net ﬁnance expense                            | (355)                         | (345)        | 2.9    | 6.2
Taxation                                      | (850)                         | (1,344)      | -36.8  | -35.8
Underlying net proﬁt (2)                      | 2,825                         | 3,593        | -21.4  | -19.1
Underlying earnings per share (S cents) (2)   | 17.3                          | 22.0         | -21.4  | -19.1
Exceptional items (post-tax)                  | 270                           | 1,880        | -85.7  | -85.2
Net proﬁt                                     | 3,095                         | 5,473        | -43.5  | -41.8
Basic earnings per share (S cents)            | 19.0                          | 33.5         | -43.5  | -41.8
Share of associates’ post-tax proﬁts          | 1,383                         | 1,823        | -24.1  | -21.8

Management Discussion Analysis
 constant exchange rates Australian Dollar United States Dollar currencies Rupee Indonesian Rupiah Philippine Peso Thai Baht previous year 31 March 2018. net profit before exceptional items.
 Group executed strategy challenging conditions. core businesses strong gained market share mobile Singapore Australia. Amobee Trustwave regional associates growth smartphone. Singtel digital ecosystems payments gaming esports.
. core businesses strong gained market share mobile Singapore Australia innovations. Amobee Trustwave regional associates smartphone. digital ecosystems payments gaming esports.
 operating revenue grew 3. 7% ICT digital services equipment sales. EBITDA down 3. 9% services price erosion. 6% depreciation Australian Dollar revenue stable EBITDA declined 7. 1%.
 Depreciation amortisation charges fell. 2% rose. 7% increased investments mobile infrastructure spectrum capital spending. 2% rose. 7%.
Group’s EBIT associates’ contributions declined 12% 9. 2%.
 EBIT contributions declined 12%.
 emerging markets regional associates network spectrum content. Pre-tax contributions declined 38% due Airtel Telkomsel largest. Airtel losses pricing pressures Indian mobile. earnings fell lower revenue competition Indonesia. EBIT S$4. 01 billion down 24% last year.
 Net finance expense up 2. lower dividend income Southern Cross higher interest expense borrowings.
 lower net profit declined 21%. S$2. 03 billion gain divestment NetLink Trust. net profit S$3. 10 billion down 44% last year.
 net profit declined 21%. S$2. 03 billion divestment NetLink Trust. profit S$3. 10 billion down 44% last year.
 Group diversified earnings base expansion investments overseas markets.operations outside Singapore three-quarters revenue EBITDA.
 financial position cash flow strong 31 March 2019. Free cash flow up. 2% S$3. 65 billion.
 Financial Year ended 31 March
$ million
 Operating revenue 17,372 17,268.
 EBITDA 4,692 5,051 -7. -3.
 EBITDA margin 27. 29. 2%
 Share associates’ pre-tax profits 1,536 2,461 -37.
 EBIT 4,006 5,261.
 pre-tax profits 2,470 2,801.
 Net finance expense (355) 2.
 Taxation (850 (1,344 -36.
 net profit 2,825  3,593.
 earnings per share 17.
 Exceptional items-tax 270 1,880 -85.
 Net profit 3,095 5,473 -43. -41.
 earnings per share 19.-43.
 post-tax profits 1,383 1,823 -24.