As at December 31, 2019, we had US$8.3 billion of US dollardenominated senior notes and debentures, all of which were hedged using debt derivatives.
1 US dollar-denominated long-term debt reflects the hedged exchange rate and the hedged interest rate.
2 Pursuant to the requirements for hedge accounting under IFRS 9, Financial instruments, as at December 31, 2019 and December 31, 2018, RCI accounted for 100% of its debt derivatives related to senior notes as hedges against designated US dollar-denominated debt. As a result, as at December 31, 2019 and 2018, 100% of our US dollar-denominated senior notes and debentures are hedged for accounting and economic purposes.
3 Borrowings include long-term debt, including the impact of debt derivatives, and short-term borrowings associated with our US CP and accounts receivable securitization programs.

                                                                        | As at December 31 |
----------------------------------------------------------------------- | ----------------- | ----------
(In millions of dollars, except exchange rates, percentages, and years) | 2019              | 2018
US dollar-denominated long-term debt 1                                  | US$ 8,300         | US$ 6,050
Hedged with debt derivatives                                            | US$ 8,300         | US$ 6,050
Hedged exchange rate                                                    | 1.1932            | 1.1438
Percent hedged2                                                         | 100.0%            | 100.0%
Amount of borrowings at fixed rates 3                                   |                   |
Total borrowings                                                        | $ 17,496          | $ 15,320
Total borrowings at fixed rates                                         | $ 15,254          | $ 13,070
Percent of borrowings at fixed rates                                    | 87.2%             | 85.3%
Weighted average interest rate on borrowings                            | 4.30%             | 4.45%
Weighted average term to maturity                                       | 14.1 years        | 10.7 years

December 31, 2019 US$8. 3 billion senior notes debentures hedged debt derivatives.
 dollar long-term debt reflects hedged exchange rate interest rate.
 accounting IFRS 9 RCI accounted 100% debt derivatives US dollar-denominated debt. 100% dollar senior notes debentures hedged economic.
 Borrowings long-term debt short-term borrowings receivable securitization programs.
 millions 2019
 US dollar-denominated long-term debt US$ 8,300 6
 Hedged debt derivatives
 exchange rate.
.
 borrowings fixed rates
 borrowings $ 17,496 $ 15,320
 15,254
 Percent borrowings 87. 2% 85. 3%
 average interest rate borrowings. 30%. 45%
 term maturity 14. 1 years 10. 7


NOTE 9. ACCOUNTS RECEIVABLE
A significant percentage of our accounts receivable is derived from sales to a limited number of large multinational semiconductor device manufacturers located throughout the world. In order to monitor potential expected credit losses, we perform ongoing credit evaluations of our customers’ financial condition.
The carrying amount of accounts receivable is as follows:

                    | December 31, |
------------------- | ------------ | -------
                    | 2018         | 2019
Current             | 154,607      | 171,866
Overdue <30 days    | 8,802        | 19,977
Overdue 31-60 days  | 2,258        | 2,076
Overdue 61-120 days | 3,507        | 1,599
Overdue >120 days   | 4,276        | 4,017
Total               | 173,450      | 199,535

. ACCOUNTS RECEIVABLE
 sales multinational semiconductor manufacturers. credit losses credit evaluations.
 accounts receivable
 2019
 154,607 171,866
 <30 days 8,802 19,977
 31-60 days 2,258 2,076
 61-120 days 3,507 1,599
 >120 days 4,276,017
 173,450 199,535


Shares Reserved for Issuance
The following are shares reserved for issuance (in thousands):

                                                      | June 30,
2019 | June 30,
2018
----------------------------------------------------- | ------------- | -------------
2013 Equity Incentive Plan shares available for grant | 8,462         | 9,957
Employee stock options and awards outstanding         | 10,455        | 12,060
2014 Employee Stock Purchase Plan                     | 10,085        | 5,365
Total shares reserved for issuance                    | 29,002        | 27,382

Issuance
 2013 Equity Incentive Plan shares 8,462
 Employee stock options awards 10,455 12,060
 2014 Employee Stock Purchase Plan 10,085 5,365
 shares 29,002 27,382


Share Options
The Company estimates the fair value of employee share options on the date of grant using the Black-Scholes option-pricing model, which requires the use of highly subjective estimates and assumptions. The Company estimates the expected term of share options for service-based awards utilizing the “Simplified Method,” as it does not have sufficient historical share option exercise information on which to base its estimate. The Simplified Method is based on the average of the vesting tranches and the contractual life of each grant.
The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the share option. Since there was no public market for the Company’s ordinary shares prior to the IPO and as its shares have been publicly traded for a limited time, the Company determined the expected volatility for options granted based on an analysis of reported data for a peer group of companies that issue options with substantially similar terms.
The expected volatility of options granted has been determined using an average of the historical volatility measures of this peer group of companies. The Company uses an expected dividend rate of zero as it currently has no history or expectation of paying dividends on its ordinary shares. The fair value of the Company’s ordinary shares at the time of each share option grant is based on the closing market value of its ordinary shares on the grant date.
The fair value of each share option grant was estimated using the Black-Scholes option-pricing model that used the following weighted-average assumptions:
The weighted-average per share fair value of share options granted to employees during the years ended March 31, 2019, 2018 and 2017 was $16.48, $11.12 and $8.65 per share, respectively.

                                                   |        | Year ended March 31,  |
-------------------------------------------------- | ------ | --------------------- | ------
                                                   | 2019   | 2018                  | 2017
Expected term (in years)                           | 6.1    | 6.1                   | 6.1
Risk-free interest rate                            | 2.7%   | 2.2%                  | 2.1%
Expected volatility                                | 41.5%  | 39.8%                 | 41.0%
Expected dividend yield                            | —%     | —%                    | —%
Estimated grant date fair value per ordinary share | $37.15 | $26.52                | $20.22

 Company estimates employee share options grant Black-Scholes option-pricing model subjective estimates assumptions. estimates term options awards “Simplified Method historical option information. Method on average vesting tranches contractual life grant.
 risk-free interest rate based on treasury instrument term consistent with expected life share option. no public market for ordinary shares prior determined expected volatility options peer similar.
 expected volatility determined average historical volatility measures. uses expected dividend rate zero no history dividends ordinary shares. fair value shares option grant based on closing market value grant date.
 fair value estimated Black-Scholes option-pricing model weighted-average assumptions
 per share fair value options March 2019 2018 2017 $16. 48 $11. 12 $8. 65 per share.
 Expected term years 6.
 Risk-free interest rate 2. 7%. 2%.
 Expected volatility 41. 5%. 8%. 0%
dividend yield
 grant date share $37. $26. 52 $20.


The Company sells its products to distributors and original equipment manufacturers (OEMs) in a broad range of market segments, performs on-going credit evaluations of its customers and, as deemed necessary, may require collateral, primarily letters of credit. The Company's operations outside the U.S. consist of product assembly and final test facilities in Thailand, and sales and support centers and design centers in certain foreign countries. Domestic operations are responsible for the design, development and wafer fabrication of products, as well as the coordination of production planning and shipping to meet worldwide customer commitments. The Company's Thailand assembly and test facility is reimbursed in relation to value added with respect to assembly and test operations and other functions performed, and certain foreign sales offices receive compensation for sales within their territory. Accordingly, for financial statement purposes, it is not meaningful to segregate sales or operating profits for the assembly and test and foreign sales office operations. Identifiable long-lived assets (consisting of property, plant and equipment net of accumulated amortization) by geographic area are as follows (in millions):
Sales to unaffiliated customers located outside the U.S., primarily in Asia and Europe, aggregated approximately 80% of consolidated net sales for fiscal 2019 and approximately 85% and 84% of net sales during fiscal 2018 and fiscal 2017, respectively. Sales to customers in Europe represented approximately 23% of consolidated net sales for fiscal 2019 and approximately 24% of consolidated net sales for each of fiscal 2018 and fiscal 2017. Sales to customers in Asia represented approximately 52% of consolidated net sales for fiscal 2019 and approximately 58% of consolidated net sales for each of fiscal 2018 and 2017. Within Asia, sales into China represented approximately 22%, 30% and 32% of consolidated net sales for fiscal 2019, 2018 and 2017, respectively. Sales into Taiwan represented approximately 13%, 11% and 9% of consolidated net sales for fiscal 2019, 2018 and 2017, respectively. Sales into any other individual foreign country did not exceed 10% of the Company's net sales for any of the three years presented.
With the exception of Arrow Electronics, the Company's largest distributor, which made up 10% of net sales, no other distributor or end customer accounted for more than 10% of net sales in fiscal 2019. In fiscal 2018 and fiscal 2017, no distributor or end customer accounted for more than 10% of net sales.

                        | March 31, |
----------------------- | --------- | ------
                        | 2019      | 2018
United States           | $521.1    | $393.3
Thailand                | 209.3     | 215.5
Various other countries | 266.3     | 159.1
Total long-lived assets | $996.7    | $767.9

Company sells products to distributors original equipment manufacturers (OEMs) market segments performs credit evaluations may require collateral letters of credit. operations outside U. S. assembly test facilities in Thailand sales support design centers in foreign countries. Domestic operations responsible for design development wafer fabrication coordination production planning shipping worldwide customer commitments. Thailand assembly test facility reimbursed value added foreign sales offices receive compensation for sales. segregate sales profits for assembly test foreign sales office operations. long assets property plant equipment net amortization by geographic area
 Sales to unaffiliated customers outside U. S. in Asia Europe 80% 2019 85% 84% 2018 2017. Europe 23% 24% 2017. Asia 52% 58% 2017. sales into China 22% 30% 32% sales. Taiwan 13% 11%. Sales other foreign country exceed 10% of net sales three years.
Arrow Electronics largest distributor 10% net sales no other accounted 10% 2019. 2018 2017 no accounted 10% sales.
 March
 United States $521. $393.
 Thailand 209. 215.
 countries 266. 3 159.
 long-lived assets $996. $767.


Trade Accounts Receivable
The Company’s trade accounts receivable, net, consisted of the following (in thousands):
(1) Included in “Receivables, net” in the accompanying Consolidated Balance Sheets.
(2) Included in “Deferred charges and other assets” in the accompanying Consolidated Balance Sheets.
The Company’s noncurrent trade accounts receivable result from (1) contracts with customers that include renewal provisions, and (2) contracts with customers under multi-year arrangements. For contracts that include renewal provisions, revenue is recognized up-front upon satisfaction of the associated performance obligations, but payments are received upon renewal. Renewals occur in bi-annual and annual increments over the associated expected contract term, the majority of which range from two to five years. The Company’s contracts with customers under multi-year arrangements generally have three-year terms and are invoiced annually at the beginning of each annual coverage period. The Company records a receivable related to revenue recognized under multi-year arrangements as the Company has an unconditional right to invoice and receive payment in the future related to these arrangements.
Where the timing of revenue recognition differs from the timing of invoicing and payment, the Company has determined that its contracts do not include a significant financing component. A substantial amount of the consideration promised by the customer under the contracts that include renewal provisions is variable, and the amount and timing of that consideration varies based on the occurrence or nonoccurrence of future events that are not substantially within the Company’s control. With respect to multi-year year arrangements, there is minimal difference between the consideration received and the cash selling price, any offered discounts are driven by volume, and the contracts are of short duration resulting in insignificant interest. Thus, the primary purpose of the invoicing terms on the multi-year arrangements is to provide the customer with a simplified and predictable way of purchasing certain products, not to provide financing or to receive financing from the Company’s customer.

                                               | December 31, |
---------------------------------------------- | ------------ | --------
                                               | 2019         | 2018
Trade accounts receivable, net, current (1)    | $375,136     | $335,377
Trade accounts receivable, net, noncurrent (2) | 26,496       | 15,948
                                               | $401,632     | $351,325

Trade Accounts Receivable
 Company’s trade accounts net
 Included in “Receivables Consolidated Balance Sheets.
 “Deferred charges assets” Sheets.
 noncurrent trade accounts result from contracts renewal provisions multi-year arrangements. contracts renewal provisions revenue recognized up-front satisfaction performance obligations payments received upon renewal. Renewals occur bi-annual annual two to five years. contracts multi-year three-year terms invoiced annually. Company records receivable revenue multi-year unconditional right to invoice receive payment future.
 timing revenue recognition differs invoicing payment contracts include significant financing component. consideration renewal provisions variable varies future events. multi-year arrangements minimal difference between consideration received cash selling price discounts driven by volume contracts short duration insignificant interest. primary purpose invoicing terms simplified predictable purchasing products not financing.
 December 31,
 2019 2018
$375,136 $335,377
 26,496 15,948
 $401,632 $351,325


1. Sales revenues
Commencing with financial year 2018/19, METRO has been applying IFRS 15 (Revenue from Contracts with Customers). The sales revenues reported for the current financial year relate exclusively to revenues from contracts with customers.
Sales revenues are allocated to the following categories:

€ million                            | 2017/2018 | 2018/2019
------------------------------------ | --------- | ---------
Store-based and other business       | 22,585    | 22,487
METRO Germany                        | 4,128     | 4,075
METRO Western Europe (excl. Germany) | 8,904     | 8,885
METRO Russia                         | 2,550     | 2,406
METRO Eastern Europe (excl. Russia)  | 5,893     | 5,986
METRO Asia                           | 1,074     | 1,097
Others                               | 35        | 38
Delivery sales                       | 4,207     | 4,595
METRO Germany                        | 633       | 660
METRO Western Europe (excl. Germany) | 1,704     | 1,867
METRO Russia                         | 265       | 257
METRO Eastern Europe (excl. Russia)  | 1,059     | 1,205
METRO Asia                           | 538       | 599
Others                               | 7         | 7
Total sales                          | 26,792    | 27,082
METRO Germany                        | 4,761     | 4,735
METRO Western Europe (excl. Germany) | 10,609    | 10,752
METRO Russia                         | 2,815     | 2,662
METRO Eastern Europe (excl. Russia)  | 6,952     | 7,191
METRO Asia                           | 1,612     | 1,696
Others                               | 43        | 46

.
 2018/19 METRO IFRS 15 Contracts.
 categories
 million 2017/2018 2018/2019
 Store-based business 22,585 22,487
 METRO Germany 4,128 4,075
 Western Europe. 8,885
 Russia 2,550 2,406
 Eastern Europe. 5,986
 Asia 1,074
 Delivery 4,207 4,595
 Germany 660
 Western Europe. 1,704 1,867
 Russia 257
 Eastern Europe. 1,059 1,205
 Asia 599
 26,792 27,082
 Germany 4,761 4,735
 Western Europe. 10,609 10,752
 Russia 2,815 2,662
 Eastern Europe. 6,952 7,191
 Asia 1,612 1,696


LIQUIDITY AND CAPITAL RESOURCES
The Company’s cash and cash equivalents increased to $93,628 at June 30, 2019 from $31,440 at June 30, 2018. Cash at the end of fiscal 2018 was lower due primarily to the acquisition of Ensenta and higher repayment of debt in fiscal 2018.
The following table summarizes net cash from operating activities in the statement of cash flows:
Cash provided by operating activities increased 5% compared to fiscal 2018. Cash from operations is primarily used to repay debt, pay dividends and repurchase stock, and for capital expenditures.

                                          | Year Ended |
----------------------------------------- | ---------- | --------
                                          | June 30    |
                                          | 2019       | 2018
Net income                                | $271,885   | $365,034
Non-cash expenses                         | 180,987    | 87,906
Change in receivables                     | (11,777)   | 21,489
Change in deferred revenue                | 23,656     | 1,255
Change in other assets and liabilities    | (33,623)   | (63,542)
Net cash provided by operating activities | $431,128   | $412,142

CAPITAL RESOURCES
 cash equivalents increased $93,628 June 30 2019 $31,440 2018. 2018 acquisition Ensenta higher repayment debt.
 table summarizes cash
 increased 5% 2018. debt dividends repurchase stock capital expenditures.
 Net income $271,885 $365,034
 Non-cash expenses 180,987 87,906
 receivables (11,777
 deferred revenue 23,656
 other assets liabilities (33,623)
 Net cash $431,128 $412,142


Global Financing Receivables and Allowances
The following table presents external Global Financing receivables excluding residual values, the allowance for credit losses and immaterial miscellaneous receivables:
(1) Includes deferred initial direct costs which are eliminated in IBM’s consolidated results.
The percentage of Global Financing receivables reserved was 1.0 percent at December 31, 2019, compared to 0.9 percent at December 31, 2018. The decline in the allowance for credit losses was driven by write-offs of $64 million, primarily of receivables previously reserved, and net releases of $7 million as a result of lower average asset balances in client and commercial financing. See note K, “Financing Receivables,” for additional information.

($ in millions)                         |         |
--------------------------------------- | ------- | -------
At December 31:                         | 2019    | 2018
Recorded investment (1)                 | $22,446 | $31,182
Specific allowance for credit losses    | 177     | 220
Unallocated allowance for credit losses | 45      | 72
Total allowance for credit losses       | 221     | 292
Net financing receivables               | $22,224 | $30,890

Financing Receivables Allowances
 table receivables excluding residual credit losses receivables
 Includes deferred costs eliminated results.
 receivables reserved 1. percent December 31, 2019. percent 2018. decline allowance write $64 million net releases $7 million lower asset balances. note Receivables information.
 December 31
 Recorded investment $22,446 $31,182
 allowance credit losses 177
 Unallocated allowance 45
 221
 Net financing receivables $22,224 $30,890


Net Periodic Benefit Cost
The following table provides information about the net periodic benefit cost for the plans for fiscal years 2019, 2018 and 2017 (in thousands):
On September 1, 2018, the Company adopted a new accounting standard, which changes the presentation of net periodic benefit cost in the Consolidated Statements of Operation. The Company adopted the standard on a retrospective basis which results in reclassifications for the service cost component of net periodic benefit cost from selling, general and administrative expense to cost of revenue and for the other components from selling, general and administrative expense to other expense. Prior periods have not been reclassified due to immateriality.

                                         |         | Pension |
---------------------------------------- | ------- | ------- | -------
                                         | 2019    | 2018    | 2017
Service cost                             | $1,437  | $1,063  | $1,068
Interest cost                            | 3,715   | 3,807   | 2,942
Expected long-term return on plan assets | (5,291) | (5,954) | (4,206)
Recognized actuarial loss                | 741     | 1,127   | 1,929
Amortization of prior service credit     | (44)    | (88)    | (138)
Net settlement loss                      | 634     | 116     | 1,472
Net periodic benefit cost                | $1,192  | $71     | $3,067

Net Periodic Benefit Cost
 table 2019 2018 2017
 September 1, 2018 adopted new accounting standard changes cost Consolidated Statements Operation. reclassifications service cost. Prior periods reclassified immateriality.
 2019
 Service cost $1,437 $1,063 $1,068
 Interest cost 3,715 3,807 2,942
 Expected long-term return assets (5,291) (5,954) (4,206
 actuarial loss 741 1,127 1,929
 Amortization service credit (44)
 Net settlement loss 634 116 1,472
 benefit cost $1,192 $3,067


Pro Forma Information
The following unaudited pro forma information gives effect to the acquisition of AutoGuide as if the acquisition occurred on January 1, 2018 and the acquisition of MiR as if the acquisition occurred on January 1, 2017. The unaudited pro forma results are not necessarily indicative of what actually would have occurred had the acquisition been in effect for the periods presented:
Pro forma results for the year ended December 31, 2019 were adjusted to exclude $1.2 million of AutoGuide acquisition related costs and $0.1 million of AutoGuide non-recurring expense related to fair value adjustment to acquisition-date inventory.
Pro forma results for the year ended December 31, 2018 were adjusted to include $1.2 million of AutoGuide acquisition related costs and $0.4 million of AutoGuide non-recurring expense related to fair value adjustment to acquisition-date inventory.
Pro forma results for the year ended December 31, 2018 were adjusted to exclude $2.9 million of MiR acquisition related costs and $0.4 million of MiR non-recurring expense related to fair value adjustment to acquisition-date inventory.

                             | For the Year Ended                       |
---------------------------- | ---------------------------------------- | -----------------
                             | December 31, 2019                        | December 31, 2018
                             | (in thousands, except per share amounts) |
Revenues                     | $2,303,737                               | $2,111,373
Net income                   | $464,602                                 | $442,082
Net income per common share: |                                          |
Basic                        | $2.73                                    | $2.36
Diluted                      | $2.59                                    | $2.30

Pro Forma Information
 unaudited forma information AutoGuide January 1 2018 MiR January 1 2017. results not indicative
 results December 31, 2019 exclude $1. 2 million AutoGuide costs $0. 1 million AutoGuide non expense fair value adjustment.
 results December 31, 2018 include $1. 2 million AutoGuide costs $0. 4 million non-recurring expense adjustment.
 $2. 9 million MiR costs $0. 4 million MiR non-recurring expense fair value adjustment-date.
 December 31, 2019 31, 2018
 Revenues $2,303,737 $2,111,373
 Net income $464,602 $442,082
 income per common share
 $2.
.


2019 Performance Target and Payout: The ultimate number of our PBRS that vest, can range between 0% to 200%, and will be based on our achievement of the absolute Adjusted EBITDA Run Rate target (measured from fourth quarter of 2018 to fourth quarter of 2020), as illustrated in the table below.
(1) Determined by dividing (i) the Adjusted EBITDA actually attained for the fourth quarter of 2020 minus the Adjusted EBITDA actually attained for the fourth quarter of 2018 by (ii) the Adjusted EBITDA actually attained for the fourth quarter of 2018.
(2) Linear interpolation is used when our Adjusted EBITDA Run Rate performance is between the threshold, target and maximum amounts to determine the corresponding percentage of target award earned.

Performance Level | Adjusted EBITDA Run Rate(1) | Payout as % of Target Award(2)
----------------- | --------------------------- | ------------------------------
Maximum           | ≥ 2.8%                      | 200%
Target            | 0.0%                        | 100%
Threshold         | (2.8)%                      | 50%
Below Threshold   | < (2.8)%                    | 0%

2019 Performance Target Payout ultimate 0% to 200%, based achievement Adjusted EBITDA Run Rate target 2018 to table.
 Determined dividing EBITDA 2020 2018.
 Linear interpolation Adjusted EBITDA Run Rate performance between threshold target maximum percentage target award earned.
 Performance Level Adjusted EBITDA Run Payout % Target Award(2)
 Maximum ≥ 2. 8% 200%
 Target. 100%
 Threshold. 50%
 Below Threshold < (2. 8)% 0%


The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions:
Based on the Black-Scholes option pricing model, the weighted average estimated fair value of employee stock options granted was $4.63 and $2.58 per share during the years ended December 31, 2019 and 2018, respectively.
The expected life was determined using the simplified method outlined in ASC 718, “Compensation - Stock Compensation”. Expected volatility of the stock options was based upon historical data and other relevant factors. We have not provided an estimate for forfeitures because we have had nominal forfeited options and RSUs and believed that all outstanding options and RSUs at December 31, 2019, would vest.

                                | Year Ended        | Year Ended
------------------------------- | ----------------- | -----------------
                                | December 31, 2019 | December 31, 2018
Expected stock price volatility | 92.34%            | 85.26%
Risk-free interest rate         | 2.09%             | 2.73%
Expected life term              | 6.14 years        | 6.02 years
Expected dividends              | 0%                | 0%

fair value option grant estimated Black-Scholes option pricing model assumptions
 value employee stock options $4. 63 $2. 58 per share December 2019 2018.
 expected life determined method ASC 718. volatility historical data factors. estimate forfeitures forfeited options RSUs options December 31, 2019 vest.
 2019 2018
 stock price volatility 92. 34%. 26%
 Risk-free interest rate. 09%. 73%
 life term. 14 years. 02
 dividends 0%


Changes in Estimates on Contracts
Changes in estimates related to contracts accounted for using the cost-to-cost method of accounting are recognized in the period in which such changes are made for the inception-to-date effect of the changes, with the exception of contracts acquired through a business combination, where the adjustment is made for the period commencing from the date of acquisition.
Changes in estimates on contracts for the periods presented were as follows:
The impact on diluted EPS attributable to Leidos common stockholders is calculated using the Company's statutory tax rate.

                                                                 |                 | Year Ended                                  |
---------------------------------------------------------------- | --------------- | ------------------------------------------- | -----------------
                                                                 | January 3, 2020 | December 28, 2018                           | December 29, 2017
                                                                 |                 | (in millions, except for per share amounts) |
Favorable impact                                                 | $95             | $167                                        | $185
Unfavorable impact                                               | (52)            | (62)                                        | (82)
Net favorable impact to income before income taxes               | $43             | $105                                        | $103
Impact on diluted EPS attributable to Leidos common stockholders | $0.23           | $0.52                                       | $0.41

Changes Estimates Contracts
 cost-to-cost recognized-date exception contracts acquired business combination adjustment acquisition.
 impact diluted EPS Leidos stockholders calculated Company statutory tax rate.
 January 3, 2020 December 28, 2018 December 29, 2017
 millions share
 Favorable impact $95 $167 $185
 Unfavorable impact (52) (62) (82)
 Net favorable impact income before taxes $43  $105 $103
 Impact diluted EPS Leidos stockholders $0. 23.


Reconciliation of Bookings
The following table reconciles total bookings to total revenue, its most directly comparable GAAP financial measure:
(1) Change in deferred revenue also includes the impact of realized gains or losses from the hedging of bookings in foreign currencies.

                              | Year Ended December 31,  |          |          |          |
----------------------------- | ------------------------ | -------- | -------- | -------- | --------
                              | 2019                     | 2018     | 2017     | 2016     | 2015
Total Bookings:               | (unaudited; in millions) |          |          |          |
Total revenue                 | $2,988.1                 | $2,660.1 | $2,231.9 | $1,847.9 | $1,607.3
Change in deferred revenue(1) | 180.5                    | 163.2    | 214.4    | 163.5    | 165.9
Net refunds                   | 233.4                    | 192.6    | 170.0    | 141.9    | 137.8
Other                         | (0.8)                    | (4.4)    | 1.9      | 2.2      | 3.2
Total bookings                | $3,401.2                 | $3,011.5 | $2,618.2 | $2,155.5 | $1,914.2

Reconciliation Bookings
 table reconciles bookings revenue GAAP
 deferred revenue gains losses hedging foreign currencies.
 Ended December 31,
 2019 2018 2017 2015
 Bookings (unaudited millions
 revenue $2,988. $2,660. $2,231. $1,847. $1,607.
 deferred 180. 163. 214. 163. 165.
 refunds 233. 192. 170. 141. 137.
.
 Total bookings $3,401. $3,011. $2,618. $2,155. $1,914.


Our calculation of TCE may not be comparable to that reported by other entities. The following table reconciles our total operating revenues to average daily TCE:
(i) "Voyage and commission expenses" is derived from the caption "Voyage, charterhire and commission expenses" and "Voyage, charterhire and commission expenses - collaborative arrangement" less (i) charterhire expenses (net of the effect of the related guarantee obligation) of $nil, $nil and $12.4 million for the years ended December 31, 2019, 2018 and 2017, respectively, which arose on the charter-back of the Golar Grand from Golar Partners, and (ii) voyage and commission expenses in relation to the Hilli Episeyo of $0.5 million, $1.4 million and $nil for the years ended December 31, 2019, 2018 and 2017, respectively.
(5) We calculate average daily vessel operating costs by dividing vessel operating costs by the number of calendar days. Calendar days exclude those from vessels chartered in where the vessel operating costs are borne by the legal owner, and those of vessels undergoing conversion.

                                             |           |           | Years Ended December 31,                                                                                |          |
-------------------------------------------- | --------- | --------- | ------------------------------------------------------------------------------------------------------- | -------- | --------
                                             | 2019      | 2018      | 2017                                                                                | 2016     | 2015
                                             |           |           | (in thousands of U.S.$, except number of shares, per common share data, fleet and other financial data) |          |
Total operating revenues                     | 448,750   | 430,604   | 143,537                                                                                | 80,257   | 102,674
Less: Liquefaction services revenue          | (218,096) | (127,625) | —                                                                                | —        | —
Less: Vessel and other management fees       | (21,888)  | (24,209)  | (26,576)                                                                                | (14,225) | (12,547)
Net time and voyage charter revenues         | 208,766   | 278,770   | 116,961                                                                                | 66,032   | 90,127
Voyage and commission expenses (i)           | (38,381)  | (104,463) | (48,933)                                                                                | (25,291) | (23,434)
                                             | 170,385   | 174,307   | 68,028                                                                                | 40,741   | 66,693
Calendar days less scheduled off-hire days   | 3,840     | 3,987     | 3,885                                                                                | 4,034    | 4,481
Average daily TCE rate (to the closest $100) | 44,400    | 43,700    | 17,500                                                                                | 10,100   | 14,900

calculation TCE entities. table reconciles revenues daily TCE
 commission expenses derived less charterhire expenses guarantee obligation $nil $12. 4 million December 2019 2018 2017 charter Golar Grand voyage commission expenses Hilli Episeyo $0. 5 million $1. 4 million $nil December 2019 2018 2017.
 calculate daily vessel operating costs calendar days. exclude vessels chartered vessels undergoing conversion.
 Years Ended December 31,
 2019 2018 2017 2016 2015
. $
 Total operating revenues 448,750  430,604  143,537 80,257 102,674
 Less Liquefaction services revenue (218,096) (127,625)
 Vessel management fees (21,888) (24,209) (26,576),225
 Net voyage charter revenues 208,766 278,770 116,961 66,032 90,127
Voyage commission expenses,381 (104,463) (48,933) (25,291) (23,434
,385 174,307 68,028 40,741
 off-hire 4
 TCE 44,400 43,700 10,100 14,900


The following is a reconciliation of the federal statutory income tax rate to the effective income tax rates reflected in the Consolidated Statements of Comprehensive Income for fiscal 2019, 2018 and 2017:
The effective tax rate for fiscal 2019 was lower than the effective tax rate for fiscal 2018 primarily due to the impact of the U.S. Tax Cuts and Jobs Act (“Tax Reform”) that was recorded in fiscal 2018. During fiscal 2019, the Company reasserted that certain historical undistributed earnings of two foreign subsidiaries will be permanently reinvested which provided a $10.5 million benefit to the effective tax rate. The impact of the changes in the Company's assertion has been included in "Withholding tax on dividends" in the effective income tax reconciliation above. The reduction to the effective tax rate compared to fiscal 2018 was offset by an increase due to the GILTI provisions of Tax Reform in fiscal 2019. The GILTI impact in the table above includes the deduction allowed by the regulations as well as the foreign tax credits attributed to GILTI. The Company has elected to treat the income tax effects of GILTI as a period cost. The effective tax rate for fiscal 2018 was higher than the effective tax rate for fiscal 2017 primarily due to expenses related to Tax Reform.
During fiscal 2019, the Company recorded a $1.9 million increase to its valuation allowance due to continuing losses in certain jurisdictions within the AMER and EMEA segments, partially offset by an expiration of net operating losses that had a valuation allowance recorded.
During fiscal 2018, the Company recorded a $32.9 million reduction to its valuation allowance which includes $9.7 million related to the U.S. federal tax rate change as part of Tax Reform from 35% to 21%, $21.0 million of carryforward credits and net operating losses utilized against the deemed repatriation of undistributed foreign earnings and $3.6 million for the release of the U.S. valuation allowance due to the expected future U.S. taxable income related to the GILTI provisions of Tax Reform. These benefits were partially offset by a $1.4 million increase in foreign valuation allowances in the EMEA segment.
During fiscal 2017, the Company recorded a $14.9 million addition to its valuation allowance relating to continuing losses in certain jurisdictions within the AMER and EMEA segments.

                                                         | 2019    | 2018    | 2017
-------------------------------------------------------- | ------- | ------- | ------
Federal statutory income tax rate                        | 21.0 %  | 24.5 %  | 35.0 %
Increase (decrease) resulting from:                      |         |         |
Foreign tax rate differences                             | (21.0)  | (30.2)  | (39.9)
Withholding tax on dividends                             | (5.4)   | 23.7    | —
Permanent differences                                    | (1.3)   | 0.8     | 3.0
Excess tax benefits related to share-based compensation  | (1.3)   | (2.7)   | (2.0)
Global intangible low-taxed income ("GILTI")             | 11.7    | —       | —
Deemed repatriation tax                                  | 5.6     | 92.2    | —
Non-deductible compensation                              | 1.5     | 0.2     | 0.2
Valuation allowances                                     | 1.5     | (30.6)  | 12.2
Rate changes                                             | —       | 9.0     | —
Other, net                                               | 1.5     | 1.0     | (0.5)
Effective income tax rate                                | 13.8 %  | 87.9 %  | 8.0 %

reconciliation federal income tax rate to rates Consolidated Statements Income 2019 2018
 tax rate 2019 lower due U. S. Tax Cuts and Jobs Act. Company reasserted undistributed earnings foreign subsidiaries reinvested $10. 5 million benefit tax rate. included in "Withholding tax on dividends reconciliation. reduction offset by increase GILTI provisions Tax Reform. GILTI impact includes deduction foreign tax credits. period cost. effective tax rate 2018 higher due to expenses Tax Reform.
 2019 $1. 9 million increase valuation allowance losses AMER EMEA offset expiration net operating losses.
 2018 $32. 9 million reduction valuation allowance $9. 7 million. federal tax rate change 35% to 21% $21. million carryforward credits net operating losses repatriation undistributed foreign earnings $3. 6 million release. valuation allowance future. taxable income Reform. offset by $1. 4 million increase foreign valuation allowances EMEA.
2017 Company recorded $14. million addition valuation allowance losses AMER EMEA.
 Federal statutory income tax rate 21. 24. 5 % 35. %
 Foreign tax rate differences (21. (30.
 Withholding tax dividends (5. 23.
 differences. 3.
 Excess tax benefits share-based compensation. (2.
 Global intangible low-taxed income 11.
 repatriation tax 5. 92.
 Non-deductible compensation.
 Valuation allowances. (30. 12.
 Rate changes 9.
.
 income tax rate 13. 8 % 87. 9 % 8.


In 2019, gross margin decreased by 130 basis points to 38.7% from 40.0% in the full year 2018 mainly due to normal price pressure and increased unsaturation charges, partially offset by improved manufacturing efficiencies, better product mix, and favorable currency effects, net of hedging. Unused capacity charges in 2019 were $65 million, impacting full year gross margin by 70 basis points.
In 2018, gross margin improved by 80 basis points to 40.0% from 39.2% in the full year 2017 benefiting from manufacturing efficiencies and better product mix, partially offset by normal price pressure and unfavorable currency effects, net of hedging. In 2018 unused capacity charges were negligible.

                                             | Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | Variation    | Variation
-------------------------------------------- | ----------------------- | ----------------------- | ----------------------- | ------------ | ------------
                                             | 2019                    | 2018                    | 2017                    | 2019 vs 2018 | 2018 vs 2017
                                             | (In millions)           | (In millions)           | (In millions)           |              |
Cost of sales                                | $(5,860)                | $(5,803)                | $(5,075)                | 1.0%         | (14.3)%
Gross profit                                 | $3,696                  | $3,861                  | $3,272                  | (4.3)%       | 18.0%
Gross margin (as percentage of net revenues) | 38.7%                   | 40.0%                   | 39.2%                   | -130 bps     | +80 bps

2019 gross margin decreased 130 points 38. 7%. 0% 2018 price pressure increased unsaturation charges offset improved manufacturing efficiencies better product mix currency effects. Unused capacity charges $65 million margin 70 points.
 2018 margin improved 80 points 40. 0% 39. 2% 2017 manufacturing efficiencies better product mix offset price pressure unfavorable currency effects. unused capacity charges negligible.
 Year Ended December
 2019 2018
 Cost sales $(5,860) $(5,075).
 Gross profit $3,696 $3,861.
 Gross margin net revenues 38. 7% 40. 0% 39. 2%


7 Trade and other payables
(i) Recognition and measurement
Trade and other payables, including accruals, are recorded when the Group is required to make future payments as a result of purchases of assets or services provided to the Group prior to the end of financial period. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
(ii) Fair values of trade and other payables
Due to the short-term nature of trade and other payables, their carrying amount is considered to be the same as their fair value.
(iii) Risk Exposure
As the majority of payables are in Australian dollars, management does not believe there are any significant risks in relation to these financial liabilities. Refer to note 15 for details of the Group’s financial risk management policies.

                               | 30 June 2019 | 30 June 2018
------------------------------ | ------------ | ------------
                               | $'000        | $'000
Trade payables                 | 44,840       | 27,640
Accrued capital expenditure    | 5,841        | 1,767
Accrued expenses               | 2,848        | 2,114
Other creditors                | 3,117        | 2,888
Total trade and other payables | 56,646       | 34,409

Trade payables
 Recognition measurement
 recorded future payments purchases financial period. amounts unsecured paid within 30 days recognition. current liabilities unless due 12 months. recognised at fair value measured at amortised cost interest method.
 Fair values
 short-term carrying amount same fair value.
 Risk Exposure
 majority Australian dollars significant risks. note 15 financial risk management policies.
 30 June 2019 June 2018
 Trade payables 44,840 27,640
 Accrued capital expenditure 1,767
 expenses 2,848 2,114
 Other creditors 3,117 2,888
 Total payables 56,646 34,409


15 Goodwill and other intangible assets continued
Acquired intangibles
The disclosure by class of acquired intangible assets is shown in the tables below.
2019
Customer relationships are amortised over their useful economic lives in line with the accounting policies disclosed in Note 1. Within this balance individually material balances relate to Thermocoax £32.6m. The remaining amortisation period is 14.3 years.
Brand names and trademark assets are amortised over their useful economic lives in line with the accounting policies disclosed in Note 1. Within this balance individually material balances relate to Chromalox £114.1m (2018: £125.4m), Gestra £28.4m (2018: £32.5m) and Thermocoax £13.6m. The remaining amortisation periods are 17.5 years, 12.3 years and 19.3 years respectively.
Manufacturing designs and core technology are amortised over their useful economic lives in line with the accounting policies disclosed in Note 1. Within this balance individually material balances relate to Chromalox £12.9m (2018: £15.1m), Gestra £10.8m (2018: £12.3m) and Aflex £8.5m (2018: £9.4m). The remaining amortisation period is 12.5 years for Chromalox, 12.3 years for Gestra and 10 years for Aflex.
Non-compete undertakings are amortised over their useful economic lives in line with the accounting policies disclosed in Note 1. There are no individually material items within this balance.

                               | Customer relationships | Brand names and trademarks | Manufacturing designs and core technology | Non-compete undertakings and other | Total acquired intangibles
------------------------------ | ---------------------- | -------------------------- | ----------------------------------------- | ---------------------------------- | --------------------------
                               | £m                     | £m                         | £m                                        | £m                                 | £m
Cost:                          |                        |                            |                                           |                                    |
At 1st January 2019            | 57.1                   | 187.3                      | 56.0                                      | 20.2                               | 320.6
Exchange and other adjustments | (3.0)                  | (7.8)                      | (2.2)                                     | (0.9)                              | (13.9)
                               | 54.1                   | 179.5                      | 53.8                                      | 19.3                               | 306.7
Acquisitions                   | 34.9                   | 14.3                       | 7.2                                       | 3.8                                | 60.2
At 31st December 2019          | 89.0                   | 193.8                      | 61.0                                      | 23.1                               | 366.9
Amortisation and impairment:   |                        |                            |                                           |                                    |
At 1st January 2019            | 25.1                   | 21.3                       | 14.2                                      | 15.6                               | 76.2
Exchange adjustments           | (1.3)                  | (1.1)                      | (0.6)                                     | (0.8)                              | (3.8)
                               | 23.8                   | 20.2                       | 13.6                                      | 14.8                               | 72.4
Amortisation and impairment    | 7.1                    | 10.4                       | 5.6                                       | 3.7                                | 26.8
At 31st December 2019          | 30.9                   | 30.6                       | 19.2                                      | 18.5                               | 99.2
Net book value:                |                        |                            |                                           |                                    |
At 31st December 2019          | 58.1                   | 163.2                      | 41.8                                      | 4.6                                | 267.7

Goodwill intangible assets
 disclosure class tables.
 Customer relationships amortised over economic lives policies. balances Thermocoax £32. 6m. amortisation 14. 3 years.
 Brand names trademark assets amortised economic lives. balances Chromalox £114. 1m. Gestra £28. 4m. Thermocoax £13. 6m. remaining amortisation periods 17. 5 12. 3 19. 3 years.
 Manufacturing designs technology amortised economic lives. balances Chromalox £12. 9m. Gestra £10. 8m. Aflex £8. 5m. 4m. amortisation 12. 5 years Chromalox. 3 Gestra 10 Aflex.
 Non-compete undertakings amortised economic lives. no material items.
 Customer relationships Brand names trademarks Manufacturing designs technology Non-compete undertakings acquired intangibles
 1st January 2019 57.320. 6
 (3. (7. 8). (13.
 54. 179. 53. 19. 306. 7
 34. 9 14. 7. 3. 60.
 31st December 2019 89. 193. 61. 23. 366. 9
 Amortisation impairment
 1st January 2019 25. 21. 14. 15. 76.
 (1.
 23. 20. 13. 14. 72.
 7. 10. 5. 3. 26.
 31st December 2019 30. 30. 19. 18. 5 99.
 31st December 2019 58. 163. 41. 4. 267.


ITEM 16.C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Deloitte LLP, an independent registered public accounting firm, has audited our annual financial statements acting as our independent auditor for the fiscal years ended December 31, 2018 and December 31, 2019.
The chart below sets forth the total amount billed and accrued for Deloitte LLP for services performed in 2018 and 2019, respectively, and breaks down these amounts by the category of service. The fees paid to our principal accountant were approved in accordance with the pre-approval policies and procedures described below.
Audit Fees
Audit fees represent compensation for professional services rendered for the audit of the consolidated financial statements of the Company and the audit of the financial statements for its individual subsidiary companies, fees for the review of the quarterly financial information, as well as in connection with the review of registration statements and related consents and comfort letters, and any other services required for SEC or other regulatory filings
Included in the audit fees for 2018 are fees of $0.2 million related to the Partnership’s public offerings completed in 2018. Included in the audit fees for 2019 are fees of $0.2 million related to equity and bond related transactions.
Tax Fees
No tax fees were billed by our principal accountant in 2018 and 2019.
Audit-Related Fees
No audit-related fees were billed by our principal accountant in 2018 and 2019.
All Other Fees
No other fees were billed by our principal accountant in 2018 and 2019.

           | 2018                                    | 2019
---------- | --------------------------------------- | ----
           | (Expressed in millions of U.S. Dollars) |
Audit fees | $1.8                                    | $1.7
Total fees | $1.8                                    | $1.7

ITEM 16. PRINCIPAL ACCOUNTANT FEES SERVICES
 Deloitte LLP independent accounting audited annual financial statements fiscal years 2018 2019.
 chart total amount billed accrued Deloitte LLP services 2018 2019 category service. fees principal accountant approved pre policies procedures.
 Audit Fees
 compensation services consolidated financial statements Company subsidiary companies quarterly financial information registration statements consents comfort letters services SEC regulatory filings
 audit fees 2018 $0. 2 million public offerings. 2019 $0. 2 million equity bond transactions.
 Tax Fees
 No fees billed 2018 2019.
 Audit-Related Fees
.
 Other Fees
 billed 2019.
 millions U. S. Dollars
 Audit fees $1. $1.
 Total fees $1.


2018 Acquisition
Wombat Security Technologies, Inc.
On February 28, 2018 (the “Wombat Acquisition Date”), pursuant to the terms of the merger agreement, the Company acquired all shares of Wombat Security Technologies, Inc. (“Wombat”), a leader for phishing simulation and security awareness computer-based training. By collecting data from Wombat’s PhishAlarm solution, the Company has access to data on phishing campaigns as seen by non-Company customers, providing broader visibility and insight to the Proofpoint Nexus platform.
With this acquisition, the Company’s customers can leverage the industry’s first solution combining the Company’s advanced threat protection with Wombat’s phishing simulation and computer-based security awareness training. With the combined solutions, the Company’s customers can:
use real detected phishing attacks for simulations, assessing users based on the threats that are actually targeting them; both investigate and take action on user-reporting phishing, leveraging orchestration and automation to find real attacks, quarantine emails in users’ inboxes, and lock user accounts to limit risk; and train users in the moment immediately after they click for both simulated and real phishing attacks.
The Company also expects to achieve savings in corporate overhead costs for the combined entities. These factors, among others, contributed to a purchase price in excess of the estimated fair value of acquired net identifiable assets and, as a result, goodwill was recorded in connection with the acquisition.
Proofpoint, Inc. Notes to Consolidated Financial Statements (Continued) (dollars and share amounts in thousands, except per share amounts)
At the Wombat Acquisition Date, the consideration transferred was $225,366, net of cash acquired of $13,452.
Per the terms of the merger agreement, unvested in-the-money stock options held by Wombat employees were canceled and paid off using the same amount per option as for the common share less applicable exercise price for each option. The fair value of $1,580 of these unvested options was attributed to pre-combination service and included in consideration transferred. The fair value of unvested options of $1,571 was allocated to post-combination services and expensed in the three months ended March 31, 2018. Also, as part of the merger agreement, 51 shares of the Company’s common stock were deferred for certain key employees with the total fair value of $5,458 (see Note 11 “Equity Award Plans”), which was not included in the purchase price. The deferred shares are subject to forfeiture if employment terminates prior to the lapse of the restrictions, and their fair value is expensed as stock-based compensation expense over the remaining service period.
The following table summarizes the fair values of tangible assets acquired, liabilities assumed, intangible assets and goodwill:

                            | Fair value | Estimated Useful Life
--------------------------- | ---------- | ---------------------
                            |            | (in years)
Current assets              | $23,344    | N/A
Fixed assets                | 954        | N/A
Customer relationships      | 37,800     | 7
Order backlog               | 6,800      | 2
Core/developed technology   | 35,200     | 4
Trade name                  | 2,400      | 4
Deferred revenue            | (14,700)   | N/A
Deferred tax liability, net | (14,725)   | N/A
Other liabilities           | (1,120)    | N/A
Goodwill                    | 162,865    | Indefinite
                            | $238,818   |

2018 Acquisition
 Wombat Security Technologies, Inc.
 February 28, 2018 Acquisition Company acquired shares Wombat Security Technologies. leader phishing simulation security awareness training. data PhishAlarm access phishing campaigns customers visibility insight Proofpoint Nexus platform.
 customers leverage solution threat protection phishing simulation security training.
 use real phishing attacks simulations investigate action phishing quarantine emails lock accounts risk train users simulated real phishing attacks.
 expects savings corporate overhead costs. purchase price estimated fair value acquired assets goodwill recorded.
 Proofpoint, Inc. Consolidated Financial Statements share amounts
 Wombat Acquisition Date consideration transferred $225,366 cash acquired $13,452.
 unvested stock options Wombat employees canceled paid off same per option less exercise price. fair value $1,580 unvested options pre-combination service consideration transferred.fair value unvested options $1,571 post-combination services expensed March 2018. merger 51 shares common stock deferred employees value $5,458 not included purchase price. deferred shares subject forfeiture employment expensed stock-based compensation.
 table summarizes fair values assets liabilities intangible assets goodwill
 Current assets $23,344
 Fixed assets 954
 Customer relationships 37,800
 Order backlog 6,800
 technology 35,200
 2
 Deferred revenue (14,700
 tax liability
 Other liabilities (1,120
 Goodwill 162,865 Indefinite
 $238,818


GasLog Ltd. and its Subsidiaries
Notes to the consolidated financial statements (Continued)
For the years ended December 31, 2017, 2018 and 2019
(All amounts expressed in thousands of U.S. Dollars, except share and per share data)
17. General and Administrative Expenses
An analysis of general and administrative expenses is as follows:
* Employee costs include restructuring costs of $3,975 pursuant to management’s decision to relocate more of its employees including several members of senior management to the Piraeus, Greece office.

                                   |        | For the year ended December 31, |
---------------------------------- | ------ | ------------------------------- | ------
                                   | 2017   | 2018                            | 2019
Employee costs*                    | 18,789 | 20,980                          | 24,863
Share-based compensation (Note 22) | 4,565  | 5,216                           | 5,107
Other expenses                     | 16,496 | 15,797                          | 17,415
Total                              | 39,850 | 41,993                          | 47,385

GasLog Ltd. Subsidiaries
 consolidated financial statements
 years December 31, 2017 2018 2019
 amounts. Dollars
. Administrative Expenses
 Employee costs restructuring $3,975 Piraeus Greece.
 December
 2017 2018 2019
 Employee costs 18,789 20,980 24,863
 Share-based compensation 4,565 5,216
 Other expenses 16,496 15,797 17,415
 39,850 41,993 47,385


Future minimum operating lease payments were as follows:
Operating lease commitments were mainly in respect of land and buildings which arose from a sale and operating leaseback transaction in 2001. Leases have an average term of 13 years (2017/18: 14 years) and rentals are fixed for an average of 13 years (2017/18: 14 years).
Other than as disclosed below, there were no contingent liabilities or guarantees at 31 March 2018 other than those arising in the ordinary course of the group’s business and on these no material losses are anticipated. We have insurance cover to certain limits for major risks on property and major claims in connection with legal liabilities arising in the course of our operations. Otherwise, the group generally carries its own risks.

Payable in the year ending 31 March:          | 2019 £m | 2018 £m
--------------------------------------------- | ------- | -------
2019                                          | -       | 600
2020                                          | 755     | 550
2021                                          | 641     | 513
2022                                          | 599     | 486
2023                                          | 555     | 463
2024                                          | 512     | 449
Thereafter                                    | 3,557   | 3,536
Total future minimum operating lease payments | 6,619   | 6,597

Future lease payments
 commitments land buildings sale leaseback transaction 2001. Leases average 13 years rentals fixed 13 years.
 no contingent liabilities guarantees 31 March 2018 business no material losses anticipated. insurance cover major risks property claims legal liabilities. group carries risks.
 Payable year 31 March 2019 £m 2018 £m
 600
 2020 755 550
 2021 641 513
 2022 486
 2023 463
 2024 449
 3,557
 future minimum lease payments 6,597


ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
Set forth below are the names and positions of our directors of the Company and senior management of the Company. The directors of the Company are elected annually, and each elected director holds office until a successor is elected. Officers are elected from time to time by vote of the Board and holds office until a successor is elected. Set forth below are the names and positions of our directors of the Company and senior management of the Company. The directors of the Company are elected annually, and each elected director holds office until a successor is elected. Officers are elected from time to time by vote of the Board and holds office until a successor is elected.
Certain biographical information with respect to each director and senior management of the Company listed above is set forth below. On March 6, 2020, Andreas Ove Ugland, a director and Vice Chairman of the Company and our Audit Committee Chairman, passed. Mr. Ugland had been a valued member of our Board of Directors since 1997.
Herbjørn Hansson earned his M.B.A. at the Norwegian School of Economics and Business Administration and attended Harvard Business School. In 1974 he was employed by the Norwegian Shipowners’ Association. In the period from 1975 to 1980, he was Chief Economist and Research Manager of INTERTANKO, an industry association whose members control about 70% of the world’s independently owned tanker fleet, excluding state owned and oil company fleets. During the 1980s, he was Chief Financial Officer of Kosmos/Anders Jahre, at the time one of the largest Norwegian based shipping and industry groups. In 1989, Mr. Hansson founded Ugland Nordic Shipping AS, or UNS, which became one of the world’s largest owners of specialized shuttle tankers. He served as Chairman in the first phase and as Chief Executive Officer as from 1993 to 2001 when UNS, under his management, was sold to Teekay Shipping Corporation, or Teekay, for an enterprise value of $780.0 million. He continued to work with Teekay, and reached the position of Vice Chairman of Teekay Norway AS, until he started working full-time for the Company on September 1, 2004. Mr. Hansson is the founder and has been Chairman and Chief Executive Officer of the Company since its establishment in 1995. He also has been a member of various governing bodies of companies within shipping, insurance, banking, manufacturing, national/international shipping agencies including classification societies and protection and indemnity associations. Mr. Hansson is fluent in Norwegian and English, and has a command of German and French for conversational purposes.
David Workman has been a director of the Company since November 2019. Mr. Workman has served as Hermitage Offshore Services Ltd.’s Class A Director since December 2013. Mr. Workman was Chief Operating Officer and member of the Supervisory Board of Stork Technical Services, or STS, guided, as Chief Executive Officer, the sale of the RBG Offshore Services Group into the STS group in 2011. Mr. Workman has 30 years of broad experience in the offshore sector ranging from drilling operations/field development through production operations and project management. He has worked with a wide variety of exploration and production companies in the sector and has balanced this with exposure to the service sector, working with management companies. As part of his experience with these different companies, he has had extensive exposure to the North Sea market. Mr. Workman graduated from Imperial College London in 1983 with a Masters in Petroleum Engineering and spent his early years as a Drilling/Production Operations Engineer with BP. In 1987 he joined Hamilton Brothers Oil and Gas who were early adopters of floating production systems. In 1993 he joined Kerr McGee as an operations manager for the Tentech 850 designed Gryphon FPSO, the first permanently moored FPSO in the North Sea. In 1996, Mr. Workman established the service company Atlantic Floating Production, which went on to become the management contractor and duty holder on the John Fredriksen owned Northern Producer and on the Petroleum Geo-Services (PGS) owned Banff FPF. In 2003, Mr. Workman was instrumental in founding Tuscan Energy which went on to redevelop the abandoned Argyll Field in the UK Continental Shelf. In 2009, Mr. Workman was appointed as Chief Executive Officer of STS in 2011.
Richard H. K. Vietor has been a director of the Company since July 2007. Mr. Vietor is the Paul Whiton Cherrington Professor of Business Administration where he teaches courses on the regulation of business and the international political economy. He was appointed Professor in 1984. Before coming to Harvard Business School in 1978, Professor Vietor held faculty appointments at Virginia Polytechnic Institute and the University of Missouri. He received a B.A. in economics from Union College in 1967, an M.A. in history from Hofstra University in 1971, and a Ph.D. from the University of Pittsburgh in 1975.
Alexander Hansson has been a director of the Company since November 2019. Mr. Hansson is an investor in various markets globally and has made several successful investments in both listed and privately held companies. Mr. Hansson is the son of the Company’s Chairman and Chief Executive Officer and he has built a network over the last 20 years in the shipping and finance sector. He has operated shipping and trading offices in London and Monaco. He studied at EBS Regents College in London, United Kingdom.
Jim Kelly has been a director of the Company since June 2010. Mr. Kelly has worked for Time Inc., the world’s largest magazine publisher, since 1978. He served as Foreign Editor during the fall of the Soviet Union and the first Gulf War, and was named Deputy Managing Editor in 1996. In 2001, Mr. Kelly became the magazine’s managing editor, and during his tenure the magazine won a record four National Magazine awards. In 2004, Time Magazine received its first EMMA for its contribution to the ABC News Series “Iraq: Where Things Stand.” In late 2006, Mr. Kelly became the managing editor of all of Time Inc., helping supervise the work of more than 2,000 journalists working at 125 titles, including Fortune, Money, Sports Illustrated and People. Since 2009, Mr. Kelly has worked as a consultant at Bloomberg LP and taught at Princeton and Columbia Universities. Jim Kelly was elected as member of our Audit Committee in February 2012. Mr. Kelly was appointed as the Chairman of the Audit Committee upon the passing of Mr. Ugland.
Bjørn Giaever joined the Company as Chief Financial Officer and Secretary on October 16, 2017. Mr. Giaever has over 20 years of experience in the shipping & offshore industry, holding key roles in corporate finance and equity research. He joined the Company from Fearnley Securities AS, where he served as partner and director in the Corporate Finance division. From 2006 to 2010, Mr. Giaever served as a senior corporate advisor in the John Fredriksen group in London. In addition, Mr. Giaever has been a top rated Shipping Analyst at DNB Markets and partner at Inge Steensland AS, specializing in gas and maritime matters. Mr. Giaever holds a BSc in business and economics.

                     |     | The Company
-------------------- | --- | ---------------------------------------------------------
Name                 | Age | Position
Herbjørn Hansson     | 72  | Chairman, Chief Executive Officer, President and Director
David Workman        | 58  | Director
Richard H. K. Vietor | 74  | Director
Alexander Hansson    | 38  | Director
Jim Kelly            | 66  | Vice Chairman, Director and Audit Committee Member
Bjørn Giaever        | 52  | Chief Financial Officer

6. DIRECTORS SENIOR MANAGEMENT
. Directors Management
 names positions directors senior management. directors elected annually holds office until successor elected. Officers elected vote Board. positions directors senior management. elected annually until successor.
 biographical information. March 6, 2020 Andreas Ove Ugland director Vice Chairman Audit Committee Chairman passed. Ugland member Board Directors since 1997.
 Herbjørn Hansson earned M. B. Norwegian School of Economics Business Administration attended Harvard Business School. 1974 employed Norwegian Shipowners’ Association. 1975 Chief Economist Research Manager INTERTANKO 70% independently owned tanker fleet. Chief Financial Officer Kosmos/Anders Jahre Norwegian shipping. 1989. founded Ugland Nordic Shipping AS specialized shuttle tankers. served Chairman Chief Executive Officer 1993 to 2001 UNS sold to Teekay Shipping Corporation for $780. 0 million.Teekay Vice Chairman Norway full-time September 1 2004. founder Chairman Chief Executive Officer since 1995. member governing bodies shipping insurance banking manufacturing shipping agencies protection indemnity associations. Norwegian English German French.
 Workman director since November 2019. Hermitage Offshore Services. Class A Director December 2013. Chief Operating Officer Supervisory Board Stork Technical Services sale RBG Offshore Services STS 2011. 30 years experience offshore drilling production project management. worked exploration production companies service. North Sea market. graduated Imperial College London 1983 Masters Petroleum Engineering Drilling/Production Operations Engineer BP. 1987 Hamilton Brothers Oil Gas floating production. 1993 Kerr McGee operations manager Tentech 850 Gryphon FPSO first permanently moored North. 1996. established Atlantic Floating Production management contractor duty holder John Fredriksen Northern Producer Petroleum Geo Banff FPF. 2003,.Workman Tuscan Energy Argyll Field UK Continental Shelf. Chief Executive Officer STS.
 Richard. Vietor director since July 2007. Paul Whiton Cherrington Professor Business Administration teaches regulation business international political economy. Professor 1984. Virginia Polytechnic Institute University Missouri. B. A. economics Union College 1967 M. A. history Hofstra University 1971 Ph. D. University Pittsburgh 1975.
 Alexander Hansson director November 2019. investor investments listed privately companies. son Chairman Chief Officer built network shipping finance. operated shipping trading offices London Monaco. studied EBS Regents College.
 Jim Kelly director June 2010. Time Inc. largest magazine publisher since 1978. Foreign Editor Gulf War Deputy Managing Editor 1996. 2001,. managing editor four National Magazine awards. 2004, EMMA ABC News Series “Iraq. 2006,. managing editor. 2,000 journalists 125 titles. 2009,. consultant Bloomberg taught Princeton Columbia Universities. member Audit Committee February 2012.appointed Chairman Audit Committee. Ugland.
 Giaever Chief Financial Officer Secretary October 16 2017. 20 years experience shipping offshore corporate finance equity research. joined Fearnley Securities partner director Corporate Finance. 2006 2010,. senior corporate advisor John Fredriksen London. Shipping Analyst DNB Markets partner Inge Steensland gas maritime. BSc business economics.
 Herbjørn Hansson Chairman Chief President
 David Workman
.
 Alexander Hansson
 Jim Kelly Vice Chairman Audit
 Bjørn Giaever Chief Financial Officer


The following represents VMware’s future minimum lease payments under non-cancellable operating and finance leases as of January 31, 2020 (table in millions):
(1) Total lease liabilities as of January 31, 2020 excluded legally binding lease payments for leases signed but not yet commenced of $361 million.

                                    | Operating Leases | Finance Leases
----------------------------------- | ---------------- | --------------
2021                                | $138             | $6
2022                                | 135              | 6
2023                                | 120              | 7
2024                                | 94               | 7
2025                                | 70               | 7
Thereafter                          | 577              | 35
Total future minimum lease payments | 1,134            | 68
Less: Imputed interest              | (279)            | (9)
Total lease liabilities(1)          | $855             | $59

VMware’s future lease payments operating finance leases January 31, 2020
 lease liabilities 2020 excluded payments $361 million.
 Finance Leases
 2021 $138 $6
 2022 135
 2023
 2024
 2025 70
 future minimum lease payments 1,134 68
 Imputed interest
 lease $855 $59


Our common shares are not a direct investment of our pension funds; however, the pension funds may indirectly include our shares. The aggregate amount of our common shares would not be considered material relative to the total pension fund assets.
Our funding policy is to make contributions in accordance with the laws and customs of the various countries in which we operate as well as to make discretionary voluntary contributions from time to time. We expect to make the minimum required contributions of $42 million and $26 million to our non-U.S. and U.S. pension plans, respectively, in fiscal 2020. We may also make voluntary contributions at our discretion.
At fiscal year end 2019, benefit payments, which reflect future expected service, as appropriate, are expected to be
paid as follows:

                 | Non-U.S. Plans | U.S. Plans
---------------- | -------------- | -------------
                 |                | (in millions)
Fiscal 2020      | $  82          | $  77
Fiscal 2021      | 77             | 74
Fiscal 2022      | 81             | 74
Fiscal 2023      | 85             | 74
Fiscal 2024      | 86             | 74
Fiscal 2025-2029 | 490            | 361

common shares not direct investment pension funds funds include shares. amount shares not material relative total pension fund assets.
 funding policy contributions laws customs countries discretionary voluntary contributions. expect minimum contributions $42 million $26 million non-U. pension plans fiscal 2020. voluntary contributions discretion.
 fiscal year end 2019 benefit payments future service
 paid
 Non.
 millions
 2020 82 77
 2021 74
 2022 81
 2023 85
 2024 86
 2025-2029


Sales and Marketing Expense
Sales and marketing expense increased by $18.1 million in 2019 compared to 2018. The increase was primarily due to a $15.5 million increase in employee-related costs, which includes stock-based compensation, associated with our increased headcount from 286 employees as of December 31, 2018 to 345 employees as of December 31, 2019. The remaining increase was principally the result of a $1.2 million increase in trade show and advertising costs and a $1.0 million increase attributed to office related expenses to support the sales team.

                    | Year Ended December 31, |                        | Change   |
------------------- | ----------------------- | ---------------------- | -------- | -----
                    | 2019                    | 2018                   | $        | %
                    |                         | (dollars in thousands) |          |
Sales and marketing | $ 87,731                | $ 69,608               | $ 18,123 | 26.0%
% of revenue        | 44%                     | 47%                    |          |

Sales Marketing Expense
 increased $18. 1 million 2019 2018. due $15. 5 million increase employee-related costs stock-based compensation increased headcount 286 345 2019. remaining increase $1. 2 million trade show advertising costs $1. 0 million office expenses.
 Year Ended December 31,
 2018
 Sales marketing $ 87,731 $ 69,608 $ 18,123.
 % revenue 44%


Restructuring charges During the year we incurred charges of £386m (2017/18: £241m, 2016/17: £nil), primarily relating to leaver costs. These costs reflect projects within our group-wide cost transformation programme and include costs related to the remaining integration of EE and £23m costs to close the BT Pension Scheme and provide transition payments to affected employees.
EE integration costs EE integration costs incurred in prior years (2017/18: £46m, 2016/17: £215m) relate to EE related restructuring and leaver costs. In 2016/17, this also included a £62m amortisation charge relating to the write-off of IT assets as we integrated the EE and BT IT infrastructure. In the current year remaining EE integration activities have been combined into the wider restructuring programme.
Retrospective regulatory matters We have recognised a net charge of £27m (2017/18: £49m, 2016/17: £479m) in relation to regulatory matters in the year. This reflects the completion of the majority of compensation payments to other communications providers in relation to Ofcom’s March 2017 findings of its investigation into our historical practices on Deemed Consent by Openreach, and new matters arising. Of this, £31m is recognised in revenue offset by £4m in operating costs.
Pension equalisation costs During the year we recognised a charge of £26m (2017/18: £nil, 2016/17: £nil) in relation to the high court requirement to equalise pension benefits between men and women due to guaranteed minimum pension (GMP).
Property rationalisation costs We have recognised a charge of £36m (2017/18: £28m, 2016/17: £nil) relating to the rationalisation of the group’s property portfolio and a reassessment of lease-end obligations.
Italian business investigation During the year we have released £(55)m provisions relating to settlement of various matters in our Italian business (2017/18: a charge of £22m, 2016/17: a charge of £238m).
Interest expense on retirement benefit obligation During the year we incurred £139m (2017/18: £218m, 2016/17: 209m) of interest costs in relation to our defined benefit pension obligations. See note 20 for more details. Tax on specific items A tax credit of £112m (2017/18: £87m, 2016/17: 154m) was recognised in relation to specific items.
10. Specific items continued EE acquisition warranty claims In the prior year we reached settlements with Deutsche Telekom and Orange in respect of any warranty claims under the 2015 EE acquisition agreement, arising from the issues previously announced regarding our operations in Italy. This represents a full and final settlement of these issues and resulted in a specific item charge of £225m.

10. Specific items continued                      |       |      |
------------------------------------------------- | ----- | ---- | -----
                                                  | 2019  | 2018 | 2017
Year ended 31 March                               | £m    | £m   | £m
Revenue                                           |       |      |
Italian business investigation                    | –     | –    | 22
Retrospective regulatory matters                  | 31    | 23   | (2)
                                                  | 31    | 23   | 20
Operating costs                                   |       |      |
EE acquisition warranty claims                    | –     | 225  | –
Restructuring charges                             | 386   | 241  | –
EE integration costs                              | –     | 46   | 215
Property rationalisation costs                    | 36    | 28   | –
Pension equalisation costs                        | 26    | –    | –
Retrospective regulatory matters                  | (4)   | 26   | 481
Italian business investigation                    | (55)  | 22   | 238
Out of period irrecoverable VAT                   | –     | –    | 30
Profit (loss) on disposal of businesses           | 5     | (1)  | (16)
                                                  | 394   | 587  | 948
Operating loss                                    | 425   | 610  | 968
Net finance expense                               |       |      |
Interest expense on retirement benefit obligation | 139   | 218  | 209
Interest on out of period irrecoverable VAT       | –     | –    | 1
                                                  | 139   | 218  | 210
Net specific items charge before tax              | 564   | 828  | 1,178
Taxation                                          |       |      |
Tax credit on specific items above                | (112) | (87) | (154)
Tax credit on re-measurement of deferred tax      | –     | –    | (63)
                                                  | (112) | (87) | (217)
Net specific items charge after tax               | 452   | 741  | 961

Restructuring charges incurred £386m (2017/18 £241m 2016/17 leaver costs. reflect cost transformation programme integration EE £23m BT Pension Scheme transition payments employees.
 EE integration costs £215m EE restructuring leaver costs. 2016/17 £62m amortisation write-off IT assets EE BT IT infrastructure. EE integration activities combined restructuring programme.
 regulatory matters recognised net charge £27m 2016/17 regulatory matters. compensation payments communications providers Ofcom’s March 2017 findings Deemed Consent Openreach. £31m revenue offset £4m operating costs.
 Pension equalisation costs £26m high court requirement pension benefits.
 Property rationalisation costs £36m rationalisation property portfolio reassessment lease-end obligations.
 Italian business investigation released £(55)m provisions settlement Italian business £22m 2016/17 £238m.
Interest expense retirement benefit obligation incurred £139m (2017/18 £218m 2016/17 209m interest costs defined benefit pension obligations. note 20. Tax specific items tax credit £112m (2017/18 2016/17 154m recognised specific items.
. EE acquisition warranty claims settlements Deutsche Telekom Orange warranty claims 2015 EE acquisition agreement. settlement specific item charge £225m.
. Specific items
 2019 2018
 Year ended 31 March £m
 Revenue
 Italian business investigation
 Retrospective regulatory matters
 Operating costs
 EE acquisition warranty claims
 Restructuring charges
 EE integration costs
 Property rationalisation costs
 Pension equalisation costs
 business investigation
 irrecoverable VAT
 Profit (loss) disposal businesses
 Operating loss
 Net finance expense
 Interest expense retirement benefit obligation
 irrecoverable VAT
139 218 210
 tax 564 828 1,178
 Tax credit items (112) (87) (154)
 re-measurement deferred tax
 (112) (217)
 tax 452 741 961


Fiscal 2018 compared to Fiscal 2017
Net Sales
Overall, our net sales were $7.94 billion in fiscal 2018, an increase of 1% compared to fiscal 2017.
Grocery & Snacks net sales for fiscal 2018 were $3.29 billion, an increase of $78.2 million, or 2%, compared to fiscal 2017. Results reflected a decrease in volumes of approximately 2% in fiscal 2018 compared to the prior-year period, excluding the impact of acquisitions. The decrease in sales volumes reflected a reduction in promotional intensity, planned discontinuation of certain lower-performing products, retailer inventory reductions, which were higher than anticipated, and deliberate actions to optimize distribution on certain lower-margin products, consistent with the Company's value over volume strategy. Price/ mix was flat compared to the prior-year period as favorable mix improvements from recent innovation and higher net pricing nearly offset continued investments in retailer marketing to drive brand saliency, enhanced distribution, and consumer trial. The acquisition of Angie's Artisan Treats, LLC contributed $68.1 million to Grocery & Snacks net sales during fiscal 2018. The Frontera acquisition contributed $8.6 million and the Thanasi acquisition contributed $66.5 million to Grocery & Snacks net sales during fiscal 2018 through the one-year anniversaries of the acquisitions. The Frontera and Thanasi acquisitions occurred in September 2016 and April 2017, respectively.
Refrigerated & Frozen net sales for fiscal 2018 were $2.75 billion, an increase of $100.3 million, or 4%, compared to fiscal 2017. Results for fiscal 2018 reflected a 3% increase in volume compared to fiscal 2017, excluding the impact of 31 acquisitions. The increase in sales volumes was a result of brand renovation and innovation launches. Price/mix was flat compared to fiscal 2017, as favorability in both net pricing and mix offset continued investment in retailer marketing to drive brand saliency, enhanced distribution, and consumer trial. The acquisition of the Sandwich Bros. of Wisconsin® business contributed $21.3 million to Refrigerated & Frozen's net sales during fiscal 2018. The Frontera acquisition, which occurred in September 2016, and subsequent innovation in the Frontera® brand contributed $4.4 million during fiscal 2018 through the one-year anniversary of the acquisition.
International net sales for fiscal 2018 were $843.5 million, an increase of $27.5 million, or 3%, compared to fiscal 2017. Results for fiscal 2018 reflected a 3% decrease in volume, a 3% increase due to foreign exchange rates, and a 3% increase in price/mix, in each case compared to fiscal 2017. The volume decrease for fiscal 2018 was driven by strategic decisions to eliminate lower margin products and to reduce promotional intensity. The increase in price/mix compared to the prior-year period was driven by improvements in pricing and trade productivity.
Foodservice net sales for fiscal 2018 were $1.05 billion, a decrease of $23.5 million, or 2%, compared to fiscal 2017. Results for fiscal 2018 reflected an 11% decrease in volume, partially offset by a 9% increase in price/mix compared to fiscal 2017. The decrease in volumes compared to the prior year primarily reflected the impact of exiting a non-core business, the planned discontinuation of certain lower-performing businesses, and softness in certain categories. The increase in price/mix for fiscal 2018 reflected favorable product and customer mix, the impact of inflation-driven increases in pricing, and the execution of the segment's value over volume strategy.
In the first quarter of fiscal 2017, we divested our Spicetec and JM Swank businesses. These businesses comprise the entire Commercial segment following the presentation of Lamb Weston as discontinued operations. Accordingly, there were no net sales in the Commercial segment after the first quarter of fiscal 2017. These businesses had net sales of $71.1 million in fiscal 2017 prior to the completion of the divestitures.

($ in millions)       |                       |                       |
--------------------- | --------------------- | --------------------- | -----------
Reporting Segment     | Fiscal 2018 Net Sales | Fiscal 2017 Net Sales | % Inc (Dec)
Grocery & Snacks      | $3,287.0              | $3,208.8              | 2%
Refrigerated & Frozen | 2,753.0               | 2,652.7               | 4%
International         | 843.5                 | 816.0                 | 3%
Foodservice           | 1,054.8               | 1,078.3               | (2)%
Commercial            | —                     | 71.1                  | (100)%
Total                 | $7,938.3              | $7,826.9              | 1%

2018 2017
 Net Sales
 sales $7. 94 billion 2018 increase 1% 2017.
 Grocery & Snacks net sales $3. 29 billion increase $78. 2 million 2% 2017. decrease volumes 2% excluding acquisitions. decrease reduction promotional intensity discontinuation lower-performing products retailer inventory reductions distribution lower-margin products value volume strategy. Price/ mix flat favorable mix improvements higher pricing offset investments marketing. acquisition Angie's Artisan Treats contributed $68. 1 million. Frontera acquisition $8. 6 million Thanasi $66. 5 million. Frontera Thanasi acquisitions September 2016 April 2017.
 Refrigerated & Frozen net sales 2018 $2. 75 billion increase $100. 3 million 4% 2017. 3% increase volume 31 acquisitions. increase brand renovation innovation launches. Price/mix flat pricing marketing. acquisition Sandwich Bros. contributed $21. 3 million sales. Frontera acquisition innovation contributed $4.million 2018 one-year acquisition.
 International net sales $843. 5 million increase $27. 5 million 3% 2017. 3% decrease volume 3% increase foreign exchange rates 3% increase price/mix. volume decrease lower margin products reduce promotional intensity. increase price/mix improvements pricing trade productivity.
 Foodservice net sales 2018 $1. 05 billion decrease $23. 5 million 2% 2017. 11% decrease volume increase price/mix. decrease exiting non-core business discontinuation lower-performing businesses categories. increase price/mix favorable product customer mix inflation-driven increases pricing value over volume strategy.
 2017 divested Spicetec JM Swank businesses. Commercial segment. no net sales Commercial quarter 2017. net sales $71. 1 million 2017 divestitures.
 Fiscal 2018 Net Sales 2017 Net Sales
 Grocery Snacks $3,287. 2%
 Refrigerated Frozen 2,753. 2,652. 4%
 International 843. 3%
Foodservice 1,054. 1,078.
 Commercial 71.
 $7,938. $7,826.


19. Related Party Transactions
Key management personnel compensation
All directors and executive management have authority and responsibility for planning, directing and controlling the activities of the Group, and are considered to be key management personnel.
Compensation for the Group’s key management personnel is as follows:

                                     |         | Fiscal Year Ended June 30, |
------------------------------------ | ------- | -------------------------- | -------
                                     | 2019    | 2018                       | 2017
                                     |         | (U.S. $ in thousands)      |
Executive management                 |         |                            |
Short-term compensation and benefits | $3,835  | $2,991                     | $2,860
Post-employment benefits             | 109     | 99                         | 100
Share-based payments                 | 17,144  | 9,335                      | 26,030
                                     | $21,088 | $12,425                    | $28,990
Board of directors                   |         |                            |
Cash remuneration                    | $430    | $362                       | $388
Share-based payments                 | 1,772   | 1,577                      | 1,825
                                     | $2,202  | $1,939                     | $2,213

. Party Transactions
 management compensation
 directors executive management activities Group key.
 Compensation
 Fiscal Year Ended June 30
.
 Short-term compensation benefits $3,835 $2,991 $2,860
 Post-employment benefits
 Share-based payments 17,144 9,335 26,030
 $21,088 $12,425 $28,990
 Board directors
 Cash remuneration $430 $362 $388
 Share-based payments 1,772
 $2,202 $1,939


Defined Benefit Pension Plans
We recognize the funded status of each defined pension benefit plan as the difference between the fair value of plan assets and the projected benefit obligation of the employee benefit plans in the Consolidated Balance Sheets, with a corresponding adjustment to accumulated other comprehensive loss, net of taxes. Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability on our Consolidated Balance Sheets. Subsequent changes in the funded status are reflected on the Consolidated Balance Sheets in unrecognized pension items, a component of AOCL, which are included in total stockholders’ deficit. The amount of unamortized pension items is recorded net of tax.
We have amortized actuarial gains or losses over the average future working lifetime (or remaining lifetime of inactive participants if there are no active participants). We have used the corridor method, where the corridor is the greater of ten percent of the projected benefit obligation or fair value of assets at year end. If actuarial gains or losses do not exceed the corridor, then there is no amortization of gain or loss.
During the year ended December 31, 2017, several of our pension plans transferred in the sale of Diversey. Two international plans were split between Diversey and Sealed Air at the close of the sale. Unless noted, the tables in this disclosure show only activity related to plans retained by Sealed Air.
The following table shows the components of our net periodic benefit cost for the three years ended December 31, for our pension plans charged to operations:
(1) The amount recorded in inventory for the years ended December 31, 2019, 2018 and 2017 was not material.

                                                                                |        | Year Ended December 31, |
--------------------------------------------------------------------------------------------------------- | ------ | ----------------------- | -----
(In millions)                                                                                | 2019   | 2018                    | 2017
Net periodic benefit (income) cost:                                                                       |        |                         |
U.S. and international net periodic benefit cost included in cost of sales(1)                             | $ 1.1  | $ 0.8                   | $ 1.4
U.S. and international net periodic benefit cost included in selling, general and administrative expenses | 2.8    | 3.5                     | 5.6
U.S. and international net periodic benefit (income) included in other (income) expense                   | (4.4)  | (8.4)                   | (6.0)
Total benefit (income) cost                                                                               | (0.5 ) | (4.1 )                  | $ 1.0

Defined Benefit Pension Plans
 recognize funded status difference between fair value projected benefit obligation adjustment accumulated loss net taxes. overfunded plan asset underfunded liability. changes in funded status reflected unrecognized pension items included in stockholders’ deficit. unamortized pension items recorded net tax.
 amortized actuarial gains losses over future working lifetime inactive participants. corridor method greater of ten percent projected benefit obligation fair value at year end. If gains losses exceed corridor no amortization.
 December 2017 pension plans transferred in sale Diversey. Two international plans split between Diversey Sealed Air. tables show activity plans retained Sealed Air.
 shows net periodic benefit cost three years ended December 31, pension plans
 inventory years December 31, 2019 2018 2017 not material.
 Net benefit cost
. included in cost.
. included in selling administrative expenses.3. 5 5. 6
. international benefit (4. 4) (8. (6.
 benefit cost. 5. 1 1.