Contributed equity represents the number of ordinary shares on issue less shares held by the Group. A reconciliation is presented to show the total number of ordinary shares held by the Group which reduces the amount of total shares traded on-market.
On 27 May 2019, the Group completed an off-market share buy-back of 58,733,844 ordinary shares. The ordinary shares were bought back at $28.94, representing a 14% discount to the Group’s market price of $33.64 (being the volume weighted average price of the Group’s ordinary shares over the five trading days up to and including the closing date of 24 May 2019), and comprised a fully franked dividend component of $24.15 per share ($1,419 million) and a capital component of $4.79 per share ($282 million), including $1 million of associated transaction costs (net of tax). The shares bought back were subsequently cancelled.
Holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at shareholders’ meetings. In the event of winding up of the Company, ordinary shareholders rank after creditors and are fully entitled to any proceeds of liquidation.
Refer to Note 6.2 for further details of outstanding options and performance rights. Performance rights carry no rights to dividends and no voting rights.

                                                               | 2019    |       | 2018    |
-------------------------------------------------------------- | ------- | ----- | ------- | -----
                                                               | NUMBER  |       | NUMBER  |
SHARE CAPITAL                                                  | M       | $M    | M       | $M
1,258,690,067 fully paid ordinary shares (2018: 1,313,323,941) |         |       |         |
Movement:                                                      |         |       |         |
Balance at start of period                                     | 1,313.3 | 6,201 | 1,294.4 | 5,719
Share buy-back                                                 | (58.7)  | (282) | –       | –
Issue of shares to satisfy the dividend reinvestment plan      | 4.1     | 114   | 18.9    | 482
Balance at end of period                                       | 1,258.7 | 6,033 | 1,313.3 | 6,201
SHARES HELD IN TRUST                                           |         |       |         |
Movement:                                                      |         |       |         |
Balance at start of period                                     | (4.9)   | (146) | (3.4)   | (104)
Issue of shares to satisfy employee long-term incentive plans  | 0.2     | 6     | 0.6     | 21
Issue of shares to satisfy the dividend reinvestment plan      | (0.2)   | (5)   | (0.1)   | (3)
Purchase of shares by the Woolworths Employee Share Trust      | (2.0)   | (60)  | (2.0)   | (60)
Balance at end of period                                       | (6.9)   | (205) | (4.9)   | (146)
Contributed equity at end of period                            | 1,251.8 | 5,828 | 1,308.4 | 6,055

Contributed equity represents ordinary shares less Group. reconciliation total reduces traded on-market.
 27 May 2019 completed off-market buy-back 58,733,844 ordinary shares. bought back at $28. 94 14% discount market price $33. 64 May franked dividend $24. 15 per share ($1,419 million capital $4. 79 per share ($282 including $1 million transaction costs tax. shares bought back cancelled.
 Holders entitled receive dividends one vote per share meetings. winding shareholders rank after creditors entitled to proceeds liquidation.
 Note 6. 2 outstanding options performance rights. no rights dividends no voting rights.
 CAPITAL
 1,258,690,067 fully paid ordinary shares (2018 1,313,323,941)
 Balance start period 1,313.
 Share buy-back.
 Issue shares dividend reinvestment plan.
period 1,258. 7 1,313. 3 6,201
 SHARES TRUST
 start (4. 9) (146) (3. 4)
 shares employee-term incentive plans.
 dividend reinvestment plan.
 Purchase shares Woolworths Employee Share Trust (2.
 end period (6. 9) (205) (4. (146)
 equity 1,251. 8 5,828 1,308. 4 6,055


Inventories.
Inventories are stated at the lower-of-cost or net realizable value. Cost is determined using the first-in, first-out method. Finished products and work-in-process inventories include direct material costs and direct and indirect manufacturing costs. The Company records reserves for inventory that may be obsolete or in excess of current and future market demand. A summary of inventories is shown below:

(Dollars in Millions) | April 27, 2019 | April 28, 2018
--------------------- | -------------- | --------------
Finished Products     | $40.2          | $15.4
Work in Process       | 9.4            | 14.6
Materials             | 67.1           | 54.1
Total Inventories     | $116.7         | $84.1

Inventories.
 lower-cost. first-in first-out.-process include material manufacturing costs. Company records reserves obsolete excess demand. summary inventories
 April 27, 2019 28, 2018
 Finished Products $40. $15.
 Work Process 9. 14.
 Materials 67. 54.
 Total Inventories $116. $84.


CREDIT RISK
We are exposed to credit risk from operating activities and certain financing activities, the maximum exposure of which is represented by the carrying amounts reported in the statements of financial position.
We are exposed to credit risk if counterparties to our trade receivables and derivative instruments are unable to meet their obligations. The concentration of credit risk from our customers is minimized because we have a large and diverse customer base. There was minimal credit risk relating to derivative instruments at December 31, 2019 and 2018. We deal with institutions that have investment-grade credit ratings, and as such we expect that they will be able to meet their obligations. We regularly monitor our credit risk and credit exposure.
The following table provides the change in allowance for doubtful accounts for trade receivables.

                     | NOTE | 2019  | 2018
-------------------- | ---- | ----- | ----
Balance, January 1   |      | (51)  | (54)
Adoption of IFRS 9   |      | –     | (4)
Additions            |      | (114) | (84)
Usage                |      | 103   | 91
Balance, December 31 | 10   | (62)  | (51)

CREDIT RISK
 exposed operating financing carrying amounts financial.
 exposed trade receivables derivative instruments meet obligations. risk minimized large diverse base. minimal credit risk derivative instruments December 31, 2019 2018. deal institutions investment-grade credit ratings expect meet obligations. monitor credit risk exposure.
 table change allowance doubtful accounts trade receivables.
 2019 2018
 Balance January 1 (51)
 Adoption IFRS 9
 Additions (114) (84
 Balance December 31


General and Administrative
General and administrative expenses increased $71.5 million, or 66.5%, for the year ended December 31, 2019 compared to the same period in 2018, due to an increase of $28.7 million in employee-related costs ($12.2 million of which related to stock-based compensation and related payroll taxes), a $14.9 million increase in finance costs, which include an estimated net liability for non-recurring HST payable to the Government of Canada in the amount of $8.1 million related to 2019 and prior years, sales and use and other value added taxes, insurance, and bank fees, a $9.0 million increase in Shopify Payments losses driven by increased GMV processed through Shopify Payments, a $8.6 million increase in losses and insurance related to Shopify Capital driven by an expansion of our Capital offerings and programs, a $6.9 million increase in professional services fees for legal and tax services, including those related to our international expansion and the growth of our business, a $1.8 million increase in computer and software costs, and a $1.6 million increase in general bad debt expense. General and administrative expenses increased $71.5 million, or 66.5%, for the year ended December 31, 2019 compared to the same period in 2018, due to an increase of $28.7 million in employee-related costs ($12.2 million of which related to stock-based compensation and related payroll taxes), a $14.9 million increase in finance costs, which include an estimated net liability for non-recurring HST payable to the Government of Canada in the amount of $8.1 million related to 2019 and prior years, sales and use and other value added taxes, insurance, and bank fees, a $9.0 million increase in Shopify Payments losses driven by increased GMV processed through Shopify Payments, a $8.6 million increase in losses and insurance related to Shopify Capital driven by an expansion of our Capital offerings and programs, a $6.9 million increase in professional services fees for legal and tax services, including those related to our international expansion and the growth of our business, a $1.8 million increase in computer and software costs, and a $1.6 million increase in general bad debt expense.
General and administrative expenses increased $39.7 million, or 58.7%, for the year ended December 31, 2018 compared to the same period in 2017, due to an increase of $30.3 million in employee-related costs, a $4.5 million increase in professional services fees for legal and tax services, a $4.0 million increase in finance costs, which includes insurance, sales and use and other value added taxes, and a $1.7 million increase in computer and software costs.

                             | Years ended December 31,           |           |          | 2019 vs 2018 | 2018 vs 2017
---------------------------- | ---------------------------------- | --------- | -------- | ------------ | ------------
                             | 2019                               | 2018      | 2017     | % Change     | % Change
                             | (in thousands, except percentages) |           |          |              |
General and administrative   | $ 178,934                          | $ 107,444 | $ 67,719 | 66.5 %       | 58.7 %
Percentage of total revenues | 11.3 %                             | 10.0 %    | 10.1 %   |              |

Administrative
 expenses increased $71. 5 million. 5% December 31, 2019 2018 $28. 7 million employee costs$12. 2 million stock-based compensation payroll $14. 9 million finance costs estimated net liability non-recurring HST $8. 1 million 2019 sales taxes insurance bank fees $9. million Shopify Payments losses $8. 6 million losses insurance $6. 9 million professional services fees legal $1. 8 million computer software costs $1. 6 million bad debt. expenses increased $71. 5 million 66. 5% December 2019 2018 $28. 7 million employee costs$12. 2 million stock-based compensation payroll $14. 9 million finance costs estimated net liability non-recurring HST $8. 1 million sales taxes insurance bank fees $9. million increase Shopify Payments losses $8. 6 million losses insurance $6. million professional services fees $1. million computer software costs $1. 6 million increase bad debt expense.
administrative expenses increased $39. 7 million. 7% year December 31, 2018 2017 increase $30. 3 million employee costs $4. 5 million professional services $4. million finance costs insurance sales taxes $1. 7 million computer software costs.
 2019 2018
 % Change
 administrative $ 178,934 $ 107,444 $ 67,719 66. 5 % 58. 7 %
 revenues 11. 3 %. 1 %


Performance-Based Restricted Stock Units
PRSU activity is summarized as follows (shares in thousands):
1 Assumes maximum achievement of the specified financial targets.
The weighted-average grant date fair value of PRSUs granted during the years ended December 31, 2019, 2018, and 2017 was $56.74, $40.53, and $41.73, respectively.
Unrecognized compensation expense related to unvested PRSUs was $16.9 million at December 31, 2019, which is expected to be recognized over a weighted-average period of 1.7 years.

                                       | Number of Shares | Weighted- Average Grant Date Fair Value
-------------------------------------- | ---------------- | ---------------------------------------
Unvested shares at December 31, 2018   | 1,924            | $40.81
Granted                                | 390              | 56.74
Forfeited                              | (562)            | 41.29
Vested                                 | —                | —
Unvested shares at December 31, 2019 1 | 1,752            | $44.21

Performance
 PRSU activity
 achievement financial targets.
-average grant value PRSUs 2019 2018 2017 $56. 74 $40. 53 $41. 73.
 Unrecognized compensation expense unvested PRSUs $16. million December 31, 2019. 7 years.
 Unvested shares December 31, 2018 1,924 $40.
.
 Forfeited.
 Unvested shares December 31, 2019 1,752 $44.


Other Assets
Other assets consist of the following (in thousands):
The Company’s other assets includes a strategic equity investment in a privately-held company. The strategic investment is a non-marketable equity security, in which the Company does not have a controlling interest or the ability to exert significant influence. This investment does not have a readily determinable market value. The Company records this strategic investment at cost less impairment and adjusts cost for subsequent observable price changes. During the years ended July 31, 2019 and 2018, there were no changes in the investment’s carrying value of $10.7 million.

                      | July 31, 2019  | July 31, 2018
--------------------- | -------------- | -------------
Prepaid expenses      | $2,640         | $2,476
Contract costs        | 23,375         | —
Deferred costs        | 8,867          | 9,377
Strategic investments | 10,672         | 10,672
Other assets          | $45,554        | 22,525

Assets
 strategic equity investment privately-held company. non-marketable controlling interest influence. market value. records cost less impairment adjusts for price changes. July 31, 2019 2018 no changes value $10. 7 million.
 Prepaid expenses $2,640 $2,476
 Contract costs 23,375
 Deferred costs 8,867 9,377
 Strategic investments 10,672
 Other assets $45,554 22,525


This section presents the total remuneration of the Group’s external auditors for audit, assurance, and other services.
The auditors’ remuneration for the Group is as follows:
(1) Assurance related services include various agreed upon procedures and review of the sustainability report.
(2)  Other non-audit services include financial due diligence and other sundry services.
(3)  Other auditors are international associates of Deloitte Touche Tohmatsu Australia.

                                                                   | 2019  | 2018
------------------------------------------------------------------ | ----- | -----
                                                                   | $’000 | $’000
Auditors of the parent entity – Deloitte Touche Tohmatsu Australia |       |
Audit or review of the financial reports                           | 3,055 | 2,778
Assurance related services (1)                                     | 341   | 289
Tax compliance services                                            | –     | 11
Other non-audit services (2)                                       | 222   | 193
                                                                   | 3,618 | 3,271
Other auditors (3)                                                 |       |
Audit or review of the financial reports                           | 432   | 419
Assurance related services (1)                                     | 50    | 50
Tax compliance services                                            | 62    | 29
                                                                   | 544   | 498
Total auditors’ remuneration                                       | 4,162 | 3,769

section presents remuneration external auditors audit.
 Assurance services procedures sustainability report.
 non-audit services financial due diligence.
 auditors associates Deloitte Touche Tohmatsu Australia.
 Auditors Deloitte Touche Tohmatsu Australia
 Audit financial 3,055 2,778
 Assurance services 341
 Tax compliance services
 non services 222
 3,618 3,271
 Audit financial reports 432 419
 Assurance
 Tax compliance services
 544 498
 Total auditors’ remuneration 4,162 3,769


5.5 Other Operating Expense Items
Note: (1) The non-audit fees for the current financial year ended 31 March 2019 included S$0.4 million and S$0.2million paid to KPMG LLP, Singapore and KPMG, Australia in respect of tax services, certification and review for regulatory purposes. In the previous financial year, the non-audit fees included S$0.2 million and S$0.3 million paid to Deloitte & Touche LLP, Singapore, and Deloitte Touche Tohmatsu, Australia, respectively in respect of tax services, certification and review for regulatory purposes.
The Audit Committee had undertaken a review of the non-audit services provided by the auditors, KPMG LLP, and in the opinion of the Audit Committee, these services did not affect the independence of the auditors. The Audit Committee had undertaken a review of the non-audit services provided by the auditors, KPMG LLP, and in the opinion of the Audit Committee, these services did not affect the independence of the auditors.

                                           | Group  |
------------------------------------------ | ------ | ------
                                           | 2019   | 2018
                                           | S$ Mil | S$ Mil
Operating expenses included the following: |        |
Auditors' remuneration                     |        |
- KPMG LLP, Singapore                      | 2.4    | -
- KPMG, Australia                          | 1.2    | -
- Other KPMG offices                       | 1.3    | -
- Deloitte & Touche LLP, Singapore         | -      | 1.5
- Deloitte Touche Tohmatsu, Australia      | -      | 1.2
- Other Deloitte & Touche offices          | -      | 2.1
Non-audit fees (1) paid to                 |        |
- KPMG LLP, Singapore                      | 0.4    | -
- KPMG, Australia                          | 0.4    | -
- Other KPMG offices                       | 0.1    | -
- Deloitte & Touche LLP, Singapore         | - -    | 0.3
- Deloitte Touche Tohmatsu, Australia      | -      | 0.3
- Other Deloitte & Touche offices          | -      | 0.2
Impairment of trade receivables            | 121.8  | 128.0
Allowance for inventory obsolescence       | 1.1    | 7.1
Operating lease payments                   | 437.2  | 470.7

5. Operating Expense Items
 non-audit fees current financial year 31 March 2019 included S$0. 4 million S$0. 2million KPMG LLP Singapore KPMG Australia tax services certification review regulatory. previous year fees included S$0. 2 million S. 3 million Deloitte & Touche LLP Singapore Deloitte Touche Tohmatsu Australia.
 Audit Committee non-audit services affect independence auditors. affect independence auditors.
 Operating expenses
 Auditors' remuneration
 KPMG LLP Singapore.
 KPMG Australia.
 Other KPMG offices.
 Deloitte & Touche LLP Singapore.
 Deloitte Touche Tohmatsu Australia.
 offices.
 Non-audit fees paid
 KPMG LLP Singapore.
 KPMG Australia.
 Other KPMG offices.
 Deloitte Touche LLP Singapore.
 Deloitte Touche Tohmatsu Australia.
 Other Deloitte & Touche offices.
trade receivables 121. 128.
 inventory obsolescence. 7.
 lease. 470.


AMERICAN TOWER CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular amounts in millions, unless otherwise disclosed)
3. PROPERTY AND EQUIPMENT
Property and equipment (including assets held under finance leases) consisted of the following:
(1) Assets on leased land are depreciated over the shorter of the estimated useful life of the asset or the term of the corresponding ground lease taking into consideration lease renewal options and residual value.
(2) Includes fiber and DAS assets.
(3) Estimated useful lives apply to improvements only.

                              | Estimated Useful Lives (years) (1) | December 31, 2019 | December 31, 2018
----------------------------- | ---------------------------------- | ----------------- | -----------------
Towers                        | Up to 20                           | $13,930.7         | $12,777.9
Equipment (2)                 | 2 - 20                             | 1,897.3           | 1,667.3
Buildings and improvements    | 3 - 32                             | 638.9             | 628.5
Land and improvements (3)     | Up to 20                           | 2,486.1           | 2,285.4
Construction-in-progress      |                                    | 372.6             | 358.1
Total                         |                                    | 19,325.6          | 17,717.2
Less accumulated depreciation |                                    | (7,241.2)         | (6,470.1)
Property and equipment, net   |                                    | $12,084.4         | $11,247.1

AMERICAN TOWER CORPORATION SUBSIDIARIES FINANCIAL STATEMENTS amounts millions
. PROPERTY EQUIPMENT
 leases
 Assets leased land depreciated estimated life lease renewal options residual value.
 fiber DAS assets.
 lives improvements.
 December 31, 2019 2018
 Towers 20 $13,930. $12,777.
 Equipment 1,897. 1,667.
 Buildings improvements 638. 628.
 Land improvements 2,486. 2,285.
 Construction-in-progress 372. 358.
 19,325. 17,717.
 accumulated depreciation (7,241. (6,470.
 Property equipment $12,084. $11,247.


The following table represents the restricted stock units and SARS stock-based compensation information for the periods indicated (in thousands):
(1) Classified as income tax expense within the Consolidated Statements of Operations.

                                                                       |          | Fiscal Year Ended August 31, |
---------------------------------------------------------------------- | -------- | ---------------------------- | -------
                                                                       | 2019     | 2018                         | 2017
Intrinsic value of SARS exercised                                      | $335     | $909                         | $5,053
Fair value of restricted stock units vested                            | $49,725  | $62,592                      | $44,010
Tax benefit for stock compensation expense(1)                          | $611     | $1,122                       | $560
Unrecognized stock-based compensation expense — restricted stock units | $41,778  |                              |
Remaining weighted-average period for restricted stock units expense   | 1.3years |                              |

table restricted stock units SARS compensation
 income tax expense Consolidated Statements Operations.
 Ended August
 value SARS $335 $909 $5,053
 restricted stock units $49,725 $62,592 $44,010
 Tax benefit stock compensation $611 $1,122 $560
 Unrecognized compensation units $41,778
-average units. 3years


1. 2019 Performance Periods and Performance Goals. For the calendar year 2019, there are four quarterly Performance Periods, ending on March 31, June 30, September 30 and December 31, 2019 (each, a “2019 Performance Period”). For each of the four 2019 Performance Periods, there are two equally weighted (50% each) performance goals (each, a “2019 Performance Goal”): Revenue and Operating Margin (each as defined below). The chart below set forth the Revenue and Operating Margin Performance Goals for the four 2019 Performance Periods.
“Revenue” means as to each of the 2019 Performance Periods, the Company’s net revenues generated from third parties, including both services revenues and product revenues as defined in the Company’s Form 10-K filed for the calendar year ended December 31, 2018. Net revenue is defined as gross sales less any pertinent discounts, refunds or other contra-revenue amounts, as presented on the Company’s press releases reporting its quarterly financial results.
“Operating Margin” means as to each of the 2019 Performance Periods, the Company’s non-GAAP operating income divided by its Revenue. Non-GAAP operating income means the Company’s Revenues less cost of revenues and operating expenses, excluding the impact of stock-based compensation expense, amortization of acquisition related intangibles, legal settlement related charges and as adjusted for certain acquisitions, as presented on the Company’s press releases reporting its quarterly financial results

2019 Performance Period | Revenue Performance Goal(in millions) | Operating Margin Performance Goal
----------------------- | ------------------------------------- | ---------------------------------
Q1                      | $199.5                                | 8.1%
Q2                      | $211.7                                | 8.3%
Q3                      | $227.3                                | 9.6%
Q4                      | $243.2                                | 10.8%

. 2019 Performance Periods Goals. 2019 four quarterly Performance Periods March June September 30 December 31, 2019. two weighted (50% each performance goals Revenue Operating Margin. chart Revenue Operating Margin Performance Goals four Periods.
 net revenues third parties services product revenues Form 10-K December 31, 2018. gross sales less discounts refunds contra-revenue.
 “Operating Margin” non-GAAP operating income divided by Revenue. Revenues less cost revenues operating expenses excluding stock-based compensation expense amortization acquisition intangibles legal settlement charges adjusted acquisitions
 2019 Performance Period Revenue Goal Operating Margin Goal
 Q1 $199. 8. 1%
 Q2 $211. 3%
 Q3 $227. 6%
 Q4 $243. 8%


Gross Profit. Gross profit increased 15%, or $144.4 million, in 2019 compared to 2018, with gross margin increasing approximately 70 basis points to 14.7% of net sales. Our gross profit and gross profit as a percent of net sales by operating segment for 2019 and 2018 were as follows (dollars in thousands):
North America’s gross profit in 2019 increased 19% compared to 2018, and as a percentage of net sales, gross margin increased by approximately 80 basis points year over year. The year over year net increase in gross margin was primarily attributable to the following:
• A net increase in product margin, which includes partner funding and freight, of 30 basis points year over year. This increase was due primarily to improvements in hardware and software product margin partially as a result of improvements in core business margins on product net sales and also as a result of PCM.
• Services margin improvement year over year of 50 basis points was generated from increased vendor funding, cloud solution offerings and referral fees. In addition, there was a 21 basis point improvement in margins from Insight delivered services.
EMEA’s gross profit in 2019 increased 3% (increased 8% excluding the effects of fluctuating foreign currency exchange rates), compared to 2018. As a percentage of net sales, gross margin increased by approximately 40 basis points year over year.
APAC’s gross profit in 2019 increased 1% (increased 6% excluding the effects of fluctuating foreign currency exchange rates), compared to 2018, with gross margin increasing to 22.1% in 2019 from 21.2% in 2018. The improvement in gross margin for both EMEA and APAC in 2019 compared to 2018 was due primarily to changes in sales mix to higher margin products and services.

             | 2019       | % of Net
Sales | 2018     | % of Net Sales
------------ | ---------- | -------------- | -------- | --------------
NorthAmerica | $ 871,114  | 14.5%          | $732,695 | 13.7%
EMEA         | $227,083   | 14.9%          | $221,467 | 14.5%
APAC         | $39,901    | 22.1%          | $39,556  | 21.2%
Consolidated | $1,138,098 | 14.7%          | $993,718 | 14.0%

Profit. increased 15% $144. 4 million 2019 2018 margin increasing 70 points to 14. 7% net sales. sales segment 2019 2018 (dollars
 North America’s gross profit 2019 increased 19% 2018 percentage net sales increased 80 points over year.
 increase product margin funding freight 30 points. due to hardware software margin.
 Services margin improvement 50 points increased vendor funding cloud solution offerings referral fees. 21 basis point improvement Insight delivered services.
 EMEA’s gross profit 2019 increased 3% 8%. gross margin increased 40 points.
 APAC’s gross profit increased 1% 6% 22. 1% 2019 from 21. 2% 2018. improvement due to changes sales mix higher margin products services.
 2019 % Net
 Sales 2018
 NorthAmerica 871,114. $732,695.
 EMEA $227,083. $221,467.
 APAC $39,901. 1% $39,556. 2%
 Consolidated $1,138,098.$993,718.


Note 26. Other Income (Expense)
Other income (expense), net consisted of the following (in thousands):

                                                                  |          | Years Ended December 31, |
----------------------------------------------------------------- | -------- | ------------------------ | ------
                                                                  | 2019     | 2018                     | 2017
Foreign currency transaction gains(losses)                        | $(1,262) | $2,029                   | $(548)
Gains (losses) on derivative instruments not designated as hedges | (674)    | (1,751)                  | 143
Net investment gains (losses) on investments held in rabbi trust  | 2,379    | (867)                    | 1,619
Other miscellaneous income (expense)                              | (857)    | (1,659)                  | 44
                                                                  | $(414)   | $(2,248)                 | $1,258

26. Income
 Ended December 31,
 Foreign currency gains $(1,262) $2,029 $(548)
 derivative instruments hedges (674) (1,751)
 gains investments trust 2,379 (867) 1,619
 miscellaneous income (857) (1,659)
 $(414) $(2,248 $1,258


Section 5: Our people
We are working to attract and retain employees with the skills and passion to best serve our markets. This section provides information about our employee benefits obligations. It also includes details of our employee share plans and compensation paid to key management personnel.
5.1 Key management personnel compensation
Key management personnel (KMP) refers to those who have authority and responsibility for planning, directing and controlling the activities of the Group. For a list of key management personnel and additional disclosures, refer to the remuneration report on pages 38 to 53.
KMP aggregate compensation
During the financial years 2019 and 2018, the aggregate compensation provided to KMP was as follows:
Other transactions with our KMP and their related parties
During the financial years 2019 and 2018, apart from transactions disclosed in note 7.2 of the financial report, there were no other transactions with our KMP and their related parties.

                             | CONSOLIDATED |
---------------------------- | ------------ | ---------
                             | 2019 $       | 2018 $
Short-term employee benefits | 3,728,367    | 2,780,820
Post-employment benefits     | 151,851      | 184,614
Share-based payments         | 651,748      | 320,560
Termination benefits         | 367,015      | 841,940
                             | 4,898,981    | 4,127,934

Section 5 people
 attract retain employees. employee benefits obligations. employee share plans compensation key management personnel.
. compensation
 authority planning activities Group. list remuneration report pages 38 to 53.
 KMP aggregate compensation
 financial years 2019 2018 compensation KMP
 transactions KMP
 2019 2018. no other transactions KMP.
 2019 2018
 Short-term employee benefits 3,728,367 2,780,820
 Post-employment benefits 151,851 184,614
 Share-based payments 651,748 320,560
 Termination benefits,015 841,940
 4,898,981,127,934


MANAGEMENT DISCUSSION SNAPSHOT
* (1.0) percent adjusted for currency; 0.2 percent excluding divested businesses and adjusted for currency.
** 2019 results were impacted by Red Hat purchase accounting and acquisition-related activity.
+ Includes charges of $2.0 billion or $2.23 of diluted earnings per share in 2018 associated with U.S. tax reform.
++At December 31

($ and shares in millions except per share amounts)             |          |          |
--------------------------------------------------------------- | -------- | -------- | ----------------------------------
For the year ended December 31:                                 | 2019     | 2018     | Yr.-to-Yr. Percent/Margin Change**
Revenue                                                         | $ 77,147 | $ 79,591 | (3.1)%*
Gross profit margin                                             | 47.3%    | 46.4%    | 0.9 pts.
Total expense and other (income)                                | $ 26,322 | $ 25,594 | 2.8%
Income from continuing operations before income taxes           | $ 10,166 | $ 11,342 | (10.4)%
Provision for income taxes from continuing operations           | $    731 | 2,619+   | (72.1)%
Income from continuing operations                               | $  9,435 | 8,723+   | 8.2%
Income from continuing operations margin                        | 12.2%    | 11.0%    | 1.3 pts.
Net income                                                      | $  9,431 | 8,728+   | 8.1%
Earnings per share from continuing operations—assuming dilution | $  10.57 | 9.51+    | 11.1%
Weighted-average shares outstanding—assuming dilution           | 892.8    | 916.3    | (2.6)%
Assets++                                                        | $152,186 | $123,382 | 23.3%
Liabilities++                                                   | $131,202 | $106,452 | 23.2%
Equity++                                                        | $ 20,985 | $ 16,929 | 24.0%

MANAGEMENT DISCUSSION
. adjusted currency. 2 divested businesses.
 2019 results impacted Red Hat accounting acquisition activity.
 $2. billion. diluted earnings share 2018. tax reform.
 December 31
 millions
 year December 31 2019. Percent/Margin
 Revenue $ 77,147 $ 79,591.
 Gross profit margin 47. 3% 46. 4%.
 Total expense $ 26,322 $ 25,594. 8%
 Income operations taxes $ 10,166 11,342.
 Provision taxes $ 731.
 Income operations $ 9,435.
. 2%.
 Net income $ 9,431 8,728.
 Earnings per share $ 10.
-average shares 892.
 $152,186 $123,382.
 $131,202 $106,452. 2%
 $ 20,985 $ 16,929.


Trade and Other Receivables
Unbilled revenues represent amounts not yet billed to merchants related to subscription fees for Plus merchants, transaction fees and shipping charges, as at the Consolidated Balance Sheet date.
Expressed in US $000's except share and per share amounts

                          | December 31, 2019 | December 31, 2018 | January 1, 2018
------------------------- | ----------------- | ----------------- | ---------------
                          | $                 | $                 | $
Indirect taxes receivable | 36,821            | 3,774             | 832
Unbilled revenues         | 31,629            | 12,653            | 7,616
Trade receivables         | 9,660             | 11,191            | 7,073
Accrued interest          | 5,754             | 5,109             | 2,015
Other receivables         | 6,665             | 8,620             | 4,403
                          | 90,529            | 41,347            | 21,939

 Unbilled revenues subscription transaction shipping charges Consolidated Balance Sheet.
 US $000
 January 1 2018
 Indirect taxes 36,821 3,774
 Unbilled revenues 31,629 12,653 7,616
 Trade receivables 9,660 11,191 7,073
 Accrued interest 5,754,109
 Other receivables 6,665 8,620
 90,529 41,347


Investing Cash Flow Activities
Year Ended December 31, 2019 Compared with the Year Ended December 31, 2018
Net cash used in investing activities – continuing operations during the year ended December 31, 2019 resulted from the absence of the sale of businesses compared to prior year. The sale of Netsmart and OneContent produced significant investing cash inflows during 2018, which was partially offset with cash paid for the acquisitions of Practice Fusion and Health Grid. Capital expenditures also decreased in 2019 compared with prior year.
Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017
We had cash inflows from investing activities – continuing operations during the year ended December 31, 2018 compared with cash outflows from investing activities – continuing operations during the year ended December 31, 2017, which was primarily driven by cash proceeds of $567 million from the sale of our investment in Netsmart and $241 million of net cash proceeds from the divestiture of the OneContent business during 2018.
Cash used in investing activities also included the purchase of Practice Fusion and Health Grid, which were mostly offset by lower overall capital expenditures during 2018.
Net cash used in investing activities – discontinued operations increased during the year ended December 31, 2018 compared with the prior year, primarily due to larger business acquisitions completed by Netsmart during 2018.

                                                                                |            | Year Ended December 31, |            |                         |
------------------------------------------------------------------------------------ | ---------- | ----------------------- | ---------- | ----------------------- | -----------------------
(In thousands)                                                                       | 2019       | 2018                    | 2017       | 2019 $ Change from 2018 | 2018 $ Change from 2017
Capital expenditures                                                                 | $(16,600)  | $(31,309)               | $(38,759)  | $14,709                 | $7,450
Capitalized software                                                                 | (113,836)  | (113,308)               | (118,241)  | (528)                   | 4,933
Cash paid for business acquisitions, net of cash acquired                            | (23,443)   | (177,233)               | (169,823)  | 153,790                 | (7,410)
Cash received from sale of businesses, net                                           | 0          | 807,764                 | 0          | (807,764)               | 807,764
Purchases of equity securities, other investments and related intangible assets, net | (7,191)    | (16,934)                | (5,606)    | 9,743                   | (11,328)
Other proceeds from investing activities                                             | 14         | 54                      | 215        | (40)                    | (161)
Net cash (used in) provided by investing activities - continuing operations          | (161,056)  | 469,034                 | (332,214)  | (630,090)               | 801,248
Net cash used in investing activities - discontinued operations                      | 0          | (221,021)               | (80,758)   | 221,021                 | (140,263)
Net cash (used in) provided by investing activities                                  | $(161,056) | $248,013                | $(412,972) | $(409,069)              | $660,985

Investing Cash Flow Activities
 Year Ended December 31, 2019 2018
 Net cash absence sale businesses. sale Netsmart OneContent produced cash inflows 2018 offset acquisitions Practice Fusion Health Grid. Capital expenditures decreased 2019.
 Ended December 31, 2018 2017
 cash inflows outflows 2017 driven by $567 million sale Netsmart $241 million divestiture OneContent 2018.
 purchase Practice Fusion Health Grid offset lower capital expenditures 2018.
 cash increased 2018 due business acquisitions Netsmart.
 Year Ended December 31,
 thousands) 2019 2018 2017 2018
 Capital expenditures $(16,600) $(31,309) $(38,759) $14,709 $7,450
 Capitalized software (113,836) (113,308) (118,241) 4,933
 Cash paid business acquisitions acquired (23,443) (177,233) (169,823) 153,790 (7,410)
sale businesses 807,764
 Purchases equity securities investments assets (7,191) (16,934) (5,606) 9,743 (11,328)
 proceeds investing activities
 (161,056),034 (332,214) (630,090) 801,248
 discontinued operations (221,021) (80,758) 221,021 (140,263)
(161,056) $248,013 $(412,972),069) $660,985


The Company had gross unrecognized tax benefits of $15.7 million and $3.0 million, as of June 30, 2019 and June 30, 2018, respectively. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.
The Company files income tax returns in various federal, state, and local jurisdictions including the United States, Canada, United Kingdom and France. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities in major tax jurisdictions for years before 2014.

                                                                  | June 30,     |
----------------------------------------------------------------- | ------------ | -----
                                                                  | 2019         | 2018
                                                                  | in millions) |
Balance at beginning of year                                      | $3.0         | $0.2
Additions for current year tax positions                          | 1.5          | 1.2
Additions for prior year tax positions                            | 11.5         | 1.7
Reductions as a result of settlement with tax authority           | (0.3)        | (0.1)
Balance at end of year                                            | $15.7        | $3.0
Interest and penalties included in balance                        | $2.2         | $0.1
Amount, if recognized, would impact the effective income tax rate | 10.0         | 1.8
Amount that could be settled within the next year                 | 10.0         | 1.9

Company unrecognized tax benefits $15. 7 million $3. 0 million June 30 2019 2018. recognizes interest penalties tax positions.
 files tax returns federal state local jurisdictions United States Canada Kingdom France. subject. no longer subject examinations before 2014.
 30
 Balance $3. 0 $0. 2
 Additions current year tax positions 1. 1.
 prior year positions 11. 1.
 Reductions settlement tax authority.
 Balance end year $15. 7 $3. 0
 Interest penalties $2. 2 $0.
 income tax rate 10. 1.
 settled next year 10.


The following is a summary of our contractual obligations and commercial commitments as ofSeptember 29, 2019 (in thousands):
(1) Includes mandatory principal and interest payments on our Class A-2 Notes. Amounts are reflected through the anticipated repayment dates as described further above in “Liquidity and capital resources.”
(2)  Includes purchase commitments for food, beverage, and packaging items to support system-wide restaurant operations.
(3)  Includes expected payments associated with our non-qualified defined benefit plan, postretirement healthcare plans and our non-qualified deferred compensation plan through fiscal 2029.
(4)  Consists primarily of letters of credit for interest reserves required under the Indenture and insurance.
We maintain a noncontributory defined benefit pension plan (“Qualified Plan”) covering substantially all full-time employees hired before January 1, 2011.  Our policy is to fund our Qualified Plan at amounts necessary to satisfy the minimum amount required by law, plus additional amounts as determined by management to improve the plan’s funded status. Contributions beyond fiscal 2019 will depend on pension asset performance, future interest rates, future tax law changes, and future changes in regulatory funding requirements. Based on the funding status of our Qualified Plan as of our last measurement date, there was no minimum contribution required in 2019. For additional information related to our pension plans, refer to Note 12,Retirement Plans, of the notes to the consolidated financial statements.

                               |            |            | Payments Due by Fiscal Year |            |
------------------------------ | ---------- | ---------- | --------------------------- | ---------- | -------------
                               |            | Less than  |                             |            |
                               | Total      | 1 year     | 1-3 years                   | 3-5 years  | After 5 years
Contractual Obligations:       |            |            |                             |            |
Long-term debt obligations (1) | 1,708,916  | 65,087     | 115,141                     | 667,245    | 861,443
Capital lease obligations      | 3,937      | 879        | 1,758                       | 1,260      | 40
Operating lease obligations    | 1,094,011  | 193,313    | 332,020                     | 205,173    | 363,505
Purchase commitments (2)       | 1,906,900  | 854,100    | 722,900                     | 308,400    | 21,500
Benefit obligations (3)        | 74,714     | 15,068     | 13,499                      | 13,533     | 32,614
Total contractual obligations  | $4,788,478 | $1,128,447 | $1,185,318                  | $1,195,611 | $1,279,102
Other Commercial Commitments:  |            |            |                             |            |
Stand-by letters of credit (4) | $45,600    | $45,600    | $—                          | $—         | $—

summary contractual obligations commercial commitments 29, 2019
 Includes mandatory principal interest payments Class A-2 Notes. anticipated repayment dates.
 purchase commitments food beverage packaging restaurant operations.
 payments non-qualified defined benefit plan postretirement healthcare plans deferred compensation plan through 2029.
 letters credit interest reserves Indenture insurance.
 noncontributory defined benefit pension plan full-time employees before January 1 2011. minimum additional. Contributions 2019 pension asset performance interest rates tax law regulatory funding requirements. no minimum contribution 2019. information Note 12,Retirement Plans consolidated financial statements.
 Payments Due Fiscal Year
 1 year 1-3 years 3-5 years After 5 years
 Long-term debt obligations 1,708,916 65,087 115,141 667,245 861,443
 Capital lease obligations 3,937 1,758 1,260
lease 1,094,011 193,313 332,020 205,173 363,505
 Purchase 1,906,900 854,100,900 308,400
 Benefit 74,714 15,068 13,499
 $4,788,478,128,447,185,318,195,611,279,102
 Commercial Commitments
-by letters credit $45,600


General and Administrative Expense
General and administrative expense increased by $8.6 million in 2018 compared to 2017. The increase was primarily due to a $3.7 million increase in employee-related costs, which includes stock-based compensation, associated with our increased headcount from 79 employees as of December 31, 2017 to 89 employees as of December 31, 2018. There was an additional increase of $2.8 million in depreciation and amortization, an increase of $1.5 million to support compliance as a public company, an increase of $0.4 million in software subscription cost and a $0.2 million increase in office related expenses to support the administrative team.

                           | Year Ended December 31, |                        | Change  |
-------------------------- | ----------------------- | ---------------------- | ------- | -----
                           | 2018                    | 2017                   | $       | %
                           |                         | (dollars in thousands) |         |
General and administrative | $ 31,462                | $ 22,895               | $ 8,567 | 37.4%
% of revenue               | 21%                     | 22%                    |         |

Administrative Expense
 increased $8. 6 million 2018 2017. due $3. 7 million employee costs stock-based compensation increased headcount 79 89. additional increase $2. 8 million depreciation amortization $1. 5 million compliance $0. 4 million software subscription $0. 2 million office expenses team.
 Year Ended December 31,
 2017
 thousands
 $ 31,462 $ 22,895 8,567. 4%
 revenue 21% 22%


10. Accrued and Other Current Liabilities
Accrued and other current liabilities consisted of the following:

                                      |         | Fiscal Year End
------------------------------------- | ------- | ---------------
                                      | 2019    | 2018
                                      |         | (in millions)
Accrued payroll and employee benefits | $  455  | $  565
Dividends payable to shareholders     | 308     | 303
Restructuring reserves                | 245     | 141
Income taxes payable                  | 94      | 109
Deferred revenue                      | 36      | 27
Interest payable                      | 31      | 34
Share repurchase program payable      | 18      | 94
Other                                 | 426     | 438
Accrued and other current liabilities | $ 1,613 | $  1,711

. Accrued Liabilities
 Fiscal Year
 millions
 Accrued payroll employee benefits $ 455 $ 565
 Dividends 308
 Restructuring reserves 141
 Income taxes 94
 Deferred revenue 36
 Interest 31
 Share repurchase program 18
 Accrued liabilities $ 1,613 1,711


Item 6. Selected Financial Data.
The following selected consolidated financial and operating data was derived from our audited consolidated financial statements. The selected financial data should be read in conjunction with the Consolidated Financial Statements and Notes thereto, and Item 7 contained in Part II of this Annual Report.
(1) When a loss is reported, the denominator of diluted earnings per share cannot be adjusted for the dilutive impact of share-based compensation awards because doing so would be anti-dilutive. In addition, when a loss from continuing operations is reported, adjusting the denominator of diluted earnings per share would also be anti-dilutive to the loss per share, even if the entity has net income after adjusting for a discontinued operation.
Therefore, for all periods presented, basic weighted-average shares outstanding were used in calculating the diluted net loss per share.

                                                        |           |          | Year ended March 31, |          |
------------------------------------------------------- | --------- | -------- | -------------------- | -------- | ---------
(In thousands, except per share data)                   | 2019      | 2018     | 2017                 | 2016     | 2015
Operating results                                       |           |          |                      |          |
Net revenue                                             | $140,842  | $127,360 | $127,678             | $120,366 | $103,514
Gross profit                                            | 73,880    | 64,417   | 63,785               | 68,106   | 60,081
Operating loss                                          | (13,081)  | (12,080) | (11,408)             | (4,313)  | (12,467)
Operating loss, net of taxes                            | (13,164)  | (8,350)  | (11,721)             | (3,765)  | (11,497)
Net loss                                                | $(13,164) | $(8,350) | $(11,721)            | $(3,765) | $(11,497)
Per share data (1)                                      |           |          |                      |          |
Basic and diluted                                       |           |          |                      |          |
Net loss                                                | $(0.57)   | $(0.37)  | $(0.52)              | $(0.17)  | $(0.51)
Weighted-average shares outstanding - basic and diluted | 23,037    | 22,801   | 22,615               | 22,483   | 22,338
Balance sheet data at year end                          |           |          |                      |          |
Cash and cash equivalents                               | $40,771   | $39,943  | $49,255              | $60,608  | $75,067
Working capital                                         | 20,707    | 19,343   | 27,183               | 41,401   | 54,407
Total assets                                            | 163,591   | 157,207  | 167,305              | 185,157  | 181,525
Total debt                                              | 57        | 177      | 237                  | 333      | 189
Total shareholders’ equity                              | 100,622   | 108,431  | 113,669              | 123,473  | 124,188

Item 6. Selected Financial Data.
 consolidated financial operating data from audited consolidated financial statements. read Financial Statements Notes Item 7 Part II Annual Report.
 loss diluted earnings per share compensation. loss continuing operations adjusting anti-dilutive loss net income.
 weighted-average shares diluted net loss per share.
 Year ended March 31,
 thousands share data 2019 2018 2017 2016 2015
 Operating results
 Net revenue $140,842 $127,360,678 $120,366 $103,514
 Gross profit 73,880 64,417
 Operating loss (13,081) (12,080) (11,408 (4,313),467
 net taxes (13,164) (8,350) (11,721) (3,765
 Net loss $(13,164)(8,350
 Per share data
 Basic diluted
 Net loss. 37..
 shares 23,037 22,801
 Balance sheet
 Cash equivalents $40,771 $39,943 $49,255,608 $75,067
 Working capital 20,707 19,343 27,183 41,401 54,407
 assets 163,591 157,207 167,305 185,157
 debt 57
 equity 100,622 108,431 113,669 123,473


Share-based Compensation Expense The following table summarizes total compensation costs recognized for share-based payments during the years ended December 31, 2019, 2018 and 2017:
Income tax benefits related to share-based compensation of approximately $1.8 million, $1.3 million and $1.1 million were recorded for the years ended December 31, 2019, 2018 and 2017, respectively. Share-based compensation expense is included in “selling, general and administrative expenses” in the accompanying consolidated statements of operations.
As of December 31, 2019, total unrecognized compensation cost related to non-vested RSAs and PSAs was $10.6 million and will be recognized over a weighted-average period of approximately 1.7 years.

                   |         | Year Ended December 31, |
------------------ | ------- | ----------------------- | -------
(In thousands)     | 2019    | 2018                    | 2017
Restricted stock   | $ 4,013 | $ 3,249                 | $ 1,986
Performance shares | 2,823   | 1,870                   | 780
Total              | $ 6,836 | $ 5,119                 | $ 2,766

Share-based Compensation Expense table summarizes compensation costs share payments 2019 2018
 Income tax benefits $1. 8 million $1. 3 million $1. 1 million. general administrative statements.
 December 2019 unrecognized compensation cost non RSAs PSAs $10. 6 million recognized. 7 years.
 2019 2017
 Restricted stock $ 4,013 $ 3,249 1,986
 Performance shares 2,823
 $ 6,836 $ 5,119 2,766


The following table shows for the fiscal year ended March 29, 2019, certain information regarding option exercises and stock vested during the last fiscal year with respect to our named executive officers:
Option Exercises and Stock Vested in Fiscal 2019
(1) The value realized upon option exercises is based on the difference between the closing price of our common stock at exercise and the option exercise price.
(2) The number of shares and value realized for stock awards set forth above reflect (i) RSUs that vested and settled in FY19, (ii) RSUs granted under the FY19 EAIP on 5/20/2019, which vested and settled on 6/1/2019, and (iii) PRUs that vested in FY19 and were settled in FY20.
(3) The value realized upon vesting is based on the closing price of our common stock upon vesting in the case of RSUs and the closing price of our common stock on March 29, 2019 in the case of PRUs.

Option Awards           |                                           |                                     | Stock Awards                                |
----------------------- | ----------------------------------------- | ----------------------------------- | ------------------------------------------- | ----------------------------------
Name                    | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise (1)($)$) | Number of Shares Acquired on Vesting(2) (#) | Value Realized on Vesting (3)($)$)
Gregory S. Clark        | —                                         | —                                   | 342,338                                     | 7,467,791
Nicholas R. Noviello    | 332,155                                   | 4,699,993                           | 111,855                                     | 2,419,818
Amy L. Cappellanti-Wolf | —                                         | —                                   | 92,644                                      | 1,997,239
Samir Kapuria           | —                                         | —                                   | 112,125                                     | 2,497,640
Scott C. Taylor         | —                                         | —                                   | 103,798                                     | 2,216,595

table shows fiscal year March 29, 2019 option exercises stock vested executive officers
 Option Exercises Stock Vested 2019
 value difference closing price common stock option price.
 shares value stock awards reflect RSUs vested settled FY19 RSUs FY19 5/20/2019 vested settled 6/1/2019 PRUs vested FY19 settled FY20.
 value vesting closing price common stock PRUs.
 Option Awards Stock Awards
 Number Shares Acquired Exercise Value
 Gregory S. Clark 342,338 7,467,791
 Nicholas R. Noviello 332,155 4,699,993 2,419,818
 Amy L. Cappellanti-Wolf 92,644 1,997,239
 Samir Kapuria 112,125 2,497,640
 Scott C. Taylor 103,798 2,216,595


Other identifiable intangible assets were as follows:
Non-amortizing intangible assets are comprised of brands and trademarks.
Amortizing intangible assets, carrying a remaining weighted-average life of approximately 20 years, are principally composed of customer relationships, and acquired intellectual property. For fiscal 2019, 2018, and 2017, we recognized amortization expense of $49.1 million, $34.9 million, and $33.6 million, respectively. Based on amortizing assets recognized in our Consolidated Balance Sheet as of May 26, 2019, amortization expense is estimated to average $58.3 million for each of the next five years, with a high expense of $59.9 million in fiscal 2020 and decreasing to a low expense of $54.2 million in fiscal 2024.
During fiscal 2019, in conjunction with the divestiture of our Italian-based frozen pasta business, Gelit, we reclassified $15.1 million and $1.7 million of goodwill and other identifiable intangible assets, respectively, to noncurrent assets held for sale for periods prior to the divestiture.
During fiscal 2019, as a result of our annual impairment test for indefinite lived intangibles, we recognized impairment charges of $76.5 million for our Chef Boyardee® and Red Fork® brands in our Grocery & Snacks segment. We also recognized impairment charges of $13.1 million for our Aylmer® and Sundrop ® brands in our International segment.
During fiscal 2018, as a result of our annual impairment test for indefinite lived intangibles, we recognized impairment charges of $4.0 million for our HK Anderson® , Red Fork® , and Salpica® brands in our Grocery & Snacks segment. We also recognized an impairment charge of $0.8 million for our Aylmer® brand in our International segment.
During fiscal 2017, we recorded goodwill impairment charges in our International reporting segment totaling $198.9 million, of which $139.2 million related to our Canadian reporting unit and $59.7 million related to our Mexican reporting unit. These impairment charges resulted from a change in reporting segments, which occurred in the first quarter of fiscal 2017 when we were required to determine new reporting units at a lower level, and from further deterioration in forecasted sales and profits during fiscal 2017, which were caused primarily by changes in foreign exchange rates.
In fiscal 2017, due to declining sales of certain brands, we elected to perform a quantitative impairment test for indefinite lived intangibles of those brands. During fiscal 2017, we recognized impairment charges of $31.5 million for our Del Monte® brand and $5.5 million for our Aylmer® brand in our International segment. We also recognized impairment charges of $67.1 million for our Chef Boyardee® brand and $1.1 million for our Fiddle Faddle® brand in our Grocery & Snacks segment.
Notes to Consolidated Financial Statements - (Continued) Fiscal Years Ended May 26, 2019, May 27, 2018, and May 28, 2017 (columnar dollars in millions except per share amounts)

                                 |                       | 2019                     |                       | 2018
-------------------------------- | --------------------- | ------------------------ | --------------------- | ------------------------
                                 | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization
Non-amortizing intangible assets | $3,678.0              | $—                       | $918.3                | $—
Amortizing intangible assets .   | 1,244.2               | 260.8                    | 576.6                 | 212.1
                                 | $4,922.2              | $260.8                   | $1,494.9              | $212.1

intangible assets
 Non-amortizing brands trademarks.
 Amortizing 20 years customer relationships acquired intellectual property. 2019 2018 2017 recognized amortization expense $49. 1 million $34. 9 million $33. 6 million. $58. 3 million next five years high expense $59. 9 million 2020 $54. 2 million 2024.
 2019 divestiture Italian frozen pasta Gelit reclassified $15. 1 million $1. 7 million goodwill assets noncurrent assets.
 2019 recognized charges $76. 5 million Chef Boyardee® Red Fork® brands. $13. 1 million Aylmer® Sundrop brands International.
 2018 recognized $4. 0 million HK Red Fork® Salpica® brands Grocery Snacks. $0. 8 million Aylmer® brand International.
 2017 goodwill impairment charges $198. 9 million $139. 2 million Canadian $59. 7 million Mexican unit.impairment charges change reporting segments first quarter 2017 units deterioration forecasted sales profits foreign exchange rates.
 2017 declining sales brands quantitative impairment test intangibles. recognized impairment charges $31. 5 million Del Monte® $5. 5 million Aylmer® International. recognized $67. 1 million Chef Boyardee® $1. 1 million Fiddle Faddle® Grocery Snacks segment.
 Consolidated Financial Statements Fiscal Years Ended May 26, 2019 27, 2018 May 28, 2017
 Gross Carrying Amount Accumulated Amortization
 Non-amortizing intangible assets $3,678. $918.
 Amortizing intangible assets. 1,244.
 $4,922. $1,494.


9. Accrued Liabilities
Accrued liabilities consisted of the following as of June 30, 2019 and 2018:

                                  | June 30, |
--------------------------------- | -------- | ------
($ in millions)                   | 2019     | 2018
Accrued compensation and benefits | $71.2    | $83.3
Derivative financial instruments  | 16.7     | —
Accrued postretirement benefits   | 14.7     | 15.4
Deferred revenue                  | 10.5     | 10.4
Accrued interest expense          | 10.4     | 10.4
Accrued income taxes              | 4.2      | 1.4
Accrued pension liabilities       | 3.4      | 3.3
Other                             | 26.5     | 24.4
Total accrued liabilities         | $157.6   | $148.6

. Accrued Liabilities
 June 30, 2019 2018:
 30 millions
 compensation benefits $71. $83.
 financial instruments 16. 7
 postretirement benefits 14. 15.
 Deferred revenue 10.
 interest expense 10.
 income taxes.
 pension liabilities 3.
 26. 24.
 liabilities $157. 6 $148.


The assets and liabilities of OpCo that are included in our Consolidated Balance Sheets at September 30, 2019 and 2018 are as follows:
The assets of OpCo are restricted for OpCo’s use and are not available for the general operations of Cubic. OpCo’s debt is non-recourse to Cubic. Cubic’s maximum exposure to loss as a result of its equity interest in the P3 Venture is limited to the $2.7 million outstanding letter of credit, which will be converted to a cash contribution upon completion of the design and build phase of the MBTA Contract.

                                                   |            | September 30,
-------------------------------------------------- | ---------- | --------------
                                                   | 2019       | 2018
                                                   |            | (in thousands)
Cash                                               | $  347     | $  374
Restricted cash                                    | 9,967      | 10,000
Other current assets                               | 33         | —
Long-term capitalized contract costs               | —          | 33,818
Long-term contracts financing receivable           | 115,508    | —
Other noncurrent assets                            | 1,419      | 810
Total assets                                       | $  127,274 | $  45,002
Trade accounts payable                             | $  25      | $  165
Accrued compensation and other current liabilities | 191        | —
Due to Cubic                                       | 25,143     | 11,724
Other long-term liabilities                        | 21,605     | 13
Long-term debt                                     | 61,994     | 9,056
Total liabilities                                  | $  108,958 | $  20,958
Total Cubic equity                                 | (603)      | (304)
Noncontrolling interests                           | 18,919     | 24,348
Total liabilities and owners' equity               | $ 127,274  | $ 45,002

assets liabilities OpCo Consolidated Balance Sheets September 30, 2019 2018
 assets restricted not operations Cubic. debt non-recourse. exposure loss P3 Venture limited $2. 7 million letter credit converted cash design MBTA Contract.
 Cash $ $ 374
 Restricted cash 9,967
 assets
 Long-term contract costs
 115,508
 noncurrent assets 1,419
 $ 127,274 $ 45,002
 Trade accounts payable $
 Accrued compensation liabilities
 25,143
 long-term liabilities 21,605
 debt 61,994
 liabilities $ 108,958 $ 20,958
 Cubic equity
 Noncontrolling interests 18,919
 liabilities equity $ 127,274 $ 45,002


6. Revenue continued
Contract assets and liabilities recognised at 31 March 2019 are as follows:
£1,216m of the contract liability recognised at 1 April 2018 was recognised as revenue during the year. Impairment losses of £36m were recognised on contract assets during the year. Other than business-as-usual movements there were no significant changes in contract asset and liability balances during the year.

                     | 31 March 2019 | 1 April 2018
-------------------- | ------------- | ------------
                     | £m            | £m
Contract assets      |               |
Current              | 1,353         | 1,417
Non-current          | 249           | 198
                     | 1,602         | 1,615
Contract liabilities |               |
Current              | 1,225         | 1,406
Non-current          | 200           | 87
                     | 1,425         | 1,493

. Revenue
 Contract assets liabilities 31 March 2019
 £1,216m contract liability 1 April 2018 revenue. Impairment losses £36m assets. no significant changes contract asset liability balances.
 31 March 2019 1 April 2018
 Contract assets
 1,353 1,417
 1,602
 liabilities
 1,225 1,406


GreenSky, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (United States Dollars in thousands, except per share data, unless otherwise stated)
Note 9. Other Liabilities
The following table details the components of other liabilities in the Consolidated Balance Sheets as of the dates indicated.
(1) We elected the fair value method to account for our servicing liabilities. Refer to Note 3 for additional information.
(2) Related party distributions payable are not included in this balance, but rather are included within related party liabilities.
(3) Refer to Note 3 and Note 8 for additional information on our interest rate swap, which was in a liability position as of December 31, 2019.
(4) Tax related liabilities primarily include certain taxes payable related to the Reorganization Transactions.
(5) Deferred lease liabilities were calculated in accordance with legacy lease guidance in ASC 840, Leases, for the amount presented as of December 31, 2018. Under the new lease guidance codified in ASC 842, Leases, which we adopted on January 1, 2019, we presented operating lease liabilities separately on the Consolidated Balance Sheets as of December 31, 2019. See Note 1 and Note 14 for additional information on our lease accounting.
(6) Accruals and other liabilities as of December 31, 2018 was adjusted to exclude the financial guarantee liability to conform to the current period presentation in the Consolidated Balance Sheets. Refer to Note 1 for additional discussion of our basis of presentation.

                                   | December 31, |
---------------------------------- | ------------ | -------
                                   | 2019         | 2018
Transaction processing liabilities | $24,465      | $4,958
Servicing liabilities(1)           | 3,796        | 3,016
Distributions payable(2)           | 5,978        | 10,066
Interest rate swap(3)              | 2,763        | —
Tax related liabilities(4)         | 873          | 4,412
Deferred lease liabilities(5)      | —            | 2,489
Accruals and other liabilities(6)  | 9,442        | 10,110
Other liabilities                  | $47,317      | $35,051

GreenSky Inc. NOTES FINANCIAL STATEMENTS States Dollars share data
 Note 9. Other Liabilities
 table details liabilities Consolidated Balance Sheets.
 elected fair value method servicing liabilities. Note 3.
 Related party distributions liabilities.
 Note 3 8 interest rate swap liability December 31, 2019.
 Tax liabilities Reorganization Transactions.
 Deferred lease liabilities calculated lease guidance ASC 840 December 31, 2018. new lease guidance ASC 842 adopted January 1, 2019 operating lease liabilities separately Balance Sheets. Note 1 14.
 Accruals liabilities December 31, adjusted exclude financial guarantee liability. Note 1.
 Transaction processing liabilities $24,465 $4,958
 Servicing 3,796
 Distributions 10,066
 Interest rate 2,763
 Tax related
 Deferred lease liabilities(5) 2,489
 Accruals liabilities(6) 9,442
$47,317,051


Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Aggregate audit fees, audit-related fees, tax fees and the aggregate of all other fees billed to us by Ernst & Young LLP for the fiscal years ended June 30, 2019 and 2018 were as follows:
(1) Audit Fees consist of fees incurred for professional services rendered for the integrated audit of our annual consolidated financial statements, review of the quarterly consolidated financial statements and foreign statutory audits and services that are normally provided by Ernst & Young LLP in connection with statutory and regulatory filings or engagements. Audit fees also include accounting consultations, research related to the integrated audit and comfort letter services in relation to our exchangeable senior notes.
(2) Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under “Audit Fees.” This primarily consists of fees for service organization control audits and due diligence on acquisitions.
(3) Tax fees relate to assistance with tax compliance, tax planning and various tax advisory services.
(4) Other fees are any additional amounts for products and services provided by the principal accountants.
Our audit committee has adopted a pre-approval policy for the engagement of our independent accountant to perform certain audit and non-audit services. Pursuant to this policy, which is designed to assure that such engagements do not impair the independence of our auditors, the audit committee pre-approves annually all audit services, audit related services, tax services and other services as described above, that may be performed by our independent accountants. All of the audit and non-audit services provided by our principal accountants have been pre-approved by our Audit Committee.

                       | 2019                  | 2018
---------------------- | --------------------- | ------
                       | (U.S. $ in thousands) |
Audit fees (1)         | $2,980                | $3,469
Audit-related fees (2) | 648                   | 447
Tax fees (3)           | 220                   | 238
Other fees (4)         | 8                     | 3
Total                  | $3,856                | $4,157

16C. PRINCIPAL ACCOUNTANT FEES SERVICES
 audit-related tax fees other fees Ernst & Young LLP fiscal years June 30, 2019 2018
 Audit Fees services integrated audit annual financial statements quarterly foreign statutory audits services Ernst & Young LLP. include accounting consultations research comfort letter services exchangeable senior notes.
 Audit-Related Fees services related audit financial statements not Fees. organization control audits due diligence acquisitions.
 Tax fees tax compliance planning advisory services.
 Other fees additional for products services principal accountants.
 audit committee pre-approval policy independent accountant audit non-audit services. pre-approves annually tax independent accountants. audit non-audit services principal accountants pre-approved Committee.
 2019 2018
.
 Audit fees (1) $2,980 $3,469
 Audit-related fees (2) 447
 Tax fees (3) 220 238
 Other fees (4) 8 3
,856 $4,157


The operating expense line items in our income statement include the following share-based payment expenses:
Share-Based Payment Expenses by Functional Area
In 2019, we paid €79 million in share-based payments that became fully vested because of terminations due to operational reasons in connection with our restructuring plan. These payments as well as the expense portion initially allocated to future services were classified as share-based payments and not as restructuring expenses.

€ millions                                  | 2019  | 2018 | 2017
------------------------------------------- | ----- | ---- | -----
Cost of cloud and software                  | 138   | 78   | 115
Cost of services                            | 246   | 142  | 158
Research and development                    | 429   | 210  | 269
Sales and marketing                         | 562   | 312  | 442
General and administration                  | 461   | 88   | 135
Share-based payment expenses                | 1,835 | 830  | 1,120
Thereof cash-settled share-based payments   | 1,664 | 674  | 963
Thereof equity-settled share-based payments | 171   | 156  | 157

operating expense share-based
 2019 paid €79 million share-based payments vested restructuring plan. share-based not restructuring expenses.
 millions 2019 2018 2017
 Cost cloud software 138 78
 services 246 142
 Research development 429 210 269
 Sales marketing 562 312 442
 General administration 461 88 135
 Share-based expenses 1,835 830 1,120
 cash-settled payments 1,664 674 963
 equity-settled payments 171 156


(1) Includes cloud services and license support revenue adjustments related to certain cloud services and license support contracts that would have otherwise been recorded as revenues by the acquired businesses as independent entities but were not recognized in our GAAP-based consolidated statements of operations for the periods presented due to business combination accounting requirements. Such revenue adjustments were included in our operating segment results for purposes of reporting to and review by our CODMs. See “Presentation of Operating Segment results and Other Financial Information” above for additional information.
(2) Excludes stock-based compensation and certain expense allocations. Also excludes amortization of intangible assets and certain other GAAP-based expenses, which were not allocated to our operating segment results for purposes of reporting to and review by our CODMs, as further described under “Presentation of Operating Segment results and Other Financial Information” above.
Excluding the effects of currency rate fluctuations, our cloud and license business’ total revenues increased in fiscal 2019 relative to fiscal 2018 due to growth in our cloud services and license support revenues, which was primarily due to increased customer purchases and renewals of cloud-based services and license support services in recent periods, contributions from our recent acquisitions and increased cloud license and on-premise license revenues. In constant currency, our total applications revenues and our total infrastructure revenues each grew during fiscal 2019 relative to fiscal 2018 as customers continued to deploy our applications technologies and infrastructure technologies through different deployment models that we offer that enable customer choice. The Americas region contributed 43%, the EMEA region contributed 31% and the Asia Pacific region contributed 26% of the constant currency revenues growth for this business in fiscal 2019.
In constant currency, total cloud and license expenses increased in fiscal 2019 compared to fiscal 2018 due to higher sales and marketing expenses and higher cloud services and license support expenses, each of which increased primarily due to higher employee related expenses from higher headcount and due to higher technology infrastructure expenses.
Excluding the effects of currency rate fluctuations, our cloud and license segment’s total margin increased in fiscal 2019 compared to fiscal 2018 primarily due to increased revenues, while total margin as a percentage of revenues decreased slightly due to expenses growth.

Year Ended May 31,                     |                             |        |                |
-------------------------------------- | --------------------------- | ------ | -------------- | -------
                                       |                             |        | Percent Change |
(Dollars in millions)                  | 2019                        | Actual | Constant       | 2018
                                       | Cloud and License Revenues: |        |                |
Americas (1)                           | $18,410                     | 2%     | 3%             | $18,030
EMEA (1)                               | 9,168                       | 0%     | 4%             | 9,163
Asia Pacific (1)                       | 5,004                       | 3%     | 7%             | 4,848
Total revenues (1)                     | 32,582                      | 2%     | 4%             | 32,041
                                       | Expenses:                   |        |                |
Cloud services and license support (2) | 3,597                       | 5%     | 6%             | 3,441
Sales and marketing (2)                | 7,398                       | 3%     | 5%             | 7,213
Total expenses (2)                     | 10,995                      | 3%     | 6%             | 10,654
Total Margin                           | $21,587                     | 1%     | 3%             | $21,387
Total Margin %                         | 66%                         |        |                | 67%
                                       | % Revenues by Geography:    |        |                |
Americas                               | 57%                         |        |                | 56%
EMEA                                   | 28%                         |        |                | 29%
Asia Pacific                           | 15%                         |        |                | 15%
                                       | Revenues by Offerings:      |        |                |
Cloud services and license support (1) | $26,727                     | 2%     | 4%             | $26,269
Cloud license and on-premise license   | 5,855                       | 1%     | 4%             | 5,772
Total revenues (1)                     | $32,582                     | 2%     | 4%             | $32,041
                                       | Revenues by Ecosystem:      |        |                |
Applications revenues (1)              | $11,510                     | 4%     | 6%             | $11,065
Infrastructure revenues (1)            | 21,072                      | 0%     | 3%             | 20,976
Total revenues (1)                     | $32,582                     | 2%     | 4%             | $32,041

Includes cloud services license support revenue adjustments not recognized in GAAP consolidated statements operations combination accounting requirements. revenue adjustments included in operating segment results CODMs. See results Financial.
 Excludes stock-based compensation expense allocations. excludes amortization of intangible assets other GAAP-based expenses not allocated to operating segment results.
 Excluding cloud license business’ revenues increased fiscal 2019 due to growth services license support revenues due to increased customer purchases renewals acquisitions increased cloud license on-premise license revenues. applications infrastructure revenues grew 2019. Americas region contributed 43% EMEA region 31% Asia Pacific region contributed 26% of revenues growth.
 cloud license expenses increased 2019 due to higher sales marketing higher cloud services license support expenses higher employee expenses headcount technology infrastructure expenses.
 Excluding cloud license segment’s total margin increased 2019 due to increased revenues total margin decreased slightly due to expenses growth.

 Year Ended May 31,
 Percent Change
 2019
 Cloud License Revenues
 Americas $18,410 2% 3% $18,030
 EMEA 9,168
 Asia Pacific 5,004 3% 7% 4,848
 Total revenues 32,582 2% 4%
 Expenses
 Cloud services license support 3,597 5% 6%
 Sales marketing 7,398
 Total expenses 10,995
 $21,587 $21,387
 66%
 Revenues Geography
 Americas 57%
 EMEA 28%
 Asia Pacific 15%
 Revenues Offerings
 Cloud services license support $26,727 2% 4% $26,269
 5,855 4%
 Total revenues $32,582 4% $32,041
 Ecosystem
 Applications revenues $11,510 4% 6% $11,065
 Infrastructure revenues 21,072 3% 20,976
revenues $32,582 4%


Results of Operations
Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018
Our management reviews and analyzes several key financial measures in order to manage our business and assess the quality of and variability of our service revenue, operating results and cash flows. The following summary tables present a comparison of our results of operations with respect to certain key financial measures. The comparisons illustrated in the tables are discussed in greater detail below.
(1) Includes non-cash equity-based compensation expense of $994 and $895 for 2019 and 2018, respectively.
(2) Includes non-cash equity-based compensation expense of $17,466 and $16,813 for 2019 and 2018, respectively.
Service Revenue. Our service revenue increased 5.0% from 2018 to 2019. Exchange rates negatively impacted our increase in service revenue by approximately $5.3 million. All foreign currency comparisons herein reflect results for 2019 translated at the average foreign currency exchange rates for 2018. We increased our total service revenue by increasing the number of sales representatives selling our services, by expanding our network, by adding additional buildings to our network, by increasing our penetration into the buildings connected to our network and by gaining market share by offering our services at lower prices than our competitors.
Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes, Universal Service Fund fees and certain state regulatory fees. We record these taxes billed to our customers on a gross basis (as service revenue and network operations expense) in our consolidated statements of operations. The impact of these taxes including the Universal Service Fund resulted in an increase to our revenues from 2018 to 2019 of approximately $2.4 million.
Our net-centric customers tend to purchase their service on a price per megabit basis. Our corporate customers tend to utilize a small portion of their allocated bandwidth on their connections and tend to purchase their service on a per connection basis. Revenues from our corporate and net-centric customers represented 68.4% and 31.6% of total service revenue, respectively, for 2019 and represented 64.9% and 35.1% of total service revenue, respectively, for 2018. Revenues from corporate customers increased 10.6% to $373.7 million for 2019 from $337.8 million for 2018 primarily due to an increase in our number of our corporate customers. Revenues from our net-centric customers decreased by 5.4% to $172.5 million for 2019 from $182.3 million for 2018 primarily due to an increase in our number of net-centric customers being offset by a decline in our average price per megabit. Our revenue from our net-centric customers has declined as a percentage of our total revenue and grew at a slower rate than our corporate customer revenue because net-centric customers purchase our services based upon a price per megabit basis and our average price per megabit declined by 23.9% from 2018 to 2019. Additionally, the net-centric market experiences a greater level of pricing pressure than the corporate market and net-centric customers who renew their service with us expect their renewed service to be at a lower price than their current price. We expect that our average price per megabit will continue to decline at similar rates which would result in our corporate revenues continuing to represent a greater portion of our total revenues and our net-centric revenues continuing to grow at a lower rate than our corporate revenues. Additionally, the impact of foreign exchange rates has a more significant impact on our net-centric revenues.
Our on-net revenues increased 5.9% from 2018 to 2019. We increased the number of our on-net customer connections by 8.4% at December 31, 2019 from December 31, 2018. On-net customer connections increased at a greater rate than on-net revenues primarily due to the 3.8% decline in our on-net ARPU, primarily from a decline in ARPU for our net-centric customers. ARPU is determined by dividing revenue for the period by the average customer connections for that period. Our average price per megabit for our installed base of customers is determined by dividing the aggregate monthly recurring fixed charges for those customers by the aggregate committed data rate for the same customers. The decline in on-net ARPU is partly attributed to volume and term based pricing discounts. Additionally, on-net customers who cancel their service from our installed base of customers, in general, have an ARPU that is greater than the ARPU for our new customers due to declining prices primarily for our on-net services sold to our net-centric customers. These trends resulted in the reduction to our on-net ARPU and a 23.9% decline in our average price per megabit for our installed base of customers.
Our off-net revenues increased 2.7% from 2018 to 2019. Our off-net revenues increased as we increased the number of our off-net customer connections by 6.3% at December 31, 2019 from December 31, 2018. Our off-net customer connections increased at a greater rate than our off-net revenue primarily due to the 5.0% decrease in our off-net ARPU.
Network Operations Expenses. Network operations expenses include the costs of personnel associated with service delivery, network management, and customer support, network facilities costs, fiber and equipment maintenance fees, leased circuit costs, access and facilities fees paid to building owners and excise taxes billed to our customers and recorded on a gross basis. Non-cash equity-based compensation expense is included in network operations expenses consistent with the classification of the employee's salary and other compensation. Our network operations expenses, including non-cash equity-based compensation expense, increased 0.1% from 2018 to 2019 as we were connected to 8.0% more customer connections and we were connected to 125 more on-net buildings as of December 31, 2019 compared to December 31, 2018. The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilities expansion activities, the increase in our off-net revenues and the increase in taxes recorded on a gross basis partly offset by price reductions obtained in certain of our circuit costs and fewer fiber operating leases. When we provide off-net services we also assume the cost of the associated tail circuits.
Selling, General, and Administrative Expenses (“SG&A”). Our SG&A expenses, including non-cash equity- based compensation expense, increased 9.8% from 2018 to 2019. Non-cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee's salary and other compensation and was $17.5 million for 2019 and $16.8 million for 2018. SG&A expenses increased primarily from an increase in salaries and related costs required to support our expansion and increases in our sales efforts and an increase in our headcount. Our sales force headcount increased by 10.8% from 619 at December 31, 2018 to 686 at December 31, 2019 and our total headcount increased by 8.3% from 974 at December 31, 2018 to 1,055 at December 31, 2019.
Depreciation and Amortization Expenses. Our depreciation and amortization expenses decreased 1.2% from 2018 to 2019. The decrease is primarily due to the depreciation expense associated with the increase related to newly deployed fixed assets being offset by the decline in depreciation expense from fully depreciated fixed assets.
Gains on Equipment Transactions. We exchanged certain used network equipment and cash consideration for new network equipment resulting in gains of $1.1 million for 2019 and $1.0 million for 2018. The gains are based upon the excess of the estimated fair value of the new network equipment over the carrying amount of the returned used network equipment and the cash paid. The increase in gains from 2018 to 2019 was due to purchasing more equipment under the exchange program in 2019 than we purchased in 2018.
Interest Expense. Interest expense results from interest incurred on our $445.0 million of senior secured notes, interest incurred on our $189.2 million of senior unsecured notes, interest on our installment payment agreement, interest on our finance lease obligations and interest incurred on our €135.0 million of 2024 Notes that we issued on June 25, 2019. Our interest expense increased by 12.5% for 2019 from 2018 primarily due to the issuance of $70.0 million of senior secured notes we issued in August 2018, the issuance of €135.0 million of senior unsecured notes we issued in June 2019 and an increase in our finance lease obligations. The 2024 Notes were issued at par for €135.0 million ($153.7 million) on June 25, 2019. The 2024 Notes were issued in Euros and are reported in our reporting currency — US Dollars. As of December 31, 2019 the 2024 Notes were valued at $151.4 million resulting in an unrealized gain on foreign exchange of $2.3 million in 2019.
Income Tax Expense. Our income tax expense was $15.1 million for 2019 and $12.7 million for 2018. The increase in our income tax expense was primarily related to an increase in our income before income taxes.
Buildings On-net. As of December 31, 2019 and 2018 we had a total of 2,801 and 2,676 on-net buildings connected to our network, respectively.

                                                 | Year Ended December 31 | Percent Change |
------------------------------------------------ | ---------------------- | -------------- | ------
                                                 | 2019                   | 2018           | Change
                                                 | (in thousands)         |                |
Service revenue                                  | $546,159               | $520,193       | 5.0%
On-net revenues                                  | 396,753                | 374,555        | 5.9%
Off-net revenues                                 | 148,931                | 145,004        | 2.7%
Network operations expenses(1)                   | 219,801                | 219,526        | 0.1%
Selling, general, and administrative expenses(2) | 146,913                | 133,858        | 9.8%
Depreciation and amortization expenses           | 80,247                 | 81,233         | (1.2)%
Gains on equipment transactions                  | 1,059                  | 982            | 7.8%
Interest expense                                 | 57,453                 | 51,056         | 12.5%
Income tax expense                               | 15,154                 | 12,715         | 19.2%

Results Operations
 Year Ended December 31, 2019 Compared 2018
 management reviews analyzes financial measures service revenue operating results cash flows. tables results operations financial measures.
 Includes non-cash equity compensation expense $994 $895 2019 2018.
 $17,466 $16,813 2019 2018.
 Service Revenue. increased 5. 0% 2018 to 2019. Exchange rates impacted revenue $5. 3 million. foreign currency comparisons reflect results 2019 average exchange rates 2018. increased service revenue increasing sales representatives expanding network adding buildings penetration market lower prices.
 Revenue recognition standards tax taxes Universal Service Fund fees state regulatory fees. record taxes consolidated statements operations. impact taxes increase revenues 2018 to 2019 $2. 4 million.
 net-centric customers purchase service price per megabit. corporate customers utilize small bandwidth per connection. Revenues corporate net-centric customers represented 68. 4% 31. 6% total service revenue 2019 64. 35.1% total service revenue 2018. Revenues corporate customers increased. 6% to $373. 7 million 2019 from $337. 8 million 2018 increase. Revenues net-centric customers decreased 5. 4% $172. 5 million 2019 from $182. 3 million 2018 increase offset decline average price per megabit. revenue net-centric declined slower corporate declined 23. 9% 2018 to 2019. net-centric market pricing pressure expect lower price. average price per megabit decline corporate revenues greater portion total revenues net-centric revenues grow lower. foreign exchange rates net-centric revenues.
 on-net revenues increased 5. 9% 2018 to 2019. increased customer connections 8. 4% December 31, 2019. due 3. 8% decline on-net ARPU decline net-centric customers. ARPU determined revenue average customer connections. average price per megabit determined charges rate. decline on-net ARPU attributed volume term based pricing discounts.on-net customers service have ARPU greater than new customers due to declining prices services. on-net ARPU 23. 9% decline average price per megabit.
 off-net revenues increased 2. 7% 2018 to 2019. increased connections 6. 3% at December 31, 2019. due to 5. 0% decrease off-net ARPU.
 Network Operations Expenses. include personnel management support facilities costs fiber equipment maintenance fees leased circuit costs access facilities fees excise taxes. Non-cash equity-based compensation expense. increased 0. 1% from 2018 to 2019 8. 0% more customer connections 125 more on-net buildings December 31, 2019. increase attributable to costs network facilities expansion off-net revenues taxes offset by price reductions fewer fiber leases. off-net services assume cost circuits.
 Selling General Administrative Expenses. increased 9. 8% 2018 to 2019.Non-cash equity compensation expense SG&A expenses $17. 5 million 2019 $16. 8 million 2018. expenses increased salaries expansion sales headcount. sales force headcount increased. 8% 619 2018 to 2019 total headcount 8. 3% 974 to 1,055.
 Depreciation Amortization Expenses. decreased. 2% 2018 to 2019. due deployed offset.
 Gains Equipment Transactions. exchanged used equipment cash new equipment gains $1. 1 million 2019 $1. 0 million 2018. gains estimated fair value new equipment equipment cash. due more equipment exchange 2019.
 Interest Expense. $445. 0 million secured notes $189. 2 million unsecured notes installment payment agreement finance lease obligations €135. 0 million 2024 Notes 2019. interest expense increased 12. 5% 2019 due $70. 0 million secured notes €135. 0 million unsecured notes 2019 finance lease obligations. 2024 Notes issued €135. 0 million.June 25 2019. 2024 Notes issued Euros reported US Dollars. December 31, valued $151. 4 million gain exchange $2. 3 million.
 Tax. $15. 1 million 2019 $12. 7 million 2018. taxes.
. December 31, 2019 2018 2,801 2,676-net buildings.
 Percent Change
 Service revenue $546,159 $520,193. 0%
 On-net revenues 396,753 374,555.
 Off-net revenues 148,931 145,004.
 Network operations 219,801.
 Selling administrative 146,913 133,858.
 Depreciation amortization 80,247 81,233.
 Gains equipment transactions 1,059.
 Interest expense 57,453.
 Income tax expense 15,154 12.