24. Post employment benefits
The Group operates a number of defined benefit and defined contribution pension plans for our employees. The Group’s largest defined benefit scheme is in the UK. For further details see “Critical accounting judgements and key sources of estimation uncertainty” in note 1 to the consolidated financial statements.
Accounting policies
For defined benefit retirement plans, the difference between the fair value of the plan assets and the present value of the plan liabilities is recognised as an asset or liability on the statement of financial position. Scheme liabilities are assessed using the projected unit funding method and applying the principal actuarial assumptions at the reporting period date. Assets are valued at market value.
Actuarial gains and losses are taken to the statement of comprehensive income as incurred. For this purpose, actuarial gains and losses comprise both the effects of changes in actuarial assumptions and experience adjustments arising from differences between the previous actuarial assumptions and what has actually occurred. The return on plan assets, in excess of interest income, and costs incurred for the management of plan assets are also taken to other comprehensive income.
Other movements in the net surplus or deficit are recognised in the income statement, including the current service cost, any past service cost and the effect of any settlements. The interest cost less the expected interest income on assets is also charged to the income statement. The amount charged to the income statement in respect of these plans is included within operating costs or in the Group’s share of the results of equity accounted operations, as appropriate
The Group’s contributions to defined contribution pension plans are charged to the income statement as they fall due.
Background
At 31 March 2019 the Group operated a number of pension plans for the benefit of its employees throughout the world, with varying rights and obligations depending on the conditions and practices in the countries concerned. The Group’s pension plans are provided through both defined benefit and defined contribution arrangements. Defined benefit schemes provide benefits based on the employees’ length of pensionable service and their final pensionable salary or other criteria. Defined contribution schemes offer employees individual funds that are converted into benefits at the time of retirement
The Group operates defined benefit schemes in Germany, Ghana, India, Ireland, Italy, the UK, the United States and the Group operates defined benefit indemnity plans in Greece and Turkey. Defined contribution pension schemes are currently provided in Egypt, Germany, Greece, Hungary, India, Ireland, Italy, New Zealand, Portugal, South Africa, Spain and the UK.
Defined benefit schemes
The Group’s retirement policy is to provide competitive pension provision, in each operating country, in line with the market median for that location. The Group’s preferred retirement provision is focused on Defined Contribution (‘DC’) arrangements and/or State provision for future service.
The Group’s main defined benefit funding liability is the Vodafone UK Group Pension Scheme (‘Vodafone UK plan’). Since June 2014 the plan has consisted of two segregated sections: the Vodafone Section and the Cable & Wireless Section (‘CWW Section’). Both sections are closed to new entrants and to future accrual. The Group also operates smaller funded and unfunded plans in the UK, funded and unfunded plans in Germany and funded plans in Ireland. Defined benefit pension provision exposes the Group to actuarial risks such as longer than expected longevity of participants, lower than expected return on investments and higher than expected inflation, which may increase the liabilities or reduce the value of assets of the schemes.
The main defined benefit schemes are administered by trustee boards which are legally separate from the Group and consist of representatives who are employees, former employees or are independent from the Company. The boards of the pension schemes are required by legislation to act in the best interest of the participants, set the investment strategy and contribution rates and are subject to statutory funding objectives.
The Vodafone UK plan is registered as an occupational pension plan with HM Revenue and Customs (‘HMRC’) and is subject to UK legislation and operates within the framework outlined by the Pensions Regulator. UK legislation requires that pension schemes are funded prudently and that valuations are undertaken at least every three years. Separate valuations are required for the Vodafone Section and CWW Section.
The trustees obtain regular actuarial valuations to check whether the statutory funding objective is met and whether a recovery plan is required to restore funding to the level of the agreed technical provisions. On 19 October 2017, the 31 March 2016 triennial actuarial valuation for the Vodafone Section and CWW Section of the Vodafone UK plan, which is used to judge the funding the Group needs to put into the scheme, was concluded.

Income statement expense                           |         |         |
-------------------------------------------------- | ------- | ------- | -------
                                                   | 2019 €m | 2018 €m | 2017 €m
Defined contribution schemes                       | 166     | 178     | 192
Defined benefit schemes                            | 57      | 44      | 20
Total amount charged to income statement (note 23) | 223     | 222     | 212

. benefits
 Group operates defined benefit contribution pension plans. largest benefit scheme UK. “Critical accounting judgements estimation uncertainty” note 1 consolidated financial statements.
 defined benefit retirement plans difference fair value assets present value liabilities recognised financial position. liabilities assessed projected unit funding method principal actuarial assumptions reporting. Assets valued at market value.
 Actuarial gains losses income. effects adjustments. return on assets interest income costs management income.
 net surplus deficit recognised income statement current service cost past cost settlements. interest cost less expected interest income assets charged to income statement. included operating costs results equity operations
 contributions to pension plans charged income statement.
 31 March 2019 Group operated pension plans employees varying rights obligations. pension plans provided defined benefit contribution arrangements. benefit schemes benefits pensionable service final pensionable salary. offer funds converted into benefits retirement
Group operates defined benefit schemes Germany Ghana India Ireland Italy UK United States Greece Turkey. pension schemes in Egypt Germany Greece Hungary India Ireland Italy New Zealand Portugal South Africa Spain UK.
 competitive pension provision market median. preferred retirement Defined Contribution arrangements State provision.
 main defined benefit Vodafone UK Group Pension Scheme. Since 2014 sections Vodafone Cable & Wireless Section. closed to new entrants future accrual. operates smaller plans UK Germany Ireland. pension exposes actuarial risks longevity return inflation liabilities value assets.
 schemes administered by trustee boards separate. boards act interest set investment strategy contribution rates subject to statutory funding objectives.
 Vodafone UK plan registered occupational pension plan with Revenue Customs subject to UK legislation operates Pensions Regulator. valuations every three years. Separate valuations for Vodafone CWW Section.
trustees obtain valuations funding objective recovery plan funding. 19 October 2017 31 March 2016 triennial valuation Vodafone CWW Section UK plan funding concluded.
 Income statement expense
 2019 2018 2017
 contribution schemes 166 178 192
 benefit schemes 57 44 20
 amount charged income statement 23 223 222


3.5 Leases
Recognition, measurement and classification
The Group has applied AASB 16 using the retrospective approach. The impact of changes is disclosed in Note 1.6.
At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:
• The contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified.
• The Group has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of use; and
• The Group has the right to direct the use of the asset. The Group has this right when it has the decisionmaking rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where all the decisions about how and for what purpose the asset is used are predetermined, the Group has the right to direct the use of the asset if either:
• The Group has the right to operate the asset
•• The Group designed the asset in a way that predetermines how and for what purpose it will be used
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. For measurement and recognition of right-of-use assets, refer to Note 3.1.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise:
• Fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
• amounts expected to be payable under a residual value guarantee; and
• the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

                  | CONSOLIDATED |
----------------- | ------------ | ----------
                  | 2019 $’000   | 2018 $’000
Lease liabilities |              |
Current           | 2,569        | 2,599
Non-current       | 6,773        | 5,934
                  | 9,342        | 8,533

3. 5 Leases
 Recognition measurement classification
 Group applied AASB 16 retrospective approach. impact changes disclosed in Note 1.
 inception contract Group assesses contract lease. contract lease if conveys right control use identified asset exchange consideration. contract
 contract involves use identified asset or physically distinct or represent capacity. If supplier substantive substitution right asset not identified.
 Group obtain economic benefits from use asset
 Group right direct use asset. decisionmaking rights relevant asset. rare cases decisions predetermined Group direct use if
 Group operate asset
 Group asset
 recognises right-of-use asset lease liability at lease commencement date. For measurement recognition right-of-use assets refer Note 3. 1.
 lease liability measured at present value lease payments not paid commencement date discounted interest rate implicit in lease or Group’s incremental borrowing rate. discount rate.
 Lease payments lease liability comprise
Fixed payments
 variable lease payments on index or rate measured commencement date
 amounts under residual value guarantee
 exercise price under purchase option lease payments optional renewal period penalties for early termination.
 lease liability measured at amortised cost effective interest method. remeasured future lease payments index or rate estimate amount residual value guarantee purchase extension termination option.
 lease liability remeasured adjustment to carrying amount right-of-use recorded in profit or loss if reduced to zero.
 Short-term leases low-value assets
 Group not recognise right-of-use assets lease liabilities for short leases machinery 12 months or less low-value assets IT equipment. recognises lease payments as expense straight-line over lease.
 Lease liabilities
 Current 2,569
 Non-current 6,773 5,934
 9,342


Net Cash Provided By Operating Activities and Free Cash Flow
The following table presents a reconciliation of net cash provided by operating activities to free cash flow (in thousands, except for percentages):
Net cash provided by operating activities for the twelve months ended December 31, 2019 was $115.5 million as compared to $90.3 million during the same period in 2018. The increase was primarily due to improved profitability, improved collections, and other working capital changes in 2019 when compared to the same period in 2018.
Free cash flow for the twelve months ended December 31, 2019 was $72.8 million, resulting in a free cash flow margin of 12.6%, as compared to free cash flow of $49.8 million and a free cash flow margin of 9.3% for the same period in 2018. The increase was primarily due to both improved profitability and collections, and is partially offset by cash paid for interest on our convertible notes of $17.4 million in the twelve months ended December 31, 2019. Refer to the section titled “Liquidity and Capital Resources” for additional information on the convertible notes.

                                          |          | Year Ended December 31, |
----------------------------------------- | -------- | ----------------------- | --------
                                          | 2019     | 2018                    | 2017
Reconciliation of free cash flow:         |          |                         |
Net cash provided by operating activities | $115,549 | $90,253                 | $67,510
Capital expenditures                      | (18,034) | (14,895)                | (7,100)
Capitalized software costs                | (24,668) | (25,515)                | (20,571)
Free cash flow                            | $72,847  | $49,843                 | $39,839
Free cash flow margin                     | 12.6%    | 9.3%                    | 8.3%

Net Cash Activities Free Cash Flow
 table net cash free cash flow
 Net cash activities twelve months December 2019 $115. 5 million $90. 3 million 2018. increase due improved profitability collections working capital changes.
 Free cash flow months $72. 8 million margin 12. 6% $49. 8 million 9. 3% 2018. increase due profitability offset cash interest convertible notes $17. 4 million. “Liquidity Capital Resources” information convertible notes.
 2018
 Reconciliation free cash flow
 Net cash operating activities $115,549 $90,253 $67,510
 Capital expenditures (18,034)
 Capitalized software costs (24
 Free cash flow $72,847 $49,843 $39,839
 margin 12. 6% 9. 3%.


The components of net deferred income tax assets for income tax purposes are as follows (in thousands):
The net deferred tax assets as of February 28, 2018 in the above table include the deferred tax assets of our Italian and Canadian subsidiaries amounting to $7.4 million and $7.6 million, respectively, which were disclosed narratively in the fiscal 2018 Form 10-K. The deferred tax assets primarily relate to net operating losses (NOL’s) and research and development expenditure pool carryforwards. We had provided a 100% valuation allowance against these deferred tax assets at February 28, 2018, as it was more likely than not that the deferred tax assets would not be realized.
As of February 28, 2019 and 2018, we maintained a valuation allowance with respect to certain of our deferred tax assets relating primarily to NOL’s in certain non-U.S. jurisdictions and certain state tax credits that we believe are not likely to be realized. During fiscal 2019, we decreased the valuation allowance against our deferred tax assets by approximately $5.9 million, as it is more likely than not that these deferred tax assets would be realized based upon the assessment of positive and negative evidence. This reduction in our valuation allowance is primarily attributable to a release of valuation allowance against foreign deferred tax assets, partially offset by an increase in valuation allowances for state tax credits.
At February 28, 2019, we had net operating loss carryforwards of approximately $30.1 million, $60.8 million and $44.7 million for federal, state and foreign purposes, respectively, expiring at various dates through fiscal 2039. Approximately $18.3 million of foreign net operating loss carryforwards do not expire. The federal net operating loss carryforwards are subject to various limitations under Section 382 of the Internal Revenue Code. If substantial changes in our ownership were to occur, there may be certain annual limitations on the amount of the NOL carryforwards that can be utilized
As of February 28, 2019, we had R&D tax credit carryforwards of $9.1 million and $8.9 million for federal and state income tax purposes, respectively. The federal R&D tax credits expire at various dates through 2039. A substantial portion of the state R&D tax credits have no expiration date.
We adopted the updated guidance on stock based compensation and we have tax deductions on exercised stock options and vested restricted stock awards that exceed stock compensation expense amounts recognized for financial reporting purposes. The gross excess tax deductions were $2.9 million, $2.6 and $0 in fiscal years 2019, 2018 and 2017, respectively. Under the new guidance, all excess tax benefits and tax deficiencies are recognized in the income statement as they occur.
We follow ASC Topic 740, “Income Taxes,” which clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. Management determined based on our evaluation of our income tax positions that we have uncertain tax benefit of $3.2 million, $1.0 million and $1.0 million on at February 28, 2019, 2018 and 2017, respectively, for which we have not yet recognized an income tax benefit for financial reporting purposes.
At February 28, 2019, we increased the uncertain tax benefits related to certain foreign net operating loss carryforwards. Such deferred tax assets were previously offset by a valuation allowance so that the increase in the unrecognized tax benefit coupled with the reduction of the valuation allowance on such net operating losses did not result in an income tax expense during the current fiscal year. If total uncertain tax benefits were realized in a future period, it would result in a tax benefit of $3.2 million. As of February 28, 2019, our liabilities for uncertain tax benefits were netted against our deferred tax assets on our consolidated balance sheet. It is reasonably possible the amount of unrecognized tax benefits could be reduced within the next 12 months by at least $0.6 million.
We recognize interest and/or penalties related to uncertain tax positions in income tax expense. No amounts of interest and/or penalties have been accrued as of February 28, 2019.

                                           |          | February 28,
------------------------------------------ | -------- | ------------
                                           | 2019     | 2018
Net operating loss carryforwards           | $19,269  | $22,013
Depreciation, amortization and impairments | (11,945) | (11,112)
Research and development credits           | 19,189   | 17,432
Stock-based compensation                   | 2,783    | 2,376
Other tax credits                          | 1,018    | 2,015
Inventory reserve                          | 624      | 292
Warranty reserve                           | 313      | 429
Payroll and employee benefit accruals      | 2,220    | 1,941
Allowance for doubtful accounts            | 454      | 354
Other accrued liabilities                  | 6,208    | 8,975
Convertible debt                           | (10,822) | (194)
Other, net                                 | 3,281    | 3,904
Gross deferred tax assets                  | 32,592   | 48,425
Valuation allowance                        | (10,929) | (16,844)
Net deferred tax assets                    | $21,663  | $31,581
Reported as:                               |          |
Deferred tax assets                        | $22,626  | $31,581
Deferred tax liabilities                   | (963)    | -
Net deferred tax assets                    | $21,663  | $31,581

net deferred income tax assets
 deferred tax assets February 28, 2018 include Italian Canadian subsidiaries $7. 4 million $7. 6 million disclosed fiscal 2018 Form 10-K. net operating losses (NOL’s research development expenditure pool carryforwards. 100% valuation allowance against.
 maintained valuation allowance assets NOL’s non-U. S. jurisdictions state tax credits. 2019 decreased valuation allowance assets $5. 9 million. attributable allowance foreign deferred tax assets offset increase allowances state tax credits.
 February 28, 2019 net operating loss carryforwards of $30. 1 million $60. 8 million $44. 7 million for federal state foreign purposes expiring through 2039. $18. 3 million foreign net operating loss carryforwards expire. subject limitations Section 382 Internal Revenue Code. limitations
 February 28, 2019 R&D tax credit carryforwards of $9. 1 million $8.9 million federal state income tax. federal R&D tax credits expire 2039. state R&D tax credits no expiration.
 adopted guidance stock compensation tax deductions stock options vested restricted stock awards compensation expense. excess tax deductions $2. 9 million $2. 6 $0 2019 2018 2017. excess tax benefits deficiencies recognized income statement.
 ASC Topic minimum recognition threshold. uncertain tax benefit $3. 2 million $1. 0 million $1. 0 million February 28, 2019 2018 2017 not recognized.
 February 28, 2019 increased uncertain tax benefits foreign net operating loss carryforwards. offset valuation allowance income tax expense fiscal year. benefits tax benefit $3. 2 million. liabilities uncertain tax benefits netted against deferred tax assets balance sheet. possible unrecognized tax benefits 12 months $0. 6 million.
 interest penalties uncertain tax positions. No accrued February 28, 2019.

 loss $19,269 $22,013
 Depreciation amortization
 Research development credits 19,189 17,432
 Stock compensation 2,783 2,376
 tax credits 1,018
 Inventory reserve
 Warranty
 Payroll benefit accruals 2,220
 doubtful accounts
 accrued liabilities 6,208
 Convertible debt (10
 3,281
 deferred tax assets 32,592 48,425
 Valuation
 deferred tax $21,663 $31,581
 $22,626 $31,581
 $21,663


Contractual Obligations
The following table summarizes our contractual obligations as of September 30, 2019 (in thousands):
Our principal executive offices, as well as our research and development facility, are located in approximately 29,000 square feet of office space in San Diego, California and the term of the lease continues through June 30, 2024. The average annual base rent under this lease is approximately $1.0 million per year. In connection with this lease, we received tenant improvement allowances totaling approximately $1.0 million. These lease incentives are being amortized as a reduction of rent expense over the term of the lease.
Our other offices are located in Paris, France; Amsterdam, The Netherlands; New York, New York; Barcelona, Spain; and London, United Kingdom. The
term of the Paris, France lease continues through July 31, 2021, with an annual base rent of approximately €0.4 million (or $0.4 million). The term of the
Amsterdam, The Netherlands lease continues through December 31, 2022, with an annual base rent of approximately €0.2 million (or $0.2 million). The term of
the New York, New York lease continues through November 30, 2024, with an annual base rent of approximately $0.2 million. The term of the Barcelona, Spain lease continues through May 31, 2023, with an annual base rent of approximately €0.1 million (or $0.1 million). The term of the London, United Kingdom lease continues through May 31, 2020, with an annual base rent of approximately £63,000 (or approximately $78,000). Our other offices are located in Paris, France; Amsterdam, The Netherlands; New York, New York; Barcelona, Spain; and London, United Kingdom. The term of the Paris, France lease continues through July 31, 2021, with an annual base rent of approximately €0.4 million (or $0.4 million). The term of the Amsterdam, The Netherlands lease continues through December 31, 2022, with an annual base rent of approximately €0.2 million (or $0.2 million). The term of the New York, New York lease continues through November 30, 2024, with an annual base rent of approximately $0.2 million. The term of the Barcelona, Spain lease continues through May 31, 2023, with an annual base rent of approximately €0.1 million (or $0.1 million). The term of the London, United Kingdom lease continues through May 31, 2020, with an annual base rent of approximately £63,000 (or approximately $78,000).
Other than the lease for our office space in San Diego, California, we do not believe that the leases for our offices are material to the Company. We believe our existing properties are in good condition and are sufficient and suitable for the conduct of its business.

                            | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | Total
--------------------------- | ---------------- | --------- | --------- | ----------------- | ------
Operating lease obligations | $1,699           | $3,950    | $2,707    | $36               | $8,392
Other borrowings            | 131              | 145       | 219       | 61                | 556
Total                       | $1,830           | $4,095    | $2,926    | $97               | $8,948

Contractual Obligations
 table summarizes obligations September 30, 2019
 executive offices research development facility 29,000 feet San Diego California lease continues through June 30, 2024. average annual base rent $1. 0 million per year. tenant improvement allowances $1. 0 million. incentives amortized rent expense.
 offices Paris France Amsterdam New York Barcelona Spain London.
 Paris France lease through July 31, 2021 annual base rent. 4 million.
 Amsterdam December 31, 2022 rent. 2 million.
 New York November 30, 2024. Barcelona Spain May 31, 2023. 1 million. London United Kingdom May 31, 2020 base rent £63,000 $78,000. other offices Paris France Amsterdam Netherlands New York Barcelona. Paris France lease through July 31, 2021 base rent. 4 million. Amsterdam Netherlands December 31, 2022. 2 million. New York November 30, 2024 rent $0. 2.Barcelona Spain lease May 31, 2023 annual base rent €0. 1 million. 1 million. London Kingdom lease May 31, 2020 base rent £63,000 $78,000).
. existing properties good business.
 Less 1 1-3 3-5 years 5 years
 Operating lease obligations $1,699  $3,950 $2,707 $36 $8,392
 Other borrowings 131 145 556
 $1,830  $4,095  $2,926 $8,948


(8) Accounts Receivable
The following table presents details of our accounts receivable balances:
We are exposed to concentrations of credit risk from residential and business customers. We generally do not require collateral to secure our receivable balances. We have agreements with other communications service providers whereby we agree to bill and collect on their behalf for services rendered by those providers to our customers within our local service area. We purchase accounts receivable from other communications service providers primarily on a recourse basis and include these amounts in our accounts receivable balance. We have not experienced any significant loss associated with these purchased receivables.

                                      | As of December 31,    |
------------------------------------- | --------------------- | -----
                                      | 2019                  | 2018
                                      | (Dollars in millions) |
Trade and purchased receivables       | $1,971                | 2,094
Earned and unbilled receivables       | 374                   | 425
Other                                 | 20                    | 21
Total accounts receivable             | 2,365                 | 2,540
Less: allowance for doubtful accounts | (106)                 | (142)
Accounts receivable, less allowance   | $2,259                | 2,398

Accounts Receivable
 table balances
 exposed credit risk residential business customers. require collateral balances. agreements communications providers bill collect services local area. purchase recourse include balance. significant loss receivables.
 December 31,
 2019 2018
 (Dollars millions
 Trade purchased receivables $1,971  2,094
 Earned unbilled receivables 374 425
 Total accounts receivable 2,365 2,540
 Less allowance doubtful accounts (106)
 less $2,259 2,398


ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data has been derived from our audited financial statements. This data should be read in conjunction with Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes thereto included elsewhere in this Form 10-K. Our historical results are not necessarily indicative of operating results to be expected in the future.

Selected Financial Data (in thousands, except per share data) |          |           |                          |         |
------------------------------------------------------------- | -------- | --------- | ------------------------ | ------- | -------
                                                              |          |           | Year Ended September 30, |         |
                                                              | 2019     | 2018      | 2017                     | 2016    | 2015
Income Statement Data                                         |          |           |                          |         |
Revenue                                                       | $84,590  | $63,559   | $45,390                  | $34,701 | $25,367
Operating income (loss)                                       | $(4,590) | $(7,806)  | $2,769                   | $1,824  | $1,892
Net income (loss)                                             | $(724)   | $(11,807) | $14,092                  | $1,959  | $2,526
Net income (loss) per share—basic                             | $(0.02)  | $(0.33)   | $0.43                    | $0.06   | $0.08
Net income (loss) per share—diluted                           | $(0.02)  | $(0.33)   | $0.40                    | $0.06   | $0.08
Balance Sheet Data                                            |          |           |                          |         |
Working capital                                               | $34,082  | $17,221   | $41,342                  | $31,980 | $24,005
Total assets                                                  | $135,897 | $127,150  | $71,719                  | $48,385 | $38,746
Other borrowings                                              | $556     | $810      | $—                       | $—      | $—
Stockholders’ equity                                          | $107,333 | $95,394   | $61,408                  | $39,485 | $30,433

6. SELECTED FINANCIAL DATA.
 derived from audited financial statements. with Discussion Analysis Financial Condition Results statements Form 10-K. historical results not indicative results future.
 Selected Financial Data
 Ended September 30
 2018 2017 2016 2015
 Income Statement Data
 Revenue $84,590 $63,559  $45,390 $34,701 $25,367
 Operating income (loss $(4,590) $(7,806) $2,769 $1,824
 Net income (loss $ $(11,807) $14,092 $1,959 $2,526
.
.
 Balance Sheet Data
 Working capital $34,082 $17,221 $41,342 $31,980 $24,005
 Total assets $135,897 $127,150 $71,719 $48,385 $38,746
 Other borrowings $556 $810
equity $107,333,394,408,485,433


Net Loss per Share
The Company applies the two-class method to calculate its basic and diluted net loss per share as both classes of its voting shares are participating securities with equal participation rights and are entitled to receive dividends on a share for share basis.
The following table summarizes the reconciliation of the basic weighted average number of shares outstanding and the diluted weighted average number of shares outstanding:
In the years ended December 31, 2019 and 2018, the Company was in a loss position and therefore diluted loss per share is equal to basic loss per share.

                                                                                | Years ended       |
------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | -----------------
                                                                                | December 31, 2019 | December 31, 2018
Basic and diluted weighted average number of shares outstanding                                                                       | 113,026,424       | 105,671,839
The following items have been excluded from the diluted weighted average number of shares outstanding because they are anti-dilutive: |                   |
Stock options                                                                                | 3,812,242         | 5,476,790
Restricted share units                                                                                | 1,939,918         | 2,473,665
Deferred share units                                                                                | 673               | 347
                                                                                | 5,752,833         | 7,950,802

Net Loss per Share
 Company applies two-class method basic diluted net loss per share dividends.
 table summarizes reconciliation basic diluted
 December 31, 2019 2018 loss position diluted loss equal basic loss.
 2019 2018
 Basic diluted shares 113,026,424 105,671,839
 items excluded diluted anti-dilutive
 Stock options 3,812,242 5,476,790
 Restricted share units 1,939,918 2,473,665
 Deferred share units
 5,752,833 7,950,802


The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Ernst & Young, our principal external auditors, for the years indicated.
(1) Audit fees consist of fees associated with the annual audit, review of our quarterly financial statements, statutory audits and internal control review. They also include fees billed for those services that are normally provided by the independent accountants in connection with statutory and regulatory filings.
(2) Audit-related fees consist of fees billed for assurance and services related to the performance of the audit or review of our financial statements but not described in footnote (1) above. These services include certification of our Singapore Branch to Singapore authorities and application for corporation registration.
(3) Tax fees include fees billed for professional services rendered by Ernst & Young, primarily in connection with our tax compliance activities.
All audit and non-audit services performed by Ernst & Young were pre-approved by our audit committee. In certain circumstances, the audit committee delegates to one designated member to pre-approve such audit and non-audit services. Pre-approval by a designated member should be reported to the audit committee at its upcoming meeting.

                       |        | Years ended December 31, |
---------------------- | ------ | ------------------------ | -----
                       | 2018   | 2019                     |
                       | NT$    | NT$                      | US$
                       |        | (in thousands)           |
Audit Fees (1)         | 52,794 | 62,040                   | 2,074
Audit-related Fees (2) | 1,283  | 1,095                    | 37
Tax Fees (3)           | 4,304  | 3,943                    | 132
Total                  | 58,381 | 67,078                   | 2,243

table fees by categories services Ernst & Young years.
 Audit fees annual audit quarterly financial statements statutory audits internal control review. independent accountants.
 Audit-related fees assurance services financial not. include certification Singapore Branch application corporation registration.
 Tax fees services Ernst & Young tax compliance activities.
 audit non-audit services Ernst & Young pre-approved by audit committee. committee delegates member pre. Pre-approval reported upcoming meeting.
 Years ended December 31,
 2018 2019
 US
 Audit Fees (1) 52,794  62,040  2,074
 Audit-related Fees (2) 1,283  1,095
 Tax Fees (3) 4,304
 Total 58,381 | 67,078 | 2,243


12. Commitments and Contingencies
The Company leases its facilities under non-cancelable operating leases and build-to-suit leases with various expiration dates through March 2029. Rent expense related to the Company’s office facilities was $5.3 million, $4.8 million and $3.2 million for the years ended March 31, 2019, 2018 and 2017, respectively. The Company has also entered into various capital lease agreements for computer equipment with non-cancelable terms through January 2022 and has non-cancelable commitments related to its data centers.
Future minimum payments for our capital leases, facility operating leases (including Lexington MA – U.S. build-to-suit lease) and data center operating leases as of March 31, 2019 are as follows:
Certain amounts included in the table above relating to data center operating leases for the Company’s servers include usage-based charges in addition to base rent.
Future lease payments in the table above do not include amounts due to the Company for future minimum sublease rental income of $0.6 million under non-cancelable subleases through 2020.
The Company has outstanding letters of credit of $3.9 million and $3.8 million related to certain operating leases as of March 31, 2019 and 2018, respectively.

Year Ending March 31,                           | Capital Leases | Facility Leases | Data Centers
----------------------------------------------- | -------------- | --------------- | ------------
2020                                            | $ 918          | $ 10,649        | $ 21,216
2021                                            | 1,102          | 15,186          | 17,427
2022                                            | 326            | 14,111          | 13,010
2023                                            | —              | 13,825          | 2,774
2024                                            | —              | 13,686          | 356
Thereafter                                      | —              | 59,502          | —
Total minimum lease payments                    | $ 2,346        | $ 126,959       | $ 54,783
Less: Amount representing interest              | (121)          |                 |
Present value of capital lease obligations      | 2,225          |                 |
Less: Current portion                           | (844)          |                 |
Long-term portion of capital lease obligations  | $1,381         |                 |

. Commitments Contingencies
 Company leases facilities non-cancelable build-to-suit leases expiration through March 2029. Rent expense office facilities $5. 3 million $4. 8 million $3. 2 million March 2019 2018 2017. capital lease agreements computer equipment through January 2022-cancelable commitments data centers.
 Future payments capital leases. data center March 31, 2019
 usage-based charges base rent.
 Future lease payments minimum sublease rental income $0. 6 million through 2020.
 outstanding letters of credit $3. 9 million $3. 8 million leases March 31, 2019 2018.
 Capital Leases Facility Leases Data Centers
 2020 10,649 21,216
 2021
 2024
 minimum lease payments $ 2,346 $ 126,959 54,783
 Present value capital lease obligations 2,225
Current (844)
 Long-term lease $1,381


Cubic Global Defense
Sales: CGD sales decreased 10% to $325.2 million in 2018 compared to $360.2 million in 2017. The year-over-year comparative sales and operating income were significantly impacted by an $8.0 million gain recognized on an equitable contract adjustment in fiscal 2017 for our littoral combat ship virtual training contract with the U.S. Navy. Sales were lower in fiscal 2018 on virtual training sales, air combat training system sales, and ground combat training system sales, while sales of international training support services increased between fiscal 2017 and 2018. The average exchange rates between the prevailing currency in our foreign operations and the U.S. dollar had no significant impact on CGD sales between 2017 and 2018.
Amortization of Purchased Intangibles: Amortization of purchased intangibles included in the CGD results amounted to $1.1 million in 2018 and $0.9 million in 2017.
Operating Income: CGD had operating income of $16.6 million in 2018 compared to $28.1 million in 2017. The decrease in operating income was primarily caused by the gain of $8.0 million recognized in fiscal 2017 due to the approval of a contract adjustment with the U.S. Navy described above. In fiscal 2018 an arbitrator awarded $1.7 million to a former reseller of our air combat training systems in the Far East, which was recorded as SG&A expense by CGD in 2018. In addition, CGD’s R&D expenditures increased approximately $1.8 million year-over-year. The increase in R&D expenditures is indicative of the acceleration of our development of next generation live, virtual, constructive, and game-based training systems. These decreases in operating income in fiscal 2018 were partially offset by increased operating income from ground combat training systems, which was higher primarily due to improvements in expected total costs for the development of two ground combat training system contracts in the Far East. The average exchange rates between the prevailing currency in our foreign operations and the U.S. dollar had no significant impact on CGD operating income between 2017 and 2018.
Adjusted EBITDA: CGD Adjusted EBITDA was $26.3 million in 2018 compared to $39.4 million in 2017. The decrease in Adjusted EBITDA was primarily driven by the same factors that drove the decrease in operating income described above excluding the increase in amortization which is excluded from Adjusted EBITDA.

                 | Fiscal 2018 | Fiscal 2017   | % Change
---------------- | ----------- | ------------- | --------
                 |             | (in millions) |
Sales            | $  325.2    | $  360.2      | (10)%
Operating income | 16.6        | 28.1          | (41)
Adjusted EBITDA  | 26.3        | 39.4          | (33)

 Sales CGD sales decreased 10% to $325. 2 million 2018 compared $360. 2 million 2017. sales income impacted by $8. 0 million gain equitable contract adjustment 2017 virtual training contract U. Navy. Sales lower 2018 virtual air ground international training services increased 2018. exchange rates. sales.
 Amortization Purchased Intangibles $1. 1 million 2018 $0. 9 million 2017.
 $16. 6 million 2018 $28. 1 million 2017. caused by gain $8. 0 million 2017 contract adjustment. Navy. 2018 arbitrator awarded $1. 7 million to former reseller air combat training SG&A expense. R&D expenditures increased $1. 8 million-over-year. development next generation virtual-based training systems. decreases income offset by increased income ground combat training systems costs contracts. average exchange rates. operating income.
 Adjusted EBITDA CGD $26. 3 million 2018 compared $39. 4 million 2017.decrease Adjusted EBITDA driven factors operating income excluding increase amortization.
 Fiscal 2018 2017 Change
 millions
 Sales $ 325. $ 360.
 Operating income 16. 28.
 Adjusted EBITDA 26. 3 39. 4


Cost of Revenues and Gross Margin
Subscription cost of revenues and gross margin. Cost of subscriptions revenues increased by $50.9 million, or 46%, during fiscal year 2019 as compared to fiscal year 2018. Primary drivers of the increase were increases in third-party costs to support our solution offerings of $21.5 million, infrastructure support costs of $19.8 million including amortization expense from acquired intangible assets, and headcount and personnel and contractor related costs of $9.6 million including share-based compensation expense. These factors resulted in a decrease in gross margin.
The increase in headcount and other expense categories described herein was driven primarily by investments in our infrastructure and capacity to improve the availability of our subscription offerings, while also supporting the growth in new customers and increased usage of our subscriptions by our existing customer base. We expect subscription gross margin to be within a relatively similar range in the future.
Other cost of revenues and gross margin. Cost of other revenues increased by $23.0 million, or 48%, during fiscal year 2019 as compared to fiscal year 2018. This was primarily due to the increase in services personnel costs of $11.1 million including share-based compensation expense, cost of product sales of $10.6 million, and overhead costs of $1.3 million. Other revenues gross margin fluctuates based on timing of completion of professional services projects and discounting on phones.

                                   | Year ended December 31, |          |          |          | Year ended December 31, |          |          |
---------------------------------- | ----------------------- | -------- | -------- | -------- | ----------------------- | -------- | -------- | --------
(in thousands, except percentages) | 2019                    | 2018     | $ Change | % Change | 2018                    | 2017     | $ Change | % Change
Cost of revenues                   |                         |          |          |          |                         |          |          |
Subscriptions                      | $160,320                | $109,454 | $50,866  | 46%      | $109,454                | $89,193  | $20,261  | 23%
Other                              | 70,723                  | 47,675   | 23,048   | 48%      | 47,675                  | 32,078   | 15,597   | 49%
Total cost of revenues             | $231,043                | $157,129 | $73,914  | 47%      | $157,129                | $121,271 | $35,858  | 30%
Percentage of revenues             |                         |          |          |          |                         |          |          |
Subscriptions                      | 18%                     | 16%      |          |          | 16%                     | 18%      |          |
Other                              | 8%                      | 7%       |          |          | 7%                      | 6%       |          |
Gross margins                      |                         |          |          |          |                         |          |          |
Subscriptions                      | 80%                     | 82%      |          |          | 82%                     | 81%      |          |
Other                              | 17%                     | 22%      |          |          | 22%                     | 16%      |          |
Total gross margin %               | 74%                     | 77%      |          |          | 77%                     | 76%      |          |

Cost Revenues Gross Margin
 Subscription cost margin. increased $50. 9 million 46% fiscal 2019 2018. third-party costs $21. 5 million infrastructure costs $19. 8 million headcount personnel contractor costs $9. 6 million. decrease gross margin.
 increase expense driven by investments infrastructure capacity subscription growth new customers increased usage. expect subscription gross margin similar range future.
 Other cost revenues gross margin. increased $23. 0 million 48% 2019. due to services personnel costs $11. 1 million product sales $10. 6 million overhead costs $1. 3 million. gross margin fluctuates timing services projects discounting phones.
 Year ended December 31,
 thousands 2019 2018 2017
 Cost revenues
 Subscriptions  $160,320  $109,454  $50,866 46%  $89,193 $20,261 23%
70,723 47,675 23,048 48% 32,078 15,597  49%
 Total cost revenues $231,043  $157,129 $73,914  47% $121,271 $35,858 30%
 Percentage revenues
 Subscriptions 18% 16%
 Other 8% 7%
 Gross margins
 Subscriptions 80% 82%
 Other 17% 22%
 Total gross margin % 74%


Change in Product Mix and Technology Migration
Because the price of wafers processed with different technologies varies significantly, the mix of wafers that we produce is among the primary factors that affect our revenues and profitability. The value of a wafer is determined principally by the complexity and performance of the processing technology used to produce the wafer, as well as by the yield and defect density. Production of devices with higher levels of functionality and performance, with better yields and lower defect density as well as with greater system-level integration requires better manufacturing expertise and generally commands higher wafer prices. The increase in price generally has more than offset associated increases in production cost once an appropriate economy of scale is reached.
Prices for wafers of a given level of technology generally decline over the processing technology life cycle. As a result, we have continuously been migrating to increasingly sophisticated technologies to maintain the same level of profitability. We began our volume production with 65-nanometer and 40-nanometer technologies in 2006 and 2009, respectively. We introduced our 28-nanometer technology to customers in 2011 and started large-scale commercial production in 2014. Our 28nm and below technologies contributed approximately 17.1%, 15.2% and 11.3% of our foundry revenue in 2017, 2018 and 2019 respectively.

                        |       | Years Ended December 31, |
----------------------- | ----- | ------------------------ | -----
Process Technologies    | 2017  | 2018                     | 2019
                        | %     | %                        | %
14 nanometers and under | 0.9   | 2.6                      | 0.0
28 nanometers           | 16.2  | 12.6                     | 11.3
40 nanometers           | 28.4  | 25.3                     | 23.1
65 nanometers           | 12.3  | 12.5                     | 14.7
90 nanometers           | 4.9   | 8.3                      | 13.6
0.11/0.13 micron        | 11.5  | 11.6                     | 12.6
0.15/0.18 micron        | 12.4  | 13.7                     | 13.1
0.25/0.35 micron        | 10.0  | 10.1                     | 8.7
0.50 micron or higher   | 3.4   | 3.3                      | 2.9
Total                   | 100.0 | 100.0                    | 100.0

Product Mix Technology Migration
 price wafers processed with technologies varies mix wafers primary revenues profitability. value wafer determined by complexity performance processing technology yield defect density. higher functionality performance better yields lower defect density greater system-level integration requires better manufacturing expertise commands higher wafer prices. increase in price more than increases production cost once economy of scale reached.
 Prices wafers technology decline over processing life cycle. migrating to sophisticated technologies profitability. began volume production with 65-nanometer 40-nanometer technologies 2006 2009,. introduced 28-nanometer technology 2011 started large-scale production 2014. 28nm below technologies contributed 17. 1% 15. 2% 11. 3% of foundry revenue in 2017 2018 2019.
 Process Technologies
 14 nanometers.
.
 40.
 65.
 90 nanometers.
. 13.
. 18 micron.
. 35 micron.8. 7
. 50 micron 3. 4. 9
 100. 100


NOTE 4 – REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue is recognized when, or as, performance obligations under terms of a contract are satisfied, which occurs when control of the promised service is transferred to a customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring services to a customer (“transaction price”). The Company will then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when, or as, the performance obligation is satisfied. When determining the transaction price of the contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. None of the Company’s licenses and collaboration agreements contained a significant financing component at either December 31, 2019 or 2018.
The Company’s existing license and collaboration agreements may contain a single performance obligation or may contain multiple performance obligations. Those which contain multiple performance obligations will require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised services underlying each performance obligation.
The Company’s existing license and collaboration agreements contain customer options for the license of additional products and territories. We determined the option’s standalone selling prices based on the option product’s potential market size in the option territory as compared to the currently licensed product and U.S. territory. Some of our existing license and collaboration agreements contain a license to the technology as well as licenses to tradenames or trademarks. The Company determined that the licenses to the tradenames or trademarks were immaterial in context of the contract.
Sales-based Milestones and Royalty Revenues
The commercial sales-based milestones and sales royalties earned under the license and collaboration for Oxaydo and sales royalties earned under the license for the Nexafed products, are recorded in the period of the related sales by Zyla and MainPointe. Payments of sales-based milestones are generally due within 30 days after the end of a calendar year. Payments of royalties are generally due within 45 days after the end of a calendar quarter.
License and Collaboration Agreement Revenues
The achievement of milestones under the Company’s license and collaboration agreements will be recorded as revenue during the period the milestone’s achievement becomes probable, which may result in earlier recognition as compared to the previous accounting standards. The license fee of an option product or option territory under the Company’s license and collaboration agreements will be recorded as revenue when the option is exercised and any obligations on behalf of the Company, such as to transfer know-how, has been fulfilled. The monthly license fee under the Company’s LTX-03 license and collaboration agreement will be recorded as revenue upon the fulfillment of the monthly development activities. The out-of-pocket development expenses under the license and collaboration agreements will be recorded as revenue upon the performance of the service or delivery of the material during the month.
On June 28, 2019 we entered into an agreement with AD Pharma for the development and license of LTX-03 (hydrocodone bitartrate with acetaminophen) immediate-release tablets utilizing Acura’s patented LIMITx™ having a monthly license payment of $350 thousand from AD Pharma to us for a period of up to 18 months until November 2020. AD Pharma will pay directly for or reimburse Acura to the extent Acura pay’s for, all out-of-pocket development expenses. The first license payment was received July 2, 2019.
Disaggregation of Total Revenues
The Company has two license agreements for currently marketed products containing its technologies; the Oxaydo product containing the Aversion Technology has been licensed to Zyla and the Nexafed products containing the Impede Technology which have been licensed to MainPointe. On January 1, 2020, MainPointe assigned to AD Pharma, with Acura’s consent, all of its right, title and interest in the MainPointe Agreement between MainPointe and Acura. All of the Company’s royalty revenues are earned from these two license agreements by the licensee’s sale of products in the United States.
Royalty revenues by licensee are summarized below:
Contract Balance and Performance Obligations
The Company had no contract assets and contract liability balances under the license and collaboration agreements at either December 31, 2019 or 2018. Contract assets may be reported in future periods under prepaid expenses or other current assets on the consolidated balance sheet. Contract liabilities may be reported in future periods consisting of deferred revenue as presented on the consolidated balance sheet.

                     |      | For the Year Ended
-------------------- | ---- | ------------------
                     |      | December 31,
                     | 2019 | 2018
                     |      | (in thousands)
Zyla (Oxaydo)        | $351 | $386
MainPointe (Nexafed) | 21   | 24
Royalty revenues     | 372  | $410

NOTE 4 REVENUE FROM CONTRACTS WITH CUSTOMERS
 Revenue recognized performance obligations satisfied control service transferred to customer. Revenue measured as consideration Company for transferring services (“transaction price”). revenue transaction price allocated to performance obligation. adjustment if payment before or after performance significant financing component. licenses collaboration agreements significant financing at December 31, 2019 or 2018.
 license agreements may contain single or multiple. require allocation transaction price based on estimated selling prices services.
 license agreements contain options for additional products territories. determined selling prices based on potential market size. Some agreements contain technology tradenames trademarks. licenses immaterial in contract.
 Sales-based Milestones Royalty Revenues
 milestones royalties Oxaydo Nexafed recorded in sales Zyla MainPointe. Payments of milestones due 30 days after end year. royalties 45 days after end quarter.
 License and Collaboration Agreement Revenues
milestones under license agreements recorded as revenue earlier recognition. license fee of option product revenue when option exercised obligations fulfilled. monthly license fee under LTX-03 recorded as revenue upon development activities. out-of-pocket development expenses recorded as revenue upon performance.
 June 28, 2019 agreement with AD Pharma for development LTX-03 (hydrocodone bitartrate acetaminophen) tablets LIMITxTM monthly license payment $350 thousand from AD Pharma 18 months until November 2020. Acura development expenses. first license payment received July 2, 2019.
 two license agreements for products Oxaydo Zyla Nexafed Impede MainPointe. January 1, 2020 MainPointe assigned to AD Pharma right title interest in MainPointe. royalty revenues earned from agreements sale products United States.
 Royalty revenues summarized
 no contract assets liability balances under agreements at December 31, 2019 or 2018.Contract assets reported future prepaid expenses consolidated balance sheet. liabilities future deferred revenue.
 Year
 December 31,
 thousands
 Zyla (Oxaydo $351 $386
 MainPointe (Nexafed
 Royalty revenues $410


Expense
For the years ended December 31, 2019, 2018, and 2017, Teradyne’s net periodic postretirement benefit cost (income) was comprised of the following:

                                                                                | 2019   | 2018           | 2017
---------------------------------------------------------------------------------------- | ------ | -------------- | ------
                                                                                |        | (in thousands) |
Components of Net Periodic Postretirement Benefit                                        |        |                |
Cost (income):                                                                           |        |                |
Service cost                                                                             | $41    | $39            | $34
Interest cost                                                                            | 347    | 196            | 201
Amortization of prior service credit                                                     | (191)  | (373)          | (496)
Net actuarial loss                                                                       | 717    | 25             | 398
Special termination benefits                                                             | —      | 3,708          | 591
Total net periodic postretirement benefit cost                                           | 914    | 3,595          | 728
Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income: |        |                |
Prior service cost                                                                       | —      | —              | —
Reversal of amortization items:                                                          |        |                |
Prior service credit                                                                     | 191    | 373            | 496
Total recognized in other comprehensive income                                           | 191    | 373            | 496
Total recognized in net periodic postretirement cost and other comprehensive income      | $1,105 | $3,968         | $1,224

 2019 2018 2017 Teradyne’s postretirement benefit cost
 Components Postretirement Benefit
 Cost
 Service cost $41 $39 $34
 Interest cost 347 196 201
 Amortization service credit (373
 Net actuarial loss 717 25  398
 Special termination benefits 3,708 591
 postretirement benefit cost 914 3,595  728
 Changes Plan Assets Benefit Obligations
 service cost
 Reversal amortization items
 service credit 191 373 496
 cost $1,105 $3,968 $1,224


Cash Flow Information
Cash flows in foreign currencies have been converted to U.S. Dollars at an approximate weighted-average exchange rate for the respective reporting periods. The weighted-average exchange rates for the consolidated statements of operations were as follows:

                 | Years ended December 31, |
---------------- | ------------------------ | --------
                 | 2019                     | 2018
Swedish Krona    | 9.46                     | 8.70
Japanese Yen     | 109.01                   | 110.43
South Korean Won | 1,165.70                 | 1,100.50
Taiwan Dollar    | 30.90                    | 30.15

Cash Flow
 foreign currencies converted. Dollars weighted-average exchange rate reporting periods. exchange rates consolidated statements
 ended December 31,
 Swedish Krona 9.
 Japanese Yen.
 South Korean Won 1,165. 1
 Taiwan Dollar.


10 Earnings per share
Basic and diluted earnings per share calculated on an adjusted profit basis are included in Note 2.
The dilution is in respect of unexercised share options and the Performance Share Plan.

                                                | 2019   | 2018
----------------------------------------------- | ------ | ------
Profit attributable to equity shareholders (£m) | 166.6  | 223.1
Weighted average shares (million)               | 73.7   | 73.6
Dilution (million)                              | 0.2    | 0.2
Diluted weighted average shares (million)       | 73.9   | 73.8
Basic earnings per share                        | 226.2p | 303.1p
Diluted earnings per share                      | 225.5p | 302.0p

Earnings share
 diluted adjusted profit Note 2.
 dilution unexercised options Performance Share Plan.
 Profit equity shareholders (£m 166. 6 223.
 Weighted average shares 73. 7. 6
 Dilution.
 73. 9. 8
 earnings 226. 303.
 Diluted 225. 302.


NOTE 21—EARNINGS PER SHARE
Basic earnings per share are computed by dividing net income, attributable to OpenText, by the weighted average number of Common Shares outstanding during the period. Diluted earnings per share are computed by dividing net income, attributable to OpenText, by the shares used in the calculation of basic earnings per share plus the dilutive effect of Common Share equivalents, such as stock options, using the treasury stock method. Common Share equivalents are excluded from the computation of diluted earnings per share if their effect is anti-dilutive.
(1) Please also see note 14 "Income Taxes" for details relating to a one-time tax benefit of $876.1 million recorded during the three months ended September 30, 2016 in connection with an internal reorganization of our subsidiaries.
(2) Represents options to purchase Common Shares excluded from the calculation of diluted earnings per share because the exercise price of the stock options was greater than or equal to the average price of the Common Shares during the period.

                                                         |          | Year Ended June 30, |
-------------------------------------------------------- | -------- | ------------------- | -------------
                                                         | 2019     | 2018                | 2017
Basic earnings per share                                 |          |                     |
Net income attributable to OpenText                      | $285,501 | $242,224            | $1,025,659(1)
Basic earnings per share attributable to OpenText        | $1.06    | $0.91               | $4.04
Diluted earnings per share                               |          |                     |
Net income attributable to OpenText                      | $285,501 | $242,224            | $1,025,659(1)
Diluted earnings per share attributable to OpenText      | $1.06    | $0.91               | $4.01
Weighted-average number of shares outstanding (in 000's) |          |                     |
Basic                                                    | 268,784  | 266,085             | 253,879
Effect of dilutive securities                            | 1,124    | 1,407               | 1,926
Diluted                                                  | 269,908  | 267,492             | 255,805
Excluded as anti-dilutive(2)                             | 2,759    | 2,770               | 1,371

21—EARNINGS PER SHARE
 Basic earnings computed net income OpenText weighted average Common Shares. Diluted earnings computed shares used dilutive effect Common Share equivalents options. equivalents excluded anti-dilutive.
 note 14 "Income Taxes one-time tax benefit $876. 1 million three months September 30, 2016 reorganization subsidiaries.
 options purchase Common Shares excluded earnings exercise price greater average price Common Shares.
 Ended June 30,
 2019 2018 2017
 Basic earnings per share
 Net income OpenText $285,501 $242,224  $1,025,659(1)
.
 Diluted earnings per share
 $285,501 $242,224 $1,025,659(1)
.
 Weighted-average number shares outstanding
 268,784 266,085 253,879
 Effect dilutive securities 1,124 1,407 1,926
 269,908 267,492 255,805
anti 2,759,770 1,371


Revenue and deferred revenue
The Group adopted IFRS 15 Revenue from Contracts with Customers in the current year and has therefore restated the results for the prior-year on a consistent basis, see note 2 of the Financial Statements for further details.
The Group’s revenue increased by $71.6 million, or 11.2 per cent, to $710.6 million in the year-ended 31 March 2019. Subscription revenue was notably strong in the period, with reported growth of 15.9 per cent, or 16.7 per cent on a constant currency basis, because of strong prior-period billings and incremental growth of the MSP channel in the current period.
1 Restated for the adoption of IFRS 15 as explained in note 2 of the Financial Statements
Revenue in the period of $710.6 million comprised $394.1 million from the recognition of prior-period deferred revenues and $316.5 million from in-period billings. The majority of the Group’s billings, which are recognised over the life of the contract, relate to subscription products (FY19: 84.8 per cent; FY18: 83.8 per cent), with the benefit from increased billings being spread over a number of years on the subsequent recognition of deferred revenue. The deferred revenue balance at the end of the period of $742.1 million increased $13.5 million year-on-year, an increase of 1.9 per cent. This was mainly due to a net deferral of billings amounting to $49.7 million partially offset by a net currency revaluation of $36.2 million, a consequence of the weakening of the euro and sterling against the US dollar during the year. Deferred revenue due within one year at the balance sheet date of $428.6M increased by 5.1 per cent at actual rates or by 10.7 per cent in constant currency.
Revenue in the Americas increased by $29.7 million or 13.3 per cent to $253.3 million in the year-ended 31 March 2019, supported by the recognition of prior-period Enduser billings from the Sophos Central platform and the growth of the MSP channel in the current period.
EMEA revenue increased by $39.1 million or 12.0 per cent to $363.6 million in the year-ended 31 March 2019, with growth in Enduser in particular, but also aided by Network sales.
APJ revenue increased by $2.8 million, or 3.1 per cent to $93.7 million in the year-ended 31 March 2019, with good growth in Enduser products partially offset by a decline in Network sales following the legacy product transition.

                    | FY19          | FY18¹         | Growth %   | Growth %
------------------- | ------------- | ------------- | ---------- | --------
                    | $m (Reported) | $m (Reported) | (Reported) | (CC)
Revenue by Region:  |               |               |            |
– Americas          | 253.3         | 223.6         | 13.3       | 13.4
– EMEA              | 363.6         | 324.5         | 12.0       | 12.7
– APJ               | 93.7          | 90.9          | 3.1        | 6.2
                    | 710.6         | 639.0         | 11.2       | 12.0
Revenue by Product: |               |               |            |
– Network           | 328.5         | 316.5         | 3.8        | 4.7
– Enduser           | 348.4         | 291.8         | 19.4       | 20.2
– Other             | 33.7          | 30.7          | 9.8        | 10.0
                    | 710.6         | 639.0         | 11.2       | 12.0
Revenue by Type:    |               |               |            |
– Subscription      | 593.9         | 512.4         | 15.9       | 16.7
– Hardware          | 106.8         | 115.1         | (7.2)      | (6.3)
– Other             | 9.9           | 11.5          | (13.9)     | (12.8)
                    | 710.6         | 639.0         | 11.2       | 12.0

 Group adopted IFRS 15 restated results note 2 Financial Statements.
 revenue increased $71. 6 million. 2 per $710. 6 million-ended 31 March 2019. Subscription revenue strong growth 15. 9 per. prior-period billings growth MSP channel.
 IFRS 15
 Revenue $710. 6 million $394. 1 million prior-period deferred revenues $316. 5 million in-period billings. majority billings subscription products 84. FY18 83. spread. balance $742. 1 million increased $13. 5 million year-on-year 1. 9 per cent. due net deferral billings $49. 7 million offset currency revaluation $36. 2 million weakening euro sterling. Deferred revenue $428. 6M increased 5. per cent 10. 7 per cent.
 Revenue Americas increased $29. 7 million. 3 per cent $253. 3 million-ended 31 March 2019 prior-period billings growth MSP channel.
 EMEA revenue increased $39.million 12. $363. 6 million year-ended 31 March 2019 growth Enduser aided Network sales.
 APJ revenue increased $2. 8 million 3. 1 $93. 7 million year-ended 31 March 2019 growth Enduser decline Network sales product transition.
 FY19 Growth
 Revenue Region
 Americas 253. 3 223. 6 13. 13.
 363. 324. 5 12.
 93. 90. 3. 6.
 710. 639. 11. 12.
 Revenue Product
 328. 316. 5 3. 4.
 348. 291. 19. 20.
 33. 30. 9. 10.
 710. 639. 11. 12.
 Revenue Type
 593. 512. 15. 16.
 106. 115. (7. (6.
 9. 11. (13. (12.
 710. 639. 11. 12.


Gross margin
The Group achieved further gross margin expansion in 2019 with an increase of 1.0 percentage points, to 73.2 per cent from 72.2 per cent in 2018. This followed an increase of 0.7 percentage points last year. Once again, all the operating segments achieved an improvement in gross margin, benefiting from new product launches and a higher proportion of software sales.

$ million                   | 2019  | %    | 2018  | %
--------------------------- | ----- | ---- | ----- | ----
Networks & Security         | 232.3 | 72.6 | 205.3 | 72.0
Lifecycle Service Assurance | 88.6  | 79.7 | 87.9  | 77.9
Connected Devices           | 47.7  | 65.8 | 51.3  | 64.9
                            | 368.6 | 73.2 | 344.5 | 72.2

 Group expansion 2019. 73. 2 72. 2018. increase. 7 points last year. operating segments margin product launches higher software sales.
 million 2019
 Networks Security 232. 3 72. 6 205. 72.
 Lifecycle Service Assurance 88. 79. 87. 77.
 Connected Devices 47. 65. 8 51. 64.
. 6 73. 2 344. 5 72.


Fiscal 2019 Restructuring Plan
During Fiscal 2019, we began to implement restructuring activities to streamline our operations (Fiscal 2019 Restructuring Plan), including in connection with our recent acquisitions of Catalyst and Liaison, to take further steps to improve our operational efficiency. The Fiscal 2019 Restructuring Plan charges relate to workforce reductions and facility consolidations. These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.
As of June 30, 2019, we expect total costs to be incurred in conjunction with the Fiscal 2019 Restructuring Plan to be approximately $30.0 million, of which $28.3 million has already been recorded within "Special charges (recoveries)" to date. We do not expect to incur any further significant charges relating to this plan.
A reconciliation of the beginning and ending liability for the year ended June 30, 2019 is shown below.

Fiscal 2019 Restructuring Plan      | Workplace reduction | Facility costs | Total
----------------------------------- | ------------------- | -------------- | --------
Balance payable as at June 30, 2018 | $—                  | $—             | $—
Accruals and adjustments            | 12,460              | 15,858         | 28,318
Cash payments                       | (10,420)            | (4,739)        | (15,159)
Non-cash adjustments                | —                   | (3,393)        | (3,393)
Foreign exchange                    | (221)               | (2,438)        | (2,659)
Balance payable as at June 30, 2019 | $1,819              | $5,288         | $7,107

Fiscal 2019 Restructuring Plan
 restructuring activities operations Catalyst Liaison operational efficiency. charges workforce reductions facility consolidations. require judgments estimates. liability change adjustments. quarterly revise assumptions estimates.
 June 30, 2019 costs approximately $30. 0 million $28. 3 million recorded "Special charges (recoveries). further significant charges.
 reconciliation liability June 30, 2019.
 Fiscal 2019 Restructuring Plan Workplace reduction Facility costs
 Balance payable June 30, 2018 $—
 Accruals adjustments 12,460 15,858
 Cash payments (10,420) (4,739),159
 Non-cash adjustments (3,393
 Foreign exchange (221) (2,438 (2,659)
 Balance payable June 30, 2019 $1,819 $5,288 $7,107


MEDIA FINANCIAL RESULTS
REVENUE
Media revenue is earned from:
• advertising sales across its television, radio, and digital media properties; • subscriptions to televised and OTT products; • ticket sales, fund redistribution and other distributions from MLB, and concession sales; and • retail product sales.
The 4% decrease in revenue this year was a result of: • the sale of our publishing business in the second quarter of 2019; and • lower revenue at the Toronto Blue Jays, primarily as a result of a distribution from Major League Baseball in 2018; partially offset by • higher revenue generated by Sportsnet and TSC. Excluding the sale of our publishing business and the impact of the distribution from Major League Baseball last year, Media revenue would have increased by 1% this year.
OPERATING EXPENSES
We record Media operating expenses in four primary categories:
• the cost of broadcast content, including sports programming
and production;
• Toronto Blue Jays player compensation;
• the cost of retail products sold; and
• all other expenses involved in day-to-day operations.
The 2% decrease in operating expenses this year was a result of:
• lower Toronto Blue Jays player compensation; and
• lower publishing-related costs due to the sale of this business;
partially offset by
• higher programming costs; and
• higher cost of sales as a result of higher revenue at TSC.
ADJUSTED EBITDA
The 29% decrease in adjusted EBITDA this year was a result of the
revenue and expense changes described above. Excluding the
impact of the sale of our publishing business in the second quarter
of 2019 and the distribution from Major League Baseball last year,
adjusted EBITDA would have increased by 1% this year.

                                         |       | Years ended December 31 |
---------------------------------------- | ----- | ----------------------- | --------
(In millions of dollars, except margins) | 2019  | 2018                    | %Chg
Revenue                                  | 2,072 | 2,168                   | (4)
Operating expenses                       | 1,932 | 1,972                   | (2)
Adjusted EBITDA                          | 140   | 196                     | (29)
Adjusted EBITDA margin                   | 6.8%  | 9.0%                    | (2.2pts)
Capital expenditures                     | 102   | 90                      | 13

MEDIA FINANCIAL RESULTS
 REVENUE
 earned from
 advertising sales digital subscriptions ticket fund redistribution distributions MLB concession sales retail sales.
 4% decrease revenue sale publishing business 2019 lower revenue Toronto Blue Jays distribution Major League Baseball offset higher revenue Sportsnet TSC. Excluding sale revenue increased 1%.
 OPERATING EXPENSES
 expenses categories
 cost broadcast content
 Toronto Blue Jays player compensation
 retail products
 other expenses.
 2% decrease operating expenses
 lower Toronto Blue Jays player compensation
 lower publishing-related costs sale
 offset
 higher programming costs
 higher cost sales higher revenue TSC.
 ADJUSTED EBITDA
 29% decrease EBITDA
 revenue expense changes.
 sale publishing
 distribution Major League Baseball
 EBITDA increased 1%.
 Years December 31
 Revenue 2,072 2,168
 Operating expenses 1,932 1,972
 Adjusted EBITDA 140 196
EBITDA. 8%.
 Capital expenditures 102 90


8 Auditor’s remuneration
1 Relates to the interim report review of the Group, and interim reviews of certain subsidiary undertakings.
2 2019 other non-audit assurance services relate primarily to reporting accountants’ work associated with the potential equity raise not completed.
The reporting accountants’ work surrounding the potential equity raise not completed includes a working capital report that requires the accountant to have detailed knowledge of the Group. If a firm other than the audit firm were to undertake this work, they would require a significant amount of additional time to become familiar with the Group. Deloitte was therefore chosen to undertake this work as it was considered to be sensible and more efficient both in terms of time and costs.
2018 other non-audit assurance services included £40,000 related to reporting accountants’ work associated with a year end significant change report and £190,000 related to reporting accountants’ work in connection with the Group’s Q3 profit estimate which was required at the time due to Takeover Code rules.
The work surrounding a significant change report and a profit estimate requires the accountant to have detailed knowledge of the Group. If a firm other than the audit firm were to undertake this work, they would require a significant amount of additional time to become familiar with the Group. PwC was therefore chosen to undertake this work as it was considered to be sensible and more efficient both in terms of time and costs.
As for all 2019 and 2018 non-audit work, consideration was given as to whether Deloitte’s (2019) and PwC’s (2018) independence could be affected by undertaking this work. It was concluded by the Audit Committee that this would not be the case.
Fees payable by the Group’s joint ventures in respect of 2019 were £156,000 (Group’s share), all of which relates to audit and audit-related services (2018: £121,000, all of which related to audit and audit-related services).

                                                              | 2019  | 2018
------------------------------------------------------------- | ----- | -----
                                                              | £000  | £000
Fees payable to the Company’s auditor and its associates for: |       |
The audit of the Company’s annual financial statements        | 559   | 382
The audit of the Company’s subsidiaries                       | 533   | 441
Fees related to the audit of the Company and its subsidiaries | 1,092 | 823
Audit-related assurance services1                             | 64    | 51
Total fees for audit and audit-related services               | 1,156 | 874
Other non-audit assurance services2                           | 534   | 230
Total fees                                                    | 1,690 | 1,104

8 Auditor’s remuneration
 1 Relates interim report review Group subsidiary undertakings.
 2019 non-audit assurance services reporting accountants’ work potential equity raise not completed.
 includes working capital report detailed knowledge Group. additional time. Deloitte chosen sensible efficient time costs.
 2018 non-audit services included £40,000 year end significant change report £190,000 Group’s Q3 profit estimate required due to Takeover Code rules.
 work change report profit estimate requires accountant detailed knowledge Group. additional time. PwC chosen sensible efficient time costs.
 2019 2018 consideration Deloitte’s PwC’s (2018) independence affected. concluded Audit Committee not case.
 Fees payable by Group’s joint ventures 2019 were £156,000 (Group’s audit audit-related services (2018: £121,000 audit audit-related services).
 2019 2018
 £000
 Fees payable to Company’s auditor associates for
 audit Company’s annual financial statements
audit subsidiaries 533 441
 Fees 1,092 823
 64 51
 fees 1,156  874
 non-audit assurance 534 230
 1,690 1,104


NOTE 3 – STAFF COSTS
Employee information
The majority of the staff on vessels are not employed by TORM. Staff costs included in operating expenses relate to the 108 seafarers (2018: 112, 2017: 131).
The average number of employees is calculated as a full-time equivalent (FTE).
The Executive Director is, in the event of termination by the Company, entitled to a severance payment of up to 12 months' salary.

USDm                                            | 2019  | 2018  | 2017
----------------------------------------------- | ----- | ----- | -----
Total staff costs                               |       |       |
Staff costs included in operating expenses      | 8.1   | 9.3   | 9.2
Staff costs included in administrative expenses | 37.7  | 36.9  | 34.6
Total                                           | 45.8  | 46.2  | 43.8
Staff costs comprise the following              |       |       |
Wages and salaries                              | 37.2  | 38.1  | 36.4
Share-based compensation                        | 1.9   | 2.1   | 1.9
Pension costs                                   | 3.5   | 3.3   | 3.1
Other social security costs                     | 0.9   | 0.6   | 0.3
Other staff costs                               | 2.3   | 2.1   | 2.1
Total                                           | 45.8  | 46.2  | 43.8
Average number of permanent employees           |       |       |
Seafarers                                       | 107.6 | 111.7 | 130.6
Land-based                                      | 313.5 | 302.2 | 286.6
Total                                           | 421.1 | 413.9 | 417.2

3 STAFF
 majority staff not employed TORM. costs operating expenses 108 seafarers (2018 112 2017: 131.
 average employees full-time equivalent.
 Executive Director termination severance payment 12 months salary.
 staff costs
 operating expenses 8. 9.
 administrative expenses 37. 36. 34.
 45. 46. 43.
 Wages salaries 37. 38. 36.
 Share-based compensation 1. 9 2.
 Pension costs 3. 5.
 social security costs.
 staff costs 2.
 45. 46. 43.
 Average permanent employees
 Seafarers 107. 111. 130. 6
 Land-based 313. 5 302. 286. 6
 421. 413. 9 417.


13. EARNINGS (LOSS) PER SHARE
Basic earnings per share (“EPS”) are computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income by the weighted-average number of common shares and dilutive common stock equivalents outstanding during the period.
On March 29, 2019, the Company launched an ATM program of our common shares for up to $40.0 million. The Company has issued 5,260,968 shares with net proceeds of $17.9 million under its At-the-Market as of December 31, 2019. The Company has not issued any shares subsequent to the balance sheet date.
The remaining available proceeds through the offering is $21.4 million as of the date of this report. Based on the share price of the Company of $3.47 per share as of April 3, 2020 it would have resulted in 6,173,500 new shares being issued, if fully utilizing the remaining balance available through the ATM.

All figures in USD except number of shares and earnings (loss) per common share | 2019        | 2018        | 2017
------------------------------------------------------------------------------- | ----------- | ----------- | -----------
Numerator:                                                                      |             |             |
Net Loss                                                                        | (10,352)    | (95,306)    | (204,969)
Denominator:                                                                    |             |             |
Basic - Weighted Average Common Shares Outstanding                              | 142,571,361 | 141,969,666 | 103,832,680
Dilutive – Weighted Average Common Shares Outstanding                           | 142,571,361 | 141,969,666 | 103,832,680
Loss per Common Share:                                                          |             |             |
Basic                                                                           | (0.07)      | (0.67)      | (1.97)
Diluted                                                                         | (0.07)      | (0.67)      | (1.97)

. EARNINGS (LOSS) PER SHARE
 earnings computed net income weighted-average common shares. Diluted EPS net income-average shares equivalents.
 March 29, 2019 Company launched ATM program $40. 0 million. issued 5,260,968 shares net proceeds $17. 9 million December 31, 2019. issued shares.
 remaining proceeds $21. 4 million. share price $3. 47 per share April 3, 2020 6,173,500 new shares issued remaining balance.
 figures USD except number shares earnings (loss) per common share 2019 2018 2017
 Net Loss (10,352) (95,306) (204,969)
 - Weighted Average Common Shares 142,571,361 141,969,666 103,832,680
 Loss per Common Share
.
.


(18) Quarterly Financial Data (Unaudited)
During the first quarter of 2019, we recorded a non-cash, non-tax-deductible goodwill impairment charge of $6.5 billion for goodwill, see Note 4—Goodwill, Customer Relationships and Other Intangible Assets for further details.
During the fourth quarter of 2018, we recorded a non-cash, non-tax-deductible goodwill impairment charge of $2.7 billion for goodwill see Note 4—Goodwill, Customer Relationships and Other Intangible Assets for further details.
During the first quarter of 2018, we recognized $71 million of expenses related to our acquisition of Level 3 followed by acquisition-related expenses of $162 million, $43 million and $117 million in the second, third and fourth quarters of 2018, respectively. During 2019, we recognized expenses related to our acquisition of Level 3 of $34 million, $39 million, $38 million and $123 million in the first, second, third and fourth quarters of 2019, respectively.

                                         | First Quarter | Second Quarter | Third Quarter                                   | Fourth Quarter | Total
---------------------------------------- | ------------- | -------------- | ----------------------------------------------- | -------------- | -------
                                         |               |                | (Dollars in millions, except per share amounts) |                |
2019                                     |               |                |                                                 |                |
Operating revenue                        | $5,647        | 5,578          | 5,606                                           | 5,570          | 22,401
Operating (loss) income                  | (5,499)       | 976            | 950                                             | 847            | (2,726)
Net (loss) income                        | (6,165)       | 371            | 302                                             | 223            | (5,269)
Basic (loss) earnings per common share   | (5.77)        | 0.35           | 0.28                                            | 0.21           | (4.92)
Diluted (loss) earnings per common share | (5.77)        | 0.35           | 0.28                                            | 0.21           | (4.92)
2018                                     |               |                |                                                 |                |
Operating revenue                        | $5,945        | 5,902          | 5,818                                           | 5,778          | 23,443
Operating income (loss)                  | 750           | 767            | 894                                             | (1,841)        | 570
Net income (loss)                        | 115           | 292            | 272                                             | (2,412)        | (1,733)
Basic earnings (loss) per common share   | 0.11          | 0.27           | 0.25                                            | (2.26)         | (1.63)
Diluted earnings (loss) per common share | 0.11          | 0.27           | 0.25                                            | (2.26)         | (1.63)

Quarterly Financial Data
 first quarter 2019 recorded non-cash-tax goodwill impairment charge $6. 5 billion Note 4—Goodwill Customer Relationships Intangible Assets.
 fourth quarter 2018 non impairment charge $2. 7 billion Note.
 first quarter 2018 recognized $71 million expenses acquisition Level 3 expenses $162 million $43 million $117 million second third fourth quarters. 2019 recognized expenses acquisition Level 3 $34 million $39 million $38 million $123 million first second third fourth quarters.
 First Second Third Fourth Quarter
 millions
 Operating revenue $5,647 5,578
 Operating (loss) income (5,499)
 Net (loss income (6,165) 371 (5,269)
 Basic (loss earnings common share.
 Diluted (loss earnings.
2018
 Operating revenue $5,945 5,778 23,443
 income 750 767 894 (1,841)
 Net income 115 292 272 (2,412) (1,733)
 Basic earnings share. 11. 27.
 Diluted earnings (loss common share.


Plan Summaries
As of January 3, 2020, the Company had stock-based compensation awards outstanding under the following plans: the 2017 Omnibus Incentive Plan, 2006 Equity Incentive Plan, as amended, and the 2006 Employee Stock Purchase Plan, as amended ("ESPP"). Leidos issues new shares upon the issuance of the vesting of stock units or exercising of stock options under these plans.
In fiscal 2017, stockholders approved the 2017 Omnibus Incentive Plan which provides the Company and its affiliates' employees, directors and consultants the opportunity to receive various types of stock-based compensation awards, such as stock options, restricted stock units and performance-based awards, as well as cash awards.
The Company grants service-based awards that generally vest or become exercisable 25% a year over four years or cliff vest in three years. As of January 3, 2020, 4.4 million shares of Leidos' stock were reserved for future issuance under the 2017 Omnibus Incentive Plan and the 2006 Equity Incentive Plan.
The Company offers eligible employees the opportunity to defer restricted stock units into an equity-based deferred equity compensation plan, the Key Executive Stock Deferral Plan ("KESDP"). Prior to 2013, the Company offered an additional opportunity for deferrals into the Management Stock Compensation Plan ("MSCP"). Benefits from these plans are payable in shares of Leidos' stock that are held in a trust for the purpose of funding shares to the plans' participants.
Restricted stock units deferred under the KESDP are counted against the total shares available for future issuance under the 2017 Omnibus Incentive Plan. All awards under the MSCP are fully vested and the plan does not provide for a maximum number of shares available for future issuance.
The Company's ESPP allows eligible employees to purchase shares of Leidos' stock at a discount of up to 15% of the fair market value on the date of purchase. During the first half of fiscal 2018 and 2017, the discount was 5% of the fair market value on the date of purchase, thereby resulting in the ESPP being non-compensatory. Effective the second half of fiscal 2018, the Company increased the discount to 10% of the fair market value on the date of purchase, resulting in the ESPP being compensatory.
During fiscal 2019, 2018 and 2017, $25 million, $11 million and $10 million, respectively, was received from ESPP plan participants for the issuance of Leidos' stock. A total of 4.2 million shares remain available for future issuance under the ESPP.
Stock-based compensation and related tax benefits recognized under all plans were as follows:

                                                      |                 | Year Ended        |
----------------------------------------------------- | --------------- | ----------------- | -----------------
                                                      | January 3, 2020 | December 28, 2018 | December 29, 2017
                                                      |                 | (in millions)     |
Total stock-based compensation expense                | $52             | $44               | $43
Tax benefits recognized from stock-based compensation | 13              | 11                | 17

 January 3, 2020 Company stock compensation awards 2017 Omnibus Incentive Plan 2006 Equity Incentive Plan 2006 Employee Stock Purchase Plan. Leidos issues new shares vesting options.
 2017 approved 2017 Omnibus Incentive Plan stock-based compensation awards options restricted stock units performance-based awards cash awards.
 grants service-based awards 25% year four years three years. January 3, 2020 4. million shares Leidos' stock reserved future issuance 2017 Omnibus 2006 Equity Incentive Plan.
 employees defer stock units Deferral Plan. deferrals Management Stock Compensation Plan. Benefits payable shares Leidos' stock.
 Restricted stock units deferred counted against shares future issuance 2017 Omnibus Incentive Plan. awards fully vested maximum future issuance.
 ESPP allows employees purchase Leidos' stock 15% fair market value. 2018 2017 discount 5% ESPP non-compensatory.2018 Company increased discount 10% market value ESPP compensatory.
 2019 2018 2017 $25 million $11 million $10 million received ESPP Leidos' stock. 4. 2 million shares future issuance.
 Stock-based compensation tax benefits
 January 3, 2020 December 28, 2018 December 29, 2017
 stock-based compensation expense $52 $44
 Tax benefits