3. Debtors
Accounting policies
Amounts owed to subsidiaries are classified and recorded at amortised cost (2018: classified as loans and receivables) and reduced by allowances for expected credit losses. Estimate future credit losses are first recorded on initial recognition of a receivable and are based on estimated probability of default. Individual balances are written off when management deems them not to be collectible. Derivative financial instruments are measured at fair value through profit and loss.
Note: 1 Amounts owed by subsidiaries are unsecured, have no fixed date of repayment and are repayable on demand with sufficient liquidity in the group to flow funds if required. Therefore expected credit losses are considered to be immateria

                                              | 2019    | 2018
--------------------------------------------- | ------- | -------
                                              | €m      | €m
Amounts falling due within one year:          |         |
Amounts owed by subsidiaries1                 | 242,976 | 220,871
Taxation recoverable                          | 233     | –
Other debtors                                 | 32      | 199
Derivative financial instruments              | 183     | 163
                                              | 243,424 | 221,233
Amounts falling due after more than one year: |         |
Derivative financial instruments              | 3,439   | 2,449
Deferred tax                                  | –       | 31
                                              | 3,439   | 2,480

. Debtors
 Accounting policies
 owed subsidiaries amortised cost loans receivables reduced credit losses. future credit losses recorded based probability default. balances written off collectible. financial instruments measured fair value profit loss.
 Amounts owed subsidiaries unsecured no fixed date repayment repayable demand liquidity. credit losses immateria
 Amounts due within year
 owed 242,976 220,871
 Taxation recoverable
 debtors
 Derivative financial instruments
 243,424 221,233
 due after one year
 3,439 2,449
 Deferred tax


The movement of contract liabilities is mainly caused by the timing difference of the satisfaction of a performance of obligation and the consideration received from customers.
The Company recognized NT$3,815 million and NT$616 million, respectively, in revenues from the contract liabilities balance at the beginning of the period as performance obligations were satisfied for the years ended December 31, 2018 and 2019.

                            | As of January 1,2018 | As of December 31,2018 | As of December 31,2019
--------------------------- | -------------------- | ---------------------- | ----------------------
                            | NT$(In Thousands)    | NT$(In Thousands)      | NT$(In Thousands)
Sales of goods and services | $3,951,414           | $932,371               | $1,470,195
Current                     | $3,951,414           | $932,371               | $988,115
Noncurrent                  | —                    | —                      | 482,080
Total                       | $3,951,414           | $932,371               | $1,470,195

contract liabilities caused timing consideration customers.
 Company recognized NT$3,815 million NT$616 million revenues contract liabilities obligations years December 2018 2019.
 January 1,2018 December 31,2018
 NT$ Thousands
 Sales goods services $3,951,414 $932,371 $1,470,195
 $3 $988,115
 Noncurrent 482,080
 Total $3,951,414 $932,371 $1,470,195


Basic earnings per share is computed on the basis of the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted-average number of shares of common stock outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and stock awards.
* Includes a charge of $2.0 billion or $2.23 of basic and diluted earnings per share in 2018 associated with U.S. tax reform.
Actual shares outstanding at December 31, 2019 and 2018 were 887.1 million and 892.5 million, respectively. The year-to- year decrease was primarily the result of the common stock repurchase program. The average number of common shares
outstanding assuming dilution was 23.5 million shares lower in 2019 versus 2018

For the year ended December 31:                               | 2019   | 2018   | Yr.-to-Yr. Percent Change
------------------------------------------------------------- | ------ | ------ | -------------------------
Earnings per share of common stock from continuing operations |        |        |
Assuming dilution                                             | $10.57 | $9.51* | 11.1%
Basic                                                         | $10.63 | $9.56* | 11.2%
Diluted operating (non-GAAP)                                  | $12.81 | $13.81 | (7.2)%
Weighted-average shares outstanding (in millions)             |        |        |
Assuming dilution                                             | 892.8  | 916.3  | (2.6)%
Basic                                                         | 887.2  | 912.0  | (2.7)%

earnings per share computed-average. Diluted earnings dilutive potential shares treasury stock method. include stock options awards.
 Includes $2. billion. basic diluted earnings per share 2018. tax reform.
 shares outstanding December 31, 2019 2018 887. 1 million 892. 5 million.-to decrease common stock repurchase program. average
 dilution 23. million shares lower 2019 2018
 December 31. Percent Change
 Earnings per share common stock continuing operations
 dilution $10. 57 $9. 51 11.
. $9. 2%
 Diluted operating-GAAP $12. 81 $13.
 Weighted-average shares outstanding millions
 892. 916.
 887. 912.


Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock trades on The Nasdaq Stock Market under the symbol ZIXI. The table below shows the high and low sales prices by quarter for fiscal 2019 and 2018.
At March 4, 2020, there were 55,641,885 shares of common stock outstanding held by 399 shareholders of record. On that date, the last reported sales price of the common stock was $8.27.
We have not paid any cash dividends on our common stock and do not anticipate doing so in the foreseeable future.
For information regarding options and stock-based compensation awards outstanding and available for future grants, see “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

              | 2019    |        | 2018   |
------------- | ------- | ------ | ------ | ------
Quarter Ended | High    | Low    | High   | Low
March 31      | $ 9.07  | $ 5.34 | $ 4.75 | $ 3.82
June 30       | $ 11.15 | $ 6.66 | $ 5.62 | $ 4.25
September 30  | $ 10.51 | $ 6.91 | $ 5.93 | $ 4.91
December 31   | $ 7.75  | $ 6.25 | $ 7.09 | $ 4.66

. Market Registrant’s Common Equity Stockholder Matters Issuer Purchases Securities
 common stock trades Nasdaq Stock Market symbol ZIXI. table high low sales prices quarter 2019 2018.
 March 4 2020 55,641,885 shares common stock 399 shareholders. last sales price $8. 27.
 paid cash dividends anticipate.
 options stock-based compensation awards. Security Ownership Beneficial Owners Management Stockholder Matters.
 March 31 $ 9. 5. 34 4. 75 3.
 11. 6. 4.
 10. 51 6. 5. 4.
 31 $ 7. 75 6. 7. 4.


Debt Activity
The table below presents the effects of issuances, prepayments, and conversions of debt in 2019. When we receive a notice of conversion for any of our convertible notes and elect to settle in cash any amount of the conversion obligation in excess of the principal amount, the cash settlement obligations become derivative debt liabilities subject to mark-to-market accounting treatment based on the volume-weighted-average price of our common stock over a period of 20 consecutive trading days. Accordingly, at the date of our election to settle a conversion in cash, we reclassify the fair value of the equity component of the converted notes from additional capital to derivative debt liability within current debt in our consolidated balance sheet.
In 2018, we repurchased or redeemed $6.96 billion of principal amount of notes (carrying value of $6.93 billion) for an aggregate of $9.42 billion in cash and 4 million shares of our treasury stock. As of August 30, 2018, an aggregate of $35 million principal amount of our 2033F Notes (with a carrying value of $165 million) had converted but not settled. These notes settled in 2019 for $153 million in cash and the effect of the settlement is included in the table above. In connection with these transactions, we recognized aggregate non-operating losses of $385 million in 2018.
In 2017, we repurchased or redeemed $1.55 billion of principal amount of notes (carrying value of $1.54 billion) for an aggregate of $1.63 billion in cash. In connection with these transactions, we recognized aggregate non-operating losses of $94 million in 2017.
(1)  Issued February 6, 2019.
(2)  Issued July 12, 2019.
(3)  As of August 29, 2019, an aggregate of $44 million principal amount of our 2033F Notes (with a carrying value of $179 million) had converted but not settled. These notes settled in the first quarter of 2020 for $192 million in cash.

                        | Increase (Decrease) in Principal | Increase (Decrease) in Carrying Value | Increase (Decrease) in Cash | Decrease in Equity | Gain (Loss)
----------------------- | -------------------------------- | ------------------------------------- | --------------------------- | ------------------ | -----------
Issuances               |                                  |                                       |                             |                    |
2024 Notes(1)           | $600                             | $597                                  | $597                        | $—                 | $—
2026 Notes(1)           | 500                              | 497                                   | 497                         | —                  | —
2027 Notes(2)           | 900                              | 895                                   | 895                         | —                  | —
2029 Notes(1)           | 700                              | 695                                   | 695                         | —                  | —
2030 Notes(2)           | 850                              | 845                                   | 845                         | —                  | —
Prepayments             |                                  |                                       |                             |                    |
2022 Term Loan B        | (728)                            | (721)                                 | (728)                       | —                  | (7)
Settled conversions     |                                  |                                       |                             |                    |
2032D Notes             | (10)                             | (9)                                   | (35)                        | (28)               | 2
2033F Notes             | (45)                             | (175)                                 | (192)                       | (28)               | 11
2043G Notes             | (1,019)                          | (691)                                 | (1,426)                     | (326)              | (400)
Conversions not settled |                                  |                                       |                             |                    |
2033F Notes(3)          | —                                | 135                                   | —                           | (133)              | (2)
                        | $1,748                           | $2,068                                | $1,148                      | $(515)             | $(396)

Debt Activity
 table effects issuances prepayments conversions debt 2019. notice conversion settle cash settlement obligations become derivative debt liabilities-market accounting volume-weighted-average price common stock 20 trading days. reclassify equity converted notes derivative debt.
 2018 repurchased redeemed $6. 96 billion notes $6. billion $9. 42 billion cash 4 million shares treasury stock. August 30, 2018 $35 million 2033F Notes $165 million converted not settled. settled 2019 $153 million cash table. recognized non-operating losses $385 million 2018.
 2017 repurchased redeemed $1. 55 billion notes $1. billion $1. 63 billion cash. recognized non-operating losses $94 million 2017.
.
 July 12.
 August $44 million 2033F Notes $179 million converted not settled. settled 2020 $192 million cash.
Increase Principal Carrying Value Cash Equity
 Issuances
 2024 Notes(1) $600 $597
 2026 Notes(1) 500  497
 2027 Notes(2) 900  895
 2029 Notes(1) 700  695
 2030 Notes(2) 850  845
 Prepayments
 2022 Term Loan B  (728)
 Settled conversions
 2032D Notes (10)
 2033F Notes (45) (175)
 2043G Notes (1,019) (691) (1,426)
 Conversions not settled
 2033F Notes(3)
 $1,748  $2,068  $1,148  $(515) $(396)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data)
Contract Assets and Liabilities
Contract assets and liabilities included in our Consolidated Balance Sheets are as follows:
During the twelve months ended December 31, 2019, we recognized revenues of $256 that was included in contract liabilities at the beginning of the period.

                                                                                | As of December 31, |
------------------------------------------------------------------------------------------- | ------------------ | --------
                                                                                | 2019               | 2018
Contract Assets                                                                             |                    |
Prepaid rebates included in Other current assets                                            | $64                | $65
Prepaid rebates included in Other assets                                                    | 1,853              | 999
Total Contract Assets                                                                       | $1,917             | $1,064
Contract Liabilities                                                                        |                    |
Customer discounts and price concessions included in Accrued expenses and other liabilities | $(2,070)           | $(1,656)
Customer rights of return included in Accrued expenses and other liabilities                | (807)              | (325)
Total Contract Liabilities                                                                  | $(2,877)           | $(1,981)

CONSOLIDATED FINANCIAL STATEMENTS thousands
 Contract Assets Liabilities
 Balance Sheets
 twelve months December 31, 2019 recognized revenues $256 contract liabilities.
 December
 2018
 Contract Assets
 Prepaid rebates $64
 1,853
 Contract Assets $1,917 $1,064
 Liabilities
 Customer discounts price concessions Accrued expenses $(2,070) $(1,656)
 Customer rights return
 Contract Liabilities $(2,877) $(1,981


Items Not Resulting in a Deferred Tax Asset
Of the unused tax losses, €187 million (2018: €213 million; 2017: €263 million) relate to U.S. state tax loss carryforwards.
We have not recognized a deferred tax liability on approximately €17.41 billion (2018: €14.04 billion) for undistributed profits of our subsidiaries, because we are in a position to control the timing of the reversal of the temporary difference and it is probable that such differences will not reverse in the foreseeable future.

€ millions                                              | 2019  | 2018  | 2017
------------------------------------------------------- | ----- | ----- | ----
Unused tax losses                                       |       |       |
Not expiring                                            | 688   | 575   | 375
Expiring in the following year                          | 63    | 7     | 9
Expiring after the following year                       | 373   | 476   | 535
Total unused tax losses                                 | 1,124 | 1,058 | 919
Deductible temporary differences                        | 538   | 509   | 524
Unused research and development and foreign tax credits |       |       |
Not expiring                                            | 28    | 54    | 38
Expiring in the following year                          | 0     | 0     | 2
Expiring after the following year                       | 17    | 18    | 34
Total unused tax credits                                | 45    | 72    | 74

Deferred Tax
 unused tax losses €187 million (2018 €213 million 2017: €263 million. state tax loss carryforwards.
 not recognized deferred tax liability €17. 41 billion (2018 €14. 04 billion undistributed profits subsidiaries reversal.
 2019 2018
 Unused tax losses
 688  575 375
 373 476 535
 unused tax losses 1,124  1,058  919
 Deductible temporary differences 538 509 524
 Unused research development foreign tax credits
 Not 28
 unused tax credits 45  72


The Company currently has one equity compensation plan, the 2007 Stock Compensation Plan, from which it grants equity awards that are used as an incentive for directors, officers, and other employees. The 2007 Stock Compensation Plan has 851,134 shares available for issue as of September 30, 2019. As of September 30, 2019, $2,371,309 of total unrecognized compensation expense related to non-vested awards is expected to be recognized over a period of approximately 4.9 years. The Company recorded related compensation expense for the years ended September 30, 2019, 2018, and 2017 of $1,729,025, $2,003,207, and $2,319,975, respectively. For the year ended September 30, 2019, $1,638,829 of this expense was included in selling, general and administrative expense and $90,196 was included in cost of sales. For the year ended September 30, 2018, $1,835,086 of this expense was included in selling, general and administrative expense and $168,121 was included in cost of sales. For the year ended September 30, 2017, $2,103,621 of this expense was included in selling, general and administrative expense and $216,354 was included in cost of sales.
Stock Options: The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options granted. During the fiscal year ended September 30, 2019, the Company granted employees non-qualified stock options to purchase an aggregate of 172,000 shares of common stock with a weighted average contractual term of 4 years, a three year vesting term, and a weighted average exercise price of $12.17. During the fiscal year ended September 30, 2018, the Company granted employees non-qualified stock options to purchase an aggregate of 108,000 shares of common stock with a weighted average contractual term of 4.7 years, a three year vesting term, and a weighted average exercise price of $13.37. There were no stock options granted during the year ended September 30, 2017. The fair value was estimated at the grant date using the assumptions listed below:
The expected stock price volatility is based on the historical volatility of the Company’s stock for a period approximating the expected life. The expected life represents the period of time that options are expected to be outstanding after their grant date. The risk-free interest rate reflects the interest rate at grant date on zero-coupon U.S. governmental bonds having a remaining life similar to the expected option term.
Options are generally granted at fair market values determined on the date of grant and vesting normally occurs over a three to five-year period. However, options granted to directors have a one year vesting period and a six year contractual term. The maximum contractual term is normally six years. Shares issued upon exercise of a stock option are issued from the Company’s authorized but unissued shares. There were 36,000 options vested during the year ended September 30, 2019 and no options vested during the year ended September 30 2018. For the year ended September 30, 2019, there were 6,750 stock options that were exercised using a cashless method of exercise. For the year ended September 30, 2018, there were 2,250 stock options that were exercised using a cashless method of exercise. The intrinsic value of options exercised during the years ended September 30, 2019 and September 30, 2018 was $81,728 and $75,767, respectively.

                                          | Year ended September 30, 2019 | Year ended September 30, 2018
----------------------------------------- | ----------------------------- | -----------------------------
Dividend yield                            | 0%                            | 0%
Weighted average expected volatility      | 37.77%                        | 43.68%
Weighted average risk-free interest rate  | 2.92%                         | 2.70%
Weighted average expected life (in years) | 3.0                           | 3.7
Vesting period (in years)                 | 3.0                           | 3.0

Company has equity compensation plan 2007 Stock Compensation Plan grants equity awards for directors officers employees. has 851,134 shares issue September 30 2019. $2,371,309 unrecognized compensation expense expected recognized over 4. 9 years. recorded compensation expense 2019 2018 2017 $1,729,025 $2,003,207 $2,319,975. 2019 $1,638,829 $90,196 cost sales. 2018 $1,835,086 $168,121. 2017 $2,103,621 $216,354.
 uses Black-Scholes option pricing model fair value options. 2019 granted employees options 172,000 shares common stock term 4 years three year vesting term exercise price $12. 17. 2018 granted 108,000 shares common stock contractual term 4. 7 years three year vesting term exercise price $13. 37. no stock options granted September 30 2017. fair value estimated at grant date
expected stock price volatility based historical volatility Company’s stock expected life. options after grant date. risk-free interest rate reflects grant date zero-coupon U. S. governmental bonds life similar option term.
 Options granted fair market values vesting three to five-year period. options directors one year vesting six year contractual term. maximum term six years. Shares issued stock option from Company’s authorized unissued shares. 36,000 options vested September 30 2019 no 2018. 6,750 exercised cashless. 2018 2,250. intrinsic value options $81,728 and $75,767.
 Dividend yield 0%
 expected volatility 37. 77% 43. 68%
 risk-free interest rate 2. 92% 2. 70%
 expected life 3.
 Vesting period 3.


Stock Option Award Amendment
The Board of Directors has in 2019 amended and restated the 2011 Equity Incentive Plan to reserve an additional 1,000,000 stock options for issuance. The stock options have been allocated amongst management and employees of the Company.
As of December 31, 2019, the Company has granted 755,000 and 234,000 options with vesting over a period of two and three years, respectively, and an exercise price of $4.70 per share.
The Company has used the Black-Scholes option pricing model to measure the grant date fair value of the options with the following assumptions applied to the model;
The expected volatility was based on historical volatility observed from historical company-specific data during the two years prior to the grant date.
The compensation expense related to the stock option awards was $0.1 million for the year ended December 31, 2019 and the remaining unrecognized cost related to non-vested stock options was $0.5 million with a remaining average remaining vesting period of 2.1 years.

                                       | Options with two year vesting | Options with three year vesting
-------------------------------------- | ----------------------------- | -------------------------------
Volatility                             | 57.5%                         | 52.5%
Dividend yield                         | 10.0 %                        | 10.0%
Risk-free interest rate                | 1.64%                         | 1.65%
Weighted-average grant date fair value | $0.59                         | $0.58

Stock Option Award Amendment
 Board Directors amended 2011 Equity Incentive Plan 1,000,000 stock options. allocated management employees.
 December 31, 2019 granted 755,000 234,000 options two three years exercise price $4. 70 per share.
 used Black-Scholes option pricing model grant value
 volatility historical volatility.
 compensation expense $0. 1 million December 31, 2019 remaining unrecognized cost non options $0. 5 million average vesting period 2. 1 years.
 three
 Volatility. 5%.
 Dividend yield.
 Risk-free interest rate. 64%.
-average grant date fair value.


Contractual Obligations and Commercial Commitments
We lease office space and equipment under operating leases that run through October 2028. Additionally, we have entered into a Credit Agreement that matures in April 2024 and have issued Senior Notes that mature in August 2026.
Contractual obligations as of December 31, 2019, are as follows (in thousands):
(1) Based on the Term Loans debt outstanding and interest rate in effect at December 31, 2019, of 4.05%.
(2) Based on Revolving Credit Facility debt outstanding and interest rate in effect at December 31, 2019, of 3.99%.
(3) Based on 2026 Notes issued of $400.0 million with an annual interest rate of 5.750%.
(4) During the year ended December 31, 2019, we financed certain multi-year license agreements for internal-use software for $10.4 million with annual payments through April 1, 2022. As of December 31, 2019, $13.8 million is outstanding under these and other agreements previously entered into, of which $6.0 million and $7.8 million is included in other current liabilities and other noncurrent liabilities, respectively, in our Consolidated Balance Sheet in Part IV, Item 15 of this Form 10-K as of December 31, 2019.
We are unable to reasonably estimate the ultimate amount or timing of settlement of our reserves for income taxes under ASC 740, Income Taxes. The liability for unrecognized tax benefits at December 31, 2019, is $29.0 million.

                                       |            |                  | Payments Due by Period |           |
-------------------------------------- | ---------- | ---------------- | ---------------------- | --------- | -----------------
                                       | Total      | Less than 1 year | 1-3 years              | 3-5 years | More than 5 years
Operating lease obligations            | $ 70,284   | $ 17,180         | $ 23,116               | $ 12,738  | $ 17,250
Term loans                             | 756,060    | 38,950           | 89,381                 | 627,729   | —
Term loans interest (1)                | 117,168    | 30,025           | 55,232                 | 31,911    | —
Revolving credit facility              | 239,000    | —                | —                      | 239,000   | —
Revolving credit facility interest (2) | 40,528     | 9,536            | 19,072                 | 11,920    | —
Senior notes                           | 400,000    | —                | —                      | —         | 400,000
Senior notes interest (3)              | 149,500    | 23,000           | 46,000                 | 46,000    | 34,500
Financed internal-use software (4)     | 13,822     | 5,974            | 7,848                  | —         | —
Total                                  | $1,786,362 | $124,665         | $240,649               | $969,298  | $451,750

Contractual Obligations Commercial Commitments
 lease office space equipment October 2028. Credit Agreement April 2024 issued Senior Notes August 2026.
 Contractual obligations December 31, 2019
 Term Loans debt interest rate 4. 05%.
 Revolving Credit Facility debt 3. 99%.
 2026 Notes $400. million annual interest rate 5. 750%.
 financed multi-year license agreements software $10. 4 million payments April 1, 2022. $13. 8 million outstanding $6. million $7. 8 million Consolidated Balance Sheet Part IV Item 15.
 estimate reserves income taxes. liability unrecognized tax benefits $29. million.
 Payments
 Less 1 1-3 years 3-5 years 5 years
 Operating lease obligations $ 70,284 $ 17,180 12,738
 Term loans 756,060 38,950 89,381 627,729
loans 117,168 30,025 55,232 31,911
 Revolving credit facility 239,000
 40,528 9,536 19,072 11,920
 Senior notes 400,000
 149,500 23,000
-use software 13,822 5,974 7,848
 $1,786,362 $124,665 $240,649 $969,298 $451,750


NAVIOS MARITIME HOLDINGS INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. dollars — except share data)
NOTE 18: INTEREST EXPENSE AND FINANCE COST
Interest expense and finance cost consisted of the following:

                                                       | For the Year Ended December 31, 2019 | For the Year Ended December 31, 2018 | For the Year Ended December 31, 2017
------------------------------------------------------ | ------------------------------------ | ------------------------------------ | ------------------------------------
Interest expense                                       | $125,496                             | $129,941                             | $115,099
Amortization and write-off of deferred financing costs | 7,746                                | 7,866                                | 6,391
Other                                                  | 237                                  | 109                                  | 121
Interest expense and finance cost                      | $133,479                             | $137,916                             | $121,611

NAVIOS MARITIME HOLDINGS. FINANCIAL STATEMENTS. dollars
 18 INTEREST EXPENSE FINANCE COST
 2019 2018 2017
 Interest expense $125,496 $129,941 $115,099
 Amortization write-off deferred financing costs 7,746 7,866 6,391
 Interest expense cost $133,479 $137,916 $121,611


ADVANCED ENERGY INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (in thousands, except per share amounts)
The Company’s effective tax rate differs from the U.S. federal statutory rate of 35% for the year ended December 31, 2017, primarily due to the benefit related to the wind down of our solar inverter business and earnings in foreign jurisdictions, which are subject to lower tax rates, offset by the impact of U.S. tax reform. The principal causes of the difference between the federal statutory rate and the effective income tax rate for each the years below are as follows:

                                                        |          | Years Ended December 31, |
------------------------------------------------------- | -------- | ------------------------ | --------
                                                        | 2019     | 2018                     | 2017
Income taxes per federal statutory rate                 | $14,111  | $36,199                  | $69,348
State income taxes, net of federal deduction            | 10       | 2,372                    | 1,794
Transition tax - U.S. Tax Reform                        | —        | 1,174                    | 61,690
Corporate tax rate changes - U.S. Tax Reform            | —        | (652)                    | 11,177
Tax benefit associated with inverter business wind down | —        | —                        | (33,837)
Stock based compensation                                | (97)     | (974)                    | (5,263)
GILTI Tax                                               | 8,796    | 13,064                   | —
Tax effect of foreign operations                        | (13,086) | (19,162)                 | (47,482)
Uncertain tax position                                  | (4,487)  | (3,088)                  | 4,948
Unremitted earnings                                     | 1,624    | 2,564                    | —
Tax credits                                             | (6,280)  | (9,844)                  | (658)
Change in valuation allowance                           | 7,222    | (1,306)                  | 841
Withholding taxes                                       | 6,500    | 1,371                    | —
Other permanent items, net                              | (3,614)  | 3,509                    | (468)
Total provision for income taxes                        | $10,699  | $25,227                  | $62,090

ADVANCED ENERGY INDUSTRIES. FINANCIAL STATEMENTS
 effective tax rate differs. federal rate 35% December 2017 due solar inverter business earnings foreign jurisdictions. tax reform. causes
 December
 2018 2017
 Income taxes federal rate $14,111 $36,199 $69,348
 State income taxes federal deduction 2,372 1,794
 Transition tax. Reform 1,174 61,690
 Corporate tax rate changes. 11
 benefit inverter business,837
 Stock based compensation
 Tax
 Tax effect foreign operations (13,086) (19 (47,482)
 Uncertain tax position (4,487)
 Unremitted earnings 1,624
 Tax credits (6,280 (9,844)
 Change valuation allowance 7,222,306)
 Withholding taxes 6,500
 Other permanent items (3,614)
 provision income taxes $10,699 $25,227 $62,090


A discussion of operating income by reportable segment is presented below (in millions):
AMER. Operating income increased $19.2 million in fiscal 2019 as compared to fiscal 2018, primarily as a result of the increase in net sales and a positive shift in customer mix, partially offset by increased fixed costs to support new program ramps.
APAC. Operating income decreased $5.7 million in fiscal 2019 as compared to fiscal 2018, primarily as a result of a negative shift in customer mix and increased fixed costs to support new program ramps, partially offset by the increase in net sales.
EMEA. Operating income increased $3.0 million in fiscal 2019 as compared to fiscal 2018 primarily as a result of the increase in net sales and a positive shift in customer mix, partially offset by increased fixed costs to support new program ramps.
Other expense. Other expense for fiscal 2019 increased $5.4 million as compared to fiscal 2018. The increase in other expense for fiscal 2019 was primarily due to a $2.7 million decrease in interest income as a result of lower cash balances and a $1.5 million increase in factoring fees related to the Company's accounts receivable sale programs.

                           | 2019    | 2018
-------------------------- | ------- | -------
Operating income (loss):   |         |
AMER                       | $57.8   | $38.6
APAC                       | 208.2   | 213.9
EMEA                       | 4.5     | 1.5
Corporate and other costs  | (128.4) | (135.7)
Total operating income     | $142.1  | $118.3

discussion operating income segment
 AMER. increased $19. 2 million 2019 net sales positive customer mix offset increased fixed costs ramps.
 APAC. income decreased $5. 7 million negative shift customer mix increased fixed costs ramps offset net sales.
 EMEA. income increased $3. million net sales mix increased fixed costs ramps.
 Other expense. 2019 increased $5. 4 million. due $2. 7 million decrease interest income lower cash balances $1. 5 million increase factoring fees receivable sale programs.
 Operating income
 AMER $57. $38.
 APAC. 213
 EMEA.
 Corporate other costs (128.
 Total operating income $142. $118.


General and Administrative Expenses: General and administrative expenses primarily consist of personnel related expenditures for IT, finance, legal and human resources support functions; and professional services fees.
(1) Excluding stock-based compensation
Excluding the effects of currency rate fluctuations, total general and administrative expenses increased in fiscal 2019 compared to fiscal 2018 primarily due to increased professional services fees

Year Ended May 31,             |        |        |                |
------------------------------ | ------ | ------ | -------------- | ------
                               |        |        | Percent Change |
(Dollars in millions)          | 2019   | Actual | Constant       | 2018
General and administrative (1) | $1,093 | -1%    | 2%             | $1,102
Stock-based compensation       | 172    | -5%    | -5%            | 180
Total expenses                 | $1,265 | -1%    | 1%             | $1,282
% of Total Revenues            | 3%     |        |                | 3%

General Administrative Expenses personnel expenditures IT finance legal human resources professional services fees.
 stock-based compensation
 expenses increased 2019 2018 increased professional services fees
 Ended May 31,
 Percent Change
 millions
 $1,093 -1% 2% $1,102
 Stock-based compensation -5%
 Total expenses $1,265 -1% 1% $1,282
 % Total Revenues 3%


The following table summarizes the activity related to the Company's gross unrecognized tax benefits from April 1, 2016 to March 31, 2019 (amounts in millions):
As of March 31, 2019 and March 31, 2018, the Company had accrued interest and penalties related to tax contingencies of $88.1 million and $80.8 million, respectively. Interest and penalties charged to operations for the years ended March 31, 2018 and 2017 related to the Company's uncertain tax positions were $5.4 million and $5.8 million, respectively. Previously accrued interest and penalties that were released during the year ended March 31, 2019 were $37.5 million.
The total amount of gross unrecognized tax benefits was $763.4 million and $436.0 million as of March 31, 2019 and March 31, 2018, respectively, of which $664.4 million and $436.0 million is estimated to impact the Company's effective tax rate, if recognized. The Company estimates that it is reasonably possible unrecognized tax benefits as of March 31, 2019 could decrease by approximately $50.0 million in the next 12 months. Positions that may be resolved include various U.S. and non-U.S. matters.

                                                          |        | Year Ended March 31, |
--------------------------------------------------------- | ------ | -------------------- | ------
                                                          | 2019   | 2018                 | 2017
Beginning balance                                         | $436.0 | $398.5               | $220.7
Increases related to acquisitions                         | 329.7  | —                    | 193.3
Decreases related to settlements with tax authorities     | (8.3)  | (0.1)                | (11.7)
Decreases related to statute of limitation expirations    | (16.2) | (10.9)               | (7.6)
Increases related to current year tax positions           | 27.8   | 30.3                 | 26.3
Increases (decreases) related to prior year tax positions | (5.6)  | 18.2                 | (22.5)
Ending balance                                            | $763.4 | $436.0               | $398.5

table summarizes activity Company's unrecognized tax benefits April 1 2016 to March 31, 2019
 March 31, 2019 2018 accrued interest penalties $88. 1 million $80. 8 million. penalties charged 2018 2017 were $5. 4 million $5. 8 million. Previously accrued penalties 2019 $37. 5 million.
 total unrecognized tax benefits $763. 4 million $436. million March 31, 2019 2018 $664. 4 million $436. 0 million estimated impact effective tax rate if recognized. unrecognized tax benefits could decrease $50. million next 12 months. Positions include. non-U. matters.
 Ended March
 Beginning balance $436. $398.
.
 settlements tax authorities.
 statute of limitation expirations.
 current year tax positions.
 prior year tax positions.
 Ending balance $763. $436. $398.


Restatement – changes to the presentation of financial income and expenses
Due to the significant variations in SEK exchange rates during the year, the Company has considered the change in reporting of foreign exchange effect to reflect how foreign exchange transaction risk is managed on a net basis in the Company. Previously foreign exchange effects were reported within both financial income and financial expenses depending on whether they relate to assets or liabilities.
In note F2, “Financial income and expenses,” the foreign exchange effect is now presented as a net amount, reported separately from other financial income and expenses items. The comparative years 2018 and 2017 have been
restated to reflect the new presentation of Financial income and expenses, net. The restatement does not impact the total net financial income and expenses reported in prior years.
The following table shows the impact of the restatement:
In line with this change the Company also elected to present all financial income and expenses, including the foreign exchange effect, on the income statement as a single line item Financial income and expenses, net. Previously,
financial income and financial expenses were presented as separate line items on the income statement. The income statement for all comparative years 2018 and 2017 have been restated to reflect the new presentation of Financial
income and expenses, net.

Financial income and expenses         |         |
------------------------------------- | ------- | -------
SEK million                           | 2018    | 2017
Reported in prior years               |         |
Reported in prior years               | –316    | –372
Financial expenses                    | –2,389  | –843
Total                                 | –2,705  | –1,215
SEK million                           | 2018    | 2017
Restated                              |         |
Financial income                      | 151     | –50
Financial expenses                    | –2,032  | –1,570
Net foreign exchange gains and losses | –824    | 405
Total                                 | -2,705  | –1,215

Restatement changes financial income expenses
 variations SEK exchange rates Company considered change reporting foreign exchange effect foreign exchange risk. Previously foreign exchange effects reported financial income expenses.
 note F2 income expenses foreign exchange effect now presented net amount separately. comparative years 2018 2017
 restated new. restatement impact total net income expenses.
 table shows impact restatement
 Company financial income expenses including foreign exchange effect income statement single line item. Previously
 separate. income statement 2018 2017 restated new
 expenses.
 income expenses
 million 2018 2017
 –316 –372
 –2,389 –843
 Total –2,705 –1,215
 million
 151 –50
 –2,032 –1,570
 Net foreign exchange gains losses –824 405
 Total -2,705  –1,215


Note: The Company adopted IFRS 16 on January 1, 2019. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 16.
Financial risk management objectives and policies
The Company’s risk management objectives are to manage the market risk, credit risk and liquidity risk related to its operating activities. The Company identifies, measures and manages the aforementioned risks based on policy and risk preference.
The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant financial activities, approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies at all times.

Financial Assets                                                  | As of December 31, |
----------------------------------------------------------------- | ------------------ | --------------
                                                                  | 2018               | 2019
                                                                  | NT$                | NT$
                                                                  | (In Thousands)     | (In Thousands)
Financial assets at fair value through profit or loss             | $12,084,297        | $14,021,473
Financial assets at fair value through other comprehensive income | 11,585,477         | 14,723,232
Financial assets measured at amortized cost                       |                    |
Cash and cash equivalents (excludes cash on hand)                 | 83,655,648         | 95,486,403
Receivables                                                       | 24,583,451         | 26,459,392
Refundable deposits                                               | 2,757,399          | 2,600,733
Other financial assets                                            | 2,320,037          | 2,353,066
Total                                                             | $136,986,309       | $155,644,299
Financial Liabilities                                             | As of December 31, |
                                                                  | 2018               | 2019
                                                                  | NT$                | NT$
                                                                  | (In Thousands)     | (In Thousands)
Financial liabilities measured at amortized cost                  |                    |
Short-term loans                                                  | $13,103,808        | $12,015,206
Payables                                                          | 23,559,548         | 27,433,065
Guarantee deposits (current portion included)                     | 665,793            | 296,694
Bonds payable (current portion included)                          | 41,378,182         | 38,781,416
Long-term loans (current portion included)                        | 30,826,215         | 33,902,074
Lease liabilities (Note)                                          | —                  | 6,031,025
Other financial liabilities                                       | 20,523,099         | 20,093,441
Total                                                             | $130,056,645       | $138,552,921

Company adopted IFRS 16 January 1, 2019. restate prior periods.
 Financial risk management objectives
 market credit liquidity risk. identifies measures manages risks.
 established policies procedures internal controls risk management. approval Board Audit Committee. complies risk management policies.
 Financial Assets December 31,
 2019
 profit loss $12,084,297 $14,021,473
 11,585,477 14,723,232
 Cash equivalents 83,655,648 95,486,403
 Receivables 24,583,451 26,459,392
 Refundable deposits 2,757,399 2,600,733
 Other financial assets 2,320,037 2,353,066
 Total $136,986,309 $155,644,299
 Financial Liabilities December 31,
 amortized cost
 Short-term loans $13,103,808 $12,015,206
 Payables 23,559,548 27,433,065
deposits 296,694
 Bonds 41,378 38,781,416
 Long-term loans 30,826,215 33,902,074
 Lease liabilities
,093,441
 $130,056,645,552,921


Components of the net deferred income tax assets are as follows:
In fiscal years 2019 and 2018, the Company continued to maintain a full valuation allowance on deferred tax assets. The valuation allowance increased by $1.7 million in fiscal year 2019. The Company recorded an income tax expense from continuing operations of $39,000 in fiscal year 2019. In fiscal year 2018, the Company recorded an income tax benefit from continuing operations of $597,000. The fiscal year 2018 income tax benefit was due primarily from the release of the tax valuation allowance associated with previously generated alternative minimum tax (AMT) credits due to the December 22, 2017 Tax Cuts and Jobs Act Tax Reform (the “Tax Act”).
The Company has, on a tax-effected basis, approximately $0.8 million in tax credit carryforwards and $26.9 million of federal net operating loss carryforwards that are available to offset taxable income in the future. The tax credit carryforwards will begin to expire in fiscal year 2021. The federal net operating loss carryforwards begin to expire in fiscal year 2022. State tax credit carryforwards and net operating loss carryforwards, on a tax effected basis and net of federal tax benefits, are $0.1 million and $8.1 million, respectively. The remaining state tax credit carryforwards and state net operating loss carry forwards begin to expire in fiscal year 2020. In fiscal year 2019, $1.2 million of state net operating loss carryforwards expired.

                                    | March 31, |
----------------------------------- | --------- | --------
(in thousands)                      | 2019      | 2018
Deferred income tax assets:         |           |
Allowance for doubtful accounts     | $26       | $24
Foreign tax credit carryforward     | 810       | 812
Depreciation                        | 173       | 227
Deferred revenue                    | 425       | 675
Accrued compensation                | 412       | 358
Inventory reserves                  | 757       | 948
Accrued warranty                    | 33        | 77
Net operating loss carryforward     | 35,024    | 34,924
Accrued restructuring               | —         | 16
Intangibles and goodwill            | 272       | —
Other                               | 839       | 660
Gross deferred tax assets           | 38,771    | 38,721
Valuation allowance                 | (38,771)  | (37,103)
Net deferred income tax assets      | —         | 1,618
Deferred income tax liabilities:    |           |
Intangibles and goodwill            | —         | (1,618)
Net deferred income tax liabilities | $—        | $—

net deferred income tax assets
 2019 2018 full valuation allowance. increased $1. 7 million 2019. tax expense $39,000. benefit $597,000. due tax valuation allowance December 22, 2017 Tax Cuts Jobs Act Tax Reform.
 $0. 8 million tax credit carryforwards $26. 9 million federal net operating loss carryforwards income. tax credit carryforwards 2021. federal net loss carryforwards 2022. State tax credit net operating loss carryforwards $0. 1 million $8. 1 million. 2020. 2019 $1. 2 million state net operating loss carryforwards expired.
 Deferred income tax assets
 Allowance doubtful accounts $26
 Foreign tax credit carryforward 810
 Depreciation 173
 Deferred revenue 425 675
 Accrued compensation
 Inventory reserves 757
 warranty
 Net operating loss carryforward 35,024 34,924
restructuring
 Intangibles goodwill 272
 839
 deferred tax assets 38,771 38,721
 Valuation allowance,103
 Net deferred income tax assets 1,618
 Intangibles goodwill


5.2 Employee share plans (continued)
Shares issued under the FY2019, FY2018 and FY2017 Performance Rights plans
For the purposes of Sections 200B and 200E of the Corporations Act, iSelect shareholders have approved the giving of any potential benefits under the Performance Rights Plan provided in connection with any future retirement of a participant who holds a ‘managerial or Executive office’ such that for the purposes of the provisions, those benefits will not be included in the statutory limit.
Change in control
Upon a ‘change of control’, the Board has discretion to determine that some or all of the participants’ Performance Rights vest immediately.
FY2018 Performance Rights Plan
The following table illustrates the number of, and movements in, shares issued during the year:

                                           | 2019 NUMBER | 2018 NUMBER
------------------------------------------ | ----------- | -----------
Outstanding at the beginning of the period | 547,949     | -
Granted during the period                  | -           | 772,303
Forfeited during the period                | (140,687)   | (224,354)
Exercised during the period                | -           | -
Outstanding at the end of the period       | 407,262     | 547,949

. Employee share plans
 Shares issued FY2019 Performance Rights plans
 Sections 200B 200E Corporations Act iSelect shareholders approved potential benefits Performance Rights Plan future retirement participant ‘managerial Executive benefits not included statutory limit.
 Change control
 Board Performance Rights.
 FY2018 Performance Rights Plan
 table illustrates movements shares issued year
 2019 2018
 Outstanding period 547,949
 Granted 772,303
 Forfeited (140,687) (224,354)
 Exercised
 Outstanding end period 407,262,949


NOTE 4 - PREPAID EXPENSES AND OTHER CURRENT ASSETS & PATENTS AND INTANGIBLE ASSETS
Prepaid Expenses and Other Current Assets
The components of prepaid expenses and other current assets are as presented below:
During 2019, tax refunds from the Internal Revenue Service of $5.0 million were received for the prepayment made during 2018.

                                                | As of December 31, |
----------------------------------------------- | ------------------ | ------
                                                | 2019               | 2018
                                                | (in thousands)     |
Prepaid income taxes                            | $—                 | $5,429
Other prepaid expenses and other current assets | 288                | 1,151
                                                | $288               | $6,580

NOTE 4 PREPAID EXPENSES CURRENT PATENTS
 components
 2019 tax refunds Internal Revenue Service $5. 0 million received prepayment 2018.
 December 31,
 2019 2018
 thousands
 Prepaid income taxes $5,429
 expenses current assets 1,151
 $6,580


The director compensation policies summarized above resulted in the following total compensation for our non-management directors in fiscal year 2019:
Director Compensation Table
(1) Oleg Khaykin, President and Chief Executive Officer, is not included in this table as he was an employee of the Company and as such received no compensation for his services as a director. His compensation is disclosed in the Summary Compensation Table.
(2) The amounts shown in this column represent the grant date fair values of RSUs issued pursuant to the Company’s 2003 Equity Incentive Plan, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”), excluding the effect of estimated forfeitures. There can be no assurance that these grant date fair values will ever be realized by the non-employee directors. For information regarding the number of unvested RSUs held by each non-employee director as of the end of fiscal year 2019, see the column “Unvested Restricted Stock Units Outstanding” in the table below

DIRECTOR COMPENSATION |                                 |                      |
--------------------- | ------------------------------- | -------------------- | ---------
Name (1)              | Fees Earned or Paid in Cash ($) | Stock Awards ($) (2) | Total ($)
Keith Barnes          | 102,500                         | 178,317              | 280,817
Richard E. Belluzzo   | 160,000                         | 178,317              | 338,317
Laura Black           | 67,500                          | 178,317              | 245,817
Tor Braham            | 67,500                          | 178,317              | 245,817
Timothy Campos        | 77,500                          | 178,317              | 255,817
Donald Colvin         | 97,500                          | 178,317              | 275,817
Masood A. Jabbar      | 90,000                          | 178,317              | 268,317

director compensation policies compensation non-management directors 2019
 Compensation
 Oleg Khaykin President not employee no compensation. compensation Summary Compensation Table.
 amounts represent grant date values RSUs 2003 Equity Incentive Plan Financial 718 excluding estimated forfeitures. no assurance values non-employee directors. unvested RSUs-employee 2019 “Unvested Restricted Stock Units Outstanding”
 DIRECTOR COMPENSATION
 Fees Stock Awards Total
 Keith Barnes 102,500 178,317 280,817
 Richard E. Belluzzo 160,000 178,317 338,317
 Laura Black 67,500 245,817
 Tor Braham 67
 Timothy Campos 77,500 178,317 255,817
 Donald Colvin 97,500 275,817
 Masood A. Jabbar 90,000,317 268,317


NOTE 15 — LEASES
We have operating and finance leases for datacenters, corporate offices, research and development facilities, retail stores, and certain equipment. Our leases have remaining lease terms of 1 year to 20 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.
The components of lease expense were as follows:

(In millions)                       |          |          |
----------------------------------- | -------- | -------- | --------
Year Ended June 30,                 | 2019     | 2018     | 2017
Operating lease cost                | $  1,707 | $  1,585 | $  1,412
Finance lease cost:                 |          |          |
Amortization of right-of-use assets | $ 370    | $ 243    | $ 104
Interest on lease liabilities       | 247      | 175      | 68
Total finance lease cost            | $617     | $418     | $172

 leases datacenters offices research retail stores equipment. 1 20 years extend 5 years terminate 1 year.
 lease expense
 millions
 Ended June 30
 Operating lease cost $ 1,707 $ 1,585 1,412
 Finance lease cost
 Amortization right-of-use assets $ 370 $ 243 104
 Interest lease liabilities 247 175
 finance lease cost $617 $418 $172


NOTE 9—PROPERTY, PLANT AND EQUIPMENT
Significant components of property, plant and equipment are as follows (in thousands):
In fiscal 2019, we entered into agreements related to the construction and leasing of two buildings on our existing corporate campus in San Diego, California. Under these agreements, a financial institution will own the buildings, and we will lease the property for a term of five years upon their completion.
In the third quarter of fiscal 2019 we sold the land and buildings comprising our separate CTS campus in San Diego. We have entered into a lease with the buyer of this campus and CTS employees will continue to occupy this separate campus until the new buildings on our corporate campus are ready for occupancy in fiscal 2021. In the third quarter of fiscal 2019 we also sold land and buildings in Orlando, Florida and we are entering a lease for new space in Orlando to accommodate our employees and operations in Orlando. In connection with the sale of these real estate campuses we received total net proceeds of $44.9 million and recognized net gains on the sales totaling $32.5 million.
As a part of our efforts to upgrade our current information systems, early in fiscal 2015 we purchased new enterprise resource planning (ERP) software and began the process of designing and configuring this software and other software applications to manage our operations.
Costs incurred in the development of internal-use software and software applications, including external direct costs of materials and services and applicable compensation costs of employees devoted to specific software development, are capitalized as computer software costs. Costs incurred outside of the application development stage, or that are types of costs that do not meet the capitalization requirements, are expensed as incurred. Amounts capitalized are included in property, plant and equipment and are amortized on a straight-line basis over the estimated useful life of the software, which ranges from three to seven years. No amortization expense is recorded until the software is ready for its intended use.
Through September 30, 2019 we have incurred costs of $138.9 million related to the purchase and development of our ERP system, including $3.1 million, $22.5 million, and $40.6 million of costs incurred during fiscal years 2019, 2018 and 2017, respectively. We have capitalized $1.6 million, $7.5 million, and $16.7 million of qualifying software development costs as internal-use software development in progress during fiscal years 2019, 2018, and 2017, respectively. We have recognized expense for $1.5 million, $15.0 million, and $23.9 million of these costs in fiscal years 2019, 2018, and 2017, respectively, for costs that did not qualify for capitalization. Amounts that were expensed in connection with the development of these systems are classified within selling, general and administrative expenses in the Consolidated Statements of Operations.
Various components of our ERP system became ready for their intended use and were placed into service at various times from fiscal 2016 through fiscal 2019. As each component became ready for its intended use, the component’s costs were transferred into completed software and we began amortizing these costs over their seven-year estimated useful life using the straight-line method. We continue to capitalize costs associated with the development of other ERP components that are not yet ready for their intended use.
Our provisions for depreciation of plant and equipment and amortization of leasehold improvements and software amounted to $22.6 million, $19.5 million and $17.8 million in 2019, 2018 and 2017, respectively. Generally, we use straight-line methods for depreciable real property over estimated useful lives ranging from 15 to 39 years or for leasehold improvements, the term of the underlying lease if shorter than the estimated useful lives. We typically use accelerated methods (declining balance) for machinery and equipment and software other than our ERP system over estimated useful lives ranging from 5 to 10 years.

                                                               |            | September 30,
-------------------------------------------------------------- | ---------- | -------------
                                                               | 2019       | 2018
Land and land improvements                                     | $  7,348   | $  13,132
Buildings and improvements                                     | 48,191     | 57,959
Machinery and other equipment                                  | 107,297    | 81,727
Software                                                       | 108,526    | 84,631
Leasehold improvements                                         | 17,064     | 11,991
Construction and internal-use software development in progress | 16,814     | 12,888
Accumulated depreciation and amortization                      | (160,271)  | (144,782)
                                                               | $  144,969 | $  117,546

NOTE 9—PROPERTY PLANT EQUIPMENT
 components
 fiscal 2019 agreements construction leasing two buildings corporate campus San Diego, California. financial institution buildings we lease property five years.
 third quarter 2019 sold land buildings CTS campus San Diego. lease with buyer CTS employees occupy until new buildings ready fiscal 2021. sold land buildings Orlando, Florida lease new space. net proceeds $44. 9 million net gains sales $32. 5 million.
 fiscal 2015 purchased enterprise resource planning (ERP) software designing configuring.
 Costs development software capitalized as software costs. Costs outside expensed as incurred. Amounts capitalized amortized over estimated useful life software three to seven years. No amortization expense recorded until software ready use.
 Through September 30, 2019 incurred costs of $138. 9 million purchase development ERP system including $3. 1 million, $22. 5 million $40. 6 million costs fiscal years 2019 2018 2017.capitalized $1. 6 million $7. 5 million $16. 7 million costs 2019 2018 2017. recognized expense $1. 5 million $15. 0 million $23. 9 million 2019 2018 2017. selling general administrative expenses Consolidated Statements of Operations.
 components ERP system ready service 2016 2019. costs transferred software seven-year life. costs ERP components.
 provisions depreciation plant equipment amortization leasehold improvements software $22. 6 million $19. 5 million $17. 8 million 2019 2018 2017. straight-line methods depreciable property 15 to 39 years leasehold improvements. accelerated methods machinery equipment software 5 to 10 years.
 Land improvements 7,348 13,132
 Buildings improvements 48,191 57,959
 Machinery equipment 107,297 81,727
 Software 108,526 84,631
 Leasehold improvements 17,064 11,991
 Construction internal-use software development 16,814 12,888
depreciation amortization,271)
 144,969 117,546


Lease liabilities regarding right-of-use assets are included on the balance sheet under “Borrowings”.
Extension and termination options are included in several leases in order to optimize operational flexibility in terms of managing contracts. The lease term determined by TORM is the noncancellable period of a lease, together with any extension/termination options if these are/are not reasonably certain to be exercised.

USDm                                                            | 2019 | 2018
--------------------------------------------------------------- | ---- | ----
Maturity analysis - contractual undiscounted cash flow          |      |
Less than one year                                              | 7.5  | 5.2
One to five years                                               | 27.6 | 25.6
More than five years                                            | 0.1  | -
Total undiscounted lease liabilities as of 31 December          | 35.2 | 30.8
Lease liabilities included under "Borrowings" as of 31 December | 30.6 | 25.3
Non-current                                                     | 10.2 | 3.2
Current                                                         | 20.4 | 22.1

Lease liabilities right-use assets balance.
 Extension termination options leases operational flexibility. lease term TORM noncancellable extension/termination options.
 Maturity analysis contractual undiscounted cash flow
 Less than one year 7.
 One to five years 27.
 More than five years.
 undiscounted lease liabilities 31 December 35. 30.
 Lease liabilities "Borrowings 31 30. 25.
 Non-current 10.
 20.


Standard & Poor's Rating Services', a Standard & Poor's Financial Services LLC business ("S&P"), corporate credit rating is "BBB." Moody’s Investor Service, Inc.'s ("Moody's") applicable rating is "Baa2." Fitch Ratings', a wholly owned subsidiary of Fimlac, S.A. ("Fitch"), applicable rating is "BBB." The below table outlines the fees paid on the unused portion of the facility ("Facility Fee Rate") and letter of credit fees and borrowings ("Undrawn Letter of Credit Fee and Borrowing Spread") that corresponds to the applicable rating levels from S&P, Moody's and Fitch.
In the event the rating levels are split, the applicable fees and spread will be based upon the rating level in effect for two of the rating agencies, or, if all three rating agencies have different rating levels, the applicable fees and spread will be based upon the rating level that is between the rating levels of the other two rating agencies.

Ratings Level (S&P/Moody's/Fitch) | Facility Fee Rate | All-in Borrowing Spread
--------------------------------- | ----------------- | -----------------------
A-/A3/A- or above                 | 0.090%            | 1.000%
BBB+/Baa1/BBB+                    | 0.100%            | 1.125%
BBB/Baa2/BBB (current level)      | 0.125%            | 1.250%
BBB-/Baa3/BBB-                    | 0.175%            | 1.375%
BB+/Ba1/BB+ or lower              | 0.225%            | 1.625%

Standard & Poor's Rating Services rating "BBB. Moody’s Investor Service. "Baa2. Fitch Ratings subsidiary Fimlac. rating "BBB. table outlines fees unused facility Fee credit fees borrowings rating levels S&P Moody's Fitch.
 rating levels split fees spread based rating level two.
 Ratings Level (S&P/Moody's/Fitch) Facility Fee Rate All-in Borrowing Spread
 A-/A3/A- or above 0. 090%.%
 BBB+/Baa1/BBB+. 100%. 125%
 BBB/Baa2/BBB. 250%
 BBB-/Baa3/BBB-. 175%. 375%
 BB+/Ba1/BB+ or lower. 225%. 625%


NOTE 14 – MAJOR CUSTOMERS AND VENDORS (CONTINUED)
Our accounts receivable includes 3 customers that individually make up more than 10% of our accounts receivable at December 31, 2019 in the percentages of 17.8%, 15.4% and 13.3%.
The Company had four key partners through which 10% or greater of its revenue was generated in either 2019 or 2018 as set forth below. The amounts in the table below reflect the amount of revenue generated through those customers.

            | 2019      |      | 2018      |
----------- | --------- | ---- | --------- | ----
            | $         | %    | $         | %
Partner A   | 1,315,706 | 5.3  | 6,841,386 | 32.3
Partner B   | 9,210,347 | 37.4 | 5,350,393 | 25.2
Partner C   | 4,051,217 | 16.5 | 2,584,103 | 12.2
Partner D   | 1,007,573 | 4.1  | 2,159,356 | 10.2

NOTE 14 MAJOR CUSTOMERS VENDORS
 receivable 3 customers 10% December 31, 2019 percentages 17. 8% 15. 4% 13. 3%.
 Company four partners 10% revenue generated 2019 2018. amounts reflect revenue generated.
 1,315,706 5.,386 32.
 9,210,347 37. 5,350,393 25.
 C 4,051,217 16. 2,584,103 12.
 1,007,573 4. 2,159,356 10.


3.1 Financial risk factors (continued)
(a) Market risk (continued)
(i) Foreign exchange risk (continued)
As at 31 December 2019, the Group’s major monetary assets and liabilities exposed to foreign exchange risk are listed below:
During the year ended 31 December 2019, the Group reported exchange gains of approximately RMB77 million (2018: RMB229 million) within “Finance costs, net” in the consolidated income statement.
As at 31 December 2019, management considers that any reasonable changes in foreign exchange rates of the above currencies against the two major functional currencies would not result in a significant change in the Group’s results, as the net carrying amounts of financial assets and liabilities denominated in a currency other than the respective subsidiaries’ functional currency are considered to be not significant, given the exchange rate peg between HKD and USD. Accordingly, no sensitivity analysis is presented for foreign exchange risk.

                                  | USD denominated RMB’Million | Non-USD denominated RMB’Million
--------------------------------- | --------------------------- | -------------------------------
As at 31 December 2019            |                             |
Monetary assets, current          | 27,728                      | 2,899
Monetary assets, non-current      | 373                         | –
Monetary liabilities, current     | (4,273)                     | (14,732)
Monetary liabilities, non-current | (91)                        | (5,739)
                                  | 23,737                      | (17,572)
As at 31 December 2018            |                             |
Monetary assets, current          | 18,041                      | 1,994
Monetary assets, non-current      | 2,642                       | –
Monetary liabilities, current     | (3,434)                     | (4,587)
Monetary liabilities, non-current | (3,733)                     | (9,430)
                                  | 13,516                      | (12,023)

. Financial risk factors
 Market
 Foreign exchange risk
 31 December 2019 major monetary assets liabilities foreign exchange risk
 31 December 2019 reported exchange gains RMB77 million (2018 RMB229 million costs consolidated income statement.
 changes foreign exchange rates significant results financial assets liabilities exchange rate peg between HKD USD. no analysis foreign exchange risk.
 USD denominated RMB’Million Non-USD denominated RMB’Million
 31 December 2019
 assets 27,728 2,899
 non-current
 (4,273) (14,732)
 (91)
 23,737 (17,572
 31 December 2018
 assets 18,041 1,994
 2,642
 (3,434) (4,587)
 (3,733) (9,430)
 13,516


NOTE 3. PROPERTY AND EQUIPMENT
The classification of property and equipment, together with their estimated useful lives is as follows:
(1) Excludes assets held for sale
(2) Lesser of lease term or estimated useful life
The change in property and equipment in accrued liabilities was $14,315 and $15,674 for the fiscal years ended June 30, 2019 and 2018, respectively. These amounts were excluded from capital expenditures on the statements of cash flows.
No impairments of property and equipment were recorded in fiscal 2019 or 2018.
During the third quarter of fiscal 2019, the Company received an unsolicited offer to purchase its Houston, TX, facility. At June 30, 2019, the facility included assets with a carrying value of approximately $5,055. Although management has not committed to the sale, a sale of the facility during fiscal 2020 is likely and the Company expects to record a gain on the sale upon closing, since the offer represents full appraisal value for the facility. Therefore, the assets are considered held for sale at June 30, 2019. Also held for sale at June 30, 2019, was the Company’s Elizabethtown, KY facility. During the third quarter of fiscal 2018, the Company reached a definitive agreement to sell the property for $1,300 pending an expected closing date during the second quarter of fiscal 2020. An impairment loss was recorded on this facility during fiscal 2017 as disclosed in Note 2 to the Company’s consolidated financial statements. Total assets held for sale by the Company at June 30, 2019 and 2018 were $6,355 and $1,300, respectively, and were included in assets held for sale on the Company’s consolidated balance sheet for each year. Those balances are not included on the above table.

                              | June 30, |          |
----------------------------- | -------- | -------- | ---------------------
                              | 2019     | 2018     | Estimated Useful Life
Land (1)                      | $23,243  | $24,845  |
Land improvements (1)         | 25,209   | 25,383   | 5 - 20 years
Buildings (1)                 | 147,220  | 143,918  | 20 - 30 years
Leasehold improvements        | 48,478   | 48,060   | 5 - 30 years(2)
Equipment and furniture       | 365,101  | 328,864  | 3 - 10 years
Aircraft and equipment        | 39,293   | 38,761   | 4 - 10 years
Construction in progress      | 12,411   | 39,872   |
                              | 660,955  | 649,703  |
Less accumulated depreciation | 388,481  | 364,153  |
Property and equipment, net   | $272,474 | $285,550 |

3. PROPERTY EQUIPMENT
 classification equipment estimated useful lives
 Excludes assets sale
 Lesser lease term estimated useful life
 change property equipment accrued liabilities $14,315 $15,674 years 2019 2018. excluded from capital expenditures.
 No impairments property recorded 2019 2018.
 2019 received offer purchase Houston, TX facility. assets value $5,055. sale 2020 likely expects gain sale full appraisal value. assets held for sale June 30 2019. Elizabethtown, KY facility. sell property for $1,300 closing second quarter 2020. impairment loss recorded 2017 Note 2 financial statements. assets sale June 2019 2018 $6,355 $1,300 included consolidated balance sheet. balances not included table.
 30
 Estimated Useful Life
 Land $23,243 $24,845
 Land improvements 25,209,383 5 - 20 years
 Buildings 147,220 143,918 20 - 30 years
48,478 5 30
 Equipment 365,101 328,864 3 10
 Aircraft 39,293 38,761 4 10
 Construction 12 39,872
,955,703
 depreciation,481 364,153
 $272,474 $285,550


ADVANCED ENERGY INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (in thousands, except per share amounts)
NOTE 10. INVENTORIES
Our inventories are valued at the lower of cost or net realizable value and computed on a first-in, first-out (FIFO) basis. Components of inventories are as follows:

                        | December 31, |
----------------------- | ------------ | -------
                        | 2019         | 2018
Parts and raw materials | $134,816     | $76,647
Work in process         | 10,269       | 6,644
Finished goods          | 84,934       | 14,696
Total                   | $230,019     | $97,987

ADVANCED INDUSTRIES. FINANCIAL STATEMENTS share
. INVENTORIES
 valued first-in first-out. Components
 December 31,
 2018
 Parts raw materials $134,816 $76,647
 Work process 10,269 6,644
 Finished goods 84,934 14,696
 $230,019 $97,987


Summarized 100% statement of financial position information for ASMPT equity method investment excluding basis adjustments (foreign currency exchange rate per December 31, 2019 was 1 HK$: €0.11432 for December 31, 2018: 1 HK$: €0.11151).
Equity of ASMPT per December 31, 2019 translated into euros at a rate of 0.11432 was €1,329 million (our 25.19% share: €335 million).
The ASMPT Board is responsible for ongoing monitoring of the performance of the Back-end activities. The actual results of the Back-end operating unit are discussed with the ASMPT Audit Committee, which includes the representative of ASMI. The ASMI representative reports to the ASMI Management Board and the Audit Committee of ASMI on a quarterly basis.
Our share of income taxes incurred directly by the associates is reported in result from investments in associates and as such is not included in income taxes in our consolidated financial statements.

                        | December 31, |
----------------------- | ------------ | ------
(HK$ million)           | 2018         | 2019
Current assets          | 15,168       | 13,381
Non-current assets      | 5,907        | 7,464
Current liabilities     | 7,792        | 4,432
Non-current liabilities | 1,122        | 4,781
Equity                  | 12,161       | 11,632

financial position ASMPT equity excluding adjustments currency exchange rate December 31, 2019 HK$ €0. 11432. 11151).
 Equity ASMPT 2019 euros. 11432 €1,329 million. 19% share €335 million.
 ASMPT Board Back-end activities. results ASMPT Audit Committee representative ASMI. reports Management Board Audit Committee quarterly.
 income taxes associates investments not included consolidated financial statements.
$ million 2019
 Current assets 15,168 13,381
 Non-current assets 7,464
 7,792
 1,122
 Equity 12,161 11,632


The following is a roll forward of accrued restructuring charges for fiscal 2019 and fiscal 2018 (in millions):
The liability for restructuring and other exit costs of $47.8 million is included in accrued liabilities and other long-term liabilities, on the Company's consolidated balance sheets as of March 31, 2019.

                                       | Restructuring             |            | Non-Restructuring |
-------------------------------------- | ------------------------- | ---------- | ----------------- | ------
                                       | Employee Separation Costs | Exit Costs | Exit Costs        | Total
Balance at March 31, 2017              | $5.4                      | $34.8      | $—                | $40.2
Charges                                | 1.2                       | 0.7        | 20.0              | 21.9
Payments                               | (5.9)                     | (9.2)      | (0.9)             | (16.0)
Non-cash - Other                       | (0.2)                     | 1.0        | —                 | 0.8
Changes in foreign exchange rates      | 0.3                       | —          | —                 | 0.3
Balance at March 31, 2018              | 0.8                       | 27.3       | 19.1              | 47.2
Additions due to Microsemi acquisition | 10.4                      | 9.0        | —                 | 19.4
Charges                                | 48.9                      | (4.7)      | —                 | 44.2
Payments                               | (47.1)                    | (13.1)     | (4.1)             | (64.3)
Non-cash - Other                       | —                         | 0.7        | 0.7               | 1.4
Changes in foreign exchange rates      | (0.1)                     | —          | —                 | (0.1)
Balance at March 31, 2019              | $12.9                     | $19.2      | $15.7             | $47.8
Current                                |                           |            |                   | $26.9
Non-current                            |                           |            |                   | 20.9
Total                                  |                           |            |                   | $47.8

roll forward accrued restructuring charges fiscal 2019 2018 millions):
 restructuring exit costs $47. 8 million long-term liabilities Company consolidated balance sheets March 31, 2019.
 Restructuring Non-Restructuring
 Employee Separation Costs Exit Costs
 Balance March 31, 2017 $5. $34. 8 $40.
 1. 20. 21.
 Payments (5. (9. (16.
 Non-cash - Other.
 Changes foreign exchange rates.
 Balance March 31, 2018. 27. 19. 47.
 Additions Microsemi acquisition 10. 9. 19.
 48. 44.
 Payments (47. (13.
 Non-cash -.
 Changes foreign exchange rates.
 March 31, 2019 $12. $19. $15. $47. 8
 $26. 9
 Non-current 20.
 $47.


The following table summarizes the change in fair value of the Level 3 liabilities with significant unobservable inputs (in thousands):
The money market accounts are included in our cash and cash equivalents in our consolidated balance sheets. Our money market assets are valued using quoted prices in active markets.
The liability for the subsidiary unit awards relates to agreements established with employees of our subsidiaries for cash awards contingent upon the subsidiary companies meeting certain financial milestones such as revenue, working capital, EBITDA and EBITDA margin. We account for these subsidiary awards using fair value and establish liabilities for the future payment for the repurchase of subsidiary units under the terms of the agreements based on estimating revenue, working capital, EBITDA and EBITDA margin of the subsidiary units over the periods of the awards through the anticipated repurchase dates. We estimated the fair value of each liability by using a Monte Carlo simulation model for determining each of the projected measures by using an expected distribution of potential outcomes. The fair value of each liability is calculated with thousands of projected outcomes, the results of which are averaged and then discounted to estimate the present value. At each reporting date until the respective payment dates, we will remeasure these liabilities, using the same valuation approach based on the applicable subsidiary's revenue and future collection of financed customer receivables, the unobservable inputs, and we will record any changes in the employee's compensation expense. Some of the awards are subject to the employees' continued employment and therefore, recorded on a straight-line basis over the remaining service period. During the year ended December 31, 2019, we settled $0.2 million of the liability related to the subsidiary unit awards. The remaining liability balances are included in either accounts payable, accrued expenses and other current liabilities or other liabilities in our consolidated balance sheets (see Note 13).
The contingent consideration liability consists of the potential earn-out payment related to our acquisition of 85% of the issued and outstanding capital stock of OpenEye on October 21, 2019. The earn-out payment is contingent on the satisfaction of certain calendar 2020 revenue targets and has a maximum potential payment of up to $11.0 million. We account for the contingent consideration using fair value and establish a liability for the future earn-out payment based on an estimation of revenue attributable to perpetual licenses and subscription licenses over the 2020 calendar year. We estimated the fair value of the liability by using a Monte Carlo simulation model for determining each of the projected measures by using an expected distribution of potential outcomes. The contingent consideration liability was valued with Level 3 unobservable inputs, including the revenue volatility and the discount rate. At October 21, 2019, the fair value of the liability was $2.8 million. At each reporting date until the payment date in 2021, we will remeasure the liability, using the same valuation approach. Changes in the fair value resulting from information that existed subsequent to the acquisition date are recorded in the consolidated statements of operations. During the year ended December 31, 2019, the contingent consideration liability decreased $0.2 million to $2.6 million as compared to the initial liability recorded at the acquisition date, primarily due to a change to OpenEye's 2020 projected revenue. The unobservable inputs used in the valuation as of December 31, 2019 included a revenue volatility of 45% and a discount rate of 3%. Selecting another revenue volatility or discount rate within an acceptable range would not result in a significant change to the fair value of the contingent consideration liability.
The contingent consideration liability is included in other liabilities in our consolidated balance sheet as of December 31, 2019 (see Note 13).
We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. There were no transfers between Levels 1, 2 or 3 during the years ended December 31, 2019, 2018 and 2017. We also monitor the value of the investments for other-than-temporary impairment on a quarterly basis. No other-than-temporary impairments occurred during the years ended December 31, 2019, 2018 and 2017.

                                           | Fair Value Measurements Using Significant Unobservable Inputs |                                                      |
------------------------------------------ | ------------------------------------------------------------- | ---------------------------------------------------- | ----------------------------
                                           | Year Ended December 31, 2019                                  |                                                      | Year Ended December 31, 2018
                                           | Subsidiary Unit Awards                                        | Contingent Consideration Liability from Acquisitions | Subsidiary Unit Awards
Beginning of period balance                | 385                                                           | $ —                                                  | $3,160
Acquired liabilities                       | —                                                             | 2,793                                                | —
Changes in fair value included in earnings | (14)                                                          | (198)                                                | 27
Settlements                                | (200)                                                         | —                                                    | (2,802)
End of period balance                      | $171                                                          | $2,595                                               | $385

table summarizes change fair value Level 3 liabilities unobservable inputs
 money market accounts included cash balance sheets. assets valued using quoted prices active markets.
 liability subsidiary unit awards agreements employees subsidiaries cash awards financial milestones revenue capital EBITDA margin. account awards fair value establish liabilities future payment repurchase units revenue capital EBITDA margin. estimated fair value Monte Carlo simulation model. calculated projected outcomes averaged discounted present value. remeasure liabilities valuation revenue future receivables unobservable inputs record changes employee's compensation expense. awards subject to employment recorded straight-line. year ended December 31, 2019 settled $0. 2 million liability subsidiary unit awards. remaining liability balances included in accounts payable accrued expenses current liabilities consolidated balance sheets.
 contingent consideration liability potential earn-out payment 85% stock OpenEye October 21, 2019.earn-out payment contingent on 2020 revenue targets maximum potential $11. 0 million. account contingent fair value liability future payment revenue subscription 2020. estimated fair value Monte Carlo simulation model. liability valued with Level 3 unobservable inputs revenue volatility discount rate. October 21, 2019 fair value $2. 8 million. until 2021 remeasure liability. Changes fair value recorded in statements operations. December 31, 2019 liability decreased $0. 2 million to $2. 6 million due to OpenEye's 2020 projected revenue. unobservable inputs revenue volatility 45% discount rate 3%. revenue volatility discount rate change fair value.
 included in other liabilities consolidated balance sheet December 31, 2019.
 market data classification financial instruments fair value. economic conditions require transfer instruments value level. reported period. no transfers between Levels 1 2 3 December 31, 2019 2018 2017. monitor value investments for-temporary impairment quarterly.impairments 2019 2018 2017.
 Fair Value Measurements Unobservable Inputs
 Ended 31, 2019 2018
 Subsidiary Unit Awards Liability Acquisitions
 Beginning period balance $3,160
 Acquired liabilities 2,793
 Changes fair value earnings 27
 Settlements
 End period balance $171 $2,595 $385


Market Information
Our common stock is traded under the symbol “OPRX” on the Nasdaq Capital Market. Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.
The following tables set forth the range of high and low bid information for our common stock for the each of the periods indicated. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
On March 24, 2020, the last sales price per share of our common stock was $7.93

                     | Fiscal Year Ending December 31, 2018 |
-------------------- | ------------------------------------ | -----
Quarter Ended        | High $                               | Low $
March 31, 2018       | 4.98                                 | 3.36
June 30, 2018        | 11.00                                | 4.29
September 30, 2018   | 18.39                                | 9.32
December 31, 2018    | 18.00                                | 8.92

 common stock traded Nasdaq Capital Market. limited market securities. no assurance regular trading market. shareholder resell securities.
 tables high low bid information common stock. reflect inter-dealer prices without retail mark-up-down commission not represent actual transactions.
 March 24, 2020 last sales price share stock $7.
 Fiscal Year Ending December 31, 2018
 Quarter Ended Low
 March 31, 2018.
 June 30.
 September 30.
 December 31,.


11 Employee Costs
Included in wages and salaries above are $4.2M (2018: $4.0M) relating to retention payments arising on business combinations.

                                   | Year-ended 31 March 2019 | Year-ended 31 March 2018 Restated See note 2
---------------------------------- | ------------------------ | --------------------------------------------
                                   | $M                       | $M
Wages and salaries                 | 286.0                    | 271.8
Social security costs              | 25.6                     | 27.3
Pension costs                      | 8.9                      | 8.4
Other costs                        | 12.7                     | 12.1
                                   | 333.2                    | 319.6
Share-based payments (see note 29) | 36.9                     | 42.3
Total employee costs               | 370.1                    | 361.9

Employee Costs
 wages salaries $4. $4. retention payments business combinations.
-ended 31 March 2019 2018
 Wages salaries 286. 271.
 Social security 25. 27.
 Pension costs 8.
 costs 12.
. 319.
 Share-based payments 36. 42.
 employee costs 370. 361.


Charters-in
As of December 31, 2019, the Company had commitments to charter-in 11 vessels, which are all bareboat charters. During the second quarter of 2019, the Company commenced a bareboat charter for the Overseas Key West for a lease term of 10 years. Based on the length of the lease term and the remaining economic life of the vessel, it is accounted for as a finance lease. The remaining 10 chartered-in vessels are accounted for as operating leases.
The right-of-use asset accounted for as a finance lease arrangement is reported in vessels and other property, less accumulated depreciation on our consolidated balance sheets. The Company holds options for 10 of the vessels chartered-in that can be exercised for one, three or five years with the one-year option only usable once, while the three- and five-year options are available indefinitely.
The lease payments for the charters-in are fixed throughout the option periods and the options are on a vessel-by-vessel basis that can be exercised individually. The Company exercised its option on one of its vessels to extend the term until June 2025. On December 10, 2018, the Company exercised its options to extend the terms of the other nine vessels.
Terms for five of the vessels were extended for an additional three years, with terms ending in December 2022, and terms for four of the vessels were extended for an additional year, with terms ending December 2020. On December 11, 2019, the terms for the four vessels ending December 2020 were extended for an additional three years, with terms ending in December 2023.
Five of the Company's chartered in vessels contain a deferred payment obligation (“DPO”) which relates to charter hire expense incurred by the Company in prior years and payable to the vessel owner in future periods. This DPO is due in quarterly installments with the final quarterly payment due upon lease termination.
The future minimum commitments under these leases are as follows:
The bareboat charters-in provide for variable lease payments in the form of profit share to the owners of the vessels calculated in accordance with the respective charter agreements or based on time charter sublease revenue. Because such amounts and the periods impacted are not reasonably estimable, they are not currently reflected in the table above. Due to reserve funding requirements and current rate forecasts, no profits are currently expected to be paid to the owners in respect of the charter term within the next year.
For the year ended December 31, 2019, lease expense for the 10 chartered-in vessels accounted for as operating leases was $90,359, which is included in charter hire expense on the consolidated statements of operations and operating cash flows on the consolidated statements of cash flows. The Company recognized sublease income of $188,163 for the year ended December 31, 2019.
For the year ended December 31, 2019, the Company had non-cash operating activities of $93,407 for obtaining operating right-of-use assets and liabilities that resulted from exercising lease renewals not assumed in the initial lease term.
For the year ended December 31, 2019, lease expense related to the Company's finance lease was $2,052 related to amortization of the right-of-use asset and $1,462 related to interest on the lease liability. These are included in operating cash flows on the consolidated statements of cash flows. For the year ended December 31, 2019, the Company had non-cash financing activities of $28,993 for obtaining finance right-of-use assets.
For the year ended December 31, 2018, lease expense relating to charters-in was $91,350, which is included in charter hire expense on the consolidated statements of operations.

At December 31, 2019         | Operating Leases | Finance Lease
---------------------------- | ---------------- | -------------
2020                         | $92,404          | $4,172
2021                         | 91,164           | 4,161
2022                         | 107,654          | 4,161
2023                         | 43,015           | 4,161
2024                         | 9,168            | 4,172
Thereafter                   | 4,534            | 17,180
Net minimum lease payments   | 347,939          | 38,007
Less: present value discount | 40,891           | 10,448
Total lease liabilities      | $307,048         | $27,559

 December 31, 2019 Company commitments 11 vessels all bareboat charters. second quarter 2019 commenced bareboat charter Overseas Key West 10 years. lease economic life accounted finance lease. remaining 10 vessels operating leases.
 right-of-use finance lease reported vessels property less accumulated depreciation balance sheets. holds options 10 vessels one three five years one-year option once three- five-year options indefinitely.
 lease payments fixed options vessel-by-vessel exercised individually. exercised option term until June 2025. December 10, 2018 terms other nine vessels.
 five extended three years December 2022 four extended year December 2020. December 11, 2019 extended three years December 2023.
 Five vessels contain deferred payment obligation charter hire expense payable. due quarterly installments final payment lease termination.
 future minimum commitments
bareboat charters provide variable lease payments profit share owners calculated agreements sublease revenue. amounts periods reflected table. reserve funding no profits expected paid next year.
 December 31, 2019 lease expense 10 chartered vessels $90,359 included hire expense cash flows. recognized sublease income $188,163.
 non-cash operating activities $93,407 obtaining right-use assets liabilities lease renewals not.
 lease expense finance lease $2,052 amortization $1,462 interest lease liability. included operating cash flows. non-cash financing activities $28,993 obtaining finance right-of-use assets.
 December 31, 2018 lease expense charters $91,350 included charter hire expense statements operations.
 December 31, 2019 Operating Leases Finance Lease
 2020 $92,404 $4,172
 2021 91,164 4,161
 2022 107,654
 2023 43,015
 2024 9,168
4,534
 347,939 38,007
 40,891 10,448
 $307,048 $27,559