Grants of Plan-Based Awards
The following table sets forth the estimated possible payouts under the cash incentive awards granted to our Named
Executive Officers in respect of 2019 performance under the 2019 NEO Plan.
(1) Amounts presented assume payment of threshold, target and maximum awards at the applicable level.

Name              | Grant Date |               | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) |             | All Other Stock Awards: Number of Shares of Stock or  Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards
----------------- | ---------- | ------------- | ------------------------------------------------------------------- | ----------- | --------------------------------------------------------------- | -------------------------------------------------------------------- | ---------------------------------------------- | ------------------------------------------------
                  |            | Threshold ($) | Target ($)                                                          | Maximum ($) |                                                                 |                                                                      |                                                |
Barry Litwin      | -          | 100,238       | 1,113,750                                                           | 1,237,500   |                                                                 |                                                                      |                                                |
Thomas Clark      | -          | 5,062         | 225,000                                                             | 337,500     |                                                                 |                                                                      |                                                |
Robert Dooley     | -          | 13,837        | 615,000                                                             | 922,500     |                                                                 |                                                                      |                                                |
Eric Lerner       | -          | 6,773         | 300,900                                                             | 451,350     |                                                                 |                                                                      |                                                |
Manoj Shetty      | -          | 5,435         | 241,535                                                             | 362,303     |                                                                 |                                                                      |                                                |
Lawrence Reinhold | N/A        | N/A           | N/A                                                                 | N/A         |                                                                 |                                                                      |                                                |

Plan-Based Awards
 table estimated payouts cash incentive awards
 Executive Officers 2019 performance NEO Plan.
 Amounts threshold target maximum awards.
 Name Grant Date Estimated Payouts Non-Equity Incentive Plan Awards Stock Awards Shares Option Awards Securities Options Price Option$ Grant Date Value Stock Option Awards
 Threshold Target Maximum
 Barry Litwin 100,238 1,113,750 1,237,500
 Thomas Clark 5,062  225,000 337,500
 Robert Dooley 13,837 615,000 922,500
 Eric Lerner 6,773  300,900 451,350
 Manoj Shetty 5,435  241,535 362,303
 Lawrence Reinhold


GreenSky, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (United States Dollars in thousands, except per share data, unless otherwise stated)
The following table reflects the cash flow impact of GS Holdings on the Consolidated Statements of Cash Flows for the years indicated.

                                                                         | Year Ended December 31, |
------------------------------------------------------------------------ | ----------------------- | ---------
                                                                         | 2019                    | 2018
Net cash provided by operating activities                                | $153,327                | $256,426
Net cash used in investing activities                                    | (15,381)                | (6,581)
Net cash used in financing activities                                    | (159,608)               | (154,210)
Net increase (decrease) in cash and cash equivalents and restricted cash | (21,662)                | 95,635
Cash and cash equivalents and restricted cash at beginning of period     | 449,473                 | 353,838
Cash and cash equivalents and restricted cash at end of period           | $427,811                | $449,473

GreenSky. FINANCIAL STATEMENTS States Dollars share data
 table reflects cash flow impact GS Holdings Statements.
 Ended December 31,
 2018
 cash operating activities $153,327 $256,426
 investing (15,381) (6,581)
 financing (159,608) (154,210)
 cash equivalents restricted cash (21,662) 95,635
 period,473 353,838
 end period $427,811 $449,473


5. Trade Accounts Receivable and Contract Liabilities:
Charges related to allowances for doubtful accounts are charged to selling, general, and administrative expenses. Charges related to stock rotation, ship from stock and debit, sales returns, and sales discounts are reported as deductions from revenue. Please refer to Note 6, “Revenue Recognition,” for additional information

                                             | Fiscal Year Ended March 31, |
-------------------------------------------- | --------------------------- | --------
                                             | 2018                        | 2019
Gross Accounts Receivable - Trade            | $300,016                    | $273,053
Less                                         |                             |
Allowances for doubtful accounts             | 1,893                       | 1,276
Stock rotation and ship from stock and debit | 15,989                      | 14,140
Sales returns and discounts                  | 6,875                       | 646
Total allowances                             | 24,757                      | 16,062
Accounts Receivable - Trade, net             | $275,259                    | $256,991

. Accounts Receivable Liabilities
 Charges selling administrative expenses. stock rotation sales returns discounts revenue. Note 6 Recognition
 Fiscal Year Ended March 31,
 Accounts Receivable $300,016 $273,053
 Allowances doubtful accounts 1,893
 Stock rotation 15,989
 Sales returns discounts
 allowances 24,757 16,062
 Accounts Receivable $275,259 $256,991


D) SHARE-BASED PAYMENT PLANS
The Corporation offers an Employee Stock Purchase Plan for the benefit of its employees and those of its subsidiaries and a Stock Option Plan to its executive officers and designated employees. No more than 10% of the outstanding subordinate voting shares are available for issuance under these plans. Furthermore, the Corporation offers an Incentive Share Unit Plan ("ISU Plan") and a Performance Share Unit Plan ("PSU Plan") for executive officers and designated employees, and a Deferred Share Unit Plan ("DSU Plan") for members of the Board of Directors ("Board").
Stock purchase plan The Corporation offers, for the benefit of its employees and those of its subsidiaries, an Employee Stock Purchase Plan, which is accessible to all employees up to a maximum of 7% of their base annual salary and the Corporation contributes 25% of the employee contributions. The subscriptions are made monthly and employee subordinate voting shares are purchased on the stock market.
Stock option plan A total of 3,432,500 subordinate voting shares are reserved for the purpose of the Stock Option Plan. The minimum exercise price at which options are granted is equal to the market value of such shares at the time the option is granted. Options vest equally over a period of five years beginning one year after the day such options are granted and are exercisable over ten years.
Under the Stock Option Plan, the following options were granted by the Corporation and are outstanding at August 31:
(1) For the year ended August 31, 2019, the Corporation granted 97,725 (126,425 in 2018) stock options to Cogeco's executive officers as executive officers of the Corporation. (2) The weighted average share price for options exercised during the year was $92.43 ($83.46 in 2018).

Years ended August 31,             |           | 2019                            |          | 2018
---------------------------------- | --------- | ------------------------------- | -------- | -------------------------------
                                   | Options   | Weighted average exercise price | Options  | Weighted average exercise price
                                   |           | $                               |          | $
Outstanding, beginning of the year | 819,393   | 65.27                           | 652,385  | 56.61
Granted (1)                        | 201,525   | 65.62                           | 281,350  | 85.08
Exercised (2)                      | (170,754) | 57.28                           | (60,337) | 57.77
Cancelled                          | (134,550) | 72.43                           | (54,005) | 72.28
Outstanding, end of the year       | 715,614   | 65.93                           | 819,393  | 65.27
Exercisable, end of the year       | 264,374   | 55.99                           | 277,108  | 49.76

SHARE-BASED PAYMENT PLANS
 Corporation offers Employee Stock Purchase Plan employees subsidiaries Stock Option Plan executive officers designated employees. No more than 10% outstanding subordinate voting shares available issuance. Corporation offers Incentive Share Performance Share Unit Plan executive officers designated employees Deferred Share Unit Plan Board Directors.
 Corporation offers Employee Stock Purchase Plan accessible employees 7% base annual salary contributes 25% employee contributions. subscriptions monthly shares purchased stock market.
 plan,500 shares reserved Plan. minimum exercise price options equal market value shares. Options vest over five years exercisable over ten years.
 Stock Option Plan options granted outstanding at August 31
 2019 granted 97,725 (126,425 2018) stock options to Cogeco's executive officers. weighted average share price options $92. 43 ($83. 46 in 2018).
 August
 Weighted average price
 819,393. 652,385.
Granted 201,525 65. 62 281,350 85.
 Exercised,754 57. (60,337.
 Cancelled (134,550 72. (54,005).
 Outstanding 715,614. 819,393.
,374. 99 277,108.


Statements of cash flows additional information (in millions):
Non-cash investing and financing activities and supplemental cash flow information are as follows:

                                                                |                | Year Ended     |
--------------------------------------------------------------- | -------------- | -------------- | --------------
                                                                | April 26, 2019 | April 27, 2018 | April 28, 2017
Non-cash Investing and Financing Activities:                    |                |                |
Capital expenditures incurred but not paid                      | $ 9            | $ 24           | $ 19
Non-cash extinguishment of sale-leaseback financing obligations | $ —            | $ 130          | $ 19
Supplemental Cash Flow Information:                             |                |                |
Income taxes paid, net of refunds                               | $ 205          | $ 87           | $ 102
Interest paid                                                   | $ 53           | $ 58           | $ 44

cash flows
 Non-cash investing financing
 Year Ended
 April 26, 2019 27, 2018 28, 2017
 Non-cash Investing Financing
 Capital expenditures paid $
 Non-cash sale-leaseback financing obligations 130
 Supplemental Cash Flow
 Income taxes refunds $ 205 87
 Interest $ 53 $ 58


Deferred tax assets and liabilities as of March 31, are as follows:
At March 31, 2019, we had $199.1 million of a federal net operating loss carryforwards that expire, if unused, in fiscal years 2031 to 2038, and $11.5 million of federal net operating loss carryforwards that can be carried forward indefinitely. Our Hong Kong, Malaysia, and Singapore subsidiaries have $0.4 million, $0.1 million, and $0.2 million of net operating loss carryforwards respectively. The losses for Hong Kong, Malaysia and Singapore can be carried forward indefinitely.
At March 31, 2019 our India subsidiary had $0.4 million of minimum alternative tax credits reported as other noncurrent assets on our Consolidated Balance Sheet. Our India subsidiary operates in a “Special Economic Zone (“SEZ”)”. One of the benefits associated with the SEZ is that the India subsidiary is not subject to regular India income taxes during its first 5 years of operations. The aggregate value of the benefit of the SEZ during the current fiscal year is $0.5 million.
At March 31, 2019 we also had $127.5 million of state net operating loss carryforwards that expire, if unused, in fiscal years 2020 through 2039.
We recorded valuation allowances related to certain deferred income tax assets due to the uncertainty of the ultimate realization of the future benefits from those assets. At March 31, 2019, the total valuation allowance against deferred tax assets of $57.9 million was comprised of $57.0 million for federal and state deferred tax assets, and $0.9 million associated with deferred tax assets in Hong Kong, Malaysia, Singapore and the Philippines.
In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized. We have recorded a valuation allowance offsetting substantially all of our deferred tax assets. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible.
Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected taxable income, and tax planning strategies in making this assessment. In order to fully realize the deferred tax assets, we will need to generate future taxable income before the expiration of the deferred tax assets governed by the tax code.
Because of our losses in current and prior periods, management believes that it is more-likely-than-not that we will not realize the benefits of these deductible differences. The amount of the valuation allowance, however, could be reduced in the near term. The exact timing will be based on the level of profitability that we are able to achieve and our visibility into future results. Our recorded tax rate may increase in subsequent periods following a valuation release. Any valuation allowance release will not affect the amount of cash paid for income taxes.
The undistributed earnings of our foreign subsidiaries are not subject to U.S. federal and state income taxes unless such earnings are distributed in the form of dividends or otherwise to the extent of current and accumulated earnings and profits. The undistributed earnings of foreign subsidiaries are permanently reinvested and totaled $3.1 million and $1.7 million as of March 31, 2019 and 2018, respectively.
We made the determination of permanent reinvestment on the basis of sufficient evidence that demonstrates we will invest the undistributed earnings overseas indefinitely for use in working capital, as well as foreign acquisitions and expansion. The determination of the amount of the unrecognized deferred U.S. income tax liability related to the undistributed earnings is not practicable.
Prior to the adoption of ASU 2016-09 in the first quarter of fiscal 2018, we used the with-and-without approach for ordering tax benefits derived from the share-based payment awards. Using the with-and-without approach, actual income taxes payable for the period were compared to the amount of tax payable that would have been incurred absent the deduction for employee share-based payments in excess of the amount of compensation cost recognized for financial reporting.
As a result of this approach, tax net operating loss carryforwards not generated from share-based payments in excess of cost recognized for financial reporting were considered utilized before the current period's share-based deduction.

(In thousands)                                 | 2019     | 2018
---------------------------------------------- | -------- | --------
Deferred tax assets:                           |          |
Accrued liabilities                            | $3,944   | $2,720
Allowance for doubtful accounts                | 120      | 143
Inventory valuation reserve                    | 41       | 20
Federal losses and credit carryforwards        | 45,227   | 42,713
Foreign net operating losses                   | 730      | 623
State losses and credit carryforwards          | 9,886    | 9,592
Deferred revenue                               | 488      | 652
Goodwill and other intangible assets           | —        | 286
Other                                          | 65       | 96
                                               | 60,501   | 56,845
Less: valuation allowance                      | (57,852) | (54,260)
Total                                          | 2,649    | 2,585
Deferred tax liabilities:                      |          |
Property and equipment & software amortization | (361)    | (412)
Goodwill and other intangible assets           | (2,706)  | (2,277)
Total                                          | (3,067)  | (2,689)
Total deferred tax liabilities                 | $(418)   | $(104)

Deferred tax assets liabilities March 31,
 March 31, 2019 $199. 1 million federal net operating loss carryforwards 2031 to 2038 $11. 5 million federal loss carryforwards carried indefinitely. Hong Kong Malaysia Singapore subsidiaries $0. 4 million $0. 1 million $0. 2 million loss carryforwards. losses carried forward indefinitely.
 India subsidiary $0. 4 million alternative tax credits. Economic Zone. not subject income taxes first 5 years. value SEZ fiscal year $0. 5 million.
 $127. 5 million state net operating loss carryforwards 2020 2039.
 valuation allowances deferred income tax assets uncertainty. March 31, 2019 total valuation allowance $57. 9 million $57. 0 million federal state deferred tax assets $0. 9 million Hong Kong Malaysia Singapore Philippines.
. valuation allowance assets. realization depends future taxable income.
Management considers reversal deferred tax liabilities carryback carryforward projected taxable income tax planning strategies. realize deferred tax assets generate future taxable income before expiration.
 losses believes realize benefits deductible differences. valuation allowance could. timing on profitability visibility future results. recorded tax rate may increase valuation release. valuation allowance release affect cash paid income taxes.
 undistributed earnings foreign subsidiaries not subject to. income taxes unless dividends. earnings permanently reinvested totaled $3. 1 million $1. 7 million as March 31, 2019 2018.
 permanent reinvestment evidence earnings overseas working capital foreign acquisitions expansion. determination unrecognized deferred. income tax liability not practicable.
 ASU 2016-09 used with-and-without approach tax benefits share-based payment awards. income taxes payable compared to tax absent deduction employee share-based payments compensation cost.
loss carryforwards before deduction.
 Deferred tax assets
 Accrued liabilities $3,944 $2,720
 doubtful accounts
 Inventory valuation reserve
 Federal losses carryforwards 45,227 42,713
 Foreign losses
 State losses credit carryforwards 9,886
 Deferred revenue
 Goodwill intangible assets 286
 60,501 56,845
 valuation allowance (57,852) (54,260
 2,649 2,585
 Deferred tax liabilities
 Property equipment software amortization
 Goodwill intangible assets (2,706)
 tax liabilities $(418)


2. Net Income (Loss) Per Share
Basic earnings per share, or EPS, is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted EPS is computed by dividing net income by the weighted-average number of common shares outstanding for the period and the weighted-average number of dilutive common stock equivalents outstanding for the period determined using the treasury-stock method.
For purposes of this calculation, common stock options, restricted stock units and restricted stock awards are considered to be common stock equivalents and are only included in the calculation of diluted EPS when their effect is dilutive. In periods in which the Company has a net loss, dilutive common stock equivalents are excluded from the calculation of diluted EPS.
The table below presents the computation of basic and diluted earnings per share:
For the years ended December 31, 2019, 2018 and 2017, the Company incurred net losses and accordingly excluded common stock equivalents for outstanding stockbased awards, which represented all potentially dilutive securities, of 2.5 million, 3.7 million, and 4.5 million, respectively, from the calculation of diluted net loss per share due to their anti-dilutive nature.

                                                   |           | Years Ended December 31,                 |
-------------------------------------------------- | --------- | ---------------------------------------- | --------
                                                   | 2019      | 2018                                     | 2017
                                                   |           | (in thousands, except per share amounts) |
Numerator:                                         |           |                                          |
Net loss                                           | $(19,898) | $(26,199)                                | $(9,187)
Denominator:                                       |           |                                          |
Weighted average common shares outstanding—basic   | 71,005    | 68,490                                   | 66,252
Dilutive common stock equivalents                  | —         | —                                        | —
Weighted average common shares outstanding—diluted | 71,005    | 68,490                                   | 66,252
Net loss per share:                                |           |                                          |
Basic                                              | $(0.28)   | $(0.38)                                  | $(0.14)
Diluted                                            | $(0.28)   | $(0.38)                                  | $(0.14)

. Net Income (Loss) Per Share
 earnings calculated income weighted-average common shares without equivalents. Diluted EPS income dilutive common stock equivalents.
 common stock options restricted stock units awards common stock equivalents included diluted EPS when dilutive. net loss dilutive common stock equivalents excluded.
 table computation basic diluted earnings per share
 years December 31, 2019 2018 2017 incurred net losses excluded common stock equivalents awards dilutive securities 2. 5 million 3. 7 million 4. 5 million from diluted net loss per share anti.
 Years Ended December
 Net loss $(19,898) $(26,199) $(9,187)
 Weighted average common shares 71,005 68,490 66,252
 Dilutive common stock equivalents
 Net loss per share
 $.28). 38). 14)
. 28). 38). 14


11 Dividends
The proposed dividend is subject to approval in 2020. It is therefore not included as a liability in these Financial Statements. No scrip alternative to the cash dividend is being offered in respect of the proposed final dividend for the year ended 31st December 2019.

                                                                                | 2019 | 2018
---------------------------------------------------------------------------------------------- | ---- | ----
                                                                                | £m   | £m
Amounts paid in the year:                                                                      |      |
Final dividend for the year ended 31st December 2018 of 71.0p (2017: 62.0p) per share          | 52.3 | 45.7
Interim dividend for the year ended 31st December 2019 of 32.0p (2018: 29.0p) per share        | 23.6 | 21.3
Total dividends paid                                                                           | 75.9 | 67.0
Amounts arising in respect of the year:                                                        |      |
Interim dividend for the year ended 31st December 2019 of 32.0p (2018: 29.0p) per share        | 23.6 | 21.3
Proposed final dividend for the year ended 31st December 2019 of 78.0p (2018: 71.0p) per share | 57.5 | 52.3
Total dividends arising                                                                        | 81.1 | 73.6

Dividends
 proposed dividend approval 2020. not included liability Financial Statements. No alternative cash dividend final dividend 31st December 2019.
 Amounts paid
 Final dividend 31st December 2018 71. (2017 62. share 52. 45. 7
 Interim dividend 32. 29. share 23. 21.
 dividends paid 75. 9 67.
 Amounts
 Interim dividend 32. 29. share 23. 21.
 final dividend 2019 78. 71. share 57. 5 52. 3
 dividends 81. 73.


Other loss
In May 2019, the Company completed a cash tender offer and purchased $460.9 million in aggregate principal amount of the 2020 Notes and issued $250.0 million in aggregate principal amount of 9.25% senior secured notes at par due November 2022. The Company recognized a loss of $10.6 million on the purchase of the 2020 Notes for the year ended December 31, 2019 (see Note 9).
During September 2019, Teekay LNG refinanced the Torben Spirit by acquiring the Torben Spirit from its original Lessor and then selling the vessel to another Lessor and leasing it back for a period of 7.5 years. As a result of this refinancing transaction, the Partnership recognized a loss of $1.4 million for the year ended December 31, 2019 on the extinguishment of the original finance lease (see Note 11).
Following the termination of the finance lease arrangements for the RasGas II LNG Carriers in 2014, the lessor made a determination that additional rentals were due under the leases following a challenge by the UK taxing authority. As a result, in 2017 the Teekay Nakilat Joint Venture recognized an additional liability, which was included as part of other loss in the Company's consolidated statements of loss.
Related to settlements and accruals made prior to September 2017 as a result of claims and potential claims made against Logitel Offshore Holding AS (or Logitel), a company acquired by Altera in 2014. Altera was deconsolidated in September 2017 (see Note 4).

                                                         | Year Ended   | Year Ended   | Year Ended
-------------------------------------------------------- | ------------ | ------------ | ------------
                                                         | December 31, | December 31, | December 31,
                                                         | 2019         | 2018         | 2017
                                                         | $            | $            | $
Loss on bond repurchases (1)                             | (10,601)     | (1,772)      | —
Loss on lease extinguishment (2)                         | (1,417)      | —            | —
Tax indemnification guarantee liability (3)              | —            | (600)        | (50,000)
Contingent liability (4)                                 | —            | —            | (4,500)
Gain on sale / (write-down) of cost-accounted investment | —            | —            | 1,250
Miscellaneous (loss) income                              | (2,457)      | 359          | (731)
Other loss                                               | (14,475)     | (2,013)      | (53,981)

 May 2019 Company purchased $460. 9 million 2020 Notes issued $250. 0 million 9. 25% senior secured notes due November 2022. loss $10. 6 million 2020 Notes year ended December 31, 2019.
 September 2019 Teekay LNG refinanced Torben Spirit leasing 7. 5 years. loss $1. 4 million year December 31, 2019 extinguishment original finance lease 11.
 termination finance lease RasGas II LNG Carriers 2014, lessor additional rentals due UK taxing authority. 2017 Teekay Nakilat Joint Venture recognized additional liability consolidated statements loss.
 September 2017 Logitel Offshore Holding AS acquired Altera 2014. deconsolidated September 2017 Note 4).
 December 31,
 Loss bond repurchases
 Loss lease extinguishment (1,417)
 Tax indemnification guarantee liability (600
 Contingent liability (4) (4,500)
Gain sale investment 1,250
 Miscellaneous income (2,457)
 loss (14,475),981


Provision for Income Taxes
We are subject to taxes in the United States as well as other tax jurisdictions and countries in which we conduct business. Earnings from our non-U.S. activities are subject to local country income tax and may be subject to current U.S. income tax.
We recognized an income tax benefit of $8.3 million for fiscal year 2019 compared to an income tax provision of $18.5 million for fiscal year 2018. The fiscal year 2018 income tax provision was primarily due to a one-time provisional net charge from re-measuring deferred tax assets and liabilities in the quarter ended January 31, 2018 as a result of the Tax Cuts and Jobs Act (the “Tax Act”).
The effective tax rate of (66)% for fiscal year 2019, differs from the statutory U.S. Federal income tax rate of 21% mainly due to permanent differences for stock-based compensation, including excess tax benefits, research and development credits, the tax rate differences between the United States and foreign countries, foreign withholding taxes, and certain non-deductible expenses including executive compensation.
As of July 31, 2019, we had unrecognized tax benefits of $6.2 million that, if recognized, would affect our effective tax rate.
On December 22, 2017, the Tax Act was enacted into law which substantially changed U.S. tax law, including a reduction in the U.S. corporate income tax rate to 21% effective January 1, 2018 and several provisions that may impact us in current and future periods.
The Tax Act includes a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries, a special deduction for foreign-derived intangible income, and a base erosion anti-abuse tax (“BEAT”) measure that taxes certain payments between a U.S. corporation and its foreign subsidiaries. These provisions of the Tax Act became effective for us beginning on August 1, 2018 and had no impact on the tax benefit for fiscal year 2019.
Under GAAP, we can make an accounting policy election to either treat taxes due on the GILTI inclusion as a current period expense or factor such amounts into our measurement of deferred taxes. We have elected the current period expense method. In December 2018, the Internal Revenue Service (the “IRS”) issued proposed regulations related to the BEAT tax, which we are in the process of evaluating. If the proposed BEAT regulations are finalized in their current form, the impact may be material to the tax provision in the quarter of enactment.
The U.S. Treasury Department, the IRS, and other standard-setting bodies will continue to interpret or issue guidance on how provisions of the Tax Act will be applied or otherwise administered. We continue to obtain, analyze, and interpret guidance as it is issued and will revise our estimates as additional information becomes available.
Any legislative changes, including any other new or proposed U.S. Department of the Treasury regulations that have yet to be issued, may result in income tax adjustments which could be material to our provision for income taxes and effective tax rate in the period any such changes are enacted. We have finalized our assessment of the transitional impacts of the Tax Act.

                                          | Fiscal years ended July 31, |                                    |          |
----------------------------------------- | --------------------------- | ---------------------------------- | -------- | -----
                                          | 2019                        | 2018                               | Change   |
                                          | Amount                      | Amount                             | ($)      | (%)
                                          |                             | (In thousands, except percentages) |          |
Provision for (benefit from) income taxes | $(8,280)                    | $18,467                            | (26,747) | (145)
Effective tax rate                        | (66)%                       | (223)%                             |          |

Income Taxes
 subject taxes United States other jurisdictions countries. Earnings non-U. activities local tax current. income tax.
 recognized income tax benefit $8. 3 million 2019 $18. 5 million 2018. due net charge re deferred tax assets liabilities January 2018 Tax Cuts Jobs Act.
 effective tax rate (66)% 2019 differs. Federal income tax rate 21% due differences stock-based compensation excess tax benefits research development credits tax rate differences foreign withholding taxes non expenses.
 unrecognized tax benefits $6. 2 million affect tax rate.
 December 2017 Tax Act changed. tax law reduction. corporate income tax rate 21% January 1, 2018 provisions.
 tax income foreign subsidiaries special deduction foreign-derived intangible income base anti-abuse tax. effective August 1, 2018 no impact tax benefit 2019.
 treat taxes GILTI current period expense or factor deferred taxes. elected current period expense method.December 2018 Internal Revenue Service issued regulations BEAT tax evaluating. regulations finalized impact material tax provision enactment.
 U. Treasury Department IRS standard-setting bodies interpret guidance Tax Act. obtain analyze interpret guidance revise estimates information.
 legislative changes. regulations result income tax adjustments material provision taxes tax rate. finalized assessment transitional impacts Tax Act.
 Fiscal years ended July 31,
 2019  2018 Change
 Amount ($) (%)
 thousands percentages
 Provision income taxes $(8,280)  $18,467  (26,747)
 Effective tax rate  (66)%  (223)%


Note 21. Earnings Per Share
Basic earnings per share are based on the weighted average number of common shares outstanding during the periods. Diluted earnings per share includes the weighted average number of common shares outstanding during the respective periods and the further dilutive effect, if any, from stock appreciation rights, restricted stock, restricted stock units and shares held in rabbi trust using the treasury stock method.
The number of shares used in the earnings per share computation were as follows (in thousands):

                                                                                |        | Years Ended December 31, |
--------------------------------------------------------------------------------------------------------------------- | ------ | ------------------------ | ------
                                                                                | 2019   | 2018                     | 2017
Basic:                                                                                |        |                          |
Weighted average common shares outstanding                                                                            | 41,649 | 42,090                   | 41,822
Diluted:                                                                                |        |                          |
Dilutive effect of stock appreciation rights, restricted stock, restricted stock units and shares held in rabbi trust | 153    | 156                      | 319
Total weighted average diluted shares outstanding                                                                     | 41,802 | 42,246                   | 42,141
Anti-dilutive shares excluded from the diluted earnings per share calculation                                         | 69     | 44                       | 46

. Earnings Per Share
 based average. Diluted earnings dilutive effect stock appreciation rights restricted stock units shares rabbi trust.
 shares earnings
 Years Ended December 31,
 2019 2018 2017
 average shares 41,649 42,090 41,822
 Diluted
 Dilutive effect stock appreciation rights restricted stock units shares rabbi trust 153 156 319
 diluted shares 41,802 42,246 42,141
 Anti-dilutive shares excluded diluted earnings 69 44 46


Contractual Obligations
The following table summarizes the payments due by fiscal year for our outstanding contractual obligations as of June 30, 2019:
(a) Refer to Note 11 – Debt of the Notes to Financial Statements.
(b) Refer to Note 7 – Property and Equipment of the Notes to Financial Statements.
(c) Refer to Note 15 – Leases of the Notes to Financial Statements.
(d) Refer to Note 12 – Income Taxes of the Notes to Financial Statements.
(e) Amounts represent purchase commitments, including open purchase orders and take-or-pay contracts that are not presented as construction commitments above.
(f) We have excluded long-term tax contingencies, other tax liabilities, and deferred income taxes of $14.2 billion from the amounts presented as the timing of these obligations is uncertain. We have also excluded unearned revenue and non-cash items.

(In millions)                                    | 2020      | 2021-2022 | 2023-2024 | Thereafter | Total
------------------------------------------------ | --------- | --------- | --------- | ---------- | ----------
Long-term debt: (a)                              |           |           |           |            |
Principal payments                               | $ 5,518   | $ 11,744  | $ 8,000   | $ 47,519   | $ 72,781
Interest payments                                | 2,299     | 4,309     | 3,818     | 29,383     | 39,809
Construction commitments (b)                     | 3,443     | 515       | 0         | 0          | 3,958
Operating leases, including imputed interest (c) | 1,790     | 3,144     | 2,413     | 3,645      | 10,992
Finance leases, including imputed interest (c)   | 797       | 2,008     | 2,165     | 9,872      | 14,842
Transition tax (d)                               | 1,180     | 2,900     | 4,168     | 8,155      | 16,403
Purchase commitments (e)                         | 17,478    | 1,185     | 159       | 339        | 19,161
Other long-term liabilities (f)                  | 0         | 72        | 29        | 324        | 425
Total                                            | $  32,505 | $  25,877 | $  20,752 | $  99,237  | $  178,371

Contractual Obligations
 table summarizes payments year obligations June 30, 2019
 Note 11 Debt.
 7 Property Equipment.
 15 Leases.
 12 Income Taxes.
 Amounts purchase commitments take-or-pay contracts not construction.
 excluded long tax contingencies liabilities deferred income taxes $14. 2 billion. unearned revenue non-cash items.
 2021 2023-2024
 Long-term debt
 Principal payments $ 5,518 11,744 47,519 72,781
 Interest payments 2,299 4,309 3,818 29,383 39,809
 Construction commitments 3,443
 Operating leases interest 1,790 3,144 2,413 3,645 10
 Finance leases 2,008 2,165 9,872 14,842
 Transition tax 1,180 2,900 4,168 8,155 16,403
Purchase commitments 17,478 1,185 19,161
 liabilities 324 425
 32,505 25,877 20,752 99,237 178,371


Aging analysis of gross values by risk category at December 31, 2019
The distribution of trade receivables and contract assets closely follows the distribution of the Company’s sales, see note B1, “Segment information.” The ten largest customers represented 49% (53%) of the total trade receivables and contract assets in 2019.

Days past due        | 1–90  | 91–180 | 181–360 | >360  | Total
-------------------- | ----- | ------ | ------- | ----- | -----
Country risk: Low    | 1,347 | 125    | 127     | 313   | 1,912
Country risk: Medium | 891   | 725    | 600     | 819   | 3,035
Country risk: High   | 583   | 365    | 217     | 1,315 | 2,480
Total past due       | 2,821 | 1,215  | 944     | 2,447 | 7,427

values risk December 31, 2019
 trade receivables assets sales. ten largest customers 49% receivables assets 2019.
 1–90 91–180 181–360
 Low 1,347 125 127 313 1,912
 Medium 891 725 600 819 3,035
 High 583  365 217 1,315 2,480
 2,821  1,215  944 2,447 7,427


Note 21. Equity - dividends
Dividends paid during the financial year were as follows:
The Directors have declared a final dividend of AU 18 cents per share for the year ended 30 June 2019. The dividend will be paid on 25 September 2019 based on a record date of 4 September 2019. This amounts to a total dividend of US$15.9 million based on the number of shares outstanding.
Accounting policy for dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the company.

Consolidated                                                                                |         |
-------------------------------------------------------------------------------------------- | ------- | -------
                                                                                | 2019    | 2018
                                                                                | US$’000 | US$’000
Final dividend for the year ended 30 June 2018 of AU 14 cents (2017: AU 12 cents)            | 13,327  | 12,534
Interim dividend for the half year ended 31 December 2018 of AU 16 cents (2017: AU 13 cents) | 14,801  | 13,099
                                                                                | 28,128  | 25,633

. Equity dividends
 financial year
 Directors declared final dividend 18 cents share year 30 June 2019. paid 25 September 2019 4 September. total dividend US$15. 9 million shares.
 Accounting policy dividends
 recognised declared discretion company.
 Final dividend year 30 June 2018 AU 14 cents 12 cents
 Interim dividend half year 31 December 2018 AU 16 cents 13 cents 14,801


The following table provides the company’s operating (non-GAAP) earnings for 2019 and 2018. See page 46 for additional information.
* 2019 results were impacted by Red Hat purchase accounting and acquisition-related activity.
** Includes charges of $2.0 billion in 2018 associated with U.S. tax reform.

($ in millions except per share amounts)               |         |         |
------------------------------------------------------ | ------- | ------- | -------------------------
For the year ended December 31:*                       | 2019    | 2018    | Yr.-to-Yr. Percent Change
Net income as reported                                 | $ 9,431 | 8,728*  | 8.1%
Income/(loss) from discontinued operations, net of tax | (4)     | 5       | NM
Income from continuing operations                      | $ 9,435 | 8,723*  | 8.2%
Non-operating adjustments (net of tax)                 |         |         |
Acquisition-related charges                            | 1,343   | 649     | 107.0
Non-operating retirement-related costs/(income)        | 512     | 1,248   | (58.9)
U.S. tax reform charge                                 | 146     | 2,037   | (92.8)
Operating (non-GAAP) earnings                          | $11,436 | $12,657 | (9.6)%
Diluted operating (non-GAAP) earnings per share        | $ 12.81 | $ 13.81 | (7.2)%

table provides operating-GAAP earnings 2019 2018. page 46 information.
 2019 results impacted Red Hat purchase accounting acquisition activity.
 Includes $2. billion 2018. tax reform.
 year December 31 2019 2018.
 Net income $ 9,431 8,728.
 discontinued operations tax
 continuing operations $ 9,435. 2%
 Non-operating adjustments tax
 Acquisition-related charges 1,343.
 Non-operating retirement-related costs.
. tax reform charge.
 Operating (non-GAAP earnings $11,436 $12,657.
 earnings per share $.


G. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net consisted of the following at December 31, 2019 and 2018:
Depreciation of property, plant and equipment for the years ended December 31, 2019, 2018, and 2017 was $70.8 million, $67.4 million, and $66.1 million, respectively. As of December 31, 2019 and 2018, the gross book value included in machinery and equipment for internally manufactured test systems being leased by customers was $5.4 million and $5.5 million, respectively. As of December 31, 2019 and 2018, the accumulated depreciation on these test systems was $5.1 million and $5.2 million, respectively.

                                  | 2019           | 2018
--------------------------------- | -------------- | --------
                                  | (in thousands) |
Land                              | $16,561        | $16,561
Buildings                         | 107,282        | 105,935
Machinery, equipment and software | 834,970        | 752,722
Furniture and fixtures            | 29,157         | 27,432
Leasehold improvements            | 59,378         | 52,536
Construction in progress          | 2,537          | 6,276
                                  | 1,049,885      | 961,462
Less: accumulated depreciation    | 729,669        | 681,641
                                  | $320,216       | $279,821

. PROPERTY PLANT EQUIPMENT
 December 31, 2019
 Depreciation 2017 $70. 8 million $67. 4 million $66. 1 million. gross value systems $5. 4 million $5. 5 million. accumulated depreciation $5. 1 million $5. 2 million.
 Land $16,561
 Buildings 107,282
 Machinery equipment software,970 752,722
 Furniture fixtures 29,157
 Leasehold improvements 59,378 52
 Construction 2,537
 1,049,885
 accumulated depreciation 729,669 681,641
 $320 $279,821


Single figure table for total remuneration (audited)
Single figure for the total remuneration received by each executive director for the 52 weeks ended 30 March 2019 (2018/19) and 31 March 2018 (2017/18).
Gavin Darby
Mr Darby received a basic salary of £700,000 per annum and a salary supplement in lieu of pension of 20% of base salary on a pro rata basis for the period up to 31 January 2019. Mr Darby received a pro rata bonus of £525,500 for the financial period to 31 January 2019. Benefits were provided for the period up to 31 January 2019 relating to the provision of an executive driver service, private health insurance and annual medical assessment.
Alastair Murray
Mr Murray received a basic salary for the period of £416,201 per annum and an annualised supplement in lieu of pension of 7.5% of the Earnings Cap (£160,800 for the 2018/19 tax year) which equates to £12,060 for the period together with an additional RPI adjusted pensions supplement of £24,348. He was appointed Acting CEO on 1 February 2019, in addition to his current role of Chief Financial Officer, on a temporary basis whilst the Board conducts a search process for a new CEO.
In recognition of this significant additional responsibility, it was agreed that Mr Murray would receive a monthly salary supplement of £20,000 (which does not count towards pension, annual bonus or long-term incentives) whilst he carries out this role.
Mr Murray received a bonus of £231,615 for the financial period. Benefits related to the provision of a company car, use of an executive driver service (following his appointment as Acting CEO) and private health insurance. In line with the current Remuneration Policy, one-third of his annual bonus award will be in the form of shares deferred for three years.
Full details of the annual bonus performance assessments for Mr Darby and Mr Murray are set out on pages 53 to 55.

                   | Gavin Darby |         | Alastair Murray |
------------------ | ----------- | ------- | --------------- | -------
                   | 2018/19     | 2017/18 | 2018/19         | 2017/18
                   | £’000       | £’000   | £’000           | £’000
Salary             | 583         | 700     | 416             | 408
Salary supplement  | –           | –       | 40              | –
Taxable benefits   | 17          | 22      | 27              | 24
Pension            | 117         | 140     | 36              | 35
Annual Bonus       | 525         | 368     | 232             | 153
Share based awards | –           | –       | –               | –
Total              | 1,242       | 1,230   | 751             | 620

figure table total remuneration
 executive director 52 weeks 30 March 2019 31 March 2018.
 Gavin Darby
 received basic salary £700,000 per annum salary supplement 20% base salary 31 January 2019. pro rata bonus £525,500 31 January 2019. Benefits executive driver service private health insurance annual medical assessment.
 Alastair Murray
 basic salary £416,201 per annum annualised supplement 7. 5% Earnings Cap (£160,800 2018/19 tax year £12,060 additional RPI adjusted pensions supplement £24,348. Acting CEO 1 February 2019 Chief Financial Officer temporary new CEO.
 monthly salary supplement £20,000 not pension annual bonus long-term incentives.
 bonus £231,615. Benefits company car executive driver service private health insurance. one-third annual bonus award shares deferred three years.
 details annual bonus performance assessments Darby Murray pages 53 to 55.
 Gavin Darby Alastair Murray
 2018/19
Salary 583 700 416 408
 supplement
 Taxable benefits 17
 Pension 117 140 36
 Annual Bonus 525 368 232
 Share awards
 1,242 1,230 751


Allowances for Receivables and Sales Returns
The allowances for receivables were as follows (in millions, except percentages):
(1) Calculated as allowance for credit loss on lease receivables as a percentage of gross lease receivables and residual value before unearned income.
The allowance for doubtful accounts is based on our assessment of the collectibility of customer accounts. We regularly review the adequacy of these allowances by considering internal factors such as historical experience, credit quality and age of the receivable balances as well as external factors such as economic conditions that may affect a customer’s ability to pay as well as historical and expected default frequency rates, which are published by major third-party credit-rating agencies and are updated on a quarterly basis. We also consider the concentration of receivables outstanding with a particular customer in assessing the adequacy of our allowances for doubtful accounts. If a major customer’s creditworthiness deteriorates, if actual defaults are higher than our historical experience, or if other circumstances arise, our estimates of the recoverability of amounts due to us could be overstated, and additional allowances could be required, which could have an adverse impact on our operating results.
The allowance for credit loss on financing receivables is also based on the assessment of collectibility of customer accounts. We regularly review the adequacy of the credit allowances determined either on an individual or a collective basis. When evaluating the financing receivables on an individual basis, we consider historical experience, credit quality and age of receivable balances, and economic conditions that may affect a customer’s ability to pay. When evaluating financing receivables on a collective basis, we use expected default frequency rates published by a major third-party credit-rating agency as well as our own historical loss rate in the event of default, while also systematically giving effect to economic conditions, concentration of risk and correlation. Determining expected default frequency rates and loss factors associated with internal credit risk ratings, as well as assessing factors such as economic conditions, concentration of risk, and correlation, are complex and subjective. Our ongoing consideration of all these factors could result in an increase in our allowance for credit loss in the future, which could adversely affect our operating results. Both accounts receivable and financing receivables are charged off at the point when they are considered uncollectible.
A reserve for future sales returns is established based on historical trends in product return rates. The reserve for future sales returns as of July 27, 2019 and July 28, 2018 was $84 million and $123 million, respectively, and was recorded as a reduction of our accounts receivable and revenue. If the actual future returns were to deviate from the historical data on which the reserve had been established, our revenue could be adversely affected.

                                              | July 27, 2019 | July 28, 2018
--------------------------------------------- | ------------- | -------------
Allowance for doubtful accounts               | $136          | $129
Percentage of gross accounts receivable       | 2.4%          | 2.3%
Allowance for credit loss—lease receivables . | $46           | $135
Percentage of gross lease receivables (1)     | 1.8%          | 4.7%
Allowance for credit loss—loan receivables    | $71           | $60
Percentage of gross loan receivables          | 1.3%          | 1.2%

Allowances for Receivables Sales Returns
 allowances receivables millions
 Calculated allowance for credit loss on lease receivables percentage of gross lease receivables residual value before unearned income.
 allowance for doubtful accounts based on collectibility customer accounts. review historical experience credit quality age receivable balances external economic conditions historical default frequency rates credit-rating agencies updated quarterly. consider concentration of receivables customer. If creditworthiness deteriorates defaults higher other circumstances estimates recoverability could overstated additional allowances required operating results.
 allowance for credit loss on financing receivables based on collectibility customer accounts. review credit allowances individual collective. historical experience credit quality age balances economic conditions. use expected default frequency rates historical loss rate effect economic conditions concentration risk correlation. Determining default frequency rates loss factors credit risk ratings economic conditions risk complex subjective. could increase allowance for credit loss affect operating results.accounts financing receivables charged uncollectible.
 reserve future sales returns established. July 27, 2019 July 28, 2018 $84 million $123 million reduction accounts receivable revenue. future returns deviate revenue.
 2019 28, 2018
 Allowance doubtful accounts $136 $129
 Percentage gross accounts 2. 4%.
 credit loss—lease receivables. $46 $135
. 8%. 7%
 credit loss—loan receivables $71 $60
 receivables. 3%.


15 Financial risk management (continued)
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due.
Management also actively monitors rolling forecasts of the Group’s cash and cash equivalents.
(i) Maturities of financial liabilities
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows.
The cash flows for unsecured notes assume that the early redemption options would not be exercised by the Group.

Contractual Maturities of Financial Liabilities | Within 12 months | Between 1 and 5 years | Over 5 years | Total contractual cash flows | Carrying amount
----------------------------------------------- | ---------------- | --------------------- | ------------ | ---------------------------- | ---------------
2019                                            | $'000            | $'000                 | $'000        | $'000                        | $'000
Trade payables                                  | 44,840           | -                     | -            | 44,840                       | 44,840
Unsecured notes                                 | 46,634           | 900,046               | -            | 946,680                      | 793,849
Lease liabilities                               | 5,008            | 26,709                | 167,214      | 198,931                      | 73,328
Total non-derivatives                           | 96,482           | 926,755               | 167,214      | 1,190,451                    | 912,017
2018                                            |                  |                       |              |                              |
Trade payables                                  | 27,640           | -                     | -            | 27,640                       | 27,640
Unsecured notes                                 | 18,750           | 342,000               | -            | 360,750                      | 296,912
Lease liabilities                               | 641              | 2,565                 | 5,451        | 8,657                        | 6,042
Total non-derivatives                           | 47,031           | 344,565               | 5,451        | 397,047                      | 330,594

Financial risk management
 Liquidity risk
 cash marketable securities funding credit facilities.
 monitors cash equivalents.
 Maturities financial liabilities
 table analyses financial liabilities groupings.
 contractual undiscounted cash flows.
 unsecured notes early redemption options exercised.
 Contractual Maturities Financial Liabilities Within 12 months Between 1 5 years Over 5 years Total cash flows amount
 2019 $
 Trade payables 44,840
 Unsecured notes 46,634 900,046 946,680 793,849
 Lease liabilities 5,008 167,214
 Total non-derivatives 96,482 926,755 167,214 1,190,451 912,017
 2018
 Trade payables 27,640
 Unsecured notes 18,750
 Lease liabilities 641 2,565 5,451 8,657
non-derivatives 47,031,565 5 330


Results of Operations for the Years Ended December 31, 2019 and December 31, 2018
We reported revenues of $187.2 million for the year ended December 31, 2019, down 7.0% from $201.2 million for the year ended December 31, 2018. Our net loss was $15.6 million or $0.96 loss per diluted share for the year ended December 31, 2019 versus a net loss of $24.1 million or $1.50 loss per diluted share for the year ended December 31, 2018. Our year-over-year unfavorable performance was primarily driven by lower Restaurant/Retail hardware revenue and corresponding hardware support service revenue from our traditional tier 1 customers as one of these customers completed significant projects in 2018 which were not repeated in 2019. The Company partially offset these reductions with continued growth in Brink POS revenue, including related SaaS, hardware and support services. The 2018 net loss include a valuation allowance of $14.9 million to reduce the carrying value of our deferred tax assets.
Operating segment revenue is set forth below:
* Brink includes $0.3 million of Restaurant Magic for 2019
Product revenues were $66.3 million for the year ended December 31, 2019, a decrease of 15.8% from $78.8 million recorded in 2018. This decrease was primarily driven by lower revenues from our tier 1 customers and by a decrease in our international business. Our hardware sales in the Restaurant/Retail reporting segment were down versus prior year as we completed hardware project installations with a large domestic customer during the first half of 2018 which was not recurring in 2019. Additionally, international sales were down in 2019 and SureCheck was divested. SureCheck product revenue was $0.7 million in 2019 versus $2.0 million in 2018.
Service revenues were $57.0 million for the year ended December 31, 2019, an increase of 3.1% from $55.3 million reported for the year ended December 31, 2018, primarily due to an increase in Brink, including a $3.9 million increase in Brink POS SaaS revenue more than offsetting a reduction in Services to our traditional Tier 1 customers and SureCheck Services. Surecheck Service revenue was $2.7 million in 2019 versus $4.0 million in 2018.
Contract revenues were $63.9 million for the year ended December 31, 2019, compared to $67.2 million reported for the year ended December 31, 2018, a decrease of 4.8%. This decrease was driven by a 4% decrease in our Mission Systems revenue due to reduction of revenue on cost-based contracts and a 4% reduction in ISR revenues due to ceiling limitations in a large customer's funding.
Product margins for the year ended December 31, 2019, were 22.9%, in line with the 23.0% for the year ended December 31, 2018.
Service margins were 30.9% for the year ended December 31, 2019, an increase from 23.8% recorded for the year ended December 31,2018. ServicemarginsincreasedprimarilyduetoBrinkPOSSaaSandtheincreaseinprofitabilityinourfieldservicebusiness. During 2018 and 2019, impairment charges were recorded for SureCheck capitalized software of $1.6 million and $0.7 million, respectively.
Contract margins were 8.9% for the year ended December 31, 2019, compared to 10.7% for the year ended December 31, 2018. The decrease in margin was primarily driven by decrease activity in Mission Systems' better performing cost-based contracts.
Selling, general, and administrative expenses were $37.0 million for the year ending December 31, 2019, compared to $35.0 million for the year ended December 31, 2018. The increase is due to additional investments in Brink POS sales and marketing and increased equity and incentive compensation, partially offset by savings in other departments. SG&A expenses associated with the internal investigation for 2019 were $0.6 million as compared to $1.1M in 2018.
Research and development expenses were $13.4 million for the year ended December 31, 2019, compared to $12.4 million recorded for the year ended December 31, 2018. This increase was primarily related to a $2.1 million increase in software development investments for Brink offset by decreases in other product lines.
During the year ended December 31, 2019, we recorded $1.2 million of amortization expense associated with acquired identifiable intangible assets in connection with our acquisition of Brink Software, Inc. in September 2014 (the "Brink Acquisition") compared to $1.0 million for the year ended December 31, 2018. Additionally, in 2019 we recorded $0.2 million of amortization expense associated with acquired identifiable intangible assets in the Drive-Thru Acquisition, and $0.1 million of amortization expense associated with acquired identifiable intangible assets in the Restaurant Magic Acquisition.
Other (expense) income, net, was ($1.5 million) for the year ended December 31, 2019, as compared to other income, net of $0.3 million for the year ended December 31, 2018. Other income/expense primarily includes fair value adjustments on contingent considerations, rental income, net of applicable expenses, foreign currency transactions gains and losses, fair value fluctuations of our deferred compensation plan and other non-operating income/expense. In 2018, a $0.5 million gain was recorded for the sale of real estate. In 2019, there was a $0.2 million expense for the termination of the Brink Acquisition earn-out agreement compared to a $0.5 million benefit as a result of a reduction of contingent consideration related to the Brink Acquisition in 2018.
Interest expense, net was $4.6 million for the year ended December 31, 2019, as compared to interest expense, net of $0.4 million for the year ended December 31, 2018. The increase reflects $2.6 million of interest expense related to the sale of the 4.50% Convertible Senior Notes due 2024 issued on April 15, 2019 (the "2024 notes") as well as $2.0 million of accretion of 2024 notes debt discount for 2019.
For the year ended December 31, 2019, our effective income tax rate was 18.9%, which was mainly due to deferred tax adjustments related to foreign tax credit carryforwards and state taxes, offset by changes in the valuation allowance and excess tax benefits resulting from the exercise of non-qualified stock options. For the year ended December 31, 2018, our effective income tax rate was (141.7)% due to recording a full valuation allowance on the entire deferred tax assets.

                                                  | Year ended December 31, |          | $         | %
------------------------------------------------- | ----------------------- | -------- | --------- | --------
(in thousands)                                    | 2019                    | 2018     | variance  | variance
 Restaurant/Retail                                |                         |          |           |
   Core                                           | $78,238                 | $102,877 | $(24,639) | (24)%
Brink *                                           | 41,689                  | 25,189   | 16,500    | 66%
SureCheck                                         | 3,380                   | 6,003    | (2,623)   | (44)%
 Total Restaurant Retail                          | $123,307                | $134,069 | $(10,762) | (8)%
 Government                                       |                         |          |           |
   Intelligence, surveillance, and reconnaissance | $29,541                 | $30,888  | $(1,347)  | (4)%
Mission Systems                                   | 33,513                  | 35,082   | (1,569)   | (4)%
Product Sales                                     | 871                     | 1,207    | (336)     | (28)%
 Total Government                                 | $63,925                 | $67,177  | $(3,252)  | (5)%

Operations 2019 2018
 revenues $187. 2 million down 7. 0% $201. 2 million 2018. net loss $15. 6 million $0. 96 per share $24. 1 million $1. 50 2018. driven lower Restaurant/Retail hardware support service revenue 1 customers 2019. offset Brink POS revenue SaaS hardware services. 2018 net loss valuation allowance $14. 9 million deferred tax assets.
 revenue
 Brink $0. 3 million Restaurant Magic 2019
 revenues $66. 3 million decrease 15. 8% $78. 8 million 2018. lower revenues 1 international business. hardware sales down 2019. international sales down SureCheck divested. revenue $0. 7 million $2. 0 million 2018.
 Service revenues $57. 0 million increase 3. 1% $55. 3 million 2018 Brink $3. 9 million increase Brink POS SaaS revenue reduction 1 SureCheck. revenue $2. 7 million 2019 $4. 0 million 2018.
 Contract revenues $63.9 million December 31, 2019 $67. 2 million 2018 decrease 4. 8%. 4% decrease Mission Systems revenue cost-based contracts 4% reduction ISR large customer funding.
 Product margins 22. 9% 23. 0% 2018.
 Service margins 30. 9% increase 23. 8%. 2018 2019 impairment charges SureCheck $1. 6 million $0. 7 million.
 Contract margins 8. 9% 10. 7% 2018. Mission Systems cost-based contracts.
 Selling general administrative expenses $37. 0 million 2019 $35. 0 million 2018. increase Brink POS sales marketing increased equity incentive compensation offset savings departments. SG&A expenses 2019 $0. 6 million $1. 1M 2018.
 Research development expenses $13. 4 million 2019 $12. 4 million 2018. increase $2. 1 million increase software development investments product lines.
 $1. 2 million amortization expense assets Brink Software. 2014 $1. 0 million 2018.2019 $0. 2 million Drive-Thru Acquisition $0. 1 million Restaurant Magic Acquisition.
 income$1. 5 million 2019 $0. 3 million 2018. value adjustments rental income expenses foreign currency transactions gains losses fluctuations deferred compensation plan non-operating income. 2018 $0. 5 million gain sale real estate. 2019 $0. 2 million expense Brink Acquisition agreement $0. 5 million reduction contingent consideration.
 Interest expense net $4. 6 million 2019 $0. 4 million 2018. increase $2. 6 million sale 4. 50% Convertible Senior Notes $2. 0 million debt discount.
 December 31, 2019 effective income tax rate 18. 9% deferred tax adjustments foreign tax credit carryforwards state taxes offset valuation allowance tax benefits non-qualified stock options. 2018 income tax rate (141. 7)% full valuation allowance deferred tax assets.
2019 2018
 Restaurant
 $78,238 $102,877
 Brink 41,689 25,189
 SureCheck 3,380 6,003
 Restaurant Retail $123,307 $134,069,762
 Government
 Intelligence surveillance $29,541 $30,888,347
 Mission Systems 33,513 35,082 (1,569)
 Product Sales 871 1,207
 Government $63,925 $67,177,252)


Note 3 − Property and Equipment
Our major classes of property and equipment were as follows:
Depreciation expense for the years ended December 31, 2019 and 2018 was $7, and $18, respectively.

                                  | December 31 | December 31
--------------------------------- | ----------- | -----------
                                  | 2019        | 2018
Office furniture                  | $79         | $79
Computer equipment                | 81          | 67
Total                             | 160         | 146
Less accumulated depreciation     | (144)       | (137)
Total property and equipment, net | $16         | $9

Note 3 Property Equipment
 major classes
 Depreciation expense 2019 2018 $7 $18.
 Office furniture $79
 Computer equipment 81 67
 160
 Less accumulated depreciation (144)
 property equipment $16 $9


Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, trade accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses approximate fair value because of the short-term nature of these financial instruments. The carrying amounts of borrowings under credit facilities and under loans approximates fair value as interest rates on these instruments approximates current market rates.
Notes payable and long-term debt is carried at amortized cost; however, the Company estimates the fair value of notes payable and long-term debt for disclosure purposes. The following table presents the carrying amounts and fair values of the Company’s notes payable and long-term debt, by hierarchy level as of the periods indicated:
(1) The fair value estimates are based upon observable market data.
(2) This fair value estimate is based on the Company’s indicative borrowing cost derived from discounted cash flows.
Refer to Note 9 – “Postretirement and Other Employee Benefits” for disclosure surrounding the fair value of the Company’s pension plan assets.

                                           |                      | August 31, 2019 |            | August 31, 2018 |
------------------------------------------ | -------------------- | --------------- | ---------- | --------------- | ----------
(in thousands)                             | Fair Value Hierarchy | Carrying Amount | Fair Value | Carrying Amount | Fair Value
Notes payable and long-term debt: (Note 8) |                      |                 |            |                 |
5.625% Senior Notes                        | Level 2(1)           | $398,886        | $416,000   | $397,995        | $415,704
4.700% Senior Notes                        | Level 2(1)           | 498,004         | 525,890    | 497,350         | 503,545
4.900% Senior Notes                        | Level 3(2)           | 299,057         | 318,704    | 298,814         | 306,535
3.950% Senior Notes                        | Level 2(1)           | 494,825         | 509,845    | 494,208         | 476,010

Value Financial Instruments
 cash equivalents trade accounts receivable prepaid expenses current assets accounts payable accrued expenses short-term. borrowings credit loans market rates.
 Notes payable long-term debt amortized cost Company estimates fair value. table amounts fair values
 value estimates based market data.
 indicative borrowing cost discounted cash flows.
 Note 9 “Postretirement Employee Benefits” pension plan assets.
 August 31, 2019 August 31, 2018
 Fair Value Hierarchy Carrying Amount
 Notes payable long-term debt
. 625% Senior Notes Level 2(1) $398,886 $416,000 $397,995 $415,704
. 700% 498,004 525,890 497,350 503,545
. 900% 3(2) 299,057 318,704 298,814 306,535
. 950% 494,825 509,845 494,208 476,010


Reconciliation of net voyage revenues to voyage revenues:
(1) Vessel Calendar Days is the total number of days the vessels were in our fleet.
(2) Time Charter Equivalent ("TCE") Rate, results from Net Voyage Revenue divided by total TCE days.

                                                  |           | Years Ended December 31,     |
------------------------------------------------- | --------- | ---------------------------- | ---------
All figures in USD '000, except TCE rate per day  | 2018      | 2017                         | Variance
Voyage Revenue                                    | 289,016   | 297,141                      | (2.7%)
Less Voyage expenses                              | (165,012) | (142,465)                    | 15.8%
Net Voyage Revenue                                | 124,004   | 154,676                      | (19.8%)
Vessel Calendar Days (1)                          | 9,747     | 10,892                       | (10.5%)
Less off-hire days                                | 277       | 867                          | (68.1%)
Total TCE days                                    | 9,470     | 10,025                       | (5.5%)
TCE Rate per day (2)                              | $13,095   | $15,428                      | (15.1%)
Total Days for vessel operating expenses          | 9,747     | 10,892                       | (10.5%)

voyage
 Vessel Calendar Days fleet.
 Time Charter Rate Voyage Revenue TCE days.
 Ended December 31,
 figures USD TCE rate 2018
 Revenue 289,016 297,141.
 Less expenses (165,012),465.
 Revenue 124,004 154,676.
 Vessel Calendar Days 9,747 10,892.
 Less off-hire days 277.
 TCE days 9,470 10,025.
 TCE Rate per day $13,095 $15,428.
 vessel operating expenses 9,747 10,892.


Liquidity and Capital Resources
The following summarizes information regarding our cash, investments, and working capital (in thousands):
Cash was $169.6 million at June 30, 2019, representing an increase of $48.5 million from $121.1 million at June 30, 2018. Cash increased primarily due to cash provided by operations of $104.9 million partially offset by cash used in investing activities of $21.8 million mainly for capital expenditures, and cash used in financing activities of $34.4 million mainly as a result of repayments of debt and repurchases of stock.
Cash was $121.1 million at June 30, 2018, representing a decrease of $9.3 million from $130.5 million at June 30, 2017. Cash and cash equivalents decreased primarily due to cash used in investing activities of $132.5 million mainly for the acquisitions of the Campus Fabric and Data Center Businesses and capital expenditures, partially offset by cash provided by financing activities of $104.7 million as a result of additional borrowings for the acquisitions and cash provided by operations of $19.0 million.

                                     | June 30,
2019 | June 30,
2018
------------------------------------ | ------------- | -------------
Cash                                 | $169,607      | $121,139
Marketable securities                | —             | 1,459
Total cash and marketable securities | $169,607      | $122,598

Liquidity Capital Resources
 cash investments working capital
 $169. 6 million June 30, 2019 $48. 5 million $121. 1 million 2018. $104. 9 million offset $21. 8 million financing $34. 4 million repayments debt repurchases stock.
 $121. 1 million June 30 2018 $9. 3 million $130. 5 million 2017. decreased $132. 5 million Campus Fabric Data Center capital expenditures offset financing $104. 7 million borrowings $19. 0 million.
 2018
 Cash $169,607 $121,139
 Marketable securities
 $169 $122,598


Property and Equipment, net
Property and equipment consist of the following (in thousands):
As of July 31, 2019 and 2018, no property and equipment was pledged as collateral. Depreciation expense, excluding the amortization of software development costs, was $9.7 million, $7.7 million, and $6.6 million for the fiscal years ended July 31, 2019, 2018, and 2017, respectively.
The Company capitalizes software development costs for technology applications that the Company will offer solely as cloud-based subscriptions, which is primarily comprised of compensation for employees who are directly associated with the software development projects. The Company begins amortizing the capitalized software development costs once the technology applications are available for general release over the estimated lives of the applications, ranging from three to five years.
The Company recognized approximately $1.0 million and $0.4 million in amortization expense in cost of revenue - license and subscription on the accompanying consolidated statements of operations during the fiscal years ended July 31, 2019 and 2018, respectively. There was no such amortization during the fiscal year ended July 31, 2017.

                                       | July 31, 2019  | July 31, 2018
-------------------------------------- | -------------- | -------------
Computer hardware                      | $17,799        | $20,614
Software                               | 6,741          | 4,664
Capitalized software development costs | 7,374          | 3,978
Equipment and machinery                | 10,455         | 4,265
Furniture and fixtures                 | 8,137          | 4,217
Leasehold improvements                 | 48,191         | 10,751
    Total property and equipment       | 98,697         | 48,489
Less accumulated depreciation          | (32,888)       | (29,894)
    Property and equipment, net        | $65,809        | $18,595

Property Equipment
 July 31, 2019 2018 no pledged collateral. Depreciation expense $9. 7 million $7. 7 million $6. 6 million 2019 2018 2017.
 Company capitalizes software costs cloud-based subscriptions compensation. three to five years.
 recognized $1. 0 million $0. 4 million amortization expense revenue statements 2019 2018. no amortization July 31, 2017.
 2019
 Computer hardware $17,799 $20,614
 Software 4
 Capitalized costs 7,374
 Equipment machinery 10,455 4
 Furniture fixtures 8,137 4,217
 Leasehold improvements 48,191
 Total property equipment 98,697 48,489
 Less accumulated depreciation (32,888) (29,894)
 Property equipment $65,809 $18,595


The plan assets of METRO are distributed between the following countries:
The above commitments are valued on the basis of actuarial calculations in accordance with relevant provisions of IAS 19. The basis for the measurement is the legal and economic circumstances prevailing in each country.

€ million       | 30/9/2018 | 30/9/2019
--------------- | --------- | ---------
Germany         | 71        | 81
Netherlands     | 584       | 671
United Kingdom  | 209       | 237
Belgium         | 50        | 52
Other countries | 26        | 25
                | 940       | 1,066

assets METRO distributed countries
 commitments valued actuarial calculations IAS 19. legal economic circumstances country.
 million 30/9/2018 30/9/2019
 Germany 71
 Netherlands 584
 United Kingdom 209
 Belgium 50
 Other countries 26


2.2 Revenue from contracts with customers
Key estimate: upfront fee revenue
Upfront fee revenue is recognised on a net basis of the historical percentage of ‘referred’ sales expected to become ‘financial’ and that do not trigger a ‘clawback’. These estimates are adjusted to actual percentages experienced at each reporting date. As such, the Group determines its revenue by estimating variable consideration and applying the constraint by utilising industry data and historical experience (refer to note 3.6 for further information).
Key estimate: trail commission revenue
The method of revenue recognition for trail commission revenue requires Directors and management to make certain estimates and assumptions based on industry data and historical experience of the Group. Refer to note 3.4 for details on trail commission revenue.
Recognition and measurement
Revenue represents the variable consideration estimated at the point in time when the Group has essentially completed its contracted services and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Upfront fees
When the Group refers a consumer to the product provider (and thereby satisfies its performance obligation), the Group is entitled to an upfront fee that is contingent upon the following events: (a) the referred sale becoming ‘financial’, which occurs upon new members joining a health fund, initiating a life insurance policy, obtaining general insurance products, mortgages, broadband or energy products via iSelect; and (b) whether a ‘clawback’ of the upfront fee is triggered. Upfront fees may trigger a ‘clawback’ of revenue in the event of early termination by customers as specified in individual product provider agreements. These contingencies are incorporated into the estimate of variable consideration (refer to key estimates).
Click-through fees
Click-through fees are recognised based on the contractual arrangement with the relevant product provider. This can occur at one of three points; either when an internet user clicks on a paying advertiser’s link, submits an application or a submitted application is approved.
Advertising and subscription fees
Revenue for contracted services, including advertising and subscription fees, are recognised based on the transaction price allocated to each key performance obligation. As a result, non-refundable revenue may be recognised across multiple periods until the performance obligation has been satisfied.
Trail commission revenue
Trail commissions are ongoing fees for customers referred to individual product providers or who have applied for mortgages via iSelect. Trail commission revenue represents commission earned calculated as a percentage of the value of the underlying policy relationship to the expected life and, in the case of mortgages, a proportion of the underlying value of the loan. The Group is entitled to receive trail commission without having to perform further services. On initial recognition, trail revenue and assets are recognised at expected value and subject to constraints.

                                                                       | CONSOLIDATED |
---------------------------------------------------------------------- | ------------ | ----------
                                                                       | 2019 $'000   | 2018 $'000
Upfront revenue                                                        |              |
Upfront fees                                                           | 113,609      | 140,971
Click-through fees                                                     | 3,657        | 1,349
Advertising and subscription fees                                      | 2,161        | 1,604
                                                                       | 119,427      | 143,924
Trail commission revenue                                               | 34,732       | 33,007
Total revenue from contracts with customers                            | 154,159      | 176,931
Revenue related to performance obligations satisfied in previous years | 502          | 4,760

2. Revenue from contracts with customers
 estimate: upfront fee revenue
 recognised historical percentage ‘referred’ sales expected ‘financial’ ‘clawback’. estimates adjusted to percentages each reporting date. Group determines revenue by estimating variable consideration utilising industry data historical experience note 3. 6.
 estimate: trail commission revenue
 revenue recognition requires estimates assumptions industry data historical experience. note 3. 4 details trail commission revenue.
 Revenue represents variable consideration estimated completed contracted services constrained until significant revenue reversal uncertainty resolved.
 Upfront fees
 Group refers consumer to upfront fee contingent upon referred sale becoming ‘financial’ ‘clawback’ triggered. fees trigger ‘clawback’ early termination agreements. contingencies incorporated into estimate variable consideration.
 Click-through fees
 recognised based contractual arrangement with product provider. user clicks link submits application approved.
 Advertising subscription fees
Revenue contracted services advertising subscription fees recognised transaction price performance obligation. non-refundable revenue recognised periods until performance obligation satisfied.
 commission
 fees customers referred mortgages iSelect. earned policy loan. Group commission without services. revenue assets recognised expected value subject constraints.
 2019 2018
 Upfront revenue
 113,609 140,971
 Click-through fees 3,657
 Advertising subscription fees 2,161
,427
 Trail commission revenue 34,732 33,007
 Total revenue contracts 154,159 176,931
 Revenue performance obligations previous years 502 4,760


Simultaneous with the Merger and the Private Offering, New Warrants to purchase 3,403,367 shares of Series B Preferred Stock at an average exercise price of
approximately $1.05 per share were issued to holders of Prior Protagenic warrants; additionally, the holder of $665,000 of our debt and $35,000 of accrued interest exchanged such debt for five-year warrants to purchase 295,945 shares of Series B Preferred Stock at $1.25 per share. Placement Agent Warrants to purchase 127,346 shares of Series B Preferred Stock at an exercise price of $1.25 per share were issued in connection with the Private offering. These warrants to purchase 423,291 shares of Series B Preferred Stock have been recorded as derivative liabilities. All of these warrants automatically converted into warrants to purchase our common stock upon the effectiveness of our reverse stock split in July 2016. See Note 5.
A summary of warrant issuances are as follows:
As of December 31, 2019, the Company had 3,826,658 shares issuable under warrants outstanding at a weighted average exercise price of $1.05 and an intrinsic value
of $1,375,990.
As of December 31, 2018 the Company had 3,826,658 shares issuable under warrants outstanding at a weighted average exercise price of $1.05 and an intrinsic value of
$3,633,335.

Warrants                      | Number    | Weighted Average Exercise Price | Weighted Average Remaining Life
----------------------------- | --------- | ------------------------------- | -------------------------------
Outstanding December 31, 2017 | 3,826,658 | $1.05                           | 4.69
Granted                       | -         | -                               | -
Outstanding December 31, 2018 | 3,826,658 | $1.05                           | 3.69
Granted                       | -         | -                               | -
Outstanding December 31, 2019 | 3,826,658 | $1.05                           | 2.69

Merger Private Offering Warrants purchase,367 shares Series B Preferred Stock
 $1. 05 per share issued holders Prior Protagenic warrants $665,000 debt $35,000 accrued interest exchanged debt five-year warrants purchase 295,945 shares Series B Preferred Stock $1. 25 per share. Placement Agent Warrants purchase 127,346 shares $1. 25 per share issued Private offering. warrants 423,291 shares recorded derivative liabilities. warrants converted common stock reverse stock split July 2016. Note 5.
 warrant issuances
 December 31, 2019 Company 3,826,658 shares price $1. 05 intrinsic value
 $1,375,990.
 2018 price $1. 05 intrinsic value
 $3,633,335.
 December 31, 2017 3,826,658.
 31, 2018.
 2019.


Free cash flow
Our non-GAAP financial measures also include free cash flow, which we define as cash provided by (used in) operating activities less the amount of property and equipment purchased. Management believes that information regarding free cash flow provides investors with an important perspective on the cash available to invest in our business and fund ongoing operations.

However, our calculation of free cash flow may not be comparable to similar measures used by other companies.
We believe these non-GAAP financial measures are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on certain of these non-GAAP measures.
We monitor the following non-GAAP financial measures:

                                                      | For the year ended December 31, |          |
----------------------------------------------------- | ------------------------------- | -------- | ---------
(in thousands, except percentages and per share data) | 2019                            | 2018     | 2017
Non-GAAP gross profit                                 | $168,242                        | $163,376 | $153,849
Non-GAAP gross margin                                 | 82.0%                           | 84.6%    | 85.6%
Non-GAAP operating loss                               | $(8,689)                        | $(4,325) | $(16,440)
Non-GAAP operating margin                             | (4.2)%                          | (2.2)%   | (9.1)%
Non-GAAP net loss                                     | $(9,460)                        | $(4,548) | $(16,594)
Non-GAAP net loss per share                           | $(0.09)                         | $(0.04)  | $(0.18)
Free cash flow                                        | $(3,924)                        | $12,201  | $(3,418)

 non-GAAP financial measures include operating activities less property equipment purchased. free cash flow provides perspective cash operations.
 calculation cash flow comparable.
 non-GAAP measures past performance future results. not GAAP read with consolidated financial statements.
 management uses non-GAAP financial measures understand manage business decisions. primary forecasting future. Compensation executives based on performance non-GAAP measures.
 monitor non-GAAP financial measures
 year ended December 31,
 Non-GAAP gross profit $168,242 $163,376 $153,849
 Non-GAAP gross margin 82. 0% 84. 6% 85. 6%
 Non-GAAP operating loss $(8,689) $(4,325) $(16,440)
 Non-GAAP margin (4. 2)% (2.% (9. 1)%
 Non-GAAP net loss $(9,460) $(4,548) $(16,594)
 net loss per share.
cash(3,924) $12,201


Note 12. Liabilities
The components of accounts payable, accrued expenses and other current liabilities are as follows (in thousands):

                                                                 | December 31, 2019 | December 31, 2018
---------------------------------------------------------------- | ----------------- | -----------------
Accounts payable                                                 | $32,878           | $20,214
Accrued expenses                                                 | 10,092            | 34,557
Subsidiary unit awards                                           | 141               | 200
Other current liabilities                                        | 5,616             | 3,459
Accounts payable, accrued expenses and other current liabilities | $48,727           | $58,430

.
 payable expenses
 December 31, 2019 2018
 Accounts payable $32,878 $20,214
 Accrued expenses 10,092 34,557
 Subsidiary unit awards 141
 liabilities 3,459
 $48,727 $58,430