document stringlengths 8.64k 13.4k | summary stringlengths 179 2.97k | __index_level_0__ int64 0 16.8k |
|---|---|---|
the amendments in this update are effective for fiscal years beginning after december 15 , 2019 , including interim periods within those fiscal years for the company and other sec filers . early adoption is permitted and if early adopted , all provisions must be adopted in the same period . the amendments should be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the period adopted . a prospective approach is required for securities with other than temporary impairment recognized prior to adoption . the company is still reviewing the impact the adoption of this guidance will have on its financial statements . in august 2016 , the fasb issued asu no . 2016-15 , statement of cash flows ( topic 230 ) : classification of certain cash receipts and cash payments . the asu intends to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows . the guidance is effective for public companies for annual periods beginning after december 15 , 2017 , including interim periods within those fiscal years . early adoption is permitted with retrospective application . the company is currently evaluating the impact of the new guidance on its consolidated financial statements . in january 2017 , fasb issued asu no . 2017-01 , business combinations ( topic 805 ) : clarifying the definition of a business . the asu clarifies the definition of a business to assist with evaluating whether transactions should be accounted for as acquisitions ( or disposals ) of assets or businesses . the amendments in this update are effective for fiscal years beginning after december 15 , 2017 , including story_separator_special_tag smartfinancial , inc. ( the โ company โ or โ smartfinancial โ ) is a bank holding company incorporated under the laws of tennessee and headquartered in knoxville , tennessee . in 2016 , the company conducted its business operations primarily through its wholly-owned subsidiaries , smartbank and cornerstone community bank , tennessee chartered community banks providing services through 15 offices in eastern tennessee , northwest florida , and north georgia . on february 26 , 2016 , the company merged smartbank and cornerstone community bank together , with smartbank surviving the merger . mergers and acquisitions merger of legacy smartfinancial and cornerstone bancshares on june 18 , 2015 , the shareholders of the legacy smartfinancial approved a merger with cornerstone bancshares , inc. ( โ cornerstone โ ) ticker symbol โ csbq , โ the one bank holding company of cornerstone community bank , which became effective august 31 , 2015. legacy smartfinancial shareholders received 1.05 shares of cornerstone common stock in exchange for each share of the legacy smartfinancial common stock . after the merger , shareholders of legacy smartfinancial owned approximately 56 percent of the outstanding common stock of the combined entity on a fully diluted basis , after taking into account the exchange ratio and new shares issued as part of a capital raise through a private placement . while cornerstone was the acquiring entity for legal purposes , the merger was accounted for as a reverse merger using the acquisition method of accounting , in accordance with the provisions of fasb asc 805-10 business combinations . under this guidance , for accounting purposes , legacy smartfinancial is considered the acquirer in the merger , and as a result the historical financial statements of the combined entity are the historical financial statements of legacy smartfinancial . the assets and liabilities of cornerstone as of the effective date of the merger were recorded at their respective estimated fair values and combined with those of legacy smartfinancial . the excess of the purchase price over the net estimated fair values of the acquired assets and liabilities was allocated to identifiable intangible assets with the remaining excess allocated to goodwill . in periods following the merger , the financial statements of the combined entity included the results attributable to cornerstone community bank beginning on the date the merger was completed . as a result of the merger company assets increased approximately $ 450 million and liabilities increased approximately $ 421 million . the merger had a significant impact on all aspects of the company 's financial statements , and as a result , financial results after the merger may not be comparable to financial results prior to the merger . acquisition of assets and liabilities of the former gulf south private bank on october 19 , 2012 , smartbank assumed all of the deposits and certain other liabilities and acquired certain assets of gulfsouth private bank ( โ gulfsouth โ ) , headquartered in destin , florida from the fdic pursuant to the terms of a purchase and assumption agreement . as a result of the transaction the company acquired approximately $ 141 million in assets and $ 136 million in liabilities . business overview the company 's business model consists of leveraging capital into assets funded by liabilities . as a general rule capital can be leveraged approximately ten times . the primary source of revenue is interest income from earning assets , namely loans and securities . these assets are funded mainly by deposits . the company seeks to maximize net interest income , the difference between interest received on earning assets and the amount of interest paid on liabilities . net interest income to average assets is a key ratio that measures the profitability of the assets of the company . noninterest income is the second source of revenue and primarily consists of customer service fees , gains on the sales of securities and loans , and other noninterest income . noninterest income to average assets is a ratio that reflects our effectiveness in generating these other forms of revenue . the company incurs noninterest expenses as result of the operations of the business . primary expenses are those of employees , occupancy and equipment , professional services , and data processing . story_separator_special_tag salaries and employee benefits , occupancy and equipment , data processing , and other non-interest expense categories in 2016 were all higher as a result of twelve full months of post-merger expense compared to four months in 2015. in 2016 , the reduction of professional services was due the absence of merger expenses . in 2017 , we expect non-interest expense to average assets to decrease as a result of assets growing faster than expenses . 2015 compared to 2014 non-interest expense totaled $ 23.2 million in 2015 compared to $ 16.4 million in 2014 . noninterest expense to average assets increased from 3.26 percent in 2014 to 3.39 percent in 2015 . salaries and employee benefits , occupancy and equipment , data processing , and other non-interest expense categories in 2015 were all significantly impacted by the merger which added employees , branches and other facilities , and equipment to the company 's expense base . in addition in 2015 there were $ 1.3 million in merger and conversion costs , which included professional fees and other expenses required to close the merger as well as costs to convert data processing to the company 's integrated platform , and $ 536 thousand in expenses from the newly established residential mortgage unit . taxes 2016 compared to 2015 in 2016 , income tax expense totaled $ 3.4 million compared to $ 1.6 million in 2015 . income taxes to average assets were 0.33 percent compared to 0.24 percent in the prior year . taxes in the prior year were elevated by $ 0.3 million due to nondeductible merger and acquisition expenses resulting in an effective tax rate of about 52 percent compared to about 37 percent in 2016 . in 2017 , we expect our effective tax rate to be in the range of 37 percent . 2015 compared to 2014 in 2015 , income tax expense totaled $ 1.6 million compared to $ 1.1 million in 2014. income taxes to average assets were 0.24 percent compared to 0.22 percent in the prior year . taxes were elevated by $ 0.3 million due to merger and acquisition expenses which were nondeductible resulting in an effective tax rate of about 52 percent compared to about 38 percent in 2014. loan portfolio composition the company had total net loans outstanding , including organic and purchased loans , of approximately $ 808.3 million at december 31 , 2016 , and $ 723.4 million million at december 31 , 2015 . loans secured by real estate , consisting of commercial or residential property , are the principal component of our loan portfolio . we do not generally originate traditional long-term residential mortgages for our portfolio but we do originate and hold traditional second mortgage residential real estate loans , adjustable rate mortgages and home equity lines of credit . even if the principal purpose of the loan is not to finance real estate , when reasonable , we attempt to obtain a security interest in the real estate in addition to any other available collateral to increase the likelihood of ultimate repayment or collection of the loan . organic loans our net organic loans increased $ 160.4 million , or 35.5 percent to $ 611.9 million at december 31 , 2016 , from december 31 , 2015 , as we continue to originate well-underwritten loans . our goal of streamlining the credit process has improved our efficiency and is a competitive advantage in many of our markets . in addition , continued training and recruiting of experienced loan officers has provided us with the opportunity to close larger and more complex deals than we historically have . finally , the overall business environment continues to rebound from recessionary conditions . organic loans include loans which were originally purchased non-credit impaired loans but have been renewed . purchased loans purchased non-credit impaired loans of $ 169.2 million at december 31 , 2016 were down $ 64.4 million from december 31 , 2015 as a result of pay-downs and renewals . during 2016 , our purchased credit impaired ( โ pci โ ) loans decreased by $ 11.1 million to $ 27.2 million at december 31 , 2016 . the activity within the purchased credit impaired loans will be impacted by how quickly these loans are resolved and or our future acquisition activity . prior to the gulfsouth transaction in 2012 the company had no purchased loans . 33 the following tables summarize the composition of our loan portfolio for the periods presented ( dollars in thousands ) : replace_table_token_6_th replace_table_token_7_th replace_table_token_8_th 34 replace_table_token_9_th replace_table_token_10_th loan portfolio maturities the following table sets forth the maturity distribution of our loans , including the interest rate sensitivity for loans maturing after one year . replace_table_token_11_th nonaccrual , past due , and restructured loans loans are considered past due when the contractual amounts due with respect to principal and interest are not received within 30 days of the contractual due date . loans are generally classified as nonaccrual if they are past due for a period of 90 days or more , unless such loans are well secured and in the process of collection . if a loan or a portion of a loan is classified as doubtful or as partially charged off , the loan is generally classified as nonaccrual . loans that are on a current payment status or past due less than 90 days may also be classified as nonaccrual if repayment in full of principal and interest is in doubt . loans may be returned to accrual status when all principal and interest amounts contractually due are reasonably assured of repayment within an acceptable period of time , and there is a sustained period of repayment performance of interest and principal by the borrower in accordance with the contractual terms . 35 pci loans with common risk characteristics are grouped in pools at acquisition .
| analysis of results of operations 2016 compared to 2015 net income was $ 5.8 million in 2016 , which was up substantially from $ 1.5 million in 2015 . net income available to common shareholders was $ 4.8 million , or $ 0.78 per diluted common share , in 2016 , an increase from $ 1.4 million , or $ 0.32 per diluted common share , in 2015 . net interest income to average assets of 3.77 percent in 2016 was up from 3.66 percent in 2015 , with the increase as a result of a higher percentage of average earning assets to average total assets . noninterest income to average assets of 0.41 percent was up from 0.33 percent in 2015 as a result of increases in customer service fees , higher gains on the sale of securities , gains on the sale of loans and other assets compared to losses in 2015 , and higher other noninterest income . noninterest expense to average assets decreased from 3.39 percent in 2015 to 3.20 percent in 2016 due to realized efficiencies of scale and the absences of merger and conversion related costs . the resulting pretax income to average assets was 0.95 percent in 2016 compared to 0.46 percent in 2015 . finally , in 2016 the effective tax rate was 36.70 percent , which was down substantially from 2015 when taxes were elevated due to merger and acquisition expenses which were nondeductible .
| 2,600 |
in some cases , you can identify these โ forward-looking statements โ by words like โ may , โ โ will , โ โ should , โ โ expects , โ โ plans , โ โ anticipates , โ โ believes , โ โ estimates , โ โ predicts , โ โ intends , โ โ potential โ or โ continue โ or the negative of those words and other comparable words . you should be aware that these statements only reflect our current predictions and beliefs . these statements are subject to known and unknown risks , uncertainties and other factors , and actual events or results may differ materially . important factors that could cause our actual results to be materially different from the forward-looking statements are disclosed throughout this report , particularly under the heading โ risk factors โ in item 1a of part i of this annual report . you should review these risk factors for a more complete understanding of the risks associated with an investment in our securities . we undertake no obligation to revise or update any forward-looking statements . the following discussion and analysis should be read in conjunction with our โ selected consolidated financial data โ and consolidated financial statements and notes thereto included elsewhere in this annual report . overview we are a network specialist focused on networking solutions that enable converged , next-generation architectures , optimized to handle the broad array of high-bandwidth communications services relied upon by business and consumer end users . we provide equipment , software and services that support the transport , switching , aggregation , service delivery and management of voice , video and data traffic on communications networks . our converged packet optical , packet networking , optical transport and software products are used , individually or as part of an integrated , programmable solution , in networks operated by communications service providers , cable operators , governments , enterprises , research and education institutions , content service providers and other network operators across the globe . our products allow network operators to scale capacity , increase transmission speeds , allocate network traffic and deliver services to end users . our network solutions also include an integrated software suite that provides network and service management capabilities that unify our product portfolio , facilitating automation and software-defined programmability to enable efficient service delivery . to complement our product portfolio , we offer a broad range of network transformation solutions and related support services that help our customers design , optimize , deploy , manage and maintain their networks . we believe that the close , collaborative partnership with customers enabled by our engagement model and services offering is an important component of our network specialist approach and a significant differentiator for ciena with our customers . rapid proliferation of and reliance by end users upon communications services and devices , increased mobility and growth in cloud-based services have fundamentally affected the demands placed upon communications networks and how they are designed . network operators face a challenging and rapidly changing environment that requires that their network infrastructures be robust enough to address increasing capacity needs and be flexible enough to adapt to new application and service offerings . network operators are competing to distinguish their service offerings to end users and generate revenue , while managing the costs required to implement and maintain their networks . to address these business , infrastructure and service delivery challenges , we believe network operators need a flexible infrastructure that can be adapted to support a variety of applications and controlled through the use of software . our op n architecture is designed to meet these challenges by providing increased scalability and programmability , as well as network-level software applications to control and configure the network dynamically . through this network approach , we seek to enable high-capacity , configurable infrastructures that can adapt to the changing needs of end-users and the applications that they require , while providing flexible interfaces for the integration of computing , storage and network resources . by increasing network flexibility for service delivery , reducing required network elements and enabling increased scale at reduced cost , our solutions simplify networks . at the same time , our approach facilitates the creation of new service offerings , creating business and operational value for our customers . our op n architecture , which underpins our solutions offering and guides our research and development strategy , is described more fully in the โ strategy โ section of the description of our business under item 1 of part 1 of this annual report . our quarterly reports on form 10-q , annual reports on form 10-k and current reports on form 8-k filed with the sec are available through the sec 's website at www.sec.gov or free of charge on our website as soon as reasonably practicable after we file these documents . we routinely post the reports above , recent news and announcements , financial results and other information about ciena that is important to investors in the `` investors '' section of our website at www.ciena.com . investors are encouraged to review the โ investors โ section of our website because , as with the other disclosure channels that we use , from time to time we may post material information on that site that is not otherwise disseminated by us . 33 market opportunity and strategy we believe that the shift that is underway in network architectures to next-generation , converged infrastructures represents significant , long-term opportunities for our business . we believe that market trends underlying this shift , including the proliferation of devices running mobile web applications , the prevalence of video applications , the increase in machine-to-machine connections , and the shift of enterprise and consumer applications to cloud-based or virtualized network environments , are indicative of increasing use and dependence by consumers and enterprises upon a growing variety of broadband applications and services . story_separator_special_tag the 2020 notes also provide us with the option , at our election , to convert the 2020 notes in whole or in part , prior to maturity , into the underlying common stock , provided the trading price of our common stock exceeds $ 26.50 ( or 130 % of the then applicable conversion price ) for the required measurement period . if we elect to convert the 2020 notes on or before maturity , holders would receive a make-whole premium payable in ciena common stock , or its cash equivalent , at our election . the 2020 notes will mature on december 15 , 2020. following these private exchange offer transactions , $ 187.5 million in aggregate principal amount of the 2015 notes remained outstanding with terms unchanged . we believe that the extension of maturity enabled by these exchange transactions has strengthened our balance sheet and provided enhanced financial flexibility . see note 12 to our consolidated financial statements included in item 8 of part ii of this report for a summary of the 2020 notes , including an explanation of the $ 28.6 million loss on the extinguishment of a portion of the 2015 notes and the separate accounting for the debt and equity components of the 2020 notes . financial results for fourth quarter of fiscal 2013 revenue for the fourth quarter of fiscal 2013 was $ 583.4 million , representing a sequential increase of 8.4 % from $ 538.4 million in the third quarter of fiscal 2013 . revenue-related details reflecting sequential changes from the third quarter of fiscal 2013 include : product revenue for the fourth quarter of fiscal 2013 increased by $ 39.0 million , primarily reflecting an increase of $ 48.9 million in converged packet optical and an increase of $ 4.0 million in software . these increases were partially offset by a decrease of $ 13.6 million in optical transport . service revenue for the fourth quarter of fiscal 2013 increased by $ 6.0 million . revenue from the united states for the fourth quarter of fiscal 2013 was $ 326.2 million , a decrease from $ 339.5 million in the third quarter of fiscal 2013 . international revenue for the fourth quarter of fiscal 2013 was $ 257.2 million , an increase from $ 198.9 million in the third quarter of fiscal 2013 . as a percentage of revenue , international revenue was 44.1 % during the fourth quarter of fiscal 2013 , an increase from 37.0 % during the third quarter of fiscal 2013 . for the fourth quarter of fiscal 2013 , one customer accounted for greater than 10 % of revenue , representing 16.5 % of total revenue . there were two customers that each accounted for greater than 10 % of revenue in the third quarter of fiscal 2013 , representing an aggregate of 31.8 % of total revenue . gross margin for the fourth quarter of fiscal 2013 was 39.7 % , a decrease from 42.4 % in the third quarter of fiscal 2013 . gross margin for the fourth quarter of fiscal 2013 was largely impacted by the recognition of converged packet optical revenue for certain large international network builds with tier one customers , primarily in our caribbean and latin american region , with initial deployments including a higher mix of lower margin common equipment . operating expense was $ 232.1 million for the fourth quarter of fiscal 2013 , an increase from $ 213.4 million in the third quarter of fiscal 2013 . fourth quarter operating expense reflects increases of $ 11.9 million in selling and marketing expense and $ 7.4 million in research and development expense . increased selling and marketing expense was primarily due to increased variable compensation expense resulting from strong order flow during fiscal 2013. as expected , increased research and development expense also reflects development costs relating to certain planned activities , the timing of which moved from the third to the fourth fiscal quarter of 2013. in spite of the increased revenue in the fourth quarter of fiscal 2013 , our lower margin and increased operating expense as described above resulted in a loss from operations for the fourth quarter of fiscal 2013 of $ 0.4 million , as compared to a $ 14.8 million income from operations during the third quarter of fiscal 2013 . our net loss for the fourth quarter of fiscal 2013 was 35 $ 9.8 million , or $ 0.09 per share . this compares to a net loss of $ 1.2 million or $ 0.01 per share , for the third quarter of fiscal 2013 . we generated $ 3.6 million in cash from operations during the fourth quarter of fiscal 2013 , consisting of $ 45.5 million provided by net losses adjusted for non-cash charges , partially offset by a $ 41.9 million use of cash related to changes in working capital . we generated $ 42.0 million in cash from operations during the third quarter of fiscal 2013 , consisting of $ 53.9 million from net losses adjusted for non-cash charges , partially offset by an $ 11.9 million use of cash related to changes in working capital . as of october 31 , 2013 , we had $ 346.5 million in cash and cash equivalents , $ 125.0 million of short-term investments in u.s. treasury securities and commercial paper and $ 15.0 million of long-term investments in u.s. treasury securities . this compares to $ 378.2 million in cash and cash equivalents , $ 100.0 million of short-term investments in u.s. treasury securities and $ 15.0 million of long-term investments in u.s. treasury securities at july 31 , 2013 and $ 642.4 million in cash and cash equivalents and $ 50.1 million of short-term investments in u.s. treasury securities at october 31 , 2012 . as of october 31 , 2013 , we had 4,754 employees , an increase from 4,680 as of july 31 , 2013 and an increase from 4,481 and 4,339 at october 31 , 2012 and 2011 , respectively .
| consolidated results of operations operating segments for the reasons described in `` overview '' above , during the first quarter of fiscal 2013 , ciena reorganized its internal organizational structure and the management of its business into the following new operating segments : converged packet optical โ includes networking solutions optimized for the convergence of coherent optical transport , otn switching and packet switching . these platforms enable automated packet-optical infrastructures that create and efficiently allocate high-capacity bandwidth for the delivery of a wide variety of enterprise and consumer-oriented network services . products in this segment include the 6500 packet-optical platform featuring ciena 's wavelogic coherent optical processors . products also include ciena 's family of coredirectorยฎ multiservice optical switches , its 5430 reconfigurable switching system and its otn configuration for the 5410 reconfigurable switching system . these products include multiservice , multi-protocol switching systems that consolidate the functionality of an add/drop multiplexer , digital cross-connect and packet switch into a single , high-capacity intelligent switching system . these products address both the core and metro segments of communications networks and support key managed services , ethernet/tdm private line , triple play and ip services . this segment also includes sales of operating system software and enhanced software features embedded in each of these products . revenue from this segment is included in product revenue on the consolidated statement of operations . packet networking โ principally includes ciena 's 3000 family of service delivery switches and service aggregation switches , the 5000 series of service aggregation switches , and its ethernet packet configuration for the 5410 service aggregation switch . these products support the access and aggregation tiers of communications networks and have principally been deployed to support wireless backhaul infrastructures and business data services . employing sophisticated , carrier-grade ethernet switching technology , these products deliver quality of service capabilities , virtual local area networking and switching functions , and carrier-grade operations , administration , and maintenance features .
| 2,601 |
โ business overview โ cubic is a technology-driven , market-leading global provider of innovative , mission-critical solutions that reduce congestion and increase operational readiness and effectiveness through superior situational understanding . cubic designs , integrates and operates systems , products and services focused in the transportation , command , control , communication , computers , intelligence , surveillance and reconnaissance ( c4isr ) , and training markets . we offer integrated payment and information systems , expeditionary communications , cloud-based computing and intelligence delivery , as well as state-of-the-art training and readiness solutions . in recent history we 've managed our business in three business segments : cubic transportation systems ( cts ) , cubic mission solutions ( cms ) , and cubic global defense systems ( cgd ) . in the fourth quarter of fiscal 2020 we combined our cms and cgd segments to form a new cubic mission and performance solutions ( cmps ) segment . this new streamlined organization structure is designed to leverage technologies , enhance collaboration and customer intimacy , reduce complexity and cost , and increase organizational efficiency . cmps will continue to deliver solutions to c4isr and training customers worldwide . notwithstanding this realignment , we are still required to report our segment financial results based upon our legacy reportable business segments . โ story_separator_special_tag style= '' visibility : hidden ; '' > โ unallocated corporate and other costs were $ 55.6 million in 2020 compared to $ 21.8 million in 2019. the change in unallocated corporate and other costs was driven by a $ 32.5 million gain recognized in 2019 related to the sale of land and buildings in san diego and orlando . excluding the gain on sale , unallocated corporate and other costs increased by $ 1.4 million in 2020 . โ interest and dividend income and interest expense : interest and dividend income was $ 7.5 million in 2020 compared to $ 6.5 million in 2019. the increase in interest income was due to the interest income recorded on higher balances of our long-term contracts financing receivables . interest expense was $ 27.7 million in 2020 compared to $ 20.5 million in 2019. the increase in interest expense was due to higher average debt balances in 2020 primarily as a result of the completion of our acquisitions of pixia and delerrok in january 2020 , as well an increase in the average outstanding non-recourse debt balance of our consolidated variable interest entity ( โ vie โ ) . the 90 % noncontrolling interest in the net income ( loss ) of the consolidated vie , which includes the interest income and expense of such vie , is added back to our net income ( loss ) to arrive at net income ( loss ) attributable to cubic . โ loss on extinguishment of debt : in 2020 , we repaid and extinguished our senior unsecured notes which resulted in a $ 16.1 million loss on extinguishment of debt . see the โ liquidity and capital resources โ section below for further discussion . โ other income ( expense ) : other income ( expense ) netted to expense of $ 28.8 million in 2020 and $ 20.0 million in 2019. c hanges in our non-operating expenses are primarily driven by the fair value of an interest rate swap held by our consolidated vie , which recognized losses of $ 18.7 million and $ 21.6 million in 2020 and 2019 , respectively . the 90 % noncontrolling interest in the net income ( loss ) of the consolidated vie , including the vie 's loss on its interest rate swap , is added back to our net income ( loss ) to arrive at net income ( loss ) attributable to cubic . the remaining non-operating expense in 2020 was caused primarily by the impact of foreign currency exchange rate changes on cash advances to our foreign subsidiaries that are not hedged . โ income tax provision : our income tax benefit totaled $ 6.4 million ( effective tax rate of 186 % ) for fiscal 2020 , compared to an income tax provision of $ 11.0 million ( effective tax rate of 21 % ) for fiscal 2019. the fiscal 2020 tax provision primarily resulted from tax on foreign earnings , offset by $ 18.6 million of tax benefits in connection with acquisitions involving significant u.s. deferred tax liabilities and the ability to monetize acquired net operating losses which allowed for a subsequent release of deferred tax valuation allowance . the fiscal 2019 tax provision primarily resulted from tax on foreign earnings and state income tax , partially offset by $ 6.6 million of tax benefits in connection with acquisitions involving significant u.s. deferred tax liabilities which allowed for a subsequent release of deferred tax valuation allowance . โ until we re-establish a pattern of continuing profitability , in accordance with the applicable accounting guidance , u.s. income tax expense or benefit related to the recognition of deferred tax assets in the consolidated statement of operations 38 for future periods will be offset by decreases or increases in the valuation allowance with no net effect on the consolidated statement of operations . โ as of september 30 , 2020 , a total valuation allowance of $ 59.8 million has been established against u.s. federal deferred tax assets , certain state and foreign operating losses and other state and foreign assets . during fiscal 2020 , the valuation allowance decreased by $ 9.3 million , of which $ 9.0 million was recorded as a net tax benefit in our consolidated statement of operations , offset by amounts recorded through acquisition accounting , retained earnings and other components of income . we will continue to assess the need for a valuation allowance on deferred tax assets and should circumstances change it is possible the valuation allowance , or a portion thereof , will be reversed . โ net income ( loss ) from continuing operations attributable to cubic : our net loss from continuing operations attributable to cubic was $ 3.7 story_separator_special_tag โ operating income : the cms operating loss was $ 26.7 million in 2020 compared to operating income of $ 7.8 million in 2019. the operating loss was driven by lower deliveries of expeditionary satellite communications products , incremental investments in technologies being developed for certain secure communications contracts , higher r & d expense , and operating losses incurred by newly acquired businesses . operating losses incurred by businesses acquired by cms during 2020 and 2019 totaled $ 19.0 million in 2020 , compared to $ 6.9 million of operating losses in 2019. these operating losses were driven by acquisition-related expenses , including amortization of intangible assets , totaling $ 27.2 million in 2020 , compared to $ 4.2 million in 2019 . โ adjusted ebitda : cms adjusted ebitda decreased 18 % to $ 28.2 million in 2020 compared to $ 34.4 million in 2019. the decrease in cms adjusted ebitda was primarily due to the same factors that drove the change in operating income ( loss ) described above , excluding amortization of purchased intangibles and acquisition-related expenses . โ 40 cubic global defense โ replace_table_token_8_th โ โ sales : cgd sales decreased 6 % to $ 298.2 million in 2020 compared to $ 317.9 million in 2019. the decrease in sales was due to decreased work on ground combat training system and digital solution contracts based primarily on the timing of delayed orders , partially offset by an increase in air combat training systems work . the average exchange rates between the prevailing currencies in our foreign operations and the u.s. dollar resulted in a decrease in cgd sales of $ 1.2 million for 2020 compared to 2019 . โ operating income : cgd operating income of $ 22.9 million in 2020 was essentially flat with operating income of $ 23.0 million in 2019. during 2020 , cgd generated higher operating income from higher system development work on air combat training systems , decreased r & d expenditures and lower sg & a costs as a result of productivity and cost saving initiatives were offset by lower income from digital and ground combat training system development contracts . the average exchange rates between the prevailing currency in our foreign operations and the u.s. dollar had no significant impact on cgd operating income between 2019 and 2020 . โ adjusted ebitda : cgd adjusted ebitda was $ 32.9 million in 2020 compared to $ 32.8 million in 2019. the change in adjusted ebitda was primarily driven by the same factors that drove the change in operating income described above . โ โ fiscal 2019 results compared with fiscal 2018 results โ consolidated results โ replace_table_token_9_th โ note on comparability of fiscal 2019 and 2018 results : we adopted accounting standards update ( asu ) 2014-09 , revenue from contracts with customers ( commonly known as accounting standards codification ( asc 606 ) , effective october 1 , 2018 using the modified retrospective transition method . in accordance with the modified retrospective transition method , 2019 is presented under asc 606 , while 2018 is presented under asc 605 , revenue recognition , the accounting standard in effect for periods ending prior to october 1 , 2018 . โ 41 the table below quantifies the impact of adopting asc 606 on sales , operating income and net income from continuing operations attributable to cubic , for the year ended september 30 , 2019 ( in millions ) : โ replace_table_token_10_th โ โ sales : our sales increased 24 % to $ 1.496 billion in 2019 from $ 1.203 billion in 2018. the increases in sales for cts and cms of 27 % and 59 % , respectively , were partially offset by a decrease in cgd sales of 2 % . sales from businesses we acquired in 2019 and 2018 amounted to $ 83.3 million and $ 0.6 million for 2019 and 2018 , respectively . the average exchange rates between the prevailing currencies in our foreign operations and the u.s. dollar between 2018 and 2019 had a negative impact on sales of $ 25.3 million , which was 2 % of 2019 sales . see the segment discussions below for further analysis of segment sales . โ gross margin : our gross margin percentage from product sales was 28 % in 2019 , compared to 33 % in 2018. the decrease in product sales gross margins was primarily due to sales mix . the gross margin on service sales was 31 % in 2019 compared to 27 % in 2018. the increase in service sales gross margins was primarily caused by an increase in service sales by cgd , which has a higher average margin percentage on services sales than our other business segments . โ selling , general , and administrative : sg & a expenses increased to $ 270.1 million in 2019 , compared to $ 258.6 million in 2018. however , as a percentage of sales sg & a decreased to 18 % in 2019 compared to 22 % in 2018. the increase in sg & a expense was primarily due to $ 29.2 million of sg & a expenses incurred by three businesses we acquired in 2019 including the impacts of business acquisition accounting which is further described in the segment discussions below . these increases in sg & a expenses were partially offset by the results of cost reduction activities undertaken in 2019 as well as reduced strategic and it system resource expenses which totaled $ 8.2 million in 2019 compared to $ 24.1 million in 2018 . โ research & development : company-sponsored r & d spending totaled $ 50.1 million in 2019 compared to $ 52.4 million in 2018 . for 2019 there was a shift in the mix of r & d expenditures between our business segments with cms increasing its portion of our total r & d spend driven by secure communications and isr-as-a-service technologies and cts and cgd decreasing .
| fiscal 2020 highlights โ โ sales of $ 1.476 billion , down 1 % year-over-year โ net loss from continuing operations attributable to cubic of $ 3.7 million , or $ 0.12 per share , compared to net income from continuing operations attributable to cubic of $ 51.1 million , or $ 1.67 per share in fiscal 2019 ; prior year included a $ 32.5 million gain on sale of fixed assets โ adjusted eps of $ 3.32 , up 6 % year-over-year โ record full year adjusted ebitda of $ 158.3 million , up 8 % year-over-year ; adjusted ebitda margin of 10.7 % increased 90 basis points year-over-year โ year-end backlog of $ 3.7 billion , up 8 % year-over-year ; book-to-bill ratio of 1.1 in all segments 35 โ โ covid-19 update โ the covid-19 pandemic has presented challenges and impacts on each of our businesses , including delays of customer orders , slowdown of certain projects and impacts due to travel restrictions and remote work . we have taken proactive measures in order to reduce the potential impacts of the pandemic . to date we have not experienced significant disruptions in our supply chain , nor have we experienced any significant disruptions at our manufacturing facilities . โ the vast majority of revenue from our cts businesses is earned under fixed-price contracts . however , approximately 2 % of our annual revenue is directly tied to the level of transit ridership . while transit ridership levels have improved from the lows of the pandemic , they remain significantly below normal levels impacting our transit agency customer 's revenue , with uncertainty surrounding the pace and timing of recovery . while we continue to believe that cts 's backlog is largely insulated from the impacts of covid-19 due to the critical service of fare collection , there could be potential delays in the award of new business .
| 2,602 |
the forward-looking statements contained herein include , without limitation , statements concerning our ability to execute on our future growth strategies , our ability to achieve intended benefits from acquisitions , future revenue sources and concentration , gross profit margins , selling and marketing expenses , capital expenditures , general and administrative expenses , capital resources , new stores , retail fleet optimization plan and anticipated cost savings , additional financings or borrowings and additional losses and are subject to risks and uncertainties including , but not limited to , those discussed in this report that could cause actual results to differ materially from the results contemplated by these forward-looking statements . we also urge you to carefully review the risk factors set forth in โ item 1a . โ risk factors. โ overview our business we are a global fashion luxury group of industry-leading fashion luxury brands led by a world-class management team and renowned designers . the michael kors brand was launched over 35 years ago by michael kors , whose vision has taken the company from its beginnings as an american luxury sportswear house to a global accessories , footwear and apparel company with a global distribution network that has presence in over 100 countries through company-operated retail stores and e-commerce sites , leading department stores , specialty stores and select licensing partners . on november 1 , 2017 , we completed the acquisition of jimmy choo and its subsidiaries ( collectively , โ jimmy choo โ ) . the combination of michael kors and jimmy choo brought together two iconic brands that are industry leaders in style and trend and created a global fashion luxury group with a diversified geographic and product portfolio , strengthening the company 's future revenue growth opportunities . michael kors is a highly recognized luxury fashion brand in the americas and europe with accelerating brand awareness in other international markets . the michael kors ( โ mk โ ) brand features distinctive designs , materials and craftsmanship with a jet-set aesthetic that combines stylish elegance and a sporty attitude . michael kors offers three primary collections : the michael kors collection luxury line , the michael michael kors accessible luxury line and the michael kors mens line . the michael kors collection establishes the aesthetic authority of the entire brand and is carried by many of our retail stores , our e-commerce sites , as well as in the finest luxury department stores in the world . michael michael kors has a strong focus on accessories , in addition to offering footwear and apparel , and addresses the significant demand opportunity in accessible luxury goods . more recently , we have begun to grow our men 's business in recognition of the significant opportunity afforded by the michael kors brand 's established fashion authority and the expanding men 's market . taken together , our michael kors collections target a broad customer base while retaining our premium luxury image . since its inception , jimmy choo has offered a distinctive , glamorous and fashion-forward product range , enabling it to develop into a leading global luxury accessories brand , whose core product offering is women 's luxury shoes , complemented by accessories , including handbags , small leather goods , scarves and belts , as well as a growing men 's luxury shoe business . in addition , certain products such as fragrances , sunglasses and eyewear are produced under product licensing agreements . jimmy choo 's design team is led by sandra choi , who has been the creative director for the brand since its inception in 1996. jimmy choo products are unique , instinctively seductive and chic . the brand offers classic and timeless luxury products , as well as innovative products that are intended to set and lead fashion trends . the jimmy choo brand is represented through its global store network , its e-commerce sites , as well as through the most prestigious department and specialty stores worldwide . prior to the third quarter of fiscal 2018 , we had three reportable segments for our michael kors brand : retail , wholesale and licensing . with the acquisition of jimmy choo , the company began to operate in four reportable segments , which are as follows : mk retail โ includes sales of michael kors products from 379 retail stores in the americas ( including concessions ) and 450 international retail stores ( including concessions ) in europe and certain parts of asia , as well as from michael kors e-commerce sites in the u.s. , canada , certain parts of europe , china , japan and south korea as of march 31 , 2018 . mk wholesale โ includes wholesale sales of michael kors products through 1,403 department store doors and 875 specialty store doors in the americas and through 1,048 specialty store doors and 218 department store doors internationally as of march 31 , 2018 . mk wholesale also includes revenues from sales of products to michael kors geographic licensees . 30 mk licensing โ includes royalties and advertising contributions earned on licensed products and use of the company 's trademarks , and rights granted to third parties for the right to operate retail stores and or sell the company 's products in certain geographic regions . jimmy choo โ includes worldwide sales of jimmy choo products through 182 retail stores ( including concessions ) and jimmy choo e-commerce sites in the u.s. , certain parts of europe and japan , through 629 wholesale doors , as well as through product and geographic licensing arrangements , as of march 31 , 2018 . certain factors affecting financial condition and results of operations establishing brand identity and enhancing global presence . we intend to grow our international presence through the formation of a global fashion luxury group , bringing together industry-leading fashion luxury brands . story_separator_special_tag as we have a march 31 fiscal year-end , the lower tax rate will be phased in , resulting in a u.s. statutory federal tax rate of approximately 32 % for fiscal 2018 and a 21 % u.s. statutory federal tax rate for fiscal years thereafter . the tax act also adds many new provisions , including changes to bonus depreciation , limits on the deductions for executive compensation and interest expense , a tax on global intangible low-taxed income ( โ gilti โ ) , the base erosion anti-abuse tax ( โ beat โ ) and a deduction for foreign derived intangible income ( โ fdii โ ) . we are still evaluating the impact of these provisions of the tax act , which do not apply until 2019 , and thus , have not adjusted any net deferred tax assets of our foreign subsidiaries for the new tax . as part of the transition to the new territorial tax system , the tax act imposes a tax on the mandatory deemed repatriation of earnings of our foreign subsidiaries . in addition , the reduction of the u.s. statutory federal tax rate will cause us to re-measure our u.s. deferred tax assets and liabilities . in accordance with accounting standards codification ( โ asc โ ) 740 , we recorded the effects of the tax law change during fiscal 2018 , which resulted in a provisional charge of $ 21.2 million , comprised of an estimated deemed repatriation tax charge of $ 3.0 million and an estimated deferred tax charge of $ 18.2 million due to the re-measurement of our net u.s. deferred tax assets . conversely , we realized a $ 6.1 million net benefit for fiscal 2018 due to the corporate tax rate reductions . while the tax act has negatively impacted our results of operations for fiscal 2018 by approximately 200 basis points , the lower corporate rate is expected to result in an ongoing reduction in our effective tax rate . the benefit to our effective tax rate for fiscal 2019 is expected to be approximately 300 to 400 basis points , which we plan to reinvest in our business . in december 2017 , the sec issued staff accounting bulletin ( โ sab โ ) 118 to provide guidance for companies that would allow for a measurement period of up to one year after the enactment date of the tax act to finalize the recording of the related tax impacts . the final transition impacts of the tax act may differ from the above estimate , possibly materially due to , among other things , changes in interpretations of the tax act , any legislative action to address questions that arise because of the tax act , or any changes in accounting standards for income taxes or related interpretations in response to the tax act . our estimates are provisional and subject to adjustment in fiscal 2019 under the measurement period allowed by the sec . the company expects to finalize its accounting related to the impacts of the tax act on the one-time transition tax liability , deferred taxes , valuation allowances , state tax considerations , and any remaining basis differences in our foreign subsidiaries during fiscal 2019. as we complete our analysis of the tax act , collect and prepare necessary data and interpret any additional guidance issued by the united states department of the treasury , the internal revenue service and other standard-setting bodies , we may make adjustments during fiscal 2019 to the provisional amounts recorded in fiscal 2018 . critical accounting policies the preparation of financial statements in conformity with accounting principles generally accepted in the united states ( โ u.s . gaap โ ) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements , as well as the reported amounts of revenue and expenses during the reporting period . critical accounting policies are those that are the most important to the portrayal of our results of operations and financial condition and that require our most difficult , subjective and complex judgments to make estimates about the effect of matters that are inherently uncertain . in applying such policies , we must use certain assumptions that are based upon on our informed judgments , assessments of probability and best estimates . estimates , by their nature , are subjective and are based on analysis of available information , including current and historical factors and the experience and judgment of management . we evaluate our assumptions and estimates on an ongoing basis . while our significant accounting policies are detailed in note 2 to the accompanying financial statements , our critical accounting policies are discussed below and include revenue recognition ( including deferred revenue associated with our loyalty program ) , inventories , impairment of long-lived assets , goodwill , share-based compensation , derivatives and income taxes . 32 revenue recognition revenue is recognized when there is persuasive evidence of an arrangement , delivery has occurred , the price has been fixed and determinable and collectability is reasonably assured . we recognize retail store revenue upon sale of our products to retail consumers , net of estimated returns . revenue from sales through our e-commerce sites is recognized at the time of delivery to the customer , reduced by an estimate of returns . wholesale revenue is recognized net of estimates for sales returns , discounts , markdowns and allowances , after merchandise is shipped and title and risk of loss are transferred to our wholesale customers . to arrive at net sales for retail , gross sales are reduced by actual customer returns , as well as by a provision for estimated future customer returns , which is based on management 's review of historical and current customer returns .
| results of operations comparison of fiscal 2018 with fiscal 2017 the following table details the results of our operations for fiscal 2018 and fiscal 2017 and expresses the relationship of certain line items to total revenue as a percentage ( dollars in millions ) : replace_table_token_11_th _ nm not meaningful . ( 1 ) includes store closure costs recorded in connection with the retail fleet optimization plan , as well as transaction and transition costs recorded in connection with our acquisitions of the jimmy choo and mkhkl businesses ( see note 3 and note 9 to the accompanying consolidated financial statements ) . total revenue total revenue increased $ 224.9 million , or 5.0 % , to $ 4.719 billion for the fiscal year ended march 31 , 2018 , compared to $ 4.494 billion for the fiscal year ended april 1 , 2017 , which included net favorable foreign currency effects of $ 64.3 million primarily related to the strengthening of the euro , the chinese renminbi and the canadian dollar , partially offset by the weakening of the japanese yen against the u.s. dollar in fiscal 2018 , as compared to fiscal 2017 . on a constant currency basis , our total revenue increased $ 160.6 million , or 3.6 % . total revenue for fiscal 2018 included approximately $ 222.6 million of incremental revenue attributable to jimmy choo , which was acquired and consolidated into the company 's results of operations effective november 1 , 2017 . the increase in revenue from our michael kors retail business was largely offset by the decrease in michael kors wholesale revenue , as further described below . 41 the following table details revenues for our four business segments ( dollars in millions ) : replace_table_token_12_th mk retail revenue from our michael kors retail stores increased $ 139.7 million , or 5.4 % , to $ 2.712 billion for fiscal 2018 , compared to $ 2.572
| 2,603 |
form 8-k filed on december 03 , 2018 and incorporated herein by reference 10.22 consulting services agreement dated november 30 , 2018 , filed as exhibit 10.2 to the current report on form 8-k filed on december 03 , 2018 and incorporated herein by story_separator_special_tag the following discussion and analysis of the results of our operations and financial condition should be read in conjunction with our financial statements , and the notes to those financial statements that are included elsewhere in this report . all monetary figures are presented in u.s. dollars , unless otherwise indicated . our management 's discussion and analysis contains not only statements that are historical facts , but also statements that are forward-looking . forward-looking statements are , by their very nature , uncertain and risky . these risks and uncertainties include international , national , and local general economic and market conditions ; our ability to sustain , manage , or forecast growth ; our ability to successfully make and integrate acquisitions ; new product development and introduction ; existing government regulations and changes in , or the failure to comply with , government regulations ; adverse publicity ; competition ; the loss of significant customers or suppliers ; fluctuations and difficulty in forecasting operating results ; change in business strategy or development plans ; business disruptions ; the ability to attract and retain qualified personnel ; the ability to protect technology ; the risk of foreign currency exchange rate ; and other risks that might be detailed from time to time in our filings with the securities and exchange commission . although the forward-looking statements in this report reflect the good faith judgment of our management , such statements can only be based on facts and factors currently known by them . consequently , and because forward-looking statements are inherently subject to risks and uncertainties , the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements . you are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business , financial condition , and results of operations and prospects . overview code chain new continent limited ( formerly known as tmsr holding company limited and jm global holding company , the โ company โ or โ ccnc โ ) , through its subsidiaries and controlled entities , focuses its business in two segments : ( 1 ) coal wholesales and sales of coke , steels , construction materials , mechanical equipment and steel scrap ; and ( 2 ) the research , development and application of internet of things ( iot ) and electronic tokens . the company 's coal and coke wholesale business is carried out by jiangsu rong hai electric power fuel co. , ltd. ( โ rong hai โ ) , an entity contractually controlled by the company . the company 's iot business is carried out wuge network games co. , ltd. ( โ wuge โ ) , an entity contractually controlled by the company . on june 30 , 2020 , the company entered into a share purchase agreement with jiazhen li , former ceo of the company ( the โ buyer โ ) , long liao and chunyong zheng , who are former shareholders of wuhan host , to sell all the equity interest the company held in china sunlong . shengrong wfoe and wuhan host are indirect subsidiaries of china sunlong . as a result , as of june 30 , 2020 , operations of shengrong wfoe and wuhan host have been designated as discontinued operations . 44 key factors that affect operating results our operating subsidiaries are incorporated , and our operations and assets are primarily located , in china . accordingly , our results of operations , financial condition and prospects are affected by china 's economic and regulation conditions in the following factors : ( a ) an economic downturn in china or any regional market in china ; ( b ) economic policies and initiatives undertaken by the chinese government ; ( c ) changes in the chinese or regional business or regulatory environment affecting our customers ; and ( e ) changes in the chinese government policy on industrial solid waste . unfavorable changes could affect demand for services that we provide and could materially and adversely affect the results of operations . although the company has generally benefited from china 's economic growth and the policies to encourage the improvement of reducing of solid waste discharge , the company is also affected by the complexity , uncertainties and changes in the chinese economic conditions and regulations governing the mining industry . our fuel materials , mainly coal , operations are largely affected by the following aspects . first , the prc 's macroeconomic growth is not as fast as expected ; the slowdown of economic growth will affect the demand of the market , and the reduction of coal consumption by enterprises will affect the sales of coal and directly affect our earnings . second , the coal market price fluctuation will also affect our sales revenue ; because jiangsu rong hai has long-term and stable customers , the price fluctuations will affect the cost of purchasing coal and thus affect our revenue . third , the risk of price fluctuation in the shipping industry . the fluctuation of shipping price will also directly affect the fluctuation of coal market price , thus affecting our income . fourth , we have long-term and stable customers and continues to rely on a small number of customers from 2009 to 2019. losing our major customers will have a significant impact on our results of operations . in addition , the payment situation of these customers will be affected by abnormal market changes , which will have a negative impact on our business recovery accounts and cash flow . story_separator_special_tag the company 's revenue streams are primarily recognized at a point in time except for the warranty revenues where the warranty periods are recognized over the warranty period , usually is a period of twelve months . 49 the asu requires the use of a new five-step model to recognize revenue from customer contracts . the five-step model requires that the company ( i ) identify the contract with the customer , ( ii ) identify the performance obligations in the contract , ( iii ) determine the transaction price , including variable consideration to the extent that it is probable that a significant future reversal will not occur , ( iv ) allocate the transaction price to the respective performance obligations in the contract , and ( v ) recognize revenue when ( or as ) the company satisfies the performance obligation . the application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the company records its revenue . upon adoption , the company evaluated its revenue recognition policy for all revenue streams within the scope of the asu under previous standards and using the five-step model under the new guidance and confirmed that there were no differences in the pattern of revenue recognition except its warranty revenues . an entity will also be required to determine if it controls the goods or services prior to the transfer to the customer in order to determine if it should account for the arrangement as a principal or agent . principal arrangements , where the entity controls the goods or services provided , will result in the recognition of the gross amount of consideration expected in the exchange . agent arrangements , where the entity simply arranges but does not control the goods or services being transferred to the customer , will result in the recognition of the net amount the entity is entitled to retain in the exchange . revenue from equipment and systems , revenue from coating and fuel materials , and revenue from trading and others are recognized at the date of goods delivered and title passed to customers , when a formal arrangement exists , the price is fixed or determinable , the company has no other significant obligations and collectability is reasonably assured . such revenues are recognized at a point in time after all performance obligations are satisfied under the new five-step model . in addition , training service revenues are recognized when the services are rendered and the company has no other obligations , and collectability is reasonably assured . these revenues are recognized at a point in time . prior to january 1 , 2018 , the company allowed its customers to retain 5 % to 10 % of the contract price as retainage during the warranty period of 12 months to guarantee product quality . retainage is considered as a payment term included as a part of the contract price , and was recognized as revenue upon the shipment of products . due to nature of the retainage , the company 's policy is to record revenue the full value of the contract without vat , including any retainage , since the company has experienced insignificant warranty claims historically . due to the infrequent and insignificant amount of warranty claims , the ability to collect retainage was reasonably assured and was recognized at the time of shipment . on january 1 , 2018 , upon the adoption of asu 2014-09 ( asc 606 ) , revenues from product warranty are recognized over the warranty period over 12 months . payments received before all of the relevant criteria for revenue recognition are recorded as customer deposits . gross versus net revenue reporting starting from july 2016 , in the normal course of the company 's trading of industrial waste materials business , the company directly purchases the processed industrial waste materials from the company 's suppliers under the company 's specifications and drop ships the materials directly to the company 's customers . the company would inspect the materials at its customers ' site , during which inspection it temporarily assumes legal title to the materials , and after which inspection legal title is transferred to its customers . in these situations , the company generally collects the sales proceed directly from the company 's customers and pay for the inventory purchases to the company 's suppliers separately . the determination of whether revenues should be reported on a gross or net basis is based on the company 's assessment of whether it is the principal or an agent in the transaction . in determining whether the company is the principal or an agent , the company follows the new accounting guidance for principal-agent considerations . since the company is the primary obligor and is responsible for ( i ) fulfilling the processed industrial waste materials delivery , ( ii ) controlling the inventory by temporarily assume legal title to the materials after inspecting the products from our vendors before passing the materials to our customers , and ( iii ) bearing the back-end risk of inventory loss with respect to any product return from the company 's customers , the company has concluded that it is the principal in these arrangements , and therefore report revenues and cost of revenues on a gross basis . 50 recently issue accounting pronouncements in february 2018 , the fasb issued asu 2018-02 , income statement - reporting comprehensive income ( topic 220 ) : reclassification of certain tax effects from accumulated other comprehensive income . the amendments in this update affect any entity that is required to apply the provisions of topic 220 , income statement โ reporting comprehensive income , and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by gaap .
| results of operations year ended december 31 , 2020 as compared to the year ended december 31 , 2019 replace_table_token_2_th revenues the company 's revenue consists of fuel materials revenue and others revenue . total revenues decreased by approximately $ 7.7 million , or approximately 39.5 % , to approximately $ 11.9 million for the year ended december 31 , 2020 , compared to approximately $ 19.6 million for the year ended december 31 , 2019. fuel revenue our fuel revenues decreased by approximately $ 7.7 million , or 40.6 % , to approximately $ 11.3 million for the year ended december 31 , 2020 as compared to approximately $ 19.0 million for the year ended december 31 , 2019. the decrease was mainly due to the reduced sales of ronghai influenced by covid-19 . others revenue our other revenues decreased by approximately $ 37,000 , or 5.9 % , to approximately $ 590,000 for the year ended december 31 , 2020 as compared to approximately $ 630,000 for the year ended december 31 , 2019. the decrease was mainly due to decreased harbor cargo handling revenue of rong hai . cost of revenues the company 's cost of revenues consists of cost of fuel materials , and cost of others . total cost of revenues decreased by approximately $ 8.3 million , or approximately 43.5 % to approximately $ 10.7 million for the year ended december 31 , 2020 , compared to approximately $ 19.0 million for the same period in 2019. our total cost of revenues decrease was attributable to the company 's general decrease in revenue for fuel materials . gross profit the company 's gross profit increased by approximately $ 540,000 or 96.5 % , to approximately $ 560,000 during the year ended december 31 , 2020 , from approximately $ 1.1 million for the year ended december 31 , 2019. this increase was mainly due to the increase in the revenue of wuge .
| 2,604 |
see โ forward-looking statements โ and โ risk factors โ for a discussion on the uncertainties , risks and assumptions associated with these statements as well as any updates to such discussion as may be included in subsequent reports we file with the sec . actual results may differ materially and adversely from those contained in any forward-looking statements . the following discussion includes certain non-gaap financial measures . see โ overviewโnon-gaap financial measures โ for a discussion of non-gaap financial measures and how they are calculated . all dollar amounts in the following discussion are in millions of united states ( โ u.s. โ ) dollars , unless otherwise indicated . overview we are a global beauty company and our vision is to be a new global leader and challenger in the beauty industry . we manufacture , market , sell and distribute branded beauty products , including fragrances , color cosmetics , hair care products and skin & body related products throughout the world . operating and reportable segments our business is organized into three divisions : luxury , consumer beauty and professional beauty , and our operating and reportable segments reflect this divisional structure . certain shared costs and the results of corporate initiatives are managed outside of our three segments by corporate . our organizational structure is product category focused , putting the consumer first , by specifically targeting how and where they shop and what and why they purchase . each division has full end-to-end responsibility to optimize the consumers ' beauty experiences in their relevant categories and channels in this new organizational design and translate this into profitable growth . the operating and reportable segments are : luxury โ primarily focused on prestige fragrances , premium skin care and premium cosmetics ; consumer beauty โ primarily focused on color cosmetics , retail hair coloring and styling products , mass fragrance , mass skin care and body care ; professional beauty โ primarily focused on hair and nail care products for professionals . geographic structure we have determined our geographic regions to be north america ( canada and the u.s. ) , europe and almea ( asia , latin america , the middle east , africa and australia ) . 28 overview we are one of the world 's largest beauty companies , with a purpose to celebrate and liberate the diversity of consumers ' beauty . over the past three years , the transformational acquisition of the p & g beauty business and our other strategic transactions have strengthened and diversified our presence across the countries , categories and channels in which we compete . as we complete the final stages of the p & g beauty business integration , we are focused on rejuvenating our core business and amplifying our growth potential , by supporting and strengthening our brands , developing a stronger innovation pipeline , advancing our end-to-end digital transformation , and expanding our presence in the faster-growing emerging markets . the beauty industry has continued to evolve , driven by increasing consumer desire for immersive shopping experiences , the importance of digital communication for brand building , the expanding role of e-commerce and specialty retail formats , and new brand introductions . this evolution has put pressure on traditional retail formats and traditional models of brand building and reaching consumers . we are tailoring our approach to address this evolution of the beauty industry . revenues from e-commerce channels comprise a small but fast-growing portion of our consolidated net revenues . transforming our digital and e-commerce capabilities is a central part of our overall strategy . while we are still in the early days of our digital transformation , we are making significant multi-year investments in talent acquisition , in-house content creation capabilities and product management systems that will fuel our e-commerce efforts . this , together with the dedication across each of our divisions to drive momentum in this rapidly expanding channel , will allow for expansion of our e-commerce footprint . the economics of developing , producing , launching , supporting and discontinuing products impact the timing of our sales and operating performance each period . in addition , as product life cycles shorten , results are driven primarily by successfully developing , introducing and marketing new , innovative products . we are continuing to improve our innovation process , aiming to introduce bigger , more impactful innovations while reducing time-to-market . we also support new and established products through our focus on strategic advertising and merchandising , brand repositioning , innovation and in-store execution . certain market segments and geographies in which we compete generally continue to grow moderately . while luxury fragrances and skin care categories are experiencing strong growth , low single digit declines in the retail nail , retail hair , mass body care , mass color cosmetics and mass fragrances categories in the u.s. and certain key countries in western europe continue to impact our business and financial results . we experienced strong growth in our luxury segment supported by strong category trends and our successful brand innovation , steady growth in our professional beauty segment and uneven performance in our consumer beauty segment . emerging markets have been a source of growth in many of our categories in fiscal 2018. we are also continuing to expand our presence in faster-growth emerging markets , by building strong relationships with key retailers in those markets and leveraging our broad portfolio of brands . transformation of our business following our acquisition of the p & g beauty business , we have been focused on integrating , restructuring and optimizing the combined organization . in fiscal 2018 , we successfully exited the third and final stage of our transition services agreement with p & g , following the successful exit of the first two stages in fiscal 2017. we also instituted new initiatives to deliver meaningful , sustainable expense and cost management to address increases in our fixed cost base as a combined company . story_separator_special_tag the following are examples of how these adjusted performance measures are utilized by our management : strategic plans and annual budgets are prepared using the adjusted performance measures ; senior management receives a monthly analysis comparing budget to actual operating results that is prepared using the adjusted performance measures ; and senior management 's annual compensation is calculated , in part , by using the adjusted performance measures . in addition , our financial covenant compliance calculations under our debt agreements are substantially derived from these adjusted performance measures . our management believes that adjusted performance measures are useful to investors in their assessment of our operating performance and the valuation of the company . in addition , these non-gaap financial measures address questions we routinely receive from analysts and investors and , in order to ensure that all investors have access to the same data , our management has determined that it is appropriate to make this data available to all investors . the adjusted performance measures exclude the impact of certain items ( as further described below ) and provide supplemental information regarding our operating performance . by disclosing these non-gaap financial measures , our management intends to provide investors with a supplemental comparison of our operating results and trends for the periods presented . our management believes these measures are also useful to investors as such measures allow investors to evaluate our performance using the same metrics that our management uses to evaluate past performance and prospects for future performance . we provide disclosure of the effects of these non-gaap financial measures by presenting the corresponding measure prepared in conformity with gaap in our 30 financial statements , and by providing a reconciliation to the corresponding gaap measure so that investors may understand the adjustments made in arriving at the non-gaap financial measures and use the information to perform their own analyses . adjusted operating income excludes restructuring costs and business structure realignment programs , amortization , acquisition-related costs and acquisition accounting impacts , the impact of accounting modifications from liability plan accounting to equity plan accounting as a result of amended share-based compensation plans , asset impairment charges and other adjustments as described below . we do not consider these items to be reflective of our core operating performance due to the variability of such items from period-to-period in terms of size , nature and significance . they are primarily incurred to realign our operating structure and integrate new acquisitions , and fluctuate based on specific facts and circumstances . additionally , adjusted net income attributable to coty inc. and adjusted net income attributable to coty inc. per common share are adjusted for certain interest and other ( income ) expense as described below and the related tax effects of each of the items used to derive adjusted net income as such charges are not used by our management in assessing our operating performance period-to-period . the adjusted performance measures were changed in the fourth quarter of fiscal 2016 to incorporate the exclusion of expense and tax effects associated with the amortization of acquisition-related intangible assets . our management believes that such amortization is not reflective of the results of operations in a particular year because the intangible assets result from the allocation of the acquisition purchase price to the fair value of identifiable intangible assets acquired . the effect of this exclusion on our non-gaap presentation was to amend adjusted operating income in a manner that provides investors with a measure of our operating performance that facilitates period to period comparisons , as well as comparability to our peers . exclusion of the amortization expense allows investors to compare operating results that are consistent over time for the consolidated company , including newly acquired and long-held businesses , to both acquisitive and nonacquisitive peer companies . adjusted performance measures reflect adjustments based on the following items : costs related to acquisition activities : we have excluded acquisition-related costs and acquisition accounting impacts such as those related to transaction costs and costs associated with the revaluation of acquired inventory in connection with business combinations because these costs are unique to each transaction . the nature and amount of such costs vary significantly based on the size and timing of the acquisitions and the maturities of the businesses being acquired . also , the size , complexity and or volume of past acquisitions , which often drives the magnitude of such expenses , may not be indicative of the size , complexity and or volume of any future acquisitions . restructuring and other business realignment costs : we have excluded costs associated with restructuring and business structure realignment programs to allow for comparable financial results to historical operations and forward-looking guidance . in addition , the nature and amount of such charges vary significantly based on the size and timing of the programs . by excluding the referenced expenses from our non-gaap financial measures , our management is able to further evaluate our ability to utilize existing assets and estimate their long-term value . furthermore , our management believes that the adjustment of these items supplement the gaap information with a measure that can be used to assess the sustainability of our operating performance . amortization expense : we have excluded the impact of amortization of finite-lived intangible assets , as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and or size of acquisitions . our management believes that the adjustment of these items supplement the gaap information with a measure that can be used to assess the sustainability of our operating performance . although we exclude amortization of intangible assets from our non-gaap expenses , our management believes that it is important for investors to understand that such intangible assets contribute to revenue generation . amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized . any future acquisitions may result in the amortization of additional intangible assets .
| overview as of june 30 , 2018 , we had cash and cash equivalents of $ 331.6 compared with $ 535.4 at june 30 , 2017 . our cash and cash equivalents balances decreased by $ 203.8 during fiscal 2018 primarily as a result of cash used for capital expenditures , dividend payments to shareholders and acquisitions , partially offset by cash generated from operations and net borrowings from long-term debt . during fiscal 2018 , we reduced our cash held outside of the u.s. by $ 168.8 , which was utilized for corporate purposes . our cash flows are subject to seasonal variation throughout the year , including demands on cash made during our first fiscal quarter in anticipation of higher global sales during the second fiscal quarter and strong cash generation in the second fiscal quarter as a result of increased demand by retailers associated with the holiday season . our principal uses of cash are to fund planned operating expenditures , capital expenditures , interest payments , acquisitions , dividends , share repurchases and any principal payments on debt . the working capital movements are based on the sourcing of materials related to the 46 production of products within each of our segments . the phasing of payments to vendors also impacts our working capital from time-to-time as we seek to efficiently manage our cash and working capital requirements . as a result of the cash on hand , our ability to generate cash from operations and through access to our revolving credit facility and other lending sources , we believe we have sufficient liquidity to meet our ongoing needs on both a near term and long-term basis .
| 2,605 |
the company 's policy is to record interest and penalties related to income tax matters as income tax expense . accrued interest and penalties were immaterial as of december 31 , 2018 and 2017. during 2018 , the company recognized an increase in its liability for unrecognized tax benefits related primarily to state income taxes , settlements , and voluntary disclosure agreements . the liability , if recognized , would affect our effective rate . a reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows : replace_table_token_24_th it is reasonably possible that the amount of the unrecognized benefits story_separator_special_tag the following discussion is based upon and should be read in conjunction with โ selected financial data โ and โ financial statements and supplementary data. โ see also โ forward-looking statements โ on page 2. overview marine products , through our wholly owned subsidiaries chaparral and robalo , is a leading manufacturer of recreational fiberglass powerboats . our sales and profits are generated by selling the products that we manufacture to a network of independent dealers who in turn sell the products to retail consumers . these dealers are located throughout the continental united states and in several international markets . dealers either remit payment upon receipt of the product or finance their inventory through third-party floor plan lenders , who pay marine products generally within ten days of delivery of the products to the dealers . we manage our company by focusing on the execution of the following business and financial strategies : โ manufacturing high-quality , stylish , and innovative powerboats for our dealers and retail consumers , โ providing our independent dealer network appropriate incentives , training , and other support to enhance their success and their customers ' satisfaction , thereby facilitating their continued relationship with us , โ managing our production and dealer order backlog to optimize operating results and reduce risk in the event of a downturn in sales of our products , โ maintaining a flexible , variable cost structure which can be reduced quickly when deemed appropriate , โ focusing on the competitive nature of the boating business and designing our products and marketing strategies in order to create a positive , memorable experience for our customers , thus growing and maintaining profitable market share , โ monitoring the recreational boat market for strong complementary product lines which we may enter through new product development or acquisition , โ extending our brand name recognition to enhance the success of new boat models that complement our existing offerings , โ improving our sales and profits by increasing the utilization of our manufacturing capacity , โ monitoring the activities and financial condition of our dealers and of the third-party floor plan lenders who finance our dealers ' inventories , โ maximizing stockholder return by optimizing the balance of cash invested in the company 's productive assets , the payment of dividends to stockholders , and the repurchase of the company 's common stock on the open market , and โ aligning the interests of our management and stockholders . in executing these strategies and attempting to optimize our financial returns , management closely monitors dealer orders and inventories , the production mix of various models , and indications of near term demand such as consumer confidence , interest rates , dealer orders placed at our annual dealer conferences , and retail attendance and orders at annual winter boat show exhibitions . we also consider trends related to certain key financial and other data , including our historical and forecasted financial results , market share , unit sales of our products , average selling price per boat , and gross profit margins , among others , as indicators of the success of our strategies . marine products ' financial results are affected by consumer confidence โ because pleasure boating is a discretionary expenditure , interest rates โ because many retail customers finance the purchase of their boats , and other socioeconomic and environmental factors such as availability of leisure time , consumer preferences , demographics and the weather . during 2018 , several segments of the recreational boating industry improved due to a stable consumer confidence and financing environment for dealers and consumers , although aggregate sales of the boating segments in which marine products operates were approximately equal to sales during 2017. overall industry retail sales of outboard recreational boats in 2018 were equal to sales in 2017 , and sterndrive unit sales continued to decline . our net sales improved in 2018 compared to 2017 due to a favorable model mix which yielded higher average selling prices . unit sales in 2018 increased by less than one percent compared to 2017. management will continue to monitor retail demand among the various segments in the recreational boat market , the actions of our competitors , dealer inventory levels and the availability of dealer and consumer financing for the purchase of our products and adjust our production levels as deemed appropriate . we periodically monitor our market share in the 19 to 34 foot sterndrive category as one indicator of the success of our strategies and the market 's acceptance of our products . for the 12 month period ended september 30 , 2018 ( latest data available to us ) , chaparral 's market share in the 19 to 34 foot sterndrive category was 16.1 percent compared to 16.8 percent during the same period in 2017 ; the highest market share in this category during both periods . for the 12 month period ended september 30 , 2018 , robalo 's share of the 16 to 31 foot outboard sport fishing boat market was 6.2 percent , the second highest market share within this category . story_separator_special_tag cash used for financing activities increased $ 6.7 million in 2018 primarily due to an increase in cash paid for open market share repurchases , coupled with an increase in regular and special cash dividends paid during 2018 . 2017 cash provided by operating activities increased by $ 13.8 million in 2017 compared to 2016. this increase was primarily due to a net favorable change in working capital coupled with an increase in net income . the major components of the net favorable change in working capital were as follows : an unfavorable change in accounts receivable of $ 2.1 million due to the timing of payments ; a favorable change of $ 14.3 million in inventories primarily due to the timing of engine purchases to obtain purchase discounts ; and a $ 3.0 million favorable change in other long term liabilities primarily due to employee deferrals related to the supplemental retirement plan . cash used for investing activities was $ 6.5 million in 2017 compared to $ 22.6 million provided by investing activities in 2016. the increase in cash used for investing activities in 2017 is primarily due to net purchases of marketable securities . the $ 22.6 million cash provided by investing activities in 2016 was primarily due to sales of marketable securities to fund the tender offer during the fourth quarter of 2016 . 23 cash used for financing activities decreased $ 25.8 million in 2017 primarily due to a decrease in cash paid for common stock purchases in the open market , partially offset by an increase in regular cash dividends and a $ 0.05 special dividend paid in the fourth quarter of 2017. cash used for financing activities in 2016 includes $ 34.0 million related the purchase of 3,500,000 common shares as part of the tender offer completed in the fourth quarter of 2016. cash requirements management expects that capital expenditures during 2019 will be approximately $ 2.7 million . the company participates in a multiple employer retirement income plan , sponsored by rpc . during 2018 , the company made a cash contribution of $ 770 to this plan in order to achieve the company 's funding objective . we do not currently expect that additional contributions by the company to the retirement income plan will be made in 2019. on january 22 , 2019 , the board of directors approved a quarterly cash dividend of $ 0.12 per common share payable march 11 , 2019 to stockholders of record at the close of business on february 11 , 2019. the company has an agreement with one employee that provides for a monthly payment equal to 10 percent of profits ( defined as pretax income before goodwill amortization and certain allocated corporate expenses ) . in january 2008 , the board of directors authorized an additional 3,000,000 shares that the company may repurchase for a total aggregate authorization of 8,250,000 shares . the company repurchased 341,135 shares in the open market during 2018. as of december 31 , 2018 , the company has repurchased under this program a total of 6,078,083 shares in the open market and there are 2,171,917 shares that remain available for repurchase . the company has entered into agreements with third-party floor plan lenders where it has agreed , in the event of default by a dealer , to repurchase mpc boats repossessed from the dealer . these arrangements are subject to maximum repurchase amounts and the associated risk is mitigated by the value of the boats repurchased . there were no material repurchases of dealer inventory during 2018 or 2017. see further information regarding repurchase obligations in โ note 10 : commitments and contingencies โ of the consolidated financial statements . the company believes that the liquidity provided by its existing cash and cash equivalents , marketable securities , and cash expected to be generated from operations will provide sufficient capital to meet its requirements for at least the next twelve months . the company 's decisions about the amount of cash to be used for investing and financing purposes are influenced by its capital position and the expected amount of cash to be provided by operations . contractual obligations the following table summarizes the company 's contractual obligations as of december 31 , 2018 : replace_table_token_5_th ( 1 ) operating leases represent agreements for warehouse space , and various office and operating equipment . ( 2 ) as part of the normal course of business the company enters into purchase commitments to manage its various operating needs . however , the company does not have any obligations that are non-cancelable or subject to a penalty if canceled . ( 3 ) the company has agreements with various third-party lenders where it guarantees varying amounts of debt for qualifying dealers on boats in dealer inventory . as of december 31 , 2018 , there are no payables outstanding to floor plan lenders . fair value measurements the company 's assets and liabilities measured at fair value are classified in the fair value hierarchy ( level 1 , 2 or 3 ) based on the inputs used for valuation . assets and liabilities that are traded on an exchange with a quoted price are classified as level 1. assets and liabilities that are valued using significant observable inputs in addition to quoted market prices are classified as level 2. the company currently has no assets or liabilities measured on a recurring basis that are valued using unobservable inputs and therefore no assets or liabilities measured on a recurring basis are classified as level 3. for defined benefit plan and supplemental executive retirement plan ( โ serp โ ) investments measured at net asset value , the values are computed using inputs such as cost , discounted future cash flows , independent appraisals and market based comparable data or on net asset values calculated by the fund and not publicly available .
| results of operations replace_table_token_3_th year ended december 31 , 2018 compared to year ended december 31 , 2017 net sales . marine products ' net sales increased by $ 31.3 million or 11.7 percent in 2018 compared to 2017. the increase was primarily due to a 10.2 percent increase in the average gross selling price per boat , coupled with a 0.7 percent increase in the number of boats sold , as well as an increase in parts and accessories sales . unit sales increased due to higher sales of our robalo outboard sport fishing boats , as well as increased sales of our ssx models and our chaparral surf series models , partially offset by decreases in unit sales of our vortex jet boat and chaparral h2o models . average selling prices increased primarily due to a model mix which included increased sales of our larger boats . domestic net sales were $ 279.2 million , an increase of 11.5 percent compared to the prior year . international sales increased 14.9 percent during 2018 compared to 2017. cost of goods sold . cost of goods sold increased 11.5 percent in 2018 compared to 2017. as a percentage of net sales , cost of goods sold decreased slightly to 77.8 percent in 2018 , compared to 77.9 percent in 2017 primarily due to a model mix which included sales of our larger boats , partially offset by production inefficiencies resulting from increased labor costs . selling , general and administrative expenses . selling , general and administrative expenses increased 5.7 percent in 2018 compared to 2017 primarily due to an increase in incentive compensation consistent with improved operating results . selling , general and administrative expenses as a percentage of sales decreased to 10.4 percent in 2018 from 10.9 percent in 2017. as a percentage of net sales , warranty expense increased slightly to 1.4 percent in 2018 , compared to 1.3
| 2,606 |
we were formed by bimini in august 2010 , commenced operations on november 24 , 2010 and completed our initial public offering ( โ ipo โ ) on february 20 , 2013. we are externally managed by bimini advisors , a registered investment adviser with the securities and exchange commission ( the โ sec โ ) . our business objective is to provide attractive risk-adjusted total returns over the long term through a combination of capital appreciation and the payment of regular monthly distributions . we intend to achieve this objective by investing in and strategically allocating capital between the two categories of agency rmbs described above . we seek to generate income from ( i ) the net interest margin on our leveraged pt rmbs portfolio and the leveraged portion of our structured agency rmbs portfolio , and ( ii ) the interest income we generate from the unleveraged portion of our structured agency rmbs portfolio . we intend to fund our pt rmbs and certain of our structured agency rmbs through short-term borrowings structured as repurchase agreements . pt rmbs and structured agency rmbs typically exhibit materially different sensitivities to movements in interest rates . declines in the value of one portfolio may be offset by appreciation in the other . the percentage of capital that we allocate to our two agency rmbs asset categories will vary and will be actively managed in an effort to maintain the level of income generated by the combined portfolios , the stability of that income stream and the stability of the value of the combined portfolios . we believe that this strategy will enhance our liquidity , earnings , book value stability and asset selection opportunities in various interest rate environments . we operate so as to qualify to be taxed as a real estate investment trust ( โ reit โ ) under the internal revenue code of 1986 , as amended ( the โ code โ ) . we generally will not be subject to u.s. federal income tax to the extent that we currently distribute all of our reit taxable income ( as defined in the code ) to our stockholders and maintain our reit qualification . the company 's common stock trades on the new york stock exchange ( โ nyse โ ) under the symbol โ orc โ . capital raising activities on july 29 , 2016 , we entered into an equity distribution agreement ( the โ july 2016 equity distribution agreement โ ) with two sales agents pursuant to which we could offer and sell , from time to time , up to an aggregate amount of $ 125,000,000 of shares of our common stock in transactions that were deemed to be โ at the market โ offerings and privately negotiated transactions . we issued a total of 10,174,992 shares under the july 2016 equity distribution agreement for aggregate gross proceeds of $ 110.0 million , and net proceeds of approximately $ 108.2 million , net of commissions and fees , prior to its termination . 45 on february 23 , 2017 , we entered into another equity distribution agreement , as amended and restated on may 10 , 2017 ( the โ may 2017 equity distribution agreement โ ) , with two sales agents pursuant to which we could offer and sell , from time to time , up to an aggregate amount of $ 125,000,000 of shares of our common stock in transactions that were deemed to be โ at the market โ offerings and privately negotiated transactions . the may 2017 equity distribution agreement replaced the july 2016 equity distribution agreement . we issued a total of 12,299,032 shares under the may 2017 equity distribution agreement for aggregate gross proceeds of $ 125.0 million , and net proceeds of approximately $ 122.9 million , net of commissions and fees , prior to its termination . on august 2 , 2017 , we entered into another equity distribution agreement ( the โ august 2017 equity distribution agreement โ ) with two sales agents pursuant to which we may offer and sell , from time to time , up to an aggregate amount of $ 125,000,000 of shares of our common stock in transactions that are deemed to be โ at the market โ offerings and privately negotiated transactions . the august 2017 equity distribution agreement replaced the may 2017 equity distribution agreement . through december 31 , 2018 , we issued a total of 7,746,052 shares under the august 2017 equity distribution agreement for aggregate gross proceeds of $ 76.0 million , and net proceeds of approximately $ 74.7 million , net of commissions and fees . however , we did not issue any shares under the august 2017 equity distribution agreement during the year ended december 31 , 2018. stock repurchase program on july 29 , 2015 , the company 's board of directors authorized the repurchase of up to 2,000,000 shares of our common stock . the timing , manner , price and amount of any repurchases is determined by the company in its discretion and is subject to economic and market conditions , stock price , applicable legal requirements and other factors . the authorization does not obligate the company to acquire any particular amount of common stock and the program may be suspended or discontinued at the company 's discretion without prior notice . on february 8 , 2018 , the board of directors approved an increase in the stock repurchase program for up to an additional 4,522,822 shares of the company 's common stock . this stock repurchase program has no termination date . from the inception of the stock repurchase program through december 31 , 2018 , the company repurchased a total of 5,195,645 shares at an aggregate cost of approximately $ 37.3 million , including commissions and fees , for a weighted average price of $ 7.17 per share . story_separator_special_tag we believe that economic interest expense and economic net interest income provide meaningful information to consider , in addition to the respective amounts prepared in accordance with gaap . the non-gaap measures help management to evaluate its financial position and performance without the effects of certain transactions and gaap adjustments that are not necessarily indicative of our current investment portfolio or operations . the unrealized gains or losses on derivative instruments presented in our consolidated statements of operations are not necessarily representative of the total interest rate expense that we will ultimately realize . this is because as interest rates move up or down in the future , the gains or losses we ultimately realize , and which will affect our total interest rate expense in future periods , may differ from the unrealized gains or losses recognized as of the reporting date . our presentation of the economic value of our hedging strategy has important limitations . first , other market participants may calculate economic interest expense and economic net interest income differently than the way we calculate them . second , while we believe that the calculation of the economic value of our hedging strategy described above helps to present our financial position and performance , it may be of limited usefulness as an analytical tool . therefore , the economic value of our investment strategy should not be viewed in isolation and is not a substitute for interest expense and net interest income computed in accordance with gaap . 49 the tables below present a reconciliation of the adjustments to interest expense shown for each period relative to our derivative instruments , and the income statement line item , gains ( losses ) on derivative instruments , calculated in accordance with gaap for the years ended december 31 , 2018 , 2017 and 2016 and each quarter during 2018 , 2017 and 2016. replace_table_token_5_th 50 replace_table_token_6_th ( 1 ) reflects the effect of derivative instrument hedges for only the period presented . ( 2 ) calculated by adding the effect of derivative instrument hedges attributed to the period presented to gaap interest expense . ( 3 ) calculated by adding the effect of derivative instrument hedges attributed to the period presented to gaap net interest income . net interest income during the year ended december 31 , 2018 , we generated $ 84.2 million of net interest income , consisting of $ 154.6 million of interest income from rmbs assets offset by $ 70.4 million of interest expense on borrowings . for the comparable period ended december 31 , 2017 , we generated $ 104.3 million of net interest income , consisting of $ 146.0 million of interest income from rmbs assets offset by $ 41.7 million of interest expense on borrowings . the $ 8.6 million increase in interest income was driven by a 24 basis point ( `` bps '' ) increase in yield on average rmbs as the average rmbs held was essentially the same as the year ended december 31 , 2017. the $ 28.7 million increase in interest expense for the year ended december 31 , 2018 was driven by a $ 116.9 million increase in average borrowings and , more significantly , a 80 bps increase in the average cost of funds . the increase in average borrowings reflects slightly higher leverage employed for the period . for the year ended december 31 , 2016 , we generated $ 71.5 million of net interest income , consisting of $ 87.1 million of interest income from rmbs assets offset by $ 15.6 million of interest expense on borrowings . the $ 58.8 million increase in interest income and $ 26.1 million increase in interest expense for the year ended december 31 , 2017 primarily reflects the growth of our portfolio due to our net capital raising activities , combined with increased yields earned on our portfolio and increased costs and amounts of our borrowings . on an economic basis , our interest expense on borrowings for the years ended december 31 , 2018 , 2017 and 2016 was $ 73.2 million , $ 56.0 million and $ 25.4 million , respectively , resulting in $ 81.4 million , $ 89.9 million and $ 61.8 million of economic net interest income , respectively . 51 the tables below provide information on our portfolio average balances , interest income , yield on assets , average borrowings , interest expense , cost of funds , net interest income and net interest spread for each quarter in 2018 , 2017 and 2016 and for the years ended december 31 , 2018 , 2017 and 2016 on both a gaap and economic basis . replace_table_token_7_th replace_table_token_8_th ( 1 ) portfolio yields and costs of borrowings presented in the tables above and the tables on pages 53-54 are calculated based on the average balances of the underlying investment portfolio/borrowings balances and are annualized for the periods presented . average balances for quarterly periods are calculated using two data points , the beginning and ending balances . ( 2 ) economic interest expense and economic net interest income presented in the table above and the tables on page 54 includes the effect of our derivative instrument hedges for only the periods presented . ( 3 ) represents interest cost of our borrowings and the effect of derivative instrument hedges attributed to the period divided by average rmbs . ( 4 ) economic net interest spread is calculated by subtracting average economic cost of funds from realized yield on average rmbs . 52 interest income and average asset yield our interest income for the years ended december 31 , 2018 and 2017 was $ 154.6 million and $ 146.0 million , respectively . we had average rmbs holdings of $ 3,582.2 million and $ 3,578.4 million for the years ended december 31 , 2018 and 2017 , respectively . the yield on our portfolio was 4.32 % and 4.08 % for the years ended december 31 , 2018 and 2017 , respectively .
| results of operations described below are the company 's results of operations for the years ended december 31 , 2018 , as compared to the company 's results of operations for the years ended december 31 , 2017 and 2016. net ( loss ) income summary net loss for the year ended december 31 , 2018 was $ 44.4 million , or $ 0.85 per share . net income for the year ended december 31 , 2017 was $ 2.0 million , or $ 0.05 per share . net income for the year ended december 31 , 2016 was $ 2.0 million , or $ 0.08 per share . the components of net ( loss ) income for the years ended december 31 , 2018 , 2017 and 2016 are presented in the table below : replace_table_token_4_th gaap and non-gaap reconciliations in addition to the results presented in accordance with gaap , our results of operations discussed below include certain non-gaap financial information , including โ net earnings excluding realized and unrealized gains and losses โ , โ economic interest expense โ and โ economic net interest income. โ net earnings excluding realized and unrealized gains and losses we have elected to account for our agency rmbs under the fair value option . securities held under the fair value option are recorded at estimated fair value , with changes in the fair value recorded as unrealized gains or losses through the consolidated statements of operations . in addition , we have not elected to designate our derivative holdings for hedge accounting treatment under the financial accounting standards board ( the โ fasb โ ) accounting standards codification ( โ asc โ ) topic 815 , derivatives and hedging . changes in fair value of these instruments are presented in a separate line item in the company 's consolidated statements of operations and not included in interest expense .
| 2,607 |
overview we are a bank holding company within the meaning of the bhc act headquartered in birmingham , alabama . through our wholly-owned subsidiary bank , we operate 19 full service banking offices located in jefferson , shelby , madison , montgomery , mobile and houston counties in alabama , escambia and hillsborough counties in florida , cobb and douglas county in georgia , charleston county in south carolina and davidson county in tennessee . these offices operate in the birmingham-hoover , huntsville , montgomery , mobile and dothan , alabama msas , the pensacola-ferry pass-brent and tampa-st. petersburg-clearwater , florida msas , the atlanta-sandy springs-roswell , georgia msa , the charleston-north charleston , south carolina msa and the nashville-davidson-murfreesboro-franklin , tennessee msa . our principal business is to accept deposits from the public and to make loans and other investments . our principal source of funds for loans and investments are demand , time , savings , and other deposits and the amortization and prepayment of loans and borrowings . our principal sources of income are interest and fees collected on loans , interest and dividends collected on other investments and service charges . our principal expenses are interest paid on savings and other deposits , interest paid on our other borrowings , employee compensation , office expenses and other overhead expenses . critical accounting policies our consolidated financial statements are prepared based on the application of certain accounting policies , the most significant of which are described in the notes to the consolidated financial statements . certain of these policies require numerous estimates and strategic or economic assumptions that may prove inaccurate or subject to variation and may significantly affect our reported results and financial position for the current period or in future periods . the use of estimates , assumptions , and judgments are necessary when financial assets and liabilities are required to be recorded at , or adjusted to reflect , fair value . assets carried at fair value inherently result in more financial statement volatility . fair values and information used to record valuation adjustments for certain assets and liabilities are based on either quoted market prices or are provided by other independent third-party sources , when available . when such information is not available , management estimates valuation adjustments . changes in underlying factors , assumptions or estimates in any of these areas could have a material impact on our future financial condition and results of operations . 39 allowance for loan losses the allowance for loan losses , sometimes referred to as the โ alll , โ is established through periodic charges to income . loan losses are charged against the alll when management believes that the future collection of principal is unlikely . subsequent recoveries , if any , are credited to the alll . if the alll is considered inadequate to absorb future loan losses on existing loans for any reason , including but not limited to , increases in the size of the loan portfolio , increases in charge-offs or changes in the risk characteristics of the loan portfolio , then the provision for loan losses is increased . loans are considered impaired when , based on current information and events , it is probable that the bank will be unable to collect all amounts due according to the original terms of the loan agreement . the collection of all amounts due according to contractual terms means that both the contractual interest and principal payments of a loan will be collected as scheduled in the loan agreement . impaired loans are measured based on the present value of expected future cash flows discounted at the loan 's effective interest rate , or , as a practical expedient , at the loan 's observable market price , or the fair value of the underlying collateral . the fair value of collateral , reduced by costs to sell on a discounted basis , is used if a loan is collateral-dependent . investment securities impairment periodically , we may need to assess whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis . in any such instance , we would consider many factors , including the severity and duration of the impairment , our intent and ability to hold the security for a period of time sufficient for a recovery in value , recent events specific to the issuer or industry , and for debt securities , external credit ratings and recent downgrades . securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value , with the write-down recorded as a realized loss in securities gains ( losses ) . other real estate owned other real estate owned ( โ oreo โ ) , consisting of assets that have been acquired through foreclosure , is recorded at the lower of cost or estimated fair value less the estimated cost of disposition . fair value is based on independent appraisals and other relevant factors . other real estate owned is revalued on an annual basis or more often if market conditions necessitate . valuation adjustments required at foreclosure are charged to the alll . subsequent to foreclosure , losses on the periodic revaluation of the property are charged to net income as oreo expense . significant judgments and complex estimates are required in estimating the fair value of other real estate , and the period of time within which such estimates can be considered current is significantly shortened during periods of market volatility , as experienced in recent years . as a result , the net proceeds realized from sales transactions could differ significantly from appraisals , comparable sales , and other estimates used to determine the fair value of other real estate . goodwill and other identifiable intangible assets other identifiable intangible assets include a core deposit intangible recorded in connection with the acquisition of metro . story_separator_special_tag our average interest-bearing liabilities increased $ 855.5 million , or 26.8 % , to $ 4.1 billion for the year ended december 31 , 2016 from $ 3.2 billion for the year ended december 31 , 2015. all of our markets had an increase in total deposits during 2016. the ratio of our average interest-earning assets to average interest-bearing liabilities was 136.4 % and 137.3 % for the years ended december 31 , 2016 and 2015 , respectively , as average noninterest-bearing deposits grew by $ 246.4 million , or 26.1 % , from 2015 to 2016. our average interest-earning assets produced a taxable equivalent yield of 3.89 % for the year ended december 31 , 2016 , compared to 4.15 % for the year ended december 31 , 2015. the average rate paid on interest-bearing liabilities was 0.64 % for the year ended december 31 , 2016 , compared to 0.55 % for the year ended december 31 , 2015. our net interest spread and net interest margin were 3.60 % and 3.75 % , respectively , for the year ended december 31 , 2015 , compared to 3.54 % and 3.68 % , respectively , for the year ended december 31 , 2014. our average interest-earning assets for the year ended december 31 , 2015 increased $ 787.3 million , or 21.9 % , to $ 4.4 billion from $ 3.6 billion for the year ended december 31 , 2014. this increase in our average interest-earning assets was attributable to the metro acquisition , which included $ 182.4 million in earnings assets as of the closing date on january 31 , 2015 , continued core growth in all of our markets and increased loan production . our average interest-bearing liabilities increased $ 534.0 million , or 20.1 % , to $ 3.2 billion for the year ended december 31 , 2015 from $ 2.7 billion for the year ended december 31 , 2014. this increase in our average interest-bearing liabilities was primarily due to an increase in interest-bearing deposits in all our markets . the ratio of our average interest-earning assets to average interest-bearing liabilities was 137.3 % and 135.2 % for the years ended december 31 , 2015 and 2014 , respectively , as average noninterest-bearing deposits grew by $ 220.7 million , or 30.5 % , from 2014 to 2015. our average interest-earning assets produced a taxable equivalent yield of 4.15 % for the year ended december 31 , 2015 , compared to 4.07 % for the year ended december 31 , 2014. the average rate paid on interest-bearing liabilities was 0.55 % for the year ended december 31 , 2015 , compared to 0.53 % for the year ended december 31 , 2014 . 43 provision for loan losses the provision for loan losses represents the amount determined by management to be necessary to maintain the alll at a level capable of absorbing inherent losses in the loan portfolio . our management reviews the adequacy of the alll on a quarterly basis . the alll calculation is segregated into various segments that include classified loans , loans with specific allocations and pass rated loans . a pass rated loan is generally characterized by a very low to average risk of default and in which management perceives there is a minimal risk of loss . loans are rated using a nine-point risk grade scale with loan officers having the primary responsibility for assigning risk grades and for the timely reporting of changes in the risk grades . based on these processes , and the assigned risk grades , the criticized and classified loans in the portfolio are segregated into the following regulatory classifications : special mention , substandard , doubtful or loss , with some general allocation of reserve based on these grades . at december 31 , 2016 , total loans rated special mention , substandard , and doubtful were $ 128.8 million , or 2.6 % of total loans , compared to $ 117.0 million , or 2.8 % of total loans , at december 31 , 2015. impaired loans are reviewed specifically and separately under fasb asc 310-30-35 , subsequent measurement of impaired loans , to determine the appropriate reserve allocation . our management compares the investment in an impaired loan with the present value of expected future cash flow discounted at the loan 's effective interest rate , the loan 's observable market price or the fair value of the collateral , if the loan is collateral-dependent , to determine the specific reserve allowance . reserve percentages assigned to non-impaired loans are based on historical charge-off experience adjusted for other risk factors . to evaluate the overall adequacy of the allowance to absorb losses inherent in our loan portfolio , our management considers historical loss experience based on volume and types of loans , trends in classifications , volume and trends in delinquencies and nonaccruals , economic conditions and other pertinent information . based on future evaluations , additional provisions for loan losses may be necessary to maintain the allowance for loan losses at an appropriate level . the allowance for loan losses as a percentage of loans was diluted in 2015 by the acquisition of $ 149 million of loans of metro bank which were recorded at net fair value . the provision expense for loan losses was $ 13.4 million for the year ended december 31 , 2016 , an increase of $ 0.6 million from $ 12.8 million in 2015. this increase in provision expense for loan losses for 2016 is primarily attributable to loan growth . also , nonperforming loans increased to $ 16.9 million , or 0.34 % of total loans , at december 31 , 2016 from $ 7.8 million , or 0.18 % of total loans , at december 31 , 2015. during 2016 , we had net charged-off loans totaling $ 4.9 million , compared to net charged-off loans of $ 5.1 million for 2015. the ratio of net charged-off loans to average loans was 0.11 % for 2016 compared to 0.13 % for 2015. the alll totaled $ 51.9
| results of operations net income net income available to common stockholders was $ 81.4 million for the year ended december 31 , 2016 , compared to $ 63.3 million for the year ended december 31 , 2015. this increase in net income is primarily attributable to an increase in net interest income , which increased $ 24.8 million , or 15.3 % , to $ 187.1 million in 2016 from $ 162.3 million in 2015. noninterest income increased $ 4.5 million , or 33.1 % , to $ 18.1 million in 2016 from $ 13.6 million in 2015. noninterest expense increased by $ 7.0 million , or 9.5 % , to $ 81.0 million in 2016 from $ 74.0 million in 2015. basic and diluted net income per common share were $ 1.55 and $ 1.52 , respectively , for the year ended december 31 , 2016 , compared to $ 1.23 and $ 1.20 , respectively , for the year ended december 31 , 2015. return on average assets was 1.42 % in 2016 , compared to 1.38 % in 2015 , and return on average stockholders ' equity was 16.64 % in 2016 , compared to 14.56 % in 2015 .
| 2,608 |
options reserved to any one related person on an annual basis may not upon exercise exceed 5 % and the aggregate number of all options outstanding will not exceed 10 % of the issued outstanding common shares as a whole calculated at that time . in june 2019 , 2,100,000 stock options were granted to non-officer employees . these options vested immediately and are exercisable at $ 0.14 for 3 years . total stock based compensation recognized on these options was $ 190,019 . the weighted average fair value of stock option awards granted and the key assumptions used in the black-scholes valuation model to calculate the fair value of the options are as follows : for the year ended december 31 , 2019 weighted average fair value $ 0.09 options issued 2,100,000 exercise price $ 0.14 expected term ( in years ) 3.0 risk-free rate 1.81 % volatility 98.6 % transactions in stock options for the years ended december 31 , 2020 and 2019 are as follows : replace_table_token_15_th at december 31 , 2020 , the stock options have an intrinsic value of approximately $ 258,300 and have a weighted average remaining term of 1.43 years . 41 new jersey mining company notes to consolidated financial statements 12. related party transactions at december 31 , 2020 and 2019 , the company had the following notes payable to related parties : replace_table_token_16_th at december 31 , 2020 , $ 37,078 of related party debt is payable in 2021 and the remaining $ 117,234 is payable in 2022. related party interest expense for the years ending december 31 , 2020 and 2019 was $ 10,992 and $ 15,169 , respectively . there is no accrued interest payable at december 31 , 2020 or 2019 on these notes . during the year ended december 31 , 2019 , the company paid $ 9,000 , to the company 's previous chairman of the board , del steiner for consulting purposes . he retired in july 2019. as of december 31 , 2020 and 2019 , gold sales receivable from former related party h & h metals , who owns 4 % of the company 's outstanding common stock , were $ 264,779 and $ 305,924 , respectively . concentrate sales to h & h metals were $ 5,384,597 and $ 5,857,942 , during the years ended december 31 , 2020 and 2019 , respectively . in february 2020 , the company 's corporate secretary , monique hayes , participated in the company 's convertible debt offering for $ 25,000 . interest expense on her note was $ 1,742 for the year ended december 31 , 2020. see note 14. the company leases office space from certain related parties on a month to month basis . payments under these short-term lease arrangements totaled $ 24,840 and $ 24,546 for the years ended december 31 , 2020 and 2019 , respectively , and are included in general and administrative expenses on the consolidated statement of operations . 13. sales of products our products consist of both gold flotation concentrates which in 2019 and 2020 we sold to a broker ( h & h metal ) , and an unrefined gold-silver product known as dorรฉ which we sell to a precious metal refinery . revenue is recognized upon the completion of the performance obligations and transfer of control of the product to the customer , and the transaction price can be determined or reasonably estimated . for gold flotation concentrate sales , the performance obligation is met when the transaction price can be reasonably estimated and revenue is recognized generally at the time when risk is transferred to h & h metal based on contractual terms . based on contractual terms , the company has determined the performance obligation is met and title is transferred to h & h metal when the company receives its first provisional payment on the concentrate because , at that time , 1 ) legal title is transferred to the customer , 2 ) the customer has accepted the concentrate lot and obtained the ability to realize all of the benefits from the product , 3 ) the concentrate content specifications are known , have been communicated to h & h metal , and h & h metal has the significant risks and rewards of ownership to it , 4 ) it is very unlikely a concentrate will be rejected by h & h metal upon physical receipt , and 5 ) we have the right to payment for the concentrate . concentrates lots that have been sold are held at our mill up to 60 days , until h & h metal provides shipping instructions . our concentrate sales sometimes involve variable consideration , as they can be subject to changes in metals prices between the time of shipment and their final settlement . however , we are able to reasonably estimate the transaction price for the concentrate sales at the time of shipment using forward prices for the estimated month of settlement , and previously recorded sales and accounts receivable are adjusted to estimated settlement metals prices until final settlement for financial reporting purposes . the embedded derivative contained in our concentrate sales is adjusted to fair value through earnings each period prior to final settlement . it is unlikely a significant reversal of revenue for any one concentrate lot will occur . as such , we use the expected value method to price the concentrate until the final settlement date occurs , at which time the final transaction price is known . at december 31 , 2020 , metals that had been sold but not final settled thus exposed to future price changes totaled 1,380 story_separator_special_tag plan of operation new jersey mining company is a gold producer focused on diversifying and building its asset base and cash flows through a portfolio of mineral properties located in historic producing gold districts in idaho and montana . the company 's story_separator_special_tag options reserved to any one related person on an annual basis may not upon exercise exceed 5 % and the aggregate number of all options outstanding will not exceed 10 % of the issued outstanding common shares as a whole calculated at that time . in june 2019 , 2,100,000 stock options were granted to non-officer employees . these options vested immediately and are exercisable at $ 0.14 for 3 years . total stock based compensation recognized on these options was $ 190,019 . the weighted average fair value of stock option awards granted and the key assumptions used in the black-scholes valuation model to calculate the fair value of the options are as follows : for the year ended december 31 , 2019 weighted average fair value $ 0.09 options issued 2,100,000 exercise price $ 0.14 expected term ( in years ) 3.0 risk-free rate 1.81 % volatility 98.6 % transactions in stock options for the years ended december 31 , 2020 and 2019 are as follows : replace_table_token_15_th at december 31 , 2020 , the stock options have an intrinsic value of approximately $ 258,300 and have a weighted average remaining term of 1.43 years . 41 new jersey mining company notes to consolidated financial statements 12. related party transactions at december 31 , 2020 and 2019 , the company had the following notes payable to related parties : replace_table_token_16_th at december 31 , 2020 , $ 37,078 of related party debt is payable in 2021 and the remaining $ 117,234 is payable in 2022. related party interest expense for the years ending december 31 , 2020 and 2019 was $ 10,992 and $ 15,169 , respectively . there is no accrued interest payable at december 31 , 2020 or 2019 on these notes . during the year ended december 31 , 2019 , the company paid $ 9,000 , to the company 's previous chairman of the board , del steiner for consulting purposes . he retired in july 2019. as of december 31 , 2020 and 2019 , gold sales receivable from former related party h & h metals , who owns 4 % of the company 's outstanding common stock , were $ 264,779 and $ 305,924 , respectively . concentrate sales to h & h metals were $ 5,384,597 and $ 5,857,942 , during the years ended december 31 , 2020 and 2019 , respectively . in february 2020 , the company 's corporate secretary , monique hayes , participated in the company 's convertible debt offering for $ 25,000 . interest expense on her note was $ 1,742 for the year ended december 31 , 2020. see note 14. the company leases office space from certain related parties on a month to month basis . payments under these short-term lease arrangements totaled $ 24,840 and $ 24,546 for the years ended december 31 , 2020 and 2019 , respectively , and are included in general and administrative expenses on the consolidated statement of operations . 13. sales of products our products consist of both gold flotation concentrates which in 2019 and 2020 we sold to a broker ( h & h metal ) , and an unrefined gold-silver product known as dorรฉ which we sell to a precious metal refinery . revenue is recognized upon the completion of the performance obligations and transfer of control of the product to the customer , and the transaction price can be determined or reasonably estimated . for gold flotation concentrate sales , the performance obligation is met when the transaction price can be reasonably estimated and revenue is recognized generally at the time when risk is transferred to h & h metal based on contractual terms . based on contractual terms , the company has determined the performance obligation is met and title is transferred to h & h metal when the company receives its first provisional payment on the concentrate because , at that time , 1 ) legal title is transferred to the customer , 2 ) the customer has accepted the concentrate lot and obtained the ability to realize all of the benefits from the product , 3 ) the concentrate content specifications are known , have been communicated to h & h metal , and h & h metal has the significant risks and rewards of ownership to it , 4 ) it is very unlikely a concentrate will be rejected by h & h metal upon physical receipt , and 5 ) we have the right to payment for the concentrate . concentrates lots that have been sold are held at our mill up to 60 days , until h & h metal provides shipping instructions . our concentrate sales sometimes involve variable consideration , as they can be subject to changes in metals prices between the time of shipment and their final settlement . however , we are able to reasonably estimate the transaction price for the concentrate sales at the time of shipment using forward prices for the estimated month of settlement , and previously recorded sales and accounts receivable are adjusted to estimated settlement metals prices until final settlement for financial reporting purposes . the embedded derivative contained in our concentrate sales is adjusted to fair value through earnings each period prior to final settlement . it is unlikely a significant reversal of revenue for any one concentrate lot will occur . as such , we use the expected value method to price the concentrate until the final settlement date occurs , at which time the final transaction price is known . at december 31 , 2020 , metals that had been sold but not final settled thus exposed to future price changes totaled 1,380 story_separator_special_tag plan of operation new jersey mining company is a gold producer focused on diversifying and building its asset base and cash flows through a portfolio of mineral properties located in historic producing gold districts in idaho and montana . the company 's
| highlights for 2020 include : ยท for the year ending december 31 , 2020 39,880 dry metric tonnes ( dmt ) were processed at the company 's new jersey mill with an average gold head grade of 3.03 grams per tonne gold ( gpt ) . ยท njmc produced a total of 3,755 ounces of gold contained in concentrates . ยท mined 27,690 tonnes of ore from the open pit at an average grade of 1.73 gpt gold with an average stripping ratio of 9.1 and an average daily mining rate of 1,480 tonnes per day ( tpd ) . tonnes and grade were lower than expected because of unmapped historic stopes where the old-timers mined portions of the veins . ยท mined 12,190 tonnes of ore from the underground mine at an average grade of 5.98 gpt gold , placed 1,828 cubic meters of cemented rockfill ( crf ) and completed 75 meters of main access ramp ( mar ) to access new stopes . ยท added additional mining equipment and a second crew of miners in the third quarter of 2020 to increase underground mine production and initiate underground development of the main access ramp . a wireless communication system was also installed underground to improve communication and safety . ยท added two rare earth element properties in central idaho to its portfolio , the diamond creek and roberts projects . ยท acquired the alder gulch project which contains 368 acres of patented , prospective land just west of the golden chest .
| 2,609 |
inventory inventory , which consists story_separator_special_tag executive summary the following management 's discussion and analysis of financial condition and results of operations ( md & a ) is intended to provide the readers of our financial statements with a narrative discussion about our business . the md & a is provided as a supplement to and should be read in conjunction with our financial statements and the accompanying notes . we are reporting net sales of $ 711,359 for the year ended june 30 , 2018 , which represents an 11.4 % increase from the $ 638,318 reported in the comparable prior year . gross profit for the year ended june 30 , 2018 was $ 111,563 and our gross margin was 15.7 % as compared to gross profit of $ 140,792 and gross margin of 22.1 % in the comparable prior year . our selling , general and administrative costs ( โ sg & a โ ) for the year ended june 30 , 2018 increased to $ 122,376 from $ 102,340 which we reported in the prior year . as previously discussed , we recorded impairment charges of $ 256,266 and a valuation allowance of $ 76,500 against our u.s. net deferred tax assets during the year ended june 30 , 2018. for the year ended june 30 , 2018 , we are reporting a net loss of $ 316,121 or $ 8.98 per diluted share , compared to net income of $ 11,376 , or $ 0.35 per diluted share for the prior year . the company is incurring substantial expenses to address the issues that led to the impairment charges taken during the year . the company has retained financial and legal advisors to assist it in dealing with the various challenges that the company is currently facing , including legal advisors retained in connection with various ongoing legal proceedings . the company is also paying a flat monthly fee of $ 250 for the services of its interim chief financial officer , rebecca roof . moreover , challenges impacting the generic pharmaceuticals industries have resulted in the company incurring substantial penalties for delays in supplying products , many of which are not likely to be reimbursed by our suppliers . see part 1 , item 1a , risk factor , - โ we may be subject to significant service level penalties in our generics business โ . we have also incurred additional expenses and made commitments to assure that we are able to attract and retain key employees required to assist us in meeting our operational challenges . included in our press release issued april 18 , 2018 , is the announcement that the board of directors has initiated a process to identify and evaluate a range of strategic alternatives . strategic alternatives to be considered may include the sale of a key business segment ( s ) , a merger or other business combination with another party , continuing as a standalone entity or other potential alternatives . we have retained a financial advisor to assist with the evaluation of these strategic alternatives . that process is ongoing . however , there can be no assurance that the strategic review process will result in any transaction . 33 as more fully described in the notes to our consolidated financial statements , on december 22 , 2017 , the tax cuts and jobs act of 2017 ( โ tcja โ ) was signed by the u.s. president . the tcja significantly changes the income tax environment for u.s. multinational corporations and as such , we recorded additional income tax expense of $ 13,739 during the year ended june 30 , 2018. in addition , as more fully described in critical accounting estimates and policies - taxes , we recorded a valuation allowance of $ 76,500 against our u.s. net deferred tax assets . despite the difficult generic pharmaceutical industry environment , our cash , cash equivalents and short-term investments at june 30 , 2018 totaled $ 103,904 , as compared with $ 57,726 at june 30 , 2017. our working capital at june 30 , 2018 remained strong at $ 200,109 ( as compared with $ 248,750 at june 30 , 2017 ) . our shareholders ' equity was $ 95,285 at june 30 , 2018 , as compared with $ 405,067 at june 30 , 2017 , reflecting our $ 316,121 net loss for fiscal 2018. our business is separated into three principal segments : human health , pharmaceutical ingredients and performance chemicals . products that fall within the human health segment include finished dosage form generic drugs and nutraceutical products . aceto sells generic prescription products and over-the-counter pharmaceutical products to leading wholesalers , chain drug stores , distributors and mass merchandisers . on december 21 , 2016 , wholly owned subsidiaries of rising pharmaceuticals , inc. ( โ rising โ ) , a wholly owned subsidiary of aceto , completed the acquisition of certain generic products and related assets of entities formerly known as citron pharma llc ( โ citron โ ) and its affiliate lucid pharma llc ( โ lucid โ ) . citron was a privately-held new jersey-based pharmaceutical company focused on developing and marketing generic pharmaceutical products in partnership with leading generic pharmaceutical manufacturers based in india and the united states . lucid was a privately-held new jersey-based generic pharmaceutical distributor specializing in providing cost-effective products to various agencies of the u.s. federal government including the veterans administration and the defense logistics agency . lucid serviced 18 national contracts with the federal government . rising formed two subsidiaries to consummate the product acquisition โ rising health , llc ( which acquired certain products and related assets of citron ) and acetris health , llc ( which acquired certain products and related assets of lucid ) . the assets acquired in the product purchase transaction expanded , complemented , and strengthened our existing and future product offerings . story_separator_special_tag the products that are incorporated in each step are known as intermediates and they can be as varied as the end uses they serve , such as crop protection products , dyes and pigments , textiles , fuel additives , electronics - essentially all things chemical . aceto provides various specialty chemicals for the food , flavor , fragrance , paper and film industries . aceto 's raw materials are also used in sophisticated technology products , such as high-end electronic parts used for photo tooling , circuit boards , production of computer chips , and in the production of many of today 's modern gadgets . according to a july 17 , 2018 federal reserve statistical release , in the second quarter of calendar year 2018 , the index for consumer durables , which impacts the specialty chemicals business of the performance chemicals segment , is expected to decrease at an annual rate of 4.0 % . aceto 's agricultural protection products include herbicides , fungicides and insecticides used on various crops including sugarcane and nuts , which control weed growth as well as the spread of insects and microorganisms that can severely damage plant growth . one of aceto 's most widely used agricultural protection products is a sprout inhibitor that extends the storage life of potatoes . utilizing our global sourcing and regulatory capabilities , we identify and qualify manufacturers either producing the product or with knowledge of the chemistry necessary to produce the product , and then file an application with the u.s. epa for a product registration . aceto has an ongoing working relationship with manufacturers in china and india to determine which of the non-patented or generic , agricultural protection products they produce can be effectively marketed in the western world . we have successfully brought numerous products to market . we have a strong pipeline , which includes future additions to our product portfolio . the combination of our global sourcing and regulatory capabilities makes the generic agricultural market a niche for us and we will continue to offer new product additions in this market . in the usda , national agricultural statistics service release dated june 29 , 2018 , the total crop acreage planted in the united states in 2018 increased by .9 % to 322 million acres from 319 million acres in 2017. the number of peanut acres planted in 2018 decreased 19.7 % from 2017 levels while sugarcane acreage harvested decreased 2.1 % from 2017. in addition , the potato acreage harvested in 2018 decreased approximately 1.0 % from the 2017 level . 35 we believe our main business strengths are sourcing , regulatory support , quality assurance and marketing and distribution . we distribute more than 1,100 chemical compounds used principally as finished products or raw materials in the pharmaceutical , nutraceutical , agricultural , coatings and industrial chemical industries . with business operations in ten countries , we believe that our global reach is distinctive in the industry , enabling us to source and supply quality products on a worldwide basis . leveraging local professionals , we source more than two-thirds of our products from asia , buying from approximately 500 companies in china and 200 in india . in this md & a , we explain our general financial condition and results of operations , including , among other things , the following : ยท factors that affect our business ยท our earnings and costs in the periods presented ยท changes in earnings and costs between periods ยท sources of earnings ยท the impact of these factors on our overall financial condition as you read this md & a , refer to the accompanying consolidated statements of income , which present the results of our operations for the three years ended june 30 , 2018. we analyze and explain the differences between periods in the specific line items of the consolidated statements of income . critical accounting estimates and policies this discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles . in preparing these financial statements , we were required to make estimates and assumptions that affect the amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . we regularly evaluate our estimates including those related to allowances for bad debts , partnered products , inventories , goodwill and indefinite-life intangible assets , long-lived assets , environmental and other contingencies , income taxes , stock-based compensation and purchase price allocation . we base our estimates on various factors , including historical experience , advice from outside subject-matter experts , and various assumptions that we believe to be reasonable under the circumstances , which together form the basis for our making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates . since june 30 , 2018 , there have been no significant changes to the assumptions and estimates related to those critical accounting estimates and policies . we implemented a new enterprise resource planning ( โ erp โ ) system at our rising subsidiary during the fourth quarter of the year ended june 30 , 2018. in automating processes that heretofore have been undertaken manually , we may be required to reassess certain of our estimates , especially with respect to our rebates , returns and chargebacks approaches . we believe the following critical accounting policies affected our more significant judgments and estimates used in preparing these consolidated financial statements . revenue recognition we recognize revenue from sales of any product when it is shipped and title and risk of loss pass to the customer . we have no acceptance or other post-shipment obligations and we do not offer product warranties or services to our customers . sales are recorded net of estimated returns of damaged goods from customers , which historically have been immaterial , and sales incentives offered to customers .
| results of operations fiscal year ended june 30 , 2017 compared to fiscal year ended june 30 , 2016 replace_table_token_6_th 44 net sales net sales increased $ 79,794 or 14.3 % , to $ 638,318 for the year ended june 30 , 2017 , compared with $ 558,524 for the prior year . we reported a sales increase in our human health segment and sales decreases in the pharmaceutical ingredients and performance chemicals segments . human health products that fall within the human health segment include finished dosage form generic drugs and nutraceutical products . net sales for the human health segment increased by $ 87,360 for the year ended june 30 , 2017 , to $ 315,395 , which represents a 38.3 % increase over net sales of $ 228,035 for the prior year . the primary reason for the increase is due to the acquisition of certain products and related assets of citron and lucid . sales from the product acquisition of $ 122,118 are included in the year ended june 30 , 2017. this increase was offset by a decline in sales of rising products of $ 30,585 and a decline of $ 4,173 in sales of nutritional products . the decrease in rising sales was primarily driven by increased competition , price erosion on certain products in our generic drugs portfolio and delays in contribution from new product launches . we believe this industry wide pricing pressure on the generic business will continue in the near term . the drop in nutraceutical sales primarily occurred abroad , specifically at our german subsidiary . pharmaceutical ingredients net sales for the pharmaceutical ingredients segment decreased by $ 3,566 for the year ended june 30 , 2017 , to $ 157,445 , which represents a 2.2 % decrease from net sales of $ 161,011 for the prior year .
| 2,610 |
we believe our improved products provide increased sales opportunities into government and commercial markets and demonstrate our ability to remain the leader in the ahd market . we also continued to design and expand our product offering for our one voice omnidirectional product line through increased variations of our current technology to accommodate various customer requirements , including the addition of various configurations of amplifiers , mounts , power sources and software . we have also configured a modified product offering that can meet a lower price point for certain applications , while still providing high quality performance . we have made , and will continue to make investments in engineering , software development , tooling and third party certifications of our product to compete in the global mass notification market with , what we believe to be , a superior product . we intend to continue innovating during fiscal year 2017 with consistent or increased levels of research and development expenditures . 18 business outlook our product line continues to gain worldwide awareness and recognition through product demonstrations , media exposure , trade show participation , and word of mouth as a result of positive responses and increased acceptance of our products . we believe we have a well-known global brand , market-leading technology and solid product foundation with our lrad directed product line , which we have expanded over the years to service new markets and customers for greater business growth . we have launched a line of omnidirectional products targeted to meet the needs of the large and growing mass notification market . we believe that we have strong market opportunities for our directional and omnidirectional product offerings within the global government and military sector , as well as commercial applications as a result of continued threats to governments , commerce , law enforcement , borders and infrastructures and in wildlife preservation and control applications . we intend to continue expanding our international mass notification business through continued expansion of our product offering and geographically , particularly in the middle east , europe and asia , where we believe there are greater market opportunities for our omnidirectional products . in fiscal year 2016 , we increased our global selling network , which consists of marketing and business development personnel , as well as relationships with key integrators and sales representatives within the united states and throughout the world . in addition , we utilize several part-time consultants with specialties in various areas of u.s. government and defense , to advise us in procedures and budget processes in an effort to be successful in these areas . however , we may continue to face challenges in fiscal year 2017 and 2018 due to continuing economic and geopolitical conditions in some international regions , as well as resulting from the change in administration with the recent u.s. presidential election . we anticipate continued u.s. military spending uncertainty due to ongoing defense budget delays and spending reductions . we continue to pursue large business opportunities , but it is difficult to anticipate how long it will take to close these opportunities , or if they will ever ultimately come to fruition . it is also difficult to determine whether our omnidirectional product will be accepted as a viable solution in the mass notification market , which includes a number of large , well-known competitors . our products have varying gross margins and therefore , product sales mix materially affects gross profit . in addition , the margins differ based on the channel of trade through which the products are sold . we continue to implement product updates and changes , including raw material and component changes that may impact product costs . we also have increased competition in the mass notification market where there are a number of larger , more established companies that we expect will cause pricing pressure on our omnidirectional products . we do not believe that historical gross profit margins should be relied upon as an indicator of future gross profit margins . during fiscal year 2016 , we had approximately 12 full-time business development and marketing personnel at the company , including two full-time international business consultants . in addition , we utilize various part-time sales consultants with experience and knowledge in various areas of government and defense to assist with specific markets we are seeking to pursue . our participation in trade shows and demonstrations has remained strong , including road shows with our lrad 360xt trailer to various events . we plan to increase our u.s. and international trade show participation further in fiscal year 2017 , which will also increase travel by our business development team . in addition , we plan to add a full-time and two part-time consultants to support us in specific markets in 2017. as a result , we would expect our selling , general and administrative expenses to increase in fiscal year 2017. also , commission expense will fluctuate based on the level of commissionable sales incurred . research and development ( โ r & d โ ) expenses vary period to period due to the timing of projects , and the timing , extent and use of outside consulting , design and development firms . in fiscal year 2016 , we added an engineer to support our development requirements . our r & d expenses were primarily for in-house development ; however , we continue to supplement our in-house development with third party services , such as product testing and certification . based on our current plans , we expect to increase engineering staffing in fiscal year 2017 , and we expect expenses for third party services to continue at the same level as fiscal year 2016. critical accounting policies and estimates we have identified the policies below as critical to our business operations and to understanding our results of operations . our accounting policies are more fully described in our financial statements and related notes located in โ item 8. financial statements and supplementary data. story_separator_special_tag we accrue bonus expense each quarter based on estimated year-end results , and then adjust the actual in the fourth quarter based on our final results compared to targets . deferred tax asset . we evaluate quarterly the realizability of the deferred tax assets and assess the need for a valuation allowance . we record valuation allowances to reduce our deferred tax assets to an amount that we believe is more likely than not to be realized . realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards . utilizing the net operating loss ( โ nol โ ) carryforwards in future years could be substantially limited due to restrictions imposed under federal and state laws upon a change in ownership or control . included in the nol carryforwards are deductions from stock options that , if recognized , will be recorded as a credit to additional paid-in capital rather than through our results of operations . in determining taxable income for financial statement reporting purposes , we must make certain estimates and judgments . these estimates and judgments are applied in the calculation of certain tax liabilities and in the determination of the ability to recover deferred tax assets . the company will continue to evaluate the ability to realize its net deferred tax assets on an ongoing basis to identify whether any significant changes in circumstances or assumptions have occurred that could materially affect the ability to realize deferred tax assets and will adjust the valuation accordingly . 20 recent accounting pronouncements new pronouncements issued for future implementation are discussed in note 3 , recent accounting pronouncements , to our consolidated financial statements . segment and related information we are engaged in the design , development and commercialization of directed sound technologies and products . we present our business as one reportable segment due to the similarity in nature of products marketed , financial performance measures ( revenue growth and gross margin ) , methods of distribution ( direct and indirect ) and customer markets ( each product is sold by the same personnel to government and commercial customers , domestically and internationally ) . our chief operating decision-making officer reviews financial information on sound products on a consolidated basis . see note 15 to our consolidated financial statements for further discussion . comparison of results of operations for fiscal years ended september 30 , 2016 and 2015 the following table provides for the periods indicated certain items of our consolidated statements of operations expressed in dollars and as a percentage of net sales . the financial information and discussion below should be read in conjunction with the consolidated financial statements and notes contained in this annual report . replace_table_token_2_th revenues revenues decreased $ 423,215 , or 2.5 % , in the fiscal year ended september 30 , 2016. revenues for the first half of the fiscal year were lower than the prior year due to the timing of orders . revenues during the second half of fiscal year 2016 improved over the prior year , but it was not enough to make up for the slow start . international revenues decreased by 19 % from the prior year . the sale of units to china for its police force in the prior few years slowed in fiscal year 2016 , but is expected to improve in fiscal year 2017. revenues from sales in japan decreased due to the timing of orders for their tsunami warning system upgrade , which we expect to improve in fiscal 2017. this led to a 45 % decrease in revenues from our mass notification products in fiscal year 2016. we continue to pursue opportunities in mass notification and received two large awards in early fiscal year 2017 : $ 1.3 million from eurasia for mobile systems and $ 600,000 for a u.s. maritime port . following several years of decline , u.s. revenues increased by 47 % in fiscal year 2016 as revenues from the u.s. military and other u.s. government agencies grew by 52 % compared to the prior fiscal year . we delivered our first major order on our u.s. army program of record in fiscal year 2016 for $ 915,000 and were awarded a $ 7.4 million multi-year contract from the u.s. navy for military sealift command ships and received several other orders for the u.s. navy , u.s. coast guard , u.s. marines , department of state , and various u.s. law enforcement agencies and municipalities . orders from international militaries and law enforcement agencies also generated strong revenues in fiscal year 2016. the receipt of orders will often be uneven due to the timing of approvals or budgets . we had aggregate deferred revenue of $ 637,763 and $ 51,345 for prepayments from customers in advance of product shipment at september 30 , 2016 and 2015 , respectively . 21 gross profit gross profit for the year ended september 30 , 2016 decreased by $ 857,036 , or 10.0 % , primarily due to decreased revenue , unfavorable channel mix and lower fixed overhead absorption . in addition , we incurred expenses to increase our inventory reserve for slow moving products and increased fixed manufacturing overhead costs to support our operations . our warranty costs decreased in 2016 for first year warranty support , but we had some additional expenses incurred this year related to an annual maintenance contact with an international customer . selling , general and administrative expenses selling , general and administrative expenses increased by $ 1,596,088 , or 30.2 % , primarily due to $ 1,138,183 of non-recurring expenses related to legal and consulting costs resulting from a proxy contest initiated by a stockholder of the company , severance and related expenses in accordance with a separation agreement and general release related to the departure of the company 's prior chief executive officer , and recruiting and hiring costs related to the search and hire of a new chief executive officer .
| overview lrad corporation develops and delivers innovative directed acoustic products that beam , focus and control sound over relatively short and long distances . by placing sound only where needed , we not only enhance many typical speaker applications , but we offer novel sound applications that conventional speakers can not achieve . over the years , we redesigned and enhanced our directional lrad products , improving quality and functionality . in 2012 , using the technology that we developed for our directional speakers , we designed and developed a new line of omnidirectional lrad one voice speakers . unlike our directional products , which have a narrow 15 to 30 degree beam of sound , the omnidirectional line offers products that project sound from 60 to 360 degrees to meet the needs of the global mass notification marketplace . we now offer a variety of directional and omnidirectional sound products , which meet a broad range of requirements from communicating with and deterring threats over distances up to 600 meters with our hand-held lrad 100x to distances up to 5,500 meters with our lrad 2000x . our long range acoustic device or lrad pioneered a new worldwide market for directional long-range acoustic hailing devices ( โ ahds โ ) , which we have sold into over 70 countries . we have been at the forefront developing new acoustic innovations and we believe we have established a significant competitive advantage in our principal markets . recent developments in the fiscal year ended september 30 , 2016 , we accomplished the following : โ following three years of declining revenues , u.s. revenues increased by 47 % in fiscal 2016 from fiscal year 2015 as a result of increased government and military programs . โ executed a contract modification with the u.s. navy that allows the u.s. army to purchase lrad ahds under an existing firm-fixed-price , indefinite-delivery/indefinite-quantity contract .
| 2,611 |
our foil technology products are recognized as global market leaders of strain gages and resistors that provide high precision , high stability over extreme temperature ranges , and long life . our force sensor products and our weighing and control systems products are also certified to meet some of the highest levels of precision measurements of force , weight , pressure , torque , tilt , motion , and acceleration . while these competencies form a solid basis for our products , we believe there are several areas that can be optimized , including : increasing our technical sales efforts ; continuing to innovate in product performance and design ; and refining our manufacturing processes . - 34 - our foil technology research group continues to provide innovations that enhance the capability and performance of our strain gages , while simultaneously reducing their size and power consumption . we believe this new level of foil technology will create new markets as customers ยdesign inย these next generation products in existing and new applications . our development engineering team is also responsible for creating new processes to further automate manufacturing and improve productivity and quality . our design , research , and product development teams , in partnership with our marketing teams , drive our efforts to bring innovations to market . we intend to leverage our insights into customer demand to continually develop and roll out new , innovative products within our existing lines and to modify our existing core products in ways that make them more appealing , addressing changing customer needs and industry trends in terms of form , fit , and function . acquisition strategy to date , our growth and acquisition strategy largely focused on vertical product integration , using our foil strain gages in our force sensor products and incorporating our sensors and electronic measurement instrumentation and software into our weighing and control systems . precision foil resistor products are also used in many of the control systems that we manufacture . the kelk acquisition will provide growth in our weighing and control systems segment , through expansion into the metals measurement processing market . we expect to continue to make strategic acquisitions , like the kelk acquisition , particularly where opportunities present themselves to grow our force sensors segment and our weighing and control systems segment . we believe acquired businesses will benefit from improvements we implement to reduce redundant functions and from our current global manufacturing operations and distribution channels . research and development research and development will continue to play a key role in our efforts to introduce innovative products to generate new sales and to improve profitability . we expect to continue to expand our position as a leading supplier of precision foil technology products . we believe our r & d efforts should provide us with a variety of opportunities to leverage technology , products , and our manufacturing base in order to ultimately improve our financial performance . the amount charged to expense for research and development aggregated $ 6.4 million , $ 6.8 million , and $ 6.0 million for the years ended december 31 , 2012 , 2011 , and 2010 , respectively . cost management to be successful , we believe we must seek new strategies for controlling operating costs . through automation in our plants , we believe we can optimize our capital and labor resources in production , inventory management , quality control , and warehousing . we are in the process of moving some manufacturing from higher-labor-cost countries to lower-labor-cost countries , such as costa rica , india , and israel . this will enable us to become more efficient and cost competitive , and also maintain tighter controls of the operation . our acquisition strategy may involve a focus on reducing selling , general , and administrative expenses and achieving significant production cost savings at acquired companies . the plant closure and employee termination costs subsequent to acquisitions are also integral to our cost reduction programs . - 35 - production transfers , facility consolidations , and other long-term cost-cutting measures require us to initially incur significant severance and other exit costs . we have begun to realize the benefits of our restructuring through lower labor costs and other operating expenses , and expect to continue reaping these benefits in future periods . however , these programs to improve our profitability also involve certain risks which could materially impact our future operating results , as further detailed in item 1a ยrisk factorsย of this annual report on form 10-k. we did not initiate any new restructuring programs during the years ended december 31 , 2012 , 2011 , or 2010 and thus did not record any restructuring expenses during those years . we are presently executing plans to further reduce our costs by consolidating additional manufacturing operations with our expansion into india . these plans will require us to incur restructuring and severance costs in future periods . however , after implementing these plans , we do not anticipate significant restructuring and severance costs for our business except in the context of acquisition integration . while streamlining and reducing fixed overhead , we are exercising caution so that we will not negatively impact our customer service , or our ability to further develop products and processes . israeli government incentives we have substantial manufacturing operations in israel , where we benefit from the government 's tax incentive programs . these benefits take the form of reduced tax rates that are lower than those in the united states . foreign currency we are exposed to foreign currency exchange rate risks , particularly due to transactions in currencies other than the functional currencies of certain subsidiaries . u.s. generally accepted accounting principles ( ยgaapย ) require that entities identify the ยfunctional currencyย of each of their subsidiaries and measure all elements of the financial statements in that functional currency . a subsidiary 's functional currency is the currency of the primary economic environment in which it operates . story_separator_special_tag for work in process goods , we are required to estimate the cost to completion of the products and the prices at which we will be able to sell the products . for finished goods , we must assess the prices at which we believe the inventory can be sold . inventories are also adjusted for estimated obsolescence and written down to net realizable value based upon estimates of future demand , technology developments and market conditions . estimates of restructuring and severance costs and purchase-related restructuring costs to maintain our cost competitiveness , we are shifting manufacturing emphasis to more advanced automation in higher-labor-cost regions and relocating production to regions with skilled workforces and relatively lower labor costs . we also incur similar costs when we acquire companies . these production transfers , facility consolidations , and other long-term cost-cutting measures require us to initially incur significant severance and other exit costs . we anticipate that we will realize the benefits of our restructuring efforts through lower labor costs and other operating expenses in future periods . restructuring and severance costs are expensed during the period in which we become obligated to pay those costs and all other requirements for accrual are met . because transfers of manufacturing operations sometimes occur incrementally over a period , the expense initially recorded is often based on estimates . because these costs are recorded based on estimates , our actual expenditures for restructuring activities may differ from the initially recorded costs . if this happens , we will need to adjust our estimates in future periods , either by recording additional expenses in future periods , if our initial estimates were too low , or by reversing part of the charges that we recorded initially , if our initial estimates were too high . impairment of long-lived assets we assess the impairment of our long-lived assets other than goodwill , including property and equipment and identifiable intangible assets subject to amortization , whenever events or changes in circumstances indicate the carrying value may not be recoverable . factors we consider important , which could trigger an impairment review , include significant changes in the manner of our use of the asset , changes in historical or projected operating performance , and significant negative economic trends . - 38 - pension and other postretirement benefits accounting for defined benefit pension and other postretirement plans involves numerous assumptions and estimates . the discount rate at which obligations could effectively be settled and the expected long-term rate of return on plan assets are two critical assumptions in measuring the cost and benefit obligations of our pension and other postretirement benefit plans . other important assumptions include the anticipated rate of future increases in compensation levels , estimated mortality , and for postretirement medical plans , increases or trends in health care costs . management reviews these assumptions at least annually . we use independent actuaries to assist us in formulating assumptions and making estimates . these assumptions are updated periodically to reflect the actual experience and expectations on a plan-specific basis , as appropriate . our defined benefit plans are concentrated in the united states and the united kingdom . plans in these countries comprise approximately 85 % of our retirement obligations at december 31 , 2012. we utilize published long-term high-quality bond indices to determine the discount rate at the measurement date . we utilize bond yields at various maturity dates to reflect the timing of expected future benefit payments . we believe the discount rates selected are the rates at which these obligations could effectively be settled . for benefit plans which are funded , we establish strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes with the aim of achieving a prudent balance between return and risk . we set the expected long-term rate of return based on the expected long-term average rates of return to be achieved by the underlying investment portfolios . in establishing this rate , we consider historical and expected returns for the asset classes in which the plans are invested , advice from pension consultants and investment advisors , and current economic and capital market conditions . the expected return on plan assets is incorporated into the computation of pension expense . the difference between this expected return and the actual return on plan assets is deferred . we believe that the current assumptions used to estimate plan obligations and annual expense are appropriate in the current economic environment . however , if economic conditions change , we may be inclined to change some of our assumptions , and the resulting change could have a material impact on the combined and consolidated statements of operations and on the consolidated balance sheet . income taxes our income tax expense , deferred tax assets and liabilities , and reserves for unrecognized tax benefits reflect our best assessment of estimated current and future taxes to be paid . we are subject to income taxes in both the united states and numerous foreign jurisdictions . significant judgments and estimates are required in determining the consolidated income tax expense for financial statement purposes . deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements , which will result in taxable or deductible amounts in the future . in assessing the realizability of deferred tax assets , we consider future taxable income by tax jurisdiction and tax planning strategies . we record a valuation allowance to reduce our deferred tax assets to equal an amount that is more likely than not to be realized . in projecting future taxable income , we begin with historical results adjusted for the results of discontinued operations and incorporate assumptions about the amount of future state , federal and foreign pretax operating income adjusted for items that do not have tax consequences . the assumptions about future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses .
| overview vpg is an internationally recognized designer , manufacturer and marketer of components based on resistive foil technology , sensors and sensor-based systems specializing in the growing markets of stress , force , weight , pressure , and current measurements . we provide vertically integrated products and solutions that are primarily based upon our proprietary foil technology . these products are marketed under a variety of brand names that we believe are characterized as having a very high level of precision and quality . our global operations enable us to produce a wide variety of products in strategically effective geographical locations that also optimize our resources for specific technologies , sensors , assemblies and systems . the company 's products are precision foil resistors , foil strain gages , and sensors that convert mechanical inputs into an electronic signal for display , processing , interpretation , or control by our instrumentation and systems products . precision sensors are essential to the accurate measurement , resolution and display of force , weight , pressure , torque , tilt , motion or acceleration , especially in the legal-for-trade , commercial , and industrial marketplace in a wide variety of applications . our products are not typically used in the consumer market . the precision sensor market is growing as a result of the significant increase in intelligent products across virtually all end markets , including medical , agricultural , transportation , industrial , avionics , military , and space applications . we believe that as oems strive to make products ยsmarter , ย they are generally integrating more sensors to link the analog/physical world with digital control and or response . until july 6 , 2010 , our business was part of vishay intertechnology , and our assets and liabilities consisted of those that vishay intertechnology attributed to its precision measurement and foil resistor businesses .
| 2,612 |
the total story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this annual report on form 10-k , including information with respect to our plans and strategy for our business , includes forward-looking statements that involve risks and uncertainties . you should review the ยrisk factorsย section of this annual report on form 10-k for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . overview we are a specialty pharmaceutical company focused primarily on the development of drugs to treat gastrointestinal , or gi , disorders and diseases . we are developing evk-001 , a metoclopramide nasal spray for the relief of symptoms associated with acute and recurrent diabetic gastroparesis in women with diabetes mellitus . diabetic gastroparesis is a gi disorder afflicting millions of sufferers worldwide , in which the stomach takes too long to empty its contents resulting in serious digestive system symptoms . metoclopramide is the only product currently approved in the united states to treat gastroparesis , and is currently available only in oral and intravenous forms . evk-001 is a novel formulation of this drug , designed to provide systemic delivery of metoclopramide through intranasal administration . we have evaluated evk-001 in a multicenter , randomized , double-blind , placebo-controlled parallel group , dose-ranging phase 2b clinical trial in 287 patients with diabetic gastroparesis where evk-001 was observed to be effective in improving the most prevalent and clinically relevant symptoms associated with gastroparesis in women while exhibiting a favorable safety profile . we plan to initiate a phase 3 trial of evk-001 in female patients with symptoms associated with acute and recurrent diabetic gastroparesis in the first half of 2014. we have no products approved for sale , and we have not generated any revenue from product sales or other arrangements . we have primarily funded our operations through the sale of our convertible preferred stock , borrowings under our loan and security agreements and the sale of shares in our initial public offering , or ipo , in september 2013. we have incurred losses in each year since our inception . our net losses were $ 2.8 million and $ 2.0 million for the years ended december 31 , 2013 and 2012 , respectively . as of december 31 , 2013 and 2012 , we had an accumulated deficit of $ 22.7 million and $ 19.9 million , respectively . substantially all of our operating losses resulted from expenses incurred in connection with advancing evk-001 through development activities and general and administrative costs associated with our operations . we expect to continue to incur significant expenses and increasing operating losses for at least the next several years . we may never become profitable , or if we do , we may not be able to sustain profitability on a recurring basis . questcor asset purchase agreement we acquired all worldwide rights , data , patents and other related assets associated with evk-001 from questcor pharmaceuticals , inc. , or questcor , in june 2007. we paid to questcor $ 650,000 in the form of an upfront payment , and will be required to make additional milestone payments totaling up to $ 52,000,000. these milestones include up to $ 5,000,000 in payments if evk-001 achieves the following development targets : $ 500,000 upon the initiation of the first patient dosing in our planned phase 3 clinical trial for evk-001 ; $ 1,500,000 upon the fda 's acceptance for review of an nda for evk-001 ; and $ 3,000,000 million upon the fda 's approval of evk-001 . the remaining $ 47,000,000 in milestone payments depend on evk-001 's commercial success and will only apply if evk-001 receives regulatory approval . in addition , we will be required to pay to questcor a low single digit royalty on net sales of evk-001 . our obligation to pay such royalties will terminate upon the expiration of the last patent right covering evk-001 , which is expected to occur in 2030. initial public offering and related transactions on september 30 , 2013 , we completed our ipo , whereby we sold 2,100,000 shares of common stock at $ 12.00 per share . on october 8 , 2013 , the underwriters for our ipo exercised the over-allotment option to purchase an additional 315,000 shares of our common stock at $ 12.00 per share . net proceeds from the ipo , including the exercise of the over-allotment option , were determined as follows : gross proceeds ( including over-allotment ) $ 28,980,000 underwriting discounts and commissions and non-accountable expense allowance ( 2,344,875 ) total offering costs ( excluding value of warrants granted to underwriter of $ 470,000 ) ( 1,514,177 ) net proceeds $ 25,120,948 additionally , upon the closing of the ipo , certain related transactions occurred : the conversion of all outstanding shares of our convertible preferred stock into 2,439,002 shares of our common stock ; retention payments in the amount of $ 355,000 became payable to our executive officers . such amount was recorded as expense on a straight-line basis from may 22 , 2013 ( the date of the retention agreements entered into with the executive officers ) through december 24 , 2013 , the date at which the final payment was due based on continued employment . since the terms of the payment required the occurrence of either a change in control of the company or an equity financing , neither of which were considered probable to occur until they happen , a catch-up expense of $ 202,857 was recorded at the time of our ipo . story_separator_special_tag this process involves the following : communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost ; estimating and accruing expenses in our financial statements as of each balance sheet date based on facts and circumstances known to us at the time ; and periodically confirming the accuracy of our estimates with selected service providers and making adjustments , if necessary . examples of estimated research and development expenses that we accrue include : fees paid to cros in connection with toxicology studies and clinical studies ; fees paid to investigative sites in connection with clinical studies ; fees paid to contract manufacturing organizations in connection with the production of clinical study materials ; and professional service fees for consulting and related services . we base our expense accruals related to clinical studies on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and cros that conduct and manage clinical studies on our behalf . the financial terms of these agreements vary from contract to contract and may result in uneven payment flows . payments under some of these contracts depend on factors such as the successful enrollment of patients , site initiation and the completion of clinical study milestones . our service providers invoice us monthly in arrears for services performed . in accruing service fees , we estimate the time period over which services will be performed and the level of effort to be expended in each period . if we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of services performed or the costs of these services , our actual expenses could differ from our estimates . to date , we have not experienced significant changes in our estimates of accrued research and development expenses after a reporting period . however , due to the nature of estimates , we can not assure you that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical studies and other research activities . estimated fair value of convertible preferred stock warrants freestanding warrants for the purchase of convertible preferred stock that is either subject to a put right or redeemable are classified as liabilities on the balance sheet at their estimated fair value . at the end of each reporting period , changes in estimated fair value during the period are recorded as a component of other income ( expense ) . we continued to adjust the carrying value of these warrants until the earlier of the exercise of the warrants or the completion of a liquidity event , including the completion of an ipo , at which time the liabilities were reclassified to additional paid-in capital . as of december 31 , 2012 we had outstanding warrants exercisable to purchase 14,000 shares of our series a convertible preferred stock . during january 2013 , an additional 8,000 warrants to purchase our series a convertible preferred stock were issued we estimate the fair values of the convertible preferred stock warrants using the black-scholes option pricing model based on inputs as of the valuation measurement dates for the estimated fair value of the underlying convertible preferred stock , the remaining contractual terms of the warrants , risk-free interest rates , expected dividend rates and the estimated volatility of the price of the convertible preferred stock . the consummation of the ipo resulted in the conversion of our series a convertible preferred stock into common stock . upon such conversion , the preferred stock warrant liability was remeasured to fair value , reclassified to additional paid-in capital and is no longer subject to remeasurement . stock-based compensation stock-based compensation expense is recorded at the estimated fair value of the award as of the grant date and is recognized as expense on a straight-line basis over the employee 's requisite service period , which is generally the vesting period of the award . stock-based compensation expense is based on awards ultimately expected to vest , and therefore , the recorded expense includes an estimate of future forfeitures . forfeitures are to be estimated at the time of grant and revised , if necessary , in subsequent periods if actual forfeitures differ from those estimates . prior to the ipo , we granted stock options to purchase common stock to employees with exercise prices equal to the value of the underlying stock , as determined by the board of directors on the date the equity award was granted . the board of directors determined the fair value of the underlying common stock by considering a number of factors , including historical and projected financial results , the risks we faced at the time , the preferences of our preferred stockholders and the lack of liquidity of our common stock . subsequent to the ipo , the exercise price of the stock options granted to our employees and members of our board of directors was determined by the closing market price of our stock on the date the stock options were granted . 38 the fair value of each option award is estimated on the date of grant using the black-scholes valuation model using the appropriate risk-free interest rate , expected term and volatility assumptions . the expected life of options was calculated using the simplified method , which calculates the life as the average of the contractual term of the stock option and the vesting period of the option . due to our limited historical data as a public company , the estimated volatility is calculated based upon our historical volatility and comparable companies whose share prices are publicly available for a sufficient period of time .
| results of operations comparison of years ended december 31 , 2013 and 2012 the following table summarizes the results of our operations for the fiscal years ended december 31 , 2013 and 2012 : replace_table_token_7_th research and development expenses . research and development expenses were approximately $ 957,000 for the year ended december 31 , 2013 , compared to approximately $ 1,165,000 for the year ended december 31 , 2012. the decrease of approximately $ 209,000 is primarily related to the decrease in executive compensation allocated to research and development as we worked to raise capital in 2013 and to the reversal of the 2012 bonus accrual due to the election by our board of directors in april 2013 to not pay 2012 bonuses in order to conserve cash . general and administrative expenses . general and administrative expenses were approximately $ 1,645,000 for the year ended december 31 , 2013 , compared to approximately $ 837,000 for the year ended december 31 , 2012. the increase of approximately $ 808,000 is primarily related to a larger portion of our labor costs being allocated to general and administrative activities in 2013 in preparation for our ipo and the payment for the executive team 's retention payments of $ 355,000 , offset by the reversal of the 2012 bonus accrual due to the election by our board of directors in april 2013 to not pay 2012 bonuses . 39 other income ( expense ) . other income ( expense ) was approximately $ ( 235,000 ) for the year ended december 31 , 2013 and primarily consisted of approximately $ ( 160,000 ) of interest expense and $ ( 82,000 ) related to the increase in the fair value of our outstanding warrant liability , and offset by approximately $ 7,000 of interest income .
| 2,613 |
64 signatures pursuant to the requirements of section 13 of 15 ( d ) the securities exchange act of 1934 , the registrant has duly caused this annual report to be signed on its behalf by the undersigned , thereunto duly authorized . fennec pharmaceuticals inc. by : rostislav raykov rostislav raykov chief executive officer and director date : march 30 , 2021 we , the undersigned directors and officers of fennec pharmaceuticals inc. , do hereby constitute and appoint rostislav raykov , as our true and lawful attorney-in-fact and agent with power of substitution , to do any and all acts and things in our name and behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below , which such attorney-in-fact and agent may deem necessary or advisable to enable said corporation to comply with the securities exchange act of 1934 , as amended , and any rules , regulations and requirements of the securities and exchange commission , in connection with this annual report on form 10-k , including specifically but without limitation , power and authority to sign for us or any of us in our names in the capacities indicated below , any and all amendments hereto ; and we do hereby ratify and confirm all that said attorney-in-fact and agent , shall do or cause to be done by virtue hereof . pursuant to the requirements of the securities exchange act of 1934 , this annual report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated . signatures title date rostislav raykov chief executive officer march 30 , 2021 rostislav raykov ( principal executive officer ) and director robert andrade chief financial officer march 30 , 2021 robert andrade ( principal financial officer and principal accounting officer ) adrian j. haigh director march 30 , 2021 adrian j. haigh dr. khalid islam director march 30 , 2021 dr. khalid islam chris a. rallis director march 30 , 2021 chris a. rallis marco brughera director march 30 , 2021 marco brughera jodi cook director march 30 , 2021 jodi cook 65 fennec pharmaceuticals inc. index to consolidated financial statements report of independent registered public accounting firm f-2 consolidated balance sheets f-4 consolidated statements of operations f-5 consolidated statements of cash flows f-6 consolidated statements of shareholders ' equity f-7 notes to the consolidated financial statements f-8 f- 1 report of independent registered public accounting firm to the shareholders and board of directors and fennec pharmaceuticals inc. opinion on the consolidated financial statements we have audited the accompanying consolidated balance sheets of fennec pharmaceuticals inc. and subsidiaries ( the โ company โ ) as of december 31 , 2020 and 2019 , and the related consolidated statements of operations , shareholders ' equity , and cash flows for each of the years then ended , and the related notes ( collectively referred to as the โ consolidated financial statements โ ) . in our opinion , the consolidated financial statements referred to above present fairly , in all material respects , the consolidated financial position of the company as of december 31 , 2020 and 2019 , and the consolidated results of its operations and its cash flows for each of the years then ended , in conformity with accounting principles generally accepted in the united states of america . basis for opinion these consolidated financial statements are the responsibility of the company 's management . our responsibility is to express an opinion on the company 's consolidated financial statements based on our audits . we are a public accounting firm registered with the public company accounting oversight board ( united states ) ( โ pcaob โ ) and are required to be independent with respect to the company in accordance with the u.s. federal securities laws and the applicable rules and regulations of the securities and exchange commission and the pcaob . we conducted our audits in accordance with the standards of the pcaob and canadian generally accepted auditing standards . those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement , whether due to error or fraud . the company is not required to have , nor were we engaged to perform , an audit of its internal control over financial reporting . as part of our audits , we are required to obtain an understanding of internal control over financial reporting story_separator_special_tag cautionary statement the following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing at the end of this annual report . some of the information contained in this discussion and analysis or set forth elsewhere in this annual report , including information with respect to our plans and strategy for our business , includes forward looking statements that involve risks and uncertainties . as a result of many factors , including those factors set forth in the โ risk factors โ section of this annual report , our actual results could differ materially from the results described in , or implied by , the forward-looking statements contained in the following discussion and analysis . overview our only product candidate in the clinical stage of development is pedmark tm ( sodium thiosulfate ( sts ) anhydrous injection ) . story_separator_special_tag a puma is a dedicated marketing authorization covering the indication and appropriate formulation for medicines developed exclusively for use in the pediatric population and provides data and market protection up to 10 years . therefore , this decision allows us to proceed with the submission of a puma in the european union ( eu ) with incentives of automatic access to the centralized procedure and up to 10 years of data and market protection . in february 2020 , we announced that we had submitted a maa for the prevention of ototoxicity induced by cisplatin chemotherapy patients 1 month to < 18 years of age with localized , non-metastatic , solid tumors . we have not received and do not expect to have significant revenues from our product candidate until we are either able to sell our product candidate after obtaining applicable regulatory approvals or we establish collaborations that provide us with up-front payments , licensing fees , milestone payments , royalties or other revenue . we generated a net loss of $ 18.1 million for the year ended december 31 , 2020. we generated a net loss of approximately $ 12.8 million for the year ended december 31 , 2019. as of december 31 , 2020 , our accumulated deficit was approximately $ 162.1 million . our projections of our capital requirements are subject to substantial uncertainty , and more capital than we currently anticipate may be required thereafter . to finance our continuing operations , we may need to raise substantial additional funds through either the sale of additional equity , the issuance of debt , the establishment of collaborations that provide us with funding , the out-license or sale of certain aspects of our intellectual property portfolio or from other sources . we may not be able to raise the necessary capital or such funding may not be available on financially acceptable terms if at all . if we can not obtain adequate funding in the future , we might be required to further delay , scale back or eliminate certain research and development studies , consider business combinations or even shut down some , or all , of our operations . our operating expenses will depend on many factors , including the progress of our drug development efforts and efficiency of our operations and current resources . our research and development expenses , which include expenses associated with our clinical trials , drug manufacturing to support clinical programs , stock-based compensation , consulting fees , sponsored research costs , toxicology studies , license fees , milestone payments , and other fees and costs related to the development of our product candidate , will depend on the availability of financial resources , the results of our clinical trials , and any directives from regulatory agencies , which are difficult to predict . our general and administration expenses include expenses associated with the compensation of employees , stock-based compensation , professional fees , consulting fees , insurance and other administrative matters associated in support of our drug development programs . on may 5 , 2020 , we announced the completion of an underwritten public offering of 4,800,000 of our common shares at a public offering price of $ 6.25 per share . in addition , we issued an additional 660,204 common shares in connection with the partial exercise of the underwriters ' over-allotment option . the approximate total gross proceeds from the offering were $ 34,100 ( $ 32,189 net of commissions , fees and issue costs ) . on february 1 , 2019 , our wholly owned subsidiary fennec pharmaceuticals , inc. entered into a loan and security agreement ( the โ loan and security agreement โ ) with bridge bank , a division of western alliance bank , an arizona corporation ( โ bridge bank โ ) , pursuant to which bridge bank agreed to loan $ 12.5 million to fennec pharmaceuticals , inc. , to be made available upon nda approval of pedmark tm by no later than september 30 , 2020. the loan and security agreement was amended on june 26 , 2020 to increase the total potential amount of the loan to $ 18 million and to extend the outside date for us to receive nda approval of pedmark tm to december 31 , 2020. in connection with this facility , we issued the bridge bank a warrant to purchase up to 39,000 of our common shares at an exercise price of $ 6.80 per share , with an exercise period of ten years from the date of issuance subject to certain early termination conditions . under accounting standards codification ( `` asc '' ) 470-50 , modifications and extinguishments , the amendment to the facility was considered a modification . as such , we had been amortizing the loan fee and the value of the warrant over the remainder of the loan term . following the receipt of the fda 's crl in august 2020 , we decided to fully amortize the remaining portions of the loan fee and the value of the warrants . the loan and security agreement expired on december 31 , 2020 as a result of us not obtaining nda approval of pedmark tm by that date , with no amounts advanced under the facility prior to its termination . we believe that the funds raised in our may 2020 public offering provides us sufficient funding to carry-out our planned activities , including potential nda approval and the commencement of commercialization efforts , for at least the next twelve months as we continue our strategic development of pedmark tm . 48 story_separator_special_tag activities for the production of pedmark tm and related regulatory expenses at year-end 2020 . ยท working capital increased between december 31 , 2020 and december 31 , 2019 by $ 17.5 million .
| results of operations fiscal 2020 versus fiscal 2019 replace_table_token_2_th ยท revenues reported represent royalties related to elion deal with processa pharmaceuticals , inc. fennec received $ 0.005 million in cash and 41,250 in restricted shares of processa pharmaceuticals , inc. ยท research and development expense decreased by $ 0.5 million in fiscal 2020 as compared to fiscal 2019 , primarily due to the shift from research and development to pre-commercialization efforts for pedmark tm which took place in the first nine months of 2020 . ยท the $ 5.5 million increase in general and administrative expenses is attributed to the increase in pre-commercialization expenses . further there was a small rise in compensation to officers , directors and key contract employees in fiscal 2020 as compared to fiscal 2019 . ยท amortization expense relates to the bridge bank loan facility as the loan origination fees were capitalized in fiscal 2019 and 2020. after receiving the crl from the fda in august 2020 , management decided to amortize the remaining amounts associated with the loan facility . the facility expired on december 31 , 2020 . ยท interest income decreased in fiscal 2020 as compared to 2019 , due to lower interest rates on money market accounts for the comparable periods . ยท there was an unrealized gain of $ 0.1 million on the processa shares between the date acquired , october 30 , 2020 , and december 31 , 2020. going forward , the processa shares will be marked to market at each balance sheet date . the resulting change in value will result in an unrealized gain or loss . quarterly information the following table presents selected consolidated financial data for each of the last eight quarters through december 31 , 2020 , as prepared under generally accepted accounting principles within the united states , or u.s. gaap ( dollars in thousands , except per share information ) .
| 2,614 |
we were established in 1936 and are one of the world 's leading providers of proprietary and patented reservoir description and production enhancement services and products to the oil and gas industry , primarily through client relationships with many of the world 's major , national and independent oil companies . in the first quarter of 2017 , core laboratories took steps to streamline its business by realigning its reporting structure into two reporting segments . these complementary segments provide different services and products and utilize different technologies for improving reservoir performance and increasing oil and gas recovery from new and existing fields . in connection with the realignment of our reporting structure , amounts previously reported in our reservoir management segment are now presented within our reservoir description and production enhancement segments , and prior periods have been revised to conform to the current presentation . reservoir description : encompasses the characterization of petroleum reservoir rock , fluid and gas samples to increase production and improve recovery of oil and gas from our clients ' reservoirs . we provide laboratory-based analytical and field services to characterize properties of crude oil and petroleum products to the oil and gas industry . we also provide proprietary and joint industry studies based on these types of analyses . production enhancement : includes services and products relating to reservoir well completions , perforations , stimulations and production . we provide integrated diagnostic services to evaluate and monitor the effectiveness of well completions and to develop solutions aimed at increasing the effectiveness of enhanced oil recovery projects . general overview we provide services and design and produce products which enable our clients to evaluate reservoir performance and increase oil and gas recovery from new and existing fields . these services and products are generally in higher demand when our clients are investing capital in their field development programs that are designed to increase productivity from existing fields or when exploring for new fields . our clients ' investment in capital expenditure programs tends to correlate over the longer term to oil and natural gas commodity prices . during periods of higher , stable prices , our clients generally invest more in capital expenditures and , during periods of lower or volatile commodity prices , they tend to invest less . consequently , the level of capital expenditures by our clients impacts the demand for our services and products . the following table summarizes the annual average and year-end worldwide and u.s. rig counts for the years ended december 31 , 2017 , 2016 and 2015 , as well as the annual average and year-end spot price of a barrel of wti crude , europe brent crude and an mmbtu of natural gas : 2017 2016 2015 baker hughes worldwide average rig count ( 1 ) 2,029 1,593 2,337 baker hughes u.s. average rig count ( 1 ) 875 510 977 baker hughes worldwide year-end rig count ( 2 ) 2,089 1,772 1,969 baker hughes u.s. year-end rig count ( 2 ) 930 634 714 average crude oil price per barrel wti ( 3 ) $ 50.80 $ 43.29 $ 48.68 average crude oil price per barrel brent ( 4 ) $ 54.12 $ 43.67 $ 52.30 average natural gas price per mmbtu ( 5 ) $ 2.99 $ 2.52 $ 2.62 year-end crude oil price per barrel wti ( 3 ) $ 60.46 $ 53.75 $ 37.13 year-end crude oil price per barrel brent ( 4 ) $ 66.73 $ 54.96 $ 36.61 year-end natural gas price per mmbtu ( 5 ) $ 3.69 $ 3.71 $ 2.28 ( 1 ) twelve month average rig count as reported by baker hughes incorporated - worldwide rig count . ( 2 ) year-end rig count as reported by baker hughes incorporated - worldwide rig count . ( 3 ) average daily and year-end west texas intermediate crude spot price as reported by the u.s. energy information administration . ( 4 ) average daily and year-end europe brent crude spot price as reported by the u.s. energy information administration . ( 5 ) average daily and year-end henry hub natural gas spot price as reported by the u.s. energy information administration . 19 the prices for both wti and brent crude oil began to weaken after the opec meeting held in november 2014. average prices for the majority of the 2014 calendar year were in excess of $ 99 per barrel for wti and in excess of $ 105 per barrel for brent ; however , both were down to approximately $ 55 per barrel by the end of 2014 and less than $ 40 per barrel by the end of 2015. the volatility and significant reduction in the average price of crude oil during 2015 and 2016 resulted in a significant decrease in the activities associated with both the exploration and production of oil during 2015 and throughout most of 2016. however , crude oil prices , although still volatile , began to improve during the second half of 2016 and continued to strengthen during 2017 , especially during the second half of 2017. on average , pricing for crude oil improved over 16 % for 2017 over 2016 , which resulted in much improved levels of land-based activity associated with the exploration and production of oil in the united states . in north america , the land-based rig count decreased 62 % during 2015 and another 53 % during the first half of 2016 , which greatly impacted both services and product sales to this market over this time period . although the north america rig count improved at the end of 2016 it still remained almost 20 % below 2015 levels and continued to strengthen throughout most of 2017. we saw resilient levels of activities on development projects and producing fields in the u.s. unconventional reservoirs during the second half of 2016 which continued and expanded during 2017 as we began the recovery phase of this business cycle . story_separator_special_tag the increases in operating income and operating margin in 2017 compared to 2016 were primarily due to increased demand for our higher margin products and services and the impact of higher revenue on our fixed-cost structure in 2017. the decreases in operating income and operating margin in 2016 compared to 2015 were primarily due to decreased revenue and the impact of our fixed-cost structure on lower revenue in 2016. liquidity and capital resources general we have historically financed our activities through cash on hand , cash flows from operations , bank credit facilities , equity financing and the issuance of debt . cash flows from operating activities provides the primary source of funds to finance operating needs , capital expenditures and our dividend and share repurchase programs . if necessary , we supplement this cash flow with borrowings under bank credit facilities to finance some capital expenditures and business acquisitions . as we are a netherlands holding company , we conduct substantially all of our operations through subsidiaries . our cash availability is largely dependent upon the ability of our subsidiaries to pay cash dividends or otherwise distribute or advance funds to us . there are no restrictions preventing any of our subsidiaries from repatriating earnings , and there are no restrictions or income taxes associated with distributing cash to the parent company through loans or advances . as of december 31 , 2017 , $ 9.8 million of our $ 14.4 million of cash was held by our foreign subsidiaries . our financial statements are prepared in conformity with generally accepted accounting principles in the u.s. ( `` u.s. gaap '' or `` gaap '' ) . we utilize the non-gaap financial measure of free cash flow to evaluate our cash flows and results of operations . free cash flow is defined as net cash provided by operating activities ( which is the most directly comparable gaap measure ) less cash paid for capital expenditures . management believes that free cash flow provides useful information to investors regarding the cash that was available in the period that was in excess of our needs to fund our capital expenditures and operating activities . free cash flow is not a measure of operating performance under gaap , and should not be considered in isolation nor construed as an alternative to operating profit , net income ( loss ) or cash flows from operating , investing or financing activities , each as determined in accordance with gaap . free cash flow does not represent residual cash available for distribution because we may have other non-discretionary expenditures that are not deducted from the measure . moreover , since free cash flow is not a measure determined in accordance with gaap and thus is susceptible to varying interpretations and calculations , free cash flow , as presented , may not be comparable to similarly titled measures presented by other companies . the following table reconciles this non-gaap financial measure to the most directly comparable measure calculated and presented in accordance with u.s. gaap for the years ended december 31 , 2017 , 2016 and 2015 ( in thousands ) : 25 replace_table_token_8_th free cash flow as a percent of net income of 126.9 % continued to be strong even though free cash flow decreased in 2017 compared to 2016 and 2015. the decrease in 2017 compared to 2016 was primarily due to increases in both working capital and capital expenditures as the activity levels in the oil industry improved . the decrease in 2016 compared to 2015 was primarily due to the decrease in cash flow from operating activities as a result of lower activity levels for the oil and gas industry . cash flows the following table summarizes cash flows for the years ended december 31 , 2017 , 2016 and 2015 ( in thousands ) : replace_table_token_9_th the decrease in cash provided by operating activities in 2017 compared to 2016 was primarily due to increases in working capital , offset by an increase in net income while the decrease in cash provided by operations in 2016 compared to 2015 was primarily attributable to the industry downturn resulting in a year-over-year decrease in net income , partially offset by reductions in working capital . cash flow used in investing activities in 2017 increased $ 5.8 million compared to 2016 primarily as a result of increased capital expenditures . cash flow used in investing activities in 2016 decreased $ 24.9 million compared to 2015 primarily as a result of a $ 13.8 million acquisition in 2015 and lower capital expenditures in 2016. cash flow used in financing activities in 2017 decreased $ 20.8 million compared to 2016 . cash flow used in financing activities in 2016 decreased $ 55.4 million compared to 2015 . during 2017 , we used $ 16.9 million to repurchase our common shares , $ 97.1 million to pay dividends , and increased our debt balance by $ 10 million . during 2016 , we used $ 7.2 million to repurchase our common shares , $ 95.1 million to pay dividends , and decreased our debt balance by $ 215 million through the issuance of new shares . during 2015 , we used $ 159.7 million to repurchase our common shares and $ 94.2 million to pay dividends , offset by an increase in our debt balance of $ 77 million . during the year ended december 31 , 2017 , we repurchased 158,569 shares of our common stock for an aggregate amount of $ 16.9 million , or an average price of $ 106.63 per share . the repurchase of shares in the open market is at the discretion of management pursuant to shareholder authorization . we regard these treasury shares as a temporary investment which may be used to fund restricted shares that vest or to finance future acquisitions . under dutch law and subject to certain dutch statutory provisions and shareholder approval , we can hold a maximum of 50 % of our issued shares in treasury .
| results of operations operating results for the year ended december 31 , 2017 compared to the years ended december 31 , 2016 and 2015 we evaluate our operating results by analyzing revenue , operating income and net income margin ( defined as net income divided by total revenue ) . since we have a relatively fixed cost structure , increases in revenue generally translate into higher operating income results as well as net income margin percentages . results for the years ended december 31 , 2017 , 2016 and 2015 are summarized in the following chart : 20 results of operations as a percentage of applicable revenue are as follows ( dollars in thousands ) : replace_table_token_4_th services revenue services revenue increased to $ 481.5 million in 2017 from $ 470.3 million in 2016 ; however , services revenue for 2016 decreased from $ 612.0 million in 2015 . the upward trend in the average price of crude oil during 2017 resulted in continued strengthening of activities associated with the exploration and production of oil during the second half of 2017. however , the most significant increase was realized in onshore activities within the united states while the decrease in international activities continued during most of 2017. average prices for wti crude oil increased 17 % in 2017 compared to an 11 % decrease in 2016 and average prices for brent crude oil increased by 24 % in 2017 compared to a 17 % decrease in 2016. as a result , the average global rig count climbed 27 % in 2017 compared to a decline of 32 % in 2016 , primarily driven by increases in the north american rig count .
| 2,615 |
current net deferred tax assets and long-term net deferred tax assets were $ 2.2 and $ 3.7 million as of december 31 , 2013 and $ 0.4 and $ 1.3 million as of december 31 , 2012 , and are included in prepaid and other story_separator_special_tag overview we derive revenues from memberships to our research and data products and services , performing advisory services and consulting projects , and hosting events . we offer contracts for our research products that are typically renewable annually and payable in advance . research revenues are recognized as revenue ratably over the term of the contract . accordingly , a substantial portion of our billings are initially recorded as deferred revenue . clients purchase advisory services independently and or to supplement their memberships to our research . billings attributable to advisory services and consulting projects are initially recorded as deferred revenue . advisory service revenues , such as workshops , speeches and advisory days , are recognized when the customer receives the agreed upon deliverable . consulting project revenues , which generally are short-term in nature and based upon fixed-fee agreements , are recognized as the services are provided . event billings are also initially recorded as deferred revenue and are recognized as revenue upon completion of each event . our primary operating expenses consist of cost of services and fulfillment , selling and marketing expenses and general and administrative expenses . cost of services and fulfillment represents the costs associated with the production and delivery of our products and services , including salaries , bonuses , employee benefits and stock-based compensation expense for research and consulting personnel and all associated editorial , travel , and support services . selling and marketing expenses include salaries , sales commissions , bonuses , employee benefits , stock-based compensation expense , travel expenses , promotional costs and other costs incurred in marketing and selling our products and services . general and administrative expenses include the costs of the technology , operations , finance , and human resources groups and our other administrative functions , including salaries , bonuses , employee benefits , and stock-based compensation expense . overhead costs such as facilities and annual fees for cloud-based information technology systems are allocated to these categories according to the number of employees in each group . deferred revenue , agreement value , client retention , dollar retention , enrichment and number of clients are metrics we believe are important to understanding our business . we believe that the amount of deferred revenue , along with the agreement value of contracts to purchase research and advisory services , provide a significant measure of our business activity . we define these metrics as follows : deferred revenue ย billings in advance of revenue recognition as of the measurement date . agreement value ย the total revenues recognizable from all research and advisory service contracts in force at a given time ( but not including advisory-only contracts ) , without regard to how much revenue has already been recognized . no single client accounted for more than 2 % of agreement value at december 31 , 2013 . 14 client retention ย the percentage of client companies with memberships expiring during the most recent twelve-month period that renewed one or more of those memberships during that same period . dollar retention ย the percentage of the dollar value of all client membership contracts renewed during the most recent twelve-month period to the total dollar value of all client membership contracts that expired during the period . enrichment ย the percentage of the dollar value of client membership contracts renewed during the most recent twelve-month period to the dollar value of the corresponding expiring contracts . clients ย we count as a single client the various divisions and subsidiaries of a corporate parent and we also aggregate separate instrumentalities of the federal , state , and provincial governments as single clients . client retention , dollar retention , and enrichment are not necessarily indicative of the rate of future retention of our revenue base . a summary of our key metrics is as follows ( dollars in millions ) : replace_table_token_4_th replace_table_token_5_th deferred revenue at december 31 , 2013 and december 31 , 2012 both increased 2 % compared to the prior years . however when including the amount of future invoicing for contracts at each period end , the combined amount of deferred revenue and future invoicing was flat at both december 31 , 2013 and 2012 compared to the prior years . the change in deferred revenue plus future invoicing is essentially consistent with the change in agreement value at december 31 , 2013 and 2012 compared to the prior years and both metrics are reflective of flat contract bookings in both 2013 and 2012 compared to prior years . enrichment , client retention and dollar retention rates at december 31 , 2013 have all trended downward from 2011 levels . the enrichment and client retention rates include a 12-month period and as such the rates in 2013 and 2012 reflect the negative effects from the challenges associated with the implementation of the sales reorganization in early 2012 , high sales employee attrition during 2013 and 2012 , a difficult selling environment in europe during 2013 and 2012 and weaker demand for our data subscription products in 2013 , in part due to the phasing out of our standalone technology marketing navigator data product . critical accounting policies and estimates management 's discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states of america ( ยgaapย ) . the preparation of these financial statements requires us to 15 make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . story_separator_special_tag service guarantees had provided our clients the right to cancel their contracts prior to the end of the contract term and receive a refund for unused products or services . furthermore , our revenue recognition determines the timing of commission expenses , as commissions are earned during the month a contract is booked and are deferred and recognized as expense as the related revenue is recognized . we evaluate the recoverability of deferred commissions at each balance sheet date . stock-based compensation . stock-based compensation is recognized as an expense based upon the fair value of the award at the time of grant . the determination of the fair value of stock-based compensation requires significant judgment and the use of estimates , particularly surrounding assumptions such as stock price volatility , expected option lives , dividend yields and forfeiture rates . these estimates involve inherent uncertainties and the application of management judgment . as a result , if circumstances change and we use different assumptions , our stock-based compensation expense could be materially different in the future . expected volatility is based , in part , on the historical volatility of our common stock as well as management 's expectations of future volatility over the expected term of the awards granted . the development of an expected life assumption involves projecting employee exercise behaviors ( expected period between stock option vesting dates and stock option exercise dates ) . expected dividend yields are based on expectations of current and future dividends , if any . we are also required to estimate future forfeitures of stock-based awards for recognition of compensation expense . we will record additional expense if the actual forfeitures are lower than estimated and will record a recovery of prior recognized expense if the actual forfeitures are higher than estimated . in addition , for our performance-vested restricted stock units , we make estimates of the performance outcome at each period end in order to estimate the actual number of shares that will be earned . the actual expense recognized over the vesting period will only be for those awards that vest . if our actual forfeiture rate or performance outcomes are materially different from our estimates , or if our estimates of forfeitures or performance outcomes are modified in a future period , the actual stock-based compensation expense could be significantly different from what we have recorded in the current period . for example , during 2011 we modified our estimates of the performance outcome for rsus issued during 2009 and 2010 that resulted in a credit of $ 0.9 million being recorded in 2011 related to expense recognized in prior periods related to these rsus . non-marketable investments . we hold minority interests in technology-related investment funds with a book value of $ 5.7 million at december 31 , 2013. these investment funds are not publicly traded , and , therefore , because no established market for these securities exists , the estimate of the fair value of our investments requires significant judgment . investments that are accounted for using the cost method are valued at cost unless an other-than-temporary impairment in their value occurs . for investments that are accounted for using the equity method , we record our share of the investee 's operating results each period . we review the fair value of our investments on a regular basis to evaluate whether an other-than-temporary impairment in the investment has occurred . we record impairment charges when we believe that an investment has experienced a decline in value that is other-than-temporary . future adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments that may not be reflected in an investment 's current carrying value , thereby possibly requiring an impairment charge in the future . 17 goodwill , intangible assets and other long-lived assets . as of december 31 , 2013 , we had $ 85.8 million of goodwill and intangible assets with finite lives recorded on our consolidated balance sheet . goodwill is required to be measured for impairment at least annually or whenever events indicate that there may be an impairment . in order to determine if an impairment exists , we compare each of our reporting unit 's carrying value to the reporting unit 's fair value . determining the reporting unit 's fair value requires us to make estimates of market conditions and operational performance . absent an event that indicates a specific impairment may exist , we have selected november 30 as the date to perform the annual goodwill impairment test . the annual assessment of goodwill can be based on either a quantitative or qualitative assessment , or a combination of both . we completed the annual goodwill impairment testing as of november 30 , 2013 utilizing a qualitative assessment and concluded that the fair values of each of our reporting units more likely than not continues to exceed their respective carrying values . future events could cause us to conclude that impairment indicators exist and that goodwill associated with our acquired businesses is impaired . any resulting impairment loss could have a material adverse impact on our results of operations . intangible assets with finite lives consist of acquired customer relationships and technology and are valued according to the future cash flows they are estimated to produce . these assigned values are amortized on a basis which best matches the periods in which the economic benefits are expected to be realized . tangible assets with finite lives consist of property and equipment , which are depreciated and amortized over their estimated useful lives . we continually evaluate whether events or circumstances have occurred that indicate that the estimated remaining useful life of our intangible and long-lived tangible assets may warrant revision or that the carrying value of these assets may be impaired .
| segment results at the end of 2013 we reorganized our fulfillment organization into a single global research organization and a single global product organization to better support our client base by facilitating better research 26 collaboration and quality , promoting a more uniform client experience and improved customer satisfaction , and encouraging innovation . in addition , we established a dedicated consulting organization during 2013. we anticipate reporting segment information for our newly formed research , product , and consulting organizations in 2014. throughout 2013 we evaluated our business operations based on our historical client group organization . until october 2013 we were organized into two client groups with each client group responsible for writing relevant research for the roles within the client organization on a worldwide basis . the two client groups , which were considered operating segments , were : business technology ( ยbtย ) and marketing and strategy ( ยm & sย ) . in addition , our events segment supported both client groups . each client group generated revenue through sales of research , advisory and other service offerings targeted at specific roles within their targeted clients . each client group consisted of research personnel focused primarily on issues relevant to particular roles and to the day-to-day responsibilities of persons within the roles . amounts included in the events segment relate to the operations of the events production department . revenue reported in the events segment consists primarily of sponsorships and sales of event tickets to forrester events . we evaluate reportable segment performance and allocate resources based on direct margin . direct margin , as presented below , is defined as operating income excluding sales expenses , certain marketing and fulfillment expenses , stock-based compensation expense , general and administrative expenses , depreciation expense , amortization of intangible assets and reorganization costs .
| 2,616 |
share-based compensation cost is measured based on the story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations together with the information under ยpart iiยitem 6. selected financial data , ย and our historical audited consolidated financial statements and related notes appearing under ยpart iiยitem 8. financial statements and supplementary data.ย the following discussion and analysis of our financial condition and results of operations contains forward-looking statements and involves numerous risks and uncertainties , including , without limitation , those described under ยpart iยitem 1a . risk factorsย and ยforward-looking statementsย of this annual report on form 10-k. actual results may differ materially from those contained in any forward-looking statements . overview we are a leading provider of operational and financial consulting services . we help clients in diverse industries improve performance , transform the enterprise , reduce costs , leverage technology , process and review large amounts of complex data , address regulatory changes , recover from distress , and stimulate growth . our professionals employ their expertise in finance , operations , strategy , analytics , and technology to provide our clients with specialized analyses and 26 customized advice and solutions that are tailored to address each client 's particular challenges and opportunities to deliver sustainable and measurable results . we provide consulting services to a wide variety of both financially sound and distressed organizations , including healthcare organizations , leading academic institutions , fortune 500 companies , governmental entities , and law firms . we provide our services and manage our business under five operating segments : huron healthcare , huron legal , huron education and life sciences , huron business advisory , and all other . during the first quarter of 2014 , we reorganized our internal operating structure to better align our service offerings and moved our enterprise performance management ( ยepmย ) practice ( formerly referred to as blue stone international , a business that we acquired during the fourth quarter of 2013 ) from the huron education and life sciences segment to the huron business advisory segment . see ยpart iยitem 1. businessยoverviewยour servicesย and note 16 ยsegment informationย within the notes to our consolidated financial statements for a detailed discussion of our five segments . how we generate revenues a large portion of our revenues is generated by our full-time consultants who provide consulting services to our clients and are billable to our clients based on the number of hours worked . a smaller portion of our revenues is generated by our other professionals , also referred to as full-time equivalents , all of whom work variable schedules as needed by our clients . other professionals include specialized finance and operational consultants and our document review and electronic data discovery groups , as well as full-time employees who provide software support and maintenance services to our clients . our document review and electronic data discovery groups generate revenues primarily based on number of hours worked and units produced , such as pages reviewed or amount of data processed . we translate the hours that these other professionals work on client engagements into a full-time equivalent measure that we use to manage our business . we refer to our full-time consultants and other professionals collectively as revenue-generating professionals . revenues generated by our full-time consultants are primarily driven by the number of consultants we employ and their utilization rates , as well as the billing rates we charge our clients . revenues generated by our other professionals , or full-time equivalents , are largely dependent on the number of consultants we employ , their hours worked , and billing rates charged , as well as the number of pages reviewed and amount of data processed in the case of our document review and electronic data discovery groups , respectively . we generate the majority of our revenues from providing professional services under four types of billing arrangements : time-and-expense , fixed-fee ( including software license revenue ) , performance-based , and support and maintenance for the software we deploy . time-and-expense billing arrangements require the client to pay based on either the number of hours worked , the number of pages reviewed , or the amount of data processed by our revenue-generating professionals at agreed upon rates . we recognize revenues under time-and-expense billing arrangements as the related services are rendered . time-and-expense engagements represented 43.6 % , 44.9 % , and 47.7 % of our revenues in 2014 , 2013 , and 2012 , respectively . in fixed-fee billing arrangements , we agree to a pre-established fee in exchange for a predetermined set of professional services . we set the fees based on our estimates of the costs and timing for completing the engagements . it is the client 's expectation in these engagements that the pre-established fee will not be exceeded except in mutually agreed upon circumstances . we generally recognize revenues under fixed-fee billing arrangements using a proportionate performance approach , which is based on work completed to-date versus our estimates of the total services to be provided under the engagement . we generate revenues from licensing two types of proprietary software to clients : revenue cycle management software and research administration and compliance software . licenses for our revenue cycle management software are 27 sold only as a component of our consulting projects , and the services we provide are essential to the functionality of the software . therefore , revenues from these software licenses are recognized over the term of the related consulting services contract , which are typically fixed-fee . license revenue from our research administration and compliance software is generally recognized in the month in which the software is delivered . for the years ended december 31 , 2014 , 2013 , and 2012 , fixed-fee engagements ( including software license revenue ) represented approximately 39.6 % , 37.2 % , and 34.7 % of our revenues , respectively . in performance-based fee billing arrangements , fees are tied to the attainment of contractually defined objectives . story_separator_special_tag these administrative function costs include corporate office support costs , certain office facility costs , costs relating to accounting and finance , human resources , legal , marketing , information technology , and company-wide business development functions , as well as costs related to overall corporate management . 29 results of operations the following table sets forth , for the periods indicated , selected segment and consolidated operating results and other operating data . certain amounts reported in the prior year have been reclassified to conform to the new segment structure that was established in the first quarter of 2014 as a result of the reorganization of our internal operating structure . for further information on our segments and the reorganization of our internal operating structure , see note 16 ยsegment informationย within the notes to our consolidated financial statements . replace_table_token_5_th replace_table_token_6_th 30 replace_table_token_7_th ( 1 ) operating expenses not allocated to the segments include the goodwill impairment charges , among others . the goodwill impairment charges are not allocated at the segment level because the underlying goodwill asset is reflective of our corporate investment in the segments . we do not include the impact of goodwill impairment charges in our evaluation of segment performance . ( 2 ) consists of our full-time professionals who provide consulting services and generate revenues based on the number of hours worked . ( 3 ) utilization rate for our full-time billable consultants is calculated by dividing the number of hours all of our full-time billable consultants worked on client assignments during a period by the total available working hours for all of these consultants during the same period , assuming a forty-hour work week , less paid holidays and vacation days . ( 4 ) average billing rate per hour for our full-time billable consultants is calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period . 31 ( 5 ) consists of project consultants and contractors who work variable schedules as needed by our clients and generate revenues primarily based on number of hours worked and units produced , such as pages reviewed and data processed . also includes full-time employees who provide software support and maintenance services to our clients . ( 6 ) during the second quarter of 2014 , we revised our methodology for allocating revenue between our billable consultants and our full-time equivalents in our huron legal segment to better reflect the nature of the work being provided . operating data for the year ended december 31 , 2014 and 2013 , as presented above , reflects this change . operating data for the year ended december 31 , 2012 was not impacted . non-gaap measures we also assess our results of operations using certain non-gaap financial measures . these non-gaap financial measures differ from gaap because the non-gaap financial measures we calculate to measure adjusted earnings before interest , taxes , depreciation and amortization ( ยebitdaย ) , adjusted net income from continuing operations , and adjusted diluted earnings per share from continuing operations exclude a number of items required by gaap , each discussed below . these non-gaap financial measures should be considered in addition to , and not as a substitute for or superior to , any measure of performance , cash flows , or liquidity prepared in accordance with gaap . our non-gaap financial measures may be defined differently from time to time and may be defined differently than similar terms used by other companies , and accordingly , care should be exercised in understanding how we define our non-gaap financial measures . our management uses the non-gaap financial measures to gain an understanding of our comparative operating performance , for example when comparing such results with previous periods or forecasts . these non-gaap financial measures are used by management in their financial and operating decision making because management believes they reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons . management also uses these non-gaap financial measures when publicly providing our business outlook , for internal management purposes , and as a basis for evaluating potential acquisitions and dispositions . we believe that these non-gaap financial measures provide useful information to investors and others in understanding and evaluating huron 's current operating performance and future prospects in the same manner as management does and in comparing in a consistent manner huron 's current financial results with huron 's past financial results . the reconciliations of these financial measures from gaap to non-gaap are as follows ( in thousands ) : replace_table_token_8_th 32 replace_table_token_9_th these non-gaap financial measures include adjustments for the following items : restructuring charges : we have incurred charges due to the restructuring of various parts of our business . these restructuring charges have primarily consisted of costs associated with office space consolidations , including the accelerated depreciation of certain leasehold improvements , and severance charges . we have excluded the effect of the restructuring charges from our non-gaap measures because the amount of each restructuring charge is significantly affected by the timing and size of the restructured business or component of a business . restatement related expenses : we incurred significant expenses related to our 2009 financial statement restatement . we have excluded the effect of these restatement related expenses from our non-gaap measures as a means to provide comparability with periods that were not impacted by the restatement related expenses . litigation and other ( gains ) losses : we have excluded the effects of the remeasurement gain recorded in 2014 related to a contingent acquisition liability , the litigation gains and other loss recorded in 2013 , and the litigation loss recorded in 2012 to permit comparability with periods that were not impacted by these items . goodwill impairment charge : goodwill impairment charges are inconsistent in their amount and frequency . we have excluded the effect of this charge to permit comparability with periods that were not impacted by such charges .
| segment results huron healthcare revenues huron healthcare segment revenues increased $ 70.0 million , or 24.2 % , to $ 358.8 million for the year ended december 31 , 2013 , from $ 288.8 million for the year ended december 31 , 2012. revenues from time-and-expense engagements , fixed-fee engagements , performance-based arrangements , and software support and maintenance arrangements represented 1.6 % , 64.6 % , 29.1 % , and 4.7 % of this segment 's revenues in 2013 , respectively , compared to 1.3 % , 62.4 % , 30.7 % , and 5.6 % in 2012 , respectively . of the overall $ 70.0 million increase in revenues , $ 68.5 million was attributable to our full-time billable consultants and $ 1.5 million was attributable to our full-time equivalents . the increase in demand for our services in the huron healthcare segment reflects the increased pressures our clients face as the result of evolving business models , rising costs , and declining reimbursements from government and commercial payers . the increase in full-time billable consultant revenues reflected increases in the average number of full-time billable consultants , consultant utilization rate , and average billing rate . performance-based fee revenue was $ 104.5 million during 2013 compared to $ 88.6 million during 2012. this increase in performance-based fee revenue reflected our execution of favorable results at certain healthcare clients during the fourth quarter of 2013. the level of performance-based fees earned may vary based on our clients ' preferences and the mix of services we provide . performance-based fee arrangements may cause significant variations in revenues , operating results , and average billing rates due to our level of execution and the timing of achievement of the performance-based criteria .
| 2,617 |
story_separator_special_tag management 's discussion and analysis of financial condition and results of operations reviews the operating results of paychex , inc. and its wholly owned subsidiaries ( ยpaychex , ย ยwe , ย ยour , ย or ยusย ) for each of the three fiscal years ended may 31 , 2011 ( ยfiscal 2011ย ) , may 31 , 2010 ( ยfiscal 2010ย ) , and may 31 , 2009 ( ยfiscal 2009ย ) , and our financial condition as of may 31 , 2011. this review should be read in conjunction with the accompanying consolidated financial statements and the related notes to consolidated financial statements contained in item 8 of this annual report on form 10-k ( ยform 10-kย ) and the ยrisk factorsย discussed in item 1a of this form 10-k. forward-looking statements in this review are qualified by the cautionary statement under the heading ยsafe harbor statement under the private securities litigation reform act of 1995ย contained at the beginning of part i of this form 10-k. overview we are a leading provider of payroll , human resource , and benefits outsourcing solutions for small- to medium-sized businesses . our payroll and human resource services offer a portfolio of services and products that allow our clients to meet their diverse payroll and human resource needs . our payroll services are the foundation of our service portfolio . they are provided through either our core payroll or major market services ( ยmmsย ) , which is utilized by clients that have more sophisticated payroll and benefits needs , and include : payroll processing ; payroll tax administration services ; employee payment services ; and regulatory compliance services ( new-hire reporting and garnishment processing ) . in addition to the above , our software-as-a-service option through our mms platform provides human resource management , employee benefits management , time and attendance systems , online expense reporting , and applicant tracking . 12 our human resource services primarily include : paychex hr solutions , under which we offer our administrative services organization ( ยasoย ) and our professional employer organization ( ยpeoย ) . we also offer paychex hr essentials , our new aso product that provides support to our clients over the phone or online to help manage employee-related topics ; retirement services administration ; insurance services ; eservices ; and other human resource services and products . we earn revenue mainly through recurring fees for services performed . service revenue is primarily driven by the number of clients , checks or transactions per client per pay period , and utilization of ancillary services . we also earn interest on funds held for clients between the time of collection from our clients and remittance to the applicable tax or regulatory agencies or client employees . our business strategy is focused on achieving strong long-term financial performance by providing high-quality , timely , accurate , and affordable services ; growing our client base ; increasing utilization of our ancillary services ; leveraging our technology and operating infrastructure ; and expanding our service offerings . our financial results for fiscal 2011 reflected year-over-year growth . we continued to see improvement in many of our key business indicators , especially in checks per client . checks per client increased 2.1 % for fiscal 2011 , compared to a decline of 2.6 % for fiscal 2010. checks per client began to show year-over-year growth in the three months ending may 31 , 2010 with 1.1 % growth for that quarter and continued to improve throughout fiscal 2011 , reflecting increases of 1.2 % , 2.5 % , 2.8 % , and 2.0 % for each of the sequential quarters . our revenue growth has been modest , as new sales units were relatively flat compared to the prior year , largely due to lack of growth in new business starts . our financial results continue to be adversely impacted by the interest rate environment . the equity markets hit a low in march 2009 , with interest rates available on high quality financial instruments remaining low since that time . the federal funds rate has been at a range of zero to 0.25 % since december 2008. our combined funds held for clients and corporate investment portfolios earned an average rate of return of 1.3 % for fiscal 2011 , compared to 1.5 % for fiscal 2010 and 2.1 % for fiscal 2009. we continue to manage our headcount and expenses while investing in our business , particularly in areas related to selling and servicing our clients , product development , and the technology required to support these areas . we believe these investments are critical to our success . looking to the future , we continue to focus on investing in our products , people , and service capabilities , positioning ourselves to capitalize on opportunities for long-term growth . highlights of our financial results for fiscal 2011 compared to fiscal 2010 are as follows : payroll service revenue increased 2 % to $ 1.4 billion . human resource services revenue increased 10 % to $ 597.4 million . interest on funds held for clients decreased 13 % to $ 48.1 million . total revenue increased 4 % to $ 2.1 billion . operating income increased 8 % to $ 786.4 million , and operating income , net of certain items , increased 7 % to $ 738.3 million . refer to the ยnon-gaap financial measureย discussion on page 14 for further information on operating income , net of certain items . operating income for fiscal 2010 reflected an expense charge of $ 18.7 million to increase the litigation reserve related to the rapid payroll court decision , which reduced diluted earnings per share for fiscal 2010 by $ 0.03 per share . net income and diluted earnings per share increased 8 % to $ 515.3 million and $ 1.42 per share , respectively . 13 cash flow from operations increased 17 % to $ 715.3 million , primarily related to the increase in net income and fluctuations in operating assets and liabilities . story_separator_special_tag we have introduced new product offerings to add value for our clients . in fiscal 2011 , we introduced paychex hr essentials , an aso offering that provides support to our clients over the phone or online to help manage employee-related topics . we also introduced paychex smarttime tm time clocks for small businesses . this self-contained system offers small businesses an economical , easy-to-use time and attendance solution that automatically collects and calculates employee hours , and integrates with paychex payroll . we continued the expansion of our insurance services nationwide , simplifying the process required to obtain coverage through our network of national and regional insurers . we now service over 100,000 clients through our subsidiary , paychex insurance agency , inc. we believe insurance services is an area that continues to offer significant opportunities for future growth . we strengthened our position as an expert in our industry by serving as a source of education and information to clients and other interested parties . we provide free webinars , white papers , and other information on our website to aid existing and prospective clients with the impact of regulatory changes . in addition , the paychex insurance agency , inc. website , www.paychexinsurance.com , helps small business owners navigate the area of insurance coverage . financial position and liquidity the volatility in the global financial markets that began in september 2008 continues to curtail available liquidity and limit investment choices . despite this macroeconomic environment , as of may 31 , 2011 , our financial position remained strong with cash and total corporate investments of $ 671.3 million and no debt . our investment strategy focuses on optimizing liquidity and protecting principal . yields on high quality financial instruments remain low , negatively impacting our income earned on funds held for clients and corporate investments . we invest predominately in municipal bonds ย general obligation bonds ; pre-refunded bonds , which are secured by a u.s. government escrow ; and essential services revenue bonds . our primary short-term investment vehicle has been u.s. agency discount notes . starting in november 2009 , we began to invest in select a-1/p-1-rated variable rate demand notes ( ยvrdnsย ) and have gradually increased our investment in vrdns to $ 828.3 million as of may 31 , 2011. during fiscal 2011 , we earned an after-tax rate of approximately 0.23 % for vrdns compared to approximately 0.06 % for u.s. agency discount notes . 15 we invest primarily in high credit quality securities with aaa and aa ratings and short-term securities with a-1/p-1 ratings . we limit the amounts that can be invested in any single issuer and invest in short- to intermediate-term instruments whose fair value is less sensitive to interest rate changes . we believe that our investments as of may 31 , 2011 were not other-than-temporarily impaired , nor has any event occurred subsequent to that date that would indicate any other-than-temporary impairment . all investments held as of may 31 , 2011 were traded in active markets . our primary source of cash is our ongoing operations . cash flow from operations was $ 715.3 million for fiscal 2011. historically , we have funded our operations , capital purchases , business acquisitions , and dividend payments from our operating activities . our positive cash flows in fiscal 2011 allowed us to support our business growth and to pay substantial dividends to our stockholders . during fiscal 2011 , dividends paid to stockholders were 87 % of net income . it is anticipated that cash and total corporate investments as of may 31 , 2011 , along with projected operating cash flows , will support our normal business operations , capital purchases , and dividend payments for the foreseeable future . for further analysis of our results of operations for fiscal years 2011 , 2010 , and 2009 , and our financial position as of may 31 , 2011 , refer to the tables and analysis in the ยresults of operationsย and ยliquidity and capital resourcesย sections of this item 7 and the discussion in the ยcritical accounting policiesย section of this item 7. outlook our outlook for fiscal 2012 is based upon current economic and interest rate conditions continuing with no significant changes . consistent with our policy regarding guidance , our projections do not anticipate or speculate on future changes to interest rates . our fiscal 2012 guidance reflects anticipated results for surepayroll and eplan . the anticipated service revenue impact is approximately 2 % and the earnings dilution is expected to be approximately $ 0.01 per share , mainly due to amortization of acquired intangible assets . our fiscal 2012 guidance is as follows : replace_table_token_7_th operating income , net of certain items , as a percentage of service revenue is expected to range from 35 % to 36 % for fiscal 2012. the effective income tax rate is expected to approximate 35 % for fiscal 2012. interest on funds held for clients and investment income for fiscal 2012 are expected to be impacted by the continuing low-interest-rate environment . the average rate of return on our combined funds held for clients and corporate investment portfolios is expected to be 1.2 % for fiscal 2012. as of may 31 , 2011 , the long-term investment portfolio had an average yield-to-maturity of 2.6 % and an average duration of 2.4 years . in the next twelve months , slightly more than 20 % of this portfolio will mature , and it is currently anticipated that these proceeds will be reinvested at a lower average interest rate of approximately 1.0 % . investment income is expected to benefit from ongoing investment of cash generated from operations , though at a lower growth rate as a result of cash outlays in fiscal 2011 for business acquisitions . under normal financial market conditions , the impact to our earnings from a 25-basis-point increase or decrease in short-term interest rates would be in the range of $ 3.5 million to $ 4.0 million , after taxes , for a twelve-month period .
| results of operations summary of results of operations for the fiscal years ended may 31 : replace_table_token_8_th we invest in highly liquid , investment-grade fixed income securities and do not utilize derivative instruments to manage interest rate risk . as of may 31 , 2011 , we had no exposure to high-risk or illiquid investments . details regarding our combined funds held for clients and corporate investment portfolios are as follows : replace_table_token_9_th 17 replace_table_token_10_th ( 1 ) the net unrealized gain of our investment portfolios was approximately $ 57.5 million as of july 11 , 2011 . ( 2 ) the federal funds rate was a range of zero to 0.25 % as of may 31 , 2011 , may 31 , 2010 , and may 31 , 2009 . ( 3 ) these items exclude the impact of vrdns held as of may 31 , 2011 and may 31 , 2010 , as they are tied to short-term interest rates . we did not hold any vrdns as of may 31 , 2009. payroll service revenue : payroll service revenue increased 2 % to $ 1.4 billion for fiscal 2011 , compared to a 5 % decline for fiscal 2010. fiscal 2011 revenue benefited from an increase in checks per client and revenue per check . checks per client increased 2.1 % for fiscal 2011 compared to fiscal 2010. revenue per check was positively impacted by lower discounting within our overall client base and price increases . our client base , excluding the impact of surepayroll , declined 0.9 % during fiscal 2011. this was largely attributable to the adverse impact on the sales of new units from lack of growth in new business starts . client retention improved for fiscal 2011 , with client losses that were 9 % lower than for fiscal 2010 , largely a result of fewer clients going out of business or having no employees .
| 2,618 |
during the rate-making process for certain of oneok partners ' assets , regulatory authorities set the framework for what oneok partners can charge customers for its services and establish the manner that its costs are accounted for , including allowing oneok partners to defer recognition of certain costs and permitting recovery of the amounts through rates over time , as opposed to expensing such costs as incurred . certain examples of types of regulatory guidance include costs for fuel and losses , acquisition costs , contributions in aid of construction , charges for depreciation and gains or losses on disposition of assets . this allows oneok partners to stabilize rates over time rather than passing such costs on to the customer story_separator_special_tag the following discussion and analysis should be read in conjunction with item 1 , business , our audited consolidated financial statements and the notes to consolidated financial statements in this annual report . recent developments on january 31 , 2017 , we and oneok partners entered into the merger agreement , by and among oneok , merger sub , oneok partners and oneok partners gp , the general partner of oneok partners , pursuant to which we will acquire all of the outstanding common units representing limited partner interests in oneok partners not already directly or indirectly owned by us . upon the terms and conditions set forth in the merger agreement , merger sub will be merged with and into oneok partners , with oneok partners continuing as the surviving entity and as a wholly owned subsidiary of ours , in a taxable transaction to oneok partners ' unitholders . for additional information on this transaction , see note b of the notes to consolidated financial statements in this annual report . oneok and its subsidiaries own all of the general partner interest and certain limited partner interests , which , together , represented a 41.2 percent ownership interest at december 31 , 2016 , in oneok partners , one of the largest publicly traded master limited partnerships . oneok partners operates predominantly fee-based businesses in each of its three reportable segments , and its consolidated earnings were approximately 88 percent fee-based in 2016. we continue to expect demand for midstream services and infrastructure development to be primarily driven by producers who need to connect production with end-use markets where current infrastructure is insufficient or nonexistent . we also expect additional demand for oneok partners ' services to support increased demand for ngl products from the petrochemical industry and ngl exporters and increased demand for natural gas from power plants previously fueled by coal and natural gas exports to mexico . stack and scoop opportunity - we expect each of the business segments to benefit from increasing producer activity in the mid-continent from the highly productive stack and scoop areas , where there was an increase in producer activity in late 2016 , which we expect to continue in 2017. oneok partners has a strong presence in the region , with the natural gas liquids segment 's gathering system serving as a primary ngl takeaway provider through connections to more than 100 third-party natural gas processing plants , the natural gas gathering and processing segment 's substantial acreage dedications in some of the most productive areas and the natural gas pipelines segment 's broad footprint . as producers continue to develop the stack and scoop areas , we expect natural gas and ngl volumes to increase in 2017 , compared with 2016 volumes , and increased demand for oneok partners ' services from producers that need incremental takeaway capacity for natural gas and ngls out of the region . 45 ethane opportunity - ethane rejection levels by natural gas processors delivering to oneok partners ' natural gas liquids gathering system have continued to fluctuate and averaged approximately 175 mbbl/d during 2016 , primarily in the mid-continent region . we expect ethane rejection levels to continue to fluctuate in 2017 as the market begins to balance ethane supply and demand and with changes in the price differentials between ethane and natural gas . we expect ethane recovery levels to increase as ethylene producers and ngl exporters increase their capacity to consume and export additional ethane feedstock volumes . ethane demand is expected to ramp up as new world-scale ethylene production projects , petrochemical plant modifications , plant expansions and export facilities near completion and begin coming on line in 2017. we expect increases in future ethane recoveries to have a favorable impact on oneok partners ' financial results , beginning primarily in the second half of 2017. growth projects - oneok partners completed its bear creek natural gas processing plant and related infrastructure projects in august 2016. these projects expand oneok partners ' natural gas gathering and processing and natural gas liquids gathering infrastructure in the williston basin to capture natural gas from new wells and natural gas previously flared by producers . in the natural gas pipelines segment , phase i of the roadrunner pipeline was completed in march 2016. phase ii of the roadrunner pipeline and the westex pipeline expansion project were completed in october 2016 , ahead of original schedule and below cost estimates . the roadrunner pipeline transports natural gas from the permian basin in west texas to the mexican border near el paso , texas , and together with oneok partners ' westex intrastate natural gas transmission pipeline , creates a platform for future opportunities to deliver natural gas supply to mexico . the execution of these capital investments aligns with oneok partners ' strategy to generate consistent growth and sustainable earnings through long-term fee-based projects . oneok partners ' contractual commitments from crude oil and natural gas producers , natural gas processors and electric generators are expected to provide incremental cash flows and long-term fee-based earnings . change in presentation of financial results - our chief operating decision-maker reviews the financial performance of each of oneok partners ' three segments , as well as our financial performance , on a regular basis . story_separator_special_tag capital expenditures decreased due to projects placed in service , spending reductions to align with customer needs and lower well connect activities due to a reduction in drilling and completion activity . see โ capital expenditures โ in โ liquidity and capital resources โ for additional detail of oneok partners ' projected capital expenditures . 2015 vs. 2014 - adjusted ebitda decreased $ 106.6 million , primarily as a result of the following : a decrease of $ 209.7 million due primarily to lower net realized ngl , natural gas and condensate prices ; an increase of $ 14.7 million in operating costs due primarily to higher outside service costs , ad valorem taxes and employee-related costs due to higher labor and employee benefit costs resulting from the growth of operations , offset partially by a decrease in materials and supplies due primarily to lower chemical costs ; and a decrease of $ 10.4 million due primarily to increased ethane recovery to maintain downstream ngl product specifications ; offset partially by an increase of $ 91.6 million due primarily to restructured contracts resulting in higher average fee rates and a lower percentage of proceeds retained from the sale of commodities under pop with fee contracts ; and an increase of $ 38.1 million due primarily to natural gas volume growth in the rocky mountain region , offset partially by unplanned operational outages in the rocky mountain region and decreased natural gas volumes in the mid continent region . capital expenditures decreased due primarily to the timing of oneok partners ' growth projects and spending reductions to align with customer needs . oneok partners recorded $ 254.3 million and $ 76.4 million of noncash impairment charges primarily related to its long-lived assets and equity investments in the dry natural gas area of the powder river basin in 2015 and 2014 , respectively . see additional discussion in โ impairment charges โ below . replace_table_token_8_th ( a ) - includes volumes for consolidated entities only . ( b ) - includes volumes at company-owned and third-party facilities . ( c ) - includes the impact of hedging activities on oneok partners ' equity volumes . ( d ) - net of transportation and fractionation costs . ( e ) - net of transportation costs . natural gas gathered and processed , ngl sales and residue natural gas sales increased in 2016 , compared with 2015 , due to the completion of capital-growth projects in the rocky mountain region , offset partially by natural gas volume declines in the mid- 50 continent region due to natural production declines on existing wells , delays in completion of several multi-well pads and the impact of weather in the williston basin in december 2016. natural gas gathered and processed , ngl sales and residue natural gas sales increased in 2015 , compared with 2014 , due to the completion of growth projects in the rocky mountain region , offset partially by unplanned outages in the rocky mountain region during the third quarter and natural gas volume declines in the mid continent region due to natural production declines . the quantity and composition of ngls and natural gas have varied as new plants were placed in service and to ensure natural gas and natural gas liquids pipeline specifications were met . beginning in june 2015 , oneok partners reduced the level of ethane rejection in the rocky mountain region to address downstream ngl product specifications . replace_table_token_9_th ( a ) - includes volumes for consolidated entities only . equity volumes decreased in 2016 as a result of oneok partners ' contract restructuring efforts . as contracts are renewed or restructured , oneok partners has generally increased the fee component and lowered the percentage of proceeds that it retains from the sale of commodities . commodity price risk - see discussion regarding oneok partners ' commodity price risk under โ commodity price risk โ in item 7a , quantitative and qualitative disclosures about market risk . impairment charges - due to the continued and greater than expected decline in volumes gathered in the dry natural gas area of the powder river basin , oneok partners evaluated its long-lived assets and equity investments in this area in 2015 and made the decision to cease operations of its wholly owned coal-bed methane natural gas gathering system in 2016. this resulted in a $ 63.5 million noncash impairment charge to oneok partners ' long-lived assets in 2015. bighorn gas gathering , in which oneok partners owns a 49 percent equity interest , and fort union gas gathering , in which oneok partners owns a 37 percent equity interest , were both partially supplied with volumes from oneok partners ' wholly owned coal-bed methane natural gas gathering system . oneok partners also owns a 35 percent equity interest in lost creek gathering company , which also is located in a dry natural gas area . oneok partners reviewed its bighorn gas gathering , fort union gas gathering and lost creek gathering company equity investments and recorded noncash impairment charges of $ 180.6 million in 2015. the remaining net book value of oneok partners ' equity investments in this dry natural gas area is $ 31.1 million as of december 31 , 2016. in 2015 , oneok partners also recorded a noncash impairment charge of $ 10.2 million related to a previously idled asset , as the expectation for future use of the asset changed . in 2014 , bighorn gas gathering recorded an impairment of its underlying assets when the operator determined that the volume decline would be sustained for the foreseeable future . as a result , oneok partners reviewed its equity investment in bighorn gas gathering for impairment and recorded noncash impairment charges of $ 76.4 million in 2014 related to bighorn gas gathering .
| selected financial results - the following table sets forth certain selected consolidated financial results for the periods indicated : replace_table_token_5_th * percentage change is greater than 100 percent or is not meaningful . see reconciliation of net income to adjusted ebitda in the โ adjusted ebitda โ section . due to the nature of oneok partners ' contracts , changes in commodity prices and sales volumes affect both commodity sales and cost of sales and fuel in our consolidated statements of income and therefore the impact is largely offset between the two line items . 2016 vs. 2015 - operating income increased due primarily to higher natural gas and ngl volumes from completed capital-growth projects in the natural gas gathering and processing and natural gas liquids segments and new plant connections and increased ethane recovery in the natural gas liquids segment , higher fees resulting from contract restructuring in the natural gas gathering and processing segment and higher firm demand charge volumes contracted in the natural gas pipelines segment . these increases were offset partially by lower net realized ngl and natural gas prices in the natural gas gathering and processing segment , higher depreciation expense due to projects completed in 2016 and 2015 , higher labor costs associated with the growth of operations in the natural gas gathering and processing segment and higher employee-related costs associated with incentive and medical benefit plans and noncash expenses of a share-based deferred compensation plan due primarily to the increase of oneok 's share price in 2016. equity in net earnings from investments increased due primarily to higher volumes delivered to overland pass pipeline from oneok partners ' bakken ngl pipeline and higher firm transportation revenues on northern border pipeline and roadrunner , offset partially by lower equity earnings from oneok partners ' powder river basin equity investments .
| 2,619 |
the following table reflects the change in contract liabilities between the date of adoption ( august 30 , 2018 ) and august 26 , 2020 : replace_table_token_24_th 49 the following table illustrates the estimated revenues expected to be recognized in the future related to our deferred franchise fees that are unsatisfied ( or partially unsatisfied ) as of august 26 , 2020 ( in thousands ) : replace_table_token_25_th ( 1 ) story_separator_special_tag management 's discussion and analysis of the financial condition and results of operations should be read in conjunction with the consolidated financial statements and footnotes for the fiscal years ended august 26 , 2020 ( โ fiscal 2020 โ ) and august 28 , 2019 , ( โ fiscal 2019 โ ) included in part ii , item 8 of this form 10-k. although store level profit , defined as restaurant sales plus vending revenue less cost of food , payroll and related costs , other operating expenses , and occupancy costs is a non-gaap measure , we believe its presentation is useful because it explicitly shows the aggregated results of our restaurant brand reportable segments . the following table reconciles between store level profit , a non-gaap measure to loss from continuing operations , a gaap measure : replace_table_token_1_th ( 1 ) marketing and advertising expense included in selling , general and administrative expenses was $ 3.4 million in fiscal 2020 and $ 3.9 million in fiscal 2019. the following table shows our restaurant unit count as of august 26 , 2020 and august 28 , 2019. restaurant counts : replace_table_token_2_th ( 1 ) includes five restaurants that are part of combo locations . 16 overview description of the business during the fiscal year ended august 26 , 2020 , we operated with five reportable operating segments : luby 's cafeterias , fuddruckers restaurants , cheeseburger in paradise , fuddruckers franchise operations , and culinary contract services . we generate revenues primarily by providing quality food to customers at our 61 luby 's branded restaurants located mostly in texas , 24 fuddruckers restaurants located throughout the united states , and 71 fuddruckers franchises located primarily in the united states . included in the luby 's cafeterias and fuddruckers restaurants segment are five locations where we operate both a luby 's cafeteria and a fuddruckers restaurant . in addition to our restaurant business model , we also provide culinary contract services for organizations that offer on-site food service , such as healthcare facilities , colleges and universities , sports stadiums , businesses and institutions , as well as sales through retail grocery outlets . plan of liquidation and dissolution at a special meeting of stockholders held on november 17 , 2020 , the company 's shareholders approved the company 's plan of liquidation and dissolution ( the โ plan of liquidation โ or the โ plan โ ) that provides for the sale of the company 's assets and distribution of the net proceeds to the company 's stockholders , after which the company will be dissolved . the plan of liquidation outlines an orderly sale of the company 's businesses , operations , and real estate , and an orderly wind down of any remaining operations . the company intends to attempt to convert all of its assets into cash , satisfy or resolve its remaining liabilities and obligations , including contingent liabilities and claims and costs associated with the liquidation of the company , and then file a certificate of dissolution . the assets to be sold include operating divisions luby 's cafeterias , fuddruckers , and the company 's culinary contract services business , as well as the company 's real estate . the company currently anticipates that its common stock will be delisted from the nyse upon the filing of the certificate of dissolution , which is not expected to occur until the earlier of the completion of the asset sales or three years , but the delisting of its common stock may occur sooner in accordance with applicable rules of the nyse . the company can not predict the timing or amount of any distributions to stockholders , as uncertainties exist as to the value it may receive upon the sale of assets pursuant to its monetization strategy , the net value of any remaining assets after such sales are completed , the ultimate amount of expenses associated with implementing its monetization strategy , liabilities , operating costs and amounts to be set aside for claims , obligations and provisions during the liquidation and winding-up process and the related timing to complete such transactions and overall process . the company does not intend to comment on or disclose developments regarding the process unless it deems further disclosure appropriate or required . please see `` risk factors '' in item 1a . accounting periods our fiscal year ends on the last wednesday in august . accordingly , each fiscal year normally consists of 13 four-week periods , or accounting periods , accounting for 364 days in the aggregate . however , every fifth or sixth year , we have a fiscal year that consists of 53 weeks , accounting for 371 days in the aggregate . our first quarter consists of four four-week periods , while our last three quarters normally consist of three four-week periods . comparability between quarters may be affected by the varying lengths of the quarters , as well as the seasonality associated with the restaurant business . story_separator_special_tag franchise revenue includes ( 1 ) royalties paid to us as the franchisor for the fuddruckers brand ; ( 2 ) funds paid to us as the franchisor for pooled advertising expenditures ; and ( 3 ) franchise fees paid to us when franchise units are opened for business or transferred to new owners and when franchise agreements are renewed or certain milestones in franchise agreements are reached . cost of franchise operations includes the direct costs associated with supporting franchisees with opening new fuddruckers franchised restaurants and the corporate overhead expenses associated with generating franchise revenue . these corporate expenses primarily include the salaries and benefits , travel and related expenses , and other expenses for employees whose primary job function involves supporting our franchise owners and the development of new franchise locations . 21 franchise revenue decreased approximately $ 3.1 million , or 45.7 % , in fiscal 2020 compared to fiscal 2019. the $ 3.1 million decrease in franchise revenue reflects ( 1 ) an approximate $ 2.4 million decrease in franchise royalties due to temporary or permanent closures from the pandemic and we waived royalty payments from the franchisees for two accounting periods ( eight weeks ) in the quarter ended june 3 , 2020 ; ( 2 ) $ 0.5 million lower amortization of franchise fees due to closures ; and ( 3 ) an approximate $ 0.2 million decline in marketing fees collected from the franchise network . cost of franchise operations decreased approximately $ 0.1 million , or 5.5 % , in fiscal 2020 compared to fiscal 2019. the decrease was due primarily to ( 1 ) recording an expense in fiscal 2020 related to pooled advertising expenditures , and lower labor charges as most franchise support personnel were furloughed due the pandemic . franchise operations segment profit , defined as franchise revenue less cost of franchise operations , decreased approximately $ 3.0 million in in fiscal 2020 compared to fiscal 2019 , due primarily to the $ 3.1 million decrease in franchise revenue partially offset by the $ 0.1 million decrease in franchise costs , both discussed above . we ended fiscal 2020 with 71 fuddruckers franchise restaurants . culinary contract services segment profit culinary contract services is a business line servicing healthcare , sport stadiums , corporate dining clients , and sales through retail grocery stores . the healthcare accounts are full service and typically include in-room delivery , catering , vending , coffee service , and retail dining . culinary contract services has contracts with long-term acute care hospitals , acute care medical centers , ambulatory surgical centers , behavioral hospitals , sports stadiums , and business and industry clients . culinary contract services has the unique ability to deliver quality services that include facility design and procurement as well as nutrition and branded food services to our clients . we operated 26 culinary contract services locations at the end of fiscal 2020 and 31 at the end of fiscal 2019. we focus on clients who are able to enter into agreements in which all operating costs are reimbursed to us and we generally charge a fixed fee as opposed to agreements where we retain all revenues and operating costs and we are exposed to the variability of the operating results of the location . the fixed fee agreements typically present lower financial risk to the company . replace_table_token_10_th culinary contract services revenue decreased $ 5.1 million , or 16.1 % , in fiscal 2020 compared to fiscal 2019. the $ 5.1 million decrease in revenue was primarily due to closure or reduced operations at most culinary contract services units as a result of the pandemic . cost of culinary contract services includes the food , payroll and related costs , other direct operating expenses , and corporate overhead expenses associated with generating culinary contract services sales . cost of culinary contract services decreased approximately $ 4.3 million , or 15.2 % , in fiscal 2020 compared to fiscal 2019 due primarily to a net decrease in culinary contract sales volume and by reductions of corporate overhead expenses required to support this business segment . ccs segment profit ( defined as culinary contract services revenue less cost of culinary contract services ) decreased in dollar terms by approximately $ 0.8 million and decreased as a percent of culinary contract services revenue to 9.5 % in fiscal 2020 from 10.5 % in fiscal 2019 , due primarily to the change in the mix of culinary contract service agreements with clients . 22 opening costs opening costs includes labor , supplies , occupancy , and other costs necessary to support the restaurant through its opening period . opening costs were $ 14 thousand in fiscal 2020 compared to approximately $ 56 thousand in fiscal 2019. opening costs of $ 14 thousand in fiscal 2020 included the carrying cost of land for one location where we previously intended to open a combo restaurant and one location that we lease where we previously intended to open a fuddruckers restaurant . depreciation and amortization replace_table_token_11_th depreciation and amortization expense decreased $ 2.5 million in fiscal 2020 compared to fiscal 2019 due primarily to certain assets reaching the end of their depreciable lives and the removal of certain assets upon sale . as a percentage of total revenue , depreciation and amortization expense increased to 5.4 % in fiscal 2020 , compared to 4.3 % in fiscal 2019. selling , general and administrative expenses replace_table_token_12_th selling , general and administrative expenses include marketing and advertising expenses , corporate salaries and benefits-related costs , including restaurant area leaders and regional directors , share-based compensation , professional fees , travel and recruiting expenses and other office expenses .
| results of operations fiscal 2020 ( 52 weeks ) compared to fiscal 2019 ( 52 weeks ) sales replace_table_token_3_th total company sales decreased approximately $ 109.4 million , or 33.8 % , in fiscal 2020 compared to fiscal 2019 , consisting primarily of an approximate $ 101.0 million decrease in restaurant sales and an approximate $ 0.2 million decrease in vending revenue . culinary contract services sales decreased by an approximate $ 5.1 million . franchise revenue decreased $ 3.1 million . in fiscal 2019 and fiscal 2020 , we operated with five reportable operating segments : luby 's cafeterias , fuddruckers restaurants , cheeseburger in paradise , fuddruckers franchise operations , and culinary contract services . company-owned restaurants restaurant sales replace_table_token_4_th total restaurant sales decreased approximately $ 101.0 million in fiscal 2020 compared to fiscal 2019. the decrease in restaurant sales included an approximate $ 57.6 million decrease in sales at stand-alone luby 's cafeterias , an approximate $ 35.1 million decrease in sales at stand-alone fuddruckers restaurants , an approximate $ 6.8 million decrease in sales from combo locations , and an approximate $ 1.6 million decrease at sales from our cheeseburger in paradise restaurants . the approximate $ 57.6 million decrease in sales at stand-alone luby 's includes the reduction of 23 operating restaurants accounting for $ 19.5 million lower sales . sales at stores that did not close on a permanent basis decreased $ 38.1 million . the number of store days where restaurants were open declined 15.0 % as stores were temporarily closed due to the pandemic . as of the last week of fiscal 2020 , sales at operating stores decreased 18 % compared to the same week of fiscal 2019. the approximate $ 35.1 million decrease in sales at stand-alone fuddruckers restaurants reflects primarily the reduction of 36 operating restaurants accounting for a decrease of $ 25.5 million .
| 2,620 |
if no amount within the range appears to be a better estimate than any other , we use the amount that is the low end of such range . if we used the high ends of such ranges , our aggregate potential liability would be approximately $ 150 million higher than the $ 284 million recorded in the consolidated financial statements as of december 31 , 2010. our ultimate responsibility may differ materially from current estimates . it is possible that technological , regulatory or enforcement developments , the results of environmental studies , the inability to identify other prps , the inability of other prps to contribute to the settlements of such liabilities , or other factors could require us to record additional liabilities . our ongoing review of our remediation liabilities could result in revisions to our accruals that could cause upward or downward adjustments to income from operations . these adjustments could be material in any given period . 78 waste management , inc. notes to consolidated financial statements ย ( continued ) where we believe that both the amount of a particular environmental remediation liability and the timing of the payments are reliably determinable , we inflate the cost in current dollars ( by story_separator_special_tag this section includes a discussion of our results of operations for the three years ended december 31 , 2010. this discussion may contain forward-looking statements that anticipate results based on management 's plans that are subject to uncertainty . we discuss in more detail various factors that could cause actual results to differ from expectations in item 1a , risk factors . the following discussion should be read in light of that disclosure and together with the consolidated financial statements and the notes to the consolidated financial statements . overview our 2010 results of operations reflect our discipline in pricing , our ability to control costs in our collection and disposal operations and our continued investment in our strategic initiatives , which will enable us to grow into new markets , provide expanded service offerings and improve our information technology systems . our results also reflect an improvement in the general economic environment . highlights of our financial results for 2010 include : revenues of $ 12.5 billion compared with $ 11.8 billion in 2009 , an increase of $ 724 million , or 6.1 % . this increase in revenues is primarily attributable to : increases from recyclable commodity prices of $ 423 million ; increases from our fuel surcharge program of $ 69 million ; and increases from foreign currency translation of $ 66 million ; increases associated with acquired businesses of $ 240 million ; and internal revenue growth from yield on our collection and disposal business of 2.3 % in the current period , which increased revenue by $ 239 million ; internal revenue growth from volume was negative 2.6 % in 2010 , compared with negative 8.1 % in 2009. in addition to the lower rate of decline driven by changes in the economy , our volume was favorably affected by revenues associated with oil spill clean-up activities along the gulf coast . the year-over-year decline in internal revenue growth due to volume was $ 304 million ; operating expenses of $ 7.8 billion , or 62.5 % of revenues , compared with $ 7.2 billion , or 61.4 % of revenues , in 2009. this increase of $ 583 million , or 8.1 % , is due primarily to higher customer rebates because of recyclable commodity prices ; higher fuel prices ; increases in subcontractor costs associated with our oil spill clean-up services along the gulf coast ; and increases in our landfill operating costs ; selling , general and administrative expenses increased by $ 97 million , or 7.1 % , from $ 1.4 billion in 2009 to $ 1.5 billion in 2010. these cost increases were primarily due to support of our strategic growth plans and initiatives ; income from operations of $ 2.1 billion , or 16.9 % of revenues , in 2010 compared with $ 1.9 billion , or 16.0 % of revenues , in 2009 ; interest expense of $ 473 million compared with $ 426 million in 2009 , an increase of $ 47 million , or 11.0 % . this increase is primarily due to higher average debt balances , including additional borrowings incurred in late 2009 primarily to support our strategic plans , and higher costs related to the execution and maintenance of our revolving credit facility executed in june 2010 ; and net income attributable to waste management , inc. of $ 953 million , or $ 1.98 per diluted share for 2010 , as compared with $ 994 million , or $ 2.01 per diluted share in 2009. the comparability of our 2010 results with 2009 has been affected by certain items management believes are not representative or indicative of our performance . our 2010 results were affected by the following : the recognition of pre-tax charges aggregating $ 55 million related to remediation and closure costs at five closed sites , which had a negative impact of $ 0.07 on our diluted earnings per share ; the recognition of net tax charges of $ 32 million due to refinements in estimates of our deferred state income taxes and the finalization of our 2009 tax returns , partially offset by favorable tax audit settlements , all of which , combined , had a negative impact of $ 0.07 on our diluted earnings per share ; 26 the recognition of a net favorable pre-tax benefit of $ 46 million for litigation and associated costs , which had a favorable impact of $ 0.06 on our diluted earnings per share ; and the recognition of net pre-tax charges of $ 26 million as a result of the withdrawal of certain of our union bargaining units from an underfunded multiemployer pension plan , which had a negative impact of $ 0.03 on our diluted earnings per share . story_separator_special_tag the new guidance also requires that we continually reassess whether we are the primary beneficiary of a variable interest entity rather than conducting a reassessment only upon the occurrence of specific events . as a result of our implementation of this guidance , effective january 1 , 2010 , we deconsolidated certain capping , closure , post-closure and environmental remediation trusts because we share power over significant activities of these trusts with others . our financial interests in these entities are discussed in note 20 of our consolidated financial statements . the deconsolidation of these trusts has not materially affected our financial position , results of operations or cash flows during the periods presented . business combinations ย in december 2007 , the fasb issued revisions to the authoritative guidance associated with business combinations . this guidance clarified and revised the principles for how an acquirer recognizes and measures identifiable assets acquired , liabilities assumed , and any noncontrolling interest in the acquiree . this guidance also addressed the recognition and measurement of goodwill acquired in business combinations and expanded disclosure requirements related to business combinations . effective january 1 , 2009 , we adopted the fasb 's revised guidance associated with business combinations . the portions of this guidance that relate to business combinations completed before january 1 , 2009 did not have a material impact on our consolidated financial statements . further , business combinations completed subsequent to january 1 , 2009 , which are discussed in note 19 of our consolidated financial statements , have not been material to our financial position , results of operations or cash flows . however , to the extent that future business combinations are material , our adoption of the fasb 's revised authoritative guidance associated with business combinations may significantly impact our accounting and reporting for future acquisitions , principally as a result of ( i ) expanded requirements to value acquired assets , liabilities and contingencies at their fair values when such amounts can be determined and ( ii ) the requirement that acquisition-related transaction and restructuring costs be expensed as incurred rather than capitalized as a part of the cost of the acquisition . noncontrolling interests in consolidated financial statements ย in december 2007 , the fasb issued authoritative guidance that established accounting and reporting standards for noncontrolling interests in subsidiaries and for the de-consolidation of a subsidiary . the guidance also established that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated 28 financial statements . we adopted this guidance on january 1 , 2009. the presentation and disclosure requirements of this guidance , which must be applied retrospectively for all periods presented , resulted in reclassifications to our prior period consolidated financial information and the remeasurement of our 2008 effective tax rate , which is discussed in note 9 of our consolidated financial statements . fair value measurements ย in september 2006 , the fasb issued authoritative guidance associated with fair value measurements . this guidance defined fair value , established a framework for measuring fair value , and expanded disclosures about fair value measurements . in february 2008 , the fasb delayed the effective date of the guidance for all non-financial assets and non-financial liabilities , except those that are measured at fair value on a recurring basis . accordingly , we adopted this guidance for assets and liabilities recognized at fair value on a recurring basis effective january 1 , 2008 and adopted the guidance for non-financial assets and liabilities measured on a non-recurring basis effective january 1 , 2009. the application of the fair value framework did not have a material impact on our consolidated financial position , results of operations or cash flows . refer to note 2 of our consolidated financial statements for additional information related to the impact of the implementation of new accounting pronouncements on our results of operations and financial position . critical accounting estimates and assumptions in preparing our financial statements , we make numerous estimates and assumptions that affect the accounting for and recognition and disclosure of assets , liabilities , equity , revenues and expenses . we must make these estimates and assumptions because certain information that we use is dependent on future events , can not be calculated with a high degree of precision from data available or simply can not be readily calculated based on generally accepted methods . in some cases , these estimates are particularly difficult to determine and we must exercise significant judgment . in preparing our financial statements , the most difficult , subjective and complex estimates and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills , environmental remediation liabilities , asset impairments , deferred income taxes and reserves associated with our insured and self-insured claims . each of these items is discussed in additional detail below . actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements . landfills accounting for landfills requires that significant estimates and assumptions be made regarding ( i ) the cost to construct and develop each landfill asset ; ( ii ) the estimated fair value of capping , closure and post-closure asset retirement obligations , which must consider both the expected cost and timing of these activities ; ( iii ) the determination of each landfill 's remaining permitted and expansion airspace ; and ( iv ) the airspace associated with each capping event . landfill costs ย we estimate the total cost to develop each of our landfill sites to its remaining permitted and expansion capacity . this estimate includes such costs as landfill liner material and installation , excavation for airspace , landfill leachate collection systems , landfill gas collection systems , environmental monitoring equipment for groundwater and landfill gas , directly related engineering , capitalized interest , on-site road construction and other capital infrastructure costs .
| summary of cash flow activity the following is a summary of our cash flows for the years ended december 31 ( in millions ) : replace_table_token_31_th net cash provided by operating activities ย the most significant items affecting the comparison of our operating cash flows for 2010 and 2009 are summarized below : increase in earnings ย our income from operations increased by $ 229 million on a year-over-year basis , driven , in part , by a favorable cash benefit of $ 77 million resulting from a litigation settlement in april 2010. this earnings increase was also impacted by ( i ) the recognition of a $ 51 million non-cash charge during the fourth quarter of 2009 associated with the abandonment of licensed revenue management software and ( ii ) the recognition of a $ 27 million non-cash charge in the fourth quarter of 2009 as a result of a change in expectations for the future operations of an inactive landfill in california . 55 the comparison of our 2010 and 2009 income from operations was also affected by a $ 91 million increase in non-cash charges attributable to ( i ) equity-based compensation expense ; ( ii ) interest accretion on landfill liabilities ; ( iii ) interest accretion and discount rate adjustments on environmental remediation liabilities and recovery assets ; ( iv ) depreciation and amortization ; and ( v ) the impact of the withdrawal of certain bargaining units from multiemployer pension plans . while the increase in non-cash charges unfavorably affected our earnings comparison , there is no impact on net cash provided by operating activities . changes in assets and liabilities , net of effects from business acquisitions and divestitures ย our cash flow from operations was negatively impacted in 2010 and favorably impacted in 2009 , by changes in our working capital accounts .
| 2,621 |
past operating results are not necessarily indicative of results that may occur in future periods . this discussion contains forward-looking statements , which involve a number of risks and uncertainties . such forward-looking statements include statements about our strategies , objectives , expectations , discoveries , collaborations , clinical trials , proprietary and external programs , products or product candidates , and other statements that are not historical facts , including statements which may be preceded by the words ยbelieves , ย ยexpects , ย ยhopes , ย ยmay , ย ยwill , ย ยplans , ย ยintends , ย ยestimates , ย ยcould , ย ยshould , ย ยwould , ย ยcontinue , ย ยseeks , ย ยaims , ย ยprojects , ย ยpredicts , ย ยpro forma , ย ยanticipates , ย ยpotentialย or similar words . for forward-looking statements , we claim the protection of the private securities litigation reform act of 1995. readers of this report are cautioned not to place undue reliance on these forward-looking statements , which speak only as of the date on which they are made . we undertake no obligation to update or revise publicly any forward-looking statements . forward-looking statements are not guarantees of performance . actual results or events may differ materially from those anticipated in our forward-looking statements as a result of various factors , including those set forth under the section captioned ยrisk factorsย elsewhere in this report . information in the following discussion for a yearly period means for the year ended december 31 of the indicated year . overview background we are a biopharmaceutical company focused on innovative small molecule drugs that address unmet medical needs in neurological and related central nervous system disorders . we have four product candidates in clinical development led by pimavanserin , which is in phase iii development as a potential first-in-class treatment for parkinson 's disease psychosis . we hold worldwide commercialization rights to pimavanserin . in addition , we have a product candidate in phase ii development for chronic pain and a product candidate in phase i development for glaucoma , both in collaboration with allergan , and a product candidate in phase i development for schizophrenia in collaboration with meiji seika pharma . all of the product candidates in our pipeline emanate from discoveries made using our proprietary drug discovery platform . we have incurred substantial operating losses since our inception due in large part to expenditures for our research and development activities . as of december 31 , 2011 , we had an accumulated deficit of $ 346.9 million . we expect to continue to incur operating losses for at least the next several years as we pursue the clinical development of our product candidates . revenues we have not generated any revenues from product sales to date and we do not expect to generate revenues from product sales for at least the next several years , if at all . our revenues to date have been generated substantially from payments under our current and past collaboration agreements . as of december 31 , 2011 , we had received an aggregate of $ 112.5 million in payments under these agreements , including upfront payments , research funding , milestone payments and reimbursed development expenses . we expect our revenues for the next several years to consist primarily of revenues derived from payments under our current agreements with allergan and meiji seika pharma and potential additional collaborations , as well as grant funding . we currently are a party to three separate collaboration agreements with allergan . pursuant to our march 2003 collaboration agreement with allergan , we had received an aggregate of $ 18.5 million in payments as of december 31 , 2011 , consisting of an upfront payment , research funding and related fees . this collaboration agreement is currently focused on the discovery of new therapeutics for ophthalmic indications and originally provided for a three-year research term , which has been extended by the parties through march 2013. our two other collaboration agreements with allergan involve the development of product candidates in the areas of 39 chronic pain and glaucoma . we are eligible to receive payments upon achievement of development and regulatory milestones , as well as royalties on future product sales , if any , under each of our three collaboration agreements with allergan . each of our agreements with allergan is subject to early termination upon specified events , including , in the case of one of our agreements , if we have a change in control . upon the conclusion of the research term under each agreement , allergan may terminate the agreement by notice . in march 2009 , we entered into a collaboration agreement with meiji seika pharma . under the agreement , we are eligible to receive up to $ 25 million in aggregate payments , consisting of $ 3 million in license fees and up to $ 22 million in payments upon achievement of development and regulatory milestones in the licensed asian territory . in addition , we are eligible to receive royalties on future product sales , if any , in the asian territory . meiji seika pharma also is responsible for the first $ 15 million of designated development expenses and we will share the remaining expenses through clinical proof-of-concept , subject to possible adjustment in the event we further license the program outside of the asian territory . as of december 31 , 2011 , we had received an aggregate of $ 4.3 million in payments from meiji seika pharma , consisting of license fees and reimbursed research and development expenses . our agreement with meiji seika pharma is subject to early termination upon specified events . in may 2009 , we entered into a collaboration agreement with biovail , pursuant to which we received a non-refundable $ 30 million upfront payment . under this collaboration , we also were eligible to receive potential development , regulatory and sales milestones as well as royalties on future net sales of pimavanserin . story_separator_special_tag our collaboration agreements also include potential payments for product royalties ; however , we have not received any product royalties to date . we consider a variety of factors in determining the appropriate method of accounting under our collaboration agreements , including whether the various elements can be separated and accounted for individually as separate units of accounting . where there are multiple deliverables identified within a collaboration agreement that are combined into a single unit of accounting , revenues are deferred and recognized over the expected period of performance . the specific methodology for the recognition of the revenue is determined on a case-by-case basis according to the facts and circumstances of the applicable agreement . upfront , non-refundable payments that do not have stand-alone value are recorded as deferred revenue once received and recognized as revenues over the expected period of performance . revenues from non-refundable license fees are recognized upon receipt of the payment if the license has stand-alone value , we do not have ongoing involvement or obligations , and we can determine the best estimate of the selling price for any undelivered items . when non-refundable license fees do not meet all of these criteria , the license revenues are recognized over the expected period of performance . non-refundable payments for research funding are generally recognized as revenues over the period as the related research activities are performed . payments for reimbursement of external development costs are generally recognized as revenues using a contingency-adjusted performance model over the expected period of performance . payments received from grants are recognized as revenues as the related research and development is performed and when collectability has been reasonably assured . we evaluate milestone payments on an individual basis and recognize revenues from non-refundable milestone payments when the earnings process is complete and the payment is reasonably assured . non-refundable milestone payments related to arrangements under which we have continuing performance obligations are recognized as revenues upon achievement of the associated milestone , provided that ( i ) the milestone event is substantive and its achievability was not reasonably assured at the inception of the agreement and ( ii ) the amount of the milestone payment is reasonable in relation to the effort expended or the risk associated with the milestone event . where separate milestone payments do not meet these criteria , we recognize revenue using a contingency-adjusted performance model over the period of performance . accrued expenses we are required to estimate accrued expenses as part of our process of preparing financial statements . examples of areas in which subjective judgments may be required include costs associated with services provided by contract organizations for preclinical development , manufacturing of clinical materials , and clinical trials . we accrue for costs incurred as the services are being provided by monitoring the status of the trials or services provided , and the invoices received from our external service providers . in the case of clinical trials , a portion of the cost normally relates to the projected cost to treat a patient in our trials and we recognize this cost over the term of the study based on the number of patients enrolled in the trial on an ongoing basis . as actual costs become known to us , we adjust our accruals . to date , our estimates have not differed significantly from the actual costs incurred . however , subsequent changes in estimates may result in a material change in our accruals , which could also materially affect our balance sheet and results of operations . 42 stock-based compensation the fair value of each employee stock option and each employee stock purchase plan right granted is estimated on the grant date under the fair value method using the black-scholes model , which requires us to make a number of assumptions including the estimated expected life of the award and related volatility . the estimated fair values of stock options or purchase plan rights , including the effect of estimated forfeitures , are then expensed over the vesting period . as of december 31 , 2011 , total unrecognized compensation cost related to stock options and purchase plan rights was approximately $ 2.2 million , and the weighted average period over which this cost is expected to be recognized is 2.4 years . story_separator_special_tag studies and other research and development programs ; the scope , prioritization and number of research and development programs ; 44 the ability of our collaborators and us to reach the milestones , or other events or developments , under our collaboration agreements ; the extent to which we are obligated to reimburse our collaborators or our collaborators are obligated to reimburse us for clinical trial costs under our collaboration agreements ; the costs involved in filing , prosecuting , enforcing and defending patent claims and other intellectual property rights ; the costs of securing manufacturing arrangements for clinical or commercial production of product candidates ; the costs of preparing applications for regulatory approvals for our product candidates ; and the costs of establishing , or contracting for , sales and marketing capabilities if we obtain regulatory clearances to market our product candidates . until we can generate significant continuing revenues , we expect to satisfy our future cash needs through strategic collaborations , private or public sales of our equity securities , debt financings , grant funding , or by licensing all or a portion of our product candidates or technology . we can not be certain that additional funding will be available to us on acceptable terms , or at all . over the last few years , turmoil and volatility in the financial markets have adversely affected the market capitalizations of many biotechnology companies and generally made equity and debt financing more difficult to obtain . this , coupled with other factors , may limit access to additional financing over the near-term future .
| results of operations fluctuations in operating results our results of operations have fluctuated significantly from period to period in the past and are likely to continue to do so in the future . we anticipate that our quarterly and annual results of operations will be impacted for the foreseeable future by several factors , including the timing and amount of payments received pursuant to our current and potential future collaborations , and the progress and timing of expenditures related to our development efforts . due to these fluctuations , we believe that the period-to-period comparisons of our operating results are not a good indication of our future performance . comparison of the years ended december 31 , 2011 and 2010 revenues revenues decreased to $ 2.1 million in 2011 from $ 42.1 million in 2010. this decrease was primarily due to the conclusion of our collaboration with biovail in october 2010 , at which time we recognized all remaining revenues related to that collaboration . we recognized $ 39.5 million in revenues from that collaboration in 2010. revenues from our collaborations with allergan totaled $ 1.1 million in each of 2011 and 2010. revenues from our agreements with other parties , including our collaboration with meiji seika pharma , totaled $ 1.0 million in 2011 compared to $ 1.5 million in 2010. research and development expenses research and development expenses decreased to $ 17.3 million in 2011 , including $ 512,000 in stock-based compensation , from $ 20.6 million in 2010 , including $ 599,000 in stock-based compensation . the decrease in research and development expenses was primarily due to $ 1.8 million in decreased external service costs and $ 1.5 million in decreased facilities , equipment and other costs associated with our internal research and development organization .
| 2,622 |
the bank comprises almost all of the consolidated assets and liabilities of the company and the company is dependent primarily upon the performance of the bank for the results of its operations . because of this relationship , references to management actions , strategies and results of actions apply to both the bank and the company . story_separator_special_tag now operating under a manager responsible for either two or three offices . currently , any future branch management reductions are expected to result from retirements and attrition . management continues to monitor the role and functions of the branch staff and will adjust the branch management and overall branch staffing structure as necessary to achieve the bank 's targets for deposit and loan production . since 2010 , the bank has reduced retail branch staff by 24 full-time equivalent positions while adding four new branch locations . additionally , lending staff have been deployed from regionally centralized locations to the branch network . by utilizing paperless electronic document technology , the bank can better utilize staff resources regardless of their physical location . this promotes a more efficient loan process which benefits the customer and the loan operation . having loan staff located in the branch network also provides them with more frequent opportunities to interact with customers and cross-sell additional products and services . during the fourth quarter of fiscal year 2014 , the bank implemented the daily leverage strategy to increase earnings . the daily leverage strategy currently involves borrowing up to $ 2.10 billion on the bank 's fhlb line of credit in two leverage tiers . the first tier of $ 800.0 million is intended to remain borrowed on the fhlb line of credit for an extended period of time . the second tier of $ 1.30 billion is borrowed at the beginning of each quarter and paid off prior to each quarter end . the proceeds of the borrowings , net of the required fhlb stock holdings , are deposited at the federal reserve bank of kansas city . the daily leverage strategy was fully implemented beginning on august 1 , 2014 and increased fiscal year 2014 net income by $ 501 thousand . the daily leverage strategy has had minimal impact on the bank 's interest rate risk and liquidity . the pre-tax yield of the daily leverage strategy , which is defined as the annualized pre-tax income resulting from the transaction as a percentage of the interest-earning assets associated with the transaction , was 0.21 % for the period that the strategy was in place during fiscal year 2014. management expects to continue this strategy and will monitor it on a continuous basis . 41 for fiscal year 2014 , the company recognized net income of $ 77.7 million , compared to net income of $ 69.3 million for fiscal year 2013. the $ 8.4 million , or 12.0 % , increase in net income was due primarily to a $ 6.0 million increase in net interest income , and a $ 5.4 million decrease in salaries and employee benefits due primarily to a reduction in esop related expenses . the net interest margin increased three basis points , from 1.97 % for the prior fiscal year to 2.00 % for the current fiscal year . excluding the effects of the daily leverage strategy , the net interest margin would have been 2.07 % for the current fiscal year . decreases in the cost of funds and a shift in the mix of interest-earning assets from relatively lower yielding securities to higher yielding loans were the primary drivers for the higher net interest margin in the current fiscal year . total assets were $ 9.87 billion at september 30 , 2014 compared to $ 9.19 billion at september 30 , 2013. the $ 678.6 million increase was due primarily to a $ 697.0 million increase in cash and cash equivalents resulting largely from the daily leverage strategy , a $ 274.3 million increase in loans receivable and an $ 84.5 million increase in fhlb stock , also due largely to the daily leverage strategy , partially offset by a $ 394.5 million decrease in the securities portfolio . cash flows from the securities portfolio were used to fund loan growth , pay dividends , and repurchase stock . during the current fiscal year , the bank originated and refinanced $ 566.9 million of loans with a weighted average rate of 3.91 % , purchased $ 515.5 million of loans from correspondent lenders with a weighted average rate of 3.70 % , and participated in $ 58.3 million of commercial real estate loans with a weighted average rate of 3.94 % . total liabilities were $ 8.37 billion at september 30 , 2014 compared to $ 7.55 billion at september 30 , 2013. the $ 817.8 million increase was due primarily to an $ 856.1 million increase in fhlb borrowings , largely due to an $ 800.0 million increase in the fhlb line of credit resulting from the daily leverage strategy , as well as to a $ 43.8 million increase in deposits . repurchase agreements decreased $ 100.0 million between periods as a result of an agreement that matured being replaced with a fhlb advance . stockholders ' equity was $ 1.49 billion at september 30 , 2014 compared to $ 1.63 billion at september 30 , 2013. the $ 139.2 million decrease was due primarily to the payment of $ 138.2 million in dividends and the repurchase of $ 83.2 million of stock , partially offset by net income of $ 77.7 million . critical accounting policies our most critical accounting policies are the methodologies used to determine the acl and fair value measurements . these policies are important to the presentation of our financial condition and results of operations , involve a high degree of complexity , and require management to make difficult and subjective judgments that may require assumptions or estimates about highly uncertain matters . story_separator_special_tag the factors applied in the formula analysis are reviewed quarterly by management to assess whether the factors adequately cover probable and estimable losses inherent in the loan portfolio . our acl methodology permits modifications to the formula analysis in the event that , in management 's judgment , significant factors which affect the collectability of the portfolio or any category of the loan portfolio , as of the evaluation date , have changed from the current formula analysis . management 's evaluation of the qualitative factors with respect to these conditions is subject to a higher degree of uncertainty because they are not identified with a specific problem loan or portfolio segment . 43 management utilizes the formula analysis , along with considering several other data elements , when evaluating the adequacy of the acl . such data elements include the trend and composition of delinquent loans , results of foreclosed property and short sale transactions , charge-off trends , the current status and trends of local and national economic conditions ( particularly levels of unemployment ) , trends and current conditions in the real estate and housing markets , and loan portfolio growth and concentrations . since our loan portfolio is primarily concentrated in one- to four-family real estate , management monitors residential real estate market value trends in the bank 's local market areas and geographic sections of the u.s. by reference to various industry and market reports , economic releases and surveys , and management 's general and specific knowledge of the real estate markets in which we lend , in order to determine what impact , if any , such trends may have on the level of acl . reviewing these data elements assists management in evaluating the overall credit quality of the loan portfolio and the reasonableness of the acl on an ongoing basis , and whether changes need to be made to our acl methodology . in addition , the adequacy of the company 's acl is reviewed during bank regulatory examinations . we consider any comments from our regulators when assessing the appropriateness of our acl . we seek to apply acl methodology in a consistent manner ; however , the methodology can be modified in response to changing conditions . fair value measurements . the company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures in accordance with accounting standard codification ( `` asc '' ) 820 and asc 825. the company groups its assets at fair value in three levels based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value , with level 1 ( quoted prices for identical assets in an active market ) being considered the most reliable , and level 3 having the most unobservable inputs and therefore being considered the least reliable . the company bases its fair values on the price that would be received from the sale of an asset in an orderly transaction between market participants at the measurement date . the company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value . the company did not have any liabilities that were measured at fair value at september 30 , 2014. the company 's afs securities are its most significant assets measured at fair value on a recurring basis . changes in the fair value of afs securities are recorded , net of tax , as accumulated other comprehensive income in stockholders ' equity . the company primarily uses prices obtained from third party pricing services to determine the fair value of its securities . various modeling techniques are used to determine pricing for the company 's securities , including option pricing , discounted cash flow models , and similar techniques . the inputs to these models may include benchmark yields , reported trades , broker/dealer quotes , issuer spreads , benchmark securities , bids , offers and reference data . there is one security , with a balance of $ 2.3 million at september 30 , 2014 , in the afs portfolio that has significant unobservable inputs requiring the independent pricing services to use some judgment in pricing the related securities . this afs security is classified as level 3. all other afs securities are classified as level 2. loans individually evaluated for impairment and oreo are the company 's significant assets measured at fair value on a non-recurring basis . these non-recurring fair value adjustments involve the application of lower-of-cost-or-fair value accounting or write-downs of individual assets . fair values of loan individually evaluated for impairment are estimated through current appraisals or analyzed based on market indicators . oreo fair values are estimated using current appraisals or listing prices . fair values may be adjusted by management to reflect current economic and market conditions and , as such , are classified as level 3. recent accounting pronouncements . for a discussion of recent accounting pronouncements , see `` item 8. financial statements and supplementary data โ notes to financial statements โ note 1 โ summary of significant accounting policies . '' 44 management strategy we are a community-oriented financial institution dedicated to serving the needs of customers in our market areas . our commitment is to provide qualified borrowers the broadest possible access to home ownership through our mortgage lending programs and to offer a complete set of personal banking products and services to our customers . we strive to enhance stockholder value while maintaining a strong capital position . to achieve these goals , we focus on the following strategies : residential portfolio lending . we are one of the leading originators of one- to four-family loans in the state of kansas . we originate these loans primarily for our own portfolio , and we service the loans we originate . we also purchase one- to four-family loans from correspondent and nationwide lenders . we offer both fixed- and adjustable-rate products with various terms to maturity and pricing options .
| executive summary the company completed its conversion from a mutual holding company form of organization to a stock form of organization in december 2010. the company 's common stock is traded on the global select tier of the nasdaq stock market under the symbol `` cffn . '' the company provides a full range of retail banking services through the bank , which is a wholly-owned subsidiary headquartered in topeka kansas . the bank has 37 traditional and 10 in-store banking offices serving primarily the metropolitan areas of topeka , wichita , lawrence , manhattan , emporia and salina , kansas and portions of the metropolitan area of greater kansas city . we have been , and intend to continue to be , a community-oriented financial institution offering a variety of financial services to meet the needs of the communities we serve . we attract retail deposits from the general public and invest those funds primarily in permanent loans secured by first mortgages on owner-occupied , one- to four-family residences . we also originate consumer loans primarily secured by first mortgages on one- to four-family residences , commercial and multi-family real estate loans , and construction loans secured by residential , multi-family , or commercial real estate . while our primary business is the origination of one- to four-family mortgage loans funded through retail deposits , we also purchase whole one- to four-family mortgage loans from correspondent and nationwide lenders , participate in loans with other lenders that are secured by multi-family or commercial real estate , and invest in certain investment securities and mbs using funding from retail deposits , fhlb borrowings , and repurchase agreements . the company 's results of operations are primarily dependent on net interest income , which is the difference between the interest earned on loans , mbs , investment securities , and cash , and the interest paid on deposits and borrowings .
| 2,623 |
using these methodologies , we determined a discount rate of 3.99 % to be appropriate as of december 31 , 2011 , which is a decrease of 0.43 percentage points from the rate used as of december 31 , 2010. an increase of 1.0 % in the discount rate would have decreased our plan liabilities as of december 31 , 2011 by $ 0.1 million . the expected long-term rate of return on assets considers the company 's historical results and projected returns for similar allocations among asset classes . in accordance with generally accepted accounting principles , actual results that differ from the company 's assumptions are accumulated and amortized over future periods and , therefore , affect expense and obligation in future periods . for the u.s. pension plan , our assumption for the expected return on plan assets was 8.25 % for 2011. for more information concerning these costs and obligations , see the discussion in note 6 โ pension and profit sharing , in the notes to the company 's consolidated financial statements . accounting for stock-based compensation . stock based compensation cost is measured at the grant date fair value of the award and is recognized as expense over the requisite service period . the company uses the black-scholes option - pricing model to determine fair value of the awards , which involves certain subjective assumptions . these assumptions include estimating the length of time employees will retain their vested stock options before exercising them ( โ expected term โ ) , the estimated volatility of the company 's common stock price over the expected term ( โ volatility โ ) and the number of options for which vesting requirements will not be completed ( โ forfeitures โ ) . changes in the subjective assumptions can materially affect estimates of fair value stock-based compensation , and the related amount recognized on the consolidated statements of operations . refer to note 11 - stock option plans - in the notes to consolidated financial statements in this report for a more detailed discussion . story_separator_special_tag style= '' text-align : left ; text-indent : 0pt ; display : block ; margin-left : 0pt ; margin-right : 0pt '' > the effective tax rate in 2011 was 30 % , compared to 12 % in 2010. the effective tax rate in 2010 included a tax credit of $ 360,000 related to land that the company donated to the city of bridgeport . also , in 2011 , the company had a higher proportion of earnings in the united states , compared to 2010 , which has a higher tax rate than the countries in which our subsidiaries operate . excluding the effect of the tax credit in 2010 , the effective tax rate would have been 24 % . off-balance sheet transactions the company did not engage in any off-balance sheet transactions during 2011. liquidity and capital resources during 2011 , working capital increased by approximately $ 4.4 million compared to december 31 , 2011. inventory increased by approximately $ 2.2 million . the company purchased approximately $ 1.2 million of inventory as part of the acquisition of pac-kit and spent an additional $ 1.0 million on inventory in anticipation of new business in 2012. inventory turnover , calculated using a twelve month average inventory balance , decreased to 2.0 from 2.1 at december 31 , 2010. receivables increased approximately $ 600,000 at december 31 , 2011 compared to december 31 , 2010. the average number of days sales outstanding in accounts receivable was 65 days in both 2011 and 2010. the company 's working capital , current ratio and long-term debt to equity ratio follow : replace_table_token_4_th during 2011 , total debt outstanding under the company 's revolving credit facility ( referred to below ) increased by approximately $ 4.0 million compared to total debt at december 31 , 2010. the increase in debt outstanding is primarily related to the financing of the acquisition of substantially all of the assets of the pac-kit company for $ 3.4 million . as of december 31 , 2011 , $ 17,568,484 was outstanding and $ 2,431,516 was available for borrowing under the revolving credit facility . on february 23 , 2011 , the company modified its revolving loan agreement with wells fargo bank ; the amendments include an increase in the maximum borrowing amount from $ 18 million to $ 20 million ; and an extension of the maturity date of the loan from february 1 , 2012 to march 31 , 2013. funds borrowed under the modified loan agreement may be used for working capital , general operating expenses , share repurchases and certain other purposes . under the provisions of the modified loan agreement , the company , among other things , is restricted with respect to outside borrowings , investments and mergers . further , the modified loan agreement continues to require the company to maintain specific amounts of tangible net worth , a specified debt service coverage ratio and a fixed charge coverage ratio . this modified loan agreement continues to be secured by the assets of the u.s. parent company . this modification did not change the permissible use of funds or the quantitative covenants that the company is required to comply with . the company was in compliance with all financial covenants under the revolving loan agreement as of and through december 31 , 2011 , and believes it will be able to continue to comply with these covenants under the modified loan agreement for the remainder of the term of the credit facility . capital expenditures during 2011 and 2010 were $ 940,713 and $ 937,083 , respectively , which were , in part , financed with borrowings under the company 's revolving credit facility . capital expenditures in 2012 are not expected to differ materially from recent years . the company believes that cash generated from operating activities , together with funds available story_separator_special_tag using these methodologies , we determined a discount rate of 3.99 % to be appropriate as of december 31 , 2011 , which is a decrease of 0.43 percentage points from the rate used as of december 31 , 2010. an increase of 1.0 % in the discount rate would have decreased our plan liabilities as of december 31 , 2011 by $ 0.1 million . the expected long-term rate of return on assets considers the company 's historical results and projected returns for similar allocations among asset classes . in accordance with generally accepted accounting principles , actual results that differ from the company 's assumptions are accumulated and amortized over future periods and , therefore , affect expense and obligation in future periods . for the u.s. pension plan , our assumption for the expected return on plan assets was 8.25 % for 2011. for more information concerning these costs and obligations , see the discussion in note 6 โ pension and profit sharing , in the notes to the company 's consolidated financial statements . accounting for stock-based compensation . stock based compensation cost is measured at the grant date fair value of the award and is recognized as expense over the requisite service period . the company uses the black-scholes option - pricing model to determine fair value of the awards , which involves certain subjective assumptions . these assumptions include estimating the length of time employees will retain their vested stock options before exercising them ( โ expected term โ ) , the estimated volatility of the company 's common stock price over the expected term ( โ volatility โ ) and the number of options for which vesting requirements will not be completed ( โ forfeitures โ ) . changes in the subjective assumptions can materially affect estimates of fair value stock-based compensation , and the related amount recognized on the consolidated statements of operations . refer to note 11 - stock option plans - in the notes to consolidated financial statements in this report for a more detailed discussion . story_separator_special_tag style= '' text-align : left ; text-indent : 0pt ; display : block ; margin-left : 0pt ; margin-right : 0pt '' > the effective tax rate in 2011 was 30 % , compared to 12 % in 2010. the effective tax rate in 2010 included a tax credit of $ 360,000 related to land that the company donated to the city of bridgeport . also , in 2011 , the company had a higher proportion of earnings in the united states , compared to 2010 , which has a higher tax rate than the countries in which our subsidiaries operate . excluding the effect of the tax credit in 2010 , the effective tax rate would have been 24 % . off-balance sheet transactions the company did not engage in any off-balance sheet transactions during 2011. liquidity and capital resources during 2011 , working capital increased by approximately $ 4.4 million compared to december 31 , 2011. inventory increased by approximately $ 2.2 million . the company purchased approximately $ 1.2 million of inventory as part of the acquisition of pac-kit and spent an additional $ 1.0 million on inventory in anticipation of new business in 2012. inventory turnover , calculated using a twelve month average inventory balance , decreased to 2.0 from 2.1 at december 31 , 2010. receivables increased approximately $ 600,000 at december 31 , 2011 compared to december 31 , 2010. the average number of days sales outstanding in accounts receivable was 65 days in both 2011 and 2010. the company 's working capital , current ratio and long-term debt to equity ratio follow : replace_table_token_4_th during 2011 , total debt outstanding under the company 's revolving credit facility ( referred to below ) increased by approximately $ 4.0 million compared to total debt at december 31 , 2010. the increase in debt outstanding is primarily related to the financing of the acquisition of substantially all of the assets of the pac-kit company for $ 3.4 million . as of december 31 , 2011 , $ 17,568,484 was outstanding and $ 2,431,516 was available for borrowing under the revolving credit facility . on february 23 , 2011 , the company modified its revolving loan agreement with wells fargo bank ; the amendments include an increase in the maximum borrowing amount from $ 18 million to $ 20 million ; and an extension of the maturity date of the loan from february 1 , 2012 to march 31 , 2013. funds borrowed under the modified loan agreement may be used for working capital , general operating expenses , share repurchases and certain other purposes . under the provisions of the modified loan agreement , the company , among other things , is restricted with respect to outside borrowings , investments and mergers . further , the modified loan agreement continues to require the company to maintain specific amounts of tangible net worth , a specified debt service coverage ratio and a fixed charge coverage ratio . this modified loan agreement continues to be secured by the assets of the u.s. parent company . this modification did not change the permissible use of funds or the quantitative covenants that the company is required to comply with . the company was in compliance with all financial covenants under the revolving loan agreement as of and through december 31 , 2011 , and believes it will be able to continue to comply with these covenants under the modified loan agreement for the remainder of the term of the credit facility . capital expenditures during 2011 and 2010 were $ 940,713 and $ 937,083 , respectively , which were , in part , financed with borrowings under the company 's revolving credit facility . capital expenditures in 2012 are not expected to differ materially from recent years . the company believes that cash generated from operating activities , together with funds available
| results of operations 2011 compared with 2010 on february 28 , 2011 , the company purchased substantially all of the assets of the pac-kit safety equipment company , a leading manufacturer of first aid kits for the industrial , safety , transportation and marine markets . the company purchased the accounts receivable , inventory , equipment and intangible assets of pac-kit for approximately $ 3.4 million using funds borrowed under its revolving loan agreement with wells fargo . the pac-kit line of products consist of high quality , unitized first aid kits sold to a broad range of customers and distributors . 14 the company recorded approximately $ 1.9 million for assets acquired including accounts receivable , inventory and fixed assets , as well as approximately $ 1.5 million for intangible assets , consisting of customer relationships and the pac-kit trade name . in 2011 , the company incurred approximately $ 125,000 of integration and transaction costs associated with the acquisition . these costs were recorded in selling , general and administrative expenses . net sales in 2011 , sales increased by $ 10,152,931 or 16 % ( 14 % in constant currency ) to $ 73,301,864 compared to $ 63,148,933 in 2010. the u.s. segment sales increased by $ 9,480,000 or 20 % in 2011 compared to 2010. sales in canada increased by $ 794,000 or 10 % ( 5 % in local currency ) in 2011 compared to 2010. european sales decreased by $ 120,000 or 2 % in u.s. dollars ( 8 % in local currency ) in 2011 compared to 2010. the decline in european net sales is primarily related to the timing of shipments to mass market customers .
| 2,624 |
investments in hotel properties and other real estate hotel properties and other completed real estate investments are depreciated using the straight-line method over estimated useful lives ranging from five to 35 years for buildings and improvements and three to 12 years for furniture , fixtures and equipment . f-10 as of december 31 , 2011 and 2010 , intangible assets included in the story_separator_special_tag the following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report . overview sunstone hotel investors , inc. is a maryland corporation . we operate as a self-managed and self-administered real estate investment trust , or reit . a reit is a legal entity that directly or indirectly owns real estate assets . reits generally are not subject to federal income taxes at the corporate level as long as they pay stockholder dividends equivalent to 100 % of their taxable income . reits are required to distribute to stockholders at least 90 % of their taxable income . we own , directly or indirectly , 100 % of the interests of sunstone hotel partnership , llc ( the ยoperating partnershipย ) , which is the entity that directly or indirectly owns our hotel properties . we also own 100 % of the interests of our taxable reit subsidiary , sunstone hotel trs lessee , inc. , which leases all of our hotels from the operating partnership , and engages third-parties to manage our hotels . in addition , prior to january 21 , 2011 , we owned 50.0 % of buyefficient , llc ( ยbuyefficientย ) , an electronic purchasing platform that allows members to procure food , operating supplies , furniture , fixtures and equipment . in january 2011 , we purchased the outside 50.0 % equity interest in buyefficient , and as a result , we are now the sole owner of buyefficient . we own primarily upper upscale and upscale hotels in the united states . as of december 31 , 2011 , we had interests in 32 hotels ( the ย32 hotelsย ) . of the 32 hotels , we classify 29 as upscale or upper upscale , two as luxury and one as upper midscale as defined by smith travel research , inc. the majority of our hotels are operated under nationally recognized brands such as marriott , hilton , fairmont , hyatt and sheraton , which are among the most respected and widely recognized brands in the lodging industry . while we believe the largest and most stable segment of demand for hotel rooms is represented by travelers who prefer the consistent service and quality associated with nationally recognized brands , we also believe that in certain markets the strongest demand growth may come from travelers who prefer non-branded hotels that focus on highly customized service standards . we seek to own hotels in urban locations that benefit from significant barriers to entry by competitors . most of our hotels are considered business , convention , or airport hotels , as opposed to resort , leisure or extended-stay hotels . the hotels comprising our 32 hotel portfolio average 413 rooms in size . our mission is to create meaningful value for our stockholders by becoming the premier hotel owner . our values include transparency , trust , ethical conduct , communication and discipline . as demand for lodging generally fluctuates with the overall economy ( we refer to these changes in demand as the lodging cycle ) , we seek to employ a balanced , cycle-appropriate corporate strategy that encompasses proactive portfolio management , intensive asset management , disciplined external growth and measured balance sheet improvement as detailed below : ยท proactive portfolio management : the leaders of each of our core disciplines function as a portfolio management team . the portfolio management team 's purpose is to strategically maximize the long-term value of our assets by enhancing portfolio quality / scale , optimizing market exposure , and improving effectiveness / efficiency of decision making by developing long-term portfolio objectives , asset specific plans and a comprehensive external growth strategy . the team is responsible for developing portfolio-wide objectives related to brand and operator relationships , asset quality and scale targets , target markets , capital investments , and asset-level capitalization . the team is also responsible for developing a comprehensive portfolio growth strategy and decision support tools and models . ยท intensive asset management : through all phases of the lodging cycle , our strategy emphasizes internal growth and value enhancements through proactive asset management , which entails working closely with our third-party hotel operators to develop and implement long-term strategic plans for each hotel designed to enhance revenues , minimize operational expenses and asset risk , maximize the appeal of our hotels to travelers and maximize our return on invested capital . we also focus on improving the appeal and growth potential of our existing hotels through an internally-managed comprehensive hotel renovation program . 29 ยท disciplined external growth : our acquisitions plan is oriented around investing in institutional-quality hotels which generate returns in excess of our cost of capital . during the recovery and growth phases of the lodging cycle , our strategy emphasizes external growth objectives oriented toward active investment in hotels that are additive to the quality of our portfolio , that have attractive growth potential and that may benefit from our asset management competencies . we endeavor to structure our acquisitions in a way that will not only increase the value of our common shares , but also will advance our other corporate objectives , such as improving our financial flexibility and reducing our leverage . during periods of cyclical decline , our strategy may emphasize opportunistically investing in distressed assets and the repurchase of our equity or debt securities . ยท measured balance sheet improvement : our financial objectives include the measured improvement of our credit ratios , improved disclosures , maintenance of appropriate levels of liquidity , and a gradual reduction in our financial leverage . story_separator_special_tag as of december 31 , 2011 , approximately $ 325.8 million of our total debt matures over the next four years ( $ 32.0 million in 2012 , $ 62.5 million in 2013 , assuming we repay our 30 operating partnership 's 4.60 % exchangeable senior notes ( the ยsenior notesย ) then remaining balance of $ 62.5 million at the first put date in 2013 , none in 2014 and $ 231.3 million in 2015 ) . in february 2012 , we repurchased $ 4.5 million of our senior notes for a price of $ 4.57 million plus accrued interest of approximately $ 13,000 , leaving approximately $ 321.3 million of our debt maturing over the next four years . the $ 321.3 million does not include $ 22.0 million of scheduled loan amortization payments due in 2012 , $ 24.1 million due in 2013 , $ 30.4 million due in 2014 , or $ 27.9 million due in 2015. operating activities operating performance indicators . the following performance indicators are commonly used in the hotel industry : ยท occupancy ; ยท average daily room rate , or adr ; ยท revenue per available room , or revpar , which is the product of occupancy and adr , and does not include food and beverage revenue , or other operating revenue ; ยท comparable revpar , which we define as the revpar generated by hotels we owned as of the end of the reporting period , but excluding those hotels that experienced material and prolonged business interruption due to renovations , re-branding or property damage during either the most recent calendar year presented or the calendar year immediately preceding it . for hotels that were not owned for the entirety of the comparison periods , comparable revpar is calculated using revpar generated during periods of prior ownership . we refer to this subset of our hotels used to calculate comparable revpar as our ยcomparable portfolio.ย currently our comparable portfolio includes all 32 hotels , and includes prior ownership results for the doubletree guest suites times square , the jw marriott new orleans and the hilton san diego bayfront , as well as operating results for the renaissance westchester for all periods presented , including the periods in 2009 and 2010 while it was held in receivership ; ยท revpar index , which is the quotient of a hotel 's revpar divided by the average revpar of its competitors , multiplied by 100. a revpar index in excess of 100 indicates a hotel is achieving higher revpar than its competitors . in addition to absolute revpar index , we monitor changes in revpar index ; ยท ebitda , which is net income ( loss ) excluding : non-controlling interests ; interest expense ; provision for income taxes , including income taxes applicable to sale of assets ; and depreciation and amortization ; ยท adjusted ebitda , which includes ebitda but excludes : amortization of deferred stock compensation ; the impact of any gain or loss from asset sales ; impairment charges ; and any other identified adjustments ; ยท funds from operations , or ffo , which includes net income ( loss ) , excluding non-controlling interests , gains and losses from sales of property , plus real estate-related depreciation and amortization ( excluding amortization of deferred financing costs ) and real estate-related impairment losses , and after adjustment for unconsolidated partnerships and joint ventures ; and ยท adjusted ffo , which includes ffo but excludes penalties , written-off deferred financing costs , non-real estate-related impairment losses and any other identified adjustments . revenues . substantially all of our revenues are derived from the operation of our hotels . specifically , our revenues consist of the following : ยท room revenue , which is the product of the number of rooms sold and the adr ; ยท food and beverage revenue , which is comprised of revenue realized in the hotel food and beverage outlets as well as banquet and catering events ; and ยท other operating revenue , which includes ancillary hotel revenue and other items primarily driven by occupancy such as telephone , transportation , parking , spa , entertainment and other guest services . additionally , this category includes , among other things , operating revenue from our commercial laundry facility located in rochester , minnesota , buyefficient ( subsequent to our purchase of the outside 50.0 % equity interest in january 2011 ) , and hotel space leased by third parties . 31 expenses . our expenses consist of the following : ยท room expense , which is primarily driven by occupancy and , therefore , has a significant correlation with room revenue ; ยท food and beverage expense , which is primarily driven by food and beverage sales and banquet and catering bookings and , therefore , has a significant correlation with food and beverage revenue ; ยท other operating expense , which includes the corresponding expense of other operating revenue , advertising and promotion , repairs and maintenance , utilities , and franchise costs ; ยท property tax , ground lease and insurance expense , which includes the expenses associated with property tax , ground lease and insurance payments , each of which is primarily a fixed expense , but property tax is subject to regular revaluations based on the specific tax regulations and practices of each municipality ; ยท property general and administrative expense , which includes our property-level general and administrative expenses , such as payroll and related costs , professional fees , travel expenses , and management fees ; ยท corporate overhead expense , which includes our corporate-level expenses , such as payroll and related costs , amortization of deferred stock compensation , acquisition and due diligence costs , severance expense , contract and professional fees , bad debt , relocation , entity level state franchise and minimum tax payments , travel expenses and office rent ; ยท depreciation and amortization expense , which includes depreciation on our hotel and commercial laundry facility buildings , improvements , furniture , fixtures and equipment , along
| operating results . the following table presents our operating results for our total portfolio for 2011 and 2010 , including the amount and percentage change in the results between the two periods . the table presents the results of operations included in the consolidated statements of operations , and includes the 32 hotels ( 13,208 rooms ) as of december 31 , 2011 and 29 hotels ( 11,056 rooms ) as of december 31 , 2010. income from discontinued operations for the year ended december 31 , 2011 includes the results of operations and other adjustments for the following : royal palm miami beach , which was sold in april 2011 ; our commercial laundry facility located in salt lake city , utah , which was sold in july 2011 ; and the valley river inn located in eugene , oregon , which was sold in october 2011. income from discontinued operations for the year ended december 31 , 2011 also includes the gain on extinguishment of debt related to the resolution of the contingency for franchise termination fees for the hilton huntington , residence inn by marriott manhattan beach , marriott provo , courtyard by marriott san diego ( old town ) , and marriott salt lake city ( university park ) , which hotels were deeded back to the lender in november 2010 pursuant to our 2009 secured debt restructuring program .
| 2,625 |
in shares of common stock owed to mr. farkas for accrued commissions on hardware sales and revenue from charging stations for the period from april 2017 to february 13 , 2018 pursuant to a verbal agreement between our company and mr. farkas , divided by the public offering price of $ 4.25 multiplied by 80 % , ( iv ) issued to mr. farkas 74,753 shares of common stock issuable as payment of principal and interest of $ 221,009 owed to blnk holdings , llc , a company controlled by mr. farkas , pursuant to the conversion agreement , dated august 23 , 2017 , between our company and blnk holdings . in march 2018 , mr. farkas also received 886,119 shares of common stock issuable pursuant to the december 6 , 2017 letter agreement . mr. farkas is owed stock options for 7,000 shares of common stock at an exercise price of $ 30 per share and stock options for 8,240 shares of common stock at an exercise price of $ 37.50 per share in connection with amounts owed pursuant to the third amendment . with the exception of the farkas additional amounts for the period from april 2017 to february 13 , 2018 , pursuant to a verbal agreement between our company and mr. farkas , the third amendment resolved all claims mr. farkas had with regard to the affiliate agreements . following the closing of our 2018 public offering and the issuance of all securities owed to mr. farkas pursuant to the verbal agreement , mr. farkas no longer has any claims with regard to the affiliate agreements . the affiliate agreements are not currently in effect and will retain that status while mr. farkas is employed by us with a monthly salary of at least $ 30,000 . pursuant to the third amendment , mr. farkas will be entitled to salary and benefits for 18 months if he is terminated for a reason other than for cause , which is defined in the original farkas employment agreement as a conviction for committing or participating in an injurious act that constitutes fraud , gross negligence , misrepresentation or embezzlement with regard to our company . james christodoulou employment agreement . in connection with mr. christodoulou 's appointment as president , the board approved an offer letter to mr. christodoulou ( the โ christodoulou offer letter โ ) , which was executed on august 28 , 2018. the christodoulou offer letter provides that mr. christodoulou is entitled to receive an annualized base salary of $ 250,000 , payable in regular installments in accordance with our general payroll practices . mr. christodoulou will also be eligible for a cash bonus of 25 % of his base salary based on the satisfaction of certain performance criteria , payable in cash or stock . mr. christodoulou will also be entitled to receive equity awards under our 2018 incentive compensation plan with an aggregate award value equal to 50 % of his base salary . mr. christodoulou also has received a $ 20,000 signing bonus . if mr. christodoulou 's employment is terminated by us other than for cause , he is entitled to receive severance equal to up story_separator_special_tag the following discussion and analysis of the results of operations and financial condition for the years ended december 31 , 2018 and 2017 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this annual report . our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties , such as our plans , objectives , expectations and intentions . actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors . see โ forward-looking statements. โ overview we are a leading owner , operator and provider of electric vehicle ( โ ev โ ) charging equipment and networked ev charging services . we offer both residential and commercial ev charging equipment , enabling ev drivers to easily recharge at various location types . our principal line of products and services is our blink ev charging network ( the โ blink network โ ) and ev charging equipment ( also known as electric vehicle supply equipment ) and ev related services . our blink network consists of proprietary cloud-based software that operates , maintain , and tracks all of the blink ev charging stations and the associated charging data . the blink network provides property owners , managers and parking companies , who we refer to as our โ property partners โ , with cloud-based services that enable the remote monitoring and management of ev charging stations payment processing , and provide ev drivers with vital station information including station location , availability and applicable fees . 15 we offer our property partners a range of business models for ev charging equipment and services that generally fall into one of the three business models below . โ in our comprehensive turnkey business model , we own and operate the ev charging equipment , undertake and manage the installation , maintenance and related services , and we keep substantially all of the ev charging revenue . โ in our hybrid business model , the property partner incurs the installation costs , while we provide the charging equipment . we operate and manage the ev charging station and provide connectivity of the charging station to the blink network . as a result , we share a greater portion of the ev charging revenue with the property partner than under the turnkey mode above . story_separator_special_tag $ 75,363,496 for the year ended december 31 , 2017. the decrease was primarily attributable to an increase in other income ( expenses ) of $ 76,130,554. our net loss attributable to common shareholders for the year ended december 31 , 2018 decreased by $ 52,750,462 or 66 % , from $ 79,630,596 to $ 26,880,134 for the aforementioned reasons and due to a decrease in the dividend attributable to series c convertible preferred stockholders of $ 4,267,100 , as well as the deemed dividend attributable to the immediate accretion of the beneficial conversion feature related to the series b and c convertible preferred stock of $ 23,458,931. liquidity and capital resources on february 16 , 2018 , we closed our underwritten public offering of an aggregate 4,353,000 shares of common stock and warrants to purchase an aggregate of 8,706,000 shares of common stock at a combined public offering price of $ 4.25 per unit comprised of one share and two warrants . the public offering resulted in $ 18,504,320 and $ 14,880,815 of gross and net proceeds , respectively , reflecting underwriting discounts , commissions and other offering expenses of $ 3,623,505 , which was recorded as a reduction of additional paid-in capital . furthermore , during the year ended december 31 , 2018 , we issued an aggregate of 4,033,660 shares of common stock pursuant to the exercise of warrants at an exercise price of $ 4.25 per share for aggregate gross proceeds of $ 17,143,056. we measure our liquidity in a number of ways , including the following : replace_table_token_0_th during the year ended december 31 , 2018 , we financed our activities from proceeds derived from debt and equity financings . a significant portion of the funds raised from the sale of capital stock has been used to cover working capital needs and personnel , office expenses and various consulting and professional fees . for the years ended december 31 , 2018 and 2017 , we used cash of $ 13,420,955 and $ 2,548,661 , respectively , in operations . our cash used for the year ended december 31 , 2018 was primarily attributable to our net loss of $ 3,421,203 , increased by net non-cash expenses in the aggregate amount of $ 3,800,074 , and by $ 6,199,678 of net cash used in changes in the levels of operating assets and liabilities . our cash used for the year ended december 31 , 2017 was primarily attributable to our net loss of $ 75,363,496 , offset for net non-cash income in the aggregate amount of $ 58,138,853 , and by $ 14,675,982 of net cash provided by changes in the levels of operating assets and liabilities . 18 during the year ended december 31 , 2018 , cash used in investing activities was $ 37,711 , which was used to install charging stations and other fixed assets . net cash used in investing activities was $ 23,169 during the year ended december 31 , 2017 , which was used to purchase charger cables . net cash provided by financing activities for the year ended december 31 , 2018 was $ 31,691,028 , of which $ 15,052,973 was attributable to the net proceeds from the sale of common stock and warrants in our public offering , and $ 17,143,055 in proceeds derived from investors in our public offering subsequently exercising their warrants to purchase our common stock . additionally , $ 305,000 was provided in connection with issuances of notes payable , offset by the repayment of notes payable of $ 810,000 from public offering proceeds . net cash provided by financing activities for the year ended december 31 , 2017 was $ 2,751,083 , of which $ 2,923,241 was provided in connection with the issuance of convertible notes payable partially offset by $ 172,158 of payment of future offering costs . as of december 31 , 2018 , we incurred an accumulated deficit since inception of $ 159,856,481. as of december 31 , 2018 , we had cash and working capital of $ 18,417,513 and $ 15,586,510 , respectively . for the year ended december 31 , 2018 , we had a net loss of $ 3,421,203. as of december 31 , 2018 , we had remaining purchase commitments to acquire second generation charging stations with an aggregate value of $ 1,843,943 we have an aggregate deposit of $ 425,620 for these charging stations , which is included within prepaid expenses and other current assets on our consolidated balance sheet as of december 31 , 2018. the remaining purchase commitment of $ 2,512,010 will come due upon delivery of the charging stations . additionally , we have commitments to repair company owned chargers estimated at $ 118,000. these repairs will be charged to income as incurred . there has been no material change in the planned use of proceeds from the public offering as described in our public offering prospectus , dated february 13 , 2018. approximately $ 4.4 million was to be used for the repayment of certain debt and other obligations , of which , as of march 27 , 2018 , approximately $ 3.8 million , had been paid . the remaining amount will be used as follows : โ approximately $ 4.0 million for the deployment of charging stations ; โ approximately $ 1.0 million to expand our product offerings including but not limited to completing the research and development , as well as the launch , of our next generation of ev charging equipment ; โ approximately $ 3.0 million to add additional staff in the areas of finance , sales , customer support , and engineering ; and ( 4 ) the remainder for working capital and other general corporate purposes . we believe our current cash on hand is sufficient to meet our obligations , operating and capital requirements for at least the next 12 months from the date of this filing . thereafter , we may need
| results of operations year ended december 31 , 2018 compared year ended december 31 , 2017 revenues total revenue for the year ended december 31 , 2018 was $ 2,686,237 compared to $ 2,500,357 for the year ended december 31 , 2017 , an increase of $ 185,880 , or 7 % . charging service revenue for company-owned charging stations was $ 1,264,719 for the year ended december 31 , 2018 compared to $ 1,186,710 for the year ended december 31 , 2017 , an increase of $ 78,009 , or 7 % . the increase was attributable to a greater number of charging stations in the network as compared to the same 2017 period . revenue from product sales was $ 476,930 for the year ended december 31 , 2018 , compared to $ 495,086 for the year ended december 31 , 2017 , a decrease of $ 18,156 , or 4 % . this decrease was attributable to a lower volume of commercial units sold as compared to the same period in 2017 network fee revenue was $ 241,826 for the year ended december 31 , 2018 , compared to $ 225,349 for the year ended december 31 , 2017 , an increase of $ 16,477 , or 7 % . the increase was commensurate with the increase in the number of charging stations in the network as compared to last year . warranty revenue was $ 109,614 for the year ended december 31 , 2018 , compared to $ 133,867 for the year ended december 31 , 2017 , a decrease of $ 24,253 , or 18 % . the decrease was primarily attributable to property partners of host owned chargers not renewing their warranty contracts . grant and rebate revenues were $ 74,776 for the year ended december 31 , 2018 , compared to $ 120,905 for the year ended december 31 , 2017 , a decrease of $ 46,129 , or 38 % .
| 2,626 |
our actual results and the timing of events could differ materially from those expressed or implied in our forward-looking statements due to various important factors , including those set forth under โ factors that may affect our performance โ and elsewhere in this form 10-k. the following discussion and analysis should be read together with the โ selected financial data โ and consolidated financial statements , including the related notes included elsewhere in this form 10-k. overview our company , bofi holding , inc. , is the holding company for bofi federal bank , a diversified financial services company with $ 2.4 billion in assets that provides innovative banking and lending products and services to approximately 40,000 customers through our scalable low cost distribution channels . bofi holding , inc. 's common stock is listed on the nasdaq global select market and is a component of the russell 3000 index . net income for the fiscal year ended june 30 , 2012 was $ 29.5 million compared to $ 20.6 million and $ 21.1 million for the fiscal years ended june 30 , 2011 and 2010 , respectively . net income attributable to common stockholders for the fiscal year ended june 30 , 2012 was $ 28.2 million , or $ 2.33 per diluted share compared to $ 20.3 million , or $ 1.87 per diluted share and $ 20.5 million , or $ 2.22 per diluted share for the years ended june 30 , 2011 and 2010 , respectively . growth in our interest earning assets , particularly the loan portfolio , was the primary driver of the increase in our net income between fiscal 2010 and fiscal 2012. net income increased $ 8.9 million for the year ended june 30 , 2012 compared to the year ended june 30 , 2011. we define net income without the after-tax impact of realized and unrealized securities gains and losses as adjusted earnings ( `` core earnings '' ) which we believe provides useful information about the bank 's operating performance . core earnings for the fiscal years ended june 30 , 2012 , 2011 , and 2010 were $ 30.7 million , $ 19.7 million , and $ 17.6 million , respectively . below is a reconciliation of net income to core earnings : replace_table_token_19_th 26 net interest income for the year ended june 30 , 2012 was $ 79.2 million compared to $ 58.5 million and $ 50.6 million for the years ended june 30 , 2011 and 2010 , respectively . the increase was primarily due to growth in our loan portfolio from fiscal years 2010 through 2012. provision for loan losses for the years ended june 30 , 2012 was $ 8.1 million , compared to $ 5.8 million for both years ended june 30 , 2011 and 2010 , respectively . the increase of $ 2.3 million for fiscal year 2012 is primarily due to our loan growth and higher write-offs . mortgage banking income was $ 16.7 million compared to $ 4.7 million and $ 1.7 million for the years ended june 30 , 2012 , 2011 , and 2010. the increase was a result of higher loan originations for sale of $ 664.6 million compared to $ 216.9 and $ 114.8 million for the years ended june 30 , 2012 , 2011 , and 2010 , respectively . realized gains on sales of securities decreased $ 2.4 million and $ 10.6 million for fiscal 2012 and 2011 , respectively . non-interest expense for the fiscal year ended june 30 , 2012 was $ 38.0 million compared to $ 26.5 million and $ 17.3 for the years ended 2011 and 2010 , respectively . the increase was primarily due to increased staffing levels and loan and deposit growth . our staffing rose to 230 full-time equivalents compared to 173 and 90 at june 30 , 2012 , 2011 , and 2010 , respectively . total assets were $ 2,386.8 million at june 30 , 2012 compared to $ 1,940.1 million at june 30 , 2011 and $ 1,421.1 million at june 30 , 2010. assets grew $ 446.7 million or 23.0 % during the last fiscal year and $ 519.0 million or 36.5 % during fiscal 2011 , primarily due to an increase in the origination of single family and multifamily mortgage loans . these loans were funded primarily with growth in deposits and to a lesser extent borrowings . our future performance will depend on many factors , including changes in interest rates , competition for deposits and quality loans , the credit performance of our assets , regulatory actions and our ability to improve operating efficiencies . ( see โ factors that may affect our performance. โ ) critical accounting policies the following discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements and the notes thereto , which have been prepared in accordance with accounting principles generally accepted in the united states of america . the preparation of these consolidated financial statements requires us to make a number of estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements . on an ongoing basis , we evaluate our estimates and assumptions based upon historical experience and various factors and circumstances . we believe that our estimates and assumptions are reasonable under the circumstances . however , actual results may differ significantly from these estimates and assumptions that could have a material effect on the carrying value of assets and liabilities at the balance sheet dates and our results of operations for the reporting periods . securities . currently , we classify securities as either trading , available-for-sale or held-to-maturity . trading securities are those securities for which we have elected fair value accounting . trading securities are recorded at fair value with changes in fair value recorded in earnings each period . story_separator_special_tag all other impaired loans are written down through charge-offs to their realizable value and no specific or general reserve is provided . a loan is measured for impairment generally two different ways . if the loan is primarily dependent upon the borrower to make payments , then impairment is calculated by comparing the present value of the expected future payments discounted at the effective loan rate to the carrying value of the loan . if the loan is collateral dependent , the net proceeds from the sale of the collateral is compared to the carrying value of the loan . if the calculated amount is less than the carrying value of the loan , the loan has impairment . a general reserve is included in the allowance for loan loss and is determined by adding the results of a quantitative and a qualitative analysis to all other loans not measured for impairment at the reporting date . the quantitative analysis determines the bank 's actual annual historic charge-off rates and applies the average historic rates to the outstanding loan balances in each pool , the product of which is the general reserve amount . the qualitative analysis considers one or more of the following factors : changes in lending policies and procedures , changes in economic conditions , changes in the content of the portfolio , changes in lending management , changes in the volume of delinquency rates , changes to the scope of the loan review system , changes in the underlying collateral of the loans , changes in credit concentrations and any changes in the requirements to the credit loss calculations . a loss rate is estimated and applied to those loans affected by the qualitative factors . the following portfolio segments have been identified : single family , home equity , multi-family , commercial real estate and land , recreational vehicles , and other . 28 use of non-gaap financial measures in addition to the results presented in accordance with gaap , this report includes non-gaap financial measures such as core earnings . core earnings exclude realized and unrealized gains and losses associated with our securities portfolios . excluding these gains and losses provides investors with an understanding of our bank 's core lending and mortgage banking business . non-gaap financial measures have inherent limitations , are not required to be uniformly applied and are not audited . readers should be aware of these limitations and should be cautious as to their use of such measures . although we believe the non-gaap financial measures disclosed in this report enhance investors ' understanding of its business and performance , these non-gaap measures should not be consider in isolation , or as a substitute for gaap basis financial measures . average balances , net interest income , yields earned and rates paid the following tables set forth , for the periods indicated , information regarding ( i ) average balances ; ( ii ) the total amount of interest income from interest-earning assets and the weighted average yields on such assets ; ( iii ) the total amount of interest expense on interest-bearing liabilities and the weighted average rates paid on such liabilities ; ( iv ) net interest income ; ( v ) interest rate spread ; and ( vi ) net interest margin : 29 replace_table_token_20_th 1 average balances are obtained from daily data . 2 loans include loans held for sale , loan premiums and unearned fees . 3 interest income includes reductions for amortization of loan and investment securities premiums and earnings from accretion of discounts and loan fees . loan fee income is not significant . also includes $ 33.4 million of community reinvestment act loans which are taxed at a reduced rate . 4 includes $ 5.5 million of municipal securities which are taxed at a reduced rate . 5 interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities . 6 net interest margin represents net interest income as a percentage of average interest-earning assets . story_separator_special_tag sale of $ 664.6 million compared to $ 216.9 million for the years ended june 30 , 2012 and 2011 , respectively . non-interest expense . the following table sets forth information regarding our non-interest expense for the periods shown : replace_table_token_23_th non-interest expense totaled $ 38.0 million for the fiscal year ended june 30 , 2012 , an increase of $ 11.5 million compared to fiscal 2011. salaries , employee benefits and stock-based compensation increased $ 5.8 million in fiscal 2012 due to increased staffing . our staff increased to 230 employees from 173 or 32.9 % between fiscal 2012 and 2011. total compensation increased approximately 40.0 % mainly as a result of the additional staffing and overall continued growth . professional services , which include accounting and legal fees , increased $ 0.1 million in fiscal 2012 compared to 2011. the increase in professional services was primarily due to contract underwriters , legal fees on loan collection and foreclosure matters . 32 advertising and promotion expense increased $ 1.7 million , primarily due to increases in lead generation costs for our single family loan origination program as a result of higher mortgage refinance volume . other expense categories such as fdic and regulator fees decreased by $ 0.5 million in fiscal 2012 , primarily due to fdic 's re-mix of the formula calculating insurance premiums . real estate owned , repossessed rv losses and collection expenses increased by $ 0.8 million due to the management and disposition of loan collateral . other general and administrative costs increased $ 1.2 million in fiscal 2012 relative to the increase in deposit and loan activity as well as the number of staff . income tax expense .
| results of operations our results of operations depend on our net interest income , which is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities . our net interest income has increased as a result of the growth in our assets and increases in our net interest margin . our net interest income is reduced by our estimate of loss provisions for our impaired loans . we also earn non-interest income primarily from mortgage banking activities , prepayment fee income from multifamily borrowers who repay their loans before maturity and from gains on sales of investment securities . losses on investment securities reduce non-interest income . the largest component of non-interest expense is salary and benefits , which is a function of the number 30 of personnel , which increased from 173 full time employees at june 30 , 2011 to 230 full time equivalent employees at june 30 , 2012. we are subject to federal and state income taxes , and our effective tax rates were 40.50 % , 39.78 % and 41.11 % for the fiscal years ended june 30 , 2012 , 2011 , and 2010 , respectively . other factors that affect our results of operations include expenses relating to occupancy , data processing and other miscellaneous expenses . comparison of the fiscal year ended june 30 , 2012 and june 30 , 2011 net interest income . net interest income totaled $ 79.2 million for the fiscal year ended june 30 , 2012 compared to $ 58.5 million for the fiscal year ended june 30 , 2011. the following table sets forth the effects of changing rates and volumes on our net interest income .
| 2,627 |
monarch 's wholly owned subsidiaries , high desert sunshine , inc. ( ยhigh desertย ) and golden north , inc. ( ยgolden northย ) , each own separate parcels of land located proximate to the atlantis , and monarch growth inc. ( ยmonarch growthย ) , formed in 2011 , entered into a definitive stock purchase agreement on september 29 , 2011 to purchase riviera black hawk , inc. and owns a parcel of land in black hawk , colorado contiguous to the riviera black hawk casino . monarch was incorporated in 1993 under nevada law for the purpose of acquiring all of the stock of golden road . the principal asset of monarch is the stock of golden road , which holds all of the assets of the atlantis . currently , our sole operating asset , the atlantis , is a hotel/casino resort located in reno , nevada . our business strategy is to maximize the atlantis ' revenues , operating income and cash flow primarily through our casino , our food and beverage operations and our hotel operations . we capitalize on the atlantis ' location for tour and travel visitors , conventioneers and locals by offering exceptional service , value and an appealing theme to our guests . our hands-on management style focuses on customer service and cost efficiencies . unless otherwise indicated , ยmonarch , ย ยcompany , ย ยwe , ย ยourย and ยusย refer to monarch casino & resort , inc. and its subsidiaries . operating results summary below is a summary of our results for the years ended december 31 for 2011 , 2010 and 2009 , respectively : replace_table_token_4_th our results for the year ended december 31 , 2011 reflect the continued effects of the challenging operating environment that began in the three month period ended december 31 , 2007. as in many other areas around the country , the economic downturn since 2007 has continued to impact business conditions in northern nevada through 2011. other factors causing negative financial impact that continued from the fourth quarter of 2007 were aggressive discounting programs by our competitors . in response to these challenges , we increased promotional expenditures to attract and retain guests . furthermore , based on statistics released by the nevada gaming control board , the reno gaming market has shrunk in the 24 aggregate . due in part to these headwinds , and to the $ 3.5 million one-time , non-cash charge discussed below , net revenue , income from operations and net income has decreased for the year ended december 31 , 2011 compared to 2010. we believe these declines were mitigated primarily due to the recent improvements to our facility ( see the capital spending and development section below ) and strong execution of service standards both of which we believe have improved the experience our customer 's receive when they come to the atlantis . our 2011 results reflect a $ 3.5 million one-time , non-cash charge related to the demolition of the adventure inn in the third quarter of 2011. the adventure inn was a free standing , low-rise building on a land parcel proximate to the atlantis . the building was primarily used for storage prior to its demolition . our 2010 results reflect a $ 414 thousand one-time charge related to the demolition of our 149 room motor lodge in the fourth quarter of 2010. the quality of the rooms of the motor lodge was no longer consistent with the higher standards of our upgraded facilities . we converted the motor lodge to paved surface parking right next to the atlantis . the factors described above were the primary drivers of : ยท decreases of 2.5 % and 1.5 % in our casino and hotel revenues , respectively ; ยท increases of 4.8 % and 1.5 % in our food and beverage and other revenues , respectively ; ยท a 30.4 % decrease in income from operations ; ยท a decrease in our 2011 operating margin of 3.0 points or 29.7 % . capital spending and development we seek to continuously upgrade and maintain the atlantis facility in order to present a fresh , high quality product to our guests . in january 2009 , we completed the final phase of a multi-phase expansion project with the opening of the new spa atlantis featuring an atmosphere , amenities and treatments that are unique from any other offering in our market . additionally , many of the pre-expansion areas of the atlantis were remodeled to be consistent with the upgraded look and feel of the new facilities . from inception of the project in 2007 through the completion date in january 2009 , the company incurred approximately $ 80 million related to these capital projects . with the opening of the skywalk the atlantis became the only hotel-casino to be physically connected to the reno-sparks convention center . the reno-sparks convention center offers approximately 500,000 square feet of leasable exhibition , meeting room , ballroom and lobby space . our capital expenditures were $ 17.4 million in 2011 , $ 6.8 million in 2010 , and $ 15.8 million in 2009. during 2009 capital expenditures primarily consisted of construction costs associated with the expansion , skybridge and redesign capital projects that commenced in june 2007. during 2009 we also spent approximately $ 5.2 million to acquire two additional land parcels with buildings within close proximity to the atlantis ( see additional discussion of these parcels below under ยpropertiesย in item 2 ) . capital expenditures in 2010 and 2011 were for various general facility improvements and for purchase of additional gaming equipment at the atlantis . during 2011 , we also acquired a 1.5 acre land parcel in black hawk , colorado for $ 8.4 million and paid a $ 3.8 million deposit related to the acquisition of the riviera black hawk casino . the land parcel is contiguous to the riviera black hawk casino . story_separator_special_tag we assess potentially unfavorable outcomes of such examinations based on accounting standards for uncertain income taxes . under the accounting guidance , we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position . the tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50.0 % likelihood of being realized upon ultimate settlement . it also provides guidance on derecognition , measurement , classification , interest and penalties , accounting in interim periods and disclosure . the liability for unrecognized tax benefits is included in current and noncurrent tax liabilities , based on when expected to be recognized , within the consolidated balance sheets at december 31 , 2011 and 2010. stock-based compensation we account for stock-based compensation in accordance with authoritative guidance which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and services or incurs a liability in exchange for goods and services that are based on the fair value of the entity 's equity instruments or that may be settled by the issuance of those equity instruments . it requires an entity to measure the costs of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognize that cost over the service period . we calculate the grant-date fair value using the black-scholes valuation model . the black-scholes valuation model requires the input of highly subjective assumptions which include the expected term of options granted , risk-free interest rates , expected volatility , and expected rates of dividends . we estimate an expected term for each stock option grant based on the weighted- 27 average time between grant date and exercise date and the risk-free interest rate assumption was based on u.s. treasury rates appropriate for the expected term . we use historical data and projections to estimate expected volatility and expected employee behaviors related to option exercises and forfeitures . changes in the assumptions used can materially affect the estimate of the stock options ' fair value . in our judgment , the most volatile input for our company has been the expected volatility assumption which has fluctuated significantly from 64.1 % to 42.9 % and then again to 54.1 % for the years ended december 31 , 2009 , 2010 and 2011 , respectively . story_separator_special_tag beverage revenue decreased slightly to 46.1 % in 2010 from 46.9 % in 2009 primarily related to lower food and other commodity prices . hotel revenues increased to $ 21.8 million in 2010 from $ 19.9 million in 2009. increases in both hotel occupancy and the average daily room rate ( ยadrย ) combined with revenue from a $ 10 per day resort fee , paid by our hotel guests , which we implemented on june 1 , 2009 drove the revenue increase . hotel revenues for the first six months of 2009 also include a $ 3 per occupied room energy surcharge . this energy surcharge was suspended when we implemented the resort fee . the atlantis ' adr was $ 69.06 in 2010 compared to $ 64.91 in 2009. the average occupancy rate at the atlantis was 85.4 % compared to 80.6 % in 2009. hotel operating expenses decreased to 27.3 % of hotel revenues in 2010 , compared to 33.2 % in 2009 due primarily to the increase in hotel revenue combined with lower payroll , benefits and overall maintenance expense . revenue per available room ( ยrevparย ) , calculated by dividing total room revenue ( less service charges , if any ) by total rooms available was $ 58.98 and $ 52.32 for 2010 and 2009 , respectively . promotional allowances increased to $ 28.4 million in 2010 compared to $ 25.7 million in 2009. as a percentage of gross revenue , the amount in 2010 increased to 16.7 % as compared to 16.1 % for 2009. the increase is attributable to higher promotional efforts to maintain existing , and generate additional , revenues . other revenues in 2010 increased to $ 7.9 million , or 16.2 % , compared to 2009 primarily due to greater sales in our gift and sundry shops and higher revenues from our new spa that opened in january of 2009 . 29 selling , general and administrative ( ยsg & aย ) expenses remained flat at $ 47.9 million for both 2010 and 2009 , respectively . as a percentage of net revenue , sg & a decreased to 33.7 % in 2010 as compared to 35.8 % in 2009 due to the increase in net revenue without a corresponding increase in sg & a expense . depreciation and amortization expense was $ 13.3 million in 2010 , an increase of 6.4 % compared to $ 12.5 million in 2009 due primarily to the completion and capitalization of the capital projects described under the ยcapital spending and developmentย section above . interest expense decreased to $ 1.5 million in 2010 from $ 2.1 million in 2009 due to decreased borrowings under our credit facility combined with lower interest rates ( see ยthe credit facilityย below ) .
| results of operations 2011 compared with 2010 for the year ended december 31 , 2011 , we earned net income of $ 5.7 million , or $ 0.35 per diluted share , on net revenues of $ 140.6 million , compared to net income of $ 8.2 million , or $ 0.51 per diluted share , on net revenues of $ 142.0 million for the year ended december 31 , 2010. income from operations totaled $ 9.8 million for 2011 , a 30.4 % decrease when compared to $ 14.0 million for 2010. casino revenues totaled $ 97.4 million in 2011 , a decrease of 2.5 % from the $ 99.8 million reported in 2010 , driven primarily by a decrease in hold in table games which resulted in lower table games revenue . casino operating expenses were 39.3 % of casino revenues in 2011 compared to 38.9 % in 2010. the increase was primarily due to the lower casino revenue combined with the cost of increased complimentary food , beverages and other services provided to casino patrons . food and beverage revenues increased 4.8 % to $ 42.9 million in 2011 from $ 41.0 million in 2010 , due primarily to a 9.3 % increase in average revenue per cover , due to menu price increases , partially offset by a 1.3 % decrease in the number of covers served . food and beverage operating expenses as a percentage of food and beverage revenue increased slightly to 46.3 % in 2011 from 46.1 % in 2010 primarily due to higher food and other commodity prices .
| 2,628 |
the company had zero borrowings under the agreement at january 3 , 2015 and december 28 , 2013 . on april 9 , 2007 , the company entered into the story_separator_special_tag 2014 vs. 2013 overview sales in 2014 increased from the prior year . net sales in 2014 were $ 1,047.8 million , an increase of about 9 percent compared to 2013 sales of $ 965.5 million . the sales increase was primarily from sales volume and price increases , as well as the company 's acquisitions . sales increases were partially offset by the impact of foreign currency translation as the us dollar strengthened against certain foreign currencies . the company 's consolidated gross profit was $ 344.4 million for 2014 , an increase of $ 12.9 million or about 4 percent from 2013. the gross profit as a percent of net sales decreased 140 basis points to 32.9 percent in 2014 from 34.3 percent in 2013. the gross profit margin change was due primarily to a sales revenue mix shift in the water systems . for 2014 , diluted earnings per share were $ 1.41 , a decrease of 16 percent compared to 2013 diluted earnings per share of $ 1.68. adjusted earnings per share were $ 1.76 , an increase of 2 percent versus the $ 1.72 adjusted earnings per share in 2013 ( see the table below for a reconciliation of the gaap eps to the adjusted eps ) . results of operations net sales net sales in 2014 were $ 1,047.8 million , an increase of $ 82.3 million or about 9 percent compared to 2013 sales of $ 965.5 million . the incremental impact of sales from acquired businesses was $ 23.5 million or about 2 percent . sales revenue decreased by $ 24.1 million or about 2 percent in 2014 due to foreign currency translation . the sales change in 2014 , excluding acquisitions and foreign currency translation , was an increase of $ 82.9 million or about 9 percent . replace_table_token_7_th net sales-water systems water systems sales were $ 824.6 million in 2014 , an increase of $ 58.2 million or 8 percent versus 2013. the incremental impact of sales from acquired businesses was $ 23.4 million or about 3 percent . foreign currency translation rate changes decreased sales $ 24.8 million , or about 3 percent , compared to sales in 2013. the sales change in 2014 , excluding acquisitions and foreign currency translation , was an increase of $ 59.6 million or about 8 percent . water systems sales in the u.s. and canada were 39 percent of consolidated sales and grew by about 5 percent compared to 2013. foreign currency translation rate changes decreased sales by about 1 percent compared to sales in 2013. the sales change in 2014 , excluding acquisitions and foreign currency translation , was an increase of $ 23 million or about 6 percent . leading the company 's growth in the u.s. and canada were sales of pioneer branded mobile pumping equipment which increased by about 70 percent in 2014 compared to the prior year . sales of surface water pumping equipment grew by 8 percent in the year . these sales increases in the u.s and canada were partially offset by lower sales of groundwater pumping equipment which declined about 10 percent in 2014 due , in part , to weaker demand in the agriculture sector as a result of less favorable weather and to a lesser extent , distributor changes the company made in its primary groundwater distribution channel . water systems sales in latin america were about 14 percent of consolidated sales for 2014 and grew by about 18 percent compared to the prior year . acquisition related sales during 2014 were about $ 17 million or about 14 percent . foreign currency translation rate changes decreased sales $ 8 million , or about 7 percent , compared to sales in 2013. excluding acquisition and foreign currency translation , sales in latin america grew by about 10 percent during 2014. the 2014 year-on-year sales increase in brazil , in local currency , was 15 percent . the sales growth in brazil is a result of increasing demand for franklin submersible pumps and motors , customer acceptance of the many product line upgrades that have been implemented over the past two years , and general market conditions . new distribution outlets in chile and colombia contributed to significantly increased sales in these markets compared to 2013. these sales increases were partially offset with lower sales in argentina . water systems sales in the middle east and africa were about 11 percent of consolidated sales and increased by about 2 percent compared to 2013. water systems sales in the middle east and africa were reduced by $ 11.3 million or about 10 13 percent in the year due to foreign currency translation . excluding acquisitions and the impact of foreign currency translation , sales were up about 11 percent compared to 2013. the growth was driven by strong sales of groundwater pumping equipment in turkey . water systems sales in europe were about 8 percent of consolidated sales and grew by about 11 percent compared to the prior year . acquisition related sales during 2014 were about 2 percent in europe . foreign currency translation rate changes decreased sales by about 1 percent compared to sales in 2013. excluding acquisitions and foreign currency translation , european sales grew by about 10 percent during 2014. sales improvements in europe included growth in both groundwater pumping equipment and pioneer products . water systems sales in the asia pacific region were 7 percent of consolidated sales and grew by about 11 percent compared to the prior year . acquisition related sales during 2014 increased sales by about 7 percent in asia pacific . foreign currency translation rate changes decreased sales in 2014 in the asia pacific region by about 2 percent . story_separator_special_tag the differences between these non-gaap financial measures and the most comparable gaap measures are reconciled in the following tables : 15 replace_table_token_9_th operating income-water systems water systems operating income , after non-gaap adjustments , was $ 123.7 million in 2014 , a decrease of 9 percent versus 2013. the 2014 operating income margin after non-gaap adjustments was 15.0 percent and decreased by 260 basis points compared to the 17.6 percent of net sales in 2013. the change in profitability was primarily the result of higher global raw material costs , higher marketing and selling costs in the u.s. and canada commercial business , and the continued sales mix shift to surface pumping equipment away from groundwater pumping equipment . contributing to both the sales mix shift to surface pumping equipment and the higher material costs , pioneer branded mobile pumping equipment sales have had a surge in demand during the year and the company has temporarily outsourced certain operations to meet the increased demand . operating income-fueling systems fueling systems operating income after non-gaap adjustments was $ 51.7 million in 2014 compared to $ 42.3 million after non-gaap adjustments in 2013 , an increase of 22 percent . the 2014 operating income margin after non-gaap adjustments was 23.2 percent and increased by 200 basis points compared to the 21.2 percent of net sales in 2013. this increased profitability was primarily due to fixed costs leverage on higher sales . operating income-other operating income-other is composed primarily of unallocated general and administrative expenses . general and administrative expenses were higher due to $ 2.5 million of cost included in non-gaap adjustments related to executive transition . interest expense interest expense for 2014 and 2013 was $ 10.7 million and $ 10.6 million , respectively . other income or expense other income or expense was a gain of $ 1.3 million in 2014. included in other income or expense in 2014 was interest income of $ 2.0 million , primarily derived from the investment of cash balances in short-term securities . other income or expense was a gain of $ 1.7 million in 2013. included in other income or expense in 2013 was interest income of $ 1.8 million , primarily derived from the investment of cash balances in short-term securities . 16 foreign exchange foreign currency-based transactions produced a loss for 2014 of $ 1.0 million , primarily due to the canadian dollar , australian dollar , turkish lira , and south african rand relative to the u.s. dollar , none of which individually were significant . foreign currency-based transactions produced a loss for 2013 of $ 3.3 million , primarily due to the turkish lira , the euro , south african rand , brazilian real and canadian dollar relative to the u.s. dollar , none of which individually were significant . income taxes the provision for income taxes in 2014 and 2013 was $ 18.9 million and $ 28.9 million , respectively . the tax rate for 2014 was 21.0 percent and 2013 was 25.9 percent . the tax rate declined in 2014 from the tax rate for 2013 primarily due to a reversal of deferred tax liabilities associated with earnings of certain foreign subsidiaries which have been realigned within the company 's organization . the realignment of certain foreign entities results in their unremitted earnings being indefinitely reinvested . the effective tax rate differs from the statutory rate primarily due to the indefinite reinvestment of foreign earnings taxed at rates below the u.s. statutory rate as well as recognition of foreign tax credits . the company has the ability to indefinitely reinvest these foreign earnings based on the earnings and cash projections of its other operations as well as cash on hand and available credit . net income net income for 2014 was $ 70.9 million compared to 2013 net income of $ 82.7 million . net income attributable to franklin electric co. , inc. for 2014 was $ 69.8 million , or $ 1.41 per diluted share , compared to 2013 net income attributable to franklin electric co. , inc. of $ 82.0 million or $ 1.68 per diluted share . net income attributable to franklin electric co. , inc. after non-gaap adjustments for 2014 was $ 84.3 million , or $ 1.76 per diluted share , compared to 2013 net income attributable to franklin electric co. , inc. after non-gaap adjustments of $ 82.9 million or $ 1.72 per diluted share . there were specific items in 2014 and 2013 that impacted net income attributable to franklin electric co. , inc. that were not operational in nature . the company refers to these items as โ non-gaap adjustments โ for purposes of presenting the non-gaap financial measures of net income attributable to franklin electric co. , inc. and adjusted eps . the company believes this information helps investors understand underlying trends in the company 's business more easily . the differences between these non-gaap financial measures and the most comparable gaap measures are reconciled in the following tables : replace_table_token_10_th 17 replace_table_token_11_th 2013 vs. 2012 overview sales in 2013 increased from the prior year . net sales in 2013 were $ 965.5 million , an increase of about 8 percent compared to 2012 sales of $ 891.3 million . the sales increase was primarily from sales volume and price increases , as well the company 's acquisitions . sales increases were partially offset by the negative impact of foreign currency translation . the company 's consolidated gross profit was $ 331.5 million for 2013 , an increase of $ 29.8 million or about 10 percent from 2012. the gross profit as a percent of increased 50 basis points to 34.3 percent in 2013 from 33.8 percent in 2012. the gross profit margin improvement was due to leveraging fixed costs on higher sales , lower labor and burden costs , partially offset by higher other variable costs ; primarily freight and obsolescence . direct materials as a percentage of sales was unchanged compared to last year .
| results of operations net sales net sales in 2013 were $ 965.5 million , an increase of $ 74.2 million or about 8 percent compared to 2012 sales of $ 891.3 million . the incremental impact of sales from acquired businesses was $ 30.1 million or about 3 percent . sales revenue decreased by $ 14.7 million or about 2 percent in 2013 due to foreign currency translation . the sales change in 2013 , excluding acquisitions and foreign currency translation , was an increase of $ 58.8 million or about 7 percent . replace_table_token_12_th net sales-water systems water systems sales were $ 766.4 million in 2013 , an increase of $ 51.4 million or 7 percent versus 2012. the incremental impact of sales from acquired businesses was $ 19.0 million or about 3 percent . foreign currency translation rate changes decreased sales $ 16.0 million , or about 2 percent , compared to sales in 2012. the sales change in 2013 , excluding acquisitions and foreign currency translation , was an increase of $ 48.4 million or about 7 percent . water systems sales in the u.s. and canada were 40 percent of consolidated sales and grew by about 11 percent compared to 2012. acquisition related sales during 2013 were about $ 17.2 million . foreign currency translation rate changes decreased sales $ 0.9 million compared to sales in 2012. the sales change in 2013 , excluding acquisitions and foreign currency translation , was an increase of $ 22.3 million or about 6 percent . there were three primary drivers for the sales growth in the u.s. and canada ; dewatering equipment , groundwater pumps and drives and controls . 18 water systems sales in latin america were about 13 percent of consolidated sales for 2013 and grew by about 4 percent compared to the prior year .
| 2,629 |
definite-lived intangible assets , including client relationships , are amortized over the pattern in which the economic benefits of the intangible assets are utilized and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable story_separator_special_tag the following discussion should be read in conjunction with our consolidated financial statements and related notes appearing in item 8 , โ financial statements and supplementary data โ in this annual report on form 10-k. the following discussion contains forward-looking statements . actual results may differ significantly from those projected in the forward-looking statements . factors that might cause future results to differ materially from those projected in the forward-looking statements include , but are not limited to , those discussed in item 1a , โ risk factors โ and elsewhere in this annual report on form 10-k. certain percentage changes may not recalculate due to rounding . overview we are a full service , early-stage contract research organization ( cro ) . for over 70 years , we have been in the business of providing the research models required in research and development of new drugs , devices , and therapies . over this time , we have built upon our original core competency of laboratory animal medicine and science ( research model technologies ) to develop a diverse portfolio of discovery and safety assessment services , both good laboratory practice ( glp ) and non-glp , that enable us to support our clients from target identification through non-clinical development . we also provide a suite of products and services to support our clients ' manufacturing activities . utilizing our broad portfolio of products and services enables our clients to create a more flexible drug development model , which reduces their costs , enhances their productivity and effectiveness , and increases speed to market . our client base includes all major global biopharmaceutical companies , many biotechnology companies , cros , agricultural and industrial chemical companies , life science companies , veterinary medicine companies , contract manufacturing companies , medical device companies , and diagnostic and other commercial entities , as well as leading hospitals , academic institutions , and government agencies around the world . we currently operate in over 90 facilities and over 20 countries worldwide , which numbers exclude our insourcing solutions ( is ) sites . segment reporting our three reportable segments are research models and services ( rms ) , discovery and safety assessment ( dsa ) , and manufacturing support ( manufacturing ) . our rms reportable segment includes the research models and research model services businesses . research models includes the commercial production and sale of small research models , as well as the supply of large research models . research model services includes : genetically engineered models and services ( gems ) , which performs contract breeding and other services associated with genetically engineered research models ; research animal diagnostic services ( rads ) , which provides health monitoring and diagnostics services related to research models ; and insourcing solutions ( is ) , which provides colony management of our clients ' research operations ( including recruitment , training , staffing , and management services ) . our dsa reportable segment includes services required to take a drug through the early development process including discovery services , which are non-regulated services to assist clients with the identification , screening , and selection of a lead compound for drug development , and regulated and non-regulated ( glp and non-glp ) safety assessment services . our manufacturing reportable segment includes microbial solutions , which provides in vitro ( non-animal ) lot-release testing products , microbial detection products , and species identification services ; biologics testing services ( biologics ) , which performs specialized testing of biologics ; avian vaccine services ( avian ) , which supplies specific-pathogen-free chicken eggs and chickens ; and contract development and manufacturing ( cdmo ) services , which , until we divested this business on february 10 , 2017 , allowed us to provide formulation design and development , manufacturing , and analytical and stability testing for small molecules . recent acquisitions and divestiture our strategy is to augment internal growth of existing businesses with complementary acquisitions . we continued to make strategic acquisitions designed to expand our portfolio of services to support the drug discovery and development continuum and position us as a market leader in the outsourced discovery services market . our recent acquisitions and divestiture are described below . on january 3 , 2020 , we acquired hemacare corporation ( hemacare ) , a business specializing in the production of human-derived cellular products for the cell therapy market . the acquisition of hemacare will expand our comprehensive portfolio of early-stage research and manufacturing support solutions to encompass the production and customization of high-quality , human derived cellular products to better support clients ' cell therapy programs . the preliminary purchase price of hemacare was approximately $ 380 million in cash . the acquisition was funded through a combination of cash on hand and proceeds from our credit facility under the multi-currency revolving facility . this business will be reported as part of our rms reportable segment . 32 on august 28 , 2019 , we acquired an 80 % ownership interest in a supplier that supports our dsa reportable segment . the remaining 20 % interest is a redeemable non-controlling interest . the preliminary purchase price was $ 23.4 million , net of a $ 4.0 million pre-existing relationship for a supply agreement settled upon acquisition , and subject to certain post-closing adjustments that may change the purchase price . the acquisition was funded through a combination of cash on hand and proceeds from our credit facility under the multi-currency revolving facility . the business is reported as part of our dsa reportable segment . on april 29 , 2019 , we acquired citoxlab , a non-clinical cro , specializing in regulated safety assessment services , non-regulated discovery services , and medical device testing . story_separator_special_tag we have enhanced our discovery services capabilities to provide clients with a comprehensive portfolio that enables them to start working with us at the earliest stages of the discovery process . we have accomplished this through acquisitions , including citoxlab 's discovery services , kws biotest in january 2018 and brains on-line in august 2017 , and through adding cutting-edge capabilities to our discovery toolkit through partnerships , such as distributed bio , bitbio , and fios genomics . in fiscal year 2019 , demand in our discovery services business also increased meaningfully , driven by biotechnology clients as many of these clients either initiated or continued to work with us on integrated programs and other projects . our efforts to enhance our sales strategies , provide clients with flexible partnering models , and become a trusted scientific partner for our clients ' early-stage programs have been successful , and enabled us to attract new clients . demand from large biopharmaceutical companies also increased . these clients continue to have significant internal discovery capabilities , on which they can choose to rely . in order for large biopharmaceutical clients to increasingly outsource more work to us , we must continue to demonstrate that our services can augment and accelerate our clients ' drug discovery processes . demand for our products and services that support our clients ' manufacturing activities was also robust in fiscal year 2019. demand for our microbial solutions business remained strong as manufacturers continued to increase their use of our rapid microbial testing solutions . our biologics business continued to benefit from increased demand for services associated with the growing proportion of biologic drugs in the pipeline and on the market . to support this increased demand , we continued to expand the capacity of our biologics business . demand for our research models and services increased in fiscal year 2019 , driven by strong demand for research models in china , higher revenue for research model services , and improved pricing . demand for research models in china continued to be robust in fiscal year 2019 , as clients in this growing market continue to value our high-quality research models . demand for research models services also improved in fiscal year 2019 , particularly for our is and gems businesses . the is business further benefited from a five-year , $ 95.7 million contract from the national institute of allergy and infectious diseases , or niaid , that commenced in september 2018. the continued effect of the consolidation of internal infrastructure within our large biopharmaceutical clients and a longer-term trend towards more efficient use of research models has led to reduced demand for research models outside of china . we are confident that research models and services will remain essential tools for our clients ' drug discovery and early-stage development efforts , and the rms business will continue to be an important source of cash flow generation for us . in addition , in january 2020 , we enhanced the rms business ' growth profile and portfolio of critical research tools that we are able to supply through the acquisition of hemacare , a premier provider of human-derived cellular products used in cell therapies . overview of results of operations and liquidity revenue for fiscal year 2019 was $ 2.6 billion compared to $ 2.3 billion in fiscal year 2018 . the 2019 increase as compared to the corresponding period in 2018 was $ 355.1 million , or 15.7 % , and was primarily due to both growth in our dsa and manufacturing segments , as discussed in the above โ business trends โ section , as well as the recent acquisitions of citoxlab and mpi research ; partially offset by the negative effect of changes in foreign currency exchange rates which decreased revenue by $ 36.1 million , or 1.5 % , when compared to the corresponding period in 2018 . in fiscal year 2019 , our operating income and operating income margin were $ 351.2 million and 13.4 % , respectively , compared with $ 331.4 million and 14.6 % , respectively , in fiscal year 2018 . the increase in operating income was primarily due to increased revenues discussed above and contributions from our recent acquisitions of citoxlab and mpi research ; partially offset by the following , which decreased the operating income margin : increased amortization expense and costs related to our recent acquisition activity ; increased costs incurred in connection with certain global restructuring initiatives , continued investments to support future growth of the businesses , which includes increased investments in personnel ( staffing levels and hourly wage increases ) and facility expansions ( primarily in the rms and biologics businesses ) , and company-wide it and 34 infrastructure projects . offsetting the decreases in operating income margin were the realization of improved volume , mix , and pricing across our products and services portfolio as well as the impact of recent productivity initiatives across all businesses . net income attributable to common shareholders increased to $ 252.0 million in fiscal year 2019 , from $ 226.4 million in the corresponding period of 2018 . the increase in net income attributable to common shareholders of $ 25.6 million was primarily due to the increase in operating income described above , as well as a lower income tax rate due to recognizing a $ 20.6 million deferred tax asset in fiscal year 2019 for net operating losses expected to be utilized in the future due to changes in the company 's international financing structure . during fiscal year 2019 , our cash flows from operations was $ 480.9 million compared with $ 441.1 million for fiscal year 2018 .
| results of operations fiscal year 2019 compared to fiscal year 2018 revenue and operating income the following tables present consolidated revenue by type and by reportable segment : replace_table_token_3_th replace_table_token_4_th the following table presents operating income by reportable segment : replace_table_token_5_th the following presents and discusses our consolidated financial results by each of our reportable segments : rms replace_table_token_6_th rms revenue increased $ 17.4 million , or 3.3 % , due primarily to higher research model services revenue and higher research model product revenue in china . research model services benefited from a large government contract in the is business and strong client demand in the gems business resulting from increased research and development activity conducted across biotechnology and academic institutional clients . partially offsetting these increases were the effect of changes in foreign currency exchange rates and lower research model product revenue outside of china , particularly from large biopharmaceutical clients . 41 rms operating income decreased $ 2.6 million , or 1.9 % , compared to the corresponding period in 2018 . rms operating income as a percentage of revenue for fiscal year 2019 was 24.9 % , a decrease of 1.4 % from 26.3 % for the corresponding period in 2018 . operating income and operating income as a percentage of revenue decreased primarily due to higher cost of revenue and selling , general , and administrative expenses to support the growth of the businesses , which included the following : a $ 2.2 million charge recorded within selling , general and administrative costs in fiscal year 2019 in connection with the modification of the option to purchase the remaining 8 % equity interest in vital river , increased investments in personnel ( staffing levels and hourly wage increases ) , higher severance charges in connection with certain global restructuring initiatives , and facility expansions ( primarily in china ) .
| 2,630 |
overview g-iii designs , manufactures and markets an extensive range of apparel , including outerwear , dresses , sportswear , swimwear , women 's suits and women 's performance wear , as well as women 's handbags , footwear , small leather goods , cold weather accessories and luggage . g-iii has a substantial portfolio of over 40 licensed and proprietary brands , anchored by five global power brands : dkny , donna karan , calvin klein , tommy hilfiger and karl lagerfeld . we are not only licensees , but also brand owners , and we distribute our products through multiple brick and mortar and online channels . while our products are sold at a variety of price points through a broad mix of retail partners and our own stores , a majority of our sales are concentrated with our ten largest customers . sales to our ten largest customers comprised 63.5 % of our net sales in 2016 , 64.1 % of our net sales in fiscal 2017 and 63.2 % of our net sales in fiscal 2018. we operate in fashion markets that are intensely competitive . our ability to continuously evaluate and respond to changing consumer demands and tastes , across multiple market segments , distribution channels and geographic areas is critical to our success . although our portfolio of brands is aimed at diversifying our risks in this regard , misjudging shifts in consumer preferences could have a negative effect on our business . our success in the future will depend on our ability to design products that are accepted in the marketplace , source the manufacture of our products on a competitive basis , and continue to diversify our product portfolio and the markets we serve . segments we report based on two segments : wholesale operations and retail operations . the wholesale operations segment includes sales of products under brands licensed by us from third parties , as well as sales of products under our own brands and private label brands . wholesale sales and revenues from license agreements related to the dki , g.h . bass , andrew marc and vilebrequin businesses are included in the wholesale operations segment . the retail operations segment consists primarily of our wilsons leather , g.h . bass and dkny retail stores , substantially all of which are operated as outlet stores , as well as a limited number of calvin klein performance and karl lagerfeld paris stores . sales through our owned websites are also included in the retail operations segment . see note k to our consolidated financial statements for financial information with respect to these segments . recent transactions we have acquired businesses that have broadened our product offerings , expanded our ability to serve different tiers of distribution and added a retail component to our business . our acquisitions and joint ventures are part of our strategy to expand our product offerings and increase the portfolio of proprietary and licensed brands that we offer through different tiers of retail distribution . 42 donna karan/dkny in december 2016 , we acquired all of the outstanding capital stock of donna karan international inc. ( โ dki โ ) from lvmh moet hennessy louis vuitton inc. ( โ lvmh โ ) for a total purchase price of approximately $ 674 million , after taking into account certain adjustments . dki owns donna karan and dkny , two of the world 's most iconic and recognizable power brands . the acquisition of dki fits squarely into our strategy to diversify and expand our business and to increase our ownership of brands . we intend to focus on the expansion of the dkny brand , while also re-establishing donna karan and other associated brands . we believe that we can also capitalize on significant , untapped global licensing potential in a number of men 's categories , as well as in home and jewelry . we plan to leverage our demonstrated ability to drive organic growth , identify and integrate acquisitions and develop talent throughout the organization to maximize the potential of the dkny and donna karan brands . in march 2017 , we entered into an agreement with macy 's under which macy 's serves , since february 2018 , as the exclusive u.s. department store for sales of dkny women 's apparel and accessories . under the agreement , macy 's has the exclusive rights to sell dkny women 's apparel , including women 's sportswear , dresses , suit separates , women 's performance wear , denim , swimwear and outerwear , handbags and women 's shoes , as well as men 's swimwear and outerwear , and luggage in all macy 's locations and on macys.com . the agreement also plans for increased and enhanced dkny shop-in-shops in many macy 's stores . g-iii and macy 's are committed to making dkny the premier fashion and lifestyle brand . we sell dkny products through department stores , specialty retailers and online retailers worldwide , as well as through company-operated retail stores , e-commerce sites and distribution agreements . we also maintain dkny 's agreements with international license partners and distributors outside of the united states . products outside the exclusive categories and products distributed by dkny 's various licensees under other categories will continue to be sold to department stores , including macy 's . in addition , we re-launched donna karan as an aspirational luxury brand that is priced above dkny and targeted to fine department stores globally . in august 2017 , we entered into a joint venture with amlon capital b.v. ( โ amlon โ ) to produce and market women 's and men 's apparel and accessories pursuant to a long-term license for dkny and donna karan in the people 's republic of china , including macau , hong kong and taiwan . we own 49 % of the joint venture , with amlon owning the remaining 51 % . story_separator_special_tag given the current retail environment , we are focusing on turning around our retail business by not renewing long-term leases as they come up for renewal if we are unable to satisfactorily renegotiate the terms of those leases . in addition , we are implementing cost-cutting initiatives , revising our merchandising strategy and repurposing certain wilsons leather and g.h . bass stores for the karl lagerfeld paris or dkny brands . we intend to continue our program of door count reduction and to increase the efficiency and productivity of our retail operations . trends significant trends that affect the apparel industry include retail chains closing unprofitable stores , an increased focus by retail chains and others on expanding e-commerce sales , the continued consolidation of retail chains and the desire on the part of retailers to consolidate vendors supplying them . retailers are seeking to expand the differentiation of their offerings by devoting more resources to the development of exclusive products , whether by focusing on their own private label products or on products produced exclusively for a retailer by a national brand manufacturer . retailers are placing more emphasis 44 on building strong images for their private label and exclusive merchandise . exclusive brands are only made available to a specific retailer , and thus customers loyal to their brands can only find them in the stores of that retailer . a number of retailers are experiencing financial difficulties , which in some cases has resulted in bankruptcies , liquidations and or store closings . the financial difficulties of a retail customer of ours could result in reduced business with that customer . we may also assume higher credit risk relating to receivables of a retail customer experiencing financial difficulty that could result in higher reserves for doubtful accounts or increased write-offs of accounts receivable . we attempt to mitigate credit risk from our customers by closely monitoring accounts receivable balances and shipping levels , as well as the ongoing financial performance and credit standing of customers . sales of apparel over the internet continue to increase . we are addressing the increase in online shopping by developing additional marketing initiatives over the internet , our web sites and social media . our e-commerce business consists of our own web platforms at www.dkny.com , www.donnakaran.com , www.wilsonsleather.com , www.ghbass.com , www.vilebrequin.com and www.andrewmarc.com . we are building an e-commerce team to help us expand our online opportunities going forward . we also sell our karl lagerfeld paris products on its website , www.karllagerfeldparis.com . we sell our licensed products over the web through retail partners such as macys.com and nordstrom.com , each of which has a significant online business . we have also increased sales to pure play online retail partners such as amazon and fanatics . we continue to develop additional marketing initiatives over the internet , our web sites and social media to increase our e-commerce presence . we have attempted to respond to trends in our industry by continuing to focus on selling products with recognized brand equity , by attention to design , quality and value and by improving our sourcing capabilities . we have also responded with the strategic acquisitions made by us and new license agreements entered into by us that added to our portfolio of licensed and proprietary brands and helped diversify our business by adding new product lines , expanding distribution channels and developing the retail component of our business . we believe that our broad distribution capabilities help us to respond to the various shifts by consumers between distribution channels and that our operational capabilities will enable us to continue to be a vendor of choice for our retail partners . use of estimates and critical accounting policies the preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period . significant accounting policies employed by us , including the use of estimates , are presented in the notes to our consolidated financial statements . critical accounting policies are those that are most important to the portrayal of our financial condition and our results of operations , and require management 's most difficult , subjective and complex judgments , as a result of the need to make estimates about the effect of matters that are inherently uncertain . our most critical accounting estimates , discussed below , pertain to revenue recognition , accounts receivable , inventories , income taxes , goodwill and intangible assets , impairment of long-lived assets and equity awards . in determining these estimates , management must use amounts that are based upon its informed judgments and best estimates . we continually evaluate our estimates , including those related to customer allowances and discounts , product returns , bad debts and inventories , and carrying values of intangible assets . we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances . the results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates under different assumptions and conditions . revenue recognition goods are shipped to retailers in accordance with specific customer orders . we recognize wholesale sales when the risks and rewards of ownership have transferred to the customer , determined by us to be when title to the merchandise passes to the customer . 45 we recognize retail sales upon customer receipt of the merchandise , generally at the point of sale . retail sales are recorded net of applicable sales tax . both wholesale revenues and retail store revenues are shown net of returns , discounts and other allowances . we estimate the amount of reserves and allowances based on current and historical information and trends . discounts , allowances and estimates of future returns are recognized when the related revenues are recognized .
| results of operations the following table sets forth selected operating data as a percentage of our net sales for the fiscal years indicated below : โ โ โ 2018 โ โ 2017 โ โ 2016 โ net sales โ โ โ โ 100.0 % โ โ โ โ โ 100.0 % โ โ โ โ โ 100.0 % โ โ cost of goods sold โ โ โ โ 62.4 โ โ โ โ โ 64.8 โ โ โ โ โ 64.2 โ โ gross profit โ โ โ โ 37.6 โ โ โ โ โ 35.2 โ โ โ โ โ 35.8 โ โ selling , general and administrative expenses โ โ โ โ 30.5 โ โ โ โ โ 29.5 โ โ โ โ โ 26.8 โ โ depreciation and amortization โ โ โ โ 1.3 โ โ โ โ โ 1.4 โ โ โ โ โ 1.1 โ โ asset impairments โ โ โ โ 0.3 โ โ โ โ โ 0.4 โ โ โ โ โ โ โ โ operating profit โ โ โ โ 5.5 โ โ โ โ โ 3.9 โ โ โ โ โ 7.9 โ โ interest and financing charges , net โ โ โ โ ( 1.6 ) โ โ โ โ โ ( 0.6 ) โ โ โ โ โ ( 0.3 ) โ โ income before income taxes โ โ โ โ 3.9 โ โ โ โ โ 3.3 โ โ โ โ โ 7.6 โ โ income tax expense โ โ โ โ 1.7 โ โ โ โ โ 1.1 โ โ โ โ โ 2.8 โ โ net income โ โ โ โ 2.2 % โ โ โ โ โ 2.2 % โ โ โ โ โ 4.8 % โ โ โ year ended january 31 , 2018 ( โ fiscal 2018 โ ) compared to year ended january 31 , 2017 ( โ fiscal 2017
| 2,631 |
we believe that the best opportunity for increasing sales in china will be best met by having a strong presence directly in the country . we expect that internal cash flow from our operations , as well as financing available through lenders will continue to fund our growth opportunities . we will continue our dividend program as we believe that our cash flows can support our growth initiatives and also reward our shareholders at the same time . we will emphasize gross margin improvement . gross margin improvement requires cost reduction , new products emphasizing more complete motion control systems and a support structure trained to sell , apply and service our products and customers . we made good progress in 2012 and these initiatives will continue in 2013. further development and promotion of our parent brand , allied motion , will continue in 2013. a global structure has been defined and we intend to use that to our advantage in the marketplace . and last but not least , we are taking our commitment to ast to a new level as we have invested in additional resources as part of our operational excellence team . as always , we will continuously utilize ast to improve efficiencies and eliminate waste throughout our company . ast is critical to and helps create the path to success in all regions of the world . 10 story_separator_special_tag net cash used in investing activities was $ 3,947,000 and $ 2,181,000 for 2012 and 2011 , respectively . purchases of property and equipment were $ 2,597,000 and $ 1,849,000 in 2012 and 2011 , respectively . investing activities also included a payment of $ 1,350,000 , which is the final portion of consideration for the รถstergrens acquisition . net cash used in financing activities was $ 244,000 in 2012 compared to $ 838,000 for 2011. the decrease in cash used in 2012 is primarily due to the company paying off debt in 2011. the activity in 2012 consists of dividend payments to shareholders , primarily offset by more company stock purchased by the allied motion employee stock ownership plan ( esop ) , based on higher company contributions to the plan for 2011. at december 31 , 2012 , the company had $ 397,000 in debt obligations . the average outstanding borrowings for 2012 were $ 198,000. the company 's credit agreement , as amended , is used for borrowing needs that may occur in the united states and europe . the credit agreement provides revolving credit up to $ 4 million and 3 million . borrowings under the revolver incur interest of libor plus 1.5 % . overnight borrowings incur interest at prime plus 0.50 % . the unused portion of the revolver is charged a commitment fee of .375 % per annum . the credit agreement contains certain financial covenants related to maximum leverage , minimum fixed charge coverage and minimum tangible net worth of the company . in october 2012 , the credit agreement was extended for an additional year , now expiring on october 26 , 2014 . 13 the company also has a credit facility in china providing credit of approximately $ 700,000 ( rmb 4,500,000 ) to provide financing availability for working capital needs for the company 's subsidiaries in china . there is approximately $ 317,000 ( rmb 2,000,000 ) available under the facility at december 31 , 2012. as of december 31 , 2012 , the amount available to borrow under the company 's various lines-of-credit was approximately $ 8,300,000. the company also has bank overdraft facilities with foreign banks in europe . the facilities had no outstanding balance as of december 31 , 2012. the amount available under the overdraft facilities was approximately $ 700,000 ( 300,000 and 2,100,000 sek ) . as part of the company 's quarterly cash dividend program , the board of directors declared a dividend of $ 0.025 per share payable on march 12 , 2013 to shareholders of record on march 1 , 2013. the company 's working capital , capital expenditure and dividend requirements are expected to be funded from cash provided by operations and amounts available under the company 's credit facilities . price levels and the impact of inflation the effect of inflation on the company 's costs of production has been minimized through production efficiencies , lower costs of materials and surcharges passed on to customers . the company anticipates that these factors will continue to minimize the effects of any foreseeable inflation and other price pressures from the industries in which it operates . as the company 's manufacturing activities mainly utilize semi-skilled labor , which is relatively plentiful in the areas surrounding the company 's production facilities , the company does not anticipate substantial inflation-related increases in the wages of the majority of its employees . recent accounting pronouncements pronouncements implemented in september 2011 , the fasb issued asu no . 2012-08 , `` intangiblesยgoodwill and other ( asc 350 ) : testing goodwill for impairment , '' which specifies that an entity has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test . an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount . asu no . 2012-08 is effective for fiscal years , and interim periods within those years , beginning after december 15 , 2011. the company 's adoption of asu no . 2011-08 had no impact on our consolidated financial condition and results of operations . in june 2011 , the fasb issued asu no . 2011-05 , `` comprehensive income ( asc 220 ) : presentation of story_separator_special_tag we believe that the best opportunity for increasing sales in china will be best met by having a strong presence directly in the country . we expect that internal cash flow from our operations , as well as financing available through lenders will continue to fund our growth opportunities . we will continue our dividend program as we believe that our cash flows can support our growth initiatives and also reward our shareholders at the same time . we will emphasize gross margin improvement . gross margin improvement requires cost reduction , new products emphasizing more complete motion control systems and a support structure trained to sell , apply and service our products and customers . we made good progress in 2012 and these initiatives will continue in 2013. further development and promotion of our parent brand , allied motion , will continue in 2013. a global structure has been defined and we intend to use that to our advantage in the marketplace . and last but not least , we are taking our commitment to ast to a new level as we have invested in additional resources as part of our operational excellence team . as always , we will continuously utilize ast to improve efficiencies and eliminate waste throughout our company . ast is critical to and helps create the path to success in all regions of the world . 10 story_separator_special_tag net cash used in investing activities was $ 3,947,000 and $ 2,181,000 for 2012 and 2011 , respectively . purchases of property and equipment were $ 2,597,000 and $ 1,849,000 in 2012 and 2011 , respectively . investing activities also included a payment of $ 1,350,000 , which is the final portion of consideration for the รถstergrens acquisition . net cash used in financing activities was $ 244,000 in 2012 compared to $ 838,000 for 2011. the decrease in cash used in 2012 is primarily due to the company paying off debt in 2011. the activity in 2012 consists of dividend payments to shareholders , primarily offset by more company stock purchased by the allied motion employee stock ownership plan ( esop ) , based on higher company contributions to the plan for 2011. at december 31 , 2012 , the company had $ 397,000 in debt obligations . the average outstanding borrowings for 2012 were $ 198,000. the company 's credit agreement , as amended , is used for borrowing needs that may occur in the united states and europe . the credit agreement provides revolving credit up to $ 4 million and 3 million . borrowings under the revolver incur interest of libor plus 1.5 % . overnight borrowings incur interest at prime plus 0.50 % . the unused portion of the revolver is charged a commitment fee of .375 % per annum . the credit agreement contains certain financial covenants related to maximum leverage , minimum fixed charge coverage and minimum tangible net worth of the company . in october 2012 , the credit agreement was extended for an additional year , now expiring on october 26 , 2014 . 13 the company also has a credit facility in china providing credit of approximately $ 700,000 ( rmb 4,500,000 ) to provide financing availability for working capital needs for the company 's subsidiaries in china . there is approximately $ 317,000 ( rmb 2,000,000 ) available under the facility at december 31 , 2012. as of december 31 , 2012 , the amount available to borrow under the company 's various lines-of-credit was approximately $ 8,300,000. the company also has bank overdraft facilities with foreign banks in europe . the facilities had no outstanding balance as of december 31 , 2012. the amount available under the overdraft facilities was approximately $ 700,000 ( 300,000 and 2,100,000 sek ) . as part of the company 's quarterly cash dividend program , the board of directors declared a dividend of $ 0.025 per share payable on march 12 , 2013 to shareholders of record on march 1 , 2013. the company 's working capital , capital expenditure and dividend requirements are expected to be funded from cash provided by operations and amounts available under the company 's credit facilities . price levels and the impact of inflation the effect of inflation on the company 's costs of production has been minimized through production efficiencies , lower costs of materials and surcharges passed on to customers . the company anticipates that these factors will continue to minimize the effects of any foreseeable inflation and other price pressures from the industries in which it operates . as the company 's manufacturing activities mainly utilize semi-skilled labor , which is relatively plentiful in the areas surrounding the company 's production facilities , the company does not anticipate substantial inflation-related increases in the wages of the majority of its employees . recent accounting pronouncements pronouncements implemented in september 2011 , the fasb issued asu no . 2012-08 , `` intangiblesยgoodwill and other ( asc 350 ) : testing goodwill for impairment , '' which specifies that an entity has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test . an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount . asu no . 2012-08 is effective for fiscal years , and interim periods within those years , beginning after december 15 , 2011. the company 's adoption of asu no . 2011-08 had no impact on our consolidated financial condition and results of operations . in june 2011 , the fasb issued asu no . 2011-05 , `` comprehensive income ( asc 220 ) : presentation of
| operating results year 2012 compared to 2011 replace_table_token_4_th net income : the company achieved net income for the year ended december 31 , 2012 of $ 5,397,000 or $ .63 per diluted share compared to $ 6,967,000 or $ 0.81 per diluted share for 2011. the 2011 results include a $ 1.1 million adjustment to the earnout that was part of the รถstergrens acquisition in 2010. excluding the earnout adjustment of $ 1.1 million , the company 's net income for 2011 was $ 0.68 per diluted share , and the company 's net income decreased 7 % , or $ 0.05 per diluted share . ebitda and adjusted ebitda : ebitda was $ 9,309,000 and $ 11,774,000 for 2012 and 2011 , respectively . adjusted ebitda was $ 9,918,000 for 2012 compared to $ 11,376,000 for 2011. ebitda and adjusted ebitda are non-gaap measurements . ebitda consists of income before interest expense , provision for income taxes , depreciation and amortization . adjusted ebitda is before stock compensation expense , as well as other nonrecurring items , such as adjustments to the earnout related to the รถstergrens acquisition . see information included in `` non-gaap measures '' below for a reconciliation of net income to ebitda and adjusted ebitda . revenues : revenues were $ 101,968,000 in 2012 compared to $ 110,941,000 in 2011. the 8 % decrease in sales from last year was the result of decreased sales in virtually all of our major industry sectors , partially offset by increased sales into the company 's medical markets . the 8 % decrease in sales is comprised of a 4 % decrease in sales to us customers and a 13 % decrease in sales to non-us customers . 56 % of our sales for the year were to us customers with the balance of our sales to customers primarily in europe , canada and asia .
| 2,632 |
to fund the construction of the prison , sacs obtained long-term financing from its equity partners and lenders , the repayment of which is fully guaranteed by the south african government , except in the event of default , in which case the government guarantee is reduced to 80 % . the company 's maximum exposure for loss under this contract is limited to its investment in the joint venture of $ 18.1 million at december 31 , 2017 and its guarantees related to sacs are discussed in note 13 ยdebt . story_separator_special_tag introduction the following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition . this discussion contains forward-looking statements that involve risks and uncertainties . our actual results may differ materially from those anticipated in these forward-looking statements as a result of numerous factors including , but not limited to , those described above under ยitem 1a . risk factors , ย and ยforward-looking statements ย safe harborย below . the discussion should be read in conjunction with the consolidated financial statements and notes thereto . we are a real estate investment trust specializing in the ownership , leasing and management of correctional , detention and reentry facilities and the provision of community-based services and youth services in the united states , australia , south africa , and the united kingdom . we own , lease and operate a broad range of correctional and detention facilities including maximum , medium and minimum security prisons , immigration detention centers , minimum security detention centers , and community based reentry facilities . we offer counseling , education and or treatment to inmates with alcohol and drug abuse problems at most of the domestic facilities we manage . we are also a provider of innovative compliance technologies , industry-leading monitoring services , and evidence-based supervision and treatment programs for community-based parolees , probationers and pretrial defendants . additionally , we have an exclusive contract with ice to provide supervision and reporting services designed to improve the participation of non-detained aliens in the immigration court system . we develop new facilities based on contract awards , using our project development expertise and experience to design , construct and finance what we believe are state-of-the-art facilities that maximize security and efficiency . we also provide secure transportation services for offender and detainee populations as contracted domestically and in the united kingdom through our joint venture geoamey . as of december 31 , 2017 , our worldwide operations included the management and or ownership of approximately 96,000 beds at 141 correctional , detention and reentry facilities , including idle facilities and projects under development and also included the provision of servicing of more than 185,000 offenders in a community-based environment on behalf of approximately 900 federal , state and local correctional agencies located in all 50 states . for the years ended december 31 , 2017 , 2016 and 2015 , we had consolidated revenues of $ 2.3 billion , $ 2.2 billion and $ 1.8 billion , respectively , and we maintained an average company wide facility occupancy rate of 91.2 % including 88,272 active beds and excluding 7,846 idle beds and beds under development for the year ended december 31 , 2017 , and 93.4 % including 83,599 active beds and excluding 3,538 idle beds and beds under development for the year ended december 31 , 2016. reit conversion we have been a leading owner , lessor and operator of correctional , detention and reentry facilities and provider of community-based services and youth services in the industry since 1984 and began operating as a reit for federal income tax purposes effective january 1 , 2013. as a result of the reit conversion , we reorganized our operations and moved non-real estate components into trss . through the trs structure , the portion of our businesses which are non-real estate related , such as our managed-only contracts , international operations , electronic monitoring services , and other non-residential and community based facilities , are part of wholly-owned taxable subsidiaries of the reit . most of our business segments , which are real estate related and involve company-owned and company-leased facilities , are part of the reit . the trs structure allows us to maintain the strategic alignment of almost all of our diversified business segments under one entity . the trs assets and operations will continue to be subject to federal and state corporate income taxes and to foreign taxes as applicable in the jurisdictions in which those assets and operations are located . 55 as a reit , we are required to distribute annually at least 90 % of our reit taxable income ( determined without regard to the dividends paid deduction and by excluding net capital gain ) and we began paying regular distributions in 2013. we declared and paid the following regular reit distributions to our shareholders for the years ended december 31 , 2017 , 2016 and 2015 which were treated for federal income taxes as follows ( retroactively adjusted to reflect the effects of our 3-for-2 stock split ) : replace_table_token_16_th ( 1 ) the amount constitutes a ยqualified dividendย , as defined by the internal revenue service . ( 2 ) the amount constitutes a ยreturn of capitalย , as defined by the internal revenue service . critical accounting policies we believe that the accounting policies described below are critical to understanding our business , results of operations and financial condition because they involve the more significant judgments and estimates used in the preparation of our consolidated financial statements . we have discussed the development , selection and application of our critical accounting policies with the audit committee of our board of directors , and our audit committee has reviewed our disclosure relating to our critical accounting policies in this ยmanagement 's discussion and analysis of financial condition and results of operations.ย our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the united states . story_separator_special_tag we establish per diem rates for all of our management contracts based on , amongst other factors , expected and guaranteed occupancy , costs of providing the services and desired margins . as such , the fair value of the consideration to each deliverable was determined using our estimated selling price for the project development deliverable and vendor specific objective evidence for the facility management services deliverable . 57 reserves for insurance losses the nature of our business exposes us to various types of third-party legal claims , including , but not limited to , civil rights claims relating to conditions of confinement and or mistreatment , sexual misconduct claims brought by prisoners or detainees , product liability claims , intellectual property infringement claims , claims relating to employment matters ( including , but not limited to , employment discrimination claims , union grievances and wage and hour claims ) , property loss claims , environmental claims , automobile liability claims , contractual claims and claims for personal injury or other damages resulting from contact with our facilities , programs , electronic monitoring products , personnel or prisoners , including damages arising from a prisoner 's escape or from a disturbance or riot at a facility . in addition , our management contracts generally require us to indemnify the governmental agency against any damages to which the governmental agency may be subject in connection with such claims or litigation . we maintain a broad program of insurance coverage for these general types of claims , except for claims relating to employment matters , for which we carry no insurance . there can be no assurance that our insurance coverage will be adequate to cover all claims to which we may be exposed . it is our general practice to bring merged or acquired companies into our corporate master policies in order to take advantage of certain economies of scale . we currently maintain a general liability policy and excess liability policies with total limits of $ 80.0 million per occurrence and $ 100 million in the aggregate covering the operations of u.s. corrections & detention , geo care 's community based services , geo care 's youth services and bi . we have a claims-made liability insurance program with a specific loss limit of $ 35.0 million per occurrence and in the aggregate related to medical professional liability claims arising out of correctional healthcare services . we are uninsured for any claims in excess of these limits . we also maintain insurance to cover property and other casualty risks including , workers ' compensation , environmental liability and automobile liability . for most casualty insurance policies , we carry substantial deductibles or self-insured retentions of $ 3.0 million per occurrence for general liability and medical professional liability , $ 2.0 million per occurrence for workers ' compensation and $ 1.0 million per occurrence for automobile liability . in addition , certain of our facilities located in florida and other high-risk hurricane areas carry substantial windstorm deductibles . since hurricanes are considered unpredictable future events , no reserves have been established to pre-fund for potential windstorm damage . limited commercial availability of certain types of insurance relating to windstorm exposure in coastal areas and earthquake exposure mainly in california and the pacific northwest may prevent the company from insuring some of its facilities to full replacement value . with respect to operations in south africa , the united kingdom and australia , we utilize a combination of locally-procured insurance and global policies to meet contractual insurance requirements and protect us . in addition to these policies , our australian subsidiary carries tail insurance on a general liability policy related to a discontinued contract . of the insurance policies discussed above , our most significant insurance reserves relate to workers ' compensation , general liability and auto claims . these reserves are undiscounted and were $ 71.0 million and $ 51.6 million as of december 31 , 2017 and 2016 , respectively and are included in accrued expenses in the accompanying balance sheets . we use statistical and actuarial methods to estimate amounts for claims that have been reported but not paid and claims incurred but not reported . in applying these methods and assessing their results , we consider such factors as historical frequency and severity of claims at each of our facilities , claim development , payment patterns and changes in the nature of our business , among other factors . such factors are analyzed for each of our business segments . our estimates may be impacted by such factors as increases in the market price for medical services and unpredictability of the size of jury awards . we also may experience variability between our estimates and the actual settlement due to limitations inherent in the estimation process , including our ability to estimate costs of processing and settling claims in a timely manner as well as our ability to accurately estimate our exposure at the onset of a claim . because we have high deductible insurance policies , the amount of our insurance expense is dependent on our ability to control our claims experience . if actual losses 58 related to insurance claims significantly differ from our estimates , our financial condition , results of operations and cash flows could be materially adversely impacted . income taxes the consolidated financial statements reflect provisions for federal , state , local and foreign income taxes . we recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis , as well as operating loss and tax credit carryforwards . we measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled .
| results of operations the following discussion should be read in conjunction with our consolidated financial statements and the notes to the consolidated financial statements accompanying this report . this discussion contains forward-looking statements that involve risks and uncertainties . our actual results may differ materially from those anticipated in the forward-looking statements as a result of certain factors , including , but not limited to , those described under ยitem 1a . risk factorsย and those included in other portions of this report . 2017 versus 2016 revenues replace_table_token_17_th u.s. corrections & detention revenues increased in 2017 compared to 2016 primarily due to aggregate increases of $ 78.6 million as a result of our acquisition of cec on april 5 , 2017 as well as the activation and intake of detainees related to our 65 new contract at our company-owned folkston ice processing center in january 2017. these increases were partially offset by net decreases of $ 8.5 million at certain of our facilities due to aggregate net decreases in population , transportation services and or rates and $ 7.3 million due to contract terminations . the number of compensated mandays in u.s. corrections & detention facilities was approximately 22.3 million in 2017 and 21.3 million in 2016. we experienced an aggregate net increase of approximately 936,000 mandays as a result of our acquisition of cec and contract activation discussed above . we look at the average occupancy in our facilities to determine how we are managing our available beds . the average occupancy is calculated by taking compensated mandays as a percentage of capacity . the average occupancy in our u.s. corrections & detention facilities was 93.1 % and 93.9 % of capacity in 2017 and 2016 , respectively , excluding idle facilities .
| 2,633 |
implementation costs incurred during the application development stage of a project are capitalized and amortized over the term of the hosting arrangement on a straight-line basis . the company capitalized $ 16.6 million of costs incurred in 2019 to implement cloud computing arrangements , primarily related to digital and consumer data platforms . amortization expense totaled $ 0.9 million in 2019. cloud computing costs of $ 15.7 million were included in prepaid story_separator_special_tag overview the following discussion and analysis is intended to help you understand us , our operations and our financial performance . it should be read in conjunction with our consolidated financial statements and the accompanying notes , which are included elsewhere in this report . we are one of the largest global apparel companies in the world and , in march 2020 , we marked our 100-year anniversary as a listed company on the new york stock exchange . we manage a diversified brand portfolio , including tommy hilfiger , calvin klein , van heusen , izod , arrow , speedo ( licensed in perpetuity for north america and the caribbean ) , warner 's , olga , true & co . and geoffrey beene . our brand portfolio also consists of various other owned , licensed and , to a lesser extent , private label brands . we entered into a definitive agreement on january 9 , 2020 to sell our speedo north america business to pentland and , upon closing of the sale , we will no longer license the speedo trademark . the speedo transaction is expected to close in the first quarter of 2020. the closing is subject to customary closing conditions , including clearance under the hart-scott-rodino antitrust improvements act of 1976 , which has been received . our business strategy is to position our brands to sell globally at various price points and in multiple channels of distribution . this enables us to offer products to a broad range of consumers , while minimizing competition among our brands and reducing our reliance on any one demographic group , product category , price point , distribution channel or region . we also license the use of our trademarks to third parties and joint ventures for product categories and in regions where we believe our licensees ' expertise can better serve our brands . our revenue was $ 9.9 billion in 2019 , of which over 50 % was generated outside of the united states . our global lifestyle brands , tommy hilfiger and calvin klein , together generated approximately 85 % of our revenue . results of operations covid-19 outbreak the covid-19 outbreak is having a significant impact on our business , financial condition , cash flows and results of operations in 2020. virus-related concerns , reduced travel , temporary store closures and government-imposed restrictions have resulted in sharply reduced traffic and consumer spending trends and sales stoppages in our retail stores and in the stores of our wholesale customers in virtually all key markets during the first quarter of 2020. in addition , our supply chain had been disrupted and may experience future disruptions as a result of either closed factories or factories with reduced workforces . our licensees ' sales and their supply chain are also being negatively impacted by the covid-19 outbreak , which in turn negatively impacts our royalty revenue . there is significant uncertainty about the duration and extent of the impact of the covid-19 outbreak ; however , there will be a significant negative impact to our 2020 revenue and net income . further , our fourth quarter of 2019 earnings were negatively impacted compared to the prior year period by $ 22 million of additional inventory reserves that we recorded in anticipation of the lower sales trends projected in 2020 as a result of the onset of the covid-19 outbreak . operations overview we generate net sales from ( i ) the wholesale distribution to retailers , franchisees , licensees and distributors of dress shirts , neckwear , sportswear ( casual apparel ) , jeanswear , performance apparel , intimate apparel , underwear , swimwear , swim products , handbags , accessories , footwear and other related products under owned and licensed trademarks , including through digital commerce sites operated by our wholesale partners and pure play digital commerce retailers , and ( ii ) the sale of certain of these products through ( a ) approximately 1,830 company-operated free-standing retail store locations worldwide under our tommy hilfiger , calvin klein and certain of our heritage brands trademarks , ( b ) approximately 1,500 company-operated shop-in-shop/concession locations worldwide under our tommy hilfiger and calvin klein trademarks , and ( c ) digital commerce sites in over 30 countries under our tommy hilfiger and calvin klein trademarks and in the united states through our directly operated digital commerce sites for speedo , true & co . , van heusen , and izod , as well as our 32 stylebureau .com site . additionally , we generate royalty , advertising and other revenue from fees for licensing the use of our trademarks . we manage our operations through our operating divisions , which are presented as six reportable segments : ( i ) tommy hilfiger north america ; ( ii ) tommy hilfiger international ; ( iii ) calvin klein north america ; ( iv ) calvin klein international ; ( v ) heritage brands wholesale ; and ( vi ) heritage brands retail . we have entered into the following transactions that have impacted our results of operations and the comparability among the years , including our 2020 expectations as compared to 2019 , as discussed below : we entered into a definitive agreement on january 9 , 2020 to sell our speedo north america business to pentland for $ 170 million in cash , subject to a working capital adjustment , as described above . story_separator_special_tag we acquired on april 20 , 2018 the geoffrey beene tradename from geoffrey beene for $ 17 million , of which $ 16 million was paid in cash . prior to the acquisition , we had licensed the rights to design , market and distribute geoffrey beene dress shirts and neckwear from geoffrey beene . we issued on december 21 , 2017 600 million euro-denominated principal amount of 3 1/8 % senior notes due december 15 , 2027. we redeemed on january 5 , 2018 our $ 700 million principal amount of 4 1/2 % senior notes due december 15 , 2022 ( using the proceeds of the senior notes due december 15 , 2027 ) and recorded pre-tax debt extinguishment charges of $ 24 million . please see the section entitled โ liquidity and capital resources โ below for further discussion . we amended on december 20 , 2017 mr. tommy hilfiger 's employment agreement , pursuant to which we made a cash buyout of a portion of the future payment obligation ( the โ mr . hilfiger amendment โ ) . we recorded pre-tax charges of $ 83 million in 2017 in connection with the amendment . we restructured our supply chain relationship with li & fung trading limited ( โ li & fung โ ) in a transaction that closed on september 30 , 2017. our non-exclusive buying agency agreement with li & fung was terminated in connection with this transaction ( the โ li & fung termination โ ) . we recorded pre-tax charges of $ 54 million in 2017 in connection with the termination . we acquired on september 1 , 2017 the tommy hilfiger and calvin klein wholesale and concessions businesses in belgium and luxembourg from a former agent ( the โ belgian acquisition โ ) for $ 12 million . as a result of this acquisition , we now operate directly our tommy hilfiger and calvin klein businesses in this region . we acquired on march 30 , 2017 true & co. , a direct-to-consumer intimate apparel digital-centric retailer , for $ 28 million , net of $ 400,000 of cash acquired . this acquisition enabled us to participate further in the fast-growing online channel and provided a platform to increase innovation , data-driven decisions and speed in the way we serve our consumers across our channels of distribution . we completed the relocation of our tommy hilfiger office in new york in 2017 and recorded related pre-tax charges of $ 19 million , including noncash depreciation expense . we purchased a group annuity in 2017 for certain participants of our retirement plans under which certain of our benefit obligations were transferred to an insurer . we recorded a pre-tax loss of $ 9 million in connection with the noncash settlement of such benefit obligations . we acquired on april 13 , 2016 the 55 % ownership interests in our former joint venture for tommy hilfiger in china that we did not already own ( the โ th china acquisition โ ) . as a result of the th china acquisition , we now operate directly our tommy hilfiger business in this market . we recorded pre-tax charges of $ 24 million and $ 27 million in 2018 and 2017 , respectively , primarily consisting of noncash amortization of short-lived assets . our tommy hilfiger and calvin klein businesses each have substantial international components that expose us to significant foreign exchange risk . our heritage brands business also has international components but those components are not significant to the business . our results of operations in local foreign currencies are translated into united states dollars using an average exchange rate over the representative period . accordingly , our results of operations are unfavorably impacted during times of a strengthening united states dollar against the foreign currencies in which we generate significant revenue and earnings and favorably impacted during times of a weakening united states dollar against those currencies . over 50 % of our 2019 revenue was subject to foreign currency translation . the united states dollar strengthened against most major currencies 34 in the latter part of 2018 and in 2019 , particularly the euro , which is the foreign currency in which we transact the most business . as a result , our 2019 revenue and net income decreased by approximately $ 215 million and $ 25 million , respectively , as compared to 2018 due to the impact of foreign currency translation . we currently expect a decrease in our revenue and net income in 2020 as compared to 2019 due to the impact of foreign currency translation . there is also a transactional impact on our financial results because inventory typically is purchased in united states dollars by our foreign subsidiaries . as with translation , our results of operations will be unfavorably impacted during times of a strengthening united states dollar , as the increased local currency value of inventory results in a higher cost of goods in local currency when the goods are sold , and favorably impacted during times of a weakening united states dollar , as the decreased local currency value of inventory results in a lower cost of goods in local currency when the goods are sold . we use foreign currency forward exchange contracts to hedge against a portion of the exposure related to this transactional impact . the contracts cover at least 70 % of the projected inventory purchases in united states dollars by our foreign subsidiaries . these contracts are generally entered into 12 months in advance of the related inventory purchases . therefore , the impact of fluctuations of the united states dollar on the cost of inventory purchases covered by these contracts may be realized in our results of operations in the year following their inception , as the underlying inventory hedged by the contracts is sold . our 2019 net income included a slight benefit as compared to 2018 as a result of this transactional impact .
| cash flow summary cash and cash equivalents at february 2 , 2020 was $ 503 million , an increase of $ 51 million from the amount at february 3 , 2019 of $ 452 million . the change in cash and cash equivalents included the impact of ( i ) $ 325 million of common stock repurchases under the stock repurchase program , ( ii ) $ 71 million of long-term debt repayments , ( iii ) a $ 59 million net payment made in connection with the australia acquisition , and ( iv ) a $ 74 million payment made in connection with the th csap acquisition . cash flow in 2020 will be impacted by various factors in addition to those noted below in this โ liquidity and capital resources โ section , including ( i ) mandatory long-term debt repayments of approximately $ 14 million , subject to exchange rate fluctuations , ( ii ) common stock repurchases under the stock repurchase program of $ 111 million , which reflects stock repurchases through march 2020 with no further repurchases planned for the remainder of 2020 , and ( iii ) the expected proceeds of $ 170 million , subject to a working capital adjustment , related to the speedo transaction , which is expected to close in the first quarter of 2020. in addition , in march 2020 we increased the aggregate borrowings outstanding under our senior unsecured revolving credit facilities , other short-term revolving credit facilities and unsecured commercial paper note program to approximately $ 930 million , in order to increase our cash position and preserve financial flexibility in responding to the impacts of the covid-19 outbreak on our business .
| 2,634 |
all forward-looking statements reflect the present expectation of future events of our management as of the date of this annual report on form 10-k and are subject to a number of important factors , risks , uncertainties and assumptions that could cause actual results to differ materially from those described in any forward-looking statements . these factors , risks , uncertainties and assumptions include , but are not limited to , the following : general economic conditions including downturns in the business cycle ; operation within a highly competitive industry and efforts to address downward pricing pressures and other factors ; industry-wide external factors largely out of our control ; cost and availability of qualified drivers , purchased transportation and fuel ; insurance and claims expenses and other expense volatility ; failure to successfully execute the strategy to expand our service geography ; disruption in or failure of our technology or equipment including services essential to our operations ; failure to keep pace with technological developments ; labor relations , including the adverse impact should a portion of our workforce become unionized ; cost and availability of real property and revenue equipment ; capacity and highway infrastructure constraints ; risks arising from international business operations and relationships ; seasonal factors , harsh weather and disasters caused by climate change ; economic declines in the geographic regions or industries in which our customers operate ; the creditworthiness of our customers and their ability to pay for services ; our need for capital and uncertainty of the credit markets ; the possibility of defaults under our debt agreements ( including violation of financial covenants ) ; failure to operate and grow acquired businesses in a manner that support the value allocated to acquired businesses ; dependence on key employees ; increased costs of healthcare benefits ; social media risks ; failure to make future acquisitions or to achieve acquisition synergies ; the effect of litigation and class action lawsuits , including impacts on the cost and availability of insurance coverage , the potential of higher corporate taxes and new regulations ; the effect of specified governmental regulations , including but not limited to hours of service , engine emissions , the compliance , safety , accountability ( csa ) initiative , the food and drug administration , homeland security , healthcare and environmental regulations ; unforeseen costs from new and existing data privacy laws ; changes in accounting and financial practices ; 30 widespread outbreak of an illness or any other communicable disease , including the covid-19 pandemic , or any other health crisis or business disruptions that may arise from the covid-19 pandemic in the future ; increasing investor and customer sensitivity to social and sustainability issues ; anti-terrorism measures and terrorist events ; provisions in our governing documents that may have anti-takeover effects ; issuances of equity that would dilute stock ownership ; and other financial , operational and legal risks and uncertainties detailed from time to time in the company 's sec filings . these factors and risks are more completely described in part i , item 1a . โ risk factors โ of this annual report on form 10-k. as a result of these and other factors , no assurance can be given as to our future results and achievements . accordingly , a forward-looking statement is neither a prediction nor a guarantee of future events or circumstances and those future events or circumstances may not occur . you should not place undue reliance on the forward-looking statements , which speak only as of the date of this form 10-k. we are under no obligation , and we expressly disclaim any obligation , to update or alter any forward-looking statements , whether as a result of new information , future events or otherwise . executive overview the company 's business is highly correlated to non-service sectors of the general economy . the company 's strategy is to improve profitability by increasing yield while also increasing volumes to build density in existing geography and to pursue geographic expansion to promote profitable growth and improve our customer value proposition over time . the company 's business is labor intensive , capital intensive and service sensitive . the company looks for opportunities to improve safety , cost effectiveness and asset utilization ( primarily tractors and trailers ) . pricing initiatives have had a positive impact on yield and profitability . the company continues to execute targeted sales and marketing programs along with initiatives to align costs with volumes and improve customer satisfaction . technology continues to be an important investment that is improving customer experience , operational efficiencies and company image . covid-19 . in march 2020 , the world health organization categorized coronavirus disease 2019 ( โ covid-19 โ ) as a pandemic , and the president of the united states declared the covid-19 outbreak a national emergency . we are considered an essential and critical business by the u.s. department of homeland security 's cyber and infrastructure security agency ( cisa ) and will continue to operate under state of emergency and shelter in place orders issued in various jurisdictions across the country . management has made a variety of efforts seeking to ensure the ongoing availability of saia 's transportation services , while instituting actions and policies to help safeguard employees and customers from covid-19 , including limiting physical employee and customer contact , implementing enhanced cleaning and hygiene protocols at saia 's facilities , and instituting telecommuting where possible . through the date of this filing , the company has not experienced significant disruptions in the company 's ltl network operations . beginning in the latter part of the first quarter of 2020 , we experienced lower demand for our transportation services along with increased costs and other challenges related to covid-19 that adversely affected our business , particularly in the second quarter of 2020 with a subsequent rebound in volumes in the third and fourth quarters of 2020. we believe we have significant liquidity available to continue business operations during this volatile period . story_separator_special_tag see note 10 to the company 's audited consolidated financial statements for an analysis of the income tax provision , impacts of the alternative fuel tax credits and the effective tax rate . working capital/capital expenditures working capital at december 31 , 2020 was negative $ 4.1 million which increased from working capital at december 31 , 2019 of negative $ 8.9 million . this increase is primarily due to an increase in cash and cash equivalents and accounts receivable , partially offset by increases in accrued taxes and claims and insurance accruals . cash flows from operating activities were $ 309.1 million for 2020 versus $ 272.9 million for 2019 largely driven by increased profitability . for 2020 , net cash used in investing activities was $ 218.8 million versus $ 281.0 million in 2019 primarily due to lower capital expenditures for real estate , technology and revenue equipment during 2020 due to management 's decision to reduce expenditures in light of uncertainty associated with covid-19 . net cash used in financing activities was $ 65.3 million in 2020 versus $ 6.2 million in net cash provided by financing activities in 2019 primarily driven by a decrease in the net borrowings ( net of repayments ) under our revolving credit facility of $ 71.9 million from 2020 compared to 2019 . 35 year ended december 31 , 2019 as compared to year ended december 31 , 2018 revenue and volume consolidated revenue increased 8.0 percent to $ 1.79 billion as a result of increased shipments , tonnage , fuel surcharges and pricing actions , including a 5.9 percent general rate increase taken february 18 , 2019. expansion into the northeastern united states continued to be a contributing factor in the increased shipments and tonnage in 2019. the economic environment over the last couple of years permitted the company to implement measured pricing actions to improve yield , which allowed saia 's ltl revenue per hundredweight ( a measure of yield ) increasing 7.4 percent to $ 18.05 per hundredweight for 2019 primarily as a result of increased rates along with increased length of haul . saia 's ltl tonnage also increased 0.4 percent per workday and ltl shipments increased 4.3 percent per workday for 2019. overall ltl revenue per shipment increased 3.4 percent due to the yield improvements discussed above . this was somewhat offset by a decrease in ltl weight per shipment decreases of 3.8 percent during 2019 , which was mainly driven by slower economic industrial production trends . for 2019 and 2018 , approximately 75 to 80 percent of saia 's operating revenue was subject to specific customer price adjustment negotiations that occur throughout the year . the remaining 20 to 25 percent of operating revenue was subject to a general rate increase which is based on market conditions . for customers subject to general rate increases , saia implemented a 5.9 percent general rate increase on february 18 , 2019. competitive factors , customer turnover and mix changes , among other things , impact the extent to which customer rate increases are retained over time . operating revenue includes fuel surcharge revenue from the company 's fuel surcharge program . that program is designed to reduce the company 's exposure to fluctuations in fuel prices by adjusting total freight charges to account for changes in the price of fuel . the company 's fuel surcharge is generally based on the average national price for diesel fuel and is reset weekly . fuel surcharges are widely accepted in the industry and are a significant component of revenue and pricing . fuel surcharges are an integral part of customer contract negotiations but represent only one portion of overall customer price negotiations as customers may negotiate increases in base rates instead of increases in fuel surcharges or vice versa . fuel surcharge revenue decreased to 13.0 percent of operating revenue for the year ended december 31 , 2019 compared to 13.6 percent for the year ended december 31 , 2018 primarily as a result of decreases in the cost of fuel . operating expenses and margin consolidated operating income was $ 152.6 million in 2019 compared to $ 141.2 million in 2018. in summary , the operations were favorably impacted in 2019 by higher tonnage , shipments , overall fuel surcharges and yield , which were offset by salary and wage increases , higher fuel and purchase transportation costs , increased depreciation expense and costs associated with the company 's geographic expansion . the 2019 operating ratio ( operating expenses divided by operating revenue ) was flat at 91.5 percent as compared to 2018. salaries , wages and benefit expense increased $ 75.2 million in 2019 compared to 2018 largely due to higher wages associated with increased headcount in 2019 , wage increases in july 2019 and 2018 and higher healthcare benefit costs . fuel , operating expenses and supplies increased $ 15.1 million during 2019 compared to 2018 largely due to increased costs of other operating expenses and supplies , including increased expenses related to the geographic expansion , partially offset by improved fuel efficiency from a newer fleet . claims and insurance expense in 2019 was $ 4.6 million higher than 2018 largely due to increased insurance reserves in 2019 associated with accident severity partially offset by the benefit from the commutation of the first 12 month period of the bodily injury and property damage liability policy . the company can experience volatility in accident expense as a result of its self-insurance structure which provides for retention amounts ranging from $ 2 million to $ 10 million per occurrence . depreciation expense increased $ 17.0 million in 2019 compared to 2018 primarily due to revenue equipment , real estate and technology investments in 2019. purchased transportation expense increased $ 6.1 million in 2019 compared to 2018 primarily due to increases in purchased transportation cost per mile and utilization of purchased transportation carriers to maintain service requirements while supporting increased shipments , tonnage and length of haul throughout 2019. other substantially all non-operating expenses represent interest expense .
| results of operations saia , inc. and subsidiaries selected results of operations and operating statistics for the years ended december 31 , 2020 , 2019 and 2018 ( in thousands , except ratios and revenue per hundredweight ) replace_table_token_3_th year ended december 31 , 2020 as compared to year ended december 31 , 2019 revenue and volume consolidated revenue increased 2.0 percent to $ 1.8 billion primarily as a result of pricing actions and terminal expansion , partially offset by a decrease in fuel surcharge revenue as a result of lower fuel prices . the economic environment over the past few years permitted the company to implement measured pricing actions to improve yield . as a result of these increased rates , along with increased length of haul , saia 's ltl revenue per hundredweight ( a measure of yield ) increased 1.6 percent to $ 18.33 per hundredweight for 2020. saia 's ltl tonnage also increased 0.1 percent per workday while ltl shipments decreased 0.9 percent per workday for 2020 , as a result of lower volumes in the first half of 2020. overall ltl revenue per shipment increased 2.6 percent in 2020 due to the yield improvements discussed above . additionally , ltl weight per shipment increased 1.0 percent during 2020. for 2020 and 2019 , approximately 75 to 80 percent of saia 's operating revenue was subject to specific customer price adjustment negotiations that occur throughout the year . the remaining 20 to 25 percent of operating revenue was subject to a general rate increase which is based on market conditions . for customers subject to general rate increases , saia implemented a 5.9 percent general rate increase on february 3 , 2020. competitive factors , customer turnover and mix changes , among other things , impact the extent to which customer rate increases are retained over time . 34 operating revenue includes fuel surcharge revenue from the company 's fuel surcharge program .
| 2,635 |
this overview summarizes the md & a , which includes the following sections : โ our business โ a general description of our business and the adult nightclub industry , our objective , our strategic priorities , our core capabilities , and challenges and risks of our business . โ critical accounting policies and estimates โ a discussion of accounting policies that require critical judgments and estimates . โ operations review โ an analysis of our company 's consolidated results of operations for the three years presented in our consolidated financial statements . โ liquidity and capital resources โ an analysis of cash flows , aggregate contractual obligations , and an overview of financial position . our business the following are our operating segments : nightclubs our wholly-owned subsidiaries own and or operate upscale adult nightclubs serving primarily businessmen and professionals . these nightclubs are in houston , austin , san antonio , dallas , fort worth , beaumont , longview , harlingen , edinburg , abilene , lubbock , el paso and odessa , texas ; charlotte , north carolina ; minneapolis , minnesota ; new york , new york ; miami gardens and pembroke park , florida ; pittsburgh , pennsylvania ; phoenix , arizona ; and washington park , kappa and chicago , illinois . no sexual contact is permitted at any of our locations . we also own and operate a studio 80 dance club in fort worth , texas . we also own and lease to third parties real properties that are adjacent to ( or used to be locations of ) our clubs . bombshells our wholly-owned subsidiaries own and operate restaurants and sports bars in houston , dallas , austin , spring and pearland , texas under the brand name bombshells restaurant & bar . other our wholly-owned subsidiaries own a media division ( โ media group โ ) , including the leading trade magazine serving the multibillion-dollar adult nightclubs industry and the adult retail products industry . we also own an industry trade show , an industry trade publication and more than a dozen industry and social media websites . included here is drink robust , which is licensed to sell robust energy drink in the united states . our revenues are derived from the sale of liquor , beer , wine , food , merchandise ; service revenues such as cover charges , membership fees , and facility use fees ; and other revenues such as commissions from vending and atm machines , real estate rental , valet parking , and other products and services for both nightclub and restaurant/sports bar operations . other revenues include media group revenues for the sale of advertising content and revenues from our annual expo convention , and drink robust sales . our fiscal year-end is september 30 . 21 we calculate same-store sales by comparing year-over-year revenues from nightclubs and restaurants/sports bars starting in the first full quarter of operations after at least 12 full months for nightclubs and at least 18 full months for bombshells . we consider the first six months of operations of a bombshells unit to be the โ honeymoon period โ where sales are significantly higher than normal . we exclude from a particular month 's calculation units previously included in the same-store sales base that have closed temporarily for more than 15 days until its next full month of operations . we also exclude from the same-store sales base units that are being reconcepted or are closed due to renovations or remodels . acquired units are included in the same-store sales calculation as long as they qualify based on the definition stated above . revenues outside of our nightclubs and bombshells reportable segments are excluded from same-store sales calculation . our goal is to use our company 's assetsโour brands , financial strength , and the talent and strong commitment of our management and employeesโto become more competitive and to accelerate growth . critical accounting policies and estimates management 's discussion and analysis of financial condition and results of operations are based upon our financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states ( โ gaap โ ) . the preparation of these consolidated financial statements requires our management to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . these estimates are based on management 's historical and industry experience and on various other assumptions that are believed to be reasonable under the circumstances . on a regular basis , we evaluate these accounting policies , assumptions , estimates and judgments to ensure that our financial statements are presented fairly and in accordance with gaap . however , because future events and their effects can not be determined with certainty , actual results may differ from our estimates , and such differences could be material . a full discussion of our significant accounting policies is contained in note 2 to our consolidated financial statements , which is included in item 8 โ โ financial statements and supplementary data โ of this report . we believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our financial results . these estimates require our most difficult , subjective or complex judgments because they relate to matters that are inherently uncertain . we have reviewed these critical accounting policies and estimates and related disclosures with our audit committee . long-lived assets we review long-lived assets , such as property and equipment , and intangible assets subject to amortization , for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable . story_separator_special_tag on december 22 , 2017 , the tax act was signed into law . the tax act contains significant changes to corporate taxation , including reduction of the corporate tax rate from 35 % to 21 % , additional limitations on the tax deductibility of interest , immediate deductions for certain new investments instead of deductions for depreciation expense over time , and modification or repeal of many business deductions and credits . our federal corporate income tax rate for fiscal 2018 was 24.5 % percent and represents a blended income tax rate for the current fiscal year . for fiscal 2019 , our federal corporate income tax rate was 21 % . legal and other contingencies as mentioned in item 3 โ โ legal proceedings โ and in a more detailed discussion in note 11 to our consolidated financial statements , we are involved in various suits and claims in the normal course of business . we record a liability when it is probable that a loss has been incurred and the amount is reasonably estimable . there is significant judgment required in both the probability determination and as to whether an exposure can be reasonably estimated . in the opinion of management , there was not at least a reasonable possibility that we may have incurred a material loss , or a material loss in excess of a recorded accrual , with respect to loss contingencies for asserted legal and other claims . however , the outcome of legal proceedings and claims brought against the company is subject to significant uncertainty . therefore , although management considers the likelihood of such an outcome to be remote , if one or more of these legal matters were resolved against the company in a reporting period for amounts in excess of management 's expectations , the company 's consolidated financial statements for that reporting period could be materially adversely affected . in matters where there is insurance coverage , in the event we incur any liability , we believe it is unlikely we would incur losses in connection with these claims in excess of our insurance coverage . 23 story_separator_special_tag salaries and wages increased by $ 5.3 million , or 11.9 % , from 2018 to 2019 and by $ 4.5 million , or 11.3 % , from 2017 to 2018. the dollar increase from 2018 to 2019 primarily came from newly opened units plus the impact of pre-opening salaries and wages on still under-construction bombshells units . the dollar increase from 2017 to 2018 was mainly from new club and restaurant openings . as a percentage of revenues , consolidated salaries and wages has been fairly stable at 27.5 % , 26.9 % , and 27.6 % for fiscal year 2019 , 2018 , and 2017 , respectively . by reportable segment , salaries and wages are broken down as follows ( in thousands ) : replace_table_token_14_th unit-level manager payroll is included in salaries and wages of each location , while payroll for regional manager and above are included in general corporate . the components of consolidated selling , general and administrative expenses are in the tables below ( dollars in thousands ) : replace_table_token_15_th by reportable segment , selling , general and administrative expenses are broken down as follows ( in thousands ) : replace_table_token_16_th 28 the significant variances in selling , general and administrative expenses are as follows : taxes and permits increased by $ 1.2 million , or 12.9 % , from 2018 to 2019 primarily due to new units , higher taxes on those new units , and increases in patron taxes and property taxes as a result of increased sales revenues . taxes and permits increased by $ 1.5 million , or 18.9 % , from 2017 to 2018 primarily due to an increased operating activity and the previously mentioned sales tax audit settlements in 2018. as a percentage of revenues , taxes and permits were 6.0 % , 5.8 % , and 5.5 % for 2019 , 2018 , and 2017 , respectively . advertising and marketing increased by $ 856,000 , or 11.4 % , from 2018 to 2019 and increased by $ 832,000 , or 12.4 % , from 2017 to 2018 mainly due to new units . as a percentage of revenues , advertising and marketing was relatively flat at 4.6 % , 4.5 % , and 4.6 % for 2019 , 2018 , and 2017 , respectively . insurance decreased nominally by $ 44,000 , or 0.8 % , from 2018 to 2019. it increased by $ 1.5 million , or 36.6 % , from 2017 to 2018 primarily due to an increase in general liability insurance premiums and additional property insurance . rent expense increased by $ 176,000 , or 4.7 % , from 2018 to 2019 mainly due to adjustments in deferred rent liability in fiscal year 2018. rent expense increased by $ 462,000 , or 14.2 % from 2017 to 2018 primarily due to scarlett 's miami , which was acquired in may 2017 , and bombshells 290 , which was opened in july 2017. as a percentage of revenues , rent expense has been flat at 2.2 % in all three years . legal expenses increased in 2019 from 2018 by $ 1.6 million , or 44.5 % , mainly due to sec-related matters . legal expenses increased by $ 512,000 , or 16.7 % , from 2017 to 2018 primarily due to increased legal activity on on-going litigation cases . charge card fees increased by $ 559,000 , or 17.5 % , from 2018 to 2019 , and by $ 461,000 , or 16.6 % , from 2017 to 2018. both increases were directly related to higher revenues from prior year . as a percentage of revenues , charge card fees were 2.1 % , 2.0 % , and 1.9 % in 2019 , 2018 , and 2017 , respectively .
| operations review highlights of operations from fiscal 2019 compared to fiscal 2018 ( with fiscal 2017 comparative data ) are as follows : โ revenues of $ 181.1 million compared to $ 165.7 million , a 9.2 % increase nightclubs revenue of $ 148.6 million compared to $ 140.1 million in 2018 , a 6.1 % increase bombshells revenue of $ 30.8 million compared to $ 24.1 million in 2018 , a 27.9 % increase fiscal 2017 total revenues of $ 144.9 million ( nightclubs revenue of $ 124.7 million and bombshells revenue of $ 18.8 million ) โ consolidated same-store sales decrease of 0.3 % ( 0.6 % increase for nightclubs and 6.1 % decrease for bombshells ) consolidated , nightclubs and bombshells same-store sales in 2018 ( compared to 2017 ) of +4.6 % , +5.8 % and -3.3 % , respectively consolidated , nightclubs and bombshells same-store sales in 2017 ( compared to 2016 ) of +4.9 % , +5.1 % and +3.5 % , respectively โ diluted earnings per share ( โ eps โ ) of $ 1.99 compared to $ 2.15 , a 7.4 % decrease ( non-gaap diluted eps * of $ 2.31 compared to $ 2.18 , a 6.0 % increase ) ( diluted eps of $ 0.85 and non-gaap diluted eps of $ 1.43 in fiscal 2017 ) โ free cash flow * of $ 33.3 million compared to $ 23.2 million , a 43.3 % increase ( $ 19.3 million in fiscal 2017 ) * reconciliation and discussion of non-gaap financial measures are included under the โ non-gaap financial measures โ section of this item . these measures should be considered in addition to , rather than as a substitute for , u.s. gaap measures . the following common size tables present a comparison of our results of operations as a percentage of total revenues for the past three fiscal years : replace_table_token_5_th โ percentages may not foot due to rounding . percentage of revenue for individual cost of goods sold items pertains to their respective revenue line .
| 2,636 |
โ macroeconomic conditions demand for our services and products is cyclical and dependent upon activity levels in the oil and gas industry , particularly our customers ' willingness to invest capital in the exploration for oil and natural gas . our customers ' capital spending programs are generally based on their outlook for near-term and long-term commodity prices , economic growth , commodity demand and estimates of resource production . third-party reports now indicate that global exploration and production spending is expected to increase 8 % in 2018. this is an improvement from the 4 % growth in 2017 that was preceded by 2 years of double-digit declines . the following is a summary of recent oil and gas pricing trends : 33 replace_table_token_3_th in the past few years , crude oil prices have been volatile due to global economic uncertainties . significant downward oil price volatility began late in 2014 and reached a low average of $ 33 per barrel in early 2016. the material decrease in crude oil prices can be attributed principally to high levels of global crude oil inventories resulting from significant production growth in the u.s. shale plays , the strengthening of the u.s. dollar relative to other foreign currencies and the organization of petroleum exporting countries ( โ opec โ ) increasing its production , causing a global supply and demand imbalance for crude oil . in late november 2016 , opec and other non-opec participants such as russia reached an agreement to cut their oil production . the prices for west texas intermediate ( โ wti โ ) and intercontinental exchange brent ( โ brent โ ) crude oil increased to an average of $ 50 per barrel and $ 53 per barrel , respectively , in 2017 compared to $ 42 per barrel and $ 43 per barrel , respectively for 2016. this increase was due to multiple factors , including successful opec production cuts and net inventory crude draws which reduced the current crude surplus . the eia forecasts the brent crude oil spot price will average $ 60 per barrel in 2018 and $ 61 per barrel in 2019. global supply and demand for crude oil is now largely in balance and some industry analysts forecast that worldwide inventories will fall below the five-year historical average in the first half of 2018. energy reform in mexico and a bill passed in brazil that eliminates the requirement for petrobras to participate in every presalt offshore block , in conjunction with the stability of oil prices , has resulted in increased investment in those areas . in addition , in january , 2018 , the interior department proposed to make more than 98 % of outer continental shelf acreage available for exploration and development . this price stability has encouraged north american drillers to increase shale production . during 2017 , u.s. producers added 270 oil rigs . this brought the total u.s. rig count to 929 , at december 31 , 2017 , an increase of 41 % during 2017 compared to 659 rigs at the end of the 2016. given the historical volatility of crude prices , there is a continued risk that if prices do not continue to improve , or if they start to decline again due to high levels of crude oil production , there is a potential for slowing growth rates in various global regions and or for ongoing supply/demand imbalances . prices for natural gas in the u.s. averaged $ 2.99 per mmbtu for 2017 , compared to $ 2.40 per mmbtu for 2016. as a result of natural gas production growth outpacing demand in the u.s. , natural gas prices continue to be weak relative to prices experienced from 2006 through 2008 and are expected to remain below levels considered economical for new investments in numerous natural gas fields . draws in late 2017 were larger than normal , resulting in total u.s. natural gas inventories of 2.8 trillion cubic feet at the end of 2017 , 13.0 % lower than levels at this time a year ago , and 12.1 % lower than the five-year average . inventories are expected to build slightly above the five year average by the end of october 2018. after a period of growth in exploration activities and associated spending leading up to the end of 2014 , many e & p companies shifted their focus to production activities , away from exploration , as the continued decline in oil and gas prices resulted in decreased revenues , prompting cost reduction initiatives across the industry . from the end of 2014 through 2017 , e & p companies decreased spending on exploration and reportedly focused their spending on critical production requirements and existing commitments . we believe this was due to several factors , but primarily because operational cash flows of e & p companies were no longer sufficient to cover capital expenditures while continuing to pay cash dividends to shareholders . e & p companies relied on asset sales and debt financings to fund capital requirements amid demands for greater returns to shareholders . the combination of these factors placed many e & p companies in a position where they were unable to cover both their capital expenditure budgets and targeted cash returns to shareholders . as a result , e & p companies dramatically cut spending , with exploration spending receiving the largest reductions and seismic spending being one of the most discretionary parts of their exploration budgets . as a result of this industry downturn , many customers experienced a significant reduction in their liquidity with challenges accessing the capital markets . several exploration and production companies declared bankruptcy , or exchanged equity for the forgiveness of debt , while others were forced to sell assets in an effort to preserve 34 liquidity . however , over the past 12 months , access to the capital and debt markets improved significantly for certain of these customers . story_separator_special_tag story_separator_special_tag roman ; font-size:10pt ; '' > $ 2.7 million , as adjusted , or 6 % , to $ 41.0 million , as adjusted for 2017 compared to $ 43.7 million , as adjusted , for 2016 . this decrease for 2017 was primarily due to the full benefit of our cost control initiatives implemented in prior years . other items interest expense , net โ interest expense , net , of $ 16.7 million for 2017 compared to $ 18.5 million for 2016 . this improvement was primarily due to reduced debt caused by the bond exchange during 2016. for additional information , please refer to โ โ liquidity and capital resources โ sources of capital โ below . other income ( expense ) โ other income ( expense ) for 2017 was $ ( 3.9 ) million compared to other income of $ 1.4 million for 2016 . the difference primarily relates to changes in our accrual for loss contingency related to a legal matter . see further discussion at footnote 6 โ legal matters โ and in part 1 , item 3 , โ legal proceedings . โ the following table reflects the significant items of other income ( in thousands ) : replace_table_token_7_th income tax expense โ income tax expense for 2017 was less than $ 0.1 million compared to $ 4.4 million for 2016 . our effective tax rates for 2017 and 2016 were ( 0.1 ) % and ( 7.3 ) % , respectively . the income tax expense for 2017 and 2016 primarily relates to results generated by our non-u.s. businesses . tax expense for 2017 includes a $ 1.3 million tax benefit for the release of the valuation allowance against refundable u.s. alternative minimum tax ( โ amt โ ) credits . tax expense has not been offset by the tax benefits on losses within the u.s. and other jurisdictions , from which we can not currently benefit . our effective tax rate for 2017 was negatively impacted by the change in valuation allowance related to u.s. operating losses for which we can not currently recognize a tax benefit . see further discussion of establishment of the deferred tax valuation allowance at footnote 5 โ income taxes โ of footnotes to consolidated financial statements . 40 results of operations year ended december 31 , 2016 ( as adjusted ) compared to year ended december 31 , 2015 ( as adjusted ) our total net revenues of $ 172.8 million for 2016 decreased $ 48.7 million , or 22 % , compared to total net revenues of $ 221.5 million for 2015. our overall gross profit percentage for 2016 was 21 % , as adjusted , compared to a gross profit percentage of 5 % , as adjusted , for 2015. total operating expenses , as adjusted , as a percentage of net revenues for 2016 and 2015 were 45 % and 48 % , respectively . during 2016 , our loss from operations was $ 41.2 million , as adjusted , compared to a loss of $ 93.4 million , as adjusted , for 2015. our net loss for 2016 was $ 66.1 million , as adjusted , or $ ( 5.80 ) per share , compared to net loss of $ 118.7 million , as adjusted , or $ ( 10.83 ) per share for 2015. as noted above , our net loss for 2016 and 2015 included restructuring charges and other ( credits ) totaling $ ( 1.0 ) million and $ ( 93.6 ) million , respectively , impacting our earnings per share by $ ( 0.09 ) and $ ( 8.54 ) , respectively . net revenues , gross profits and gross margins ( as adjusted ) e & p technology & services โ net revenues for 2016 decreased by $ 64.4 million , or 41 % , to $ 92.9 million , compared to $ 157.3 million for 2015. revenues for our new venture , data library and imaging services businesses decreased due to the continued softness in exploration spending . gross profit decreased by $ 11.2 million to $ 5.5 million , as adjusted , representing a 6 % gross margin , compared to $ 16.7 million , as adjusted , or an 11 % gross margin , for 2015. this decrease was attributable to the significant revenue decline in our new venture , data library and imaging services businesses in 2016 , partially offset by cost cutting measures . e & p operations optimization โ devices net revenues for 2016 decreased by $ 9.5 million , or 26 % , to $ 26.7 million , compared to $ 36.3 million for 2015. this decrease in revenues was principally due to lower sales of new marine positioning products and lower marine replacement revenues on existing equipment . optimization software & services net revenues for 2016 decreased by $ 11.2 million , or 40 % , to $ 16.8 million , compared to $ 28.0 million for 2015. this decrease in revenues was due to a reduction in orca licensing revenues during 2016 , due to reduced activity by seismic contractors who have taken vessels out of service . e & p operations optimization gross profit for 2016 decreased by $ 12.6 million to $ 21.9 million , as adjusted , representing a 50 % gross margin , compared to $ 34.5 million , as adjusted , or a 54 % gross margin , for 2015. gross profit and gross margin decreased due to the significant reduction in revenues in 2016 compared to 2015. ocean bottom seismic services โ net revenues for 2016 were $ 36.4 million representing a 27 % gross margin , compared to zero revenues and gross margins for 2015 .
| results of operations year ended december 31 , 2017 ( as adjusted ) compared to year ended december 31 , 2016 ( as adjusted ) our total net revenues of $ 197.6 million for 2017 increased $ 24.8 million , or 14 % , compared to total net revenues of $ 172.8 million for 2016 . our overall gross profit percentage for 2017 was 38 % , compared to a gross profit percentage of 21 % , as adjusted , for 2016. total operating expenses as a percentage of net revenues for 2017 and 2016 were 40 % and 45 % , as adjusted , respectively . during 2017 , our loss from operations was $ 2.6 million , as adjusted , compared to a loss of $ 41.2 million , as adjusted , for 2016 . our net loss for 2017 was $ 19.1 million , as adjusted , or $ ( 1.61 ) per share , compared to net loss of $ 66.1 million , as adjusted , or $ ( 5.80 ) per share for 2016 . as noted above , our net loss for 2017 and 2016 included restructuring charges and other special items totaling $ 11.1 million and $ ( 1.0 ) million , respectively , impacting our earnings per share by $ 0.94 and $ ( 0.09 ) , respectively . net revenues , gross profits and gross margins ( as adjusted for 2016 ) e & p technology & services โ net revenues for 2017 increased by $ 64.4 million , or 69 % , to $ 157.2 million , compared to $ 92.9 million for 2016 . the increase was driven by new venture revenues from our 3-d multi-client reimaging programs offshore mexico and brazil , as well as revenues from a new 2-d multi-client program in panama and other programs that have recently been launched .
| 2,637 |
should one or more of these risks or uncertainties materialize , actual results may differ materially from those expressed or implied by the forward-looking statements . please see `` forward-looking statements '' elsewhere in this annual report on form 10-k for a description of these risks and uncertainties . overview we ( including , as required by context , healthcare trust operating partnership , l.p. ( the `` op '' ) and its subsidiaries ) invest in healthcare real estate , focusing on seniors housing and medical office buildings ( `` mob '' ) , located in the united states for investment purposes . as of december 31 , 2017 , we owned 185 properties located in 30 states and comprised of 9.0 million rentable square feet . we were incorporated on october 15 , 2012 as a maryland corporation that elected and qualified to be taxed as a real estate investment trust for u.s. federal income tax purposes ( `` reit '' ) beginning with our taxable year ended december 31 , 2013. substantially all of our business is conducted through the op . on march 30 , 2017 , our board of directors ( โ board โ ) approved a per share estimate of net asset value ( โ estimated per-share nav โ ) equal to $ 21.45 as of december 31 , 2016. we intend to publish an updated estimated per-share nav as of december 31 , 2017 shortly following the filing of this annual report on form 10-k and , thereafter , periodically at the discretion of the board , provided that such estimates will be made at least once annually . pursuant to the drip , our stockholders can elect to reinvest distributions by purchasing shares of our common stock at the then-current estimated per-share nav approved by the board . 52 we have no employees . healthcare trust advisors , llc ( the `` advisor '' ) has been retained by us to manage our affairs on a day-to-day basis . we have retained healthcare trust properties , llc ( the `` property manager '' ) to serve as our property manager . the advisor and property manager are under common control with ar global investments , llc ( the successor business to ar capital , llc , `` ar global '' ) , the parent of our sponsor , as a result of which they are related parties , and each have received or will receive compensation , fees and expense reimbursements for services related to managing of our business . the advisor , healthcare trust special limited partnership , llc ( the `` special limited partner '' ) and property manager also have received or will receive compensation , fees and expense reimbursements from us related to the investment and management of our assets . on december 22 , 2017 , we purchased all of the membership interests in indirect subsidiaries of american realty capital healthcare trust iii , inc. ( โ ht iii โ ) that own the 19 properties comprising substantially all of ht iii 's assets ( the โ asset purchase โ ) , pursuant to a purchase agreement ( the โ purchase agreement โ ) , dated as of june 16 , 2017. ht iii is sponsored and advised by an affiliate of our advisor . significant accounting estimates and critical accounting policies set forth below is a summary of the significant accounting estimates and critical accounting policies that management believes are important to the preparation of our financial statements . certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management . as a result , these estimates are subject to a degree of uncertainty . these significant accounting estimates and critical accounting policies include : revenue recognition our rental income is primarily related to rent received from tenants in our mobs and triple-net leased healthcare facilities . rent from tenants in our mob and triple-net leased healthcare facilities operating segments is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease . because many of the leases provide for rental increases at specified intervals , accounting principles generally accepted in the united states ( `` gaap '' ) require us to record a receivable , and include in revenues on a straight-line basis , unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease . when we acquire a property , the acquisition date is considered to be the commencement date for purposes of this calculation . for new leases after acquisition , the commencement date is considered to be the date the tenant takes control of the space . for lease modifications , the commencement date is considered to be the date the lease is executed . we defer the revenue related to lease payments received from tenants in advance of their due dates . cost recoveries from tenants are included in operating expense reimbursement in the period the related costs are incurred , as applicable . resident services and fee income primarily relates to rent from residents in our seniors housing โ operating properties ( `` shop '' ) held using a structure permitted by the reit investment diversification and empowerment act of 2007 and to fees for ancillary services performed for residents in our shops . rental income from residents of our shop operating segment is recognized as earned . residents pay monthly rent that covers occupancy of their unit and basic services , including utilities , meals and some housekeeping services . the terms of the rent are short term in nature , primarily month-to-month . fees for ancillary services are recorded in the period in which the services are performed . we defer the revenue related to lease payments received from tenants and residents in advance of their due dates . story_separator_special_tag impairment of long lived assets if circumstances indicate that the carrying value of a property may not be recoverable , we review the asset for impairment . this review is based on an estimate of the future undiscounted cash flows , excluding interest charges , expected to result from the property 's use and eventual disposition . these estimates consider factors such as expected future operating income , market and other applicable trends and residual value , as well as the effects of leasing demand , competition and other factors . if impairment exists due to the inability to recover the carrying value of a property , an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used . for properties held for sale , the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset . these assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income . recently issued accounting pronouncements see note 2 โ summary of significant accounting policies - recently issued accounting pronouncements to our audited consolidated financial statements in this annual report on form 10-k for further discussion . results of operations as of december 31 , 2017 , we operated in three reportable business segments for management and internal financial reporting purposes : medical office buildings , triple-net leased healthcare facilities , and seniors housing โ operating properties . in our mob operating segment , we own , manage and lease , through our property manager or third party property managers , single and multi-tenant mobs where tenants are required to pay their pro rata share of property operating expenses , which may be subject to expense exclusions and floors , in addition to base rent . in our triple-net leased healthcare facilities operating segment , we own , manage and lease seniors housing communities , hospitals , post-acute care and skilled nursing facilities throughout the united states under long-term triple-net leases , which tenants are generally directly responsible for all operating costs of the respective properties . in our shop operating segment , we invest in seniors housing communities under a structure permitted by the reit investment diversification empowerment act of 2007 ( `` ridea '' ) . under ridea , a reit may lease qualified healthcare properties on an arm 's length basis to a taxable reit subsidiary ( `` trs '' ) if the property is operated on behalf of such subsidiary by an entity who qualifies as an eligible independent contractor . as of december 31 , 2017 , we had 11 eligible independent contractors operating 52 shop properties . all of our properties across all three business segments are located throughout the united states . net operating income ( `` noi '' ) is a non-gaap financial measure used by us to evaluate the operating performance of our real estate portfolio . noi is equal to total revenues , excluding contingent purchase price consideration , less property operating and maintenance expense . noi excludes all other financial statement amounts included in net income ( loss ) . we believe noi provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis . see โ non-gaap financial measures โ included elsewhere in this annual report on form 10-k for additional disclosures regarding noi and a reconciliation to our net income ( loss ) attributable to stockholders , as computed in accordance with gaap . as of december 31 , 2017 , we owned 185 properties . there were 162 properties ( our `` same store '' properties ) owned for the entire year ended december 31 , 2017 , including two vacant land parcels and one property under development . during the year ended december 31 , 2017 , we acquired twenty mobs , one triple-net leased healthcare facility , and two shops ( our `` acquisitions '' ) . we disposed of one mob and two triple-net leased healthcare facilities during the year ended december 31 , 2016 and one mob during the year ended december 31 , 2017 ( four properties in total , our `` dispositions '' ) . 54 the following table presents a roll-forward of our properties owned from january 1 , 2016 to december 31 , 2017 : replace_table_token_16_th _ ( 1 ) includes 12 properties that were transitioned from our triple-net leased healthcare facilities segment to our shop segment during the year ended december 31 , 2017 . for purposes of the segment reporting below , these properties were treated as acquisitions in the shop segment and dispositions in the triple-net leased healthcare facilities segment . see below for further details on the transition of these properties . on june 8 , 2017 , our trs acquired 12 operating entities that leased twelve healthcare facilities included in our triple-net leased healthcare facilities segment . concurrently with the acquisition of the 12 operating entities , we transitioned the management of the healthcare facilities to a third-party management company that manages other healthcare facilities in our shop segment . as a part of the transition , our subsidiary property companies executed leases with the acquired operating entities and the acquired operating entities executed management agreements with the management company under the ridea structure . as a part of the transition of operations , we now control the operating entities that hold the operating licenses for these healthcare facilities . the results of operations of these properties are included in the dispositions under our triple-net leased healthcare facilities segment through june 7 , 2017 and results of operations since june 8 , 2017 are included in acquisitions under our shop segment .
| other results of operations contingent purchase price consideration during the years ended december 31 , 2016 and 2015 , we recognized $ 0.1 million and $ 0.6 million , respectively , which primarily related to contingent purchase price consideration in connection with holdback and other vacancy escrow arrangements associated with two acquisitions . contingent purchase price consideration during the year ended december 31 , 2016 related to releases from a holdback escrow for unit renovations at one of our shops , partially offset by the settlement of certain property operating expenses related to vacancy escrow agreements at one acquisition which resulted in us making payments to the seller . contingent purchase price consideration during the year ended december 31 , 2015 related to releases from escrow under a vacancy escrow arrangement at two of our mobs . based on facts and circumstances that existed at the time of acquisition , we determined that it was not probable that we would recover certain amounts placed into escrow under vacancy escrow agreements . however , the vacant leasable space under the vacancy escrow agreements was not occupied as of the agreed upon dates , which resulted in the return of escrowed funds to us and the recognition of contingent purchase price consideration . impairment on sale of real estate investments impairment on sale of real estate investments for the year ended december 31 , 2016 related to two real estate investments held for sale with an accepted sale price less than the carrying value . the aggregate sale price of two real estate investments located in kansas city , missouri was $ 8.8 million , which resulted in an impairment of $ 0.4 million during the period .
| 2,638 |
as provided in story_separator_special_tag the following discussion and analysis is related to our financial condition and results of operations for the three years ended december 31 , 2017. this information should be read in conjunction with item 6 โ โ selected financial data โ and our consolidated financial statements and related notes thereto beginning on f-1 of this form 10-k. statement of forward-looking information certain statements in the section are โ forward-looking statements โ . you should read the information in โ cautionary statement regarding forward-looking statements โ set forth before part i of this report above for more information about our presentation of information . 37 fair value we have issued warrants ( the โ warrants โ ) in august 2016 , february 2017 , june 2017 and august 2017 that are single compound derivatives containing both an embedded right to obtain stock upon exercise ( a โ call โ ) and a series of embedded rights to settle the warrants for cash upon the occurrence of certain events ( each , a โ put โ ) . generally , the put provisions allow the warrant holders liquidity protection ; the right to receive cash in certain situations where the holders would not have a means of readily selling the shares issuable upon exercise of the warrants ( e.g. , where there would no longer be a significant public market for our common stock ) . however , because the contractual formula used to determine the cash settlement value of the embedded put requires use of certain assumptions , the cash settlement value of the embedded put can differ from the fair value of the unexercised embedded call option at the time the embedded put option is exercised . we recompute the fair value of the warrants at the end of each quarterly reporting period . such value computation includes subjective input assumptions that are consistently applied each period . if we were to alter our assumptions or the numbers input based on such assumptions , the resulting fair value could be materially different . story_separator_special_tag style= '' font-family : times new roman , times , serif ; font-size : 10pt '' > 6 ) an increase in general and administrative expense of approximately $ 534,000 or 7 % . net loss per share was $ ( 0.34 ) and $ ( 0.77 ) for the year ended december 31 , 2016 and 2015 , respectively . the weighted average number of shares of our common stock outstanding as of december 31 , 2016 was 21,818,206 as compared to 19,679,315 as of december 31 , 2015. revenues revenues from our ampligenยฎ cost recovery program were $ 92,000 and $ 133,000 for the year ended december 31 , 2016 and 2015 , respectively . for the years ended december 31 , 2016 and 2015 , we had no alferon n injectionยฎ finished good product to commercially sell and all revenue was generated from the fda approved open-label treatment protocol , ( โ amp-511 โ ) , that allows patient access to ampligenยฎ for treatment in an open-label safety study . production costs production costs were approximately $ 1,108,000 and 1,598,000 , respectively , for the years ended december 31 , 2016 and 2015. this decrease of approximately $ 490,000 or 31 % was primarily due to a decline in ongoing stability testing on alferonยฎ work-in-process inventory . research and development costs overall research and development ( โ r & d โ ) costs for the year ended december 31 , 2016 were approximately $ 5,107,000 as compared to $ 8,038,000 for the same period a year ago , reflecting a decrease of approximately $ 2,931,000 or 36 % . the primary reason for the decrease in research and development costs was due to a decrease in general r & d expenses of approximately $ 2,489,000 including alferon n injectionยฎ compliance testing and clinical work and a decrease in executive salaries and wages of approximately $ 1,478,000. this was offset by a general net increase in r & d expenses of approximately $ 916,000 associated with ampligenยฎ . these decreases in general r & d expenses were mainly the result of implementing a strong financial austerity plan whereby we conducted an analysis of our research and development programs and our staffing levels within our new jersey manufacturing facility . 40 general and administrative expenses general and administrative ( โ g & a โ ) expenses for the years ended december 31 , 2016 and 2015 , were approximately $ 7,681,000 and $ 7,147,000 , respectively , reflecting an increase of approximately $ 534,000 or 7 % . the increase in g & a expenses in 2016 was mainly due to higher salaries and wages and severance related costs in the current period . interest and other income interest and other income for the years ended december 31 , 2016 and 2015 were approximately $ 129,000 and $ 364,000 , respectively , representing a decrease of approximately $ 235,000 or 65 % . the primary cause for the decrease in investment income during the current period was primarily due to lower balances available to invest in the current period as compared to the prior period . insurance settlement net of litigation expenses we recorded a net insurance settlement of $ 1,626,000 during the year ended december 31 , 2016 which resulted from the legal settlements of various class action lawsuits during the current period . insurance proceeds received of $ 3,726,000 were offset by litigation settlement expenses of $ 2,100,000. there were no such expenses in the prior period ( see โ part i ; item 3 : legal proceedings โ for details ) . loss on sale of marketable securities loss on sale of marketable securities was $ 0 and $ 315,000 , respectively , for the years ended december 31 , 2016 and 2015. our securities sold during the current period resulted in net realized losses . story_separator_special_tag this program was also terminated as of august 31 , 2017. as of september 1 , 2017 , certain officers agreed to defer 40 % of their salaries until cash is available and all employees agreed to be paid 50 % of their salaries in the form of unrestricted common stock of the company . we are committed to a focused business plan oriented toward finding senior co-development partners with the capital and expertise needed to commercialize the many potential therapeutic aspects of our experimental drugs and our fda approved drug alferonยฎ . we reactivated our equity distribution agreement with maxim group llc ( the โ eda โ ) under our universal shelf registration statement in december 2017. since december 5 , 2017 , we have sold an aggregate of 2,003,563 shares under the eda for proceeds of $ 853,000 net of $ 26,000 in commissions . pursuant to our prospectus supplement dated february 7 , 2018 , we are currently able to sell up to 6,549,157 of our common stock ( inclusive of the above shares sold to date ) under the eda . the actual number of shares that we can sell and the proceeds to be received therefrom are dependent upon the market price of our common stock . in february 2017 , we entered into securities purchase agreements ( each , a โ purchase agreement โ ) with certain investors for the sale by us of 1,818,185 shares of our common stock at a purchase price of $ 0.55 per share . concurrently with the sale of the common stock , pursuant to the purchase agreement , we also sold warrants to purchase 1,363,639 shares of common stock for aggregate net proceeds of approximately $ 875,000. we also issued placement agent warrants for the purchase of an aggregate of 90,910 shares of our common stock . in may 2017 , we entered into a mortgage and note payable agreement with a bridge funding company to obtain a two-year funding line of up to $ 4,000,000 secured by our assets and property located at 783 jersey ave. , new brunswick , new jersey . we paid interest on this note at a fixed rate of 12 % per annum . we were permitted to prepay the line without penalty commencing after six months . the balance on this note was $ 1,835,000 as of december 31 , 2017 , however , it was paid off on march 16 , 2018 in conjunction with the sale of 783 jersey ave. on march 16 , 2018 , we sold our property located at 783 jersey ave , new brunswick , nj for $ 4,080,000 and the purchasers received 3,225,806 warrants to purchase common stock . simultaneously therewith , we leased the facility back . see โ part 2. properties. โ in february 2018 , the company sold the unencumbered , unutilized , and wholly owned property located at 5 jules lane , new brunswick , new jersey to acellories , nj llc , a new jersey limited liability company , pursuant to a sale agreement dated september , 11 , 2017. the sale price was $ 1,050,000. in june 2017 , pursuant to an offer ( the โ exchange transaction โ ) to the holders of warrants issued to investors in september 2016 ( the โ 2016 warrants โ ) , the exercise price of the 2016 warrants was changed to $ 0.50. as a result the warrant holders exercised 2016 warrants and purchased 2,370,000 shares of company common stock . the company realized net proceeds of $ 1,055,000 from this exercise . as part of the exchange transaction , the company issued 2,370,000 series a warrants with an exercise price of $ 0.60 per share , an initial exercise date of december 1 , 2017 and expiring march 6 , 2022 , and 7,584,000 series b warrants with an exercise price of $ 0.60 , an initial exercise date of december 1 , 2017 per share and expiring march 1 , 2018. these warrants were exercised in january and february 2018 for proceeds of $ 1,260,000. in addition , in july 2017 , the warrant holders exercised the remaining 130,000 2016 warrants and purchased 130,000 shares of common stock . the company realized net proceeds of $ 65,000 from this exercise . in conjunction with the foregoing the company issued 130,000 series a warrants with an exercise price of $ 0.60 per share and an initial exercise date of january 10 , 2018 and expiring march 6 , 2022 , and 416,000 series b warrants with an exercise price of $ 0.60 and an initial exercise date of january 10 , 2018 . 43 in august 2017 , the holders of the series a warrants and series b warrants exchanged all of their series a warrants and series b warrants for new warrants ( respectively , the โ series a exchange warrants โ and the โ series b exchange warrants โ and , collectively , the โ exchange warrants โ ) identical to the series a warrants and series b warrants except as follows : the exercise price of both exchange warrants is $ 0.45 per share , subject to adjustment therein , and the number of series b exchange warrants issued was proportionately reduced so that all exchange warrants in the exchange transaction do not exceed 19.9 % of the number of the company 's issued and outstanding shares of common stock as of may 31 , 2017 , the date of the exchange transaction offer letters . the issuance of the exchange warrants by the company and the shares of common stock issuable upon exercise of the exchange warrants is exempt from registration pursuant to sections 3 ( a ) ( 9 ) and 4 ( a ) ( 2 ) of the securities act of 1933 , as amended ( the โ securities act โ ) .
| results of operations year ended december 31 , 2017 versus year ended december 31 , 2016 our net loss was approximately $ 8,259,000 and $ 7,502,000 for the years ended december 31 , 2017 and 2016 , respectively , representing an increase in loss of approximately $ 757,000 or 10 % when compared to the same period in 2016. this increase in loss for the year ended december 31 , 2017 was primarily due to the following : replace_table_token_6_th net loss per share was $ ( 0.29 ) and $ ( 0.34 ) for the years ended december 31 , 2017 and 2016 , respectively . the weighted average number of shares of our common stock outstanding as of december 31 , 2017 was 28,676,076 as compared to 21,818,206 as of december 31 , 2016. revenues revenues from our ampligenยฎ cost recovery program were $ 437,000 and $ 92,000 for the years ended december 31 , 2017 and 2016 , respectively . the increase in revenues of $ 345,000 , an increase of 375 % , between periods was primarily due to our eap through our agreement with mytomorrows designed to enable access of ampligenยฎ to pancreatic cancer patients in the netherlands . for the years ended december 31 , 2017 and 2016 , we had no alferon n injectionยฎ finished good product to commercially sell and all revenue was generated from the eap and our fda approved open-label treatment protocol , ( โ amp 511 โ ) , that allows patient access to ampligenยฎ for treatment in an open-label safety study . 38 production costs production costs were approximately $ 1,183,000 and $ 1,108,000 , respectively , for the years ended december 31 , 2017 and 2016 , representing an increase of $ 75,000 in production costs in the current period . these costs primarily represent stability testing and pre-production expenses related to alferonยฎ .
| 2,639 |
the remaining net periodic benefit cost was $ 4.8 million at december 31 , story_separator_special_tag overview in 2015 and 2014 , net income was $ 45.0 million and $ 56.7 million , respectively . diluted earnings per share decreased $ 0.25 to $ 0.94 or 21.0 % from 2014 to 2015. net income decreased $ 11.7 million mostly due to a decrease in estimated unbilled revenue of $ 4.9 million in 2015 , a $ 4.8 million tax benefit in 2014 that did not recur in 2015 , and increases in drought-related costs in 2015. the decrease to net income was partially offset by decreases in water treatment and uninsured loss expenses . the decrease in the estimated unbilled revenue was driven by a reduction in customer consumption associated with the california drought and water conservation programs . estimated unbilled revenue , which includes estimates of unbilled drought surcharges , is not included in the wram until it is billed . unbilled revenue is seasonal and the pattern of estimated unbilled revenue changes can fluctuate on a year-to-year basis . net other income decreased $ 0.7 million to $ 1.1 million in 2015 due primarily to an unrealized loss on our benefit plan insurance investments . in 2014 and 2013 , net income was $ 56.7 million and $ 47.3 million , respectively . diluted earnings per share increased $ 0.17 to $ 1.19 or 16.7 % from 2013 to 2014. net income increased $ 9.5 million mostly due to incremental revenue with the approval of our 2012 grc in california , a $ 4.8 million tax benefit in 2014 and reductions to administrative and general , other operations , net interest , and property tax expenses . we achieved these cost reductions primarily because we operated within our budget in 2014. the increase to net income was partially offset by increases in employee wages , income tax , maintenance , and depreciation and amortization expenses and a reduction to other income . we plan to continue to seek rate relief to recover our operating cost increases and receive reasonable returns on invested capital . we expect to fund our long-term capital needs through a combination of debt , common stock offerings , and cash flow from operations . critical accounting policies and estimates we maintain our accounting records in accordance with accounting principles generally accepted in the united states of america and as directed by the commissions to which our operations are subject . the process of preparing financial statements requires the use of estimates on the part of management . the estimates used by management are based on historic experience and an understanding of current facts and circumstances . a summary of our significant accounting policies is listed in note 2 of the notes to consolidated financial statements . the following sections describe those policies where the level of subjectivity , judgment , and variability of estimates could have a material impact on the financial condition , operating performance , and cash flows of the business . revenue recognition revenue generally includes monthly cycle customer billings for regulated water and wastewater services at rates authorized by the commissions ( plus an estimate for water used between the customer 's last meter reading and the end of the accounting period ) and billings to certain non-regulated customers at rates authorized by contract with government agencies . the company 's regulated water and waste water revenue requirements are authorized by the commissions in the states in which we operate . the revenue requirements are intended to provide the company a reasonable opportunity to recover its cost of service and earn a return on investments . for metered customers , cal water recognizes revenue from rates which are designed and authorized by the cpuc . under the wram , cal water records the adopted level of volumetric revenues , which would include recovery of cost of service and a return on investments as established by the cpuc for metered accounts . the adopted volumetric revenue considers the seasonality of consumption of water based upon historical averages . the variance between adopted volumetric revenues and actual billed volumetric revenues for metered accounts is recorded as a component of revenue with an offsetting entry to a regulatory asset or liability balancing account ( tracked individually for each cal water district ) subject to certain criteria under the accounting for regulated operations . the variance amount represents amounts that will be billed or refunded to customers in the future . in addition to volumetric revenues , the revenue requirements approved by the cpuc include service charges , flat rate charges , and other items not subject to the wram . cost-recovery rates are designed to permit full recovery of certain costs allowed to be recovered by the commissions . cost-recovery rates such as the mcba provides for recovery of adopted expense levels for purchased water , purchased power and pump taxes , as established by the cpuc . in addition , cost-recovery rates include recovery of cost related to water conservation programs and certain other operating expenses adopted by the cpuc . variances ( which include the effects of changes in both rate and volume for the mcba ) between adopted and actual costs are recorded as a component of revenue , as the amount of such variances will 31 be recovered from or refunded to our customers at a later date . cost-recovery expenses are generally recognized when the expenses are incurred with no markup for return or profit . the balances in the wram and mcba assets and liabilities accounts will fluctuate on a monthly basis depending upon the variance between adopted and actual results . the recovery or refund of the wram is netted against the mcba over- or under-recovery for the corresponding district and the deferred net balances are interest bearing at the current 90 day commercial paper rate . at the end of the calendar year , cal water files with the cpuc to refund or collect the balance in the accounts . story_separator_special_tag the total federal nol carry-forward was $ 43.9 million and the state nol carry-forward was $ 58.2 million as of december 31 , 2015 net of any unrecognized tax benefit . management has concluded that the nol carry-forward amounts are more likely than not to be recovered and therefore require no valuation allowance . the nol carry-forward will begin to expire in 2032. as of december 31 , 2015 we recorded unrecognized tax benefits of approximately $ 10.3 million . included in the balance of unrecognized tax benefits is approximately $ 2.1 million of tax benefits that , if recognized , would result in an adjustment to the company 's effective tax rate . the company does not expect its unrecognized tax benefits to change significantly within the next 12 months . pension and postretirement health care benefits we incur costs associated with our pension and postretirement health care benefits plans . to measure the expense of these benefits , our management must estimate compensation increases , mortality rates , future health cost increases and discount rates used to value related liabilities and to determine appropriate funding . different estimates used by our management could result in significant variances in the cost recognized for pension and postretirement health care benefit plans . the estimates used are based on historical experience , current facts , future expectations , and recommendations from independent advisors and actuaries . we use an investment advisor to provide advice in managing the plan 's investments . we anticipate any increases in funding for the pension benefits plans will be recovered in future rate filings , thereby mitigating the financial impact . we believe it is probable that future costs will be recovered in future rates and therefore have recorded a regulatory asset in accordance with generally accepted accounting principles . changes to the pension benefits actuarial assumptions can significantly affect pension costs , regulatory assets , and liabilities . the following table reflects the sensitivity of pension amounts reported for the year ended december 31 , 2015 , to changes in actuarial assumptions : replace_table_token_9_th 33 story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > , purchased power expense decreased $ 5.2 million , or 15.7 % mainly due to 16.4 % decrease in water production . in 2014 , purchased power expense increased $ 0.9 million , or 2.8 % primarily due to power supplier rate increases . changes in climate change regulations could increase the cost of purchased power which in turn would result in an increase in the rates our power suppliers charge us . any change in pricing of our purchased power in california would be recovered from our customers by the mcba . any change in power costs in other states would be requested to be recovered by the customers in those states . the impact of such legislation , is dependent upon the enacted date , the factors that impact our suppliers cost structure , and their ability to pass the costs to us in their approved tariffs . these items are not known at this time . administrative and general expenses administrative and general expenses include payroll related to administrative and general functions , all employee benefits charged to expense accounts , insurance expenses , legal fees , expenses associated with being a public company , and general corporate expenses . during 2015 , administrative and general expenses increased $ 15.7 million or 16.2 % , as compared to 2014. the increase was mostly due to increases in employee pension and other postretirement benefit costs of $ 11.9 million , employee wage increases of $ 2.3 million , and drought-related expense increases of $ 3.3 million . these cost increases were partially offset by a $ 2.4 million decrease in employee health care costs , $ 1.6 million decrease in uninsured losses , and $ 1.0 million decrease in outside services . wage increases became effective january 1 , 2015. employee pension benefit expenses are fully recovered in rates and are tracked in a balancing account , such that revenues are recovered on a dollar-for-dollar basis up to the amounts authorized in the 2012 grc . employee and retiree medical expenses are recovered in rates up to 85 % of adopted values and are tracked in a balancing account as authorized in the 2012 grc . during 2014 , administrative and general expenses decreased $ 0.7 million or 0.7 % , as compared to 2013. the decrease was mostly due to decreases in employee pension benefit costs which were partially offset by increases to health care costs , outside service fees , and business insurance costs . employee pension benefit expenses are fully recovered in rates and are tracked in a balancing account , such that revenues are recovered on a dollar-for-dollar basis up to the amounts authorized in the 2012 grc . employee and retiree medical expenses are recovered in rates up to 85 % of adopted values and are tracked in a balancing account as authorized in the 2012 grc . 35 other operations expenses the components of other operations expenses include payroll , material and supplies , and contract service costs of operating the regulated water systems , including the costs associated with water transmission and distribution , pumping , water quality , meter reading , billing , operations of district offices , and water conservation programs . during 2015 , other operating expenses increased $ 1.4 million , or 2.2 % , compared to 2014. the increase was mostly due to conservation program expense increases of $ 3.2 million , employee wage increases of $ 1.4 million , and drought-related expense increases of $ 0.6 million which was partially offset by water treatment cost decreases of $ 2.1 million . conservation program expenses are fully recovered in rates and are tracked in a balancing account , such that revenues are recovered on a dollar-for-dollar basis up to the amounts authorized in the 2012 grc .
| results of operations operating revenue operating revenue in 2015 was $ 588.4 million , a decrease of $ 9.1 million , or 1.5 % , over 2014. operating revenue in 2014 was $ 597.5 million , an increase of $ 13.4 million , or 2.3 % , over 2013. the estimated sources of changes in operating revenue were : replace_table_token_10_th _ ( 1 ) the operating revenue increase in 2015 resulted from rate increases ( see table in rates and regulation section below ) which was partially offset by a $ 7.3 million reduction in estimated unbilled revenue in 2015 mostly due to a decrease in customer consumption and the cal water 2012 grc decision rate design changes in 2014. in 2014 , operating revenue increase is due to rate increases ( see table in rates and regulation section below ) and an increase of $ 5.1 million in estimated unbilled revenue mostly due to rate design changes in cal water 2012 grc decision . ( 2 ) the mcba revenue decrease in 2015 resulted from a significant reduction in customer consumption in california caused by drought conditions . as required by the mcba mechanism , the reduction to water production costs in california also reduced operating revenue in the same amount . in 2014 , the operating revenue increases were because of an increase in water production costs compared to adopted water production costs . ( 3 ) the other balancing accounts revenue consists of the pension , conservation and health care balancing account revenues . pension and conservation balancing account revenues are the differences between actual expenses and adopted rate recovery . health care balancing account revenue is 85 % of the difference between actual health care expenses and adopted rate recovery . in 2015 , the increase in revenue was due to an increase in pension expense and an increase in conservation spending .
| 2,640 |
our actual results could differ materially from those anticipated by this forward-looking information . factors that may cause such differences include , but are not limited to , those discussed under the heading , ยrisk factors , ย and elsewhere in this report . ยmanagement 's discussion and analysis of financial condition and results of operationsย should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this report . overview our business , industry and target market imergent , inc. is incorporated under the laws of delaware and is an eservices company that provides ecommerce technology , training and a variety of web-based technologies and resources including search engine optimization and search engine management services to entrepreneurs and small , medium , and large enterprises . our eservices offerings leverage industry and client practices and are designed to help increase the predictability of success for internet merchants . our services are also designed to help decrease the risks associated with ecommerce implementation by providing low-cost , scalable solutions with ongoing industry updates and support . our strategic vision is to remain an ecommerce provider focused on our target markets . we sell and market our products and services in the united states and international ( english-speaking ) markets , including canada , the uk , australia , new zealand , and singapore . fluctuations in quarterly results and seasonality in view of our revenue recognition policies as required by u.s. generally accepted accounting principles ( us gaap ) and the rapidly evolving nature of our business and the markets we serve , we believe period-to-period comparisons of our operating results , including operating expenses as a percentage of revenues and cash flows , are not necessarily meaningful and should not be relied upon as an indication of future performance . we operate with a june 30 fiscal year end and we experience seasonality in our business . historically , revenues from our core business during the first fiscal quarter were lower than revenues during our second , third and fourth fiscal quarters . we believe this to be attributable to summer vacations that occur during our first fiscal quarter . we strive to mitigate seasonal fluctuations in our business by conducting workshops in non-seasonal markets throughout the world during periods of seasonality in our primary markets . developments impacting results of operations and cash flows in september 2006 , the board of directors authorized the repurchase of up to $ 20,000,000 of the company 's common stock . in september 2007 , the company 's board of directors authorized the repurchase of an additional $ 50,000,000 of the company 's common stock , bringing the total amount authorized for repurchase to $ 70,000,000 through september 2012. during the years ended june 30 , 2009 , 2008 and 2007 , the company repurchased 109,100 , 948,297 and 654,398 shares of common stock for $ 734,000 , $ 12,581,000 and $ 13,745,000 , respectively . as of june 30 , 2009 , $ 42,940,000 remained of the $ 70,000,000 approved repurchase amount . in march 2007 , the board of directors authorized the initiation of a quarterly cash dividend of $ 0.10 per common share . in september 2007 , the board of directors increased the quarterly cash dividend to $ 0.11 per common share . in december 2008 , the board of directors decreased the quarterly cash dividend to $ 0.02 per common share . for the years ended june 30 , 2009 , 2008 , and 2007 , $ 1,943,000 , $ 5,113,000 , and $ 2,442,000 of dividends were declared and paid to common stockholders . temporary injunction in california in august 2007 , the superior court of california , county of ventura , issued a temporary restraining order against us which prohibited us from conducting business in the state of california until , among other things , we register under the california seller assisted marketing plans ( ยsampย ) act . in march 2009 , the company and the office of the district attorney of ventura county , california and the attorney general of the state of california agreed on a settlement in which the company agreed to register as a samp seller and agreed to certain actions intended to clarify its business practices as well as provide certain notices and information to the state of california . the company is no longer limited in its ability to conduct business in the state of california . for the year ended june 30 , 2007 , sales in california represented approximately 12 % of our total revenue . for the years ended june 30 , 2009 and 2008 , we had an insignificant amount of sales in california . launch of crexendo business solutions division in march 2009 , we launched our crexendo business solutions division with a focus on providing customized website design , hosting , search engine optimization and search engine management services to the small , medium , and large enterprises . unlike our storesonline division , which utilizes a two-step training event go to market strategy , crexendo business solutions ' go-to market 21 strategy utilizes a network of value added resellers ( ยvarsย ) along with inside telephone sales reps to reach our target market . as of june 30 , 2009 , we have reseller agreements with 10 vars . no revenue was generated from our crexendo business solutions division for the year ended june 30 , 2009. launch of crexendo network services in february 2009 , we launched our crexendo network services division with a focus on providing hosted telecom solutions to the small , medium , and large enterprises . crexendo network services is in the development phase with an anticipated product launch in calendar 2010. crexendo network services will be marketed through both our crexendo business solutions and storesonline divisions . story_separator_special_tag fees related to epta contracts are deferred and recognized as revenue during the service period or when cash is collected , whichever occurs later . in april 2007 , the company began marketing and selling avail 24/7 , an all-in-one communications service which assists small businesses and entrepreneurs to manage phone menus , voicemail , email , and fax in one online application . customers purchasing the avail product are charged a non-refundable activation fee along with a monthly service fee . the non-refundable activation fee is deferred and recognized ratably over the estimated customer life , which is currently estimated to be four and one half years . the monthly service fee is recognized ratably over the service period . allowance for doubtful accounts since 1999 , the company has offered to its customers the option to finance , through eptas , purchases made at the internet training workshops . the company records the receivable and deferred revenue , along with an allowance for doubtful accounts , at the time the epta contract is perfected . the allowance represents estimated losses resulting from the customers ' failure to make required payments . the allowances for doubtful accounts for eptas retained by the company are netted against the current and long-term trade receivable balances in the consolidated balance sheets . all allowance estimates are based on historical collection experience , specific identification of probable bad debts based on collection efforts , aging of trade receivables , customer payment history , and other known factors , including current economic conditions . if allowances prove inadequate , additional allowances would be required . because revenue generated from customers financing through eptas is deferred and not recognized prior to the collection of cash , adjustments to allowances for doubtful accounts are made through deferred revenue and do not impact operating income or loss . trade receivables are written-off against the allowance when the related customers are no longer making required payments and the trade receivables are determined to be uncollectible , typically 90 days past their original due date . income taxes in preparing our consolidated financial statements , we are required to estimate our income taxes in each of the jurisdictions in which we operate . this process involves estimating current income tax liabilities together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes . these temporary differences result in deferred income tax assets and liabilities . our deferred income tax assets consist primarily of the future benefit of net operating loss carryforwards , certain deferred revenue , accrued expenses and tax credit carryforwards . under fin no . 48 , we may recognize the tax benefits from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by the taxing authorities , based on the technical merits of the position . 23 story_separator_special_tag ยrecognition periodย ) . we had previously determined we had sufficient built-in gains to offset future income without limitation . as a result of the settlement reached with the irs , we conceded that the fiscal 2002 ownership change resulted in a section 382 limitation of $ 461,000 per year and that there were not sufficient built-in gains to offset future income . based on this settlement , we have determined that it is more likely than not that approximately $ 14,641,000 of our federal nol carry forwards will expire unutilized . accordingly , during fiscal 2009 , we recorded a valuation allowance of $ 5,124,000 related to these federal nol carry forwards . ยท the irs argued to re-open our income tax returns for the fiscal years ended june 30 , 2004 and 2003 , both of which are closed from examination . the irs argued that under section 481 ( a ) there was a change in ยmethod of accountingย with respect to our recognized built-in-gains described above . as part of the settlement , the irs appeals office found no merit to the assertion that section 481 ( a ) can be applied to the fiscal 2004 and 2003 tax returns . therefore , no liabilities are recognized in the consolidated financial statements related to this issue . 25 fiscal year ended june 30 , 2008 compared to fiscal year ended june 30 , 2007 revenues revenues for the fiscal year ended june 30 , 2008 ( ยfiscal 2008ย ) decreased 16 % to $ 128,048,000 from $ 151,617,000 for the fiscal year ended june 30 , 2007 ( ยfiscal 2007ย ) . product and other revenues decreased 23 % to $ 97,141,000 for fiscal 2008 from $ 125,552,000 for fiscal 2007. the following table summarizes the activity within deferred revenue for the years ended june 30 : replace_table_token_6_th revenues related to cash collected under epta agreements included in product and other revenues increased to $ 33,970,000 in fiscal 2008 compared to $ 21,775,000 in fiscal 2007. this increase was offset by a decrease in product and other revenues from fiscal 2008 compared to fiscal 2007 and are primarily related to a decrease in cash sales of sos licenses at workshop and preview events which decreased to $ 61,487,000 in fiscal 2008 compared to $ 91,222,000 in fiscal 2007. the decrease in revenues from fiscal 2008 compared to fiscal 2007 is attributable to the following factors : ( 1 ) the number of internet training workshops conducted during fiscal 2008 decreased to 1,028 ( including 184 that were held outside the united states ) compared to 1,193 ( including 264 that were held outside the united states ) during fiscal 2007 , ( 2 ) the average number of buying units in attendance at our workshops during fiscal 2008 was 84 compared to 95 during fiscal 2007. persons who pay an enrollment fee to attend our workshops are allowed to bring a guest at no additional charge , and that individual and his/her guest constitute one buying unit .
| results of operations fiscal year ended june 30 , 2009 compared to fiscal year ended june 30 , 2008 revenues revenues for the fiscal year ended june 30 , 2009 ( ยfiscal 2009ย ) decreased 26 % to $ 94,411,000 from $ 128,048,000 for the fiscal year ended june 30 , 2008 ( ยfiscal 2008ย ) . product and other revenue decreased 29 % to $ 68,664,000 for fiscal 2009 from $ 97,141,000 for fiscal 2008. the following table summarizes the activity within deferred revenue for the years ended june 30 : replace_table_token_5_th fees for sos licenses sold under eptas are recognized as revenue as cash payments are received from the customer and not at the time of sale . revenues related to cash collected under epta agreements included in product and other revenue decreased to $ 30,131,000 for fiscal 2009 compared to $ 33,970,000 for fiscal 2008. the remaining decrease in product and other revenues from fiscal 2009 compared to fiscal 2008 is primarily related to a decrease in cash sales of sos licenses at workshop and preview events which decreased to $ 37,395,000 in fiscal 2009 compared to $ 61,487,000 in fiscal 2008. the decrease is attributable to : ( 1 ) the number of internet training workshops conducted during fiscal 2009 decreased 24 % to 783 ( including 81 that were held outside the united states ) compared to 1,028 ( including 184 that were held outside the united states ) during fiscal 2008 , ( 2 ) the average number of buying units in attendance at our workshops during fiscal 2009 was relatively constant at 85 compared to 84 during fiscal 2008. persons who pay an enrollment fee to attend our workshops are allowed to bring a guest at no additional charge , and that individual and his/her guest constitute one buying unit .
| 2,641 |
if we undergo a fundamental change , as defined in the indenture , prior to the maturity date of the notes , holders may require us to repurchase for cash all or any portion of the notes at a fundamental change repurchase price equal to 100 % of the principal amount of the notes to be repurchased , plus story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing at the end of this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this annual report on form 10-k , including information with respect to our plans and strategy for our business and related financing , includes forward-looking statements that involve risks and uncertainties . you should read the โ risk factors โ section of this report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . 45 overview we are a biopharmaceutical company focused on acquiring , developing and commercializing innovative anti-cancer agents in the united states , europe and additional international markets . we target our development programs for the treatment of specific subsets of cancer populations and seek to simultaneously develop , with partners , companion diagnostics that direct our product candidates to the patients that are most likely to benefit from their use . we are currently developing three product candidates : ยท rociletinib , an oral epidermal growth factor receptor ( โ egfr โ ) , mutant-selective covalent inhibitor that is in advanced clinical development for the treatment of non-small cell lung cancer ( โ nsclc โ ) in patients with activating egfr mutations , as well as the primary resistance mutation , t790m ; ยท rucaparib , an oral inhibitor of poly ( adp-ribose ) polymerase ( โ parp โ ) that is currently in advanced clinical development for the treatment of ovarian cancer ; and ยท lucitanib , an oral , potent inhibitor of the tyrosine kinase activity of fibroblast growth factor receptors 1-3 ( โ fgfr1-3 โ ) , vascular endothelial growth factor receptors 1-3 ( โ vegfr1-3 โ ) and platelet-derived growth factor receptors alpha and beta ( โ pdgfr a /ร โ ) that is currently in phase ii development for the treatment of breast and lung cancers . we hold global development and commercialization rights for rociletinib and rucaparib . for lucitanib , we hold development and commercialization rights in the u.s. and japan and have sublicensed rights to europe and rest of world markets , excluding china , to les laboratoires ( โ servier โ ) . we commenced operations in april 2009. to date , we have devoted substantially all of our resources to identifying and in-licensing product candidates , performing development activities with respect to those product candidates and the general and administrative support of these operations . through december 31 , 2014 , we have generated $ 13.6 million in license and milestone revenue related to our collaboration and license agreement with servier , but have generated no product revenues . we have principally funded our operations using the net proceeds from the sale of convertible preferred stock , the issuance of convertible promissory notes , public offerings of our common stock and our convertible senior notes offering . we have never been profitable and , as of december 31 , 2014 , we had an accumulated deficit of $ 429.0 million . we incurred losses of $ 160.0 million , $ 84.5 million and $ 74.0 million for the years ended december 31 , 2014 , 2013 and 2012 , respectively . we expect to incur significant and increasing losses for the foreseeable future as we advance our product candidates through clinical development to seek regulatory approval and , if approved , commercialize such product candidates . we will need additional financing to support our operating activities . we will seek to fund our operations through equity or debt financings or other sources . adequate additional financing may not be available to us on acceptable terms , or at all . our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy . we expect that research and development expenses will increase as we continue the development of our product candidates . we will need to generate significant revenues to achieve profitability , and we may never do so . on november 19 , 2013 , the company acquired all of the outstanding common and preferred stock of ethical oncology science , s.p.a. ( โ eos โ ) ( now known as clovis oncology italy s.r.l . ) using a combination of cash and the company 's common stock as the initial purchase consideration . eos was a biopharmaceutical company located in italy that focused on the development of novel medicines for the treatment of cancer . the primary reason for the business acquisition was to obtain development and commercialization rights to lucitanib . the company paid $ 11.8 million in cash and issued $ 173.7 million of common stock at the acquisition date and may make additional contingent future cash payments of $ 65.0 million and 115.0 million if certain regulatory and sales milestones are achieved . on september 9 , 2014 , we completed a private placement of $ 287.5 million aggregate principal amount of our 2.5 % convertible senior notes due 2021 ( the โ notes โ ) resulting in net proceeds to the company of $ 278.3 million after deducting offering expenses . story_separator_special_tag in october 2008 , eos entered into an exclusive license agreement with advenchen to develop and commercialize lucitanib on a global basis , excluding china . if and when commercial sales commence , we are obligated to pay advenchen tiered royalties at percentage rates in the mid-single digits on net sales of lucitanib , based on the volume of annual net sales achieved . in addition , after giving effect to the first and second amendments to the license agreement , we are required to pay to advenchen a percentage in the mid-twenties of any consideration , excluding royalties , received by clovis from sublicensees , in lieu of the milestone obligations set forth in the agreement . 47 we are obligated under the agreement to use commercially reasonable efforts to develop and commercialize at least one product containing lucitanib , and we are also responsible for all remaining development and commercialization costs for lucitanib . in the first quarter of 2014 , the company recognized acquired in-process research and development expense of $ 3.4 million , which represents 25 % of the sublicense agreement consideration of $ 13.6 million received from servier upon the end of opposition and appeal of the lucitanib patent by the european patent office . in september 2012 , eos entered into a collaboration and license agreement with servier whereby eos sublicensed to servier exclusive rights to develop and commercialize lucitanib in all countries outside of the u.s. , japan and china . in exchange for these rights , eos received an up-front payment of 45.0 million . we are entitled to receive additional payments upon achievement of specified development , regulatory and commercial milestones up to an additional 90.0 million in the aggregate . in addition , the company is entitled to receive sales milestone payments if specified annual sales targets for lucitanib are met , which , in the aggregate , could total 250.0 million . the company is also entitled to receive royalties at percentage rates ranging from low to mid-teens on sales of lucitanib by servier . we , along with servier , are obligated to use diligent efforts to develop a product containing lucitanib and to carry out the activities delegated to each party under a mutually-agreed global development plan . servier is responsible for all of the development costs for lucitanib up to 80.0 million , as incurred by each party in connection with global development plan activities . cumulative global development plan costs in excess of 80.0 million , if any , will be shared between the company and servier . co-101 in november 2009 , the company entered into a license agreement with clavis pharma asa ( โ clavis โ ) to develop and commercialize co-101 in north america , central america , south america and europe . under terms of the license agreement , the company made a $ 15.0 million up-front payment to clavis , which was comprised of $ 13.1 million for development costs incurred prior to the execution of the agreement that was recognized as acquired in-process research and development expense and $ 1.9 million for the prepayment of preclinical activities to be performed by clavis . in november 2010 , the license agreement was amended to expand the license territory to include asia and other international markets . the company made a payment of $ 10.0 million to clavis for the territory expansion and recognized the payment as acquired in-process research and development expense . as part of the amended license agreement , clavis also agreed to reimburse up to $ 3.0 million of the company 's research and development costs for certain co-101 development activities subject to the company incurring such costs , all of which was completed in 2011. on november 12 , 2012 , the company reported negative results from a pivotal study for co-101 . based on the results of the study , the company ceased development of co-101 and terminated the license agreement . drug discovery collaboration agreement in july 2012 , the company entered into a drug discovery collaboration agreement with array biopharma inc. for the discovery of a novel ckit inhibitor targeting resistance mutations for the treatment of gist , a gastrointestinal cancer . under the terms of the agreement , the company was responsible to fund all costs of the discovery program , as well as costs to develop and commercialize any clinical candidates discovered . this drug discovery program did not identify a compound to be used in further development activities , and the program was terminated in the fourth quarter of 2013. financial operations overview revenue to date , we have generated $ 13.6 million in license and milestone revenue related to our collaboration and milestone agreement with servier . in the future , we may generate revenue from the sales of product candidates that are currently under development or from milestone payments or royalties pursuant to our sublicense agreement with servier . based on our current development plans , we do not expect to generate significant revenues for the foreseeable future . if we fail to complete the development of our product candidates and , together with our partners , companion diagnostics or obtain regulatory approval for them , our ability to generate future revenue , and our results of operations and financial position , will be adversely affected . research and development expenses research and development expenses consist of costs incurred for the development of our product candidates and companion diagnostics , which include : ยท license fees and milestone payments related to the acquisition of in-licensed products , which are reported on our consolidated statements of operations as acquired in-process research and development ; ยท employee-related expenses , including salaries , benefits , travel and share-based compensation expense ; 48 ยท expenses incurred under agreements with contract research organizations ( โ cros โ ) and investigative sites that conduct our clinical trials ; ยท the cost of acquiring , developing and manufacturing clinical trial materials ; ยท costs associated with preclinical activities and regulatory operations ; and ยท activities
| results of operations comparison of years ended december 31 , 2014 , 2013 and 2012 : license and milestone revenue . license and milestone revenue for the year ended december 31 , 2014 was due to the recognition of $ 13.6 million of milestone revenue from servier upon the end of opposition and appeal of the lucitanib patent by the european patent office in the first quarter of 2014. we did not recognize any revenue in 2013 and 2012. research and development expenses . research and development expenses for the years ended december 31 , 2014 , 2013 and 2012 were as follows : replace_table_token_6_th the increase in research and development expenses for the year ended december 31 , 2014 compared to 2013 was primarily due to expanded development activities for the rociletinib and rucaparib programs . costs associated with clinical and nonclinical development activities for rociletinib were $ 29.4 million higher than 2013 driven by higher enrollment in the ongoing phase i/ii study in nsclc , as well as the initiation of the tiger-1 , tiger-2 and japanese phase i studies in 2014. clinical trial costs for rucaparib were $ 11.8 million higher than the prior year primarily due to the initiation of the ariel2 and ariel3 studies in ovarian cancer . our development costs for rucaparib were also $ 3.4 million higher than 2013 due to the expansion of our collaboration with foundation medicine , inc. to incorporate a coordinated regulatory strategy for the development of a novel companion diagnostic test . clinical supply and related manufacturing development costs for both programs were $ 13.8 million higher than 2013 , as we increased production to support expanded clinical studies . in addition , salaries , share-based compensation expense and other personnel related costs were $ 13.2 million higher in 2014 driven by higher headcount to support our expanded development activities .
| 2,642 |
factors that could affect results are discussed more fully under the item 1a , entitled ยrisk factors , ย and elsewhere in this annual report . although forward-looking statements help to provide complete information about us , readers should keep in mind that forward-looking statements may not be reliable . readers are cautioned not to place undue reliance on the forward-looking statements . we undertake no duty to update any forward-looking statements made herein after the date of this annual report . the following discussion should be read in conjunction with the consolidated financial statements contained herein and the notes thereto , along with the section entitled ยcritical accounting policies and estimates , ย set forth below . overview we develop , manufacture , market and sell diagnostic products and specimen collection devices using our proprietary technologies , as well as other diagnostic products , including immunoassays and other in vitro diagnostic tests that are used on other specimen types . our diagnostic products include tests that are performed on a rapid basis at the point-of-care and tests that are processed in a laboratory . we sell the only rapid point-of-care hiv test approved for use in the domestic consumer retail or over-the-counter ( ยotcย ) market . we also manufacture and sell oral fluid collection devices used to collect , stabilize and store samples of genetic material for molecular testing in the consumer genetic , clinical genetic testing , academic research , pharmacogenomics , personalized medicine , and animal genetics markets . lastly , we manufacture and sell medical devices used for the removal of benign skin lesions by cryosurgery , or freezing . our products are sold in the united states and internationally to various clinical laboratories , hospitals , clinics , community-based organizations , public health organizations , research and academic institutions , distributors , government agencies , physicians ' offices , and commercial and industrial entities . in addition , our otc hiv and cryosurgical products are available at retail pharmacies and mass merchandisers , and our otc hiv product is also sold to consumers over the internet . current consolidated financial results during the year ended december 31 , 2014 , our consolidated net revenues were $ 106.5 million compared to $ 98.9 million for the year ended december 31 , 2013. net product revenues during the year ended december 31 , 2014 increased 1 % when compared to 2013 , primarily as a result of higher sales of our molecular collection systems , oraquick ยฎ hcv and cryosurgical systems products . these increases were partially offset by lower sales of our oraquick ยฎ professional hiv product line and our oraquick ยฎ in-home hiv test . oraquick ยฎ in-home hiv test revenues in 2013 included a favorable non-recurring $ 2.5 million net revenue adjustment to account for a change in the revenue recognition policy associated with this product . licensing and product development revenues for 2014 were $ 7.6 million compared to $ 623,000 for 2013. licensing and product development revenues in 2014 represent the recognition of payments from abbvie for exclusive promotion rights and certain services we provided under our hcv agreement ( see further discussion below ) . licensing and product development revenues in 2013 represent royalties related to sales of merck 's otc cryosurgical wart removal product pursuant to a license and settlement agreement that expired in august 2013. our consolidated net loss for the year ended december 31 , 2013 was $ 4.6 million , or $ 0.08 per share , compared to a net loss of $ 11.2 million , or $ 0.20 per share , for the year ended december 31 , 2013. our consolidated net loss for the current period reflects lower advertising and promotional expenses associated with our oraquick ยฎ in-home hiv test . these costs were $ 8.5 million in 2014 , as compared to $ 18.8 million in 2013. this decrease in advertising and promotion expenses was partially offset by increased expenses under our hcv agreement with abbvie , higher research and development costs , and higher legal , staffing and consulting costs . in addition , our current period loss includes a $ 5.5 million gain ( recorded as a reduction to operating expenses ) for a final 55 settlement payment received for the termination of our assay agreement with roche diagnostics . this compares to an $ 8.3 million gain recorded in 2013 for the initial settlement payment received pursuant to the same termination agreement . cash provided by operating activities for the year ended december 31 , 2014 was $ 7.5 million , compared to $ 8.4 million for the year ended december 31 , 2013. as of december 31 , 2014 , we had $ 97.9 million in cash and short term investments compared to $ 93.2 million at december 31 , 2013 . 2014 developments hcv co-promotion initiatives on june 10 , 2014 , we entered into an agreement with abbvie to co-promote our oraquick ยฎ hcv test in the united states . the product is used to test individuals at-risk for the hepatitis c virus . we are responsible for manufacturing and selling the product into all markets covered by the agreement . pursuant to the agreement , we have granted exclusive co-promotion rights for the oraquick ยฎ hcv test in certain markets to abbvie and will provide certain additional services in support of hcv testing . in exchange for these exclusive rights and other services which we will provide to abbvie , we are eligible to receive up to $ 75.0 million in aggregate payments over the term of the agreement , which runs through december 31 , 2019. we plan to recognize the payments ratably on a monthly basis over the life of the agreement . the first $ 15.0 million payment was received in july 2014 and as of december 31 , 2014 , we recognized $ 7.6 million in revenues . story_separator_special_tag legislative , budgetary or regulatory changes may also be adopted which could adversely affect our ability to sell our current products or successfully develop and commercialize new products . business segments we operate our business within two reportable segments : our ยosurย business , which consists of the development , manufacture and sale of diagnostic products , specimen collection devices , and medical devices and our ยdnagย or molecular collection systems business , which consists primarily of the development , manufacture and sale of oral fluid collection devices that are used to collect , stabilize , and store samples of genetic material for molecular testing . osur revenues are derived primarily from products sold into the united 57 states and internationally to various clinical laboratories , hospitals , clinics , community-based organizations , public health organizations , distributors , government agencies , physicians ' offices , and commercial and industrial entities . revenues from osur 's otc products result from sales to retail pharmacies and mass merchandisers and to consumers over the internet . dnag revenues result primarily from products sold into the commercial market , which consists of companies and other entities engaged in consumer genetics , clinical genetic testing , pharmacogenomics , personalized medicine , and animal genetic testing , as well as products sold into the academic research market which consists of research laboratories , universities and hospitals . results of operations year ended december 31 , 2014 compared to december 31 , 2013 consolidated net revenues the table below shows the amount of total net product revenues generated by each of our business segments and net revenues from licensing and product development activities ( dollars in thousands ) . replace_table_token_5_th * calculation is not considered meaningful . consolidated net product revenues increased 1 % to $ 98.9 million in 2014 from $ 98.3 million in 2013 , primarily as a result of higher sales of our molecular collection systems , oraquick ยฎ hcv and cryosurgical systems products . these increases were partially offset by lower sales of our oraquick ยฎ in-home hiv test and our professional oraquick ยฎ hiv , substance abuse , and insurance risk assessment products . licensing and product development revenues were $ 7.6 million in 2014 and represent the recognition of revenues from abbvie for exclusive co-promotion rights and certain services provided under our hcv agreement . licensing and product development revenues were $ 623,000 in 2013 and represent royalties received on sales of merck 's otc cryosurgical wart removal product pursuant to a license and settlement agreement that expired in august 2013. consolidated net revenues derived from products sold to customers outside the u.s. were $ 24.2 million and $ 21.7 million , or 23 % and 22 % of consolidated net revenues during the years ended december 31 , 2014 and 2013 , respectively . because the majority of our international sales are denominated in u.s. dollars , the impact of fluctuating foreign currency exchange rates was not material to our total net revenues . 58 net revenues by segment osur segment the table below shows the amount of total net revenues generated by our osur segment in each of our principal markets and by licensing and product development activities ( dollars in thousands ) . replace_table_token_6_th * calculation is not considered meaningful . infectious disease testing market sales to the infectious disease testing market decreased 7 % to $ 47.5 million in 2014 from $ 51.0 million in 2013 , primarily due to lower sales of our oraquick ยฎ hiv professional product and oraquick ยฎ in-home hiv test , partially offset by higher sales of our oraquick ยฎ hcv product . the table below shows a breakdown of our total net oraquick ยฎ revenues ( dollars in thousands ) during 2014 and 2013. replace_table_token_7_th domestic oraquick ยฎ hiv sales decreased 7 % to $ 29.9 million in 2014 from $ 32.3 million in 2013. this decrease was primarily the result of customer migration to automated fourth generation hiv immunoassays performed in a laboratory , as recommended under new testing guidelines issued by the cdc , and some price competition . we anticipate that future sales of our professional hiv product will continue to be negatively affected as a result of the cdc 's guidelines , and by changes in government funding and continued price competition . international sales of our oraquick ยฎ hiv test during 2014 decreased 26 % to $ 2.5 million from $ 3.4 million in 2013 largely due to lower order volume related to testing initiatives in africa and the inconsistent purchasing patterns of certain latin american distributors . 59 during 2014 , we recorded $ 6.5 million in net revenues from sales of our oraquick ยฎ in-home hiv test . in 2013 , we recorded $ 9.1 million in net revenues from sales of our oraquick ยฎ in-home hiv test , including $ 2.5 million of previously deferred gross revenue recognized in december 2013 when we changed our revenue recognition policy . since the product launch in late 2012 , revenues had been recognized upon consummation of a purchase by consumers either in a store or over the internet . in december 2013 , as a result of our growing experience with this product and improved ability to estimate potential product returns , we began recognizing revenues upon shipment of the product to retailers or distributors . based on available retail point-of-sale data , consumer purchases increased 5 % in 2014 as compared to 2013. sales of our oraquick ยฎ in-home hiv test in 2014 and 2013 included approximately $ 392,000 and $ 701,000 , respectively , of direct sales to public health customers . we anticipate that some public health entities may choose to use a portion of their funding to purchase our otc product in lieu of professional rapid hiv testing products .
| consolidated operating results consolidated gross margin was 59 % in 2013 compared to 63 % in 2012. this decrease was largely due to higher royalty expenses , an unfavorable change in product mix , and the absence of the $ 1.0 million hcv milestone payment which was received in 2012. these negative effects on gross margin were partially offset by an improvement in overhead absorption during 2013 when compared to the prior year period . consolidated operating loss decreased $ 4.1 million to $ 12.2 million in 2013 , compared to $ 16.3 million in 2012. our 2013 operating loss reflects the $ 8.3 million settlement payment received for the termination of our assay agreement with roche diagnostics partially offset by higher sales and marketing expenses associated with the promotion of our oraquick ยฎ in-home hiv test . operating loss by segment osur segment osur 's gross margin was 57 % in 2013 compared to 62 % in 2012. osur 's 2013 margin was negatively impacted by higher lateral flow patent royalties on sales of our oraquick ยฎ hiv products , an unfavorable change in product mix , and the absence of the $ 1.0 million hcv milestone payment received from merck in the first quarter of 2012. the negative impact of these items was partially offset by an improvement in overhead absorption . research and development expenses declined 13 % to $ 8.4 million in 2013 from $ 9.7 million in 2012 , largely due to lower staffing costs and decreased spending on lab supplies . sales and marketing expenses increased 29 % to $ 39.5 million in 2013 from $ 30.5 million in 2012. this increase was primarily the result of higher spending associated with advertising and promotional activities for our oraquick ยฎ in-home hiv test .
| 2,643 |
we are a team of over 19,000 employees , providing global support for all facets of the product realization process โ design and development , supply chain solutions , new product introduction , manufacturing , and aftermarket services โ to companies in the healthcare/life sciences , industrial/commercial , aerospace/defense and communications market sectors . plexus is an industry leader that specializes in serving customers with highly complex products used in demanding regulatory environments in the americas ( `` amer '' ) , asia-pacific ( `` apac '' ) and europe , middle east , and africa ( `` emea '' ) regions . plexus delivers customer service excellence to leading global companies by providing innovative , comprehensive solutions throughout the product 's lifecycle . a discussion regarding our financial condition and results of operations for fiscal 2019 compared to fiscal 2018 is presented below . a discussion regarding our financial condition and results of operations for fiscal 2018 compared to fiscal 2017 can be found under part ii , item 7 , `` management 's discussion and analysis of financial condition and results of operations , '' in our annual report on the form 10-k for the fiscal year ended september 29 , 2018 , which was filed with the sec on november 16 , 2018 , and is available on the sec 's website at www.sec.gov as well as our inventor relations website at www.plexus.com . the following information should be read in conjunction with our consolidated financial statements included herein and `` risk factors '' included in part i , item 1a herein . results of operations story_separator_special_tag 2018 . the increase was driven by overall net increased customer end-market demand , a $ 32.7 million increase in production ramps of new products for existing customers and a $ 26.9 million increase in production ramps for new customers . industrial/commercial . net sales for fiscal 2019 in the industrial/commercial sector increased $ 63.5 million , or 6.9 % , as compared to fiscal 2018 . the increase was driven by a $ 64.8 million increase in production ramps of new products for existing customers and a $ 33.2 million increase in production ramps for new customers . the increase was partially offset by a $ 7.3 million decrease due to end-of-life products , a $ 4.2 million decrease due to a disengagement with a customer and overall net decreased customer end-market demand . aerospace/defense . net sales for fiscal 2019 in the aerospace/defense sector increased $ 143.5 million , or 32.2 % , as compared to fiscal 2018 . the increase was driven by a $ 120.2 million increase in production ramps of new products for existing customers , a $ 9.9 million increase in production ramps for new customers and overall net increased customer end-market demand . communications . net sales for fiscal 2019 in the communications sector decreased $ 96.2 million , or 20.4 % , as compared to fiscal 2018 . the decrease was driven by a $ 37.3 million reduction due to disengagements with customers , a $ 15.3 million decrease due to end-of-life products and overall net decreased customer end-market demand . the decrease was partially offset by an $ 18.1 million increase in production ramps of new products for existing customers and a $ 4.5 million increase in production ramps for new customers . 24 as a percentage of consolidated net sales , net sales attributable to customers representing 10 % or more of consolidated net sales as well as the percentage of net sales attributable to our ten largest customers for the indicated fiscal years were as follows : replace_table_token_6_th cost of sales . cost of sales for fiscal 2019 increased $ 256.7 million , or 9.8 % , as compared to fiscal 2018 . cost of sales is comprised primarily of material and component costs , labor costs and overhead . in fiscal 2019 and 2018 , approximately 89 % of the total cost of sales was variable in nature and fluctuated with sales volumes . of these amounts , approximately 86 % and 88 % of these costs in fiscal 2019 and 2018 , respectively , were related to material and component costs . as compared to fiscal 2018 , the increase in cost of sales in fiscal 2019 was primarily driven by the increase in net sales and increased fixed costs to support program ramps . partially offsetting the increase was a positive shift in customer mix and the $ 13.5 million one-time employee bonus ( the `` one-time employee bonus '' ) that was paid during fiscal 2018 , of which $ 12.6 million impacted cost of sales in that period . gross profit . gross profit for fiscal 2019 increased $ 34.2 million , or 13.3 % , as compared to fiscal 2018 . gross margin of 9.2 % increased by 20 basis points as compared to fiscal 2018. the primary driver of the increases in gross profit and gross margin as compared to fiscal 2018 was the increase in net sales , a positive shift in customer mix and the one-time employee bonus that was paid during fiscal 2018. operating income . operating income for fiscal 2019 increased $ 23.8 million , or 20.1 % , as compared to fiscal 2018 as a result of the increase in gross profit as well as the non-recurrence of the one-time employee bonus that was paid during fiscal 2018 , as noted above . this was partially offset by an $ 8.8 million increase in selling and administrative expenses , driven by a $ 4.9 million increase in compensation expense , and $ 1.7 million of restructuring costs . operating margin of 4.5 % increased 40 basis points compared to fiscal 2018 primarily due to the increase in gross margin as a result of the factors discussed above . a discussion of operating income by reportable segment is presented below ( in millions ) : replace_table_token_7_th amer . story_separator_special_tag diluted earnings per share increased to $ 3.50 in fiscal 2019 from $ 0.38 in fiscal 2018 primarily as a result of increased net income due to the factors discussed above and a reduction in diluted shares outstanding due to repurchase activity under the company 's stock repurchase plans . return on invested capital ( `` roic '' ) and economic return . we use a financial model that is aligned with our business strategy and includes a roic goal of 500 basis points over our weighted average cost of capital ( `` wacc '' ) , which we refer to as `` economic return . '' our primary focus is on our economic return goal of 5.0 % , which is designed to create shareholder value and generate sufficient cash to self-fund our targeted organic revenue growth rate of 12.0 % . roic and economic return are non-gaap financial measures . non-gaap financial measures , including roic and economic return , are used for internal management goals and decision making because such measures provide management and investors additional insight into financial performance . in particular , we provide roic and economic return because we believe they offer insight into the metrics that are driving management decisions because we view roic and economic return as important measures in evaluating the efficiency and effectiveness of our long-term capital requirements . we also use a derivative measure of roic as a performance criteria in determining certain elements of compensation , and certain compensation incentives are based on economic return performance . we define roic as tax-effected operating income before restructuring and other special items divided by average invested capital over a rolling five-quarter period for the fiscal year . invested capital is defined as equity plus debt , less cash and cash equivalents . other companies may not define or calculate roic in the same way . roic and other non-gaap financial measures should be considered in addition to , not as a substitute for , measures of our financial performance prepared in accordance with u.s. generally accepted accounting principles ( `` gaap '' ) . we review our internal calculation of wacc annually . our wacc was 9.0 % for fiscal year 2019 and 9.5 % for fiscal year 2018 . by exercising discipline to generate roic in excess of our wacc , our goal is to create value for our shareholders . fiscal 2019 roic of 13.1 % reflects an economic return of 4.1 % , based on our weighted average cost of capital of 9.0 % , and fiscal 2018 roic of 16.1 % reflects an economic return of 6.6 % , based on our weighted average cost of capital of 9.5 % for that fiscal year . for a reconciliation of roic , economic return and adjusted operating income ( tax effected ) to our financial statements that were prepared using gaap , see exhibit 99.1 to this annual report on form 10-k , which exhibit is incorporated herein by reference . 27 refer to the table below , which includes the calculation of roic and economic return ( dollars in millions ) for the indicated periods : replace_table_token_11_th liquidity and capital resources cash and cash equivalents and restricted cash were $ 226.3 million as of september 28 , 2019 , as compared to $ 297.7 million as of september 29 , 2018 . as of september 28 , 2019 , 96.8 % of our cash balance was held outside of the u.s. by our foreign subsidiaries . with the enactment of tax reform , we believe that our offshore cash can be accessed in a more tax efficient manner than before tax reform . currently , we believe that our cash balance , together with cash available under our credit facility , will be sufficient to meet our liquidity needs and potential share repurchases , if any , for the next twelve months and for the foreseeable future . our future cash flows from operating activities will be reduced by $ 65.1 million due to cash payments for u.s. federal taxes on the deemed repatriation of undistributed foreign earnings that are payable over an eight year period that began in fiscal 2019 with the first payment . the table below provides the expected timing of these future cash outflows , in accordance with the following installment schedule for the remaining seven years ( in millions ) : replace_table_token_12_th cash flows . the following table provides a summary of cash flows for fiscal 2019 and 2018 , excluding the effect of exchange rates on cash and cash equivalents and restricted cash ( in millions ) : replace_table_token_13_th operating activities . cash flows provided by operating activities were $ 115.3 million for fiscal 2019 , as compared to $ 66.8 million for fiscal 2018 . the increase was primarily due to cash flow improvements ( reductions ) of : $ 159.4 million in inventory cash flows driven by inventory management efforts . $ 66.4 million in customer deposit cash flows driven by significant deposits received from three customers . $ ( 150.1 ) million in accounts payables cash flows driven by reduced purchasing in an effort to manage inventory . $ ( 66.0 ) million in accounts receivable cash flows , which resulted primarily from the increase in net sales . $ 14.1 million in other current and noncurrent liabilities cash flows driven by an increase in advance payments from customers . 28 the following table provides a summary of cash cycle days for the periods indicated ( in days ) : replace_table_token_14_th we calculate days in accounts receivable and contract assets as each balance sheet item for the respective quarter divided by annualized sales for the respective quarter by day . we calculate days in inventory , accounts payable , and cash deposits as each balance sheet line item for the respective quarter divided by annualized cost of sales for the respective quarter by day .
| consolidated performance summary . the following table presents selected consolidated financial data for the indicated fiscal years ( dollars in millions , except per share data ) : 2019 2018 net sales $ 3,164.4 $ 2,873.5 cost of sales 2,872.6 2,615.9 gross profit 291.8 257.6 gross margin 9.2 % 9.0 % operating income 142.1 118.3 operating margin 4.5 % 4.1 % other expense 16.1 10.7 income tax expense 17.3 94.6 net income 108.6 13.0 diluted earnings per share $ 3.50 $ 0.38 return on invested capital * 13.1 % 16.1 % economic return * 4.1 % 6.6 % * non-gaap metric ; refer to `` return on invested capital ( `` roic '' ) and economic return '' below for more information and exhibit 99.1 for a reconciliation . net sales . fiscal 2019 net sales increased $ 290.9 million , or 10.1 % , as compared to fiscal 2018 . net sales are analyzed by management by geographic segment , which reflects the company 's reportable segments , and by market sector . management measures operational performance and allocates resources on a geographic segment basis . the company 's global business development strategy is based on our targeted market sectors . 23 a discussion of net sales by reportable segment is presented below for the indicated fiscal years ( in millions ) : replace_table_token_4_th amer . net sales for fiscal 2019 in the amer segment increased $ 210.4 million , or 17.3 % , as compared to fiscal 2018 .
| 2,644 |
ยother costsย in 2014 also include lease termination fees and cancellation fees on assets under construction related to the company 's decision not to continue with the planned start up of a composite story_separator_special_tag story_separator_special_tag style= '' font-size:4pt ; margin-top:0pt ; margin-bottom:0pt '' > 18 sonoco 2016 annual report costs , and the tax effect of these items and or other income tax-related events . these items could have a significant impact on the company 's future gaap financial results . 2016 overview and 2017 outlook despite low growth rates in many of the company 's served markets and headwinds stemming from the continued strength of the u.s. dollar , sonoco reported solid results in 2016 , posting year-over-year improvements in all of our segments . operating profit in the consumer packaging segment improved $ 9.3 million , or 4 percent , year-over-year . although the operating profit improvement was lower in dollar terms , our protective solutions and display and packaging segments both posted double digit percentage growth in operating profits year over year . on a company-wide basis , gains from a positive overall price/cost relationship ( the relationship of the change in sales prices to the change in costs of materials , energy and freight ) , manufacturing productivity improvements and the benefit of lower pension expense were only somewhat offset by volume/mix , higher labor , maintenance and other operating costs , and the impact of foreign currency translation . as a result , consolidated gross profit margin for 2016 improved to 19.6 % compared to 18.7 % in 2015. current year net income attributable to sonoco ( gaap earnings ) improved $ 36.3 million year over year , or 14.5 % , and includes a $ 104.3 million net gain , $ 49.3 million after tax , related to the sale of the company 's rigid plastics blow molding operations . base earnings for the current year , which excludes this gain as well as certain other items of income and expense , as more fully described within this item under ยuse of non-gaap financial measuresย and reconciled within this item under ยreconciliations of gaap to non-gaap financial measures , ย improved $ 20.6 million , or 8.0 % , year over year . key expectations for 2016 were that overall volumes would increase by around 2 % , price/cost would be relatively flat , productivity would be strong enough to more than offset the expected inflation in labor and other costs , and there would be a benefit from lower pension and post-retirement expense . although actual volume was essentially flat overall , it was mixed by business unit , with gains in flexible packaging , plastics , protective packaging and tubes and cores being offset by declines in composite cans , reels and recycling . despite flat volume , reported sales were down 3.6 % from a combination of lower selling prices in response to lower raw material costs , the translation impact of a stronger dollar , and the negative impact of dispositions net of acquisitions . offsetting the earnings impact of lower than expected volume , the company was able to maintain a stronger than expected positive price/cost relationship in many of its businesses , aided by a declining raw material cost environment and procurement productivity gains . although manufacturing productivity improvements for the year fell short of expectations , the results of our fixed cost productivity and cost management efforts were better than expected and partially offset inflation in labor and other costs . pension and postretirement benefit expenses for the year were $ 12.0 million lower than in 2015. the aggregate unfunded position of the company 's various defined benefit plans increased from $ 432 million at the end of 2015 , to $ 446 million at the end of 2016. this increase was largely driven by the impact of lower discount rates , partially offset by contributions to the plans . the effective tax rate on gaap earnings was 10.6 percentage points higher than the prior year while the rate on base earnings was 0.5 percentage points lower than in 2015. a more favorable distribution of earnings between high- and low-tax jurisdictions reduced the year-over-year effective tax rate on both gaap and base earnings ; however , the year-over-year benefit to the gaap rate was more than offset by the unfavorable impact of taxes associated with the 2016 disposal of the rigid plastics blow molding operations and prior-year income tax benefits related to the release of valuation allowances against deferred tax assets in certain international jurisdictions . the company generated $ 399 million in cash from operations during 2016 , compared with $ 453 million in 2015. the majority of the year-over-year decrease is attributable to income taxes and expenses related to the sale of the blow molding operations and an increased use of cash to fund working capital changes , partially offset by lower year-over-year income tax payments in 2016 , excluding payments related to the blow molding sale . cash flow from operations is expected to be approximately $ 470 million in 2017. outlook in 2017 , management 's focus will be on accelerating organic growth , improving manufacturing productivity and using the company 's strong financial position to make strategic acquisitions primarily aimed at its targeted growth areas of thermoforming , flexibles and protective packaging . the company has identified a number of targeted growth projects , the majority of which fall within its consumer packaging , display and packaging , and protective solutions segments and emerging markets . two key projects planned for 2017 are the commercial roll out of our new truvue tm clear plastic can and development of a new contract packaging services center to support the expansion of a key north american customer . expected increases in raw materials , particularly resins , tinplate steel and old corrugated containers ( occ ) , together with forecasts for a continued strengthening of the dollar , if realized , could create pressure on reported earnings . story_separator_special_tag the transaction is subject to normal regulatory review and is expected to close by the end of the second quarter of 2017. the acquisition of packaging is expected to add approximately $ 190 million of annual sales in the company 's consumer packaging segment . the company completed two acquisitions during 2015 at an aggregate cost of $ 21.2 million , of which $ 17.4 million was paid in cash . on april 1 , 2015 , the company acquired a 67 % controlling interest in graffo paranaense de embalagens s/a ( ยgraffoย ) , a flexible packaging business located in brazil . graffo serves the confectionery , dairy , pharmaceutical and tobacco markets in brazil with approximately 230 employees . total consideration paid for graffo was approximately $ 18.3 million , including cash of $ 15.7 million , and assumed debt of $ 2.6 million . on september 21 , 2015 , the company acquired the high-density wood plug business from smith family companies , inc. , in hartselle , alabama . total consideration for the acquisition was $ 2.9 million , including cash of $ 1.8 million and a contingent purchase liability of $ 1.1 million . the company completed two acquisitions during 2014 at an aggregate cost of $ 366.3 million , of which $ 334.1 million was paid in cash . the most significant of these was the october 31 , 2014 , acquisition of the privately held weidenhammer packaging group ( ยweidenhammerย ) , a manufacturer of composite cans , drums , and luxury tubes , as well as rigid plastic containers using thin-walled injection molding technology with in-mold labeling . markets served include processed foods , powdered beverages , tobacco , confectionery , personal care , pet food , pharmaceuticals , and home and garden products . at the time of acquisition weidenhammer had approximately 1,100 employees and 13 production facilities located in germany and six other european countries , chile , and the united states . total consideration paid for weidenhammer was approximately $ 355.3 million , including cash of $ 323.2 million , and debt and other liabilities assumed totaling $ 32.1 million . on may 2 , 2014 , the company completed the acquisition of dalton paper products , inc. , a manufacturer of tubes and cores , for a net cash cost of $ 11.3 million . the acquisition consisted of a single manufacturing facility located in dalton , georgia . also during 2014 , the company received cash totaling $ 0.3 million in connection with the final working capital settlement related to a 2013 acquisition . dispositions on november 7 , 2016 , the company completed the sale of its rigid plastics blow molding operations to amcor rigid plastics usa , llc and amcor packaging canada , inc. for approximately $ 280 million , with the company receiving net cash proceeds of $ 271.8 million . in conjunction with the sale , the company recognized a gain on the disposition , net of associated fees , of $ 104.3 million . the company 's rigid plastics blow molding operations included seven manufacturing facilities in the u.s. and canada with approximately 850 employees producing containers serving the personal care and food and beverage markets . the disposition of these operations is expected to negatively impact the 2017 year-over-year sales comparison by approximately $ 175 million . the decision to sell the blow molding operations was made to focus on , and provide resources to further enhance , the company 's targeted growth businesses , including flexible packaging , thermoformed rigid plastics , form 10-k 20 sonoco 2016 annual report and temperature-assurance packaging . this sale is not expected to notably affect operating margin percentages for the company 's consumer packaging segment , nor does it represent a strategic shift for the company that will have a major effect on the entity 's operations and financial results . see note 3 to the consolidated financial statements for further information about acquisition and disposition activities . restructuring and asset impairment charges due to its geographic footprint ( 318 locations in 33 countries ) and the cost-competitive nature of its businesses , the company is constantly seeking the most cost-effective means and structure to serve its customers and to respond to fundamental changes in its markets . as such , restructuring costs have been and are expected to be a recurring component of the company 's operating costs . the amount of these costs can vary significantly from year to year depending upon the scope and location of the restructuring activities . the following table recaps the impact of restructuring and asset impairment charges on the company 's net income for the periods presented ( dollars in thousands ) : replace_table_token_4_th during 2016 , the company announced the closure of four tubes and cores plants ย one in the united states , one in canada , one in ecuador , and one in switzerland . the company closed a packaging services center in mexico and a fulfillment service center in brazil . the company also began manufacturing rationalization efforts in its reels division , completed the sales of a paper mill in france , and a retail security packaging plant in puerto rico . in addition , the company continued to realign its cost structure , resulting in the elimination of approximately 180 positions . during 2015 , the company announced the closure of six rigid paper facilities ย two in the united states , one in canada , one in russia , one in germany , and one in the united kingdom ; the closure of a production line at a thermoforming plant in the united states ; and the sale of a portion of its metal ends and closures business in the united states . restructuring actions also included the closures of a tubes and cores plant , a recycling business , and a printed backer card facility in the united states .
| general overview sonoco is a leading manufacturer of consumer , industrial and protective packaging products and provider of packaging services with 318 locations in 33 countries . the company 's operations are reported in four segments , consumer packaging , display and packaging , paper and industrial converted products , and protective solutions . generally , the company serves two broad end-use markets , consumer and industrial , which , period to period , can exhibit different economic characteristics from each other . geographically , approximately 65 % of sales were generated in the united states , 20 % in europe , 6 % in canada and 9 % in other regions . the company is a market-share leader in many of its product lines , particularly in tubes , cores and composite containers . competition in most of the company 's businesses is intense . demand for the company 's products and services is primarily driven by the overall level of consumer consumption of non-durable goods ; however , certain product and service groups are tied more directly to durable goods , such as appliances , automobiles and construction . the businesses that supply and or service consumer product companies have tended to be , on a relative basis , more recession resistant than those that service industrial markets . financially , the company 's objective is to deliver average annual double-digit total returns to shareholders over time . to meet that target , the company focuses on three major areas : driving profitable sales growth , improving margins and leveraging the company 's strong cash flow and financial position . operationally , the company 's goal is to be the acknowledged leader in high-quality , innovative , value-creating packaging solutions within targeted customer market segments .
| 2,645 |
the objective of this financial review is to enhance the reader 's understanding of the accompanying tables and charts , the consolidated financial statements , notes to financial statements and financial statistics appearing elsewhere in this annual report on form 10-k. where applicable , this discussion also reflects management 's insights of known events and trends that have or may reasonably be expected to have a material effect on farmers ' business , financial condition or results of operations . cautionary note regarding forward looking statements discussions in this annual report on form 10-k that are not statements of historical fact ( including statements that include terms such as โ will , โ โ may , โ โ should , โ โ believe , โ โ expect , โ โ anticipate , โ โ estimate , โ โ project , โ intend , โ and โ plan โ ) are forward-looking statements that involve risks and uncertainties . any forward-looking statement is not a guarantee of future performance , and actual future results could differ materially from those contained in forward-looking information . factors that could cause or contribute to such differences include , without limitation , risks and uncertainties detailed from time to time in farmers ' filings with the securities and exchange commission , including without limitation the risk factors disclosed in item 1a , โ risk factors โ of this annual report on form 10-k. 29 many of these factors are beyond the company 's ability to control or predict , and readers are cautioned not to put undue reliance on those forward-looking statements . the following list , which is not intended t o be an all-encompassing list of risks and uncertainties affecting the company , summarizes several factors that could cause the company 's actual results to differ materially from those anticipated or expected in these forward-looking statements : general economic conditions in market areas where farmers conducts business , which could materially impact credit quality trends ; business conditions in the banking industry ; the regulatory environment ; fluctuations in interest rates ; demand for loans in the market areas where farmers conducts business ; rapidly changing technology and evolving banking industry standards ; competitive factors , including increased competition with regional and national financial institutions ; new service and product offerings by competitors and price pressures ; and other similar items . other factors not currently anticipated may also materially and adversely affect farmers ' business , financial condition , results of operations or cash flows . there can be no assurance that future results will meet expectations . while the company believes that the forward-looking statements in this annual report on form 10-k are reasonable , the reader should not place undue reliance on any forward-looking statement . in addition , these statements speak only as of the date made . farmers does not undertake , and expressly disclaims , any obligation to update or alter any statements whether as a result of new information , future events or otherwise , except as may be required by applicable law . story_separator_special_tag securities and federal funds sold also increased from $ 407.2 million in 2015 to $ 416.8 million in 2016. total interest expense amounted to $ 4.4 million for 2016 , a 7.0 % increase from $ 4.1 million reported in 2015. the increase in 2016 is the result of a $ 204.9 million increase in interest-bearing deposits and an $ 89.0 million increase in other borrowings . the cost of interest-bearing liabilities decreased from 0.39 % in 2015 to 0.32 % in 2016 . 31 management will continue to evaluate future changes in interest rates and the shape of the treasury yield curve so that assets and liabilities may be priced accordingly to minimize the impact on the net interest margin . noninterest income total noninterest income increased by $ 4.9 million in 2016. the increase in noninterest income is due to several factors . gains on the sale of mortgage loans increased from $ 1.1 million to $ 2.8 million , representing an increase of $ 1.7 million . insurance agency commissions also increased to $ 1.6 million compared to $ 569 thousand in 2015 and service charges on deposit accounts increased from $ 3.3 million in 2015 to $ 4.0 million in 2016 , reflecting the size of the company of after the two bank acquisitions . debit card interchange fees also increased $ 780 thousand or 41.5 % . other operating income also increased $ 599 thousand , primarily as a result of the positive impact from account level transaction volumes from the merger related growth . the bank and company expect these amounts to increase during 2017 as management continues to focus on growing the various sources of noninterest income . noninterest expenses noninterest expense for 2016 was $ 59.5 million , compared to $ 54.0 million in 2015 , representing an increase of $ 5.5 million , or 10.1 % . most of the increase was from salaries and employee benefits , which increased $ 5.3 million or 19.8 % , mainly due to an increase in the number of employees resulting from the mergers . the company 's full time equivalent employees ( โ fte โ ) increased by 8.5 % from december 31 , 2015 to december 31 , 2016. occupancy and equipment costs also increased $ 1.2 million due to the additional banking locations resulting from the mergers . story_separator_special_tag most of the increase was from merger related costs , which were $ 6.4 million in 2015 , compared to none in 2014. salaries and employee benefits also increased $ 5.8 million , mainly due to an increase in the number of employees resulting from the mergers . the company 's full time equivalent employees ( โ fte โ ) increased by 105 from december 31 , 2014 to december 31 , 2015. occupancy and equipment costs also increased $ 947 thousand due to the additional eighteen banking locations resulting from the mergers . excluding expenses related to acquisition activities , noninterest expenses measured as a percentage of average assets decreased from 3.34 % in 2014 to 3.21 % in 2015. the company 's tax equivalent efficiency ratio for the twelve month period ended december 31 , 2015 was 75.26 % , compared to 70.24 % for the same period in 2014. excluding expenses related to acquisition activities , the efficiency ratio for the year ended december 31 , 2015 improved to 66.2 % . the main factors leading to the improvement in the efficiency ratio was the increase in net interest income and noninterest income , along with the stabilized level of noninterest expenses relative to average assets as explained in the preceding paragraph . the efficiency ratio is calculated as follows : non-interest expense divided by the sum of tax equivalent net interest income plus non-interest income , excluding security gains and losses and intangible amortization . this ratio is a 33 measure of the expense incurred to generate a dollar of revenue . management will continue to closely monitor and keep the increases in other expenses to a m inimum . income taxes income tax expense totaled $ 2.5 million for 2015 and $ 2.6 million in 2014. the small decrease in the current year tax expense can be mainly attributed to the $ 1.0 million decrease in income before taxes . the effective tax rates are less than the statutory tax rate primarily due to nontaxable interest and dividend income . the effective income tax rate was 23.7 % for 2015 and 22.7 % for 2014. liquidity farmers maintains , in the opinion of management , liquidity sufficient to satisfy depositors ' requirements and meet the credit needs of customers . the company depends on its ability to maintain its market share of deposits as well as acquiring new funds . the company 's ability to attract deposits and borrow funds depends in large measure on its profitability , capitalization and overall financial condition . principal sources of liquidity include assets considered relatively liquid , such as short-term investment securities , federal funds sold and cash and due from banks . along with its liquid assets , farmers has additional sources of liquidity available which help to insure that adequate funds are available as needed . these other sources include , but are not limited to , loan repayments , the ability to obtain deposits through the adjustment of interest rates and the purchasing of federal funds and borrowings on approved lines of credit at two major domestic banks . at december 31 , 2016 , farmers had not borrowed against these lines of credit . management feels that its liquidity position is more than adequate and will continue to monitor the position on a monthly basis . the company also has additional borrowing capacity with the fhlb , as well as access to the federal reserve discount window , which provides an additional source of funds . the company views its membership in the fhlb as a solid source of liquidity . as of december 31 , 2016 , the bank is eligible to borrow an additional $ 144 million from the fhlb under various fixed rate and variable rate credit facilities . advances outstanding from the fhlb at december 31 , 2016 amounted to $ 132.9 million . farmers ' primary investing activities are originating loans and purchasing securities . during 2016 , net cash used by investing activities amounted to $ 115.2 million , compared to $ 23.1 million used in 2015. net increases in loans were $ 133.2 million in 2016 , compared to $ 139.7 million in 2015. the cash used by lending activities during 2016 can be attributed to the activity in the commercial real estate , residential real estate , agricultural and consumer loan portfolios . purchases of securities available for sale were $ 52.6 million in 2016 , compared to $ 72.7 million in 2015 , and proceeds from maturities and sales of securities available for sale were $ 71.4 million in 2016 , compared to $ 165.6 million in 2015. net cash of $ 29.7 million was received as a result of the acquisitions of nboh and tri-state in 2015. farmers ' primary financing activities are obtaining deposits , repurchase agreements and other borrowings . net cash provided by financing activities amounted to $ 76.7 million for 2016 , compared to $ 45.4 million in 2015. the majority of this increase can be attributed to the net change in deposits . deposits increased $ 115.7 million in 2016 , compared to a $ 44.7 million decrease in 2015. short-term borrowings decreased $ 27.4 million during 2016 , compared to a $ 91.2 million increase during 2015 . 34 loan portfolio maturities and sensitivities of loans to interest rates the following schedule shows the composition of loans and the percentage of loans in each category at the dates indicated . balances include unamortized loan origination fees and costs . replace_table_token_10_th the following schedule sets forth maturities based on remaining scheduled repayments of principal for commercial and commercial real estate loans listed above as of december 31 , 2016 : replace_table_token_11_th the amounts of commercial and commercial real estate loans as of december 31 , 2016 , based on remaining scheduled repayments of principal , are shown in the following table : replace_table_token_12_th total loans were $ 1.4 billion at year-end 2016 , compared to $ 1.3 billion at year-end 2015. loans grew 10 % organically during the past twelve months .
| results of operations comparison of operating results for the years ended december 31 , 2016 and 2015. the company 's net income totaled $ 20.6 million during 2016 , compared to $ 8.1 million for 2015. on a per share basis , diluted earnings per share were $ 0.76 as compared to $ 0.36 diluted earnings per share for 2015. excluding expenses related to acquisition activities , net income for 2016 would have been $ 21.0 million , or $ 0.78 per share , compared to $ 12.9 million or $ 0.57 per share in 2015. common comparative ratios for results of operations include the return on average assets and return on average stockholders ' equity . for 2016 , the return on average equity was 9.72 % , compared to 4.97 % for 2015. the return on average assets was 1.07 % for 2016 and 0.54 % for 2015. the annualized return on average assets and return on average equity excluding merger related expenses were 1.09 % and 9.92 % in 2016 , compared to 0.87 % and 7.95 % in 2015 , respectively . the results for 2016 included $ 73 thousand in gains on sales of securities , compared to $ 94 thousand in 2015. in addition , 2016 results include $ 238 thousand in gains from the sale of land and buildings . on june 1 , 2016 , the bank completed the acquisition of bowers , and merged bowers with insurance , the bank 's wholly-owned insurance agency subsidiary . bowers will continue to operate out of its cortland , ohio location and will enhance the company 's current product lineup , and offer broader options of commercial , farm , home , and auto property/casualty insurance carriers to meet all the needs of all the company 's customers . the transaction involved both cash and 123,280 shares of stock totaling $ 3.2 million , including up to $ 1.2 million of future payments , contingent upon bowers meeting performance targets .
| 2,646 |
see โ forward-looking information โ on page ii of this annual report on form 10-k. these forward-looking statements are subject to numerous risks and uncertainties , including , but not limited to , the risks and uncertainties described under โ item 1a โ risk factors. โ our actual results may differ materially from those contained in or implied by any forward-looking statements . 30 company overview commercial vehicle group , inc. is a delaware ( usa ) corporation . we were formed as a privately-held company in august 2000. we became a publicly held company in 2004. the company ( and its subsidiaries ) is a leading supplier of a full range of cab related products and systems for the global commercial vehicle market , including the medium-and heavy-duty truck ( โ md/hd truck โ ) market , the medium-and heavy-construction vehicle market , and the military , bus , agriculture , specialty transportation , mining , industrial equipment and off-road recreational markets . we have manufacturing operations in the united states , mexico , united kingdom , czech republic , ukraine , china , india and australia . our products are primarily sold in north america , europe , and the asia-pacific region . our products include seats and seating systems ( โ seats โ ) ; trim systems and components ( โ trim โ ) ; cab structures , sleeper boxes , body panels and structural components ; mirrors , wipers and controls ; and electronic wire harness and panel assemblies specifically designed for applications in commercial and other vehicles . we are differentiated from automotive industry suppliers by our ability to manufacture low volume , customized products on a sequenced basis to meet the requirements of our customers . we believe our products are used by a majority of the north american md/hd truck and certain leading global construction and agriculture original equipment manufacturers ( โ oems โ ) , which we believe creates an opportunity to cross-sell our products . business overview demand for our heavy-duty ( or `` class 8 '' ) truck products is generally dependent on the number of new heavy truck commercial vehicles manufactured in north america , which in turn is a function of general economic conditions , interest rates , changes in governmental regulations , consumer spending , fuel costs , freight costs and our customers ' inventory levels and production rates . new heavy truck commercial vehicle demand has historically been cyclical and is particularly sensitive to the industrial sector of the economy , which generates a significant portion of the freight tonnage hauled by commercial vehicles . the north american class 8 market declined in 2013 as production levels decreased approximately 12 % from 2012 ; however , production levels rebounded 31 % from 246,000 in 2013 to 323,000 in 2015. according to a january 2016 report by act research , a publisher of industry market research , north american class 8 production levels are expected to decline to 251,000 in 2016 , be relatively flat in 2017 , and increase to 330,000 in 2020. we believe the demand for class 8 vehicles in 2016 will be between 230,000 to 250,000 and will be driven by several factors , including growth in freight volumes and the replacement of aging vehicles . act estimates that the average age of active u.s. class 8 trucks is 10.6 years in 2015 , which is consistent with the average age in 2014. as vehicles age , their maintenance costs typically increase . act forecasts that the vehicle age will decline as aging fleets are replaced . the north american class 5-7 production has steadily increased from 201,000 in 2013 to 237,000 in 2015. according to a january 2016 report by act research , north american class 5-7 production levels are expected to be relatively flat in 2016 at 233,000 and gradually increase to 273,000 in 2020. we believe the demand for north american class 5-7 in 2016 will be relatively stable . in 2015 , approximately 49 % of our revenue was generated from sales to north american md/hd truck oems . our remaining revenue in 2015 was primarily derived from sales to oems in the global construction equipment market , aftermarket , oe service organizations , military market and other commercial vehicle specialty markets . demand for our products is driven to a significant degree by preferences of the end-user of the commercial vehicle , particularly with respect to heavy-duty trucks . unlike the automotive industry , commercial vehicle oems generally afford the end-user the ability to specify many of the component parts that will be used to manufacture the commercial vehicle , including a wide variety of cab interior styles and colors , the brand and type of seats , type of seat fabric and color and specific interior styling . in addition , certain of our products are only utilized in north american class 8 market , such as our storage systems , sleeper boxes and privacy curtains , and , as a result , changes in demand for heavy-duty trucks or the mix of options on a vehicle can have a greater impact on our business than changes in the overall demand for commercial vehicles . to the extent that demand for higher content vehicles increases or decreases , our revenues and gross profit will be impacted positively or negatively . demand for our construction products is dependent on the vehicle production and demand for new commercial vehicles in the global construction equipment market and generally follows certain economic conditions around the world . our products are primarily used in the medium-and heavy-duty construction equipment markets ( weighing over 12 metric tons ) . demand in the medium-and heavy-duty construction equipment market is typically related to the level of larger scale infrastructure development projects such as highways , dams , harbors , hospitals , airports and industrial development , as well as activity in the mining , forestry and other raw material based industries . we believe there is a bias toward continuing softness in global construction and agriculture markets in 2016. story_separator_special_tag the decrease in gca segment revenue is primarily a result of : a $ 30.3 million , or 18 % , decrease in oem construction revenue ; a $ 6.6 million , or 13 % , decrease in aftermarket revenues ; a $ 6.0 million , or 13 % , decrease in automotive revenues ; and a $ 2.7 million , or 5 % , decrease in revenues from other markets . 34 gca segment 2015 revenues were adversely impacted by foreign currency exchange translation of $ 15.8 million , which is reflected in the changes in revenue above . gross profit . gca segment gross profit decreased $ 1.0 million , or 3.2 % , to $ 28.6 million for the year ended december 31 , 2015 from $ 29.6 million for year ended december 31 , 2014 . included in gross profit is cost of revenues which consists primarily of raw material and purchased component costs for our products , wages and benefits for our employees and overhead expenses such as manufacturing supplies , facility rent and utilities costs related to our operations . cost of revenues decreased $ 44.6 million , or 15.5 % , as a result of an decrease in raw material and purchased component costs of $ 33.0 million , salaries and benefits of $ 3.0 million and overhead of $ 8.6 million . the decrease in gross profit resulted from the decrease in sales , unfavorable foreign currency exchange translation of $ 2.4 million , a year over year increase in net warranty charges of $ 0.9 million , employee separation and facility charges of $ 0.3 million as a part of our fourth quarter 2015 restructuring plan . this increase was offset by ongoing margin enhancement efforts in 2015. as a percentage of revenues , gross profit was 10.5 % for the year ended december 31 , 2015 compared to 9.3 % for the year ended december 31 , 2014. selling , general and administrative expenses . selling , general and administrative expenses consist primarily of wages and benefits and other overhead expenses such as marketing , travel , legal , audit , rent and utilities costs , which are not directly or indirectly associated with the manufacturing of our products . gca segment selling , general and administrative expenses decreased $ 1.5 million , or 6.7 % , to $ 20.4 million in the year ended december 31 , 2015 from $ 21.9 million for the year ended december 31 , 2014 . the decrease in selling , general and administrative expenses was primarily a result of favorable foreign currency exchange translation , a focus on cost discipline while selectively investing in value accretive activities , and a reduction in the allocation of shared corporate costs to the gca segment resulting primarily from the realignment of certain corporate personnel to centrally led activities conducted for the benefit of the company taken as a whole and not for the benefit of the gca segment . this was partially offset by employee separation and facility charges of $ 0.2 million as a part of our fourth quarter 2015 restructuring plan . year ended december 31 , 2014 compared to year ended december 31 , 2013 consolidated results revenues . consolidated revenue increased $ 92.0 million , or 12.3 % , to $ 839.7 million for the year ended december 31 , 2014 from $ 747.7 million for the year ended december 31 , 2013 . the increase in sales primarily resulted from increased north american md/hd truck production volumes and increased sales into the north american construction and agriculture markets . specifically , the $ 92.0 million revenue increase on a consolidated basis resulted from : a $ 50.2 million , or 15 % , increase primarily in oem north american md/hd truck revenues ; a $ 26.1 million or 17 % increase in oem construction revenues ; a $ 4.6 million , or 4 % , increase in aftermarket revenues ; a $ 4.5 million , or 99 % , increase in agriculture revenues ; and a $ 6.6 million , or 5 % , increase in revenues from other markets . in 2015 , the classification of some sales by end market were changed for certain customers . these classification changes were applied to prior periods above to conform to 2015 presentation . gross profit . gross profit increased $ 28.0 million to $ 107.7 million for the year ended december 31 , 2014 from $ 79.7 million for the year ended december 31 , 2013 . included in gross profit is cost of revenues which consists primarily of raw materials and purchased components for our products , wages and benefits for our employees and overhead expenses such as manufacturing supplies , facility rent and utilities costs related to our operations . cost of revenues increased $ 64.1 million , or 9.6 % , resulting from an increase in raw material and purchased component costs of $ 51.6 million , wages and benefits of $ 5.9 million and overhead costs of $ 6.6 million . as a percentage of revenues , gross profit increased to 12.8 % for the year ended december 31 , 2014 from 10.7 % for the year ended december 31 , 2013 . the increase in gross profit resulted from the increase in sales as well as non-recurrence of asset impairments incurred in 2013 amounting to $ 2.7 million . this was offset by a loss of $ 0.8 million on the sale of our norwalk , ohio facility and $ 1.3 million in closure costs of our tigard , oregon facility . selling , general and administrative expenses . selling , general and administrative expenses consist primarily of wages and benefits and other expenses such as marketing , travel , legal , audit , rent and utilities costs which are not directly or indirectly associated with the manufacturing of our products .
| resulted from : a $ 29.7 million or 16 % decrease in oem global construction revenues ; a $ 2.5 million , or 2 % , decrease in revenues from other markets ; a $ 12.9 million , or 3 % , increase primarily in oem north american md/hd truck revenues ; a $ 3.8 million , or 3 % , increase in aftermarket revenues ; and a $ 1.1 million , or 13 % , increase in agriculture revenues . 2015 revenues were adversely impacted by foreign currency exchange translation of $ 18.3 million , which is reflected in the change in revenue above . gross profit . gross profit increased $ 3.1 million to $ 110.8 million for the year ended december 31 , 2015 from $ 107.7 million for the year ended december 31 , 2014 . included in gross profit is cost of revenues which consists primarily of raw materials and purchased components for our products , wages and benefits for our employees and overhead expenses such as manufacturing supplies , facility rent and utilities costs related to our operations . cost of revenues decreased $ 17.5 million , or 2.4 % , resulting from a decrease in raw material and purchased component costs of $ 14.1 million , wages and benefits of $ 1.0 million and overhead costs of $ 2.4 million . the increase in gross profit primarily resulted from ongoing margin enhancement efforts , offset by $ 2.6 million year over year increase in net warranty charges , a year over year increase in tigard , oregon facility closure costs of $ 0.2 million and additional employee separation and facility charges of $ 0.6 million as a part of our fourth quarter 2015 restructuring plan . additionally , 2014 results included a loss of $ 0.8 million on the sale of our norwalk , ohio facility .
| 2,647 |
our solutions provide a secure way for our customers to connect and leverage multivendor , multiprotocol communications systems and applications across their networks and the cloud , around the world and in a rapidly changing ecosystem of ip-enabled devices such as smartphones and tablets . in addition , our solutions secure the evolution to cloud-based delivery of uc solutions - both for service providers transforming to a cloud-based network and for enterprises using cloud-based uc . we go to market through both direct sales and indirect channels globally , leveraging the assistance of resellers , and we provide ongoing support to our customers through a global services team with experience in design , deployment and maintenance of some of the world 's largest ip networks . we recently completed our merger with genband in october 2017. as a result of the merger , we believe we are better positioned to enable network transformations to ip and to cloud-based networks for service providers and enterprise customers worldwide , with a broader and deeper sales footprint , increased ability to invest in growth , more efficient and effective research and development , and a comprehensive rtc product offering . business acquisitions on october 27 , 2017 ( the `` merger date '' ) , sonus networks , inc. ( `` sonus '' ) consummated an acquisition as specified in an agreement and plan of merger ( the โ merger agreement โ ) with solstice sapphire investments , inc. ( `` newco '' ) and certain of its wholly-owned subsidiaries , genband holdings company , genband inc. and genband ii , inc. ( collectively , `` genband '' ) such that , following a series of mergers ( collectively , the `` merger '' ) , sonus and genband each became a wholly-owned subsidiary of newco . pursuant to the merger agreement , newco issued 50.9 million shares to the genband equity holders , with the number of shares issued in the aggregate to the genband equity holders equal to the number of shares of sonus common stock outstanding immediately prior to the closing date of the merger , such that former stockholders of sonus would own approximately 50 % , and former shareholders of genband and the two related holding companies would own approximately 50 % , of the shares of newco common stock issued and outstanding immediately following the consummation of the merger . the merger has been accounted for as a business combination and the financial results of genband have been included in our consolidated financial statements beginning on the merger date . on november 28 , 2017 , the company changed its name to `` ribbon communications inc. '' on september 26 , 2016 ( the `` taqua acquisition date '' ) , we acquired taqua , llc ( `` taqua '' ) , a leading supplier of ip communications systems , applications and services to mobile and fixed operators . taqua enables the transformation of software-based service provider networks to deliver next-generation voice , video and messaging services , including voip , vowifi and volte . the financial results of taqua are included in our consolidated financial statements beginning on the taqua acquisition date . on january 2 , 2015 ( the `` treq asset acquisition date '' ) , we acquired from treq labs , inc. ( `` treq '' ) certain assets related to its business of designing , developing , marketing , selling , servicing and maintaining sdn technology , sdn controller software and sdn management software ( the `` sdn business '' ) . the sdn business provides solutions that optimize networks for voice , video and uc for both enterprise and service provider customers . the financial results of the sdn business are included in our consolidated financial statements beginning on the treq asset acquisition date . 44 financial overview story_separator_special_tag accrued for severance and related costs were fully paid by the end of the third quarter of 2017. we expect that the amounts accrued for facilities costs will be paid by the end of 2018 . 45 on july 25 , 2016 , we announced a program ( the `` 2016 restructuring initiative '' ) to further accelerate our investment in new technologies as the communications industry migrates to a cloud-based architecture and pursues new strategic initiatives , such as new products and an expanded go-to-market footprint in selected geographies and discrete vertical markets . we have recorded an aggregate of approximately $ 2 million of restructuring expense in connection with this initiative , primarily for severance and related costs . the amounts accrued for severance and related costs were fully paid by the end of the third quarter of 2017. we expect that the amounts accrued for facilities will be paid by the end of october 2019. to better align our cost structure to our then-current revenue expectations , in april 2015 , we announced a cost reduction review . on april 16 , 2015 , we initiated a restructuring plan to reduce our workforce by approximately 150 positions , or approximately 13 % of our worldwide workforce ( the `` 2015 restructuring initiative '' ) . we recorded nominal restructuring expense in 2016 and approximately $ 4 million in 2015 in connection with the 2015 restructuring initiative . we made the final payments in connection with this initiative in 2017 and do not expect to either incur additional expense or make additional payments in the future related to the 2015 restructuring initiative . critical accounting policies and estimates management 's discussion and analysis of the financial condition and results of operations is based upon our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states of america . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . story_separator_special_tag effective january 1 , 2018 , we adopted accounting standards update ( `` asu '' ) 2014-09 , revenue from contracts with customers ( `` asu 2014-09 '' ) , along with additional asus which , among other things , clarified the implementation of the new revenue guidance and delayed the adoption by one year , to january 1 , 2018 ( collectively , the `` new revenue standard '' ) . we will utilize the modified retrospective approach . the new revenue standard replaces most of the existing revenue recognition standards and includes expanded disclosure requirements . for a further discussion of the new revenue standard , see `` recent accounting pronouncements '' in this md & a . valuation of inventory . we review inventory for both potential obsolescence and potential loss of value periodically . in this review , we make assumptions about the future demand for and market value of the inventory and , based on these assumptions , estimate the amount of any excess , obsolete or slow-moving inventory . we write down our inventories if they are considered to be obsolete or at levels in excess of forecasted demand . in these cases , inventory is written down to estimated realizable value based on historical usage and expected demand . inherent in our estimates of market value in determining inventory valuation are estimates related to economic trends , future demand for our products and technical obsolescence of our products . if future demand or market conditions are less favorable than our projections , additional inventory write-downs could be required and would be reflected in the cost of revenue in the period the revision is made . to date , we have not been required to revise any of our assumptions or estimates used in determining our inventory valuations . we write down our evaluation equipment at the time of shipment to our customers , as it is not probable that the inventory value will be realizable . loss contingencies and reserves . we are subject to ongoing business risks arising in the ordinary course of business that affect the estimation process of the carrying value of assets , the recording of liabilities and the possibility of various loss contingencies . an estimated loss contingency is accrued when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated . we regularly evaluate current information available to determine whether such amounts should be adjusted and record changes in estimates in the period they become known . we are subject to various legal claims . we reserve for legal contingencies and legal fees when the amounts are probable and reasonably estimable . stock-based compensation . our stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period , which is generally the vesting period . 47 we use the black-scholes valuation model for estimating the fair value on the date of grant of employee stock options . determining the fair value of stock option awards at the grant date requires judgment regarding certain valuation assumptions , including the volatility of our stock price , expected term of the option , risk-free interest rate and expected dividends . changes in such assumptions and estimates could result in different fair values and could therefore impact our earnings . such changes , however , would not impact our cash flows . the fair value of restricted stock awards , restricted stock units and performance-based awards is based upon our stock price on the grant date . in 2015 , we began to grant performance-based stock units that include a market condition to certain of our executives . we use a monte carlo simulation approach to model future stock price movements based upon the risk-free rate of return , the volatility of each entity , and the pair-wise covariance between each entity . these results are then used to calculate the grant date fair values of the performance-based stock units . the amount of stock-based compensation expense recorded in any period for unvested awards requires estimates of the amount of stock-based awards that are expected to be forfeited prior to vesting , as well as assumptions regarding the probability that performance-based stock awards will be earned . business combinations . we allocate the purchase price of acquired companies to identifiable assets acquired and liabilities assumed at their acquisition date fair values . goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed and represents the expected future economic benefits arising from other assets acquired in the business combination that are not individually identified and separately recognized . significant management judgments and assumptions are required in determining the fair value of assets acquired and liabilities assumed , particularly acquired intangible assets which are principally based upon estimates of the future performance and cash flows expected from the acquired business and applied discount rates . while we use our best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at a business combination date , our estimates and assumptions are inherently uncertain and subject to refinement . if different assumptions are used , it could materially impact the purchase price allocation and our financial position and results of operations . any adjustments to assets acquired or liabilities assumed subsequent to the purchase price allocation period are included in operating results in the period in which the adjustments are determined . intangible assets typically are comprised of developed technology , trademarks and trade names , customer contracts/relationships , order backlog , internal use software and covenants not to compete . goodwill and intangible assets . goodwill is not amortized , but instead is tested for impairment at least annually or if indicators of potential impairment exist .
| financial results we reported losses from operations of approximately $ 55 million for 2017 , $ 14 million for 2016 and $ 31 million for 2015. we reported net losses of approximately $ 35 million for 2017 , $ 14 million for 2016 and $ 32 million for 2015. our revenue was approximately $ 330 million in 2017 , $ 253 million in 2016 and $ 249 million in 2015. our gross profit was approximately $ 201 million in 2017 , $ 168 million in 2016 and $ 162 million in 2015. our gross profit as a percentage of revenue ( `` total gross margin '' ) was approximately 61 % in 2017 , 66 % in 2016 and 65 % in 2015. our operating expenses were approximately $ 257 million in 2017 , compared to approximately $ 181 million in 2016 and approximately $ 193 million in 2015. our 2017 operating expenses included approximately $ 15 million of acquisition- and integration-related expenses , nearly all related to the merger , and approximately $ 9 million of restructuring expense . our 2017 restructuring expense was primarily related to severance and related costs . our 2016 operating expenses included approximately $ 1 million of acquisition- and integration-related costs for professional and services fees related to our acquisition of taqua and approximately $ 3 million of restructuring expense , primarily comprised of approximately $ 2 million related to our 2016 restructuring initiative and approximately $ 1 million related to our taqua restructuring initiative . our 2015 operating expenses included approximately $ 2 million of restructuring expense , comprised of approximately $ 4 million of expense related to our 2015 restructuring initiative , net of approximately $ 2 million of reversals of restructuring expense previously recorded in connection with our 2012 restructuring initiative .
| 2,648 |
as of december 31 , 2015 , our outstanding debt also included ( i ) $ 285 million of a term loan which consisted of a $ 283 million net carrying amount including a $ 2 million debt issuance cost related to our tranche a term facility which is subject to quarterly principal payments as described above through december 8 , 2019 , ( ii ) $ 225 million of notes which consisted of a $ 221 million net carrying amount including a $ 4 million debt issuance cost of 5 3 /8 percent senior notes due december 15 , 2024 , ( iii ) $ 500 million of notes which consisted of a $ 494 million net carrying amount including a $ 6 million debt issuance cost of 6 7 /8 percent senior notes due december 15 , 2020 , and ( iv ) $ 107 million of other debt . senior credit facility โ interest rates and fees . beginning december 8 , 2014 , our tranche a term facility and revolving credit facility bear interest at an annual rate equal to , at our option , either ( i ) london interbank offered rate ( โ libor โ ) plus a margin of 175 basis points , or ( ii ) a rate consisting of the greater of ( a ) the jpmorgan chase prime rate plus a margin of 75 basis points , ( b ) the federal funds rate plus 50 basis points plus a margin of 75 basis points , and ( c ) one month libor plus 100 basis points plus a margin of 75 basis points . the story_separator_special_tag as you read the following review of our financial condition and results of operations , you should also read our consolidated financial statements and related notes in item 8. story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > depreciation and amortization : depreciation and amortization expense was $ 203 million and $ 208 million for 2015 and 2014 , respectively . earnings before interest expense , taxes and noncontrolling interests ( โ ebit โ ) was $ 519 million for 2015 , an increase of $ 27 million , when compared to $ 492 million in the prior year . higher oe light vehicle volumes in north america , europe , india and china , increased aftermarket sales in north america and south america , new platforms in europe , china and japan , the benefit of our product cost leadership initiatives and savings from previous restructuring activities were partially offset by lower commercial truck , off-highway and other revenue mainly in south america and china , unfavorable mix , higher restructuring costs and $ 64 million of negative currency . ebit for 2015 also benefited from the timing of a customer recovery in china clean air of $ 5 million . ebit for 2014 included a $ 7 million adjustment to workers ' compensation reserves . results from operations net sales and operating revenues for years 2015 and 2014 the tables below reflect our revenues for 2015 and 2014. we show the component of our oe revenue represented by substrate sales . while we generally have primary design , engineering and manufacturing responsibility for oe emission control systems , we do not manufacture substrates . substrates are porous ceramic filters coated with a catalyst - typically , precious metals such as platinum , palladium and rhodium . these are supplied to us by tier 2 suppliers generally as directed by our oe customers . we generally earn a small margin on these components of the system . as the need for more sophisticated emission control solutions increases to meet more stringent environmental regulations , and as we capture more diesel aftertreatment business , these substrate components have been increasing as a percentage of our revenue . while these substrates dilute our gross margin percentage , they are a necessary component of an emission control system . our value-add content in an emission control system includes designing the system to meet environmental regulations through integration of the substrates into the system , maximizing use of thermal energy to heat up the catalyst quickly , efficiently managing airflow to reduce back pressure as the exhaust stream moves past the catalyst , managing the expansion and contraction of the emission control system components due to temperature extremes experienced by an emission control system , using advanced acoustic engineering tools to design the desired exhaust sound , minimizing the opportunity for the fragile components of the substrate to be damaged when we integrate it into the emission control system and reducing unwanted noise , vibration and harshness transmitted through the emission control system . we present these substrate sales separately in the following table because we believe investors utilize this information to understand the impact of this portion of our revenues on our overall business and because it removes the impact of potentially volatile precious metals pricing from our revenues . while our original equipment customers generally assume the risk of precious metals pricing volatility , it impacts our reported revenues . presenting revenues that exclude โ substrates โ used in catalytic converters and diesel particulate filters removes this impact . additionally , we present these reconciliations of revenues in order to reflect value-add revenues without the effect of changes in foreign currency rates . we have not reflected any currency impact in the 2014 table since this is the base period for measuring the effects of currency during 2015 on our operations . we believe investors find this information useful in understanding period-to-period comparisons in our revenues . story_separator_special_tag europe , south america and india 's ebit was $ 52 million in 2015 compared to $ 59 million in 2014 . 47 the benefit from higher light vehicle volumes , higher commercial truck , off-highway and other vehicle volumes and new platforms in the europe , lower restructuring and related expenses , year-over-year restructuring savings and a charge related to the bankruptcy of an european aftermarket customer in prior year was more than offset by lower volumes in south america , lower aftermarket volumes in europe , unfavorable mix , higher sg & a and engineering expenses and negative currency . ebit for asia pacific increased $ 20 million to $ 121 million in 2015 from $ 101 million in 2014. ebit benefited from higher light vehicle volumes in china , new platforms in china and japan , strong operational cost management , lower restructuring and related expenses and year-over-year savings from prior restructuring activities , partially offset by lower commercial truck revenue in china . for the clean air division , restructuring and related expenses of $ 10 million were included in ebit for 2015 and $ 17 million in 2014. ebit for clean air division also benefited from the timing of a customer recovery in china of $ 5 million in 2015. ebit for clean air division included a charge of $ 4 million related to the bankruptcy of an aftermarket customer in europe in 2014. currency had a $ 22 million unfavorable impact on ebit of the clean air division in 2015 when compared to last year . ebit for the ride performance division was $ 189 million in 2015 compared to $ 219 million in 2014. ebit for north america increased $ 12 million in 2015 to $ 155 million from $ 143 million in 2014. the benefit from increased aftermarket volumes , lower restructuring and related expenses and improved operational cost management was partially offset by lower light vehicle volumes , lower commercial truck , off-highway and other vehicle volumes and negative currency . europe , south america and india 's ebit was a loss of $ 5 million in 2015 compared to an income of $ 40 million in 2014. the benefit from higher light vehicle and aftermarket volumes in the region , higher commercial truck , off-highway and other vehicle volumes and new platforms in europe and savings from prior restructuring activities was more than offset by higher restructuring and related expenses , higher sg & a and engineering expenses , unfavorable mix and negative currency . ebit for asia pacific increased $ 3 million to $ 39 million in 2015 from $ 36 million in 2014. ebit benefited from higher light vehicle volumes in china and operational cost management , partially offset by lower volumes in australia and unfavorable currency . for the ride performance division , restructuring and related expenses of $ 53 million were included in ebit in 2015 and $ 28 million in 2014. ebit for the ride performance division included a charge of $ 1 million related to postretirement medical true-up in 2014. currency had a $ 42 million unfavorable impact on ebit of the ride performance division for 2015 when compared to last year . ebit for the ride performance division also included a $ 7 million expense to adjust workers ' compensation reserves in 2014. currency had a $ 64 million unfavorable impact on overall company ebit in 2015 as compared to 2014. ebit for years 2014 and 2013 replace_table_token_25_th 48 the ebit results shown in the preceding table include the following items , certain of which are discussed below under โ restructuring and other charges , โ which have an effect on the comparability of ebit results between periods : replace_table_token_26_th ( 1 ) charge related to the bankruptcy of an aftermarket customer in europe . ( 2 ) charges related to pension derisking and the correction of postretirement census data . ebit for the clean air division was $ 397 million in 2014 compared to $ 370 million in 2013. ebit for north america increased $ 8 million to $ 237 million in 2014 versus $ 229 million in 2013. ebit benefited from higher light vehicle and aftermarket revenues , a ramp up on new platforms and positive currency , partially offset by higher engineering investments . europe , south america and india 's ebit increased $ 2 million in 2014 to $ 59 million from $ 57 million in 2013. the increase was driven by higher oe revenue , new platforms in europe and year-over-year savings from prior restructuring activities , partially offset by higher year-over-year restructuring and related expenses , a charge related to the bankruptcy of an european aftermarket customer in 2014 and negative currency . ebit for asia pacific increased $ 17 million to $ 101 million in 2014 from $ 84 million in 2013. ebit benefited from higher light vehicle production volumes , new platforms and higher commercial truck and off-highway vehicle revenues in china and japan , and restructuring savings in australia , partially offset by lower volumes in australia and thailand , higher engineering expenses and higher restructuring and related expenses . for the clean air division , ebit included restructuring and related expenses of $ 17 million in 2014 and $ 11 million in 2013. ebit for the clean air division included a charge of $ 4 million related to the bankruptcy of an aftermarket customer in europe in 2014. currency had a $ 2 million unfavorable impact on ebit of the clean air division for 2014 when compared to 2013. ebit for the ride performance division was $ 219 million in 2014 compared to $ 139 million in 2013. ebit for north america increased $ 19 million in 2014 to $ 143 million from $ 124 million in 2013. the benefits of increased light vehicle and commercial truck volumes and positive aftermarket product mix were partially offset by higher restructuring and related expenses and unfavorable currency .
| executive summary we are one of the world 's leading manufacturers of clean air and ride performance products and systems for light vehicle , commercial truck and off-highway applications . we serve both original equipment ( oe ) vehicle designers and manufacturers and the repair and replacement markets , or aftermarket , globally through leading brands , including monroe ยฎ , rancho ยฎ , clevite ยฎ elastomers , axios , kinetic ยฎ and fric-rot ride performance products and walker ยฎ , xnox ยฎ , fonos , dynomax ยฎ and thrush ยฎ clean air products . we serve more than 80 different original equipment manufacturers and commercial truck and off-highway engine manufacturers , and our products are included on nine of the top 10 car models produced for sale in europe and eight of the top 10 light truck models produced for sale in north america for 2015. our aftermarket customers are comprised of full-line and specialty warehouse distributors , retailers , jobbers , installer chains and car dealers . as of december 31 , 2015 , we operated 93 manufacturing facilities worldwide and employed approximately 30,000 people to service our customers ' demands . factors that continue to be critical to our success include winning new business awards , managing our overall global manufacturing footprint to ensure proper placement and workforce levels in line with business needs , maintaining competitive wages and benefits , maximizing efficiencies in manufacturing processes and reducing overall costs . in addition , our ability to adapt to key industry trends , such as a shift in consumer preferences to other vehicles in response to higher fuel costs and other economic and social factors , increasing technologically sophisticated content , changing aftermarket distribution channels , increasing environmental standards and extended product life of automotive parts , also play a critical role in our success .
| 2,649 |
u.s. gaap define 's fair value as the exchange price that would be received for an asset or paid to transfer a liability ( an exit price ) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date . this guidance establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value . the hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs . the three levels of inputs used to measure fair value are as follows : f- 12 ยท level 1 โ quoted prices in active markets for identical assets or liabilities . ยท level 2 โ observable inputs other than quoted prices included in level 1 , such as quoted prices for similar assets and liabilities in active markets ; quoted prices for identical or similar assets and liabilities in markets that are not active ; or other inputs that are observable or can be corroborated by observable market data . ยท level 3 โ unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities . this includes certain pricing models , discounted cash flow methodologies and similar valuation techniques that use significant unobservable inputs . the guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value . we have segregated all financial assets and liabilities that are measured at fair value on a recurring basis ( at least annually ) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below . financial assets and liabilities measured at fair value on a recurring basis as of december 31 , 2015 and december 31 , 2014 are summarized below : ( in thousands ) description as of december 31 , 2015 level 1 level 2 level 3 total gains ( losses ) liabilities : contingent consideration $ 2,591 $ - $ - $ 2,591 $ 3,898 ( in thousands ) description as of december 31 , 2014 level 1 level 2 level 3 total gains ( losses ) liabilities : derivative liability- preferred stock $ - $ - $ - $ - $ ( 23,110 ) in order to calculate the level 3 derivative liability - preferred stock , we used the monte carlo simulation to estimate future stock prices . the use of valuation techniques requires the company to make various key assumptions for inputs into the model , including assumptions about the expected future volatility of the price of the company 's stock . the preferred stock liability was converted into common stock on december 24 , 2014. note 8 โ preferred stock series a cumulative convertible preferred stock all series a preferred stock , series a dividends payable and interest on series a preferred stock dividends payable were converted into 8,961,769 shares of common stock just prior to the closing of the financing on december 24 , 2014. derivative liability effective january 1 , 2009 , we adopted the provisions of fasb asc 815 , โ derivatives and hedging โ ( fasb asc 815 ) ( previously eitf 07-5 , โ determining whether an instrument ( or an embeded feature ) is indexed to an entity 's own stock โ ) . as a result of adopting fasb asc 815 , warrants to purchase 77,091 of our common stock previously treated as equity pursuant to the derivative treatment exemption were no longer afforded equity treatment . these warrants had an exercise price of $ 175.00 and expired on november 10 , 2013 and february 4 , 2014. f- 13 we determined that the anti-dilution provision built into the series a preferred stock and warrants issued should be considered for derivative accounting . fasb asc 815 requires freestanding contracts that are settled in a company 's own stock to be designated as an equity instrument , assets or liability . under the provisions of fasb asc 815 , a contract designated as an asset or liability must be initially recorded and carried at fair value until the contract meets the requirements for classification as equity , until the contract is exercised or until the contract expires . we determined that the anti-dilution provision associated with the november 2007 and february 2008 preferred shares and warrants no longer met the criteria for equity accounting through the revised criteria in fasb asc 815. accordingly , at january 1 , 2009 , we determined that the warrants and the series a preferred stock conversion feature should be accounted for as derivative liabilities . the preferred stock conversion feature was determined to have no fair market value at both issuance dates as well as each reporting period until the third quarter of 2010 since management asserted that the likelihood of issuing any new equity at a price that would trigger the anti-dilution effect to be nil . during the third quarter of 2010 we were actively raising capital . with our stock price below $ 150.00 a share it was possible that we would sell shares below $ 150.00 per share . since this would require an adjustment to our convertible preferred stock we recorded a derivative liability and expense at september 30 , 2010. the derivative liability and expense was revalued at december 31 , 2013 was $ 1,190,000 ; and at december 24 , 2014 was $ 24,300,000 . story_separator_special_tag when we determine that an asset has become impaired or we abandon a project , we write down the carrying value of the related intangible asset to its fair value and take an impairment charge in the period in which the impairment occurs . generally licensed technology is amortized over the life of the patent or the agreement . we test our intangible assets for impairment on an annual basis , or more frequently if indicators are present or changes in circumstance suggest that impairment may exist . events that could result in an impairment , or trigger an interim impairment assessment , include the receipt of additional clinical or nonclinical data regarding our drug candidate or a potentially competitive drug candidate , changes in the clinical development program for a drug candidate or new information regarding potential sales for the drug . in connection with each annual impairment assessment and any interim impairment assessment , we compare the fair value of the asset as of the date of the assessment with the carrying value of the asset on our consolidated balance sheet . in 2015 , we did not impair any licensed technology . gene therapy license agreements on may 15 , 2015 , we acquired abeona therapeutics llc which had a an exclusive license through nationwide children 's hospital to the ab-101 and ab-102 patent portfolios for developing treatments for patients with sanfilippo syndrome type a and type b. this portfolio comprises 1 patent family : โ products and methods for delivery of polynuleotides by adeno-associated virus for lysosomal storage disorders โ . additionally , abeona has secured fda orphan drug designation for both sanfilippo a and b , which will provide 7 years of post-launch market exclusivity for both abx-a and abx-b in the u.s. abeona will be seeking orphan drug status within the ema , which will grant 10 years of post-market exclusivity in the european union . the license is amortized over the life of the license of 20 years . on june 5 , 2015 , we entered into an exclusive , worldwide , licensing agreement with the unemed corporation , the technology transfer and commercialization office for the university of nebraska medical center ( unmc ) in omaha , nebraska , for an aav gene therapy for the treatment of juvenile batten disease . we licensed the rights to two patents ( 62/092,501 and 62/146,793 ) . under the terms of the licensing agreement , we paid a license fee of $ 75,000 and will pay milestone payments on certain milestone events . commencing with the first commercial sale of licensed products a royalty will be paid . terms of the agreement require we execute a sponsored research agreement with unmc focused on additional efficacy studies within 12 months . on october 14 , 2015 we entered into a sponsored research agreement with unmc to support ongoing aav9/cln3 projects in the amount of $ 215,000. on june 5 , 2015 , we entered into an exclusive , worldwide , licensing agreement with the university of minnesota for an aav gene therapy for the treatment of patients with fanconi anemia ( fa ) disorder and other rare blood diseases . we licensed one patent ( 62/000,590 ) , method for editing a genetic sequence . under terms of the licensing agreement , we paid a license fee of $ 80,000 , will pay an additional license fee of $ 50,000 , will pay annual maintenance fees and a royalty fee with the first commercial sale of licensed products . on september 17 , 2015 , we entered into a nonexclusive license agreement with stanford university for an aav delivery vector for the treatment of fa and rare blood disease platform . this license augments the university of minnesota agreement . we licensed two patents ( 13/594,773 and epo 12756603.2 ) . under terms of the licensing agreement , we paid a license fee of $ 25,000 , will pay annual maintenance fees and a royalty fee with the first commercial sale of licensed products . plasma-based therapeutics license agreements on september 22 , 2014 , we entered into an exclusive , worldwide licensing agreement with licensor to obtain rights to utilize and to sub-license to other pharmaceuticals firms , its patented methods for the extraction of therapeutic biologics from human plasma . under the terms of the licensing agreement , as amended on january 23 , 2015 , we paid a license fee of $ 1 million in cash , will pay $ 4,000,000 in cash or 1,096,151 shares of our common stock in 2017 , a regulatory approval milestone payment of 513,375 shares of our common stock upon the first fda regulatory approval of a drug derived from the licensor 's proprietary sdf process , and a tiered royalty on annual net sales of plasma fractions produced with licensor 's proprietary sdf process . the license is amortized over the life of the patent of 11 years . goodwill as of december 31 , 2015 , goodwill of $ 32.5 million was recorded on the company 's balance sheet . the implied fair value of goodwill represented the excess of the abeona ohio 's value over and above the fair value of its tangible assets and identifiable intangible assets . in accordance with accounting standards codification ( โ asc โ ) no . 350 โ intangibles โ goodwill and other , goodwill is not amortized , but is rather tested annually for impairment and whenever changes in circumstances occur that would indicate impairment . contingent consideration liability there is a contingent valuation on three milestones . per the merger agreement with abeona ohio each milestone would consist of either cash , our stock or a combination of both , at the company 's election , equivalent to a stated dollar amount . the fair value of the probability of achieving all three milestones was estimated at $ 6,489,000. the first milestone of receiving
| results of operations the following discussion should be read in conjunction with our consolidated financial statements and related notes included in this form 10-k. abeona therapeutics inc. ( together with our subsidiaries , โ we โ , โ our โ , โ abeona โ or the โ company โ ) is a delaware corporation . we are focused on developing and delivering gene therapy and plasma-based products for severe and life-threatening rare diseases . abeona 's lead programs are abo-101 ( aav naglu ) and abo-102 ( aav sgsh ) , adeno-associated virus ( aav ) -based gene therapies for sanfilippo syndrome ( mps iiib and iiia , respectively ) . we are also developing abo-201 ( aav cln3 ) gene therapy for juvenile neuronal ceroid lipofuscinoses ( jncl ) also known as juvenile batten disease ; and abo-301 ( aav fancc ) for fanconi anemia ( fa ) disorder using a novel crispr/cas9-based gene editing approach to gene therapy program for rare blood diseases . in addition , we are also developing rare plasma protein therapies including ptb-101 sdf alpha ( alpha-1 protease inhibitor ) for inherited copd using our proprietary sdf ( salt diafiltration ) ethanol-free process . results of operations comparison of years ended december 31 , 2015 and december 31 , 2014 our licensing revenue for the year ended december 31 , 2015 was $ 602,000 as compared to $ 598,000 for the same period of 2014 , an increase of $ 4,000. we recognize licensing revenue over the period of the performance obligation under our licensing agreements . we recorded royalty revenue for mugard of $ 438,000 for year ended december 31 , 2015 as compared to $ 327,000 for the same period of 2014 , an increase of $ 111,000. we licensed mugard to amag and currently receive quarterly royalties from amag under our agreement .
| 2,650 |
allowance for doubtful accounts โ we continually monitor our allowance for doubtful accounts for all receivables . we apply judgment in assessing the ultimate realization of our receivables and we estimate an allowance for doubtful accounts based on various factors , such as , the aging of accounts receivable balances , historical experience , and the financial condition of our customers . based on our analysis of our receivables as of april 30 , 2017 and 2016 , we determined no allowance for doubtful accounts was necessary . inventories โ inventories are recorded at the lower of cost or market ( net realizable value ) and primarily include raw materials , work-in-process ( comprised of raw materials , direct labor and overhead costs story_separator_special_tag the following discussion is included to describe our financial position and results of operations for each of the three years in the period ended april 30 , 2017. the audited consolidated financial statements and notes thereto contain detailed information that should be referred to in conjunction with this discussion . overview we are a biopharmaceutical company committed to improving the lives of patients by manufacturing high quality pharmaceutical products through our contract manufacturing business , avid bioservices , inc. ( โ avid โ ) , and by advancing and licensing our novel , development-stage immunotherapy product through our research and development business , peregrine pharmaceuticals , inc. ( โ peregrine โ ) . peregrine is focused primarily on the research and development of immune stimulating therapies for the treatment of various cancers . avid , a wholly-owned subsidiary of peregrine , is our contract development and manufacturing organization ( โ cdmo โ ) business . in june 2016 , following the discontinuation of our bavituximab phase iii sunrise trial , we announced a shift in our corporate focus toward achieving profitability within two ( 2 ) years ( during the quarter ending july 31 , 2018 ) . this was to be achieved by focusing on revenue growth from our contract manufacturing business , avid , while also reducing our spending on research and development while continuing to evaluate data from the phase iii sunrise trial . we believe we made significant progress towards this goal during the fiscal year ended april 30 , 2017 by reducing research and development expenses by fifty-two percent ( 52 % ) while simultaneously growing avid revenues by thirty percent ( 30 % ) , as compared to the prior fiscal year . the result was a reduction of our net loss by 49 % to $ 28,159,000 for the fiscal year ended april 30 , 2017. while reducing research and development expenses over the past fiscal year , we have also been able to allow the clinical data from the phase iii sunrise trial to mature , enabling us to conduct and present data analysis at key scientific meetings that support the clinical development of bavituximab with immune checkpoint inhibitors such as anti-pd-1/pd-l1 therapies . while we currently expect to reduce research and development spending by at least 40 % in fiscal year 2018 compared to fiscal year 2017 , this reduction in spending will not allow us to advance the bavituximab clinical program through a company sponsored trial . instead , we are collaborating with leading immunotherapy experts and institutions to continue to drive forward our research and further guide our clinical development program . with respect to our cdmo business , fiscal year 2017 was a record year for revenues , topping $ 57 million and representing 30 % revenue growth over the prior fiscal year . while we are pleased at the continued year over year revenue growth , we have also recently seen unanticipated decreases in manufacturing demand from our largest customer and a recent regulatory filing delay from our second largest customer which will have some impact on our ability to grow the revenues from our cdmo business in fiscal year 2018 and could impact our ability to achieve overall profitability by the quarter ending july 31 , 2018. however , we believe this to be temporary delay in revenue growth during fiscal year 2018 and have recently secured four new customers and are continuing to focus on securing additional customer business in order to better diversify our customer base . our goal is to maintain profitability for avid over the short term while positioning the business for long-term growth and attracting the resources necessary to continue to advance our promising research and development efforts . importantly , we continually evaluate various strategic options that we believe may enable us to enhance stockholder value , including the possible separation of these two distinct businesses . avidโour cdmo business avid provides fully-integrated cgmp services from cell line development to commercial biomanufacturing of large molecules , such as monoclonal antibodies and recombinant proteins for third-party customers while also supporting peregrine 's internal drug development business . we believe this integration offers considerable time and cost efficiencies for our internal drug development business . 30 we have been developing and manufacturing biologics since 1993 in our franklin biomanufacturing facility ( the โ franklin facility โ ) located at our current headquarters in tustin , california and formed avid in 2002 to offer these services to third-party customers using . in march 2016 , we expanded our manufacturing capacity through the launch of our myford biomanufacturing facility ( the โ myford facility โ ) , which doubled our manufacturing capacity . the 42,000 square foot facility , which is our second biomanufacturing facility , can accommodate single-use bioreactors up to the 2,000-liter manufacturing scale . the myford facility was designed to accommodate a fully disposable biomanufacturing process for products in late stage clinical development to commercial . to date , myford facility has been utilized to complete a number of process validation runs for our third-party customers , which may lead to future commercial production , and has supported the process validation of our internal product , bavituximab . the myford facility is located adjacent to our franklin facility . story_separator_special_tag following the discontinuation of the phase ii sunrise trial , we promptly initiated and are nearing completion of an extensive review and analysis of the available data and testing the numerous collected samples for potential biomarkers in order to understand what subgroups may have benefited more from the bavituximab treatment . we believe such information will be important in supporting and refining our clinical strategy , as discussed above . the most compelling data to date was presented in april 2017 at the annual meeting of the aacr . in a subgroup analysis , we looked at the outcome of 91 patients that were enrolled in the phase iii sunrise trial that were subsequently treated with immune checkpoint inhibitors ( โ ici 's โ ) post study treatments . the results from this analysis demonstrated that the patients who received docetaxel plus bavituximab and subsequent ici 's ( anti-pd-1/pd-l1 ) had not yet reached median overall survival ( โ mos โ ) compared to mos of 13.0 months for patients who received docetaxel plus placebo ( hazard ratio [ hr ] , 0.43 ; p=0.005 ) . the statistically significant difference between the two arms in the trial provides strong rationale for combining bavituximab with ici 's and supports the hypothesis that bavituximab may modulate the tumor microenvironment to enhance the anti-tumor activity of ici 's . 32 in june 2017 , we announced additional supportive data at the annual meeting of the american society of clinical oncology ( โ asco โ ) demonstrating that patients in the bavituximab containing arm who had low baseline pd-l1 expression on tumor cells ( i.e. , patients typically with poorer response to pd-1/pd-l1 checkpoint inhibitors ) lived significantly longer than patients with high baseline pd-l1 expression . these data further support the hypothesis that bavituximab may modulate the tumor microenvironment to complement and enhance the anti-tumor activity of ici 's . story_separator_special_tag including raw materials and supplies , product testing , depreciation , and facility related expenses , ( iv ) expenses for research services provided by universities and contract laboratories , including sponsored research funding , and ( v ) other research and development expenses . research and development expenses are charged to expense as incurred when these expenditures relate to our research and development efforts and have no alternative future uses . for the years ended april 30 , 2017 , 2016 and 2015 , approximately 91 % , 100 % and 98 % , respectively , of our total research and development expenses related to our ps-targeting platform , which includes our lead immunotherapy candidate , bavituximab . 34 fiscal year 2017 compared to fiscal year 2016 : in june 2016 , we announced our clinical development strategy that will focus on conducting small , early stage studies of bavituximab in combination with immune stimulating therapies while we continued to wind down activities and related costs associated with the phase iii sunrise trial . as we executed on this clinical development strategy , research and development expenses decreased $ 31,232,000 ( 52 % ) during fiscal year 2017. the current fiscal year decrease in research and development expenses was primarily related to the following decreases associated with our ps-targeting platform : ยท decrease in third-party clinical trial costs of $ 15,290,000 primarily related to our discontinued phase iii sunrise trial ( as discussed above ) and previously planned phase ii trials in breast and lung cancers ; ยท decrease in manufacturing costs of $ 11,749,000 primarily related to internal and external costs and expenses incurred in the prior year associated with preparing bavituximab for commercial production ; ยท decrease in payroll and related expenses of $ 3,288,000 related to a reduction of research and development personnel combined with the reassignment of certain personnel to our contract manufacturing operations ; and ยท decreases in facility-related expenses and share-based compensation expense ( non-cash ) of $ 672,000 and $ 501,000 , respectively . as we continue to execute our clinical development strategy , we currently expect research and development expenses for fiscal year 2018 to decrease at least 40 % or more in comparison to fiscal year 2017. fiscal year 2016 compared to fiscal year 2015 : the increase in research and development expenses of $ 16,533,000 ( 38 % ) during fiscal year 2016 was directly related to the fiscal year 2016 increase in ps-targeting expenses of $ 16,970,000 , offset by the fiscal year 2016 decrease in expenses related to our other technologies of $ 437,000. the fiscal year 2016 net increase in ps-targeting expenses was primarily attributed to : ยท increase in manufacturing costs of $ 10,053,000 primarily related to the internal and external costs and expenses associated with preparing bavituximab for commercial production ; ยท increase in third-party clinical trial costs of $ 6,014,000 primarily related to our discontinued phase iii sunrise trial ( as discussed above ) and previously planned phase ii trials in breast and lung cancers , which were also discontinued during fiscal year 2016 ; ยท increase in payroll and related expenses of $ 1,314,000 primarily related to increased employee headcount to support the aforementioned discontinued phase iii sunrise trial and previously planned phase ii trials in breast and lung cancers ; and ยท decrease in share-based compensation expense ( non-cash ) of $ 769,000. selling , general and administrative expenses selling , general and administrative ( โ sg & a โ ) expenses consist primarily of payroll and related expenses and share-based compensation expense ( non-cash ) , for personnel in executive , finance , accounting , business development , legal , human resources , information technology , and other internal support functions . in addition , sg & a expenses include corporate and patent legal fees , audit and accounting fees , investor relation expenses , non-employee director fees , facility related expenses , and other expenses relating to our general management , administration , and business development activities .
| results of operations the following table compares the consolidated statements of operations and comprehensive loss for the fiscal years ended april 30 , 2017 , 2016 and 2015. this table provides you with an overview of the changes in the statements of operations and comprehensive loss for the comparative periods , which are further discussed below . replace_table_token_7_th contract manufacturing revenue fiscal year 2017 compared to fiscal year 2016 : the increase in contract manufacturing revenue of $ 13,273,000 ( 30 % ) during fiscal year 2017 was primarily due to manufacturing services provided to support the process validation of three separate customer products in the amount of $ 15,444,000 , all of which were manufactured in our myford facility . no process validation services were provided in the prior year for third-party customers . excluding any future potential new business , we expect contract manufacturing revenue for fiscal year 2018 to slightly decline in comparison to fiscal year 2017. part of this decline is due to lower anticipated commitments from halozyme , inc. ( our largest customer ) based on their most recent committed forecast ( covering the three quarters ending march 2018 ) , which amount is expected to be partially offset by revenue in the amount of $ 10 million that was expected to be recognized in fiscal year 2017 , but has been shifted to fiscal year 2018 due to a delay in shipping product that was complete and ready for shipment as of the fiscal year ended april 30 , 2017 . 33 as we continue to seek to diversify our customer base , over the recent months , we have secured four new customers . these new customers are predominately in an earlier stage of development and , therefore , we expect that contract manufacturing revenue from these new customers during fiscal year 2018 will only partially offset the net anticipated decrease from our other existing customers .
| 2,651 |
as of december 31 , 2018 and 2017 , the company had reserved shares of common stock for issuance as follows : replace_table_token_28_th in july 2018 , the company issued and story_separator_special_tag the following discussion and analysis of financial condition and results of operations should be read together with the financial statements and the related notes included in item 8 of part ii of this annual report on form 10-k. this discussion and analysis contains certain forward-looking statements that involve risks and uncertainties . our actual results may differ materially from those discussed below . factors that could cause or contribute to such differences include , but are not limited to , those identified below and those set forth under the section entitled `` risk factors '' in item 1a , and other documents we file with the securities and exchange commission . historical results are not necessarily indicative of future results . overview we are a leading genomic diagnostics company that is creating value through innovation . we were founded in 2008 with a mission of improving diagnostic accuracy . today , our foundational science is enabling us to serve this critical medical need and expand our offerings further along the clinical continuum of care so that we can advance early detection of disease and inform treatment decisions at the same time as diagnosis . we have three leading , first-to-market tests that are transforming care in large , untapped clinical areas - thyroid cancer , lung cancer and ipf . we develop tests that answer specific clinical questions , providing patients and physicians with a clear path forward without the need for risky or costly procedures that are often unnecessary . our rna whole-transcriptome sequencing platform enables us to maximize the amount of genomic content that we extract from each nonsurgical patient sample . we utilize our machine learning expertise to develop genomic classifiers that provide actionable information at the time of diagnosis . at the same time , our approach enables us to provide information that can guide treatment decisions such as surgery strategy and therapy selection . we position our tests in each clinical indication at the point of where they improve diagnostic clarity for cancer and other diseases . in its 2015 report , โ improving diagnostic errors in medicine , โ the institute of medicine concluded that most people will experience at least one diagnostic error in their lifetime , sometimes with devastating consequences . annually , of the hundreds of thousands of patients who are evaluated for suspected disease in our thyroid and lung indications , diagnosis can be ambiguous in 15-70 % of cases . to date , we have commercialized three genomic tests that are changing disease diagnosis : the afirma genomic sequencing classifier , or gsc , and its predecessor , the afirma gene expression classifier , or gec , for thyroid cancer ; the percepta bronchial genomic classifier for lung cancer ; and the envisia genomic classifier for ipf . in 2018 , we unveiled our afirmaยฎ xpression atlas which provides information on the most common and emerging gene alterations associated with thyroid cancer , enabling physicians to confidently tailor surgical and treatment decisions at time of diagnosis . collectively , we believe these three tests address a $ 2 billion global market opportunity . the published evidence supporting our tests demonstrates the robustness of our science and clinical studies , and we believe is key to driving adoption and reimbursement . patients and physicians can access our full list of publications on our website . over 38 clinical studies covering our products have been published , including two landmark clinical validation papers published in the new england journal of medicine for the afirma and percepta classifiers , respectively . we continue to build upon our extensive library of clinical evidence . we believe our focus on developing clinically useful tests that change patient care is enabling us to set new standards in genomic test reimbursement . our afirma genomic classifier is now covered by every major health plan in the united states , which collectively insure more than 275 million people , for use in thyroid cancer diagnosis . veracyte is now contracted as an in-network service provider to health plans representing over 200 million people in the united states our second commercial product , the percepta classifier , is the first genomic test to gain medicare coverage for improved lung cancer screening and diagnosis , making it a covered benefit for more than 60 million people . 50 fourth quarter and full-year 2018 financial results for the three- and twelve-month periods ended december 31 , 2018 , compared to the prior year : revenue was $ 25.8 million and $ 92.0 million , respectively , an increase of 31 % and 28 % ; gross margin was 66 % and 64 % , respectively , an increase of 6 % and 3 % ; operating expenses , excluding cost of revenue , were $ 20.1 million and $ 81.2 million , respectively , an increase of 12 % and 15 % ; net loss and comprehensive loss was ( $ 3.1 ) million and ( $ 23.0 ) million , respectively , an improvement of 63 % and 26 % ; basic and diluted net loss per common share was ( $ 0.08 ) and ( $ 0.62 ) , respectively , an improvement , of 67 % and 32 % ; net cash used in operating activities was $ 1.2 million and $ 13.5 million , respectively , an improvement of 79 % and 44 % ; cash burn ( 1 ) was $ 1.7 million and $ 15.4 million , respectively , an improvement of 73 % and 39 % ; and cash and cash equivalents was $ 78.0 million at december 31 , 2018 . story_separator_special_tag factors impacting the number of tests that we report as completed include , but are not limited to : 52 the number of samples that we receive that meet the medical indication for each test performed ; the quantity and quality of the sample received ; receipt of the necessary documentation , such as physician order and patient consent , required to perform , bill and collect for our tests ; the patient 's ability to pay or provide necessary insurance coverage for the tests performed ; the time it takes us to perform our tests and report the results ; the seasonality inherent in our business , such as the impact of work days per period , timing of industry conferences and the timing of when patient deductibles are exceeded , which also impacts the reimbursement we receive from insurers ; and our ability to obtain prior authorization or meet other requirements instituted by payers , benefit managers , or regulators necessary to be paid for our tests . we generate substantially all our revenue from genomic testing services , including the rendering of a cytopathology diagnosis as part of the afirma solution . for the afirma classifier , we do not accrue revenue for approximately 5 % - 10 % of the tests that we perform and report as complete due principally to insufficient rna from which to render a result and tests performed for which we do not reasonably expect to be paid . continued adoption of and reimbursement for our products revenue growth depends on our ability to secure coverage decisions , achieve broader reimbursement at increased levels from third-party payers , expand our base of prescribing physicians and increase our penetration in existing accounts . because some payers consider our products experimental and investigational , we may not receive payment for tests and payments we receive may not be at acceptable levels . we expect our revenue growth to increase if more payers make a positive coverage decision and as payers enter into contracts with us , which should enhance our revenue and cash collections . to drive increased adoption of our products , we increased our sales force and marketing efforts over the last several years . our sales team is structured to sell all of our products ; we do not maintain a separate sales force for each product . if we are unable to expand the base of prescribing physicians and penetration within these accounts at an acceptable rate , or if we are not able to execute our strategy for increasing reimbursement , we may not be able to effectively increase our revenue . we expect to continue to see pressure from payers to limit the utilization of tests , generally , and we believe more payers are deploying cost containment tactics , such as pre-authorization and employing laboratory benefit managers to reduce utilization rates . how we recognize revenue we commenced recognizing revenue in accordance with the provisions of asc 606 , revenue from contracts with customers starting january 1 , 2018. prior to january 1 , 2018 , we recognized revenue in accordance with the provisions of asc 954-605 , health care entities - revenue recognition . most of our revenue is generated from the provision of diagnostic services . these services are completed upon the delivery of test results to the prescribing physician , at which time we bill for the services . we recognize revenue related to billings on an accrual basis based on estimates of the amount that will ultimately be realized . in determining the amount to accrue for a delivered test , we consider factors such as payment history , payer coverage , whether there is a reimbursement contract between the payer and us , payment as a percentage of agreed upon rate ( if applicable ) , amount paid per test and any current developments or changes that could impact reimbursement . these estimates require significant judgment by management . as of december 31 , 2017 , cumulative amounts billed at list price for tests processed which were not recognized as revenue upon delivery of a patient report because our accrual revenue recognition criteria were not met and for which we have not collected cash or written off as uncollectible , totaled approximately $ 159.3 million . of this amount , we did not collect any amounts in the year ended december 31 , 2018. generally , cash we receive is collected within 12 months of the date the test is billed . we can not provide any assurance as to when , if ever , or to what extent any of these amounts will be collected . notwithstanding our efforts to obtain payment for these tests , payers may deny our claims , in whole or in part , and we may never receive payment for these tests . revenue may not be equal to the billed amount due to a number of factors that we consider when determining revenue accrual rates , including differences in reimbursement rates , the amounts of patient co-payments and co-insurance , the existence of secondary 53 payers , claims denials and the amount we expect to ultimately collect . finally , when we increase our list price , as we did in july 2015 , it will increase the cumulative amounts billed . in addition , payer contracts generally include the right of offset and payers may offset payments prior to resolving disputes over tests performed . generally , we calculate the average afirma genomic classifier reimbursement from all payers for tests that are on average a year old , since it can take a significant period of time to collect from some payers . except in situations where we believe the rate we reasonably expect to collect to vary due to a coverage decision , contract , more recent reimbursement data or evidence to the contrary , we use an average of reimbursement for tests provided over four quarters as it reduces the effects of temporary volatility and seasonal effects .
| results of operations comparison of the years ended december 31 , 2018 , 2017 and 2016 ( in thousands of dollars , except percentages ) replace_table_token_6_th revenue revenue increased $ 20.1 million , or 28 % , for the year ended december 31 , 2018 compared to the same period in 2017 primarily due to a 22 % volume increase in genomic classifiers reported and an increase in the accrual rate for our afirma genomic classifiers . in the year ended december 31 , 2018 , we also recognized $ 2.0 million of revenue for percepta , the volume for which is included in the number of genomic classifiers reported , and $ 1.0 million of biopharmaceutical service revenue . we also make adjustments , as necessary , for tests accrued in prior quarters as collections are made if the amount we expect to ultimately collect changes . the adjustments for tests accrued in prior quarters increased revenue by $ 2.0 million and $ 1.0 million for the years ended december 31 , 2018 and 2017 , respectively , a net increase of $ 1.0 million between the periods . revenue increased $ 6.9 million , or 11 % , for the year ended december 31 , 2017 compared to 2016. revenue recognized on the accrual basis increased $ 22.2 million , or 47 % , for the year ended december 31 , 2017 compared to 2016 , due to increased adoption of afirma and increases in the accrual rates for afirma from higher historical reimbursement from payers . commencing 58 from the quarter ended september 30 , 2016 , we had sufficient information developed to support reasonable estimates of the amount of revenue to accrue upon test delivery for a number of payers that had been previously recognized on the cash basis and as a result , we accrued revenue for substantially all of our test volume .
| 2,652 |
in july 2006 , the financial accounting standards board ( story_separator_special_tag executive overview general following the recession that commenced in 2008 , the lodging industry has experienced improvement in fundamentals , which has continued into 2012. room rates , measured by the average daily rate , or adr , which typically lags occupancy growth in the early stage of a recovery , have shown upward growth . we believe improvements in the economy will continue to positively impact the lodging industry and hotel operating results for several years to come , and we will continue to seek ways to benefit from the cyclical nature of the hotel industry . we believe that in the prior cycle , hotel values and cash flows , for the most part , peaked in 2007 , and we believe the hotel industry may exceed these cash flows and values during the next cyclical peak . as of december 31 , 2012 , we owned 90 hotel properties directly , and four hotel properties through majority-owned investments in joint ventures , which represents 20,034 total rooms , or 19,773 net rooms excluding those attributable to our joint venture partners . currently , all of our hotel properties are located in the united states . in march 2011 , we acquired 96 hotel condominium units at worldquest resort in orlando , florida for $ 12.0 million . also in march 2011 , with an investment of $ 150.0 million , we converted our interest in a joint venture that held a mezzanine loan into a 71.74 % common equity interest and a $ 25.0 million preferred equity interest in a new joint venture ( the โ pim highland jv โ ) that holds 28 high quality full and select service hotel properties with 8,084 total rooms , or 5,800 net rooms excluding those attributable to our joint venture partner . at december 31 , 2012 , we also wholly owned one mezzanine loan with a net carrying value of $ 3.2 million and one note receivable of $ 8.1 million in connection with a joint venture restructuring . 36 based on our primary business objectives and forecasted operating conditions , our current key priorities and financial strategies include , among other things : acquisition of hotel properties ; disposition of hotel properties ; investing in securities ; pursuing capital market activities to enhance long-term shareholder value ; repurchasing capital stock subject to regulatory limitations and our board of directors ' authorization ; preserving capital , enhancing liquidity , and continuing current cost saving measures ; implementing selective capital improvements designed to increase profitability ; implementing effective asset management strategies to minimize operating costs and increase revenues ; financing or refinancing hotels on competitive terms ; utilizing hedges and derivatives to mitigate risks ; and making other investments or divestitures that our board of directors deems appropriate . our investment strategies continue to focus on the upscale and upper-upscale segments within the lodging industry . we believe that as supply , demand , and capital market cycles change , we will be able to shift our investment strategies to take advantage of new lodging-related investment opportunities as they may develop . our board of directors may change our investment strategies at any time without shareholder approval or notice . significant transactions in 2012 and recent developments credit facility capacity expansion and modification - on february 21 , 2012 , we expanded our borrowing capacity under our $ 105.0 million senior credit facility to an aggregate $ 145.0 million and on september 24 , 2012 , we further expanded our borrowing capacity to an aggregate $ 165.0 million . we have an option , subject to lender approval , to further expand the facility to an aggregate size of $ 225.0 million . as part of these expansions two additional banks have been added to the participating banks in the senior credit facility . on december 21 , 2012 , we amended the senior credit facility to reduce the minimum fixed charge coverage ratio from 1.35x to 1.25x through expiration in september 2014. at-the-market preferred stock offering - in september 2011 , we entered into an at-the-market ( โ atm โ ) program with an investment banking firm , pursuant to which we may issue up to 700,000 shares of 8.55 % series a cumulative preferred stock and up to 700,000 shares of 8.45 % series d cumulative preferred stock at market prices up to $ 30.0 million in total proceeds . the atm program remains in effect until such time that either party elects to terminate or the share or dollar threshholds are reached . on march 2 , 2012 , we commenced issuances of preferred stock and during the first two quarters of the year ended december 31 , 2012 , we issued 169,306 shares of 8.55 % series a cumulative preferred stock for gross proceeds of $ 4.2 million and 501,909 shares of 8.45 % series d cumulative preferred stock for gross proceeds of $ 12.3 million . such proceeds , net of commissions and other expenses , were $ 16.0 million for the year ended december 31 , 2012. refinanced our $ 167.2 million mortgage loan - on may 9 , 2012 , we refinanced our $ 167.2 million mortgage loan , due may 2012 , and having an interest rate of libor plus 1.65 % , with a $ 135.0 million mortgage loan , due may 2014 with three one-year extension options and an interest rate of libor plus 6.50 % . as a result , our doubletree guest suites hotel property in columbus , ohio , which was one of ten hotels securing our $ 167.2 million mortgage loan , was no longer encumbered and later sold as the nine remaining hotels secure our $ 135.0 million mortgage loan . story_separator_special_tag as a result , the doubletree guest suites hotel property in columbus , ohio , which was one of ten hotels securing our $ 167.2 million mortgage loan , was no longer encumbered and was later sold , with the nine remaining hotels securing our $ 135.0 million mortgage loan . 38 on november 7 , 2012 , we refinanced our $ 153.9 million non-recourse mortgage loan set to mature in december 2015 , and having an interest rate of 12.72 % , with a $ 211.0 million mortgage loan due november 2014 with three one-year extension options . the new loan is interest only and provides for a floating interest rate of libor plus 6.15 % with a 0.25 % libor floor . the new loan remains secured by the same five hotels including : the embassy suites crystal city , embassy suites orlando airport , embassy suites santa clara , embassy suites portland and the hilton costa mesa . in september 2010 , we entered into an atm program with an investment banking firm to offer for sale from time to time up to $ 50.0 million of our common stock at market prices . no shares have been sold under this atm program since its inception . the atm program remains in effect until such time that either party elects to terminate or the $ 50.0 million cap is reached . our principal sources of funds to meet our cash requirements include : cash on hand , positive cash flow from operations , capital market activities , property refinancing proceeds , asset sales , and net cash derived from interest-rate derivatives . additionally , our principal uses of funds are expected to include possible operating shortfalls , owner-funded capital expenditures , new investments , and debt interest and principal payments . items that impacted our cash flow and liquidity during the periods indicated are summarized as follows : net cash flows provided by operating activities . net cash flows provided by operating activities were $ 130.6 million and $ 74.6 million for the year ended december 31 , 2012 and 2011 , respectively . the increase in cash flows from operating activities was primarily due to increased hotel ebitda , the timing of collecting receivables from hotel guests , paying vendors , and settling with hotel managers and a decrease in restricted cash due to the release of cash deposits for certain loans and capital expenditures . net cash flows used in investing activities . for the year ended december 31 , 2012 , investing activities used net cash flows of $ 68.4 million , which primarily consisted of $ 81.4 million of capital improvements made to various hotel properties offset by cash inflows of $ 5.2 million attributable to cash payments received on previously impaired mezzanine loans and net proceeds of $ 7.7 million attributable to the sale of our douletree guest suites hotel in columbus , ohio . for the year ended december 31 , 2011 , investing activities used net cash flows of $ 47.8 million . cash outlays consisted of $ 145.4 million for the acquisition of a 71.74 % interest in pim highland jv , $ 12.0 million for the acquisition of hotel condominiums , and $ 67.8 million for capital improvements made to various hotel properties . cash inflows consisted of $ 154.0 million from the sale of four hotel properties and two condominium properties , $ 22.6 million from repayment of mezzanine loans , and $ 748,000 of insurance proceeds from settlement of insurance claims . net cash flows used in financing activities . for the year ended december 31 , 2012 , net cash flows used in financing activities were $ 43.9 million . cash outlays primarily consisted of $ 353.4 million for repayments of indebtedness , $ 71.6 million for dividend payments to common and preferred stockholders and unit holders , $ 10.4 million for payments of deferred loan costs and $ 1.9 million for distributions to noncontrolling interests in joint ventures . these cash outlays were partially offset by cash inflows of $ 346.0 million in borrowings on indebtedness , $ 32.0 million in proceeds from the counterparties of our interest rate derivatives and $ 16.0 million from issuances of our series a and series e preferred stock under our atm program . for the year ended december 31 , 2011 , net cash flows used in financing activities were $ 76.9 million . cash outlays consisted of $ 73.0 million for the repurchase of our series b-1 preferred stock , $ 53.3 million for dividend payments to common and preferred stockholders and unit holders , $ 6.0 million for loan modification and extension fees , $ 235.8 million for repayments of indebtedness and capital leases , $ 3.2 million for distributions to noncontrolling interests in joint ventures and payments of $ 97,000 for entering into interest rate caps . these cash outlays were partially offset by cash inflows of $ 109.8 million from issuance of series e preferred stock , $ 25.0 million from borrowings on our senior credit facility , $ 86.0 million from issuance of 7.3 million shares of common stock , $ 72.7 million from the counterparties of our interest rate derivatives , and $ 970,000 from a ) recovery of a short-swing profit from a large shareholder ( greater than 10 % of a class of equity securities ) and b ) buy-in payments from executives in connection with the issuance of operating partnership units . we are required to maintain certain financial ratios under various debt and derivative agreements . if we violate covenants in any debt or derivative agreement , we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms , if at all . violations of certain debt covenants may result in us being unable to borrow unused amounts under a line of credit , even if repayment of some or all borrowings is not required .
| results of operations marriott international , inc. ( โ marriott โ ) currently manages 40 of our properties . for these marriott-managed hotels , the fiscal year reflects twelve weeks of operations for each of the first three quarters of the year and sixteen weeks for the fourth quarter of the year . therefore , in any given quarterly period , period-over-period results will have different ending dates . for marriott-managed hotels , the fourth quarters of 2012 , 2011 and 2010 ended december 28 , 2012 , december 30 , 2011 and december 31 , 2010 , respectively . revpar is a commonly used measure within the hotel industry to evaluate hotel operations . revpar is defined as the product of the average daily room rate ( โ adr โ ) charged and the average daily occupancy achieved . revpar does not include revenues from food and beverage or parking , telephone , or other guest services generated by the property . although revpar does 40 not include these ancillary revenues , it is generally considered the leading indicator of core revenues for many hotels . we also use revpar to compare the results of our hotels between periods and to analyze results of our comparable hotels ( comparable hotels represent hotels we have owned for the entire year ) . revpar improvements attributable to increases in occupancy are generally accompanied by increases in most categories of variable operating costs . revpar improvements attributable to increases in adr are generally accompanied by increases in limited categories of operating costs , such as management fees and franchise fees .
| 2,653 |
the company sells its consumer products under a variety of brands through a broad distribution platform that includes supermarkets , mass merchandisers , wholesale clubs , drugstores , convenience stores , home stores , dollar , pet and other specialty stores , and websites , all of which sell the products to consumers . the company also sells specialty products to industrial customers and distributors . the company focuses its consumer products marketing efforts principally on its ยpower brands.ย these well-recognized brand names include arm & hammer ( used in multiple product categories such as baking soda , cat litter , carpet deodorization and laundry detergent ) , trojan condoms , lubricants and vibrators , oxiclean stain removers , cleaning solutions , laundry detergent and bleach alternatives , spinbrush battery-operated toothbrushes , first response home pregnancy and ovulation test kits , nair depilatories , orajel oral analgesics , xtra laundry detergent , and l'il critters and vitafusion dietary supplements . the company considers four of these brands to be ยmega brandsย : arm & hammer , oxiclean , trojan , and l'il critters and vitafusion , and is giving greatest focus to the growth of these brands . the company operates its business in three segments : consumer domestic , consumer international and spd . the consumer domestic segment includes the power brands and other household and personal care products such as scrub free , kaboom and orange glo cleaning products , feline pine cat litter , answer home pregnancy and ovulation test kits , arrid antiperspirant , close-up and aim toothpastes and simply saline nasal saline moisturizer . the consumer international segment primarily sells a variety of personal care products , some of which use the same brand names as the company 's domestic product lines , in international markets including canada , france , australia , the united kingdom , mexico and brazil . the spd segment is the largest u.s. producer of sodium bicarbonate , which it sells together with other specialty inorganic chemicals for a variety of industrial , institutional , medical and food applications . this segment also sells a range of animal nutrition and specialty cleaning products . in 2013 , the consumer domestic , consumer international and spd segments represented approximately 75 % , 17 % and 8 % , respectively , of the company 's consolidated net sales . fiscal year 2013 financial highlights key fiscal year 2013 financial results include : 2013 net sales grew 9.3 % over fiscal year 2012 , with gains in two of the company 's three segments , reflecting growth in both the base business and the company 's gummy vitamin dietary supplements business . gross margin increased 80 basis points to 45.0 % in fiscal year 2013 from 44.2 % in fiscal year 2012 , reflecting the benefit of productivity programs outpacing commodity inflation and unfavorable price/mix . operating margin increased 80 basis points to 19.5 % in fiscal year 2013 from 18.7 % in fiscal year 2012 , reflecting gross margin expansion and selling , general and administrative expenses ( ยsg & aย ) leverage offset by incremental marketing investments . 35 church & dwight co. , inc. and subsidiaries ( dollars in millions , except share and per share data ) the company achieved diluted net earnings per share in fiscal year 2013 of $ 2.79 , an increase of approximately 14 % from fiscal year 2012 diluted net earnings per share of $ 2.45. cash from operations was $ 499.6 million , a $ 24 million decrease from the prior year , reflecting the shift of a $ 36 million payment of the december 2012 estimated federal tax payment into the first quarter of 2013 as a result of hurricane sandy relief . the company returned $ 205 million to its stockholders through dividends and share repurchases . strategic goals , challenges and initiatives the company 's ability to generate sales depends on consumer demand for its products and retail customers ' decisions to carry its products , which are , in part , affected by general economic conditions in its markets . in 2013 , many of the markets in which the company operates continued to experience general economic softness and weak or inconsistent consumer demand . although the company 's consumer products generally are consumer staples and less vulnerable to decreases in discretionary spending than other products , the continued economic downturn has reduced demand in many categories , particularly those in personal care , and affected company sales in recent periods . some customers have responded to economic conditions by increasing their private label offerings ( primarily in the dietary supplements , diagnostic kits and oral analgesics categories ) , and consolidating the product selections they offer to the top few leading brands in each category . in addition , an increasing portion of the company 's product categories are being sold by club stores , dollar stores and mass merchandisers . these customer actions have placed downward pressure on the company 's sales and gross margins . the company expects the challenging conditions of the last several years to continue in 2014 primarily due to continued weak consumer demand in many categories , new product introductions by competitors and continuing aggressive competitive pricing pressures . in the u.s. , a continued slowdown in income growth , the unemployment rate and the uncertainty of unemployment benefits for the long-term unemployed may also adversely impact consumption patterns . to continue to deliver attractive results for stockholders in this environment , the company intends to continue to aggressively pursue several key strategic initiatives : maintain competitive marketing and trade spending , tightly control its cost structure , continue to develop and launch new and differentiated products , and pursue strategic acquisitions . the company also intends to continue to grow its product sales geographically ( in an attempt to mitigate the impact of weakness in any one area ) , and maintain an offering of premium and value brand products ( to appeal to a wide range of consumers ) . story_separator_special_tag the company actively seeks acquisitions that fit its guidelines , 37 church & dwight co. , inc. and subsidiaries ( dollars in millions , except share and per share data ) and its strong financial position provides it with flexibility to take advantage of acquisition opportunities . in addition , the company 's ability to quickly integrate acquisitions and leverage existing infrastructure has enabled it to establish a strong track record in making accretive acquisitions . since 2001 , the company has acquired eight of its nine ยpower brandsย . in 2013 , the company completed the integration of the acquisition of its l'il critters and vitafusion dietary supplements business , which it acquired in 2012. the company believes it is positioned to meet the ongoing challenges described above due to its strong financial condition , experience operating in challenging environments and continued focus on key strategic initiatives : maintaining competitive marketing and trade spending , managing its cost structure , continuing to develop and launch new and differentiated products , and pursuing strategic acquisitions . this focus , together with the strength of the company 's portfolio of premium and value brands , has enabled the company to succeed in a range of economic environments , and should position the company to continue to increase stockholder value over the long-term . moreover , the generation of a significant amount of cash from operations , as a result of net income and effective working capital management , combined with an investment grade credit rating provides the company with the financial flexibility to pursue acquisitions , drive new product development , make capital expenditures to support organic growth and gross margin improvements , return cash to stockholders through dividends and share buy backs , and reduce outstanding debt , positioning it to continue to create stockholder value . for information regarding risks and uncertainties that could materially adversely affect the company 's business , results of operations and financial condition , see ยrisk factorsย in item 1a of this annual report . recent developments dividend increase and share repurchase authorization on january 29 , 2014 the board declared an 11 % increase in the regular quarterly dividend from $ 0.28 to $ 0.31 per share , equivalent to an annual dividend of $ 1.24 per share or a current dividend yield of approximately 1.9 % per share as of february 14 , 2014. the decision raises the dividend payout from $ 155 million to approximately $ 170 million . on january 29 , 2014 , the board authorized a share repurchase program , under which the company may repurchase up to $ 500 million of common stock . this share repurchase program replaces the company 's share repurchase program previously announced on november 5 , 2012. in 2013 , the company purchased 0.9 million shares at an aggregate cost of approximately $ 50 million under the previous share purchase authorization , which is now terminated . in addition , the board authorized a new evergreen share repurchase program , under which the company may repurchase , from time to time , the common stock to reduce or eliminate dilution associated with issuances of common stock under the company 's incentive plans . as part of the share repurchase programs , in february 2014 , the company entered into an accelerated share repurchase contract with a commercial bank to purchase $ 140 million of the company 's common stock . the company paid $ 140 million to the bank , inclusive of fees , and received an initial delivery of approximately 2 million shares , which reduced the company 's shares outstanding . the company used cash on hand to fund the initial purchase price . the total amount of shares to be ultimately delivered by the bank will be determined by the average price per share paid by the bank during the purchase period , which is expected to end in mid-may 2014. as of the filing of this annual report , the company has made no purchases in 2014 other than those pursuant to the asr described above . 38 church & dwight co. , inc. and subsidiaries ( dollars in millions , except share and per share data ) critical accounting policies and estimates the company 's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the u.s. ( gaap ) . the preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets , liabilities , revenue and expenses , and related disclosure of contingent assets and liabilities . by their nature , these judgments are subject to uncertainty . they are based on the company 's historical experience , its observation of trends in industry , information provided by its customers and information available from other outside sources , as appropriate . the company 's significant accounting policies and estimates are described below . revenue recognition and promotional and sales return reserves virtually all of the company 's revenue represents sales of finished goods inventory and is recognized when received or picked up by the company 's customers . the reserves for consumer and trade promotion liabilities and sales returns are established based on the company 's best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date . promotional reserves are provided for sales incentives , such as coupons to consumers , and sales incentives provided to customers ( such as slotting , cooperative advertising , incentive discounts based on volume of sales and other arrangements made directly with customers ) . all such costs are netted against sales . slotting costs are recorded when the product is delivered to the customer . cooperative advertising costs are recorded when the customer places the advertisement for the company 's products . discounts relating to price reduction arrangements are recorded when the related sale takes place . costs associated with end-aisle or other in-store displays are recorded when product that is subject to the promotion is sold .
| consolidated results 2013 compared to 2012 net sales net sales for the year ended december 31 , 2013 were $ 3,194.3 , $ 272.4 or approximately 9.3 % above 2012 net sales . the components of the net sales increase are as follows : replace_table_token_7_th ( 1 ) on october 1 , 2012 , the company acquired the l'il critters and vitafusion gummy vitamin dietary supplement business . net sales of these product lines subsequent to the acquisition are included in the company 's results . the volume change primarily reflects increased product sales in the consumer domestic and consumer international segments partially offset by lower spd sales . lower price/mix in consumer domestic and spd was partially offset by favorable price/mix in consumer international . sales in the first quarter of 2012 were negatively impacted due to a timing shift in customer orders from the first quarter of 2012 to the fourth quarter of 2011 in anticipation of the january 1 , 2012 information systems upgrade in the u.s. gross profit the company 's gross profit for 2013 was $ 1,438.0 , a $ 146.6 increase as compared to the same period in 2012 due primarily to contributions from its gummy vitamin dietary supplement business , higher sales volume and productivity improvement programs . these increases were partially offset by higher trade promotion and an unfavorable product mix . commodity costs for the company were unchanged in 2013 as compared to 2012. gross margin was 45.0 % in 2013 as compared to 44.2 % in 2012. gross margin was higher due to the positive impact of productivity improvement programs and higher sales volume , partially offset by higher trade promotion and coupon costs and unfavorable product mix .
| 2,654 |
our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and uncertainties , including those described in `` risk factors '' , `` โcautionary note regarding forward-looking statements '' and elsewhere in this annual report on form 10-k. we assume no obligation to update any of these forward-looking statements . overview we are a global oilfield products company , serving the subsea , drilling , completion , production and infrastructure sectors of the oil and natural gas industry . we design , manufacture and distribute products , and engage in aftermarket services , parts supply and related services that complement our product offering . our product offering includes a mix of highly engineered capital products and frequently replaced items that are used in the exploration , development , production and transportation of oil and natural gas . our capital products are directed at : drilling rig equipment for new rigs , upgrades and refurbishment projects ; subsea construction and development projects ; the placement of production equipment on new producing wells ; and downstream capital projects . our engineered systems are critical components used on drilling rigs or in the course of subsea operations , while our consumable products are used to maintain efficient and safe operations at well sites in the well construction process , within the supporting infrastructure and at processing centers and refineries . historically , just over half of our revenue is derived from activity-based consumable products , while the balance is derived from capital products and a small amount from rental and other services . we seek to design , manufacture and supply reliable products that create value for our diverse customer base , which includes , among others , oil and gas operators , land and offshore drilling contractors , oilfield service companies , subsea construction and service companies , and pipeline and refinery operators . we operate two business segments : drilling & subsea segment . we design and manufacture products and provide related services to the subsea , drilling , well construction , completion and intervention markets . through this segment , we offer subsea technologies , including robotic vehicles and other capital equipment , specialty components and tooling , a broad suite of complementary subsea technical services and rental items , and applied products for subsea pipelines ; drilling technologies , including capital equipment and a broad line of products consumed in the drilling and well intervention process ; and downhole technologies , including cementing and casing tools , completion products , and a range of downhole protection solutions . production & infrastructure segment . we design and manufacture products and provide related equipment and services to the well stimulation , production and infrastructure markets . through this segment , we supply flow equipment , including well stimulation consumable products and related recertification and refurbishment services ; production equipment , including well site production equipment and process equipment ; and valve solutions , which includes a broad range of industrial and process valves . market conditions the demand for our products and services is ultimately driven by energy prices and the expectation of exploration and production companies as to future trends in those prices . the level of demand for our products and services is directly related to activity levels and the capital and operating budgets of our customers , which in turn are influenced heavily by the outlook for energy prices . energy prices have historically been cyclical in nature , as exemplified by the recent decrease in oil prices . current energy prices are affected by a wide range of factors and are difficult to predict . as discussed in more detail below , energy prices have decreased significantly from the first half of 2014. although the extent and duration of the decline in energy prices is difficult to predict , we expect the current market conditions to have a significant , adverse impact on our business in 2015 . 34 the table below shows average crude oil and natural gas prices for west texas intermediate crude oil ( wti ) , united kingdom brent crude oil ( brent ) , and henry hub natural gas : replace_table_token_7_th average oil prices were approximately 7 % lower in 2014 than 2013. average natural gas prices were approximately 17 % higher in 2014 than 2013. these oil and natural gas price levels during 2014 were sufficient to support high levels of exploration and production activity , including the continued development of offshore projects . oil prices experienced a significant decline in the second half of 2014 , declining over 17 % from the average price during the first half and ending the year more than 50 % off their june peak . as of february 25 , 2015 , the west texas intermediate oil price has continued to decline another 7 % from the end of 2014. we expect the precipitous decline in oil prices over the last several months to have a significant negative impact on spending by our customers and therefore on our results of operations in 2015. in addition to the commodity price levels , the average active rig count data below , based on the weekly baker hughes incorporated rig count , reflect a broad measure of industry activity and resultant demand for our drilling , completion and production related products and services . replace_table_token_8_th generally , our sales are impacted by changes in rig activity and wells completed . the average u.s. rig count increased 6 % from 2013 , the international rig count increased 3 % from 2013 and the canadian rig count remained stable . the u.s. rig count peaked in september 2014 at 1,931 rigs . as a result of lower oil prices , the u.s. rig count experienced a 5 % decline in the fourth quarter . story_separator_special_tag our management continually evaluates the level of our selling , general and administrative expenses in relation to our revenue and makes appropriate changes in light of activity levels to preserve and improve our profitability while meeting the on-going support and regulatory requirements of the business . operating income and operating margin percentage . we define operating income as revenue less cost of goods sold less selling , general and administrative expenses . we define our operating margin percentage as operating income divided by revenue . these metrics assist management in evaluating the performance of each segment as a whole , especially to determine whether the amount of administrative burden is appropriate to support current business activity levels . earnings per share . we calculate fully-diluted earnings per share as prescribed under generally accepted accounting principles ( `` gaap '' ) , that is net income divided by common shares outstanding , giving effect for the assumed exercise of all outstanding options and warrants with a strike price less than the average fair value of the shares over the period covered for the calculation . we believe this measure is important as it reflects the sum total of operating results and all attendant capital decisions , showing in one number the amount earned for the stockholders of our company . free cash flow . we define free cash flow as net income , increased by non-cash charges included in net income ( e.g. , depreciation and amortization and deferred income taxes ) , increased or decreased by changes in net working capital , less capital expenditures . we believe that this measure is important because it encompasses both profitability and capital management in evaluating results . free cash flow represents the business ' contribution in the generation of funds available to pay debt outstanding , invest in other areas , or return funds to our stockholders . factors affecting the comparability of our future results of operations to our historical results of operations our future results of operations may not be comparable to our historical results of operations for the periods presented , primarily for the following reasons : on april 17 , 2012 , we sold 13,889,470 shares of common stock in the ipo and 2,666,666 shares of common stock in a private placement to a private equity fund ( not affiliated with the original sponsor ) for aggregate net proceeds of approximately $ 256.4 million and $ 50 million , respectively . we used all of the net proceeds to repay a portion of the outstanding borrowings under the revolving portion of the credit facility . since 2012 , we have grown our business both organically and through strategic acquisitions . we have expanded and diversified our product portfolio and business lines with the acquisition of one business in 2014 , two businesses and our joint venture investment in 2013 and four businesses in 2012. the historical financial data for periods prior to the acquisitions does not include the results of any of the acquired companies for the periods presented and , as such , does not provide an accurate indication of our future results . as we integrate acquired companies and further implement internal controls , processes and infrastructure to operate in compliance with the regulatory requirements applicable to companies with publicly traded shares , it is likely that we will incur incremental selling , general and administrative expenses relative to historical periods . our future results will depend on our ability to efficiently manage our combined operations and execute our business strategy . 37 story_separator_special_tag style= '' font-family : arial ; font-size:11pt ; color : # 000000 ; font-style : italic ; font-weight : bold ; text-decoration : none ; '' > december 31 , 2012 replace_table_token_10_th 41 revenue our revenue for the year ended december 31 , 2013 increased $ 109.9 million , or 7.8 % , to $ 1,524.8 million compared to the year ended december 31 , 2012. for the year ended december 31 , 2013 , our drilling & subsea segment and our production & infrastructure segment comprised 61.6 % and 38.4 % of our total revenue , respectively , compared to 58.4 % and 41.6 % , respectively , for the year ended december 31 , 2012. the revenue changes by operating segment consisted of the following : drilling & subsea segment โ revenue increased $ 114.3 million , or 13.8 % , to $ 940.8 million during the year ended december 31 , 2013 compared to the year ended december 31 , 2012. the increase in revenue is attributable to acquisitions in the third quarter 2013 and fourth quarter 2012 , contributing $ 166.0 million in incremental revenue , offset by lower sales of other drilling products and equipment on reduced drilling activity levels . production & infrastructure segment โ revenue decreased $ 3.7 million , or 0.6 % , to $ 585.5 million during the year ended december 31 , 2013 compared to the year ended december 31 , 2012. the net decrease in revenue was driven by 18.7 % lower sales of our well stimulation products , as orders remain at depressed levels compared to 2012 on lower utilization of our customers ' pressure pumping equipment . this decrease is partially offset by 10.6 % higher sales of our surface production equipment . segment operating income and segment operating margin percentage segment operating income for the year ended december 31 , 2013 decreased $ 24.9 million , or 10.5 % , to $ 212.9 million compared to the year ended december 31 , 2012. the segment operating margin percentage is calculated by dividing segment operating income by revenue .
| results of operations year ended december 31 , 2014 compared with year ended december 31 , 2013 replace_table_token_9_th 38 revenue our revenue for the year ended december 31 , 2014 increased $ 214.9 million , or 14.1 % , to $ 1,739.7 million compared to the year ended december 31 , 2013 . for the year ended december 31 , 2014 , our drilling & subsea segment and our production & infrastructure segment comprised 64.7 % and 35.3 % of our total revenue , respectively , compared to 61.6 % and 38.4 % , respectively , for the year ended december 31 , 2013 . the revenue changes by operating segment consisted of the following : drilling & subsea segment โ revenue increased $ 185.8 million , or 19.7 % , to $ 1,126.6 million during the year ended december 31 , 2014 compared to the year ended december 31 , 2013 . the increase is primarily attributable to increased market activity as reflected in higher average rig counts as compared to the prior year . we have had particularly strong increases in sales of our pipe handling tools , other drilling capital and consumable products , downhole products and workclass remotely operated vehicles . a portion of the increase is attributable to two acquisitions closed in the third quarter 2013 and one in the second quarter 2014 , offset by a small divestiture in the first quarter 2014. production & infrastructure segment - revenue increased $ 28.9 million , or 4.9 % , to $ 614.4 million during the year ended december 31 , 2014 compared to the year ended december 31 , 2013 . the increase in revenue was primarily due to a strong recovery in the market for our flow equipment products as sales of well stimulation products increased 45 % over the prior year .
| 2,655 |
we undertake no obligation to publicly update forward-looking statements , whether as a result of new information , future events or otherwise . overview our key therapeutic products and product candidates include : prostacyclin analogues ( remodulinยฎ , tyvasoยฎ , oral treprostinil and beraprost-mr ) : stable synthetic forms of prostacyclin , an important molecule produced by the body that has powerful effects on blood vessel health and function ; phosphodiesterase type 5 ( pde-5 ) inhibitor ( adcircaยฎ ) : a molecule that acts to inhibit the degradation of cyclic guanosine monophosphate ( cgmp ) in cells . cgmp is activated by nitric oxide , a naturally occurring substance in the body that mediates the relaxation of vascular smooth muscle ; monoclonal antibodies for oncologic applications ( ch14.18 mab and 8h9 mab ) : antibodies that treat cancer by activating the immune system ; glycobiology antiviral agents : a novel class of small , sugar-like molecules that have shown antiviral activity in a range of pre-clinical settings ; and cell-based therapy : a cell-based product known as placental expanded ( plx ) cells being studied for the treatment of pulmonary hypertension . we concentrate substantially all of our research and development efforts on these key therapeutic programs . our lead product is remodulin ( treprostinil ) injection ( remodulin ) for the treatment of pulmonary arterial hypertension ( pah ) . the united states food and drug administration ( fda ) initially approved remodulin in 2002 for subcutaneous ( under the skin ) administration . the fda subsequently broadened its approval of remodulin in 2004 for intravenous ( in the vein ) use and for the treatment of patients requiring transition from flolanยฎ , the first drug approved by the fda for the treatment of pah . remodulin has also been approved in various countries outside of the united states . in most of these countries , remodulin has been approved for both routes of administration . we announced in december 2011 that we received regulatory approval by the french regulatory agency , agence franรงaise de sรฉcuritรฉ sanitaire des produits de santรฉ ( afssaps ) for the intravenous use of remodulin to treat pah . the afssaps approval follows a review period during which 22 european economic area member nations , each of which had previously approved subcutaneous remodulin through the mutual recognition process , reviewed and endorsed the final variation assessment report issued by afssaps , which will allow the marketing of intravenous remodulin in those nations . our other commercial products include adcirca ( tadalafil ) tablets ( adcirca ) and tyvaso ( treprostinil ) inhalation solution ( tyvaso ) . in may 2009 , the fda approved adcirca , an orally administered therapy for the treatment of pah to which we acquired certain exclusive commercialization rights from eli lilly and company ( lilly ) . in july 2009 , we received fda 60 approval of tyvaso , an inhaled therapy for the treatment of pah . we launched both of these products for commercial sale during the third quarter of 2009. these two products enable us to offer treatments to a broader range of patients who suffer from pah . in addition , we are continuing to develop oral formulations of treprostinil and beraprost-mr , both for the treatment of pah . we sold medicomp , inc. , our former telemedicine subsidiary , to a group of private investors on march 31 , 2011. in addition , in june 2011 , we discontinued all of our continuing telemedicine-related activities . accordingly , the results of medicomp , inc. , including the gain recognized on its disposal , have been included in discontinued operations for each of the three years in the three-year period ended december 31 , 2011 on our consolidated statements of operations . refer to note 18 ย sale of medicomp , inc. to our consolidated financial statements included in this annual report on form 10-k for details . revenues sales of remodulin comprise the largest share of our revenues . other significant sources of revenues include sales of tyvaso and adcirca . sales of tyvaso and adcirca have continued to grow since their commercial introduction in 2009 , as each of these therapies has gained broader market acceptance . we sell remodulin and tyvaso in the united states to our specialty pharmaceutical distributors : accredo health group , inc. , curascript , inc. and cvs caremark . adcirca is sold to pharmaceutical wholesalers that are part of lilly 's pharmaceutical wholesaler network . we also sell remodulin to distributors outside of the united states . on july 21 , 2011 , express scripts , inc. , the parent company of curascript , announced the signing of a merger agreement with medco health solutions , inc. , the parent company of accredo . the parties announced that the merger , which is subject to regulatory and shareholder approvals , is expected to close in the first half of 2012. presently , we do not expect the merger , if approved , to materially affect our business . we require our distributors to maintain reasonable levels of contingent inventory at all times as the interruption of remodulin or tyvaso therapy can be life threatening . consequently , sales of these therapies in any given quarter may not precisely reflect patient demand . our distributors typically place monthly orders based on estimates of future demand and considerations of contractual minimum inventory requirements . as a result , sales volume of remodulin and tyvaso can vary , depending on the timing and magnitude of these orders . the patient protection and affordable care act , as amended by the health care and education reconciliation act ( collectively , the acts ) contains broad provisions that will be implemented over the next several years . we are continually evaluating the impact of the acts on our business ; however , our evaluation is dependent upon the issuance of final regulations and the impact this legislation will have on insurance companies and their relationships with drug manufacturers . story_separator_special_tag european approval to produce remodulin at our silver spring facility is pending . we intend to use our own facilities to produce our primary supply of remodulin , tyvaso and oral treprostinil tablets , and we will contract with third parties to supplement our production capacity . we acquired the rights to the tyvaso inhalation system from nebu-tec international med products eike kern gmbh ( nebu-tec ) in september 2009. we currently manufacture the tyvaso inhalation system in germany using labor supplied by nebu-tec . in addition , we received fda approval in december 2010 for minnetronix , inc. to manufacture the tyvaso inhalation system and for quality tech services , inc. to package daily supplies . catalent pharma solutions , inc. continues to manufacture tyvaso for us and in march 2011 , we received fda approval to produce tyvaso in our silver spring , maryland facility . operating expenses since our inception , we have devoted substantial resources to our various research and development initiatives . accordingly , we incur considerable costs related to our clinical trials and research , which are conducted both internally and through third parties , on a variety of projects to develop pharmaceutical products . we also seek to license or acquire promising technologies and or compounds to be incorporated into our development pipeline . our operating expenses can be materially impacted by the recognition of share-based compensation expense ( benefit ) in connection with any stock option grants and our share tracking award plans ( stap ) . stap awards are required to be measured at fair value at the end of each reporting period until the awards are no longer outstanding . the fair value of both stap awards and stock option grants are measured using inputs and assumptions that can materially impact the amount of compensation expense for a given period . additionally , some or all of the following factors , among others , can cause substantial variability in the amount of share-based compensation recognized in connection with the stap from period to period : ( 1 ) changes in the price of our common stock ; ( 2 ) changes in the number of outstanding awards ; and ( 3 ) changes in both the number of vested awards and the period awards have accrued toward vesting . generally , our stock option grants are measured at fair value at the date of grant and related compensation is recognized over the requisite service period , which typically coincides with the vesting period . however , in the case of options granted to our chief executive officer , which vest upon issuance in accordance with her employment agreement , we recognize all compensation expense immediately at the date of grant . we accrue compensation expense for performance-related stock option grants when we determine that it is probable that the performance criteria will be met . major research and development projects our major research and development projects focus on the use of prostacyclin analogues to treat cardiovascular diseases , monoclonal antibodies to treat a variety of cancers , and glycobiology antiviral agents to treat infectious diseases . cardiopulmonary disease projects tyvaso the fda approved tyvaso for the treatment of pah in july 2009 , and we launched the product for commercial sale in september 2009. in connection with the tyvaso approval , we agreed to a post-marketing requirement ( pmr ) and certain post-marketing commitments ( pmcs ) . pmrs and pmcs often obligate sponsors to conduct studies after fda approval to gather additional information about a product 's safety , efficacy , or optimal use . pmrs are required studies , whereas pmcs are 63 voluntary commitments . we are required to provide the fda with annual updates on our pmr and pmcs . failure to complete or adhere to the timelines set forth by the fda for the pmr could result in penalties , including fines or withdrawal of tyvaso from the market , unless we are able to demonstrate good cause for the failure or delay . in accordance with our pmr , we are enrolling patients in a long-term observational study in the u.s. that will include 1,000 patient years of follow-up in patients treated with tyvaso , and 1,000 patient years of follow up in control patients receiving other pah treatments . this study will allow us to continue to assess the safety of tyvaso . we are currently required to submit the results of the study by december 15 , 2014. under the pmcs , we committed to modify particular aspects of the tyvaso inhalation system . as part of these modifications , we agreed to perform a usability analysis incorporating the evaluation and prioritization of user-related risk followed by a human factors study . the modifications and usability analysis have been completed , and in september 2011 , the fda notified us that we had fulfilled the requirements of the pmcs . we are in the process of finalizing the design of a new clinical trial aimed at securing european medicines agency approval of tyvaso for the treatment of pah . we expect the new trial will be conducted in patients who are either not on an approved background therapy ( etra or pde-5 inhibitor ) or are on an approved background therapy , but can not be on dual background therapy for more than one year . the trial 's planned primary endpoint is the median change in six-minute walk distance after 24 weeks .
| results of operations years ended december 31 , 2011 and 2010 the following table presents the components of net revenues ( dollars in thousands ) : replace_table_token_6_th the growth in revenues for the year ended december 31 , 2011 , compared to year ended december 31 , 2010 , corresponded to the continued increase in the number of patients being prescribed our products . for the years ended december 31 , 2011 and 2010 , approximately 81 % and 84 % , respectively , of net revenues were derived from our three u.s.-based distributors . 69 the table below includes a reconciliation of the accounts associated with estimated rebates , prompt-pay discounts , allowances for sales returns and distributor fees ( in thousands ) : replace_table_token_7_th replace_table_token_8_th the table below summarizes research and development expense by major project and non-project components ( dollars in thousands ) : replace_table_token_9_th cardiopulmonary . the increase in cardiopulmonary program expenses of $ 64.3 million for the year ended december 31 , 2011 , compared to year ended december 31 , 2010 , corresponded to : ( 1 ) an increase of $ 46.1 million in expenses to develop beraprost-mr , which resulted in large part from our july 2011 license agreement amendment with toray ; ( 2 ) an increase of $ 18.3 million in connection with other cardiopulmonary projects , including a $ 5.0 million charge incurred in connection with the closing of our license agreement with pluristem ; and ( 3 ) an increase of $ 4.2 million in expenses related to our freedom-c 2 and freedom-m clinical trials . share-based compensation . the decrease in share-based compensation of $ 53.9 million for the year ended december 31 , 2011 , compared to the year ended december 31 , 2010 , resulted from the 70 decrease in share-based compensation recognized in connection with the stap as a result of the decline in our stock price . other .
| 2,656 |
overview we are a biopharmaceutical company focused on discovering , developing , and delivering important new medicines to patients for the treatment of cancer . we are leveraging our proprietary switch-control kinase inhibitor platform and deep expertise in kinase biology to execute our strategy to develop a broad portfolio of innovative medicines . we have one approved drug , qinlock , which was developed through our proprietary platform . beyond qinlock , we are developing three clinical-stage drug candidates and advancing our research-stage programs . we wholly own qinlock and all of our drug candidates with the exception of a development and commercialization out-license agreement for qinlock in greater china . we are preparing for a potential launch of qinlock in europe and we have entered , and intend in the future to enter , into select distributor arrangements to offer qinlock in geographies where we do not intend to distribute qinlock on our own , such as australia and canada . our drug and drug candidates qinlock on may 15 , 2020 , qinlock was approved by the fda for the treatment of adult patients with advanced gist who have received prior treatment with three or more kinase inhibitors , including imatinib . following fda approval of qinlock , in may 2020 , we launched qinlock commercially in the u.s. additionally , in november 2020 , we announced that we had entered into exclusive distribution agreements for qinlock in canada , israel , australia , new zealand , singapore , malaysia , and brunei . in july 2020 , zai , our licensee for qinlock in greater china , announced that the china nmpa accepted the nda submission for qinlock for the treatment of adult patients with advanced gist who have received prior treatment with three or more kinase inhibitors , including imatinib . in october 2020 , an eu maa for qinlock in fourth-line gist was accepted for review by the ema . in january 2021 , we announced that swissmedic accepted a swiss maa for qinlock in fourth-line gist . we also announced plans to file a marketing application in the u.k. for qinlock in fourth-line gist . in preparation for a potential european approval of qinlock , we are actively engaged in building a direct commercial presence in key european markets and building a targeted infrastructure to commercialize qinlock , if approved . in january 2021 , we also announced commencement of planning efforts for a bridging study for qinlock in japan . 104 in addition , we successfully completed enrollment of our global pivotal phase 3 study in second-line gist patients , intrigue , and expect to announce top-line results from intrigue in the second half of 2021. we are also studying qinlock in an ongoing phase 1 study in patients with different stages of gist following treatment with at least one systemic anticancer therapy , such as imatinib . we believe qinlock has the potential to play an even broader role than in the fourth-line setting in the treatment of gist , and we are planning further clinical development to explore this potential . vimseltinib we are currently studying vimseltinib in an open-label phase 1/2 study designed to evaluate the safety , efficacy , pk , and pd of vimseltinib in patients with malignant solid tumors as well as patients with tgct . in november 2020 , we announced the selection of a phase 2 dose and initiated the expansion portion of the study with vimseltinib in patients with symptomatic tgct not suitable for surgery . we are continuing to enroll tgct patients in cohort 9 of the dose escalation portion of the study to complete enrollment in this cohort . we expect to present updated data for vimseltinib in the second half of 2021. rebastinib we are currently studying rebastinib in two phase 1b/2 studies in combination with chemotherapy , one with paclitaxel and one with carboplatin . in october 2018 , we initiated an open-label , multicenter , phase 1b/2 study of rebastinib in combination with paclitaxel to assess safety , tolerability , pk , and efficacy in patients with advanced or metastatic solid tumors . in january 2019 , we initiated an open-label , multicenter , phase 1b/2 study of rebastinib in combination with carboplatin in patients with advanced or metastatic solid tumors . in january 2020 , we selected a phase 2 dose for , and activated , part 2 of the phase 1b/2 study of rebastinib in combination with carboplatin . in may 2020 , we announced that in part 2 of the study of rebastinib in combination with paclitaxel , we observed the required number of responses in the first stage in both the endometrial and platinum-resistant ovarian cancer cohorts , triggering the expansion of enrollment in these cohorts . in addition , based on the clinical activity observed in part 1 , we added a cohort for patients with carcinosarcoma in part 2 of the study of rebastinib in combination with paclitaxel . we expect to present updated data from the study of rebastinib in combination with paclitaxel in patients with endometrial cancer in the second quarter of 2021 and in patients with proc in the second half of 2021. dcc-3116 in january 2021 , we announced our plans to initiate a phase 1 study of dcc-3116 in the second quarter of 2021 , subject to fda authorization to proceed under our ind for dcc-3116 , submitted in the fourth quarter of 2020 and cleared by the fda . story_separator_special_tag we may generate revenue in the future from a combination of product sales or payments from collaboration , distribution , or any potential additional license agreements that we may enter into with third parties . we expect that our revenue in the foreseeable future will be derived primarily from sales of qinlock and , payments , if any , made under the zai license and zai supply agreements we entered into in june 2019 and february 2020 , respectively . we can not provide assurance as to the timing of future milestone or royalty payments or that we will receive any of these payments at all . we can not provide assurance as to what extent we will generate revenue from the commercialization of qinlock or if , when , or to what extent we will generate revenue from the commercialization and sale of our drug candidates for which we receive marketing approval , if any . we may never succeed in obtaining regulatory approval for any of our drug candidates other than qinlock . net product revenues following the fda approval of qinlock in may 2020 , we commenced commercial sales of qinlock in the u.s. and began generating product revenue . during the year ended december 31 , 2020 , our only source of product revenues were from the sales of qinlock . product revenues are recorded net of estimates of variable consideration . please read note 2 , summary of significant accounting policies , of these consolidated financial statements for further details of the reserves recorded for variable considerations . collaboration revenues for the years ended december 31 , 2020 and 2019 , collaboration revenues were associated with our license and supply agreements with zai , as applicable . pursuant to the terms of the zai license agreement , we received an upfront cash payment of $ 20.0 million and became eligible to receive up to $ 185.0 million in potential development and commercial milestone payments , consisting of up to $ 50.0 million of development milestones and up to $ 135.0 million of commercial milestones . in addition , during the term of the zai license agreement , zai will be obligated to pay us tiered percentage royalties ranging from low to high teens on potential annual 106 net sales of the licensed products in the territory , subject to adjustments in specified circumstances . additionally , certain costs we incur associated with the zai license agreement are reimbursed by zai . as of december 31 , 2020 , qinlock had not received regulatory approval in the territory , and it is not possible to estimate when , or if , we may receive royalty payments or commercial milestones under the zai license agreement . pursuant to the terms of the zai supply agreement , costs we incur for external manufacturing services are reimbursed by zai . cost of sales our cost of sales includes external costs of producing and distributing inventories that are related to product revenue during the respective period of the associated sales . in addition , shipping and handling costs for product shipments are recorded in cost of sales as incurred . cost of sales for newly launched products , such as qinlock , will not be significant until the initial pre-launch inventory is depleted , and additional inventory is manufactured and sold . as a result , the gross margin on sales of qinlock for the year ended december 31 , 2020 was enhanced by the use of active pharmaceutical ingredients and components that were previously expensed as research and development expenses prior to the launch of qinlock . operating expenses the successful development and commercialization of our drug and drug candidates is highly uncertain . this is due to the numerous risks and uncertainties , including the following : successful completion of preclinical studies and clinical trials ; receipt and related terms of marketing approvals from applicable regulatory authorities ; raising additional funds necessary to complete clinical development of and commercialize qinlock and any current or future drug candidates for which we receive approval ; obtaining and maintaining patent , trade secret and other intellectual property protection , and regulatory exclusivity for our drug and drug candidates ; making arrangements with third-party manufacturers , or establishing manufacturing capabilities , for both clinical and commercial supplies of our drug and drug candidates ; developing and implementing marketing and reimbursement strategies ; continuing to establish sales , marketing , and distribution capabilities to support the commercial launch of qinlock or our drug candidates , if and when approved , whether alone or in collaboration with others such as zai , our licensee for qinlock in greater china ; acceptance of qinlock or our drug candidates , if and when approved , by patients , the medical community , and third-party payors ; effectively competing with other therapies ; the ability to obtain clearance or approval of companion diagnostic tests , if required , on a timely basis , or at all ; obtaining and maintaining third-party coverage and adequate reimbursement ; protecting and enforcing our rights in our intellectual property portfolio ; and maintaining a continued acceptable safety profile of our products following approval . a change in the outcome of any of these variables with respect to the commercialization of qinlock or the development of any of our drug candidates would significantly change the costs and timing associated with the commercialization of qinlock or development of that drug candidate . we may never succeed in obtaining regulatory approval for any of our drug candidates other than qinlock .
| results of operations comparison of the years ended december 31 , 2020 , 2019 , and 2018 the following table summarizes our results of operations for the years ended december 31 , 2020 , 2019 , and 2018 : replace_table_token_5_th revenues net product revenues during the year ended december 31 , 2020 , our only source of product revenues were from the sales of qinlock , which commenced in the u.s. in may 2020 following the fda approval of qinlock on may 15 , 2020. for the year december 31 , 2020 , product revenues were $ 39.5 million , which consisted of $ 38.0 million of revenues in the u.s. and $ 1.5 million of revenues outside of the u.s. collaboration revenues for the year ended december 31 , 2020 compared to the same period in 2019 , collaboration revenues decreased $ 22.4 million , primarily driven by the recognition of up-front and development milestone payments of $ 20.0 million and $ 5.0 million , respectively , associated with the zai license agreement , entered into in june 2019 , in the second quarter of 2019 as compared to the recognition of a $ 2.0 million development milestone payment associated with the zai license agreement in the second quarter of 2020. the decrease in up-front and milestone payments were partially offset by $ 0.6 million of revenues recognized associated with reimbursements under the zai license and supply agreements during the year ended december 31 , 2020 . 111 cost of sales cost of sales were $ 0.2 million for the year ended december 31 , 2020 and were primarily related to packaging , labeling , shipping , and distribution costs associated with sales of qinlock . external manufacturing costs associated with qinlock inventory prior to fda approval were previously expensed as research and development expenses and , therefore , are not included in cost of sales during the year ended december 31 , 2020.
| 2,657 |
risk factors โ above and elsewhere in this annual report on form 10-k. see section heading โ note regarding forward-looking statements โ above . all dollar amounts stated herein are in u.s. dollars in thousands , except per share amounts , per warrant amounts , per ounce amounts , gold price per ounce amounts , and exchange rates unless specified otherwise . references to c $ refer to canadian currency , a $ to australian currency and $ to united states c urrenc y. overview vista gold corp. and its subsidiaries ( collectively , โ vista , โ the โ company , โ โ we , โ โ our , โ or โ us โ ) operate in the gold mining industry . we are focused on the evaluation , acquisition , exploration and advancement of gold exploration and potential development projects , which may lead to gold production or value adding strategic transactions such as earn-in right agreements , option agreements or leases to third parties , joint venture arrangements with other mining companies , or outright sales of assets for cash and or other consideration . as such , we are considered an exploration stage enterprise . our approach to acquisitions of gold projects has generally been to seek projects within political jurisdictions with well-established mining , land ownership and tax laws , which have adequate drilling and geological data to support the completion of a third-party review of the geological data and to complete an estimate of the gold mineralization . in addition , we look for opportunities to improve the value of our gold projects through exploration drilling and or technical studies resulting in changes to the operating assumptions underlying previous engineering work . our principal assets include our flagship mt . todd gold project in northern territory ( โ nt โ ) , australia , and a 24.9 % holding in midas gold corp. common shares ( โ midas gold shares โ ) ( reduced to 12.4 % during february 2014 ) . in addition to non-core projects in mexico and california , we hold royalty interests in projects in bolivia and indonesia . outlook we do not currently generate operating cash flows . our sources of financing in the past have been the issuance of our common shares , debt financing and sale of non-core assets . the prices for gold equities , particularly those with early stage projects , have decreased steadily during the past year , and capital raising has become more difficult for mining companies which do not have producing assets . consequently , raising sufficient amounts of capital on reasonable terms has become increasingly difficult . these conditions are expected to continue for the foreseeable future , and could affect our ability to raise sufficient capital on reasonable terms , if at all . we are committed to ensuring that the company remains liquid and we will continue to identify and to execute meaningful cost cutting initiatives . the company will continue to seek other financing sources with priority given to non-dilutive sources such as the sale of our used mill equipment and monetization of other non-core assets . however , there can be no assurance that we will be able to timely monetize the non-core assets at a value acceptable to us or at all . the company believes that after giving effect to the sale of 16,000,000 midas gold shares held by the company 's subsidiary vista gold u.s. inc. for gross proceeds of c $ 12,800 ( $ 11,640 ) and paying down the 2013 facility by approximately c $ 5,516 ( $ 5,000 ) ( see note 20 of the consolidated financial statements ) , it will have sufficient working capital to operate the company through 2014 and repay the remaining approximately c $ 1,443 ( $ 1,300 ) on its 2013 facility in full upon the facility maturing in march of 2015 or earlier ( defined below in โ financial position , liquidity and capital resources . โ ) story_separator_special_tag is principally related to the unrealized loss arising from the change in fair value of our midas gold shares . th e 2011 deferred tax expense of $ ( 35,522 ) is a result of the unrealized gains arising from the disposal of gold assets in the yellow pine-stibnite district in idaho in exchange for midas gold shares ; and subsequent fair value gains in our midas gold shares ( see above ) . the estimated deferred tax liability associated with the 2011 gains exceeded our u.s. deferred tax asset valuation allowance , consequently this valuation allowance was released upon receipt of the midas gold shares . financial position , liquidity and capital resources operating activities net cash used in operating activities was $ 24 ,522 , $ 30,155 and $ 24,990 for the years ended december 31 , 2013 , 2012 and 2011 , respectively . the decrease is primarily the result of changes in operating expenses as discussed in โ results of operations , โ above , together with the payment in 2013 for significant water treatment costs incurred in 2012 . investing activities net cash provided b y investing activities of $ 5,039 for the year ended december 31 , 2013 was primarily due to receipt of $ 7,000 related to the sale of the los cardones project , offset by additions to plant and equipment of $ 2,199 at the mt . todd gold project . net cash provided by investing activities o f $ 3,839 for the year ended december 31 , 2012 was primarily due to receipt of $ 5,500 from agreements related to awak mas and los cardones projects , offset by additions to plant and equipment of $ 2,066 , mainly at our mt . todd gold project . net cash used in investing activities of $ 4,044 for the same period in 2011 was primarily due to the acquisition for cash of 1,400,000 additional midas gold shares issued in a private placement . story_separator_special_tag ( the โ purchasers โ ) , for a total of $ 13,000 , $ 7,000 of which was paid in october 2013 and $ 6,000 was ori ginally payable in january 2014 . in january 2014 , we extended the due to date to july 2014 for additional consideration of $ 250. if the purchaser does not make the $ 6,250 payment , vista will retain the $ 7,000 already received and 100 % of the los cardones gold project will be returned to vista . pursuant to the terms of vista 's 2013 facil ity , vista repaid c $ 3,041 ( $ 2,96 0 ) of the 2013 facility using proceeds from the los cardones sale . during february 2014 , we completed the sale of 16,000,000 midas gold s hares held by our subsidiary vista gold u.s. inc. for gross proceeds of c $ 12,800 ( $ 11,640 ) . after giving effect to the sale of midas gold shares ( note 20 ) , our proforma working capital increases to approximately $ 14,500 ( all other items remaining constant ) , and the balance of the 2013 facility reduces to approximately $ 1,300. included in the $ 14,500 working capital amount is approximately $ 11 ,2 00 of cash and cash equivalents . in the past year , capital raising has become more difficult for junior mining companies which do not have producing assets and these conditions are expected to continue for the foreseeable future . consequently , we may not be able to raise capital in sufficient amounts on reasonable terms , if at all . management is strongly committed to careful cash management and maintaining liquidity . the company 's cash burn rate has been dramatically reduced since 2012 and the first half of 2013 as several cash intensive programs such as water treatment and preparation of the preliminary feasibility have been completed . in addition , several significant cost cutting measures have been introduced including a reduction of management positions , significant reductions in cash compensation for executives , senior management and the company 's board of directors , and the delay or elimination of all discretionary programs , including exploration activities . other aggressive cost cutting measures , particularly at mt . todd , are being pursued . the company 's cash burn rate is expected to average approximately $ 2,000 per quarter through 2014 , assuming normal wet seasons in the nt . the company believes that after giving effect to the sale of 16,000,000 midas gold shares , its cash position , will be sufficient to fund the company through 2014 , and to repay its 2013 facility in full . in addition , the company hopes to receive $ 6,250 in july 2014 , related to the 2013 sale of the los cardones gold project , subject to the purchaser 's option to elect to not make this payment . the company will continue to seek additional financing with priority given to non-dilutive sources such as the sale of non-core assets , including our used mill equipment and , if the parties agree to acceptable terms , the entry into the guadalupe de los reyes gold/silver project option agreement with cangold ( note 20 ) . however , there can be no assurance that we will be able to timely monetize our non-core assets at a value acceptable to us or at all . the continuing operations of the company are dependent upon our ability to secure sufficient funding and to generate future profits from operations . the underlying value and recoverability of the amounts shown as mineral properties , plant and equipment , assets held for sale , investments and other property interests in our consolidated balance sheets are dependent on our ability to generate positive cash flow from operations and to continue to fund exploration and development activities that would lead to profitable production or proceeds from the disposition of these assets . there can be no assurance that we will be successful in generating future profitable operations , disposing of these assets or securing additional funding in the future on terms acceptable to us or at all . our audited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or liabilities which might be necessary should we not be able to continue as a going-concern . fair value accounting the following table sets forth the company ' s assets measured at fair value by level within the fair value hierarchy . as required by accounting guidance , assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement . replace_table_token_11_th our cash equivalent instruments , marketable securities and investment in midas gold shares are classified as level 1 of the fair value hierarchy as they are valued at quoted market prices in an active market . the estimated fair value of the amayapampa interest is based on probability-weighted cash flow scenarios discounted using a risk-adjusted discount rate ( 15 % ) and assumptions including future gold prices ( average gold prices realized range from $ 832 to $ 884 , depending on timing of assumed start-up ) , estimated 9 years life-of-mine go ld production of 615,000 ounces and the expected timing of the start of commercial production ( periods ranging from 2 to 4 years , or never ) , which are management 's best estimates based on currently available information . significant changes in any of the unobservable inputs in isolation would result in a significant change in fair value estimate . the company incurred a level 3 impairment loss on certain mill equipment ( note 7 ) for the years ended december 31 , 2013 and 2012. this equipment was valued at $ 6,500 and $ 10,000 , at december 31 , 2013 and 2012 , respectively , based on a third party assessment of the projected sale value given full consideration to current market conditions and an orderly sale process .
| results from operations summary for the year ended december 31 , 2013 , substantially all of our resources were focused on our mt . todd gold project in nt , australia , where we completed a pre-feasibility study and submitted a final environmental impact statement . through 2013 we introduced a range of cost cutting measures including the elimination of discretionary spending , downsizing the company and voluntary reductions to cash compensation for senior management . consolidated net loss for the year s ended december 31 , 2013 and 2012 was $ 59,488 and $ 70,656 or $ 0.73 and $ 0.9 5 per basic share , respectively . for the same period in 2011 we reported net income of $ 51,546 or $ 0.75 per basic share . the principal components of these year-over-year changes are discussed below . exploration , property evaluation and holding costs exploration , property evaluation and holding costs were $ 15,600 , $ 27,536 and $ 21,774 during the years ended december 31 , 2013 , 2012 and 2011 , respectively . the lower 2013 costs were in part due to the cost reductions noted above . in addition , several capital intensive activities which had started in 2012 were completed in early 2013. this includ es the mt todd gold project pre-feasibility study and related activities , permitting , and the september 2012 start of water treatment in the existing open pit . at our los cardones gold project , costs decreased in 2012 from 2011 because since february 2012 invecture group , s.a. de c.v. ( โ invecture โ ) began to incur all costs associated with the progression of this project under an earn-in right agreement ( โ earn-in right agreement โ ) .
| 2,658 |
similarly , as of december 31 , 2018 and 2017 , the goodwill amount recorded for the acquisition of pemco world air services , inc. , ( `` pemco `` ) , a business unit included in mro services , was tested for impairment . to perform the goodwill impairment test , the company determined the fair value of pemco , using industry market multiples and discounted cash flows utilizing a market-derived rate of return ( level 3 fair value inputs ) . the goodwill recorded from the pemco acquisition was not impaired . as disclosed in note b , on november 9 , 2018 , the company acquired omni . the purchase price was allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition . the excess story_separator_special_tag the following management 's discussion and analysis has been prepared with reference to the historical financial condition and results of operations of air transport services group , inc. , and its subsidiaries . it should be read in conjunction with the accompany consolidated financial statements and related notes included in item 8 of this report as well as business development described in item 1 and risk factors in item 1a of this report . overview we lease aircraft and provide airline operations , aircraft modification and maintenance services , ground services , and other support services to the air transportation and logistics industries . through the company 's subsidiaries , we offer a range of complementary services to delivery companies , freight forwarders , e-commerce operators , airlines and government customers . our principal subsidiaries include three independently certificated airlines , ( abx , ati and oai ) and an aircraft leasing company , ( cam ) . cam provides competitive aircraft lease rates by converting passenger aircraft into cargo freighters and offering them to customers under long-term leases . we have three reportable segments : cam , which leases boeing 777 , 767 , 757 and 737 aircraft and aircraft engines ; acmi services , which includes the cargo and passenger transportation operations of the three airlines ; and mro services , which provides aircraft maintenance and modification services to customers . our other business operations , which primarily provide support services to the transportation industry , include load transfer and sorting services as well as related equipment maintenance services . these operations do not constitute reportable segments due to their size . on november 9 , 2018 , the company acquired oai , a passenger airline , along with related entities ( referred to collectively as omni ) . revenues and operating expenses include the activities of omni for periods since their acquisition by the company on november 9 , 2018. at december 31 , 2018 , cam owned 88 aircraft that were in revenue service . this fleets consists of 34 boeing 767-200 freighter aircraft , two boeing 767-200 passenger aircraft , 33 boeing 767-300 freighter aircraft , six boeing 767-300 passenger aircraft , three boeing 777-200 passenger aircraft , four boeing 757-200 freighter aircraft , four boeing 757 `` combi '' aircraft and two boeing 737-400 freighter aircraft . at december 31 , 2018 , cam also owned five boeing 767-300 aircraft either already undergoing , or awaiting induction into the freighter conversion process and one boeing 767-200 aircraft being staged for redeployment . our largest customers are dhl network operations ( usa ) , inc. and its affiliates , asi , which is a subsidiary of amazon , and the u.s. department of defense . we have had long-term contracts with dhl since august 2003. dhl accounted for 26 % , 30 % and 37 % of the company 's consolidated revenues excluding directly reimbursed revenues during the years ended december 31 , 2018 , 2017 and 2016 , respectively . under a 2015 cmi agreement with dhl , abx operates and maintains aircraft based on pre-defined fees scaled for the number of aircraft hours flown , aircraft scheduled and flight crews provided to dhl for its network . under the pricing structure of the cmi agreement , abx is responsible for complying with faa airworthiness directives , the cost of boeing 767 airframe maintenance and certain engine maintenance events for the dhl-leased aircraft that it operates . as of december 31 , 2018 , the company , through cam , leased 16 boeing 767 aircraft to dhl comprised of nine boeing 767-200 aircraft through march 2019 and seven boeing 767-300 aircraft expiring between 2019 and 2024. ten of the 16 boeing 767 were being operated by the company 's airlines for dhl . we also operate four cam-owned boeing 757 aircraft under other operating arrangements with dhl . all but two of the expiring boeing 767 aircraft leases and cmi agreement with dhl are expected to be renewed in march 2019 under terms similar to the existing terms . we have been providing freighter aircraft and services for cargo handling and logistical support for amazon 's asi since september 2015. revenues from our commercial arrangements with asi comprised approximately 27 % , 27 % and 18 % of our consolidated revenues excluding directly reimbursed revenues during the years ended december 31 , 2018 , 2017 and 2016 , respectively . on march 8 , 2016 , we entered into an air transportation services agreement ( the โ atsa โ ) with asi pursuant to which cam leased 20 boeing 767 freighter aircraft to asi , including 12 boeing 767-200 freighter aircraft for a term of five years and eight boeing 767-300 freighter aircraft for a term of seven years . the atsa also provides for the operation of those aircraft by our airline subsidiaries , for a term of five years , and the performance of ground handling services by our subsidiary , lgstx . story_separator_special_tag we experienced additional revenues and earnings due to the acquisition of omni in november 2018. adjusted pre-tax earnings from continuing operations also improved due to additional aircraft leases and the expansion of gateway ground operations for asi . growth in revenue was partially offset by the cost necessary to support expanded flight operations , higher costs for flight crews , higher depreciation expense and employee expenses , particularly in support of logistical services . pre-tax earnings for 2018 and 2017 included additional interest expense due to the acquisition of omni and the expansion of the fleet and included $ 8.3 million and $ 2.1 million for the amortization of convertible debt discount and issuance costs . operating results for 2016 were negatively impacted when abx flight crewmembers went on strike for two days , which disrupted our customers ' operations and reduced our revenues . 28 a summary of our revenues and pre-tax earnings and adjusted pre-tax earnings from continuing operations is shown below ( in thousands ) : replace_table_token_5_th adjusted pre-tax earnings from continuing operations , a non-gaap measure , is pre-tax earnings excluding settlement charges and other non-service components of retiree benefit costs , gains and losses for the fair value re-measurement of financial instruments , lease incentive amortization , the transaction fees related to the acquisition of omni , the start-up costs of a non-consolidated joint venture and the charge off of debt issuance costs from a non-consolidated affiliate during the first quarter of 2016. we exclude these items from adjusted pre-tax earnings because they are distinctly different in their predictability or not closely related to our on-going operating activities . management uses adjusted pre-tax earnings to compare the performance of core operating results between periods . presenting this measure provides investors with a comparative metric of fundamental operations while highlighting changes to certain items among periods . adjusted pre-tax earnings should not be considered in isolation or as a substitute for analysis of the company 's results as reported under gaap . we adopted topic 606 using a modified retrospective approach , under which financial statements are prepared under the revised guidance for the year of adoption , but not for prior years . we determined that under topic 606 , the company is an agent for aircraft fuel and certain other costs reimbursed under its acmi and cmi contracts and for certain ground services that it arranges for asi . under the new standard , such reimbursed amounts are reported net of 29 the corresponding expenses beginning in 2018. revenues during 2017 and 2016 included $ 289.4 million and $ 126.8 million for reimbursable revenues under its acmi and cmi contracts and for directly reimbursed ground services , which under the new standard , would have been reported net of the related expenses in 2018 . 2018 and 2017 cam cam offers aircraft leasing and related services to external customers and also leases aircraft internally to the company 's airlines . cam acquires passenger aircraft and manages the modification of the aircraft into freighters . the follow-on aircraft leases normally cover a term of five to eight years . as of december 31 , 2018 and 2017 , cam had 59 and 51 aircraft under lease to external customers , respectively . cam 's revenues grew by $ 19.4 million during 2018 compared to 2017 , primarily as a result of additional aircraft leases . revenues from external customers totaled $ 156.5 million and $ 140.4 million for 2018 and 2017 , respectively . cam 's revenues from the company 's airlines totaled $ 72.4 million during 2018 , compared to $ 69.1 million for 2017 , reflecting lease revenues for the addition of the eleven passenger aircraft acquired with omni in november 2018. cam 's aircraft leasing and related services revenues , which exclude customer lease incentive amortization , increased $ 22.3 million in 2018 compared to 2017 , primarily as a result of new aircraft leases in 2018. since the beginning of 2018 , cam has added nine boeing 767-300 freighter aircraft and one boeing 737-400 freighter aircraft to its lease portfolio . cam also added two boeing 767-200 passenger aircraft , six boeing 767-300 passenger aircraft and three boeing 777-200 passenger aircraft to its lease portfolio after the company 's acquisition of omni in november 2018. cam 's pre-tax earnings , inclusive of internally allocated interest expense , were $ 65.6 million and $ 61.5 million during 2018 and 2017 , respectively . increased pre-tax earnings reflect the eleven passenger aircraft leased to omni as well as the ten freighter aircraft placed into service in 2018 , offset by a $ 6.2 million increase in internally allocated interest expense due to higher debt levels , the $ 2.9 million increase in the amortization of the asi lease incentive in 2018 compared to 2017 , and $ 18.8 million more depreciation expense driven by the addition of ten boeing aircraft in 2018 compared to 2017. during 2018 , cam purchased eight 767-300 passenger aircraft for freighter conversion , two of which were leased to external customers and one leased internally during 2018 after completing the conversion process . as of december 31 , 2018 , the remaining five of these boeing 767-300 passenger aircraft were being modified from passenger to freighter configuration . the company also leased one boeing 737-400 aircraft which was purchased during 2017 to an external customer after completing the conversion process in 2018. we expect cam to complete the freighter modification of the five passenger aircraft which were in the modification process at december 31 , 2018. we have customer commitments or letters of intent for these five aircraft . in december , 2018 , we entered into an agreement to acquire twenty boeing 767-300 extended-range passenger aircraft over the next three years . the aircraft covered by this agreement are currently operated by american airlines . additionally , the company has agreements to acquire three more boeing 767-300 passenger aircraft .
| aircraft fleet summary our fleet of cargo and passenger aircraft is summarized in the following table as of december 31 , 2018 , 2017 and 2016. our cam-owned operating aircraft fleet has increased by 29 aircraft since the end of 2016 , driven by customer demand for the boeing 767-300 converted freighter as well as the purchase of 11 passenger aircraft operated by oai . our freighters , converted from passenger aircraft , utilize standard shipping containers and can be deployed into regional cargo markets more economically than larger capacity aircraft , newly built freighters or other competing alternatives . at december 31 , 2018 , the company owned five boeing 767-300 aircraft that were either already undergoing , or awaiting induction into the freighter conversion process . aircraft fleet activity during 2018 is summarized below : - cam completed the modification of nine boeing 767-300 freighter aircraft , six purchased in the previous year and three purchased in 2018. cam began to lease seven of those aircraft under multi-year leases to external customers . cam began to lease the other two aircraft to ati . - cam completed the modification of one boeing 737-400 freighter aircraft purchased in the previous year and entered into a multi-year lease with an external customer . 26 - with the company 's acquisition of omni , cam added two boeing 767-200 passenger aircraft , six boeing 767-300 passenger aircraft and three boeing 777-200 passenger aircraft . all eleven of these passenger aircraft are being leased to oai . additionally , oai leases two other boeing 767 aircraft from third party lessors . - abx returned one boeing 767-300 and two boeing 767-200 freighter aircraft to cam . the 767-300 aircraft was then leased to an external customer under a multi-year lease and is being operated by abx while the two 767-200 aircraft were leased to different external customers under multi-year leases .
| 2,659 |
. words such as โ expects , โ โ anticipates , โ โ targets , โ โ goals , โ โ projects , โ โ would , โ โ could , โ โ intends , โ โ plans , โ โ believes , โ โ seeks , โ โ estimates , โ variations of such words , and similar expressions are intended to identify such forward-looking statements . forward-looking statements by their nature address matters that are , to different degrees , uncertain , and these forward-looking statements are only predictions and are subject to risks , uncertainties , and assumptions that are difficult to predict . therefore , actual results may differ materially and adversely from those expressed in any forward-looking statements . factors that might cause or contribute to such differences include , but are not limited to , those discussed in this report under the section entitled โ risk factors โ in item 1a of part i and elsewhere , and in other reports we file with the sec . while forward-looking statements are based on reasonable expectations of our management at the time that they are made , you should not rely on them . we undertake no obligation to revise or update publicly any forward-looking statements for any reason . the following discussion is based upon our consolidated financial statements included elsewhere in this report , which have been prepared in accordance with u.s. generally accepted accounting principles ( โ u.s . gaap โ ) . in the course of operating our business , we routinely make decisions as to the timing of the payment of invoices , the collection of receivables , the manufacturing and shipment of products , the fulfillment of orders , the purchase of supplies , and the building of inventory and spare parts , among other matters . each of these decisions has some impact on the financial results for any given period . in making these decisions , we consider various factors including contractual obligations , customer satisfaction , competition , internal and external financial targets and expectations , and financial planning objectives . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues , expenses , and related disclosure of contingencies . on an ongoing basis , we evaluate our estimates , including those related to sales returns , pricing credits , warranty costs , allowance for doubtful accounts , impairment of long-term assets , especially goodwill and intangible assets , contract manufacturer exposures for carrying and obsolete material charges , assumptions used in the valuation of share-based compensation , and litigation . we base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . for further information about our critical accounting policies and estimates , see note 2 , significant accounting policies , in notes to consolidated financial statements in item 8 of part ii of this report , and our โ critical accounting policies and estimates โ section included in this โ management 's discussion and analysis of financial condition and results of operations. โ actual results may differ from these estimates under different assumptions or conditions . to aid in understanding our operating results for the periods covered by this report , we have provided an executive overview and a summary of the business and market environment . these sections should be read in conjunction with the more detailed discussion and analysis of our consolidated financial condition and results of operations in this item 7 , our โ risk factors โ section included in item 1a of part i , and our consolidated financial statements and notes thereto included in item 8 of part ii of this report . business and market environment at juniper networks , we design , develop , and sell products and services that together provide our customers with a high-performance network infrastructure built on simplicity , security , openness , and scale . we serve the high-performance networking requirements of global service providers , enterprises , governments , and research and public sector organizations that view the network as critical to their success . our core competencies in hardware systems , silicon design , network architecture , and our open cross-network software platform are helping customers achieve superior performance , greater choice and flexibility , while reducing overall total cost of ownership . we do business in three geographic regions : americas , emea , and apac . beginning in the first quarter of 2012 , we aligned our organizational structure to focus on our platform and software strategy , which resulted in two business segments organized principally by product families : psd and ssd . our psd segment primarily offers scalable routing and switching products that are used in service provider , enterprise , and public sector networks to control and direct network traffic between data centers , core , edge , aggregation , campus , wans , branch , and consumer and business devices . our ssd segment offers software solutions focused on network security and network services applications for both service providers and enterprise customers . both segments offer worldwide services , including technical support and professional services , as well as educational and training programs to our customers . 32 we remain focused on a common vision for the new network and we believe that the organizational structure we have in place will effectively drive our innovative portfolio and support our customers ' next-generation network requirements . together , our high-performance product and service offerings help our customers to convert legacy networks that provide commoditized services into more valuable assets that provide differentiation , value , increased performance , reliability , and security to end-users . story_separator_special_tag sales of our core and edge legacy routing products and firewall products , partially offset by increases in our service revenue , switching products , and high-end srx products . gross margin : our gross margin as a percentage of revenues decreased in 2012 , compared to 2011 , due to lower product margin from $ 44.3 million in inventory charges related to component inventory held in excess of forecasted demand and an intangible asset impairment charge of $ 16.1 million , and to a lesser extent , due to an increase in the size and number of strategic contracts with lower margins , and a shift in product mix to lower margin products . this decrease was partially offset by an increase in service margin . operating income : our operating income as a percentage of revenues decreased in 2012 , compared to 2011 , primarily due to slower revenue growth relative to our sales and marketing and research and development expense , as we continue to invest in our innovative portfolio and bring new products to market . in addition , restructuring and other associated charges of $ 99.7 million were recorded in 2012 , related to workforce reduction activities , facility closures , asset impairment charges , and contract terminations . net income attributable to juniper networks and net income per share attributable to juniper networks common stockholders : the decrease in net income attributable to juniper networks in 2012 , compared to 2011 , reflects the lower operating income discussed above . operating cash flows : operating cash flows decreased in 2012 , compared to 2011 , primarily due to lower net income , higher taxes paid , timing of payments to our vendors , and a decrease in deferred revenue , offset by collections of our outstanding receivables . 34 deferred revenue : total deferred revenue decreased $ 43.6 million to $ 923.4 million as of december 31 , 2012 , compared to $ 967.0 million as of december 31 , 2011 , due to a decline in deferred service revenue , partially offset by an increase in deferred product revenue . dso : dso is calculated as the ratio of ending accounts receivable , net of allowances , divided by average daily net sales for the preceding 90 days . dso for the quarter ended december 31 , 2012 decreased by 11 days , or 24 % compared to the quarter ended december 31 , 2011. the decrease was primarily due to shipment linearity , resulting in a greater proportion of the periods shipments converted to cash by the end of the period and an increase in collections on our outstanding receivables . book-to-bill : book-to-bill represents the ratio of product orders booked divided by product revenues during the respective period . book-to-bill was greater than one for the quarter ended december 31 , 2012 and one for the quarter ended december 31 , 2011. stock repurchase plan activity : under our stock repurchase program , we repurchased approximately 35.8 million shares of our common stock at an average price of $ 18.05 per share for an aggregate purchase price of $ 645.6 million during the year ended december 31 , 2012 . critical accounting policies and estimates the preparation of financial statements and related disclosures in conformity with u.s. gaap requires us to make judgments , assumptions , and estimates that affect the amounts reported in the consolidated financial statements and the accompanying notes . we base our estimates and assumptions on current facts , historical experience , and various other factors that we believe are reasonable under the circumstances , to determine the carrying values of assets and liabilities that are not readily apparent from other sources . note 2 , significant accounting policies , in notes to consolidated financial statements in item 8 of part ii of this report , describes the significant accounting policies and methods used in the preparation of the consolidated financial statements . the critical accounting policies described below are significantly affected by critical accounting estimates . such accounting policies require significant judgments , assumptions , and estimates used in the preparation of the consolidated financial statements and actual results could differ materially from the amounts reported based on these policies . to the extent there are material differences between our estimates and the actual results , our future consolidated results of operations may be affected . inventory valuation and contract manufacturer liabilities . inventory consists primarily of component parts to be used in the manufacturing process and is stated at lower of average cost or market . a provision is recorded when inventory is determined to be in excess of anticipated demand or obsolete , to adjust inventory to its estimated realizable value . in determining the provision , we also consider estimated recovery rates based on the nature of the inventory . as of december 31 , 2012 and 2011 , our inventory balances were $ 62.5 million and $ 69.1 million , respectively . we establish a liability for non-cancelable , non-returnable purchase commitments with our contract manufacturers for carrying charges , quantities in excess of our demand forecasts , or obsolete material charges for components purchased by the contract manufacturers to meet our demand forecasts or customer orders . we also take estimated recoveries of aged inventory into consideration when determining the liability . as of december 31 , 2012 and 2011 , our contract manufacturer liabilities were $ 27.7 million and $ 14.8 million , respectively . significant judgment is used in establishing our forecasts of future demand , recovery rates based on the nature and age of inventory , and obsolete material exposures . if the actual component usage and product demand are significantly lower than forecast , which may be caused by factors within and outside of our control , or if there were a higher incidence of inventory obsolescence because of rapidly changing technology and our customer requirements , we may be required to increase our inventory write-downs and contract manufacturer liabilities , which could have an adverse impact on our gross margins and profitability .
| summary of cash flows as of december 31 , 2012 , our cash and cash equivalents decreased by $ 502.6 million from december 31 , 2011 . this decrease was mainly the result of cash used in our investing and financing activities of $ 596.7 million and $ 548.3 million , respectively , offset by $ 642.4 million generated from operating activities . operating activities net cash provided by operating activities was $ 642.4 million , $ 986.7 million , and $ 812.3 million , for 2012 , 2011 , and 2010 , respectively . cash flows from operations decreased by $ 344.3 million in 2012 , compared to 2011 , primarily due to lower consolidated net income , higher taxes paid , timing of payments to our vendors , and a decrease in deferred revenue , offset by the timing of collections on our outstanding receivables . cash flows from operations increased by $ 174.4 million in 2011 , compared to 2010 , primarily due to the one-time litigation settlement payment of $ 169.3 million in 2010 which did not occur in 2011. the increase was partially offset by lower consolidated net income in 2011. investing activities net cash used in investing activities was $ 596.7 million , $ 707.2 million , and $ 532.7 million , in 2012 , 2011 , and 2010 , respectively . the decrease in net cash used in investing activities in 2012 , compared to 2011 , was primarily due to fewer purchases of investments , offset by higher spending on asset purchases , property and equipment , and acquisitions . during 2011 , we invested the proceeds from the issuance of the notes in available-for-sale securities and purchased property and equipment for the phased campus build-out of our corporate headquarters in sunnyvale , ca . we expect our capital expenditures to decrease in 2013 as we complete our phased campus build-out .
| 2,660 |
assets held for sale on november 18 , 2020 , the company entered into a purchase and sale agreement to sell the cherry creek property for $ 95.0 million . the company determined that the property met the criteria for classification as held for sale as of december 31 , 2020 . refer to note 13 โ subsequent events โ to the accompanying consolidated financial statements for further information . the property was classified as held for sale as of december 31 , 2020 ( in thousands ) : replace_table_token_16_th on may 10 , 2019 , the company entered into a purchase and sale agreement to sell a land parcel at the circle point property for $ 6.5 million . the company determined that the land parcel met the criteria for classification as held for sale as of december 31 , 2019. on july 23 , 2020 , the company completed the sale of the land parcel at the circle point property . the property has been classified as held for sale as of december 31 , 2019 ( in thousands ) : circle point land december 31 , 2019 real estate properties , net $ 4,514 assets held for sale $ 4,514 accounts payable , accrued expenses , deferred rent and tenant rent deposits $ ( 67 ) liabilities related to assets held for sale $ ( 67 ) 76 5. lease intangibles lease intangibles and the value of assumed lease obligations as of december 31 , 2020 and december 31 , 2019 were comprised as follows ( in thousands ) : replace_table_token_17_th the estimated story_separator_special_tag the following discussion and analysis is based on , and should be read in conjunction with , the consolidated financial statements and the related notes thereto of the city office reit , inc. for the years ended december 31 , 2020 and december 31 , 2019. as used in this section , unless the context otherwise requires , references to โ we , โ โ our , โ โ us , โ and โ our company โ refer to city office reit , inc. , a maryland corporation , together with our consolidated subsidiaries , including city office reit operating partnership l.p. , a maryland limited partnership of which we are the sole general partner and which we refer to in this section as our operating partnership , except where it is clear from the context that the term only means city office reit , inc. this management 's discussion and analysis of financial condition and results of operations ( this โ md & a โ ) contains forward-looking statements that involve risks , uncertainties and assumptions . see โ cautionary statement regarding forward-looking statements โ for a discussion of the risks , uncertainties and assumptions associated with those statements . our actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors , including , but not limited to , those in โ risk factors โ and included in other portions of this document . you should read the following md & a in conjunction with the historical consolidated financial statements , and notes thereto , included elsewhere in this report . we have omitted from this md & a a detailed discussion of the year-over-year changes from the company 's fiscal year 2018 as compared to fiscal year 2019 , which can be found in the md & a section in the company 's annual report on form 10-k for the year ended december 31 , 2019 , filed with the u.s. securities and exchange commission on february 26 , 2020. overview company we were formed as a maryland corporation on november 26 , 2013. on april 21 , 2014 , we completed our initial public offering ( โ ipo โ ) of shares of common stock . we contributed the net proceeds of the ipo to our operating partnership in exchange for common units in our operating partnership . both we and our operating partnership commenced operations upon completion of the ipo and certain related formation transactions . the company 's interest in the operating partnership entitles the company to share in distributions from , and allocations of profits and losses of , the operating partnership in proportion to the company 's percentage ownership of common units . as the sole general partner of the operating partnership , the company has the exclusive power under the operating partnership 's partnership agreement to manage and conduct the operating partnership 's business , subject to limited approval and voting rights of the limited partners . the company has elected to be taxed and will continue to operate in a manner that will allow it to qualify as a reit under the code . subject to qualification as a reit , the company will be permitted to deduct dividend distributions paid to its stockholders , eliminating the u.s. federal taxation of income represented by such distributions at the company level . reits are subject to a number of organizational and operational requirements . if the company fails to qualify as a reit in any taxable year , the company will be subject to u.s. federal and state income tax on its taxable income at regular corporate tax rates and any applicable alternative minimum tax . during the year ended december 31 , 2020 , the company completed the repurchase of 11,363,851 shares of its common stock for approximately $ 100.0 million . 44 on july 23 , 2020 , the company sold a land parcel at the circle point property in denver , colorado for $ 6.5 million , resulting in an aggregate gain of $ 1.3 million net of disposal-related costs and taxes paid by our taxable reit subsidiary , which has been classified as net gain on sale of real estate property in the consolidated statements of operations . indebtedness at december 31 , 2020 , we had approximately $ 75.0 million outstanding under the company 's unsecured credit facility ( the โ unsecured credit facility โ ) and a $ 7.0 story_separator_special_tag not all tenant requests ultimately result in modification agreements , nor are we foregoing our contractual rights under our lease agreements . we believe many of these requests received were from tenants who had the ability to pay rent at the time and were seeking opportunistic deferral opportunities . we continue to work efficiently to find tailored resolutions in each case where warranted , including potential deferrals of rent , lease term extensions with short-term rent relief , temporary percentage rent opportunities , or , in limited circumstances , rent abatement particularly when the tenant is viewed as an amenity to the building . we may incur additional losses in future periods due to tenants that default on their leases , file for bankruptcy and or otherwise experience significant financial difficulty as a result of the duration of the covid-19 pandemic , but the extent of those losses is impossible to predict given the fluidity of the pandemic and its uncertain impact on economic activity . leasing activity has generally been slow , with the exception of the life science sector , and we believe it will continue to be impacted by covid-19 . we have experienced and we expect that we will continue to experience slower new leasing and there remains uncertainty over existing tenants ' long-term space requirements . overall , this could reduce our anticipated rental revenues . in addition , certain tenants in our markets have and may explore opportunities to sublease all or a portion of their leased square footage to other tenants or third parties . while subleasing generally does not impact the ability to collect payment from the original lessee and will not result in any decrease in the rental revenues expected to be received from the primary tenant , this trend could reduce our ability to lease incremental square footage to new tenants , could increase the square footage of our properties that โ goes dark โ , could reduce anticipated rental revenue should tenants determine their long-term needs for square footage are lower than originally anticipated and potentially impact the pricing and competitiveness for lease office space in our markets . because construction activities have generally been classified as essential activities throughout our markets during the pandemic , we do not currently expect meaningful delays in customers taking occupancy under recently signed leases . 46 during 2020 , we made strategic adjustments to our business operations as a result of covid-19 . we ceased acquisition activities , allocated capital towards our share repurchase program and adjusted our common stock dividend which will allow us to operate with lower leverage and higher levels of liquidity than previously planned . we believe economic conditions , leasing activity and acquisition prospects have improved substantially since the initial phase of the pandemic and we will continue to actively evaluate business operations and strategies to optimally position ourselves . for a discussion of the impact of the covid-19 pandemic on our liquidity and balance sheet , see โ liquidity and capital resources โ below . the situation surrounding covid-19 remains fluid and we will continue to monitor and actively manage our response in collaboration with tenants , government officials and other third parties to optimally position the company . additional information about our response to the covid-19 pandemic and the impact on our business is included elsewhere in this md & a . business and strategy we focus on owning and acquiring office properties in our target markets . our target markets generally possess what we believe are growing populations with above-average employment growth forecasts , a large number of government offices , large international , national and regional employers across diversified industries , generally low-cost centers for business operations and a high quality of life . we utilize our management 's market-specific knowledge and relationships as well as the expertise of local real estate operators and our investment partners to identify acquisition opportunities that we believe will offer cash flow stability and long-term value appreciation . our target markets are attractive , among other reasons , because we believe that ownership is often concentrated among local real estate operators that typically do not benefit from the same access to capital as public reits and there is a relatively low level of participation of large institutional investors . we believe that these factors result in attractive pricing levels and risk-adjusted returns . the long-term impact of the covid-19 pandemic on these markets is uncertain and impossible to estimate , and will depend on the scope , severity and duration of the covid-19 pandemic . rental revenue and tenant recoveries the amount of net rental revenue generated by our properties will depend principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space that becomes available from lease terminations . the amount of rental revenue generated also depends on our ability to maintain or increase rental rates at our properties . we believe that the average rental rates for our portfolio of properties are generally in-line or slightly below the current average quoted market rates . negative trends in one or more of these factors could adversely affect our rental revenue in future periods . future economic downturns or regional downturns affecting our markets or submarkets or downturns in our tenants ' industries , including as a result of the covid-19 pandemic , that impair our ability to renew or re-let space and the ability of our tenants to fulfill their lease commitments , as in the case of tenant bankruptcies , could adversely affect our ability to maintain or increase rental rates at our properties . in addition , growth in rental revenue will also partially depend on our ability to acquire additional properties that meet our investment criteria . operating expenses our operating expenses generally consist of utilities , property and ad valorem taxes , insurance and site maintenance costs .
| results of operations comparison of year ended december 31 , 2020 to year ended december 31 , 2019 rental and other revenues . revenue includes net rental income , including parking , signage and other income , as well as the recovery of operating costs and property taxes from tenants . rental and other revenues increased $ 4.5 million , or 3 % , to $ 160.8 million for the year ended december 31 , 2020 compared to 50 $ 156.3 million for the year ended december 31 , 2019. of this increase , the acquisitions of 7601 tech , cascade station and canyon park contributed increases of $ 4.0 million , $ 1.7 million , and $ 1.3 million , respectively . revenue increased by $ 1.2 million at our dtc crossroads property within the denver tech portfolio and by $ 0.9 million at our sorrento mesa property due to significant leasing transactions during the year , which lifted occupancy and rental income . revenue from the cherry creek property also increased by $ 0.7 million , as it benefited from a lease termination fee payment during the year ended december 31 , 2020. partially offsetting these increases , rental revenue decreased at 190 office center and pima center by $ 0.4 million and $ 0.6 million , respectively , due to a decrease in occupancy during the year ended december 31 , 2020. revenue during the year ended december 31 , 2019 also benefited from a one-time payment of $ 2.6 million received as consideration for the assignment of a purchase contract . the assignment fee originated through our administrative services relationship .
| 2,661 |
2019-12 story_separator_special_tag dillard 's , inc. operates 285 retail department stores spanning 29 states and an internet store . the company also operates a general contractor , cdi , a portion of whose business includes constructing and remodeling stores for the company , which is a reportable segment separate from our retail operations . in accordance with the national retail federation fiscal reporting calendar and our bylaws , the fiscal 2019 reporting period presented and discussed below ended february 1 , 2020 and contained 52 weeks . the fiscal 2018 reporting period presented and discussed below ended february 2 , 2019 and contained 52 weeks . the fiscal 2017 reporting period presented below ended february 3 , 2018 and contained 53 weeks . for comparability purposes , where noted , some of the information presented below is based upon comparison of the 52 weeks ended february 2 , 2019 to the 52 weeks ended february 3 , 2018. additionally , where noted , some of the information presented below is based upon comparison of the 52 weeks ended january 27 , 2018 to the 52 weeks ended january 28 , 2017. a discussion regarding results of operations and analysis of financial condition for the year ended february 2 , 2019 , as compared to the year ended february 3 , 2018 is included in item 7 of part ii , โ management 's discussion and analysis of financial condition and results of operations โ of our annual report on form 10-k for the year ended february 2 , 2019. executive overview fiscal 2019 comparable retail sales decreased 1 % for fiscal 2019 compared to fiscal 2018. gross profit from retail operations decreased 99 basis points of sales for fiscal 2019 compared to fiscal 2018. consolidated gross profit for fiscal 2019 decreased 76 basis points of sales compared to fiscal 2018. consolidated selling , general and administrative ( `` sg & a '' ) expenses during fiscal 2019 increased 65 basis points of sales compared to fiscal 2018. net income decreased to $ 111.1 million , or $ 4.38 per share , during fiscal 2019 from $ 170.3 million , or $ 6.23 per share , in the prior year . included in net income for fiscal 2019 is a pretax gain of $ 20.3 million ( $ 15.8 million after tax or $ 0.62 per share ) primarily related to the sale of six store properties . also included is $ 5.1 million ( $ 0.20 per share ) in tax benefits related to amended state tax return filings and the taxpayer certainty and disaster tax relief act of 2019. included in net income for fiscal 2018 is $ 2.9 million ( $ 0.11 per share ) in tax benefits related to additional federal tax credits and an update of the provisional amounts recorded for the income tax effects of the tax cuts and jobs act of 2017. during fiscal 2019 , the company repurchased $ 138.3 million , or 2.2 million shares , of class a common stock under the company 's stock repurchase plan , with $ 268.7 million in authorization remaining under the march 2018 stock plan at february 1 , 2020. as of february 1 , 2020 , we had working capital of $ 917.3 million ( including cash and cash equivalents of $ 277.1 million ) and $ 565.7 million of total debt outstanding , excluding finance lease liabilities and operating lease liabilities , with no scheduled maturities in fiscal 2020. cash flows provided by operating activities were $ 365.1 million in fiscal 2019. on february 25 , 2020 , the company provided estimates for certain financial statement items , including depreciation and amortization , rentals , interest and debt expense , net and capital expenditures , for the fiscal year ending january 30 , 2021 based upon current conditions at that time , which did not include the impact of covid-19 . due to heightened uncertainty relating to the impacts of covid-19 on the company 's business operations , including the duration and impact on overall customer demand , the company is withdrawing its 2020 guidance . 18 key performance indicators we use a number of key indicators of financial condition and operating performance to evaluate the performance of our business , including the following : replace_table_token_7_th * based upon the 52 weeks ended february 2 , 2019 and the 52 weeks ended february 3 , 2018 * * based upon the 52 weeks ended january 27 , 2018 and the 52 weeks ended january 28 , 2017. trends and uncertainties fluctuations in the following key trends and uncertainties may have a material effect on our operating results . cash flowโcash from operating activities is a primary source of our liquidity that is adversely affected when the retail industry faces economic challenges . furthermore , operating cash flow can be negatively affected by competitive factors . pricingโif our customers do not purchase our merchandise offerings in sufficient quantities , we respond by taking markdowns . if we have to reduce our retail selling prices , the cost of sales on our consolidated statement of income will correspondingly rise , thus reducing our net income and cash flow . success of brandโthe success of our exclusive brand merchandise as well as merchandise we source from national vendors is dependent upon customer fashion preferences and how well we can predict and anticipate trends . sourcingโour store merchandise selection is dependent upon our ability to acquire appealing products from a number of sources . our ability to attract and retain compelling vendors as well as in-house design talent , the adequacy and stable availability of materials and production facilities from which we source our merchandise and the speed at which we can respond to customer trends and preferences all have a significant impact on our merchandise mix and , thus , our ability to sell merchandise at profitable prices . story_separator_special_tag income on and equity in earnings of joint ventures includes the company 's portion of the income or loss of the company 's unconsolidated joint ventures as well as the distribution of excess cash ( excluding returns of investments ) from a mall joint venture , if any . 21 critical accounting policies and estimates the company 's significant accounting policies are also described in note 1 in the `` notes to consolidated financial statements '' in item 8 hereof . as disclosed in that note , the preparation of financial statements in conformity with accounting principles generally accepted in the united states of america ( `` gaap '' ) requires management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes . the company evaluates its estimates and judgments on an ongoing basis and predicates those estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances . since future events and their effects can not be determined with absolute certainty , actual results could differ from those estimates . management of the company believes the following critical accounting policies , among others , affect its more significant judgments and estimates used in preparation of the company 's consolidated financial statements . merchandise inventory . all of the company 's inventories are valued at the lower of cost or market using the last-in , first-out ( โ lifo โ ) inventory method . approximately 97 % of the company 's inventories are valued using the lifo retail inventory method . under the retail inventory method , the valuation of inventories at cost and the resulting gross margins are calculated by applying a cost to retail ratio to the retail value of inventories . the retail inventory method is an averaging method that is widely used in the retail industry due to its practicality . inherent in the retail inventory method calculation are certain significant management judgments including , among others , merchandise markon , markups , and markdowns , which significantly impact the ending inventory valuation at cost as well as the resulting gross margins . during periods of deflation , inventory values on the first-in , first-out ( `` fifo '' ) retail inventory method may be lower than the lifo retail inventory method . additionally , inventory values at lifo cost may be in excess of net realizable value . at february 1 , 2020 and february 2 , 2019 , merchandise inventories valued at lifo , including adjustments as necessary to record inventory at the lower of cost or market , approximated the cost of such inventories using the fifo retail inventory method . the application of the lifo retail inventory method did not result in the recognition of any lifo charges or credits affecting cost of sales for fiscal 2019 , 2018 or 2017. a 1 % change in the dollar amount of markdowns would have impacted net income by approximately $ 14 million for fiscal 2019. the company regularly records a provision for estimated shrinkage , thereby reducing the carrying value of merchandise inventory . complete physical inventories of the company 's stores and warehouses are performed no less frequently than annually , with the recorded amount of merchandise inventory being adjusted to coincide with these physical counts . the differences between the estimated amounts of shrinkage and the actual amounts realized during the past three years have not been material . revenue recognition . the company 's retail operations segment recognizes revenue upon the sale of merchandise to its customers , net of anticipated returns of merchandise . the asset and liability for sales returns are based on historical evidence of our return rate . we recorded an allowance for sales returns of $ 18.3 million and $ 15.1 million and return assets of $ 12.1 million and $ 10.2 million as of february 1 , 2020 and february 2 , 2019 , respectively . the return asset and the allowance for sales returns are recorded in the consolidated balance sheets in other current assets and trade accounts payable and accrued expenses , respectively . adjustments to earnings resulting from revisions to estimates on our sales return provision were not material for fiscal years 2019 , 2018 and 2017. the company 's share of income under the wells fargo alliance and the company 's former long-term marketing and servicing alliance with synchrony financial , which expired in 2014 ( `` synchrony alliance '' ) , involving the dillard 's branded private label credit cards is included as a component of service charges and other income . the company received income of approximately $ 91 million , $ 94 million and $ 101 million from the alliance in fiscal 2019 , 2018 and 2017 , respectively . the company participates in the marketing of the private label credit cards , which includes the cost of customer reward programs . through the reward programs , customers earn points that are redeemable for discounts on future purchases . the company defers a portion of its net sales upon the sale of merchandise to its customer reward program members that is recognized in net sales when the reward is redeemed or expired at a future date . revenues from cdi construction contracts are generally measured based on the ratio of costs incurred to total estimated contract costs ( the `` cost-to-cost method '' ) . some of our contracts with customers contain multiple performance obligations . for these contracts , we account for individual performance obligations separately if they are distinct . the transaction price is allocated to the separate performance obligations based on stand-alone selling prices . construction contracts are often modified to account for changes in contract specifications and requirements . we consider contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations .
| results of operations the following table sets forth the results of operations and percentage of net sales , for the periods indicated : replace_table_token_8_th 25 sales replace_table_token_9_th the percent change by segment and product category in the company 's sales for the past two years is as follows : replace_table_token_10_th _ ( 1 ) based upon the 52 weeks ended february 2 , 2019 and 52 weeks ended february 3 , 2018 2019 compared to 2018 net sales from the retail operations segment decreased $ 108.6 million during fiscal 2019 compared to fiscal 2018 , a decrease of 2 % on a percentage basis . sales in comparable stores decreased 1 % for fiscal 2019 compared to fiscal 2018. during fiscal 2019 , sales of ladies ' apparel , ladies ' accessories and lingerie , shoes , cosmetics and home and furniture decreased moderately , while sales of men 's apparel remained essentially flat . sales of juniors ' and children 's apparel increased slightly . the number of sales transactions during fiscal 2019 decreased 2 % over fiscal 2018 while the average dollars per sales transaction remained relatively flat . net sales from the construction segment decreased $ 44.0 million or 18.7 % during fiscal 2019 as compared to fiscal 2018 due to a decrease in construction activity . the remaining performance obligations related to executed construction contracts totaled $ 156.5 million , increasing approximately 9 % from february 2 , 2019. exclusive brand merchandise sales penetration of exclusive brand merchandise for fiscal years 2019 , 2018 and 2017 was 21.1 % , 20.7 % and 21.4 % of total net sales , respectively . 26 service charges and other income replace_table_token_11_th 2019 compared to 2018 service charges and other income is composed primarily of income from the wells fargo alliance .
| 2,662 |
from september 13 , 2019 until december 31 , 2019 , the company issued 87,756 shares of common stock at an average price of $ 4.77 per share through the atm prospectus , resulting in net proceeds of $ 418 . the company paid a commission equal to 3 % of the gross proceeds from the sale of our shares of common stock under the atm prospectus . on january 15 , 2020 , the company terminated the atm prospectus , but the sales agreement remains in full force and effect . the common stock is accounted for under equity , resulting in an increase of $ 266 after deducting legal and other related expenses . f- 19 my size , inc. and its subsidiaries notes to consolidated financial statements u.s. dollars in thousands ( except share data and per share data ) note 10 - shareholders ' equity ( cont . ) f. a summary of the warrant activity during the years ended december 31 , 2020 and 2019 is presented below : replace_table_token_16_th ( * ) pursuant to the anti-dilution adjustment provisions in outstanding warrants , the per share exercise price was reduced to $ 4.1 , following the issuance of shares of common stock under the company 's at-the-market offering program . note 11 - stock based compensation the stock-based expense recognized in the financial statements for services received is related to research and development , sales and marketing and general and administrative expenses as shown in the following table : replace_table_token_17_th f- 20 my size , inc. and its subsidiaries notes to consolidated financial statements u.s. dollars in thousands ( except share data and per share data ) note 11 - stock based compensation ( cont . ) options issued to consultants a. in april 2017 , the company engaged a consultant ( โ consultant3 โ ) to provide services to the company with respect to financing and strategic advisory for a period of two years . for such consulting services , the company agreed to pay a monthly retainer and agreed to issue to consultant3 3,334 shares of the company common stock and 2,084 shares each quarter thereafter . during 2019 company issued 10,417 shares of common stock to consultant3 . during the years 2020 and 2019 , costs in the sum of $ 0 and $ 48 , respectively , were recorded as a stock-based compensation expense . . b. in august 2018 , the company entered into an agreement with a consultant ( โ consultant10 โ ) to provide services to the company including promoting the company 's products and services . pursuant to such agreement and in consideration for such consulting services , the company agreed to issue to consultant10 options to purchase up to 3,334 shares of the company 's common stock at an exercise price of $ 15.00 per share . the options shall vest quarterly in eight equal installments and shall terminate five years after the grant date . the board approved the issuance on august 15 , 2018. during 2020 and 2019 , amounts of $ 17 and $ 22 respectively , were recorded by the company as stock-based equity -awards respectively , with respect to consultant10 . c. in december 2018 , the company entered into an agreement with a consultant ( โ consultant11 โ ) to provide services to the company including promoting the company 's products and services . pursuant to such story_separator_special_tag you should read the following discussion along with our financial statements and the related notes included elsewhere in this annual report on form 10-k. the following discussion contains forward-looking statements that are subject to risks , uncertainties and assumptions , including those discussed under โ risk factors. โ our actual results , performance and achievements may differ materially from those expressed in , or implied by , these forward-looking statements . overview we are a creator of mobile device measurement solutions that has developed innovative solutions designed to address shortcomings in multiple verticals , including the e-commerce fashion/apparel , shipping/parcel and do it yourself , or diy , industries . utilizing our sophisticated algorithms within our proprietary technology , we can calculate and record measurements in a variety of novel ways , and most importantly , increase revenue for businesses across the globe . our solutions can be utilized to accurately take measurements of a variety of items via a mobile device . by downloading the application to a smartphone , the user is then able to run the mobile device over the surface of an item the user wishes to measure . the information is then automatically sent to a cloud-based server where the dimensions are calculated through our proprietary algorithms , and the accurate measurements ( + or - 2 centimeters ) are then sent back to the user 's mobile device . we believe that the commercial applications for this technology are significant in many areas . currently , we are mainly focusing on the e-commerce fashion/apparel industry . in addition , our solutions address the shipping/parcel and diy uses markets . while we rollout our products to major retailers and apparel companies , there is a lead time for new customers to ramp up before we can recognize revenue . this lead time varies between customers , especially when the customer is a tier 1 retailer , where the integration process may take longer . generally , first we integrate our product into a customer 's online platform , which is followed by piloting and implementation , and , assuming we are successful , commercial roll-out , all of which takes time before we expect it to impact our financial results in a meaningful way . while we have begun generating initial sales revenue , we do not expect to generate meaningful revenue during the upcoming quarters . story_separator_special_tag additional capital would be used to accomplish the following : โ finance our current operating expenses ; โ pursue growth opportunities ; โ hire and retain qualified management and key employees ; โ respond to competitive pressures ; โ comply with regulatory requirements ; and โ maintain compliance with applicable laws . current conditions in the capital markets are such that traditional sources of capital may not be available to us when needed or may be available only on unfavorable terms . our ability to raise additional capital , if needed , will depend on conditions in the capital markets , economic conditions , the impact of the covid-19 pandemic and a number of other factors , many of which are outside our control , and on our financial performance . accordingly , we can not assure you that we will be able to successfully raise additional capital at all or on terms that are acceptable to us . if we can not raise additional capital when needed , it may have a material adverse effect on our business , results of operations and financial condition . to the extent that we raise additional capital through the sale of equity or convertible debt securities , the issuance of such securities could result in substantial dilution for our current stockholders . the terms of any securities issued by us in future capital transactions may be more favorable to new investors , and may include preferences , superior voting rights and the issuance of warrants or other derivative securities , which may have a further dilutive effect on the holders of any of our securities then-outstanding . we may issue additional shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock in connection with hiring or retaining personnel , option or warrant exercises , future acquisitions or future placements of our securities for capital-raising or other business purposes . the issuance of additional securities , whether equity or debt , by us , or the possibility of such issuance , may cause the market price of our common stock to decline and existing stockholders may not agree with our financing plans or the terms of such financings . in addition , we may incur substantial costs in pursuing future capital financing , including investment banking fees , legal fees , accounting fees , securities law compliance fees , printing and distribution expenses and other costs . we may also be required to recognize non-cash expenses in connection with certain securities we issue , such as convertible notes and warrants , which may adversely impact our financial condition . furthermore , any additional debt or equity financing that we may need may not be available on terms favorable to us , or at all . if we are unable to obtain such additional financing on a timely basis , we may have to curtail our development activities and growth plans and or be forced to sell assets , perhaps on unfavorable terms , or we may have to cease our operations , which would have a material adverse effect on our business , results of operations and financial condition . recently issued accounting pronouncements certain recently issued accounting pronouncements are discussed in note 2 , significant accounting policies , to the consolidated financial statements included in โ item 8. financial statements and supplementary data โ of this annual report on form 10-k. off-balance sheet arrangements we have not entered into any transactions with unconsolidated entities in which we have financial guarantees , subordinated retained interests , derivative instruments or other contingent arrangements that expose us to material continuing risks , contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing , liquidity , market risk or credit risk support . 39 application of critical accounting policies and estimates our management 's discussion and analysis of our financial condition and results of operations is based on our financial statements , which we have prepared in accordance with u.s. generally accepted accounting principles issued by the financial accounting standards board , or fasb . the preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements , as well as the reported expenses during the reporting periods . actual results may differ from these estimates under different assumptions or conditions . while our significant accounting policies are more fully described in the notes to our financial statements appearing elsewhere in this annual report on form 10-k , we believe that the accounting policies discussed below are critical to our financial results and to the understanding of our past and future performance , as these policies relate to the more significant areas involving management 's estimates and assumptions . we consider an accounting estimate to be critical if : ( 1 ) it requires us to make assumptions because information was not available at the time or it included matters that were highly uncertain at the time we were making our estimate ; and ( 2 ) changes in the estimate could have a material impact on our financial condition or results of operations . revenue from contracts with customers the company implemented asc 606 , revenue from contract with customers . to recognize revenue under asc 606 , the company applies the following five steps : 1. identify the contract with a customer . a contract with a customer exists when the company enters into an enforceable contract with a customer and the company determines that collection of substantially all consideration for the services is probable . 2. identify the performance obligations in the contract . 3. determine the transaction price . the transaction price is determined based on the consideration to which the company will be entitled in exchange for providing the service
| results of operations the table below provides our results of operations for the periods indicated . replace_table_token_0_th 36 year ended december 31 , 2020 compared to year ended december 31 , 2019 revenues from inception through december 31 , 2018 , we did not generate any revenue from operations and we continue to expect to incur additional losses to perform further research and development activities . we started to generate revenues only in 2019. our revenues for the year ended december 31 , 2020 amounted to $ 142,000 compared to $ 63,000 for year ended december 31 , 2019. the increase from the corresponding period primarily resulted from increase in traffic , as measured by the mysizeid engine under the license agreements with customers and from fees from customer projects . research and development expenses our research and development expenses for the year ended december 31 , 2020 amounted to $ 1,523,000 an increase of $ 7,000 , or approximately 0.5 % , compared to $ 1,516,000 for the year ended december 31 , 2019. the increase resulted primarily from increased expenses associated with hiring new employees and from stock-based payments , which were offset by a decrease in subcontractor expenses . we expect that research and development expenses will continue to increase in 2021 and that we will recruit additional employees . sales and marketing expenses our sales and marketing expenses for the year ended december 31 , 2020 amounted to $ 2,196,000 , an increase of $ 267,000 , or 13.8 % , compared to $ 1,929,000 for the year ended december 31 , 2019. the increase primarily resulted from an increase in subcontractor and marketing expenses which were offset by a decrease in travel expenses and from stock-based payments .
| 2,663 |
during the quarter ended march 31 , 2017 , the company sold one of the properties held for sale for $ 2.2 million , recognizing a $ 116,000 loss . during the story_separator_special_tag overview the following management 's discussion and analysis of financial condition and results of operations ( โ md & a โ ) is intended to help the reader understand rci hospitality holdings , inc. , our operations and our present business environment . md & a is provided as a supplement to , and should be read in conjunction with , our consolidated financial statements and the accompanying notes thereto contained in item 8 โ โ financial statements and supplementary data โ of this report . this overview summarizes the md & a , which includes the following sections : โ our business โ a general description of our business and the adult nightclub industry , our objective , our strategic priorities , our core capabilities , and challenges and risks of our business . โ critical accounting policies and estimates โ a discussion of accounting policies that require critical judgments and estimates . โ operations review โ an analysis of our company 's consolidated results of operations for the three years presented in our consolidated financial statements . โ liquidity and capital resources โ an analysis of cash flows , aggregate contractual obligations , and an overview of financial position . our business the following are our operating segments : nightclubs our wholly-owned subsidiaries own and or operate upscale adult nightclubs serving primarily businessmen and professionals . these nightclubs are in houston , austin , san antonio , dallas , fort worth , beaumont , longview , harlingen , edinburg , tye , lubbock , el paso and odessa , texas ; charlotte , north carolina ; minneapolis , minnesota ; new york , new york ; miami gardens and pembroke park , florida ; philadelphia , pennsylvania ; phoenix , arizona ; and washington park , illinois . no sexual contact is permitted at any of our locations . we also own and operate studio 80 dance clubs in fort worth and webster , texas . bombshells our wholly-owned subsidiaries own and operate non-adult nightclubs , restaurants , and sports bars in houston , dallas , austin and spring , texas under the brand name bombshells restaurant & bar . media group our wholly-owned subsidiaries own a media division , including the leading trade magazine serving the multibillion-dollar adult nightclubs industry and the adult retail products industry . we also own an industry trade show , an industry trade publication and more than a dozen industry and social media websites . our revenues are derived from the sale of liquor , beer , wine , food , merchandise , cover charges , membership fees , facility use fees , commissions from vending and atm machines , valet parking and other products and services for both nightclub and restaurant/sports bar operations . media group revenues include the sale of advertising content and revenues from our annual expo convention . our fiscal year-end is september 30 . 23 we calculate same-store sales by comparing year-over-year revenues from nightclubs and restaurants/sports bars operating at least 12 full months . we exclude from a particular month 's calculation units previously included in the same-store sales base that have closed temporarily for more than 15 days until its next full month of operations . we also exclude from the same-store sales base units that are being reconcepted or are closed due to renovations or remodels . acquired units are included in the same-store sales calculation as long as they qualify based on the definition stated above . revenues outside of our nightclubs and bombshells reportable segments are excluded from same-store sales calculation . our goal is to use our company 's assetsโour brands , financial strength , and the talent and strong commitment of our management and associatesโto become more competitive and to accelerate growth in a manner that creates value for our shareholders . critical accounting policies and estimates management 's discussion and analysis of financial condition and results of operations are based upon our financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states ( โ gaap โ ) . the preparation of these consolidated financial statements requires our management to make assumptions and estimates about future events , and apply judgments that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . these estimates are based on management 's historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances . on a regular basis , we evaluate these accounting policies , assumptions , estimates and judgments to ensure that our financial statements are presented fairly and in accordance with gaap . however , because future events and their effects can not be determined with certainty , actual results may differ from our estimates , and such differences could be material . a full discussion of our significant accounting policies is contained in note 2 to our consolidated financial statements , which is included in item 8 โ โ financial statements and supplementary data โ of this report . we believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our financial results . these estimates require our most difficult , subjective or complex judgments because they relate to matters that are inherently uncertain . we have reviewed these critical accounting policies and estimates and related disclosures with our audit committee . long-lived assets we review long-lived assets , such as property and equipment , and intangible assets subject to amortization , for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable . story_separator_special_tag in the opinion of management , there was not at least a reasonable possibility that we may have incurred a material loss , or a material loss in excess of a recorded accrual , with respect to loss contingencies for asserted legal and other claims . however , the outcome of legal proceedings and claims brought against the company is subject to significant uncertainty . therefore , although management considers the likelihood of such an outcome to be remote , if one or more of these legal matters were resolved against the company in a reporting period for amounts in excess of management 's expectations , the company 's consolidated financial statements for that reporting period could be materially adversely affected . 25 story_separator_special_tag 29 we consider rent plus interest expense as our occupancy costs since most of our debts are for real property where our clubs and restaurants are located . as a percentage of revenues , rent has consistently dropped as we bought properties and interest expense has increased , but in total , occupancy costs have decreased . replace_table_token_12_th depreciation and amortization decreased by $ 408,000 , or 5.6 % , from 2016 to 2017 mainly due to the cessation of depreciation on properties held for sale ; and increased by $ 283,000 , or 4.0 % , from 2015 to 2016 mainly due to an increase in the number of clubs we own . refer to note 3 to our consolidated financial statements for the impact of the revision of prior year financial statements . the components of other charges , net are in the table below ( dollars in thousands ) : replace_table_token_13_th the significant variances in other charges , net are as follows : during the year ended september 30 , 2015 , we recorded an impairment of $ 1.7 million ( $ 1.4 million in the first quarter and $ 347,000 in the fourth quarter ) for the indefinite-lived intangible assets at two clubs that were closed . during the fourth quarter of 2016 , we recorded an impairment of $ 3.5 million , of which $ 2.1 million was for indefinite-lived intangible assets of one club and $ 1.4 million was for one property held for sale . during the year ended september 30 , 2017 , we recorded aggregate impairment charges of $ 7.6 million ( $ 1.4 million in the third quarter and $ 6.2 million in the fourth quarter ) for the goodwill of four club locations ( $ 4.7 million ) , including one that we have put up for sale during the fiscal year ; for property and equipment of one club ( $ 385,000 ) ; for sob license of two club locations ( $ 1.4 million ) , and for our remaining investment in drink robust ( $ 1.2 million ) . see note 16 to our consolidated financial statements for further discussion . settlement of lawsuits in 2015 consists principally of settlement of suits relating to the new york based federal wage and hour class and collective action , as explained in note 11 to our consolidated financial statements . in 2015 , the company reached a settlement with the state of texas over the payment of the state 's patron tax on adult club customers . we recorded the difference between the present value of the $ 10.0 million settlement amount and the previously accrued tax amount as a gain in the amount of $ 8.2 million . see note 11 to our consolidated financial statements for details of the gain on settlement of patron tax in 2015 . 30 income from operations below is a table which reflects segment contribution to income from operations ( in thousands ) : replace_table_token_14_th our operating margin ( total income from operations divided by total revenues ) was 16.0 % in 2017 , 15.3 % in 2016 and 15.3 % in 2015. nightclubs operating margin was 28.2 % , 29.1 % and 26.3 % in 2017 , 2016 and 2015 , respectively , primarily due to the closure of underperforming units , the leverage on increasing same-store sales of fixed expenses , and impairment of assets of $ 6.5 million , $ 2.1 million and $ 1.7 million for 2017 , 2016 and 2015 , respectively . bombshells operating margin was 16.4 % , 6.2 % and 9.3 % in 2017 , 2016 and 2015 , respectively , mainly due to increasing sales partially offset by increasing depreciation expense from higher unit count and the loss on sale of assets in 2016 caused by the closure of one underperforming unit . excluding the impact of settlement of lawsuits , impairment of assets , gain on patron tax settlement and gain on sale of assets , operating margin for the nightclub segment would have been 33.1 % , 32.3 % and 30.9 % for 2017 , 2016 and 2015 , respectively . excluding the impact of loss on sale of assets , which caused fiscal 2016 and 2015 operating margin to be low , bombshells segment operating margin would have been 16.4 % , 13.5 % and 13.9 % for 2017 , 2016 and 2015 , respectively . non-operating items interest expense decreased in 2015 due to the significant paydown and refinance of high-interest debt during the last two years . we are now able to finance property acquisition with bank debt which is at significantly lower rates than the debt we previously had . we added more debt in 2017 and 2016 to acquire certain properties , which in turn increased our interest expense and also decreased rent expense . income taxes income tax expense increased by $ 4.0 million from 2016 to 2017 , and decreased by $ 2.8 million from 2015 to 2016. our effective income tax rate was 43.4 % , 18.5 % and 36.5 % during fiscal 2017 , 2016 and 2015 , respectively .
| operations review the following tables present a comparison of our results of operations as a percentage of total revenues for the past three fiscal years : replace_table_token_6_th * percentages may not foot due to rounding . percentage of revenue for individual cost of goods sold items pertains to their respective revenue line . 26 we have revised prior year financial statements to correct certain misstatements that could have a material impact if corrected cumulatively in the current year . see note 3 to the consolidated financial statements for details . below is a table presenting the changes in each line item of the income statement for the last three fiscal years ( dollar amounts in thousands ) replace_table_token_7_th revenues our total consolidated revenues for fiscal 2017 amounted to $ 144.9 million compared to $ 134.9 million for fiscal 2016 and $ 135.4 million for fiscal 2015. the increase of $ 10.0 million , or 7.4 % , from 2016 to 2017 was primarily due to 7.4 % increase in new or reconcepted locations and the impact of the 4.9 % full year increase in same-store sales , partially offset by a 3.8 % decrease from closed locations and a minimal decrease from other revenue items . the $ 589,000 , or 0.4 % , decrease from 2015 to 2016 was primarily due to the impact of the 1.3 % decrease in same-store sales partially offset by an increase in rental income and sale of energy drinks . 27 by reportable segment , revenues were as follows ( in thousands ) : replace_table_token_8_th nightclubs revenues increased by 9.4 % from 2016 to 2017 , while decreasing by 1.3 % from 2015 to 2016. a breakdown of the changes is as follows : replace_table_token_9_th included in 2017 new units are clubs acquired in the third quarter of 2017 , scarlett 's cabaret miami and hollywood showclub ( the latter now relaunched and rebranded as scarlett 's cabaret st. louis ) , which contributed a combined $ 5.6 million in revenues since the acquisition dates .
| 2,664 |
information contained in the following discussion of our results of operations and financial condition contains forward-looking statements within the meaning of section 27a of the securities act of 1933 , as amended , section 21e of the exchange act of 1934 , as amended , and the private securities litigation reform act of 1995 , and , as such , is based on current expectations and is subject to certain risks and uncertainties . the reader should not place undue reliance on these forward-looking statements for many reasons , including those risks discussed under item 1a , โ risk factors , โ and elsewhere in this document . see โ disclosure regarding forward-looking statements โ that precedes part i of this report . we undertake no obligation to publicly update or revise any forward-looking statements as a result of new information , future events or otherwise . references in this item to โ we , โ โ our , โ or โ us โ are to the company and its subsidiaries on a consolidated basis unless the context otherwise requires . the term โ usd โ refers to us dollars , the term โ cad โ refers to canadian dollars and the term โ pln โ refers to polish zloty . amounts presented in this item 7 are rounded . as such , there may be rounding differences in period over period changes and percentages reported throughout this item 7. executive overview overview since our inception in 1992 , we have been primarily engaged in developing and operating gaming establishments and related lodging , restaurant and entertainment facilities . our primary source of revenue is from the net proceeds of our gaming machines and tables , with ancillary revenue generated from hotel , restaurant , horse racing ( including off-track betting ) , bowling and entertainment facilities that are in most instances a part of the casinos . we view each casino property as a separate operating segment and aggregate all such properties into three reportable segments based on the geographical locations in which our casinos operate : canada , united states and poland . we have additional business activities including concession agreements , management agreements , consulting agreements and certain other corporate and management operations that we report as corporate and other . the table below provides information about the aggregation of our operating segments into reportable segments : reportable segment operating segment canada century casino & hotel - edmonton canada century casino calgary canada century downs racetrack and casino canada century bets united states century casino & hotel โ central city united states century casino & hotel โ cripple creek poland casinos poland corporate and other cruise ships & other corporate and other corporate other 32 the following operating segments are own ed , operate d and manage d through wholly-owned subsidiaries : ยท the century casino & hotel in edmonton , alberta , canada ; ยท the century casino calgary in calgary , alberta , canada ; ยท the century casino & hotel in central city , colorado ; and ยท the century casino & hotel in cripple creek , colorado . we have controlling financial interests through our subsidiary cce in the following operating segments : ยท w e have a 66.6 % ownership interest in cpl and we consolidate cpl as a majority-owned subsidiary for which we have a controlling financial interest . polish airports owns the remaining 33.3 % of cpl . we account for and report the 33.3 % polish airports ownership interest as a non-controlling financial interest . cpl has been in operation since 1989 and is the owner and operator of nine casinos throughout poland with a total of 500 slot machines and 82 tables . the following table summarizes the polish cities in which cpl operated as of december 31 , 2015 , each casino 's location and the number of slots and tables at each casino . replace_table_token_11_th * operations at the sosnow ie c casino were suspended as of june 30 , 2014 . t he casino began operating on a limited basis i n february 2015 , and we expect the casino will continue limited operations until its gaming license expires in may 201 7 . ยท w e have a 75 % ownership interest in cdr and we consolidate cdr as a majority-owned subsidiary for which we have a controlling financial interest . we account for and report the remaining 25 % ownership interest in cdr as a non-controlling financial interest . cdr operates century downs racetrack and casino , a rec in balzac , a north metropolitan area of calgary , alberta , canada . cdr 's casino opened on april 1 , 2015 and the horse racing season began on april 25 , 2015. the 2015 horse racing season wa s from april to november . century downs is the only horse racing track in the calgary area and is located less than one mile north of the city limits of calgary and 4.5 miles from the calgary international airport . ยท w e have a 75 % ownership interest in cbs and we consolidate cbs as a majority-owned subsidiary for which we have a controlling financial interest . rocky mountain turf club ( โ rmtc โ ) owns the remaining 25 % of cbs . we account for and report the 25 % ownership interest of rmtc in cbs as a non-controlling financial interest . cbs began operating the pari-mutuel network on may 4 , 2015. the pari-mutuel network consists of sourcing of common pool pari-mutuel wagering content and live video to off-track betting parlors throughout southern alberta . 33 the following agreements make up the operating segment cruise ships & other in the corporate and other reportable segment : ยท we operate 1 0 ship-based casinos onboard ships of tui cruises and windstar cruises . as of december 31 , 2015 , we had a total of 1 55 slot machines and 2 2 tables on board the 1 0 cruise ships where we operated casinos . story_separator_special_tag net earnings increased by $ 10.7 million , or 866.5 % , for the year ended december 31 , 2015 compared to the year ended december 31 , 2014 , and decreased by ( $ 5.0 ) million , or ( 80.1 % ) , for the year ended december 31 , 2014 compared to the year ended december 31 , 2013. items deducted from or added to earnings from operations to arrive at net earnings include gains on business combinations related to the acquisition of the additional equity interest in cpl and the acquisition of cdr , interest income , interest expense , gains ( losses ) on foreign currency transactions and other , income tax expense and non-controlling interest s . for a discussion of these items , see โ non-operating income ( expense ) โ and โ taxes โ below in this item 7 . 38 reportable segments the following discussion provides further detail of consolidated results by reportable segment . replace_table_token_15_th years ended december 31 , 2015 and 2014 net operating revenue in canada increased by $ 11.3 million , or 32.7 % , for the year ended december 31 , 2015 compared to the year ended december 31 , 2014. the increase in net operating revenue was primarily due to the additional revenue generated from century downs , which opened on april 1 , 2015 , and century bets , which began operating the southern alberta pari-mutuel network in may 2015. net operating revenue from century downs increased by $ 11.5 million , or 2272.5 % , for the year ended december 31 , 2015 compared to the year ended december 31 , 2014. the net operating revenue increase was mainly comprised of gaming revenue of $ 9.3 million and food and beverage revenue of $ 1.8 million . century bets a dded $ 2.9 million in net operating revenue for the year ended december 31 , 2015. the comparable differences in cad and usd were impacted by the decrease in the average exchange rate between the u.s. dollar and canadian dollar of 15.8 % for the year ended december 31 , 2015 compared to the year ended december 31 , 2014 ( the โ 15.8 % exchange rate decrease โ ) . in cad , net operating revenue increased by 20.5 million , or 53.6 % , for the year ended december 31 , 2015 compared to the year ended december 31 , 2014. gaming revenue increased by cad 13.5 million , or 51.7 % , due to cad 12.0 million in gaming revenue from century downs and increased gaming revenue of cad 1.5 million , or 7.5 % , at our edmonton location mainly from increased baccarat revenue for the year ended december 31 , 2015 compared to the year ended december 31 , 2014. food and beverage revenue increased by cad 2.7 million , or 32.8 % , due to cad 2.3 million in food and beverage revenue from century downs and increased food and beverage revenue of cad 0.2 million , or 3.8 % , at our edmonton property and cad 0.1 million , or 5.5 % , at our calgary property . f ood and beverage revenue increased at our edmonton property due to higher patronage at our showroom throughout 2015 , and at our calgary property due to the renovation of the mid city grill . other revenue increased by cad 4.6 million , or 106.1 % , due to increased revenue at century downs and the inclusion of revenue for century bets . 39 total operating costs and expenses increased by $ 7.2 million , or 27.4 % , primarily due to additional expenses from century downs and century bets for the year ended december 31 , 2015 compared to the year ended december 31 , 2014. century downs total operating costs and expenses increased by $ 8.2 million , or 1304.8 % , for the year ended december 31 , 2015 compared to the year ended december 31 , 2014 due to the operation of the casino and racetrack in 2015. century bets added $ 2.1 million in total operating costs and expenses for the year ended december 31 , 2015. the comparable differences in cad and usd were impacted by the 15.8 % exchange rate decrease for the year ended december 31 , 2015 compared to the year ended december 31 , 2014. in cad , total operating costs and expenses increased by 13.8 million , or 47.8 % , for the year ended december 31 , 2015 compared to the year ended december 31 , 2014. total operating costs and expenses at century downs increased by cad 10.6 million , or 1555.2 % , for the year ended december 31 , 2015 compared to the year ended december 31 , 2014. century bets added cad 2.7 million of total operating costs and expenses for the year ended december 31 , 2015. at edmonton total operating costs and expenses increased by cad 0.4 million , or 2.3 % , mainly due to increased payroll costs of cad 0.2 million relating to the increased minimum wage in alberta , canada , increased general and administrative costs of cad 0.2 million relating to increased property taxes and increased maintenance costs at the property , and increased depreciation costs of cad 0.1 million , offset by decreased gaming expenses of ( cad 0.1 ) million mainly due to decreased royalty expenses on slot machines for the year ended december 31 , 2015 compared to the year ended december 31 , 2014. at calgary total operating costs and expenses increased by cad 0.1 million , or 0.9 % , mainly due to increased property taxes for the year ended december 31 , 2015 compared to the year ended december 31 , 2014. because of the foregoing , earnings from operations increased by $ 4.1 million , or 48.9 % , net earnings increased by $ 1.4 million , or 2 1 .3 % , and adjusted ebitda increased by $ 5.0 million , or 48.6 % , for the year ended december 31 ,
| discussion of results year s ended december 31 , 201 5 , 201 4 and 2013 century casinos , inc. and subsidiaries replace_table_token_14_th ( 1 ) for a discussion of adjusted eb it da and reconciliation of adjusted ebitda to net earnings attributable to century casinos , inc. shareholders , see item 6 , โ selected financial data โ . 36 factors impacting the year - over - year comparability include the following : ยท on april 8 , 2013 , we purchased an additional 33.3 % ownership interest in cpl and began consolidating cpl as a majority-owned subsidiary for which we have a controlling financial interest . prior to the acquisition of this additional interest in cpl , we accounted for our 33.3 % ownership interest as an equity investment . cpl contributed $ 34.8 million in net operating revenue and less than $ 0.1 million in net earnings for the year ended december 31 , 2013 and $ 51.2 million in net operating revenue and $ 0.1 million in net losses for the year ended december 31 , 2014 . cpl is reported in the poland reportable segment . ยท we began consolidating cdr as of november 29 , 2013 as a minority - owned subsidiary for which we have a controlling financial interest . on march 20 , 2015 , we acquired an additional 60 % ownership interest in cdr through the conversion of cad 11 million in loans . the casino and racetrack at century downs began operating in april 2015. cdr contributed $ 0.5 million in net operating revenue and $ 0.1 million in net earnings for the year ended december 31 , 2014 and $ 12.0 million in net operating revenue and $ 1.5 million in net earnings for the year ended december 31 , 2015 and is reported in the canada reportable segment . ยท century bets began operating the southern alberta pari-mutuel network in may 2015. we have a 75 % ownership interest in century bets .
| 2,665 |
the fair value of our financial assets and liabilities at november 29 , 2013 was determined using the following inputs ( in thousands ) : replace_table_token_35_th liabilities : accrued expenses : foreign currency derivatives $ 1,067 $ โ $ 1,067 $ โ total liabilities $ 1,067 $ โ $ 1,067 $ โ 75 adobe systems incorporated notes to consolidated financial statements ( continued ) the fair value of our financial assets and liabilities at november 30 , 2012 was determined using the following inputs ( in thousands ) : replace_table_token_36_th liabilities : accrued expenses : foreign currency derivatives $ 998 $ โ $ 998 $ โ total liabilities $ 998 $ โ $ 998 $ โ see note 3 for further information regarding the fair value of our financial instruments . our fixed income available-for-sale securities consist of high quality , investment grade securities from diverse story_separator_special_tag the following discussion should be read in conjunction with our consolidated financial statements and notes thereto . acquisitions during fiscal 2013 , we completed our acquisitions of privately held neolane , a leader in cross-channel campaign management technology for $ 616.7 million and privately held behance , an online social media platform to showcase and discover creative work for $ 111.1 million . during fiscal 2013 , we began integrating neolane and behance into our digital marketing and digital media reportable segments , respectively . the impact of these acquisitions were not material to our consolidated financial statements . during fiscal 2012 , we completed the acquisition of privately held efficient frontier , a multi-channel digital ad buying and optimization company for $ 374.7 million . during fiscal 2012 , we began integrating efficient frontier into our digital marketing segment . during fiscal 2011 , we completed six business combinations and two asset acquisitions with aggregate purchase prices totaling $ 328.3 million . we have included the financial results of the business combinations in our consolidated results of operations beginning on the respective acquisition dates . see note 2 of our notes to consolidated financial statements for further information regarding these acquisitions . critical accounting policies and estimates in preparing our consolidated financial statements in accordance with gaap and pursuant to the rules and regulations of the sec , we make assumptions , judgments and estimates that affect the reported amounts of assets , liabilities , revenue and expenses , and related disclosures of contingent assets and liabilities . we base our assumptions , judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances . actual results could differ materially from these estimates under different assumptions or conditions . on a regular basis , we evaluate our assumptions , judgments and estimates . we also discuss our critical accounting policies and estimates with the audit committee of the board of directors . we believe that the assumptions , judgments and estimates involved in the accounting for revenue recognition , stock-based compensation , business combinations , goodwill impairment and income taxes have the greatest potential impact on our consolidated financial statements . these areas are key components of our results of operations and are based on complex rules requiring us to make judgments and estimates , so we consider these to be our critical accounting policies . historically , our assumptions , judgments and estimates relative to our critical accounting policies have not differed materially from actual results . revenue recognition our revenue is derived from the licensing of perpetual , time-based and subscription software products , associated software maintenance and support plans , non-software related hosting services , consulting services , training and technical support . we recognize revenue when persuasive evidence of an arrangement exists , we have delivered the product or performed the service , the fee is fixed or determinable and collection is probable . determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount of revenue we report . we enter into multiple element revenue arrangements in which a customer may purchase a combination of software , upgrades , maintenance and support , hosting services and consulting . for our software and software-related multiple element arrangements , we must : ( 1 ) determine whether and when each element has been delivered ; ( 2 ) determine whether undelivered products or services are essential to the functionality of the delivered products and services ; ( 3 ) determine the fair value of each undelivered element using vendor-specific objective evidence ( โ vsoe โ ) , and ( 4 ) allocate the total price among the various elements . vsoe of fair value is used to allocate a portion of the price to the undelivered elements and the residual method is used to allocate the remaining portion to the delivered elements . absent vsoe , revenue is deferred until the earlier of the point at which vsoe of fair value exists for any undelivered element or until all elements of the arrangement have been delivered . however , if the only undelivered element is maintenance and support , the entire arrangement fee is recognized ratably over the performance period . changes in assumptions or judgments or changes to the 35 elements in a software arrangement could cause a material increase or decrease in the amount of revenue that we report in a particular period . we determine vsoe for each element based on historical stand-alone sales to third parties or from the stated renewal rate for the elements contained in the initial arrangement . in determining vsoe , we require that a substantial majority of the selling prices for a product or service fall within a reasonably narrow pricing range . we have established vsoe for our software maintenance and support services , custom software development services , con sulting services and training . story_separator_special_tag examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to : future expected cash flows from software license sales , subscriptions , support agreements , consulting contracts and acquired developed technologies and patents ; expected costs to develop the in-process research and development into commercially viable products and estimated cash flows from the projects when completed ; the acquired company 's trade name and trademarks as well as assumptions about the period of time the acquired trade name and trademarks will continue to be used in the combined company 's product portfolio ; and discount rates . in connection with the purchase price allocations for our acquisitions , we estimate the fair value of the deferred revenue obligations assumed . the estimated fair value of the support obligations is determined utilizing a cost build-up approach . the cost build-up approach determines fair value by estimating the costs related to fulfilling the obligations plus a normal profit margin . the estimated costs to fulfill the obligations are based on the historical costs related to fulfilling the obligations . in connection with the purchase price allocations for our acquisitions , we estimate the fair value of the equity awards assumed . the estimated fair value is determined utilizing a modified binomial option pricing model which assumes employees exercise their stock options when the share price exceeds the strike price by a certain dollar threshold . if the acquired company has significant historical data on their employee 's exercise behavior , then this threshold is determined based upon the acquired company 's history . otherwise , our historical exercise experience is used to determine the exercise threshold . zero coupon yields implied by u.s. treasury issuances , implied volatility for our common stock and our historical forfeiture rate are other inputs to the binomial model . unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions , estimates or actual results . goodwill impairment we complete our goodwill impairment test on an annual basis , during the second quarter of our fiscal year , or more frequently , if changes in facts and circumstances indicate that an impairment in the value of goodwill recorded on our balance sheet may exist . in order to estimate the fair value of goodwill , we typically estimate future revenue , consider market factors and estimate our future cash flows . based on these key assumptions , judgments and estimates , we determine whether we need to record an impairment charge to reduce the value of the asset carried on our balance sheet to its estimated fair value . assumptions , judgments and estimates about future values are complex and often subjective . they can be affected by a variety of factors , including external factors such as industry and economic trends , and internal factors such as changes in our business strategy or our internal forecasts . although we believe the ass umptions , judgme nts and estimates we have made in the past have been reasonable and appropriate , different assumptions , judgments and estimates could materially affect our reported financial results . we completed our annual impairment test in the second quarter of fiscal 2013 and determined there was no impairment . the results of our annual impairment test indicate there is no significant risk of future material goodwill impairment in any of our reporting units . accounting for income taxes we use the asset and liability method of accounting for income taxes . under this method , income tax expense is recognized for the amount of taxes payable or refundable for the current year . in addition , deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities , and for operating losses and tax credit carryforwards . management must make assumptions , judgments and estimates 37 to determine our current provision for income taxes and also our deferred tax assets and liabilities and any valuation allowance to be recorded against a deferred tax asset . our assumptions , judgments and estimates relative to the current provision for income taxes take into account current tax laws , our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities . we have established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities . in addition , we are subject to the continual examination of our income tax returns by the irs and other domestic and foreign tax authorities , including a current examination by the irs of our fiscal 2010 , 2011 and 2012 tax returns . we expect future examinations to focus on our intercompany transfer pricing practices as well as other matters . we regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from the current examinations . we believe such estimates to be reasonable ; however , the final determination of any of these examinations could significantly impact the amounts provided for income taxes in our consolidated financial statements . our assumptions , judgments and estimates relative to the value of a deferred tax asset take into account predictions of the amount and category of future taxable income , such as income from operations or capital gains income . actual operating results and the underlying amount and category of income in future years could render our current assumptions , judgments and estimates of recoverable net deferred taxes inaccurate . any of the assumptions , judgments and estimates mentioned above could cause our actual income tax obligations to differ from our estimates , thus materially impacting our financial position and results of operations . we are a united states-based multinational company subject to tax in multiple u.s. and foreign tax jurisdictions .
| results of operations overview of 2013 for fiscal 2013 , we reported financial results consistent with the continued execution of our plans for our two strategic growth areas , digital media and digital marketing , while continuing to market and license a broad portfolio of products and solutions . we are a market leader in the fast-growing category addressed by our digital marketing segment . our adobe marketing cloud offering includes six solutions addressing the expanding needs of marketers , the newest of which is adobe campaign โ a cross-channel campaign management tool that we added to our portfolio with the acquisition of neolane during our third quarter of fiscal 2013. revenue from adobe marketing cloud increased 26 % and 35 % during fiscal 2013 and 2012 , respectively , compared to the year ago periods . helping to drive this performance was strong adoption of our adobe experience manager ( โ aem โ ) offering and the addition of neolane in mid-third quarter of fiscal 2013. aem , our fastest growing digital marketing solution , has typically been licensed by our customers as an on-premise offering where license revenue is recognized at the time of the transaction . in the past year , we introduced a managed services offering of aem for which revenue is recognized ratably . we expect continued adoption of the newer managed services offering , which will increasingly migrate aem revenue to recurring revenue in this segment . given the comparisons involving more new license revenue being recognized over time versus past license revenue being recognized up front , we anticipate this trend may impact overall adobe marketing cloud revenue in the near term . within our digital media segment , in may 2012 we delivered adobe creative cloud , our subscription-based offering for creating and publishing content and applications . creative cloud is our next-generation offering that supersedes our historical model of licensing our creative products with perpetual licenses .
| 2,666 |
indefinite-lived intangible assets are assessed annually for impairment first by making a qualitative assessment , and if necessary , performing a story_separator_special_tag forward-looking statements this annual report includes `` forward-looking statements , '' within the meaning of section 27a of the securities act of 1933 , section 21e of the securities and exchange act of 1934 and the private securities litigation reform act of 1995. in general , all statements included or incorporated in this annual report that are not historical in nature are forward-looking . these may include statements about our plans , strategies and prospects under the headings `` business , '' and `` management 's discussion and analysis of financial condition and results of operations . '' forward-looking statements are often characterized by the use of words such as `` believes , '' `` estimates , '' `` expects , '' `` projects , '' `` may , '' `` will , '' `` intends , '' `` plans , '' or `` anticipates , '' or by discussions of strategy , plans or intentions . forward-looking statements are typically included , for example , in discussions regarding the manufactured housing and site-built housing industries ; our financial performance and operating results ; and the expected effect of certain risks and uncertainties on our business , financial condition and results of operations , economic conditions and consumer confidence , our operational and legal risks , how we may be affected by governmental regulations and legal proceedings , the expected effect of certain risks and uncertainties on our business , the availability of favorable consumer and wholesale manufactured home financing , market interest rates and our investments , and the ultimate outcome of our commitments and contingencies . all forward-looking statements are subject to risks and uncertainties , many of which are beyond our control . as a result , our actual results or performance may differ materially from anticipated results or performance . also , forward-looking statements are based upon management 's estimates of fair values and of future costs , using currently available information . therefore , actual results may differ materially from those expressed or implied in those statements . factors that could cause such differences to occur include , but are not limited to , those discussed under item 1a , `` risk factors , '' and elsewhere in this annual report . we expressly disclaim any obligation to update any forward-looking statements contained in this annual report , whether as a result of new information , future events or otherwise . for all of these reasons , you should not place any reliance on any such forward-looking statements included in this annual report . introduction the following should be read in conjunction with the company 's consolidated financial statements and the related notes that appear in part iv of this report . references to `` note '' or `` notes '' refer to the notes to the company 's consolidated financial statements . overview headquartered in phoenix , arizona , the company designs and produces factory-built homes primarily distributed through a network of independent and company-owned retailers . we are one of the largest producers of manufactured homes in the united states , based on reported wholesale shipments , marketed under a variety of brand names , including cavco homes , fleetwood homes , palm harbor homes , fairmont homes , friendship homes , chariot eagle and lexington homes . the company is also a leading builder of park model rvs , vacation cabins and systems-built commercial structures , as well as modular homes built primarily under the nationwide homes brand . cavco 's mortgage subsidiary , countryplace , is an approved fannie mae and freddie mac seller/servicer , a ginnie mae mortgage-backed securities issuer that offers conforming mortgages , non-conforming mortgages and home-only loans to purchasers of factory-built homes . our insurance subsidiary , standard casualty , provides property and casualty insurance primarily to owners of manufactured homes . company growth from its inception in 1965 , cavco traditionally served affordable housing markets in the southwestern united states principally through manufactured home production . during the period from 1997 to 2000 , cavco was purchased by and became a wholly-owned subsidiary of centex corporation , which operated the company until 2003 , when cavco became a stand-alone publicly-held company traded on the nasdaq global select market under the ticker symbol cvco . 30 beginning in 2007 , the overall housing industry experienced a multi-year decline , which included the manufactured housing industry . since this downturn , cavco strategically expanded its factory operations and related business initiatives primarily through the acquisition of industry competitor operations . this development has enabled the company to more broadly participate in the overall housing industry recovery . in 2009 , the company acquired certain manufactured housing assets and liabilities of fleetwood . the assets purchased included seven operating production facilities as well as idle factories . during fiscal year 2011 , the company acquired certain manufactured housing assets and liabilities of palm harbor homes , inc. , a florida corporation . the assets purchased included five operating production facilities as well as idle factories , 49 operating retail locations , a manufactured housing finance company and a homeowners insurance company . these acquisitions expanded the company 's presence across the united states . in 2015 , the company purchased the business and operating assets of chariot eagle , a florida-based manufacturer of park model rvs and manufactured homes , as well as certain assets and liabilities of fairmont homes . these transactions provided additional home production capabilities , grew the company 's offering of park model rv product lines and further strengthened our market position in the southeast , midwest , the western great plains states and several provinces in canada . on april 3 , 2017 , the company purchased lexington homes , which operates a manufacturing facility in lexington , mississippi . this transaction was accounted for as a business combination and provides additional home production capabilities , further expanding our distribution into new southern markets . story_separator_special_tag we are working directly with other industry participants to develop manufactured home consumer financing loan portfolios to attract industry financiers interested in furthering or expanding lending opportunities in the industry . additionally , we continue to invest in community-based lending initiatives that provide home-only financing to new residents of certain manufactured home communities . our mortgage subsidiary has developed and invests in home-only lending programs to grow sales of homes through traditional distribution points as well . we believe that growing our participation in home-only lending may provide additional sales growth opportunities for our factory-built housing operations . 32 we are also working through industry trade associations to encourage favorable legislative and gse action to address the mortgage financing needs of potential buyers of affordable homes . federal law requires the gses to issue a regulation to implement the `` duty to serve '' requirements specified in the federal housing enterprises financial safety and soundness act of 1992 , as amended by the housing and economic recovery act of 2008. fnma and fhlmc released their final underserved markets plan that describes , with specificity , the actions they will take over a three-year period to fulfill the `` duty to serve '' obligation . these plans became effective on january 1 , 2018. each of the three-year plans is intended to establish steps to ensure home-only loans can be purchased in bulk prior to proceeding with a pilot program to purchase these loans . expansion of the secondary market for home-only lending through the gses could provide further demand for housing , as lending options would likely become more available to home buyers . although some limited progress has been made in the area , meaningful positive impact in the form of increased home orders has yet to be realized . on january 25 , 2018 , hud announced a top-to-bottom review of its manufactured housing rules as part of a broader effort to identify regulations that may be ineffective , overly burdensome , or excessively costly given the critical need for affordable housing . if certain changes are made , the company may be able to more effectively serve buyers of affordable homes . the insurance subsidiary is subject to adverse effects from excessive policy claims that may occur during periods of inclement weather , including seasonal spring storms or fall hurricane activity in texas where most of its policies are underwritten . where applicable , losses from catastrophic events are somewhat limited by reinsurance contracts in place as part of the company 's loss mitigation structure . during the second fiscal quarter of fiscal 2018 , hurricane harvey produced the largest recorded rain volume for a single weather event in u.s. history , resulting in historic flooding and widespread property damage , primarily in southeast texas , causing high homeowners ' insurance claim volume . the substantial economic toll in the affected market areas was widely reported . increased consumer demand for replacement of homes lost as a result of these events may continue for several quarters . this may include demand for additional disaster-relief manufactured home orders from federal and state agencies . the company initially participated by producing a limited number of disaster-relief homes for fema during the third and fourth quarters of fiscal year 2018. story_separator_special_tag homes operations versus fiscal year 2016 , as fairmont homes was purchased by the company on may 1 , 2015 . 36 net factory-built housing revenue per home sold is a volatile metric dependent upon several factors . changes to the proportion of home sales among our various distribution channels between reporting periods impacts the overall net revenue per home sold . for the twelve months ending april 1 , 2017 , the company sold 11,142 homes wholesale and 2,678 retail versus 9,953 homes wholesale and 2,386 homes retail in the comparable prior year period . further , fluctuations in net factory-built housing revenue per home sold are the result of changes in product mix , which results from home buyer tastes and preferences as they select home types/models , as well as optional home upgrades when purchasing the home . financial services segment revenue decreased primarily from changes made to the recognition of certain ceded insurance commissions that took effect in fiscal year 2017 and lower interest income earned on securitized loan portfolios that continue to amortize , offset by increased higher home loan sales volume and premium revenue from a greater number of insurance policies in force . gross profit . gross profit consisted of the following for fiscal years 2017 and 2016 , respectively ( in thousands ) : replace_table_token_9_th the increase in factory-built housing gross profit was the result of higher home sales volume . gross profit increased for financial services mainly as a result of fewer weather-related insurance claims overall and higher home loan sales volume , offset by lower net interest income earned on securitized loan portfolios that continue to amortize . selling , general and administrative expenses . selling , general and administrative expenses consisted of the following for fiscal years 2017 and 2016 , respectively ( in thousands ) : replace_table_token_10_th factory-built housing selling , general and administrative expenses increased from higher salary and incentive compensation expense from improved earnings on increased home sales . selling , general and administrative expenses for financial services increased primarily from higher salary and incentive compensation costs related to improved earnings . 37 as a percentage of net revenue , selling , general and administrative expenses declined from increased utilization on higher net revenue . interest expense . interest expense was $ 4.4 million in both fiscal year 2017 and 2016 . interest expense consisted primarily of debt service on the countyplace securitized and other financings of manufactured home loans and interest related to the capital lease treatment for a lease of manufacturing facilities and land entered into as part of the fairmont acquisition during the first quarter of fiscal year 2016. on september 20 , 2016 , the company purchased the assets under the capital lease , terminating the lease arrangement .
| results of operations fiscal year 2018 compared to fiscal year 2017 net revenue . net revenue consisted of the following for fiscal years 2018 and 2017 , respectively ( dollars in thousands ) : replace_table_token_4_th factory-built housing segment revenue increased . rising material and labor input costs have resulted in higher home sales prices . additionally , sales volume increased , which has been driven by greater demand for our products . the increase also includes approximately $ 14.8 million of home sales revenue recognized from early commercial loan payoffs received under cavco 's wholesale lending programs . additionally , the current fiscal year includes 12 months of lexington homes operations , which was purchased by the company on april 3 , 2017 . 33 net factory-built housing revenue per home sold is a volatile metric dependent upon several factors . a primary factor is the price disparity between sales of homes to independent retailers , builders , communities and developers ( `` wholesale '' ) and sales of homes to consumers by company-owned retail centers ( `` retail '' ) . wholesale sales prices are primarily comprised of the home and the cost to ship the home from a homebuilding facility to the home-site . retail home prices include these items and retail markup , as well as items that are largely subject to home buyer discretion , including , but not limited to , installation , utility connections , site improvements , landscaping and additional services . changes to the proportion of home sales among these distribution channels between reporting periods impacts the overall net revenue per home sold . for the twelve months ending march 31 , 2018 , the company sold 12,137 homes wholesale and 2,400 retail versus 11,142 homes wholesale and 2,678 homes retail in the comparable prior year period .
| 2,667 |
in that portfolio are a number of patents and patent applications that we believe are or may be essential or may become essential to cellular and other wireless standards , including 2g , 3g , 4g and the ieee 802 suite of standards . that portfolio has largely been built through internal development , supplemented by joint development projects with other companies as well as select patent acquisitions . products incorporating our patented inventions include : mobile devices , such as cellular phones , tablets , notebook computers and wireless personal digital assistants ; wireless infrastructure equipment , such as base stations ; and components , dongles and modules for wireless devices . interdigital derives revenues primarily from patent licensing and sales , technology solutions licensing and sales and engineering services . in 2013 , 2012 , and 2011 , our total revenues were $ 325.4 million , $ 663.1 million and $ 301.7 million , respectively . our revenues in 2012 included $ 384.0 million related to the sale of less than ten percent of our patent portfolio . our patent licensing revenues in 2013 , 2012 , and 2011 were $ 264.2 million , $ 276.6 million and $ 295.3 million , respectively . in 2013 , the amortization of fixed-fee royalty payments accounted for approximately 26 % of our patent licensing revenues . these fixed-fee revenues are not affected by the related licensees ' success in the market or the general economic climate . the majority of the remaining portion of our patent licensing revenue is variable in nature due to the per-unit structure of the related license agreements . approximately 83 % of this per-unit , variable portion for 2013 related to sales by three of our licensees with concentrations in the smartphone market and our collection of japanese licensees , for whom the majority of the sales are within japan . as a result , our per-unit , variable patent license royalties have been , and will continue to be , largely influenced by the sales performance of these licensees . huawei settlement agreement on december 23 , 2013 , interdigital and huawei reached a settlement agreement to enter into binding arbitration to resolve their global patent licensing dispute . the agreement is based on an expedited process leading to a license on terms set by the arbitration panel , with the arbitration process expected to be complete in 2014 or early 2015. pursuant to the settlement agreement , interdigital and huawei moved to dismiss all litigation matters pending between the parties , including the two usitc investigations and related u.s. district court proceedings as they relate to huawei , and including withdrawal by huawei of its various antitrust complaints , but excluding the action filed by huawei in china to set a frand rate for the licensing of interdigital 's chinese standards-essential patents . the terms of the settlement agreement permit interdigital to further appeal , through a petition for retrial in the chinese supreme people 's court , this chinese court decision relating to interdigital 's chinese standards-essential patents . repositioning on october 23 , 2012 , we announced that , as part of our ongoing expense management , we had initiated a voluntary early retirement program ( `` verp '' ) . in connection with the verp , we incurred related repositioning charges of $ 1.5 million and $ 12.5 million in 2013 and 2012 , respectively . these charges are included in the repositioning line of our consolidated statements of income . the majority of the charges represent cash obligations associated with severance . during 2012 and 2013 , cash payments of $ 1.4 million and $ 12.6 million , respectively , were made for severance and related costs associated with the verp . as of december 31 , 2013 and december 31 , 2012 , our accrued repositioning charges were zero and $ 11.1 million , respectively . we do not expect to incur any additional charges related to the verp . patent sales on june 18 , 2012 , we announced that certain of our subsidiaries had entered into a definitive agreement to sell approximately 1,700 patents and patent applications , including approximately 160 issued u.s. patents and approximately 40 u.s. patent applications , to intel corporation for $ 375.0 million . the sale agreement involved patents primarily related to 3g , lte and 802.11 technologies . upon completion of the transaction in third quarter 2012 , we recognized $ 375.0 million as patent sales revenue and $ 15.6 million as patent sales expense , which was recorded within the patent administration and licensing line on our consolidated statements of income . included in the patent sales expense was the remaining net book value of the patents sold , as well as commissions and legal and accounting services fees paid in conjunction with the sale . we did not complete any patents sales in 2013 or 2011 . 37 we intend to pursue additional patent sale opportunities as part of our expanded strategy . however , we are unable to predict the timing and magnitude of any such sales due to the unpredictable nature of the sales cycle for such transactions . expiration of apple patent license agreement our patent license agreement with apple inc. ( โ apple โ ) , which covers certain apple iphones ( but does not cover apple ipads or any apple products designed to operate on cdma2000 or lte networks ) , expires at the end of june 2014. because this is a fixed-fee agreement , we recognize the revenue associated with this agreement on a straight-line basis over the life of the agreement . upon expiration of the agreement , apple will become unlicensed as to all products covered under the agreement . patent licensing royalties patent licensing royalties in 2013 of $ 264.2 million decreased 4 % from the prior year . story_separator_special_tag the complaints seek permanent injunctions and compensatory damages in an amount to be determined , as well as enhanced damages based on willful infringement and recovery of reasonable attorneys ' fees and costs . on march 13 , 2013 , interdigital filed an amended complaint against nokia and samsung , respectively , in delaware district court to assert allegations of infringement of recently-issued u.s. patent no . 8,380,244. on march 21 , 2013 , pursuant to stipulation , the delaware district court granted interdigital leave to file an amended complaint against huawei and zte , respectively , to assert allegations of infringement of recently-issued u.s. patent no . 8,380,244. on december 30 , 2013 , the delaware district court granted the stipulation of dismissal filed by interdigital and huawei , terminating the huawei district court action . the delaware district court has set separate trial dates for the cases against each of the three remaining defendants , with nokia scheduled for september 2014 , zte scheduled for october 2014 and samsung scheduled for june 2015. nokia , huawei and zte 2011 usitc proceeding ( 337-ta-800 ) and related delaware district court proceeding on july 26 , 2011 , interdigital 's wholly owned subsidiaries interdigital communications , llc ( now interdigital communications , inc. ) , interdigital technology corporation and ipr licensing , inc. filed a complaint with the usitc against nokia corporation and nokia inc. , huawei technologies co. , ltd. and futurewei technologies , inc. d/b/a huawei technologies ( usa ) and zte corporation and zte ( usa ) inc. ( collectively , the `` 337-ta-800 respondents '' ) , alleging violations of section 337 of the tariff act of 1930 in that they engaged in unfair trade practices by selling for importation into the united states , importing into the united states and or selling after importation into the united states certain 3g wireless devices ( including wcdma- and cdma2000-capable mobile phones , usb sticks , mobile hotspots and tablets and components of such devices ) that infringe seven of interdigital 's u.s. patents . the action also extends to certain wcdma and cdma2000 devices incorporating wi-fi functionality . interdigital 's complaint with the usitc seeks an exclusion order that would bar from entry into the united states any infringing 3g wireless devices ( and components ) that are imported by or on behalf of the 337-ta-800 respondents , and also seeks a cease-and-desist order to bar further sales of infringing products that have already been imported into the united states . the alj 's initial determination issued on june 28 , 2013 , finding no violation because the asserted patents were not infringed and or invalid . petitions for review of the initial determination ( `` id '' ) to the commission were filed by interdigital and the 337-ta-800 respondents on july 15 , 2013. on september 4 , 2013 , the commission determined to review the id in its entirety . on december 19 , 2013 , the commission issued its final determination . the commission adopted , with some modification , the alj 's finding of no violation of section 337 as to nokia , huawei , and zte . the commission did not rule on any other issue , including frand and domestic industry , and stated that all other issues remain under review . on december 20 , 2013 , interdigital filed in the federal circuit a petition for review seeking reversal of the commission 's final determination . on january 17 , 2014 , the nokia and zte respondents moved for leave to intervene in the appeal , and on january 30 , 2014 , the alj granted these motions . on january 22 , 2014 , third party samsung moved for leave to intervene in the appeal . samsung 's motion remains pending . nokia 2007 usitc proceeding ( 337-ta-613 ) , related delaware district court proceeding and federal circuit appeal on august 1 , 2012 , the federal circuit issued its decision in interdigital 's appeal of the usitc 's final determination in this proceeding , holding that the commission had erred in interpreting the claim terms at issue and reversing the commission 's finding of non-infringement . the federal circuit adopted interdigital 's interpretation of such claim terms and remanded the case back to the commission for further proceedings . in addition , the federal circuit rejected nokia 's argument that interdigital did not satisfy the domestic industry requirement . on january 17 , 2013 , the federal circuit issued its mandate remanding usitc proceeding ( 337-ta-613 ) to the commission for further proceedings . on may 10 , 2013 , nokia filed a petition for a writ of certiorari to the united states supreme court ( no . 12 -1352 ) , and on october 15 , 2013 , the supreme court denied nokia 's petition . 39 on february 12 , 2014 , the commission issued a notice , order and opinion remanding the 337-ta-613 investigation to an alj . in doing so , the commission determined certain issues and identified others that would be subject to further proceedings by the alj . please see part i , item 3 , of this form 10-k for more information regarding the commission 's february 12 , 2014 action in the 337-ta-613 investigation as well as for a fuller discussion of our other usitc proceedings . cash and short-term investments at december 31 , 2013 , we had $ 698.5 million of cash and short-term investments and an additional $ 164.5 million of fixed-fee or royalty prepayments due under agreements signed , including $ 92.8 million recorded in accounts receivable as it is due within twelve months of the balance sheet date . a substantial portion of this balance relates to fixed and prepaid royalty payments we have received that relate to future sales of our licensees ' products . as a result , our cash receipts from existing licenses subject to fixed and prepaid royalties will be reduced in future periods .
| results of operations 2013 compared with 2012 revenues the following table compares 2013 revenues to 2012 revenues ( in millions ) : replace_table_token_15_th ( a ) the 2013 amount includes $ 53.3 million of past technology solutions revenue related to the intel arbitration . the $ 337.7 million decrease in total revenue was primarily attributable to the $ 384.0 million decrease in patent sales revenue and a $ 60.0 million decrease in current patent royalties . these decreases were partially offset by increases to past patent royalties of $ 47.6 million and technology solutions revenue of $ 58.7 million , each primarily related to the previously discussed arbitration awards . the decrease in patent sales was due to the 2012 sales of patents to intel corporation and nufront mobile communications technology co. ltd. the majority of the current patent royalties decrease was attributable to a fixed-fee amortized royalty revenue decrease primarily due to the expiration of the 3g portion of our patent license agreement with 50 samsung at the end of 2012 , which was partially offset by the addition of fixed-fee amortized royalty revenue from the sony patent license agreement signed in fourth quarter 2012. additionally , per-unit royalty revenue increased $ 7.4 million primarily due to the inclusion of certain products as a result of the combination of the pegatron and apple arbitration awards . in 2013 and 2012 , 60 % and 72 % of our total revenues , respectively , were attributable to companies that individually accounted for 10 % or more of our total revenues . in 2013 and 2012 , the following customers accounted for 10 % or more of our total revenues : replace_table_token_16_th ( a ) 2013 revenues include $ 71.4 million of past patent royalties . ( b ) 2013 revenues include $ 53.3 million of past technology solutions revenue .
| 2,668 |
interest under the tranche b term loan facility is determined based on alternative rates that we may choose in accordance with the credit agreement , including a base rate per annum plus an applicable margin of 2.50 % , and libor plus an applicable margin of 3.50 % , in each case subject story_separator_special_tag the following management 's discussion and analysis of financial condition and results of operations contains forward-looking statements that involve risks and uncertainties . our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors , including those set forth under item 1a , `` risk factors '' and under the heading `` forward-looking statements '' below and elsewhere in this report . the following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report . general we manufacture , sell and distribute a diverse portfolio of branded , high quality , shelf-stable foods and household products , many of which have leading regional or national market shares . in general , we position our branded products to appeal to the consumer desiring a high quality and reasonably priced product . we complement our branded product retail sales with institutional and food service sales and limited private label sales . our goal is to continue to increase sales , profitability and cash flows by enhancing our existing portfolio of branded shelf stable products and by capitalizing on our competitive strengths . we intend to implement our growth strategy through the following initiatives : expanding our brand portfolio with disciplined acquisitions of complementary branded businesses , continuing to develop new products and delivering them to market quickly , leveraging our multiple channel sales and distribution system and continuing to focus on higher growth customers and distribution channels . on november 30 , 2011 , we completed the acquisition of the mrs. dash , sugar twin , baker 's joy , molly mcbutter , static guard and kleen guard brands from conopco , inc. dba unilever united states , inc. , which we refer to in this report as the `` culver specialty brands acquisition . '' we completed the acquisition of the don pepino and sclafani brands from violet packing llc on november 18 , 2010 , which we refer to in this report as the `` don pepino acquisition . '' the culver specialty brands acquisition and the don pepino acquisition have been accounted for using the acquisition method of accounting and , accordingly , the assets acquired and results of operations of the acquired businesses are included in our consolidated financial statements from the respective dates of acquisition . these acquisitions and the application of the acquisition method of accounting affect comparability between periods . we are subject to a number of challenges that may adversely affect our businesses . these challenges , which are discussed above under item 1a , `` risk factors '' and below under the heading `` forward-looking statements '' include : fluctuations in commodity prices and production and distribution costs : we purchase raw materials , including agricultural products , meat , poultry , ingredients and packaging materials from growers , commodity processors , other food companies and packaging suppliers located in u.s. and foreign locations . raw materials and other input costs , such as fuel and transportation , are subject to fluctuations in price attributable to a number of factors . fluctuations in commodity prices can lead to retail price volatility and intensive price competition , and can influence consumer and trade buying patterns . the cost of raw materials , fuel , labor , distribution and other costs related to our operations can increase from time to time significantly and unexpectedly . we attempt to manage cost inflation risks by locking in prices through short-term supply contracts and advance commodities purchase agreements and by implementing cost saving measures . we also attempt to offset rising input costs by raising sales prices to our customers . however , increases in the prices we charge our customers may lag behind rising input costs . competitive pressures also may limit our ability to quickly raise prices in response to rising costs . 30 we expect significant cost increases for raw materials in the market place during 2012. however , we are currently locked into our supply and prices for a majority of our most significant commodities ( excluding , among others , maple syrup ) through 2012 at a cost increase of less than 2.0 % of projected 2012 cost of goods sold . during fiscal 2010 and 2011 , our sales price increases and our cost saving measures more than offset our cost increases . to the extent we are unable to avoid or offset present and future cost increases by locking in our costs , implementing cost saving measures or increasing prices to our customers , our operating results could be materially adversely affected . in addition , should input costs begin to decline , customers may look for price reductions in situations where we have locked into purchases at higher costs . consolidation in the retail trade and consequent inventory reductions : as the retail grocery trade continues to consolidate and our retail customers grow larger and become more sophisticated , our retail customers may demand lower pricing and increased promotional programs . these customers are also reducing their inventories and increasing their emphasis on private label products . changing customer preferences : consumers in the market categories in which we compete frequently change their taste preferences , dietary habits and product packaging preferences . consumer concern regarding food safety , quality and health : the food industry is subject to consumer concerns regarding the safety and quality of certain food products . if consumers in our principal markets lose confidence in the safety and quality of our food products , even as a result of a product liability claim or a product recall by a food industry competitor , our business could be adversely affected . story_separator_special_tag this process involves estimating our current tax expenses together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes . these differences result in deferred tax assets and liabilities . we then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe the recovery is not likely , we establish a valuation allowance . further , to the extent that we establish a valuation allowance or increase this allowance in a financial accounting period , we include such charge in our tax provision , or reduce our tax benefits in our consolidated statements of operations . we use our judgment to determine our provision or benefit for income taxes , deferred tax assets and liabilities and any valuation allowance recorded against our deferred tax assets . there are various factors that may cause these tax assumptions to change in the near term , and we may have to record a valuation allowance against our deferred tax assets . we can not predict whether future u.s. federal and state income tax laws and regulations might be passed that could have a material effect on our results of operations . we assess the impact of significant changes to the u.s. federal and state income tax laws and regulations on a regular basis and update the assumptions and estimates used to prepare our consolidated financial statements when new regulations and legislation are enacted . we recognize the benefit of an uncertain tax position that we have taken or expect to take on the income tax returns we file if it is more likely than not that such tax position will be sustained based upon its technical merits . share-based compensation expense performance share long-term incentive awards ( ltias ) granted to our executive officers and certain other members of senior management entitle each participant to earn shares of common stock upon the attainment of certain performance goals over the applicable performance period . the recognition of compensation expense for the ltias is initially based on the probable outcome of the performance goals based on the fair value of the award on the date of grant and the anticipated number of shares to be awarded on a straight-line basis over the applicable performance period . the fair value of the awards on the date of grant is determined based upon the closing price of our common stock on the applicable measurement dates ( i.e. , the deemed grant dates for accounting purposes ) reduced by the present value of expected dividends using the risk-free interest-rate as the award holders are not entitled to dividends or dividend equivalents during the vesting period . our company 's performance against the defined performance goals are re-evaluated on a quarterly basis throughout the applicable performance period and the recognition of compensation expense is adjusted for subsequent changes in the estimated or actual outcome . the cumulative effect of a change in the estimated number of shares of common stock to be issued in respect of performance share awards is recognized as an adjustment to earnings in the period of the revision . pension expense we have defined benefit pension plans covering substantially all of our employees . our funding policy is to contribute annually not less than the amount recommended by our actuaries . the funded status of our pension plans is dependent upon many factors , including returns on invested assets and the level of certain market interest rates . we review pension assumptions regularly and we may from time to time make voluntary contributions to our pension plans , which exceed the amounts required by statute . during fiscal 2011 , we made total pension contributions to our pension plans of $ 4.2 million compared with $ 4.1 million in fiscal 2010. changes in interest rates and the market value of the securities held by the plans could materially change , positively or negatively , the underfunded status of the plans and affect the level of pension expense and required contributions in fiscal 2012 and beyond . 33 our discount rate assumption for the three defined benefit plans changed from 5.50 % at january 1 , 2011 to 4.34 % at december 31 , 2011. while we do not presently anticipate a change in our fiscal 2012 assumptions , as a sensitivity measure , a 0.25 % decline or increase in our discount rate would increase or decrease our pension expense by approximately $ 0.2 million . similarly , a 0.25 % decrease or increase in the expected return on pension plan assets would increase or decrease our pension expense by approximately $ 0.1 million . we expect to make $ 4.2 million of defined benefit pension plan contributions during fiscal 2012. acquisition accounting our consolidated financial statements and results of operations include an acquired business 's operations after the completion of the acquisition . we account for acquired businesses using the acquisition method of accounting , which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values . any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill . transaction costs are expensed as incurred . the judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed , as well as asset lives , can materially impact our results of operations . accordingly , for significant items , we typically obtain assistance from third party valuation specialists . determining the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may even be considered to have indefinite useful lives . all of these judgments and estimates can materially impact our results of operations . story_separator_special_tag income tax expense .
| results of operations the following table sets forth the percentages of net sales represented by selected items reflected in our consolidated statements of operations . the comparisons of financial results are not necessarily indicative of future results : replace_table_token_7_th as used in this section the terms listed below have the following meanings : net sales . our net sales represents gross sales of products shipped to customers plus amounts charged to customers for shipping and handling , less cash discounts , coupon redemptions , slotting fees and trade promotional spending . 34 gross profit . our gross profit is equal to our net sales less cost of goods sold . the primary components of our cost of goods sold are cost of internally manufactured products , purchases of finished goods from co-packers plus freight costs to our distribution centers and to our customers . selling , general and administrative expenses . our selling , general and administrative expenses include costs related to selling our products , as well as all other general and administrative expenses . some of these costs include administrative , marketing and internal sales force employee compensation and benefits costs , consumer advertising programs , brokerage costs , warehouse facility and distribution costs , information technology and communication costs , office rent , utilities , supplies , professional services and other general corporate expenses . in fiscal 2011 , selling , general and administrative expenses include $ 1.4 million of transaction costs for the culver specialty brands acquisition . amortization expense . amortization expense includes the amortization expense associated with customer relationship and other intangibles . net interest expense .
| 2,669 |
replace_table_token_33_th 43 hawkins , inc. notes to consolidated financial statements ย ( continued ) the tax effects of items comprising our net deferred tax asset ( liability ) as of april 1 , 2012 and april 3 , 2011 are as follows : replace_table_token_34_th as of april 1 , 2012 , the company has determined that it is more likely than not that the deferred tax assets at april 1 , 2012 will be realized either through future taxable income or reversals of taxable temporary differences . as of april 1 , 2012 and april 3 , 2011 , there were no unrecognized tax benefits . accordingly , a tabular reconciliation from beginning to ending periods is not provided . we are subject to u.s. federal income tax as well as income tax of multiple state jurisdictions . the tax years beginning with 2007 remain open to examination by the internal revenue service , and with few exceptions , state and local income tax jurisdictions . note 11 ย discontinued operations in february 2009 , we agreed to sell our inventory and entered into a marketing agreement regarding the business of our pharmaceutical segment , which provided pharmaceutical chemicals to retail pharmacies and small-scale pharmaceutical manufacturers . the inventory was sold in fiscal 2010 for cash of approximately $ 1.8 million which approximated its carrying value . the marketing agreement provides for annual payments based on a percentage of gross profit on future sales up to a maximum of approximately $ 3.5 million . we have no significant remaining obligations to fulfill under the agreement . amounts received under the marketing agreement in excess of $ 1.7 million , the carrying value of intangible assets related to this business at the time of sale , have been recorded as a gain on sale of discontinued operations . through fiscal 2012 , we have recorded gains of approximately $ 1.7 million before taxes and expect to accrue a nominal amount in fiscal 2013 which will finalize the agreement . to date , we have received $ 2.2 million in cash under this marketing agreement and expect to collect the remaining $ 1.3 million in fiscal 2013. the results of the pharmaceutical segment have been reported as discontinued operations for all periods presented . 44 hawkins , inc. notes to consolidated financial statements ย ( continued ) note 12 ย segment information we have two reportable segments : industrial and water treatment . the accounting policies of the segments are the same as those described in the summary of significant accounting policies . product costs and expenses for each segment are based on actual costs incurred along with cost allocation of shared and centralized functions . we evaluate performance based on profit or loss from operations before income taxes not including nonrecurring gains and losses . reportable segments are defined by product and type of customer . segments are responsible for the sales , marketing and development of their products and services . the segments do not have separate accounting , administration , customer service or purchasing functions . there are no intersegment sales and no operating segments have been aggregated . given our nature , it is not practical to disclose revenues from external customers for each product or each group of similar products . no single customer 's revenues amount to 10 % or more of our revenue . no single customer represents 10 % or more of either of our segments ' sales . sales are primarily within the united states and all assets are located within the united states . replace_table_token_35_th * unallocated assets consisting primarily of cash and cash equivalents , investments and prepaid expenses were $ 48.0 million at april 1 , 2012 , $ 41.7 million at april 3 , 2011 and $ 60.5 million at march 28 , 2010. additionally , assets associated with the discontinued operations of the pharmaceutical segment were $ 1.2 million at april 1 , 2012 , $ 0.9 million at april 3 , 2011 and $ 1.0 million at march 28 , 2010 . 45 hawkins , inc. notes to consolidated financial statements ย ( continued ) note 13 ย selected quarterly financial data ( unaudited ) replace_table_token_36_th 46 item 9. changes in and disagreements with accountants on accounting and financial disclosure not applicable . item 9a . controls and procedures evaluation of disclosure controls and procedures as of the end of the period covered by this annual report on form 10-k , we conducted an story_separator_special_tag the following is a discussion and analysis of our financial condition and results of operations for fiscal 2012 , 2011 and 2010. this discussion should be read in conjunction with the financial statements and notes to financial statements included in item 8 of this annual report on form 10-k. overview we derive substantially all of our revenues from the sale of bulk and specialty chemicals to our customers in a wide variety of industries . we began our operations primarily as a distributor of bulk chemicals with a strong customer focus . over the years we have maintained the strong customer focus and have expanded our business by increasing our sales of value-added specialty chemical products , including repackaging , blending and manufacturing certain products . in recent years , we significantly expanded the sales of our higher-margin blended and manufactured products , including our food-grade products . we have continued to invest in growing our business . story_separator_special_tag gross profit for the industrial segment was $ 36.9 million , or 17.7 % of sales , for fiscal 2011 , as compared to $ 37.3 million , or 21.3 % of sales , for fiscal 2010. competitive pricing pressures and increased operational overhead costs contributed to the lower gross profit levels in the industrial segment . this group incurred $ 0.3 million of overhead costs associated with flood control efforts in the fourth quarter of fiscal 2011. these reductions in gross profit were partially offset by higher sales of higher margin manufactured and specialty chemical products . the lifo method of valuing inventory negatively impacted gross profit in this segment by $ 2.9 million in fiscal 2011 , as compared to positively impacting gross profit by $ 10.2 million in fiscal 2010. water treatment segment . gross profit for the water treatment segment was $ 25.0 million , or 28.1 % of sales , for fiscal 2011 , as compared to $ 27.2 million , or 33.0 % of sales , for fiscal 2010. the decrease in gross profit dollars was primarily due to competitive pricing pressures and increased operational overhead costs , partially offset by increased sales . additionally , the lifo method of valuing inventory negatively impacted gross profit in this segment by $ 1.1 million in fiscal 2011 , as compared to positively impacting gross profit by $ 2.4 million in fiscal 2010 . 19 selling , general and administrative expenses selling , general and administrative ( ยsg & aย ) expenses increased $ 4.3 million to $ 29.9 million , or 10.1 % of sales , for fiscal 2011 , as compared to $ 25.6 million , or 10.0 % of sales , for fiscal 2010. we incurred approximately $ 1.0 million in additional expense as a result of the death of john hawkins , our former chief executive officer , through payments due under his retention bonus agreement and the accelerated vesting of his previously granted performance-based restricted stock units and stock options . other items driving the increased expenses include acquisition costs of approximately $ 0.7 million relating to the vertex acquisition in addition to higher equity incentive plan costs and litigation defense costs . operating income operating income was $ 32.0 million , or 10.7 % of sales , for fiscal 2011 , as compared to $ 38.8 million , or 15.1 % of sales , for fiscal 2010. the decrease in operating income was the result of reduced gross profits and increased sg & a expenses . both reporting segments saw a decline in their gross profit dollars due to competitive pricing pressures and higher operational overhead costs . both segments were also negatively impacted by the lifo method of valuing inventory in fiscal 2011. investment income investment income was $ 0.3 million for fiscal 2011 and fiscal 2010. provision for income taxes our effective income tax rate was 37.1 % for fiscal 2011 compared to 39.3 % for fiscal 2010. the lower effective tax rate for fiscal 2011 was primarily due to increased permanent tax differences , lower taxable income levels and somewhat lower effective state tax rates . liquidity and capital resources cash provided by operating activities in fiscal 2012 was $ 33.7 million compared to $ 28.5 million in fiscal 2011 and $ 38.8 million in fiscal 2010. the increase in cash provided by operating activities in fiscal 2012 from fiscal 2011 was primarily due to increases in net income and depreciation and amortization . higher working capital balances used $ 1.9 million in cash in fiscal 2012 compared to cash used of $ 0.4 million for working capital in fiscal 2011. the net increase in working capital balances in fiscal 2012 was primarily due to increasing commodity chemical costs and the resulting increase in selling prices , which resulted in an increase in trade receivables , lower accounts payable and income tax payable balances due to the timing of payments . due to the nature of our operations , which includes purchases of large quantities of bulk chemicals , the timing of purchases can result in significant changes in working capital investment and the resulting operating cash flow . historically , our cash requirements for working capital increase during the period from april through november as caustic soda inventory levels increase as the majority of barges are received during this period . cash used in financing activities was $ 3.7 million in fiscal 2012 compared to $ 6.9 million in fiscal 2011 and $ 6.6 million in fiscal 2010. the decrease in cash used in financing activities in fiscal 2012 was primarily due to proceeds from the exercise of employee stock options , recognition of excess tax benefits from share-based compensation and proceeds from the issuance of new shares of common stock for the company 's employee stock purchase plan . cash and investments available-for-sale of $ 45.9 million at april 1 , 2012 increased by $ 8.5 million as compared with april 3 , 2011 , primarily due to cash generated from operations , proceeds from the exercise of employee stock options and proceeds from the issuance of new shares of common stock through the company 's employee stock purchase plan , partially offset by capital expenditures and dividend payments . investments available-for-sale as of april 1 , 2012 and april 3 , 2011 consisted of certificates of deposit with maturities ranging from three months to two years .
| results of operations the following table sets forth certain items from our statement of income as a percentage of sales from period to period : replace_table_token_5_th fiscal 2012 compared to fiscal 2011 sales sales increased $ 46.2 million , or 15.5 % , to $ 343.8 million for fiscal 2012 , as compared to sales of $ 297.6 million for fiscal 2011. vertex , which we acquired during the fourth quarter of 2011 , contributed $ 32.9 million of the increase in sales for fiscal 2012. we also experienced increased sales as a result of higher selling prices due to increased commodity chemical prices . sales of bulk chemicals , including caustic soda , were approximately 23 % of sales compared to approximately 20 % in the previous year . the increase in the bulk 17 chemical sales percentage for fiscal 2012 was primarily attributable to a full year of vertex sales volumes compared to a partial year of sales volumes in fiscal 2011. industrial segment . industrial segment sales increased $ 42.7 million , or 20.5 % , to $ 251.4 million for fiscal 2012. vertex contributed $ 32.9 million of the increase in sales for fiscal 2012. we experienced higher selling prices due to increased commodity chemical prices . water treatment segment . water treatment segment sales increased $ 3.5 million , or 3.9 % , to $ 92.4 million for fiscal 2012. the sales increase was primarily attributable to increased sales volumes related to manufactured and specialty chemical products and higher bulk chemical selling prices due to increased commodity chemical prices for those products .
| 2,670 |
our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors , including those discussed in item 1a . ยrisk factorsย and ยforward looking statements.ย we have acquired and initiated a number of businesses since inception . our financial statements include the results of operations of those businesses from the date acquired or when they commenced operations . this management 's discussion and analysis of financial condition and results of operations has been updated to reflect the revision of our financial statements for entities which have been treated as discontinued operations through december 31 , 2010. overview we are the second largest automotive retailer headquartered in the u.s. as measured by total revenue . as of december 31 , 2010 , we operated 323 retail automotive franchises , of which 172 franchises are located in the u.s. and 151 franchises are located outside of the u.s. the franchises outside of the u.s. are located primarily in the u.k. we are diversified geographically , with 63 % of our total revenues in 2010 generated in the u.s. and puerto rico and 37 % generated outside the u.s. we offer a full range of vehicle brands with 95 % of our total retail revenue in 2010 generated from brands of non-u.s. based manufacturers , and 66 % generated from premium brands , such as audi , bmw , cadillac , mercedes-benz and porsche . each of our dealerships offers a wide selection of new and used vehicles for sale . in addition to selling new and used vehicles , we generate higher-margin revenue at each of our dealerships through maintenance and repair services and the sale and placement of higher-margin products , such as third-party finance and insurance products , third-party extended service contracts and replacement and aftermarket automotive products . smart usa . we are also , through smart usa distributor , llc ( ยsmart usaย ) , a wholly-owned subsidiary , the exclusive distributor of the smart fortwo vehicle in the u.s. and puerto rico . the smart fortwo is manufactured by mercedes-benz cars and is a daimler brand . this technologically advanced vehicle achieves more than 40 miles per gallon on the highway and is an ultra-low emissions vehicle as certified by the state of california air resources board . as of december 31 , 2010 , smart usa had certified a network of approximately 75 smart dealerships , ten of which are owned and operated by us . the smart fortwo is available in three different versions , the pure , passion coupe , and passion cabriolet with base prices ranging from $ 12,490 to $ 17,690. beginning in 2011 , smart usa began limited deliveries of an electric drive vehicle that has an electric motor which generates no harmful emissions and is available in limited quantities . smart usa wholesaled 5,045 and 13,772 smart fortwo vehicles in 2010 and 2009 , respectively . in february 2011 , we began discussions with mercedes-benz usa to transition distribution of the smart fortwo to mercedes-benz usa . this transaction , estimated to be completed by june 30 , 2011 , is subject to completion of binding documentation , regulatory approvals , and other conditions outside our control . we also hold a 9 % limited partnership interest in penske truck leasing co. , l.p. ( ยptlย ) , a leading global transportation services provider . ptl operates and maintains more than 200,000 vehicles and serves customers in north america , south america , europe and asia . product lines include full-service leasing , contract maintenance , commercial and consumer truck rental and logistics services , including , transportation and distribution center management and supply chain management . the general partner of ptl is penske truck leasing corporation , a wholly-owned subsidiary of penske corporation , which , together with other wholly-owned subsidiaries of penske corporation , owns 41.1 % of ptl . the remaining 49.9 % of ptl is owned by general electric capital corporation . outlook the level of new automotive unit sales in our markets will impact our results . while the market began to recover and the amount of customer traffic visiting our dealerships improved in 2010 , the level of automotive sales in the u.s. remains at a low level compared to the last 10 years . we expect continued improvement in the automotive market in the u.s. over the next several years , although the level of such improvement is uncertain . the relatively low level of new retail automotive sales in the u.s. during the last two years has led to a decline in the number of 2009 and 2010 vehicles in operation , which may adversely impact availability and pricing in our used vehicle operations and may also negatively impact demand in our parts and service operations . many of the same economic factors have and may continue to impact the german and u.k. automotive markets . while new unit registrations increased in the u.k. in 2010 , this was due in part to government incentive programs aimed to increase vehicle sales . those programs ended in 2010. as a result , we anticipate that new vehicle sales in the u.k. will decline in 2011 , however , we believe the premium/luxury market will be more resilient than the retail market as a whole . the german market experienced a sharp decline in new unit sales in 2010 as government sponsored incentive programs expired . we believe that the german automotive market will recover somewhat in 2011 , although the level of recovery is uncertain . 23 operating overview new and used vehicle revenues include sales to retail customers and to leasing companies providing consumer automobile leasing . we generate finance and insurance revenues from sales of third-party extended service contracts , sales of third-party insurance policies , commissions relating to the sale of finance and lease contracts to third parties and the sales of certain other products . story_separator_special_tag during the years ended december 31 , 2010 , 2009 , and 2008 , we earned $ 363.6 million , $ 317.3 million , and $ 323.9 million , respectively , of rebates , incentives and reimbursements from manufacturers , of which $ 353.9 million , $ 311.6 million , and $ 316.4 million was recorded as a reduction of cost of sales . finance and insurance sales subsequent to the sale of a vehicle to a customer , we sell installment sale contracts to various financial institutions on a non-recourse basis ( with specified exceptions ) to mitigate the risk of default . we receive a commission from the lender equal to either the difference between the interest rate charged to the customer and the interest rate set by the financing institution or a flat fee . we also receive commissions for facilitating the sale of various third-party insurance products to customers , including credit and life insurance policies and extended service contracts . these commissions are recorded as revenue at the time the customer enters into the contract . impairment testing franchise value impairment is assessed as of october 1 every year and upon the occurrence of an indicator of impairment through a comparison of its carrying amount and estimated fair value . an indicator of impairment exists if the carrying value of a franchise exceeds its estimated fair value and an impairment loss may be recognized up to that excess . the fair value of franchise value is determined using a discounted cash flow approach , which includes assumptions that include revenue and profitability growth , franchise profit margins , and our cost of capital . we also evaluate our franchise agreements in connection with the annual impairment testing to determine whether events and circumstances continue to support our assessment that the franchise agreements have an indefinite life . goodwill impairment is assessed at the reporting unit level as of october 1 every year and upon the occurrence of an indicator of impairment . we have determined that the dealerships in each of our operating segments within the retail reportable segment are components that are aggregated into four geographical reporting units for the purpose of goodwill impairment testing , as they ( a ) have similar economic characteristics ( all are automotive dealerships having similar margins ) , ( b ) offer similar products and services ( all sell new and used vehicles , service , parts and third-party finance and insurance products ) , ( c ) have similar target markets and customers ( generally individuals ) and ( d ) have similar distribution and marketing practices ( all distribute products and services through dealership facilities that market to customers in similar fashions ) . there is no goodwill recorded in our distribution or pag investments reportable segments . an indicator of goodwill impairment exists if the carrying amount of the reporting unit , including goodwill , is determined to exceed its estimated fair value . the fair value of goodwill is determined using a discounted cash flow approach , which includes assumptions about revenue and profitability growth , franchise profit margins , residual values and our cost of capital . if an indication of goodwill impairment exists , an analysis reflecting the allocation of the estimated fair value of the reporting unit to all assets and liabilities , including previously unrecognized intangible assets , is performed . the impairment is measured by comparing the implied fair value of the reporting unit goodwill with its carrying amount and an impairment loss may be recognized up to any excess of the carrying value over the implied fair value . investments we account for each of our investments under the equity method , pursuant to which we record our proportionate share of the investee 's income each period . the net book value of our investments was $ 288.4 million and $ 295.5 million as of december 31 , 2010 and 2009 , respectively . investments for which there is not a liquid , actively traded market are reviewed periodically by management for indicators of impairment . if an indicator of impairment is identified , management estimates the fair value of the investment using a discounted cash flow approach , which includes assumptions relating to revenue and profitability growth , profit margins , residual values and our cost of capital . declines in investment values that are deemed to be other than temporary may result in an impairment charge reducing the investments ' carrying value to fair value . 25 self-insurance we retain risk relating to certain of our general liability insurance , workers ' compensation insurance , auto physical damage insurance , property insurance , employment practices liability insurance , directors and officers insurance and employee medical benefits in the u.s. as a result , we are likely to be responsible for a significant portion of the claims and losses incurred under these programs . the amount of risk we retain varies by program , and , for certain exposures , we have pre-determined maximum loss limits for certain individual claims and or insurance periods . losses , if any , above the pre-determined loss limits are paid by third-party insurance carriers . our estimate of future losses is prepared by management using our historical loss experience and industry-based development factors . aggregate reserves relating to retained risk were $ 22.8 million and $ 21.5 million as of december 31 , 2010 and 2009 , respectively . changes in the reserve estimate during 2010 relate primarily to current year activity in our general liability and workers compensation programs . income taxes tax regulations may require items to be included in our tax returns at different times than the items are reflected in our financial statements . some of these differences are permanent , such as expenses that are not deductible on our tax return , and some are temporary differences , such as the timing of depreciation expense . temporary differences create deferred tax assets and liabilities .
| results of operations the following tables present comparative financial data relating to our operating performance in the aggregate and on a ยsame-storeย basis . dealership results are included in same-store comparisons when we have consolidated the acquired entity during the entirety of both periods being compared . as an example , if a dealership was acquired on january 15 , 2009 , the results of the acquired entity would be included in annual same-store comparisons beginning with the year ended december 31 , 2011 . 2010 compared to 2009 and 2009 compared to 2008 ( in millions , except unit and per unit amounts ) our results for the year ended december 31 , 2010 include a gain of $ 5.3 million ( $ 3.6 million after-tax ) , or $ 0.04 per share , relating to a gain on the sale of an investment , a gain of $ 1.6 million ( $ 1.1 million after-tax ) , or $ 0.01 per share , relating to the repurchase of $ 155.7 million aggregate principal amount of our 3.5 % senior subordinated convertible notes , and a charge of $ 4.1 million ( $ 2.8 million after-tax ) , or $ 0.03 per share , associated with costs related to franchise closure and relocation costs .
| 2,671 |
these forward-looking statements are subject to business and economic risks and uncertainties , including those discussed under the caption ยrisk factorsย in item 1a of this form 10-k , and our actual results of operations may differ materially from those contained in the forward-looking statements . business overview we are a leading developer and implementer of supply chain software solutions that help organizations optimize their supply chain operations from planning through execution . our platform-based supply chain software solution portfolios ย manhattan scope ยฎ and manhattan scale tm ย are designed to deliver both business agility and total cost of ownership advantages to customers . manhattan scope ( supply chain optimization , planning through execution ) leverages our supply chain process platform ( scpp ) to unify the full breadth of the supply chain , while manhattan scale ( supply chain architected for logistics execution ) leverages microsoft 's .net ยฎ platform to unify logistics functions . early in the company 's history , our offerings were heavily focused on warehouse management solutions . as the company grew in size and scope , our offerings expanded across the entire supply chain , while still maintaining a significant presence in , and a relatively strong concentration of revenues from warehouse management solutions , which is a component of our distribution management solution suite . over time , as our non-warehouse management solutions have proliferated and increased in capability , the company 's revenue concentration in its warehouse management solutions has correspondingly decreased . our business model is singularly focused on the development and implementation of complex supply chain software solutions that are designed to optimize supply chain effectiveness and efficiency for our customers . we have three principal sources of revenue : licenses of our supply chain software ; professional services , including solutions planning and implementation , related consulting , customer training , and customer support services and software enhancements ( collectively , ยservicesย ) ; and hardware sales and other revenue . in 2012 , we generated $ 376.2 million in total revenue , with a revenue mix of : license revenue 16 % ; services revenue 76 % ; and hardware and other revenue 8 % . we manage our business based on three geographic regions : north america and latin america ( americas ) , europe , middle east , and africa ( emea ) , and asia pacific ( apac ) . geographic revenue is based on the location of the sale . our international revenue was approximately $ 104.4 million , $ 90.7 million , and $ 80.7 million for the years ended december 31 , 2012 , 2011 , and 2010 , respectively , which represents approximately 28 % , 28 % , and 27 % of our total revenue for the years ended december 31 , 2012 , 2011 , and 2010 , respectively . international revenue includes all revenue derived from sales to customers outside the united states . at december 31 , 2012 , we employed approximately 2,400 employees worldwide , of which 1,130 employees are based in the americas , 170 employees in emea , and 1,100 employees in apac ( including india ) . we have offices in australia , china , france , india , japan , the netherlands , singapore , and the united kingdom , as well as representatives in mexico and reseller partnerships in latin america , eastern europe , the middle east , south africa , and asia . global economic trends and industry factors global macro economic trends , technology spending , and supply chain management market growth are important barometers for our business . in 2012 , approximately 72 % of our total revenue was generated in the united states , 12 % in emea , and the balance in apac , canada , and latin america . in addition , gartner inc. , an information technology research and advisory company , estimates that nearly 80 % of every supply chain software solutions dollar invested is spent in the united states ( 50 % ) and western europe ( 28 % ) ; consequently , the health of the u.s. and the western european economies has a meaningful impact on our financial results . 24 we sell technology-based solutions with total pricing , including software and services , in many cases exceeding $ 1.0 million . our software often is a part of our customers ' and prospects ' much larger capital commitment associated with facilities expansion and business improvement . we believe that , given the lingering uncertainty in the global macro environment , the current sales cycles for large license sales of $ 1.0 million or greater in our target markets have been extended . the current business climate within the united states and geographic regions in which we operate continues to affect customers ' and prospects ' decisions regarding timing of strategic capital expenditures . delays with respect to such decisions can have a material adverse impact on our business , and may further intensify competition in our already highly competitive markets . in january 2013 , the international monetary fund ( imf ) provided a world economic outlook ( weo ) update lowering its previous 2013 world economic growth forecast from october 2012 by 10 basis points projecting 3.5 percent growth in 2013 versus 3.2 percent growth in 2012. the weo noted that europe and japan are in recession , and the united states continues to struggle with fiscal policy , including the debt ceiling , tax policy , and entitlement programs . the update stated that ย [ g ] lobal growth is projected to increase during 2013 , as the factors underlying soft global activity are expected to subside . story_separator_special_tag professional services are typically rendered under time and materials-based contracts with services typically billed on an hourly basis . professional services are sometimes rendered under fixed-fee based contracts with payments due on specific dates or milestones . typically , our professional services lag license revenue by several quarters , as implementation services and related consulting are performed after the purchase of the software . services revenue growth is contingent upon license revenue growth and customer upgrade cycles , which is influenced by the strength of general economic and business conditions and the competitive position of our software products . in addition , our professional services business has competitive exposure to offshore providers and other consulting companies . all of these factors potentially create the risk of pricing pressure , fewer customer orders , reduced gross margins , and loss of market share . for csse , we offer a comprehensive 24 hours per day , 365 days per year program that provides our customers with software upgrades , when and if available , which include additional or improved functionality and technological advances incorporating emerging supply chain and industry initiatives . our csse revenues totaled $ 98.6 million in 2012 , representing approximately 35 % of services revenue and approximately 25 % of total revenue , respectively . the growth of csse revenues is influenced by : ( 1 ) new license revenue growth ; ( 2 ) annual renewal of support contracts ; ( 3 ) increase in customers through acquisitions ; and ( 4 ) fluctuations in currency rates . substantially all of our customers renew their annual support contracts . over the last three years , our annual revenue renewal rate of customers subscribing to comprehensive support and enhancements has been greater than 90 % . csse revenue is generally paid in advance and recognized ratably over the term of the agreement , typically twelve months . csse renewal revenue is not recognized unless payment is received from the customer . hardware and other revenue : our hardware and other revenue totaled $ 30.9 million in 2012 representing 8 % of total revenue with gross margins of 18.4 % . during 2012 , americas , emea , and apac were responsible for $ 28.9 million , $ 1.4 million , and $ 0.6 million , respectively , in hardware and other revenue . in conjunction with the licensing of our software , and as a convenience for our customers , we resell a variety of hardware products developed and manufactured by third parties . these products include computer hardware , radio frequency terminal networks , rfid chip readers , bar code printers and scanners , and other peripherals . we resell all third-party hardware products and related maintenance pursuant to agreements with manufacturers or through distributor-authorized reseller agreements pursuant to which we are entitled to purchase hardware products and services at discount prices . we generally purchase hardware from our vendors only after receiving an order from a customer . as a result , we generally do not maintain hardware inventory . other revenue represents amounts associated with reimbursements from customers for out-of-pocket expenses . the total amount of expense reimbursement recorded to hardware and other revenue was $ 12.6 million , $ 10.4 million , and $ 9.0 million for 2012 , 2011 , and 2010 , respectively . 26 product development we continue to invest significantly in research and development ( r & d ) , which historically has averaged about 14 cents of every revenue dollar , excluding hardware and other revenue , to provide leading solutions that help global manufacturers , wholesalers , distributors , retailers , and logistics providers successfully manage accelerating and fluctuating demands as well as the increasing complexity and volatility of their local and global supply chains . our research and development expenses for the years ended december 31 , 2012 , 2011 , and 2010 were $ 44.7 million , $ 42.4 million , and $ 40.5 million , respectively . at december 31 , 2012 , our r & d organization totaled approximately 650 employees , located in the u.s. and india . we expect to continue to focus our r & d resources on the development and enhancement of supply chain software solutions . we offer what we believe to be the broadest solution portfolio in the supply chain solutions marketplace , to address all aspects of planning and forecasting , inventory optimization , order lifecycle management , transportation lifecycle management , and distribution management . we also plan to continue to enhance our existing solutions and to introduce new solutions to address evolving industry standards and market needs . we identify opportunities to further enhance our solutions and to develop and provide new solutions through our customer support organization , as well as through ongoing customer consulting engagements and implementations , interactions with our user groups , association with leading industry analysts and market research firms , and participation on industry standards and research committees . our solutions address the needs of customers in various vertical markets , including retail , consumer goods , food and grocery , logistics service providers , industrial and wholesale , high technology and electronics , life sciences , and government . cash flow and financial condition for 2012 , we generated cash flow from operating activities of $ 75.3 million and have generated a cumulative total of $ 181.1 million for the three years ended december 31 , 2012. our cash and investments at december 31 , 2012 totaled $ 103.0 million , with no debt on our balance sheet . we currently have no credit facilities . during the past three years , our primary uses of cash have been funding investment in r & d and operations to drive earnings growth and repurchases of common stock . during 2012 , we repurchased approximately $ 99.7 million of manhattan associates ' outstanding common stock under the share repurchase program approved by our board of directors throughout the year .
| results of operations the following table summarizes selected statement of income data for the years ended december 31 , 2012 , 2011 , and 2010. replace_table_token_5_th ( 1 ) amount represents recovery of an auction rate security investment which had been impaired in a prior period . 31 we manage our business based on three geographic regions : the americas , emea , and apac . geographic revenue information is based on the location of sale . the revenues represented below are from external customers only . the geographical-based expenses include costs of personnel , direct sales , and marketing expenses , and general and administrative costs to support the business . there are certain corporate expenses included in the americas region that are not charged to the other segments including research and development , certain marketing and general and administrative costs that support the global organization , and the amortization of acquired developed technology . included in the americas costs are all research and development costs , including the costs associated with the company 's india operations . during 2012 , 2011 , and 2010 , we derived the majority of our revenues from sales to customers within our americas region . the following table summarizes revenue and operating profit by region : replace_table_token_6_th the results of our operations for the years ended december 31 , 2012 , 2011 , and 2010 are discussed below . revenue our revenue consists of fees generated from the licensing and hosting of software ; fees from professional services , customer support services and software enhancements ; hardware sales of complementary radio frequency and computer equipment ; and other revenue representing amounts associated with reimbursements from customers for out-of-pocket expenses . replace_table_token_7_th 32 license revenue year 2012 compared with year 2011 license revenue increased $ 7.3 million , or 13 % , to $ 61.5 million in 2012 compared to 2011. we completed twelve large deals and thirteen large deals greater than $ 1.0 million in 2012 and 2011 , respectively .
| 2,672 |
tilc and the third-party equity investors have commitments to provide additional story_separator_special_tag management 's discussion and analysis of financial condition and results of operations ( โ md & a โ ) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition , results of operations , liquidity , and certain other factors that may affect our future results . our md & a should be read in conjunction with our consolidated financial statements and related notes in item 8 , financial statements and supplementary data , of this annual report on form 10-k. this md & a includes financial measures compiled in accordance with generally accepted accounting principles ( `` gaap '' ) and certain non-gaap measures . please refer to the non-gaap financial measures section herein for information on the non-gaap measures included in the md & a , reconciliations to the most directly comparable gaap financial measure , and the reasons why management believes each measure is useful to management and investors . company overview trinity industries , inc. and its consolidated subsidiaries own businesses that are leading providers of railcar products and services in north america . our rail-related businesses market their railcar products and services under the trade name trinityrail ยฎ . the trinityrail platform provides railcar leasing and management services , railcar manufacturing , and railcar maintenance and modification services . we also own businesses engaged in the manufacturing of products used on the nation 's roadways and in traffic control , as well as a logistics business that primarily provides support services to trinity . we report our operating results in three principal business segments : ( 1 ) the railcar leasing and management services group , which owns and operates a fleet of railcars and provides third-party fleet leasing , management , and administrative services ; ( 2 ) the rail products group , which manufactures and sells railcars and related parts and components , and provides railcar maintenance and modification services ; and ( 3 ) all other . on november 1 , 2018 , we completed the separation of trinity industries , inc. into two public companies : ( 1 ) trinity industries , inc. , primarily comprised of trinity 's rail-related businesses , and ( 2 ) arcosa , inc. ( `` arcosa '' ) , a public company focused on infrastructure-related products and services . the separation was effected through a pro rata dividend to trinity 's shareholders of all outstanding arcosa shares and was structured to qualify as a tax-free distribution for federal income tax purposes . following the distribution , arcosa became an independent , publicly-traded company on the new york stock exchange . trinity did not retain an ownership interest in arcosa following the completion of the spin-off transaction . see note 2 of the consolidated financial statements for further information related to the spin-off transaction . arcosa 's results of operations have been presented as discontinued operations for all periods presented in this annual report on form 10-k. additionally , all intersegment sales between arcosa and us , previously recorded as intersegment sales and eliminated in consolidation prior to the arcosa spin-off , are now reflected as third-party sales . these sales , along with their related costs , are no longer eliminated in consolidation . all segment results set forth herein have been recast to present results on a comparable basis . 27 executive summary story_separator_special_tag style= '' padding-left:0px ; text-indent:0px ; line-height : normal ; padding-top:10px ; '' > replace_table_token_6_th revenues the tables below present revenues by segment for the years ended december 31 , 2019 and 2018 : replace_table_token_7_th 31 operating costs operating costs are comprised of cost of revenues ; selling , engineering , and administrative costs ; gains or losses on property disposals ; and restructuring activities . operating costs by segment for the years ended december 31 , 2019 and 2018 were as follows : replace_table_token_8_th operating profit operating profit by segment for the years ended december 31 , 2019 and 2018 was as follows : replace_table_token_9_th discussion of consolidated results revenues โ our revenues for the year ended december 31 , 2019 were $ 3,005.1 million , representing an increase of $ 496.0 million , or 19.8 % , over the prior year , primarily related to a higher volume of railcars sold from our lease fleet and higher leasing and management services revenue in the leasing group primarily associated with growth in the lease fleet . additionally , revenues increased in the rail products group as a result of favorable product mix on external railcar sales , higher unit deliveries and growth in our maintenance services business . cost of revenues โ our cost of revenues for the year ended december 31 , 2019 were $ 2,365.7 million , representing an increase of $ 426.9 million , or 22.0 % , over the prior year . the increase in cost of revenues in our rail products group resulted primarily from product mix changes on external railcar sales and higher volumes in our maintenance services business . additionally , cost of revenues increased in the leasing group due to a higher volume of railcars sold , including cost of revenues attributable to sales-type leases , and increased depreciation expense associated with the growth of our lease fleet . selling , engineering , and administrative expenses โ selling , engineering , and administrative expenses decreased by 11.4 % for the year ended december 31 , 2019 , when compared to the prior year primarily due to cost reductions associated with optimizing our post-spin corporate structure . gains on disposition of property โ gains on disposition of property increased by $ 13.0 million for the year ended december 31 , 2019 , when compared to the prior year . property disposition losses for the year ended december 31 , 2018 included a non-cash charge of $ 12.6 million associated with our election to forego the early purchase options contained in certain lease agreements . story_separator_special_tag information regarding the leasing group 's lease fleet , managed or owned through its wholly-owned and partially-owned subsidiaries , follows : replace_table_token_12_th ( 1 ) includes 2,175 railcars under sale-leaseback arrangements . ( 2 ) includes wholly-owned and partially-owned railcars and railcars under sale-leaseback arrangements . 35 rail products group replace_table_token_13_th * not meaningful additional information related to our rail products group backlog of railcars is summarized below : replace_table_token_14_th replace_table_token_15_th ( 1 ) for the year ended december 31 , 2019 , the adjustment includes 3,280 leased railcars that were removed from the backlog because of the financial condition of leasing group customers , and 625 railcars that resulted from order cancellations negotiated with customers for which the company received compensation and recorded cancellation fees . additionally , the adjustment includes 145 railcars for which the original order was satisfied with railcars from the company 's existing lease fleet . these adjustments resulted in a reduction of the backlog of approximately $ 364 million . substantially all of the railcars removed from the backlog during the year ended december 31 , 2019 were planned for delivery subsequent to 2019. for the year ended december 31 , 2018 , the other adjustments line reflects the removal of 400 railcars . revenues and cost of revenues for the rail products group increased for the year ended december 31 , 2019 by 24.7 % and 22.1 % , respectively , when compared to the prior year . the increases in revenues and cost of revenues for the year ended december 31 , 2019 primarily resulted from favorable railcar product mix changes and higher deliveries compared to the prior year period , and growth in our maintenance services business . total backlog dollars decreased by 49.8 % when compared to the prior year period primarily from a reduction in orders received , partially offset by a 2.8 % higher average selling price on railcars included in backlog as a result of changes to the product mix . approximately 59 % of our railcar backlog value is expected to be delivered during 2020 with the remainder to be delivered thereafter into 2023 . the orders in our backlog from the leasing group are fully supported by lease commitments with external customers . the final amount of backlog attributable to the leasing group may vary by the time of delivery as customers may choose to purchase railcars from the rail products group rather than lease . during the year ended december 31 , 2019 , railcar shipments included sales to the leasing group of $ 1,179.5 million with a deferred profit of $ 147.7 million , representing 9,363 railcars , compared to $ 876.0 million with a deferred profit of $ 77.2 million , representing 9,013 railcars , in the comparable period in 2018 . in 2019 , the leasing group purchased 42.6 % of our railcar production , compared to 44.8 % in 2018 . 36 all other replace_table_token_16_th * not meaningful revenues and cost of revenues decreased for the year ended december 31 , 2019 when compared to the prior year primarily due to decreased demand and lower shipping volumes in our highway products and logistics businesses . the decrease in cost of revenues for the year ended december 31 , 2019 was partially offset by increased production costs in our highway products business . the decline in operating profit in the year ended december 31 , 2019 primarily resulted from insurance recoveries and gains on dispositions of property recognized in the prior year . operating profit was further impacted by higher product development costs during the year ended december 31 , 2019 . corporate replace_table_token_17_th operating costs for the year ended december 31 , 2019 decreased 27.6 % , compared to the prior year primarily due to cost reductions associated with optimizing our post-spin corporate structure and lower litigation-related expenses . 37 liquidity and capital resources overview we expect to finance future operating requirements with cash , cash equivalents , and short-term marketable securities ; cash flows from operations ; and short-term debt , long-term debt , and equity . debt instruments that we have utilized include the tilc warehouse facility , senior notes , convertible subordinated notes , asset-backed securities , non-recourse promissory notes , sale-leaseback transactions , and our revolving credit facility . as of december 31 , 2019 , we had an unrestricted cash and cash equivalents balance of $ 166.2 million , and $ 289.5 million available under our revolving credit facility . under the tilc warehouse facility , $ 396.6 million was unused and available as of december 31 , 2019 based on the amount of warehouse-eligible , unpledged equipment . additionally , our revolving credit facility contains an expansion feature that allows us to access up to an additional $ 200.0 million , subject to certain conditions . we believe we have access to adequate capital resources to fund operating requirements and are an active participant in the capital markets . liquidity highlights trl-2019 railcar financing โ in april 2019 , trl-2019 , a delaware limited liability company and a limited purpose , indirect wholly-owned subsidiary of the company owned through tilc , issued $ 528.3 million of trl-2019 secured railcar equipment notes . these notes bear interest at a fixed rate of 3.82 % and have a stated final maturity date of 2049. in october 2019 , trl-2019 issued an additional $ 386.5 million of trl-2019 secured railcar equipment notes , consisting of two classes of notes with ( i ) an aggregate principal amount of $ 106.9 million of trl-2019 's series 2019-2 class a-1 secured railcar equipment notes ( the `` class a-1 notes '' ) , and ( ii ) an aggregate principal amount of $ 279.6 million of trl-2019 's series 2019-2 class a-2 secured railcar equipment notes ( the โ class a-2 notes โ ) .
| financial and operational highlights our revenues for the year ended december 31 , 2019 were $ 3,005.1 million representing an increase of 19.8 % , compared to the year ended december 31 , 2018 . our operating profit for the year ended december 31 , 2019 was $ 416.3 million representing an increase of 32.1 % , compared to the year ended december 31 , 2018 . the railcar leasing and management services group ( the `` leasing group '' ) reported additions to the wholly-owned and partially-owned lease fleet of 4,490 railcars , for a total of 103,705 railcars as of december 31 , 2019 , an increase of 4.5 % compared to december 31 , 2018 . for the year ended december 31 , 2019 , we made a net investment in our lease fleet of approximately $ 916.5 million , which primarily includes new railcar additions and railcar modifications , net of deferred profit , and secondary market purchases ; and is net of proceeds from the sales of leased railcars owned more than one year at the time of sale . the leasing group 's lease fleet of 103,705 company-owned railcars was 96.0 % utilized as of december 31 , 2019 , in comparison to a lease fleet utilization of 98.5 % on 99,215 company-owned railcars as of december 31 , 2018 . our company-owned railcars include wholly-owned , partially-owned , and railcars under sale-leaseback arrangements . the total value of the railcar backlog at december 31 , 2019 was $ 1.8 billion , compared to $ 3.6 billion at december 31 , 2018 . the rail products group received orders for 10,220 railcars and delivered 21,960 railcars in 2019 , in comparison to orders for 28,795 railcars and deliveries of 20,105 railcars in 2018 .
| 2,673 |
interest cost represents the time value of money cost associated with the passage story_separator_special_tag you should read the following discussion in conjunction with the audited consolidated financial statements and the corresponding notes included elsewhere in this annual report . this management 's discussion and analysis of financial condition and results of operations contains forward-looking statements . the matters discussed in these forward-looking statements are subject to risk , uncertainties and other factors that could cause actual results to differ materially from those made , projected or implied in the forward-looking statements . please see โ risk factors โ and โ forward-looking statements โ for a discussion of the uncertainties , risks and assumptions associated with these statements . overview we are an industry-leading provider of optical and photonic products defined by revenue and market share addressing a range of end-market applications including optical communications , which we refer to as opcomms , and lasers for manufacturing , inspection and life-science applications . we seek to use our core optical and photonic technology and our volume manufacturing capability to expand into attractive emerging markets that benefit from advantages that optical or photonics-based solutions provide , including 3d sensing for consumer electronics and diode light sources for a variety of consumer and industrial applications . we have two operating segments , opcomms and lasers . the two operating segments were primarily determined based on how the chief operating decision maker ( โ codm โ ) views and evaluates our operations . operating results are regularly reviewed by the codm to make decisions about resources to be allocated to the segments and to assess their performance . other factors , including market separation and customer specific applications , go-to-market channels , products and manufacturing , are considered in determining the formation of these operating segments . we believe the world is becoming more reliant on ever-increasing amounts of data flowing through optical networks and data centers , which require new networks and data centers to satisfy this demand . as manufacturers demand higher levels of precision , new materials , and factory and energy efficiency , suppliers of manufacturing tools globally are turning to laser based approaches , including the types of lasers lumentum supplies . laser based 3d sensing is a rapidly developing market . the technology enables computer vision applications that enhance security , safety , and new functionality in the electronic devices that people rely on every day . we believe the global markets in which lumentum participates have fundamentally robust , long-term trends that increase the need for our photonics products and technologies . on december 10 , 2018 , we completed the acquisition of oclaro , a provider of optical components and modules for the long-haul , metro and data center markets . refer to โ note 4. business combinations โ in the notes to consolidated financial statements for further discussion of the merger . opcomms our opcomms products address the following markets : telecom , datacom and consumer and industrial . our opcomms products include a wide range of components , modules and subsystems to support customers including carrier networks for access ( local ) , metro ( intracity ) , long-haul ( city-to-city and worldwide ) and submarine ( undersea ) applications . additionally , our products address enterprise , cloud , and data center applications , including storage-access networks ( โ sans โ ) , local-area networks ( โ lans โ ) and wide-area networks ( โ wans โ ) . these products enable the transmission and transport of video , audio and data over high-capacity fiber-optic cables . we maintain leading positions in these fast growing opcomms markets through our extensive product portfolio , including reconfigurable optical add/drop multiplexers ( โ roadms โ ) , coherent dwdm pluggable transceivers , and tunable small form-factor pluggable transceivers . we also sell laser chips for use in the manufacture of high-speed datacom transceivers . in the consumer and industrial market , our opcomms products include laser light sources , which are integrated into 3d sensing platforms being used in applications for mobile devices , gaming , computers , and other consumer electronics devices . new emerging applications include virtual and augmented reality , as well as automotive and industrial segments . our products include vertical cavity surface emitting lasers ( โ vcsels โ ) and edge emitting lasers which are used in 3d sensing depth imaging systems . these systems simplify the way people interact with technology by enabling the use of natural user interfaces . systems are used for biometric identification , surveillance , and process efficiency , among numerous other application spaces . emerging applications for this technology include various mobile device applications , autonomous vehicles , self-navigating robotics and drones in industrial applications and 3d capture of objects coupled with 3d printing . in addition , our industrial diode lasers are used primarily as pump sources for pulsed and kilowatt class fiber lasers . our opcomms customers include alphabet , apple , ciena , cisco systems ( which announced the acquisition of acacia communications , another customer of ours ) , huawei technologies ( including hisilicon ) , infinera , innolight , nokia networks ( including alcatel-lucent international ) , o-net , and zte . 35 following the acquisition of oclaro , during our fiscal 2019 , we made several strategic changes to our opcomms business to better position it for growth and profitability . these changes included attaining acquisition cost synergies related to redundant capabilities and divestiture of telecom lithium niobate modulators and datacom transceiver modules because of their muted growth and profitability trends . these changes were substantially completed in fiscal 2020. we expect our indium phosphide photonic integrated circuits will continue to replace lithium niobate modulators over time and focusing on the development and sale of datacom chips has enabled us to participate in the growth of the datacom and 5g wireless markets . related to the strategic changes in our opcomms business , we entered into two strategic transactions to sell some of the discontinued product lines . story_separator_special_tag we believe there may be long-term opportunities , as the world 's experience with covid-19 could drive an increasingly digital and virtual world touching all aspects of life and work that increasingly emphasizes communications systems , cloud services , augmented and virtual reality , and enhanced security . additionally , ever advancing electronic devices are needed to consume , produce , and communicate digital and virtual content . all these trends could drive the need for higher volumes of higher performing optical devices that we could supply . as such , we expect to continue to invest strongly in new products , technology , and customer programs . for more information on risks associated with the covid-19 outbreak , see the section titled โ risk factors โ in item 1a of part i. critical accounting policies and estimates our consolidated financial statements are prepared in accordance with u.s. generally accepted accounting principles ( โ gaap โ ) as set forth in the financial accounting standards board 's accounting standards codification ( โ asc โ ) , and we consider the various staff accounting bulletins and other applicable guidance issued by the united states securities and exchange commission ( โ sec โ ) . gaap , as set forth within the asc , requires us to make certain estimates , judgments and assumptions . we believe that the estimates , judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates , judgments and assumptions are made . these estimates , judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented . to the extent there are differences between these estimates , judgments or assumptions and actual results , our financial statements will be affected . the accounting policies that reflect our more significant estimates , judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following : inventory valuation revenue recognition income taxes long-lived asset valuation goodwill except for the adoption of asu 2016-02 , leases ( topic 842 ) and the resulting changes in our accounting policies and disclosures for lease accounting , there have been no significant changes to our significant accounting policies as of and for the year ended june 27 , 2020. refer to โ note 1. description of business and summary of significant accounting policies โ for the details of asu 2016-02 ( topic 842 ) adoption . 37 inventory valuation inventory is valued at standard cost , which approximates actual cost computed on a first-in , first-out basis , not in excess of net realizable value . we assess the value of our inventory on a quarterly basis and write down those inventories which are obsolete or in excess of our forecasted demand to the lower of their cost or estimated net realizable value . our estimates of forecasted demand are based upon our analysis and assumptions including , but not limited to , expected product lifecycles , product development plans and historical usage by product . our product line management personnel play a key role in our excess review process by providing updated sales forecasts , managing product transitions and working with manufacturing to minimize excess inventory . if actual market conditions are less favorable than our forecasts , or actual demand from our customers is lower than our estimates , we may be required to record additional inventory write-downs . if actual market conditions are more favorable than anticipated , inventory previously written down may be sold , resulting in lower cost of sales and higher income from operations than expected in that period . revenue recognition adoption of topic 606 pursuant to topic 606 , our revenues are recognized upon the application of the following steps : identification of the contract , or contracts , with a customer ; identification of the performance obligations in the contract ; determination of the transaction price ; allocation of the transaction price to the performance obligations in the contract ; and recognition of revenues when , or as , the contractual performance obligations are satisfied . the majority of our revenue comes from product sales , consisting of sales of lasers and opcomms hardware products to our customers . our revenue contracts generally include only one performance obligation . revenues are recognized at a point in time when control of the promised goods or services are transferred to our customers upon shipment or delivery , in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services . we have entered into vendor managed inventory ( โ vmi โ ) programs with our customers . under these arrangements , we receive purchase orders from our customers , and the inventory is shipped to the vmi location upon receipt of the purchase order . the customer then pulls the inventory from the vmi hub based on its production needs . revenue under vmi programs is recognized when control transfers to the customer , which is generally once the customer pulls the inventory from the hub . revenue from all sales types is recognized at the transaction price . the transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer , adjusted for estimated variable consideration , if any . we typically estimate the impact on the transaction price for discounts offered to the customer for early payments on receivables or net of accruals for estimated sales returns . these estimates are based on historical returns , analysis of credit memo data and other known factors . actual returns could differ from these estimates . we allocate the transaction price to each distinct product based on its relative standalone selling price .
| results of operations the results of operations for the periods presented are not necessarily indicative of results to be expected for future periods . the following table summarizes selected consolidated statements of operations items as a percentage of net revenue : 41 replace_table_token_5_th 42 financial data for fiscal 2020 , 2019 and 2018 the following table summarizes selected consolidated statements of operations items ( in millions , except for percentages ) : replace_table_token_6_th net revenue net revenue increased by $ 113.3 million , or 7.2 % , during fiscal 2020 compared to fiscal 2019. this increase was primarily due to the increased sales of telecom and datacom of $ 68.9 million and consumer and industrial of $ 76.0 million , offset by decreased sales of lasers of $ 31.6 million . opcomms net revenue increased by $ 144.9 million , or 10.6 % , during fiscal 2020 compared to fiscal 2019 , primarily driven by increased sales of telecom and datacom products , driven by the acquisition of oclaro , as well as increased sales in 3d sensing products for mobile devices . lasers net revenue decreased by $ 31.6 million , or 16.2 % , during fiscal 2020 compared to fiscal 2019 , primarily due to decreased sales of our kilowatt class fiber lasers . net revenue increased by $ 317.6 million , or 25.5 % , during fiscal 2019 compared to fiscal 2018. this increase was primarily due to the acquisition of oclaro , which closed in december 2018 , and organic growth in our telecom business . opcomms net revenue increased by $ 311.0 million , or 29.4 % , during fiscal 2019 compared to fiscal 2018 , primarily driven by increased sales of telecom products of $ 310.2 million , specifically roadm products . opcomms net revenue in fiscal 2019 includes $ 250.1 million from the acquisition of oclaro from the date of closing .
| 2,674 |
the company is currently in discussion with the edb to extend the dei through june 2019. dei can be enjoyed up to 40 years . renewals and story_separator_special_tag the following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included in this annual report on form 10-k. this discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties including those discussed under part i , item 1a , ยrisk factors.ย these risks and uncertainties may cause actual results to differ materially from those discussed in the forward-looking statements . overview we are a fabless semiconductor provider of high-performance application-specific standard products . our core strength of expertise is the development of complex soc devices , leveraging our extensive technology portfolio of intellectual property in the areas of analog , mixed-signal , digital signal processing , and embedded and standalone integrated circuits . the majority of our product portfolio leverages the arm technology portfolio . we also develop platforms that we define as integrated hardware along with software that incorporates digital computing technologies designed and configured to provide an optimized computing solution . our broad product portfolio includes devices for data storage , enterprise-class ethernet data switching , ethernet phy , mobile handsets , connectivity and other consumer electronics . our products serve diverse applications used in carrier , metropolitan , enterprise and pc-client data communications and storage systems . additionally , we serve the consumer electronics market for the convergence of voice , video and data applications . as a fabless integrated circuit company , we rely on independent , third-party contractors to perform manufacturing , assembly and test functions . this approach allows us to focus on designing , developing and marketing our products and significantly reduces the amount of capital we need to invest in manufacturing products . historically , a relatively small number of customers have accounted for a significant portion of our net revenue . we had two end customers who each represented greater than 10 % of our total net revenue in fiscal 2014. combined revenue from these two customers was 36 % of total net revenue in fiscal 2014. no distributors accounted for more than 10 % of our net revenue for fiscal 2014. we had three end customers who represented greater than 10 % of our total net revenue in fiscal 2013. combined revenue from these three customers was 44 % of total net revenue in fiscal 2013. we also had one distributor who accounted for more than 10 % of our net revenue in fiscal 2013. we had one end customer who represented greater than 10 % of our total net revenue in fiscal 2012. revenue from this customer was 19 % of total net revenue in fiscal 2012. we also had one distributor who accounted for more than 10 % of our net revenue in fiscal 2012. we expect to continue to experience significant customer concentration in future periods and most of our sales are made to customers located outside of the united states , primarily in asia . sales to customers in asia represented approximately 95 % , 90 % and 88 % of our net revenue for fiscal 2014 , 2013 and 2012 , respectively . because many manufacturers and manufacturing subcontractors of our customers are located in asia , we expect that most of our net revenue will continue to be represented by sales to our customers in that region . substantially all of our sales are denominated in u.s. dollars . a significant number of our products are being incorporated into consumer electronics products , including gaming devices and personal computers , which are subject to significant seasonality and fluctuations in demand . holiday and back to school buying trends may at times negatively impact our results in the first and fourth quarter and positively impact our results in the second and third quarter of our fiscal years . in addition , consumer electronics sales are heavily dependent on new product launch timelines and product refreshes . for example , our sales of wireless connectivity products may increase significantly during a period when one of our consumers launches a new gaming console , and these sales may taper significantly after the initial launch period . a relatively large portion of our sales have historically been made on the basis of purchase orders rather than long-term agreements . in addition , the sales cycle for our products is long , which may cause us to experience a delay between the time we incur expenses and the time revenue is generated from these 40 expenditures . we anticipate that the rate of new orders may vary significantly from quarter to quarter . consequently , if anticipated sales and shipments in any quarter do not occur when expected , expenses and inventory levels could be disproportionately high , and our operating results for that quarter and future quarters may be adversely affected . our fiscal year is the 52- or 53-week period ending on the saturday closest to january 31. in a 52-week year , each fiscal quarter consists of 13 weeks . the additional week in a 53-week year is added to the fourth quarter , making such quarter consist of 14 weeks . fiscal 2014 and fiscal 2012 had a 52-week period , and fiscal 2013 had a 53-week period . critical accounting policies and estimates the preparation of consolidated financial statements in conformity with gaap requires management to make estimates , judgments and assumptions that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . on an ongoing basis , we evaluate our estimates , including those related to performance-based compensation , revenue recognition , provisions for sales returns and allowances , inventory excess and obsolescence , investment fair values , goodwill and other intangible assets , restructuring , income taxes , litigation and other contingencies . story_separator_special_tag if the actual forfeiture rate is higher than the estimated forfeiture rate , then an adjustment will be made to increase the estimated forfeiture rate , which will result in a decrease to the expense recognized in the financial statements . if the actual forfeiture rate is lower than the estimated forfeiture rate , then an adjustment will be made to lower the estimated forfeiture rate , which will result in an increase to the expense recognized in the financial statements . the expense we recognize in future periods could be affected by changes in the estimated forfeiture rate and may differ significantly from amounts recognized in the current period and or our forecasts . additionally , for certain of our performance-based awards , we must make subjective assumptions regarding the likelihood that the related performance metrics will be met . these assumptions are based on various revenue and operating performance criteria . changes in our actual performance could cause a significant adjustment in future periods for these performance-based awards . accounting for income taxes . we estimate our income taxes in each of the jurisdictions in which we operate . this process involves estimating our actual tax exposure together with assessing temporary differences resulting from the differing treatment of certain items for tax return and financial statement purposes . these differences result in deferred tax assets and liabilities , which are included within our consolidated balance sheets . 42 we recognize income taxes using an asset and liability approach . this approach requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns . the measurement of current and deferred taxes is based on provisions of the enacted tax law and the effects of future changes in tax laws or rates are not anticipated . evaluating the need for an amount of a valuation allowance for deferred tax assets often requires judgment and analysis of all the positive and negative evidence available to determine whether all or some portion of the deferred tax assets will not be realized . a valuation allowance must be established for deferred tax assets when it is more likely than not that they will not be realized . based on the available evidence and judgment , we have determined that it is more likely than not that our u.s. research credits , which we earn in excess of our current year tax liabilities , and certain acquired net operating losses will not be realized . therefore , we have provided a full valuation allowance against these credits and a portion against the net operating losses . if there is a change in our ability to realize our deferred tax assets , then our tax provision may decrease in the period in which we determine that realization is more likely than not . as a multinational corporation , we conduct our business in many countries and are subject to taxation in many jurisdictions . the taxation of our business is subject to the application of various and sometimes conflicting tax laws and regulations as well as multinational tax conventions . our effective tax rate is highly dependent upon the geographic distribution of our worldwide earnings or losses , the tax regulations and tax holidays in each geographic region , the availability of tax credits and carryforwards , and the effectiveness of our tax planning strategies . the application of tax laws and regulations is subject to legal and factual interpretation , judgment and uncertainty . tax laws themselves are subject to change as a result of changes in fiscal policy , changes in legislation , and the evolution of regulations and court rulings . consequently , taxing authorities may impose tax assessments or judgments against us that could materially impact our tax liability and or our effective income tax rate . we are subject to income tax audits by the respective tax authorities in all of the jurisdictions in which we operate . we recognize the effect of income tax positions only if these positions are more likely than not of being sustained . recognized income tax positions are measured at the largest amount that is more than 50 % likely of being realized . changes in recognition or measurement are reflected in the period in which the change in judgment occurs . we record interest and penalties related to unrecognized tax benefits in income tax expense . the calculation of our tax liabilities involves the inherent uncertainty associated with the application of gaap and complex tax laws . we believe we have adequately provided for in our financial statements additional taxes that we estimate may be required to be paid as a result of such examinations . while we believe that we have adequately provided for all tax positions , amounts asserted by tax authorities could be greater or less than our accrued position . these tax liabilities , including the interest and penalties , are released pursuant to a settlement with tax authorities , completion of audit or expiration of various statutes of limitation . the material jurisdictions in which we may be subject to potential examination by tax authorities throughout the world include china , israel , singapore , switzerland and the united states . the recognition and measurement of current taxes payable or refundable and deferred tax assets and liabilities require that we make certain estimates and judgments . changes to these estimates or a change in judgment may have a material impact on our tax provision in a future period . inventories . we value our inventory at the lower of cost or market , cost being determined under the first-in , first-out method .
| results of operations fiscal 2014 was the start of a turnaround for marvell . revenue in fiscal 2014 was $ 3.4 billion , which was 7 % higher compared to net revenue of $ 3.2 billion in fiscal 2013. revenue for products in the storage market was strong and grew approximately 13 % over fiscal 2013 due to strong growth in our solid state drives ( ยssdย ) business and continued share gains in our hard disk drive ( ยhddย ) business . revenue from our mobile and wireless end market delivered modest growth in fiscal 2014 after undergoing two years of customer and product transitions , and we are now well positioned to deliver strong growth in fiscal 2015. although revenue for products in our networking market declined in fiscal 2014 , the decline was consistent with the overall enterprise networking market . we believe our sustained investments in advanced technologies leading to new innovations will help drive increased business opportunities . we are seeing many of our customers introducing new devices using our innovative solutions , which we believe will drive success across all of our end markets . our future growth is expected to be driven by areas such as mobile handsets , tablets , connectivity , smart home devices and ssds . in the mobile market , our 3g unified platform is in mass production at multiple top tier oems . for example , samsung has successfully launched their 7-inch galaxy tab 3 globally based on our dual-core platform and china mobile has selected our dual-core platform to launch its first branded smartphone . in addition to our dual-core devices , our quad-core platform is now in production with leading oem customers who have introduced multiple quad-core smartphone models targeting the mass-market segments for both wcdma and td-scdma . in the deployment of lte technology , we continued to make steady progress with our lte solution , which passed qualifications in china .
| 2,675 |
our most significant expenses are related to compensating employees , designing , manufacturing , marketing , and selling our products and services , and income taxes . industry trends our industry is dynamic and highly competitive , with frequent changes in both technologies and business models . each industry shift is an opportunity to conceive new products , new technologies , or new ideas that can further transform the industry and our business . at microsoft , we push the boundaries of what is possible through a broad range of research and development activities that seek to identify and address the changing demands of customers , industry trends , and competitive forces . key opportunities and investments based on our assessment of key technology trends and our broad focus on long-term research and development of new products and services , we see significant opportunities to generate future growth . we invest research and development resources in new products and services in these areas . the capabilities and accessibility of pcs , tablets , phones , televisions , and other devices powered by rich software platforms and applications continue to grow . with this trend , we believe the full potential of software will be seen and felt in how people use these devices and the associated services at work and in their personal lives . devices with end-user services we work with an ecosystem of partners to deliver a broad spectrum of windows devices . in some cases , we build our own devices , as we have chosen to do with xbox and surface . in all our work with partners and on our own devices , we focus on delivering seamless services and experiences across devices . as consumer services and hardware advance , we expect they will continue to better complement one another , connecting the devices people use daily to unique communications , productivity , and entertainment services from microsoft and our partners and developers around the world . windows 8 reflects this shift . launched in october 2012 , windows 8 was designed to unite the light , thin , and convenient aspects of a tablet with the power of a pc . the windows 8 operating system includes the windows store , which offers a large and growing number of applications from microsoft and partners for both business and consumer customers . going forward , our strategy will focus on creating a family of devices and services for individuals and businesses that empower people around the globe at home , at work , and on the go , for the activities they value most . this strategy will require investment in datacenters and other infrastructure to support our services , and will bring continued competition with apple , google , and other well-established and emerging competitors . we believe our history of powering devices such as windows pcs and xbox , as well as our experience delivering high-value experiences through office and other applications , will position us for future success . services for the enterprise today , businesses face important opportunities and challenges . enterprises are asked to deploy technology that drives business strategy forward . they decide what solutions will make employees more productive , collaborative , and satisfied , or connect with customers in new and compelling ways . they work to unlock business insights from a world of data . at the same time , they must manage and secure corporate information that employees access across a growing number of personal and corporate devices . 24 part ii item 7 to address these opportunities , businesses look to our world-class business applications like microsoft dynamics , office , exchange , sharepoint , lync , yammer , and our business intelligence solutions . they rely on our technology to manage employee corporate identity and to protect their corporate data . and , increasingly , businesses of all sizes are looking to microsoft to realize the benefits of the cloud . helping businesses move to the cloud is one of our largest opportunities . cloud-based solutions provide customers with software , services , and content over the internet by way of shared computing resources located in centralized data centers . the shift to the cloud is driven by three important economies of scale : larger data centers can deploy computational resources at significantly lower cost per unit than smaller ones ; larger data centers can coordinate and aggregate diverse customer , geographic , and application demand patterns improving the utilization of computing , storage , and network resources ; and multi-tenancy lowers application maintenance labor costs for large public clouds . because of the improved economics , the cloud offers unique levels of elasticity and agility that enable new solutions and applications . for businesses of all sizes , the cloud creates the opportunity to focus on innovation while leaving non-differentiating activities to reliable and cost-effective providers . unique to microsoft , we continue to design and deliver cloud solutions that allow our customers to use both the cloud and their on-premise assets however best suits their own needs . for example , a company can choose to deploy office or microsoft dynamics on premise , as a cloud service , or a combination of both . with windows server 2012 , windows azure , and system center infrastructure , businesses can deploy applications in their own datacenter , a partner 's datacenter , or in microsoft 's datacenter with common security , management , and administration across all environments , with the flexibility and scale they desire . these hybrid capabilities allow customers to fully harness the power of the cloud so they can achieve greater levels of efficiency and tap new areas of growth . our future opportunity there are several distinct areas of technology that we are focused on driving forward . our goal is to lead the industry in these areas over the long-term , which we expect will translate to sustained growth well into the future . story_separator_special_tag we estimate that sales of pcs to businesses grew approximately 4 % and sales of pcs to consumers decreased 1 % . excluding a decline in sales of netbooks , we estimate that sales of pcs to consumers grew approximately 5 % . taken together , the total pc market increased an estimated 0 % to 2 % . relative to pc market growth , windows division revenue was negatively impacted by higher growth in emerging markets , where average selling prices are lower than developed markets , and the deferral of $ 540 million of revenue relating to the windows upgrade offer . windows division operating income decreased , due mainly to lower revenue and a $ 172 million or 11 % increase in research and development expenses , primarily associated with the windows 8 operating system . 28 part ii item 7 server and tools replace_table_token_3_th server and tools develops and markets technology and related services that enable information technology professionals and their systems to be more productive and efficient . server and tools product and service offerings include windows server , microsoft sql server , windows azure , visual studio , system center products , windows embedded device platforms , and enterprise services . enterprise services comprise premier product support services and microsoft consulting services . we also offer developer tools , training , and certification . approximately 80 % of server and tools revenue comes from product revenue , including purchases through volume licensing programs , licenses sold to oems , and retail packaged product , while the remainder comes from enterprise services . fiscal year 2013 compared with fiscal year 2012 server and tools revenue increased in both product sales and enterprise services . product revenue increased $ 1.3 billion or 9 % , driven primarily by growth in microsoft sql server , system center , and windows server . enterprise services revenue grew $ 434 million or 11 % , due to growth in both premier product support and consulting services . server and tools operating income increased , primarily due to revenue growth , offset in part by higher cost of revenue and sales and marketing expenses . cost of revenue grew $ 589 million or 15 % , reflecting a $ 269 million increase in headcount-related expenses and a $ 169 million increase in datacenter expenses . headcount-related expenses increased due mainly to higher enterprise services headcount supporting revenue growth , while datacenter expenses grew primarily to support our online services offerings . sales and marketing expenses grew $ 160 million or 3 % , reflecting increased fees paid to third-party enterprise software advisors and corporate sales and marketing activities . fiscal year 2012 compared with fiscal year 2011 server and tools revenue increased in both product sales and enterprise services . product revenue increased $ 1.4 billion or 11 % , driven primarily by growth in sql server , windows server , and system center , reflecting continued adoption of the windows platform . enterprise services revenue grew $ 585 million or 17 % , due to growth in both premier product support and consulting services . server and tools operating income increased primarily due to revenue growth , offset in part by higher costs of providing products and services and increased sales and marketing expenses . cost of revenue increased $ 678 million or 22 % , primarily reflecting higher enterprise services headcount-related expenses . sales and marketing expenses grew $ 154 million or 3 % , reflecting increased corporate marketing activities . online services division replace_table_token_4_th * not meaningful online services division ( ยosdย ) develops and markets information and content designed to help people simplify tasks and make more informed decisions online , and help advertisers connect with audiences . osd offerings include bing , bing ads , and msn . bing and msn generate revenue through the sale of search and display advertising , accounting for nearly all of osd 's revenue . 29 part ii item 7 fiscal year 2013 compared with fiscal year 2012 online advertising revenue grew $ 409 million or 16 % to $ 3.0 billion , reflecting an increase in search advertising revenue , offset in part by a decrease in display advertising revenue . search revenue grew primarily due to increased revenue per search , resulting from ongoing improvements in ad products , while display advertising revenue decreased primarily due to industry-wide market pressure . osd 's operating loss decreased , primarily due to the prior year goodwill impairment charge of $ 6.2 billion . operating loss was further reduced by higher revenue and lower cost of revenue and operating expenses . cost of revenue decreased $ 302 million or 12 % , driven by a $ 271 million decrease in traffic acquisition costs as well as lower yahoo ! reimbursement costs . sales and marketing expenses were $ 120 million or 15 % lower , due mainly to decreased corporate sales and marketing activities . research and development costs increased $ 94 million or 7 % , due primarily to higher headcount-related expenses resulting mainly from increased headcount . fiscal year 2012 compared with fiscal year 2011 online advertising revenue grew $ 317 million or 14 % to $ 2.6 billion , reflecting continued growth in search advertising revenue , offset in part by decreased display advertising revenue . search revenue grew due to increased revenue per search , increased volumes reflecting general market growth , and share gains in the u.s. according to third-party sources , bing organic u.s. market share for the month of june 2012 was approximately 16 % , and grew 120 basis points year over year . bing-powered u.s. market share , including yahoo ! properties , was approximately 26 % for the month of june 2012 , down 100 basis points year over year . osd 's fiscal year 2012 operating loss reflects a goodwill impairment charge of $ 6.2 billion , which we recorded as a result of our annual goodwill impairment test in the fourth quarter .
| results of operations summary ( in millions , except percentages and per share amounts ) 2013 2012 2011 percentage change 2013 versus 2012 percentage change 2012 versus 2011 revenue $ 77,849 $ 73,723 $ 69,943 6 % 5 % operating income $ 26,764 $ 21,763 $ 27,161 23 % ( 20 ) % diluted earnings per share $ 2.58 $ 2.00 $ 2.69 29 % ( 26 ) % fiscal year 2013 compared with fiscal year 2012 revenue increased , primarily due to higher revenue from server and tools as well as revenue from new products and services , including windows 8 , surface , and the new office , offset in part by the impact on revenue of a decline in the x86 pc market . 26 part ii item 7 operating income grew , primarily due to the $ 6.2 billion goodwill impairment charge related to our osd business recorded during the prior year . other key changes in cost of revenue and operating expenses were : cost of revenue increased $ 2.7 billion or 16 % , reflecting increased product costs associated with surface and windows 8 , including an approximately $ 900 million charge for surface rt inventory adjustments , higher headcount-related expenses , payments made to nokia related to joint strategic initiatives , royalties on xbox live content , and retail stores expenses , offset in part by decreased costs associated with lower sales of xbox 360 consoles and decreased traffic acquisition costs . sales and marketing expenses increased $ 1.4 billion or 10 % , reflecting advertising of windows 8 and surface . research and development expenses increased $ 600 million or 6 % , due mainly to higher headcount-related expenses , largely related to the entertainment and devices division . general and administrative expenses increased $ 580 million or 13 % , due to higher legal charges , primarily the eu fine of $ 733 million .
| 2,676 |
as actual loss information has been reported , the company has story_separator_special_tag the following is a discussion and analysis of the financial condition and results of operations for the year ended december 31 , 2019 and 2018 , including comparisons between 2019 and 2018. comparisons between 2018 and 2017 have been omitted from this form 10-k , but may be found in `` management 's discussion and analysis of financial condition and results of operations '' in part ii , item 7 of the company 's annual report on form 10-k year ended december 31 , 2018 filed with the sec . this discussion and analysis contains forward-looking statements which involve inherent risks and uncertainties . all statements other than statements of historical fact are forward-looking statements . these statements are based on our current assessment of risks and uncertainties . actual results may differ materially from those expressed or implied in these statements and , therefore , undue reliance should not be placed on them . important factors that could cause actual events or results to differ materially from those indicated in such statements are discussed in this report , including the sections entitled โ cautionary note regarding forward-looking statements , โ and โ risk factors. โ this discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto presented under item 8. tabular amounts are in u.s. dollars in thousands , except share amounts , unless otherwise noted . general overview arch capital group ltd. ( โ arch capital โ and , together with its subsidiaries , โ we โ or โ us โ ) is a bermuda public limited liability company with approximately $ 13.23 billion in capital at december 31 , 2019 and , through operations in bermuda , the united states , europe , canada , australia and hong kong , writes specialty lines of property and casualty insurance and reinsurance , as well as mortgage insurance and reinsurance , on a worldwide basis . it is our belief that our underwriting platform , our experienced management team and our strong capital base have enabled us to establish a strong presence in the insurance and reinsurance markets . the worldwide property casualty insurance and reinsurance industry is highly competitive and has traditionally been subject to an underwriting cycle in which a hard market ( high premium rates , restrictive underwriting standards , as well as terms and conditions , and underwriting gains ) is eventually followed by a soft market ( low premium rates , relaxed underwriting standards , as well as broader terms and conditions , and underwriting losses ) . property casualty market conditions may affect , among other things , the demand for our products , our ability to increase premium rates , the terms and conditions of the insurance policies we write , changes in the products offered by us or changes in our business strategy . the financial results of the property casualty insurance and reinsurance industry are influenced by factors such as the frequency and or severity of claims and losses , including natural disasters or other catastrophic events , variations in interest rates and financial markets , changes in the legal , regulatory and judicial environments , inflationary pressures and general economic conditions . these factors influence , among other things , the demand for insurance or reinsurance , the supply of which is generally related to the total capital of competitors in the market . mortgage insurance and reinsurance is subject to similar cycles to property casualty except that they have historically been more dependent on macroeconomic conditions . current outlook our objective is to achieve an average operating return on average equity of 15 % or greater over the insurance cycle , which we believe to be an attractive return to our common shareholders given the risks we assume . we continue to look for opportunities to find acceptable books of business to underwrite without sacrificing underwriting discipline and continue to write a portion of our overall book in catastrophe-exposed business which has the potential to increase the volatility of our operating results . in 2019 , property and casualty rates increased in many lines of business and we believe that insurance markets remain in a transitioning phase . given the uncertainty of current claim trends , the industry needs further rate increases to provide insurers an adequate buffer and a positive risk-reward proposition . in this kind of environment , risk selection and active capital allocation remain critical to generating superior returns . strengthening market conditions are evident to us from both the rise in our submission activity and our ability to achieve significant rate increases across numerous lines of business . reinsurance pricing tends to follow that of the primary insurance industry although catastrophe and large attritional losses , such as the japanese typhoons this year , can disproportionately affect results and create opportunities in the reinsurance market . we believe that property facultative and marine businesses are examples of improving markets . our underwriting teams continue to execute a disciplined strategy by emphasizing small and medium-sized accounts over large accounts , shrinking premiums in more commoditized arch capital 55 2019 form 10-k lines such as general liability and by utilizing reinsurance purchases to reduce volatility on large account , high capacity business . the spread between rate changes and loss trend continues to be a key variable in assessing expected returns and can be difficult to quantify precisely , particularly in specialty lines . our mortgage segment continues to experience generally favorable market conditions . although pricing remains competitive in the u.s. , borrower credit quality and the general economy remain strong . our results continue to reflect our success in making high quality credit underwriting risk decisions and building customer relationships . story_separator_special_tag the presentation of after-tax operating income available to arch common shareholders and annualized operating return on average common equity are non-gaap financial measures as defined in regulation g. the reconciliation of such measures to net income available to arch common shareholders and annualized return on average common equity ( the most directly comparable gaap financial measures ) in accordance with regulation g is included under โ results of operations โ below . we believe that net realized gains or losses , net impairment losses recognized in earnings , equity in net income or loss of investments accounted for using the equity method , net foreign exchange gains or losses , transaction costs and other and loss on redemption of preferred shares in any particular period are not indicative of the performance of , or trends in , our business . although net realized gains or losses , net impairment losses recognized in earnings , equity in net income or loss of investments accounted for using the equity method and net foreign exchange gains or losses are an integral part of our operations , the decision to realize investment gains or losses , the recognition of the change in the carrying value of investments accounted for using the fair value option in net realized gains or losses , the recognition of net impairment losses , the recognition of equity in net income or loss of investments accounted for using the equity method and the recognition of foreign exchange gains or losses are independent of the insurance underwriting process and result , in large part , from general economic and financial market conditions . furthermore , certain users of our financial information believe that , for many companies , the timing of the realization of investment gains or losses is largely opportunistic . in addition , net impairment losses recognized in earnings on our investments represent other-than-temporary declines in expected recovery values on securities without actual realization . the use of the equity method on certain of our investments in certain funds that invest in fixed maturity securities is driven by the ownership structure of such funds ( either limited partnerships or limited liability companies ) . in applying the equity method , these investments are initially recorded at cost and are subsequently adjusted based on our proportionate share of the net income or loss of the funds ( which include changes in the market value of the underlying securities in the funds ) . this method of accounting is different from the way we account for our other fixed maturity securities and the timing of the recognition of equity in net income or loss of investments accounted for using the equity method may differ from gains or losses in the future upon sale or maturity of such investments . transaction costs and other include advisory , financing , legal , severance , incentive compensation and other transaction costs related to acquisitions . we believe that transaction costs and other , due to their non-recurring nature , are not indicative of the performance of , or trends in , our business performance . the loss on redemption of preferred arch capital 57 2019 form 10-k shares related to the redemption of our series c preferred shares in january 2018 and had no impact on shareholders ' equity or cash flows . due to these reasons , we exclude net realized gains or losses , net impairment losses recognized in earnings , equity in net income or loss of investments accounted for using the equity method , net foreign exchange gains or losses , transaction costs and other and loss on redemption of preferred shares from the calculation of after-tax operating income available to arch common shareholders . we believe that showing net income available to arch common shareholders exclusive of the items referred to above reflects the underlying fundamentals of our business since we evaluate the performance of and manage our business to produce an underwriting profit . in addition to presenting net income available to arch common shareholders , we believe that this presentation enables investors and other users of our financial information to analyze our performance in a manner similar to how management analyzes performance . we also believe that this measure follows industry practice and , therefore , allows the users of financial information to compare our performance with our industry peer group . we believe that the equity analysts and certain rating agencies which follow us and the insurance industry as a whole generally exclude these items from their analyses for the same reasons . our segment information includes the presentation of consolidated underwriting income or loss and a subtotal of underwriting income or loss before the contribution from the โ other ' segment . such measures represent the pre-tax profitability of our underwriting operations and include net premiums earned plus other underwriting income , less losses and loss adjustment expenses , acquisition expenses and other operating expenses . other operating expenses include those operating expenses that are incremental and or directly attributable to our individual underwriting operations . underwriting income or loss does not incorporate items included in our corporate ( non-underwriting ) segment . while these measures are presented in note 4 , โ segment information , โ to our consolidated financial statements in item 8 , they are considered non-gaap financial measures when presented elsewhere on a consolidated basis . the reconciliations of underwriting income or loss to income before income taxes ( the most directly comparable gaap financial measure ) on a consolidated basis and a subtotal before the contribution from the โ other ' segment , in accordance with regulation g , is shown in note 4 , โ segment information , โ to our consolidated financial statements in item 8. we measure segment performance for our three underwriting segments based on underwriting income or loss .
| simulation results in order to illustrate the potential volatility in our loss reserves , we used a monte carlo simulation approach to simulate a range of results based on various probabilities . both the probabilities and related modeling are subject to inherent uncertainties . the simulation relies on a significant number of assumptions , such as the potential for multiple entities to react similarly to external events , and includes other statistical assumptions . the simulation results shown for each segment do not add to the total simulation results , as the individual segment simulation results do not reflect the diversification effects across our segments . at december 31 , 2019 , our recorded loss reserves by underwriting segment , net of unpaid losses and loss adjustment expenses recoverable , and the results of the simulation were as follows : replace_table_token_28_th ( 1 ) net of reinsurance recoverables . excludes amounts reflected in the โ other ' segment . ( 2 ) simulation results indicate that a 90 % probability exists that the net reserves for losses and loss adjustment expenses will not exceed the indicated amount . ( 3 ) simulation results indicate that a 10 % probability exists that the net reserves for losses and loss adjustment expenses will be at or below the indicated amount . for informational purposes , based on the total simulation results , a change in our loss reserves to the amount indicated at the 90th percentile would result in a decrease in income before income taxes of approximately $ 1.47 billion , or $ 3.55 per diluted share , while a change in our loss reserves to the amount indicated at the 10th percentile would result in an increase in income before income taxes of approximately $ 1.44 billion , or $ 3.47 per diluted share .
| 2,677 |
f-13 ( ) the following table sets forth the activity of restricted stock : replace_table_token_7_th ( a ) excludes the fair value of 2012 plan grants to altisource employees since we include no share-based compensation in our consolidated financial statements related to those grants . our employees we calculate the grant date fair value of restricted stock using a monte carlo simulation and amortize the resulting compensation expense over the respective vesting or service period . the weighted average grant date fair value of restricted stock granted during 2012 was determined using the following assumptions : risk free interest rate ( a ) 2.81 % common stock dividend yield ( b ) 0 % expected volatility ( c ) 100 % ( a ) represents the interest rate as of the grant date on us treasury bonds having the same life as the estimated life of the option grants . ( b ) at the date of grant , we had no history of dividend payments . ( c ) based on the historical volatility of comparable companies , adjusted for our expected additional cash-flow volatility . ocwen employees as part of the separation , we granted restricted stock to employees of ocwen . similarly , we calculate the fair value of non-employee restricted stock using a monte carlo simulation . the fair value is re-measured each accounting period with amortization of the resulting servicing expense over the vesting period . these instruments qualify for equity classification . the weighted average grant date fair value of restricted stock granted during 2012 was determined using the following assumptions : replace_table_token_8_th ( a ) represents the interest rate as of the grant date on us treasury bonds having the same life as the estimated life of the option grants . ( b ) at the date of grant , we had no history of dividend payments . ( c ) based on the historical volatility of comparable companies , adjusted for our expected additional cash-flow volatility . 8. earnings per share because we incurred a net loss attributable to common stockholders from inception to december 31 , 2012 , basic and diluted earnings per share are equivalent for the period . f-14 ( ) 9. income taxes we are domiciled in the united states virgin islands and under current united states virgin islands law are obligated to pay taxes in the united states virgin islands on income and or capital gains . we applied for tax benefits from the united states virgin islands economic development commission and received approval of our application by the governor of the united states virgin islands on august 10 , 2012. we are currently story_separator_special_tag we were incorporated in the united states virgin islands on march 15 , 2012. our primary business is to provide asset management and corporate governance services under the residential asset management agreement to residential , a maryland corporation recently formed to acquire and own single-family rental assets . we have a capital light operating strategy with profits available for share repurchases and dividends , although we have no current plans to repurchase shares or pay dividends . initially , residential is our primary source of revenue and will drive our potential future growth . the residential asset management agreement entitles us to incentive management fees that will give us an increasing share of residential 's cash available for distribution to its shareholders as well as reimbursement for certain overhead and operating expenses . accordingly , our operating results are highly dependent on residential 's ability to achieve positive operating results . we have concluded residential is a variable interest entity because residential 's equity holders lack the ability through voting rights to make decisions about residential 's activities that have a significant effect on the success of residential . we have also concluded that we are the primary beneficiary of residential because under the residential management agreement we have the power to direct the activities of residential that most significantly impact residential 's economic performance including establishing residential 's investment and business strategy . as a result , we consolidate residential in our consolidated financial statements . executive summary our business strategy is to : provide asset management services to residential to assist it in generating a growing stream of cash available for distribution to its shareholders and thereby growing our earnings ; assist residential in generating a steady , stable cash flow stream from its preferred investment in a title insurance and reinsurance business and develop other scalable investment strategies and vehicles by leveraging the expertise of our management team . residential 's business objective is to provide attractive returns to its shareholders primarily through dividends . as residential 's asset manager , we believe we can accomplish this on residential 's behalf with the following strategy : we expect to acquire single-family rental assets for residential primarily through the acquisition of non-performing loan portfolios . we believe that the non-performing loan acquisition channel will give residential a cost advantage over other acquisition channels such as foreclosure auctions and other real-estate owned , or โ reo , โ acquisitions because : โฆ we believe residential will be able to purchase single-family assets at a lower price because there are fewer participants in the non-performing loan marketplace leading to a higher discount rate and โฆ we believe residential will be able to purchase non-performing loans at a lower price because the seller does not have to pay the broker commissions and closing costs of up to 10 % of gross proceeds that typically are incurred when selling reo after foreclosure . we expect to generate near-term cash-flow for residential through the modification of non-performing loans and subsequently refinance them at or near the value of the underlying property without waiting for entire loan portfolios to reach stabilized rental state . story_separator_special_tag depreciation and amortization is a non-cash expense associated with the ownership of real estate and generally remains relatively consistent each year at an asset level , unless residential makes capital improvements , since residential depreciates its properties on a straight-line basis over a fixed life . general and administrative expenses consist of those costs related to the general operation and overall administration of the business . interest expense consists of the costs to borrow money . 20 ( ) other factors influencing our results the avenue through which a non-performing loan is resolved impacts the amount and timing of revenue residential will receive . the avenue will be dependent on a number of factors that are beyond residential 's control including interest rates , conditions in the financial markets and other factors . in addition , we expect that residential 's real estate assets would decline in value in a rising interest rate environment and that its net income could decline in a rising interest rate environment to the extent such real estate assets are financed with floating rate debt and there is no accompanying increase in rental yield . the state of the real estate market/home prices will determine residential 's proceeds from sale of real estate acquired in settlement of loans . while we make extensive efforts at anticipating real estate price trends and estimate the effects of those trends on the valuations of residential 's portfolios of mortgage loans , future real estate values are subject to influences beyond residential 's control . generally , rising home prices are expected to positively affect residential 's results of real estate acquired in settlement of loans . conversely , declining home prices are expected to negatively affect residential 's results of real estate acquired in settlement of loans . the size of residential 's investment portfolio will also be a key revenue driver for both residential and us . generally , as the size of residential 's investment portfolio grows , the amount of revenue residential expects to generate will increase which thereby would increase our revenues . the larger investment portfolio , however , will drive increased expenses including servicing fees to ocwen and property management fees to altisource . residential may also incur additional interest expense to finance the purchase of its assets which would affect the incentive management fees payable to us . completion of spin-off as of the close of business on december 21 , 2012 , we completed our spin-off from altisource . our shares began โ regular way โ trading on the otcqx market tier operated by otc markets group , inc under the ticker symbol โ aamc โ on december 24 , 2012. the spin-off was treated as a taxable pro rata distribution by altisource of all of our outstanding shares of common stock to the shareholders of record of altisource as of the record date of december 17 , 2012. the shareholders of altisource received one share of our common stock for every 10 shares of altisource common stock held and cash in lieu of fractional shares . story_separator_special_tag style= '' line-height:120 % ; text-align : left ; font-size:10pt ; '' > we have no off-balance sheet arrangements as of december 31 , 2012. contractual obligations the following table sets forth a summary regarding our known contractual obligations including required interest payments , if any , as of december 31 , 2012 ( in thousands ) : replace_table_token_0_th on december 21 , 2012 , we entered into a subscription agreement to invest $ 2.0 million to acquire 100 % of the common stock and voting rights of newsource . in addition , residential entered into a subscription agreement to invest $ 18.0 million in the non-voting preferred stock of newsource . recent accounting pronouncements none . critical accounting judgments accounting standards require information in financial statements about the risks and uncertainties inherent in significant estimates , and the application of generally accepted accounting principles involves the exercise of varying degrees of judgment . certain amounts included in or affecting our financial statements and related disclosures must be estimated requiring us to make certain assumptions with respect to values or conditions that can not be known with certainty at the time our consolidated financial statements are prepared . these estimates and assumptions affect the amounts we report for our 23 ( ) assets and liabilities and our revenues and expenses during the reporting period and our disclosure of contingent assets and liabilities at the date of our consolidated financial statements . we routinely evaluate these estimates utilizing historical experience , consultation with experts and other methods we consider reasonable in the particular circumstances . nevertheless , actual results may differ significantly from our estimates and any effects on our business , financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known . we consider our critical accounting judgments to be those used in the determination of the reported amounts and disclosure related to the following : consolidations the consolidated financial statements include wholly owned subsidiaries and those subsidiaries in which we own a majority voting interest with the ability to control operations of the subsidiaries and where no substantive participating rights or substantive kick out rights have been granted to the noncontrolling interests . additionally , we would consolidate partnerships , joint ventures and limited liability companies when we control the major operating and financial policies of the entity through majority ownership in our capacity as general partner or managing member or by contract . in addition , we consolidate those entities deemed to be variable interest entities in which we are determined to be the primary beneficiary . as of december 31 , 2012 , we have concluded residential is a variable interest entity because residential 's equity holders lack the ability through voting rights to make decisions about residential 's activities
| results of operations the following sets forth discussion of our results of operations from inception on march 15 , 2012 through december 31 , 2012. because the results of residential are consolidated into our financial statements , the results of operations disclosures set forth below include the results of residential . rental revenues residential has generated no rental revenues for the period from inception to december 31 , 2012. we expect residential to generate rental revenues in 2013 upon acquisition of non-performing loans and conversion to single-family rental properties . gains on acquisition of property residential has generated no gains on acquisition of property for the period from inception to december 31 , 2012. we expect residential to generate gains from acquisition of property in 2013 upon acquisition of non-performing loans and conversion to single-family rental properties . gains on repayment of non-performing loans residential has generated no gains on repayment of non-performing loans for the period from inception to december 31 , 2012. we expect residential to generate gains on repayment of non-performing loans in 2013 through short sales or through modification and refinancing . gains on disposition of property residential generated no gains on disposition of property for the period from inception to december 31 , 2012. we expect residential to generate gains on disposition of property in 2013 through liquidation of the underlying collateral of non-performing loans . 21 ( ) loan servicing fees residential has incurred no loan servicing fees for the period from inception to december 31 , 2012. we expect residential to incur loan servicing fees to ocwen in 2013 upon acquisition of non-performing loans . rental property operating expenses residential has incurred no rental property operating expenses for the period from inception to december 31 , 2012. we expect residential to incur rental property operating expenses in 2013 upon acquisition of non-performing loans and conversion to single-family rental properties .
| 2,678 |
at march 31 , 2013 , a total of approximately 2,405,300 shares were available for future issuance under the plan . stock-based compensation the following table summarizes stock-based compensation expense by financial statement line item in the company 's consolidated statements of operations for the fiscal years ended march 31 , 2013 , 2012 and 2011 ( in thousands ) : replace_table_token_26_th the components of stock-based compensation for the fiscal years ended march 31 , 2013 , 2012 and 2011 were as follows ( in thousands ) : replace_table_token_27_th stock options the following table summarized stock option activity for the year ended march 31 , 2013 : replace_table_token_28_th f-16 abiomed , inc. and subsidiaries notes to consolidated financial statementsย ( continued ) note 9. stock award plans and stock-based compensation ( continued ) the remaining unrecognized stock-based compensation expense for unvested stock option awards at march 31 , 2013 was approximately $ 3.6 million , net of forfeitures , and the weighted-average period over which this cost will be recognized is 2.7 years . the aggregate intrinsic value of options exercised for fiscal years 2013 , 2012 and 2011 was $ 4.6 million , $ 13.4 million and $ 0.4 million , respectively . the total cash received as a result of story_separator_special_tag all statements , trend analysis and other information contained in the following discussion relative to markets for our products and trends in revenue , gross margin and anticipated expense levels , as well as other statements , including words such as ยmay , ย ยanticipate , ย ยbelieve , ย ยplan , ย ยestimate , ย ยexpect , ย and ยintendย and other similar expressions constitute forward-looking statements . these forward-looking statements are subject to business and economic risks and uncertainties and our actual results of operations may differ materially from those contained in the forward-looking statements . factors that could cause or contribute to such differences include , but are not limited to , those discussed under item 1a risk factors as well as other risks and uncertainties referenced in this report . overview we are a leading provider of mechanical circulatory support devices and we offer a continuum of care to heart failure patients . we develop , manufacture and market proprietary products that are designed to enable the heart to rest , heal and recover by improving blood flow and or performing the pumping function of the heart . our products are used in the cardiac catheterization lab , or cath lab , by interventional cardiologists and in the heart surgery suite by heart surgeons for patients who are in need of hemodynamic support prophylactically or emergently before , during or after angioplasty or heart surgery procedures . we believe heart recovery is the optimal clinical outcome for patients experiencing heart failure because it restores their quality of life . in addition , we believe that for the care of such patients , heart recovery is the most cost-effective solution for the healthcare system . our strategic focus and the driver of the majority of our revenue growth is the market penetration of our impella family of products , and principally our impella 2.5 product , which received 510 ( k ) clearance in june 2008 from the u.s. food and drug administration , or fda , for partial circulatory support for up to six hours . we received 510 ( k ) clearance in april 2009 for our impella 5.0 and impella ld devices for circulatory support for up to six hours . these devices are larger and provide more blood flow to patients than the impella 2.5. in september 2012 , we announced that our impella cp product received 510 ( k ) clearance from the fda for circulatory support for up to six hours . the impella cp ( previously marketed outside of the u.s. as impella cvad ) received ce mark approval to market the device in the european union and health canada approval to market the device in canada . we initiated a controlled launch with top heart hospitals in the u.s. during the second quarter of fiscal 2013 and have continued a controlled commercial launch of impella cp to more hospitals in the u.s. , which we expect to continue over the next 12 months . in november 2012 , we announced that the impella rp received investigational device exemption , or ide , approval from the fda for use in recover right , a pivotal clinical study in the u.s. the impella rp is a percutaneous catheter-based axial flow pump that is designed to allow greater than four liters of flow per minute and is intended to provide the flow and pressure needed to compensate for right side heart failure . in april 2013 , we announced the enrollment of the first patient in recover right and we expect to enroll 30 patients with signs of right side heart failure and are being treated in the cath lab or surgery suite . we are also conducting initial patient use trials of the impella rp outside of the u.s. this product is not currently available for commercial use . in december 2012 , as part of the fda 's 515 program initiative , an fda panel voted to recommend continuation of class iii status for temporary ventricular support devices within the non-roller type cardiopulmonary bypass blood pumps category , which includes our impella products . the panel 's recommendation of class iii for this category of device is consistent with the current class iii designation for these device types . if the fda accepts the panel 's determination and issues a final order classifying these devices in class iii , we will be required to file a pma application for impella 2.5. under the 515 program initiative , we will be permitted to continue to market our impella products pursuant to the 510 ( k ) clearance for a sufficient period of time to allow for the submission and review of pma applications relating to our impella products . story_separator_special_tag on an ongoing basis , we evaluate our estimates , including those related to revenue recognition , collectability of receivables , realizability of inventory , goodwill and intangible assets , valuation of long-lived assets , accrued expenses , warranty provisions , stock-based compensation , income taxes including the valuation allowance for deferred tax assets , contingencies and litigation . provisions for depreciation are based on their estimated useful lives using the straight-line method . some of these estimates can be subjective and complex and , consequently , actual results may differ from these estimates under different assumptions or conditions . we believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements . revenue recognition we recognize revenue when evidence of an arrangement exists , title has passed ( generally upon shipment ) or services have been rendered , the selling price is fixed or determinable and collectibility is reasonably assured . revenue from product sales to customers is recognized when delivery has occurred . all costs related to product sales are recognized at time of delivery . we do not provide for rights of return to customers on our product sales and therefore do not record a provision for returns . maintenance and service support contract revenues are included in product revenue and are recognized ratably over the term of the service contracts based upon the elapsed term of the service contract . revenue is recognized as it is earned in limited instances where we rent console medical devices to customers on a month-to-month basis or for a longer specified period of time . government-sponsored research and development contracts and grants generally provide for payment on a cost-plus-fixed-fee basis . revenues from these contracts and grants are recognized as work is performed , provided the government has appropriated sufficient funds for the work . under contracts in which we elect to spend significantly more on the development project during the term of the contract than the total contract amount , we prospectively recognize revenue on such contracts ratably over the term of the contract as related research and development costs are incurred . 31 goodwill goodwill is recorded when consideration for an acquisition exceeds the fair value of the net tangible and intangible assets acquired . goodwill is not amortized , instead we evaluate goodwill for impairment at least annually at october 31 , as well as whenever events or changes in circumstances suggest that the carrying amount may not be recoverable . the goodwill impairment test involves a two-step process . the first step is a comparison of the reporting unit 's fair value to its carrying value . if the reporting unit 's fair value exceeds its carrying value , no further procedures are required . however , if the reporting unit 's fair value is less than its carrying value , an impairment of goodwill may exist , requiring a second step to measure the amount of impairment loss . if the implied fair value of goodwill is less than the recorded goodwill , an impairment charge is recorded for the difference . we estimate the fair value of our single reporting unit using a combination of the income approach and the market approach . the income approach incorporates the use of a discounted cash flow method in which the estimated future cash flows and terminal values for the reporting unit is discounted to a present value using an appropriate discount rate . cash flow projections are based on management 's estimates of economic and market conditions which drive key assumptions of revenue growth rates , operating margins , capital expenditures and working capital requirements . the discount rate is based on the specific risk characteristics of the reporting unit and its underlying forecast . the market approach estimates fair value by comparing publicly traded companies with similar operating and investment characteristics as the reporting unit . the fair values determined by the market approach and income approach , are weighted to determine the fair value for the reporting unit based primarily on the similarity of the operating and investment characteristics of the reporting unit to the comparable publicly traded companies used in the market approach . in order to assess the reasonableness of the calculated reporting unit 's fair value , we also compare the reporting unit 's fair value to our market capitalization ( per share stock price times number of common shares outstanding ) and calculate an implied control premium ( the excess of the reporting unit 's fair value over the market capitalization ) . we performed our annual impairment review for fiscal 2013 as of october 31 , 2012 and determined that no write-down for impairment of goodwill was required as the fair value of the reporting unit substantially exceeded the carrying value . the carrying amount of goodwill at march 31 , 2013 was $ 35.4 million . stock-based compensation we record stock-based compensation in our statements of operations based on the fair value method . this expense is determined after consideration of several significant judgments and estimates , including the probable outcome for awards with a performance condition or conditions . the fair value of stock option grants is estimated using the black-scholes option pricing model , which requires management to make certain assumptions with respect to selected model inputs . the risk-free interest rate is based on the u.s. treasury yield curve in effect at the time of grant for a term consistent with the expected life of the stock options . volatility assumptions are calculated based on historical volatility of our stock . in addition , an expected dividend yield of zero is used in the option valuation model because we do not pay dividends and do not expect to pay any dividends in the foreseeable future . we estimate the expected term of options based on historical exercise experience and estimates of future exercises of unexercised options .
| results of operations the following table sets forth certain consolidated statements of operations data for the periods indicated as a percentage of total revenues : replace_table_token_5_th fiscal years ended march 31 , 2013 and march 31 , 2012 ( ยfiscal 2013ย and ยfiscal 2012ย ) revenue our revenues are comprised of the following : replace_table_token_6_th impella product revenue encompasses impella 2.5 , impella cp , impella 5.0 , and impella ld product sales . other product revenue includes ab5000 , bvs5000 and cannulae product sales . service and other revenue represents revenue earned on preventative maintenance service contracts and maintenance calls . total revenues for fiscal 2013 increased by $ 31.7 million , or 25 % , to $ 158.1 million from $ 126.4 million for fiscal 2012. the increase in total revenue was primarily due to higher impella revenue due to greater utilization in the u.s. , which was attributable in part to the launch of impella cp in fiscal 2013 . 33 impella product revenues for fiscal 2013 increased by $ 33.4 million , or 31 % , to $ 140.3 million from $ 106.9 million for fiscal 2012. most of our increase in impella revenue was from disposable catheter sales in the u.s. , as we focus on increasing utilization of our disposable catheter products through continued investment in our field organization and physician training program . in the second half of fiscal 2013 , we began our initial launch of impella cp in the u.s. we plan to continue our controlled commercial launch of impella cp during fiscal 2014 and we expect impella cp and impella 2.5 revenues to increase as we add new customer sites and increase utilization at existing customer sites .
| 2,679 |
the compensation committee administers the 2015 plan , including the determination of the recipient of an award , the number of shares or amount of cash subject to each award , whether an option is to be classified as an incentive stock option or non-qualified stock option , and the terms and conditions of each award , including the exercise and purchase prices and the vesting and duration of the award . our board may appoint one or more separate committees of our board , each consisting of one or more members of our board , to administer our 2015 plan with respect to employees who are not subject to section 16 of the exchange act . subject to applicable law , our board may also authorize one or more officers to designate employees , other than employees who are subject to section 16 of the exchange act , to receive awards under our 2015 plan and or determine the number of such awards to be received by such employees subject to limits specified by our board . authorized shares . under our 2015 plan , the aggregate number of shares of our common stock authorized for issuance may not exceed ( 1 ) 54,200 plus ( 2 ) the sum of the number of shares subject to outstanding awards under the 2008 plan as of the 2015 plan 's effective date that are subsequently forfeited or terminated for any reason before being exercised or settled , plus the number of shares subject to vesting restrictions under the 2008 plan on the 2015 plan 's effective date that are subsequently forfeited . in addition , the number of shares that have been authorized for issuance under the 2015 plan are automatically increased on the first day of each fiscal year beginning on january 1 , 2016 and ending on ( and including ) january 1 , 2025 , in an amount equal to the lesser of ( i ) 4 % of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year , and ( ii ) another lesser amount determined by our board . as of january 1 , 2020 , 229,075 shares remain available for future awards under the 2015 plan . shares subject to awards granted under the 2015 plan that are forfeited or terminated before being story_separator_special_tag story_separator_special_tag style= '' font-family : times new roman ; font-size:10pt ; font-weight : normal ; font-style : normal ; text-transform : none ; font-variant : normal ; '' > the acuitas amr gene panel ( isolates ) 510 ( k ) submission . however , we anticipate delays to the planned timeline as a result of the ongoing coronavirus pandemic . consequently , the anticipated timeline for the remainder of the second interactive resp onse review , and ultimately the clearance of the acuitas amr gene panel ( isolates ) diagnostic test is currently unknown , although we anticipate that the extensive review process is nearing completion . the company 's operations are subject to certain risks and uncertainties . the risks include rapid technology changes , the need to manage growth , the need to retain key personnel , the need to protect intellectual property and the need to raise additional capital financing on terms acceptable to the company . the company 's success depends , in part , on its ability to develop and commercialize its proprietary technology as well as raise additional capital . following receipt of approval from stockholders at a special meeting of stockholders held on august 22 , 2019 , the company filed an amendment to its amended and restated certificate of incorporation to effect a reverse stock split of the issued and outstanding shares of common stock , at a ratio of one share for twenty shares . all share amounts and per share prices in this annual report have been adjusted to reflect the reverse stock split . 2019 financing transactions since inception , the company has incurred , and continues to incur , significant losses from operations . the company has funded its operations primarily through external investor financing arrangements . the following financing transactions took place during 2019 : on october 28 , 2019 , the company closed the october 2019 public offering of 2,590,170 units at $ 2.00 per unit and 2,109,830 pre-funded units at $ 1.99 per pre-funded unit , raising gross proceeds of approximately $ 9.4 million and net proceeds of approximately $ 8.3 million . each unit included one share of common stock and one common warrant to purchase one share of common stock at an exercise price of $ 2.00 per share . each pre-funded unit included one pre-funded warrant to purchase one share of common stock for an exercise price of $ 0.01 per share , and one common warrant to purchase one share of common stock at an exercise price of $ 2.00 per share . the common warrants are exercisable immediately and have a five-year term from the date of issuance . as of december 31 , 2019 , all 2,109,830 pre-funded warrants issued in the october 2019 public offering have been exercised . on march 29 , 2019 , the company closed the march 2019 public offering of 450,000 shares of its common stock at a public offering price of $ 12.00 per share . the offering raised gross proceeds of $ 5.4 million and net proceeds of approximately $ 4.8 million . story_separator_special_tag the common warrants are exercisable immediately and have a five-year term from the date of issuance . during the year ended december 31 , 2018 , the company sold 15,912 shares of its common stock under its at the market offering resulting in aggregate net proceeds to the company of approximately $ 0.6 million , and gross proceeds of $ 0.6 million . in connection with the october 2018 public offering , the company terminated the at the market offering . sources and uses of cash the following table summarizes the net cash flows provided by ( used in ) operating activities , investing activities and financing activities for the periods indicated : replace_table_token_4_th net cash used in operating activities net cash used in operating activities in 2019 consists primarily of our net loss of $ 12.4 million , reduced by certain non-cash items , including depreciation and amortization expense of $ 0.9 million , share-based compensation of $ 0.4 million , partially offset by the net change in operating assets and liabilities of $ 0.9 million . net cash used in operating activities for 2018 consists primarily of our net loss of $ 13.4 million , reduced by certain non-cash items , including depreciation and amortization expense of $ 0.7 million , share-based compensation expense of $ 0.9 million , and the net change in operating assets and liabilities of $ 0.6 million . net cash used in investing activities net cash used in investing activities in 2019 consisted primarily of funds provided to curetis gmbh as part of the interim facility . net cash used in investing activities in 2018 consisted of the purchase of property and equipment offset by proceeds from the sale of equipment . net cash provided by financing activities net cash provided by financing activities in 2019 of $ 12.2 million consisted primarily of net proceeds from the october 2019 public offering and march 2019 public offering . net cash provided by financing activities in 2018 of $ 13.8 million consisted primarily of net proceeds from the october 2018 public offering , february 2018 public offering and the at the market offering . 49 critical accounting policies and use of estimate s this management 's discussion and analysis of financial condition and results of operations is based on our audited consolidated financial statements , which have been prepared in accordance with gaap . the preparation of financial statements in conformity with gaap requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period . in our audited consolidated financial statements , estimates are used for , but not limited to , liquidity assumptions , revenue recognition , stock-based compensation , allowances for doubtful accounts and inventory obsolescence , and valuation of derivative financial instruments measured at fair value on a recurring basis , deferred tax assets and liabilities and related valuation allowance , estimated useful lives of long-lived assets , and the recoverability of long lived assets . actual results could differ from those estimates . a summary of our significant accounting policies is included in note 3 to the accompanying audited consolidated financial statements . certain of our accounting policies are considered critical , as these policies require significant , difficult or complex judgments by management , often requiring the use of estimates about the effects of matters that are inherently uncertain . revenue recognition the company derives revenues from ( i ) the sale of quickfish and pna fish diagnostic test products and acuitas amr gene panel ( urine ) ruo test products , ( ii ) providing laboratory services , and ( iii ) providing collaboration services including funded software arrangements , and license arrangements . the company analyzes contracts to determine the appropriate revenue recognition using the following steps : ( i ) identification of contracts with customers , ( ii ) identification of distinct performance obligations in the contract , ( iii ) determination of contract transaction price , ( iv ) allocation of contract transaction price to the performance obligations and ( v ) determination of revenue recognition based on timing of satisfaction of the performance obligation . the company recognizes revenues upon the satisfaction of its performance obligation ( upon transfer of control of promised goods or services to our customers ) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services . the company defers incremental costs of obtaining a customer contract and amortizes the deferred costs over the period that the goods and services are transferred to the customer . the company had no material incremental costs to obtain customer contracts in any period presented . deferred revenue results from amounts billed in advance to customers or cash received from customers in advance of services being provided . impairment of long-lived assets property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable . recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset . recoverability measurement and estimating of undiscounted cash flows is done at the lowest possible level for which we can identify assets . if such assets are considered to be impaired , impairment is recognized as the amount by which the carrying amount of assets exceeds the fair value of the assets . definite-lived intangible assets include trademarks , developed technology and customer relationships . if any indicators were present , the company would test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset .
| financial condition and results of operations the following management 's discussion and analysis of financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the accompanying notes thereto included elsewhere in this annual report . this discussion contains forward-looking statements , based on current expectations and related to future events and our future financial performance , that involve risks and uncertainties . our actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors , including those set forth in the section titled โ risk factors โ included under part i , item 1a of this annual report . overview opgen was incorporated in delaware in 2001. on july 14 , 2015 , opgen completed the merger with advandx . pursuant to the terms of a merger agreement , velox acquisition corp. , opgen 's wholly-owned subsidiary formed for the express purpose of effecting the merger , merged with and into advandx with advandx surviving as opgen 's wholly-owned subsidiary . opgen and advandx are collectively referred to hereinafter as the โ company. โ the company 's headquarters and principal operations are in gaithersburg , maryland . the company also has operations in copenhagen , denmark , and bogota , colombia . the company operates in one business segment . opgen is a precision medicine company using molecular diagnostics and informatics to help combat infectious disease . the company is developing molecular information products and services for global healthcare settings , helping to guide clinicians with more rapid and actionable information about life threatening infections , improve patient outcomes , and decrease the spread of infections caused by multidrug-resistant microorganisms , or mdros . the company 's proprietary dna tests and informatics address the rising threat of antibiotic resistance by helping physicians and other healthcare providers optimize care decisions for patients with acute infections .
| 2,680 |
we may receive payment for the unrecognized and uncollected management fees in whole or in part in the future only if cash flows from operating and investing activities of the centers or proceeds from the sale of the centers are sufficient to pay the fees . there can be no assurance that such future improved cash flows will occur . 62 rental income in 2007 , nhc acquired all of the net assets of national health realty , inc. , which was a health care real estate investment trust . the properties acquired in the acquisition story_separator_special_tag overview national healthcare corporation , which we also refer to as nhc or the company , is a leading provider of long-term health care services . at december 31 , 2011 we operate or manage 75 long-term health care centers with 9,456 beds in 10 states and provide other services in one additional state . these operations are provided by separately funded and maintained subsidiaries . we provide long-term health care services to patients in a variety of settings including long-term nursing centers , managed care specialty units , sub-acute care units , alzheimer 's care units , hospice care , homecare programs , assisted living centers and independent living centers . in addition , we provide management services , accounting services and insurance services to third party owners of long-term health care centers . 31 executive summary earnings to monitor our earnings , we have developed budgets and management reports to monitor labor , census , and the composition of revenues . inflationary increases in our costs may cause net earnings from patient services to decline . medicare reimbursement rate changes in july 2011 , cms announced a final rule reducing medicare skilled nursing facility pps payments in fiscal year 2012 by $ 3.87 billion , or 11.1 % lower than payments for fiscal year 2011. we estimate the resulting decrease in revenue from the fiscal year 2012 medicare rate changes will be approximately $ 24,000,000 annually or $ 6,000,000 quarterly . furthermore , changes in government requirements for providing therapy services are estimated to increase our operating costs by approximately $ 6,000,000 annually , or $ 1,500,000 per quarter . we are examining cost saving measures to help mitigate a portion of the revenue decrease and cost increase , but we are also committed to maintaining the quality of care to our patients . development and growth we are undertaking to expand our long-term care operations while protecting our existing operations and markets . the following table lists our recent construction and purchase activities . replace_table_token_8_th also , in 2012 , we expect to begin construction on a 90-bed skilled nursing facility in tullahoma , tennessee , a 92-bed skilled nursing facility in hendersonville , tennessee and a 50-bed skilled nursing addition to nhc lexington in lexington , sc . during 2012 , we will apply for certificates of need for additional beds in our markets and also evaluate the feasibility of expansion into new markets by building private pay health care centers or by the purchase of existing health care centers . 32 accrued risk reserves our accrued professional liability reserves , workers ' compensation reserves and health insurance reserves totaled $ 98,732,000 at december 31 , 2011 and are a primary area of management focus . we have set aside restricted cash and marketable securities to fund our professional liability and workers ' compensation reserves . as to exposure for professional liability claims , we have developed for our centers performance certification criteria to measure and bring focus to the patient care issues most likely to produce professional liability exposure , including in โ house acquired pressure ulcers , significant weight loss and numbers of falls . these programs for certification , which we regularly modify and improve , have produced measurable improvements in reducing these incidents . our experience is that achieving goals in these patient care areas improves both patient and employee satisfaction . application of critical accounting policies the preparation of financial statements in conformity with accounting principles generally accepted in the united states of america requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . actual results could differ from those estimates and cause our reported net income to vary significantly from period to period . our critical accounting policies that are both important to the portrayal of our financial condition and results and require our most difficult , subjective or complex judgments are as follows : revenue recognition - third party payors approximately 70 % of our net patient revenues are derived from medicare , medicaid , and other government programs . amounts earned under these programs are subject to review by the medicare and medicaid intermediaries or their agents . in our opinion , adequate provision has been made for any adjustments that may result from these reviews . any differences between our original estimates of reimbursements and subsequent revisions are reflected in operations in the period in which the revisions are made often due to final determination or the period of payment no longer being subject to audit or review . we have made provisions of approximately $ 16,807,000 as of december 31 , 2011 for various medicare and medicaid current and prior year cost reports and claims reviews . revenue recognition - private pay for private pay patients in skilled nursing or assisted living facilities , we bill room and board in advance for the current month with payment being due upon receipt of the statement in the month the services are performed . charges for ancillary , pharmacy , therapy and other services to private patients are billed in the month following the performance of services ; however , all billings are recognized as revenue when the services are performed . story_separator_special_tag however , because of uncertainty of interpretation by various tax authorities and the possibility that there are issues that have not been recognized by management , we can not guarantee we have accurately estimated our tax liabilities . the above listing is not intended to be a comprehensive list of all of our accounting policies . in many cases , the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles , with limited need for management ' s judgment in their application . there are also areas in which management ' s judgment in selecting any available alternative would not produce a materially different result . see our audited consolidated financial statements and notes thereto which contain accounting policies and other disclosures required by generally accepted accounting principles . story_separator_special_tag providers with high volume of therapy cases could see greater net rate reductions while others with non-therapy patients may see a negligible overall reduction in revenue or a slight increase . we estimate the effect of the revenue decrease for nhc homecare programs to be approximately $ 2,600,000 annually , or $ 650,000 per quarter . effective october 1 , 2011 , hospice agencies received medicare payments which represented a 2.5 % increase . 37 medicaid no rate increases or decreases were implemented for the fiscal years beginning july 1 , 2011 for medicaid programs in the states of tennessee and missouri . tennessee , however , has announced that it will implement a 4.25 % rate reduction beginning january 1 , 2012. we estimate the resulting decrease in revenue in tennessee will be approximately $ 2,600,000 annually , or $ 650,000 per quarter . on april 7 , 2011 , effectively immediately , south carolina implemented a three percent medicaid rate reduction . we estimate the resulting decrease in revenue is approximately $ 1,480,000 annually , or $ 370,000 per quarter . overall our average medicaid per diem increased 0.5 % in 2011 compared to 2010. we face challenges with respect to states ' medicaid payments , because many currently do not cover the total costs incurred in providing care to those patients . states will continue to control medicaid expenditures and also look for adequate funding sources , including provider assessments . the dra includes several provisions designed to reduce medicaid spending . these provisions include , among others , provisions strengthening the medicaid asset transfer restrictions for persons seeking to qualify for medicaid long-term care coverage , which could , due to the timing of the penalty period , increase facilities ' exposure to uncompensated care . other provisions could increase state funding for home and community-based services , potentially having an impact on funding for nursing facilities . there is no assurance that the funding for our services will increase or decrease in the future . 2011 compared to 2010 results for 2011 compared to 2010 include a 7.3 % increase in net operating revenues and a 20.9 % increase in net income before income taxes . net patient revenues increased $ 51,860,000 or 7.8 % compared to the same period last year . medicare , medicaid and private pay per diem rates increased 13.5 % , 0.5 % and 0.7 % , respectively , in 2011 compared to 2010. in combination with our per diem increases , the addition of our newly constructed or acquired businesses during the 2011 year helped increase net patient revenues approximately $ 18,589,000. the new operations consisted of three skilled nursing facilities and two assisted living communities . other revenues this year increased $ 1,024,000 or 1.8 % to $ 58,048,000. other revenues in 2011 include management and accounting service fees of $ 21,510,000 ( $ 20,897,000 in 2010 ) and insurance services revenue of $ 15,657,000 ( $ 17,068,000 in 2010 ) . rental income of $ 19,124,000 in 2011 increased $ 1,749,000 compared to 2010. nhc provided management services for 21 skilled nursing centers , four assisted living communities , and two independent living communities in 2011. we also provided accounting and financial services to 28 healthcare facilities in 2011. rental income increased due to the renewed rental agreements of thirteen of our properties with third party operators . see application of critical accounting policies , revenue recognition - subordination of fees and uncertain collections for a discussion of the factors that may cause management fee revenues to fluctuate from period to period . non-operating income in 2011 decreased $ 2,807,000 or 12.0 % to $ 20,533,000. the decrease in 2011 is due to the nonrecurring gain ( $ 3,563,000 ) that was recorded in 2010 due to the acquisition of two missouri long-term health care centers . the remaining increase is due to an increase in equity in earnings of our unconsolidated investments ( $ 681,000 ) . total costs and expenses for 2011 increased $ 33,165,000 or 5.0 % to $ 696,191,000 from $ 663,026,000 in 2010. salaries , wages and benefits , the largest operating costs of this service company , increased $ 28,402,000 or 7.1 % to $ 428,672,000 from $ 400,270,000. other operating expenses increased $ 1,423,000 or 0.7 % to $ 198,439,000 for 2011 compared to $ 197,016,000 in 2010. rent expense increased $ 1,650,000 or 4.3 % to $ 39,736,000. depreciation and amortization increased 6.5 % to $ 28,901,000. interest costs decreased to $ 443,000. salaries , wages and benefits as a percentage of net operating revenue was 55.4 % and 55.5 % for the years ended december 31 , 2011 and 2010 , respectively . the increases in salaries , wages and benefits are primarily due to increased staffing from the opening or acquisition of the three skilled nursing facilities and two assisted living 38 communities during 2011 ( $ 9,880,000 ) . we also had increased costs in our existing skilled nursing facilities ( $ 9,754,000 ) , increased costs for therapist services ( $ 6,664,000 ) and inflationary wage increases .
| results of operations the following table and discussion sets forth items from the consolidated statements of income as a percentage of net revenues for the audited years ended december 31 , 2011 , 2010 and 2009. percentage of net revenues replace_table_token_9_th 35 the following table sets forth the increase in certain items from the consolidated statements of income as compared to the prior period . period to period increase ( decrease ) replace_table_token_10_th our long-term health care services , including therapy and pharmacy services , provided 89.7 % , 89.1 % and 89.4 % of net patient revenues in 2011 , 2010 , and 2009 , respectively . homecare and hospice programs provided 10.3 % , 10.9 % , and 10.6 % of net patient revenues in 2011 , 2010 , and 2009 , respectively . the overall average census in owned and leased health care centers for 2011 was 90.6 % compared to 92.0 % in 2010 and 2009 , respectively . approximately 70 % of our net patient revenues are derived from medicare , medicaid , and other government programs . as discussed above in the application of critical accounting policies section , amounts earned under these programs are subject to review by the medicare and medicaid intermediaries . see application of critical accounting policies for discussion of the effects that this revenue concentration and the uncertainties related to such revenues have on our revenue recognition policies . government program financial changes cost containment will continue to be a priority for federal and state governments for health care services , including the types of services we provide . government reimbursement programs such as medicare and medicaid prescribe , by law , the billing methods and amounts that health care providers may charge and be reimbursed to care for patients covered by these programs . congress has passed a number of laws that have effected major changes in the medicare and medicaid programs .
| 2,681 |
this section of this annual report on form 10-k generally discusses fiscal years 2021 and 2020 items and year-to-year comparisons between fiscal years 2021 and 2 020. discussions of fiscal year 2020 items and year-to-year comparisons between fiscal years 2020 and 2019 that are not included in this annual report on form 10-k can be found in part ii , item 7 of our annual report on form 10-k , as amended , for the fiscal year ended january 31 , 2020 , which was filed with the sec on march 27 , 2020. overview at cloudera , we believe that data can make what is impossible today , possible tomorrow . we empower people to transform complex data into clear and actionable insights . powered by the relentless innovation of the open source community , we advance digital transformation for the world 's largest enterprises . we deliver an enterprise data cloud for any data , anywhere , from the edge to ai . we are an enterprise data cloud company . we pioneered the creation of the enterprise data cloud category . an enterprise data cloud is multi-function , hybrid and multi-cloud , secure and governed , and open and extensible . an enterprise data cloud offers cloud-native agility , elasticity and ease-of-use . we generate revenue from subscriptions and services . please see โ components of results of operations - revenue โ for further details . we market and sell our platform to a broad range of organizations , although we focus our selling efforts on the largest enterprises globally . we target these organizations because they capture and manage the vast majority of the world 's data and operate in highly complex information technology environments . we market our platform primarily through a direct sales force while benefiting from business driven by our ecosystem of technology partners , resellers , original equipment manufacturers ( oems ) , managed service providers , independent software vendors and systems integrators . as of january 31 , 2021 , we had approximatel y 1,800 customers . we have a broad customer base that spans industries and geographies . for the years ended january 31 , 2021 , 2020 and 2019 , no customer accounted for more than 10 % of our total revenue . we have significant revenue in the industries of banking and financial services , manufacturing , technology , business services , telecommunications , public sector , consumer and retail , and healthcare and life sciences verticals , and continue to expand our penetration across many other data-intensive industries . sales outside of the united states represented approximatel y 40 % , 38 % and 34 % of our total revenue for the years ended january 31 , 2021 , 2020 and 2019 , respectively . our business model is based on a โ land and expand โ strategy designed to use the initial sale as a foothold to increase revenue per customer by increasing the amount of data and number of use cases each customer runs through our platform . after an initial purchase of our platform , we work with our customers to identify new use cases that can be developed on or moved to our platform , ultimately increasing the amount of data managed on our platform as well as the number and size of our platform deployments . 33 non-gaap financial measures in addition to our results determined in accordance with u.s. generally accepted accounting principles ( gaap ) , we believe the following non-gaap financial measures are useful in evaluating our operating performance . annualized recurring revenue ( arr ) is the primary metric that management uses to monitor customer retention and growth and to make operational decisions related to our business . arr equals the annualized value of recurring subscription contracts with active entitlements as of the end of the applicable period . arr provides a normalized and composite view of customer retention , renewal and expansion as well as growth from new customers , that is a supplement to reported revenue . as of change january 31 , 2021 january 31 , 2020 amount % ( in thousands , except percentages ) annualized recurring revenue $ 778,042 $ 705,882 $ 72,160 10 % approximately 7 percentage points of the 10 % increase in arr was due to existing customers expanding their use of cloudera products with the remainder of the increase due to new customers . non-gaap operating income ( loss ) is our income ( loss ) from operations before stock-based compensation expense , amortization of acquired intangible assets an d non-cash real estate impairment charges . w e believe that this non-gaap financial measure , when taken together with the corresponding gaap financial measure , provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business , operating results or future outlook . our management uses , and believes that investors benefit from referring to , this non-gaap financial measure in evaluating our operating results , as well as when planning , forecasting , budgeting and analyzing future periods . we also use non-gaap operating income ( loss ) in conjunction with traditional gaap measures to communicate with our board of directors regarding our financial performance . years ended january 31 , change 2021 2020 amount % ( in thousands , except percentages ) non-gaap operating income ( loss ) $ 146,804 $ ( 39,376 ) $ 186,180 ( 473 ) % we believe non-gaap operating income ( loss ) provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period to period comparisons of operations . we believe non-gaap operating income ( loss ) is useful in evaluating our operating performance compared to that of other companies in our industry as this metric generally eliminates the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance . our definition may differ from the definitions used by other companies and therefore comparability may be limited . story_separator_special_tag cost of revenue cost of revenue for subscriptions primarily consists of personnel costs including salaries , bonuses , travel costs , benefits and stock-based compensation for employees providing technical support for our subscription customers , allocated shared costs ( including rent and information technology ) and amortization of certain acquired intangible assets from business combinations . cost of revenue for services primarily consists of personnel costs including salaries , bonuses , benefits and stock-based compensation , fees to subcontractors associated with service contracts , travel costs and allocated shared costs ( including rent and information technology ) . operating expenses research and development . research and development expenses primarily consist of personnel costs including salaries , bonuses , travel costs , benefits and stock-based compensation for our research and development employees , contractor fees , allocated shared costs ( including rent and information technology ) , supplies , and depreciation of equipment associated with the continued development of our platform prior to establishment of technological feasibility and the related maintenance of the existing technology . sales and marketing . sales and marketing expenses primarily consist of personnel costs including salaries , bonuses , travel costs , sales-based incentives , benefits and stock-based compensation for our sales and marketing employees . in addition , sales and marketing expenses also include costs for advertising , promotional events , corporate communications , product marketing and other brand-building activities , allocated shared costs ( including rent and information technology ) and amortization of certain acquired intangible assets from business combinations . most sales-based incentives are capitalized and expensed over the period of benefit from the underlying contracts . general and administrative . general and administrative expenses primarily consist of personnel costs including salaries , bonuses , travel costs , benefits and stock-based compensation for our executive , finance , legal , human resources , information technology and other administrative employees . in addition , general and administrative expenses include lease related right-of-use asset impairment charges , fees for third-party professional services , including consulting , legal and accounting services , merger related costs , other corporate expenses , and allocated shared costs ( including rent and information technology ) . interest income , net interest income primarily relates to amounts earned on our cash and cash equivalents and marketable securities . interest expense primarily relates to interest incurred on our debt and related amortization of debt discount and issuance costs . 36 other income ( expense ) , net other income ( expense ) , net primarily relates to gains and losses from foreign currency transactions and forward contracts , realized gains and losses on our marketable securities and other non-operating gains or losses . provision for income taxes provision for income taxes primarily consists of withholding taxes on sales to international customers and income taxes in foreign jurisdictions wherein we conduct business . a valuation allowance is established , when necessary , for any portion of deferred income tax assets where it is considered more likely than not that it will not be realized . story_separator_special_tag style= '' color : # 000000 ; font-family : 'times new roman ' , sans-serif ; font-size:10pt ; font-weight:400 ; line-height:120 % '' > primarily due to a decline in interest rates , increased funds held as cash and cash equivalents due to greater market volatilit y , and the decline in weighted average maturities as we re-invested in securities with shorter maturities during fiscal 2021. interest income was also offset by interest expense of $ 1.7 million incurred on our december 2020 term loan . other income ( expense ) , net years ended january 31 , change 2021 2020 amount % ( in thousands , except percentages ) other income ( expense ) , net $ ( 3,117 ) $ 185 $ ( 3,302 ) ( 1,785 ) % other expense , net of $ 3.1 million for the year ended january 31 , 2021 increased expenses as compared to other income , net of $ 0.2 million during the prior fiscal year , was primarily due to a $ 2.0 million impairment charge incurred in the first quarter of fiscal 2021 to write off our investment in equity securities of a privately held company and a $ 1.1 million loss on the disposal of facility lease related fixed assets . provision for income taxes years ended january 31 , change 2021 2020 amount % ( in thousands , except percentages ) provision for income taxes $ 7,346 $ 8,700 $ ( 1,354 ) ( 16 ) % the decrease in provision for income taxes for t he year ended january 31 , 2021 , as compared to the prior fiscal year , was primari ly due to lower foreign income taxes partially offset by higher withholding taxes on international sales . seaso nality we have seasonal and end-of-quarter concentration of our sales , which impacts our ability to plan and manage cash flows and margins . our sales vary by season with the fourth quarter typically being our strongest sales quarter , 40 and the first quarter typically being our largest collections and operating cash flow quarter . in addition , within each quarter , most sales occur in the last month of that quarter . liquidity and capital resources as of january 31 , 2021 , our principal sources of liquidity were cash , cash equivalents and marketable securities totaling $ 769.7 million which are held for working capital purposes . our cash equivalents are comprised primarily of money market funds and our marketable securities are comprised of corporate notes and obligations , u.s. agency obligations , certificates of deposit , commercial paper , municipal securities , u.s. treasury securities and asset-backed securities . to date , our principal sources of liquidity has been payments received from customers in addition to amounts raised in our debt and equity offerings .
| results of operations revenue replace_table_token_4_th the increase in subscription revenue for the year ended january 31 , 2021 , as compared to the prior fiscal year , was primarily attributable to an increase in subscription sales to existing customers and the remainder driven by new customers , with international customers expanding faster than our u.s. customers . the decrease in services revenue for the year ended january 31 , 2021 , as compared to the prior fiscal year , was primarily attributable to lower services demand partially as a result of covid-19 related customer budget restrictions as well as covid-19 related limitations for on-site service delivery . 37 cost of revenue , gross profit and gross margin replace_table_token_5_th the decrease in cost of revenue for subscription during the year ended january 31 , 2021 , as compared to the prior fiscal year , was primarily due to an increased portion of our support resources employed outside of the united states resulting in a decrease of $ 6.8 mi llion in payroll and payroll related costs including salaries , stock-based compensation , and retention bonuses . facility costs also decreased by $ 2.4 million due mainly to lower office lease allocations . the decrease in cost of revenue for services during the year ended january 31 , 2021 , as compared to the prior fiscal year , was primarily due to a decrease o f $ 17.4 million in payroll and payroll related costs including salaries , stock-based compensation , retention bonuses , payroll taxes and benefits . cost related to use of third-party contractor services and travel also declined by $ 6.6 million and $ 6.3 million , respectively .
| 2,682 |
our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain risks and uncertainties , including those set forth under the heading โ risk factors โ and elsewhere in this report . โ overview โ our company is a value added it distribution and solutions company , primarily selling software and other third-party it products and services through two reportable operating segments . through our โ distribution โ segment we sell products and services to corporate resellers , value added resellers ( vars ) , consultants and systems integrators worldwide , who in turn sell these products to end users . through our โ solutions โ segment we act as a cloud solutions provider and value-added reseller , selling computer software and hardware developed by others and provide technical services directly to end user customers worldwide . we offer an extensive line of products from leading software vendors and tools for virtualization/cloud computing , security , networking , storage and infrastructure management , application lifecycle management and other technically sophisticated domains as well as computer hardware . we market these products through creative marketing communications , including our web sites , local and on-line seminars , webinars , social media , direct e-mail , and printed materials . โ we have subsidiaries in the united states , canada , netherlands , united kingdom and ireland , through which sales are made . โ covid-19 โ we are closely monitoring the impact of the covid-19 pandemic on all aspects of our business . covid-19 has resulted and will continue to result in significant economic disruption , which could also impact our business . โ in the first quarter of 2020 , we took a number of precautionary measures designed to help minimize the risk of the spread of the virus to our employees , including temporarily closing our offices and requiring all employees to work remotely . the majority of our employees continue to work remotely through the first quarter of 2021 . โ while we did not incur significant disruptions to our operations during the year ended december 31 , 2020 as a result of the covid-19 pandemic , we are unable to predict the impact that the covid-19 pandemic will have on our business , liquidity or results of operations at this time . โ this situation is changing rapidly , and additional impacts may arise that we are not aware of currently . we will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal , state or local authorities or that we determine are in the best interests of our employees , customers and shareholders . โ story_separator_special_tag $ 1.01 for the year ended december 31 , 2020 compared to $ 1.51 for the same period in 2019 . โ critical accounting policies and estimates โ management 's discussion and analysis of the company 's financial condition and results of operations are based upon the company 's consolidated financial statements that have been prepared in accordance with generally accepted accounting principles in the united states of america ( โ us gaap โ ) . the preparation of these financial statements requires the company to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . โ on an on-going basis , the company evaluates its estimates , including those related to product returns , bad debts , inventories , investments , intangible assets , income taxes , stock-based compensation , contingencies and litigation . โ the company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates . โ the company believes the following critical accounting policies used in the preparation of its consolidated financial statements affect its more significant judgments and estimates . โ revenue โ the company utilizes judgment regarding performance obligations inherent in the products for services it sells including , whether ongoing maintenance obligations performed by third party vendors are distinct from the related software licenses , and allocation of sales prices among distinct performance obligations . these estimates require significant judgment to determine whether the software 's functionality is dependent on ongoing maintenance or if substantially all functionality is available in the original software download . we also use judgment in the allocation of sales proceeds among performance obligations , utilizing observable data such as stand-alone selling prices , or market pricing for similar products and services . โ allowance for accounts receivable โ the company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments . management determines the estimate of the allowance for uncollectible accounts receivable by considering a number of factors , including historical experience , aging of the accounts receivable , and specific information obtained by the company on the financial condition and the current creditworthiness of its customers . if the financial condition of the company 's customers were to deteriorate , resulting in an impairment of their ability to make payments , additional allowances may be required . at the time of sale , we record an estimate for sales returns based on historical experience . if actual sales returns are greater than estimated by management , additional expense may be incurred . 20 โ accounts receivable โ long term โ the company 's accounts receivable long-term are discounted to their present value at prevailing market rates at the time of sale . in doing so , the company considers competitive market rates and other relevant factors . story_separator_special_tag the company does not enter into foreign exchange contracts for trading purposes and the risk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties , which the company minimizes by limiting its counterparties to major financial institutions . the fair value of forward purchase contracts at december 31 , 2020 was not material to the consolidated financial statements . โ recently issued accounting pronouncements โ in june 2016 , the fasb issued accounting standards update no . 2016-13 , โ financial instruments - credit losses ( topic 326 ) โ ( `` asu 2016-13 '' ) . asu 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded . originally , asu 2016-13 was effective for fiscal years , and for interim periods within those fiscal years , beginning after december 15 , 2019 , with early adoption permitted . in november 2019 , fasb issued asu 2019-10 , โ financial instruments โ credit losses ( topic 326 ) , derivatives and hedging ( topic 815 ) , and leases ( topic 842 ) . โ this asu defers the effective date of asu 2016-13 for public companies that are considered smaller reporting companies as defined by the sec to fiscal years beginning after december 15 , 2022 , including interim periods within those fiscal years . the company is planning to adopt this standard in the first quarter of fiscal 2023. the company is currently evaluating the potential effects of adopting the provisions of asu no . 2016-13 on its consolidated financial statements , particularly its recognition of allowances for accounts receivable . in december 2019 , the fasb issued asu 2019-12 , โ income taxes ( topic 740 ) : simplifying the accounting for income taxes โ as part of its initiative to reduce complexity in the accounting standards . the standard eliminates certain exceptions related to the approach for intraperiod tax allocation , the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences . the standard also clarifies and simplifies other aspects of the accounting for income taxes . the standard is effective for fiscal years , and interim periods within those fiscal years , beginning after december 15 , 2020. early adoption is permitted . the company is currently evaluating the impact that this guidance will have upon its financial position and results of operations , if any . 22 โ results of operations โ the following table sets forth for the years indicated the percentage of net sales represented by selected items reflected in the company 's consolidated statements of earnings . the year-to-year comparison of financial results is not necessarily indicative of future results : โ replace_table_token_2_th โ non-gaap financial measures โ our management monitors several financial and non-financial measures and ratios on a regular basis in order to track the progress of our business . we believe that the most important of these measures and ratios include net sales , adjusted gross billings , gross profit , net income , net income excluding separation expenses , net of taxes , adjusted ebitda , gross profit as a percentage of adjusted gross billings and adjusted ebitda as a percentage of gross profit . we use a variety of operating and other information to evaluate the operating performance of our business , develop financial forecasts , make strategic decisions , and prepare and approve annual budgets . these key indicators include financial information that is prepared in accordance with us gaap and presented in our consolidated financial statements as well as non-us gaap performance measurement tools . replace_table_token_3_th โ we define adjusted gross billings as net sales in accordance with us gaap , adjusted for the cost of sales related to software โ security and highly interdependent with support and maintenance , support and other services . we provided a reconciliation of adjusted gross billings to net sales , which is the most directly comparable us gaap measure . we use adjusted gross billings of product and services as a supplemental measure of our performance to gain insight into the volume of business generated by our business , and to analyze the changes to our accounts receivable and accounts payable . our use of adjusted gross billings of product and services as analytical tools has limitations , and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under us gaap . in addition , other 23 companies , including companies in our industry , might calculate adjusted gross billings of product and services or similarly titled measures differently , which may reduce their usefulness as comparative measures . โ replace_table_token_4_th โ we define adjusted ebitda , as net income , plus provision for income taxes , depreciation , amortization , share-based compensation , interest , legal and financial advisory expenses , net โ unsolicited bid and related matters and acquisition related costs . we define effective margin as adjusted ebitda as a percentage of gross profit . we provided a reconciliation of adjusted ebitda to net income , which is the most directly comparable us gaap measure . we use adjusted ebitda as a supplemental measure of our performance to gain insight into our businesses profitability when compared to the prior year and our competitors . adjusted ebitda is also a component to our financial covenants in our credit facility . our use of adjusted ebitda has limitations , and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under us gaap . in addition , other companies , including companies in our industry , might calculate adjusted ebitda , or similarly titled measures differently , which may reduce their usefulness as comparative measures . โ key financial metrics replace_table_token_5_th โ we consider gross profit growth and effective margin to be key metrics in evaluating our business .
| factors influencing our financial results โ we derive most of our net sales though the sale of third-party software licenses , maintenance and service agreements . in our distribution segment , sales are impacted by the number of product lines we distribute , and sales penetration of those products into the reseller channel , product lifecycle competitive , and demand characteristics of the products which we are authorized to distribute . in our solutions segment sales are generally driven by sales force effectiveness and success in providing superior customer service and cloud solutions support , competitive pricing , and flexible payment solutions to our customers . our sales are also impacted by external factors such as levels of it spending and customer demand for products we distribute . 18 โ we sell in a competitive environment where gross product margins have historically declined due to competition and changes in product mix towards products where no delivery of a physical product is required . in addition , we grant discounts , allowances , and rebates to certain customers , which may vary from period to period , based on volume , payment terms and other criteria . to date , we have been able to implement cost efficiencies such as the use of drop shipments , electronic ordering ( โ edi โ ) and other capabilities to be able to operate our business profitably as gross margins have declined . we evaluate the profitability of our business based on return on equity and effective margin ( see management 's discussion and analysis below ) . โ gross profit is calculated as net sales less cost of sales . we record customer rebates and discounts as a component of net sales and record vendor rebates and discounts as a component of cost of sales .
| 2,683 |
a summary of the fair value of the contingent consideration liability , including non-current and current amounts , is as follows ( in thousands ) : replace_table_token_61_th other non-current liabilities amounts included in other non-current liabilities primarily consist of deferred rent related to our operating lease agreements as discussed below , deferred compensation as discussed above , and an environmental remediation reserve as discussed in note 6. leases in the ordinary course of business we enter into lease agreements for retail , restaurant , office and warehouse/distribution space , as well as leases for certain equipment . the leases have varying terms and expirations and frequently have provisions to extend , renew or terminate the lease agreement , among other terms and conditions , as negotiated story_separator_special_tag the following discussion and analysis of our operations , cash flows , liquidity and capital resources should be read in conjunction with our consolidated financial statements contained in this report . overview we generate revenues and cash flow primarily through our design , sourcing , marketing and distribution of branded apparel products bearing the trademarks of our owned lifestyle brands , as well as certain licensed and private label apparel products . we distribute our products through our direct to consumer channels , including our retail stores , e-commerce sites and restaurants , and our wholesale distribution channel , which includes better department stores , specialty stores , national chains , 36 specialty catalogs , mass merchants , warehouse clubs and internet retailers . in fiscal 2013 , more than 90 % of our consolidated net sales were to customers located in the united states , with the sales outside the united states primarily being sales of our ben sherman products in the united kingdom and europe as well as sales of our tommy bahama product in the asia-pacific region and canada . we source substantially all of our products through third party manufacturers located outside of the united states . our business strategy is to develop and market compelling lifestyle brands and products that evoke a strong emotional response from our target consumers . we strive to exploit the potential of our existing brands and products and , as suitable opportunities arise , we may acquire additional lifestyle brands that we believe fit within our business model . we believe that lifestyle branded products that create an emotional connection with consumers can command greater customer loyalty and higher price points at retail , resulting in higher earnings . we also believe a successful lifestyle brand opens up greater opportunities for direct to consumer operations as well as licensing opportunities in product categories beyond our core business . we operate in highly competitive domestic and international markets in which numerous u.s.-based and foreign apparel firms compete . no single apparel firm or small group of apparel firms dominates the apparel industry and our direct competitors vary by operating group and distribution channel . we believe that the principal competitive factors in the apparel industry are the reputation , value and image of brand names ; design ; consumer preference ; price ; quality ; marketing ; and customer service . we believe that our ability to compete successfully in styling and marketing is directly related to our proficiency in foreseeing changes and trends in fashion and consumer preference , and presenting appealing products for consumers . in some instances , a retailer that is our customer may compete directly with us by offering certain of its own competing products in its own retail stores . additionally , the apparel industry is cyclical and dependent upon the overall level of discretionary consumer spending , which changes as regional , domestic and international economic conditions change . often , negative economic conditions have a longer and more severe impact on the apparel and retail industry than these conditions have on other industries . we believe the global economic conditions and resulting economic uncertainty that have prevailed in recent years continue to impact each of our operating groups , and the apparel industry as a whole . although some signs of economic improvements exist , the retail environment remains very promotional and economic uncertainty remains . we anticipate that sales of our products may continue to be negatively impacted as long as there is an elevated level of economic uncertainty in geographies in which we operate . additionally , we have been impacted in recent years by pricing pressures on raw materials , fuel , transportation , labor and other costs necessary for the production and sourcing of apparel products , which continued in fiscal 2013 . we believe that our tommy bahama and lilly pulitzer lifestyle brands have significant opportunities for long-term growth in their direct to consumer businesses through expansion of our retail store operations , as we add additional retail store locations , and increases in same store and e-commerce sales , with e-commerce likely to grow at a faster rate than retail store operations . we also believe that these lifestyle brands provide an opportunity for moderate sales increases in their wholesale businesses in the long-term primarily from our current customers adding to their existing door count and the selective addition of new wholesale customers who generally follow a full-price retail model . we believe that we must continue to invest in our tommy bahama and lilly pulitzer lifestyle brands in order to take advantage of their long-term growth opportunities . investments include capital expenditures primarily related to the direct to consumer operations such as retail store build-out and distribution center and technology enhancements as well as increased employment , advertising and other costs in key functions to provide future net sales growth and support the ongoing business operations . we expect that the investments will continue to put downward pressure on our operating margins in the near future until we have sufficient sales to leverage the operating costs . story_separator_special_tag lilly pulitzer products can be found in our owned lilly pulitzer stores , in lilly pulitzer signature stores and on our lilly pulitzer website , lillypulitzer.com , as well as in better department stores and independent specialty stores . we also license the lilly pulitzer name for various product categories . lanier clothes designs , sources and markets branded and private label men 's tailored clothing , including suits , sportcoats , suit separates and dress slacks across a wide range of price points , with the majority of the business at moderate price points . the majority of our lanier clothes branded products are sold under certain trademarks licensed to us by third parties . licensed brands include kenneth cole , dockers , geoffrey beene and ike behar . additionally , we design and market products for our owned billy london , arnold brant and oxford republic brands . in addition to the branded businesses , lanier clothes designs and sources private label tailored clothing products for certain customers . our lanier clothes products are sold to national chains , department stores , specialty stores , specialty catalog retailers , warehouse clubs and discount retailers throughout the united states . ben sherman is a london-based designer , marketer and distributor of men 's branded sportswear and related products . ben sherman was established in 1963 as an edgy shirt brand that was adopted by the `` mods '' and has throughout its history been inspired by what is new and current in british art , music , culture and style . the brand has evolved into a british lifestyle brand of apparel targeted at style conscious men ages 25 to 40 in markets throughout the world . ben sherman products can be found in better department stores , a variety of independent specialty stores and our owned and licensed ben sherman retail stores , as well as on ben sherman e-commerce websites . we also license the ben sherman name for various product categories . corporate and other is a reconciling category for reporting purposes and includes our corporate offices , substantially all financing activities , elimination of inter-segment sales , lifo inventory accounting adjustments , other costs that are not allocated to the operating groups and operations of our other businesses which are not included in our four operating groups , including our oxford golf and lyons , georgia distribution center operations . lifo inventory calculations are made on a legal entity basis which does not correspond to our operating group definitions ; therefore , lifo inventory accounting adjustments are not allocated to operating groups . for further information regarding our operating groups , see note 10 to our consolidated financial statements and part i , item 1 , business , both included in this report . comparable store sales we often disclose comparable store sales in order to provide additional information regarding changes in our results of operations between periods . our disclosures of comparable store sales include net sales from full-price stores and our e-commerce sites , excluding sales associated with e-commerce flash clearance sales . we believe that given the similar nature and process of inventory planning , allocation and return policy , as well as our cross-channel marketing and other initiatives , for the direct to consumer channel , the inclusion of our e-commerce sites in the comparable store sales disclosures is a more meaningful way of reporting our comparable store sales results . for our comparable store sales disclosures , we exclude ( 1 ) outlet store sales , warehouse sales and amounts related to e-commerce flash clearance sales , as those sales are used primarily to liquidate end of season inventory , which may vary significantly depending on the level of end of season inventory on hand and generally occurs at lower gross margins than our full-price direct to consumer sales and ( 2 ) restaurant sales as we do not believe that the inclusion of restaurant sales is meaningful in assessing our consolidated results of operations . comparable store sales information , which reflects net sales , includes shipping and handling revenues , if any , associated with product sales . 39 for purposes of our disclosures , we consider a comparable store to be , in addition to our e-commerce sites , a physical full-price retail store that was owned and open as of the beginning of the prior fiscal year and which did not during the relevant periods , and is not within the current fiscal year scheduled to , have ( 1 ) a remodel resulting in the store being closed for an extended period of time ( which we define as a period of two weeks or longer ) , ( 2 ) a greater than 15 % change in the size of the retail space due to expansion , reduction or relocation to a new retail space , ( 3 ) a relocation to a new space that was significantly different from the prior retail space , or ( 4 ) a closing or opening of a tommy bahama restaurant adjacent to the retail store . for those stores which are excluded from comparable stores based on the preceding sentence , the stores continue to be excluded from comparable store sales until the criteria for a new store is met subsequent to the remodel , relocation or restaurant closing or opening . generally , a store that is remodeled will continue to be included in our comparable store metrics as a store is not typically closed for a two week period during a remodel . however , a store that is relocated generally will not be included in our comparable store metrics until that store has been open in the relocated space for the entirety of the prior fiscal year as the size or other characteristics of the store typically change significantly from the prior location .
| results of operations the following table sets forth the specified line items in our consolidated statements of earnings both in dollars ( in thousands ) and as a percentage of net sales . we have calculated all percentages based on actual data , but percentage columns may not add due to rounding . replace_table_token_20_th fiscal 2013 compared to fiscal 2012 the discussion and tables below compare certain line items included in our statements of earnings for fiscal 2013 , which included 52 weeks , to fiscal 2012 , which included 53 weeks . each dollar and percentage change provided reflects the change between these periods unless indicated otherwise . each dollar and share amount included in the tables is in thousands except for per share amounts . individual line items of our consolidated statements of earnings may not be directly comparable to those of our competitors , as classification of certain expenses may vary by company . net sales 40 replace_table_token_21_th consolidated net sales increased $ 61.6 million , or 7.2 % , in fiscal 2013 compared to fiscal 2012 primarily due to the net sales increases at tommy bahama and lilly pulitzer , which were partially offset by decreased net sales at ben sherman , each as discussed below .
| 2,684 |
under the terms of the agreement , the company would not be reimbursed by the city for any remediation cost above the currently estimated cleanup cost of approximately $ 2.6 million . during the second quarter of 2012 , the company entered into a second agreement with the city to complete a remediation in accordance with a remediation plan on environmentally contaminated story_separator_special_tag forward-looking statements in this form 10-k and in other documents incorporated herein , as well as in oral statements made by the company , statements that are prefaced with the words ยmay , ย ยwill , ย ยexpect , ย ยanticipate , ย ยcontinue , ย ยestimate , ย ยproject , ย ยintend , ย ยdesigned , ย and similar expressions , are intended to identify forward-looking statements regarding events , conditions , and financial trends that may affect the company 's future plans of operations , business strategy , results of operations , and financial position . these statements are based on the company 's current expectations and estimates as to prospective events and circumstances about which the company can give no firm assurance . further , any forward-looking statement speaks only as of the date on which such statement is made , and the company undertakes no obligation to update any forward-looking statement to reflect future events or circumstances . forward-looking statements should not be relied upon as a prediction of actual future financial condition or results . these forward-looking statements , like any forward-looking statements , involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated . such risks and uncertainties include the factors set forth above and the other information set forth in this form 10-k. 21 introduction the boston beer company is engaged in the business of producing and selling alcohol beverages primarily in the domestic market and , to a lesser extent , in selected international markets . the company 's revenues are derived by selling its beers and ciders to distributors , who in turn sell the products to retailers and drinkers . the company 's beers compete primarily in the better beer category , which includes imported beers and craft beers . this category has seen high single-digit compounded annual growth over the past ten years . defining factors for better beer include superior quality , image and taste , supported by appropriate pricing . the company believes that the better beer category is positioned to increase market share as drinkers continue to trade up in taste and quality . the company estimates that in 2013 the craft beer category grew approximately 15 % , while the better beer category was up approximately 8 % , while the total beer category was down approximately 1 % . the company believes that the better beer category is approximately 24 % of united states beer consumption by volume . the company believes that significant opportunity to gain market share continues to exist for the better beer category . depletions of the company 's beers and ciders , or distributor sales to retailers , increased approximately 23 % in 2013 from the comparable 52 week period in the prior year . outlook year-to-date depletions reported to the company for the 7 weeks ended february 15 , 2014 are estimated by the company to be up approximately 35 % from the comparable period in 2013. the company is targeting earnings per diluted share for 2014 of between $ 6.00 and $ 6.40 , but actual results could vary significantly from this target . the company is currently planning that 2014 depletions and shipments growth will be between 16 % and 20 % . the company is targeting national price increases of approximately 2 % to offset anticipated upward pressures on ingredients , packaging and freight costs , as well as increased investments behind the company 's brands . full-year 2014 gross margins are currently expected to be between 51 % and 53 % . the company intends to increase advertising , promotional and selling expenses by between $ 34 million and $ 42 million for the full year 2014 , which does not include any increases in freight costs for the shipment of products to its distributors . the company estimates increased investments of between $ 5 million and $ 7 million in existing brands developed by alchemy & science , which are included in our full year estimated increases in advertising , promotional and selling expenses . brand investments in the alchemy & science brands could vary significantly from current estimates . the company intends to increase its investment in its brands in 2014 commensurate with the opportunities for growth that it sees , but there is no guarantee that such increased investments will result in increased volumes . the company estimates a full-year 2014 effective tax rate of approximately 38 % . the company is continuing to evaluate 2014 capital expenditures . its current estimates are between $ 160 million and $ 220 million , consisting mostly of continued investments in the company 's breweries , as well additional keg purchases in support of growth . these estimates include capital investments for existing alchemy & science projects of between $ 7 million and $ 9 million . the actual total amount spent on 2014 capital expenditures may well be different from these estimates . based on information currently available , the company believes that its capacity requirements for 2014 can be covered by its company-owned breweries and existing contracted capacity at third-party brewers . story_separator_special_tag included in advertising , promotional and selling expenses and general and administrative expenses . stock compensation increased by $ 790,000 in 2013 compared to 2012 , primarily due to increased fair value of options and awards granted during 2013 . 24 provision for income taxes . the company 's effective tax rate for the year ended december 28 , 2013 of 37.5 % decreased from the year ended december 29 , 2012 rate of approximately 37.7 % . story_separator_special_tag general and administrative expenses increased by $ 6.7 million , or 15.4 % , to $ 50.2 million in 2012 as compared to 2011 , driven by increases in salary and benefit costs and alchemy & science startup costs . impairment of long-lived assets . during 2012 , the company incurred impairment charges of $ 149,000 based upon its review of the carrying values of its property , plant and equipment , compared to $ 666,000 of impairment charges in 2011. stock-based compensation expense . for the year ended december 29 , 2012 , an aggregate of $ 6.5 million in stock-based compensation expense is included in advertising , promotional and selling expenses and general and administrative expenses . stock compensation increased by $ 0.3 million in 2012 compared to 2011 , primarily due to increased fair value of options and awards granted during 2012. provision for income taxes . the company 's effective income tax rate for the year ended december 29 , 2012 increased to 37.7 % from the 2011 rate of 36.2 % . this increase in the effective tax rate is primarily due to the favorable state tax settlement in 2011 and higher pre-tax income in 2011 with no corresponding increase in non-deductible expenses . liquidity and capital resources cash decreased to $ 49.5 million as of december 28 , 2013 from $ 74.5 million as of december 29 , 2012 , reflecting purchases of property , plant and equipment and repurchases of class a common stock that were only partially offset by cash provided by operating activities . cash provided by or used in operating activities consists of net income , adjusted for certain non-cash items , such as depreciation and amortization , stock-based compensation expense and related excess tax benefit , other non-cash items included in operating results , and changes in operating assets and liabilities , such as accounts receivable , inventory , accounts payable and accrued expenses . cash provided by operating activities in 2013 was $ 100.0 million and primarily consisted of net income of $ 70.4 million and non-cash items of $ 41.6 million , partially offset by a net increase in operating assets and liabilities of $ 12.0 million . the company 's inventories have increased at a rate higher than revenue growth primarily due to increases in finished goods and raw materials . the company 's accounts receivable have increased at a rate higher than its net revenue growth primarily due to increased international accounts receivable . cash provided by operating activities in 2012 totaled $ 95.3 million and primarily consisted of net income of $ 59.5 million , and non-cash items of $ 21.2 million , and a net decrease in operating assets and liabilities of $ 14.7 million . the company used $ 103.3 million in investing activities during 2013 , as compared to $ 67.3 million during 2012. investing activities primarily consisted of discretionary equipment purchases to increase capacity of the company-owned breweries and the purchase of additional kegs . 26 cash used in financing activities was $ 21.6 million during 2013 , as compared to $ 3.0 million during 2012. the $ 18.6 million difference in financing cash flow in 2013 from 2012 is primarily due an increase in stock repurchases under the company 's stock repurchase program and a decrease in proceeds from the exercise of stock options and the related tax benefits . during the year ended december 28 , 2013 , the company repurchased approximately 196,000 shares of its class a common stock for an aggregate purchase price of $ 29.6 million . on may 29 , 2013 , the board of directors approved an increase of $ 25.0 million to the previously approved $ 300.0 million share buyback expenditure limit , for a new limit of $ 325.0 million . as of december 28 , 2013 , the company had repurchased a cumulative total of approximately 10.9 million shares of its class a common stock for an aggregate purchase price of $ 299.5 million and had approximately $ 25.5 million remaining on the $ 325 million stock repurchase expenditure limit set by the board of directors . from december 29 , 2013 through february 21 , 2014 , the company did not repurchase any additional shares of its class a common stock . the company expects that its cash balance as of december 28 , 2013 of $ 49.5 million , along with future operating cash flow and the company 's unused line of credit of $ 150.0 million , will be sufficient to fund future cash requirements . during january 2014 , the company amended its line of credit to increase the amount available from $ 50 million to $ 150 million and extended the scheduled expiration date to march 31 , 2019. the amended line of credit has terms and covenants similar to the previous line of credit . as of the date of this filing , the company was not in violation of any of its covenants to the lender under the credit facility and there were no amounts outstanding under the credit facility . critical accounting policies the discussion and analysis of the company 's financial condition and results of operations is based upon its consolidated financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles . the preparation of these financial statements requires the company to make significant estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . these items are monitored and analyzed by management for changes in facts and circumstances , and material changes in these estimates could occur in the future . the more judgmental estimates are summarized below . changes in estimates are recorded in the period in which they become known . the company bases its estimates on historical experience and various other assumptions that the company believes to be reasonable under the circumstances .
| results of operations boston beer 's flagship product is samuel adams boston lager . for purposes of this discussion , boston beer 's ยcore brandsย or ยcore productsย include all products sold under the samuel adams , twisted tea , angry orchard and various alchemy & science trade names . ยcore productsย do not include the products brewed or packaged at the company 's brewery in cincinnati , ohio ( the ยcincinnati breweryย ) under a contract arrangement for a third party . sales of such products are not significant to the company 's net revenues . 22 the following table sets forth certain items included in the company 's consolidated statements of income as a percentage of net revenue : replace_table_token_5_th year ended december 28 , 2013 ( 52 weeks ) compared to year ended december 29 , 2012 ( 52 weeks ) fiscal periods . the 2013 and 2012 fiscal years consisted of 52 weeks as compared to 53 weeks in fiscal 2011. net revenue . net revenue increased by $ 158.9 million , or 27.4 % , to $ 739.1 million for the year ended december 28 , 2013 , as compared to $ 580.2 million for the year ended december 29 , 2012 , due primarily to increased shipments . volume . total shipment volume of 3,416,000 barrels for the year ended december 28 , 2013 includes shipments of core brands of 3,403,000 barrels and other shipments of 13,000 barrels . shipment volume for core brands increased by 24.8 % over comparable 2012 levels to 3,403,000 barrels , due primarily to increases in shipments of angry orchard , samuel adams and twisted tea brand products . depletions , or sales by distributors to retailers , of the company 's core products for the year ended december 28 , 2013 increased by approximately 23 % compared to the prior year , primarily due to increases in depletions of angry orchard , twisted tea and samuel adams brand products . net revenue per barrel .
| 2,685 |
this guidance simplifies how an entity is required to test goodwill for impairment by eliminating step 2 from the goodwill impairment test . instead , if the carrying amount of a reporting unit exceeds its fair value , an impairment loss will be recognized story_separator_special_tag the following discussion should be read in conjunction with the consolidated financial statements and the related notes that appear elsewhere in this document . overview we develop and manufacture a broad line of pre-programmed universal remote control products , av accessories , software and intelligent wireless automation components dedicated to redefining the home entertainment and automation experience . our customers operate primarily in the consumer electronics market and include subscription broadcasters , oems , international retailers , private label brands , pro-security installers and companies in the computing industry . we also sell integrated circuits , on which our software and device control database is embedded , and license our device control database to oems that manufacture televisions , digital audio and video players , streamer boxes , cable converters , satellite receivers , set-top boxes , room air conditioning equipment , game consoles , and wireless mobile phones and tablets . since our beginning in 1986 , we have compiled an extensive device control database that covers nearly one million individual device functions and approximately 7,900 unique consumer electronic brands . quicksetยฎ , our proprietary software , can automatically detect , identify and enable the appropriate control commands for home entertainment , automation and appliances like air conditioners . our library is regularly updated with new control functions captured directly from devices , remote controls and manufacturer specifications to ensure the accuracy and integrity of our database and control engine . our universal remote control library contains device codes that are capable of controlling virtually all set-top boxes , televisions , audio components , dvd players , blu-ray players , and cd players , as well as most other remote controlled home entertainment devices and home automation control modules worldwide . with the wider adoption of more advanced control technologies , emerging rf technologies , such as rf4ce , bluetooth , and bluetooth smart have increasingly become a focus in our development efforts . several new recently released platforms utilize rf to effectively implement popular features like voice search . we operate as one business segment . we have 23 international subsidiaries located in argentina , brazil , british virgin islands , cayman islands , france , germany , hong kong ( 3 ) , india , italy , japan , mexico , the netherlands , people 's republic of china ( 6 ) , singapore , spain and the united kingdom . to recap our results for 2016 : net sales increased 8.1 % to $ 651.4 million in 2016 from $ 602.8 million in 2015 . our gross margin percentage decreased from 27.7 % in 2015 to 25.2 % in 2016 . operating expenses , as a percent of sales , decreased from 21.8 % in 2015 to 21.3 % in 2016 operating income decreased 29.3 % to $ 25.4 million in 2016 from $ 35.9 million in 2015 , and our operating margin percentage decreased to 3.9 % in 2016 , compared to 5.9 % in 2015 . our effective tax rate increased to 19.1 % in 2016 from 18.9 % in 2015 . our strategic business objectives for 2017 include the following : continue to develop and market the advanced remote control products and technologies our customer base is adopting ; continue to broaden our home control and automation product offerings ; further penetrate international subscription broadcasting markets ; acquire new customers in historically strong regions ; increase our share with existing customers ; and continue to seek acquisitions or strategic partners that complement and strengthen our existing business . we intend for the following discussion of our financial condition and results of operations to provide information that will assist in understanding our consolidated financial statements , the changes in certain key items in those financial statements from period to period , and the primary factors that accounted for those changes , as well as how certain accounting principles , policies and estimates affect our consolidated financial statements . 26 critical accounting policies and estimates the preparation of financial statements in conformity with gaap requires us to make estimates and judgments that affect the reported amounts of assets and liabilities , disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . on an on-going basis , we evaluate our estimates and judgments , including those related to revenue recognition , allowances for sales returns and doubtful accounts , inventory valuation , our review for impairment of long-lived assets , intangible assets and goodwill , business combinations , income taxes , stock-based compensation expense and performance-based common stock warrants . actual results may differ from these judgments and estimates , and they may be adjusted as more information becomes available . any adjustment may be significant and may have a material impact on our consolidated financial position or results of operations . an accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made , if different estimates reasonably may have been used , or if changes in the estimate that are reasonably likely to occur may materially impact the financial statements . management believes the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements . in addition to the accounting policies mentioned below , see `` item 8. financial statements and supplementary data โ notes to consolidated financial statements โ note 2 '' for other significant accounting policies . story_separator_special_tag fair value is estimated utilizing the asset 's projected discounted future cash flows . in assessing fair value , we must make assumptions regarding estimated future cash flows , the discount rate and other factors . goodwill we evaluate the carrying value of goodwill on december 31 of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount . such circumstances may include , but are not limited to : ( 1 ) a significant adverse change in legal factors or in business climate , ( 2 ) unanticipated competition or ( 3 ) an adverse action or assessment by a regulator . to evaluate whether goodwill is impaired , we conduct a two-step quantitative goodwill impairment test . in the first step we compare the estimated fair value of our single reporting unit to the reporting unit 's carrying amount , including goodwill . we estimate the fair value of our reporting unit based on income and market approaches . under the income approach , we calculate the fair value based on the present value of estimated future cash flows . under the market approach , we estimate the fair value based on market multiples of enterprise value to ebitda for comparable companies . if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit , then we perform the second step of the impairment test in order to determine the implied fair value of the reporting unit 's goodwill . to calculate the implied fair value of the reporting unit 's goodwill , the fair value of the reporting unit is first allocated to all of the other assets and liabilities of that unit based on their fair values . the excess of the reporting unit 's fair value over the amount assigned to its other assets and liabilities is the implied fair value of goodwill . an impairment loss would be recognized equal to the amount by which the carrying value of goodwill exceeds its implied fair value . determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions . these estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows , risk-adjusted discount rates , future economic and market conditions and the determination of appropriate market comparables . in addition , we make certain judgments and assumptions in determining our reporting units . we base our fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain . actual future results may differ from those estimates . business combinations we allocate the purchase price of acquired businesses to the tangible and intangible assets and the liabilities assumed based on their estimated fair values on the acquisition date . the excess of the purchase price over the fair value of net assets acquired is recorded as goodwill . we engage independent third-party appraisal firms to assist us in determining the fair values of assets 28 acquired and liabilities assumed . such valuations require management to make significant fair value estimates and assumptions , especially with respect to intangible assets and contingent consideration . management estimates the fair value of certain intangible assets and contingent consideration by utilizing the following ( but not limited to ) : future cash flow from customer contracts , customer lists , distribution agreements , acquired developed technologies , trademarks , trade names and patents ; expected costs to complete development of in-process technology into commercially viable products and cash flows from the products once they are completed ; brand awareness and market position as well as assumptions regarding the period of time the brand will continue to be used in our product portfolio ; and discount rates utilized in discounted cash flow models . in those circumstances where an acquisition involves a contingent consideration arrangement , we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date . we re-measure this liability at each reporting period and record changes in the fair value within operating expenses . increases or decreases in the fair value of the contingent consideration liability can result from changes in discount periods and rates , as well as changes in the timing and amount of earnings estimates or in the timing or likelihood of achieving earnings-based milestones . our estimates are based upon assumptions believed to be reasonable ; however , unanticipated events or circumstances may occur which may affect the accuracy of our fair value estimates , including assumptions regarding industry economic factors and business strategies . results of operations and cash flows of acquired businesses are included in our operating results from the date of acquisition . income taxes we calculate our current and deferred tax provisions based on estimates and assumptions that may differ from the actual results reflected in our income tax returns filed during the subsequent year . we record adjustments based on filed returns when we have identified and finalized them , which is in the third and fourth quarters of the subsequent year for u.s. federal and state provisions , respectively . we recognize deferred tax assets and liabilities for the expected tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts using enacted tax rates in effect for the year in which we expect the differences to reverse . we record a valuation allowance to reduce the deferred tax assets to the amount that we are more likely than not to realize . we have considered future market growth , forecasted earnings , future taxable income , the mix of earnings in the jurisdictions in which we operate and prudent tax planning strategies in determining the need for a valuation allowance .
| results of operations the following table sets forth our results of operations expressed as a percentage of net sales for the periods indicated . replace_table_token_6_th year ended december 31 , 2016 ( `` 2016 `` ) compared to year ended december 31 , 2015 ( `` 2015 `` ) net sales . net sales for 2016 were $ 651.4 million , an increase of 8.1 % compared to $ 602.8 million in 2015 . net sales by our business and consumer lines were as follows : replace_table_token_7_th net sales in our business lines ( subscription broadcasting , oem , and computing companies ) were 92.4 % of net sales in 2016 compared to 91.4 % in 2015 . net sales in our business lines in 2016 increased by 9.2 % to $ 601.7 million from $ 551.0 million in 2015 driven by an increased demand in both the subscription broadcasting and oem markets for our advanced products which include features such as voice control and two-way rf technologies . net sales in our consumer lines ( one for all ยฎ retail and private label ) were 7.6 % of net sales in 2016 compared to 8.6 % in 2015 . net sales in our consumer lines in 2016 decreased by 4.1 % to $ 49.7 million from $ 51.8 million in 2015 . this decrease was driven primarily by the weakening of the british pound compared to the u.s. dollar , which negatively impacted sales in the current year by $ 2.4 million . gross profit . gross profit in 2016 was $ 164.1 million compared to $ 166.7 million in 2015 . gross profit as a percent of sales decreased to 25.2 % in 2016 from 27.7 % in 2015 . the gross margin percentage was unfavorably impacted in 2016 by an increase in sales to certain large customers that yield a lower gross margin rate than our company average .
| 2,686 |
during the three months ended march 31 , 2016 , xcoal energy & resources and voestelpine accounted for $ 10.7 million , or 16.4 % and $ 8.3 million , or 12.8 % of total revenues , respectively . credit is extended based on an evaluation of the individual customer 's financial condition . in some instances , the company requires letters of credit , cash collateral or prepayments from its customers on or before shipment to story_separator_special_tag the following discussion and analysis provides a narrative of our results of operations and financial condition for the years ended december 31 , 2018 and december 31 , 2017 , the nine months ended december 31 , 2016 , and the three months ended march 31 , 2016 ( predecessor ) . you should read the following discussion and analysis of our financial condition and results of operations together with our audited financial statements and related notes appearing elsewhere in this annual report . some of the information contained in this discussion and analysis or set forth elsewhere in this annual report , including information with respect to our plans and strategy for our business and related financing , includes forward โ looking statements that involve risks and uncertainties . as a result of many factors , including those factors set forth in โ part i , item 1a . risk factors , โ our actual results could differ materially from the results described in , or implied by , the forward โ looking statements contained in the following discussion and analysis . please see โ forward-looking statements . โ overview we are a large scale , low cost u.s.-based producer and exporter of premium met coal operating two highly productive underground mines in alabama . as of december 31 , 2018 , mine no . 4 and mine no . 7 , our two operating mines , had approximately 108.3 million metric tons of recoverable reserves and our undeveloped blue creek energy mine contained 103.0 million metric tons of recoverable reserves . as a result of our high quality coal , our realized price has historically been in line with , or at a slight discount to , the platts index . our hcc , mined from the southern appalachian portion of the blue creek coal seam , is characterized by low sulfur , low-to-medium ash , and lv to mv . these qualities make our coal ideally suited as a coking coal for the manufacture of steel . we sell substantially all of our met coal production to steel producers . met coal , which is converted to coke , is a critical input in the steel production process . met coal is both consumed domestically in the countries where it is produced and exported by several of the largest producing countries , such as china , australia , the united states , canada and russia . therefore , demand for our coal will be highly correlated to conditions in the global steelmaking industry . the steelmaking industry 's demand for met coal is affected by a number of factors , including the cyclical nature of that industry 's business , technological developments in the steelmaking process and the availability of substitutes for steel such as aluminum , composites and plastics . a significant reduction in the demand for steel products would reduce the demand for met coal , which would have a material adverse effect upon our business . similarly , if alternative ingredients are used in substitution for met coal in the integrated steel mill process , the demand for met coal would materially decrease , which could also materially adversely affect demand for our met coal . basis of presentation our results on a โ predecessor โ basis relate to the assets acquired and liabilities assumed by warrior met coal , llc from walter energy in the asset acquisition and the related periods ending on or prior to march 31 , 2016. our results on a โ successor โ basis relate to warrior met coal , llc and its subsidiaries for periods beginning as of april 1 , 2016 and warrior met coal , inc. after giving effect to our corporate conversion on april 12 , 2017 from a delaware limited liability company into a delaware corporation . our results for the predecessor and successor periods have been separated by a vertical line to identify these different bases of accounting . the historical costs and expenses reflected in the predecessor combined results of operations include an allocation for certain corporate functions historically provided by walter energy . substantially all of the predecessor 's senior management were employed by walter energy and certain functions critical to the predecessor 's operations were centralized and managed by walter energy . historically , the centralized functions have included executive senior management , financial reporting , financial planning and analysis , accounting , shared services , information technology , tax , risk management , treasury , legal , human resources , and strategy and development . the costs of each of these services have been allocated to the predecessor on the basis of the predecessor 's relative headcount , revenue and total assets to that of walter energy . the combined financial statements of our predecessor included elsewhere in this annual report and the other historical predecessor combined financial information presented and discussed in this management 's discussion and analysis may not be indicative of what our financial condition , results of operations and cash flows would actually have been had we been a separate stand-alone entity , nor are they indicative of what our financial position , results of operations and cash flows may be in the future . 61 factors affecting the comparability of our financial statements asset acquisition on march 31 , 2016 , we consummated the acquisition of the predecessor on a debt free basis with minimum legacy liabilities . the asset acquisition included mine no . 4 and mine no . story_separator_special_tag the gross price realization for the year ended december 31 , 2018 is based on a volume weighted-average platts index price , the year december 31 , 2017 is based on a volume weighted average of the three-month average of the platts index , the steel index ( `` tsi '' ) premium coking coal index and the argus index on a one month lag during each quarter ( the `` australian lv index '' ) , and for the nine months ended december 31 , 2016 and the three months ended march 31 , 2016 is based on a volume weighted average australian hcc benchmark . segment adjusted ebitda we define segment adjusted ebitda as net income ( loss ) adjusted for other revenues , cost of other revenues , depreciation and depletion , selling , general and administrative , and certain transactions or adjustments that the ceo , our chief operating decision maker does not consider for the purposes of making decisions to allocate resources among segments or assessing segment performance . segment adjusted ebitda is used as a supplemental financial measure by management and by external users of our financial statements , such as investors , industry analysts , lenders and ratings agencies , to assess : our operating performance as compared to the operating performance of other companies in the coal industry , without regard to financing methods , historical cost basis or capital structure ; the ability of our assets to generate sufficient cash flow to pay distributions ; our ability to incur and service debt and fund capital expenditures ; and the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities . sales volumes , gross price realization and average net selling price we evaluate our operations based on the volume of coal we can safely produce and sell in compliance with regulatory standards , and the prices we receive for our coal . our sales volume and sales prices are largely dependent upon the terms of our coal sales contracts , for which prices generally are set on daily index averages or a quarterly basis . the volume of coal we sell is also a function of the pricing environment in the international met coal markets and the amounts of lv and mv coal that we sell . we evaluate the price we receive for our coal on two primary metrics : first , our gross price realization and second , our average net selling price per metric ton . in the first quarter of 2018 , we changed our gross price realization calculation to no longer be based on the quarterly australian lv index average due to this index being on a one-month lag basis and not closely correlating with the timing of our 63 shipments . our gross price realization now represents a volume weighted-average calculation of our daily realized price per ton based on the blended gross sales of our lv and mv coal , excluding demurrage and quality specification adjustments , as a percentage of the platts index daily price . our gross price realizations reflect the premiums and discounts we achieve on our lv and mv coal versus the platts index price because of the high quality premium products we sell into the export markets . in addition , the premiums and discounts in a quarter or year can be impacted by a rising or falling price environment . on a quarterly basis , our blended gross selling price per metric ton may differ from the platts index price per metric ton , primarily due to our gross sales price per ton being based on a blended average of gross sales price on our lv and mv coals as compared to the platts index price and due to the fact that many of our met coal supply agreements are based on a variety of indices . our average net selling price per metric ton represents our coal net sales revenue divided by total metric tons of coal sold . in addition , our average net selling price per metric ton is net of the previously mentioned demurrage and quality specification adjustments . cash cost of sales we evaluate our cash cost of sales on a cost per metric ton basis . cash cost of sales is based on reported cost of sales and includes items such as freight , royalties , manpower , fuel and other similar production and sales cost items , and may be adjusted for other items that , pursuant to gaap , are classified in the statements of operations as costs other than cost of sales , but relate directly to the costs incurred to produce met coal and sell it free-on-board at the port of mobile . our cash cost of sales per metric ton is calculated as cash cost of sales divided by the metric tons sold . cash cost of sales is used as a supplemental financial measure by management and by external users of our financial statements , such as investors , industry analysts , lenders and ratings agencies , to assess : our operating performance as compared to the operating performance of other companies in the coal industry , without regard to financing methods , historical cost basis or capital structure ; and the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities . we believe that this non-gaap financial measure provides additional insight into our operating performance , and reflects how management analyzes our operating performance and compares that performance against other companies on a consistent basis for purposes of business decision making by excluding the impact of certain items that management does not believe are indicative of our core operating performance . we believe that cash costs of sales presents a useful measure of our controllable costs and our operational results by including all costs incurred to produce met coal and sell it free-on-board at the port of mobile .
| results of operations the results of operations , cash flows and financial condition for the predecessor and successor periods reflect different bases of accounting due to the impact of the asset acquisition on the financial statements . to aid the reader in understanding the results of operations of each of these distinctive periods , we have provided the following discussion of our historical results for the years ended december 31 , 2018 and 2017 , the nine months ended december 31 , 2016 , and the three months ended march 31 , 2016 ( predecessor ) . due to these periods not being comparable , each period is discussed below on a standalone basis . 66 year ended december 31 , 2018 and 2017 the following table summarizes certain financial information relating to our operating results that have been derived from our audited financial statements for the year ended december 31 , 2018 and 2017 . replace_table_token_9_th sales , production and cost of sales components on a per unit basis for the year ended december 31 , 2018 and 2017 were as follows : replace_table_token_10_th ( 1 ) for the year ended december 31 , 2018 , our gross price realization represents a volume weighted-average calculation of our daily realized price per ton based on gross sales , which excludes demurrage and other charges , as a percentage of the platts index price . for the year ended december 31 , 2017 , our gross price realization represents a volume weighted-average calculation of our realized price per ton based on gross sales as a percentage of the australian lv index . sales were $ 1.3 billion for the year ended december 31 , 2018 , compared to $ 1.1 billion for the year ended december 31 , 2017 .
| 2,687 |
the fsg designs and manufactures jet engine and aircraft component replacement parts , which are approved by the federal aviation administration ( โ faa โ ) . in addition , the fsg repairs , overhauls and distributes jet engine and aircraft components , avionics and instruments for domestic and foreign commercial air carriers and aircraft repair companies as well as military and business aircraft operators . the fsg also manufactures and sells specialty parts as a subcontractor for aerospace and industrial original equipment manufacturers and the united states ( `` u.s. '' ) government . additionally , the fsg is a leading supplier , distributor , and integrator of military aircraft parts and support services primarily to foreign military organizations allied with the u.s. and a leading manufacturer of advanced niche components and complex composite assemblies for commercial aviation , defense and space applications . further , the fsg engineers , designs and manufactures thermal insulation blankets and parts as well as removable/reusable insulation systems for aerospace , defense , commercial and industrial applications ; manufactures expanded foil mesh for lightning strike protection in fixed and rotary wing aircraft ; distributes aviation electrical interconnect products and electromechanical parts ; and overhauls industrial pumps , motors , and other hydraulic units with a focus on the support of legacy systems for the u.s. navy . the etg consists of heico electronic technologies corp. ( โ heico electronic โ ) and its subsidiaries , which primarily : designs and manufactures electronic , microwave and electro-optical equipment , high-speed interface products , high voltage interconnection devices , emi and rfi shielding and filters , high voltage advanced power electronics , power conversion products , underwater locator beacons , microelectronic memory products , self-sealing auxiliary fuel systems , active antenna systems and tscm equipment . the etg collectively designs , manufactures and sells various types of electronic , data and microwave , and electro-optical products , including infrared simulation and test equipment , laser rangefinder receivers , electrical power supplies , back-up power supplies , power conversion products , underwater locator beacons , emergency locator transmission beacons , flight deck annunciators , panels and indicators , electromagnetic and radio frequency interference shielding and filters , high power capacitor charging power supplies , amplifiers , traveling 33 index wave tube amplifiers , photodetectors , amplifier modules , microwave power modules , flash lamp drivers , laser diode drivers , arc lamp power supplies , custom power supply designs , cable assemblies , high voltage power supplies , high voltage interconnection devices and wire , high voltage energy generators , high frequency power delivery systems , three-dimensional microelectronic and stacked memory products , harsh environment electronic connectors and other interconnect products , radio frequency ( `` rf '' ) and microwave amplifiers , transmitters and receivers ; rf sources , detectors and controllers , wireless cabin control systems , solid state power distribution and management systems , crashworthy and ballistically self-sealing auxiliary fuel systems , nuclear radiation detectors , communications and electronic intercept receivers and tuners , fuel level sensing systems , high-speed interface products that link devices , high performance active antenna systems for commercial aircraft , precision guided munitions , other defense applications and commercial uses ; silicone material for a variety of demanding applications ; precision power analog monolithic , hybrid and open frame components ; high-reliability ceramic-to-metal feedthroughs and connectors , technical surveillance countermeasures ( tscm ) equipment to detect devices used for espionage and information theft ; and rugged small-form factor embedded computing solutions . our results of operations in fiscal 2020 were significantly affected by the covid-19 global pandemic ( the โ pandemic โ ) . the effects of the pandemic and related actions by governments around the world to mitigate its spread have impacted our employees , customers , suppliers and manufacturers . in response to the economic impact from the pandemic , we implemented certain cost reduction efforts , including layoffs , temporary reduced work hours and temporary pay reductions within various departments of our business , including within our executive management team and our board of directors . additionally , our response to the pandemic included the implementation of varying health and safety measures at our facilities , including : supplying and requiring the use of personal protective equipment ; staggering work shifts ; body temperature taking ; increasing work-from-home capabilities ; consistent and ongoing cleaning of work spaces and high-touch areas ; and establishing processes aligned with the centers for disease and control guidelines to work with any individual exposed to covid-19 on their necessary quarantine period and the process for the individual to return to work . with respect to our results of operations , approximately 59 % of our net sales in fiscal 2020 were derived from defense , space and other industrial markets including electronics , medical and telecommunications . although demand for these products was slightly moderated in fiscal 2020 , our overall results from this portion of our business were not materially impacted by the pandemic . however , we experienced , and expect to continue experiencing , periodic operational disruptions resulting from supply chain disturbances , staffing challenges - including at some of our customers , temporary facility closures , transportation interruptions and other conditions which slow production and orders , or increase costs . the remaining portion of our fiscal 2020 net sales was derived from commercial aviation products and services . the pandemic has caused significant volatility and a substantial decline in value across global markets . story_separator_special_tag further , we are cautiously optimistic that the recent vaccine progress may generate increased commercial air travel and result in a gradual recovery in demand for our commercial aerospace parts and services commencing in fiscal 2021. inflation we have generally experienced increases in our costs of labor , materials and services consistent with overall rates of inflation . the impact of such increases on net income attributable to heico has been generally minimized by efforts to lower costs through manufacturing efficiencies and cost reductions . liquidity and capital resources the following table summarizes our capitalization ( in thousands ) : replace_table_token_10_th our principal uses of cash include acquisitions , capital expenditures , cash dividends , distributions to noncontrolling interests and working capital needs . capital expenditures in fiscal 2021 are anticipated to approximate $ 40 million . we finance our activities primarily from our operating and financing activities , including borrowings under our revolving credit facility . as of december 22 , 2020 , we had approximately $ 755 million of unused committed availability under the terms of our revolving credit facility . based on our current outlook , we believe that net cash provided by operating activities and available borrowings under our revolving credit facility will be sufficient to fund our cash requirements for at least the next twelve months . 40 index operating activities net cash provided by operating activities was $ 409.1 million in fiscal 2020 and consisted primarily of net income from consolidated operations of $ 335.9 million , depreciation and amortization expense of $ 88.6 million ( a non-cash item ) , net changes in other long-term liabilities and assets related to the heico leadership compensation plan ( โ lcp โ ) of $ 14.8 million ( principally participant deferrals and employer contributions ) , $ 10.1 million in share-based compensation expense ( a non-cash item ) , and $ 9.6 million in employer contributions to the heico savings and investment plan ( a non-cash item ) , partially offset by a $ 48.5 million increase in working capital . the increase in working capital is inclusive of a $ 68.2 million decrease in accrued expenses and other current liabilities and trade accounts payable mainly reflecting lower accrued performance-based compensation as well as the timing of payments ; a $ 28.3 million increase in inventories as a result of certain inventory purchase commitments based on pre-pandemic net sales expectations and to support the backlog of certain of our businesses ; and a $ 16.4 million increase in contract assets , partially offset by a $ 71.5 million decrease in accounts receivable resulting from lower net sales and strong cash collections . net cash provided by operating activities decreased by $ 28.3 million in fiscal 2020 from $ 437.4 million in fiscal 2019. the decrease is principally attributable to a $ 23.9 million decrease in net income from consolidated operations and a $ 16.3 million increase in net working capital partially offset by a $ 5.1 million increase in depreciation and amortization expense ( a non-cash item ) . net cash provided by operating activities was $ 437.4 million in fiscal 2019 and consisted primarily of net income from consolidated operations of $ 359.7 million , depreciation and amortization expense of $ 83.5 million ( a non-cash item ) , net changes in other long-term liabilities and assets related to the heico lcp of $ 12.9 million ( principally participant deferrals and employer contributions ) and $ 10.3 million in share-based compensation expense ( a non-cash item ) , partially offset by a $ 32.3 million increase in working capital . investing activities net cash used in investing activities totaled $ 199.0 million in fiscal 2020 and related primarily to acquisitions of $ 163.9 million ( net of cash acquired ) , capital expenditures of $ 22.9 million and investments related to the heico lcp of $ 15.9 million . further details on acquisitions may be found in note 2 , acquisitions , of the notes to consolidated financial statements . net cash used in investing activities totaled $ 280.6 million in fiscal 2019 and related primarily to acquisitions of $ 240.8 million ( net of cash acquired ) , capital expenditures of $ 28.9 million and investments related to the heico lcp of $ 13.7 million . further details on acquisitions may be found in note 2 , acquisitions , of the notes to consolidated financial statements . 41 index financing activities net cash provided by financing activities in fiscal 2020 totaled $ 137.7 million . during fiscal 2020 , we borrowed $ 200.0 million under our revolving credit facility to provide a cushion of liquidity during this period of economic uncertainty resulting from the pandemic and $ 45.0 million to fund our fiscal 2020 acquisitions . we also received $ 14.3 million in capital contributions from the noncontrolling interest holders of a subsidiary of heico electronic representing their share of the purchase price for a 25 % interest in two acquisitions made by a subsidiary of heico electronic in august 2020 . ( see note 2 , acquisitions , of the notes to consolidated financial statements for further details ) . additionally , we made $ 68.0 million in payments on our revolving credit facility , paid $ 21.6 million in cash dividends on our common stock , made $ 17.9 million of distributions to noncontrolling interests , redeemed common stock related to stock option exercises aggregating $ 12.1 million , paid $ 7.5 million to acquire certain noncontrolling interests and received $ 7.0 million in proceeds from stock option exercises . net cash used in financing activities in fiscal 2019 totaled $ 159.7 million . during fiscal 2019 , we made $ 283.0 million in payments on our revolving credit facility , paid $ 110.9 million in distributions to noncontrolling interests , redeemed common stock related to stock option exercises aggregating $ 64.0 million and paid $ 18.7 million in cash dividends on our common stock .
| results of operations the following table sets forth the results of our operations , net sales and operating income by segment and the percentage of net sales represented by the respective items in our consolidated statements of operations ( in thousands ) : replace_table_token_9_th 36 index comparison of fiscal 2020 to fiscal 2019 net sales our consolidated net sales in fiscal 2020 decreased by 13 % to $ 1,787.0 million , as compared to net sales of $ 2,055.6 million in fiscal 2019. the decrease in consolidated net sales principally reflects a decrease of $ 315.4 million ( a 25 % decrease ) to $ 924.8 million in net sales within the fsg partially offset by an increase of $ 40.5 million ( a 5 % increase ) to a record $ 875.0 million in net sales within the etg . the net sales decrease in the fsg is principally organic and reflects lower demand for the majority of our products and services resulting from the significant decline in global commercial air travel beginning in march 2020 due to the pandemic . as a result , organic net sales of our aftermarket replacement parts , repair and overhaul parts and services , and specialty products product lines decreased by $ 154.0 million , $ 106.2 million , and $ 58.8 million , respectively . the net sales increase in the etg principally reflects $ 52.8 million contributed by our fiscal 2020 and 2019 acquisitions and higher demand for our defense products resulting in an organic net sales increase of $ 13.6 million partially offset by lower demand for our commercial aerospace and medical products resulting in organic net sales decreases of $ 12.9 million and $ 5.6 million , respectively , largely attributable to the pandemic .
| 2,688 |
the company used a binomial lattice option pricing model and assumptions that consider , among other factors , the fair value of the underlying stock , risk-free interest rate , volatility , expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments . changes in fair value of the derivative financial instruments are recognized currently in the company 's consolidated statement of operations as a derivative gain or loss . the warrant derivative losses are non-cash expenses and for the 12 months ended december 31 , 2015 , 2014 and 2013 , a loss of $ 10,804 , $ 376 and $ 18,871 , respectively , were included in other income ( expenses ) in the company 's consolidated statement of operations . the company uses the binomial lattice option pricing model and assumptions that consider among other factors the fair value of the underlying stock , risk-free interest rate , volatility , expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments . the fair value of these derivative instruments at december 31 , 2015 and 2014 was $ 1,907 and $ 7,224 , respectively , and was included as a derivative warrant liability , a current liability . changes in fair value of the derivative financial instruments are recognized currently in the consolidated statement of operations as a derivative gain or loss . the assumptions used principally in determining the fair value of warrants were as follows : replace_table_token_19_th the primary underlying risk exposure pertaining to the warrants is the change in fair value of the underlying common stock for each reporting period . the table below presents the changes in derivative warrant liability during the years ended december 31 , 2015 , 2014 , and 2013 : replace_table_token_20_th 12. stock options in 2007 , the company adopted the 2007 employee , director and consultant stock plan ( the `` 2007 plan `` ) . pursuant to the 2007 plan , the company 's board of directors ( or committees and or executive 73 invivo therapeutics holdings corp. notes to consolidated financial statements ( continued ) ( in thousands , except share and per-share data ) 12. stock options ( continued ) officers delegated by the board of directors ) may grant incentive and nonqualified stock options to the company 's employees , officers , directors , consultants and advisors . as of december 31 , 2015 , there were options to purchase an aggregate of 240,863 shares of common stock outstanding under the 2007 plan and no shares available for future grants under the 2007 plan . on october 26 , 2010 , the company 's board of directors adopted , and the company 's shareholders subsequently approved , the 2010 equity incentive plan ( as subsequently amended , the `` 2010 plan `` ) . the 2010 plan provides for grants of incentive stock options to employees , and nonqualified stock options and restricted common stock to employees , consultants and non-employee directors of the company . in april 2015 , the company 's board of directors adopted , and the company ' shareholders subsequently approved , the 2015 equity incentive plan ( the `` 2015 plan `` ) . the 2015 plan provides for grants of incentive stock options to employees , and nonqualified stock , restricted common stock , restricted stock units and stock appreciation rights to employees , consultants and directors of the company . as of december 31 , 2015 , the total number of shares authorized for issuance under the 2015 plan is 4,322,355 shares , consisting of 4,000,000 shares plus 322,355 shares that remained available for grant under the 2010 plan . upon approval of the 2015 plan by the company 's shareholders on june 16 , 2016 , the 2010 plan was terminated and no additional shares or share awards have been subsequently granted under the 2010 plan . as of december 31 , 2015 , there were outstanding options to purchase an aggregate of 946,760 and 2,065,687 shares of common stock under the 2015 plan and 2010 plan , respectively . options issued under the plans are exercisable for up to 10 years from the date of issuance . options issued under the 2007 , 2010 , and 2015 plan ( collectively , the `` plans `` ) are exercisable for up to 10 years from the date of issuance . in march 2015 , the company 's board of directors adopted , and the company 's shareholders subsequently approved , the employee stock purchase plan ( the `` espp `` ) . the espp allows employees to buy company stock twice a year through after-tax payroll deductions at a discount from market . the board of directors initially authorized 187,500 shares for issuance under the espp . commencing on the first day of fiscal 2016 and on the first day of each fiscal year thereafter during the term of the espp , the number of shares of common stock reserved for issuance shall be increased by the lesser of ( i ) 1 % of our outstanding shares of common stock on such date , ( ii ) 50,000 shares or ( iii ) a lesser amount determined by the board . in no event shall the aggregate number of shares reserved for issuance during the term of the espp exceed 1,250,000 shares . the 2015 espp is considered a compensatory plan with the related compensation cost recognized over the six month offering period . story_separator_special_tag critical accounting policies and estimates our consolidated financial statements , which appear in item 8 of this annual report on form 10-k , have been prepared in accordance with accounting principles generally accepted in the united states , which require that the management make certain assumptions and estimates and , in connection therewith , adopt certain accounting policies . our significant accounting policies are set forth in note 2 in the notes to consolidated financial statements . of those policies , we believe that the policies discussed below may involve a higher degree of judgment and may be more critical to an accurate reflection of our financial condition and results of operations . stock-based compensation stock options are granted with an exercise price at fair market value at the date of the grant . the stock options generally expire ten years from the date of grant . stock option awards vest upon terms determined by our board of directors . we recognize compensation costs resulting from the issuance of stock-based awards to employees , non-employees and directors as an expense in the statement of operations over the service period based on a measurement of fair value for each stock-based award . the fair value of each option grant was estimated as of the date of grant using the black-scholes option-pricing model . the fair value is amortized as compensation cost on a straight-line basis over the requisite service period of the awards , which is generally the vesting period . we use historical data , as well as subsequent events occurring prior to the issuance of the consolidated financial statements , to estimate option exercise and employee departure within the valuation model . the expected term of options granted under our stock plans is based on the average of the contractual term ( generally , 10 years ) and the vesting period ( generally , 48 months ) . the risk-free rate is based on the yield of a u.s. treasury security with a term consistent with the option . see note 12 , `` stock options , '' in the notes to consolidated financial statements in item 8 of this annual report on form 10-k for more information about the assumptions underlying these estimates . 47 derivative instruments certain of our issued and outstanding warrants to purchase common stock contain anti-dilution provisions . these warrants do not meet the requirements for classification as equity and are recorded as derivative warrant liabilities . we used valuation methods and assumptions that consider among other factors the fair value of the underlying stock , risk-free interest rate , volatility , expected life and dividend rates consistent with those discussed in note 11 , `` derivative instruments '' in the notes to consolidated financial statements in item 8 of this annual report on form 10-k in estimating the fair value for these warrants . such derivative warrant liabilities are initially recorded at fair value with subsequent changes in fair value charged ( credited ) to operations in each reporting period . the fair value of the derivative warrant liability is most sensitive to changes in the fair value of the underlying common stock and the estimated volatility of our common stock . research and development and general and administrative expenses research and development expenses consist primarily of costs incurred for the development of our product candidates , which include : employee-related expenses , including salaries , benefits , travel and stock-based compensation expense ; expenses incurred under agreements with cros and clinical sites that conduct our clinical studies ; facilities , depreciation , and other expenses , which include direct and allocated expenses for rent and maintenance of facilities , insurance , and other supplies ; costs associated with our research platform and preclinical activities ; costs associated with our regulatory , quality assurance and quality control operations ; and amortization of intangible assets . research and development costs are expensed as incurred . we can not determine with certainty the duration and completion costs of the current or future clinical studies of our product candidates or if , when , or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval . we may never succeed in achieving regulatory approval for any of our product candidates . the duration , costs , and timing of clinical studies and development of our product candidates will depend on a variety of factors , including : the scope , rate of progress , and expense of our ongoing as well as any additional clinical studies and other research and development activities we undertake ; future clinical study results ; uncertainties in clinical study enrollment rates ; changing standards for regulatory approval ; and the timing and receipt of any regulatory approvals . a change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate . for example , if the fda , or another regulatory authority were to require us to conduct clinical studies beyond those that we currently anticipate will be required for the completion of clinical development of a product candidate or if we experience significant delays in enrollment in any of our clinical studies , we could be required to expend significant additional financial resources and time on the completion of clinical development for our product candidates . 48 we accrue costs associated with third parties related to our research and development expenses based on our estimate of site management , monitoring , and project management costs . we maintain regular communication with third parties to develop these estimates .
| results of operations comparison of the years ended december 31 , 2015 and 2014 ( in thousands , except share and per share amounts ) research and development expenses research and development expenses decreased by $ 215 to $ 10,058 for the year ended december 31 , 2015 from $ 10,273 for the year ended december 31 , 2014. after adjusting for the insurance settlement related to business interruption , ( $ 621 for 2014 ) , the research and development expenses were $ 10,894 for 2014. the decrease in adjusted research and development expenses for 2015 of $ 836 is primarily attributable to lower consulting costs ( $ 612 ) , testing costs ( $ 375 ) , packaging and lab supplies ( $ 359 ) and lower compensation related expenses related to the 2014 reduction in force ( $ 564 ) and other various expenses ( $ 338 ) . these reductions were partly offset by higher clinical trial costs ( $ 729 ) , stock comp expense ( $ 147 ) and bonuses ( $ 536 ) . there was a higher bonus expense in 49 2015 compared to 2014 due to the fact that in 2014 the accrual which related to the 2013 bonus accrual was reversed because of the company 's decision not paying out the 2013 bonuses .
| 2,689 |
asset retirement obligations : the company establishes an asset retirement obligation , and related asset , for leases of property that require us to return the property to its original condition ( commonly referred to as a reinstatement provision ) if and when we exit the facility . these reinstatement provisions are primarily applicable to story_separator_special_tag tjx provides projections and other forward-looking statements in the following discussions particularly relating to the company 's future financial performance . these forward-looking statements are estimates based on information currently available to the company , are made pursuant to the safe harbor provisions of the private securities litigation reform act of 1995 , and subject to the cautionary statements set forth on page 2 of this form 10-k. the company 's results are subject to risks and uncertainties including , but not limited to , those described in part i , item 1a , risk factors , and those identified from time to time in our other filings with the securities and exchange commission . tjx undertakes no obligation to publicly update any forward-looking statements , whether as a result of new information , future developments or otherwise . the discussion that follows relates to our 53-week fiscal year ended february 3 , 2018 ( fiscal 2018 ) and our 52-week fiscal years ended january 28 , 2017 ( fiscal 2017 ) and january 30 , 2016 ( fiscal 2016 ) . story_separator_special_tag billion remaining under previously announced stock repurchase programs , our board of directors approved our 19 th stock repurchase program that authorizes the repurchase of up to an additional $ 3.0 billion . 27 the following is a discussion of our consolidated operating results , followed by a discussion of our segment operating results . tax cuts and jobs act of 2017 : on december 22 , 2017 , the 2017 tax act was enacted into law which , among other things , includes a one-time mandatory transition tax on accumulated foreign undistributed earnings and a reduction of the u.s. corporate income tax rate to 21 percent , effective january 1 , 2018. the change in the u.s. income tax rate also requires us to revalue our deferred tax assets and liabilities . although we are still evaluating the impact of the 2017 tax act on tjx , the company has estimated the impact of the 2017 tax act which resulted in a reduction of the full year tax provision . the company has reinvested a portion of these tax benefits by approving a discretionary bonus to eligible non-bonus plan associates globally , providing an incremental contribution to the company 's defined contribution retirement plans for eligible associates in the u.s. and internationally , as well as making contributions to the company 's charitable foundations , collectively referred to as ยincremental investments related to the 2017 tax act.ย the tax benefits recognized due to the 2017 tax act , offset by the after-tax impact of incremental investments we made related to the 2017 tax act , resulted in a net benefit to net income of $ 0.17 per share for the fiscal 2018 fourth quarter and full year . net sales : consolidated net sales for fiscal 2018 totaled $ 35.9 billion , an 8 % increase over $ 33.2 billion in fiscal 2017. the increase reflected a 4 % increase from new stores , a 2 % increase from comp sales , and a 2 % increase from the impact of the 53 rd week in the fiscal 2018 calendar . foreign currency had a neutral impact in fiscal 2018. net sales from our e-commerce businesses amounted to approximately 2 % of total sales and had an immaterial impact on fiscal 2018 sales growth . consolidated net sales for fiscal 2017 totaled $ 33.2 billion , a 7 % increase over $ 30.9 billion in fiscal 2016. the increase reflected a 5 % increase from comp sales and a 4 % increase from new stores , offset by a 2 % negative impact from foreign currency exchange rates . comparable store sales : we define comparable store sales ( ยcomp salesย ) , formerly referred to as same-store sales , to be sales of stores that have been in operation for all or a portion of two consecutive fiscal years , or in other words , stores that are starting their third fiscal year of operation . we calculate comp sales on a 52-week basis by comparing the current and prior year weekly periods that are most closely aligned . relocated stores and stores that have changed in size are generally classified in the same way as the original store , and we believe that the impact of these stores on the consolidated comp percentage is immaterial . we define customer traffic to be the number of transactions in stores included in the comp sales calculation and average ticket to be the average retail price of the units sold . we define average transaction or average basket to be the average dollar value of transactions included in the comp sales calculation . sales excluded from comp sales ( ยnon-comp salesย ) consists of : ย new stores- stores that have not yet met the comp sales criteria ย stores that are closed permanently or for an extended period of time ย sales from our e-commerce businesses , meaning sierra trading post ( including stores ) , tjmaxx.com and tkmaxx.com we determine which stores are included in the comp sales calculation at the beginning of a fiscal year and the classification remains constant throughout that year unless a store is closed permanently or for an extended period during that fiscal year . in the third quarter of fiscal 2018 , 37 stores were significantly impacted by hurricanes , mostly in puerto rico , and were excluded from comp sales . these stores will be included in the comp sales measures once they again meet the comp sales criteria . story_separator_special_tag these improvements were partially offset by higher supply chain costs and the negative impact of the mark-to-market of inventory derivatives . sg & a : sg & a expenses as a percentage of net sales were 17.8 % in fiscal 2018 , 17.4 % in fiscal 2017 and 16.8 % in fiscal 2016. the fiscal 2018 expense ratio increased by 0.3 percentage points due to the incremental investments related to the 2017 tax act . the remaining increase in fiscal 2018 was primarily due to higher employee payroll costs due to wage increases . the increase in this ratio in fiscal 2017 was primarily due to a combination of higher employee payroll costs , due to wage increases and investments to support our growth and supply chain costs , partially offset by the favorable impact of reduced contributions to the tjx charitable foundations in fiscal 2017 as compared to fiscal 2016. impairment of goodwill and other long-lived assets , related to stp : our fiscal 2018 results included a $ 99.3 million impairment charge , primarily related to goodwill , as the estimated fair value of stp fell below the carrying value due to a decrease in projected revenue growth rates . the impairment charge is included in the marmaxx segment . as we continue transitioning this business to an off-price model , we saw improvement in the top line during the second half of fiscal 2018. we remain confident in the potential of stp and believe we are positioned for successful growth going forward . loss on early extinguishment of debt : during the fiscal 2017 third quarter , we issued $ 1.0 billion of 2.25 % ten-year notes . we used a portion of the proceeds to redeem our $ 375 million 6.95 % notes on october 12 , 2016 , prior to their scheduled maturity of april 15 , 2019 and we recorded a pre-tax loss on the early extinguishment of debt of $ 51.8 million . pension settlement charge : during the fiscal 2017 third quarter , we offered eligible former tjx associates , who had not yet commenced receiving their qualified pension plan benefit , an opportunity to receive a lump sum payout of their vested pension benefit . as a result , tjx 's qualified pension plan paid $ 103.2 million from pension plan assets to those who accepted this offer . this transaction had no cash impact on tjx , but did result in a non-cash pre-tax settlement charge of $ 31.2 million . interest expense , net : the components of interest expense , net for the last three fiscal years are summarized below : replace_table_token_11_th 30 the decrease in interest expense , net for fiscal 2018 and fiscal 2017 was driven by additional interest income , primarily due to an increase in invested balances and higher return rates . income taxes : our effective annual income tax rate was 32.4 % in fiscal 2018 , 38.3 % in fiscal 2017 and 37.7 % in fiscal 2016. the decrease in the effective income tax rate in fiscal 2018 was primarily due to the favorable effect of the 2017 tax act , excess tax benefit from share-based compensation attributable to the adoption of asu 2016-09- compensation- stock compensation ( topic 718 ) : improvements to employee share-based payment accounting , and the jurisdictional mix of income . the increase in the fiscal 2017 income tax rate was due to the jurisdictional mix of income and the valuation allowance on foreign net operating losses . in addition , the fiscal 2016 effective income tax rates benefitted from a reduction in our reserve for uncertain tax positions related to our adoption of the new tangible property regulations . the 2017 tax act made broad and complex changes to the u.s. tax code which impacted fiscal 2018 including , but not limited to , reducing the u.s. federal corporate tax rate from 35 % to 21 % and requiring a one-time transition tax on certain undistributed earnings of foreign subsidiaries . the provisional tax benefit of the 2017 tax act is based on currently available information and interpretations , which are continuing to evolve . we will continue to analyze additional information and guidance related to the 2017 tax act as supplemental legislation , regulatory guidance , or evolving technical interpretations become available . the final impacts may differ from the recorded amounts as of february 3 , 2018 , and we will continue to refine such amounts within the measurement period provided by staff accounting bulletin no . 118. we expect to complete our analysis no later than the fourth quarter of fiscal 2019. net income and diluted earnings per share : net income was $ 2.6 billion in fiscal 2018 compared to $ 2.3 billion in both fiscal 2017 and fiscal 2016. diluted earnings per share were $ 4.04 in fiscal 2018 , $ 3.46 in fiscal 2017 and $ 3.33 in fiscal 2016. the tax benefits recognized due to the 2017 tax act , offset by the after-tax impact of the incremental investments related to the 2017 tax act , resulted in a net benefit to diluted earnings per share of $ 0.17 per share . the impairment charge related to stp reduced fiscal 2018 diluted earnings per share by $ 0.10 per share while the 53rd week in the fiscal 2018 calendar provided a benefit of approximately $ 0.11 per share . foreign currency exchange rates had a $ 0.02 positive impact on earnings per share in fiscal 2018 when compared to fiscal 2017 , and a $ 0.07 negative impact in fiscal 2017 when compared to fiscal 2016. during the third quarter of fiscal 2017 , we incurred charges from the loss on early extinguishment of debt and the pension settlement , collectively reducing fiscal 2017 net income by $ 50 million , or $ 0.07 per share . our stock repurchase programs , which reduce our weighted average diluted shares outstanding , benefited our earnings per share growth by approximately 3 % in each fiscal year presented .
| overview we are the leading off-price apparel and home fashions retailer in the u.s. and worldwide . we sell a rapidly changing assortment of apparel , home fashions and other merchandise at prices generally 20 % to 60 % below full-price retailers ' ( including department , specialty , and major online retailers ) regular prices on comparable merchandise , every day . we operate over 4,000 stores through our four main segments : in the u.s. , marmaxx 26 ( which operates t.j. maxx , marshalls and tjmaxx.com ) and homegoods ( which operates homegoods and homesense ) ; tjx canada ( which operates winners , homesense and marshalls in canada ) ; and tjx international ( which operates t.k . maxx , homesense and tkmaxx.com in europe , and t.k . maxx in australia ) . we also operate sierra trading post ( ยstpย ) , an off-price internet retailer that operates sierratradingpost.com and retail stores in the u.s. the results of stp are reported in our marmaxx segment . during the fourth quarter , the tax cuts and jobs act of 2017 referred to as ยtax reformย or the ย2017 tax actย was enacted . the 2017 tax act , along with the related reinvestments made by the company , had a significant impact on our fiscal 2018 results ( see ย tax cuts and jobs act of 2017 ย below ) . highlights of our financial performance for fiscal 2018 include the following : ย net sales increased to $ 35.9 billion for fiscal 2018 , up 8 % over the same period last year . the 53rd week in fiscal 2018 increased net sales by 2 % . at february 3 , 2018 , the number of stores in operation increased 7 % and selling square footage increased 4 % over the end of fiscal 2017 .
| 2,690 |
future amortization expense is estimated to be as follows for the next five years : replace_table_token_36_th note 9. pension plans united kingdom plan the company maintains a defined benefit pension plan ( the ยplanย ) covering a number of its current and former employees in the united kingdom , although it does also have other much smaller pension arrangements in the u.s. and overseas . the plan is closed to future service accrual but has a story_separator_special_tag this discussion should be read in conjunction with our consolidated financial statements and the notes thereto . executive overview in 2016 , our sales were in line with our expectations , and performance improved as we delivered on our strategy to grow all of our strategic business units . sales in fuel specialties and personal care reflected the strength of our product portfolio and research and development pipeline in these markets . we maintained our oilfield services business against the current challenging market conditions . our octane additives segment performance was in line with the final stages of transition to unleaded gasoline in the automotive market . our avtel product line , producing tel for avgas 100ll for piston engine aircraft , is included in our fuel specialties segment . we anticipate that this product line will decline when an alternative to avgas 100ll is proven . on december 30 , 2016 , we completed the acquisition of the european differentiated surfactants business of huntsman investments ( netherlands ) b.v. to further build our presence in the personal care , home care , agrochemcial and mining markets . critical accounting estimates note 2 of the notes to the consolidated financial statements includes a summary of the significant accounting policies and methods used in the preparation of the consolidated financial statements . business combinations the acquisition method of accounting requires that we recognize the assets acquired and liabilities assumed at their acquisition date fair values . goodwill is measured as the excess of consideration transferred over the acquisition date net fair values of the assets acquired and the liabilities assumed . the measurement of the fair values of assets acquired and liabilities assumed requires considerable judgment . although independent appraisals may be used to assist in the determination of the fair values of certain assets and liabilities , those determinations are usually based on significant estimates provided by management , such as forecast revenue or profit . in determining the fair value of intangible assets , an income approach is generally used and may incorporate the use of a discounted cash flow method . in applying the discounted cash flow method , the estimated future cash flows and residual values for each intangible asset are discounted to a present value using a discount rate appropriate to the business being acquired . these cash flow projections are based on management 's estimates of economic and market conditions including revenue growth rates , operating margins , capital expenditures and working capital requirements . 25 while we use our best estimates and assumptions as part of the process to value assets acquired and liabilities assumed at the acquisition date and contingent consideration at each balance sheet reporting date , our estimates are inherently uncertain and subject to refinement . during the measurement period , which occurs before finalization of the purchase price allocation , changes in assumptions and estimates that result in adjustments to the fair values of assets acquired and liabilities assumed will have a corresponding offset to goodwill . subsequent adjustments will impact our consolidated statements of income . environmental liabilities we are subject to environmental laws in the countries in which we conduct business . our principal site giving rise to environmental remediation liabilities is the octane additives manufacturing site at ellesmere port in the united kingdom . there are also environmental remediation liabilities on a much smaller scale in respect of our other manufacturing sites in the u.s. and europe . at ellesmere port there is a continuing asset retirement program related to certain manufacturing units that have been closed . remediation provisions at december 31 , 2016 amounted to $ 39.5 million and relate principally to our ellesmere port site in the united kingdom . we recognize environmental liabilities when they are probable and costs can be reasonably estimated , and asset retirement obligations when there is a legal obligation and costs can be reasonably estimated . the company has to anticipate the program of work required and the associated future expected costs , and comply with environmental legislation in the countries in which it operates or has operated in . the company views the costs of vacating our ellesmere port site as contingent upon if and when it vacates the site because there is no present intention to do so . pensions the company maintains a defined benefit pension plan covering a number of its current and former employees in the united kingdom . the company also has other much smaller pension arrangements in the u.s. and overseas , but the obligations under those plans are not material . the united kingdom plan is closed to future service accrual , but has a large number of deferred and current pensioners . movements in the underlying plan asset value and projected benefit obligation ( ยpboย ) are dependent on actual return on investments as well as our assumptions in respect of the discount rate , annual member mortality rates , future return on assets and future inflation . a change in any one of these assumptions could impact the plan asset value , pbo and pension charge recognized in the income statement . such changes could adversely impact our results of operations and financial position . for example , a 0.25 % change in the discount rate assumption would change the pbo by approximately $ 26 million while the net pension credit for 2017 would change by approximately $ 0.2 million . story_separator_special_tag if events occur or circumstances change it may cause a reduction in periods over which these long-lived assets are amortized or depreciated , or result in a non-cash impairment of a portion of their carrying value . a reduction in amortization or depreciation periods would have no effect on cash flows . 28 story_separator_special_tag replace_table_token_14_th the impact on the effective tax rate from profits earned in foreign jurisdictions with lower tax rates varies as the geographical mix of the company 's profits changes year on year . in 2016 , the company 's income tax expense benefited to a greater degree from a proportion of its overall profits arising in switzerland than in 2015. this resulted in a $ 7.8 million benefit in switzerland ( 2015 ย $ 7.5 million ) . in addition , there was an $ 8.4 million benefit in relation to the united kingdom ( 2015 ย $ 6.8 million ) and a $ 0.5 million benefit in relation to germany ( 2015 ย $ 0.3 million ) , and a $ 0.3 million benefit in other jurisdictions ( 2015 ย $ 0.1 million reduction ) . foreign income inclusions arise each year from certain types of income earned overseas being taxable under u.s. tax regulations . these types of income include subpart f income , principally from foreign based company sales in the united kingdom , including the associated section 78 tax gross up , and also from the income earned by certain overseas subsidiaries taxable under the u.s. tax regime . in 2016 , subpart f income and the associated section 78 gross up resulted in u.s. taxation of $ 5.7 million ( 2015 ย $ 4.7 million ) . certain overseas subsidiaries taxable under the u.s. tax regime incurred losses of $ 0.2 million ( 2015 ย $ 0.2 million losses ) . foreign tax credits can fully or partially offset these incremental u.s. taxes from foreign income inclusions . the utilization of foreign tax credits varies year on year as this is 34 dependent on a number of variable factors which are difficult to predict and may in certain years prevent any offset of foreign tax credits . in total , $ 6.1 million of foreign tax credits were utilized during 2016 to offset the incremental u.s. taxes arising from foreign income inclusions in the year ( 2015 ย $ 4.7 million ) . of this balance , $ 0.5 million of foreign tax credit carry forwards from earlier years was utilized ( 2015 ย $ 2.4 million ) . as at december 31 , 2016 , the company has utilized all foreign tax credit carry forwards from earlier years . the united kingdom 's 1 % reduction in the corporation tax rate effective from april 2020 from 18 % to 17 % , enacted in september 2016 , resulted in a deferred tax credit of $ 0.6 million in the fourth quarter of 2016 primarily in relation to the deferred tax position of the united kingdom defined benefit pension plan . further details are given in note 10 of the notes to the consolidated financial statements . results of operations ย fiscal 2015 compared to fiscal 2014 : replace_table_token_15_th 35 fuel specialties net sales : the table below details the components which comprise the year on year change in net sales spread across the markets in which we operate : replace_table_token_16_th volumes in the americas were higher than the prior year as a result of increased demand . emea volumes increased from the prior year driven by a strong performance in our core markets . volumes were lower in aspac driven by lower demand . an adverse price and product mix in emea negatively impacted revenues primarily due to sales of lower margin products compared to the prior year . avtel volumes were lower than the prior year due to the timing of shipments to customers as opposed to any change in the long-term outlook for that market , with an improved price and product mix . emea and aspac were adversely impacted by exchange rate movements year over year , driven primarily by a weakening of the european union euro and the british pound sterling against the u.s. dollar . gross margin : the year on year increase of 2.9 percentage points primarily reflected the higher margins achieved in the americas , together with the higher margin contribution from avtel and the positive effect of weaker exchange rates versus the u.s. dollar on our cost base . operating expenses : the year on year decrease of $ 2.7 million , was primarily due to favorable exchange rates in emea and aspac resulting from a weakening of the european union euro and the british pound sterling against the u.s. dollar . performance chemicals net sales : the table below details the components which comprise the year on year change in net sales spread across the markets in which we operate : replace_table_token_17_th volumes were higher in the americas and emea , primarily due to increased personal care volumes , partly offset by adverse pricing pressures affecting the price and product mix . aspac saw lower volumes offset by a favorable price and product mix . a weakening of the european union euro and the british pound sterling against the u.s. dollar resulted in an 36 adverse exchange variance for emea and aspac . the disposal of our aroma chemicals business has been excluded from the market analysis above and included as one variance for the segment total . gross margin : the year on year increase of 2.8 percentage points was primarily driven by a greater proportion of sales from our higher margin personal care business , following the disposal of our aroma chemicals business at the start of the third quarter .
| results of operations the following table provides operating income by reporting segment : replace_table_token_9_th in the second quarter of 2016 , we finalized changes to our reporting segments to reflect the development of our management structure and strategy . as a result of these changes , information that the company 's chief operating decision makers regularly review for the purposes of allocating resources and assessing financial performance has changed . therefore , the company has reported its financial performance based on the four reportable segments described below . fuel specialties , including the polymers business previously reported in performance chemicals and excluding the oilfield services business performance chemicals , excluding the polymers business oilfield services , which was previously reported within fuel specialties octane additives ( no change ) we have recast certain prior period amounts to conform to the way we internally manage and monitor segment performance . 29 the fuel specialties , performance chemicals and oilfield services segments operate in markets where we actively seek growth opportunities although their ultimate customers are different . the octane additives segment is expected to decline in the near future as our one remaining refinery customer transitions to unleaded fuel . results of operations ย fiscal 2016 compared to fiscal 2015 : replace_table_token_10_th 30 fuel specialties net sales : the table below details the components which comprise the year on year change in net sales spread across the markets in which we operate : replace_table_token_11_th volumes in the americas were lower than the prior year due to softer fuel demand , a warmer winter and a change in the refinery crude slates . emea and aspac volumes increased from the prior year driven by increased demand for high volume low margin products . price and product mix in emea and aspac was adversely impacted by the increased sales of lower margin products together with some pricing pressures .
| 2,691 |
the company is currently evaluating the effects of asu 2017-01. in may 2017 , the fasb issued asu 2017-09 , โ compensation-stock compensation ( topic 718 ) : scope of modification accounting โ , which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in topic 718. asu 2017-09 is effective for annual periods beginning after december 15 , 2017 , with early adoption permitted , including adoption in any interim period for story_separator_special_tag general the following is a discussion by management of its view of the company 's business , financial condition , and corporate performance for the past year . the purpose of this information is to give management 's recap of the past year , and to give an understanding of management 's current outlook for the near future . this section is meant to be read in conjunction with โ item 8. financial statements and supplementary data โ of this annual report on form 10-k. our fiscal year ends on the last day of march of the calendar year . we refer to the years ended march 31 , 2018 and 2017 as our 2018 and 2017 fiscal years , respectively . recent securities and stock purchase agreements on october 5 , 2017 , the company and the investor entered into the october 2017 purchase agreement , pursuant to which ( 1 ) the investor purchased 212 shares of series c preferred stock on the closing date of the agreement , october 4 , 2017 ( the โ initial closing โ ) , for $ 2 million , and agreed , subject to certain closing conditions set forth in the agreement , agreed to purchase ( 2 ) 106 shares of series c preferred stock for $ 1,000,000 , 10 days after the initial closing ( which closing occurred on november 21 , 2017 ) ; ( 3 ) 105 shares of series c preferred stock for $ 1,000,000 , 10 days after the second closing ( which closing occurred on december 27 , 2017 ) ; ( 4 ) 105 shares of series c preferred stock for $ 1,000,000 , 10 days after the third closing ( which closing occurred on january 30 , 2018 ) ; ( 5 ) 105 shares of series c preferred stock for $ 1,000,000 , 10 days after the fourth closing ; ( 6 ) 525 shares of series c preferred stock for $ 5,000,000 , 30 days after the fifth closing ; and ( 7 ) 525 shares of series c preferred stock for $ 5,000,000 , 30 days after the sixth closing . on october 5 , 2017 , in connection with the entry into the october 2017 purchase agreement , the investor purchased 212 shares of series c preferred stock for $ 2 million ( the โ initial closing โ ) ; on november 21 , 2017 , pursuant to the terms of the october 2017 purchase agreement , we sold the investor an additional 106 shares of series c preferred stock for $ 1 million ( the โ second closing โ ) ; on december 27 , 2017 , pursuant to the terms of the october 2017 purchase agreement , we sold the investor an additional 105 shares of series c preferred stock for $ 1 million ( the โ third closing โ ) ; on january 31 , 2018 , pursuant to the terms of the october 2017 purchase agreement , we sold the investor an additional 105 shares of series c preferred stock for $ 1 million ( the โ fourth closing โ ) ; on february 22 , 2018 , pursuant to the terms of the october 2017 purchase agreement , we sold the investor an additional 105 shares of series c preferred stock for $ 1 million ( the โ fifth closing โ ) ; on march 9 , 2018 , the company sold the investor an additional 105 shares of series c preferred stock for $ 1 million ( the โ sixth closing โ ) ; on april 10 , 2018 , the company sold the investor an additional 105 shares of series c preferred stock for $ 1 million ( the โ seventh closing โ ) ; and on may 22 , 2018 , the company sold the investor an additional 105 shares of series c preferred stock for $ 1 million ( the โ eighth closing โ ) . 56 the sixth closing , seventh closing and eighth closing occurred notwithstanding the terms of the october 2017 purchase agreement which required the sixth closing to be for a total of $ 5 million ( the โ $ 5 million closing โ ) , as the parties mutually agreed to the sales of only $ 1 million of series c preferred stock to be sold pursuant to the $ 5 million closing , at the sixth closing , seventh closing and eighth closing . on march 2 , 2018 , the company and the investor entered into an amendment to the october 2017 purchase agreement ( the โ amendment โ ) , pursuant to which the investor ( a ) waived any and all trigger events ( as defined in the certificate of designation of the series c preferred stock ( the โ designation โ ) ) that had occurred prior to march 2 , 2018 , ( b ) agreed that all calculations provided for in the designation would be made as if no such trigger event had occurred , and ( c ) waived any right to receive any additional shares of common stock based upon any such trigger event , with respect to all shares of series c preferred stock , other than any which have already been converted . story_separator_special_tag these reserves are based on the oil and gas benchmark prices to estimate year-end petroleum reserves and values using u.s. securities and exchange commission guidelines from the modernization of oil and gas reporting and on the quantities of oil , natural gas and ngls , which , by analysis of geoscience and engineering data , can be estimated with reasonable certainty to be economically producible from a given date forward from known reservoirs under existing economic conditions , operating methods and government regulations prior to the time at which contracts providing the rights to operate expire , unless evidence indicates that renewal is reasonably certain , regardless of whether deterministic or probabilistic methods are used for the estimation . reserves and economic evaluation of all of our properties are prepared on a well-by-well basis . the accuracy of the reserve estimates is a function of the quality and quantity of available data ; interpretation of that data ; accuracy of various mandated economic assumptions ; and judgement of the independent reserve engineer . using the average monthly crude oil price of $ 50.63 per bbl and natural gas price of $ 2.53 per thousand cubic feet ( mcf ) for the twelve months ended march 31 , 2018 , our estimated discounted future net cash flow ( โ pv-10 โ ) before tax expenses for our total proved reserves was approximately $ 7.5 million . total reserve value at march 31 , 2018 represents a decrease of approximately $ 8.5 million or 53 % from a year earlier using the same sec pricing and reserves methodology . the decrease is primarily due to the rogers foreclosure and natural declines in the production of our oil and gas properties . oil , natural gas and ngl prices are market driven and have been historically volatile , and we expect that future prices will continue to fluctuate due to supply and demand factors , seasonality , and geopolitical and economic factors , and such volatility can have a significant impact on our estimates of proved reserves and the related pv-10 value . the reserves as of march 31 , 2018 were determined in accordance with standard industry practices and sec regulations by the licensed independent petroleum engineering firm of graves & co. consulting llc . oil , natural gas and ngl reserve estimates require significant judgments in the evaluation of all available geological , geophysical , engineering and economic data . the data for a given field may change substantially over time as a result of numerous factors including , but not limited to , additional development activity , production history , projected future production , economic assumptions relating to commodity prices , operating expenses , severance and other taxes , capital expenditures and remediation costs and these estimates are inherently uncertain . if estimates of proved reserves decline , our depreciation , depletion and amortization ( โ dd & a โ ) rate will increase , resulting in a decrease in net income . a decline in estimates of proved reserves could also cause us to perform an impairment analysis to determine if the carrying amount of oil and natural gas properties exceeds fair value and could result in an impairment charge , which would reduce earnings . although these hydrocarbon quantities have been determined in accordance with industry standards , they are prepared using the subjective judgments of the independent engineers , and may actually be more or less . oil and gas revenue during the year ended march 31 , 2018 , our net crude oil sales volumes decreased to 27,704 bbls from 32,918 bbls , a 16 % decrease over the previous fiscal year . the production decrease is primarily related to the effects of the rogers foreclosure , described in greater detail above under โ part i โ โ โ item 1. business โ - โ recent events โ - โ rogers loan default and foreclosure โ . 58 major expenditures the table below sets out the major components of our operating and corporate expenditures for the years ended march 31 , 2018 and 2017 : replace_table_token_6_th ( a ) other capitalized costs include title related expenses and tangible and intangible drilling costs . market conditions and commodity prices our financial results depend on many factors , particularly the price of natural gas and related natural gas liquids , and crude oil and our ability to market our production on economically attractive terms . commodity prices are affected by many factors outside of our control , including changes in market supply and demand , which are impacted by weather conditions , inventory storage levels , basis differentials and other factors . as a result , we can not accurately predict future commodity prices and , therefore , we can not determine with any degree of certainty what effect increases or decreases in these prices will have on our production volumes or revenues . in addition to production volumes and commodity prices , finding and developing sufficient amounts of natural gas and crude oil reserves at economical costs are critical to our long-term success . we expect prices to remain volatile for the remainder of the year . for information about the impact of realized commodity prices on our natural gas and crude oil and condensate revenues , refer to โ results of operations โ below . story_separator_special_tag utilized for the purpose of conserving cash resources for use in field development activities and operations . 61 interest expense . interest expense for the year ended march 31 , 2018 increased by $ 2.8 million or 90 % , when compared to the prior year primarily due to the approximate $ 2.1 million of default interest related to the rogers foreclosure , additional interest payments on the ibc loan ( which was only outstanding for part of the year ended march 31 , 2017 ) and the amortization of various loan discounts for outstanding and recently retired payables . other expense .
| results of operations the following discussion and analysis of the results of operations for each of the two fiscal years in the period ended march 31 , 2018 should be read in conjunction with the financial statements of camber energy , inc. and notes thereto ( see โ item 8. financial statements and supplementary data โ ) . as used below , the abbreviations โ bbls โ stands for barrels , โ mcf โ for thousand cubic feet and โ boe โ for barrels of oil equivalent ( determined under the relative energy content method by using a ratio of 6.0 mmbtu ( 1 million british thermal units ) to 1.0 bbl of oil ) . we reported a net loss for the year ended march 31 , 2018 of $ 24.8 million , or ( $ 10.69 ) per share . for the year ended march 31 , 2017 , we reported a net loss of $ 89.1 million , or ( $ 173.41 ) per share . the decrease in net loss was primarily due to the recognition of a substantial impairment of oil and gas properties in prior period and higher operating revenues during the current period , as discussed in greater detail below . 59 net operating revenues the following table sets forth the revenue and production data for the years ended march 31 , 2018 and 2017. replace_table_token_7_th total crude oil and natural gas revenues for the year ended march 31 , 2018 increased $ 1.58 million , or 29 % , to approximately $ 6.9 million compared to $ 5.3 million for the same period a year ago due primarily to the increase in sales volume . 60 operating and other expenses the following table sets forth operating and other expenses for the years ended march 31 , 2018 and 2017 : replace_table_token_8_th lease operating expenses .
| 2,692 |
factors that could cause or contribute to such differences include , but are not limited to , those identified below and those discussed in the section titled โ risk factors โ under part ii , item 1a in this annual report on form 10-k. overview we were founded in 1999 and are a leading global provider of survey software products that enable organizations to engage with their key constituents , including their customers , employees and the markets they serve . our mission is to power curious individuals and organizations to measure , benchmark and act on the opinions that drive success . our people powered data platform enables conversations at scale to deliver impactful customer , employee and market insights to our over 17.5 million active users globally . our widely adopted cloud-based saas platform helps individuals and organizations design and distribute surveys that generate an average of more than 20 million answered questions daily across more than 190 countries and territories . our products drive actionable insights that allow organizations to solve mission-critical business problems , including enhancing customer experience and loyalty , increasing employee productivity and retention and optimizing product and marketing investments . our products we generate substantially all of our revenue from the sale of subscriptions to our products . in addition to our free basic survey product , we offer multiple tiers of subscriptions to individual usersโstandard , advantage and premierโthat provide a compelling range of functionality and features to power the collection and analysis of feedback . we also offer team versions of our individual advantage and premier subscription plans . our surveymonkey teams ' versions of such subscription plans are oriented for smaller groups of users who want to collaborate with others . in addition to the features available in individual advantage and premier subscription plans , the surveymonkey teams ' versions provide collaboration capabilities around sharing , commenting and analyzing surveys and a shared asset library for team users . in addition , we offer an enterprise-grade version of our survey platform , surveymonkey enterprise , which provides managed user accounts , customized company branding , enterprise-grade security , sophisticated collaboration capabilities and deep integrations with a broad set of leading software applications . we also generate revenue from a wide range of purpose-built solutions , including surveymonkey cx for customer experience and feedback , techvalidate for content marketing , surveymonkey engage for employee engagement and surveymonkey audience for market research and analysis . we generate revenue from these purpose-built solutions by subscription or on a transactional basis , depending on the product . our business model our self-serve offering underpins a powerful , capital efficient business model that is fueled by the virality of our products . we believe our brand is synonymous with high-quality , easy to use products . the strength of our brand enables us to rapidly and cost-effectively acquire new users through free organic searches , paid online marketing and word of mouth referrals . our survey platform and purpose-built solutions can be used without costly implementation , professional services or training , and anyone can create a survey in minutes . our free basic survey product allows users to design and send simple surveys to collect and analyze feedback . users and respondents can access our survey platform on a broad range of desktop and mobile devices , and surveys can be distributed through multiple channels , such as email , web , mobile , messaging apps and social media . users often share results 44 and collaborate with others , who are then attracted to our survey platform and f requently sign up as new users . every person who ta kes a survey is a potential future customer , and we seek to capitalize on that opportunity through end of survey marketing designed to engage further with respondents and encourage them to create accounts and become new users . we invest in new features and improvements to our product functionality as well as targeted marketing campaigns to drive conversion of unpaid users to paid users . as a result , we have a predictable , high-visibility revenue model where we generate more than 90 % our revenue from sales o f subscriptions to our products . we have a broad and diverse customer base and no customer represented more than 1 % of our revenue in any of the periods presented . we supplement our self-serve channel with a targeted sales effort to upsell organizations to surveymonkey enterprise , to expand deployments of surveymonkey enterprise within organizations and to cross-sell purpose-built solutions within organizations . we believe our existing user base represents a significant opportunity to expand our business and increase our revenue . we have 646,727 paying users in more than 345,000 organizational domains and believe the individual paying users within organizational domains represent an opportunity to significantly increase conversion from individual subscriptions to our enterprise offerings . key business metric we review a number of operating and financial metrics , including the following key metric to evaluate our business , measure our performance , identify trends affecting our business , formulate our business plan and make strategic decisions . replace_table_token_6_th paying users we define a paying user as an individual customer of our survey platform or form-based application , a seat within a surveymonkey enterprise deployment or a subscription to one of our purpose-built solutions , in each case as of the end of a period . one person would count as multiple paying users if the person had more than one paid license at the end of the period . for example , if an individual paying user also had a designated seat in a surveymonkey enterprise deployment , we would count that person as two paying users . paying users is an indicator of the scale of our business and an important factor in our ability to increase our revenue . story_separator_special_tag adjusted ebitda has limitations as an analytical tool , and it should not be considered in isolation or as a substitute for analysis of other gaap financial measures . some of the limitations of adjusted ebitda are that it excludes recurring expenses for interest payments , does not reflect the dilution that results from stock-based compensation , and does not reflect the cost to replace depreciated property and equipment . it may be calculated differently by other companies in our industry , limiting its usefulness as a comparative measure . the following is a reconciliation of adjusted ebitda to the most comparable gaap measure , net loss : replace_table_token_10_th ( 1 ) includes interest expense on our credit facilities and financing lease obligations related to our corporate headquarters . core revenue , arpu , free cash flow and adjusted ebitda are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with gaap . 47 2017 and 2016 restructuring s during the years ended december 31 , 2017 and 2016 , we restructured our business to focus on our core products , increase operating efficiency and reduce costs over the long-term . in november 2017 , in conjunction with the hiring of our new chief sales officer , we implemented a plan to centralize our u.s. salesforce in our san mateo , california headquarters . in november 2016 , we implemented a plan to wind down the operations of a previously acquired business . in march 2016 , we implemented a plan to reduce our sales and marketing headcount and to close several international offices , which was primarily related to our decision to generally cease offering the non-self-serve portion of our surveymonkey audience solution . we recognized aggregate restructuring costs of $ 3.5 million in 2018 , $ 1.8 million in 2017 and $ 25.3 million in 2016. as of december 31 , 2018 and 2017 , $ 0.9 million and $ 1.4 million , respectively , has been accrued primarily related to the restructurings and non-cancellable lease costs , which amounts will be paid through 2021. restructuring costs incurred during 2018 are related to our november 2017 restructuring plan and are primarily due to changes in estimated lease termination costs and related leasehold impairment costs . components of results of operations revenue we derive revenue primarily from sales of subscriptions to our products . we recognize revenue ratably over the subscription term , generally ranging from one month to one year , as long as all other revenue recognition criteria have been met . we have an increasing proportion of multi-year contracts with organizations . our contracts are generally non-cancellable and do not contain refund provisions . subscription fees are collected primarily from credit cards through our website at the beginning of the subscription period . we also generate a small portion of revenue from one of our purpose-built solutions that we sell on a transactional basis . no customer represented more than 1 % of our revenue in any of the periods presented . cost of revenue and operating expenses we allocate shared costs , such as depreciation on equipment shared by all departments , facilities ( including rent and utilities ) , employee benefit costs and information technology costs to all departments based on headcount . as such , allocated shared costs are reflected in each cost of revenue and operating expense category , other than restructuring . cost of revenue . our cost of revenue consists primarily of expenses associated with the delivery and distribution of our products to our users . these expenses generally consist of infrastructure costs , personnel costs and other related costs . infrastructure costs generally include expenses related to the operation of our data centers , such as data center equipment depreciation , facility costs ( such as co-location rentals ) , amortization of capitalized software , payment processing fees , website hosting costs , external sample costs and charitable donations associated with our surveymonkey audience solution . personnel costs include salaries , bonuses , stock-based compensation , other employee benefits and travel-related expenses for employees whose primary responsibilities relate to supporting our infrastructure and delivering user support . other related costs include amortization of acquired developed technology intangible assets and allocated overhead . we plan to continue investing in additional resources to enhance the capability and reliability of our infrastructure to support user growth and increased use of our products . we expect that cost of revenue , excluding the impact from certain stock-based compensation charges described in โ โsignificant impacts of stock-based compensation โ , will increase in absolute dollars in future periods and vary from period to period as a percentage of revenue in the near term . we expect that cost of revenue will decrease as a percentage of revenue in the long term . in addition , as a result of certain stock-based compensation charges described in โ โsignificant impacts of stock-based compensation , โ our cost of revenue increased significantly in absolute dollars during the year ended december 31 , 2018 due to the completion of our ipo . 48 research and development . research and development expenses primarily include personnel costs , costs for third-party consultants , depreciation of equipment used in research and development activities and allocated overhead . personnel costs for our research and development organization include salaries , bonuses , stock-based compensation , other employee benefits and travel-related expenses . our research and developmen t efforts focus on maintaining and enhancing existing products and adding new products . except for costs associated with the development of internal-use software , research and development costs are expensed as incurred . we expect that research and developm ent expenses , excluding the impact from certain stock-based compensation charges described in โ โsignificant impacts of stock-based compensation โ , will increase in absolute dollars in future periods and vary from period to period as a percentage of revenue in the near term .
| quarterly results of operations the following tables show a summary of our unaudited quarterly statements of operations data for each of the four quarters of the years ended december 31 , 2018 and 2017. the unaudited quarterly statements of operations data set forth below have been prepared on a basis consistent with our audited annual consolidated financial 55 statements included e lsewhere in this annual report on form 10-k and include , in our opinion , all normal recurring adjustments necessary for the fair presentation of the results of operations for the periods presented , in accordance with gaap . our historical quarterly results are not necessarily indicative of the results that may be expected in any future period and the unaudited quarterly statements of operations data should be read in conjunction with our consolidated financial statements and the related notes thereto include d elsewhere in this annual report on form 10-k . percentages presented in the following tables may not sum due to rounding . quarterly periods in the year ended december 31 , 2018 replace_table_token_19_th ( 1 ) includes stock-based compensation , net of amounts capitalized as follows : replace_table_token_20_th ( 2 ) includes amortization of acquisition intangible assets as follows : replace_table_token_21_th 56 replace_table_token_22_th quarterly periods in the year ended december 31 , 2017 replace_table_token_23_th ( 1 ) for the three months ended december 31 , 2017 , dilutive net income per share was calculated using 102,202 thousand weighted-average dilutive shares . 57 ( 2 ) includes stock-based compensation , net of amounts capitalized as follows : replace_table_token_24_th ( 3 ) includes amortization of acquisition intangible assets as follows : replace_table_token_25_th replace_table_token_26_th quarterly revenue trends our revenue in each of the quarters presented increased sequentially for all subsequent periods primarily due to increases in arpu and in the number of paying users .
| 2,693 |
recoveries by integrated biopharma under insurance policies will reduce the amount of indemnification due from us to integrated biopharma only if the recoveries are under insurance policies integrated biopharma maintains for our benefit . recoveries by us will in all cases reduce the amount of any indemnification due from integrated biopharma to us . under the indemnification and insurance matters agreement , a party has the right to control the defense of third-party claims for which it is obligated to provide indemnification , except that integrated biopharma has the right to control the defense of any third-party claim or series of related third- party claims in which it is named as a party whether or not it is obligated to provide indemnification in connection with the claim and any third-party claim for which integrated biopharma and we may both be obligated to provide indemnification . we may not assume the control of the defense of any claim unless we acknowledge that if the claim is adversely determined , we will indemnify integrated biopharma in respect of all liabilities relating to that claim . the indemnification and insurance matters agreement does not apply to taxes covered by the tax responsibility allocation agreement . offset . integrated biopharma is permitted to reduce amounts it owes us under any of our agreements with integrated biopharma , by amounts we may owe to integrated biopharma under those agreements . assignment . we may not assign or transfer any part of the indemnification and insurance agreement without integrated biopharma 's prior written consent . nothing contained in the agreement restricts the transfer of the agreement by integrated biopharma . 42 tax responsibility allocation agreement in order to allocate our responsibilities for taxes and certain other tax matters , we and integrated biopharma entered into a tax responsibility allocation agreement prior to the date of the distribution . under the terms of the agreement , with respect to consolidated federal income taxes , and consolidated , combined and unitary state income taxes , integrated biopharma will be responsible for , and will indemnify and hold us harmless from , any liability for income taxes with respect to taxable periods or portions of periods ending prior to the date of distribution to the extent these amounts exceed the amounts we have paid to integrated biopharma prior to the distribution or in connection with the filing of relevant tax returns . integrated biopharma is also responsible for , and will indemnify and hold us harmless from , any liability for income taxes of integrated biopharma or any member of the integrated biopharma group ( other than us ) by reason of our being severally liable for those taxes under u.s. treasury regulations or analogous state or local provisions . under the terms of the agreement , with respect to consolidated federal income taxes , and consolidated , combined and unitary state income taxes , we are responsible for , and will indemnify and hold integrated biopharma harmless from , any liability for our income taxes for all taxable periods , whether before or after the distribution date . with respect to separate state income taxes , we are also responsible for , and will indemnify and hold integrated biopharma harmless from , any liability for income taxes with respect to taxable periods or portions of periods beginning on or after the distribution date . we are also responsible for , and will indemnify and hold integrated biopharma harmless from , any liability for our non-income taxes and our breach of any obligation or covenant under the terms of the tax responsibility allocation agreement , and in certain other circumstances as provided therein . in addition to the allocation of liability for our taxes , the terms of the agreement also provide for other tax matters , including tax refunds , returns and audits . item 14. principal accountant fees and services . the following table represents aggregate fees billed to us by cohnreznick llp : for the year ended june 30 , 2015 2014 audit fees $ 88,357 $ 103,475 audit-related fees โ โ tax fees โ โ other fees โ โ total fees $ 88,357 $ 103,475 in the above table , in accordance with the sec 's definitions and rules , โ audit fees โ are fees we paid cohnreznick llp for professional services for the audit of our financial statements included in our annual reports on form 10-k , review of our financial statements included in our quarterly reports on form 10-q and services normally provided in connection with statutory and regulatory filings or engagements , consents and assistance with and review of our documents filed with the securities and exchange commission . pre-approval policies and procedures the audit committee 's policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm . these services may include audit services , audit-related services , tax services and other services . pre-approval is generally detailed as to the particular service or category of services and is generally subject to a specific budget . the independent registered public accounting firm and management are required to periodically report to the audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval , and the fees for the services performed to date . the audit committee may also pre-approve particular services on a case-by-case basis . the audit committee has determined that the rendering of the services other than audit services by cohnreznick llp is compatible with maintaining the principal accountant 's independence . part iv item 15. exhibits and financial statement schedules . story_separator_special_tag these advances are occurring subsequent to the demonstration of safety of ibiolaunch-produced vaccine candidates against each of the h1n1 โ swine โ flu virus and the h5n1 avian flu virus in successfully completed phase 1 clinical trials . we developed our ibiomodulator technology based on the use of a modified form of the cellulose degrading enzyme lichenase , or lickm , from clostridium thermocellum , a thermophilic and anaerobic bacterium . ibiomodulator enables an adjuvant component to be fused directly to preferred recombinant antigens to create a single protein for use in vaccine applications . multiple proteins or antigenic domains of proteins can be fused to various portions of lickm to enhance vaccine performance . the ibiomodulator platform has been shown to be applicable to a range of vaccine proteins and can significantly modify the immune response to a vaccine in two important ways . animal efficacy studies have demonstrated that it can increase the strength of the initial immune response to a vaccine antigen ( as measured by antibody titer ) and also extend the duration of the immune response . these results suggest the possibility that use of the ibiomodulator platform may lower vaccine antigen requirements and enable fewer doses to establish prolonged protective immunity . we believe that the ability to provide better immune response and longer-term protection with fewer or zero booster inoculations would add significant value to a vaccine by reducing the overall costs and logistical difficulties of its use . our near-term focus is to realize two key objectives : ( 1 ) the establishment of additional business arrangements pursuant to which commercial , government and not-for-profit licensees will utilize ibiolaunch and ibiomodulator in connection with the production and development of therapeutic proteins and vaccine products ; and ( 2 ) the further development of select product candidates based upon or enhanced by our technology platforms . these objectives are the core components of our strategy to commercialize the proprietary technology we have developed and validated . our strategy to engage in partnering and out-licensing of our technology platforms seeks to preserve the opportunity for ibio to share in the successful development and commercialization of product candidates by our licensees while enhancing our own capital and financial resources for development , alone or through commercial alliances with others , of high-potential product candidates based upon our platforms . in addition to financial resources we may receive in connection with the license of our platform technologies , we believe that successful development by third party licensees of ibiolaunch-derived and ibiomodulator-enhanced product candidates will further validate our technology , increase awareness of the advantages that may be realized by the use of such platforms and promote broader adoption of our technologies by additional third parties . the advancement of ibiolaunch-derived and ibiomodulator-enhanced product candidates is a key element of our strategy . we believe that selecting and developing products which individually have substantial commercial value and are representative of classes of pharmaceuticals that can be successfully produced using either or both of our technology platforms will allow us to maximize the near and longer term value of each platform while exploiting individual product opportunities . to realize this result , we are currently advancing designated product candidates through the preclinical phase of development and undertaking the studies required for submission of investigational new drug applications , or inds . the most advanced product candidate we are currently internally advancing through preclinical ind enabling studies is a proprietary recombinant protein we call ibio-cfb03 for treatment of idiopathic pulmonary fibrosis , systemic sclerosis , and potentially other fibrotic diseases . to the extent that we anticipate the opportunity to realize additional value , we may elect to further the development of this or other product candidates through the early stages of clinical development before seeking to license the product candidate to other industry participants for late stage clinical development and if successful , commercialization . 29 story_separator_special_tag style= '' font : 10pt times new roman , times , serif ; margin : 0pt 0 ; text-align : justify '' > on august 25 , 2014 , we entered into the 2014 aspire purchase agreement with aspire capital , pursuant to which the company had the option to require aspire capital to purchase up to $ 10 million of its common stock upon and subject to the terms of the agreement over a two-year period . as of april 28 , 2015 , aspire capital fulfilled its commitment to purchase $ 10.0 million of the company 's common stock under the 2014 aspire purchase agreement . on may 15 , 2015 , the company entered into a new common stock purchase agreement with aspire capital ( the โ 2015 aspire purchase agreement โ ) , pursuant to which the company has the option to require aspire capital to purchase up to $ 15 million of its common stock , upon and subject to the terms of the agreement , over a three-year term . despite the receipt of these proceeds , we may still need additional capital to fully implement our business , operating and development plans for periods beyond june 30 , 2016. on november 20 , 2014 , we filed with the securities and exchange commission a registration statement on form s-3 under the securities act , which was declared effective by the securities and exchange commission on december 2 , 2014. this registration statement allows us , from time to time , to offer and sell shares of common stock , shares of preferred stock , debt securities , units comprised of shares of common stock , preferred stock , debt securities and warrants in any combination , andwarrants to purchase common stock , preferred stock , debt securities and or units , up to a maximum aggregate amount of $ 100 million of such securities .
| results of operations revenue gross revenue for 2015 and 2014 was approximately $ 1.85 million and $ 205,000 , respectively . revenue has been attributable to technology services provided to fiocruz in connection with the development by fiocruz of a yellow fever vaccine using our ibiolaunch technology . to fulfill our obligations , we engage fraunhofer usa inc. as a subcontractor to perform the services required . during 2013 , the company , fiocruz and fraunhofer were awaiting approval by the brazilian government of a contract amendment reflecting the agreed modifications to the work plan . during this waiting period , no revenues were recognized by the company in connection with services provided to fiocruz through the subcontract arrangement with fraunhofer . in june 2014 , the company , fiocruz and fraunhofer amended their collaboration and license agreement reflecting the agreed modifications to the work plan and work was resumed by fraunhofer for the company to continue development of a yellow fever vaccine using the company 's ibiolaunch technology . research and development expenses research and development expenses for 2015 were $ 3.5 million . research and development expenses for 2014 were approximately ( $ 150,000 ) . however , research and development expenses for 2014 included ( i ) a credit of $ 1.04 million resulting from the reversal of expenses accrued through june 30 , 2013 under the tta prior to the settlement agreement with fraunhofer completed in september 2013 and ( ii ) the reversal of expenses totaling $ 1.007 million incurred during 2013 as the result of the amendment discussed above . adjusting for this , research and development spending was approximately $ 1.9 million for 2014 , an increase of approximately $ 1.6 million . the increase was primarily related to the modifications to the work plan described above .
| 2,694 |
the total number of shares reserved for issuance under the 2008 equity incentive plan was 4,828,150 shares of common stock , subject to adjustment resulting from a stock split or the payment of a stock dividend or any other increase or decrease in the number of issued shares of the company 's stock effected without receipt of consideration by the company . as of january 1 , 2016 , 1,077,325 shares were available for grant under the 2008 equity incentive plan . the espp allows for officers and employees to purchase common stock through payroll deductions of up to 15 % of a participant 's eligible compensation . shares of common stock are purchased under the espp at 95 % of the fair market value of the company 's common stock on each purchase date . subject to adjustment resulting from a stock split or the payment of a stock dividend or any other increase or decrease in the number of issued shares of the company 's stock effected without receipt of consideration by the company , the total number of shares reserved for issuance under the espp was 400,000 shares of common stock . as of january 1 , 2016 , 66,030 shares were available for grant . weighted average purchase prices for shares sold under the espp plan in fiscal 2015 , 2014 and 2013 were $ 43.88 , $ 35.68 and $ 30.32 , respectively . restricted stock units the company grants restricted stock units to employees and outside directors . these restricted stock unit grants are designed to attract and retain employees , and to better align employee interests with those of the company 's stockholders . for a select group of employees , up to 40 % of their annual bonus is settled with fully vested restricted stock unit awards . under these fully vested restricted stock unit awards , the holder of each award has the right to receive one share of the company 's common stock for each fully vested restricted stock unit four years from the date of grant . each individual who received a fully vested restricted stock unit award is granted a matching number of unvested restricted stock unit awards . these unvested restricted stock unit awards cliff vest story_separator_special_tag overview exponent , inc. is a science and engineering consulting firm that provides solutions to complex problems . our multidisciplinary team of scientists , physicians , engineers , business and regulatory consultants brings together more than 90 different technical disciplines to solve complicated issues facing industry and government today . our services include analysis of products , people , property , processes and finances related to litigation , product recall , regulatory compliance , research , development and design . critical accounting estimates in preparing our consolidated financial statements , we make assumptions , judgments and estimates that can have a significant impact on our revenue , operating income and net income , as well as on the value of certain assets and liabilities on our consolidated balance sheet . we base our assumptions , judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances . actual results could differ materially from these estimates under different assumptions or conditions . on a regular basis we evaluate our assumptions , judgments and estimates and make changes accordingly . we believe that the assumptions , judgments and estimates involved in accounting for revenue recognition and estimating the allowance for doubtful accounts and contract losses have the greatest potential impact on our consolidated financial statements , so we consider these to be our critical accounting policies . we discuss below the assumptions , judgments and estimates associated with these policies . historically , our assumptions , judgments and estimates relative to our critical accounting policies have not differed materially from actual results . for further information on our critical accounting policies , see โ note 1 : summary of significant accounting policies โ of our notes to consolidated financial statements . 20 revenue recognition . we derive our revenues primarily from professional fees earned on consulting engagements , fees earned for the use of our equipment and facilities , as well as reimbursements for outside direct expenses associated with the services that are billed to our clients . substantially all of our engagements are service contracts performed under time and material or fixed-price billing arrangements . for time and material and fixed-price service projects , revenue is generally recognized as the services are performed . for substantially all of our fixed-price service engagements , we recognize revenue based on the relationship of incurred labor hours at standard rates to our estimate of the total labor hours at standard rates we expect to incur over the term of the contract . our estimate of total labor hours we expect to incur over the term of the contract is based on the nature of the project and our past experience on similar projects . we believe this methodology achieves a reliable measure of the revenue from the consulting services we provide to our customers under fixed-price contracts . significant management judgments and estimates must be made and used in connection with the revenues recognized in any accounting period . these judgments and estimates include an assessment of collectability and , for fixed-price engagements , an estimate as to the total effort required to complete the project . if we made different judgments or utilized different estimates , the amount and timing of our revenue for any period could be materially different . all contracts are subject to review by management , which requires a positive assessment of the collectability of contract amounts . story_separator_special_tag other income ( expense ) , net fiscal years percent ( in thousands except percentages ) 2015 2014 change other income and expense , net $ 2,200 $ 4,416 ( 50.2 ) % percentage of total revenues 0.7 % 1.4 % other income ( expense ) , net , consists primarily of interest income earned on available cash , cash equivalents and short-term investments , changes in the value of assets associated with our deferred compensation plan and rental income from leasing excess space in our silicon valley facility . the decrease in other income ( expense ) , net , was primarily due to the change in value of assets associated with our deferred compensation plan . during fiscal 2015 , other income , net decreased $ 2,850,000 with a corresponding decrease to deferred compensation expense as compared to fiscal 2014. this change consisted of a decrease in the value of the plan assets of $ 325,000 during fiscal 2015 as compared to an increase in the value of the plan assets of $ 2,525,000 during fiscal 2014 . 24 income taxes replace_table_token_5_th the decrease in our effective tax rate was due to an increase in foreign earnings in jurisdictions with lower income tax rates and a decrease in state income taxes . fiscal years ended january 2 , 2015 , and january 3 , 2014 revenues replace_table_token_6_th the increase in revenues for our engineering and other scientific segment was due to an increase in billable hours and an increase in billing rates partially offset by fiscal 2014 having one less week of activity than fiscal 2013. during fiscal 2014 , billable hours for this segment increased by 2.1 % to 794,000 as compared to 778,000 during fiscal 2013. the increase was due to demand for services in our materials & corrosion engineering , biomedical engineering , polymer science & materials chemistry , human factors , and construction consulting practices . utilization was 74 % for both fiscal 2014 and fiscal 2013. technical full-time equivalents increased 4.6 % to 519 for fiscal 2014 from 496 for fiscal 2013 due to our recruiting and retention efforts . the increase in revenues from our environmental and health segment was due to an increase in billable hours and an increase in billing rates partially offset by fiscal 2014 having one less week of activity than fiscal 2013. during fiscal 2014 , billable hours for this segment increased by 1.3 % to 313,000 as compared to 309,000 during fiscal 2013. utilization increased to 68 % for fiscal 2014 as compared to 65 % for fiscal 2013. the increase in billable hours and utilization was due to demand for our services in our environmental sciences and ecological sciences practices . technical full-time equivalents were 222 during fiscal 2014 as compared to 223 for fiscal 2013. compensation and related expenses fiscal years percent ( in thousands except percentages ) 2014 2013 change compensation and related expenses $ 183,533 $ 184,084 ( 0.3 ) % percentage of total revenues 60.2 % 62.2 % the decrease in compensation and related expenses during fiscal 2014 was due to a change in the value of assets associated with our deferred compensation plan partially offset by an increase in payroll and bonus expense . during fiscal 2014 , deferred compensation expense decreased $ 3,519,000 with a corresponding decrease to other income ( expense ) , net , as compared with the prior year due to the change in value of assets associated with our deferred compensation plan . this decrease consisted of an increase in the value of the plan assets of $ 2,525,000 during fiscal 2014 as compared to an increase in the value of the plan assets of $ 6,044,000 during fiscal 2013. payroll increased $ 1,657,000 due to a 3.1 % increase in technical full-time equivalent employees and the impact of our annual salary increases partially offset by fiscal 2014 having one less week of activity than fiscal 2013. bonuses increased $ 1,503,000 due to a corresponding increase in profitability . other operating expenses fiscal years percent ( in thousands except percentages ) 2014 2013 change other operating expenses $ 26,285 $ 25,299 3.9 % percentage of total revenues 8.6 % 8.5 % other operating expenses include facilities-related costs , technical materials , computer-related expenses and depreciation and amortization of property , equipment and leasehold improvements . the increase in other operating expenses was primarily due to an increase in occupancy expense of $ 514,000 and an increase in depreciation and amortization of $ 454,000. the increases in occupancy expense and depreciation and amortization were due to the continued expansion of our facilities to accommodate the increase in technical full-time equivalent employees . 25 reimbursable expenses fiscal years percent ( in thousands except percentages ) 2014 2013 change reimbursable expenses $ 15,495 $ 16,125 ( 3.9 ) % percentage of total revenues 5.1 % 5.4 % the decrease in reimbursable expenses was primarily due to a decrease in project-related costs in our technology development practice in our engineering and other scientific segment . the amount of reimbursable expenses will vary from year to year depending on the nature of our projects . general and administrative expenses fiscal years percent ( in thousands except percentages ) 2014 2013 change general and administrative expenses $ 15,842 $ 14,714 7.7 % percentage of total revenues 5.2 % 5.0 % the increase in general and administrative expenses during fiscal 2014 was primarily due to an increase in travel and meals of $ 561,000 and an increase in contributions of $ 506,000. the increase in travel and meals was due to a firm-wide managers ' meeting held during the third quarter of 2014. other income ( expense ) , net fiscal years percent ( in thousands except percentages ) 2014 2013 change other income and expense , net $ 4,416 $ 7,999 ( 44.8 ) % percentage of total revenues 1.4 % 2.7 % other income (
| executive summary revenues for fiscal 2015 increased 3 % and revenues before reimbursements increased 2 % as compared to the prior year . the increase in revenues before reimbursements was due to an increase in billable hours and an increase in billing rates . we experienced demand for our consulting services from a diverse set of clients for both reactive and proactive projects . during fiscal 2015 , we experienced demand for our reactive services performing high profile accident and failure investigations and evaluating potentially significant product recalls . we also experienced demand for our proactive consulting services , performing design evaluations of consumer electronics and medical devices in addition to regulatory consulting for the chemical and food industries . during fiscal 2015 , we had notable performances in several practices including our materials & corrosion engineering , biomedical engineering , and polymer science & materials chemistry practices , as well as our infrastructure group . we experienced strong demand from the consumer electronics industry , as our clients broadened their product offerings and needed assistance with the use of new materials . we also continued to assist clients in the biomedical industry with regulatory approvals and assessing the field performance of their products . our infrastructure group benefited from increased commercial construction and infrastructure spending . the low growth rate in revenues was due to one of our major investigations in our environmental and health segment ending in july of 2015 and a continued step down in the level of activity in our technology development practice due to constraints on defense spending and the withdrawal of united states and united kingdom combat troops from afghanistan . the increase in revenues before reimbursements and low expense growth resulted in a 7 % increase in net income to $ 43,599,000 during fiscal 2015 as compared to $ 40,701,000 during the prior year .
| 2,695 |
also , projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions , or that the degree of compliance with the policies or procedures may story_separator_special_tag the following discussion and analysis of the financial condition and results of our operations for the year ended december 31 , 2019 should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this annual report on form 10-k. the discussion summarizing the significant factors affecting the results of operations and financial condition of msci for the year ended december 31 , 2018 can be found in part ii , โ item 7. management 's discussion and analysis of financial condition and results of operations โ of our annual report on form 10-k for the year ended december 31 , 2018 ( the โ 2018 annual report โ ) , which was filed with the securities and exchange commission on february 22 , 2019. overview we are a leading provider of critical decision support tools and services for the global investment community . leveraging our knowledge of the global investment process and our expertise in research , data and technology , our actionable solutions power better investment decisions by enabling our clients to understand and analyze key drivers of risk and return and confidently and efficiently build more effective portfolios . investors all over the world use our tools and services to gain insight and improve transparency throughout their investment processes , including to help define their investment universe , inform and analyze their asset allocation and portfolio construction decisions , measure and manage portfolio performance and risk , conduct performance attribution , implement sustainable and other investment strategies , design and issue etfs and other index-enabled financial products , and facilitate reporting to stakeholders . our industry-leading , research-enhanced products and services include indexes ; portfolio construction and risk management analytics ; esg research and ratings ; and real estate benchmarks , return-analytics and market insights . through our integrated franchise we provide solutions across our products and services to support our clients ' dynamic and complex needs . we are flexible in the delivery of our content and capabilities , much of which can be accessed by our clients through multiple channels and platforms . we are focused on staying at the forefront of investment trends to address the evolving needs of our clients in a changing industry . in order to most effectively serve our clients , we are committed to driving an integrated solutions-based approach , achieving service excellence , enhancing our differentiated research and content , and delivering flexible , cutting-edge technology and platforms . our clients comprise a wide spectrum of the global investment industry and include the following key client types : asset owners ( pension funds , endowments , foundations , central banks , sovereign wealth funds , family offices and insurance companies ) asset managers ( institutional funds and accounts , mutual funds , hedge funds , etfs , insurance products , private banks and real estate investment trusts ) financial intermediaries ( banks , broker-dealers , exchanges , custodians , trust companies and investment consultants ) wealth managers ( including an increasing number of โ robo-advisors โ ) as of december 31 , 2019 , we had offices in more than 30 cities across more than 20 countries to help serve our diverse client base , with 49.0 % of our revenues coming from clients in the americas , 36.0 % in europe , the middle east and africa ( โ emea โ ) and 15.0 % in asia and australia . in evaluating our financial performance , we focus on revenue and profit growth , including results accounted for under accounting principles generally accepted in the united states ( โ gaap โ ) as well as non-gaap measures , for the company as a whole and by operating segment . in addition , we focus on operating metrics , including run rate , subscription sales and retention rate , to manage the business . our business is not highly capital intensive and , as such , we expect to continue to convert a high percentage of our profits into excess cash in the future . our growth strategy includes : ( a ) expanding leadership in research-enhanced content , ( b ) strengthening existing and new client relationships by providing solutions , ( c ) improving access to our solutions through cutting-edge technology and platforms , ( d ) expanding value-added service offerings and ( e ) executing strategic relationships and acquisitions with complementary content and technology companies . 33 key financial metrics and drivers as discussed in the previous section , we utilize a portfolio of key financial metrics to manage the company , including gaap and non-gaap measures . as detailed below , we review revenues by type and by segment , or by major product line . we also review expenses by activity , which provides more transparency into how resources are being deployed . in addition , we utilize operating metrics including run rate , subscription sales and retention rate to analyze past performance and to provide insight into our latest reported portfolio of recurring business . in the discussion that follows , we provide certain variances excluding the impact of foreign currency exchange rate fluctuations . foreign currency exchange rate fluctuations reflect the difference between the current period results as reported compared to the current period results recalculated using the foreign currency exchange rates in effect for the comparable prior period . while operating revenues adjusted for the impact of foreign currency fluctuations includes asset-based fees that have been adjusted for the impact of foreign currency fluctuations , the underlying aum , which is the primary component of asset-based fees , is not adjusted for foreign currency fluctuations . approximately two-thirds of the aum are invested in securities denominated in currencies other than the u.s. dollar , and accordingly , any such impact is excluded from the disclosed foreign currency-adjusted variances . story_separator_special_tag all companies do not calculate adjusted ebitda and adjusted ebitda expenses in the same way . these measures can differ significantly from company to company depending on , among other things , long-term strategic decisions regarding capital structure , the tax jurisdictions in which companies operate and capital investments . accordingly , the company 's computation of the adjusted ebitda and adjusted ebitda expenses measures may not be comparable to similarly-titled measures computed by other companies . run rate run rate is a key operating metric and is important because an increase or decrease in our run rate ultimately impacts our operating revenues over time . at the end of any period , we generally have subscription and investment product license agreements in place for a large portion of total revenues for the following 12 months . we measure the fees related to these agreements and refer to this as โ run rate. โ see โ โ operating metrics โ run rate โ below for additional information on the calculation of this metric . subscription sales subscription sales is a key operating metric and is important because new subscription sales increase our run rate and ultimately our operating revenues over time . see โ โ operating metrics โ subscription sales โ below for additional information . retention rate another key operating metric is retention rate which is important because subscription cancellations decrease our run rate and ultimately our operating revenues over time . see โ โ operating metrics โ retention rate โ below for additional information on the calculation of this metric . 36 critical accounting policies and estimates our consolidated financial statements are prepared in accordance with gaap . these accounting principles require us to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements , as well as the reported amounts of revenues and expenses during the periods presented . we believe the estimates and judgments upon which we rely are reasonable based upon information available to us at the time these estimates and judgments are made . to the extent there are material differences between these estimates and actual results , our consolidated financial statements will be affected . see note 1 , โ introduction and basis of presentationโ significant accounting policies , โ and note 2 , โ recent accounting standards updates , โ of the notes to the consolidated financial statements included herein for a listing of our accounting policies . factors affecting the comparability of results divestitures on april 9 , 2018 , we completed the divestiture of fea for $ 21.0 million in cash , which resulted in a gain of $ 10.6 million . fea was included as a component of the analytics segment through the date of divestiture . the results of operations from fea were not material to the company . on october 12 , 2018 , we completed the divestiture of investorforce and received $ 62.8 million in cash , which resulted in a gain of $ 46.6 million . investorforce was included as a component of the analytics segment through the date of divestiture . the results of operations from investorforce were not material to the company . share repurchases the board of directors has approved a stock repurchase program for the purchase of the company 's common stock . see note 10 , โ shareholders ' equity ( deficit ) , โ of the notes to consolidated financial statements included herein for additional information on our stock repurchase program . the weighted average shares outstanding used to calculate our diluted earnings per share for the year ended december 31 , 2019 decreased by 4.6 % compared to the year ended december 31 , 2018. the decrease primarily reflects the impact of share repurchases made prior to march 31 , 2019 pursuant to the 2016 and 2018 repurchase programs and the vesting of the restricted stock units that were included in the dilutive share count in the prior year . senior notes we have an aggregate $ 3,100.0 million of senior notes outstanding as of december 31 , 2019. see โ โliquidity and capital resourcesโsenior notes and credit agreement โ below and note 5 , โ commitments and contingencies , โ of the notes to consolidated financial statements included herein for additional information on our senior notes and revolving credit agreement . tax cuts and jobs act of 2017 tax reform which was enacted on december 22 , 2017 , significantly revised the u.s. corporate income tax by , among other things , lowering u.s. corporate income tax rates , implementing a territorial tax system and imposing a one-time tax on deemed repatriation of historic earnings of foreign subsidiaries ( the โ toll charge โ ) . in the year ended december 31 , 2018 , the company finalized the toll charge and determined the final impact of tax reform , resulting in a net benefit of $ 11.2 million that included a benefit of $ 5.7 million on the true-up of the toll charge and a benefit of $ 2.6 million for a reduction in the expected withholding taxes from foreign subsidiaries . the company also recorded a benefit of $ 2.9 million related to the revaluation of deferred taxes at the lower statutory rate as a result of tax planning . 37 results of operations year ended december 31 , 2019 compared to year ended december 31 , 2018 the following table presents the results of operations for the years indicated : replace_table_token_5_th operating revenues our revenues are grouped by the following types : recurring subscription , asset-based fees and non-recurring revenues . we also group revenues by major product lines as follows : index , analytics and all other , which includes the esg and real estate product lines .
| segment results the results for each of our three reportable segments for the years ended december 31 , 2019 and 2018 are presented below : index segment the following table presents the results for the index segment for the years indicated : replace_table_token_15_th revenues related to index products increased 10.2 % to $ 920.9 million for the year ended december 31 , 2019 compared to $ 835.5 million for the year ended december 31 , 2018. revenues from recurring subscriptions were up 11.2 % to $ 531.0 million for the year ended december 31 , 2019 compared to $ 477.6 million for the year ended december 31 , 2018. the increase was driven by strong growth in core developed market modules , factor and esg index products and emerging market modules . the impact of foreign currency exchange rate fluctuations on revenues from recurring subscriptions was negligible . 44 revenues from asset-based fees increased 7.5 % to $ 361.9 million for the year ended december 31 , 2019 compared to $ 336.6 million for the year ended december 31 , 2018. the increase in asset-based fees was primarily driven by an increase in revenues from exchange traded futures and options contracts linked to msci indexes . the increase in revenues from futures and options contracts was driven by approximately $ 5.0 million in additional fees associated with prior periods attributed to a retrospective price increase from a renegotiated contract entered into during the year ended december 31 , 2019 , as well as the cumulative impact of price and volume increases . the increase in revenues from asset-based fees was also driven by higher revenues from etfs linked to msci indexes , which was driven by a 7 . 6 % increase in average aum , partially offset by the impact of a change in product mix .
| 2,696 |
under this guidance , a lessee will be required to recognize the following for all leases , excluding short-term leases , at the commencement date : ( i ) a lease liability , which is a lessee 's obligation to make lease payments arising from a lease , measured on a discounted basis ; and ( ii ) a right-of-use asset , which is an asset that represents the lessee 's right to use , or control the use of , a specified asset for the lease term . under the guidance , lessor accounting is largely unchanged . a package of optional transition practical expedients allows an entity not to reassess under the new guidance ( i ) whether any existing contracts are or contain leases ( ii ) lease classification story_separator_special_tag the following discussion should be read together with the consolidated financial statements and the notes thereto included elsewhere in this form 10-k. this discussion contains forward-looking statements that are based on management 's current expectations , estimates and projections about our business , operations and financial performance . the cautionary statements made in this form 10-k should be read as applying to all related forward-looking statements whenever they appear in this form 10-k. our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors , including those we discuss under โ forward-looking statements , โ item 1aโrisk factors and elsewhere in this form 10-k. overview american water is the largest and most geographically diverse , publicly-traded water and wastewater utility company in the united states , as measured by both operating revenues and population served . we employ approximately 7,100 professionals who provide drinking water , wastewater and other related services to more than 14 million people in 46 states and ontario , canada . our primary business involves the ownership of utilities that provide water and wastewater services to residential , commercial , industrial , public authority , fire service and sale for resale customers , collectively presented as our โ regulated businesses . โ our utilities operate in approximately 1,600 communities in 16 states in the united states , with approximately 3.4 million active customers to our water and wastewater networks . services provided by our utilities are generally subject to economic regulation by certain state utility commissions or other entities engaged in utility regulation . we also operate market-based businesses which provide a broad range of related and complementary water , wastewater and other services to residential and smaller commercial customers , the u.s. government on military installations and shale natural gas exploration and production companies , as well as municipalities , utilities and industrial customers , collectively presented as our market-based businesses . see item 1โbusiness for additional information . financial results the following table provides our diluted earnings per share ( gaap ) and our adjusted diluted earnings per share ( a non-gaap measure ) : replace_table_token_4_th 42 for the year ended december 31 , 2018 , diluted earnings per share ( gaap ) were $ 3.15 , an increase of $ 0.77 per diluted share , or 32.4 % compared to the prior year , which includes the net adjustments presented in the table above and discussed in greater detail in the โ adjustments to gaap โ section below . excluding the net adjustments presented in the table above , adjusted diluted earnings per share ( non-gaap ) were $ 3.30 for the year ended december 31 , 2018 , an increase of $ 0.27 per diluted share , or 8.9 % compared to the prior year . these results were driven by continued growth in our regulated businesses from infrastructure investment , acquisitions and organic growth , combined with strong results in our market-based businesses , primarily in our homeowner services group with the mid-year acquisition of pivotal . these increases were partially offset by higher o & m and depreciation expenses from the growth of the business and a lower tax shield on interest expense at the parent company resulting from the tcja . for the year ended december 31 , 2017 , diluted earnings per share ( gaap ) were $ 2.38 per diluted share , a decrease of $ 0.24 per diluted share , or 9.2 % compared to the prior year , which includes the net adjustments presented in the table above and discussed in greater detail in the โ adjustments to gaap โ section below . excluding the net adjustments presented in the table above , adjusted diluted earnings per share ( non-gaap ) were $ 3.03 for the year ended december 31 , 2017 , an increase of $ 0.19 per diluted share , or 6.7 % compared to the prior year . these results were driven by continued growth in our regulated businesses from infrastructure investment , acquisitions and organic growth , combined with growth in our market-based businesses from our homeowner services group and keystone . these increases were partially offset by lower water services demand in our regulated businesses and lower capital upgrades in our military services group . adjustments to gaap adjusted diluted earnings per share represents a non-gaap financial measure and is calculated as gaap diluted earnings per share , excluding the impact of one or more of the following events : ( i ) a gain in the third quarter of 2018 on the sale of the majority of our contract services group 's o & m contracts ; ( ii ) a goodwill and intangible impairment charge in the third quarter of 2018 resulting from narrowing the scope of the keystone business ; ( iii ) insurance settlements received in the third quarter of 2017 and the second quarter of 2018 related to the freedom industries chemical spill in west virginia ; ( iv ) non-cash re-measurement charges recorded in the fourth quarters of 2017 and 2018 resulting from the impact of the change in the federal corporate income tax rate on the company 's deferred income taxes from the enactment of the tcja ; ( v story_separator_special_tag in 2018 , we : continued to demonstrate our commitment to employees by expanding training and development across the company , with virtually all employees completing at least 20 hours of formal training during 2018 ; 44 expanded the executive leadership team to include key operational leaders across the company to enable a broader operational focus and stronger communication throughout the organization ; reached a new , five -year national benefits agreement with approximately 3,200 of our union-represented employees , including their participation in the company 's annual performance plan , which will align company goals across all employees , as well as providing additional medical plan options for our employees and their families ; and simplified our performance management process to foster meaningful feedback conversations and ensure feedback is the focus of performance management . looking forward , we will : implement a strategic workforce plan which will address the changing requirements of our business and our jobs , largely driven by our customer 's expectations and new technologies ; continue to improve inclusion and diversity of our overall employee population , ensuring our workforce is reflective of the customers and communities we serve ; implement a new and more frequent culture survey focused on employee insights into how american water can become a better company to work for , and to implement recommendations with the goal of increasing employees ' likelihood to recommend american water as a place to work ; and leverage technology to ensure our employees have the tools and resources they need to keep the customer at the center of everything that we plan and do . growthโwe expect to continue to grow our businesses , with the majority of our growth to be achieved in our regulated businesses through ( i ) continued capital investment in our infrastructure to provide safe , clean , reliable and affordable water and wastewater services to our customers , and ( ii ) regulated acquisitions to expand our services to new customers . we also expect to continue to grow our market-based businesses , which leverage our core water and wastewater competencies . in 2018 , we invested $ 2.0 billion in our regulated businesses and market-based businesses . regulated businesses growth $ 1.5 billion capital investment in our regulated businesses , the majority for infrastructure improvements and replacements . $ 33 million to fund acquisitions in our regulated businesses , which added approximately 14,000 water and wastewater customers . entered into agreements as of january 31 , 2019 for pending acquisitions to add approximately 61,000 customers including : on may 30 , 2018 , our pennsylvania subsidiary entered into an agreement to acquire the wastewater assets of exeter township , pennsylvania , for approximately $ 96 million . this system currently serves approximately 9,000 customers . we are expecting to close this acquisition during the third quarter of 2019 , pending regulatory approval . on april 13 , 2018 , our illinois subsidiary entered into an agreement to acquire the city of alton , illinois ' regional wastewater system for approximately $ 54 million . this system currently represents approximately 23,000 customers , comprised of approximately 11,000 customers in alton and an additional 12,000 customers under bulk contracts in the nearby communities of bethalto and godfrey . in connection with the execution of the purchase agreement , our illinois subsidiary made a $ 5 million non-escrowed deposit to the seller during january 2019. we are expecting to close this acquisition during the second quarter of 2019 , pending regulatory approval . market-based businesses growth and optimization we invested $ 365 million to acquire pivotal , a leading provider of home warranty protection products and services for gas , electric and other service lines inside and around a home , heating and cooling systems , and home appliances . pivotal , which joins our homeowner services group , operates in 18 states with approximately 1.2 million customer contracts at the time of acquisition . 45 our military services group was awarded a contract for ownership , operation and maintenance of the water and wastewater systems at fort leonard wood in missouri , effective october 1 , 2018 . designated as the u.s. army 's maneuver support center of excellence and the home to three u.s. army schools , fort leonard wood directly and indirectly supports 36,400 jobs across the state of missouri . the contract award includes estimated revenues of approximately $ 591 million over a 50 -year period , subject to an annual economic price adjustment . on july 5 , 2018 , we entered into an agreement for the sale of 22 of our contract services group 's 33 o & m contracts to subsidiaries of veolia environnement s.a. for $ 27 million . we closed on the sale of 20 of the 22 contracts during the third quarter of 2018 , and expect to close on the sale of the remaining two contracts , subject to customer consents , in the first half of 2019. we will retain four of our o & m contracts due to their proximity to our existing service areas , and expect the majority of our remaining o & m contracts to be sold to other parties , or expire within the next year . as a result of operational and financial challenges encountered in the construction business of keystone , the company decided to exit this business line during the third quarter of 2018. this action , along with the exit of the water trucking business line during the first half of 2018 , narrowed the scope of the keystone business going forward , focusing solely on providing water transfer services . these factors prompted the impairment testing of keystone 's goodwill and customer relationship intangible asset at september 30 , 2018 , resulting in a non-cash , after-tax , impairment charge of $ 40 million , net of noncontrolling interest . see note 8โgoodwill and other intangible assets in the notes to the consolidated financial statements for additional information .
| consolidated results of operations the following table provides our consolidated results of operations and the ensuing discussions provide explanations for the variances related to the major components : replace_table_token_8_th in 2018 , net income attributable to common shareholders increased $ 141 million , or 33.1 percent , compared to the same period in 2017. this increase was due to a $ 125 million non-cash charge in 2017 related to the implementation of tcja , continued growth in the regulated businesses , driven by infrastructure investment , acquisitions and organic growth and growth in the market-based businesses , mainly from our homeowner services group due to the mid-year acquisition of pivotal . these increases were partially offset by higher o & m and depreciation expenses across the company due to growth of the business and the asset impairment charge recorded for our keystone subsidiary during the third quarter of 2018. in 2017 , net income attributable to common shareholders decreased $ 42 million , or 9.0 percent , as compared to the same period in 2016. this decrease was due to a $ 125 million non-cash charge in 2017 related to the implementation of tcja resulting from the re-measurement of deferred taxes primarily at the parent company from the reduction in the federal corporate income tax rate from 35 % to 21 % . partially offsetting this non-cash charge was continued growth in the regulated businesses driven mainly by infrastructure investment , acquisitions and organic growth , combined with growth in the market-based businesses mainly from the homeowner services group and keystone . segment results of operations our operating segments are comprised of the revenue-generating components of the business for which separate financial information is internally produced and regularly used by management to make operating decisions , assess performance and allocate resources . the company operates its business primarily through one reportable segment , the regulated businesses segment .
| 2,697 |
michael l. bagnoli , secretary and director . mr. bagnoli became a director in may 1999 and was appointed secretary in june 2004. he holds degrees as a medical doctor and a dental specialist . since 1988 he has practiced dentistry in the specialty area of oral and maxillofacial surgery for a physician group in lafayette , indiana . in his practice he introduced arthroscopy surgery along with the full scope of arthroplastic and total joint reconstruction . mr. bagnoli was founder , ceo and president of a successful medical products company , biotek , inc. , which was sold in 1994. martin maassen , director . mr. maassen became a director in may 1999. he formerly served as our chairman of the board from april 2000 to september 2002. from september 1995 to the present he was a staff physician at lafayette emergency care , p.c . located in lafayette , indiana . he is board-certified in internal medicine and emergency medicine and has served as a staff physician in the emergency departments of jackson county , deaconess , union and st. elizabeth hospitals located in indiana . in addition to practicing medicine , he maintains an expertise in computer technologies and their medical applications . involvement in certain legal proceedings none of our directors , executive officers or control persons has been involved in any of the legal proceedings required to be disclosed in item 401 of regulation s-k , during the past five years . corporate governance matters audit committee the board of directors has established an audit committee , and the functions of the audit committee are currently performed by our corporate secretary , with assistance by expert independent accounting personnel and oversight by the entire board of directors . we are not currently subject to any law , rule or regulation requiring that we establish or maintain an audit committee . board of directors independence . our board of directors currently consists of three members . we are not currently subject to any law , rule or regulation requiring that all or any portion of our board of directors include `` independent `` directors . audit committee financial expert . our board of directors has determined that we do not have an audit committee financial expert serving on our audit committee within the meaning of item 407 ( d ) ( 5 ) of regulation s-k. in general , an `` audit committee financial expert `` is an individual member of the audit committee who ( a ) understands generally accepted accounting principles and financial statements , ( b ) is able to assess the general application of such principles in connection with accounting for estimates , accruals and reserves , ( c ) has experience preparing , auditing , analyzing or evaluating financial statements comparable to the breadth and complexity to the company 's financial statements , ( d ) understands internal controls over financial reporting and ( e ) understands audit committee functions . we have not yet replaced our former audit committee financial expert , but we are engaged in finding a suitable replacement . 50 code of ethics we have not adopted a code of ethics for our executive officers , directors and employees . however , our management intends to promote honest and ethical conduct , full and fair disclosure in our reports to the sec , and compliance with applicable governmental laws and regulations . nominating committee we have not yet established a nominating committee . our board of directors , sitting as a board , performs the role of a nominating committee . we are not currently subject to any law , rule or regulation requiring that we establish a nominating committee . compensation committee we have not established a compensation committee . our board of directors , sitting as a board , performs the role of a compensation committee . we are not currently subject to any law , rule or regulation requiring that we establish a compensation committee . during the last fiscal year , mr. gunther than , an executive officer , participated in our board of directors ' deliberations concerning executive officer compensation . section 16 ( a ) beneficial ownership reporting compliance section 16 ( a ) of the securities exchange act of 1934 requires officers and directors , and persons who own more than ten percent of a registered class of our equity securities , to file reports of ownership and changes in ownership with the commission . officers , directors and greater than ten percent beneficial owners are required by commission regulations to furnish us with copies of all forms they file pursuant to section 16 ( a ) . based solely on our review of the copies of such forms received and written representations from reporting persons required to file reports under section 16 ( a ) , all of the section 16 ( a ) filing requirements applicable to such persons , with respect to fiscal year 2014 , appear not to have been complied with to the best of our knowledge . item 11. executive compensation . management has been compensated entirely in accrued salary , common stock , and reimbursement of fuel expense during the fiscal years ended december 31 , 2015 and 2014. the cash value of mr. gunther than 's compensation was determined in negotiations with directors drs . maassen and bagnoli and was determined based upon an informal survey of human resource firms as to the compensation awarded to chief executives in companies with similar revenues . our limited revenues have prevented our chief executive officer , mr. than , from receiving payment in cash for compensation for services . story_separator_special_tag during fiscal year ended december 31 , 2015 , we incurred operating expenses of $ 541,444 compared to $ 1,623,642 incurred during fiscal year ended december 31 , 2014 ( a decrease of $ 1,082,198 ) . these operating expenses incurred during fiscal year ended december 31 , 2015 consisted of : ( i ) general and administrative expenses of $ 130,901 ( 2014 : $ 279,082 ) ; ( ii ) professional fees of $ 180,020 ( 2014 : $ 817,237 ) ; and ( iii ) salaries and benefits of $ 230,523 ( 2014 : $ 527,323 ) . operating expenses incurred during fiscal year ended december 31 , 2015 compared to fiscal year ended december 31 , 2014 decreased primarily due to the decrease in professional fees of $ 637,217. thus , our loss from operations during fiscal year ended december 31 , 2015 was ( $ 387,385 ) compared to a loss from operations of ( $ 1,316,425 ) during fiscal year ended december 31 , 2014. during fiscal year ended december 31 , 2015 , we realized other expense in the total amount of ( $ 31,414 ) . during fiscal year ended december 31 , 2014 , we realized other expense in the total amount of ( $ 21,720 ) . the difference being mostly due a gain realized from a renegotiated debt of $ 9,234. after deducting other expense , we realized a net loss of ( $ 418,799 ) or ( $ 0.00 ) for fiscal year ended december 31 , 2015 compared to a net loss of ( $ 1,338,145 ) or ( $ 0.01 ) for fiscal year ended december 31 , 2014. the weighted average number of shares outstanding was 296,940,184 for fiscal year ended december 31 , 2015 compared to 261,754,044 for fiscal year ended december 31 , 2014. liquidity , capital resources and going concern fiscal year ended december 31 , 2015 as of december 31 , 2015 , our current assets were $ 10,780 and our current liabilities were $ 1,659,742 , which resulted in a working capital deficit of $ 1,648,962. as of december 31 , 2015 , current assets were comprised of : ( i ) $ 2,617 in cash ; ( ii ) $ 7,075 in accounts receivable ( net of allowance for doubtful accounts of $ -0- ) ; and ( iii ) $ 1,088 in inventory . as of december 31 , 2015 , current liabilities were comprised of : ( i ) $ 398,702 in accounts payable and accrued expenses ; ( ii ) $ 37,835 in deferred compensation ; ( iii ) $ 181,809 in accrued and withheld payroll taxes payable ; ( iv ) $ 95,625 in accrued interest payable ; ( v ) $ 225,000 in accrued royalties payable ; ( vi ) $ 564,703 in loans from stockholders ; ( vii ) $ 61,095 in notes payable ; and ( viii ) deferred revenue of $ 94,973. as of december 31 , 2015 , our total assets were $ 15,372 comprised of : ( i ) $ 10,780 in current assets ; ( ii ) property and equipment ( net ) of $ 2,997 ; and ( iii ) $ 1,595 in deposits . the decrease in total assets during fiscal year ended december 31 , 2015 from fiscal year ended december 31 , 2014 was primarily due to the substantial decrease in cash and receivables . as of december 31 , 2015 , our total liabilities were $ 1,659,742 comprised of current liabilities . the increase in liabilities during fiscal year ended december 31 , 2015 from fiscal year ended december 31 , 2014 was primarily due to the increase in accounts payable and accrued expenses and loans from stockholders . 27 stockholders ' deficit increased from ( $ 1,512,321 ) for fiscal year ended december 31 , 2014 to ( $ 1,644,370 ) for fiscal year ended december 31 , 2015. cash flows from operating activities we have not generated positive cash flows from operating activities . for fiscal year ended december 31 , 2015 , net cash flows used in operating activities was $ 121,375 compared to $ 172,367 for fiscal year ended december 31 , 2014. net cash flows used in operating activities consisted primarily of a net loss of $ 418,799 ( 2014 : $ 1,338,145 ) , which was partially adjusted by : ( i ) $ 925 ( 2014 : $ 6,470 ) in depreciation ; ( ii ) $ 26,750 ( 2014 : $ 591,930 ) in common stock issued for payment of services ; ( ii ) $ 75,000 ( 2014 : $ 480,000 ) in preferred stock issued for services ; ( iii ) $ -0- ( 2015 : $ -0- ) in stock option expense ; ( iv ) $ -0- ( 2014 : $ -0- ) in bad debt ; ( v ) a gain of ( $ -0- ) ( 2014 : ( $ 9,234 ) ) from re-negotiated debt ; and ( vi ) $ 1,408 ( 2014 : $ 2,841 ) in interest expense paid with debt . net cash flows used in operating activities was further changed by : ( i ) a decrease of $ 19,670 ( 2014 : decrease of $ 19,679 ) in accounts receivable ; ( ii ) decrease of $ 0 ( 2014 : $ 23,021 ) in inventory ; ( iii ) decrease $ -0- ( 2014 : ( $ 32,889 ) in pre-paid expenses ; ( iv ) increase of $ 915 ( 2014 : $ 54,218 ) in accounts payable and accrued expenses ; ( v ) increase of $ 112,270 (
| overview management believes that continued attention to personal threats , potential large scale destruction and theft of property in the united states along with spending by the united states government on homeland security will continue to drive sales for security products . however , we have decided to limit our sales efforts to one product , namely the concealed weapons detection system . with regards to the product as described below , revenue is considered earned when the product is shipped to the customer , installed ( if necessary ) and accepted by the customer as a completed sale . the concealed weapons detection system require installation and training . the customer can engage us for installation and training , which is a revenue source separate and apart from the sale of the product . in those cases revenue is recognized at the completion of the installation and training and acceptance by the customer . however , the customer can also self-install or can engage another firm to provide installation and training . the product has an unconditional 30 day warranty , during which time the product can be returned for a complete refund . customers can purchase extended warranties , which provide for replacement or repair of the unit beyond the period provided by the unconditional warranty . warranties can be purchased for various periods but generally they are for one year period that begins after any other warranties expire . during fiscal year ended december 31 , 2015 , we received 63 % of our sales revenue from the sales of the viewscan . the balance of our revenue came from service and sales of warranties .. thus , this may result in a significant decrease in future revenue in subsequent years and result in a material effect on our financial results . our strategy for 2015 for viewscan will be to extend our service provisions . we have continued to offer extended warranties to our customers .
| 2,698 |
however , any future dividends will be reviewed individually and declared by our board of directors at its discretion , dependent on our assessment of the company 's financial condition and business outlook at the applicable time . outlook overall business conditions have continued to improve during 2017 and we are optimistic about our incoming order rate as we enter 2018. however , we continue to experience some softness in the agriculture and certain oil and gas driven markets . increased emphasis on infrastructure improvements at both the federal and state levels coupled with the newly enacted u.s. tax legislation could be additional positive factors over the next several years . the company remains focused on operational efficiencies and will continue to manage expenses closely . our underlying fundamentals remain strong and we remain well positioned to drive long-term growth . our strong balance sheet provides us with the flexibility to continue to evaluate acquisition opportunities and new product development that we expect will help add value to our operations over the longer-term . on december 22 , 2017 , the u.s. tax cuts and jobs act ( the ยtax actย ) was enacted . the tax act reduces the federal corporate tax rate on u.s. earnings to 21 % and moves from a global taxation regime to a modified territorial regime . as part of the tax act , u.s. companies are required to pay a tax on historical earnings generated offshore that have not been repatriated to the u.s. companies are required to re-measure their deferred tax assets and liabilities to reflect the lower federal base rate of 21 % . these transitional impacts resulted in a provisional net tax expense of $ 0.4 million for the fourth quarter of 2017 , comprised of an estimated repatriation tax expense of $ 2.0 million ( which includes u.s. repatriation taxes and foreign withholding taxes ) and a net deferred tax benefit of approximately $ 1.6 million . the provisional estimates are based on the company 's initial analysis of the tax act . given the significant complexity of the tax act , anticipated guidance from the u. s. treasury about implementing the tax act , and the potential for additional guidance from the securities and exchange commission or the financial accounting standards board related to the tax act , these estimates may be adjusted during 2018. the company 's preliminary estimate of its future effective tax rate attributable to the tax act is between 23 % and 26 % . the company continues to evaluate the impact of the tax act , and will update its estimates as appropriate . results of operations ย 2017 compared to 2016 : in 2017 , due primarily to the continued decreased demand for barge pumps for the marine transportation market driven by low oil prices and overcapacity of inland barges , the bayou city pump company ( ยbayouย ) reporting unit recorded pre-tax non-cash goodwill and intangible asset impairment charges of $ 4.1 million . in 2016 , due primarily to the prolonged downturn in the oil and gas industry , the bayou reporting unit recorded a pre-tax non-cash goodwill impairment charge of $ 1.8 million . there were no impairment charges recorded in 2015. see note 8 , goodwill and other intangible assets . in 2017 , due to increased employee retirements and related lump sum pension payments , the company recorded a u.s. gaap-required and actuarially-determined $ 4.0 million non-cash pension settlement charge . the value of lump sum pension payments was less in 2016 and a non-cash pension settlement charge was not required . net sales year ended december 31 , 2017 2016 $ change % change net sales $ 379,389 $ 382,071 $ ( 2,682 ) ( 0.7 ) % 15 net sales for the year ended december 31 , 2017 were $ 379.4 million compared to $ 382.1 million for 2016 , a decrease of 0.7 % or $ 2.7 million . excluding sales from the pccp project of $ 0.7 million in 2017 and $ 9.9 million in 2016 , net sales in 2017 increased 1.8 % or $ 6.5 million . domestic sales , excluding pccp , increased $ 0.1 million while international sales increased 4.9 % or $ 6.4 million . sales in our larger water markets , excluding pccp , decreased 0.4 % or $ 1.1 million in 2017 compared to 2016. sales in the construction market increased $ 10.4 million due primarily to sales to rental market customers , and sales of repair parts increased $ 2.4 million . these increases were offset by decreased sales in the municipal market decreased $ 7.3 million principally driven by decreased shipments attributable to flood control projects . in addition , sales in the fire protection market decreased $ 4.2 million principally due to market softness in the middle east , and sales in the agriculture market decreased $ 2.4 million principally due to low farm income and competitive pricing pressure . sales in our non-water markets increased 6.9 % or $ 7.6 million in 2017 compared to 2016. sales increased $ 7.7 million in the industrial market driven by an increase in oil and gas drilling activity . sales in the oem market increased $ 2.5 million primarily related to power generation equipment and new customers associated with transportation and alternative energy applications . these increases were partially offset by decreased shipments of $ 2.6 million in the petroleum market driven by challenging market conditions . international sales were $ 137.6 million in 2017 compared to $ 131.2 million in 2016. international sales represented 36 % and 34 % of total sales for the company in each of the years 2017 and 2016 , respectively . international sales increased in the construction and industrial markets and continued to be softer in the fire protection market due to sluggish economic conditions in the middle east . story_separator_special_tag cost of products sold and gross profit replace_table_token_12_th the gross margin increase in 2016 compared to 2015 was due principally to favorable sales mix changes , most notably within the municipal market and lower lifo inventory expense of 50 basis points . also , a non-cash pension settlement charge of 60 basis points was recognized in 2015 which did not recur in 2016. conversely , health care expenses increased 30 basis points in 2016 primarily due to higher claims . selling , general and administrative expenses ( sg & a ) replace_table_token_13_th the increase in sg & a expenses as a percentage of net sales in 2016 compared to 2015 was due principally to loss of leverage due to lower sales volume and increased professional services fees of approximately 30 basis points related largely to costs incurred in connection with acquired businesses during the previous two years . offsetting these variances were a gain on the sale of property , plant and equipment in 2016 of 30 basis points and a non-cash pension settlement charge of 30 basis points in 2015 which did not recur in 2016 . 18 operating income replace_table_token_14_th the change in operating margin was impacted by the variances mentioned above , including a non-cash goodwill impairment charge in 2016 of 50 basis points and a non-cash pension settlement charge totaling 90 basis points in 2015 which did not recur in 2016. net income replace_table_token_15_th the decreases in net income and earnings per share in 2016 compared to 2015 were due primarily to sales volume decreases and a non-cash goodwill impairment charge in 2016 of $ 1.2 million , net of income taxes . these unfavorable variances were offset by a gain on the sale of property , plant and equipment , lower lifo inventory expense and lower pension expense due to a pension settlement charge of $ 2.5 million , net of income taxes , in 2015 which did not recur in 2016. the decrease in the effective tax rate between the two periods was due primarily to changes in the estimated domestic production activities deduction and the impact of more income in jurisdictions with lower tax rates . liquidity and sources of capital cash and cash equivalents totaled $ 79.7 million and there was no outstanding bank debt at december 31 , 2017. in addition , the company had $ 21.8 million available in bank lines of credit after deducting $ 9.2 million in outstanding letters of credit primarily related to customer orders . the company was in compliance with its debt covenants , including limits on additional borrowings and maintenance of certain operating and financial ratios , at all times in 2017 and 2016. capital expenditures for 2018 , which are expected to consist principally of building expansion and machinery and equipment purchases , are estimated to be in the range of $ 10- $ 15 million and are expected to be financed through internally generated funds and existing lines of credit . during 2017 , 2016 and 2015 , the company financed its capital improvements and working capital requirements principally through internally generated funds . free cash flow , a non-gaap measure for reporting cash flow , is defined by the company as adjusted earnings before interest , income taxes and depreciation and amortization , less capital expenditures and dividends . the company believes free cash flow provides investors with an important perspective on cash available for investments , acquisitions and working capital requirements . 19 the following table reconciles adjusted earnings before interest , income taxes and depreciation and amortization as reconciled above to free cash flow : replace_table_token_16_th financial cash flow replace_table_token_17_th the change in cash provided by operating activities in 2017 compared to 2016 was primarily due to a decrease in accounts receivable , more than offset by increased inventories and decreased commissions payable and benefit obligations . the change in cash provided by operating activities in 2016 compared to 2015 was primarily due to reductions in inventories and accounts receivable driven by lower sales volume , partially offset by contributions to the company 's defined benefit pension plan . during 2017 , investing activities of $ 10.4 million primarily consisted of a $ 3.0 million increase in short-term investments and $ 7.8 million of capital expenditures for machinery and equipment offset by $ 0.3 million of proceeds from the sale of property , plant and equipment . during 2016 , investing activities of $ 8.5 million primarily consisted of capital expenditures for machinery and equipment , a new operations facility in africa , and other building improvements totaling $ 6.9 million as well as a payment for an acquisition , net of cash acquired , of $ 3.0 million , offset by proceeds from the sale of property , plant , and equipment of $ 1.4 million . during 2015 , investing activities of $ 11.2 million primarily consisted of capital expenditures for building , building improvements and machinery and equipment totaling $ 8.3 million as well as payments for acquisitions , net of cash acquired , of $ 3.4 million , offset by proceeds from the sale of property , plant , and equipment of $ 0.5 million . net cash used for financing activities consisted of dividend payments of $ 12.3 million , $ 11.2 million and $ 10.6 million during 2017 , 2016 and 2015 , respectively . during 2015 , the company also paid off its $ 12.0 million of short-term bank borrowings and $ 1.9 million of assumed acquisition debt and made a privately-arranged market value purchase of company shares in the amount of $ 4.6 million from a rupp family estate . the company currently expects to continue its exceptional history of paying regular quarterly dividends and increased annual dividends .
| executive overview the following discussion of results of operations includes certain non-gaap financial data , and measures such as adjusted earnings before interest , taxes , depreciation and amortization and adjusted earnings per share amounts which exclude non-cash pension settlement charges in 2017 and 2015 and non-cash impairment charges in 2017 and 2016 relating to goodwill and other intangible assets . management utilizes these adjusted financial data and measures to assess comparative operations against those of prior periods without the distortion of non-comparable factors . the gorman-rupp company believes that these non-gaap financial data and measures will be useful to investors as well as to assess the continuing strength of the company 's underlying operations from period to period . provided below is a reconciliation of adjusted earnings per share amounts and adjusted earnings before interest , taxes , depreciation and amortization . replace_table_token_7_th the gorman-rupp company is a leading designer , manufacturer and international marketer of pumps and pump systems for use in diverse water , wastewater , construction , dewatering , industrial , petroleum , original equipment , agriculture , fire protection , heating , ventilating and air conditioning ( hvac ) , military and other liquid-handling applications . the company attributes its success to long-term product quality , applications and performance combined with timely delivery and service , and continually seeks to develop initiatives to improve performance in these key areas . gorman-rupp actively pursues growth opportunities through organic growth , international business expansion and acquisitions . we regularly invest in training for our employees , in new product development and in modern manufacturing equipment , technology and facilities all designed to increase production efficiency and capacity and drive growth by delivering innovative solutions to our customers . we believe that the diversity of our markets is a major contributor to the generally stable financial growth we have produced over the past 80 plus years .
| 2,699 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.