document stringlengths 8.64k 13.4k | summary stringlengths 179 2.97k | __index_level_0__ int64 0 16.8k |
|---|---|---|
on february 6 , 2018 , china sunlong environmental technology inc. ( โ china sunlong โ ) consummated the business combination ( the โ business combination โ ) with jm global pursuant to a share exchange agreement ( the โ share exchange agreement โ ) dated as of august 28 , 2017 by and among ( i ) jm global ; ( ii ) zhong hui holding limited ; ( iii ) china sunlong ; ( iv ) each of the shareholders of china sunlong named on annex i of the share exchange agreement ( the โ sellers โ ) ; and ( v ) chuanliu ni , a chinese citizen who is the chief executive officer and director of china sunlong , in the capacity as the representative for the sellers . pursuant to the share exchange agreement , jm global acquired from the sellers all of the issued and outstanding equity interests of china sunlong in exchange for 17,990,856 newly-issued shares of common stock of jm global to the sellers . 1,799,088 of these newly-issued shares are held in escrow for 18 months from the closing date of the business combination as a security for china sunlong and the sellers ' indemnification obligations under the share exchange agreement . this transaction is accounted 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 tmsr holding company limited ( the โ company โ or โ tmsr โ ) , formerly known as jm global holding company ( โ jm global โ ) , was a blank check company incorporated in delaware on april 10 , 2015. the company was formed for the purpose of acquiring , through a merger , capital stock exchange , asset acquisition , stock purchase , reorganization , exchangeable share transaction or other similar business transaction , one or more operating businesses or assets ( โ business combination โ ) . on june 20 , 2018 , tmsr consummated the reincorporation . as a result , the company changed its state of incorporation from delaware to nevada , and implemented a 2-for-1 forward stock split of the company 's common stock ( the โ forward split ) . the reincorporation and forward split were approved by shareholders holding the majority of the outstanding shares of common stock of tmsr on june 1 , 2018 at the annual meeting of shareholders . china sunlong environmental technology inc. ( โ china sunlong โ ) is a holding company incorporated on august 31 , 2015 , under the laws of the cayman islands . china sunlong has no substantive operations other than holding all of the outstanding share capital of shengrong environmental protection holding company limited ( โ shengrong bvi โ ) . shengrong bvi , a business company incorporated in the british virgin islands with limited liability on june 30 , 2015 , is a holding company for hong kong shengrong environmental technology limited , a hong kong registered company ( โ shengrong hk โ ) incorporated on september 25 , 2015 , which in turn owns 100 % of the issued and outstanding equity interests in shengrong environmental protection technology ( wuhan ) co. , ltd. , a wholly foreign-owned enterprise registered in hubei , china ( โ shengrong wfoe โ ) , which in turn , since march 2016 , has owned 100 % of the issued and outstanding equity interests in hubei shengrong environmental protection energy-saving science and technology co. ltd. , a registered company in hubei , china ( โ hubei shengrong โ ) . we refer to shengrong bvi and its consolidated subsidiaries collectively as โ china sunlong โ or the โ company โ . hubei shengrong was formed in 2009. since inception , the company has been focused on the research , development , production and sale of an array of solid waste recycling systems for the mining and industrial sectors in the prc . hubei shengrong 's waste recycling systems provide end users in these markets with a cleaner alternative to traditional waste disposal by significantly reducing solid waste disposed into the environment , and enables end users to extract value from valuable metals and other industrial waste materials in waste disposals . story_separator_special_tag in exchange for the transfer of 100 % equity interest of wuhan host , purchasers paid a total consideration of $ 11.2 million ( โ total consideration โ ) , of which $ 5.2 million or rmb equivalent was paid in cash ( โ cash consideration โ ) and $ 6.0 million was paid in shares of common stock ( โ common stock โ ) , par value $ 0.0001 , of tmsr ( โ share consideration โ ) . the parties agreed the share consideration was 1,293,104 shares of common stock based on the closing price of us $ 4.64 on march 27 , 2018. the share consideration would be issued in three equal installments , and subject to lock-ups of 12 , 24 and 36 months , respectively . the acquisition was closed on may 1 , 2018 , since when the company 's business activities added research , development , production and sale of coating materials . 44 on august 16 , 2018 , the company , shengrong wfoe and hubei shengrong , both of which are the company 's indirectly owned subsidiaries ( collectively โ purchasers โ ) , and long liao , chunyong zheng , wuhan modern industrial technology research institute , and hubei zhonggong materials group co. , ltd. and wuhan host coating materials co. , ltd. ( โ wuhan host โ ) ( collectively โ sellers โ ) , entered into a supplement agreement ( โ supplement agreement โ ) , which modified the terms of consideration set forth in the share purchase agreement entered between purchasers and sellers on april 11 , 2018. pursuant to the supplement agreement , in exchange for the transfer of 100 % equity interest of wuhan host , purchasers shall pay a total consideration of $ 11.2 million ( โ total consideration โ ) , of which $ 6.5 million or rmb equivalent shall be paid in cash ( โ cash consideration โ ) and $ 4.7 million shall be paid in shares of common stock ( โ common stock โ ) , par value $ 0.0001 , of tmsr ( โ share consideration โ ) . in the supplement agreement , both purchasers and sellers also agreed to delete the section 3.3 of the share purchase agreement , a section that stipulates the share consideration shall be issued in three equal installments . on november 30 , 2018 , the company entered into a share purchase agreement ( the โ purchase agreement โ ) with jirong huang and qihuang wang ( collectively โ sellers โ ) and jiangsu rong hai electric power fuel co. , ltd. ( โ rong hai โ ) , a company incorporated in china engaging in the sale of fuel materials and harbor cargo handling services . pursuant to the spa , tmsr shall issue an aggregate of 4,630,000 shares of tmsr 's common stock to the rong hai shareholders , in exchange for rong hai shareholders ' agreement to enter into , and their agreement to cause rong hai to enter into , certain vie agreements ( the โ rong hai vie agreements โ ) with shengrong wfoe , through which wfoe shall have the right to control , manage and operate rong hai in return for a service fee approximately equal to 100 % of rong hai 's net income ( โ acquisition โ ) . on november 30 , 2018 , shengrong wfoe , the company 's indirectly owned subsidiary , entered into a series of vie agreements with rong hai and the rong hai shareholders . the vie agreements are designed to provide wfoe with the power , rights and obligations equivalent in all material respects to those it would possess as the sole equity holder of rong hai , including absolute rights to control the management , operations , assets , property and revenue of rong hai . rong hai has the necessary license to carry out coal trading business in china . the acquisition closed on november 30 , 2018. starting on november 30 , 2018 , the company 's business activities added coal wholesales and sales of coke , steels , construction materials , mechanical equipment and steel scrap , of which business activities are carried out in nantong , jiang su province , prc . on december 27 , 2018 , the company , entered into an equity purchase agreement ( the โ epa โ ) with hopeway international enterprises limited. , a private limited company duly organized under the laws of british virgin islands ( the โ hopeway โ or โ purchaser โ ) . pursuant to the epa , shengrong wofe shall sell 100 % equity interests in hubei shengrong to the purchaser in exchange for the purchaser 's agreement ( โ consideration โ ) to irrevocably forfeit and cancel 8,523,320 shares of common stock of the company ( the โ shares โ ) , constituting all the shares owned by the purchaser . the transaction contemplated by the epa is hereby referred as disposition . the company 's decision to dispose of hubei shengrong is due to the wuhan municipal government 's policy change that hubei shengrong is forced to close the existing facility , relocate and build a new facility , which is expected to take approximately 7-8 years . as a result , hubei shengrong will not be able to keep the production running and will generate no income in the foreseeable future . management believed it is very difficult , if possible at all , to continue manufacturing of solid waste recycling systems . as such , the company has been actively seeking to dispose hubei shengrong while retaining the research and development and sale of solid waste recycling systems business . upon closing of the disposition , the purchaser will become the sole shareholder of hubei shengrong and as a result , assume all assets and obligations of hubei shengrong except the research and development team and intellectual property rights in connection with the solid waste recycling systems business shall be assigned to shengrong wfoe as part of the disposition .
| results of operations years ended december 31 , 2018 vs. december 31 , 2017 replace_table_token_2_th 46 revenues the company 's revenue consists of solid waste recycling systems and equipment revenue , coating and fuel materials revenue , and trading and others revenue . total revenues decreased by approximately $ 15.6 million , or approximately 40.2 % , to approximately $ 23.2 million for the year ended december 31 , 2018 , compared to approximately $ 38.8 million for the year ended december 31 , 2017. the overall decrease in total revenue was attributable to the decreased sales of solid waste recycling systems and equipment and trading industrial waste materials and offset by the increased sales of coating materials after the acquisition of wuhan host and increased sales of fuel materials after the acquisition of rong hai . equipment and systems revenue revenue of solid waste recycling systems and equipment decreased by approximately $ 3.3 million , or approximately 17.9 % , to approximately $ 15.3 million for the year ended december 31 , 2018 , compared to approximately $ 18.6 million for the year ended december 31 , 2017. the decrease in revenues was primarily attributable to the decrease of solid waste recycling equipment orders . from july to september this year , due to floods in many places in china , almost 90 % of hubei shengrong 's customers requested to delay acceptance of our equipment and payment , resulting in the sales revenue of hubei shengrong in the third quarter of this year decreased by 90 % compared with the same period of last year . in addition , according to the planning mandates of wuhan municipal government 2018 , manufacturers should move away from city 's downtown area . therefore , due to the policy change , hubei shengrong is forced to close the existing facility , relocate and build a new facility , which is expected to take approximately 7-8 years .
| 4,600 |
md & a is provided as a supplement to , and should be read in conjunction with , our audited consolidated financial statements and the accompanying notes to consolidated financial statements and other disclosures included in this annual report on form 10-k ( including the disclosures under item 1a , risk factors ) . our consolidated financial statements have been prepared in accordance with u.s. generally accepted accounting principles and are presented in u.s. dollars . management overview gilead sciences , inc. ( gilead , we or us ) , incorporated in delaware on june 22 , 1987 , is a research-based biopharmaceutical company that discovers , develops and commercializes innovative medicines in areas of unmet medical need . with each new discovery and investigational drug candidate , we strive to transform and simplify care for people with life-threatening illnesses around the world . gilead 's primary areas of focus include human immunodeficiency virus ( hiv ) , liver diseases such as chronic hepatitis c virus ( hcv ) infection and chronic hepatitis b virus ( hbv ) infection , cardiovascular , hematology/oncology and inflammation/respiratory . we have operations in more than 30 countries worldwide , with headquarters in foster city , california . we continue to add to our existing portfolio of products through our internal discovery and clinical development programs and through a product acquisition and in-licensing strategy . our portfolio of marketed products includes ambisome ยฎ , atripla ยฎ , cayston ยฎ , complera ยฎ /eviplera ยฎ , emtriva ยฎ , genvoya ยฎ , harvoni ยฎ , hepsera ยฎ , letairis ยฎ , ranexa ยฎ , sovaldi ยฎ , stribild ยฎ , tamiflu ยฎ , truvada ยฎ , tybost ยฎ , viread ยฎ , vitekta ยฎ , and zydelig ยฎ . we have u.s. and international commercial sales operations , with marketing subsidiaries in north and south america , europe and asia-pacific . we also sell and distribute certain products through our corporate partners under royalty-paying collaborative agreements . story_separator_special_tag summarizes our product sales , and royalty , contract and other revenues : replace_table_token_4_th product sales total product sales were $ 32.2 billion in 2015 , compared to $ 24.5 billion in 2014 and $ 10.8 billion in 2013 , driven primarily by an increase in antiviral product sales . antiviral product sales , which include products in our hiv and liver disease areas , were $ 30.2 billion in 2015 , $ 22.8 billion in 2014 and $ 9.3 billion in 2013 . the sequential increases in antiviral product sales in 2015 and 2014 were driven primarily by the launch of sovaldi and harvoni . the increases in 2015 sales from the launch of harvoni across various geographies were partially offset by a year-over-year decline in sovaldi sales , with patients being prescribed harvoni instead of sovaldi . hiv products also contributed to sales increases in 2015 and 2014 primarily due to increased sales of our newer hiv single-tablet regimens , stribild , complera/eviplera and the recently launched genvoya , partially offset by declines in atripla sales volumes . other product sales , which include letairis , ranexa , ambisome and zydelig , were $ 1.9 billion in 2015 , an increase of 16 % compared to $ 1.7 billion in 2014 , an increase of 15 % over other product sales of $ 1.5 billion in 2013 . in 2015 , approximately 34 % of our product sales were generated outside the united states . we face exposure to adverse movements in foreign currency exchange rates , primarily in the euro and yen . we used foreign currency exchange contracts to hedge a percentage of our foreign currency exposure . foreign currency exchange , net of hedges , had an unfavorable impact of $ 737 million on our 2015 revenues compared to 2014 and a favorable impact of $ 39 million on our 2014 revenues compared to 2013 . we record product sales net of estimated mandatory and supplemental discounts to government payers , in addition to discounts to private payers , including rebates , chargebacks , cash discounts for prompt payment , distributor fees and other related costs . these deductions are generally referred to as gross-to-net deductions and totaled $ 18.1 billion or 36 % of gross product sales in 2015 , $ 7.3 billion or 23 % in 2014 and $ 3.9 billion or 26 % in 2013 . of the $ 18.1 billion in 2015 , $ 16.4 billion or 33 % of gross product sales was related to government and other rebates and chargebacks , and $ 1.7 billion was related to cash discounts for prompt payment , distributor fees and other related costs . as anticipated , our 2015 gross-to-net deductions attributable to our hcv product sales exceeded our overall gross-to-net of 36 % in order to obtain formulary status or expand access for patients . as a result of the launch of competing regimens , we have experienced , and may continue to experience , increased pricing pressure . the decline in gross-to-net deductions as a percentage of gross product sales in 2014 compared to 2013 was primarily due to change in our payer mix reflecting a higher proportion of product sales to private payers compared to 2013 given the launch of sovaldi in december 2013 and harvoni in october 2014. product sales in the united states increased by 17 % to $ 21.2 billion in 2015 compared to $ 18.1 billion in 2014 , primarily due to sales of harvoni and increases in sales of stribild , truvada and complera , partially offset by declines in sales of sovaldi . product sales in the united states increased by 173 % in 2014 compared to $ 6.6 billion in 2013 , primarily due to sales of sovaldi and harvoni and increases in sales of stribild and complera . product sales in europe increased by 39 % to $ 7.2 billion in 2015 compared to $ 5.1 billion in 2014 , primarily due to sales of harvoni . product sales in europe increased by 54 % to $ 5.1 story_separator_special_tag in 2014 , net products sales of atripla were $ 2.4 billion in united states , $ 888 million in europe and $ 225 million in other international locations . in 2013 , net products sales of atripla were $ 2.4 billion in united states , $ 1.1 billion in europe and $ 231 million in other international locations . a generic version of bristol-myers squibb company 's sustiva ( efavirenz ) , a component of atripla , was made available in canada and europe in 2013 and will be made available in the united states in 2017. while we have observed some pricing pressure related to the efavirenz component of our atripla sales , we have not yet observed any meaningful splitting of the atripla single tablet regimen . stribild stribild sales accounted for 6 % , 5 % and 6 % of our total antiviral product sales for 2015 , 2014 and 2013 , respectively . stribild sales increased 52 % to $ 1.8 billion in 2015 compared to $ 1.2 billion in 2014 and 122 % compared to $ 539 million in 2013 , primarily due to increased sales volume in the united states and europe . in 2015 , net product sales of stribild were $ 1.5 billion in the united states and $ 282 million in europe . in 2014 , net products sales of stribild were $ 1.0 billion in united states and $ 145 million in europe . in 2013 , net products sales of stribild were primarily attributable to sales in united states of $ 510 million . complera/eviplera complera/eviplera sales accounted for 5 % , 5 % and 9 % of our total antiviral product sales for 2015 , 2014 and 2013 , respectively . complera/eviplera sales increased by 16 % to $ 1.4 billion in 2015 compared to $ 1.2 billion 2014 and 52 % compared to $ 810 million in 2013 driven primarily by sales volume growth in the united states and europe . in 2015 , net product sales of complera/eviplera were $ 796 million in the united states and $ 576 million in europe . in 2014 , net products sales of complera/eviplera were $ 663 million in united states and $ 513 million in europe . in 2013 , net products sales of complera/eviplera were $ 503 million in united states and $ 268 million in europe . 51 viread viread sales accounted for 4 % , 5 % , 10 % of our total antiviral product sales for 2015 , 2014 and 2013 , respectively . viread sales increased 5 % in 2015 compared to 2014 and increased 10 % in 2014 compared to 2013 driven primarily by sales volume in the united states and other international locations . in 2015 , net product sales of viread were $ 541 million in the united states , $ 310 million in europe and $ 257 million in other international locations . in 2014 , net products sales of viread were $ 484 million in united states , $ 336 million in europe and $ 238 million in other international locations . in 2013 , net products sales of viread were $ 428 million in united states , $ 354 million in europe and $ 177 million in other international locations . other products other products which include letairis , ranexa , ambisome and zydelig , were $ 1.9 billion in 2015 , $ 1.7 billion in 2014 and $ 1.5 billion in 2013. the year-over-year increases in other product sales were primarily due to increased sales volume of letairis and zydelig . royalty , contract and other revenues the following table summarizes the period over period changes in our royalty , contract and other revenues : replace_table_token_6_th royalty , contract and other revenues primarily includes royalty revenues from f. hoffman-la roche ltd for sales of tamiflu . the majority of our royalties are recognized in the quarter following the quarter in which the corresponding product sales occur . cost of goods sold and product gross margin the following table summarizes the period over period changes in our product sales , cost of goods sold and product gross margin : replace_table_token_7_th our product gross margin for 2015 increased compared to 2014 primarily due to changes in product mix , as atripla sales , which include the efavirenz component at a gross margin of zero , declined and hcv sales increased as a percentage of product sales . our product gross margin for 2014 increased compared to 2013 primarily due to changes in product mix , resulting from the launches of sovaldi and harvoni . research and development expenses the following table summarizes the period over period changes in r & d expenses : replace_table_token_8_th r & d expenses summarized above consist primarily of clinical studies performed by contract research organizations , materials and supplies , licenses and fees , milestone payments under collaboration arrangements , personnel costs , including salaries , benefits and stock-based compensation and overhead allocations consisting of various support and facilities-related costs . we do not track total r & d expenses by product candidate , therapeutic area or development phase . however , we manage our r & d expenses by identifying the r & d activities we anticipate will be performed during a given period and then prioritizing efforts based on scientific data , probability of successful development , market potential , available human and capital resources and other considerations . we continually review our r & d pipeline and the status of development and , as necessary , reallocate resources among the r & d portfolio that we believe will best support the future growth of our business .
| 2015 business highlights during 2015 , we continued to advance our product pipeline across our therapeutic areas with the goal of delivering best-in-class drugs that advance the current standard of care and or address unmet medical needs . highlights of our 2015 activities include : antiviral program u.s. food and drug administration ( fda ) and european commission approved genvoya for the treatment of hiv-1 infection . genvoya is our first t enofovir alafenamide ( taf ) -based regimen . we submitted marketing applications to fda and european medicines agency ( ema ) for an investigational , once-daily single tablet regimen that combines our emtricitabine 200 mg and taf 25 mg with rilpivirine 25 mg ( r/f/taf ) from janssen sciences ireland uc , one of the janssen pharmaceutical companies of johnson & johnson , for the treatment of hiv-1 infection in adult and pediatric patients 12 years of age and older . we submitted marketing applications to fda and ema for two doses of f/taf ( 200/10 mg and 200/25 mg ) for the treatment of hiv-1 infection in adults and pediatric patients age 12 years and older , in combination with other hiv antiretroviral agents . fda approved harvoni for expanded use in patients with genotype 4 , 5 and 6 hcv infection and in patients co-infected with hiv . in addition , harvoni plus ribavirin for 12 weeks was approved as an alternate therapy to 24 weeks of harvoni for treatment-experienced , genotype 1 patients with cirrhosis . japanese ministry of health , labour and welfare approved sovaldi for the suppression of viremia in patients with genotype 2 chronic hcv infection with or without compensated cirrhosis and harvoni , the first once-daily single-tablet regimen for the treatment of chronic hcv genotype 1 infection in adults with or without compensated cirrhosis , with a treatment duration of 12 weeks .
| 4,601 |
the results of operations of diningin , restaurants on the run and delivered dish have been included in the company 's financial statements since february 4 , 2015 , story_separator_special_tag overview the following management 's discussion and analysis of financial condition and results of operations ( โ md & a โ ) should be read in conjunction with the consolidated financial statements and the notes thereto included elsewhere in this annual report on form 10-k. unless otherwise stated , the discussion below primarily reflects the historical condition and results of operations for ( i ) grubhub inc. as of december 31 , 2017 , 2016 and 2015 and for the years ended december 31 , 2017 , 2016 and 2015 and ( ii ) the results of acquired businesses from the relevant acquisition dates in 2017 , 2016 and 2015. in addition to historical consolidated financial information , the following discussion contains forward-looking statements that reflect the company 's plans , estimates , and beliefs . actual results could differ materially from those discussed in the forward-looking statements . factors that could cause or contribute to these differences include those discussed below and elsewhere in this annual report on form 10-k , particularly in part i , item 1a , โ risk factors โ . this overview summarizes the md & a , which includes the following sections : our business โ for a general description of our business , strategy , challenges and products and services see part i , item 1 , โ business โ of this annual report on form 10-k. significant accounting policies and critical estimates โ for further discussion of accounting policies that require critical judgments and estimates see part ii , item 8 , note 2 , summary of significant accounting policies , of the accompanying notes to our consolidated financial statements in this annual report on form 10-k. operations review โ an analysis of our consolidated results of operations for the three years presented in our consolidated financial statements , pro-forma results of operations and non-gaap financial measures . liquidity and capital resources โ an analysis of cash flows , contractual obligations and commitments , the impact of inflation , changes in interest rates and fluctuations in foreign currency and an overview of financial position . significant accounting policies and critical estimates our financial statements are prepared in accordance with gaap . the preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets , liabilities , revenues , expenses and related disclosures . we evaluate our estimates and assumptions on an ongoing basis . our estimates are based on historical experience and various other 27 assumptions tha t we believe to be reasonable under the circumstances . our actual results could differ from these estimates . we believe our most critical accounting policies and estimates relate to the following : revenue recognition website and software development costs recoverability of intangible assets with finite lives and other long-lived assets stock-based compensation goodwill income taxes for a description of our significant accounting policies including critical judgments and estimates , see part ii , item 8 , note 2 , โ summary of significant accounting policies โ of the accompanying notes to our consolidated financial statements in this annual report on form 10-k. operations review executive overview in 2017 , we continued our strong growth trajectory , generating 38 % revenue growth and a 100 % increase in net income compared to 2016. compared to 2016 , our revenues increased by $ 189.7 million , or 38 % , to $ 683.1 million for the year ended december 31 , 2017. the increase was primarily related to the significant growth in active diners , which increased from 8.2 million as of december 31 , 2016 to 14.5 million at the end of december 31 , 2017 , driving an increase in daily average grubs to 334,000 during the year ended december 31 , 2017 from 274,800 daily average grubs during 2016. we processed $ 3.8 billion in gross food sales in 2017 , a 26 % increase from the $ 3.0 billion in gross food sales processed in 2016. the growth in active diners and daily average grubs was due to increased product and brand awareness largely as a result of marketing efforts and word-of-mouth referrals , better restaurant choices for diners in our markets , and technology and product improvements to drive more orders as well as the impact of recent acquisitions . in addition , revenue increased during the year ended december 31 , 2017 compared to the same period in 2016 due to an increase in our average commission rates , the inclusion of results from our recent acquisitions ( see part ii , item 8 , note 3 , acquisitions ) , and a higher average order size . net income increased by $ 49.4 million to $ 99.0 million during the year ended december 31 , 2017 compared to the year ended december 31 , 2016. the increase was primarily related to the increase in revenues described above as well an income tax benefit of $ 34.1 million related to the tax act ( see part ii , item 8 , note 10 , income taxes ) and excess tax benefits of $ 7.1 million related to stock-based compensation recognized in income tax benefit for the year ended december 31 , 2017. these increases were partially offset by an increase in operating expenses to support higher order volume including delivery related expenses and payment processing costs ; an increase in certain other expenses to support organic growth in the business , including compensation and benefits expense and advertising ; as well as increased expenses related to recent acquisitions including depreciation and amortization of intangible assets , acquisition-related expenses and other general and administrative expenses of the acquired companies . story_separator_special_tag basis of presentation revenues we generate revenues primarily when diners place an order on our platform . restaurants pay us a commission , typically a percentage of the transaction on orders that are processed through our platform . most of the restaurants on our platform can choose their level of commission rate , at or above the base rate . a restaurant can choose to pay a higher rate which affects its prominence and exposure to diners on the platform . additionally , restaurants that use our delivery services pay an additional commission for the use of those services . for most orders , diners use a credit card to pay us for their meal when the order is placed . for these transactions , we collect the total amount of the diner 's order net of payment processing fees from the payment processor and remit the net proceeds to 29 the restaurant less commissions . we generally accumulate funds and remit the net proceeds to the restaurants on at least a monthly basis . we also deduct commissions for other transactions that go through our platform , such as cash transactions for restaurants in our network , from the aggregate proceeds received . additionally , we recognize as revenue any fees charged to the diner for delivery services we provide . we periodically provide incentive offers to restaurants and diners to use our platform . these promotions are generally cash credits to be applied against purchases . these incentive offers are recorded as reductions in revenues , generally on the date the corresponding revenue is recorded . we generate a small amount of revenues directly from companies that participate in our corporate ordering program and by selling advertising on our allmenus.com and menupages.com websites to third parties . we do not anticipate that corporate fees or advertising will generate a significant portion of our revenues in the foreseeable future . costs and expenses operations and support operations and support expenses consist of salaries and benefits , stock-based compensation expense and bonuses for salaried employees and payments to independent contractors engaged in customer care , operations and restaurant delivery services . operations and support expenses also include payment processing costs for diner orders , costs of uploading and maintaining restaurant menu content , communications costs related to orders , facilities costs allocated on a headcount basis and other expenses related to operating and maintaining an independent delivery network . sales and marketing sales and marketing expenses contain advertising expenses including search engine marketing , television , online display , media and other programs . sales and marketing expenses also consist of salaries , commissions , benefits , stock-based compensation expense and bonuses for restaurant sales , restaurant sales support , corporate customer sales and marketing employees , payments to contractors and facilities costs allocated on a headcount basis . technology ( exclusive of amortization ) technology ( exclusive of amortization ) expenses consist of salaries and benefits , stock-based compensation expense and bonuses for salaried employees and payments to contractors engaged in the design , development , maintenance and testing of our platform , including our websites , mobile applications and other products . technology expenses also include facilities costs allocated on a headcount basis but do not include amortization of capitalized website and software development costs . general and administrative general and administrative expenses consist of salaries , benefits , stock-based compensation expense and bonuses for executive , finance , accounting , legal , human resources and administrative support . general and administrative expenses also include legal , accounting , other third-party professional services , other miscellaneous expenses and facilities costs allocated on a headcount basis . depreciation and amortization depreciation and amortization expenses primarily consist of amortization of acquired intangibles and depreciation of computer equipment , furniture and fixtures , leasehold improvements and capitalized website and software development costs . income tax ( benefit ) expense income tax ( benefit ) expense consists of federal and state income taxes in the united states and income taxes in certain foreign jurisdictions , deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes , excess tax benefits or deficiencies from stock-based compensation and net operating loss carryforwards . 30 story_separator_special_tag of miscellaneous expenses required to support growth in the business . depreciation and amortization replace_table_token_11_th 2017 compared to 2016 depreciation and amortization expense increased by $ 16.7 million , or 47 % , for the year ended december 31 , 2017 compared to 2016 . the increase was primarily attributable to the amortization of recently acquired intangible assets , higher depreciation and amortization expense related to an increase in capital spending on internally developed software , and depreciation expense related to the additions of restaurant facing technology , leasehold improvements and office equipment to support the growth of our business . the increase was partially offset by a decrease in amortization expense related to acquired developed technology and trademark intangible assets that became fully amortized in the first quarter of 2017 . 2016 compared to 2015 depreciation and amortization expense increased by $ 7.2 million , or 26 % , for the year ended december 31 , 2016 compared to 2015 . the increase was primarily attributable to higher depreciation expense related to an increase in capital spending on internally developed software , facilities and equipment to support the growth of the business and the amortization of intangible assets acquired in recent acquisitions . income tax ( benefit ) expense replace_table_token_12_th 33 2017 compared to 2016 income tax expense decreased by $ 43.6 million for the year ended december 31 , 2017 compared to 2016 . the decrease was primarily due to the decrease in the effective income tax rate from 41 % to negative 10 % during the respective periods , partially offset by the increase in income before provision for income taxes due to the factors described above .
| results of operations the following tables set forth our results of operations for the periods presented in dollars and as a percentage of our revenues : replace_table_token_5_th ( a ) totals of percentage of revenues may not foot due to rounding ( b ) for an explanation of adjusted ebitda as a measure of the company 's operating performance and a reconciliation to net earnings , see โ non-gaap financial measureโadjusted ebitda โ below . revenues replace_table_token_6_th 2017 compared to 2016 revenues increased by $ 189.7 million , or 38 % , for the year ended december 31 , 2017 compared to 2016 . the increase was primarily related to significant growth in active diners , which increased from 8.2 million to 14.5 million at the end of each year , driving an increase in daily average grubs to 334,000 during the year ended december 31 , 2017 from 274,800 daily average grubs during 2016 . the growth in active diners and daily average grubs was due to increased product and brand awareness largely as a result of marketing efforts and word-of-mouth referrals , better restaurant choices for diners in our markets , and technology and product improvements to drive more orders , as well as the impact of recent acquisitions . in addition , revenue increased during the year ended december 31 , 2017 compared to 2016 due to an increase in our average commission rates , the inclusion of results from the acquisitions ( see part ii , item 8 , note 3 , โ acquisitions , โ to our consolidated financial statements in this annual report on form 10-k ) and a higher average order size . 2016 compared to 2015 revenues increased by $ 131.5 million , or 36 % , for the year ended december 31 , 2016 compared to 2015 .
| 4,602 |
see โ cautionary statement regarding forward-looking statements โ within this annual report and โ risk factors โ within this annual report for a discussion of the uncertainties , risks and assumptions associated with these statements . actual results may differ materially from those contained in any forward-looking statements as a result of various factors , including but not limited to , those in โ risk factors โ set forth within this annual report . references to โ ladder , โ the โ company , โ and โ we , โ โ our โ and โ us โ refer to ladder capital corp , a delaware corporation incorporated in 2013 , and its consolidated subsidiaries . ladder capital corp is the sole general partner of ladder capital finance holdings lllp ( โ lcfh โ ) and , as a result of the serialization of lcfh on december 31 , 2014 , became the sole general partner of series reit of lcfh . lc trs i llc , a wholly-owned subsidiary of series reit of lcfh , is the general partner of series trs of lcfh . ladder capital corp has a controlling interest in series reit of lcfh , and through such controlling interest , also has a controlling interest in series trs of lcfh . ladder capital corp 's only business is to act as the sole general partner of lcfh and series reit of lcfh , and , as a result of the foregoing , ladder capital corp directly and indirectly operates and controls all of the business and affairs of lcfh , and each series thereof , and consolidates the financial results of lcfh , and each series thereof , into ladder capital corp 's consolidated financial statements . 65 story_separator_special_tag investments versus higher yields on loan investments . for the year ended december 31 , 2019 , securities investments averaged $ 1.8 billion and loan investments averaged $ 3.4 billion . for the year ended december 31 , 2018 , securities investments averaged $ 1.1 billion and loan investments averaged $ 3.8 billion . there was a $ 404.9 million decrease in average loan investments , offset by a $ 668.3 million increase in average securities investments . the $ 10.1 million increase in interest expense was primarily attributable to increased borrowing levels due to an increase in our real estate securities portfolio , a decreased reliance on fhlb financing , and an increased reliance on mortgage loan financing , partially offset by lower prevailing libor rates during 2019. the average securities balance was $ 1.8 billion for the year ended december 31 , 2019 compared to $ 1.1 billion for the year ended december 31 , 2018 , an increase of $ 668.3 million . our interest expense related to mortgage loan financing increased by $ 1.6 million from $ 36.9 million for the year ended december 31 , 2018 to $ 38.5 million for the year ended december 31 , 2019 , primarily as a result of our increase in average outstanding mortgage loan financing of $ 742.3 million for the year ended december 31 , 2019 compared to $ 735.2 million for the year ended december 31 , 2018 . the $ 13.3 million decrease in net interest income after provision for loan losses was primarily attributable to the decrease in net interest income and the increase in interest expense discussed above . 67 as of december 31 , 2019 , the weighted average yield on our mortgage loan receivables was 6.8 % , compared to 7.7 % as of december 31 , 2018 as the weighted average yield on new loans originated was lower than the weighted average yield on loans that were securitized or paid off . as of december 31 , 2019 , the weighted average interest rate on borrowings against our mortgage loan receivables was 3.1 % , compared to 4.1 % as of december 31 , 2018 . the decrease in the rate on borrowings against our mortgage loan receivables from december 31 , 2018 to december 31 , 2019 was primarily due to lower prevailing market borrowing rates as of december 31 , 2019 compared to december 31 , 2018 . as of december 31 , 2019 , we had outstanding borrowings secured by our mortgage loan receivables equal to 38.3 % of the carrying value of our mortgage loan receivables , compared to 43.3 % as of december 31 , 2018 . as of december 31 , 2019 , the weighted average yield on our real estate securities was 3.1 % , compared to 3.2 % as of december 31 , 2018 . as of december 31 , 2019 , the weighted average interest rate on borrowings against our real estate securities was 2.7 % , compared to 2.8 % as of december 31 , 2018 . as of december 31 , 2019 , we had outstanding borrowings secured by our real estate securities equal to 93.1 % of the carrying value of our real estate securities , compared to 72.0 % as of december 31 , 2018 . our real estate is comprised of non-interest bearing assets ; however , interest incurred on mortgage financing collateralized by such real estate is included in interest expense . as of december 31 , 2019 , the weighted average interest rate on mortgage borrowings against our real estate was 4.9 % , compared to 5.1 % as of december 31 , 2018 . as of december 31 , 2019 , we had outstanding borrowings secured by our real estate equal to 77.6 % of the carrying value of our real estate , compared to 74.5 % as of december 31 , 2018 . provision for loan losses the company determined that a provision expense for loan losses of $ 2.6 million was required for the year ended december 31 , 2019 . story_separator_special_tag we sold our last residential condominium units from veer towers in las vegas , nv , resulting in a net gain on sale of $ 0.4 million and 16 residential condominium units from terrazas river park village in miami , fl , resulting in a net gain on sale of $ 0.4 million . during the year ended december 31 , 2018 , income from sales of residential condominiums totaled $ 5.4 million . we sold 12 residential condominium units from veer towers in las vegas , nv , resulting in a net gain on sale of $ 4.3 million , and 26 residential condominium units from terrazas river park village in miami , fl , resulting in a net gain on sale of $ 1.1 million . impairment of real estate impairment of real estate of $ 1.4 million for the year ended december 31 , 2019 is attributable to the receipt of a lease termination payment on a single-tenant two-story office building in wayne , nj . see note 5 , real estate and related lease intangibles , net and note 15 , fair value of financial instruments for further detail . there was no impairment of real estate for the year ended december 31 , 2018 . fee and other income we generated fee income from origination fees , exit fees and other fees on the loans we originate and in which we invest , unrealized gains ( losses ) on our investment in a mutual fund and dividend income on our investment in fhlb stock and equity securities . the $ 1.9 million decrease in fee and other income year-over-year was primarily due to a decrease in homeowners association ( โ hoa โ ) fee income . 69 net result from derivative transactions net result from derivative transactions represented a loss of $ 30.0 million for the year ended december 31 , 2019 , which was comprised of an unrealized gain of $ 1.5 million and a realized loss of $ 31.6 million , compared to a gain of $ 15.9 million , for the year ended december 31 , 2018 , which was comprised of an unrealized gain of $ 0.7 million and a realized gain of $ 15.2 million , resulting in a negative change of $ 45.9 million . the hedge positions were related to fixed rate conduit loans and securities investments . the derivative positions that generated these results were a combination of interest rate futures that we employed in an effort to hedge the interest rate risk on the financing of our fixed rate assets and the net interest income we earn against the impact of changes in interest rates . the loss in 2019 was primarily related to movement in interest rates during the year ended december 31 , 2019 . the total net result from derivative transactions is comprised of hedging interest expense , realized gains/losses related to hedge terminations and unrealized gains/losses related to changes in the fair value of asset hedges . earnings ( loss ) from investment in unconsolidated joint ventures earnings from our investment in grace lake llc totaled $ 1.0 million and $ 1.7 million for the year ended december 31 , 2019 and 2018 , respectively . earnings ( loss ) from our investment in 24 second avenue totaled $ 2.4 million and $ ( 0.9 ) million for the years ended december 31 , 2019 and 2018 , respectively . the loss for the year ended december 31 , 2018 is due to a negative return related to upfront costs on the investment . the gain in the year ended december 31 , 2019 is due to a recapitalization of our investment in 24 second avenue . see note 6 , investment in and advances to unconsolidated joint ventures for further detail . gain ( loss ) on extinguishment/defeasance of debt gain ( loss ) on extinguishment/defeasance of debt totaled $ ( 1.1 ) million for the year ended december 31 , 2019 . during the year ended december 31 , 2019 , the company paid off $ 6.6 million of mortgage loan financing , recognizing a loss on extinguishment of debt of $ ( 1.1 ) million . there was a $ ( 4.4 ) million gain ( loss ) on extinguishment/defeasance of debt for the year ended december 31 , 2018 . during the year ended december 31 , 2018 the company retired $ 5.9 million of principal of the clo debt , via the purchase of related clo securities , for a repurchase price of $ 6.0 million , recognizing a $ ( 0.1 ) million net loss on extinguishment of debt after recognizing $ 0.1 million of unamortized debt issuance costs associated with the retired debt . salaries and employee benefits salaries and employee benefits are comprised primarily of salaries , bonuses , equity based compensation and other employee benefits . the increase of $ 7.7 million in compensation expense was primarily attributable to an increase in equity based compensation expense ( due in part to the payment of some compensation awards in december 2017 that would normally have been paid in early 2018 ) , partially offset by a decrease in bonus expense . operating expenses operating expenses are primarily composed of professional fees , lease expense and technology expenses . the increase of $ 0.9 million was primarily related to an increase in professional fees , partially offset by a decrease in other operating expenses . real estate operating expenses the decrease of $ 6.5 million in real estate operating expense primarily relates to the sale of real estate in 2018 and a decrease in operating expenses for condominium properties , partially offset by real estate acquired in 2019. fee expense fee expense is comprised primarily of custodian fees , financing costs and servicing fees related to loans .
| results of operations a discussion regarding our results of operations for the year ended december 31 , 2019 compared to the year ended december 31 , 2018 is presented below . a discussion regarding our results of operations for the year ended december 31 , 2018 compared to the year ended december 31 , 2017 can be found in item 7 of part ii , โ management 's discussion and analysis of financial condition and results of operations โ in the company 's annual report on form 10-k for the year ended december 31 , 2018 . year ended december 31 , 2019 compared to the year ended december 31 , 2018 the following table sets forth information regarding our consolidated results of operations ( $ in thousands , except per share data ) : replace_table_token_4_th investment overview investment activity in the year ended december 31 , 2019 focused on loan , security and real estate activities . we originated and funded $ 2.4 billion in principal value of commercial mortgage loans , which was offset by $ 1.0 billion of sales and $ 1.5 billion of principal repayments in the year ended december 31 , 2019 . we acquired $ 1.6 billion of new securities , which was partially offset by $ 855.9 million of sales and $ 491.9 million of amortization in the portfolio , which partially contributed to a net increase in our securities portfolio of $ 311.2 million during the year ended december 31 , 2019 . we also invested $ 104.6 million in real estate and received proceeds from the sale of real estate of $ 24.2 million . 66 investment activity in the year ended december 31 , 2018 focused on loan , security and real estate activities .
| 4,603 |
in addition , united comprises approximately the entire balance of ual 's assets , liabilities and operating cash flows . when appropriate , ual and united are named specifically for their individual contractual obligations and related disclosures and any significant differences between the operations and results of ual and united are separately disclosed and explained . we sometimes use the words ยwe , ย ยour , ย ยus , ย and the ยcompanyย in this report for disclosures that relate to all of ual and united . 2017 financial highlights 2017 net income was $ 2.1 billion , or $ 7.02 diluted earnings per share . united 's consolidated prasm decreased 0.4 % in 2017 compared to 2016. aircraft fuel cost increased 18.9 % year-over-year due mainly to higher fuel prices . in 2017 , ual repurchased approximately 28 million shares of ual common stock for $ 1.8 billion , completing the $ 2.0 billion share repurchase program authorized by ual 's board of directors in july 2016. in december 2017 , ual 's board of directors authorized a new $ 3.0 billion share repurchase program to acquire ual 's common stock . as of december 31 , 2017 , the company had approximately $ 3.0 billion remaining to purchase shares under its share repurchase program . ual ended the year with $ 5.8 billion in unrestricted liquidity , which consisted of unrestricted cash , cash equivalents , short-term investments and available capacity under the revolving credit facility . story_separator_special_tag font-family : times new roman '' > in average full-time equivalent employees , partially offset by a decrease in profit sharing and other employee incentives . aircraft fuel expense increased $ 1.1 billion , or 18.9 % , primarily due to increased fuel prices and a 3.5 % increase in capacity . the table below presents the significant changes in aircraft fuel cost per gallon for the years ended december 31 ( in millions , except percentage changes ) : replace_table_token_11_th landing fees and other rent increased $ 75 million , or 3.5 % , in 2017 as compared to the year-ago period due to higher rental and landing fee rates . regional capacity purchase costs increased $ 35 million , or 1.6 % , in 2017 as compared to the year-ago period despite regional capacity being down 3.8 % in 2017 as compared to 2016 due to increases in annual rates , maintenance cycle-related costs and lease return costs . depreciation and amortization increased $ 172 million , or 8.7 % , in 2017 as compared to 2016 primarily due to additions of new and used aircraft , aircraft improvements and increases in information technology infrastructure and application development projects . aircraft maintenance materials and outside repairs increased $ 107 million , or 6.1 % , in 2017 as compared to 2016 primarily due to an increase in airframe and engine maintenance visits and additional repairs to wireless and inflight entertainment equipment . aircraft rent decreased $ 59 million , or 8.7 % , in 2017 as compared to 2016 primarily due to the purchase of leased aircraft and lower lease renewal rates . the table below presents special charges incurred by the company during the years ended december 31 ( in millions ) : replace_table_token_12_th see note 14 to the financial statements included in part ii , item 8 of this report for additional information . other operating expenses increased $ 236 million , or 4.4 % , in 2017 as compared to 2016 primarily due to increased costs in food , marketing and technology associated with the company 's enhanced customer experience initiatives , and due to volume-driven increases in cargo trucking and handling costs . 31 nonoperating income ( expense ) the following table illustrates the year-over-year dollar and percentage changes in the company 's nonoperating income ( expense ) for the years ended december 31 ( in millions , except percentage changes ) : replace_table_token_13_th 2016 compared to 2015 operating revenue the table below illustrates the year-over-year percentage change in the company 's operating revenues for the years ended december 31 ( in millions , except percentage changes ) : replace_table_token_14_th the table below presents selected passenger revenue and operating data of the company , broken out by geographic region , expressed as year-over-year changes : replace_table_token_15_th ( a ) see part ii , item 6 , selected financial data , of this report for the definition of these statistics . consolidated passenger revenue decreased $ 1.3 billion , or 4.1 % , in 2016 as compared to 2015. consolidated prasm decreased 5.4 % in 2016 as compared to 2015. the decline in prasm was driven by factors including a competitive domestic fare environment , lower surcharges , a strong u.s. dollar and reductions from energy-related corporate travel . 32 cargo revenue decreased $ 61 million , or 6.5 % , in 2016 as compared to 2015 due to lower freight yields and lower mail volumes year-over-year , partially offset by an increase in freight volumes . freight yields were negatively impacted as air freighter competitors increased capacity in response to lower fuel prices . another contributing factor to the year-over-year decrease was a u.s. west coast port labor dispute that resulted in an increase in air freight results in the first quarter of 2015. the labor dispute was resolved during the first quarter of 2015. operating expense the table below includes data related to the company 's operating expense for the years ended december 31 ( in millions , except percentage changes ) : replace_table_token_16_th salaries and related costs increased $ 562 million , or 5.8 % , in 2016 as compared to 2015 primarily due to higher pay rates and benefit expenses driven by new and extended collective bargaining agreements , an increase in employee incentive expenses due to improvements in operational performance and a 2.2 % increase in average full-time equivalent employees , partially offset by a reduction in profit sharing expense in 2016 as compared to 2015 , a reduction in medical and story_separator_special_tag see note 13 to the financial statements included in part ii , item 8 of this report for additional information on commitments . as of december 31 , 2017 , a substantial portion of the company 's assets , principally aircraft , route authorities , airport slots and loyalty program intangible assets , was pledged under various loan and other agreements . we must sustain our profitability and or access the capital markets to meet our significant long-term debt and capital lease obligations and future commitments for capital expenditures , including the acquisition of aircraft and related spare engines . see note 10 to the financial statements included in part ii , item 8 of this report for additional information on assets provided as collateral by the company . the following is a discussion of the company 's sources and uses of cash from 2015 through 2017. operating activities 2017 compared to 2016 cash flow provided by operations for the year ended december 31 , 2017 was $ 3.4 billion compared to $ 5.5 billion in the same period in 2016 , the decrease resulting from lower operating income and reduced cash flows from certain changes in working capital items . excluding the non-cash impairment of the newark slots , operating income for 2017 was approximately $ 1.2 billion lower than 2016. working capital changes reduced cash flow from operations by an additional $ 1.2 billion year-over-year in 2017 as compared to 2016. the following were significant working capital items in 2017 : $ 0.9 billion decrease in advanced purchase of miles due to increased utilization of pre-purchased miles . $ 0.4 billion increase in prepayments for maintenance contracts . 2016 compared to 2015 cash flow provided by operations for the year ended december 31 , 2016 was $ 5.5 billion compared to $ 6.0 billion in the same period in 2015. working capital changes reduced cash flow from operations by 35 $ 0.5 billion year-over-year in 2016 as compared to 2015. the following were significant working capital items in 2016 : frequent flyer and advance purchase of miles decreased $ 0.6 billion due to increased utilization of pre-purchased miles . other assets , including spare parts , increased by $ 0.3 billion as part of the company 's efforts to improve fleet reliability . accounts payable increased $ 0.2 billion , driven by the timing of payments . investing activities 2017 compared to 2016 the company 's capital expenditures were $ 4.0 billion and $ 3.2 billion in 2017 and 2016 , respectively . the company 's capital expenditures for both years were primarily attributable to the purchase of new aircraft , aircraft improvements , facility and fleet-related costs and the purchase of information technology assets . 2016 compared to 2015 the company 's capital expenditures were $ 3.2 billion and $ 2.7 billion in 2016 and 2015 , respectively . the company 's capital expenditures for both years were primarily attributable to the purchase of aircraft , facility and fleet-related costs and the purchase of information technology assets . financing activities significant financing events in 2017 were as follows : share repurchases the company used $ 1.8 billion of cash to purchase approximately 28 million shares of its common stock during 2017 , completing its july 2016 repurchase authorization . in december 2017 , ual 's board of directors authorized a new $ 3.0 billion share repurchase program to acquire ual 's common stock . as of december 31 , 2017 , the company had approximately $ 3.0 billion remaining to purchase shares under its share repurchase program . debt issuances during 2017 , united received and recorded $ 1.8 billion of proceeds as debt related to enhanced equipment trust certificate ( ยeetcย ) offerings created in 2016 and 2017 to finance the purchase of aircraft . in 2017 , ual issued , and united guaranteed , ( i ) $ 400 million aggregate principal amount of unsecured 4.25 % senior notes due october 1 , 2022 , and ( ii ) $ 300 million aggregate principal amount of unsecured 5 % senior notes due february 1 , 2024. in 2017 , united and ual , as borrower and guarantor , respectively , increased the term loan under the 2017 credit agreement by approximately $ 440 million . during 2017 , united borrowed approximately $ 497 million aggregate principal amount from various financial institutions to finance the purchase of several aircraft delivered in 2017. debt and capital lease principal payments during the year ended december 31 , 2017 , the company made debt and capital lease principal payments of $ 1.0 billion . 36 significant financing events in 2016 were as follows : share repurchases the company used $ 2.6 billion of cash to purchase 50 million shares of its common stock during 2016 under its share repurchase programs . debt issuances in 2016 , united completed two eetc offerings for a total principal amount of $ 2.0 billion . of the $ 2.0 billion , united received and recorded $ 708 million of proceeds as debt as of december 31 , 2016 to finance the purchase of 17 aircraft . in 2016 , united borrowed approximately $ 369 million aggregate principal amount from various financial institutions to finance the purchase of several aircraft delivered in 2016. debt and capital lease principal payments during the year ended december 31 , 2016 , the company made debt and capital lease principal payments of $ 1.4 billion . significant financing events in 2015 were as follows : share repurchases the company used $ 1.2 billion of cash to purchase 21 million shares of its common stock during 2015 under its share repurchase programs . debt issuances during 2015 , united issued $ 1.4 billion of debt related to eetc offerings to finance aircraft .
| 2017 operational highlights consolidated rpms for 2017 increased 2.8 % as compared to 2016 , and consolidated asms increased 3.5 % from the prior year , resulting in a consolidated load factor of 82.4 % in 2017 versus 82.9 % in 2016. for 2017 and 2016 , the company recorded a dot on-time arrival rate of 81.9 % and 81.3 % , respectively , and a system completion factor of 99.0 % for each year . during 2017 , the company took delivery of three new boeing 787-9s , four new boeing 737-800s , 12 new boeing 777-300ers , 24 new embraer e175s , two used airbus a320s and six used airbus a319s and retired 20 boeing 747-400s . outlook set forth below is a discussion of the principal matters that we believe could impact our financial and operating performance and cause our results of operations in future periods to differ materially from our historical operating results and or from our anticipated results of operations described in the forward-looking statements in this report . see part i , item 1a. , risk factors , of this report and the factors described under ยforward-looking informationย below for additional discussion of these and other factors that could affect us . in 2017 , the company had its best operational performance in its post-merger history . operational reliability , service and experience underpin the company 's long-term strategy . our priorities for 2018 are continued top-tier operational reliability while strengthening our domestic network through growth , driving efficiency and productivity and continued investment in our employees , product and technology . 28 economic conditions . the aviation industry in 2018 is expected to show continued growth in the demand for air travel . passenger numbers are expected to increase . cargo volumes are also expected to grow , with some recovery in yields . passenger revenue in all regions are expected to demonstrate improved performance in 2018. capacity .
| 4,604 |
additionally , if the ceo ( i ) voluntarily leaves the employ of the company within six months of his becoming aware of a change of control ( as defined in the agreement ) of the company , then he shall be entitled to receive a lump sum amount equal to three times the five -year average of his combined total annual compensation , which includes story_separator_special_tag the following discussion should be read in conjunction with the consolidated financial statements of the company ( including the notes thereto ) included elsewhere in this report . the company generates revenues primarily from the sale , shipping , licensing , leasing and installation of precast concrete products for the construction , utility and farming industries . the company 's operating strategy has involved producing innovative and proprietary products , including slenderwall , a patented , lightweight , energy efficient concrete and steel exterior wall panel for use in building construction ; j-j hooksยฎ barrier , a positive-connected highway safety barrier ; sierra wall , a sound barrier primarily for roadside use ; transportable concrete buildings ; and softsound , a highway sound attenuation system . in addition , the company produces utility vaults ; farm products such as cattleguards , and water and food troughs ; and custom order precast concrete products with various architectural surfaces . as a part of the construction industry , the company 's sales and net income may vary greatly from quarter to quarter over a given year . because of the cyclical nature of the construction industry , many factors not under our control , such as weather and project delays , affect the company 's production schedule , possibly causing a momentary slowdown in sales and net income . as a result of these factors , the company is not always able to smooth out these anomalies and show a profit for each period , therefore , please read management 's discussion and analysis of financial condition and results of operations and the accompanying financial statements with these factors in mind . overview overall , the company 's financial performance improved significantly in 2016 when compared to 2015 . the company had net income in 2016 in the amount of $ 2,835,200 compared to a net income of $ 1,044,304 for 2015 . the primary reasons for the increase in net profit was the significant increase in sales , a two percentage point decrease in cost of goods sold as a percentage of total revenue and overhead costs remaining relatively flat . sales were particularly strong in the third quarter of 2016 due to several large short-term highway barrier rental projects , which produce profits slightly higher than our normal rental projects because of the large amount of preparation , installation and removal and follow through that must be accomplished in a short period of time . sales continue to look strong for 2017 , although several larger projects were delayed from starting in the first quarter of 2017 and will not start until the second quarter of the year . based on current market activity and the company 's backlog , management believes that 2017 will be another strong financial year for the company , although no assurance can be given . story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > 2016 barrier sales increased by $ 6,618,289 from the previous year . the increase is a result of adding the columbia , south carolina production plant and the barrier produced in that facility under a $ 3.5 million contract awarded to the company , and the barrier produced under a large contract produced in the north carolina production plant . in addition to the increase in barrier sales at these two production facilities , the virginia production plant increased barrier sales by $ 1.0 million . as discussed above in the soundwall section , there are several large soundwall projects currently waiting to be awarded , which awards will also have significant amounts of barrier required to be supplied with the projects , consequently a large amount of barrier will be required to be delivered in 2017 and 2018 by the persons awarded these soundwall projects or other highway barrier producers such as smith-midland corp. as a result of the increased federal and state highway and infrastructure improvements , management believes barrier sales will continue to be strong over the next several years . beach prisms โ there were no sales of beach prisms in 2016. the company made one sale of beach prisms in 2015 to the michigan department of natural resources for the stated usage of preventing shoreline erosion . the company still struggles to obtain the necessary permits from the states of maryland and virginia , even though where beach prisms have been installed , they have performed better than expected by the company and the customer . future sales of beach prisms can not be accurately predicted because of continued difficulty in obtaining the needed state permits , however , management still believes that beach prisms are a viable product and will continue to push for licensing approval . easi-setยฎ and easi-spanยฎ building sales โ the easi-setยฎ buildings program includes easi-setยฎ , plant assembled and easi-spanยฎ , site assembled , and an extensive line of pre-engineered restrooms . building sales decreased by 13.3 % in 2016 compared to 2015 . the decrease in sales was primarily due to less sales under our gsa sales contract which expired in july of 2016. the company decided not to bid on the renewal of the gsa contract as the pricing has fallen well below our current selling price . the company continues to expand and improve its proprietary line of restroom buildings for parks , athletic fields and other outdoor venues and is continuing to market these products with a highly visible advertising campaign . story_separator_special_tag the increase in general and administrative expenses is primarily due to the addition of the columbia , south carolina facility which began operations in february of 2016. general and administrative expense as a percent of total revenue were 10 % for the year ended december 31 , 2016 and 12 % for the year ended december 31 , 2015 . selling expenses โ selling expenses for the year ended december 31 , 2016 decreased by $ 47,035 , or 2.2 % , to $ 2,120,978 from $ 2,168,013 for the year ended december 31 , 2015 . the decrease was due to a decrease in salary expense , a decrease in office expense and a decrease in general office expense . all sales activities for the new facility located in columbia , south carolina are currently being performed by the sales department in smith-midland virginia . the company is currently searching for several sales persons , with one to be located in columbia , south carolina . with the current increase in sales and the anticipated increase in future years , additional sales persons are a priority for the company . operating income โ the company had operating income for the year ended december 31 , 2016 of $ 4,336,446 compared to operating income of $ 1,576,879 for the year ended december 31 , 2015 , an increase of $ 2,759,567 . the increase in operating income was primarily the result of a significant increase in sales and a decrease in cost of goods sold as a percentage of total revenue for year ended december 31 , 2016 as discussed above . interest expense โ interest expense was $ 162,529 for the year ended december 31 , 2016 compared to $ 103,086 for the year ended december 31 , 2015 . the increase of $ 59,443 , or 58 % , was due primarily to the $ 1.3 million note payable for the acquisition of the columbia , south carolina facility and several smaller installment notes payable for the purchase of machinery and equipment . income tax expense โ the company had income tax expense of $ 1,462,000 for the year ended december 31 , 2016 compared to income tax expense of $ 557,000 for the year ended december 31 , 2015 . the company had an effective rate of 34.0 % for the year ended december 31 , 2016 compared to an effective rate of 34.9 % for the same period in 2015 . the changes in the tax expense for the periods correlated to the change in pre-tax income . net income โ the company had net income of $ 2,835,200 for the year ended december 31 , 2016 , compared to net income of $ 1,044,304 for the same period in 2015 . the basic income per share was $ 0.57 and the diluted income per share for 2016 was $ 0.56 , compared to basic and diluted income per share of $ 0.21 for the year ended december 31 , 2015 . there were 4,934,431 basic and 5,066,714 diluted weighted average shares outstanding in 2016 and 4,895,367 basic and 4,946,375 diluted weighted average shares outstanding in the 2015 . liquidity and capital resources the company financed its capital expenditures requirements for 2016 with cash flows from operations , cash balances on hand and notes payable to a bank . the company had $ 3,933,034 of debt obligations at december 31 , 2016 , of which $ 587,523 was 15 scheduled to mature within twelve months . during the twelve months ended december 31 , 2016 , the company made repayments of outstanding debt in the amount $ 2,262,840 , of which $ 1,450,000 was paid to reduce the balance on the company 's line of credit . the company has a note payable to summit community bank ( the โ bank โ ) with a balance of $ 1,328,549 as of december 31 , 2016 . the note has a remaining term of approximately five years and a fixed interest rate of 3.99 % annually with monthly payments of $ 25,642 and is secured by principally all of the assets of the company . under the terms of the note , the bank will permit chattel mortgages on purchased equipment not to exceed $ 250,000 for any one individual loan so long as the company is not in default . also , the company is limited to $ 1,500,000 for annual capital expenditures . at december 31 , 2016 , the company was in compliance with all covenants pursuant to the loan agreement as amended except for the limit of $ 1,500,000 for the purchase of capital expenditures , for which the company received a waiver for the excess capital expenditures in 2016. on march 27 , 2016 , the company executed an agreement to purchase the land , building and fixtures of a facility located in hopkins , south carolina ( `` smith-columbia '' ) for a purchase price of $ 1,550,000. the facility is located on 39 acres of land and has approximately 40,000 square feet of production space . the agreement was completed in july 2016 , and was financed by a new 10 year term facility from the bank . the note has a remaining term of approximately nine and one-half years and a fixed interest rate of 5.29 % annually with monthly payments of $ 10,673 and is secured by all of the assets of smith-columbia and a guarantee by the company . the balance of the note payable at december 31 , 2016 was $ 1,293,542 . the acquisition of smith-columbia was approved by the bank , and as such , was excluded from the $ 1,500,000 capital expenditures limit . in addition to the notes payable discussed above , the company also has a $ 2,000,000 line of credit with the bank , of which there was no outstanding balance at december 31 , 2016 .
| results of operations year ended december 31 , 2016 compared to the year ended december 31 , 2015 for the year ended december 31 , 2016 , the company had total revenue of $ 40,050,046 compared to total revenue of $ 29,204,239 for the year ended december 31 , 2015 , an increase of $ 10,845,807 , or 37 % . sales include revenues from product sales , royalty income , barrier rental income and shipping and installation income . product sales are further divided into wall panel sales , which include soundwall , architectural and slenderwall panels , highway barrier , beach prisms , easi-setยฎ and easi-spanยฎ buildings , utility and farm products and miscellaneous precast products . the following table summarizes the sales by product type and a comparison for the years ended december 31 , 2016 and 2015 : 12 replace_table_token_1_th wall panel sales โ wall panel sales are generally medium to large contracts issued by general contractors for production , delivery and installation of a specific wall panel product for a specific construction project . changes in the mix of wall panel sales depend on what contracts are in production during the period . overall wall panel sales increased by 20.5 % for year ended december 31 , 2016 , compared to the same period in 2015 . the following describes the changes by wall panel type : soundwall panel sales increased by 143.9 % in 2016 compared to 2015 due primarily to the larger number of projects in production in 2016 compared to 2015 and the number of larger dollar value projects in production during 2016. soundwall bid projects continue to remain strong in 2017 and management believes that it will be able to obtain a sizable share of the projects available , although no assurance can be given .
| 4,605 |
the acquired business contributed net sales of $ 60.1 million and $ 4.1 million and net income attributable to ferro of $ 11.0 million and net loss attributable to ferro story_separator_special_tag overview during the year ended december 31 , 2015 , net sales were down $ 36.3 million , or 3.3 % , compared with 2014. the decrease was primarily due to unfavorable foreign currency impacts , which totaled approximately $ 132.4 million , partially offset by the sales from nubiola of $ 56.9 million , which was acquired in the third quarter of 2015 , and by the sales from vetriceramici of $ 56.0 million , which was acquired in the fourth quarter of 2014. despite the decline in net sales , gross profit increased $ 16.6 million compared with 2014. as a percentage of net sales excluding precious metals , gross profit rate increased approximately 230 basis points to 29.1 % , from 26.8 % in the prior year . for the year ended december 31 , 2015 , selling , general and administrative ( โ sg & a โ ) expenses decreased $ 69.9 million , or 24.4 % , compared with 2014 , primarily driven by the pension and other postretirement benefits mark-to-market adjustment and curtailment and settlement effects . in 2015 , the adjustment resulted in a loss of $ 8.2 million in sg & a , while in 2014 , the adjustment resulted in a loss of $ 88.5 million . for the year ended december 31 , 2015 , net income was $ 63.1 million , compared with net income of $ 86.2 million in 2014 , and net income attributable to common shareholders was $ 64.1 million , compared with net income attributable to common shareholders of $ 86.1 million in 2014. income from continuing operations was $ 99.9 million for the year ended december 31 , 2015 , compared with loss from continuing operations of $ 8.6 million in 2014. gross profit in 2015 was $ 301.7 million , compared with $ 285.1 million in 2014. outlook during 2015 , d espite challenging curren cy and global economic conditions , the company delivered strong performance and continued to advance on our value creation strategy . during the past 18 months , we have invested in acquisitions that complement our existing businesses , provide attractive margins , and improve our capabilities in important growth markets . we are well positioned strategically to leverage our infrastructure and market leading positions to achieve or exceed our performance targets and generate stronger returns for our shareholders . w e expect foreign currency to continue to have a negative impact on our results . the earnings improvement will be driven by contributions from acquisitions , organic sales growth and continued focus on reducing our direct and indirect purchasing costs . in addition , we intend to continue making acquisitions . we have a robust pipeline of acquisition targets and the financial flexibility to pursue them . our acquisition growth objective is to invest $ 100 million annually to add assets that strengthen our product and technology portfolios , improve our market position , expand our global reach , and drive shareholder value . for 2016 , we expect sales growth of 10 โ 11 % , including the addition of our acquisitions and excluding the adverse impact of the changes in foreign currency . we expect gross profit margins will improve by 50 โ 100 basis points , based primarily on higher volumes , and improved business mix . in addition , we will continue to focus on reducing costs in sg & a and manufacturing related operations . we expect the result of our efforts in all of these areas will allow the company to generate $ 80 - $ 90 million of free cash flow in 2016. we continue to be focused on integration of our recent acquisitions , including al salomi and nubiola , which were acquired in 2015. further , we are continuing efforts to divest our europe-based polymer additives assets . these assets to be divested are classified a s held-for-sale on our consolidated balance sheets . 20 results of operations - consolidated comparison of the years ended december 31 , 2015 and 2014 for the year ended december 31 , 2015 , income from continuing operations was $ 99.9 million , compared with loss from continuing operations of $ 8.6 million in 2014 . for the year ended december 31 , 2015 , net income was $ 63.1 million , compared with net income of $ 86.2 million in 2014 . for the year ended december 31 , 2015 , net income attributable to common shareholders was $ 64.1 million , or $ 0.74 per share , compared with net income attributable to common shareholders of $ 86.1 million , or $ 0.99 per share in 2014 . net sales replace_table_token_4_th net sales decreased by $ 36.3 million , or 3.3 % , in the year ended december 31 , 2015 , compared with the prior year . net sales excluding precious metals decreased $ 27.7 million , primarily driven by decreased sales in performance coatings and performance colors and glass of $ 55.2 million and $ 28.0 million , respectively , partially mitigated by increased net sales in pigments , powders and oxides of $ 55.5 million . the main driver of the decrease in net sales excluding precious metals was unfavorable foreign currency impacts , which totaled approximately $ 132.4 million , and unfavorable pricing impacts of $ 16.6 million , partially mitigated by $ 56.9 million of sales from nubiola , which was acquired in the third quarter of 2015 , and $ 56.0 million of sales from vetriceramici , which was acquired in the fourth quarter of 2014. the decline in precious metal sales in 2015 was attributable to the expiration of tolling arrangements resulting from the sale of our north american and asian metal powders business and exit of our solar pastes business in 2014 , which contributed $ 5.7 million of story_separator_special_tag restructuring and impairment charges replace_table_token_9_th restructuring and impairment charges increased in 2015 compared with 2014 . the primary drivers were the increase in employee severance cost of $ 1.3 million in 2015 compared with 2014 and the early termination cost of a contract associated with restructuring a corporate function of $ 2.8 million during in 2015. the increase in restructuring and impairment charges was partially mitigated by a decrease of $ 2.5 million due to a lease termination charge that occurred in 2014 . 23 interest expense replace_table_token_10_th interest expense in 2015 decreased $ 1.1 million compared with 2014 , primarily due to the redemption of the 7.875 % senior notes and refinancing of the 2013 revolving credit facility during the third quarter of 2014 . the decrease was partially offset by reduced interest capitalization related to the construction project at our antwerp , belgium facility in 2015 compared with 2014. income tax expense in 2015 , w e recorded an income tax benefit of $ 45.1 m illion , or ( 82.3 % ) of income be fore income taxes , compared to an income tax benefit of $ 34.2 million , or 79.9 % of loss before taxes in 2014 . the 2015 effective tax rate was less than the statutory income tax rate of 35 % primarily as a result of a $ 3.1 million benefit for the release of the valuation allowances related to deferred tax assets that were utilized in the current year , $ 7.3 million benefit related to the expiration of fully valued tax credits and $ 63.3 million benefit for the release of valuation allowances deemed no longer necessary . the 2014 effective tax rate was greater than the statutory income tax rate of 35 % primarily as a result of a $ 17.4 million benefit related to the release of valuation allowances for deferred tax assets that were utilized in the 2014 , the release of valuation allowances deemed no longer necessary and the expiration of fully valued tax attributes , $ 15.2 million of benefit related to 2014 domestic foreign tax credit generated and utilized , and foreign tax rate differences from the statutory income tax rate of 35 % . comparison of the years ended december 31 , 2014 and 2013 for the year ended december 31 , 2014 , loss from continuing operations was $ 8.6 million , compared with income from continuing operations of $ 63.9 million in 2013 . for the year ended december 31 , 2014 , net income was $ 86.2 million , compared with net income of $ 72.4 million in 2013 . for the year ended december 31 , 2014 , net income attributable to common shareholders was $ 86.1 million , or $ 0.99 earnings per share , compared with net income attributable to common shareholders of $ 71.9 million , or $ 0.83 earnings per share in 2013 . net sales replace_table_token_11_th net sales decreased by $ 77.0 million , or 6.5 % in the year ended december 31 , 2014 , compared with the prior year . net sales excluding precious metals decreased $ 26.2 million , driven by decreased sales in our pigments , powders and oxides segment of $ 35.6 million , primarily due to the sale of our north american and asian metal powders business and exit of solar pastes during 2013 , and decreased sales in our performance coatings segment of $ 11.8 million . partially mitigating these declines were increased sales in our performance colors and glass segment of $ 21.2 million . sales of precious metals were down compared with the prior year primarily due to the sale of our north american and asian metal powders business and the exit of solar pastes which contributed $ 47.2 million of the decline . 24 gross profit gross profit increased $ 7.4 million , or 2.7 % in 2014 to $ 285.1 million , compared with $ 277.7 million in 2013. the significant driver of the increased gross profit was strong performance in our performance colors and glass segment which exceeded prior year gross profit by $ 22.1 million , primarily driven by higher sales volumes and favorable mix , favorable product pricing , and favorable manufacturing costs . this increase was partially offset by lower gross profit in our pigments , powders and oxides and performance coatings segments . g eographic revenues the following table presents our sales on the basis of where sales originated . replace_table_token_12_th the decline in net sales excluding precious metals of $ 26.2 million , compared with 2013 , was driven by declines in all regions . the decline in sales was largely driven by the sale of our north american and asian metal powders business and exit of solar pastes , which resulted in a decrease of $ 27.5 million , partially mitigated by higher sales in the united states for performance colors and glass products of $ 11.2 million . in addition , lower sales in latin america were due to decreased sales in our performance coatings and pigments , powders and oxides segments of $ 5.5 million and $ 3.0 million , respectively , partially offset by higher sales in performance colors and glass . the decline in sales in europe in 2014 compared with 2013 was attributable to lower sales of performance coatings products of $ 1.9 million , partially mitigated by slightly higher sales of pigments , powders and oxides products compared to the prior year . the following table presents our sales on the basis of where sold products were shipped . replace_table_token_13_th selli ng , general and administrative expense the following table presents selling , general and administrative expenses attributable to operating sites and regional costs outside the united states together as performance materials , and regional costs attributable to the united states and other corporate costs together as corporate .
| result ed in an actuarial gain of $ 70.4 million . the 2013 gain was primarily driven by the change in discount rate used to value the liability , which increased by 95 basis points , compared with 2012 , resulting in a reduction in the value of the liability . excluding the impact s of the mark-to-market adjustment s and curtailment and settlement effects , sg & a expenses decreased 170 basis points from 20.3 % in the pri or year to 18.6 % in 2014. various restructu ring activities executed in 2013 that had a full year impact in 2014 drove the decrease in personnel expenses . the decreases were partially offset by higher stock-based compensation expense due to higher grants to retirement-eligible employees that require accelerated expense recognition , and the i mpact of improved stock price on our liability based awards . 26 restructuring and impairment charges replace_table_token_16_th restructuring and impairment charges decreased significantly in 2014 compared with 2013 . the primary drivers of the decline were the decrease in employee severance cost of $ 18.2 million in 2014 compared with 2013 and the various 2013 impairment charges of $ 10.8 million that did not recur in 2014 . many of our restructuring activities commenced during the first half of 2013 , t hereby driving the higher prior year expenses . we had fewer restructuring activities during 2014. interest expense replace_table_token_17_th interest expen se in 2014 decreased $ 3.9 million compared with 2013 , primarily due to the amendment of our revolving credit facility and retirement of the 7.875 % senior notes . additionally , interest expense decreased due to additional interest capitalization related to the construction project at our antwerp , belgium facility .
| 4,606 |
after a lengthy review process of several national third-party hotel management companies , on february 1 , 2017 , justice entered into a hotel management agreement ( โ hma โ ) with interstate management company , llc ( โ interstate โ ) to manage the hotel with an effective takeover date of february 3 , 2017. the term of management agreement is for an initial period of 10 years commencing on the takeover date and automatically renews for an additional year not to exceed five years in the aggregate subject to certain conditions . the hma also provides for interstate to advance a key money incentive fee to the hotel for capital improvements in the amount of $ 2,000,000 under certain terms and conditions described in a separate key money agreement . the key money contribution shall be amortized in equal monthly amounts over an eight ( 8 ) year period commencing on the second ( 2 nd ) anniversary of the takeover date . the $ 2,000,000 is included in restricted cash and related party note payable balances in the balance sheets as of june 30 , 2018 and 2017. during the years ended june 30 , 2018 and 2017 , interstate management fees were $ 957,000 and $ 372,000 , respectively , and are included in hotel operating expenses in the consolidated statements of operations . note 13 โ concentration of credit risk as of june 30 , 2018 and 2017 , all accounts receivables are related to hotel customers . the hotel had two customers that accounted for 32 % , or $ 572,000 of accounts receivable at june 30 , 2018 , and one customer that accounted for 27 % , or $ 390,000 of accounts receivable at june 30 , 2017. the partnership maintains its cash and cash equivalents and restricted cash with various financial institutions that are monitored regularly for credit quality . at times , such cash and cash equivalents holdings may be in excess of the federal deposit insurance corporation ( โ fdic โ ) or other federally insured limits . note 14 โ income taxes the provision for the company 's income tax expense is comprised of the following : replace_table_token_28_th 47 the provision for income taxes differs from the amount of income tax computed by applying the federal statutory income tax rate to income before taxes as a result of the following differences : replace_table_token_29_th on december 22 , 2017 , the u.s. government enacted comprehensive tax legislation commonly referred to as the tax cuts and jobs act ( the โ tax act โ ) . the tax act significantly revises the future ongoing corporate income tax by , among other things , lowering corporate income tax rates . as the company has a june 30 fiscal year-end , the lower corporate income tax rate was phased in , resulting in a statutory federal rate of approximately 28 % for our fiscal year ending june 30 , 2018 , and 21 % for subsequent fiscal years . the decrease in corporate tax rate reduced the company 's deferred tax assets and liabilities to the lower federal base rate of 21 % . as a result , a provisional net credit of $ 404,000 was included in the income tax expense for the year ended june 30 , 2018. the components of the deferred tax asset and liabilities are as follows : replace_table_token_30_th as of june 30 , 2018 , the company had estimated net operating losses ( nols ) of $ 27,633,000 and $ 18,784,000 for federal and state purposes , respectively . below is the break-down of the nols for intergroup , santa fe and portsmouth . the carryforward expires in varying amounts through the year 2037. federal state intergroup $ - $ - santa fe 8,893,000 3,664,000 portsmouth 18,740,000 15,120,000 $ 27,633,000 $ 18,784,000 utilization of the net operating loss carryover may be subject a substantial annual limitation if it should be determined that there has been a change in the ownership of more than 50 percent of the value of the company 's stock , pursuant to section 382 of the internal revenue code of 1986 and similar state provisions . the annual limitation may result in the expiration of net operating loss carryovers before utilization . assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the โ more-likely-than-not โ threshold based on the technical merits story_separator_special_tag story_separator_special_tag replace_table_token_5_th the hotel 's continued focus on growing occupancy during off peak timeframes resulted in the $ 8 revpar growth from fiscal year 2017. while the hotel focused on rate growth over peak demands of midweek , the growth of occupancy came over weekends and holidays which resulted in the overall rate remaining flat year over year at $ 250. we believe that enhancing the hotel 's technology is critical and to that end , we are currently working with all hilton approved vendors to upgrade all technical aspects of the hotel and the implementation of state-of-the-art systems that will set us apart from our competitors . we have made ten additional rooms available by eliminating the justice administrative office from the hotel and relocating the accounting department to administrative space and eliminated the unprofitable wellness center that was added by previous management . we anticipate that the additional ten rooms will be placed into service within the fiscal year ending june 30 , 2019. additionally , the fitness center which is occupying the equivalent of five rooms and the executive lounge which is occupying the equivalent of three rooms , will be relocated to a different area within the hotel . the eight equivalent rooms will be placed back into service . story_separator_special_tag part of this renovation will be funded by the hotel 's furniture , fixture and equipment reserve account with our lender as well as the $ 2,000,000 key money incentive provided by interstate . lastly , we anticipate the completion of the installation of a complete exterior building maintenance system during fiscal 2019 in order to wash the windows periodically . 24 real estate operations revenue from real estate operations decreased to $ 14,480,000 for the year ended june 30 , 2018 from $ 14,671,000 for the year ended june 30 , 2017 primarily as a result of increased vacancy loss . real estate operating expenses increased to $ 7,579,000 from $ 7,166,000 primarily as a result of higher real estate taxes . management continues to review and analyze the company 's real estate operations to improve occupancy and rental rates and to reduce expenses and improve efficiencies . investment transactions the company had a net loss on marketable securities of $ 1,777,000 for the year ended june 30 , 2018 compared to a net loss on marketable securities of $ 3,496,000 for the year ended june 30 , 2017. for the year ended june 30 , 2018 , the company had an unrealized loss of $ 2,337,000 and a realized loss of $ 6,007,000 , related to the company 's investment in the common stock of comstock mining inc. ( โ comstock โ - nyse mkt : lode ) . for the year ended june 30 , 2017 , the company had an unrealized loss of $ 4,517,000 and zero realized loss related to the company 's investment in the common stock of comstock . as of june 30 , 2018 and 2017 , investments in comstock represent approximately 7 % and 28 % , respectively , of the company 's investment portfolio . for the year ended june 30 , 2018 , the company had a net realized loss of $ 5,375,000 and a net unrealized gain of $ 3,598,000. for the year ended june 30 , 2017 , the company had a net realized gain of $ 356,000 and a net unrealized gain of $ 3,852,000. gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the company 's results of operations . however , the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value . for a more detailed description of the composition of the company 's marketable securities see the marketable securities section below . during the years ended june 30 , 2018 and 2017 , the company performed an impairment analysis of its other investments and determined that its investments had an other than temporary impairment and recorded impairment losses of $ 200,000 and $ 178,000 , respectively . the company and its subsidiaries , portsmouth and santa fe , compute and file income tax returns and prepare discrete income tax provisions for financial reporting . the income tax expense during the year ended june 30 , 2018 and 2017 represents primarily the combined income tax effect of portsmouth 's pretax income which includes its share in net income from the hotel and the pre-tax loss from intergroup ( standalone ) . marketable securities and other investments as of june 30 , 2018 and 2017 , the company had investments in marketable equity securities of $ 13,841,000 and $ 17,177,000 , respectively . the following table shows the composition of the company 's marketable securities portfolio by selected industry groups as : 25 replace_table_token_6_th replace_table_token_7_th the company 's investment portfolio is diversified with 35 different equity positions the company holds two equity securities that comprised more than 10 % of the equity value of the portfolio . the largest security position represents 15.8 % of the portfolio and consists of the common stock of colony financial inc. which is included in the reits and real estate companies industry group . the following table shows the net gain or loss on the company 's marketable securities and the associated margin interest and trading expenses for the respective years . replace_table_token_8_th financial condition and liquidity the company 's cash flows are primarily generated from its hotel operations , general partner management fees from justice investors , its real estate operations and from the investment of its cash in marketable securities and other investments . to fund the redemption of limited partnership interests and to repay the prior mortgage , justice obtained a $ 97,000,000 mortgage loan and a $ 20,000,000 mezzanine loan in december of 2013. the mortgage loan is secured by the partnership 's principal asset , the hotel . the mortgage loan bears an interest rate of 5.275 % per annum and matures in january 2024. as additional security for the mortgage loan , there is a limited guaranty executed by the company in favor of mortgage lender . the mezzanine loan is a secured by the operating membership interest held by mezzanine and is subordinated to the mortgage loan . the mezzanine loan bears interest at 9.75 % per annum and matures in january 2024. as additional security for the mezzanine loan , there is a limited guaranty executed by the company in favor of mezzanine lender . effective as of may 12 , 2017 , intergroup agreed to become an additional guarantor under the limited guaranty and an additional indemnitor under the environmental indemnity for justice investors limited partnership 's $ 97,000,000 mortgage loan and the $ 20,000,000 mezzanine loan . 26 management believes that its cash , securities assets , real estate and the cash flows generated from those assets and from partnership management fees , will be adequate to meet the company 's current and future obligations . additionally , management believes there is significant appreciated value in the hotel and other real estate properties to
| results of operations as of june 30 , 2018 , the company owned approximately 81.9 % of the common shares of its subsidiary , santa fe , and santa fe owned approximately 68.8 % of the common shares of portsmouth square , inc. intergroup also directly owns approximately 13.4 % of the common shares of portsmouth . the company 's principal sources of revenue continue to be derived from the general and limited partnership interests of its subsidiary , portsmouth , in the justice investors limited partnership ( โ justice โ or the โ partnership โ ) , rental income from its investments in multi-family and commercial real estate properties , and income received from investment of its cash and securities assets . justice owns a 544 room hotel property located at 750 kearny street , san francisco , california 94108 , known as the โ hilton san francisco financial district โ ( the โ hotel โ or the โ property โ ) and related facilities , including a five-level underground parking garage . the financial statements of justice have been consolidated with those of the company . 22 the hotel is operated by the partnership as a full-service hilton brand hotel pursuant to a license agreement with hilton . the partnership entered into the license agreement on december 10 , 2004. the term of the license agreement was for an initial period of 15 years commencing on the reopening date , upon completion of a major renovation , with an option to extend the license agreement for another five years , subject to certain conditions .
| 4,607 |
business environment . several economic factors and industry trends tend to shape grainger 's business environment . the overall economy and leading economic indicators provide general insight into projecting grainger 's growth . grainger 's sales tend to correlate with gross domestic product ( gdp ) , industrial production , exports , business investment , business inventory for the united states and oil prices for canada . the table below provides these estimated indicators for 2012 and 2013 : replace_table_token_6_th the bureau of economic analysis reported the gdp ( advance estimate released on january 30 , 2013 ) decreased at an annual rate of 0.1 % in the fourth quarter of 2012. grainger 's results reflected this as sales growth slowed in the fourth quarter , particularly with a sudden decrease in sales the last third of december . sequentially , grainger 's sales growth declined in each of the four quarters of 2012. the light and heavy manufacturing customer sectors , which comprised approximately 27 % of grainger 's total 2012 sales , have historically correlated with manufacturing employment levels and manufacturing production . manufacturing employment levels in the united states increased approximately 1.5 % from december 2011 to december 2012 , while manufacturing output increased 1.5 % . these increases contributed to a low double-digit percent increase in the heavy manufacturing customer sector and a high single-digit percent increase in the light manufacturing customer sector for grainger in 2012 . outlook . during 2013 , grainger plans to continue to make investments in growth drivers such as sales force and product line expansion , ecommerce , inventory management services and international expansion . while indicators on a macro basis point to a softer economy in 2013 , grainger believes it will continue to outperform these metrics . on january 24 , 2013 , grainger reiterated the 2013 earnings per share guidance of $ 10.85 to $ 12.00 and raised the 2013 sales guidance to a new range of 3 to 9 percent growth . grainger 's previous 2013 sales guidance was 2 to 8 percent growth issued on november 14 , 2012. the increase in sales guidance reflects the december 31 , 2012 , acquisition of techni-tool , inc. , which had sales of $ 88 million in 2011 . 12 matters affecting comparability . there were 255 sales days in 2012 , 255 in 2011 and 254 in 2010 . grainger completed several acquisitions throughout 2012 and 2011 , all of which were immaterial individually and in the aggregate . grainger 's operating results have included the results of each business acquired since the respective acquisition dates . story_separator_special_tag percentage points in 2012 over 2011 , primarily driven by price increases exceeding product cost increases , partially offset by customer mix . operating expenses were up 8 % for 2012 versus 2011 . the 2012 year included a $ 76 million expense related to the settlement of disputes involving the gsa and usps contracts . also included was $ 10 million of expense primarily related to branch closure costs and an impairment charge for grainger lighting services ( formerly known as alliance energy solutions ) , an acquisition completed in november 2009. the 2011 year included costs for the closure of 35 branches of $ 18 million . excluding these expenses from both years , operating expenses increased 4 % , primarily driven by an incremental $ 70 million in growth-related spending on new sales representatives , ecommerce and advertising . 14 for the segment , operating earnings of $ 1,133 million for 2012 increased 6 % over $ 1,066 million in 2011 . excluding the expenses mentioned above in both years , operating earnings were up 12 % . the improvement in operating earnings for 2012 was due to an increase in net sales and gross profit margin , and operating expenses increasing at a slower rate than sales . canada net sales were $ 1,106 million for 2012 , an increase of $ 113 million , or 11 % , when compared with $ 993 million for 2011 . in local currency , daily sales increased 12 % for 2012. the 11 % daily increase for the year consisted of the following contributors : percent increase/ ( decrease ) volume 11 % price 1 % foreign exchange ( 1 ) % total 11 % the increase in net sales was led by growth to oil and gas , commercial and construction customers . the gross profit margin increased 0.2 percentage points in 2012 over 2011 , primarily driven by price increases exceeding product cost increases , partially offset by unfavorable customer and product mix . operating expenses increased 9 % in 2012 . in local currency , operating expenses increased 10 % primarily due to higher volume-related payroll and travel costs , and higher advertising and depreciation expense , partially offset by lower occupancy costs . operating earnings of $ 127 million for 2012 were up $ 20 million , or 18 % , versus 2011 . in local currency , operating earnings increased 19 % . the increase in earnings was due to strong sales growth , an improved gross profit margin and expense leverage . other businesses net sales for other businesses , which include operations in europe , asia , latin america and other u.s. operations were up 55 % for 2012 . the sales increase was due primarily to a full year of sales from fabory , acquired in august 2011 , and incremental sales from anfreixo , acquired in april 2012 , as well as strong growth from the businesses in japan and mexico . operating earnings for other businesses were $ 20 million for 2012 compared to $ 31 million for 2011 . the decrease was primarily due to restructuring charges related to improving the long-term performance of the businesses in europe , india and china . story_separator_special_tag in addition , 2010 included a $ 30 million benefit that resulted from a paid time off policy change , which reduced the related liability . excluding the branch closure costs from 2011 and the 2010 benefit , operating expenses increased 7 % . for the segment , operating earnings of $ 1,066 million for 2011 increased 16 % over $ 920 million in 2010. the improvement in operating earnings for 2011 was due to an increase in net sales and gross profit margin , partially offset by operating expenses increasing at a faster rate than sales . 17 canada net sales were $ 993 million for 2011 , an increase of $ 172 million , or 21 % , when compared with $ 821 million for 2010. daily sales were up 20 % . in local currency , daily sales increased 15 % for 2011. the 20 % daily increase for the year consisted of the following contributors : percent increase/ ( decrease ) volume 12 % foreign exchange 5 % acquisitions 3 % total 20 % the increase in net sales was led by growth to heavy manufacturing , retail , oil and gas , and agriculture and mining customers . the gross profit margin increased 2.3 percentage points in 2011 over 2010 , primarily driven by lower product costs and stronger sales of private label products , which carry higher margins . operating expenses increased 10 % in 2011. in local currency , operating expenses increased 5 % primarily due to increased payroll and benefits costs driven by higher bonus expense , headcount and incremental costs for acquisitions made over the last year . non-payroll related expenses also increased driven by volume-related occupancy and warehouse costs . operating earnings of $ 108 million for 2011 were up $ 61 million , or 130 % , versus 2010. in local currency , operating earnings increased 121 % due to higher sales , an improved gross profit margin and operating expenses increasing at a slower rate than sales . other businesses net sales for other businesses , which include operations in europe , asia , latin america and other u.s. operations , were up 66 % for 2011. the increase in net sales was due primarily to fabory , acquired in august of 2011 , along with strong growth from all the other international businesses . operating earnings for other businesses were $ 31 million for 2011 compared to $ 12 million for 2010. the increase was primarily driven by improved performance in japan and mexico . other income and expense other income and expense was $ 1 million of expense in 2011 compared with $ 7 million of expense in 2010. the following table summarizes the components of other income and expense ( in thousands of dollars ) : replace_table_token_11_th the reduction in net expense was primarily attributable to a gain of $ 8 million in the fourth quarter of 2011 related to the divestiture of grainger 's 49 % ownership in the mro korea co. , ltd. joint venture . income taxes income taxes of $ 385 million in 2011 increased 13 % as compared with $ 340 million in 2010. grainger 's effective tax rates were 36.6 % and 39.8 % in 2011 and 2010 , respectively . the 2011 rate benefited from a tax law change in japan and the settlement of various tax reviews . the 2010 effective tax rate included a tax expense related to the u.s. healthcare legislation enacted in the first quarter of 2010. excluding these items in both years , the effective tax rate for 2011 was 38.1 % compared to 39.1 % in 2010 , primarily the result of lower state tax expense and higher earnings in foreign jurisdictions with lower tax rates in 2011 . 18 financial condition grainger expects its strong working capital position , cash flows from operations and borrowing capacity to continue , allowing it to fund its operations , including growth initiatives , capital expenditures , acquisitions and repurchase of shares , as well as to pay cash dividends . cash flow fiscal year 2012 compared with fiscal year 2011 cash from operating activities continues to serve as grainger 's primary source of liquidity . net cash flows from operations in 2012 were $ 816 million and increased $ 70 million from $ 746 million in 2011. the primary driver of the improvement was an increase in net earnings of $ 32 million as well as an increase of $ 38 million in net non-cash expenses . net cash used in investing activities of $ 306 million in 2012 was driven by net cash expended for property , buildings , equipment and software of $ 241 million and net cash paid for business acquisitions of $ 65 million . additional information regarding capital spending is detailed in the capital expenditures section below . net cash used in investing activities was $ 229 million less than in 2011 due primarily to a decrease in net cash paid for business acquisitions of $ 294 million versus 2011. net cash used in financing activities of $ 394 million in 2012 increased $ 217 million from $ 177 million in 2011. the increase was primarily due to higher treasury shares repurchases and higher dividends paid in 2012 versus 2011. cash paid for treasury share purchases was $ 341 million in 2012 versus $ 151 million in 2011 , an increase of $ 190 million . cash dividends paid were $ 220 million in 2012 , an increase of $ 39 million versus 2011. fiscal year 2011 compared with fiscal year 2010 cash from operating activities served as grainger 's primary source of liquidity . net cash flows from operations in 2011 were $ 746 million and increased $ 150 million from $ 596 million in 2010. the primary driver of the improvement was an increase in net earnings of $ 153 million .
| results of operations the following table is included as an aid to understanding changes in grainger 's consolidated statements of earnings : replace_table_token_7_th 2012 compared to 2011 grainger 's net sales of $ 8,950 million for 2012 increased 11 % when compared with net sales of $ 8,078 million for 2011 . the 11 % daily increase for the year consisted of the following contributors : percent increase/ ( decrease ) volume 6 % business acquisitions 3 % price 3 % foreign exchange ( 1 ) % total 11 % sales to all customer end-markets increased for 2012 . the increase in net sales was led by growth in sales to heavy and light manufacturing customers , followed by diversified commercial services customers . refer to the segment analysis below for further details . gross profit of $ 3,916 million for 2012 increased 12 % . the gross profit margin for 2012 was 43.8 % , up 0.3 percentage points versus 2011 , primarily driven by price increases exceeding product cost increases , partially offset by customer mix . operating expenses of $ 2,785 million for 2012 increased 13 % from $ 2,458 million for 2011 . operating expenses in 2012 included a $ 76 million expense related to the settlement of disputes involving the gsa and usps contracts . also included was $ 24 million of expense related to branch closure costs , restructuring charges related to improving the long-term performance of the businesses in europe , india and china and an impairment charge for grainger lighting services ( formerly known as alliance energy solutions ) , an acquisition completed in november 2009. the year 2011 included $ 18 million of branch closure costs . excluding these expenses from both years , operating expenses increased 10 % , primarily driven by the fabory and anfreixo acquisitions and incremental growth-related spending on new sales representatives , ecommerce and advertising , primarily in the united states .
| 4,608 |
the following section presents additional information to assess our results of operations and financial condition . this section should be read in conjunction with the consolidated financial statements and the supplemental financial data contained elsewhere in this report . the information under item 1 โ business of this report is incorporated here by reference . results of operations summary : net income was $ 30.2 million ( $ 36.8 million on a pretax basis ) for 2020 , compared to $ 32.0 million ( $ 39.4 million on a pretax basis ) for 2019. earnings per common share on a diluted basis were $ 0.88 for 2020 and $ 0.94 for 2019. over the past several years , the improvement in our earnings has been the result of growth in revenue while expenses have been stable . the increase in revenue in 2020 compared to 2019 was due primarily to increased gains on sales of mortgage loans more than offsetting the reduction in net interest income . net interest income decreased to $ 61.5 million in 2020 compared to $ 63.5 million in 2019. gain on sales of mortgage loans were $ 6.5 million in 2020 compared to $ 2.3 million in 2019. total noninterest expense was $ 45.7 million in 2020 compared to $ 44.2 million in 2019. we recorded a provision for loan losses of $ 3.0 million in 2020 and a negative provision for loan losses of $ 450,000 in 2019. the provision taken in 2020 was driven by a $ 4.1 million charge-off taken in the second quarter of 2020 related to a single loan relationship with a movie theater business where the underlying assets were sold through bankruptcy proceedings . the 2020 provision also included additional allocations provided to the portfolio for qualitative allocations related to the covid-19 pandemic . the provision was impacted by low levels of nonperforming loans , strong asset quality and the levels of net loan charge-offs/recoveries realized in recent periods ( excluding the large charge-off to the movie theater business discussed above ) . these items are discussed more fully below . net interest income : net interest income totaled $ 61.5 million during 2020 compared to $ 63.5 million during 2019. the decrease in net interest income during 2020 compared to 2019 was due to the impact of an increase in average earning assets of $ 360.7 million from $ 1.89 billion in 2019 to $ 2.25 billion in 2020 being more than offset by a reduction in yields on earning assets , particularly overnight deposits as the federal funds rate was decreased by 150 basis points in march 2020 in response to the covid-19 pandemic . average yields on securities , interest earning assets and net interest margin are presented on a fully taxable equivalent basis . our net interest income as a percentage of average interest-earning assets ( i.e . `` net interest margin '' or `` margin '' ) was 2.75 % for the year ended december 31 , 2020 and 3.38 % for the year ended december 31 , 2019. the yield on earning assets decreased 104 basis points from 4.04 % for 2019 to 3.00 % for 2020. the decrease from 2019 to 2020 was generally due to an increase of $ 216.5 million in average federal funds sold while the average short-term interest rates earned on these deposits decreased by 185 basis points from 2019 to 2020. our margin in recent years has been negatively impacted by our decision to hold significant balances in liquid and short-term investments . net interest income for 2020 decreased $ 2.0 million compared to 2019. of this decrease , $ 8.3 million was due to changes in rates earned or paid , partially offset by $ 6.3 million increase from changes in the volume of average interest earning assets and interest bearing liabilities . the largest changes came in commercial loan interest income which decreased by $ 1.9 million in 2020. of the $ 1.9 million decrease in interest income on commercial loans , $ 7.4 million was due to decreases in rates earned , partially offset by $ 5.5 million increase from increases in average balances , driven by ppp loans . average interest earning assets totaled $ 2.25 billion for 2020 compared to $ 1.89 billion in 2019. increases of $ 216.5 million in average short-term investment balances and $ 124.2 million in average loan balances from 2019 to 2020 were the primary drivers of the increase in total earning assets . yield on commercial loans ( excluding ppp loans ) decreased from 4.72 % in 2019 to 4.01 % in 2020. yield on ppp loans was 3.32 % in 2020. yield on residential mortgage loans decreased from 3.72 % in 2019 to 3.66 % in 2020 , while yield on consumer loans decreased from 5.19 % in 2019 to 4.32 % in 2020. the decreases in yields on commercial loans and consumer loans , in particular , were the result of the predominance of loans in these categories with variable rates of interest tied to prime and libor which decreased significantly in 2020. our net interest margin for 2020 was positively impacted from a 56 basis point decrease in our cost of funds from 0.94 % for 2019 to 0.38 % for 2020. average interest bearing liabilities increased from $ 1.32 billion in 2019 to $ 1.47 billion in 2020. decreases in the rates paid on certain deposit account types in response to market rate declines were the primary cause of the decrease in our cost of funds . while these costs have decreased , the yields on our interest earning assets decreased to a larger extent , causing net interest margin to decrease from 2019 to 2020 . - 25 - in 2021 , we expect that net interest margin will continue to be pressured by our higher levels of short-term investment balances held . story_separator_special_tag earnings from bank owned life insurance decreased by $ 98,000 in 2020 compared to 2019 due to the general performance of the underlying investments . other real estate rental income was $ 327,000 in 2020 compared to $ 495,000 in 2019. the year over year changes were a result of changes in rental arrangements on some of these properties . other income was up by $ 420,000 in 2020 due largely to fees collected on customer back-to-back interest rate swaps . these fees were $ 420,000 in 2020 compared to $ 62,000 in 2019 . - 28 - noninterest expense : noninterest expense was $ 45.7 million in 2020 and $ 44.2 million in 2019. the slight increase in total noninterest expense reflected our active management of controllable costs . the components of noninterest expense are shown in the table below ( in thousands ) : replace_table_token_19_th salaries and benefits expense was the largest component of noninterest expense and was $ 25.5 million in 2020 and $ 24.7 million in 2019. the increase in 2020 was primarily driven by annual merit increases and an increase in variable compensation tied to higher mortgage loan production and investment services fees in 2020 , partially offset by lower medical insurance costs resulting from lower claims experience in 2020 , higher salary cost deferrals ( driven by ppp loan originations ) and lower 401k matching costs as we suspended our 401k matching for the second quarter of 2020. the table below identifies the primary components of salaries and benefits ( in thousands ) : replace_table_token_20_th costs associated with nonperforming assets remained at low levels , totaling $ 115,000 in 2020 and $ 253,000 in 2019. these costs included legal costs , repossessed and foreclosed property administration expense and losses ( gains ) on repossessed and foreclosed properties . repossessed and foreclosed property administration expense included survey and appraisal , property maintenance and management and other disposition and carrying costs . net ( gains ) losses on repossessed and foreclosed properties included both net gains and losses on the sale of properties and unrealized losses from value declines for outstanding properties . these costs are itemized in the following table ( in thousands ) : replace_table_token_21_th during 2020 , we did not add any other real estate properties and sold $ 192,000 of other real estate and repossessed assets , allowing for another reduction in our year-end balance , bringing it from $ 2.7 million at december 31 , 2019 to $ 2.5 million at december 31 , 2020. in 2019 , we did not add any other real estate properties and sold $ 618,000. fdic assessments increased to $ 400,000 in 2020 compared to $ 239,000 in 2019 primarily due to our assessment category and assessment credits applied during 2019 , resulting in no expense in the third and fourth quarters of 2019. assessment credits of $ 266,000 were applied in 2019 , leaving approximately $ 172,000 in assessment credits that were fully utilized in 2020. further discussion regarding the determination of fdic assessments for the bank may be found in item 1 of this report under the heading `` supervision and regulation . '' - 29 - occupancy expense decreased by $ 39,000 in 2020 primarily due to a decrease in snow removal and outside grounds maintenance , partially offset by an increase in janitorial costs and building maintenance . furniture and equipment expense increased by $ 258,000 in 2020 primarily due to an increase in equipment service contracts and software related to information security solutions , partially offset by a decrease in depreciation expense and equipment rental and repairs . data processing expenses were $ 3.4 million in 2020 and $ 3.0 million in 2019. increases in data processing for our systems and card programs in 2020 and costs associated with our conversion to a new online banking service in 2020 were the primary reasons for the increase in 2020. other noninterest expenses not discussed above were $ 8.3 million in 2020 and $ 8.3 million in 2019. federal income tax expense : we recorded federal income tax expense of $ 6.6 million in 2020 and $ 7.5 million in 2019. our effective tax rate was 18.00 % for 2020 and 18.92 % for 2019. in the fourth quarter of 2020 , we received the final distribution of a partnership interest we had acquired in a loan settlement . this removed the uncertainty regarding our realization of the related deferred tax asset and , as such , the $ 92,000 valuation allowance we had established at december 31 , 2018 was reversed at december 31 , 2020. financial condition story_separator_special_tag 0 ; height : 2px ; color : # 000000 ; background-color : # 000000 ; clear : both ; '' / > our portfolio of other consumer loans includes loans secured by personal property and home equity fixed term and line of credit loans . consumer loans decreased by $ 14.4 million to $ 62.2 million at december 31 , 2020 from $ 76.5 million at december 31 , 2019 primarily due to a decrease in home equity loans . consumer loans comprised approximately 4.3 % of our portfolio loans at december 31 , 2020 and 5.5 % at december 31 , 2019. the following table shows our loan origination activity for portfolio loans during 2020 and 2019 , broken out by loan type and also shows average originated loan size ( dollars in thousands ) : replace_table_token_23_th ( 1 ) 2020 includes $ 346.7 million in ppp loan originations the table above demonstrates that our loan origination activity in 2020 was higher than in 2019 , but was significantly impacted by ppp loan originations . we believe the lower origination activity ( excluding ppp activity ) is primarily the result of reduced business activity occurring in our marketplace in response to uncertainty over economic and political conditions with the covid-19 pandemic .
| summary : total assets were $ 2.64 billion at december 31 , 2020 , an increase of $ 573.3 million from $ 2.07 billion at december 31 , 2019. this change reflected increases of $ 511.3 million in cash and cash equivalents , $ 43.7 million in our loan portfolio , $ 11.6 million in securities available for sale , $ 7.9 million in other assets , $ 2.1 million in loans held for sale and $ 360,000 in bank owned life insurance , partially offset by decreases of $ 3.3 million in securities held to maturity , $ 211,000 in other real estate owned and $ 163,000 in premises and equipment . total deposits increased by $ 545.3 million and other borrowed funds were up by $ 10.0 million at december 31 , 2020 compared to december 31 , 2019. total shareholders ' equity increased by $ 22.4 million from december 31 , 2019 to december 31 , 2020. shareholders ' equity was increased by $ 30.2 million of net income in 2020 , partially offset by cash dividends of $ 10.9 million , or $ 0.32 per share . shareholders ' equity also increased by $ 2.7 million in 2020 as a result of a swing in accumulated other comprehensive income due to the effect of interest rate movement on the fair value of our available for sale securities portfolio . as of december 31 , 2020 and 2019 , the bank was categorized as โ well capitalized โ under applicable regulatory guidelines .
| 4,609 |
overview financial and operating overview financial and operating results for the year ended december 31 , 2019 compared to the year ended december 31 , 2018 are as follows : natural gas production increase d 135.4 bcf , or 19 percent , from 729.9 bcf in 2018 to 865.3 bcf in 2019 , as a result of drilling and completion activities in the marcellus shale . equivalent production increase d 130.3 bcfe , or 18 percent , from 735.0 bcfe , or 2,013.7 mmcfe per day , in 2018 to 865.3 bcfe , or 2,370.9 mmcfe per day , in 2019 . the increase is primarily due to drilling and completion activities in the marcellus shale , partially offset by the sale of our eagle ford shale assets in south texas in february 2018. average realized natural gas price for 2019 was $ 2.45 per mcf , 4 percent lower than the $ 2.54 per mcf price realized in 2018 . total capital expenditures were $ 783.3 million in 2019 compared to $ 816.1 million in 2018 . drilled 96 gross wells ( 94.0 net ) with a success rate of 100.0 percent in 2019 compared to 97 gross wells ( 95.1 net ) with a success rate of 90.7 percent in 2018 . completed 99 gross wells ( 97.0 net ) in 2019 compared to 94 gross wells ( 93.0 net ) in 2018 . average rig count during 2019 was approximately 3.1 rigs in the marcellus shale , compared to an average rig count in the marcellus shale of approximately 3.5 rigs and approximately 0.5 rigs in other areas during 2018 . repurchased 25.5 million shares of our common stock for a total cost of $ 488.5 million in 2019 compared to 38.5 million shares of common stock for a total cost of $ 904.1 million in 2018 . received proceeds of $ 249.5 million , including restricted cash of $ 13.6 million , related to the sale of our equity investment in meade in november 2019. market conditions and commodity prices our financial results depend on many factors , particularly the commodity prices 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 pipeline capacity constraints , inventory storage levels , basis differentials , weather conditions and other factors . in addition , our realized prices are further impacted by our hedging activities . as a result , we can not accurately predict future commodity prices and , therefore , can not determine with any degree of certainty what effect increases or decreases in these prices will have on our capital program , production volumes or revenues . we expect commodity prices to remain volatile . 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 . for information about the impact of realized commodity prices on our revenues , refer to `` results of operations '' below . refer to `` risk factorsโ commodity prices fluctuate widely , and low prices for an extended period would likely have a material adverse impact on our business `` and `` risk factorsโ our future performance depends on our ability to find or acquire additional natural gas and oil reserves that are economically recoverable `` in item 1a . we account for our derivative instruments on a mark-to-market basis with changes in fair value recognized in operating revenues in the consolidated statement of operations . as a result of these mark-to-market adjustments associated with our derivative instruments , we will experience volatility in our earnings due to commodity price volatility . refer to โ impact of derivative instruments on operating revenues โ below and note 6 of the notes to the consolidated financial statements for more information . 37 commodity prices have been and are expected to remain volatile . we believe that we are well-positioned to manage the challenges presented in a volatile commodity pricing environment by : continuing to exercise discipline in our capital program with the expectation of funding our capital expenditures with cash on hand , operating cash flows , and if required , borrowings under our revolving credit facility . continuing to optimize our drilling , completion and operational efficiencies , resulting in lower operating costs per unit of production . continuing to manage our balance sheet , which we believe provides sufficient availability under our revolving credit facility and existing cash balances to meet our capital requirements and maintain compliance with our debt covenants . continuing to manage price risk by strategically hedging our production . while we are unable to predict future commodity prices , in the e vent that commodity prices significantly decline , management would test the recoverability of the carrying value of its oil and gas properties and , if necessary , record an impairment charge . financial condition capital resources and liquidity our primary sources of cash in 2019 were from the sale of natural gas production and proceeds from the sale of our equity investment in meade . these cash flows were primarily used to fund our capital expenditures , interest payments on debt , repurchases of shares of our common stock , payment of dividends and contributions to our equity method investments . see below for additional discussion and analysis of cash flow . on april 22 , 2019 , we entered into a second amended and restated credit agreement ( revolving credit facility ) . the borrowing base under the terms of our revolving credit facility is redetermined annually in april . in addition , either we or the banks may request an interim redetermination twice a year or in connection with certain acquisitions or divestitures of oil and gas properties . the borrowing base and available commitments were reaffirmed at $ 3.2 billion and $ 1.5 billion , respectively . story_separator_special_tag million and 38.5 million shares of our common stock for $ 904.1 million , respectively . during 2019 and 2018 , we paid dividends of $ 145.5 million ( $ 0.35 per share ) and $ 111.4 million ( $ 0.25 per share ) on our common stock , respectively . 39 in april 2019 , the board of directors approved an increase in the quarterly dividend on our common stock from $ 0.07 per share to $ 0.09 per share . in october 2019 , the board of directors approved an additional increase in the quarterly dividend on our common stock from $ 0.09 per share to $ 0.10 per share . capital and exploration expenditures on an annual basis , we generally fund most of our capital expenditures , excluding any significant property acquisitions , with cash generated from operations and , if required , borrowings under our revolving credit facility . we budget these expenditures based on our projected cash flows for the year . the following table presents major components of our capital and exploration expenditures : replace_table_token_16_th _ ( 1 ) exploration expenditures include $ 2.2 million , $ 97.7 million and $ 3.8 million of exploratory dry hole expenditures in 2019 , 2018 and 2017 , respectively . in 2019 , we drilled 96 gross wells ( 94.0 net ) and completed 99 gross wells ( 97.0 net ) , of which 29 gross wells ( 29.0 net ) were drilled but uncompleted in prior years . in 2020 , we plan to allocate substantially all of our capital to the marcellus shale , where we expect to drill , complete and place on production 60 to 70 net wells . our 2020 capital program is expected to be approximately $ 575.0 million . we will continue to assess the natural gas price environment and may increase or decrease our capital expenditures accordingly . contractual obligations we have various contractual obligations in the normal course of our operations . a summary of our contractual obligations as of december 31 , 2019 are set forth in the following table : replace_table_token_17_th _ ( 1 ) interest payments have been calculated utilizing the rates associated with our revolving credit facility and senior notes outstanding at december 31 , 2019 , assuming that our revolving credit facility and senior notes will remain outstanding through their respective maturity dates . ( 2 ) for further information on our obligations under transportation and gathering agreements and operating leases , refer to note 9 of the notes to the consolidated financial statements . ( 3 ) for further information on our equity investment contribution commitments , refer to note 4 of the notes to the consolidated financial statements . 40 amounts related to our asset retirement obligations are not included in the above table due to the uncertainty regarding the actual timing of such expenditures . the total amount of our asset retirement obligations at december 31 , 2019 was $ 72.1 million . refer to note 8 of the notes to the consolidated financial statements for further details . we have no off-balance sheet debt or other similar unrecorded obligations . potential impact of our critical accounting policies our significant accounting policies are described in note 1 of the notes to the consolidated financial statements . the preparation of the consolidated financial statements , which is in accordance with accounting principles generally accepted in the united states , requires management to make certain estimates and judgments that affect the amounts reported in our financial statements and the related disclosures of assets and liabilities . the following accounting policies are our most critical policies requiring more significant judgments and estimates . we evaluate our estimates and assumptions on a regular basis . actual results could differ from those estimates . successful efforts method of accounting we follow the successful efforts method of accounting for our oil and gas producing activities . acquisition costs for proved and unproved properties are capitalized when incurred . judgment is required to determine the proper classification of wells designated as developmental or exploratory , which will ultimately determine the proper accounting treatment of costs incurred . exploration costs , including geological and geophysical costs , the costs of carrying and retaining unproved properties and exploratory dry hole costs are expensed . development costs , including costs to drill and equip development wells and successful exploratory drilling costs to locate proved reserves , are capitalized . oil and gas reserves the process of estimating quantities of proved reserves is inherently imprecise , and the reserves data included in this document is only an estimate . the process relies on interpretations and judgment of available geological , geophysical , engineering and production data . the extent , quality and reliability of this technical data can vary . the process also requires certain economic assumptions , some of which are mandated by the sec , such as commodity prices . additional assumptions include drilling and operating expenses , capital expenditures , taxes and availability of funds . any significant variance in the interpretations or assumptions could materially affect the estimated quantity and value of our reserves and can change substantially over time . periodic revisions to the estimated reserves and future cash flows may be necessary as a result of reservoir performance , drilling activity , commodity prices , fluctuations in operating expenses , technological advances , new geological or geophysical data or other economic factors . accordingly , reserve estimates are generally different from the quantities ultimately recovered . we can not predict the amounts or timing of such future revisions . our reserves estimate has been prepared by our petroleum engineering staff and audited by miller and lents , independent petroleum engineers , who in their opinion determined the estimates presented to be reasonable in the aggregate .
| results of operations 2019 and 2018 compared we reported net income for 2019 of $ 681.1 million , or $ 1.64 per share , compared to net income for 2018 of $ 557.0 million , or $ 1.25 per share . the increase in net income was primarily due to lower operating expenses and interest expense and higher earnings on equity method investments . these increases were partially offset by lower operating revenues and higher income tax expense . 44 revenue , price and volume variance our revenues vary from year to year as a result of changes in commodity prices and production volumes . below is a discussion of revenue , price and volume variances . replace_table_token_18_th replace_table_token_19_th natural gas revenues the increase in natural gas revenues of $ 104.1 million was due to higher production partially offset by lower natural gas prices . the increase in production was a result of an increase in our drilling and completion activities in the marcellus shale . crude oil and condensate revenues the decrease in crude oil and condensate revenues of $ 48.7 million was primarily due to the sale of our eagle ford shale assets in february 2018. impact of derivative instruments on operating revenues replace_table_token_20_th brokered natural gas brokered natural gas revenues decreased $ 209.5 million . there was no brokered natural gas activity in the current period . 45 operating and other expenses replace_table_token_21_th total costs and expenses from operations decrease d by $ 211.6 million from 2018 to 2019 . the primary reasons for this fluctuation are as follows : direct operations increase d $ 7.3 million primarily driven by $ 18.7 million of higher operating costs due to higher production , which included a $ 10.1 million increase in workover expense .
| 4,610 |
we also operate esports leagues and offer digital advertising within our content . the terms โ activision blizzard , โ the โ company , โ โ we , โ โ us , โ and โ our โ are used to refer collectively to activision blizzard , inc. and its subsidiaries . reportable segments based upon our organizational structure , we conduct our business through three reportable segments : activision , blizzard , and king . ( i ) activision activision is a leading global developer and publisher of interactive software products and entertainment content , particularly for the console platform . activision primarily delivers content through retail and digital channels , including full-game and in-game sales , as well as by licensing software to third-party or related-party companies that distribute activision products . activision develops , markets , and sells products primarily based on our internally developed intellectual properties . activision also includes the activities of the call of duty league , a global professional esports league with city-based teams for call of duty . ( ii ) blizzard blizzard is a leading global developer and publisher of interactive software products and entertainment content , particularly for the pc platform . blizzard primarily delivers content through retail and digital channels , including subscriptions , full-game , and in-game sales , as well as by licensing software to third-party or related-party companies that distribute blizzard products . blizzard also maintains a proprietary online gaming service , blizzard battle.net , which facilitates digital distribution of blizzard content and selected activision content , online social connectivity , and the creation of user-generated content . blizzard also includes the activities of the overwatch league , the first major global professional esports league with city-based teams . ( iii ) king king is a leading global developer and publisher of interactive entertainment content and services , particularly for the mobile platform , including for google 's android and apple 's ios . king also distributes its content and services on the pc platform , primarily via facebook . king 's games are free to play ; however , players can acquire in-game items , either with virtual currency or real currency , and we continue to focus on in-game advertising as a growing source of additional revenue . other we also engage in other businesses that do not represent reportable segments , including our distribution business , which consists of operations in europe that provide warehousing , logistics , and sales distribution services to third-party publishers of interactive entertainment software , our own publishing operations , and manufacturers of interactive entertainment hardware . destiny franchise in 2010 , activision entered into an exclusive relationship with bungie to publish games in the destiny franchise . effective december 31 , 2018 , activision and bungie mutually agreed to terminate their publishing relationship related to the destiny franchise . as part of this termination , activision agreed to transfer its publishing rights for the destiny franchise to bungie in exchange for cash and bungie 's assumption of on-going customer obligations of activision . as a result of the agreement to terminate the relationship , the company recognized net bookings , a key operating metric , of $ 20 million , gaap revenues of $ 164 million , and gaap operating income of $ 91 million for the year ended december 31 , 2018. activision no longer has any material rights or obligations related to the destiny franchise . 31 story_separator_special_tag style= '' vertical-align : top '' > a $ 55 million decrease in king net bookings primarily driven by lower net bookings from player purchases across various franchise titles , primarily driven by the candy crush franchise , partially offset by an increase in advertising net bookings . in-game net bookings the decrease in in-game net bookings for 2019 , as compared to 2018 , was primarily due to : a $ 539 million decrease in blizzard in-game net bookings primarily driven by ( 1 ) lower in-game net bookings from hearthstone and ( 2 ) lower in-game net bookings from world of warcraft , in part due to world of warcraft : battle for azeroth ; a $ 167 million decrease in activision in-game net bookings primarily due to lower in-game net bookings from the destiny franchise , partially offset by in-game net bookings from call of duty : mobile ; and a $ 131 million decrease in king in-game net bookings primarily due to lower in-game net bookings across various franchise titles , primarily driven by the candy crush franchise . monthly active users we monitor monthly active users ( โ maus โ ) as a key measure of the overall size of our user base . maus are the number of individuals who accessed a particular game in a given month . we calculate average maus in a period by adding the total number of maus in each of the months in a given period and dividing that total by the number of months in the period . an individual who accesses two of our games would be counted as two users . in addition , due to technical limitations , for activision and king , an individual who accesses the same game on two platforms or devices in the relevant period would be counted as two users . for blizzard , an individual who accesses the same game on two platforms or devices in the relevant period would generally be counted as a single user . in certain instances , we rely on third parties to publish our games . in these instances , mau data is based on information provided to us by those third parties , or , if final data is not available , reasonable estimates of maus for these third-party published games . the number of maus for a given period can be significantly impacted by the timing of new content releases , since new releases may cause a temporary surge in maus . story_separator_special_tag accordingly , our ability to maintain our top franchises and our ability to successfully compete against our competitors ' top franchises can significantly impact our performance . recurring revenue business models and seasonality increased consumer online connectivity has allowed us to offer players new investment opportunities and to shift our business further towards a more consistently recurring and year-round model . offering downloadable content and microtransactions , in addition to full games , allows our players to access and invest in new content throughout the year . this incremental content not only provides additional high-margin revenues , it can also increase player engagement . also , mobile games , and free-to-play games more broadly , are generally less seasonal than premium games developed primarily for the console or pc platforms . while our business is shifting toward a year-round engagement model , the interactive entertainment industry remains somewhat seasonal . we have historically experienced our highest sales volume , particularly for activision , in the calendar year-end holiday buying season . outlook in the second half of 2020 , we plan to release the next premium title in our call of duty franchise and the next expansion for world of warcraft , world of warcraft : shadowlands . in addition , throughout the year we expect to deliver ongoing content for our various franchises , including continued in-game content for call of duty : modern warfare and call of duty : mobile , expansion packs and content updates for hearthstone , in-game events for overwatch , and continued releases of content , features , and services across king 's portfolio with an ongoing focus on the candy crush franchise . we will also continue to invest in opportunities that we think have the potential to drive our growth over the long-term , including continuing to build on our advertising and esports initiatives . we expect lower revenues and earnings per share in 2020 as compared to 2019 , primarily due to the impact of deferrals as a result of the timing of releases for our games and content updates in 2020. additionally , during 2019 , we implemented our previously announced restructuring plan , which was aimed at refocusing our resources on our largest opportunities and removing unnecessary levels of complexity and duplication from certain parts of the business . the restructuring actions remain in progress and will continue into 2020 as we execute against our plan . during implementation , we expanded the scope of certain actions within our plan aimed at integrating our global and regional sales and โ go-to-market โ functions , along with certain of our administrative-related functions . we expect to incur aggregate pre-tax restructuring charges of approximately $ 50 million in 2020 as we complete the execution of the restructuring plan . refer to note 17 of the notes to the consolidated financial statements included in item 8 of this annual report on form 10-k for further discussion . 36 consolidated statements of operations data the following table sets forth consolidated statements of operations data for the periods indicated ( amounts in millions ) and as a percentage of total net revenues , except for cost of revenues , which are presented as a percentage of associated revenues : replace_table_token_6_th ( 1 ) during the three months ended march 31 , 2019 , we identified an amount which should have been recorded in the three months and year ended december 31 , 2018 to reduce income tax expense by $ 35 million . our statement of operations for the year ended december 31 , 2018 , as presented above , has been revised to reflect the correction . see further discussion in note 2 of the notes to the consolidated financial statements included in item 8 of this annual report on form 10-k. ( 2 ) represents the loss on extinguishment of debt we recognized in connection with our debt financing activities during the year ended december 31 , 2018. the loss on extinguishment is comprised of a $ 25 million premium payment and a $ 15 million write-off of unamortized discount and deferred financing costs . 37 consolidated net revenues the key drivers of changes in our consolidated net revenues , operating segment results , consolidated results , and sources of liquidity are presented in the order of significance . the following table summarizes our consolidated net revenues , increase ( decrease ) in associated deferred net revenues recognized , and in-game net revenues ( amounts in millions ) : replace_table_token_7_th ( 1 ) in-game net revenues primarily includes the net amount of revenue recognized for downloadable content and microtransactions during the period . consolidated net revenues the decrease in consolidated net revenues for 2019 , as compared to 2018 , was primarily driven by a decrease in revenues of $ 1.1 billion due to : lower revenues recognized from the destiny franchise ( reflecting our sale of the publishing rights for destiny to bungie in december 2018 ) ; lower revenues recognized from hearthstone ; lower revenues recognized from call of duty franchise catalog titles ; and lower revenues recognized from overwatch . the decrease was partially offset by an increase in revenues of $ 236 million due to : revenues from sekiro : shadows die twice , which was released in march 2019 ; and revenues recognized from crash team racing nitro-fueled , which was released in june 2019. the remaining net decrease of $ 131 million was driven by various other franchises and titles . change in deferred revenues recognized the decrease in net deferred revenues recognized for 2019 , as compared to 2018 , was primarily due to a decrease of $ 312 million in net deferred revenues recognized from activision , primarily due to lower net deferred revenues recognized from the destiny franchise .
| business results and highlights financial results 2019 financial highlights included : consolidated net revenues decreased 13 % to $ 6.5 billion and consolidated operating income decreased 19 % to $ 1.6 billion , as compared to consolidated net revenues of $ 7.5 billion and consolidated operating income of $ 2.0 billion in 2018 ; revenues from digital online channels decreased 15 % to $ 4.9 billion and were 76 % of consolidated net revenues , as compared to $ 5.8 billion and 77 % of consolidated net revenues in 2018 ; operating margin was 24.8 % , as compared to 26.5 % in 2018 ; consolidated net income decreased to $ 1.5 billion , as compared to $ 1.8 billion in 2018 , which included significant discrete tax-related impacts in both 2019 and 2018โrefer to โ consolidated results , income tax expense โ discussion below for details ; diluted earnings per common share decreased to $ 1.95 , as compared to $ 2.40 in 2018 ; and cash flows from operating activities were approximately $ 1.83 billion , an increase of 2 % , as compared to $ 1.79 billion in 2018 . since certain of our games are hosted online or include significant online functionality that represents a separate performance obligation , we defer the transaction price allocable to the online functionality from the sale of these games and recognize the attributable revenues over the relevant estimated service periods , which are generally less than a year . net revenues and operating income for the year ended december 31 , 2019 , include net effects of $ 101 million and $ 52 million , respectively , from the recognition of deferred net revenues and related cost of revenues . additionally , for the year ended december 31 , 2019 , 18 % of total net revenues recognized were from revenue sources that were recognized at a โ point-in-time , โ while โ over-time and other โ revenues were 82 % of total net revenues .
| 4,611 |
see `` cautionary notice regarding forward-looking information '' above for further information . also , when we cross reference to a `` note , '' we are referring to our `` notes to consolidated financial statements , '' unless the context indicates otherwise . all amounts and percentages are approximate due to rounding . under the sec 's amended definition of a `` smaller reporting company , '' the company is deemed to be a smaller reporting company . accordingly , among other things , the company is not required to present selected financial data in item 6 , has limited the year-over-year comparisons in this item 7 to a comparison of fiscal 2018 with fiscal 2017 and has reduced the number of years covered by its financial statements in item 8. overview our company we design , manufacture and market a broad array of products that power , protect and connect electronic circuits . these products are primarily used in the networking , telecommunications , computing , military , aerospace , transportation and broadcasting industries . bel 's portfolio of products also finds application in the automotive , medical and consumer electronics markets . we operate through three geographic segments : north america , asia and europe . in 2018 , 50 % of the company 's revenues were derived from north america , 34 % from asia and 16 % from its europe operating segment . by product group , 34 % of 2018 sales related to the company 's connectivity solutions products , 34 % in magnetic solutions products and 32 % in power solutions and protection products . our operating expenses are driven principally by the cost of labor where the factories that bel uses are located , the cost of the materials that we use and our ability to effectively and efficiently manage overhead costs . as labor and material costs vary by product line and region , any significant shift in product mix can have an associated impact on our costs of sales . costs are recorded as incurred for all products manufactured . such amounts are determined based upon the estimated stage of production and include labor cost and fringes and related allocations of factory overhead . our products are manufactured at various facilities in the u.s. , mexico , dominican republic , england , czech republic , slovakia and the prc . we have little visibility into the ordering habits of our customers and we can be subjected to large and unpredictable variations in demand for our products . accordingly , we must continually recruit and train new workers to replace those lost to attrition and be able to address peaks in demand that may occur from time to time . these recruiting and training efforts and related inefficiencies , and overtime required in order to meet any increase in demand , can add volatility to the labor costs incurred by us . key factors affecting our business the company believes the key factors affecting bel 's 2018 and or future results include the following : ยท revenues โ the company 's revenues increased by $ 56.6 million , or 11.5 % , in 2018 as compared to 2017 , despite a $ 5.5 million decline in sales related to the nps divestiture . sales growth was seen across all of our major product groups as certain project wins from 2017 are in full production and we continue to see strength in sales through our distribution partners . approximately 27 % of 2018 sales were generated through the company 's distribution partners . ยท backlog โ our backlog of orders totaled $ 171.2 million at december 31 , 2018 , representing an increase of $ 24.7 million , or 17 % , from december 31 , 2017. since the 2017 year-end , we saw a 28 % increase at magnetic solutions , driven by a strong position with our integrated connector modules in next-generation switching products . the backlog for our connectivity solutions products increased by 16 % , driven by recent awards on key military programs , and heightened structured cabling demand for our passive connectors . our power solutions and protection backlog grew by 11 % , led by higher demand for our power supplies and circuit protection products through our distribution partners . ยท product mix โ material and labor costs vary by product line and any significant shift in product mix between higher- and lower-margin product lines will have a corresponding impact on the company 's gross margin percentage . in general , our connectivity products have the highest contribution margins , our magnetic products are more labor intensive and are therefore less profitable than the connectivity products and our power products are on the lower end of our profit margin range , due to their high material content . fluctuations in sales volume among our product groups will have a corresponding impact on bel 's profit margins . 16 return to index ยท pricing and availability of materials โ there have been recent supply constraints related to components that constitute raw materials in our manufacturing processes , particularly with resistors , capacitors , mosfets and printed circuit boards . lead times have been extended and the reduction in supply has also caused an increase in prices for certain of these components throughout 2018. as a result , the company 's material costs as a percentage of sales increased to 41.9 % during 2018 from 40.2 % during 2017. we 've started to see some relief in availability and pricing of passive components and capacitors in early 2019 as compared to 2018 levels though pricing remains high compared to pre-2018 levels . we anticipate our material costs as a percentage of sales will continue to be elevated during the first half of 2019 as we work through our higher-cost inventory on hand . the preceding sentence represents a forward-looking statement . see `` cautionary notice regarding forward-looking statements . '' story_separator_special_tag the decrease in interest expense during 2018 related to a lower debt balance throughout 2018 as compared to 2017 , partially offset by higher interest rates on our outstanding balance . see `` liquidity and capital resources '' and note 10 of the notes to our consolidated financial statements - `` debt , '' for further information on the company 's outstanding debt . income taxes the company 's effective tax rate will fluctuate based on the geographic segment in which the pretax profits are earned . of the geographic segments in which the company operates , the u.s. and europe 's tax rates are generally equivalent ; and asia has the lowest tax rates of the company 's three geographical segments . see note 9 , `` income taxes '' and the `` tax reform '' discussion below . tax reform the tax cuts and jobs act ( the `` act '' ) was enacted on december 22 , 2017. the act reduced the u.s. federal corporate tax rate from 35 % to 21 % , required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign sourced earnings . at december 31 , 2017 , we had made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax in which we recognized a provisional amount of $ 18.1 million , which was included as a component of income tax expense from continuing operations . on the basis of revised earnings and profit computations that were completed during the year ended december 31 , 2018 , the company recognized a measurement-period adjustment reducing the deemed repatriation tax by $ 2.6 million , resulting in the reduction of the company 's provisional estimate from $ 18.1 million to $ 15.5 million . the effect of the measurement-period adjustment on the 2018 effective tax rate was a reduction of approximately 11 % . effective january 1 , 2018 , the act subjects a u.s. shareholder to current tax on global intangible low-taxed income ( gilti ) earned by certain foreign subsidiaries . the company has elected an accounting policy to provide for the tax expense related to the gilti in the period the tax is incurred . during the year ended december 31 , 2018 , the company included approximately $ 18.0 million of gilti inclusion which was offset by the company 's nol carryforwards and credits which resulted in no additional u.s. tax expense . 2018 as compared to 2017 the provision for income taxes for the year ended december 31 , 2018 and 2017 was $ 2.9 million and $ 21.5 million , respectively . the company 's earnings before income taxes for the year ended december 31 , 2018 were approximately $ 14.0 million higher than the same period in 2017 , primarily attributable to increases in income in the europe and north america segments . the company 's effective tax rate was 12.3 % and 223.4 % for the year ended december 31 , 2018 and 2017 , respectively . the change in the effective tax rate during the year ended december 31 , 2018 as compared to the same period of 2017 , is primarily attributable to a decrease in tax expense in the north america segment due to the reduction in the estimated transition tax on post 1986 untaxed accumulated foreign earnings , a reduction in the u.s. tax rate from 35 % in 2017 to 21 % in 2018 , as well as a decrease in taxes related to uncertain tax positions . this decrease was partially offset by an increase in u.s. taxes relating to income from foreign subsidiaries taxed in the u.s. as part of the act . additionally , the decrease in the effective tax rate for the year ended december 31 , 2018 as compared to the same period in 2017 , is partially attributable to u.s. and foreign taxes accrued for gains recognized on a bel fuse legal entity restructuring transaction during the 2017 period . other tax matters the company has a portion of its products manufactured on the mainland of the prc where bel is not subject to corporate income tax on manufacturing services provided by third parties . hong kong has a territorial tax system which imposes corporate income tax at a rate of 16.5 % on income from activities solely conducted in hong kong . 20 return to index the company holds an offshore business license from the government of macao . with this license , a macao offshore company named bel fuse ( macao commercial offshore ) limited has been established to handle the company 's sales to third-party customers in asia . sales by this company primarily consist of products manufactured in the prc . this company is not subject to macao corporate profit taxes which are imposed at a tax rate of 12 % . on september 21 , 2018 , the executive council of the macao sar government has proposed to abolish the existing offshore law . it is proposed that the existing law and the relevant regulations related to the offshore business will be abolished , and that the operating permit to carry on offshore business will be terminated on january 1 , 2021. the company is currently looking at other options for this company 's operations . additionally , the company established trp international , a china business trust ( `` cbt '' ) , when it acquired the trp group , as previously discussed . sales by the cbt consists of products manufactured in the prc and sold to third-party customers inside and outside asia . the cbt is not subject to prc income taxes , which are generally imposed at a tax rate of 25 % .
| summary by operating segment net sales to external customers by reportable operating segment for the years ended december 31 , 2018 and 2017 were as follows ( dollars in thousands ) : replace_table_token_3_th net sales and income from operations by operating segment for the years ended december 31 , 2018 and 2017 were as set forth in the following table ( dollars in thousands ) . segment net sales are attributed to individual segments based on the geographic source of the billing for such customer sales . replace_table_token_4_th the growth in north america sales in 2018 was largely due to increased demand for our passive connector products from our premise wiring customers , strength in our connectivity products within key military programs , and higher sales of our transformer products into medical applications . sales of our power solutions products have also increased in 2018 with heightened demand for our power supplies for use in various datacenter applications and increased sales through our distribution partners . the increases in asia sales noted above for 2018 primarily relate to higher sales of our integrated connector modules for next-generation switching platforms . sales in europe increased in 2018 as a result of higher demand for our stewart and cinch connector products in that region , coupled with strong sales of our power products into rail applications . there was also a favorable impact on our european sales in general during 2018 as a portion of those sales are invoiced in euros or pounds , which had appreciated against the u.s. dollar particularly during the first half of 2018 as compared to the same period of 2017. the improvement in income from operations within our north america segment was largely due to higher sales volumes in 2018 , partially offset by increased material costs on purchased components .
| 4,612 |
( iv ) of regulation s-k and the related instructions , or a reportable event within the meaning set forth in item 304 ( a ) ( 1 ) ( v ) of regulation s-k. audit fees the fees involved with the audit by bfb of the financial statements for the year ended december 31 , 2019 are $ 5,000 . other than that , the company paid $ 4,500 to bfb for the review of all interim financial statements during 2019 , $ 4,500 for the previous audit for the year ended december 31 , 2018 and $ 4,500 for the review of all interim financial statements during 2018. audit-related fees during the years ended december 31 , 2019 and december 31 , 2018 , our principal accountant did not render audit-related services to us . tax fees during the year ended december 31 , 2019 and december 31 , 2018 , our principal accountant did not render services to us for tax compliance , tax advice or tax planning . all other fees during the year ended december 31 , 2019 and december 31 , 2018 there were no fees billed for products and services provided by the principal accountant other than those set forth above . currently , we have no independent audit committee . our full board of directors functions as our audit committee and is comprised of one director who is not considered to be `` independent `` in accordance with the requirements of rule 10a-3 under the exchange act . our audit committee 's pre-approval policies and procedures described in paragraph ( c ) ( 7 ) ( i ) of rule 2-01 of regulation s-x were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor . 18 part iv item 15 exhibits , financial statement schedules ( a ) the following documents are filed as a part of this report : 1. financial statements . the following financial statements of new leap , inc. are included in item 8 : replace_table_token_8_th 2. financial statement schedule ( s ) : all schedules are omitted for the reason that the information is included in the financial statements or the notes thereto or that they are not required or are not applicable . 3. exhibits : replace_table_token_9_th _ * filed herewith . ( 1 ) incorporated herein by reference from the company 's form s-1 filed with the securities and exchange commission on august 8 , 2017 . 19 signatures in accordance with section 13 or 15 ( d ) of the securities exchange act , the registrant caused this report to be signed on its behalf by the undersigned , thereunto duly authorized . march 27 , 2020 itzhak ostashinsky itzhak ostashinsky chief executive officer 20 story_separator_special_tag this discussion summarizes the significant factors affecting the operating results , financial condition , liquidity and cash flows of the company for the fiscal year ended december 31 , 2019. the discussion and analysis that follows should be read together with the section entitled โ forward looking statements โ and our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this annual report on form 10-k. except for historical information , the matters discussed in this section are forward-looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the company 's control . 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 . company overview new leap plans to match up potential investors from all over the world , except for u.s. residents with private u.s. companies and companies which are publicly traded in the u.s. ( both u.s. and foreign incorporated ) . the goal is to use the crowdfunding trend in order to make private investments in such companies more accessible to non-u.s. investors on one hand and allow easier access to capital for these companies on the other . we will not allow u.s. persons access to the materials presented by the companies offering their securities on our website . anyone trying to gain access to the offering materials posted on our website will first need to fill out a questionnaire which will include a question about the country of residence . anyone answering โ u.s.a โ or any of its states will be prohibited from gaining access to the page showing the offering materials of the presenting companies . we intend to start developing a website following completion of this offering . for this purpose our intention is to use a third party vendor which can provide both design and programming services . all securities will bear a legend indicating that the securities are `` restricted securities '' and may not be sold in the u.s. absent an effective registration statement under the securities act covering the resale of such securities or an available exemption from such registration requirement . new leap will keep a complete audit trail of investments in the companies presenting on its website . funds committed for an investment will be kept in an escrow account until the company 's funding goal is reached . upon reaching such goal , funds will be transferred from the escrow account to the company 's bank account while simultaneously stock certificates will be delivered to the investors . should the funding goal not be reached until the deadline of the offering , funds would immediately be returned to the investors . story_separator_special_tag text-align : justify ; '' > going concern our auditor has issued a `` going concern '' explanatory paragraph as part of his opinion in the audit report dated march 27 , 2020 for the story_separator_special_tag ( iv ) of regulation s-k and the related instructions , or a reportable event within the meaning set forth in item 304 ( a ) ( 1 ) ( v ) of regulation s-k. audit fees the fees involved with the audit by bfb of the financial statements for the year ended december 31 , 2019 are $ 5,000 . other than that , the company paid $ 4,500 to bfb for the review of all interim financial statements during 2019 , $ 4,500 for the previous audit for the year ended december 31 , 2018 and $ 4,500 for the review of all interim financial statements during 2018. audit-related fees during the years ended december 31 , 2019 and december 31 , 2018 , our principal accountant did not render audit-related services to us . tax fees during the year ended december 31 , 2019 and december 31 , 2018 , our principal accountant did not render services to us for tax compliance , tax advice or tax planning . all other fees during the year ended december 31 , 2019 and december 31 , 2018 there were no fees billed for products and services provided by the principal accountant other than those set forth above . currently , we have no independent audit committee . our full board of directors functions as our audit committee and is comprised of one director who is not considered to be `` independent `` in accordance with the requirements of rule 10a-3 under the exchange act . our audit committee 's pre-approval policies and procedures described in paragraph ( c ) ( 7 ) ( i ) of rule 2-01 of regulation s-x were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor . 18 part iv item 15 exhibits , financial statement schedules ( a ) the following documents are filed as a part of this report : 1. financial statements . the following financial statements of new leap , inc. are included in item 8 : replace_table_token_8_th 2. financial statement schedule ( s ) : all schedules are omitted for the reason that the information is included in the financial statements or the notes thereto or that they are not required or are not applicable . 3. exhibits : replace_table_token_9_th _ * filed herewith . ( 1 ) incorporated herein by reference from the company 's form s-1 filed with the securities and exchange commission on august 8 , 2017 . 19 signatures in accordance with section 13 or 15 ( d ) of the securities exchange act , the registrant caused this report to be signed on its behalf by the undersigned , thereunto duly authorized . march 27 , 2020 itzhak ostashinsky itzhak ostashinsky chief executive officer 20 story_separator_special_tag this discussion summarizes the significant factors affecting the operating results , financial condition , liquidity and cash flows of the company for the fiscal year ended december 31 , 2019. the discussion and analysis that follows should be read together with the section entitled โ forward looking statements โ and our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this annual report on form 10-k. except for historical information , the matters discussed in this section are forward-looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the company 's control . 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 . company overview new leap plans to match up potential investors from all over the world , except for u.s. residents with private u.s. companies and companies which are publicly traded in the u.s. ( both u.s. and foreign incorporated ) . the goal is to use the crowdfunding trend in order to make private investments in such companies more accessible to non-u.s. investors on one hand and allow easier access to capital for these companies on the other . we will not allow u.s. persons access to the materials presented by the companies offering their securities on our website . anyone trying to gain access to the offering materials posted on our website will first need to fill out a questionnaire which will include a question about the country of residence . anyone answering โ u.s.a โ or any of its states will be prohibited from gaining access to the page showing the offering materials of the presenting companies . we intend to start developing a website following completion of this offering . for this purpose our intention is to use a third party vendor which can provide both design and programming services . all securities will bear a legend indicating that the securities are `` restricted securities '' and may not be sold in the u.s. absent an effective registration statement under the securities act covering the resale of such securities or an available exemption from such registration requirement . new leap will keep a complete audit trail of investments in the companies presenting on its website . funds committed for an investment will be kept in an escrow account until the company 's funding goal is reached . upon reaching such goal , funds will be transferred from the escrow account to the company 's bank account while simultaneously stock certificates will be delivered to the investors . should the funding goal not be reached until the deadline of the offering , funds would immediately be returned to the investors . story_separator_special_tag text-align : justify ; '' > going concern our auditor has issued a `` going concern '' explanatory paragraph as part of his opinion in the audit report dated march 27 , 2020 for the
| results of operations january 1 , 2018 to december 31 , 2018 compared to january 1 , 2019 to december 31 , 2019 selling , general and administrative expenses selling , general and administrative expenses for the year ended december 31 , 2018 were $ 54,774 compared to $ 77,140 for the year ended december 31 , 2019. the expenses were consisted primarily of contributed services from the sole officer and director and costs associated with our status a public company . 9 liquidity and capital resources the following is a summary of the company 's cash flows provided by ( used in ) operating , investing , and financing activities for the year ended december 31 , 2018 and the year ended december 31 , 2019 : replace_table_token_1_th to date , most of our resources and work have been devoted to planning our business , completing our registration statement and building our website . private capital , if sought , we believe will be sought from former business associates of our president and chief executive officer or through private investors referred to us by those same business associates . if a market for our shares ever develops , of which there can be no assurances , we may use restricted shares of our common stock to compensate employees/consultants and independent contractors wherever possible . we can not predict the likelihood or source of raising capital or funds that may be needed to complete the development of our business plan . we are a public company and as such we have incurred and will continue to incur significant expenses for legal , accounting and related services . as a public entity , subject to the reporting requirements of the exchange act of 1934 , we incur ongoing expenses associated with professional fees for accounting , legal and a host of other expenses including annual reports and proxy statements , if required .
| 4,613 |
you can identify these statements by forward-looking words such as โ may , โ โ will , โ โ expect , โ โ anticipate , โ โ believe , โ โ estimate โ and โ continue , โ or similar words . those statements include statements regarding the intent , belief or current expectations of us and members of our management team as well as the assumptions on which such statements are based . prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties , and that actual results may differ materially from those contemplated by such forward-looking statements . readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the securities and exchange commission . important factors currently known to management could cause actual results to differ materially from those in forward-looking statements . we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions , the occurrence of unanticipated events or changes in the future operating results over time . we believe that our assumptions are based upon reasonable data derived from and known about our business and operations . no assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions . factors that could cause differences include , but are not limited to , expected market demand for our products , fluctuations in pricing for materials , and competition . business overview we were formed in august 2015 to expand upon the successful implementation of a hydrogen energy system used to completely power a residence or commercial property with clean energy so that it can run independent of the utility grid and also provide energy to the utility grid for monetary credits . this system uses renewable energy as its source for hydrogen production . it functions as a self-sustaining clean energy system using hydrogen and fuel cell technology . its production of electricity is truly eco-friendly , as it is not produced by the use of fossil fuels . it is a revolutionary green-energy concept that is safe , renewable , self-sustaining and cost effective . there are great benefits to hydrogen energy . the use of hydrogen as an energy source produces no carbon dioxide or other greenhouse gases . unlike fossil fuels , the only emission from hydrogen is chemically pure water . hydrogen can be extracted from water using renewable energy from the sun and unlike batteries , hydrogen can be stored indefinitely . there is no drilling , fracking or mining required to produce hydrogen . we believe it is safe and the most abundant and cleanest energy source on the planet . in addition to offering this self-sustaining clean energy system using hydrogen and fuel cell technology , we offer a number of renewable energy services , such as audits of energy consumption , review of energy/tax credits available , feasibility studies , solar/battery system installation , zoning/permitting analysis , site design/preparation and restoration , system startup , testing , commissioning , maintenance and interconnection applications . we have succeeded in developing and installing hydrogen energy systems that are combined with renewable solar energy to produce clean electricity . we call the hydrogen energy system the hc-1 . the hc-1 system functions as a self-sustaining renewable energy system . it can be configured as an off grid solution for all your electricity needs or it can be connected to the grid to generate energy credits . it is a system comprised of solar , batteries , a hydrogen generator , a fuel cell and a hydrogen storage tank . when there is sunlight , the solar produce renewable energy that charges a bank of batteries . after the batteries are fully charged , the excess electricity is then combined with water through a hydrogen generator that extracts the hydrogen from the water in a gasified state , which is safely transferred to a tank and stored for later use . if the tank is full , excess electricity is sent from the batteries to the utility grid , which results in energy credits for the system owner . the electricity for the end user is always provided by the charged batteries . if there is no solar power to charge the batteries , the system keeps the batteries fully charged by using the hydrogen gas stored in the tank , which processed through a fuel cell , creates the electricity to charge the batteries . as the system is able to produce its own hydrogen gas , which keeps the tank full , it provides a continuous supply of clean energy and sustainability that is independent from the grid . each hc-1 system is custom designed to accommodate the electrical loads for an end user . the system is completely scalable . if a customer wishes to connect the system to the electrical grid in order to generate renewable energy credits , we obtain interconnection agreements from the local electric utility company . if the customer obtains authorization for interconnection to the utility grid , once the hc-1 system is operational , the hc-1 system owner can eliminate their electric bill and , if in a permissible state , can begin generating energy credits . in certain states , an end user receives one energy credit for each 1,000 kilowatt hours ( kwh ) produced through renewal energy . the customer sells these credits to a broker , who in turn sells the credits to a utility company so that the utility company can demonstrate their compliance with the regulatory obligations to reduce greenhouse gas emissions . the price per credit can vary depending on supply and demand . many other states that may not offer an energy credit program , do offer other cash incentives for renewable energy systems . 19 on january 31 , 2017 , we acquired the pride group ( qld ) pty ltd , an australian company ( โ pride โ ) . story_separator_special_tag for the year ended december 31 , 2018 , we used $ 412,646 of cash in operating activities , which represented our net loss of $ 554,010 , $ 146,105 of depreciation and amortization , $ 114,656 of billings in excess of cost , $ 68,293 of stock-based compensation , $ 28,261 of changes in accounts payable , $ 5,743 change in deferred tax asset , $ 15,418 on change in fair value contingent consideration $ 2,018 of prepaid expenses , $ 1,067 of costs in excess of billings , and $ 616 of bad debt expense , offset by $ 219,501 of changes in accounts receivables , and $ 17,276 of gain on the sale of assets . for the year ended december 31 , 2019 , we used $ 6,587 of cash , in investing activities relating to the purchase of fixed assets of $ 244,412 and security deposits of $ 372 , offset by $ 238,197 of proceeds from the disposition of property and equipment . for the year ended december 31 , 2018 , we generated $ 24,755 of cash from investing activities relating to the purchase of fixed assets of $ 46,690 and security deposits of $ 26,922 , offset by $ 30,408 of cash acquired in business acquisition and $ 67,959 of proceeds from the disposition of property and equipment . for the year ended december 31 , 2019 , we generated $ 331,985 of cash from financing activities relating to $ 241,387 of proceeds from line of credit , $ 240,000 for the issuance of convertible debt and $ 40,122 proceeds from equity financing , offset by $ 90,000 in legal fees associated with financing transactions , $ 61,300 in repayments on finance leases and $ 38,224 in repayments of notes payable . for the year ended december 31 , 2018 , we generated $ 324,443 of cash from financing activities , which represented $ 395,000 of proceeds from the issuance of convertible debt , $ 27,175 of net proceeds from a line of credit and $ 1,000 from the exercise of stock options , offset by $ 51,048 in repayments on capital leases and $ 47,684 of repayments of notes payable . in the future we expect to incur expenses related to compliance for being a public company and travel related to visiting potential customer sites . we expect that our general and administrative expenses will increase as we expand our business development , add infrastructure and incur additional costs related to being a public company , including incremental audit fees , investor relations programs and increased professional services . our future capital requirements will depend on a number of factors , including the progress of our sales and marketing of our services , the timing and outcome of potential acquisitions , the costs involved in operating as a public reporting company , the status of competitive services , the availability of financing and our success in developing markets for our services . when we enter into contracts with customers , they will be required to make payments in tranches , including a payment after a contract is executed but prior to commencement of the project . we believe our existing cash , together with revenue generated by operations , will be sufficient to fund our operating expenses and capital equipment requirements for at least the next 12 months . 22 credit facility on august 21 , 2018 , pvbj entered into a loan and security agreement ( the โ credit agreement โ ) with thermo , which was amended in march 2020. the credit agreement provides for a revolving line of credit in an amount not to exceed $ 400,000 , which is evidenced by a promissory note issued by pvbj to thermo ( the โ note โ ) . pursuant to the credit agreement , pvbj granted a security interest to thermo in all of its assets . in addition , pursuant to a limited recourse guaranty , andrew hidalgo , our chief executive officer , personally guaranteed the repayment of the credit agreement under certain conditions . pursuant to the terms of the credit agreement , we are permitted to borrow up to $ 400,000 under the revolving credit line , under a borrowing base equal to the lesser of ( i ) or 85 % of eligible accounts ( as defined in the credit agreement ) . borrowings under the credit agreement may be used for working capital and to refinance certain existing debt of pvbj . the credit agreement contains certain customary representations and warranties , affirmative and negative covenants , and events of default . principal covenants include a debt service coverage ratio of not less than 1.15 to 1.0 , a fixed charge coverage ratio of not less than 1.15 to 1.0 , and maintaining a tangible net worth of at least $ 150,000 , excluding intercompany loans . as of december 31 , 2019 , we were in compliance with these covenants . the loan commitment shall expire on august 21 , 2020. the interest rate applicable to revolving loans under the credit agreement is prime plus 5.0 % , subject to a minimum interest rate of 9.5 % . we paid a loan commitment fee of $ 7,000 , of which $ 3,500 was paid on closing , and $ 3,500 was paid on the first anniversary . we will also pay a monthly monitoring fee during the term of the credit agreement of 0.33 % of the average outstanding balance , payable monthly in arrears . we may prepay the note at any time and terminate the credit agreement .
| results of operations for the years ended december 31 , 2019 and 2018 revenue and cost of revenue for the year ended december 31 , 2019 , we had $ 6,817,324 of revenue and $ 4,854,878 of cost of revenue . pride revenues for year ended december 31 , 2019 were $ 3,943,528 , down from $ 5,073,533 for the year ended december 31 , 2018. this was due in large part to government and contract jobs that pride were awarded in 2019 but pushed into 2020. pvbj revenue for 2019 was $ 2,873,796 , up from $ 2,440,854 for the year ended december 31 , 2018. this was due to a large contract job performed in january 2019 , new direct digital controls division that pvbj started in 2019 , along with another month of revenue in 2019 as pvbj was acquired in february of 2018. for the year ended december 31 , 2018 , we had $ 7,546,437 of revenue and $ 5,532,983 of cost of revenue , of which $ 40,548 and $ 40,376 , respectively , was related party . replace_table_token_1_th 20 general and administrative expenses during the year ended december 31 , 2019 , our total operating expenses were $ 2,415,785 . $ 528,283 was related to the renewable systems integration segment , including corporate expenses comprised of $ 150,000 of gross payroll , $ 98,451 of accounting fees related to audit , consulting and tax costs , $ 80,500 in management disbursements , $ 58,000 of legal fees , $ 25,669 of dues and subscription fees , which pertained to transfer agent , press release , edgar fees and otc market annual listing fees , $ 23,089 of stock-based compensation , $ 21,084 of amortization , $ 16,138 of directors and officers insurance liability , $ 10,916 of travel and meals , $ 10,457 of payroll taxes , $ 9,313 of investor relations , $ 8,000 of investment banking fees , $ 7,846 in automobile expense and $ 8,820 of miscellaneous expenses .
| 4,614 |
the company 's contribution expense pursuant to these plans was $ 7,503 , $ 6,145 and $ 3,715 for the years ended december 31 , 2014 , 2013 and 2012 , respectively . the company also has a defined benefit plan . see note 18. loss per common share . basic loss per share is based upon the weighted average number of common shares outstanding during each period , including the โ share capital to be issued โ as reflected in the shareholders ' equity on the balance sheet . diluted loss per share is based on the above , plus , if dilutive , common share equivalents , which include outstanding options , warrants , stock appreciation rights , restricted stock units and convertible notes . subsidiary and affiliate stock transactions . in accordance with accounting standards codification topic on business combinations , effective january 1 , 2009 , transactions involving purchases , sales or issuances of stock of a subsidiary where control is maintained are recorded as an increase or decrease in additional story_separator_special_tag unless otherwise indicated , references to a fiscal year means the company 's year commencing on january 1 of that year and ending december 31 of that year ( e.g. , fiscal 2014 means the period beginning january 1 , 2014 , and ending december 31 , 2014 ) . references in the annual report on form 10-k to `` partners '' refer to the subsidiaries of the company . the company reports its financial results in accordance with generally accepted accounting principles ( โ gaap โ ) of the united states of america ( โ u.s . gaap โ ) . however , the company has included certain non-u.s. gaap financial measures and ratios , which it believes provide useful information to both management and readers of this report in measuring the financial performance and financial condition of the company . one such term is โ organic revenue โ , which means growth in revenues from sources other than acquisitions or foreign exchange impacts . these measures do not have a standardized meaning prescribed by u.s. gaap and , therefore , may not be comparable to similarly titled measures presented by other publicly traded companies , nor should they be construed as an alternative to other titled measures determined in accordance with u.s. gaap . executive summary the company 's objective is to create shareholder value by building market-leading partner firms and affiliates that deliver innovative , value-added marketing communications and strategic consulting to their clients . management believes that shareholder value is maximized with an operating philosophy of โ perpetual partnership โ with proven committed industry leaders in marketing communications . mdc manages the business by monitoring several financial and non-financial performance indicators . the key indicators that we review focus on the areas of revenues and operating expenses and capital expenditures . revenue growth is analyzed by reviewing the components and mix of the growth , including : growth by major geographic location ; existing growth by major segment ( organic ) ; growth from currency changes ; and growth from acquisitions . mdc conducts its businesses through the marketing communications group . within the marketing communications group , there is one reportable operating segment , the strategic marketing services , and an other segment , the performance marketing services . in addition , mdc has a โ corporate group โ which provides certain accounting , administrative , financial , human resource and legal functions . marketing communications businesses through its partners , mdc provides value-added marketing and communications and strategic consulting services to clients throughout the world . the operating companies earn revenue from agency arrangements in the form of retainer fees or commissions ; from short-term project arrangements in the form of fixed fees or per diem fees for services ; and from incentives or bonuses . additional information about revenue recognition appears in note 2 of the notes to the consolidated financial statements included herein . mdc measures operating expenses in two distinct cost categories : cost of services sold , and office and general expenses . cost of services sold is primarily comprised of employee compensation related costs and direct costs related primarily to providing services . office and general expenses are primarily comprised of rent and occupancy costs and administrative service costs including related employee compensation costs . also included in office and general expenses are the changes of the estimated value of our contingent purchase price obligations , including the accretion of present value and acquisition related costs . depreciation and amortization are also included in operating expenses . because we are a service business , we monitor these costs on a percentage of revenue basis . cost of services sold tend to fluctuate in conjunction with changes in revenues , whereas office and general expenses and depreciation and amortization , which are not directly related to servicing clients , tend to decrease as a percentage of revenue as revenues increase because a significant portion of these expenses are relatively fixed in nature . we measure capital expenditures as either maintenance or investment related . maintenance capital expenditures are primarily composed of general upkeep of our office facilities and equipment that are required to continue to operate our businesses . investment capital expenditures include expansion costs , the build out of new capabilities , technology , or other growth initiatives not related to the day to day upkeep of the existing operations . growth capital expenditures are measured and approved based on the expected return of the invested capital . certain factors affecting our business overall factors affecting our business and results of operations . the most significant factors include national , regional and local economic conditions , our clients ' profitability , mergers and acquisitions of our clients , changes in top management of our clients and our ability to retain and attract key employees . new business wins and client losses occur due to a variety of factors . story_separator_special_tag operating margins increased by 2.1 % and were 10.9 % for 2014 , compared to 8.8 % for 2013. the increase in operating profit and operating margin was primarily due to increases in revenue , decreases in total staff costs and decreases in office and general , offset by an increase in direct cost ( excluding staff labor ) . total staff costs as a percentage of revenue decreased by 1.9 % from 57.7 % in 2013 to 55.8 % in 2014. direct costs ( excluding staff labor ) increased as a percentage of revenues from 14.4 % in 2013 , to 15.8 % in 2014. direct costs increased as there were more pass-through costs incurred on the clients ' behalf during 2014 where the company was acting as principal versus agent for certain client contracts . office and general expenses decreased as a percentage of revenue by 1.5 % from 21.6 % in 2013 , to 20.1 % in 2014 . this decrease was primarily due to a reduction of $ 19.4 million in expense relating to estimated deferred acquisition consideration and the increase in revenue on relatively fixed costs . depreciation and amortization as a percentage of revenue increased from 3.3 % in 2013 to 3.7 % in 2014 , due primarily to the increase in revenue . marketing communications businesses strategic marketing services revenues attributable to strategic marketing services in 2014 were $ 954.2 million , compared to $ 836.9 million in 2013. the year-over-year increase of $ 117.3 million , or 14.0 % , was attributable primarily to organic growth of $ 102.2 million , or 12.2 % , as a result of net new business wins , and acquisition growth of $ 20.3 million or 2.4 % . these increases were offset by a foreign exchange translation decrease of $ 5.2 million , due to the strengthening of the u.s. dollar compared to the canadian dollar . the operating profit of strategic marketing services increased by $ 24.5 million from $ 86.9 million in 2013 to $ 111.4 million in 2014 . operating margins increased from 10.4 % in 2013 to 11.7 % in 2014 . the increase in operating profits and operating margins were primarily due to increases in revenues , decrease in total staff costs and decreases in office and general , offset by an increase in direct costs ( excluding staff labor ) . total staff costs as a percentage of revenue decreased from 59.3 % in 2013 to 58.7 % in 2014. direct costs ( excluding staff labor ) increased as a percentage of revenue from 10.1 % in 2013 to 11.6 % in 2014 . direct costs increased as there were more pass-through costs incurred on the clients ' behalf during 2014 where the company was acting as principal versus agent for certain client contracts . office and general expenses decreased as a percentage of revenue from 22.8 % in 2013 to 21.0 % in 2014 . the decrease was due to a reduction of $ 12.5 million in expense relating to estimated deferred acquisition consideration and the increased revenue on relatively fixed costs . depreciation and amortization as a percentage of revenue decreased from 2.9 % in 2013 to 2.5 % in 2014 due to the increase in revenue . performance marketing services performance marketing services generated revenues of $ 269.3 million for 2014 , an increase of $ 43.8 , or 19.4 % , compared to revenues of $ 225.5 million in 2013. the year-over-year increase was attributable primarily to an organic growth of $ 12.7 million or 5.6 % as a result of net new business and an increase in acquisition growth of $ 34.4 million or 15.2 % , offset by a foreign translation decrease of $ 3.3 million . the operating profit of performance marketing services increased by $ 15.7 million , from $ 6.6 million in 2013 to $ 22.2 million in 2014 . operating margins increased from 2.9 % in 2013 to 8.3 % in 2014 . the increase in operating profits and 21 operating margins were primarily due to increased revenue , decreases in total staff costs , offset by an increase in direct costs ( excluding staff labor ) . total staff costs decreased from 51.8 % in 2013 to 45.3 % in 2014 . direct costs increased from 30.1 % in 2013 to 30.5 % in 2014 due to increased pass-through costs incurred on the clients ' behalf during 2014 where the agency was acting as principal versus agent for certain client contracts . office and general costs decreased from 17.1 % in 2013 to 16.8 % in 2014 due primarily to decreased expenses relating to estimated deferred acquisition consideration . depreciation and amortization increased from 4.7 % in 2013 to 7.9 % in 2014 due primarily to the additional amortization expense related to the 2014 acquisitions . corporate operating costs related to the company 's corporate operations decreased by $ 82.2 million to $ 45.9 million in 2014 , compared to $ 128.1 million in 2013. this decrease was primarily due to the 2013 settlement of sar 's in cash resulting in a stock based compensation charge of $ 78.0 million and a one-time bonus payment of $ 9.6 million to our ceo for the company 's stock price achieving specified targets , offset by a reduction of expense relating to the $ 5.3 million repayment of a previously fully reserved loan by the company 's ceo . excluding these items , corporate expenses were consistent year over year . other income ( expense ) , net other income ( expense ) , net , decreased by $ 1.9 million from income of $ 2.5 million in 2013 to income of $ 0.7 million in 2014 . the decrease relates to the 2013 distribution received in excess of the assets carrying value of $ 3.1 million .
| fourth quarter results . revenues for the fourth quarter of 2014 increased to $ 339.9 million , compared to 2013 fourth quarter revenues of $ 289.2 million . the increase consisted of organic growth of $ 36.2 million , acquisition revenue of $ 18.2 million and a decrease of $ 3.7 million due to foreign currency fluctuations . the strategic marketing services segment had revenue growth of $ 42.9 million in 2014 , of which $ 33.0 million was organic , acquisition revenue of $ 12.7 million , offset by a decrease of $ 2.8 million due to foreign currency fluctuations . the performance marketing services segment had increased revenue of $ 7.8 million in 2014 , which consisted of organic growth of $ 3.2 million , acquisition revenue of $ 5.5 million , offset by a decrease of $ 0.9 million related to foreign currency fluctuations . operating results for the fourth quarter of 2014 resulted in a profit of $ 25.7 million , compared to a loss of $ 70.1 million in 2013. the increase in operating profits was primarily related to two compensation related items from 2013 : a stock based compensation charge of $ 55.8 million relating to the company 's settlement of its outstanding sar 's in cash , and a one-time contractual bonus to the company 's ceo of $ 9.6 million for the company 's stock price achieving specified targets and to a reduction of $ 28.8 million relating to the estimated deferred acquisition consideration expense . loss from continuing operations for the fourth quarter of 2014 was $ 6.4 million , compared to $ 90.1 million in 2013. other expense net increased to $ 9.1 million in 2014 , compared to $ 4.6 million in 2013 due to unrealized losses due to foreign currency fluctuations .
| 4,615 |
if the anticipated transactions are deemed probable , the story_separator_special_tag forward-looking statements please note that in this annual report on form 10-k we may use words such as โ appears , โ โ anticipates , โ โ believes , โ โ plans , โ โ expects , โ โ intends , โ โ future , โ and similar expressions which constitute forward-looking statements within the meaning of the safe harbor provisions of the private securities litigation reform act of 1995. forward-looking statements are made based on our expectations and beliefs concerning future events impacting the company and therefore involve a number of risks and uncertainties . we caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements . potential risks and uncertainties that could cause the actual results of operations or financial condition of the company to differ materially from those expressed or implied by forward-looking statements in this annual report on form 10-k include , but are not limited to , the overall level of consumer spending on our products ; general economic conditions and other factors affecting consumer confidence ; disruption and volatility in the global capital and credit markets ; the financial strength of the company 's customers ; the company 's ability to implement its growth strategy , including its ability to organically grow each of its historical product lines , its new apparel line and its recently acquired businesses ; the results of the company 's review of strategic alternatives ; the company 's ability to successfully integrate and grow acquisitions ; the company 's exposure to product liability of product warranty claims and other loss contingencies ; stability of the company 's manufacturing facilities and foreign suppliers ; the company 's ability to protect trademarks , patents and other intellectual property rights ; fluctuations in the price , availability and quality of raw materials and contracted products ; foreign currency fluctuations ; our ability to utilize our net operating loss carryforwards ; and legal , regulatory , political and economic risks in international markets . more information on potential factors that could affect the company 's financial results can be found under item 1a.โrisk factors of this annual report on form 10-k. all forward-looking statements included in this annual report on form 10-k are based upon information available to the company as of the date of this annual report on form 10-k , and speak only as the date hereof . we assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this annual report on form 10-k. story_separator_special_tag greater or lower than the allowances that we have established , we will record a reduction or increase to sales in the period in which we make such a determination . ยท we account for income taxes using the asset and liability method . the asset and liability method provides that 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 loss and tax credit carryforwards . we make assumptions , judgments and estimates to determine our current provision for income taxes , our deferred tax assets and liabilities , and our uncertain tax positions . our judgments , assumptions and estimates relative to the current provision for income tax 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 . changes in tax law or our interpretation of tax laws and the resolution of current and future tax audits could significantly affect the amounts provided for income taxes in our consolidated financial statements . our assumptions , judgments and estimates relative to the realizability of a deferred tax asset take into account predictions of the amount and category of expected future taxable income . actual operating results and the underlying amount and category of income in future years could cause our current assumptions , judgments and estimates of recoverable net deferred taxes to be inaccurate . changes in any of the assumptions , judgments and estimates mentioned above related to the realizability of deferred tax assets , could materially affect our financial position and results of operations . ยท we make ongoing estimates of potential excess , close-out or slow moving inventory . we evaluate our inventory on hand considering our purchase commitments , sales forecasts , and historical experience to identify excess , close-out or slow moving inventory and make provisions as necessary to properly reflect inventory value at the lower of cost or estimated market value . 33 ยท indefiniteโlived intangible assets , consisting of trademarks are not subject to amortization . rather , we qualitatively evaluate those assets for possible impairment on an annual basis or more frequently if events or changes in circumstances indicate that it is more likely than not that the carrying value of an asset may exceed its fair value . if our analysis leads us to believe that it is more likely than not that the carrying value of an asset may exceed its fair value , we perform a quantitative analysis based on an income approach using the reliefโfromโroyalty method . under this method , forecasted revenues for a trademark are assigned a royalty rate that would be charged to license the trademark ( in lieu of ownership ) from an independent party , and fair value is the present value of those forecasted royalties avoided by owning the trademark . if the fair value of the trademark intangible asset exceeds its carrying value , there is no impairment charge . if the fair value of the asset is less than its carrying value , an impairment charge would be recognized for the difference . ยท we assess the recoverability of our one reporting unit 's carrying value of goodwill by making a qualitative or quantitative assessment . story_separator_special_tag selling , general and administrative consolidated selling , general , and administrative expenses increased $ 6,540 , or 8.8 % , to $ 81,077 during the year ended december 31 , 2014 compared to consolidated selling , general , and administrative expenses of $ 74,537 during the year ended december 31 , 2013. the increase in selling , general and administrative expenses was attributable to the company 's investments in its strategic initiatives , such as black diamond equipment apparel , the transition of certain distributors into our in-house operations for poc , and the launch of poc 's road cycling collection . this was offset by stock based compensation expense which was higher during the year ended december 31 , 2013 compared to the year ended december 31 , 2014 , as a result of the company issuing more fully vested stock option awards in the prior year . restructuring charges consolidated restructuring expense increased $ 3,408 , or 1,947.4 % , to $ 3,583 during the year ended december 31 , 2014 compared to consolidated restructuring expense of $ 175 during the year ended december 31 , 2013. the restructuring expenses incurred during the year ended december 31 , 2014 relate to impairment of assets of $ 2,056 , benefits provided to employees who were or will be terminated due to the company 's reduction-in-force as part of its continued realignment of resources within the organization of $ 813 , and other restructuring costs of $ 714. the restructuring expenses incurred during the year ended december 31 , 2013 , related to the relocation of poc 's portsmouth , nh facility to the company 's u.s. distribution facilities in salt lake city , ut . merger and integration costs consolidated merger and integration expense decreased to $ 0 during the year ended december 31 , 2014 compared to consolidated merger and integration expense of $ 565 during the year ended december 31 , 2013 , which consisted of expenses related to the integration of poc and pieps . transaction costs consolidated transaction expense decreased to $ 0 during the year ended december 31 , 2014 compared to consolidated transaction expense of $ 54 during the year ended december 31 , 2013 , which consisted of professional accounting fees in 2013 related to the company 's acquisitions of poc and pieps . interest expense , net consolidated interest expense increased $ 107 , or 4.2 % , to $ 2,684 during the year ended december 31 , 2014 compared to consolidated interest expense of $ 2,577 during the year ended december 31 , 2013. the increase in interest expense , net , was primarily attributable to higher average outstanding debt amounts during the year ended december 31 , 2014 , compared to the same period in 2013 . 36 other , net consolidated other , net , decreased to expense of $ 296 during the year ended december 31 , 2014 compared to a consolidated other , net income of $ 350 during the year ended december 31 , 2013. the decrease in other , net , was primarily attributable to losses on mark-to-market adjustments on non-hedged foreign currency contracts partially off-set by remeasurement gains recognized on the company 's foreign denominated accounts receivable and accounts payable . income taxes consolidated income tax benefit decreased $ 1,818 , or 33.9 % , to $ 3,551 during the year ended december 31 , 2014 compared to consolidated income tax benefit of $ 5,369 during the same period in 2013. the decrease in tax benefit is due to the decrease in the effective tax rate and the decrease in loss before income tax recorded during the year ended december 31 , 2014 , compared to the same period in 2013. our effective income tax rate was 27.9 % for the year ended december 31 , 2014 compared to an effective income tax rate of 32.5 % for the same period in 2013. during the year ended december 31 , 2013 , a benefit of $ 230 was recorded as a discrete event for the 2012 federal research credit that was retroactively reinstated in 2013. there were no meaningful discrete events recorded in the company 's effective income tax rate calculation for the year ended december 31 , 2014. discontinued operations the company sold the assets and liabilities of gregory for $ 84,135 effective july 23 , 2014 and as a result we recognized a pre-tax gain of $ 39,491. discontinued operations increased $ 17,936 , to $ 23,198 during the year ended december 31 , 2014 , compared to discontinued operations of $ 5,262 during the year ended december 31 , 2013. the increase was due primarily to recording the gain on sale net of tax of $ 20,067 in discontinued operations in our december 31 , 2014 condensed consolidated financial statements as a result of the gmp sale . 37 consolidated year ended december 31 , 2013 compared to consolidated year ended december 31 , 2012 the following presents a discussion of consolidated operations for the year ended december 31 , 2013 compared with the consolidated year ended december 31 , 2012 : replace_table_token_5_th sales consolidated sales increased $ 22,786 , or 15.7 % , to $ 168,109 during the year ended december 31 , 2013 compared to consolidated sales of $ 145,323 during the year ended december 31 , 2012. the increase in sales was attributable to the inclusion of poc and pieps for the full year ended december 31 , 2013 , and the addition of apparel sales by black diamond equipment .
| overview black diamond , inc. ( which may be referred to as โ black diamond , โ โ company , โ โ we , โ โ our โ or โ us โ ) is a global leader in designing , manufacturing , and marketing innovative active outdoor performance equipment and apparel for climbing , mountaineering , backpacking , skiing , cycling , and a wide range of other year-round outdoor recreation activities . our principal brands include black diamondยฎ , poc and pieps and are targeted not only to the demanding requirements of core climbers , skiers and cyclists , but also to the more general outdoor performance enthusiasts and consumers interested in outdoor-inspired gear for their backcountry and urban activities . our black diamondยฎ , poc and pieps brands are iconic in the active outdoor , ski and cycling industries and linked intrinsically with the modern history of the sports we serve . we believe our brands are synonymous with the performance , innovation , durability and safety that the outdoor and action sports communities rely on and embrace in their active lifestyle . we offer a broad range of products including : high performance apparel ( such as jackets , shells , pants and bibs ) rock-climbing equipment ( such as carabiners , protection devices , harnesses , belay devices , helmets , and ice-climbing gear ) ; technical backpacks and high-end day packs ; tents ; trekking poles ; headlamps and lanterns ; and gloves and mittens . we also offer advanced design helmets , body armor , and goggles for skiing , mountain and road cycling , as well as eyewear , skis , ski poles , ski bindings , ski boots , ski skins , and ski safety products , including avalanche transceivers , shovels , and probes . on may 28 , 2010 , we acquired black diamond equipment , ltd. ( which may be referred to as โ black diamond equipment โ or โ bdel โ ) and gregory mountain products , llc ( which may be referred to as โ gregory mountain products โ , โ gregory โ or โ gmp โ ) .
| 4,616 |
since losses were incurred in all story_separator_special_tag this management 's discussion and analysis is based upon the financial statements of secureworks which have been prepared in accordance with accounting principles generally accepted in the united states , or gaap , and should be read in conjunction with our consolidated financial statements and related notes included in this report . in addition to historical financial information , the following discussion contains forward-looking statements that reflect our plans , estimates and beliefs . our actual results could differ materially from those discussed or implied in our forward-looking statements . factors that could cause or contribute to these differences include those discussed in โ risk factors. โ our fiscal year is the 52- or 53-week period ending on the friday nearest january 31. we refer to our fiscal years ending february 2 , 2018 , february 3 , 2017 , and january 29 , 2016 as fiscal 2018 , fiscal 2017 and fiscal 2016 , respectively . fiscal 2018 and fiscal 2016 each included 52 weeks , while fiscal 2017 included 53 weeks , with the extra week included in the fourth quarter . all percentage amounts and ratios presented in this management 's discussion and analysis were calculated using the underlying data in thousands . unless otherwise indicated , all changes identified for the current-period results represent comparisons to results for the prior corresponding fiscal periods . except where the context otherwise requires or where otherwise indicated , all references to โ secureworks โ โ we , โ โ us , โ โ our โ and โ our company โ in this management 's discussion and analysis refer to secureworks corp. and our subsidiaries on a consolidated basis , all references to โ dell โ refer to dell inc. and its subsidiaries on a consolidated basis and all references to โ dell technologies โ refer to dell technologies inc. , the ultimate parent company of dell inc. overview we are a leading global cybersecurity company that protects organizations in the digitally connected world . we combine visibility from thousands of clients , machine learning and automation from our industry-leading secureworks counter threat platform tm , and actionable insights from our team of elite researchers , analysts and consultants to create a powerful network effect that provides increasingly strong protection for our clients . by aggregating and analyzing data from various sources around the world , we prevent security breaches , detect malicious activity in real time , respond rapidly and predict emerging threats . our mission is to unlock the value of our clients ' security investments by simplifying their complex security operations and amplifying their defenses . through our vendor-neutral approach , we create integrated and comprehensive solutions by proactively managing the collection of โ point โ products deployed by our clients to address specific security issues and provide supplemental solutions where gaps exist in our clients ' defenses . we customize the right level of security for each client 's unique situation , which evolves as the client 's organization grows and changes . we have pioneered an integrated approach that delivers a broad portfolio of information security solutions to organizations of varying size and complexity . our flexible and scalable solutions support the evolving needs of the largest , most sophisticated enterprises staffed with in-house security experts , as well as small and medium-sized businesses and government agencies with limited in-house capabilities and resources . our solutions enable organizations to : prevent security breaches by fortifying their cyber defenses , detect malicious activity , respond rapidly to security breaches , and predict emerging threats . the solutions leverage our proprietary technologies , processes and extensive expertise in the information security industry , which we have developed over more than 18 years . key elements of our strategy include : maintain and extend our technology leadership , expand and diversify our client base , deepen our existing client relationships , and attract and retain top talent . 45 we opened our first counter threat operations center in atlanta , georgia in 1999 to support our managed security business . we began providing security and risk consulting offerings to our clients in 2005. in 2006 , we acquired lurhq corporation , a leading provider of security information and event monitoring solutions to enterprises . in addition , we launched our information security offerings . shortly thereafter , we focused our growth strategy on expanding into new market segments and geographic regions . in 2008 , we launched our log management solution , among other new solutions . we began offering our managed web application firewall solutions in 2009 , shortly before we acquired verisign , inc. 's managed security business . in the same year , we also expanded internationally through the acquisition of dns limited , a managed security and consulting organization , which operated in london , england and in edinburgh , scotland . from 2009 to 2012 , we capitalized on all of our investments , both organic and acquired , and integrated these technologies into the counter threat platform in order to provide our clients with a comprehensive view of their network environments and security threats , while adapting to a constantly evolving threat landscape . over the last several years , we have continued to expand our offerings , including through the launch of our advanced endpoint threat detection solution and our advanced malware protection and detection solution . we continuously evaluate potential investments and acquisitions of businesses , services and technologies to expand our offerings and supplement our organic growth . from april 2009 to february 2 , 2018 , the number of events processed by our technology platform increased from five billion to as many as 250 billion events per day . further , our client base has grown to approximately 4,400 subscription-based clients as of february 2 , 2018 . this significant growth has required continual investment in our business , resulting in net losses . story_separator_special_tag these professionals are led by a highly experienced and tenured management team with extensive it security expertise and a record of developing successful new technologies and solutions to help protect our clients . we will continue to invest in attracting and retaining top talent to support and enhance our information security offerings . key operating metrics in recent years , we have experienced broad growth across our portfolio of intelligence-driven information security solutions being provided to all sizes of clients . we have achieved much of this growth by providing solutions to large enterprise clients , which generate substantially more average revenue than our small and medium-sized business , or smb , clients , and by continually expanding the volume and breadth of the security solutions that we provide to all clients . this has resulted in steady growth in our average revenue per client . this growth has required continuous investment in our business , resulting in net losses . we believe these investments are critical to our success , although they may continue to impact our profitability . we believe the operating metrics described below provide further insight into the long-term value of our subscription agreements and our ability to maintain and grow our client relationships . relevant key operating metrics are presented below as of the dates indicated and for the quarterly periods then ended : replace_table_token_5_th client base . we define our client base as the number of clients who subscribe to our managed security solutions as of a particular date . we believe that growing our existing client base and our ability to grow our average revenue per client represent significant future revenue opportunities for us . the increases in our client base and average revenue per client are primarily related to the persistence of cyber threats and the results of our sales and marketing efforts to increase the awareness of our solutions . additionally , our client composition of both enterprise and smb companies provides us with an opportunity to expand our professional services revenue . as of february 2 , 2018 , february 3 , 2017 , and january 29 , 2016 , approximately 44 % , 49 % , and 48 % , respectively , of our professional services clients subscribed to our managed security solutions . monthly recurring revenue . we define monthly recurring revenue as the monthly value of our subscription contracts as of a particular date . because we use monthly recurring revenue as a leading indicator of future revenue , we include operational backlog . we define operational backlog as the monthly recurring revenue associated with pending contracts , which are contracts that have been sold but for which the service period has not yet commenced . our increase in monthly recurring revenue has been driven primarily by our continuing ability to expand our offerings and sell additional solutions to existing 47 clients , as well as by growth in our client base . overall , we expect monthly recurring revenue to continue to grow as we retain and expand our client base , and as our clients extend the use of our solutions over time . revenue retention rate . our revenue retention rate is an important measure of our success in retaining and growing revenue from our subscription-based clients . to calculate our revenue retention rate for any period , we compare the monthly recurring revenue excluding operational backlog of our subscription-based client base at the beginning of the fiscal year , which we call our base recurring revenue , to the monthly recurring revenue excluding operational backlog from that same cohort of clients at the end of the period , which we call our retained recurring revenue . by dividing the retained recurring revenue by the base recurring revenue , we measure our success in retaining and growing installed revenue from the specific cohort of clients we served at the beginning of the period . our calculation includes the positive revenue impacts of selling and installing additional solutions to this cohort of clients and the negative revenue impacts of client or service attrition during the period . however , the calculation does not include the positive impact on revenue from sales of solutions to any clients acquired during the period . our revenue retention rates may decline or increase from period to period as a result of several factors , including timing of the installation of solutions contracted in prior periods , client satisfaction with our solutions , the price of our solutions , the prices or availability of competing solutions and changing technologies , and consolidation within our client base . non-gaap financial measures we use supplemental measures of our performance , which are derived from our financial information , but which are not presented in our financial statements prepared in accordance with generally accepted accounting principles in the united states of america , referred to as gaap . non-gaap financial measures presented in this management 's discussion and analysis include non-gaap revenue , non-gaap gross margin , non-gaap research and development expenses , non-gaap sales and marketing expenses , non-gaap general and administrative expenses , non-gaap operating loss , non-gaap net loss , non-gaap net loss per share and adjusted ebitda . we use non-gaap financial measures to supplement financial information presented on a gaap basis . we believe these non-gaap financial measures provide useful information to help evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling more meaningful period-to-period comparisons . in particular , we have excluded the impact of certain purchase accounting adjustments related to a change in the basis of deferred revenue for the acquisition of dell by dell technologies in fiscal 2014. we believe it is useful to exclude such purchase accounting adjustments related to the foregoing transactions as this deferred revenue generally results from multi-year service contracts under which deferred revenue is established upon sale and revenue is recognized over the term of the contract .
| results of operations fiscal 2018 compared to fiscal 2017 the following table summarizes our key performance indicators for the fiscal years ended february 2 , 2018 and february 3 , 2017 . replace_table_token_8_th _ ( 1 ) see `` non-gaap financial measures '' and `` reconciliation of non-gaap financial measures '' for more information about these non-gaap financial measures , including our reasons for including the measures , material limitations with respect to the usefulness of the measures , and a reconciliation of each non-gaap financial measure to the most directly comparable gaap financial measure . non-gaap financial measures as a percentage of revenue are calculated based on non-gaap revenue . revenue net revenue , which we refer to as revenue , increase d $ 38.4 million , or 8.9 % , for fiscal 2018 , which has 52 weeks , compared to fiscal 2017 , which had 53 weeks . adjusting for the additional week in fiscal 2017 , revenue would have been $ 420.5 million , resulting in an increase of $ 47.4 million , or 11.3 % . on a non-gaap basis , revenue increase d $ 38.1 million , or 8.9 % , for fiscal 2018 . adjusting for the additional week in fiscal 2017 , non-gaap revenue would have been $ 421.4 million , resulting in an increase of approximately $ 47.0 million , or 11.2 % . this revenue increase resulted primarily from revenue generated by subscription-based solutions , which represented approximately 78 % of revenue for fiscal 2018 . the number of clients subscribing to such solutions was approximately the same as in fiscal 2017 , while existing clients continued to increase their purchases of our solutions . average recurring revenue per client increased 10.7 % for fiscal 2018. professional services revenue increased to 22 % of total revenue for fiscal 2018 from 20 % of total revenue for fiscal 2017. we primarily generate revenue from sales in the united states .
| 4,617 |
upon resolution of any pending legal matters , the university may incur charges in excess of presently established reserves . management does not believe that any such charges would , individually or in the aggregate , have a material adverse effect on the university 's financial condition , results of operations or cash flows . tax reserves , non-income tax related from time to time the university has exposure to various non-income tax related story_separator_special_tag the following discussion and analysis of our financial condition and results of operations for the years ended december 31 , 2016 and 2015 should be read in conjunction with our consolidated financial statements and related notes that appear in item 8 , consolidated financial statements and supplementary data . in addition to historical information , the following discussion contains forward-looking statements that reflect our plans , estimates and beliefs . our actual results could differ materially from those discussed in the forward-looking statements . factors that could cause or contribute to these differences include those discussed below and elsewhere in this annual report on form 10-k , particularly in item 1a , risk factors and forward-looking statements . executive overview we are a comprehensive regionally accredited university that offers over 200 graduate and undergraduate degree programs and certificates across nine colleges both online and on ground at our over 260 acre campus in phoenix , arizona , and onsite at facilities we lease and at facilities owned by third party employers . we are committed to providing an academically rigorous educational experience with a focus on professionally relevant programs that meet the objectives of our students . our undergraduate programs are designed to be innovative and meet the future needs of employers , while providing students with the needed critical thinking and effective communication skills developed through a christian , liberal arts foundation . we offer master 's and doctoral degrees in contemporary fields that are designed to provide students with the capacity for transformational leadership in their chosen industry , emphasizing the immediate relevance of theory , application , and evaluation to promote personal and organizational change . we believe the growing brand of the university and the value proposition for both traditional aged students attending on our campus in phoenix , arizona and working adult students attending on our campus or at off-site locations in cohorts ( referred to by us as professional studies student ) or online , has enabled us to increase enrollment to approximately 81,900 students at december 31 , 2016. at december 31 , 2016 , 78.9 % of our students were enrolled in our online programs , and , of our working adult students ( online and professional studies students ) , 49.5 % were pursuing master 's or doctoral degrees . key trends , developments and challenges the following circumstances and trends present opportunities , challenges and risks . evolving postsecondary education market . we believe that there is a large number of traditional-aged students looking for a residential experience at an affordable , private , christian university . as a result of state funding challenges , most state universities are receiving less state subsidies and therefore have been forced to increase tuition , decrease the number of students they can accept and or make other changes that impact the student experience . some private universities also are facing enrollment challenges as a result of their high tuition costs . we also believe the number of non-traditional students who work , are raising a family , or are doing both while trying to earn a college degree continues to grow . the continued economic environment in the u.s. , however , has caused an increased number of potential students and or their parents to consider the cost of education as a primary factor in choosing the school that they will attend . given these trends , we believe that many individuals will be attracted to our high quality academic programs at affordable tuition rates . we also believe that competition for students continues to increase . we compete primarily with traditional public and four-year degree-granting regionally accredited colleges and universities and other proprietary degree-granting regionally accredited schools . an increasing number of traditional colleges , universities and community colleges are offering distance learning and other online education programs , including programs that are geared towards the needs of working adult students . this trend has been accelerated by private companies that provide and or manage online learning platforms for traditional colleges and universities . as the proportion of traditional colleges and universities providing alternative learning modalities increases , we face increasing competition for students from such institutions , including those with well-established reputations for excellence . regulation and oversight . we are subject to extensive regulation by federal and state governmental agencies and accrediting bodies . in particular , the higher education act of 1965 , as amended ( the ยhigher education actย ) , and the regulations promulgated thereunder by the department of education subject us to significant regulatory scrutiny on the basis of numerous standards that schools must satisfy in order to participate in the various federal student financial assistance programs under title iv of the higher education act . recent regulations have imposed new reporting and disclosure requirements that have caused increased administrative burden and costs and may have a negative effect on our growth and enrollments . in addition , in recent years , there has been increased focus by congress on the role that proprietary educational institutions play in higher education and various proposals to modify the laws to which proprietary educational institutions are subject . we can not predict what legislation , if any , may result from these congressional proposals or what impact any such legislation might have on the proprietary education sector generally or our business in particular . story_separator_special_tag we believe that the principal factors that affect our enrollments and net revenue are the number and breadth of the programs we offer ; the attractiveness of our program offerings and learning experience , particularly for career-oriented adults who are seeking pay increases or job opportunities that are directly tied to higher educational attainment ; the effectiveness of our marketing , recruiting and retention efforts , which is affected by our brand strength and price point ; the quality of our academic programs and student services ; the convenience and flexibility of our online delivery platform ; the availability and cost of federal and other funding for student financial aid ; the seasonality of our net revenue , which is enrollment driven and is typically lowest in our second fiscal quarter and highest in our fourth fiscal quarter ; and general economic conditions , particularly as they might affect job prospects in our core disciplines . 43 the following is a summary of our student enrollment at december 31 , 2016 , 2015 , and 2014 by degree type and by instructional delivery method : replace_table_token_7_th replace_table_token_8_th ( 1 ) enrollment represents individual students who attended a course during the last two months of the calendar quarter . included in enrollment at december 31 , 2016 , 2015 and 2014 are students pursuing non-degree certificates of 847 , 679 , and 585 , respectively . ( 2 ) includes 7,084 , 6,302 and 5,570 students pursuing doctoral degrees at december 31 , 2016 , 2015 and 2014 , respectively . ( 3 ) as of december 31 , 2016 , 2015 and 2014 , 49.5 % , 47.8 % and 46.0 % , respectively , of our working adult students ( online and professional studies students ) were pursuing graduate or doctoral degrees . ( 4 ) includes our traditional on-campus students , as well as our professional studies students . for the 2016-17 academic year ( the academic year begins in may ) , our prices per credit hour range from $ 355 to $ 470 for undergraduate online and professional studies courses , $ 330 to $ 630 for graduate online courses , $ 640 for doctoral online programs , and $ 688 for undergraduate courses for ground students . for our active duty and active reserve online and professional studies students , our prices per credit hour are $ 250 for undergraduate , $ 400 for graduate courses and $ 608 for doctoral courses . the overall price of each course varies based upon the number of credit hours per course ( with most courses representing four credit hours ) , the degree level of the program , and the discipline . in addition , we charge a fixed $ 8,250 ยblock tuitionย for undergraduate ground students taking between 12 and 18 credit hours per semester , with an additional $ 688 per credit hour for credits in excess of 18. a traditional undergraduate degree typically requires a minimum of 120 credit hours . the minimum number of credit hours required for a master 's degree and overall cost for such a degree varies by program , although such programs typically require approximately 36 credit hours . the doctoral program requires approximately 60 credit hours and on average , doctoral students who graduated during the 2014-2015 academic year required 5.25 dissertation continuation courses to complete their degree . based on current tuition rates , tuition for a full program would generally equate to between $ 15,450 and $ 37,000 for an online master 's program , between $ 42,600 and $ 56,400 for a full four-year online bachelor 's program , approximately $ 66,000 for a full four-year bachelor 's program taken on our ground campus , and $ 48,000 for a full doctoral program including five dissertation continuation courses . students requiring dissertation continuation courses in excess of five are only charged $ 500 per course . the tuition amounts referred to above assume no reductions for transfer credits or scholarships , which many of our students utilize to reduce their total program costs . for example , the average student on our ground traditional campus will pay approximately $ 8,600 in tuition in the 2016-17 school year after scholarships . thus , based on the number of transfer credits and the scholarships they receive it is likely that a student will pay less than $ 35,000 in tuition for a bachelor 's degree on our ground campus . for the years ended december 31 , 2016 , 2015 and 2014 , our revenue was reduced by approximately $ 179.2 million , $ 163.9 million and $ 140.0 million , respectively , as a result of scholarships that we offered to our students . the increase in scholarships reflects our increased revenues and our resulting increased use of scholarships ( especially academic scholarships ) , to attract high performing students to our ground traditional campus . revenue per student for the year ended december 31 , 2016 increased over 2015 primarily due to our residential traditional campus enrollment growing at a rate higher than our working adult enrollment . when factoring in room , board , and fees , the revenue per student is higher for these students than for our working adult students . we did not raise tuition in any of our programs for our 2016-2017 academic year and have not raised our tuition for our traditional ground program in eight years . a tuition increase of approximately 1 % was implemented for the majority of online programs in september 2015. this reflects a concerted effort to control tuition pricing for students so that debt levels assumed by our students are reasonable . tuition increases have not historically been , and may not in the future be , consistent across our programs due to market conditions and differences in operating costs of individual programs . 44 we derive a majority of our net revenues from tuition financed by the title iv programs .
| results of operations the following table sets forth statements of operations data as a percentage of net revenue for each of the periods indicated : replace_table_token_9_th year ended december 31 , 2016 compared to year ended december 31 , 2015 net revenue . our net revenue for the year ended december 31 , 2016 was $ 873.3 million , an increase of $ 95.1 million , or 12.2 % , as compared to net revenue of $ 778.2 million for the year ended december 31 , 2015. this increase was primarily due to an increase in ground and online enrollment and , to a lesser extent , an increase in room and board and other student fees , partially offset by an increase in institutional scholarships . we did not raise tuition in any of our programs for our 2016-17 academic year . a tuition increase of approximately 1 % was implemented for the majority of our online programs in september 2015. we have not raised our tuition for our traditional ground program in eight years . end-of-period enrollment increased 9.9 % between december 31 , 2016 and 2015 , as ground enrollment increased 13.6 % and online enrollment increased 9.0 % over the prior year . the majority of the ground enrollment growth between years was residential students at our ground traditional campus in phoenix , arizona . we attribute the significant growth in our ground enrollment between years to our increasing brand recognition and the value proposition that our ground traditional campus affords to traditional-aged students and their parents . after scholarships , our ground traditional students pay for tuition , room , board , and fees , often half to a third of what it costs to attend a private , traditional university in another state and an amount comparable to what it costs to attend a public university .
| 4,618 |
item 12. security ownership of certain beneficial owners and management and related stockholder matters the information appearing in the proxy statement under the heading โ beneficial ownership of common stock โ is incorporated herein by this reference . information regarding equity compensation plan information as of june 30 , 2017 is included in item 5. item 13. certain relationships and related transactions , and director independence the information appearing in the proxy statement under the headings โ corporate governance and board matters โ independence of directors , โ โ corporate governance and board matters โ board structure and committee composition , โ โ corporate governance โ policy with respect to related person transactions , โ and โ executive compensation โ certain transactions โ is incorporated herein by this reference . item 14. principal accounting fees and services information appearing in the proxy statement under the headings โ principal accountant fees โ and โ policy on audit committee pre-approval of audit and permissible non-audit services of independent auditors โ is incorporated herein by this reference . part iv item 15 : exhibits and financial statement schedules . ( a ) 1. financial statements the following consolidated financial statements of napco security technologies , inc. and its subsidiaries are included in part ii , item 8 : page management report on internal control fs-1 report of independent registered public accounting firm fs-2 consolidated financial statements : consolidated balance sheets as of june 30 , 2017 and 2016 fs-4 consolidated statements of income for the fiscal years ended june 30 , 2017 , 2016 and 2015 fs-6 consolidated statements of stockholders ' equity for the fiscal years ended june 30 , 2017 , 2016 and 2015 fs-7 consolidated statements of cash flows for the fiscal years ended june 30 , 2017 , 2016 and 2015 fs-8 notes to consolidated financial statements fs-9 20 ( a ) 2. financial statement schedules the following consolidated financial statement schedules of napco security technologies , inc. and its subsidiaries are included in part ii , item 8 : b. supplementary financial data ( a ) 3. and ( b ) . exhibits management contracts designated by asterisk . exhibit no . title ex-3 . ( i ) certificate of amendment of certificate of incorporation exhibit-3 . ( i ) to report on form 10-k ( commission file no . 0-10004 ) for the fiscal year ended june 30 , 2011 ex-3 . ( ii ) certificate of incorporation as amended exhibit-3 . ( ii ) to report on form 10-k ( commission file no . 0-10004 ) for the fiscal year ended june 30 , 2011 ex-3 . ( iii ) amended and restated by-laws exhibit 3 . ( iii ) to report on form 10-k ( commission file no . 0-10004 ) for the fiscal year ended june 30 , 2010 ex 4.01 third amended and restated credit agreement dated june 29 , 2012. exhibit 4.01 to report on form 8-k ( commission file no . 0-10004 ) dated june 29 , 2012 ex 4.02 second amended and restated term a loan note exhibit 4.02 to report on form 8-k ( commission file no . 0-10004 ) dated june 29 , 2012 ex 4.03 second amended and restated term b loan note exhibit 4.03 to report on form 8-k ( commission file no . 0-10004 ) dated june 29 , 2012 ex 4.04 second amended and restated revolving credit note exhibit 4.04 to report on form 8-k ( commission file no . 0-10004 ) dated june 29 , 2012 ex 4.05 second amended and restated swing line note exhibit story_separator_special_tag overview the company is a diversified manufacturer of security products , encompassing access control systems , door security products , intrusion and fire alarm systems and video surveillance products for commercial and residential use . these products are used for commercial , residential , institutional , industrial and governmental applications , and are sold worldwide principally to independent distributors , dealers and installers of security equipment . international sales accounted for approximately 3 % , 3 % and 4 % of our revenues for the fiscal years ended june 30 , 2017 , 2016 and 2015 , respectively . the company owns and operates manufacturing facilities in amityville , new york and the dominican republic . a significant portion of our operating costs are fixed , and do not fluctuate with changes in production levels or utilization of our manufacturing capacity . as production levels rise and factory utilization increases , the fixed costs are spread over increased output , which may contribute to increasing profit margins . conversely , when production levels decline our fixed costs are spread over reduced levels , which may contribute to decreasing margins . the security products market is characterized by constant incremental innovation in product design and manufacturing technologies . generally , the company devotes 6-8 % of revenues to research and development ( r & d ) on an annual basis . the company does not expect products resulting from our r & d investments in a given fiscal year to contribute materially to revenue during that same fiscal year , but should benefit the company over future years . in general , the new products introduced by the company are initially shipped in limited quantities , and increase over time . prices and manufacturing costs tend to decline over time as products and technologies mature . economic and other factors we are subject to the effects of general economic and market conditions . in the event that the u.s. or international economic conditions deteriorate , our revenue , profit and cash-flow levels could be materially adversely affected in future periods . story_separator_special_tag any inventories expected to convert to sales beyond 12 months from the balance sheet date are classified as non-current . 12 intangible assets the company evaluates its intangible assets for impairment at least on an annual basis and will evaluate them earlier if there are indicators of a potential impairment . those intangible assets that are classified as goodwill or as other intangibles with indefinite lives are not amortized . impairment testing is performed in two steps : ( i ) the company determines if there is impairment by comparing the fair value of a reporting unit with its carrying value , and ( ii ) if there is impairment , the company measures the amount of impairment loss by comparing the implied fair value of intangible assets with the carrying amount of the intangible assets . income taxes the company has identified the united states and new york state as its major tax jurisdictions . the fiscal 2012 and forward years are still open for examination . for the year ended june 30 , 2017 , the company recognized a net income tax expense of $ 696,000. during the year ending june 30 , 2017 the company increased its reserve for uncertain income tax positions by $ 35,000. the company 's practice is to recognize interest and penalties related to income tax matters in income tax expense and accrued income taxes . as of june 30 , 2017 , the company had accrued interest totaling $ 0 and $ 183,000 of unrecognized net tax benefits that , if recognized , would favorably affect the company 's effective income tax rate in any future period . the company uses the flow through method to account for investment tax credits earned on eligible research and development expenditures . under this method , the investment tax credits are recognized as a reduction to income tax expense . deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases . deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled . the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date . deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities . deferred tax assets are reduced by a valuation allowance when , in the opinion of management , it is more likely than not that some portion or all of the deferred tax assets will not be realized . the company measures and recognizes the tax implications of positions taken or expected to be taken in its tax returns on an ongoing basis . liquidity and capital resources the company 's cash on hand as of june 30 , 2016 combined with proceeds from operating activities during fiscal 2017 were adequate to meet the company 's capital expenditure needs and debt obligations during fiscal 2017. the company 's primary internal source of liquidity is the cash flow generated from operations . the primary source of external financing is a revolving credit facility of $ 11,000,000 ( the โ revolving credit facility โ ) which expires in june 2021. as of june 30 , 2017 , $ 3,500,000 was outstanding under this revolving line of credit . as of june 30 , 2017 , the company 's unused sources of funds consisted principally of $ 3,454,000 in cash and $ 7,500,000 unused balance available under its revolving line of credit . during the year ended june 30 , 2017 the company utilized a portion of its cash on hand at june 30 , 2016 ( $ 2,714,000 of $ 3,805,000 ) to repay outstanding debt ( $ 1,300,000 ) and purchase property , plant and equipment ( $ 1,414,000 ) . as of june 30 , 2017 , long-term debt consisted of a revolving credit facility of $ 11,000,000 ( the โ revolving credit facility โ ) which expires in june 2021. the term loan which was outstanding as of june 30 , 2016 was repaid in full as of june 30 , 2017. the company 's long-term debt is described more fully in note 6 to the condensed consolidated financial statements . the revolving credit facility contains various restrictions and covenants including , among others , restrictions on payment of dividends , restrictions on borrowings and compliance with certain financial ratios , as defined in the restated agreement . 13 outstanding balances and interest rates as of june 30 , 2017 and june 30 , 2016 are as follows : replace_table_token_5_th the company believes its current working capital , anticipated cash flows from operations and its revolving credit agreement will be sufficient to fund the company 's operations through at least the next twelve months . the company takes into consideration several factors in measuring its liquidity , including the ratios set forth below : replace_table_token_6_th as of june 30 , 2017 , the company had no material commitments for capital expenditures or inventory purchases other than purchase orders issued in the normal course of business . on april 26 , 1993 , the company 's foreign subsidiary entered into a 99-year land lease of approximately 4 acres of land in the dominican republic , on which the company 's principle manufacturing facility is located , at an annual cost of approximately $ 288,000. working capital . working capital increased by $ 3,910,000 to $ 40,798,000 at june 30 , 2017 from $ 36,888,000 at june 30 , 2016. working capital is calculated by deducting current liabilities from current assets . accounts receivable . accounts receivable increased by $ 1,263,000 to $ 20,275,000 at june 30 , 2017 as compared to $ 19,012,000
| results of operations fiscal 2017 compared to fiscal 2016 replace_table_token_8_th net sales in fiscal 2017 increased by $ 4,861,000 to $ 87,374,000 as compared to $ 82,513,000 in fiscal 2016. the increase in net sales was primarily due to increased sales of the company 's napco brand intrusion products ( $ 4,081,000 ) , marks brand door-locking products ( $ 808,000 ) and continental brand access control products ( $ 240,000 ) and was partially offset by decreases in the company 's alarm lock brand door-locking products ( $ 268,000 ) . the company 's gross profit increased by $ 1,994,000 to $ 29,578,000 or 33.9 % of net sales in fiscal 2017 as compared to $ 27,584,000 or 33.4 % of net sales in fiscal 2016. gross profit was primarily affected by the increase in net sales as discussed above as partially offset by increased research and development expenditures which are included in cost of sales . selling , general and administrative expenses for fiscal 2017 increased by $ 1,939,000 to $ 23,200,000 as compared to $ 21,261,000 in fiscal 2016. selling , general and administrative expenses as a percentage of net sales increased to 26.6 % in fiscal 2017 from 25.8 % in fiscal 2016. the increases in dollars and as a percentage of sales resulted primarily from increases in selling wages and commissions as well as increased advertising and tradeshow expenditures . the company increased expenditures in these areas in order to generate higher sales . interest expense for fiscal 2017 decreased by $ 96,000 to $ 83,000 from $ 179,000 for the same period a year ago . the decrease in interest expense is primarily the result of the company 's reduction of its outstanding borrowings under its revolving line of credit and its term loan , which was repaid in full during fiscal 2017 .
| 4,619 |
story_separator_special_tag 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 elsewhere in this annual report . this discussion contains forward-looking statements that reflect our plans , estimates and beliefs , and involve risks and uncertainties . our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of several factors , including those discussed in the section titled ยrisk factorsย included under part i , item 1a and elsewhere in this annual report . see ยspecial note regarding forward-looking statementsย in this annual report . overview yelp connects people with great local businesses by bringing ยword of mouthย online and providing a platform for businesses and consumers to engage and transact . our platform provides value to consumers and businesses alike by connecting consumers with great local businesses at the critical moment when they are deciding where to spend their money . each day , millions of consumers use our platform to find and interact with local businesses , which in turn use our free and paid services to help them engage with consumers . the yelp platform , which allows consumers and businesses to transact directly on yelp , provides consumers with a continuous experience from discovery to completion of transactions and local businesses with an additional point of consumer engagement . we derive substantially all of our revenue from the sale of advertising products . in the year ended december 31 , 2016 , our net revenue was $ 713.1 million , which represented an increase of 30 % from the year ended december 31 , 2015 , and we recorded a net loss of $ 4.7 million and adjusted ebitda of $ 120.1 million . in the year ended december 31 , 2015 , our net revenue was $ 549.7 million , which represented an increase of 46 % from the year ended december 31 , 2014 , and we recorded a net loss of $ 32.9 million and adjusted ebitda of $ 69.1 million . our success is primarily the result of significant investment in our communities , employees , content , brand and technology . we believe that continued investment in our business provides our largest opportunity for future growth and plan to continue to invest for long-term growth in our key strategies : โ network effect . we plan to invest in marketing and product development aimed at both attracting more , and increasing the engagement of , consumers as we look to leverage our brand and benefit from network dynamics in yelp communities . in addition to continuing our efforts to raise brand awareness , we plan to allocate a greater proportion of our advertising budget to performance advertising , with the objective of growing our communities , among other goals . we also plan to continue to invest in our mobile platform , where we find our most engaged users , and in our transaction capabilities , which we believe will driver further consumer engagement . together with our continued focus on making our content widely available and developing innovative features , while maintaining a great user experience , we believe these investments will attract new consumers as well as increase the number of visits and searches per user . 41 โ enhance monetization . our core strength is our advertising business in the united states and canada . in the fourth quarter of 2016 , we carried out a significant reduction in our sales and marketing activities outside the united states and canada , where we believe the long-term return on continued investment to be lower than alternative opportunities for the business within our core markets . we plan to continue to invest in initiatives to enhance our opportunities in the united states and canada , including aggressively growing our sales force in order to reach more businesses ; however , we will also broaden our sales strategy by developing new and evolving sales channels , such as self-serve advertising and partnerships with marketing agencies and resellers , and deepening our relationships with existing customers . in addition , we will continue the expansion of the yelp platform to drive transaction volume , new business owner products and comprehensive tools to measure the effectiveness of our products , as well as our local business outreach . we expect to continue to invest in capital expenditures in 2017 to support the growth of our business , primarily to increase our office space , upgrade our technology and infrastructure to improve the ability of our platform to handle the projected increase in usage , and enable the release of new features and solutions . as a result of this investment philosophy , we expect that our operating expenses will continue to increase for the foreseeable future . factors affecting our performance traffic and user engagement . changes in consumer traffic , as well as the quality and quantity of contributed content , has affected and will continue to affect our revenue and financial performance . traffic to our platform determines the number of ads we are able to show , affects the value of those ads to businesses and influences the content creation that drives further traffic ; as a result , our ability to grow our business depends on our ability to increase traffic on our platform . because we rely on internet search engines to drive traffic to our platform , a significant portion of our traffic can be affected by a number of factors , many of which are not in our direct control . changes in a search engine 's ranking algorithms , methodologies or design layouts may result in links to our website not being prominent enough to drive traffic to our website and mobile app . story_separator_special_tag our long-term growth depends on our ability to successfully develop yelp communities . it can take years for our platform to achieve a critical mass of consumers and reviews to drive meaningful traction of our advertising products and to begin generating revenue in a particular community . as a result , we may continue to generate losses in new communities for an extended period , and different communities can be expected to grow at different rates and generate varying levels of revenue . as with most businesses , we expect our revenue growth to slow as our business matures over time . advertising revenue for the oldest cohort of yelp communities in the united states , which launched in 2005-2006 , grew at 30 % in 2016 compared to 2015. this is lower than the growth rate of advertising revenue for the 2007-2008 cohort , which grew 37 % over the same period . we believe this is indicative of continued revenue growth , but slowing revenue growth for older communities . in the fourth quarter of 2016 , we wound down our international sales and marketing operations , including our international community management team , and reallocated the associated resources primarily to our u.s. and canadian markets . as a result , our continued growth depends on our ability to further develop our u.s. and canadian communities and operations . however , we have already entered many of the largest cities in the united states and canada , and launching additional communities may not yield results similar to those of our existing communities . as a result , we continue to believe that development of our existing communities currently provides the greatest opportunity for growth , and plan to focus our community development efforts on existing communities in 2017 . 43 acquisitions . as part of our business strategy , we may determine to expand our product offerings and grow our business through the acquisition of complementary businesses or technologies . for example , in february 2017 , we acquired nowait , a restaurant technology company with the industry 's leading waitlist system and seating tool . this will help drive yelp 's daily engagement in the key restaurant vertical . our acquisitions will affect our future financial results due to factors such as the amortization of acquired intangible assets . key metrics we regularly review a number of metrics , including the following key metrics , to evaluate our business , measure our performance , identify trends in our business , prepare financial projections and make strategic decisions . unless otherwise stated , these metrics do not include metrics for yelp eat24 or yelp reservations , or from our business owner products . reviews number of reviews represents the cumulative number of reviews submitted to yelp since inception , as of the period end , including reviews that were not recommended or had been removed from our platform . in addition to the text of the review , each review includes a rating of one to five stars . we include reviews that are not recommended and that have been removed because all of them are either currently accessible on our platform or were accessible at some point in time , providing information that may be useful to users to evaluate businesses and individual reviewers . because our automated recommendation software continually reassesses which reviews to recommend based on new information that becomes available , the ยrecommendedย or ยnot recommendedย status of reviews may change over time . reviews that are not recommended or that have been removed do not factor into a business 's overall star rating . by clicking on a link on a reviewed business 's page on our website , users can access the reviews that are not currently recommended for the business , as well as the star rating and other information about reviews that were removed for violation of our terms of service . as of december 31 , 2016 , approximately 112.6 million reviews were available on business listing pages , including approximately 26.9 million reviews that were not recommended , after 8.4 million reviews had been removed from our platform , either by us for violation of our terms of service or by the users who contributed them . the following table presents the number of cumulative reviews as of the dates indicated : replace_table_token_10_th traffic traffic to our website and mobile app has three components : visitors to our non-mobile optimized website ( our ยdesktop websiteย ) , visitors to our mobile-optimized website ( our ยmobile websiteย ) and mobile devices accessing our mobile app . we use the following metrics to measure each of these traffic streams : desktop and mobile website unique visitors . we calculate desktop unique visitors as the number of ยusers , ย as measured by google analytics , who have visited our desktop website at least once in a given month , averaged over a given three-month period . similarly , we calculate mobile website unique visitors as the number of ยusersย who have visited our mobile website at least once in a given month , averaged over a given three-month period . google analytics , a product from google inc. that provides digital marketing intelligence , measures ยusersย based on unique cookie identifiers . because the numbers of desktop unique visitors and mobile website unique visitors are therefore based on unique cookies , an individual who accesses our desktop website or mobile website from multiple devices with different cookies may be counted as multiple desktop unique visitors or mobile website unique visitors , as applicable , and multiple individuals who access our desktop website or mobile website from a shared device with a single cookie may be counted as a single desktop unique visitor or mobile website unique visitor . 44 app unique devices . we calculate app unique devices as the number of unique mobile devices using our mobile app in a given month , averaged over a given three-month period .
| results of operations the following tables set forth our results of operations for the periods indicated as a percentage of net revenue for those periods . the period-to-period comparison of financial results is not necessarily indicative of future results . replace_table_token_16_th 48 years ended december 31 , 2016 , 2015 and 2014 net revenue we generate revenue from our advertising products , transactions , other services and , through the end of 2015 , brand advertising . advertising . we generate advertising revenue from our advertising programs , which consist of enhanced listing pages and performance and impression-based advertising in search results and elsewhere on our website and mobile app . advertising revenue also includes revenue generated from resale of our advertising products by certain partners and monetization of remnant advertising inventory through third-party ad networks . transactions . we generate revenue from various transactions with consumers , including through yelp eat24 , platform transactions and the sale of yelp deals and gift certificates . yelp eat24 generates revenue through arrangements with restaurants , in which restaurants pay a commission percentage fee on orders placed through the yelp eat24 platform . we record revenue associated with yelp eat24 's transactions on a net basis . our platform partnerships are revenue-sharing arrangements that provide consumers with the ability to complete food delivery transactions , order flowers and book spa and salon appointments , among others , through third parties directly on yelp . we earn a fee on our platform partnerships for acting as an agent for these transactions , which we record on a net basis and include in revenue upon completion of a transaction . yelp deals allow merchants to promote themselves and offer discounted goods and services on a real-time basis to consumers directly on our website and mobile app .
| 4,620 |
the following tables present our financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated : replace_table_token_12_th cash and cash equivalents are classified as level 1 of the fair value hierarchy as they represent cash held in a rabbi trust established under retirement story_separator_special_tag financial condition and results of operations overview the company , as the sole managing member of its subsidiary j. alexander 's holdings , llc , owns and operates complementary upscale dining restaurants including : j. alexander 's , redlands grill , lyndhurst grill , overland park grill , merus grill and stoney river steakhouse and grill ( โ stoney river โ ) . for more than 28 years , j. alexander 's guests have enjoyed a contemporary american menu , polished service and an attractive ambiance . in february 2013 , our team brought our quality and professionalism to the steakhouse category with the addition of the stoney river concept . stoney river provides โ white tablecloth โ service and food quality in a casual atmosphere at a competitive price . our redlands grill concept offers guests a different version of our contemporary american menu and a distinct architectural design and feel . in 2017 , we successfully converted one of our previous j. alexander 's locations in ohio to the lyndhurst grill . further , in the second quarter of 2018 , we successfully converted one of our previous j. alexander 's locations in kansas to the overland park grill . in 2019 , we opened merus grill in houston , texas . each of these locations offers a contemporary american menu . our business plan has evolved over time to include a collection of restaurants dedicated to providing guests with what we believe to be the highest quality food , high levels of professional service and a comfortable ambiance . by offering multiple restaurant concepts and utilizing unique non-standardized architecture and specialized menus , we believe we are positioned to continue to scale and grow our overall restaurant business in an efficient manner in urban and affluent suburban areas . we want each of our restaurants to be perceived by our guests as a locally managed , stand-alone dining experience . this differentiation permits us to successfully operate multiple restaurants in the same geographic market . if this strategy continues to prove successful , we may expand beyond our current existing concepts in the future . while each restaurant concept operates under a unique trade name , each of our restaurants is identified as a โ j . alexander 's holdings restaurant. โ we believe our restaurants deliver on our guests ' desire for freshly-prepared , high quality food and exemplary service in a restaurant with architecture and design that varies from location to location . through our combination with stoney river and opening new restaurants , we have grown from 33 restaurants across 13 states in 2012 to 47 restaurants across 16 states as of march 12 , 2020. our financial performance has allowed us to invest significant amounts of capital to drive growth through the continuous improvement of existing locations , the development of plans to open new restaurants , and the hiring of personnel to support our growth plans . we plan to execute the following strategies to continue to enhance the awareness of our concepts , grow our revenue and improve our profitability by : pursuing new restaurant development ; expanding beyond our current existing restaurant concepts ; increasing our same store sales through providing high quality food and service ; and improving our margins and leveraging infrastructure . the most recent restaurant openings include a merus grill in houston , texas , during november 2019 and a new stoney river restaurant in troy , michigan , during october 2018. additionally , the company announced the signing of two leases to open a new redlands grill in san antonio , texas , and a new j. alexander 's restaurant in madison , alabama , each of which are currently slated to open in late 2020. our restaurants often have a slower ramp up than many other restaurant groups due to our reliance on repeat business from a relatively small group of guests within each market . having opened seven restaurants since the beginning of 2016 , all of which are at different stages of maturity , our near-term focus will be on building guest traffic and sales at certain of the newer locations while we continue to evaluate promising opportunities for new restaurant development . the locations that have been recently transitioned from a j. alexander 's restaurant to a redlands grill , lyndhurst grill or overland park grill restaurant or opened as a merus grill restaurant have been included in the j. alexander 's results of operations , average weekly same store sales calculations and all other applicable disclosures , and are collectively referred to herein as โ j . alexander 's / grill โ restaurants . performance indicators we use the following key metrics in evaluating our performance : same store sales . we include a restaurant in the same store restaurant group starting in the first full accounting period following the eighteenth month of operations . our same store restaurant base consisted of 45 restaurants at december 29 , 2019. changes in same store sales reflect changes in sales for the same store group of restaurants over a specified period of time . this measure highlights the performance of existing restaurants , as the impact of new restaurant openings is excluded . 37 measuring our same store sales allows us to evaluate the performance of our existing restaurant base . story_separator_special_tag other operating expenses includes repairs and maintenance , credit card fees , rent , property taxes , selected insurance premiums , utilities , operating supplies and other restaurant-level related operating expenses . pre-opening expenses . pre-opening expenses are costs incurred prior to opening a restaurant , and primarily consist of manager salaries , relocation costs , recruiting expenses , employee payroll and related training costs for new employees , including rehearsal of service activities , as well as lease costs incurred prior to opening . we currently target pre-opening costs per restaurant at approximately $ 700. general and administrative expenses . general and administrative expenses consists of costs related to certain corporate and administrative functions and technology that support development and restaurant operations and provide an infrastructure to support future company growth . these expenses reflect management , supervisory and staff salaries and employee benefits , travel , information systems , training , corporate rent , depreciation of corporate assets , professional and consulting fees , technology and market research . these expenses have increased over time as a result of costs associated with being a public company , and we believe such expenses will continue to increase related to our anticipated growth . however , as we are able to leverage these investments made in our people , systems and technology , we expect these expenses to decrease as a percentage of net sales over time . interest expense . interest expense consists primarily of interest on our outstanding indebtedness . our debt issuance costs are recorded at cost and are amortized over the lives of the related debt under the effective interest method . income tax ( expense ) benefit . this primarily represents expense or benefit related to the taxable income allocated to the company from j. alexander 's holdings , llc at the federal , state and local level . as a partnership , j. alexander 's holdings , llc generally pays no tax on its income , and each of its members is required to report such member 's allocable share of the partnership 's income on such member 's income tax returns . discontinued operations . the company remains party to a lease agreement for a location that was closed in 2013 , and is accounted for as a discontinued operation . refer to item 8. financial statements and supplementary data - notes to consolidated financial statements - note 2 ( c ) summary of significant accounting policiesโdiscontinued operations and restaurant closing costs for more information . 39 story_separator_special_tag result of the opening of a j. alexander 's restaurant in king of prussia , pennsylvania , which commenced operations in april 2018 and the stoney river restaurant in troy , michigan , which opened in october 2018. other income ( expense ) interest expense decreased by $ 144 , or 19.9 % , in 2019 compared to 2018. interest expense decreased in fiscal year 2019 compared to the prior year due to the impact of debt service payments made during the course of the year lowering each principal balance relative to their outstanding balance in the prior year . other income , net increased by $ 54 for fiscal year 2019 compared to the fiscal year 2018 primarily as a result of the change in the fair value of trading securities held by the company . income taxes we reported an income tax benefit of $ 568 in 2019 compared to an income tax benefit of $ 1,596 in 2018 , reflecting the company 's federal , state and local income tax liability or benefit , as applicable , for its allocable share of income of j. alexander 's holdings , llc . the decrease in the income tax benefit of $ 1,028 in fiscal year 2019 compared to fiscal year 2018 primarily relates to the impact of higher pre-tax book income . discontinued operations losses from discontinued operations totaling $ 236 and $ 459 for fiscal years 2019 and 2018 , respectively , consist solely of exit and disposal costs which are primarily related to a continuing obligation under one lease agreement for a closed location to which the company remains a party . 43 liquidity and capital resources liquidity the company is a holding company and the sole managing member of j. alexander 's holdings , llc . as such , we control the business and affairs of j. alexander 's holdings , llc and its subsidiaries and consolidate j. alexander 's holdings , llc and subsidiaries into our consolidated financial statements . our principal sources of cash are cash and cash equivalents on hand , cash flow from operations and available borrowings under our credit facility . as of december 29 , 2019 , cash and cash equivalents totaled $ 8,803. our capital needs are primarily for the development and construction of new restaurants , maintenance of and improvements to our existing restaurants and meeting debt service requirements and operating lease obligations . based on our current growth plans , we believe our cash on hand , expected cash flows from operations and available borrowings under our credit facility will be sufficient to finance our planned capital expenditures , any stock repurchases under our announced stock repurchase program and other operating activities for the next 12 months . consistent with many other restaurant companies , we use operating lease arrangements for many of our restaurants . we believe that these operating lease arrangements provide appropriate leverage for our capital structure in a financially efficient manner . our liquidity may be adversely affected by a number of factors , including a decrease in guest traffic or average check per guest due to changes in economic conditions , as described in detail in this annual report , under the heading item 1a . risk factors . cash flows the table below shows our net cash flows from operating , investing and financing activities for the periods indicated : replace_table_token_4_th operating activities .
| results of operations year ended december 29 , 2019 compared to year ended december 30 , 2018 the following tables set forth , for the periods indicated , ( i ) the items in the company 's consolidated statements of income and comprehensive income , including our results expressed as a percentage of net sales , and ( ii ) other selected operating data : replace_table_token_2_th 40 replace_table_token_3_th net sales net sales increased by $ 5,005 , or 2.1 % , in fiscal year 2019 compared to fiscal year 2018 due to sales at our newer locations . sales increases in 2019 attributable to the three newest restaurant locations opening within the last two years totaled $ 5,623. the j. alexander 's king of prussia , stoney river troy and merus grill restaurants contributed an additional 66 sales weeks in 2019 compared to fiscal year 2018. this increase was partially offset by a sales decrease in our remaining locations of $ 683 during the fiscal year . an increase of $ 65 in gift card breakage also contributed to the increase in net sales for 2019. the company was confronted by several external issues during fiscal year 2019 that affected guest counts and sales within its same store base , particularly at the j. alexander 's / grill restaurants , including continued competitive intrusion into certain markets , weather-related disturbances , significant disruption of traffic patterns in certain locations related to ongoing road construction and other outside factors . additionally , the company completed the switchover of its reservation system to resy ยฎ during the third quarter . the company anticipated some short-term interruption in guest counts from the switchover in certain markets , but the new platform is expected to result in significant long-term margin expansion from the related cost savings .
| 4,621 |
our accounting policies have the potential to have a significant impact on our financial statements , either because of the significance of the financial statement item to which they relate , or because they require judgment and estimation due to the uncertainty involved in measuring , at a specific point in time , events which are continuous in nature . business overview , recent developments and outlook please see item 1 , above , of this report for an overview of the company 's business and recent developments . please see item 1a , above , for a discussion of the risk factors that may impact the company 's current and future operations , and financial condition . liquidity and capital resources liquidity at december 31 , 2012 the company had a working capital deficit of $ 2,348 , as compared to working capital of $ 7,626 at december 31 , 2011. the most significant changes in the company 's non-cash current assets were increases of $ 2,334 in receivable from a related party , and $ 1,412 in deposits . cash decreased by $ 2,358. the most significant changes to current liabilities were increases of $ 3,560 in accounts payable and accrued liabilities , and $ 7,792 in debt payable to third parties . the changes in the amounts of the company 's consolidated assets and liabilities between december 31 , 2011 and december 31 , 2012 are due to two factors . the most significant and ongoing factor is the company 's acquisition of heritage global partners during the first quarter of 2012. in particular , cash , accounts receivable and inventory associated with heritage global partners at december 31 , 2012 were $ 820 , $ 365 and $ 238 , respectively , and accounts payable and accrued liabilities were $ 3,426. the second factor relates to the uneven nature of the timing of asset liquidation transactions . transactions in the fourth quarter of 2012 , which included a significant acquisition of assets that had not been sold at december 31 , were responsible for the increase in debt payable to third parties . the company 's debt payable to third parties consists of borrowings under counsel rb 's revolving credit facility , and , as noted above , is subject to significant fluctuation depending on the number and magnitude of asset liquidation transactions in process at any given date . the credit facility has a limit of $ 15,000 , which may be used to finance its purchases of assets for resale , as discussed in note 7 of the audited consolidated financial statements . during 2012 , the company 's primary source of cash , in addition to borrowings under counsel rb 's revolving credit facility , was the operations of its asset liquidation business . cash disbursements , other than those related to repayment of debt , and the net $ 2,344 related to the acquisition of heritage global partners , were primarily related to operating expenses . it should be noted that generally accepted accounting principles in the united states of america ( โ gaap โ ) require the company to classify both real estate inventory and asset liquidation investments as non-current , although they are expected to be converted to cash within a year . if these assets were classified as current , the company would report working capital of $ 7,348 at december 31 , 2012 and working capital of $ 13,212 at december 31 , 2011. the company is continuing to pursue licensing and royalty agreements with respect to its patents . however , the company expects that its asset liquidation business will continue to be the primary source of cash required for ongoing operations for the foreseeable future , and that its operations will generate sufficient cash to cover the company 's requirements . the company 's portfolio investments are in companies that are not publicly traded , and therefore these investments are illiquid . the company 's investments were made with the objective of recognizing long-term capital gains , and neither the amount nor the timing of such gains can be predicted with any certainty . to date the company has realized capital gains on its investments in mytrade.com , limos.com and buddy media , inc. , and has not sold any investments at a loss . 15 ownership structure and capital resources ยท at december 31 , 2012 the company had stockholders ' equity of $ 46,012 , as compared to $ 42,940 at december 31 , 2011 . ยท at december 31 , 2012 the company is 71.3 % ( december 31 , 2011 โ 76.1 % ) owned , and therefore controlled , by counsel . at december 31 , 2011 the co-ceos of counsel rb each owned 5.98 % of the company . one million shares , or 3.7 % , were held by a single investor . the remaining 8.2 % was owned by public stockholders . on february 29 , 2012 , as discussed in note 2 of the audited consolidated financial statements , the company issued one million common shares as part of the consideration for its acquisition of heritage global partners , representing 3.69 % of the then-outstanding common shares . subsequently , on august 10 , 2012 , the company issued 800,000 shares to its co-ceos in connection with the acquisition of intellectual property from them . counsel 's ownership was thereby decreased to 71.3 % , that of the co-ceos increased to 7.0 % each , that of both the single investor referenced above , and the former owners of heritage global partners , decreased to 3.5 % , and that of the remaining public stockholders decreased to 7.7 % . cash position and cash flows cash at december 31 , 2012 was $ 4,314 compared to $ 6,672 at december 31 , 2011. cash provided by or used in operating activities . story_separator_special_tag the increase is due to the growth of the company 's asset liquidation business , including the acquisition of heritage global partners in 2012 . ยท office rent was $ 392 in 2012 as compared to $ 179 in 2011 , and related solely to the operations of the company 's asset liquidation business . the increase is due to the growth of the asset liquidation business , in particular to the acquisition of equity partners and heritage global partners . ยท foreign exchange was a credit of $ 53 in 2012 as compared to a credit of $ 13 in 2011. the increase is primarily related to asset liquidation transactions in canada . depreciation and amortization expense was $ 407 during 2012 , compared to $ 2 in 2011 . $ 376 represents amortization of the intangible assets recognized in connection with the acquisition of heritage global partners , and the remaining $ 31 represents depreciation of property , plant and equipment . 18 o ther income ( expense ) and earnings of other equity accounted investments โ the significant items included : ยท other income was $ 64 in 2012 , as compared to other income of $ 30 in 2011. in 2012 , this consisted of settlement income of $ 46 and interest income of $ 18. in 2011 , it consisted of $ 17 interest income and $ 13 refund of a retainer . ยท in 2012 , the company recorded $ 112 as its share of losses from its equity accounted investments , as compared to earnings of $ 28 in 2011. in 2012 , the amount consisted of a loss of $ 116 from polaroid and income of $ 4 from knight 's bridge gp . in 2011 , the earnings consisted of $ 23 from polaroid and $ 5 from knight 's bridge gp . future accounting pronouncements in july 2012 , the fasb issued accounting standards update 2012-02 , testing indefinite-lived intangible assets for impairment ( โ asu 2012-02 โ ) . asu 2012-02 amends the indefinite-lived intangible asset impairment testing guidance in asc 350-30 , by providing the option to perform a qualitative assessment before calculating the fair value of the asset . if it is determined , on the basis of qualitative factors , that the fair value of the indefinite-lived intangible asset is not more likely than not ( i.e. , a likelihood of more than 50 percent ) impaired , a reporting entity would not need to calculate the fair value of the asset . asu 2012-02 does not change the requirement to test indefinite-lived intangible assets annually for impairment , or to test for impairment between annual tests if warranted by events or circumstances . however , it does revise the examples of events and circumstances that should be considered . asu 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after september 15 , 2012 , with early adoption permitted . the company does not expect that the adoption of asu 2012-02 will have a significant impact on its consolidated financial statements . the fasb , the emerging issues task force and the sec have issued other accounting pronouncements and regulations during 2012 that will become effective in subsequent periods . the company 's management does not believe that these pronouncements will have a significant impact on the company 's financial statements at the time they become effective . critical accounting policies use of estimates our audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the united states ( โ gaap โ ) . this requires management 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 amounts of revenues and expenses during the reporting period . management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances . actual results could differ from those estimates . significant estimates required in the preparation of the audited consolidated financial statements included in item 15 of this report include the assessment of collectability of revenue recognized , and the valuation of amounts receivable , inventory , investments , assets acquired , deferred income tax assets , goodwill and intangible assets , liabilities , and stock-based compensation . these estimates have the potential to significantly impact our consolidated financial statements , either because of the significance of the financial statement item to which they relate , or because they require judgment and estimation due to the uncertainty involved in measuring , at a specific point in time , events that are continuous in nature . amounts receivable the company 's amounts receivable are primarily related to the operations of its subsidiaries counsel rb , equity partners and heritage global partners . they consist of three major categories : receivables from joint venture partners , receivables from asset sales , and fees and retainers relating to the businesses of equity partners and heritage global partners . the initial value of an amount receivable corresponds to the fair value of the underlying goods or services . to date all receivables have been classified as current and , due to their short-term nature , any decline in fair value would be due to issues involving collectability . at each financial statement date the collectability of each outstanding amount receivable is evaluated , and an allowance is recorded if the book value exceeds the amount that is deemed collectable . collectability is determined on the basis of payment history . to date , the company has not experienced significant collectability issues with respect to its amounts receivable , and has not recorded an allowance since 2011. it should also be noted that amounts receivable associated with the sale of distressed assets are typically due upon asset delivery , which facilitates early identification of potential collectability issues .
| consolidated results of operations key selected financial data for the years ended december 31 , 2012 and 2011 are as follows : replace_table_token_3_th asset liquidation revenue is primarily earned from the acquisition and subsequent disposition of distressed and surplus assets , including industrial machinery and equipment , real estate , inventories , accounts receivable and distressed debt . following the acquisitions of heritage global partners and equity partners , it is also earned from more traditional asset disposition services , such as commissions from on-site and webcast auctions , liquidations and negotiated sales , and fees earned for management advisory services . the company also earns income from its asset liquidation business through its earnings from equity accounted asset liquidation investments . the revenues and expenses discussed below include the operating results of heritage global partners for the period following its acquisition by the company on february 29 , 2012. in the near-term , the company 's earnings have been impacted by the incremental costs associated with the acquisition and integration of heritage global partners and the expansion of its operations into latin america and europe , as discussed above under overview , history and recent developments . 2012 compared to 2011 asset liquidation revenues were $ 14,128 in 2012 compared to $ 17,238 in 2011 , asset liquidation expense was $ 7,090 in 2012 compared to $ 9,766 in 2011 , and earnings of equity accounted asset liquidation investments were $ 2,023 in 2012 compared to $ 2,183 in 2011. the net earnings of these three items were $ 9,061 in 2012 compared to $ 9,655 in 2011. because the company conducts its asset liquidation operations both independently and through partnerships , as discussed in note 2 of the audited consolidated financial statements , and the ratio of the two is unlikely to remain constant year over year , the operations must be considered as a whole rather than on a line-by-line basis .
| 4,622 |
103 pronai therapeutics , inc. notes to consolidated financial statements the company 's series b , b-1 , c and d redeemable convertible preferred stock ( collectively , redeemable convertible preferred stock ) was classified outside of stockholders ' equity ( deficit ) from issuance through the closing of the ipo , because the stocks contain redemption features that commence at any time on or after december 31 , 2018 at the election of the series b , b-1 , c and d redeemable convertible preferred stockholders . the company adjusted the carrying amount of the redeemable convertible preferred stock to equal the redemption value at the end of each reporting period . due to the absence of retained earnings , adjustments to redemption value were recorded against additional paid-in capital , if any , and then to accumulated deficit . the following table sets forth the total adjustment to redemption value of each series of redeemable convertible preferred stock recognized during the following periods : replace_table_token_29_th as the redemption value for the redeemable convertible preferred stock was at times based on fair market value , the company determined the fair value of the redeemable story_separator_special_tag the following discussion contains management 's discussion and analysis of our financial condition and results of operations and should be read together with the historical consolidated financial statements and the notes thereto included in part ii , item 8 ยconsolidated financial statements and supplementary data.ย this discussion contains forward-looking statements that reflect our plans , estimates and beliefs and involve numerous risks and uncertainties , including but not limited to those described in the ยrisk factorsย section of this annual report . actual results may differ materially from those contained in any forward-looking statements . you should carefully read ยspecial note regarding forward-looking statementsย and part i , item 1a , ยrisk factors.ย overview we are a clinical-stage oncology company led by a world-class senior management team of proven oncology drug developers . our vision is to be a leader in developing and commercializing a broad and diverse portfolio of cancer therapies that deliver therapeutic outcomes that dramatically change patients ' lives . our lead dnai product candidate , pnt2258 , is designed to target bcl2 , a widely overexpressed oncogene that is an important gatekeeper of the programmed cell death process known as apoptosis and has been linked to many forms of cancer . we are pursuing a multi-faceted clinical development strategy that is designed to efficiently achieve regulatory approval and maximize the commercial opportunity of pnt2258 . in addition to advancing pnt2258 , we are seeking to expand the number of products we have under clinical development to leverage the full potential of our team . we have conducted two clinical trials with pnt2258 to date : a phase 1 safety trial in patients with relapsed or refractory solid tumors and a phase 2 trial in patients with relapsed or refractory non-hodgkin 's lymphoma ( nhl ) . having observed preliminary evidence of efficacy and tolerability , we plan to pursue a broad registration-oriented clinical development program , initially in hematologic malignancies , that we anticipate will provide the foundation of a global registration strategy for pnt2258 . in december 2014 , we initiated ยwolverine , ย an open-label 60 patient phase 2 trial evaluating pnt2258 for the treatment of third-line relapsed or refractory diffuse large b-cell lymphoma ( dlbcl ) . in october 2015 , we initiated ยbrighton , ย an open-label 50 patient phase 2 trial evaluating pnt2258 for the treatment of richter 's transformed chronic lymphocytic leukemia ( richter 's cll ) . richter 's cll is a rare and aggressive form of nhl with no currently approved therapies . based on our current development plan , we are planning to initiate additional phase 2 trials with pnt2258 in combination with other therapeutic agents or treatment regiments . we may also evaluate pnt2258 's potential in other hematological malignancies . if the efficacy data obtained in some or all of these trials are highly compelling , we plan to discuss accelerated registration paths and other regulatory designations with regulatory agencies . our dnai platform technology is based on the breakthrough discovery at wayne state university and karmanos cancer institute that single-stranded dna oligonucleotides can interact with genomic dna in order to interfere with oncogenes . we acquired this technology and subsequently developed an algorithm that we employ for rationally designing our dnai product candidates using bioinformatics and our understanding of gene regulatory domains . in march 2007 , we entered into an exclusive license agreement with novosom ag ( novosom ) to use certain patented lipid nanoparticle ( lnp ) delivery technology used in pnt2258 . in july 2010 , the original novosom license agreement was acquired by marina biotech , inc. ( marina ) , but novosom retained the right to receive all future payments related to pnt2258 . in march 2012 , we and marina entered into another exclusive license agreement for the use of certain of marina 's patented delivery technology , including lnp technology , for any of our current or future dnai product candidates other than pnt2258 . in exchange for this exclusive right , we paid marina an upfront payment of $ 0.3 million and will also be required to pay marina milestone payments of up to an aggregate of $ 14.5 million for each dnai product candidate other than pnt2258 as well as low single-digit royalties on net sales for dnai product candidates other than pnt2258 . in april 2014 , we entered into a license payment agreement with novosom , pursuant to which we made a one-time payment to novosom of $ 11.0 million in april 2014 and terminated the other payment obligations owed to novosom for pnt2258 except for one remaining $ 3.0 million payment due upon regulatory approval of pnt2258 and a low single-digit royalty on net sales of pnt2258 . story_separator_special_tag foreign currency gains and losses may continue to fluctuate in the future due to changes in foreign currency exchange rates . 72 provision for income taxes provision for income taxes consists of federal and state income taxes in the united states and income taxes in canada and australia , as well as deferred income taxes and changes in related valuation allowance reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes . as of december 31 , 2015 , we had not generated any taxable income for u.s. federal income tax purposes . our tax expense to date relates to income taxes in canada and australia . as of december 31 , 2015 , we had u.s. federal operating loss carryforwards of $ 57.0 million and state operating loss carryforwards of $ 54.5 million , expiring in years ranging from 2021 to 2035. we also had net tax credit carryforwards of $ 1.9 million available to reduce future tax liabilities , if any , for u.s. federal purposes . the net tax carryforwards begin to expire in 2031. based upon our historical operating performance and the recorded cumulative net losses in prior fiscal periods , we have recorded a full valuation allowance against the net u.s. deferred tax assets as of december 31 , 2015. story_separator_special_tag cellspacing= '' 0 '' style= '' border-collapse : collapse ; font-family : times new roman ; font-size:10pt '' width= '' 100 % '' > continue to develop our dnai technology platform ; identify and develop additional product candidates ; hire additional clinical , scientific and management personnel ; seek regulatory and marketing approvals for any product candidates that we may develop ; ultimately establish a sales , marketing and distribution infrastructure to commercialize any drugs for which we may obtain marketing approval ; maintain , expand and protect our intellectual property portfolio ; and add operational , financial and management information systems and personnel , including personnel to support our drug development , any future commercialization efforts and operating as a public company . 75 to fund our current operating plans , we will need to raise additional capital . our existing cash and cash equivalents will not be sufficient for us to complete development of our lead product candidate and , if applicable , to prepare for commercializing any product candidate that may receive approval . accordingly , we will continue to require substantial additional capital to continue our clinical development and potential commercialization activities ; however , we believe that our existing cash and cash equivalents will be sufficient to fund our current operating plans through at least the next 18 months . we can not assure that we will ever be profitable or generate positive cash flow from operating activities . however , our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties , and actual results could vary materially . the amount and timing of our future funding requirements will depend on many factors , including the pace and results of our clinical development efforts . we plan to continue to fund our current operating plans ' needs through equity financings or other arrangements . to the extent that we raise additional capital through future equity financings , the ownership interest of our stockholders will be diluted , and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders . if we raise additional funds through the issuance of debt securities , these securities could contain covenants that would restrict our operations . there can be no assurance that such additional financing , if available , can be obtained on terms acceptable to us . if we are unable to obtain such additional financing , we would need to reevaluate our future operating plans . the following table summarizes our cash flows for the periods indicated : replace_table_token_8_th cash flows from operating activities in 2015 , cash used in operating activities of $ 28.3 million was attributable to a net loss of $ 53.3 million , partially offset by $ 20.8 million in non-cash charges and a net change of $ 4.2 million in our net operating assets and liabilities . the non-cash charges consisted primarily of $ 17.4 million for the change in fair value of our preferred stock warrants and $ 3.2 million in stock-based compensation . the change in operating assets and liabilities was primarily attributable to an increase in accrued liabilities of $ 5.3 million due to an increase in accrued research and development activities and headcount , partially offset by an increase in prepaid expenses of $ 1.1 million , driven by an increase in prepaid insurance and third-party manufacturing costs . in 2014 , cash used in operating activities of $ 21.8 million was attributable to a net loss of $ 23.9 million , of which $ 11.0 million pertained to a milestone payment to novosom , partially offset by $ 1.7 million in non-cash charges and a net change of $ 0.4 million in our net operating assets and liabilities . the non-cash charges consisted primarily of $ 1.4 million for the change in fair value of our preferred stock warrants and $ 0.3 million in stock-based compensation . the change in operating assets and liabilities was primarily attributable to a $ 0.5 million increase in prepaid expenses and other current assets related to our prepayment of manufacturing costs for clinical supply , offset by a $ 0.9 million increase in accounts payable and accrued liabilities due to an increase in headcount and accrued research and development costs driven by growth in our research and development activities .
| results of operations year ended december 31 , 2015 compared to year ended december 31 , 2014 replace_table_token_6_th research and development research and development expenses increased $ 7.3 million , from $ 19.1 million in 2014 to $ 26.4 million in 2015. the increase was primarily due to a $ 7.4 million increase in costs related to the continuation of our pnt2258 clinical trials , a $ 5.7 million increase in personnel-related costs , of which $ 1.8 million was attributable to an increase in stock-based compensation , a $ 4.8 million increase due to the third-party manufacturing costs for the manufacture of pnt2258 and a $ 0.4 million increase in overhead . these increased costs were partially offset by a one-time $ 11.0 million milestone payment that was made to novosom during the year ended december 31 , 2014. general and administrative general and administrative expenses increased $ 6.0 million , from $ 3.5 million in 2014 to $ 9.5 million in 2015. the increase was primarily due to a $ 2.8 million increase in personnel-related costs , of which $ 1.1 million was attributable to an increase in stock-based compensation . the remaining increase was attributable to a $ 1.7 million 73 increase in accounting , consulting , legal and other professional fees primarily incurred in connection with activities related to being a public company and a $ 1.5 million increase in overhead expenses primarily related to increased headcount in support of corporate growth .
| 4,623 |
we have capitalized the licensing fees paid for the rights to use this patented technology as an intangible asset . during 2011 , we acquired an abbreviated new drug application ( `` anda `` ) for a generic version of an intravenous vitamin-d analogue , calcitriol . total capitalized costs related to this anda were approximately $ 695,000 . these costs are being amortized over a five year period . replace_table_token_15_th our policy is to amortize licensing fees over the life of the patents pertaining to certain licensing agreements . estimated amortization expense for licensing fees for 2014 through 2016 is approximately $ 167,000 per year . our trifericยฎ licensing agreement , which is with a company owned by our chief scientific officer , requires additional payments by the company upon achievement of certain milestones . f-15 rockwell medical , inc. and subsidiary notes to consolidated financial statements ( continued ) 9. other current assets the company has entered into contracts with contract research organizations for the purpose of conducting human clinical research trials and advanced funds to contract research organizations to partially offset future service costs and expenses under these contracts . all such advances had been used to offset costs as of december 31 , 2013. as of december 31 , 2012 , such advances classified as other current assets aggregated $ 852,555 . 10. notes payable in 2013 , the company entered into a loan and security agreement ( the `` loan agreement `` ) with hercules technology iii , l.p. ( `` hercules `` ) pursuant to which the company received a loan in the aggregate principal amount of $ 20.0 million . the company is required to repay the aggregate principal balance under the loan agreement in 30 equal monthly installments of principal and interest commencing on september 1 , 2014. the company will be required to make monthly interest only payments through august 31 , 2014. the loan will mature and become due on march 1 , 2017 , subject to adjustment as provided below , and will bear interest at the greater of ( i ) 12.50 % plus the prime rate as reported in the wall street journal minus 3.25 % , or ( ii ) 12.50 % . the loan may be prepaid at any time after june 14 , 2014 without penalty and will mature and become due upon any change in control of the company . the company paid debt issuance costs of $ 1.1 million including a fee of $ 0.2 million at closing to hercules , which are recorded as a noncurrent asset , and is required to pay a fee of $ 1.1 million upon any prepayment or at maturity . the $ 1.1 million fee due upon any prepayment or at maturity is being accrued using the effective interest rate method over the life of the loan . the effective interest rate of the loan is 14.5 % . in connection with the loan , the company granted hercules a security interest in substantially all of the company 's assets other than motor vehicles , real property and certain intellectual property and other interests . the loan agreement provides for standard indemnification of hercules and contains representations , warranties and non-financial covenants that , among other things , limit the company 's ability to incur additional indebtedness , transfer assets , acquire assets of or merge with another entity and pay dividends to the company 's shareholders . the loan agreement defines event of default , to include , among other events , the occurrence of an event that results in a material adverse effect upon the company 's business operations story_separator_special_tag overview and recent developments rockwell is a fully-integrated pharmaceutical company targeting end-stage renal disease and chronic kidney disease with innovative products and services for the treatment of iron deficiency , secondary hyperparathyroidism and hemodialysis . we are also an established manufacturer and leader in delivering high-quality hemodialysis concentrates/dialysates to dialysis providers and distributors in the u.s. and abroad . we are currently developing unique , proprietary renal drug therapies . these novel renal drug therapies support disease management initiatives to improve the quality of life and care of dialysis patients and are designed to deliver safe and effective therapy , while decreasing drug administration costs and improving patient convenience and outcome . our strategy is to develop high potential drugs while expanding our dialysis products business . in 2013 , our sales increased 5.1 % to $ 52.4 million . the increase in sales was primarily a result of increased business with current customers . we signed a multi-year contract extension through 2018 with our largest customer , which increased the number of committed clinics purchasing from us , but we do not expect a material increase in gross profit to result from the increase . most of our total sales are to domestic clinics that order routinely . from time to time , we have experienced volatility in international sales . our product development costs were primarily related to completing the phase 3 clinical trials for trifericยฎ , our lead drug candidate . we believe our trifericยฎ product has unique and substantive benefits compared to current treatment options and has the potential to compete in the iron maintenance therapy market . we successfully completed the phase 3 clinical trial program for trifericยฎ in early 2014 and we are preparing to file our nda for trifericยฎ in the first quarter of 2014. in 2011 , we acquired the right to manufacture the generic version of calcitriol , a vitamin d analogue , indicated in the treatment of secondary hyperparathyroidism , which is common in esrd patients . story_separator_special_tag we are in the process of obtaining fda approval to make a change in manufacturing locations and we expect to receive such approval during the first half of 2014. we anticipate that our gross profit margins and operating cash flows will improve once we begin marketing calcitriol . in march and may 2013 , we completed common stock offerings for a total of approximately $ 50.4 million in net proceeds . in june 2013 , we entered into a secured loan agreement and borrowed $ 20.0 million . as of december 31 , 2013 , we had $ 23.9 million in cash , cash equivalents and short term investments . we have completed the major spending on trifericยฎ development and future spending on trifericยฎ r & d and commercial launch is not expected to require additional cash resources to complete . we believe we have adequate cash resources to fund our business development and drug launch efforts for trifericยฎ and calcitriol . story_separator_special_tag and updated when necessary . actual results will generally differ from these estimates . changes in estimates are reflected in our financial statements in the period of change based upon on-going actual experience , trends , or subsequent realization depending on the nature and predictability of the estimates and contingencies . interim changes in estimates are generally applied prospectively within annual periods . certain accounting estimates , including those concerning revenue recognition , allowance for doubtful accounts , impairments of long-lived assets , and accounting for income taxes , are considered to be critical in evaluating and understanding our financial results because they involve inherently uncertain matters and their application requires the most difficult and complex judgments and estimates . these are described below . for further information on our accounting policies , see note 2 to our consolidated financial statements . revenue recognition we recognize revenue at the time we transfer title to our products to our customers consistent with generally accepted accounting principles . our products are generally sold domestically on a delivered basis and as a result we do not recognize revenue until delivered to the customer with title transferring upon completion of the delivery . for our international sales , we recognize revenue upon the transfer of title as defined by standard shipping terms and conventions uniformly recognized in international trade . allowance for doubtful accounts accounts receivable are stated at invoice amounts . the carrying amount of trade accounts receivable is reduced by an allowance for doubtful accounts that reflects our best estimate of accounts that may not be collected . we review outstanding trade account receivable balances and based on our assessment of expected collections , we estimate the portion , if any , of the balance that may not be collected as well as a general valuation allowance for other accounts receivable based primarily on historical experience . all accounts or portions thereof deemed to be uncollectible are written off to the allowance for doubtful accounts . if we underestimate the allowance , we would incur a current period expense which could have a material adverse effect on earnings . impairments of long-lived assets we account for impairment of long-lived assets , which include property and equipment , amortizable and non-amortizable intangible assets and goodwill , in accordance with authoritative accounting pronouncements . an impairment review is performed annually or whenever a change in condition occurs which indicates that the carrying amounts of assets may not be recoverable . such changes may include changes in our business strategies and plans , changes to our customer contracts , changes to our product lines and changes in our operating practices . we use a variety of factors to assess the realizable value of long-lived assets depending on their nature and use . goodwill is not amortized ; however , it must be tested for impairment at least annually . the goodwill impairment analysis is based on the fair market value of our common shares . amortization continues to be recorded for other intangible assets with definite lives over the estimated useful lives . intangible assets subject to amortization are reviewed for potential impairment whenever events or 31 circumstances indicate that carrying amounts may not be recoverable based on future cash flows . if we determine that goodwill has been impaired , the change in value will be accounted for as a current period expense and could have a material adverse effect on earnings . accounting for income taxes we estimate our income tax provision to recognize our tax expense and our deferred tax liabilities and assets for future tax consequences of events that have been recognized in our financial statements using current enacted tax laws . deferred tax assets must be assessed based upon the likelihood of recoverability from future taxable income and to the extent that recovery is not likely , a valuation allowance is established . the allowance is regularly reviewed and updated for changes in circumstances that would cause a change in judgment about whether the related deferred tax asset may be realized . these calculations and assessments involve complex estimates and judgments because the ultimate tax outcome can be uncertain and future events unpredictable . if we determine that the deferred tax asset will be realized in the future , it may result in a material beneficial effect on earnings . new accounting pronouncements no new accounting pronouncements that were issued or became effective during the year have had or are expected to have a material impact on our consolidated financial statements . liquidity and capital resources our strategy is centered on obtaining regulatory approval to market trifericยฎ and developing other high potential drug candidates , while also expanding our dialysis products business . we have completed the clinical trials required for the submission of our nda for trifericยฎ . our future spending on research and development for trifericยฎ is not expected to be material in future periods . we believe we have adequate cash resources to launch
| results of operations for the year ended december 31 , 2013 compared to the year ended december 31 , 2012 sales in 2013 , our sales were $ 52.4 million compared to $ 49.9 million in 2012. sales increased $ 2.5 million or 5.1 % in 2013 compared to 2012. domestic sales increased $ 1.8 million or 4.0 % to $ 46.0 million while international sales increased by $ 0.8 million or 14 % to $ 6.4 million . 28 domestic sales increased due to new business additions , including the renewal and expansion of the supply agreement with our largest customer , as well as conversions to our citrapure and dry acid concentrate product lines . dry acid concentrate lowers providers ' cost per treatment and reduces our sales , but improves our gross profit margins due to a reduction in shipping costs . international sales and domestic sales shipped internationally increased due to increased demand in international markets for dialysis products . gross profit our gross profit was $ 6.7 million in both 2013 and 2012. gross profit margins were 12.7 % in 2013 compared to 13.4 % in 2012. favorable product mix changes from citrapure growth were offset by higher costs for material , shipping and operating costs , as well as growth in lower margin sales and higher regulatory compliance costs .
| 4,624 |
this transaction has been designated as a cash flow hedge and qualifies for hedge accounting treatment . notional value of copper derivatives january 2016- march 2016 150 metric tons per month april 2016 - june 2016 130 metric tons per month july 2016 - september 2016 127 metric tons per month october 2016 - december 2016 117 metric tons per month january 2017 - march 2017 16 metric tons per month replace_table_token_32_th ( dollars in thousands ) the effect of story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read together with the selected financial data and our consolidated financial statements and the related notes that appear elsewhere in this form 10-k. in the following discussion and analysis , we sometimes provide financial information that was not prepared in accordance with u.s. generally accepted accounting principles ( gaap ) . management believes that this non-gaap information provides meaningful supplemental information regarding the company 's performance by excluding certain expenses that are generally non-recurring or otherwise may not be indicative of the core business operating results . in general , the company believes that the additional non-gaap financial information provided herein is useful to management and investors in assessing the company 's historical performance and for planning , forecasting and analyzing future periods . however , non-gaap information has limitations as an analytical tool and should not be considered in isolation from , or solely as an alternative to , financial information prepared in accordance with gaap . any time we provide non-gaap information in the following narrative we identify it as such and in close proximity provide the most directly comparable gaap financial measure , as well as the information necessary to reconcile the two measures . business overview rogers corporation designs , develops , manufactures and sells high-quality and high-reliability engineered materials and components for mission critical applications . we operate principally three strategic business segments : advanced connectivity solutions ( acs ) , elastomeric material solutions ( ems ) and power electronics solutions ( pes ) . we have a history of innovation and have established two rogers innovation centers for our leading research and development activities , in massachusetts and china . our growth strategy is based upon the following principles : ( 1 ) market-driven organization , ( 2 ) innovation leadership , ( 3 ) synergistic mergers and acquisitions , and ( 4 ) operational excellence . as a market-driven organization , we are focused on three megatrends of expanding business opportunities : internet connectivity , clean energy and safety & protection . during 2015 , we added the safety & protection megatrend in place of mass transit in response to the increase in demand for advanced driver assistance systems and growth in products focused on consumer impact protection , passenger safety and vibration management and flexible heater insulation . in january 2015 , we completed the acquisition of arlon llc and its subsidiaries , other than arlon india ( pvt ) limited ( the acquired subsidiaries , collectively , arlon ) , for an aggregate purchase price of approximately $ 157 million . arlon manufactures high performance materials for the printed circuit board industry and silicone rubber-based materials . the acquisition of arlon and its subsequent integration into our business segments have enabled us to increase scale and complement our existing product offerings , thus enhancing our ability to support our customers . the arlon polyimide and thermoset laminate business , which was not integrated , was sold in december 2015. story_separator_special_tag style= '' padding-left:0px ; text-indent:0px ; line-height : normal ; padding-top:10px ; '' > replace_table_token_7_th research and development ( r & d ) expenses increased by 20.8 % in 2015 compared with 2014. as a percentage of sales , r & d costs increased from 3.7 % in 2014 to 4.3 % in 2015. the overall increase is due to $ 1.8 million of expenses related to the arlon business as well as an increase in investments that are targeted at developing new platforms and technologies focused on long term growth initiatives at our innovation centers in the u.s. and asia . equity income in unconsolidated joint ventures ( dollars in thousands ) 2015 2014 percent change equity income in unconsolidated joint ventures $ 2,890 $ 4,123 ( 29.9 ) % equity income in unconsolidated joint ventures declined approximately 29.9 % in 2015 from 2014. the decrease was due to lower demand , product mix and unfavorable currency exchange rate shifts . interest income ( expense ) , net ( dollars in thousands ) 2015 2014 percent change interest income ( expense ) , net $ ( 4,480 ) $ ( 2,946 ) 52.1 % interest income ( expense ) , net , was higher expense by 52.1 % in 2015 from 2014. the increase year over year was driven by the increase in long term debt associated with the arlon acquisition , which occurred in january of 2015. other income ( expense ) , net ( dollars in thousands ) 2015 2014 percent change other income ( expense ) , net $ ( 8,492 ) $ ( 1,194 ) 611.2 % other income ( expense ) , net was higher expense of $ 7.3 million from 2014 to 2015. our 2015 results included approximately $ 7.2 million of special charges comprised of $ 4.8 million of a loss on the sale of the arlon specialty polyimide and epoxy-based laminates business and $ 2.4 million of receivables related to the tax indemnities that were reversed , which related to the release of uncertain tax positions . 24 income tax expense replace_table_token_8_th in 2015 , the difference between the our effective tax rate and the statutory federal tax rate was favorably impacted by taxable income generated in countries with a lower tax rate to that of the united states , research and development credits , a tax benefit related to a change in the effective state rate and release of valuation allowance on certain state tax attributes . story_separator_special_tag in 2013 , these charges were comprised primarily of the following : ( i ) $ 4.6 million related to the impairment charge on the investment in brightvolt , inc. , ( ii ) $ 4.2 million of severance and related charges as a result of additional streamlining initiatives as well as changes to the executive management team , and ( iii ) a $ 1.5 million curtailment charge related to the freezing of the defined benefit pension plans . equity income in unconsolidated joint ventures ( dollars in thousands ) 2014 2013 percent change equity income in unconsolidated joint ventures $ 4,123 $ 4,326 ( 4.7 ) % equity income in unconsolidated joint ventures decreased 4.7 % in 2014 from 2013. the decline was primarily due to the depreciation of the japanese yen against the u.s. dollar of approximately 8.6 % year over year . interest income ( expense ) , net ( dollars in thousands ) 2014 2013 percent change interest income ( expense ) , net $ ( 2,946 ) $ ( 3,481 ) ( 15.4 ) % interest income ( expense ) , net , declined by 15.4 % in 2014 from 2013. the decline was due primarily to lower interest expense on our debt facility , as we paid down principal from $ 98.0 million at the end of 2013 to $ 60.0 million at the end of 2014 26 other income ( expense ) , net ( dollars in thousands ) 2014 2013 percent change other income ( expense ) , net $ ( 1,194 ) $ ( 1,240 ) ( 3.7 ) % other income ( expense ) , net remained consistent in 2014 from 2013. although the ending balance was the same year over year , there were changes in the activity . our 2014 results included unfavorable commodity hedging transactions offset by lower commission payments to the joint ventures . our 2013 results included approximately $ 0.7 million of unfavorable mark to market adjustments related to copper hedging contracts and approximately $ 0.3 million related to unfavorable foreign currency transaction adjustments . income tax expense replace_table_token_12_th in 2014 , the difference between the our effective tax rate and the statutory federal tax rate was favorably impacted by taxable income generated in countries with a lower tax rate to that of the united states and research and development credits . the rate was unfavorably impacted by reserves for uncertain tax positions , distributions of current year earnings from our foreign subsidiaries as well as nondeductible acquisition costs . the rate increased from 2013 primarily due to an increased level of repatriation of current foreign earnings which was done to facilitate the arlon acquisition , mix of earnings , lower reversals of uncertain tax benefits and nondeductible acquisition costs . backlog the backlog of firm orders was $ 77.0 million at december 31 , 2014 , as compared to $ 50.5 million at december 31 , 2013. the increase at the end of 2014 was primarily related to the power electronics solutions and advanced connectivity solutions operating segments , which experienced an increase in backlog of $ 8.3 million and $ 18.9 million , respectively , at december 31 , 2014 as compared to december 31 , 2013. segment sales and operations core strategic advanced connectivity solutions replace_table_token_13_th the advanced connectivity solutions ( acs ) operating segment is comprised of high frequency circuit material products used for making circuitry that receives , processes and transmits high frequency communications signals , in a wide variety of markets and applications , including wireless communications , high reliability , and automotive , among others . 2015 vs. 2014 net sales in this segment increased by 11.1 % in 2015. organic sales declined 11.4 % , currency fluctuations decreased net sales by 1.3 % and the acquisition of arlon added 23.8 % net sales growth as compared to the same period in the prior year . the year over year increase in net sales , including the acquisition , was driven by an increase in automotive radar applications for advanced drive assistance systems ( 33.4 % ) and aerospace and defense applications ( 54.4 % ) and the wireless telecom market ( 1.5 % ) . these increases were partially offset by weaker demand in 4g lte base stations , primarily in china ( -25 % ) . operating income improved by 2.5 % in 2015. as a percentage of net sales , operating income in 2015 was 16.9 % , a 140 basis point decline as compared to the 18.3 % reported in 2014. our 2015 operating income included approximately $ 5.3 million of special charges comprised of $ 2.6 million of integration expenses related to the arlon acquisition , $ 1.0 million of arlon purchase accounting expenses related to the non-recurring fair value adjustment for inventory , a $ 1.4 million environmental charge and $ 0.4 million of severance related charges . our 2014 operating income included approximately $ 2.9 million of special charges comprised of 27 $ 1.9 million from the early payment of certain long term pension obligations , $ 0.9 million related to acquisition costs and $ 0.1 million related to the impairment of the brightvolt investment ( formerly solicore ) . as a percentage of sales , excluding the 2015 and 2014 special charges , 2015 operating income was 18.8 % , a 70 basis point decline as compared to the 19.5 % achieved in 2014. this decline is primarily due to the lower organic net sales partially offset by the addition of the operating income from the acquisition , combined with favorable results from the continuous efforts targeted at manufacturing efficiency improvements and favorable inventory absorption . 2014 vs. 2013 net sales in this segment increased 30.2 % in 2014. the increase in net sales was due primarily to a 52.9 % increase in orders for high frequency circuit materials to support wireless base station and antenna applications in connection with the global 4g/lte infrastructure build-out , particularly in china .
| 2015 executive summary in 2015 as compared to 2014 , our revenue increased 5.0 % to $ 641.4 million , gross margin decreased 170 bps to 36.7 % , and operating income decreased 6.1 % to $ 76.3 million . the following key factors should be considered when reviewing our results of operations , financial condition and liquidity for the periods discussed : our revenue growth in 2015 was attributable primarily to our newly-acquired arlon operations . the increase in net sales in 2015 was composed of an organic sales decrease of 6.9 % , negative currency impact of 4.5 % , offset by acquisition related growth of 16.4 % . we believe our revenue decline is associated with the uncertain macro-economic conditions in china and europe as well as the u.s. this situation has resulted in the delay of several key projects within the markets that we participate in , leading to weaker demand in certain applications across all three business segments . we expect to see a moderate recovery in sales going forward however we remain cautious as to the exact timing of the recovery . our operating income declined due to a variety of factors in 2015. we achieved $ 76.3 million in operating income during 2015 , a 6.1 % decline over the $ 81.2 million achieved in 2014. operating results in 2015 and 2014 included approximately $ 11.2 million and $ 7.7 million of special charges , respectively . contributing to the decline in operating income was the decline in gross margin . gross margin declined due to the lower organic sales and the lower gross margin from the arlon business ; however , this decline was partially mitigated through operational excellence initiatives across our business units . gross margin was 36.7 % in 2015 as compared to 38.4 % in 2014 .
| 4,625 |
these statements include , among other things , statements concerning our expectations regarding : variability in sales in certain product categories from year to year and between quarters ; expected impact of sales of certain products ; the proportion of our revenue that consists of our product and service and other revenue , and the mix of billings between products and services ; the impact of our product innovation strategy ; growing our sales to large enterprises , service providers , and government organizations ; trends in revenue , costs of revenue , and gross margin ; trends in our operating expenses , including personnel costs , research and development expense , sales and marketing expense and general and administrative expense , and expectations regarding these expenses as a percentage of revenue ; continued investments in research and development to strengthen our technology leadership position and the impact of those investments ; continued investments in sales and marketing to drive market share gains and the impact of those investments ; expectations regarding uncertain tax benefits and our effective tax rate ; expectations regarding spending related to capital expenditures ; competition in our markets ; the sufficiency of our existing cash , cash equivalents and investments to meet our cash needs for at least the next 12 months ; as well as other statements regarding our future operations , financial condition and prospects and business strategies . these forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements . factors that could cause or contribute to such differences include , but are not limited to , those discussed in this annual report on form 10-k and , in particular , the risks discussed under the heading โ risk factors โ in part i , item 1a of this annual report on form 10-k and those discussed in other documents we file with the sec . we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements . given these risks and uncertainties , readers are cautioned not to place undue reliance on such forward-looking statements . business overview we provide high performance cyber security solutions to some of the largest enterprises , service providers and government organizations across the globe , including a majority of the 2014 fortune 100. our cyber security solutions are fast and secure and designed to provide broad , high-performance protection against dynamic security threats while simplifying the it infrastructure of our end-customers worldwide . our core product platform is the fortigate physical and virtual appliance , which ships with a set of broad security services , including firewall , vpn , application control , intrusion prevention , web filtering and advanced threat protection ( โ atp โ ) . these security services are enabled by fortiguard which provides extensive threat research and a global cloud 33 network to deliver protection services to each fortigate appliance . fortigate also has extensive networking capability such as switching , routing , native internet protocol version 6 ( โ ipv6 โ ) and different modes of deployment . fortimanager provides central management and fortianalyzer provides reporting and analytics . the fortigate platform can be extended to provide enhanced capabilities . for example , it can be used as a wireless controller for access points . an external sandbox can also be attached for local atp analysis . customers select the functions or combination of functions that best meet their specific security requirements such as a high-speed dcfw at the network core , a ngfw at the edge , or a broad utm solution at branch sites . we derive a substantial majority of product sales from our fortigate appliances , which range from the fortigate-20 to -100 series , designed for small businesses , fortigate-200 to -800 series for mid-sized enterprises , to the fortigate-1000 to -5000 series for large enterprises and service providers . our network security platform also includes our fortiguard security subscription services , which end-customers can subscribe to in order to obtain access to dynamic updates to application control , anti-virus , intrusion prevention , web filtering , and anti-spam functionality . end-customers can also choose to purchase forticare technical support services for our products . end-customers also often use fortimanager and fortianalyzer products in conjunction with a fortigate deployment to provide centralized management and analysis and reporting capabilities . we complement our core fortigate product line with other appliances and software that offer additional protection from security threats to other critical areas of the enterprise , such as our wireless access point , advanced threat protection , secure email gateway , web application firewalls , application delivery controllers , databases security product , ddos security product , and endpoint security product for employee computers and mobile devices . sales of these complementary products have grown in recent quarters , although these products still represented less than 10 % of our total revenue in fiscal 2014. financial highlights we recorded total revenue of $ 770.4 million in fiscal 2014 , an increase of 25 % compared to fiscal 2013 . product revenue was $ 360.6 million , an increase of 30 % compared to fiscal 2013 . services and other revenue was $ 409.8 million in fiscal 2014 , an increase of 22 % compared to fiscal 2013 . cash , cash equivalents and investments were $ 991.7 million as of december 31 , 2014 , an increase of $ 148.7 million , or 18 % , from december 31 , 2013 . deferred revenue was $ 558.8 million as of december 31 , 2014 , an increase of $ 126.1 million , or 29 % , from december 31 , 2013 . we generated cash flows from operating activities of $ 196.6 million in fiscal 2014 , an increase of $ 49.2 million , or 33 % , compared to fiscal 2013 . we received $ 20.0 million pursuant to a six-year mutual covenant-not-to-sue and release agreement with palo alto networks , inc. in january 2014. story_separator_special_tag a reconciliation of billings to revenue , the most directly comparable financial measure calculated and presented in accordance with gaap , is provided below : replace_table_token_7_th free cash flow ( non-gaap ) . we define free cash flow as net cash provided by operating activities less capital expenditures . we consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that , after the acquisition of property and equipment , can be used for strategic opportunities , including investing in our business , making strategic acquisitions , repurchasing outstanding common stock , and strengthening the balance sheet . analysis of free cash flow facilitates comparisons of our operating results to competitors ' operating results . a limitation of using free cash flow as opposed to the gaap measure of net cash provided by operating activities as a means for evaluating liquidity is that free cash flow does not represent the total increase or decrease in the cash , cash equivalents and investments balances for the period because it excludes cash used for capital expenditures and cash provided by or used for other investing and financing activities . we compensate for this limitation by providing information about our capital expenditures and other investing and financing activities on the face of the cash flow statement and under โ โliquidity and capital resources. โ a reconciliation of free cash flow to net cash provided by operating activities , the most directly comparable financial measure calculated and presented in accordance with gaap , is provided below : replace_table_token_8_th components of operating results revenue we generate the majority of our revenue from sales of our products and fortiguard security subscription and forticare technical support services . revenue is recognized when persuasive evidence of an arrangement exists , delivery has occurred or services have been rendered , the sales price is fixed or determinable and collectability is reasonably assured . our total revenue is comprised of the following : product revenue . product revenue is generated from sales of our appliances . the substantial majority of our product revenue has been generated by our fortigate line of appliances , and we do not expect this to change in the foreseeable future . product revenue also includes revenue derived from sales of fortimanager , fortianalyzer , fortiswitch , fortimail , fortidb , fortiweb , fortiap , fortiscan , forticarrier , fortibalancer , forticache , fortivoice , fortibridge , fortiddos , fortidns , fortisandbox , fortiadc , and fortiauthenticator appliances , and our forticlient and virtual domain , or vdom , software . for arrangements which include end-customer acceptance criteria , revenue is recognized upon acceptance . we recognize product revenue on sales to distributors that have no general right of return and direct sales to end-customers upon shipment , once all other revenue recognition criteria have been met . certain distributors that stock our products are 36 granted stock rotation rights , limited rights of return , as well as rebates for sales of our products . the arrangement fee for this group of distributors is not fixed and determinable when products are shipped and revenue is therefore deferred and recognized upon sell-through . as a percentage of total revenue , we expect our product revenue may vary from quarter-to-quarter based on seasonal and cyclical factors discussed below under โ โquarterly results of operations โ but generally may remain at relatively comparable levels , as services revenue becomes a larger portion of our business as our customers renew existing services contracts and we expand our customer base . services revenue . services revenue is generated primarily from fortiguard security subscription and forticare technical support services for software updates , maintenance releases and patches , internet access to technical content , telephone and internet access to technical support personnel and hardware support , and fortiguard security subscription services related to application control , antivirus , intrusion prevention , web filtering , anti-spam and vulnerability management updates . we recognize revenue from fortiguard security subscription and forticare technical support services over the service performance period . our typical contractual support and subscription term is one to three years . we also generate a small portion of our revenue from professional services and training services , and we recognize this revenue as the services are provided . as a percentage of total revenue , we expect our services revenue to remain at comparable levels or increase as our customers renew existing service contracts and we expand our customer base . our services revenue growth rate depends significantly on the growth of our customer base and the renewal of service contracts by our customers . beginning in fiscal 2014 , we combined ratable and other revenue with services revenue to present the combined amounts as services and other revenue in the consolidated statements of operations . the related cost of revenue and gross profit have also been combined to conform to the current period presentation . ratable and other revenue is not material and is not expected to become material in the future . our total cost of revenue is comprised of the following : cost of product revenue . a substantial majority of the cost of product revenue consists of costs of materials used in production , as well as costs paid to our third-party contract manufacturers . our cost of product revenue also includes supplies , shipping costs , personnel costs associated with logistics and quality control , warranty costs , facility-related costs , excess and obsolete inventory costs , and impairment of intangible assets , if applicable . personnel costs include salaries , benefits and bonuses , as well as stock-based compensation . cost of services revenue . cost of services revenue is primarily comprised of salaries , benefits and bonuses , as well as stock-based compensation associated with our fortiguard labs and our forticare technical support teams . cost of service revenue also includes replacement products and supplies , facility-related costs , including depreciation expense , and professional services and training teams .
| results of operations the following tables set forth our results of operations for the periods presented and as a percentage of our total revenue for those periods . the period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods . replace_table_token_9_th 42 replace_table_token_10_th fiscal years 2014 and 2013 revenue replace_table_token_11_th total revenue increased by $ 155.1 million , or 25 % , in fiscal 2014 compared to fiscal 2013 . the americas region contributed the largest portion of our revenue growth on an absolute dollar basis and all three regions showed growth on a percentage basis . product revenue increased by $ 82.5 million , or 30 % , compared to fiscal 2013 . the increase in product 43 revenue was primarily driven by greater sales volume in our fortigate product due to increased demand for our high-end products from large enterprise and service provider customers . services and other revenue increased by $ 72.6 million , or 22 % , in fiscal 2014 compared to fiscal 2013 due to the recognition of revenue from our growing deferred revenue balance consisting of fortiguard security subscription and forticare technical support contracts sold to a larger customer base as well as the renewals of similar contracts sold in earlier periods . cost of revenue and gross margin replace_table_token_12_th total gross margin decreased by 0.6 percentage points in fiscal 2014 compared to fiscal 2013 , as product gross margins declined . product gross margin decreased by 0.8 percentage points in fiscal 2014 compared to fiscal 2013 due to an increase in warranty-related costs of $ 3.2 million and impairment charges related to certain intangible assets of $ 2.4 million .
| 4,626 |
as a result of many factors , including those factors set forth in the โ risk factors โ section of this annual report on form 10-k , our actual results could differ materially from the results described in , or implied by , these forward-looking statements . covid-19 business update we are closely monitoring developments related to covid-19 , which was declared a pandemic by the world health organization on march 11 , 2020. in response to this global pandemic , we have concentrated our efforts on the health and safety of our employees and patients , while maintaining business continuity and honoring our commitment to deliver life-changing treatments for people battling devastating diseases . we implemented business continuity plans in march 2020 designed to address the impact and potential impact of covid-19 on our operations . effective march 12 , 2020 , we implemented measures to mitigate the spread of covid-19 and contribute to the ongoing public health effort to reduce the spread of the virus . we formed a covid-19 response team to maintain business continuity while safeguarding employee and patient health . we also mandated a work-from-home policy for most employees and set up additional processes to work from home effectively , including measures to bolster our cybersecurity . since early june 2020 , we have been able to increase the number of employees working onsite , as well as expand the amount and type of manufacturing and lab-based activities being conducted onsite . our manufacturing operations and lab-based activities continue with social-distancing and updated protocols for accessing our facilities . as a biopharmaceutical research and development company , we are deemed to provide essential services under the โ stay at home โ advisory that was issued by the governor of massachusetts on march 23 , 2020. while we continue to conduct r & d activities , including our ongoing clinical trials , the covid-19 pandemic has impacted , and may continue to impact , certain of our early-stage discovery efforts and clinical trials . we are working with our clinical investigators , r & d vendors , and supply chain vendors to continually assess and take steps to mitigate the potential impact of covid-19 on our manufacturing operations and r & d activities . we will continue to closely monitor the covid-19 situation ( along with emerging or future variants of covid-19 ) as we evolve our business continuity plans . given the global economic slowdown and the other risks and uncertainties associated with covid-19 , our business , financial condition , results of operations , and prospects could be materially adversely affected . for additional information , see โ item 1a . risk factors โ of this annual report on form 10-k. 96 overview we are a clinical-stage genetic medicines company committed to delivering life-changing treatments for people battling devastating diseases . using prism , our proprietary discovery and drug development platform that enables the precise design , optimization and production of novel stereopure oligonucleotides , we aspire to develop best in class medicines for genetically defined diseases with a high degree of unmet need . we are developing oligonucleotides that target ribonucleic acid ( โ rna โ ) to either reduce the expression of disease-promoting proteins or transform the production of dysfunctional mutant proteins into the production of functional proteins . by intervening at the rna level , we have the potential to address diseases that have historically been difficult to treat with small molecules or biologics , while retaining the ability to titrate dose and avoid permanent off-target genetic changes and other challenges associated with dna editing or gene therapy approaches . the mechanisms that we are currently using to target rna with our oligonucleotides include silencing , splicing , and adar ( adenosine deaminases acting on rna ) -mediated rna editing ( โ adar editing โ ) . oligonucleotides have additional advantages as a therapeutic class including the ability to access multiple tissue types and the ability to modulate the frequency of dosing to ensure broad distribution within tissues over time . oligonucleotides also have well-established manufacturing processes and validated test methods based on decades of improvements . the oligonucleotides we are developing with prism are stereopure and differ from the mixture-based oligonucleotides currently on the market or in development by others . a stereopure oligonucleotide is comprised of molecules with atoms precisely arranged in three-dimensional orientations at each linkage . based on our preclinical studies , we believe that controlling the stereochemistry of each backbone position will allow us to optimize the pharmacological profile of our oligonucleotides by maximizing the potential therapeutic benefit while minimizing the potential for side effects and safety risks . to further mitigate pharmacological risks and potential manufacturing challenges , our approach focuses on designing oligonucleotides without the need for delivery vehicles . through our work in developing stereopure oligonucleotides , we have created and continue to evolve prism , our proprietary discovery and drug development platform . prism enables us to target genetically defined diseases with stereopure oligonucleotides across multiple therapeutic modalities . prism combines our unique ability to construct stereopure oligonucleotides with a deep understanding of how the interplay among oligonucleotide sequence , chemistry and backbone stereochemistry impacts key pharmacological properties . by exploring these interactions through iterative analysis of in vitro and in vivo outcomes and machine learning-driven predictive modeling , we continue to define design principles that we deploy across programs to rapidly develop and manufacture clinical candidates that meet pre-defined product profiles . in august 2020 , we introduced our novel pn backbone chemistry modifications , which were discovered through prism and have been shown preclinically to increase potency , tissue exposure and durability across various modalities . our lead clinical development programs are focused on genetic diseases within neurology . our first stereopure therapeutic candidates in development , wve-120101 and wve-120102 , are designed to selectively target mutant huntingtin ( โ mhtt โ ) and spare wild-type , or healthy , huntingtin ( โ wthtt โ ) for the treatment of huntington 's disease ( โ hd โ ) . story_separator_special_tag product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development , primarily due to the increased size and duration of later-stage clinical trials . we expect to continue to incur significant research and development expenses in the foreseeable future as we continue to manage our existing clinical trials , initiate additional clinical trials for certain product candidates , pursue later stages of clinical development for certain product candidates , maintain our manufacturing capabilities and continue to discover and develop additional product candidates in multiple therapeutic areas . general and administrative expenses general and administrative expenses consist primarily of compensation-related expenses , including salaries , bonuses , share-based compensation and other related benefits costs for personnel in our executive , finance , corporate , legal and administrative functions , as well as compensation-related expenses for our board of directors . general and administrative expenses also include legal fees ; expenses associated with being a public company ; professional fees for accounting , auditing , tax and consulting services ; insurance costs ; travel expenses ; other operating costs ; and facility-related expenses . other income , net other income , net consists primarily of refundable tax credits from tax authorities and dividend and interest income earned on cash and cash equivalents balances for the years ended december 31 , 2020 and 2019. we recognize refundable tax credits when there is reasonable assurance that we will comply with the requirements of the refundable tax credit and that the refundable tax credit will be received . income taxes we are a singapore multi-national company subject to taxation in the united states and various other jurisdictions . in 2020 , we recorded an income tax benefit of $ 0.8 million and in 2019 we recorded no income tax benefit or provision . as of december 31 , 2020 and 2019 , we have recorded a full valuation allowance against our net operating loss carryforwards and federal and state tax credits in all jurisdictions due to uncertainty regarding future taxable income . story_separator_special_tag million in ordinary shares that we may issue and sell from time to time , through jefferies llc acting as our sales agent , pursuant to the open market sales agreement that we entered into with jefferies llc in may 2019 , as amended in march 2020 , for our โ at-the-market โ equity program . since we no longer qualify as a โ well-known seasoned issuer โ at the time of the filing of this annual report on form 10-k , we have amended the shelf registration statement to register for sale up to $ 500 million of any combination of our ordinary shares , debt securities , warrants , rights and or units from time to time and at prices and on terms that we may determine , including the $ 250 million in ordinary shares that we may issue and sell from time to time pursuant to our โ at-the-market โ equity program . adequate additional financing may not be available to us on acceptable terms , or at all . our inability 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 will need to generate significant revenue to achieve profitability , and we may never do so . 101 cash flows the following table summarizes our sources and uses of cash for each of the periods presented : replace_table_token_3_th operating activities during 2020 , operating activities used $ 116.0 million of cash , primarily due to our net loss of $ 149.9 million , offset by non-cash charges of $ 24.3 million , partially offset by changes in our operating assets and liabilities of $ 9.6 million . the non-cash charges for 2020 related mainly to share-based compensation expense of $ 14.3 million and depreciation expense of $ 8.1 million . the largest changes in operating assets and liabilities were a decrease of $ 20.0 million in accounts receivable and a decrease of $ 20.1 million in deferred revenue , primarily related to the takeda collaboration agreement and a $ 14.1 million decrease in other assets primarily related to receiving the reimbursement of the refundable tax credits . during 2019 , operating activities used $ 188.2 million of cash , primarily due to our net loss of $ 193.6 million and changes in our operating assets and liabilities of approximately $ 23.3 million , offset by non-cash charges of $ 28.7 million . the non-cash charges for 2019 related mainly to share-based compensation expense of $ 19.5 million and $ 7.6 million of depreciation expense . investing activities during 2020 , investing activities used $ 1.3 million of cash , consisting of purchases of property and equipment . during 2019 , investing activities used $ 3.9 million of cash , consisting of purchases of property and equipment . financing activities during 2020 , net cash provided by financing activities was $ 154.5 million , which was mainly due to the $ 93.7 million in net proceeds from our september 2020 follow-on underwritten public offering and $ 59.9 million in net proceeds from our at-the-market equity program . during 2019 , net cash provided by financing activities was $ 164.4 million , which was due to the $ 161.8 million in net proceeds from our january 2019 follow-on underwritten public offering and approximately $ 2.6 million in proceeds from the exercise of share options . 102 funding requirements we expect to continue to incur significant expenses in connection with our ongoing research and development activities and our internal cgmp manufacturing activities .
| results of operations in this section , we discuss the results of our operations for the year ended december 31 , 2020 compared to the year ended december 31 , 2019 . 99 comparison of the year ended december 31 , 2020 to the year ended december 31 , 2019 the following table summarizes our results of operations for 2020 and 2019 : replace_table_token_1_th revenue revenue of $ 20.1 million and $ 16.0 million was earned under the pfizer collaboration agreement and takeda collaboration agreement for the years ended december 31 , 2020 and 2019 , respectively . the $ 4.1 million increase in revenue is primarily due to an increase in research and development services under the takeda collaboration agreement , partially offset by a decrease in research and development services under the pfizer collaboration agreement , which ended by its original terms in may 2020. research and development expenses the following table summarizes our research and development expenses incurred for the years ended december 31 , 2020 and 2019 : replace_table_token_2_th ( 1 ) includes discovery and development programs , identification of potential drug discovery candidates , and compensation-related expenses , internal manufacturing expenses , equipment repairs and maintenance expense , facility-related expenses and other operating expenses , which are not allocated to specific programs .
| 4,627 |
the trust division manages inter vivos trusts and trusts under will , develops and administers employee benefit and individual retirement plans , and manages and settles estates . fiduciary fees for these services are charged on a schedule related to the size , nature , and complexity of the account . revenues consist primarily of commissions on assets under management and investment advisory fees . as of december 31 , 2019 , the trust division and fcwm managed and administered $ 1.12 billion in combined assets under various fee-based arrangements as fiduciary or agent . our acquisition and divestiture activity during the last three years includes the december 31 , 2019 , close of the acquisition of highlands bankshares , inc. ( โ highlands โ ) , headquartered in abingdon , virginia with total assets of $ 563 million . the completion of the transaction resulted in total consolidated assets increasing to $ 2.80 billion . activity in prior years include the completion of our agreement and plan of reincorporation and merger changing our corporate domicile from nevada to virginia on october 2 , 2018 , as well as the sale of our remaining insurance agency assets to bankers insurance , llc on october 1 , 2018. for additional information , see note 2 , โ acquisitions and divestitures , โ to the consolidated financial statements in item 8 of this report . critical accounting policies our consolidated financial statements are prepared in conformity with generally accepted accounting principles ( โ gaap โ ) in the u.s. and prevailing practices in the banking industry . our accounting policies , as presented in note 1 , โ basis of presentation and accounting policies , โ to the consolidated financial statements in item 8 of this report are fundamental in understanding md & a and the disclosures presented in item 8 , โ financial statements and supplementary data , โ of this report . management may be required to make significant estimates and assumptions that have a material impact on our financial condition or operating performance . due to the level of subjectivity and the susceptibility of such matters to change , actual results could differ significantly from management 's assumptions and estimates . based on the valuation techniques used and the sensitivity of financial statement amounts to the methods , assumptions , and estimates used , we have identified the allowance for loan losses , and goodwill and other intangible assets , and business combinations as the accounting areas that require the most subjective or complex judgments or are the most susceptible to change . 22 allowance for loan losses we review our allowance for loan losses quarterly to determine if it is sufficient to absorb probable loan losses in the portfolio . this determination requires management to make significant estimates and assumptions . while management uses its best judgment and available information , the ultimate adequacy of the allowance is dependent upon a variety of factors beyond our control , including the performance of our loan portfolio , the economy , changes in interest rates , and the view of regulatory authorities towards loan classifications . these uncertainties may result in material changes to the allowance for loan losses in the near term ; however , the amount of the change can not reasonably be estimated . our allowance for loan losses consists of reserves assigned to specific loans and credit relationships and general reserves assigned to loans not separately identified that have been segmented into groups with similar risk characteristics using our internal risk grades . general reserve allocations are based on management 's judgments of qualitative and quantitative factors about macro and micro economic conditions reflected within the loan portfolio and the economy . factors considered in this evaluation include , but are not limited to , probable losses from loan and other credit arrangements , general economic conditions , changes in credit concentrations or pledged collateral , historical loan loss experience , and trends in portfolio volume , maturities , composition , delinquencies , and nonaccruals . historical loss rates for each risk grade of commercial loans are adjusted by environmental factors to estimate the amount of reserve needed by segment . individually significant loans require additional analysis that may include the borrower 's underlying cash flow and capacity for debt repayment , specific business conditions , and value of secondary sources of repayment ; consequently , this analysis may result in the identification of weakness and a corresponding need for a specific reserve . no allowance for loan losses is carried over or established at acquisition for purchased loans acquired in business combinations . a provision for loan losses is recorded for any credit deterioration in purchased performing loans after the acquisition date . loans acquired in business combinations that are deemed impaired at acquisition , purchased credit impaired ( โ pci โ ) loans , are grouped into pools and evaluated separately from the non-pci portfolio . the estimated cash flows to be collected on pci loans are discounted at a market rate of interest . management believed the allowance was adequate to absorb probable loan losses inherent in the loan portfolio as of december 31 , 2019. for additional information , see note 6 , โ allowance for loan losses , โ to the consolidated financial statements in item 8 of this report . third-party collateral valuations are regularly obtained and evaluated to help management determine changes in cash flows on purchased loans acquired in business combinations , potential credit impairment , and the amount of impairment to record . internal collateral valuations are generally performed within two to four weeks of identifying the initial potential impairment . the internal evaluation compares the original appraisal to current local real estate market conditions and considers experience and expected liquidation costs . when a third-party evaluation is received , it is reviewed for reasonableness . once the evaluation is reviewed and accepted , discounts are applied to fair market value , based on , but not limited to , our historical liquidation experience for like collateral , resulting in an estimated net realizable value . story_separator_special_tag the acquisition of highlands bankshares , inc. , headquartered in abingdon , virginia , with total assets of $ 563 million . the completion of the transaction increased total consolidated assets to $ 2.80 billion . โ for the full year , the company earned $ 38.80 million , or $ 2.46 per diluted share , an increase of $ 2.46 million , or 6.77 % over 2018 . โ compared to last year , return on average assets increased 0.19 % to 1.75 % and return on average equity increased 0.90 % to 11.54 % . โ net interest margin increased 18 basis points to 4.59 % compared to the year 2018 . โ the company received $ 7.00 million in litigation settlements for the year . โ the company incurred $ 2.12 million in pre-tax merger expenses related to the highlands acquisition for the year . โ book value per common share increased $ 2.54 to $ 23.33 compared to december 31 , 2018 . โ the company repurchased 487,400 common shares for approximately $ 16.36 million . story_separator_special_tag small bank assessment credits received from the fdic . these decreases were offset by an increase in merger expenses of $ 2.12 million related to the highlands acquisition as well as increases in service fees , furniture and equipment expense , and an increase in salaries and employee benefits totaling $ 1.52 million . 201 8 compared to 201 7 . noninterest expense increased $ 2.87 million , or 4.29 % , which was largely due to a one-time goodwill impairment charge related to the divestiture of the company 's remaining insurance agency assets , the loss on extinguishment of the company 's remaining fhlb debt , and an increase in salaries and employee benefits . these increases were offset by a decrease in professional fees , which were largely due to a reduction in legal fees . the increase in other operating expense included a $ 330 thousand increase in property write-downs and a $ 347 thousand increase in the net loss on sales and expenses related to other real estate owned ( โ oreo โ ) to $ 1.55 million in 2018 from $ 1.20 million in 2017. income tax expense the company 's effective tax rate , income tax as a percent of pre-tax income , may vary significantly from the statutory rate due to permanent differences and available tax credits . permanent differences are income and expense items excluded by law in the calculation of taxable income . the company 's most significant permanent differences generally include interest income on municipal securities and increases in the cash surrender value of life insurance policies . the tax reform act enacted on december 22 , 2017 , reduced our federal statutory income tax rate from 35 % to 21 % beginning january 1 , 2018 . 201 9 compared to 201 8 . income tax expense increased $ 2.21 million , or 25.19 % , and the effective tax rate increased to 22.08 % in 2019 compared to 19.46 % in 2018. the lower effective rate in 2018 was primarily due to the enactment of the tax reform act and the completion of the deferred tax asset revaluation , which resulted in a $ 1.67 million reduction in tax expense . 201 8 compared to 201 7 . income tax expense decreased $ 11.85 million , or 57.43 % , and the effective tax rate decreased to 19.46 % in 2018 compared to 48.98 % in 2017 primarily due to the decreased tax rate and deferred tax asset revaluation charge taken in 2017 as a result of the enactment of the tax reform act . 29 f inancial condition total assets as of december 31 , 2019 , increased $ 554.47 million , or 24.71 % , to $ 2.80 billion from $ 2.24 billion as of december 31 , 2018. the increase is primarily attributable to the december 31 , 2019 acquisition of highlands with total assets of $ 563 million . total liabilities as of december 31 , 2019 , increased $ 458.51 million , or 23.99 % , to $ 2.37 billion from $ 1.91 billion as of december 31 , 2018. the increase is primarily attributable to the december 31 , 2019 acquisition of highlands as noted earlier . investment securities our investment securities are used to generate interest income through the deployment of excess funds , to provide liquidity , to fund loan demand or deposit liquidation , and to pledge as collateral where required . the composition of our investment portfolio changes from time to time as we consider our liquidity needs , interest rate expectations , asset/liability management strategies , and capital requirements . available-for-sale debt securities as of december 31 , 2019 , increased $ 16.46 million , or 10.75 % , compared to december 31 , 2018 , and includes $ 53.7 million in investments securities acquired in the highlands transaction . the market value of debt securities available for sale as a percentage of amortized cost was 100.65 % as of december 31 , 2019 compared to 99.76 % as of december 31 , 2018. there were no held-to-maturity debt securities as of december 31 , 2019. the remaining debt securities in the held-to-maturity category in 2018 matured during the first quarter of 2019. the funds were used to repay the company 's remaining wholesale repurchase agreement of $ 25 million . the following table presents the amortized cost and fair value of debt securities as of the dates indicated : replace_table_token_9_th the following table provides information about our investment portfolio as of the dates indicated : replace_table_token_10_th there were no holdings of any one issuer , other than the u.s. government and its agencies , in an amount greater than 10 % of our total consolidated shareholders ' equity as of december 31 , 2019 or 2018 .
| results o f operations net income the following table presents the changes in net income and related information for the periods indicated : replace_table_token_4_th 201 9 compared to 201 8 . pre-tax income increased $ 4.67 million , or 10.36 % , due to an increase in noninterest income of $ 7.23 million partially offset by a decrease in net interest income of $ 1.39 million and an increase in the provision for loan losses of $ 1.18 million . income tax expense increased $ 2.21 million due to an increase in the effective rate from 19.46 % in 2018 to 22.08 % in 2019 . 201 8 compared to 201 7 . net income increased in 2018 due to a decrease in income tax expense , driven by a lower federal statutory rate and the deferred tax asset revaluation charge taken in 2017 , in accordance with the tax reform act . pre-tax income increased $ 3.01 million , or 7.15 % , due to increases in net interest and noninterest income and a decrease in the provision for loan losses . these changes were offset by an increase in noninterest expense . 25 net interest income net interest income , our largest contributor to earnings , is analyzed on a fully taxable equivalent ( โ fte โ ) basis , a non-gaap financial measure . for additional information , see โ non-gaap financial measures โ above . the following table presents the consolidated average balance sheets and net interest analysis on a fte basis for the dates indicated : replace_table_token_5_th ( 1 ) fte basis based on the federal statutory rate of 21 % for periods after january 1 , 2018 , and 35 % for periods prior to january 1 , 2018 ( 2 ) nonaccrual loans are included in average balances ; however , no related interest income is recognized during the period of nonaccrual .
| 4,628 |
these forward-looking statements are based on management 's current expectations and assumptions regarding our business and performance , the economy and other future conditions and forecasts of future events , circumstances and results . consequently , no forward-looking statements can be guaranteed . actual results may vary materially . we undertake no obligation to update any forward-looking statement , whether as a result of new information , future events or otherwise . we caution you not to place undue reliance on any forward-looking statements . numerous risks , uncertainties and other factors could cause our actual results to differ materially from expectations described in such forward-looking statements , including the following : general economic and business conditions in the united states and our other markets , including conditions affecting employment levels , consumer confidence and spending ; our ability to attract and retain key personnel and maintain and grow our relationships with customers , suppliers and other business partners ; our ability to adapt our products to changes in technology , the marketplace and customer preferences ; our ability to maintain and enhance brand recognition and reputation ; reductions , unexpected changes in or our inability to accurately forecast demand for ammunition , firearms or other outdoor sports and recreation products ; risks associated with our sales to significant retail customers , including unexpected cancellations , delays and other changes to purchase orders ; supplier capacity constraints , production disruptions or quality or price issues affecting our operating costs ; our competitive environment ; risks associated with compliance and diversification into international and commercial markets ; the supply , availability and costs of raw materials and components ; increases in commodity , energy and production costs ; changes in laws , rules and regulations relating to our business , such as federal and state firearms and ammunition regulations ; our ability to execute our long-term growth strategy , including our ability to complete and realize expected benefits from acquisitions and integrate acquired businesses ; our ability to take advantage of growth opportunities in international and commercial markets ; foreign currency exchange rates and fluctuations in those rates ; the outcome of contingencies , including with respect to litigation and other proceedings relating to intellectual property , product liability , warranty liability , personal injury and environmental remediation ; risks associated with cybersecurity and other industrial and physical security threats ; capital market volatility and the availability of financing ; changes to accounting standards or policies ; and changes in tax rules or pronouncements . it is not possible to predict or identify all such factors and the list above should not be considered to be a complete statement of all potential risks and uncertainties . new factors may emerge or changes to the foregoing factors may occur that would impact our business . additional information regarding these factors is contained in item 1a of this report and may also 31 be contained in our filings with the securities and exchange commission on forms 10-q and 8-k. all such risk factors are difficult to predict , contain material uncertainties that may affect actual results , and may be beyond our control . story_separator_special_tag style= '' line-height:120 % ; text-indent:30px ; font-size:10pt ; '' > our inventories are valued at the lower of cost or market . we evaluate the quantities of inventory held against past and future demand and market conditions to determine excess or slow moving inventory . for those product classes of inventory identified , we estimate their market value based on current and projected selling prices . if the projected market value is less than cost , we provide an allowance to reflect the lower value of that inventory . this methodology recognizes projected inventory losses at the time such losses are evident rather than at the time goods are actually sold . the projected market value can decrease due to consumer preferences , legislation , or loss of key contracts among other events . 33 income taxes provisions for federal , state and foreign income taxes are calculated based on reported pre-tax earnings and current tax law . such provisions differ from the amounts currently receivable or payable because certain items of income and expense are recognized in different time periods for financial reporting purposes than for income tax purposes . significant judgment is required in determining income tax provisions and evaluating tax positions . we periodically assess our liabilities and contingencies for all periods that are currently open to examination or have not been effectively settled based on the most current available information . where it is not more likely than not that our tax position will be sustained , we record the entire resulting tax liability and when it is more likely than not of being sustained , we record our best estimate of the resulting tax liability . any applicable interest and penalties related to these positions are also recorded in the consolidated and combined financial statements . to the extent our assessment of the tax outcome of these matters changes , such change in estimate will impact the income tax provision in the period of the change . it is our policy to record any interest and penalties related to income taxes as part of the income tax expense for financial reporting purposes . deferred tax assets related to carryforwards are reduced by a valuation allowance when it is not more likely than not that the amount will be realized before expiration of the carryforward period . as part of this analysis , we take into account the amount and character to determine if the carryforwards will be realized . significant estimates are required for this analysis . changes in the amounts of valuation allowance are recorded in the tax provision in the period when the change occurs . acquisitions the results of acquired businesses are included in our consolidated and combined financial statements from the date of acquisition . story_separator_special_tag based on this analysis , we have identified four reporting units , as of the fiscal 2016 testing date . the goodwill impairment test is performed using a two-step process . in the first step , we determine the estimated fair value of each reporting unit and compare it to the carrying value of the reporting unit , including goodwill . if the carrying amount of a reporting unit is higher than its estimated fair value , an indication of impairment exists and the second step must be performed in order to determine the amount of the impairment . in the second step , we must determine the implied fair value of the reporting unit 's goodwill , which is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation . the implied fair value is compared to the carrying amount and if the carrying amount of the reporting unit 's goodwill exceeds the implied fair value of its goodwill , an impairment loss must be recognized for the excess . the fair value of each reporting unit is determined using both an income and market approach . the value estimated using a discounted cash flow model is weighted against the estimated value derived from the guideline company market approach method . this market approach method estimates the price reasonably expected to be realized from the sale of the company based on comparable companies . in developing the discounted cash flow analysis , our assumptions about future revenues and expenses , capital expenditures , and changes in working capital are based on our plan , as reviewed by the board of directors , and assume a terminal growth rate thereafter . a separate discount rate is determined for each reporting unit and these cash flows are then discounted to determine the fair value of the reporting unit . our identifiable intangibles with indefinite lives consist of certain trademarks and trade names ( `` tradenames '' ) . the impairment test consists of a comparison of the fair value of the specific tradename with its carrying value . the fair value of these assets are measured using the relief-from-royalty method which assumes that the asset has value to the extent that the owner is relieved of the obligation to pay royalties for the benefits received from them . this method requires that we estimate the future revenue for the related brands and technology , the appropriate royalty rate , and the weighted average cost of capital . we base our fair values and estimates on assumptions we believe to be reasonable , but which are unpredictable and inherently uncertain . if the carrying amount of a tradename is higher than its fair value , an impairment exists and the asset would be recorded at the fair value . projecting discounted future cash flows requires us to make significant estimates regarding future revenues and expenses , projected capital expenditures , changes in working capital , and the appropriate discount rate . the projections also take into account several factors including current and estimated economic trends and outlook , costs of raw materials and other factors that are beyond our control . if the current economic conditions were to deteriorate , or if we were to lose significant business , causing a reduction in estimated discounted cash flows , it is possible that the estimated fair value of certain reporting units or tradenames could fall below their carrying value resulting in the necessity to conduct additional impairment tests in future 35 periods . we continually monitor the reporting units and tradenames for impairment indicators and update assumptions used in the most recent calculation of the estimated fair value of a reporting unit or tradenames as appropriate . results of our fiscal year 2016 impairment test for the fiscal year 2016 goodwill impairment assessment performed as of january 4 , 2016 , we utilized estimated cash flows from our plan and assumed a terminal growth rate thereafter of 3 % . the cash flows were then discounted using a separate discount rate for each reporting unit which ranged from 8 % to 10 % . an assumed value was also determined using multiples by comparing operating results from guideline companies . the results of our fiscal year 2016 goodwill impairment test indicated that the estimated fair value of reporting units tested exceeded their carrying value by more than 10 % , which we deem to be a sufficient excess . for the fiscal year 2016 tradenames impairment assessment performed as of january 4 , 2016 , we utilized estimated revenues from our plan and assumed a royalty rate of 3 % to 6 % and a terminal growth rate thereafter of 3 % . the cash flows were then discounted using a separate discount rate for each tradename which ranged from 9 % to 11 % . all indefinite intangible assets tested had a fair value that was significantly in excess of carrying value which we define as greater than 10 % . results of operations the following information should be read in conjunction with our consolidated and combined financial statements . the key performance indicators that our management uses in managing the business are sales , gross profit and cash flows . segment total net sales , cost of sales and gross profit exclude intercompany sales and profit . fiscal 2016 sales the following is a summary of each operating segment 's sales : replace_table_token_4_th the overall fluctuation in net sales was driven by the changes within the operating segments as described below . shooting sports . the increase in sales was primarily driven by increases in firearm and rimfire ammunition volume , partially offset by decreases in shotshell volume . the volumes in the back half of fiscal 2016 improved as market demand stabilized . outdoor products .
| executive summary we serve the outdoor sports and recreation markets through a diverse portfolio of over 40 well-recognized brands that provide consumers with a wide range of performance-driven , high-quality and innovative products , including sporting ammunition and firearms , outdoor accessories , outdoor sports optics , golf rangefinders , performance eyewear , hydration products , and stand up paddle boards . we serve a broad range of end consumers , including outdoor enthusiasts , hunters and recreational shooters , athletes , as well as law enforcement and military professionals . our products are sold through a wide variety of mass , specialty and independent retailers , such as bass pro shops , cabela 's , dick 's sporting goods , gander mountain , recreational equipment , inc. , sportsman 's warehouse , target and walmart . we also sell certain of our products directly to consumers through the relevant brand 's website . we have a scalable , integrated portfolio of brands that allows us to leverage our deep customer knowledge , product development and innovation , supply chain and distribution , and sales and marketing functions across product categories to better serve our retail partners and end users . as of march 31 , 2016 , we operated in two business segments . these operating segments are defined based on the reporting and review process used by the chief operating decision maker , vista outdoor 's chief executive officer . as of march 31 , 2016 , vista outdoor 's two operating segments were : shooting sports , which generated 62 % of our sales in fiscal year 2016 . shooting sports product lines include centerfire ammunition , rimfire ammunition , shotshell ammunition , reloading components , centerfire rifles , rimfire rifles , shotguns and range systems . outdoor products , which generated 38 % of our sales in fiscal year 2016 . the outdoor products product lines are archery/hunting accessories , global eyewear and sport protection , golf , hydration products , optics , shooting accessories , tactical products and water sports .
| 4,629 |
rather , each owner reports his or her share of our income or loss on his or her individual tax return . we have certain taxable corporate subsidiaries in the united states and canada . in addition , our operations in texas are subject to a state franchise tax that is calculated based on revenues net of cost of sales . noncontrolling interests we have certain consolidated subsidiaries in which outside parties own interests . the noncontrolling interest shown in our consolidated statements of operations represents the other owners ' share of the net income of these entities . non-gaap financial measures the following tables reconcile net income attributable to parent equity to ebitda and adjusted ebitda , each of which are non-gaap financial measures : replace_table_token_13_th we define ebitda as net income ( loss ) attributable to parent equity , plus interest expense , loss on early extinguishment of debt , income taxes , and depreciation and amortization expense . we define adjusted ebitda as ebitda excluding the unrealized gain or loss on derivative contracts , the gain or loss on the disposal or impairment of assets , and share-based compensation expense . ebitda and adjusted ebitda should not be considered an alternative to net income , income before income taxes , cash flows from operating activities , or any other measure of financial performance calculated in accordance with accounting principles generally accepted in the united states ( ยgaapย ) as those items are used to measure operating performance , liquidity or the ability to service debt obligations . we believe that ebitda provides additional information to investors for evaluating our ability to make quarterly distributions to our unitholders and is presented solely as a supplemental measure . we believe that adjusted ebitda provides additional information for evaluating our financial performance without regard to our financing methods , capital structure and historical cost basis . further , ebitda and adjusted ebitda , as we define them , may not be comparable to ebitda and adjusted ebitda or similarly titled measures used by other entities . 58 for purposes of our adjusted ebitda calculation , we make a distinction between unrealized gains and losses on derivatives and realized gains and losses on derivatives . during the period when a derivative contract is open , we record changes in the fair value of the derivative as unrealized gains or losses . when a derivative contract is settled , we reverse the previously-recorded unrealized gain or loss and record a realized gain or loss . the realized gain or loss is equal to the amount received or paid on the contract . we acquired gavilon energy in december 2013. we are still in the process of developing procedures to calculate realized and unrealized gains and losses for the gavilon energy operations in the same way we calculate them for our other operations . accordingly , the unrealized gain and loss in the table above excludes any unrealized gains and losses related to gavilon energy . the tables below reconcile depreciation and amortization amounts per the ebitda table above to depreciation and amortization amounts reported in our consolidated statements of operations and consolidated statements of cash flows : replace_table_token_14_th story_separator_special_tag seq.=1 , folio='62 ' , file= ' c : \jms\c901830\14-6956-1\task6809258\6956-1-bw.htm ' , user='c901830 ' , cd='may 30 20:11 2014 ' -- > revenues . our water solutions segment generated $ 125.8 million of treatment and disposal revenue during the year ended march 31 , 2014 , taking delivery of 62.8 million barrels of wastewater at an average revenue of $ 2.00 per barrel . during the year ended march 31 , 2013 , our water solutions segment generated $ 54.3 million of treatment and disposal revenue , taking delivery of 25.0 million barrels of wastewater at an average revenue of $ 2.17 per barrel . the increase in revenues was due primarily to the fact that we did not own a water solutions business until our june 19 , 2012 merger with high sierra and was due also to acquisitions during the year ended march 31 , 2013 , including indigo , and acquisitions during the year ended march 31 , 2014 , including owl , big lake and coastal . the decrease in revenue per barrel was due primarily to the fact that the expansion of our water solutions business subsequent to our merger with high sierra has been primarily in texas , where the market rates for water disposal services are typically lower than in wyoming or colorado . in our june 2012 merger with high sierra , we acquired a water transportation business in oklahoma . in our august 2013 acquisition of owl , we acquired a water transportation business in texas . our water solutions segment generated $ 17.3 million of transportation revenues during the year ended march 31 , 2014 , compared to $ 7.9 million of transportation revenues during the year ended march 31 , 2013. this increase was due primarily to the acquisition of owl . this increase was partially offset by a decrease in water transportation revenues generated by the water solutions business acquired in the merger with high sierra , which resulted primarily from a slowdown in production activities by a customer . during the three months ended december 31 , 2013 , we wound down our water transportation operations in oklahoma , transferring certain of the assets to our business in texas and selling the remaining assets . cost of sales . story_separator_special_tag the cost of sales for our water solutions segment was $ 11.7 million during the year ended march 31 , 2014. our cost of sales during the year ended march 31 , 2014 was increased by $ 0.6 million of unrealized losses on derivatives . because a portion of our processing revenue is generated from the sale of recovered hydrocarbons , we enter into derivatives to protect against the risk of a decline in the market price of a portion of the hydrocarbons we expect to recover . during the year ended march 31 , 2013 , the cost of sales for our water solutions segment was $ 5.6 million . our cost of sales during the year ended march 31 , 2013 was increased by $ 1.0 million of unrealized losses on derivatives . the increase in our cost of sales was due primarily to the expansion of our operations through acquisitions of water solutions businesses . operating expenses . our water solutions segment incurred $ 58.2 million of operating expenses during the year ended march 31 , 2014 , compared to $ 25.5 million of operating expenses during the year ended march 31 , 2013. this increase was due primarily to the fact that we did not own a water solutions business until our june 19 , 2012 merger with high sierra , and was also due primarily to subsequent acquisitions of businesses . we incurred losses on disposal of property , plant and equipment of $ 2.0 million during the year ended march 31 , 2014 as a result of property damage from lightning strikes at two of our facilities . general and administrative expenses . our water solutions segment incurred $ 7.8 million of general and administrative expenses during the year ended march 31 , 2014 , compared to $ 1.7 million of general and administrative expenses during the year ended march 31 , 2013. this increase was due in part to the fact that we did not own a water solutions business until our june 19 , 2012 merger with high sierra , and was also due to subsequent acquisitions of businesses . depreciation and amortization expense . our water solutions segment incurred $ 55.1 million of depreciation and amortization expense during the year ended march 31 , 2014 , compared to $ 20.9 million of depreciation and amortization expense during the year ended march 31 , 2013. this increase was due in part to the fact that we did not own a water solutions business until our june 19 , 2012 merger with high sierra , and was also due to subsequent acquisitions of businesses . the increase is also due in part to $ 2.1 million of amortization expense related to trade name intangible assets . during the year ended march 31 , 2014 , we ceased using certain trade names and began amortizing them as finite-lived defensive assets . operating income . our water solutions segment generated $ 10.3 million of operating income during the year ended march 31 , 2014 , compared to operating income of $ 8.6 million during the year ended march 31 , 2013. exclusive of acquisitions during the year ended march 31 , 2014 , our operating income decreased by $ 3.7 million . increases in revenues were offset by increases in operating expenses , including a $ 7.2 million increase in depreciation and amortization expense . the businesses acquired during the year ended march 31 , 2014 generated operating income of $ 5.5 million , which included $ 27.0 million of depreciation and amortization expense , which consisted primarily of amortization expense on acquired customer relationship intangible assets . 63 liquids the following table summarizes the operating results of our liquids segment for the years ended march 31 , 2014 and 2013 : replace_table_token_19_th ( 1 ) revenues include $ 245.6 million of intersegment sales during the year ended march 31 , 2014 and $ 128.9 million of intersegment sales during the year ended march 31 , 2013 that are eliminated in our consolidated statements of operations . revenues . our liquids segment generated $ 1.6 billion of wholesale propane sales revenue during the year ended march 31 , 2014 , selling 1.1 billion gallons at an average price of $ 1.37 per gallon . during the year ended march 31 , 2013 , our liquids segment generated $ 841.4 million of wholesale propane sales revenue , selling 912.6 million gallons at an average price of $ 0.92 per gallon . approximately 221.2 million gallons of the increase in volumes was due to the fact that we only owned the natural gas liquids business of high sierra for a part of the year ended march 31 , 2013. the remaining increase in volume was due to several factors , including higher market demand , due in part to colder weather conditions , and the expansion of our customer base . in addition , during the year ended march 31 , 2013 , we upgraded two terminals that we acquired in february 2012 , which enabled us to expand our wholesale operations from these terminals . our liquids segment generated $ 1.2 billion of other wholesale products sales revenue during the year ended march 31 , 2014 , selling 786.7 million gallons at an average price of $ 1.57 per gallon . during the year ended march 31 , 2013 , our liquids segment generated $ 858.3 million of other wholesale products sales revenue , selling 505.5 million gallons at an average price of $ 1.70 per gallon . approximately 454.1 million gallons of the increase in volumes was due to the fact that we only owned the natural gas liquids business of high sierra for a part of the year ended march 31 , 2013. the remaining increase in volume was due to several factors , including higher market demand for butane to be used in gasoline blending operations , the expansion of our customer base
| segment operating results items impacting the comparability of our financial results our current and future results of operations may not be comparable to our historical results of operations for the periods presented , due to business combinations . we expanded our crude oil logistics business through a number of acquisitions , including our acquisitions of high sierra in june 2012 , pecos in november 2012 , third coast in december 2012 , crescent in july 2013 , and gavilon energy in december 2013. we expanded our water solutions business through several acquisitions of water disposal and transportation businesses , including high sierra in june 2012 , big lake in july 2013 , owl in august 2013 , and coastal in september 2013. we expanded our liquids business through the acquisitions of semstream in october 2011 and high sierra in june 2012. we expanded our retail propane operations through the acquisitions of osterman in october 2011 , pacer in january 2012 , north american in february 2012 , and downeast in may 2012. our refined products and renewables businesses began with our december 2013 acquisition of gavilon energy . 59 volumes the following table summarizes the volume of product sold and water delivered for the years ended march 31 , 2014 and 2013. volumes shown in the table below for our liquids segment include sales to our retail propane segment . replace_table_token_15_th volumes sold by our crude oil logistics and water solutions segments were higher during the year ended march 31 , 2014 than during the year ended march 31 , 2013 , due primarily to the expansion of our business through acquisitions . volumes sold by our liquids segment were higher during the year ended march 31 , 2014 than during the year ended march 31 , 2013 , due to several factors . market demand for propane was higher , due in part to colder weather conditions .
| 4,630 |
for entities that , as of june 2020 , had not issued financial statements under topic 606 , the effective date was extended by one year to annual periods beginning after december 15 , 2019 and interim periods within annual periods beginning after december 15 , 2020. entities who have not issued financial statements under topic 842 , are required to adopt topic 842 for financial statements issued for fiscal years beginning after december 15 , 2021 , and interim periods within fiscal years beginning after december 15 , 2022. earlier application is permitted . in august 2018 , the fasb issued asu 2018-13 , fair value measurement ( topic 820 ) : disclosure framework โ changes to the disclosure requirements for fair value measurement . for all entities , amendments pursuant to asu 2018-13 are effective for fiscal years , and interim periods within those fiscal years , beginning after december 15 , 2019. the amendments on changes in unrealized gains and losses , the range and weighted average of significant unobservable inputs used to develop level 3 fair value measurements , and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption story_separator_special_tag the following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes , and other financial information included in this form 10-k. 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 risky , and are subject to uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this form 10-k. 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 sec . we do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this form 10-k. although the forward-looking statements in this form 10-k reflect the good faith judgment of our management , such statements can only be based on facts and factors currently known by them . 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 . for a more detailed discussion of the inclusion of forward-looking statements in this form 10-k , please refer to the discussion , above , entitled โ cautionary statement regarding forward-looking statements and information. โ 43 overview our current business , and the primary source of our revenues to date , has been under a traditional staffing services business model . our market focus is to use this traditional approach , coupled with developed technology , to address underserved markets containing predominately lower wage employees with high turnover , including the light industrial , services , and food and hospitality markets . we provide human resources , employment compliance , insurance , payroll , and operational employment services solutions for our business clients ( โ clients โ or โ operators โ ) and shift work or โ gig โ opportunities for wses ( or โ shifters โ ) . as consideration for providing these services , we receive administrative or processing fees as a percentage of a client 's gross payroll , process and file payroll taxes and payroll tax returns , provide workers ' compensation insurance , and provide employee benefits . we have built a substantial business on a recurring revenue model since our inception in 2015. for the fiscal year ended august 31 , 2020 , including our discontinued operations related to the vensure asset sale described below , we processed approximately $ 186 million of payroll billings . accounting for and excluding these discontinued operations , our total processed billings exceeded $ 65 million . for our continuing operations , we observed recurring and new client wage billings growth for the first half of fiscal 2020 , followed by a significant decline beginning in march 2020. for existing clients at february 29 , 2020 , we experienced a may 2020 quarterly billings decrease of approximately 27 % due to the covid-19 pandemic , or approximately $ 3.9 million , of which $ 0.6 million was attributable to clients that have not reopened to date , and $ 3.3 million to clients whose operations have been largely ongoing throughout the pandemic . we benefited from a qsr client mix that has been able to adapt towards takeout , delivery , and outside or limited inside dining , particularly in southern california , where most of our clients are located and the weather and climate are more favorable to โ distanced dining โ than other regions of the country . we recovered approximately $ 1.8 million in billings during the quarter ended august 31 , 2020 , representing more than 50 % of the billings lost due primarily to the pandemic during the prior fiscal quarter . we were also successful in acquiring new customers during the second half of fiscal 2020 , adding 26 new clients that resulted in $ 3.8 million of additional billings during the period . story_separator_special_tag following completion of the questions , applicable onboarding paperwork will be prepopulated with the data and prepared for the employee 's signature to be affixed digitally via the app as well . we are currently in the early implementation stage of several key pieces of functionality . first is the scheduling component of our software , which is designed to enable each client worksite to schedule workers and to identify shift gaps that need to be filled . we leverage artificial intelligence to maintain schedules and fulfillment , using an active methodology to engage and move people to action . second , we are continuing to implement the โ delivery features โ of our mobile platform , which we began rolling out to our clients on a test basis during the fourth calendar quarter of 2019 , and which is described in more detail below . third is the implementation our shift intermediation functionality , which is designed to enable our shift workers to receive information regarding and to accept available shift work opportunities . we believe that our technology and approach to human capital management provides the company a unique window into the daily demands of qsr operators , and the ability to extend our technology and engagement to enable this unique self-delivery proposition . shiftpixy 's new driver management layer for operators in the shiftpixy ecosystem will allow clients to use their own team members to deliver a brand intended customer experience and retain customer data as well as retain profit currently absorbed by third party delivery platforms . shiftpixy has taken the compliance , management and insurance issues related to the support of a delivery option and created a turnkey self-delivery opportunity . this will allow our clients to enjoy the income growth from delivery and preserve their customer experience and their brand . we are currently implementing features that we believe will enhance the capability of our mobile application to track and manage the delivery process . the enhanced features will include โ micro metering โ of essential commercial insurance coverages required by our operator clients -- primarily workers ' compensation and auto coverages -- on a delivery-by-delivery basis . 45 prior to march 2019 , we primarily used turnkey contract software development firms to build the software code , mobile application , and license integrations required to build the functional solution , with our internal personnel maintaining principally an oversight role . beginning in march 2019 , we hired and assembled an internal development team for cost-cutting and for better feature and implementation control . our development team was fully in place by august 2019 and focused on delivering a version of our mobile app and software solution using a combination of third-party licensed software and internally developed software . we began building our internal software development team and transitioned away from our former software development vendor to expedite our technology deployment . the tardy delivery of the user features from our previous software development vendor and related on-going litigation slowed the pace of our growth . we believe that the completion of our technology and the deployment of these features will further accelerate our growth . we launched version 2.0 of our mobile app and enhanced user features , including onboarding , scheduling and driver management , during the fourth calendar quarter of 2019. we believe that the continuing release and update of these features will further accelerate the growth of our business and move us closer to our financial breakeven point . during the fourth quarter of fiscal 2020 , we evaluated the software developed by our former software development vendor for impairment . we identified approximately $ 3.5 million of capitalized software that we now believe to be impaired based upon our analysis , particularly in light of the procedural posture and status of the litigation surrounding much of this software , as well as the state of the replacement user features developed over the last two years . accordingly , we reduced the carrying value of the software to $ 0 and recorded a corresponding $ 3.5 million charge to earnings in the fourth quarter of fiscal 2020. we continued our software development internally during the first half of fiscal 2020 primarily through feature enhancements such as delivery , scheduling , and onboarding functionality improvement , and better integration and more seamless process flow improvements . we believe that this has resulted in an improved user experience , reduced internal staff time required for onboarding , and increased trials of our future revenue generation features such as delivery and scheduling . our software development during the second half of fiscal 2020 continued to focus on enhanced delivery and intermediation functionality but was disrupted due to inefficiencies caused by the covid-19 lockdown , impacting personnel located in our irvine , ca offices as well as our external development teams . from inception of the project in 2017 through august 31 , 2020 , we spent approximately $ 20.7 million , consisting of outsourced research and development , it related expenses , development contractors and employee costs , as well as marketing spending consisting of advertising , trade shows , and personnel costs . the following table shows the technology and marketing spending for each year ended august 31 : replace_table_token_2_th we capitalized no development spending into fixed assets for the year ended august 31 , 2020 , since the development activities related to our intermediation software , as defined by gaap , was reached during the fall of 2020. for the years ended august 31 , 2019 and 2018 , we capitalized $ 0.9 million and $ 2.8 million , respectively , of contract development spending into fixed assets .
| results of operations year ended august 31 , 2020 compared to year ended august 31 , 2019 the following table summarizes our consolidated results of operations : replace_table_token_6_th we report our revenues as gross billings , net of related direct labor costs for our eas clients and revenues without reduction of labor costs for staffing services clients . for the years ended august 31 , 2020 and 2019 , we recorded no revenues associated with staffing services . replace_table_token_7_th 55 our net revenue excludes the payroll cost component of gross billings . with respect to employer payroll taxes , employee benefit programs , and workers ' compensation insurance , we believe that we are the primary obligor , and we have latitude in establishing price , selecting suppliers , and determining the service specifications . as such , the billings for those components are included as revenue . revenues are recognized ratably over the payroll period as wses perform their services at the client worksite . net revenue . our net revenue decrease of $ 1.9 million , or 17.3 % , from $ 10.5 million in fiscal 2019 to $ 8.6 million in fiscal 2020 was primarily driven by the net effect of an increase in restaurant wses , representing $ 3.1 million of qsr related revenue growth , offset by a decrease of $ 5.0 million in revenues from fiscal 2019 associated with light industrial wses employed by clients that were either sold to vensure , ( and therefore included in discontinued operations ) , or terminated during fiscal 2019. active wses increased by 1,700 , or 113.3 % , from 1,500 at the end of fiscal 2019 to 3,200 at the end of fiscal 2020. revenue associated with admin fees remained consistent at $ 1.3 million for both fiscal 2019 and fiscal 2020. revenues associated with taxes decreased by 12.8 % consistent with the billed wages decrease of 10.7 % .
| 4,631 |
our actual results could differ materially from those discussed in the forward-looking statements . factors that could cause or contribute to those differences include those discussed below and elsewhere in this annual report on form 10-k , particularly in โ risk factors , โ โ note regarding forward-looking statements , โ and โ note regarding user metrics and other data. โ the following generally discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019. discussion of historical items and year-to-year comparisons between 2019 and 2018 that are not included in this discussion can be found in โ management 's discussion and analysis of financial condition and results of operations โ in our annual report on form 10-k for the fiscal year ended december 31 , 2019 , filed with the sec on february 4 , 2020. overview of full year 2020 results our key user metrics and financial results for fiscal year 2020 are as follows : user metrics daily active users , or daus , increased to 265 million in q4 2020 , compared to 218 million in q4 2019. average revenue per user , or arpu , increased 33 % to $ 3.44 in q4 2020 , compared to $ 2.58 in q4 2019. story_separator_special_tag measurement services , and personnel-related costs , including salaries , benefits , and stock-based compensation expenses . cost of revenue also includes facilities and other supporting overhead costs , including depreciation and amortization , and inventory costs for spectacles . research and development expenses research and development expenses consist primarily of personnel-related costs , including salaries , benefits , and stock-based compensation expense for our engineers , designers , and other employees engaged in the research and development of our products . in addition , research and development expenses include facilities and other supporting overhead costs , including depreciation and amortization . research and development costs are expensed as incurred . sales and marketing expenses sales and marketing expenses consist primarily of personnel-related costs , including salaries , benefits , commissions , and stock-based compensation expense for our employees engaged in sales and sales support , business development , media , marketing , corporate partnerships , and customer service functions . sales and marketing expenses also include costs incurred for advertising , market research , tradeshows , branding , marketing , promotional expense , and public relations , as well as facilities and other supporting overhead costs , including depreciation and amortization . general and administrative expenses general and administrative expenses consist primarily of personnel-related costs , including salaries , benefits , and stock-based compensation expense for our finance , legal , information technology , human resources , and other administrative teams . general and administrative expenses also include facilities and supporting overhead costs , including depreciation and amortization , and external professional services . interest income interest income consists primarily of interest earned on our cash , cash equivalents , and marketable securities . interest expense interest expense consists primarily of interest expense associated with our senior convertible notes , or the convertible notes , and commitment fees and amortization of financing costs related to our revolving credit facility . other income ( expense ) , net other income ( expense ) , net consists of realized gains and losses on sales of marketable securities , our portion of non-marketable investment income and losses , foreign currency transaction gains and losses , and gains and impairments on non-marketable investments . other income ( expense ) , net also includes any gains or losses on divestitures of businesses . income tax benefit ( expense ) we are subject to income taxes in the united states and numerous foreign jurisdictions . these foreign jurisdictions have different statutory tax rates than the united states . additionally , certain of our foreign earnings may also be taxable in the united states . accordingly , our effective tax rates will vary depending on the relative proportion of foreign to domestic income , use of tax credits , changes in the valuation of our deferred tax assets and liabilities , and changes in tax laws . 49 adjusted ebitda we define adjusted ebitda as net income ( loss ) , excluding interest income ; interest expense ; other income ( expense ) , net ; income tax benefit ( expense ) ; depreciation and amortization ; stock-based compensation expense and related payroll tax expense ; and certain other non-cash or non-recurring items impacting net income ( loss ) from time to time . we consider the exclusion of certain non-cash and non-recurring expenses in calculating adjusted ebitda to provide a useful measure for period-to-period comparisons of our business and for investors and others to evaluate our operating results in the same manner as does our management . additionally , we believe that adjusted ebitda is an important measure since we use third-party infrastructure partners to host our services and therefore we do not incur significant capital expenditures to support revenue-generating activities . see โ selected financial data โ non-gaap financial measures โ for additional information and a reconciliation of net loss to adjusted ebitda . discussion of results of operations the following table sets forth our consolidated statements of operations data : replace_table_token_5_th ( 1 ) stock-based compensation expense included in the above line items : replace_table_token_6_th ( 2 ) depreciation and amortization expense included in the above line items : replace_table_token_7_th ( 3 ) see โ selected financial dataโnon-gaap financial measures โ of this annual report on form 10-k for more information and for a reconciliation of adjusted ebitda to net loss , the most directly comparable financial measure calculated and presented in accordance with gaap . story_separator_special_tag โ unaudited quarterly results of operations data the following table sets forth the primary components of our unaudited quarterly consolidated statements of cash flows for each of the four quarters in the periods ended december 31 , 2020 and december 31 , 2019. these unaudited quarterly statements of cash flows have been prepared on the same basis as our audited consolidated financial statements included in โ financial statements and supplementary data โ in this annual report on form 10-k. in the opinion of management , the financial information reflects all normal recurring adjustments necessary for the fair statement of results of operations for these periods . this information should be read in conjunction with our consolidated financial statements and the related notes included in โ financial statements and supplementary data โ in this annual report on form 10-k. the results of historical periods are not necessarily indicative of the results in any future period . replace_table_token_19_th 54 the following table sets forth the major components of our unaudited quarterly consolidated statements of operations for each of the four quarters in the periods ended december 31 , 2020 and december 31 , 2019. these unaudited quarterly results of operations have been prepared on the same basis as our audited consolidated financial statements included in โ financial statements and supplementary data โ in this annual report on form 10-k. in the opinion of management , the financial information reflects all normal recurring adjustments necessary for the fair statement of results of operations for these periods . this information should be read in conjunction with our consolidated financial statements and the related notes included in โ financial statements and supplementary data โ in this annual report on form 10-k. the results of historical periods are not necessarily indicative of the results in any future period . replace_table_token_20_th ( 1 ) stock-based compensation expense included in the above line items : replace_table_token_21_th ( 2 ) depreciation and amortization expense included in the above line items : replace_table_token_22_th 55 the following table presents a reconciliation of free cash flow to net cash used in operating activities , the most comparable gaap financial measure , for each of the periods presented : replace_table_token_23_th the following table presents a reconciliation of adjusted ebitda to net loss , the most comparable gaap financial measure , for each of the periods presented : replace_table_token_24_th 56 the following table sets forth the components of our unaudited quarterly consolidated statements of operations for each of the periods presented as a percentage of revenue : replace_table_token_25_th liquidity and capital resources cash , cash equivalents , and marketable securities were $ 2.5 billion as of december 31 , 2020 , primarily consisting of cash on deposit with banks and highly liquid investments in u.s. government and agency securities , corporate debt securities , certificates of deposit , and commercial paper . our primary source of liquidity is cash generated through financing activities . our primary uses of cash include operating costs such as personnel-related costs and the infrastructure costs of the snapchat application , facility-related capital spending , and acquisitions and investments . there are no known material subsequent events that could have a material impact on our cash or liquidity . we may contemplate and engage in merger and acquisition activity that could materially impact our liquidity and capital resource position . in april 2020 , we entered into a purchase agreement for the sale of an aggregate of $ 1.0 billion principal amount of senior convertible notes , or the 2025 notes . the net proceeds from the issuance of the 2025 notes were $ 888.6 million , net of debt issuance costs and cash used to pay the costs of the capped call transactions , or the 2025 capped call transactions , discussed further in note 7 . the 2025 notes mature on may 1 , 2025 unless repurchased , redeemed , or converted in accordance with their terms prior to such date . the sale price for conversion was satisfied as of december 31 , 2020 and as a result , the 2025 notes first became eligible for optional conversion during the first quarter of 2021. in august 2019 , we entered into a purchase agreement for the sale of an aggregate of $ 1.265 billion principal amount of senior convertible notes , or the 2026 notes . the net proceeds from the issuance of the 2026 notes were $ 1.15 billion , net of debt issuance costs and cash used to pay the costs of the capped call transactions , or the 2026 capped call transactions , discussed further in note 7 . the 2026 notes mature on august 1 , 2026 unless repurchased , redeemed , or converted in accordance with their terms prior to such date . the sale price for conversion was satisfied as of december 31 , 2020 and as a result , the 2026 notes first became eligible for optional conversion during the first quarter of 2021. in july 2016 , we entered into a five-year senior unsecured revolving credit facility , or the credit facility , with lenders some of which are affiliated with certain members of the underwriting syndicate for our convertible notes offering , that allows us to borrow up to $ 1.1 billion to fund working capital and general corporate-purpose expenditures . the loan bears interest at libo plus 0.75 % , as well as an annual commitment fee of 0.10 % on the daily undrawn balance of the facility . no origination fees were incurred at the closing of the credit facility . in december 2016 , the amount we are permitted to borrow under the credit facility was increased to $ 1.2 billion . in february 2018 , the amount we are permitted to borrow under the credit facility was increased to $ 1.25 billion . in august 2018 , we amended the credit facility to extend the term to august 2023 with respect to an aggregate of $ 1.05 billion of the $ 1.25 billion that we may borrow under the credit facility .
| financial results cash used in operating activities was $ ( 167.6 ) million in 2020 , compared to $ ( 305.0 ) million in 2019. free cash flow was $ ( 225.5 ) million in 2020 , compared to $ ( 341.4 ) million in 2019. common shares outstanding plus shares underlying stock-based awards , including restricted stock units , restricted stock awards , and outstanding stock options , totaled 1,630 million at december 31 , 2020 , compared with 1,576 million one year ago . capital expenditures were $ 57.8 million in 2020 , compared to $ 36.5 million in 2019. cash , cash equivalents , and marketable securities were $ 2.5 billion as of december 31 , 2020. revenue increased 46 % to $ 2.5 billion in 2020 , compared to $ 1.7 billion in 2019. total costs and expenses excluding stock-based compensation and related payroll tax expense increased 21 % to $ 2.5 billion in 2020 , compared to $ 2.1 billion in 2019. net loss decreased 9 % to $ ( 944.8 ) million in 2020 , compared to $ ( 1.0 ) billion in 2019. diluted net loss per share decreased 13 % to $ ( 0.65 ) in 2020 , compared to $ ( 0.75 ) in 2019. adjusted ebitda increased 122 % to $ 45.2 million in 2020 , compared to $ ( 202.2 ) million in 2019. overview snap inc. is a camera company . we believe that reinventing the camera represents our greatest opportunity to improve the way that people live and communicate . we contribute to human progress by empowering people to express themselves , live in the moment , learn about the world , and have fun together . our flagship product , snapchat , is a camera application that helps people communicate visually with friends and family through short videos and images called snaps .
| 4,632 |
such risks and uncertainties include : ( 1 ) the loss of a large customer ; ( 2 ) current and future conditions in the global economy ; ( 3 ) the reliance on revenue from the consumer electronics or automotive industries ; ( 4 ) the inability to penetrate new markets ; ( 5 ) the cyclicality of the semiconductor and electronics industries ; ( 6 ) the inability to achieve significant international revenue ; ( 7 ) fluctuations in foreign currency exchange rates and the use of derivative instruments ; ( 8 ) the inability to attract and retain skilled employees ; ( 9 ) the reliance upon key suppliers to manufacture and deliver critical components for our products ; ( 10 ) the failure to effectively manage product transitions or accurately forecast customer demand ; ( 11 ) the inability to design and manufacture high-quality products ; ( 12 ) the technological obsolescence of current products and the inability to develop new products ; ( 13 ) the failure to properly manage the distribution of products and services ; ( 14 ) the inability to protect our proprietary technology and intellectual property ; ( 15 ) our involvement in time-consuming and costly litigation ; ( 16 ) the impact of competitive pressures ; ( 17 ) the challenges in integrating and achieving expected results from acquired businesses ; ( 18 ) potential impairment charges with respect to our investments or for acquired intangible assets or goodwill ; ( 19 ) exposure to additional tax liabilities ; and ( 20 ) information security breaches or business system disruptions . the foregoing list should not be construed as exhaustive and we encourage readers to refer to the detailed discussion of risk factors included in part i - item 1a of this annual report on form 10-k. the company cautions readers not to place undue reliance upon any such forward-looking statements , which speak only as of the date made . the company disclaims any obligation to subsequently revise forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date such statements are made . executive overview cognex corporation is a leading worldwide provider of machine vision products that capture and analyze visual information in order to automate tasks , primarily in manufacturing processes , where vision is required . our modular vision systems division ( mvsd ) specializes in machine vision systems and id products that are used to automate the manufacture and tracking of discrete items , while our surface inspection systems division ( sisd ) specializes in machine vision systems that are used to inspect the surfaces of materials processed in a continuous fashion . in addition to product revenue derived from the sale of machine vision systems , the company also generates revenue by providing maintenance and support , training , consulting , and installation services to its customers . our customers can be classified into three primary markets : factory automation , semiconductor and electronics capital equipment , and surface inspection . factory automation customers , who are included in the company 's mvsd segment , purchase cognex vision products and incorporate them into their manufacturing processes . virtually every manufacturer can achieve better quality and manufacturing efficiency by using machine vision , and therefore , this market includes a broad base of customers across a variety of industries , including consumer electronics , automotive , consumer products , food and beverage , medical devices , and pharmaceuticals . the factory automation market also includes customers who purchase cognex vision products for use outside of the assembly process , such as using id products in logistics automation for package sorting and distribution . sales to factory automation customers represented approximately 82 % of total revenue in 2014 compared to 80 % of total revenue in 2013. semiconductor and electronics capital equipment manufacturers , who are included in the company 's mvsd segment , purchase cognex vision products and integrate them into the automation equipment that they manufacture and then sell to their customers to either make semiconductor chips or assemble printed circuit boards . demand from these capital equipment manufacturers has historically been highly cyclical , with periods of investment followed by downturn . sales to 18 semiconductor and electronics capital equipment manufacturers represented approximately 6 % of total revenue in 2014 compared to 7 % of total revenue in 2013. surface inspection customers , who comprise the company 's sisd segment , are manufacturers of materials processed in a continuous fashion , such as metals , paper , nonwoven , plastics , and glass . these customers need sophisticated machine vision to detect , classify , and analyze defects on the surfaces of those materials as they are being processed at high speeds . surface inspection sales represented approximately 12 % of total revenue in 2014 compared to 13 % of total revenue in 2013. revenue for the year ended december 31 , 2014 totaled $ 486,270,000 , representing an increase of $ 132,384,000 , or 37 % over the prior year , driven by higher sales to factory automation customers , including revenue of approximately $ 70 million from a single customer . gross margin was 75 % of revenue in 2014 compared to 76 % of revenue in 2013 due to a relatively lower gross margin on the revenue from this single customer , as well as higher new product introduction costs and inventory charges . operating expenses increased by $ 38,149,000 , or 21 % , from the prior year due primarily to additional headcount to support the significantly higher level of business in 2014. despite this higher spending level , operating income increased by $ 57,295,000 , or 66 % , from the prior year . story_separator_special_tag the table below ( in thousands ) details the $ 21,943,000 net increase in mvsd sg & a in 2014 : replace_table_token_7_th the increase in mvsd sg & a expenses was due to headcount additions , resulting in higher personnel-related costs , such as salaries , fringe benefits , sales commissions , and travel expenses , as well as modest salary increases granted early in 2014. headcount was added to support the significantly higher level of business in 2014 and these costs are expected to continue in future periods . sales commissions also increased as a result of the higher business level , as did marketing activities . stock-based compensation expense increased due to a higher valuation of stock options granted early in 2014. company bonus expense increased due to the additional headcount and the company incurred higher expenses related to other employee incentive programs , including a $ 1,000 bonus given to every full-time employee in celebration of the company 's one-millionth shipment . recruiting and other non-recurring personnel-related costs , as well as sales demonstration equipment , also increased as a result of the additional headcount and higher business level . the increase in sisd sg & a expenses was primarily due to company bonus recorded in 2014 ( $ 472,000 ) , while the division did not meet its bonus metrics in 2013 , in addition to higher stock-based compensation expense ( $ 237,000 ) . the increase in corporate expenses was primarily due to higher stock-based compensation expense ( $ 1,343,000 ) , higher company bonus expense ( $ 648,000 ) , and higher legal fees related to patent-infringement actions ( $ 1,156,000- refer to note 10 to the consolidated financial statements in part ii - item 8 of this annual report on form 10-k ) . nonoperating income ( expense ) the company recorded foreign currency gains of $ 861,000 in 2014 compared to foreign currency losses of $ 646,000 in 2013. the foreign currency gains and losses in each period resulted primarily from the revaluation and settlement of accounts receivable , accounts payable , and intercompany balances that are reported in one currency and collected in another . as of december 31 , 2014 , the company had collected the vast majority of the u.s. dollar-denominated accounts receivable on the books of its irish subsidiary , for which the functional currency is the euro , from the single customer noted in โ revenue. โ investment income increased by $ 552,000 , or 21 % , from the prior year . this increase was primarily due to investment losses of $ 702,000 that were recorded in 2013. excluding these losses , investment income decreased due to lower returns , partially offset by a higher investment balance . the company recorded other expense , net of other income , of $ 283,000 in 2014 and $ 440,000 in 2013. the company recorded $ 354,000 of other income in 2013 due to the expiration of the statutes of limitations relating to tax holidays , 22 during which time the company collected value-added taxes from customers that were not required to be remitted to the government authority . other income ( expense ) also includes rental income , net of associated expenses , from leasing buildings adjacent to the company 's corporate headquarters . these buildings were largely unoccupied during 2013 ; however , late in 2013 , a new tenant began to occupy a significant portion of the space in one of the buildings , which resulted in higher rental income in 2014. income tax expense the company 's effective tax rate was 18 % of the company 's pretax income in 2014 compared to 16 % in 2013. the effective tax rate for 2014 included the impact of the following discrete events : ( 1 ) a decrease in tax expense of $ 674,000 from the final true-up of the prior year 's tax accrual upon filing the actual returns , ( 2 ) a decrease in tax expense of $ 217,000 from the expiration of statutes of limitations for certain reserves for income tax uncertainties , ( 3 ) a decrease in tax expense of $ 553,000 , which includes $ 296,000 for the release of certain tax reserves , related to the closing of the internal revenue service audit of the company for tax years 2010 and 2011 , and ( 4 ) a decrease in tax expense , net of reserves , of $ 757,000 from the retroactive application of the 2014 research and development tax credit . the tax increase prevention act of 2014 was passed by congress in december 2014 and the provisions under this act are to be applied retroactively to january 1 , 2014. the effective tax rate for 2013 included the impact of the following discrete events : ( 1 ) a decrease in tax expense of $ 1,790,000 from the expiration of statutes of limitations for certain reserves for income tax uncertainties , ( 2 ) an increase in tax expense of $ 267,000 from the final true-up of the prior year 's tax accrual upon filing the actual tax returns , and ( 3 ) a decrease in tax expense of $ 555,000 from the retroactive application of the 2012 research and development credit . the american taxpayer relief act of 2012 was passed by congress and signed into law on january 1 , 2013 , and as a result , the reduction to income tax expense was recorded as a discrete event in the first quarter of 2013. excluding the impact of these discrete events , the company 's effective tax rate was 19 % of the company 's pretax income in both 2014 and 2013. results of operations year ended december 31 , 2013 compared to year ended december 31 , 2012 revenue revenue for the year ended december 31 , 2013 increased by $ 29,607,000 , or 9 % , from the prior year .
| results of operations as foreign currency exchange rates are a factor in understanding period-to-period comparisons , we believe the presentation of results on a constant-currency basis in addition to reported results helps improve investors ' ability to understand our operating results and evaluate our performance in comparison to prior periods . we also use results on a constant-currency basis internally as one measure to evaluate our performance . constant-currency information compares results between periods as if exchange rates had remained constant period-over-period . we generally refer to such amounts calculated on a constant-currency basis as excluding the impact of foreign currency exchange rate changes . results on a constant-currency basis are not in accordance with accounting principles generally accepted in the united states of america ( u.s. gaap ) and should be considered in addition to , and not as a substitute for , results prepared in accordance with u.s. gaap . year ended december 31 , 2014 compared to year ended december 31 , 2013 revenue revenue for the year ended december 31 , 2014 increased by $ 132,384,000 , or 37 % , from the prior year . the company recorded higher sales in all three markets it serves . sales to factory automation customers increased by $ 115,519,000 , or 41 % ; sales to semiconductor and electronics capital equipment customers increased by $ 3,279,000 , or 14 % ; and sales to surface inspection customers increased by $ 13,586,000 , or 29 % . factory automation market sales to customers in the factory automation market represented 82 % of total revenue in 2014 compared to 80 % of total revenue in 2013. sales to these customers increased by $ 115,519,000 , or 41 % , from the prior year .
| 4,633 |
see the `` adoption of new accounting standards `` caption below for further discussion . earnings per share basic income ( loss ) per share is computed story_separator_special_tag the following management 's discussion and analysis is intended to provide the reader with an overall understanding of our financial condition , results of operations , cash flows , sources and uses of cash , contractual obligations , and financial position . this section also includes general information about our business and management 's analysis of certain trends , risks and opportunities in our industry . we also provide a discussion of accounting policies that require critical judgments and estimates . this discussion contains and refers to statements that constitute โ forward-looking statements โ within the meaning of the private securities litigation reform act of 1995 and other federal securities laws . such statements relate to our intent , belief or current expectations primarily with respect to our future operating , financial and strategic performance . any such forward-looking statements are not guarantees of future performance and may involve risks and uncertainties . many of these risks and uncertainties are beyond our control , and the unexpected occurrence or failure to occur of any such events or matters could significantly alter our actual results of operations or financial condition . you should read the following information in conjunction with our consolidated financial statements and notes to our consolidated financial statements beginning on page f-2 in this form 10-k , as well as the information set forth in item 1a . โ risk factors. โ our business a leader in the radio broadcasting industry , we combine high-quality local programming with iconic , nationally syndicated media , sports and entertainment brands to deliver premium content choices to the 245 million people reached each 37 index to financial statements week through our 454 owned-and-operated stations broadcasting in 90 us media markets ( including eight of the top 10 ) , more than 8,200 broadcast radio stations affiliated with our westwoodone network and numerous digital channels . together , the cumulus/westwoodone platforms make us one of the few media companies that can provide advertisers national reach and local impact . cumulus/westwoodone is the exclusive radio broadcast partner to the some of the largest brands in sports and entertainment , including the nfl , the ncaa , the masters , the olympics , the grammys , the academy of country music awards , the american music awards , and the billboard music awards . additionally , we are the nation 's leading provider of country music and lifestyle content through our nash brand , which serves country fans nationwide through radio programming , nash country weekly magazine , video , and live events . we generate revenue through monetization of our programming content and other sources across the following four major revenue streams : broadcast advertising . we generate most of our revenue through the sale of commercial advertising time to local , national and network clients across our 454 owned-and-operated radio stations and more than 8,200 radio broadcast affiliations . local spot advertising is sold by approximately 1,000 cumulus employed sales executives across 90 u.s. media markets ( including eight of the top ten ) . national spot advertising for our owned and operated stations is outsourced to katz media , which markets itself to advertisers as westwoodone media sales . network advertising airing across our owned , operated and affiliated stations is sold by cumulus employed account executives in regional hubs across the united states under the westwoodone networks brand . at december 31 , 2015 , under lmas , we also provided sales and marketing services for 11 radio stations in the united states . digital advertising . we also generate revenue from the sale of advertising and promotional opportunities across our streaming audio network , digital commerce platform , websites and mobile applications . we operate the fourth largest streaming audio advertising network in the united states , including owned and operated internet radio simulcast stations and other third party internet companies with whom we have advertising reseller agreements . our digital commerce platform utilizes couponing and discount daily deals to create promotional opportunities for local and national merchants under our sweetjack , sweetdeals and incentrev brands . we also sell banner and other display ads across more than 400 local radio station websites , mobile applications , and ancillary custom client microsites . political advertising . we generate political advertising revenue across all of our broadcast and digital assets , but highlight it as a separate category to distinguish its highly cyclical nature versus core revenue . political advertising is generally strongest during even-numbered years , especially in the fourth quarter of such years , when most national and state elections are conducted . in addition to candidate advertising revenue , we also receive advertising revenue from special interest and advocacy groups . license fees & other . all of our other non-advertising based revenue is aggregated in our license fees & other revenue category . this includes cash based fees we receive for content licensing , third party network compensation , proprietary software licensing , subleases and rents , and all other revenue . subsequent to december 31 , 2015 , we modified our management reporting framework which changed how we evaluate operating performance and internally report financial information . we are currently assessing the expected impact , if any , on our reportable segments . operating overview and highlights we believe that we have created a leading national audio advertising platform that allows us to leverage and expand upon our strengths , market presence and programming . specifically we have an extensive radio station portfolio , including a presence in eight of the top 10 markets , and broad diversity in format , listener base , geography , advertiser base and revenue stream , designed to reduce our dependence on any single demographic , region or industry . story_separator_special_tag in connection with the entry into the securitization facility , pursuant to a receivables sale and servicing agreement , dated as of december 6 , 2013 ( the โ sale agreement โ ) , certain subsidiaries of the company may sell and or contribute their existing and future accounts receivable to a special purpose entity and wholly owned subsidiary of the company ( the โ spv โ ) . the spv may thereafter make borrowings from the lenders , which borrowings are secured by those receivables , pursuant to a receivables funding and administration agreement , dated as of december 6 , 2013. at december 31 , 2015 , after giving effect to the prepayment of the term loan described above , our long-term debt consisted of $ 1.839 billion outstanding under the term loan and $ 610.0 million in 7.75 % senior notes due 2019 ( the `` 7.75 % senior notes '' ) . no amounts were outstanding under the revolving credit facility or the securitization facility . we have assessed the current and expected business climate , our current and expected needs for funds and our current and expected sources of funds and determined , based on our financial condition as of december 31 , 2015 , that cash on hand , cash expected to be generated from operating activities , and cash expected to be available from various financing sources , excluding any access to amounts under the revolving credit facility , will be sufficient to satisfy our anticipated financing needs for 39 index to financial statements working capital , capital expenditures , interest and debt service payments , and any repurchases of securities and other debt obligations for at least the next twelve months . on november 3 , 2015 , we received a notification from the listing qualifications department of the nasdaq stock market llc ( โ nasdaq โ ) indicating that we were not in compliance with nasdaq listing rule 5450 ( a ) ( 1 ) ( the โ rule โ ) because the minimum bid price of our common stock on the nasdaq global select market has closed below $ 1.00 per share for 30 consecutive business days . in accordance with nasdaq listing rule 5810 ( c ) ( 3 ) ( a ) , we have until may 2 , 2016 to regain compliance with the requirements under the rule . if , at any time before that date the bid price of our common stock closes at $ 1.00 per share or more for a minimum of 10 consecutive business days , nasdaq will notify us that we have achieved compliance with the rule . in the event we do not regain compliance with the rule by may 2 , 2016 , nasdaq will notify us that our common stock will be delisted from the nasdaq global select market , unless we request a hearing before a nasdaq hearings panel . alternatively , we may apply to transfer our securities to the nasdaq capital market if we satisfy the requirements for initial listing set forth in nasdaq listing rule 5505 ( a ) , with the exception of the minimum bid price . if such an application for transfer were approved , we would have an additional 180 calendar days to comply with the rule in order for our common stock to remain listed on the nasdaq capital market . no assurances can be provided that we will be able to regain compliance with the rule . our inability to maintain the listing of our common stock on any nasdaq market may materially adversely affect the liquidity and market price of our common stock . advertising revenue and adjusted ebitda our primary source of revenue is the sale of advertising time . our sales of advertising time are primarily affected by the demand from local , regional and national advertisers , which impacts the advertising rates charged by us . advertising demand and rates are based primarily on the ability to attract audiences in the demographic groups targeted by its advertisers , as measured principally by various ratings agencies on a periodic basis . we endeavor to develop strong listener loyalty , and we believe that the diversification of our formats and programs helps to insulate us from the effects of changes in the musical tastes of the public with respect to any particular format as a substantial portion of our revenue comes from non-music format and proprietary content . in addition , we believe that the platform that we own and operate , which has increased diversity in terms of format , listener base , geography , advertiser base and revenue stream as a result of our acquisitions and the development of our strategy to focus on radio stations in larger markets and geographically strategic regional clusters , will further reduce our revenue dependence on any single demographic , region or industry . our larger markets are also supported with content through network programming . we strive to maximize revenue by managing our on-air inventory of advertising time and adjusting prices up or down based on supply and demand . the optimal number of advertisements available for sale depends on the programming format of a particular radio program . each of our markets has a general target level of on-air inventory available for advertising . this target level of advertising inventory may vary at different times of the day but tends to remain stable over time . we seek to broaden our base of advertisers in each of our markets by providing a wide array of audience demographic segments across each cluster of stations , thereby providing potential advertisers with an effective means to reach a targeted demographic group . in the broadcasting industry , we sometimes utilize trade or barter agreements that exchange advertising time for goods or services such as travel or lodging , instead of for cash . trade revenue totaled $ 39.2 million , $ 34.9 million and $ 31.1 million for the years ended december 31 , 2015 , 2014 and 2013 , respectively .
| results of operations analysis of consolidated statements of operations the following analysis of selected data from our consolidated statements of operations should be referred to while reading the results of operations discussion that follows ( dollars in thousands ) : replace_table_token_14_th * * calculation is not meaningful . 42 index to financial statements year ended december 31 , 2015 compared to year ended december 31 , 2014 net revenue net revenue consists of gross revenue less agency commissions , third party producer revenue shares and other direct costs . agency commissions are variable as they are based upon a stated percentage of our gross billings . replace_table_token_15_th the following table presents our broadcast advertising revenue by source ( dollars in thousands ) . replace_table_token_16_th net revenue for the year ended december 31 , 2015 decreased $ 94.7 million , or 7.5 % , to $ 1,168.7 million compared to $ 1,263.4 million for the year ended december 31 , 2014 . the decrease resulted from decreases of $ 58.3 million , $ 16.0 million , $ 15.9 million and $ 4.5 million in broadcast advertising , digital advertising , political advertising and license fees and other revenue , respectively . the decreases in national broadcast advertising revenue and network broadcast advertising revenue were a result of three distinct factors . first , national spot advertising sales are heavily dependent on ratings across our stations . declining ratings in certain key markets resulted in a significant decrease in national spot revenue period over period . second , our largest competitor has strategically shifted its focus towards national advertising clients , resulting in lower market share and revenues for us and the remainder of the industry . third , our sales execution in 2015 compared to 2014 was less successful partially due to national advertisers seeking more digital advertising components than we are currently able to fulfill .
| 4,634 |
plan category number of securities to be issued upon exercise of outstanding options , warrants and rights ( a ) weighted-average exercise price of outstanding options , warrants and rights ( b ) number of securities remaining available for future issuance under equity compensation plans ( excluding securities reflected in column a ) ( c ) equity compensation plans approved by security holders 723,817 $ 4.17 242,764 equity compensation plans not not approved by security holders - - - 723,817 $ 4.17 242,764 the above schedule excludes stock grants of 190,424 and 18,250 shares under the 2011 equity incentive plan and the 2013 consultant stock plan , respectively . item 13 : certain relationships and related transactions , and director independence the information required by this item is incorporated by reference to the company 's proxy statement for the 2015 annual meeting of shareholders to be filed with the sec within 120 days of the fiscal year ended december 31 , 2014. item 14 : principal accountant fees and services the information required by this item is incorporated by reference to the company 's proxy statement for the 2015 annual meeting of shareholders to be filed with the sec within 120 days of the fiscal year ended december 31 , 2014. part iv item 15. exhibits , financial statement schedules 15 ( a ) ( 1 ) financial statements the financial statements filed as part of this report are listed and indexed in the . financial statement schedules have been omitted because they are not applicable or the required information has been included elsewhere in this report . 15 ( a ) ( 2 ) financial statement schedules not applicable . 26 15 ( a ) ( 3 ) exhibits the exhibits filed as part of this annual report on form 10-k are listed in the exhibit index immediately preceding the exhibits . the company has identified in the exhibit index each management contract and compensation plan filed as an exhibit to this annual report on form 10-k in response to item 15 ( a ) ( 3 ) of form 10-k. replace_table_token_20_th * filed herewith . +agreement with management . ( 1 ) incorporated by reference from the registrant 's registration statement on form s-1 , as amended , file number 333-177946 , originally filed with the securities and exchange commission on november 14 , 2011 . ( 2 ) incorporated by reference from the registrant 's quarterly report on form 10-q for the quarter ended march 31 , 2013 , filed with the securities and exchange commission on may 6 , 2013 . ( 3 ) incorporated by reference from the registrant 's current report on form 8-k filed with the securities and exchange commission on february 28 , 2014 . ( 4 ) incorporated by reference from the registrant 's annual report on form 10-k filed with the securities and exchange commission on march 11 , 2014 . ( 5 ) incorporated by reference from the registrant 's current report on form 8-k filed with the securities and exchange commission on february 5 , 2015 . ( 6 ) incorporated by reference from the registrant 's current report on form 8-k filed with the securities and exchange commission on december 12 , 2014 . 27 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities exchange act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized . clearsign combustion corporation date : february 26 . 2015 by : stephen e. pirnat stephen e. pirnat chief executive officer date : february 26 , 2015 by : james n. harmon james n. harmon chief financial officer pursuant to the requirements of the securities exchange act of 1934 , this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated . date : february 26 , 2015 stephen e. pirnat stephen e. pirnat chief executive officer and director ( principal executive officer ) date : february 26 , 2015 james n. harmon james n. harmon chief financial officer ( principal financial and accounting officer ) date : february 26 , 2015 lon e. bell lon e. bell , ph.d. , director date : february 26 , 2015 david b. goodson david b. goodson , director date : february 26 , 2015 scott p. isaacson scott p. isaacson , director date : february 26 , 2015 jeffrey l. ott jeffrey l. ott , director 28 exhibit index replace_table_token_21_th * filed herewith . +agreement with management . ( 1 ) incorporated by reference from the registrant 's registration statement on form s-1 , as amended , file number 333-177946 , originally filed with the securities and exchange commission on november 14 , story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited financial statements and related notes included elsewhere in this annual report on form 10-k. in addition to historical information , this discussion and analysis here and throughout this form 10-k contains forward-looking statements that involve risks , uncertainties and assumptions . our actual results may differ materially from those anticipated in these forward-looking statements . overview we design and develop technologies that aim to improve both the energy efficiency and emission control characteristics of combustion systems . our core technologies include our duplex and electrodynamic combustion control ( ecc ) technologies . story_separator_special_tag our anticipated costs include employee salaries and benefits , compensation paid to consultants , capital costs for research and other equipment , costs associated with development activities including travel and administration , legal expenses , sales and marketing costs , general and administrative expenses , and other costs associated with an early stage , publicly-traded technology company . we currently have 12 full-time employees and 2 part-time employees . we anticipate continuing to increase the number of employees required to support our activities in the areas of research and development , sales and marketing , and general and administrative functions . we expect to incur consulting expenses related to technology development commensurate with our current levels and we expect to incur increasing expenses to protect our intellectual property . the amount that we spend for any specific purpose may vary significantly , and could depend on a number of factors including , but not limited to , the pace of progress of our commercialization and development efforts , actual needs with respect to product testing , development and research , market conditions , and changes in or revisions to our marketing strategies . research , development , and commercial acceptance of new technologies are , by their nature , unpredictable . although we will undertake development and commercialization efforts with reasonable diligence , there can be no assurance that the net proceeds from our securities offerings will be sufficient to enable us to develop our technology to the extent needed to create future sales to sustain operations . if the net proceeds from these offerings are insufficient for this purpose , we will consider other options to continue our path to commercialization , including , but not limited to : additional financing through follow-on equity offerings , debt financing , co-development agreements , sale or licensing of developed intellectual or other property , or other alternatives . if management is unable to implement its proposed business plan or employ alternative financing strategies , it does not presently have any alternative proposals . in that case , we may be required to scale back our development plans by reducing expenditures for employees , consultants , business development and marketing efforts , and other envisioned expenditures or curtail or even suspend our operations . we can not assure that our technology will be accepted , that we will ever earn revenues sufficient to support our operations , or that we will ever be profitable . furthermore , we have no committed source of financing and we can not assure that we will be able to raise money as and when we need it to continue our operations . if we can not raise funds as and when we need them , we may be required to severely curtail , or even to cease , our operations . critical accounting policies the following discussion and analysis of financial condition and results of operations is based upon our financial statements , which have been prepared in conformity with accounting principles generally accepted in the united states of america . certain accounting policies and estimates are particularly important to the understanding of our financial position and results of operations and require the application of significant judgment by our management or can be materially affected by changes from period to period in economic factors or conditions that are outside of our control . as a result , they are subject to an inherent degree of uncertainty . in applying these policies , our management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates . those estimates are based on our historical operations , our future business plans and projected financial results , the terms of existing contracts , our observance of trends in the industry , information provided by our customers and information available from other outside sources , as appropriate . see note 2 to our audited financial statements for a more complete description of our significant accounting policies . 19 revenue recognition . the company recognizes revenue on co-development agreements using the percentage of completion method . under this method , the completion percentage is determined by dividing costs incurred to date by total estimated project costs . since our projects will require technological development to complete , which by its nature is difficult to predict , the actual cost required to complete contracted work may vary from estimates . estimated project costs are revised regularly which can alter the reported level of project profitability . any estimated project losses are recognized in the current reporting period . customer billings are recorded when cash receipts are probable and in accordance with the underlying co-development contract . if billings exceed recognized revenue , the difference is recorded as a current liability , while any recognized revenues exceeding billings are recorded as a current asset . recognized revenues are subject to revisions as the contract progresses to completion and actual revenue and cost become certain . revisions in revenue estimates are reflected in the period in which the facts that give rise to the revision become known . cost of revenue . cost of co-development revenue includes both direct and allocated indirect costs of completing the scope of work of co-development agreements . direct costs include labor , materials and other costs incurred directly in fulfilling co-development agreements . indirect costs include labor , rent , depreciation and other costs associated with operating the company . due to the nature of the work involved , the cost of co-development projects may fluctuate substantially from period to period . research and development . the cost of research and development is expensed as incurred . research and development costs consist of salaries , benefits , share based compensation , consulting fees , rent , utilities , depreciation , and consumables . stock-based compensation . the costs of all employee stock options , as well as other equity-based compensation arrangements ,
| results of operations comparison of the years ended december 31 , 2014 and 2013 revenue , cost of revenue , and gross profit . the company reported revenue of $ 93,000 in 2013 resulting from a solid fuel burner co-development project that resulted in an immaterial gross profit . no revenue was reported in 2014. operating expenses . operating expenses increased by $ 2,000,000 , or approximately 37 % , to $ 7,301,000 in 2014 compared to 2013. the company increased its research and development ( r & d ) expenses by $ 366,000 to $ 2,217,000 for 2014. r & d expenses rose due primarily to the addition of personnel hired as a result of increased research activities resulting in a $ 357,000 increase in compensation expense to $ 1,357,000. r & d expenses also included an $ 84,000 increase due to laboratory and field development costs related to the project for aera energy , llc , build-to-suit equipment and expendables , all of which totaled $ 384,000. these costs were offset by the receipt of $ 110,000 from participants in solid fuel research associated with our ecc technology . g & a expenses increased by $ 1,634,000 , to $ 5,084,000 for 2014. this increase resulted primarily from a oneโtime expense in the amount of $ 943,000 due to the termination of an employment agreement with our former chief executive officer , an increase of $ 350,000 , to $ 736,000 , in business development and marketing consulting costs , and $ 262,000 of costs resulting from the abandonment of patent applications filed in less cost beneficial jurisdictions . loss from operations . due to the increase in operating expenses , our loss from operations increased during 2014 by $ 2,005,000 , to $ 7,301,000. net loss .
| 4,635 |
had our board of directors made these determinations , our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director 's business and personal activities and relationships as they may relate to us and our management . certain legal proceedings no director , nominee for director , or executive officer of the company has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past ten years . significant employees and consultants as of february 29 , 2016 , daniel solomita is our sole significant employee . don danks , is a non-employee director of the company . other than our two officers and directors , we currently have no significant independent contractors or consultants . audit committee and conflicts of interest since we do not have an audit or compensation committee comprised of independent directors , the functions that would have been performed by such committees are performed by our directors . the board of directors has not established an audit committee and does not have an audit committee financial expert , nor has the board of directors established a nominating committee . the board is of the opinion that such committees are not necessary since the company is an early exploration stage company and has only two directors , and to date , such directors have been performing the functions of such committees . thus , there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation , nominations , and audit issues that may affect management decisions . there are no family relationships among our directors or officers . other than as described above , we are not aware of any other conflicts of interest with any of our executive officers or directors . section 16 ( a ) beneficial ownership reporting compliance section 16 ( a ) of the securities exchange act of 1934 requires our executive officers and directors , and persons who own more than ten percent of a registered class of our equity securities , file reports of ownership and changes in ownership with the sec . executive officers , directors and greater-than-ten percent stockholders are required by sec regulations to furnish us with all section 16 ( a ) forms they file . based on our review of filings made on the sec website , and the fact of us not receiving certain forms or written representations from certain reporting persons that they have complied with the relevant filing requirements , we believe that , during the year ended february 29 , 2016 , one of our two executive officers , directors and greater-than-ten percent stockholders complied with all section 16 ( a ) filing requirements , that person being daniel solomita . 21 stockholder communications with the board of directors we have not implemented a formal policy or procedure by which our stockholders can communicate directly with our board of directors . nevertheless , every effort has been made to ensure that the views of stockholders are heard by the board of directors or individual directors , as applicable , and that appropriate responses are provided to stockholders in a timely manner . we believe that we are responsive to stockholder communications , and therefore have not considered it necessary to adopt a formal process for stockholder communications with our board . during the upcoming year , our board will continue to monitor whether it would be appropriate to adopt such a process . code of ethics the company has not adopted a code of ethics that applies to its principal executive officers , principal financial officer , principal accounting officer or controller , or persons performing similar functions . the company has not adopted a code of ethics because it has only commenced operations . employment agreements in connection with the company 's june 29 , 2015 share exchange with loop holdings , the company entered into an employment agreement , which has no term , with its president and chief executive officer , daniel solomita . the employment agreement dated june 29 , 2015 , provides for an initial annual base salary , commencing june 29 , 2015 of $ 180,000 . the agreement also provides for ( i ) a bonus of 4,000,000 shares of common stock , ( ii ) the company to pay for mr. solomita 's costs related to executive 's reasonable monthly cell phone and other mobile internet costs , home office internet costs , ( iii ) the company to pay for executive 's car and commuting costs , not to exceed $ 1,000 per month , and club membership costs , payable not later than 10 days after the end of each month , and ( iv ) a severance payment for mr. solomita equal to his then current annual base salary rate plus one month of salary for each year of employment , not to exceed 24 months of severance , upon the termination of his employment by the company without cause or by mr. solomita for good reason or in the event of a change in control . the employment agreement defines the term `` cause `` as `` any grounds entitling the company 's board to summarily dismiss `` mr. solomita . the bonus of 4,000,000 shares of common stock is payable to mr. solomita as follows : ( i ) 1,000,000 story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report . story_separator_special_tag all references to shares of common stock in this annual report on form 10-k give effect to a one-for-four ( 1:4 ) reverse split of the company 's issued and outstanding shares of common stock , which reverse split took effect on the otcqb on september 21 , 2015. recent developments reverse acquisition of loop holdings on june 29 , 2015 , we completed a reverse acquisition transaction through a share exchange with loop holdings whereby we acquired all of the issued and outstanding shares of loop holdings in exchange for 23,257,500 shares of our common stock . under the terms and conditions of the share exchange agreement , first american group issued 23,257,500 shares of its common stock for the acquisition of all of the issued and outstanding shares of loop holdings . the number of common shares issued represented approximately 78.1 % of the issued and outstanding common stock immediately after the consummation of the share exchange agreement and stock redemption agreements . the board of directors and the members of the management of first american group resigned and the board of directors and the member of the management of loop holdings became the board of directors and the member of the management of the combined entities upon consummation of the share exchange agreement . as a result of the controlling financial interest of the former stockholders of loop holdings , inc. , for financial statement reporting purposes , the merger between first american group and loop holdings was treated as a reverse acquisition , with loop holdings deemed the accounting acquirer and first american group deemed the accounting acquiree under the acquisition method of accounting in accordance with the section 805-10-55 of the fasb accounting standards codification . the reverse acquisition is deemed a capital transaction in substance whereas the assets and liabilities of loop holdings , inc. ( the accounting acquirer ) are carried forward to first american group ( the legal acquirer and the reporting entity ) at their carrying value before the combination and the equity structure ( the number and type of equity interests issued ) of loop holdings , inc. is being retroactively restated using the exchange ratio established in the share exchange agreement and stock redemption agreements to reflect the number of shares of first american group issued to effect the acquisition . the number of common shares issued and outstanding and the amount recognized as issued equity interests in the consolidated financial statements is determined by adding the number of common shares deemed issued and the issued equity interests of loop holdings , inc. immediately prior to the business combination to the unredeemed shares and the fair valueof first american group determined in accordance with the guidance in asc section 805-40-55 applicable to business combinations , i.e . the equity structure ( the number and type of equity interests issued ) in the consolidated financial statements immediately post combination reflects the equity structure of first american group , including the equity interests the legal acquirer issued to effect the combination . loop holdings was incorporated on october 23 , 2014 , in nevada . we are a development company and have never generated any revenues . the commercialization of our depolymerization technology is in its incipient stages and must be scaled-up before we can commercialize the technology and generate any revenues . the depolymerization technology underlying the business of loop holdings was originally developed by hatem essaddam , who sold the depolymerization technology to loop holdings for a purchase price of up to $ 445,050 and contingent consideration consistent in up to cdn $ 800,000 pursuant to an intellectual property assignment agreement dated october 27 , 2014 , by and among hatem essadam , loop holdings , and daniel solomita , our president and chief executive officer , secretary , treasurer and chairman of the board of directors . 13 our depolymerization of polyethylene terephthalate ( pet ) process is completed through a series of chemical reactions is completed at room temperature and under normal atmospheric pressure . the resulting monomers of the depolymerization is purified terephthalic acid and ethylene glycol . our depolymerization process is summarized as follows : ยท pet bottles are shredded into 5 mm size pieces ; ยท shredded pet is put into a large reactor , where certain chemicals are added ; ยท the pet molecular chain begins to be broken down in 20 minutes ; ยท purified terephthalic acid ( solid ) and ethylene glycol ( liquid ) and mother liquor are separated using a combination of centrifugation and distillation ; ยท the mother liquor is returned to the reactor to be reused in the process ; and ยท purified terephthalic acid and ethylene glycol are processed and packaged . plan of operation we have not yet generated or realized any revenues from our business . we are aiming to become an environmentally friendly manufacturer of purified terephthalic acid ( pta ) and mono ethelyne glycol ( meg ) , these high purity specialty chemicals are mainly used in the production of polyethylene terephthalate . we have completed the construction of our pilot plant facility which is capable of producing 5000 lbs . per day of high purity pta and meg , we are currently doing qualification testing of the resulting resin with potential costumers . we are currently refining our process to ensure an easy transition from pilot scale to full scale commercial manufacturing facility . we anticipate that this facility will have the initial capacity to process approximately 36,000,000 lbs . of pet plastic per year . estimated costs for this facility are approximately $ 15 million dollars . story_separator_special_tag exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life . if the carrying value of an asset exceeds its undiscounted cash flows , the company writes down the carrying value of the intangible asset to its fair value in the period
| results of operations for the year ended february 29 , 2016 and the period from october 23 , 2014 ( inception ) to february 28 , 2015 we recorded no revenues for the year ended february 29 , 2016 and the period from october 23 , 2014 ( inception ) to february 28 , 2015. for the year ended february 29 , 2016 and the period from october 23 , 2014 ( inception ) to february 28 , 2015 , general and administrative expenses were $ 1,748,044 , and $ 285,908 , respectively . the increase of $ 1,462,136 was due primarily to the short 2015 period which included 5 months only vs twelve months in the year 2016. in addition , the increase is due to the intensification of the company 's operations including rent of a corporate office in montreal , increased head count and additional costs related to compliance and public company operations , including professional fees , filing fees , payroll and related expenses . the increase is also the result of a charge of $ 277,700 corresponding to the fair value of warrants granted to employees and the amortization of $ 534,000 prepaid stock compensation costs . for the year ended february 29 , 2016 and the period from october 23 , 2014 ( inception ) to february 28 , 2015 , research and development expenses were $ 801,666 , and $ 40,614 , respectively . the increase of $ 761,052 was due primarily to the short 2015 period which included 5 months only vs twelve months in the year 2016. in addition , the increase is due to the intensification of the company 's operations including the start-up of a pilot plant in montreal and increased head count . the increase is also the result of a charge of $ 126,806 corresponding to the fair value of warrants granted to employees .
| 4,636 |
the amendments in this asu are effective for sec filers for fiscal years , and interim periods within those fiscal years , beginning after december 15 , 2019. the company believes this asu will have a significant impact on our consolidated financial statements and the method in which we calculate our credit losses , primarily on loans and held to maturity securities . at this time , the company has established a project management team which meets periodically to discuss and assign roles and responsibilities , key tasks to complete , and a general time line to be followed for implementation . the team has been working with an advisory consultant and has story_separator_special_tag the following discussion compares the company 's financial condition at december 31 , 2018 to its financial condition at december 31 , 2017 and the results of operations for the years ended december 31 , 2018 and 2017. this discussion should be read in conjunction with the consolidated financial statements and the notes thereto appearing in item 8 of part ii of this annual report . performance overview the company recorded net income of $ 25.00 million for 2018 and net income of $ 11.26 million for 2017. the company sold the assets and activities of its retail insurance business , avon dixon , llc ( โ avon โ ) on december 31 , 2018 for net proceeds of $ 25.2 million and a net gain after tax of $ 8.2 million . in addition , the company discontinued operations of its insurance premium finance company , mubell , llc ( โ mubell โ ) , which it intends to dispose of in the next year . excluding the sale and activity of avon and mubell ( discontinued operations ) , the company reported net income of $ 15.76 million for 2018 for continuing operations . the basic and diluted income per share was $ 1.96 which comprised of $ 1.24 from continuing operations and $ 0.72 from discontinued operations for 2018 and $ 0.73 from continuing operations and $ 0.16 from discontinued operations for 2017. when comparing 2018 to 2017 , earnings were significantly improved due to increases in net interest income and noninterest income , partially offset by an increase in noninterest expenses . total assets were $ 1.483 billion at december 31 , 2018 , a $ 89.2 million , or 6.4 % , increase when compared to the $ 1.394 billion at december 31 , 2017. the primary factors contributing to the increase were increases in gross loans of $ 101.8 million and interest-bearing deposits with other banks of $ 40.6 million , partially offset by decreases of $ 42.5 million in investment securities which was utilized to fund loan growth and $ 11.2 million in total assets due to the sale of avon . total deposits increased $ 9.6 million , or less than 1 % to $ 1.212 billion at december 31 , 2018. the increase was due to increases in rates paid on core deposits as well as a new insured cash sweep ( โ ics โ ) product for customers . total stockholders ' equity increased $ 19.4 million , or 11.9 % , to $ 183.2 million , or 12.35 % of total assets at december 31 , 2018. the increase in total stockholders ' equity was primarily due to current year earnings and the sale of avon . critical accounting policies the company 's consolidated financial statements are prepared in accordance with gaap and follow general practices within the industries in which it operates . application of these principles requires management to make estimates , assumptions , and judgments that affect the amounts reported in the financial statements and accompanying notes . these estimates , assumptions , and judgments are based on information available as of the date of the financial statements ; accordingly , as this information changes , the financial statements could reflect different estimates , assumptions , and judgments . certain policies inherently have a greater reliance on the use of estimates , assumptions , and judgments and as such have a greater possibility of producing results that could be materially different than originally reported . estimates , assumptions , and judgments are necessary when assets and liabilities are required to be recorded at fair value , when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established , or when an asset or liability needs to be recorded contingent upon a future event . carrying assets and liabilities at fair value inherently result in more financial statement volatility . the fair values and the information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices , collateral value or are provided by other third-party sources , when available . the most significant accounting policies that the company follows are presented in note 1 to the consolidated financial statements . these policies , along with the disclosures presented in the notes to the financial statements and in this discussion , provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined . based on the valuation techniques used and the sensitivity of financial statement amounts to the methods , assumptions , and estimates underlying those amounts , management has determined that the accounting policies with respect to the allowance for credit losses , goodwill and other intangible assets , deferred tax assets , and fair value are critical accounting policies . these policies are considered critical because they relate to accounting areas that require the most subjective or complex judgments , and , as such , could be most subject to revision as new information becomes available . the allowance for credit losses represents management 's estimate of credit losses inherent in the loan portfolio as of the balance sheet date . story_separator_special_tag the net interest margin is managed through loan and deposit pricing and asset/liability strategies . the net interest margin was 3.74 % for 2018 and 3.76 % for 2017. the net interest margin decreased when comparing 2018 to 2017 due to the significant increase in the average balance of loans , higher yields on investment securities , offset by increases in rates paid on deposits and an increase in short and long-term borrowings . the net interest margin increased when comparing 2017 to 2016 due to an increase in the average balance of loans and lower rates paid on interest-bearing deposits . the net interest spread , which is the difference between the average yield on earning assets and the rate paid for interest-bearing liabilities , was 3.57 % for 2018 , 3.67 % for 2017 and 3.46 % for 2016 . 28 the following table sets forth the major components of net interest income , on a tax-equivalent basis , for the years ended december 31 , 2018 , 2017 , and 2016. replace_table_token_1_th ( 1 ) all amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21 % for 2018 and 35 % for 2017 and 2016 , exclusive of the alternative minimum tax rate and nondeductible interest expense . the tax-equivalent adjustment amounts used in the above table to compute yields aggregated $ 114 thousand in 2018 , $ 242 thousand in 2017 and $ 198 thousand in 2016 . ( 2 ) average loan balances include nonaccrual loans . ( 3 ) interest income on loans includes amortized loan fees , net of costs , and all are included in the yield calculations . on a tax-equivalent basis , total interest income was $ 56.0 million for 2018 compared to $ 48.0 million for 2017. the increase in interest income for 2018 compared to 2017 was primarily due to the increase in the average balance of loans coupled with a higher yield on taxable investment securities . interest income on taxable investment securities increased $ 442 thousand or 11.5 % in 2018 compared to 2017. for 2018 compared to 2017 , average loans increased $ 169.7 million and the yield earned on loans remained flat at 4.46 % . the increased volume of loans coupled with a disciplined effort to maintain and attempt to improve rates on new loan originations resulted in an increase in tax-equivalent interest income of $ 7.6 million . also impacting interest income is the accretion of acquisition accounting adjustments from the branch acquisition in 2017 for loans of $ 319 thousand and $ 506 thousand for 2018 and 2017 , respectively , which is accounted for using a level yield method . excluding average nonaccrual loans , the yield on loans would have been 4.49 % for 2018 and 2017 and 4.59 % for 2016 , respectively . 29 on a tax-equivalent basis , total interest income was $ 48.0 million for 2017 compared to $ 40.9 million for 2016. the increase in interest income for 2017 compared to 2016 was primarily due to the increase in the average balance of loans coupled with a higher yield on taxable investment securities . interest income on taxable investment securities increased $ 652 thousand or 20.4 % in 2017 compared to 2016. in addition , interest-bearing deposits increased due to three fed fund rate hikes of 25bps during 2017. for 2017 compared to 2016 , average loans increased $ 158.0 million and the yield earned on loans decreased 6 basis points . the increased volume of loans and the higher yield on loans purchased in the branch acquisition during the second quarter of 2017 , outweighed the decline in the yield on originated loans resulting in an increase in tax-equivalent interest income of $ 6.5 million . also impacting interest income is the accretion of acquisition accounting adjustments from the branch acquisition for loans of $ 420 thousand which is accounted for using a level yield method . in addition , the accretion on certificates of deposits acquired from the branch purchase , decreased interest expense by $ 86 thousand . as a percentage of total average earning assets , loans , investment securities , and interest-bearing deposits were 84.9 % , 14.0 % , and 1.1 % , respectively , for 2018 which reflected an increase in higher-yielding earning assets when compared to 2017. the comparable percentages for 2017 were 80.9 % , 16.6 % , and 2.5 % , respectively , and for 2016 were 76.4 % , 18.2 % , and 5.4 % , respectively . when comparing 2018 to 2017 , the overall increase in average balances of earning assets produced $ 8.0 million more in interest income the result of a stable yield on loans , coupled with higher yields on taxable investment securities and interest-bearing deposits , as seen in the rate/volume variance analysis below . when comparing 2017 to 2016 , the overall increase in average balances of earning assets produced $ 7.2 million more in interest income and the decrease in yields on loans were offset by higher yields on taxable investment securities and interest-bearing deposits which produced $ 129 thousand more in interest income , as seen in the rate/volume variance analysis below . interest expense was $ 5.3 million for 2018 compared to $ 2.3 million for 2017. the increase in interest expense for 2018 was primarily due to increases in short and long-term borrowings , rates paid on interest-bearing deposits and the addition of brokered deposits . the average balances on short-term and long-term deposits increased $ 72.8 million and $ 3.6 million when compared to 2017 , with a rate of 2.12 % and 2.89 % , respectively . additionally , brokered deposits were added during 2018 resulting in an average balance of $ 14.8 million with a rate of 2.12 % .
| review of financial condition asset and liability composition , capital resources , asset quality , market risk , interest sensitivity and liquidity are all factors that affect our financial condition . the following sections discuss each of these factors . assets interest-bearing deposits with other banks and federal funds sold the company invests excess cash balances ( i.e. , the excess cash remaining after funding loans and investing in securities with deposits and borrowings ) in interest-bearing accounts and federal funds sold offered by our correspondent banks . these liquid investments are maintained at a level that management believes is necessary to meet current liquidity needs . total interest-bearing deposits with other banks increased $ 40.6 million from $ 10.3 million at december 31 , 2017 to $ 50.9 million at december 31 , 2018. this significant increase was primarily the result of receiving $ 25.2 million from the sale of avon on december 31 , 2018 along with some large payoffs and paydowns of loans at the end of 2018. average interest-bearing deposits with other banks decreased $ 16.1 million in 2018 when compared to 2017. the decrease in 2018 was due to higher period-end and average balances on loans which absorbed the excess liquidity in both average interest-bearing deposits with other banks and average balances on deposits . investment securities the investment portfolio is structured to provide us with liquidity and also plays an important role in the overall management of interest rate risk . investment securities available for sale are stated at estimated fair value based on quoted prices and may be sold as part of the asset/liability management strategy or which may be sold in response to changing interest rates . net unrealized holding gains and losses on available for sale debt securities are reported net of related income taxes as accumulated other comprehensive income , a separate component of stockholders ' equity .
| 4,637 |
interest recognition on notes receivable we record interest income as earned in accordance with the terms of the related loan agreements . allowance for estimated losses we assess the collectability of notes receivable on a periodic basis , of which the assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note . we recognize impairments on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan . the amount of the impairment to be recognized generally is based on the fair value of the partnership 's real estate that represents the primary source of loan repayment . ( see note 3 , below , notes and interest receivable from related parties , for details on our notes receivable . ) fair value measurement the company applies the guidance in asc 820 , fair value measurements and disclosures , to the valuation of notes receivable . these provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date , establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy . the hierarchy gives the highest priority to quoted prices in active markets ( level 1 measurements ) and the lowest priority to unobservable data ( level 3 measurements ) , such as the reporting entity 's own data . the valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and includes three levels defined as follows : level 1โunadjusted quoted prices for identical and unrestricted assets or liabilities in active markets . level 2โquoted prices for similar assets and liabilities in active markets , and inputs that are observable for the asset or liability , either directly or indirectly , for substantially the full term of the financial instrument . level 3โunobservable inputs that are significant to the fair value measurement . a financial instrument 's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement . management reviews the carrying values of our mortgage notes receivable at least annually and whenever events or a change in circumstances indicates that impairment may exist . for notes receivable , impairment is considered to exist if it is probable that all amounts due under the terms of the note will not be collected . the note receivable review includes an evaluation of the collateral property securing such note . if impairment is found to exist , a provision for loss is recorded by a charge against earnings . we did not record any impairment charges for the years ended december 31 , 2020 and 2019. related parties we apply asc 850 , related party disclosures , to evaluate business relationships . related parties are persons or entities who have one or more of the following characteristics , which include entities for which investments in their equity securities would be required , trust for the benefit of persons including principal owners of the entities and members of their immediate families , management personnel of the entity and members of their immediate families and other parties with which the entity may deal if one party controls or can significantly influence the decision making of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests , or affiliates of the entity . 9 contractual obligations at december 31 , 2020 , the company had no outstanding debt , lease or purchase obligations . newly issued accounting pronouncements in december 2019 , the fasb issued asu 2019-12 , income taxes ( topic 740 ) : simplifying the accounting for income taxes . the amendments in this update simplify the accounting for income taxes by removing certain exceptions from asc 740. also , the amendments in this update simplify the accounting for income taxes by requiring that an entity recognize a franchise tax ( or similar tax ) that is partially based on income as an income-based tax , requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination , and other targeted changes . the effective date of the amendments is for fiscal years , and interim periods within those years , beginning after december 15 , 2020. the company 's adoption of asu 2019-12 on january 1 , 2021 , did not have a material impact on the company 's consolidated financial statements . story_separator_special_tag serif ; margin : 0pt 0 ; text-align : justify '' > gain on land sales of $ 7.3 million were recognized for the year ended december 31 , 2018 , as a result of the sale of real estate holdings during the third quarter for approximately $ 22.5 million . liquidity and capital resources general our principal liquidity needs are to fund normal recurring expenses . our principal sources of cash are and will continue to be the collection of mortgage notes receivables , and the collections of receivables and interests from related companies . cash flow summary the following summary discussion of our cash flows is based on the consolidated statements of cash flows as presented in part i , item 8. financial statements and supplementary data and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented . 11 our cash and cash equivalents were $ 12,000 and $ 5,000 as of december 31 , 2020 and 2019 , respectively . the increase was a result story_separator_special_tag interest recognition on notes receivable we record interest income as earned in accordance with the terms of the related loan agreements . allowance for estimated losses we assess the collectability of notes receivable on a periodic basis , of which the assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note . we recognize impairments on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan . the amount of the impairment to be recognized generally is based on the fair value of the partnership 's real estate that represents the primary source of loan repayment . ( see note 3 , below , notes and interest receivable from related parties , for details on our notes receivable . ) fair value measurement the company applies the guidance in asc 820 , fair value measurements and disclosures , to the valuation of notes receivable . these provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date , establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy . the hierarchy gives the highest priority to quoted prices in active markets ( level 1 measurements ) and the lowest priority to unobservable data ( level 3 measurements ) , such as the reporting entity 's own data . the valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and includes three levels defined as follows : level 1โunadjusted quoted prices for identical and unrestricted assets or liabilities in active markets . level 2โquoted prices for similar assets and liabilities in active markets , and inputs that are observable for the asset or liability , either directly or indirectly , for substantially the full term of the financial instrument . level 3โunobservable inputs that are significant to the fair value measurement . a financial instrument 's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement . management reviews the carrying values of our mortgage notes receivable at least annually and whenever events or a change in circumstances indicates that impairment may exist . for notes receivable , impairment is considered to exist if it is probable that all amounts due under the terms of the note will not be collected . the note receivable review includes an evaluation of the collateral property securing such note . if impairment is found to exist , a provision for loss is recorded by a charge against earnings . we did not record any impairment charges for the years ended december 31 , 2020 and 2019. related parties we apply asc 850 , related party disclosures , to evaluate business relationships . related parties are persons or entities who have one or more of the following characteristics , which include entities for which investments in their equity securities would be required , trust for the benefit of persons including principal owners of the entities and members of their immediate families , management personnel of the entity and members of their immediate families and other parties with which the entity may deal if one party controls or can significantly influence the decision making of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests , or affiliates of the entity . 9 contractual obligations at december 31 , 2020 , the company had no outstanding debt , lease or purchase obligations . newly issued accounting pronouncements in december 2019 , the fasb issued asu 2019-12 , income taxes ( topic 740 ) : simplifying the accounting for income taxes . the amendments in this update simplify the accounting for income taxes by removing certain exceptions from asc 740. also , the amendments in this update simplify the accounting for income taxes by requiring that an entity recognize a franchise tax ( or similar tax ) that is partially based on income as an income-based tax , requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination , and other targeted changes . the effective date of the amendments is for fiscal years , and interim periods within those years , beginning after december 15 , 2020. the company 's adoption of asu 2019-12 on january 1 , 2021 , did not have a material impact on the company 's consolidated financial statements . story_separator_special_tag serif ; margin : 0pt 0 ; text-align : justify '' > gain on land sales of $ 7.3 million were recognized for the year ended december 31 , 2018 , as a result of the sale of real estate holdings during the third quarter for approximately $ 22.5 million . liquidity and capital resources general our principal liquidity needs are to fund normal recurring expenses . our principal sources of cash are and will continue to be the collection of mortgage notes receivables , and the collections of receivables and interests from related companies . cash flow summary the following summary discussion of our cash flows is based on the consolidated statements of cash flows as presented in part i , item 8. financial statements and supplementary data and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented . 11 our cash and cash equivalents were $ 12,000 and $ 5,000 as of december 31 , 2020 and 2019 , respectively . the increase was a result
| results of operations the following discussion is based on our consolidated financial statements consolidated statement of operations , for the years ended december 31 , 2020 , 2019 , and 2018 from part ii , item 8. financial statements and supplementary data and is not meant to be an all-inclusive discussion of the changes in our net income applicable to common shares . instead , we have focused on significant fluctuations within our operations that we feel are relevant to obtain an overall understanding of the change in income applicable to common shareholders . our operating expenses consist primarily of general and administrative costs such as audit and legal fees and administrative fees paid to a related party . we also have other income and expense items . we receive interest income from the funds deposited with our advisor at a rate of prime plus 1.0 % . we have receivables from related parties which also provide interest income . comparison of the year ended december 31 , 2020 to the year ended december 31 , 2019 we had a net income applicable to common shares of $ 4.2 million or $ 1.01 per diluted earnings per share for the year ended december 31 , 2020 , compared to a net income applicable to common shares of $ 4.1 million or $ .99 per diluted earnings per share for the same period ended 2019. expenses general and administrative expenses were $ 450,000 for the year ended december 31 , 2020. general and administrative expenses were $ 494,000 for the year ended december 31 , 2019. this included a decrease in legal expenses of $ 17,000 , a decrease in audit fees of $ 11,000 , and a decrease in expense reimbursements to pillar and of $ 13,000. net income fee to related party was $ 371,000 for the year ended december 31 , 2020. this represents an increase of $ 14,000 , compared
| 4,638 |
64 trimas corporation notes to consolidated financial statements ( continued ) while the individual and aggregate historical and current year revenue and earnings associated with the company 's 2013 acquisitions is not significant compared to the company 's total results of operations , the following information has been provided to summarize the aggregate fair value of consideration paid for the acquisitions , the assets acquired and liabilities assumed . replace_table_token_16_th ( a ) deferred/contingent consideration included approximately $ 2.6 million of both short-term and long-term deferred purchase price , based on set amounts and fixed payment schedules per the purchase agreement , and an additional $ 1.7 million of contingent consideration to be paid , if earned , based on a multiple of future earnings , as defined . ( b ) consists of approximately $ 23.1 million story_separator_special_tag the statements in the discussion and analysis regarding industry outlook , our expectations regarding the performance of our business and the other non-historical statements in the discussion and analysis are forward-looking statements . these forward-looking statements are subject to numerous risks and uncertainties , including , but not limited to , the risks and uncertainties described in item 1a `` risk factors . '' our actual results may differ materially from those contained in or implied by any forward-looking statements . you should read the following discussion together with item 8 , `` financial statements and supplementary data . '' introduction we are a global manufacturer and distributor of products for commercial , industrial and consumer markets . we are principally engaged in four reportable segments : packaging , aerospace , energy and engineered components . on june 30 , 2015 , we completed the spin-off of our cequent businesses , creating a new independent publicly-traded company , horizon global corporation ( `` horizon '' ) . on june 30 , 2015 , our stockholders received two shares of horizon common stock for every five shares of trimas common stock that they held as of the close of business on june 25 , 2015. the financial position , results of operations and cash flows of horizon are reflected as discontinued operations for all periods presented through the date of the spin-off . key factors and risks affecting our reported results . our businesses and results of operations depend upon general economic conditions and we serve some customers in cyclical industries that are highly competitive and themselves significantly impacted by changes in economic conditions . there has been little or no economic growth , particularly in the united states , although global economic conditions appear to have been relatively stable over the past couple of years . the most significant external factor impacting us in 2015 was the impact of lower oil prices , which directly impacted our arrow engine business ( which serves the upstream oil and natural gas market at the well site ) and our energy business , which primarily serves petrochemical and other refineries in the downstream oil and gas markets . our arrow engine business revenue declined more than 50 % during 2015 , primarily due to fewer orders for new engines and well-site content as a result of the reduction in oil prices and drilling activity . the arrow engine business reacted aggressively in cutting costs and structuring its business to the lower demand levels , and was essentially able to break-even in profit during 2015 despite the significant top line reduction . in addition to oil prices , our 2015 results were also significantly impacted by a stronger u.s. dollar and a slowing of industrial production and related customer demand during the back half of 2015. while we experienced some organic growth in certain of our businesses in 2015 as compared to 2014 , the majority of our growth was generated by sales from acquisitions . our 2015 sales decreased as compared to 2014 , as the aforementioned sales growth was more than offset by reductions in sales , primarily as a result of the impact of lower oil prices . during 2014 and 2015 , we undertook significant actions in our energy reportable segment to reassess , restructure and optimize our manufacturing and sales footprints , as demand levels had been less consistent and lower than historical levels . starting in the second half of 2013 , both in the united states and abroad , petrochemical plants and refinery customers deferred shutdown activity , plus we experienced decreases in engineering and construction ( `` e & c '' ) customer activity . we were able to gain market share and additional product content during 2014 and the first three quarters of 2015 , primarily consisting of standard and highly-engineered bolts , which essentially offset the reduction in upstream channel business impacted by lower oil prices . thus , we held total sales at consistent levels at around $ 50 million each quarter , but with significantly less favorable product sales mix primarily due to the lower e & c and shutdown activity , which would typically be a higher-margin business . given these factors , during 2014 , we announced the closure of a sales branch in china , a manufacturing facility in brazil and the move of certain longer lead-time standard products from our houston , texas manufacturing facility to a new facility in mexico , which began production in the fourth quarter of 2015. in 2015 , we also announced the consolidation and or closure of several of our facilities , including manufacturing facilities in hangzhou , china , rio de janeiro , brazil and houston , texas ( former south texas bolt and fitting facility ) . 28 during the third quarter of 2015 , given the impact of lower oil prices on net sales and profitability , the uncertain macroeconomic environment and a recent slowing of industrial production and related demand , we announced a financial improvement plan ( `` fip '' ) to improve our profitability , cash flow conversion and operational efficiency . story_separator_special_tag arrow 's pumpjack and other engine sales and related parts , which comprise a significant portion of the business , are impacted by oil drilling levels , rig counts and commodity pricing . the decline of oil prices in late fourth quarter 2014 and through 2015 has significantly impacted demand levels in this business , with sales levels dropping more than 50 % from 2014. our other businesses may be impacted by volatile oil prices , but not as directly . for example , a portion of our energy reportable segment serves upstream customers at oil well sites that have been impacted by changes in oil prices , while the majority of the segment provides parts for refineries and chemical plants , which may or may not choose to defer capital expenditures or changeover production stock , both of which would require retooling with our gaskets and bolts , in times of fluctuations in oil prices . our packaging reportable segment may be impacted by oil prices , as it is a significant driver of resin pricing , although we generally are able to maintain profit levels when oil prices change due to escalator/de-escalator clauses in contracts with many of our customers . 30 segment information and supplemental analysis the following table summarizes financial information for our four reportable segments : replace_table_token_4_th 31 story_separator_special_tag reported domestic and foreign pre-tax losses of approximately $ 3.2 million and $ 19.0 million , respectively , and recognized tax benefits of approximately $ 3.1 million due to a change in an uncertain tax position for which the statute of limitations expired and research and manufacturing tax incentives . in addition , we were unable to record tax benefit of approximately $ 11.4 million related to pre-tax goodwill impairment charges in the u.s. and certain other jurisdictions . we also incurred tax charges of approximately $ 3.8 million directly attributable to increases in valuation allowances on certain deferred tax assets including foreign tax operating loss carryforwards . in 2014 , we reported domestic and foreign pre-tax income of approximately $ 67.3 million and $ 2.3 million , respectively , and recognized tax benefits of approximately $ 4.4 million due to a change in an uncertain tax position for which the statute of limitations expired and research and manufacturing tax incentives . in addition , we incurred tax charges of approximately $ 3.3 million during 2014 directly attributable to increases in valuation allowances on certain deferred tax assets including foreign tax operating loss carryforwards . income ( loss ) from continuing operations decreased approximately $ 75.6 million to a loss of $ 28.7 million in 2015 , from income of $ 46.9 million in 2014 . the decrease was primarily the result of an approximately $ 91.0 million decrease in operating profit , which includes approximately $ 74.1 million in goodwill impairment charges in 2015 , and increased interest expense of approximately $ 4.5 million , partially offset by a decrease in income tax expense of approximately $ 16.2 million , decreases in other expenses of approximately $ 2.3 million , and decreased debt financing and extinguishment costs of approximately $ 1.4 million . net income attributable to noncontrolling interest was $ 0.8 million in 2014 . the income was related to our 70 % acquisition in arminak & associates llc ( `` arminak '' ) in february 2012 , and represented the 30 % interest not attributed to trimas corporation . we acquired the remaining 30 % interest in arminak on march 11 , 2014. see note 5 , `` acquisitions , '' included in item 8 , `` financial statements and supplementary data , '' within this form 10-k. see below for a discussion of operating results by reportable segment . packaging . net sales decreased approximately $ 3.4 million , or 1.0 % , to $ 334.3 million in 2015 , as compared to $ 337.7 million in 2014 , primarily as a result of approximately $ 8.5 million of unfavorable currency exchange , as our reported results in u.s. dollars were negatively impacted as a result of the stronger u.s. dollar relative to foreign currencies . sales of our industrial closures also decreased approximately $ 2.4 million , primarily as a result of lower demand in north america . these decreases were partially offset by incremental net sales of approximately $ 7.0 million related to the acquisition of lion holdings pvt . ltd. ( `` lion holdings '' ) in the third quarter of 2014 and an increase of approximately $ 0.4 million related to our specialty systems products , primarily due to increased demand from customers in north america . packaging 's gross profit increased approximately $ 2.4 million to $ 120.6 million , or 36.1 % of sales in 2015 , as compared to $ 118.2 million , or 35.0 % of sales in 2014 . gross profit increased primarily due to profit derived from the acquisition of lion holdings , as well as a $ 1.2 million reduction of an estimated acquisition related liability , a more favorable product mix and continued productivity initiatives . these increases were partially offset by approximately $ 3.9 million of unfavorable currency exchange as a result of the stronger u.s. dollar relative to foreign currencies . 33 packaging 's selling , general and administrative expenses increased approximately $ 3.5 million to $ 42.0 million , or 12.6 % of sales in 2015 , as compared to $ 38.5 million , or 11.4 % of sales in 2014 , primarily as a result of approximately $ 1.8 million of incremental selling , general and administrative costs associated with our lion holdings acquisition and a $ 0.9 million charge associated with the closure of a distribution center in europe .
| results of operations year ended december 31 , 2015 compared with year ended december 31 , 2014 the principal factors impacting us during the year ended december 31 , 2015 , compared with the year ended december 31 , 2014 were : the spin-off of the cequent businesses , including costs incurred to affect and reclassifying to discontinued operations for all periods presented , and amending our credit agreement ( `` credit agreement '' ) ; the impact of lower oil prices , primarily in our engineered components and energy reportable segments ; the impact of acquisitions ( see below for the impact by reportable segment ) ; cash and non-cash costs incurred related to facility closures and consolidations , primarily within our energy reportable segment ; an approximate $ 74.1 million goodwill impairment charge between our energy and engineered components reportable segments ; the impact of the stronger u.s. dollar , primarily in our packaging and energy reportable segments ; and the impact of industrial slowing demand in the back half of 2015 , primarily in our packaging and engineered components reportable segments ; overall , net sales decreased approximately $ 23.3 million , or approximately 2.6 % , to $ 864.0 million in 2015 , as compared to $ 887.3 million in 2014 . the impact of lower oil prices and the strong u.s. dollar significantly pressured the top-line during 2015 , more than offsetting additional sales from organic sales growth and acquisitions in our aerospace reportable segment . as a result of lower oil prices and related activity , sales of engine and compression-related products declined approximately $ 52.9 million during 2015 within our engineered components reportable segment . sales further declined in our engineered components reportable segment by approximately $ 8.6 million , primarily due to a reduction of sales of our acetylene cylinders and lower export sales due to the impact of the stronger u.s. dollar .
| 4,639 |
if cytori receives an aggregate $ 35,000,000 in cash through strategic or financing arrangements during the first year of the termination agreement , cytori would be required to pay $ 4,500,000 ( minus installment payments previously made ) upon request of olympus as full and complete consideration under the agreement . story_separator_special_tag overview we are a cell therapy company dedicated to the development of novel treatments primarily for cardiovascular disease as well as for a range of soft tissue injuries . in the u.s. our goal is to bring cytori cell therapy to market for treatment of heart failure due to ischemic heart disease through cytori-sponsored clinical development efforts and to develop a treatment for thermal burns combined with radiation injury under a contract from barda , a division of the u.s. department of health and human services . cytori cell therapy is a proprietary formulation of stem and regenerative cells derived from a patient 's own adipose ( fat ) tissue ( adrcs ) . adipose tissue is a rich and accessible source of stem and other regenerative cells . to access these cells from a patient at the time of a surgical procedure , we have designed and developed a sophisticated tissue processing system , the celutionยฎ system , which automates the complex process of digesting fat tissue , releasing the adrcs , and concentrating them into an optimized and proprietary formulation in a sterile environment . the system is comprised of a central device and single-use , per-procedure consumable cartridges . the business model is based on the sale of the device and generating recurring revenue from the cartridges that are utilized in each procedure . in addition to our targeted therapeutic development , we have continued to commercialize the celutionยฎ system under select medical device clearances to research customers developing new therapeutic applications for cytori cell therapy in europe , japan , and other regions . the early sales of systems , consumables and ancillary products contributes margins that partially offset our operating expenses and play an important strategic role in fostering familiarity within the medical community with our technology . these sales have also facilitated the discovery of new applications for cytori cell therapy by customers conducting investigator-initiated and funded research . development pipeline the primary therapeutic areas currently within our development pipeline are cardiovascular disease , specifically heart failure due to ischemic heart disease , the treatment of thermal burns , and orthopedics and sports medicine indications . in the u.s. , we are conducting our athena trial , a prospective , double blind , placebo-controlled , multi-center trial in up to 45 patients with ischemic heart disease . the trial will measure several endpoints , including peak oxygen consumption ( vo2 max ) . additional endpoints include perfusion defect , left ventricle end-systolic and diastolic volume and ejection fraction at six and 12 months , nyha functional class and health-related quality of life . in the third quarter , the fda approved expanding the athena trial from six trial centers to a total of eight centers . in addition , we also received approval from the fda to expand the athena program to include a higher cell dose . this trial , athena ii , will enroll 45 patients at up to 10 centers , including most of the centers in athena i and will begin enrolling in the first quarter of 2014. advance is our european clinical trial for acute myocardial infarction ( heart attack ) . as part of a comprehensive evaluation of our global cardiovascular strategy , resource utilization and development priorities , we have discontinued enrollment in the advance trial as of september 30 , 2013. all evidence to date supports the current , known safety profile for cytori 's cell therapy and the patients enrolled in the trial will continue to be followed according to the protocol . the outcomes will be fully analyzed in conjunction with the existing safety and feasibility data from the apollo acute myocardial infarction trial . we will focus our internal and financial resources on the highest clinical development priority , which is the expanded u.s. athena trial . we have completed two european pilot trials investigating cytori 's cell therapy for cardiovascular disease . we have reported long term , 18-month data from the precise trial for chronic myocardial ischemia , which showed that cytori 's cell therapy demonstrated safety and sustained improvement in cardiac functional capacity as measured by vo 2 max . results from the apollo trial for acute heart attack demonstrated safety and sustained improvement in infarct size . in addition to our cardiovascular disease therapeutic pipeline , cytori is also developing its cell therapy platform for the treatment of thermal burns combined with radiation injury , sports medicine and orthopedics . in the third quarter of 2012 , we were awarded a contract to develop a new countermeasure for thermal burns valued at up to $ 106 million with the u.s. department of health and human service 's biomedical advanced research and development authority ( barda ) . the initial base period includes $ 4.7 million over two years and covers preclinical research and continued development of cytori 's celutionยฎ system to improve cell processing . the additional contract options , if fully executed , could cover our clinical development through fda approval under a device-based pma regulatory pathway . we are making progress in fulfilling the required milestones of the base contract with the goal of completing the base period in early 2014. we have also received fda approval in late 2013 to conduct a safety and feasibility clinical trial in patients with acute hamstring tears in order to evaluate the effect of cytori cell therapy on healing in muscle injury . 27 story_separator_special_tag 2013 , which included allowable fees as well as cost reimbursements . during the year ended december 31 , 2012 , we incurred $ 331,000 in qualified expenditures . story_separator_special_tag the decrease in share-based compensation for the year ended december 31 , 2013 as compared to the same period in 2012 is primarily due to restricted stock awards granted to our executive team during 2012. see note 16 to the consolidated financial statements included elsewhere herein for disclosure and discussion of share based compensation . the increase in share-based compensation for the year ended december 31 , 2012 as compared to the same period in 2011 is primarily due to the grant of restricted stock awards and performance based stock awards . see note 16 to the consolidated financial statements included elsewhere herein for disclosure and discussion of share based compensation . the future . we expect to continue to grant options and stock awards ( which will result in an expense ) to our employees , directors , and , as appropriate , to non-employee service providers . in addition , previously-granted options will continue to vest in accordance with their original terms . as of december 31 , 2013 , the total compensation cost related to non-vested stock options and stock awards not yet recognized for all our plans is approximately $ 4,810,000. of this amount , $ 4,725,000 is expected to be recognized as a result of vesting under service conditions over a weighted average period of 1.81 years . change in fair value of warrant liability the following is a table summarizing the change in fair value of warrant liability for the years ended december 31 , 2013 , 2012 and 2011 : replace_table_token_11_th changes in fair value of our warrant liability are primarily due to fluctuations in the valuation inputs , such as stock price , volatility , remaining life and others . see note 2 to the consolidated financial statements included elsewhere herein for disclosure and discussion of our warrant liability . the future : no future changes in the fair value of the warrant liability will be recognized as the warrants expired in august 2013. change in fair value of option liability the following is a table summarizing the change in fair value of option liability for the years ended december 31 , 2013 , 2012 and 2011 : replace_table_token_12_th changes in fair value of our put option liability are due to changes in assumptions used in estimating the value of the put , such as bankruptcy threshold for cytori , fair value of the olympus-cytori , inc. joint venture , volatility and others . see note 4 to the consolidated financial statements included elsewhere herein for disclosure and discussion of our put option liability . the future : the put was cancelled as a result of the joint venture termination as such we will not be recognizing any changes in fair value of put option liability in the future . 32 financing items the following table summarizes interest income , interest expense , and other income and expenses for the years ended december 31 , 2013 , 2012 and 2011 : replace_table_token_13_th ยท in connection with the june 28 , 2013 loan and security agreement ( loan agreement ) , a loss on debt extinguishment was recorded that relates to the payoff of the prior loan obligation . see note 11 to consolidated financial statements for further information . ยท interest expense increased for the year ended december 31 , 2013 as compared to prior year ended december 31 , 2012 due to cash interest and non-cash amortization of debt issuance costs and debt discount for our $ 27.0 million term loan . ยท interest expense increased for the year ended december 31 , 2012 and december 31 , 2011 is due to cash interest and non-cash amortization of debt issuance costs and debt discount for our $ 25.0 million term loan . in september 2011 , we entered into a second amendment to the amended and restated loan and security agreement , pursuant to which the lenders funded an additional principal , increasing the total principal balance to $ 25.0 million . ยท the changes in other income ( expense ) in 2013 , 2012 and 2011 resulted primarily from changes in foreign currency exchange rates . ยท refer to note 5 for discussion on gain on puregraft divestiture . ยท refer to note 4 for discussion on gain on previously held equity interest in joint venture . the future : interest income earned in 2014 will be dependent on our levels of funds available for investment as well as general economic conditions . subject to our future financing activities , we expect interest expense in 2014 to increase slightly as we continue to pay interest on the $ 27.0 million term loan that was amended in june 2013. equity loss from investment in joint venture the following table summarizes equity loss from investment in joint venture for the years ended december 31 , 2013 , 2012 and 2011. replace_table_token_14_th the losses relate entirely to our 50 % equity interest in the joint venture , which we account for using the equity method of accounting . the future : pursuant to the may 2013 acquisition of the remaining interest in the olympus-cytori joint venture we will not recognize any additional losses from the activities of the joint venture . liquidity and capital resources short-term and long-term liquidity the following is a summary of our key liquidity measures at december 31 , 2013 and 2012 : replace_table_token_15_th 33 we incurred net losses of $ 26,177,000 , $ 32,279,000 and $ 32,451,000 for the years ended december 31 , 2013 , 2012 and 2011 , respectively . we have an accumulated deficit of $ 300,905,000 as of december 31 , 2013. additionally , we have used net cash of $ 34,563,000 , $ 32,193,000 and $ 35,323,000 to fund our operating activities for years ended december 31 , 2013 , 2012 and 2011 , respectively . to date , these operating losses have been funded primarily from outside sources of invested capital and gross profits .
| results of operations product revenues product revenues consisted of revenues primarily from our celutionยฎ and stemsourceยฎ cell banks . the following table summarizes the components for the years ended december 31 , 2013 , 2012 and 2011 : replace_table_token_4_th a significant contributor to cytori 's product revenue historically and throughout 2013 has been sales in japan . in september 2012 we obtained class i device clearance for celutionยฎ and a number of our other products in japan . this clearance is expected to facilitate sales growth in japan and it is anticipated that demand will come mostly from researchers at academic hospitals seeking to perform investigator-initiated and funded studies using cytori 's cell therapy . we experienced a decrease in product revenue during year ended december 31 , 2013 as compared to the same periods in 2012 and 2011 , due principally to the product mix comprising revenue for each period and anticipated timing associated with larger system related sales . an additional $ 3.6 million in orders shipped to customers in 2013 was excluded from product revenues as the relevant revenue recognition criteria were not met , and is expected to be recognized in 2014. the future : we expect to continue to generate product revenues from a mix of celutionยฎ and stemsourceยฎ system and consumables sales . we will sell the products to a diverse group of distributors and partners in europe , asia and the u.s. , who may apply the products towards reconstructive surgery , soft tissue repair , research , aesthetics , and cell and tissue banking as approved in each country . additionally , as a result of class i device clearance for celutionยฎ and a number of our other products in japan , we anticipate to sell these products to researchers at academic hospitals seeking to perform investigator-initiated and funded studies using cytori 's cell therapy .
| 4,640 |
please read this discussion in conjunction with the consolidated financial statements and notes included in this form 10-k. cautionary statement regarding forward-looking statements our statements , trend analyses and other information contained in this report and elsewhere ( such as in filings by cno with the sec , press releases , presentations by cno or its management or oral statements ) relative to markets for cno 's products and trends in cno 's operations or financial results , as well as other statements , contain forward-looking statements within the meaning of the federal securities laws and the private securities litigation reform act of 1995. forward-looking statements typically are identified by the use of terms such as `` anticipate , '' `` believe , '' `` plan , '' `` estimate , '' `` expect , '' `` project , '' `` intend , '' `` may , '' `` will , '' `` would , '' `` contemplate , '' `` possible , '' `` attempt , '' `` seek , '' `` should , '' `` could , '' `` goal , '' `` target , '' `` on track , '' `` comfortable with , '' `` optimistic '' and similar words , although some forward-looking statements are expressed differently . you should consider statements that contain these words carefully because they describe our expectations , plans , strategies and goals and our beliefs concerning future business conditions , our results of operations , financial position , and our business outlook or they state other `` forward-looking '' information based on currently available information . the `` risk factors '' in item 1a provide examples of risks , uncertainties and events that could cause our actual results to differ materially from the expectations expressed in our forward-looking statements . assumptions and other important factors that could cause our actual results to differ materially from those anticipated in our forward-looking statements include , among other things : changes in or sustained low interest rates causing reductions in investment income , the margins of our fixed annuity and life insurance businesses , and sales of , and demand for , our products ; expectations of lower future investment earnings may cause us to accelerate amortization , write down the balance of insurance acquisition costs or establish additional liabilities for insurance products ; general economic , market and political conditions , including the performance of the financial markets which may affect the value of our investments as well as our ability to raise capital or refinance existing indebtedness and the cost of doing so ; the ultimate outcome of lawsuits filed against us and other legal and regulatory proceedings to which we are subject ; our ability to make anticipated changes to certain nges of our life insurance products ; our ability to obtain adequate and timely rate increases on our health products , including our long-term care business ; the receipt of any required regulatory approvals for dividend and surplus debenture interest payments from our insurance subsidiaries ; mortality , morbidity , the increased cost and usage of health care services , persistency , the adequacy of our previous reserve estimates and other factors which may affect the profitability of our insurance products ; changes in our assumptions related to deferred acquisition costs or the present value of future profits ; the recoverability of our deferred tax assets and the effect of potential ownership changes and tax rate changes on their value ; our assumption that the positions we take on our tax return filings will not be successfully challenged by the irs ; changes in accounting principles and the interpretation thereof ( including changes in principles related to accounting for deferred acquisition costs ) ; our ability to continue to satisfy the financial ratio and balance requirements and other covenants of our debt agreements ; 48 our ability to achieve anticipated expense reductions and levels of operational efficiencies including improvements in claims adjudication and continued automation and rationalization of operating systems ; performance and valuation of our investments , including the impact of realized losses ( including other-than-temporary impairment charges ) ; our ability to identify products and markets in which we can compete effectively against competitors with greater market share , higher ratings , greater financial resources and stronger brand recognition ; our ability to generate sufficient liquidity to meet our debt service obligations and other cash needs ; our ability to maintain effective controls over financial reporting ; our ability to continue to recruit and retain productive agents and distribution partners and customer response to new products , distribution channels and marketing initiatives ; our ability to achieve additional upgrades of the financial strength ratings of cno and our insurance company subsidiaries as well as the impact of our ratings on our business , our ability to access capital , and the cost of capital ; the risk factors or uncertainties listed from time to time in our filings with the sec ; regulatory changes or actions , including those relating to regulation of the financial affairs of our insurance companies , such as the payment of dividends and surplus debenture interest to us , regulation of the sale , underwriting and pricing of products , and health care regulation affecting health insurance products ; and changes in the federal income tax laws and regulations which may affect or eliminate the relative tax advantages of some of our products or affect the value of our deferred tax assets . other factors and assumptions not identified above are also relevant to the forward-looking statements , and if they prove incorrect , could also cause actual results to differ materially from those projected . all written or oral forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statement . our forward-looking statements speak only as of the date made . story_separator_special_tag ) fair value changes in embedded derivative liabilities that are unrelated to the company 's underlying fundamentals ; and ( vi ) equity in earnings of certain non-strategic investments and earnings attributable to non-controlling interests . net realized investment gains or losses include : ( i ) gains or losses on the sales of investments ; ( ii ) other-than-temporary impairments recognized through net income ; and ( iii ) changes in fair value of certain fixed maturity investments with embedded derivatives . the table above reconciles the non-gaap measure to the corresponding gaap measure . our mission is to be the recognized market leader in providing financial security for the protection and retirement needs of middle-income american working families and retirees . our strategic plans are focused on continuing to grow and deliver long-term value for all our stakeholders . specifically , we will focus on the following priorities : build on our investment in the business ( i ) continue to increase our reach , adding to our agent force and locations ( ii ) invest in additional agent productivity tools ( iii ) add to our product offerings and service capabilities continue to focus on sustainable , profitable growth ( i ) grow sales by at least 6 percent in 2014 ( ii ) continue progress towards our 9 percent operating return on equity goal by 2015 accelerate operating effectiveness ( i ) optimize sourcing ( ii ) improve operating platforms further enhance the customer experience ( i ) continue to improve communications with customers ( ii ) track progress through a set of client service metrics including net promoter score ( a standard tool for measuring , understanding and improving the customer experience ) tactically deploy excess capital ( i ) meet our share repurchase guidance of $ 225 million to $ 300 million in 2014 ( ii ) make further progress towards a 20 percent dividend payout ratio by 2015 continue to invest in and develop our talent ( i ) actively drive job development and rotation programs ( ii ) develop future leaders through our leadership development program critical accounting policies the preparation of financial statements in accordance with gaap 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 and the reported amounts of revenues and expenses during the reporting period . management has made estimates in the past that we believed to be appropriate but were subsequently revised to reflect actual experience . if our future experience differs materially from these estimates and assumptions , our results of operations and financial condition could be materially affected . we base our estimates on historical experience and other assumptions that we believe are reasonable under the circumstances . we continually evaluate the information used to make these estimates as our business and the economic environment change . the use of estimates is pervasive throughout our financial statements . the accounting policies and estimates we consider most critical are summarized below . additional information on our accounting policies is included in the note to our consolidated financial statements entitled `` summary of significant accounting policies '' . 52 investments at december 31 , 2013 , the carrying value of our investment portfolio was $ 27.2 billion . we defer any fees received or costs incurred when we originate investments . we amortize fees , costs , discounts and premiums as yield adjustments over the contractual lives of the investments . we consider anticipated prepayments on structured securities when we estimate yields on such securities . when actual prepayments differ from our estimates , the adjustment to yield is recognized as investment income ( loss ) . our evaluation of investments for impairment requires significant judgments , including : ( i ) the identification of potentially impaired securities ; ( ii ) the determination of their estimated fair value ; and ( iii ) the assessment of whether any decline in estimated fair value is other than temporary . we regularly evaluate all of our investments with unrealized losses for possible impairment . our assessment of whether unrealized losses are `` other than temporary '' requires significant judgment . factors considered include : ( i ) the extent to which fair value is less than the cost basis ; ( ii ) the length of time that the fair value has been less than cost ; ( iii ) whether the unrealized loss is event driven , credit-driven or a result of changes in market interest rates or risk premium ; ( iv ) the near-term prospects for specific events , developments or circumstances likely to affect the value of the investment ; ( v ) the investment 's rating and whether the investment is investment-grade and or has been downgraded since its purchase ; ( vi ) whether the issuer is current on all payments in accordance with the contractual terms of the investment and is expected to meet all of its obligations under the terms of the investment ; ( vii ) whether we intend to sell the investment or it is more likely than not that circumstances will require us to sell the investment before recovery occurs ; ( viii ) the underlying current and prospective asset and enterprise values of the issuer and the extent to which the recoverability of the carrying value of our investment may be affected by changes in such values ; ( ix ) projections of , and unfavorable changes in , cash flows on structured securities including mortgage-backed and asset-backed securities ; ( x ) our best estimate of the value of any collateral ; and ( xi ) other objective and subjective factors . future events may occur , or additional information may become available , which may necessitate future realized losses in our portfolio . significant losses could have a material adverse effect on our consolidated financial statements in future periods . impairment losses on equity securities are recognized in net income .
| results of operations : we manage our business through the following operating segments : bankers life , washington national and colonial penn , which are defined on the basis of product distribution ; other cno business , comprised primarily of products we no longer sell actively ; and corporate operations , comprised of holding company activities and certain noninsurance company businesses . please read this discussion in conjunction with the consolidated financial statements and notes included in this form 10-k. the following tables and narratives summarize the operating results of our segments ( dollars in millions ) : 2013 2012 2011 income ( loss ) before loss related to reinsurance transaction , net realized investment gains ( losses ) , fair value changes in embedded derivative liabilities , net of related amortization , equity in earnings of certain non-strategic investments and earnings attributable to non-controlling interests , loss on extinguishment of debt and income taxes ( a non-gaap measure ) ( a ) : bankers life $ 310.5 $ 300.9 $ 290.9 washington national 120.8 127.1 96.1 colonial penn ( 12.5 ) ( 8.6 ) ( 4.7 ) other cno business 25.5 ( 48.8 ) 15.3 corporate operations ( 32.7 ) ( 86.5 ) ( 124.0 ) 411.6 284.1 273.6 loss related to reinsurance transaction : other cno business ( 98.4 ) โ โ net realized investment gains ( losses ) , net of related amortization : bankers life 15.1 48.7 42.7 washington national 4.1 6.7 2.0 colonial penn .4 7.2 5.8 other cno business 13.7 < td
| 4,641 |
we also provide consulting services , maintenance , and training for our software , as well as a variety of applications . our applications and pega 7 can be deployed in the cloud or on-premises . pega 7 and our related applications are used by our clients in the financial services , healthcare , insurance , communications and media , public sector , manufacturing , life sciences , and other markets . we sell our software directly , and also through a network of business and technology alliances . our partners include major systems integrators , management consulting firms , technology providers , and application developers . our clients include global 500 companies and government agencies that seek to manage complex enterprise systems and customer service issues more nimbly and cost-effectively . our strategy is to sell a client a series of licenses , each focused on a specific purpose or area of operations . as we have found meaningful interest from smaller companies , we are expanding our sales force to extend coverage beyond our traditional global 500 focus . we license our products and render consulting and training services to clients domestically and internationally , including in canada , europe , the middle east , latin america , asia , and australia . in 2014 , 2013 , and 2012 , sales to clients based outside of the united states of america ( ยu.s.ย ) represented approximately 45 % , of our total revenue . see note 18 , ยgeographic information and major clients , ย included in the notes to consolidated financial statements included in item 8 of this annual report on form 10-k for further detail on our geographic revenues . our license revenue is primarily derived from sales of our applications in the areas of marketing , sales and onboarding , customer service and support , and operations , as well our pega 7 platform . our consulting services revenue is primarily related to new license implementations . our consulting services revenue may be lower in future periods as our clients become enabled and our partners lead more projects . we offer training for our staff , clients , and partners at our regional training facilities and at third-party facilities , including client sites . our online training through pegaacademy provides an alternative way to learn our software in a virtual environment . we believe that this online training will continue to expand the number of trained experts at a faster pace . we continue to invest heavily in research and development to improve our software . our research and development operations are primarily located in the u.s. and india . we also regularly evaluate acquisitions or investment opportunities in complementary businesses , services and technologies , and intellectual property rights in an effort to expand and enhance our product offerings . the pega mobile capabilities in our pega 7 platform are designed to help clients efficiently build , manage , and deploy mobile applications as part of a unified omni-channel experience . by using pega mobile , enterprises can deploy pega applications as packaged , branded mobile applications and manage the complex elements of the mobile application lifecycle including security , integration , testing , and management of mobile applications and devices . our mobile application development solutions help businesses to reduce the development time , deployment cost , and complexity associated with run-the-business mobile applications . we acquired antenna software , inc. and its subsidiaries ( ยantennaย ) in october 2013. the operations of antenna are included in our operating results from the date of acquisition . due to the integration of the products , sales force , and operations of antenna , as of the third quarter of 2014 , it is no longer feasible for us to identify the impact of antenna on our consolidated results of operations . 21 for 2014 , we recorded total revenue of $ 590 million , an increase of 16 % over 2013. license revenue was $ 232.3 million , an increase of 21 % over 2013. diluted earnings per share for 2014 was $ 0.42 as compared to $ 0.49 for 2013 , a decrease of 14 % . we generated cash flow from operations of $ 99.9 million during 2014 , an increase of 24 % over 2013. the increase in cash flow from operations was primarily driven by increased net income and our strong accounts receivable collections in 2014. in addition to the above key financial metrics , management also focuses on license and cloud backlog . license and cloud backlog is computed by adding billed deferred license and cloud revenue as recorded on the balance sheet and license and cloud commitments , which are not billed and not recorded on our balance sheet . license and cloud backlog may vary in any given period depending on the amount and timing of when arrangements are executed , as well as the mix between perpetual and term license arrangements . replace_table_token_6_th to grow our business , we intend to : execute sales and support models for the needs of our expanding target market ; employ a digital marketing program in support of customer buying ; utilize our network of partner alliances to support our growth strategies ; and develop talent and an organizational structure capable of supporting our growth targets . whether or not we are successful depends on our ability to : successfully execute our marketing and sales strategies ; appropriately manage our expenses as we grow our organization ; develop new products or product enhancements ; and successfully incorporate acquired technologies into our applications and unified pega 7 platform . 22 story_separator_special_tag style= '' font-size:10px ; margin-top:0px ; margin-bottom:0px '' > replace_table_token_11_th 2014 compared to 2013 the increase in total gross profit was primarily due to increases in software license and maintenance revenue . the decrease in services gross profit percent was primarily due to increased subcontractor and employee-related costs associated with higher headcount , primarily related to antenna . story_separator_special_tag stock-based compensation we recognize stock-based compensation expense associated with equity awards in our consolidated statements of operations based on the fair value of these awards at the date of grant using the accelerated recognition method with each vesting tranche treated as if it were an individual grant . replace_table_token_16_th 2014 compared to 2013 the increase was primarily due to the timing of the 2013 and 2012 annual equity grants , which occurred in march 2014 and december 2012 , respectively , as well as the higher value of the 2013 annual equity grant , executive new hire grants made since september 30 , 2013 , and awards granted in connection with the 2014 acquisitions . 2013 compared to 2012 the increase was primarily due to a full year of expense on the december 2012 annual equity grant . see note 15 ยstock-based compensationย in the notes to consolidated financial statements included in item 8 of this annual report on form 10-k for further information on our stock-based awards . non-operating income and ( expenses ) , net replace_table_token_17_th we have historically used foreign currency forward contracts ( ยforward contractsย ) to manage our exposure to changes in foreign currency denominated accounts receivable , intercompany payables , and cash primarily held by our u.s. operating company . we have not designated these forward contracts as hedging instruments and as a result , we record the fair value of the outstanding contracts at the end of the reporting period 28 in our consolidated balance sheet , with any fluctuations in the value of these contracts recognized in other expense ( income ) , net . the fluctuations in the value of these forward contracts recorded in other expense , net , partially offset in net income , the gains and losses from the remeasurement or settlement of the foreign currency denominated accounts receivable , intercompany payables , and cash held by the u.s. operating company recorded in foreign currency transaction ( loss ) gain . we are primarily exposed to the fluctuation in the british pound , euro , australian dollar , and indian rupee relative to the u.s. dollar . see note 4 ยderivative instrumentsย in the notes to consolidated financial statements included in item 8 of this annual report on form 10-k for discussion on our use of forward contracts . we are in the process of reassessing our hedging strategy and have not entered into any forward contracts since february 2014. the total change in the fair value of our foreign currency forward contracts recorded in other expense , net , during 2014 , 2013 , and 2012 was a loss of $ 0.5 million , $ 0.7 million , and $ 1.7 million , respectively . provision for income taxes 2014 compared to 2013 the provision for income taxes represents current and future amounts owed for federal , state , and foreign taxes . during 2014 and 2013 , we recorded a $ 14.7 million and an $ 18.4 million provision , respectively , which resulted in an effective tax rate of 30.7 % and 32.5 % , respectively . our effective income tax rate for 2014 was below the statutory rate primarily due to a $ 2.4 million benefit related to the current period domestic production activities deduction , a $ 1.8 million benefit related to income generated in foreign jurisdictions that is subject to tax at a rate lower than the u.s. statutory tax rate , and a $ 0.8 million benefit related to the 2014 federal research and experimentation ( ยr & eย ) credit discussed below . these benefits were partially offset by $ 1.8 million of permanent differences related to nondeductible meals and entertainment expenses and foreign stock compensation . our effective income tax rate for 2013 was below the statutory federal income tax rate due to a $ 2.1 million benefit related to the current period domestic production activities deduction , a $ 1.2 million benefit related to income generated in foreign jurisdictions that is subject to tax at a rate lower than the u.s. statutory tax rate , and a $ 1.6 million benefit related to the 2012 and 2013 r & e credit discussed below . these benefits were partially offset by $ 1.4 million of permanent differences related to nondeductible meals and entertainment expenses , foreign stock compensation , and transaction costs . the american taxpayer relief act of 2012 ( the ยactย ) was signed into law by president obama on january 2 , 2013. among other things , the act retroactively extended the r & e credit through the end of 2013. under asc 740 , income taxes , the effects of new legislation are recognized upon enactment , such that both the retroactive tax effects for the 2012 r & e credit and the tax effects for the 2013 r & e were recognized in the 2013 financial statements . if we had recognized the effects of the 2012 r & e credit in the 2012 financial statements , the effective tax rate in 2012 would have been lowered by approximately 2.6 % . on december 19 , 2014 , president obama signed the tax increase prevention act of 2014 , which included an extension of the r & e credit through the end of 2014. as of december 31 , 2014 , we had approximately $ 43.4 million of total unrecognized tax benefits , of which $ 23.4 million would decrease our effective tax rate if recognized . the remaining $ 20 million of unrecognized tax benefits relate to acquired net operating losses ( ยnolsย ) and r & e credits that are subject to limitations on their use . we expect that the changes in the unrecognized benefits within the next twelve months will be approximately $ 0.5 million , all of which relate to the expiration of applicable statute of limitations and would reduce our effective tax rate if realized .
| results of operations replace_table_token_7_th revenue replace_table_token_8_th the mix between perpetual and term license arrangements executed in a particular period varies based on client needs . a change in the mix between perpetual and term license arrangements executed may cause our revenues to vary materially from period to period . a higher proportion of term license arrangements executed would result in more license revenue being recognized over longer periods as payments become due or earlier if prepaid . additionally , some of our perpetual license arrangements include extended payment terms or additional rights of use , which also result in the recognition of revenue over longer periods . the aggregate value of new license agreements executed also fluctuates quarter to quarter . subscription revenue primarily consists of the ratable recognition of license , maintenance and bundled services revenue on license arrangements that include a right to successor products or unspecified future products . subscription revenue does not include revenue from our pega cloud arrangements , which is included in services . the timing of client scheduled payments under subscription arrangements may limit the amount of revenue recognized in a reporting period . consequently , our subscription revenue may vary materially quarter to quarter . 2014 compared to 2013 the aggregate value of new license arrangements executed during 2014 increased compared to 2013 due to a higher number of license arrangements executed in 2014. the increase in the aggregate value of license arrangements executed was primarily due to one perpetual license arrangement executed in the second quarter of 2014 for more than $ 10 million , partially offset by a decrease in the value of new license arrangements executed in the fourth quarter of 2014. during 2014 and 2013 , approximately 82 % and 80 % , respectively , of the value of new license arrangements were executed with existing clients .
| 4,642 |
the following table shows the number of systems that we had in operation as of the years ended december 31 , 2017 , 2016 and 2015 : replace_table_token_8_th we derive substantially all of our revenue from fees charged for the diagnostic imaging services performed at our facilities . the following table shows our facilities in operation at year end , diagnostic volumes and revenues for the years ended december 31 , 2017 , 2016 and 2015 : replace_table_token_9_th during 2017 we continued to focus on our most established markets , growing there through joint ventures and acquisitions . in conjunction with cedars sinai medical center , we entered into two new joint ventures in the city of los angeles . we acquired our main competitor in the state of delaware , picking up an additional 5 multi-modality centers to consolidate our leadership position in that market . we sold our wholly-owned breast oncology practice , breastlink medical group , completely divesting that practice along with 3 facilities . we also divested all of our holdings in the state of rhode island through the sale of 5 centers , concentrating our geographic focus on the maryland to new york corridor with our delaware acquisition . we also agreed to create a new joint venture with another hospital system consisting of 34 outpatient centers spread across southern los angeles and orange counties in california . 36 our revenue is derived from a diverse mix of payors , including private payors , managed care capitated payors and government payors . we believe our payor diversity mitigates our exposure to possible unfavorable reimbursement trends within any one payor class . in addition , our experience with capitation arrangements over the last several years has provided us with the expertise to manage utilization and pricing effectively , resulting in a predictable stream of revenue . our service fee revenue , net of contractual allowances and discounts , the provision for bad debts , and revenue under capitation arrangements for the years ended december 31 , are summarized in the following table ( in thousands ) : replace_table_token_10_th ( 1 ) other consist of revenue from teleradiology services , consulting fees and software revenue . we have developed our medical imaging business through a combination of organic growth , acquisitions and joint venture formations . for further information , see โ recent developments and facility acquisitions and dispositions โ below . we typically experience some seasonality to our business . during the first quarter of each year we generally experience the lowest volumes of procedures and the lowest level of revenue for any quarter during the year . this is primarily the result of two factors . first , our volumes and revenue are typically impacted by winter weather conditions in our northeastern operations . it is common for snowstorms and other inclement weather to result in patient appointment cancellations and , in some cases , imaging center closures . second , in recent years , we have observed greater participation in high deductible health plans by patients . as these high deductibles reset in january for most of these patients , we have observed that patients utilize medical services less during the first quarter , when securing medical care will result in significant out-of-pocket expenditures . the consolidated financial statements in this annual report include the accounts of radnet management , brmg and the ny groups . the consolidated financial statements also include radnet management i , inc. , radnet management ii , inc. , radiologix , inc. , radnet management imaging services , inc. , delaware imaging partners , inc. , new jersey imaging partners , inc. and diagnostic imaging services , inc. ( dis ) , all wholly owned subsidiaries of radnet management . accounting standards codification ( asc ) 810-10-15-14 , consolidation , stipulates that generally any entity with a ) insufficient equity to finance its activities without additional subordinated financial support provided by any parties , or b ) equity holders that , as a group , lack the characteristics specified in the codification which evidence a controlling financial interest , is considered a variable interest entity ( โ vie โ ) . we consolidate all vies in which we own a majority voting interest and all vies for which we are the primary beneficiary . we determine whether we are the primary beneficiary of a vie through a qualitative analysis that identifies which variable interest holder has the controlling financial interest in the vie . the variable interest holder that has both of the following has the controlling financial interest and is the primary beneficiary : ( 1 ) the power to direct the activities of the vie that most significantly impact the vie 's economic performance and ( 2 ) the obligation to absorb losses of , or the right to receive benefits from , the vie that could potentially be significant to the vie . in performing our analysis , we consider all relevant facts and circumstances , including : the design and activities of the vie , the terms of the contracts the vie has entered into , the nature of the vie 's variable interests issued and how they were negotiated with or marketed to potential investors , and which parties participated significantly in the design or redesign of the entity . facility acquisitions , formation of joint ventures and dispositions facility acquisitions on october 5 , 2017 we completed our acquisition of all of the outstanding equity interests in radsite , llc , for $ 1.0 million in common stock and $ 856,000 in cash . radsite provides both quality certification and accreditation programs for imaging providers in accordance with standards of private insurance payors and federal regulations under medicare . we have made a fair value determination of the acquired assets and approximately $ 91,000 of current assets , $ 25,000 in fixed assets , a $ 150,000 covenant not to compete , $ 75,000 in liabilities and $ 1.7 million in goodwill were recorded . story_separator_special_tag on april 28 , 2017 we completed the sale of five imaging centers operating in rhode island to rhode island medical imaging , inc. for approximately $ 4.5 million . we recorded a gain of approximately $ 1.9 million in the second quarter with regard to this transaction and have no remaining imaging centers in the state . on april 1 , 2017 we received from cedars sinai medical center $ 5.9 million in exchange for a 25 % noncontrolling interest in the west valley imaging group , llc ( โ wvi โ ) . the determined net book value of the 25 % interest was approximately $ 3.0 million . the proceeds in excess of the net book value , amounting to $ 1.8 million net of taxes , were recorded to equity . on april 1 , 2017 we completed the sale of 2 wholly owned oncology practices to cedars sinai medical center in connection with the sale of non-controlling interest of the wvi subsidiary described above for approximately $ 1.2 million . we recorded a gain of approximately $ 361,000 on this transaction on the statement of operations . 39 story_separator_special_tag to physician staffing in correlation with the increase in net revenue . the other 4 % increase was attributable to non-physician staffing cost due to increased volumes at centers along with ramping up our staffing in reimbursement operations and self pay team in an effort to increase collection and improve our collection rates . this comparison excludes contributions from centers that were acquired subsequent to january 1 , 2016. for the year ended december 31 , 2017 , salaries and professional reading fees from centers that were acquired subsequent to january 1 , 2016 and excluded from the above comparison was $ 24.9 million . for the year ended december 31 , 2016 , salaries and professional reading fees from centers that were acquired subsequent to january 1 , 2016 , and excluded from the above comparison was $ 25.6 million . ยท stock-based compensation stock-based compensation increased $ 960,000 , or 16.5 % , to $ 6.8 million for the year ended december 31 , 2017 compared to $ 5.8 million for the year ended december 31 , 2016. this increase was driven by the higher fair value of stock based compensation awarded and vested in the year 2017 as compared to 2016 . ยท building and equipment rental building and equipment rental expenses increased $ 4.4 million , or 6.0 % , to $ 78.6 million for the year ended december 31 , 2017 , compared to $ 74.2 million for the year ended december 31 , 2016. building and equipment rental expenses , including only those centers which were in operation throughout the full fiscal years of both 2017 and 2016 , increased $ 4.7 million , or 6.7 % , mainly related to new facility and radiology equipment leases in support of imaging operations . this comparison excludes contributions from centers that were acquired subsequent to january 1 , 2017. for the year ended december 31 , 2017 , building and equipment rental expenses from centers that were acquired subsequent to january 1 , 2016 , and excluded from the above comparison , was $ 3.7 million . for the year ended december 31 , 2016 , building and equipment rental expenses from centers that were acquired subsequent to january 1 , 2016 , and excluded from the above comparison , was $ 4.0 million . ยท medical supplies medical supplies expense decreased $ 9.1 million , or 17.6 % , to $ 42.6 million for the year ended december 31 , 2017 , compared to $ 51.7 million for the year ended december 31 , 2016. medical supplies expense , including only those centers which were in operation throughout the full fiscal years of both 2017 and 2016 , increased $ 508,000 , or 1.7 % . this comparison excludes contributions from centers that were acquired or divested subsequent to january 1 , 2017. for the year ended december 31 , 2017 , medical supplies expense from centers that were acquired subsequent to january 1 , 2016 , and excluded from the above comparison was $ 11.4 million . for the year ended december 31 , 2016 , medical supplies expense from centers that were acquired subsequent to january 1 , 2016 , and excluded from the above comparison was $ 21.0 million . ยท other operating expenses other operating expenses increased $ 5.6 million , or 2.8 % , to $ 204.0 million for the year ended december 31 , 2017 compared to $ 198.3 million for the year ended december 31 , 2016. other operating expenses , limited to only those centers which were in operation throughout the full fiscal years of both 2017 and 2016 , increased $ 7.7 million or 4.1 % . the increase was primarily related to insurance reserve charges , higher utility usage rates in the fourth quarter of the year , and billing services . this comparison excludes contributions from centers that were acquired or divested subsequent to january 1 , 2016. for the year ended december 31 , 2017 , other operating expenses from centers that were acquired subsequent to january 1 , 2016 , and excluded from the above comparison were $ 8.8 million . for the year ended december 31 , 2016 , other operating expenses from centers that were acquired subsequent to january 1 , 2016 , and excluded from the above comparison were $ 10.9 million . 42 ยท depreciation and amortization expense depreciation and amortization expense increased $ 186,000 , or 0.3 % , to $ 66.8 million for the year ended december 31 , 2017 when compared $ 66.6 million for the year ended december 31 , 2016. depreciation and amortization expense at those centers which were in operation throughout the full fiscal years of both 2017 and 2016 , decreased $ 32,000 or 0.1 % .
| results of operations the following table sets forth , for the periods indicated , the percentage that certain items in the statements of operations bears to net revenue before provision for bad debts . replace_table_token_11_th year ended december 31 , 2017 compared to the year ended december 31 , 2016 service fee revenue , net of contractual allowances and discounts service fee revenue , net of contractual allowances and discounts for the year ended december 31 , 2017 was $ 857.2 million compared to $ 821.6 million for the year ended december 31 , 2016 , an increase of $ 35.6 million , or 4.3 % . service fee revenue , net of contractual allowances and discounts , for only those centers in operation throughout the full fiscal years of both 2017 and 2016 , increased $ 40.4 million , or 5.3 % . the overall 5.3 % increase was precipitated by a 4 % hike in volumes of advanced imaging modalities at the higher 2017 fee schedule reimbursement rates plus a 1.4 % revenue increase on digital tomography procedures . this comparison excludes revenue contributions from centers that were acquired subsequent to january 1 , 2016. for the year ended december 31 , 2017 , service fee revenue , net of contractual allowances and discounts , from centers that were acquired subsequent to january 1 , 2016 and excluded from the above comparison was $ 47.1 million . for the year ended december 31 , 2016 , net revenue from centers that were acquired subsequent to january 1 , 2016 and excluded from the above comparison was $ 51.9 million .
| 4,643 |
24,302 27,821 total current assets 449,107 426,251 property , plant and equipment , net 2,855,363 2,635,844 deferred debits and other assets : regulatory assets 257,873 293,115 other long-term assets 34,176 32,963 total deferred debits and other assets 292,049 326,078 total assets $ 3,596,519 $ 3,388,173 liabilities and capitalization current liabilities : notes payable to eversource parent $ 231,300 $ 90,500 accounts payable 87,925 93,349 accounts payable to affiliated companies 24,214 33,734 regulatory liabilities 6,898 16,044 accumulated deferred income taxes - 36,164 other current liabilities 43,921 38,969 total current liabilities 394,258 308,760 deferred credits and other liabilities : accumulated deferred income taxes 705,894 587,292 regulatory liabilities 47,851 51,372 accrued pension , serp and pbop 89,579 93,243 other long-term liabilities 50,746 50,155 total deferred credits and other liabilities 894,070 782,062 capitalization : long-term debt 1,071,017 1,070,021 common stockholder 's equity : common stock - - capital surplus , paid in 748,634 748,240 retained earnings 494,901 486,459 accumulated other comprehensive loss ( 6,361 ) ( 7,369 ) common stockholder 's equity 1,237,174 1,227,330 total capitalization 2,308,191 2,297,351 commitments and contingencies ( note 11 ) total liabilities and capitalization $ 3,596,519 $ 3,388,173 the accompanying notes are an integral part of these consolidated financial statements . 82 replace_table_token_34_th 83 public service company of new hampshire and subsidiary consolidated statements of common stockholder 's equity accumulated total capital other common common stock surplus , retained comprehensive stockholder 's ( thousands of dollars , except stock information ) stock amount paid in earnings income/ ( loss ) equity balance as of january 1 , 2013 301 $ - $ 701,052 $ 395,118 $ ( 9,655 ) $ 1,086,515 net income 111,397 111,397 dividends on common stock ( 68,000 ) ( 68,000 ) allocation of benefits - esop 859 859 other comprehensive income 1,105 1,105 balance as of december 31 , 2013 301 - 701,911 438,515 ( 8,550 ) 1,131,876 net income 113,944 113,944 dividends on common stock ( 66,000 ) ( 66,000 ) capital contributions from eversource parent 45,000 45,000 allocation of benefits - esop 1,329 1,329 other comprehensive income 1,181 1,181 balance as of december 31 , 2014 301 - 748,240 486,459 ( 7,369 ) 1,227,330 net income 114,442 114,442 dividends on common stock ( 106,000 ) ( 106,000 ) allocation of benefits ย esop 394 394 other comprehensive income 1,008 1,008 balance as of december 31 , 2015 301 $ - $ 748,634 $ 494,901 $ ( 6,361 ) $ 1,237,174 the accompanying notes are an integral part of these consolidated financial statements . 84 public service company of new hampshire and subsidiary consolidated statements of cash flows for the years ended december 31 , ( thousands of dollars ) 2015 2014 2013 operating activities : net income $ 114,442 $ 113,944 $ 111,397 adjustments to reconcile net income to net cash flows provided by operating activities : depreciation 105,372 98,436 91,581 deferred income taxes 83,776 94,813 75,693 pension , serp and pbop expense 4,580 7,197 26,846 pension and pbop contributions ( 982 ) ( 2,482 ) ( 112,964 ) regulatory over/ ( under ) recoveries , net 41 ( 11,875 ) ( 8,481 ) amortization of regulatory assets/ ( liabilities ) , net 16,276 ( 29,602 ) ( 20,387 ) amortization of rate reduction bonds - - 19,748 refunds related to spent nuclear fuel 979 14,453 - other 8,677 10,095 16,079 changes in current assets and liabilities : receivables and unbilled revenues , net ( 4,750 ) ( 15,576 ) 2,412 fuel , materials and supplies ( 8,729 ) ( 19,403 ) ( 33,391 ) taxes receivable/accrued , net ( 23,909 ) ( 23,857 ) 26,462 accounts payable ( 22,203 ) 17,796 2,632 other current assets and liabilities , net 953 ( 5,972 ) ( 9,520 ) net cash flows provided by operating activities 274,523 247,967 188,107 investing activities : investments in property , plant and equipment ( 308,036 ) ( 256,159 ) ( 186,009 ) ( increase ) /decrease in special deposits - ( 1,013 ) 22,040 other investing activities 306 ( 139 ) ( 88 ) net cash flows used in investing activities ( 307,730 ) ( 257,311 ) ( 164,057 ) financing activities : cash dividends on common stock ( 106,000 ) story_separator_special_tag partially offsetting this benefit was an increase in the recovery of previously deferred tracked transition costs , which increased amortization expense , in 2015 compared to 2014. fluctuations in these costs are recovered from customers in rates and have no impact on earnings . energy efficiency programs , which are tracked costs , increased in 2015 , as compared to 2014 , due primarily to an increase in energy efficiency costs incurred in accordance with the three-year program guidelines established by the dpu . income tax expense increased in 2015 , as compared to 2014 , due primarily to higher pre-tax earnings ( $ 23.6 million ) , and higher state taxes and the impact of adjusting estimated tax expense to what was filed on our tax return ( provision to return ) ( $ 2.4 million ) . story_separator_special_tag includes tracked costs and costs that are part of base distribution rates with changes impacting earnings ( non-tracked costs ) . operations and maintenance increased in 2015 , as compared to 2014 , driven by a $ 7.5 million increase in tracked costs , which have no earnings impact , that was primarily attributable to increased maintenance activities at psnh 's generating facilities , partially offset by lower employee-related expenses , and a $ 7.1 million increase in non-tracked costs , which was primarily attributable to a $ 5 million contribution to create a clean energy fund that was recorded in 2015 in connection with the generation divestiture agreement , which is not recoverable from customers . story_separator_special_tag depreciation increased in 2015 , as compared to 2014 , due primarily to higher utility plant in service balances . amortization of regulatory assets/ ( liabilities ) , net reflects an increase in the deferral to expense of energy supply costs and other amortizations for 2015 , as compared to 2014. fluctuations in these costs are recovered from customers in rates and have no impact on earnings . taxes other than income taxes increased in 2015 , as compared to 2014 , due primarily to an increase in property taxes as a result of an increase in utility plant balances . earnings summary psnh 's earnings increased $ 0.5 million in 2015 compared to 2014 , driven by higher distribution revenues due primarily to the impact of the distribution rate increase effective july 1 , 2015 and higher retail sales volumes , and an increase in transmission earnings due primarily to a higher transmission rate base and lower reserves associated with the ferc roe complaint proceedings recorded in 2015 compared to 2014. these favorable earnings impacts were offset by a $ 5 million contribution to create a clean energy fund recorded in 2015 in connection with the generation divestiture agreement , which is not recoverable from customers , higher property tax expense , higher depreciation expense and an increase in operations and maintenance costs . liquidity psnh had cash flows provided by operating activities of $ 274.5 million in 2015 , as compared to $ 248 million in 2014. the increase in operating cash flows was due primarily to the timing of payments related to fuel , materials and supplies as well as an increase in recoveries from customers in 2015 , compared to 2014 , and the timing of collections and payments related to our working capital items , including accounts receivable and accounts payable . partially offsetting these favorable impacts were doe damages proceeds received from the yankee companies of $ 1 million in 2015 , compared to $ 14.5 million in 2014 . 57 results of operations ย western massachusetts electric company the following provides the amounts and variances in operating revenues and expense line items in the statements of income for wmeco for the years ended december 31 , 2015 and 2014 included in this annual report on form 10-k : replace_table_token_31_th operating revenues wmeco 's operating revenues increased by $ 24.7 million in 2015 compared to 2014. fluctuations in wmeco 's sales volumes have no impact on total operating revenues or earnings , as wmeco 's revenues are decoupled from sales volumes . fluctuations in the overall level of operating revenues are primarily related to tracked revenues . tracked revenues consist of certain costs that are recovered from customers in rates through dpu-approved cost tracking mechanisms and therefore have no impact on earnings . costs recovered through cost tracking mechanisms include energy supply costs , transmission related costs , energy efficiency programs , low income assistance programs , and restructuring and stranded costs as a result of deregulation . tracked revenues increased due primarily to an increase in energy supply costs ( $ 20.3 million ) driven by increased average retail rates . the increase in operating revenues was partially offset by a $ 3.9 million decrease in revenues that impacts earnings due to the absence of a 2014 wholesale billing adjustment . transmission revenues increased by $ 8.7 million due primarily to higher revenue requirements associated with ongoing investments in our transmission infrastructure and the impact of a lower ferc roe complaint proceedings reserve recorded in 2015 as compared to 2014. purchased power and transmission expense includes costs associated with purchasing electricity on behalf of wmeco 's customers . these energy supply costs are recovered from customers in dpu-approved cost tracking mechanisms , which have no impact on earnings ( tracked costs ) . purchased power and transmission increased in 2015 , as compared to 2014 , due primarily to the following : ( millions of dollars ) increase/ ( decrease ) purchased power costs $ 18.1 transmission costs ( 13.8 ) total purchased power and transmission $ 4.3 included in purchased power are the costs associated with wmeco 's basic service charge and deferred energy supply costs . the basic service charge recovers energy-related costs incurred as a result of providing electric generation service supply to all customers that have not migrated to competitive energy suppliers . the increase in purchased power costs was due primarily to higher prices associated with the procurement of energy supply . the decrease in transmission costs was as a result of a decrease in the retail transmission cost deferral , which reflects the actual costs of transmission service compared to estimated amounts billed to customers . operations and maintenance expense includes tracked costs and costs that are part of base distribution rates with changes impacting earnings ( non-tracked costs ) . operations and maintenance decreased in 2015 , as compared to 2014 , driven by $ 3.9 million reduction in tracked costs , which have no earnings impact , that was primarily attributable to lower employee-related expenses , partially offset by higher tracked bad debt expense . non-tracked costs increased $ 0.8 million , which was primarily attributable to higher bad debt expense , partially offset by a decrease in workers ' compensation claims . depreciation increased in 2015 , as compared to 2014 , due primarily to higher utility plant in service balances . 58 amortization of regulatory assets/ ( liabilities ) , net reflects the absence of the refund of the doe proceeds to customers in 2014 as well as energy and energy related costs and amortizations that can fluctuate period to period based on timing of costs incurred and related rate changes to recover these costs . fluctuations in energy and energy related costs are recovered from customers in rates and have no impact on earnings . taxes other than income taxes increased in 2015 , as compared 2014 , due primarily to an
| earnings summary nstar electric 's earnings increased $ 41.4 million in 2015 , as compared to 2014 , due primarily to the resolution of the basic service bad debt adder mechanism ( $ 14.5 million ) , the favorable impact associated with the comprehensive settlement agreement , which resolved eleven open dockets including the cpsl program filings and the recovery of lbr related to 2009 through 2011 energy efficiency programs ( $ 13 million ) , the recovery of higher lbr related to 2015 energy efficiency programs , an increase in transmission earnings due primarily to a higher transmission rate base and lower reserves associated with the ferc roe complaint proceedings recorded in 2015 compared to 2014 , and higher retail sales volumes . these favorable earnings impacts were partially offset by an increase in employee-related expenses and higher depreciation expense . liquidity nstar electric had cash flows provided by operating activities of $ 657 million in 2015 , compared with $ 533 million in 2014. the improved operating cash flows were due primarily to a $ 110 million decrease in pension and pbop plan cash contributions in 2015 compared to 2014 , the $ 236.9 million favorable impact of receiving net income tax refunds in 2015 compared with making net income tax payments in 2014 due to the extension of the accelerated depreciation deduction . these favorable cash flow impacts were partially offset by the impact of the timing of regulatory recoveries resulting from the increase in purchased power costs and the timing of collections and payments related to our working capital items , including affiliated company receivables , accounts receivable and accounts payable .
| 4,644 |
amortization of intangible assets was $ 438 and $ 458 for the years ended june 30 , 2016 and 2015. clinical protocols have not yet been introduced to the market place and are therefore not yet subject to amortization . the company 's estimated future amortization expense for subsequent years are as follows : replace_table_token_11_th 4. equipment equipment consisted of the following at june 30 : replace_table_token_12_th depreciation and amortization expense for the years ended june 30 , 2016 and 2015 was $ 630 and $ 850 , respectively . 5. convertible debentures convertible debentures consist of the following as of june 30 , 2016 : convertible debentures $ 12,500 unamortized debt discount ( 9,851 ) unamortized debt issue costs ( 160 ) convertible debentures , net $ 2,489 57 cesca therapeutics inc. notes to consolidated financial statements ( continued ) ( in thousands except shares and per share amounts ) 5. convertible debentures ( continued ) february 2016 financing transaction in february 2016 in exchange for aggregate proceeds of $ 15 million , the company sold and issued to boyalife investment inc. and boyalife ( hong kong limited ) ( i ) 735,294 shares of common stock at a purchase price of $ 3.40 per share ( the โ stock price โ ) for gross proceeds of $ 2.5 million , ( ii ) secured convertible debentures for $ 12.5 million ( the โ debentures โ ) convertible into 3,676,471 shares of common stock and ( iii ) warrants to purchase 3,529,412 additional shares of common stock at an exercise price of $ 8.00 per share for a period of five years . the amount of warrants was based on 80 % coverage of the shares issued or to be issued for the equity transaction in ( i ) and the debt transaction in ( ii ) above . the warrants are exercisable on august 13 , 2016. total issue costs of $ 220 were allocated proportionately between the debt and equity proceeds , $ 183 and $ 37 , respectively . the debentures will be due in three years or february 13 , 2019 and bear simple interest at a rate per annum of 22 % of the principal amount outstanding . the debentures may not be prepaid prior to maturity without the prior consent of the investor . additionally , the company 's obligations under the debentures are secured by a first priority , senior lien over all of the company 's assets . in accordance with the terms of the nomination and voting agreement entered into in connection with the financing , dr. xiaochun xu , chairman and ceo of boyalife group and chairman of boyalife investment inc. and boyalife ( hong kong limited ) , was appointed to the board of directors of the company in march 2016. all outstanding principal and accrued and unpaid interest ( as well as all interest that would have accrued after the conversion and up to and including maturity in the event conversion occurs prior to maturity ) under the debentures will be convertible into the company 's common stock at the stock price per share at the option of the investor at maturity or prior to maturity if ( i ) for 15 days upon and after the time that the company 's cash balance and short-term investments , net of short term debt , are less than $ 2.1 million , ( ii ) the company effects certain changes in control , or ( iii ) the company 's common stock is delisted from nasdaq 's markets . all outstanding principal and accrued and unpaid interest under the debentures will also be convertible into shares of the company 's common stock at the stock price per share at the option of the company at any time prior to maturity , provided that ( i ) the 20-day simple moving average price of the company 's common stock on the date of conversion is at least 125 % of the stock price and ( ii ) the volume weighted average trading price of the company 's common stock has been greater than the stock price for ten consecutive days . the warrants were classified as an equity instrument . accordingly , the company valued the warrants using the black-scholes option pricing model with the following assumptions : closing stock price on the measurement date of $ 4.00 ; warrant term of five years based on contractual term of the warrant ; expected volatility based on historical volatility of 91 % and discount rate based on the u.s. treasury zero-coupon issues with equivalent terms of 1.2 % . 58 cesca therapeutics inc. notes to consolidated financial statements ( continued ) ( in thousands except shares and per share amounts ) 5 . convertible debentures ( continued ) february 2016 financing transaction ( continued ) for financial reporting purposes , the net proceeds from the debt of $ 12,319 was allocated first to the relative fair value of the warrants , amounting to $ 4,434 , then to the intrinsic value of the beneficial conversion feature on the debentures of $ 6,824 , resulting in an initial carrying value of the debentures of $ 1,061 . the initial debt discount on the debentures totaled $ 11,258 and is being amortized over the three year life of story_separator_special_tag ( amounts in thousands , except share and per share amounts ) certain statements contained in this section and other parts of this annual report on form 10-k which are not historical facts are forward looking statements and are subject to certain risks and uncertainties . story_separator_special_tag products our product offerings include : โ the surgwerks system ( in development ) - a proprietary system comprised of the surgwerks processing platform , including devices and analytics , and indication-specific surgwerks procedure kits for use in regenerative stem cell therapy at the point of care for vascular and orthopedic diseases . โ the cellwerks system ( in development ) - a proprietary cell processing system with associated analytics for intra-laboratory preparation of adult stem cells from bone marrow or blood . โ the autoxpress ยฎ system ( axp ยฎ ) - a proprietary automated device and companion sterile disposable for concentrating hematopoietic stem cells from cord blood . โ the marrowxpress system ( mxp ) - a derivative product of the axp and its accompanying sterile disposable for the isolation and concentration of hematopoietic stem cells from bone marrow . โ the bioarchiveยฎ system - an automated cryogenic device used by cord blood banks for the cryopreservation and storage of cord blood stem cell concentrate for future use . โ manual disposables - bag sets for use in the processing and cryogenic storage of cord blood . results of operations the following is management 's discussion and analysis of certain significant factors which have affected our financial condition and results of operations during the periods included in the accompanying consolidated financial statements . 31 story_separator_special_tag > tm development program . 34 at june 30 , 2016 , we had three distributors/customers that accounted for 57 % of accounts receivable . at june 30 , 2015 , we had four distributors that accounted for 64 % of accounts receivable . revenues from one distributor totaled $ 2,797 or 23 % and $ 2,358 or 15 % of net revenues for the years ended june 30 , 2016 and 2015 , respectively . revenues from a customer totaled $ 2,475 or 21 % and $ 2,549 or 16 % for the years ended june 30 , 2016 and 2015 , respectively . revenues from another distributor totaled $ 2,303 or 14 % of net revenues for the year ended june 30 , 2015. we manage the concentration of credit risk with these customers through a variety of methods including , letters of credit with financial institutions , pre-shipment deposits , credit reference checks and credit limits . although management believes that these customers are sound and creditworthy , a severe adverse impact on their business operations could have a corresponding material effect on their ability to pay timely and therefore on our net revenues , cash flows and financial condition . critical accounting policies the preparation of these consolidated 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 . on an on-going basis , we evaluate our estimates , including those related to stock-based compensation , depreciation , fair values of intangibles and goodwill , bad debts , inventories , warranties , contingencies and litigation . we base our 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 under different assumptions or conditions . we believe the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements . goodwill , intangible assets and impairment assessments goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired . intangible assets that are not considered to have an indefinite useful life are amortized over their useful lives , which generally range from three to ten years . clinical protocols are not expected to provide economic benefit until they are introduced to the marketplace or licensed to an independent entity . each period we evaluate the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization . the carrying amounts of these assets are periodically reviewed for impairment ( at least annually ) and whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable . according to asc 350 , intangibles-goodwill and other , for goodwill and indefinite-lived intangible assets , we can opt to perform a qualitative assessment or a quantitative assessment ; however , if the qualitative assessment determines that it is more likely than not ( i.e. , a likelihood of more than 50 percent ) the fair value is less than the carrying amount , a quantitative assessment must be performed . if the quantitative assessment determines that the fair value is less than the carrying amount , an impairment loss equal to the difference would be recorded . 35 revenue recognition revenues from the sale of our products are recognized when persuasive evidence of an arrangement exists , delivery has occurred ( or services have been rendered ) , the price is fixed or determinable , and collectability is reasonably assured . we generally ship products f.o.b . shipping point . there is no conditional evaluation on any product sold and recognized as revenue . amounts billed in excess of revenue recognized are recorded as deferred revenue on the consolidated balance sheet . there is no right of return provided for distributors or customers .
| results of operations for the fiscal year ended june 30 , 2016 versus the fiscal year ended june 30 , 2015 net revenues net revenues for 2016 were $ 11,929 compared to $ 16,042 for 2015 , a decrease of $ 4,113. primary contributors to the decline were bioarchive devices as we shipped ten fewer devices during the year ended june 30 , 2016 versus the year ended june 30 , 2015 , and res-q as a result of reduced purchase from our largest distributor following our decision to withdraw the product from the united states market . the decision to withdraw res-q from the united states market was made in 2015 in accordance with a settlement agreement reached with harvest technologies corp. related to a long-standing intellectual property dispute . the following represents our revenues by product platform for the years ended : replace_table_token_2_th gross profit gross profit was $ 2,744 or 23 % of revenues for 2016 compared to $ 4,749 or 30 % of revenues for 2015. our gross profit declined primarily due to changes in the mix of products sold and increases in inventory reserves primarily associated with the bioarchive product line . we expect gross margin to return to normal levels in fiscal 2017. sales and marketing expenses sales and marketing expenses include costs primarily associated with generating revenues from the sale of cord blood and bone marrow disposables and bioarchive devices . sales and marketing expenses were $ 2,148 for 2016 , compared to $ 2,974 for 2015 , a decrease of $ 826. the decrease was primarily due to lower personnel costs as a result of our september 2015 restructuring initiative , lower medical device excise taxes and reduction in travel expenses . research and development expenses research and development expenses include costs associated with our engineering , regulatory , scientific and clinical functions .
| 4,645 |
federal and state governments have implemented measures in an effort to contain the virus , including physical distancing recommendations , travel restrictions , border closures , limitations on public gatherings , work-from-home recommendations , supply chain logistical changes and closure of non-essential businesses . veritiv 's logistics and distribution operations have fallen within guidance provided by various government authorities on essential businesses , services and workplaces and therefore the company has not experienced any closures of distribution centers . veritiv serves customers across a broad range of industry sectors and geographies , with varying covid-19 impacts . primarily beginning in april 2020 , unfavorable impacts from the covid-19 pandemic have had a negative impact on the company 's financial results , including decreased sales activity across all segments . during the third and fourth quarters of 2020 , the company experienced improvements in sales activity in each of its reportable segments as compared to the second quarter of 2020 , with the packaging segment nearing pre-covid-19 levels . veritiv 's first priority remains the health and safety of its employees , customers and their families . the company has taken steps to limit exposure and enhance the safety of its facilities for employees working to continue to supply vital products to its customers . in response to the pandemic , veritiv initiated its corporate incident response team and initiated enhanced health and safety measures across its facilities . the company modified practices at its distribution centers and offices to adhere to guidance from the u.s. centers for disease control and prevention and local health and governmental authorities with respect to social distancing , enhanced cleaning protocols and usage of personal protective equipment , where appropriate . in addition , the company implemented global travel restrictions and work-from-home policies for employees who have the ability to work remotely . towards the end of the first quarter of 2020 , the company began to experience decreased sales activity in each of its reportable segments as compared to the corresponding prior year period . as a result , in april 2020 , veritiv took several actions to help mitigate the effects of the revenue decline and improve liquidity . these actions included ( i ) temporarily reducing salaries for senior leaders ranging from 10 % to 50 % through june 2020 , ( ii ) temporarily reducing annual cash retainers for independent directors by 50 % through june 2020 , ( iii ) placing approximately 15 % of its salaried workforce on temporary furloughs through mid-july 2020 , ( iv ) adjusting its supply chain operations staff depending on volume at specific locations , ( v ) suspending its share repurchase program and ( vi ) reducing discretionary spending including planned capital expenditures . in july 2020 , veritiv took additional actions in response to the ongoing impacts of the covid-19 pandemic to enhance liquidity , including implementing cost-savings and cash preservation initiatives . these actions included the permanent reduction of the company 's u.s. salaried workforce by approximately 15 % across all business segments and corporate functions , as further described under `` 2020 restructuring plan '' below . in addition , during the second , third and fourth quarters of 2020 the company invested $ 75.0 million of its cash in highly-liquid investments instead of paying down its long-term debt . veritiv 's management expects that cash provided by operating activities and available capacity under the asset-based lending facility ( the `` abl facility '' ) will provide sufficient funds to operate the business and meet other liquidity needs . as of december 31 , 2020 , veritiv had cash and cash equivalents of $ 120.6 million and also had $ 341.9 million in available additional borrowing capacity under the abl facility . in april 2020 , veritiv refinanced and extended the maturity date of the abl facility to april 2025. the current circumstances are dynamic and the impacts of the covid-19 pandemic on the company 's business operations , including the duration and impact on overall customer demand , can not be reasonably estimated at this time . the extent to which the covid-19 pandemic impacts the company 's business , results of operations , access to sources of liquidity 26 and financial condition will depend on future developments . these developments , which are highly uncertain and can not be predicted , include , but are not limited to , the duration , spread and severity of the covid-19 pandemic , the effects of the covid-19 pandemic on the company 's employees , customers , suppliers and vendors and the remedial actions and stimulus measures adopted by local and federal governments , the availability , adoption and effectiveness of a vaccine and to what extent normal economic and operating conditions can resume and be sustained . even after the covid-19 pandemic has subsided , the company may experience an impact to its business as a result of any economic recession , downturn or volatility that has occurred or may occur in the future . see part i , item 1a , risk factors , for additional information on risks related to the covid-19 pandemic . other recent events 2020 restructuring plan during the second quarter of 2020 , the company initiated a restructuring plan in response to the impact of the covid-19 pandemic on its business operations and the ongoing secular changes in its print and publishing segments . during the fourth quarter of 2020 , the company expanded the initial plan to further align its cost structure with ongoing business needs as the company executes on its stated corporate strategy . the initial and expansion activities are collectively referred to as the `` 2020 restructuring plan . '' story_separator_special_tag veritiv 's broad geographic platform of operations coupled with the breadth of paper and graphics products , including exclusive private brand offerings , provides a foundation to service national , regional and local customers across north america . publishing โ the publishing segment sells and distributes coated and uncoated commercial printing papers to publishers , retailers , converters , printers and specialty businesses for use in magazines , catalogs , books , directories , gaming , couponing , retail inserts and direct mail primarily in the u.s. this segment also provides print management , procurement and supply chain management solutions to simplify paper and print procurement processes for veritiv 's customers . 28 results of operations , including business segments the following discussion compares the consolidated operating results of veritiv for the years ended december 31 , 2020 , 2019 and 2018 : replace_table_token_5_th net sales 2020 compared to 2019 : net sales decreased by $ 1,313.8 million , or 17.2 % . primarily beginning in april 2020 , the company experienced decreased net sales in each of its segments due to the negative impacts from the covid-19 pandemic . declines in the print and publishing segments ' net sales were responsible for approximately 70 % of the total decline in net sales . however , net sales declines of 10.5 % in the fourth quarter of 2020 and 17.3 % in the third quarter of 2020 were sequential improvements as compared to the decline of 28.3 % in the second quarter of 2020. see the `` segment results '' section for additional discussion . management expects net sales during the first half of 2021 to be unfavorably impacted in each of the company 's reportable segments , with the possible exception of the packaging segment , due to the continuing negative effects of the covid-19 pandemic . the duration and extent of the covid-19 pandemic is highly uncertain and the magnitude of net sales declines is difficult to predict . 2019 compared to 2018 : net sales decreased by $ 1,036.8 million , or 11.9 % , primarily due to the print and publishing segments ' decline in net sales as those segments were responsible for over 75 % of the total decline in net sales . see the `` segment results '' section for additional discussion . cost of products sold ( exclusive of depreciation and amortization shown separately below ) 2020 compared to 2019 : cost of products sold decreased by $ 1,166.0 million , or 18.8 % , primarily due to the decline in net sales as previously discussed . cost of products sold decreased at a faster rate than net sales due to improvements in pricing , as well as changes in both segment and customer mix . see the `` segment results '' section for additional discussion . 2019 compared to 2018 : cost of products sold decreased by $ 949.5 million , or 13.3 % , primarily due to the decline in net sales as previously discussed . see the `` segment results '' section for additional discussion . 29 distribution expenses 2020 compared to 2019 : distribution expenses decreased by $ 79.4 million , or 15.6 % . the decrease was primarily attributable to ( i ) a $ 39.1 million decrease in wages and temporary employee expenses , ( ii ) a $ 23.8 million decrease in freight and logistics expense , ( iii ) a $ 10.9 million decrease in equipment and facility rent expense and ( iv ) a $ 3.3 million decrease in maintenance costs . the decrease in wages and temporary employee expenses was primarily driven by actions taken by the company in response to the covid-19 pandemic , including lowering headcount across the company 's distribution network . the decrease in freight and logistics expense was primarily driven by a decrease in third-party freight and fuel expenses mostly related to lower net sales volumes . the decrease in equipment and facility rent expense was primarily driven by consolidation of the company 's facilities . 2019 compared to 2018 : distribution expenses decreased by $ 41.3 million , or 7.5 % . the decrease was primarily attributable to ( i ) a $ 25.7 million decrease in freight and logistics expenses , primarily driven by a decrease in third-party freight and fuel expenses , ( ii ) an $ 18.7 million decrease in personnel expenses driven by lower wages , temporary employee expenses and multi-employer pension plan ( `` mepp '' ) withdrawal charges and ( iii ) a $ 3.5 million decrease related to replacing certain equipment leases , previously treated as operating leases ( expenses included in distribution expense ) , with finance leases ( expenses included in depreciation and amortization and interest expense , net ) , partially offset by a $ 7.4 million increase in storage expenses mostly during the first half of 2019 , primarily due to replacing certain property leases , previously treated as financing arrangements ( expenses included in depreciation and amortization and interest expense , net ) with operating leases . charges associated with withdrawals from mepps were $ 6.6 million in 2019 and $ 11.2 million in 2018. selling and administrative expenses 2020 compared to 2019 : selling and administrative expenses decreased by $ 105.4 million , or 12.8 % . the decrease was primarily due to ( i ) a $ 78.9 million decrease in personnel expenses , ( ii ) an $ 8.6 million decrease in professional fees expense , ( iii ) an $ 8.3 million net gain on the sale of property , ( iv ) a $ 3.9 million decrease related to the escheat audit expense in 2019 that did not repeat in 2020 and ( v ) a $ 2.5 million decrease in bad debt expense .
| segment results adjusted ebitda ( earnings before interest , income taxes , depreciation and amortization , restructuring charges , net , integration and acquisition expenses and other similar charges including any severance costs , costs associated with warehouse and office openings or closings , consolidation , and relocation and other business optimization expenses , stock-based compensation expense , changes in the lifo reserve , non-restructuring asset impairment charges , non-restructuring severance charges , non-restructuring pension charges , net , fair value adjustments related to contingent liabilities assumed in mergers and acquisitions and certain other adjustments ) is the primary financial performance measure veritiv uses to manage its businesses , to monitor its results of operations , to measure its performance against the abl facility and to incentivize its management . veritiv believes investors commonly use adjusted ebitda as a key financial metric for valuing companies . in addition , the credit agreement governing the abl facility permits the company to exclude these and other charges in calculating consolidated ebitda , as defined in the abl facility . this common metric is intended to align shareholders , debt holders and management . adjusted ebitda is a non-gaap financial measure and is not an alternative to net income , operating income or any other measure prescribed by u.s. generally accepted accounting principles ( `` u.s. gaap '' ) . adjusted ebitda has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of veritiv 's results as reported under u.s. gaap . for example , adjusted ebitda : does not reflect the company 's income tax expenses or the cash requirements to pay its taxes ; and although depreciation and amortization charges are non-cash charges , it does not reflect that the assets being depreciated and amortized will often have to be replaced in the future , and the foregoing metric does not reflect any cash requirements for such replacements .
| 4,646 |
this decrease was partially offset by growth in multifamily housing and a lower net loss from our mortgage solutions business , which was sold on august 1 , 2018. global housing net earned premiums , fees and other income decreased $ 85.8 million to $ 2.09 billion for twelve months 2018 compared with $ 2.18 billion for twelve months 2017 , primarily due to the sale of mortgage solutions . excluding mortgage solutions , net earned premiums , fees and other income increased approximately 3 % due to growth from specialty property offerings , including commercial property and multifamily housing . these increases were partially offset by lower volumes from our reo lender-placed insurance product and the ongoing declines in placement rates in our lender-placed insurance business . global lifestyle net income increased $ 119.7 million , or 67 % , to $ 297.7 million for twelve months 2018 from $ 178.0 million for twelve months 2017. the increase was primarily driven by $ 74.7 million of net operating income contribution from twg and the impact of a lower effective tax rate . excluding the impact of these items , segment net income increased primarily due to increased income from our connected living business , which was driven by growth from recently launched mobile programs and continued growth in existing mobile programs , partially offset by continued declines in global financial services , primarily from expected discontinued partnerships , and unfavorable foreign exchange . global lifestyle net earned premiums , fees and other income increased $ 1.79 billion to $ 5.18 billion for the twelve months 2018 compared with $ 3.40 billion for twelve months 2017 , primarily due to the addition of $ 1.47 billion of net earned premiums and fee income from twg . excluding twg , net earned premiums , fees and other income increased 9 % due to increased revenue from our connected living business , due to growth from existing and recently launched mobile programs , as well as growth from our global automotive business . these increases were partially offset by lower earned premiums and fees from our international extended service contracts and global financial services business due to unfavorable foreign exchange . global preneed net income increased $ 18.1 million , or 46 % , to $ 57.7 million for twelve months 2018 from $ 39.6 million for twelve months 2017. this increase was primarily due to the lower effective tax rate . excluding the impact of a lower effective tax rate , segment net income increased due to higher investment income and the absence of $ 5.0 million in after-tax software impairment recorded in 2017. global preneed net earned premiums , fees and other income increased $ 8.5 million to $ 189.5 million for twelve months 2018 compared with $ 181.0 million for twelve months 2017 primarily due to growth in pre-funded funeral policies in the u.s. and canada , as well as prior period sales of the final need product . critical factors affecting results our results depend on , among other things , the appropriateness of our product pricing , underwriting , the accuracy of our reserving methodology for future policyholder benefits and claims , the frequency and severity of reportable and non-reportable catastrophes , returns on and values of invested assets and our ability to manage our expenses and achieve expense savings . our results will also depend on our ability to profitably grow our connected living , multifamily housing and global automotive businesses , and manage the pace of declines in placement rates in our lender-placed insurance business and the u.s. credit insurance business in global financial services . in addition , our results will be impacted by our ability to integrate twg and achieve benefits and synergies from the acquisition . factors affecting these items , including , but not limited to , conditions in financial markets , the global economy and the markets in which we operate , fluctuations in exchange rates and inflation , may have a material adverse effect on our results of operations or financial condition . for more information on these and other factors that could affect our results , see โ item 1a โ risk factors. โ management believes that we will have sufficient liquidity to satisfy our needs over the next twelve months , including the ability to pay interest on our debt and dividends on our common and preferred stock . for twelve months 2018 , net cash provided by operating activities totaled $ 656.7 million ; net cash used in investing activities totaled $ 2.20 billion and net cash provided by financing activities totaled $ 1.84 billion . we had $ 1.25 billion in cash and cash equivalents as of december 31 , 2018. please see โ โ liquidity and capital resources โ below for further details . revenues we generate revenues primarily from the sale of our insurance policies , service contracts and related products and services and from income earned on our investments . sales of insurance policies are recognized in revenue as earned premiums while sales of administrative services are recognized as fee income . under the universal life insurance guidance , income earned on preneed life insurance policies sold after january 1 , 2009 are presented within fee income net of policyholder benefits . under the limited pay insurance guidance , the consideration 41 received on preneed policies sold prior to january 1 , 2009 is presented separately as net earned premiums , with policyholder benefits expense shown separately . our premium and fee income is supplemented by income earned from our investment portfolio . we recognize revenue from interest payments , dividends , change in market value of equity securities and sales of investments . currently , our investment portfolio is primarily invested in fixed maturity securities . story_separator_special_tag however , based on information currently available , we believe our reserve estimates are adequate . see โ item 1a โ risk factors โ financial risks โ our actual claims losses may exceed our reserves for claims , requiring us to establish additional reserves or to incur additional expense for settling unreserved liabilities , which could have a material adverse effect on our results of operations , profitability and capital โ for more detail on this risk . the following table provides reserve information for our reporting segment lines as of december 31 , 2018 and 2017 : replace_table_token_6_th for additional information regarding our reserves , see note 16 to the consolidated financial statements included elsewhere in this report . short duration contracts claims and benefits payable reserves for short duration contracts include ( 1 ) case reserves for known claims which are unpaid as of the balance sheet date ; ( 2 ) ibnr reserves for claims where the insured event has occurred but has not been reported to us as of the balance sheet date ; and ( 3 ) loss adjustment expense reserves for the expected handling costs of settling the claims . periodically , we review emerging experience and make adjustments to our reserves and assumptions where necessary . below are further discussions on the reserving process for our major short duration products . global housing and global lifestyle ultimate loss and loss adjustment expenses are estimated utilizing generally accepted actuarial loss reserving methods . both paid claims development as well as case incurred development are typically analyzed at the product or product grouping level , considering product size and data credibility . the reserving methods widely employed by us include the chain ladder , munich chain ladder and bornhuetter-ferguson methods . for global housing , reportable catastrophes are analyzed and reserved for separately using a frequency and severity approach . the methods all involve aggregating paid and case-incurred loss data by accident quarter ( or accident year ) and accident age for each product grouping . as the data ages , development factors are calculated that measure emerging claim development patterns between reporting periods . by selecting loss development factors indicative of remaining development , known losses 43 are projected to an ultimate incurred basis for each accident period . the underlying premise of the chain ladder method is that future claims development is best estimated using past claims development , whereas the bornhuetter-ferguson method employs a combination of past claims development and prior estimates of ultimate losses based on an expected loss ratio . the munich chain ladder method incorporates the correlations between paid and incurred development in projecting future development factors , and is typically more applicable to products experiencing variability in incurred to paid ratios . each of these methods applied to the data groupings produces an estimate of the loss reserves for the product grouping . the best estimate is generally selected from a blend of the different methods . the ibnr associated with the best estimate is then allocated to accident year based on a weighting of the underlying actuarial methods . the determination of the best estimate is based on many factors , including but not limited to : the nature and extent of the underlying assumptions ; the quality and applicability of historical data - whether internal or industry data ; current and expected future economic and market conditions ; regulatory , legislative , and judicial considerations ; the extent of data segmentation - data should be homogeneous yet credible enough for loss development methods to apply ; trends in loss frequencies and severities for various causes of loss ; consideration of the distribution of loss reserves , management 's selection of the best estimate that may exceed an estimate based on median values , suggesting that favorable development may be more likely than unfavorable development ; and hindsight testing of prior loss estimates - the loss estimates on some product lines will vary from actual loss experience more than others . when employing the reserving methods , consideration is given to contractual requirements , historical utilization trends and payment patterns , coverage changes , seasonality , product mix , the legislative and regulatory environment , economic factors , natural catastrophes , and other relevant factors . we consistently apply reserving principles and methodologies from year to year , while also giving due consideration to the potential variability of these factors . while management has used judgment in establishing its best estimate of required reserves , different assumptions and variables could lead to significantly different reserve estimates . two key measures of loss activity are loss frequency , which is a measure of the number of claims per unit of insured exposure , and loss severity , which is a measure of the average size of claims . factors affecting loss frequency include the effectiveness of loss controls , changes in economic activity and weather patterns . factors affecting loss severity include changes in policy limits , retentions , rate of inflation and judicial interpretations . if the actual level of loss frequency and severity are higher or lower than expected , the ultimate reserves required will be different than management 's estimate . the effect of higher and lower levels of loss frequency and severity on our ultimate costs for claims occurring in 2018 would be as follows : replace_table_token_7_th ( 1 ) represents the sum of the case reserves and incurred but not reported reserves as of december 31 , 2018 for global housing and global lifestyle . 44 disposed and runoff short duration lines we have exposure to asbestos , environmental and other general liability claims arising from our participation in various reinsurance pools from 1971 through 1985. this exposure arose from a contract that we discontinued writing many years ago . we carried case reserves for these liabilities , as recommended by the various pool managers , and ibnr reserves totaling $ 26.9 million
| results of operations assurant consolidated overview the table below presents information regarding our consolidated results of operations : replace_table_token_10_th year ended december 31 , 2018 compared to the year ended december 31 , 2017 consolidated net income attributable to common stockholders decreased $ 282.8 million , or 54 % , to $ 236.8 million for twelve months 2018 from $ 519.6 million for twelve months 2017. the decrease was primarily related to the absence of a $ 177.0 million tax benefit from the reduction of net deferred tax liabilities following the enactment of the tcja that was recorded in 2017 and an increase in net realized losses on investments . the decrease was also due to an increase in expenses 50 related to the twg acquisition including a $ 58.8 million increase in after-tax net acquisition and integration expenses and a $ 32.2 million increase in after-tax interest expense and preferred dividends from acquisition related financing . additionally , the decrease was due to lower amortization of deferred gains associated with the sale of assurant employee benefits , a $ 31.9 million after-tax loss on the sale of our mortgage solutions business and the absence of a $ 27.1 million tax benefit from the release of a reserve for uncertain tax positions included in 2017. these decreases were partially offset by the impact of a lower effective tax rate due to the tcja , $ 74.7 million of net operating income from twg and a decrease in reportable catastrophes .
| 4,647 |
as described in greater detail below , the corporation 's major financial endeavor over the years has been its effort to raise additional capital . ii . assets total assets as of november 30 , 2014 includes cash and cash equivalent of $ 1,085,006 , accounts receivable of $ 7,393 , prepaid expenses and other receivables of $ 29,557 , inventory of $ 120,246 , deferred financing costs for $ 170,674 and plant and equipment for $ 144,176 net of depreciation . total assets as of november 30 , 2013 includes cash and cash equivalent of $ 1,842,149 , accounts receivable of $ 20,351 , prepaid expenses and other receivables of $ 45,372 and plant and equipment for $ 152,137 net of depreciation . total assets decreased from $ 2,060,009 on november 30 , 2013 to $ 1,577,052 on november 30 , 2014. this decrease is primarily the result of expenses incurred in normal course of business . iii . revenues revenue from operations during the year ended november 30 , 2014 was $ 42,480 as compared to $ 30,096 during the year ended november 30 , 2013. iv . net loss the company 's expenses are reflected in the statements of operation under the category of operating expenses . the significant components of expense that have contributed to the total operating expense are discussed as follows : ( a ) general and administration expense general and administration expense represents professional , consulting , office and general , stock based compensation and other miscellaneous costs incurred during the years covered by this report . general and administration expense for the year ended november 30 , 2014 was $ 2,624,488 , as compared with $ 1,698,523 for the year ended november 30 , 2013. general and administration expense increased by $ 925,965 in the current year , as compared to the prior year . the primary reasons for the change in general and administrative costs are as follows : the company expensed stock based compensation expense ( included in general and administrative expenses ) for issue of options and warrants for $ 751,610 during the year ended november 30 , 2014 ( $ nil in 2013 ) . stock based compensation expense does not require the use of cash ( non-cash expenses ) , associated with the issuance of options and warrants . during the year ended november 30 , 2014 the company expensed an additional $ 40,000 being expense for applied dna sciences unique signature dna system for the dna marking and authentication of 40mm non lethal projectiles . 6 ( b ) research and product development costs research and product development costs for the year ended november 30 , 2014 and year ended november 30 , 2013 were $ nil . v. quarterly results the net loss and comprehensive loss ( unaudited ) of the corporation for the quarter ended november 30 , 2014 as well as the seven quarterly periods completed immediately prior thereto are set out below : for the three for the for the for the for the three for the for the for the months three three three months three three three ended months months months ended months months months november30 , ended ended ended november30 ended ended ended 2014 august may 31 , february , 2013 august may 31 , february ( $ ) 31 , 2014 2014 28 , 2014 ( $ ) 31 , 2013 2013 28 , 2013 ( $ ) ( $ ) ( $ ) ( $ ) ( $ ) ( $ ) story_separator_special_tag 898,645 common shares to the agent and members of its selling group . the agent 's warrants entitles the agent and members of its selling group to purchase common shares at a price of cad $ 0.40 ( us $ 0.38 ) per common share until august 27 , 2015. upon completion of the offering , $ 700,000 face value of convertible debentures along with $ 97,716 of interest was converted to 2,297,044 common shares , resulting in the discharge of those debentures . on january 30 , 2013 , the company issued a $ 199,342 ( cad $ 200,000 ) 6 % convertible bridge loan with a term to july 30 , 2013 ( the ยmaturity dateย ) . in connection with the issuance of the bridge loan , the company issued detachable warrants to purchase 100,000 shares of the company 's common stock . the warrants have an exercise price of cad $ 0.50 per share and a time to expiration of two years . the relative fair value allocated to warrants and credited to additional paid in capital was $ 24,246 on march 14 , 2013 , the company issued a $ 97,456 ( cad $ 100,000 ) 6 % convertible bridge loan with a term to july 30 , 2013 ( the ยmaturity dateย ) . in connection with the issuance of the bridge loan , the company issued detachable warrants to purchase 50,000 shares of the company 's common stock . the warrants have an exercise price of cad $ 0.50 per share and a time to expiration of two years . the relative fair value allocated to warrants and credited to additional paid in capital was $ 11,269 on april 12 , 2013 , the company issued a $ 197,355 ( cad $ 200,000 ) 6 % convertible bridge loan with a term to july 30 , 2013 ( the ยmaturity dateย ) . in connection with the issuance of the bridge loan , the company issued detachable warrants to purchase 100,000 shares of the company 's common stock . the warrants have an exercise price of cad $ 0.50 per share and a time to expiration of two years . the relative fair value allocated to warrants and credited to additional paid in capital was $ 20,502 on may 14 , 2013 , the company issued a $ 147,812 ( cad $ 150,000 ) 6 % convertible bridge loan with a term to july 30 , 2013 ( the ยmaturity dateย ) . story_separator_special_tag b ) the company has commitments for leasing office premises in oakville , ontario , canada to april 30 , 2018 at a rent of $ 5,593 ( cad $ 6,399 ) per month . c ) the company has commitments for leasing office premises in tampa , florida , usa to june 30 , 2015 at a rent of $ 1,418 per month . contingencies in november of 2013 , a former officer filed a law suit against the company in the ontario superior court of justice ( province of ontario ) seeking , among other things , $ 60,000 in damages for wrongful dismissal , damages of $ 35,000 on account of vacation pay and damages to be determined for out of pocket expenses , breach of contract , unjust enrichment and loss of business opportunity . subsequent to the year , the company and the former officer executed a settlement agreement at cad $ 15,000 ( see subsequent events ) 11 exclusive supply and teaming agreement : the company entered into a development , supply and manufacturing agreement with the bip manufacturer on july 25 , 2012. this agreement provides the company to order and purchase only from the bip manufacturer certain 40mm assemblies and components for use by the company to produce less-lethal and training projectiles as described in the agreement . the agreement is for a term of five years with an automatic extension for an additional year if neither party has given written notice of termination prior to the end of the five year period . the company and a division of abrams airborne manufacturing inc. ( aami ) , namely milkor usa ( musa ) , agreed to partner for a joint cross-selling / marketing initiative . this arrangement allows both companies to leverage existing and future sales channels by offering a comprehensive , full-package of milkor usa 's 40mm multi-shot grenade launchers in conjunction with sdi 's 40mm less-lethal ammunition product-line to end-users globally . ix . subsequent events in december , 2014 , sdi terminated the agreement executed with a non-related consultant to pay compensation of $ 7,000 per month . the company and a former officer executed a settlement agreement to settle a lawsuit filed by the said officer seeking damages for wrongful dismissal , vacation pay , out of pocket expenses , breach of contract and loss of business opportunity . the company agreed to pay cad $ 15,000 in settlement . ( see note on contingencies ) x. critical accounting policies the preparation of financial statements in accordance with accounting principles generally accepted in the united states requires us to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements , the reported amount of revenues and expenses during the reporting period and related disclosure of contingent assets and liabilities . these estimates are based on our best knowledge of current events and actions the corporation may undertake in the future . on an ongoing basis , we evaluate our estimates and judgments . to the extent actual results differ from those estimates ; our future results of operations may be affected . 12 recent accounting pronouncements in june 2014 , the fasb issued asu 2014-10 , ยdevelopment stage entities ( topic 915 ) : elimination of certain financial reporting requirementsย ( ยasu 2014-10ย ) , which eliminates the distinction of a development stage entity and certain related disclosure requirements , including the elimination of inception-to-date information on the statements of operations , cash flows and changes in stockholders ' equity . the amendments in asu 2014-10 are effective prospectively for annual reporting periods beginning after december 15 , 2014 , and interim periods within those annual periods ; however early adoption is permitted . the company evaluated and adopted asu 2014-10 early for the current period presented . in august 2012 , the fasb issued asu 2012-03 , technical amendments and corrections to sec sections : amendments to sec paragraphs pursuant to sec staff accounting bulletin ( sab ) no . 114 , technical amendments pursuant to sec release no . 33-9250 , and corrections related to fasb accounting standards update 2010-22 ( sec update ) ( ยasu 2012-03ย ) . this update amends various sec paragraphs pursuant to the issuance of sab no . 114. the adoption of asu 2012-03 is not expected to have a significant impact on our financial position or results of operations . in april 2014 , the fasb issued asu 2014-08 , presentation of financial statements ( topic 205 ) and property , plant , and equipment ( topic 360 ) : reporting discontinued operations and disclosures of disposals of components of an entity ( ยasu 2014-08ย ) , which includes amendments that change the requirements for reporting discontinued operations and require additional disclosures about discontinued operations . under the new guidance , only disposals representing a strategic shift in operations should be presented as discontinued operations . those strategic shifts should have a major effect on the organization 's operations and financial results . additionally , asu 2014-08 requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets , liabilities , income , and expenses of discontinued operations . the new standard is effective for the company on december 1 , 2016. early application is permitted . the company is evaluating the effect that asu 2014-08 will have on its consolidated financial statements and related disclosures . in may 2014 , the fasb issued asu 2014-09 , revenue from contracts with customers ( topic 606 ) ( ยasu 2014-09ย ) , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers . asu 2014-09 will replace most existing revenue recognition guidance in u.s. gaap when it becomes effective . the new standard is effective for the company on december 1 , 2017. early application is not permitted .
| revenues nil nil nil nil nil nil nil nil net loss ( 1,167,718 ) ( 445,163 ) ( 631,094 ) ( 478,437 ) ( 547,206 ) ( 444,595 ) ( 562,762 ) ( 469,648 ) loss per weighted average number of ( 0.03 ) ( 0.01 ) ( 0.01 ) ( 0.01 ) ( 0.02 ) ( 0.01 ) ( 0.02 ) ( 0.01 ) shares outstanding ย basic and fully diluted quarterly activities and financial performance are impacted by the company 's ability to raise capital for its activities . the loss during the three months period ended may 31 , 2014 , august 31 , 2014 and november 30 , 2014 include non-cash stock based compensation expense for $ 188,470 , $ 33,952 and $ 529,188 respectively . 7 vi . liquidity and capital resources the following table summarizes the company 's cash flows and cash in hand : replace_table_token_3_th as of november 30 , 2014 , the company had working capital of $ 1,251,471 as compared to working capital of $ 1,801,343 as of november 30 , 2013. working capital decreased primarily as a result of capital financing activities during the year ended november 30 , 2014 for $ 1,253,799 offset in part by expenses incurred in normal course of business . net cash used in operations for the year ended november 30 , 2014 , was $ 1,940,050 as compared to $ 1,731,957 used for the year ended november 30 , 2013. the major components of change relate to : 1 ) items not affecting cash : stock based compensation of $ 751,610 in 2014 , as compared to $ nil in 2013. november 30 , 2014 on march 19 , 2014 , the board of directors granted options to five consultants to acquire a total of 400,000 common shares . the 400,000 options were issued at an exercise price of $ 0.31 ( cad $ 0.35 ) per share and vest immediately with an expiry term of three years .
| 4,648 |
based on the results of the annual impairment tests , the story_separator_special_tag the following discussion of the corporation 's historical results of operations and of its liquidity and capital resources should be read in conjunction with the consolidated financial statements of the corporation and related notes . statements that are not historical are forward-looking and involve risks and uncertainties , including those discussed under `` item 1a . risk factors '' and elsewhere in this report . overview the corporation has two reportable segments : office furniture and hearth products . the corporation is a leading global office furniture manufacturer and north america 's leading manufacturer and marketer of gas and wood burning fireplaces . the corporation utilizes its split and focus , decentralized business model to deliver value to its customers with various brands and selling models . the corporation is focused on growing its existing businesses while seeking out and developing new opportunities for growth . the corporation delivered strong top-line growth in both the office furniture and hearth products segments in 2014. growth in the office furniture segment was led by accelerating momentum in the contract channel . the corporation 's hearth products segment leveraged its leading market position to increase sales and drive significant profit improvement as the housing market continued to recover and demand for alternative fuel products increased . the corporation continued its disciplined approach to managing cost and made the decision to close three office furniture manufacturing facilities and consolidate production into existing facilities in 2014. the corporation also remained committed to long-term profitable growth across its core businesses and increased the amount of focused investments in selling , marketing , manufacturing and product initiatives . the corporation completed the acquisition of vermont castings group ( `` vcg '' ) , a manufacturer of free-standing hearth stoves and fireplaces , during the fourth quarter of 2014. net sales during 2014 were $ 2.2 billion , an increase of 7.9 percent , compared to net sales of $ 2.1 billion in 2013 . the sales increase was driven by increased volume in both the supplies-driven and contract channels of the office furniture segment as well as both the new construction and remodel/retrofit channels of the hearth products segment . fiscal 2014 included 53 weeks compared to 52 weeks in 2013. due to the corporation 's holiday schedule and production shutdowns , the extra week had minimal impact on net sales and operating income . the corporation recorded $ 29.4 million of goodwill and intangible impairment charges during 2014 related to reporting units in the office furniture segment acquired over the past four years due to current and projected market conditions and product and operational transformation . management is optimistic about the office furniture and hearth markets . the corporation will continue to invest in selling , marketing and product initiatives and remain focused on improving operations and reducing cost . - 22 - story_separator_special_tag net income attributable to hni corporation decreased 3.5 percent to $ 61.5 million in 2014 compared to $ 63.7 million in 2013 and $ 49.0 million in 2012 . net income per diluted share decreased 2.9 percent to $ 1.35 in 2014 compared to $ 1.39 in 2013 and $ 1.07 in 2012 . - 24 - office furniture office furniture comprised 78 percent , 82 percent and 84 percent of consolidated net sales for 2014 , 2013 and 2012 , respectively . net sales for office furniture increased $ 53.8 million or 3.2 percent in 2014 to $ 1.739 billion compared to $ 1.685 billion in 2013 including increased price realization of $ 36 million . compared to prior year , divestitures of several small businesses , including office furniture dealers , reduced sales by $ 17.7 million . the corporation experienced growth in both the supplies-driven and contract channels . net sales for office furniture decreased $ 2.1 million or 0.1 percent in 2013 to $ 1.685 billion compared to $ 1.687 billion in 2012 including increased price realization of $ 30 million . compared to prior year , divestitures of several small businesses , including office furniture dealers , partially offset by the acquisition of bp ergo , reduced sales by $ 27.5 million . the corporation experienced growth in both the supplies-driven and contract channels which was more than offset by a large decline in sales to the federal government . bifma reported 2014 shipments up 4 percent from 2013 levels which were up 1 percent from 2012 levels . operating profit as a percent of net sales was 5.0 percent in 2014 , 5.8 percent in 2013 and 5.4 percent in 2012 . the decrease in operating margins in 2014 was due to unfavorable product mix , investment in operations , higher freight costs due to carrier capacity constraints , increased incentive-based compensation , restructuring charges , goodwill and intangible impairments and transition costs . these were partially offset by higher volume , better price realization , strong operational performance and gains on sale of assets . the increase in operating margins in 2013 was due to better price realization , lower material costs , distribution network realignment savings and lower restructuring costs . these were partially offset by unfavorable mix , new product ramp-up , facility reconfiguration costs to meet changing market demands and loss on the sale of a small non-core business . hearth products hearth products sales increased $ 108.9 million or 29.1 percent in 2014 to $ 484 million compared to $ 375 million in 2013 including increased price realization of $ 6 million and incremental sales from the vcg acquisition of $ 25 million . the sales increase was also due to an increase in both the new construction channel due to the continued housing market recovery and the remodel/retrofit channel due to strong biofuel product sales . hearth products sales increased 18.3 percent in 2013 to $ 375 million compared to $ 317 million in 2012 including increased price realization of $ 5 million . story_separator_special_tag cash flow โ financing activities on september 28 , 2011 , the corporation amended and restated its existing revolving credit facility dated june 11 , 2010. the corporation increased its borrowing capacity from $ 150 million to $ 250 million and has the option to increase its borrowing capacity by an additional $ 100 million . the corporation also extended the term to the earlier of ( i ) september 28 , 2016 or ( ii ) the date 90 days prior to the maturity date of the corporation 's senior notes ( april 6 , 2016 ) , subject to certain exceptions . the corporation effectively decreased interest costs . amounts borrowed under the credit agreement may be borrowed , repaid and reborrowed from time to time . the corporation paid approximately $ 1.2 million of debt issuance costs that are being amortized straight-line over the term of the credit agreement . during 2014 net borrowings under the revolving credit facility peaked at $ 60 million . as of january 3 , 2015 , there was $ 47.7 million outstanding under the revolving credit facility classified as long-term as the corporation does not expect to repay the borrowings within a year . in 2006 , the corporation refinanced $ 150 million of borrowings outstanding under its prior revolving credit facility with 5.54 percent , ten-year unsecured senior notes due in 2016 issued through the private placement debt market . interest payments are due semi-annually on april 1 and october 1 of each year and the principal is due in a lump sum in 2016. the corporation currently expects to be able to refinance the debt under is credit facility and its senior notes when given its past history . however , if there is a deterioration in the credit markets , the corporation 's ability to refinance such debt may be adversely affected . additional borrowing capacity of $ 250 million is available through the revolving credit facility in the event cash generated from operations should be inadequate to meet future needs . the corporation does not currently expect access to future capital to be a constraint on planned growth . long-term debt , including capital lease obligations , was 32 % , 26 % and 26 % of total capitalization as of january 3 , 2015 , december 28 , 2013 and december 29 , 2012 , respectively . - 26 - the credit agreement governing the revolving credit facility and the note purchase agreement pertaining to the senior notes contain covenants that , among other things , restrict , subject to certain exceptions , our ability to : incur additional indebtedness and lease obligations and make guarantees ; create liens on assets ; engage in any material line of business substantially different from existing lines of business ; sell assets ; make investments , loans and advances , including acquisitions ; engage in sale-leaseback transactions in excess of $ 50 million in the aggregate ; repay the senior notes or enter into certain amendments thereof ; and engage in certain transactions with affiliates . the credit agreement governing the revolving credit facility contains a number of covenants , including covenants requiring maintenance of the following financial ratios as of the end of any fiscal quarter : a consolidated interest coverage ratio of not less than 4.0 to 1.0 , based upon the ratio of ( a ) consolidated ebitda ( as defined in the credit agreement ) for the last four fiscal quarters to ( b ) the sum of consolidated interest charges ; and a consolidated leverage ratio of not greater than 3.0 to 1.0 , based upon the ratio of ( a ) the quarter-end consolidated funded indebtedness ( as defined in the credit agreement ) to ( b ) consolidated ebitda for the last four fiscal quarters ; or a consolidated leverage ratio of not greater than 3.5 to 1.0 , based upon the ratio of ( a ) the quarter-end consolidated funded indebtedness to ( b ) consolidated ebitda for the last four fiscal quarters following any qualifying debt financed acquisition . the note purchase agreement governing the senior notes also contains a number of covenants , including a covenant requiring maintenance of consolidated debt to consolidated ebitda ( as defined in the note purchase agreement ) of not greater than 3.5 to 1.0 , based upon the ratio of ( a ) the quarter-end consolidated funded indebtedness ( as defined in the note purchase agreement ) to ( b ) consolidated ebitda for the last four fiscal quarters . the revolving credit facility and senior notes are the primary sources of committed funding from which the corporation finances its planned capital expenditures , strategic initiatives such as repurchases of common stock and certain working capital needs . non-compliance with the various financial covenant ratios could prevent the corporation from being able to access further borrowings under the revolving credit facility , require immediate repayment of all amounts outstanding with respect to the revolving credit facility and senior notes and increase the cost of borrowing . the most restrictive of the financial covenants is the consolidated leverage ratio requirement of 3.0 to 1.0 included in the credit agreement governing the revolving credit facility . under the credit agreement , adjusted ebitda is defined as consolidated net income before interest expense , income taxes and depreciation and amortization of intangibles , as well as non-cash nonrecurring charges and all non-cash items increasing net income . at january 3 , 2015 , the corporation was well below this ratio at 1.14 and was in compliance with all of the covenants and other restrictions in the credit agreement and note purchase agreement . the corporation currently expects to remain in compliance over the next twelve months . during 2014 , the corporation repurchased 1,665,850 shares of its common stock at a cost of approximately $ 67.9 million , or an average price of $ 40.76 per share .
| results of operations the following table sets forth the percentage of consolidated net sales represented by certain items reflected in the corporation 's consolidated statements of income for the periods indicated . replace_table_token_4_th net sales net sales during 2014 were $ 2.2 billion , an increase of 7.9 percent , compared to net sales of $ 2.1 billion in 2013 . both the office furniture segment and the hearth products segment experienced better price realization and increased volume . compared to the prior year , the acquisition of vcg net of divestitures of several small businesses , including office furniture dealers , increased sales $ 7.5 million . fiscal 2014 included 53 weeks compared to 52 weeks in 2013. due to the corporation 's holiday schedule and production shutdowns , the extra week had minimal impact on net sales and operating income . net sales during 2013 were $ 2.1 billion , an increase of 2.8 percent , compared to net sales of $ 2.0 billion in 2012 . the office furniture segment experienced better price realization and increased volume in commercial markets offset by a 28 percent decline in sales to the federal government . the hearth products segment experienced increased volume and better price realization in both the new construction and remodel/retrofit channels . compared to prior year , divestitures of several small businesses , including office furniture dealers , partially offset by the acquisition of bp ergo , reduced sales $ 27.5 million . gross profit gross profit as a percent of net sales increased 60 basis points in 2014 as compared to 2013 due to higher volume , better price realization and strong operational performance offset partially by unfavorable product mix , investments in operations , higher warranty costs and increased restructuring and transition costs .
| 4,649 |
for the year ended december 31 , 2017 , we recorded net foreign currency gain of $ 1.1 million . research and development research and development costs are expensed as incurred except as noted below under software development costs . these costs include compensation costs for engineering story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with item 1a risk factors and our consolidated financial statements and related notes included elsewhere in this annual report on form 10-k. the following discussion and analysis presents financial information denominated in millions of dollars which can lead to differences from rounding when compared to similar information contained in the consolidated financial statements and related notes , which are primarily denominated in thousands of dollars . executive summary we are the world 's leading cloud software company powering social good . serving the entire social good communityโnonprofits , foundations , companies , education institutions , healthcare organizations and individual change agentsโ we connect and empower organizations and individuals to increase their impact through cloud software , services , expertise and data intelligence . our portfolio is tailored to the unique needs of vertical markets , with solutions for fundraising and crm , marketing , advocacy , peer-to-peer fundraising , corporate social responsibility , school management , ticketing , grantmaking , financial management , payment processing and analytics . serving the industry for more than three decades , we are headquartered in charleston , south carolina and have operations in the united states , australia , canada , costa rica and the united kingdom . as of december 31 , 2019 , we had over 45,000 global customers . our revenue is primarily generated from the following sources : ( i ) charging for the use of our software solutions in cloud and hosted environments ; ( ii ) providing payment and transaction services ; ( iii ) providing software maintenance and support services ; and ( iv ) providing professional services , including implementation , consulting , training , analytic and other services . four-point growth strategy 1 delight customers with innovative cloud solutions 2 drive sales effectiveness 3 expand total addressable market 4 improve operating efficiency 1. delight customers with innovative cloud solutions this strategy reflects our relentless focus on driving value and outcomes for our customers through our solutions . blackbaud skyยฎ , our platform for cloud innovation , is a core tenant of this strategy and continues to power an elevated level of innovation by our engineers . it is also enabling our growing ecosystem of partners who are also passionate about social good , to extend and expand the capabilities available to our customers . for the first time in the history of the company , beginning in 2019 , there are now significantly more outside developers developing on our platform than blackbaud engineers . the customers we serve require vertical specific business solutions to automate their operations . in october 2019 , we announced the general availability of blackbaud church management , which is already transforming the faith community technology landscape . we now serve congregations in more than half of the 50 u.s. states , representing all different sizes and spanning more than 13 denominations . bringing this solution to market is a significant step toward addressing several challenges in the faith market and a substantial opportunity for blackbaud . we are seeing positive momentum as more functionality continues to be released , market awareness is increasing and win rates are improving . replace_table_token_32_th blackbaud , inc. we are also seeing momentum continue to build in our higher education vertical where blackbaud powers 24 of the top 25 private u.s. colleges as ranked by forbes . a year after introducing the cloud solution for higher education , we continue to drive innovation and introduce solutions taking full advantage of the rapid innovation , modern user experience , and enhanced capabilities made possible by our blackbaud sky platform . we extended our industry proven education management portfolio up market to small-scale higher education institutions . we are seeing strong sales momentum and look forward to seeing these customers begin to go-live in 2020. we also recently introduced talent management capabilities as part of the cloud solution for higher education , providing institutions the first online performance tracking tool for fundraising leaders and managers , enabling transparency , proactive management and peer gift officer benchmarking . blackbaud peer-to-peer fundraising powered by justgiving continues to gain traction . since the u.s. launch in early 2019 , over 1,000 customers have signed up to use the solution and roughly half of these organizations are net new customers to blackbaud . 2. drive sales effectiveness we have been investing in sales and marketing to better address our market opportunity with a focus on adding additional sales headcount , improving productivity and putting a greater focus on adding net new logos . one way we are equipping our growing salesforce to be more effective is by investing in the necessary technology and resources to efficiently drive an increased number of quality leads and better cover our large addressable market . we have grown our lead generation teams , which we call business development representatives , to support our growing sales teams . we have simultaneously increased the productivity of our business development representatives with the implementation of a leading sales engagement technology platform , enabling our teams to generate more prospects , and convert those prospects into sales opportunities . we are entering 2020 with an improved ratio of business development representatives to account executives , and the lead generation from the team has increased substantially as a result of these changes . we have also implemented software tools to enhance our digital footprint and drive lead generation across the company . for the first time ever , we are taking a multi-touch attribution approach to measuring the effectiveness of our marketing campaigns to drive efficiency in our go-to-market efforts and improve returns on our marketing dollars . story_separator_special_tag our net leverage ratio was 2.30 to 1.00 . during 2019 , we generated $ 182.5 million in cash flow from operations , had net cash outlays of $ 109.4 million , primarily for the acquisition of yourcause , returned $ 23.6 million to stockholders by way of dividends and had cash outlays of $ 58.4 million for purchases of property and equipment and capitalized software development costs . adoption of new lease accounting standard on january 1 , 2019 , we adopted asu 2016-02 , using the transition method that allowed us to initially apply the guidance at the adoption date of january 1 , 2019 without adjusting comparative periods presented . adopting asu 2016-02 had a material impact on our consolidated balance sheets as we recognized lease liabilities and rou assets for those leases classified as operating leases . the impacts of adoption are reflected in the financial information herein . for additional information regarding the impact of our adoption of asu 2016-02 , see notes 2 and 11 to our consolidated financial statements in this report . story_separator_special_tag style= '' vertical-align : bottom ; padding-left:2px ; padding-top:2px ; padding-bottom:2px ; padding-right:2px ; '' > increase in compensation costs of $ 11.2 million , primarily attributable to an increasing portion of our resources now providing subscription-based retained services as opposed to one-time + increase in hosting and data center costs of $ 5.4 million as we are migrating our cloud infrastructure to leading public cloud service providers + increase in third-party data and tool costs of $ 5.1 million replace_table_token_36_th blackbaud , inc. + increase in allocated corporate costs of $ 5.1 million primarily due to investments in corporate it , including cyber security and increases in related headcount + increase in amortization of software development costs of $ 4.1 million due to investments made on innovation , quality and the integration of our cloud solutions recurring gross margin decreased by 3.0 % , driven primarily by incremental costs associated with our continued shift toward selling cloud solutions and retained services , including hosting and data center costs , compensation costs and amortization of software development costs . we expect continued pressure on recurring gross margin largely driven by duplicate data center costs as we migrate our cloud infrastructure to leading public cloud service providers . one-time services and other revenue ( $ m ) cost of revenue ( $ m ) gross profit ( $ m ) and gross margin ( % ) yoy growth ( % ) yoy growth ( % ) one-time services and other revenue is comprised of fees for one-time consulting , analytic and onsite training services , as well as revenue from the sale of our software sold under perpetual license arrangements , fees from user conferences and third-party software referral fees . cost of one-time services and other is primarily comprised of compensation costs for professional services and onsite training personnel , other costs incurred in providing onsite customer training , third-party contractor expenses , data expense incurred to perform one-time analytic services , third-party software royalties , costs of user conferences , allocated depreciation , facilities and it support costs and amortization of intangible assets from business combinations . we expect that the shift in our go-to-market strategy towards cloud subscription offerings , which generally include integrated analytics , training and payment services , and require little to no customization services , will continue to negatively impact one-time services and other revenue . one-time services and other revenue decreased by $ 17.6 million , or 20.4 % , driven primarily by the following : - decrease in one-time consulting revenue of $ 12.6 million . services are increasingly embedded in our renewable cloud solution contracts and we are selling more subscription-based contracts for retained professional services . both our embedded services and retained services are recorded as recurring revenue . - decrease in one-time analytics revenue of $ 3.8 million as analytics are generally integrated in our cloud solutions cost of one-time services and other decreased by $ 15.8 million , or 20.8 % , driven primarily by a decrease in compensation costs of $ 13.3 million . the decrease in compensation costs was in line with the decrease in one-time services sold and delivered as an increasing portion of our resources are now providing subscription-based retained services as opposed to one-time . one-time services and other gross margin increased by 0.4 % , as the reductions in costs of one-time services and other discussed above slightly outpaced the declines in one-time consulting revenue and analytics revenue associated with the shift in our go-to-market strategy . replace_table_token_37_th blackbaud , inc. operating expenses sales , marketing and customer success ( $ m ) research and development ( $ m ) general and administrative ( $ m ) percentages indicate expenses as a percentage of total revenue sales , marketing and customer success sales , marketing and customer success expense includes compensation costs , variable sales commissions , travel-related expenses , advertising and marketing materials , public relations costs , variable reseller commissions and allocated depreciation , facilities and it support costs . we see a large market opportunity and continue to make investments to improve market coverage and drive sales effectiveness , which is a component of our four-point growth strategy . we have also implemented software tools to enhance our digital footprint and drive lead generation . sales , marketing and customer success expenses increased by $ 31.3 million , or 16.2 % . the increases in dollars and as a percentage of total revenue were primarily driven by the following : + increase in compensation costs of $ 21.2 million primarily associated with our efforts beginning in the second half of 2018 to increase our direct sales force as well as incremental headcount associated with the inclusion of yourcause . as a result , our direct sales headcount increased 8 % during 2019 .
| results of operations reportable segment we report our operating results and financial information in one operating and reportable segment . see note 16 of our consolidated financial statements in this report for additional information . comparison of 2019 to 2018 for information regarding the comparison of 2018 to 2017 , please refer to part ii item 7 of our annual report on form 10-k for the year ended december 31 , 2018 filed with the sec on february 20 , 2019. acquisitions during 2019 and 2018 , we acquired companies that provided us with strategic opportunities to expand our tam and share of the philanthropic giving market through the integration of complementary solutions and services to serve the changing needs of our customers . the following are the companies we acquired and their respective acquisition dates : yourcause holdings , llc ( `` yourcause '' ) โ january 2 , 2019 ; and reeher llc ( `` reeher '' ) โ april 30 , 2018 we have included the results of operations of acquired companies in our consolidated results of operations from the date of their respective acquisition . we determined that the yourcause and reeher acquisitions were not material business combinations ; therefore , revenue and earnings since the acquisition date and pro forma information are not required or presented . see note 3 to our consolidated financial statements in this report for a summary of these acquisitions . replace_table_token_35_th blackbaud , inc. revenue and cost of revenue recurring revenue ( $ m ) cost of revenue ( $ m ) gross profit ( $ m ) and gross margin ( % ) yoy growth ( % ) yoy growth ( % ) recurring revenue is comprised of fees for the use of our subscription-based software solutions , which includes providing access to cloud solutions , hosting services , online training programs , subscription-based analytic services , such as donor acquisitions and data enrichment , and payment services .
| 4,650 |
story_separator_special_tag the following discussion and analysis should be read in conjunction with โ selected financial data โ and our financial statements and related notes included elsewhere in this annual report . this discussion and analysis and other parts of this annual report contain forward-looking statements based upon current beliefs , plans and expectations that involve risks , uncertainties and assumptions , such as statements regarding our plans , objectives , expectations , intentions and projections . our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors , including those set forth under โ risk factors โ and elsewhere in this annual report . you should carefully read the โ risk factors โ section of this annual report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements . please also see the section entitled โ forward-looking statements. โ overview chimerix is a development-stage biopharmaceutical company dedicated to accelerating the advancement of innovative medicines that make a meaningful impact in the lives of patients living with cancer and other serious diseases . the two clinical-stage development programs are dociparstat sodium ( dstat ) and brincidofovir ( bcv ) . dociparstat sodium is a potential first-in-class glycosaminoglycan compound derived from porcine heparin that has low anticoagulant activity but retains the ability to inhibit activities of several key proteins implicated in the retention and viability of aml blasts and leukemic stem cells in the bone marrow during chemotherapy ( e.g. , cxcl12 , selectins , hmgb1 , elastase ) . mobilization of aml blasts and leukemic stem cells from the bone marrow has been associated with enhanced chemosensitivity and may be a primary mechanism accounting for the observed increases in event free survival ( efs ) and overall survival ( os ) in a phase 2 study with dstat versus placebo . data from a randomized phase 2 study suggests that dstat may also accelerate platelet recovery post chemotherapy via inhibition of platelet factor 4 , a negative regulator of platelet production that impairs platelet recovery following chemotherapy . bcv is a lipid conjugate viral dna polymerase inhibitor in development as a medical countermeasure for smallpox . we expect to continue our evaluation of external innovation in order to license , acquire or otherwise gain access to molecules that further broaden our pipeline of investigational agents in cancer or other serious diseases . recent developments dociparstat for first-line acute myeloid leukemia ( aml ) in july 2019 , we entered into a license and development agreement with cantex pharmaceuticals , inc. ( cantex ) pursuant to which we acquired exclusive worldwide rights to develop and commercialize dstat , for any and all uses . dstat is a potential first-in-class glycosaminoglycan compound derived from porcine heparin that has low anticoagulant activity , but retains the ability to inhibit activities of several key proteins implicated in the retention and viability of aml blasts and leukemic stem cells in the bone marrow during chemotherapy ( e.g. , cxcl12 , selectins , hmgb1 , elastase ) . under the terms of the license agreement , we will be responsible for , and bear the future costs of , worldwide development and commercialization of dstat . in consideration for the license rights , we made an upfront cash payment of $ 30.0 million and issued 10,000,000 shares of our common stock to cantex . the license agreement obligates us to pay cantex regulatory milestone payments of up to $ 202.5 million upon receipt of product approvals in the united states , the european union and japan , and sales milestone payments of up to $ 385.0 million upon achievement of specified net sales levels . we also agreed to pay cantex tiered royalties based on percentages of net sales beginning at 10 % and not to exceed the high teens . dstat has received fast track and orphan drug designations from the u.s. food and drug administration ( fda ) for the treatment of aml . earlier this year , we conducted an end of phase 2 meeting with the fda related to the company 's development of dstat in aml . following that meeting , we incorporated fda 's feedback on key elements of a proposed phase 3 clinical trial and have since submitted a full protocol for final fda review . we plan to initiate a phase 3 trial mid- year of dstat in combination with standard chemotherapy ( cytarabine plus anthracycline , or โ 7+3 โ ) in newly diagnosed aml patients . the proposed phase 3 trial will be a randomized , blinded trial of approximately 570 newly diagnosed aml patients . the trial will include patients 60 years of age and older who have an intermediate or adverse genetic risk profile . it will also include patients between 18 and 60 years old who have an adverse genetic risk profile . patients will be randomized 1:1 to receive dstat in combination with standard cytarabine plus anthracycline ( 7+3 ) induction and cytarabine consolidation chemotheraphy or will receive standard of care ( 7+3 ) induct 49 ion and consolidation chemotherapy alone . patients with flt-3 mutations will be allowed in the study and will be eligible to receive midostaurin . the primary endpoint of the proposed trial will be overall survival ( os ) . in addition , the fda has indicated that event-free survival ( efs ) using complete response with hematologic recovery to define induction success ( cr ) , is acceptable as an endpoint for regulatory approval . other endpoints to be evaluated in the proposed trial include : minimal residual disease ( mrd ) , relapse-free survival ( rfs ) , time to hematologic recovery , and induction response . in order to supplement the previously reported data from pilot and phase 2 studies and provide additional evidence of dstat 's mechanism of action , the proposed phase 3 trial includes an early assessment of comparative cr and mrd rates among the first 80 evaluable patients . story_separator_special_tag in september 2019 , we entered into a license agreement with symbio for worldwide rights to develop , manufacture and commercialize bcv in all human indications , excluding the use for treatment of orthopoxviruses , including smallpox . under the contract , we received a $ 5.0 million upfront payment in october 2019 and could receive up to an additional $ 180.0 million in potential regulatory and commercial milestones . as of december 31 , 2019 , we recognized $ 4.9 of revenue under this agreement . the remainder of the upfront payment will be recognized when the inventory transfer and technical assistance performance obligations are complete , which is expected to occur in the first half of 2020. the revenue from regulatory and commercial milestones and royalties from net sales will be recognized upon occurrence of the triggering events . in the future , we may generate revenue from a combination of product sales , license fees , milestone payments and royalties from the sales of products developed under licenses of our intellectual property . we expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing and amount of license fees , milestone and other payments , and the amount and timing of payments that we receive upon the sale of our products , to the extent any are successfully commercialized . if we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval for them , our ability to generate future revenue , and our results of operations and financial position , would be materially adversely affected . research and development expenses since our inception , we have focused our resources on our research and development activities , including conducting preclinical studies and clinical trials , manufacturing development efforts and activities related to regulatory filings for our product candidates . we recognize research and development expenses as they are incurred . costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors . we can not determine with certainty the duration and completion costs of the current or future clinical studies of our product candidates . our research and development expenses consist primarily of : fees paid to consultants and contract research organizations ( cros ) , including in connection with our preclinical and clinical trials , and other related clinical trial fees , such as for investigator grants , patient screening , laboratory work , clinical trial database management , clinical trial material management and statistical compilation and analysis ; salaries and related overhead expenses , which include stock option , restricted stock unit ( rsu ) and employee stock purchase program compensation and benefits , for personnel in research and development functions ; payments to third-party manufacturers , which produce , test and package our drug substance and drug product ( including continued testing of process validation and stability ) ; costs related to legal and compliance with regulatory requirements ; and license fees for and milestone payments related to licensed products and technologies . 51 the table below summarizes our research and development expenses for the periods indicated ( in thousands ) . our direct research and development expenses consist primarily of external costs , such as fees paid to investigators , consultants , central laboratories and cros , in connection with our clinical trials , preclinical development , and payments to third-party manufacturers of drug substance and drug product . we typically use our employee and infrastructure resources across multiple research and development programs . replace_table_token_2_th the successful development of product candidates is highly uncertain . at this time , we can not reasonably estimate the nature , timing or costs of the efforts that will be necessary to complete the development of any product candidates or the period , if any , in which material net cash inflows from any product candidates may commence . this is due to the numerous risks and uncertainties associated with our business , as detailed in part i , item ia , โ risk factors โ in this annual report on form 10-k and in our other filings with the sec . dociparstat sodium ( dstat ) in july of 2019 , we acquired dstat from cantex pharmaceuticals . in connection with the transaction we recorded a total of $ 65.0 million in expense . this is comprised of a $ 30.0 million upfront payment , $ 34.9 million in stock-based compensation and $ 0.1 million in transaction costs . as we continue to focus on the development of dstat for first-line treatment of aml patients , we expect research and development expense to increase . we plan to initiate a phase 3 trial in aml in mid-2020 subject to finalization of the protocol with the fda . brincidofovir we are developing bcv for the treatment of smallpox . under our cost-plus-fixed fee barda contract and additional costs we are not seeking reimbursement for from barda , we incurred expense in connection with the development of orthopoxvirus animal models , the demonstration of efficacy and pharmacokinetics of bcv in the animal models , the conduct of an open label clinical safety study for subjects with dna viral infections , and the manufacture and process validation of bulk drug substance and bcv 100 mg tablets . in addition , we have incurred additional supportive costs for the development of bcv for smallpox that we are not seeking reimbursement for from barda .
| results of operations comparison of the years ended december 31 , 2019 and december 31 , 2018 the following table summarizes our results of operations for the years ended december 31 , 2019 and december 31 , 2018 , together with the changes in those items in dollars and percentages ( in thousands , except percentages ) : replace_table_token_6_th * not meaningful or not calculable revenue for the year ended december 31 , 2019 , contract revenue increased to $ 7.6 million compared to $ 7.2 million for the year ended december 31 , 2018 . the increase of $ 0.4 million , or 5.4 % , was related to an increase in reimbursable expenses associated with our contract with barda . license revenue was $ 4.9 million for the year ended december 31 , 2019 due to our licensing agreement with symbio . research and development expenses for the year ended december 31 , 2019 , our research and development expenses decreased to $ 42.3 million compared to $ 55.2 million for the year ended december 31 , 2018 . the decrease of $ 13.0 million , or 23.4 % , was primarily related to the following : a decrease of $ 8.4 million related to the discontinuation of both the oral and iv bcv development programs and cmx521 for norovirus ; a decrease of $ 2.0 million related to compensation expenses as headcount was reduced as part of the company 's restructuring activities in may 2019 ; a decrease of $ 1.9 million in oral brincidofovir smallpox program expenses ; and a decrease of $ 1.5 million in legal fees and operational expenses ; offset by an increase of $ 1.2 million in dstat research and development expenses to initiate and conduct animal studies and to develop and manufacture clinical trial material . general and administrative expenses for the year ended december 31 , 2019 , our general and administrative expenses decreased to $ 21.2
| 4,651 |
the facility will primarily serve as an additional manufacturing location for story_separator_special_tag you should read the following discussion and analysis of financial condition and results of operations together with our consolidated financial statements and the related notes included elsewhere in this form 10-k. this discussion and analysis contains forward-looking statements about our business and operations , 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 we currently anticipate as a result of many important factors , including the factors we describe under โ risk factors โ and elsewhere in this form 10-k. overview we are a medical device company focused on developing and commercializing interventional treatment systems for vascular disease . our primary products , the stealth 360ยฐ pad system ( the โ stealth 360ยฐ โ ) , the diamondback 360ยฐ pad system ( the โ diamondback 360ยฐ โ ) , and the diamondback predator 360ยฐ pad system ( the โ predator 360ยฐ โ ) are catheter-based platforms capable of treating a broad range of plaque types in leg arteries both above and below the knee and address many of the limitations associated with existing treatment alternatives . we also are pursuing approval of our products for coronary use . we refer to the stealth 360ยฐ , diamondback 360ยฐ , and the predator 360ยฐ collectively in this report as the โ pad systems. โ we were incorporated as replidyne , inc. in delaware in 2000. on february 25 , 2009 , replidyne , inc. completed its business combination with cardiovascular systems , inc. , a minnesota corporation ( โ csi-mn โ ) , in accordance with the terms of the agreement and plan of merger and reorganization , dated as of november 3 , 2008 ( the โ merger agreement โ ) . pursuant to the merger agreement , csi-mn continued after the merger as the surviving corporation and a wholly-owned subsidiary of replidyne . replidyne changed its name to cardiovascular systems , inc. ( โ csi โ ) and csi-mn merged with and into csi , with csi continuing after the merger as the surviving corporation . these transactions are referred to herein as the โ merger. โ replidyne was a biopharmaceutical company focused on discovering , developing , in-licensing and commercializing anti-infective products . csi was incorporated in minnesota in 1989. from 1989 to 1997 , we engaged in research and development on several different product concepts that were later abandoned . since 1997 , we have devoted substantially all of our resources to the development of the pad systems and since 2007 , to obtaining approval for a coronary application of our orbital technology . from 2003 to 2005 , we conducted numerous bench and animal tests in preparation for application submissions to the fda . we initially focused our testing on providing a solution for coronary in-stent restenosis , but later changed the focus to peripheral artery disease , or pad . in 2006 , we obtained an investigational device exemption from the fda to conduct our pivotal oasis clinical trial , which was completed in january 2007. the oasis clinical trial was a prospective 20-center study that involved 124 patients with 201 lesions . in august 2007 , the fda granted us 510 ( k ) clearance for the use of the diamondback 360ยฐ as a therapy in patients with pad . we commenced commercial introduction of the diamondback 360ยฐ in the united states in september 2007. we were granted 510 ( k ) clearance of the predator 360ยฐ in march 2009 and stealth 360ยฐ in march 2011. we market the pad systems in the united states through a direct sales force and expend significant capital on our sales and marketing efforts to expand our customer base and utilization per customer . we assemble at our facilities the saline infusion pump used with our stealth 360ยฐ product and the single-use catheter used in the pad systems with components purchased from third-party suppliers , as well as with components manufactured in-house . supplemental products are purchased from third-party suppliers . we have developed modified versions of the stealth 360ยฐ and diamondback 360ยฐ to treat coronary arteries . a coronary application requires us to conduct a clinical trial and file a premarket application , or pma , and obtain approval from the fda . on march 15 , 2013 , we completed submission of our pma application to the fda for our orbital atherectomy system to treat calcified coronary arteries . as of june 30 , 2013 , we had an accumulated deficit of $ 203.3 million . we expect our losses to continue as we invest in sales , marketing , medical education , clinical studies and product research and development for our next phase of growth in the peripheral market and preparation for a potential coronary application . to date , we have financed our operations primarily from the issuance of common and preferred stock , convertible promissory notes , and debt . 32 financial overview revenues . we derive substantially all of our revenues from the sale of pad systems and other ancillary products . the pad systems each use a disposable , single-use , low-profile catheter that travels over our proprietary viperwire guidewire . the electric powered stealth 360ยฐ pad system uses a saline infusion pump as a power supply for the operation of the catheter , while the air powered diamondback 360ยฐ and predator 360ยฐ pad systems use an external control unit that powers the system . our ancillary products include the viperslide lubricant and vipertrack radiopaque tape . we also have an exclusive distribution agreement with asahi to market its peripheral guide wire line in the united states . cost of goods sold . we assemble the single-use catheter with components purchased from third-party suppliers , as well as with components manufactured in-house . the infusion pump and guidewires are purchased from third-party suppliers . our cost of goods sold consists primarily of raw materials , direct labor , and manufacturing overhead . story_separator_special_tag we have inventories that are principally comprised of capitalized direct labor and manufacturing overhead , raw materials and components , and finished goods . due to the technological nature of our products , there is a risk of obsolescence to changes in our technology and the market , which is impacted by technological developments and events . accordingly , we write down our inventories as we become aware of any situation where the carrying amount exceeds the estimated realizable value based on assumptions about future demands and market conditions . the evaluation includes analyses of inventory levels , expected product lives , product at risk of expiration , sales levels by product and projections of future sales demand . debt conversion option . the fair value of the debt conversion option is related to the loan and security agreement with partners for growth and has been included as a component of debt conversion option and other assets on our balance sheet . the monte carlo option pricing model used to determine the value of the debt conversion option includes various inputs including historical volatility , stock price simulations , and the assessed behavior of us and partners for growth based on those simulations . stock-based compensation . we recognize stock-based compensation expense in an amount equal to the fair value of share-based payments computed at the date of grant . the fair value of all restricted stock awards and units are expensed in the consolidated statements of operations over the related vesting period . all restricted stock awards and units we have granted become exercisable over periods established at the date of grant . the fair value of each restricted stock award and unit was equal to the fair market value of our common stock at the date of grant , as determined by management and the board of directors . legal proceedings . in accordance with fasb guidance , we record a liability in our consolidated financial statements related to legal proceedings when a loss is known or considered probable and the amount can be reasonably estimated . if the reasonable estimate of a known or probable loss is a range , and no amount within the range is a better estimate than any other , the minimum amount of the range is accrued . if a loss is possible , but not known or probable , and can be reasonably estimated , the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements . in most cases , significant judgment is required to estimate the amount and timing of a loss to be recorded . 34 story_separator_special_tag the year ended june 30 , 2013 was $ 24.0 million , compared to $ 16.8 million for the year ended june 30 , 2012 . our net loss has increased as a result of increased operating expenses , partially offset by higher gross profit . comparison of fiscal year ended june 30 , 2012 with fiscal year ended june 30 , 2011 revenues . revenues increased by $ 3.7 million , or 4.7 % , from $ 78.8 million for the year ended june 30 , 2011 to $ 82.5 million for the year ended june 30 , 2012. this increase was primarily attributable to a $ 3.7 million , or 5.4 % , increase in average selling prices of pad systems during the year ended june 30 , 2012 , compared to the year ended june 30 , 2011. cost of goods sold . cost of goods sold increased by $ 2.9 million , or 18.1 % , from $ 16.3 million for the year ended june 30 , 2011 to $ 19.2 million for the year ended june 30 , 2012. these amounts represent the cost of materials , labor and overhead for single-use catheters , guidewires , control units , pumps , and other supplemental products . the decrease in gross margin from 79.3 % during the year ended june 30 , 2011 to 76.7 % for the year ended june 30 , 2012 was primarily due to a higher mix of stealth 360ยฐ sales , which currently carry higher unit costs than its predecessor products due to limited initial component purchasing volumes , and to reserves for inventory transitions . also , the addition of our second manufacturing facility in texas for future production capacity temporarily increased production costs , but we believe will enhance efficiencies over time . cost of goods sold for the years ended june 30 , 2012 and 2011 includes $ 296,000 and $ 312,000 , respectively , for stock-based compensation . selling , general and administrative expenses . selling , general , and administrative expense increased by $ 4.0 million , or 6.4 % , from $ 62.4 million for the year ended june 30 , 2011 to $ 66.4 million for the year ended june 30 , 2012. our selling , general and administrative expenses for the year ended june 30 , 2012 have increased due to the expansion of our marketing organization , increased variable compensation , and increased medical education programs , partially offset by lower stock-based compensation . selling , general , and administrative expenses for the years ended june 30 , 2012 and 2011 include $ 4.4 million and $ 5.6 million , respectively , for stock-based compensation . 36 research and development expenses . research and development expenses increased by $ 2.4 million , or 27.2 % , from $ 8.9 million for the year ended june 30 , 2011 , to $ 11.4 million for the year ended june 30 , 2012. research and development expenses relate to specific projects to improve our product or expand into new markets , such as the development of an electric version of the pad systems , shaft designs , crown designs , and pad and coronary clinical trials . the increase in clinical expenses related to advancement of the orbit ii coronary trial , partially offset by lower stock-based compensation .
| results of operations the following table sets forth , for the periods indicated , our results of operations expressed as dollar amounts ( in thousands ) , and , for certain line items , the changes between the specified periods expressed as percent increases or decreases : replace_table_token_3_th comparison of fiscal year ended june 30 , 2013 with fiscal year ended june 30 , 2012 revenues . revenues increased by $ 21.4 million , or 26.0 % , from $ 82.5 million for the year ended june 30 , 2012 to $ 103.9 million for the year ended june 30 , 2013 . this increase was primarily attributable to an $ 18.2 million , or 25.0 % , increase in the number of pad systems sold and a $ 3.2 million , or 33.6 % , increase in sales of supplemental and other revenue during the year ended june 30 , 2013 , compared to the year ended june 30 , 2012 . currently , all of our revenues are in the united states ; however , we may potentially sell internationally in the future . we expect our revenue to increase as we continue to increase the number of physicians using the devices and the usage per physician as we continue to focus on physician education programs , introduce new and improved products , and generate clinical data . cost of goods sold . cost of goods sold increased by $ 5.2 million , or 26.9 % , from $ 19.2 million for the year ended june 30 , 2012 , to $ 24.4 million for the year ended june 30 , 2013 . these amounts represent the cost of materials , labor and overhead for single-use catheters , guidewires , control units , pumps , and other supplemental products .
| 4,652 |
as of december 31 , 2013 , of the total 46 facilities , we owned and operated 26 facilities , leased and operated nine facilities , and managed 11 facilities . as part of our strategy to focus on the growth of skilled nursing facilities , we decided in the fourth quarter of 2011 to exit the home health business ; and accordingly , this business is reported as discontinued operations . we sold the assets of the home health business in 2012. additionally , in the fourth quarter of 2012 we entered into an agreement to sell six assisted living facilities located in ohio and executed a sublease arrangement to exit the skilled nursing business in jeffersonville , georgia . the six ohio assisted living facilities and the jeffersonville , georgia skilled nursing facility have an aggregate of 313 units in service . these seven facilities are also reported as discontinued operations . we sold the assets of four of the six ohio assisted living facilities in december 2012 , one in february 2013 , and the other in may 2013. during the second quarter of 2013 , the company executed two sublease arrangements to exit the skilled nursing business in tybee island , georgia . the two skilled nursing facilities had an aggregate of 135 units in service . a sales listing agreement was executed for the 105-unit assisted living facility located in hoover , alabama , which is a consolidated variable interest entity , during the fourth quarter of 2013. the two skilled nursing facilities located in tybee island , georgia and the assisted living facility located in hoover , alabama are reported as discontinued operations ( see note 10 - discontinued operations ) . as further discussed in the footnotes to the consolidated financial statements included in this annual report ( see note 14 and note 19 to our consolidated financial statements included in part ii , item 8. , `` financial statements and supplementary data . `` ) , effective august 1 , 2011 entities ( the `` oklahoma owners '' ) controlled by christopher brogdon ( vice chairman of the board of directors , owner of greater than 5 % of the outstanding common stock and former chief acquisition officer of the company ) and his spouse , connie brogdon ( related parties to the company ) , acquired five skilled nursing facilities located in oklahoma ( the `` oklahoma facilities '' ) . the company entered into a management agreement with the oklahoma owners pursuant to which a wholly-owned subsidiary of the company supervises the management of the oklahoma facilities for a monthly fee equal to 5 % of the monthly gross revenues of the oklahoma facilities . upon acquisition , the company concluded it was the primary beneficiary of the oklahoma owners and pursuant to financial accounting standards board ( `` fasb '' ) accounting standards codification ( `` asc '' ) topic 810-10 , consolidationโoverall , consolidated the oklahoma owners in its 2011 consolidated financial statements . during the process of finalizing the 2012 financial statements , the company reassessed its prior conclusion that it should consolidate the oklahoma owners . in the reassessment process , the company concluded that it should not have consolidated the oklahoma owners . the company has deconsolidated the oklahoma owners effective january 1 , 2012 and the balance sheet , operations and cash flows of the oklahoma owners are not included in the company 's consolidated financial statements subsequent to that date . the company further concluded that including the oklahoma owners in its 2011 financial statements was not material to such consolidated financial statements and therefore no adjustments have been made to the previously issued 2011 financial statements . note 14 , variable interest entities , in the consolidated financial statements included in part ii , item 8. , `` financial statements and supplementary data , '' includes summarized financial statements of the oklahoma owners for 2011 that are included in the company 's 2011 consolidated financial statements . liquidity for the year ended and as of december 31 , 2013 , we had a net loss of $ 13.4 million and negative working capital of $ 15.6 million . at december 31 , 2013 , we had $ 19.4 million in cash and cash equivalents and $ 160.3 million in indebtedness , including current maturities and discontinued operations , of which $ 32.2 million is current debt ( including the company 's outstanding convertible promissory notes with a principal amount in the aggregate of $ 4.5 million and $ 6.9 million , which mature march 31 , 2014 and august 29 , 2014 , respectively , and approximately $ 6.0 million of mortgage notes included in liabilities of variable interest entity held for sale ) . our ability to achieve profitable operations is dependent on continued growth in revenue and controlling costs . we anticipate that scheduled debt service ( excluding approximately $ 6.4 million of bullet maturities due july 2014 that the company believes will be refinanced on a longer term basis and $ 6.9 million in outstanding convertible promissory notes that mature august 29 , 2014 but including principal and interest ) , will total approximately $ 21.4 million and cash outlays for 32 capital expenditures , dividends on our series a preferred stock and income taxes will total approximately $ 6.5 million for the year ending december 31 , 2014 . we routinely have ongoing discussions with existing and potential new lenders to refinance current debt on a longer term basis and , in recent periods , have refinanced shorter term acquisition debt , including seller notes , with traditional longer term mortgage notes , some of which have been executed under government guaranteed lending programs . story_separator_special_tag the company deposited $ 0.4 million of 33 earnest money escrow deposits in february 2013. on june 1 , 2013 , the purchase and sale agreement was terminated due to the failure of the transaction to close by may 31 , 2013. on august 1 , 2013 , the company entered into a settlement agreement regarding the return of the $ 0.4 million previously deposited earnest money escrow deposits . pursuant to the agreement , the previously deposited earnest money escrow deposits were released and distributed , $ 0.3 million to the company and $ 0.1 million to avalon . divestitures as part of the company 's strategy to focus on the growth of its skilled nursing segment , the company decided in the fourth quarter of 2011 to exit the home health segment of the business and sold the assets of the home health business in 2012. in the fourth quarter of 2012 , the company continued this strategy and entered into an agreement to sell six assisted living facilities located in ohio . the company also entered into a sublease arrangement in the fourth quarter of 2012 to exit the operations of a skilled nursing facility in jeffersonville , georgia . on june 12 , 2013 , the company executed two sublease agreements to exit the skilled nursing business in tybee island , georgia effective june 30 , 2013 relating to two facilities . a sales listing agreement was executed for the 105-unit assisted living facility located in hoover , alabama , which is a consolidated variable interest entity , during the fourth quarter of 2013. the results of operations and cash flows for the home health business , the six ohio assisted living facilities , the jeffersonville , georgia skilled nursing facility , the two facilities in tybee island , georgia , and the assisted living facility located in hoover , alabama are reported as discontinued operations in 2013 and 2012. the following table summarizes the activity of discontinued operations for the years ended december 31 , 2013 and 2012 : replace_table_token_7_th segments consistent with our strategy to focus on the growth of our skilled nursing facilities and in light of our sale of the majority of our assisted living facilities ( the completed sale of four of our assisted living facilities located in ohio in fourth quarter of 2012 ) , beginning in the fourth quarter of 2012 , we only evaluate operating performance for our 43 skilled nursing facilities , our remaining two assisted living facilities and one independent living facility on a combined basis . through the third quarter of 2012 , we previously evaluated our operations under three segments : skilled nursing facilities ( `` snf '' ) , assisted living facilities ( `` alf '' ) , and corporate & other . accordingly , management discussion and analysis on a segment basis is not included herein . primary performance indicators we focus on two primary indicators in evaluating our financial performance . those indicators are facility average occupancy and patient mix . facility average occupancy is important as higher occupancy generally leads to higher revenues . in addition , concentrating on increasing the number of medicare covered admissions ( `` the patient mix '' ) helps in increasing revenues . we include commercial insurance covered admissions that are reimbursed at the same level as those covered by medicare in our medicare utilization percentages and analysis . we also evaluate `` same facilities '' and `` recently acquired facilities '' results . same facilities represent those owned and leased facilities we began to operate prior to january 1 , 2012 . recently acquired facilities results represents those owned and leased facilities we began to operate subsequent to january 1 , 2012 . the tables below reflect our 2013 and 2012 patient care revenue key performance indicators for our skilled nursing facilities excluding discontinued operations . excluding discontinued operations , our assisted living facilities represent approximately 1 % of our total consolidated revenues in both 2013 and 2012 . we continue our work towards maximizing the number of patients covered by medicare where our operating margins are higher . 34 snf average occupancy replace_table_token_8_th snf patient mix replace_table_token_9_th medicare reimburses our skilled nursing facilities under a prospective payment system ( โ pps โ ) for certain inpatient covered services . under the pps , facilities are paid a predetermined amount per patient , per day , based on the anticipated costs of treating patients . the amount to be paid is determined by classifying each patient into a resource utilization group ( โ rug โ ) category that is based upon each patient 's acuity level . in october 2010 , the number of rug categories was expanded from 53 to 66 as part of the implementation of the rugs iv system and the introduction of a revised and substantially expanded patient assessment tool called the minimum data set , version 3.0. on july 29 , 2011 , the centers for medicare & medicaid services ( โ cms โ ) issued a final rule providing for , among other things , a net 11.1 % reduction in pps payments to skilled nursing facilities for cms 's fiscal year 2012 ( which began october 1 , 2011 ) as compared to pps payments in cms 's fiscal year 2011 ( which ended september 30 , 2011 ) . the 11.1 % reduction is on a net basis , after the application of a 2.7 % market basket increase , and reduced by a 1.0 % multi-factor productivity ( `` mfp '' ) adjustment required by the patient protection and affordable care act of 2010 ( โ ppaca โ ) . the final cms rule also adjusted the method by which group therapy is counted for reimbursement purposes , and changed the timing in which patients who are receiving therapy must be reassessed for purposes of determining their rug category .
| results of operations year ended december 31 , 2013 and 2012 continuing operations : the following table sets forth , for the periods indicated , statement of operations items and the amount and percentage of change of these items . the results of operations for any particular period are not necessarily indicative of results for any future period . the following data should be read in conjunction with our consolidated financial statements and the notes thereto , which are included herein . 40 replace_table_token_12_th year ended december 31 , 2013 compared to year ended december 31 , 2012 same and recently acquired facility patient care revenue analysis : replace_table_token_13_th 41 replace_table_token_14_th replace_table_token_15_th replace_table_token_16_th ( 1 ) includes assisted living and skilled nursing facilities ; excludes managed facilities . ( 2 ) same facilities results represents those owned and leased facilities we began to operate prior to january 1 , 2012 . ( 3 ) recently acquired facilities results represent those owned and leased facilities we began to operate subsequent to january 1 , 2012. patient care revenues โtotal patient care revenues increased by $ 28.8 million , or 15 % , to $ 220.8 million for the year ended december 31 , 2013 , compared with $ 191.9 million for the year ended december 31 , 2012 . the $ 28.8 million increase is primarily due to an increase in skilled patient mix percentage from 14.2 % to 14.4 % , increases in average medicare reimbursement rate per patient day from $ 436.22 to $ 442.62 , or 1.5 % , partially offset by the decrease in facility occupancy rate of 79.3 % to 76.9 % , and reductions in average medicaid reimbursement rates per patient day of $ 161.82 to $ 159.11 , or ( 1.7 ) % , compared to 2012 .
| 4,653 |
f- 17 note 8. treasury stock during 2012 , the board of directors authorized a stock repurchase program whereby the company story_separator_special_tag the following is a discussion of the company 's financial condition and results of operations comparing the calendar years ended december 31 , 2020 and 2019. this section should be read in conjunction with the company 's consolidated financial statements and the notes thereto that are incorporated herein by reference and the other financial information included herein and the notes thereto . story_separator_special_tag style= '' vertical-align : top '' > - suspended share repurchases . the terms of the company 's ppp loans restrict share repurchases until 12 months have passed after full repayment . - did not renew the leases on three new york city model apartments when the terms ended in june and august , 2020 . - did not renew the lease on the company 's new york city office , and required all new york based staff to work remotely . - suspended efforts to fill two highly compensated executive roles following the resignation of the company 's chief executive officer and vice president in early 2020 . - negotiated discounts with various vendors and service providers . - effective july 1 , 2020 , implemented layoffs of approximately 36 % of its staff , including employees at each of the company 's five offices , and effected temporary salary reductions for the remaining staff . if the quarantines and limitations on non-essential work are re-implemented , or persist for an extended period , the company may need to implement additional cost savings measures . the consolidated appropriations act , 2021 , which includes the covid-related tax relief act of 2020 and the taxpayer certainty and disaster tax relief act of 2020 , was passed and signed into law the last week of 2020. the many provisions of the legislation include items such as expenses associated with forgiven ppp loans , business meals deductions , individual tax rebates and unemployment benefits . the company is currently evaluating the impact of this new legislation . brexit on january 31 , 2020 , the united kingdom ( โ uk โ ) withdrew from the european union ( โ eu โ ) . effective january 1 , 2021 , new visa requirements and other restrictions limit the freedom of movement for british workers to travel to the eu for work , which may impact the ability of the company 's london office to book modeling photoshoots that take place in the european union . it may also be more difficult , in the future , for talent represented by wilhelmina london , but based in the eu , to travel to london and other parts of the uk for photoshoots and campaign work . new immigration sponsorship or visa requirements could discourage fashion brands , and other clients , from booking as frequently in london , which has historically been an international fashion and modeling hub , and could impact the revenue of the company 's london operations . 12 results of operations of the company for the year ended december 31 , 2020 compared to year ended december 31 , 2019 in addition to net income , the key financial indicators that the company reviews to monitor its business are revenues , model costs , operating expenses and cash flows . the company analyzes revenue by reviewing the mix of revenues generated by the different boards , by geographic locations and from significant clients . wilhelmina 's primary sources of revenue include : ( i ) revenues from principal relationships where the gross amount billed to the client is recorded as revenue when earned and collectability is reasonably assured ; and ( ii ) separate service charges , paid by clients in addition to the booking fees , which are calculated as a percentage of the models ' booking fees and are recorded as revenues when earned and collectability is reasonably assured . see โ critical accounting policies - revenue recognition. โ wilhelmina provides professional services . therefore , salary and service costs represent the largest part of the company 's operating expenses . salary and service costs are comprised of payroll and related costs and travel , meals and entertainment ( โ t & e โ ) to deliver the company 's services and to enable new business development activities . analysis of consolidated statements of operations replace_table_token_3_th service revenues the company 's service revenues fluctuate in response to its clients ' willingness to spend on advertising and the company 's ability to have the desired talent available . in 2020 , the covid-19 pandemic had a material impact on revenues , as many customers cancelled or postponed bookings while non-essential business activities were temporarily barred in the cities where wilhelmina operates . service revenues decreased 44.9 % for the year ended december 31 , 2020 , when compared to the year ended december 31 , 2019 , primarily due to cancelled bookings resulting from covid-19 , as well as the closure of the wilhelmina studios division in the fourth quarter of 2019 and the closure of the hair and makeup artist division in the second half of 2020. license fees and other income license fees and other income include franchise revenues from independently owned model agencies that use the wilhelmina trademark and various services provided by the company . license fees decreased by 50.0 % for the year ended december 31 , 2020 , when compared to the year ended december 31 , 2019 , primarily due to the timing of income from licensing agreements and the closure of wilhelmina 's dubai licensee in 2020 . 13 gross profit margin gross profit margins were unchanged for the year ended december 31 , 2020 , when compared to the year ended december 31 , 2019. salaries and service costs salaries and service costs consist of payroll and related costs and t & e required to deliver the company 's services to its clients and talent . story_separator_special_tag net cash used in operating activities of $ 2.0 million was primarily the result of net loss and decreases in amounts due to models , accounts payable and accrued liabilities , and lease liabilities , partially offset by decreases in accounts receivable and right of use assets . the $ 0.2 million cash used in investing activities was attributable to purchases of property and equipment , including software and computer equipment . the $ 0.6 million of cash used in financing activities was primarily attributable to receipt of $ 2.0 million of ppp loans , partially offset by $ 1.3 million principal payments on the company 's amegy bank term loans , and payments on finance leases . the company 's primary liquidity needs are for working capital associated with performing services under its client contracts and servicing its remaining term loan . generally , the company incurs significant operating expenses with payment terms shorter than its average collections on billings . the covid-19 pandemic has had an impact on the company 's cash flows during the year ended december 31 , 2020 , primarily due to reduced bookings and modeling jobs and delayed payments from customers . the company has taken actions to address the impact of covid-19 by reducing expenses and has the ability to implement more significant cost savings measures if the current limitations on non-essential work persist for an extended period . based on 2021 budgeted and year-to-date cash flow information , management believes that the company has sufficient liquidity to meet its projected operational expenses and capital expenditure requirements for the next twelve months . amegy bank credit agreement the company has a credit agreement with amegy bank which provides a $ 4.0 million revolving line of credit and previously provided up to a $ 3.0 million term loan which could be drawn through october 24 , 2016. amounts outstanding under the term loan reduce the availability under the revolving line of credit . the revolving line of credit is also subject to a borrowing base derived from 80 % of eligible accounts receivable ( as defined ) and the company 's minimum net worth covenant . the revolving line of credit bears interest at prime plus 0.50 % payable monthly . as of december 31 , 2020 , the company had a $ 0.2 million irrevocable standby letter of credit outstanding under the revolving line of credit and had additional borrowing capacity of $ 1.7 million . the revolving line of credit presently expires october 24 , 2022. on august 16 , 2016 , the company drew $ 2.7 million of the term loan and used the proceeds to fund the purchase of shares of its common stock in a private transaction . the term loan bore interest at 4.5 % per annum and was payable in monthly payments of interest only until november , 2016 , followed by 47 equal monthly payments of principal and interest computed on a 60-month amortization schedule . a final $ 0.6 million payment of principal and interest was paid on october 28 , 2020. on july 16 , 2018 , the company amended its credit agreement with amegy bank to provide for an additional term loan of up to $ 1.0 million that could be drawn by the company through july 12 , 2019 , for the purpose of repurchases of its common stock . the additional term loan is evidenced by a promissory note bearing interest at 5.15 % per annum and was payable in monthly installments of interest only through july 12 , 2019. thereafter , the note is payable in monthly installments sufficient to fully amortize the outstanding principal balance in 60 months with the balance of principal and accrued interest due on july 12 , 2023 . 15 amounts outstanding under the additional term loan reduce the availability under the company 's revolving line of credit with amegy bank . on august 1 , 2018 , the company drew $ 0.7 million of the additional term loan and used the proceeds to fund the purchase of 100,000 shares of its common stock in a private transaction . on december 12 , 2018 , the company drew $ 0.3 million of the additional term loan and used the proceeds to partially fund a purchase of 50,000 shares of its common stock in a private transaction . as of december 31 , 2020 , a total of $ 0.7 million was outstanding on the term loan . reduced outstanding accounts receivable available as collateral under the company 's credit agreement with amegy bank has limited access to additional financing . net losses in recent periods have also impacted compliance with the financial covenants under the amegy bank credit agreement , further impeding the company 's ability to obtain additional financing . on march 26 , 2020 , the company entered into a thirteenth amendment to credit agreement ( the โ thirteenth amendment โ ) with amegy bank . the thirteenth amendment amended the minimum net worth covenant to require the company to maintain tangible net worth ( as defined therein ) of $ 4.0 million , determined on a quarterly basis . under the thirteenth amendment , amegy bank also waived an existing default caused by the company 's failure to satisfy the old $ 20.0 million minimum net worth covenant as of december 31 , 2019. on may 12 , 2020 , the company entered into a fourteenth amendment to credit agreement ( the โ fourteenth amendment โ ) with amegy bank . the fourteenth amendment amended the line of credit to reduce the maximum borrowing capacity to $ 3.0 million .
| overview the company 's primary business is fashion model management and complementary business activities . the business of talent management firms , such as wilhelmina , depends heavily on the state of the advertising industry , as demand for talent is driven by digital , mobile , print and television advertising campaigns for consumer goods , e-commerce , and retail clients . wilhelmina believes it has strong brand recognition , which enables it to attract and retain top agents and talent to service a broad universe of clients . in order to take advantage of these opportunities and support its continued growth , the company will need to continue to successfully allocate resources and staffing in a way that enhances its ability to respond to new opportunities . the company continues to focus on tightly managing costs , recruiting top agents , and scouting and developing talent . although wilhelmina has a large and diverse client base , it is not immune to global economic conditions , such as the impact from the covid-19 pandemic . the company closely monitors economic conditions , client spending , and other industry factors and continually evaluates opportunities to increase the market share of its existing boards and further expand its geographic reach . there can be no assurance as to the effects on wilhelmina of future economic circumstances , technological developments , client spending patterns , client creditworthiness and other developments and whether , or to what extent , wilhelmina 's efforts to respond to them will be effective . covid-19 pandemic on march 11 , 2020 , the world health organization declared the outbreak of novel coronavirus ( covid-19 ) as a pandemic , which spread rapidly throughout the united states and the world . as the global impact of covid-19 continues , wilhelmina 's first priority has been to protect the health and safety of its employees and talent .
| 4,654 |
the amount of the unrecognized deferred tax liability for temporary differences related to story_separator_special_tag overview management 's discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes that appear elsewhere in this annual report on form 10-k. invacare is a multi-national company with integrated capabilities to design , produce and distribute durable medical equipment . the company makes products that help people move , breathe , rest and perform essential hygiene , and with those products the company supports people with congenital , acquired and degenerative conditions . the company 's products and solutions are important parts of care for people with a range of challenges , from those who are active and heading to work or school each day and may need additional mobility or respiratory support , to those who are cared for in residential care settings , at home and in rehabilitation centers . the company operates in facilities in north america , europe and asia/pacific , which are the result of dozens of acquisitions made over the company 's nearly forty-year history . some of these acquisitions have been combined into integrated operating units , while others remain relatively independent . strategy the company had a strategy to be a leading provider of durable medical equipment to providers in global markets by providing the broadest portfolio available . this strategy has not kept pace with certain reimbursement changes , competitive dynamics and company-specific challenges . since 2015 , the company has made a major shift in its strategy . the company has since been aligning its resources to produce products and solutions that assist customers and end-users with their most clinically complex needs . by focusing the company 's efforts to provide the best possible assistance and outcomes to the people and caregivers who use its products , the company aims to improve its financial condition for sustainable profit and growth . to execute this transformation , the company is undertaking a substantial three-phase multi-year transformation plan . transformation the company is executing a multi-year transformation to shift to its new strategy . this is expected to yield better financial results from the application of the company 's resources to products and solutions that provide greater healthcare value in clinically complex rehabilitation and post-acute care . the transformation is divided into the following three phases : phase one - assess and reorient increase commercial effectiveness ; shift and narrow the product portfolio ; align innovation resources to clinically complex solutions ; accelerate quality efforts with culture of quality excellence ; and develop and expand talent . phase two - build and align leverage commercial improvements ; optimize the business for cost and efficiency ; continue to improve quality systems ; launch new clinical product platforms ; and expand talent management and culture . phase three - grow lead in quality culture and operations excellence ; and grow above market . 2017 was a tremendous year of progress in the company 's transformation across the company . in quality milestones , the company had a major step forward with the consent decree . as of july 24 , 2017 , the company was able to sell without restrictions from its elyria , ohio power wheelchair manufacturing facility . the company launched over ten new products , including two products that move invacare into the world of informatics - the new invacare ยฎ tdx ยฎ sp2 power wheelchair with linx ยฎ technology and the invacare ยฎ platinum ยฎ mobile oxygen concentrator with connectivity . the company also made significant investments to begin to resize its infrastructure around its new business model , as reflected in the reduction of sg & a expense . 35 part ii management discussion & analysis overview in 2017 , europe overcame foreign currency headwinds from the beginning of the year and delivered solid performance . asia/pacific demonstrated continued improvement . na/hme continued to stabilize constant currency sequential net sales in the fourth quarter compared to the third quarter 2017 with growth in mobility and seating and respiratory products . the increase in respiratory sales was largely driven by promotional activities for the company 's new portable oxygen concentrator that launched in october 2017. the company will continue to make significant investments in its transformation , reduce sales in certain areas , refocus resources away from less accretive activities , and look at its global infrastructure for opportunities to drive efficiency . phase one investments are providing returns . the company expects to see improved results in 2018 with phase two actions continuing as the company continues to streamline operations , resize and reshape the organization , especially in north america , around its new business mix and size . by executing this strategy and making these operational improvements , the company expects long-term benefits for the company 's constituents . as a result of anticipated commercial effectiveness , the company expects increased working capital to support growth , especially of na/hme mobility and seating products , which would include investments in demonstration units and the working capital needed to support the extended quote-to-cash process for power wheelchairs . also , the company will make additional restructuring and capital investments as it continues to reshape the business over the course of 2018. the company expects spending on capital expenditures to increase from recent low levels to approximately $ 20,000,000 to $ 25,000,000 in 2018. as a result , the company anticipates its cash flow usage for 2018 will be similar to the cash used in 2017 , including consideration of seasonality of cash flow usage during the year . as noted previously , the company is gradually applying the transformation to the europe segment , which may slightly reduce the segment 's net sales as it begins to shift its product mix toward more clinically valued , higher-margin products . regarding the ipg segment , the company expects its new strategic selling approach in the capital selling environment to continue to take time to yield growth . story_separator_special_tag na/hme - na/hme net sales decreased 15.2 % in 2016 versus the prior year to $ 402,914,000 from $ 475,287,000 with foreign currency translation decreasing net sales by 0.2 of a percentage point . constant currency net sales decreased 15.0 % compared to the prior year . excluding the net sales impact of the divested gcm business , reported net sales decreased by 14.6 % and by 14.3 % on a constant currency basis . the decreases in constant currency net sales were primarily driven by reduced sales of lifestyle and respiratory products while mobility and seating declined slightly . ipg - ipg net sales decreased 26.1 % in 2016 over the prior year to $ 64,413,000 from $ 87,137,000 as foreign currency translation decreased sales by 0.2 of a percentage point . excluding the net sales impact of the divested rentals businesses , reported net sales decreased by 11.5 % and by 11.3 % on a constant currency basis . the decreases in constant currency net sales of the non-rentals businesses were driven by sales declines in all major product categories . asia/pacific - asia/pacific net sales increased 1.8 % in 2016 from the prior year to $ 45,346,000 from $ 44,542,000. foreign currency translation decreased net sales by 1.7 percentage points . constant currency net sales increased 3.5 % compared to 2015 due to net sales increases in the australia and new zealand distribution businesses and at the company 's subsidiary that produces microprocessor controllers . 41 part ii management discussion & analysis gross profit gross profit 2017 versus 2016 consolidated gross profit as a percentage of net sales was 27.9 % in 2017 as compared to 27.1 % in 2016 . excluding the impact of the divested gcm business , gross profit as a percentage of net sales for 2017 increased by 0.5 of a percentage point as compared to 2016 . the gross margin improvement was principally a result of the strategic shift toward mobility and seating products and reduced freight costs partially offset by increased manufacturing costs , including unfavorable impact from foreign exchange . gross profit as a percentage of net sales increased for all segments . gross profit dollars increased for the europe and asia/pacific segments but declined in na/hme and ipg principally due to lower net sales . europe - gross profit as a percentage of net sales increased 0.4 of a percentage point in 2017 from the prior year and gross margin dollars increase d by $ 2,547,000 . the increase in margin dollars was principally due to favorable net sales mix and reduced warranty expense partially offset by unfavorable manufacturing variances , including negative impact from foreign exchange , and r & d expenses . na/hme - gross profit as a percentage of net sales increased by 0.8 of a percentage point in 2017 from the prior year while gross margin dollars decrease d by $ 16,293,000 . excluding the impact of the divested gcm business , gross margin as a percentage of net sales increased by 0.5 of a percentage point , while gross profit dollars decrease d by $ 10,796,000 . the decrease in gross profit dollars was primarily due to net sales volume declines and partially offset by reduced freight , warranty and r & d expenses as well as favorable net sales mix . ipg - gross profit as a percentage of net sales increased 1.3 percentage points in 2017 from the prior year and gross margin dollars decrease d $ 681,000 . the decrease in gross profit dollars was driven by volume declines partially offset by favorable sales mix and reduced freight expense . asia/pacific - gross profit as a percentage of net sales increased 0.9 of a percentage point in 2017 from the prior year and gross margin dollars increase d $ 950,000 . the increase was primarily attributable to volume increases , favorable net sales mix and reduced research and development expense partially offset by unfavorable manufacturing variances and increased warranty expense . sequential gross margin as a percentage of net sales and gross margin dollars stabilized during 2017 with the decline in the fourth quarter of 2017 driven by the liquidation of inventories built up over the year to facilitate smooth transitions in 2017 related to plant closures and manufacturing costs related to product transfers , and year-end promotional activities . 42 part ii management discussion & analysis gross profit the increase in gross profit dollars during the second half of 2017 was driven by volume increases , favorable sales mix , and favorable foreign currency partially offset by unfavorable manufacturing variances and increased freight and warranty expense . sequential gross margin dollars increased in the europe and asia/pacific segments but declined in the na/hme and ipg segments . research and development the company continued to invest in research and development activities in 2017 . the company dedicated funds to applied research activities to ensure that new and enhanced design concepts are available to its businesses . research and development expenditures , which are included in costs of products sold , increased to $ 17,796,000 in 2017 from $ 17,123,000 in 2016 . the expenditures , as a percentage of net sales , were 1.8 % and 1.6 % in 2017 and 2016 , respectively . 2016 versus 2015 consolidated gross profit as a percentage of net sales was 27.1 % in 2016 as compared to 27.4 % in 2015. excluding the impact of all the divested businesses , gross margin as a percentage of net sales for 2016 increased by 0.2 of a percentage point as compared to 2015 driven by favorable sales mix principally offset by increased warranty expense . gross margin as a percentage of net sales increased for the na/hme and asia/pacific segments with declines in the europe and ipg segments . gross profit dollars declined in all segments , except for asia/pacific , with the largest declines in na/hme and ipg . the decline in ipg was primarily impacted by the sale of the rentals businesses in 2015. gross profit in europe as a percentage of net sales decreased 0.7
| results of operations the company has completed various divestitures over the past few years as part of its focus on other lines of business where the company 's resources can best generate returns . the most recent divested operations are explained below . on september 30 , 2016 , the company completed the sale of its subsidiary , garden city medical inc. for approximately $ 13,829,000 in cash ( `` gcm '' ) , to compass health brands . gcm , doing business as pmi and pinnacle medsource , sourced and distributed primarily single-use products under the brand probasics by pmi . gcm was part of the north america/home medical equipment ( na/hme ) segment . the net proceeds from the transaction were $ 12,729,000 , net of expenses . the company recorded a pre-tax gain of $ 7,386,000 in the third quarter of 2016 , which represented the excess of the net sales price over the book value of the assets and liabilities of gcm . the sale of gcm was dilutive to the company 's results . the company determined that the sale of gcm did not meet the criteria for classification as a discontinued operation in accordance with asu 2014-08 but the `` held for sale '' criteria of asc 360-10-45-9 were met and thus gcm was treated as held for sale for purposes of the consolidated balance sheets as of december 31 , 2015. as such , the results of the rentals businesses are included in the results from continuing operations discussion below . on july 2 , 2015 , the company sold its rentals businesses to joerns healthcare parent , llc , for approximately $ 15,500,000 in cash , which was subject to final post-closing adjustments . the rentals businesses had been operated on a stand-alone basis and reported as part of the ipg segment of the company .
| 4,655 |
financial overview and highlights community west bancshares is a financial services company headquartered in goleta , california that provides full service banking and lending through its wholly-owned subsidiary community west bank ( โ cwb โ ) , which has seven california branch banking offices located in goleta , oxnard , san luis obispo , santa barbara , santa maria , ventura and westlake village , and one loan production office in paso robles . financial result highlights of 2017 net income available to common stockholders of $ 4.9 million , or $ 0.57 per diluted share for 2017 , compared to $ 5.2 million , or $ 0.62 per diluted share for 2016 and $ 2.6 million or $ 0.30 per diluted share for 2015. the significant factors impacting the company during 2017 were : ยท net income of $ 4.9 million for 2017 compared to a net income of $ 5.2 million for 2016 . ยท total loans increased 16.5 % to $ 734.6 million at december 31 , 2017 compared to $ 630.8 million at december 31 , 2016 . ยท total deposits increased 14.3 % to $ 699.7 million at december 31 , 2017 compared to $ 612.2 million at december 31 , 2016 . ยท non-interest-bearing deposits increased 8.1 % to $ 108.5 million at december 31 , 2017 , compared to $ 100.4 million at december 31 , 2016 . ยท the provision ( credit ) for loan losses was $ 0.4 million for 2017 compared to ( $ 48,000 ) for 2016. net loan loss recoveries were ( $ 0.5 million ) for 2017 compared to ( $ 0.6 million ) in 2016 . ยท net nonaccrual loans increased to $ 4.5 million at december 31 , 2017 , compared to $ 2.4 million at december 31 , 2016 . ยท allowance for loan losses was $ 8.4 million at december 31 , 2017 , or 1.24 % of total loans held for investment compared to $ 7.5 million , or 1.31 % at december 31 , 2016 . ยท net interest margin for the year ended december 31 , 2017 decreased to 4.34 % compared to 4.60 % for the year ended december 31 , 2016 . ยท full service branch office location opened in oxnard , california . ยท net dta revaluation to write down $ 1.3 million due to the tax cuts and job act law change enacted in december 2017. the impact to the company from these factors , and others of both a positive and negative nature are discussed in more detail below as they pertain to the company 's overall comparative performance for the year ended december 31 , 2017. a summary of our results of operations and financial condition and select metrics is included in the following table : replace_table_token_2_th asset quality for all banks and bank holding companies , asset quality plays a significant role in the overall financial condition of the institution and results of operations . the company measures asset quality in terms of nonaccrual loans as a percentage of gross loans , and net charge-offs as a percentage of average loans . net charge-offs are calculated as the difference between charged-off loans and recovery payments received on previously charged-off loans . the following table summarizes these asset quality metrics : 15 index replace_table_token_3_th asset and deposit growth the company 's assets and liabilities are comprised primarily of loans and deposits respectively . the ability to originate new loans and attract new deposits is fundamental to the company 's asset growth . total assets increased to $ 833.3 million at december 31 , 2017 from $ 710.6 million at december 31 , 2016. total loans including net deferred fees and unearned income , increased by $ 103.8 million , or 16.5 % , to $ 734.6 million as of december 31 , 2017 compared to december 31 , 2016. total deposits increased by 14.3 % to $ 699.7 million as of december 31 , 2017 from $ 612.2 million as of december 31 , 2016. story_separator_special_tag border-right-width : 0px ; border-bottom-width : 0px ; color : # 000000 ; clear : both ; margin : 4px 0px ; border-top-width : 0px ; width : 100 % ; background-color : # 000000 '' / > index income taxes the income tax provision for 2017 was $ 5.5 million compared to $ 3.6 million in 2016 and $ 2.1 million in 2015. the effective income tax rate was 53.0 % , 40.9 % , and 42.7 % , respectively for 2017 , 2016 and 2015. deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts and their respective tax basis including operating losses and tax credit carryforwards . net deferred tax assets of $ 3.2 million at december 31 , 2017 are reported in the consolidated balance sheet as a component of total assets . on december 22 , 2017 , the president of the united states signed into law the tax cuts and jobs act tax reform legislation . this legislation makes significant change in u.s. tax law including a reduction in the corporate tax rates , changes to net operating loss carryforwards and carrybacks , and a repeal of the corporate alternative minimum tax . the legislation reduced the u.s. corporate tax rate from the current rate of 34 % to 21 % . as a result of the enacted law , the company was required to revalue deferred tax assets and liabilities at the 21 % . the revaluation resulted in a cost of $ 1.3 million income tax expense and a corresponding reduction in the net deferred tax asset . the other provisions of the tax cuts and job act did not have a material impact on the fiscal 2017 consolidated financial statements . story_separator_special_tag under the terms of the revolving lines of credit , the company grants a maximum loan amount , which remains available to the business during the loan term . the collateral for these loans typically are secured by uniform commercial code ( โ ucc-1 โ ) lien filings , real estate and personal guarantees . the company does not extend material loans of this type in excess of two years . commercial real estate commercial real estate and construction loans are primarily made for the purpose of purchasing , improving or constructing , commercial and industrial properties . this loan category also includes sba 504 loans and land loans . commercial and industrial real estate loans are primarily secured by nonresidential property . office buildings or other commercial property primarily secure these types of loans . loan to appraised value ratios on nonresidential real estate loans are generally restricted to 75 % of appraised value of the underlying real property if occupied by the owner or owner 's business ; otherwise , these loans are generally restricted to 70 % of appraised value of the underlying real property . the company makes real estate construction loans on commercial properties and single family dwellings . these loans are collateralized by first and second trust deeds on real property . construction loans are generally written with terms of six to eighteen months and usually do not exceed a loan to appraised value of 80 % . sba 504 loans are made in conjunction with certified development companies . these loans are granted to purchase or construct real estate or acquire machinery and equipment . the loan is structured with a conventional first trust deed provided by a private lender and a second trust deed which is funded through the sale of debentures . the predominant structure is terms of 10 % down payment , 50 % conventional first loan and 40 % debenture . construction loans of this type must provide additional collateral to reduce the loan-to-value to approximately 75 % . conventional and investor loans are sometimes funded by our secondary-market partners and cwb receives a premium for these transactions . sba loans sba loans consist of sba 7 ( a ) and business and industry loans ( โ b & i โ ) . the sba 7 ( a ) loan proceeds are used for working capital , machinery and equipment purchases , land and building purposes , leasehold improvements and debt refinancing . at present , the sba guarantees as much as 85 % on loans up to $ 150,000 and 75 % on loans more than $ 150,000. the sba 's maximum exposure amount is $ 3,750,000. the company may sell a portion of the loans , however , under the sba 7 ( a ) loan program ; the company is required to retain a minimum of 5 % of the principal balance of each loan it sells into the secondary market . 24 index b & i loans are guaranteed by the u.s. department of agriculture . the maximum guaranteed amount is 80 % for loans of $ 5 million or less . b & i loans are similar to the sba 7 ( a ) loans but are made to businesses in designated rural areas . these loans can also be sold into the secondary market . agricultural loans for real estate and operating lines the company has an agricultural lending program for agricultural land , agricultural operational lines , and agricultural term loans for crops , equipment and livestock . the primary product is supported by guarantees issued from the u.s. department of agriculture ( โ usda โ ) , farm service agency ( โ fsa โ ) , and the usda b & i loan program . the fsa loans typically have a 90 % guarantee up to $ 1,399,000 ( amount adjusted annually based on inflation ) for up to 40 years , but not always . the company had $ 71.7 million of these loans at december 31 , 2017. cwb is an approved federal agricultural mortgage corporation ( โ farmer mac โ ) lender under the farmer mac i and farmer mac ii programs . under the farmer mac i program , loans are sourced by cwb , underwritten , funded and serviced by farmer mac . cwb does some servicing such as collecting client information , processing payments and performing site visits . cwb receives an origination fee and an ongoing field servicing fee for maintaining the relationship with the borrower and performing certain loan compliance monitoring , and other duties as directed by the central servicer . cwb underwrites loans under the farmer mac 1 program which are funded by farmer mac and do not have a guarantee . eligible loans include fsa and b & i loans . manufactured housing loans cwb originates loans secured by manufactured homes located in approved rental , co-operative ownership , condominium and planned unit development mobile home parks in santa barbara , ventura and san luis obispo counties as well as along the california coast from san diego to san francisco . the loans are made to borrowers for purchasing or refinancing new or existing manufactured homes . the loans are made under either fixed rate programs for terms of 10 to 20 years or adjustable rate programs with terms of 25 to 30 years . the adjustable rate loans have an initial fixed rate period of five years and then adjust annually subject to interest rate caps . heloc cwb holds a portfolio of lines of credit collateralized by residential real estate , home equity lines of credit ( โ heloc โ ) . typically , helocs are collateralized by a second deed of trust . the combined loan-to-value , first trust deed and second trust deed , are not to exceed 75 % on all helocs . the bank is not actively originating new helocs . other installment loans installment loans consist of automobile and general-purpose loans made to individuals .
| results of operations the following table sets forth a summary financial overview for the comparable years : replace_table_token_4_th 16 index interest rates and differentials the following table illustrates average yields on interest-earning assets and average rates on interest-bearing liabilities for the periods indicated : replace_table_token_5_th ( 1 ) includes nonaccrual loans . ( 2 ) net interest margin is computed by dividing net interest income by total average earning assets . ( 3 ) net interest spread represents average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities . 17 index replace_table_token_6_th ( 1 ) includes nonaccrual loans . ( 2 ) net interest margin is computed by dividing net interest income by total average earning assets . ( 3 ) net interest spread represents average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities . the table below sets forth the relative impact on net interest income of changes in the volume of earning assets and interest-bearing liabilities and changes in rates earned and paid by the company on such assets and liabilities . for purposes of this table , nonaccrual loans have been included in the average loan balances . replace_table_token_7_th ( 1 ) changes due to both volume and rate have been allocated to volume changes . 18 index comparison of interest income , interest expense and net interest margin the company 's primary source of revenue is interest income .
| 4,656 |
medical stop-loss . standard security life , madison national life and independence american are sometimes collectively referred to as the ยinsurance groupย . ihc and its subsidiaries ( including the insurance group ) are sometimes collectively referred to as the `` company '' , or ยihcย , or are implicit in the terms ยweย , ยusย and ยourย . ihc 's health insurance products serve niche sectors of the commercial market through multiple classes of business and varied distribution channels . medical stop-loss is marketed to large employer groups that self-insure their medical risks ; in 2013 the company 's average case size was 230 covered employee lives . this niche is expected to grow as result of federal health care reform . the small-group major medical product is purchased by employers with between two and 50 covered lives . with regard to those persons in the growing individual market , ihc 's products offer coverage for individuals and 26 families with short-term medical needs , and fixed indemnity limited benefit and scheduled benefit plans through select distribution partners . in 2012 , we entered the pet insurance market through a national distributor with a long history in this niche . our fixed indemnity limited benefit product is primarily purchased by hourly workers and others who are generally not eligible for coverage under their employer 's group medical plan . the dental and vision products are marketed to large and small groups as well as individuals . with respect to ihc 's life and disability business , madison national life has historically sold almost all of this business through one distribution source specializing in serving school districts and municipalities . while management considers a wide range of factors in its strategic planning and decision-making , underwriting profit is consistently emphasized as the primary goal in all decisions as to whether or not to increase our retention in a core line , expand into new products , acquire an entity or a block of business , or otherwise change our business model . management 's assessment of trends in healthcare and morbidity , with respect to medical stop-loss , fully insured medical , disability and dbl ; mortality rates with respect to life insurance ; and changes in market conditions in general play a significant role in determining the rates charged , deductibles and attachment points quoted , and the percentage of business retained . ihc also seeks transactions that permit it to leverage its vertically integrated organizational structure by generating fee income from production and administrative operating companies as well as risk income for its carriers and profit commissions . management has always focused on managing the costs of its operations and providing its insureds with the best cost-containment tools available . the following is a summary of key performance information and events : the results of operations for the years ended december 31 , 2013 , 2012 and 2011 , are summarized as follows ( in thousands ) : replace_table_token_6_th ยท net income of $ .77 per share , diluted , for the year ended december 31 , 2013 , compared to $ 1.09 per share , diluted , for the year ended december 31 , 2012. the results for 2012 include a $ 5.9 million credit to federal income taxes as a result of the reduction in amic 's valuation allowance related to its deferred tax asset at december 31 , 2012 ; ยท consolidated investment yield ( on an annualized basis ) of 3.8 % in 2013 compared to 4.1 % in 2012 ; ยท in the first quarter of 2013 , ihc 's ownership in amic increased to 80.6 % as a result of amic 's share repurchases . in october 2013 , ihc further increased its ownership of amic to 90.0 % with the acquisition of 762,640 shares of amic common stock as a result of a public tender offer for such shares ; ยท in the second quarter of 2013 , madison national life entered into a coinsurance agreement with an unaffiliated reinsurer , effective may 31 , 2013 , to cede approximately $ 218.6 million of life 27 and annuity reserves . net realized investment gains were $ 19.8 million for the year ended december 31 , 2013 , of which a significant portion resulted from sales of invested assets in connection with the transfer of assets in accordance with the terms of such coinsurance agreement . in addition , the company wrote-off $ 9.3 million of deferred acquisition costs as a result of this coinsurance agreement , which was more than offset by the net realized investment gains in the period ; and ยท book value of $ 15.22 per common share at december 31 , 2013 compared to $ 15.93 at december 31 , 2012. the following is a summary of key performance information by segment : ยท the medical stop-loss segment reported income before taxes of $ 12.7 million and $ 15.8 million for the years ended december 31 , 2013 and 2012 , respectively . the decrease is primarily due to higher loss ratios in 2013 ; o premiums earned increased $ 26.6 million for the year ended december 31 , 2013 when compared to 2012. the increase in premiums earned is primarily due to increased volume . o underwriting experience for the medical stop-loss segment , as indicated by its u.s. gaap combined ratios , is as follows for the years indicated ( in thousands ) : replace_table_token_7_th o the company recorded an increase in the loss ratio in the medical stop-loss line of business for 2013 due to an unfavorable reserve development related to business written with a certain producer . we have ceased writing new business with this producer . there was also adverse development on two non-owned mgu programs , both of which have been terminated , one effective september 30 , 2013 and the other december 31 , 2013 . ( a ) loss ratio represents insurance benefits claims and reserves divided by premiums earned . story_separator_special_tag many factors could affect these reserves , including economic and social conditions , frequency and severity of claims , medical trend resulting from the influences of underlying cost inflation , changes in utilization and demand for medical services , and changes in doctrines of legal liability and damage awards in litigation . therefore , the company 's reserves are necessarily based on estimates , assumptions and analysis of historical experience . the company 's results depend upon the variation between actual claims experience and the assumptions used in determining reserves and pricing products . reserve assumptions and estimates require significant judgment and , therefore , are inherently uncertain . the company can not determine with precision the ultimate amounts that will be paid for actual claims or the timing of those payments . the company 's estimate of loss represents management 's best estimate of the company 's liability at the balance sheet date . loss reserves differ for short-duration and long-duration insurance policies , including annuities . reserves are based on approved actuarial methods , but necessarily include assumptions about expenses , mortality , morbidity , lapse rates and future yield on related investments . policy benefits and claims all of the company 's short-duration contracts are generated from its accident , health , disability and pet insurance business , and are accounted for based on actuarial estimates of the amount of loss inherent in that period 's claims , including losses incurred for which claims have not been reported . short-duration contract loss estimates rely on actuarial observations of ultimate loss experience for similar historical events . the company believes that its liability for policy benefits and claims is reasonable and adequate to satisfy its ultimate liability . the company primarily uses its own loss development experience , but will also supplement that with data from its outside actuaries , reinsurers and industry loss experience as warranted . to illustrate the impact that loss ratios have on the company 's loss reserves and related expenses , each hypothetical 1 % change in the loss ratio for the health business ( i.e. , the ratio of insurance benefits , claims and settlement expenses to earned health premiums ) for the year ended december 31 , 2013 , would increase reserves ( in the case of a higher ratio ) or decrease reserves ( in the case of a lower ratio ) by approximately $ 4.6 million with a corresponding increase or decrease in the pre- 31 tax expense for insurance benefits , claims and reserves in the consolidated statement of income . depending on the circumstances surrounding a change in the loss ratio , other pre-tax amounts reported in the consolidated statement of income could also be affected , such as amortization of deferred acquisition costs and commission expense . the liability for policy benefits and claims by segment is as follows ( in thousands ) : replace_table_token_11_th replace_table_token_12_th medical stop-loss all of the company 's medical stop-loss policies are short-duration and are accounted for based on actuarial estimates of the amount of loss inherent in that period 's claims or open claims from prior periods , including losses incurred for claims that have not been reported ( ยibnrย ) . short-duration contract loss estimates rely on actuarial observations of ultimate loss experience for similar historical events . the two ยprimaryย assumptions underlying the calculation of policy benefits and claims for medical stop-loss business are ( i ) projected net loss ratio , and ( ii ) claim development patterns . the projected net loss ratio is set at expected levels consistent with the underlying assumptions ( ยprojected net loss ratioย ) . claim development patterns are set quarterly as reserve estimates are developed and are based on recent claim development history ( ยclaim development patternsย ) . the company uses the projected net loss ratio to establish reserves until developing losses provide a better indication of ultimate results and it is feasible to set reserves based on claim development patterns . the company has concluded that a reasonably likely change in the projected net loss ratio assumption could have a material effect on the company 's financial condition , results of operations , or liquidity ( ยmaterial effectย ) but a reasonably likely change in the claim development pattern would not have a material effect . 32 projected net loss ratio generally , during the first twelve months of an underwriting year , policy benefits and claims for medical stop-loss are first set at the projected net loss ratio , which is set using assumptions developed using completed prior experience trended forward . the projected net loss ratio is the company 's best estimate of future performance until such time as developing losses provide a better indication of ultimate results . while the company establishes a best estimate of the projected net loss ratio , actual experience may deviate from this estimate . this was the case with the 2010 , 2011 and 2012 underwriting years which deviated by ( 1.2 ) , 4.8 and ( 0.2 ) net loss ratio points , respectively . after the recorded reserve estimate , it is reasonably likely that the actual experience will fall within a range up to five net loss ratio points above or below the expected projected net loss ratio for the 2013 underwriting year at december 31 , 2013. the impact of these reasonably likely changes at december 31 , 2013 , would be an increase in net reserves ( in the case of a higher ratio ) or a decrease in net reserves ( in the case of a lower ratio ) of up to approximately $ 4.1 million with a corresponding increase or decrease in the pre-tax expense for insurance benefits , claims and reserves in the consolidated statement of income .
| results of operations results of operations for the year ended december 31 , 2013 compared to the year ended december 31 , 2012 information by business segment for the year ended december 31 , 2013 and 2012 is as follows : replace_table_token_13_th replace_table_token_14_th premiums earned in 2013 , premiums earned increased $ 139.9 million over the comparable period of 2012. the increase is primarily due to : ( i ) the fully insured health segment which had a $ 107.3 million increase in premiums primarily as a result of increased retentions on most lines of business and increased volume in the short term medical business and major medical business for groups and individuals in addition to premiums from the new pet and international lines of business ; ( ii ) a $ 26.6 million increase in the medical stop-loss segment due to increased volume of business in 2013 ; and ( iii ) a $ 10.7 million increase in the group disability , life , annuities and dbl segment primarily due to increased premiums from the dbl line ; partially offset by ( iv ) a decrease of $ 4.7 million of earned premiums in the individual life , annuities and other segment primarily as a result of decreased premium volume from the coinsurance agreement and from lines in run-off . 39 net investment income total net investment income decreased $ 5.9 million . the overall annualized investment yields were 3.8 % and 4.1 % ( approximately 3.8 % and 4.2 % , on a tax advantaged basis ) for 2013 and 2012 , respectively . the overall decrease was primarily a result of a decrease in investment income on bonds , equities and short-term investments due to the transfer of $ 215.1 million of invested assets in the second quarter of 2013 related to a coinsurance treaty .
| 4,657 |
the fasb guidance provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed story_separator_special_tag you should read the following discussion in conjunction with the consolidated financial statements and accompanying notes included elsewhere in this annual report on form 10-k. 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 . see `` cautionary statements concerning forward-looking statements '' below and item 1a , risk factors , in this annual report on form 10-k for a discussion of the uncertainties , risks and assumptions associated with these statements . this section discusses our results of operations for the year ended january 29 , 2021 as compared to the year ended january 31 , 2020. for a discussion and analysis of the year ended january 31 , 2020 compared to february 1 , 2019 , please refer to โ management 's discussion and analysis of financial condition and results of operations โ included in item 7 of our annual report on form 10-k for the year ended january 31 , 2020 , filed with the sec on march 23 , 2020. as used in this annual report on form 10-k , references to the `` company '' , `` lands ' end '' , `` we '' , `` us '' , `` our '' and similar terms refer to lands ' end , inc. and its subsidiaries . our fiscal year ends on the friday preceding the saturday closest to january 31. executive overview description of the company lands ' end , inc. is a leading uni-channel retailer of casual clothing , accessories , footwear and home products . operating out of america 's heartland , we believe our vision and values make a strong connection with our core customers . we offer products online at www.landsend.com , on third-party online marketplaces and through our own company operated store locations and third-party retail stores . we are a classic american lifestyle brand with a passion for quality , legendary service and real value . we seek to deliver timeless style for women , men , kids and the home . lands ' end was founded in 1963 by gary comer and his partners to sell sailboat hardware and equipment by catalog . while our product focus has shifted significantly over the years , we have continued to adhere to our founder 's motto as one of our guiding principles : `` take care of the customer , take care of the employee and the rest will take care of itself . '' lands ' end seeks to provide a common customer experience regardless of whether our customers are interacting with us on our company websites , third-party marketplaces , at company operated stores or other points of distribution . we have one external reportable segment and identify our operating segments according to how our business activities are managed and evaluated . our operating segments consist of : u.s. ecommerce , outfitters , europe ecommerce , japan ecommerce , third party , and retail . we have determined that each of our operating segments share similar economic and other qualitative characteristics , and therefore , the results of our operating segments are aggregated into one external reportable segment . product channels lands ' end identifies five separate distribution channels for revenue reporting purposes : u.s. ecommerce offers products through the company 's ecommerce website utilizing digital marketing and direct mail catalogs . international offers products primarily to consumers located in europe and japan through ecommerce international websites , and third-party affiliates . 28 outfitters sells products to end consumers , located primarily in the u.s. , through negotiated arrangements to make specific styles or customized products available to employees and members of client organizations , as well as through the company 's ecommerce websites . third party sells the same products as u.s. ecommerce but to domestic wholesale customers or direct to consumers through third-party marketplaces and websites . retail sells products and services through company operated stores . impact of the covid-19 pandemic a novel strain of coronavirus ( โ covid-19 โ ) surfaced in late 2019 and in march 2020 , the world health organization declared covid-19 a pandemic . health and safety of employees and consumers from the beginning of the covid-19 pandemic , the company 's priority has been the safety of employees and customers . on march 16 , 2020 , the company temporarily closed its 26 u.s. company operated stores . these company operated stores reopened during second quarter 2020. additionally , the company opened four new company operated stores in second quarter 2020 and one new company operated store in third quarter 2020. these new company operated stores were already planned and construction underway prior to the start of the covid-19 pandemic . in response to the covid-19 pandemic , the company has implemented extra precautions in its company operated stores , offices and distribution centers . these precautions were developed in line with guidance from global , federal and state health authorities , including work from home policies , social distancing , thermal scanning and partitions in all facilities . customer demand the ecommerce channel experienced a decline in customer demand in first quarter 2020 , which rebounded in second quarter 2020 and continued to be strong the remainder of the year . consequently , fiscal 2020 ecommerce revenue increased compared to prior year . fiscal 2020 revenue in the outfitters and retail channels was lower than in fiscal 2019 due to the reduction in customer demand caused by the covid-19 pandemic . retail revenue also declined due to lengthy store closures . the ultimate timing and impact of customer demand levels will depend on the duration and scope of the covid-19 pandemic , overall economic conditions and consumer preferences . story_separator_special_tag we use adjusted ebitda to evaluate the operating performance of our business for comparable periods and as the basis for an executive compensation metric . the methods we use to calculate our non-gaap financial measures may differ significantly from methods other companies use to compute similar measures . as a result , any non-gaap financial measures presented herein may not be comparable to similar measures provided by other companies . adjusted ebitda should not be used by investors or other third parties as the sole basis for formulating investment decisions as it excludes a number of important cash and non-cash recurring items . while adjusted ebitda is a non-gaap measurement , management believes that it is an important indicator of operating performance , and useful to investors , because : ebitda excludes the effects of financings , investing activities and tax structure by eliminating the effects of interest , depreciation and income tax . other significant items , while periodically affecting our results , may vary significantly from period to period and have a disproportionate effect in a given period , which affects comparability of results . we 31 have adjusted our results for these items to make our story_separator_special_tag million in fiscal 2020 , compared with $ 26.0 million in fiscal 2019. the increase of $ 1.8 million in interest expense was driven by higher interest rates associated with the current term loan facility . other expense ( income ) other expense was $ 0.8 million in fiscal 2020 compared to other income of $ 1.9 million in fiscal 2019. the increase in other expense was attributed to less interest income and the final payment to an affiliate of transform holdco associated with the transitioning of a sourcing office . income tax expense income tax expense of $ 1.8 million was recorded for fiscal 2020 which resulted in an effective tax rate of 13.9 % . this compared to income tax expense of $ 2.1 million in fiscal 2019 which resulted in an effective tax rate of 9.7 % . the fiscal 2020 tax rate reflected a $ 3.1 million benefit as a result of the cares act . the fiscal 2019 tax rate reflected a $ 3.4 million benefit related to the company 's election to treat certain foreign entities as a u.s. branch . net income as a result of the above factors , net income was $ 10.8 million , or $ 0.33 per diluted share in fiscal 2020 compared to $ 19.3 million , or $ 0.60 per diluted share in fiscal 2019. adjusted ebitda as a result of the above factors , adjusted ebitda increased 11.6 % to $ 87.0 million in fiscal 2020 , compared to adjusted ebitda of $ 77.9 million in fiscal 2019. liquidity and capital resources our primary need for liquidity is to fund working capital requirements of our business , capital expenditures , debt service and for general corporate purposes . our cash and cash equivalents and the abl facility serve as sources of liquidity for short-term working capital needs and general corporate purposes . the revolving abl facility had a balance outstanding of $ 25 million at january 29 , 2021 , other than for letters of credit . cash generated from our net revenue and profitability , and somewhat to a lesser extent our changes in working capital , are driven by the seasonality of our business , with a significant amount of net revenue and operating cash flows generally occurring in the fourth fiscal quarter of each year . we expect that our cash on hand and cash flows from operations , along with borrowings on the abl facility , will be adequate to meet our capital requirements and operational needs for at least the next 12 months . 34 description of material indebtedness debt arrangement s in fiscal 2020 , the company exercised the โ accordion โ feature under the abl facility increasing the maximum borrowings available under the facility from $ 175 million to $ 275 million , subject to a borrowing base ( the โ loan cap โ ) . this was completed in two transactions . the first was a $ 25 million increase effective march 19 , 2020 , and the second a $ 75 million increase effective september 9 , 2020. the latter was completed through the second amendment to the abl facility executed on august 12 , 2020. the revolving abl facility has a letter of credit sublimit of $ 70.0 million and matures on november 16 , 2022 , subject to customary extension provisions provided for therein , and is available for working capital and other general corporate liquidity needs . the balance outstanding on january 29 , 2021 , was $ 25 million . there was no balance outstanding as of january 31 , 2020. the balance of outstanding letters of credit was $ 27.1 million and $ 23.3 million on january 29 , 2021 , and january 31 , 2020 , respectively . on september 9 , 2020 , the company entered into the current term loan facility which provides a term loan facility of $ 275 million , the proceeds of which were used , along with borrowings of $ 125 million under the company 's revolving abl facility , to repay all the indebtedness under the former term loan facility and pay fees and expenses in connection with the financing . origination costs , including an original issue discount ( oid ) of 3 % and $ 5.0 million in debt origination fees were paid upon entering into the current term loan facility . maturity ; amortization and prepayments the current term loan facility matures on september 9 , 2025 and will amortize at a rate equal to 1.25 % per quarter .
| results more comparable and therefore more useful to investors as the items are not representative of our ongoing operations . โช corporate restructuring โ severance costs associated with the reduction in corporate positions in fiscal 2020 and closure of five school uniform showrooms in fiscal 2019 . โช goodwill and long-lived asset impairment โ charges associated with the non-cash write-down of goodwill and certain long-lived assets in fiscal 2020 and fiscal 2019 . โช gain or loss on disposal of property and equipment - management considers the gains or losses on asset valuation to result from investing decisions rather than ongoing operations in fiscal 2020 and fiscal 2019. replace_table_token_7_th discussion and analysis fiscal 2020 compared to fiscal 2019 net revenue total net revenue for fiscal 2020 was $ 1.43 billion , a decrease of $ 22.8 million or 1.6 % from fiscal 2019. u.s. ecommerce and international saw increased demand as customers reacted positively to the continued enhancements in our seasonal product assortments and digital capabilities , along with an increase in third party revenues with the launch of our product with kohl 's . however , this was more than offset by the decrease across our entire outfitters and retail channels due to decreased customer demand related to the covid-19 pandemic . net revenue is presented by product channel in the following table : replace_table_token_8_th u.s. ecommerce net revenue was $ 961.9 million in fiscal 2020 , an increase of $ 51.8 million or 5.7 % from $ 910.1 million during the same period of the prior year . the increase in u.s. ecommerce was largely attributable to an increase in online shopping as customers reacted positively to the continued enhancements in our seasonal 32 product assortments and digital capabilities , which drove a year over year increase in our new customers acquired and overall customer file .
| 4,658 |
sonus then changed its name to oncogenex pharmaceuticals , inc. prior to the arrangement , sonus entered into a non-cancellable lease arrangement for office space located in bothell , washington , which is story_separator_special_tag forward-looking statements this annual report on form 10-k contains ยforward-looking statementsย within the meaning of the private securities litigation reform act of 1995. these forward-looking statements involve a number of risks and uncertainties . we caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement . these statements are based on current expectations of future events . such statements include , but are not limited to , statements about future financial and operating results , plans , objectives , expectations and intentions , costs and expenses , interest rates , outcome of contingencies , financial condition , results of operations , liquidity , business strategies , cost savings , objectives of management and other statements that are not historical facts . you can find many of these statements by looking for words like ยbelieves , ย ยexpects , ย ยanticipates , ย ยestimates , ย ยmay , ย ยshould , ย ยwill , ย ยcould , ย ยplan , ย ยintend , ย or similar expressions in this annual report on form 10-k or in documents incorporated by reference into this annual report on form 10-k . we intend that such forward-looking statements be subject to the safe harbors created thereby . examples of these forward-looking statements include , but are not limited to : progress and preliminary and future results of clinical trial conducted by us or our collaborators ; anticipated regulatory filings , requirements and future clinical trials conducted by us or our collaborators ; timing and amount of future contractual payments , product revenue and operating expenses ; market acceptance of our products and the estimated potential size of these markets ; and our anticipated future capital requirements and the terms of any capital financing agreements . these forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties . if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize , actual results may differ materially from current expectations and projections . factors that might cause such a difference include those discussed in item 1a ยrisk factors , ย as well as those discussed elsewhere in the annual report on form 10-k. you are cautioned not to place undue reliance on these forward-looking statements , which speak only as of the date of this annual report on form 10-k or , in the case of documents referred to or incorporated by reference , the date of those documents . all subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section . we do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this annual report on form 10-k or to reflect the occurrence of unanticipated events , except as may be required under applicable u.s. securities law . if we do update one or more forward-looking statements , no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements . overview we are a biopharmaceutical company committed to the development and commercialization of new therapies that address treatment resistance in cancer patients . we have three product candidates in our pipeline : custirsen , apatorsen and ogx-225 , each of which has a distinct mechanism of action and represents a unique opportunity for cancer drug development . of the product candidates in our pipeline , custirsen and apatorsen are clinical-stage assets . 54 our product candidates custirsen , apatorsen and ogx-225 focus on mechanisms of treatment resistance in cancer patients and are designed to block the production of specific proteins that we believe promote treatment resistance and survival of tumor cells and are over-produced in response to a variety of cancer treatments . our aim in targeting these particular proteins is to disable the tumor cell 's adaptive defenses , thereby rendering the tumor cells more susceptible to attack with a variety of cancer therapies . we believe this approach will increase survival time and improve the quality of life for cancer patients . our product candidates focus on mechanisms of treatment resistance in cancer patients and are designed to block the production of specific proteins that we believe promote treatment resistance and survival of tumor cells and are over-produced in response to a variety of cancer treatments . we believe this approach will increase survival time and improve the quality of life for cancer patients . product candidate custirsen as discussed above , in december 2009 , we entered into a collaboration agreement with teva for the development and global commercialization of custirsen ( and related compounds targeting clusterin , excluding apatorsen and ogx-225 ) . we and teva have developed a clinical development plan under which the following three phase 3 clinical trials have been initiated : the synergy trial : the phase 3 clinical trial to evaluate a survival benefit for custirsen in combination with first-line docetaxel treatment in patients with castrate resistant prostate cancer , or crpc . during discussions with the u.s. food and drug administration , or fda , the fda informed us that an application supported primarily by the results of synergy alone would be acceptable for submission for market approval . synergy patient enrollment was completed in the fourth quarter of 2012. over 1,000 men were enrolled in order to show a survival benefit with 90 % power based on a hazard ratio of 0.75 with a critical hazard ratio of 0.84 the pre-specified number of death events required for final analysis has been reached and study data are being reviewed and prepared for final analysis . story_separator_special_tag 56 the borealis-2ย trial : the investigator-sponsored , randomized phase 2 trial evaluating apatorsen in combination with docetaxel treatment compared to docetaxel treatment alone in patients with advanced or metastatic bladder cancer who have disease progression following first-line platinum-based chemotherapy . this trial is designed to have adequate power to detect a survival benefit corresponding to a hazard ratio of approximately 0.667. the primary analysis is to be performed at one-sided 0.10 significance level with 90 % power to detect a difference in overall survival . we expect to enroll approximately 200 patients . patients may also continue weekly apatorsen infusions as maintenance treatment until disease progression or unacceptable toxicity if they complete all 10 cycles of docetaxel , or are discontinued from docetaxel due to docetaxel toxicity . this trial was initiated in april 2013 and is enrolling patients . our current apatorsen development activities for nsclc include the following clinical trials : the spruceย trial : an investigator-sponsored , randomized , placebo-controlled phase 2 trial evaluating apatorsen in patients with previously untreated advanced non-squamous nsclc . the trial is expected to randomize approximately 155 patients with non-squamous nsclc to receive either apatorsen plus carboplatin and pemetrexed therapy or placebo plus carboplatin and pemetrexed therapy . the aim of the trial is to determine if adding apatorsen to carboplatin and pemetrexed therapy can extend pfs outcome . additional analyses are expected to include tumor response rates , overall survival , safety , tolerability and the effect of therapy on hsp27 levels . this trial was initiated in august 2013 and we expect to complete patient enrollment by the end of 2014. the cedarย trial : an investigator-sponsored , randomized phase 2 trial evaluating apatorsen in patients with previously untreated advanced squamous nsclc . the trial is expected to randomize approximately 140 patients with squamous nsclc to receive apatorsen plus gemcitabine and carboplatin therapy or gemcitabine and carboplatin therapy alone . the aim of the trial is to determine if adding apatorsen to gemcitabine and carboplatin therapy can extend pfs outcome . additional analyses will include tumor response rates , overall survival , safety , and health-related quality of life . additional analyses are expected to determine the effect of therapy on hsp27 levels and to explore potential biomarkers that may help predict response to treatment . patient enrollment is expected to be initiated in the first-half of 2014. our current apatorsen development activities for pancreatic cancer include the following clinical trial : the rainierย trial : an investigator-sponsored , randomized , placebo-controlled phase 2 trial evaluating apatorsen in combination with abraxane ยฎ ( paclitaxel protein-bound particles for injectable suspension ) ( albumin-bound ) and gemcitabine in approximately 130 patients with previously untreated metastatic pancreatic cancer . the objective of the trial will be overall survival , with additional analyses to evaluate pfs , tumor response rates , safety , tolerability , and the effect of therapy on hsp27 levels . the trial was initiated in august 2013 and is enrolling patients . our current apatorsen development activities for prostate cancer include the following clinical trials : the pacificย trial : an investigator-sponsored , randomized phase 2 trial evaluating apatorsen in men with crpc who are experiencing a rising psa while receiving zytiga ยฎ ( abiraterone acetate ) . the aim of the trial is to determine if adding apatorsen to zytiga treatment can reverse or delay treatment resistance by evaluating the pfs rate at a milestone day 60 assessment . other secondary endpoints such as psa and objective responses , time to disease progression , ctcs and hsp27 levels are expected to be evaluated . we expect approximately 80 patients will be enrolled . the trial was initiated in december 2012 and is enrolling patients . results of these trials may direct future company-sponsored trials in indications that show promising clinical benefits . 57 refer to the discussion in part i , item 1 under the heading ยour product candidatesยapatorsenยsummary of results of apatorsen clinical trialsย for further details . product candidates ogx-225 ogx-225 is our product candidate designed to inhibit the production of insulin growth factor binding proteins -2 and -5 ( igfbp-2 , igfbp-5 ) , two proteins that when overexpressed affect the growth of cancer cells . increased igfbp-2 and igfbp-5 production are observed in many human cancers , including prostate , breast , colorectal , non-small cell lung , glioblastoma , acute myeloid leukemia , acute lymphoblastic leukemia , neuroblastoma , and melanoma . the increased production of these proteins is linked to faster rates of cancer progression , treatment resistance , and shorter survival duration in humans . preclinical studies with human prostate and breast cancer cells have shown that reducing igfbp-2 and igfbp-5 production with ogx-225 sensitized these tumor types to hormone ablation therapy or chemotherapy and induced tumor cell death . we have begun development activities for ogx-225 and toxicology studies are ongoing . collaboration revenue revenue recognized to date is attributable to the upfront payment we received in the fourth quarter of 2009 pursuant to our collaboration agreement with teva , as well as cash reimbursements from teva for certain costs incurred by us under the clinical development plan . our policy is to account for these reimbursements as collaboration revenue . we are eligible to receive payments of up to $ 370 million upon the achievement of developmental and commercial milestones set forth in our collaboration agreement with teva . at present , we are unable to predict the timing or likelihood of such milestone payments . we did not receive any payments from teva as a result of the achievement of developmental or commercial milestones in 2013. we may receive milestones in late 2014 or early 2015 from teva depending on the timing of final results from the synergy trial and other related activities . isis has disclosed in its sec , filings that it is entitled to receive 30 % of the up to $ 370 million in milestone payments we may receive from teva as part of the collaboration agreement .
| results of operations years ended december 31 , 2013 , 2012 and 2011 revenue revenue for the year ended december 31 , 2013 increased to $ 29.9 million , from $ 20.1 million for the year ended december 31 , 2012 and $ 5.5 million for the year ended december 31 , 2011. revenue in all years was earned through our strategic collaboration with teva . revenue earned in 2013 consisted of reimbursable clinical trial , manufacturing and preclinical costs incurred by us under our clinical development plan with teva . the increase in 2013 compared with 2012 and 2011 was primarily due to patient enrollment and treatment in the affinity trial . revenue earned in 2012 includes recognition of $ 18.3 million from the $ 30 million upfront payment , as well as $ 1.8 million earned through collaboration research . revenue earned in 2011 consisted solely of the recognition of deferred collaboration revenue . research and development expenses r & d expenses for the year ended december 31 , 2013 increased to $ 55.3 million , from $ 40.0 million for the year ended december 31 , 2012 and $ 21.6 million for the year ended december 31 , 2011. the increase in 2013 compared with 2012 was predominantly the result of higher clinical trial expenses associated with patient enrollment and treatment in the affinity and borealis-1 trials , increased costs related to our investigator-sponsored apatorsen trials , toxicology expenses related to apatorsen and ogx-225 and increased employee expenses , including stock-based compensation , due to an increase in the average number of employees to support our clinical development activities . the increase in 2012 as compared to 2011 was due primarily to higher clinical study expenses associated with the startup of the affinity trial , increased patient enrollment in the 59 borealis-1 trial and associated manufacturing costs , and increased employee expenses , including stock-based compensation expense . these increases were partially offset by lower preclinical expenses .
| 4,659 |
the following discussion contains forward-looking statements that reflect future plans , estimates , beliefs and expected performance . the forward-looking statements are dependent upon events , risks and uncertainties that may be outside our control . our actual results could differ materially from those discussed in these forward-looking statements . see the sections entitled โ cautionary note regarding forward-looking statements โ and โ risk factors โ above . overview we are a global provider of a wide range of environmental , compliance and waste management services . our broad range of capabilities and global reach enable us to meet the critical , and often non-discretionary , needs of more than 5,000 customers across diverse end markets to ensure compliance with eh & s laws and regulations around the world . our diverse service offerings and broad geographic footprint enable us to reach customers around the world to : โ ensure compliance with international and domestic eh & s laws and regulations ; โ maximize operating efficiency and longevity of critical operating assets ; โ ensure adherence with their eh & s policies ; โ reduce risk and liability ; โ enhance safety ; โ maximize profitability and manage costs ; โ reduce downtime of critical operations ; and โ protect people and the environment from potentially dangerous materials and waste streams . we have broad global reach , with approximately 75 locations in the united states and approximately 20 additional locations internationally across eight countries , including the united kingdom , mexico , turkey , the republic of georgia , united arab emirates , angola , thailand and trinidad and tobago . we operate in four reportable segments : ( 1 ) domestic environmental services , ( 2 ) sprint , ( 3 ) domestic standby services and ( 4 ) international services . story_separator_special_tag text-align : justify ; text-indent : 0.5in '' > replace_table_token_2_th 35 operating revenues there are many factors that have impacted and continue to impact our operating revenues . these factors include , but are not limited to : overall industrial activity , federal regulations , the effect of oil and gas commodity prices on business activity in the industry , international and domestic eh & s policies , the level of emergency response events and acquisitions . domestic standby services replace_table_token_3_th domestic standby services operating revenues for the year ended december 31 , 2018 decreased $ 9.7 million , or 22 % , from $ 43.8 million in the comparable period in 2017. this decrease was primarily attributable to a $ 10.6 million decrease in emergency response activity due to the efforts supporting relief as a result of hurricanes harvey , irma , jose and maria in 2017. the decrease is partially offset by an increase of $ 1.8 million related to retainer revenue primarily resulting from higher volumes associated with our tolling-based pricing program . domestic standby services operating revenues for the year ended december 31 , 2017 increased $ 14.2 million from $ 29.6 million , or 48 % , in the comparable period in 2016. this increase was primarily attributable to an $ 11.0 million increase in emergency response operating revenues from the hurricanes noted above and an oil pipeline spill that impacted south dakota in 2017 , as compared with smaller emergency response projects in 2016. retainer operating revenues also increased by $ 2.0 million , primarily driven by higher volumes associated with our voyage-based pricing program . domestic environmental services replace_table_token_4_th domestic environmental services operating revenues for the year ended december 31 , 2018 increased $ 55.4 million from $ 171.0 million , or 32 % , in the comparable period in 2017. approximately $ 32.1 million of this increase was attributable to the acquisition of sws in may 2018 , $ 15.8 million due to increase project management activity , and $ 7.8 million due to increased emergency response events . domestic environmental services operating revenues for the year ended december 31 , 2017 increased $ 6.5 million from $ 164.5 million , or 4 % , in the comparable period in 2016. this increase was primarily attributable to a $ 7.8 million increase in operating revenues related to the acquisition of enpro , which was completed on april 11 , 2016 , and an increase due to the benefits of a management restructure in the segment in 2016. the increase was partially offset by a $ 4.7 million decrease in emergency response operating revenues due to a lower volume of emergency response events in 2017. international services replace_table_token_5_th international services operating revenues for the year ended december 31 , 2018 increased $ 6.7 million from $ 17.7 million , or 38 % , in the comparable period in 2017. this increase was primarily attributable to a $ 7.0 million increase due to the acquisition of clean line , a $ 1.1 million increase in operating revenue generated by our north sea operations , offset by lower standby revenue in the united arab emirates . international services operating revenues for the year ended december 31 , 2017 decreased $ 5.8 million from $ 23.5 million , or 25 % , in the comparable period in 2016. this decrease was primarily attributable to decreased services due to lower business activity by our customers , which is consistent with a decline in the overall market conditions resulting from depressed oil prices in 2017. sprint replace_table_token_6_th 36 sprint operating revenues for the year ended december 31 , 2018 increased $ 30.1 million from $ 45.1 million , or 67 % , in the comparable period in 2017. approximately $ 10.7 million of this increase was primarily attributable to an increase from expanding the sprint segment 's environmental service operations and continuing to increase operational activity in the two new locations in carrizo springs , texas and pecos , texas to full operation levels after opening during the second quarter of 2017. this increase is also due to higher demand from the sprint segment 's customers due to improved oil prices during the year ended december 31 , 2018 as compared to the story_separator_special_tag sprint replace_table_token_10_th sprint operating expenses , including cost of revenue exclusive of depreciation and amortization for the year ended december 31 , 2018 increased $ 10.8 million from $ 21.8 million , or 50 % , in the comparable period in 2017. approximately $ 5.4 million of this increase was primarily attributable to an increase from expanding the sprint segment 's environmental service operations by continuing to increase operational activity in the two new locations in carrizo springs , texas and pecos , texas to full operation levels after opening during the second quarter of 2017. this increase is also consistent with greater operating revenues from the sprint segment 's landfill operations due to the landfill operations continuing to increase operational activity to full operation levels by the second quarter of 2017 , after starting operations for the segment in late 2016 , and a higher demand from the sprint segment 's customers due to the improved oil prices for the year ended december 31 , 2018 as compared to the comparable period in 2017. the costs as a percentage of operating revenues decreased , which is consistent with increased revenues for the year ended december 31 , 2018 , as compared to the comparable period in 2017. these costs also decreased due to higher margins resulting from improved management of the fixed cost structure and the efficiencies gained as the sprint segment 's landfill became fully operational during the second quarter of 2017 , after beginning operations in late 2016. sprint operating expenses , including cost of revenue exclusive of depreciation and amortization for the year ended december 31 , 2017 increased $ 14.8 million from $ 6.9 million , or 214 % , in the comparable period in 2016. approximately $ 6.1 million of this increase is primarily attributable to a full year of landfill operations in 2017 as compared to 2016 when the landfill operations were beginning , and $ 6.1 million of this increase is consistent with increased revenues resulting from higher demand from the sprint segment 's environmental services customers due to improved oil prices in 2017 as compared to 2016. the increase was also attributable to a $ 2.6 million increase from expanding the sprint segment 's environmental services operations by opening two new locations in carrizo springs , texas and pecos , texas during 2017. the costs as a percentage of revenues decreased as there were only limited landfill operations in 2016 . 38 general and administrative expenses general and administrative expenses represent costs incurred for back office administration and support . this includes , but is not limited to , senior management , accounting , finance , treasury , collections , accounts payable , invoicing and analysis . we are focusing on managing such costs by centralizing back office operations and consolidating vendors in order to leverage economies of scale and remain competitive in the marketplace . domestic standby services replace_table_token_11_th domestic standby services general and administrative expenses for the year ended december 31 , 2018 remained relatively consistent , as compared to the year ended december 31 , 2017. as a percentage of operating revenues , costs increased for the year ended december 31 , 2018 as compared to the comparable period in 2017 as the general and administrative expenses are primarily fixed costs and thus increase as a percentage of revenue as operating revenues decrease . domestic standby services general and administrative expenses for the year ended december 31 , 2017 remained relatively consistent as compared to 2016. as a percentage of operating revenues , costs decreased for the year ended december 31 , 2017 as compared to 2016 due to realizing the benefit from consolidating our back office functions and implementing a centralized national purchasing program . domestic environmental services replace_table_token_12_th domestic environmental services general and administrative expenses for the year ended december 31 , 2018 increased $ 8.1 million from $ 17.9 million , or 45 % , in the comparable period in 2017. approximately $ 7.1 million of the general and administrative expenses was attributable to the acquisition of sws . the $ 1.0 million increase , excluding the impact of sws , is due to investment in the back office to support the growth in revenue . as a percentage of operating revenues , the costs remained relatively consistent for the year ended december 31 , 2018 as compared to 2017. domestic environmental services general and administrative expenses for the year ended december 31 , 2017 remained relatively consistent as compared to 2016. international services replace_table_token_13_th international services general and administrative expenses for the year ended december 31 , 2018 increased $ 0.5 million from $ 2.9 million , or 18 % , in the comparable period in 2017. approximately $ 0.7 million of the general and administrative expenses was attributable to the acquisition of clean line . excluding the impact of clean line , the international segment reduced services general and administrative expenses by $ 0.2 million to be aligned with revenue levels . as a percentage of operating revenues , the costs remained relatively consistent for the year ended december 31 , 2018 , as compared to 2017. international services general and administrative expenses for the year ended december 31 , 2017 decreased $ 1.7 million from $ 4.6 million , or 37 % , in the comparable period in 2016 primarily attributable to cost reductions due to decreased services demand primarily from lower oil production activity in the north sea . as a percentage of operating revenues , costs decreased for the year ended december 31 , 2017 as compared to 2016 due to realizing the benefit from consolidating our back office functions and consolidating vendors to realize economies of scale .
| trends and factors impacting results of operations there are many factors that have impacted and continue to impact our revenues . these factors include , but are not limited to : overall industrial activity , federal regulations , the effect of oil and gas commodity prices on business activity in the industry , international and domestic eh & s policies , the level of emergency response events , competitive industry pricing , execution of operations , safety of operations and acquisitions . we believe that our ability to manage operating costs is important to the ability to remain price competitive . we continue to evolve to a national platform in order to derive benefits from economies of scale for sourcing . we will also focus on other cost reduction initiatives in an effort to optimize operating margins . we are focusing on managing selling , general and administrative costs by centralizing back office operations and consolidating vendors in order to leverage economies of scale and remain competitive in the marketplace . domestic environmental services . domestic environmental services segment results are primarily driven by the following factors : โ high-frequency , low-cost services . the domestic environmental services segment provides our customers with services to meet stringent federal regulations and eh & s policies . the domestic environmental services are impacted by market activity , oil and gas commodity prices and business activity in the industry . an increase in activity creates a demand for increased maintenance and spending on discretionary compliance . 33 โ seasonality . domestic environmental services activity is impacted by seasonality in business and weather conditions , market conditions and overall levels of industrial activity . โ acquisitions , integration and restructuring . the domestic environmental services segment has expanded through organic growth as well as acquisitions . the domestic environmental services segment underwent an internal restructuring of management to target more recurring and predictable higher volume customers .
| 4,660 |
the 27 % increase in medical management expenses in 2002 are related to the 55 % increase in revenues for the same period . the 3 % decrease in medical receivable expenses in 2002 as compared to its increase in revenues was primarily due to the cost of increasing the infrastructure in 2001 in anticipation of the new clients that were eventually obtained . the company now has an improved infrastructure , which includes better trained employees , computer systems and office facilities that can handle further increases of revenue without substantial increases in expenses . in addition , the company has also been more selective in the bill purchasing process , which results in a minimal amount of bad debt losses . the company may incur a bad debt loss when the portion of a medical claim collected does not exceed the advance ( including the fee charged ) given to the client . the company also has other contractual rights to help minimize its risk of loss . the company continually monitors the aging of the uncollected medical claims as it relates to its advances and establishes a reserve deemed adequate to cover potential losses . the decrease in corporate expenses and other of $ 50,000 in 2002 is primarily due to reductions in professional fees , reallocations of a greater portion of executive salaries to the medical division and a reduction in shareholder reporting expenses . the increase in depreciation and amortization of $ 22,000 in 2002 is attributable to increased capital expenditures in the medical financing division . interest expense in 2002 was $ 62,000 , an increase of $ 29,000 from 2001. the increase was attributable to the debt that was incurred to finance the purchase of additional medical claims receivable and an mri machine in the medical division . spin-off expenses decreased by $ 209,000 in 2002 to $ -0- , due to the one time only charge in 2001 of the distribution of mfc stock to frm 's shareholders and the registration of mfc 's common stock . income from discontinued operations decreased by $ 399,000 to $ -0- in 2001 , due to the gain of $ 381,000 from the sale of the wendcello subsidiary in the quarter ended august 31 , 2000. for the reasons described above , most notably , ( i ) the settlement of the goshen receivables resulting in the realization of $ 745,000 of deferred income , ( ii ) the continuing increases in revenues in the medical division , which are substantially greater than increases in expenses and ( iii ) the elimination of spin-off expenses , the company recorded net income from continuing operations of $ 808,000 for the year ended february 28,2002 as compared to a loss of $ 1,149,000 for the year ended february 28 , 2002. liquidity and capital resources the company 's two business activities during the year ended february 28 , 2003 resulted in a decrease of cash in the amount of $ 1,091,000. the company expects continued growth of its medical division based on its ongoing negotiations with prospective new clients , which are expected to be obtained in the next few months . these prospective clients will result in an increase in the amount of cash needed to purchase their medical insurance claims receivable . the funds for those needs are expected to be provided from existing cash and an additional $ 175,000 of series a bonds that were issued after the year end . additional funds may be provided by additional asset-based borrowing facilities , refinancing of assets under capital leases and the sale of real estate assets . the real estate division is not expected to be a significant user of cash flow from operations , due to the elimination of carrying costs on the real estate that was sold during the two years ended february 28 , 2002. the company 's real estate assets in hunter , ny are owned free and clear of mortgages , except for the construction loan that is being used to finance the current property renovation . further development of this property , at any significant cost , is expected to be funded by additional proceeds from the construction loan , the issuance of series b bonds , other asset-based financing , the sale of property under renovation or the sale of other property in hunter . the company believes that its present cash resources and the cash available from financing activities will be sufficient on a short-term basis and over the next 12 months to fund continued expansion of its medical financing business , its company-wide working capital needs , and its expected investments in property and equipment . the company intends to pace its growth in the medical division to its capacity to provide the funds internally and from its financing activities . cash used by operations in 2003 was $ 284,000 , as compared to $ 77,000 being used in 2002. the $ 207,000 increase in cash used by operations in 2003 was due to ( i ) an increase in the additions to management fee receivables of $ 200,000 , ( ii ) a decrease of $ 50,000 in collections from real estate held for development and sale , ( iii ) an increase of $ 57,000 in expenditures on real estate primarily due to the conversion of a vacant office building into townhouse units and ( iv ) and fluctuations in operating assets and liabilities primarily caused by timing differences . these increases in the use of cash were offset by increases in cash provided by operations due to an increase in net income after adjustments for non cash items of depreciation , real estate gains , provision for bad debts and billing adjustments , and deferred taxes , the net of these items totaling $ 320,000. cash used by investing activities was $ 1,111,000 in 2003 as compared with the $ 1,305,000 being provided story_separator_special_tag the 27 % increase in medical management expenses in 2002 are related to the 55 % increase in revenues for the same period . the 3 % decrease in medical receivable expenses in 2002 as compared to its increase in revenues was primarily due to the cost of increasing the infrastructure in 2001 in anticipation of the new clients that were eventually obtained . the company now has an improved infrastructure , which includes better trained employees , computer systems and office facilities that can handle further increases of revenue without substantial increases in expenses . in addition , the company has also been more selective in the bill purchasing process , which results in a minimal amount of bad debt losses . the company may incur a bad debt loss when the portion of a medical claim collected does not exceed the advance ( including the fee charged ) given to the client . the company also has other contractual rights to help minimize its risk of loss . the company continually monitors the aging of the uncollected medical claims as it relates to its advances and establishes a reserve deemed adequate to cover potential losses . the decrease in corporate expenses and other of $ 50,000 in 2002 is primarily due to reductions in professional fees , reallocations of a greater portion of executive salaries to the medical division and a reduction in shareholder reporting expenses . the increase in depreciation and amortization of $ 22,000 in 2002 is attributable to increased capital expenditures in the medical financing division . interest expense in 2002 was $ 62,000 , an increase of $ 29,000 from 2001. the increase was attributable to the debt that was incurred to finance the purchase of additional medical claims receivable and an mri machine in the medical division . spin-off expenses decreased by $ 209,000 in 2002 to $ -0- , due to the one time only charge in 2001 of the distribution of mfc stock to frm 's shareholders and the registration of mfc 's common stock . income from discontinued operations decreased by $ 399,000 to $ -0- in 2001 , due to the gain of $ 381,000 from the sale of the wendcello subsidiary in the quarter ended august 31 , 2000. for the reasons described above , most notably , ( i ) the settlement of the goshen receivables resulting in the realization of $ 745,000 of deferred income , ( ii ) the continuing increases in revenues in the medical division , which are substantially greater than increases in expenses and ( iii ) the elimination of spin-off expenses , the company recorded net income from continuing operations of $ 808,000 for the year ended february 28,2002 as compared to a loss of $ 1,149,000 for the year ended february 28 , 2002. liquidity and capital resources the company 's two business activities during the year ended february 28 , 2003 resulted in a decrease of cash in the amount of $ 1,091,000. the company expects continued growth of its medical division based on its ongoing negotiations with prospective new clients , which are expected to be obtained in the next few months . these prospective clients will result in an increase in the amount of cash needed to purchase their medical insurance claims receivable . the funds for those needs are expected to be provided from existing cash and an additional $ 175,000 of series a bonds that were issued after the year end . additional funds may be provided by additional asset-based borrowing facilities , refinancing of assets under capital leases and the sale of real estate assets . the real estate division is not expected to be a significant user of cash flow from operations , due to the elimination of carrying costs on the real estate that was sold during the two years ended february 28 , 2002. the company 's real estate assets in hunter , ny are owned free and clear of mortgages , except for the construction loan that is being used to finance the current property renovation . further development of this property , at any significant cost , is expected to be funded by additional proceeds from the construction loan , the issuance of series b bonds , other asset-based financing , the sale of property under renovation or the sale of other property in hunter . the company believes that its present cash resources and the cash available from financing activities will be sufficient on a short-term basis and over the next 12 months to fund continued expansion of its medical financing business , its company-wide working capital needs , and its expected investments in property and equipment . the company intends to pace its growth in the medical division to its capacity to provide the funds internally and from its financing activities . cash used by operations in 2003 was $ 284,000 , as compared to $ 77,000 being used in 2002. the $ 207,000 increase in cash used by operations in 2003 was due to ( i ) an increase in the additions to management fee receivables of $ 200,000 , ( ii ) a decrease of $ 50,000 in collections from real estate held for development and sale , ( iii ) an increase of $ 57,000 in expenditures on real estate primarily due to the conversion of a vacant office building into townhouse units and ( iv ) and fluctuations in operating assets and liabilities primarily caused by timing differences . these increases in the use of cash were offset by increases in cash provided by operations due to an increase in net income after adjustments for non cash items of depreciation , real estate gains , provision for bad debts and billing adjustments , and deferred taxes , the net of these items totaling $ 320,000. cash used by investing activities was $ 1,111,000 in 2003 as compared with the $ 1,305,000 being provided
| results of operations year ended february 28 , 2003 compared to year ended february 28 , 2002 the company 's revenues from operations for the year ended february 28 , 2003 ( `` 2003 '' ) were $ 5,260,000 , an increase of $ 1,094,000 or 26 % as compared to the year ended february 28 , 2002 ( `` 2002 '' ) . the increase was a result of increase in the medical division , offset by a decrease in the real estate division . revenue in the real estate division decreased in 2003 by $ 79,000 , to $ 1,037,000. the decrease was due to ( i ) a $ 68,000 decrease in interest income from the goshen mortgage , ( ii ) lack of real estate sales in 2003 as compared to 2002 , when the company sold the land for eight un-built condominium units for $ 50,000 , offset by ( iii ) an increase of gain on sale of real estate of $ 35,000 in 2003. the increase reflects the 2003 recognition of $ 850,000 of deferred income attributable to the termination of a contingent obligation related to a sale leaseback , as compared to the 2002 realization of $ 745,000 of deferred income related to the settlement of an outstanding mortgage . the $ 1,173,000 increases in revenues in the medical division were due to increases in both income from the purchase and collection of medical claims and in management fees . the 20 % increase in income from the purchase and collection of medical claims of $ 324,000 in 2003 were primarily due to additional collection services that are now being provided to new and existing clients . these additional services also generate interest income received from insurance companies for delayed payments on improperly denied and delayed receivables .
| 4,661 |
we produce and distribute our european-based prestige products primarily under license agreements with brand owners , and european-based prestige product sales represented approximately 79 % , 82 % and 87 % of net sales for 2014 , 2013 and 2012 , respectively . we have built a portfolio of prestige brands , which include balmain , boucheron , jimmy choo , karl lagerfeld , lanvin , montblanc , paul smith , s.t . dupont , repetto and van cleef & arpels , whose products are distributed in over 100 countries around the world . burberry was our most significant license , and net sales of burberry products represented 0 % , 23 % and 46 % of net sales for the years ended december 31 , 2014 , 2013 and 2012 , respectively . ( see note 2 โ termination of burberry license โ in notes to consolidated financial statements on page f-13 of this form 10-k ) . in addition , we own the lanvin brand name for our class of trade , and license the montblanc and jimmy choo brand names ; for the year ended december 31 , 2014 , sales of product for these brands represented 18 % , 22 % and 16 % of net sales , respectively . through our united states operations we market prestige brands as well as specialty retail fragrance and fragrance related products . united states operations represented 21 % , 18 % and 13 % of net sales in 2014 , 2013 and 2012 , respectively . these fragrance products are sold or to be sold under trademarks owned by us or pursuant to license or other agreements with the owners of the abercrombie & fitch , agent provocateur , anna sui , banana republic , bebe , dunhill , gap , hollister , oscar de la renta , and shanghai tang brands . quarterly sales fluctuations are influenced by the timing of new product launches as well as the third and fourth quarter holiday season . in certain markets where we sell directly to retailers , seasonality has been more evident in the past few years . we operate distribution subsidiaries in italy , germany , spain , and the united states . in addition , our specialty retail product lines sold to u.s. retailers are also concentrated in the second half of the year . we grow our business in two distinct ways . first , we grow by adding new brands to our portfolio , either through new licenses or other arrangements or out-right acquisitions of brands . second , we grow through the introduction of new products and supporting new and established products through advertising , merchandising and sampling as well as phasing out existing products that no longer meet the needs of our consumers . the economics of developing , producing , launching and supporting products influence our sales and operating performance each year . our introduction of new products may have some cannibalizing effect on sales of existing products , which we take into account in our business planning . 34 our business is not capital intensive , and it is important to note that we do not own manufacturing facilities . we act as a general contractor and source our needed components from our suppliers . these components are received at one of our distribution centers and then , based upon production needs , the components are sent to one of several third party fillers , which manufacture the finished product for us and then deliver them to one of our distribution centers . as with any global business , many aspects of our operations are subject to influences outside our control . we believe we have a strong brand portfolio with global reach and potential . as part of our strategy , we plan to continue to make investments behind fast-growing markets and channels to grow market share . during 2014 , the economic and political uncertainty and financial market volatility taking place in certain european countries and the middle east did not have a significant impact on our business , and at this time we do not believe it will have a significant impact on our business for the foreseeable future . however , if the degree of uncertainty or volatility worsens or is prolonged , then there will likely be a negative effect on ongoing consumer confidence , demand and spending and as a result , our business . currently , we believe general economic , political and other uncertainties still exist in select markets in which we do business and we continue to monitor global economic and political uncertainties and other risks that may affect our business . our reported net sales are impacted by changes in foreign currency exchange rates . a strong u.s. dollar has a negative impact on our net sales . however , earnings are positively affected by a strong dollar , because approximately 40 % of net sales of our european operations are denominated in u.s. dollars , while almost all costs of our european operations are incurred in euro . our company addresses certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments . we primarily enter into foreign currency forward exchange contracts to reduce the effects of fluctuating foreign currency exchange rates . recent important events burberry burberry exercised its option to buy-out the license rights effective december 31 , 2012. in october 2012 , the company and burberry entered into a transition agreement that provided for certain license rights and obligations to continue through march 31 , 2013. the company continued to operate certain aspects of the business for the brand including product development , testing , and distribution . the transition agreement provided for non-exclusivity for manufacturing , a cap on sales of burberry products , a reduced advertising requirement and no minimum royalty amounts . story_separator_special_tag the cash flow projections are based upon a number of assumptions , including , future sales levels and future cost of goods and operating expense levels , as well as economic conditions , changes to our business model or changes in consumer acceptance of our products which are more subjective in nature . if the carrying value of an indefinite-lived intangible asset exceeds its fair value , an impairment charge is recorded . 37 we believe that the assumptions we have made in projecting future cash flows for the evaluations described above are reasonable and currently no impairment indicators exist for our indefinite-lived intangible assets . however , if future actual results do not meet our expectations , we may be required to record an impairment charge , the amount of which could be material to our results of operations . the following table presents the impact a change in the following significant assumptions would have had on the calculated fair value in 2014 assuming all other assumptions remained constant : replace_table_token_7_th intangible assets subject to amortization are evaluated for impairment testing whenever events or changes in circumstances indicate that the carrying amount of an amortizable intangible asset may not be recoverable . if impairment indicators exist for an amortizable intangible asset , the undiscounted future cash flows associated with the expected service potential of the asset are compared to the carrying value of the asset . if our projection of undiscounted future cash flows is in excess of the carrying value of the intangible asset , no impairment charge is recorded . if our projection of undiscounted future cash flows is less than the carrying value of the intangible asset , an impairment charge would be recorded to reduce the intangible asset to its fair value . the cash flow projections are based upon a number of assumptions , including future sales levels and future cost of goods and operating expense levels , as well as economic conditions , changes to our business model or changes in consumer acceptance of our products which are more subjective in nature . we believe that the assumptions we have made in projecting future cash flows for the evaluations described above are reasonable and currently no impairment indicators exist for our intangible assets subject to amortization . in those cases where we determine that the useful life of long-lived assets should be shortened , we would depreciate the net book value in excess of the salvage value ( after testing for impairment as described above ) , over the revised remaining useful life of such asset thereby increasing amortization expense . in determining the useful life of our lanvin brand names and trademarks , we applied the provisions of asc topic 350-30-35-3. the only factor that prevented us from determining that the lanvin brand names and trademarks were indefinite life intangible assets was item c. โ any legal , regulatory , or contractual provisions that may limit the useful life. โ the existence of a repurchase option in 2025 may limit the useful life of the lanvin brand names and trademarks to the company . however , this limitation would only take effect if the repurchase option were to be exercised and the repurchase price was paid . if the repurchase option is not exercised , then the lanvin brand names and trademarks are expected to continue to contribute directly to the future cash flows of our company and their useful life would be considered to be indefinite . 38 with respect to the application of asc topic 350-30-35-8 , the lanvin brand names and trademarks would only have a finite life to our company if the repurchase option were exercised , and in applying asc topic 350-30-35-8 , we assumed that the repurchase option is exercised . when exercised , lanvin has an obligation to pay the exercise price and the company would be required to convey the lanvin brand names and trademarks back to lanvin . the exercise price to be received ( residual value ) is well in excess of the carrying value of the lanvin brand names and trademarks , therefore no amortization is required . derivatives we account for derivative financial instruments in accordance with asc topic 815 , which establishes accounting and reporting standards for derivative instruments , including certain derivative instruments embedded in other contracts , and for hedging activities . this topic also requires the recognition of all derivative instruments as either assets or liabilities on the balance sheet and that they are measured at fair value . we currently use derivative financial instruments to hedge certain anticipated transactions and interest rates , as well as receivables denominated in foreign currencies . we do not utilize derivatives for trading or speculative purposes . hedge effectiveness is documented , assessed and monitored by employees who are qualified to make such assessments and monitor the instruments . variables that are external to us such as social , political and economic risks may have an impact on our hedging program and the results thereof . income taxes the company accounts for income taxes using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in its financial statements or tax returns . the net deferred tax assets assume sufficient future earnings for their realization , as well as the continued application of currently anticipated tax rates . included in net deferred tax assets is a valuation allowance for deferred tax assets , where management believes it is more-likely-than-not that the deferred tax assets will not be realized in the relevant jurisdiction . if the company determines that a deferred tax asset will not be realizable , an adjustment to the deferred tax asset will result in a reduction of net income at that time .
| results of operations see information regarding regulation s-k item 10 ( e ) , โ use of non-gaap financial measures in commission filings , โ on page v of this form 10-k. as a result of the termination of the burberry license , after declining 14 % in 2013 , net sales in 2014 declined 11 % to $ 499.3 million , as compared to $ 563.6 million in 2013. however , with respect to the company 's ongoing brands ( excluding burberry brand sales ) , after increasing 23 % in 2013 , net sales in 2014 increased 15 % to $ 499.3 million , as compared to $ 433.3 million in 2013. replace_table_token_8_th at comparable foreign currency exchange rates , ongoing brand net sales increased 16 % in 2014 , as there was no discernible effect of currency rates on net sales in 2013. the average u.s. dollar/euro exchange rates were 1.33 in both 2014 and 2013 and 1.28 in 2012. ongoing european-based prestige product sales increased 18 % in 2014 to $ 394.0 million , as compared to 2013. new product launches were the primary catalyst for sales growth in 2014. karl lagerfeld 's signature scents for both men and women yielded $ 24.2 million in incremental sales in 2014. steady gains from legend fragrances along with the 2014 launch of emblem , enabled montblanc brand sales to continue to outperform expectations with sales reaching $ 110.8 million in 2014 , up 33 % as compared to 2013. montblanc has now become our top selling brand .
| 4,662 |
through its wholly owned subsidiary , the bank , with five retail offices located in the new york metropolitan area , it offers a wide variety of business and personal banking products and services . the bank offers a traditional range of services to individuals , businesses and others needing banking services . its primary lending products are commercial mortgages and commercial and industrial loans . substantially all loans are secured by specific items of collateral including business assets , consumer assets , and commercial and residential real estate . commercial loans are expected to be repaid from cash flow from operations of businesses . there are no significant concentrations of loans to any one industry or customer . the bank 's primary deposit products are checking , savings , and term deposit accounts . the company is focused on organically growing and expanding its position in the new york metropolitan area . through an experienced team of commercial relationship managers and its integrated , client-centric approach , the bank has successfully demonstrated its ability to consistently grow market share by deepening existing client relationships and continually expanding its client base through referrals . since initiating the transition to a core-funded institution with the opening of its first banking center in 2006 , the bank has maintained a goal of converting many of its commercial lending clients into full retail relationship banking clients . this deposit growth has been a result of the bank 's diversified funding strategy , which affords it the opportunity to be a core funded and branch light institution . deposits are primarily derived from three sources : existing lending relationships , non-borrowing clients usually sourced through banking centers and debit card issuing business . additionally , part of the diversified strategy is growth in deposits through government or state directed fund deposits and cash management solutions provided to the cryptocurrency exchange customer . given the size of the market in which the bank operates and its differentiated approach to client service , there is significant opportunity to continue its loan and deposit growth trajectory . critical accounting policies a summary of accounting policies is described in note 1 to the consolidated financial statements included in this report . critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change . critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions . management believes that the most critical accounting policies , which involve the most complex or subjective decisions or assessments , are as follows : allowance for loan losses although management evaluates available information to determine the adequacy of the allowance for loan losses , the level of allowances is an estimate which is subject to significant judgement and short term change . because of uncertainties associated with local economic conditions , collateral values and future cash flows on the loan portfolio , it is reasonably possible that a material change could occur in the allowance for loan losses in the near term due to economic , operating , regulatory and other conditions beyond the company 's control . however , the amount of the change that is reasonably possible can not be estimated . the evaluation of the adequacy of loan collateral is often based upon estimates and appraisals . because of changing economic conditions , the valuations determined from such estimates and appraisals may also change . accordingly , the company may ultimately incur losses that vary from management 's current estimates . adjustments to the allowance for loan losses will be reported in the period such adjustments become known or can be reasonably estimated . all loan losses are charged to the allowance for loan losses when the loss actually occurs or when the collectability of the principal is unlikely . recoveries are credited to the allowance at the time of recovery . emerging growth company pursuant to the jobs act , an egc is provided the option to adopt new or revised accounting standards that may be issued by the fasb or the sec either ( i ) within the same periods as those otherwise 45 applicable to non-egcs or ( ii ) within the same time periods as private companies . the company elected delayed effective dates of recently issued accounting standard . as permitted by jobs act , so long as it qualifies as an egc , the company will take advantage of some of the reduced regulatory and reporting requirements that are available to it , including , but not limited to , not being required to comply with the auditor attestation requirements of section 404 ( b ) of the sarbanes-oxley act , reduced disclosure obligations regarding executive compensation , and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments . discussion on the results of operations for the years ended december 31 , 2017 , december 31 , 2016 and december 31 , 2015 net income for the year ended december 31 , 2017 , net income was $ 12.4 million , an increase of $ 7.4 million or 146.7 % from $ 5.0 million for the year ended december 31 , 2016. the increase was due to an increase in net interest income after provision for loan losses of $ 15.0 million , primarily driven by higher volume of loans combined with higher yield on loans , and an increase in non-interest income of $ 5.9 million , primarily driven by an increase in service charges and fees . story_separator_special_tag 31 , 2017 , net interest income was $ 52.1 million , an increase of $ 14.0 million , or 36.8 % , compared to $ 38.1 million in 2016. the increase in net interest income is mainly attributable to higher volume of loans , combined with higher yield on loans , partially offset by a $ 2.6 million increase in interest expense . the increase in interest expense was primarily driven by the interest on subordinated debt issued in march 2017. at december 31 , 2017 total average interest-earning assets increased by $ 416.6 million and total average interest bearing liabilities increased by $ 74.1 million . net interest rate spread decreased by 32 basis points to 2.94 % for the year ended december 31 , 2017 from 3.26 % for the year ended december 31 , 2016 , while net interest margin decreased 3 basis point to 3.54 % in the year ended december 31 , 2017 from 3.57 % in 2016. net interest income increased $ 10.6 million , or 38.8 % , to $ 38.1 million for the year ended december 31 , 2016 from $ 27.4 million for the year ended december 31 , 2015. the increase in net interest income is mainly attributable to higher volume of loans , combined with higher yield on loans . total average interest earning assets increased by $ 240.2 million , which was offset by an increase of $ 88.6 million in total interest bearing liabilities . net interest rate spread increased 19 basis points to 3.26 % for the year ended december 31 , 2016 from 3.07 % for the year ended december 31 , 2015 , while net interest margin increased 21 basis points to 3.57 % for the year ended december 31 , 2016 from 3.36 % for the year ended december 31 , 2015. interest income interest income increased $ 16.6 million , or 37.6 % , to $ 60.8 million for the year ended december 31 , 2017 from $ 44.2 million for the year ended december 31 , 2016. this was attributable , primarily , to an increase in income from interest and fees on loans , which increased $ 14.7 million , or 34.7 % , to $ 57.1 million for the year ended december 31 , 2017 from $ 42.4 million for the year ended december 31 , 2016. the increase in interest income on loans was due to an increase in average balance of loans of $ 313.0 million , or 33.6 % , to $ 1.2 billion for the year ended december 31 , 2017 from $ 931.2 million for the year ended december 31 , 2016. this increase was due to the bank 's continued success in loan growth . interest income increased $ 11.5 million , or 35.1 % , to $ 44.2 million for the year ended december 31 , 2016 from $ 32.7 million for the year ended december 31 , 2015. this was attributable to an increase in 48 interest and fees on loans , which increased $ 11.3 million , or 36.1 % , to $ 42.4 million for the year ended december 31 , 2016 from $ 31.1 million for the year ended december 31 , 2015. the increase in interest income on loans was due to an increase in average balance of loans of $ 227.1 million , or 32.3 % , to $ 931.2 million for the year ended december 31 , 2016 from $ 704.1 million for the year ended december 31 , 2015. this increase was due to the bank 's continued success in loan growth . interest expense interest expense increased $ 2.6 million , or 42.4 % , to $ 8.7 million for the year ended december 31 , 2017 from $ 6.1 million for the year ended december 31 , 2016 , caused by an increase in the average balance of interest bearing deposits . the average rate paid on interest bearing deposits increased eleven basis points to 0.91 % for the year ended december 31 , 2017 from 0.80 % for the year ended december 31 , 2016. the average balance of interest bearing deposits increased $ 38.3 million , or 6.3 % , to $ 641.9 million for the year ended december 31 , 2017 from $ 603.6 million for the year ended december 31 , 2016. interest expense increased $ 829,000 , or 15.8 % , to $ 6.1 million for the year ended december 31 , 2016 from $ 5.3 million for the year ended december 31 , 2015 , caused by an increase in the average balance of interest bearing deposits . the average rate paid on interest bearing deposits increased 5 basis point to 0.80 % for the year ended december 31 , 2016 from 0.75 % for the year ended december 31 , 2015. the average balance of interest bearing deposits increased $ 97.8 million , or 19.3 % , to $ 603.6 million for the year ended december 31 , 2016 from $ 505.8 million for the year ended december 31 , 2015. provision for loan losses for the year ended december 31 , 2017 , provision for loan losses was $ 7.1 million , compared to $ 8.1 million in 2016 , a decrease of $ 1.0 million , or 12.4 % . the provisions recorded resulted in the allowance for loan losses of $ 14.9 million , or 1.05 % of total loans at december 31 , 2017 , compared to $ 11.8 million , or 1.12 % of total loans at december 31 , 2016. provision for loan losses decreased , primarily , as the result of better asset quality and lower charge-offs of $ 4.0 million the year ended december 31 , 2017 , including a $ 3.7 million charge off related to the bank 's taxi medallion portfolio , when compared to loans-charged off for the year ended december 31 , 2016. at december 31 , 2017 , there was a balance of $ 1.2 million in the bank 's
| summary of loan loss experience the following tables present a summary by loan portfolio segment of allowance for loan and lease loss , loan loss experience , and provision for loan losses for the years indicated ( dollars in thousands ) : replace_table_token_4_th deposits the tables below summarize the bank 's deposit composition by segment for the periods indicated , and the dollar and percent change from december 31 , 2016 to december 31 , 2017 and december 31 , 2015 to december 31 , 2016 ( dollars in thousands ) : โ โ โ at december 31 , โ โ โ โ 2017 โ โ percentage of total balance โ โ 2016 โ โ percentage of total balance โ โ 2015 โ โ percentage of total balance โ non-interest-bearing demand deposits โ โ โ $ 812,497 โ โ โ โ โ 57.86 % โ โ โ โ $ 403,402 โ โ โ โ โ 40.59 % โ โ โ โ $ 250,373 โ โ โ โ โ 32.68 % โ โ money market โ โ โ โ 484,589 โ โ โ โ โ 34.51 โ โ โ โ โ 482,393 โ โ โ โ โ 48.54 โ โ โ โ โ 392,525 โ โ โ โ โ 51.24 โ โ savings accounts โ โ โ โ 27,024 โ โ โ โ โ 1.92 โ โ โ
| 4,663 |
70 amerisafe , inc. and subsidiaries notes to consolidated financial statements december 31 , 2020 a summary of the company 's realized gains and losses on sales , calls or redemptions of investments for 2020 , 2019 and 2018 is as follows : replace_table_token_34_th major categories of the company 's net investment income are summarized as follows : replace_table_token_35_th 71 amerisafe , inc. and subsidiaries notes to consolidated financial statements december 31 , 2020 the following table summarizes the fair value and gross unrealized losses on fixed maturity securities , aggregated by major investment category and length of time that the individual securities have been in a continuous unrealized loss position : less than 12 months 12 months or greater total fair value of investments with unrealized losses gross unrealized losses fair value of investments with unrealized losses gross unrealized losses fair value of investments with unrealized losses gross unrealized losses ( in thousands ) december 31 , 2020 available-for-sale corporate bonds $ 2,515 story_separator_special_tag the following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto included in item 8 of this report . this discussion includes forward-looking statements that are subject to risks , uncertainties and other factors described in item 1a of this report . these factors could cause our actual results in 2021 and beyond to differ materially from those expressed in , or implied by , those forward-looking statements . overview amerisafe is a holding company that markets and underwrites workers ' compensation insurance through its insurance subsidiaries . workers ' compensation insurance covers statutorily prescribed benefits that employers are obligated to provide to their employees who are injured in the course and scope of their employment . our business strategy is focused on providing this coverage to small to mid-sized employers engaged in hazardous industries , principally construction , trucking , logging and lumber , manufacturing , agriculture , maritime , and oil and gas . employers engaged in hazardous industries pay substantially higher than average rates for workers ' compensation insurance compared to employers in other industries , as measured per payroll dollar . the higher premium rates are due to the nature of the work performed and the inherent workplace danger of our target employers . hazardous industry employers also tend to have less frequent but more severe claims as compared to employers in other industries due to the nature of their businesses . we provide proactive safety reviews of employers ' workplaces . these safety reviews are a vital component of our underwriting process and also promote safer workplaces . we utilize intensive claims management practices that we believe permit us to reduce the overall cost of our claims . in addition , our audit services ensure that our policyholders pay the appropriate premiums required under the terms of their policies and enable us to monitor payroll patterns that cause underwriting , safety or fraud concerns . we believe that the higher premiums typically paid by our policyholders , together with our disciplined underwriting and safety , claims and audit services , provide us with the opportunity to earn attractive returns for our shareholders . we actively market our insurance in 27 states through independent agencies , as well as through our wholly owned insurance agency subsidiary . we are also licensed in an additional 20 states , the district of columbia and the u.s. virgin islands . two of the key financial measures that we use to evaluate our performance are return on average equity and growth in book value per share adjusted for dividends paid to shareholders . we calculate return on average equity by dividing annual net income by the average of annual shareholders ' equity . our return on average equity was 19.9 % in 2020 , 22.1 % in 2019 and 17.2 % in 2018. we calculate book value per share by dividing ending shareholders ' equity by the number of common shares outstanding . our book value per share was $ 22.70 at december 31 , 2020 , $ 22.29 at december 31 , 2019 and $ 21.26 at december 31 , 2018. we paid cash dividends of $ 4.58 per share in 2020 , $ 4.50 per share in 2019 and $ 4.38 per share in 2018. investment income is an important element of our net income . because the period of time between our receipt of premiums and the ultimate settlement of claims is often several years or longer , we are able to invest cash from premiums for significant periods of time . as a result , we are able to generate more investment income from our premiums as compared to insurance companies that operate in other lines of business that pay claims more quickly . at december 31 , 2020 , our investment portfolio , including cash and cash equivalents , was $ 1.2 billion and produced net investment income of $ 29.4 million in 2020 , $ 32.5 million in 2019 and $ 30.5 million in 2018. the use of reinsurance is an important component of our business strategy . we purchase reinsurance to reduce our net liability on individual risks and to protect against catastrophic losses . our reinsurance program for 2021 includes 15 reinsurers that provide coverage to us in excess of a certain specified loss amount , or retention level . our 2021 reinsurance program provides us with reinsurance coverage for each loss occurrence up to $ 70.0 million , subject to applicable limitations , deductibles , retentions and aggregate limits . however , for any loss occurrence involving only one claimant , our reinsurance coverage is limited to $ 10.0 million , subject to applicable deductibles , retentions and aggregate limits . story_separator_special_tag in 2019 , we decreased our estimates for prior year loss reserves by $ 65.0 million . in 2018 , we decreased our estimates for prior year loss reserves by $ 45.6 million . the workers ' compensation insurance industry is cyclical in nature and influenced by many factors , including price competition , medical cost increases , natural and man-made disasters , changes in interest rates , changes in state laws and regulations , and general economic conditions . a hard market in our industry is characterized by decreased competition that results in higher premium rates , more restrictive policy coverage terms , and lower commissions paid to agencies . in contrast , a soft market is characterized by increased competition that results in lower premium rates , expanded policy coverage terms , and higher commissions paid to agencies . our strategy is to focus on maintaining underwriting profitability throughout the cycle . for additional information regarding our loss reserves and the analyses and methodologies used by management to establish these reserves , see the information under the caption โ businessโloss reserves โ in item 1 of this report . 39 principal revenue and expense items our revenues consist primarily of the following : net premiums earned . net premiums earned is the earned portion of our net premiums written . net premiums written is equal to gross premiums written less premiums ceded to reinsurers . gross premiums written includes the estimated annual premiums from each insurance policy we write in our voluntary and assigned risk businesses during a reporting period based on the policy effective date or the date the policy is bound , whichever is later . premiums are earned on a daily pro rata basis over the term of the policy . at the end of each reporting period , premiums written that are not earned are classified as unearned premiums and are earned in subsequent periods over the remaining term of the policy . our insurance policies typically have a term of one year . thus , for a one-year policy written on july 1 , 2020 for an employer with constant payroll during the term of the policy , we would earn half of the premiums in 2020 and the other half in 2021. on a monthly basis , we also recognize net premiums earned from mandatory pooling arrangements . we estimate the annual premiums to be paid by our policyholders when we issue the policies and record those amounts on our balance sheet as premiums receivable . we conduct premium audits on all of our voluntary business policyholders annually , upon the expiration of each policy , including when the policy is renewed . the purpose of these audits is to verify that policyholders have accurately reported their payroll expenses and employee job classifications , and therefore have paid us the premium required under the terms of the policies . the difference between the estimated premium and the ultimate premium is referred to as โ earned but unbilled โ premium , or ebub premium . ebub premium is subject to significant variability and can either increase or decrease earned premium based upon several factors , including changes in premium growth , industry mix and economic conditions . due to the timing of audits and other adjustments , the ultimate premium earned is generally not determined for several months after the expiration of the policy . we review the estimate of ebub premiums on a quarterly basis using historical data and applying various assumptions based on the current market and economic conditions , and we record an adjustment to premium , related losses , and expenses as warranted . net investment income and net realized gains and losses on investments . we invest our statutory surplus funds and the funds supporting our insurance liabilities in fixed maturity securities , equity securities and alternative investments . in addition , a portion of these funds are held in cash and cash equivalents to pay current claims . our net investment income includes interest and dividends earned on our invested assets and amortization of premiums and discounts on our fixed maturity securities . we assess the performance of our investment portfolio using a standard tax equivalent yield metric . investment income that is tax-exempt is increased by our marginal federal tax rate to express yield on tax-exempt securities on the same basis as taxable securities . net realized gains and losses on our investments are reported separately from our net investment income . net realized gains occur when our investment securities are sold for more than their cost or amortized cost , as applicable . net realized losses occur when our investment securities are sold for less than their cost or amortized cost , as applicable , or are written down as a result of other-than-temporary impairment . we classify the majority of our fixed maturity securities as held-to-maturity . the remainder of our fixed maturity securities are classified as available-for-sale . net unrealized gains or losses on our securities classified as available-for-sale are reported separately within accumulated other comprehensive income on our balance sheet . changes in net unrealized gains or losses on our equity securities are recognized in net income . fee and other income . we recognize commission income earned on policies issued by other carriers that are sold by our wholly owned insurance agency subsidiary as the related services are performed . we also recognize a small portion of interest income from mandatory pooling arrangements in which we participate . our expenses consist primarily of the following : loss and loss adjustment expenses incurred . loss and loss adjustment expenses incurred represents our largest expense item and , for any given reporting period , includes estimates of future claim payments , changes in those estimates from prior reporting periods and costs associated with investigating , defending , and administering claims . these expenses fluctuate based on the amount and types of risks we insure .
| results of operations the table below summarizes certain operating results and key measures we use in monitoring and evaluating our operations . replace_table_token_14_th replace_table_token_15_th ( 1 ) includes policy acquisition expenses , and other general and administrative expenses , excluding commissions and salaries and benefits , related to insurance operations and corporate operating expenses . ( 2 ) we adopted asu 2016-13 , financial instruments โ credit losses ( topic 326 ) , in the first quarter of 2020. we elected the modified retrospective approach . therefore , prior comparative periods are not adjusted 44 ( 3 ) the current accident year loss ratio is calculated by dividing loss and loss adjustment expenses incurred for the current accident year by the current year 's net premiums earned . ( 4 ) the prior accident year loss ratio is calculated by dividing the change in loss and loss adjustment expenses incurred for prior accident years by the current year 's net premiums earned . ( 5 ) the net underwriting expense ratio is calculated by dividing underwriting and certain other operating costs , commissions and salaries , and benefits by the current year 's net premiums earned . ( 6 ) the net dividend ratio is calculated by dividing policyholder dividends by the current year 's net premiums earned . ( 7 ) the net combined ratio is the sum of the net loss ratio , the net underwriting expense ratio and the net dividend ratio . ( 8 ) we adopted asu 2016-02 , leases ( topic 842 ) , in the first quarter of 2019. we elected the new transition method under the transition guidance within the new standard . therefore , prior comparative periods are not adjusted . overview of operating results year ended december 31 , 2020 compared to year ended december 31 , 2019 gross premiums written . gross premiums written for 2020 were $ 303.1 million , compared to $ 333.5 million for 2019 , a decrease of 9.1 % .
| 4,664 |
interest f-18 and penalties were immaterial in 2012 , 2011 and 2010. as a result of our net operating loss carryforward position , we are subject to audit by the internal revenue service since our inception , as well as by several state jurisdictions for the years ended december 31 , 2001 through 2012. a reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows : replace_table_token_35_th 10. stockholders ' equity : stock-based awards we grant stock-based awards under the orasure technologies , inc. stock award plan , as amended and restated ( the ยstock planย ) . the stock plan permits stock-based awards to employees , outside directors and consultants or other third-party advisors . awards which may be granted under the stock plan include qualified story_separator_special_tag statements below regarding future events or performance are ยforward-looking statementsย within the meaning of the private securities litigation reform act of 1995. our actual results could be quite different from those expressed or implied by the forward-looking statements . 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 are a leader in the development , manufacture , marketing and sale of oral fluid diagnostic products and specimen collection devices using our proprietary oral fluid 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 . in september 2012 , we began selling the first and only rapid point-of-care hiv test approved for use in the domestic consumer retail market . dnag , a canadian subsidiary acquired on august 17 , 2011 , manufactures and sell kits that are used to collect , stabilize , and store samples of genetic material for molecular testing in the academic research , clinical genetic testing , pharmacogenomics , personalized medicine , animal and livestock genetics markets . we also manufacture and sell medical devices used for the removal of benign skin lesions by cryosurgery , or freezing . one of our cryosurgery products is sold in the over-the-counter or consumer retail market in north america , europe , central and south america , and australia . our products are sold in the united states and internationally to various clinical laboratories , hospitals , clinics , community-based organizations and other public health organizations , research and academic institutions , distributors , government agencies , physicians ' offices , and commercial and industrial entities . story_separator_special_tag there have been numerous initiatives on the federal and state levels for comprehensive reforms affecting the payment for , the availability of and reimbursement for healthcare services in the united states . one example is the affordable care act , the federal healthcare reform law enacted in 2010. the affordable care act imposes a 2.3 % excise tax on certain transactions , including u.s. sales of many medical devices , which will include domestic non-retail sales of some of our products . this new tax became effective in january 2013 and will have a negative impact on our gross margin . also , on august 2 , 2011 , president obama signed into law the budget control act of 2011 , which was designed to reduce federal spending over the next 10 years by $ 2.5 trillion . under that law , a select committee of congress was tasked with identifying and recommending $ 1.2 trillion in spending cuts by late november 2011. because the committee did not agree on spending cuts within that time frame , certain automatic cuts to discretionary , national defense and medicare spending became effective on march 1 , 2013. although the full impact is uncertain , the spending cuts implemented under this new law could adversely affect our customers ' ability to purchase our products . business segments we operate our business within two reportable segments : our ยosurย business , which consists of the development , manufacture and sale of oral fluid diagnostic products , specimen collection devices , and medical devices used for the removal of benign skin lesions by cryosurgery ; and our ยdnagย or molecular collection systems business , which consists 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 consist primarily of products sold into the united states and internationally to various clinical laboratories , hospitals , clinics , community-based organizations and other public health organizations , distributors , government agencies , physicians ' offices , and commercial and industrial entities . osur also derives revenues from licensing and product development activities . dnag revenues consist of products sold into the academic research , clinical genetic testing , pharmacogenomics , personalized medicine , animal and livestock genetics markets . results of operations year ended december 31 , 2012 compared to december 31 , 2011 consolidated net revenues the table below shows the amount of total net product revenues ( dollars in thousands ) generated by each of our business segments and net revenue generated by licensing and product development activities . story_separator_special_tag the table below shows a breakdown of our total net intercept ยฎ revenues ( dollars in thousands ) generated in each market during 2012 and 2011. replace_table_token_7_th domestic intercept ยฎ sales decreased 21 % to $ 6.3 million in 2012 from $ 8.0 million in 2011. in 2011 , our largest laboratory distributor began selling its own competing oral specimen collection device and a panel of oral fluid drug assays suitable for use on fully-automated high throughput homogenous processing systems . as a result , by the end of 2012 , this distributor had stopped purchasing our intercept ยฎ product line . intercept ยฎ sales to this distributor were $ 1.5 million for the year ended december 31 , 2012 compared to $ 3.5 million for the year ended december 31 , 2011 . 52 international intercept ยฎ sales decreased 63 % to $ 706,000 in 2012 from $ 1.9 million in 2011 , as a result of lower purchases by our uk laboratory distributor as it also has begun selling its own competing oral specimen collection device . we expect sales to this distributor to remain flat in 2013. intercept ยฎ sales to this distributor were $ 610,000 for the year ended december 31 , 2012 compared to $ 1.9 million in the year ended december 31 , 2011. during 2006 , in an effort to expand our intercept ยฎ product line and meet the needs of our laboratory customers , we entered into a joint development agreement with roche diagnostics to develop a series of homogeneous fully-automated oral fluid drugs of abuse assays . fda 510 ( k ) clearance has since been received for assays to detect pcp , opiates , cocaine , methamphetamines and amphetamines . however , we have experienced significant delays in completing development of the assays under our collaboration , primarily because roche has not been able to obtain fda clearance of a thc assay . a thc assay is needed to offer a complete nida-5 panel of assays required by our customers . the inability to obtain clearance of this assay has also delayed development of assays beyond the nida-5 panel . we are in discussions with roche about the thc assay and the future of our collaboration . cryosurgical systems market sales of our products in the cryosurgical systems market ( which includes both the physicians ' office and otc markets ) increased to $ 14.9 million for the year ended december 31 , 2012 from $ 12.1 million for the year ended december 31 , 2011. the table below shows a breakdown of our total net cryosurgical revenues ( dollars in thousands ) generated in each market during 2012 and 2011. replace_table_token_8_th sales of our histofreezer ยฎ product to physicians ' offices in the united states increased 6 % to $ 7.2 million in 2012 , compared to $ 6.8 million in 2011 , due to the success of sales and promotional efforts by our distributors . during the year ended december 31 , 2012 , international sales of histofreezer ยฎ increased 4 % to $ 1.5 million compared to $ 1.4 million in the same period of the prior year , largely as a result of higher out-sales in australia by our distributor in that new market . sales of our otc cryosurgical products during 2012 increased 62 % to $ 6.3 million from $ 3.9 million in 2011. this increase was largely the result of higher sales to both our latin american distributor , genomma , and our european distributor , reckitt benckiser . in 2012 , genomma purchased $ 2.7 million compared to $ 990,000 during 2011. early in 2011 , the mexican government placed limitations on the advertising genomma could use for our product . at the same time , the brazilian government also required changes to our package insert . both of these events negatively impacted sales of our product to genomma during 2011 , but were resolved by the end of that year . sales to reckitt benckiser increased to $ 3.3 million in 2012 from $ 2.6 million in 2011 as a result of increased advertising and promotional activities and expansion into additional european countries . our distribution contract with reckitt benckiser has expired and we are currently negotiating the final terms of the renewal of this agreement . 53 insurance risk assessment market sales to the insurance risk assessment market decreased 14 % to $ 4.5 million in 2012 from $ 5.2 million in 2011 , largely as a result of the loss of one of our larger customers who changed its underwriting methodologies in 2011. licensing and product development licensing and product development revenues increased 73 % to $ 2.1 million in 2012 from $ 1.2 million in 2011. during the first quarter of 2012 , we received a $ 1.0 million milestone payment as a result of our achievement of certain regulatory and commercial objectives pursuant to our collaboration agreement with merck for the development and promotion of our oraquick ยฎ rapid hcv test in international markets . no such milestone payments were received in the prior year . the remaining licensing revenues for these periods represent royalties paid on domestic outsales of merck 's otc cryosurgical wart removal product , pursuant to a license and settlement agreement executed in january 2008. in the latter half of 2011 , t he royalty rate decreased pursuant to the terms of our license . royalties under this license will no longer be payable after certain of our cryosurgical patents expire in august 2013. dnag segment molecular collection systems net molecular collection systems revenues primarily represent sales of the oragene ยฎ product line by our subsidiary , dna genotek , which we acquired in august 2011. during 2012 , net dnag revenues included several new orders from large commercial customers as well as continued strong sales into the academic research market despite funding challenges in both canada and the united states .
| current consolidated financial results during the year ended december 31 , 2012 , our consolidated net revenues were $ 87.8 million compared to $ 81.9 million for the year ended december 31 , 2011. net product revenues during the year ended december 31 , 2012 increased 6 % when compared to 2011 , primarily as a result of the inclusion of dnag revenues for all of 2012. full-year 2012 net revenues from our molecular collection systems subsidiary were $ 14.3 million , compared to $ 6.2 million in 2011 for the period from the august 17 , 2011 acquisition date through december 31 , 2011. licensing and product development revenues for 2012 increased as a result of a $ 1.0 million milestone payment received from our achievement of certain regulatory and commercial objectives pursuant to the terms of our hcv collaboration agreement with merck . the initial term of our domestic collaboration agreement with merck expired in september 2012 and was not renewed . we are also in the process of terminating our international agreement with merck . termination of these agreements is not expected to have a material impact on sales of our oraquick ยฎ hcv test , either in the u.s. or in international markets . the milestone payment was partially offset by a decrease in the royalty rate paid to us on domestic outsales of merck 's otc cryosurgical wart removal product , pursuant to a license and settlement agreement executed in january 2008. our consolidated net loss for the year ended december 31 , 2012 was $ 15.1 million , or $ 0.29 per share , compared to a net loss of $ 8.8 million , or $ 0.19 per share , for the year ended december 31 , 2011. our loss for the current period included $ 9.9 million in costs associated with the commercialization of our oraquick ยฎ in-home hiv test .
| 4,665 |
14 contractual obligations ( in thousands ) payments due by period contractual obligation total 2007 2008-2009 2010-2011 after 2011 long-term debt $ 168 $ 37 $ 38 $ 43 $ 50 capital lease obligations ย principal 1,800 ย ย ย 1,800 capital lease obligations ย interest 6,354 155 310 339 5,550 operating leases 1,720 497 869 354 0 purchase commitments 2,695 1,314 1,381 ย ย total $ 12,737 $ 2,003 $ 2,598 $ 736 $ 7,400 off-balance sheet arrangements the only off-balance sheet arrangements the company has are operating leases for production equipment and a car lease . rental expense under these non-cancellable leases was $ 498,000 in 2006 , $ 498,000 in 2005 , and $ 492,000 in 2004. minimum future rental payments under non-cancellable operating lease obligations as of december 31 , 2006 are : 2007 , $ 497,000 ; 2008 , $ 445,000 ; 2009 , $ 424,000 ; 2010 $ 354,000 and thereafter , $ 0. the company has the right to purchase the leased equipment for its fair market value at the end of the lease . relationship with vistaprint limited the company performed printing and order fulfillment services for vistaprint limited that resulted in no revenue in 2006 and revenue of $ 12,012,000 in 2005 , and $ 16,467,000 in 2004. there were no outstanding receivables from vistaprint as of december 31 , 2006. in 2005 and 2004 , the company also recognized $ 19,556,000 and $ 2,443,000 of revenue attributable to the amortization of the $ 22 million contract buy-out fee received on september 1 , 2004 in connection with the new supply agreement . robert s. keane is a shareholder in and chief executive officer of vistaprint limited and is the son of kevin t. keane , the chairman of the board of directors of mod-pac . mod-pac had a supply agreement with vistaprint limited pursuant to which they were vistaprint limited 's exclusive north american supplier of printed products through august 30 , 2005. this agreement , which was effective july 2004 , set prices on a price per unit basis and provided a framework for pricing products covered by any renewals or extensions through august 2007. the unit prices were arrived at by reference to mod-pac 's fully burdened costs for products subject to the agreement , plus a 25 % mark-up . the $ 22 million buyout fee that vistaprint paid mod-pac on august 31 , 2004 was negotiated between the two companies . the buyout fee was primarily associated with providing mod-pac cost recovery and profit on the production resources developed or acquired which were dedicated to the fulfillment of vistaprint 's business in north america through 2011. this agreement replaced a previous supply agreement that extended to 2011 , and whereby mod-pac charged vistaprint on a cost plus one-third mark-up basis . on april 15 , 2005 , the company agreed to an amendment of the supply agreement with vistaprint , which modified the exclusivity provision regarding the north american market . as a result , vistaprint was allowed to produce and ship product to its customers in north america from its windsor , ontario plant prior to august 31 , 2005 , the expiration of the supply agreement , in exchange for payments to mod-pac that approximated mod-pac 's fixed costs and mark-up on such costs for the actual products vistaprint ships . these payments totaled $ 2,154,000 in 2005. simultaneously , the company executed a supply agreement with vistaprint for the 12 month period ending august 30 , 2006. this agreement established unit pricing for volumes above $ 750,000 per month , and for volumes below that threshold , a low volume surcharge was put into place . however , vistaprint is not obligated to purchase printed products from mod-pac under this agreement . during the fourth quarter of 2005 , given the final conclusion that the company no longer expects to have sales to vistaprint , the remaining $ 14.1 unamortized portion of the contract buy-out fee was recognized as revenue . recently issued accounting standards 15 during the first quarter of 2006 , the company adopted sfas 123 ( r ) , ยshare-based payment , ย applying the modified prospective method . this statement requires all equity-based payments to employees , including grants of employee stock options , to be recognized in the statement of earnings based on the grant date fair value of the award . under the modified prospective method , the company is required to record equity-based compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards outstanding as of the date of adoption . the company uses a straight-line method of attributing the value of stock-based compensation expense , subject to minimum levels of expense , based on vesting . stock compensation expense recognized during the period is based on the value of the portion of shared-based payment awards that is ultimately expected to vest during the period . stock compensation expense was $ 378,000 in 2006. no stock compensation expense was recognized prior to 2006. in june 2006 , the fasb issued fasb interpretation no . 48 , ยaccounting for uncertainty in income taxesย ( fin 48 ) . fin 48 clarifies the accounting and reporting for income taxes recognized in accordance with sfas no . 109 , ยaccounting for income taxes.ย fin 48 prescribes a comprehensive model for the financial statement recognition , measurement , presentation and disclosure of uncertain tax positions taken or expected to be taken on income tax returns . fin 48 is effective for fiscal years beginning after december 15 , 2006. the company is currently evaluating the impact of adopting fin 48 on our consolidated financial statements . critical accounting policies the preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes story_separator_special_tag 14 contractual obligations ( in thousands ) payments due by period contractual obligation total 2007 2008-2009 2010-2011 after 2011 long-term debt $ 168 $ 37 $ 38 $ 43 $ 50 capital lease obligations ย principal 1,800 ย ย ย 1,800 capital lease obligations ย interest 6,354 155 310 339 5,550 operating leases 1,720 497 869 354 0 purchase commitments 2,695 1,314 1,381 ย ย total $ 12,737 $ 2,003 $ 2,598 $ 736 $ 7,400 off-balance sheet arrangements the only off-balance sheet arrangements the company has are operating leases for production equipment and a car lease . rental expense under these non-cancellable leases was $ 498,000 in 2006 , $ 498,000 in 2005 , and $ 492,000 in 2004. minimum future rental payments under non-cancellable operating lease obligations as of december 31 , 2006 are : 2007 , $ 497,000 ; 2008 , $ 445,000 ; 2009 , $ 424,000 ; 2010 $ 354,000 and thereafter , $ 0. the company has the right to purchase the leased equipment for its fair market value at the end of the lease . relationship with vistaprint limited the company performed printing and order fulfillment services for vistaprint limited that resulted in no revenue in 2006 and revenue of $ 12,012,000 in 2005 , and $ 16,467,000 in 2004. there were no outstanding receivables from vistaprint as of december 31 , 2006. in 2005 and 2004 , the company also recognized $ 19,556,000 and $ 2,443,000 of revenue attributable to the amortization of the $ 22 million contract buy-out fee received on september 1 , 2004 in connection with the new supply agreement . robert s. keane is a shareholder in and chief executive officer of vistaprint limited and is the son of kevin t. keane , the chairman of the board of directors of mod-pac . mod-pac had a supply agreement with vistaprint limited pursuant to which they were vistaprint limited 's exclusive north american supplier of printed products through august 30 , 2005. this agreement , which was effective july 2004 , set prices on a price per unit basis and provided a framework for pricing products covered by any renewals or extensions through august 2007. the unit prices were arrived at by reference to mod-pac 's fully burdened costs for products subject to the agreement , plus a 25 % mark-up . the $ 22 million buyout fee that vistaprint paid mod-pac on august 31 , 2004 was negotiated between the two companies . the buyout fee was primarily associated with providing mod-pac cost recovery and profit on the production resources developed or acquired which were dedicated to the fulfillment of vistaprint 's business in north america through 2011. this agreement replaced a previous supply agreement that extended to 2011 , and whereby mod-pac charged vistaprint on a cost plus one-third mark-up basis . on april 15 , 2005 , the company agreed to an amendment of the supply agreement with vistaprint , which modified the exclusivity provision regarding the north american market . as a result , vistaprint was allowed to produce and ship product to its customers in north america from its windsor , ontario plant prior to august 31 , 2005 , the expiration of the supply agreement , in exchange for payments to mod-pac that approximated mod-pac 's fixed costs and mark-up on such costs for the actual products vistaprint ships . these payments totaled $ 2,154,000 in 2005. simultaneously , the company executed a supply agreement with vistaprint for the 12 month period ending august 30 , 2006. this agreement established unit pricing for volumes above $ 750,000 per month , and for volumes below that threshold , a low volume surcharge was put into place . however , vistaprint is not obligated to purchase printed products from mod-pac under this agreement . during the fourth quarter of 2005 , given the final conclusion that the company no longer expects to have sales to vistaprint , the remaining $ 14.1 unamortized portion of the contract buy-out fee was recognized as revenue . recently issued accounting standards 15 during the first quarter of 2006 , the company adopted sfas 123 ( r ) , ยshare-based payment , ย applying the modified prospective method . this statement requires all equity-based payments to employees , including grants of employee stock options , to be recognized in the statement of earnings based on the grant date fair value of the award . under the modified prospective method , the company is required to record equity-based compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards outstanding as of the date of adoption . the company uses a straight-line method of attributing the value of stock-based compensation expense , subject to minimum levels of expense , based on vesting . stock compensation expense recognized during the period is based on the value of the portion of shared-based payment awards that is ultimately expected to vest during the period . stock compensation expense was $ 378,000 in 2006. no stock compensation expense was recognized prior to 2006. in june 2006 , the fasb issued fasb interpretation no . 48 , ยaccounting for uncertainty in income taxesย ( fin 48 ) . fin 48 clarifies the accounting and reporting for income taxes recognized in accordance with sfas no . 109 , ยaccounting for income taxes.ย fin 48 prescribes a comprehensive model for the financial statement recognition , measurement , presentation and disclosure of uncertain tax positions taken or expected to be taken on income tax returns . fin 48 is effective for fiscal years beginning after december 15 , 2006. the company is currently evaluating the impact of adopting fin 48 on our consolidated financial statements . critical accounting policies the preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes
| financial condition and results of operations the following discussion and analysis of our financial condition and results of operations should be read together with the selected financial data , our consolidated financial statements and the related notes included elsewhere in this annual report . this discussion and analysis contains forward-looking statements that involve risks , uncertainties and assumptions . our actual results may differ materially from those anticipated in those forward-looking statements as a result of many factors including those under the caption ยforward-looking informationย in item 1. overview our strategy for returning to growth and profitability is by continuing to gain market share in the custom folding cartons business and aggressively entering the commercial print market by serving the largest print distributors and internet print providers , while capturing direct customers in select markets . we believe the commercial print industry will continue consolidating and , given our operational expertise to serve a large number of smaller orders with rapid production on a profitable basis , we can quickly gain market share . we believe we can effectively challenge other printer businesses because we offer faster speed , higher variability and flexibility , more value added services such as web-based print and can capitalize on our facility 's economies of scale to offer competitive prices with better margins than those printers whose business models are based on long lead-times and large production runs or those lacking the depth in capabilities and sufficient scale to profitably serve such a diverse marketplace . during the period of 2004 through 2006 reviewed in the following discussion , our operations have been significantly influenced by the activities associated with our former supply agreements with vistaprint limited .
| 4,666 |
๏ปฟ in 2018 , we initiated a phase ii clinical program in patients with alzheimer 's disease using pti-125 . our phase ii clinical program with pti-125 is substantially funded by research grant awards from the nih . pti-125 was discovered and designed in-house and was characterized by our academic collaborators during research activities that were conducted from approximately 2008 to date . we own exclusive , worldwide rights to pti-125 , without royalty obligations to any third party . ๏ปฟ pti-125dx โ we are developing pti-125dx as a blood-based biomarker/diagnostic to detect alzheimer 's disease . the goal of pti-125dx is to make the detection of alzheimer 's disease as simple as getting a blood test . this clinical-stage program is substantially funded by research grant awards from the nih . pti-125dx was discovered and designed in-house and was characterized by our academic collaborators during research activities that were conducted from approximately 2008 to date . we own exclusive , worldwide rights to pti-125dx , without royalty obligations to any third party . ๏ปฟ our scientific approach is different . ๏ปฟ for over 100 years , scientists have ascribed various neurodegenerative diseases to pathological proteins that misfold . misfolded proteins are also altered or they aggregate , such as amyloid and tau in the case of alzheimer 's disease . destruction of neuronal synapses , accelerated nerve cell death , and dysfunction of the brain support cells , are all widely believed to be a direct consequence of misfolded proteins . ๏ปฟ historically , the drug industry has attempted to treat alzheimer 's disease by developing drugs that block the synthesis of , or remove or dis-aggregate , beta amyloid and , more recently , tau . essentially , the prevailing doctrine said that amyloid must be cleared out of the brain . this scientific approach โ known as the amyloid hypothesis - has been repeatedly tested by our competitors in late stage clinical trials using a variety of antibody backbones , epitopes , target conformations , biomarkers and in various stages of disease . such studies have all failed to yield therapeutic benefit for patients with alzheimer 's disease . more recently , experimental efforts have been proposed to ramp up the brain 's immune system in people with alzheimer 's disease to remove amyloid or tau , an approach known as immunotherapy . current attempts to use immunotherapy to treat alzheimer 's disease may yet work , but for over 20 years this approach has also consistently failed due to lack of efficacy and or for safety reasons . for example , older adults who receive active immunotherapy treatment often show reduced responsiveness of the immune system , and patients who do improve sometimes develop a life-threatening brain inflammation 60 called aseptic meningitis . more generally , even when active or passive immunization against amyloid beta has reduced the brain 's amyloid load , such effects resulted in no therapeutic benefit to patients with alzheimer 's disease . ๏ปฟ since drug innovation is a trial-and-error process , clinical failures represent important learning opportunities . in the case of alzheimer 's disease , we believe the biopharmaceutical industry 's track record of persistent failure reflects a need to consider more recent and innovative approaches regarding the neurobiology of alzheimer 's disease . we believe such scientific approaches may broaden the range of possible treatment approaches . ๏ปฟ over the last ten years , we have developed a new and promising scientific approach for the treatment and diagnosis of neurodegeneration , particularly alzheimer 's disease . ๏ปฟ importantly , we do not seek to clear amyloid out of the brain . our approach is to stabilize a critical protein in the brain . ๏ปฟ โ proteopathy โ refers to a disease in which a protein becomes structurally abnormal , assembles and aggregates , and therefore loses its normal function and disrupts or injures the function of surrounding cells , tissues and organs . through years of basic research , we have identified a structurally altered protein in the brain . we believe our experimental evidence demonstrates that this proteopathy plays a critical role in the development of neurodegenerative diseases , including the neurodegeneration observed in alzheimer 's disease . using scientific insight and advanced tools in biochemistry , bioinformatics and imaging , we have elucidated this protein dysfunction . we have engineered a family of high-affinity small molecules to target the structurally altered protein and restore the protein to its normal shape and function . this family of small molecules , including pti-125 , was designed in-house and characterized by our academic collaborators . ๏ปฟ the target of pti-125 is an altered form of a scaffolding protein called filamin a ( โ flna โ ) . altered flna causes a cascade of toxic effects in the brain . altered flna is a proteopathy , which means that this protein is no longer capable of executing a stable , beneficial and protective role and instead becomes harmful and destructive to the brain . by reversing the alteration of flna , its pathology ceases to adversely affect surrounding cells in the brain . in animal models of disease , restoring normal flna resulted in a multitude of therapeutic effects , including normalizing neurotransmission , decreasing neuroinflammation and restoring memory and cognition . by restoring function to multiple receptors and exerting powerful anti-inflammatory effects , we believe our approach has potential to slow the progression of neurodegeneration in humans . thus , we have designed product candidates , such as pti-125 , with the goal of slowing or , potentially , even reversing the deterioration of brain cells . story_separator_special_tag ๏ปฟ financial overview ๏ปฟ we have yet to generate any revenues from product sales . we have an accumulated deficit of $ 164.0 million at december 31 , 2018. these losses have resulted principally from costs incurred in connection with research and development activities , salaries and other personnel-related costs and general corporate expenses . research and development activities include costs of preclinical and clinical trials as well as clinical supplies associated with our product candidates . salaries and other personnel-related costs include non-cash stock-based compensation associated with options and other equity awards granted to employees and non-employees . our operating results may fluctuate substantially from period to period as a result of the timing of preclinical activities , enrollment rates of clinical trials for our product candidates and our need for clinical supplies . ๏ปฟ we believe that our cash and cash equivalents at december 31 , 2018 , will enable us to fund our operating expenses for at least the next 12 months . in addition , we may seek in the future to fund our operations through additional public or private equity or debt financings or other sources . however , we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all . if we are unable to obtain financing or reach profitability , the related lack of liquidity will have a material adverse effect on our operations and future prospects . ๏ปฟ 62 we expect to continue to use significant cash resources in our operations for the next several years . our cash requirements for operating activities and capital expenditures may increase substantially in the future as we : ๏ปฟ ยท conduct preclinical and clinical trials for our product candidates ; ๏ปฟ ยท seek regulatory approvals for our product candidates ; ๏ปฟ ยท develop , formulate , manufacture and commercialize our product candidates ; ๏ปฟ ยท implement additional internal systems and develop new infrastructure ; ๏ปฟ ยท acquire or in-license additional products or technologies , or expand the use of our technology ; ๏ปฟ ยท maintain , defend and expand the scope of our intellectual property ; and ๏ปฟ ยท hire additional personnel . ๏ปฟ product revenue will depend on our ability to receive regulatory approvals for , and successfully market , our product candidates . if our development efforts result in regulatory approval and successful commercialization of our product candidates , we will generate revenue from direct sales of our drugs and or , if we license our drugs to future collaborators , from the receipt of license fees and royalties from sales of licensed products . we conduct our research and development programs through a combination of internal and collaborative programs . we rely on arrangements with universities , our collaborators , cros and clinical research sites for a significant portion of our product development efforts . ๏ปฟ we focus substantially all our research and development efforts on research and development in the areas of neurology . the following table summarizes expenses which have been reduced for reimbursements received for nih grants ( in thousands ) : ๏ปฟ ๏ปฟ replace_table_token_1_th ๏ปฟ research and development expenses include compensation , contractor fees and supplies as well as allocated common costs . contractor fees and supplies generally include expenses for preclinical studies and clinical trials and costs for formulation and manufacturing activities . other common costs include the allocation of common costs such as facilities . during the year ended december 31 , 2018 and 2017 , we received $ 3.0 million and $ 1.4 million from research grants from the nih . these reimbursements were recorded as a reduction to our research and development expenses . ๏ปฟ our abuse-deterrent technology has been applied across certain of our portfolio of product candidates . data , know-how , personnel , clinical results , research results and other matters related to the research and development of any one of our product candidates also relate to , and further the development of , our other product candidates . as a result , costs allocated to a specific drug candidate may not necessarily reflect the actual costs surrounding research and development of such drug candidate due to cross application of the foregoing . ๏ปฟ estimating the dates of completion of clinical development , and the costs to complete development , of our product candidates would be highly speculative , subjective and potentially misleading . pharmaceutical products take a significant amount of time to research , develop and commercialize . the clinical trial portion of the development of a new drug alone usually spans several years . we expect to reassess our future research and development plans based on our review of data we receive from our current research and development activities . the cost and pace of our future research and development activities are linked and subject to change . ๏ปฟ 63 critical accounting policies ๏ปฟ the preparation of our financial statements in accordance with u .s . generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets , liabilities , revenues , expenses and interest income in our financial statements and accompanying notes . we evaluate our estimates on an ongoing basis , including those estimates related to agreements and research collaborations . we base our estimates on historical experience and 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 . actual results may differ from these estimates under different assumptions or conditions .
| results of operations ๏ปฟ research and development expense ๏ปฟ research and development expense consist primarily of costs of drug development work associated with our product candidates , including : ๏ปฟ ยท preclinical testing , ๏ปฟ ยท clinical trials , ๏ปฟ ยท clinical supplies and related formulation and design costs , and ๏ปฟ ยท compensation and other personnel-related expenses . ๏ปฟ research and development expenses decreased to $ 3.0 million in 2018 from $ 7.6 million in 2017 , representing a 61 % decrease . this was due primarily to decreases in remoxy related expenses , a product candidate that we are no longer developing . we also received reimbursements of $ 3.0 million from research grants in 2018 from the nih that we recorded as a reduction to our research and development expense compared to $ 1.4 million in 2017. grant reimbursement increased from the prior year as additional grant awards have been received from the nih . ๏ปฟ research and development expenses included non-cash stock-related compensation expenses of $ 1.0 million in 2018 compared to $ 1.2 million in reimbursements from research grants in 2017 . ๏ปฟ we expect research and development expense to fluctuate in future periods as we continue our development efforts . we expect our development efforts to result in our product candidates progressing through various stages of clinical trials . our research and development expenses may fluctuate from period to period due to the timing and scope of our development activities and the results of clinical trials and preclinical studies . ๏ปฟ general and administrative expense ๏ปฟ general and administrative expenses consist of personnel costs , allocated expenses and other expenses for outside professional services , including legal , human resources , audit and accounting services . personnel costs consist of salaries , bonus , benefits and stock-based compensation . allocated expenses consist primarily of facility costs .
| 4,667 |
this discussion includes forward-looking statements within the meaning of section 27a of the securities act , section 21e of the exchange act and the private securities litigation reform act of 1995 and should be read in conjunction with the disclosure and information contained and referenced in โ cautionary note regarding forward-looking statements โ and โ item 1a . risk factors โ included elsewhere in this annual report on form 10-k. for a discussion of the year ended december 31 , 2019 compared to the year ended december 31 , 2018 , please refer to part ii , item 7 , โ management 's discussion and analysis of financial condition and results of operations โ in our annual report on form 10-k for the year ended december 31 , 2019. overview we are a leading designer and supplier of egms and other products and services for the gaming industry . we operate our business in three distinct segments : egms , table products and interactive . each segment 's activities include the design , development , acquisition , manufacturing , marketing , distribution , installation and servicing of a distinct product line . founded in 2005 , we historically focused on supplying egms , including slot machines , video bingo machines , and other electronic gaming devices , to the native american gaming market . since 2014 , we have expanded our product line-up to include : ( i ) class iii egms for commercial and native american casinos permitted to operate class iii egms , ( ii ) table game products and ( iii ) interactive products , all of which we believe provide us with growth opportunities as we expand in markets where we currently have limited or no presence . for the year ended december 31 , 2020 , approximately 77 % of our total revenue was generated through recurring contracted lease agreements whereby we place egms and table game products at our customers ' gaming facilities under either a revenue sharing agreement ( we receive a percentage of the revenues that these products generate ) or fee-per-day agreement ( we receive a daily or monthly fixed fee per egm or table game product ) , or recurring revenue from our interactive gaming operations . 27 key drivers of our business our revenues are impacted by the following key factors : the amount of money spent by consumers on our domestic revenue share installed base ; the amount of the daily fee and selling price of our participation egms ; our revenue share percentage with customers ; the capital budgets of our customers ; the level of replacement of existing egms in existing casinos ; expansion of existing casinos ; development of new casinos ; opening or closing of new gaming jurisdictions both in the united states and internationally ; our ability to obtain and maintain gaming licenses in various jurisdictions ; the relative competitiveness and popularity of our egms compared to competitive products offered in the same facilities ; and general macro-economic factors , including levels of and changes to consumer disposable income and personal consumption spending . the factors above have been significantly affected by the covid-19 pandemic and the related closure of nearly all of our casino customer locations . due to the business disruption caused by the rapid nationwide spread of the coronavirus and the actions by state and tribal governments and businesses to contain the virus , almost all of the company 's customers closed their operations during the months of march and april 2020 and their respective markets have been significantly and adversely impacted . beginning in may 2020 and continuing through december , casinos began to reopen at limited capacity and nearly all of our customers ' casino properties in the united states and canada were partially open as of december 31 , 2020 under limited operations . as of december 31 , 2020 , in mexico , approximately half of our customers ' casinos were partially open under capacity limitations . as a result of the temporary closures of our casino customers , there has been a decrease in the amount of money spent by consumers on our revenue shared installed base and the amount of daily fees of our participation egms and a slow down in the expansion of existing casinos or development of new casinos . specifically , gaming operations revenue and equipment sales have decreased compared to the prior year period as a result of the temporary closures of our casino customers . similarly , our egm and table products segment operating results have been disrupted because each segment 's activities including design , development , acquisition , manufacturing , marketing , distribution , installation and servicing of its products lines have been temporarily halted or significantly reduced . in addition , each segment 's revenue from leasing , licensing and selling products has been adversely impacted due to the temporary closures of our casino customers . as a result , the company has taken several actions to adapt to the severity of the covid-19 crisis . among other things , the company implemented short-term furloughs with retained benefits , company-wide salary reductions , and reduced its workforce by over 10 % . our non-employee directors have also agreed to reduce their fees by 50 % . some of the company 's customers have reopened at limited capacity , some have reopened and then been required to close again due to local conditions and regulations relating to the spread of the coronavirus , and there are also customers who still remain closed . depending on the number and length of casino closures , the company will consider additional reductions to payroll and related expenses through additional employee furloughs in order to conserve liquidity . story_separator_special_tag each segment 's activities include the design , development , acquisition , manufacturing , marketing , distribution , installation and servicing of its product lines . we evaluate the performance of our operating segments based on revenues and segment adjusted ebitda . segment revenues include leasing , licensing or selling of products within each reportable segment . we measure segment performance in terms of revenue , segment-specific adjusted ebitda and unit placements . we believe that unit placements are an important gauge of segment performance for egm 's and table products because it measures historical market placements of leased and sold units and provides insight into potential markets for next generation products and service . we do not present a sold unit cumulative installed base as previously sold units may no longer be in use by our customers or may have been replaced by other models or products . 30 adjusted expenses we have provided ( i ) adjusted cost of gaming operations , ( ii ) adjusted selling , general and administrative costs and ( iii ) adjusted research and development cost ( collectively , the โ adjusted expenses โ ) in this form 10-k because we believe such measure provides investors with additional information to measure our performance . we believe that the presentation of each of the adjusted expenses is appropriate to provide additional information to investors about certain non-cash items that vary greatly and are difficult to predict . these adjusted expenses take into account non-cash stock compensation expense , acquisitions and integration related costs including restructuring and severance , initial and secondary public offering costs , legal and litigation expenses including settlement payments , non-cash charges on capitalized installation and delivery , non-cash charges and loss on disposition of assets and other adjustments . further , we believe each of the adjusted expenses provides a meaningful measure of our expenses because we use it for evaluating our business performance , making budgeting decisions , and comparing our performance against that of other peer companies using similar measures . it also provides management and investors with additional information to estimate our value . each of the adjusted expenses is not a presentation made in accordance with gaap . our use of the term adjusted expenses may vary from others in our industry . each of the adjusted expenses should not be considered as an alternative to our operating expenses under gaap . each of the adjusted expenses has important limitations as an analytical tool , and you should not consider it in isolation or as a substitute for the analysis of our results as reported under gaap . our definition of adjusted expenses allows us to add back certain non-cash charges that are deducted in calculating net income and to deduct certain gains that are included in calculating net income . however , these expenses and gains vary greatly , and are difficult to predict . they can represent the effect of long-term strategies as opposed to short-term results . in addition , in the case of charges or expenses , these items can represent the reduction of cash that could be used for other corporate purposes . due to these limitations , we rely primarily on our gaap cost of gaming operations , cost of equipment sales , selling , general and administrative costs and research and development costs and use each of the adjusted expenses only supplementally . 31 the tables below present each of the adjusted expenses and include a reconciliation to the nearest gaap measure . electronic gaming machines year ended december 31 , 2020 compared to the year ended december 31 , 2019 replace_table_token_3_th ( 1 ) exclusive of depreciation and amortization . ( 2 ) adjustments to cost of gaming operation include non-cash stock compensation expense , acquisitions and integration-related costs including restructuring and severance , non-cash charges on capitalized installation and delivery and other adjustments primarily composed of costs and inventory valuation charges associated with the covid-19 pandemic that are deemed to be non-recurring in nature . ( 3 ) adjustments to selling , general and administrative expense include non-cash stock compensation expense , acquisitions and integration-related costs including restructuring and severance , initial public offering and secondary offering costs , legal and litigation-related costs including settlements payments , professional fees incurred by the company for projects , contract cancellation fees and other adjustments primarily composed of receivable valuation charges associated with the covid-19 pandemic . ( 4 ) adjustments to research and development costs include non-cash stock compensation expense and acquisitions and integration-related costs including restructuring and severance . 32 gaming operations revenue gaming operations revenue decreased primarily due to a decrease in rpd of 36.1 % compared to the prior year due to the temporary casino closures that began in march 2020 caused by the covid-19 outbreak . nearly all of the company 's customers were closed during april 2020 and a limited number began to reopen at reduced capacity in late-may through december 2020. as of december 31 , 2020 , nearly all of our customers ' casino properties in the united states and canada were open under limited operations . on december 31 , 2020 , in mexico , approximately half of our customers ' casinos were open under capacity limitations . additional decreases in gaming operations revenue are due to a decrease in our domestic egm installed base year over year due to sales of 1,236 previously leased , lower yielding units to distributors during the last twelve months as well as a removal of 512 vlt units were removed from the leased base in the forth quarter 2020 as part of a planned end of lease term buyout . during the year ended december 31 , 2020 , several of our customers reconfigured their slot floors in response to the covid-19 pandemic and , as a result , removed nearly 350 egms from our domestic installed base .
| results of operations year ended december 31 , 2020 compared to the year ended december 31 , 2019 the following tables set forth certain selected audited consolidated financial data for the periods indicated ( in thousands ) : replace_table_token_2_th revenues gaming operations . gaming operations revenue decreased $ 81.4 million primarily due to a decrease in our egm and table products segments . egm revenue per day ( `` rpd '' ) decreased by 36.1 % compared to the prior year and tables average lease price decreased by 35.2 % due to the temporary casino closures that began in march 2020 caused by the covid-19 pandemic . nearly all of the company 's customers were closed during april 2020 and a limited number began to reopen at reduced capacity starting in late-may through december 2020. as of december 31 , 2020 , nearly all of our customers ' casino properties in the united states and canada were open under limited operations . on december 31 , 2020 in mexico , approximately half of our customers ' casinos were open under capacity limitations . additional decreases in gaming operations revenue are due to a decrease in our domestic egm installed base year over year due to sales of 1,236 lower yielding units to distributors during the last twelve months as well as a removal of 512 vlt units from the leased base in the forth quarter 2020 as part of a planned end of lease term buyout . during the year , several of our customers reconfigured their slot floors in response to the covid-19 pandemic and , as a result , removed nearly 350 egms from our domestic installed base . our international egm installed base also decreased year over year due primarily to the permanent closure of certain casinos in mexico and the sale of previously leased egms during the last twelve months .
| 4,668 |
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 . 48 overview we are a biopharmaceutical company focused on acquiring , developing and commercializing innovative anti-cancer agents in the united states , europe and other international markets . we generally 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 currently under review with the u.s. and e.u . regulatory authorities for the treatment of advanced non-small cell lung cancer ( โ nsclc โ ) in patients with activating egfr mutations , as well as the dominant 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 for which the first u.s. regulatory application is expected to be submitted for approval during the second quarter of 2016 and the first e.u . regulatory application is expected to be submitted in the second half of 2016 ; and ยท lucitanib , an oral inhibitor of the tyrosine kinase activity of vascular endothelial growth factor receptors 1-3 ( โ vegfr1-3 โ ) , platelet-derived growth factor receptors alpha and beta ( โ pdgfr a /ร โ ) and fibroblast growth factor receptors 1-3 ( โ fgfr1-3 โ ) that is currently in phase ii development for the treatment of breast cancer . 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 , 2015 , 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 , 2015 , we had an accumulated deficit of $ 781.9 million . we incurred net losses of $ 352.9 million , $ 160.0 million and $ 84.5 million for the years ended december 31 , 2015 , 2014 and 2013 , respectively , and had cash , cash equivalents and available-for-sale securities totaling $ 528.6 million at december 31 , 2015. we expect to incur significant 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 . based on our current estimates , we believe that our cash , cash equivalents and available-for-sale securities will allow us to fund activities through the next 12 months ; however , we expect that we will need to raise capital during 2016 in order to fully implement our business plan to further the development and commercialization of our product candidates , as well as to fund our other operating expenses , milestone payments to licensors and capital expenditures . we expect to finance future cash needs through a combination of public or private equity or debt offerings , collaborations , strategic alliances or other similar licensing arrangements . 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 will need to generate significant revenues to achieve profitability , and we may never do so . in july 2015 , the company sold 4,054,487 shares of its common stock in a public offering at $ 78.00 per share . the net proceeds to the company from the offering were $ 298.5 million , after deducting underwriting discounts and commissions and offering expenses . in july 2015 , the company submitted a new drug application ( โ nda โ ) regulatory filing and a marketing authorization application ( โ maa โ ) for rociletinib to the u.s. food and drug administration ( โ fda โ ) and the european medicines agency ( โ ema โ ) , respectively . both the fda and ema subsequently accepted the respective filings , and they are currently under active review . in december 2015 , the fda extended the prescription drug user fee act goal date for the rociletinib nda by three months to june 28 , 2016 to allow additional time for review of additional clinical data submitted by the company in a major amendment in november 2015. the fda has scheduled the nda for rociletinib for discussion by the oncologic drugs advisory committee ( โ odac โ ) on april 12 , 2016. the odac reviews and evaluates data concerning the safety and effectiveness of marketed and investigational human drug products used in the treatment of cancer and makes recommendations to the fda . story_separator_special_tag subsequently , rights to develop and commercialize lucitanib in markets outside the u.s. and japan were sublicensed by eos to servier in exchange for upfront milestone fees , royalties on sales of lucitanib in the sublicensed territories and research and development funding commitments . 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 25 % of any consideration , excluding royalties , received by the company from sublicensees , in lieu of the milestone obligations set forth in the agreement . 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 upfront 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 , we are entitled to receive sales milestone payments if specified annual sales targets for lucitanib are met , which , in the aggregate , could total 250.0 million . we are 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 equally between the company and servier . based on current estimates , we expect that servier 's 80.0 million funding commitment will be fulfilled in late 2016 or early 2017 , and thereafter , we will share with servier in future development costs pursuant to a mutually agreed upon global development plan . financial operations overview revenue to date , we have generated $ 13.6 million in license and milestone revenue related to our collaboration and license agreement with servier . in the future , we may generate revenue from the sales of product candidates that are currently under review with the u.s. and e.u . regulatory authorities and under development by the company , as well as from milestone payments or royalties pursuant to our sublicense agreement with servier . if we fail to successfully complete the regulatory review and 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 ; 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 non-clinical activities and regulatory operations ; 51 ยท market research , disease education and other commercial product planning activities , including the hiring of a u.s. sales and marketing and medical affairs organization in preparation for potential commercial launch ; and ยท activities associated with the development of companion diagnostics for our product candidates . research and development costs are expensed as incurred . license fees and milestone payments related to in-licensed products and technology are expensed if it is determined that they have no alternative future use . costs for certain development activities , such as clinical trials and manufacturing of clinical supply , are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment , clinical site activations or information provided to us by our vendors . product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development , primarily due to the increased size and duration of later stage clinical trials . we plan to increase our research and development expenses for the foreseeable future as we seek to expand our clinical and companion diagnostic development activities for our product candidates . the following table identifies research and development and acquired in-process research and development costs on a program-specific basis for our products under development .
| results of operations comparison of years ended december 31 , 2015 , 2014 and 2013 : 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 2015 and 2013. research and development expenses . research and development expenses for the years ended december 31 , 2015 , 2014 and 2013 were as follows : replace_table_token_6_th the increase in research and development expenses for the year ended december 31 , 2015 compared to 2014 was primarily due to increased development activities for the rociletinib and rucaparib programs . costs associated with non-clinical and clinical development activities for rociletinib were $ 35.6 million higher than 2014 driven by increased patient enrollment in the tiger program of studies in nsclc . in addition , market research , disease education and other commercial product planning activities for rociletinib were $ 18.2 million higher in 2015 due to the preparation for the potential commercial launch of rociletinib . clinical trial costs for rucaparib were $ 10.3 million higher than the prior year primarily due to higher enrollment in the ariel2 and ariel3 studies in ovarian cancer , as well as the expansion of study 010 in 2015. development costs for rucaparib were $ 5.9 million higher than 2014 due to the advancement of our collaboration with foundation medicine , inc. to develop a novel companion diagnostic test to identify patients most likely to respond to rucaparib . clinical supply and related manufacturing development costs for both programs were $ 3.2 million higher than 2014 , as we increased production to support the expanded clinical studies .
| 4,669 |
80 alimera sciences , inc. notes to consolidated financial statements โ ( continued ) 8. loan agreements 2010 term loan the company entered into a loan and security agreement with silicon valley bank ( svb ) and midcap financial llp ( midcap and together with svb , the lenders ) in october 2010 , which was subsequently amended in may 2011 ( as amended , the 2010 term loan agreement ) . pursuant to the 2010 term loan agreement , in october 2010 the company borrowed an aggregate of $ 6,250,000 from the lenders ( the 2010 term loan ) . the 2010 term loan agreement also provided for the ability to drawdown an additional $ 11,000,000 subject to fda approval of the nda for iluvien by december 31 , 2011 , which was not obtained . in august 2011 , the company began repaying the outstanding principal under the 2010 term loan story_separator_special_tag the following discussion and analysis should be read in conjunction with our audited annual consolidated financial statements and the related notes that appear elsewhere in this annual report on form 10-k. this discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties . actual results may differ materially from those discussed in these forward-looking statements due to a number of factors , including those set forth in the section entitled โ risk factors โ and elsewhere in this annual report on form 10-k. for further information regarding forward-looking statements , please refer to the โ special note regarding forward-looking statements and projections โ at the beginning of part i of this annual report on form 10-k. overview alimera sciences , inc. , and its subsidiaries ( we , alimera or the company ) is a biopharmaceutical company that specializes in the research , development and commercialization of prescription ophthalmic pharmaceuticals . we are presently focused on diseases affecting the back of the eye , or retina , because we believe these diseases are not well treated with current therapies and represent a significant market opportunity . our only commercial product is iluvien ยฎ , which has received marketing authorization in austria , the united kingdom , portugal , france , germany and spain , and has been recommended for marketing authorization in italy , for the treatment of vision impairment associated with chronic diabetic macular edema ( dme ) considered insufficiently responsive to available therapies . dme is a disease of the retina that affects individuals with diabetes and can lead to severe vision loss and blindness . iluvien has not been approved by the u.s. food and drug administration ( fda ) . we launched iluvien in the united kingdom and germany , in april and may of 2013 , respectively , and currently plan to launch iluvien in france in 2014. to date , the majority of our sales have been in germany . we were able to launch in germany without price restriction , but continue to work with the statutory health insurance funds in germany to streamline reimbursement for iluvien . in january 2013 , the united kingdom 's national institute for health and care excellence ( nice ) published final guidance for england and wales indicating that iluvien does not satisfy nice 's definition of cost effectiveness for the treatment of vision impairment associated with chronic dme considered insufficiently responsive to available therapies given the cost of ยฃ5,500 . we submitted a simple patient access scheme ( pas ) for iluvien to nice for consideration under its rapid review facility . in october 2013 , the nice appraisal committee issued a positive final appraisal determination recommending iluvien funding for the treatment of pseudophakic eyes ( eyes with an artificial lens ) in chronic dme patients that are insufficiently responsive to available therapies and the final technology appraisal guidance was published in november 2013. the technology appraisal guidance reverses the published guidance issued by nice in january 2013 , and takes into consideration the pas . nice requires clinical commissioning groups , national health service ( nhs ) england and local public health authorities to comply with the recommendations in the final guidance within three months of its date of publication . we began receiving orders for iluvien from several nhs facilities in january 2014 , indicating early implementation of the nice guidance in certain nhs facilities . further , in february 2014 , the scottish medicines consortium smc , after completing its assessment and review of a similar simple pas , announced that is has accepted iluvien for restricted use within the nhs scotland . in july 2013 , the transparency commission ( commission de la transparence or ct ) of the french national health authority ( haute autorite de sante ) issued a favorable opinion for the reimbursement and hospital listing of iluvien by the french national health insurance for the treatment of chronic dme considered insufficiently responsive to available therapies . 47 in the opinion , iluvien was deemed as providing a `` moderate medical benefit '' as defined by the service medical rendu . as a result , when we agree on a price with the french authorities , patients will be reimbursed for 100 % of the cost of iluvien under the affection de longue duree , a specific program for severe chronic diseases such as diabetes . when comparing the clinical benefit of iluvien to existing therapies ( amelioration du service medical rendu or asmr ) , the ct rated the product at `` level iv '' which will be used in considering the price and any reimbursement conditions for iluvien in france . in september 2013 , we submitted an application to the medicines and healthcare products regulatory agency ( mhra ) in the united kingdom , as the reference member state , for ten additional european union ( eu ) country approvals through the mutual recognition procedure . we submitted a new drug application ( nda ) in june 2010 for iluvien in the u.s. with the fda . story_separator_special_tag further , our agreement with psivida permits psivida to grant to any other party the right to use its intellectual property ( i ) to treat dme through an incision smaller than that required for a 25-gauge needle , unless using a corticosteroid delivered to the back of the eye , ( ii ) to deliver any compound outside the back of the eye unless it is to treat dme through an incision required for a 25-gauge or larger needle , or ( iii ) to deliver non-corticosteroids to the back of the eye , unless it is to treat dme through an incision required for a 25-gauge or larger needle . the agreement provides that after commercialization of iluvien , psivida will be entitled to 20 % of the net profits , as defined in the amended and restated agreement . in connection with this arrangement we are entitled to recover 20 % of commercialization costs of iluvien , as defined in the agreement , incurred prior to product profitability out of psivida 's share of net profits . as of december 31 , 2013 and 2012 , psivida owed us $ 11.0 million and $ 5.6 million , respectively , in commercialization costs . due to the uncertainty of future profits from iluvien , we have fully reserved these amounts in the accompanying consolidated financial statements . we will owe psivida an additional milestone payment of $ 25.0 million if iluvien is approved by the fda . if we were to enter into any sub-license of iluvien , we must share 20 % of net profits and 33 % of any lump sum milestone payments received from a sub-licensee , as defined in the agreement , with psivida . our credit facility 2010 term loan we entered into a loan and security agreement with silicon valley bank ( svb ) and midcap financial llp ( midcap and together with svb , the lenders ) in october 2010 , which was subsequently amended in may 2011 ( as amended , the 2010 term loan agreement ) . pursuant to the 2010 term loan agreement , in october 2010 we borrowed an aggregate of $ 6.25 million from the lenders ( the 2010 term loan ) . the 2010 term loan agreement also provided for the ability to drawdown an additional $ 11.0 million subject to fda approval of the nda for iluvien by december 31 , 2011 , which was not obtained . in august 2011 , we began repaying the outstanding principal under the 2010 term loan in 33 equal monthly installments plus interest at a rate of 11.5 % . at maturity , we were also required to make an additional interest payment equal to 4 % of the total amount borrowed . we paid to the lenders an upfront fee of $ 62,500 upon execution of the 2010 term loan agreement and an additional fee of $ 50,000 in connection with the may 2011 amendment . in accordance with the financial accounting standards board ( fasb ) accounting standard codification ( asc ) 470-50-40-17 , debt - modifications and extinguishments ( asc 470-50-40-17 ) , we were amortizing the deferred financing costs on the 2010 term loan and the $ 50,000 modification fee over the remaining term of the 2010 term loan , as modified . in october 2010 , in connection with entering into the 2010 term loan , we issued svb a warrant to purchase up to 15,909 shares of our common stock and midcap a warrant to purchase up to 23,864 shares of our common stock . each of the warrants were exercisable upon issuance , had a per-share exercise price of $ 11.00 and a term of 10 years . we estimated the fair value of warrants granted using the black-scholes option pricing model to be $ 389,000. we allocated a portion of the proceeds from the 2010 term loan to the warrants in accordance with asc 470-20-25-2 , debt instruments with detachable warrants . as a result , we recorded a discount of $ 366,000 which was amortized to interest expense using the effective interest method . the lenders were also issued warrants to purchase up to an aggregate of 69,999 additional shares of our common stock , which were exercisable only upon the drawdown of the additional $ 11.0 million subject to fda approval of the nda for iluvien by december 31 , 2011 , which was not obtained . in may 2013 , we repaid all amounts owed to the lenders under the 2010 term loan , including the final interest payment equal to 4 % of the total amount borrowed , and a 1.0 % prepayment penalty on the then outstanding principal owed to midcap . in connection with the repayment of the 2010 term loan , we recognized a loss on early extinguishment of debt of $ 153,000 associated with the remaining unamortized deferred financing costs , unamortized discount associated with the lenders ' warrants , the final interest payment , the prepayment penalty and a lender fee and warrants associated with a new term loan . 2010 revolving loan agreement 49 in october 2010 , we entered into a loan and security agreement with svb , which was subsequently amended in may 2011 ( as amended , the 2010 revolving loan agreement ) , pursuant to which we obtained a secured revolving line of credit from svb against eligible u.s. domestic accounts receivable with borrowing availability up to $ 20.0 million . upon entering into the 2010 revolving loan agreement , we paid to svb an upfront fee of $ 100,000. as of december 31 , 2012 , no amounts under the 2010 revolving loan agreement were outstanding or available to us . in may 2013 , we terminated the 2010 revolving loan agreement .
| results of operations the following selected financial and operating data are derived from our financial statements and should be read in conjunction with โ management 's discussion and analysis of financial condition and results of operations '' and our consolidated financial statements . replace_table_token_3_th year ended december 31 , 2013 compared to the year ended december 31 , 2012 net revenue . net revenue was $ 1.9 million for the year ended december 31 , 2013. we initiated the commercial launch of iluvien in germany and the united kingdom in the second quarter of 2013 and began recognizing revenue at that time . our revenues for the fiscal year ended december 31 , 2013 were primarily generated from product sales in germany and our product sales were concentrated to a limited number of customers . two customers in europe accounted for approximately 23 % of our total consolidated revenues for the year ended december 31 , 2013. no other customer accounted for more than 10 % of revenue in 2013. cost of goods sold . cost of goods sold was $ 1.9 million for the year ended december 31 , 2013. we initiated the commercial launch of iluvien in germany and the united kingdom in the second quarter of 2013 and began recognizing cost of goods sold at that time . cost of goods sold was impacted by two inventory issues during the year ended december 31 , 2013. during a routine manufacturing inspection , we identified a quality issue related to one of our suppliers that affected certain batches of work in process which we had to write off . this write-off amounted to $ 1.4 million .
| 4,670 |
this information is provided as a supplement to , and should be read in conjunction with , our consolidated financial statements and the accompanying notes thereto . nabors has grown from a land drilling business centered in the united states and canada to a global business aimed at optimizing the entire well life cycle , with operations on land and offshore in most of the major oil and gas markets in the world . the majority of our business is conducted through two business lines : drilling & rig services this business line is comprised of our global drilling rig operations and drilling-related services , consisting of equipment manufacturing , instrumentation optimization software and directional drilling services . completion & production services this business line is comprised of our operations involved in the completion , life-of-well maintenance and eventual plugging and abandonment of a well . these product lines include stimulation , coiled-tubing , cementing , wireline , workover , well-servicing and fluids management . our businesses depend , to a large degree , on the level of spending by oil and gas companies for exploration , development and production activities . a sustained increase or decrease in the price of oil or natural gas could materially impact exploration , development and production activities of our customers and , consequently , our financial position , results of operations and cash flows . the magnitude of customer spending on new and existing wells is the primary driver of our business . our customers ' spending is determined principally by their internally generated cash flow and to a lesser extent by joint venture arrangements and funding from the capital markets . in our drilling & rig services business line , operations have traditionally been driven by natural gas prices , but the majority of current activity is driven by the price of oil and to a lesser extent natural gas liquids from unconventional reservoirs ( shales ) . activity in our international markets is increasingly driven by the development of natural gas reserves . in our completion & production services business line , operations are primarily driven by oil prices . during 2013 , the west texas intermediate crude oil spot price averaged $ 98.02 per barrel , up from $ 94.10 in 2012 and $ 95.05 in 2011. the henry hub natural gas spot price averaged $ 3.72 per mcf versus $ 2.75 in 2012 and $ 4.00 in 2011. while the commodity price environment has impacted demand for drilling , the technologies used to gain drilling efficiencies have increased . two factors that have contributed to this increase are the high-performance capabilities of modern a/c rigs , which address the more complex horizontal drilling requirements of the unconventional reservoirs , and the shift by exploration and production operators toward pad drilling . crude oil pricing remains volatile and potentially vulnerable , which keeps our customers ' forward-spending plans in check . for 2014 , we believe natural gas and liquids prices , as well as crude oil prices , are likely to remain in the same range as 2013. with that outlook , it is likely that continuing additions of new rig capacity and improving rig efficiency will result in a continued oversupply of rigs for most , if not all , of the year in our u.s. markets . until recently , our international markets have been generally slower to respond to the improving oil prices of the last three years . during 2013 , we signed several multiyear contracts for new rigs and 28 rig renewals with revenue expected to commence during 2014. those contracts are consistent with a general tightening of the international rig market . many of those rigs are likely to deploy on large-scale natural gas projects . for 2014 , we expect the international rig market to remain tight , and we anticipate additional opportunities to contract rigs at rates commensurate with this market . the following table sets forth oil and natural gas price data per bloomberg for the last three years : replace_table_token_9_th operating revenues and earnings ( losses ) from unconsolidated affiliates in 2013 totaled $ 6.2 billion , representing a decrease of $ 402.3 million , or 6 % , over 2012. adjusted income derived from operating activities and net income ( loss ) from continuing operations for 2013 totaled $ 558.2 million and $ 158.3 million ( $ 0.51/per diluted share ) , respectively , representing decreases of 39 % and 32 % when compared to 2012. operating revenues and earnings ( losses ) from unconsolidated affiliates for 2012 totaled $ 6.6 billion , representing an increase of $ 455.4 million , or 7 % , over 2011. adjusted income derived from operating activities for 2012 totaled $ 908.6 million , representing an increase of 5 % over 2011 , while net income ( loss ) from continuing operations for 2012 totaled $ 233.0 million ( $ 0.79/per diluted share ) , representing a decrease of 33 % over 2011. during 2013 , our income ( loss ) from continuing operations was negatively impacted primarily by the $ 208.2 million loss recognized when we repurchased $ 785.4 million aggregate principal amount of the 9.25 % senior notes in september . excluding this , our operating results in north american drilling and completion operations decreased due to the industry-wide decrease in land drilling activity and overcapacity in the pressure pumping markets . our international operations increased significantly resulting from the deployment of additional rigs under long-term contracts and the renewal of existing contracts at current market rates . story_separator_special_tag as a percentage of operating revenues , general and administrative expenses decreased from 2011 to 2012. depreciation and amortization depreciation and amortization expense increased from 2012 to 2013 and from 2011 to 2012 as a result of the incremental depreciation expense from 41 newly constructed rigs placed into service during 2012 and 2013 and rig upgrades and other capital expenditures made since 2012. interest expense interest expense decreased from 2012 to 2013 primarily as a result of the redemptions of some of our 9.25 % senior notes in september 2013 and our 5.375 % senior notes in august 2012. during 2013 , our overall debt was lower and average interest rates were lower on our outstanding senior notes , revolving credit facility and commercial paper balances as compared to 2012. these reductions were partially offset by the september 2013 issuance of $ 700 million aggregate principal amount of 2.35 % and 5.10 % senior notes . interest expense decreased from 2011 to 2012 primarily as a result of the redemption in may 2011 of our remaining 0.94 % senior exchangeable notes , aggregate principal amount $ 1.4 billion , and the redemption in august 2012 of our 5.375 % senior notes , aggregate principal amount $ 275 million . the decrease was partially offset by interest expense increases related to our august 2011 issuance of 4.625 % senior notes due september 2021 and interest on larger amounts outstanding on our revolving credit facilities . investment income investment income during 2013 was $ 96.6 million and included $ 89.0 million related to realized gains from short-term and other long-term investments and net gains of $ 2.5 million from our trading 35 securities . the balance was attributable to $ 5.1 million in interest and dividend income and $ 2.5 million in realized gains on the trading securities . investment income during 2012 was $ 63.1 million and included ( i ) $ 41.1 million net realized gains from our trading securities , ( ii ) $ 14.5 million realized gains from short-term and other long-term investments and ( iii ) $ 7.5 million interest and dividend income from our cash , other short-term and long-term investments . investment income during 2011 was $ 19.9 million and included ( i ) a $ 12.9 million realized gain relating to one of our overseas fund investments classified as long-term investments , ( ii ) $ 5.1 million realized gains from short-term and other long-term investments and ( iii ) $ 9.9 million interest and dividend income from our cash , other short-term and long-term investments . investment income was partially offset by net unrealized losses of $ 8.0 million from our trading securities . gains ( losses ) on sales and disposals of long-lived assets and other income ( expense ) , net the amount of gains ( losses ) on sales and disposals of long-lived assets and other income ( expense ) , net for 2013 was a net loss of $ 38.0 million , which was primarily comprised of ( i ) net losses on sales and disposals of assets of approximately $ 13.6 million , ( ii ) increases to litigation reserves of $ 11.7 million and ( iii ) foreign currency exchange losses of $ 6.2 million . the amount of gains ( losses ) on sales and disposals of long-lived assets and other income ( expense ) , net for 2012 was a net gain of $ 136.6 million , which included net gains on sales and disposals of long-lived assets of approximately $ 147.5 million , primarily as result of the gain from the sale of our equity interest in sabine . these gains were partially offset by ( i ) increases to our litigation reserves of $ 5.4 million and ( ii ) foreign currency exchange losses of approximately $ 4.8 million . the amount of gains ( losses ) on sales and disposals of long-lived assets and other income ( expense ) , net for 2011 was a net loss of $ 4.5 million and was comprised of ( i ) increases to our litigation reserves of $ 11.3 million , ( ii ) foreign currency exchange losses of approximately $ 5.5 million and ( iii ) a net loss on sales and disposals of long-lived assets of approximately $ 1.9 million . the net loss was partially offset by a $ 13.1 million gain recognized in connection with our acquisition of the remaining 50 % equity interest of peak . impairments and other charges replace_table_token_15_th loss on tendered notes during 2013 , we recognized a loss related to the extinguishment of debt in connection with the tender offer for our 9.25 % senior notes . see note 13ยdebt in part ii , item 8ยfinancial statements and supplementary data for additional discussion . in 2013 , we completed a cash tender offer for these 36 notes and repurchased $ 785.4 million aggregate principal amount . we paid the holders an aggregate of approximately $ 1.0 billion in cash , reflecting principal , accrued and unpaid interest and recognized a loss as part of the debt extinguishment . provision for retirement of assets during 2013 , we recorded a provision for retirement of long-lived assets in multiple operating segments totaling $ 14.0 million , which reduced the carrying value of some assets to their salvage value . the retirements related to assets in saudi arabia and included obsolete top-drives , nonworking trucks , generators , engines and other miscellaneous equipment . the retirements in our canada operations included functionally inoperable rigs and other drilling equipment . in our completion & production operations , the retirements related to rigs and vehicles that would require significant repair to return to work and other non-core assets . during 2012 , we recorded a provision for retirement of long-lived assets in multiple operating segments , including $ 37.1 million in u.s. , $ 33.7 million in canada , $ 16.5 million in international and $ 2.0 million in rig services , all from our drilling & rig services business line .
| segment results of operations drilling & rig services our drilling & rig services business line is comprised of drilling on land and offshore , by geographic region . this business line also includes our drilling technology , top drive manufacturing , directional drilling , construction services and rig instrumentation and software businesses . replace_table_token_12_th 32 u.s. our u.s. drilling segment includes land drilling activities in the lower 48 states , alaska and offshore operations in the gulf of mexico . operating results decreased from 2012 to 2013 primarily as a result of an industry-wide decrease in land drilling activity over the latter part of 2012 in response to declines in commodity prices . throughout 2013 , this resulted in both reduced drilling activity and lower dayrates for our lower 48 fleet . expiring term contracts also contributed to the decrease as contracts were renewed at the lower market prices . these decreases were partially offset by slight improvements in margins and costs for our offshore fleet operating in the gulf of mexico . operating results increased from 2011 to 2012 primarily due to higher average dayrates and a slight increase in drilling activity , as well as $ 39.6 million in revenues recognized that were related to early contract terminations . these increases were partially offset by higher depreciation expense related to new rigs placed into service during 2012. canada operating results decreased from 2012 to 2013 also as a result of the industry-wide decrease in land drilling activity , similar to the united states . strong oil prices and oil-related drilling activities have partially mitigated the impact of the overall natural gas oversupply in north america and the resulting reductions in customer demand for gas drilling . operating results increased slightly from 2011 to 2012 primarily due to higher average dayrates , which offset the decreases in drilling and well-servicing activities .
| 4,671 |
these statements may be preceded by , followed by or include the words โ may , โ โ might , โ โ will , โ โ will likely result , โ โ should , โ โ estimate , โ โ plan , โ โ project , โ โ forecast , โ โ intend , โ โ expect , โ โ anticipate , โ โ believe , โ โ seek , โ โ continue , โ โ target โ or similar expressions . these forward-looking statements are based on information available to us as of the date of this annual report and on our current expectations , forecasts and assumptions , and involve substantial risks and uncertainties . actual results may vary materially from those expressed or implied by the forward-looking statements herein due to a variety of factors , including : our reliance on one key customer for a substantial percentage of its revenue ; our ability to consummate the proposed acquisition of podcastone and the timing of the closing of the proposed transaction , including the risks that a condition to closing would not be satisfied within the expected timeframe or at all or that the closing of the proposed acquisition will not occur ; our ability to continue as a going concern ; if and when required , our ability to obtain additional capital , including to fund our current debt obligations and to fund potential acquisitions and capital expenditures ; the effects of the global covid-19 pandemic ; our ability to attract , maintain and increase the number of its users and paid subscribers ; our ability to identify , acquire , secure and develop content ; our ability to integrate our acquired businesses , the ability of the combined business to grow , including through acquisitions which we are able to successfully integrate , and the ability of our executive officers to manage growth profitably ; our ability to maintain compliance with certain financial and other covenants ; successfully implementing our growth strategy , including relating to our technology platforms and applications ; our management 's relationships with industry stakeholders ; changes in economic conditions ; competition ; and other risks and uncertainties set forth in โ item 1a . risk factors โ of this annual report . we do not undertake any obligation to update forward-looking statements as a result of as a result of new information , future events or developments or otherwise . the following discussion and analysis of our business and results of operations for the fiscal year ended march 31 , 2020 , and our financial conditions at that date , should be read in conjunction with the financial statements and the notes thereto included elsewhere in this annual report . as used herein , โ livexlive , โ โ lxl , โ the โ company , โ โ we , โ โ our โ or โ us โ and similar terms refer collectively to livexlive media , inc. and its subsidiaries , unless the context indicates otherwise . 59 overview of the company we are a pioneer in the acquisition , distribution and monetization of live music , internet radio , podcasting and music-related streaming and video content . our principal operations and decision-making functions are located in north america . we manage and report our businesses as a single operating segment . our chief operating decision maker regularly reviews our operating results , principally to make decisions about how we allocate our resources and to measure our segment and consolidated operating performance . we currently generate a majority of our revenue through subscription services from our streaming radio and music services , and to a lesser extent through advertising and licensing across our music platform . beginning in the fourth quarter of our fiscal year ended march 31 , 2020 , we began generating ticketing , sponsorship , and promotion-related revenue from live music events through our february 2020 acquisition of react presents , llc ( โ react presents โ ) , a leading live entertainment and promoter of electronic dance music ( โ edm โ ) festivals and events . for the fiscal years ended march 31 , 2020 and 2019 , we reported revenue of $ 38.7 million and $ 33.7 million , respectively . for the years ended march 31 , 2020 and 2019 , one customer accounted for 60 % and 41 % of our consolidated revenues , respectively . fiscal 2020 significant transactions on july 25 , 2019 , in a registered direct public offering , the company entered into securities purchase agreements with certain institutional investors pursuant to which the company sold a total of 5,000,000 shares of the its common stock at a price per share of $ 2.10. the gross proceeds to the company were $ 10.5 million . the net proceeds of the offering to the company were $ 9.5 million , after deducting placement agent fees and other offering expenses totaling $ 1.0 million paid by the company . on january 31 , 2020 , the company modified certain financial liquidity covenants in its debentures . the amendment went effective retroactive to december 31 , 2019. in addition , the company issued 400,000 shares of its common stock to the holders of debentures in exchange for the debentures in the principal amount of $ 10,000 , originally issued by the company on june 29 , 2018 , as sole consideration for the shares , sufficient to qualify for an exemption under section 5 of the securities act pursuant to section 3 ( a ) ( 9 ) thereof and accompanying removal of applicable restrictions under rule 144 promulgated under the securities act . any sale of such shares shall be subject to a percentage limitation of the daily trading volume . in february 2020 , the company acquired react presents for $ 2.0 million in subordinated convertible debt . react presents is a leading live entertainment and promoter of edm festivals and events , including the spring awakening festival and hundreds of club shows located in and around the city of chicago , illinois . story_separator_special_tag 61 as our music platform continues to evolve , we believe that there are opportunities to expand our services by adding more content in a greater variety of formats such as podcasts and video podcasts ( โ vodcasts โ ) , extending our distribution to include pay television and social channels , deploying new services for our subscribers such as ppv , artist merchandise and live music event ticket sales , and licensing user data across our platform . in 2019 we combined our slacker audio and livexlive video services into a single platform โ livexlive powered by slacker , including offering a greater variety of exclusive and unique music content across our platform . for example , we acquired slacker in december 2017 to accelerate our paid subscription platform , and secondarily to gain synergies across product development initiatives . in 2018 and more recently in 2020 , we integrated resources and improved our live music streaming app across apple tv , samsung tv , roku and amazon fire platforms . we acquired react presents in february 2020 , which gives us the ability to produce live music events and festivals along with increasing our original music content . in may 2020 we also launched our first ppv performances across our platform , allowing artists and fans to access a new digital compliment to live concerts and events . in may 2020 , we announced we would acquire podcastone which is expected to close in july 2020 and if the acquisition is successful , we would own one of the largest networks of podcast content in north america , including over 300 new podcasts per week and over 2.0 billion downloads annually . conversely , the evolution of technology presents an inherent risk to our business . today , we see large opportunities to expand our music services within north america and other parts of the world where we will need to make substantial investments to improve our current service offerings . as a result , and during the fiscal year ending march 31 , 2021 , we will continue to invest in product and engineering to further develop our future music apps and services , and we expect to continue making significant product development investments to our existing technology solutions over the next 12 to 24 months to address these opportunities . as our platform matures , we also expect our contribution margins * and aol * to improve in the near and long term . historically , our live events business has not generated enough direct revenue to cover the costs to produce such events , and as a result generated negative contribution margins * and operating losses . beginning in late march 2020 , the covid-19 pandemic had an adverse impact on on-premise live music events and festivals . major global music festivals such as coachella , edc las vegas , rock-in-rio , austin city limits were postponed to 2021 or indefinitely . historically , we produced and digitally distributed the live music performances of many of these large global music events to fans all around the world . with the elimination of any fan-attended music events , festivals and concerts , we shifted our operating model beginning in april 2020 towards self-producing live music events that were 100 % digital ( e.g. , artists not performing in front of live fans and solely for digital purposes ) . in april 2020 , we also launched our first all-digital music festival , music lives , which aired continuously for over 48 straight hours , with over 100 artists and generated over 50 million livestreams and over 5.0 billion video views of the of hashtag # musiclives across tiktok . music lives was simulcast across our platform and on tiktok 's platform , who also sponsored the event . since april 1 , 2020 through june 15 , 2020 , we have live streamed over 35 events , accumulated over 60 million livestreams and generated 300 % higher sponsorship revenue versus any quarter historically since our inception . in addition , we also introduced our ppv platform in may 2020 , generating over 8,000 ticket sales at average prices of approximately $ 20.00 per ticket during its first 30 days of launch . lastly , we are forecasting our cost per live event over near term to decrease substantially when compared to prior periods . when combined , the aggregate financial impact of these new events is improvements in both contribution margins * and aol * in the near and long term . growth in our music services is also dependent upon the number of customers that use and pay for our services , the attractiveness of our music platform to sponsors and advertisers and our ability to negotiate favorable economic terms with music labels , publishers , artists and or festival owners , and the number of passengers who use our services . growth in our margins is heavily dependent on our ability to grow , coupled with the managing the costs associated with implementing and operating our services , including the costs of licensing music with the music labels , and producing , streaming and distributing video and audio content . our ability to attract and retain new and existing customers will be highly dependent on our abilities to implement and continually improve upon our technology and services on a timely basis and continually improve our network and operations as technology changes and as we experience increased network capacity constraints as we continue to grow . 62 for the majority of our agreements with festival owners , we acquire the global broadcast rights . moreover , the digital rights we acquire principally include any format and screen , and future rights to vr and ar . for the years ended march 31 , 2020 and 2019 , all material amounts of our revenue was derived from customers located in the united states . moreover , and during the year ended march 31 , 2020 , one of our customers accounted for 60 % of our consolidated revenue .
| consolidated results of operations the following tables set forth our results of operations for the periods presented . the period-to-period comparison of financial results is not necessarily indicative of future results ( in thousands ) : replace_table_token_4_th 74 the following table provides the depreciation expense included in the above line items ( in thousands ) : replace_table_token_5_th the following table provides the stock-based compensation expense included in the above line items ( in thousands ) : replace_table_token_6_th the following table provides our results of operations , as a percentage of revenue , for the periods presented : replace_table_token_7_th revenue revenue was as follows ( in thousands ) : replace_table_token_8_th 75 advertising and licensing revenue advertising and licensing revenue for the year ended march 31 , 2020 decreased by $ 0.8 million or 25 % to $ 2.5 million as compared to $ 3.3 million for the year ended march 31 , 2019 largely due to less listening hours across our freemium user base in the current period , therefore less opportunity to serve impressions . covid-19 marginally impacted advertising revenue in the month of march 2020 with a larger impact expected in the first half of fiscal year ending march 31 , 2021. ticket/event ticket/event revenue increased $ 0.3 million , to $ 0.3 million for the year ended march 31 , 2020 , as compared to $ 0 million for the year ended march 31 , 2019. the increase was due to the acquisition of react presents in the fourth quarter of fiscal year ended march 31 , 2020 and did not exist in 2019. subscription revenue subscription revenue increased $ 5.5 million , or 18 % , to $ 35.9 million for the year ended march 31 , 2020 , as compared to $ 30.4 million for the year ended march 31 , 2019. the increase was due to the growth in the number of paid subscribers year-over-year .
| 4,672 |
changes in our loss assumptions caused by changes in actual experience would affect our assessment of the ultimate liability and could have an effect on our operating results and financial position up to $ story_separator_special_tag results of operations general we are one of the largest diversified heavy civil contractors and construction materials producers in the united states , engaged in the construction and improvement of streets , roads , highways , mass transit facilities , airport infrastructure , bridges , trenchless and underground utilities , power-related facilities , water-related facilities , utilities , tunnels , dams and other infrastructure-related projects . we own aggregate reserves and plant facilities to produce construction materials for use in our construction business and for sale to third parties . our permanent offices are located in alaska , arizona , california , florida , illinois , nevada , new york , texas , utah and washington . we have three reportable business segments : construction , large project construction and construction materials ( see note 18 of โ notes to the consolidated financial statements โ ) . in addition to business segments , we review our business by operating groups and by public and private market sectors . our operating groups are defined as follows : ( i ) california ; ( ii ) northwest , which primarily includes offices in alaska , arizona , nevada , utah and washington ; ( iii ) heavy civil , which primarily includes offices in california , florida , new york and texas ; and ( iv ) kenny , which primarily includes offices in illinois . each of these operating groups may include financial results from our construction and large project construction segments . a project 's results are reported in the operating group that is responsible for the project , not necessarily the geographic area where the work is located . in some cases , the operations of an operating group include the results of work performed outside of that geographic region . our california and northwest operating groups include financial results from our construction materials segment . the four primary economic drivers of our business are ( i ) the overall health of the u.s. economy ; ( ii ) federal , state and local public funding levels ; ( iii ) population growth resulting in public and private development ; and ( iv ) the need to replace or repair aging infrastructure . a stagnant or declining economy will generally result in reduced demand for construction and construction materials in the private sector . this reduced demand increases competition for private sector projects and will ultimately also increase competition in the public sector as companies migrate from bidding on scarce private sector work to projects in the public sector . in addition , a stagnant or declining economy tends to produce less tax revenue for public agencies , thereby decreasing a source of funds available for spending on public infrastructure improvements . some funding sources that have been specifically earmarked for infrastructure spending , such as diesel and gasoline taxes , are not as directly affected by a stagnant or declining economy , unless actual consumption is reduced or gasoline sales tax revenues decline consistent with fuel prices . however , even these can be temporarily at risk as federal , state and local governments take actions to balance their budgets . additionally , fuel prices and more fuel efficient vehicles can have a dampening effect on consumption , resulting in overall lower tax revenue . conversely , increased levels of public funding as well as an expanding or robust economy will generally increase demand for our services and provide opportunities for revenue growth and margin improvement . critical accounting policies and estimates the financial statements included in โ item 8. financial statements and supplementary data โ have been prepared in accordance with accounting principles generally accepted in the united states of america ( โ u.s . gaap โ ) . the preparation of these financial statements requires management to make estimates that affect the reported amounts of assets and liabilities , revenue and expenses , and related disclosure of contingent assets and liabilities . our estimates and related judgments and assumptions are continually evaluated based on available information and experiences ; however , actual amounts could differ from those estimates . the following are accounting policies and estimates that involve significant management judgment and can have significant effects on the company 's reported results of operations . the audit/compliance committee of our board of directors has reviewed our disclosure of critical accounting policies and estimates . 23 revenue and earnings recognition for construction contracts revenue and earnings on construction contracts , including construction joint ventures , are recognized under the percentage of completion method using the ratio of costs incurred to estimated total costs . revenue from unapproved change orders is recognized to the extent the related costs have been incurred , the amount can be reliably estimated and recovery is probable . on certain projects we have submitted and have pending unresolved contract modifications and affirmative claims ( โ affirmative claims โ ) to recover additional costs to which the company believes it is entitled under the terms of contracts with customers , subcontractors , vendors or others . the owners or their authorized representatives and or other third parties may be in partial or full agreement with the modifications or affirmative claims , or may have rejected or disagree entirely or partially as to such entitlement . revenue related to affirmative claims with customers is recognized to the extent of costs incurred when it is probable that a claim settlement with a customer will result in additional revenue and the amount can be reasonably estimated . a reduction to costs related to affirmative claims with non-customers with whom we have a contractual arrangement ( โ back charges โ ) is recognized when the estimated recovery is probable and the amount can be reasonably estimated . story_separator_special_tag out of the five reporting units with goodwill , the kenny large project construction business is the most susceptible to fluctuations in results depending on awarded work given the large size and limited frequency of awards . while we believe the current cushion for the reporting unit is adequate to absorb these fluctuations , a material decline in job win rates could have a material impact to this reporting unit 's estimated fair value . long-lived assets we review property and equipment and amortizable intangible assets for impairment at an asset group level whenever events or changes in circumstances indicate the net book value of an asset group may not be recoverable . recoverability of these asset groups is measured by comparing their net book values to the future undiscounted cash flows the asset groups are expected to generate . if the asset groups are considered to be impaired , an impairment charge will be recognized equal to the amount by which the net book value of the asset group exceeds fair value . we group construction and plant equipment assets at a regional level , which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets . when an individual asset or group of assets is determined to no longer contribute to the vertically integrated asset group , it is assessed for impairment independently . 25 insurance estimates we carry insurance policies to cover various risks , primarily general liability , automobile liability , workers compensation and employee medical expenses under which we are liable to reimburse the insurance company for a portion of each claim paid . payment for general liability and workers compensation claim amounts generally range from the first $ 0.5 million to $ 1.0 million per occurrence . we accrue for probable losses , both reported and unreported , that are reasonably estimable using actuarial methods based on historic trends , modified , if necessary , by recent events . changes in our loss assumptions caused by changes in actual experience would affect our assessment of the ultimate liability and could have an effect on our operating results and financial position up to $ 1.0 million per occurrence for general liability and workers compensation or $ 0.3 million for medical insurance . asset retirement obligations we account for the costs related to legal obligations to reclaim aggregate mining sites and other facilities by recording our estimated asset retirement obligation at fair value , capitalizing the estimated liability as part of the related asset 's carrying amount and allocating it to expense over the asset 's useful life . to determine the fair value of the obligation , we estimate the cost for a third-party to perform the legally required reclamation including a reasonable profit margin . this cost is then increased for future estimated inflation based on the estimated years to complete and discounted to fair value using present value techniques with a credit-adjusted , risk-free rate . in estimating the settlement date , we evaluate the current facts and conditions to determine the most likely settlement date . we review reclamation obligations at least annually for a revision to the cost or a change in the estimated settlement date . additionally , reclamation obligations are reviewed in the period that a triggering event occurs that would result in either a revision to the cost or a change in the estimated settlement date . contingencies we are currently involved in various claims and legal proceedings . loss contingency provisions are recorded if the potential loss from any asserted or unasserted claim or legal proceeding is considered probable and the amount can be reasonably estimated . if a potential loss is considered probable but only a range of loss can be determined , the low-end of the range is recorded . these accruals represent management 's best estimate of probable loss . disclosure is also provided when it is reasonably possible and estimable that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the amount recorded . significant judgment is required in both the determination of probability of loss and the determination as to whether an exposure is reasonably estimable . because of uncertainties related to these matters , accruals are based only on the best information available at the time . as additional information becomes available , we reassess the potential liability related to claims and litigation and may revise our estimates . see note 17 of โ notes to the consolidated financial statements โ and โ item 3. legal proceedings โ for additional information . 26 current economic environment and outlook steady demand across end markets and geographies enabled our teams to finish the 2017 fiscal year in a very solid position . total company backlog finished at $ 3.7 billion , a year-end record . public and private markets remain highly competitive , as economic stability and steady-to-improving demand continue to provide broad growth opportunities for our businesses . following decades of under-investment , state , regional , and local public infrastructure investment is poised to grow . we continue to emphasize pricing discipline , balancing a bottom-line focus in 2018 with significant , long-term revenue growth opportunities for our construction and construction materials segments emanating from a significant step-up in public investment this year . state and local infrastructure funding commitments across the country have improved significantly in the past few years . more than half of u.s. states have taken action over the past five years to stabilize maintenance and to reinvest in transportation infrastructure .
| results of operations replace_table_token_7_th 27 revenue replace_table_token_8_th replace_table_token_9_th construction revenue in 2017 increased $ 299.5 million , or 21.9 % , compared to 2016 primarily due to increased volumes from entering the year with greater contract backlog in the kenny , northwest and heavy civil public sectors , from an improved success rate on bidding activity on power and airport related construction in the california public sector and on power work in the kenny private sector . the increases were partially offset by declines in the california private sector from a reduction in solar construction and the kenny public sector from the completion of projects in 2016 and a decrease in awards in 2017. replace_table_token_10_th 1 for the periods presented , this large project construction revenue was earned from the public sector . large project construction revenue in 2017 increased $ 144.0 million , or 16.2 % , compared to 2016 , primarily due to progress on new and existing projects partially offset by a net negative impact from revisions in estimates ( see note 2 of โ notes to the consolidated financial statements โ for more information ) . 28 replace_table_token_11_th construction materials revenue in 2017 increased $ 31.6 million , or 12.1 % , compared to 2016 primarily due to a net increase in sales volume from improved demand and a net increase in sales prices from an improved market . contract backlog our contract backlog consists of the revenue we expect to record in the future on awarded contracts , including 100 % of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts . we generally include a project in our contract backlog at the time it is awarded and to the extent we believe funding is probable .
| 4,673 |
denny 's restaurants are operated in all 50 states , the district of columbia , two u.s. territories and 12 foreign countries with principal concentrations in california ( 23 % of total restaurants ) , texas ( 12 % ) and florida ( 8 % ) . at december 25 , 2019 , the denny 's brand consisted of 1,703 franchised , licensed and company restaurants . of this amount , 1,635 of our restaurants were franchised or licensed , representing 96 % of the total restaurants , and 68 were company restaurants . our revenues are derived primarily from two sales channels , which we operate as one segment : company restaurants and franchised and licensed restaurants . the primary sources of revenues are the sale of food and beverages at our company restaurants and the collection of royalties , advertising revenue , initial and other other fees and occupancy revenue from restaurants operated by our franchisees under the denny 's name . sales and customer traffic at both company and franchised restaurants are affected by the success of our marketing campaigns , new product introductions , product quality enhancements , customer service and menu pricing , as well as external factors including competition , economic conditions affecting consumer spending and changes in guests ' tastes and preferences . sales at company restaurants and royalty , advertising and fee income from franchised restaurants are also impacted by the opening of new restaurants , the closing of existing restaurants , the sale of company restaurants to franchisees and the acquisition of restaurants from franchisees . costs of company restaurant sales are exposed to volatility in two main areas : payroll and benefit costs and product costs . the volatility of payroll and benefit costs results primarily from changes in wage rates and increases in labor related expenses , such as medical benefit costs and workers ' compensation costs . additionally , changes in guest counts and investments in store-level labor impact payroll and benefit costs as a percentage of sales . many of the products sold in our restaurants are affected by commodity pricing and are , therefore , subject to price volatility . this volatility is caused by factors that are fundamentally outside of our control and are often unpredictable . in general , we purchase food products based on market prices or we set firm prices in purchase agreements with our vendors . in an inflationary commodity environment , our ability to lock in prices on certain key commodities is imperative to controlling food costs . in addition , our continued success with menu management helps us offer menu items that provide a compelling value to our customers while maintaining attractive product costs and profitability . our fiscal year ends on the last wednesday in december . as a result , a fifty-third week is added to a fiscal year every five or six years . fiscal 2019 , 2018 and 2017 each included 52 weeks of operations . our next 53-week year will be fiscal 2020 . 20 summary of operations transitioning to a lower risk business model during 2019 , the company migrated from a 90 % franchised business model to one that is 96 % franchised . changes in restaurant counts are as follows : replace_table_token_8_th the sale of 113 company restaurants in 2019 and 2018 with attached development commitments created an opportunity for development-focused franchisees to expand their businesses . in addition to stimulating domestic restaurant development , this transition yielded a smaller portfolio of higher volume company restaurants . the smaller number of company restaurants will require lower remodel and maintenance-related capital expenditures and general and administrative support costs . further , we expect to benefit from reduced exposure to volatility in costs of company restaurant sales along with greater stability in royalties and fees from restaurants operated by our franchisees . we generated approximately $ 119.0 million of cash proceeds from the sale of company restaurants in 2019. growing and revitalizing the brand over the last five years , our growth initiatives have led to 194 new restaurant openings . during 2019 , our franchisees opened 30 restaurants of which 14 are international franchised locations including three each in canada , the philippines , and the united arab emirates . our goal is to increase net restaurant growth through both domestic and international avenues . domestic growth will focus on markets in which we have modest penetration . development agreements related to the sale of 113 of our company restaurants during 2018 and 2019 and recently enhanced development agreements in canada and the philippines are expected to stimulate both domestic and international growth over the next several years . our current standard franchise agreement includes a royalty rate of up to the current rate of 4.5 % . approximately 66 % of our franchised restaurants were operating under this agreement as of december 25 , 2019 , and we expect over 75 % to be operating under this agreement by the end of 2020. we anticipate that existing franchisees will elect to migrate to the new fee structure over the next decade as incentives under previous franchise agreements expire . due to the long-term migration of existing franchisees , we will not see the full benefit of the higher royalty rate for some time . for 2019 , our average contractual domestic royalty rate was approximately 4.18 % , compared to 4.17 % for 2018 and 4.14 % for 2017. a total of 144 remodels were completed during 2019 , comprised of 141 at franchised restaurants and three at company restaurants . these remodels were in our heritage image , which we launched in late 2013. this updated look reflects a more contemporary diner feel to further reinforce our america 's diner positioning . as of the end of 2019 , approximately 89 % of the restaurants in the system have been remodeled to the most current image . story_separator_special_tag while we do not record franchise and licensed sales as revenue in our consolidated financial statements , we believe system-wide same-store sales information is useful to investors in understanding our financial performance , as our royalty revenues are calculated based on a percentage of franchise sales . accordingly , system-wide same-store sales should be considered as a supplement to , not a substitute for , our results as reported under gaap . 23 statements of income replace_table_token_9_th ( a ) costs of company restaurant sales percentages are as a percentage of company restaurant sales . costs of franchise and license revenue percentages are as a percentage of franchise and license revenue . all other percentages are as a percentage of total operating revenue . ( b ) equivalent units are calculated as the weighted average number of units outstanding during a defined time period . ( c ) same-store sales include sales from company restaurants or non-consolidated franchised and licensed restaurants that were open the same period in the prior year . while we do not record franchise and licensed sales as revenue in our consolidated financial statements , we believe domestic franchised same-store sales information is useful to investors in understanding our financial performance , as our royalty revenues are calculated based on a percentage of franchise sales . accordingly , domestic franchised same-store sales should be considered as a supplement to , not a substitute for , our results as reported under gaap . ( d ) prior year amounts have not been restated for 2019 comparable restaurants . 24 company restaurant operations company same-store sales increase d 1.9 % in 2019 and 1.8 % in 2018 compared with the respective prior year . company restaurant sales for 2019 decreased $ 105.6 million , or 25.6 % , primarily resulting from a 55 equivalent unit decrease in company restaurants , partially offset by the increase in same-store sales . company restaurant sales for 2018 increased $ 21.6 million , or 5.5 % , primarily resulting from the increase in same-store sales and an eight equivalent unit increase in company restaurants . total costs of company restaurant sales as a percentage of company restaurant sales were 84.3 % in 2019 , 84.7 % in 2018 and 83.2 % in 2017 consisting of the following : product costs were 24.4 % in 2019 and 2018 and 25.1 % in 2017 . for 2019 , leverage gained from increased pricing offset impacts of commodity increases . the decrease for 2018 was primarily due to leverage gained from increased pricing and lower commodity costs . payroll and benefits were 38.8 % in 2019 , 39.9 % in 2018 and 39.2 % in 2017 . the 2019 decrease was primarily due to a 0.4 percentage point decrease in payroll taxes and fringe benefits , a 0.5 percentage point decrease in labor resulting from the impact of refranchising restaurants and a 0.1 percentage point decrease in workers ' compensation costs related to claims development . the increase in 2018 was primarily due to a 0.4 percentage point increase in labor costs due to minimum wage rate increases and a 0.3 percentage point increase in incentive compensation . occupancy costs were 6.1 % in 2019 , 5.6 % in 2018 and 5.3 % in 2017 . the 2019 increase was related to a 0.3 percentage point increase in rental costs primarily due to the impact of refranchising restaurants and a 0.2 percentage point increase in general liability costs primarily due to higher property insurance costs . the 2018 increase was primarily related to a 0.3 percentage point increase in general liability costs from unfavorable claims development . other operating expenses consisted of the following amounts and percentages of company restaurant sales : replace_table_token_10_th the increases in repairs and maintenance as a percentage of company restaurant sales for 2019 were primarily related to the sale of company restaurants as part of our refranchising and development strategy . the increase in other direct costs for 2018 primarily resulted from higher third party delivery fees of $ 2.9 million related to increased delivery sales . 25 franchise operations franchise and license revenue and costs of franchise and license revenue consisted of the following amounts and percentages of franchise and license revenue for the periods indicated : replace_table_token_11_th royalties increase d by $ 7.3 million , or 7.1 % , in 2019 primarily resulting from a 40 equivalent unit increase from the impact of our refranchising and development strategy and a 2.0 % increase in domestic same-store sales . royalties increased by $ 0.9 million , or 0.9 % , in 2018 primarily resulting from a higher average royalty rate as compared to 2017 and in increase in domestic same-store sales of 0.6 % , partially offset by equivalent unit decreases in franchised and licensed restaurants . the average domestic royalty rate was 4.18 % , 4.17 % and 4.14 % for 2019 , 2018 and 2017 , respectively . advertising revenue increased $ 2.8 million , or 3.6 % , in 2019 resulting from the the increase in equivalent units and impact of the increase in same-store sales . initial and other fees increased $ 0.1 million , or 1.9 % , as the recognition of revenue on additional franchised units from the sale of restaurants to franchisees exceeded the impact of less accelerated revenue recognition during 2019 as a result of fewer franchised unit closures compared to 2018. the 2018 increases in advertising revenue and initial and other fees primarily resulted from the implementation of topic 606 related to revenue recognition . beginning in 2018 , advertising revenue and costs are presented on a gross basis instead of a net basis as previously presented . occupancy revenue increase d $ 6.6 million , or 20.5 % , in 2019 primarily resulting from the sale of restaurants to franchisees . occupancy revenue decreased by $ 3.8 million , or 10.5 % , in 2018 primarily resulting from scheduled lease expirations .
| summary of cash flows our primary sources of liquidity and capital resources are cash generated from operations and borrowings under our credit facility ( as described below ) . principal uses of cash are operating expenses , capital expenditures and the repurchase of shares of our common stock . the following table presents a summary of our sources and uses of cash and cash equivalents for the periods indicated : replace_table_token_17_th net cash flows provided by operating activities were $ 43.3 million for the year ended december 25 , 2019 compared to $ 73.7 million for the year ended december 26 , 2018 . the decrease in cash flows provided by operating activities was primarily due to the reduction in equivalent units and the related runoff of liabilities resulting from the sale of company restaurants . net cash flows provided by operating activities were $ 73.7 million for the year ended december 26 , 2018 compared to $ 78.3 million for the year ended december 27 , 2017. the decrease in cash flows provided by operating activities was primarily due to the timing of receiving credit card receivables . we believe that our estimated cash flows from operations for 2020 , combined with our capacity for additional borrowings under our credit facility , will enable us to meet our anticipated cash requirements and fund capital expenditures over the next twelve months . net cash flows provided by investing activities were $ 105.0 million for the year ended december 25 , 2019 . these cash flows are primarily comprised of $ 129.7 million of proceeds from the sale of assets , including $ 119.0 million from the sale of 105 restaurants and $ 10.7 million from the sale of real estate . these cash flows are offset by capital expenditures of $ 14.0 million and acquisitions of real estate of $ 11.3 million .
| 4,674 |
included in cash and cash equivalents in the consolidated balance sheets are $ 34,016 and $ 35,741 as of april 27 , 2019 and april 28 , 2018 , respectively , which represent cash collected from previously sold story_separator_special_tag overview our financial information for fiscal 2019 is summarized in this management 's discussion and analysis and the consolidated financial statements and related notes . the following background is provided to readers to assist in the review of our financial information . we present three reportable segments : dental , animal health and corporate . dental and animal health are strategic business units that offer similar products and services to different customer bases . dental provides a virtually complete range of consumable dental products , equipment and software , turnkey digital solutions and value-added services to dentists and dental laboratories throughout north america . animal health is a leading , full-line distributor in north america and the u.k. of animal health products , services and technologies to both the production-animal and companion-pet markets . our corporate segment is comprised of general and administrative expenses , including home office support costs in areas such as information technology , finance , legal , human resources and facilities . in addition , customer financing and other miscellaneous sales are reported within corporate results . operating margins of the animal health business are considerably lower than the dental business . while operating expenses run at a lower rate in the animal health business when compared to the dental business , gross margins in the animal health business are substantially lower due generally to the low margins experienced on the sale of pharmaceutical products . we operate with a 52-53 week accounting convention with our fiscal year ending on the last saturday in april . fiscal 2019 , 2018 and 2017 ended on april 27 , 2019 , april 28 , 2018 and april 29 , 2017 , respectively , and all years consisted of 52 weeks . fiscal 2020 will end on april 25 , 2019 and will consist of 52 weeks . we believe there are several important aspects of our business that are useful in analyzing it , including : ( 1 ) growth in the various markets in which we operate ; ( 2 ) internal growth ; ( 3 ) growth through acquisition ; and ( 4 ) continued focus on controlling costs and enhancing efficiency . management defines internal growth as the increase in net sales from period to period , adjusting for differences in the number of weeks in fiscal years , excluding the impact of changes in currency exchange rates , and excluding the net sales , for a period of twelve months following the transaction date , of businesses we have acquired . factors affecting our results intangible asset impairment . in fiscal 2006 , we extended our exclusive north american distribution relationship with sirona for its cerec 3d dental restorative system . at that time , we paid a $ 100.0 million distribution fee to extend the existing exclusive relationship for at least a 10-year period beginning in 2007. this distribution fee was accounted for as an intangible asset and began amortizing in 2007. based on our november 2016 decision not to extend sales exclusivity for the full sirona portfolio of products , we recorded a pre-tax non-cash impairment charge of $ 36.3 million , or $ 23.0 million after taxes or $ 0.24 per diluted share in our dental segment in fiscal 2017 , related to the distribution fee associated with the cerec product component of this arrangement . u.s. tax reform . on december 22 , 2017 , the u.s. government enacted comprehensive tax legislation commonly referred to as the tax act . the tax act significantly revised the future ongoing u.s. federal corporate income tax by , among other things , lowering u.s. federal corporate tax rates and implementing a territorial tax system . effective january 1 , 2018 , the tax act reduced the u.s. federal corporate tax rate from 35.0 % to 21.0 % . for our fiscal year ending april 28 , 2018 , we utilized a blended rate of approximately 30.5 % . for fiscal 2018 , these impacts resulted in a provisional discrete net tax benefit of $ 76.6 million , which included provisional amounts of $ 81.9 million of tax benefit on u.s. deferred tax assets and liabilities , $ 4.0 million of tax expense for a one-time transition tax on unremitted foreign earnings and $ 1.2 million in withholding taxes paid on current year distributions . receivables securitization program . on july 24 , 2018 , we entered into a receivables purchase agreement with mufg bank , ltd. ( `` mufg '' ) . under this agreement , mufg acts as an agent to facilitate the sale of certain patterson receivables ( the โ receivables โ ) to certain unaffiliated financial institutions ( the โ purchasers โ ) . the proceeds from the sale of these receivables comprise a combination of cash and a deferred purchase price ( โ dpp โ ) receivable . the initial transaction was a sale of $ 237.6 million of net receivables . from this sale , we received $ 171.0 million of cash and a dpp receivable with a fair value of $ 65.9 million . in addition , we recorded a loss of $ 0.7 million as a result of this transaction . the proceeds from the initial sale were primarily used to reduce debt . 38 the dpp receivable is ultimately realized by patterson following the collection of the underlying receivables sold to the purchasers . the collection of the dpp receivable is recognized as an increase to net cash provided by investing activities within the consolidated statements of cash flows , with a corresponding reduction to net cash provided by operating activities within the consolidated statements of cash flows . legal reserve . in september 2018 , we signed an agreement to settle the litigation entitled in re dental supplies antitrust litigation . story_separator_special_tag under the patterson-sponsored program , equipment purchased by creditworthy customers may be financed up to a maximum of $ 1 million . we generally sell our customers ' financing contracts to outside financial institutions in the normal course of our business . we currently have two arrangements under which we sell these contracts . first , we operate under an agreement to sell a portion of our equipment finance contracts to commercial paper conduits with mufg bank , ltd. ( `` mufg '' ) serving as the agent . we utilize pdc funding , a consolidated , wholly owned subsidiary , to fulfill a requirement of participating in the commercial paper conduit . we receive the proceeds of the contracts upon sale to mufg . the capacity under the agreement with mufg at april 27 , 2019 was $ 525 million . second , we maintain an agreement with fifth third bank ( `` fifth third '' ) whereby fifth third purchases customers ' financing contracts . pdc funding ii , a consolidated , wholly owned subsidiary , sells financing contracts to fifth third . we receive the proceeds of the contracts upon sale to fifth third . the capacity under the agreement with fifth third at april 27 , 2019 was $ 100 million . our financing business is described in further detail in note 8 to the consolidated financial statements . 41 contractual obligations a summary of our contractual obligations as of april 27 , 2019 follows ( in thousands ) : replace_table_token_6_th as of april 27 , 2019 our gross liability for uncertain tax positions , including interest and penalties , was $ 15.0 million . we are not able to reasonably estimate the amount by which the liability will increase or decrease over an extended period of time or whether a cash settlement of the liability will be required . therefore , these amounts have been excluded from the schedule of contractual obligations . for a more complete description of our contractual obligations , see notes 7 and 11 to the consolidated financial statements . outlook our fiscal 2019 performance demonstrates that the execution against our strategic priorities has enabled us to achieve our objective of stabilizing our core business . following a successful first year of our multi-year plan , we are well positioned to build upon our performance going forward . we believe we can deliver continued sales and margin improvement in both our dental and animal health segments . we also plan continued additional strategic investments in our people , technology and systems that will contribute to our long-term success . our outlook reflects our strong conviction in the fundamentals of our business , our compelling value proposition to customers , and continued execution to further improve performance and drive growth . working capital management the following table summarizes our average accounts receivable days sales outstanding and average annual inventory turnover for the past three fiscal years : replace_table_token_7_th foreign operations we derive foreign sales from dental operations in canada , and animal health operations in canada and the u.k. fluctuations in currency exchange rates have not significantly impacted earnings , as these fluctuations impact sales , cost of sales and operating expenses . however , changes in exchange rates adversely affected net sales by $ 24.3 million and $ 89.9 million in fiscal 2019 and 2017 , respectively , while they positively impacted net sales by $ 29.5 million in fiscal 2018. changes in currency exchange rates are a risk accompanying foreign operations , but this risk is not considered material with respect to our consolidated operations . critical accounting policies and estimates patterson has adopted various accounting policies to prepare our consolidated financial statements in accordance with accounting principles generally accepted in the u.s. management believes that our policies are conservative and our philosophy is to adopt accounting policies that minimize the risk of adverse events having a material impact on recorded assets and liabilities . however , the preparation of financial statements requires the use of estimates and judgments regarding the realization of assets and the settlement of liabilities based on the information available to management at the time . changes subsequent to the preparation of the financial statements in economic , technological and competitive conditions may materially impact the recorded values of patterson 's assets and liabilities . therefore , 42 the users of the financial statements should read all the notes to the consolidated financial statements and be aware that conditions currently unknown to management may develop in the future . this may require a material adjustment to a recorded asset or liability to consistently apply to our significant accounting principles and policies that are discussed in note 1 to the consolidated financial statements . the financial performance and condition of patterson may also be materially impacted by transactions and events that we have not previously experienced and for which we have not been required to establish an accounting policy or adopt a generally accepted accounting principle . revenue recognition โ revenues are generated from the sale of consumable products , equipment and support , software and support , technical service parts and labor , and other sources . revenues are recognized when or as performance obligations are satisfied . performance obligations are satisfied when the customer obtains control of the goods or services . consumable , equipment , software and parts sales are recorded upon delivery , except in those circumstances where terms of the sale are fob shipping point , in which case sales are recorded upon shipment . technical service labor is recognized as it is provided . revenue derived from equipment and software support is recognized ratably over the period in which the support is provided . in addition to revenues generated from the distribution of consumable products under arrangements ( buy/sell agreements ) where the full market value of the product is recorded as revenue , we earn commissions for services provided under agency agreements .
| results of operations the following table summarizes our results as a percent of net sales : replace_table_token_5_th fiscal 2019 compared to fiscal 2018 net sales . consolidated net sales in fiscal 2019 were $ 5,574.5 million , an increase of 2.0 % from $ 5,465.7 million in fiscal 2018 . foreign exchange rate changes had an unfavorable impact of 0.4 % on fiscal 2019 sales . dental segment sales decreased 0.2 % to $ 2,191.8 million in fiscal 2019 from $ 2,196.1 million in fiscal 2018 . foreign exchange rate changes had an unfavorable impact of 0.2 % on fiscal 2019 sales . sales of consumables decreased 2.9 % , sales of equipment and software increased 5.2 % , and sales of other services and products decreased 0.7 % in fiscal 2019 . the decrease in sales of consumables was mainly due to changes in our sales force and disruptions resulting from our erp system initiatives . animal health segment sales grew 3.5 % to $ 3,354.5 million in fiscal 2019 from $ 3,242.6 million in fiscal 2018 . foreign exchange rate changes had an unfavorable impact of 0.6 % on fiscal 2019 sales . sales of certain products previously recognized on a gross basis were recognized on a net basis during fiscal 2019 , resulting in an estimated 0.3 % unfavorable impact to sales . gross profit . consolidated gross profit margin decreased 50 basis points from the prior year to 21.4 % . gross profit margin rates decreased in both the dental and animal health segment . a greater percentage of sales came from our lower margin animal health segment during fiscal 2019 , resulting in a lower consolidated gross profit margin rate .
| 4,675 |
we have operated in the t & d industry since 1891. we are one of the largest national contractors servicing the t & d sector of the electric utility industry , and our customers include many of the leading companies in the industry . we have provided c & i electrical contracting services to facility owners and general contractors in the western united states since 1912. we believe that we have a number of competitive advantages in both of our segments , including our skilled workforce , extensive centralized fleet , proven safety performance and reputation for timely completion of quality work that allow us to compete favorably in our markets . in addition , we believe that we are better capitalized than some of our competitors , which provides us with valuable flexibility to take on additional and complex projects . we had consolidated revenues , for the year ended december 31 , 2013 , of $ 902.7 million compared to $ 999.0 million for the year ended december 31 , 2012. for the year ended december 31 , 2013 , our net income was $ 34.8 million compared to $ 34.3 million for the year ended december 31 , 2012. our results for 2013 benefitted from the successful execution of several large transmission projects and the high rate of utilization of our labor and fleet assets , which resulted in higher gross profit and gross margins . overviewยsegments transmission and distribution segment . the t & d segment provides comprehensive solutions to customers in the electric utility industry and the renewable energy industry . our t & d segment generally serves the electric utility industry as a prime contractor to customers such as electric utilities , cooperatives , municipalities and private developers . our t & d segment provides a broad range of services on electric transmission and distribution networks and substation facilities which include design , engineering , procurement , construction , upgrade , maintenance and repair services with a particular focus on construction , maintenance and repair . the demand for transmission construction and maintenance services increased over the past several years due to the modernization of the existing electric utility infrastructure and the need to integrate renewable generation into the electric power grid . for the year ended december 31 , 2013 , our t & d revenues were $ 722.4 million or 80.0 % of our consolidated revenue , compared to $ 828.7 million or 83.0 % of our consolidated revenue for the year ended december 31 , 2012 and $ 622.0 million or 79.7 % of our consolidated revenue for the year ended december 31 , 2011. material and subcontractor cost in our t & d segment comprised approximately 27 % , 42 % , and 36 % , of t & d segment costs for the years ended december 31 , 2013 , 2012 and 2011 , 35 respectively . revenues from transmission projects represented 84.8 % , 82.0 % , and 74.3 % , of t & d segment revenue for the years ended december 31 , 2013 , 2012 and 2011 , respectively . our t & d segment also provides storm restoration services in response to hurricanes , ice or other storm related events , which typically account for less than 5 % of our annual consolidated revenues . in 2013 , 2012 and 2011 , we recognized revenues from storm restoration services of approximately $ 14.6 million , $ 41.3 million and $ 31.1 million , respectively , which represented approximately 1.6 % , 4.1 % and 4.0 % of our annual consolidated revenues , respectively . measured by revenues in our t & d segment , we provided 55.4 % , 42.0 % and 49.1 % of our t & d services under fixed-price contracts during the years ended december 31 , 2013 , 2012 and 2011 , respectively . we also provide many services to our customers under multi-year maintenance service agreements and other variable service agreements . commercial and industrial segment . the c & i segment provides services such as the design , installation , maintenance and repair of commercial and industrial wiring , installation of traffic networks and the installation of bridge , roadway and tunnel lighting . in our c & i segment , we generally provide our electric construction and maintenance services as a subcontractor to general contractors in the c & i industry as well as to facility owners . our c & i operations are primarily focused on the arizona and colorado regional markets where we have sufficient scale to deploy the level of resources necessary to achieve significant market share . we concentrate our efforts on projects where our technical and project management expertise are critical to successful and timely execution . the majority of c & i contracts cover electrical contracting services for airports , hospitals , data centers , hotels , stadiums , convention centers , manufacturing plants , processing facilities , waste-water treatment facilities , mining facilities and transportation control and management systems . for the year ended december 31 , 2013 , our c & i revenues were $ 180.3 million or 20.0 % of our consolidated revenue , compared to $ 170.2 million or 17.0 % of our consolidated revenue for the year ended december 31 , 2012 and $ 158.4 million or 20.3 % of our consolidated revenue for the year ended december 31 , 2011. material and subcontractor cost in our c & i segment comprised approximately 44 % , 48 % , and 52 % , of c & i segment costs for the years ended december 31 , 2013 , 2012 and 2011 , respectively . measured by revenues in our c & i segment , we provided 45.9 % , 49.9 % and 55.2 % of our services under fixed-price contracts for the years ended december 31 , 2013 , 2012 and 2011 , respectively . overviewยrevenue and gross margins revenue recognition . we recognize revenue on a percentage-of-completion method of accounting , which is commonly used in the construction industry . story_separator_special_tag we believe that legislative and regulatory actions , state renewable portfolio standards , the aging of the electric grid , and the general improvement of the economy will positively impact the level of spending by our customers . although competition remains strong , we see these trends as positive factors for us in the future . our business is directly impacted by the level of spending on t & d infrastructure throughout the markets we serve and the level of commercial and industrial electrical construction activity in the western united states . the electric grid is aging and requires significant upgrades and maintenance to meet current and future demands for electricity . in addition , regulatory pressures and the low price of natural gas may accelerate the shut-down of coal-fired generating plants , which could result in the need for line upgrades and new substations . over the past several years , many utilities have begun to implement plans to improve their transmission systems , improve reliability and reduce congestion . these utilities have started or planned new construction , line upgrades and maintenance projects on many transmission systems . we believe that our customers remain committed to the expansion and strengthening of their transmission infrastructure , with planning , engineering and funding for many of their projects already in place . although multi-year transmission project bidding activity in 2013 was lower compared to the past several years , we believe that we will begin to see increased bidding activity in 2014. significant construction on any large multi-year projects awarded in 2014 will not likely occur until 2015. the timing of multi-year transmission project awards and substantial construction activity is difficult to predict due to regulatory requirements and right-of-way permits needed to commence construction . bidding and construction activity for small to medium-size transmission projects and upgrades remains strong , and we expect this trend to continue in 2014 , primarily due to reliability and economic drivers . we also believe that the number of competitors in the transmission industry has grown , as a number of engineering , construction and general contractors , who historically have not competed with us , now bid on some projects in our industry . competition in the transmission market , from existing competition and new entrants , has made winning projects more difficult and has increased pressure on contract margins . the canadian transmission market appears to be entering a substantial growth phase which we expect will extend over the next several years , driven by the need for oil and gas infrastructure , further development of hydropower , load center delivery requirements , and upgrades to aging infrastructure . we are evaluating several near- and long-term canadian projects and opportunities that we believe would fit our portfolio of work . legislative or regulatory actions may affect demand for the services provided by our t & d segment in the long term , particularly in connection with electric power infrastructure . federal energy regulatory commission ( ferc ) order no . 1000 promotes more efficient and cost-effective development of new transmission facilities , which we believe could have a long-term positive impact on electric transmission line development . we also anticipate increased infrastructure spending over the long term as a result of legislation requiring the electric power industry to meet national and local reliability standards for its transmission and distribution systems and incentives to the industry to invest in and improve maintenance on its systems . the environmental protection agency 's mercury and air toxics standards , or mats , may force some coal-fired and oil-fired generating plants to discontinue operation . should this occur , it could result in increased spending by the affected utilities to strengthen their transmission infrastructure to alleviate congestion and deliver new and existing power sources to their regions . 38 we believe that renewable resources will be a driver for large transmission project activity . state renewable portfolio standards , which set required or voluntary standards for how much electricity is to be generated from renewable energy sources , as well as general environmental concerns , are driving the development of renewable energy projects . the economic feasibility of renewable energy projects , and therefore the attractiveness of investment in the projects , may depend on the availability of tax incentive programs or the ability of the projects to take advantage of such incentives . the production tax credit was not extended at the end of 2013 and there is no assurance that the government will extend the production tax credit or any tax incentives , or create new incentive or funding programs , for renewable energy programs . we do not know the impact , if any , this will have on our services related to renewable energy projects . as a result of reduced spending by utilities on their distribution systems for several years , we believe there is a growing need for sustained investment by utilities on their distribution systems to properly maintain or meet reliability requirements . in 2013 we saw a small increase in bidding activity in some of our electric distribution markets , as economic conditions improved in those areas . we believe that a recovery in the u.s. economy , and in the housing market in particular , over the next few years could provide additional stimulus for spending by our customers on their distribution systems . in addition , we believe there will be a push to strengthen utility distribution systems against major storm-related damage such as what occurred with hurricane sandy in the northeast . several industry and market trends are also prompting customers in the electric utility industry to seek outsourcing partners rather than performing projects internally . these trends include an aging electric utility workforce , increasing costs and labor issues . we believe electric utility employee retirements could increase with further economic recovery , which may result in an increase in outsourcing opportunities . we expect to see an incremental increase in distribution opportunities in 2014 and we believe these opportunities will continue to be bid in a competitive market .
| segment results the following table sets forth , for the periods indicated , statements of operations data by segment , segment net sales as a percentage of total net sales and segment operating income as a percentage of segment net sales : replace_table_token_10_th transmission & distribution revenues for our t & d segment for the year ended december 31 , 2013 were $ 722.4 million compared to $ 828.7 million for the year ended december 31 , 2012 , a decrease of $ 106.3 million or 12.8 % . the decrease in revenues was primarily the result of lower material and subcontractor costs associated with several large transmission projects . material and subcontractor costs in our t & d segment comprised approximately 27 % of total contract costs in the year ended december 31 , 2013 , compared to approximately 42 % in the year ended december 31 , 2012. revenues from storm work declined $ 26.7 million to $ 14.6 million in year ended december 31 , 2013 from $ 41.3 million in the year ended december 31 , 2012. revenues from transmission projects represented 84.8 % and 82.0 % of t & d segment revenue for the years ended december 31 , 2013 and 2012 , respectively . additionally , for the year ended december 31 , 2013 , measured by revenue in our t & d segment , we provided 55.4 % of our t & d services under fixed-price contracts , as compared to 42.0 % for the year ended december 31 , 2012. operating income for our t & d segment for the year ended december 31 , 2013 was $ 81.4 million compared to $ 80.5 million for the year ended december 31 , 2012 , as lower volume in large transmission projects was largely offset by higher contract margins on several large transmission projects .
| 4,676 |
factors that could cause or contribute to any differences include , but are not limited to , those discussed under the caption โ forward-looking information โ and under item 1a โ โ risk factors. โ business overview 1 -800-flowers.com , inc. and its subsidiaries ( collectively , the โ company โ ) is a leading provider of gourmet food and floral gifts for all occasions . for the past 40 years , 1-800-flowersยฎ ( 1-800-356-9377 or www.1800flowers.com ) has been helping deliver smiles for our customers with gifts for every occasion , including fresh flowers and the finest selection of plants , gift baskets , gourmet foods , confections , candles , balloons and plush stuffed animals . as always , our 100 % smile guaranteeยฎ backs every gift . the company 's celebrations suite of services including celebrations passport free shipping program , celebrations rewards and celebrations reminders , are all designed to engage with customers and deepen relationships as a one-stop destination for all celebratory and gifting occasions . in 2017 , 1-800-flowers.com , inc. was named as the gold winner for the golden bridge awards in the โ new products and services โ category for the company 's groundbreaking implementation of an artificial intelligence-powered online gift concierge , gwyn . earlier in the year , 1-800-flowers.com was awarded the gold stevie โ e-commerce customer service โ award , recognizing the company 's innovative use of online technologies and social media to service the needs of customers . in addition , 1-800-flowers.com , inc. was recognized as one of internet retailer 's top 300 b2b e-commerce companies in 2015 and was also recently named in internet retailer 's 2016 top mobile 500 as one of the world 's leading mobile commerce sites . the company was included in internet retailer 's 2015 top 500 for fast growing e-commerce companies . in 2015 , 1-800-flowers.com was named a winner of the โ best companies to work for in new york state โ award by the new york society for human resource management ( nys-shrm ) . the company 's bloomnetยฎ international floral wire service ( www.mybloomnet.net ) provides a broad range of quality products and value-added services designed to help professional florists grow their businesses profitably . the 1-800-flowers.com , inc. โ gift shop โ also includes gourmet gifts such as premium , gift-quality fruits and other gourmet items from harry & davidยฎ ( 1-877-322-1200 ) or www.harryanddavid.com ) , popcorn and specialty treats from the popcorn factoryยฎ ( 1-800-541- 2676 or www.thepopcornfactory.com ) ; cookies and baked gifts from cheryl'sยฎ ( 1-800-443-8124 or www.cheryls.com ) ; gift baskets and towers from 1-800-baskets.comยฎ ( www.1800baskets.com ) ; premium english muffins and other breakfast treats from wolferman 's ( 1-800-999-1910 or www.wolfermans.com ) ; carved fresh fruit arrangements from fruitbouquets.com ( www.fruitbouquets.com ) ; and top quality steaks and chops from stock yardsยฎ ( www.stockyards.com ) . as a provider of gifts to consumers and wholesalers for resale to consumers , the company is subject to changes in consumer confidence and the economic conditions that impact our customers . demand for the company 's products is affected by the financial health of our customers , which , in turn , is influenced by macro economic issues such as unemployment , fuel and energy costs , trends in the housing market and availability of consumer credit . as such , the company expects that its revenues will continue to be closely tied to changes in consumer sentiment . the company has organized its operations into three categories , or segments : consumer floral , bloomnet wire service and gourmet foods & gift baskets , reflecting the way the company evaluates its business performance and manages its operations . on may 30 , 2017 , the company completed the sale of the outstanding equity of fannie may confections brands , inc. , including its subsidiaries , fannie may confections , inc. and harry london candies , inc. ( โ fannie may โ ) to ferrero international s.a. , a luxembourg corporation ( โ ferrero โ ) . the company and ferrero also entered into a transition services agreement whereby the company will provide certain post-closing services to ferrero and fannie may related to the business of fannie may and a commercial agreement with respect to the distribution of certain ferrero and fannie may products . on september 30 , 2014 , the company completed its acquisition of harry & david holdings , inc. ( โ harry & david โ ) , a leading multi-channel specialty retailer and producer of branded premium gift-quality fruit , gourmet food products and other gifts marketed under the harry & davidยฎ , wolferman 'sยฎ and cushman'sยฎ brands . during fiscal 2017 , the company was able to achieve a number of operational and financial milestones : โ continued i mproved operating results โ overall revenues were $ 1.194 billion , an increase of 1.8 % in comparison to fiscal 2016 ( up 3.1 % after adjusting for several issues affecting year over year comparability , discussed in more detail below within results of operations ) . income from operations improved from $ 43.3 million in fiscal 2016 to $ 46.4 million in fiscal 2017 , while adjusted ebitda improved from $ 85.7 million in fiscal 2016 to $ 87.2 million in fiscal 2017. these results were driven by revenue growth and improved operating performance within the consumer floral and bloomnet wire service segments , despite the competitive and promotional environment in which these businesses operate . these favorable results were partially offset by underperformance within the gourmet foods & gift baskets segment , primarily reflecting revenue declines within the harry & david brand during the december 2016 holiday season . โ strength ened balance sheet - throughout fiscal 2017 , the company continued its responsible stewardship of shareholders ' capital . story_separator_special_tag the company 's credit agreement uses ebitda and adjusted ebitda to measure compliance with covenants , such as leverage and coverage . ebitda and adjusted ebitda are also used by the company to evaluate and price potential acquisition candidates . ebitda and a djusted ebitda have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the company 's results as reported under gaap . some of the limitations are : ( a ) ebitda and adjusted ebitda do not reflect changes in , or cash requirements for , the company 's working capital needs ; ( b ) ebitda and adjusted ebitda do not reflect the significant interest expense , or the cash requirements necessary to service interest or principal payments , on the company 's debts ; and ( c ) although depreciation and amortization are non-cash charges , the assets being depreciated and amortized may have to be replaced in the future and ebitda does not reflect any cash requirements for such capital expenditures . ebitda should only be used on a supplemental basis combined with gaap results when evaluating the company 's performance . category contribution m argin : we define category contribution m argin as earnings before interest , taxes , depreciation and amortization , before the allocation of corporate overhead expenses . when viewed together with ou r gaap results , we believe that category contribution margin provides management and users of the financial statements information about the performance of our business segments . category contribution m argin is used in addition to and in conjunction with results presented in accordance with gaap and should not be relied upon to the exclusion of gaap financial measures . the material limitation associated with the use of the category contribution margin is that it is an incomplete measure of profitability as it does not include all operating expenses or non-operating income and expenses . management compensates for these limitations when using this measure by looking at other gaap measures , such as operating income and net income . 22 adjusted net income and a djusted n et income per common share : we de fine adjusted net income and adjusted net income per common share as net income and net income per common share adjusted for certain items affecting period to period comparability . adjusted net income and adjusted net income per common share for fiscal 2017 exclude certain charges including harry & david severance and the gain on the sale of fannie may . adjusted net income and adjusted net income per common share for fiscal 2016 exclude : ( i ) the gain from insurance recovery on the fannie may warehouse fire , ( ii ) loss on the sale of iflorist , and the impairment of a foreign equity method investment , ( iii ) harry & david integration costs , ( iv ) litigation settlement costs as well as ( vi ) severance expenses associated with harry & david and the rightsizing of the fannie may operations , prior to disposition . we believe t hat adjusted net income and adjusted net income per common share are meaningful measures because they increase the comparability of period to period results . since these are not measures of performance calculated in accordance with gaap , they should not be considered in isolation of , or as a substitute for , gaap net income and net income per common share as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies . 23 category information the following table presents the net revenues , gross profit and category contribution margin from each of the company 's business segments , as well as consolidated ebitda and adjusted ebitda . years ended july 2 , 2017 compensation charge related to nq plan investment appreciation severance costs adjusted ( non-gaap ) july 2 , 2017 july 3 , 2016 harry & david integration costs litigation settlement compensation charge related to nq plan investment appreciation severance costs adjusted ( non-gaap ) july 3 , 2016 ( in thousands ) net revenues : 1-800-flowers.com consumer floral $ 437,132 $ - $ - $ 437,132 $ 418,492 $ - $ - $ - $ - $ 418,492 bloomnet wire service 87,700 87,700 85,483 85,483 gourmet food & gift baskets 670,677 670,677 670,453 670,453 corporate 1,102 1,102 1,066 1,066 intercompany eliminations ( 2,986 ) ( 2,986 ) ( 2,470 ) ( 2,470 ) total net revenues $ 1,193,625 $ - $ - $ 1,193,625 $ 1,173,024 $ - $ - $ - $ - $ 1,173,024 gross profit : 1-800-flowers.com consumer floral $ 177,488 $ - $ - $ 177,488 $ 170,536 $ - $ - $ - $ - $ 170,536 40.6 % 40.6 % 40.8 % 40.8 % bloomnet wire service 49,562 49,562 48,169 48,169 56.5 % 56.5 % 56.3 % 56.3 % gourmet food & gift baskets 292,199 292,199 297,782 297,782 43.6 % 43.6 % 44.4 % 44.4 % corporate ( a ) 1,032 1,032 971 971 93.6 % 93.6 % 91.1 % 91.1 % total gross profit $ 520,281 $ - $ - $ 520,281 $ 517,458 $ - $ - $ - $ - $ 517,458 43.6 % 43.6 % 44.1 % 44.1 % category contribution margin ( non-gaap ) : 1-800-flowers.com consumer floral $ 51,860 $ - $ - $ 51,860 $ 50,773 $ - $ - $ - $ - $ 50,773 bloomnet wire service 32,383 32,383 30,629 30,629 gourmet food & gift baskets 77,312 756 78,068 79,398 79,398 category contribution margin subtotal 161,555 756 162,311 160,800 160,800 corporate ( a ) ( 81,820 ) 988 ( 80,832 ) ( 85,134 ) 828 1,500 ( 122 ) 1,437 ( 81,491 ) ebitda ( non-gaap ) $ 79,735 $ 988 $ 756 $ 81,479 $ 75,666 $ 828 $ 1,500 $ ( 122 ) $ 1,437 $ 79,309 add : stock-based compensation 5,694 5,694 6,343 6,343 ebitda , excluding stock-based compensation ( non-gaap ) $ 85,429 $ 988 $ 756 $ 87,173 $ 82,009 $ 828 $ 1,500 $ (
| results of operations the company 's fiscal year is a 52- or 53-week period ending on the sunday nearest to june 30. fiscal years 2017 and 2015 , which ended on july 2 , 2017 and june 28 , 2015 , respectively consisted of 52 weeks . fiscal year 2016 , which ended on july 3 , 2016 , consisted of 53 weeks . net revenues replace_table_token_7_th net revenues consist primarily of the selling price of the merchandise , service or outbound shipping charges , less discounts , returns and credits . during the year ended july 2 , 2017 , net revenues increased 1.8 % in comparison to the prior year , as a result of growth within the company 's consumer floral and bloomnet segments , with the 1-800-flowers.com brand continuing to extend its market leadership position , driven by increased demand throughout the year , particularly during the valentine 's day holiday . the increases above were partially offset by a decline in harry & david revenues , due to the closure of a number of underperforming retail locations , and a reduction in e-commerce demand , primarily during the christmas holiday selling season , and the timing of certain factors including : ( i ) the closing of the company 's sale of the fannie may confection brands business on may 30 , 2017 , ( ii ) a 52-week fiscal year in fiscal 2017 versus 53-week fiscal year in fiscal 2016 , reflecting the company 's retail calendar , and ( iii ) the shift of harry & david 's fruit of the month clubยฎ cherries shipment out of the company 's fiscal fourth quarter in fiscal 2017 , due to a late harvest , into the first quarter of fiscal 2018. on a comparable basis , adjusting fiscal year 2016 gaap revenues to remove : ( i ) the 53rd week ( $ 8.0 million ) , ( ii ) fannie may 's june 2016 revenues ( $ 4.8 million ) and ( iii ) the june 2016 harry & david fruit of the month clubยฎ cherry shipment ( $ 2.4 million
| 4,677 |
the company tests goodwill for impairment during the fourth quarter every fiscal year and when an event occurs or circumstances change such that it is reasonably possible that an impairment may exist . the qualitative analysis includes assessing the impact of changes in certain factors including ( 1 ) changes in forecasted operating results and comparing actual results to projections , ( 2 ) changes in the industry or its competitive environment since the acquisition date , ( 3 ) changes in the overall economy , its market share and market interest rates since the acquisition date , ( 4 ) trends in the stock price and related market capitalization and enterprise values , ( 5 ) trends in peer companies total enterprise value metrics , and ( 6 ) additional factors such story_separator_special_tag company overview we are an innovator in communications technologies and services . our end-to-end platform of high-capacity ka-band satellites , ground infrastructure and user terminals enables us to provide cost-effective , high-speed , high-quality broadband solutions to enterprises , consumers and government users around the globe , whether on the ground , on the move or in flight . in addition , we develop and provide advanced wireless communications systems , military tactical data link systems , secure networking systems and cybersecurity and information assurance products and services . our product , system and service offerings are often linked through common underlying technologies , customer applications and market relationships . we believe that our portfolio of products and services , combined with our ability to effectively cross-deploy technologies between government and commercial segments and across different geographic markets , provides us with a strong foundation to sustain and enhance our leadership in advanced communications and networking technologies . we conduct our business through three segments : satellite services , commercial networks and government systems . satellite services our satellite services segment uses our proprietary technology platform to provide satellite-based high-speed broadband services with multiple applications to consumers , enterprises and mobile broadband customers ( including commercial airlines and maritime vessels ) both in the united states and abroad . our viasat internet and viasat business internet fixed broadband services offer high-speed , high-quality broadband internet access . for commercial aircraft , we offer high-speed internet and other in-flight services , including our wireless in-flight entertainment ( w-ife ) platform . our community and urban wi-fi hotspot services provide satellite-powered wi-fi to rural , suburban and urban areas in a number of countries in the americas . our proprietary ka-band satellites are at the core of our technology platform . we own three ka-band satellites in service : viasat-2 ( our second-generation high-capacity ka-band spot beam satellite , which was placed into service in the fourth quarter of fiscal year 2018 ) , viasat-1 ( our first-generation high-capacity ka-band spot-beam satellite , which was placed into service in january 2012 ) , and wildblue-1 ( which was placed into service in march 2007 ) . we also have two third-generation viasat-3 class satellites that have entered the phase of full construction , and in january 2019 we signed an agreement to proceed for a third viasat-3 class satellite . in the fourth quarter of fiscal year 2018 , shortly before the launch of commercial broadband services on our viasat-2 satellite , we reported an antenna deployment issue . we worked with the satellite manufacturer to determine the root cause of the antenna deployment issue , potential correcting measures , and resulting damage . in the second quarter of fiscal year 2019 , the root cause analysis was completed . based on that analysis , during the second quarter of fiscal year 2019 , we recorded a reduction to the carrying value of the viasat-2 satellite of $ 177.4 million , with a corresponding insurance receivable of $ 177.4 million , based on our estimated viasat-2 output capabilities as compared to the anticipated , potential and configured capacity of the viasat-2 satellite . during fiscal year 2019 , we received $ 185.7 million in insurance recovery proceeds related to such claims . we recorded an insurance receivable of $ 2.3 million as of march 31 , 2019 with respect to probable remaining viasat-2 related insurance claims . as a result , during fiscal year 2019 , we recorded a $ 7.5 million gain related to viasat-2 insurance claims in sg & a expenses in the consolidated statements of operations and comprehensive incomes ( loss ) . the viasat-2 satellite was primarily financed by the ex-im credit facility ( see โ liquidity and capital resourcesโex-im credit facility โ below ) . pursuant to the terms of the ex-im credit facility , insurance proceeds received from such claims were used to pay down outstanding borrowings under the ex-im credit facility . the primary services offered by our satellite services segment are comprised of : fixed broadband services , which provide consumers and businesses with high-speed broadband internet access and voip services . as of march 31 , 2019 , we provided fixed broadband services to approximately 586,000 subscribers . in addition , our satellite-powered community and urban wi-fi hotspot services are now available within walking distance to more than one million people living and working in thousands of rural , suburban and urban mexican communities . in-flight services , including our flagship viasat in-flight internet , w-ife and aviation software services . as of march 31 , 2019 , 1,312 commercial aircraft were in service receiving our in-flight services through our ifc systems . mobile broadband services , which provide global network management and high-speed internet connectivity services for customers using airborne , maritime and ground-mobile satellite systems . 42 we also offer a variety of other broadband services and capabilities , including live on-line event streaming and oil and natural gas data gathering services . commercial networks our commercial networks segment develops and produces a variety of advanced satellite and wireless products , systems and solutions that enable the provision of high-speed fixed and mobile broadband services . story_separator_special_tag revenues for our funded development from our customer contracts were approximately 19 % of our total revenues for fiscal years 2019 , 2018 and 2017. we also incur ir & d expenses , which are not directly funded by a third party . ir & d expenses consist primarily of salaries and other personnel-related expenses , supplies , prototype materials , testing and certification related to r & d projects . ir & d expenses were approximately 6 % , 11 % and 8 % of total revenues in fiscal years 2019 , 2018 and 2017 , respectively . as a government contractor , we are able to recover a portion of our ir & d expenses pursuant to our government contracts . approximately 11 % , 12 % and 13 % of our total revenues in fiscal years 2019 , 2018 and 2017 , respectively , were derived from international sales . doing business internationally creates additional risks related to global political and economic conditions and other factors identified under the heading โ risk factors โ in item 1a and elsewhere in this report . critical accounting policies and estimates management 's discussion and analysis of financial condition and results of operations discusses our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states of america ( gaap ) . the preparation of these financial statements requires management 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 and the reported amounts of revenues and expenses during the reporting period . we consider the policies discussed below to be critical to an understanding of our financial statements because their application places the most significant demands on management 's judgment , with financial reporting results relying on estimation about the effect of matters that are inherently uncertain . we describe the specific risks for these critical accounting policies in the following paragraphs . for all of these policies , we caution that future events rarely develop exactly as forecast , and even the best estimates routinely require adjustment . revenue recognition we apply the five-step revenue recognition model under asu 2014-09 , revenue from contracts with customers ( commonly referred to as accounting standards codification ( asc ) 606 ) to our contracts with our customers . under this model , we ( 1 ) identify the contract with the customer , ( 2 ) identify our performance obligations in the contract , ( 3 ) determine the transaction price for the contract , ( 4 ) allocate the transaction price to our performance obligations and ( 5 ) recognize revenue when or as we satisfy our performance obligations . these performance obligations generally include the purchase of services ( including broadband capacity and the leasing of broadband equipment ) , the purchase of products , and the development and delivery of complex equipment built to customer specifications under long-term contracts . 44 the timing of satisfaction of performance obligations may require judgment . we derive a substantial portion of our revenues from contracts with customers for services , primarily consisting of connectivity services including leasing of related broadband equipment . these contracts typically require advance or recurring monthly payments by the customer . our obligation to provide connectivity services is satisfied over time as the customer simultaneously receives and consumes the benefits provided . the measure of progress over time is based upon either a period of time ( e.g. , over the estimated contractual term ) or usage ( e.g. , bandwidth used/bytes of data processed ) . from a recognition perspective , the leasing of broadband equipment is evaluated in accordance with the authoritative guidance for leases ( asc 840 ) . our accounting for equipment leases involves specific determinations under asc 840 , which may involve complex provisions and significant judgments . in accordance with asc 840 , we apply the following criteria to determine the nature of the lease ( e.g . , as an operating or sales type lease ) : ( 1 ) review for transfers of ownership of the equipment to the lessee by the end of the lease term , ( 2 ) review of the lease terms to determine if it contains an option to purchase the leased equipment for a price which is sufficiently lower than the expected fair value of the equipment at the date of the option , ( 3 ) review of the lease term to determine if it is equal to or greater than 75 % of the economic life of the equipment , and ( 4 ) review of the present value of the minimum lease payments to determine if they are equal to or greater than 90 % of the fair market value of the equipment at the inception of the lease . additionally , we consider the cancelability of the contract and any related uncertainty of collections or risk in recoverability of the lease investment at lease inception . revenue from sales type leases is recognized at the inception of the lease or when the equipment has been delivered and installed at the customer site , if installation is required . revenues from equipment rentals under operating leases are recognized as earned over the lease term , which is generally on a straight-line basis . we also derive a portion of our revenues from contracts with customers to provide products . performance obligations to provide products are satisfied at the point in time when control is transferred to the customer . these contracts typically require payment by the customer upon passage of control and determining the point at which control is transferred may require judgment .
| results of operations the following table presents , as a percentage of total revenues , income statement data for the periods indicated : replace_table_token_2_th fiscal year 2019 compared to fiscal year 2018 revenues replace_table_token_3_th 48 our total revenues grew by $ 473.6 million as a result of a $ 337.1 million increase in product revenues and a $ 136 .5 million increase in service revenues . the product revenue increase was driven primarily by increases of $ 1 85 . 5 million in our commercial networks segment and $ 1 52 . 3 million in our government systems segment . the service revenue increase was due to increases of $ 95 . 6 million in our satellite services segment , $ 31 . 2 million in our government systems segment and $ 9 .7 million in our commercial networks segment . cost of revenues replace_table_token_4_th cost of revenues increased by $ 416.9 million due to increases of $ 280.8 million in cost of product revenues and $ 136.1 million in cost of service revenues . the cost of product revenue increase was primarily due to increased revenues , mainly from our mobile broadband satellite communication systems products and antenna systems products in our commercial networks segment and tactical data link products and government satellite communication systems products in our government systems segment , causing a $ 247.1 million increase in cost of product revenues on a constant margin basis . additionally , cost of product revenues increased due to lower margins , primarily from our antenna systems products in our commercial networks segment and government satellite communication systems products in our government systems segment .
| 4,678 |
the agreement contains customary affirmative and negative covenants for agreements of this type including , among others , limitations on the company and its subsidiaries with respect to incurrence of liens and priority indebtedness , disposition of assets , mergers , and transactions with affiliates . the agreement also requires the company to maintain a consolidated interest coverage ratio of not less than 3.5 to 1.0 and a consolidated leverage ratio of not more than 3.5 to 1.0. the agreement contains customary events of default f-17 mettler-toledo international inc. notes to the consolidated financial statements ย ( continued ) ( in thousands , except share data , unless otherwise stated ) with customary grace periods , story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read together with our audited consolidated financial statements . overview we operate a global business , with sales that are diversified by geographic region , product range and customer . we hold leading positions worldwide in many of our markets and attribute this leadership to several factors , including the strength of our brand name and reputation , our comprehensive offering of innovative instruments and solutions , and the breadth and quality of our global sales and service network . during 2009 we experienced broad-based sales declines across most geographies and products related to adverse global economic conditions . net sales in u.s. dollars decreased by 12 % in 2009 and increased by 10 % in 2008. excluding the effect of currency exchange rate fluctuations , or in local currencies , net sales decreased 10 % in 2009 and increased 6 % in 2008. our future sales in local currencies may continue to be adversely affected by weak global economic conditions , although we also expect to continue to benefit from our strong leadership positions and the impact of our global sales and marketing initiatives . examples include identifying and investing in growth opportunities , improving our lead generation and nurturing processes , better penetrating our market segments and more effectively pricing our products and services . while we believe previous year financial comparisons will improve during 2010 , it is currently difficult to predict the extent to which our results may be adversely affected in this uncertain environment . with respect to our end-user markets , we experienced decreased results during 2009 in our laboratory-related end-user markets , such as pharmaceutical and biotech customers as well as the laboratories of chemical companies , food and beverage companies and universities . demand from these markets decreased during 2009 related to the previously mentioned global economic slowdown , particularly in the americas and europe . 24 our industrial markets , especially core-industrial products , were particularly impacted negatively by the global economic slowdown due to reduced production capacity for domestic and export markets . reduced demand in our industrial markets was experienced globally , including in our emerging markets . emerging market economies have historically been an important source of growth based upon the expansion of their domestic economies , as well as increased exports as companies have moved production to low-cost countries . local currency sales growth in our industrial emerging markets improved during the fourth quarter of 2009 and we anticipate future sales in emerging markets will continue to improve as compared to 2009 absent a further deterioration in global economic conditions . however , we expect reduced demand in our developed industrial markets may continue during 2010. in our food retail end markets , we also experienced decreased results during 2009 related to the global economic slowdown as well as strong project activity in europe during the previous year . traditionally the spending levels in this sector have experienced more volatility than our other customer sectors due to the timing of customer project activity or new regulation . similar to our industrial business , emerging markets have also historically provided growth as the expansion of local emerging market economies creates a significant number of new retail stores each year . in 2010 , we expect to continue to pursue the overall business growth strategies which we have followed in recent years : gaining market share . our global sales and marketing initiative , ยspinnaker , ย continues to be an important growth strategy . we aim to achieve above-market sales growth by improving the productivity and effectiveness of our global sales and marketing processes . while this initiative is broad-based , efforts to improve these processes include increased segment marketing and leads generation and nurturing activities , the implementation of more effective pricing and value-based selling strategies and processes , improved sales force training and other sales and marketing topics . our comprehensive service offerings also help us further penetrate developed markets . we estimate that we have the largest installed base of weighing instruments in the world . in addition to traditional repair and maintenance , our service offerings continue to expand into value-added services for a range of market needs , including regulatory compliance . expanding emerging markets . emerging markets , comprising asia ( excluding japan ) , eastern europe , latin america , the middle east and africa , account for approximately 28 % of our total net sales . we have a two-pronged strategy in emerging markets : first , to capitalize on growth opportunities in these markets and second , to leverage our low-cost manufacturing operations in china . we have over a 20-year track record in china , and our sales in asia have grown more than 15 % on a compound annual growth basis in local currency since 1999. we have broadened our product offering to the asian markets and are benefiting as multinational customers shift production to china . we are pleased with our accomplishments in china and in recent years have expanded our territory coverage with new branch offices , additional dealers and more service professionals . india has also been a source of emerging market sales growth in past years due to increased life science research activities . story_separator_special_tag 26 gross profit gross profit as a percentage of net sales was 51.4 % for 2009 , compared to 50.3 % for 2008 and 50.0 % for 2007. gross profit as a percentage of net sales for products was 55.2 % for 2009 , compared to 54.2 % for 2008 and 53.8 % for 2007. gross profit as a percentage of net sales for services ( including spare parts ) was 39.8 % for 2009 , compared to 36.8 % for 2008 and 36.9 % for 2007. the increase in gross profit as a percentage of net sales reflects benefits from reduced material costs , increased pricing and favorable product mix . these benefits were partially offset by the negative impact of decreased sales volume in excess of our reduced production costs . research and development and selling , general and administrative expenses research and development expenses as a percentage of net sales were 5.2 % for both 2009 and 2008 and 5.1 % for 2007. research and development expenses decreased by 11 % in 2009 and increased by 4 % in 2008 in local currencies . our research and development spending levels reflect reduced project activity and the impact of our cost reduction program . selling , general and administrative expenses as a percentage of net sales decreased to 29.2 % for 2009 , compared to 29.4 % for 2008 and 29.5 % for 2007. selling , general and administrative expenses decreased by 11 % in 2009 and increased by 5 % in 2008 in local currencies . the decrease is primarily due to benefits from our cost reduction activities and reduced performance-related compensation ( bonus and commission ) costs . the increase in selling , general and administrative expenses in 2008 compared to 2007 is primarily due to increased sales and marketing investments , especially in china and other emerging market countries and expenses associated with product launches . selling , general and administrative expenses during 2008 also included severance expense , partially offset by a gain associated with an asset sale . other charges ( income ) , net other charges ( income ) , net consisted of net charges of $ 32.8 million in 2009 , compared to net charges of $ 9.0 million in 2008 and other income , net of $ 0.9 million in 2007. other charges ( income ) , net consisted primarily of restructuring charges , interest income , ( gains ) losses from foreign currency transactions and other items . other charges ( income ) , net in 2009 and 2008 includes restructuring charges of $ 31.4 million and $ 6.4 million , respectively , related to our global cost reduction program as further described below . other charges ( income ) , net for 2008 compared to 2007 was also impacted by unfavorable foreign currency fluctuations and reduced interest income associated with lower cash balances . during the fourth quarter of 2008 , we initiated a global cost reduction program . during the first quarter of 2009 , we revised the program to include further cost reductions . charges under the program primarily comprise severance costs of approximately $ 40 million , of which $ 31.4 million was recorded in other charges ( income ) , net during the year ended december 31 , 2009 and $ 6.4 million was recognized during the fourth quarter of 2008. under the program , our workforce ( including employees and temporary personnel ) has been reduced by approximately 1,000. as a result of the reduction in workforce , our personnel costs will be reduced by approximately $ 65 million on an annual basis . we expect total cost savings from our global cost reduction program to be approximately $ 100 million on an annual basis . interest expense and taxes interest expense was $ 25.1 million for 2009 , compared to $ 25.4 million for 2008 and $ 21.0 million for 2007. the 2009 amount includes charges associated with the tender offer of our 4.85 % senior notes and other financing costs as well as costs associated with our interest rate swap agreements . these costs were offset by lower average debt balances . the increase in 2008 is due primarily to increased borrowings compared to 2007 . 27 during 2009 , we recorded a discrete net tax benefit of $ 8.3 million primarily related to the favorable resolution of certain prior year tax matters . in 2008 , we recorded a discrete tax benefit of $ 2.5 million related to favorable withholding tax law changes in china and discrete tax items resulting in a net tax benefit of $ 3.5 million primarily related to the closure of certain tax matters . during 2007 , we recorded certain discrete tax items that resulted in a net tax benefit of $ 1.1 million . the discrete items include a benefit of $ 3.4 million related to a favorable resolution of certain tax matters and other adjustments related to prior years , which were partially offset by a charge of $ 2.3 million primarily due to a tax law change in germany . our annual effective tax rate was 23 % , 24 % and 27 % for 2009 , 2008 and 2007 , respectively . the previously described discrete tax items had the effect of lowering our annual effective tax rate by 4 % in 2009 and 2 % in 2008. results of operations ย by operating segment the following is a discussion of the financial results of our operating segments . we currently have five reportable segments : u.s. operations , swiss operations , western european operations , chinese operations and other . a more detailed description of these segments is outlined in note 17 to our consolidated financial statements . u.s. operations ( amounts in thousands ) replace_table_token_3_th ( 1 ) represents u.s. dollar growth for net sales and segment profit .
| effect of currency on results of operations because we conduct operations in many countries , our operating income can be significantly affected by fluctuations in currency exchange rates . swiss franc-denominated expenses represent a much greater percentage of our total operating expenses than swiss franc-denominated sales represent of our total net sales . in part , this is because most of our manufacturing costs in switzerland relate to products that are sold outside switzerland . moreover , a substantial percentage of our research and development expenses and general and administrative expenses are incurred in switzerland . therefore , if the swiss franc strengthens against all or most of our major trading currencies ( e.g . , the u.s. dollar , the euro , other major european currencies , the chinese yuan and the japanese yen ) , our operating profit is reduced . we also have significantly more sales in european currencies ( other than the swiss franc ) than we have expenses in those currencies . therefore , when european currencies weaken against the u.s. dollar and the swiss franc , it also decreases our operating profits . accordingly , the swiss franc exchange rate to the euro is an important cross-rate that we monitor . in recent years , we have seen higher volatility in exchange rates generally than in the past , and the swiss franc has strengthened against the euro . we estimate that a 1 % strengthening of the swiss franc against the euro would result in a decrease in our earnings before tax of $ 1.1 million to $ 1.4 million on an annual basis . in addition to the swiss franc and major european currencies , we also conduct business in many geographies throughout the world , including asia pacific , eastern europe , latin america and canada . fluctuations in these currency exchange rates against the u.s. dollar can also affect our operating results .
| 4,679 |
fasb asc 740 requires the reduction of deferred tax assets by a valuation allowance , if , based on the weight of available evidence , it is more likely than not that some or all of the deferred tax assets will not be realized . in the company 's opinion , it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset . accordingly , a valuation allowance equal to the deferred tax asset has been recorded . the cumulative deferred tax asset for the years 2018 and 2017 is $ 33,905 and $ 28,786 , respectively , which is calculated by multiplying the estimated tax rate by the cumulative net operating loss ( nol ) adjusted for the following items : f- 9 replace_table_token_9_th details of valuation allowance for the last two years are as follows : replace_table_token_10_th rate reconciliation : replace_table_token_11_th uncertain tax positions unrecognized income tax benefits represent income tax positions taken on income tax returns but not yet recognized in the financial statements . if recognized , substantially all of the unrecognized tax benefits for the company 's fiscal years ended december 31 , 2018 and 2017 would affect the effective income tax rate . there were no unrecognized income tax benefits as of december 31 , 2018 and 2017. the company recognizes the interest and penalties accrued related to unrecognized tax benefits in income tax expense . the company did not recognize any expenses any interest and penalties as of december 31 , 2018 and 2017 , respectively . all tax years since inception are open for examination by taxing authorities . f- 10 note 7 โ related party transactions on january 1 , 2017 , pursuant to the terms of an executive management agreement , the company granted 200,000 shares of common stock to mr. sandor miklos , president and member of the board of directors . the shares were issued at $ 1.00 per share for a total non-cash expense of $ 200,000 . on january 1 , 2017 , pursuant to the terms of an executive and consulting agreement , the company granted 200,000 shares of common stock to mr. simon smith , chief technology officer . the shares were issued at $ 1.00 per share for a total non-cash expense of $ 200,000 . on january 1 , 2018 , the company amended the january 1 , 2015 executive and consulting agreement with sandor miklos , president and member of the board of directors for services rendered . the amended agreement calls for annual compensation of 450,000 common shares of the company fully earned immediately to be assigned and registered fully as at the end of the fiscal year . as of december 31 , 2018 , 450,000 shares valued at $ 1.00 per share for a total of $ 450,500 was accrued as compensation for sandor miklos . on november 20 , 2018 , the company received a loan payable in the amount of $ 2,781 from a more than 5 % shareholder for the payment of company expenses . this loan is unsecured , non-interest bearing , and has no specific terms for repayment . as of december 31 , 2018 , the company had a loan payable of $ 2,781 to the same party . note 8 โ subsequent events the company 's management evaluated subsequent events through the date the financial statements were issued and there were no subsequent events to report . f- 11 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities exchange act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized . team 360 sport inc. ( registrant ) date : april 1 , 2019 by : sandor miklos sandor miklos president , chief executive officer chairman of the board of directors ( principal executive officer ) date : april 1 , 2019 by : sandor miklos sandor miklos chief financial officer ( principal financial officer and principal accounting officer ) pursuant to the requirements of the securities exchange act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized . team 360 sports inc. dated : april 1 , 2019 by : sandor miklos sandor miklos president , chief executive officer , chairman of the board of directors ( principal executive officer ) dated : april 1 , 2019 by : sandor miklos sandor miklos chief financial officer ( principal financial officer and principal accounting officer ) 23 story_separator_special_tag of operations . this discussion summarizes the significant factors affecting the operating results , financial condition , liquidity and cash flows of the company for the fiscal years ended december 31 , 2018 and 2017. the discussion and analysis that follows should be read together with our financial statements and the notes to the financial statements included elsewhere in this annual report on form 10-k. except for historical information , the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the company 's control . 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 . overview we were incorporated in nevada on february 26 , 2013 , and on april 4 , 2016 , amended the articles of incorporation to change the name of the company to team 360 sports inc. the company provides amateur sports clubs , leagues and teams with easy to use robust digital administration management systems . the company has had minimal revenues as the company has been developing story_separator_special_tag fasb asc 740 requires the reduction of deferred tax assets by a valuation allowance , if , based on the weight of available evidence , it is more likely than not that some or all of the deferred tax assets will not be realized . in the company 's opinion , it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset . accordingly , a valuation allowance equal to the deferred tax asset has been recorded . the cumulative deferred tax asset for the years 2018 and 2017 is $ 33,905 and $ 28,786 , respectively , which is calculated by multiplying the estimated tax rate by the cumulative net operating loss ( nol ) adjusted for the following items : f- 9 replace_table_token_9_th details of valuation allowance for the last two years are as follows : replace_table_token_10_th rate reconciliation : replace_table_token_11_th uncertain tax positions unrecognized income tax benefits represent income tax positions taken on income tax returns but not yet recognized in the financial statements . if recognized , substantially all of the unrecognized tax benefits for the company 's fiscal years ended december 31 , 2018 and 2017 would affect the effective income tax rate . there were no unrecognized income tax benefits as of december 31 , 2018 and 2017. the company recognizes the interest and penalties accrued related to unrecognized tax benefits in income tax expense . the company did not recognize any expenses any interest and penalties as of december 31 , 2018 and 2017 , respectively . all tax years since inception are open for examination by taxing authorities . f- 10 note 7 โ related party transactions on january 1 , 2017 , pursuant to the terms of an executive management agreement , the company granted 200,000 shares of common stock to mr. sandor miklos , president and member of the board of directors . the shares were issued at $ 1.00 per share for a total non-cash expense of $ 200,000 . on january 1 , 2017 , pursuant to the terms of an executive and consulting agreement , the company granted 200,000 shares of common stock to mr. simon smith , chief technology officer . the shares were issued at $ 1.00 per share for a total non-cash expense of $ 200,000 . on january 1 , 2018 , the company amended the january 1 , 2015 executive and consulting agreement with sandor miklos , president and member of the board of directors for services rendered . the amended agreement calls for annual compensation of 450,000 common shares of the company fully earned immediately to be assigned and registered fully as at the end of the fiscal year . as of december 31 , 2018 , 450,000 shares valued at $ 1.00 per share for a total of $ 450,500 was accrued as compensation for sandor miklos . on november 20 , 2018 , the company received a loan payable in the amount of $ 2,781 from a more than 5 % shareholder for the payment of company expenses . this loan is unsecured , non-interest bearing , and has no specific terms for repayment . as of december 31 , 2018 , the company had a loan payable of $ 2,781 to the same party . note 8 โ subsequent events the company 's management evaluated subsequent events through the date the financial statements were issued and there were no subsequent events to report . f- 11 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities exchange act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized . team 360 sport inc. ( registrant ) date : april 1 , 2019 by : sandor miklos sandor miklos president , chief executive officer chairman of the board of directors ( principal executive officer ) date : april 1 , 2019 by : sandor miklos sandor miklos chief financial officer ( principal financial officer and principal accounting officer ) pursuant to the requirements of the securities exchange act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized . team 360 sports inc. dated : april 1 , 2019 by : sandor miklos sandor miklos president , chief executive officer , chairman of the board of directors ( principal executive officer ) dated : april 1 , 2019 by : sandor miklos sandor miklos chief financial officer ( principal financial officer and principal accounting officer ) 23 story_separator_special_tag of operations . this discussion summarizes the significant factors affecting the operating results , financial condition , liquidity and cash flows of the company for the fiscal years ended december 31 , 2018 and 2017. the discussion and analysis that follows should be read together with our financial statements and the notes to the financial statements included elsewhere in this annual report on form 10-k. except for historical information , the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the company 's control . 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 . overview we were incorporated in nevada on february 26 , 2013 , and on april 4 , 2016 , amended the articles of incorporation to change the name of the company to team 360 sports inc. the company provides amateur sports clubs , leagues and teams with easy to use robust digital administration management systems . the company has had minimal revenues as the company has been developing
| results of operations comparison of twelve-month periods ended december 31 , 2018 and 2017 13 revenue we have generated $ 2,557 and $ 2,557 in revenues for the year ended december 31 , 2018 and 2017 , respectively . expenses general and administration expenses for the year ended december 31 , 2018 , amounted to $ 26,532 , compared to $ 34,313 during the year ended december 31 , 2017. the decrease is due to decreased technical support fees incurred in 2018 and reduced legal fees , which were incurred in 2017 for the s-1 preparation . compensation expenses for the year ended december 31 , 2018 , amounted to $ 450,000 compared to $ 725,000 during the year ended december 31 , 2017. the decrease is primarily attributable to the company paying $ 450,000 in share based compensation to its chief executive officer in 2018 , versus $ 300,000 in share based compensation being paid to a third party , and a total of $ 400,000 in share based compensation being paid to the chief executive officer and chief technology officer in 2017. other expense for the year ended december 31 , 2018 amounted to $ 4,342 , compared to $ 910 during the year ended december 31 , 2017. the increase is primarily due to an increase in interest expense and financing fees associated with the company 's increase in its loan payable .
| 4,680 |
except as required by law , we assume no responsibility for updating any forward-looking statements , whether as a result of new information , future events or otherwise . the following discussion should be read in conjunction with our audited consolidated financial statements and the related notes and other financial information appearing elsewhere in this annual report and other reports and filings made with the sec . overview we are a specialized security technology business providing mission critical products , solutions and services for domestic and international customers , with our principal customers being agencies of the u.s. government . our core capabilities are sophisticated engineering , manufacturing , technology development , system integration , and test and evaluation offerings for national security platforms and programs . our principal products and solutions are related to command , control , communications , computing , combat systems , intelligence , surveillance and reconnaissance ( โ c5isr โ ) . we offer our customers products , solutions , services and expertise to support their mission-critical needs by leveraging our skills across our core offering areas in c5isr . we design , engineer , and manufacture specialized electronic components , subsystems and systems for electronic attack , electronic warfare , radar , and missile system platforms ; integrated technology solutions for satellite communications ; products and solutions for unmanned systems ; products and services related to cybersecurity and cyberwarfare ; products and solutions for ballistic missile defense ; weapons systems trainers ; advanced network engineering and information technology services ; weapons systems lifecycle support and sustainment ; military weapon range operations and technical services ; and public safety , critical infrastructure security and surveillance systems . our primary end customers are u.s. government agencies , including the dod , classified agencies , intelligence agencies , other national security agencies and homeland security related agencies . we also conduct business with local , state and foreign governments and domestic and international commercial customers . in fiscal 2011 , 2012 and 2013 , we generated 74 % , 65 % and 64 % , respectively , of our total revenues from contracts with the u.s. government ( including all branches of the u.s. military ) , either as a prime contractor or a subcontractor . we believe our stable customer base , strong customer relationships , broad array of contract vehicles , large employee base possessing specialized skills , extensive list of past performance qualifications , and significant management and operational capabilities position us for continued growth . we were incorporated in the state of new york on december 19 , 1994 and began operations in march 1995. we reincorporated in the state of delaware in 1998 . 39 industry background in august 2011 , congress and the administration enacted the budget control act of 2011 ( the โ budget control act โ ) in order to permit an increase in the federal government 's borrowing limit while reducing projected net government spending over the next ten years . the budget control act required $ 900 billion in immediate cuts to discretionary spending for 2012-2021. it also established a bi-partisan congressional joint select committee on deficit reduction ( the โ joint committee โ ) , which was charged with recommending legislation that would reduce net government spending by $ 1.2 to $ 1.5 trillion over the next 10 years , in addition to the $ 900 billion in immediate discretionary spending reductions referenced above . the joint committee was unable to identify the required reductions , thereby triggering a provision of the budget control act called โ sequestration , โ which requires very substantial automatic spending cuts , split between defense and non-defense programs , that started in 2013 and continues over a nine-year period . in january 2013 , congress enacted the american taxpayer relief act of 2012. it addressed a number of tax code provisions and certain spending issues but left in place the sequester ( although delaying its implementation to march 1 , 2013 ) and did not address other fiscal matters such as the debt ceiling . although debate on budget reductions continued through the first two months of 2013 , no resolution was reached prior to the march 1 , 2013 sequester deadline . as a result , the president was required by law to issue an order canceling $ 85 billion in budgetary resources across the u.s. government for the remainder of fy 2013. the office of management and budget ( โ omb โ ) in its report to congress of march 1 , 2013 , entitled โ omb report to the congress on the joint committee sequestration , โ calculated that , over the course of the fiscal year , the order required a 7.8 percent reduction in non-exempt defense discretionary funding and a 5.0 percent reduction in non-exempt non-defense discretionary funding . the sequestration also required reductions of 7.9 percent to non-exempt defense mandatory programs . the sequestration report provided calculations of the amounts and percentages by which various budgetary resources are required to be reduced , and a listing of the reductions required for each non-exempt budget account . federal agencies were directed to apply the same percentage reduction to all programs , projects , and activities within a budget account , as required by section 256 ( k ) ( 2 ) of balanced budget and emergency deficit control act , as amended ( โ bbedca โ ) , and to operate in a manner that is consistent with guidance provided by omb in memorandum 13-03 , planning for uncertainty with respect to fiscal year 2013 budgetary resources and memorandum 13-05 , agency responsibilities for implementation of potential joint committee sequestration . on april 10 , 2013 , the president delivered his proposed fiscal year ( `` fy '' ) 2014 budget to congress . story_separator_special_tag $ 10.7 million of the cash paid was placed into an escrow account as security for cei 's indemnification obligations as set forth in the cei purchase agreement and was reduced by $ 1.0 million for the working capital adjustment paid to the company in july 2013 , at which time the remaining escrow was released to the cei shareholders . in addition , we paid $ 2.5 million to retire certain pre-existing cei debt and settle pre-existing accounts receivable from cei at its carrying and fair value of $ 3.0 million . the company made an election under section 338 ( h ) ( 10 ) of the irc , which resulted in tax deductible goodwill related to this transaction , and paid approximately $ 1.6 million in additional tax liability incurred by the shareholders of cei for this election . the company estimates that the tax deductible goodwill and intangibles is approximately $ 136.3 million and can be deducted for federal and california state income taxes over a 15-year period . in connection with the cei acquisition certain cei personnel entered into long-term employment agreements with us . on july 2 , 2012 , we granted restricted stock units ( โ rsus โ ) for an aggregate 2.0 million shares of our common stock as long-term retention inducement grants to certain employees of cei who have joined kratos . the rsus had an estimated value of $ 11.9 million on the grant date , cliff vest on the fourth anniversary of the closing of the cei acquisition , or earlier upon the occurrence of certain events , and are being accounted for as compensation expense over this four year period . 41 to fund the acquisition of cei , on may 14 , 2012 , we sold 20.0 million shares of our common stock at a purchase price of $ 5.00 per share in an underwritten public offering . we received gross proceeds of approximately $ 100.0 million and net proceeds of approximately $ 97.0 million after deducting underwriting fees and other offering expenses . we used the net proceeds from this offering to fund a portion of the purchase price for the acquisition of cei . in addition , we borrowed $ 40.0 million from our revolving line of credit to partially fund the purchase price of cei . cei is a vertically integrated manufacturer and developer of unmanned aerial target systems and composite structures used for national security programs . its drones are designed to replicate some of the most lethal aerial threats facing warfighters and strategic assets . cei 's customers include u.s. and foreign governments . on november 15 , 2011 , we acquired secureinfo corporation ( โ secureinfo โ ) for $ 20.3 million in cash , which included a $ 1.5 million earn-out payment made in the first quarter of 2012. based in northern virginia , secureinfo is a leading cybersecurity company specializing in assisting defense , intelligence , civilian government and commercial customers to identify , understand , document , manage , mitigate and protect against cybersecurity risks while reducing information security costs and achieving compliance with applicable regulations , standards and guidance . secureinfo offers strategic advisory , operational cybersecurity and cybersecurity risk management services and is a recognized leader in the rapidly evolving fields of cloud security , continuous monitoring and cybersecurity training . customers include the dod , dhs and large commercial customers , including market-leading cloud computing service providers . on july 27 , 2011 , we acquired integral systems , inc. ( โ integral โ ) in a cash and stock transaction valued at $ 241.1 million . as consideration for the acquisition of integral , we paid $ 131.4 million in cash and issued approximately 10.4 million shares of our common stock valued at $ 108.7 million . the cash portion of the acquisition was substantially funded with the gross proceeds from the sale of our 10 % senior secured notes due 2017 in the aggregate principal amount of $ 115.0 million issued on july 27 , 2011. in addition , upon completion of the merger ( i ) each outstanding integral stock option with an exercise price less than $ 13.00 per share was , if the holder thereof had so elected in writing , canceled in exchange for an amount in cash equal to the product of the total number of shares of integral common stock subject to such in-the-money option , multiplied by the aggregate value of the excess , if any , of $ 13.00 over the exercise price per share subject to such option , less the amount of any tax withholding , ( ii ) each outstanding integral stock option with an exercise price equal to or greater than $ 13.00 per share and each integral in-the-money option the holder of which had not made the election described in ( i ) , above , was converted into an option to purchase our common stock , with the number of shares subject to such option adjusted to equal the number of shares of integral common stock subject to such out-of-the-money option multiplied by 0.9559 , rounded up to the nearest whole share , and the per share exercise price under each such option adjusted by dividing the per share exercise price under such option by 0.9559 , rounded up to the nearest whole cent , and ( iii ) each outstanding share of restricted stock granted under an integral equity plan or otherwise , whether vested or unvested , was canceled and converted into the right to receive $ 13.00 , less the amount of any tax withholding . integral is a global provider of products , systems and services for satellite command and control , telemetry and digital signal processing , data communications , enterprise network management and communications information assurance . integral specializes in developing , managing and operating secure communications networks , both satellite and terrestrial , as well as systems and services to detect , characterize and geolocate sources of radio frequency interference .
| results of operations comparison of results for the year ended december 30 , 2012 to the year ended december 29 , 2013 revenues . revenues by reportable segment for the years ended december 30 , 2012 and december 29 , 2013 are as follows ( in millions ) : replace_table_token_4_th revenues decreased $ 18.6 million from $ 969.2 million in 2012 to $ 950.6 million in 2013 . included in our 2013 revenues are increased revenues of $ 33.6 million generated from the acquisition of cei in 2012. organic increases in our weapons range support work of $ 4.0 million were offset by continued reductions and compression in our legacy government service revenues of approximately $ 14.5 million , which have continued to be negatively impacted by increased competitive pricing pressures , and continued in-sourcing of our employees by the u.s. government . in addition , expected reductions due to the completion of production and subsequent migration to the maintenance phase of certain of our satellite communications projects resulted in reduced annual revenues of $ 18.3 million . finally , the delay of contract awards and shipments caused by the uncertainty in the dod budgetary environment impacted revenues primarily in our ground equipment , ballistic missile target and our electronic warfare products business by an aggregate amount of $ 28.0 million . pss segment revenue increased by $ 23.7 million , which was primarily due to strong demand for security and surveillance systems primarily in our transportation and utility vertical within our critical infrastructure business . product sales , which are all from the kgs segment , decreased $ 12.2 million from $ 519.2 million for the year ended december 30 , 2012 to $ 507.0 million for the year ended december 29 , 2013 .
| 4,681 |
we offer a broad array of deposit , lending , and other financial services to individuals , municipalities and businesses in western and central new york through our wholly-owned new york-chartered banking subsidiary , five star bank ( the โ bank โ ) . our indirect lending network includes relationships with franchised automobile dealers in western and central new york , the capital district of new york and northern and central pennsylvania . we offer insurance services through our wholly-owned subsidiary , sdn insurance agency , llc ( formerly scott danahy naylon , llc ) ( โ sdn โ ) , a full-service insurance agency . in addition , we offer customized investment advice , wealth management , investment consulting and retirement plan services through our wholly-owned subsidiaries courier capital , llc ( โ courier capital โ ) and hnp capital , llc ( โ hnp capital โ ) , sec-registered investment advisory and wealth management firms . our primary sources of revenue are net interest income ( interest earned on our loans and securities , net of interest paid on deposits and other funding sources ) and noninterest income , particularly fees and other revenue from insurance , investment advisory and financial services provided to customers or ancillary services tied to loans and deposits . business volumes and pricing drive revenue potential , and tend to be influenced by overall economic factors , including market interest rates , business spending , consumer confidence , economic growth , and competitive conditions within the marketplace . we are not able to predict market interest rate fluctuations with certainty and our asset/liability management strategy may not prevent interest rate changes from having a material adverse effect on our results of operations and financial condition . executive overview 2018 financial performance review during 2018 we continued to execute on our growth and diversification strategy and progressed in growing our core banking franchise . we delivered year-over-year increases in both total loans and total deposits of 13 % and 5 % , respectively , which drove our revenue higher . we acquired hnp capital , a rochester-based investment advisory firm , furthering our strategy to increase fee-based noninterest income . we also made progress on our initiative to reposition the balance sheet by deploying marketable securities into loans , funding approximately $ 143 million of loans with investment security maturities , sales and payment proceeds . net income for 2018 was $ 39.5 million , compared to $ 33.5 million for 2017. this resulted in a 0.95 % return on average assets and a 10.18 % return on average equity . net income available to common shareholders was $ 38.1 million or $ 2.39 per diluted share for 2018 , compared to $ 32.1 million or $ 2.13 per diluted share for 2017. we declared cash dividends of $ 0.96 during 2018 , an increase of $ 0.11 per common share or 13 % compared to the prior year . fully-taxable equivalent net interest income was $ 124.2 million in 2018 , an increase of $ 8.4 million , or 7 % , compared to 2017. this reflected the impact of 8 % growth in average interest-earning assets , partially offset by a three-basis point decline in the net interest margin to 3.18 % . the provision for loan losses decreased $ 4.4 million , or 33 % , from 2017 as our allowance for loan losses reflects the release of reserves due to favorable asset quality trends and qualitative factors . net charge-offs increased $ 69 thousand from the prior year to $ 9.7 million in 2018. net charge-offs were an annualized 0.33 % of average loans in the current year compared to 0.38 % in 2017. in addition , non-performing loans decreased $ 5.4 million compared to a year ago to $ 7.1 million , or 0.23 % of total loans . - 37 - management 's discussion and analysis noninterest income totaled $ 36.5 million for the full year 2018 , an increase of $ 1.7 million or 5 % when compared to the prior year . investment advisory income increased by $ 2.0 million to $ 8.1 million during the current year reflecting higher assets under management driven by the acquisition of hnp capital . income from investments in limited partnerships increased to $ 1.2 million in 2018 from $ 110 thousand in the prior year . income from these investments fluctuates based on the maturity and performance of the underlying investments . income from derivative instruments , net increased to $ 972 thousand in 2018 from $ 131 thousand in the prior year . income from derivative instruments , net primarily consists of income associated with interest rate swap products offered to commercial loan customers and is based on the number and value of transactions executed . the bank i mplemented this program in the third quarter of 2017. in addition , the net gain ( loss ) on investment securities was a loss of $ 127 thousand in 2018 , compared to a gain of $ 1.3 million in 2017. during 2017 , we recognized a non-cash fair value adjustment of the contingent consideration liability related to the sdn acquisition that resulted in noninterest income of $ 1.2 million . the fair value of the contingent consideration liability was recorded at the time of the sdn acquisition as a component of the purchase price . noninterest expense for the full year 2018 totaled $ 100.9 million , a $ 10.4 million increase compared to $ 90.5 million in the prior year . salaries and benefits expense increased $ 6.0 million year-over-year , primarily as a result of investments in bank personnel , the 2018 acquisition of hnp capital , compensation to employees not covered by existing incentive programs , and nonrecurring expense incurred in connection with employee retirements and severance . also contributing to the increase were higher occupancy and equipment expense , higher advertising and promotions expense and a higher goodwill impairment charge related to sdn . story_separator_special_tag the prime interest rate , which is the rate offered on loans to borrowers with strong credit , increased to 5.50 % in december 2018 , reflecting the four 25 basis point increases in 2018 , after the previous three 25 basis point increases in 2017 to 4.50 % and 25 basis point increase to 3.75 % in december 2016. net interest income and net interest margin the following table reconciles interest income per the consolidated statements of income to interest income adjusted to a fully taxable equivalent basis for the years ended december 31 ( in thousands ) : replace_table_token_7_th ( 1 ) adjustment calculated on a tax equivalent basis assuming a federal tax rate of 21 % , 35 % and 35 % for the years ended december 31 , 2018 , 2017 and 2016 , respectively . net interest income on a taxable equivalent basis for 2018 increased $ 8.4 million or 7 % , compared to 2017. the increase was due to an increase in average interest-earning assets of $ 295.7 million or 8 % compared to 2017. the net interest margin of 3.18 % for 2018 declined three-basis points compared to 3.21 % in 2017. this decrease was a function of a 12-basis point decrease in interest rate spread to 2.96 % during 2018 , partially offset by a nine-basis point higher contribution from net free funds . the lower interest rate spread was a net result of a 25-basis point increase in the yield on earning assets and a 37-basis point increase in the cost of interest-bearing liabilities . for the year ended december 31 , 2018 , the yield on average earning assets of 3.94 % was 25-basis points higher than 2017. loan yields increased 29-basis points during 2018 to 4.51 % . the yield on investment securities decreased 15-basis points during 2018 to 2.33 % . overall , the earning asset rate changes increased interest income by $ 5.9 million during 2018 and a favorable volume variance increased interest income by $ 14.9 million , which collectively drove a $ 20.8 million increase in interest income . - 39 - management 's discussion and analysis average interest-earning assets were $ 3.91 billion for 2018 , an increase of $ 295.7 million or 8 % from the prior year , with average loans up $ 379.6 million and average federal funds sold and other interest-earning deposits up $ 17.8 million , partially offset by a decrease in average securities of $ 101.7 million . average loans were $ 2.90 billion for 2018 , an increase of $ 379.6 million or 15 % from the prior year . the growth in average loans reflected increases in most loan categories , which in turn reflects the impact of our growth strategy , with commercial loans up $ 250.9 million , residential real estate loans up $ 53.6 million , and consumer loans up $ 81.0 million , partially offset by a $ 5.9 million decrease in residential real estate lines . loans comprised 74.2 % of average interest-earning assets during 2018 compared to 69.7 % during 2017. loans generally have significantly higher yields compared to securities and federal funds sold and interest-bearing deposits and , as such , have a more positive effect on the net interest margin . the yield on average loans was 4.51 % for 2018 , an increase of 29-basis points compared to 4.22 % for 2017. the increase in the volume of average loans resulted in a $ 17.1 million increase in interest income , in addition to a $ 7.3 million increase due to the favorable rate variance . average securities were $ 984.6 million for 2018 , a decrease of $ 101.7 million or 9 % from the prior year . securities comprised 25.2 % of average interest-earning assets in 2018 compared to 30.1 % in 2017. the taxable equivalent yield on average securities was 2.33 % in 2018 compared to 2.48 % in 2017. the decrease in the volume of average securities resulted in a $ 2.5 million decrease in interest income , in addition to a $ 1.4 million decrease due to the unfavorable rate variance . for the year ended december 31 , 2018 , the cost of average interest-bearing liabilities of 0.98 % was 37-basis points higher than 2017. the cost of average interest-bearing deposits increased 28-basis points to 0.73 % , the cost of short-term borrowings increased 95-basis points to 2.11 % and the cost of long-term borrowings decreased one-basis point to 6.31 % . overall , interest-bearing liability rate and volume increases resulted in $ 12.4 million of higher interest expense . average interest-bearing liabilities of $ 3.04 billion in 2018 were $ 192.9 million or 7 % higher than 2017. on average , interest-bearing deposits grew $ 136.6 million , while noninterest-bearing demand deposits ( a principal component of net free funds ) were up $ 38.3 million . the increase in average deposits was due to successful business development efforts . overall , interest-bearing deposit rate and volume changes resulted in $ 8.0 million of higher interest expense during 2018. average short-term and long-term borrowings were $ 433.8 million in 2018 , $ 56.4 million higher than in 2017. overall , short and long-term borrowing rate and volume changes resulted in $ 4.4 million of higher interest expense during 2018 .
| results of operations for the years ended december 31 , 2017 and december 31 , 2016 net interest income and net interest margin net interest income was $ 112.6 million in 2017 , compared to $ 102.7 million in 2016. the taxable equivalent adjustments of $ 3.2 million for 2017 and 2016 resulted in fully taxable equivalent net interest income of $ 115.8 million in 2017 and $ 105.9 million in 2016. net interest income on a taxable equivalent basis for 2017 increased $ 9.9 million or 9 % , compared to 2016. the increase was due to an increase in average interest-earning assets of $ 339.5 million or 10 % compared to 2016. the net interest margin of 3.21 % for 2017 declined three-basis points compared to 3.24 % in 2016. this decrease was a function of a five-basis point decrease in interest rate spread to 3.08 % during 2017 , partially offset by a two-basis point higher contribution from net free funds . the lower interest rate spread was a net result of a seven-basis point increase in the yield on earning assets and a 12-basis point increase in the cost of interest-bearing liabilities . for the year ended december 31 , 2017 , the yield on average earning assets of 3.69 % was seven-basis points higher than 2016. loan yields increased four-basis points during 2017 to 4.22 % . the yield on investment securities increased three-basis points during 2017 to 2.48 % . overall , the earning asset rate changes increased interest income by $ 1.2 million during 2017 and a favorable volume variance increased interest income by $ 13.7 million , which collectively drove a $ 14.9 million increase in interest income .
| 4,682 |
forward-looking statements , which are based on certain assumptions and describe our future plans , strategies , beliefs and expectations , are generally identifiable by use of the words `` believe '' , `` expect '' , `` intend '' , `` anticipate '' , `` estimate '' , `` project '' , or similar expressions . such forward-looking statements include , but are not limited to , statements regarding : the expected impact of the novel coronavirus ( โ covid-19 โ ) pandemic on our business , financial results and financial condition ; our ability to raise additional capital , including via future issuances of equity and debt , and the use of proceeds from such issuances ; our results of operations and financial condition ; capital expenditure and working capital needs and the funding thereof ; the repurchase of the company 's common shares , including the potential use of a 10b5-1 plan to facilitate repurchases ; future dividend payments ; the possibility of future asset impairments ; potential developments , expansions , renovations , acquisitions or dispositions of outlet centers ; compliance with debt covenants ; renewal and re-lease of leased space ; the outlook for the retail environment , potential bankruptcies , and other store closings ; the outcome of legal proceedings arising in the normal course of business ; and real estate joint ventures . you should not rely on forward-looking statements since they involve known and unknown risks , uncertainties and other important factors which are , in some cases , beyond our control and which could materially affect our actual results , performance or achievements . currently , one of the most significant factors , however , is the adverse effect of the covid-19 pandemic on the financial condition , results of operations , cash flows , compliance with debt covenants and performance of the company and its tenants , the real estate market and the global economy and financial markets . the extent to which covid-19 impacts us and our tenants will depend on future developments , which are highly uncertain and can not be predicted with confidence , including the scope , severity and duration of the pandemic , the actions taken to contain the pandemic or mitigate its impact , the availability or effectiveness of vaccines or treatments , future mutations or variations of the virus , and the direct and indirect economic effects of the pandemic and containment measures , among others . moreover , you should interpret many of the risks identified in this report , as well as the risks set forth below , as being heightened as a result of the ongoing and numerous adverse impacts of covid-19 . other important factors which may cause actual results to differ materially from current expectations include , but are not limited to : our inability to develop new outlet centers or expand existing outlet centers successfully ; risks related to the economic performance and market value of our outlet centers ; the relative illiquidity of real property investments ; impairment charges affecting our properties ; our dispositions of assets may not achieve anticipated results ; competition for the acquisition and development of outlet centers , and our inability to complete outlet centers we have identified ; environmental regulations affecting our business ; risk associated with a possible terrorist activity or other acts or threats of violence , public health crises and threats to public safety ; our dependence on rental income from real property ; our dependence on the results of operations of our retailers ; the fact certain of our lease agreements include co-tenancy and or sales-based provisions that may allow a tenant to pay reduced rent and or terminate a lease prior to its natural expiration ; the fact that certain of our properties are subject to ownership interests held by third parties , whose interests may conflict with ours ; risks related to uninsured losses ; risks related to changes in consumer spending habits ; risks associated with our canadian investments ; risks associated with attracting and retaining key personnel ; risks associated with debt financing ; risk associated with our guarantees of debt for , or other support we may provide to , joint venture properties ; the effectiveness of our interest rate hedging arrangements ; uncertainty relating to the phasing out of libor ; risk associated with our interest rate hedging arrangements ; risk associated to uncertainty related to determination of libor ; our potential failure to qualify as a reit ; our legal obligation to make distributions to our shareholders ; legislative or regulatory actions that could adversely affect our shareholders ; our dependence on distributions from the operating partnership to meet our financial obligations , including dividends ; the risk of a cyber-attack or an act of cyber-terrorism . 39 we qualify all of our forward-looking statements by these cautionary statements . the forward-looking statements in this annual report on form 10-k are only predictions . we have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business , financial condition and results of operations . because forward-looking statements are inherently subject to risks and uncertainties , some of which can not be predicted or quantified , you should not rely on these forward-looking statements as predictions of future events . the events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements . except as required by applicable law , we do not plan to publicly update or revise any forward-looking statements contained herein , whether as a result of any new information , future events , changed circumstances or otherwise . for a further discussion of the risks relating to our business , see โ item 1a-risk factors โ in part i of this annual report on form 10-k. the following discussion should be read in conjunction with the consolidated financial statements appearing elsewhere in this report . story_separator_special_tag while none of our domestic outlet centers are in these markets , our centers in canada were required to shut down the last week of the year , two of which reopened in mid-february 2021 and the other is expected to open soon thereafter . if store closures were to occur again in our domestic markets , this could have a material adverse impact on our financial position and results . although our outlet centers remained open , retailers began closing their stores in our outlet centers in mid-march and by april 6 , 2020 , substantially all of the stores in our portfolio were closed as a result of mandates by order of local and state authorities . reopened stores as a percentage of total leased stores improved over time as mandates were lifted , from 1 % on april 6 , 2020 to 56 % on june 3 , 2020 to 72 % on june 14 , 2020. by june 15 , 2020 , in-store shopping for non-essential retail was allowed in every market in which our centers are located . as of december 31 , 2020 , 99.9 % of total occupied stores in our consolidated portfolio had reopened , representing 99.9 % of leased square footage and 99.9 % of annualized base rent . in addition , traffic during the fourth quarter represented approximately 90 % of prior year levels and increased to approximately 96 % in january . governmental mandates effective between late december and early-to-mid-february impacted traffic at the tanger outlet centers in canada . excluding those centers , domestic traffic was over 99 % in january . our outlet centers may experience additional short-term store closures as retailers implement additional safety protocols at specific locations impacted by increased exposure to covid-19 . 42 while our outlet centers have not closed throughout the pandemic , we operated under reduced hours since late april when the first stores began to reopen . prior to the pandemic , our outlet centers operated an average of 12 hours per day . upon reopening , our centers were open an average of 8 hours per day . effective november 6 , 2020 , center hours expanded to an average of 10 hours per day to accommodate the holiday shopping season . a number of our tenants have requested rent deferrals , rent abatements or other types of rent relief during this pandemic . as a response , in late march 2020 , we offered all tenants in our consolidated portfolio the option to defer 100 % of april and may rents interest free , payable in equal installments due in january and february of 2021. the following table sets forth information regarding the status of rents billed during the fourth , third and second quarters ( in thousands ) : replace_table_token_18_th ( 1 ) excludes v ariable revenue which is derived from tenant sales and lease termination fees . ( 2 ) includes rents deferred with substantially all payments due in 2021 , for which the majority is due in january/february of 2021 as a direct result of the pandemic , bankruptcies and restructurings , the company 's earnings were negatively impacted by approximately $ 47.3 million due to ( 1 ) write-offs related to bankruptcies and other uncollectible accounts due to financial weakness , ( 2 ) one-time concessions in exchange for landlord-favorable amendments to lease structure , ( 3 ) reserves for a portion of deferred and under negotiation billings that we expect to become uncollectible in future periods , ( 4 ) and write-offs of straight-line rents associated with the bankruptcies and uncollectible accounts . included in the negative impact discussed above , for the year ended december 31 , 2020 , we recorded a $ 5.3 million reserve for a portion of deferred and under negotiation billings that are expected to become uncollectible in future periods and recognized a write-off of revenue of approximately $ 7.2 million of straight-line rents associated with the tenant bankruptcies and uncollectible accounts . we are closely monitoring changes in the collectability assessment of our tenant receivables as a result of certain tenants suffering adverse financial consequences due to covid-19 and should our estimates change , there could be material modifications to our revenues in future periods . given the economic environment as a result of covid-19 , a select number of our tenants underwent liquidity hardships and filed for chapter 11 bankruptcy protection during the year . although some of these tenants intend to exit the chapter 11 bankruptcy process and resume operations , the outcomes of such proceedings are unknown and we are currently exploring leasing alternatives for stores we expect to close . recent chapter 11 bankruptcy filings include , but not limited to , j. crew group , inc. ( filed in may 2020 ) and brooks brothers , lucky brand jeans , new york and company and ascena retail group , inc. ( all filed in july 2020 ) , francesca 's ( filed in december 2020 ) and christopher and banks ( filed in january 2021 ) . also , in 2020 , g-iii apparel announced a brand-wide restructuring , including its intention to close all of its wilsons and bass stores . approximately 93 % of the amounts included in the table above under the caption ( โ bankruptcy related , primarily pre-petition rents โ ) that were written off as uncollectible rents during the year ended december 31 , 2020 were related to these tenants . 43 due to the potential impact of covid-19 and related bankruptcies and brand-wide restructurings , our revenues may continue to be significantly impacted in 2021. the extent of the impact to our results of operations and cash flows is uncertain and can not be predicted at this time . while our preference is to work with our tenant partners to reach a financial resolution that maintains occupancy and positions both parties for long-term growth , certain tenants may close a number of their stores or seek significant rent reductions .
| results of operations 2020 compared to 2019 net income ( loss ) net income decreased $ 130.7 million in the 2020 period to a net loss of $ 38.0 million as compared to net income of $ 92.7 million for the 2019 period . the decrease in income is primarily due to : significant revenue reductions in the 2020 period caused by the covid-19 pandemic discussed above , the $ 43.4 million gain recorded on the sale of four outlet centers in march 2019 , the loss of revenues from the four outlet centers sold in march 2019 , the $ 64.8 million in impairment charges recognized in 2020 on the outlet center in mashantucket , connecticut , the $ 2.4 million impairment charge recognized in 2020 on the outlet center in jeffersonville , ohio , and a decrease in equity in earnings ( losses ) , which includes our share of an impairment charge totaling $ 3.1 million in the 2020 period related to the saint-sauveur , quebec outlet center in our canadian joint venture . the decrease in net income was partially offset by the following : the $ 37.6 million in impairment charges recognized in 2019 on the outlet center in jeffersonville , ohio , the $ 10.5 million increase in lease termination fees over the prior year , the $ 2.3 million gain recorded on the sale of our terrell outlet center , decreased operating costs in the 2020 period due to lower operating and advertising costs as a result of covid-19 government mandated store closures , a $ 4.4 million charge in the 2019 period related to the accelerated recognition of compensation cost as a result of a transition agreement with the company 's former president and chief operating officer in connection with his retirement ( the โ coo transition agreement โ ) , and a $ 3.6 million foreign currency loss recorded in the 2019 period upon the
| 4,683 |
the fair value of forward foreign exchange contracts is determined by using quoted market prices of the same or similar instruments story_separator_special_tag overview the company 's fiscal year ends on the saturday closest to january 31 , typically resulting in a fifty-two week year , but occasionally giving rise to an additional week , resulting in a fifty-three week year as was the case for fiscal 2012. a store is included in comparable sales when it has been open as the same brand at least one year and its square footage has not been expanded or reduced by more than 20 % within the past year . additionally , beginning with fiscal 2012 , comparable direct-to-consumer sales were included in comparable sales . for purposes of this โ item 7. management 's discussion and analysis of financial condition and results of operations , โ the fifty-three week period ended february 2 , 2013 is compared to the fifty-two week period ended january 28 , 2012 and the fifty-two week period ended january 28 , 2012 is compared to the fifty-two week period ended january 29 , 2011 . the company has changed its method of accounting for inventory from the lower of cost or market utilizing the retail method to the weighted average cost method ( `` cost method '' ) effective in the fourth quarter of fiscal 2012. results discussed in this `` item 7. management 's discussion and analysis of financial condition and results of operations , '' reflect the cost method of accounting for inventory . refer to note 4 , `` change in accounting principle , '' of the notes to consolidated financial statements included in `` item 8. financial statements and supplementary data . '' all references to historical amounts reflect the effects of the change to the cost method . the company had net sales of $ 4.511 billion for fiscal 2012 , an increase of 8 % from $ 4.158 billion for fiscal 2011. operating income for fiscal 2012 was $ 374.2 million , which increased 69 % from the fiscal 2011 operating income of $ 221.4 million . net income from continuing operations was $ 237.0 million and net income from continuing operations per diluted share was $ 2.85 in fiscal 2012 , compared to net income from continuing operations of $ 143.1 million and net income from continuing operations per diluted share of $ 1.60 in fiscal 2011 . excluding charges for impairments , the company reported adjusted , non-gaap net income per diluted share of $ 2.90 for the fiscal 2012. excluding charges for impairments and write-downs of store-related long-lived assets , charges related to store closures and lease exits , and other charges associated with legal settlements and a change in intent regarding the company 's auction rate securities ( `` ars '' ) , the company reported non-gaap net income per diluted share of $ 2.49 for fiscal 2011. the company believes that the non-gaap financial measures are useful to investors as they provide the ability to measure the company 's operating performance and compare it against that of prior periods without reference to the consolidated statements of operations and comprehensive income impact of non-cash , store-related asset impairment charges , charges related to store closures and lease exits , and other charges associated with legal settlements and a change in intent regarding the company 's ars . these non-gaap financial measures should not be used as alternatives to net income per diluted share or as indicators of the ongoing operating performance of the company and are also not intended to supersede or replace the company 's gaap financial measures . the table below reconciles the gaap financial measures to the non-gaap financial measures discussed above . replace_table_token_6_th ( 1 ) the store-related asset impairment charges relate to stores whose asset carrying value exceeded their fair value . for fiscal 2012 , the charge was primarily associated with one abercrombie & fitch , three abercrombie kids , 12 hollister and one gilly hicks store . for fiscal 2011 , the charge was associated with 14 abercrombie & fitch , 21 abercrombie kids , 42 hollister and two gilly hicks stores . ( 2 ) for fiscal 2011 , the charge associated with the asset write-downs was related to the reconfiguration of three flagship stores and a small write-off related to a cancelled flagship project . 28 ( 3 ) for fiscal 2011 , the charges for store closures and lease exits were associated with lease buyouts and other lease obligations related to stores closing prior to natural lease expirations , other lease terminations , and other incidental costs associated with store closures . ( 4 ) for fiscal 2011 , the charge was related to legal settlements during the fourth quarter . ( 5 ) for fiscal 2011 , the charge associated with the ars was related to a change in intent with regard to the company 's auction rate securities portfolio , which resulted in recognition of an other-than-temporary impairment . net cash provided by operating activities , the company 's primary source of liquidity , was $ 684.2 million for fiscal 2012 . this source of cash was primarily driven by a change in inventories partially offset by a change in accounts payable . the company used $ 339.9 million of cash for capital expenditures partially offset by cash proceeds of $ 102.0 million from the sale of marketable securities . the company also repurchased $ 321.7 million of common stock and paid dividends totaling $ 57.6 million . as of february 2 , 2013 , the company had $ 643.5 million in cash and equivalents , no outstanding debt aside from that related to landlord financing obligations , and immaterial stand-by letters of credit . story_separator_special_tag other operating expense included a charge of $ 13.4 million related to the company 's change of intent regarding the sale of its ars portfolio , which resulted in recognition of an other-than-temporary impairment in fiscal 2011. operating income operating income for fiscal 2012 was $ 374.2 million compared to operating income of $ 221.4 million for fiscal 2011. operating income growth by new international stores , existing u.s. stores and direct-to-consumer operations more than off-set declines in existing international stores driven by negative comparable store sales and higher non-four wall expenses . non-four wall expenses include : marketing , general and administrative expense ; store management and support functions such as regional and district management and other functions not dedicated to an individual store ; and distribution center costs . interest expense ( income ) , net and tax expense fiscal 2012 interest expense was $ 10.5 million , offset by interest income of $ 3.2 million , compared to interest expense of $ 7.9 million , offset by interest income of $ 4.3 million for fiscal 2011 . the effective tax rate for fiscal 2012 was 35.4 % compared to 34.3 % for fiscal 2011 . as of february 2 , 2013 , there were approximately $ 22.2 million of net deferred tax assets in japan . the realization of the net deferred tax assets is dependent upon the future generation of sufficient taxable profits in japan . while the company 33 believes it is more likely than not that the net deferred tax assets will be realized , it is not certain . should circumstances change , the net deferred tax assets not currently subject to a valuation allowance may become subject to one in the future . additional valuation allowances would result in additional tax expense . net income and net income per diluted share net income for fiscal 2012 was $ 237.0 million compared to net income of $ 143.9 million for fiscal 2011 . net income per diluted share for fiscal 2012 was $ 2.85 compared to net income per diluted share of $ 1.61 for fiscal 2011 . net income per diluted share for fiscal 2012 included store-related asset impairment charges of approximately $ 0.06 per diluted share . net income per diluted share for fiscal 2011 included store-related asset impairment charges of approximately $ 0.49 per diluted share , asset write-down charges of approximately $ 0.10 per diluted share , store closure and exit charges of approximately $ 0.13 per diluted share , legal charges of approximately $ 0.07 per diluted share , and other-than-temporary impairment charges of approximately $ 0.09 per diluted share related to a change in intent regarding the company 's ars portfolio . refer to the gaap reconciliation table in the โ overview โ section of this โ item 7. management 's discussion and analysis of financial condition and results of operations โ for a reconciliation of net income per diluted share on a gaap basis to net income per diluted share on a non-gaap basis , excluding charges for impairment and write-downs of store related long-lived assets , charges related to store closures and lease exits , and other charges associated with legal settlements and with a change in intent regarding the company 's ars . fiscal 2011 compared to fiscal 2010 net sales net sales for fiscal 2011 were $ 4.158 billion , an increase of 20 % from fiscal 2010 net sales of $ 3.469 billion . the net sales increase was attributable to new stores , primarily international , a 5 % increase in comparable store sales , and a 36 % increase in the direct-to-consumer business , including shipping and handling revenue . the impact of foreign currency on sales ( based on converting prior year sales at current year exchange rates ) for fiscal 2011 and fiscal 2010 was a benefit of $ 21.6 million and $ 4.9 million , respectively . total company u.s. store sales for fiscal 2011 were $ 2.711 billion , an increase of 6 % from fiscal 2010 sales of $ 2.547 billion . total company international store sales for fiscal 2011 were $ 894.6 million , an increase of 73 % from fiscal 2010 sales of $ 517.0 million . direct-to-consumer sales in fiscal 2011 , including shipping and handling revenue , were $ 552.6 million , an increase of 36 % from fiscal 2010 direct-to-consumer sales of $ 405.0 million . the direct-to-consumer business , including shipping and handling revenue , accounted for 13 % of total net sales in fiscal 2011 compared to 12 % in fiscal 2010 . comparable store sales by brand for fiscal 2011 were as follows : abercrombie & fitch increased 3 % , with men 's and women 's increasing by a low single digit percent . abercrombie kids increased 4 % , with guys increasing by a high single digit and girls increasing by a low single digit . hollister increased 8 % , with dudes and bettys increasing by a high single digit . on a comparable store sales basis , the southern and the western regions of the u.s. were the strongest performing regions , while canada and japan were the weakest . from a merchandise classification standpoint , fleece , active wear , and knit tops were stronger performing categories for the male business while graphics and woven shirts were weaker performing categories . in the female business , woven shirts , sweaters , and knit tops were stronger performing categories , while graphics and dresses were weaker performing categories . gross profit gross profit during fiscal 2011 was $ 2.550 billion compared to gross profit of $ 2.217 billion during fiscal 2010 . the gross profit rate for fiscal 2011 was 61.3 % , down 260 basis points from the fiscal 2010 rate of 63.9 % . the decrease in the gross profit rate for fiscal 2011 was primarily driven by an increase in average unit cost . stores and distribution expense stores and distribution expense for fiscal 2011 was $ 1.888 billion compared to $ 1.590
| financial summary the following summarized financial and statistical data compares fiscal 2012 , fiscal 2011 and fiscal 2010 : replace_table_token_8_th * beginning with 2012 , comparable sales were reported including comparable direct-to-consumer sales . prior year figures were not restated . a store is included in comparable sales when it has been open as the same brand 12 months or more and its square footage has not been expanded or reduced by more than 20 % within the past year . the fiscal 2012 retail year included a fifty-third week and , therefore , fiscal 2012 comparable sales are compared to the fifty-three week period ended february 4 , 2012 . * * net sales for the year-to-date periods ended february 2 , 2013 , january 28 , 2012 and january 29 , 2011 reflect the activity of 27 , 21 and 19 stores , respectively . 30 current trends and outlook our results for fiscal 2012 included an 8 % increase in net sales and a 78 % increase in diluted earnings per share compared to last year . we have made progress in our operating income the past couple of years , including improvement in gross margin in fiscal 2012 driven by a reduction in average unit cost . however , our operating margins remain well below historical levels , despite our highly profitable international business , which presents opportunities in two specific areas . first , we will be revisiting our operating model and identifying processes and investments we make in our business that may have had a return in the past but no longer do today . we have established a cross-functional team to simplify processes , eliminate low value added components of our model , increase efficiencies and lower expenses . second , we will be seeking to identify ways to increase our average unit retail , particularly in the u.s. stores and u.s. direct-to-consumer operations .
| 4,684 |
discussions of the fiscal year ended march 31 , 2019 items and comparisons between the fiscal years ended march 31 , 2020 and 2019 that are not included in this annual report on form 10-k can be found 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 fiscal year ended march 31 , 2020 filed with the united states securities and exchange commission on may 18 , 2020. business overview we are a biopharmaceutical company focused on redefining care for women and for men through purpose-driven science , empowering medicines , and transformative advocacy . orgovyx tm ( relugolix ) was approved by the u.s. food and drug administration ( โ fda โ ) in 2020 as the first and only oral gonadotropin-releasing hormone ( โ gnrh โ ) receptor antagonist for the treatment of adult patients with advanced prostate cancer . relugolix is also under regulatory review in europe for men with advanced prostate cancer . in addition , relugolix combination tablet ( relugolix 40 mg , estradiol 1.0 mg , and norethindrone acetate 0.5 mg ) is under regulatory review in the u.s. and europe for women with uterine fibroids , has completed phase 3 registration-enabling studies for women with endometriosis , and is being assessed for contraceptive efficacy in healthy women ages 18-35 years who are at risk for pregnancy . we are also developing mvt-602 , an oligopeptide kisspeptin-1 receptor agonist , which has completed a phase 2a study for the treatment of female infertility as a part of assisted reproduction . since our inception , we have devoted substantially all of our efforts to identifying and in-licensing our product candidates , organizing and staffing our company , raising capital , preparing for and advancing the clinical development of our product candidates , preparing for and achieving regulatory approvals , and preparing for and executing on commercialization of our product candidates . since our inception , we have funded our operations primarily from the issuance and sale of our common shares , from debt financing arrangements , and more recently from the upfront and milestone payments we received from pfizer inc. ( โ pfizer โ ) and gedeon richter plc . ( โ richter โ ) . we launched our first product , orgovyx , in the u.s. in january 2021 and began generating product revenue , net from sales of orgovyx in the u.s. in january 2021. our majority shareholder is sumitovant biopharma ltd. ( โ sumitovant โ ) , a wholly-owned subsidiary of sumitomo dainippon pharma co. , ltd. ( โ sumitomo dainippon pharma โ ) . as of march 31 , 2021 , sumitovant directly , and sumitomo dainippon pharma indirectly , own 48,641,181 , or approximately 53.5 % , of our outstanding common shares . fiscal year ended march 31 , 2021 and recent business updates in this section , we summarize certain of our fiscal year ended march 31 , 2021 and recent clinical , regulatory , and corporate updates . additional information about our business , our approved product , and our product candidates is included in part i. item 1. , โ business , โ of this annual report on form 10-k. product and product candidates advanced prostate cancer ( hero program ) on december 18 , 2020 , the fda approved orgovyx for the treatment of adult patients with advanced prostate cancer . orgovyx , which was granted priority review by the fda , is the first and only oral gnrh receptor antagonist for men with advanced prostate cancer . orgovyx became commercially available through authorized specialty distributors in the u.s. in early january 2021. our oncology sales force began promoting orgovyx to target prescribers in early january 2021 and the uro-oncology sales force of our collaboration partner , pfizer , began actively promoting orgovyx to target prescribers in early february 2021. on march 29 , 2021 , we announced that the european medicines agency ( โ ema โ ) validated our previously submitted marketing authorization application ( โ maa โ ) for relugolix for the treatment of men with advanced prostate cancer . the validation of the application confirmed that the submission is sufficiently complete for the ema to begin the formal review process . if approved , relugolix would be the first and only oral androgen deprivation therapy for advanced prostate cancer in europe . 70 table of content s in may 2020 , efficacy and safety data from the phase 3 hero study were simultaneously published online in the new england journal of medicine and presented at the american society of clinical oncology ( โ asco โ ) 's asco20 virtual scientific program . uterine fibroids ( liberty program ) in may 2020 , we submitted a new drug application ( โ nda โ ) to the fda for relugolix combination tablet for the treatment of women with heavy menstrual bleeding associated with uterine fibroids , which has been accepted by the fda with a target action date of june 1 , 2021. if approved , we and pfizer expect to launch relugolix combination tablet for the treatment of uterine fibroids in the u.s. in june 2021. on september 14 , 2020 , we announced one-year data on bone mineral density from the phase 3 liberty program and from a prospective observational study of women with uterine fibroids . on october 21 , 2020 , we presented one-year efficacy and safety data from the liberty long-term extension study at the american society for reproductive medicine ( โ asrm โ ) 2020 virtual congress . in february 2021 , we and our collaboration partner , pfizer , announced publication in the new england journal of medicine of the phase 3 liberty 1 and liberty 2 studies of investigational once-daily relugolix combination therapy in women with uterine fibroids . on march 24 , 2021 , we and pfizer announced positive safety and efficacy data from the liberty randomized withdrawal study . story_separator_special_tag in an effort to protect the safety of our employees and our patients , we adopted safety measures in response to the covid-19 pandemic that meet or exceed the guidelines established by government and public health officials . these measures include adopting policies applicable to office-based employees such as working from home , limiting the number of employees on site , and limiting business travel . at this time , we have not identified a material change to our productivity as a result of these measures , but this could change , particularly if restricted travel , closed schools , and shelter-in-place orders are not removed or significantly eased . to date , the impact of the covid-19 pandemic on our ability to advance our clinical studies , our regulatory activities , our u.s. commercial launch activities for orgovyx , and our preparations for the potential commercialization of relugolix combination tablet has been limited and all of our publicly announced milestones remain on track . the fda approved orgovyx for the treatment of adult patients with advanced prostate cancer on december 18 , 2020. in may 2020 , we submitted our nda to the fda for relugolix combination tablet for the treatment of women with heavy menstrual bleeding 72 table of content s associated with uterine fibroids , which has been accepted by the fda with a target action date of june 1 , 2021. we launched orgovyx in the u.s. in early january 2021 , and may launch other approved products in the covid-19 environment . in response to the covid-19 pandemic , health professionals may reduce staffing and reduce or postpone appointments with patients , or patients may cancel or miss appointments , resulting in potential delays in diagnosis and treatment , and therefore fewer prescriptions . in addition , multiple medical conferences have been cancelled , postponed or moved to virtual formats , resulting in fewer opportunities to present our scientific data . in addition , our sales teams have been and would likely have to continue to make presentations to physicians and the medical community in many cases by virtual means instead of in-person , which could reduce the number of medical professionals we are able to present to , and these virtual meetings may not be as successful as in-person meetings . reduced access to healthcare providers as a result of social distancing protocols may impact or require adjustments to our planned commercialization activities , including the manner in which our field teams engage with healthcare providers and facilities . at this time , we do not believe that the covid-19 pandemic has disproportionately impacted us relative to other companies in our industry and the medical community appears to be highly engaged with our field team . to date , we have not experienced supply constraints , and we believe we have procured sufficient quantities of relugolix drug substance to meet our u.s. orgovyx launch plans and u.s. launch plans for relugolix combination tablet , if approved . we have taken numerous steps , and will continue to take further actions , in our approach to addressing the covid-19 pandemic . we continue to monitor the rapidly evolving situation and guidance from international and domestic authorities , including federal , state , and local public health authorities and may take additional action based on their recommendations . the ultimate impact of the covid-19 pandemic is highly uncertain and we do not yet know the full extent of potential delays or impacts on our business , our financial results , our clinical studies , our supply chains , our commercial launch for orgovyx , and pre-launch commercial readiness activities for relugolix combination tablet , end user demand for our products , if approved , healthcare systems or the global economy as a whole . as such , given the dynamic nature of this situation , we can not estimate the ultimate impact of covid-19 on our business , financial condition , or results of operations . refer to the risk factor titled โ business interruptions resulting from effects of pandemics or epidemics , such as the covid-19 pandemic , may materially and adversely affect our business and financial condition , โ as well as other risk factors included in the section titled โ risk factors โ set forth in part i. item 1a . components of our results of operations revenues on december 18 , 2020 , the fda approved orgovyx for the treatment of adult patients with advanced prostate cancer . in january 2021 , we began to generate product revenue from sales of orgovyx in the u.s. we record product revenue net of estimated discounts , chargebacks , rebates , product returns , and other gross-to-net revenue deductions . our collaboration revenue represents the partial amortization of the upfront payment we received from pfizer pursuant to the terms of the pfizer collaboration and license agreement ( see note 13 ( b ) to our audited consolidated financial statements included elsewhere in this annual report on form 10-k ) . our license and milestone revenue represents the partial recognition of previously deferred revenue associated with upfront and regulatory milestone payments we received from richter pursuant to the terms of the richter development and commercialization agreement ( see note 13 ( a ) to our audited consolidated financial statements included elsewhere in this annual report on form 10-k ) . we recognize revenue as we satisfy our combined performance obligation to richter . cost of product revenue our cost of product revenue is composed of the cost of goods sold and royalty expense . our cost of goods sold consists of raw materials , third-party manufacturing costs to manufacture the raw materials into finished product , freight , and indirect overhead costs associated with sales of orgovyx in the u.s. our royalty expense consists of a fixed , high single-digit royalty on net sales of orgovyx payable to takeda pursuant to the terms of the takeda license agreement ( see note 14 ( d ) to our audited consolidated financial statements included elsewhere in this annual report on form 10-k ) .
| results of operations the following table summarizes our results of operations for the years ended march 31 , 2021 and 2020 ( in thousands ) : replace_table_token_0_th revenues our revenues to date have been generated substantially from the richter development and commercialization agreement and the pfizer collaboration and license agreement , which are further discussed in note 13 to our audited consolidated financial statements included elsewhere in this annual report on form 10-k. we began commercializing orgovyx in the u.s. for adult patients with advanced prostate cancer in january 2021. product revenue , net from sales of orgovyx was $ 3.6 million for the year ended march 31 , 2021. there were no such amounts recognized for the year ended march 31 , 2020. product revenue is recorded net of estimated discounts , chargebacks , rebates , product returns , and other gross-to-net revenue deductions . collaboration revenue for the year ended march 31 , 2021 represents the partial amortization of the upfront payment received from pfizer pursuant to the terms of the pfizer collaboration and license agreement . there were no such amounts recognized for the year ended march 31 , 2020. license and milestone revenue for the year ended march 31 , 2021 represents the partial recognition of previously deferred revenue associated with upfront and regulatory milestone payments we received from richter pursuant to the terms of the richter development and commercialization agreement . there were no such amounts recognized for the year ended march 31 , 2020. cost of product revenue for the year ended march 31 , 2021 , our cost of product revenue was $ 0.3 million , which includes the cost of goods sold and royalty expense payable to takeda pursuant to the takeda license agreement ( see note 14 ( d ) to our audited consolidated financial statements included elsewhere in this annual report on form 10-k ) .
| 4,685 |
if it is impracticable for a company to apply story_separator_special_tag of operations the following discussion and analysis provides a comparison of our results of operations for the years ended december 31 , 2017 , 2016 , and 2015 and financial condition as of december 31 , 2017 and 2016 . this discussion should be read in conjunction with the financial statements and related notes included elsewhere in this report . all share data has been adjusted to give retroactive recognition to stock splits and stock dividends . cautionary notice regarding forward-looking statements certain statements of other than historical fact that are contained in this document and in written material , press releases and oral statements issued by or on behalf of southside bancshares , inc. , a bank holding company , may be considered to be โ forward-looking statements โ within the meaning of and subject to the protections of the private securities litigation reform act of 1995. these forward-looking statements are not guarantees of future performance , nor should they be relied upon as representing management 's views as of any subsequent date . these statements may include words such as โ expect , โ โ estimate , โ โ project , โ โ anticipate , โ โ appear , โ โ believe , โ โ could , โ โ should , โ โ may , โ โ might , โ โ will , โ โ would , โ โ seek , โ โ intend , โ โ probability , โ โ risk , โ โ goal , โ โ target , โ โ objective , โ โ plans , โ โ potential , โ and similar expressions . forward-looking statements are statements with respect to our beliefs , plans , expectations , objectives , goals , anticipations , assumptions , estimates , intentions and future performance , and are subject to significant known and unknown risks and uncertainties , which could cause our actual results to differ materially from the results discussed in the forward-looking statements . for example , discussions of the effect of our expansion , trends in asset quality and earnings from growth , and certain market risk disclosures are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations . see โ item 1. business โ and this โ item 7. management 's discussion and analysis of financial condition and results of operations. โ by their nature , certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future . accordingly , our results could materially differ from those that have been estimated . other factors that could cause actual results to differ materially from those indicated by forward-looking statements include , but are not limited to , the following : general economic conditions , either globally , nationally , in the state of texas , or in the specific markets in which we operate , including , without limitation , the deterioration of the commercial real estate , residential real estate , construction and development , energy , oil and gas , credit and liquidity markets , which could cause an adverse change in our net interest margin , or a decline in the value of our assets , which could result in realized losses ; current or future legislation , regulatory changes or changes in monetary or fiscal policy that adversely affect the businesses in which we are engaged , including the impact of the dodd-frank wall street reform and consumer protection act of 2010 ( โ dodd-frank act โ ) , the federal reserve 's actions with respect to interest rates , the capital requirements promulgated by the basel committee on banking supervision ( โ basel committee โ ) and other regulatory responses to economic conditions ; adverse changes in the status or financial condition of the government-sponsored enterprises ( the โ gses โ ) which impact the gses ' guarantees or ability to pay or issue debt ; adverse changes in the credit portfolio of other u.s. financial institutions relative to the performance of certain of our investment securities ; economic or other disruptions caused by acts of terrorism in the united states , europe or other areas ; changes in the interest rate yield curve such as flat , inverted or steep yield curves , or changes in the interest rate environment that impact interest margins and may impact prepayments on our mortgage-backed securities ( โ mbs โ ) portfolio ; increases in our nonperforming assets ; our ability to maintain adequate liquidity to fund operations and growth ; any applicable regulatory limits or other restrictions on southside bank 's ability to pay dividends to us ; the failure of our assumptions underlying allowance for loan losses and other estimates ; the effectiveness of our derivative financial instruments and hedging activities to manage risk ; unexpected outcomes of , and the costs associated with , existing or new litigation involving us ; changes impacting our balance sheet and leverage strategy ; risks related to actual mortgage prepayments diverging from projections ; risks related to actual u.s. agency mbs prepayments exceeding projected prepayment levels ; 31 risks related to u.s. agency mbs prepayments increasing due to u.s. government programs designed to assist homeowners to refinance their mortgage that might not otherwise have qualified ; our ability to monitor interest rate risk ; risks related to the price per barrel of crude oil ; significant increases in competition in the banking and financial services industry ; changes in consumer spending , borrowing and saving habits ; technological changes , including potential cyber-security incidents ; execution of future acquisition , reorganization or disposition transactions , including the risk that the anticipated benefits of such transactions are not realized ; our ability to increase market share and control expenses ; our ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by our customers ; the effect of changes in federal or state tax story_separator_special_tag refer to โ part ii - item 7. management 's discussion and analysis of financial condition and results of operations - loan loss experience and allowance for loan losses โ and โ note 6 โ loans and allowance for probable loan losses โ to our consolidated financial statements included in this report for a detailed description of our estimation process and methodology related to the allowance for loan losses . estimation of fair value . the estimation of fair value is significant to a number of our assets and liabilities . in addition , gaap requires disclosure of the fair value of financial instruments as a part of the notes to the consolidated financial statements . fair values for securities are volatile and may be influenced by a number of factors , including market interest rates , prepayment speeds , discount rates and the shape of yield curves . fair values for most investment and mbs are based on quoted market prices , where available . if quoted market prices are not available , fair values are based on the quoted prices of similar instruments or estimates from independent pricing services . where there are price variances outside certain ranges from different pricing services for specific securities , those pricing variances are reviewed with other market data to determine which of the price estimates is appropriate for that period . fair values for our derivatives are based on measurements that consider observable data that may include dealer quotes , market spreads , the u.s. treasury yield curve , live trading levels , trade execution data , credit information , and the derivatives ' terms and conditions , among other things . we validate prices supplied by such sources by comparison to one another . business combination . during a business combination consideration is first assigned to identifiable assets and liabilities , based on estimated fair values , with any excess recorded as goodwill . determining fair value requires significant estimates and assumptions based on an evaluation of a number of factors , such as market share , customer and employee loyalty , asset lives , and the amount and timing of prospective cash flows and the discount rate applied to the cash flows . assets and liabilities , including deposits , core deposit intangibles , property and equipment and loans , among others , are evaluated based upon the nature of the asset or liability , the business in which it is utilized , and the economic return it is generating or expected to generate . deposits , in a business combination , are evaluated based upon maturity and the weighted average rate to determine the present value or fair value . core deposit intangibles represent the cost savings derived from available core deposits relative to alternative financing . the cost of deposits on hand is evaluated against the company primary source of funds , or fhlb advance agreements . for loans acquired in a business combination , refer to โ allowance for losses on loans โ in this section . other intangibles are evaluated based upon the nature of the underlying asset , life and the timing of prospective cash flows . property and equipment obtained in a business combination is evaluated at the highest and best use of the asset . functional and economic obsolescence is also evaluated . 33 impairment of investment securities and mortgage-backed securities . investment securities and mbs classified as available for sale ( โ afs โ ) are carried at fair value and the impact of changes in fair value are recorded on our consolidated balance sheet as an unrealized gain or loss in โ accumulated other comprehensive loss , โ a separate component of shareholders ' equity . securities classified as afs or held to maturity ( โ htm โ ) are subject to our review to identify when a decline in value is other-than-temporary . when it is determined that a decline in value is other-than-temporary , the carrying value of the security is reduced to its estimated fair value , with a corresponding charge to earnings for the credit portion and to other comprehensive income for the noncredit portion unless there is no ability or intent to hold to recovery . factors considered in determining whether a decline in value is other-than-temporary include : ( 1 ) whether the decline is substantial , the duration of the decline and the reasons for the decline in value ; ( 2 ) whether the decline is related to a credit event , a change in interest rate or a change in the market discount rate ; ( 3 ) the financial condition and near-term prospects of the issuer ; and ( 4 ) whether we have a current intent to sell the security and whether it is not more likely than not that we will be required to sell the security before the anticipated recovery of its amortized cost basis . for certain assets , we consider expected cash flows of the investment in determining if impairment exists . defined benefit pension plan . the plan obligations and related assets of our defined benefit pension plan ( the โ plan โ ) and the omniamerican bank defined benefit plan ( the โ acquired plan โ ) are presented in โ note 11 - employee benefits โ to our consolidated financial statements included in this report . effective december 31 , 2005 , entry into the plan by new employees was frozen . effective december 31 , 2006 , employee benefits under the acquired plan were frozen . in addition , no new participants may be added to the acquired plan . assets in both plans , consist primarily of marketable equity and debt instruments , and are valued using observable market quotations . obligations and annual pension expense of both plans are determined by independent actuaries and through the use of a number of assumptions that are reviewed by management . key assumptions in measuring the obligations of both plans include the discount rate and the estimated future return on the assets in both plans .
| operating results during the year ended december 31 , 2017 , our net income increase d $ 5.0 million , or 10.1 % , to $ 54.3 million , from $ 49.3 million for the same period in 2016 . the increase was primarily the result of an $ 18.6 million increase in interest income , a $ 5.1 million decrease in provision for loan losses and a $ 3.2 million decrease in noninterest expense , partially offset by a $ 14.2 million increase in interest expense , a $ 5.8 million increase in income tax expense and a $ 1.9 million decrease in noninterest income . noninterest expense decreased primarily due to a reduction in salaries and employee benefits , occupancy expense , other noninterest expense and professional fees , partially offset by acquisition expense incurred in connection with the diboll merger . earnings per diluted share was $ 1.81 for both years ended december 31 , 2017 and 2016 . during the year ended december 31 , 2016 , our net income increase d $ 5.4 million , or 12.2 % , to $ 49.3 million , from $ 44.0 million for the same period in 2015 . the increase was primarily the result of a $ 14.4 million increase in interest income , a $ 3.4 million decrease in noninterest expense , and a $ 1.5 million increase in noninterest income , partially offset by a $ 9.5 million increase in interest expense , a $ 3.0 million increase in income tax expense and a $ 1.4 million increase in provision for loan losses . noninterest expense decreased primarily due to cost containment efforts and cost synergies as omni was fully integrated in 2016. earnings per diluted share increased $ 0.20 , or 12.4 % , to $ 1.81 for the year ended december 31 , 2016 , from $ 1.61 for the same period in 2015 .
| 4,686 |
we are a recognized market leader in chicken , beef and pork as well as prepared foods , including bacon , breakfast sausage , turkey , lunchmeat , hot dogs , pizza crusts and toppings , tortillas and desserts . some of the key factors influencing our business are customer demand for our products ; the ability to maintain and grow relationships with customers and introduce new and innovative products to the marketplace ; accessibility of international markets ; market prices for our products ; the cost and availability of live cattle and hogs , raw materials , and feed ingredients ; and operating efficiencies of our facilities . we operate in four reportable segments : chicken , beef , pork and prepared foods . following the sale of our mexico and brazil operations in fiscal 2015 , we began reporting our international operation , which was previously reported as the international segment , in other . other now includes our foreign chicken production operations in china and india and third-party merger and integration costs . all periods presented have been reclassified to reflect this change . chicken , beef , pork and prepared foods results were not impacted by this change . on august 28 , 2014 , we acquired and consolidated the hillshire brands company ( `` hillshire brands '' ) , a manufacturer and marketer of branded , convenient foods . hillshire brands results from operations subsequent to the acquisition closing are included in the prepared foods segment . overview fiscal year โ our accounting cycle resulted in a 53-week year for fiscal 2015 and a 52-week year for 2014 and 2013. general โ operating income grew 52 % in fiscal 2015 over fiscal 2014 , which was led by record earnings in our chicken and prepared foods segments . sales increased 10 % to a record $ 41.4 billion , driven by price and mix improvements , the incremental impact of hillshire brands and the positive impact of 53 weeks in fiscal 2015. we continued to execute our strategy of accelerating growth in domestic value-added chicken sales , prepared food sales , innovating products , services and customer insights and cultivating our talent development to support tyson 's growth for the future . hillshire integration โ we continue to maintain focus on the integration of hillshire brands and synergy capture . as we execute our prepared foods strategy , we estimate the impact of the hillshire brands synergies , along with the profit improvement plan related to our legacy prepared foods business , will have a positive impact of more than $ 500 million in fiscal 2016 and more than $ 700 million by fiscal 2017. the majority of these benefits are expected to be realized in the prepared foods segment . we will invest a portion of the synergies in innovation , new product launches and strengthening our brands . in fiscal 2015 , we captured $ 322 million of synergies and profit improvement initiatives , of which $ 285 million impacted the prepared foods segment . market environment โ our chicken segment delivered record results in fiscal 2015 driven by strong demand and favorable domestic market conditions , partially offset by disruptions caused by export bans . the pork segment results remained in its normalized operating margin range , but were down from last year due to unfavorable market conditions from a decline in exports and periods of increased domestic availability of pork products . our prepared foods segment delivered record operating income and operating margins as we continued to execute our profit improvement plan and integrate hillshire brands . the beef segment experienced a loss driven by lower availability of fed cattle supplies , higher fed cattle costs , export market disruptions , and reduced demand for premium beef products due to the relative value of competing proteins . mexico โ we recorded a $ 161 million pre-tax gain as a result of the sale of our mexico operation in the fourth quarter of fiscal 2015. the gain is reflected in other for segment reporting and included in cost of sales in the consolidated statements of income . china impairment โ following the sale of our mexico and brazil chicken production operations , we have continued to review our strategies and outlook for the remaining international businesses , which operations include our chicken production operations in china . despite our belief in the potential for this business , our chinese operations have not achieved profitability . given the ongoing losses being generated in this business , recent changes in the strategy and management of the business , and the depressed economic outlook for china , we assessed our chinese operations for potential impairment in the fourth quarter of fiscal 2015. as a result of this evaluation , during the fourth quarter of fiscal 2015 , we recorded a $ 169 million impairment charge . the impairment was comprised of $ 126 million of property , plant and equipment , $ 23 million of goodwill and $ 20 million of other assets . the china operation is included in other for segment reporting and the impairment is included in cost of sales in the consolidated statements of income . 23 margins โ our total operating margin was 5.2 % in fiscal 2015 . operating margins by segment were as follows : chicken โ 12.0 % beef โ ( 0.4 ) % ( included $ 12 million closure and impairment charges related to the ceasing of beef operations at our denison facility ) pork โ 7.2 % prepared foods โ 7.5 % ( included $ 8 million in net insurance proceeds related to a legacy hillshire brands plant fire , $ 10 million in merger and integration costs and $ 59 million in prepared foods network optimization impairment charges ) liquidity โ during fiscal 2015 , we generated $ 2.6 billion of operating cash flows . we repurchased 11.0 million shares of our class a common stock for $ 455 million under our share repurchase program in fiscal 2015 . story_separator_special_tag state income taxes increased the rate 2.8 % . foreign rate differences and valuation allowances increased the rate 2.8 % . 2013 โ domestic production activity deduction reduced the rate 3.2 % . general business credits reduced the rate 1.3 % . state income taxes increased the rate 2.4 % . 27 segment results we operate in four reportable segments : chicken , beef , pork and prepared foods . following the sale of our mexico and brazil operations in fiscal 2015 , we began reporting our international operation in other , which was previously reported as the international segment . other now includes our foreign chicken production operations in china and india , in addition to third-party merger and integration costs . chicken , beef , pork and prepared foods results were not impacted by this change . all periods presented have been reclassified to reflect this change . additionally , the results from dynamic fuels , which was sold in fiscal 2014 , are also included in other in comparative periods . the following table is a summary of sales and operating income ( loss ) , which is how we measure segment income ( loss ) . replace_table_token_16_th replace_table_token_17_th 2015 vs. 2014 โ sales volume โ sales volume grew as a result of the additional week in fiscal 2015 as well as stronger demand for chicken products and mix of rendered product sales . average sales price โ average sales price decreased as feed ingredient costs declined , partially offset by mix changes . operating income โ operating income increased due to higher sales volume and lower feed ingredient costs of $ 450 million , partially offset by disruptions caused by export bans . 2014 vs. 2013 โ sales volume โ sales volume grew as a result of stronger demand for chicken products and mix of rendered product sales . average sales price โ average sales price decreased as feed ingredient costs declined , partially offset by mix changes . operating income โ operating income increased due to higher sales volume and lower feed ingredient costs of $ 600 million , partially offset by decreased average sales price . 28 replace_table_token_18_th 2015 vs. 2014 โ sales volume โ sales volume decreased due to reduced live cattle supplies available to process , partially offset by an additional week in fiscal 2015. average sales price โ average sales price increased due to lower domestic availability of beef products . operating income โ operating income decreased due to unfavorable market conditions associated with a decrease in supply which drove up fed cattle costs , export market disruptions , the relative value of competing proteins and increased operating costs . additionally , in fiscal 2015 , we incurred $ 12 million in denison plant impairment and closure costs and $ 81 million of losses from mark-to-market open derivative positions and lower-of-cost-or-market inventory adjustments , which was mostly the result of a large and rapid decline in live cattle futures in september of fiscal 2015 . 2014 vs. 2013 โ sales volume โ sales volume decreased due to a reduction in live cattle processed . average sales price โ average sales price increased due to lower domestic availability of beef products . operating income โ operating income increased due to improved operational execution and maximizing our revenues relative to the rising live cattle markets , partially offset by increased operating costs . derivative activities โ operating results included net losses of $ 72 million in fiscal 2014 , compared to net gains of $ 9 million in fiscal 2013 for commodity risk management activities related to futures contracts . these amounts exclude the impact from related physical sale and purchase transactions , which mostly offset the commodity risk management gains and losses . replace_table_token_19_th 2015 vs. 2014 โ sales volume โ sales volume decreased due to the divestiture of our heinold hog markets business in the first quarter of fiscal 2015. excluding the impact of the divestiture , we had a 5.4 % increase in sales volume as a result of the additional week in fiscal 2015 as well as better demand for our pork products . average sales price โ average sales price decreased due to an increase in live hog supplies , which drove down livestock cost and average sales price . operating income โ while reduced compared to prior year , operating income remained strong as we maximized our revenues relative to live hog markets , partially attributable to operational and mix performance . 2014 vs. 2013 โ sales volume โ sales volume increased due to better domestic demand for our pork products . average sales price โ average sales price increased due to lower total hog supplies , which resulted in higher input costs . operating income โ operating income increased as we maximized our revenues relative to live hog markets , partially attributable to operational and mix performance . derivative activities โ operating results included net losses of $ 112 million in fiscal 2014 , compared to net losses of $ 15 million in fiscal 2013 for commodity risk management activities related to futures contracts . these amounts exclude the impact from related physical sale and purchase transactions , which mostly offset the commodity risk management losses . 29 replace_table_token_20_th 2015 vs. 2014 โ sales volume โ sales volume increased due to incremental volumes from the acquisition of hillshire brands and an additional week in fiscal 2015. average sales price โ average sales price increased primarily due to better product mix which was positively impacted by the acquisition of hillshire brands . operating income โ operating income improved due to an increase in sales volume and average sales price mainly attributed to hillshire brands , as well as lower raw material costs of approximately $ 290 million for fiscal 2015 related to our legacy prepared foods business .
| summary of results replace_table_token_9_th 2015 vs. 2014 โ sales volume โ sales were positively impacted by higher sales volume , which accounted for an increase of $ 2.4 billion . the chicken segment had an increase in sales volume primarily due to an extra week in fiscal 2015 , and the prepared foods segment had an increase in sales volume primarily due to the acquisition and consolidation of hillshire brands in our final month of fiscal 2014 in addition to an extra week in fiscal 2015. the increase in sales volume was partially offset by a decrease in the beef and pork segments along with the divestitures of the mexico and brazil chicken operations in fiscal 2015. average sales price โ sales were positively impacted by higher average sales prices , which accounted for an increase of $ 1.4 billion . the beef and prepared foods segments each had an increase in average sales prices , partially offset by a decrease in average sales prices in the chicken and pork segments . the increase in average sales price was largely due to continued tight domestic availability of beef products along with the change in mix in the prepared foods segment as a result of the acquisition and consolidation of hillshire brands in our final month of fiscal 2014 . 2014 vs. 2013 โ sales volume โ sales were positively impacted by an increase in sales volume , which accounted for an increase of $ 679 million . all segments , with the exception of the beef segment , had an increase in sales volume . prepared foods contributed to the majority of the increase due to the acquisition and consolidation of hillshire brands in our final month of fiscal 2014. average sales price โ sales were positively impacted by higher average sales price , which accounted for an increase of approximately $ 2.5 billion .
| 4,687 |
net interest margin is dependent primarily on the difference or spread between the average yield earned on interest-earning assets ( including loans , mortgage-related securities , and investments ) and the average rate paid on interest-bearing liabilities ( including deposits , securities sold under agreements to repurchase , and borrowings ) , as well as the relative amounts of these assets and liabilities . southern bank is subject to interest rate risk to the degree that its interest-earning assets mature or reprice at different times , or on a varying basis , from its interest-bearing liabilities . southern bank 's noninterest income consists primarily of fees charged on transaction and loan accounts , interchange income from customer debit and atm card use , gains on sales of loans to the secondary market , and increased cash surrender value of bank owned life insurance ( โ boli โ ) . southern bank 's operating expenses include : employee compensation and benefits , occupancy expenses , legal and professional fees , federal deposit insurance premiums , amortization of intangible assets , and other general and administrative expenses . southern bank 's operations are significantly influenced by general economic conditions including monetary and fiscal policies of the u.s. government and the federal reserve board . additionally , southern bank is subject to policies and regulations issued by financial institution regulatory agencies including the federal reserve , the missouri division of finance , and the federal deposit insurance corporation . each of these factors may influence interest rates , loan demand , prepayment rates and deposit flows . interest rates available on competing investments as well as general market interest rates influence the bank 's cost of funds . lending activities are affected by the demand for real estate and other types of loans , which in turn is affected by the interest rates at which such financing may be offered . lending activities are funded through the attraction of deposit accounts consisting of checking accounts , passbook and statement savings accounts , money market deposit accounts , certificate of deposit accounts with terms of 60 months or less , securities sold under agreements to repurchase , advances from the federal home loan bank of des moines , and , to a lesser extent , brokered deposits . the bank intends to continue to focus on its lending programs for one- to four-family residential real estate , commercial real estate , commercial business and consumer financing on loans secured by properties or collateral located primarily in southeast missouri and northeast and north central arkansas . non-gaap financial information this annual report on form 10-k contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the united states of america ( gaap ) . these measures include : ยท fiscal year 2011 net income available to common stockholders per diluted common share excluding bargain purchase gain , net of transaction expenses related to the december 2010 fdic-assisted acquisition involving the former first southern bank ( the โ acquisition โ ) , net of tax ; ยท fiscal year 2013 , 2012 and 2011 net income available to common stockholders excluding accretion of fair value discount on acquired loans , amortization of fair value premium on assumed time deposits , and bargain purchase gain , net of transaction expenses , related to the acquisition , net of tax ; ยท fiscal year 2013 , 2012 and 2011 return on average assets excluding accretion of fair value discount on acquired loans , amortization of fair value premium on assumed time deposits , and bargain purchase gain , net of transaction expenses , related to the acquisition , net of tax ; ยท fiscal year 2013 , 2012 and 2011 return on average common equity excluding accretion of fair value discount on acquired loans , amortization of fair value premium on assumed time deposits , and bargain purchase gain , net of transaction expenses , related to the acquisition , net of tax ; ยท fiscal year 2013 , 2012 and 2011 net interest margin excluding accretion of fair value discount on acquired loans and amortization of fair value premium on assumed time deposits related to the acquisition ; 52 management believes that showing these amounts and measures excluding these items is useful for investors because it better reflects our core operating results and provides useful information by which to evaluate the company 's operating performance on an ongoing basis from period to period . the following table presents a reconciliation of the calculation of fiscal 2011 diluted earnings per share available to common shareholders excluding bargain purchase gain and transaction expenses related to the acquisition : for the twelve months ended june 30 , 2011 diluted earnings per share available to common stockholders $ 5.12 less : impact of excluding bargain purchase gain , net of transaction expenses , related to the acquisition , net of tax 1.92 diluted earnings per share available to common stockholders - excluding bargain purchase gain , net of tax and transaction expenses , related to the acquisition $ 3.20 the following table presents a reconciliation of the calculation of net income available to common stockholders , excluding accretion of fair value discount on acquired loans , amortization of premium on acquired time deposits , and bargain purchase gain , net of transaction expenses , related to the acquisition , net of tax : for the twelve months ended ( dollars in thousands ) june 30 , 2013 june 30 , 2012 june 30 , 2011 net income available to common stockholders $ 9,722 $ 9,580 $ 10,958 less : impact of excluding accretion of fair value discount on acquired loans and amortization of fair value premium on acquired time deposits , and bargain purchase gain , net of transaction expenses , related to the acquisition , net of tax 873 2,446 5,435 net income available to common shareholders - excluding accretion of fair value discount on acquired loans and amortization of fair value premium on acquired time deposits , and bargain purchase gain , net of transaction expenses story_separator_special_tag loans are considered impaired if , based on current information and events , it is probable that southern bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement . the measurement of impaired loans is generally based on the fair value of the collateral for collateral-dependent loans . if the loan is not collateral-dependent , the measurement of impairment is based on the present value of expected future cash flows discounted at the historical effective interest rate or the observable market price of the loan . in measuring the fair value of the collateral , management uses the assumptions ( i.e. , discount rates ) and methodologies ( i.e. , comparison to the recent selling price of similar assets ) consistent with those that would be utilized by unrelated third parties . impairment identified through this evaluation process is a component of the allowance for loan losses . if a loan that is individually evaluated for impairment is found to have none , it is grouped together with loans having similar characteristics ( i.e. , the same risk grade ) , and an allowance for loan losses is based upon a quantitative factor ( historical average charge-offs for similar loans over the past one to five years ) , and qualitative factors such as qualitative factors such as changes in lending policies ; national , regional , and local economic conditions ; changes in mix and volume of portfolio ; experience , ability , and depth of lending management and staff ; entry to new markets ; levels and trends of delinquent , nonaccrual , special mention , and classified loans ; concentrations of credit ; changes in collateral values ; agricultural economic conditions ; and regulatory risk . for portfolio loans that are evaluated for impairment as part of homogenous pools , an allowance is maintained based upon similar quantitative and qualitative factors . changes in the financial condition of individual borrowers , in economic conditions , in historical loss experience and in the conditions of the various markets in which collateral may be sold may all affect the required level of the allowance for losses on loans and the associated provision for losses on loans . 55 financial condition story_separator_special_tag block ; margin-left : 0pt ; margin-right : 0pt '' > 57 stockholders ' equity . the company 's stockholders ' equity increased $ 7.1 million , or 7.5 % , to $ 101.8 million at june 30 , 2013 , from $ 94.7 million at june 30 , 2012. the increase was due primarily to retention of net income , partially offset by cash dividends paid on common and preferred stock , and by a decrease in accumulated other comprehensive income , as the market value of the available-for-sale investment portfolio declined , net of tax . comparison of operating results for the years ended june 30 , 2013 and 2012 net income . the company 's net income available to common stockholders for the fiscal year ended june 30 , 2013 , was $ 9.7 million , an increase of $ 142,000 , or 1.5 % , from the $ 9.6 million available to common stockholders for the prior fiscal year . before an effective dividend on preferred shares of $ 345,000 , net income was $ 10.1 million for the 2013 fiscal year , unchanged from the $ 10.1 million in net income for the prior fiscal year . exclusive of fair value discount accretion on acquired loans and amortization of fair value premium on acquired time deposits related to the acquisition , net of tax , net income available to common stockholders for fiscal 2013 was $ 8.8 million , as compared to $ 7.1 million for fiscal 2012. net interest income . net interest income for fiscal 2013 was $ 28.8 million , a decrease of $ 232,000 , or 0.8 % , when compared to the prior fiscal year . the decrease , as compared to the prior fiscal year , was attributable to a decline in the net interest margin , from 4.12 % to 4.02 % , partially offset by a 1.6 % increase in the average balance of interest-earning assets . accretion of fair value discount on loans and amortization of fair value premiums on time deposits related to the acquisition declined from $ 3.9 million in fiscal 2012 to $ 1.4 million in fiscal 2013. this component of net interest income contributed 19 basis points to net interest margin in fiscal 2013 , as compared to 57 basis points in fiscal 2012. the company expects the impact of the fair value discount accretion to continue to decline , over time , as the assets acquired at a discount continue to mature or prepay . interest income . interest income for fiscal 2013 was $ 36.3 million , a decrease of $ 2.7 million , or 6.9 % , when compared to the prior fiscal year . the decrease was due to a 46 basis point decrease in the average yield earned on interest-earning assets , from 5.53 % in fiscal 2012 , to 5.07 % in fiscal 2013 , partially offset by an increase of $ 11.2 million in the average balance of interest-earning assets . interest income on loans receivable for fiscal 2013 was $ 34.4 million , a decrease of $ 1.9 million , or 5.5 % , when compared to the prior fiscal year . the decrease was due to a 96 basis point decrease in the average yield earned on loans receivable , partially offset by a $ 60.4 million increase in the average balance of loans receivable . accretion of fair value discount on loans attributable to the acquisition declined from $ 3.7 million in fiscal 2012 to $ 1.3 million in fiscal 2013. interest income on the investment portfolio and other interest-earning assets was $ 1.9 million for fiscal 2013 , a decrease of $ 680,000 , or 26.0 % , when compared to the prior fiscal year .
| general . the company experienced balance sheet growth in fiscal 2013 , with total assets increasing $ 57.2 million , or 7.7 % , to $ 796.4 million at june 30 , 2013 , as compared to $ 739.2 million at june 30 , 2012. balance sheet growth was primarily due to growth in loan and available-for-sale securities balances , and investments in fixed assets . balance sheet growth was funded primarily by increases in deposits and retention of net income . cash and equivalents . cash equivalents and time deposits were down $ 20.9 million , or 60.3 % , as compared to june 30 , 2012 , as growth in loans and investments outpaced increases in deposit balances . loans . loans , net of the allowance for loan losses , increased $ 63.7 million , or 10.9 % , to $ 647.2 million at june 30 , 2013 , as compared to $ 583.5 million at june 30 , 2012. increases in commercial , agricultural , and residential real estate lending were partially offset by decreases in commercial business and agricultural operating and equipment loan balances . residential real estate loan growth was primarily attributable to loans secured by multi-family housing . allowance for loan losses .
| 4,688 |
on may 19 , 2013 , miami services ceased operations story_separator_special_tag the following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with โ selected consolidated financial data โ and the consolidated financial statements and related notes to those statements included elsewhere in this annual report on form 10-k. one group acts as a holding company for multiple subsidiaries of which we own varying ownership percentages . we report on an as consolidated basis and reflect noncontrolling interest in the โ net loss attributable to noncontrolling interest โ account . 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 strategies for our business , includes forward-looking statements that involve risks and uncertainties . forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and generally contain words such as โ believes , โ expects , โ โ may , โ โ will , โ โ should , โ โ seeks , โ โ approximately , โ โ intends , โ โ plans , โ โ estimates , โ or โ anticipates โ or similar expressions . our forward-looking statements are subject to risks and uncertainties , which may cause actual results to differ materially from those projected or implied by the forward-looking statement . forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance . you should not place undue reliance on forward-looking statements , which speak only as of the date hereof . see โ item 1a . risk factors โ and โ forward-looking statements โ for a discussion of factors that could cause our actual results to differ from those expressed or implied by forward-looking statements . overview we are a global hospitality company that develops , owns and operates upscale , high-energy restaurants and lounges and provides turn-key food and beverage services for hospitality venues including hotels , casinos and other high-end locations globally . we opened our first restaurant in january 2004 in new york city and as of december 31 , 2015 , we owned and operated ( under lease agreements ) 13 and managed ( under management agreements ) 15 restaurants and lounges globally . our primary restaurant brand is stk , a steakhouse concept that features a high-energy , fun environment that encourages social interaction . we currently operate ten stk restaurants in major metropolitan cities globally ( of which seven are owned and three managed ) , and we have additional stk restaurants expected to open in austin , dallas , denver , orlando , san diego , miami and toronto , canada in 2016 and in boston , edinburgh , scotland and ibiza , spain in 2017. the average unit volume , check average and beverage mix for stk restaurants that have been open a full twelve months at december 31 , 2015 were $ 11.0 million , $ 118.99 and 39 % , respectively . in addition to operating stand-alone restaurants , we also operate turn-key food and beverage services at high-end hotels and casinos , which , in some cases , include upscale restaurants , such as stk . our diversified portfolio of differentiated , high-energy food and beverage hospitality solutions provides landlords and owners a choice of having one or several of our concepts and or services in their venues . these locations are typically operated under our management agreements under which we earn a management fee based on revenue and an incentive fee based on profitability of the underlying operations . we typically target food and beverage hospitality opportunities where we believe we can generate $ 500,000 to $ 750,000 of annual pre-tax income . we also own or manage a small number of other standalone restaurants and lounges . net income for the years ended december 31 , 2015 and december 31 , 2014 were $ 7.1 million and $ 5.0 million , respectively . the year ended december 31 , 2015 included derivative income of $ 6.1 million related to the potential exercise of our publicly traded warrants , transaction costs of $ 1.7 million , an impairment charge of $ 3.0 million and a loss from discontinued operations of $ ( 2,476 ) . on february 27 , 2016 our publicly traded warrants expired and approximately 1.4 million shares of our common stock were forfeited in connection with the expiration of all the publicly traded warrants . the year ended december 31 , 2014 included derivative income of $ 3.9 million related to the contingent payment associated with the potential exercise of our 31 publicly traded warrants and a loss from discontinued operations of $ ( 1.5 ) million . the loss from discontinued operations reflects our exiting of non-strategic and underperforming units during these periods and includes the closing of the tenjune concept in 2014 and the closing of the bagatelle unit in las vegas , the termination of the management agreement with the palms hotel in las vegas for the heraea concept and the termination of the lease with the palms hotel in las vegas for the xi shi concept in 2013. on march 13 , 2015 , after hotel renovations and additional work required due to water damage were completed , we re-opened stk miami beach in the new 1 hotel & homes ( formerly known as the perry hotel ) building located in miami beach , florida . story_separator_special_tag this measure is calculated by dividing total comparable restaurant sales in a given period by the total number of comparable restaurants in that period . this indicator assists management in measuring changes in customer traffic , pricing and development of our brand . comparable unit sales . we consider a unit to be comparable , whether owned or managed , in the first full quarter following the 18th month of operations to remove the impact of new unit openings in comparing the operations of existing units . changes in comparable unit sales reflect changes in sales for the comparable group of units over a specified period of time . changes in comparable sales reflect changes in customer count trends as well as changes in average check , which reflects both menu mix shifts and menu pricing . our comparable unit base consisted of five units for the years ended december 31 , 2015 and december 31 , 2014 , respectively . we believe that certain of our restaurants operate at or near their effective productive capacities . as a result , we may be unable to grow comparable restaurant sales at those restaurants . key financial terms and metrics we evaluate our business using a variety of key financial measures : segment reporting the company operates in three segments : owned stk units ( `` stks '' ) , food and beverage hospitality management agreements ( `` f & b '' ) and other concepts ( `` other '' ) . we believe stks , f & b and other to be our reportable segments as they do not have similar economic or other characteristics to be aggregated into a single reportable segment . our stks segment consists of leased restaurant locations and competes in the full service dining industry . our f & b segment consists of management agreements in which the company operates the food and beverage services in hotels or casinos and could include an stk , which we refer to as managed stk units . we refer to owned stk units and managed stk units together as โ stk units. โ these management agreements generate management and incentive fees on net revenue at each location . our other segment includes owned non-stk leased locations . revenues owned unit net revenue . owned unit net revenues , which includes stks and other segment brands , consists of food , beverage , and miscellaneous merchandise sales by company-owned units net of any discounts , such as management and employee meals , associated with each sale . in 2015 , beverage sales comprised 42 % of owned food and beverage sales , before giving effect to any discounts , with food comprising the remaining 58 % . this indicator assists management in understanding the trends in gross margins of the units . management and incentive fee revenue . management and incentive fee revenue includes : ( 1 ) management fees received pursuant to management agreements with hospitality clients that are calculated based on a fixed percentage of revenues ; and ( 2 ) incentive fees based on operating profitability , as defined by each agreement . we evaluate the performance of our managed properties based on sales growth , which drives our management fee , and on improvements in operating profitability margins , which along with sales growth , drives incentive fee growth . 33 our primary restaurant brand is stk and we specifically look at comparable revenues from both owned and managed stks in order to understand customer count trends and changes in average check as it relates to our primary restaurant brand . cost and expenses food and beverage costs . food and beverage costs include all unit-level food and beverage costs of stks and other units . we measure cost of goods as a percentage of owned unit net revenues . food and beverage costs are generally influenced by the cost of food and beverage items , menu mix and discounting activity . purchases of beef represented approximately 30 % of our food and beverage costs during each of 2015 and 2014. see โ item 1a . risk factors โ increases in the prices of , and or reductions in the availability of commodities , primarily beef , could adversely affect our business and results of operations. โ unit operating expenses . we measure unit operating expenses for stks and other units as a percentage of owned unit net revenues . unit operating expenses include the following : payroll and related expenses . payroll and related expenses consists of manager salaries , hourly staff payroll and other payroll-related items , including taxes and fringe benefits . we measure our labor cost efficiency by tracking total labor costs as a percentage of food and beverage revenues . occupancy . occupancy comprises all occupancy costs , consisting of both fixed and variable portions of rent , deferred rent expense , which is a non-cash adjustment included in our adjusted ebitda calculation as defined below , common area maintenance charges , real estate property taxes , utilities and other related occupancy costs and is measured by tracking occupancy as a percentage of revenues . direct operating expenses . direct operating expenses consists of supplies , such as paper , small wares , china , silverware and glassware , cleaning supplies and laundry and linen costs and typically tracks revenues . outside services . outside services includes music and entertainment costs , such as the use of live dj 's , promoter costs , security services , outside cleaning services at certain locations and commissions paid to event staff for banquet sales . repairs and maintenance . repairs and maintenance consists of facility and computer maintenance contracts as well as general repair work to maintain the facilities . these costs will typically increase as the facility gets older . marketing . marketing includes the cost of goods used specifically for complimentary purposes as well as general public relation costs related to the specific unit , but excluding any discounts such as management and employee meals .
| results of operations the following table sets forth certain statements of income data for the periods indicated : replace_table_token_7_th 38 the following table sets forth certain statements of income data as a percentage of revenues for the periods indicated : replace_table_token_8_th ( 1 ) these expenses are being shown as a percentage of owned unit net revenues . 39 the following tables show our operating results by segment for the periods indicated : replace_table_token_9_th 40 replace_table_token_10_th year ended december 31 , 2015 compared to year ended december 31 , 2014 revenues owned unit net revenues . owned unit net revenues for stks increased $ 12.7 million , or 32.1 % , from $ 39.5 million for the year ended december 31 , 2014 to $ 52.2 million for the year ended december 31 , 2015. this increase was primarily due to the reopening of our stk in miami and the opening of our stks in los angeles , california , and chicago , illinois . comparable owned stk unit sales decreased $ 205,000 or 0.7 % from $ 31.3 million for the year ended december 31 , 2014 to $ 31.1 million for the year ended december 31 , 2015. owned unit net revenues in our other segment decreased $ 577,000 , or 59.2 % , from $ 1.0 million for the year ended december 31 , 2014 to $ 397,000 for the year ended december 31 , 2015. this decrease was primarily due to a decrease in sales at cucina asellina in atlanta and a decrease in revenue from off-site super bowl related catering events . management and incentive fee revenue .
| 4,689 |
the update was initially effective for the company in the first quarter 61 ekso bionics holdings , inc. notes to consolidated financial statements ( in thousands , except per share amounts ) of 2020. however , in august 2019 , the fasb issued a proposed asu , which defers the effective date for this guidance until the first quarter of 2023. early adoption is permitted . the company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements and related disclosures . accounting pronouncements adopted in 2019 in february 2016 , the fasb issued asu 2016-02-leases ( asc 842 ) and subsequent amendments to the initial guidance under asu 2017-13 , asu 2018-10 and asu 2018-11 ( collectively , topic 842 ) which superseded existing guidance on accounting for leases in asc 840 , leases ( asc 840 ) . topic 842 requires the company to recognize on its balance sheet a lease liability representing the present value of future lease payments and a right-of-use asset representing the lessee 's right to use , or control the use of a specified asset for the lease term for any operating lease with a term greater than one year . this standard became effective for the company in the first quarter of 2019. the company used the modified retrospective transition method , under which the company applied the standard to each lease that had commenced as of the beginning of january 1 , 2019. in addition , the company elected to apply the package of practical expedients permitted under the transition guidance , which among other things , allowed the company to carry forward the historical lease classification . upon adoption of this standard on january 1 , 2019 , the company recorded right-of-use assets and corresponding lease liabilities of $ 1,454 and $ 1,498 , respectively . as of december 31 , 2019 , the right-of-use assets and corresponding lease liabilities in the company 's consolidated balance sheets were $ 1,084 and $ 1,132 , respectively . the adoption of this standard did not have a material impact on the company 's consolidated statements of operations or cash flows , nor did it have a material impact on the financial covenants set forth in the company 's long-term debt agreement . the company has provided detailed disclosures as required by the new standard ( refer to note 10. lease obligations ) . 3. net loss per share of common stock basic net loss per share of common stock is computed using the weighted average number of shares of common stock outstanding during the period . diluted net loss per share is computed using the weighted average number of common stock , adjusted to include conversion of certain stock options and warrants for common stock and release of common stock in connection with restricted stock units during the period , as follows : replace_table_token_13_th 62 ekso bionics holdings , inc. notes to consolidated financial statements ( in thousands , except per share amounts ) the following table sets forth potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented : replace_table_token_14_th 4. investment in unconsolidated affiliate on january 30 , 2019 , the company and its wholly-owned subsidiary , ekso bionics , inc. ( โ ekso us โ ) , entered into an agreement with zhejiang youchuang venture capital investment co. , ltd ( โ zyvc โ ) and another partner ( collectively , the โ story_separator_special_tag 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 `` risk factors '' and elsewhere in this annual report . see also `` cautionary note regarding forward-looking statements . '' overview the following discussion highlights the results of our operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described , and provides information that management believes is relevant for an assessment and understanding of our financial condition and results of operations presented herein . the following discussion and analysis is based on our audited consolidated financial statements contained in this annual report on form 10-k , which have been prepared in accordance with generally accepted accounting principles in the united states . you should read the discussion and analysis together with such financial statements and the related notes thereto . story_separator_special_tag style= '' line-height:120 % ; text-align : justify ; font-size:10pt ; '' > critical accounting policies , estimates , and judgments our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the united states . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities , disclosure of contingent liabilities at the date of the financial statements , and the reported amounts of revenues and expenses during the reporting period . we continually evaluate our estimates and judgments . we base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances . materially different results can occur as circumstances change and additional information becomes known . besides the estimates identified below that are considered critical , we make many other accounting estimates in preparing our financial statements and related disclosures . all estimates , whether or not deemed critical , affect reported amounts of assets , liabilities , revenues and expenses , as well as disclosures of contingent liabilities . story_separator_special_tag our common stock price represents a significant input that affects the valuation of our warrants . business combinations we account for business combinations under the acquisition method of accounting in accordance with accounting standards codification , or asc , 805 , business combinations , where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values . the purchase price is allocated using the information currently available , and may be adjusted , up to one-year from the acquisition date , after obtaining more information regarding , among other things , asset valuations , liabilities assumed and revisions to preliminary estimates . contingent consideration , if any , is recorded at the acquisition date based upon the estimated fair value of the contingent payments . the fair value of the contingent consideration is re-measured each reporting period with any adjustments in fair value being recognized in our consolidated statement of operations and comprehensive loss . the purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill . going concern we assess our ability to continue as a going concern at every interim and annual period in accordance with asc 205-40 , presentation of financial statements โ going concern . the accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern . 41 comparison of the year ended december 31 , 2019 to the year ended december 31 , 2018 ( dollars in thousands ) : replace_table_token_3_th ( 1 ) not meaningful revenue revenue increased $ 2.6 million , or 23 % , for the year ended december 31 , 2019 , compared to the same period of 2018 . this increase was comprised of a $ 3.1 million increase in eksohealth revenue due to an increased volume of device sales , including a significant increase in conversion of device rentals into sales , partially offset by a $ 0.5 million decrease in eksoworks revenue primarily due to a decrease in volume of device sales . gross profit gross profit increased $ 2.5 million , or 57 % , for the year ended december 31 , 2019 , compared to the same period of 2018 , primarily attributable to our eksohealth business . we achieved higher average selling prices and lower production costs for our eksogt and eksonr devices . operating expenses sales and marketing expenses decreased $ 2.4 million , or 18 % , for the year ended december 31 , 2019 , compared to the same period of 2018 , primarily due to the absence of severance and related expenses in the comparable period of 2018 associated with the departure of the former president of our eksoworks business unit , our chief marketing officer and other marketing employees , a decrease in advertising and trade show activities , a decrease in clinical trial activities , and the absence of amortization expense related to intangible assets as intangible assets were fully amortized by december 31 , 2018. the decrease in sales and marketing expenses were partially offset by an increase in commissions associated with the higher level of sales in 2019. research and development expenses decreased $ 1.3 million , or 21 % , for the year ended december 31 , 2019 , compared to the same period of 2018 , primarily due to lower employee compensation expense from decreased headcount in the eksoworks business unit . 42 general and administrative expenses decreased $ 4.3 million , or 36 % , for the year ended december 31 , 2019 , compared to the same period of 2018 , primarily due to the absence of severance and related expenses in the comparable period of 2018 associated with former executive officers , lower external consulting costs associated with our business development activities in china , lower compensation expense from decreased headcount , and lower legal expenses . other income , net gain on revaluation of warrant liabilities of $ 6.4 million for the year ended december 31 , 2019 , related to warrants issued in 2019 and 2015. gain on revaluation of warrant liabilities of $ 1.1 million for the year ended december 31 , 2018 , related to warrants issued in 2015. gains and losses on revaluation of warrants are primarily driven by changes in our stock price . loss on modification of warrants of $ 0.3 million for the year ended december 31 , 2019 , was due to the reduction of the exercise price of the 2015 warrants ( refer to note 13. capitalization and equity structure in the notes to our consolidated financial statements ) . there was no comparable amount during the same period in 2018 . warrant issuance expense of $ 1.1 million for the year ended december 31 , 2019 was recorded in connection with our underwritten common stock and warrant financing in may 2019 and december 2019. we incurred $ 1.7 million in direct financing costs , which were allocated on a relative fair value basis between the common stock and warrant issuances , of which $ 1.1 million was allocated to warrants and expensed immediately . there was no comparable amount of warrant issuance expense for the same period in 2018 . other expense , net decreased $ 0.3 million , or 69 % , for the year ended december 31 , 2019 , compared to the same period of 2018 , due to unrealized gains and losses on foreign currency revaluations of our inter-company monetary assets and liabilities . financial condition , liquidity and capital resources since our inception , we have devoted substantially all of our efforts toward the development of exoskeletons for the medical and industrial markets , toward the commercialization of medical exoskeletons to rehabilitation centers and toward raising capital .
| operational highlights in january 2019 , we entered into the jv agreement to develop and serve the exoskeleton market in china and other asian markets through the china jv and to create a global exoskeleton manufacturing center . in july 2019 , we announced the expansion of our medical exoskeleton portfolio with an upper extremity rehabilitation device called eksoue . our eksoue 's wearable upper body exoskeleton assists patients with a broad range of upper extremity impairments and aims to provide them with a wider active range of motion and increased endurance for rehabilitation sessions of higher intensity . in august 2019 , we introduced our next generation lower extremity rehabilitation exoskeleton , eksonr , which succeeds our eksogt . our eksonr , is used as a rehabilitation tool to allow physicians and therapists to rehabilitate patients who have suffered a stroke or spinal cord injury . with its unique features designed specifically for hospitals and its proprietary smartassist software , eksonr allows for the early mobilization of patients , enabling increased endurance during rehabilitation sessions through higher step counts and for longer periods . the intent is to allow the patient 's central nervous system to take advantage of a patient 's neuroplasticity to maximize the patient 's recovery . in october 2019 , we entered into a technology license agreement , with the china jv pursuant to the terms of the jv agreement . pursuant to the technology license agreement , we granted a nontransferable , non-sublicensable , irrevocable , and exclusive right and license to patented and non-patented manufacturing technologies involved in the manufacture of certain products for the china jv . in the fourth quarter of 2019 , we completed technology transfer for eksovest ( but not transfer of patented technologies ) . in 2019 , we booked a total of 98 eksogt and eksonr units , 17 of which were rental units and 25 of which were previously rented units that were converted to sales .
| 4,690 |
certain of these trends and other statements made herein may be ยforward-lookingย within the meaning of the private securities litigation reform act of 1995. such statements are included herein because management believes that an understanding of these trends is important to understand our results for the fiscal year ended march 31 , 2007 ( ยfiscal 2007ย ) , as well as our future prospects . this summary is not intended to be exhaustive , nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this form 10-k , including in the remainder of ยmanagement 's discussion and analysis of financial condition and results of operationsย or the consolidated financial statements and related notes . the discussion and analysis herein may be understood more fully by reference to the consolidated financial statements and notes to the consolidated financial statements . additionally , readers should refer to our cautionary statement on page 1 herein as well as ยrisk factorsย set forth in item 1a . all references to ยwe , ย ยus , ย ยour , ย ยthq , ย or the ยcompanyย in the following discussion and analysis mean thq inc. and its subsidiaries . overview of fiscal 2007 results in the fiscal year ended march 31 , 2007 , we recorded the highest total annual revenue in our history . net sales in fiscal 2007 increased 27 % over the fiscal year ended march 31 , 2006 ( ยfiscal 2006ย ) , to $ 1,026.9 million , up from $ 806.6 million . the year-over-year growth in our net sales was due primarily to significant growth in sales of games from our key long-term licensed properties ; disney pixar , wwe and nickelodeon as well as sales of our new , owned intellectual property , saints row . titles released in fiscal 2007 under our key licensed properties included cars , wwe smackdown vs. raw 2007 and a new title from our nickelodeon license , avatar : the last airbender . additionally , in fiscal 2007 , our operating margin improved by 367 basis points over fiscal 2006 , to 8 % of net sales . our operating margin improved in fiscal 2007 due primarily to improved gross margins on our key titles , led by multi-million unit sales of cars and wwe smackdown vs. raw and leverage of our selling and marketing and general and administrative expenses . net income from continuing operations for fiscal 2007 was $ 65.0 million , or $ 0.96 per diluted share , compared to net income from continuing operations of $ 32.1 million , or $ 0.49 per diluted share , for fiscal 2006. net income for fiscal 2007 was $ 68.0 million , or $ 1.01 per diluted share , and included a $ 3.1 million gain on sale of discontinued operations . our fiscal 2007 results include our continued investment in development of games based on new generation consoles . cash provided by operations was $ 64.0 million during fiscal 2007 , up 50 % as compared to fiscal 2006 , which had $ 42.8 million . the increase in cash provided by operations was primarily a result of an increase in earnings , improved working capital and amortization of licenses and software , partially offset by increases in cash payments for software development and licenses . prospective business trends we operate in one business segment : video game development and publishing . we derive revenue principally from sales of packaged interactive software games designed for play on video game consoles , handheld devices and personal computers . transition to new generation console systems . in fiscal 2007 , our industry continued to transition from the legacy consoles , sony playstation 2 ( ยps2ย ) and nintendo gamecube , to the new generation consoles , sony playstation 3 ( ยps3ย ) and nintendo wii . additionally , in fiscal 2006 , microsoft launched its new generation platform , the microsoft xbox 360 and two new handheld platforms were launched , the nintendo ds and sony psp . with the new generation of console systems and new handheld platforms , we believe that market segmentation will be extremely important . we have designed our publishing strategy to 25 take advantage of the unique feature sets of the new consoles , handhelds and pc . our strategy to reach core gamers focuses on the xbox 360 , ps3 and pc platforms . our mass-market brands are targeted primarily for the nintendo wii , ps2 and ds platforms . we plan to publish some of our licensed brands , such as wwe and disney pixar across all viable platforms . software development . the new generation consoles have increased functionality ( e.g. , realistic environments and artificial intelligence ) over their legacy counterparts . the increased functionality delivers a more exciting gaming experience but adds complexity to the development of video games for these new consoles . this complexity increases the overall cost to develop these games and accordingly , during fiscal 2008 , we expect our average software development costs to increase as we develop more games for these new consoles . products . in order to increase revenues while facing higher development costs , we believe that it is more important than ever in our industry to have a robust and diversified product portfolio . in recent years , we have focused our efforts on growing both our owned intellectual properties and our licensed brands . as a result of these efforts , we believe that we can continue to grow our revenues at or above the market growth rate in our industry . international growth . over the past few years , sales of video games outside of the united states have grown significantly . in fiscal 2007 , international sales growth drove approximately $ 110.1 million of our overall net sales increase of $ 220.3 million . story_separator_special_tag the recoverability of capitalized license costs is evaluated based on the expected performance of the specific products in which the licensed trademark or copyright is to be used . as many of our licenses extend for multiple products over multiple years , we also assess the recoverability of capitalized license costs based on certain qualitative factors such as the success of other products and or entertainment vehicles utilizing the intellectual property , whether there are any future planned theatrical releases or television series based on the intellectual property and the rights holder 's continued promotion and exploitation of the intellectual property . prior to the related product 's release , we expense , as part of cost of salesยlicense amortization and royalties , capitalized license costs when we believe such amounts are not recoverable . licenses are expensed to cost of salesยlicense amortization and royalties at the higher of ( 1 ) the contractual royalty rate based on actual net product sales related to such license or ( 2 ) an effective rate based upon total projected revenue related to such license . when , in management 's estimate , future cash flows will not be sufficient to recover previously capitalized costs , we expense these capitalized costs to cost of salesยlicense amortization and royalties . if actual revenues or revised forecasted revenues fall below 27 the initial forecasted revenues for a particular license , the charge to cost of salesยlicense amortization and royalties expense may be larger than anticipated in any given quarter . as of march 31 , 2007 , the net carrying value of our licenses was $ 91.1 million . if we were required to write off licenses , due to changes in market conditions or product acceptance , our results of operations could be materially adversely affected . software development . we utilize both internal development teams and third-party software developers to develop our software . we account for software development costs in accordance with statement of financial accounting standards ( ยsfasย ) no . 86 , ยaccounting for the costs of computer software to be sold , leased , or otherwise marketed.ย we capitalize software development costs once technological feasibility is established and we determine that such costs are recoverable against future revenues . for products where proven game engine technology exists , this may occur early in the development cycle . we capitalize the milestone payments made to third-party software developers and the direct payroll and overhead costs for our internal development teams . we evaluate technological feasibility on a product-by-product basis . amounts related to software development for which technological feasibility is not yet met are charged as incurred to product development expense in our consolidated statements of operations . on a quarterly basis , we compare our unamortized software development costs to net realizable value , on a product-by-product basis . the amount by which any unamortized software development costs exceed their net realizable value is charged to cost of salesยsoftware amortization and royalties . the net realizable value is the estimated future gross revenues from the product , reduced by the estimated future costs of completing the product . commencing upon product release , capitalized software development costs are amortized to cost of salesยsoftware amortization and royalties based on the ratio of current revenues to total projected revenues . if actual revenues , or revised projected revenues , fall below the initial projections , the charge to cost of salesยsoftware amortization and royalties may be larger than anticipated in any given quarter . as of march 31 , 2007 , the net carrying value of our software development was $ 164.3 million . the milestone payments made to our third-party developers during their development of our games are typically considered non-refundable advances against the total compensation they can earn based upon the sales performance of the products . any additional compensation earned beyond the milestone payments are expensed to cost of salesยsoftware amortization and royalties as earned . goodwill . when we adopted sfas no . 142 , ยgoodwill and other intangible assetsย ( ยfas 142ย ) effective january 1 , 2002 , we elected to perform the annual review of goodwill impairment required by fas 142 on june 30 th of each calendar year which at that time corresponded to the second quarter of our fiscal year . in february 2003 we changed our fiscal year end from december 31 st to march 31 st . since changing our fiscal year end to march 31 st we continued to perform our annual review of goodwill impairment on june 30 th , which also changed to be the end of our first fiscal quarter . in fiscal 2007 , we changed the date of our annual review of goodwill for impairment to the first day of our fourth fiscal quarter . our first fiscal quarter is generally when we are required to adopt recently issued accounting pronouncements in addition to managing our annual financial reporting requirements , which can strain our personnel resources in that quarter . we changed the quarter in which we perform our annual review of goodwill impairment to better utilize these resources . additionally , the first day of our fourth fiscal quarter 's proximity to our fiscal year end provides us with more comprehensive data to be included in our review . it was not intended to delay , accelerate or avoid any impairment charge . accordingly , we believe that this change is preferable . goodwill impairment tests performed as of january 1 , 2007 and june 30 , 2006 , 2005 and 2004 concluded that no impairment charges were required as of those dates . the change in accounting principle related to the annual testing does not result in adjustments to our financial statements when applied retrospectively . we will perform this annual review on the first day of our fourth fiscal quarter in future years or more frequently if indicators of potential impairment exist .
| results of operations comparison of fiscal 2007 to fiscal 2006 net income from continuing operations for fiscal 2007 was $ 65.0 million , or $ 0.96 per diluted share , compared to net income from continuing operations of $ 32.1 million , or $ 0.49 per diluted share , for fiscal 2006. net income for fiscal 2007 was $ 68.0 million , or $ 1.01 per diluted share , and included a $ 3.1 million gain on sale of discontinued operations . net sales we derive revenue principally from sales of packaged interactive software games designed for play on video game consoles , handheld devices and personal computers . we also derive revenue through downloads by mobile phone users of our wireless content . 31 the following table details our net sales by territory for fiscal 2007 and 2006 ( in thousands ) : replace_table_token_8_th north america and international net sales in fiscal 2007 were primarily driven by the release of cars , from the disney pixar franchise , wwe smackdown vs. raw 2007 , and the successful launch of saints row , a new internally developed and owned intellectual property . net sales in fiscal 2007 increased 27 % over fiscal 2006 , from $ 806.6 million to $ 1,026.9 million .
| 4,691 |
we accrue warranty related costs under story_separator_special_tag management 's discussion and analysis of financial condition and results of operations ( `` md & a '' ) is designed to provide information that is supplemental to , and should be read together with , our consolidated financial statements and the accompanying notes . information in md & a is intended to assist the reader in obtaining an understanding of ( i ) our consolidated financial statements , ( ii ) the changes in certain key items within those financial statements from year-to-year , ( iii ) the primary factors that contributed to those changes , ( iv ) any changes in known trends or uncertainties that we are aware of and that may have a material effect on our future performance , and ( v ) how certain accounting principles affect our consolidated financial statements . in addition , md & a provides information about our business segments and how the results of those segments impact our results of operations and financial condition as a whole . executive overview we are an international manufacturer of internationalยฎ brand commercial and military trucks , proprietary brand diesel engines , and ic bustm ( `` ic '' ) brand school and commercial buses , as well as a provider of service parts for trucks and diesel engines . our core business is conducted in the north american truck and parts markets , where we principally participate in the u.s. and canada school bus and class 6 through 8 medium and heavy truck markets . we also provide retail , wholesale , and lease financing services for our trucks and parts . executive summary during 2017 , we continued to take actions that we believe will improve our performance . going forward , we will focus on our strategy which includes : growing the core business , driving operational excellence , pursuing innovative technology solutions , leveraging the vw t & b alliance , enhancing our winning culture , and improving our financial performance . we believe our strategy will enable us to improve sales and market share by offering more value to our customers . in january 2017 , we issued an additional $ 250 million aggregate principal amount of our 8.25 % senior notes due in 2022 ( `` senior notes '' ) . the proceeds from the january 2017 issuance of additional senior notes were used for general corporate purposes , including working capital and capital expenditures . in february 2017 , we amended the senior secured term loan credit facility ( `` term loan '' ) to reprice our remaining $ 1.0 billion loan and insert provisions regarding european union bail-in legislation . the amendment reduced the interest rate applicable to the outstanding loan by 1.50 % . also in february 2017 , we consummated our previously announced strategic alliance with vw t & b , which included an equity investment in the company by vw t & b pursuant to a stock purchase agreement ( the `` stock purchase agreement '' ) , a license and supply framework agreement and a procurement jv framework agreement . pursuant to the stock purchase agreement , we issued and vw t & b purchased 16.2 million shares of our common stock for an aggregate purchase price of $ 256 million at $ 15.76 per share ( a 19.9 % stake ( 16.6 % on a fully-diluted basis ) ) in the company . pursuant to the license and supply framework agreement , the parties have agreed to use commercially reasonable efforts to enter into certain individual contracts in respect of the licensing and supply of certain engines and technologies , conduct feasibility studies in order to investigate the feasibility of sharing certain technologies and begin good faith discussions on possible collaboration with respect to certain powertrain combinations and other strategic initiatives . negotiations related to certain individual contracts are ongoing . under the procurement jv framework agreement , the parties formed a joint venture to make recommendations for sourcing , evaluating and negotiating joint procurement opportunities . each party is making final sourcing decisions for various components and other purchases to be made by the procurement jv . in november 2017 , we completed the refinancing of and amendments to certain debt instruments included for our manufacturing operations . we issued $ 1.1 billion aggregate principal amount of 6.625 % senior notes due 2025 ( โ 2025 notes โ ) with a maturity date of november 1 , 2025. to effect the retirement of the senior notes , we commenced a tender offer for the outstanding senior notes which achieved 72.50 % participation . the proceeds from the issuance of the 2025 notes were used to retire the tendered portion of our then-outstanding senior notes and pay accrued and unpaid interest thereon , and pay the associated prepayment premiums , and certain transaction fees and expenses incurred in connection with the new 2025 notes . we also entered into the term loan credit agreement , which provides for a seven-year senior secured term loan credit facility in an aggregate principal amount of $ 1.6 billion . a portion of the proceeds were used to repay all outstanding loans under ni 's existing term loan , redeem the remaining untendered senior notes at a redemption price equal to 100 % of the aggregate principal amount , and pay certain fees and expenses incurred in connection with the term loan credit agreement and the 2025 notes . the remainder of the proceeds will be used for ongoing working capital purposes and general corporate purposes . in addition , we amended certain provisions of our tax exempt bonds to , among other things , permit the company to incur secured debt up to $ 1.7 billion , in exchange for a coupon increase from 6.50 % to 6.75 % and the grant of a junior priority lien on certain collateral securing the company 's term loan credit agreement . story_separator_special_tag these trends , as well as the key trends that we expect will impact our future results of operations , are as follows : 29 engine strategy and emissions standards compliance โwe are focused on new product introductions , enhancements of current products , quality improvements and continuous material cost-reductions across our truck and bus product lines . we have shifted our investment focus from engines to trucks including developing driver-centric designs . we are also expanding our powertrain offerings with a mix of proprietary engines and cummins engines . we have incurred significant research and development and tooling costs to design and produce our product lines to meet the epa and carb on-highway hdd emissions standards , including obd requirements . recently announced ghg phase 2 regulations will further drive up significant investments in product development by us and our competitors . these emissions standards have and will continue to result in significant increases in costs of our products . vw t & b alliance โ we and vw t & b have a similar vision for the role of technology , including the importance of driver-focused open architecture solutions . we expect the alliance will be a source of powertrain options and other high-value technologies , including advanced driver assistance systems , connected vehicle solutions including platooning and autonomous technologies , electric vehicles , and cab and chassis subsystems . we plan to introduce a medium-duty vehicle electric powertrain by late 2019 and launch the ic electric bus charge as early as 2019. we are also collaborating on fully integrated , next generation diesel big bore powertrains and the convergence of oncommand and rio digital brands . core truck market โthe core truck markets , including u.s. and canada , in which we compete are cyclical in nature and are strongly influenced by macroeconomic factors such as industrial production , demand for durable goods , construction spending , business investment , oil prices , and consumer confidence and spending . class 8 industry volume declined in 2017 but we anticipate industry volumes to increase in 2018 as general economic and industry-specific indicators are trending well into 2018. in addition , improved new truck fuel economy along with rising freight demand and rates show the trucking industry remains healthy . however , an oversupply of class 8 used trucks throughout the industry continues to suppress used truck trade-in values , negatively impacting new class 8 truck sales . the medium truck and school bus markets are expected to maintain the strong demand in 2018. we anticipate that core markets retail industry deliveries will range between 345,000 units to 375,000 units for 2018. used truck inventory - our gross used truck inventory decreased to approximately $ 206 million at october 31 , 2017 from $ 410 million at october 31 , 2016 , offset by reserves of $ 110 million and $ 208 million , respectively . during 2017 , additions to our used truck reserves were $ 111 million , compared to $ 187 million and $ 117 million in 2016 and 2015 , respectively . the decline was primarily due to the implementation of a shift in market mix for our used trucks to include an increase in volume to certain export markets , that have a lower price point as compared to sales through our domestic channels , and to lower domestic pricing to enable higher sales velocity . we have decreased our gross used truck inventory balances and inventory reserves as a result of the shift in market mix and change in pricing strategy . we continue to seek alternative channels to sell our used trucks . military sales - our u.s. military sales were $ 224 million in 2017 , compared to $ 198 million in 2016 and $ 203 million in 2015 . the 2017 u.s. military sales primarily consisted of deliveries of military commercial off the shelf variants ( `` milcots '' ) and new maxxpro vehicles to foreign militaries , refurbishment and upgrades of government owned maxxpro vehicles to โ like new โ condition , upgrade kits , spare parts , and technical support service . in 2018 , we expect our u.s. military sales to increase compared to 2017 due to additional contracts to deliver refurbished and upgraded maxxpro vehicles and new maxxpro vehicles to foreign militaries . warranty costs โemissions regulations in the u.s. and canada have resulted in rapid product development cycles , driving significant changes from previous engine models . in 2010 , we introduced changes to our engine line-up in response to 2010 emissions regulations . component complexity and other related costs associated with meeting emissions standards have contributed to higher repair costs that exceeded those that we have historically experienced . historically , warranty claims experience for launch-year engines has been higher compared to the prior model-year engines ; however , over time we have been able to refine both the design and manufacturing process to reduce both the volume and the severity of warranty claims . we recognized a benefit for adjustments to pre-existing warranties of $ 1 million in 2017 compared to charges for adjustments of $ 77 million in 2016 and $ 1 million in 2015 . in future periods , we could experience an increase in warranty spend compared to prior periods that could result in additional charges for adjustments to pre-existing warranties . in addition , as we identify opportunities to improve the design and manufacturing of our engines , we may incur additional charges for product recalls and field campaigns to address identified issues . these charges may have an adverse effect on our financial condition , results of operations and cash flows . for more information , see note 1 , summary of significant accounting policies , to the accompanying consolidated financial statements . income taxes โat october 31 , 2017 , we had $ 3 billion of u.s. federal net operating loss carryforwards and $ 249 million of federal tax credit carryforwards .
| results of continuing operations the following information summarizes our consolidated statements of operations and illustrates the key financial indicators used to assess our consolidated financial results . results of operations for the year ended october 31 , 2017 as compared to the year ended october 31 , 2016 replace_table_token_6_th _ n.m. not meaningful . ( a ) amounts attributable to nic . sales and revenues , net our sales and revenues , net , are principally generated via sales of products and services . sales and revenues , net in our consolidated statements of operations , by reporting segment were as follows : replace_table_token_7_th 32 in 2017 , our truck segment net sales increased $ 406 million , or 8 % , primarily due to higher volumes in our core markets , an increase in mexico truck volumes , an increase in sales of gm-branded units manufactured for gm , and higher used truck sales . chargeouts from our core markets were up 8 % , which is reflective of an improvement in our class 8 volumes and market share . in 2017 , our parts segment net sales decreased $ 35 million , or 1 % , primarily due to lower bdp sales and lower north america volumes , partially offset by higher u.s. and canada parts sales related to the fleetrite brand and remanufactured parts sales .
| 4,692 |
the 2015 story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included 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 , includes forward-looking statements that involve risks and uncertainties . you should review item 1a . `` risk factors `` and `` special note regarding forward-looking statements `` in this annual 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 . overview alarm.com is the leading platform for the intelligently connected property . we offer a comprehensive suite of cloud-based solutions for smart residential and commercial properties , including interactive security , video monitoring , intelligent automation , energy management and wellness solutions . millions of property owners depend on our technology to intelligently secure , monitor and manage their residential and commercial properties . in the last year alone , our platforms processed more than 200 billion data points generated by over 90 million connected devices . we believe that this scale of subscribers , connected devices and data operations makes us the leader in the connected property market . our solutions are delivered through an established network of over 8,000 trusted service providers , who are experts at selling , installing and supporting our solutions . we primarily generate software-as-a-service , or saas , and license revenue through our service provider partners , who resell these services and pay us monthly fees . our service provider partners have indicated that they typically have three to five-year service contracts with residential and commercial property owners who use our solutions . we also generate hardware and other revenue , primarily from our service provider partners and distributors . our hardware sales include connected devices that enable our services , such as video cameras , gateway modules and smart thermostats . we believe that the length of service relationship with residential and commercial property owners , combined with our robust platforms and over 15 years of operating experience , contribute to a compelling business model . our technology platforms are designed to make connected properties safer , smarter and more efficient . our solutions are used in both smart residential and commercial properties , which we refer to as the connected property market and we have designed our technology platforms for all market participants . this includes not only the residential and commercial property owners who subscribe to our services , but also the hardware partners who manufacture devices that integrate with our platforms and the service provider partners who install and maintain our solutions . our service provider partners can deploy our interactive security , video monitoring , intelligent automation and energy management solutions as stand-alone offerings or as combined solutions to address the needs of a broad range of customers . our technology enables subscribers to seamlessly connect to their property through our family of mobile apps , websites , and new engagement platforms like voice control through amazon echo and google home , wearable devices like the apple watch , and tv platforms such as apple tv and amazon fire tv . executive overview and highlights of 2018 and 2017 results we primarily generate saas and license revenue , our largest source of revenue , through our service provider partners who resell our services and pay us monthly fees . our service provider partners sell , install and support alarm.com solutions that enable residential and commercial property owners to intelligently secure , connect , control and automate their properties . our service provider partners have indicated that they typically have three to five -year service contracts with residential or commercial property owners . our subscribers consist of all of the properties maintained by those residential and commercial property owners to which we are delivering at least one of our solutions . we derive a portion of our revenue from licensing our intellectual property to third parties on a per customer basis . saas and license revenue represented 69 % , 70 % and 66 % of our revenue in 2018 , 2017 and 2016 , respectively . we also generate saas and license revenue from monthly fees charged to service providers on a per subscriber basis for access to our non-hosted software platform , or software platform . the non-hosted software for interactive security , automation and related solutions is typically deployed and operated by the service provider in its own network operations center . software license revenue represented 10 % , 9 % and 0 % of our revenue in 2018 , 2017 and 2016 , respectively . we also generate revenue from the sale of hardware , including video cameras , cellular radio modules , thermostats , image sensors and other peripherals , that enables our solutions . we have a rich history of innovation in cellular technology that enables our robust saas offering . hardware and other revenue represented 31 % , 30 % and 34 % of our revenue in 2018 , 2017 and 2016 , respectively . we typically expect hardware and other revenue to fluctuate as a percentage of total revenue . 47 highlights of our financial performance for the periods covered in this annual report include : saas and license revenue increase d 23 % to $ 291.1 million in 2018 from $ 236.3 million in 2017 . saas and license revenue increase d 36 % to $ 236.3 million in 2017 from $ 173.5 million in 2016 . total revenue increase d 24 % to $ 420.5 million in 2018 from $ 338.9 million in 2017 . revenue increase d 30 % to $ 338.9 million in 2017 from $ 261.1 million in 2016 . story_separator_special_tag our service provider partner s , who resell our services to our subscribers , have indicated that they typically have three to five -year service contracts with our subscribers . our saas and license revenue renewal rate is calculated across our entire subscriber base on the alarm.com platform , including subscribers whose contract with their service provider reached the end of its contractual term during the measurement period , as well as subscribers whose contract with their service provider has not reached the end of its contractual term during the measurement period , and is not intended to estimate the rate at which our subscribers renew their contracts with our service provider partner s. we believe that our saas and license revenue renewal rate allows us to measure our ability to retain and grow our saas and license revenue and serves as an indicator of the lifetime value of our subscriber base . revenue from contracts with customers ( topic 606 ) in may 2014 , the financing accounting standards board , or fasb , and international accounting standards board jointly issued accounting standards update , or asu , 2014-09 , `` revenue from contracts with customers ( topic 606 ) , '' a new revenue recognition standard that provides a framework for addressing revenue issues , improves the comparability of revenue recognition practices across industries , provides useful information to users of financial statements through improved disclosure requirements and simplifies the presentation of financial statements . on january 1 , 2018 , we adopted topic 606 by applying the modified retrospective transition method to all of our contracts . comparative information has not been restated and continues to be reported under the accounting standards in effect for the periods presented . the adoption of topic 606 did not have a material impact on our revenue recognition policies , however , as a result of adopting the new standard , we changed our treatment of commissions paid to employees , which we previously expensed as incurred . under the new standard , we capitalize a portion of our commission costs as an incremental cost of obtaining a contract and amortize our commission costs over a period of three years , which is consistent with the period over which the products and services related to the commission are transferred to the customer . based on the results of our evaluation , the adoption of topic 606 did not have a material impact on our consolidated financial statements for the year ended december 31 , 2018 . additionally , the cumulative effect to the opening balance sheet on january 1 , 2018 from the adoption of topic 606 was not material . 49 components of operating results our fiscal year ends on december 31. the key elements of our operating results include : revenue we derive our revenue from three primary sources : the sale of cloud-based saas services on our integrated alarm.com platform , the sale of licenses and services on the software platform and the sale of hardware products . we sell our platform and hardware solutions to service provider partners that resell our solutions and hardware to residential and commercial property owners , who are the service provider partners ' customers . saas and license revenue . we generate the majority of our saas and license revenue primarily from monthly fees charged to our service provider partners sold on a per subscriber basis for access to our cloud-based intelligently connected property platform and related solutions . our fees per subscriber vary based upon the service plan and features utilized . we offer multiple service level packages for our platform solutions including a range of solutions and a range of a la carte add-ons for additional features . the fee paid by our service provider partners each month for the delivery of our solutions is based on the combination of packages and add-ons enabled for each subscriber . we utilize tiered pricing plans where our service provider partners may receive prospective pricing discounts driven by volume . we also generate saas and license revenue from the fees paid to us when we license our intellectual property to third parties for use of our patents . in addition , in certain markets our energyhub subsidiary sells its demand response service for an annual service fee , with pricing based on the number of subscribers or amount of aggregate electricity demand made available for a utility 's or market 's control . software license revenue . our saas and license revenue also includes our software license revenue from monthly fees charged to service providers sold on a per subscriber basis for access to our software platform . the non-hosted software for interactive security , automation and related solutions is typically deployed and operated by the service provider in its own network operations center . our agreements for the software platform solution typically include software and services , such as post-contract customer support , or pcs . hardware and other revenue . we generate hardware and other revenue primarily from the sale of video cameras and cellular radio modules that provide access to our cloud-based platforms and , to a lesser extent , the sale of other devices , including image sensors and peripherals . we primarily transfer hardware to our customers upon delivery to the customer , which corresponds with the time at which the customer obtains control of the hardware . we record a reserve against revenue for hardware returns based on historical returns . hardware and other revenue may also include activation fees charged to some of our service provider partners for activation of a new subscriber account on our platforms , as well as fees paid by service provider partners for our marketing services . the decision whether to charge an activation fee is based in part on the expected number of subscribers to be added by our service provider partners and as a result , many of our largest service provider partners do not pay an activation fee .
| results of operations the following table sets forth our selected consolidated statements of operations and data as a percentage of revenue for the periods presented ( in thousands ) : consolidated statements of operations replace_table_token_9_th _ ( 1 ) excludes amortization and depreciation shown in operating expenses below . ( 2 ) operating expenses include stock-based compensation expense as follows ( in thousands ) : 52 replace_table_token_10_th the following table sets forth the components of cost of revenue as a percentage of revenue : replace_table_token_11_th comparison of years ended december 31 , 2018 to december 31 , 2017 and december 31 , 2017 to december 31 , 2016 revenue replace_table_token_12_th 2018 compared to 2017 the $ 81.6 million increase in total revenue in 2018 compared to 2017 was the result of a $ 54.8 million , or 23 % , increase in our saas and license revenue and a $ 26.8 million , or 26 % , increase in our hardware and other revenue . our software license revenue included within saas and license revenue increase d $ 11.6 million to $ 41.3 million in 2018 compared to as compared to $ 29.7 million during the same period in the prior year . the increase in our alarm.com segment saas and license revenue in 2018 was primarily due to growth in our subscriber base , including the revenue impact from subscribers we added in 2017. additionally , the increase in the software license revenue was due to the timing of the acquisition of certain assets and assumed certain liabilities of the connect line of business and all of the outstanding equity interests of the two subsidiaries through which icontrol conducted its piper line of business in june 2016 , or the acquisition . to a lesser extent , saas and license revenue increased in the period due to an increase in license fees .
| 4,693 |
we depreciate these costs using the straight-line method over the shorter of the lease term or the useful life of the improvement . during the third quarter of 2013 , we relocated our corporate headquarters . in conjunction with this relocation , we capitalized approximately $ 12.2 million related to leasehold improvements which will be depreciated over the life of our new lease . f-10 depreciation and amortization is computed over the expected useful lives of depreciable property on a straight-line basis with lives generally as follows : estimated useful life buildings and improvements 5-35 years furniture , fixtures , equipment and other 3-20 years intangible assets/liabilities ( in-place leases and below market leases ) underlying lease term discontinued operations . a property is classified as a discontinued operation when ( i ) the operations and cash flows of the property can be clearly distinguished and have been or will be eliminated from our ongoing operations ; ( ii ) the property has either been disposed of or is classified as held for sale ; and ( iii ) we will not have any significant continuing involvement in the operations of the property after the disposal transaction . significant judgments are involved in determining whether a property meets the criteria for discontinued operations reporting and the period in which these criteria are met . a property is classified as held for sale when ( i ) management commits to a plan to sell and it is actively marketed ; ( ii ) it is available for immediate sale in its present condition and the sale is expected to be completed within one year ; and ( iii ) it is unlikely significant changes to the plan will be made or the plan will be withdrawn . the results of operations for properties sold during the period or classified as held for sale at the end of the current period are classified as discontinued operations in the current and prior periods . the property-specific components of earnings classified as discontinued operations include separately identifiable property-specific revenues , story_separator_special_tag the following discussion should be read in conjunction with the consolidated financial statements and notes appearing elsewhere in this report . historical results and trends which might appear in the consolidated financial statements should not be interpreted as being indicative of future operations . we consider portions of this report to be โ forward-looking โ within the meaning of section 27a of the securities act of 1933 and section 21e of the securities exchange act of 1934 , both as amended , with respect to our expectations for future periods . forward-looking statements do not discuss historical fact , but instead include statements related to expectations , projections , intentions , or other items relating to the future ; forward-looking statements are not guarantees of future performances , results , or events . although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions , we can give no assurance our expectations will be achieved . any statements contained herein which are not statements of historical fact should be deemed forward-looking statements . reliance should not be placed on these forward-looking statements as these statements are subject to known and unknown risks , uncertainties , and other factors beyond our control and could differ materially from our actual results and performance . factors which may cause our actual results or performance to differ materially from those contemplated by forward-looking statements include , but are not limited to , the following : volatility in capital and credit markets , or other unfavorable changes in economic conditions , could adversely impact us ; short-term leases expose us to the effects of declining market rents ; we face risks associated with land holdings and related activities ; we could be negatively impacted by the elimination of fannie mae or freddie mac ; compliance or failure to comply with laws , including those requiring access to our properties by disabled persons , could result in substantial cost ; competition could limit our ability to lease apartments or increase or maintain rental income ; development , redevelopment and construction risks could impact our profitability ; our acquisition strategy may not produce the cash flows expected ; competition could adversely affect our ability to acquire properties ; losses from catastrophes may exceed our insurance coverage ; investments through joint ventures and discretionary funds involve risks not present in investments in which we are the sole investor ; tax matters , including failure to qualify as a reit , could have adverse consequences ; a cybersecurity incident and other technology disruptions could negatively impact our business and our relationships with residents ; we depend on our key personnel ; litigation risks could affect our business ; insufficient cash flows could limit our ability to make required payments for debt obligations or pay distributions to shareholders ; we have significant debt , which could have adverse consequences ; we may be unable to renew , repay , or refinance our outstanding debt ; variable rate debt is subject to interest rate risk ; issuances of additional debt may adversely impact our financial condition ; failure to maintain our current credit ratings could adversely affect our cost of funds , related margins , liquidity , and access to capital markets ; share ownership limits and our ability to issue additional equity securities may prevent takeovers beneficial to shareholders ; 19 our share price will fluctuate ; and the form , timing and or amount of dividend distributions in future periods may vary and be impacted by economic or other considerations . these forward-looking statements represent our estimates and assumptions as of the date of this report , and we assume no obligation to update or supplement forward-looking statements because of subsequent events . executive summary we are primarily engaged in the ownership , management , development , redevelopment , acquisition and construction of multifamily apartment communities . story_separator_special_tag we believe we are well-positioned with a strong balance sheet and sufficient liquidity to cover near-term debt maturities and new development , redevelopment , and other capital funding requirements . we will , however , continue to assess and take further actions we believe are prudent to meet our objectives and capital requirements . property portfolio our multifamily property portfolio is summarized as follows : replace_table_token_8_th 21 replace_table_token_9_th ( 1 ) represents the units under construction for phase ix-b of camden miramar , our one student housing community , located in corpus christi , texas . ( 2 ) refer to note 8 , โ investments in joint ventures , โ in the notes to consolidated financial statements for further discussion of our unconsolidated joint venture investments . ( 3 ) represents a property under development owned by one of our unconsolidated joint ventures . see communities under construction below for details . 22 acquisitions during the year ended december 31 , 2013 , we completed the acquisition of three operating properties and acquired three land parcels as follows : acquisitions of operating properties location number of apartment homes date of acquisition camden post oak houston , tx 356 4/10/2013 camden sotelo tempe , az 170 9/11/2013 camden vantage atlanta , ga 592 9/18/2013 consolidated total 1,118 location of land tract acquisitions acreage date of acquisition chandler , az 21.7 6/12/2013 scottsdale , az 9.3 6/12/2013 tempe , az 7.8 6/12/2013 consolidated total 38.8 in january 2014 , we acquired approximately 2.9 acres of land located in houston , texas for approximately $ 15.6 million . dispositions during the year ended december 31 , 2013 , we sold 12 operating properties and two of our unconsolidated joint ventures sold 16 operating properties as follows : replace_table_token_10_th 23 replace_table_token_11_th at december 31 , 2013 , one of our funds had an operating property held for sale comprised of 240 apartment homes located in san antonio , texas . this property sold in february 2014. during the year ended december 31 , 2013 , we sold two land holdings as follows : location of disposed land acres date of disposition atlanta , ga 2.0 1/15/2013 houston , tx 1.7 2/15/2013 consolidated total 3.7 stabilized communities we generally consider a property stabilized once it reaches 90 % occupancy . during the year ended december 31 , 2013 , stabilization was achieved at four recently completed consolidated development properties as follows : replace_table_token_12_th ( 1 ) represents the completed units for phase ix-a of camden miramar , our one student housing community . 24 completed construction in lease-up at december 31 , 2013 , one of our unconsolidated joint ventures had one completed operating property in lease-up as follows : ( $ in millions ) property and location number of apartment homes cost incurred date of construction completion estimated date of stabilization % leased at 1/26/14 south capitol ( 1 ) washington , dc 276 $ 77.4 3q13 3q14 64 % ( 1 ) property owned through an unconsolidated joint venture in which we own a 20 % interest . our consolidated balance sheet at december 31 , 2013 included approximately $ 472.6 million related to properties under development and land . of this amount , approximately $ 368.1 million related to our projects currently under development . in addition , we had approximately $ 104.5 million primarily invested in land held for future development , which included approximately $ 70.1 million related to projects we expect to begin constructing during the next two years , and approximately $ 34.4 million invested in land tracts which we may develop in the future . communities under construction . at december 31 , 2013 , we had 12 consolidated properties , two properties held by one of our unconsolidated joint ventures , and 75 units at one of our consolidated properties in various stages of construction as follows : replace_table_token_13_th 25 replace_table_token_14_th ( 1 ) property in lease-up and was 10 % leased at january 26 , 2014 . ( 2 ) formerly known as camden hollywood . ( 3 ) represents the units under construction for phase ix-b of camden miramar , our one student housing community . ( 4 ) property owned through an unconsolidated joint venture in which we own a 20 % interest . ( 5 ) property in lease-up and was 41 % leased at january 26 , 2014. development pipeline communities . at december 31 , 2013 , we had the following communities undergoing development activities : replace_table_token_15_th ( 1 ) represents our estimate of total costs we expect to incur on these projects . however , forward-looking statements are not guarantees of future performance , results , or events . although we believe these expectations are based upon reasonable assumptions , future events rarely develop exactly as forecasted , and estimates routinely require adjustment . land holdings . at december 31 , 2013 , we had the following land tracts : replace_table_token_16_th 26 geographic diversification at december 31 , 2013 and 2012 , our real estate assets by various markets , excluding depreciation , investments in joint ventures and properties held for sale , were as follows : replace_table_token_17_th story_separator_special_tag 2012 and decreased approximately $ 1.1 million for the year ended december 31 , 2012 as compared to 2011 . the decrease in 2012 was primarily related to decreases in property taxes expensed on four land holdings for projects which were approved during 2012 and the second half of 2011 for development activities . as a result , we started capitalizing expenses , including property taxes , on these development projects . non-property income replace_table_token_22_th * not a meaningful percentage . fee and asset management income decreased approximately $ 0.7 million for the year ended december 31 , 2013 as compared to 2012 and increased approximately $ 2.4 million for the year ended december 31 , 2012 as compared to 2011 .
| results of operations changes in revenues and expenses related to our operating properties from period to period are due primarily to the performance of stabilized properties in the portfolio , the lease-up of newly constructed properties , acquisitions , and dispositions . where appropriate , comparisons of income and expense for communities included in continuing operations are made on a dollars-per-weighted average apartment home basis in order to adjust for such changes in the number of apartment homes owned during each period . selected weighted averages for the years ended december 31 are as follows : replace_table_token_18_th 27 property-level operating results ( 1 ) the following tables present the property-level revenues and property-level expenses , excluding discontinued operations , for the year ended december 31 , 2013 as compared to 2012 and for the year ended december 31 , 2012 as compared to 2011 : replace_table_token_19_th ( 1 ) same store communities are communities we owned and were stabilized since january 1 , 2012 . non-same store communities are stabilized communities not owned or stabilized since january 1 , 2012 . development and lease-up communities are non-stabilized communities we have acquired or developed since january 1 , 2012 . other includes results from non-multifamily rental properties , above/below market lease amortization related to acquired communities , and expenses related to land holdings not under active development . properties held for sale are excluded from the above results . replace_table_token_20_th * not a meaningful percentage . ( 1 ) same store communities are communities we owned and were stabilized since january 1 , 2011 . non-same store communities are stabilized communities not owned or stabilized since january 1 , 2011 . development and lease-up communities are non-stabilized communities we have acquired or developed since january 1 , 2011 . other includes results from non-multifamily rental properties , above/below market lease amortization related to acquired communities , and expenses related to land holdings not under active development .
| 4,694 |
โ readers are cautioned that the statements , estimates , projections or outlook contained in this report , including discussions regarding 24 financial prospects , economic conditions , trends and uncertainties contained in this item 7 , may constitute forward-looking statements within the meaning of the pslra . these forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations expressed or implied in the forward-looking statements . a description of some of the risks and uncertainties can be found further below in this item 7 and in part i , item 1a , โ risk factors. โ executive overview general unitedhealth group is a diversified health care company dedicated to helping people live healthier lives and helping make the health system work better for everyone . through our diversified family of businesses , we leverage core competencies in data analytics and health information ; advanced technology ; and clinical expertise . these core competencies are deployed within our two distinct , but strategically aligned , business platforms : health benefits operating under unitedhealthcare and health services operating under optum . we have four reportable segments across our two business platforms , unitedhealthcare and optum : unitedhealthcare , which includes unitedhealthcare employer & individual , unitedhealthcare medicare & retirement , unitedhealthcare community & state and unitedhealthcare global ; optumhealth ; optuminsight ; and optumrx . further information on our business and reportable segments is presented in part i , item 1 , โ business โ and in note 13 of notes to the consolidated financial statements included in part ii , item 8 , โ financial statements and supplementary data. โ business trends our businesses participate in the united states , south america and certain other international health markets . in the united states , health care spending has grown consistently for many years and comprises 18 % of gross domestic product ( gdp ) . we expect overall spending on health care to continue to grow in the future , due to inflation , medical technology and pharmaceutical advancement , regulatory requirements , demographic trends in the population and national interest in health and well-being . the rate of market growth may be affected by a variety of factors , including macro-economic conditions and regulatory changes , which have impacted and could further impact our results of operations . pricing trends . to price our health care benefit products , we start with our view of expected future costs . we frequently evaluate and adjust our approach in each of the local markets we serve , considering relevant factors , such as product positioning , price competitiveness and environmental , competitive , legislative and regulatory considerations , including minimum mlr thresholds . we will continue seeking to balance growth and profitability across all of these dimensions . the commercial risk market remains highly competitive in both the small group and large group segments . we expect broad-based competition to continue as the industry adapts to individual and employer needs amid reform changes . the aca included an annual , nondeductible insurance industry tax ( health insurance industry tax ) to be levied proportionally across the insurance industry for risk-based health insurance products . a provision in the 2018 federal budget imposed a one year moratorium for 2019 on the collection of the health insurance industry tax . pricing for contracts that cover a portion of calendar year 2019 reflected the impact of the moratorium . the industry has continued to experience favorable medical cost trends due to moderated utilization , which has impacted the competitive pricing environment . medicare advantage funding continues to be pressured , as discussed below in โ regulatory trends and uncertainties. โ we expect continued medicaid revenue growth due to anticipated changes in mix and increases in the number of people we serve ; we also believe that the payment rate environment creates the risk of downward pressure on medicaid margin percentages . we continue to take a prudent , market-sustainable posture for both new business and maintenance of existing relationships . we continue to advocate for actuarially sound rates that are commensurate with our medical cost trends and we remain dedicated to partnering with those states that are committed to the long-term viability of their programs . medical cost trends . our medical cost trends primarily relate to changes in unit costs , health system utilization and prescription drug costs . we endeavor to mitigate those increases by engaging physicians and consumers with information and helping them make clinically sound choices , with the objective of helping them achieve high-quality , affordable care . 25 delivery system and payment modernization . the health care market continues to change based on demographic shifts , new regulations , political forces and both payer and patient expectations . health plans and care providers are being called upon to work together to close gaps in care and improve overall care quality , improve the health of populations and reduce costs . we continue to see a greater number of people enrolled in plans with underlying incentive-based care provider payment models that reward high-quality , affordable care and foster collaboration . we work together with clinicians to leverage our data and analytics to provide the necessary information to close gaps in care and improve overall health outcomes for patients . we are increasingly rewarding care providers for delivering improvements in quality and cost-efficiency . as of december 31 , 2018 , we served nearly 17 million people through some form of aligned contractual arrangement , including full-risk , shared-risk and bundled episode-of-care and performance incentive payment approaches . as of december 31 , 2018 , our contracts with value-based elements totaled $ 74 billion in annual spending , including $ 18 billion through risk-transfer agreements . story_separator_special_tag see note 4 of notes to the consolidated financial statements included in part ii , item 8 , โ financial statements and supplementary data โ for further detail concerning our fair value measurements . our available-for-sale debt portfolio had a weighted-average duration of 3.3 years and a weighted-average credit rating of โ double a โ as of december 31 , 2018 . when multiple credit ratings are available for an individual security , the average of the available ratings is used to determine the weighted-average credit rating . capital resources and uses of liquidity in addition to cash flows from operations and cash and cash equivalent balances available for general corporate use , our capital resources and uses of liquidity are as follows : commercial paper and bank credit facilities . our revolving bank credit facilities provide liquidity support for our commercial paper borrowing program , which facilitates the private placement of senior unsecured debt through third-party broker-dealers , and are available for general corporate purposes . for more information on our commercial paper and bank credit facilities , see note 8 of notes to the consolidated financial statements included in part ii , item 8 , โ financial statements and supplementary data. โ our revolving bank credit facilities contain various covenants , including covenants requiring us to maintain a defined debt to debt-plus-shareholders ' equity ratio of not more than 60 % . as of december 31 , 2018 , our debt to debt-plus-shareholders ' equity ratio , as defined and calculated under the credit facilities , was 38 % . long-term debt . periodically , we access capital markets to issue long-term debt for general corporate purposes , such as , to meet our working capital requirements , to refinance debt , to finance acquisitions or for share repurchases . for more information on our debt , see note 8 of notes to the consolidated financial statements included in part ii , item 8 โ financial statements and supplementary data. โ credit ratings . our credit ratings as of december 31 , 2018 were as follows : moody 's s & p global fitch a.m. best ratings outlook ratings outlook ratings outlook ratings outlook senior unsecured debt a3 stable a+ stable a- stable a- stable commercial paper p-2 n/a a-1 n/a f1 n/a amb-1 n/a the availability of financing in the form of debt or equity is influenced by many factors , including our profitability , operating cash flows , debt levels , credit ratings , debt covenants and other contractual restrictions , regulatory requirements and economic and market conditions . for example , a significant downgrade in our credit ratings or adverse conditions in the capital markets may increase the cost of borrowing for us or limit our access to capital . share repurchase program . as of december 31 , 2018 , we had board authorization to purchase up to 94 million shares of our common stock . for more information on our share repurchase program , see note 10 of notes to the consolidated financial statements included in part ii , item 8 , โ financial statements and supplementary data. โ dividends . in june 2018 , our board increased our annual cash dividend rate to shareholders to $ 3.60 per share from $ 3.00 per share . for more information on our dividend , see note 10 of notes to the consolidated financial statements included in part ii , item 8 , โ financial statements and supplementary data. โ 32 contractual obligations and commitments the following table summarizes future obligations due by period as of december 31 , 2018 , under our various contractual obligations and commitments : replace_table_token_7_th ( a ) includes interest coupon payments and maturities at par or put values . the table also assumes amounts are outstanding through their contractual term . see note 8 of notes to the consolidated financial statements included in part ii , item 8 , โ financial statements and supplementary data โ for more detail . ( b ) includes fixed or minimum commitments under existing purchase obligations for goods and services , including agreements that are cancelable with the payment of an early termination penalty and remaining capital commitments for venture capital funds and other funding commitments . excludes agreements that are cancelable without penalty and excludes liabilities to the extent recorded in our consolidated balance sheets as of december 31 , 2018 . ( c ) includes obligations associated with contingent consideration and payments related to business acquisitions , certain employee benefit programs , amounts accrued for guaranty fund assessments , unrecognized tax benefits , and various long-term liabilities . due to uncertainty regarding payment timing , obligations for employee benefit programs , charitable contributions , future settlements , unrecognized tax benefits and other liabilities have been classified as โ thereafter. โ ( d ) includes commitments for redeemable shares of our subsidiaries . when the timing of the redemption is indeterminable , the commitment has been classified as โ thereafter. โ pending acquisitions . in december 2017 , we entered into an agreement to acquire a company in the health care sector for a total of approximately $ 4.3 billion , which is not reflected in the table above . we do not have other significant contractual obligations or commitments that require cash resources . however , we continually evaluate opportunities to expand our operations , which include internal development of new products , programs and technology applications and may include acquisitions . off-balance sheet arrangements as of december 31 , 2018 , we were not involved in any off-balance sheet arrangements , which have or are reasonably likely to have a material effect on our financial condition , results of operations or liquidity . recently issued accounting standards see note 2 of notes to the consolidated financial statements in part ii , item 8 โ financial statements and supplementary data โ for a discussion of new accounting pronouncements that affect us .
| consolidated financial results revenue the increase in revenue was primarily driven by the increase in the number of individuals served through risk-based products across our unitedhealthcare benefits businesses ; pricing trends , including the health insurance industry tax in 2018 ; and growth across the optum business , primarily due to expansion and growth in care delivery , pharmacy care services , managed services and advisory services . medical costs and mcr medical costs increased due to growth in people served through risk-based products and medical cost trends . the mcr decreased due to the revenue effects of the health insurance industry tax , which more than offset business mix changes and a lower level of favorable reserve development . 27 reportable segments see note 13 of notes to the consolidated financial statements included in part ii , item 8 , โ financial statements and supplementary data โ for more information on our segments . the following table presents a summary of the reportable segment financial information : replace_table_token_3_th unitedhealthcare the following table summarizes unitedhealthcare revenues by business : replace_table_token_4_th 28 the following table summarizes the number of individuals served by our unitedhealthcare businesses , by major market segment and funding arrangement : replace_table_token_5_th the overall increase in people served through risk-based benefit plans in the commercial group market was due to growth in services to small groups . fee-based commercial group business declined primarily due to customers converting their retirees to medicare advantage plans , as well as certain customers expanding the number of carriers and reconfiguring geographies served . medicare advantage increased year-over-year due to growth in people served through individual and employer-sponsored group medicare advantage plans . the decrease in people served through medicaid was primarily driven by states adding new carriers to existing programs , reduced enrollment from state efforts to manage eligibility status and the sale of our new mexico medicaid plan .
| 4,695 |
we also operate 274 dd 's discounts stores in 21 states as of january 30 , 2021 that feature a more moderately-priced assortment of first-quality , in-season , name brand apparel , accessories , footwear , and home fashions for the entire family at savings of 20 % to 70 % off moderate department and discount store regular prices every day . our primary objective is to pursue and refine our existing off-price strategies to maintain and improve both profitability and financial returns over the long term . in establishing appropriate growth targets for our business , and considering the pace and magnitude of the economic recovery post the covid-19 pandemic , we are closely monitoring market share trends for the off-price industry and believe our share gains will continue to be driven mainly by continued focus on value and convenience by consumers . our merchandise and operational strategies are designed to take advantage of the expanding market share of the off-price industry as well as the ongoing customer demand for name brand fashions for the family and home at compelling discounts every day . we refer to our fiscal years ended january 30 , 2021 , february 1 , 2020 , and february 2 , 2019 as fiscal 2020 , fiscal 2019 , and fiscal 2018 , respectively . effects of the covid-19 pandemic on our business the united states and other countries are experiencing an ongoing , major global health pandemic related to the outbreak of a novel strain of coronavirus , covid-19 , that started at the beginning of 2020. governmental authorities in affected regions have taken , and continue to take , dramatic actions in an effort to slow down the spread of the disease . like other retailers across the country , we temporarily closed all our store locations , our distribution centers , and our buying and corporate offices for a significant part of our first and second fiscal quarters . we also instituted โ work from home โ measures for many of our associates . our closures took effect march 20 , 2020. all our distribution centers were reopened by the end of may 2020. the vast majority of our store locations were open and operating by the end of june 2020 , and remained open throughout the remainder of fiscal 2020. while open , many of our stores were operating on shorter hours and under mandated occupancy restrictions for periods of time as compared to the prior year . the covid-19 pandemic and the related economic disruption had a material adverse impact on our results of operations , financial position , and cash flows for fiscal 2020. the consolidated results presented in this report reflect the significant revenue decline and other impacts from our temporary store closures ( for approximately half of the first quarter and 25 percent of the second quarter ) , mandated occupancy restrictions , and reduced operating hours . our core business results improved during the second half of fiscal 2020 ; however , upsurges of covid-19 in the fourth quarter , especially in california , our largest state , resulted in reduced customer traffic and slowed the pace of recovery . while vaccines have become available and a steadily increasing portion of the u.s. population is being vaccinated , it will take time for those efforts to reach levels that permit a relaxation of the social distancing restrictions . we expect the material adverse effects from the pandemic to continue through fiscal 2021 and potentially beyond . the temporary closure of all our stores during much of the first two fiscal quarters significantly impacted our ability to sell the seasonal inventory then on hand in a timely manner . as we reopened our stores and resumed operations in the middle of the second quarter , a significant portion of the merchandise in our stores was aged and out of season . we took deep markdowns to sell through this inventory . during the initial reopenings , sales were ahead of our conservative plans , as we benefited from pent-up consumer demand and aggressive markdowns . in the weeks after reopening , sales trends were negatively affected by depleted store inventory levels while we were ramping up our buying and distribution capabilities . during the third quarter , sales improved substantially compared to the second quarter . this was driven by several factors , including an improvement in our merchandise assortm ents , a 25 later back-to-school season , stronger performance in our larger markets , and our return to more normal store hours . our fourth quarter sales remained suppressed due to the negative impact from the upsurge in the virus that resulted in reduced customer traffic and more stringent occupancy and store operating hours restrictions . the ongoing effect of the covid-19 pandemic on consumer behavior and spending patterns remains highly uncertain . despite the initial surge in customer demand as our stores first reopened , we expect customer demand to be generally suppressed for an extended period of time . in addition , there have been recent resurgences in the spread of covid-19 and new virus variants throughout the united states , which may also recur in the future , in one or more regions , and which have and could require our stores and distribution centers to temporarily close again nationally , regionally , or in specific locations . these closures would negatively impact our future revenue and operations . in response to the covid-19 pandemic , we incurred various costs to reopen our stores and distribution centers , and we incurred additional operating costs for processes and procedures to facilitate social distancing , to enhance cleaning and sanitation activities , and to provide personal protective equipment to our associates . these actions , combined with various other actions taken to reduce costs , resulted in approximately $ 130 million of additional net costs in fiscal 2020 . we expect our operating costs to remain elevated related to our continuing response to the covid-19 pandemic . story_separator_special_tag 29 financial condition liquidity and capital resources as previously noted , the united states and other countries are experiencing a major global health pandemic related to the outbreak of a novel strain of coronavirus , covid-19 that started at the beginning of 2020. governmental authorities in affected regions have taken , and continue to take , dramatic actions in an effort to slow down the spread of the disease . similar to other retailers across the country , we temporarily closed all store locations , our distribution centers , and our buying and corporate offices , effective march 20 , 2020 through may 14 , 2020 , when we began a phased process of resuming operations . all our distribution centers were reopened by the end of may 2020. the vast majority of our store locations were open and operating by the end of june 2020 , and remained open throughout the remainder of fiscal 2020 , though many of our stores were operating on shorter hours and under mandated occupancy restrictions for periods of time , compared to the prior year . to preserve our financial liquidity and enhance our financial flexibility , we borrowed $ 800 million from our revolving credit facility in march 2020 , completed a $ 2.0 billion senior notes offering in april 2020 , and entered into a new $ 500 million 364-day senior revolving credit facility in may 2020. in the third quarter of fiscal 2020 , we refinanced $ 775 million in aggregate principal amount of higher interest senior notes with the issuance of $ 1.0 billion in aggregate principal amount of lower interest rate senior notes . this action resulted in a refinancing charge of approximately $ 240 million in the third quarter , but will significantly reduce our annual interest expense and total cash outlays over the life of the debt . in addition to refinancing the senior notes refinancing , we took several other actions during the third quarter , to reduce our ongoing debt costs , including repayment of the $ 800 million revolving credit facility and termination of the undrawn $ 500 million 364-day senior revolving credit facility . we suspended our stock repurchase program in march 2020 and temporarily suspended quarterly dividends in may 2020 , a nd we took measures to reduce our expenses , inventory receipts , and capital expenditures . beginning april 5 , 2020 , we implemented temporary furloughs for a large portion of our hourly store and distribution center and other associates in our buying and corporate offices who could not work productively while our stores and distribution centers were closed . employee health benefits for eligible associates continued during the temporary furlough at no cost to the impacted associates . we also reduced payroll expenses through temporary salary reductions for senior executives and other personnel , which remained in effect until may 24 , 2020 , when more than half of our stores had reopened . in conjunction with these payroll expense reduction measures , effective april 1 , 2020 , the non-employee members of our board of directors suspended the cash elements of their director compensation , which remained in effect until august 2020. also in may 2020 , we suspended rent payments associated with the leases for our temporarily closed stores . during fiscal 2020 , we negotiated rent deferrals and or rent abatements for a significant number of our stores . the repayment of the deferrals will be at later dates , primarily in fiscal 2021. we recorded accruals for rent payment deferrals and recorded rent abatements as a reduction of variable lease costs . we ended fiscal 2020 with ove r $ 5.6 billion in liquidity , which consists of $ 4.8 billion unrestricted cash balances and the $ 800 million available under our revolving credit facility . historically , our primary sources of funds for our business activities have been cash flows from operations and short-term trade credit . our primary ongoing cash requirements are for merchandise inventory purchases , payroll , operating and variable lease costs , taxes , and for capital expenditures in connection with new and existing stores , and investments in distribution centers , information systems , and buying and corporate offices . we also use cash to pay dividends , to repay debt as it becomes due , and to repurchase stock under active stock repurchase programs . due to the covid-19 pandemic and related economic disruptions , and with the possibility that some of our stores , distribution centers , and other facilities may need to temporarily close again , or continue on reduced operating hours and or capacity restrictions , as a result of government mandates , we anticipate potential interruptions to our cash flows from operations . we anticipate that we will be required to rely more on our cash reserves and we expect to carefully monitor and manage our cash position in light of ongoing conditions and levels of operations . 30 replace_table_token_10_th operating activities net cash provided by operating activities was $ 2.2 billion in fiscal 2020. this was primarily driven by higher accounts payable due to extended payment terms , lower merchandise receipts as we closely managed inventory levels and used packaway inventory to replenish our stores , and net earnings excluding non-cash expenses for depreciation and amortization . this was partially offset by the lower net earnings due to lower sales from the temporary closing of all store locations starting on march 20 , 2020 through a portion of the second quarter , and the negative impact on customer demand from the covid-19 pandemic . net cash provided by operating activities was $ 2.2 billion and $ 2.1 billion in fiscal 2019 and 2018 , respectively , and was primarily driven by net earnings excluding non-cash expenses for depreciation and amortization and for deferred taxes . the increase in cash flow from operating activities in fiscal 2020 compared to fiscal 2019 was primarily driven by higher accounts payable leverage .
| results of operations the following table summarizes the financial results for fiscal 2020 , 2019 , and 2018 : replace_table_token_7_th stores . total stores open at the end of fiscal 2020 , 2019 , and 2018 were 1,859 , 1,805 , and 1,717 , respectively . the number of stores at the end of fiscal 2020 , 2019 , and 2018 increased by 3 % , 5 % , and 6 % from the respective prior years . in response to the impacts from the covid-19 pandemic , we reduced our pace of new store openings for fiscal 2020. our longer term strategy is to open additional stor es based on market penetration , local demographic characteristics , competition , expected store profitability , and the ability to leverage overhead expenses . we continually evaluate opportunistic real estate acquisitions and opportunities for potential new store locations . we also evaluate our current store locations and determine store closures based on similar criteria . replace_table_token_8_th sales . sales for fiscal 2020 decreased $ 3.5 billion , or 21.9 % , compared to the prior year . this was primarily due to the negative impact from store closures during the march 2020 to june 2020 period , the negative impact on customer demand from the covid-19 pandemic , mandated occupancy restrictions , and reduced store operating hours during the remainder of fiscal 2020. we opened 54 net new stores during 2020. the sales from these new stores partially offset the overall sales decline . sales for fiscal 2019 increased $ 1.1 billion , or 7.0 % , compared to the prior year due to the opening of 88 net new stores during 2019 and a 3 % increase in sales from comparable stores .
| 4,696 |
our actual results may differ materially from those anticipated in these forward- looking statements as a result of many factors , including but not limited to those under the heading โ risk factors โ in part i , item 1a of this report . certain amounts in this section may not foot due to rounding . overview we are a financial technology-driven group specializing in payment acceptance and value-added solutions across multiple channels in the united states and selected international markets . we are differentiated by our proprietary technology which enables us to provide a broad suite of payment products , end-to-end transaction processing services and superior client support . we are able to deliver our services across multiple points of access , or โ multi-channel , โ including brick and mortar locations , software integration , e-commerce , mobile operator billing , mobile and tablet-based solutions . in the united states , via our u.s. based subsidiaries , we generate revenues from transactional services and value-added payment technologies for small and medium-sized businesses . through payonline , we provide transactional services , mobile payment transactions , online payment transactions and other payment technologies in selected international markets , the russian federation , eurasian economic community ( โ eaec โ ) , europe and asia . our transactional services business enables merchants to accept credit cards as well as other forms of payment , including debit cards , checks , gift cards , loyalty programs and alternative payment methods in traditional card-present or swipe transactions , as well as card-not-present transactions , such as those conducted over the phone or through the internet or a mobile device . we market and sell our services through both independent sales groups ( โ isgs โ ) , which are non-employee , external sales organizations and other third-party resellers of our products and services , and directly to merchants through electronic media , telemarketing and other programs , including utilizing partnerships with other companies that market products and services to local and international merchants . we have agreements with several banks that sponsor us for membership in the visa ยฎ , mastercard ยฎ , american express ยฎ and discover ยฎ card brands and settle card transactions for our merchants . these agreements allow us to use the banks ' identification numbers , referred to as bank identification numbers ( bin ) for visaยฎ transactions and interbank card association ( ica ) number for mastercardยฎ transactions . the principal sponsoring banks through which we process the majority of our transaction in the united states include citizens bank , esquire bank , n.a . and wells fargo bank , n.a . from time to time , we may enter into agreements with additional banks . we perform core functions for merchants such as application processing , underwriting , number account set-up , risk management , fraud detection , merchant assistance and support , equipment deployment , chargeback services and offer our own dedicated bin and ica for various types of specialty merchants . netevia , our future-ready payments and merchant management platform acts as a framework and core for a number of value-added services that connect merchants and consumers directly utilizing disruptive emerging technologies while increasing the economic efficiency of all transactions being made within the ecosystem . specifically , netevia delivers end-to-end payment processing through easy-to-use apis and complements the company 's ability to perform in a multi-channel environment , including point-of-sale ( pos ) , e-commerce and mobile devices and will enable the company to perform as a hub for disruptive emerging technology solutions . our mobile payments business , previously provided through digital provider , has been combined with payonline to provide contracts with mobile operators that give us the ability to offer our clients in-app , premium sms ( short message services , which is a text messaging service ) , wireless application protocol ( wap ) -click , one click and other carrier billing services . we have substantially reorganized this business , and currently we are not generating revenues from new mobile content . we have not yet been able to find or solidify an acceptable joint venture partner or other arrangement that provides sufficient profit potential and operating benefit for our mobile payments operations . payonline provides flexible , high-tech payment solutions to companies doing business on the internet or in the mobile environment . payonline specializes in integration and customization of payment solutions for websites and mobile apps . in particular , payonline arranges payment on the website of any commercial organization , which increases the convenience of using the website and helps maximize the number of successful transactions . in addition , payonline is focused on providing online and mobile payment acceptance services to the travel industry through direct integration with leading global distribution systems ( โ gds โ ) , which include amadeusยฎ and sabreยฎ . key geographic regions that payonline serves include eastern europe , central asia , western europe , north america and asia major sub regions . payonline offices are located in moscow , russia . aptito is a proprietary , cloud-based payments platform for the hospitality industry , which creates an online consumer experience in offline commerce environments via tablet , mobile and all other cloud-connected devices . aptito 's easy to use point-of-sale ( โ pos โ ) system makes things easier by providing a comprehensive solution to the hospitality industry to help streamline management and operations . orders placed tableside by customers directly speed up the ordering process and improve overall efficiency . aptito 's mobile pos system provides portability to the staff while performing all the same functions as a traditional pos system . recent developments during the year ended december 31 , 2018 we acquired the following recurring cash flow portfolios . there were no recurring cash flow portfolios acquired during the year ended 2017. acquisitions of recurring cash flow portfolios from time to time , the company acquires future recurring revenue streams from sales agents in exchange for an upfront cash payment . this results in an increase in net cash flow to the company . story_separator_special_tag during the first quarter of 2019 , payonline has entered into a financial services agreement for transaction clearing services with mobi.money and amended its agreement with vtb bank , allowing for greater scalability and sponsorship of payonline to card brands . card brands have initiated projects for registration of payonline as a third-party payment processor , following successful registration , payonline plans to further implement direct integrations with international payment networks ( โ ipns โ ) . in order to achieve its business plan , payonline has identified several investors for financing a proposed venture . the executive team continues to work diligently to select the most capable financial partner for this venture . operating segments prior to the fourth quarter of 2017 , we had three reportable business segments : ( i ) north american transaction solutions , ( ii ) mobile solutions and ( iii ) online solutions . management determines the reportable segments based on the internal reporting information necessary to evaluate performance and to assess where to allocate resources . in addition , management considers certain other factors , such as , the increased growth in our north american transactions solutions segment and the consolidation of our mobile solutions business with our online solutions business , which has changed how management evaluates performance and allocates resources . we now have two reportable business segments ( i ) north american transaction solutions and ( ii ) international transaction solutions . our reportable segments are business units that offer different products and services in different geographies . the reportable segments are each managed separately because they offer distinct products , in distinct geographic locations , with different delivery and service processes . north american transaction solutions our north american transaction solutions business segment consists of the former unified payments business and aptito . this segment operates primarily in north america . in march 2013 , we acquired all of the business assets of unified payments , a provider of comprehensive turnkey , payment processing solutions to small and medium size business owners ( merchants ) and independent sales organizations across the united states . in april 2013 , we acquired 80 % of aptito , a cloud-based software-as-a-service ( โ saas โ ) restaurant management solution , which provides integrated pos , mpos , kiosk , digital menus functionality to drive consumer engagement via appleยฎ ipadยฎ-based pos , kiosk and all other cloud-connected devices . international transaction solutions our international transaction solutions segment consists of payonline , which also now includes our mobile payments operations , primarily located in russia . payonline provides a secure online payment processing system to accept bank card payments for goods and services . 37 critical accounting policies and estimates our significant accounting policies are described more fully in note 3 of the accompanying notes to our audited consolidated financial statements . the preparation of these consolidated financial statements requires the company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the reporting period . such estimates include , but are not limited to , the value of purchase consideration paid and identifiable assets acquired and assumed in acquisitions , goodwill and asset impairment review , valuation reserves for accounts receivable , valuation of acquired or current merchant portfolios , incurred but not reported claims , revenue recognition for multiple element arrangements , loss reserves , assumptions used in the calculation of equity-based compensation and in the calculation of income taxes , and certain tax assets and liabilities , as well as , the related valuation allowances . actual results could differ from those estimates . below is a summary of the company 's critical accounting policies and estimates for which the nature of management 's assumptions are material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change , and for which the impact of the estimates and assumptions on financial condition or operating performance is material . revenue we recognize revenue when all of the following criteria are met : ( 1 ) the parties to the contract have approved the contract and are committed to perform their respective obligations , ( 2 ) we can identify each party 's rights regarding the goods or services to be transferred , ( 3 ) we can identify the payment terms for the goods or services to be transferred , ( 4 ) the contract has commercial substance , and ( 5 ) it is probable that we will collect substantially all of the consideration to which we will be entitled in exchange for the goods or services that will be transferred to the customer . the company considers persuasive evidence of a sales arrangement to be the receipt of a billable transaction from aggregators , signed contract or the processing of a credit card transaction . collectability is assessed based on a number of factors , including transaction history with the customer and the credit worthiness of the customer . if it is determined that the collection is not reasonably assured , revenue is not recognized until collection becomes reasonably assured , which is generally upon receipt of cash . we record cash received in advance of revenue recognition as deferred revenue . revenue consists primarily of fees generated through the electronic processing of payment transactions and related services and is recognized as revenue during the period the transactions are processed or when the related services are performed . the majority of our revenues is derived from volume-based payment processing fees ( `` discount fees โ ) and other related fixed transaction or service fees . discount fees represent a percentage of the dollar amount of each credit or debit transaction processed . discount fees are recognized at the time the merchants ' transactions are processed .
| results of operations for the year ended december 31 , 2018 compared to the year ended december 31 , 2017 we reported a net loss attributable to common stockholders of approximately $ 4.9 million or ( $ 1.28 ) loss per share for the year ended december 31 , 2018 as compared to a net loss of approximately $ 9.9 million or ( $ 5.04 ) loss per share for the year ended december 31 , 2017. this resulted in a decrease in net loss attributable to stockholders of approximately 50 % primarily due to an increase in revenues and other income , combined with selling , general and administrative expenses , and non-cash compensation , which was partially offset by an increase in bad debt expense . the following table sets forth our sources of revenues , cost of revenues and gross margins for the years ended december 31 , 2018 and 2017. gross margin analysis : replace_table_token_3_th replace_table_token_4_th replace_table_token_5_th net revenues consist primarily of service fees from transaction processing . net revenues were approximately $ 65.8 million for the year ended december 31 , 2018 as compared to approximately $ 60.1 million for the year ended december 31 , 2017. the increase in net revenues is primarily due to continued organic growth of north american merchants with emphasis on value-added offerings and the acquisition of a recurring cash flow portfolio in july 2018. the net increase also is reflective of the following factors which consisted of a $ 2 million decrease in net revenues from our international transaction solutions segment as we experienced increased competition , and reorganizing assignments from our international transaction solutions segment and approximately $ 1.9 million reduction in gross revenues , due to the adoption of asc 606. for the year ended december 31 , 2017 , approximately $ 2.2 million was included in gross revenues that would have been excluded under asc 606. cost of revenues represents direct costs of
| 4,697 |
these inputs include the estimated amount and timing of projected cash flows , the probability of success ( achievement of the contingent event ) and a risk-adjusted discount rate of 8 % used story_separator_special_tag description of merck 's business merck & co. , inc. ( merck or the company ) is a global health care company that delivers innovative health solutions through its prescription medicines , vaccines , biologic therapies and animal health products . the company 's operations are principally managed on a products basis and include four operating segments , which are the pharmaceutical , animal health , healthcare services and alliances segments . the pharmaceutical segment is the only reportable segment . the pharmaceutical segment includes human health pharmaceutical and vaccine products marketed either directly by the company or through joint ventures . human health pharmaceutical products consist of therapeutic and preventive agents , generally sold by prescription , for the treatment of human disorders . the company sells these human health pharmaceutical products primarily to drug wholesalers and retailers , hospitals , government agencies and managed health care providers such as health maintenance organizations , pharmacy benefit managers and other institutions . vaccine products consist of preventive pediatric , adolescent and adult vaccines , primarily administered at physician offices . the company sells these human health vaccines primarily to physicians , wholesalers , physician distributors and government entities . sales of vaccines in most major european markets were marketed through the company 's sanofi pasteur msd ( spmsd ) joint venture until its termination on december 31 , 2016. beginning in 2017 , merck will record vaccine sales in the european markets that were previously part of the joint venture . the company also has animal health operations that discover , develop , manufacture and market animal health products , including vaccines , which the company sells to veterinarians , distributors and animal producers . the company 's healthcare services segment provides services and solutions that focus on engagement , health analytics and clinical services to improve the value of care delivered to patients . merck 's alliances segment primarily includes results from the company 's relationship with astrazeneca lp until the termination of that relationship on june 30 , 2014. on october 1 , 2014 , the company divested its consumer care segment that developed , manufactured and marketed over-the-counter , foot care and sun care products . overview during 2016 , merck continued to execute its innovation strategy and the company 's sustained investment in research yielded a number of recent approvals and regulatory milestones across various therapeutic areas . the company received several approvals in 2016 that include expanded indications for keytruda , the company 's anti-pd-1 ( programmed death receptor-1 ) therapy , which was approved by the u.s. food and drug administration ( fda ) for the first-line treatment of metastatic non-small-cell lung cancer ( nsclc ) , as well as for the treatment of head and neck cancer . additionally , in 2016 , both the fda and the european commission ( ec ) approved zepatier , a once-daily , single tablet combination therapy for the treatment of chronic hepatitis c virus ( hcv ) genotype ( gt ) 1 or gt4 infection , with ribavirin in certain patient populations . worldwide sales were $ 39.8 billion in 2016 , an increase of 1 % compared with 2015 , including a 2 % unfavorable effect from foreign exchange . sales growth was driven by oncology , hcv , vaccine , and hospital acute care products , reflecting in part the ongoing launches of keytruda , zepatier and bridion , as well as positive performance from merck 's animal health business . growth in these areas was largely offset by the effects of generic and biosimilar competition that resulted in declines for products such as remicade and nasonex . business development remains an important component of the company 's overall strategy as merck seeks to identify the best external innovation to augment its portfolio and pipeline , with a particular focus on early-to-mid-stage pipeline assets . merck looks for growth opportunities that meet the company 's strategic criteria . while looking for the best scientific opportunities , merck remains financially disciplined , pursuing those business opportunities that the company believes can contribute to long-term growth and sustainable value for shareholders . in january 2016 , merck acquired iomet pharma ltd ( iomet ) , a drug discovery company focused on the development of innovative medicines for the treatment of cancer , with a particular emphasis on the fields of cancer immunotherapy and cancer metabolism . in july 2016 , merck acquired afferent pharmaceuticals ( afferent ) , a privately held pharmaceutical company focused on the development of therapeutic candidates targeting the p2x3 receptor for the treatment of common , poorly-managed , neurogenic conditions , such as chronic cough . in addition , in 2016 , merck entered into a strategic collaboration and license agreement with moderna therapeutics ( moderna ) to develop and commercialize novel messenger rna ( mrna ) -based personalized cancer vaccines . 33 merck continues to support its in-line portfolio , as well as ongoing and upcoming product launches . keytruda is launching around the world in multiple indications . in 2016 , merck achieved multiple additional regulatory milestones for keytruda including approval from the fda for the first-line treatment of patients with nsclc whose tumors have high pd-l1 expression ( tumor proportion score [ tps ] of 50 % or more ) as determined by an fda-approved test , with no egfr or alk genomic tumor aberrations and also for the treatment of patients with recurrent or metastatic head and neck squamous cell carcinoma with disease progression on or after platinum-containing chemotherapy . additionally , in 2016 , the ec approved keytruda for the treatment of locally advanced or metastatic nsclc in patients whose tumors express pd-l1 and who have received at least one prior chemotherapy regimen . story_separator_special_tag the u.s. patent and exclusivity periods for zetia and vytorin otherwise expire in april 2017 and the company anticipates declines in u.s. zetia and vytorin sales thereafter . u.s. sales of zetia and vytorin were $ 1.6 billion and $ 473 million , respectively , in 2016. the company has market exclusivity in major european markets for ezetrol until april 2018 and for inegy until april 2019. combined worldwide sales of the ezetimibe family were $ 3.8 billion in 2015 , a decline of 9 % compared with 2014 including an 8 % unfavorable effect from foreign exchange . the sales decline was driven primarily by lower volumes of ezetrol in canada where it lost market exclusivity in september 2014 , as well as by lower volumes in the united states , partially offset by higher pricing in the united states . pursuant to a collaboration between merck and bayer ag ( bayer ) ( see note 3 to the consolidated financial statements ) , merck has lead commercial rights for adempas , a novel cardiovascular drug for the treatment of pulmonary arterial hypertension , in countries outside the americas while bayer has lead rights in the americas , including the united states . in 2016 , merck began promoting and distributing adempas in europe . transition in other merck territories will continue in 2017. merck recorded sales for adempas of $ 169 million in 2016 , which includes sales in merck 's marketing territories , as well as merck 's share of profits from the sale of adempas in bayer 's marketing territories . in september 2016 , merck sold the marketing rights for zontivity in the united states and canada to aralez pharmaceuticals inc. for a $ 25 million upfront payment and royalties at graduated rates , plus potential future consideration dependent upon the achievement of certain aggregate annual sales-based milestones . previously , in march 2016 , following several business decisions that reduced sales expectations for zontivity in the united states and europe , the company lowered its cash flow projections for zontivity . the company utilized market participant assumptions and considered several different scenarios to determine the fair value of the intangible asset related to zontivity that , when compared with its related carrying value , resulted in an impairment charge of $ 252 million recorded in materials and production costs in 2016. diabetes worldwide combined sales of januvia and janumet , medicines that help lower blood sugar levels in adults with type 2 diabetes , were $ 6.1 billion in 2016 , an increase of 2 % compared with 2015. sales growth was driven primarily by higher volumes in the united states , europe and canada , partially offset by pricing pressures in the united states and europe , and lower sales in venezuela due to the company 's reduced operations in that country . combined global sales of januvia and janumet were $ 6.0 billion in 2015 , essentially flat as compared with 2014 including a 7 % unfavorable effect from foreign exchange . sales performance reflects higher volumes and pricing in the united states , as well as volume growth in emerging markets and europe . volume declines of co-marketed sitagliptin in japan due to the timing of sales to the licensee partially offset growth in 2015. general medicine and women 's health worldwide sales of nuvaring , a vaginal contraceptive product , were $ 777 million in 2016 , an increase of 6 % compared with 2015 , and were $ 732 million in 2015 , an increase of 1 % compared with 2014. foreign exchange unfavorably affected global sales performance by 1 % and 7 % in 2016 and 2015 , respectively . sales growth in both years largely reflects higher pricing in the united states . volume declines in europe partially offset revenue growth in 2016. in august 2016 , the u.s. district court ruled that the company 's delivery system patent for nuvaring is invalid . the company is appealing this verdict to the u.s. court of appeals for the federal circuit . however , given the u.s. district court 's decision , there may be generic entrants into the u.s. market in advance of the april 2018 patent 38 expiration . if this should occur , the company anticipates a significant decline in u.s. nuvaring sales thereafter . u.s. sales of nuvaring were $ 576 million in 2016. as a result of the unfavorable u.s. district court decision , the company evaluated the intangible asset related to nuvaring for impairment and concluded that it was not impaired . the intangible asset value for nuvaring was $ 319 million at december 31 , 2016. worldwide sales of implanon/nexplanon , single-rod subdermal contraceptive implants , grew to $ 606 million in 2016 , an increase of 3 % compared with 2015 including a 3 % unfavorable effect from foreign exchange . sales growth reflects higher demand in the united states , partially offset by declines in certain emerging markets , particularly in venezuela . implanon/nexplanon sales rose to $ 588 million in 2015 , a 17 % increase compared with 2014 including a 6 % unfavorable effect from foreign exchange . the increase was driven primarily by higher demand in the united states and in emerging markets . global sales of dulera inhalation aerosol , a combination medicine for the treatment of asthma , were $ 436 million in 2016 , a decline of 19 % compared with 2015 including a 1 % unfavorable effect from foreign exchange . the decline was driven by lower sales in the united sales reflecting competitive pricing pressures that were partially offset by higher demand . worldwide sales of dulera inhalation aerosol grew 16 % in 2015 to $ 536 million driven primarily by higher demand in the united states .
| operating results sales worldwide sales were $ 39.8 billion in 2016 , an increase of 1 % compared with 2015. foreign exchange unfavorably affected global sales performance by 2 % in 2016 , which includes a lower benefit from revenue hedging activities as compared with 2015. revenue growth primarily reflects higher sales in the oncology franchise largely from keytruda , the launch of the hcv treatment zepatier , and growth in vaccine products , including gardasil/gardasil 9 , varivax and pneumovax 23. also contributing to sales growth in 2016 were higher sales of hospital acute care products including bridion and noxafil , growth within the diabetes franchise of januvia and janumet , as well as higher sales of animal health products , particularly bravecto . these increases were partially offset by sales declines attributable to the ongoing effects of generic and biosimilar competition for certain products , including remicade and nasonex , along with other products within diversified brands . declines in isentress , pegintron and dulera inhalation aerosol also partially offset revenue growth in 2016. sales performance in 2016 reflects a decline of approximately $ 625 million due to reduced operations by the company in venezuela as a result of evolving economic conditions and volatility in that country . sales in the united states were $ 18.5 billion in 2016 , an increase of 5 % compared with $ 17.5 billion in 2015 . within the pharmaceutical segment , sales in the united states grew 5 % in 2016 driven primarily by the launches of zepatier and bridion , along with higher sales of keytruda and gardasil/gardasil 9 , partially offset by lower sales of nasonex , cubicin , dulera inhalation aerosol , and isentress . international sales were $ 21.3 billion in 2016 , a decline of 3 % compared with $ 22.0 billion in 2015 . foreign exchange unfavorably affected international sales performance by 4 % in 2016 .
| 4,698 |
this report on form 10-k contains forward-looking statements within the meaning of the federal securities laws , principally , but not only , under the captions โ business โ , โ risk factors โ and โ management 's discussion and analysis of financial condition and results of operations โ . we caution investors that any forward-looking statements in this report , or which management may make orally or in writing from time to time , are based on management 's beliefs and on assumptions made by , and information currently available to , management . when used , the words โ anticipate , โ โ believe , โ โ expect , โ โ intend , โ โ may , โ โ might , โ โ plan , โ โ estimate , โ โ project , โ โ should , โ โ will , โ โ result โ and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements . these statements are subject to risks , uncertainties and assumptions and are not guarantees of future performance , which may be affected by known and unknown risks , trends , uncertainties and factors that are beyond our control . should one or more of these risks or uncertainties materialize , or should underlying assumptions prove incorrect , actual results may vary materially from those anticipated , estimated or projected . we caution you that , while forward-looking statements reflect our good faith beliefs when we make them , they are not guarantees of future performance and are impacted by actual events when they occur after we make such statements . we expressly disclaim any responsibility to update our forward-looking statements , whether as a result of new information , future events or otherwise . accordingly , investors should use caution in relying on past forward-looking statements , which are based on results and trends at the time they are made , to anticipate future results or trends . some of the risks and uncertainties that may cause our actual results , performance or achievements to differ materially from those expressed or implied by forward-looking statements include , among others , the following : โ general risks affecting the real estate industry ( including , without limitation , the inability to enter into or renew leases , dependence on tenants ' financial condition , and competition from other developers , owners and operators of real estate ) ; โ risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments ; โ failure to manage effectively our growth and expansion into new markets or to integrate acquisitions successfully ; โ risks and uncertainties affecting property development and construction ( including , without limitation , construction delays , cost overruns , inability to obtain necessary permits and public opposition to such activities ) ; โ risks associated with downturns in the national and local economies , increases in interest rates and volatility in the securities markets ; โ costs of compliance with the americans with disabilities act and other similar laws and regulations ; โ potential liability for uninsured losses and environmental contamination ; โ risks associated with our dependence on key personnel whose continued service is not guaranteed ; and โ the other risk factors identified in this form 10-k , including those described under the part i , item 1a . โ risk factors โ . the risks included herein are not exhaustive . other sections of this report , including part i , item 1a . risk factors , include additional factors that could adversely affect our business and financial performance . moreover , we operate in a very competitive and rapidly changing environment . new risk factors emerge from time to time and it is not possible for management to predict all such risk factors , nor can we assess the impact of all such risk factors on our business or the extent to which any factor , or combination of factors , may cause actual results to differ materially from those contained in any forward-looking statements . given these risks and uncertainties , investors should not place undue reliance on forward-looking statements as a prediction of actual results . investors should also refer to our quarterly reports on form 10-q for future periods and current reports on form 8-k as we file them with the sec , and to other materials we may furnish to the public from time to time through forms 8-k or otherwise . 10 overview our primary business is in real estate holdings and investment in mortgage receivables . land held for development or sale is our sole operating segment . the principal source of revenue for the company is interest income on approximately 92.1 million of note receivables due from related parties . since april 30 , 2011 , pillar is the company 's external advisor and cash manager under a contractual arrangement that is reviewed annually by our board of directors . pillar 's duties include , but are not limited to , locating , evaluating and recommending real estate and real estate-related investment opportunities . pillar also arranges , for ior 's benefit , debt and equity financing with third party lenders and investors . as the contractual advisor , pillar is compensated by ior under an advisory agreement . the company has no employees . employees of pillar render services to ior in accordance with the terms of the advisory agreement . this advisory agreement is more fully described in part iii , item 10. directors , executive officers and corporate governance โ the advisor . pillar also serves as an advisor and cash manager to arl and tci . story_separator_special_tag the components of the property 's net income that is reflected as discontinued operations include the net gain ( or loss ) upon the disposition of the property held for sale , operating results , depreciation and interest expense ( if the property is subject to a secured loan ) . we generally consider assets to be โ held for sale โ when the transaction has been approved by the company 's board of directors , or its executive committee thereof , and there are no known significant contingencies relating to the sale , such that the property sale within one year is considered probable . following the classification of a property as โ held for sale , โ no further depreciation is recorded on the assets . a variety of costs are incurred in the acquisition , development and leasing of properties . after determination is made to capitalize a cost , it is allocated to the specific component of a project that is benefited . determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment . our capitalization policy on development properties is guided by asc 835-20 โ interest - capitalization of interest โ and asc 970 โ real estateโgeneral โ . the costs of land and buildings under development include specifically identifiable costs . the capitalized costs include pre-construction costs essential to the development of the property , development costs , construction costs , interest costs , real estate taxes , salaries and related costs and other costs incurred during the period of development . we consider a construction project as substantially completed and held available for occupancy upon the receipt of certificates of occupancy , but no later than one year from cessation of major construction activity . we cease capitalization on the portion ( 1 ) substantially completed and ( 2 ) occupied or held available for occupancy , and we capitalize only those costs associated with the portion under construction . recognition of revenue our revenues are composed largely of interest income on notes receivable . revenue recognition on the sale of real estate sales and the associated gains or losses of real estate assets are recognized in accordance with the provisions of asc 360-20 , โ property , plant and equipment โ real estate sale โ . the specific timing of a sale is measured against various criteria in asc 360-20 related to the terms of the transaction and any continuing involvement in the form of management or financial assistance associated with the properties . if the sales criteria for the full accrual method are not met , we defer some or all of the revenue or gain recognition and account for the continued operations of the property by applying the finance , leasing , deposit , installment or cost recovery methods , as appropriate , until the full revenue recognition sales criteria are met . non-performing notes receivable the company considers a note receivable to be non-performing when the maturity date has passed without principal repayment and the borrower is not making interest payments in accordance with the terms of the agreement . interest recognition on notes receivable we record interest income as earned in accordance with the terms of the related loan agreements . allowance for estimated losses we assess the collectability of notes receivable on a periodic basis , of which the assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note . we recognize impairments on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan . the amount of the impairment to be recognized generally is based on the fair value of the partnership 's real estate that represents the primary source of loan repayment . ( see note 3 , below , notes and interest receivable from related parties , for details on our notes receivable . ) 12 fair value measurement the company applies the guidance in asc 820 , fair value measurements and disclosures , to the valuation of real estate assets . these provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date , establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy . the hierarchy gives the highest priority to quoted prices in active markets ( level 1 measurements ) and the lowest priority to unobservable data ( level 3 measurements ) , such as the reporting entity 's own data . the valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and includes three levels defined as follows : level 1โunadjusted quoted prices for identical and unrestricted assets or liabilities in active markets . level 2โquoted prices for similar assets and liabilities in active markets , and inputs that are observable for the asset or liability , either directly or indirectly , for substantially the full term of the financial instrument . level 3โunobservable inputs that are significant to the fair value measurement . a financial instrument 's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement . management reviews the carrying values of our properties and mortgage notes receivable at least annually and whenever events or a change in circumstances indicates that impairment may exist .
| results of operations the following discussion is based on our consolidated financial statements consolidated statement of operations , for the years ended december 31 , 2018 , 2017 , and 2016 from part ii , item 8. financial statements and supplementary data and is not meant to be an all-inclusive discussion of the changes in our net income applicable to common shares . instead , we have focused on significant fluctuations within our operations that we feel are relevant to obtain an overall understanding of the change in income applicable to common shareholders . our operating expenses consist primarily of general and administrative costs such as audit and legal fees and administrative fees paid to a related party . we also have other income and expense items . we receive interest income from the funds deposited with our advisor at a rate of prime plus 1.0 % . we have receivables from related parties which also provide interest income . comparison of the year ended december 31 , 2018 to the year ended december 31 , 2017 we had a net income applicable to common shares of $ 8.2 million or $ 1.97 per diluted earnings per share for the year ended december 31 , 2018 , compared to a net income applicable to common shares of $ 1.5 million or $ 0.36 per diluted earnings per share for the same period ended 2017. revenue land held subject to a sales contract was our sole operating segment .
| 4,699 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.