document stringlengths 8.64k 13.4k | summary stringlengths 179 2.97k | __index_level_0__ int64 0 16.8k |
|---|---|---|
we operate retail stores under the names tractor supply company and del 's farm supply and operate a website under the name tractorsupply.com . our stores are located in towns outlying major metropolitan markets and in rural communities , and they offer the following comprehensive selection of merchandise : · equine , pet and small animal products , including items necessary for their health , care , growth and containment ; · hardware , truck , towing and tool products ; · seasonal products , including lawn and garden items , power equipment , gifts and toys ; · maintenance products for agricultural and rural use ; and · work/recreational clothing and footwear . we operated 1,085 retail farm and ranch stores in 44 states as of december 31 , 2011. given the size of the communities that we target , we believe that there is ample opportunity for new store growth in existing and new markets . we have developed a proven method for selecting store sites and have identified over 1,000 additional markets for new tractor supply stores , inclusive of recently identified small market locations . approximately 55 % of our stores are in freestanding buildings and 45 % are located in strip shopping centers . fiscal 2011 was once again a year of strong performance for our company . we achieved double-digit increases in both sales and earnings on top of last year 's record results . in fiscal 2011 , our net revenues increased 16.3 % to $ 4.23 billion compared to $ 3.64 billion in fiscal 2010 , and we increased our fiscal 2011 diluted earnings per share to $ 3.01 versus $ 2.25 in fiscal 2010. we also ended the year with $ 199 million in cash and restricted cash after returning nearly $ 211 million to our stockholders through stock repurchases and dividends . over the past five years we have experienced considerable sales growth , with a compounded annual growth rate of approximately 12.3 % . we plan to open 90 to 95 new stores in 2012 , a selling square footage increase of approximately 8.0 % . we opened 85 new stores in 2011 and 74 new stores in 2010 , a square footage increase of approximately 7.8 % and 7.4 % , respectively . our current and long-term growth strategy is to : ( 1 ) expand geographic market presence through opening new retail stores , ( 2 ) enhance financial performance through same-store sales growth achieved through targeted merchandising programs with an “ everyday value prices ” philosophy and supported by strong customer service , ( 3 ) enhance product margin through strategic product sourcing and regional allocation , a strong private label offering , and optimization of product pricing , transportation and distribution costs , ( 4 ) leverage operating costs , especially advertising , distribution and corporate overhead by focusing on opportunities for continuous improvement and elimination of waste in all of our processes , ( 5 ) expand market opportunities via internet sales accomplished by improving our product content and enhancing our customers ' online experience and ( 6 ) expand through selective acquisition , as such opportunities arise , to enhance penetration into new and existing markets as a complementary strategy to organic growth . our store strategy features low initial capital expenditures , limited maintenance capital , and low occupancy and operating costs . the average cash investment for new leased stores opened in 2011 was approximately $ 1.2 million . a majority of the cash outlay was for initial acquisition of inventory and capital expenditures ( principally leasehold improvements , fixtures and equipment ) , and approximately $ 82,000 for pre-opening costs . our new stores are typically profitable in the first full year of operation and reach chain average in approximately five years . our capital allocation strategy focuses first on capital expenditure requirements ( to support growth and invest in existing facilities and improved information technology processes and systems ) , and promotes effective stockholder return through our share repurchase and dividend programs . our capital expenditures for fiscal 2011 and 2010 were $ 166.2 million and $ 96.5 million , respectively . we expect capital expenditures in 2012 to be approximately $ 160 million to $ 170 million as we continue to invest in new store growth , existing stores , distribution center capacity and information technology . 17 we place significant emphasis on our merchandising programs , evaluating the sales and profitability of our products through detailed line reviews , review of vendor performance measures and modification of the overall product offerings . modifications of product offerings include increasing the quality and affordability of some items through strategic sourcing , improving our private label offerings and ensuring we have the best product mix in our stores based on the regional needs of our customers . we believe these efforts , coupled with a strong marketing program and in-depth product knowledge training of our store team members , have enhanced our sales and financial performance . significant accounting policies and estimates management 's discussion and analysis of our financial position and results of operations are based upon our consolidated financial statements , which have been prepared in accordance with united states generally accepted accounting principles . the preparation of these financial statements requires management to make informed estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses and related disclosure of contingent assets and liabilities . our financial position and or results of operations may be materially different when reported under different conditions or when using different assumptions in the application of such policies . in the event estimates or assumptions prove to be different from actual amounts , adjustments are made in subsequent periods to reflect more current information . our significant accounting policies are disclosed in note 1 to our consolidated financial statements . story_separator_special_tag we allocate freight as a component of total cost of sales without regard to inventory mix or unique freight burden of certain categories . this assumption has been consistently applied for all years presented . we have not made any material changes in the accounting methodology used to establish our capitalized freight balance or freight allocation in the financial periods presented . if a 10 % increase or decrease had been applied against our current inventory capitalized freight balance , net income would have been affected by approximately $ 4.1 million . 20 description judgments and uncertainties effect if actual results differ from a ssumptions self-insurance reserves : we self-insure a significant portion of our employee medical insurance , workers ' compensation and general liability insurance plans . we have stop-loss insurance policies to protect from individual losses over specified dollar values . when estimating our self-insured liabilities , we consider a number of factors , including historical claims experience , demographic factors and severity factors . the full extent of certain claims , especially workers ' compensation and general liability claims , may not become fully determined for several years . our self-insured liabilities contain uncertainties because management is required to make assumptions and to apply judgment to estimate the ultimate cost to settle reported claims and claims incurred but not reported as of the balance sheet date . we have not made any material changes in the accounting methodology used to establish our self-insurance reserves in the financial periods presented . we do not believe there is a reasonable likelihood that there will be a material change in the assumptions we use to calculate insurance reserves . however , if we experience a significant increase in the number of claims or the cost associated with these claims , we may be exposed to losses that could be material . a 10 % change in our self-insurance reserves at december 31 , 2011 , would have affected net income by approximately $ 2.0 million in fiscal 2011. sales tax audit reserve : a portion of our sales are to tax-exempt customers . we obtain exemption information as a necessary part of each tax-exempt transaction . many of the states in which we conduct business will perform audits to verify our compliance with applicable sales tax laws . the business activities of our customers and the intended use of the unique products sold by us create a challenging and complex compliance environment . these circumstances also create some risk that we could be challenged as to the accuracy of our sales tax compliance . while we believe we reasonably enforce sales tax compliance with our customers and endeavor to fully comply with all applicable sales tax regulations , there can be no assurance that we , upon final completion of such audits , would not have a significant liability for disallowed exemptions . we review our past audit experience and assessments with applicable states to continually determine if we have potential exposure for non-compliance . any estimated liability is based on an initial assessment of compliance risk and our historical experience with each state . we continually reassess the exposure based on historical audit results , changes in policies , preliminary and final assessments made by state sales tax auditors , and additional documentation that may be provided to reduce the assessment . our sales tax audit reserve contains uncertainties because management is required to make assumptions and to apply judgment regarding the complexity of agricultural-based exemptions , the ambiguity in state tax regulations , the number of ongoing audits , and the length of time required to settle with the state taxing authorities . our sales tax audit assessment methodology remained materially consistent in the financial periods presented . we do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to calculate the sales tax liability reserve . however , if our estimates regarding the ultimate sales tax liability are inaccurate , we may be exposed to losses or gains that could be material . a 10 % change in our sales tax audit reserve at december 31 , 2011 , would have affected net income by approximately $ 720,000 in fiscal 2011 . 21 description judgments and uncertainties effect if actual results differ from a ssumptions tax contingencies : our income tax returns are periodically audited by u.s. federal and state tax authorities . these audits include questions regarding our tax filing positions , including the timing and amount of deductions and the allocation of income among various tax jurisdictions . at any time , multiple tax years are subject to audit by the various tax authorities . in evaluating the exposures associated with our various tax filing positions , we record a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return . a number of years may elapse before a particular matter , for which we have established a reserve , is audited and fully resolved or clarified . we recognize the effect of income tax positions only if those positions are more likely than not of being sustained . recognized income tax positions are measured at the largest amount that is greater than 50 % likely of being realized . changes in recognition or measurement are reflected in the period in which the change in judgment occurs . we adjust our tax contingencies reserve and income tax provision in the period in which actual results of a settlement with tax authorities differs from our established reserve , the statute of limitations expires for the relevant tax authority to examine the tax position or when more information becomes available . our tax contingencies reserve contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions and whether or not the minimum requirements for recognition of tax benefits have been met .
| results of operations our fiscal year includes 52 or 53 weeks and ends on the last saturday of the calendar year . references to fiscal year mean the year in which that fiscal year ended . the fiscal year ended december 31 , 2011 consisted of 53 weeks while fiscal years ended december 25 , 2010 and december 26 , 2009 contained 52 weeks . the following table sets forth , for the periods indicated , certain items in our consolidated statements of income expressed as a percentage of net sales . 2011 2010 2009 net sales 100.0 % 100.0 % 100.0 % cost of merchandise sold ( a ) 66.8 66.9 67.5 gross margin ( a ) 33.2 33.1 32.5 selling , general and administrative expenses ( a ) 23.0 23.9 24.4 depreciation and amortization 1.9 1.9 2.1 operating income 8.3 7.3 6.0 interest expense , net -- -- 0.1 income before income taxes 8.3 7.3 5.9 income tax provision 3.0 2.7 2.2 net income 5.3 % 4.6 % 3.7 %
| 5,700 |
axogen 's annual cost of such story_separator_special_tag s the following information should be read in conjunction with “ selected financial data ” contained in item 6 of this form 10-k , our consolidated financial statements and the notes thereto contained in item 8 of this form 10-k , the “ cautionary notice regarding forward-looking statements ” contained in part 1 of this form 10-k , “ risk factors ” contained in item 1a of this form 10-k , and the other information appearing elsewhere in , or incorporated by reference into , in this form 10-k . overview we are a leading medical technology company dedicated to peripheral nerve repair . we provide products and education to improve surgical treatment algorithms for peripheral nerve injuries . our portfolio of regenerative medicine products is available in the united states , canada and several other countries and includes ( i ) avance ® nerve graft , an off-the-shelf processed human nerve allograft for bridging severed nerves without the comorbidities associated with a second surgical site , ( ii ) axoguard ® nerve connector , a porcine submucosa extracellular matrix ( “ ecm ” ) coaptation aid for tensionless repair of severed nerves , and ( iii ) axoguard ® nerve protector , a porcine submucosa ecm product used to wrap and protect injured peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments . along with these core surgical products , we also offer the axotouch tm two-point discriminato r and expect to launch in march 2016 the acroval neurosensory and motor testing system . these evaluation and measurement tools assist healthcare professionals in detecting changes in sensation , assessing return of sensory , grip and pinch function , evaluating effective treatment interventions , and providing feedback to patients . the introduction of our evaluation and measurement products further reflects our commitment to bring best practices to the treatment of peripheral nerve conditions . revenue from the distribution of axogen 's nerve repair products , the avance ® nerve graft , axoguard ® nerve connector and axoguard ® nerve protector , in the united states is the main contributor to axogen 's total reported sales and has been the key component of its growth to date . axogen revenues increased in 2015 compared to 2014 primarily as a result of increased product usage by existing accounts , which is consistent with its sales plan as axogen believes that most of its current accounts are lightly penetrated and to a lesser extent as a result of new clients which usually have low sales volumes prior to them being considered existing accounts . axogen has continued to broaden its sales and marketing focus which is expected to have a positive contribution to its revenue growth in the long term . in the near term revenue growth lags behind the expense increases for market development such as hiring and training of new sales representatives and surgeon education programs . story_separator_special_tag liabilities are recovered or settled . a valuation allowance is provided for deferred tax assets when management concludes it is more-likely-than-not that some portion of the deferred tax assets will not be recognized . we have a full valuation allowance established on the deferred tax asset upon management 's best estimate of final outcomes based upon estimated future revenue and changes in business capitalization . factors used to establish the valuation allowance are complicated and could cause variability in application over time . comparison of t he years ended december 31 , 2015 and 201 4 revenues revenues for the year ended december 31 , 2015 increased 62.5 % to approximately $ 27,331,000 as compared to approximately $ 16,817,000 for the year ended december 31 , 2014. this increase was primarily a result of our strategy of focusing on growing product usage in our existing accounts and to a lesser extent the establishment of new accounts . 55 with regards to new accounts , each new customer in a defined period has the potential to become an established customer with repeat orders and increased account penetration . as such , revenue growth primarily occurs from increased purchasing from established customers , while revenue from new customers is usually small as they ramp up purchasing and become existing customers . each new period of measurement is thus benefited from growth in existing customer accounts which include those that were new customers in the prior measurement period . in addition , the company received grant revenue of approximately $ 433,000 in the year ended december 31 , 2015 , as compared to grant revenue of approximately $ 314,000 in the year ended december 31 , 2014 gross profit gross profit for the year ended december 31 , 2015 increased 68.1 % to approximately $ 22,483,000 as compared to approximately $ 13,375,000 for the year ended december 31 , 2014. this increase is primarily attributable to the increased revenues in 2015 , manufacturing efficiencies , a favorable product mix and a product price increase instituted in march 2015. as a result , gross profit margin also improved to 82.3 % in 2015 as compared to 79.5 % for 2014. costs and expenses total cost and expenses increased 37.0 % to approximately $ 31,749,000 for the year ended december 31 , 2015 as compared to approximately $ 23,176,000 for the year ended december 31 , 2014. these increases were primarily due to increasing sales activity , expanded surgeon education programs , increases in compensation and increased general expenses associated with greater corporate size . as a percentage of revenue , total cost and expenses decreased 2 1.6 % from 2014 to 2015 . story_separator_special_tag under the royalty contract , pdl received royalty payments based on a royalty rate of 9.95 % of the company 's net revenues , subject to certain agreed upon minimum payment requirements , which were anticipated to be approximately $ 1.3 million to $ 2.5 million per quarter to begin in the fourth quarter of 2014 through the third quarter of 2020 as provided in the royalty contract . the company recorded interest using its best estimate of the effective interest rate accruing interest using the specified internal rate of return of the p ut o ption of 20 % . the total consideration pdl paid to the company was $ 20,800,000 ( the “ funded amount ” ) , which included $ 19,050,000 pdl paid to the company on october 5 , 2012 and $ 1,750,000 pdl paid to the company on august 14 , 2012 pursuant to an interim revenue interest purchase agreement between the company and pdl , dated august 14 , 2012 ( the “ interim royalty contract ” ) . upon the closing of pdl 's purchase of the specified royalties described above , which was concurrent with the execution of the royalty contract , the interim royalty contract was terminated . on november 12 , 2014 , the company paid pdl $ 30.3 million to fully extinguish the royalty contract . the company has no further obligations under the royalty contract . on november 12 , 2014 , the company sold 643,382 shares of its c ommon s tock for a total of $ 1.75 million to pdl ( “ pdl equity sale ” ) at a price of $ 2.72 per share pursuant to a securities purchase agreement by and between the company and pdl . the company intends to use the proceeds from the pdl equity sale for general corporate purposes . 57 term loan agreement and revenue interest agreement on the signing date , axogen , as borrower , and ac , as guarantor , entered into a term loan agreement ( the “ term loan agreement ” ) with the lenders party thereto and three peaks , an indirect wholly-owned subsidiary of oberland capital healthcare master fund lp ( “ oberland ” ) , as administrative and collateral agent for the lenders . under the term loan agreement , three peaks has agreed to lend to axogen a term loan of $ 25 million ( the “ initial term loan ” ) which has a six year term and requires interest only payments and a final principal payment due at the end of the term . interest is payable quarterly at 9.00 % per annum plus the greater of libor or 1.0 % which as of november 13 , 2014 ( “ the initial closing date ” ) resulted in a 10 % rate . under certain conditions , axogen has the option to draw an additional $ 7 million ( “ subsequent borrowing ” and , together with the initial term loan , the “ term loan ” ) during the period of april 1 , 2016 through june 29 , 2016 ( the closing date of each such subsequent borrowing , a “ subsequent closing date ” and , together with the initial closing date , the “ closing dates ” ) under similar terms and conditions . axogen has to maintain certain covenants including limiting new indebtedness , restriction of the payment of dividends and maintain certain levels of revenue . three peaks has a first perfected security interest in the assets of axogen . in a ddition , axogen entered into a ten year revenue interest agreement ( the “ revenue interest agreement ” ) with three peaks . royalty payments are based on a royalty rate of 3.75 % of axogen 's revenues up to a maximum of $ 30 million in revenues in any 12 month period . in the event the subsequent borrowing is drawn , the royalty rate increases proportionally up to a maximum of 4.80 % . axogen has to maintain certain covenants including those covenants under the term loan . under the term loan agreement , axogen has the option at any time to prepay the term loan , in whole or in part , and the r evenue interest agreement by making the following payment , and three peaks has the right to demand the following payment upon a change of control of axogen , sale of the majority of axogen 's assets or a material adverse change to axogen : ( i ) on or prior to the first anniversary of the applicable closing date , 120 % of the outstanding principal amount of the term loan or any portion being prepaid ; ( ii ) after the first anniversary but no later than the second anniversary of the applicable closing date , 135 % of the outstanding principal amount of the term loan or any portion being prepaid ; ( iii ) after the second anniversary but no later than the third anniversary of the applicable closing date , 150 % of the outstanding principal amount of the term loan or any portion being prepaid ; or ( iv ) after the third anniversary of the applicable closing date , an amount generating an internal rate of return of 16.25 % of the outstanding principal amount of the term loan or any portion being prepaid . in all cases , the amount due is reduced by the sum of interest and principal previously paid and all amounts received under the revenue interest agreement . in each such case axogen will also owe an additional 3 % of the originally advanced term loan amount . upon payment to three peaks , axogen would have no further obligations to three peaks under the term loan or the revenue interest agreement .
| results of operations critical accounting policies and estimates the discussion and analysis of the company 's financial condition and results of operations is based upon the company 's consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the united states of america . the preparation of these financial statements requires 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 reported amount of expenses during the period reported . management bases its estimates and judgments on historical experience , observance of trends in the industry , information provided by outside sources and on various other factors that are believed to be reasonable under the circumstances . actual results may differ from these estimates under different assumptions or conditions . we have identified the following policies as critical to our business operations and the understanding of our consolidated results of operations : 54 accounts receivable and concentration of credit risk — doubtful accounts trade accounts receivable are recorded at the invoiced amount and do not bear interest . the carrying amount of accounts receivable is reduced by an allowance for doubtful accounts which reflects management 's best estimate of the amounts that are uncollectable . in establishing the required allowance , management considers customers ' financial condition , credit history and current economic conditions . account balances are charged off after all means of collection have been exhausted and the potential for recovery is considered remote . our internal financial operations have primary responsibility for billing and collecting our accounts receivable and utilize various processes and procedures in our collection efforts including monthly statements , written collection notices and telephonic follow-ups . in the event the current conditions as to doubtful accounts negatively change , management will consider increasing the reserve for doubtful accounts .
| 5,701 |
in addition , retail value is a component of the financial reports we use to analyze our financial results because , among other things , it can provide additional detail and visibility into our net sales results on a company-wide and a geographic region and product category basis . therefore , this non-gaap measure may be useful to investors because it provides investors with the same information used by management . as this measure is not in accordance with u.s. generally accepted accounting principles , or u.s. gaap , retail value should not be considered in isolation from , nor as a substitute for , net sales and other consolidated income or cash flow statement data prepared in accordance with u.s. gaap , or as a measure of profitability or liquidity . a reconciliation of retail value to net sales is presented below under results of operations . our international operations have provided and will continue to provide a significant portion of our total net sales . as a result , total net sales will continue to be affected by fluctuations in the u.s. dollar against foreign currencies . in order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations , in addition to comparing the percent change in net sales from one period to another in u.s. dollars , we also compare the percent change in net sales from one period to another period using “ net sales in local currency . ” net sales in local currency is not a u.s. gaap financial measure . net sales in local currency removes from net sales in u.s. dollars the impact of changes in exchange rates between the u.s. dollar and the local currencies of our foreign subsidiaries , by translating the current period net sales into u.s. dollars using the same foreign currency exchange rates that were used to translate the net sales for the previous comparable period . we believe presenting net sales in local currency is useful to investors because it allows a meaningful comparison of net sales of our foreign operations from period to period . however , net sales in local currency measures should not be considered in isolation or as an alternative to net sales in u.s. dollar measures that reflect current period exchange rates , or to other financial measures calculated and presented in accordance with u.s. gaap . 43 additionally , the impact of foreign currency fluctuations in venezuela and the price increases we implement as a result of the highly inflationary economy in that market can each , when considered in isolation , have a disproportionately large impact to our consolidated results despite the offsetting nature of these drivers and that net sales in venezuela , which represent less than 1 % of our consolidated net sales , are not material to our consolidated results . therefore , in certain instances , we believe it is helpful to provide additional information with respect to these factors as reported and excluding the impact of venezuela to illustrate the disproportionate nature of venezuela 's individual pricing and foreign exchange impact to our consolidated results . however , excluding the impact of venezuela from these measures is not in accordance with u.s. gaap and should not be considered in isolation or as an alternative to the presentation and discussion thereof calculated in accordance with u.s. gaap . our “ gross profit ” consists of net sales less “ cost of sales , ” which represents our manufacturing costs , the price we pay to our raw material suppliers and manufacturers of our products as well as shipping and handling costs including duties , tariffs , and similar expenses . while certain members may profit from their activities by reselling our products for amounts greater than the prices they pay us , members that develop , retain , and manage other members may earn additional compensation for those activities , which we refer to as “ royalty overrides . ” royalty overrides are our most significant operating expense and consist of : royalty overrides and production bonuses ; the mark hughes bonus payable to some of our most senior members ; and other discretionary incentive cash bonuses to qualifying members . royalty overrides are compensation to members for the development , retention and improved productivity of their sales organizations and are paid to several levels of members on each sale . royalty overrides are compensation for services rendered to us and , as such , are recorded as an operating expense . in china , our independent service providers are compensated for marketing , sales support , and other services instead of the distributor allowances and royalty overrides utilized in our global marketing plan . service fees to china independent service providers are included in selling , general , and administrative expenses . because of local country regulatory constraints , we may be required to modify our member incentive plans as described above . we also pay reduced royalty overrides with respect to certain products worldwide . consequently , the total royalty override percentage may vary over time . our “ contribution margins ” consist of net sales less cost of sales and royalty overrides . “ selling , general , and administrative expenses ” represent our operating expenses , which include labor and benefits , service fees to china service providers , sales events , professional fees , travel and entertainment , member promotions , occupancy costs , communication costs , bank fees , depreciation and amortization , foreign exchange gains and losses and other miscellaneous operating expenses . story_separator_special_tag our “ other operating income ” consists of government grant income related to china and the finalization of insurance recoveries in connection with the flooding at one of our warehouses in mexico during september 2017. our “ other ( income ) expense , net ” consists of non-operating income and expenses such as gains or losses on extinguishment of debt and gains or losses due to subsequent changes in the fair value of the non-transferable contractual contingent value right , or cvr , provided for each share tendered in the october 2017 modified dutch auction tender offer . see note 8 , shareholders ' deficit , to the consolidated financial statements included in part iv , item 15 , exhibits , financial statement schedules , of this annual report on form 10-k for further information on the cvr . most of our sales to members outside the united states are made in the respective local currencies . in preparing our financial statements , we translate revenues into u.s. dollars using average exchange rates . additionally , the majority of our purchases from our suppliers generally are made in u.s. dollars . consequently , a strengthening of the u.s. dollar versus a foreign currency can have a negative impact on our reported sales and contribution margins and can generate foreign currency losses on intercompany transactions . foreign currency exchange rates can fluctuate significantly . from time to time , we enter into foreign currency derivatives to partially mitigate our foreign currency exchange risk as discussed in further detail in part ii , item 7a , quantitative and qualitative disclosures about market risk , of this annual report on form 10-k. 44 results of operations our results of operations for the periods below are not necessarily indicative of results of operations for future periods , which depend upon numerous factors , including our ability to sponsor members and retain sales leaders , further penetrate existing markets , introduce new products and programs that will help our members increase their retail efforts and develop niche market segments . the following table sets forth selected results of our operations expressed as a percentage of net sales for the periods indicated : replace_table_token_7_th ( 1 ) service fees to our independent service providers in china are included in selling , general , and administrative expenses while member compensation for all other countries is included in royalty overrides . changes in net sales are directly associated with the retailing of our products , recruitment of new members , and retention of sales leaders . our strategies involve providing quality products , improved dmos , including daily consumption approaches such as nutrition clubs , easier access to product , systemized training and education of members on our products and methods , and continued promotion and branding of herbalife products . management 's role , in-country and at the region and corporate level , is to provide members with a competitive , broad , and innovative product line , offer leading-edge business tools and technology services , and encourage strong teamwork and member leadership to make doing business with herbalife simple . management uses the marketing plan , which reflects the rules for our global network marketing organization that specify the qualification requirements and general compensation structure for members , coupled with educational and motivational tools and promotions to encourage members to increase retailing , retention , and recruiting , which in turn affect net sales . such tools include sales events such as extravaganzas , leadership development weekends and world team schools where large groups of members gather , thus allowing them to network with other members , learn retailing , retention , and recruiting techniques from our leading members and become more familiar with how to market and sell our products and business opportunities . accordingly , management believes that these development and motivation programs increase the productivity of the sales leader network . the expenses for such programs are included in selling , general , and administrative expenses . we also use event and non-event product promotions to motivate members to increase retailing , retention , and recruiting activities . these promotions have prizes ranging from qualifying for events to product prizes and vacations . a program that we have seen success with in many markets is the member activation program , under which new members , who order a modest number of volume points in each of their first three months , earn a prize . our objective is to improve the quality of sales leaders by encouraging new members to begin acquiring retail customers before attempting to qualify for sales leader status . additionally , in certain markets we have begun to utilize the segmentation of our member base into “ preferred members ” and “ distributors ” for more targeted and efficient communication and promotions for these two differently motivated types of members . in certain other markets that have not been segmented , we have begun using member data to similarly categorize members for communication and promotion efforts . 45 dmos are being generated in many of our markets and are globalized where applicable through the combined efforts of members and country , regional and corporate management . while we support a number of different dmos , one of the most popular dmos is the daily consumption dmo . under our traditional dmo , a member typically sells to its customers on a somewhat infrequent basis ( e.g. , monthly ) which provides fewer opportunities for interaction with their customers . under a daily consumption dmo , a member interacts with its customers on a more frequent basis , including such activities as weekly weigh-ins , which enables the member to better educate and advise customers about nutrition and the proper use of the products and helps promote daily usage as well , thereby helping the member grow his or her business . specific examples of dmos include the nutrition club
| reporting segment results we aggregate our operating segments , excluding china , into a reporting segment , or the primary reporting segment . the primary reporting segment includes the north america , mexico , south and central america , emea , and asia pacific regions . china has been identified as a separate reporting segment as it does not meet the criteria for aggregation . see note 10 , segment information , to the consolidated financial statements included in part iv , item 15 , exhibits , financial statement schedules , of this annual report on form 10-k for further discussion of our reporting segments . see below for discussions of net sales and contribution margin by our reporting segments . net sales by reporting segment the primary reporting segment reported net sales of $ 4,125.1 million for the year ended december 31 , 2019. net sales for the primary reporting segment increased $ 240.9 million , or 6.2 % ( $ 253.8 million , or 6.6 % excluding venezuela ) , as compared to the same period in 2018. in local currency , net sales increased 375.0 % ( 9.6 % excluding venezuela ) for the year ended december 31 , 2019 as compared to the same period in 2018. the 6.2 % increase in net sales for the year ended december 31 , 2019 was primarily due to an increase in sales volume , as indicated by a 6.7 % increase in volume points , and a 369.0 % favorable impact of price increases ( 3.5 % favorable impact excluding venezuela ) , partially offset by a 368.8 % unfavorable impact of fluctuations in foreign currency rates ( 3.1 % unfavorable impact excluding venezuela ) and a 0.4 % unfavorable impact of country sales mix . for a discussion of china 's net sales for the year ended december 31 , 2019 as compared to the same period in 2018 , see the china section of sales by geographic region below .
| 5,702 |
product sales resulting from purchase orders involve a purchase order received by us from our dealers or our stocking distributor . this category includes product sales for standard products , as well as products which require some customization . these sales are recognized under the terms of the purchase order which generally are freight on board ( fob ) shipping point and do not include rights of return . accordingly , these sales are recognized at the time of shipment . allowance for doubtful accounts evaluation of the allowance for doubtful accounts involves management judgments and estimates . we evaluate the collectability of our trade accounts receivable based on a number of factors . in circumstances where management is aware of a customer 's inability to meet its financial obligations to us , or a project dispute makes it unlikely that all of the receivable owed by a customer will be collected , a specific reserve for bad debts is estimated and recorded to reduce the recognized receivable to the estimated amount we believe will ultimately be collected . in addition to specific customer identification of potential bad debts , a general reserve for bad debts is estimated and recorded based on our recent past loss history and an overall assessment of past due trade accounts receivable amounts outstanding . inventories the majority of inventories are valued at the lower of cost or market under the last-in , first-out ( lifo ) method . the lifo method allocates the most recent costs to cost of products sold , and , therefore , recognizes into operating results fluctuations in raw materials and other inventory costs more quickly than other methods . inventories at our international subsidiaries are measured on the first-in , first-out ( fifo ) method . pension benefits we sponsor pension plans covering all employees who met eligibility requirements as of april 30 , 2005. in february 2005 , our pension plans were amended as of april 30 , 2005. no further benefits have been , or will be , earned under the plans subsequent to the amendment date , and no additional participants have been , or will be , added to the plans . several statistical and other factors , which attempt to anticipate future events , are used in calculating the expense and liability related to the pension plans . these factors include assumptions about the discount rate used to calculate and determine benefit obligations and expected return on plan assets within certain guidelines . the actuarial assumptions used by us may differ materially from actual results due to changing market and economic conditions , higher or lower withdrawal rates , or longer or shorter life spans of participants . these differences may significantly affect the amount of pension income or expense recorded by us in future periods . story_separator_special_tag respectively . capital expenditures in fiscal year 2013 were funded primarily from operations . the increase in capital expenditures in fiscal year 2011 was primarily attributable to the completion of the expansion and remodeling of our statesville facilities . capital expenditures in fiscal year 2011 were primarily funded by long-term bank financing . fiscal year 2014 capital expenditures are anticipated to be approximately $ 3.0 million , with the majority of these expenditures for manufacturing equipment . the fiscal year 2014 expenditures are expected to be funded primarily by operating activities , supplemented as needed by borrowings under our revolving credit facility . working capital was $ 25.1 million at april 30 , 2013 , up from $ 23.4 million at april 30 , 2012 , and the ratio of current assets to current liabilities was 2.1-to-1.0 at april 30 , 2013 and 2.2-to-1.0 at april 30 , 2012. the increase in working capital for fiscal year 2013 was primarily due to cash provided by operating activities . we paid cash dividends of $ 0.40 per share in fiscal years 2013 , 2012 and 2011. we expect to pay dividends in the future in line with our actual and anticipated future operating results . recent accounting standards new accounting standards in june 2011 , the fasb issued asu 2011-05 , comprehensive income ( topic 220 ) presentation of comprehensive income. this update requires an entity to present the total of comprehensive income , the components of net income , and the components of other comprehensive income in either a single continuous statement or two separate but consecutive statements . this guidance does not change the items that must be reported in other comprehensive income . subsequently , in december 2011 , the fasb issued asu 2011-12 which deferred some aspects of the june guidance that relate to the presentation of reclassification adjustments . asu 2011-05 is effective for fiscal years , and interim periods within those years , beginning after december 15 , 2011. the company adopted this standard effective may 1 , 2012. the adoption of this standard did not have a significant impact on the company 's consolidated financial position or results of operations . in february 2013 , the fasb issued asu 2013-02 , comprehensive income ( topic 220 ) reporting of amounts reclassified out of accumulated other comprehensive income. this guidance adds new disclosure requirements for items reclassified out of accumulated other comprehensive income ( aoci ) , including changes in aoci balances by component and significant items reclassified out of aoci . this guidance does not amend any existing requirements for reporting net income or aoci in the 12 financial statements . the company will adopt this standard in fiscal year 2014. the company does not expect the adoption of this standard to have a significant impact on the company 's consolidated financial position or results of operations . in march 2013 , the fasb issued asu 2013-05 foreign currency matters ( topic 830 ) parent 's accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of story_separator_special_tag product sales resulting from purchase orders involve a purchase order received by us from our dealers or our stocking distributor . this category includes product sales for standard products , as well as products which require some customization . these sales are recognized under the terms of the purchase order which generally are freight on board ( fob ) shipping point and do not include rights of return . accordingly , these sales are recognized at the time of shipment . allowance for doubtful accounts evaluation of the allowance for doubtful accounts involves management judgments and estimates . we evaluate the collectability of our trade accounts receivable based on a number of factors . in circumstances where management is aware of a customer 's inability to meet its financial obligations to us , or a project dispute makes it unlikely that all of the receivable owed by a customer will be collected , a specific reserve for bad debts is estimated and recorded to reduce the recognized receivable to the estimated amount we believe will ultimately be collected . in addition to specific customer identification of potential bad debts , a general reserve for bad debts is estimated and recorded based on our recent past loss history and an overall assessment of past due trade accounts receivable amounts outstanding . inventories the majority of inventories are valued at the lower of cost or market under the last-in , first-out ( lifo ) method . the lifo method allocates the most recent costs to cost of products sold , and , therefore , recognizes into operating results fluctuations in raw materials and other inventory costs more quickly than other methods . inventories at our international subsidiaries are measured on the first-in , first-out ( fifo ) method . pension benefits we sponsor pension plans covering all employees who met eligibility requirements as of april 30 , 2005. in february 2005 , our pension plans were amended as of april 30 , 2005. no further benefits have been , or will be , earned under the plans subsequent to the amendment date , and no additional participants have been , or will be , added to the plans . several statistical and other factors , which attempt to anticipate future events , are used in calculating the expense and liability related to the pension plans . these factors include assumptions about the discount rate used to calculate and determine benefit obligations and expected return on plan assets within certain guidelines . the actuarial assumptions used by us may differ materially from actual results due to changing market and economic conditions , higher or lower withdrawal rates , or longer or shorter life spans of participants . these differences may significantly affect the amount of pension income or expense recorded by us in future periods . story_separator_special_tag respectively . capital expenditures in fiscal year 2013 were funded primarily from operations . the increase in capital expenditures in fiscal year 2011 was primarily attributable to the completion of the expansion and remodeling of our statesville facilities . capital expenditures in fiscal year 2011 were primarily funded by long-term bank financing . fiscal year 2014 capital expenditures are anticipated to be approximately $ 3.0 million , with the majority of these expenditures for manufacturing equipment . the fiscal year 2014 expenditures are expected to be funded primarily by operating activities , supplemented as needed by borrowings under our revolving credit facility . working capital was $ 25.1 million at april 30 , 2013 , up from $ 23.4 million at april 30 , 2012 , and the ratio of current assets to current liabilities was 2.1-to-1.0 at april 30 , 2013 and 2.2-to-1.0 at april 30 , 2012. the increase in working capital for fiscal year 2013 was primarily due to cash provided by operating activities . we paid cash dividends of $ 0.40 per share in fiscal years 2013 , 2012 and 2011. we expect to pay dividends in the future in line with our actual and anticipated future operating results . recent accounting standards new accounting standards in june 2011 , the fasb issued asu 2011-05 , comprehensive income ( topic 220 ) presentation of comprehensive income. this update requires an entity to present the total of comprehensive income , the components of net income , and the components of other comprehensive income in either a single continuous statement or two separate but consecutive statements . this guidance does not change the items that must be reported in other comprehensive income . subsequently , in december 2011 , the fasb issued asu 2011-12 which deferred some aspects of the june guidance that relate to the presentation of reclassification adjustments . asu 2011-05 is effective for fiscal years , and interim periods within those years , beginning after december 15 , 2011. the company adopted this standard effective may 1 , 2012. the adoption of this standard did not have a significant impact on the company 's consolidated financial position or results of operations . in february 2013 , the fasb issued asu 2013-02 , comprehensive income ( topic 220 ) reporting of amounts reclassified out of accumulated other comprehensive income. this guidance adds new disclosure requirements for items reclassified out of accumulated other comprehensive income ( aoci ) , including changes in aoci balances by component and significant items reclassified out of aoci . this guidance does not amend any existing requirements for reporting net income or aoci in the 12 financial statements . the company will adopt this standard in fiscal year 2014. the company does not expect the adoption of this standard to have a significant impact on the company 's consolidated financial position or results of operations . in march 2013 , the fasb issued asu 2013-05 foreign currency matters ( topic 830 ) parent 's accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of
| results of operations sales for fiscal year 2013 were $ 117.1 million , an increase of 13.9 % from fiscal year 2012 sales of $ 102.8 million . domestic operations sales for fiscal year 2013 were $ 93.5 million , an increase of 11.4 % from fiscal year 2012 sales of $ 84.0 million . international operations sales for fiscal year 2013 were $ 23.6 million , an increase of 25 % from fiscal year 2012 sales of $ 18.9 million . the increase in domestic operations sales was due to increased activity for mid-sized projects and several large direct projects . the increase in international operations sales was due to the shipment of several large international orders . sales for fiscal year 2012 were $ 102.8 million , an increase of 3 % from fiscal year 2011 sales of $ 100.0 million . domestic operations sales for fiscal year 2012 were $ 84.0 million , comparable to fiscal year 2011 sales of $ 84.1 million . international operations sales for fiscal year 2012 were $ 18.9 million , an increase of 19 % from fiscal year 2011 sales of $ 15.9 million . the increase in international operations sales reflected increased sales opportunities as the international marketplace continued to recover . 10 our order backlog was $ 80.2 million at april 30 , 2013 , as compared to $ 86.2 million at april 30 , 2012 and $ 65.7 million at april 30 , 2011. gross profit represented 19.0 % , 18.6 % and 19.3 % of sales in fiscal years 2013 , 2012 and 2011 , respectively . the increase in gross profit margin for fiscal year 2013 was primarily due to cost savings initiatives and a more favorable product mix . the decrease in gross profit margin for fiscal year 2012 was primarily due to increased competitive pricing in the marketplace and higher costs for steel and epoxy resin raw materials .
| 5,703 |
readers are cautioned not to place undue reliance on these forward-looking statements , which reflect management 's opinions only as of the date hereof . we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements . readers should also carefully review the risk factors described in other documents which we file from time to time with the sec , including the quarterly reports on form 10-q to be filed by us during 2012. general we are a leading provider of environmental , energy and industrial services throughout north america . we serve over 60,000 customers , including a majority of fortune 500 companies , thousands of smaller private entities and numerous federal , state , provincial and local governmental agencies . we have more than 200 locations , including over 50 waste management facilities , throughout north america in 37 u.s. states , seven canadian provinces , mexico and puerto rico . we also operate international locations in bulgaria , china , singapore , sweden , thailand and the united kingdom . we report our business in four operating segments , consisting of : technical services—provides a broad range of hazardous material management services including the packaging , collection , transportation , treatment and disposal of hazardous and non-hazardous waste at company-owned incineration , landfill , wastewater , and other treatment facilities . field services—provides a wide variety of environmental cleanup services on customer sites or other locations on a scheduled or emergency response basis including tank cleaning , decontamination , remediation , and spill cleanup . industrial services—provides industrial and specialty services , such as high-pressure and chemical cleaning , catalyst handling , decoking , material processing , and industrial lodging services to refineries , chemical plants , oil sands facilities , pulp and paper mills , and other industrial facilities . oil and gas field services—provides fluid handling , fluid hauling , downhole servicing , surface rentals , exploration , mapping and directional boring services to the energy sector serving oil and gas exploration , production , and power generation . overview during the third quarter of 2011 , we acquired ( i ) certain assets of a canadian public company which is engaged in the business of providing geospatial , line clearing and drilling services in canada and the united states ; ( ii ) all of the outstanding stock of a privately owned u.s. company which specializes in treating refinery waste streams primarily in the united states ; and ( iii ) all of the outstanding stock of a privately owned canadian company which manufactures modular buildings . the combined purchase price for the three acquisitions was approximately $ 141.3 million , including the assumption and payment of debt of $ 25.2 million , and preliminary post-closing adjustments of $ 3.7 million based upon the assumed target amounts of working capital . these third quarter acquisitions ( i ) enhance our service offerings to our customers and our reputation as a leading provider of comprehensive field services for the oil and gas sectors ; ( ii ) provide a complement to our catalyst handling , industrial and specialty industrial services for the refinery and petrochemical industries ; and ( iii ) help expand our growing lodging business , respectively . these acquisitions have been integrated with the oil and gas field services , technical services and industrial services segments of our operations and reporting structure . on june 10 , 2011 , we completed the acquisition of peak energy services ltd. ( “ peak ” ) and integrated the peak operations with our existing systems and processes . peak is a diversified energy services organization headquartered in calgary , alberta , operating in western canada and the u.s. through its various operating divisions , peak provides drilling and production equipment and services to its customers in the conventional and unconventional oil and natural gas industries as well as the oil sands region of western canada . peak also provides water technology solutions to a variety of customers throughout north america . at acquisition , peak employed approximately 900 people . this acquisition expands our presence in the energy services marketplace , particularly in the area of oil and natural gas drilling and production support . the peak business has been integrated within the oil and gas field services and industrial services segments of our operations and reporting structure . 29 we acquired 100 % of peak 's outstanding common shares ( other than the 3.15 % of peak 's outstanding common shares which we already owned ) in exchange for approximately cdn $ 158.7 million in cash ( cdn $ 0.95 for each peak share ) , and the assumption and payment of peak net debt of approximately cdn $ 37.5 million . the total acquisition price , which includes the previous investment in peak shares referred to above , was approximately cdn $ 200.2 million or u.s. $ 205.1 million based on an exchange rate of 0.976057 cdn $ to one u.s. $ on june 10 , 2011. during the year ended december 31 , 2011 , our revenues increased 15 % to $ 1.98 billion compared with $ 1.73 billion during the year ended december 31 , 2010 . revenues for the year ended december 31 , 2011 included our emergency response efforts related to the yellowstone river oil spill in montana of $ 43.6 million . revenues for the prior year included revenue associated with our oil spill response efforts in the gulf of mexico and michigan of $ 253.0 million . the year-over-year revenue growth , exclusive of the oil spill project work , was driven by broad-based growth across all of our segments . our revenues were also favorably impacted by $ 23.8 million due to the strengthening of the canadian dollar . our field services revenues accounted for 15 % of our total revenues for the year ended december 31 , 2011 . story_separator_special_tag landfill assets —landfill assets include the costs of landfill site acquisition , permits and cell construction incurred to date . these amounts are amortized under the units-of-consumption method such that the asset is completely amortized when the landfill ceases accepting waste . landfill capacity —landfill capacity , which is the basis for the amortization of landfill assets and for the accrual of final closure and post-closure obligations , represents total permitted airspace plus unpermitted airspace that management believes is probable of ultimately being permitted based on established criteria . our management applies the following criteria for evaluating the probability of obtaining a permit for future expansion airspace at existing sites , which provides management a basis to evaluate the likelihood of success of unpermitted expansions : personnel are actively working to obtain the permit or permit modifications ( land use , state and federal ) necessary for expansion of an existing landfill , and progress is being made on the project . management expects to submit the application within the next year and to receive all necessary approvals to accept waste within the next five years . at the time the expansion is included in management 's estimate of the landfill 's useful economic life , it is probable that the required approvals will be received within the normal application and processing time periods for approvals in the jurisdiction in which the landfill is located . the company or other owner of the landfill has a legal right to use or obtain the right to use the land associated with the expansion plan . there are no significant known political , technical , legal or business restrictions or other issues that could impair the success of such expansion . a financial feasibility analysis has been completed and the results demonstrate that the expansion will have a positive financial and operational impact such that management is committed to pursuing the expansion . additional airspace and related additional costs , including permitting , final closure and post-closure costs , have been estimated based on the conceptual design of the proposed expansion . exceptions to the criteria set forth above are approved through a landfill-specific approval process that includes approval from our chief financial officer and review by the audit committee of our board of directors . as of december 31 , 2011 , there was one unpermitted expansion at one location included in management 's landfill calculation , which represented 22.5 % of our remaining airspace at that date . as of december 31 , 2011 and 2010 , none of the unpermitted expansions were considered exceptions to management 's established criteria described above . if actual expansion airspace is significantly different from management 's estimate of expansion airspace , the amortization rates used for the units-of-consumption method would change , therefore impacting our profitability . if we determine that there is less actual expansion airspace at a landfill , this would increase amortization expense recorded and decrease profitability , while if we determine a landfill has more actual expansion airspace , amortization expense would decrease and profitability would increase . landfill final closure and post-closure liabilities —the balance of landfill final closure and post-closure liabilities at december 31 , 2011 and 2010 was $ 25.8 million and $ 29.8 million , respectively . we have material financial commitments for the costs associated with requirements of the epa and the comparable regulatory agency in canada for landfill final closure and post-closure activities . in the united states , the landfill final closure and post-closure requirements are established under the 31 standards of the epa , and are implemented and applied on a state-by-state basis . we develop estimates for the cost of these activities based on our evaluation of site-specific facts and circumstances , such as the existence of structures and other landfill improvements that would need to be dismantled , the amount of groundwater monitoring and leachate management expected to be performed , and the length of the post-closure period as determined by the applicable regulatory agency . included in our cost estimates are our interpretation of current regulatory requirements and proposed regulatory changes . such estimates may change in the future due to various circumstances including , but not limited to , permit modifications , changes in legislation or regulations , technological changes and results of environmental studies . we perform zero-based reviews of these estimated liabilities at least every five years or sooner if the occurrence of a significant event is likely to change the timing or amount of the currently estimated expenditures . we consider a significant event to be a new regulation or an amendment to an existing regulation , a new permit or modification to an existing permit , or a change in the market price of a significant cost item . our cost estimates are calculated using internal sources as well as input from third party experts . these costs are measured at estimated fair value using present value techniques , and therefore changes in the estimated timing of closure and post-closure activities would affect the liability , the value of the related asset , and our results of operations . final closure costs are the costs incurred after the site ceases to accept waste , but before the landfill is certified as closed by the applicable state or provincial regulatory agency . these costs generally include the costs required to cap the final cell of the landfill ( if not included in cell closure ) , to dismantle certain structures for landfills and other landfill improvements and regulation-mandated groundwater monitoring , and for leachate management . post-closure costs involve the maintenance and monitoring of a landfill site that has been certified closed by the applicable regulatory agency . these costs generally include groundwater monitoring and leachate management . regulatory post-closure periods are generally 30 years after landfill closure . final closure and post-closure obligations are accrued on a units-of-consumption basis , such that the present value of the final closure and post-closure obligations are fully accrued at the date the landfill discontinues accepting waste .
| results of operations the following table sets forth for the periods indicated certain operating data associated with our results of operations . this table and subsequent discussions should be read in conjunction with item 6 , `` selected financial data , '' and item 8 , `` financial statements and supplementary data , '' of this report . replace_table_token_12_th segment data performance of our segments is evaluated on several factors of which the primary financial measure is adjusted ebitda . the following tables set forth certain operating data associated with our results of operations and compare adjusted ebitda contribution by operating segment for the years ended december 31 , 2011 and 2010 and the years ended december 31 , 2010 and 2009 . see footnote 3 under item 6 , “ selected financial data , ” for a description of the calculation of adjusted ebitda and a reconciliation of adjusted ebitda to net income and net cash provided by operating activities . we consider the adjusted ebitda contribution from each operating segment to include revenue attributable to that segment less operating expenses , which include cost of revenues and selling , general and administrative expenses . revenue attributable to each segment is generally external or direct revenue from third party customers . direct revenue is the revenue allocated to the segment performing the provided service . certain income or expenses of a non-recurring or unusual nature are not included in the operating segment 's adjusted ebitda contribution . during the quarter ended march 31 , 2011 , we re-aligned our management reporting structure . under the new structure , our operations are managed in four reportable segments : technical services , field services , industrial services and oil and gas field services . the new segment , oil and gas field services , consists of the previous exploration services segment , as well as certain oil and gas related field services departments that were re-assigned from the industrial services segment .
| 5,704 |
we generally use an income based valuation method to estimate the fair value of intangible assets , which story_separator_special_tag you should read the following discussion in conjunction with the sections of this report entitled “ forward-looking statements , ” “ risk factors ” and “ selected financial data , ” along with the historical consolidated financial statements including related notes , included in this report . story_separator_special_tag issuances through a public offering and an “ at-the-market ” equity offering sales agreement with jmp securities llc ( “ jmp ” ) . we used a significant portion of the net proceeds to redeem secured indebtedness and make investments and also used $ 37.7 million to purchase op units and common shares ; and ● we filed a shelf registration statement as a `` well-known seasoned issuer , '' which registered an unlimited and indeterminate amount of debt or equity securities for future issuance and sale . the shelf registration statement was declared effective upon filing . financing activity . ● we closed our thirteenth collateralized securitization vehicle ( clo xiii ) totaling $ 800.0 million of real estate related assets and cash , of which $ 668.0 million of investment grade notes were issued to third party investors and $ 70.0 million of below investment-grade notes and a $ 62.0 million equity interest in the portfolio were retained by us ; ● we closed our first private label multifamily mortgage loan securitization totaling $ 727.2 million and retained the apl certificates totaling $ 63.6 million ; ● we completed the unwind of clo viii , redeeming $ 282.9 million of outstanding notes which were repaid primarily from refinancing the remaining assets within our existing financing facilities ( including clo xiii ) , as well as with cash held by clo viii ; ● we completed the unwind of our $ 70.0 million luxembourg commercial real estate debt fund ( “ debt fund ” ) and redeemed all the outstanding notes with a portion of the proceeds from our senior unsecured notes issued in march 2020 ; and ● we increased the capacity of our credit facilities and repurchase agreements by approximately $ 420.0 million primarily by increasing the capacity of existing facilities . 38 adoption of current expected credit losses ( “ cecl ” ) . the new cecl guidance , which we adopted on january 1 , 2020 , requires companies to estimate the expected lifetime credit loss of an asset over its contractual term with quarterly updates . during 2020 , we recorded a $ 74.6 million net credit loss provision under cecl . see note 2 for details . agency business activity . ● loan originations and sales totaled $ 6.71 billion and $ 6.59 billion , respectively , and our fee-based servicing portfolio grew 23 % to $ 24.63 billion from $ 20.06 billion at december 31 , 2019. our loan sales and servicing portfolio totals include the private label loans sold and securitized in may 2020 ; and ● we recorded losses on derivative instruments totaling $ 58.3 million , primarily related to our over-the-counter interest rate swap futures ( “ swap futures ” ) held to hedge interest rate exposure on our private label loans until they are securitized . structured business activity . ● our structured loan and investment portfolio grew 28 % to $ 5.48 billion on loan originations totaling $ 2.43 billion , partially offset by loan runoff totaling $ 1.21 billion ; and ● we recorded income of $ 75.7 million and received $ 43.2 million of cash distributions from our residential mortgage business joint venture . dividend . we raised our quarterly common dividend for the past three consecutive quarters to $ 0.33 per share , a 10 % increase over the dividend declared in the fourth quarter of 2019 of $ 0.30 per share . current market conditions , risks and recent trends as discussed throughout this report , the covid-19 pandemic has impacted the global economy in an unprecedented way , swiftly halting activity across many industries , and causing significant disruption and liquidity constraints in many market segments , including the financial services , real estate and credit markets . the impact of covid-19 on companies continues to evolve , and the extent and duration of the economic fallout from this pandemic remains unclear . covid-19 could have a continued and prolonged adverse impact on economic and market conditions and could trigger a period of global economic slowdown . adverse economic conditions have and may continue to result in declining real estate values , increased payment delinquencies and defaults and increased loan modifications and foreclosures , all of which could significantly impact our results of operations , financial condition , business prospects and our ability to make distributions to our stockholders . the pandemic has caused a dislocation in the capital markets resulting in a reduction of available liquidity . many commercial mortgage reits are suffering from the reduced available liquidity as access to capital is critical to grow their business . despite this reduction in liquidity , subsequent to the first quarter of 2020 we raised $ 233.6 million through two private placement debt offerings and common stock issuances through a public offering and our “ at-the-market ” equity offering sales agreements . our agency business requires limited capital to grow , as originations are financed through warehouse facilities for generally up to 60 days before the loans are sold , therefore , this lack of liquidity has not and should not , impact our ability to grow this business . however , our structured business is more reliant on the capital markets to grow , and therefore , a lack of liquidity could limit our ability to grow this business . in our structured business , 81 % of our portfolio is in multifamily assets with most of these loans containing interest reserves and or replenishment obligations by our borrowers . story_separator_special_tag collateralized loan obligations increased $ 387.2 million , primarily due to the issuance of a new clo , where we issued $ 668.0 million of notes to third party investors , partially offset by the unwind of a clo totaling $ 282.9 million . we completed the unwind of our $ 70.0 million debt fund . senior unsecured notes increased $ 343.0 million , primarily due to our issuances of $ 275.0 million of 4.50 % notes and $ 70.8 million of 8.00 % notes . convertible senior unsecured notes decreased $ 16.2 million , primarily due to partial redemption of our 5.25 % convertible notes . allowance for loss-sharing obligations increased $ 29.7 million , primarily due to the adoption of cecl in the first quarter of 2020. see note 2 for details . other liabilities increased $ 63.3 million , primarily due to an increase in our operating lease liabilities as a result of office lease extensions and an increase in accrued compensation . equity during 2020 , we sold 14,790,121 shares of our common stock through a public offering and our “ at-the-market ” agreement and issued 368,498 shares of common stock in connection with settlements of our convertible notes . we also repurchased 4,184,394 shares of our common stock and op units from acm and certain of its members and repurchased 993,106 shares of our common stock under our share repurchase program . 41 distributions the following table presents dividends declared ( on a per share basis ) for 2020 : replace_table_token_7_th ( 1 ) the dividend declared on january 31 , 2020 was for december 1 , 2019 through february 29 , 2020. the dividend declared on may 1 , 2020 was for march 1 , 2020 through may 31 , 2020. the dividend declared on july 29 , 2020 was for june 1 , 2020 through august 31 , 2020. the dividend declared on october 28 , 2020 was for september 1 , 2020 through november 30 , 2020. common stock – on february 17 , 2021 , the board of directors declared a cash dividend of $ 0.33 per share of common stock . the dividend is payable on march 19 , 2021 to common stockholders of record as of the close of business on march 3 , 2021. preferred stock – on february 1 , 2021 , the board of directors declared a cash dividend of $ 0.515625 per share of 8.25 % series a preferred stock ; a cash dividend of $ 0.484375 per share of 7.75 % series b preferred stock ; and a cash dividend of $ 0.53125 per share of 8.50 % series c preferred stock . these amounts reflect dividends from december 1 , 2020 through february 28 , 2021 and are payable on march 1 , 2021 to preferred stockholders of record on february 15 , 2021. deferred compensation during 2020 , we issued 360,885 shares of restricted stock to our employees ( including our chief executive officer ) and 52,735 shares to the independent members of the board of directors . our chief executive officer was also granted 275,569 shares of performance-based restricted stock units and 313,152 shares of performance-based restricted stock as a result of achieving goals related to the integration of our 2016 acquisition of acm 's agency platform ( the “ acquisition ” ) . our chief executive officer net settled 421,348 shares of fully vested performance-based restricted stock units for 215,014 common shares and 357,569 shares of fully vested performance-based restricted stock for 182,467 common shares . we also withheld 158,722 shares of restricted common stock from our employees ( including our chief executive officer ) to net settle and pay their respective withholding taxes in connection with awards that vested . see note 17 for details of our deferred compensation transactions . agency servicing portfolio the following table sets forth the characteristics of our loan servicing portfolio collateralizing our mortgage servicing rights and servicing revenue ( $ in thousands ) : replace_table_token_8_th replace_table_token_9_th 42 ( 1 ) prepayments reflect loans repaid prior to six months from the loan 's maturity . the majority of our loan servicing portfolio has a prepayment protection term and therefore , we may collect a prepayment fee which is included as a component of servicing revenue , net . ( 2 ) delinquent loans reflect loans that are contractually 60 days or more past due . as of december 31 , 2020 and 2019 , delinquent loans totaled $ 91.3 million and $ 59.2 million , respectively , of which $ 19.6 million and $ 33.5 million , respectively , were in the foreclosure process . in addition , as of december 31 , 2019 , loans collateralizing our servicing portfolio totaling $ 3.2 million were in bankruptcy . our servicing portfolio represents commercial real estate loans originated in our agency business , which are generally transferred or sold within 60 days from the date the loan is funded . primarily all of the loans in our servicing portfolio are collateralized by multifamily properties . in addition , we are generally required to share in the risk of any losses associated with loans sold under the fannie mae dus program , see note 12. comparison of results of operations for years ended 2020 and 2019 the following table provides our consolidated operating results ( $ in thousands ) : replace_table_token_10_th nm – not meaningful 43 the following table presents the average balance of our structured business interest-earning assets and interest-bearing liabilities , associated interest income ( expense ) and the corresponding weighted average yields ( $ in thousands ) : replace_table_token_11_th replace_table_token_12_th ( 1 ) based on upb for loans , amortized cost for securities and principal amount for debt . ( 2 ) weighted average yield calculated based on annualized interest income or expense divided by average carrying value .
| overview through our structured business , we invest in a diversified portfolio of structured finance assets in the multifamily , single-family rental and commercial real estate markets , primarily consisting of bridge and mezzanine loans , including junior participating interests in first mortgages and preferred and direct equity . we also invest in real estate-related joint ventures and may directly acquire real property and invest in real estate-related notes and certain mortgage-related securities . through our agency business , we originate , sell and service a range of multifamily finance products through fannie mae and freddie mac , ginnie mae , fha and hud . we retain the servicing rights and asset management responsibilities on substantially all loans we originate and sell under the gse and hud programs . we are an approved fannie mae dus lender nationally , a freddie mac multifamily conventional loan lender , seller/servicer , in new york , new jersey and connecticut , a freddie mac affordable , manufactured housing , senior housing and sbl lender , seller/servicer , nationally and a hud map and lean senior housing/healthcare lender nationally . we also originate and service permanent financing loans underwritten using the guidelines of our existing agency loans sold to the gses , which we refer to as `` private label '' loans and originate and sell finance products through conduit/commercial mortgage-backed securities ( `` cmbs '' ) programs . we pool and securitize the private label loans and sell certificates in the securitizations to third-party investors , while retaining the servicing rights and apl certificates of the securitization . we conduct our operations to qualify as a reit . a reit is generally not subject to federal income tax on its reit-taxable income that is distributed to its stockholders , provided that at least 90 % of its reit-taxable income is distributed and provided that certain other requirements are met .
| 5,705 |
our ability to hold finance receivables for the foreseeable future is subject to a number of factors , including economic and liquidity conditions , and therefore may change . as of each reporting period , management determines our ability to hold finance receivables for the story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and related notes in part ii - item 8 of this report . this discussion and analysis contains forward-looking statements that involve risk , uncertainties , and assumptions . see “ forward-looking statements ” beginning on page 3 of this report . our actual results could differ materially from those anticipated in the forward-looking statements as a result of many factors , including those discussed in “ risk factors ” in part i - item 1a of this report . an index to our management 's discussion and analysis follows : replace_table_token_4_th overview on november 15 , 2015 , we completed our acquisition of onemain from citigroup . the onemain acquisition has brought together two branch-based consumer finance companies with complementary strategies and locations . together , we provide personal loans primarily to non-prime customers through our combined network of over 1,800 branch offices in 44 states as of december 31 , 2016 and on a centralized basis as part of our centralized operations and our digital platform ( our online consumer loan origination business ) . we also write credit and non-credit insurance covering our customers . in addition , we service loans owned by us and service or subservice loans owned by third parties . our products our product offerings include : personal loans — we offer personal loans through our combined branch network and over the internet through our centralized operations to customers who generally need timely access to cash . our personal loans are typically non-revolving with a fixed-rate and a fixed , original term of three to six years and are secured by consumer goods , automobiles , or other personal property or are unsecured . at december 31 , 2016 , we had over 2.2 million personal loans , representing $ 13.6 billion of net finance receivables , of which 43 % were secured by collateral , compared to 2.2 million personal loans totaling $ 13.3 billion at december 31 , 2015 , of which 27 % were secured by collateral . personal loans held for sale totaled $ 617 million at december 31 , 2015. insurance products — we offer our customers credit insurance ( life insurance , disability insurance , and involuntary unemployment insurance ) and non-credit insurance through both our combined branch network and our centralized operations . credit insurance and non-credit insurance products are provided by the springleaf insurance subsidiaries , merit and yosemite , and by the onemain insurance subsidiaries , ahl and triton . we also offer auto membership plans of an unaffiliated company as an ancillary product . our products also included the springcastle portfolio at december 31 , 2015 , as described below : springcastle portfolio — we service the springcastle portfolio that was acquired through a joint venture in which we previously owned a 47 % equity interest . on march 31 , 2016 , the springcastle portfolio was sold in connection with the springcastle interests sale , as discussed in “ recent developments and outlook ” below . these loans consisted of 40 unsecured loans and loans secured by subordinate residential real estate mortgages and include both closed-end accounts and open-end lines of credit . these loans were in a liquidating status and varied in substance and form from our originated loans . unless we are terminated , we will continue to provide the servicing for these loans pursuant to a servicing agreement , which we service as unsecured loans due to the fact that the liens are subordinated to superior ranking security interests . our non-originating legacy products include : real estate loans — we ceased real estate lending in january of 2012 , and during 2014 , we sold $ 6.4 billion real estate loans held for sale . in connection with the august 2016 real estate loan sale and the december 2016 real estate loan sale ( as discussed and defined in “ recent developments and outlook ” below ) , we sold $ 308 million real estate loans held for sale . the remaining real estate loans may be closed-end accounts or open-end home equity lines of credit , generally have a fixed rate and maximum original terms of 360 months , and are secured by first or second mortgages on residential real estate . predominantly , our first lien mortgages are serviced by third-party servicers , and we continue to provide servicing for our second lien mortgages ( home equity lines of credit ) . at december 31 , 2016 , we had $ 144 million of real estate loans held for investment , of which 93 % were secured by first mortgages , compared to $ 538 million at december 31 , 2015 , of which 38 % were secured by first mortgages . real estate loans held for sale totaled $ 153 million and $ 176 million at december 31 , 2016 and 2015 , respectively . retail sales finance — we ceased purchasing retail sales contracts and revolving retail accounts in january of 2013. we continue to service the liquidating retail sales contracts and will provide revolving retail sales financing services on our revolving retail accounts . we refer to retail sales contracts and revolving retail accounts collectively as “ retail sales finance. ” our segments at december 31 , 2016 , we had three operating segments : consumer and insurance ; acquisitions and servicing ; and real estate . following the onemain acquisition , we include onemain 's operations within the consumer and insurance segment . see note 22 of the notes to consolidated financial statements in part ii - item 8 of this report for more information about our segments . story_separator_special_tag see note 2 of the notes to consolidated financial statements in part ii - item 8 of this report for further information on the settlement agreement and the lendmark sale . springcastle interests sale on march 31 , 2016 , springleaf finance , inc. , springcastle holdings , llc ( “ springcastle holdings ” ) and springleaf acquisition corporation ( “ springleaf acquisition ” and , together with springcastle holdings , the “ springcastle sellers ” ) , wholly owned subsidiaries of omh , entered into a purchase agreement with certain subsidiaries of new residential investment corp. ( “ nrz ” and such subsidiaries , the “ nrz buyers ” ) and bto willow holdings ii , l.p. and blackstone family tactical opportunities investment partnership—nq—esc l.p. ( collectively , the “ blackstone buyers ” and together with the nrz buyers , the “ springcastle buyers ” ) . pursuant to the purchase agreement , on march 31 , 2016 , springcastle holdings sold its 47 % limited liability company interest in each of springcastle america , llc , springcastle credit , llc and springcastle finance , llc , and springleaf acquisition sold its 47 % limited liability company interest in springcastle acquisition llc , to the springcastle buyers for an aggregate purchase price of approximately $ 112 million ( the “ springcastle interests sale ” ) . springcastle america , llc , springcastle credit , llc , springcastle finance , llc and springcastle acquisition llc are collectively referred to herein as the “ springcastle joint venture. ” as a result of this sale , springcastle acquisition and springcastle holdings no longer hold any ownership interests of the springcastle joint venture . however , unless we are terminated , we will remain as servicer of the springcastle portfolio under the servicing agreement for the springcastle funding trust . see note 2 of the notes to consolidated financial statements in part ii - item 8 of this report for further information on the springcastle interests sale . real estate loan sales on august 3 , 2016 , sfc and certain of its subsidiaries sold a portfolio of second lien mortgage loans for aggregate cash proceeds of $ 246 million ( the “ august 2016 real estate loan sale ” ) and recorded a net loss in other revenues at the time of sale of $ 4 million . the proceeds from this sale , together with cash on hand , were used to pay off $ 375 million aggregate principal amount of our senior notes that matured in the third quarter of 2016. unless we are terminated or we resign as servicer , we will continue to service the loans included in this sale pursuant to a servicing agreement . the purchase and sale agreement and the servicing agreement include customary representations and warranties and indemnification provisions . on december 19 , 2016 , sfc and certain of its subsidiaries sold a portfolio of first and second lien mortgage loans for aggregate cash proceeds of $ 58 million ( the “ december 2016 real estate loan sale ” ) and recorded a net loss in other revenues at the time of sale of less than $ 1 million . liquidation of united kingdom subsidiary on august 16 , 2016 , we liquidated our united kingdom subsidiary , ocean finance and mortgages limited , which had previously ceased originating real estate loans in 2012. in connection with this liquidation , we recorded a net gain in other revenues of $ 4 million resulting from a net realized foreign currency translation gain . outlook on november 15 , 2015 , we completed the onemain acquisition , the most significant transaction undertaken by the company to date . during 2016 , many significant integration milestones were achieved , involving substantial changes in operating policies and procedures in the onemain branch network and significant personnel realignment across our onemain and springleaf field management teams . in the second half of 2016 , we developed and implemented unified pricing , credit , and underwriting models across our branches , consolidated branch incentive and commission plans , and configured former onemain branches into the springleaf data network . we completed the conversion of approximately 100 of the former onemain branches ( representing approximately 10 % of the former onemain branch network 's net finance receivables ) to the springleaf loan origination and servicing system . this initial conversion , as well as the re-branding of all springleaf branches and websites under the “ onemain financial ” name and logo , was completed on october 1 , 2016. during january and february of 2017 , all of the remaining former onemain branches , as well as our centralized servicing operations , were converted to springleaf systems , completing the integration . we also continued to execute our strategy to increase the proportion of our loan originations secured by auto collateral ( which typically have lower yields and credit losses relative to unsecured personal loans ) , particularly within the former onemain 43 branches where secured loan originations have historically represented a smaller proportion of total originations than those of the former springleaf branches . while we have been able to increase secured loan originations at former onemain branches in recent quarters , not every unsecured loan customer has the collateral or the willingness to take on a secured loan , and we believe this has contributed to slower growth in personal loan net finance receivables than anticipated . as we continue to increase secured loans as a proportion of our total loan portfolio , our yields may be lower in future periods relative to our historical yields ; however , we also expect a proportional improvement in net credit losses as secured loans become a greater proportion of our total loan portfolio .
| consolidated results on november 15 , 2015 , we completed the onemain acquisition . the results of onemain are included in our consolidated operating results and selected financial statistics from november 1 , 2015 in the table below . a further discussion of our operating results for each of our operating segments is provided under “ segment results ” below . replace_table_token_5_th ( a ) includes personal loans held for sale , but excludes real estate loans held for sale in order to be comparable with our segment statistics disclosed in “ segment results. ” ( b ) see “ key financial definitions ” at the end of our management 's discussion and analysis for formulas and definitions of key performance ratios . 45 comparison of consolidated results for 2016 and 2015 interest income increased in 2016 when compared to 2015 due to the net of the following : ( dollars in millions ) 2016 compared to 2015 increase in average net receivables ( a ) $ 1,428 decrease in yield ( b ) ( 269 ) increase in number of days in 2016 7 increase in interest income on finance receivables held for sale ( c ) 14 total $ 1,180 ( a ) average net receivables increased primarily due to ( i ) loans acquired in the onemain acquisition and ( ii ) the continued growth of our loan portfolio ( primarily of our secured personal loans ) . this increase was partially offset by ( i ) the springcastle interests sale , ( ii ) the transfer of $ 608 million of our personal loans to finance receivables held for sale on september 30 , 2015 , and ( iii ) our liquidating real estate loan portfolio , including the transfers of $ 257 million and $ 50 million of real estate loans to finance receivables held for sale on june 30 , 2016 and november 30 , 2016 , respectively .
| 5,706 |
in some cases you can identify these “ forward-looking statements ” by words like “ may , ” “ will , ” “ should , ” “ expects , ” “ plans , ” “ anticipates , ” “ believes , ” “ estimates , ” “ predicts , ” “ potential ” or “ continue ” or the negative of those words and other comparable words . any such forward-looking statements are not guarantees of future performance and involve risks , uncertainties and other factors that may cause our actual results , performance or achievements , or industry results to vary materially from our future results , performance or achievements , or those of our industry , expressed or implied in such forward-looking statements . such factors include , among others , general industry , economic and business conditions , demand for our products , changes in consumer preferences , competition within our industry , our reliance on our network of independent dealers , our ability to manage our manufacturing levels and our large fixed cost base , and the successful introduction of our new products , as well as other factors affecting us discussed under the heading “ item 1a . risk factors ” in this form 10-k. many of these risks and uncertainties are outside our control , and there may be other risks and uncertainties which we do not currently anticipate because they relate to events and depend on circumstances that may or may not occur in the future . we do not intend and undertake no obligation to update any forward-looking information to reflect actual results or future events or circumstances . overview we are a leading designer , manufacturer and marketer of performance sport boats , having the # 1 market share position in the united states since 2010. our boats are used for water sports , including water skiing , wakeboarding and wake surfing , as well as general recreational boating . we earn revenue and generate profits from the sale of our high performance boats under two brands—malibu and axis . our flagship malibu brand boats offer our latest innovations in performance , comfort and convenience , and are designed for consumers seeking a premium boating experience . our axis brand of boats is designed to appeal to consumers who desire a more affordable product but still demand high performance , functional simplicity and the option to upgrade key features . since inception in 1982 , we have been a consistent innovator in the powerboat industry , designing products that appeal to an expanding range of recreational boaters and water sports enthusiasts whose passion for boating and water sports is a key aspect of their lifestyle . we continue to focus on innovation and invest in product development to expand the market for our products by introducing consumers to new and exciting recreational activities . we believe that our boats are increasingly versatile , allowing consumers to use them for a wide range of activities that enhance the experience of a day on the water with family and friends . while there is no guarantee that we will achieve market share growth in the future , we believe that the 39 performance , quality , value and multi-purpose features of our boats position us to achieve our goal of increasing our market share in the expanding recreational boating market . we offer our boats for sale through an extensive network of independent dealers in north america and throughout the world . as of july 1 , 2015 , our distribution channel consisted of 114 independent dealers in north america operating 154 locations and we had 64 independent dealer locations across 44 countries outside of north america , including australia . our boats are the exclusive performance sport boats offered by the majority of our dealers . additionally , we offered our boats through an exclusive licensee in australia that is one of the largest performance sport boat manufacturers in that country until october 23 , 2014 , at which time we acquired it and it became our subsidiary . our dealer base is an important part of our consumers ' experience , our marketing efforts and our brands . we devote significant time and resources to find , develop and improve the performance of our dealers and believe our dealer network gives us a distinct competitive advantage . we have undergone significant growth since we were founded in 1982 and began building custom ski boats in a small shop in merced , california . in 2006 , we were acquired by an investor group , including affiliates of black canyon capital llc , horizon holdings , llc and then-current management . beginning in 2009 , under the leadership of new management , we implemented several measures designed to improve our cost structure , increase our operating leverage , enhance our product offerings and brands , and strengthen our dealer network . jack springer , our chief executive officer , and wayne wilson , our chief financial officer , helped lead us successfully through the volume declines experienced during the economic recession . despite the downturn , we continued to build on our legacy of innovation and invested in product development and process improvements . for example , we : introduced the axis brand in 2009 for consumers seeking a performance sport boat at a more affordable price ; acquired titan wake accessories in 2009 in order to bring tower manufacturing in-house , and subsequently designed and introduced the g3/g4 tower ; released the first picklefork bow design under the malibu brand in 2012 to fill a specific gap within our product portfolio , quickly followed by two additional malibu picklefork models ; enhanced our manufacturing efficiencies through process improvements and product engineering , including moving from batch to continuous flow manufacturing ; and introduced our patented surf gate technology in 2012 , which allows users to surf on either side of the boat 's wake , generates a better quality surf wave and was the watersports industry association 's innovation of the year in 2013. in addition , story_separator_special_tag each of these items includes personnel and related expenses , supplies , non-manufacturing overhead , third-party professional fees and various other operating expenses . further , selling and marketing expenditures include the cost of advertising and various promotional sales incentive programs . general and administrative expenses include , among other things , salaries , benefits and other personnel related expenses for employees engaged in product development , engineering , finance , information technology , human resources , litigation settlement expense and executive management . other costs include outside legal and accounting fees , investor relations , risk management ( insurance ) and other administrative costs . other income ( expense ) , net other income ( expense ) , net consists of interest expense and other income or expense , net . interest expense consists of interest charged under our outstanding debt , debt issuance costs written off in connection with the pay down of all the amounts owed under our prior credit facilities and term loans with the proceeds from our ipo , and settlement of our interest rate swap . other income includes a portion of the amounts received from the settlement of our litigation with nautique entered into on february 6 , 2015 . 41 income taxes malibu boats , inc. is subject to u.s. federal and state income tax in multiple jurisdictions with respect to our allocable share of any net taxable income of the llc after the ipo on february 5 , 2014. the llc is a pass-through entity for federal purposes but incurs income tax in certain state jurisdictions . the income tax provision ( benefit ) reflects a reported effective income tax rate of 27.2 % and 65.2 % attributable to malibu boats , inc. 's share of income ( loss ) after the completion of the ipo for fiscal 2015 and 2014 , respectively . the reported effective tax rates differ from the statutory federal income tax rate of 35 % primarily due to the impact of the non-controlling interest and state income taxes attributable to the llc , including the impact of an out-of-period tax adjustment associated with benefits recognized for the tennessee jobs tax credit for fiscal 2015. our effective tax rates also reflect the impact of state taxes and our share of the llc 's permanent items such as stock compensation expense attributable to profits interests , the domestic production activities deduction , nondeductible offering costs for fiscal 2015 and 2014 and acquisition related costs for fiscal 2015 . net income attributable to non-controlling interest as of june 30 , 2015 and june 30 , 2014 , we had a 92.6 % and 49.3 % , respectively , controlling economic and 100 % voting interest in the llc and , therefore , we consolidate the llc 's operating results for financial statement purposes . net income or loss attributable to non-controlling interest represents the portion of net income or loss attributable to the llc members . recapitalization , ipo and equity transactions recapitalization and ipo immediately prior to the closing of the ipo of malibu boats , inc. on february 5 , 2014 , a new single class of llc units was allocated among the pre-ipo owners of the llc in exchange for their prior membership interests of the llc based upon the liquidation value of the llc , assuming it was liquidated at the time of the ipo with a value implied by the initial public offering price of the shares of class a common stock sold in the ipo . immediately prior to the closing of the ipo , there were 17,071,424 llc units issued and outstanding . further , on february 4 , 2014 ( prior to the closing of the ipo ) , two holders of membership interests in the llc merged with and into two newly formed subsidiaries of malibu boats , inc. as a result of these mergers , the sole stockholders of each of the two merging entities received shares of class a common stock in exchange for shares of capital stock of the merging entities . also , we redeemed for nominal consideration , the initial 100 shares of class a common stock issued to our initial stockholder in connection with our formation . we refer to the foregoing transactions as the “ recapitalization. ” on february 5 , 2014 , we completed our initial public offering of 8,214,285 shares of class a common stock , of which 7,642,996 shares were issued and sold by us and 571,289 shares were sold by selling stockholders . we received $ 99.5 million and the selling stockholders received $ 7.4 million net proceeds from the ipo . with the proceeds we received , approximately $ 29.8 million was used to purchase llc units directly from the pre-ipo owners and $ 69.8 million was used to purchase newly issued llc units from the llc , which the llc then used ( i ) to pay down all of the amounts owed under the llc 's credit facilities and term loans in the amount of $ 63.4 million , ( ii ) to pay malibu boats investor , llc , an affiliate of the llc , a fee of $ 3.8 million in connection with the termination of the llc 's management agreement upon consummation of the ipo , and ( iii ) for general corporate purposes with the remaining approximately $ 2.7 million . in connection with the repayment of the llc 's credit facilities and term loans , debt issuance costs associated with the term loans were written off to interest expense . subsequent equity transactions since the ipo , we have engaged in three significant transactions involving our equity . on july 15 , 2014 , we completed a follow-on public offering of 5,520,000 shares of our class a common stock , of which 4,371,893 shares were issued and sold by us and 1,148,107 shares were sold by selling stockholders . the aggregate gross proceeds from the follow-on offering were $ 102.1 million .
| results of operations the table below sets forth our results of operations , expressed in thousands ( except unit volume and net sales per unit ) and as a percentage of net sales , for the periods presented . our financial results for these periods are not necessarily indicative of the financial results that we will achieve in future periods . data from the consolidated statement of operations and comprehensive income ( loss ) for the fiscal year ended june 30 , 2013 reflects information presented by the llc for the period prior to the recapitalization and ipo on february 5 , 2014. data for the fiscal year ended june 30 , 2014 reflects information presented by the llc prior to february 5 , 2014 and information as presented by us after such date , and data for the fiscal year ended june 30 , 2015 reflects information as presented by us for the period after the recapitalization and ipo . certain totals for the table below will not sum to exactly 100 % due to rounding . replace_table_token_8_th 45 ( 1 ) fiscal 2014 includes a one-time charge related to the settlement of litigation with pcmw on september 15 , 2014. for more information , see note 15 to our audited consolidated financial statements included elsewhere in this annual report . ( 2 ) for the period after the ipo on february 5 , 2014 , the non-controlling interest represents the portion of earnings or loss attributable to the economic interest held by the non-controlling llc unit holders . the weighted average non-controlling interest attributable to ownership interests in the llc was 36.8 % and 50.7 % for the fiscal year ended june 30 , 2015 and for the period from february 5 , 2014 ( the date of our ipo ) to june 30 , 2014 , respectively .
| 5,707 |
we categorize our financial instruments into three levels of story_separator_special_tag december 31 , 2015 and 2014 , and our consolidated results of operations for the three years in the period ended december 31 , 2015 , and where appropriate , factors that may affect future financial performance . this analysis should be read in conjunction with our audited consolidated financial statements , notes thereto and selected consolidated financial data appearing elsewhere in this report . cautionary statement regarding forward-looking information all statements , trend analyses and other information contained in this report and elsewhere ( such as in filings by us with the sec , press releases , presentations by us or our management or oral statements ) relative to markets for our products and trends in our operations or financial results , as well as other statements including words such as `` anticipate '' , `` believe '' , `` plan '' , `` estimate '' , `` expect '' , `` intend '' and other similar expressions , constitute forward-looking statements . we caution that these statements may and often do vary from actual results and the differences between these statements and actual results can be material . accordingly , we can not assure you that actual results will not differ materially from those expressed or implied by the forward-looking statements . factors that could contribute to these differences include , among other things : general economic conditions and other factors , including prevailing interest rate levels and stock and credit market performance which may affect ( among other things ) our ability to sell our products , our ability to access capital resources and the costs associated therewith , the fair value of our investments , which could result in impairments and other than temporary impairments , and certain liabilities , and the lapse rate and profitability of policies ; customer response to new products and marketing initiatives ; changes in federal income tax laws and regulations which may affect the relative income tax advantages of our products ; increasing competition in the sale of annuities ; regulatory changes or actions , including those relating to regulation of financial services affecting ( among other things ) bank sales and underwriting of insurance products and regulation of the sale , underwriting and pricing of products ; and the risk factors or uncertainties listed from time to time in our filings with the sec . for a detailed discussion of these and other factors that might affect our performance , see item 1a of this report . story_separator_special_tag as deposit liabilities are primarily generated from the excess of net investment income earned over the interest credited or the cost of providing index credits to the policyholder , or the `` investment spread . '' our investment spread is summarized as follows : replace_table_token_5_th the cost of money for fixed index annuities and average crediting rates for fixed rate annuities are computed based upon policyholder account balances and do not include the impact of amortization of deferred sales inducements . see critical accounting policies—deferred policy acquisition costs and deferred sales inducements . with respect to our fixed index annuities , the cost of money includes the average crediting rate on amounts allocated to the fixed rate strategy , expenses we incur to fund the annual index credits and where applicable , minimum guaranteed interest credited . proceeds received upon expiration or early termination of call options purchased to fund annual index credits are recorded as part of the change in fair value of derivatives , and are largely offset by an expense for interest credited to annuity policyholder account balances . see critical accounting policies—policy liabilities for fixed index annuities and financial condition—derivative instruments . our profitability depends in large part upon the amount of assets under our management , investment spreads we earn on our policyholder account balances , our ability to manage our investment portfolio to maximize returns and minimize risks such as interest rate changes and defaults or impairment of investments , our ability to manage interest rates credited to policyholders and costs of the options purchased to fund the annual index credits on our fixed index annuities , our ability to manage the costs of acquiring new business ( principally commissions to agents and bonuses credited to policyholders ) and our ability to manage our operating expenses . results of operations for the three years ended december 31 , 2015 annuity deposits by product type collected during 2015 , 2014 and 2013 , were as follows : replace_table_token_6_th 20 annuity deposits before coinsurance ceded increased 69 % during 2015 compared to 2014 and decreased 1 % during 2014 compared to 2013 . over these years , we have remained consistently in the top three companies for sales of fixed index annuities according to wink 's sales and market report published by wink , inc. we attribute the continuing significant sales to our attractive product offerings , our consistent presence in the fixed index annuity market , our continued strong relationships with and excellent service provided to our distribution partners , the withdrawal in the first quarter of 2015 of a competitor 's guaranteed income product that had been the source of significant competition , the increased attractiveness of safe money products in volatile markets and lower interest rates on competing products such as bank certificates of deposit . net income , in general , has been positively impacted by the growth in the volume of business in force and the investment spread earned on this business . the average amount of annuity liabilities outstanding ( net of annuity liabilities ceded under coinsurance agreements ) increased 14 % to $ 38.1 billion for the year ended december 31 , 2015 compared to $ 33.4 billion in 2014 and 13 % for the year ended december 31 , 2014 compared to $ 29.5 billion in 2013 . story_separator_special_tag the impact of the partial unwinds decreased the change in fair value of derivatives and net income for the year ended december 31 , 2013 by $ 5.8 million and $ 3.4 million , respectively ( see note 5 to our audited consolidated financial statements ) . operating income , a non-gaap financial measure ( see reconciliation to net income in item 6. selected consolidated financial data ) increased 3 % to $ 195.8 million in 2015 and increased 17 % to $ 190.6 million in 2014 from $ 163.4 million in 2013 . in addition to net income , we have consistently utilized operating income , a non-gaap financial measure commonly used in the life insurance industry , to evaluate our financial performance . operating income equals net income adjusted to eliminate the impact of items that fluctuate from year to year in a manner unrelated to core operations . we believe measures excluding their impact are useful in analyzing operating trends , and the combined presentation and evaluation of operating income together with net income provides information that may enhance an investor 's understanding of our underlying results and profitability . operating income is not a substitute for net income determined in accordance with gaap . the adjustments made to derive operating income are important to understanding our overall results from operations and , if evaluated without proper context , operating income possesses material limitations . as an example , we could produce a low level of net income in a given period , despite strong operating performance , if in that period we experience significant net realized losses from our investment portfolio . we could also produce a high level of net income in a given period , despite poor operating performance , if in that period we generate significant net realized gains from our investment portfolio . as an example of another limitation of operating income , it does not include the decrease in cash flows expected to be collected as a result of credit loss otti . therefore , our management reviews net realized investment gains ( losses ) and analyses of our net investment income , including impacts related to otti write-downs , in connection with their review of our investment portfolio . in addition , our management examines net income as part of their review of our overall financial results . operating income includes benefits from unlocking in 2015 , 2014 and 2013 as follows : replace_table_token_9_th the revision of assumptions in 2015 , 2014 and 2013 used in determining liabilities for lifetime income benefit riders had the same effect on operating income as it had on net income as discussed previously . annuity product charges ( surrender charges assessed against policy withdrawals and fees deducted from policyholder account balances for lifetime income benefit riders ) increased 14 % to $ 136.2 million in 2015 and 15 % to $ 119.0 million in 2014 from $ 103.6 million in 2013 . the components of annuity product charges are set forth in the table that follows : replace_table_token_10_th 22 the increases in annuity product charges were primarily attributable to increases in fees assessed for lifetime income benefit riders due to a larger volume of business in force subject to the fee and and an increase in the average fees being charged as compared to prior periods . see interest sensitive and index product benefits below for corresponding expense recognized on lifetime income benefit riders . surrender charges decreased in 2015 as withdrawals from annuity policies subject to surrender charges decreased as compared to 2014. the decrease in surrender charges in 2014 was primarily a result of the 2013 amount including surrender charges of $ 4.7 million deducted from california policyholders surrendering their policies as a condition of receiving certain benefits in a national class action lawsuit settlement . net investment income increased 10 % to $ 1.7 billion in 2015 and 11 % to $ 1.5 billion in 2014 from $ 1.4 billion in 2013 . the increases were principally attributable to the growth in our annuity business and corresponding increases in our invested assets . average invested assets excluding derivative instruments ( on an amortized cost basis ) increased 14 % to $ 35.9 billion in 2015 and 13 % to $ 31.3 billion in 2014 compared to $ 27.8 billion in 2013 . the average yield earned on average invested assets was 4.73 % , 4.90 % and 4.98 % for 2015 , 2014 and 2013 , respectively . the decrease in yield earned on average invested assets in 2015 , 2014 and 2013 was attributable to yields on investments purchased in those periods and 2012 being lower than the overall portfolio yield . in addition , net investment income and average yield were negatively impacted by a lag in reinvestment of proceeds from bonds called for redemption during 2014 and 2013 into new assets causing excess liquidity held in low yielding cash and other short-term investments . the average balance held in cash and short-term investments was $ 0.4 billion and $ 1.0 billion in 2014 and 2013 , respectively . the average yield on our cash and short-term investments was 0.07 % in 2014 and 0.38 % in 2013 . additionally , net investment income and average yield was positively impacted by prepayment and fee income received resulting in additional net investment income of $ 26.9 million , $ 22.3 million and $ 15.7 million , in 2015 , 2014 and 2013 , respectively . change in fair value of derivatives consists of call options purchased to fund annual index credits on fixed index annuities , the 2015 notes hedges and 2015 warrants related to our 2015 notes and an interest rate swap and interest rate caps that hedge our floating rate subordinated debentures .
| executive summary excellent customer service teamed with our ability to offer innovative insurance products that provide principal protection and lifetime income continued to result in significant sales of our annuity products . in 2015 , our sales increased 69 % to $ 7.1 billion which has resulted in cash and investments in excess of $ 39 billion at december 31 , 2015 . our sales for the last five years have ranged from $ 3.9 billion to $ 7.1 billion and we have exceeded $ 4 billion in sales in four of those years . we have applied a conservative investment strategy to the annuity deposits we continue to manage which has provided reliable returns on our invested assets . our profitability has also been driven by maintaining an efficient operation . we are currently in the midst of an unprecedented period of low interest rates . in response to this persistent low interest rate environment , we have been reducing policyholder crediting rates for new annuities and existing annuities since the fourth quarter of 2011. spread results for 2015 , 2014 and 2013 reflect the benefit from these reductions ; however , the reductions in cost of money were offset by continued lower yields available on investments including those purchased with the reinvestment of proceeds from calls of callable bonds in our investment portfolio . the current interest rate environment with low yields for investments with the credit quality we prefer presents a strong headwind to restoring our investment spread to our 3.00 % target rate . with our portfolio yield under pressure from lower yields on benchmark u.s. treasury securities and narrower credit spreads , further adjustments to new and renewal crediting rates will be considered .
| 5,708 |
the un-realized gains resulting from intra-group transactions are also story_separator_special_tag you should read the following discussion in connection with our consolidated financial statements and the related notes included elsewhere in this annual report on form 10-k. some of the statements in the following discussion are forward looking statements . see “ —forward-looking statements. ” dollar amounts within item 7 are presented as actual dollar amounts . forward-looking statements this annual report on form 10-k contains forward looking statements . you should not place undue reliance on these statements because they are subject to numerous uncertainties and factors relating to our operations and business environment , all of which are difficult to predict and many of which are beyond our control . these statements often include words such as “ may , ” “ will , ” “ should , ” “ believe , ” “ expect , ” “ anticipate , ” “ intend , ” “ plan , ” “ estimate ” or similar expressions . these statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends , current conditions , expected future developments and other factors we believe are appropriate under the circumstances . as you read and consider this annual report on form 10-k , you should understand that these statements are not guarantees of performance or results . they involve known and unknown risks , uncertainties and assumptions . although we believe that these forward looking statements are based on reasonable assumptions , you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward looking statements . these factors include but are not limited to : our dependence on a limited number of clients in a limited number of industries ; worldwide political , economic or business conditions ; negative public reaction in the u.s. or elsewhere to offshore outsourcing ; fluctuations in our earnings ; our ability to attract and retain clients including in a timely manner ; our ability to successfully consummate or integrate strategic acquisitions ; restrictions on immigration ; our ability to hire and retain enough sufficiently trained employees to support our operations ; our ability to grow our business or effectively manage growth and international operations ; any changes in the senior management team ; increasing competition in our industry ; telecommunications or technology disruptions ; our ability to withstand the loss of a significant customer ; regulatory , legislative and judicial developments , including changes to or the withdrawal of governmental fiscal incentives ; changes in tax laws or decisions regarding repatriation of funds held abroad ; ability to service debt or obtain additional financing on favorable terms ; legal liability arising out of customer contracts ; technological innovation ; political or economic instability in the geographies in which we operate ; cyber security incidents , data breaches , or other unauthorized disclosure of sensitive or confidential client and customer data ; and adverse outcome of our disputes with the indian tax authorities . these and other factors are more fully discussed elsewhere in this annual report on form 10-k. these and other risks could cause actual results to differ materially from those implied by forward-looking statements in this annual report on form 10-k. the forward-looking statements made by us in this annual report on form 10-k , or elsewhere , speaks only as of the date on which they were made . new risks and uncertainties come up from time to time , and it is impossible for us to predict these events or how they may affect us . we have no obligation to update any forward-looking statements in this annual report on form 10-k after the date of this annual report on form 10-k , except as required by federal securities laws . 32 executive overview we are an operations management and analytics company that helps businesses enhance revenue growth and improve profitability . using proprietary platforms , methodologies , and our full range of digital capabilities , we look deeper to help companies transform their businesses , functions and operations , to help them deliver better customer experience and business outcomes , while managing risk and compliance . we serve our customers in the insurance , healthcare , travel , transportation and logistics , banking and financial services and utilities industries , among others . we operate in the business process management ( “ bpm ” ) industry and we provide operations management and analytics services . our eight operating segments are strategic business units that align our products and services with how we manage our business , approach our key markets and interact with our clients . six of those operating segments provide bpm or “ operations management ” services , which we organize into industry focused operating segments ( insurance , healthcare , travel , transportation and logistics , banking and financial services , and utilities ) and one “ capability ” operating segment ( finance and accounting ) that provides services to clients in our industry-focused segments as well as clients across other industries . in each of these six operating segments we provide operations management services , which typically involve transfer to the company business operations of a client , after which we administer and manage those operations for our client on an ongoing basis . our remaining two operating segments are consulting , which provides industry-specific digital transformational services related to operations management services , and our analytics operating segment , which provides services that focus on driving improved business outcomes for clients by generating data-driven insights across all parts of their business . we present information for the following reportable segments : insurance , healthcare , travel , transportation and logistics , finance and accounting , analytics , and all other ( consisting of our remaining operating segments including our banking and financial services , utilities and consulting operating segments ) . story_separator_special_tag we actively cross-sell and , where appropriate , integrate our analytics services with other operations management services as part of a comprehensive offering set for our clients . 34 we anticipate that revenues from our analytics services will grow as we expand our service offerings and client base , both organically and through acquisitions . expenses cost of revenues our cost of revenues primarily consists of : employee costs , which include salary , bonus and other compensation expenses ; recruitment and training costs ; employee insurance ; transport and meals ; rewards and recognition for certain employees ; and non-cash stock compensation expense ; and costs relating to our facilities and communications network , which include telecommunication and it costs ; facilities and customer management support ; operational expenses for our outsourcing centers ; rent expenses ; and travel and other billable costs to our clients . the most significant components of our cost of revenues are salaries and benefits ( including stock based compensation ) , recruitment , training , transport , meals , rewards and recognition and employee insurance . salary levels , employee turnover rates and our ability to efficiently manage and utilize our employees significantly affect our cost of revenues . salary increases for most of our operations personnel are generally awarded each year effective april 1. accordingly , employee costs are generally lower in the first quarter of each year compared to the rest of the year . we make every effort to manage employee and capacity utilization and continuously monitor service levels and staffing requirements . although we generally have been able to reallocate our employees as client demand has fluctuated , a contract termination or significant reduction in work assigned to us by a major client could cause us to experience a higher-than-expected number of unassigned employees , which would increase our cost of revenues as a percentage of revenues until we are able to reduce or reallocate our headcount . a significant increase in the turnover rate among our employees , particularly among the highly skilled workforce needed to execute certain services , would increase our recruiting and training costs and decrease our operating efficiency , productivity and profit margins . in addition , cost of revenues also includes non-cash amortization of stock compensation expense relating to our issuance of equity awards to employees directly involved in providing services to our clients . we expect our cost of revenues to continue to increase as we continue to add professionals in our operating centers globally to service additional business and as wages continue to increase globally . in particular , we expect training costs to continue to increase as we continue to add staff to service new clients and provide existing staff with additional skill sets . there is significant competition for professionals with skills necessary to perform the services we offer to our clients . as our existing competitors continue to grow , and as new competitors enter the market , we expect competition for skilled professionals in each of these areas to continue to increase , with corresponding increases in our cost of revenues to reflect increased compensation levels for such professionals . however , a significant portion of our client contracts include inflation-based adjustments to our billing rates year over year which partially offset such increase in cost of revenues . see item 1a- “ risk factors-employee wage increases may prevent us from sustaining our competitive advantage and may reduce our profit margin. ” we generally experience a higher cost of revenues as a percentage of revenues during the initial 12 months to 18 months in a long-term bpm contract due to upfront investments in infrastructure , resource hiring and training during migration . the cost of revenues as a percentage of revenues improve as we scale up , achieve operational efficiencies and complete the migration . selling , general and administrative expenses ( `` sg & a '' ) our general and administrative expenses are comprised of expenses relating to salaries and benefits ( including stock based compensation ) as well as costs related to recruitment , training and retention of senior management and other support personnel in enabling functions , telecommunications , utilities , travel and other miscellaneous administrative costs . general and administrative ( “ g & a ” ) expenses also include acquisition-related costs , legal and professional fees ( which represent the costs of third party legal , tax , accounting and other advisors ) , investment in product development , digital technology , advanced automation and robotics , bad debt allowance and non-cash amortization of stock compensation expenses related to our issuance of equity awards to members of our board of directors . we expect our g & a costs to increase as we continue to strengthen our support and enabling functions and invest in leadership development , performance management and training programs . selling and marketing expenses primarily consist of salaries and benefits ( including stock based compensation ) and other compensation expenses of sales and marketing and client management personnel , sales commission , travel and brand building , client events and conferences . we expect that sales and marketing expenses will continue to increase as we invest in our sales and client management functions to better serve our clients and in our branding . 35 depreciation and amortization depreciation and amortization pertains to depreciation of our tangible assets , including network equipment , cabling , computers , office furniture and equipment , motor vehicles and leasehold improvements and amortization of intangible assets . as we add new facilities and expand our existing operations centers , we expect that depreciation expense will increase , reflecting additional investments in equipment such as desktop computers , servers and other infrastructure . we expect amortization of intangible assets to increase further as we pursue strategic relationships and acquisitions . foreign exchange we report our financial results in u.s. dollars .
| results of operations the following table summarizes our results of operations for the years ended december 31 , 2017 , 2016 and 2015 : replace_table_token_2_th 41 year ended december 31 , 2017 compared to year ended december 31 , 2016 revenues . replace_table_token_3_th revenues for the year ended december 31 , 2017 were $ 762.3 million up $ 76.3 million or 11.1 % compared to the year ended december 31 , 2016. revenue growth in insurance of $ 28.5 million was driven by expansion of business from our new and existing clients of $ 26.9 million , including incremental $ 3.7 million from our liss systems limited ( “ liss ” ) acquisition in 2016. the remaining increase of $ 1.6 million was attributable to a net impact of appreciation of the south african rand and indian rupee against the u.s. dollar during the year ended december 31 , 2017 compared to the year ended december 31 , 2016. insurance revenues were 30.8 % and 30.1 % of our total revenues in 2017 and 2016 , respectively . revenue growth in healthcare of $ 8.3 million was primarily driven by expansion of business from our new and existing clients . healthcare revenues were 10.1 % and 10.0 % of our total revenues in 2017 and 2016 , respectively . revenue growth in travel , transportation and logistics ( `` tt & l '' ) of $ 1.6 million was primarily driven by net volume increases from our new and existing clients of $ 2.5 million , partially offset by a $ 0.9 million impact due to depreciation of the philippine peso against the u.s. dollar during the year ended december 31 , 2017 compared to the year ended december 31 , 2016. tt & l revenues were 9.3 % and 10.1 % of our total revenues in 2017 and 2016 , respectively . revenue growth in finance and accounting ( `` f & a '' ) of $ 7.1 million was driven by net volume increases from our new and existing clients of $ 6.5 million .
| 5,709 |
ultratech also develops , manufactures , sells , and supports ald equipment for scientific and industrial applications . ultratech 's customers are primarily located throughout the united states , europe , china , japan , taiwan , singapore , and korea . with the addition of ultratech , we establish ourselves as a leading equipment supplier in the advanced packaging market , forming a strong technology portfolio to address critical advanced packaging applications , as well as greatly increasing our critical mass in the front-end semiconductor market . the results of ultratech 's operations have been included in the consolidated financial statements since the date of acquisition . we categorize our revenue by the key market segments into which we sell . our four key markets are : advanced packaging , mems & rf filters ; led lighting , display & compound semiconductor ; front-end semiconductor ; and scientific & industrial . we are a technology company that develops , manufactures , sells , and supports semiconductor process equipment aligned to meet the demands of key global trends such as enhanced mobility , increased connectivity , and energy efficiency . our primary technologies include metal organic chemical vapor deposition , advanced packaging lithography , wet etch and clean , laser annealing , ion beam , molecular beam epitaxy , wafer inspection , and atomic layer deposition systems . these technologies play an integral role in producing leds for solid-state lighting and displays , and in the fabrication and packaging of advanced semiconductor devices . with equipment designed to optimize performance , yield , and cost of ownership , we hold technology leadership positions in all of these served markets . sales in the advanced packaging , mems & rf filter markets were driven by lithography and psp systems , as the market continues to be influenced by the mobility trend and increasing functionality in mobile devices . advanced packaging opportunities slowed in 2017 as customers temporarily delayed adoption of fan-out wafer level packaging ( fowlp ) in favor of cheaper flip chip solutions . our versatile psp product architecture has allowed us to continue to generate solid business in the mems and rf filter portion of this category . we remain well positioned for future growth in these markets , supported by trends such as mobile connectivity , automotive electronics , big data processing and 5g infrastructure deployment , as well as the longer term growth of fowlp and other advanced packaging applications . sales in the led lighting , display & compound semiconductor market were driven by the continued shipment of mocvd and psp systems to customers in china , malaysia , and europe . the largest applications for leds are solid state lighting , followed by tv displays . over the past several quarters , demand has increased for larger lcd tv displays , which require relatively more leds to backlight than smaller display sizes . more recently , we have seen an increase in demand in non general-lighting applications such as 3d sensors , vcsels , laser diodes , and rf devices . our broad portfolio of mocvd and psp technologies have been developed to support these significant industry trends , driving an increase in demand for our mocvd and psp equipment . our product mix in the led market is expected to shift , and we expect to see a decline in gross margins in the first half of 2018. we expect margins in the second half of 2018 to be higher than the first half . sales in the front-end semiconductor market were primarily driven by laser annealing systems , an ibd photomask system for euv applications , and ibe systems sold into stt-mram applications . we see strong interest from customers for our laser melt anneal systems which are being qualified in 7nm and 5nm applications , as well as our 3d inspection systems which are being evaluated at several high volume manufacturing fabs . sales in the scientific & industrial markets were supported by shipments of ion beam systems for optical coatings and data storage applications , as well as shipments of mbe systems to universities and laboratories . while equipment demand from each individual market may fluctuate quarter to quarter , the diverse customer base has historically provided a relatively stable revenue stream for the company . 30 story_separator_special_tag size= '' 2 '' style= '' font-size:10.0pt ; '' > selling , general , and administrative expenses increased primarily due to the addition of the acquired ultratech related selling , general , and administrative costs , as well as increased professional and legal fees . amortization expense the increase in amortization expense is a result of the additional intangibles acquired as part of the acquisition of ultratech , offset by the lower amortization resulting from the impairment of the certain technology assets in the prior year 32 as well as certain other intangible assets becoming fully amortized during 2016. restructuring expense during 2016 , we undertook restructuring activities as part of our initiative to streamline operations , enhance efficiencies , and reduce costs , as well as reducing future investments in certain technology development , which together impacted approximately 75 employees . these activities were substantially completed in 2017. in addition , during 2017 , we began the acquisition integration process to enhance efficiencies , resulting in additional employee terminations and other facility closing costs . restructuring expense for the year ended december 31 , 2017 included non-cash charges of $ 1.9 million related to accelerated share-based compensation for employee terminations . story_separator_special_tag the ratio is defined as orders recorded in a given period divided by revenue recognized in the same period . a ratio greater than one indicates we are adding orders faster than we are recognizing revenue . in 2016 , the ratio was 1.1 , a rise compared to 2015 , when it was 0.8. our backlog at december 31 , 2016 was $ 209.2 million , which was higher than the ending backlog at december 31 , 2015 of $ 186.0 million . during the year ended december 31 , 2016 , we recorded backlog adjustments of approximately $ 17.9 million primarily relating to a partial cancellation of a prior period customer order . for certain sales arrangements , we require a deposit for a portion of the sales price prior to manufacturing a system for a customer . at december 31 , 2016 and 2015 , we had customer deposits of $ 22.2 million and $ 28.2 million , respectively . gross profit gross profit decreased compared to 2015 due to sharp decline in sales volume , partially offset by improved gross margins . gross margins increased despite the decline in overall sales volume principally due to favorable product and region mix of sales in the period and from the benefits associated with ongoing cost reduction activities . research and development r & d expenses increased in 2016 compared to 2015 as a result of a reduction in external funding used to offset the cost of r & d activities , as well as the additional use of third party contractors to accelerate the development of products for the led lighting , display & compound semiconductor market . we also incurred increased depreciation of research and development-related property , plant , and equipment . these increases were partially offset by decreased personnel-related incentive compensation . 35 selling , general , and administrative selling , general , and administrative expenses decreased primarily due to reductions in sales commissions and incentive compensation as a result of the decline in our financial performance , as well as a decrease in personnel-related expenses as a result of our initiative to streamline operations , enhance efficiency , and reduce costs in response to market conditions . amortization expense the decrease in amortization expense is a result of the impairment of certain technology assets as well as certain other intangible assets becoming fully amortized during 2016. restructuring expense during 2016 , additional accruals were recognized and payments made related to previous years ' restructuring initiatives . in addition , during 2016 , we undertook additional restructuring activities as part of our initiative to streamline operations , enhance efficiencies , and reduce costs , as well as reducing future investments in certain technology development , which together impacted approximately 75 employees . asset impairment during 2016 , we recorded non-cash impairment charges of $ 57.6 million relating to our decision to reduce investments in certain technologies , $ 5.7 million relating to our assessments of the fair market value of assets held for sale , and $ 6.2 million relating to the disposal of certain lab equipment . income taxes the 2016 income tax expense is comprised of three components : ( i ) $ 1.9 million related primarily to u.s. tax amortization of our indefinite-lived intangible assets that is not available to offset existing deferred tax assets and related valuation allowance as well as state and local income taxes , ( ii ) a $ 0.4 million tax benefit associated with the termination of the pension plan , and ( iii ) $ 1.3 million in net tax expense related primarily to our profitable foreign operations . the 2015 income tax expense is comprised of two components : ( i ) $ 1.8 million related primarily to u.s. tax amortization of our indefinite-lived intangible assets that is not available to offset existing deferred tax assets and related valuation allowance and state and local income taxes and ( ii ) $ 7.5 million in tax expense relating to our profitable foreign operations . our 2016 and 2015 effective tax rate is different than the statutory rate primarily due to our inability to recognize our u.s. deferred tax assets on a more-likely-than-not basis with respect to the pre-tax u.s. operating losses in those years . liquidity and capital resources our cash and cash equivalents , restricted cash , and short-term investments are as follows : replace_table_token_9_th a portion of our cash and cash equivalents is held by our subsidiaries throughout the world , frequently in each subsidiary 's respective functional currency , which is typically the u.s. dollar . at december 31 , 2017 and 2016 , cash and cash equivalents of $ 214.3 million and $ 149.2 million , respectively , were held outside the united states . as of december 31 , 2017 , we had $ 155.8 million of accumulated undistributed earnings generated by our non-u.s. subsidiaries , of which approximately $ 140.2 million was subject to the one-time transition tax on foreign earnings required by the 2017 tax act . we do not expect to incur a current u.s. tax liability for the one-time transition tax due to the utilization of foreign tax 36 credits and research and development credits . we expect to repatriate accumulated undistributed earnings from certain non-u.s. subsidiaries and have recognized applicable withholding taxes of $ 6.2 million .
| results of operations years ended december 31 , 2017 and 2016 the following table presents revenue and expense line items reported in our consolidated statements of operations for 2017 and 2016 and the period-over-period dollar and percentage changes for those line items . our results of operations are reported as one business segment , represented by our single operating segment , including the ultratech business acquired . replace_table_token_5_th * not meaningful net sales the following is an analysis of sales by market and by region : replace_table_token_6_th 31 total sales increased across all market categories for the year ended december 31 , 2017 against the comparable prior year period , driven by ongoing improvements in led industry conditions , as well as additional sales of approximately $ 65.5 million from the ultratech business acquired in may 2017 , primarily in the front-end semiconductor and advanced packaging , mems , and rf filters markets . pricing was not a significant driver of the change in total sales . by geography , sales increased in the united states , china , and rest of world regions , offset by a slight decrease in the emea region . the most significant increase occurred in the rest of world region , which was attributable to the increased sales in the led lighting , display & compound semiconductor market in malaysia , as well as additional sales from the ultratech business acquired . sales into malaysia for the year ended december 31 , 2017 was approximately $ 78.2 million , compared to $ 6.6 million for the year ended december 31 , 2016. sales in china increased principally due to increased sales in the led lighting , display , and compound semiconductor market . we expect there will continue to be year-to-year variations in our future sales distribution across markets and geographies .
| 5,710 |
when used in this form 10‑k , the words “ estimate , ” “ anticipate , ” “ expect , ” “ believe , ” “ should ” and similar expressions are intended to be forward‑looking statements . although the company believes that its plans , intentions and expectations reflected in such forward‑looking statements are reasonable , it can give no assurance that such plans , intentions or expectations will be achieved . prospective investors are cautioned that any such forward‑looking statements are not guarantees of future performance and involve risks and uncertainties , and that actual results may differ materially from those contemplated by such forward‑looking statements . important factors currently known to management that could cause actual results to differ materially from those in forward‑looking statements are set forth under the heading “ risk factors ” in item 1a and elsewhere in this form 10‑k . capitalized or defined terms included in this item 7 have the meanings set forth in item 1 of this form 10‑k . business overview the company is engaged in the healthcare management business , and is focused on meeting needs in areas of healthcare that are fast growing , highly complex and high cost , with an emphasis on special population management . the company provides services to health plans and other mcos , employers , labor unions , various military and governmental agencies , tpas , consultants and brokers . the company 's business is divided into three segments , based on the services it provides and or the customers that it serves . see item 1— “ business ” for more information on the company 's business segments . summarized results summarized below are the key financial highlights for the year ended december 31 , 2018 ( “ 2018 ” ) . for additional information see the “ results of operations ” section , which discusses both consolidated and segment results in more detail : · net revenue for 2018 increased to $ 7.3 billion from the year ended december 31 , 2017 ( “ 2017 ” ) . · income before income taxes for 2018 decreased to $ 43.2 million from 2017 . · net income attributable to magellan for 2018 decreased to $ 24.2 million from 2017 . · segment profit ( 1 ) for 2018 decreased to $ 228.0 million from 2017 . · adjusted net income ( 1 ) for 2018 decreased to $ 61.7 million from 2017 . ( 1 ) see non-gaap measures section for a discussion of these non-gaap financial measures and a reconciliation to the most comparable gaap item . key developments and accomplishments · on march 12 , 2018 , the company entered into a contract with the state of arizona as one of seven integrated managed care organizations that will coordinate physical and behavioral health services for approximately one million medicaid eligible members in the central geographic service area effective october 1 , 2018 . · on april 16 , 2018 , the company entered into a contract with the commonwealth of virginia to participate statewide in the medallion 4 program . the company was selected through a competitive procurement and is one of six health plans to contract with virginia for this program . the medallion program will collectively serve over 700,000 tanf medicaid enrollees commencing on august 1 , 2018 . · in may , the company announced that it had been named to the annual fortune 500 list of america 's largest corporations by revenue for the first time in the company 's history . story_separator_special_tag style= '' margin-left:10.2941176470588 % ; margin-right:10.2941176470588 % ; '' > the following table summarizes , for the periods indicated , operating results for the healthcare segment ( in thousands ) : replace_table_token_6_th ( 1 ) may include some duplicate count of membership for customers that contract with magellan for both behavioral and other specialty management services . 2018 compared to 2017 managed care and other revenue net revenue related to healthcare increased by 44.7 percent or $ 1,432.3 million from 2017 to 2018. the increase in revenue is primarily due to revenue for senior whole health acquired on october 31 , 2017 of $ 1,011.6 million , new contracts implemented during ( or after ) 2017 of $ 376.9 million , higher membership partially offset by unfavorable rate changes of $ 180.6 million , net revenue recorded for hif fees in 2018 of $ 31.1 million , customer settlements in 2018 of $ 22.3 million , a performance penalty in 2017 of $ 4.6 million , the revenue impact of net favorable prior period medical claims recorded in 2017 of $ 4.1 million and the revenue impact of favorable prior period medical claims recorded in 2018 of $ 1.6 million . these increases were partially offset by terminated contracts of $ 111.4 million , net retroactive program changes recorded in 2017 of $ 23.3 million , program changes of $ 21.8 million , unfavorable retroactive membership and rate adjustments in 2018 of $ 18.3 million , retroactive profit share in 2017 of $ 2.6 million , favorable customer settlements in 2017 of $ 2.0 million , retroactive rate adjustments in 2017 of $ 1.5 million and other net unfavorable variances of $ 19.6 million . 38 cost of care cost of care increased by 55.9 percent or $ 1,348.6 million from 2017 to 2018. the increase in cost of care is primarily due to care cost for senior whole health acquired on october 31 , 2017 of $ 889.5 million , new contracts implemented after ( or during ) 2017 of $ 346.8 million , increased membership and higher care from existing customers partially offset by unfavorable rate changes of $ 160.6 million , favorable customers settlements in 2017 of $ 11.1 million , net favorable prior period medical claims development recorded in 2017 of $ 7.5 million and care trends and other net unfavorable variances of $ 87.9 million . story_separator_special_tag the following table summarizes , for the periods indicated , operating results for the pharmacy management segment ( in thousands , except state count ) : replace_table_token_7_th 2018 compared to 2017 managed care and other revenue managed care and other revenue related to pharmacy management decreased by 12.1 percent or $ 33.1 million from 2017 to 2018. this decrease is primarily due to decreased formulary management revenue of $ 20.5 million , lower revenue in government pharmacy of $ 5.6 million , decreased medical pharmacy revenue of $ 3.3 million , terminated contracts of $ 1.2 million and other net unfavorable variances of $ 5.0 million . these decreases were partially offset by new contracts implemented after ( or during ) 2017 of $ 2.5 million . 40 pbm and dispensing revenue pbm and dispensing revenue related to pharmacy management increased by 5.4 percent or $ 134.4 million from 2017 to 2018. this increase is primarily due to new contracts implemented after ( or during ) 2017 of $ 154.4 million and other net favorable variances of $ 0.3 million . these increases were partially offset by terminated contracts of $ 17.0 million and customer guarantee penalties in 2018 of $ 3.3 million . cost of goods sold cost of goods sold increased by 5.4 % percent or $ 126.2 million from 2017 to 2018. this increase is primarily due to new contracts implemented after ( or during ) 2017 of $ 147.2 million , partially offset by terminated contracts of $ 16.3 million and decreased membership and utilization of $ 4.7 million . as a percentage of the portion of net revenue that relates to pbm , cost of goods sold is consistent with 2017 at 94.0 percent . direct service costs direct service costs decreased by 1.3 percent or $ 3.8 million from 2017 to 2018. the decrease is primarily due to a decrease in stock compensation due to acquisition related awards which became fully vested in the prior year , partially offset by higher costs to support new business . 2017 compared to 2016 managed care and other revenue managed care and other revenue related to pharmacy management increased by 12.3 percent or $ 29.9 million from 2016 to 2017. this increase is primarily due to medical pharmacy revenue of $ 11.7 million , new contracts implemented after ( or during ) 2016 of $ 8.3 million , increased formulary management revenue of $ 6.2 million , revenue for veridicus acquired on december 13 , 2016 of $ 4.8 million and other net favorable variances of $ 2.1 million . these increases were partially offset by terminated contracts of $ 3.2 million . pbm and dispensing revenue pbm and dispensing revenue related to pharmacy management increased by 21.3 percent or $ 437.9 million from 2016 to 2017. this increase is primarily due to increased membership and utilization of $ 294.4 million , new contracts implemented after ( or during ) 2016 of $ 210.2 million , revenue for veridicus acquired on december 13 , 2016 of $ 173.9 million , government pharmacy revenue of $ 11.1 million and other net favorable variances of $ 1.2 million . these increases were partially offset by terminated contracts of $ 252.9 million . cost of goods sold cost of goods sold increased by 21.2 percent or $ 408.9 million from 2016 to 2017. this increase is primarily due to an increased membership and utilization of $ 274.1 million , new contracts implemented after ( or during ) 2016 of $ 207.5 million , veridicus acquired on december 13 , 2016 of $ 159.8 million , government pharmacy of $ 10.9 million and other net unfavorable variances of $ 3.9 million . these increases were partially offset by terminated contracts of $ 247.3 million . as a percentage of the portion of net revenue that relates to pbm and dispensing activity , cost of goods sold decreased from 94.2 percent in 2016 to 94.0 percent in 2017 , mainly due to increases in formulary management and medical pharmacy revenue and changes in business mix . direct service costs direct service costs increased by 15.7 percent or $ 41.0 million from 2016 to 2017. this increase is mainly due to the acquisition of veridicus , contract implementation costs and ongoing costs to support new business . as a percentage of revenue , direct service costs decreased from 11.4 percent in 2016 to 10.9 percent in 2017 , mainly due to an increase in revenue from business growth and acquisitions and a decrease in stock compensation expense . 41 corporate segment the corporate segment of the company is comprised primarily of amounts not allocated to the healthcare and pharmacy management segments that are largely associated with costs related to being a publicly traded company . the following table summarizes , for the periods indicated , operating results for the corporate segment ( in thousands ) : replace_table_token_8_th 2018 compared to 2017 net expenses related to corporate , which includes eliminations , decreased 19.4 percent or $ 6.2 million , primarily due to lower discretionary benefits in 2018 , higher corporate development costs in 2017 related to the swh acquisition and a litigation settlement recorded in 2017 partially offset by higher stock compensation expense in 2018. as a percentage of revenue , corporate and elimination decreased from 0.5 percent in 2017 to 0.3 percent in 2018 , mainly due to increased revenue from business growth , higher corporate development costs in 2017 and lower discretionary benefits . 2017 compared to 2016 net expenses related to corporate , which includes eliminations , decreased by 6.2 percent or $ 2.1 million , primarily due to lower stock compensation expense and discretionary benefits in 2017 , partially offset by a litigation settlement in 2017. as a percentage of revenue , corporate and elimination decreased from 0.7 percent in 2016 to 0.5 percent in 2017 , mainly due to higher revenue due to acquisitions and new business , lower discretionary benefits and stock compensation expenses .
| results of operations the following table summarizes , for the periods indicated , consolidated operating results ( in thousands ) : 34 replace_table_token_5_th ( 1 ) includes stock compensation expense of $ 37,422 , $ 39,116 and $ 29,472 for the years ended december 31 , 2016 , 2017 and 2018 , respectively . ( 2 ) includes changes in fair value of contingent consideration of $ ( 104 ) , $ 696 and $ 1,307 for the years ended december 31 , 2016 , 2017 and 2018 , respectively . ( 3 ) includes impairment of intangible assets of $ 4,800 for the year ended december 31 , 2016 . 2018 compared to 2017 net revenue , cost of care , cost of goods sold , and direct service costs and other operating expenses net revenue , cost of care , cost of goods sold , and direct service costs and other operating expense variances are addressed within the segment results that follow . depreciation and amortization depreciation and amortization expense increased by 14.7 percent or $ 17.0 million from 2017 to 2018 , primarily due to asset additions after 2017 and acquisition activity . interest expense interest expense increased by $ 9.4 million from 2017 to 2018 mainly due to an increase in interest rates and the amount of outstanding debt . interest and other income interest and other income increased by $ 8.2 million from 2017 to 2018 primarily due to higher yields and invested balances . income taxes the company 's effective income tax rate was 18.6 percent in 2017 and 44.0 percent in 2018. these rates differ from the applicable federal statutory income tax rate for each year primarily due to state income taxes , remeasurement of deferred tax balances in 2017 due to the tax act , permanent differences between book and tax income , and changes to the valuation allowances . the company also accrues interest and penalties related to uncertain tax positions in its provision for income taxes .
| 5,711 |
our retail network is made up of dealerships operating primarily under the following locally-branded dealership groups : coggin dealerships , operating primarily in jacksonville , fort pierce and orlando , florida ; courtesy dealerships operating in tampa , florida ; crown dealerships operating in new jersey , north carolina , south carolina and virginia ; nalley dealerships operating in atlanta , georgia ; mcdavid dealerships operating primarily in dallas and houston , texas ; north point dealerships operating in little rock , arkansas ; plaza dealerships operating in st. louis , missouri ; and gray-daniels dealerships operating in jackson , mississippi . our revenues are derived primarily from : ( i ) the sale of new vehicles to individual retail customers ( “ new vehicle retail ” ) and commercial customers ( “ fleet ” ) ( the terms “ new vehicle retail , ” and “ fleet ” being together referred to as “ new ” ) ; ( ii ) the sale of used vehicles to individual retail customers ( “ used retail ” ) and to other dealers at auction ( “ wholesale ” ) ( the terms “ used retail ” and “ wholesale ” being together referred to as “ used ” ) ; ( iii ) maintenance and collision repair services and the sale of automotive parts ( together referred to as “ parts and service ” ) ; and ( iv ) the arrangement of vehicle financing and the sale of a number of aftermarket products , such as insurance and service contracts ( collectively referred to as “ f & i ” ) . we evaluate the results of our new and used vehicle sales based on unit volumes and gross profit per vehicle sold , our parts and service operations based on aggregate gross profit , and f & i based on dealership generated f & i gross profit per vehicle sold . we assess the organic growth of our revenue and gross profit by comparing the year-to-year results of stores that we have operated for at least twelve full months ( “ same store ” ) . our organic growth is dependent upon the execution of our balanced automotive retailing and service business strategy , the continued strength of our brand mix and the production of desirable vehicles by automotobile manufacturers whose brands we sell . our vehicle sales have historically fluctuated with product availability as well as local and national economic conditions , including consumer confidence , availability of consumer credit , fuel prices and employment levels . we believe that the impact on our business of any future negative trends in new vehicle sales would be partially mitigated by ( i ) the expected relative stability of our parts and service operations over the long-term , ( ii ) the variable nature of significant components of our cost structure and ( iii ) our brand mix . historically , our brand mix has been less affected by market volatility than the u.s. automobile industry as a whole . we believe that our new vehicle revenue brand mix , which included approximately 47 % revenue from mid-line import brands and 37 % revenue from luxury brands for 2011 , is well positioned for growth over the long term . our operating results are generally subject to changes in the economic environment as well as seasonal variations . we tend to generate more revenue and operating income in the second and third quarters than in the first and fourth quarters of the calendar year . generally , the seasonal variations in our operations are caused by factors related to weather conditions , changes in manufacturer incentive programs , model changeovers and consumer buying patterns , among other things . our gross profit margin varies with our revenue mix . the sale of new vehicles generally results in lower gross profit margin than used vehicle sales and sales of parts and service . as a result , when used vehicle and parts and service revenue increase as a percentage of total revenue , we expect our overall gross profit margin to increase . selling , general and administrative ( “ sg & a ” ) expenses consist primarily of fixed and incentive-based compensation , advertising , rent , insurance , utilities and other customary operating expenses . a significant portion of our cost structure is variable ( such as sales commissions ) , or controllable ( such as advertising ) , generally allowing us to adapt to changes in the retail environment over the long-term . we evaluate commissions paid to salespeople as a percentage of retail vehicle gross 30 profit and all other sg & a expenses in the aggregate as a percentage of total gross profit , with the exception of advertising expense , which we evaluate on a per vehicle retailed ( `` pvr '' ) basis . the united states automotive retail market has shown continued improvement in 2011 , with new vehicle saar increasing to 12.8 million as compared to 11.6 million in 2010. we believe that improvement in the industry will continue to be slow , with the new vehicle saar expected to improve only modestly in 2012 , as the long-term prospects for , and the timing of , a full recovery continue to be difficult to predict . we continue to evaluate potential consequences resulting from the natural disasters and related events in japan on our operating results . disruption in new vehicle inventories from certain japanese manufacturers began during the second quarter of 2011 and continued into the fourth quarter of 2011. we currently expect that the resulting inventory supply shortages will subside by the first quarter of 2012 , although we can provide no assurance of this . in addition , we do not expect that the disruption in the supply of inventory from our japanese manufacturing partners will have a material adverse effect on our earnings , results of operations or our business during 2012 , although we can provide no assurance of this . story_separator_special_tag depreciation and amortization — the $ 1.8 million ( 9 % ) increase in depreciation and amortization expense was primarily the result of increased capital expenditures in 2011 and 2010 as compared to 2009 , as well our decision to purchase certain previously leased real estate during 2011. other operating expense , net — other operating expense , net includes gains and losses from the sale of property and equipment , income derived from lease arrangements and other non-core operating items . during the year ended december 31 , 2011 , we recognized ( i ) approximately $ 9.0 million of expense due to legal claims related to operations from 2000 to 2006 and ( ii ) approximately $ 6.6 million of executive separation costs , which were partially offset by income related to proceeds received from the elimination of one of our franchises . 39 other interest expense — the $ 3.3 million ( 9 % ) increase in other interest expense was attributable to ( i ) a refinancing of our long-term debt in the fourth quarter of 2010 , which included the issuance of $ 200.0 million of our 8.375 % senior subordinated notes due 2020 ( the `` 8.375 % notes '' ) , the proceeds of which were primarily used to repurchase all $ 179.4 million aggregate principal amount of our outstanding 8 % senior subordinated notes due 2014 ( the `` 8 % notes '' ) and ( ii ) our entrance into a mortgage for the purchase of land and building associated with an acquisition in the fourth quarter of 2010. swap interest expense — we have entered into various derivative financial instruments , including fair value and cash flow interest rate swaps , which have been designed to provide hedges against changes in fair value of certain debt obligations and variable rate cash flows . our earnings have been impacted by these interest rate swaps in the form of ( i ) amounts reclassified from aoci to earnings for active swaps , ( ii ) amortization of amounts reclassified from aoci to earnings for terminated cash flow swaps and ( iii ) amortization of terminated fair value swaps . the pre-tax impact on earnings related to our various derivative financial instruments for 2011 and 2010 was $ 5.5 million and $ 6.6 million , respectively . income tax expense— the $ 6.4 million ( 28 % ) increase in income tax expense was primarily a result of the $ 17.0 million ( 28 % ) increase in income before income taxes in 2011 as compared to 2010 . our effective tax rate decreased from 38.3 % for 2010 to 38.1 % for 2011 . our effective tax rate is highly dependent on our level of income before income taxes and permanent differences between book and tax income . as a result , it is difficult to project our overall effective tax rate for any given period . based upon our current expectation of 2012 income before income taxes , we expect our effective income tax rate will be between 38 % and 40 % in 2012. discontinued operations— during 2011 , we sold ( i ) our heavy truck business in atlanta , georgia , which consisted of ten franchises ( three dealership locations ) and one collision repair center , ( ii ) two franchises ( two dealership locations ) and ( iii ) one additional ancillary business . the $ 19.9 million , net of tax , net income from discontinued operations for 2011 consists of a $ 22.3 million , net of tax , gain on the sale of the businesses discussed above , partially offset by $ 2.4 million , net of tax , of net operating losses of franchises and ancillary businesses sold prior to december 31 , 2011 , including rent and other expenses of idle facilities . during 2010 , we sold one franchise ( one dealership location ) . the $ 0.7 million , net of tax , net income from discontinued operations during 2010 consists of $ 2.5 million , net of tax , of income from insurance proceeds related to tornado damage to the unused real estate of one of our former dealership locations in yazoo city , mississippi , offset by ( i ) $ 1.3 million , net of tax , of impairment expenses related to certain property not used in our operations , ( ii ) $ 0.2 million , net of tax , of net operating losses of franchises sold prior to december 31 , 2011 , including primarily rent and other expenses of idle facilities , ( iii ) $ 0.2 million , net of tax , of rent acceleration on certain real estate not used in our operations and ( iv ) a $ 0.1 million , net of tax , loss on the sale of one franchise ( one dealership location ) . we continuously evaluate the financial and operating results of our dealerships , as well as each dealership 's geographical location , and may continue to refine our dealership portfolio through strategic acquisitions or divestitures from time to time . 40 results of operations year ended december 31 , 2010 compared to the year ended december 31 , 2009 replace_table_token_16_th 41 replace_table_token_17_th net income and income from continuing operations increased by $ 24.7 million and $ 11.7 million , respectively , during 2010 as compared to 2009 , primarily as a result of ( i ) a $ 66.1 million ( 11 % ) increase in gross profit and ( ii ) a 270 basis point decrease in sg & a expenses as a percentage of gross profit . net income and income from continuing operations for 2010 were reduced by $ 8.3 million , net of tax , from losses on the extinguishment of long-term debt . the $ 11.7 million increase in income from continuing operations was primarily a result of a $ 66.1 million ( 11 % ) increase in total gross profit .
| results of operations the year ended december 31 , 2011 compared to the year ended december 31 , 2010 replace_table_token_7_th 32 replace_table_token_8_th net income and income from continuing operations increased by $ 29.8 million and $ 10.6 million , respectively , during 2011 as compared to 2010 , primarily a result of a $ 70.4 million ( 11 % ) increase in gross profit , partially offset by ( i ) a $ 47.3 million ( 9 % ) increase in sg & a expenses , ( ii ) a $ 14.3 million increase in other operating expense and ( iii ) a $ 3.3 million ( 9 % ) increase in other interest expense . the increase in net income was primarily the result of the sale of our heavy truck business , two additional franchises ( two dealership locations ) and one ancillary business in 2011 , which resulted in $ 22.3 million in net-of-tax gains , which are included in discontinued operations , net . net income and income from continuing operations for 2011 were reduced by ( i ) $ 5.5 million , net of tax , due to legal claims related to operations from 2000 to 2006 , ( ii ) $ 4.2 million , net of tax , due to expenses related to executive separation benefits and ( iii ) $ 1.1 million , net of tax , due to real estate related charges . net income and income from continuing operations for 2010 were reduced by $ 8.3 million , net of tax , from losses on the extinguishment of long-term debt . gross profit increased across all four of our business lines and was driven by a $ 26.2 million ( 23 % ) increase in f & i gross profit and a $ 20.3 million ( 7 % ) increase in parts and service gross profit .
| 5,712 |
we disclaim any obligation , except as specifically required by law and the rules of the securities and exchange commission , or sec , to publicly update or revise any such statements to reflect any change in our expectations or in events , conditions or circumstances on which any such statements may be based , or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements . overview we are a clinical-stage biopharmaceutical company leveraging our proprietary methionine aminopeptidase 2 , or metap2 , biology platform to develop novel therapies for patients affected by complex metabolic diseases . we have pioneered the study of metap2 inhibitors in both common and rare metabolic disorders and we are currently advancing programs for type 2 diabetes , prader-willi syndrome , or pws , and liver diseases . our lead product candidate is zgn-1061 , a novel fumagillin-class metap2 inhibitor administered by subcutaneous injection , which is currently being profiled for its utility in the treatment of type 2 diabetes . type 2 diabetes is a prevalent , chronic , progressive , multifactorial disease that leads to increased microvascular and macrovascular disease , and as such , increases risk of death from cardiovascular disease , stroke , and kidney failure . type 2 diabetes is also a leading cause of lower-limb amputation and blindness . existing treatments , while effective in reducing blood glucose levels , fail to reduce progression of the disease , which is driven by loss of function of insulin-producing beta cells and by loss of sensitivity to insulin action . it is estimated that approximately one-third of patients with type 2 diabetes progress to needing insulin ( recently estimated to be a $ 20.0 billion market based on annual sales ) . new therapies are needed to improve glycemic control and reduce comorbidities of type 2 diabetes . we have also initiated development of a second metap2 development candidate , zgn-1258 , which is administered by subcutaneous injection . we initiated investigational new drug application , or ind , enabling nonclinical activities in the first quarter of 2018 , in preparation for filing an ind with the u.s. food and drug administration , or fda . in march 2019 , we announced our decision to suspend plans to file an ind for zgn-1258 in order to evaluate an unexpected finding in muscle tissue in four- and six-month long-term rodent toxicology studies . nonclinical data showed degeneration and other anomalies in rat muscle tissue to different degrees in both vehicle and dose arms of the studies . the effects were absent from other animal species in long term models , and importantly , this observed finding is specific to zgn-1258 and is not related to effects seen with any prior compound . we are taking the necessary steps to assess the unexpected effects we observed . we will continue to evaluate zgn-1258 , as well as explore other potential options within our portfolio of metap2 inhibitors , to address the devastating hyperphagia experienced by those with pws . we continue to have a commitment to people with pws and their families and we will continue to evaluate zgn-1258 as well as explore other potential options within our portfolio of metap2 inhibitors . pws is a rare and complex genetic disorder characterized by physiologic , cognitive and behavioral symptoms including hyperphagia , uncontrollable hunger and its related behaviors , and obesity . published population studies estimate that the prevalence of pws in the united states and in the eu ranges from 1 in 8,000 to 1 in 50,000. the physiological drive to eat in patients with pws is so powerful that they will go to great lengths to eat large quantities of food , even if it is spoiled , indigestible or unpalatable to others . unsupervised patients will often eat to the point that it causes serious physical harm or death . as a result , caregivers are often forced to place locks and alarms on refrigerators and pantries that contain food . despite attempts to control the access to food , the typical adult patient with pws is morbidly obese and , based on evaluation of published survival data , has an average life expectancy of 32 years of age . unfortunately , neither dietary intervention nor currently available pharmaceutical therapies bring meaningful benefits to patients with pws and , as a result , they experience severe and life-threatening consequences of their condition . furthermore , existing surgical techniques such as bariatric surgery are contraindicated in pws , as patients with pws often overeat to a point whereby they can rupture their stomachs , which is frequently a cause of death in this patient population . we have launched a co-sponsored four-year natural history study to advance understanding of the medical history of and medical events in people with pws . path for pws , is our natural history study conducted in collaboration with the 56 f oundation for prader-willi research , or fpwr , is independent of any specific development program and continues enrollment , with mor e than 400 of the 500-participant goal enrolled as of march 2019. the study is a non-interventional , observational study to evaluate occurrences of serious medical events in pws , intended to inform development and clinical trial design for potential new tr eatments for pws . the new zgn-1258 findings do not impact the conduct of this study or our support of path for pws . both zgn-1061 and zgn-1258 were discovered by our researchers as part of a multi-year campaign to identify highly potent and effective novel compounds with nonclinical safety profiles supportive of continued development . one core element of focus for optimization was to reduce or eliminate the potential for pro-thrombotic effects , a limiting factor that led to termination of development of our first-generation compound . to date , both new compounds have similar intrinsic potency against the metap2 enzyme and display appropriate activity in animal models of type 2 diabetes and obesity . story_separator_special_tag we expect to continue to incur expenses in connection with our ongoing activities , if and as we : advance the development of zgn-1061 through phase 2 clinical trials ; advance the development of zgn-1258 through further nonclinical studies and into clinical trials if warranted upon further evaluation of zgn-1258 ; seek to identify and advance development of additional product candidates into clinical development and indications for our product candidates ; seek to obtain regulatory approvals for our product candidates ; add operational , financial and management information systems ; add personnel , including personnel to support our product development and future commercialization ; and maintain , leverage and expand our intellectual property portfolio . as a result , we will need additional financing to support our continuing operations . until such time that we can generate significant revenue from product sales , if ever , we expect to finance our operations through a combination of public equity , private equity , debt financings , or other sources , which may include collaborations with third parties . arrangements with collaborators or others may require us to relinquish rights to certain of our technologies or product candidates . in addition , we may never successfully complete development of any of our product candidates , obtain adequate patent protection for our technology , obtain necessary regulatory approval for our product candidates or achieve commercial viability for any approved product candidates . 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 revenue to achieve profitability , and we may never do so . we expect that our existing cash , cash equivalents and marketable securities as of december 31 , 2018 , will enable us to fund our operating expenses and capital expenditure requirements for a period of at least one year from the issuance date of this annual report . see “ —liquidity and capital resources. ” financial operations overview revenue we have not generated any revenue from product sales since our inception , and do not expect to generate any revenue from the sale of products in the near future . if our development efforts result in clinical success and regulatory approval or collaboration agreements with third parties for our product candidates , we may generate revenue from those product candidates or collaborations . operating expenses the majority of our operating expenses since inception have consisted primarily of research and development activities , and general and administrative costs . research and development expenses . research and development expenses , which consist primarily of costs associated with our product research and development efforts , are expensed as incurred . research and development expenses consist primarily of : personnel costs , including salaries , related benefits and stock-based compensation for employees engaged in scientific research and development functions ; third-party contract costs relating to research , formulation , manufacturing , nonclinical studies and clinical trial activities ; external costs of outside consultants ; 58 payments made under our third-party licensing agreements ; sponsored research agreements ; laboratory consumables ; and allocated facility-related costs . we are currently primarily focused on developing zgn-1061 , zgn-1258 , zgn-1345 and other early research activities and typically use our employee , consultant and infrastructure resources across our research and development programs . we track outsourced development costs by product candidate or development program , but we do not allocate personnel costs , external consultant costs , payments made under our licensing agreements or other internal costs to specific development programs or product candidates unless the payments are specifically identifiable to a development program or product candidate . we record our research and development expenses net of any research and development tax incentives we are entitled to receive from government authorities . research and development activities are central to our business . 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 that our research and development expenses will increase in the foreseeable future as we pursue clinical development of our product candidates . we can not determine with certainty the duration and completion costs of the current or future clinical trials of our product candidates or if , when , or to what extent we will generate revenue from the commercialization and sale of any of our product candidates that obtain regulatory approval . we may never succeed in achieving regulatory approval for any of our product candidates . the duration , costs , and timing of clinical trials and development of our product candidates will depend on a variety of factors , including : the scope , rate of progress , and expense of clinical trials and other research and development activities ; clinical trial results ; uncertainties in clinical trial enrollment rate or design ; significant and changing government regulation ; the timing and receipt of any regulatory approvals ; and the fda 's or other regulatory authority 's influence on clinical trial design . a change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate . for example , if the fda , or another regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of clinical development of a product candidate , or if we experience significant delays in enrollment in any of our clinical trials , we could be required to expend significant additional financial resources and time on the completion of clinical development . general and administrative expenses .
| results of operations comparison of years ended december 31 , 2018 and 2017 the following table summarizes our results of operations for the years ended december 31 , 2018 and 2017 : replace_table_token_5_th research and development expenses replace_table_token_6_th research and development expenses for the year ended december 31 , 2018 increased $ 7.1 million compared to the year ended december 31 , 2017. the increase was primarily due to an increase of $ 11.5 million related to our zgn-1258 program , as well as an increase in our unallocated expenses of $ 3.1 million and discovery and screening of $ 0.5 million , partially offset by decreased costs of $ 7.3 million associated with our zgn-1061 program and $ 0.7 million associated with our beloranib program . costs associated with our zgn-1258 program for the year ended december 31 , 2018 are due to our advancement of the program in january 2018 , and in the first quarter of 2018 our nonclinical efforts for evaluation of zgn-1258 initially in the treatment of people affected by pws . in march 2019 , we announced our decision to suspend plans to file an ind for zgn- 63 1258 in order to evaluate zgn-1258 following an une xpected finding in muscle tissue in rodent toxicology studies . based on our experience in metap2 inhibitor development , in 2018 we identified zgn-1345 , an orally dosed metap2 inhibitor specifically targeting the liver . our discovery and screening costs hav e increased slightly by $ 0 . 5 million from the year ended december 31 , 2018 as compared to the year ended december 31 , 2017 due to the timing of expenses . unallocated expenses increased period over period primarily due to an increase of $ 1.3 million in non-cash stock-based compensation , as well as an increase in personnel related costs of $ 1.1 million .
| 5,713 |
words or phrases such as “ does not believe ” and “ believes , ” or similar expressions , when used in this form 10-k or other filings with the sec , are intended to identify “ forward-looking statements ” within the meaning of the private securities litigation reform act of 1995. overview tpl was originally organized in 1888 as a business trust to hold title to extensive tracts of land in numerous counties in west texas which were previously the property of the texas and pacific railway company . as discussed in item 1 . “ business — general — corporate reorganization , ” on january 11 , 2021 , we completed our corporate reorganization from a business trust to a corporation changing our name from texas pacific land trust to texas pacific land corporation . our revenues are derived primarily from oil and gas royalties , sales of water and land , easements and commercial leases . due to the nature of our operations , our revenue is subject to substantial fluctuations from quarter to quarter and year to year . the demand for , and sale price of , particular tracts of land is influenced by many factors beyond our control , including general economic conditions , the rate of development in nearby areas and the suitability of the particular tract for commercial uses prevalent in western texas . we are not an oil and gas producer . rather , our oil and gas revenue is derived from our oil and gas royalty interests . thus , in addition to fluctuating in response to the market prices for oil and gas , our oil and gas royalty revenues are also subject to decisions made by the owners and operators of the oil and gas wells to which our royalty interests relate as to investments in and production from those wells . we monitor reports from the operators , the texas railroad commission , and other private data providers to assure that we are being paid the appropriate royalties . our revenue from easements is primarily generated from pipelines transporting oil , gas and related hydrocarbons , power line and utility easements and subsurface wellbore easements . the majority of our easements have a thirty-plus year term but subsequently renew every ten years with an additional payment . commercial lease revenue is derived primarily from saltwater disposal royalties , processing , storage and compression facilities and roads . tpwr provides full-service water offerings to operators in the permian basin . these services include , but are not limited to , water sourcing , produced-water gathering/treatment , infrastructure development , disposal solutions , water tracking , analytics and well testing services . tpwr 's revenue streams principally consist of revenue generated from sales of sourced and treated water as well as revenues from produced water royalties . covid-19 pandemic and market conditions the increased supply of oil and gas by member nations of opec+ and the uncertainty caused by the global spread of covid 19 led to declines in crude oil prices and a reduction in global demand for oil and gas in 2020. the full impact of these events , which resulted in production curtailments and or conservation of capital by the owners and operators of the oil and gas wells to which the company 's royalty interests relate , is unknown at this time . these events have negatively affected the company 's business and results of operations for the year ended december 31 , 2020. during these uncertain times , we have continued to generate positive operating results and remain focused on meeting the operational needs of our customers while maintaining a safe and healthy work environment for our employees . our existing information technology infrastructure has afforded us the opportunity to allow our corporate employees to work remotely . we have deployed additional safety and sanitization measures , including quarantine facilities for our field employees , if needed . in an effort to decrease ongoing operational costs , we have implemented certain cost reduction measures which include , but are not limited to , a reduction in contract labor , conversion of portions of our water sourcing infrastructure to electric power and negotiated price reductions and discounts with certain vendors . we continue to monitor our customer base and outstanding accounts receivable balances as a means of minimizing any potential collection issues . as a royalty owner , we have no capital expenditure or operating expense burden for development of wells . furthermore , our water operations currently have limited capital expenditure requirements , the amount and timing of which are entirely within our control . 17 table of contents the coronavirus aid , relief , and economic security act ( “ cares act ” ) was enacted on march 27 , 2020. the company evaluated the provisions and potential impacts of this legislation ; however , there have been no significant impacts to the company 's results of operations or financial position resulting from the cares act for the year ended december 31 , 2020. despite the uncertainty caused by the covid-19 pandemic and the resulting record low oil prices and reduced demand , we believe our longevity in the industry and strong financial position provide us with the tools necessary to navigate these unprecedented times . we have no debt , a strong cash position ( cash and cash equivalents were $ 281.0 million for the year ended december 31 , 2020 ) and we continue to maintain our capital resource allocation discipline . liquidity and capital resources our principal sources of liquidity are revenues from oil and gas royalties , easements and other surface-related income , and water and land sales . our primary liquidity and capital requirements are for capital expenditures related to our water services and operations segment , working capital and general corporate needs . we continuously review our liquidity and capital resources . story_separator_special_tag for the year ended december 31 , 2020 , the combined revenue from these revenue streams was $ 52.6 million as compared to $ 42.2 million for the year ended december 31 , 2019. the increase in easements and other surface-related income was principally related to an increase of $ 11.6 million in produced water royalties for the year ended december 31 , 2020 compared to the same period of 2019 , partially offset by a $ 1.2 million decrease in temporary permit income over the same time period . net income . net income for the water services and operations segment was $ 48.1 million for the year ended december 31 , 2020 compared to $ 60.4 million for the year ended december 31 , 2019. as discussed above , revenues for the water services and operations segment decreased $ 19.7 million for the year ended december 31 , 2020 compared to the same period of 2019. expenses , including income tax expense , for the water services and operations segment were $ 59.3 million for the year ended december 31 , 2020 as compared to $ 66.8 million for the year ended december 31 , 2019. expenses are discussed further below under “ other financial data — consolidated. ” other financial data — consolidated salaries and related employee expenses . salaries and related employee expenses were $ 32.2 million for the year ended december 31 , 2020 compared to $ 35.0 million for the comparable period of 2019. the decrease in salaries and related employee expenses during 2020 as compared to the same period of 2019 is principally due to decreased usage of contract labor . 20 table of contents water service-related expenses . water service-related expenses were $ 14.2 million for the year ended december 31 , 2020 compared to $ 20.8 million for the same period of 2019. this decrease in expenses was principally the result of a decrease in fuel , equipment rental and repairs and maintenance expenses and is directly related to cost saving measures implemented during 2020 and an approximately 6.8 % decrease in the number of barrels of sourced and treated water sold , as previously discussed . legal and professional fees . legal and professional fees decreased $ 5.6 million to $ 10.8 million for the year ended december 31 , 2020 from $ 16.4 million for the comparable period of 2019. legal and professional fees for the year ended december 31 , 2020 principally related to our corporate reorganization which was effective on january 11 , 2021. additionally , legal and professional fees for the year ended december 31 , 2020 includes $ 1.35 million representing the final specified settlement payment due under the settlement agreement . see further discussion under item 1 . “ business — general — corporate reorganization. ” legal and professional fees for the year ended december 31 , 2019 principally related to the proxy contest to elect a new trustee , the entry into and payments made under the settlement agreement dated july 30 , 2019 and the ce committee . land sales expenses . land sales expenses were $ 4.0 million for the year ended december 31 , 2020 compared to $ 0.2 million for the comparable period of 2019. land sales expenses represent expenses related to land sales and include cost basis and closing costs associated with land sales . land sales expenses for the year ended december 31 , 2020 include $ 3.9 million of cost basis . depreciation , depletion and amortization . depreciation , depletion and amortization was $ 14.4 million for the year ended december 31 , 2020 compared to $ 8.9 million for the year ended december 31 , 2019. the increase in depreciation , depletion and amortization is principally related to the company 's investment in water service-related assets placed in service in 2020 and 2019 and to a lesser extent , additional depreciation expense related to the change in estimated useful lives of certain water service-related assets in july 2019 as discussed in note 2 , “ summary of significant accounting policies — change in accounting estimate. ” year ended december 31 , 2019 compared to year ended december 31 , 2018 revenues . revenues increased $ 190.3 million , or 63.4 % , to $ 490.5 million for the year ended december 31 , 2019 compared to $ 300.2 million for the year ended december 31 , 2018. net income increased $ 109.0 million , or 52.0 % to $ 318.7 million for the year ended december 31 , 2019 compared to $ 209.7 million for the year ended december 31 , 2018 . 21 table of contents the following is an analysis of our operating results for the comparable periods by reportable segment ( in thousands ) : replace_table_token_9_th land and resource management land and resource management segment revenues increased $ 151.9 million , or 71.8 % , to $ 363.3 million for the year ended december 31 , 2019 as compared with revenues of $ 211.5 million for the comparable period of 2018. the increase in land and resource management segment revenues is due to changes in oil and gas royalty revenue , easements and other surface-related income , sale of oil and gas royalty interests and land sales and other operating revenue , which are discussed below . oil and gas royalties . oil and gas royalty revenue was $ 154.7 million for the year ended december 31 , 2019 compared to $ 123.8 million for the year ended december 31 , 2018 , an increase of 24.9 % .
| results of operations we operate our business in two segments : land and resource management and water services and operations . we eliminate any inter-segment revenues and expenses upon consolidation . we analyze financial results for each of our reportable segments . the reportable segments presented are consistent with our reportable segments discussed in note 10 , “ business segment reporting ” in item 8 . “ financial statements and supplementary data ” in this annual report on form 10-k. we monitor our reporting segments based upon revenue and net income calculated in accordance with accounting principles generally accepted in the united states of america ( “ gaap ” ) . our results of operations for the year ended december 31 , 2020 have been negatively impacted by the economic impacts related to the covid-19 pandemic and the declines in pricing and demand for crude oil that occurred during 2020. given the uncertainty surrounding the severity and duration of the covid-19 pandemic , our results of operations may continue to be impacted in future periods . year ended december 31 , 2020 compared to year ended december 31 , 2019 revenues . revenues decreased $ 187.9 million , or 38.3 % , to $ 302.6 million for the year ended december 31 , 2020 compared to $ 490.5 million for the year ended december 31 , 2019. net income decreased $ 142.7 million , or 44.8 % , to $ 176.0 million for the year ended december 31 , 2020 compared to $ 318.7 million for the year ended december 31 , 2019. revenues and net income for the year ended december 31 , 2019 included a $ 100 million land sale . excluding the impact of the 2019 land sale , revenues and net income ( net of income tax ) for the year ended december 31 , 2019 were $ 390.5 million and $ 239.7 million , respectively .
| 5,714 |
” overview we are a maryland corporation formed in april 2013. we became a public company on november 19 , 2013 when ashford trust , a nyse-listed reit , completed the spin-off of our company through the distribution of our outstanding common stock to the ashford trust stockholders . we invest primarily in high revenue per available room ( “ revpar ” ) , luxury hotels and resorts . high revpar , for purposes of our investment strategy , means revpar of at least twice the u.s. national average revpar for all hotels as determined by smith travel research . two times the u.s. national average was $ 162 for the year ended december 31 , 2016 . we have elected to be taxed as a reit under the internal revenue code beginning in the year ended december 31 , 2013. we conduct our business and own substantially all of our assets through our operating partnership , ashford prime op . we operate in the direct hotel investment segment of the hotel lodging industry . as of february 24 , 2017 , we own interests in eleven hotel properties in six states , the district of columbia and st. thomas , u.s. virgin islands with 3,702 total rooms , or 3,467 net rooms , excluding those attributable to our joint venture partner . the hotel properties in our current portfolio are predominantly located in u.s. urban markets with favorable growth characteristics resulting from multiple demand generators . we own nine of our hotel properties directly , and the remaining two hotel properties through an investment in a majority-owned consolidated entity . we are advised by ashford llc , a subsidiary of ashford inc. , and an affiliate of ashford trust , through an advisory agreement . all of the hotel properties in our portfolio are currently asset-managed by ashford llc . we do not have any employees . all of the services that might be provided by employees are provided to us by ashford llc . recent developments on april 8 , 2016 , the company announced a number of immediate and longer-term initiatives designed to enhance value for its stockholders , which include : utilizing up to $ 50 million to initiate a stock repurchase program ; amending the company 's 2016 dividend policy commencing with the second quarter by increasing the expected quarterly cash dividend for the company 's common stock by 20 % , from $ 0.10 per diluted share to $ 0.12 per diluted share . this equates to an annual rate of $ 0.48 per diluted share , representing a 4.4 % yield based on the company 's closing stock price on april 7 , 2016 ; liquidating our investment in the aqua u.s. fund and utilizing the cash to fund the share repurchase plan ; 78 immediately unwinding the op unit enfranchisement preferred equity transaction for the company 's op unit holders , previously announced on february 2 , 2016 ; and commencing the sale process for up to four of the company 's assets that do not have the revpar level and product quality consistent with the long-term vision of ashford prime . the assets include the courtyard philadelphia downtown hotel , courtyard seattle downtown hotel , renaissance tampa hotel and marriott legacy center hotel in plano , texas . on april 26 , 2016 , in connection with a previously announced required public offering , we issued 290,850 shares of our 5.50 % series b preferred stock at $ 17.24 per share for gross proceeds of $ 5.0 million . the series b preferred stock offering includes accrued and unpaid dividends since april 15 , 2016. dividends on the preferred stock accrue at a rate of 5.50 % on the liquidation preference of $ 25.00 per share . the offering closed on april 29 , 2016. the net proceeds from the sale of the shares after underwriting discounts and commissions were approximately $ 4.2 million . on may 23 , 2016 , the company announced it had entered into a definitive agreement to sell the courtyard seattle downtown for $ 84.5 million in cash . the sale closed on july 1 , 2016. the company received net proceeds from the disposition of approximately $ 13.9 million following the repayment of approximately $ 65 million of debt and other transaction costs . on june 7 , 2016 , the weisman group sent a letter to mr. monty j. bennett , chairman of our board of directors , which outlined a non-binding proposal to acquire the assets of the company for a total consideration of $ 1.48 billion ( including refinancing of all existing debt of the company ) . on june 27 , 2016 , the company delivered a letter to the weisman group in response to the weisman group 's proposal . on july 21 , 2016 , in a letter to mr. monty j. bennett , the weisman group proposed a revised non-binding proposal to acquire the company for $ 1.54 billion . on august 9 , 2016 , the company announced that its board of directors took a series of actions , in response to the board 's on-going dialogue with its shareholders , which were intended to enhance the company 's corporate governance . the enhanced governance measures , which were unanimously approved by the board of directors , included : adoption of a majority voting standard for uncontested director elections and a plurality voting standard in contested director elections ; separate the roles of chairman of our board of directors and chief executive officer ; prohibit share recycling with respect to share forfeitures , stock options and stock appreciation rights under the company 's stock plan by executives and directors ; implementation of a mandatory equity award retention period for executives and directors ; adoption of a proxy access resolution which would enable a shareholder , or a group of not more than 20 shareholders , who have continuously owned 3 % or more of the company 's common stock for a minimum of 3 years to include nominees in its proxy story_separator_special_tag luxury hotels have proven to have superior long-term revpar growth versus other chain scales , and the company believes its exclusive focus of investing in luxury hotels should generate attractive returns for its shareholders . increased dividend : the company 's 2017 dividend policy will be amended commencing with the first quarter by increasing the expected quarterly cash dividend for the company 's common stock by 33 % , from $ 0.12 per diluted share to $ 0.16 per diluted share . this equates to an annual rate of $ 0.64 per diluted share , representing a 4.5 % yield based on the company 's closing stock price on january 23 , 2017 ; reaffirming conservative leverage : the company will continue to target conservative leverage , with a target leverage level of 45 % net debt to gross assets ; strong liquidity : the company will continue to focus on having access to liquidity for both opportunistic investments and as a hedge against economic uncertainty . the company will target holding 10-15 % of its gross debt balance in cash . on january 24 , 2017 , we entered into the amended and restated advisory agreement with ashford inc. that amended and restated our current advisory agreement . for more information , please see “ business- certain agreements—fourth amended and restated advisory agreement ” herein . although our board of directors , through the action of the independent directors only , may amend the advisory agreement without stockholder approval , the independent directors have elected to seek stockholder approval of the amended and restated advisory agreement . accordingly , the amended and restated advisory agreement will not become effective until is approved by our stockholders . on february 16 , 2017 , the ashford entities entered into a settlement agreement with the sessa entities regarding the composition of the company 's board of directors , dismissal of pending litigation involving the parties and certain other matters . for more information , please see “ legal proceedings ” herein . 80 key indicators of operating performance we use a variety of operating and other information to evaluate the operating performance of our business . these key indicators include financial information that is prepared in accordance with gaap as well as other financial measures that are non-gaap measures . in addition , we use other information that may not be financial in nature , including statistical information and comparative data . we use this information to measure the operating performance of our individual hotels , groups of hotels and or business as a whole . we also use these metrics to evaluate the hotels in our portfolio and potential acquisitions to determine each hotel 's contribution to cash flow and its potential to provide attractive long-term total returns . these key indicators include : occupancy-occupancy means the total number of hotel rooms sold in a given period divided by the total number of rooms available . occupancy measures the utilization of our hotels ' available capacity . we use occupancy to measure demand at a specific hotel or group of hotels in a given period . adr-adr means average daily rate and is calculated by dividing total hotel rooms revenues by total number of rooms sold in a given period . adr measures average room price attained by a hotel and adr trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels . we use adr to assess the pricing levels that we are able to generate . revpar-revpar means revenue per available room and is calculated by multiplying adr by the average daily occupancy . revpar is one of the commonly used measures within the hotel industry to evaluate hotel operations . revpar does not include revenues from food and beverage sales or parking , telephone or other non-rooms revenues generated by the property . although revpar does not include these ancillary revenues , it is generally considered the leading indicator of core revenues for many hotels . we also use revpar to compare the results of our hotels between periods and to analyze results of our comparable hotels ( comparable hotels represent hotels we have owned for the entire period ) . revpar improvements attributable to increases in occupancy are generally accompanied by increases in most categories of variable operating costs . revpar improvements attributable to increases in adr are generally accompanied by increases in limited categories of operating costs , such as management fees and franchise fees . revpar changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in adr . for example , an increase in occupancy at a hotel would lead to additional variable operating costs ( including housekeeping services , utilities and room supplies ) and could also result in increased other operating department revenue and expense . changes in adr typically have a greater impact on operating margins and profitability as they do not have a substantial effect on variable operating costs . occupancy , adr and revpar are commonly used measures within the lodging industry to evaluate operating performance . revpar is an important statistic for monitoring operating performance at the individual hotel level and across our entire business . we evaluate individual hotel revpar performance on an absolute basis with comparisons to budget and prior periods , as well as on a regional and company-wide basis . adr and revpar include only rooms revenue . rooms revenue comprised approximately 71 % of our total hotel revenue for the year ended december 31 , 2016 and is dictated by demand ( as measured by occupancy ) , pricing ( as measured by adr ) and our available supply of hotel rooms . we also use ffo , affo , ebitda , adjusted ebitda and hotel ebitda as measures of the operating performance of our business . see “ non-gaap financial measures.
| results of operations year ended december 31 , 2016 compared to year ended december 31 , 2015 the following table summarizes the changes in key line items from our consolidated statements of operations for the years ended december 31 , 2016 and 2015 ( in thousands except percentages ) : replace_table_token_33_th 83 all hotel properties owned during the years ended december 31 , 2016 and 2015 have been included in our results of operations during the respective periods in which they were owned . based on when a hotel property was acquired or disposed of , operating results for certain hotel properties are not comparable for the years ended december 31 , 2016 and 2015. the hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties . the following acquisitions and dispositions affect reporting comparability related to our consolidated financial statements : hotel properties location acquisition/disposition acquisition/disposition date bardessono hotel yountville , ca acquisition july 9 , 2015 ritz-carlton , st. thomas st. thomas , usvi acquisition december 15 , 2015 seattle courtyard downtown seattle , wa disposition july 1 , 2016 the following table illustrates the key performance indicators of our hotel properties for the periods indicated : replace_table_token_34_th the following table illustrates the key performance indicators of the nine comparable hotel properties that were included for the entire years ended december 31 , 2016 and 2015 : replace_table_token_35_th net income ( loss ) attributable to the company . net income attributable to the company increased $ 26.0 million , to $ 19.3 million for the year ended december 31 , 2016 ( “ 2016 ” ) compared to a net loss attributable to the company of $ 6.7 million for the year ended december 31 , 2015 ( “ 2015 ” ) as a result of the factors discussed below . rooms revenue . rooms revenue from our hotel properties in creased $ 32.4 million , or 12.7 % to $ 287.8
| 5,715 |
the gross margin percent of merchandise sales decreased to 20.4 % for the year ended december 31 , 2014 , from 22.4 % in 2013 , driven primarily by a 90 day cash option in certain acceptance now locations that has lower margins than our rental purchase agreements . vendor settlement credit . during 2014 , we recorded a $ 6.8 million credit as a result of a class-action settlement with the manufacturers of lcd screen displays . gross profit . gross profit increased by $ 30.9 million , or 1.4 % , to $ 2,184.4 million for the year ended december 31 , 2014 , from $ 2,153.5 million in 2013 , primarily due to increased store revenue in the acceptance now segment and the $ 6.8 million vendor settlement credit as discussed above . gross profit as a percentage of total revenue decreased to 69.2 % in 2014 compared to 69.6 % in 2013 . without the $ 6.8 million vendor settlement credit discussed above , gross margin as a percentage of total revenue would have been 69.0 % for the year ended december 31 , 2014 , a decrease of 0.6 % from the prior year , driven by increased revenue in the acceptance now segment , which has higher costs of rental merchandise , and a 90 day cash option in certain acceptance now locations that has lower margins than our rental purchase agreements . store labor . store labor includes all salaries and wages paid to store-level employees and district managers ' salaries , together with payroll taxes and benefits . store labor increased by $ 7.3 million , or 0.8 % , to $ 888.9 million for the year ended december 31 , 2014 , as compared to $ 881.7 million in 2013 . this increase was primarily attributable to the growth of our acceptance now segment , partially offset by a reduction in labor costs due to store closures in the core u.s. segment and the reduction of labor hours at the store level . store labor expenses expressed as a percentage of total store revenue decreased to 28.4 % for the year ended december 31 , 2014 , from 28.8 % in 2013 , driven by better leverage on acceptance now sales , the benefit of store closures and the reduction of labor hours at the store level . other store expenses . other store expenses include occupancy , charge-offs due to customer stolen merchandise , delivery , advertising , selling , insurance , travel and other store-level operating expenses . other store expenses increased by $ 50.6 million , or 6.4 % , to $ 839.8 million for the year ended december 31 , 2014 , as compared to $ 789.2 million in 2013 . this was primarily attributable to increased expenses associated with the growth of our acceptance now segment , an increase in charge-offs due to customer stolen merchandise , and increased professional fees due to the investments we are making under our multi-year transformation program . other store expenses expressed as a percentage of total store revenue increased to 26.8 % for the year ended december 31 , 2014 , from 25.8 % in 2013 . general and administrative expenses . general and administrative expenses include all corporate overhead expenses related to our headquarters such as salaries , payroll taxes and benefits , stock-based compensation , occupancy , administrative and other operating expenses , as well as salaries and labor costs for our regional directors , divisional vice presidents and executive vice presidents . general and administrative expenses increased by $ 14.7 million , or 10.0 % , to $ 162.3 million for the year ended december 31 , 2014 , as compared to $ 147.6 million in 2013 . general and administrative expenses expressed as a percentage of total revenue increased to 5.1 % for the year ended december 31 , 2014 , from 4.8 % in 2013 . other charges . as discussed in note m to the consolidated financial statements , we closed 150 stores in the core u.s. segment , which resulted in a restructuring charge of $ 5.1 million during the year ended december 31 , 2014 . this charge included approximately $ 3.4 million of accelerated depreciation expense for fixed assets , leasehold improvements and write-off of merchandise inventory , $ 1.3 million in early lease termination costs and $ 0.4 million of other operating costs to decommission the stores . in addition , we eliminated certain departments and functions in our field support center during the year ended december 31 , 2014 , as a part of our multi-year transformation program . the changes resulted in restructuring charges of approximately $ 2.8 million for severance and other payroll-related costs . 24 during the third quarter of 2014 , we recorded a $ 4.6 million impairment charge related to internally-developed computer software that was placed into service in the fourth quarter of 2014. we determined that certain components developed for our new store management information system would not be utilized . operating profit . operating profit decreased by $ 53.5 million , or 21.7 % , to $ 193.5 million for the year ended december 31 , 2014 , as compared to $ 247.0 million in 2013 . operating profit as a percentage of total revenue decreased to 6.1 % for the year ended december 31 , 2014 , from 8.0 % for 2013 , primarily due to the decrease in revenue and resulting decrease in gross profit in the core u.s. segment , increased expenses associated with the growth of our acceptance now segment , an increase in charge-offs due to customer stolen merchandise and increased professional fees due to the investments we are making under our multi-year transformation program . finance charges from refinancing . story_separator_special_tag general and administrative expenses increased by $ 7.6 million , or 5.4 % , to $ 147.6 million for the year ended december 31 , 2013 , as compared to $ 140.0 million in 2012. general and administrative expenses expressed as a percentage of total revenue increased to 4.8 % for the year ended december 31 , 2013 , from 4.6 % in 2012. operating profit . operating profit decreased by $ 66.0 million , or 21.1 % , to $ 247.0 million for the year ended december 31 , 2013 , as compared to $ 313.0 million in 2012. operating profit as a percentage of total revenue decreased to 8.0 % for the year ended december 31 , 2013 , from 10.2 % for 2012 , primarily due to the decrease in revenue and resulting decrease in gross profit in the core u.s. segment , partially offset by the increase in revenue and resulting increase in gross profit in our acceptance now segment . net interest . net interest expense increased $ 7.6 million , or 24.2 % , to $ 38.8 million for the year ended december 31 , 2013 as compared to $ 31.2 million in 2012 due primarily to the issuance of $ 250 million of senior notes in may of 2013. income tax expense . our effective income tax rate was 38.2 % and 36.1 % for 2013 and 2012 , respectively . the 2013 rate for income taxes was greater than that of 2012 due primarily to the non-deductible write-down of goodwill related to stores sold to franchisees . net earnings and earnings per share . net earnings decreased by $ 51.3 million , or 28.5 % , to $ 128.8 million for the year ended december 31 , 2013 as compared to $ 180.0 million in 2012. this decrease was primarily attributable to a decline in the core u.s. segment operating profit , an increase in interest expense and an increase in the effective income tax rate in 2013 as compared to 2012 , partially offset by growth in the acceptance now and mexico segments . diluted earnings per share in 2013 were $ 2.33 compared to $ 3.03 in 2012 , due to the decrease in net income discussed above . segment performance core u.s. segment . replace_table_token_9_th revenues . rentals and fees revenue and merchandise sales decreased in 2014 compared to 2013 . the portfolio of recurring revenue is down year over year due to softer demand and the closure of 150 stores in the second quarter of 2014 , partially offset by the rollout of smartphones in the third quarter of 2014. gross profit . gross profit decreased in 2014 from 2013 primarily due to decreased store revenue as discussed above . gross profit as a percentage of total segment revenue increased to 72.6 % in 2014 from 72.1 % in 2013 . without the $ 6.8 million vendor settlement credit discussed above , gross profit as a percentage of total revenue would have been 72.3 % in 2014. operating profit . operating profit as a percentage of total segment revenue decreased to 11.0 % in 2014 from 12.3 % for 2013 . operating profit in 2014 was impacted by decreased gross profit as discussed above , increased charge-offs due to customer stolen merchandise and store closure costs related to the closure of 150 stores in the second quarter , partially offset by decreases in store labor costs as a result of the store closures . advertising expense as a percentage of core u.s. store revenues for the years ended december 31 , 2014 and 2013 was 3.9 % and 3.7 % , respectively . charge-offs in our core u.s. rent-to-own stores due to customer 26 stolen merchandise , expressed as a percentage of revenues , were approximately 3.1 % in 2014 , as compared to 2.7 % in 2013 . operating expenses expressed as a percentage of total segment revenue increased to 61.6 % in 2014 from 59.8 % in 2013 primarily due to the decrease in revenue . acceptance now segment . replace_table_token_10_th revenues . the increase in revenues in 2014 was driven by the 25.5 % growth in same store revenue and the net addition of 81 locations during the period . this segment contributed approximately 20.4 % of consolidated revenues in 2014. gross profit . gross profit as a percentage of revenues was 57.7 % in 2014 as compared to 59.4 % in 2013 . this 170 basis point decline was primarily driven by lower margins from the 90 day cash option , which was expanded to approximately 60 % of our locations . the higher cost of merchandise results in lower gross margins in this segment . operating profit . operating profit as a percentage of total segment revenue decreased to 17.5 % in 2014 from 18.2 % for 2013 . operating profit was positively impacted by the growth in revenue and gross profit in this segment , partially offset by increases in charge-offs due to customer stolen merchandise and an increase in store labor expenses due to the growth in this segment . charge-offs due to customer stolen merchandise , expressed as a percentage of revenues , were approximately 7.8 % in 2014 as compared to 5.9 % in 2013 . mexico segment . replace_table_token_11_th revenues . the increase in total revenues in 2014 was driven by the 19.7 % growth in same store revenue and the net addition of 26 stores during 2014 . gross profit . gross profit increased in 2014 primarily due to increased revenue as discussed above . gross profit as a percentage of total revenues decreased to 70.7 % in 2014 from 72.0 % in 2013 . operating loss . operating loss as a percentage of total segment revenue decreased to 30.4 % in 2014 from 48.4 % for 2013 , improving as more stores mature . 27 franchising segment . replace_table_token_12_th revenues .
| results of operations the following discussion focuses on our results of operations and issues related to our liquidity and capital resources . you should read this discussion in conjunction with the consolidated financial statements and notes thereto included elsewhere in this annual report on form 10-k. the following results of operations narrative and table reflect the revisions to prior year balances due to immaterial error corrections discussed in note b to the consolidated financial statements , as well as the realignment of our segments discussed in note s , as canada is now reported in the core u.s. segment , the segment formerly reported as international has been revised to reflect the operations of mexico only and we are no longer allocating corporate costs to the segments . overview during 2014 , we have continued efforts under our multi-year transformation program , testing a new labor model for our core u.s. stores , formulating a customer-focused value-based pricing strategy , developing a new sourcing and distribution model and implementing new technology into our acceptance now locations . we continue to grow the acceptance now segment , with revenue growth of approximately $ 155 million year over year . same store sales increased over 25 % in 2014 , we added a net of 81 acceptance now locations and launched our virtual solution in 650 locations . acceptance now contributed over 20 % of our consolidated revenues in 2014. revenues in our core u.s. segment decreased approximately $ 113 million year over year . in addition to softer demand , during the second quarter of 2014 , we closed 150 core u.s. stores and merged those accounts into existing core u.s. stores , which improved profitability but reduced revenues .
| 5,716 |
the following discussion is based upon our consolidated financial statements included elsewhere in this report , which have been prepared in accordance with u.s. generally accepted accounting principles , or u.s. gaap . in the course of operating our business , we routinely make decisions as to the timing of the payment of invoices , the collection of receivables , the manufacturing and shipment of products , the fulfillment of orders , the purchase of supplies , and the building of inventory and spare parts , among other matters . in making these decisions , we consider various factors including contractual obligations , customer satisfaction , competition , internal and external financial targets and expectations , and financial planning objectives . each of these decisions has some impact on the financial results for any given period . for further information about our critical accounting policies and estimates , see “ critical accounting policies and estimates ” section included in this “ management 's discussion and analysis of financial condition and results of operations. ” to aid in understanding our operating results for the periods covered by this report , we have provided an executive overview , which includes a summary of our business and market environment along with a financial results and key performance metrics overview . these sections should be read in conjunction with the more detailed discussion and analysis of our consolidated financial condition and results of operations in this item 7 , our “ risk factors ” section included in item 1a of part i , and our consolidated financial statements and notes thereto included in item 8 of part ii of this report . 39 table of conten t s executive overview financial results and key performance metrics overview the following table provides an overview of our financial results and key financial metrics ( in millions , except per share amounts , percentages , and days sales outstanding , or dso ) : replace_table_token_3_th ( * ) dso is for the fourth quarter ended december 31 , 2020 , and 2019. net revenues : net revenues were flat during 2020 compared to 2019. we experienced growth in our enterprise and cloud verticals , which was offset by a decline in our service provider vertical . the growth in our enterprise vertical was primarily driven by switching , and the growth in our cloud vertical was primarily driven by routing . we believe the decline in our service provider vertical was partially due to the covid-19 related supply constraints . service net revenues increased primarily due to strong renewals of support contracts . gross margin : gross margin as a percentage of net revenues decreased primarily due to increased logistics and other supply chain-related costs related to the covid-19 pandemic , customer and product mix , and intangible amortization associated with the acquisition of mist , partially offset by the impact associated with higher service revenues . operating margin : operating income as a percentage of net revenues decreased primarily due to the drivers described in the gross margin discussion above , higher restructuring charges , and higher personnel-related costs . the decrease in operating margin was partially offset by lower travel costs due to the covid-19 pandemic . operating cash flows : net cash provided by operations increased primarily due to higher invoicing activity and working capital differences related to customer collections , partially offset by higher payments to indirect suppliers and for employee compensation . capital return : we continue to return capital to our stockholders . during the fourth quarter of 2019 , we entered into an accelerated share repurchase program ( the `` asr '' ) , to repurchase an aggregate of $ 200.0 million in shares . under 40 table of conten t s the asr , we made an up-front payment of $ 200.0 million and received and retired 6.4 million shares of our common stock during the fourth quarter of 2019. during the first quarter of 2020 , the asr was completed , and we received and retired an additional 1.8 million shares for a total repurchase of 8.2 million shares of our common stock . during 2020 , we repurchased a total of 16.1 million shares of our common stock in the open market at an average price of $ 23.36 per share for an aggregate purchase price of $ 375.0 million . during 2020 , we paid quarterly dividends of $ 0.20 per share , for an aggregate amount of $ 264.1 million . dso : dso is calculated as the ratio of ending accounts receivable , net of allowances , divided by average daily net revenues for the preceding 90 days . dso increased , primarily due to higher accounts receivable resulting from higher overall invoicing volume . deferred revenue : total deferred revenue increased , primarily due to the timing of maintenance service renewals . covid-19 pandemic update the covid-19 pandemic and the containment measures taken by governments and businesses are expected to continue to have a substantial negative impact on businesses around the world and on global , regional , and national economies . as a result , the pandemic has , and may continue to , negatively affect our operations , including as a result of external factors beyond our control such as restrictions on the physical movement of our employees , contract manufacturers , partners , and customers to limit the spread of covid-19 and the availability and acceptance of a covid-19 vaccine . since march 2020 , the majority of our global workforce has been working remotely due to shelter-in-place requirements and travel restrictions . we continue to follow the guidance of local and national governments , including monitoring the health of our employees who have returned to our offices and limiting the gathering size of employee groups in indoor spaces . we continue to support healthy customer demand for our products by working with our suppliers and distributors to address supply chain disruptions as well as travel restrictions that have impacted our operations . story_separator_special_tag goodwill is tested for impairment at the reporting unit level , which is one level below the operating segment , by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value . this initial assessment includes , among others , consideration of macroeconomic conditions and financial performance . if the qualitative assessment indicates that it is more likely than not that an impairment exists , a quantitative analysis is performed by determining the fair value of each reporting unit using a combination of the discounted cash flow and the market approaches . the discounted cash flow approach uses expected future operating results . the market approach uses comparable company information to determine revenue and earnings multiples to value our reporting units . failure to achieve these expected results or market multiples may cause a future impairment of goodwill of our reporting units . goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value . a goodwill impairment loss is recognized for the amount that the carrying amount of a reporting unit , including goodwill , exceeds its fair value , limited to the total amount of goodwill allocated to that reporting unit . we conducted our annual impairment test of goodwill during the fourth quarters of 2020 and 2019. for the years ended december 31 , 2020 and 2019 , we determined that no impairment of the carrying value of goodwill for any reporting units exists . see note 6 , goodwill and purchased intangible assets , in notes to the consolidated financial statements in item 8 of part ii of this report for additional information regarding our goodwill and purchased intangible assets . inventory valuation and contract manufacturer liabilities : inventory consists primarily of component parts to be used in the manufacturing process and finished goods in-transit , and is stated at the lower of cost or net realizable value . a provision is recorded when inventory is determined to be in excess of anticipated demand or obsolete , to adjust inventory to its estimated realizable value . in determining the provision , we also consider estimated recovery 42 table of conten t s rates based on the nature of the inventory . as of december 31 , 2020 and december 31 , 2019 , our net inventory balances were $ 221.9 million and $ 94.2 million , respectively . we establish a liability for non-cancelable , non-returnable purchase commitments with our contract manufacturers for quantities in excess of our demand forecasts or obsolete materials charges for components purchased by contract manufacturers based on our demand forecasts or customer orders . we also take estimated recoveries of aged inventory into consideration when determining the liability . as of december 31 , 2020 and december 31 , 2019 , our contract manufacturer liabilities were $ 15.2 million and $ 28.6 million , respectively . significant judgment is used in establishing our forecasts of future demand , recovery rates based on the nature and age of inventory , and obsolete material exposures . we perform a detailed analysis and review of data used in establishing our demand forecasts . if the actual component usage and product demand are significantly lower than forecast , which may be caused by factors within and outside of our control , or if there were a higher incidence of inventory obsolescence because of rapidly changing technology and our customer requirements , we may be required to increase our inventory write-downs and contract manufacturer liabilities , which could have an adverse impact on our gross margins and profitability . we regularly evaluate our exposure for inventory write-downs and adequacy of our contract manufacturer liabilities . inventory and supply chain management remains an area of focus as we balance the risk of material obsolescence and supply chain flexibility in order to reduce lead times . revenue recognition : we enter into contracts to sell our products and services , and while some of our sales agreements contain standard terms and conditions , there are agreements that contain non-standard terms and conditions and include promises to transfer multiple goods or services . as a result , significant interpretation and judgment are sometimes required to determine the appropriate accounting for these transactions , including : ( 1 ) whether performance obligations are considered distinct that should be accounted for separately versus together , how the price should be allocated among the performance obligations , and when to recognize revenue for each performance obligation ; ( 2 ) developing an estimate of the stand-alone selling price , or ssp , of each distinct performance obligation ; ( 3 ) combining contracts that may impact the allocation of the transaction price between product and services ; and ( 4 ) estimating and accounting for variable consideration , including rights of return , rebates , price protection , expected penalties or other price concessions as a reduction of the transaction price . our estimates of ssp for each performance obligation require judgment that considers multiple factors , including , but not limited to , historical discounting trends for products and services , pricing practices in different geographies and through different sales channels , gross margin objectives , internal costs , competitor pricing strategies , and industry technology lifecycles . our estimates for rights of return , rebates , and price protection are based on historical sales returns and price protection credits , specific criteria outlined in customer contracts or rebate agreements , and other factors known at the time . our estimates for expected penalties and other price concessions are based on historical trends and expectations regarding future incurrence . changes in judgments with respect to these assumptions and estimates could impact the timing or amount of revenue recognition . income taxes : we are subject to income taxes in the united states and numerous foreign jurisdictions . significant judgment is required in evaluating our uncertain tax positions and determining our taxes .
| results of operations a discussion regarding our financial condition and results of operations for the fiscal year ended december 31 , 2020 compared to 2019 is presented below . a discussion regarding our financial condition and results of operations for fiscal year ended december 31 , 2019 compared to 2018 can be found under item 7 of our annual report on form 10-k for the fiscal year ended december 31 , 2019 , filed with the sec on february 20 , 2020 , which is available on the sec 's website at www.sec.gov and our investor relations website at http : //investor.juniper.net . revenues the following table presents net revenues by product and service , customer vertical , and geographic region ( in millions , except percentages ) : replace_table_token_4_th product net revenues decreased due to decreases in security and routing , offset by switching . security revenue decreased primarily driven by enterprise from lower net revenues in our srx product family . routing revenue decreased primarily driven by service provider and to a lesser extent , enterprise , from lower net revenues in our mx product family . the decrease was partially offset by strength in cloud . switching revenue increased primarily driven by enterprise and service provider , from higher net revenues in our mist product family . 45 table of conten t s service net revenues increased primarily due to strong renewals of support contracts .
| 5,717 |
of december 31 , 2013 and 2012 , and the related statements of operations and comprehensive loss , stockholders ' equity , and cash flows for the years then ended . these financial statements are the responsibility of the company 's management . our responsibility is to express an opinion on these financial statements based on our audits . we conducted our audits in accordance with standards of the public company accounting oversight board ( united states ) . those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements . the company is not required to have , nor were we engaged to perform , an audit of its internal control over financial reporting . our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances , but not for the purpose of expressing an opinion on the effectiveness of the company 's internal control over financial reporting . accordingly , we express no such opinion . an audit includes examining , on a test basis , evidence supporting the amounts and disclosures in the financial statements . an audit also includes assessing the accounting principles used and significant estimates made by management , as well as evaluating the overall financial statement presentation . we believe that our audits provide a reasonable basis for our opinion . in our opinion , the financial statements referred to above present fairly , in all material respects , the financial position of the company as of december 31 , 2013 and 2012 , and the related results of its operations and its cash flows for the years then ended , in conformity with accounting principles generally accepted in the united states of america . as disclosed in note 18 to the financial statements , the company restated its previously issued financial statements as of december 31 , 2012 , and for the year then ended . malonebailey , llp www.malone-bailey.com houston , texas march 28 , 2014 f-2 macrosolve , inc. balance sheets replace_table_token_7_th the accompanying notes are an integral part of these statements . f-3 macrosolve , inc. statements of income and comprehensive income replace_table_token_8_th the accompanying notes are an integral part of these statements . f-4 macrosolve , inc. statements of stockholders story_separator_special_tag introduction the following discussion and analysis of financial condition and results of operations should be read in conjunction with our historical financial statements and the notes to those statements that appear elsewhere in this report . certain statements in the discussion contain forward-looking statements based upon current expectations that involve risks and uncertainties , such as plans , objectives , expectations and intentions . actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors , including those set forth under “ item 1a . risk factors. ” and elsewhere in this report . business overview for this information please see part 1 , item 1 “ business. ” story_separator_special_tag ability of the company to continue as a going concern on a long-term basis will be dependent upon its ability to resolve issues with the uspto , including the rejection of claims 1-14 in the ‘ 816 patent and prosecution of continuation patents , to create and market innovative services and to sustain adequate working capital to finance its operations . we have historically financed our operations through operating revenues , proceeds from bank loans , shareholder loans and sales of equity and debt securities to accredited investors . since the divestiture of illume mobile and its deficit operation in july 2012 , the company has generated sufficient working capital through operations to support its requirements without additional debt or equity financing . however , the uspto office action prevents us from continuing to generate licensing revenue from patent settlements . unless we can obtain a reversal of the uspto office action in the near future , it will have a material adverse effect on our operations . we continue to make progress on our business activities not directly related to patent licensing and we are proceeding with those segments of our business . however , we do not expect significant increases in revenues from our non-patent business activity in the near term . while we currently believe we have sufficient capital to continue our operations for the next 12 months , we may incur significant expenses in appealing the uspto office action . as a result , we could deplete our cash and working capital more rapidly than expected , which could result in our need to curtail our operations . 2011 debenture financing between april and june 2011 , the company sold convertible debentures series 2011 ( the “ 2011 class a debentures ” ) with class a warrants for gross proceeds of $ 950,000 and the conversion of $ 725,000 of 2010 debentures into 2011 debentures . between september and october 2011 , the company sold convertible debentures series 2011 ( the “ 2011 class b debentures ” and together with the 2011 class a debentures , the “ 2011 debentures ” ) with class b warrants for gross proceeds of $ 700,000 and the conversion of $ 25,000 in accrued compensation . the 2011 debentures , which mature on december 31 , 2016 , earn interest at an annual rate of 12 % , which will be paid quarterly exclusively from the debenture account which has been established with a financial institution for the deposit of 25 % of the net funds the company receives from licensing its intellectual property ( the “ debenture account ” ) . principal on the 2011 debentures will be paid quarterly as the debenture account permits . story_separator_special_tag 18 financing activities : net cash used in financing activities was $ 82,500 in 2013 compared with approximately $ 971,000 provided by financing activities for the same period in 2012 , a decrease of approximately $ 1,000,000. the company reduced its oklahoma technology commercialization center note payable by $ 82,500 in 2013. cash provided by financing activities in 2012 was primarily from $ 180,000 net proceeds from sales of convertible debentures , $ 250,000 net proceeds from sales of common stock , and approximately $ 778,000 proceeds from shareholder loans , which was offset by $ 100,000 repayment of the bank line of credit , $ 115,000 repayment of shareholder loans and $ 22,500 repayment of the oklahoma technology commercialization center loan . since our inception , we have experienced negative cash flow from operations . although the company has been experiencing positive cash flow from operations since divesting of illume mobile in july 2012 , significant negative cash flow from operations are likely to occur in the future , as the uspto office action rejecting our patent claims will have a material effect on our cash flow until the issue is resolved . although we currently have adequate funds to sustain our operations in the near term , we have historically required additional funds to continue operations and may again in the future as a result of uspto office action . we have no current plans to raise additional funds ; however , if we need to raise additional funds through the issuance of equity , equity-related or convertible debt securities in the future , these securities may have rights , preferences or privileges senior to those of the rights of holders of our common stock and they may experience additional dilution . we can not predict whether additional financing will be available to us on favorable terms when required , or at all . the issuance of additional common stock by our management may have the effect of further diluting the proportionate equity interest and voting power of holders of our common stock . historically , we have financed our cash needs by registered private placements of our securities . there is no assurance that we will be able to obtain financing on terms consistent with our past financings or satisfactory to us , if at all . as of december 31 , 2013 , our common stock is the only class of stock outstanding and we have in $ 784,136 debt that consists of $ 150,000 convertible secured debentures offset by $ 54,545 in debt discount , $ 533,681 in shareholder notes payable , $ 22,500 in note payable – related party and a $ 132,500 note from the oklahoma technology commercialization center , of which $ 112,500 is classified as current maturities of long-term debt . off-balance sheet arrangements we do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition , revenues , and results of operations , liquidity or capital expenditures . critical accounting policies and estimates the company 's accounting policies are more fully described in note 1 of the financial statements . as disclosed in note 1 , the preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes . actual results could differ significantly from those estimates . the company believes that the following discussion addresses the company 's most critical accounting policies , which are those that are most important to the portrayal of the company 's financial condition and results of operations and require management 's most difficult , subjective and complex judgments . accounts receivable and credit policies : trade accounts receivable consist of amounts due from the sale of patent licenses and consulting services . accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days of receipt of the invoice . the company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts based on historical collection experience and a review of the current status of trade accounts receivable . in many instances , the company is extending trade terms to customers who have agreed to acquire ip licenses as a result of settlement agreements . at the years ended december 31 , 2013 and 2012 , the company deems all trade receivable amounts recorded as collectible and , thus has not provided an allowance for uncollectible amounts . 19 revenue recognition and unearned income : revenues from intellectual property licenses are recognized upon receipt . when intellectual property licenses are received under a contingent fee agreement with the law firm of antonelli , harrington & thompson llp , the applicable contingent legal expense is recorded as a cost of sale . consulting services revenues consist primarily of advisory services to third party customers under contract for specific projects . contracted projects that are fixed price are accounted for under the percentage-of-completion method of accounting . revenue from contracted projects that are for provision of services is recognized at the time the service is provided . long-lived assets : the company accounts for long-lived assets in accordance with the provisions of asc 360-10-35 , “ impairment or disposal of long-lived assets ” . this statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable . recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset . if the carrying amount of an asset exceeds its estimated future cash flows , an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset . no impairment charges
| results of operations year ended december 31 , 2013 compared to year ended december 31 , 2012 ( all references are to fiscal years ) . total net revenues : total net revenues decreased $ 980,000 , or 40 % , to $ 1,454,000 in 2013 from $ 2,434,000 for 2012. sources of revenue were derived from our ip licensing and services . licensing revenues represented the majority of the net revenues with a decrease of $ 1,019,000 , or 42 % , in 2013 to $ 1,415,000 from $ 2,434,000 for the same period in 2012. ip licensing is subject to fluctuation based on the inherent nature of legal proceedings . cost of revenues and gross profit : cost of revenues for 2013 decreased $ 176,000 , or 17 % , from $ 1,030,000 in 2012 to $ 854,000 in 2013. legal fees and costs associated with licenses sold pursuant to intellectual property monetization were $ 850,000 , or 99 % , of the 2013 cost of sales . contingent legal fees decreased $ 401,000 in 2013 in relation to the reduced ip licensing revenues . other legal expenses related to ongoing litigation was $ 301,000 , a $ 221,000 increase over 2012. during 2013 , legal costs associated with our intellectual property monetization increased due to a markman hearing , discovery and expert witnesses . the resulting gross profit for 2013 of $ 600,000 was a decrease of $ 804,000 , or 57 % , from the gross profit for 2012 of $ 1,404,000. gross profit margins were 41 % and 58 % for 2013 and 2012 , respectively .
| 5,718 |
as a result of the company 's restatement of prior consolidated financial statements described herein , the following events of default occurred under the chase credit agreement : ( i ) an event of default resulting from our breach of the fixed charge coverage covenant as of march 31 , 2016 as required under section 6.12 ( b ) ; and 57 ( ii ) an event of default resulting from the unintentional misrepresentations made prior to the date of the first amendment in connection with the certification as to the accuracy of the financial statements and compliance certificate delivered pursuant to section 5.01 as they relate solely to the source of the error that has necessitated the restatement discussed herein . the company also experienced an event of default due to the delay in filing its form 10-q for the quarter ended september 30 , 2016 because of its financial restatement . in order to cure these violations , the company entered into the first amendment to credit agreement and waiver ( first amendment ) on december 5 , 2016. this first amendment amends the chase credit agreement in the following material respects : ( i ) a waiver of the event of default that resulted from the failure to timely story_separator_special_tag the following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in this form 10-k. the forward-looking statements included in this discussion and elsewhere in this form 10-k involve risks and uncertainties , including those set forth under cautionary statement about forward-looking statements. actual results and experience could differ materially from the anticipated results and other expectations expressed in our forward-looking statements as a result of a number of factors , including but not limited to those discussed in this item and in item 1a risk factors. overview we are a leading provider of infusion pumps and related products and services for patients in the home , oncology clinics , ambulatory surgery centers , and other sites of care from five locations in the united states and canada . we provide our products and services to hospitals , oncology practices and facilities and other alternate site health care providers . headquartered in madison heights , michigan , we deliver local , field-based customer support , and also operate pump service and repair centers of excellence in michigan , kansas , california , texas , georgia and ontario , canada . isi is accredited by the chap while first biomedical is iso certified . our core service is to supply electronic ambulatory infusion pumps and associated disposable supply kits to oncology clinics , infusion clinics and hospital outpatient chemotherapy clinics to be utilized in the treatment of a variety of cancers including colorectal cancer and other disease states . colorectal cancer is the third most prevalent form of cancer in the united states , according to the american cancer society , and the standard of care for the treatment of colorectal cancer relies upon continuous chemotherapy infusions delivered via ambulatory infusion pumps . in addition , we sell or rent new and pre-owned pole mounted and ambulatory infusion pumps to , and provide biomedical recertification , maintenance and repair services for , oncology practices as well as other alternate site settings including home care and home infusion providers , skilled nursing facilities , pain centers and others . we also provide these products and services to customers in the small-hospital market . we purchase new and pre-owned pole mounted and ambulatory infusion pumps from a variety of sources on a non-exclusive basis . we repair , refurbish and provide biomedical certification for the devices as needed . the pumps are then available for sale , rental or to be used within our ambulatory infusion pump management service . we view our payor environment as changing . management is intent on extending its considerable breadth of payor contracts as patients move into different insurance coverages , including medicaid and insurance marketplace products . in some cases , this may slightly reduce our aggregate billed revenues payment rate but result in an overall increase in collected revenues , as shown by a reduction in bad debt expense . consequently , we are increasingly focused on net collected revenues less bad debt . 29 in the midst of changes in the healthcare arena , we believe that we will support our overall business strategy discussed above by ( i ) focusing on supporting recurring revenues by increasing our pump fleet ; ( ii ) improving liquidity and strengthening the balance sheet by keeping debt levels comparable to our operations ; ( iii ) improving internal operational efficiencies ; ( iv ) increasing our product and services offerings ; ( v ) enhancing our technology offerings to the patients and providers of care ; and ( vi ) investigating synergistic acquisitions . for additional information pertaining to cms , refer to item 1 business significant customers and also recent events in our business . key business metrics our management monitors a number of financial and non-financial measures and ratios on a regular basis in order to track the progress of our business and make adjustments as necessary . we believe that the most important of these measures and ratios include net revenue , net rental revenue , net collected rental revenue , gross margin , operating margin , net income , return on invested capital , cash and cash equivalents , net working capital , and debt levels including available credit and leverage ratios . these measures and ratios are compared to standards or objectives set by management , so that actions can be taken , as necessary , in order to achieve the standards and objectives . story_separator_special_tag selling and marketing expenses for the year ended december 31 , 2016 , our selling and marketing expenses decreased to $ 9.7 million , or 7 % , compared to december 31 , 2015 and decreased as a percentage of net revenues to 14 % compared to the prior year at 15 % . the decrease of $ 0.8 million was largely due to a reduction for salaries and benefits of $ 0.5 million and travel expenses of $ 0.2 million . selling and marketing expenses during these years consisted of sales personnel salaries , commissions and associated fringe benefit and payroll-related items , marketing , share-based compensation , travel and entertainment and other miscellaneous expenses . story_separator_special_tag the last business day of march 2016. the value of each principal payment due on term loan b shall be equal to 3.575 % of the principal balance of term loan b as of the term loan b draw expiration date for the first eight quarterly payments . thereafter , the next eight principal payments shall be equal to 4.475 % of the principal balance of term loan b as of the term loan b draw expiration date . the entire outstanding balance of the revolver shall be due at the maturity of the chase credit facility . during the year ended december 31 , 2015 , the company made optional pre-payments of $ 4.8 million on our term loan a , which was applied against a future mandatory payment . prepayments of $ 1.9 million were applied to the september 30 , 2015 and december 31 , 2015 term loan a required principal payments and prepayments of $ 2.9 million were applied to the march 31 , 2016 , june 30 , 2016 and september 30 , 2016 term loan a required principal payments . the restatement error and our decision to prepay debt , would have resulted in the company being non-compliant with its fixed charge coverage ratio covenant under its credit facility as of march 31 , 2016 , however , as of june 30 , 2016 , we would have been in compliance with this ratio covenant . as a result of our restatement of prior consolidated financial statements described herein , the following events of default occurred under the chase credit agreement : ( i ) an event of default resulting from our breach of the fixed charge coverage covenant as of march 31 , 2016 as required under section 6.12 ( b ) ; and ( ii ) an event of default resulting from the unintentional misrepresentations made prior to the date of the first amendment in connection with the certification as to the accuracy of the financial statements and 33 compliance certificate delivered pursuant to section 5.01 as they relate solely to the source of the error that has necessitated the restatement discussed herein . we also experienced an event of default due to the delay in filing our form 10-q for the quarter ended september 30 , 2016 because of our financial restatement . in order to cure these violations , we entered into the first amendment on december 5 , 2016. this first amendment amends the chase credit agreement in the following material respects : ( i ) a waiver of the event of default that resulted from the failure to timely deliver the unaudited financial statements for the fiscal quarter ended september 30 , 2016 as required under section 5.01 ( b ) and ( c ) ; ( ii ) a waiver of the event of default that resulted from breach of the fixed charge coverage covenant as of march 31 , 2016 as required under section 6.12 ( b ) ; ( iii ) a waiver of the event of default that resulted from the unintentional misrepresentations made prior to the date of the first amendment in connection with the certification as to the accuracy of the financial statements and compliance certificate delivered pursuant to section 5.01 as they relate solely to the source of the error that has necessitated the restatement discussed herein ; ( iv ) a restructuring of the credit facility that effectively consolidated term loan a and term loan b into a single term loan resulting in a new total drawn amount of $ 32 million under the term loan with the approximately $ 5 million excess over the current aggregate drawn amounts under term loan a and term loan b to be available to reduce the company 's drawings under the revolving credit line ; ( v ) set the maturity of the new term loan described in item ( iv ) and the revolving credit line to five years from the effective date of the first amendment ; ( vi ) set the quarterly mandatory principal payment due on the term loan to $ 1.3 million due on the last business day of each fiscal quarter with any remaining unpaid and outstanding amount due at maturity ; ( vii ) amend the deadline for delivery of consolidated financial statements to allow for the delivery of such statements for the quarter ended september 30 , 2016 by december 16 , 2016 ; ( viii ) amend the deadline for delivery of the company 's annual financial plan and forecast to 30 days after the end of each fiscal year ; ( ix ) amend the leverage ratio covenant to provide for the following schedule of maximum permitted ratios : ( i ) 3.0 to 1.0 at any time on or after the effective date but prior to december 31 , 2015 , ( ii ) 2.75 to 1.0 at any time on or after december 31 , 2015 but prior to march 31 , 2017 , ( iii ) 2.50 to 1.0 at any time on or after march 31 , 2017 but prior to march 31 , 2018 or ( iv ) 2.25 to 1.00 at any time on or after march 31 , 2018 ; ( x ) amend the definition of ebitda to provide for the exclusion of certain one-time expenses directly related to the financial restatement described
| general and administrative expenses general and administrative ( g & a ) expenses during 2016 and 2015 consisted primarily of accounting , administrative , third-party payor billing and contract services , customer service , nurses on staff , new product services , and service center personnel salaries , fringe benefits and other payroll related items , professional fees , legal fees , stock-based compensation , insurance and other miscellaneous items . during the year ended december 31 , 2016 , our g & a expenses were $ 24.6 million , an increase of 4 % from $ 23.8 million for the year ended december 31 , 2015. the increase in g & a expenses versus the same prior year period was mainly attributable to increases in spending on it and pain management initiatives of $ 1.7 million offset by decreases in compensation and employee personnel of $ 0.9 million . the company has brought in-house certain services previously performed by outside advisors and contractors , including tax , legal , information technology , internal audit and increased warehouse headcount in atlanta and houston over the prior year period . 31 the following table includes additional details regarding our g & a expenses for the years ended december 31 ( in thousands ) : replace_table_token_2_th ( a ) strategic costs for 2016 , we recorded expenses associated with the acquisition and integration of ciscura of $ 177 and $ 280 was due to other strategic opportunity costs . strategic costs for 2015 were attributable to the acquisition , transition and integration of ciscura . other income and expenses during the year ended december 31 , 2016 , we recorded interest expense of $ 1.3 million , compared to $ 1.7 million for the year ended december 31 , 2015. this is a direct result of the lower interest rates with our new credit facility .
| 5,719 |
in the case of the private placement units and their constituent securities , we may file a registration statement immediately following the business combination . we will bear the costs and expenses of filing any such registration statements . 45 we have also entered into an agreement with our sponsors pursuant to which we have agreed as follows : our sponsors will use best efforts so as not to permit us to enter into a contract involving amounts in excess of $ 25,000 ( other than an underwriting agreement and our initial business combination ) without the approval of one of our hydra sponsor designees and our macquarie sponsor designee to our board of directors ; our sponsors agreed to take any action necessary to ensure that , our board of directors will consist of five persons in total , two hydra sponsor designees ( one of whom is deemed by applicable rules and regulations to be an independent director ) , one macquarie sponsor designee and two persons mutually selected by our sponsors who are deemed by applicable rules and regulations to be independent directors ; and we agree not to consummate our initial business combination without our macquarie sponsor 's consent ; provided , however , that if we fail to consummate a business combination within the required time period , and our board of directors ( other than our macquarie sponsor designee ) unanimously votes in favor of a proposed business combination and our macquarie sponsor decides to withhold its vote on such business combination ( for reasons other than regulatory reasons or because the business combination involves a competitor to our macquarie sponsor , its affiliates , or an entity in which our macquarie sponsor or an affiliate has an equity interest ) , our macquarie sponsor will be , subject to certain conditions , obligated to pay a $ 740,000 fee to our hydra sponsor and the private placement warrants purchased by our macquarie sponsor , mr. weil and another member of our management will expire worthless . notwithstanding the foregoing , in the event our macquarie sponsor withholds consent to consummate a business combination because of regulatory reasons or because the business combination involves a competitor to our macquarie sponsor , its affiliates , or an entity in which our macquarie sponsor or an affiliate has an equity interest , then our macquarie sponsor is not obligated to pay the $ 740,000 fee , we may proceed with such business combination , our macquarie sponsor shall be permitted to sell its private placement warrants and founder shares ( provided , that the transferee agrees to be bound by the transfer restrictions , lock-up provisions , voting obligations , registration rights and other such restrictions and rights of the transferred private placement warrants and founder shares ) , our hydra sponsor will use its best efforts to facilitate a sale of our macquarie sponsor 's private placement warrants and founder shares , and the term of our macquarie sponsor 's designee on the board of directors shall automatically terminate and such board seat shall remain vacant until filled by a successor duly appointed by our hydra sponsor . we entered into a letter agreement with macquarie capital ( usa ) inc. , pursuant to which we have agreed that prior to the third anniversary of the story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this report . certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties . overview we are a blank check company incorporated on may 30 , 2014 as a delaware corporation and formed for the purpose of acquiring , through a merger , capital stock exchange , asset acquisition , stock purchase , reorganization , recapitalization or other similar business transaction , one or more operating businesses or assets that we have not yet identified . we intend to effectuate our business combination using cash from the proceeds of our initial public offering and a sale of warrants in a private placement that occurred simultaneously with the completion of our initial public offering , our capital stock , debt or a combination of cash , stock and debt . the issuance of additional shares of our stock in a business combination : may significantly dilute the equity interest of existing stockholders ; may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock ; could cause a change of control if a substantial number of shares of our common stock are issued , which may affect , among other things , our ability to use our net operating loss carry forwards , if any , and could result in the resignation or removal of our present officers and directors ; may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us ; and may adversely affect prevailing market prices for our common stock , rights and or warrants . similarly , if we issue debt securities , it could result in : default and foreclosure on our assets if our cash flows after an initial business combination are insufficient to repay our debt obligations ; acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of such covenants ; our immediate repayment of all principal and accrued interest , if any , if the debt security is payable on story_separator_special_tag demand ; 35 our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding ; our inability to pay dividends on our common stock ; using a substantial portion of our cash flow to pay principal and interest on our debt , which will reduce the funds available for dividends on our common stock , if declared , expenses , capital expenditures , acquisitions and other general corporate purposes ; limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate ; increased vulnerability to adverse changes in general economic , industry and competitive conditions and adverse changes in government regulation ; and limitations on our ability to borrow additional amounts for expenses , capital expenditures , acquisitions , debt service requirements , execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt . we expect to continue to incur significant costs in the pursuit of our acquisition plans . we can not assure you that our plans to raise capital or to complete our initial business combination will be successful . story_separator_special_tag the business combination , which approval can be withheld for any reason . we may need to raise additional capital through loans or additional investments from our sponsors , stockholders , officers , directors , or third parties . our sponsors have each committed $ 250,000 , for an aggregate of $ 500,000 , to be provided to us in the event that funds held outside of the trust are insufficient to fund our expenses prior to our initial business combination . in addition , our sponsors , officers and directors may , but are not obligated to , loan us additional funds , from time to time or at any time , in whatever amount they deem reasonable in their sole discretion , to meet our working capital needs . other than as described above , none of our sponsors , stockholders , officers or directors , or third parties , are under any obligation to advance us funds , or to invest in us . accordingly , we may not be able to obtain additional financing . if we are unable to raise additional capital , we may be required to take additional measures to conserve liquidity , which could include , but not necessarily be limited to , curtailing operations , suspending the pursuit of our business plan , and reducing overhead expenses . we can not provide any assurance that new financing will be available to us on commercially acceptable terms , if at all . these conditions raise substantial doubt about our ability to continue as a going concern . if we complete our initial business combination , we expect to repay such loaned amounts out of the proceeds of the trust account released to us . otherwise , such loans would be repaid only out of funds held outside the trust account . in the event that our initial business combination does not close , we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment . up to $ 1,000,000 of all loans made to us are convertible at the option of the lender into warrants of the post-business combination entity at a price of $ 0.50 per warrant . the warrants would be identical to the private placement warrants . the terms of such loans , if any , by our officers and directors ( other than the $ 500,000 in loans which our sponsors have committed to make in the aggregate ) have not been determined and no written agreements exist with respect to such loans . off-balance sheet financing arrangements we have no obligations , assets or liabilities which would be considered off-balance sheet arrangements . we have not entered into any off-balance sheet financing arrangements , established any special purpose entities , guaranteed any debt or commitments of other entities , or purchased any non-financial assets . contractual obligations we do not have any long-term debt , capital lease obligations , operating lease obligations or long-term liabilities other than an agreement to pay an affiliate of our hydra sponsor a monthly fee of $ 10,000 for office space , utilities and administrative support provided to us . we began incurring these fees on october 24 , 2014 and will continue to incur these fees monthly until the earlier of the completion of the business combination or our company 's liquidation . significant accounting policies the preparation of financial statements and related disclosures in conformity with gaap requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities , disclosure of contingent assets and liabilities at the date of the financial statements , and income and expenses during the periods reported . actual results could materially differ from those estimates . we have identified the following significant accounting policy : 37 common stock subject to possible redemption we account for our common stock subject to possible conversion in accordance with the guidance in accounting standards codification ( “ asc ” ) topic 480 “ distinguishing liabilities from equity. ” common stock subject to mandatory redemption ( if any ) is classified as a liability instrument and is measured at fair value . conditionally redeemable common stock ( including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control ) is classified as temporary equity . at all other times , common stock is classified as stockholders ' equity . our common stock features certain redemption rights that are considered to be outside of our control and subject
| results of operations we have neither engaged in any operations nor generated any operating revenues to date . all activity from inception to december 31 , 2015 relates to our formation , our initial public offering and private placement and the identification and evaluation of prospective candidates for a business combination . since the completion of our initial public offering , we have not generated any operating revenues and will not generate such revenues until after the completion of our business combination . we generate non-operating income in the form of interest income on cash and securities held , which we expect to be insignificant in view of the low yields on short-term government securities . we expect to incur increased expenses as a result of being a public company ( for legal , insurance , financial reporting , accounting and auditing compliance ) , as well as for due diligence expenses . for the year ended december 31 , 2015 and for the period from may 30 , 2014 ( inception ) through december 31 , 2014 , we had a net loss of $ 3,526,206 and $ 141,529 , respectively , consisting of target identification expenses , operating costs and due diligence expenses .
| 5,720 |
all offering costs associated with the series b and series b-1 are being accreted into the carrying value of the preferred stock until its redemption date in july 2016. in connection with the issuance of the series b-1 shares in the second and third closings , the series b-1 shareholders received ten-year warrants to purchase a total of 1,650,000 shares of the company 's series b-1 preferred stock at an exercise price of $ 1.00 per share . the estimated fair value of the preferred stock warrants on the dates of issuance of $ 1,347,428 was recorded as a reduction to the carrying value of the series story_separator_special_tag you should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing in this annual report . some of the information contained in this discussion and analysis or set forth elsewhere in this annual report , including information with respect to our plans and strategy for our business and related financing , includes forward-looking statements that involve risks and uncertainties . as a result of many factors , including those factors set forth in the `` risk factors '' section of this annual report , our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis . overview we are a clinical stage biopharmaceutical company that discovers , develops and intends to commercialize therapeutics that use a novel approach to target g protein coupled receptors , or gpcrs . using our proprietary product platform , we have identified and advanced three differentiated product candidates into the clinic . we have completed a phase 2a clinical trial and we have initiated a phase 2b clinical trial of trv027 for acute heart failure , or ahf . forest laboratories holdings limited , or forest , has the exclusive option to license trv027 from us . trv130 has completed a phase 1b clinical trial to evaluate its potential to treat moderate to severe acute pain intravenously and we plan to complete an additional phase 1 trial and initiate a phase 2 trial in the first half of 2014. we have retained all worldwide development and commercialization rights to trv130 . we are currently running a phase 1 trial for our other lead program , trv734 . we plan to develop and commercialize trv027 and trv130 initially in the acute care hospital markets . we plan to advance trv734 and our most advanced preclinical program focused on central nervous system , or cns , indications . we were incorporated and commenced operations in the fourth quarter of 2007. our operations to date have included organizing and staffing our company , business planning , raising capital and developing trv027 , trv130 , trv734 and our other product candidates . we have financed our operations primarily through private placements of our preferred stock and debt borrowings . as of december 31 , 2013 , we had a deficit accumulated during the development stage of $ 82.3 million . our net loss was $ 15.6 million and $ 23.3 million for the years ended december 31 , 2012 and 2013 , respectively . our ability to become and remain profitable depends on our ability to generate revenue . we do not expect to generate significant revenue unless and until we or a collaborator obtain marketing approval for and commercialize trv027 , trv130 , trv734 or one of our other product candidates . we have received aggregate proceeds of $ 120.1 million through december 31 , 2013 from the sale of our preferred stock and related warrants and $ 9.4 million pursuant to grant and collaboration agreements . as of december 31 , 2012 , we had drawn down the entire amount of a $ 5.3 million loan facility , which we subsequently repaid in full in may 2013 with a portion of the proceeds we received from the issuance of series c preferred stock . from inception through december 31 , 2013 , we had incurred approximately $ 72.8 million of total research and development expenses and approximately $ 18.7 million of total general and administrative expenses . we expect to incur significant expenses and operating losses for the foreseeable future as we continue the development and clinical trials of , and seek regulatory approval for , our product candidates . if we obtain regulatory approval for any of our product candidates , we expect to incur significant commercialization expenses . furthermore , as a result of our initial public offering in february 2014 , we expect to incur additional costs associated with operating as a public company . we expect that these costs will include significant legal , accounting , investor relations and other expenses 83 that we did not incur as a private company . we will need to obtain substantial additional funding in connection with our continuing operations . if we are unable to raise capital when needed or on attractive terms , we could be forced to delay , reduce or eliminate our research and development programs or any future commercialization efforts . we will seek to fund our operations through the sale of equity , debt financings or other sources , including potential additional collaborations . however , we may be unable to raise additional funds or enter into such other agreements when needed on favorable terms , or at all . if we fail to raise capital or enter into such other arrangements as , and when , needed , we may have to significantly delay , scale back or discontinue the development and or commercialization of one or more of our product candidates . story_separator_special_tag we have not generated any revenue from commercial product sales . in the future , if any of our product candidates currently under development is approved for commercial sale , we may generate revenue from product sales , or alternatively , we may choose to select a collaborator to commercialize our product candidates in all or selected markets . we expect revenue to decrease because we have completed our grant programs and our research collaboration . we do not currently anticipate any revenue from new grant programs or research collaborations . we will not generate any commercial revenue until one of our product candidates receives regulatory approval , if ever . general and administrative expenses general and administrative expenses consist principally of salaries and related costs for executive and other personnel , including stock-based compensation and travel expenses . other general and administrative expenses include facility-related costs , communication expenses and professional fees for legal , patent prosecution and maintenance consulting and accounting services . we anticipate that our general and administrative expenses will increase in the future with continued research , development and potential commercialization of our product candidates and expanded compliance obligations of operating as a public company . these increases will likely include greater costs for insurance , costs related to the hiring of additional personnel , payments to outside consultants and investor relations providers , and costs for lawyers and accountants , among other expenses . additionally , if and when we believe a regulatory approval of a product candidate appears likely , we anticipate an increase in payroll and expense as a result of our preparation for commercial operations , especially as it relates to the sales and marketing of our product candidates . 85 research and development expenses our research and development expenses consist primarily of costs incurred for the development of our product candidates . these costs include external costs and internal research and development costs . external costs include : expenses incurred under agreements with contract research organizations and investigative sites that conduct our clinical trials , preclinical studies and regulatory activities ; and the costs of acquiring , developing and manufacturing clinical trial materials . internal costs include : personnel-related expenses , including salaries , benefits and stock-based compensation expense of our research and development personnel ; laboratory supplies ; allocated facilities , depreciation and other expenses , which include rent and utilities ; travel and training for research and development employees ; product liability insurance ; and laboratory service costs . we track external costs by discovery program and subsequently by product candidate once a product candidate has been selected for development . trv130 and trv734 were both selected from the m -opioid receptor discovery program and so we did not separately allocate costs between trv734 and trv130 until the start of 2011 when we selected trv130 as a product candidate . we have incurred a total of $ 72.8 million in research and development expenses from inception through december 31 , 2013 , with $ 29.3 million being spent on external costs for trv027 , trv130 and trv734 and the remainder being spent on internal costs , predominantly personnel related costs , and external costs related to the development of our able product platform , grant funded activities and our early stage programs , including the d -opioid receptor program . research and development costs are expensed as incurred . we record costs for some development activities , such as clinical trials , 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 . research and development activities are central to our business model . 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 . as we advance our product candidates , we expect the amount of research and development spending allocated to external spending relative to internal spending will continue to grow for the foreseeable future , while our internal spending should grow at a slower and more controlled pace . it is difficult to determine with certainty the duration and completion costs of our current or future preclinical programs and clinical trials of our product candidates , or if , when or to what extent we will generate revenue from the commercialization and sale of any of our product candidates that obtain regulatory approval . we may never succeed in achieving regulatory approval for any of our product candidates . the duration , costs and timing of clinical trials and development of our product candidates will depend on a variety of factors , including the uncertainties of future clinical and preclinical studies , uncertainties in clinical trial enrollment rate and significant and changing government regulation . in addition , the probability of success for each product candidate will depend on numerous factors , including competition , manufacturing capability and commercial viability . we will 86 determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate , as well as an assessment of each product candidate 's commercial potential . change in fair value of warrant liability we have issued warrants for the purchase of our series b and series b- 1 preferred stock that we believe are financial instruments that may require a transfer of assets because of the redemption features of the underlying preferred stock . therefore , we have classified these warrants as liabilities that we re-measure to fair value at each balance sheet date and we record the changes in the fair value of the warrant liability in our statement of operations and comprehensive loss as a change in fair value of warrant liability . in november 2013 , one of our warrant holders exercised its warrants to purchase 550,000 shares of our series b preferred stock .
| results of operations comparison of years ended december 31 , 2012 and 2013 replace_table_token_5_th revenue revenue decreased by $ 673 thousand , or 83 % , from $ 808 thousand for the year ended december 31 , 2012 to $ 135 thousand for the year ended december 31 , 2013. the change was attributable to a decrease of $ 196 thousand in grant revenue due to the conclusion of the michael j. fox foundation research grant in november 2012 , a decrease of $ 127 thousand in grant revenue due to the discontinuation of funding in june 2013 for a research grant from the national institutes of health 91 and a decrease of $ 350 thousand in collaboration revenue related to the completion of the research activities under a research collaboration agreement with merck sharp & dohme corporation . general and administrative expense general and administrative expenses increased by $ 1.6 million , or 51 % , for the year ended december 31 , 2013 compared to the same period in 2012 primarily as a result of an increase in professional fees for legal services , for financial consulting services in connection with business development activities and certain expenses incurred in connection with planning for our initial public offering of common stock .
| 5,721 |
actual results could differ materially because of the factors discussed in “ risk factors ” elsewhere in this annual report , and other factors that we may not know . overview guardion health sciences , inc. ( the “ company ” or “ we ” ) was formed in december 2009 in california as a limited liability company under the name p4l health sciences , llc and we subsequently changed our name to guardion health sciences , llc . on june 30 , 2015 , we converted from a california limited liability company to a delaware corporation , changing our name to guardion health sciences , inc. we are a specialty health sciences company formed to develop , formulate and distribute condition-specific medical foods with an initial medical food product on the market under the brand name lumega-z ® that replenishes and restores the macular protective pigment . a depleted macular protective pigment is a modifiable risk factor for retina based diseases such as age-related macular degeneration ( “ amd ” ) , computer vision syndrome ( “ cvs ” ) and diabetic retinopathy . additional research has also shown a depleted macular protective pigment to be a biomarker for neurodegenerative diseases such as alzheimer 's and dementia . we have had limited commercial operations to date , and have primarily been engaged in research , development , commercialization and capital raising . we have also developed a proprietary medical device called the mapcatsf ® that accurately measures the macular pigment optical density ( “ mpod ” ) . we invented our own proprietary patented technology embodied in the mapcatsf . on november 8 , 2016 , the uspto issued patent number 9,486,136 for the mapcatsf invention . using the mapcatsf to measure the mpod allows one to monitor the increase in the density of the macular protective pigment after taking lumega-z . the mapcatsf is a non-mydriatic , non-invasive device that is designed to accurately measure the mpod , the lens optical density and lens equivalent age , thereby creating an evidence-based protocol that is shared with the patient . a non-mydriatic device is one that does not require dilation of the pupil for it to function . the mapcatsf is intended to be the first device using a patented “ single fixation ” process and “ automatic lens density correction ” that produces accurate serialized data . lumega-z has a patent-pending formula that replenishes and restores the macular protective pigment simultaneously delivering critical and essential nutrients to the eye . formulated by dr. sheldon hendler in 2010 , modifications were made over a two-year period to improve the taste and method of delivery . we believe that there is an increasing level of acceptance of medical foods as a primary therapy by patients and healthcare providers to treat pain syndromes , sleep and cognitive disorders , obesity , hypertension , and viral infection . in clinical practice , medical foods are being prescribed as both a standalone therapy and as an adjunct therapy to low doses of commonly prescribed drugs . we believe that medical foods will continue to grow in importance over the coming years . by combining our mapcatsf medical device and lumega-z medical food , we have developed , based on management 's knowledge of the industry , what we believe to be the only reliable two-pronged , evidence-based protocol for replenishing and restoring the macular protective pigment and increasing overall retinal health . in september 2017 , the company , through its wholly-owned subsidiary vectorvision ocular health , inc. , acquired substantially all of the assets and certain liabilities of vectorvision , inc. , a company that specializes in the standardization of contrast sensitivity , glare sensitivity , low contrast acuity , and early treatment diabetic retinopathy study ( “ etdrs ” ) visual acuity testing . vectorvision 's standardization system is designed to provide the practitioner or researcher with the ability to delineate very small changes in visual capability , either as compared to the population or from visit to visit . vectorvision develops , manufactures and sells equipment and supplies for standardized vision testing for use by eye doctors in clinical trials , for real-world vision evaluation , and industrial vision testing . the acquisition expands our technical portfolio and we believe it further establishes our position at the forefront of early detection , intervention and monitoring of a range of eye diseases . 37 recent developments sale of common stock and conversion of preferred stock into common stock on november 3 , 2017 , the company completed the issuance and sale of an aggregate of 4,347,827 shares of common stock , par value $ 0.001 per share , at a purchase price of $ 1.15 per share . total gross proceeds were $ 5,000,001. these shares were sold in a private placement to certain purchasers pursuant to a stock purchase agreement dated as of november 3 , 2017. the completion of the private placement triggered , at the company 's election , the automatic conversion of the preferred stock into shares of common stock . accordingly , immediately following the completion of the private placement , the company effected the conversion of all outstanding shares of preferred stock into 6,981,938 shares of common stock ( excluding accrued but unpaid dividends ) effective november 3 , 2017. the company issued 205,242 shares of common stock for the accrued but unpaid dividends from october 1 , 2017 through november 3 , 2017 , representing the payment in full of all preferred stock dividend obligations . development of sales force the company is investing in a direct sales force comprised of a field-based team of account managers located in key geographical locations based on high population density areas with demographics that match the company 's target markets . each account manager will have responsibility for a pre-defined geographical area , and will be expected to travel extensively to support the needs of customers . story_separator_special_tag asu 2016-09 requires , among other things , that all income tax effects of awards be recognized in the statement of operations when the awards vest or are settled . asu 2016-09 also allows for an employer to repurchase more of an employee 's shares than it can today for tax withholding purposes without triggering liability accounting and allows for a policy election to account for forfeitures as they occur . asu 2016-09 is effective for fiscal years beginning after december 15 , 2016 , including interim periods within those fiscal years . early adoption is permitted for any entity in any interim or annual period . the adoption of asu 2016-09 has not had any impact on the company 's financial statement presentation or disclosures . management does not believe that any other recently issued , but not yet effective , authoritative guidance , if currently adopted , would have a material impact on the company 's financial statement presentation or disclosures . concentration of risk cash balances are maintained at large , well-established financial institutions . at times , cash balances may exceed federally insured limits . insurance coverage limits are $ 250,000 per depositor at each financial institution . the company has never experienced any losses related to these balances . 39 critical accounting policies and estimates our financial statements have been prepared in conformity with accounting principles generally accepted in the united states of america ( “ gaap ” ) . the preparation of the financial statements in conformity with gaap requires management to make certain 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 reported amounts of expenses during the reporting period . actual results could differ from those estimates . our financial statements included herein include all adjustments , consisting of only normal recurring adjustments , necessary to present fairly the company 's financial position , results of operations and cash flows . the following critical accounting policies affect the more significant judgments and estimates used in the preparation of the company 's consolidated financial statements . intangible assets in connection with our acquisition of vectorvision , inc. , we identified and allocated estimated fair values to intangible assets including goodwill and customer relationships . in accordance with accounting standard codification ( “ asc ” ) 350 – intangibles – goodwill and other , we determined whether these assets are expected to have indefinite ( such as goodwill ) or limited useful lives , and for those with limited lives , we established an amortization period and method of amortization . our goodwill and other intangible assets are subject to periodic impairment testing . we utilized the services of an independent third party valuation firm to assist us in identifying intangible assets and in estimating their fair values . the useful lives for our intangible assets other than goodwill were estimated based on management 's consideration of various factors , including assumptions that market participants might use about sales expectations as well as potential effects of obsolescence , competition , technological progress and the regulatory environment . because the future pattern in which the economic benefits of these intangible assets may not be reliably determined , amortization expense is generally calculated on a straight-line basis . revenue recognition the company 's revenue is comprised of sales of medical foods and dietary supplements to consumers through a direct sales/credit card process . in addition , the company sells medical device equipment and supplies to consumers both in the u.s. and internationally . revenue is recognized when the risk of loss transfers to our customers , and collection of the receivable is reasonably assured , which generally occurs when the product is shipped . a product is not shipped without an order from the customer and credit acceptance procedures performed . the company allows for returns within 30 days of purchase . product returns for the years ended december 31 , 2017 and 2016 were insignificant . research and development research and development costs consist primarily of fees paid to consultants and outside service providers , patent fees and costs , and other expenses relating to the acquisition , design , development and testing of the company 's medical foods and related products . research and development expenditures , which include stock compensation expense , are expensed as incurred and totaled $ 259,463 and $ 33,084 for the years ended december 31 , 2017 and 2016 , respectively . patent costs the company is the owner of one issued domestic patent , three pending domestic patent applications , and three foreign patent applications in canada , europe and hong kong . due to the significant uncertainty associated with the successful development of one or more commercially viable products based on the company 's research efforts and any related patent applications , patent costs , including patent-related legal fees , filing fees and internally generated costs , are expensed as incurred . during the years ended december 31 , 2017 and 2016 , patent costs were $ 30,789 and $ 30,942 , respectively , and are included in general and administrative costs in the statements of operations . 40 convertible notes payable when conventional convertible debt is issued with detachable warrants , the proceeds from issuance are allocated to the two instruments based on their relative fair values . this method is generally appropriate if debt is issued with any other freestanding instrument that is classified in equity . when the convertible debt instrument includes both detachable instruments such as warrants , and a beneficial conversion option , the proceeds of issuance are allocated among the convertible instrument and the other detachable instruments based on their relative fair values as indicated above , and the amount allocated to the convertible instrument is further analyzed to determine if the embedded conversion option has intrinsic value .
| results of operations through december 31 , 2017 , we had limited operations and have primarily been engaged in research , development , commercialization and raising capital . we have incurred and will continue to incur significant expenditures for the development of our products and intellectual property , which includes research and development of both medical foods and medical diagnostic equipment for the treatment of various eye diseases . we had limited revenue during the years ended december 31 , 2017 and 2016. beginning in the fourth quarter of 2017 , we recognized product revenue from the sale of vectorvision products in addition to sales of our proprietary product , lumega-z . comparison of years ended december 31 , 2017 and 2016 replace_table_token_2_th revenue for the year ended december 31 , 2017 , revenue from product sales was $ 437,349 compared to $ 141,029 for the year ended december 31 , 2016 , reflecting an increase of $ 296,320 or 210 % . the increase reflects both an increased customer base for lumega-z as we expand into new clinics and fourth quarter 2017 sales of vectorvision products . approximately 44 % of 2017 revenue was generated by sales of vectorvision products . cost of goods sold for the year ended december 31 , 2017 , cost of goods sold was $ 175,470 compared to $ 75,702 for the year ended december 31 , 2016 , reflecting an increase of $ 99,768 or 132 % . cost of goods sold was 40 % of revenue for the year ended december 31 , 2017 compared to 54 % of revenue for the year ended december 31 , 2016. the increase in cost of sales is due to the rise in lumega-z customers as well as the inclusion in 2017 of vectorvision sales .
| 5,722 |
diluted net 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 consolidated financial statements and related notes included elsewhere in this form 10-k. this discussion contains forward-looking statements that involve risks and uncertainties . our actual results could differ materially from those discussed below . factors that could cause or contribute to such differences include , but are not limited to , those identified below and those discussed in “ risk factors ” included elsewhere in this form 10-k. overview we are a technology infrastructure company powering the sustainable growth of the connected world and the internet of everything . using our technology platform , we provide solutions to help enable that growth . our advanced data centers are the center of our platform and provide power densities that exceed industry averages with efficient cooling , while being powered by 100 % renewable energy . these exascale data centers address the growing challenges facing the data center industry . our critical infrastructure components in our data centers are purpose-built to satisfy customers ' needs , drive efficiency and enable the deployment of highly advanced computing technologies . we presently own and operate four primary campus locations , called primes , which encompass 12 colocation facilities with an aggregate of up to 4.7 million gsf of space . our primes consist of the core campus in las vegas , nevada ; the citadel campus near reno , nevada ; the pyramid campus in grand rapids , michigan ; and the keep campus in atlanta , georgia , which opened during the first quarter of 2020. in addition to our primes , we held a 50 % ownership interest in supernap international through december 31 , 2020 , which has deployed facilities in italy and thailand . until march 31 , 2018 , we accounted for this ownership interest under the equity method of accounting . in february 2021 , we acquired supernap international 's 30 % ownership interest in supernap thailand , the entity which has deployed the facility in thailand , and sold our ownership interest in supernap international , thus disposing of our interest in the facility in italy . we currently have more than 950 customers , including some of the world 's largest technology and digital media companies , cloud , it and software providers , as well as financial institutions and network and telecommunications providers . our ecosystem connects over 250 cloud , it and software providers and more than 90 network and telecommunications providers . our business is based on a recurring revenue model comprised of ( 1 ) colocation , which includes the licensing and leasing of cabinet space and power and ( 2 ) connectivity services , which include cross-connects , broadband services and external connectivity . we consider these services recurring because our customers are generally billed on a fixed and recurring basis each month for the duration of their contract . we generally derive more than 95 % of our revenue from recurring revenue and we expect to continue to do so for the foreseeable future . our non-recurring revenue is primarily comprised of installation services related to a customer 's initial deployment . these services are non-recurring because they are typically billed once , upon completion of the installation . factors that may influence future results of operations impact of covid-19 . in march 2020 , the world health organization declared the outbreak of covid-19 as a pandemic , which continues to be spread throughout the u.s. and the world . while we have not incurred significant disruptions thus far from the covid-19 outbreak , we are unable to accurately predict the full impact that covid-19 will have on our results of operations due to numerous uncertainties , including the severity of the disease , the duration of the outbreak , actions that may be taken by governmental authorities , the future impact to the business of our customers , partners and vendors , the future impact and functioning of the global financial markets and other factors identified in “ item 1a—risk factors ” in part i of this form 10-k. we will continue to evaluate the nature and extent of the impact to our business , consolidated results of operations , and financial condition . switch , inc. | 2020 form 10-k | 45 market and economic conditions . we are affected by general business and economic conditions in the united states and globally . these conditions include short-term and long-term interest rates , inflation , money supply , political issues , legislative and regulatory changes , fluctuations in both debt and equity capital markets and broad trends in industry and finance , all of which are beyond our control . macroeconomic conditions that affect the economy and the economic outlook of the united states and the rest of the world , including as a result of the covid-19 pandemic , could adversely affect our customers and vendors , which could adversely affect our results of operations and financial condition . growth and expansion activities . our future revenue growth will depend on our ability to maintain our existing revenue base while expanding and increasing utilization at our existing and developing prime campus locations . our existing prime campus locations currently encompass 12 colocation facilities with an aggregate of up to 4.7 million gsf of space and up to 490 mw of power . as of december 31 , 2020 , the utilization rates at these prime campuses , based on currently available cabinets , were approximately 89 % , 93 % , 96 % , and 38 % at the core campus , the citadel campus , the pyramid campus , and the keep campus , respectively . additionally , each of our existing primes has room for further expansion . story_separator_special_tag we believe that the inclusion of certain adjustments in presenting adjusted ebitda and adjusted ebitda margin is appropriate to provide additional information to investors because adjusted ebitda and adjusted ebitda margin exclude certain items that we believe are not indicative of our core operating performance and that are not excluded in the calculation of ebitda . adjusted ebitda is also similar to the measures used under the debt covenants included in our credit facilities , except that the definition used in our credit facilities does not exclude certain cash gains or shareholder-related litigation expense . accordingly , we believe that adjusted ebitda and adjusted ebitda margin provide useful information to investors and others in understanding and evaluating our operating results , enhancing the overall understanding of our past performance and future prospects , and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision-making . switch , inc. | 2020 form 10-k | 47 our non-gaap financial measures have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under gaap . there are a number of limitations related to the use of these non-gaap financial measures versus their nearest gaap equivalents . non-gaap financial measures may not provide information directly comparable to measures provided by other companies in our industry , as those other companies may calculate their non-gaap financial measures differently . in addition , the non-gaap financial measures exclude certain recurring expenses that have been and will continue to be significant expenses of our business . the following table sets forth a reconciliation of our net income to adjusted ebitda : replace_table_token_3_th ( 1 ) interest income is included in the “ other ” line of other income ( expense ) in our consolidated statements of comprehensive income . ( 2 ) shareholder-related litigation expense is included in the “ selling , general and administrative expense ” line in our consolidated statements of comprehensive income . components of results of operations revenue during each of the years ended december 31 , 2020 , 2019 , and 2018 , we derived more than 95 % of our revenue from recurring revenue streams , consisting primarily of ( 1 ) colocation , which includes the licensing and leasing of cabinet space and power and ( 2 ) connectivity services , which include cross-connects , broadband services and external connectivity . the remainder of our revenue is from non-recurring revenue , which primarily includes installation services related to a customer 's initial deployment . the majority of our revenue contracts are classified as licenses , with the exception of certain contracts that contain lease components . based on the current growth stage of our business , we expect increases in revenue to be driven primarily by increases in volume , rather than changes in the prices we charge to our customers . we recognize revenue when control of these goods and services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods and services . revenue from recurring revenue streams is generally billed monthly and recognized using a time-based measurement of progress as customers receive service benefits evenly throughout the term of the contract . contracts with our customers generally have terms of three to five years . non-recurring installation fees , although generally paid in a lump sum upon installation , are deferred and recognized ratably over the contract term , determined using a portfolio approach . revenue is generally recognized on a gross basis as a principal versus on a net basis as an agent , largely because we are primarily responsible for fulfilling the contract , take title to services , and bear credit risk . cost of revenue cost of revenue consists primarily of depreciation and amortization expense , expenses associated with the operations of our facilities , including electricity and other utility costs and repairs and maintenance , data center employees ' salaries and benefits , including equity-based compensation , connectivity costs , and rental payments related to our leased buildings and land used in data center operations . a substantial portion of our cost of revenue is fixed in nature and may not vary significantly from period to period , unless we expand our existing data centers or open new data centers . however , there are certain costs that are considered more variable in nature , including switch , inc. | 2020 form 10-k | 48 utilities and supplies that are directly related to growth in our existing and new customer base . the largest portion of our utility costs is fixed and a smaller portion is variable with market conditions . gross profit and gross margin gross profit , or revenue less cost of revenue , and gross margin , or gross profit as a percentage of revenue , has been and will continue to be affected by various factors , including customer growth , the expansion of our existing data centers or opening of new data centers , and the cost of our utilities , specifically electricity . our gross margin may fluctuate from period to period depending on the interplay of these factors . operating expenses selling , general and administrative expense selling , general and administrative expense consists primarily of salaries and related expenses , including equity-based compensation , accounting , legal and other professional service fees , real estate and personal property taxes , rental payments related to our corporate office lease , marketing and selling expenses , including sponsorships , commissions paid to partners , travel , depreciation and amortization expense , insurance , and other facility and employee related costs . this expense classification may not be comparable to those of other companies . we expect to incur additional selling , general and administrative expenses as we continue to scale our operations to invest in sales and marketing initiatives to further increase our revenue and support our growth .
| results of operations the following table sets forth our results of operations : replace_table_token_4_th switch , inc. | 2020 form 10-k | 50 the following table sets forth the consolidated statements of income data presented as a percentage of revenue . amounts may not sum due to rounding . replace_table_token_5_th comparison of the years ended december 31 , 2020 and 2019 revenue replace_table_token_6_th revenue increased by $ 49.2 million , or 11 % , for the year ended december 31 , 2020 , compared to the year ended december 31 , 2019. the increase was primarily attributable to an increase of $ 43.1 million in colocation revenue . of the overall increase , 12 % was attributable to revenue from new customers initiating service after december 31 , 2019 , and the remaining 88 % was attributable to increased revenue from existing customers . cost of revenue and gross margin replace_table_token_7_th cost of revenue increased by $ 36.8 million , or 15 % , for the year ended december 31 , 2020 , compared to the year ended december 31 , 2019. the increase was primarily attributable to increases of $ 21.7 million in depreciation and amortization expense due to additional property and equipment being placed into service , $ 8.7 million in facilities costs due to increased utility rates , and $ 2.4 million in costs related to sales-type lease transactions .
| 5,723 |
( 2 ) in addition to the $ 1,981 provision for loan loss , the company recorded an impairment of $ 3,019 against a related investment previously recorded under other assets on the company 's consolidated balance sheet . the following table details overall statistics for story_separator_special_tag the following discussion should be read in conjunction with the company 's financial statements and accompanying notes included in item 8 , “ financial statements and supplementary data ” of this annual report on form 10-k. overview the company is a maryland corporation that has elected to be taxed as a reit for u.s. federal income tax purposes . the company primarily originates , acquires , invests in and manages performing commercial first mortgage loans , subordinate financings , and other commercial real estate-related debt investments . these asset classes are referred to as the company 's target assets . the company is externally managed and advised by the manager , an indirect subsidiary of apollo , a leading global alternative investment manager with a contrarian and value oriented investment approach in private equity , credit and real estate with assets under management of approximately $ 248.9 billion as of december 31 , 2017. the manager is led by an experienced team of senior real estate professionals who have significant expertise in underwriting and structuring commercial real estate financing transactions . the company benefits from apollo 's global infrastructure and operating platform , through which the company is able to source , evaluate and manage potential investments in the company 's target assets . story_separator_special_tag for the years ended december 31 , 2017 , 2016 , and 2015 was $ ( 674 ) , $ 1,876 and $ ( 788 ) , respectively . loss on early extinguishment of debt upon the sale of the remaining cmbs in december 2017 , the company extinguished the related secured debt arrangement with deutsche bank ag ( the `` db facility '' ) , which was set to mature in april 2018 , and recognized a loss on early extinguishment of debt of $ 1,947. dividends for the years ended december 31 , 2017 , 2016 and 2015 the company declared the following dividends : replace_table_token_6_th — ( 1 ) as the company 's aggregate distributions exceeded its earnings and profits , $ 0.4211 of the january 2018 distribution declared in the fourth quarter of 2017 and payable to common stockholders of record as of december 29 , 2017 will be treated as a 2018 distribution for u.s. federal income tax purposes . subsequent events refer to `` note 22 - subsequent events '' to the audited consolidated financial statements for disclosure regarding significant transactions that occurred subsequent to december 31 , 2017. factors impacting operating results the company 's results of operations are affected by a number of factors and primarily depend on , among other things , the level of the interest income from target assets , the market value of its assets and the supply of , and demand for , commercial mortgage loans , cmbs , commercial real estate corporate debt and loans and other real estate-related debt investments in which the company invests , and the financing and other costs associated with its business . interest income and borrowing costs may vary as a result of changes in interest rates and the availability of financing , each of which could impact the net interest income the company receives on its assets . the company 's operating results may also be impacted by conditions in the financial markets , credit losses in excess of initial anticipations or unanticipated credit events experienced by borrowers whose commercial mortgage loans are held directly by the company or are included in the company 's cmbs . changes in market interest rates . with respect to the company 's business operations , increases in interest rates , in general , may over time cause : ( i ) the interest expense associated with variable rate borrowings to increase ; ( ii ) the value of commercial mortgage loans and commercial real estate corporate debt and loans to decline ; ( iii ) coupons on variable rate commercial mortgage loans and commercial real estate corporate debt and loans to reset , although on a delayed basis , to higher interest rates ; ( iv ) to the extent applicable under the terms of the company 's investments , prepayments on commercial mortgage loan and commercial real estate corporate debt and loans portfolio to slow , and ( v ) to the extent the company enters into interest rate swap agreements as part of its hedging strategy , the value of these agreements to increase . 36 conversely , decreases in interest rates , in general , may over time cause : ( i ) the interest expense associated with variable rate borrowings to decrease ; ( ii ) the value of commercial mortgage loan and commercial real estate corporate debt and loans portfolio to increase ; ( iii ) coupons on variable rate commercial mortgage loans and commercial real estate corporate debt and loans to reset , although on a delayed basis , to lower interest rates ; ( iv ) to the extent applicable under the terms of the company 's investments , prepayments on commercial mortgage loan and commercial real estate corporate debt and loan portfolio to increase , and ( v ) to the extent the company enters into interest rate swap agreements as part of its hedging strategy , the value of these agreements to decrease . changes in fair value of assets . the company has designated investments in certain mortgage-backed securities as available-for-sale because the company may dispose of them prior to maturity and does not hold them principally for the purpose of selling them in the near term . securities are carried at estimated fair value with the net unrealized gains or losses reported as a component of accumulated other comprehensive income ( loss ) in stockholders ' equity . story_separator_special_tag upon measurement of impairment , the company records an allowance to reduce the carrying value of the loan with a corresponding charge to net income . significant judgments are required in determining impairment , including making assumptions regarding the value of the loan , the value of the underlying collateral and other provisions such as guarantees . the company assesses the risk factors of each loan , and assigns a risk rating based on a variety of factors , including , without limitation , loan-to-value ratio , or ltv , debt yield , property type , geographic and local market dynamics , physical condition , cash flow volatility , leasing and tenant profile , loan structure and exit plan , and project sponsorship . this review is performed quarterly . based on a 5-point scale , our loans are rated “ 1 ” through “ 5 , ” from less risk to greater risk , which ratings are defined as follows : 1. very low risk 2. low risk 3. moderate/average risk 4. high risk/potential for loss : a loan that has a risk of realizing a principal loss 5. impaired/loss likely : a loan that has a high risk of realizing principal loss , has incurred principal loss or has been impaired the following table allocates the carrying value of our loan portfolio based on the company 's internal risk ratings : replace_table_token_7_th during the year ended december 31 , 2017 , the company recorded $ 5,000 for provision for loan losses and impairment . the $ 5,000 , recognized in the second quarter of 2017 , related to an investment in a fully-built , for-sale residential condominium units located in bethesda , md . during the year ended december 31 , 2016 , the company recorded a loan loss provision of $ 10,000 on a multifamily commercial mortgage loan and $ 5,000 on a multifamily subordinate loan secured by a multifamily property located in williston , nd . as of december 31 , 2017 , this was assigned a risk rating of 5 . 38 interest income recognition interest income on the company 's commercial mortgage loans , subordinate loans , cmbs and commercial real estate corporate debt and loans is accrued based on the actual coupon rate and the outstanding principal balance of such assets . premiums , discounts and any deferred fees are amortized or accreted into interest income over the lives of the assets using the effective yield method , which includes the accretion of purchase discounts and any deferred fees as well as the amortization of purchase premiums and the stated coupon interest payments . hedging instruments and hedging activities consistent with maintaining its qualification as a reit , in the normal course of business , the company uses a variety of derivative financial instruments to manage , or hedge , interest rate and foreign currency risk . derivatives are used for hedging purposes rather than speculation . the company determines their fair value and obtains quotations from a third party to facilitate the process in determining these fair values . if the company 's hedging activities do not achieve the desired results , reported earnings may be adversely affected . gaap requires an entity to recognize all derivatives as either assets or liabilities in the balance sheets and to measure those instruments at fair value . to the extent the instrument qualifies for hedge accounting , the fair value adjustments will be recorded as a component of other comprehensive income in stockholders ' equity until the hedged item is recognized in earnings . whenever the company decides not to pursue hedge accounting , the fair value adjustments will be recorded in earnings immediately based on changes in the fair market value of those instruments . the company also uses interest rate swaps and caps to manage exposure to variable cash flows on portions of its borrowings under secured debt arrangements . interest rate swap and cap agreements allow the company to receive a variable rate cash flow based on libor and pay a fixed rate cash flow , mitigating the impact of this exposure . the company uses forward currency contracts to economically hedge interest and principal payments due under its loans denominated in currencies other than u.s. dollars . the company has not designated any of its derivative instruments as hedges under gaap and therefore , changes in the fair value of the company 's derivatives are recorded directly in earnings . recent accounting pronouncements for a description of the company 's adoption of new accounting pronouncements and the impact thereof on the company 's business , see `` note 2 - summary of significant accounting policies '' to the accompanying consolidated financial statements . recent u.s. federal income tax legislation the tax cuts and jobs act , or tcja , which was signed into law on december 22 , 2017 , made significant changes to the u.s. federal income tax laws applicable to businesses and their owners , including reits and their stockholders . certain key provisions of the tcja could impact the company and its stockholders , beginning in 2018 , including the following : reduced tax rates . the highest individual u.s. federal income tax rate on ordinary income is reduced from 39.6 % to 37 % ( through taxable years ending in 2025 ) , and the maximum corporate income tax rate is reduced from 35 % to 21 % . in addition , individuals , trust , and estates that own the company 's stock are permitted to deduct up to 20 % of dividends received from the company ( other than dividends that are designated as capital gain dividends or qualified dividend income ) , generally resulting in an effective maximum u.s. federal income tax rate of 29.6 % on such dividends ( through taxable years ending in 2025 ) .
| results of operations all non-u.s. dollar denominated assets and liabilities are translated to u.s. dollars at the exchange rate prevailing at the reporting date and income , expenses , gains , and losses are translated at the prevailing exchange rate on the dates that they were recorded . investments the following table sets forth certain information regarding the company 's commercial real estate debt portfolio as of december 31 , 2017 : replace_table_token_4_th — ( 1 ) weighted-average coupon and weighted average all-in-yield reflects one-month libor at december 31 , 2017 , which was 1.56 % . ( 2 ) weighted-average all-in-yield includes the amortization of deferred origination fees , loan origination costs and accrual of both extension and exit fees . the company 's average asset and debt balances for the year ended december 31 , 2017 , were : average month-end balances for the year ended december 31 , 2017 description assets related debt commercial mortgage loans , net 2,148,219 1,193,197 subordinate loans , net 1,201,258 — cmbs 246,087 190,483 investment activity – 2017 during the year ended december 31 , 2017 , the company committed $ 2,042,900 of capital to loans ( $ 1,597,600 of which was funded at closing ) . in addition , during the year ended december 31 , 2017 , the company funded $ 193,119 for loans closed prior to 2017 , and received $ 891,848 in repayments . 33 net income available to common stockholders for the years ended december 31 , 2017 , 2016 and 2015 , respectively , the company 's net income available to common stockholders was $ 156,270 , or $ 1.54 per share , $ 127,581 , or $ 1.74 per share and $ 91,372 , or $ 1.54 per share , respectively .
| 5,724 |
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 , particularly in risk factors under item ia . business overview emcore corporation and its subsidiaries ( referred to herein as the “ company ” , “ we ” , “ our ” , or “ emcore ” ) offers a broad portfolio of compound semiconductor-based products for the broadband , fiber optics , satellite , and solar power markets . we were established in 1984 as a new jersey corporation and we have two reporting segments : fiber optics and photovoltaics . emcore 's fiber optics business segment provides optical components , subsystems and systems for high-speed telecommunications , cable television ( catv ) , wireless and fiber-to-the-premises ( fttp ) networks , as well as products for satellite communications , video transport and specialty photonics technologies for defense and homeland security applications . our photovoltaics business segment provides products for space power applications including high-efficiency multi-junction solar cells , covered interconnect cells ( cics ) and complete satellite solar panels , and terrestrial applications , including high-efficiency gaas solar cells for concentrating photovoltaic ( cpv ) power systems . in addition to organic growth and development of our existing fiber optics and photovoltaics segments , we intend to pursue other strategies to enhance shareholder value , which may include acquisitions , investments in joint ventures , partnerships , and other strategic alternatives , such as dispositions , reorganizations , recapitalizations or other similar transactions . accordingly , the strategy committee of the board and our management may from time to time be engaged in evaluating potential strategic opportunities and may enter into definitive agreements with respect to , such transactions or other strategic alternatives . recent developments sale of photovoltaics business on september 17 , 2014 , emcore entered into an asset purchase agreement ( the “ photovoltaics agreement ” ) with photon acquisition corporation ( `` photon '' ) , a delaware corporation and an affiliate of private equity firm veritas capital , pursuant to which photon agreed to acquire substantially all of the assets , and assume substantially all of the liabilities , primarily related to or used in connection with the company 's photovoltaics business , including emcore 's subsidiaries emcore solar power , inc. and emcore irb company , llc ( collectively , the `` photovoltaics business '' and , the sale of the photovoltaics business , the `` photovoltaics asset sale '' ) for $ 150.0 million in cash , subject to a working capital adjustment pursuant to the photovoltaics agreement . at a special meeting of emcore 's shareholders held on december 5 , 2014 , emcore 's shareholders approved the photovoltaics asset sale , and on december 10 , 2014 , emcore completed the photovoltaics asset sale . as a result the financial results of the photovoltaics business will be presented as discontinued operations on the consolidated statements of operations beginning in the first quarter of fiscal year 2015. accordingly , the company will have one remaining reportable segment : fiber optics . planned asset sale transaction with neophotonics corporation on october 22 , 2014 , emcore entered into an asset purchase agreement ( the `` digital products agreement '' ) with neophotonics corporation , a delaware corporation ( `` neophotonics '' ) pursuant to which the company has agreed to sell certain assets , and transfer certain liabilities of the company 's telecommunications business ( collectively , the `` digital products business '' and , the sale of the digital products business , the `` digital products assets sale '' ) to neophotonics for an aggregate purchase price of $ 17.5 million , subject to certain adjustments , consisting of $ 1.5 million in cash at closing and a promissory note in the principal amount of $ 16.0 million ( the `` promissory note '' ) . the promissory note will bear interest of 5.0 % per annum for the first year and 13.0 % per annum for the second year , payable semi-annually in cash , and matures two years from the closing of the transaction contemplated by the digital products agreement . in addition , the promissory note will be subject to prepayments under certain circumstances , and will be secured by certain of the assets to be sold to neophotonics in the transaction . the assets sold pursuant to the digital products agreement include fixed assets , inventory , and intellectual property for the itla , micro-itla , t-tosa and t-xfp product lines within the company 's telecommunications business . the purchase price is subject to certain adjustments for inventory , net accounts receivable and pre-closing revenue levels , 44 which will increase or decrease the principal amount under the promissory note as applicable . the transaction is subject to customary closing conditions and is expected to close by early january 2015. as the result of this transaction , we expect financial results of the digital products business to be classified as held for sale and reported as discontinued operations in the company 's consolidated financial statements in the first quarter of fiscal year 2015. following the closing of the photovoltaics asset sale and the digital products assets sales , emcore will continue to operate its fiber optics division which provides optical components , subsystems and systems for high-speed telecommunications , cable television ( catv ) and fiber-to-the-premise ( fttp ) networks , as well as products for satellite communications , video transport and specialty photonics technologies for defense and homeland security applications . strategy committee of the board of directors the company 's board of directors created a strategy committee of the board of directors in december 2013 , which is charged with evaluating strategic opportunities for the company that may enhance shareholder value . story_separator_special_tag a listing and description of our critical accounting policies includes the following : accounts receivable we regularly evaluate the collectability of our accounts receivable and maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to meet their financial obligations to us . the allowance is based on the age of receivables and a specific identification of receivables considered at risk of collection . we classify charges associated with the allowance for doubtful accounts as sales , general , and administrative expense . if the financial condition of our customers were to deteriorate , impacting their ability to pay us , additional allowances may be required . see note 5 - receivables in the notes to the consolidated financial statements for additional information related to our receivables . 46 inventory inventory is stated at the lower of cost or market , with cost being determined using the standard cost method that includes material , labor , and manufacturing overhead costs , which approximates weighted average cost . we write-down inventory once it has been determined that conditions exist that may not allow the inventory to be sold for its intended purpose or the inventory is determined to be excess or obsolete based on our forecasted future revenue . the charge related to inventory write-downs is recorded as a cost of revenue . the majority of the inventory write-downs are related to estimated allowances for inventory whose carrying value is in excess of net realizable value and on excess raw material components resulting from finished product obsolescence . in most cases where we sell previously written down inventory , it is typically sold as a component part of a finished product . the finished product is sold at market price at the time resulting in higher average gross margin on such revenue . we do not track the selling price of individual raw material components that have been previously written down or written off , since such raw material components usually are only a portion of the finished products and related sales price . we evaluate inventory levels at least quarterly against sales forecasts on a significant part-by-part basis , in addition to determining its overall inventory risk . we have incurred , and may in the future incur charges to write-down our inventory . see note 6 - inventory in the notes to the consolidated financial statements for additional information related to our inventory . goodwill the company 's goodwill of approximately $ 20.4 million is associated with our photovoltaics segment . goodwill represents the excess of the purchase price of an acquired business over the fair value of the identifiable assets acquired and liabilities assumed . as required by asc 350 , intangibles - goodwill and other , we evaluate our goodwill for impairment on an annual basis , or whenever events or changes in circumstances indicate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount . pursuant to asc 350 , circumstances that could trigger an interim impairment test include but are not limited to : macroeconomic conditions such as a deterioration in general economic conditions , limitations on accessing capital , fluctuations in foreign exchange rates , or other developments in equity and credit markets ; industry and market considerations such as a deterioration in the environment in which an entity operates , an increased competitive environment , a decline in market-dependent multiples or metrics ( considered in both absolute terms and relative to peers ) , a change in the market for an entity 's products or services , or a regulatory or political development ; cost factors such as increases in raw materials , labor , or other costs that have a negative effect on earnings and cash flows ; overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods ; other relevant entity-specific events such as changes in management , key personnel , strategy , or customers ; contemplation of bankruptcy ; or litigation ; events affecting a reporting unit such as a change in the composition or carrying amount of its net assets , a more-likely-than-not expectation of selling or disposing all , or a portion , of a reporting unit , the testing for recoverability of a significant asset group within a reporting unit , or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit ; and , if applicable , a sustained decrease in share price ( considered in both absolute terms and relative to peers ) . on september 17 , 2014 , emcore entered into an asset purchase agreement with photon to sell the photovoltaics business for $ 150.0 million in cash , subject to a working capital adjustment pursuant to the photovoltaics agreement . as of september 30 , 2014 , management performed the step 1 test , which compares the fair value of the reporting unit with its carrying value , including goodwill . as of september 30 , 2014 , no impairment existed as emcore had assigned a fair value for the photovoltaics business which was in excess of the carrying value . on december 10 , 2014 , emcore completed the sale of its photovoltaics business to photon . also see note 18 - subsequent events in the notes to the consolidated financial statements for additional information . 47 we will continue to monitor any changes in circumstances or triggering events that might indicate impairment of our goodwill . if there is a significant erosion of the company 's market capitalization or the photovoltaics reporting unit is unable to achieve its projected cash flows , we may be required to perform additional impairment tests . the outcome of these additional tests may result in the recording of goodwill impairment charges .
| comparison of financial results : revenue : replace_table_token_6_th fiber optics revenue : our fiber optics reporting segment provides optical components , subsystems , and systems for high-speed telecommunications , catv , and fttp networks , as well as products for satellite communications , video transport , and specialty photonics technologies for defense and homeland security applications . our fiber optics segment is broken out into two distinct product lines : broadband products , which includes cable television products , fiber-to-the-premises products , satellite communication products , video transport products , and defense and homeland security products ; and , digital products , which include telecom optical products . broadband product revenue : for the fiscal year ended september 30 , 2014 , revenue from broadband products decreased 9.0 % from the prior year . which was primarily driven by lower sales of our catv products due to lower customer demand . sales of our catv products , which include our quadrature amplitude modulation ( qam ) transmitters and receivers , represented the second largest percentage of our total fiber optics-related revenue . for the fiscal year ended september 30 , 2013 , revenue from broadband products increased 2.0 % from the prior year which was primarily driven by increased unit shipments of our catv-related products primarily due to the impact of the thailand flood in 2011 that adversely impacted our revenues in 2012. sales of our catv products , which include our ( qam ) transmitters and receivers , represent the second largest percentage of our total fiber optics-related revenue . digital product revenue : for the fiscal year ended september 30 , 2014 , revenue from digital products increased 27.9 % from the prior year which was primarily driven by higher sales of our integrated tunable laser assemblies ( itlas ) due to increased customer demand . our telecom optical-related product line , which includes tunable xfp , and itlas , represented the largest percentage of our total fiber optics-related revenue .
| 5,725 |
historically , our clients have primarily been public agencies in communities with populations ranging from 10,000 to 300,000 people . we believe communities of this size are underserved by large outsourcing companies that tend to focus on securing large federal and state projects , as well as projects for the private sector . recently , we have begun to provide increased services to public and private utilities that service major metropolitan communities and commercial and industrial firms , particularly in connection with the growth of our energy efficiency and sustainability services . we seek to establish close working relationships with our clients and expand the breadth and depth of the services we provide to them over time . while we currently serve communities throughout the country , our business with public agencies is concentrated in california and neighboring states . we provide services to approximately 56 % of the 482 cities and over 60 % of the 58 counties in california . we also serve special districts , school districts , a range of public agencies and private industry . our business with public and private utilities is concentrated in california and new york . we were founded in 1964 and willdan group , inc. , a delaware corporation , was formed in 2006 to serve as our holding company . we consist of a family of wholly owned companies that operate within the following segments for financial reporting purposes : engineering services . our engineering services segment includes the operations of our subsidiaries , willdan engineering and public agency resources ( `` pars '' ) . willdan engineering provides civil engineering-related and city planning services to our clients . pars primarily provides staffing to willdan engineering . for fiscal years 2011 and 2010 , contract revenue for the engineering services segment represented approximately 32 % and 42 % , respectively , of our consolidated contract revenue . energy efficiency services . our energy efficiency services segment consists of the business of our subsidiary , willdan energy solutions , which offers energy efficiency and sustainability consulting services to utilities , public agencies and private industry . for fiscal years 2011 and 2010 , contract revenue for the energy efficiency services segment represented approximately 54 % and 38 % , respectively , of our consolidated contract revenue , and this segment is currently our largest segment based on contract revenue . public finance services . our public finance services segment consists of the business of our subsidiary , willdan financial services , which offers economic and financial consulting services to 32 public agencies . for fiscal years 2011 and 2010 , contract revenue for the public finance services segment represented approximately 9 % and 13 % , respectively , of our consolidated contract revenue . homeland security services . our homeland security services segment consists of the business of our subsidiary , willdan homeland solutions , which offers national preparedness and interoperability services and communications and technology solutions . for fiscal years 2011 and 2010 , contract revenue for our homeland security services segment represented approximately 5 % and 7 % , respectively , of our consolidated contract revenue . in fiscal 2008 and 2009 , general economic conditions declined due to a number of factors including slower economic activity , a lack of available credit , decreased consumer confidence and reduced corporate profits and capital spending , leading to a slowdown in construction , particularly residential housing construction , in the western united states . as a result of this slowdown , both our engineering services segment and public finance services segment suffered declines in revenue and operating margin compression . while economic conditions began to improve in fiscal 2010 and 2011 , the recovery has been slow , particularly with regard to our traditional engineering services and public finance services . however , our profitability has increased in fiscal 2010 and 2011 as a result of increased revenues from our energy efficiency services segment . components of income and expense contract revenue we provide our services under contracts , purchase orders or retainer letters . the contracts we enter into with our clients contain three principal types of pricing provisions : time and materials , unit based , and fixed price . revenue on our time and materials and unit based contracts are recognized as the work is performed in accordance with specific terms of the contract . approximately 33 % of our contracts are based on contractual rates per hour plus costs incurred . some of these contracts include maximum contract prices , but the majority of these contracts are not expected to exceed the maximum . contract revenue on our fixed price contracts is determined on the percentage of completion method based generally on the ratio of direct costs incurred to date to estimated total direct costs at completion . many of our fixed price contracts are relatively short in duration , thereby lowering the risks of not properly estimating the percent complete . adjustments to contract cost estimates are made in the periods in which the facts requiring such revisions become known . when the revised estimate indicates a loss , such loss is recognized currently in its entirety . claims revenue is recognized only upon resolution of the claim . change orders in dispute are evaluated as claims . costs related to un-priced change orders are expensed when incurred and recognition of the related contract revenue is based on an evaluation of the probability of recovery of the costs . estimated profit is recognized for un-priced change orders if realization of the expected price of the change order is probable . our contracts come up for renewal periodically and at the time of renewal may be subject to renegotiation , which could impact the profitability on that contract . in addition , during the term of a contract , public agencies may request additional or revised services which may impact the economics of the transaction . story_separator_special_tag if a quantitative assessment is warranted , we then determine the fair value of the applicable reporting units . to estimate the fair value of our reporting units , we use both an income approach based on management 's estimates of future cash flows and other market data and a market approach based upon multiples of ebitda earned by similar public companies . for our annual impairment testing in fiscal years 2011 , 2010 and 2009 , we weighted the income approach and the market approach at 80 % and 20 % , respectively . the income approach was given a higher weight because it has a more direct correlation to the specific economics of the reporting units than the market approach , which is based on multiples of public companies that , although comparable , may not provide the same mix of services as our reporting units . once the fair value is determined , we then compare the fair value of the reporting unit to its carrying value , including goodwill . if the fair value of the reporting unit is determined to be less than the carrying value , we perform an additional assessment to determine the extent of the impairment based on the implied fair value of goodwill compared with the carrying amount of the goodwill . in the event that the current implied fair value of the goodwill is less than the carrying value , an impairment charge is recognized . inherent in such fair value determinations are significant judgments and estimates , including but not limited to assumptions about our future revenue , profitability and cash flows , our operational plans and our interpretation of current economic indicators and market valuations . to the extent these assumptions are incorrect or economic conditions that would impact the future operations of our reporting units change , our goodwill may be deemed to be impaired , and an impairment charge could result in a material adverse effect on our financial position or results of operation . at our measurement date , the estimated fair value of our energy solutions reporting unit exceeded the carrying value . a reduction in estimated fair value of our willdan energy solutions reporting unit could result in an impairment charge in future periods . 35 accounting for claims against the company we accrue an undiscounted liability related to claims against us for which the incurrence of a loss is probable and the amount can be reasonably estimated . we disclose the amount accrued and an estimate of any reasonably possible loss in excess of the amount accrued , if such disclosure is necessary for our financial statements not to be misleading . we do not accrue liabilities related to claims when the likelihood that a loss has been incurred is probable but the amount can not be reasonably estimated , or when the liability is believed to be only reasonably possible or remote . losses related to recorded claims are included in general and administrative expenses . determining probability and estimating claim amounts is highly judgmental . initial accruals and any subsequent changes in our estimates could have a material effect on our consolidated financial statements . income taxes income taxes are accounted for under the asset and liability method . deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial reporting basis and tax basis of our assets and liabilities , subject to a judgmental assessment of recoverability of deferred tax assets . 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 . a valuation allowance is recorded when it is more likely than not that some of the deferred tax assets may not be realized . we recognize the tax benefit from uncertain tax positions if it is more likely than not that the tax positions will be sustained on examination by the tax authorities , based on the technical merits of the position . the tax benefit is measured based on the largest benefit that has a greater than 50 % likelihood of being realized upon ultimate settlement . we recognize interest and penalties related to unrecognized tax benefits in income tax expense . 36 story_separator_special_tag million for the fiscal year ended december 30 , 2011 as compared to operating income of $ 3.1 million for the fiscal year ended december 31 , 2010. income from operations , as a percentage of contract revenue , decreased to 3.2 % for the fiscal year ended december 30 , 2011 , from 3.9 % for the fiscal year ended december 31 , 2010. other ( expense ) income . other ( expense ) income , net , was $ 71,000 for the fiscal year ended december 30 , 2011 as compared to other ( expense ) income of $ 10,000 the fiscal year ended december 31 , 2010. income tax expense ( benefit ) . we recorded an income tax expense of $ 1.5 million for the fiscal year ended december 30 , 2011 , as compared to an income tax expense of $ 0.3 million for the fiscal year ended december 31 , 2010 due to a change in the income tax provision . for further discussion of our income tax provision , see note 12 `` income taxes . '' net income ( loss ) . as a result of the above factors , our net income was $ 1.8 million for the fiscal year ended december 30 , 2011 , compared to net income of $ 2.7 million for the fiscal year ended december 31 , 2010. fiscal year 2010 compared to fiscal year 2009 contract revenue .
| results of operations the following table sets forth , for the periods indicated , certain information derived from our consolidated statements of operations expressed as a percentage of contract revenue . amounts may not add to the totals due to rounding . replace_table_token_8_th fiscal year 2011 compared to fiscal year 2010 contract revenue . our contract revenue was $ 107.2 million for the fiscal year ended december 30 , 2011 , with $ 33.9 million attributable to the engineering services segment , $ 57.7 million attributable to the energy efficiency services segment , $ 9.7 million attributable to the public finance services segment , and $ 5.9 million attributable to the homeland security services segment . consolidated contract revenue increased $ 29.3 million , or 37.6 % , to $ 107.2 million for the fiscal year ended december 30 , 2011 from $ 77.9 million in the fiscal year ended december 31 , 2010. this increase was due primarily to an increase of $ 28.6 million , or 97.6 % , in contract revenue of the energy efficiency services segment as a result of the increase in demand for the energy efficiency , sustainability and renewable energy services of our subsidiary , willdan energy solutions .
| 5,726 |
an updated appraisal is requested , at a minimum , every 12 months thereafter if the loan is 180 days or more delinquent or in foreclosure . if the bank holds the first and second mortgage , both loans are combined when evaluating whether there is a potential loss on the loan . for commercial real estate loans , losses are charged-off when the collection of such amounts is story_separator_special_tag the following discussion and analysis is intended to assist in understanding the financial condition , results of operations , liquidity , and capital resources of the company . the bank comprises almost all of the consolidated assets and liabilities of the company and the company is dependent primarily upon the performance of the bank for the results of its operations . because of this relationship , references to management actions , strategies and results of actions apply to both the bank and the company . story_separator_special_tag rate of 3.68 % and purchased $ 563.2 million of one- to four-family loans from correspondent lenders with a weighted average rate of 3.60 % . the bank also entered into participations of $ 67.7 million of commercial real estate loans with a weighted average rate of 3.98 % , of which $ 43.2 million had not yet been funded as of september 30 , 2017. loan activity in the current fiscal year decreased compared to the prior fiscal year due to the bank managing the size of the loan portfolio as it manages its liquidity levels . loan volume has primarily been maintained through the rates offered to correspondent lenders . generally , over the past couple years , cash flows from the securities portfolio have been used primarily to purchase loans and in part to pay down fhlb advances . by moving cash from lower yielding assets to higher yielding assets and repaying higher cost liabilities , we have been able to maintain our net interest margin . in addition to the repayment of securities , the bank has emphasized growth in the deposit portfolio in part to pay down fhlb advances . the ratio of securities and cash to total assets was 17.4 % at september 30 , 2017 , and we will be managing this ratio to approximately 15 % . in the long run , management considers a ten percent ratio of stockholders ' equity to total assets at the bank as an appropriate level of capital . at september 30 , 2017 , this ratio was 13.1 % . total liabilities were $ 7.82 billion at september 30 , 2017 compared to $ 7.87 billion at september 30 , 2016. fhlb borrowings decreased $ 198.6 million , to $ 2.17 billion at september 30 , 2017 , as certain maturing fhlb advances were not replaced . deposits increased $ 145.9 million , to $ 5.31 billion at september 30 , 2017 , due mainly to increases in wholesale certificates and non-maturity retail deposits . stockholders ' equity was $ 1.37 billion at september 30 , 2017 compared to $ 1.39 billion at september 30 , 2016. the $ 24.7 million decrease was due primarily to the payment of $ 118.0 million in cash dividends , partially offset by net income of $ 84.1 million . the cash dividends paid during the current fiscal year totaled $ 0.88 per share and consisted of a $ 0.29 per share cash true-up dividend related to fiscal year 2016 earnings per the company 's dividend policy , a $ 0.25 per share true blue capitol dividend , and four regular quarterly cash dividends totaling $ 0.34 per share . 43 critical accounting policies our most critical accounting policies are the methodologies used to determine the acl and fair value measurements . these policies are important to the presentation of our financial condition and results of operations , involve a high degree of complexity , and require management to make difficult and subjective judgments that may require assumptions or estimates about highly uncertain matters . the use of different judgments , assumptions , and estimates could cause reported results to differ materially . these critical accounting policies and their application are reviewed at least annually by our audit committee . the following is a description of our critical accounting policies and an explanation of the methods and assumptions underlying their application . allowance for credit losses . the company maintains an acl to absorb inherent losses in the loan portfolio based upon ongoing quarterly assessments of the loan portfolio . the acl is maintained through provisions for credit losses which are either charged or credited to income . the methodology for determining the acl is considered a critical accounting policy by management because of the high degree of judgment involved , the subjectivity of the assumptions used , and the potential for changes in economic conditions that could result in changes to the amount of the recorded acl . additionally , bank regulators review the acl and could have a differing view from management regarding the acl balance , which could result in an increase in the acl and or the recognition of additional charge-offs . although management believes that the bank has established and maintained the acl at appropriate levels , additions may be necessary if economic and other conditions worsen substantially from the current operating environment , and or if bank regulators have a differing view from management regarding the acl balance . our primary lending emphasis is the origination and purchase of one- to four-family loans and , to a lesser extent , consumer loans secured by one- to four-family residential properties , resulting in a loan concentration in residential mortgage loans . we believe the primary risks inherent in our one- to four-family and consumer loan portfolios are a decline in economic conditions , elevated levels of unemployment or underemployment , and declines in residential real estate values . story_separator_special_tag the company primarily uses prices obtained from third party pricing services to determine the fair value of its afs securities . various modeling techniques are used to determine pricing for the company 's securities , including option pricing , discounted cash flow models , and similar techniques . the inputs to these models may include benchmark yields , reported trades , broker/dealer quotes , issuer spreads , benchmark securities , bids , offers and reference data . there is one security , with a balance of $ 2.1 million at september 30 , 2017 , in the afs portfolio that has significant unobservable inputs requiring the independent pricing services to use some judgment in pricing the related securities . this afs security is classified as level 3. all other afs securities are classified as level 2. the company 's interest rate swaps are measured at fair value on a recurring basis . the company uses a discounted cash flow analysis using observable market-based inputs to determine the fair value of is interest rate swaps . changes in the fair value of the interest rate swaps are recorded , net of tax , as aoci in stockholders ' equity . the company did not have any other liabilities that were measured at fair value at september 30 , 2017 . loans individually evaluated for impairment and oreo are measured at fair value on a non-recurring basis . these non-recurring fair value adjustments involve the application of lower-of-cost-or-fair value accounting or write-downs of individual assets . fair values of loans individually evaluated for impairment are estimated through current appraisals . oreo fair values are estimated using current appraisals or listing prices . fair values may be adjusted by management to reflect current economic and market conditions and , as such , are classified as level 3. recent accounting pronouncements for a discussion of recent accounting pronouncements , see `` part ii , item 8. financial statements and supplementary data – notes to financial statements – note 1. summary of significant accounting policies . '' 45 management strategy we are a community-oriented financial institution dedicated to serving the needs of customers in our market areas . our commitment is to provide qualified borrowers the broadest possible access to home ownership through our mortgage lending programs and to offer a complete set of personal banking products and services to our customers . we strive to enhance stockholder value while maintaining a strong capital position . to achieve these goals , we focus on the following strategies : residential portfolio lending . we are one of the leading originators of one- to four-family loans in the state of kansas . we originate these loans primarily for our own portfolio , and we service the loans we originate . we also purchase one- to four-family loans from correspondent lenders . we offer both fixed- and adjustable-rate products with various terms to maturity and pricing options . we maintain strong relationships with local real estate agents to attract mortgage loan business . we rely on our marketing efforts and customer service reputation to attract mortgage business from walk-in customers , customers that apply online , and existing customers . retail financial services . we offer a wide array of deposit products and retail services . these products include checking , savings , money market , certificates of deposit , and retirement accounts . they are provided through a branch network of 47 locations , including traditional branches and retail in-store locations , our call center which operates on extended hours , mobile banking , telephone banking , and online banking and bill payment services . cost control . we generally are very effective at controlling our costs of operations . by using technology , we are able to centralize our loan servicing and deposit support functions for efficient processing . we have located our branches to serve a broad range of customers through relatively few branch locations . our average deposit base per traditional branch at september 30 , 2017 was approximately $ 123.1 million . this large average deposit base per branch helps to control costs . our one- to four-family lending strategy and our effective management of credit risk allows us to service a large portfolio of loans at efficient levels because it costs less to service a portfolio of performing loans . asset quality . we utilize underwriting standards for our lending products that are designed to limit our exposure to credit risk . we require complete documentation for both originated and purchased loans , and make credit decisions based on our assessment of the borrower 's ability to repay the loan in accordance with its terms . capital position . our policy has always been to protect the safety and soundness of the bank through credit and operational risk management , balance sheet strength , and sound operations . the end result of these activities has been a capital ratio in excess of the well-capitalized standards set by the occ . we believe that maintaining a strong capital position safeguards the long-term interests of the bank , the company , and our stockholders . stockholder value . we strive to enhance stockholder value while maintaining a strong capital position . one way that we continue to provide returns to stockholders is through our dividend payments . total dividends declared and paid during fiscal year 2017 were $ 118.0 million , including a $ 0.25 per share , or $ 33.6 million , true blue® capitol dividend paid in june 2017 . the company 's cash dividend payout policy is reviewed quarterly by management and the board of directors , and the ability to pay dividends under the policy depends upon a number of factors , including the company 's financial condition and results of operations , regulatory capital requirements , regulatory limitations on the bank 's ability to make capital distributions to the company , and the amount of cash at the holding company level .
| executive summary the following summary should be read in conjunction with the management 's discussion and analysis of financial condition and results of operations section in its entirety . the company provides a full range of retail banking services through the bank , which is a wholly-owned subsidiary of the company , headquartered in topeka kansas . the bank has 37 traditional and 10 in-store banking offices serving primarily the metropolitan areas of topeka , wichita , lawrence , manhattan , emporia and salina , kansas and portions of the metropolitan area of greater kansas city . we have been , and intend to continue to be , a community-oriented financial institution offering a variety of financial services to meet the needs of the communities we serve . the company 's results of operations are primarily dependent on net interest income , which is the difference between the interest earned on loans , securities , and cash , and the interest paid on deposits and borrowings . on a weekly basis , management reviews deposit flows , loan demand , cash levels , and changes in several market rates to assess all pricing strategies . the bank 's pricing strategy for first mortgage loan products includes setting interest rates based on secondary market prices and competitor pricing for our local lending markets , and secondary market prices and competitor pricing for our correspondent lending markets . generally , deposit pricing is based upon a survey of competitors in the bank 's market areas , and the need to attract funding and retain maturing deposits . the majority of our loans are fixed-rate products with maturities up to 30 years , while the majority of our retail deposits have stated maturities or repricing dates of less than two years . the company is significantly affected by prevailing economic conditions , including federal monetary and fiscal policies and federal regulation of financial institutions .
| 5,727 |
2016-02 , leases ( `` topic 842 `` ) , we recognize a right-of-use asset and a lease liability for core leases classified as operating leases with a term in excess of 12 months in our consolidated balance sheet . for other non-core operating leases , which is comprised of small-dollar-value items such as office equipment , we continued to expense these costs in the period incurred rather than capitalizing such expenditures on our consolidated balance sheet . we identify lease and nonlease components in a contract to which consideration in the contract will be allocated . we may elect by class of underlying asset to choose not to separate nonlease components from lease components and instead account for each separate lease component and the nonlease components in story_separator_special_tag `` of this annual report on form 10-k. the favorable cash flow impact associated with the changes in our assets and liabilities , net of effects of acquisitions and divestitures , which are affected by both cost changes and the timing of payments , in fiscal year 2020 as compared to fiscal year 2019 was due primarily to the following : 44 a $ 13.8 million favorable impact to operating cash flows associated with the change in accrued expenses and other liabilities due primarily to the timing of environmental remediation payments and final capping , closure and post-closure payments , which increased in fiscal year 2019 and then decreased in fiscal year 2020 ; and a $ 11.3 million favorable impact to operating cash flows associated with the change in accounts receivable ; and a $ 0.5 million favorable impact to operating cash flows associated with the change in prepaid expenses , inventories and other assets ; partially offset by a $ ( 22.0 ) million unfavorable impact to operating cash flows associated with the change in accounts payable based on differences in the timing of payments . cash flows from investing activities . a summary of investing cash flows ( in millions ) follows : replace_table_token_18_th a summary of the most significant items affecting the change in our investing cash flows follows : acquisitions , net of cash acquired . in fiscal year 2020 , we acquired seven tuck-in solid waste collection businesses and a solid waste collection business , a transportation business , and one recycling operation for total consideration of $ 33.5 million , including $ 29.0 million in cash , and paid $ 3.5 million in holdback payments on businesses previously acquired , as compared to fiscal year 2019 , during which we acquired seven tuck-in solid waste collection businesses , a business comprised of solid waste collection , transfer and recycling operations and a business comprised of solid waste hauling and transfer assets for total consideration of $ 82.2 million , including $ 72.1 million in cash and $ 3.3 million in holdback payments on businesses previously acquired . capital expenditures . capital expenditures were $ 4.8 million higher in fiscal year 2020 as compared to fiscal year 2019 primarily due to timing differences and the following items : $ 5.7 million in additional capital expenditures from phase vi construction and development costs related to long-term infrastructure at the subtitle d landfill in coventry , vermont ( `` waste usa landfill '' ) to facilitate future landfill airspace construction which will significantly enhance the economic useful life of the waste usa landfill once construction is finished ; partially offset by $ ( 1.8 ) million from lower capital expenditures associated with the integration of newly acquired operations , which includes planned capital expenditures following an acquisition , as well as non-routine development investments that are expected to provide long-term returns . proceeds from property insurance settlement . recovery of insurance proceeds was $ ( 0.3 ) million lower in fiscal year 2020 as compared to fiscal year 2019 due to increased recoveries in prior year pertaining to property damage related to a fire at a transfer station in our western region . 45 cash flows from financing activities . a summary of financing cash flows ( in millions ) follows : replace_table_token_19_th a summary of the most significant items affecting the change in our financing cash flows follows : debt activity . net cash provided by debt activity increased $ 53.2 million year-over-year . the increase in financing cash flows related to debt activity is primarily associated with the timing of the pay down of our revolving credit facility and an increase in new finance lease obligations . payments of debt issuance costs . we made $ 1.5 million of debt issuance cost payments in fiscal year 2020 related to the issuance of $ 40.0 million aggregate principal amount of new york state environmental facilities corporation solid waste disposal revenue bonds series 2020 ( `` new york bonds 2020 '' ) as compared to $ 0.7 million of debt issuance cost payments in fiscal year 2019 related to the remarketing of $ 11.0 million aggregate principal amount of new hampshire bonds and $ 25.0 million aggregate principal amount of new york bonds 2014r-1 . proceeds from the exercise of share-based awards . we received $ 0.1 million of cash receipts associated with the exercise of stock options in fiscal year 2020 as compared to $ 3.4 million in the prior year . proceeds from the public offering of class a common stock . in fiscal year 2020 , we completed a public offering of 2.7 million shares of our class a common stock at a public offering price of $ 56.00 per share . the offering resulted in net proceeds to us of $ 144.8 million , after deducting underwriting discounts , commissions and offering expenses . the net proceeds from the offering were and are to be used for general corporate purposes , including potential acquisitions or development of new operations or assets with the goal of complementing or expanding our business , and for working capital and capital expenditures . story_separator_special_tag if we were unable to repay debt to our lenders , or were otherwise in default under any provision governing our outstanding debt obligations , our secured lenders could proceed against us and against the collateral securing that debt . 47 based on the seasonality of our business , operating results in the late fall , winter and early spring months are generally lower than the remainder of our fiscal year . given the cash flow impact that this seasonality , the capital intensive nature of our business and the timing of debt payments has on our business , we typically incur higher debt borrowings in order to meet our liquidity needs during these times . consequently , our availability and performance against our financial covenants tighten during these times as well . tax-exempt financings new york bonds . in fiscal year 2020 , we completed the issuance of $ 40.0 million aggregate principal amount of new york bonds 2020. the new york bonds 2020 , which are unsecured and guaranteed jointly and severally , fully and unconditionally by all of our significant wholly-owned subsidiaries , accrue interest at 2.75 % per annum from september 2 , 2020 through september 1 , 2025 , at which time they may be converted to a variable interest rate period or to a new term interest rate period . the new york bonds 2020 mature on september 1 , 2050. as of december 31 , 2020 , we had outstanding $ 40.0 million aggregate principal amount of new york bonds 2020. in fiscal year 2019 , we completed the remarketing of $ 25.0 million aggregate principal amount of new york bonds 2014r-1 . as of december 31 , 2020 , we had outstanding $ 25.0 million aggregate principal amount of new york bonds 2014r-1 and $ 15.0 million aggregate principal amount of new york state environmental facilities corporation solid waste disposal revenue bonds series 2014r-2 ( `` new york bonds 2014r-2 '' ) issued by the new york state environmental facilities corporation under the indenture dated december 1 , 2014 ( collectively , the “ new york bonds 2014 ” ) . the new york bonds 2014r-1 accrue interest at 2.875 % per annum through december 2 , 2029 , at which time they may be converted from a fixed rate to a variable rate . the new york bonds 2014r-2 accrue interest at 3.125 % per annum through may 31 , 2026 , at which time they may be converted from a fixed rate to a variable rate . the new york bonds 2014 , which are unsecured and guaranteed jointly and severally , fully and unconditionally by all of our significant wholly-owned subsidiaries , require interest payments on june 1 and december 1 of each year and mature on december 1 , 2044. we borrowed the proceeds of the new york bonds 2014 to finance or refinance certain capital projects in the state of new york and to pay certain costs of issuance of the new york bonds 2014. maine bonds . as of december 31 , 2020 , we had outstanding $ 25.0 million aggregate principal amount of finance authority of maine solid waste disposal revenue bonds series 2005 ( “ fame bonds 2005r-3 '' ) , $ 15.0 million aggregate principal amount finance authority of maine solid waste disposal revenue bonds series 2015 ( “ fame bonds 2015r-1 ” ) , and $ 15.0 million aggregate principal amount of finance authority of maine solid waste disposal revenue bonds series 2015r-2 ( `` fame bonds 2015r-2 '' ) . the fame bonds 2005r-3 accrue interest at 5.25 % per annum , and interest is payable semiannually on february 1 and august 1 of each year until such bonds mature on january 1 , 2025. the fame bonds 2015r-1 accrue interest at 5.125 % per annum through august 1 , 2025 , at which time they may be converted from a fixed to a variable rate , and interest is payable semiannually on february 1 and august 1 of each year until the fame bonds 2015r-1 mature on august 1 , 2035. the fame bonds 2015r-2 accrue interest at 4.375 % per annum through july 31 , 2025 , at which time they may be converted from a fixed to a variable rate , and interest is payable semiannually on may 1 and november 1 of each year until the fame bonds 2015r-2 mature on august 1 , 2035. the fame bonds 2005r-3 , 2015r-1 and 2015r-2 ( collectively , the `` fame bonds '' ) are unsecured and guaranteed jointly and severally , fully and unconditionally by all of our significant wholly-owned subsidiaries . we borrowed the proceeds of the offering of the fame bonds to finance or refinance the costs of certain of our solid waste landfill facilities and solid waste collection , organics and transfer , recycling and hauling facilities , and to pay certain costs of the issuance of the fame bonds . vermont bonds . as of december 31 , 2020 , we had outstanding $ 16.0 million aggregate principal amount of vermont economic development authority solid waste disposal long-term revenue bonds series 2013 ( `` vermont bonds '' ) . the vermont bonds , which are guaranteed jointly and severally , fully and unconditionally by all of our significant wholly-owned subsidiaries , accrue interest at 4.625 % per annum through april 2 , 2028 , after which time there is a mandatory tender , and interest is payable semiannually on may 1 and november 1 of each year . the vermont bonds mature on april 1 , 2036. we borrowed the proceeds of the vermont bonds to finance or refinance certain qualifying property , plant and equipment assets purchased in the state of vermont . new hampshire bonds . in fiscal year 2019 , we completed the remarketing of $ 11.0 million aggregate principal amount of senior unsecured new hampshire bonds . as of december 31 , 2020 , we had outstanding $ 11.0 million aggregate principal amount of new hampshire bonds .
| summary of significant accounting policies of our consolidated financial statements included in item 8 , `` financial statements and supplementary data `` of this annual report on form 10-k. 49 landfill accounting landfill development costs . we estimate the total cost to develop each of our landfill sites to its remaining permitted and expansion capacity ( see landfill development costs discussed within the “ property , plant and equipment ” accounting policy more fully discussed in note 3 , summary of significant accounting policies of our consolidated financial statements included in item 8 , `` financial statements and supplementary data `` of this annual report on form 10-k ) . the projection of these landfill costs is dependent , in part , on future events . the remaining amortizable basis of each landfill includes costs to develop a site to its remaining permitted and expansion capacity and includes amounts previously expended and capitalized , net of accumulated airspace amortization , and projections of future purchase and development costs including capitalized interest . the interest capitalization rate is based on our weighted average interest rate incurred on borrowings outstanding during the period . under life-cycle accounting , all costs related to acquisition and construction of landfill sites are capitalized and charged to expense based on tonnage placed into each site . landfill permitting , acquisition and preparation costs are amortized on the units-of-consumption method as landfill airspace is consumed . in determining the amortization rate for each of our landfills , preparation costs include the total estimated costs to complete construction of the landfills ' permitted and expansion capacity . final capping , closure and post-closure costs . the cost estimates for final capping , closure and post-closure activities at landfills for which we have responsibility are estimated based on our interpretations of current requirements and proposed or anticipated regulatory changes .
| 5,728 |
the acquisitions of agile resources , inc. , a georgia corporation ( “ agile ” ) , access data consulting corporation , a colorado corporation ( “ access ” ) , paladin consulting inc. ( “ paladin ” ) and sni companies , a delaware corporation ( “ sni ” ) expanded the array and numbers of end markets and clients we serve , as well as our geographical footprint within the placement and contract staffing end markets we serve , including information technology , in particular . the company markets its services using the trade names general employment enterprises , omni one , ashley ellis , agile resources , scribe solutions inc. , access data consulting corporation , paladin consulting inc. , sni companies , triad personnel services and triad staffing . as of september 30 , 2019 , we operated thirty-three branch offices in downtown or suburban areas of major u.s. cities in fourteen states . we have one office located in each of arizona , washington d.c. , iowa , connecticut , georgia , minnesota , new jersey , and virginia , three offices in colorado and massachusetts , two offices in illinois , four offices in texas , seven offices in ohio and six offices in florida . management has implemented a strategy which includes organic and acquisition growth components . management 's organic growth strategy includes seeking out and winning new client business , as well as expansion of existing client business and on-going cost reduction and productivity improvement efforts in operations . management 's acquisition growth strategy includes identifying strategic acquisitions , financed primarily through the issuance of equity and debt to improve the overall profitability and cash flows of the company . the company 's contract and placement services are principally provided under two operating divisions or segments : professional staffing services and industrial staffing services . we believe our current segments complement one another and position us for future growth . 16 story_separator_special_tag locations , personnel costs associated with eliminated positions , and other costs incurred related to acquisitions , including associated legal and professional costs . management believes reporting these expenses separately from other sg & a provides useful information considering the company 's dual track growth strategy of internal ( organic ) growth and growth by acquisitions and when comparing and considering the company 's operating results and activities with other entities . the company 's sg & a for fiscal 2019 , decreased by approximately $ 4.9 million as compared to fiscal 2018. sg & a for fiscal 2019 , as a percentage of revenue was approximately 28.0 % versus 28.7 % for fiscal 2018. the decline in sg & a expenses is primarily attributable to the continuing effects of office consolidations and office closures and other reductions in its core workforce that were undertaken by the company to maximize productivity , reduce overall field costs and improve profitability . acquisition , integration and restructuring expenses the company classifies and reports costs incurred related to acquisition , integration and restructuring activities separately from other sg & a within its operating expenses . these costs were $ 4.3 million in fiscal 2019 and $ 3.1 million in fiscal 2018. these costs include mainly expenses associated with former closed and consolidated locations , personnel costs associated with eliminated positions , costs incurred related to acquisitions and associated legal and professional costs . the increase in acquisition , integration and restructuring expenses in fiscal 2019 were related to potential acquisitions and restructuring costs of prior acquisitions . depreciation expense depreciation expense was $ 0.3 million for fiscal 2019 and $ 0.4 million for fiscal 2018. amortization expense amortization expense was $ 5.6 million for fiscal 2019 , and remained approximately level compared with 2018. goodwill impairment charge in 2019 , the company early adopted asu 2017-04 , intangibles — goodwill and other ( topic 350 ) , simplifying the test for goodwill impairment , which simplifies the subsequent measurement of goodwill by eliminating the second step from the quantitative goodwill impairment test . under this guidance , annual or interim goodwill impairment testing is performed by comparing the fair value of a reporting unit with its carrying amount . an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit 's fair value , not to exceed the carrying value of goodwill . due to a sustained decline in the market capitalization of our common stock during fiscal 2019 , we performed an interim goodwill impairment test during our third quarter in accordance with the provisions of asu 2017-04. the outcome of this goodwill impairment test resulted in a non-cash charge for the impairment of goodwill of $ 4.3 million , which was recorded in the consolidated financial statements for fiscal 2019. for purposes of performing this interim goodwill impairment assessment , management mainly considered recent trends in the company 's stock price , estimated control or acquisition premium , and related matters , including other possible factors affecting the recent declines in the company 's stock price and their effects on estimated fair value of the company 's reporting units . loss from operations as the net result of the matters discussed regarding revenues and operating expenses above , income from operations decreased $ 7.4 million , to a loss of approximately $ ( 5.0 ) million for fiscal 2019 from income of approximately $ 2.5 million for fiscal 2018. change in acquisition deposit for working capital guarantee as of september 30 , 2018 , the sni merger consideration held in the working capital reserve fund of $ 1.5 million was reduced by $ 0.6 million ( “ nwc adjustment amount ” ) , following completion of the process provided for in the merger agreement , in which an independent accounting firm ( the “ firm ” ) was engaged to review related working capital-related claims made by the company against such funds . as a result of the firm 's findings , the company has recognized and reported a corresponding gain in its consolidated statement of operations for the fiscal year ended september 30 , 2018. story_separator_special_tag initial funds were distributed on april 3 , 2017 ( the “ closing date ” ) to repay existing indebtedness , pay fees and expenses relating to the credit agreement , and to pay a portion of the purchase price for the acquisition of the sni companies . under the terms of the credit agreement , the company may borrow up to $ 73.8 million consisting of a four-year term loan in the principal amount of $ 48.8 million and revolving loans in a maximum amount up to the lesser of ( i ) $ 25.0 million or ( ii ) an amount determined pursuant to a borrowing base that is calculated based on the outstanding amount of the company 's eligible accounts receivable , as described in the credit agreement . the loans under the credit agreement mature on march 31 , 2021. the credit agreement , as amended , contains certain financial covenants , which are required to be maintained as of the last day of each fiscal quarter , including the following : fixed charge coverage ratio ( “ fccr ” ) . this is the ratio of consolidated earnings before interest , taxes , depreciation and amortization ( “ ebitda ” ) to fixed charges , each of which is as defined in the credit agreement , as amended . the minimum fccr requirements are : 1.00 to 1.00 for the trailing two fiscal quarters ending march 31 , 2019 ; 0.60 to 1.00 for the trailing three fiscal quarters ending june 30 , 2019 ; 0.70 to 1.00 for the trailing four fiscal quarters ending september 30 , 2019 ; 0.75 to 1.00 for the trailing four fiscal quarters ending december 31 , 2019 ; 0.85 to 1.00 for the trailing four fiscal quarters ending march 31 , 2020 ; and 1.00 to 1.00 for each of the trailing four fiscal quarterly periods ending thereafter . 21 minimum ebitda . minimum ebitda , which is determined on a consolidated basis and measured on a trailing four ( 4 ) quarter basis , as defined in the credit agreement , as amended , are : $ 13 million for the fiscal quarter ending march 31 , 2019 ; $ 10 million for the fiscal quarter ending june 30 , 2019 ; $ 10.0 million for the fiscal quarter ending september 30 , 2019 ; $ 10.0 million for the fiscal quarter ending december 31 , 2019 ; and $ 11.0 million for the fiscal quarter ending march 31 , 2020 , and each fiscal quarter thereafter . senior leverage ratio . this is the ratio of maximum indebtedness , which is substantially comprised of consolidated senior indebtedness , to consolidated ebitda , each of which is as defined under the credit agreement , as amended . the senior leverage ratios are : 4.25 to 1.00 for the fiscal quarter ending march 31 , 2019 ; 5.50 to 1.00 for the fiscal quarter ending june 30 , 2019 ; 5.50 to 1.00 for the fiscal quarter ending september 30 , 2019 ; 5.60 to 1.00 for the fiscal quarter ending december 31 , 2019 ; and 5.00 to 1.00 for the fiscal quarter ended march 31 , 2020 , and for each fiscal quarter thereafter . in addition to these financial covenants , the credit agreement includes other restrictive covenants . the credit agreement permits capital expenditures up to a certain level and contains customary default and acceleration provisions . the credit agreement also restricts , above certain levels , acquisitions , incurrence of additional indebtedness , and payment of dividends . on august 31 , 2017 , the company entered into a consent to extension of waiver to the credit agreement ( the “ waiver ” ) . under the terms of the waiver , the lenders and the agents agreed to extend to october 3 , 2017 the deadline by which the company must deliver updated financial information satisfactory to the lenders in order to amend the financial covenant levels , execute a fully executed amendment to the credit agreement , and any other terms and conditions required by the lenders in their sole discretion . additionally , the company paid a $ 0.07 million consent fee to the agents for the pro rata benefit of the lenders , in connection with the waiver . on august 31 , 2017 , an additional waiver to the credit agreement ( “ additional waiver ” ) , pursuant to which the due date for the company to deliver the subordination agreement and an amended subordinated note , executed by one of the company 's subordinated lenders was extended from august 31 , 2017 to october 3 , 2017 , also was obtained . on october 2 , 2017 , the company , the other borrower entities and guarantor entities named therein ( collectively , the “ loan parties ” ) , pnc , and certain investment funds managed by mgg ( collectively the ( “ lenders ” ) entered into a first amendment and waiver ( the “ first amendment ” ) to the revolving credit , term loan and security agreement dated as of march 31 , 2017 ( the “ credit agreement ” ) by and among the loan parties , and the lenders . the first amendment , which was effective as of october 2 , 2017 , modified the required principal repayment schedule with respect to the term loans . the amendment also modified the ability of the loan parties to repay or make other payments with respect to certain other loans that are subordinated in right of payment to the indebtedness under the credit agreement . pursuant to the first amendment the lenders also waived any event of default arising out of the loan parties ' failure to deliver , on or before october 3 , 2017 , the materials satisfying the requirements of clauses ( i ) and ( ii ) of section 5 of the waiver to revolving credit , term loan and security agreement , dated as of august 14 , 2017 , as amended .
| results of operations fiscal year ended september 30 , 2019 ( “ fiscal 2019 ” ) , and fiscal year ended september 30 , 2018 ( “ fiscal 2018 ” ) net revenues consolidated net revenues are comprised of the following : replace_table_token_3_th contract staffing services contributed $ 133.1 million or approximately 88 % of consolidated revenue and direct hire placement services contributed $ 18.5 million or approximately 12 % of consolidated revenue for fiscal 2019. this compares to contract staffing services revenue of $ 142.2 million , or approximately 86 % of consolidated revenue and direct hire placement revenue of $ 23.1 million or approximately 14 % of consolidated revenue , respectively , for fiscal 2018. the overall decrease in contract staffing services revenue of $ 9.1 million , or 6.4 % for fiscal 2019 compared to fiscal 2018 was primarily attributable to the continuing effects of office consolidations and office closures and other reductions in core workforce that have been undertaken by the company to maximize productivity , reduce overall field costs and improve profitability following sni acquisition . reductions in the temporary workforce requirements of a few key customers in the professional and industrial services divisions , and to a lesser extent , higher incidences of bad weather in midwest and northeastern markets in fiscal 2019 , as compared to fiscal 2018 , also contributed . direct hire placement revenue for fiscal 2019 decreased by $ 4.5 million or 19.6 % over fiscal 2018. the decrease in direct hire placement revenues also is attributable to the continuing effects of office consolidations and office closures and other reductions in its core workforce that were undertaken by the company to maximize productivity , reduce overall field costs and improve profitability . management also believes market speculation of an impending recession in the u.s economy during the first fiscal quarter of 2019 had a cooling effect on hiring , especially around the holiday season and into the beginning of the 2019 calendar year .
| 5,729 |
these messaging conversations harness human agents , bots and artificial intelligence ( ai ) to power convenient , personalized and content-rich journeys across the entire consumer lifecycle , from discovery and research , to sales , service and support , and even marketing , social and brick and mortar engagements . for example , consumers can look up product info like ratings , images and pricing , search for stores , see product inventory , schedule appointments , apply for credit , approve repairs , make purchases or payments - all without ever leaving the messaging channel . these ai and human-assisted conversational experiences constitute the conversational space . liveengage , our enterprise-class cloud-based platform , enables businesses to become conversational by securely deploying messaging , coupled with bots and ai , at scale for brands with tens of millions of customers and many thousands of customer care agents . liveengage powers conversations across each of a brand 's primary digital channels , including mobile apps , mobile and desktop web browsers , short message service ( sms ) , social media and third-party consumer messaging platforms . brands can also use liveengage to message consumers when they dial a 1-800 number instead of forcing them to navigate interactive voice response systems ( ivrs ) and wait on hold . similarly , liveengage can ingest traditional emails and convert them into messaging conversations , or embed messaging conversations directly into web advertisements , rather than redirect consumers to static website landing pages . our robust , cloud-based suite of rich messaging , real-time chat , ai and automation offerings features consumer and agent facing bots , intelligent routing and capacity mapping , real-time intent detection and analysis , queue prioritization , customer sentiment , analytics and reporting , content delivery , payment card industry ( pci ) compliance , cobrowsing and a sophisticated proactive targeting engine . with liveengage , agents can manage all conversations with consumers through a single console interface , regardless of which disparate messaging endpoints the consumers originate from ; i.e. , whatsapp , line , apple business chat , ivr , social , email , alexa , or wechat . an extensible application programming interface ( api ) stack facilitates a lower cost of ownership by facilitating robust integration into back-end systems , as well as enabling developers to build their own programs and services on top of the platform . more than 40 apis and software development kits are available on liveengage . liveperson 's conversational ai offerings put the power of bot development , training , management and analysis into the hands of the contact center and its agents , the teams most familiar with how to structure sales and service conversations to drive successful outcomes . the platform enables what we call “ the tango ” of humans , ai and bots , whereby human agents act as bot managers , overseeing ai-powered conversations and seamlessly stepping into the flow when a personal touch is needed . agents become ultra-efficient , leveraging the ai engine to serve up relevant content , define next-best actions and take over repetitive transactional work , so that the agent can focus on relationship building . by seamlessly integrating messaging with our proprietary conversational ai , as well as third-party bots , liveengage offers brands a comprehensive approach to scaling automations across their millions of customer conversations . complementing our proprietary messaging and conversational ai offerings are teams of technical , solutions and consulting professionals that have developed deep domain expertise in the implementation and optimization of conversational services across industries and messaging endpoints . we are a leading authority in the conversational space . liveperson 's products , coupled with our domain knowledge , industry expertise and professional services , have been proven to maximize the effectiveness of the conversational space and deliver measurable return on investment . certain of our customers have achieved the following advantages from our offerings : the ability for each agent to manage as many as 40 messaging conversations at a time , as compared to one at a time for a voice agent and two to four at a time for a good chat agent . adding ai and bots provides even greater scale to the number of conversations managed ; labor efficiency gains of at least two times that of voice agents , effectively cutting labor costs by at least 50 % ; improving the overall customer experience , thereby fueling customer satisfaction increases of up to 20 percentage points , and enhancing retention and loyalty ; more convenient , personalized and content-rich conversations that increase sales conversion by up to 20 % , increase average order value and reduce abandonment ; more satisfied contact center agents , thereby reducing agent churn by up to 50 % ; maintain a valued connection with consumers via mobile devices , either through native applications , websites , text messages , or third-party messaging platforms ; leverage spending that drives visitor traffic by increasing visitor conversions ; refine and improve performance by understanding which initiatives deliver the highest rate of return ; and increase lead generation by providing a single platform that engages consumers through advertisements and listings on branded and third-party websites . 48 as a “ cloud computing ” or software-as-a-service ( saas ) provider , liveperson provides solutions on a hosted basis . this model offers significant benefits over premise-based software , including lower up-front costs , faster implementation , lower total cost of ownership , scalability , cost predictability , and simplified upgrades . organizations that adopt a fully-hosted , multi-tenant architecture that is maintained by liveperson eliminate the majority of the time , server infrastructure costs , and it resources required to implement , maintain , and support traditional on-premise software . more than 18,000 businesses , including hsbc , orange , the home depot , and gm financial use our conversational solutions to orchestrate humans and ai , at scale , and create a convenient , deeply personal relationship with their customers . story_separator_special_tag we believe that ai and machine learning are critical to successfully scaling in the conversational space , and that in order to develop the industry 's leading technology , we need to attract the industry 's best talent . in 2018 , liveperson recruited alex spinelli , key architect of the alexa operating system at amazon.com , as our global cto . under mr. spinelli 's leadership , liveperson opened an advanced technology center in seattle , washington , where the company now has more than 125 of the industry 's brightest data scientists , machine learning engineers and automation engineers , many from firms such as nike , amazon.com , microsoft and target , that are working exclusively on applying ai to conversational . liveperson also expanded its mannheim , germany development center , and added key development talent through the acquisitions of botcentral in mountain view , california and conversable in austin , texas . bring to market best-in-class ai and machine learning technologies designed for the conversational space . we believe that in the last decade many vendors introduced ai and bot offerings that created frustrating experiences for consumers and businesses alike , which in turn has eroded trust in automation . many of these solutions have proven difficult to build and scale , and have been limited by stand alone implementations that lacked the measurement , reporting and human oversight of conversational platforms such as liveengage . in december 2018 , liveperson announced its patent pending ai engine that is designed to overcome these shortcomings and help brands rapidly bring to market conversational ai that can scale to millions of interactions , while increasing customer satisfaction and conversion rates . unlike alternative solutions designed solely for it departments , liveperson 's conversational ai was built to be used by developers and contact center agents . by putting the power of conversational design and bot management in the hands of contact center agents , liveperson 's conversational ai gives brands the ability to leverage the employees closest to the customer , those who are most versed in the voice of the brand , and with the most expertise in how to craft successful outcomes for customer service and sales journeys . some of the key innovations behind liveperson 's conversational ai include : a holistic approach to scaling ai by combining consumer facing bots , agent facing bots , intelligent routing and real-time intent understanding , with an analytics dashboard that helps users focus on the intents that are impacting their business and prioritize which intents to automate next bot building software that is based on dialogue instead of workflow or code , so non-technical employees like contact center agents can design automations leverage a data moat of hundreds of millions of conversations to feed the machine learning that rapidly and accurately detects consumer sentiment and intents in real-time . use intent understanding for advanced routing , next-best actions , and to fully contain conversations with automation the establishing of contact center agents as bot managers , ensuring that every conversation is safeguarded by a human and that agents are continuously training the ai to be smarter and drive more successful outcomes powerful assist technology that multiplies the efficiency of agents by analyzing intents in real time and then suggesting next best actions , predefined content , and bots that can take over transactional work pre-built templates for target verticals that provide out of the box support for the top intents and back-end integrations the ability to bootstrap conversations with existing transcripts , reducing design effort and speeding time to market third-party ai nlu integration , so customers are n't boxed into one vendor ai analytics and reporting tailored to the conversational space , providing brands with immediate , actionable insights about their businesses and contact center operations our strategy is to continue to enhance the conversational ai engine and related products , leveraging our global r & d footprint and substantial library of mobile and online conversational data , with the aim of increasing agent efficiency , decreasing customer care costs , improving the customer experience and increasing customer lifetime value . sustain our leadership position by aligning brands to a vision that transforms how they communicate with consumers and delivers a superior return on investment . we believe that most contact center technology vendors incorrectly view messaging as a feature . they are content with building integrations to a messaging endpoint and offering messaging as just another product in their suite . liveperson holds the perspective that messaging and ai are the foundation for transforming conversational experiences , disrupting how agents operate and how brands engage with consumers across service , sales , marketing , social and brick and mortar . brands must adapt their contact centers to an asynchronous messaging environment and leverage a combination of human agents , bots and ai to achieve scale and efficiencies . when done correctly , the entire consumer lifecycle with a brand will be maintained within the conversational space , and traffic will steadily shift away from lower returning voice calls , websites , emails and apps to higher returning messaging endpoints . 50 we believe that liveperson is uniquely positioned to deliver this transformation due to its technology and expertise : the liveengage enterprise-class , automation-first , cloud-based platform , was designed for ai-assisted and human-powered messaging in mobile and online channels . the platform offers best-in-class security and scalability , offers the broadest ecosystem of messaging endpoints , is designed for ease of use , and features an ai engine custom built for the conversational space , intent recognition , robust real-time reporting , role-based real-time analytics , predictive intelligence , and innovations in customer satisfaction and connection measurement . additionally , liveengage is an open platform with pre-built , enterprise-grade integrations into back-end systems as well as the ability to work across natural language understanding ( nlu ) providers .
| results of operations we are organized into two operating segments for purposes of making operating decisions and assessing performance . the business segment enables brands to leverage liveengage 's sophisticated intelligence engine to connect with consumers through an integrated suite of mobile and online business messaging technologies . the consumer segment facilitates online transactions between experts and users seeking information and knowledge for a fee via mobile and online messaging . the following tables set forth our results of operations for the periods presented and as a percentage of our revenues for those periods . the period-to-period comparison of financial results is not necessarily indicative of future results . replace_table_token_8_th 54 revenue replace_table_token_9_th our business revenue growth has traditionally been driven by a mix of revenue from new customers as well as expansion from existing customers . business revenue increased by 16 % to $ 267.1 million for the year ended december 31 , 2019 , from $ 230.3 million for the year ended december 31 , 2018 . this increase is primarily attributable to revenue from existing customers of approximately $ 13.3 million , net of cancellations , revenue from professional services provided to clients in the amount of $ 8.1 million , revenue from new customers of approximately $ 15.8 million , and partially offset by a decrease in revenue that is variable based on interactions and usage of approximately $ 0.2 million . business revenue increased by 14 % to $ 230.3 million for the year ended december 31 , 2018 , from $ 201.4 million for the year ended december 31 , 2017 .
| 5,730 |
in particular , the statements herein regarding future sales and operating results ; growth or contraction , and trends in the industry and markets in which the company participates ; international events , regulatory or legislative activity , or various economic factors ; product performance ; the generation , protection and acquisition of intellectual property , and litigation related to such intellectual property ; new product introductions ; development of new products , technologies and markets ; natural disasters ; the acquisition of or investment in other entities , including nexplanar corporation ( `` nexplanar '' ) , the potential risks and uncertainties of which include , among others , the reaction of customers of the company and nexplanar to the transaction , the company 's ability to successfully integrate nexplanar 's operations and employees , to maintain , develop and grow nexplanar 's business , and to realize the expected benefits of the acquisition ; uses and investment of the company 's cash balance ; financing facilities and related debt , payment of principal and interest , and compliance with covenants and other terms ; the company 's capital structure ; and the construction and operation of facilities by the company ; and statements preceded by , followed by or that include the words `` intends '' , `` estimates '' , `` plans '' , `` believes '' , `` expects '' , `` anticipates '' , `` should '' , `` could '' or similar expressions , are forward-looking statements . forward-looking statements reflect our current expectations and are inherently uncertain . our actual results may differ significantly from our expectations . we assume no obligation to update this forward-looking information . the section entitled `` risk factors '' describes some , but not all , of the factors that could cause these differences . the following discussion and analysis should be read in conjunction with our historical financial statements and the notes to those financial statements which are included in item 8 of part ii of this form 10-k. overview cabot microelectronics corporation ( `` cabot microelectronics '' , `` the company '' , `` us '' , `` we '' , or `` our '' ) supplies high-performance polishing slurries and pads used in the manufacture of advanced integrated circuit ( ic ) devices within the semiconductor industry , in a process called chemical mechanical planarization ( cmp ) . cmp polishes surfaces at an atomic level , thereby enabling ic device manufacturers to produce smaller , faster and more complex ic devices with fewer defects . we operate predominantly in one industry segment – the development , manufacture and sale of cmp consumables . we develop , produce and sell cmp slurries for polishing many of the conducting and insulating materials used in ic devices , and also for polishing the disk substrates and magnetic heads used in hard disk drives . we also develop , manufacture and sell cmp polishing pads , which are used in conjunction with slurries in the cmp process . we also pursue other demanding surface modification applications through our engineered surface finishes ( esf ) business where we believe we can leverage our expertise in cmp consumables for the semiconductor industry to develop products for demanding polishing applications in other industries . on december 16 , 2014 , we announced that our board of directors had elected david h. li as our president and chief executive officer , and a member of the board , effective january 1 , 2015 , and that as of that date , our then president and chief executive officer , william p. noglows , would continue to serve only as executive chairman of the board through at least december 31 , 2015. on january 5 , 2015 , we announced additional changes to our executive leadership team , including the appointment of two new executive officers effective as of such date . at that same time , we also announced that three of our then-existing executive officers had resigned from such roles , effective december 31 , 2014 , and would subsequently leave our company . 25 on september 28 , 2015 , we announced that on september 27 , 2015 , we had entered into a definitive agreement to acquire nexplanar , a supplier of advanced cmp polishing pad solutions to the semiconductor industry , pursuant to an agreement and plan of merger ( the `` merger agreement '' ) , among the company , nexplanar , and certain other parties , which was filed with the sec as an exhibit to our current report on form 8-k on september 28 , 2015. on october 22 , 2015 , we announced we had completed the acquisition , pursuant to the terms of the merger agreement , and paid the purchase price of approximately $ 142.3 million from our available cash balance . in fiscal 2015 , demand patterns for our products represented a departure from the seasonal demand trends we had experienced during the last three fiscal years . in fiscal years 2012 , 2013 , and 2014 , we experienced weaker demand in the first half of the fiscal year , and stronger demand in the second half , driven by consumer electronics demand around the `` back-to-school '' and holiday periods . in fiscal 2015 , we saw somewhat stronger than `` normal '' seasonal demand in the first half of the fiscal year , followed by softer demand in the second half . the demand patterns that we experienced appear to be consistent with those experienced by some other participants in the semiconductor industry . story_separator_special_tag we will continue to monitor the financial solvency of our customers and , if global economic , or individual customer , conditions weaken , we may have to record additional increases to our allowance for doubtful accounts . as of september 30 , 2015 , our allowance for doubtful accounts represented 2.4 % of gross accounts receivable . if we had increased our estimate of bad debts to 3.4 % of gross accounts receivable , our general and administrative expenses would have increased by $ 0.5 million . warranty reserve we maintain a warranty reserve that reflects management 's best estimate of the cost to replace product that does not meet our specifications and customers ' performance requirements , and costs related to such replacement . the warranty reserve is based upon a historical product replacement rate , adjusted for any specific known conditions or circumstances . should actual warranty costs differ substantially from our estimates , revisions to the estimated warranty liability may be required . as of september 30 , 2015 , our warranty reserve represented 0.2 % of the current quarter revenue . if we had increased our warranty reserve estimate to 1.2 % of the current quarter revenue , our cost of goods sold would have increased by $ 1.2 million . inventory valuation we value inventory at the lower of cost or market and write down the value of inventory for estimated obsolescence or if inventory is deemed unmarketable . an inventory reserve is maintained based upon a historical percentage of actual inventories written off applied against the inventory value at the end of the period , adjusted for known conditions and circumstances . we exercise judgment in estimating the amount of inventory that is obsolete . for instance , we wrote off approximately $ 1.4 million of inventory during the third quarter of fiscal 2015 related to raw material that did not meet our quality requirements . should actual product marketability be affected by conditions that are different from those projected by management , revisions to the estimated inventory reserve may be required . if we had increased our reserve for obsolete inventory at september 30 , 2015 by 10 % , our cost of goods sold would have increased by $ 0.2 million . 27 valuation and classification of auction rate securities as of september 30 , 2015 , we owned two auction rate securities ( ars ) recorded at cost with a par value of $ 5.7 million and an estimated fair value of $ 5.2 million , which are classified as other long-term assets on our consolidated balance sheet and are considered held-to-maturity investments . in general , ars investments are securities with long-term nominal maturities for which interest rates are reset through a dutch auction every seven to 35 days . historically , these periodic auctions provided a liquid market for these securities . beginning in 2008 , general uncertainties in the global credit markets reduced liquidity in the ars market , and this illiquidity continues . our ars , when purchased , were issued by a-rated municipalities . although the credit ratings of both municipalities have been downgraded since our original investment , one of the ars is credit enhanced with bond insurance , and the other has become an obligation of the bond insurer . both ars currently carry a credit rating of aa- by standard & poor 's . we classify these investments as held-to-maturity based on our intention and ability to hold the securities until maturity . although there has been occasional trading activity on these securities , the ars market is not considered active . consequently , we determine the fair value of these securities using level 2 fair value inputs , including trading activity . the calculation of fair value and the balance sheet classification for our ars requires critical judgments and estimates by management , including the probabilities that a security may be monetized through a future successful auction , of a refinancing of the underlying debt , or of a default in payment by the issuer or the bond insurance carrier . an other-than-temporary impairment must be recorded when a credit loss exists ; that is when the present value of the expected cash flows from a debt security is less than the amortized cost basis of the security . however , we believe the gross $ 0.5 million unrecognized loss on these securities is due to illiquidity in the ars market rather than credit loss . if auctions involving our ars continue to fail , if issuers of our ars are unable to refinance the underlying securities , if the issuing municipalities are unable to pay their debt obligations and the bond insurance fails , or if credit ratings decline or other adverse developments occur in the credit markets , we may not be able to monetize our securities in the near term and may be required to adjust the carrying value of these instruments through an impairment charge that may be deemed other-than-temporary . impairment of long-lived assets and investments we assess the recoverability of the carrying value of long-lived assets , including finite lived intangible assets , whenever events or changes in circumstances indicate that the assets may be impaired . we perform a periodic review of our long-lived assets to determine if such impairment indicators exist . we must exercise judgment in assessing whether an event of impairment has occurred . for purposes of recognition and measurement of an impairment loss , long-lived assets are either individually identified or grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities . we must exercise judgment in this grouping . if the sum of the undiscounted future cash flows expected to result from the identified asset group is less than the carrying value of the asset group , an impairment provision may be required .
| results of operations the following table sets forth , for the periods indicated , the percentage of revenue of certain line items included in our historical statements of income : replace_table_token_6_th 31 year ended september 30 , 2015 , versus year ended september 30 , 2014 revenue revenue was $ 414.1 million in fiscal 2015 , which represented a decrease of 2.5 % , or $ 10.6 million , from fiscal 2014. the decrease in revenue was primarily due to a $ 12.0 million decrease in sales volume , a $ 7.5 million decrease due to the effect of foreign exchange rate changes , primarily due to the weakening of the japanese yen and the korean won versus the u.s. dollar , and $ 1.9 million due to changes in average selling prices . these decreases were partially offset by a $ 10.8 million increase due to product mix . the decrease in revenue from fiscal 2014 reflects continued softness of demand in the in global semiconductor industry and the loss of approximately $ 20.0 million in annualized legacy dielectrics slurry business for lower-performing applications for 200 millimeter wafers , as noted in the `` overview '' above and discussed in our quarterly reports on form 10-q for the quarters ended march 31 , 2015 and june 30 , 2015. we also generated lower revenue from our slurries for polishing aluminum and data storage applications , as well as from our polishing pads . these decreases were partially offset by increased revenue from our slurries for polishing tungsten , which generated record annual revenue , and increased revenue from our esf products . cost of goods sold total cost of goods sold was $ 201.9 million in fiscal 2015 , which represented a decrease of 8.9 % , or $ 19.7 million , from fiscal 2014. the decrease in cost of goods sold was primarily due to a $ 12.3 million decrease due to product mix , an $ 8.9
| 5,731 |
we have three operating divisions : ( a ) security , providing security and inspection systems and turnkey security screening solutions ; ( b ) healthcare , providing patient monitoring , diagnostic cardiology and anesthesia systems ; and ( c ) optoelectronics and manufacturing , providing specialized electronic components for our security and healthcare divisions , as well as to third parties for applications in the defense and aerospace markets , among others . security division . through our security division , we provide security screening , threat detection and non-intrusive inspection products and services worldwide , and provide turnkey security screening solutions . these products and services are used to inspect baggage , cargo , vehicles and other objects for weapons , explosives , drugs , radioactive material and other contraband as well as to screen people . revenues from our security division accounted for 49 % of our total consolidated revenues for fiscal 2014. as a result of the terrorist attacks of september 11 , 2001 , and subsequent attacks in other locations worldwide , security and inspection products have increasingly been used at a wide range of facilities other than airports , such as border crossings , railway stations , seaports , cruise line terminals , freight forwarding operations , sporting venues , government and military installations and nuclear facilities . we believe that our wide-ranging product portfolio together with our ability to provide turnkey screening solutions position us to competitively pursue security and inspection opportunities as they arise throughout the world . currently , the u.s. federal government is discussing various options to address sequestration and the u.s. federal government 's overall fiscal challenges and we can not predict the outcome of these efforts . while we believe that national security spending will continue to be a priority , u.s. government budget deficits and the national debt have created increasing pressure to examine and reduce spending across many federal agencies . we believe that the diversified product portfolio and international customer mix of our security division position us well to withstand the impact of these uncertainties and even benefit from specific initiatives within various governments . however , depending on how future sequestration cuts are implemented and how the u.s. federal government manages its fiscal challenges , we believe that these federal actions could have a material , adverse effect on our business , financial condition and results of operations . on december 5 , 2013 , we were notified by the u.s. transportation security administration ( tsa ) that a delivery order that we had received on september 26 , 2013 , for baggage and handling inspection systems was being terminated for default . the termination resulted from the use of an upgraded x-ray generator component . while the component had been vetted by our security division 's internal quality assurance , we had not met the contractual requirement of obtaining the tsa 's approval in advance . the upgraded x-ray generator component has since been approved for use by the tsa . as a result of this termination for default , we were referred to the u.s. department of homeland security ( dhs ) for further review . although the results of this review can not be determined at this time , among other consequences , we could be barred from conducting future business with the u.s. government for a period of time . we are continuing to work to complete the review process with dhs , but the timing of the completion of this process and the ultimate outcome are currently unknown . healthcare division . through our healthcare division , we design , manufacture , market and service patient monitoring , diagnostic cardiology and anesthesia delivery and ventilation systems worldwide for sale primarily to hospitals and medical centers . our products monitor patients in critical , emergency and perioperative care areas of the hospital and provide such information , through wired and wireless networks , to physicians and nurses who may 51 be at the patient 's bedside , in another area of the hospital or even outside the hospital . revenues from our healthcare division accounted for 24 % of our total consolidated revenues for fiscal 2014. the healthcare markets in which we operate are highly competitive . we believe that our customers choose among competing products on the basis of product performance , functionality , value and service . in addition , there is continued uncertainty regarding the ongoing debates related to the u.s. budget , the debt ceiling and the affordable care act , any of which may impact hospital spending , third-party payor reimbursement and fees to be levied on certain medical device revenues , any of which could adversely affect our business and results of operations . in addition , hospital capital spending appears to have been impacted by strategic uncertainties surrounding the affordable care act and economic pressures . we also believe that the economic slowdown has caused some hospitals and healthcare providers to delay purchases of our products and services . during this period of uncertainty , sales of our healthcare products may be negatively impacted . although there are indications that a general economic recovery is underway , we can not predict when the markets will fully recover or when the uncertainties related to the u.s. federal government will be resolved and , therefore , when this period of delayed and diminished purchasing will end . a prolonged delay could have a material adverse effect on our business , financial condition and results of operations . optoelectronics and manufacturing division . through our optoelectronics and manufacturing division , we design , manufacture and market optoelectronic devices and provide electronics manufacturing services globally for use in a broad range of applications , including aerospace and defense electronics , security and inspection systems , medical imaging and diagnostics , telecommunications , office automation , computer peripherals , industrial automation , automotive diagnostic systems , gaming systems and consumer products . story_separator_special_tag the process of estimating the fair value of stock-based compensation awards and recognizing stock-based compensation cost over their requisite vesting period involves significant assumptions and judgments . we estimate the fair value of stock option awards on the date of grant using the black-scholes option-valuation model which requires that we make certain assumptions regarding : ( i ) the expected volatility in the market price of our common stock ; ( ii ) dividend yield ; ( iii ) risk-free interest rates ; and ( iv ) the period of time employees are expected to hold the award prior to exercise . we estimate the fair value of restricted stock and restricted stock unit awards on the date of the grant using the market price of our common stock on that date . in addition , we are required to estimate the expected impact of forfeited awards and recognize stock-based compensation cost only for those awards expected to vest . if actual forfeiture rates differ materially from our estimates , stock-based compensation expense could differ significantly from the amounts we have recorded in the current period . we periodically review actual forfeiture experience and revise our estimates , as necessary . we recognize the cumulative effect on current and prior periods change in the estimated forfeiture rate as compensation cost in earnings in the period of the revision . as a result , if we revise our assumptions and estimates , our stock-based compensation expense could change materially in the future . certain shares of restricted stock and restricted stock units vest based upon the achievement of pre-established performance goals . we estimate the fair value of performance-based awards at the date of grant and the probability that the specified performance criteria will be met , adjusted for estimated forfeitures . each quarter we update our assessment of the probability that the specified performance criteria will be achieved and adjust our estimate of the fair value of the performance-based awards if necessary . we amortize the fair values of performance-based awards over the requisite service period adjusted for estimated forfeitures for each separately vesting tranche of the award . see note 7 to the consolidated financial statements for a further discussion of stock-based compensation . legal and other contingencies . we are subject to various claims and legal proceedings . we review the status of each significant legal dispute to which we are a party and assess our potential financial exposure , if any . if the potential financial exposure from any claim or legal proceeding is considered probable and the amount can be reasonably estimated , we record a liability and an expense for the estimated loss . significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable . 55 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 our pending claims and litigation and revise our estimates accordingly . such revisions in the estimates of the potential liabilities could have a material impact on our results of operations and financial position . net revenues the table below and the discussion that follows are based upon the way we analyze our business . see note 13 to the consolidated financial statements for additional information about business segments . replace_table_token_8_th fiscal 2014 compared with fiscal 2013. net revenues for fiscal 2014 increased $ 104.7 million , or 13 % , to $ 906.7 million from $ 802.0 million for fiscal 2013. revenues for the security division for fiscal 2014 increased $ 68.2 million , or 18 % , to $ 440.4 million , from $ 372.2 million for fiscal 2013. the increase was primarily attributable to a $ 52.0 million increase in revenue from our turnkey screening services in mexico as the program ramped up in fiscal 2014 , and due to growth in the sales of cargo equipment , which increased $ 33.5 million , including the partial fulfillment of a large foreign military sale to the u. s. department of defense . these increases were partially offset by a decrease in the sales of baggage and parcel inspection equipment of $ 20.2 million . revenues for the healthcare division for fiscal 2014 decreased $ 9.0 million , or 4 % , to $ 222.3 million , from $ 231.3 million for fiscal 2013. the decrease was primarily attributable to an $ 8.7 million , or 5 % , decrease in our patient monitoring product line sales mainly in our north american region as certain hospitals have delayed capital spending . revenues for the optoelectronics and manufacturing division for fiscal 2014 increased $ 45.5 million , or 23 % , to $ 244.0 million from $ 198.5 million for fiscal 2013 . $ 28.0 million of this increase was attributable to businesses we acquired during the fiscal year . the remaining $ 17.5 million organic growth , or 9 % , was driven by a $ 25.1 million increase in contract manufacturing sales primarily to customers in the consumer products and industrial businesses , partially offset by a $ 7.6 million decrease in commercial optoelectronics sales mainly caused by reduced aerospace and defense industry spending . fiscal 2013 compared with fiscal 2012. net revenues for fiscal 2013 increased $ 9.0 million , or 1 % , to $ 802.0 million from $ 793.0 million for fiscal 2012. revenues for the security division for fiscal 2013 decreased $ 19.6 million , or 5 % , to $ 372.2 million , from $ 391.8 million for fiscal 2012. in fiscal 2012 , we recognized $ 94.7 million in revenues related to a single large contract where we served as a prime contractor and hardware systems integrator that was substantially completed in the fourth quarter of the prior year .
| consolidated results fiscal 2014 compared with fiscal 2013. we reported consolidated operating profit of $ 81.3 million for fiscal 2014 , a $ 6.9 million or 9 % improvement over the $ 74.4 million operating profit reported for fiscal 2013. this improved profitability was driven primarily by a 13 % increase in sales , which resulted in a $ 14.6 million increase in gross profit . this increase was partially offset by a $ 7.1 million increase in sg & a expenses to support our growth and a $ 4.0 million increase in impairment , restructuring and other charges . fiscal 2013 compared with fiscal 2012. we reported consolidated operating profit of $ 74.4 million for fiscal 2013 , an $ 8.5 million or 13 % improvement over the $ 65.9 million operating profit reported for fiscal 2012. this improved profitability was driven primarily by a 2.3 % improvement in our gross margin , which resulted in a $ 21.8 million increase in gross profit which was partially offset by a $ 6.7 million or 3 % increase in operating expenses to support our growth initiatives and by a $ 6.6 million increase in impairment , restructuring and other charges . acquisitions . historically , an active acquisition program has been an important element of our corporate strategy . over the past three years , each of our acquisitions has not been considered materially significant , either individually or in the aggregate . we continue to believe that an active acquisition program supports our long-term strategic goals and we intend to look to acquisitions to strengthen our competitive position , expand our customer base and augment our considerable research and development programs . through such efforts we aim to accelerate innovation , improve earnings and increase overall stockholder value .
| 5,732 |
goodwill story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with the 'selected consolidated financial data ' and our consolidated financial statements and related notes thereto included elsewhere in this report . in addition to historical consolidated financial information , the following discussion contains forward-looking statements that reflect our plans , estimates and beliefs . our actual results could differ materially and adversely from those anticipated in the forward-looking statements . please see the sections entitled “ special note regarding forward-looking statements ” and `` risk factors '' above for a discussion of the uncertainties , risks and assumptions associated with these statements . on february 5 , 2016 , we were acquired by affiliates of silver lake and thoma bravo in a take private transaction , or the take private . we applied purchase accounting on the date of the take private . we refer to the company as predecessor in the periods before the take private and successor in the subsequent periods . although the period from january 1 , 2016 to february 4 , 2016 relates to the predecessor and the period from february 5 , 2016 to december 31 , 2016 relates to the successor , to assist with the period-to-period comparison , we have combined these periods as a sum of the amounts without any other adjustments and refer to the combined period as the combined year ended december 31 , 2016. unless otherwise indicated , all results presented for 2016 represent the combined year ended december 31 , 2016. this combination does not comply with gaap or with the rules for pro forma presentation . overview solarwinds is a leading provider of information technology , or it , infrastructure management software . our products give organizations worldwide , regardless of type , size or it infrastructure complexity , the power to monitor and manage the performance of their it environments , whether on-premise , in the cloud , or in hybrid models . we combine powerful , scalable , affordable , easy to use products with a high-velocity , low-touch sales model to grow our business while also generating significant cash flow . we offer over 50 products to monitor and manage network , systems , desktop , application , storage , database and website infrastructures , whether on-premise , in the public or private cloud or in a hybrid it infrastructure . we intend to continue to innovate and invest in areas of product development that bring new products to market and enhance the functionality , ease of use and integration of our current products . we believe this will strengthen the overall value proposition of our products in any it environment . financial highlights key financial highlights for the period include the following : replace_table_token_4_th ( 1 ) see `` non-gaap financial measures '' for a reconciliation of our gaap to non-gaap results . business highlights highlights for the fourth quarter of 2018 include : solarwinds introduced solarwinds apm ( application performance monitor ) to deliver application support for it operations and devops teams . solarwinds apm extends the application monitoring capabilities of solarwinds server & application monitor ( sam ) to provide in-depth , code-level monitoring of custom applications . the new solution is designed to deliver deeper performance insights and distributed transaction tracing capabilities across applications hosted in or across on-premise , hybrid it , and cloud environments . 39 solarwinds released database performance analyzer v12.0 , a powerful database and query performance monitoring , analysis , and tuning tool built for many of today 's popular databases . the latest enhancements are designed to help database professionals quickly identify and pinpoint the root cause of slow database queries , and easily optimize database tables to help ensure the speed of business-critical applications that rely on them . solarwinds also expanded its rmm capabilities for msps with network device monitoring . network device monitoring is built to give msps the visibility they need to monitor customer switches , printers , routers , and firewalls—in addition to servers and workstations—from a single pane of glass . with greater visibility into the complete network , msps can proactively maintain network devices by getting information on hardware health , performance , and utilization . initial public offering in october 2018 , we completed our ipo , in which we sold and issued 25,000,000 shares of our common stock at an issue price of $ 15.00 per share . we raised a total of $ 375.0 million in gross proceeds from the offering , or approximately $ 353.0 million in net proceeds after deducting underwriting discounts and commissions of $ 17.8 million and offering-related expenses of approximately $ 4.2 million . a portion of the net proceeds from the offering were used to repay the $ 315.0 million in borrowings outstanding under our second lien term loan . in connection with the voluntary prepayment of the second lien term loan , we paid a $ 14.2 million prepayment fee . financial model our solarwinds model has allowed us to grow while maintaining high levels of operating efficiency . our total revenue was $ 833.1 million , $ 728.0 million and $ 469.4 million for the years ended december 31 , 2018 , 2017 and 2016 , respectively . our non-gaap total revenue was $ 836.8 million , $ 741.0 million and $ 630.8 million for the years ended december 31 , 2018 , 2017 and 2016 , respectively . recurring revenue , which consists of subscription and maintenance revenue , represented over 80 % of our total revenue for the year ended december 31 , 2018 . we have increased our recurring revenue as a result of the growth in our subscription sales and the continued growth of our maintenance revenue . we derive subscription revenue from the sale of our cloud management and msp products . story_separator_special_tag allocated costs consist of certain facilities , depreciation , benefits and it costs allocated based on headcount . amortization of acquired technologies . we amortize to cost of revenue the capitalized costs of technologies acquired in connection with the take private and our other acquisitions . operating expenses operating expenses consists of sales and marketing , research and development and general and administrative expenses as well as amortization of acquired intangibles . personnel costs are the most significant component of operating expenses and consist of salaries , benefits , bonuses , sales commissions , stock-based compensation , contractor fees and an allocation of overhead costs based on headcount . sales and marketing . sales and marketing expenses primarily consist of related personnel costs , including our sales , marketing and maintenance renewal and subscription retention teams . sales and marketing expenses also includes the cost of digital marketing programs such as paid search , search engine optimization and management , website maintenance and design . we expect to continue to hire personnel globally to drive new sales and maintenance renewals . research and development . research and development expenses primarily consist of related personnel costs . we expect to continue to grow our research and development organization , particularly internationally . general and administrative . general and administrative expenses primarily consist of personnel costs for our executive , finance , legal , human resources and other administrative personnel , general restructuring charges and other acquisition-related costs , professional fees and other general corporate expenses . in the periods after the take private and prior to 41 our initial public offering , these expenses also included management fees payable to our sponsors , which were eliminated upon the completion of our initial public offering . amortization of acquired intangibles . we amortize to operating expenses the capitalized costs of intangible assets acquired in connection with the take private and our other acquisitions . other income ( expense ) other income ( expense ) primarily consists of interest expense , gains ( losses ) resulting from changes in exchange rates on foreign currency denominated intercompany loans , and losses on extinguishment of debt . we expect interest expense to decrease as we repay indebtedness . we established a foreign currency denominated intercompany loan as part of the take private to provide a conduit to utilize foreign earnings effectively . until any cash payments are made with respect to this loan , the gains ( losses ) associated with the changes in exchange rates on amounts borrowed are unrealized non-cash events . substantially all of these unrealized amounts are related to this one foreign currency denominated loan . as of july 1 , 2018 , this foreign currency denominated intercompany loan was designated as long-term due to a change in our investment strategy and the new tax act . therefore , beginning on july 1 , 2018 , the foreign currency transaction gains and losses resulting from remeasurement are recognized as a component of accumulated other comprehensive income ( loss ) . foreign currency as a global company , we face exposure to adverse movements in foreign currency exchange rates . fluctuations in foreign currencies impact the amount of total assets , liabilities , revenue , operating expenses and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into u.s. dollars . see “ item 7a : quantitative and qualitative disclosures about market risk ” for additional information on how foreign currency impacts our financial results . income tax expense income tax expense consists of domestic and foreign corporate income taxes related to the sale of products . the tax rate on income earned by our north american entities is higher than the tax rate on income earned by our international entities . we expect the income earned by our international entities to grow over time as a percentage of total income , which may result in a decline in our effective income tax rate . however , our effective tax rate will be affected by many other factors including changes in tax laws , regulations or rates , new interpretations of existing laws or regulations , shifts in the allocation of income earned throughout the world and changes in overall levels of income before tax . the tax act was enacted on december 22 , 2017. the tax act reduces the u.s. federal corporate tax rate from 35 % to 21 % , requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that have not been taxed previously in the u.s. and creates new taxes on certain foreign sourced earnings . for additional discussion about our income taxes , see note 15. income taxes in the notes to consolidated financial statement s included in item 8 of part ii of this annual report on form 10-k. critical accounting policies and estimates our consolidated financial statements are prepared in conformity with gaap and require our management to make estimates and assumptions that affect the reported amounts of assets , liabilities , revenue , costs and expenses and related disclosures . we base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances . actual results may differ from these estimates , and such estimates may change if the underlying conditions or assumptions change . to the extent that there are differences between our estimates and actual results , our future financial statement presentation , financial condition , results of operations and cash flows will be affected , perhaps materially . in many cases , the accounting treatment of a particular transaction is specifically dictated by gaap and does not require management 's judgment in its application , while in other cases , management 's judgment is required in selecting among available alternative accounting standards that allow different accounting treatment for similar transactions .
| results of operations the comparability of our operating results in fiscal 2018 and 2017 compared to fiscal 2016 was impacted by our accounting for acquisitions , including the take private , and related activities . we account for acquired businesses using the acquisition method of accounting , which requires that the assets acquired and liabilities assumed , including deferred revenue , be recorded at the date of acquisition at their respective fair values which could differ from the historical book values . in most cases , adjusting the acquired deferred revenue balances to fair value on the date of the relevant acquisition had the effect of reducing the historical deferred revenue balance and therefore reducing the revenue recognized in subsequent periods . the following table sets forth our results of operations for the periods indicated : replace_table_token_5_th 46 comparison of the years ended december 31 , 2018 and 2017 revenue replace_table_token_6_th the impact to revenue as a result of purchase accounting adjustments during the relevant periods were as follows : replace_table_token_7_th total revenue increased $ 105.1 million , or 14.4 % , for the year ended december 31 , 2018 compared to the year ended december 31 , 2017 . revenue from north america was approximately 65 % and 67 % of total revenue for the years ended december 31 , 2018 and 2017 , respectively . other than the united states , no single country accounted for 10 % or more of our total revenue during these periods . recurring revenue subscription revenue . subscription revenue increased $ 51.8 million , or 24.3 % , for the year ended december 31 , 2018 compared to the year ended december 31 , 2017 , primarily due to sales of additional cloud management and msp products . our subscription revenue increased as a percentage of our total revenue for the year ended december 31 , 2018 compared to the year ended december 31 , 2017 .
| 5,733 |
● hvac & gas products—includes commercial high-efficiency boilers , water heaters and heating solutions , hydronic and electric heating systems for under-floor radiant applications , custom heat and hot water solutions , hydronic pump groups for boiler manufacturers and alternative energy control packages , and flexible stainless steel connectors for natural and liquid propane gas in commercial food service and residential applications . hvac is an acronym for heating , ventilation and air conditioning . ● drainage & water re-use products—includes drainage products and engineered rain water harvesting solutions for commercial , industrial , marine and residential applications . ● water quality products—includes point-of-use and point-of-entry water filtration , conditioning and scale prevention systems , monitoring and metering products for commercial , marine and residential applications . our business is reported in three geographic segments : americas , europe , and apmea . we distribute our products through four primary distribution channels : wholesale , original equipment manufacturers ( oems ) , specialty , and do-it-yourself ( diy ) . we believe that the factors relating to our future growth include continued product innovation , including smart and connected products and solutions that meet the needs of our customers and our end markets ; our ability to make selective acquisitions , both in our core markets as well as in new complementary markets ; regulatory requirements relating to the quality and conservation of water and the safe use of water ; increased demand for clean water ; and continued enforcement of plumbing and building codes . we have completed 12 acquisitions in the last decade . our acquisition strategy focuses on businesses that promote our key macro themes around safety & regulation , energy efficiency and water conservation . we target businesses that will provide us with one or more of the following : an entry into new markets and or new geographies , improved channel access , unique and or proprietary technologies , advanced production capabilities or complementary solution offerings . our innovation strategy is focused on differentiated products and solutions that provide greater opportunity to distinguish ourselves in the marketplace . conversely , we continue to migrate away from commoditized products where it is more difficult to add value . our goal is to be a solutions provider , not merely a components supplier . we continually look for strategic opportunities to invest in new products and markets or divest existing product lines where necessary in order to meet those objectives . products representing a majority of our sales are subject to regulatory standards and code enforcement , which typically require that these products meet stringent performance criteria . we have consistently advocated for the development and enforcement of such plumbing codes . we are focused on maintaining stringent quality control and testing procedures at each of our manufacturing facilities in order to manufacture products in compliance with code requirements and take advantage of the resulting demand for compliant products . we believe that the product development , product testing capability and investment in plant and equipment needed to manufacture products in compliance with code requirements , represent a competitive advantage for us . in 2019 , our financial performance was driven by strong organic sales growth in the americas and modest growth in europe and apmea . we achieved margin expansion through price , volume and savings from productivity initiatives while simultaneously reinvesting in the business . we continued to drive commercial and operational excellence , and invest in product innovation , including our smart and connected products and solutions , as we strive to meet the needs of our customers . overall , sales for 2019 increased 2.3 % , or $ 35.6 million , compared to 2018. the increase included organic sales growth of 4.0 % , or $ 62.8 million , as we experienced growth across all of our segments . this was partially offset by a decrease from foreign exchange of 1.8 % , or $ 29.4 million , primarily driven by a weaker euro . organic sales is a non-gaap measure that excludes the impacts of acquisitions , divestitures and foreign exchange from year-over-year comparisons . management believes reporting organic sales growth provides useful information to investors , potential investors and 24 others , because it allows for a more complete understanding of underlying sales trends by providing sales growth on a consistent basis . we reconcile the change in organic sales to our reported sales for each region within our results below . operating income of $ 197.1 million increased by $ 8.7 million , or 4.6 % , compared to 2018. this increase is primarily driven by price , volume and savings from productivity initiatives , including savings from restructuring actions , partially offset by higher general inflation including tariffs , strategic investments , and increased corporate expenses . management 's discussion and analysis of our financial condition , results of operations and cash flows as of and for the year ended december 31 , 2017 can be found in item 7 of part ii , “ management 's discussion and analysis of financial condition and results of operations , ” in our annual report on form 10-k for the year ended december 31 , 2018 . acquisitions in the third quarter of 2019 we purchased substantially all the assets of backflow direct llc , based in rancho cordova , california . backflow direct specializes in the design and manufacture of backflow prevention valves used primarily in fire protection applications . story_separator_special_tag we used $ 105.6 million of net cash from financing activities in 2019 primarily due to payments of long-term debt of $ 127.0 million , dividend payments of $ 31.4 million , and payments to repurchase approximately 228,000 shares of class a common stock at a cost of $ 19.5 million . these outflows were partially offset by proceeds from additional drawdowns on our revolving credit facility of $ 82.0 million . in february 2016 , we entered into a credit agreement among the company , certain subsidiaries of the company who become borrowers under the credit agreement , jpmorgan chase bank , n.a. , as administrative agent , swing line lender and letter of credit issuer , and the other lenders referred to therein . the credit agreement provides for a $ 500 million , five-year , senior unsecured revolving credit facility ( the “ revolving credit facility ” ) with a sublimit of up to $ 100 million in letters of credit . as of december 31 , 2019 , we had drawn $ 10.0 million against the revolving credit facility . the credit agreement also provides for a $ 300 million , five-year , term loan facility ( the “ term loan facility ” ) available to the company in a single draw , of which the entire $ 300 million had been drawn in february 2016. we had $ 225.0 million of borrowings outstanding on the term loan facility as of december 31 , 2019. we paid total installments on the term loan facility of $ 30.0 million during 2019. we had $ 25.8 million of stand-by letters of credit outstanding and had $ 464.2 million of unused and available credit under the revolving credit facility . we have historically financed our operating and capital needs primarily through cash flows generated by our operations . we expect to continue funding future operating requirements principally through our cash flows from operations , in addition to existing cash resources . we believe that our existing funds , when combined with cash generated from operations and our ability to access additional financing resources , if needed , are sufficient to satisfy our operating , working capital , strategic investments , capital expenditure and debt service requirements for the foreseeable future , including repayment of our $ 75 million senior notes due in june 2020. in addition , we may choose to opportunistically return cash to shareholders and pursue other business initiatives , including acquisition activities . we may , from time to time , also seek additional funding through a combination of equity and debt financings should we identify a significant new opportunity . as of december 31 , 2019 , we held $ 219.7 million in cash and cash equivalents . of this amount , $ 168.4 million was held by foreign subsidiaries . our u.s. operations typically generate sufficient cash flows to meet our domestic obligations . however , if we did have to borrow to fund some or all of our expected cash outlay , we can do so at reasonable interest rates by utilizing the uncommitted borrowings under our revolving credit facility . subsequent to recording the toll tax as part of the tax cuts and jobs act 2017 , our intent is to permanently reinvest undistributed earnings of foreign 28 subsidiaries , and we do not have any current plans to repatriate foreign earnings to fund operations in the united states . however , if amounts held by foreign subsidiaries were needed to fund operations in the united states , we could be required to accrue and pay taxes to repatriate these funds . such charges may include potential state income taxes and other tax charges . covenant compliance under the credit agreement , we are required to satisfy and maintain specified financial ratios and other financial condition tests as of december 31 , 2019. the financial ratios include a consolidated interest coverage ratio based on consolidated earnings before income taxes , interest expense , depreciation , and amortization ( consolidated ebitda ) to consolidated interest expense , as defined in the credit agreement . our credit agreement defines consolidated ebitda to exclude unusual or non-recurring charges and gains . we are also required to maintain a consolidated leverage ratio of consolidated funded debt to consolidated ebitda . consolidated funded debt , as defined in the credit agreement , includes all long and short-term debt , capital lease obligations and any trade letters of credit that are outstanding , less cash on the balance sheet that exceeded $ 50 million . as of december 31 , 2019 , our actual financial ratios calculated in accordance with our credit agreement compared to the required levels under the credit agreement were as follows : actual ratio required level minimum level interest charge coverage ratio 19.29 to 1.00 3.50 to 1.00 maximum level leverage ratio 0.53 to 1.00 3.25 to 1.00 as of december 31 , 2019 , we were in compliance with all covenants related to the credit agreement . we have one senior note agreement as further detailed in note 11 of notes to consolidated financial statements in this annual report form 10-k. this senior note agreement requires us to maintain a fixed charge coverage ratio of consolidated ebitda plus consolidated rent expense during the period to consolidated fixed charges . consolidated fixed charges are the sum of consolidated interest expense for the period and consolidated rent expense .
| results of operations year ended december 31 , 2019 compared to year ended december 31 , 2018 net sales . our business is reported in three geographic segments : americas , europe and apmea . our net sales in each of these segments for the years ended december 31 , 2019 and december 31 , 2018 were as follows : replace_table_token_3_th 25 the change in net sales was attributable to the following : replace_table_token_4_th our products are sold to wholesalers , oems , diy chains , and through various specialty channels . the change in organic net sales by channel was attributable to the following : replace_table_token_5_th the increase in americas organic net sales was primarily due to a combination of price and volume across our valve , drainage , and water quality products , which are sold through each of our channels , and our heating and hot water products , which are sold through the specialty channel . organic net sales in europe increased primarily due to price and volume . the increase in wholesale sales was driven by our drainage and valve products . the increase in oem sales was mainly due to increases in certain hvac and electronics products . organic net sales in apmea increased primarily due to increased commercial valve and underfloor heating sales in china . this was partially offset by softness within korea and australia . the net decrease in sales due to foreign exchange was primarily due to the depreciation of the euro , chinese yuan , and canadian dollar against the u.s. dollar in 2019 compared to 2018. we can not predict whether foreign currencies will appreciate or depreciate against the u.s. dollar in future periods or whether future foreign exchange rate fluctuations will have a positive or negative impact on our net sales . gross profit .
| 5,734 |
overview liberty tripadvisor holdings , inc. ( “ tripco ” or the “ company ” ) holds its subsidiary tripadvisor , inc. ( “ tripadvisor ” ) and held its former subsidiary , buyseasons , inc. ( “ buyseasons ” ) until buyseasons was sold on june 30 , 2017. as of december 31 , 2019 , tripco held an approximate 23 % equity interest and 58 % voting interest in tripadvisor . the financial information represents the historical consolidated results of tripco and its subsidiaries as discussed in note 1 in the accompanying consolidated financial statements . in the following discussion , tripco and its subsidiaries are referred to as “ tripco , ” “ the company , ” “ us , ” “ we ” and “ our ” in the notes to the consolidated financial statements . all significant intercompany accounts and transactions have been eliminated in the consolidated financial statements . our “ corporate and other ” category includes our interest in buyseasons , until its disposition on june 30 , 2017 , and corporate expenses . strategies and challenges story_separator_special_tag results . tripadvisor believes executing its long-term growth strategy can enable tripadvisor to deepen customer engagement on its platform , monetize its influence and stabilize – and eventually grow – hotels , media & platform segment revenue . for example , in tripadvisor-branded display and platform revenue , tripadvisor enables travel partners to amplify their brand , generate brand impressions , and potentially drive qualified leads and bookings for their businesses . historically , tripadvisor has limited both the type and number of display-based advertising opportunities it makes available to travel partners , particularly on mobile phone , which , in turn , has limited display-based advertising revenue growth . however , tripadvisor is working on initiatives to better leverage its audience , content , data , travel influence and platform breadth to open up new media advertising opportunities through a more modern , high-powered advertising suite spanning native , video and programmatic solutions . tripadvisor also intends to deliver this broadened solution to a larger set of advertising travel endemic and non-travel endemic advertising partners , including industries such as airlines , finance and beauty . in addition , tripadvisor is focused on initiatives to increase its traffic quality and deepen customer engagement on its platform , including membership growth , personalization , and mobile app initiatives tripadvisor believes can lead to increased monetization over time in this segment . for example , there remains not only an opportunity to continue to grow its member base , but also to deepen member engagement by making membership more valued , through building communities and leveraging content to further personalize trip-planning features . ii-4 experiences & dining segment during 2019 , tripadvisor 's experiences & dining segment growth strategy prioritized near-term investments for platform expansion and bookings and revenue growth . tripadvisor has increased investments in product , supply and marketing to enhance its long-term growth prospects . tripadvisor has done this by , for example , growing bookable supply in newer experience categories in lower-priced options , such as events , tickets , and other experiences , and also non-english markets and mobile offerings . these categories have grown rapidly and added to tripadvisor 's total bookable experience products , which reached approximately 345,000 as of december 31 , 2019. tripadvisor believes offering consumers more selection can contribute to its goals to build deeper , more durable consumer relationships with its platform . tripadvisor also continues to seek selective acquisition opportunities in this segment . for example , in december 2019 , tripadvisor acquired u.k.-based bookatable , which offers an online restaurant reservation and booking platform . this further strengthens tripadvisor 's position in certain of its existing european markets as well as expands it into new countries , such as the u.k. , germany , austria , finland and norway . once fully integrated , bookatable should add approximately 14,000 more restaurants to thefork 's online restaurant booking platform , which , including booktable , had approximately 84,000 total bookable restaurants , as of december 31 , 2019. over the long-term , tripadvisor 's experiences and dining offerings enable tripadvisor to deliver consumers a more comprehensive experience , which tripadvisor believes will increase awareness of , loyalty to , and engagement with its products , drive more bookings to experiences and dining partners and generate greater revenue and increased profitability on its platform . given the significant market opportunities in these large and growing categories , as well as competition aiming to provide consumers a similar multimodal experience , tripadvisor expects to continue to invest to drive bookings and revenue growth . corporate and other corporate and other is a combination of rentals , flights/cruises/car , smartertravel , and tripadvisor china business units . in 2019 , tripadvisor contributed a portion of its business in china , including a long-term exclusive brand and content license and other assets , to form a new entity with ctrip investment holding ltd. , in return for a 40 % equity ownership interest . this investment is being accounted for as an equity method investment . profits have been relatively stable to positive and revenue has declined in recent periods primarily due to strategic re-alignments and resource re-allocation to other areas of business . tripadvisor operates these offerings opportunistically as they complement its overall strategic objectives to deliver more value to consumers and travel partners . ii-5 results of operations—consolidated general . we provide in the tables below information regarding our historical consolidated operating results and other income and expense , as well as information regarding the contribution to those items from our reportable segments . replace_table_token_4_th ii-6 revenue . tripadvisor 's hotels , media & platform revenue decreased by $ 62 million and $ 21 million for the years ended december 31 , 2019 and 2018 , respectively , as compared to the corresponding prior year periods . story_separator_special_tag corporate and other revenue , which primarily includes click-based advertising and display-based advertising revenue from rentals , and flights , cruises and car offerings on tripadvisor and non-tripadvisor branded websites , such as www.smartertravel.com , www.bookingbuddy.com , www.cruisecritic.com and www.onetime.com , decreased by $ 77 million or 32 % , and $ 41 million or 14 % during the years ended december 31 , 2019 and 2018 , respectively , when compared to the same periods in 2018 and 2017. this was primarily driven by the elimination of some marginal and unprofitable revenue within these offerings near the end of 2018 , as well as strategic resource re-allocation of investment across other areas of tripadvisor 's business and continued competition in the rentals offering . operating expense . the most significant drivers of operating expense are technology and content costs , which increased by $ 15 million during the year ended december 31 , 2019 when compared to the same period in 2018 , primarily due to additional headcount in the experiences & dining segment to support business growth , partially offset by a decrease of personnel and overhead costs in corporate and other as a result of strategic personnel re-allocation across the business . technology and content costs increased by $ 21 million during the year ended december 31 , 2018 , when compared to the same period in 2017 , primarily due to increased personnel and overhead costs , primarily as a result of an increase to headcount to support the business growth in tripadvisor 's experiences & dining businesses , as well as an increase in software and other professional licensing costs . selling , general and administrative . the most significant driver of selling , general and administrative expense is selling and marketing expenses . these include direct costs , including traffic generation costs from sem and other online traffic acquisition costs , syndication costs and affiliate program commissions , social media costs , brand advertising ( including television and other offline advertising ) , promotions and public relations . in addition , indirect sales and marketing expense consists of personnel and overhead expenses , including salaries , commissions , benefits , bonuses for sales , sales support , customer support and marketing employees . total selling and marketing costs decreased $ 108 million during the year ended december 31 , 2019 when compared to the same period in 2018 , primarily due to an overall decrease in sem and other online traffic acquisition costs , as well as lower television advertising costs , driven by the hotels , media & platform segment and corporate and other . this decrease was partially offset by an increase in similar marketing expenditures in the experiences & dining segment and increased personnel and overhead costs related to additional headcount in the experiences & dining segment to support business growth . total selling and marketing costs decreased $ 71 million during the year ended december 31 , 2018 when compared to the same period in 2017 , primarily due to decreased sem and online traffic acquisition costs in tripadvisor 's hotels , media & platform businesses , partially offset by an increase in its television advertising campaign spend of $ 40 million during the year ended december 31 , 2018 , and by an increase in online and offline advertising costs in its experiences & dining businesses during the year ended december 31 , 2018 , when compared to the same period in 2017 , as well as increased personnel and overhead costs due to an increase in headcount to support business growth . stock-based compensation . stock based compensation increased $ 8 million and $ 20 million for the years ended december 31 , 2019 and 2018 , respectively , when compared to the same period in the prior year due to continued grants of stock options . ii-8 depreciation and amortization . depreciation and amortization increased $ 9 million during the year ended december 31 , 2019 when compared to the same period in 2018 , primarily due to incremental amortization for the right-of-use asset related to tripadvisor 's headquarters lease in needham , massachusetts ( tripadvisor 's “ headquarters lease ” ) recorded upon adoption of asc 842 and to a lesser extent increased amortization related to capitalized software and website development costs . depreciation and amortization decreased $ 53 million during the year ended december 31 , 2018 when compared to the same period in 2017 , due to the decrease in amortization expense associated with certain intangible assets that were fully amortized in 2017. impairment of intangible assets . due to deteriorations in revenue , impairment losses of $ 288 million and $ 527 million were recorded during the years ended december 31 , 2019 and december 31 , 2017 , respectively , related to trademarks . the trademarks were related to the hotels , media & platform reporting unit in 2019 and the legacy hotels reporting unit in 2017 , which is now included in the hotels , media & platform reporting unit . due to certain marketplace factors impacting tripadvisor 's operating results , which led to a decline in tripadvisor 's stock price , an impairment loss of $ 1,271 million was recorded during the year ended december 31 , 2017 related to goodwill , related to the legacy hotels reporting unit , which is now included in the hotels , media & platform reporting unit . operating income ( loss ) . our consolidated operating income ( loss ) declined $ 287 million and improved $ 1,920 million for the years ended december 31 , 2019 and 2018 , respectively , as compared to the corresponding prior year periods . operating income was impacted by the above explanations . ii-9 adjusted oibda . to provide investors with additional information regarding our financial results , we also disclose adjusted oibda , which is a non-gaap financial measure .
| executive summary results for tripco are largely dependent upon the operating performance of tripadvisor . therefore , the executive summary below contains the strategies and challenges of tripadvisor for an understanding of the business objectives of tripadvisor . tripadvisor 's growth strategy tripadvisor 's growth strategy aims to increase revenue by deepening customer engagement on its platform by pursuing the following key strategies , including : ● continue building products that reduce friction throughout the travel planning and trip-taking journey and delight travelers ; ● deepen consumer engagement with tripadvisor 's platform ( including , but not limited to , membership growth , mobile app engagement and overall repeat usage ) ; ● invest in technology to further improve customer and supplier experiences ; ● deepen travel partner engagement with tripadvisor 's platform by expanding the number of products and services offered ; ● invest in and grow certain categories where tripadvisor leads the broader travel market today and or can leverage unique assets , such as hotel business to business ( “ b2b ” ) services , media advertising , experiences and restaurants ; ● leverage tripadvisor 's technological and operational efficiencies ; and ● opportunistically pursue strategic acquisitions . ii-3 current trends affecting tripadvisor 's business the online travel industry is large and growing and remains highly dynamic and competitive . tripadvisor 's overall strategy is to deliver more value to consumers and travel partners in order to generate more monetization on its platform . while tripadvisor operates with a long-term growth focus , its specific growth objectives and resource allocation strategies can differ in both duration and magnitude within the reportable segments . descriptions of these dynamics , as well as other trends in tripadvisor 's business , are below . hotels , media & platform segment tripadvisor operates the hotels , media & platform segment by delivering consumers a holistic product experience and by offering travel partners a diversified number of advertising opportunities .
| 5,735 |
10. commitments and contingencies minimum future rental payments the company leases certain equipment and facilities under operating leases expiring in various years through fiscal year 2022. the terms of some of the company 's leases provide for rental payments on a graduated scale . the company recognizes rent expense on a straight-line basis over the lease period , and has accrued for rent expense incurred but not paid . minimum future rental payments under non-cancelable operating leases story_separator_special_tag the following discussion and analysis is intended to help you understand our results of operations and financial condition . it is provided as a supplement to , and should be read in conjunction with , our consolidated financial statements and related notes thereto included elsewhere in this report . this discussion contains forward-looking statements . please see the `` cautionary statement '' and `` risk factors '' above for discussions of the uncertainties , risks , and assumptions associated with these statements . our fiscal year-end financial reporting periods are 52 or 53 week years ending on the saturday closest to march 31 st . fiscal year 2012 had 52 weeks and ended on march 31 , 2012. fiscal year 2011 had 52 weeks and ended on april 2 , 2011 . fiscal year 2010 had 53 weeks , with the extra week occurring in the fourth quarter of the year , and ended on april 3 , 2010 . except as noted , financial results are for continuing operations ; altec lansing , our former aeg segment , was sold effective december 1 , 2009 and is reported as discontinued operations . overview we are a leading designer , manufacturer , and marketer of lightweight communications headsets , telephone headset systems , and accessories for the worldwide business and consumer markets under the plantronics brand . in addition , we manufacture and market , under our clarity brand , specialty telephone products , such as telephones for the hearing impaired , and other related products for people with special communication needs . our priorities during fiscal year 2012 were to win in unified communications ( “ uc ” ) , to improve our execution effectiveness , and to deliver strong financial results . we sharply increased revenues from uc products , growing by 76 % over the prior year to $ 93.4 million , and believe we continue to lead the market in this category . we improved our execution effectiveness by extending our simply smarter communications tm technology branding to become an integral part of the value proposition available through uc solutions . we also created the plantronics developer connection ( “ pdc ” ) , subsequently launched on may 9 , 2012 , to extend the opportunities in uc to the vast ecosystem of vendors , application developers and vertical markets . even with continued pressures from the macroeconomic environment , we delivered strong financial results . as part of our continued commitment to a strong and innovative set of integrated solutions , we increased research , development and engineering spending by approximately 10 % over the prior year , yet still achieved $ 109.0 million in net income , representing approximately 15 % of our net revenues . we believe uc represents our key long-term driver of revenue and profit growth , and it continues to be our primary focus area . business communications are being transformed from voice-centric systems supported by traditional pbx infrastructure to communication systems that are fully integrated with voice , video , and data and are supported by feature rich uc software . with this transformation , the requirement for a traditional headset used only for voice communications continues to evolve into a device that delivers contextual intelligence , providing the ability to reach people using the mode of communication that is most effective , on the device that is most convenient , and with control over when and how they can be reached . our portfolio of uc solutions combines hardware with advanced sensor technology and capitalizes on contextual intelligence , addressing the needs of the constantly changing business environments and evolving work styles to make connecting easier and by sharing presence information to convey user availability and other contextual information . we believe uc systems will become more commonly adopted by enterprises to reduce costs and improve collaboration , and we believe our solutions with simply smarter communications tm technology will be an important part of the uc environment . the contact center is the most mature market in which we participate , and we expect this market to grow slowly over the long-term . given the migration to uc by corporations globally , we also expect the market for headsets for non-uc enterprise applications to grow very slowly . we believe the growth of uc will increase overall headset adoption in enterprise environments and we therefore expect most of the growth in office and contact center ( `` occ '' ) over the next five years to come from headsets designed for uc . based on the prioritization of uc investments in fiscal years 2010 and 2011 , our bluetooth product portfolio for mobile phone applications was less competitive during the first half of fiscal year 2012 , contributing to a decline in our mobile market share . however , by the beginning of our third quarter , we were in volume production on several new models that were well-received and our market share position began recovering . over the course of the year , we also invested in the stereo bluetooth mobile category and , at the end of the fourth quarter of fiscal year 2012 , introduced the backbeat go , our first stereo bluetooth product in several years . while we experienced an approximate 4 % decline in the mobile category in fiscal year 2012 over fiscal year 2011 , due in part to weakness in the bluetooth product category , we believe our recent and planned investments will help position us to maintain share in the overall market for bluetooth headsets . story_separator_special_tag in addition , we had greater interest income resulting from increased interest on a higher average investment portfolio in fiscal year 2012. interest and other income ( expense ) , net in fiscal year 2011 decreased from fiscal year 2010 due primarily to greater foreign currency exchange gains in fiscal year 2010 as a result of a weaker u.s. dollar in fiscal year 2010 than in fiscal year 2011 , in addition to penalties and interest recorded in fiscal year 2011 related to the settlement of an indirect tax matter in brazil . in addition , we generated income from a government stimulus program in mexico in fiscal year 2010 that did not recur in fiscal year 2011. income tax expense replace_table_token_13_th in comparison to fiscal year 2011 , the increase in the effective tax rate for fiscal year 2012 was due primarily to the reduced benefit from the u.s. federal research tax credit as the credit expired in december 2011 ; therefore , the effective tax rate in fiscal year 2012 included the benefit of the credit for only three quarters . the effective tax rate for fiscal year 2011 includes the impact of credits earned in our fourth quarter of fiscal year 2010 because the credit was reinstated in december 2010 retroactively to january 2010. in comparison to fiscal year 2010 , the decrease in the effective tax rate for fiscal year 2011 was due primarily to the increased benefit from the u.s. federal research tax credit . our effective tax rate for fiscal year 2012 , 2011 and 2010 differs from the statutory rate due to the impact of foreign operations taxed at different statutory rates , income tax credits , state taxes , and other factors . our future tax rate could be impacted by a shift in the mix of domestic and foreign income , tax treaties with foreign jurisdictions , changes in tax laws in the u.s. or internationally or a change in estimate of future taxable income which could result in a valuation allowance being required . as of march 31 , 2012 , we had $ 11.1 million of unrecognized tax benefits compared to $ 10.5 million as of march 31 , 2011 and $ 11.2 million as of march 31 , 2010. the unrecognized tax benefits as of the end of fiscal year 2012 would favorably impact the effective tax rate in future periods if recognized . 36 it is our continuing practice to recognize interest and or penalties related to income tax matters in income tax expense . as of march 31 , 2012 , 2011 and 2010 , we had approximately $ 1.7 million of accrued interest related to uncertain tax positions . no penalties have been accrued . although the timing and outcome of income tax audits is highly uncertain , it is possible that certain unrecognized tax benefits may be reduced as a result of the lapse of the applicable statutes of limitations in federal , state , and foreign jurisdictions within the next twelve months . currently , we can not reasonably estimate the amount of reductions , if any , during the next twelve months . any such reduction could be impacted by other changes in unrecognized tax benefits . we are subject to taxation in various foreign and state jurisdictions as well as in the u.s. we are no longer subject to u.s. federal tax examinations by tax authorities for years prior to 2009. we are under examination by the california franchise tax board for our 2007 and 2008 tax years . foreign income tax matters for material tax jurisdictions have been concluded for tax years prior to fiscal year 2006 , except for the united kingdom which has been concluded for tax years prior to fiscal year 2010. discontinued operations we entered into an asset purchase agreement ( “ apa ” ) on october 2 , 2009 , as subsequently amended , to sell altec lansing , our aeg segment . the sale was completed effective december 1 , 2009 . all of the revenues in the aeg segment were derived from sales of altec lansing products . all operations of aeg have been classified as discontinued operations in the consolidated statement of operations for all periods presented . there was no income or loss from discontinued operations for the fiscal years ended march 31 , 2012 and 2011. the results from discontinued operations for the fiscal year ended march 31 , 2010 were as follows ( in thousands ) : replace_table_token_14_th in addition , the results from discontinued operations in fiscal year 2010 included a loss of $ 0.6 million on sale of altec lansing , which is calculated as follows ( in thousands ) : proceeds received upon close $ 11,075 escrow payments received to date 2,065 remaining escrow payments to be received ( subsequently received in fiscal 2011 ) 1,625 payment to purchaser for adjustment for final value of net assets under apa ( 3,956 ) total estimated proceeds 10,809 book value of net assets sold ( 11,057 ) costs incurred upon closing ( 363 ) loss on sale of aeg $ ( 611 ) 37 financial condition the table below provides selected consolidated cash flow information for the periods indicated : replace_table_token_15_th cash provided by operating activities cash provided by operating activities in fiscal year 2012 was $ 140.4 million and consisted of net income of $ 109.0 million , non-cash charges of $ 25.9 million and working capital sources of cash of $ 5.5 million . non-cash charges consisted primarily of $ 17.5 million of stock-based compensation expense , $ 13.8 million of depreciation and amortization and a $ 5.6 million income tax benefit associated with stock option exercises , offset in part by a $ 9.1 million benefit from deferred income taxes and $ 7.0 million in excess tax benefits from stock-based compensation expense .
| results of operations the following tables set forth , for the periods indicated , the consolidated statements of operations data . the financial information and the ensuing discussion should be read in conjunction with the accompanying consolidated financial statements and notes thereto . except as noted , financial results are for continuing operations . altec lansing , our former aeg segment , was sold effective december 1 , 2009. we have classified the aeg operating results as discontinued operations in the consolidated statement of operations for all periods presented . replace_table_token_3_th 31 net revenues replace_table_token_4_th occ products represent our largest source of revenues , while mobile products represent our largest unit volumes . net revenues may vary due to seasonality , the timing of new product introductions and discontinuation of existing products , discounts and other incentives , and channel mix . net revenues derived from sales of consumer goods into the retail channel typically account for a seasonal increase in our net revenues in the third quarter of our fiscal year . our consolidated net revenues increased in fiscal year 2012 compared to fiscal year 2011 driven by growth in occ product revenues as a result of growth in demand for uc . in addition , favorable foreign exchange fluctuations in the euro ( `` eur '' ) and great britain pound ( `` gbp '' ) contributed approximately $ 4.0 million to the growth in our net revenues . our consolidated net revenues increased in fiscal year 2011 compared to fiscal year 2010 primarily in our occ product category as a result of growth in demand for uc , offset partly by weakness in the bluetooth market and loss of market share which resulted in a decrease in our mobile product revenues .
| 5,736 |
accordingly , during the year ended december 31 , 2013 , we recorded a non-cash impairment charge of $ 2,797,600 , which was recorded as impairment of in-process research and development in our consolidated statements of operations . the fair value of this asset was determined to be zero primarily as a result of the expiring intellectual property rights surrounding the asset . this fair value measurement technique is based on significant inputs not observable in the market and thus represents a level 3 measurement within the fair value hierarchy . as of december 31 , 2012 , as a result of market changes affecting the commercial potential for the ariston in-process research and development assets ( ast-726 and ast-915 ) , the company determined that the asset 's carrying value was no longer fully recoverable . accordingly , during the year ended december 31 , 2012 , we recorded a non-cash impairment charge of $ 1,104,700 , which was recorded as impairment of in-process research and development in our consolidated statements of operations . the fair value of this asset was determined using a discounted cash flow model , where the expected cash flows of the ariston assets are discounted to the present using a yield that incorporates compensation for the probability of success in clinical development and marketing , among other factors . this fair value measurement technique is based on significant inputs not observable in the market and thus represents a level 3 measurement within the fair value hierarchy . also contributing to the impairment charge recorded story_separator_special_tag the following discussion and analysis contains forward-looking statements about our plans and expectations of what may happen in the future . forward-looking statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties , and our results could differ materially from the results anticipated by our forward-looking statements as a result of many known or unknown factors , including , but not limited to , those factors discussed in “ item 1a . risk factors. ” see also the “ special cautionary notice regarding forward-looking statements ” set forth at the beginning of this report . you should read the following discussion and analysis in conjunction with “ item 8. financial statements and supplementary data , ” and our consolidated financial statements beginning on page f-1 of this report . overview we were incorporated in delaware in 1993 under the name “ atlantic pharmaceuticals , inc. ” and , in march 2000 , we changed our name to “ atlantic technology ventures , inc. ” in 2003 , we completed a “ reverse acquisition ” of privately held “ manhattan research development , inc ” . in connection with this transaction , we also changed our name to “ manhattan pharmaceuticals , inc. ” from an accounting perspective , the accounting acquirer is considered to be manhattan research development , inc. and accordingly , through december 29 , 2011 , the historical financial statements were those of manhattan research development , inc. 34 on march 8 , 2010 , we entered into an agreement and plan of merger ( the `` merger agreement '' ) by and among us , ariston pharmaceuticals , inc. , a delaware corporation ( `` ariston '' ) and ariston merger corp. , a delaware corporation and wholly-owned subsidiary of the company ( the `` merger sub '' ) . pursuant to the terms and conditions set forth in the merger agreement , on march 8 , 2010 , the merger sub merged with and into ariston ( the `` merger '' ) , with ariston being the surviving corporation of the merger . as a result of the merger , ariston became our wholly-owned subsidiary . on december 29 , 2011 , we entered into and consummated an exchange transaction agreement ( the “ exchange transaction ” ) with opus point partners , llc ( “ opus ” ) and tg biologics , inc. ( formerly known as tg therapeutics , inc. ) ( “ tg bio ” ) . the stockholders of tg bio received the majority of our voting shares ; therefore , the merger was accounted for as a reverse acquisition whereby tg bio was the accounting acquirer ( legal acquiree ) and we were the accounting acquiree ( legal acquirer ) under the acquisition method of accounting . tg bio was incorporated in delaware in november 2010 , but did not commence operations until april 2011. on april 30 , 2012 , we filed a certificate of amendment to our certificate of incorporation to change our name from manhattan pharmaceuticals , inc. ( “ manhattan ” ) to tg therapeutics , inc. in conjunction with this change , the subsidiary formerly named tg therapeutics , inc. filed a certificate of amendment changing its name to tg biologics , inc. we are a biopharmaceutical company focused on the acquisition , development and commercialization of innovative and medically important pharmaceutical products for the treatment of cancer and other underserved therapeutic needs . we aim to acquire rights to these technologies by licensing or otherwise acquiring an ownership interest , funding their research and development and eventually either out-licensing or bringing the technologies to market . currently , we are developing therapies targeting hematological malignancies . tg-1101 ( ublituximab ) , is a novel , third generation monoclonal antibody that targets a specific and unique epitope on the cd20 antigen found on mature b-lymphocytes . we are also developing tgr-1202 , an orally available pi3k delta inhibitor . our license revenues currently consist of license fees arising from our agreement with ildong . we recognize upfront license fee revenues ratably over the estimated period in which we will have certain significant ongoing responsibilities under the sublicense agreement , with unamortized amounts recorded as deferred revenue . we have not earned any revenues from the commercial sale of any of our drug candidates . story_separator_special_tag for the year ended december 31 , 2013 , net cash used in investing activities was $ 4,925,552 as compared to $ 1,399 for the year ended december 31 , 2012. the increase in net cash used in investing activities was primarily due to our investment in held-to-maturity securities . cash provided by financing activities for the year ended december 31 , 2013 was $ 39,779,254 as compared to $ 11,896,867 for the year ended december 31 , 2012. the increase in net cash provided by financing activities in 2013 was primarily related to the 2013 equity financing , as discussed below . 2013 equity financing on july 18 , 2013 , we announced the pricing of an underwritten public offering of 5,700,000 shares of our common stock at a price of $ 6.15 per share for gross proceeds of approximately $ 35 million . we also granted to the underwriters a 30-day option to acquire an additional 855,000 shares to cover overallotments in connection with the offering , which they exercised . total net proceeds from this offering , including the overallotment , were approximately $ 37.6 million , net of underwriting discounts and offering expenses of approximately $ 2.7 million . the shares were sold under a shelf registration statement on form s-3 ( file no . 333-189015 ) that was previously filed and declared effective by the sec on june 17 , 2013 . 2011 equity pipe on december 30 , 2011 , we completed the first closing of the private placement of our securities , issuing 4,929,523 shares of common stock at a price per share of $ 2.25 for total gross proceeds , before placement commissions and expenses , of $ 11,091,425 ( the “ 2011 equity pipe ” ) . investors also received warrants to purchase 1,232,381 shares of common stock . the warrants have an exercise price of $ 2.25 per share and are exercisable for five years . in 2012 , we completed two additional closings of the 2011 equity pipe . these closings were held on january 31 , 2012 , and february 24 , 2012. in these closings , the company issued 695,428 shares of our company preferred stock at a price per share of $ 20.00 for total gross proceeds , before placement commissions and expenses , of $ 13,908,560. each share of company preferred stock was convertible into 8.89 shares of common stock ; provided that such conversion rights were subject to sufficient available authorized shares of common stock . in connection with the reverse stock split effected by the company on april 30 , 2012 , all shares of preferred stock issued in the 2011 equity pipe were converted to common stock . investors also received warrants to purchase 1,545,396 shares of common stock . the warrants have an exercise price of $ 2.25 per share and are exercisable for five years . the shares of common stock , company preferred stock , and warrants sold in these closings were offered and sold to accredited investors , including members of management , without registration under the securities act , or state securities laws , in reliance on the exemptions provided by section 4 ( 2 ) of the securities act , and regulation d promulgated thereunder and in reliance on similar exemptions under applicable state laws . accordingly , the securities issued in the offering have not been registered under the securities act , and until so registered , these securities may not be offered or sold in the united states absent registration or availability of an applicable exemption from registration . the placement agent received cash commissions equal to 10 % of the gross proceeds of the offering , five-year warrants to purchase shares of the company 's stock equal to 10 % of shares sold in the offering , and a non-accountable expense allowance equal to two percent of the gross proceeds of the offering for their expenses . 38 off-balance sheet arrangements we have not entered into any transactions with unconsolidated entities whereby we have financial guarantees , subordinated retained interests , derivative instruments or other contingent arrangements that expose us to material continuing risks , contingent liabilities , or any other obligations under a variable interest in an unconsolidated entity that provides us with financing , liquidity , market risk or credit risk support . critical accounting policies the discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities and related disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the applicable period . actual results may differ from these estimates under different assumptions or conditions . we define critical accounting policies as those that are reflective of significant judgments and uncertainties and which may potentially result in materially different results under different assumptions and conditions . in applying these critical accounting policies , our management uses its judgment to determine the appropriate assumptions to be used in making certain estimates . these estimates are subject to an inherent degree of uncertainty . our critical accounting policies include the following : revenue recognition . we recognize license revenue in accordance with the revenue recognition guidance of the financial accounting standards board ( “ fasb ” ) accounting standards codification , or codification . we analyze each element of our licensing agreement to determine the appropriate revenue recognition . the terms of the license agreement may include payments to us of non-refundable up-front license fees , milestone payments if specified objectives are achieved , and or royalties on product sales .
| results of operations years ended december 31 , 2013 and 2012 replace_table_token_4_th 36 license revenue . license revenue was $ 152,381 for the year ended december 31 , 2013 , as compared to $ 19,048 for the year ended december 31 , 2012. license revenue is related to the amortization of an upfront payment of $ 2.0 million associated with our license agreement with ildong . the upfront payment from ildong will be recognized as license revenue on a straight-line basis through december 2025 , which represents the estimated period over which the company will have certain ongoing responsibilities under the sublicense agreement . noncash stock expense associated with in-licensing agreement . noncash stock expense associated with an in-licensing agreement was $ 0 for the year ended december 31 , 2013 , as compared to $ 16,578,000 for the year ended december 31 , 2012. the expense during the year ended december 31 , 2012 related to a noncash stock expense recorded in conjunction with the stock issued to lfb group for the license to tg-1101 . noncash compensation expense ( research and development ) . noncash compensation expense ( research and development ) related to equity incentive grants increased by $ 585,710 from $ 455,809 for the year ended december 31 , 2012 to $ 1,041,519 during the year ended december 31 , 2013. the noncash compensation expense was related to the period 's expense for restricted stock grants to research and development personnel . we expect noncash compensation expense ( research and development ) to remain at a comparable level in 2014. other research and development expenses .
| 5,737 |
we primarily perform customer acquisition services by operating highly scalable digital marketing campaigns , through which we connect our advertiser clients with consumers they are seeking to reach . we deliver data and performance-based marketing executions to our clients , which in 2020 included over 500 consumer brands , direct marketers and agencies across a wide range of industries , including media & entertainment , financial products & services , health & wellness , retail & consumer , and staffing & recruitment . we attract consumers at scale to our owned digital media properties primarily through promotional offerings and employment opportunities . to register on our sites , consumers provide their names , contact information and opt-in permission to present them with offers on behalf of our clients . approximately 90 % of these users engage with our media on their mobile devices or tablets . our always-on , real-time capabilities enable users to access our media whenever and wherever they choose . once users have registered with our sites , we integrate proprietary direct marketing technologies and analytics to engage them with surveys , polls and other experiences , through which we learn about their lifestyles , preferences and purchasing histories . based on these insights , we serve targeted , relevant offers to them on behalf of our clients . as new users register and engage with our sites and existing registrants re-engage , we believe the enrichment of our database expands our addressable client base and improves the effectiveness of our performance-based campaigns . since our inception , we have amassed a large , proprietary database of first-party , self-declared user information and preferences . we have permission to contact the majority of users in our database through multiple channels , such as email , home address , telephone , push notifications and sms text messaging . we leverage this data in our performance offerings primarily to serve advertisements that we believe will be relevant to users based on the information they provide , and in our data offerings to provide our clients with users ' contact information so that our clients may communicate with them directly . we have also begun to leverage our existing database into new revenue streams , including utilization-based models , such as programmatic advertising . for the years ended december 31 , 2020 and 2019 , we recorded revenue of $ 310.7 million and $ 281.7 million , net income of $ 2.2 million and net loss of $ 1.7 million , and adjusted ebitda of $ 41.2 million and $ 34.7 million , respectively . adjusted ebitda is a non-gaap financial measure equal to net income ( loss ) , the most directly comparable financial measure based on us gaap , adding back income taxes , interest expense , depreciation and amortization , share-based compensation expense , and other adjustments . see our audited consolidated financial statements and accompanying notes thereto appearing elsewhere in this 2020 form 10-k , and for further discussion and analysis of our results of operations , including a reconciliation of adjusted ebitda from net income ( loss ) , see `` non-us gaap financial measures ” and “ results of operations ” below . 23 trends affecting our business development , acquisition and retention of high-quality targeted media traffic a key challenge for our business is identifying and accessing media sources that are of high quality and able to attract targeted users to our media properties , in order to connect them with our advertiser clients , at scale and in a cost-effective manner . as one means of growing our business , we seek to find , develop and retain quality targeted media sources that meet these needs . consolidation of media sources , changes in search engine and email and text message blocking algorithms and increased competition for available media have , during some periods , including during the second half of 2020 and the second and third quarters of 2019 , limited and may in the future limit our ability to generate revenue at acceptable margins . additionally , through our traffic quality initiative , we substantially curtailed the volume of lower quality affiliate traffic that we source , particularly during the fourth quarter of 2020 and continuing into the first quarter of 2021. see `` results of operations '' below concerning the impact to our revenue . to offset this impact , we have sourced and continue to source traffic that meets our quality requirements through new suppliers , channels and media buying strategies . we believe these actions will benefit the company over time , providing the foundation to support sustainable long-term growth and positioning us as an industry leader . seasonality and cyclicality our results are subject to fluctuation as a result of seasonality and cyclicality in our and our clients ' businesses . for example , our fourth fiscal quarter ending december 31 is typically characterized by higher advertiser budgets , which can be somewhat offset by seasonal challenges of lower availability and or higher pricing for some forms of media during the holiday period . further , as reflected in historical data from the iab , industry spending on internet advertising has generally declined sequentially in the first quarter of the calendar year from the fourth quarter . similar to the industry overall , some of our clients have lower advertising budgets during our first fiscal quarter ending march 31 ; however , we believe that the breadth of industries in which our clients operate provides us with some insulation from these fluctuations . in addition to variations in budgets from quarter to quarter , certain clients have budgets that start stronger at the beginning of quarterly or monthly periods , may reach limits during such periods and then may have needs to satisfy their performance objectives at the end of such periods . beyond these budgetary constraints and buying patterns of clients , other factors affecting our business may include macroeconomic conditions affecting the digital media industry and the various client verticals we serve . story_separator_special_tag items are considered one-time in nature if they are non-recurring , infrequent or unusual and have not occurred in the past two years or are not expected to recur in the next two years , in accordance with sec rules . adjusted ebitda for the year ended december 31 , 2019 excluded as one-time items $ 0.2 million of costs associated with the move of our corporate headquarters . there were no other material adjustments for one-time items in the periods presented . adjusted net income , as defined above , and the related measure of adjusted net income per share exclude certain items that are recognized and recorded under us gaap in particular periods but might be viewed as not necessarily coinciding with the underlying business operations for the periods in which they are so recognized and recorded . adjusted net income for the year ended december 31 , 2019 excluded as one-time items $ 0.2 million of costs associated with the move of our corporate headquarters . there were no other material adjustments for one-time items in the periods presented . we believe adjusted net income affords investors a different view of the overall financial performance of the company than adjusted ebitda and the us gaap measure of net income ( loss ) . media margin , adjusted ebitda , adjusted net income and adjusted net income per share are not intended to be performance measures that should be regarded as an alternative to , or more meaningful than , net income ( loss ) as indicators of operating performance . none of these metrics are presented as measures of liquidity . the way we measure media margin , adjusted ebitda and adjusted net income may not be comparable to similarly titled measures presented by other companies and may not be identical to corresponding measures used in our various agreements . 26 results of operations story_separator_special_tag million , respectively . we are actively managing our sales and marketing expenditures to reflect the evolving market dynamics associated with the impact of covid-19 on our industry 's practices , including trade events and exhibitions , and our advertiser clients ' businesses . as a result , past levels of sales and marketing expenditures may not be indicative of future expenditures , which may increase or decrease as these uncertainties in our business play out . product development . for the year ended december 31 , 2020 , product development expenses increased $ 4.5 million , or 56 % , to $ 12.6 million , from $ 8.1 million for the year ended december 31 , 2019. for the years ended december 31 , 2020 and 2019 , the amounts consisted primarily of employee salaries and benefits of $ 9.6 million and $ 7.0 million , non-cash share-based compensation expense of $ 1.1 million and $ 0.9 million , and software license and maintenance costs of $ 1.0 million and $ 0.0 million , respectively . the increase in product development expenses reflects , in part , the development of new app-based media properties , expanding beyond our traditional focus on web-based media properties . we did not implement any material changes to our product development strategy in 2020. general and administrative . for the year ended december 31 , 2020 , general and administrative expenses decreased $ 1.3 million , or 3 % , to $ 46.8 million , from $ 48.1 million for the year ended december 31 , 2019. for the years ended december 31 , 2020 and 2019 , the amounts consisted mainly of employee salaries and benefits of $ 17.3 million and $ 18.4 million , certain litigation and related costs of $ 8.7 million and $ 2.1 million , professional fees of $ 5.5 million and $ 5.6 million , office overhead of $ 4.6 million and $ 3.7 million , non-cash share-based compensation expense of $ 3.5 million and $ 8.5 million , accrued compensation expense for put/call consideration from the winopoly acquisition of $ 1.8 million and $ 0.0 million , provision for bad debt of $ 0.3 million and $ 2.6 million and restructuring and severance expense of $ 0.6 million and $ 2.0 million , respectively . the decrease was mainly the result of lower non-cash share-based compensation expense , provision for bad debt expense , restructuring and severance expense , and salaries and benefits expense , partially offset by increases in certain litigation and related costs year over year and accrued compensation expense for put/call consideration in connection with the winopoly acquisition . depreciation and amortization . depreciation and amortization expenses increased $ 1.4 million , or 10 % , to $ 15.3 million , from $ 13.9 for year ended december 31 , 2019 , due primarily to the timing of the adparlor acquisition , which was completed on july 1 , 2019. goodwill impairment . during the second quarter of 2020 , we recognized $ 0.8 million of goodwill impairment related to the all other reporting unit , with no corresponding impairment charge in the prior period . write-off of long-lived assets . during the years ended december 31 , 2020 and 2019 , we recognized $ 0.0 million and $ 0.4 million , respectively , due to abandonment of certain internally developed software that had not yet been placed into service . interest expense , net . for the year ended december 31 , 2020 , interest expense , net , decreased $ 1.5 million , or 22 % , to $ 5.4 million , from $ 6.9 million for the year ended december 31 , 2019 . the decrease was primarily attributable to a lower interest rate environment and a lower average debt balance outstanding on the refinanced term loan , as described below under “ liquidity and capital resources . ” income ( loss ) before income taxes .
| summary year ended december 31 , 2020 compared to year ended december 31 , 2019 : revenue increased 10 % to $ 310.7 million , from $ 281.7 million . net income was $ 2.2 million , or $ 0.03 per share , compared to net loss of $ 1.7 million , or $ 0.02 per share . media margin increased 18 % to $ 110.4 million , representing 35.5 % of revenue , from $ 93.6 million . adjusted ebitda increased 19 % to $ 41.2 million , based on a net income of $ 2.2 million , from $ 34.7 million , based on net loss of $ 1.7 million . adjusted net income increased $ 5.9 million to $ 19.7 million , or $ 0.25 per share , from $ 13.8 million , or $ 0.17 per share . the following tables show our results of operations for the periods presented and express the relationship of certain line items as a percentage of revenue for those respective periods : replace_table_token_4_th year ended december 31 , 2020 compared to year ended december 31 , 2019 revenue . for the year ended december 31 , 2020 , revenue increased $ 29.0 million , or 10 % , to $ 310.7 million , from $ 281.7 million for the year ended december 31 , 2019. the increase was primarily attributable to higher monetization of the consumer traffic to our websites through improved matching of offers with consumers and an increase in consumers ' completing of offers presented . the increase also reflected more effective re-engagement of consumers after their initial experience on our websites , through sms text messaging , push notifications and telephony .
| 5,738 |
billion were 3 % lower than net sales of $ 1.2 billion in 2013 due primarily to a decrease in precious metal prices . the net sales comparison between years was affected by the pass-through of lower metal prices . the costs of gold , silver , platinum , palladium , and copper are typically passed through to customers and , therefore , movements in the prices of these metals will affect net sales , but may not have a proportionate impact on gross margin . lower pass-through metal costs were partially offset by an increase in value-added sales . value-added sales were $ 637.1 million in 2014 , an increase of 5 % as compared to 2013 value-added sales of $ 609.1 million . value-added sales is a non-gaap measure that removes the impact of pass-through metal costs and allows for analysis without the distortion of the movement or volatility in metal prices . internally , we manage our business on this basis , and a reconciliation of net sales to value-added sales is included herein . gross margin was $ 205.9 million in 2014 compared to $ 188.0 million in 2013. the increased gross margin represents an approximate 150 basis point margin expansion as a percentage of value-added sales associated with improved sales volume , better product mix , and facility consolidation savings . operating profit was $ 57.0 million in 2014 compared to $ 26.8 million in 2013. the increased operating profit was driven by the gross margin improvement and favorable one-time items including a $ 6.8 million insurance settlement related to a precious metal theft claim , a $ 4.0 million settlement of a legal claim related to our beryllium pebble facility , and a $ 2.4 million gain on the sale of used equipment . as a result of the aforementioned items , overall diluted earnings per share increased to $ 2.00 in 2014 versus $ 0.94 in 2013 , an increase in excess of 100 % . we also repurchased 690,339 shares of common stock during 2014 for $ 22.3 million in the aggregate . 22 story_separator_special_tag million and $ 4.1 million , respectively . the effective tax rates for 2014 and 2013 were 23 % and 17 % , respectively . the effects of percentage depletion ( a tax benefit resulting from our mining operations ) , foreign source income and deductions , the production deduction , the r & d tax credit , discrete events , and other items were major causes of the differences between the effective and statutory rates in 2014 and 2013. the research and experimentation credit provided a tax benefit of $ 0.7 million in 2014 and $ 1.8 million in 2013. the difference between years is due to the fact that the 2013 benefit includes amounts related to both 2013 and 2012. the federal government did not extend the benefit of the tax credit for 2012 until january of 2013. u.s. generally accepted accounting principles require us to record tax expense based upon the laws in effect at the end of the year . the effective tax rate in 2013 includes the benefit for 2013 and 2012. tax expense included net favorable discrete items totaling $ 1.5 million in 2014 and $ 1.4 million in 2013. discrete items included reductions to tax reserves due to the lapse of the statute of limitations and adjustments to the respective prior-year 's tax returns in each year . refer to note q to the consolidated financial statements for a reconciliation of the statutory and effective tax rates . net income was $ 41.7 million , or $ 2.00 per share diluted , in 2014 , compared to $ 19.7 million , or $ 0.94 per share diluted , in 2013 . 2013 compared to 2012 net sales were $ 1.2 billion in 2013 , a decline of $ 106.2 million , or 8 % , from net sales of $ 1.3 billion in 2012. the net sales comparisons between years were affected by the pass-through of lower metal prices , the discontinuation of a non-strategic product line , changes in the use of customer-supplied metal , new product development , and changes in market demand . the costs of gold , silver , platinum , palladium and copper are typically passed through to customers and , therefore , movements in the prices of these metals will affect net sales , but may not have a proportionate impact on margins . the average prices for the metals we purchased in 2013 were lower than 2012. the net change in metal prices resulted in an estimated $ 92.3 million decrease in net sales in 2013 from 2012 and accounted for the majority of the reduction in net sales for the year . in addition , as part of our product rationalization actions , we exited the silver investment bar business in 2012. this non-strategic product line generated extremely low margins that could not support the associated level of working capital and overhead . this action resulted in a reduction of net sales of approximately $ 9.3 million in 2013 from 2012 with an immaterial impact on value-added sales and profitability . value-added sales were $ 609.1 million in 2013 compared to $ 615.6 million in 2012. value-added sales to the consumer electronics end market , our largest end market accounting for approximately 27 % of our total value-added sales in 2013 , were 3 % lower in 2013 than in 2012. the decline in value-added sales in 2013 was due to lower shipments of precious metal products offset in part by increased shipments of various products for gaming systems and advanced chemicals for led applications . industrial components end market value-added sales also softened in 2013 as compared to 2012. value-added sales for certain industrial applications , including x-ray windows , declined in 2013 from 2012 levels . story_separator_special_tag the incentive compensation expense on plans that pay in cash was slightly lower in 2013 versus 2012. the changes 25 in the annual expense between years were caused primarily by the performance of the individual operations relative to plan objectives . stock-based compensation expense , including the expense for stock appreciation rights , restricted stock , and performance restricted shares , was $ 5.7 million in 2013 and $ 5.9 million in 2012. the comparison of stock-based compensation expense between years may be affected by changes in plan design , the number of grants in a given year , actual performance relative to the plan objectives , movement in our stock price , forfeitures , vesting schedules , and other factors . various corporate costs increased in 2013 over 2012. a portion of the higher costs was due to various initiatives , including a new centralized procurement function , that are designed to produce long-term savings and improve profitability across the organization . other costs increased in 2013 , including administration , legal , information technology , and business development , in order to support a more diverse organization . corporate costs also included legal and investigation expenses associated with the albuquerque inventory loss and the related insurance claim totaling $ 1.3 million in 2013. sg & a savings in 2013 from the plant consolidations and related efforts totaled an estimated $ 2.9 million . r & d expenses were $ 13.4 million in 2013 , a 7 % increase from the expense of $ 12.5 million in 2012. r & d expenses were 2 % of value-added sales for 2013 and 2012. our r & d staff works closely with production engineers , sales engineers , and marketing to support the development of new products and applications as well as to make improvements in the current product portfolio . other - net totaled $ 14.5 million of expense in 2013 and $ 15.6 million of expense in 2012. refer to note n to the consolidated financial statements for the details of the major components of other-net . in addition to the previously discussed charges recorded in conjunction with the plant consolidation efforts , the major differences in other-net between the years include the following : the metal consignment fee was $ 1.8 million lower in 2013 than in 2012 , mainly due to differences in the rate charged by the financial institutions and the value of the metal on hand ; there were one-time bank fees of $ 0.9 million in 2013 associated with the renewal of the metal consignment facilities ; and the net foreign currency exchange gains totaled $ 1.5 million in both 2013 and 2012. the gains and losses result from movements in the value of the u.s. dollar versus other currencies , primarily the euro and yen , and the related impact on certain foreign currency denominated assets , liabilities , and transactions and the maturity of foreign currency hedge contracts . operating profit was $ 26.8 million ( 4 % of value-added sales ) in 2013 compared to $ 36.8 million ( 6 % of value-added sales ) in 2012. the lower profit in 2013 was largely due to the decline in gross margin as a result of manufacturing inefficiencies and other operating factors . in addition , the annual expense on the domestic defined benefit pension plan was $ 13.3 million in 2013 and $ 9.8 million in 2012. the increase in pension expense was due to changes in the discount rate , the performance of plan assets , and other factors and affected cost of sales , selling , general , and administrative expenses and , to a lesser extent , research and development expenses . refer to note i to the consolidated financial statements . interest expense - net was $ 3.0 million in 2013 and $ 3.1 million in 2012. the lower expense in 2013 resulted from lower average outstanding debt levels offset in part by a higher average borrowing rate . income tax expense was $ 4.1 million for 2013 and $ 9.0 million for 2012 , respectively . the effective tax rates for 2013 and 2012 were 17 % and 27 % , respectively . the effects of percentage depletion ( a tax benefit resulting from our mining operations ) , foreign source income and deductions , the production deduction , discrete events , and other items were major causes of the differences between the effective and statutory rates in 2013 and 2012. the research and experimentation credit provided a tax benefit in 2011 , but this credit was not extended by the federal government for 2012 until january 2013. u.s. generally accepted accounting principles require us to record tax expense based upon the laws in effect at the end of the year and even though the research and experimentation credit was used to determine our actual liability on our 2012 tax return , the 2012 benefit of this credit was not recorded in our consolidated statement of income until 2013. the effective tax rate in 2013 also includes the benefit of this credit for 2013 activity . tax expense included net favorable discrete items totaling $ 1.4 million in 2013 and $ 0.3 million in 2012. discrete items included reductions to tax reserves due to the lapse of the statute of limitations and adjustments to the respective prior year 's tax returns in each year . discrete items in 2013 also included the favorable impact from filing an amended return for a prior period , while 2012 discrete items included the impact of a change in japanese tax rates on the carrying value of certain deferred tax assets . refer to note q to the consolidated financial statements for a reconciliation of the statutory and effective tax rates . net income was $ 19.7 million , or $ 0.94 per share diluted , in 2013 , compared to $ 24.7 million , or $ 1.19 per share diluted , in 2012 .
| results of operations replace_table_token_6_th 2014 compared to 2013 net sales were $ 1.1 billion in 2014 , a decline of $ 40.0 million , or 3 % , from net sales of $ 1.2 billion in 2013. the net sales comparisons between years were primarily affected by the pass-through of lower metal prices . the costs of gold , silver , platinum , palladium , and copper are typically passed through to customers and , therefore , movements in the prices of these metals will affect net sales , but may not have a proportionate impact on margins . the average prices for the metals we purchased in 2014 were lower than 2013. the net change in metal prices resulted in an estimated $ 58.7 million decrease in net sales in 2014 from 2013 and accounted for the reduction in net sales for the year . value-added sales of $ 637.1 million in 2014 increased $ 28.0 million or 5 % compared to 2013. the year-over-year improvement in value-added sales was primarily driven by increases in value-added sales to the consumer electronics and medical end markets , partially offset by a decrease in sales to the defense end market . value-added sales to the consumer electronics end market , our largest market accounting for approximately 28 % of our total value-added sales in 2014 , were 8 % higher in 2014 versus 2013. the increase in value-added sales to the consumer electronics end market in 2014 was due to higher shipments for semiconductor , hand-held devices , and other applications . value-added sales to the medical end market , which accounted for 12 % of total value-added sales in 2014 , increased 17 % in 2014 as compared to 2013. the increase in medical end market value-added sales was due to higher sales for nuclear medicine applications and higher shipments related to life science and medical research .
| 5,739 |
the cardiac and vascular human tissues distributed by cryolife include the cryovalve ® sg pulmonary heart valve ( cryovalve sgpv ) and the cryopatch ® sg pulmonary cardiac patch tissue ( cryopatch sg ) , both processed using cryolife 's proprietary synergraft ® technology . cryolife 's surgical sealants and hemostats include bioglue ® surgical adhesive ( bioglue ) , biofoam ® surgical matrix ( biofoam ) , and perclot ® , an absorbable powdered hemostat , which the company distributes for starch medical , inc. ( smi ) in the european community and other select international markets . cryolife 's subsidiary , cardiogenesis corporation ( cardiogenesis ) , specializes in the treatment of coronary artery disease using a laser console system and single use , fiber-optic handpieces to treat patients with severe angina . cryolife and its subsidiary , hemosphere , inc. ( hemosphere ) , market the he modialysis r eliable o utflow graft ( hero ® graft ) , which is a solution for end-stage renal disease in certain hemodialysis patients . for the year ended december 31 , 2012 cryolife had record annual revenues of $ 131.7 million . during 2012 cryolife reported its highest revenues ever for a first , second , third , and fourth quarter , with each quarter exceeding $ 32 million in revenues . the company 's acquisition of hemosphere in may 2012 coupled with its acquisition of cardiogenesis in may 2011 continued to add revenue generating product lines to the company 's existing tissue services and products portfolio . the company also reported new record annual revenues for its vascular preservation services and bioglue . the company 's cash position was strong as the company generated $ 19.0 million in cash flows from operations during 2012. this cash was used to fund the company 's acquisition of hemosphere , the common stock buyback , and the $ 0.025 per share quarterly cash dividend that the company initiated in the third quarter of 2012. the company experienced increases in selling , general , and administrative expenses during 2012 due to increased spending on business development activities and additional general , administrative , and marketing costs related to the company 's recent acquisitions of hemosphere and cardiogenesis . see the results of operations section below for additional analysis of the fourth quarter and full year 2012 results . see part i , item 1 , business , for further discussion of the company 's business and activities during 2012. recent events on january 30 , 2013 cryolife received a warning letter ( warning letter ) dated january 29 , 2013 from the u.s. food and drug administration ( fda ) . the warning letter followed a form 483 , notice of inspectional observations from the fda ( form 483 ) related to the company 's processing , preservation , and distribution of human tissue and the manufacture of medical devices . the form 483 followed a routine quality system inspection of the company 's facilities by the fda during the period september 17 , 2012 to october 16 , 2012. the warning letter relates to certain observations from the form 483 that the fda believes were either inadequately addressed by the company 's responses or for which the fda required further information to fully assess the company 's corrective actions . the company intends to respond fully to the fda 's requests and believes that it will be able to address the fda 's notice of violations contained in the warning letter ; however , it is possible that the company may not be able to do so in a manner satisfactory to the fda . the company believes that the warning letter and its actions regarding the warning letter and form 483 will not have a material impact on the company . however , it is possible that actions it may be required to take in response to the form 483 and warning letter could materially , adversely impact the availability of the company 's tissues and products and cost structure , which could impact the company 's revenues , financial condition , profitability , or cash flows . see also part i , item 1a , risk factors critical accounting policies a summary of the company 's significant accounting policies is included in part ii , item 8 , note 1 of the notes to consolidated financial statements. management believes that the consistent application of these policies enables the company to provide users of the financial statements with useful and reliable information about the company 's operating results and financial condition . the consolidated financial statements are prepared in accordance with accounting principles generally accepted in the u.s. which require the company to make estimates and assumptions . the following are accounting policies that management believes are most important to the portrayal of the company 's financial condition and results of operations and may involve a higher degree of judgment and complexity . 42 fair value measurements the company records certain financial instruments at fair value , including : cash equivalents , certain marketable securities , certain restricted securities , contingent consideration , and derivative instruments . the company may make an irrevocable election to measure other financial instruments at fair value on an instrument-by-instrument basis ; although as of december 31 , 2012 the company has not chosen to make any such elections . fair value financial instruments are recorded in accordance with the fair value measurement framework . the company also measures certain non-financial assets at fair value on a non-recurring basis . these non-recurring valuations include evaluating assets such as cost method investments , long-lived assets , and non-amortizing intangible assets for impairment ; allocating value to assets in an acquired asset group ; and applying accounting for business combinations . the company uses the fair value measurement framework to value these assets and reports these fair values in the periods in which they are recorded or written down . story_separator_special_tag estimates and judgments used in the determination of the need for a valuation allowance and in calculating the amount of a needed valuation allowance include , but are not limited to , the following : projected future operating results , anticipated future state tax apportionment , timing and amounts of anticipated future taxable income , timing of the anticipated reversal of book/tax temporary differences , evaluation of statutory limits regarding usage of certain tax assets , and evaluation of the statutory periods over which certain tax assets can be utilized . significant changes in the factors above , or other factors , could materially , adversely impact the company 's ability to use its deferred tax assets . such changes could have a material , adverse impact on the company 's operations , financial condition , and cash flows . the company will continue to assess the recoverability of its deferred tax assets , as necessary , when the company experiences changes that could materially affect its prior determination of the recoverability of its deferred tax assets . the company believes that the realizability of its acquired net operating loss carryforwards will be limited in future periods due to a change in control of its subsidiaries hemosphere and cardiogenesis , as mandated by section 382 of the internal revenue code of 1986 , as amended . the company believes that its acquisition of hemosphere constituted a change in control and that prior to the company 's acquisition , hemosphere had experienced other equity ownership changes that should be considered a change in control . the company also believes that its acquisition of cardiogenesis constituted a change in control . the deferred tax assets recorded on the company 's consolidated balance sheets do not include amounts that it expects will not be realizable due to these changes in control . a portion of the acquired net operating loss carryforwards is related to state income taxes and can only be used by the company 's subsidiaries hemosphere and cardiogenesis . due to the history of losses of these subsidiaries when operated as stand-alone companies , management believes it is more likely than not that these deferred tax assets will not be realized . therefore , the company recorded a valuation allowance against these state net operating loss carryforwards . the company 's tax years 2009 through 2012 generally remain open to examination by the major taxing jurisdictions to which the company is subject . however , certain returns from years prior to 2009 , in which net operating losses and tax credits have arisen , are still open for examination by the tax authorities . 44 valuation of acquired assets or businesses as part of its corporate strategy , the company is seeking to identify and evaluate acquisition opportunities of complementary product lines and companies . the company evaluates and accounts for acquired patents , licenses , distribution rights , and other tangible or intangible assets as the purchase of an asset or asset group , or as a business combination , as appropriate . the determination of whether the purchase of a group of assets should be accounted for as an asset group or as a business combination requires significant judgment based on the weight of available evidence . for the purchase of an asset group , the company allocates the cost of the asset group , including transaction costs , to the individual assets purchased based on their relative estimated fair values . in-process research and development acquired as part of an asset group is expensed upon acquisition . the company accounts for business combinations by allocating the purchase price to the assets and liabilities acquired at their estimated fair value . transaction costs related to a business combination are expensed as incurred . in-process research and development acquired as part of a business combination is accounted for as an indefinite-lived intangible asset until the related research and development project gains regulatory approval or is discontinued . the company engages external advisors to assist it in determining the fair value of acquired asset groups or business combinations , using cost , market , or income valuation methodologies , as appropriate , including : the excess earnings , the discounted cash flow , or the relief from royalty methods . the determination of fair value requires significant judgments and estimates , including , but not limited to : timing of product life cycles , estimates of future revenues , estimates of profitability for new or acquired products , cost estimates for new or changed manufacturing processes , estimates of the cost or timing of obtaining regulatory approvals , estimates of the success of competitive products , and discount rates . management , in consultation with its advisor ( s ) , makes these estimates based on its prior experiences and industry knowledge . management believes that its estimates are reasonable , but actual results could differ significantly from the company 's estimates . a significant change in management 's estimates used to value acquired asset groups could result in future write-downs of tangible or intangible assets acquired by the company and , therefore , could materially impact the company 's financial position and profitability . if the value of the liabilities assumed by the company , including contingent liabilities , is determined to be significantly different from the amounts previously recorded in purchase accounting , the company may need to record additional expenses or write-downs in future periods , which could materially impact the company 's financial position and profitability . new accounting pronouncements in january 2012 the company adopted accounting standards update ( asu ) 2011-04 , fair value measurement ( topic 820 ) : amendments to achieve common fair value measurement and disclosure requirements in u.s. gaap and ifrss , which clarifies some existing concepts and expands the disclosures for fair value measurements that are estimated using significant unobservable ( level 3 ) inputs . the adoption of asu 2011-04 did not have a material effect on the company 's financial condition , profitability , and cash flows .
| results of operations ( in thousands ) year ended december 31 , 2012 compared to year ended december 31 , 2011 revenues replace_table_token_3_th replace_table_token_4_th revenues increased 8 % for the three months and 10 % for the twelve months ended december 31 , 2012 as compared to the three and twelve months ended december 31 , 2011 , respectively . a detailed discussion of the changes in preservation services revenues , product revenues , and other revenues for the three and twelve months ended december 31 , 2012 is presented below . 46 preservation services revenues from preservation services increased 3 % for the three months and 6 % for the twelve months ended december 31 , 2012 as compared to the three and twelve months ended december 31 , 2011 , respectively . the increase for the three and twelve months ended december 31 , 2012 was primarily due to an increase in cardiac preservation services revenues . see further discussion of cardiac and vascular preservation services revenues below . cardiac preservation services revenues from cardiac preservation services ( consisting of revenues from the distribution of heart valves and cardiac patch tissues ) increased 7 % for the three months ended december 31 , 2012 as compared to the three months ended december 31 , 2011. this increase was primarily due to an increase in average service fees , which increased revenues by 4 % , and by the aggregate impact of an increase in volume and tissue mix , which increased revenues by 3 % . revenues from cardiac preservation services increased 12 % for the twelve months ended december 31 , 2012 as compared to the twelve months ended december 31 , 2011. this increase was primarily due to the aggregate impact of an increase in volume and tissue mix , which increased revenues by 9 % , and by an increase in average service fees , which increased revenues by 3 % .
| 5,740 |
criteria that the company considers in its review of aging trends include average selling cycle and seasonality of merchandise , the historical rate at which merchandise has sold below cost during the prior 12 months and the value and nature of merchandise currently held in inventory and priced below original cost . a provision is recorded to reduce the cost of inventory to its estimated net realizable value , if appropriate . the majority of inventory at january 31 , 2019 and 2018 consisted of finished goods . raw materials and work-in-process were not material to the overall inventory value . property and equipment property and equipment are stated at cost and primarily story_separator_special_tag financial condition and results of operations overview we operate two reportable segments : a leading lifestyle specialty retail segment and a wholesale segment . our retail segment consists of our anthropologie , bhldn , free people , terrain and urban outfitters brands and our food and beverage division . our retail segment consumer products and services are sold directly to our customers through our stores , websites , mobile applications , catalogs , customer contact centers , franchised or third-party operated stores and digital businesses . the wholesale segment sells through department and specialty stores worldwide , digital businesses and our retail segment . the wholesale segment primarily designs , develops and markets young women 's contemporary casual apparel , intimates , fp movement activewear and shoes under the free people brand , home goods , including gifts , tabletop and textiles , under the anthropologie brand and the bdg apparel collection under the urban outfitters brand . our fiscal year ends on january 31. all references to our fiscal years refer to the fiscal years ended on january 31 in those years . for example , our fiscal year 2019 ended on january 31 , 2019. retail segment our omni-channel strategy enhances our customers ' brand experience by providing a seamless approach to the customer shopping experience . all available company-owned shopping channels are fully integrated , including stores , websites , mobile applications , catalogs and customer contact centers . our investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the omni-channel and not the separate store or digital channels . store sales are primarily fulfilled from that store 's inventory , but may also be shipped from any of our fulfillment centers or from a different store location if an item is not available at the original store . digital orders are primarily shipped to our customers through our fulfillment centers , but may also be shipped from any store , or a combination of fulfillment centers and stores depending on the availability of particular items . digital orders may also be picked up at a store location , and customers may also return certain merchandise purchased through digital channels at store locations . as our customers continue to shop across multiple channels , we have adapted our approach towards meeting this demand . due to the availability of like product in a variety of shopping channels , we source these products utilizing single skus based on the omni-channel demand rather than the demand of the separate channels . these and other technological capabilities allow us to better serve our customers and help us complete sales that otherwise may not have occurred due to out-of-stock positions . we manage and analyze our performance based on a single omni-channel rather than separate channels and believe that the omni-channel results present the most meaningful and appropriate measure of our performance . our comparable retail segment net sales data is equal to the sum of our comparable store and comparable digital channel net sales . a store is considered to be comparable if it has been open at least 12 full months , unless it was materially expanded or remodeled within that year or was not otherwise operating at its full capacity within that year . a digital channel is considered to be comparable if it has been operational for at least 12 full months . sales from stores and digital channels that do not fall within the definition of comparable store or channel are considered to be non-comparable . franchise net sales and the effects of foreign currency translation are also considered non-comparable . we monitor customer traffic , average unit selling price , transactions and average units per transaction at our stores , and we monitor customer sessions , average order value , conversion rates and average units per transaction on our websites and mobile applications . we believe that changes in any of these metrics may be caused by a response to our brands ' fashion offerings , our marketing and digital marketing campaigns , circulation of our catalogs and an overall growth in brand recognition . urban outfitters targets young adults aged 18 to 28 through a unique merchandise mix , compelling store environment , websites and mobile applications and a product offering that includes women 's and men 's fashion apparel , activewear , intimates , footwear , accessories , home goods , electronics and beauty . a large portion of our merchandise is exclusive to urban outfitters , consisting of an assortment of product designed internally and designed in collaboration with third-party brands . urban outfitters stores are in street locations in large metropolitan areas , select university communities , specialty centers and enclosed malls that accommodate our customers ' propensity not only to shop , but also to congregate with their peers . urban outfitters operates websites and mobile applications in north america and europe that capture the spirit of the brand by offering a similar yet broader selection of merchandise as found in its stores , sells merchandise through franchisee-owned stores in israel , and partners with a third-party digital marketplace to offer a limited selection of merchandise , which is available in asia . story_separator_special_tag the anthropologie wholesale division was established in fiscal 2018 and the urban outfitters wholesale division was established in fiscal 2019. our wholesale segment net sales accounted for approximately 8.8 % of consolidated net sales for fiscal 2019 , compared to 8.7 % for fiscal 2018. critical accounting policies and estimates our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the united states . these generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets , liabilities , net sales and expenses during the reporting period . our senior management has reviewed the critical accounting policies and estimates with the audit committee of our board of directors . our significant accounting policies are described in note 2 , “ summary of significant accounting policies , ” in the notes to our consolidated financial statements included in this annual report on form 10-k. we believe that the following discussion addresses our critical accounting policies , which are those that are most important to the portrayal of our financial condition , results of operations and cash flows and require management 's most difficult , subjective and complex judgments , often as a result of the need to make estimates about the effect of matters that are inherently uncertain . if actual results were to differ significantly from estimates made , the reported results could be materially affected . we are not currently aware of any reasonably likely events or circumstances that would cause our actual results to be materially different from our estimates . revenue recognition merchandise : merchandise is sold through retail stores , catalogs and the digital sales channel , as well as to wholesale customers and franchise partners . revenue is recognized when control of the promised goods is transferred to the customer . we have elected to treat shipping and handling as fulfillment activities and not a separate performance obligation . accordingly , we will recognize revenue for our single performance obligation at the point of sale or at the time of shipment , which is when transfer of control to the customer occurs . revenue does not include taxes assessed by governmental authorities , including value-added and other sales-related taxes , that are imposed on and concurrent with revenue-producing activities . revenue is recognized net of estimated customer returns . retail segment return policies vary by brand , but generally provide for no time limit on returns and the refund to be issued in either the form of original payment or as a gift card . payment for merchandise is tendered primarily by cash , check , credit card , debit card or gift card . uncollectible accounts receivable primarily results from unauthorized credit card transactions . we maintain an allowance for doubtful accounts for our wholesale segment accounts receivable , which we review on a regular basis and believe is sufficient to cover potential credit losses and billing adjustments . payment terms in our wholesale segment vary by customer with the most common being a net 30-day policy . food and beverage : revenue from restaurant sales and events is recognized upon completion of the service , when we satisfy our single performance obligation . customer deposits may be received in advance for events , which represents a contract liability until we satisfy our performance obligation . franchise fees : revenue from franchise operations primarily relates to merchandise sales to franchisees and royalty fees . merchandise sales to franchisees are discussed above under merchandise . royalty fees are based upon a percentage of franchisee net sales to third party customers and are recognized when such sales occur . gift cards : we account for a gift card transaction by recording a liability at the time the gift card is issued to the customer in exchange for consideration from the customer . at the time of issuance , we have an open performance obligation for the future delivery of promised goods or services . the liability remains outstanding until the card is redeemed by the customer , at which time we recognize revenue . over time , a portion of the outstanding gift cards will not be redeemed by the customer which we refer to as “ breakage ” . revenue is recognized from breakage over time in proportion to gift card redemptions . judgment is used in determining the amount of breakage revenue to be recognized and is based on historical gift card redemption patterns . gift card breakage revenue is included in net sales and is not material . our gift cards do not expire . customer loyalty programs : we maintain a customer loyalty program under our urban outfitters brand . under this program , customers can earn and accumulate points that convert to a reward coupon upon reaching a specified point threshold . reward coupons 20 c an be redeemed for merchandise discounts and expire 60 days after issuance . outstanding reward coupons and points earned through sale activity represent a performance obligation . revenue is deferred in an amount equal to the standalone selling price , takin g into account expected future redemptions , and recognized at the earlier of redemption or expiration . judgment is used in determining the expected future redemption rates . the redemption and expiration of reward coupons are included in net sales . there ar e no material accounting policies related to the anthroperks customer loyalty program outside of our general revenue recognition practices . sales return reserve we record a reserve for estimated product returns where the sale has occurred during the period reported , but the return is likely to occur subsequent to the period reported . the reserve for estimated product returns is based on our most recent historical return trends . if the actual return rate is materially different than our estimate , sales returns would be adjusted in the future .
| results of operations as a percentage of net sales the following table sets forth , for the periods indicated , the percentage of our net sales represented by certain income statement data and the change in certain income statement data from period to period . this table should be read in conjunction with the discussion that follows : replace_table_token_5_th ( 1 ) during fiscal 2018 , we recorded an additional $ 64.7 million in income tax expense related to a one-time charge on foreign earnings and profits and statutory rate changes on deferred taxes in relation to the tax act . during fiscal 2019 , we recorded an additional $ 1.2 million in income tax expense to adjust our initial provisional estimates for the tax act in our provision for income taxes . fiscal 2019 compared to fiscal 2018 net sales in fiscal 2019 increased by 9.3 % to $ 4.0 billion , from $ 3.6 billion in fiscal 2018. the $ 334.6 million increase was attributable to a $ 304.5 million , or 9.2 % , increase in retail segment net sales and a $ 30.1 million , or 9.5 % , increase in wholesale segment net sales . retail segment net sales for fiscal 2019 accounted for 91.2 % of total net sales compared to 91.3 % of total net sales during fiscal 2018. the growth in our retail segment net sales during fiscal 2019 was due to an increase of $ 256.1 million , or 8.2 % , in retail segment comparable net sales , which includes our digital channel , and an increase of $ 48.4 million in non-comparable net sales , including new store and franchise net sales . retail segment comparable net sales increased 11.4 % at free people , 8.0 % at urban outfitters and 7.5 % at the anthropologie group .
| 5,741 |
91 waste connections , inc. notes to consolidated financial statements story_separator_special_tag the following discussion should be read in conjunction with the “ selected financial data ” included in item 6 of this annual report on form 10-k , our consolidated financial statements and the related notes included elsewhere in this annual report on form 10-k. industry overview the solid waste industry is a local and highly competitive business , requiring substantial labor and capital resources . the participants compete for collection accounts primarily on the basis of price and , to a lesser extent , the quality of service , and compete for landfill business on the basis of tipping fees , geographic location and quality of operations . the solid waste industry has been consolidating and continues to consolidate as a result of a number of factors , including the increasing costs and complexity associated with waste management operations and regulatory compliance . many small independent operators and municipalities lack the capital resources , management , operating skills and technical expertise necessary to operate effectively in such an environment . the consolidation trend has caused solid waste companies to operate larger landfills that have complementary collection routes that can use company-owned disposal capacity . controlling the point of transfer from haulers to landfills has become increasingly important as landfills continue to close and disposal capacity moves farther from the collection markets it serves . generally , the most profitable operators within the solid waste industry are those companies that are vertically integrated or enter into long-term collection contracts . a vertically integrated operator will benefit from : ( 1 ) the internalization of waste , which is bringing waste to a company-owned landfill ; ( 2 ) the ability to charge third-party haulers tipping fees either at landfills or at transfer stations ; and ( 3 ) the efficiencies gained by being able to aggregate and process waste at a transfer station prior to landfilling . the e & p waste services industry is regional in nature and is also highly fragmented , with acquisition opportunities available in several active natural resource basins . competition for e & p waste comes primarily from smaller regional companies that utilize a variety of disposal methods and generally serve specific geographic markets , and other solid waste companies . in addition , customers in many markets have the option of using internal disposal methods or outsourcing to another third-party disposal company . the principal competitive factors in this business include : gaining customer approval of treatment and disposal facilities ; location of facilities in relation to customer activity ; reputation ; reliability of services ; track record of environmental compliance ; ability to accept multiple waste types at a single facility ; and price . the demand for our e & p waste services depends on the continued demand for , and production of , oil and natural gas . crude oil and natural gas prices historically have been volatile and the substantial reductions in crude oil prices that began in october 2014 , and continued through early 2016 , resulted in a decline in the level of drilling and production activity , reducing the demand for e & p waste services in the basins in which we operate . during the year ended december 31 , 2015 , we recorded charges totaling $ 517.8 million associated with the impairment of a portion of our goodwill , intangible assets and property and equipment within our e & p segment as a result of the sustained decline in oil prices being experienced at the time , together with market expectations of a likely slow recovery in such prices , making it more likely than not that the fair value of these assets had decreased below their respective carrying values . upon the adoption in january 2017 of new accounting guidance regarding goodwill impairment , we performed an impairment test for our e & p segment which showed its carrying value exceeded its fair value by an amount in excess of the carrying amount of goodwill , or $ 77.3 million . therefore , during the year ended december 31 , 2017 , we recorded an impairment charge of $ 77.3 million , consisting of the remaining carrying amount of goodwill at our e & p segment . at december 31 , 2017 , the total carrying value of intangible assets and property and equipment at our e & p segment is $ 67.8 million and $ 870.2 million , respectively . the prices of crude oil and natural gas have recovered from their low point in 2016 and the demand for our e & p waste services has improved as a result of increased production of oil and natural gas . if this recovery of the prices of crude oil and natural gas is not sustained , or if a further reduction in crude oil and natural gas prices occurs , it could lead to continued declines in the level of production activity and demand for our e & p waste services , which could result in the recognition of additional impairment charges on our intangible assets and property and equipment associated with our e & p operations . executive overview we are an integrated solid waste services company that provides waste collection , transfer , disposal and recycling services in mostly exclusive and secondary markets in the u.s. and canada . through our r360 environmental solutions subsidiary , we are also a leading provider of non-hazardous e & p waste treatment , recovery and disposal services in several of the most active natural resource producing areas in the u.s. we also provide intermodal services for the rail haul movement of cargo and solid waste containers in the pacific northwest through a network of intermodal facilities . 38 we seek to avoid highly competitive , large urban markets and instead target markets where we can attain high market share either through exclusive contracts , vertical integration or asset positioning . story_separator_special_tag 39 return of capital to shareholders in 2017 , we returned $ 132.0 million to shareholders through cash dividends declared by our board of directors , which also increased the quarterly cash dividend by 16.7 % from $ 0.12 to $ 0.14 per common share in october 2017. cash dividends increased by $ 39.5 million from $ 92.5 million in 2016 , an increase of 42.6 % due to an increase in common shares outstanding as a result of the progressive waste acquisition and a 24 % increase in the quarterly cash dividend in october 2016 , followed by the additional increase in 2017. our board of directors intends to review the quarterly dividend during the fourth quarter of each year , with a long-term objective of increasing the amount of the dividend . in 2017 , we did not repurchase any common shares due to expectations regarding the size and timing of acquisitions . we expect the amount of capital we return to shareholders through share repurchases to vary depending on our financial condition and results of operations , capital structure , the amount of cash we deploy on acquisitions , the market price of our common shares , and overall market conditions . we can not assure you as to the amounts or timing of future share repurchases or dividends . we have the ability under our credit agreement and master note purchase agreements to repurchase our common shares and pay dividends provided that we maintain specified financial ratios . capital position we target a leverage ratio , as defined in our credit agreement , of approximately 2.75x – 3.0x total debt to ebitda . the percentage increase in ebitda in 2017 more than offset the percentage increase in debt in 2017 ; therefore , our leverage ratio decreased to 2.53x at december 31 , 2017 , from 2.69x at december 31 , 2016. critical accounting estimates and assumptions the preparation of financial statements in conformity with u.s. generally accepted accounting principles requires estimates and assumptions that affect the reported amounts of assets and liabilities , revenues and expenses and related disclosures of contingent assets and liabilities in the consolidated financial statements . as described by the sec , critical accounting estimates and assumptions are those that may be 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 that have a material impact on the financial condition or operating performance of a company . such critical accounting estimates and assumptions are applicable to our reportable segments . based on this definition , we believe the following are our critical accounting estimates . insurance liabilities . we maintain high deductible or self-insured retention insurance policies for automobile , general , employer 's , environmental , cyber , employment practices and directors ' and officers ' liability as well as for employee group health insurance , property insurance and workers ' compensation . we carry umbrella policies for certain types of claims to provide excess coverage over the underlying policies and per incident deductibles or self-insured retentions . our insurance accruals are based on claims filed and estimates of claims incurred but not reported and are developed by our management with assistance from our third-party actuary and third-party claims administrator . the insurance accruals are influenced by our past claims experience factors , which have a limited history , and by published industry development factors . if we experience insurance claims or costs above or below our historically evaluated levels , our estimates could be materially affected . the frequency and amount of claims or incidents could vary significantly over time , which could materially affect our self-insurance liabilities . additionally , the actual costs to settle the self-insurance liabilities could materially differ from the original estimates and cause us to incur additional costs in future periods associated with prior year claims . income taxes . deferred income tax assets and liabilities are determined based on differences between the financial reporting and income tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse . if our judgment and estimates concerning assumptions made in calculating our expected future income tax rates are incorrect , our deferred income tax assets and liabilities would change . based on our deferred income tax liability balance at december 31 , 2017 , each 0.1 percentage point change to our expected future income tax rates would change our deferred income tax liability balance and income tax expense by approximately $ 2.5 million . on december 22 , 2017 , the u.s. government enacted comprehensive tax legislation commonly referred to as the tax cuts and jobs act . the tax act makes broad and complex changes to the u.s. tax code that will affect 2017 , including , but not limited to , ( 1 ) requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years and ( 2 ) bonus depreciation that will allow for full expensing of qualified property . 40 the tax act also establishes new tax laws that will affect 2018 , including , but not limited to , ( 1 ) a reduction of the u.s. federal corporate income tax rate from 35 percent to 21 percent ; ( 2 ) elimination of the corporate alternative minimum tax ; ( 3 ) the creation of the base erosion anti-abuse tax , which acts similar to a new minimum tax ; ( 4 ) a general elimination of u.s. federal income taxes on dividends from foreign subsidiaries ; ( 5 ) a new provision designed to tax global intangible low-taxed income , which allows for the possibility of using foreign tax credits , or ftcs , and a deduction of up to 50 percent to offset the income tax liability ( subject to some limitations ) ; ( 6 ) a new limitation on deductible interest expense ; ( 7 ) limitations on
| results of operations the following table sets forth items in our consolidated statements of net income ( loss ) in thousands of u.s. dollars and as a percentage of revenues for the periods indicated : replace_table_token_12_th years ended december 31 , 2017 and 2016 revenues . total revenues increased $ 1.255 billion , or 37.2 % , to $ 4.630 billion for the year ended december 31 , 2017 , from $ 3.376 billion for the year ended december 31 , 2016. during the year ended december 31 , 2017 , incremental revenue from acquisitions closed during , or subsequent to , the year ended december 31 , 2016 , increased revenues by approximately $ 1.059 billion , of which the progressive waste acquisition contributed $ 826.9 million . operations that were divested in 2017 decreased revenues by approximately $ 55.8 million for the year ended december 31 , 2017. during the year ended december 31 , 2017 , the net increase in prices charged to our customers at our existing operations was $ 100.0 million , consisting of $ 98.2 million of core price increases and $ 1.8 million from fuel , materials and environmental surcharges due primarily to an increase in the market price of diesel fuel . during the year ended december 31 , 2017 , volume increases in our existing business increased solid waste revenues by $ 35.7 million from increases in roll off collection , transfer station volumes and landfill volumes resulting from increased construction and general economic activity in our markets , partially offset by declines in residential volumes resulting from certain contracts acquired with the progressive waste acquisition that were terminated subsequent to june 30 , 2016 and declines in commercial volumes due to intentional losses of certain low margin commercial collection customers .
| 5,742 |
74 excluding mortgage and asset-backed securities , no securities from the same issuer had an aggregate unrealized loss in excess of $ 1.1 million at december 31 , 2014 , with story_separator_special_tag when reading the following management 's discussion and analysis of financial condition and results of operations , please refer to our consolidated financial statements and related notes included in item 8 , `` financial statements and supplementary data , '' of this report . unless noted otherwise , all references to fbl financial group , inc. ( we or the company ) include all of its direct and indirect subsidiaries , including its insurance subsidiaries farm bureau life insurance company ( farm bureau life ) and greenfields life insurance company ( greenfields life ) . in this discussion and analysis , we explain our consolidated results of operations , financial condition and where appropriate , factors that management believes may affect future performance , including : our revenues and expenses in the periods presented , changes in revenues and expenses between periods , sources of earnings and changes in stockholders ' equity , impact of these items on our overall financial condition and expected sources and uses of cash . we have organized our discussion and analysis as follows : first , we discuss our business and drivers of profitability . we then describe the business environment in which we operate including factors that affect operating results . we highlight significant events that are important to understanding our results of operations and financial condition . we then review the results of operations beginning with an overview of the total company results , followed by a more detailed review of those results by operating segment . finally , we discuss critical accounting policies and recently issued accounting standards . the critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management 's most difficult or complex judgment . story_separator_special_tag investment could adversely impact the demand for our products in the future . we also may experience a higher incidence of claims , lapses or surrenders of policies during such times . we can not predict whether or when such actions may occur , or what impact , if any , such actions could have on our business , results of operations , cash flows or financial condition . economic environmental factors which may impact our business include , but are not limited to , the following : gross domestic product increased approximately 2.6 % during 2014 based on early estimates . u.s. unemployment was estimated to be 5.6 % through december 2014. u.s. net farm income is forecast to decrease 24.6 % and farm real estate value is forecast to increase 2.9 % during 2014. the u.s. 10 year treasury yield declined during 2014 from 3.04 % at december 31 , 2013 to 2.17 % at december 31 , 2014. continued uncertainty as to actions the united states congress will take to address the national debt , including potential actions to change the tax advantages of life insurance . the low market interest rate environment continues to impact our investment yields as well as the interest we credit on our interest sensitive products . interest rates remained low during 2014 , as the benchmark 10 year u.s. treasury yield declined during the year , offsetting moderate increases in overall credit spreads and placing further strain on available investment yields . our average investment portfolio yield declined during 2014 as yields on new acquisitions were generally lower than the average portfolio yield . as a result we proactively reduced customer crediting rates on certain annuity and universal life products . low crediting rates pose challenges to maintaining attractive annuity and universal life products , although our rates are comparable to other insurance companies , allowing us to maintain our competitive position within the market . we continue to reassess the future profitability of our interest sensitive products as future profit expectations impact the valuation of deferred policy acquisition costs . during 2014 we unlocked our profitability assumptions to reflect the expectation of lower earned spread rates , primarily driven by the expected continuation of low market interest rates . we have , however , experienced an increase in the fair value of our fixed maturity security portfolio during 2014 due to declining market yields . see the segment discussion and “ financial condition ” section that follows for additional information regarding the impact of low market interest rates on our business . 25 results of operations for the three years ended december 31 , 2014 replace_table_token_11_th ( 1 ) amounts are net of adjustments , as applicable , to amortization of unearned revenue reserves , deferred acquisition costs , value of insurance in force acquired and income taxes attributable to these items . our operating income increased in 2014 , compared to 2013 , primarily due to the impact of an increase in the volume of business in force , higher investment fee income and lower expenses , partially offset by the impact of unlocking assumptions used in the calculation of amortization of deferred acquisition costs and the value of insurance in force . operating income increased in 2013 , compared to 2012 , primarily due to the impact of an increase in the volume of business in force , higher corporate segment net investment income and the impact of unlocking . these increases were partially offset by an increase in death benefits in 2013. net income increased in 2014 , compared to 2013 , primarily due to the increase in operating income and was largely offset by a decrease in net realized gains from investment sales . net income increased in 2013 , compared to 2012 , due to increases in operating income and realized gains from investment sales , and a reduction in losses from discontinued operations . see the discussion that follows for details regarding operating income by segment . story_separator_special_tag death benefits , net of reinsurance and reserves released during 2014 , remained level compared with 2013. the increase in 2013 compared to 2012 was primarily due to an increase in the average size of claims . the weighted average yield on cash and invested assets for interest sensitive life insurance products decreased in 2014 and 2013 compared to prior periods due to lower yields on new investment acquisitions from premium receipts and reinvestment of 29 the proceeds from maturing investments , compared with the average existing portfolio yield and continued decreases in investment fee income . see the `` financial condition '' section which follows for additional information regarding the yields obtained on investment acquisitions . weighted average interest crediting rates on our interest sensitive life insurance products were impacted by crediting rate decreases taken on various products in 2014 , 2013 and 2012 in response to the declining portfolio yield , partially offset by sales of products with higher crediting rates . replace_table_token_16_th replace_table_token_17_th ( 1 ) includes prepayment fee income and net discount accretion on mortgage and asset-backed securities resulting from changing payment speed assumptions at the end of the period . 30 pre-tax operating income increased in 2014 and 2013 compared to prior periods . the increase in 2014 was primarily due to an increase in investment fee income and decreases in interest expense , other expenses and death benefits , partially offset by a decrease in net investment income and an increase in the amortization of deferred acquisition costs from the impact of market performance and profits on our variable business . the increase in 2013 was primarily due to an increase in net investment income , a decrease in amortization of deferred acquisition costs from the impact of market performance and profits on our variable business and a decrease in death benefits , partially offset by an increase in pre-tax equity loss . other income and other expenses includes fees and expenses from sales of brokered products and operating results of our non-insurance subsidiaries , which include management , advisory , marketing and distribution services and leasing activities . the decrease in other expenses in 2014 compared to 2013 was primarily due to one-time impairment charges of $ 0.7 million in 2013 and decreases in salaries and benefits . other income in 2012 included administrative fee income of $ 3.5 million received from equitrust life for accounting and other services rendered to support the transition of that company subsequent to its sale in december 2011. amortization of deferred acquisition costs and unearned revenue reserves changed over the three-year period primarily due to the impact of unlocking and market performance in the separate accounts . death benefits net of reinsurance and reserves released decreased in 2014 compared to 2013 due to lower claim counts and a decrease in the average claim size . death benefits decreased in 2013 compared to 2012 primarily due to a decrease in the average claim size . net investment income decreased in 2014 compared to 2013 as we had lower invested assets held in the segment during 2014 due to higher stockholder dividends , share repurchase activity and the retirement of long-term debt in the third quarter of 2013. the retirement of debt also resulted in a decrease in interest income in 2014 compared to 2013. net investment income increased in 2013 compared to 2012 due to an increase in investments as well as the impact of higher yielding securities held in the portfolio . equity income ( loss ) includes our proportionate share of gains and losses attributable to our ownership interest in partnerships , joint ventures and certain companies where we exhibit some control but have a minority ownership interest . given the timing of availability of financial information from our equity investees , we will consistently use information that is as much as three months in arrears for certain of these entities . several of these entities are investment companies whose operating results are derived primarily from unrealized and realized gains and losses generated by their investment portfolios . as is normal with these types of entities , the level of these gains and losses is subject to fluctuation from period to period depending on the prevailing economic environment , changes in prices of bond and equity securities held by the investment partnerships , timing and success of initial public offerings or exit strategies , and the timing of the sale of investments held by the partnerships and joint ventures . we have increased our investments in low income housing tax credit partnerships which generate pre-tax losses but after-tax gains as the related tax credits are realized . the timing of the realization of tax credits is subject to fluctuation from period to period due to the timing of housing project completions and the approval of tax credits . equity income , net of related income taxes , was as follows : replace_table_token_18_th 31 income taxes on operating income the effective tax rate on operating income was 23.2 % for 2014 , 25.3 % for 2013 and 29.0 % for 2012 . the effective tax rates differ from the federal statutory rate of 35 % primarily due to the impact of low income housing credits from equity method investees , tax-exempt interest and dividend income and incentive stock option deductions . the 2014 effective tax rate decreased , compared to 2013 , primarily due to an increase in tax credits from low income housing tax credit partnerships . the 2013 effective tax rates decreased compared to 2012 primarily due to an increase in our holdings in tax-exempt municipal securities and an increase in tax credits from low income housing tax credit partnerships . see note 5 to our consolidated financial statements included in item 8 for additional information on income taxes . replace_table_token_19_th replace_table_token_20_th income taxes on operating income adjustments on continuing operations are recorded at 35 % as there are no permanent differences between book and taxable income relating to these adjustments .
| overview and profitability we operate predominantly in the life insurance industry through our principal subsidiary , farm bureau life . farm bureau life markets individual life insurance policies and annuity contracts to farm bureau members and other individuals and businesses in the midwestern and western sections of the united states through an exclusive agency force . several subsidiaries support various functional areas of farm bureau life and other affiliates by providing investment advisory , marketing and distribution , and leasing services . in addition , we manage two farm bureau affiliated property-casualty companies . we analyze operations by reviewing financial information regarding our primary products that are aggregated in annuity and life insurance product segments . in addition , our corporate and other segment includes various support operations , corporate capital and other product lines that are not currently underwritten by the company . we analyze our segment results based on pre-tax operating income , which excludes the impact of certain items that are included in net income . see note 13 to our consolidated financial statements included in item 8 for further information regarding how we define our segments and operating income . we also include within our analysis “ premiums collected , ” which is not a measure used in financial statements prepared in accordance with u.s. generally accepted accounting principles ( gaap ) , but is a common industry measure of agent productivity . see note 13 to our consolidated financial statements included in item 8 for further information regarding this measure and its relationship to gaap revenues . on december 30 , 2011 , we completed the sale of our wholly-owned subsidiary , equitrust life insurance company ( equitrust life ) . as a result of the sale , certain lines of business are considered discontinued operations , and unless otherwise indicated , have been removed from the discussion that follows .
| 5,743 |
risk factors ” ; and the consolidated financial statements and related notes in “ item 8. financial statements and supplementary data ” . this section of this form 10-k generally discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019. discussions of 2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this form 10-k can be found in `` management 's discussion and analysis of financial condition and results of operations '' in part ii , item 7 of the company 's annual report on form 10-k for the fiscal year ended december 31 , 2019. general real estate investment trust we are a reit specializing in the acquisition , ownership , leasing , financing and redevelopment of convenience stores , gasoline stations and other automotive-related and retail real estate , including express car washes , instant oil change centers , automotive service centers , automotive parts retailers and select other properties . as of december 31 , 2020 , we owned 901 properties and leased 58 properties from third-party landlords . as a reit , we are not subject to federal corporate income tax on the taxable income we distribute to our stockholders . in order to continue to qualify for taxation as a reit , we are required , among other things , to distribute at least 90 % of our ordinary taxable income to our stockholders each year . covid-19 in march 2020 , the world health organization declared the outbreak of covid-19 as a pandemic . the impact from the rapidly changing market and economic conditions due to the covid-19 pandemic remains uncertain . while we have not incurred significant disruptions to our financial results thus far from the covid-19 pandemic , we are unable to accurately predict the impact that covid-19 will have on our business , operations and financial result due to numerous evolving factors , including the severity of the disease , the duration of the pandemic , actions that may be taken by governmental authorities , the impact to our tenants , including the ability of our tenants to make their rental payments and any closures of tenants ' facilities . additionally , while we expect to continue our overall growth strategy during the 2021 and to fund our business operations from cash flows from our properties and our revolving facility , the rapid developments and fluidity of covid-19 may cause us to re-evaluate , if not suspend , our growth strategy and or to rely more heavily on borrowings under our revolving facility , proceeds from the sale of shares of our common stock under our atm program , or other sources of liquidity . see “ part i. item . 1a . risk factors ” in this annual report on form 10-k for additional information . our triple-net leases substantially all of our properties are leased on a triple-net basis to convenience store operators , petroleum distributors and other automotive-related and retail tenants . our tenants either operate their business at our properties directly or sublet our properties and supply fuel to third parties that operate the convenience store and gasoline station businesses . our triple-net lease tenants are responsible for the payment of all taxes , maintenance , repairs , insurance and other operating expenses relating to our properties , and are also responsible for environmental contamination occurring during the terms of their leases and in certain cases also for environmental contamination that existed before their leases commenced . substantially all of our tenants ' financial results depend on convenience store sales , the sale of refined petroleum products or rental income from their subtenants . as a result , our tenants ' financial results are highly dependent on the performance of the petroleum marketing industry , which is highly competitive and subject to volatility . ( for additional information regarding risks related to our tenants ' dependence on the performance of the petroleum industry , see “ item 1a . risk factors – substantially all of our tenants depend on the same industry for their revenues ” in this form 10-k. ) during the terms of our leases , we monitor the credit quality of our triple-net lease tenants by reviewing their published credit rating , if available , reviewing publicly available financial statements , or reviewing financial or other operating statements which are delivered to us pursuant to applicable lease agreements , monitoring news reports regarding our tenants and their respective businesses , and monitoring the timeliness of lease payments and the performance of other financial covenants under their leases . for additional information regarding our real estate business , our properties and environmental matters , see “ item 1. business – company operations ” , “ item 2. properties ” and “ environmental matters ” below . our properties net lease . as of december 31 , 2020 , we leased 946 of our properties to tenants under triple-net leases . our net lease properties include 829 properties leased under 31 separate unitary or master triple-net leases and 117 properties leased under single unit triple-net leases . these leases generally provide for an initial term of 15 or 20 years with options for successive renewal terms of up to 20 years and periodic rent escalations . several of our leases provide for additional rent based on the aggregate volume of fuel sold . in addition , certain of our leases require the tenants to invest capital in our properties , substantially all of which is related to the replacement of usts that are owned by our tenants . 30 redevelopment . as of december 31 , 2020 , we were actively redeveloping six of our properties either as a new convenience and gasoline use or for alternative single-tenant net lease retail uses . vacancies . as of december 31 , 2020 , seven of our properties were vacant . we expect that we will either sell or enter into new leases on these properties over time . story_separator_special_tag ” supplemental non-gaap measures we manage our business to enhance the value of our real estate portfolio and , as a reit , place particular emphasis on minimizing risk , to the extent feasible , and generating cash sufficient to make required distributions to stockholders of at least 90 % of our ordinary taxable income each year . in addition to measurements defined by gaap , we also focus on funds from operations ( “ ffo ” ) and adjusted funds from operations ( “ affo ” ) to measure our performance . ffo and affo are generally considered by analysts and investors to be appropriate supplemental non-gaap measures of the performance of reits . ffo and affo are not in accordance with , or a substitute for , measures prepared in accordance with gaap . in addition , ffo and affo are not based on any comprehensive set of accounting rules or principles . neither ffo nor affo represent cash generated from operating activities calculated in accordance with gaap and therefore these measures should not be considered an alternative for gaap net earnings or as a measure of liquidity . these measures should only be used to evaluate our performance in conjunction with corresponding gaap measures . ffo is defined by the national association of real estate investment trusts ( “ nareit ” ) as gaap net earnings before depreciation and amortization of real estate assets , gains or losses on dispositions of real estate , impairment charges and the cumulative effect of accounting changes . our definition of affo is defined as ffo less ( i ) certain revenue recognition adjustments ( defined below ) , ( ii ) changes in environmental estimates , ( iii ) accretion expense , ( iv ) environmental litigation accruals , ( v ) insurance reimbursements , ( vi ) legal settlements and judgments , ( vii ) acquisition costs expensed and ( viii ) other unusual items that are not reflective of our core operating performance . other reits may use definitions of ffo and or affo that are different from ours and , accordingly , may not be comparable . we believe that ffo and affo are helpful to analysts and investors in measuring our performance because both ffo and affo exclude various items included in gaap net earnings that do not relate to , or are not indicative of , our core operating performance . specifically , ffo excludes items such as depreciation and amortization of real estate assets , gains or losses on dispositions of real estate , and impairment charges . however , gaap net earnings and ffo typically include certain other items that the we exclude from affo , including the impact of revenue recognition adjustments comprised of deferred rental revenue ( straight-line rental revenue ) , the net amortization of above-market and below-market leases , adjustments recorded for the recognition of rental income from direct financing leases and the amortization of deferred lease incentives ( collectively , “ revenue recognition adjustments ” ) that do not impact our recurring cash flow and which are not indicative of our core operating performance . deferred rental revenue results primarily from fixed rental increases scheduled under certain leases with our tenants . in accordance with gaap , the aggregate minimum rent due over the current term of these leases is recognized on a straight-line basis rather than when payment is contractually due . the present value of the difference between the fair market rent and the contractual rent for in-place leases at the time properties are acquired is amortized into revenues from rental properties over the remaining lives of the in-place leases . income from direct financing leases is recognized over the lease terms using the effective interest method , which produces a constant periodic rate of return on the net investments in the leased properties . the amortization of deferred lease incentives represents our funding commitment in certain leases , which deferred expense is recognized on a straight-line basis as a reduction of rental revenue . gaap net earnings and ffo also include non-cash and or unusual items such as changes in environmental estimates , environmental accretion expense , allowances for credit loss on notes and mortgages receivable and direct finance leases , environmental litigation accruals , insurance reimbursements , legal settlements and judgments , property acquisition costs expensed and loss on extinguishment of debt , that do not impact our recurring cash flow and which are not indicative of our core operating performance . we pay particular attention to affo which we believe provides a more accurate depiction of our core operating performance than either gaap net earnings or ffo . by providing affo , we believe that we are presenting useful information that assists analysts and investors to better assess our core operating performance . further , we believe that affo is useful in comparing the sustainability of our core operating performance with the sustainability of the core operating performance of other real estate companies . 32 a reconciliation of net earnings to ffo and affo is as follows ( in thousands , except per share amounts ) : replace_table_token_5_th story_separator_special_tag administrative expense for the year ended december 31 , 2020 , was principally due to a $ 0.7 million increase in stock-based compensation , a $ 0.7 million increase in other employee-related expenses and a $ 0.6 million increase in legal and other professional fees . depreciation and amortization expense was $ 30.2 million for the year ended december 31 , 2020 , as compared to $ 25.2 million for the year ended december 31 , 2019. the increase in depreciation and amortization expense was primarily due to depreciation and amortization of properties acquired offset by a decrease in depreciation charges related to asset retirement costs , the effect of certain assets becoming fully depreciated , lease terminations and dispositions of real estate .
| results of operations year ended december 31 , 2020 , compared to year ended december 31 , 2019 revenues from rental properties increased by $ 6.9 million to $ 144.6 million for the year ended december 31 , 2020 , as compared to $ 137.7 million for the year ended december 31 , 2019. the increase in revenues from rental properties was primarily due to $ 6.1 million of revenue from the properties acquired in 2020. rental income contractually due from our tenants included in revenues from rental properties was $ 128.2 million for the year ended december 31 , 2020 , as compared to $ 119.3 million for the year ended december 31 , 2019. tenant reimbursements , which are included in revenues from rental properties , and which consist of real estate taxes and other municipal charges paid by us which are reimbursable by our tenants pursuant to the terms of triple-net lease agreements , were $ 17.3 million and $ 17.5 million for the years ended december 31 , 2020 and 2019 , respectively . interest income on notes and mortgages receivable was $ 2.7 million for the year ended december 31 , 2020 , as compared to $ 2.9 million for the year ended december 31 , 2019. in accordance with gaap , we recognize revenues from rental properties in amounts which vary from the amount of rent contractually due during the periods presented . as a result , revenues from rental properties include revenue recognition adjustments comprised of non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line basis over the current lease term , the net amortization of above-market and below-market leases , recognition of rental income under direct financing leases using the effective interest rate method which produces a constant periodic rate of return on the net investments in the leased properties and the amortization of deferred lease incentives .
| 5,744 |
future increases in these costs could adversely affect the profitability of the company if it can not pass the cost increases along to its customers in the form of price increases or if the timing of price increases does not closely match the cost increases . the covid-19 outbreak , and the government and private sector responses thereto , has negatively impacted certain of the company 's customers who have been forced to temporarily close retail stores or have seen a significant decline in their sales . as a result , the company experienced a decrease in sales to these customers beginning in march 2020. this decrease , however , has been somewhat offset by higher sales to other customers and sales in other channels , such as e-commerce . the company can not predict with certainty when or if these customers will reopen their retail stores or if demand from consumers will return to the same level as it was prior to the covid-19 outbreak . if the company 's customers experience financial difficulties as a result of the covid-19 outbreak , they may cause them to close their retail stores permanently , reduce orders , file for bankruptcy or liquidate , any of which may negatively impact the company 's sales . 16 in addition , beginning in february 2020 the company experienced supply chain disruption because nearly all of the company 's products are imported from china . while the company 's product supply from chinese manufacturers has begun to return to normal levels , the supply chain could again be disrupted if there is another outbreak of covid-19 in china . as of may 18 , 2020 , the majority of the company 's foreign suppliers have returned to full capacity . the company continues to monitor the impact of the covid-19 outbreak on its supply chain , manufacturing and distribution operations , customers and employees , as well as the u.s. economy in general . however , due to the uncertainty as to when governmental restrictions on business will be fully lifted , the impact thereof , and the duration and widespread nature of the covid-19 outbreak , the company can not currently predict the long-term impact on its operations and financial results . the uncertainties associated with the covid-19 outbreak include potential adverse effects on the overall economy , the company 's supply chain , transportation services , employees and customers , consumer sentiment in general , and traffic within the retail stores that carry the company 's products . the covid-19 outbreak could adversely affect the company 's revenues , earnings , liquidity and cash flows and may require significant actions in response , including employee furloughs , closings of company facilities , expense reductions or discounts of the pricing of the company 's products , all in an effort to mitigate such effects . for an additional discussion of trends , uncertainties and other factors that could impact the company 's operating results , refer to “ risk factors ” in item 1a . of part i. of this annual report on form 10-k. financial position , liquidity and capital resources net cash provided by operating activities decreased from $ 9.0 million for the fiscal year ended march 31 , 2019 to $ 8.5 million for the fiscal year ended march 29 , 2020. in the current year , the company experienced a decrease in its accounts payable balances that was $ 1.7 million higher than the increase in the prior year , an increase in its accounts receivable balances that was $ 757,000 higher than the decrease in the prior year and a decrease in its reserve for unrecognized tax liabilities that was $ 650,000 higher than the increase in the prior year . as offsets to these decreases in cash provided by operating activities , the company in the current year experienced a decrease in its inventory balances that was $ 1.5 million higher than the decrease in the prior year and an increase its net income in the current year that was $ 1.5 million higher than in the prior year . net cash used in investing activities was $ 678,000 in fiscal year 2020 compared with $ 751,000 in fiscal year 2019. the decrease in fiscal year 2020 was due primarily to lower payments in the current year for expenditures for property , plant and equipment . net cash used in financing activities decreased from $ 8.3 million in fiscal 2019 to $ 7.7 million in fiscal 2019. in the current year , the company experienced net repayments under its revolving line of credit that were $ 3.1 million lower than the prior year . offsetting this decrease in cash used in financing activities were dividend payments that were $ 2.6 million higher in the current year than the prior year , due primarily to the payment in the current year of a special dividend in the amount of $ 2.5 million . the company 's future performance is , to a certain extent , subject to general economic , financial , competitive , legislative , regulatory and other factors beyond its control . based upon the current level of operations , the company believes that its cash flow from operations and the availability on its revolving line of credit will be adequate to meet its liquidity needs . the company 's credit facility at march 29 , 2020 consisted of a revolving line of credit under a financing agreement with the cit group/commercial services , inc. ( “ cit ” ) , a subsidiary of cit group inc. , of up to $ 26.0 million , which includes a $ 1.5 million sub-limit for letters of credit , bearing interest at the rate of prime minus 0.5 % or libor plus 1.75 % . the financing agreement matures on july 11 , 2022 and is secured by a first lien on all assets of the company . story_separator_special_tag the majority of the company 's sales consists of single performance obligation arrangements for which the transaction price for a given product sold is equivalent to the price quoted for the product , net of any stated discounts applicable at a point in time . each sales transaction results in an implicit contract with the customer to deliver a product as directed by the customer . shipping and handling costs that are charged to customers are included in net sales , and the company 's costs associated with shipping and handling activities are included in cost of products sold . a provision for anticipated returns , which are based upon historical returns and claims , is provided through a reduction of net sales and cost of products sold in the reporting period within which the related sales are recorded . actual returns and claims experienced in a future period may differ from historical experience , and thus , the company 's provision for anticipated returns at any given point in time may be over-funded or under-funded . the company recognizes revenue associated with unredeemed store credits and gift certificates at the earlier of their redemption by customers , their expiration or when their likelihood of redemption becomes remote , which is generally two years from the date of issuance . 18 revenue from sales made directly to consumers is recorded when the shipped products have been received by customers , and excludes sales taxes collected on behalf of governmental entities . revenue from sales made to retailers is recorded when legal title has been passed to the customer based upon the terms of the customer 's purchase order , the company 's sales invoice , or other associated relevant documents . such terms usually stipulate that legal title will pass when the shipped products are no longer under the control of the company , such as when the products are picked up at the company 's facility by the customer or by a common carrier . payment terms can vary from prepayment for sales made directly to consumers to payment due in arrears ( generally , 60 days of being invoiced ) for sales made to retailers . allowances against accounts receivable : revenue from sales made to retailers is reported net of allowances for anticipated returns and other allowances , including cooperative advertising allowances , warehouse allowances , placement fees , volume rebates , coupons and discounts . such allowances are recorded commensurate with sales activity or using the straight-line method , as appropriate , and the cost of such allowances is netted against sales in reporting the results of operations . the provision for the majority of the company 's allowances occurs on a per-invoice basis . when a customer requests to have an agreed-upon deduction applied against the customer 's outstanding balance due to the company , the allowances are correspondingly reduced to reflect such payments or credits issued against the customer 's account balance . the company analyzes the components of the allowances for customer deductions monthly and adjusts the allowances to the appropriate levels . the timing of funding requests for advertising support can cause the net balance in the allowance account to fluctuate from period to period . the timing of such funding requests should have no impact on the consolidated statements of income since such costs are accrued commensurate with sales activity or using the straight-line method , as appropriate . valuation of long-lived assets and identifiable intangible a s sets : in addition to the systematic annual depreciation and amortization of the company 's fixed assets and identifiable intangible assets , the company reviews for impairment long-lived assets and identifiable intangible assets whenever events or changes in circumstances indicate that the carrying amount of any asset may not be recoverable . in the event of impairment , the asset is written down to its fair market value . assets to be disposed of , if any , are recorded at the lower of net book value or fair market value , less estimated costs to sell at the date management commits to a plan of disposal , and are classified as assets held for sale on the consolidated balance sheets . inventory valuation : on a periodic basis , management reviews its inventory quantities on hand for obsolescence , physical deterioration , changes in price levels and the existence of quantities on hand which may not reasonably be expected to be sold within the company 's normal operating cycle . to the extent that any of these conditions is believed to exist or the market value of the inventory expected to be realized in the ordinary course of business is otherwise no longer as great as its carrying value , an allowance against the inventory value is established . to the extent that this allowance is established or increased during an accounting period , an expense is recorded in cost of products sold in the company 's consolidated statements of income . only when inventory for which an allowance has been established is later sold or is otherwise disposed is the allowance reduced accordingly . significant management judgment is required in determining the amount and adequacy of this allowance . in the event that actual results differ from management 's estimates or these estimates and judgments are revised in future periods , the company may not fully realize the carrying value of its inventory or may need to establish additional allowances , either of which could materially impact the company 's financial position and results of operations . item 8. financial statements and supplementary data refer to pages 23 and f-1 through f-20 hereof . i tem 9. c hanges in and disagreements with accountants on accounting and financial disclosure not applicable . 19 i tem 9a .
| results of operations the following table contains results of operations for fiscal years 2020 and 2019 and the dollar and percentage changes for those periods ( in thousands , except percentages ) . replace_table_token_3_th net sales : sales of $ 73.4 million for 2020 were $ 3.0 million lower than 2019 , a decrease of 3.9 % , primarily due to the timing of shipments to certain retailers as well as a program that was discontinued during the second quarter of 2020. sales of bibs , bath , developmental toys , feeding , baby care and disposable products in the current year decreased by $ 360,000 over the prior year , while sales of bedding , blankets and accessories in the current year decreased by $ 2.6 million . gross profit : gross profit decreased by $ 717,000 and increased from 29.2 % of net sales for 2019 to 29.4 % of net sales for 2020. the decrease in amount is primarily due to lower sales in the current year . marketing and administrative expenses : marketing and administrative expenses decreased by $ 1.3 million for fiscal year 2020 compared with fiscal year 2019 , which included a decrease in the current year of $ 525,000 in overall compensation costs as compared to the prior year . in addition , charges in the current year for outside services and advertising decreased by $ 284,000 and $ 122,000 , respectively , as compared to the prior year . finally , the prior year included $ 210,000 in charges incurred that were associated with transferring most of the sassy-branded developmental toy , feeding and baby care product line inventory from grand rapids , michigan to the company 's distribution facility in compton , california .
| 5,745 |
( 12 ) commitments and contingencies legal proceedings the company periodically becomes subject to legal proceedings and claims arising in connection with its business . the ultimate legal and financial liability of the company in respect to all proceedings , claims and lawsuits , pending or threatened , can not be estimated with any certainty . as of the date of this report story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes appearing elsewhere in this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this annual report on form 10-k , including information with respect to our plans and strategy for our business and related financing , includes forward-looking statements that involve risks and uncertainties and should be read together with the “ risk factors ” section of this annual report on form 10-k 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 . 68 overview business we are a clinical-stage therapeutics company focused on developing innovative products at the intersection of drugs and devices that address significant unmet medical needs in the treatment of cardiopulmonary diseases . our focus is the continued development of our nitric oxide therapy for patients with pulmonary hypertension , or ph , using our proprietary delivery system , inopulse , with pulmonary arterial hypertension , or pah , representing the lead indication . our inopulse platform is based on our proprietary pulsatile nitric oxide delivery device . in february 2016 , we announced positive data from the final analysis of our phase 2 long-term extension clinical trial of inopulse for pah , which was part 2 of our phase 2 clinical trial of inopulse for pah . the data indicates a sustainability of benefit to pah patients who received inopulse therapy at the 75 mcg/kg of ideal body weight/hour dose for an average of greater than 12 hours per day and were on long-term oxygen therapy , or ltot . after reaching an agreement with the u.s. food and drug administration , or fda , and the european medicines agency , or ema , on our phase 3 protocol , we are moving forward with phase 3 development . in september 2015 , the fda issued a special protocol assessment , or spa , for our phase 3 pah program for inopulse , which will include two confirmatory clinical trials . the first of the two phase 3 trials , or inovation-1 , has been initiated . during january 2017 , we received confirmation from the fda of its acceptance of all of our proposed modifications to our phase 3 program . under the modified phase 3 program , the ongoing inovation-1 study , and a second confirmatory randomized withdrawal study with approximately 40 patients who will be crossing over from the inovation-1 study , can serve as the two adequate and well-controlled studies to support a nda filing for inopulse in pah subjects on ltot . both studies include an interim analysis approximately half-way through each study to assess for efficacy and futility . the interim analysis for the inovation-1 study also includes a potential sample size reassessment . in january 2018 , we announced that our inovation-1 study enrollment exceeded 100 patients , representing more than half of the anticipated enrollment . we completed a randomized , placebo-controlled , double-blind , dose-confirmation phase 2 clinical trial of inopulse for ph-copd in july 2014. we received results from this trial , and completed further phase 2 testing to demonstrate the potential benefit on exercise capacity . in september 2015 , an oral presentation of late-breaking data from a clinical trial sponsored by us was presented at the european respiratory society international congress 2015 in amsterdam . the data showed that inopulse improved vasodilation in patients with ph-copd . in july 2016 , the results were published in the international journal of copd in an article titled “ pulmonary vascular effects of pulsed inhaled nitric oxide in copd patients with pulmonary hypertension. ” in september 2017 , we shared results of our phase 2 ph-copd study designed to evaluate the acute effects of pulsed inhaled nitric oxide , or ino , on vasodilation as well as the chronic effect on hemodynamics and exercise tolerance . the data results showed a statistically significant and clinically meaningful increase in six-minute walk distance , or 6mwd , and a statistically significant and clinically meaningful decrease in systolic pulmonary arterial pressure , or spap . the therapy was well tolerated with no related safety concerns . we have begun our clinical program in interstitial lung disease , based on feedback from the medical community and the large unmet medical need . during may 2017 , we announced completion of our phase 2 study using inopulse therapy to treat ph associated with idiopathic pulmonary fibrosis , or ph-ipf . the clinical data showed that inopulse was associated with clinically meaningful improvements in hemodynamics and exercise capacity in difficult-to-treat ph-ipf patients . the ph-ipf study was a proof of concept study ( n=4 ) designed to evaluate the ability of pulsed inhaled nitric oxide , or ino , to provide selective vasodilation as well as to assess the potential for improvement in hemodynamics and exercise capacity in ph-ipf patients . the study met its primary endpoint showing an average of 15.3 % increase in blood vessel volume ( p < 0.001 ) during acute inhalation of ino as well as showing a significant association between ventilation and vasodilation , demonstrating the ability of inopulse to provide selective vasodilation to the better ventilated areas of the lung . the study showed consistent benefit in hemodynamics with a clinically meaningful average reduction of 14 % in systolic spap with acute exposure to ino . story_separator_special_tag research and development laboratory expenses are also not allocated to a specific program and are included in research and development infrastructure . engineering activities related to inopulse and the manufacture of cylinders related to inopulse are included in inopulse engineering . inopulse for pah we completed a randomized , placebo-controlled , double-blind phase 2 clinical trial of inopulse for pah in october 2014. in february 2016 , we performed the final analysis of our phase 2 long-term extension clinical trial of inopulse for pah , which is part 2 of our phase 2 clinical trial of inopulse for pah . after reaching an agreement with the fda and the ema on our phase 3 protocol , we initiated and are currently conducting the first of two phase 3 trials . inopulse for ph-copd we completed and received results from a randomized , placebo-controlled , double-blind , dose-confirmation phase 2 clinical trial of inopulse for ph-copd in july 2014. during september 2017 , we shared results of our phase 2 ph-copd study designed to evaluate the acute effects of pulsed inhaled nitric oxide , or ino , on vasodilation as well as the chronic effect on hemodynamics and exercise tolerance . inopulse for ph-ild we initiated our clinical program in ph associated with interstitial lung disease , or ph-ild , in 2016. during may 2017 , we announced completion of our phase 2 study using inopulse therapy to treat ph associated with idiopathic pulmonary fibrosis , or ph-ipf . bcm in december 2011 , we initiated a clinical trial of bcm and completed enrollment in december 2014. top-line results from the clinical trial were announced in july 2015. following the results , we are considering further exploratory work but we do not intend to proceed with further clinical development of bcm at this point until and unless we can determine an alternative path forward . research and development infrastructure we invest in regulatory , quality , clinical development and clinical operations activities , which are expensed as incurred . these activities primarily support our clinical development programs . inopulse engineering 71 we have invested a significant amount of funds in inopulse , which is configured to be highly portable and compatible with available modes of ltot via nasal cannula delivery . our phase 2 clinical trials of inopulse for pah and inopulse for ph-copd utilized the first generation inopulse ds device . we believe our second generation inopulse device , as well as a custom triple-lumen cannula , will significantly improve several characteristics of our inopulse delivery system . we have also invested in design and engineering technology , through ikaria , for the manufacture of our drug cartridges . in february 2015 , we entered into an agreement with flextronics medical sales and marketing ltd. , a subsidiary of flextronics international ltd. , or flex , to manufacture and service the inopulse devices that we are using in our ongoing clinical trials of inopulse for pah , ph-copd and ph-ild . it is difficult to determine with certainty the duration and completion costs of our current or any future pre-clinical programs and any of our current or future clinical trials and any future product candidates we may advance , or if , when or to what extent we will generate revenue from the commercialization and sale of any of our product candidates that obtain regulatory approval . we may never succeed in achieving regulatory approval for any of our product candidates . the duration , costs and timing of clinical trials and development of our product candidates will depend on a variety of factors , including the uncertainties of any future clinical trials and pre-clinical studies , uncertainties in clinical trial enrollment rate and significant and changing government regulation . in addition , the probability of success for each product candidate will depend on numerous factors , including competition , manufacturing capability and commercial viability . a change in the outcome of any of these variables with respect to the development of a product candidate could change significantly the costs and timing associated with the development of that product candidate . for example , if the fda or other regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of clinical development of a product candidate , or if we experience significant delays in enrollment in any of our clinical trials , we could be required to expend significant additional financial resources and time with respect to the development of that product candidate . we will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate , as well as an assessment of each product candidate 's commercial potential , including the likelihood of regulatory approval on a timely basis . general and administrative expenses general and administrative expenses include salaries and costs related to executive , finance , and administrative support functions , patent filing , patent prosecution , professional fees for legal , insurance , consulting , investor relations , human resources , information technology and auditing and tax services not otherwise included in research and development expenses . 72 story_separator_special_tag style= '' line-height:120 % ; text-align : left ; text-indent:48px ; font-size:10pt ; '' > change in fair value of common stock warrant liability . change in fair value of common stock warrant liability for the year ended december 31 , 2017 was $ 30.4 million compared to $ 0.6 million for the year ended december 31 , 2016 , an increase of $ 29.8 million . the warrants were issued in november 2016 and in may 2017 and the increase was primarily due to an increase in our stock price and the timing of the warrants ' issuance . income tax benefit .
| results of operations comparison of years ended december 31 , 2017 and 2016 the following table summarizes our results of operations for the years ended december 31 , 2017 and 2016 , together with the changes in these items in dollars and as a percentage . replace_table_token_5_th total operating expenses . total operating expenses for the year ended december 31 , 2017 were $ 24.6 million compared to $ 23.8 million for the year ended december 31 , 2016 , an increase of $ 0.8 million , or 4 % . this increase was primarily due to increased research and development expenses pertaining to drug and device costs and to our ph-copd and ph-ipf clinical trials . the increase in research and development expenses was partially offset by a decrease in our general and administrative expenses . research and development expenses . total research and development expenses for the year ended december 31 , 2017 were $ 17.9 million compared to $ 16.7 million for the year ended december 31 , 2016 , an increase of $ 1.2 million , or 7 % . total research and development expenses consisted primarily of the following : pah research and development expenses for the year ended december 31 , 2017 were $ 6.1 million compared to $ 6.4 million for the year ended december 31 , 2016 , a decrease of $ 0.3 million , or 5 % . the decrease was primarily due to completion of the phase 2 clinical trial partially offset by a reversal of an accrual recorded in the year ended december 31 , 2016 and increased costs for the phase 3 clinical trial . bcm research and development expenses for the year ended december 31 , 2017 were $ 0.1 million compared to $ 0.4 million for the year ended december 31 , 2016 , a decrease of $ 0.4 million , or 85 % .
| 5,746 |
” the goodwill recorded as a result of the acquisitions primarily reflects unidentified intangible assets acquired , including operational synergies across the company , assembled workforces , the value of integrating acquired technologies and engaging and growing the connected fitness community . none of the goodwill is expected to be deductible for tax purposes . the following table summarizes the company 's allocation of goodwill to its operating segments : replace_table_token_23_th 55 4. property and equipment , net property and equipment consisted of the following : replace_table_token_24_th construction in progress primarily includes costs incurred for software systems , leasehold improvements and in-store fixtures and displays not yet placed in use . depreciation expense related to property and equipment was $ 87.1 million , $ 63.6 million and $ 48.3 million for the years ended december 31 , 2015 , 2014 and 2013 , respectively . 5. goodwill and intangible assets , net story_separator_special_tag the information contained in this section should be read in conjunction with our consolidated financial statements and related notes and the information contained elsewhere in this form 10-k under the captions “ risk factors , ” “ selected financial data , ” and “ business. ” overview we are a leading developer , marketer and distributor of branded performance apparel , footwear and accessories . the brand 's moisture-wicking fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional products . our products are sold worldwide and worn by athletes at all levels , from youth to professional , on playing fields around the globe , as well as by consumers with active lifestyles . the under armour connected fitness platform powers the world 's largest digital health and fitness community and our strategy is focused on engaging with these consumers and increasing awareness and sales of our products . we plan to grow this community by developing innovative applications , services and other digital solutions to impact how athletes and fitness-minded individuals train , perform and live . our net revenues grew to $ 3,963.3 million in 2015 from $ 1,472.7 million in 2011 . we believe that our growth in net revenues has been driven by a growing interest in performance products and the strength of the under armour brand in the marketplace . we plan to continue to increase our net revenues over the long term by increased sales of our apparel , footwear and accessories , expansion of our wholesale distribution sales channel , growth in our direct to consumer sales channel and expansion in international markets and engaging with consumers through our connected fitness business . our direct to consumer sales channel includes our brand and factory house stores and websites . new offerings for 2015 include our stephen curry signature basketball shoes and new ua speedform® running introductions . a large majority of our products are sold in north america ; however , we believe our products appeal to athletes and consumers with active lifestyles around the globe . internationally , our net revenues are generated from a mix of wholesale sales to retailers , sales to distributors and sales through our direct to consumer sales channels in europe , latin america , and asia-pacific . in addition , a third party licensee sells our products in japan and korea . our operating segments include north america ; latin america ; europe , the middle east and africa ( “ emea ” ) ; asia-pacific ; and connected fitness . due to the insignificance of the latin america , emea , and asia-pacific operating segments , they have been combined into international for disclosure purposes . we believe there is an increasing recognition of the health benefits of an active lifestyle . we believe this trend provides us with an expanding consumer base for our products . we also believe there is a continuing shift in consumer demand from traditional non-performance products to performance products , which are intended to provide better performance by wicking perspiration away from the skin , helping to regulate body temperature and enhancing comfort . we believe that these shifts in consumer preferences and lifestyles are not unique to the united states , but are occurring in a number of markets globally , thereby increasing our opportunities to introduce our performance products to new consumers . we plan to continue to grow our business over the long term through increased sales of our apparel , footwear and accessories , expansion of our wholesale distribution , growth in our direct to consumer sales channel and expansion in international markets . although we believe these trends will facilitate our growth , we also face potential challenges that could limit our ability to take advantage of these opportunities , including , among others , the risk of general economic or market conditions that could affect consumer spending and the financial health of our retail customers . in addition , we may not be able to effectively manage our growth and a more complex global business . we may not consistently be able to anticipate consumer preferences and develop new and innovative products that meet changing preferences in a timely manner . furthermore , our industry is very competitive , and competition pressures could cause us to reduce the prices of our products or otherwise affect our profitability . we also rely on third-party suppliers and manufacturers outside the u.s. to provide fabrics and to produce our products , and disruptions to our supply chain could harm our business . for a more complete discussion of the risks facing our business , refer to the “ risk factors ” section included in item 1a . general net revenues comprise net sales , license revenues and connected fitness revenues . net sales comprise sales from our primary product categories , which are apparel , footwear and accessories . our license revenues primarily consist of fees paid to 26 us by our licensees in exchange for the use of our trademarks on our products . story_separator_special_tag our effective tax rate for 2014 was higher than the effective tax rate for 2013 primarily due to increased foreign investments driving a lower proportion of foreign taxable income in 2014 and state tax credits received in 2013 . segment results of operations the net revenues and operating income ( loss ) associated with our segments are summarized in the following tables . the majority of corporate expenses within north america have not been allocated to international or connected fitness ; however , certain costs and revenues included within north america in the prior period have been allocated to connected fitness in the current period . prior period segment data has been recast by an immaterial amount within the tables to conform to the current period presentation . year ended december 31 , 2015 compared to year ended december 31 , 2014 net revenues by segment are summarized below : replace_table_token_9_th net revenues in our north america operating segment increase d $ 659.3 million to $ 3,455.7 million in 2015 from $ 2,796.4 million in 2014 primarily due to the items discussed above in the consolidated results of operations . net revenues in international increased $ 185.4 million to $ 454.2 million in 2015 from $ 268.8 million in 2014 primarily due to unit sales growth in our emea and asia-pacific operating segments . net revenues in our connected fitness operating segment increased $ 34.2 30 million to $ 53.4 million in 2015 from $ 19.2 million in 2014 primarily due to revenues generated from our two connected fitness acquisitions in 2015 and growth in our existing connected fitness business . operating income ( loss ) by segment is summarized below : replace_table_token_10_th operating income in our north america operating segment increased $ 81.2 million to $ 461.0 million in 2015 from $ 379.8 million in 2014 primarily due to the items discussed above in the consolidated results of operations . operating income in international increased $ 14.1 million to $ 8.9 million in 2015 from an operating loss of $ 5.2 million in 2014 primarily due to sales growth in our emea and asia-pacific operating segments . operating loss in our connected fitness segment increased $ 40.6 million to $ 61.3 million in 2015 from $ 20.7 million in 2014 primarily due to investments to support growth in our connected fitness business , including the impact of our two connected fitness acquisitions in 2015. these acquisitions contributed $ 23.6 million to the operating loss for the connected fitness segment in 2015. year ended december 31 , 2014 compared to year ended december 31 , 2013 net revenues by segment are summarized below : replace_table_token_11_th net revenues in our north america operating segment increased $ 602.7 million to $ 2,796.4 million in 2014 from $ 2,193.7 million in 2013 primarily due to the items discussed above in the consolidated results of operations . net revenues in international increased $ 131.6 million to $ 268.8 million in 2014 from $ 137.2 million in 2013 primarily due to sales growth in our asia-pacific and latin america operating segments . net revenues in our connected fitness operating segment increased $ 18.1 million to $ 19.2 million in 2014 from $ 1.1 million in 2013 primarily due to a full year of revenue from our connected fitness business in 2014 compared to one month in 2013. operating income ( loss ) by segment is summarized below : replace_table_token_12_th operating income in our north america operating segment increased $ 108.5 million to $ 379.8 million in 2014 from $ 271.3 million in 2013 primarily due to the items discussed above in the consolidated results of operations . operating loss in international decreased $ 0.5 million to $ 5.2 million in 2014 from $ 5.7 million in 2013 primarily due to sales growth in our emea and asia-pacific operating segments . operating loss in our connected fitness segment increased $ 20.2 million to $ 20.7 million in 2014 from $ 0.5 million in 2013. seasonality historically , we have recognized a majority of our net revenues and a significant portion of our income from operations in the last two quarters of the year , driven primarily by increased sales volume of our products during the fall selling season , including our higher priced cold weather products , along with a larger proportion of higher margin direct to consumer sales . 31 the level of our working capital generally reflects the seasonality and growth in our business . we generally expect inventory , accounts payable and certain accrued expenses to be higher in the second and third quarters in preparation for the fall selling season . the following table sets forth certain financial information for the periods indicated . the data is prepared on the same basis as the audited consolidated financial statements included elsewhere in this form 10-k. all recurring , necessary adjustments are reflected in the data below . replace_table_token_13_th financial position , capital resources and liquidity our cash requirements have principally been for working capital and capital expenditures . we fund our working capital , primarily inventory , and capital investments from cash flows from operating activities , cash and cash equivalents on hand and borrowings available under our credit and long term debt facilities . our working capital requirements generally reflect the seasonality and growth in our business as we recognize the majority of our net revenues in the back half of the year . our capital investments have included expanding our in-store fixture and branded concept shop program , improvements and expansion of our distribution and corporate facilities to support our growth , leasehold improvements to our new brand and factory house stores , and investment and improvements in information technology systems . our inventory strategy is focused on continuing to meet consumer demand while improving our inventory efficiency over the long term by putting systems and processes in place to improve our inventory management . these systems and processes are designed to improve our forecasting and supply planning capabilities .
| consolidated results of operations year ended december 31 , 2015 compared to year ended december 31 , 2014 net revenues increase d $ 878.9 million , or 28.5 % , to $ 3,963.3 million in 2015 from $ 3,084.4 million in 2014 . net revenues by product category are summarized below : replace_table_token_7_th the increase in net sales was driven primarily by : apparel unit sales growth and new offerings in multiple lines led by training , golf and running ; and footwear unit sales growth , led by running and basketball and the expansion of our footwear offerings internationally . license revenues increase d $ 17.0 million , or 25.3 % , to $ 84.2 million in 2015 from $ 67.2 million in 2014 . this increase in license revenues was driven primarily by increased distribution of our licensed products in north america and japan . connected fitness revenue increase d $ 34.2 million , or 177.8 % , to $ 53.4 million in 2015 from $ 19.2 million in 2014 primarily driven by our connected fitness acquisitions in the first quarter of 2015 and revenue growth in our existing connected fitness business . gross profit increase d $ 393.3 million to $ 1,905.5 million in 2015 from $ 1,512.2 million in 2014 . gross profit as a percentage of net revenues , or gross margin , decrease d 90 basis points to 48.1 % in 2015 compared to 49.0 % in 2014 .
| 5,747 |
the amendment also modifies the fixed charge covenant , eliminates the leverage covenant , places limits on capital expenditures and requires prepayments from story_separator_special_tag overview we are a self-managed and self-administered reit incorporated in maryland in august 2004 to pursue opportunities primarily in the full-service upper-upscale and upscale segments of the hotel industry located in primary and secondary markets in the mid-atlantic and southern united states . we commenced operations in december 2004 when we completed our initial public offering and thereafter consummated the acquisition of six initial hotel properties . since our initial public offering , we have engaged in the following acquisitions and dispositions : on july 22 , 2005 , we acquired the crowne plaza jacksonville riverfront ( formerly , the hilton jacksonville riverfront ) . on august 10 , 2006 , we sold the holiday inn downtown williamsburg . on september 20 , 2006 , we acquired the louisville ramada riverfront inn , which went through an extensive renovation and re-opened in may 2008 as the sheraton riverside louisville . on august 8 , 2007 , through our joint venture with carlyle , we acquired a 25.0 % indirect noncontrolling interest in the crowne plaza hollywood beach resort , a newly renovated 311-room hotel in hollywood , florida . on october 29 , 2007 , we acquired a hotel in tampa , florida , formerly known as the tampa clarion hotel , which went through an extensive renovation and re-opened in march 2009 as the crowne plaza tampa westshore . on april 24 , 2008 , we acquired the hampton marina hotel in hampton , virginia , which has been renovated and was converted to the crowne plaza hampton marina in october 2008. our wholly-owned hotel portfolio currently consists of nine full-service , upper upscale and mid-scale hotels which are 100.0 % owned by subsidiaries of our operating partnership . we also own a 25.0 % indirect noncontrolling interest in the crowne plaza hollywood beach resort and we have leasehold interests in a resort condominium facility in wrightsville beach , north carolina . our hotel portfolio currently consists of ten full-service , upper-upscale and upscale hotels with 2,421 rooms , which operate under well-known brands such as hilton , crowne plaza , sheraton and holiday inn . nine of these hotels , totaling 2,110 rooms , are 100 % owned by subsidiaries of our operating partnership . we also own a 25.0 % indirect non-controlling interest in the crowne plaza hollywood beach resort through a joint venture with carlyle and we have leasehold interests in a resort condominium facility in wrightsville beach , north carolina . as of december 31 , 2010 , we owned the following hotel properties : replace_table_token_8_th we conduct substantially all our business through our operating partnership , mhi hospitality , l.p. we are the sole general partner of our operating partnership and we own an approximate 74.0 % interest in our operating partnership , with the remaining interest being held by limited partners who were contributors of our original hotel properties and related assets . 37 to qualify as a reit , we can not operate hotels . therefore , our operating partnership leases our wholly-owned hotel properties to our trs lessee . our trs lessee has engaged mhi hotels services to manage our hotels . our trs lessee , and its parent , mhi hospitality trs holding , inc. , are consolidated into our financial statements for accounting purposes . the earnings of mhi hospitality trs holding , inc. are subject to taxation similar to other c corporations . key operating metrics in the hotel industry , most categories of operating costs , with the exception of franchise , management , and credit card fees and the costs of the food and beverages served , do not vary directly with revenues . this aspect of our operating costs creates operating leverage , whereby changes in sales volume disproportionately impact operating results . room revenue is the most important category of revenue and drives other revenue categories such as food and beverage and telephone . there are three key performance indicators used in the hotel industry to measure room revenues : occupancy , or the number of rooms sold , usually expressed as a percentage of total rooms available ; average daily rate or adr , which is total room revenue divided by the number of rooms sold ; and revenue per available room or revpar , which is the room revenue divided by the total number of available rooms . story_separator_special_tag align= '' center '' style= '' margin-top:0px ; margin-bottom:0px '' > 39 comparison of year ended december 31 , 2009 to year ended december 31 , 2008 the following table illustrates the key operating metrics for the years ended december 31 , 2009 and 2008 for our nine wholly-owned operating properties ( actual properties ) as well as the six wholly-owned properties in our portfolio that were under our control during all of 2009 and 2008 and were not under development ( same-store properties ) . accordingly , the same-store data does not reflect the performance of the crowne plaza hampton marina , which we purchased in april 2008 ; the sheraton louisville riverside , which opened in may 2008 ; or the crowne plaza tampa westshore , which opened in march 2009. replace_table_token_10_th revenue . total revenue for the year ended december 31 , 2009 was approximately $ 71.5 million , an increase of approximately $ 0.8 million or 1.1 % from total revenue for the year ended december 31 , 2008 of approximately $ 70.8 million . the overall increase in room revenue offset a decrease in food and beverage revenue . increases in room revenue attributable to the opening in march 2009 of the crowne plaza tampa westshore as well as full-year operations reflected in 2009 for the sheraton louisville riverside which opened in may 2008 and the crowne plaza hampton marina , which was acquired in april 2008 , offset declines in room revenues at our other properties . story_separator_special_tag depreciation and amortization for the year ended december 31 , 2009 increased approximately $ 2.1 million or 32.7 % to approximately $ 8.4 million compared to depreciation and amortization expense of approximately $ 6.3 million for the year ended december 31 , 2008. the increase in depreciation and amortization was attributable to the crowne plaza tampa westshore , which opened in march 2009 , as well as a full-year of depreciation on renovations placed in service during in 2008 at the hilton savannah desoto and the sheraton louisville riverside , as well as the acquisition and renovation of the crowne plaza hampton marina . corporate general and administrative . corporate general and administrative expenses for the year ended december 31 , 2009 increased approximately $ 0.3 million or 7.8 % to approximately $ 3.2 million compared to corporate general and administrative expenses of approximately $ 2.9 million for the year ended december 31 , 2008. interest expense . interest expense for the year ended december 31 , 2009 increased approximately $ 2.9 million or 41.8 % to approximately $ 9.7 million ( net of capitalized interest of approximately $ 0.3 million ) compared to approximately $ 6.8 million of interest expense ( net of capitalized interest of approximately $ 1.6 million ) for the year ended december 31 , 2008. higher interest expense relates to borrowings on the credit facility used to fund the acquisition and renovation of the crowne plaza tampa westshore ; interest expense for a full year on the borrowings on the credit facility associated with the sheraton louisville riverside subsequent to its re-opening and completion of its renovations ; borrowings on the mortgage on the hilton savannah desoto for completion of the renovations at that property , as well as borrowings associated with the purchase of the property in hampton , virginia . the additional interest expense related to these borrowings , as well as the interest expense related to the increase in the interest-rate spread on our line of credit which was raised by 1.125 % upon execution of the third amendment , was offset by a significant decrease in the level of interest rates from 2008 to 2009. equity loss in joint venture . equity loss in the joint venture was approximately $ 0.25 million for the year ended december 31 , 2009 compared to an equity income in the joint venture of approximately $ 0.05 million for the year ended december 31 , 2008 and represents our 25.0 % share of the net income of the crowne plaza hollywood beach resort . during the year ended december 31 , 2008 , the joint venture was able to restructure the mortgage on the property by purchasing a $ 22.0 million principal balance junior participation in the outstanding loan on the property at a price of $ 19.0 million resulting in a $ 3.0 million gain on extinguishments of debt of the joint venture . for the year ended december 31 , 2009 , the crowne plaza hollywood beach resort reported occupancy of 70.7 % , adr of $ 121.06 and revpar of $ 85.62. this compares with results reported by the hotel for the year ended december 31 , 2008 of occupancy of 59.0 % , adr of $ 151.64 and revpar of $ 89.49. income taxes . the income tax benefit for the year ended december 31 , 2009 increased approximately $ 0.3 million or 22.5 % to approximately $ 1.8 million compared to an income tax benefit for the year ended december 31 , 2008 of 41 approximately $ 1.5 million . the income tax benefit is primarily derived from the operations of our trs lessee . the net operating loss of our trs lessee for the year ended december 31 , 2009 was significantly larger than the net operating loss for the year ended december 31 , 2008. net loss . net loss attributable to the company for the year ended december 31 , 2009 increased approximately $ 1.4 million to approximately $ 2.0 million compared to a net loss of approximately $ 0.6 million for the year ended december 31 , 2008 as a result of the operating results discussed above . sources and uses of cash operating activities . our principal source of cash to meet our operating requirements , including distributions to unit holders and stockholders as well as repayments of indebtedness , is the operations of our hotels . cash flow provided by operating activities for the year ended december 31 , 2010 was approximately $ 4.7 million . we expect that the net cash provided by operations will be adequate to fund the company 's operating requirements , scheduled payments of principal and interest and the payment of dividends in accordance with federal income tax laws which require us make annual distributions to our stockholders of at least 90.0 % of our reit taxable income , excluding net capital gain . investing activities . approximately $ 2.9 million was spent during the year ended december 31 , 2010 on renovations and capital improvements . financing activities . for the year ended december 31 , 2010 , net cash used in financing activities was approximately $ 1.8 million . we incurred costs of approximately $ 0.7 million associated with the modification of our credit facility and made principal payments of approximately $ 0.3 million on our credit facility and principal payments of $ 0.7 million on our mortgage indebtedness . capital expenditures since mid-2004 , we have completed product improvement plans ( pips ) in connection with the licensing or re-licensing at eight of our nine properties .
| results of operations comparison of year ended december 31 , 2010 to year ended december 31 , 2009 the following table illustrates the key operating metrics for the years ended december 31 , 2010 and 2009 for our nine wholly-owned properties ( actual properties ) as well as the eight wholly-owned properties in our portfolio that were not under development and under our control during all of 2010 and 2009 ( same-store properties ) . accordingly , the same-store data does not reflect the performance of the crowne plaza tampa westshore , which opened in march 2009. replace_table_token_9_th revenue . total revenue for the year ended december 31 , 2010 was approximately $ 77.4 million , an increase of approximately $ 5.9 million or 8.2 % from total revenue for the year ended december 31 , 2009 of approximately $ 71.5 million . increases in revenue at the hilton savannah desoto , the sheraton louisville riverside and the crowne plaza tampa westshore offset decreases in revenue at our properties in laurel , maryland and jacksonville , florida . room revenues at our properties for the year ended december 31 , 2010 increased approximately $ 4.2 million or 8.5 % to approximately $ 53.1 million compared to room revenues for the year ended december 31 , 2009 of approximately $ 48.9 million . the increase in room revenue was mostly attributable to increases in occupancy at our recently renovated properties in savannah , georgia ; jeffersonville , indiana ; hampton , virginia ; and tampa , florida . we expect occupancy and adr to increase as demand continues to strengthen as the overall economy stabilizes . food and beverage revenues at our properties for the year ended december 31 , 2010 increased approximately $ 1.9 million or 10.6 % to approximately $ 19.9 million compared to food and beverage revenues for the year ended december 31 , 2009 of approximately $ 18.0 million .
| 5,748 |
our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors . company overview our cancer vaccines we are an immuno-oncology company specializing in the development of innovative peptide and gene-based immunotherapeutics and vaccines for the treatment of cancer . we combine a set of proprietary technologies to improve the ability of the cellular immune system to destroy diseased cells . these are peptide antigen technologies and dna expression technologies and polystart . to enhance shareholder value and taking into account development timelines , we plan to focus on advancing our clinical programs including our folate receptor alpha program for breast and ovarian and our her2/neu peptide antigen program into phase ii clinical trials . in parallel , we plan to complete the preclinical development of our polystart technology as an integral component of our prime-and-boost vaccine methodology . the immunotherapy industry for cancer immuno-oncology has become the most rapidly growing sector in the pharmaceutical and biotech industry . the approval and success of checkpoint inhibitors yervoy and opdivo ( bristol myers squibb ) and keytruda ( merck ) together with the development of car t-cell therapies ( juno , kite ) has provided much momentum in this sector . in addition , new evidence points to the increasing use of combination immunotherapies for the treatment of cancer . this has provided greater opportunities for the successful development of t-cell vaccines in combination with other approaches . products and technology in development clinical phase i human clinical trials folate alpha breast and ovarian cancer mayo foundation folate receptor alpha is expressed in over 80 % of triple negative breast cancers and in addition , over 90 % of ovarian cancers , for which the only treatment options are surgery and chemotherapy , leaving a very important and urgent clinical need for a new therapeutic . time to recurrence is relatively short for these types of cancer and survival prognosis is extremely poor after recurrence . in the united states alone , there are approximately 30,000 ovarian cancer patients and 40,000 triple negative breast cancer patients newly diagnosed every year . a 24 patient phase i clinical trial has been completed . the vaccine is well tolerated and safe and 20 out of 21 evaluable patients showed positive immune responses providing a strong rationale rational for progressing to phase ii trials . gmp manufacturing for phase ii trials is progressing well towards a commercial formulation and final analyses of clinical plans are near completion . on july 27 , 2015 , we exercised our option agreement with mayo foundation with the signing of a worldwide exclusive license agreement to commercialize a proprietary folate receptor alpha vaccine technology for all cancer indications . our obligations under this agreement are license fees ( $ 350,000 upon signing ; $ 100,000 on march 27 , 2016 and $ 250,000 on june 27 , 2016 ) , clinical development and commercial milestones , and a 6 % royalty on net sales . our obligations include a $ 50,000 license maintenance fee starting on the second anniversary of the signing of the license . as part of this agreement , the ind for the folate receptor alpha phase i trial was transferred from mayo to us for amendment for our phase ii clinical trials on our lead product . on september 15 , 2015 , we announced that our collaborators at the mayo foundation had been awarded a grant of $ 13.3 million from the u. s. department of defense . this grant , commencing september 15 , 2015 , will cover the costs for a 280 patient phase ii clinical trial of folate receptor alpha vaccine in patients with triple negative breast cancer . we will work closely with mayo foundation on this clinical trial by providing clinical and manufacturing expertise as well as providing gmp vaccine formulations . these vaccine formulations are being developed for multiple phase ii clinical programs in triple negative breast and ovarian cancer in combination with other immunotherapeutics . 36 on december 9 , 2015 , we announced that we received orphan drug designation from the u. s. food & drug administration 's office of orphan products development ( oopd ) for our cancer vaccine tpiv 200 in the treatment of ovarian cancer . the tpiv 200 ovarian cancer clinical program will now receive benefits including tax credits on clinical research and 7-year market exclusivity upon receiving marketing approval . tpiv 200 is a multi-epitope peptide vaccine that targets folate receptor alpha which is overexpressed in multiple cancers . phase i human clinical trials her2/neu+ breast cancer mayo foundation patient dosing has been completed . final safety analysis on all the patients treated is complete and shown to be safe . in addition , 19 out of 20 evaluable patients showed robust t-cell immune responses to the antigens in the vaccine composition providing a solid case for advancement to phase ii in 2016. an additional secondary endpoint incorporated into this phase i trial will be a two year follow on recording time to disease recurrence in the participating breast cancer patients . for phase i ( b ) /ii studies , we plan to add a class i peptide , licensed from the mayo foundation ( april 16 , 2012 ) , to the four class ii peptides . management believes that the combination of class i and class ii her2/neu antigens , gives us the leading her2/neu vaccine platform . as the folate receptor alpha vaccine is our lead product our plans are now initiating formulation studies to progress the her2/neu vaccine towards a phase ii clinical trial in 2016. preclinical polystart we have converted the previously filed u. s. provisional patent application on polystart into a full patent application , and will extend technology constructs as boost strategies for the current clinical programs in breast and ovarian cancer . story_separator_special_tag the series c and series c-1 warrants have a 5 year term and an exercise price of $ 0.50. there is a mandatory exercise if the stock trades at or above $ 1.00 for 10 trading days . these warrants have anti-dilution protection for subsequent securities issuances by us at prices below the exercise price which would require an adjustment to the warrant exercise price ( excluding warrant exercises ) . series d and series d-1 warrants . the series d and series d-1 warrants have a term of 5 years from the date of the exercise of the series b and series b-1 warrants and an exercise price of $ 0.75. these warrants have anti-dilution protection for subsequent securities issuances by us at prices below the exercise price which would require an adjustment to the warrant exercise price ( excluding warrant exercises ) . 38 series e and series e-1 warrants . the series e and series e-1 warrants have a term of 5 years from the date of the exercise of the series c and series c-1 warrants and an exercise price of $ 1.25. these warrants have anti-dilution protection for subsequent securities issuances by us at prices below the exercise price which would require an adjustment to the warrant exercise price ( excluding warrant exercises ) . warrant holder contingent put right . each of the warrants provide that at the request of a warrant holder delivered at any time commencing on the earliest to occur of ( x ) the public disclosure of any fundamental transaction , ( y ) the consummation of any fundamental transaction and ( z ) such warrant holder first becoming aware of any fundamental transaction through the date that is ninety ( 90 ) days after the public disclosure of the consummation of such fundamental transaction by the company , the company or the successor entity ( as the case may be ) shall purchase the warrant from such warrant holder on the date of such request by paying to the holder cash in an amount equal to the black scholes value . a fundamental transaction means : ( i ) the company or any of its subsidiaries shall , directly or indirectly , in one or more related transactions , ( 1 ) consolidate or merge with or into ( whether or not the company or any of its subsidiaries is the surviving corporation ) any other person , or ( 2 ) sell , lease , license , assign , transfer , convey or otherwise dispose of all or substantially all of its respective properties or assets to any other person , or ( 3 ) allow any other person to make a purchase , tender or exchange offer that is accepted by the holders of more than 50 % of the outstanding shares of voting stock of the company ( not including any shares of voting stock of the company held by the person or persons making or party to , or associated or affiliated with the persons making or party to , such purchase , tender or exchange offer ) , or ( 4 ) consummate a stock or share purchase agreement or other business combination ( including , without limitation , a reorganization , recapitalization , spin-off or scheme of arrangement ) with any other person whereby such other person acquires more than 50 % of the outstanding shares of voting stock of the company ( not including any shares of voting stock of the company held by the other person or other persons making or party to , or associated or affiliated with the other persons making or party to , such stock or share purchase agreement or other business combination ) , or ( 5 ) ( i ) reorganize , recapitalize or reclassify the common stock , ( ii ) effect or consummate a stock combination , reverse stock split or other similar transaction involving the common stock or ( iii ) make any public announcement or disclosure with respect to any stock combination , reverse stock split or other similar transaction involving the common stock ( including , without limitation , any public announcement or disclosure of ( x ) any potential , possible or actual stock combination , reverse stock split or other similar transaction involving the common stock or ( y ) board or shareholder approval thereof , or the intention of the company to seek board or shareholder approval of any stock combination , reverse stock split or other similar transaction involving the common stock ) , or ( ii ) any person or group ( as these terms are used for purposes of sections 13 ( d ) and 14 ( d ) of the 1934 act and the rules and regulations promulgated thereunder ) is or shall become the beneficial owner ( as defined in rule 13d-3 under the 1934 act ) , directly or indirectly , of 50 % of the aggregate ordinary voting power represented by issued and outstanding voting stock of the company . assuming a fundamental transaction occurs we estimate , using the black scholes value method required by the terms of the warrants and assuming all warrant holders exercise their rights to require us to purchase their warrants , the aggregate amount we would be obligated to pay would be approximately $ 26 million . 39 variable rate transaction prohibition . during the two year period commencing on the closing date under both the january 2015 and march 2015 financings ( dated january 12 , 2015 and march 9 , 2015 , respectively ) , the company and each subsidiary are prohibited from entering into an agreement related to any subsequent issuance of securities involving a variable rate transaction .
| results of operations year ended december 31 , 2015 compared to the year ended december 31 , 2014 in this discussion of our results of operations and financial condition , amounts , other than per-share amounts , have been rounded to the nearest thousand dollars . we recorded a net loss of $ 34,066,000 or ( $ 0.78 ) during the year ended december 31 , 2015 compared to $ 30,883,000 or ( $ 2.00 ) for the year ended december 31 , 2014. operating expenses operating expenses incurred during the fiscal year ended december 31 , 2015 were $ 6,159,000 compared to $ 3,371,000 in the prior year . significant changes and expenditures are outlined as follows : general and administrative expenses increased to $ 4,448,000 during the year ended december 31 , 2015 from $ 3,182,000 during the prior period . the increase was primarily due to higher salaries for administration , professional fee , business development , investor relations , management fee , travel expenses and more significantly , higher non-cash consulting and management fees paid as stock-based compensation of $ 1,705,000 during the year ended december 31 , 2015 from $ 1,391,000 during the prior period . the increase in stock-based compensation from the prior year was primarily due to us issuing stock options to management and board members in the current year . research and development costs during the fiscal year ended december 31 , 2015 were $ 1,711,000 compared to $ 189,000 during the prior fiscal year . this was due to higher technology licensing fee due to mayo clinic and increased in house research activity in the current year . the weighted average number of shares outstanding was 43,947,067 for the year ended december 31 , 2015 compared to 15,465,213 for the prior year .
| 5,749 |
mr. reinemund served as dean of business at wake forest university from july 2008 to june 2014 , an organization he joined after a 23-year career with pepsico , inc. ( nasdaq : pep ) ( “ pepsico ” ) . at pepsico , mr. reinemund served as executive chairman from october 2006 to may 2007 , and as chairman and chief executive officer from may 2001 to october 2006. prior to being chief executive officer , he was pepsico , inc. 's president and chief operating officer from september 1999 to may 2001. mr. reinemund began his career with pepsico , inc. in 1984 at pizza hut , inc. and held other positions until he became president and chief executive officer of frito-lay 's north american snack division in 1992. he became chairman and chief executive officer of frito-lay 's worldwide operations in 1996. mr. reinemund was a director of johnson & johnson ( nyse : jnj ) from 2003 to 2008 and of american express company ( nyse : axp ) from 2007 to 2015. mr. reinemund currently serves as a director of exxon mobil corporation ( nyse : xom ) , marriott international , inc. ( nasdaq : mar ) , walmart inc. ( nyse : wmt ) and chick-fil-a , inc. he also serves on the board of directors at usna foundation . a graduate of the united states naval academy in 1970 , mr. reinemund served five years as an officer in the united states marine corps , achieving the rank of captain . he received an mba from the university of virginia , and has been awarded honorary doctorate degrees by johnson and wales university and bryant university . mr. reinemund was selected to serve on our board due to his considerable business leadership roles , mergers and acquisitions experience and his relevant board expertise . 61 robin l. washington . ms. washington has served as one of our directors since february 7 , 2020. ms. washington is the former executive vice president and chief financial officer of gilead sciences , inc. ( nasdaq : gild ) , a biopharmaceutical company . she held this role from may 2008 until november 1 , 2019 , the effective date of her retirement as chief financial officer , and remains an advisor to the company until march 1 , 2020. from 2006 to 2007 , ms. washington served as chief financial officer of hyperion solutions , an enterprise software company that was acquired by oracle corporation in march 2007. prior to that , she spent nearly 10 years at peoplesoft , inc. , a provider of enterprise application software , where she served in a number of executive positions , most recently in the role of senior vice president and corporate controller . since april 2019 , ms. washington has served on the board and on the leadership development and compensation committee of alphabet inc. ( nasdaq : goog ) , a multinational technology company . ms. washington also currently serves as a director of honeywell international , inc. ( nyse : hon ) , a diversified technology and manufacturing company , where she has served since april 2013 , and as director of salesforce.com ( nyse : crm ) , a global leader in customer relationship management technology , where she has served since september 2013 , where she currently chairs the audit committee . ms. washington also serves on the board of visitors , graziadio school of business and management , pepperdine university , the presidents council & ross business school advisory board , university of michigan and the ucsf benioff children 's hospital oakland board of directors . she is a certified public accountant , and received a b.a . in business administration from the university of michigan and an m.b.a. from pepperdine university . ms. washington was selected to serve on our board due to her extensive experience in management , operations and accounting in the technology sector , along with her financial expertise . executive officers david m. cote . mr. cote has served as our executive chairman of our board of directors since february 7 , 2020. biographical information for mr. cote is set forth under “ —directors ” above . rob johnson . mr. johnson has served as our chief executive officer and one of our directors since february 7 , 2020. biographical information for mr. johnson is set forth under “ —directors ” above . david j. fallon . mr. fallon has served as our chief financial officer since february 7 , 2020. from july 2017 until the business combination , mr. fallon served as the chief financial officer of vertiv and has more than 25 years of experience in financial management with global companies . prior to joining vertiv , from 2010 to 2017 , mr. fallon served as chief financial officer at clarcor , inc. ( formerly nyse : clc ) , which was a $ 1.4 billion filtration company with operations in north america , europe , asia , africa and australia . from 2009 to 2010 , he served as vice president of finance for clarcor , inc. clarcor , inc. was purchased by parker-hannifin in february 2017. from 2002 to 2009 , mr. fallon served as chief financial officer and vice president of finance for noble international ( formerly nasdaq : nobl ) , which was a $ 1.1 billion auto supplier with global manufacturing operations . story_separator_special_tag prior to joining noble international , he served as treasury manager at textron story_separator_special_tag unless the context otherwise requires , all references in this section to the “ we , ” “ us , ” “ our , ” the “ company ” or “ gsah ” refer to gsah prior to the consummation of the business combination . the following discussion and analysis of the company 's financial condition and results of operations should be read in conjunction with the audited financial statements and the notes related thereto which are included in “ item 8. financial statements and supplementary data ” of this annual report on form 10-k. certain information contained in the discussion and analysis set forth below includes forward-looking statements . our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors , including those set forth under “ special note regarding forward-looking statements , ” “ item 1a . risk factors ” and elsewhere in this annual report on form 10-k. overview as of december 31 , 2019 , we were a blank check company incorporated as a delaware corporation and formed for the purpose of effecting a merger , capital stock exchange , asset acquisition , stock purchase , reorganization or similar business combination with one or more businesses . we reviewed a number of opportunities to enter into a business combination with an operating business , and entered into the merger agreement on december 10 , 2019. we financed the business combination through the issuance of shares of our class a common stock to the vertiv stockholder , the pipe investors and the subscribing vertiv executives and cash . at december 31 , 2019 , we had cash and cash equivalents of $ 955,457 , current liabilities of $ 6,602,104 and deferred underwriting compensation of $ 24,150,000. story_separator_special_tag 41 on march 2 , 2020 , vertiv holdings co completed the refinancing by entering into ( i ) the amendment to the prior-asset based revolving credit facility , which amendment extended the maturity of , and made certain other modifications to , the prior asset-based revolving credit facility and ( ii ) the term loan facility , with the borrowings thereunder used to repay or redeem , as applicable , in full the prior term loan facility and the prior notes . the refinancing transactions reduce vertiv holdings co 's debt service requirements going forward and extend the maturity profile of its indebtedness . for more information regarding the refinancing transactions , see “ item 1. business—recent developments . ” off-balance sheet arrangements we have no obligations , assets or liabilities which would be considered off-balance sheet arrangements ( within the meaning of item 303 of regulation s-k ) as of december 31 , 2019. we do not participate in transactions that create relationships with unconsolidated entities or financial partnerships , often referred to as variable interest entities , which would have been established for the purpose of facilitating off-balance sheet arrangements ( within the meaning of item 303 of regulation s-k ) . we have not entered into any off-balance sheet financing arrangements ( within the meaning of item 303 of regulation s-k ) , established any special purpose entities , guaranteed any debt or commitments of other entities , or entered into any non-financial agreements involving assets . contractual obligations at december 31 , 2019 , we did not have any long-term debt , capital lease obligations , operating lease obligations or long-term liabilities . on june 7 , 2018 , we entered into an administrative support agreement pursuant to which we agreed to pay an affiliate of the sponsor a total of $ 10,000 per month for office space , administrative and support services . for the year ended december 31 , 2019 , we incurred expenses of $ 120,000 for such services . the administrative support agreement was terminated on the closing date . the underwriters of the ipo were entitled to underwriting discounts and commissions of 5.5 % , of which 2.0 % ( $ 13,800,000 ) was paid at the closing of the ipo and 3.5 % ( $ 24,150,000 ) was deferred . the deferred underwriting discount was paid to the underwriters on the closing date . critical accounting policies the preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the united states requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities , disclosure of contingent assets and liabilities at the date of the condensed financial statements , and income and expenses during the periods reported . actual results could materially differ from those estimates . we have identified the following as our critical accounting policies : net income per common share we comply with accounting and disclosure requirements of fasb asc topic 260 , earnings per share . net income per share of common stock is computed by dividing net income by the weighted average number of common shares outstanding during the period . we apply the two-class method in calculating earnings per share . accretion associated with the redeemable shares of class a common stock is excluded from earnings per share ( “ eps ” ) as the redemption value approximates fair value . 42 at december 31 , 2019 , we had outstanding warrants to purchase of up to 33,533,317 shares of class a common stock . the weighted average of these shares was excluded from the calculation of diluted net income per share of common stock since the exercise of the warrants is contingent upon the occurrence of future events . at december 31 , 2019 , we did not have any dilutive securities or other contracts that could , potentially , be exercised or converted into shares of common stock and then share in our earnings . as a result , diluted net income per share of common stock is the same
| results of operations for the years ended december 31 , 2019 , 2018 and 2017 , we had net income/ ( loss ) of $ 4,389,796 , $ 5,030,748 and $ ( 1,276 ) , respectively . our income for 2019 consist solely of dividends earned . our business activities from inception to december 31 , 2019 consisted primarily of our formation , completing our ipo and identifying and evaluating prospective acquisition targets for an initial business combination . liquidity and capital resources until the closing of the ipo , our only source of liquidity was from the sale of the founder shares to an affiliate of our sponsor and the proceeds of a promissory note ( the “ note ” ) from an affiliate of the sponsor , in the amount of $ 300,000 , as well as the proceeds of a 2016 promissory note from an affiliate of the sponsor ( the “ 2016 note ” ) , in the amount of $ 300,000. the note and the 2016 note were repaid upon the closing of the ipo and in december 2016 , respectively . on june 12 , 2018 , we closed the ipo of 69,000,000 units , including 9,000,000 units issued pursuant to the exercise by the underwriters of their option to purchase additional units in full , at a price of $ 10.00 per unit , generating proceeds to us of $ 690,000,000 before underwriting discounts and expenses .
| 5,750 |
the company 's main lateral flow products are three rapid tests for the detection of hiv antibodies in whole blood , serum and plasma samples , story_separator_special_tag story_separator_special_tag · dpp® ebola assay and dpp® malaria-ebola assay : the dpp® ebola assay is a rapid poc test for the detection of ebola and the dpp® malaria-ebola assay is a rapid , poc , multiplex test for the simultaneous detection of malaria and ebola . in october 2014 , we announced plans to develop , validate , and commercialize poc dpp ® assays for ebola and febrile illness . we completed the development of the dpp® ebola assay and submitted it for emergency use authorization ( eua ) with the food & drug administration ( fda ) and world health organization ( who ) . during the third and fourth quarters of 2015 , we sold dpp® ebola and dpp® malaria-ebola assays to the centers for disease control & prevention ( cdc ) for field studies in west africa , which is ongoing . · dpp® dengue fever assay : the dpp® dengue fever assay is a rapid , poc , multiplex test for the simultaneous detection of igg/igm and ns1 antigens . we are currently conducting verification and validation studies , and we anticipate the production of pilot lots , to support preclinical studies . we anticipate starting pre-clinical studies in the second quarter of 2016. this program is fully funded by a partner . however , under the terms of our agreement , chembio 's partner is not being disclosed . · dpp® zika assays : the dpp® zika assay is a rapid poc stand-alone test for the simultaneous detection of igg/igm antibodies and the dpp® dengue/chikungunya/zika assay is a rapid , poc , multiplex test for the simultaneous detection of igg/igm antibodies . · in february 2016 , we received a $ 550,000 grant from the paul g. allen family foundation to develop the dpp® zika assays , which we plan to be ready for field testing in 2016 . 18 technology collaboration · dpp® cancer assay : the dpp® cancer assay is a rapid , poc , multiplex test for the early detection and monitoring of a specific type of cancer . in october 2014 , we entered into collaboration with an international diagnostics company to develop a poc diagnostic test for a specific type of cancer . this program is fully funded by a partner . however , under the terms of the agreement , neither chembio 's partner nor the specific type of cancer is being disclosed . the cancer project represents an application of the dpp® technology outside of the infectious disease field , and the scope of the agreement involves product development of a quantitative , reader-based cancer assay for two cancer markers , utilizing chembio 's dpp® technology and dpp® micro reader . during the third quarter of 2015 , we completed successful feasibility , and our partner agreed to fund continued development of the dpp® cancer assay . · dpp® traumatic brain injury assay : the dpp® traumatic brain injury assay is a rapid poc test for the detection of traumatic brain injury ( tbi ) and sports-related concussion . in january 2015 , we entered into an agreement with the concussion science group ( csg ) division of perseus science group llc , to combine csg 's patented biomarker with our proprietary dpp® platform and dpp® micro reader , to develop a semi-quantitative or quantitative poc test , to diagnose tbi . in may 2015 , an informational meeting was conducted at the fda to present the technology and intended use , as well to initiate dialogue regarding the regulatory pathway for this product . the dpp® traumatic brain injury assay is in the feasibility stage . we are currently working with several hospitals to finalize institutional review board ( irb ) agreements and develop the plan for conducting initial studies of the dpp® traumatic brain injury assay using patient samples . · dpp® flu immunostatus assay : the dpp® flu immunostatus assay is a rapid , poc , multiplex influenza immunity test . in november 2014 , we entered into a follow-on , milestone-based development agreement with a contracting organization acting on behalf of the u.s. government , for a multiplex poc influenza immunity test utilizing our patented dpp® technology . we successfully completed the product development of a 7-band multiplex dpp® flu immunostatus assay with a digital reader during the first quarter of 2015 and subsequently applied for additional funding in response to a new request for proposal ( rfp ) from the u.s. government , for which we expect a response in the second quarter of 2016. regulatory activities dpp® hiv 1/2 assay : in may 2015 we received approval for a ce mark for the dpp® hiv 1/2 assay for oral fluid , serum , plasma , fingerstick whole blood and venous whole blood . the chembio dpp® hiv 1/2 assay for rapid , poc detection of hiv is now cleared for commercialization and sale within the 28 member states of the european union . dpp® hiv-syphilis : the dpp® hiv-syphilis assay is a rapid , poc , multiplex test for the simultaneous detection of antibodies to hiv and to treponema pallidum ( tp ) bacteria ( the causative agent of syphilis ) . this novel combination assay was developed to address the growing concern among public health officials regarding the rising co-infection rates of hiv and syphilis as well as mother-to-child transmission ( mtct ) of hiv and syphilis . the product was successfully launched in mexico during 2014 , and received approval for commercial use by the brazilian regulatory agency , agência nacional de vigilância sanitária ( anvisa ) . the dpp® hiv-syphilis assay is the only test cleared for commercialization in brazil for rapid , poc detection of both hiv 1/2 and syphilis . in december 2015 , the application by way of technical file was submitted to the notified body for ce mark consideration to commercialize within the european union . story_separator_special_tag selling , general and administrative expense : replace_table_token_6_th selling , general and administrative expenses for the year ended december 31 , 2015 , increased by $ 131,000 as compared with the same period in 2014 , a 1.7 % increase . this increase resulted primarily from increases in wages and related costs and travel expenses , which for 2015 included the continued development of a sales and marketing team over 2014 , professional fees and in investor relations/investment bankers , which were partially offset by decreases in consulting , commissions ( due to decreased sales to brazil ) , stock-based compensation , and marketing materials . 21 other income and expense : replace_table_token_7_th other ( expense ) for the year ended december 31 , 2015 decreased approximately $ 3,400 , primarily due to decreased interest income , compared to the same period in 2014. income tax provision ( benefit ) : for the year ended december 31 , 2015 the company recognized a $ ( 1,160,000 ) income tax benefit and increased its deferred tax assets by $ ( 1,160,000 ) . for the year ended december 31 , 2014 , the company recognized a $ ( 413,000 ) income tax benefit and increased its deferred tax assets by $ ( 403,000 ) . the effective tax rate used to recognize the benefit in 2015 was 32.0 % compared to a 26.6 % rate used in 2014 to record the amount charged . in both years non-deductible expenses for tax purposes accounted for most of the difference from the standard 34 % u.s. tax rate . the company maintains a full valuation allowance on research and development tax credits material changes in financial condition replace_table_token_8_th cash increased by $ 762,000 from december 31,2014 , primarily due to net cash provided by operating activities for the year of 2015. in addition there were decreases in accounts receivable , net of allowance , of $ 5,916,000 , fixed assets of $ 424,000 after depreciation , license agreements of $ 157,000 , accounts payable and accrued liabilities of $ 2,145,000 , and increases in non-current deferred tax asset of $ 1,436,000 and in prepaid expenses of $ 190,000. the decrease in accounts receivable was primarily attributable to the lower amount of credit sales at the end of december 2015 versus december 2014. the decrease in fixed assets is primarily due to depreciation . the increase in prepaid and other current assets is due to the current portion of additional licenses . deferred tax asset decrease is related to recording of a valuation allowance . 22 liquidity and capital resources replace_table_token_9_th the company 's cash increased as of december 31 , 2015 by $ 762,000 from december 31 , 2014 , primarily due to net cash provided by operating activities and partially offset by cash used in investing activities for year of 2015. the cash provided by operations in 2015 was $ 1,793,000 , primarily due to a decrease in accounts receivable of $ 5,916,000 , a decrease in inventories of $ 60,000 and an increase in deferred revenue of $ 13,000 , partially offset by an increase in prepaid and other current assets of $ 191,000 , a decrease in accounts payable and other accrued liabilities of $ 2,145,000 and a net loss net of non-cash items of $ 1,861,000. net loss net of non-cash items includes net loss of $ 2,397,000 , $ 1,171,000 in income tax benefit , partially offset by $ 1,373,000 in depreciation and amortization , and $ 334,000 in share-based compensation . the use of cash from investing activities is primarily the purchase of fixed assets and acquisition of licenses . fixed asset commitments as of december 31 , 2015 , the company had paid deposits on various pieces of equipment aggregating $ 30,918 which is reflected in other assets on the balance sheet . the company is further committed to additional equipment-purchase obligation of $ 31,000 as various milestones are achieved by the various vendors . 23 recent developments and chembio 's plan of operations for the next twelve months during 2015 , chembio took important strategic steps to expand our patented dpp® technology to new markets . while the company continues to strengthen its sexually transmitted disease business , we are also building robust product pipelines in two new areas : fever disease and technology collaborations . as sexually transmitted disease products continue to make important contributions to our business , we believe our new fever disease portfolio and technology collaborations will pave the way for future growth . sexually transmitted diseases in the u.s. during 2015 , chembio recorded an increase in lateral flow sales of approximately $ 440,000 and an increase of dpp ® sales of more than $ 1.0 million ( primarily as a result of sales to the cdc for dpp ® malaria-ebola and dpp ® ebola assays ) , as compared to the respective u.s. sales in 2014. we are optimistic about the increasing demand for our products in the u.s. we will also have full control of sure check ® hiv assay , effective june 1 , 2016 , to add to our u.s. commercial efforts . in latin america , we experienced a decline in sales in 2015 due primarily to a $ 3.5 million decrease in sales of dpp ® hiv-syphilis assay in mexico , related to excess inventory from 2014 , and a $ 2.1 million decrease in sales of dpp ® hiv assay in brazil . we expect that our recently announced dpp ® zika assay program will expand our sales in this region , and given our initial indications for 2016 , we believe latin america will continue to be a strong market for chembio . in europe , chembio 's partners , aaz and biosure , launched sales of chembio 's sure check ® hiv 1/2 self-testing kits in the u.k. and france , respectively .
| overview this discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and related notes . our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . the preparation of financial statements in conformity with accounting principles generally accepted in the united states of america requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities , disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period . on an ongoing basis , we review our estimates and assumptions . our estimates are based on our historical experience and other assumptions that we believe to be reasonable under the circumstances . actual results are likely to differ from those estimates under different assumptions or conditions , but we do not believe such differences will materially affect our financial position or results of operations . our critical accounting policies , the policies we believe are most important to the presentation of our financial statements and require the most difficult , subjective and complex judgments , are outlined below in `` critical accounting policies , '' and have not changed significantly . in addition , certain statements made in this report may constitute `` forward-looking statements '' . these forward-looking statements involve known or unknown risks , uncertainties and other factors that may cause the actual results , performance or achievements of the company to be materially different from any future results , performance or achievements expressed or implied by the forward-looking statements . these factors include , among others , 1 ) our ability to obtain necessary regulatory approvals for our products ; and 2 ) our ability to increase revenues and operating income , which is dependent upon our ability to develop and sell our products , general economic conditions , demand for our products , and other factors .
| 5,751 |
in addition to historical information , this discussion contains forward-looking statements that involve risks , uncertainties and assumptions that could cause actual results to differ materially from management 's expectations . factors that could cause such differences are discussed in “ forward-looking statements ” and “ risk factors. ” we assume no obligation to update any of these forward-looking statements . presentation of information the discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the fiscal years ended december 31 , 2019 and 2020. for a discussion of changes from the fiscal year ended december 31 , 2018 to the fiscal year ended december 31 , 2019 , refer to management 's discussion and analysis of financial condition and results of operations in part ii , item 7 of our annual report on form 10-k for the year ended december 31 , 2019 ( filed march 4 , 2020 ) . overview-introduction we are a holding company of specialty electrical construction service providers that was established in 1995 through the merger of long-standing specialty contractors . through our subsidiaries , we serve the electric utility infrastructure , commercial and industrial construction markets . we manage and report our operations through two electrical contracting service segments : transmission and distribution ( “ t & d ” ) and commercial and industrial ( “ c & i ” ) . we have operated in the transmission and distribution industry since 1891. we are one of the largest u.s. contractors servicing the t & d sector of the electric utility industry and provide t & d services throughout the united states and western canada . our t & d customers include many of the leading companies in the electric utility industry . we have provided electrical contracting services for commercial and industrial construction since 1912. our c & i segment provides services in the united states and in western canada . our c & i customers include facility owners and general contractors . 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 allows 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 more complex projects . we had revenues for the year ended december 31 , 2020 of $ 2.25 billion compared to $ 2.07 billion for the year ended december 31 , 2019. for the year ended december 31 , 2020 , net income attributable to myr group inc. was $ 58.8 million compared to $ 37.7 million for the year ended december 31 , 2019. overview-segments transmission and distribution segment . our t & d segment provides comprehensive solutions to customers in the electric utility industry . our t & d segment generally serves the electric utility industry as a prime contractor to customers such as investor-owned utilities , cooperatives , private developers , government-funded utilities , independent power producers , independent transmission companies , industrial facility owners and other contractors . we have long-standing relationships with many of our t & d customers who rely on us to construct and maintain reliable electric and other utility infrastructure . 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 . our t & d services include the construction and maintenance of high voltage transmission lines , substations , lower voltage underground and overhead distribution systems , renewable power facilities and limited gas construction services . we also provide many services to our customers under multi-year master service agreements ( “ msas ” ) and other variable-term service agreements . for the year ended december 31 , 2020 , our t & d revenues were $ 1.15 billion , or 51.4 % , of our revenue , compared to $ 1.13 billion , or 54.8 % , of our revenue for the year ended december 31 , 2019 and $ 893.1 million , or 58.3 % , of our revenue for the year ended december 31 , 2018. revenues from transmission projects represented 64.6 % , 68.1 % , and 62.6 % of t & d segment revenue for the years ended december 31 , 2020 , 2019 and 2018 , respectively . our t & d segment also provides restoration services in response to hurricanes , ice storms or other storm related events , which accounted for less than 5 % of our annual revenues in 2020 , 2019 and 2018 . 29 measured by revenues in our t & d segment , we provided 43.9 % , 49.7 % and 40.5 % of our t & d services under fixed-price contracts during the years ended december 31 , 2020 , 2019 and 2018 , respectively . we also provide many services to our customers under multi-year maintenance service agreements and other variable service agreements . commercial and industrial segment . our c & i segment provides a wide range of services including design , installation , maintenance and repair of commercial and industrial wiring , the 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 directly to facility owners . we have a diverse customer base with many long-standing relationships . we concentrate our efforts on projects where our technical and project management expertise are critical to successful and timely execution . story_separator_special_tag during the winter months , demand for our t & d work may be high , but our work can be delayed due to inclement weather . during the summer months , the demand for our t & d work may be affected by fewer available system outages , due to peak electrical demands caused by warmer weather , which limits our ability to perform electrical line service work . during the spring and fall months , the demand for our t & d work may increase due to improved weather conditions and system availability ; however , extended periods of rain and other severe weather can affect the deployment of our crews and efficiency of operations . furthermore , our work is performed under a variety of conditions in different locations , including but not limited to , difficult terrain , sites which may have been exposed to harsh and hazardous conditions , and in large urban centers where delivery of materials and availability of labor may be impacted . we also provide storm restoration services to our t & d customers . these services tend to have a higher profit margin . however , storm restoration service work that is performed under an msa typically has similar rates to other work under the agreement . in addition , deploying employees on storm restoration work may , at times , delay work on other transmission and distribution work . storm restoration service work is unpredictable and can affect results of operations . outlook our business is directly impacted by the level of spending on t & d infrastructure and the level of c & i electrical construction activity across the united states and western canada . we are optimistic about infrastructure spending and believe that industry activity will continue in both our transmission and distribution market segments and the drivers for utility investment will remain intact . we believe that regulatory reform , state renewable portfolio standards , the aging of the electric grid , and potential overall improvement of the economy will positively impact the level of spending by our customers in all of the markets we serve . although competition remains strong , we see these trends as positive factors for us in the future . since march 2020 , the covid-19 pandemic has had a significant impact on the global economy , including the us and canadian economies . as the situation continues to evolve , we are closely monitoring the impact of the covid-19 pandemic on all aspects of our business , including how it impacts our customers , subcontractors , suppliers , vendors and employees . the covid-19 pandemic caused a slowdown of certain projects due to specific state , local , municipal and customer mandated stay-at-home orders and new project requirements that were established to protect construction workers and the general public , most of which continue to impact our c & i segment . although the majority of stay-at-home orders have been phased-out , we continue to experience impacts associated with the covid-19 project-specific protocols . we expect the project-specific requirements to remain in place which will continue to impact project schedules and workflow going forward . we are unable to predict the ultimate impact that covid-19 will have on our business , employees , liquidity , financial condition , results of operations and cash flows . most of the company 's operations are considered critical and essential businesses , making our projects generally exempt from stay-at-home or similar orders in certain parts of the united states and western canada . however , if this pandemic persists for an extended timeframe our business could be more significantly impacted as a result of prolonged unfavorable economic conditions . the company began implementing changes in march of 2020 in an effort to protect our employees and customers and to support appropriate health and safety protocols , including implementing alternative and flexible work arrangements where possible . as the conditions surrounding the ongoing covid-19 pandemic remain fluid , and if disruptions do re-emerge , they could materially adversely impact our business . our key estimates that could potentially be impacted include estimates of costs to complete contracts , the recoverability of goodwill and intangibles and allowance for doubtful accounts . 31 we continue to expect long-term growth in the transmission market , although the timing of large bids and subsequent construction will likely continue to be highly variable from year to year . the electric grid is aging and requires significant upgrades and maintenance to meet current and future demands for electricity . over the past several years , many utilities have begun to implement plans to improve reliability of their transmission systems and reduce congestion . these utilities have started or planned new construction , line upgrades and maintenance projects on their 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 . 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 , continue to drive 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 . renewable energy-related construction contracts , depending on the type , may benefit both the t & d and c & i business segments . we believe there is an ongoing need for utilities to sustain investment in their transmission systems to improve reliability , reduce congestion and connect to new sources of renewable generation . consequently , we believe we will continue to see significant bidding activity on large transmission projects over the next two years .
| 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 , 2020 were $ 1.15 billion compared to $ 1.13 billion for the year ended december 31 , 2019 , an increase of $ 20.0 million , or 1.8 % . the increase in revenue was primarily related to an increase in revenue on distribution projects which include an increase in storm work related to certain weather events , partially offset by a decrease in revenue on transmission projects . revenues from transmission projects represented 64.6 % and 68.1 % of t & d segment revenue for the years ended december 31 , 2020 and 2019 , respectively . additionally , for the year ended december 31 , 2020 , measured by revenue in our t & d segment , we provided 43.9 % of our t & d services under fixed-price contracts , as compared to 49.7 % for the year ended december 31 , 2019. operating income for our t & d segment for the year ended december 31 , 2020 was $ 109.4 million compared to $ 73.6 million for the year ended december 31 , 2019 , an increase of $ 35.8 million , or 48.7 % . the increase in t & d operating income from the prior year was primarily due to better-than-anticipated productivity on certain projects , and an increase in higher margin and storm related work . these increases were partially offset by labor and material inefficiencies and inclement weather experienced on certain projects . operating income , as a percentage of revenues , for our t & d segment increased to 9.5 % for the year ended december 31 , 2020 from 6.5 % for the year ended december 31 , 2019 .
| 5,752 |
we currently hold investments in entities that have ownership or leasehold interests in 60 hotels , consisting of premium-branded hotels and resorts with over 33,000 rooms , of which over 86 % are luxury and upper upscale and are located in prime u.s. markets and its territories . our high-quality portfolio includes hotels in major urban and convention areas , such as new york city , washington , d.c. , chicago , san francisco , boston , new orleans and denver ; premier resorts in key leisure destinations , including hawaii , orlando , key west and miami beach ; and hotels adjacent to major gateway airports , such as los angeles international , boston logan international and miami international , as well as hotels in select suburban locations . our objective is to be the preeminent lodging real estate investment trust ( “ reit ” ) , focused on consistently delivering superior , risk-adjusted returns to stockholders through active asset management and a thoughtful external growth strategy while maintaining a strong and flexible balance sheet . as a pure-play real estate company with direct access to capital and independent financial resources , we believe our enhanced ability to implement compelling return on investment initiatives within our portfolio represents a significant embedded growth opportunity . finally , given our scale and investment expertise , we believe we will be able to successfully execute single-asset and portfolio acquisitions and dispositions to further enhance the value and diversification of our assets throughout the lodging cycle , including potentially taking advantage of the economies of scale that could come from consolidation in the lodging reit industry . we operate our business through two operating segments , our consolidated hotels and unconsolidated hotels . our consolidated hotels operating segment is our only reportable segment . refer to note 14 : “ geographic and business segment information ” in our audited consolidated financial statements included elsewhere within this annual report on form 10-k for additional information regarding our operating segments . basis of presentation the consolidated financial statements reflect our financial position , results of operations and cash flows , in conformity with u.s. generally accepted accounting principles ( “ u.s . gaap ” ) . refer to note 2 : “ basis of presentation and summary of significant accounting policies ” in our audited consolidated financial statements included elsewhere within this annual report on form 10-k for additional information . recent events covid-19 effect on our business the global outbreak of a novel strain of coronavirus and the disease it causes ( “ covid-19 ” ) have had and continue to have a significant effect on the lodging industry and our company . we can not presently determine the extent or duration of the overall operational and financial effects that covid-19 will have on our company . the effects of covid-19 , including related government restrictions , border closings , quarantining , “ shelter-in-place ” orders and “ social distancing , ” have had and continue to have a significant adverse effect on the hospitality industry , including our business , and have contributed to a significant decrease in business and consumer spending , with a particularly dramatic effect on travel and hospitality spending . in march and april 2020 , travel restrictions and mandated closings of non-essential businesses were imposed , which resulted in temporary suspensions of operations at certain of our hotels , the majority of which have now reopened , and significantly reduced capacity at the remainder of our hotels . temporary closings of restaurants and hotels across entire regions also contributed to severely reduced overall lodging demand . there continues to be significant cancellations of existing reservations , including the vast majority of group business and events throughout the first-half of 2021 and significant reductions in new reservations . 34 since the beginning of march , we have experienced a significant decline in occupancy , average daily rate ( “ adr ” ) and revenue per available room ( “ revpar ” ) associated with the covid-19 pandemic throughout our consolidated portfolio , which resulted in a decline in our operating cash flow . changes in our monthly and quarterly 2020 pro-forma metrics , which exclude results from property dispositions and include results from property acquisitions , as compared to the same periods in 2019 , and pro-forma occupancy are as follows : replace_table_token_7_th we believe that imposed or re-imposed government restrictions and the economic contraction associated with covid-19 will continue to significantly affect our business . we believe demand will remain significantly reduced as long as mandatory travel restrictions , “ social distancing , ” and cost-saving measures , such as the postponing or cancelling of non-essential business travel , remain in place . however , the announcements of covid-19 vaccines in november 2020 and the reports of their initial effectiveness appear to have resulted in an improvement in traveler and general consumer sentiment . although we were able to recommence operations at reduced capacity at most of our previously suspended hotels by the end of 2020 , there remains considerable uncertainty as to both the time it will take to see travel and demand for lodging and travel-related experiences to increase and the long-term impacts on consumer attitudes to travel . we can not predict whether our reopened hotels will be forced to suspend operations again or decrease capacity in the future . we believe that the distribution of covid-19 vaccines will eventually ease government regulation and decrease the number of covid-19 cases , resulting in an improvement in business and other consumer preferences for travel . due to the effects of covid-19 , during the year ended december 31 , 2020 , we recognized $ 607 million of impairment losses for goodwill and $ 90 million of impairment losses primarily related to one of our hotels resulting from a significant decline in market value . further , economic uncertainty generally will make it more difficult to execute on our external growth strategy . story_separator_special_tag group guests are traveling for group events that reserve rooms for meetings , conferences or social functions sponsored by associations , corporate , social , military , educational , religious or other organizations . group business usually includes a block of room accommodations , as well as other ancillary services , such as meeting facilities , catering and banquet services . a majority of our food and beverage sales and other ancillary services are provided to customers who also are occupying rooms at our hotels . as a result , occupancy affects all components of revenues from our hotels . due to the effects of covid-19 , we have experienced a greater shift to transient business as a result of the cancellation or postponement of business conferences and other group events . principal components rooms . represents the sale of room rentals at our hotels and accounts for a substantial majority of our total revenue . food and beverage . represents revenue from group functions , which may include both banquet revenue and audio and visual revenue , as well as revenue from outlets such as restaurants and lounges at our hotels . ancillary hotel . represents revenue for guest services provided at our hotels , including parking , telecommunications , golf course and spa . also includes tenant leases and other rental revenue . other . primarily related to support services we provide to hilton grand vacations ( “ hgv ” ) timeshare properties that have a presence within or adjacent to certain of our hotels , which include cost reimbursements for the costs of providing housekeeping , landscaping , general maintenance and other services plus a fee representing a percentage of cost reimbursements . also included , revenue from our laundry business prior to permanent suspension of operations in 2020. factors affecting our revenues consumer demand . consumer demand for our products and services is closely linked to the performance of the general economy and is sensitive to business and personal discretionary spending levels . leading indicators of demand include gross domestic product , non-residential fixed investment and the consumer price index . declines in consumer demand due to adverse general economic conditions , reductions in travel patterns , lower consumer confidence , outbreaks of pandemic or contagious diseases , and adverse political conditions can lower the revenues and profitability of our hotels . further , competition for guests and the supply of services at our hotels affect our ability to sustain or increase rates charged to customers at our hotels . as a result , changes in consumer demand and general business cycles have historically subjected and could in the future subject our revenues to significant volatility . in addition , leisure travelers currently make up the majority of our transient demand . therefore , we will be significantly more affected by trends in leisure travel than trends in business travel . supply . new room supply is an important factor that can affect the lodging industry 's performance . room rates and occupancy , and thus revpar , tend to increase when demand growth exceeds supply growth . the addition of new competitive hotels and resorts affects the ability of existing hotels and resorts to sustain or grow revpar , and thus profits . new development is determined largely by construction costs , the availability of financing and expected performance of existing hotels and resorts . expenses principal components rooms . these costs include housekeeping , reservation systems , room supplies , laundry services at our hotels and front desk costs . food and beverage . these costs primarily include food , beverage and the associated labor and will correlate closely with food and beverage revenues . other departmental and support . these costs include labor and other costs associated with other ancillary revenue , such as parking , telecommunications , golf course and spa , as well as labor and other costs associated with administrative departments , sales and marketing , repairs and minor maintenance and utility costs . additionally , these costs include franchise fees and are generally 37 computed as a percentage of rooms revenues . refer to item 1 : “ business – our principal agreements , ” included elsewhere in this annual report on form 10-k for additional information on franchise fees . other property-level . these costs consist primarily of real and personal property taxes , other local taxes , ground rent , equipment rent and property insurance . management fees . base management fees are computed as a percentage of gross revenue . incentive management fees generally are paid if specified financial performance targets are achieved . refer to item 1 : “ business – our principal agreements , ” included elsewhere in this annual report on form 10-k for additional information . impairment loss and casualty ( gain ) loss , net . impairment losses are non-cash expenses that are recognized when circumstances indicate that the carrying value of a long-lived asset is not recoverable . an impairment loss is recognized for the excess of the carrying value over the fair value of the asset . casualty losses are expenses that represent losses incurred resulting from property damage or destruction caused by any sudden , unexpected or unusual event such as a hurricane . casualty gains are insurance proceeds for property damage claims that are in excess of any associated impairment loss recognized and clean-up and recovery costs incurred , less any insurance deductible . depreciation and amortization . these are non-cash expenses that primarily consist of depreciation of fixed assets such as buildings , furniture , fixtures and equipment at our hotels , as well as amortization of finite lived intangible assets . corporate general & administrative . these costs include general and administrative expenses , including costs associated with the potential disposition of hotels . general and administrative expenses consist primarily of compensation expense for our corporate staff and personnel supporting our business , professional fees , travel and entertainment expenses , and office administrative and related expenses . acquisition costs .
| results of operations the following items have had a significant effect on the year-over-year comparability of our operations and are illustrated further discussed in the table of hotel revenues and operating expenses below : property acquisitions : on may 5 , 2019 , the company , pk domestic and pk domestic sub llc , a wholly-owned subsidiary of pk domestic ( “ merger sub ” ) , entered into a definitive agreement and plan of merger ( the “ merger agreement ” ) with chesapeake lodging trust ( “ chesapeake ” ) . on september 18 , 2019 , pursuant to the terms and subject to the conditions set forth in the merger agreement , chesapeake merged with and into merger sub ( the “ merger ” ) . as a result of the merger , we acquired 18 hotels , two of which were disposed of in december 2019. the results of operations of these hotels prior to acquisition for the year ended december 31 , 2019 are not included in our consolidated results . property dispositions : since january 1 , 2019 , we disposed of ten consolidated hotels , including two hotels acquired in the merger that were subsequently sold . as a result of these dispositions , our revenues and operating expenses decreased for the year ended december 31 , 2020 as compared to the same period in 2019. the results of operations during our period of ownership of these hotels are included in our consolidated results . covid-19 : beginning in march 2020 , we experienced a significant decline in adr , occupancy and revpar due to covid-19 . the economic contraction resulting from the spread of covid-19 has and is expected to continue to significantly affect our business .
| 5,753 |
the company also elected the accounting policy election to keep leases with a term of twelve months or less off the balance sheet and to recognize payments for those leases on a straight-line basis over the lease term . rou assets represent the company 's right to use an underlying asset for the lease term , and lease liabilities represent the company 's obligation to make lease payments arising from the lease . at the inception of the arrangement , the company determines if an arrangement is a lease based on an assessment of the terms and conditions of the contract . operating lease rou assets and lease liabilities are recognized at the commencement date , and thereafter , if modified , based on the present value of lease payments over the lease term . the lease term includes any renewal or early-termination options that the company is reasonably assured to exercise . the present value of lease payments is determined by using the interest rate implicit in the lease , if that rate is readily determinable ; otherwise , the company uses its estimated secured incremental borrowing rate for that lease term . the underlying assets of the company 's leases as of the adoption date consisted of office and laboratory space . in march 2017 , the fasb issued asu no . 2017-08 , receivables—nonrefundable fees and other costs ( subtopic 310-20 ) : premium story_separator_special_tag you should read the following discussion and analysis of financial condition and results of operations together with the section entitled “ selected consolidated financial data ” and our consolidated financial statements and related notes included elsewhere in this annual report on form 10-k. this discussion and other parts of this annual report on form 10-k contain forward-looking statements that involve risks and uncertainties , such as statements regarding our plans , objectives , expectations , intentions , and projections . our actual results could differ materially from those discussed in these forward-looking statements . factors that could cause or contribute to such differences include , but are not limited to , those discussed in the “ risk factors ” section of this annual report on form 10-k. overview we are a biotechnology company that uses our robust , chemistry-driven approach and drug discovery capabilities to become a leader in the discovery and development of small molecule drugs for the treatment of viral infections and liver diseases . we discovered glecaprevir , the second of two protease inhibitors discovered and developed through our collaboration with abbvie for the treatment of chronic hepatitis c virus , or hcv . glecaprevir is co-formulated as part of abbvie 's leading brand of direct-acting antiviral , or daa , combination treatment for hcv , which is marketed under the tradenames mavyret ® ( u.s. ) and maviret ® ( ex-u.s. ) ( glecaprevir/pibrentasvir ) . our royalties from our abbvie collaboration provide us funding to support our wholly-owned research and development programs , which are primarily focused on the following disease targets : respiratory syncytial virus , or rsv , the most common cause of bronchiolitis and pneumonia in young children and a significant cause of respiratory illness in older adults , with estimates suggesting that approximately 200,000 hospitalizations in the u.s. and eu occur each year in children under the age of two and approximately 170,000 hospitalizations in these regions occur each year in adults over the age of 65 ; hepatitis b virus , or hbv , the most prevalent chronic hepatitis , which is estimated by the world health organization to affect more than 250 million individuals worldwide ; sars-cov-2 , the virus that causes covid-19 ; human metapneumovirus , or hmpv , a virus that causes respiratory infection with symptoms similar to rsv ; and non-alcoholic steatohepatitis , or nash , a liver disease estimated to affect approximately 1.5 % to 6.5 % of the population in the developed world ( which translates to approximately 5 to 20 million individuals in the u.s. alone ) . we had $ 419.3 million in cash and marketable securities at september 30 , 2020. in fiscal 2020 , we earned $ 122.5 million in product royalties on abbvie 's net sales of its hcv regimens . we expect cash flows from our continuing hcv royalties and our existing financial resources will allow us to continue to fund our wholly-owned research and development programs for the foreseeable future . our wholly-owned programs our wholly-owned research and development programs are in virology , namely rsv , hbv , sars-cov-2 and hmpv , and in nash , a non-viral liver disease : rsv : we have a clinical stage program for rsv , for which the lead asset is edp-938 . o in june 2019 , we announced positive topline results from our phase 2a human challenge study of edp-938 in healthy adults infected with a specific strain of rsv . o based on the results of the challenge study , we now have an ongoing phase 2b study of edp-938 , which is in adult outpatients with community-acquired rsv infection . this study , named rsvp , is designed to help us better understand the feasibility of this direct-acting antiviral therapy . while many of the sites for the northern hemisphere missed an unusually early rsv season in 2019-2020 and covid-19 delayed or prevented activation of some trial sites in the southern hemisphere , the mitigation steps to manage the covid-19 pandemic significantly reduced the incidence of respiratory illnesses ( other than covid-19 ) at the activated sites in that region 's rsv season . story_separator_special_tag we have earned all $ 330.0 million milestone payments under the agreement related to clinical development and commercialization regulatory approvals of these regimens in major markets . glecaprevir is the protease inhibitor we discovered that was developed by abbvie in a fixed-dose combination with its ns5a inhibitor , pibrentasvir , for the treatment of hcv . this patented combination , currently marketed under the brand names mavyret ® ( u.s. ) and maviret ® ( ex-u.s. ) , is referred to in this report as mavyret/maviret . this regimen is a once-daily , all-oral , fixed-dose , ribavirin-free treatment for hcv genotypes 1-6 , or gt1-6 , which is referred to as being pan-genotypic . in the u.s. , eu and japan it is approved as an 8-week treatment for patients with and without compensated cirrhosis and new to treatment . today , these patients are estimated to represent the majority of hcv patients in over 50 countries where mavyret/maviret is sold by abbvie and where mavyret/maviret remains the only 8-week pan-genotypic hcv treatment . since august 2017 , substantially all of our royalty revenue has been derived from abbvie 's net sales of mavyret/maviret . our ongoing royalty revenues from this regimen consist of annually tiered , double-digit , per-product royalties on 50 % of the calendar year net sales of the 2-daa glecaprevir/ pibrentasvir combination in mavyret/maviret . these royalties are calculated separately from the royalties on abbvie 's paritaprevir-containing regimens , abbvie 's initial hcv treatment now replaced by mavyret/maviret in most markets worldwide . the annual royalty tiers for each of these royalty-bearing products return to the lowest tier for sales on and after each january 1. financial operations overview we are currently funding all research and development for our wholly-owned programs , which are targeted toward the discovery and development of novel compounds for the treatment of viral infections and liver diseases . in 2020 , we had two phase 2 studies ongoing for our wholly-owned programs in rsv and nash and two phase 1 studies in our hbv and nash programs . we are also progressing other compounds into preclinical development in our rsv , hbv and nash programs as well as pursuing drug discovery efforts in hmpv and covid-19 . during 2020 , we experienced disruptions in our business due to the spread of covid-19 . specifically , we paused recruitment of our phase 2 argon-2 study in nash and part 2 of our phase 1a/1b study in nuc-suppressed hbv patients in march 2020 but were able to resume recruitment in both of these studies in july 2020. further , covid-19 resulted in a delay or prevention in site activation in the southern hemisphere for our phase 2 rsvp trial in rsv for that region 's rsv season . however , we are reactivating sites in north america and are adding sites in several countries in europe in preparation for the 2020-2021 winter rsv season , and also plan to add sites in asian countries in 2021. as a result of our clinical development programs , as well as efforts to advance other compounds into preclinical development , we expect to incur greater expenses in fiscal 2021 than in 2020 as we continue to advance our rsv , nash , hbv , hmpv , and sars cov-2 programs . however , if the covid-19 pandemic slows down our research and development programs , it will reduce our spending in those areas in the near term . we are funding our operations primarily through royalty payments received under our collaboration agreement with abbvie and our existing cash , cash equivalents , and short-term and long-term marketable securities . our revenue is currently dependent on royalty payments we receive from abbvie on its sales of mavyret/maviret . during 2020 , royalty revenues declined as compared to the prior year due primarily to the worldwide impact of covid-19 on treated patient volumes as well as competitive pricing pressures in select markets . given the uncertainty regarding the level of abbvie 's future mavyret/maviret sales that will generate our royalty revenue as well as increases in our future expenditures for the advancement of our internally developed compounds , we expect our expenses will exceed our revenues in fiscal 2021. revenue our revenue is derived from our collaboration agreement with abbvie . substantially all our royalty revenues are now derived from the sales of mavyret/maviret , an 8-week treatment regimen that is pan-genotypic . under the terms of our abbvie agreement , we earn annually tiered , double-digit royalties on the 50 % of abbvie 's net sales of mavyret/maviret allocated to glecaprevir , the protease inhibitor we discovered . beginning with each january 1 , the cumulative net sales of each royalty-bearing product start at zero for purposes of calculating the tiered royalties on a product-by-product basis . 56 the following table is a summary of revenue recognized for the years ended september 30 , 2020 , 2019 , and 2018 : replace_table_token_5_th abbvie agreement we currently receive annually tiered , double-digit royalties per protease inhibitor product on abbvie 's net sales allocable to either of our collaboration 's protease inhibitor products . under the terms of our abbvie agreement , as amended in october 2014 , 50 % of abbvie 's net sales of mavyret/maviret are allocated to glecaprevir . in the case of regimens containing paritaprevir , 30 % of net sales of 3-daa regimens containing paritaprevir and 45 % of net sales of 2-daa regimens containing paritaprevir are allocated to paritaprevir for purposes of calculating our annually tiered royalties . beginning with each january 1 , the cumulative net sales of each royalty-bearing product start at zero for purposes of calculating the tiered royalties on a product-by-product basis . for detail regarding the royalty tiers under our abbvie agreement , see note 7 in notes to consolidated financial statements of this report which is incorporated herein by this reference .
| results of operations comparison of years ended september 30 , 2020 , 2019 , and 2018 replace_table_token_7_th revenue . we recognized revenue of $ 122.5 million during the year ended september 30 , 2020 , as compared to $ 205.2 million during the year ended september 30 , 2019. the decrease in revenue of $ 82.7 million year-over-year was due to lower numbers of treated hcv patients as a result of the worldwide covid-19 pandemic as well as competitive pricing pressures in select markets . 59 we recognized revenue of $ 205.2 million during the year ended september 30 , 2019 compared to $ 206.6 million during the year ended september 30 , 201 8 . the decrease in revenue of $ 1.4 million year-over-year was due to the fact that in fiscal 2018 we received the final milestone payment of $ 15.0 million earned under our abbvie agreement related to reimbursement approval for maviret ® , in japan . this decrease was offset by an increase of $ 13.6 million in royalties earned under our abbvie agreement which were driven by the launch of mavyret/maviret in late calendar 2017. our weighted average royalty rate on the portion of abbvie 's sales allocable to our protease inhibitor products was approximately 13 % , 13 % and 12 % during the years ended september 30 , 2020 , september 30 , 2019 and 2018 , respectively . our royalty revenues eligible to be earned in the future will depend on abbvie 's hcv market share , the pricing of the mavyret/maviret regimen , the impact of the covid-19 pandemic on treated patient volumes and the number of patients treated . in addition , at the beginning of each calendar year ( the second quarter of our fiscal year ) , our royalty rate resets to the lowest tier for each of our royalty-bearing products licensed to abbvie .
| 5,754 |
unless stated otherwise , all dollar figures in this report are presented in thousands ( 000s ) . n/m indicates that the change in dollars or percentage was not meaningful . overview general dmc global inc. , formerly dynamic materials corporation , ( `` dmc '' ) operates a diversified family of technical product and process businesses serving the energy , industrial and infrastructure markets . our businesses operate globally through an international network of manufacturing , distribution and sales facilities . our business is organized into two segments : nobelclad and dynaenergetics . on october 1 , 2014 we completed the sale of our amk business . we have reflected the results of amk as discontinued operations in the consolidated statements of operations for all periods presented . accordingly , historical consolidated statements of operations included in the management 's discussion and analysis of financial condition and results of operations have been restated to reflect the discontinued operation . our diversified business segments each provide a suite of unique technical products to niche segments of the global energy , industrial and infrastructure markets ; and each of our businesses has established a strong or leading position in the markets in which it participates . with an underlying focus on free-cash flow generation , our objective is to sustain and grow the market share of our businesses through increased market penetration , development of new applications , and research and development of new and adjacent products that can be sold across our global network of sales and distribution facilities . we also intend to explore acquisitions of complementary businesses that could strengthen or add to our existing product portfolio , or expand our geographic footprint and market presence . nobelclad nobelclad is a global leader in the production of explosion-welded clad metal plates for use in the construction of corrosion resistant industrial processing equipment and specialized transition joints.while a large portion of the demand for our clad metal products is driven by new plant construction and large plant expansion projects , maintenance and retrofit projects at existing chemical processing , petrochemical processing , oil refining , and aluminum smelting facilities also account for a significant portion of total demand . these industries tend to be cyclical in nature and timing of new order inflow remains difficult to predict . we use backlog as a primary means to measure the immediate outlook for our nobelclad business . we define “ backlog ” at any given point in time as all firm , unfulfilled purchase orders and commitments at that time . most firm purchase orders and commitments are realized , and we expect to fill most backlog orders within the following 12 months . nobelclad 's backlog decreased to $ 31,634 at december 31 , 2016 from $ 41,832 at december 31 , 2015 . dynaenergetics dynaenergetics designs , manufactures and distributes products utilized by the global oil and gas industry principally for the perforation of oil and gas wells . these products are sold to large , mid-sized , and small oilfield service companies in the u.s. , europe , canada , south america , africa , the middle east , russia , and asia . dynaenergetics also sells directly to end-users . the market for perforating products , which are used during the well completion process , generally corresponds with oil and gas exploration and production activity . exploration activity over the last several years has led to increasingly complex well completion operations , which in turn , has increased the demand for high quality and technically advanced perforating products . cost of products sold for dynaenergetics includes the cost of metals , explosives and other raw materials used to manufacture shaped charges , detonating products and perforating guns as well as employee compensation and benefits , depreciation of manufacturing facilities and equipment , manufacturing supplies and other manufacturing overhead expenses . factors affecting results 31 the following items impacted the comparability of the company 's results for the years ended december 31 , 2016 and 2015 : nobelclad 's gross profit , operating income , and adjusted ebitda ( see `` use of non-gaap financial measures '' below ) improved due to favorable customer and project mix , lower manufacturing overhead expenses from the consolidation of european manufacturing facilities , lower general and administrative expenses , and no restructuring charges in 2016. dynaenergetics was impacted by continued pressure on selling prices from the prolonged downturn in the oil and gas well-completions sector , which is the segment 's primary end market . however , we continued to increase dynaenergetics ' market share in the perforating market in 2016. unit sales of our dynaselect tm family of detonators continued to grow during 2016 , as an increasing number of operators and service providers are leveraging the reliability , efficiency and safety of this product . the company continued its investments in research and development , as well as technology , product and market development initiatives . dynaenergetics ' research and development spending in 2016 was $ 3,990 compared with $ 2,357 in 2015 . research and development expenses are included in the costs of product sold line item in the consolidated statements of operations . restructuring expenses of $ 1,202 were incurred in 2016 , primarily related to severance for headcount reductions and lease termination costs in dynaenergetics compared to $ 4,063 in 2015 , primarily related to closing distribution and production centers , consolidating manufacturing to more cost-effective locations , and reducing corporate headcount . a goodwill impairment charge of $ 11,464 in 2015 related to the dynaenergetics reporting unit . selling , general , and administrative expenses of $ 38,741 for 2016 compared favorably to $ 39,743 for 2015 . in 2016 , general and administrative expenses included the impact of ongoing patent infringement and ad/cvd litigation . net debt of $ 9,313 decreased 55 % from december 31 , 2015 . net debt , a non-gaap measure , is calculated as lines of credit less cash and cash equivalents . story_separator_special_tag the effects of these factors are difficult to predict . new factors emerge from time to time and we can not assess the potential impact of any such factor on our business or the extent to which any factor , or combination of factors , may cause results to differ materially from those contained in any forward-looking statement . all forward-looking statement speaks only as of the date of this annual report , and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of such statement or to reflect the occurrence of unanticipated events . in addition , see “ risk factors ” for a discussion of these and other factors that could materially affect our results of operations and financial condition . 34 story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; text-decoration : underline ; '' > replace_table_token_10_th net sales the decrease compared with 2014 was due to a 27 % decrease in dynaenergetics and a 7 % decrease in nobelclad . excluding the impact of unfavorable foreign currency fluctuations , nobelclad 's net sales increased 1 % and dynaenergetics ' decreased 21 % . the decline in dynaenergetics resulted from the global downturn in the oil and gas market , which outweighed higher sales of new products and technologies . gross profit the decrease in gross profit percentage compared with 2014 was driven by the impact of a $ 6,205 accrual for anti-dumping and countervailing duties resulting from an unfavorable scope ruling from the department of commerce on prior imports of metals primarily used by dynaenergetics for gun carrier tubing . the decline also resulted from a lower proportion of sales in dynaenergetics relative to nobelclad , an unfavorable product mix in nobelclad , lower average selling prices and increased inventory reserves in dynaenergetics and the impact of lower sales volume on fixed manufacturing overhead expenses in both segments . general and administrative expenses the decrease compared with 2014 was primarily due to a reduction in salaries of $ 1,451 , lower stock-based compensation of $ 894 , and a reduction in outside services expenses of $ 667. in the first half of 2015 we recognized incremental audit and legal expenses of $ 450 associated with the restatement of previously-issued financial statements included in our 2014 form 10-k. these one-time expenses were offset by a reduction in fees related to fewer board of directors members and lower information technology spending from bringing selected services in-house and the completion of an enterprise resource planning ( erp ) project in nobelclad . selling and distribution expenses the increase compared with 2014 was principally due to an increase in bad debt expense . amortization expense the decrease compared with 2014 was due to fully amortizing nobelclad 's customer relationships as of december 31 , 2014 and the impact of foreign currency translation . restructuring expenses the components of 2015 restructuring expenses are detailed as follows : 38 replace_table_token_11_th nobelclad restructuring expenses relate to the shifting of the majority of clad metal plate production from facilities in both rivesaltes , france and würgendorf , germany to the new manufacturing facility in liebenscheid , germany . dynaenergetics restructuring expenses relate to the consolidation of perforating gun manufacturing centers , the closure of distribution centers , and the reduction of administrative workforce at the corporate offices in troisdorf , germany . corporate restructuring expenses relate to the elimination of certain positions in our corporate office and the severance and expense related to the acceleration of unvested stock awards . the components of 2014 restructuring charges are detailed as follows : replace_table_token_12_th nobelclad restructuring expenses relate to the shifting of the majority of clad metal plate production from facilities in both rivesaltes , france and wurgendorf , germany to the new manufacturing facility in liebenscheid , germany . operating income ( loss ) the operating loss in 2015 versus operating income in 2014 primarily was due to non-recurring charges related to goodwill impairment and accrual for anti-dumping and countervailing duties in dynaenergetics and lower customer demand and average selling prices in dynaenergetics resulting from a significant decline in completion activity in the oil and gas sector , partially offset by improved earnings in nobelclad . corporate unallocated and stock-based compensation expenses are not allocated to our business segments . other income ( expense ) , net the increase in expense compared with 2014 primarily was due to an increase in unrealized foreign currency losses . our subsidiaries frequently enter into inter-company and third party transactions that are denominated in currencies other than their functional currency . changes in exchange rates with respect to these transactions will result in unrealized gains or losses if unsettled at end of the reporting period or realized foreign currency transaction gains or losses at settlement of the transaction . interest income ( expense ) , net the increase in expense compared with 2014 was due to the amortization of loan fees associated with the credit agreement entered into on february 23 , 2015 , the write off of $ 508 of loan fees previously deferred in conjunction with our december 2015 credit facility amendment , and higher interest expense on a larger average outstanding debt balance . goodwill impairment charge the impairment charge relates to fully writing off goodwill related to the dynaenergetics segment . income tax provision ( benefit ) we recorded an income tax benefit of $ 2,118 for 2015 compared to an income tax expense of $ 3,913 for 2014 . our consolidated income tax benefit for 2015 and expense for 2014 included $ 1,584 and $ 76 , respectively , related to u.s. taxes , with the remainder relating to a net foreign tax benefit of $ 534 in 2015 and expense of $ 3,837 in 2014 , respectively , associated with our foreign operations and holding companies . net income ( loss ) primarily as a result of restructuring expenses and the non-recurring goodwill impairment charge along with the other factors discussed above , net loss in 2015 was $ 23,971 , or $ 1.72
| consolidated results of operations year ended december 31 , 2016 compared to year ended december 31 , 2015 replace_table_token_6_th net sales the decrease compared with 2015 was due to a 13 % decrease in dynaenergetics partially offset by a 1 % increase in nobelclad . the decline in dynaenergetics was due to a decline in demand and average selling prices due to lower activity levels in the oil and gas well-completions sector . the increase in nobelclad primarily related to a large project for the semiconductor capital equipment industry that shipped in the second quarter of 2016. gross profit the increase in gross profit and gross profit percentage compared with 2015 primarily was due to the impact in 2015 of a $ 6,205 accrual for anti-dumping and countervailing duties resulting from an unfavorable scope ruling from the department of commerce on prior imports of metals primarily used by dynaenergetics for gun carrier tubing . gross profit and gross profit percentage in 2016 were adversely affected by lower average selling prices in dynaenergetics , a lower proportion of sales in dynaenergetics relative to nobelclad , and the impact of higher research and development costs in dynaenergetics . general and administrative expenses the increase compared with 2015 primarily was due to higher outside legal expenses in dynaenergetics due to patent infringement and anti-dumping litigation . selling and distribution expenses the decrease compared with 2015 principally was due to lower salaries and benefits , a reduction in bad debt expense , and lower outside sales agent commissions in dynaenergetics driven by sales volume in territories in which we do not have an internal sales team . restructuring expenses the components of 2016 restructuring expenses are detailed as follows : replace_table_token_7_th 35 dynaenergetics restructuring expenses relate to severance for headcount reductions in troisdorf , germany and austin , texas , as well as lease termination costs in austin .
| 5,755 |
the key assumptions used to value the warrants included the expected date of the next round of equity financing , volatility of 84 % on the company 's common stock based upon similar public companies ' volatilities for comparison , an expected dividend yield of 0.0 % , and a term of 10 years . the company recorded the fair value of the warrant of $ 229,345 as warrant liability and as a debt discount to the carrying value of the loan . this warrant liability will be adjusted to fair value each reporting period using a lattice-based option model and the debt discount will be amortized to interest expense over the term of the loan . also , upon full repayment or maturity of the loan , hercules is due a payment of 2.65 % of the loan , or $ 106,000 , which is recorded as deferred financing costs and as a long-term liability . additionally , as noted above , the company incurred fees related to the loan agreement and reimbursed hercules for costs incurred by them related to the loan aggregating $ 119,000 . the company will amortize these loan costs totaling $ 225,000 to interest expense over the term of the loan . for the year ended december 31 , 2012 , interest expense related to the hercules loan was $ 9,386 . 7. stockholders ' equity the company was originally organized as an s story_separator_special_tag this discussion , which refers to the historical results of adma and its predecessor business , should be read in conjunction with the other sections of this annual report , including “ risk factors , ” “ business ” and the consolidated financial statements and other consolidated financial information included in this report . the various sections of this discussion contain a number of forward-looking statements , all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this report . see “ special note regarding forward-looking statements. ” our actual results may differ materially . 36 financial operations overview revenue as of december 31 , 2012 , we have generated $ 1,879,160 of revenue since inception from the sale of normal source human plasma collected at our plasma collection center and plasma-derived medicinal products . revenue is recognized at the time of transfer of title and risk of loss to the customer , which usually occurs at the time of shipment ; however , revenue is recognized at the time of delivery if we retain the risk of loss during shipment . research and development expenses research and development expenses consists of clinical research organization and clinical trial costs related to our clinical trial ; consulting expenses relating to regulatory affairs ; quality control and manufacturing ; assay development and ongoing testing costs , drug product manufacturing including the cost of plasma , plasma storage and transportation costs ; as well as wages and benefits for employees directly related to the research and development of ri-002 . all research and development is expensed as incurred . the process of conducting preclinical studies and clinical trials necessary to obtain fda approval is costly and time consuming . the probability of success for each product candidate and clinical trial may be affected by a variety of factors , including , among others , the quality of the product candidate 's early clinical data , investment in the program , competition , manufacturing capabilities and commercial viability . as a result of the uncertainties discussed above , the uncertainty associated with clinical trial enrollments and the risks inherent in the development process , we are unable to determine the duration and completion costs of current or future clinical stages of our product candidates or when , or to what extent , we will generate revenues from the commercialization and sale of any of our product candidates . development timelines , probability of success and development costs vary widely . we expect that our research and development expenses will increase during 2013 as a result of our pivotal phase iii clinical program , the hiring of a chief scientific and medical officer in the second half of 2012 and additional clinical operations staff , consultants and vendor requirements attributed to the development of ri-002 . general and administrative expenses general and administrative expenses consist of professional fees for our attorneys , accountants and auditors , wages and stock-based compensation for our senior management and staff unrelated to research and development , maintenance and utilities , insurance , information technology , travel and other expenses related to the general operations of the business . we expect that our general administrative expenses will increase during 2013 , as a result of our hiring a chief financial officer in the first half of 2012 and additional staff after becoming a public company in february 2012. interest income and interest expense interest income consists of interest earned on our cash and cash equivalents . interest expense consists of interest incurred on our notes payable and previous convertible notes up to their automatic conversion into our common stock upon the completion of our private placement in february 2012 , as well as the amortization and write-off of deferred financing costs and debt discounts and a charge for the beneficial conversion feature relating to our notes payable and previous convertible notes . story_separator_special_tag if adequate funds are not available , we may be required to delay , reduce the scope of or eliminate our research and development programs , reduce our planned clinical trials and delay or abandon potential commercialization efforts of our lead product candidate . see also “ future financing needs ” below . as of december 31 , 2012 , we had working capital of $ 12.1 million , consisting primarily of $ 12.5 million of cash and cash equivalents and $ 1.3 million of inventories and $ 0.1 million of prepaid expenses , offset by $ 1.8 million in accounts payable and accrued expenses . during january 2012 , we received $ 617,615 from the sale of our state of new jersey net operating losses through the new jersey economic development authority program . we can not make assurances that funding will be available for us in the future under this program . hercules loan and security agreement on december 21 , 2012 , we and our subsidiaries entered into a loan and security agreement , or the loan agreement , with hercules technology growth capital , inc. , or hercules . under the loan agreement , we may borrow up to a maximum of $ 6 million . we borrowed $ 4 million on the closing date and we have the option to borrow an additional $ 2 million in two equal tranches of $ 1 million each upon the satisfaction of ( a ) enrolling at least one patient in a pivotal ( phase iii ) clinical study of our lead product candidate ri-002 and ( b ) the closing of an equity financing or subordinated unsecured convertible debt financing with aggregate unrestricted net proceeds of at least $ 10 million on or before june 30 , 2013. the loan bears interest at a rate per annum equal to the greater of ( i ) 8.5 % and ( ii ) the sum of ( a ) 8.5 % plus ( b ) the prime rate ( as reported in the wall street journal ) minus 5.75 % . the loan is secured by our assets , except for our intellectual property ( which is subject to a negative pledge ) . the principal will be repaid over 27 months beginning no later than may 1 , 2014 , unless accelerated as a result of certain events of default . interest is due and payable on the first of every month and at the termination date , unless accelerated as a result of an event of default . in addition , a backend fee equal to 2.65 % of the amount funded under the facility is due on the maturity or prepayment date or the date that the secured obligations become due and payable and a 1 % facility fee in the amount of $ 60,000 and a commitment fee in the amount of $ 25,000 were both due at closing . the loan matures no later than august 2016 . 41 in the event we elect to prepay the loan , we are obligated to pay a prepayment charge corresponding to a percentage of the principal amount of the loan , with such percentage being : 3.0 % if prepayment occurs in the first year , 2 % if prepayment occurs in the second year and 0.5 % if prepayment occurs after the second year but prior to the last day of the term . the loan agreement contains customary representations , warranties and covenants , including limitations on incurring indebtedness , engaging in mergers or acquisitions and making investments , distributions or transfers . the representations , warranties and covenants contained in the loan agreement were made only for purposes of such agreement and as of a specific date or specific dates , were solely for the benefit of the parties to such agreement , and may be subject to limitations agreed upon by the contracting parties , including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the loan agreement . events of default under the agreement include , but are not limited to : ( i ) insolvency , liquidation , bankruptcy or similar events ; ( ii ) failure to pay any debts due under the loan agreement or other loan documents on a timely basis ; ( iii ) failure to observe any covenant or secured obligation under the loan agreement or other loan documents , which failure , in most cases , is not cured within 10 days of written notice by lender ; ( iv ) occurrence of any default under any other agreement between us and the lender , which is not cured within 10 days ; ( v ) occurrence of an event that could reasonably be expected to have a material adverse effect ; ( vi ) material misrepresentations ; ( vii ) occurrence of any default under any other agreement involving indebtedness in excess of $ 50,000 or the occurrence of a default under any agreement that could reasonably be expected to have a material adverse effect ; and ( viii ) certain money judgments are entered against us or a certain portion of our assets are attached or seized . remedies for events of default include acceleration of amounts owing under the loan agreement and taking immediate possession of , and selling , any collateral securing the loan . in connection with the loan agreement , we issued to hercules a warrant to purchase 25,000 shares of common stock with an exercise price set at the lower of ( i ) $ 9.60 or ( ii ) the price per share of the next round of financing , subject to customary anti-dilution adjustments . the warrant expires after 10 years and has piggyback registration rights with respect to the shares of common stock underlying the warrant .
| results of operations year ended december 31 , 2012 compared to year ended december 31 , 2011 summary table the following table presents a summary of our results of operations for the year ended december 31 , 2012 compared to the year ended december 31 , 2011 . 37 replace_table_token_1_th revenue we recorded revenue of $ 1,118,118 during the year ended december 31 , 2012 compared to $ 761,042 during the year ended december 31 , 2011. we received fda approval for adma biocenters in august 2011 and began collecting blood plasma in february 2009. our revenue is primarily derived from sales under a plasma supply agreement entered into with biotest pharmaceuticals corporation , or biotest , during june 2012 , under which biotest purchases normal source plasma from our georgia facility to be used in their product manufacturing . we have not generated any revenue from our therapeutics/research and development segment . cost of sales cost of sales was $ 669,056 for the year ended december 31 , 2012 , an increase of $ 461,486 from $ 207,570 for the year ended december 31 , 2011. the increase of cost of sales was related to increased costs associated to increased normal source plasma revenues attributed to the plasma supply agreement entered into with biotest in june 2012. research and development expenses research and development expenses were $ 3,469,078 for the year ended december 31 , 2012 , an increase of $ 2,822,322 from $ 646,756 for the year ended december 31 , 2011. research and development expenses consist of consulting expenses relating to regulatory affairs , quality control and manufacturing , assay development and ongoing testing costs , clinical trial costs and fees , drug product manufacturing including the cost of plasma , plasma storage and transportation costs , as well as wages and benefits for staff directly related to the research and development of ri-002 .
| 5,756 |
estimated forfeiture rates were based upon historical data of awards that were cancelled prior to vesting . the company adjusted the total amount of compensation cost recognized for each award , in the period in story_separator_special_tag financial condition and results of operations . you should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing at the end of this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this annual report on form 10-k , including information with respect to our plans and strategy for our business and related financing , includes forward-looking statements that involve risks and uncertainties . you should read “ cautionary note regarding forward-looking statements ” and item 1a . risk factors of this annual report on form 10-k 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 introduction we are a clinical-stage biopharmaceutical company focused on developing and commercializing new chemical entities designed to alleviate pruritus and pain by selectively targeting kappa opioid receptors . we are developing a novel and proprietary class of product candidates , led by korsuva tm ( cr845/difelikefalin ) , that target the body 's peripheral nervous system and certain immune cells . the fda has conditionally accepted korsuva as the trade name for cr845/difelikefalin , an investigational drug product for the treatment of itch , whose safety and efficacy have not been fully evaluated by any regulatory authority . in phase 2 trials , korsuva ( cr845/difelikefalin ) has demonstrated statistically significant reductions in itch intensity and concomitant improvement in quality of life measures in hemodialysis patients with moderate-to-severe chronic kidney disease-associated pruritus ( ckd-ap ) and is currently being investigated in phase 3 trials in hemodialysis patients with ckd-ap . in addition , cr845/difelikefalin has also demonstrated initial signs of efficacy in patients with moderate-to-severe pain without inducing many of the undesirable side effects typically associated with currently available pain therapeutics . see part i , item 1 , business in this annual report on form 10-k for a more detailed discussion of our product candidate pipeline and clinical development . we commenced operations in 2004 , and our primary activities to date have been organizing and staffing our company , developing our product candidates , including conducting preclinical studies and clinical trials of cr845-based product candidates , and raising capital . to date , we have financed our operations primarily through sales of our equity and debt securities and payments from license agreements . we have no products currently available for sale , and substantially all of our revenue to date has been revenue from license agreements , although we have received nominal amounts of revenue under research grants . collaborations with maruishi and ckdp to date , we have entered into two license agreements relating to the development of cr845/difelikefalin . in april 2013 , we entered into a license agreement , or the maruishi agreement , with maruishi pharmaceutical co. , ltd. , or maruishi , in japan , under which we granted maruishi an exclusive license , to develop , manufacture and commercialize drug products containing cr845/difelikefalin in japan in the acute pain and uremic pruritus fields . we and maruishi are each required to use commercially reasonable efforts , at our respective expense , to develop , obtain regulatory approval for and commercialize cr845/difelikefalin in the united states and japan , respectively . in addition , we have provided maruishi specific clinical development services for cr845/difelikefalin in maruishi 's field of use between 2013 and 2015. under the terms of the maruishi agreement , we received a non-refundable and non-creditable upfront license fee of $ 15.0 million and are eligible to receive up to an aggregate of $ 6.0 million in clinical development milestones and $ 4.5 million in regulatory milestones . in august 2014 , we received a clinical development milestone payment of $ 0.5 million upon completion by maruishi of a phase 1 clinical trial in japan related to cr845/difelikefalin in acute post-operative pain . in october 2015 , we received a $ 1.7 million milestone payment ( net of contractual foreign currency exchange adjustments of $ 0.3 million ) related to the initiation by maruishi of a phase 2 clinical trial of cr845/difelikefalin in japan for uremic pruritus . in march 2017 , we received a payment of $ 0.8 million in connection with maruishi entering into a sub-license agreement with another japanese pharmaceutical company for 74 the development and sales/marketing of cr845/difelikefalin for the treatment of uremic pruritus in dialysis patients in japan . we are also eligible to receive tiered royalties , with percentages ranging from the low double digits to the low twenties , based on net sales of products containing cr845/difelikefalin in japan , if any , and share in any sub-license fees . in addition , in connection with the maruishi agreement , maruishi purchased 842,105 shares of our common stock for an aggregate purchase price of $ 8.0 million . in april 2012 , we entered into a license agreement , or the ckdp agreement with chong kun dang pharmaceutical corporation , or ckdp , in south korea , under which we granted ckdp an exclusive license to develop , manufacture and commercialize drug products containing cr845/difelikefalin in south korea . we and ckdp are each required to use commercially reasonable efforts , at our respective expense , to develop , obtain regulatory approval for and commercialize cr845/difelikefalin in the united states and south korea , respectively . under the terms of the ckdp agreement , we received a non-refundable and non-creditable upfront license fee of $ 0.6 million and are eligible to receive up to an aggregate of $ 2.3 million in clinical development milestones and $ 1.5 million in regulatory milestones . story_separator_special_tag in addition , if i.v . cr845/difelikefalin , oral cr845/difelikefalin or any future product candidate obtains regulatory approval for marketing , we expect to incur expenses associated with building a sales and marketing team . other income other income consists of interest and dividend income earned on our cash , cash equivalents , marketable securities and restricted cash and realized gains and losses on the sale of marketable securities and property and equipment . 76 benefit from income taxes the benefit from income taxes relates to state r & d tax credits exchanged for cash pursuant to the connecticut r & d tax credit exchange program , which permits qualified small businesses engaged in r & d activities within connecticut to exchange their unused r & d tax credits for a cash amount equal to 65 % of the value of the exchanged credits . story_separator_special_tag allocable to research and development activities due during the remaining term of the shelton operating lease ( see note 16 of notes to financial statements , commitments and contingencies , in this annual report on form 10-k ) . 78 the following table summarizes our r & d expenses by product candidate for the years ended december 31 , 2017 , 2016 and 2015 : replace_table_token_8_th general and administrative expense replace_table_token_9_th for the year ended december 31 , 2017 compared to the year ended december 31 , 2016 , the increase in professional fees and public/investor relations was due primarily to an increase in public/investor relations costs . the increase in stock-based compensation primarily resulted from increased employee headcount , including our current chief financial officer , the acceleration of vesting of outstanding stock option awards upon the retirement of our former chief financial officer , and stock option awards granted to non-employee consultants , which are marked to market each quarter , and resulted from an increase in the market price of our common stock . the decrease in depreciation and amortization expense reflects the acceleration of amortization of our leasehold improvements at our shelton , connecticut facility related to general and administrative activities prior to the relocation of our corporate headquarters in may 2016. the increase in other g & a operating expenses was primarily the result of an increase in personnel-related costs , partially offset by a decrease in rent expense , primarily due to the recognition in 2016 of all of the remaining rent expense allocable to general and administrative activities due during the remaining term of the shelton operating lease . for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 , the increase in professional fees and public/investor relations costs primarily included increases in public/investor relations costs and in accounting and auditing fees . the increase in depreciation and amortization expense reflects the acceleration of amortization of our leasehold improvements at our shelton , connecticut facility related to general and administrative activities prior to the relocation of our corporate headquarters ( see note 16 of notes to financial statements , commitments and contingencies , in this annual report on form 10-k ) . the increase in other g & a operating expenses included increases in payroll and related costs and in insurance and rent , which includes recognition of all of the remaining rent expense allocable to general and administrative activities due during the remaining term of the shelton operating lease ( see note 16 of notes to financial statements , commitments and contingencies , in this annual report on form 10-k ) . 79 other income replace_table_token_10_th for the year ended december 31 , 2017 compared to the year ended december 31 , 2016 , the increase in other income was primarily due to an increase in dividend and interest income resulting from higher interest rates on a higher average balance of our portfolio of investments in the 2017 period . for the year ended december 31 , 2016 compared to the year ended december 31 , 2015 , the increase in other income was primarily due to ( 1 ) an increase in interest income and dividends earned on our portfolio of investments , which included marketable securities during the entire year ended december 31 , 2016 but only during the last month of the year ended december 31 , 2015 ; ( 2 ) higher interest rates in the 2016 period and a higher average balance of cash and cash equivalents and marketable securities in the year ended december 31 , 2016 as a result of our follow-on offering of common stock , which closed in august 2015 ; and ( 3 ) $ 23 thousand of realized gains on sales of marketable securities . liquidity and capital resources sources of liquidity since our inception and through december 31 , 2017 , we have raised an aggregate of approximately $ 324.5 million to fund our operations , including ( 1 ) net proceeds of $ 217.7 million from the sale of shares of our common stock in three public offerings , including our initial public offering ; ( 2 ) proceeds of $ 73.3 million from the sale of shares of our convertible preferred stock and from debt financings prior to our initial public offering ; and ( 3 ) payments of $ 33.5 million under our license agreements , primarily with maruishi and ckdp , and an earlier product candidate for which development efforts ceased in 2007. in order to fund future operations , including our planned clinical trials , we filed a shelf registration statement on form s-3 ( file no . 333-216657 ) , which the securities and exchange commission , or sec , declared effective on march 24 , 2017. the shelf registration statement provides for aggregate offerings of up to $ 250 million of common stock , preferred stock , debt securities , warrants or any combination thereof . the securities registered under this shelf registration statement include unsold securities that had been registered under our previous shelf registration statement ( file no .
| results of operations comparison of the years ended december 31 , 2017 , 2016 and 2015 revenue replace_table_token_6_th license and milestone fee revenue license and milestone fees revenue for the year ended december 31 , 2017 included $ 530 thousand of the $ 843 thousand sub-license fee earned by us in connection with maruishi 's sub-license agreement with kissei pharmaceuticals , co. ltd. that was allocated to the license fee deliverable under the maruishi agreement ( see note 11 of notes to financial statements , collaborations , in this annual report on form 10-k ) . license and milestone fee revenue for the year ended december 31 , 2015 , consisted of $ 1.1 million of the $ 1.7 million milestone payment earned in september 2015 under the maruishi agreement , which was attributable to the previously delivered license , and $ 0.6 million from the two milestone payments earned by us under the ckdp agreement in july and september 2015. collaborative revenue collaborative revenue for the year ended december 31 , 2017 included $ 313 thousand of the $ 843 thousand sub-license fee earned by us in connection with maruishi 's sub-license agreement with kissei pharmaceuticals , co. ltd. that was allocated to the r & d services deliverable under the maruishi agreement . collaborative revenue for the year ended december 31 , 2015 consists of $ 0.6 million of the $ 1.7 million milestone payment earned in september 2015 under the maruishi agreement , which was attributable to the fully-delivered r & d services deliverable , and $ 1.5 million of revenue that had been deferred upon entry into the maruishi agreement . clinical compound revenue clinical compound revenue for the years ended december 31 , 2017 and 2016 relate to the sale of clinical compound to maruishi .
| 5,757 |
upon acquisition , the company determines the estimated economic lives of the acquired intangible assets for amortization purposes , which are based on the underlying 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 related notes thereto and other financial information appearing elsewhere in this form 10-k. fortress biotech , inc. ( “ fortress ” or the “ company ” ) is a biopharmaceutical company dedicated to acquiring , developing and commercializing novel pharmaceutical and biotechnology products . fortress develops and commercializes products both within fortress and through certain of our subsidiary companies , also referred to herein as the “ fortress companies. ” additionally , the company recently acquired a controlling interest in national holdings corporation , a diversified independent brokerage company ( together with its subsidiaries , herein referred to as “ nhld ” or “ national ” ) . in addition to its internal development programs , the company leverages its biopharmaceutical business expertise and drug development capabilities and provides funding and management services to help the fortress companies achieve their goals . the company and the fortress companies may seek licensings , acquisitions , partnerships , joint ventures and or public and private financings to accelerate and provide additional funding to support their research and development programs . 2016 activity fortress biotech , inc. on september 9 , 2016 , the company purchased approximately 56.6 % of nhld 's common stock , par value $ 0.02 per share , at the purchase price of $ 3.25 per share in cash for a total purchase price of approximately $ 22.9 million . in july 2016 , fortress entered into a license agreement with genemedicine , inc. ( “ genemedicine ” ) to develop products using genemedicine 's oncolytic adenovirus technology . fortress agreed to fund a research study in connection with the technology of $ 0.3 million for the duration of 18 months . as of october 2016 , fortress paid genemedicine $ 0.1 million to initiate the research program in connection with the license . in september 2016 , fortress entered into a development and license agreement with effcon laboratories , inc. ( “ effcon ” ) for the extended release formulation of methazolamide . fortress made an upfront payment of $ 0.2 million , and seven additional milestone payments totaling up to $ 5.3 million may become payable upon the achievement of certain developmental and sales milestones . fortress agreed to fund a related development budget of up to $ 1.6 million . avenue therapeutics , inc. in december 2016 , avenue received notices of allowance from the u.s. patent and trademark officer ( “ uspto ” ) for two continuation patent applications covering methods of administration for iv tramadol ; issuance of both patents occurred in february 2017. avenue filed a form 10 registration statement with the sec on january 12 , 2017. caelum biosciences , inc. on january 1 , 2017 , caelum acquired its lead asset , cael-101 , through a license with columbia university . cael-101 is a novel 35 antibody in phase 1b clinical trials for the treatment of al amyloidosis . interim phase 1a/1b data on cael-101 was presented at the american society of hematology meeting in december 2016. cellvation , inc. in 2016 , cellvation , acquired novel therapies for treatment of traumatic brain injury ( “ tbi ” ) from the university of texas health science center houston ( “ university of texas ” ) . during 2016 cellvation continued to advance : a phase 2 study of ceva101 in pediatric patients ( clinicaltrials.gov identifier : nct01851083 ) and a phase 2 study of ceva101 in adults ( clinicaltrials.gov identifier : nct02525432 ) . these programs are supported by grants in excess of $ 10.0 million from the national institutes of health ( “ nih ” ) and the department of defense . cellvation further continued to develop ceva-d , a novel bioreactor that enhances the anti-inflammatory potency of bone marrow-derived cells without genetic manipulation . checkpoint therapeutics , inc. in may 2016 , checkpoint entered into a license agreement with jubilant biosys limited ( “ jubilant ” ) , whereby checkpoint obtained an exclusive , worldwide license ( the “ jubilant license ” ) to jubilant 's family of patents covering compounds that inhibit brd4 , a member of the bromodomain and extra-terminal ( “ bet ” ) domain for cancer treatment , which checkpoint refers to as ck-103 . also , in connection with the jubilant license , checkpoint entered into a sublicense agreement with tgtx to develop and commercialize the compounds licensed in the field of hematological malignancies , while checkpoint retains the right to develop and commercialize these compounds in the field of solid tumors . during 2016 , checkpoint submitted an ind application to the u.s. food and drug administration ( “ fda ” ) for its epidermal growth factor receptors ( “ egfr ” ) inhibitor , which was accepted in august 2016 , and in september 2016 checkpoint dosed the first patient in a phase 1/2 clinical trial . checkpoint plans to submit an ind application for its bet inhibitor in 2017. escala therapeutics , inc. during 2016 we extended the mannac open label phase 2 clinical study for the treatment of gne myopathy . a phase 1 study to further investigate mannac safety and tolerability in a range of kidney disorders ( glomerular nephropathies ) associated with hyposialylation is ongoing . helocyte , inc. on june 30 , 2016 , september 30 , 2016 , october 31 , 2016 and november 30 , 2016 , helocyte raised gross proceeds of $ 4.4 million in four separate closings of its offering of convertible promissory notes . in march 2016 , helocyte entered into amended and restated license agreements ( the “ amended and restated licenses ” ) for each of its pepvax and triplex vaccine programs with its licensor , coh , effectively splitting the its original single license for two vaccines into two separate licenses . story_separator_special_tag we did not generate any revenues from operations during the year ended december 31 , 2014. research and development expenses increased $ 8.2 million , or 80 % , from $ 10.2 million for the year ended december 31 , 2014 to $ 18.4 million for the year ended december 31 , 2015. this increase was primarily due to a $ 4.6 million increase in stock compensation expense which included a $ 1.9 million charge relating to the grant made to our senior vice president of operations and a $ 3.0 million charge related to the mark-to-market impact on the value of the restricted stock grant made to a checkpoint consultant . in addition , our fortress companies research and development expenses increased by $ 5.1 million in 2015 , as a result of the commencement of clinical development on their licenses . in 2015 our expenses related to tso product development decreased by $ 0.4 million from $ 3.4 million in 2014 to $ 3.0 million in 2015. the 2015 costs related to the $ 2.7 million potential payment due dr. falk pharma in connection with its delivery of the csr ( though the company disputes the adequacy of the csr and does not believe the payment is due ) , partially offset by lower clinical trial costs of $ 2.4 million and $ 0.7 million charge taken in 2014 relating to the abandonment of our plans to manufacture tso in the united states . additionally , we experienced a $ 1.5 million decrease in expenses related to cndo 109. during the year ended december 31 , 2015 , we invested $ 11.4 million in new research and development programs with various partners . this increase was primarily due to our in-licensing of iv tramadol for $ 3.0 million , the purchase by mustang of car-t from coh for $ 2.2 million , checkpoint 's payment of $ 2.2 million for the license to develop a portfolio of fully human immuno-oncology targeted antibodies , coronado so 's licensing of its phase 2 uracil topical cream , for $ 1.6 million , our license from nzp for the development of mannac for $ 1.3 million , our license for egfr inhibitors for $ 1.0 million ( which was transferred to checkpoint in march 2015 ) , and helocyte 's purchase of $ 0.2 million to develop novel immunotherapies for the prevention and treatment of cmv from coh . general and administrative expenses increased $ 11.2 million , or 107 % , from $ 10.4 million in the year ended december 31 , 2014 to $ 21.6 million in the year ended december 31 , 2015 , largely due to a $ 2.7 million increase in costs related to the development of a sales and marketing infrastructure for jmc and $ 2.0 million of professional expenses related to our business development activity , including $ 0.9 million of legal expenses pertaining to due diligence and activities related to the financing and formation of our 40 subsidiaries . in addition , salaries and benefits increased by $ 1.8 million as a result of headcount increases related to business development . lastly , stock-based compensation expense increased by $ 4.0 million , primarily due to $ 2.2 million of expense for warrants for fortress companies ' common stock issued to our president and chief executive officer and executive vice chairman , strategic development , $ 0.5 million of expense related to the modification of a restricted stock grant to a former member of our board of directors , as well as an increase in expense related to restricted stock units granted to new employees in 2015. during the year ended december 31 , 2015 , interest expense primarily relates to interest and amortization of deferred financing cost on the promissory note for $ 10.0 million to national securities corporation 's nsc biotech venture fund i llc ( the “ nsc note ” ) of approximately $ 1.0 million . while during the same period in 2014 , we incurred $ 0.8 million of expense in connection with our loan with hercules technology growth capital , inc. ( the “ hercules note ” ) of which $ 0.3 related to the early payment penalty . the decrease in interest income in 2015 compared to 2014 was primarily due to on average lower cash balances for the period . the change in the fair value of investments primarily relates to the decrease in value of our investment in cb pharma acquisition corp. ( “ cb pharma ” ) of approximately $ 1.7 million in 2015. net loss attributable to the non-controlling interests of $ 5.5 million relates to the share of loss in checkpoint , mustang , avenue , jmc and coronado so for the year ended december 31 , 2015. cash flows for the three years ended december 31 , 2016 , 2015 and 2014 replace_table_token_7_th operating activities net cash used in operating activities increased by $ 25.4 million from the year ended december 31 , 2015 to the year ended december 31 , 2016 , primarily due to a $ 17.4 million increase in net loss , a $ 6.7 million decrease of research and development-licenses acquired , a $ 2.2 million decrease in stock-based compensation expense , a $ 3.2 million decrease in change in operating assets and liabilities and a $ 0.6 million decrease in change in fair value of our long-term investments . this increase was partially offset by $ 1.7 million of common shares issuable for license expenses , $ 1.2 million increase of amortization of debt discount , an increase in financing fees on subsidiaries ' convertible notes of $ 1.0 million , an increase of $ 0.9 million of depreciation and amortization expense and an increase of $ 0.6 million in change in fair value of derivative liabilities . net cash used in operating activity increased by $ 4.0 million from the year ended december 31 , 2014 to the year ended december 31 , 2015 , primarily due to a $ 33.5 million increase in net loss .
| results of operations general for the year ended december 31 , 2016 , we generated $ 16.5 million of net revenue of which $ 10.3 million of revenue relates to national , $ 2.6 million of revenue is in connection with checkpoint 's collaborative agreements with tgtx and $ 3.6 million of revenue relates primarily to the sale of journey branded products . at december 31 , 2016 , we had an accumulated deficit of $ 245.3 million primarily as a result of research and development expenses , purchases of in-process research and development and general and administrative expenses . while we may in the future generate revenue from a variety of sources , including license fees , milestone payments , research and development payments in connection with strategic partnerships and or product sales , our current product candidates are at an early stage of development and may never be successfully developed or commercialized . accordingly , we expect to continue to incur substantial losses from operations for the foreseeable future and there can be no assurance that we will ever generate significant revenues . research and development expenses research and development costs primarily consist of personnel related expenses , including salaries , benefits , travel , and other related expenses , stock-based compensation , payments made to third parties for licenses and milestones costs related to in-licensed products and technology , payments made to third party contract research organizations for preclinical and clinical studies , investigative sites for clinical trials , consultants , the cost of acquiring and manufacturing clinical trial materials , costs associated with regulatory filings and patents , laboratory costs and other supplies . also included in research and development is the total purchase price for the licenses acquired during the period . for the years ended december 31 , 2016 , 2015 and 2014 , total research and development expenses were $ 29.6 million , $ 18.4 million and $ 10.2 million .
| 5,758 |
the company 's story_separator_special_tag the following is management 's discussion and analysis of the financial condition and results of operations of atlantic american corporation ( atlantic american or the parent ) and its subsidiaries ( collectively with the parent , the company ) for the years ended december 31 , 2017 and 2016. this discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere herein . atlantic american is an insurance holding company whose operations are conducted primarily through its insurance subsidiaries : american southern insurance company and american safety insurance company ( together known as american southern ) in the property and casualty insurance industry , and bankers fidelity life insurance company and bankers fidelity assurance company ( together known as bankers fidelity ) in the life and health insurance industry . each operating company is managed separately , offers different products and is evaluated on its individual performance . critical accounting policies the accounting and reporting policies of the company are in accordance with accounting principles generally accepted in the united states of america ( gaap ) and , in management 's belief , conform to general practices within the insurance industry . the following is an explanation of the company 's accounting policies and the resultant estimates considered most significant by management . these accounting policies inherently require significant judgment and assumptions and actual operating results could differ significantly from management 's estimates determined using these policies . atlantic american does not expect that changes in the estimates determined using these policies will have a material effect on the company 's financial condition or liquidity , although changes could have a material effect on its consolidated results of operations . unpaid loss and loss adjustment expenses comprised 29 % of the company 's total liabilities at december 31 , 2017. this liability includes estimates for : 1 ) unpaid losses on claims reported prior to december 31 , 2017 , 2 ) future development on those reported claims , 3 ) unpaid ultimate losses on claims incurred prior to december 31 , 2017 but not yet reported and 4 ) unpaid loss adjustment expenses for reported and unreported claims incurred prior to december 31 , 2017. quantification of loss estimates for each of these components involves a significant degree of judgment and estimates may vary , materially , from period to period . estimated unpaid losses on reported claims are developed based on historical experience with similar claims by the company . development on reported claims , estimates of unpaid ultimate losses on claims incurred prior to december 31 , 2017 but not yet reported , and estimates of unpaid loss adjustment expenses are developed based on the company 's historical experience , using actuarial methods to assist in the analysis . the company 's actuaries develop ranges of estimated development on reported and unreported claims as well as loss adjustment expenses using various methods , including the paid-loss development method , the reported-loss development method , the paid bornhuetter-ferguson method and the reported bornhuetter-ferguson method . any single method used to estimate ultimate losses has inherent advantages and disadvantages due to the trends and changes affecting the business environment and the company 's administrative policies . further , external factors , such as legislative changes , medical cost inflation , and others may directly or indirectly impact the relative adequacy of liabilities for unpaid losses and loss adjustment expenses . the company 's approach is to select an estimate of ultimate losses based on comparing results of a variety of reserving methods , as opposed to total reliance on any single method . unpaid loss and loss adjustment expenses are reviewed periodically for significant lines of business , and when current results differ from the original assumptions used to develop such estimates , the amount of the company 's recorded liability for unpaid loss and loss adjustment expenses is adjusted . in the event the company 's actual reported losses in any period are materially in excess of the previously estimated amounts , such losses , to the extent reinsurance coverage does not exist , could have a material adverse effect on the company 's results of operations . 16 future policy benefits comprised 36 % of the company 's total liabilities at december 31 , 2017. these liabilities relate primarily to life insurance products and are based upon assumed future investment yields , mortality rates , and withdrawal rates after giving effect to possible risks of adverse deviation . the assumed mortality and withdrawal rates are based upon the company 's experience . if actual results differ from the initial assumptions , the amount of the company 's recorded liability could require adjustment . deferred acquisition costs comprised 10 % of the company 's total assets at december 31 , 2017. deferred acquisition costs are commissions , premium taxes , and other incremental direct costs of contract acquisition that results directly from and are essential to the contract transaction ( s ) and would not have been incurred by the company had the contract transaction ( s ) not occurred . the deferred amounts are recorded as an asset on the balance sheet and amortized to expense in a systematic manner . traditional life insurance and long-duration health insurance deferred policy acquisition costs are amortized over the estimated premium-paying period of the related policies using assumptions consistent with those used in computing the related liability for policy benefit reserves . deferred acquisition costs for property and casualty insurance and short-duration health insurance are amortized over the effective period of the related insurance policies . deferred policy acquisition costs are expensed when such costs are deemed not to be recoverable from future premiums ( for traditional life and long-duration health insurance ) and from the related unearned premiums and investment income ( for property and casualty and short-duration health insurance ) . assessments of recoverability for property and casualty and short-duration health insurance are extremely sensitive to the estimates of a subsequent year 's projected losses related to the unearned premiums . story_separator_special_tag 20 net losses and loss adjustment expenses at american southern increased slightly during 2017 as compared to 2016. as a percentage of premiums , net losses and loss adjustment expenses were 64.3 % in 2017 compared to 64.0 % in 2016. the slight increase in the loss ratio was primarily attributable to less favorable loss experience in the general liability and surety lines of business during 2017 as compared to 2016. underwriting expenses decreased slightly during 2017 as compared to 2016. as a percentage of premiums , underwriting expenses were 30.6 % in 2017 and 2016. the nominal increase in the expense ratio was primarily due to american southern 's use of a variable commission structure with certain agents , which compensates the participating agents in relation to the loss ratios of the business they write . in 2017 , variable commissions at american southern increased $ 0.2 million as compared to 2016 due to more favorable loss experience from certain accounts subject to variable commissions . in establishing reserves , american southern initially reserves for losses at the higher end of the reasonable range if no other value within the range is determined to be more probable . selection of such an initial loss estimate is an attempt by management to give recognition that initial claims information received generally is not conclusive with respect to legal liability , is generally not comprehensive with respect to magnitude of loss and generally , based on historical experience , will develop more adversely as time passes and more information becomes available . however , as a result , american southern generally experiences reserve redundancies when analyzing the development of prior year losses in a current period . at december 31 , 2017 , the range of estimates developed in connection with the loss reserves for american southern indicated that reserves could be as much as 9.7 % lower or as much as 12.1 % higher . development from prior years ' reserves has historically reduced the current year loss ratio ; however , such reduction in the current year loss ratio is generally offset by the reserves established in the current year for current period losses . american southern 's estimated net reserve redundancies for the years ended december 31 , 2017 and 2016 were $ 2.5 million and $ 2.1 million , respectively . to the extent reserve redundancies vary between years , there is an incremental impact on the results of operations of american southern and the company . the indicated redundancy in 2017 was $ 0.4 million more than in 2016. after considering the impact on contingent commissions and other related accruals , the $ 0.4 million increase in the redundancy resulted in an estimated increase in income from operations before tax of approximately $ 0.2 million in 2017 as compared to 2016. management believes that such differences will continue in future periods but is unable to determine if or when incremental redundancies will increase or decrease , until the underlying losses are ultimately settled . contingent commissions , if contractually applicable , are ultimately payable to participating agents based on the underlying profitability of a particular insurance contract or a group of insurance contracts , and are periodically evaluated and accrued as earned . in 2017 , approximately 51 % of american southern 's earned premium provides for contractual commission arrangements which compensate the company 's agents in relation to the loss ratios of the business they write , compared to 52 % in 2016. by structuring its business in this manner , american southern provides its agents with an economic incentive to place profitable business with american southern . in periods in which loss reserves reflect favorable development from prior years ' reserves , there is generally a highly correlated increase in commission expense also related to the prior year business . accordingly , favorable loss development from prior years , while anticipated to continue in future periods , is not an indicator of significant additional profitability in the current year . 21 bankers fidelity the following summarizes , for the periods indicated , bankers fidelity 's premiums , losses and expenses : replace_table_token_13_th premium revenue at bankers fidelity increased $ 10.0 million , or 10.0 % , during 2017 as compared to 2016. premiums from the medicare supplement line of business increased $ 9.5 million , or 11.3 % , in 2017 as compared to 2016 , due primarily to the successful execution of new business generating strategies with both new and existing agents . other health product premiums increased $ 0.8 million , or 14.6 % , during 2017 as compared to 2016 , primarily as a result of new sales of the company 's disability income and group health products . premiums from the life insurance line of business decreased $ 0.4 million , or 4.0 % , in 2017 from 2016 due to the redemption and settlement of existing policy obligations exceeding the level of new sales activity . medicare supplement premiums ceded under the reinsurance agreement in 2017 and 2016 were approximately $ 32.5 million and $ 5.3 million , respectively . benefits and losses increased $ 14.2 million , or 20.7 % , during 2017 as compared to 2016. as a percentage of premiums , benefits and losses were 75.7 % in 2017 compared to 69.0 % in 2016. the increase in the loss ratio was primarily attributable to unfavorable loss experience in the medicare supplement line . further , beginning late in 2016 and continuing throughout the first quarter of 2017 , bankers fidelity experienced significantly increased levels of mortality and morbidity across all lines of business which had an unfavorable effect on the company 's loss patterns and increased the resultant 2017 loss ratio .
| overall corporate results replace_table_token_9_th management also considers and evaluates performance by analyzing the non-gaap measure operating income , and believes it is a useful metric for investors , potential investors , securities analysts and others because it isolates the core operating results of the company before considering certain items that are either beyond the control of management ( such as taxes , which are subject to timing , regulatory and rate changes depending on the timing of the associated revenues and expenses ) or are not expected to regularly impact the company 's operational results ( such as any realized investment gains , which are not a part of the company 's primary operations and are , to a limited extent , subject to discretion in terms of timing of realization ) . 18 a reconciliation of net income to operating income is as follows : replace_table_token_10_th on a consolidated basis , the company had net income of $ 4.5 million , or $ 0.20 per diluted share , in 2017 , compared to $ 2.6 million , or $ 0.11 per diluted share , in 2016. operating loss was $ 3.8 million in 2017 as compared to operating income of $ 0.9 million in 2016. the decrease in operating income was primarily due to unfavorable loss experience in the life and health operations . also contributing to the decrease in operating income was a decrease in investment income attributable to a decrease in the average yield on the company 's investments in fixed maturities and losses from the equity in earnings from investments in real estate partnerships . total revenue was $ 181.1 million in 2017 as compared to $ 166.1 million in 2016. premium revenue increased to $ 163.3 million in 2017 from $ 153.5 million in 2016. the increase in premium revenue was primarily due to an increase in medicare supplement business in the life and health operations .
| 5,759 |
79 the consideration received as a result of the pace business combination is summarized as follows ( $ in thousands ) : purchase of all of our predecessor 's cumulative redeemable preferred shares ( 1 ) $ 353,873 net cash transferred from pace 78,859 playa employee offering ( 2 ) 799 total consideration transferred $ 433,531 ( 1 ) balance consisted of the face value of our predecessor 's cumulative redeemable preferred shares ( “ preferred shares ” ) and their associated paid-in-kind ( “ pik ” ) dividends as of march 10 , 2017 , per the terms of the pace business combination . ( 2 ) in connection with the pace business combination , we entered into subscription agreements ( the “ subscription agreements ” ) with playa employees , their family members and persons with business relationships with playa , pursuant to which those persons agreed to story_separator_special_tag any reference in this management 's discussion and analysis of financial condition and results of operations to our financial condition and results of operations prior to the pace business combination on march 11 , 2017 refer to the financial condition and results of operations of our predecessor , playa hotels & resorts b.v. 37 this section of this annual report on form 10-k generally discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018. discussions of 2017 items and year-to-year comparisons between 2018 and 2017 that are not included in this annual report on form 10-k can be found in “ management 's discussion and analysis of financial condition and results of operations ” in part ii , item 7 of the company 's annual report on form 10-k for the fiscal year ended december 31 , 2018. overview playa is a leading owner , operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in mexico and the caribbean . as of december 31 , 2019 , playa owned and or managed a total portfolio consisting of 23 resorts ( 8,690 rooms ) located in mexico , jamaica , and the dominican republic . in mexico , playa owns and manages hyatt zilara cancún , hyatt ziva cancún , panama jack resorts cancún , panama jack resorts playa del carmen , hilton playa del carmen all-inclusive resort , hyatt ziva puerto vallarta and hyatt ziva los cabos . in jamaica , playa owns and manages hyatt zilara rose hall , hyatt ziva rose hall , hilton rose hall resort & spa , jewel dunn 's river beach resort & spa , jewel grande montego bay resort & spa , jewel runaway bay beach resort & waterpark and jewel paradise cove beach resort & spa . in the dominican republic , playa owns and manages the hilton la romana all-inclusive family resort , the hilton la romana all-inclusive adult resort , hyatt zilara cap cana and hyatt ziva cap cana . playa also owns four resorts in mexico and the dominican republic that are managed by a third party and playa manages the sanctuary cap cana in the dominican republic . we believe that the resorts we own and manage are among the finest all-inclusive resorts in the markets they serve . all of our resorts offer guests luxury accommodations , noteworthy architecture , extensive on-site activities and multiple food and beverage options . our guests also have the opportunity to purchase upgrades from us such as premium rooms , dining experiences , wines and spirits and spa packages . for the year ended december 31 , 2019 , we generated a net loss of $ 4.4 million , total revenue of $ 636.5 million , net package revpar of $ 198.28 and adjusted ebitda of $ 150.7 million . for the year ended december 31 , 2018 , we generated net income of $ 19.0 million , total revenue of $ 617.0 million , net package revpar of $ 205.83 and adjusted ebitda of $ 179.0 million . for discussions of adjusted ebitda and reconciliation to the most comparable u.s. gaap financial measures , see “ key indicators of financial and operating performance ” and “ non-u.s. gaap financial measures , ” below . 38 story_separator_special_tag 42 depreciation and amortization expense our depreciation and amortization expense for the year ended december 31 , 2019 increased $ 28.6 million , or 39.1 % , compared to the year ended december 31 , 2018 . this increase was primarily due to the acquisition of the sagicor assets and the opening of hyatt ziva and hyatt zilara cap cana , which together accounted for $ 9.3 million of the increase , and an $ 18.8 million increase in depreciation from renovations at the hilton la romana all-inclusive resort and hilton playa del carmen all-inclusive resort , which included accelerated depreciation on asset disposals . impairment loss we recorded an impairment loss of $ 6.2 million for the year ended december 31 , 2019 due to the loss recognized on the goodwill of our panama jack playa del carmen reporting unit during the fourth quarter of 2019. during the year ended december 31 , 2018 , we did not record any impairment loss . interest expense our interest expense for the year ended december 31 , 2019 decreased $ 18.2 million , or 29.2 % , as compared to the year ended december 31 , 2018 . the decrease in interest expense was primarily driven by a $ 13.2 million decrease due to the change in accounting for our interest rate swaps . in march 2019 , we elected to adopt hedge accounting and designate our interest rate swaps as cash flow hedges . after the adoption of hedge accounting , we recorded the change in fair value of our interest rate swaps through other comprehensive ( loss ) income . prior to our adoption of hedge accounting , the change in fair value of our interest rate swaps was recognized through interest expense . story_separator_special_tag the fees earned are typically composed of a base fee , which is computed as a percentage of resort revenue , and an incentive fee , which is computed as a percentage of resort profitability . management fee revenue was immaterial to our operations for the years ended december 31 , 2019 , 2018 and 2017 , but we expect management fee revenue to be a more relevant indicator to assess the overall performance of our business in the future as we enter into more management contracts . “ total net revenue ” represents net package revenue , net non-package revenue and management fee revenue . “ cost reimbursements ” is excluded from total net revenue as it is not considered a key indicator of financial and operating performance . cost reimbursements is derived from the reimbursement of certain costs incurred by playa on behalf of resorts managed by playa and owned by third parties . this revenue is fully offset by reimbursable costs and has no net impact on operating income or net income . “ net direct expenses ” represents direct expenses , net of compulsory tips paid to employees . occupancy “ occupancy ” represents the total number of rooms sold for a period divided by the total number of rooms available during such period . the total number of rooms available excludes any rooms considered “ out of order ” due to renovation or a temporary problem rendering them inadequate for occupancy for an extended period of time . occupancy is a useful measure of the utilization of a resort 's total available capacity and can be used to gauge demand at a specific resort or group of properties during a given period . occupancy 44 levels also enable us to optimize net package adr ( as defined below ) by increasing or decreasing the stated rate for our all-inclusive packages as demand for a resort increases or decreases . net package adr “ net package adr ” represents total net package revenue for a period divided by the total number of rooms sold during such period . net package adr trends and patterns provide useful information concerning the pricing environment and the nature of the guest base of our portfolio or comparable portfolio , as applicable . net package adr is a commonly used performance measure in the all-inclusive segment of the lodging industry , and is commonly used to assess the stated rates that guests are willing to pay through various distribution channels . net package revpar “ net package revpar ” is the product of net package adr and the average daily occupancy percentage . net package revpar does not reflect the impact of non-package revenue . although net package revpar does not include this additional revenue , it generally is considered the key performance measure in the all-inclusive segment of the lodging industry to identify trend information with respect to net room revenue produced by our portfolio or comparable portfolio , as applicable , and to evaluate operating performance on a consolidated basis or a regional basis , as applicable . ebitda , adjusted ebitda , owned resort ebitda , owned resort ebitda margin and adjusted ebitda margin we define ebitda , a non-u.s. gaap financial measure , as net income ( loss ) , determined in accordance with u.s. gaap , for the period presented , before interest expense , income tax and depreciation and amortization expense . we define adjusted ebitda , a non-u.s. gaap financial measure , as ebitda further adjusted to exclude the following items : other ( expense ) income pre-opening expense transaction expenses severance expense other tax expense gain on property damage insurance proceeds share-based compensation loss on extinguishment of debt other items which may include , but are not limited to the following : management contract termination fees ; gains or losses from legal settlements ; repairs from hurricanes and tropical storms ; impairment losses and jamaica delayed opening accrual reversals . we include the non-service cost components of net periodic pension cost recorded within other ( expense ) income in the consolidated statements of operations in calculating adjusted ebitda as they are considered part of our ongoing resort operations . “ owned resort ebitda ” represents adjusted ebitda before corporate expenses and management fee revenue . “ owned resort ebitda margin ” represents owned resort ebitda as a percentage of owned net revenue . “ adjusted ebitda margin ” represents adjusted ebitda as a percentage of total net revenue . non-u.s. gaap measures net package revenue , net non-package revenue , owned net revenue , total net revenue , net package adr , net package revpar and net direct expenses are all useful to investors as they more accurately reflect our operating results by excluding compulsory tips . these tips have a margin of zero and do not represent our operating results . we also believe that adjusted ebitda is useful to investors for two principal reasons . first , we believe adjusted ebitda assists investors in comparing our performance over various reporting periods on a consistent basis by removing from our operating results the impact of items that do not reflect our core operating performance . for example , changes in foreign exchange rates ( which are the principal driver of changes in other expense ) , and expenses related to capital raising , strategic initiatives and other corporate 45 initiatives , such as expansion into new markets ( which are the principal drivers of changes in transaction expenses ) , are not indicative of the operating performance of our resorts . the other adjustments included in our definition of adjusted ebitda relate to items that occur infrequently and therefore would obstruct the comparability of our operating results over reporting periods . for example , revenue from insurance policies , other than business interruption insurance policies , is infrequent in nature , and we believe excluding these expense and revenue items permits investors to better evaluate the core operating performance of our resorts over time .
| results of operations years ended december 31 , 2019 and 2018 the following table summarizes our results of operations on a consolidated basis for the years ended december 31 , 2019 and 2018 ( $ in thousands ) : replace_table_token_5_th the tables below set forth information with respect to our occupancy , net package adr , net package revpar , net package revenue , net non-package revenue , management fee revenue , total net revenue , adjusted ebitda and adjusted ebitda margin . for a description of these operating metrics and non-u.s. gaap measures , see “ key indicators of financial and operating performance , ” below . our comparable portfolio for the year ended december 31 , 2019 excludes the following resorts : hilton la romana all-inclusive resort and hilton playa del carmen all-inclusive resort , which were under renovation in 2019 , hilton rose hall resort & spa , jewel runaway bay beach resort & waterpark , jewel dunn 's river beach resort & spa , jewel paradise cove beach resort & spa and jewel grande montego bay resort & spa , which were acquired on june 1 , 2018 , and hyatt ziva and hyatt zilara cap cana , a ground-up development opened during november 2019 . 39 total portfolio replace_table_token_6_th comparable portfolio replace_table_token_7_th total revenue and total net revenue our total revenue for the year ended december 31 , 2019 increased $ 19.5 million , or 3.2 % , compared to the year ended december 31 , 2018 . our total net revenue for the year ended december 31 , 2019 increased $ 8.6 million , or 1.4 % , compared to the year ended december 31 , 2018 . this increase was driven primarily by an increase in net package revenue of $ 2.8 million , or 0.5 % , and an increase in net non-package revenue of $ 4.7 million , or 5.7 % .
| 5,760 |
the results of operations for the accounting predecessor are not indicative of the actual level of expense that would have been incurred had nep operated as a publicly-traded company during the period prior to the completion of the ipo . following nep 's ipo , nep has consolidated the results of nep opco and its subsidiaries through its controlling interest in the general partner of nep opco . nep owns a 20.1 % limited partnership interest in nep opco and nee equity owns a noncontrolling 79.9 % limited partnership interest in nep opco . nep 's financial results are shown on a consolidated basis with financial results attributable to nee equity reflected in noncontrolling interest . the discussion and analysis below has been organized as follows : overview , including a description of nep 's business and significant factors that are important to understanding the results of operations and financial condition ; results of operations , including an explanation of significant differences between the periods in the specific line items of the consolidated statements of operations ; liquidity and capital resources , addressing nep 's liquidity position , financing arrangements , contractual obligations , capital expenditures , cash distributions to unitholders and cash flows ; critical accounting policies and estimates , which are most important to both the portrayal of nep 's financial condition and results of operations , and which require management 's most difficult , subjective or complex judgments ; and quantitative and qualitative disclosures about market risk . overview company description nep is a growth-oriented limited partnership formed by nee to acquire , manage and own contracted clean energy projects with stable long-term cash flows . nep owns a controlling , non-economic general partnership interest and a 20.1 % limited partnership interest in nep opco . through nep opco , nep owns a portfolio of contracted renewable generation assets consisting of wind and solar projects , all of which are operational as of december 31 , 2014. nep intends to take advantage of favorable trends in the north american energy industry , including the addition of clean energy projects as aging or uneconomic generation facilities are phased out , increased demand from utilities for renewable energy to meet state rps requirements and improving competitiveness of energy generated from wind and solar projects relative to energy generated using other fuels . nep plans to focus on high-quality , long-lived projects operating under long-term contracts with creditworthy counterparties that are expected to produce stable long-term cash flows . nep believes its cash flow profile , geographic 37 and technological diversity , cost-efficient business model and relationship with nee provide nep with a significant competitive advantage and enable nep to execute its business strategy . the following table sets forth the projects in nep 's portfolio as of december 31 , 2014 and their respective commercial operation date , nameplate capacity , energy sale counterparty , contract expiration and the name and maturity date of project financing agreements : replace_table_token_7_th on january 9 , 2015 , a subsidiary of nep completed the acquisition of 100 % of the membership interests of palo duro wind project holdings , llc , which indirectly owns the palo duro wind facility , an approximately 250 mw wind generating facility located in texas . in october 2014 , a subsidiary of nep entered into an agreement to acquire 100 % of the membership interests of shafter solar , llc , which owns the development rights and facilities under construction of shafter , that is expected to close in the first quarter of 2015. see note 1. significant factors affecting results of operations and financial condition significant factors that could affect nep 's results of operations and financial condition are : wind and solar resource levels , weather conditions and the operational performance of nep 's portfolio ; financings ; and o & m expenses . wind and solar resource levels , weather conditions and the performance of nep 's portfolio represent significant factors that could affect its operating results because these variables impact energy sales . energy produced from nep 's portfolio depends primarily on wind and solar resource levels , weather conditions at each project and the related impact of each on the performance of the projects . nep 's wind analysis evaluates wind speed and prevailing direction , atmospheric conditions , wake and seasonal variations for each project . nep 's solar analysis evaluates solar irradiance levels and prevailing direction , atmospheric conditions and seasonal variations for each project . financings nep intends to use a portion of its cash flows for interest and principal payments on borrowings under various financing arrangements . interest expense reflects periodic interest on project-level debt of the initial portfolio and interest on borrowings , if any , under the revolving credit facility . changes in interest rates could impact the amount of interest due under these financings , to the extent the interest expense is not hedged under a swap agreement . 38 principal payments under existing project financings are due on a semi-annual basis . the following table shows certain characteristics of nep 's various project financings : replace_table_token_8_th ( a ) the amortization of project financings is principally related to the length of the applicable ppa . ( b ) approximately $ 113 million of the genesis balance relates to a bank loan with a stated maturity date of 2019. see note 7. expenses o & m expenses are expected to increase by approximately $ 4 million on an annualized basis relative to the comparable predecessor annual period as a result of becoming a publicly-traded limited partnership . this increase will be due , in part , to increased third-party accounting services , filing reports with the sec , independent auditor fees , investor relations activities , directors ' fees , compensation and expenses , directors ' and officers ' insurance , stock exchange listing fees , registrar and transfer agent fees and other expenses . nep opco will reimburse nep for such expenses . story_separator_special_tag there was no similar adjustment during the year ended december 31 , 2012 . 42 income taxes for the year ended december 31 , 2013 , nep recorded income tax expense of $ 14 million resulting in an effective tax rate of approximately 48 % . the tax expense also reflects valuation allowances against deferred tax assets , partially offset by citc benefit , both at genesis . for the year ended december 31 , 2012 , nep recorded an income tax benefit of $ 9 million resulting in an effective tax rate of approximately ( 125 ) % . the tax benefit primarily reflects citc benefits , partially offset by valuation allowances against deferred tax assets . liquidity and capital resources nep 's business uses cash to fund : o & m expenses ; debt service payments ; distributions to holders of common units ; maintenance and expansion capital expenditures and other investments ; unforeseen events ; and other business expenses . prior to the completion of the ipo and for the year ended december 31 , 2014 , nep 's operations largely relied on , and for subsequent periods are expected to continue to largely rely on , internally generated cash flow . nep expects to satisfy its future capital requirements through a combination of cash on hand , cash flow from operations , and borrowings under existing and anticipated future financing arrangements . these sources of funds are expected to be adequate to provide for nep 's short-term and long-term liquidity and capital needs . however , nep is subject to business and operational risks that could adversely affect its cash flow . a material decrease in cash flows would likely produce a corresponding adverse effect on nep 's borrowing capacity . as a normal part of its business and depending on market conditions , nep expects from time to time to consider opportunities to repay , redeem , repurchase or refinance its indebtedness . in addition , nep expects from time to time to consider potential investments in new acquisitions . these events may cause nep to seek additional debt or equity financing , which may not be available on acceptable terms or at all . debt financing , if available , could impose operating restrictions , additional cash payment obligations and additional covenants . nep opco has agreed to allow neer or one of its affiliates to withdraw funds received by its subsidiaries , including nep opco , and to hold those funds in accounts of neer or one of its affiliates to the extent the funds are not required to pay project costs or otherwise required to be maintained by nep 's subsidiaries , until the financing agreements permit distributions to be made , or , in the case of nep opco , until such funds are required to make distributions or to pay expenses or other operating costs . if neer fails to return withdrawn funds when required by nep 's subsidiaries ' financings , the lenders will be entitled to draw on credit support provided by neer in the amount of such withdrawn funds . in addition , nep opco will have a claim for any funds that neer fails to return : when required by its subsidiaries ' financings ; when its subsidiaries ' financings otherwise permit distributions to be made to nep opco ; when funds are required to be returned to nep opco ; or when otherwise demanded by nep opco . if neer or one of its affiliates realizes any earnings on the withdrawn funds prior to the return of such funds , it will be permitted to retain those earnings . 43 liquidity position at december 31 , 2014 and december 31 , 2013 , nep 's liquidity position was approximately $ 559 million and $ 75 million , respectively . the table below provides the components of nep 's liquidity position : replace_table_token_12_th ( a ) on january 9 , 2015 , approximately $ 58 million was drawn on this credit facility in connection with the palo duro acquisition . see note 7 . ( b ) excludes restricted cash of approximately $ 25 million and $ 2 million at december 31 , 2014 and december 31 , 2013 , respectively . the restricted cash at december 31 , 2014 includes citc cash to be paid to neech . management believes that nep 's liquidity position and cash flows from operations will be adequate to finance o & m , capital expenditures , distributions to its unitholders and liquidity commitments . management continues to regularly monitor nep 's financing needs consistent with prudent balance sheet management . financing arrangements revolving credit facility in connection with the ipo , on july 1 , 2014 , nep opco and its direct subsidiaries entered into a $ 250 million revolving credit facility . on january 9 , 2015 , approximately $ 58 million was drawn on this credit facility in connection with the palo duro acquisition . for a discussion of the terms of the revolving credit facility , see note 7. project financings projects in the portfolio are subject to project financings that contain certain financial covenants and distribution tests , including debt service coverage ratios . in general , these project financings contain representations , warranties and covenants that are customary for these types of financings , including limitations on investments and restricted payments . generally , nep 's project financings provide for interest payable at a fixed interest rate . however , two of nep 's project financings accrue interest at variable rates based on the london interbank offered rate and one project accrues interest at a variable rate based upon the three-month canadian dealer offered rate . several interest rate swaps were entered into for two of these financings to hedge against interest rate movements with respect to interest payments on the loan .
| results of operations replace_table_token_9_th 2014 compared to 2013 operating revenues operating revenues primarily consist of income from the sale of energy under nep 's ppas . operating revenues increased $ 159 million during the year ended december 31 , 2014 , as compared to the year ended december 31 , 2013 , primarily due to the commencement of commercial operations at summerhaven in august 2013 , genesis unit 1 in november 2013 , genesis unit 2 in march 2014 and bluewater in july 2014. replace_table_token_10_th operating expenses operations and maintenance o & m expenses include interconnection costs , labor expenses , turbine servicing costs , lease royalty payments , property taxes , insurance , materials , supplies , shared services and administrative expenses attributable to nep 's projects , and costs and expenses under asas and o & m agreements . o & m expenses also include the cost of maintaining and replacing certain parts for the projects in the initial portfolio to maintain , over the long-term , operating income or operating capacity . o & m expenses increased $ 26 million for the year ended december 31 , 2014 , as compared to the year ended december 31 , 2013 , primarily due to the commencement of commercial operations at summerhaven in august 2013 , genesis unit 1 in november 2013 , genesis unit 2 in march 2014 and bluewater in july 2014. depreciation and amortization depreciation and amortization expense reflects costs associated with depreciation and amortization of nep 's assets , based on consistent depreciable asset lives and depreciation methodologies . for all of the u.s. projects , nep elected to receive citcs , which are recorded as a reduction in property , plant and equipment—net on the consolidated balance sheets and are amortized as a reduction to depreciation and amortization expense over the estimated life of the related property .
| 5,761 |
the computation of diluted earnings ( loss ) per share does not assume conversion , exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings ( loss story_separator_special_tag business overview of api technologies corp. general we design , develop and manufacture highly engineered solutions , systems , secure communications and electronic components for military and aerospace applications , including mission critical information systems and technologies . we own and operate several state-of-the-art manufacturing facilities in north america and the united kingdom . with the spectrum acquisition , we now also have manufacturing facilities in china and mexico . our customers , which include military prime contractors , and the contract manufacturers who work for them , in the united states , canada , the united kingdom and various other countries in the world , outsource many of their defense electronic components and systems to us as a result of the combination of our design , development and manufacturing expertise . operating through two segments , systems & subsystems , and secure systems & information assurance , we are positioned as a total engineered solution provider to various world governments , as well as military , defense , aerospace and homeland security contractors . we provide a wide range of electronic manufacturing services from prototyping to high volume production , with specialization in high speed surface mount circuit card assembly for military and commercial organizations . our manufacturing and design products have recently been expanded to include secure communication products , including ruggedized computers and peripherals , network security appliances , and tempest emanation prevention products . on january 9 , 2011 , api entered into an agreement and plan of merger ( the merger agreement ) with vintage albany acquisition , llc ( vintage ) and api merger sub , inc. , pursuant to which we acquired sendec corp. , a new york corporation ( sendec ) ( the merger ) . sendec is a leading defense electronics manufacturing services company headquartered in fairport , new york . in the merger , we acquired all of the equity of sendec , which included sendec 's electronics manufacturing operations and approximately $ 30 million of cash , in exchange for the issuance of 22,000,000 shares of api shares of common stock to vintage . the merger closed on january 21 , 2011 , immediately after the january 21 , 2011 closing of the acquisition by vintage of sendec , pursuant to the first merger agreement among vintage , sendec , and south albany acquisition corp. , and kenton w. fiske , as stockholder representative . api succeeded to the rights , and assumed the obligations , of vintage under the first merger agreement among vintage , including without limitation , certain earn-out payments , and payments in an amount relating to certain tax benefits realized by sendec relating to the payment of certain bonuses and the conversion of sendec 's options in connection with the first merger . in addition , certain sendec employees will be eligible for a bonus under a management bonus plan of up to $ 11 million , potentially payable in three installments through july 31 , 2013 , based on achievement of certain financial milestones of sendec . the first installment is based on financial results for the trailing twelve months ending july 31 , 2012. the acquired product lines from the kgc companies in january 2010 significantly expanded our systems & subsystems revenues , including approximately $ 54,608,000 to net sales for the year ended may 31 , 2011. the july 2009 cryptek acquisition expanded our manufacturing and design of products to include secured systems & information assurance products , including ruggedized computer products , network security appliances , and tempest emanation prevention products . the acquired product lines from sendec in january 2011 significantly expanded our systems & subsystems revenues , including approximately $ 19,286,000 to net sales for the year ended may 31 , 2011. following the acquisitions of the assets of cryptek and the assets of the kgc companies in july 2009 and january 2010 , respectively , api had operating facilities in ronkonkoma and hauppauge , new york , somerset , new jersey , and ottawa , ontario , as well as windber , pennsylvania , sterling , virginia , south plainfield , 29 new jersey , and gloucester , united kingdom . commencing in may 2010 , we began a cost cutting initiative to rationalize the number of facilities and personnel , resulting in the consolidation of our manufacturing operations from eight facilities into three facilities . this process was completed in december 2010 and is expected to result in the reduction of approximately $ 4 million in annual costs . in connection with the sendec acquisition , we now also have two manufacturing facilities in fairport , new york . effective september 13 , 2010 , the company entered into a proxy agreement with the dod . following the merger , the proxy agreement was terminated . on june 15 , 2010 , we closed the asset sale of our nanotechnology research and development subsidiary based in somerset , new jersey . this business had historically been unprofitable and the closure is expected to improve our operating results and allow us to deploy our capital and management resources on our expanding defense business . recent developments on june 1 , 2011 , api completed the acquisition of spectrum control , inc. ( spectrum ) through the merger of erie merger corp. , a wholly owned subsidiary of api , with and into spectrum ( the spectrum merger ) , as provided for in the agreement and plan of merger ( the spectrum agreement ) , entered into on march 28 , 2011 by api , spectrum , and erie merger corp. spectrum is a leading designer and manufacturer of high performance , custom solutions for the defense , aerospace , industrial , and medical industries headquartered in fairview , pennsylvania . story_separator_special_tag other income also includes gains related to the sales of fixed assets held for sale and acquisition-related gains when net assets acquired exceed the purchase price of the business acquisition . 31 backlog management uses a number of indicators to measure the growth of the business . one measure is sales backlog . our sales backlog at may 31 , 2011 ( prior to the acquisition of spectrum ) was approximately $ 69,591,000 compared to $ 68,664,000 at may 31 , 2010. the increase relates to the acquisition of sendec , which represents approximately $ 12,392,000 of our backlog , partially offset by the completion of a major contract for a large u.s. customer during the last twelve months . our backlog figures represent confirmed customer purchase orders that we had not shipped at the time the figures were calculated and that have a delivery date within a 12-month period . we have very little insight on the timing of new contract releases and , as such , the backlog can increase or decrease significantly based on timing of customer purchase orders . results of operations for the years ended may 31 , 2011 and 2010 the following discussion of results of operations is a comparison of our years ended may 31 , 2011 and 2010. operating revenue replace_table_token_5_th we recorded a 58.0 % increase in revenues for the year ended may 31 , 2011 over the same period in 2010. the increase is mainly attributed to the acquisition of sendec on january 21 , 2011 and the acquisition of the assets of the kgc companies completed on january 20 , 2010. in addition , the secure systems & information assurance results include twelve months results compared to less than eleven months for the year ended may 31 , 2010 , after the july 7 , 2009 acquisition of the cryptek assets . during the year ended may 31 , 2011 , our revenues were negatively impacted in our systems & subsystems segment by delays on new programs that delayed revenues into future quarters , as well as lower throughput while manufacturing operations from our new york facility were physically moved into our pennsylvania location as part of our restructuring initiatives . we were also impacted by a decrease in our secure systems & information assurance revenues primarily as a result of delays in receiving facility clearance at one of our u.s. facilities , which prevented us from bidding on secure contracts . that facility clearance was awarded in november 2010. operating expenses cost of revenue and gross margin replace_table_token_6_th our combined gross margin for the year ended may 31 , 2011 decreased by approximately 6.7 percentage points compared to the year ended may 31 , 2010. gross profit margin varies from period to period and can be 32 affected by a number of factors , including product mix , new product introduction , production efficiency , inventory obsolescence and restructuring activities . overall cost of revenue from continuing operations as a percentage of sales increased in the year ended may 31 , 2011 from 74.7 % to 81.4 % compared to the same period in 2010. the systems & subsystems segment cost of sales increased 9.1 % compared to the same period in 2010 , mainly as a result of product mix from the acquisition of sendec and the assets of the kgc companies during the year ended may 31 , 2011 , and initially lower efficiency on the transferred production at our pennsylvania location , compared to the same period in 2010. the secure systems & information assurance segment realized a decrease in cost of sales mainly as a result of the company realizing benefits through consolidation efforts and cost cutting measures . total cost of revenue from continuing operations for the year ended may 31 , 2011 included approximately $ 2,067,000 of restructuring costs . general and administrative expenses general and administrative expenses increased to approximately $ 18,960,000 for the year ended may 31 , 2011 from $ 11,980,000 for the year ended may 31 , 2010. the increase is primarily a result of the addition of sendec in january 2011 and the kgc companies in january 2010 , which increased general and administrative expenses by approximately $ 1,362,000 and $ 3,684,000 , respectively , for the year ended may 31 , 2011 , higher share based compensation and higher professional fees , partially offset by certain cost reductions following restructuring initiatives . as a percentage of sales , general and administrative expenses for the year ended may 31 , 2011 were 17.5 % , which was consistent with the prior year . the major components of general and administrative expenses are as follows : replace_table_token_7_th selling expenses selling expenses from continuing operations increased to approximately $ 6,347,000 for the year ended may 31 , 2011 from approximately $ 3,352,000 for the same period in fiscal 2010. the increase was largely due to the inclusion of selling expenses related to the acquisition of sendec and the asset acquisition of the kgc companies on january 21 , 2011 and january 20 , 2010 , respectively . as a percentage of sales , selling expenses were 5.9 % for the year ended may 31 , 2011 , compared to 4.9 % for the year ended may 31 , 2010. the major components of selling expenses are as follows : replace_table_token_8_th research and development expenses research and development costs from continuing operations increased slightly to approximately $ 2,389,000 for the year ended may 31 , 2011 from approximately $ 2,200,000 for the same period in fiscal 2010 . 33 business acquisition and related charges business acquisition charges primarily represent costs of engaging outside legal , accounting , due diligence , business valuation consultants and accelerated stock option expenses related to business combinations .
| summary we believe that i ) our current cash and cash equivalent balances , ii ) funds available under our credit facilities as described above with morgan stanley , and iii ) cash flows from operations , will be sufficient to satisfy our anticipated cash requirements for the next twelve months , including scheduled debt repayment , lease commitments , planned capital expenditures , and research and development expenses . there can be no assurance , however , that unplanned capital replacement or other future events will not require us to seek additional debt or equity financing and , if so required , that it will be available on terms acceptable to us , if at all . in addition , any raising of additional funds could dilute our current shareholders ' ownership interests . summary of critical accounting policies and estimates our significant accounting policies are fully described in the notes to our consolidated financial statements . some of our accounting policies involved estimates that required management 's judgment in the use of assumptions about matters that were uncertain at the time the estimate was made . different estimates , with respect to key variables used for the calculations , or changes to estimates , could potentially have had a material impact on our financial position or results of operations . the development and selection of the critical accounting estimates are described below . principles of consolidation the consolidated financial statements include the accounts of api , together with its wholly-owned subsidiaries . all significant inter-company transactions and balances have been eliminated upon consolidation . accounting estimates the preparation of financial statements in conformity with generally accepted accounting principles in the united states of america requires management to make certain estimates and assumptions that affect the reported amounts in the consolidated financial statements , and the disclosures made in the accompanying notes .
| 5,762 |
the severance provisions provide that executive will receive , subject to compliance with certain non-compete , non-solicitation and other obligations , ( i ) his annual base salary for twelve months after the termination date , ( ii ) the full amount of any unpaid bonus in respect of the immediately prior calendar year , ( iii ) if at the date of termination 50 % or more of the 48 measurement period for any performance-based cash bonus has expired , executive shall be paid a portion of such bonus for the current measurement period , and ( iv ) the other benefits provided to him under his employment agreement , until the earlier of ( x ) twelve months or ( y ) the time when he becomes eligible for such benefits offered by any subsequent employer . mr. richman . on april 21 , 2006 wayne richman 's employment was terminated with the company . mr. richman 's employment provided for severance payments upon termination of his employment without cause or his resignation due to a material adverse change in status ( as such terms are defined in the agreement ) conditioned upon mr. richman delivering a general release in favor of the company . based on the nature of the separation , mr. richman was entitled to receive severance payments , subject to compliance with certain non-compete , non-solicitation and other obligations , an amounts equal to ( i ) his annual base salary for twelve months after the date of termination , ( ii ) the full amount of any unpaid bonus story_separator_special_tag the following management 's discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto included as part of this annual report on form 10-k. the discussion in this section contains forward-looking statements that are based upon current expectations . we sometimes identify forward-looking statements with such words as may , will , expect , intend , anticipate , plan , believe , seek , estimate , outlook , trends , future benefits , strategies , goals and similar word concerning future events . the forward-looking statements contained herein , include , without limitation , statements concerning future revenue sources and concentration , gross profit margins , selling and marketing expenses , research and development expenses , general and administrative expenses , 22 capital resources , additional financings or borrowings and additional losses and are subject to risks and uncertainties including , but not limited to , those discussed below and elsewhere in this annual report on form 10-k that could cause actual results to differ materially from the results contemplated by these forward-looking statements . we also urge you to carefully review the risk factors set forth in item 1a risk factors. overview we believe we are a leading specialty retailer and direct marketer of vitamins , minerals , herbs , supplements , sports nutrition and other health and wellness products . we are second in overall sales among national vitamin , mineral and supplement specialty retailers , and offer the greatest variety of products with over 8,500 skus offered in our stores with an additional 11,500 skus available for our direct sales orders , versus 1,900 skus offered by our leading competitor . in addition , we operate the largest retail stores among the leading retailers in the vms industry , which average 3,600 square feet , and are at least double that of our two leading competitors . as of march 15 , 2007 , we operated 314 stores located in 29 states and the district of columbia and sell direct to consumers through our nationally circulated catalog and our web site , www.vitaminshoppe.com . we target the dedicated , well-informed vms consumer and differentiate ourselves by providing our customers with an extensive selection of high quality products sold at competitive prices and value-added customer service . within our selection of over 20,000 skus , we offer over 400 national brands , including our best value vitamin shoppe and bodytech private label brands . our broad product offering enables us to provide our customers with a selection of products that is not readily available at other specialty vms retailers , supermarkets , chain drug stores or mass merchants , which we believe drives customer traffic and creates a loyal customer base . our company began as a single store in new york , new york in 1977. our vitamin shoppe branded products were introduced in 1989. we were acquired in november 2002 by bsmb and other investors . trends and other factors affecting our business our performance is affected by trends that affect the vms industry , including demographic , health and lifestyle preferences . changes in these trends and other factors , which we may not foresee , may also impact our business . for example , our industry is subject to potential regulatory actions , such as the ban on ephedra , and other legal matters that affect the viability of a given product . volatile consumer trends , such as those described in the following paragraph , as well as the overall impact on consumer spending , can dramatically affect purchasing patterns . our business allows us to respond to changing industry trends by introducing new products and adjusting our product mix and sales incentives . we will continue to diversify our product lines to offer items less susceptible to the effects of economic conditions and not as readily substitutable , such as teas , lotions and spring water . sales of weight management products are generally more sensitive to consumer trends , resulting in higher volatility than our other products . our sales of weight management products have been significantly influenced by the rapid increase and subsequent decline of products such as products containing ephedra , low carb products and cortislim ® . story_separator_special_tag we evaluate our assumptions and estimates on an ongoing basis . revenue recognition . we recognize revenue upon sale of our products to our retail customers at the point of sale , which occurs when merchandise is sold over-the-counter in retail stores or upon delivery to a direct customer , net of sales returns . in accordance with emerging issues task force ( eitf ) issue 00-10 , accounting for shipping and handling fees and costs , we classify all amounts billed to customers that represent shipping fees as sales in all periods presented . to arrive at net sales , gross sales are reduced by actual customer returns and a provision for estimated future customer returns , which is based on management 's review of historical and current customer returns . the amounts reserved for sales returns , net of cost of goods sold , were $ 0.1 million and $ 0.2 million at december 30 , 2006 and december 31 , 2005 , respectively . inventories . inventories are stated at the lower of cost or market value . cost is determined using the moving weighted average method . as applied to inventories , cost means in principle the sum of the applicable expenditures and charges directly or indirectly incurred in bringing the product to its existing condition and location . finished goods inventory includes the cost of labor and overhead required to package products . we adjust our inventory to reflect situations in which the cost of inventory is not expected to be recovered . we regularly review our inventory , including when a product is close to expiration and not expected to be sold , when a product has reached its expiration date , or when a product is not expected to be saleable . in determining the reserves for these products we consider factors such as the amount of inventory on hand and its remaining shelf life , and current and expected market conditions , including management forecasts and levels of competition . we have evaluated the current level of inventory considering historical trends and other factors , and based on our evaluation , have recorded adjustments to reflect inventory at net realizable value . these 24 adjustments are estimates , which could vary significantly from actual results if future economic conditions , customer demand or competition differ from expectations . these estimates require us to make assessments about the future demand for our products in order to categorize the status of such inventory items as slow moving , obsolete or in excess of need . these future estimates are subject to the ongoing accuracy of management 's forecasts of market conditions , industry trends and competition . we are also subject to volatile changes in specific product demand as a result of unfavorable publicity , government regulation and rapid changes in demand for new and improved products or services . at december 30 , 2006 and december 31 , 2005 , obsolescence reserves were $ 1.3 million and $ 1.8 million , respectively . effective december 26 , 2004 ( the beginning of fiscal 2005 ) , we implemented a change in accounting for costs included in inventory . the change relates to capitalizing freight on internally transferred merchandise , rent for the distribution center and costs associated with our buying department and distribution facility , including payroll . these costs were previously expensed as incurred in cost of goods sold and are now treated as inventory product costs which are expensed as inventory is sold . freight on internally transferred merchandise , rent for the distribution center and costs associated with our buying department and the distribution facility are includable in inventory because they directly relate to the acquisition of goods for resale by us . we have determined that it is preferable to capitalize such costs into inventory because it better represents the costs incurred to prepare inventory for sale to the end user , shows better comparability with other retailers and will improve the management and planning of inventory . as a result , we recorded the cumulative effect of accounting change of $ 2.3 million ( net of tax provision of $ 1.6 million ) upon adoption . long-lived assets . we evaluate long-lived assets , including fixed assets and intangible assets with finite useful lives , periodically for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable . if the sum of our estimated undiscounted future cash flows is less than the carrying value , we recognize an impairment loss , measured as the amount by which the carrying value exceeds the fair value of the asset . these estimates of cash flow require significant management judgment and certain assumptions about future volume , sales and expense growth rates , devaluation and inflation . as such , these estimates may differ from actual cash flows . for the periods presented we had no impairments of our long-lived assets . goodwill and other intangible assets . on an annual basis , or whenever impairment indicators exist , we perform a valuation of the goodwill and indefinite lived intangible assets . judgments regarding the existence of impairment indicators are based on market conditions and operational performance of the business . future events could cause us to conclude that impairment indicators exist , and therefore that goodwill and other intangible assets are impaired . to the extent that the fair value associated with the goodwill and indefinite-lived intangible assets is less than the recorded value , we write down the value of the asset . the valuation of the goodwill and indefinite-lived intangible assets is affected by , among other things , our business plan for the future , and estimated results of future operations . changes in the business plan or operating results that are different than the estimates used to develop the valuation of the assets result in an impact on their valuation . deferred sales .
| results of operations the information presented below is for the fiscal years ended december 30 , 2006 , december 31 , 2005 and december 25 , 2004 and was derived from our audited consolidated financial statements , which , in the opinion of management , includes all adjustments necessary for a fair presentation of our financial position and operating results for such periods and as of such dates . the following table summarizes our results of operations for the fiscal years ended december 30 , 2006 , december 31 , 2005 and december 25 , 2004 as a percentage of net sales , which does not include any adjustments in 2004 for our change in accounting policy in fiscal 2005 for costs included in inventory ( see note 4 in notes to consolidated financial statements ) : 27 replace_table_token_9_th the net sales results presented for the year ended december 30 , 2006 are based on a 52-week period ( fiscal 2006 ) , while the net sales results for the year ended december 31 , 2005 , are based on a 53-week period ( fiscal 2005 ) , and the net sales results for the year ended december 25 , 2004 are based on a 52-week period ( fiscal 2004 ) . comparison of fifty-two weeks ended december 30 , 2006 with fifty-three weeks ended december 31 , 2005 net sales net sales increased $ 49.6 million , or 11.4 % , to $ 486.0 million for fiscal 2006 compared to $ 436.5 million for fiscal 2005. the increase was the result of an increase in our comparable store sales , new sales from our non-comparable stores and an increase in our direct sales .
| 5,763 |
this asu 's core principle is that a reporting entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity story_separator_special_tag business overview we develop and sell network infrastructure equipment and offer related services contracts for extended warranty and maintenance to our enterprise , data center and service provider customers . substantially all of our revenue is derived from the sale of our networking equipment and related service contracts . we believe that understanding the following key developments is helpful to an understanding of our operating results for the fiscal year ended june 30 , 2014 . we are a leading provider of network infrastructure equipment and services for enterprises , data centers , and service providers . we were incorporated in california in may 1996 and reincorporated in delaware in march 1999. our corporate headquarters are located in san jose , california . we develop and sell network infrastructure equipment to our enterprise , data center and telecommunications service provider customers . on october 31 , 2013 ( the “ acquisition date ” ) , we completed the acquisition of enterasys networks , inc. ( “ enterasys ” ) , a privately held provider of wired and wireless network infrastructure and security solutions , for $ 180.0 million , net of cash acquired , whereby enterasys became our wholly-owned subsidiary . the combined entity immediately became a networking industry leader with more than 12,000 customers . as a combined company , we believe we will set the standard for the networking industry with a strategic focus on three principles : highly scaled and differentiated products and solutions : our combined product portfolio spans data center networking , switching and routing , software-defined networking ( sdn ) , wired and wireless lan access , network management with analytics and integrated security features . this broader solutions portfolio can be leveraged to better serve existing and new customers . we will continue to enhance and support the product roadmaps of both companies going forward to protect the investments of customers and avoid any disruption to their businesses . we intend to increase research and development to accelerate our vision for high-performance , modular , open networking . leading customer service and support : we are working to augment our current outsourced support model by integrating enterasys ' in-sourced expertise , building on enterasys ' award-winning heritage and strong commitment to exceptional customer experience . the company 's expanded global network of channel partners and distributors will benefit from expanded services and support capabilities . strong channels and strategic partners : our focus is to leverage the capabilities of the combined company and expand existing partnerships with ericsson and the developing partnership with lenovo as well as continue to add new strategic partnerships in the future . additionally , we will increase our focus on partnering with distributors and channel partners globally . the goal is to develop and enhance relationships that grow revenue and profits for the company and our alliance and channel partners . at the same time , we are investing in infrastructure to make doing business with the company easier and more efficient . also , on october 31 , 2013 , the company entered into a $ 125 million senior secured credit facilities agreement consisting of a $ 65 million term loan facility ( “ term loan ” ) and a revolving credit facility of $ 60 million ( “ revolving facility ” ) . both facilities mature on october 31 , 2018. the company drew $ 35 million of the $ 60 million revolving facility on the acquisition date and used the proceeds from the term loan to pay a portion of the purchase price in the acquisition of all of the issued and outstanding capital stock of enterasys . impact of the global economic developments we believe that the slow economic recovery in the united states , asia and europe , and other challenges affecting global economic conditions placed significant limitations on our financial performance . we operate in three regions : americas , which includes the united states , canada , mexico , central america and south america ; emea , which includes europe , middle east , and africa ; and apac which includes asia pacific , south asia , japan and australia . sales in apac and some european countries were most impacted as a result of the soft global economy . we believe that conservative purchasing patterns and delays or cancellation of it infrastructure plans in the face of continued uncertainty regarding the global economy , may continue to negatively impact overall demand for networking solutions , including ethernet equipment . we have taken , and plan to continue to take , other steps to manage our business in the current economic environment . for example , we have managed from time to time our contingent work force , consolidation of office locations , reduced travel and other discretionary spending , realigned our product portfolio and organization to grow revenue and operating income , and controlled all hiring activities . 31 increasing demand for bandwidth we believe that the continued increase in demand for bandwidth will over time drive future demand for high performance ethernet solutions . wide-spread adoption of electronic communications in all aspects of our lives , proliferation of next generation converged mobile devices and deployment of triple-play services to residences and businesses alike , continues to generate demand for greater network performance across broader geographic locations . in parallel to these transformational forces within society and the community at large , the accelerating adoption of internet and intranet “ cloud ” solutions within business enterprises is enabling organizations to offer greater business scalability to improve efficiency and through more effective operations , improve profitability . in order to realize the benefits of these developments , customers require additional bandwidth and high performance from their network infrastructure at affordable prices . story_separator_special_tag cost of revenue and gross profit the following table presents the gross profit on product and service revenue and the gross profit percentage of net revenue for the fiscal years 2014 , 2013 and 2012 ( dollars in thousands ) : replace_table_token_6_th cost of product revenue includes costs of materials , amounts paid to third-party contract manufacturers , costs related to warranty obligations , charges for excess and obsolete inventory , amortization of developed technology intangibles , royalties under 34 technology license agreements , and internal costs associated with manufacturing overhead , including management , manufacturing engineering , quality assurance , development of test plans , and document control . we outsource substantially all of our manufacturing and supply chain management operations , and we conduct quality assurance , manufacturing engineering , document control and distribution at our facilities in san jose , california , salem , new hampshire , china , and taiwan . product gross margin in fiscal 2014 decreased as compared to fiscal 2013 primarily due to a $ 11.1 million charge related to the utilization of the net increase in cost basis of the inventory acquired in connection with the purchase of enterasys , $ 11.0 million for the amortization of developed technology intangibles from the acquisition of enterasys during the second quarter of fiscal 2014 and increased stock compensation expenses offset by higher economic benefits realized in our manufacturing costs as compared to fiscal 2013 . product gross margin in fiscal 2013 decreased as compared to fiscal 2012 due to lower product revenue and an increase in charges for excess and obsolete inventory offset by economic benefits realized in our manufacturing costs . our cost of service revenue consists primarily of labor , overhead , repair and freight costs and the cost of spares used in providing support under customer service contracts . service gross margin in fiscal 2014 increased as compared to fiscal 2013 primarily due to increased service revenue as a result of acquisition of enterasys and cost reduction initiatives offset by higher personnel , overhead and travel cost as a result of our acquisition of enterasys during the second quarter of fiscal 2014. service gross profit in fiscal 2013 increased as compared to fiscal 2012 primarily due to lower labor costs from our cost reduction initiatives . operating expenses the following table presents operating expenses and operating income ( dollars in thousands ) : replace_table_token_7_th 35 the following table highlights our operating expenses and operating income as a percentage of net revenues : replace_table_token_8_th research and development expenses research and development expenses consist primarily of salaries and related personnel expenses , consultant fees and prototype expenses related to the design , development , and testing of our products . research and development expenses increased in fiscal 2014 as compared to fiscal 2013 primarily due to increased personnel and occupancy costs as a result of our acquisition of enterasys in the second quarter of fiscal 2014 . research and development expenses decreased in fiscal 2013 as compared to fiscal 2012 primarily due to lower spending on engineering projects due to differences in timing and pattern of planned engineering project spending as compared to fiscal 2012 . sales and marketing expenses sales and marketing expenses consist of salaries , commissions and related expenses for personnel engaged in marketing and sales functions , as well as trade shows and promotional expenses . sales and marketing expenses increased in fiscal 2014 as compared to fiscal 2013 primarily due to increased personnel costs as well as additional spending on additional sales and marketing programs , as a result of our acquisition of enterasys in the second quarter of fiscal 2014. sales and marketing expenses decreased in fiscal 2013 as compared to fiscal 2012 primarily due to lower commissions and reduced personnel costs resulting from lower revenue levels and a reduction in headcount during the year . general and administrative expenses general and administrative expenses increased in fiscal 2014 as compared to fiscal 2013 primarily due to higher personnel and travel costs and higher occupancy costs as a result of our acquisition of enterasys in the second quarter of fiscal 2014. general and administrative expenses decreased in fiscal 2013 as compared to fiscal 2012 primarily due to cost reduction initiatives realized as part of the restructuring plan offset by ceo transition expenses of $ 2.1 million . acquisition and integration costs as a result of our acquisition of enterasys , we incurred $ 25.7 million of acquisition and integration costs in fiscal 2014 . of the total $ 25.7 million expense for fiscal 2014 , $ 19.7 million expense related to integration costs and the remaining $ 6.0 million expense related to acquisition costs . the company expects to incur integration costs for the next two years at a lower rate . amortization of intangibles during fiscal 2014 , we recorded $ 16.7 million of amortization expenses primarily for certain intangibles related to the acquisition of enterasys . restructuring charge , net of reversal during fiscal 2014 , 2013 and 2012 , we recorded restructuring charges , net of reversals , of $ 0.5 million , $ 6.8 million , and $ 1.6 million , respectively . 36 fiscal 2013 restructuring during the second quarter of fiscal 2013 , we reduced costs through targeted restructuring activities intended to reduce operating costs and realign our organization in the current competitive environment . as part of our restructuring efforts in the second quarter of fiscal 2013 , we initiated a plan to reduce our worldwide headcount by 13 % , consolidate specific global administrative functions , and shift certain operating costs to lower cost regions , among other actions . we have substantially expensed all costs associated with this initiative . as of june 30 , 2014 , we had restructuring liabilities of $ 0.3 million related to the fiscal 2013 restructuring , which we anticipate paying by the end of fiscal 2015. fiscal 2012 restructuring during fiscal 2012 , we incurred total charges of $ 2.2 million , including $ 1.8 million related to severance , $ 0.1
| results of operations our operations and financial performance have been affected by the economic factors described above and our acquisition of enterasys , and during fiscal 2014 , we achieved the following results : net revenue of $ 519.6 million , an increase of 73.6 % from fiscal 2013 net revenue of $ 299.3 million . product revenue of $ 411.8 million , an increase of 71.6 % from fiscal 2013 product revenue of $ 240.0 million . service revenue of $ 107.8 million , an increase of 81.5 % from fiscal 2013 service revenue of $ 59.4 million . total gross margin of 51.5 % of net revenue in fiscal 2014 , compared to 54.3 % in fiscal 2013 . operating loss of $ 50.2 million ( including acquisition and integration costs of $ 25.7 million , amortization of intangibles of $ 16.7 million , restructuring charges of $ 0.5 million , and $ 0.1 million of litigation settlement income ) , a decrease from operating income of $ 10.9 million in fiscal 2013 . net loss was $ 57.3 million in fiscal 2014 , a decrease from net income of $ 9.7 million in fiscal 2013 . cash flow used in operating activities was $ 26.8 million , compared to cash flow provided by operating activities of $ 32.2 million in fiscal 2013 , a decrease of $ 59.1 million . cash and cash equivalents , short-term investments and marketable securities were $ 105.9 million as of june 30 , 2014 , a decrease of $ 99.7 million from fiscal 2013 .
| 5,764 |
we operate in two principal operating segments , at-sea processing and land-based processing . the at-sea processing segment includes the harvesting and processing of pollock , cod , pacific whiting and yellowfin sole on our vessels while at sea . the land-based processing segment includes the primary processing of catfish at our facilities in alabama and scallops in massachusetts and secondary processing of pollock , cod and other white fish products in massachusetts . the most significant portion of our revenues and profitability is derived from our at-sea processing segment . the performance of our at-sea processing segment largely depends on the amount of pollock , cod and pacific whiting resources that we harvest and the prevailing market prices for the related products we sell . during 2003 , 2004 and 2005 , we harvested approximately 329,000 metric tons , 365,000 metric tons and 393,000 metric tons of whitefish , respectively . pollock represents the most significant portion of our harvest and the most significant portion of our net sales both in terms of volume and revenues . in 2003 , 2004 and 2005 , our pollock products represented approximately 68.4 % , 73.0 % and 67.2 % , respectively , by volume of the products sold in our at-sea processing segment . some of our products exhibit commodity-like pricing characteristics . these prices fluctuate from season to season and from year to year as a result of factors such as market conditions , inventory levels and production volumes . we operate in three primary u.s. fisheries , the u.s. bering sea pollock fishery , the u.s. bering sea pacific cod fishery and the u.s. pacific whiting fishery . for each u.s. fishery , the fishery management council determines the annual total allowable catch , which is the total weight of fish that can be harvested . in addition to the amount of the directed pollock catch that we harvest , we supplement our pollock and longline cod harvest by purchasing community development quota allocated to alaska community development groups . the remaining portion of our revenues and profitability is derived from our land-based processing segment . the performance of our land-based processing segment largely depends on the amount of catfish , pollock , cod and scallops that we process each year , the cost of fish we purchase and the prevailing market prices for the related products we sell . during 2003 , 2004 and 2005 , we processed approximately 81 million , 81 million and 87 million finished pounds , respectively , in our land-based processing segment . corporate history on january 28 , 2000 , american seafoods , l.p. ( aslp ) purchased , through its subsidiaries , from norway seafoods six catcher-processors , one catcher-vessel , all of the outstanding stock of american seafoods company 40 ( now referred to as asc , inc. ) and certain assets of frionor usa ( now called american seafoods international llc ) . asc , inc. was the operator of the six acquired vessels and the owner-operator of one additional catcher-processor vessel . asg was formed in connection with the acquisition . the acquisition was accounted for as a purchase , and all of the debt , assets and goodwill and other intangible assets relating to the acquisition have been pushed down to the balance sheet of asg . the purchase accounting resulted in all assets and liabilities being recorded at their estimated fair values on the date of acquisition . the aggregate purchase price for the acquisition was $ 477.9 million , including acquisition costs . in august 2001 , we , along with two other partners , formed pacific longline company ( plc ) in order to acquire three freezer-longliner vessels . our initial ownership through this transaction was 60 % of plc . effective january 1 , 2004 we purchased the third party minority interest in plc and increased our ownership to 100 % . plc harvests and processes primarily pacific cod in the u.s. bering sea . effective december 16 , 2002 , we purchased substantially all of the assets of southern pride . southern pride is engaged in the business of catfish harvesting , processing and distribution . the acquired assets included , among other things , certain real property , fixtures , equipment , accounts receivable , trade name , customer and other contracts , and cash on hand . on february 27 , 2006 , aslp acquisition llc , a new company controlled by bernt o. bodal , our chairman and chief executive officer , and cvp , one of aslp 's existing equity holders , and other entities controlled by bodal or cvp purchased from centre partners and its affiliated funds ( centre ) , all of centre 's direct and indirect ownership of partnership interests in aslp . the aggregate purchase price for centre 's partnership interests was $ 81.8 million . aslp acquisition llc and cvp also purchased partnership interests from aslp partners who had rights to tag-along with centre 's sale . the aggregate purchase price paid to these partners was $ 34.9 million . after the acquisition , aslp acquisition llc owned 20.1 % of aslp . overview of recent financial results for 2003 to 2005 our seafood sales revenues increased primarily due to the growth in our sales volumes as a result of increases in the pollock community development quota ( cdq ) we purchase , increases in the pacific whiting quota and increases in sales for certain products in both segments . our gross margin as a percentage of sales declined in 2004 as compared to 2003 primarily due to the purchase of additional cdq and the downward trend in pollock surimi prices that began in the second half of 2003 ( although prices have increased since the second half of 2004 ) . our gross profit as a percentage of sales increased slightly in 2005 as compared to 2004 primarily as a result of higher sales prices , which was partially offset by higher fuel and freight costs . story_separator_special_tag during the years ended december 31 , 2003 , 2004 and 2005 , the value of the u.s dollar increased ( decreased ) against the japanese yen by approximately ( 9.9 % ) , ( 3.9 % ) and 14.9 % , respectively , when comparing such values at the beginning and end of the years . while we conduct hedging activities to mitigate the risk of currency fluctuations , these hedging activities may not be sufficient to provide complete protection against loss and , accordingly , any such fluctuations could adversely affect our revenues . at-sea processing expenses . the operating cost structure of our at-sea processing operations includes four main cost categories : variable costs driven by revenue or product volume , such as crew compensation , product freight and storage , packaging and additives ; vessel-related depreciation and amortization of cooperative and fishing rights ; fixed costs that are incurred whether or not the vessel is deployed , such as quota purchases , insurance , repair and maintenance , moorage and general supplies ; and operating costs driven by vessel operations , such as fuel , nets and gear supplies , galley supplies , equipment rental , crew travel , observers and technicians . after depreciation expense , crew compensation represents the largest operating cost for the vessel operations and is primarily a variable cost , structured to reward each crew member based upon an estimated value of the product . quota purchase costs are calculated as an amount per harvestable ton and are incurred when we purchase quota amounts from our alaska community development group partners , catcher vessel owners and other third party fishery participants . product freight is incurred when we transport the product to either our customer or a cold storage facility . storage costs are incurred for product entering a cold storage facility . land-based processing segment land-based processing revenues . revenues from our land-based processing segment are primarily a function of our throughput volume of pollock , cod , catfish and scallops that we process and the prevailing market prices for those products . land-based processing expenses . operating costs related to our land-based processing operations are principally comprised of the cost of raw material purchases , labor and operating costs . operating costs include depreciation expense related to equipment and facilities used for processing and transportation . enterprise expense summary cost of sales include operating costs such as crew and factory personnel compensation , quota purchase costs , seafood purchases , vessel fuel , packaging , insurance , product freight , other operating related expenses , amortization of cooperative and fishing rights and depreciation applicable to property , vessels and equipment used in production . selling , general and administrative expenses include employee compensation and benefits , rent expense , professional fees , promotional costs and other expenses , such as office equipment and supplies , not directly involved in the production process . 43 story_separator_special_tag style= '' page-break-before : always '' > gross profit . the following table compares selected segment gross profit data presented in amount and as a percentage of related segment revenue for the years ended december 31 , 2003 and 2004 , and presents the corresponding change in amount and percentage between the periods ( amounts in millions ) : replace_table_token_16_th at-sea processing gross profit decreased in 2004 both in amount and as a percentage of related revenue primarily as a result of the sale of the lower grade carryover 2003 b season pollock surimi inventory that we sold at a lower margin and additional purchase of cdq , which are partially offset by the revenue factors described above . land-based processing gross profit also decreased in amount and as a percentage of related revenue primarily as a result of higher catfish purchase and production costs and lower production yields , which are partially offset by the revenue factors described above . the lower production yields were largely due to processing smaller , less meaty fish , which resulted from less frequent feeding patterns by catfish farmers . operating expenses . the following table compares selected operating expenses in amount and as a percentage of total revenue for the years ended december 31 , 2003 and 2004 , and presents the corresponding change in amount and percentage between the periods ( amounts in millions ) : replace_table_token_17_th selling , general and administrative expenses , excluding equity-based compensation , were higher in 2003 primarily due to higher selling , marketing and retirement costs as compared to 2004. the change in equity-based compensation expense resulted primarily from the change in the estimated fair value of options accounted for under variable accounting . amortization and depreciation remained relatively consistent between periods . during 2004 , we wrote off goodwill related to our investment in our catfish operations . 47 other income ( expense ) , net . the following table compares selected other income ( expense ) , net in amount and as a percentage of total revenue for the years ended december 31 , 2003 and 2004 , and presents the corresponding change in amount and percentage between the periods ( amounts in millions ) : replace_table_token_18_th interest expense increased due to the addition of the accretion of discounts and amortization financing costs of $ 2.8 million related to our senior discount notes issued in october 2004 and general rises in interest rates on our variable rate debt , which is partially offset by decreases resulting from reductions in the outstanding balance of our revolving credit facility during 2004. the following table compares the average outstanding debt levels and interest rates on borrowed funds for the years ended december 31 , 2003 and 2004 ( amounts in millions ) : replace_table_token_19_th foreign exchange losses and other derivative losses increased in 2004 primarily due to the weakness of the average u.s. dollar versus the japanese yen when compared to 2003. this increase was primarily attributable to unrealized losses on foreign exchange contracts , partially offset by unrealized gains recognized during the period related to the time value portion of our financial derivatives
| results of operations overview of operating results the following table compares selected statements of operations data , expressed in terms of percentage of revenue , for years ended december 31 , 2003 , 2004 and 2005. replace_table_token_9_th year ended december 31 , 2005 compared to the year ended december 31 , 2004. revenue . the following table compares selected segment revenue data presented in amount and as a percentage of total revenue for the years ended december 31 , 2004 and 2005 , and presents the corresponding change in amount and percentage between the periods ( amounts in millions ) : replace_table_token_10_th at-sea processing sales increased primarily as a result of higher prices for our pollock surimi and block , as well as higher sales volumes of pacific whiting and yellowfin sole products . this increase was partially offset by lower sales volumes of pollock roe and block products , as well as pollock surimi due to a lower amount of carryover inventory than in the prior year . land-based processing sales increased primarily due to higher sales prices generated from our secondary processed and scallop products , which was partially offset by lower catfish and scallop sales volumes . gross profit .
| 5,765 |
84 recently adopted accounting standards leases in february 2016 , the fasb issued asu no . 2016-02 , leases , which requires an entity that is a lessee to record a right-of-use asset and a lease liability for lease story_separator_special_tag the following combined management 's discussion and analysis of financial condition and results of operations ( md & a ) should be read in conjunction with the consolidated financial statements and accompanying notes in this combined annual report on form 10-k. none of the registrants make any representation as to information related solely to evergy , evergy kansas central or evergy metro other than itself . the following md & a generally discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018. discussions of 2017 items and year-to-year comparisons between 2018 and 2017 can be found in md & a in part ii , item 7 , of the evergy companies ' combined annual report on form 10-k for the fiscal year ended december 31 , 2018. evergy , inc. story_separator_special_tag style= '' font-family : inherit ; font-size:11pt ; font-weight : bold ; '' > common stock repurchase program in july 2018 , the evergy board authorized the repurchase of up to 60 million shares of evergy 's common stock . evergy has utilized various methods to effectuate the share repurchase program since its authorization , including the repurchase of shares through asr agreements and open market transactions . for 2019 , evergy had total repurchases of common stock of $ 1,628.7 million and had repurchased 28.8 million shares under the repurchase program . since the start of the repurchase program in august 2018 , evergy has made total repurchases of common stock of $ 2,671.0 million and has repurchased 45.2 million shares under the repurchase program . evergy does not anticipate making additional repurchases of common stock under its share repurchase program while the strategic review & operations committee of the evergy board conducts its review of ways to enhance long-term shareholder value , which is expected to conclude in the first half of 2020. see note 18 to the consolidated financial statements for more information regarding evergy 's common stock repurchase program . great plains energy and evergy kansas central merger evergy was incorporated in 2017 as monarch energy , a wholly-owned subsidiary of great plains energy . prior to the closing of the merger transactions , monarch energy changed its name to evergy and did not conduct any business activities other than those required for its formation and matters contemplated by the amended merger agreement . on june 4 , 2018 , in accordance with the amended merger agreement , great plains energy merged into evergy , with evergy surviving the merger and king energy merged into evergy kansas central , with evergy kansas central surviving the merger . these merger transactions resulted in evergy becoming the parent entity of evergy kansas central and the direct subsidiaries of great plains energy , including evergy metro and evergy missouri west . as a result of the closing of the merger transactions , each outstanding share of great plains energy common stock was converted into 0.5981 shares of evergy common stock , resulting in the issuance of 128.9 million shares . additionally , each outstanding share of evergy kansas central common stock was converted into 1 share of evergy common stock . evergy kansas central was determined to be the accounting acquirer in the merger and thus , the predecessor of evergy . evergy had separate operations for the period beginning with the quarter ended june 30 , 2018 , and references to amounts for periods after the closing of the merger relate to evergy . the results of great plains 30 energy 's direct subsidiaries have been included in evergy 's results of operations from june 4 , 2018 , the date of the closing of the merger , and thereafter . see note 2 to the consolidated financial statements for more information regarding the merger . regulatory proceedings see note 5 to the consolidated financial statements for information regarding regulatory proceedings . earnings overview the following table summarizes evergy 's net income and diluted earnings per share ( eps ) . replace_table_token_11_th net income attributable to evergy , inc. increased in 2019 compared to 2018 , primarily due to the inclusion of evergy metro 's and evergy missouri west 's earnings in the first five months of 2019 , merger-related costs and reductions of revenue for customer bill credits incurred in june 2018 following the consummation of the merger , lower operating and maintenance expenses at fossil-fuel generating units and lower administrative and general expenses , partially offset by lower retail sales driven by unfavorable weather and higher depreciation expense . diluted eps increased in 2019 compared to 2018 , primarily due to the increase in net income attributable to evergy , inc. discussed above , partially offset by a higher number of diluted weighted average common shares outstanding in 2019 , which diluted eps by $ 0.34 for 2019. for additional information regarding the change in net income , refer to the evergy results of operations section within this md & a . adjusted earnings ( non-gaap ) and adjusted eps ( non-gaap ) evergy 's adjusted earnings ( non-gaap ) and adjusted eps ( non-gaap ) for 2019 were $ 694.0 million or $ 2.89 per share , respectively . for 2018 , evergy 's adjusted earnings ( non-gaap ) and adjusted eps ( non-gaap ) were $ 680.9 million or $ 2.54 per share , respectively . in addition to net income attributable to evergy , inc. , diluted eps , pro forma net income attributable to evergy , inc. and pro forma diluted eps as prepared in accordance with gaap , evergy 's management uses adjusted earnings ( non-gaap ) and adjusted eps ( non-gaap ) to evaluate earnings and eps without the costs and or benefits resulting from rebranding , voluntary severance and significant items related to the great plains energy and evergy kansas central merger . story_separator_special_tag in 2019 , evergy 's pension expense was $ 131.3 million under gaap and $ 168.7 million for ratemaking . the impact on 2020 pension expense in the table above reflects the impact on gaap pension costs . under the evergy companies ' rate agreements , any increase or decrease in gaap pension expense is deferred to a regulatory asset or 33 liability for future ratemaking treatment . see note 10 to the consolidated financial statements for additional information regarding the accounting for pensions . market conditions and interest rates significantly affect the future assets and liabilities of the plan . it is difficult to predict future pension costs , changes in pension liability and cash funding requirements due to the inherent uncertainty of market conditions . revenue recognition evergy recognizes revenue on the sale of electricity to customers over time as the service is provided in the amount it has the right to invoice . revenues recorded include electric services provided but not yet billed by evergy . unbilled revenues are recorded for kwh usage in the period following the customers ' billing cycle to the end of the month . this estimate is based on net system kwh usage less actual billed kwhs . evergy 's estimated unbilled kwhs are allocated and priced by regulatory jurisdiction across the rate classes based on actual billing rates . evergy 's unbilled revenue estimate is affected by factors including fluctuations in energy demand , weather , line losses and changes in the composition of customer classes . see note 4 for the balance of unbilled receivables for evergy as of december 31 , 2019 and 2018 . regulatory assets and liabilities evergy has recorded assets and liabilities on its consolidated balance sheets resulting from the effects of the ratemaking process , which would not otherwise be recorded under gaap . regulatory assets represent incurred costs that are probable of recovery from future revenues . regulatory liabilities represent future reductions in revenues or refunds to customers . management regularly assesses whether regulatory assets and liabilities are probable of future recovery or refund by considering factors such as decisions by the mpsc , kcc or ferc in evergy 's rate case filings ; decisions in other regulatory proceedings , including decisions related to other companies that establish precedent on matters applicable to evergy ; and changes in laws and regulations . if recovery or refund of regulatory assets or liabilities is not approved by regulators or is no longer deemed probable , these regulatory assets or liabilities are recognized in the current period results of operations . evergy 's continued ability to meet the criteria for recording regulatory assets and liabilities may be affected in the future by restructuring and deregulation in the electric industry or changes in accounting rules . in the event that the criteria no longer applied to all or a portion of evergy 's operations , the related regulatory assets and liabilities would be written off unless an appropriate regulatory recovery mechanism were provided . additionally , these factors could result in an impairment on utility plant assets . see note 5 to the consolidated financial statements for additional information . impairments of assets and goodwill long-lived assets are required to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable as prescribed under gaap . accounting rules require goodwill to be tested for impairment annually and when an event occurs indicating the possibility that an impairment exists . the goodwill impairment test consists of comparing the fair value of a reporting unit to its carrying amount , including goodwill , to identify potential impairment . in the event that the carrying amount exceeds the fair value of the reporting unit , an impairment loss is recognized for the difference between the carrying amount of the reporting unit and its fair value . evergy 's consolidated operations are considered one reporting unit for assessment of impairment , as management assesses financial performance and allocates resources on a consolidated basis . the annual impairment test for the $ 2,336.6 million of goodwill from the great plains energy and evergy kansas central merger was conducted on may 1 , 2019. the fair value of the reporting unit substantially exceeded the carrying amount , including goodwill . as a result , there was no impairment of goodwill . the determination of fair value for the reporting unit consisted of two valuation techniques : an income approach consisting of a discounted cash flow analysis and a market approach consisting of a determination of reporting unit invested capital using a market multiple derived from the historical earnings before interest , income taxes , depreciation and amortization and market prices of the stock of peer companies . the results of the two techniques 34 were evaluated and weighted to determine a point within the range that management considered representative of fair value for the reporting unit , which involves a significant amount of management judgment . the discounted cash flow analysis is most significantly impacted by two assumptions : estimated future cash flows and the discount rate applied to those cash flows . management determines the appropriate discount rate to be based on the reporting unit 's weighted average cost of capital ( wacc ) . the wacc takes into account both the return on equity authorized by the kcc and mpsc and after-tax cost of debt . estimated future cash flows are based on evergy 's internal business plan , which assumes the occurrence of certain events in the future , such as the outcome of future rate filings , future approved rates of return on equity , anticipated returns of and earnings on future capital investments , continued recovery of cost of service and the renewal of certain contracts . management also makes assumptions regarding the run rate of operations , maintenance and general and administrative costs based on the expected outcome of the aforementioned events .
| executive summary evergy is a public utility holding company incorporated in 2017 and headquartered in kansas city , missouri . evergy operates primarily through the following wholly-owned direct subsidiaries listed below . in september 2019 , these wholly-owned direct subsidiaries were rebranded and renamed under the evergy brand name . evergy kansas central , formerly known as westar energy , inc. , is an integrated , regulated electric utility that provides electricity to customers in the state of kansas . evergy kansas central has one active wholly-owned subsidiary with significant operations , evergy kansas south , formerly known as kansas gas and electric company . evergy metro , formerly known as kansas city power & light company , is an integrated , regulated electric utility that provides electricity to customers in the states of missouri and kansas . evergy missouri west , formerly known as kcp & l greater missouri operations company , is an integrated , regulated electric utility that provides electricity to customers in the state of missouri . evergy transmission company , formerly known as gpe transmission holding company , llc , owns 13.5 % of transource with the remaining 86.5 % owned by aep transmission holding company , llc , a subsidiary of aep . transource is focused on the development of competitive electric transmission projects . evergy transmission company accounts for its investment in transource under the equity method . evergy kansas central also owns a 50 % interest in prairie wind , which is a joint venture between evergy kansas central and subsidiaries of aep and berkshire hathaway energy company . prairie wind owns a 108-mile , 345 kv double-circuit transmission line that provides transmission service in the spp . evergy kansas central accounts for its investment in prairie wind under the equity method . since the rebranding in september 2019 , evergy kansas central , evergy kansas south , evergy metro and evergy missouri west have been conducting business in their respective service territories using the name evergy .
| 5,766 |
our products enhance safety , improve productivity and reduce maintenance costs for customers , and many of our core products and services are essential in the safe and efficient operation of freight rail and passenger transit vehicles . wabtec is a global company with operations in 30 countries . in 2018 , about 67 % of the company 's revenues came from customers outside the u.s. management review and future outlook wabtec 's long-term financial goals are to generate cash flow from operations in excess of net income , maintain a strong credit profile while minimizing our overall cost of capital , increase margins through strict attention to cost controls and implementation of the wabtec excellence program , and increase revenues through a focused growth strategy , including product innovation and new technologies , global and market expansion , aftermarket products and services , and acquisitions . in addition , management evaluates the company 's current operational performance through measures such as quality and on-time delivery . the company primarily serves the worldwide freight and transit rail industries . as such , our operating results are largely dependent on the level of activity , financial condition and capital spending plans of railroads and passenger transit agencies around the world , and transportation equipment manufacturers who serve those markets . many factors influence these industries , including general economic conditions ; traffic volumes , as measured by freight carloadings and passenger ridership ; government spending on public transportation ; and investment in new technologies . in general , trends such as increasing urbanization , a focus on sustainability and environmental awareness , an aging equipment fleet , and growth in global trade are expected to drive continued investment in freight and transit rail . the company monitors a variety of factors and statistics to gauge market activity . freight rail markets around the world are driven primarily by overall economic conditions and activity , while transit markets are driven primarily by government funding and passenger ridership . changes in these market drivers can cause fluctuations in demand for wabtec 's products and services . according to the 2018 bi-annual edition of a market study by unife , the association of the european rail industry , the accessible global market for railway products and services was more than $ 100 billion and was expected to grow at a compounded annual growth rate of 2.6 % through 2023. the three largest geographic markets , which represented about 80 % of the total accessible market , were europe , north america and asia pacific . unife projected above-average growth rates in north america , latin america and africa/middle east , with asia pacific and europe growing at about the industry average . unife said trends such as urbanization and increasing mobility , deregulation , investments in new technologies , energy and environmental issues , and increasing government support continue to drive investment . the largest product segments of the market were rolling stock , services and infrastructure , which represent almost 90 % of the accessible market . unife projected spending on turnkey management projects and infrastructure to grow at above-average rates . unife estimated that the global installed base of locomotives was about 114,000 units , with about 33 % in asia pacific , about 26 % in north america and about 18 % in russia-cis ( commonwealth of independent states ) . wabtec estimates that about 2,500 new locomotives were delivered worldwide in 2018 , and we expect deliveries of about 2,900 in 2019. unife estimated the global installed base of freight cars was about 5.1 million , with about 33 % in north america , about 26 % in asia pacific and about 24 % in russia-cis . wabtec estimates that about 175,000 new freight cars were delivered worldwide in 2018 , and we expect deliveries of about 174,000 in 2019. unife estimated the global installed base of passenger transit vehicles to be about 600,000 units , with about 45 % in asia pacific , about 33 % in europe and about 12 % in russia-cis . wabtec estimates that about 30,000 new passenger transit vehicles were ordered worldwide in 2018 , and we expect orders of about the same number in 2019. in europe , the majority of the rail system serves the passenger transit market , which is expected to continue growing as energy and environmental factors encourage continued investment in public mass transit . according to unife , france , germany and the united kingdom were the largest western european transit markets , representing almost two-thirds of industry spending in the european union . unife projected the accessible western european rail market to grow at about 2.3 % annually , led by investments in new rolling stock in france and germany . about 75 % of freight traffic in europe is hauled by truck , while rail accounts for about 20 % . the largest freight markets in europe are germany , poland and the united kingdom . in recent years , the european commission has adopted a series of measures designed to increase the efficiency of the european rail network by standardizing operating rules and certification requirements . unife believes that adoption of these measures should have a positive effect on ridership and investment in public transportation over time . 25 in north america , railroads carry about 40 % of intercity freight , as measured by ton-miles , which is more than any other mode of transportation . through direct ownership and operating partnerships , u.s. railroads are part of an integrated network that includes railroads in canada and mexico , forming what is regarded as the world 's most-efficient and lowest-cost freight rail service . there are more than 500 railroads operating in north america , with the largest railroads , referred to as “ class i , ” accounting for more than 90 % of the industry 's revenues . the railroads carry a wide variety of commodities and goods , including coal , metals , minerals , chemicals , grain , and petroleum . story_separator_special_tag in the merger , subject to adjustment in accordance with the merger agreement , each share of spinco common stock converted into the right to receive a number of shares of wabtec common stock based on the common stock exchange ratio set forth in the merger agreement and the share of spinco class c preferred stock was converted into the right to receive ( a ) 10,000 shares of wabtec convertible preferred stock and ( b ) a number of shares of wabtec common stock equal to 9.9 % of the fully-diluted pro forma wabtec shares . immediately prior to the merger , wabtec paid $ 10.0 million in cash to ge in exchange for all of the shares of spinco class b preferred stock . upon consummation of the merger and calculated based on wabtec 's outstanding common stock on a fully-diluted , as-converted and as-exercised basis , as of december 31 , 2018 , approximately 49.2 % of the outstanding shares of wabtec common stock would be held collectively by ge and spin-off record date holders of ge common stock ( with 9.9 % to be held by ge directly in shares of wabtec common stock and 15 % underlying the shares of wabtec convertible preferred stock to be held by ge ) and approximately 50.8 % of the outstanding shares of wabtec common stock would be held by pre-merger wabtec stockholders . following the effective time of the merger , ge will also own 15,000 shares of spinco class a preferred stock , and wabtec will hold 10,000 shares of spinco class b preferred stock . the shares of wabtec common stock and wabtec convertible preferred stock held by ge will be subject to ge 's obligations under the shareholders agreement , including , among other things , and in each case subject to certain exceptions , ( i ) restrictions on the ability to sell , transfer or otherwise divest such shares for a period of 30 days and ( ii ) an obligation to sell , transfer or otherwise divest ( a ) by no later than 120 days following the closing date of the merger , ge 's ( and its affiliates ' ) ownership of wabtec common stock and or wabtec convertible preferred stock so that ge ( together with its affiliates ) beneficially owns not less than 14.9 % and not more than 19.9 % of the number of shares of wabtec common stock that were outstanding immediately after the closing of the merger , ( b ) by no later than one year following the closing date of the merger , ge 's ( and its affiliates ' ) ownership of wabtec common stock and or wabtec convertible preferred stock so that ge ( together with its affiliates ) beneficially owns not more than 18.5 % of the number of shares of wabtec common stock that were outstanding immediately after the closing of the merger , in each case of clauses ( a ) and ( b ) treating the wabtec convertible preferred stock as the wabtec common stock into which it is convertible both for purposes of determining the number of shares of wabtec common stock owned and for purposes of determining the number of shares of wabtec common stock outstanding and ( c ) by no later than the third anniversary of the closing date of the merger , all of the subject shares that ge ( together with its affiliates ) beneficially owns , and ( iii ) an obligation to vote all of such shares of wabtec common stock in the proportion required under the shareholders agreement . the estimated total value of the consideration to be paid by wabtec in the transactions was subject to the market price of shares of wabtec common stock at the date of closing . using wabtec 's closing stock price on the nyse as of february 22 , 2019 , the total value of the consideration for the transactions was approximately $ 10.2 billion , including the direct sale purchase price , contingent consideration , assumed debt and net of cash acquired . on september 14 , 2018 , wabtec completed a public offering and sale of ( i ) $ 500 million aggregate principal amount of floating rate senior notes , ( ii ) $ 750 million aggregate principal amount of 2024 senior notes and ( iii ) $ 1.25 billion aggregate principal amount of 2028 senior notes . the company used the net proceeds from the offering and sale of these notes combined with the proceeds from a $ 400 million delayed draw term loan that was entered into on june 8 , 2018 to finance the $ 2.875 billion direct sale . wabtec used a portion of the proceeds from the september 14 , 2018 notes to pay debt associated with its revolving credit facility . the remaining proceeds are classified as restricted cash on the consolidated balance sheet , as the company used these cash amounts to finance the direct sale . refer to footnote 10 for further information regarding debt . after the merger , spinco , which is wabtec 's wholly owned subsidiary ( except with respect to shares of spinco class a preferred stock held by ge ) , holds the spinco business and direct sale purchaser , which also is wabtec 's wholly owned subsidiary , holds the assets purchased and the liabilities assumed in connection with the direct sale . together , spinco and direct sale purchaser own and operate the post-transaction ge transportation . all shares of the company 's common stock , including those issued in the merger , are listed on the nyse under the company 's current trading symbol “ wab. ” on the date of the distribution , ge or its subsidiaries and spinco or the spinco transferred subsidiaries entered into additional agreements relating to , among other things , intellectual property , employee matters , tax matters , research and development and transition services .
| results of operations the following table shows our consolidated statements of operations for the years indicated . replace_table_token_4_th 2018 compared to 2017 the following table summarizes the results of operations for the period : replace_table_token_5_th the following table shows the major components of the change in sales in 2018 from 2017 : replace_table_token_6_th net sales increased by $ 481.8 million to $ 4,363.5 million in 2018 from $ 3,881.8 million in 2017 . the increase is primarily due to an organic increase of $ 158.9 million for specialty products and electronics from higher demand for freight and transit original equipment rail products and train control and signaling products and services and a $ 126.2 million increase for brake products due to increased demand for original equipment brakes from freight and transit customers . additionally , sales from acquisitions increased sales by $ 134.7 million , and favorable foreign exchange increased sales $ 62.3 million . 29 freight segment sales increased by $ 167.7 million , or 12.0 % , mostly from an organic increase of $ 85.1 million for specialty products and electronics due to higher demand for freight original equipment rail products and train control and signaling products and services . additionally , other products sales increased $ 33.2 million from increased spare parts demand resulting from an increase in rail traffic . acquisitions increased sales by $ 50.9 million . transit segment sales increased by $ 314.1 million , or 12.6 % , primarily due to a $ 104.6 million increase for brake products from higher demand for original equipment brakes , $ 83.8 million from sales related to acquisitions , and $ 73.8 million for specialty products and electronics from higher demand for train control and signaling products and services . favorable foreign exchange increased sales by $ 63.5 million .
| 5,767 |
the expected present value technique used to calculate the fair value of aro liabilities story_separator_special_tag general mge energy is an investor-owned public utility holding company operating through subsidiaries in five business segments : regulated electric utility operations , conducted through mge , regulated gas utility operations , conducted through mge , nonregulated energy operations , conducted through mge power and its subsidiaries , transmission investments , representing our equity investment in atc and atc holdco , and all other , which includes corporate operations and services . our principal subsidiary is mge , which generates and distributes electric energy , distributes natural gas , and represents a majority portion of our assets , liabilities , revenues , and expenses . mge generates and distributes electricity to approximately 155,000 customers in dane county , wisconsin , including the city of madison , and purchases and distributes natural gas to approximately 163,000 customers in the wisconsin counties of columbia , crawford , dane , iowa , juneau , monroe , and vernon . our nonregulated energy operations own interests in electric generating capacity that is leased to mge . the ownership/leasing structure was adopted under applicable state regulatory guidelines for mge 's participation in these generation facilities , consisting principally of a stable return on the equity investment in the new generation facilities over the term of the related leases . the nonregulated energy operations include an ownership interest in two coal-fired generating units in oak creek , wisconsin and a partial ownership of a cogeneration project on the uw-madison campus . a third party operates the units in oak creek , and mge operates the cogeneration project . due to the nature of mge 's participation in these facilities , the results of mge energy 's nonregulated operations are also consolidated into mge 's consolidated financial position and results of operations under applicable accounting standards . we have not included a discussion of results of operations and changes in financial position for the year ended december 31 , 2018 , as compared to the year ended december 31 , 2017. that discussion can be found in item 7. management 's discussion and analysis of financial condition and results of operations in our annual report on form 10-k for the year ended december 31 , 2018 , which was filed with the sec on february 22 , 2019. executive overview our primary focus today and for the foreseeable future is our core utility customers at mge as well as creating long-term value for our shareholders . mge continues to face the challenge of providing its customers with reliable power at competitive prices . mge works on meeting this challenge by investing in more efficient generation projects , including renewable energy sources . mge continues to examine and pursue opportunities to reduce the proportion that coal generation represents in its generation mix , including a reduction in its ownership of columbia and its growing ownership of renewable generation sources . mge will continue to focus on growing earnings while controlling operating and fuel costs . mge 's goal is to provide safe and efficient operations in addition to providing customer value . we believe it is critical to maintain a strong credit standing consistent with financial strength in mge as well as the parent company in order to accomplish these goals . we earn revenue and generate cash from operations by providing electric and natural gas utility services , including electric power generation and electric power and gas distribution . the earnings and cash flows from the utility business are sensitive to various external factors , including : weather , and its impact on customer sales , economic conditions , including current business activity and employment and their impact on customer demand , regulation and regulatory issues , and their impact on the timing and recovery of costs , energy commodity prices , including natural gas prices , equity price risk pertaining to pension related assets , 29 credit market conditions , including interest rates and our debt credit rating , environmental laws and regulations , including adopted and pending environmental rule changes , and other factors listed in item 1a . risk factors of this report . for the year ended december 31 , 2019 , mge energy 's earnings were $ 86.9 million or $ 2.51 per share compared to $ 84.2 million or $ 2.43 per share for the same period in the prior year . mge 's earnings for the year ended december 31 , 2019 , were $ 58.4 million compared to $ 56.5 million for the same period in the prior year . mge energy 's net income was derived from our business segments as follows : replace_table_token_8_th our net income during 2019 compared to 2018 primarily reflects the effects of the following factors : electric utility an increase in owned generation assets included in rate base was the primary contributor to increased earnings for 2019 as a result of the completion of the saratoga wind farm . gas utility for 2019 , gas operating income increased primarily related to an increase in gas retail sales from an increase in retail customers and higher customer demand resulting from colder weather experienced compared to the same period in the prior year . heating degree days ( a measure for determining the impact of weather during the heating season ) increased by 1.4 % compared to 2018. during 2019 , the following events occurred : 2019/2020 rate change settlement : in december 2018 , the pscw approved a settlement agreement between mge and intervening parties in the then pending rate case . the settlement decreased electric rates by 2.24 % , or $ 9.2 million , in 2019. mge will maintain this rate level for 2020 , with the exception that mge 's electric rates will be adjusted by the 2020 fuel cost plan . the decrease in electric rates reflects the ongoing impacts of the tax act . story_separator_special_tag million in september 2019. there was no change to the refund order from the amount mge deferred as of december 31 , 2018. debt issuance : mge issued $ 50 million of long-term unsecured debt in november 2019. the proceeds of this debt financing were used to assist with the financing of additional capital expenditures , including two creeks and badger hollow i , maturing short-term debt , and other corporate obligations . the covenants of this debt issue are substantially consistent with mge 's existing unsecured long-term debt . see footnote 14 of notes to consolidated financial statements in this report for more information regarding long-term debt . during 2020 , several items may affect us , including : tax reform : pursuant to the tax act , deferred income tax balances as of december 31 , 2017 , were remeasured to reflect the decrease in corporate tax rate . approximately $ 131 million of regulatory liability was recorded given 31 that changes in income taxes are generally passed through in customer rates for the regulated utility . the amount and timing of the cash impacts will depend on the period over which certain income tax benefits are provided to customers . approximately $ 117 million of the regulatory liability is being returned to customers using a normalization method of accounting . the return of the remaining portion will be determined by the pscw in mge 's next rate case . atc return on equity : several parties have filed complaints with the ferc seeking to reduce the roe used by miso transmission owners , including atc . any change to atc 's roe could result in lower equity earnings and distributions from atc in the future . we derived approximately 8.0 % of our net income for the year ended december 31 , 2019 , from our investment in atc . see `` other matters '' below for additional information concerning atc . environmental initiatives : there are proposed legislative rules and initiatives involving matters related to air emissions , water effluent , hazardous materials , and greenhouse gases , all of which affect generation plant capital expenditures and operating costs as well as future operational planning . at present , it is unclear how the changes in the presidential , congressional , and epa administrations may affect existing , pending or new legislative or rulemaking proposals or regulatory initiatives . such legislation and rulemaking could significantly affect the costs of owning and operating fossil-fueled generating plants , such as columbia and the elm road units , from which we derive approximately 43 % of our electric generating capacity as of december 31 , 2019. we would expect to seek and receive recovery of any such costs in rates ; however , it is difficult to estimate the amount of such costs due to the uncertainty as to the timing and form of the legislation and rules , and the scope and time of the recovery of costs in rates , which may lag the incurrence of those costs . epa 's affordable clean energy ( ace ) rule : in july 2019 , the epa published a final ace rule to reduce greenhouse gas emissions from existing coal-fired egus . the ace rule directs states to submit plans to the epa for approval that implement standards of performance ( called best system of emissions reductions , or bser ) for individual coal-fired egus over 25 mw . the ace defines bser as on-site “ inside the fenceline , ” heat-rate efficiency improvements . under the ace rule , states such as wisconsin have the primary role in developing standards of performance that result from the application of bser . the ace rule will apply to columbia and the elm road units . egus compliance with the ace rule may not be required until 2024 or later . until the state of wisconsin develops a plan that is accepted by the epa , mge will not be able to determine the final impact of the rule . additionally , the ace rule is subject to a legal challenge pending in the united states district court of the district of columbia . mge will continue to evaluate the rule development within the state and monitor ongoing and potential legal proceedings associated with the rule . columbia : mge has reduced its obligation to pay certain capital expenditures ( other than scr-related expenditures ) at columbia in exchange for proportional reductions in mge 's ownership in columbia . by june 2020 , mge 's ownership in columbia is forecasted to be approximately 19 % , a decrease of 3 % from the 22 % ownership interest held by mge on january 1 , 2016 , and a decrease of 0.1 % from the ownership percentage held as of december 31 , 2019. future generation - riverside : in 2016 , mge entered into an agreement with wpl under which mge may acquire up to 50 mw of capacity in a gas-fired generating plant being constructed by wpl at its riverside energy center in beloit , wisconsin , during the five-year period following the in-service date of the plant . the plant is expected to be completed by early 2020. mge has not yet determined whether it will exercise its option in the riverside plant . a determination will be made based on a variety of factors during the option period . future generation – utility solar : in february 2020 , the pscw issued a final decision regarding the badger hollow ii solar project . the project , jointly owned with wepco , consists of 150mw of solar generation assets to be located in southwestern wisconsin . mge 's ownership share is expected to be 50 mw . construction of the project is expected to be completed by the end of 2021. mge 's share of the construction cost is expected to be approximately $ 65 million . the following discussion is based on the business segments as discussed in footnote 22 of the notes to consolidated financial statements in this report .
| results of operations results of operations include financial information prepared in accordance with gaap and electric and gas margins , both which are non-gaap measures . electric margin ( electric revenues less fuel for electric generation and purchase power costs ) and gas margin ( gas revenues less cost of gas sold ) are non-gaap measures because they exclude items used in the calculation of the most comparable gaap measure , operating income . these exclusions consist of nonregulated operating revenues , other operations and maintenance expense , depreciation and amortization expense , and other general taxes expense . thus , electric and gas margin are not measures determined in accordance with gaap . management believes that electric and gas margins provide a meaningful basis for evaluating and managing utility operations since fuel for electric generation , purchase power costs , and cost of gas sold are passed through without mark-up to customers in current rates . as a result , management uses electric and gas margins internally when assessing the operating performance of our segments . the presentation of utility electric and gas margins herein is intended to provide supplemental information for investors regarding operating performance . these electric and gas margins may not be comparable to how other entities calculate utility electric and gas margin or similar measures . furthermore , these measures are not intended to replace operating income as determined in accordance with gaap as an indicator of operating performance . year ended december 31 , 2019 , versus the year ended december 31 , 2018 replace_table_token_9_th operating income for 2019 compared to 2018 primarily reflects the effects of the following factors : electric revenues and fuel costs o a $ 7.4 million increase in electric revenue reflecting the comparison to 2018 electric revenues that were reduced to account for an over-collection of costs in customer rates in 2018. see revenue subject to refund discussed in the `` electric margin '' section below . o a $ 4.2
| 5,768 |
11 forward-looking statements all statement , trend analyses and other information contained in this report and elsewhere ( such as in filings by us with the securities and exchange commission , press releases , presentations by us or our management or oral statements ) relative to markets for our products and trends in our operations or financial results , as well as other statements including words such as “ anticipate , ” “ believe , ” “ plan , ” “ estimate , ” “ expect , ” “ intend , ” and other similar expressions , constitute forward-looking statements under the private securities litigation reform act of 1995. these forward-looking statements are subject to known and unknown risks , uncertainties and other factors which may cause actual results to be materially different from those contemplated by the forward-looking statements . such factors include , among other things : ( i ) general economic conditions and other factors , including prevailing interest rate levels and stock and credit market performance which may affect ( among other things ) our ability to sell our products , our ability to access capital resources and the costs associated therewith , the market value of our investments and the lapse rate and profitability of policies ; ( ii ) world conflict , including but not limited to the war in iraq , which may affect consumers spending trends and priorities ( iii ) customer response to new products and marketing initiatives : ( iv ) mortality , morbidity and other factors which may affect the profitability of our products ( v ) changes in the federal income tax laws and regulations which may affect the relative income tax advantages of our products ( vi ) regulatory changes or actions , including those relating to regulation of financial services affecting ( among other things ) bank sales and underwriting of insurance products and regulation of the sale , underwriting and pricing of products ( vii ) the risk factors or uncertainties listed from time to time in our filings with the securities and exchange management believes the company 's current critical accounting policies are comprised of the following : reserves for unpaid policy claims are a sensitive accounting estimate unique to the insurance industry . management uses an independent actuary to formulate this estimate . differences in the estimates and actual results may result in revised claims expense which is recognized in the period in which the difference is determined . see note 11 to our financial statements for the effect on the year 2005. claim reserve methodology the company , through its wholly owned subsidiary , bnlac , has a single line of business which is life and accident and health insurance . the company 's sic code is 6311 which is a standard industrial classification used by the united states securities and exchange commission ( “ sec ” ) . using such sic code , an interested person can research the internet website of the sec , www.sec.gov , to find and review business and financial information of other companies which are in the same line of business . the following is a summary description of the company 's methodology for estimating its reserve liabilities for its insurance policies . the company and management believe that this discussion constitutes forward looking statements and , therefore , this discussion is given full safe-harbor . it should be understood that there is no assurance that anything which the company and its management have done in the past regarding its claim reserve methodology will be done in the future . the company and its management are afforded full and complete authority and judgment in determining and implementing its claim reserve methodology which includes any and all changes which may be made from time to time . the company 's significant insurance product types are presently dental ( group and individual ) , life ( group and individual ) , and annuities . in the life and accident and health insurance industry , the liabilities for claims and the related expensing of those liabilities are evaluated and recorded using estimates of claim reserves . the company estimates its claim reserves using the general methodology described herein . 12 the liability for claim reserves generally consists of the following : ( 1 ) due and unpaid claims , ( 2 ) claims in the course of settlement , and ( 3 ) claims incurred but unreported . the company records the actual liability for all claims that are due but unpaid , item ( 1 ) . but , with regard to the last items ( 2 ) and ( 3 ) , the company must make estimates . the estimates are based on actuarial principles . the company 's independent consulting actuary works with company financial personnel and management in determining the estimates and the independent consulting actuary annually gives the company a certification as to the amounts of the reserves . the company calculates and maintains claim reserves for the estimated future payments on claims incurred before the statement date . these calculations are based on actuarial principles in accordance with industry standards and applicable gaap requirements . development of such reserves is done with company financial personnel and management working with the company 's independent consulting actuary . these reserves involve many considerations including but not limited to economic and social conditions , inflation , and healthcare costs . the claim reserves developed include significant estimates and assumptions based on management 's review of historical experience in consultation with its independent actuary . the extent to which future payments match the claims reserves is dependent on how well actual future experience matches the assumptions management makes regarding the future experience . the company 's reserves are estimates that require significant judgment and , therefore , are inherently uncertain . story_separator_special_tag notes 7 and 11 are limited to the most recent fiscal year being reported , december 31 , 2005 , and the previous fiscal years of 2004 and 2003. life insurance - group and individual - and annuities the company reinsures a substantial portion of its life insurance and the associated risks and liabilities . see item 1 , business , reinsurance ; and note 8 , reinsurance , to the company 's financial statements . the company determines its life insurance claim reserves by recording three items : ( 1 ) actual claims due and unpaid ; ( 2 ) the claims received during the 30 day period following year end ( this is done by taking an inventory of claims received during the thirty day period ) ; and ( 3 ) estimating a liability amount for claims which have been incurred but not yet reported by the end of the thirty day period . the company 's annuity policies are simple deferred annuities . the company does not explicitly establish a claim reserve for its annuities since the liability is already held in the annuity deposit liability . trends in completion factors , loss ratio and claims per insured per month claim reserves for the group dental line are the most significant part of the company 's claim liability . as stated above , the company uses the completion factor method for calculating the liability . two main assumptions are made in this approach . first , for months the claims are incurred where the completion factor is credible , the company uses that completion factor to calculate the liability associated with that month the claim occurred . second , for the most recent months before the company 's financial statement date where it is determined that the completion factors are not fully credible , the company reviews loss ratios and claims per insured per month to determine the reserve for those months . the discussion in this paragraph relates to the months where the completion factors are deemed to be fully credible which are typically the months prior to november and december . the completion factors have been relatively stable in the recent past . in the future , there could be changes in the trend of completion factors . the company and its independent consulting actuary review the trends in the completion factors and when necessary make judgments as to the single point estimate value for these items . such estimates are based on observable trends and would also reflect any known major changes . professional judgments are made based on the experience of the actuary and company 's financial personnel and management . to observe the possible sensitivity of assuming 100 % reliance on completion factors for claims incurred during the months for which completion factors are believed to be fully credible , if the associated claim reserves for those months had increased by 5 % , the year end december 31 , 2005 , claim reserves would have been increased by approximately $ 21,000. the discussion in this paragraph relates to the months where the completion factors are deemed to be not fully credible which are typically the months of november and december . the choice of the loss ratio assumption or claims per insured per month assumption for the most recent month of the claim was incurred may also have an impact on the reserve estimate . these assumptions are monitored for trends . the company and its consulting actuary monitor the loss ratio and claims per insured month and override the completion factor approach for the most recent months before the company 's financial statement date where the completion factors are not fully credible , i.e . november and december . to observe the possible 14 sensitivity of assuming 100 % reliance on loss ratio or claims per insured per month factors for claims incurred during the months for which completion are believed to be not fully credible ( typically november and december of a fiscal year ) , if the loss ratio or claims per insured per month had increased by 3 % for those months ( a multiple of 1.03 ) , the associated claim reserves for those months and the year end december 31 , 2005 , claim reserve would have been increased by approximately $ 126,000. the company believes that its recorded claim liabilities are reasonable and adequate to satisfy its ultimate claims liability . the company 's recorded claim liabilities are , in accordance with industry practice , estimates of such liabilities . the reader must recognize that the completion factors , loss ratios and claims per insured per month may , and probably will , be affected by events and conditions which are or will be unknown to the company 's financial personnel or management or the company 's consulting actuary . the reader must also recognize that any trending of the completion factors , loss ratios or claims per insured per month may not be indicative of changes in the company 's financial condition . while a presentation such as described above provides some mathematical and hypothetical numerical calculations , such calculations may or may not have any relevance to the company 's future financial condition , earnings or cash flow . deferred tax asset the valuation allowance against deferred taxes is a sensitive accounting estimate . the company follows statement of financial accounting standards ( sfas ) no . 109 , “ accounting for income taxes , ” which prescribes the liability method of accounting for deferred income taxes . under the liability method , companies establish a deferred tax liability or asset for the future tax effects of temporary differences between book and tax basis of assets and liabilities .
| results of operations premium income was $ 44,303,827 in 2005 , $ 42,451,319 in 2004 and $ 40,270,571 in 2003. the 5 % increase in 2005 was due to new sales of group dental insurance and increased group and individual dental renewal premiums . the increase of 6 % in 2004 was due to new sales of group and individual dental insurance and increased group and individual dental renewal premiums from a reduction in the lapse rates on existing business . net investment income was $ 1,003,613 in 2005 , $ 975,485 in 2004 and $ 970,382 in 2003 , an increase of 3 % in 2005 , and an increase of 1 % in 2004. the increases in 2005 and 2004 were due to an increase in investment in fixed maturities and an increase in interest rates . continued profitability and stable or increased interest rates in subsequent years , will permit the company to invest its profits in fixed maturities and continue the trend of increased investment income . the company receives marketing fees from ebi per the marketing agreement mentioned above . the company received marketing fees of $ 115,233 in 2005 , $ 165,275 in 2004 and $ 146,107 in 2003. the decrease in marketing fees in 2005 is due to reduced operating income at ebi and the increase in 2004 was due to an increase in third party administrator income at ebi in 2004 . 19 bnlac markets group and individual vision insurance products that are underwritten by other insurance companies , and bnlac does not have any exposure to underwriting ( claims ) losses . the company had vision insurance income of $ 1,051,720 , $ 695,046 and $ 538,765 in 2005 , 2004 and 2003 , respectively . the vision income increased by 51 % in 2005 primarily due to the addition of voluntary plans .
| 5,769 |
by acquiring 3d-id , the company gained the rights to a portfolio of patented technology in the field of three-dimensional facial recognition and imaging including 3d facial recognition products for access control , law enforcement and travel and immigration . 3d-id was an early stage company engaged in the design , research and development , integration , analysis , modeling , system networking , sales and support of intelligent surveillance , three-dimensional facial recognition and three-dimensional imaging devices and systems primarily for identification and access control in the security industries . since the company 's acquisition of 3d-id was a transaction between entities under common control in accordance with accounting standards codification ( “ asc ” ) 805 , “ business combinations ” , nxt-id recognized the net assets of 3d-id at their carrying amounts in the accounts of nxt-id on the date that 3d-id was organized , february 14 , 2011. we are an early stage technology company that is focused on developing and marketing products , solutions , and services for organizations that have a need for biometric secure access control . we have three distinct lines of business that we believe will form our company : law enforcement ; m-commerce ; and biometric access control applications . our initial efforts are focused on our secure products offering for law enforcement , the department of defense , and homeland security through our 3d facematch® biometric identification systems . in parallel we are developing a secure biometric electronic smart wallet for the growing m-commerce market . we believe that this constitutes unique technology because it takes a very different approach relative to the current offerings : instead of replacing the wallet through a smartphone , our aim is to improve it . we believe that our wocket will reduce the number of cards carried in a consumer 's wallet while supporting virtually every payment method currently available at point of sale at retailers around the world , including magnetic stripe , barcodes and quick response ( qr ) codes and in the near future near field communications , all within a secure biometric vault . we have also recently launched a new biometric authentication product named voicematch® . this product is a new method of recognizing both speakers and specific words they use providing innovative multi-factor recognition that is efficient enough to run on low-power devices . 20 using our biometrics technologies , we plan to address the growing m-commerce market with our innovative mobilebio ® suite of biometric solutions that secure mobile platforms . currently , most mobile devices continue to be protected simply by questions that a user asks and pin numbers . this security methodology is easily duplicated on another device and can be easily spoofed or hacked . nxt-id 's biometric security paradigm is dynamic pairing codes ( dpcs ) . dpcs are a new , proprietary method to secure users , devices , accounts , locations and servers over any communication media by sharing key identifiers , including biometric-enabled identifiers , between end-points by passing dynamic pairing codes ( random numbers ) between end-points to establish sessions and or transactions without exposing identifiers or keys . our plan also anticipates that we will use our core biometric algorithms to develop a security application that can be used for corporations ( industrial uses , such as enterprise computer networks ) , as well as individuals ( consumer uses , such as smart phones , tablets , or personal computers ) . in august 2013 , we commenced a pilot program with the palm bay , florida police department to evaluate the potential implementation of our 3d facematch® biometric facial recognition identification systems . the pilot program is expected to expand to include other law enforcement agencies connected to 3d-id 's biocloud to improve identification of previously enrolled ( booked ) individuals from multiple law enforcement agencies searching from a common 3d database . we have also hired a former law enforcement officer to assist with the marketing of these products . we were also invited and have recently demonstrated our products to the department of defense . in addition , we recently announced a three year distribution and supply agreement for the distribution of the company 's 3d facial recognition systems in india and sri lanka on an exclusive basis and in the middle east and singapore on a non-exclusive basis . to date , our operations have been funded through sales of our common stock , an initial sale of our 3d facial recognition access control and identification products , advances from an officer , a loan from connecticut innovations , inc. , a quasi-state owned venture capital fund and exercises of common stock purchase warrants . our financial statements contemplate the continuation of our business as a going concern . however , we are subject to the risks and uncertainties associated with an emerging business , as noted above we have no established source of capital , and we have incurred recurring losses from operations since inception . our independent registered public accounting firm 's report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern . 21 story_separator_special_tag text-indent : 0 '' > we have incurred net losses of $ 7,076,609 and $ 1,544,534 for the years ended december 31 , 2014 and 2013 , respectively . as of december 31 , 2014 the company had cash and a stockholders ' equity of $ 2,201,287 and $ 2,735,344 , respectively . at december 31 , 2014 , the company had working capital of $ 2,579,121. during the year ended december 31 , 2014 , the company raised net proceeds of approximately $ 5,755,055 through the issuance of common stock and warrants and $ 1,470,000 from the exercise of common stock warrants . cash used in operating activities our primary ongoing uses of operating cash relate to payments to subcontractors and vendors for research and development , salaries and related expenses and professional fees . our vendors and subcontractors generally provide us with normal trade payment terms . story_separator_special_tag june 2014 private placement from june 12 , 2014 to june 17 , 2014 , the company conducted a private offering with a group of accredited investors ( the “ june purchasers ” ) who had previously participated in the offering that occurred between december 30 , 2013 and january 13 , 2014. pursuant to a securities purchase agreement with the purchasers , the company issued to the june purchasers warrants ( the “ june warrants ” ) to purchase an aggregate of 400,000 shares ( the “ june shares ” ) of the company 's common stock at an exercise price of $ 3.00 per share . the june warrants are exercisable for a period of five ( 5 ) years from the original issue date . the exercise price for the june warrants is subject to adjustment upon certain events , such as stock splits , combinations , dividends , distributions , reclassifications , mergers or other corporate change and dilutive issuances . 24 in connection with the issuance of the june warrants , the company entered into a registration rights agreement with the june purchasers pursuant to which the company agreed to register the shares and the shares of the common stock underlying the june warrants ( the “ june registrable securities ” ) on a form s-1 registration statement ( the “ june registration statement ” ) to be filed with the sec ninety ( 90 ) days following the completion of an underwritten public offering ( the “ filing date ” ) and to cause the june registration statement to be declared effective under the securities act within ninety ( 90 ) days following the filing date ( the “ required effective date ” ) . the registration statement was not filed by the filing date or declared effective by the required effective date of december 15 , 2014. under the original terms of the arrangement , the company was required to pay partial liquidated damages to each june purchaser in the amount equal to two percent ( 2 % ) for the purchase price paid for the june warrants then owned by such june purchaser for each 30-day period for which the company is non-compliant . on january 30 , 2015 , the company received signed documentation from all of the june purchasers waiving their right to liquidated damages and terminating the registration rights agreement . august 2014 private placement on august 21 , 2014 , pursuant to a securities purchase agreement with two ( 2 ) purchasers ( the “ august purchasers ” ) who had previously participated in the offering that occurred between december 30 , 2013 and january 13 , 2014 , the company issued to the august purchasers warrants ( the “ august warrants ” ) to purchase an aggregate of 100,000 shares ( the “ august shares ” ) of the company 's common stock at an exercise price of $ 3.00 per share . the august warrants are exercisable for a period of five ( 5 ) years from the original issue date . the exercise price for the august warrants is subject to adjustment upon certain events , such as stock splits , combinations , dividends , distributions , reclassifications , mergers , or other corporate changes and dilutive issuances . in connection with the issuance of the august warrants , the company entered into a registration rights agreement with the august purchasers pursuant to which the company agreed to register the august shares and the shares of the common stock underlying the august warrants ( the “ august registrable securities ” ) on a form s-1 registration statement ( the august registration statement ” ) to be filed with the sec ninety ( 90 ) days following the filing date and to cause the august registration statement to be declared effective under the securities act by the required effective date . the august registration statement was not filed by the filing date or declared effective by the required effective date . under the original terms of the arrangement , the company was required to pay partial liquidated damages to each august purchaser in the amount equal to two percent ( 2 % ) for the purchase price paid for the august warrants then owned by such august purchaser for each 30-day period for which the company is non-compliant . on january 30 , 2015 , the company received signed documentation from all of the august purchasers waiving their right to liquidated damages and terminating the registration rights agreement . the company determined that the effect of the issuance of the 500,000 warrants was to induce the purchasers to exercise warrants previously issued to them in the offering . as a result , the company recorded inducement expense of $ 1,262,068 during the twelve months ended december 31 , 2014. september public offering on september 15 , 2014 , the company closed on an underwritten public offering of its common stock and warrants . the company offered 2,127,273 shares of common stock and warrants to purchase 2,127,273 shares of common stock , at a combined price to the public of $ 2.75 per share and related warrant . the warrants are exercisable for a period of five ( 5 ) years beginning on september 15 , 2014 at an exercisable price of $ 3.288 per share . the company received net proceeds of $ 4,954,042 from the public offering , after deducting the underwriting discount and other offering related expenses . the underwriters were northland securities , inc. , the benchmark company , llc , and newport coast securities inc. in connection with the underwritten public offering of the company 's common stock and warrants on september 15 , 2014 , the company was required to obtain a waiver and consent from the investors in the january 13 , 2014 private offering in order to conduct the public offering at a price of $ 2.75 per share and warrant .
| results of operations year ended december 31 , 2014 , compared with the year ended december 31 , 2013 . revenue . there were no revenues during the year ended december 31 , 2014 or the year ended december 31 , 2013. in may 2014 , the company started taking advance orders for the wocket . as of december 31 , 2014 , the company has received $ 138,599 in customer deposits in connection with pre-orders of its wocket . deliveries of the product are now expected to commence in the second quarter of 2015. operating expenses . operating expenses for the year ended december 31 , 2014 totaled $ 5,246,482 and consisted of research and development expenses of $ 1,417,745 , selling and marketing expenses of $ 1,396,077 and general and administrative expenses of $ 2,432,660. the research and development expenses related primarily to salaries and consulting services of $ 962,102 , as well as materials including prototypes of $ 329,304 necessary for the design , development and manufacturing of the company 's biometric wallet . selling and marketing expenses consisted of $ 1,396,077 primarily for marketing consultants of $ 664,079 and advertising and promotion for the pre-orders for the wocket of $ 602,492. general and administrative expenses for the period consisted of salaries of $ 544,483 , legal , audit and accounting fees of $ 473,334 and consulting fees for public relations of $ 527,458. also included is $ 283,150 in non-cash stock compensation to employees and board members .
| 5,770 |
3.1 ( 4 ) amended and restated certificate of incorporation . 3.2 ( 5 ) certificate of amendment of amended and restated certificate of incorporation . 3.3 ( 6 ) certificate of amendment of amended and restated certificate of incorporation 3.4 ( 7 ) amended and restated bylaws . 10.1 * ( 8 ) amended and restated 1996 incentive and nonqualified stock option plan . 10.2 * ( 9 ) form of cardo medical , llc ( nka tiger x medical , llc ) nonstatutory option agreement . 10.3 ( 9 ) form of indemnification agreement for officers and directors . 10.4 ( 10 ) form of registration rights agreement , dated october 27 , 2009 , by and among cardo medical , inc. ( nka tiger x medical , inc. ) and the several purchasers signatory thereto . 34 10.5 * ( 11 ) cardo medical , inc. ( nka tiger x medical , inc. ) 2010 equity incentive plan 10.6 ( 12 ) secured promissory note by the company in favor of jon brooks , dated november 2 , 2010 . 10.7 ( 12 ) security agreement between the company and jon brooks , dated november 2 , 2010 . 10.8 ( 12 ) secured promissory note by the company in favor of earl brien , dated november 4 , 2010 . 10.9 ( 12 ) security agreement between the company and earl brien , dated november 4 , 2010 . 10.10 ( 2 ) secured promissory note by cardo medical , inc. ( nka tiger x medical , inc. ) and cardo medical , llc ( nka tiger x medical , llc ) in favor of arthrex , inc. dated march 18 , 2011 . 21.1 ( 9 ) subsidiaries of tiger x medical , inc. 31.1 # certification of chief executive officer 31.2 # certification of chief financial officer 32.1 # certification of chief executive officer pursuant to rule 13a-14 ( b ) and section 906 of the sarbanes-oxley act of 2002 ( subsections ( a ) and ( b ) of section 1350 , title 18 , united states code ) 32.2 # certification of chief financial officer pursuant to rule 13a-14 ( b ) and section 906 of the sarbanes-oxley act of 2002 ( subsections ( a ) and ( b ) of section 1350 , title 18 , united states code ) 101.ins # xbrl instance document 101.sch # xbrl taxonomy extension schema 101.cal # xbrl taxonomy extension calculation linkbase 101.def # xbrl taxonomy extension definition linkbase 101.lab # xbrl taxonomy extension label linkbase 101.pre # xbrl taxonomy extension presentation linkbase # filed herewith . * management compensation plan or agreement . ( 1 ) previously filed as an exhibit to the current report on form 8-k filed by us on january 27 , 2011 . ( 2 ) previously filed as an exhibit to the current report on form 8-k filed by us on march 24 , 2011 . ( 3 ) previously filed as an exhibit to the current report on form 8-k filed by us on april 8 , 2011 . ( 4 ) previously filed as an exhibit to the current report on form 8-k filed by us on march 18 , 2008 . ( 5 ) previously filed as an annex to the information statement on schedule 14c filed by us on september 30 , 2008 . 35 ( 6 ) previously filed as an exhibit to the current report on form 8-k filed by us on june 16 , 2011 . ( 7 ) previously filed as an exhibit to the current report on form 8-k filed by us on february 1 , 2008 . ( 8 ) previously filed as an exhibit to the annual report on form 10-ksb filed by us on september 28 , 1998 . ( 9 ) previously filed as an exhibit to the current report on form 8-k filed by us on september 9 , 2008 . ( 10 ) previously filed as an exhibit to the current report on form 8-k filed by us on october 29 , 2009 . ( 11 ) previously filed as an exhibit to the quarterly report on form 10-q filed by us on august 12 , 2010 . ( 12 ) previously filed as an exhibit to the current report on form 8-k filed by us on november 8 , 2010 . 36 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities and exchange act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized . tiger x medical , inc. dated : march 24 , 2015 andrew a. brooks andrew a. brooks chief executive officer pursuant to the requirements of the securities and 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 . signature title date andrew a. brooks chairman of the board and chief executive officer march 24 , 2015 andrew a. brooks and interim chief financial officer ( principal executive officer ) ( principal financial and accounting officer ) jonathan brooks director march 24 , 2015 jonathan brooks stephen liu director march 24 , 2015 stephen liu thomas h. morgan director march 24 , 2015 thomas h. morgan ronald n. richards director march 24 , 2015 ronald n. richards steven d. rubin director march 24 , 2015 steven d. rubin subbarao uppaluri director march 24 , 2015 subbarao uppaluri 37 story_separator_special_tag the discussion and analysis of our financial condition and results of operations are based on our financial statements , which we have prepared in accordance with accounting principles generally accepted in the united states of america . the preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and story_separator_special_tag 3.1 ( 4 ) amended and restated certificate of incorporation . 3.2 ( 5 ) certificate of amendment of amended and restated certificate of incorporation . 3.3 ( 6 ) certificate of amendment of amended and restated certificate of incorporation 3.4 ( 7 ) amended and restated bylaws . 10.1 * ( 8 ) amended and restated 1996 incentive and nonqualified stock option plan . 10.2 * ( 9 ) form of cardo medical , llc ( nka tiger x medical , llc ) nonstatutory option agreement . 10.3 ( 9 ) form of indemnification agreement for officers and directors . 10.4 ( 10 ) form of registration rights agreement , dated october 27 , 2009 , by and among cardo medical , inc. ( nka tiger x medical , inc. ) and the several purchasers signatory thereto . 34 10.5 * ( 11 ) cardo medical , inc. ( nka tiger x medical , inc. ) 2010 equity incentive plan 10.6 ( 12 ) secured promissory note by the company in favor of jon brooks , dated november 2 , 2010 . 10.7 ( 12 ) security agreement between the company and jon brooks , dated november 2 , 2010 . 10.8 ( 12 ) secured promissory note by the company in favor of earl brien , dated november 4 , 2010 . 10.9 ( 12 ) security agreement between the company and earl brien , dated november 4 , 2010 . 10.10 ( 2 ) secured promissory note by cardo medical , inc. ( nka tiger x medical , inc. ) and cardo medical , llc ( nka tiger x medical , llc ) in favor of arthrex , inc. dated march 18 , 2011 . 21.1 ( 9 ) subsidiaries of tiger x medical , inc. 31.1 # certification of chief executive officer 31.2 # certification of chief financial officer 32.1 # certification of chief executive officer pursuant to rule 13a-14 ( b ) and section 906 of the sarbanes-oxley act of 2002 ( subsections ( a ) and ( b ) of section 1350 , title 18 , united states code ) 32.2 # certification of chief financial officer pursuant to rule 13a-14 ( b ) and section 906 of the sarbanes-oxley act of 2002 ( subsections ( a ) and ( b ) of section 1350 , title 18 , united states code ) 101.ins # xbrl instance document 101.sch # xbrl taxonomy extension schema 101.cal # xbrl taxonomy extension calculation linkbase 101.def # xbrl taxonomy extension definition linkbase 101.lab # xbrl taxonomy extension label linkbase 101.pre # xbrl taxonomy extension presentation linkbase # filed herewith . * management compensation plan or agreement . ( 1 ) previously filed as an exhibit to the current report on form 8-k filed by us on january 27 , 2011 . ( 2 ) previously filed as an exhibit to the current report on form 8-k filed by us on march 24 , 2011 . ( 3 ) previously filed as an exhibit to the current report on form 8-k filed by us on april 8 , 2011 . ( 4 ) previously filed as an exhibit to the current report on form 8-k filed by us on march 18 , 2008 . ( 5 ) previously filed as an annex to the information statement on schedule 14c filed by us on september 30 , 2008 . 35 ( 6 ) previously filed as an exhibit to the current report on form 8-k filed by us on june 16 , 2011 . ( 7 ) previously filed as an exhibit to the current report on form 8-k filed by us on february 1 , 2008 . ( 8 ) previously filed as an exhibit to the annual report on form 10-ksb filed by us on september 28 , 1998 . ( 9 ) previously filed as an exhibit to the current report on form 8-k filed by us on september 9 , 2008 . ( 10 ) previously filed as an exhibit to the current report on form 8-k filed by us on october 29 , 2009 . ( 11 ) previously filed as an exhibit to the quarterly report on form 10-q filed by us on august 12 , 2010 . ( 12 ) previously filed as an exhibit to the current report on form 8-k filed by us on november 8 , 2010 . 36 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities and exchange act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized . tiger x medical , inc. dated : march 24 , 2015 andrew a. brooks andrew a. brooks chief executive officer pursuant to the requirements of the securities and 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 . signature title date andrew a. brooks chairman of the board and chief executive officer march 24 , 2015 andrew a. brooks and interim chief financial officer ( principal executive officer ) ( principal financial and accounting officer ) jonathan brooks director march 24 , 2015 jonathan brooks stephen liu director march 24 , 2015 stephen liu thomas h. morgan director march 24 , 2015 thomas h. morgan ronald n. richards director march 24 , 2015 ronald n. richards steven d. rubin director march 24 , 2015 steven d. rubin subbarao uppaluri director march 24 , 2015 subbarao uppaluri 37 story_separator_special_tag the discussion and analysis of our financial condition and results of operations are based on our financial statements , which we have prepared in accordance with accounting principles generally accepted in the united states of america . the preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and
| overview tiger x medical , inc. ( `` tiger x '' or the `` company '' ) , formerly known as cardo medical , inc. , previously operated as an orthopedic medical device company specializing in designing , developing and marketing high performance reconstructive joint devices and spinal surgical devices . as discussed below , in 2011 we entered into an asset purchase agreement to sell substantially all of our assets in the reconstructive division to arthrex , inc. ( `` arthrex '' ) . additionally , we completed the sale of substantially all of the assets in the spine division in 2011. our continuing operations include the collection and management of our royalty income earned in connection with the asset purchase agreement with arthrex , as well as continuing to promote our former products sold to arthrex through participation in mobile teaching labs , seminars and live surgery and seek a joint venture partner or buyer for the remaining intellectual property owned by the company . the company will also be evaluating future investment opportunities and uses for its cash . we are headquartered in los angeles , california . our common stock is quoted on the national association of securities dealers , inc. 's , over-the-counter bulletin board , or the otc bulletin board with a trading symbol of cdom.ob . critical accounting policies and estimates our significant accounting policies are more fully described in the notes to our consolidated financial statements . those material accounting estimates that we believe are the most critical to an investor 's understanding of our financial results and condition are discussed immediately below and are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates .
| 5,771 |
the applicable margin as of the ipo varied between ( i ) in the case of libor-based loans , 2.35 % and 3.00 % and ( ii ) in the case of base rate loans , 1.35 % 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 included in this annual report on form 10-k. in addition , the following discussion contains forward-looking statements , such as statements regarding our expectation for future performance , liquidity and capital resources , that involve risks , uncertainties and assumptions that could cause actual results to differ materially from our expectations . our actual results may differ materially from those contained in or implied by any forward-looking statements . factors that could cause such differences include those identified below and those described under item 1a of this annual report on form 10-k. management 's overview we are the world 's largest owner and operator of temperature-controlled warehouses . we are organized as a self-administered and self-managed reit with proven operating , development and acquisition expertise . as of december 31 , 2018 , we operated a global network of 155 temperature-controlled warehouses encompassing 918.7 cubic feet , with 137 warehouses in the united states , six warehouses in australia , seven warehouses in new zealand , two warehouses in argentina and three warehouses in canada . we also own and operate a limestone quarry through a separate business segment . we view and manage our business through three primary business segments : warehouse , third–party managed and transportation . in addition , we hold a minority interest in the china jv , which owns or operates 12 temperature-controlled warehouses located in china . components of our results of operations warehouse . our primary source of revenues consists of rent , storage and warehouse services fees . our rent , storage and warehouse services revenues are the key drivers of our financial performance . rent and storage revenues consist of recurring , periodic charges related to the storage of frozen and perishable food and other products in our warehouses by our customers . we also provide these customers with a wide array of handling and other warehouse services , such as ( 1 ) receipt , handling and placement of products into our warehouses for storage and preservation , ( 2 ) retrieval of products from storage upon customer request , ( 3 ) blast freezing , which involves the rapid freezing of non-frozen products , including individual quick freezing for agricultural produce and seafood , ( 4 ) case-picking , which involves selecting product cases to build customized pallets , ( 5 ) kitting and repackaging , which involves assembling custom product packages for delivery to retailers and consumers , and labeling services , ( 6 ) order assembly and load consolidation , ( 7 ) exporting and importing support services , ( 8 ) container handling , ( 9 ) cross-docking , which involves transferring inbound products to outbound trucks utilizing our warehouse docks without storing them in our warehouses , and ( 10 ) government-approved temperature-controlled storage and inspection services . we refer to these handling and other warehouse services as our value-added services . cost of operations for our warehouse segment consists of power , other facilities costs , labor , and other costs . labor , the largest component of the cost of operations from our warehouse segment , consists primarily of employee wages , benefits , and workers ' compensation . trends in our labor expense are influenced by changes in headcount and compensation levels , changes in customer requirements , workforce productivity , variability in costs associated with medical insurance and the impact of workplace safety programs , inclusive of the number and severity of workers ' compensation claims . our second largest cost of operations from our warehouse segment is power utilized in the operation of our temperature-controlled warehouses . as a result , trends in the price for power in the regions where we operate may have a significant effect on our financial results . we may from time to time hedge our exposure to changes in power prices through fixed rate agreements or , to the extent possible and appropriate , through rate escalations or power surcharge provisions within our customer contracts . other facilities 61 costs include utilities other than power , property insurance , property taxes , sanitation , repairs and maintenance on real estate , rent under operating leases , where applicable , and other related facilities costs . other services costs include equipment costs , warehouse consumables ( e.g. , shrink-wrap and uniforms ) , warehouse administration and other related services costs . third-party managed . we receive a reimbursement of substantially all expenses for warehouses that we manage on behalf of third-party owners , with all reimbursements recognized as revenues under the relevant accounting guidance . we also earn management fees , incentive fees upon achieving negotiated performance and cost-savings results , or an applicable mark-up on costs . cost of operations for our third-party managed segment is reimbursed on a pass-through basis ( typically within two weeks ) . transportation . we charge transportation fees , including fuel surcharges , to our customers for whom we arrange the transportation of their products . cost of operations for our transportation segment consists primarily of third-party carrier charges , which are impacted by factors affecting those carriers . other . in addition to our primary business segments , we own and operate a limestone quarry in carthage , missouri . revenues are generated from the sale of limestone mined at our quarry . cost of operations for our quarry consists primarily of labor , equipment , fuel and explosives . we have referred to this segment as quarry within our management 's discussion and analysis . other consolidated operating expenses . we also incur depreciation , depletion and amortization expenses and corporate-level selling , general and administrative expenses . story_separator_special_tag of the revenues received from this customer , $ 196.3 million , $ 183.1 million and $ 196.1 million represented reimbursements for certain expenses we incurred during the years ended december 31 , 2018 , 2017 and 2016 , respectively , that were offset by matching expenses included in our third-party managed cost of operations . occupancy of our warehouses occupancy in our warehouses is an important driver of our financial results . physical occupancy of an individual warehouse is impacted by a number of factors , including the type of warehouse ( i.e . , distribution , public , production advantaged or leased facility ) , specific customer needs in the markets served by the warehouse , timing of harvests or protein production for customers of the warehouse , the existence of leased but unoccupied pallets and the adverse effect of weather or market conditions on the customers of the warehouse . on a portfolio-wide basis , physical occupancy rates and warehouse revenues generally peak between mid-september and early december in connection with the holiday season and the peak harvest season in the united states . physical occupancy rates and warehouse revenues on a portfolio-wide basis are generally the lowest during may and june . our target occupancy across our warehouse portfolio varies by warehouse and warehouse type because our warehouses are configured to accommodate the individual needs of our customers . we generally regard approximately 85 % average physical occupancy across our temperature-controlled warehouse portfolio as optimal , subject to relevant local market conditions and individual customer needs . we do not believe that a 100 % occupancy rate is an ideal target for utilization of our warehouses because optimizing pallet throughput and efficient delivery of relevant value-added services require a certain amount of free pallet position capacity at all times in order to be able to efficiently place , store and retrieve products from pallet positions , particularly during periods of greatest occupancy or highest volume . our occupancy metrics account for the physical occupancy of our warehouses . as customers continue to transition to contracts that feature a fixed storage commitment , our 64 financial occupancy may be greater than our physical occupancy , as our customers may have committed to , and be paying for , space that they are currently not physically occupying , but intend to physically occupy in the future . throughput at our warehouses the level of throughput at our warehouses is an important factor impacting our warehouse services revenues in our warehouse segment . throughput refers to the volume of pallets that enter and exit our warehouses . higher levels of throughput drive warehouse services revenues in our warehouse segment as customers are typically billed on a basis that takes into account the level of throughput of the goods they store in our warehouses . how we assess the performance of our business segment contribution ( noi ) we evaluate the performance of our primary business segments based on their contribution ( noi ) to our overall results of operations . we use the term “ segment contribution ( noi ) ” to mean a segment 's revenues less its cost of operations ( excluding any depreciation , depletion and amortization , impairment charges and corporate-level selling , general and administrative expenses ) . we use segment contribution ( noi ) to evaluate our segments for purposes of making operating decisions and assessing performance in accordance with fasb asc , topic 280 , segment reporting . we also analyze the “ segment contribution ( noi ) margin ” for each of our business segments , which we calculate as segment contribution ( noi ) divided by segment revenues . in addition to our segment contribution ( noi ) and segment contribution ( noi ) margin , we analyze the contribution ( noi ) of our warehouse rent and storage operations and our warehouse services operations within our warehouse segment . we calculate the contribution ( noi ) of our warehouse rent and storage operations as rent and storage revenues less power and other facilities cost . we calculate the contribution ( noi ) of our warehouse services operations as warehouse services revenues less labor and other service costs . we calculate the contribution ( noi ) margin for each of these operations as the applicable contribution ( noi ) measure divided by the applicable revenue measure . we believe the presentation of these contribution ( noi ) and contribution ( noi ) margin measures helps investors understand the relative revenues , costs and earnings resulting from each of these separate types of services we provide to our customers in the same manner reviewed by our management in connection with the operation of our business . these contribution ( noi ) measures within our warehouse segment are not measurements of financial performance under u.s. gaap , and these measures should be considered as supplements , but not as alternatives , to our results calculated in accordance with u.s. gaap . we provide reconciliations of these measures in the discussions of our comparative results of operations below . 65 same store analysis we refer to a “ same store ” as a warehouse we owned or leased for the entirety of two comparable periods and which has reported at least twelve months of consecutive normalized operations prior to the commencement of the earlier period being considered . we define “ normalized operations ” as a site open for operation or lease after a warehouse acquisition , development or significant modification , including the expansion of a warehouse footprint or a warehouse rehabilitation subsequent to an extraordinary event , such as natural disasters or similar events . in addition , our definition of “ normalized operations ” takes into account changes in the ownership structure ( e.g . , acquisition of a previously leased warehouse would result in different charges in the compared periods ) , which would impact comparability in our warehouse segment contribution ( noi ) .
| results of operations the results of operations discussion is combined for americold realty trust and our operating partnership because there are no material differences in the results of operations between the two reporting entities . comparison of results for the years ended december 31 , 2018 and 2017 warehouse segment the following table presents the operating results of our warehouse segment for the years ended december 31 , 2018 and 2017 . replace_table_token_15_th ( 1 ) the adjustments from our u.s. gaap operating results to calculate our operating results on a constant currency basis are the effect of changes in foreign currency exchange rates relative to the comparable prior period . ( 2 ) includes real estate rent expense of $ 14.0 million and $ 15.1 million for the year ended december 31 , 2018 and 2017 , respectively . ( 3 ) includes non-real estate rent expense ( equipment lease and rentals ) of $ 13.8 million and $ 14.0 million for the year ended december 31 , 2018 and 2017 , respectively . ( 4 ) calculated as rent and storage revenues less power and other facilities costs . ( 5 ) calculated as warehouse services revenues less labor and other services costs . ( 6 ) calculated as warehouse rent and storage contribution ( noi ) divided by warehouse rent and storage revenues . ( 7 ) calculated as warehouse services contribution ( noi ) divided by warehouse services revenues . warehouse segment revenues were $ 1.18 billion for the year ended december 31 , 2018 , an increase of $ 31.3 million , or 2.7 % , compared to $ 1.15 billion for the year ended december 31 , 2017 . on a constant currency basis , our warehouse segment revenues were $ 1.19 billion for the year ended december 31 , 2018 , an increase of $ 42.6 million , or 3.7 % , compared to the prior year .
| 5,772 |
our extensive suite of end-to-end products covers “ the first mile to the last mile ” of the water infrastructure grid , ranging from large diameter pipe that transports water to and from treatment centers and manages drainage along major transportation corridors , to smaller diameter pipe that delivers potable water to , and removes wastewater from , end users in residential and commercial settings . we employ a specialized technical salesforce , including engineers and field service representatives , which enables us to deliver a high degree of customer service , create tailored solutions and ensure our products meet project specifications to maximize applications in the field . we believe that our product breadth , footprint in the united states and eastern canada and significant scale help make us a one-stop shop for water-related pipe and products , and a preferred supplier to a wide variety of customers , including contractors , distributors and municipalities . our segments our operations are organized into the following reportable segments , which is the way management views the business in making operating decisions and assessing performance : drainage pipe & products - we are a producer of concrete drainage pipe and precast products in the united states and eastern canada . water pipe & products - we are a producer of ductile iron pipe ( dip ) and concrete and steel pressure pipe . corporate and other - consists of corporate overhead locations in the united states , and our roof tile operations which were sold in april 2016. basis of presentation predecessor and successor historical results of operations lone star , through a wholly owned subsidiary , acquired our business , along with the business of forterra , plc , the operator the former building products business of heidelbergcement ag , or heidelbergcement , in the united kingdom , or forterra uk , on march 13 , 2015 from heidelbergcement , or the acquisition for aggregate cash consideration of $ 1.33 billion , subject to a $ 100.0 million earn-out that is currently subject to dispute , as discussed in greater detail in note 15 to our consolidated financial statements included elsewhere in this report . prior to the acquisition , we were heidelbergcement 's building products operations in the united states and eastern canada . lsf9 concrete holdings ltd , or lsf9 was formed on february 6 , 2015 for the purpose of consummating the acquisition and had no operations prior to the date of acquisition . 41 prior to our initial public offering of common stock on october 25 , 2016 , or the offering , lsf9 transferred its building products operations in the united states and eastern canada to forterra , inc. in an internal reorganization transaction , or the reorganization , which is described in greater detail below in the section entitled `` -recent developments-reorganization. ” forterra , inc. was formed on june 21 , 2016 for purposes of the reorganization and did not have any operations prior to the date of the reorganization . in our financial statements included elsewhere in this report , “ predecessor ” refers to our business prior to the acquisition and “ successor ” refers to our business following the acquisition . the historical combined predecessor financial statements were prepared on a stand-alone basis in accordance with generally accepted accounting principles in the united states , or u.s. gaap , and were derived from heidelbergcement 's financial statements and accounting records using the historical results of operations and assets and liabilities attributed to our business and include allocations of expenses from heidelbergcement . the historical combined predecessor statements of operations included expense allocations for certain corporate functions historically provided by heidelbergcement . substantially all of the predecessor 's senior management was employed by heidelbergcement and certain functions critical to our operations were centralized and managed by heidelbergcement . historically , the centralized functions included executive senior management , financial reporting , financial planning and analysis , accounting , information technology , tax , risk management , treasury , legal , human resources , land management and strategy and development . heidelbergcement used a centralized approach to cash management and financing of its operations . historically , the majority of the predecessor 's cash was transferred to heidelbergcement or its north american affiliates daily and our company was dependent on heidelbergcement 's funding of our operating and investing activities . this arrangement was not reflective of the manner in which we would have been able to finance our operations had we been a stand-alone business separate from heidelbergcement . the historical combined predecessor financial statements included elsewhere in this report and the other historical combined predecessor financial information presented and discussed in this discussion and analysis may not be indicative of what they would actually have been had we been a separate stand-alone entity , nor are they indicative of what our financial position , results of operations and cash flows may be in the future . unless otherwise specified or where the context otherwise requires , references in this report “ our , ” “ we , ” “ us , ” the “ company ” and “ our business ” ( i ) for the predecessor periods prior to the completion of the acquisition , refer to the building products business of heidelbergcement in the united states and eastern canada , ( ii ) for the successor periods after completion of the acquisition , the operations of forterra , inc. , in each case together with its consolidated subsidiaries . recent developments bricks disposition on august 23 , 2016 , an affiliate of lone star fund ix ( u.s. ) , l.p. ( along with its affiliates and associates , but excluding the company and other companies that it owns as a result of its investment activity , or lone star ) entered into an agreement with an unaffiliated third party to contribute lsf9 's bricks business to a newly formed joint venture with the unaffiliated third party , or the bricks joint venture . story_separator_special_tag for purposes of the tax receivable agreement , the aggregate reduction in income tax payable by the company will be computed by comparing the company 's actual income tax liability with its hypothetical liability had it not been able to utilize the related tax benefits . the agreement will remain in effect for the period of time in which all such related tax benefits remain . the company accounts for potential payments under the tax receivable agreement as a contingent liability , with amounts accrued when considered probable and reasonably estimable . as of the offering date , the company has recorded a $ 160.8 million liability and a reduction to additional paid-in-capital related to the tax receivable agreement for the undiscounted value of probable future payments . net of tax effects of $ 18.5 million , the net reduction to additional paid-in-capital related to the initial liability for the tax receivable agreement issued in connection with the offering was $ 142.3 million . the company anticipates that it will have sufficient taxable income in future periods to realize the full value of the obligation recorded . future tax receivable agreement payments related to the tax basis of assets at the time of the offering will be recorded as a reduction to the liability and will be recorded as a financing obligation in the statement of cash flows . at the end of each reporting period , any changes in the company 's estimate of the liability will be recorded in the statement of operations as a component of other income/expense and will be recorded as an operating activity in the statement of cash flows . the timing and amount of future tax benefits associated with the tax receivable agreement are subject to change , and additional payments may be required which could be materially different from the current accrued liability . acquisitions we completed multiple business combinations during 2016. below is a summary of the aggregate purchase price of each of the transactions . purchase price acquisitions : ( in millions ) sherman-dixie concrete industries $ 66.8 usp holdings , inc. 778.7 bio clean environmental services , inc. and modular wetland systems , inc. 30.6 j & g concrete operations , llc 32.4 precast concepts , llc 99.6 44 principal factors affecting our results of operations our financial performance and results of operations are influenced by a variety of factors , including conditions in the residential , and non-residential and infrastructure construction markets , general economic conditions , changes in cost of goods sold , and seasonality and weather conditions . some of the more important factors are discussed below , as well as in the section entitled “ risk factors. ” infrastructure spending and residential and non-residential construction activities a large proportion of our net sales in our drainage pipe & products and water pipe & products segments are generated through public infrastructure projects . many of these projects are dependent on government funding , including subsidies and stimulus programs . government spending on infrastructure projects depends on the availability of public funds , which is influenced by various factors , including fiscal budgets , the level of public debt , interest rates , existing and anticipated tax revenues and the political climate . increases or reductions in governmental funding for these infrastructure projects can have a material effect on our net sales and results of operations . in the united states , federal and state government funding for infrastructure projects is usually accomplished through multi-year funding and authorization bills known as highway bills , such as the fast act , which authorized $ 305 billion in spending over the next five years . the outlook for future growth and consistent revenue streams for our drainage pipe & products and water pipe & products segments has improved with the passage of the fast act . historically , demand for many of our products has been closely tied to residential construction and non-residential construction activity in the united states and eastern canada . activity levels in these markets can be materially affected by general economic and global financial market conditions . in addition , residential construction activity levels are influenced by and sensitive to mortgage availability , the cost of financing a home ( in particular , mortgage and interest rates ) , unemployment levels , household formation rates , residential vacancy and foreclosure rates , existing housing prices , rental prices , housing inventory levels , consumer confidence and government policy and incentives . non-residential construction activity is primarily driven by levels of business investment , availability of credit and interest rates , as well as many of the factors that impact residential construction activity levels . see the section entitled “ business-our industry. ” mix of products we derive our sales from both the sale of products manufactured to inventory , such as concrete drainage pipe and bricks , and highly engineered products which are made to order , such as concrete and steel pressure pipe and structural precast products for drainage . these two components of our business differ in their dynamics . approximately two-thirds of our net sales during 2016 were derived from the sale of products which are manufactured to inventory and approximately one-third came from highly engineered products which were made to order . this mix of products varies from period to period . we generally recognize revenue in connection with product shipment ; however , for some of our highly engineered products , we recognize revenue on a percentage of completion method , which amounted to $ 39.9 million in 2016. products such as concrete drainage pipe and bricks are typically sold on a one-off basis , with volumes and prices determined frequently based on market participants ' perceptions of short-term supply and demand factors . a shortage of capacity or excess capacity in the industry , or in the regions where we have operations , or the behavior of our competitors , can each result in significant increases or decreases in market prices for these products , often within a short period of time .
| results of operations year ended december 31 , 2016 total company the following table summarizes certain financial information relating to our operating results that have been derived from our consolidated financial statements of forterra for the year months ended december 31 , 2016. also included is certain information relating to the operating results as a percentage of net sales . replace_table_token_3_th net sales for the year ended december 31 , 2016 were $ 1,364.0 million consisting of legacy forterra net sales of $ 632.1 million , net sales as a result of the u.s. pipe acquisition of $ 475.9 million , $ 184.1 million of net sales from the cretex acquisition , $ 53.1 million from the sherman-dixie acquisition , $ 8.2 million from the precast concepts acquisition , $ 8.0 million from the bio clean acquisition and $ 2.6 million from the j & g acquisition . cost of goods sold were $ 1,083.5 million , which included $ 15.1 million of inventory step-up adjustments due to the impact of business combinations primarily related to the u.s. pipe acquisition , which resulted in gross profit of $ 280.5 million . selling , general and administrative expenses were $ 216.1 million , which includes $ 94.0 million of costs from acquired businesses . loss on the disposal of pp & e was $ 21.3 million primarily driven by a loss on the sale-leaseback of $ 19.6 million . interest expense of $ 125.0 million was incurred as a result of the outstanding debt during the period as well as a write-off of debt issuance costs of $ 22.4 million and an early payment penalty of $ 7.8 million associated with the payment of the junior term loan .
| 5,773 |
certain of our functional categories are especially important to overall expense control and management . these operating expenses are categorized as follows : cost of revenue . these are expenses primarily for hardware , third-party software , outside service expenses and payroll and related expenses for our professional services , logistics , customer support and maintenance staff . research and development . these expenses relate primarily to the development of new software products and the ongoing maintenance and enhancement of existing products . this classification consists primarily of employee payroll and related expenses , outside services related to the design , development , testing and enhancement of our solutions and to a lesser extent hardware equipment . service , rental and maintenance . these are expenses associated with the operation of our paging networks . expenses consist largely of site rent expenses for transmitter locations , telecommunication expenses to deliver messages over our paging networks , and payroll and related expenses for our engineering and pager repair functions . we actively pursue opportunities to consolidate transmitters and other service , rental and maintenance expenses in order to maintain an efficient network while simultaneously ensuring adequate service for our customers . we believe continued reductions in these expenses will occur as our networks continue to be consolidated for the foreseeable future . selling and marketing . the sales and marketing staff are involved in selling our communication solutions primarily in the united states . these expenses support our efforts to maintain gross placements of units in service , which mitigated the impact of disconnects on our wireless revenue base , and to identify business opportunities for additional or future software sales . we have a centralized marketing function , which is focused on supporting our products and vertical sales efforts by strengthening our brand , generating sales leads and facilitating the sales process . these marketing functions are accomplished through targeted email campaigns , webinars , regional and national user conferences , monthly newsletters and participation at industry trade shows . expenses consist largely of payroll and related expenses , commissions and other costs such as travel and advertising costs . general and administrative . these are expenses associated with information technology and administrative functions which includes finance and accounting , human resources and executive management . this classification consists primarily of payroll and related expenses , outside service expenses , taxes , licenses and permit expenses , and facility rent expenses . the company reclassified $ 0.1 million from severance to the general and administrative operating expense classification . corresponding reclassifications of $ 1.4 million and $ 2.7 million were made to the consolidated statement of operations for the years ended december 31 , 2016 and 2015. the company had previously reported severance as a separate item on the consolidated statement of operations . 27 results of operations the following table is a summary of our consolidated statements of operations for the years ended december 31 , 2017 , 2016 and 2015 . replace_table_token_5_th 28 revenue the table below details total revenue for the periods stated : replace_table_token_6_th the decrease in wireless revenue during 2017 compared to both 2016 and 2015 , respectively , reflects the decrease in demand for our wireless services . wireless revenue is generally based upon the number of units in service and the monthly average revenue per user ( `` arpu '' ) . on a consolidated basis arpu is affected by several factors , including the mix of units in service and the pricing of the various components of our services . the number of units in service changes based on subscribers added , referred to as gross placements , less subscriber cancellations , or disconnects . arpu for the years ended december 31 , 2017 , 2016 and 2015 was $ 7.51 , $ 7.67 and $ 7.83 , respectively , while total units in service were 1.0 million , 1.1 million and 1.2 million , respectively . while demand for wireless services continues to decline it has done so at a slower rate for each of the periods presented . while we are encouraged that this trend will continue in future periods , we believe that demand will continue to decline for the foreseeable future in line with recent and historical trends . as our wireless products and services are replaced with other competing technologies , such as the shift from narrow band wireless service offerings to broad band technology services , our wireless revenue will continue to decrease . the following reflects the impact of subscribers and arpu on the change in wireless revenue : replace_table_token_7_th replace_table_token_8_th as demand for one-way and two-way messaging has declined , we have developed or added service offerings such as encrypted paging and spok mobile with a pager number in order to increase our revenue potential and mitigate the decline in our wireless revenue . we will continue to explore ways to innovate and provide customers the highest value possible . the decrease in software operations revenue during 2017 when compared to 2016 primarily reflects a decrease in the number and size of projects completed during 2017 as compared to the same period in 2016 . starting in late 2015 , we began a reorganization of the sales staff and related sales territories , which realigned territories and replaced lower performing sales employees with new staff . the decrease in operational bookings during 2015 and 2016 also factored into the decrease in operational revenue for the same period . the decrease in operations revenue during 2016 when compared to 2015 primarily reflects lower sales of software to new customers which was reflected in the decrease in license revenue . 29 the continued increase in maintenance revenue for each of the periods stated reflects our continuing success in renewals of our maintenance support for existing software solutions and in maintenance support for sales of new solutions . story_separator_special_tag the decrease in stock compensation was largely due to the estimated outcome of the 2015 and 2016 grants being reduced to fifty percent of the original awards . the decrease in other was primarily due to a decrease in severance costs . the increase in outside services was primarily due to an increase in information technology and system related costs as well as corresponding consulting and implementation costs . depreciation , amortization and accretion . for the year ended december 31 , 2017 compared to the same period in 2016 depreciation , amortization and accretion expenses decreased by $ 1.3 million due primarily to the full amortization of trademark costs during the first quarter of 2017 and other various intangible costs that were fully amortized during 2016.the decrease of $ 1.0 million in depreciation , amortization and accretion expenses for the year ended december 31 , 2016 compared to the same period in 2015 was due primarily to $ 0.6 million related to the amortization of our acquired technology and non-compete arrangements which were included for the year ended december 31 , 2015 but were completely amortized during the year ended december 31 , 2016 and $ 0.5 million related to lower depreciation expense because of a lower balance of pagers for the year ended december 31 , 2016 partially offset by $ 0.1 million in other changes . interest income , other income , and income tax expense ( benefit ) interest income . for the year ended december 31 , 2017 , compared to the same period in 2016 , interest income increased by $ 0.4 million primarily due to higher interest rates earned on the company 's cash balances . the increase of $ 0.3 million in interest expense for the year ended december 31 , 2016 compared to the same period in 2015 was primarily due to an increase in funds held in interest bearing accounts . other income . for the year ended december 31 , 2017 compared to the same period in 2016 other income , net decreased by $ 0.4 million due to a variety of immaterial transactions . the decrease of $ 0.6 million in other income , net for the year ended december 31 , 2016 compared to the same period in 2015 , due primarily to $ 0.8 million related to the sale of two land parcels in 2015 that did not occur in 2016 partially offset by $ 0.2 million related to a reduction in the total estimated royalty liability for the purchase of imco in 2012 . 32 income tax expense ( benefit ) . the tax cuts and jobs act of 2017 ( `` 2017 tax act '' ) was signed into law on december 22 , 2017. the 2017 tax act significantly revises the u.s. corporate income tax by , among other things , lowering the statutory corporate tax rate from 35 % to 21 % , eliminating certain deductions , imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries , introducing new tax regimes , and changing how foreign earnings are subject to u.s. tax . the 2017 tax act also enhanced and extended through 2026 the option to claim accelerated depreciation deductions on qualified property . we have not completed our determination of the accounting implications of the 2017 tax act on our tax accruals . however , we have reasonably estimated the effects of the 2017 tax act and recorded provisional amounts in our financial statements as of december 31 , 2017. we recorded a provisional tax expense for the impact of the 2017 tax act of approximately $ 24.2 million . this amount is primarily comprised of the remeasurement of net deferred tax assets resulting from the permanent reduction in the u.s. statutory corporate tax rate to 21 % from 35 % . changes that impact foreign earnings are not expected to have a material effect . as we complete our analysis of the 2017 tax act , collect and prepare necessary data , and interpret any additional guidance issued by the u.s. treasury department , the irs , and other standard-setting bodies , we may make adjustments to the provisional amounts . those adjustments may materially impact our provision for income taxes in the period in which the adjustments are made . the effects of foreign taxes are immaterial for all periods presented . the following is the effective tax rate reconciliation for the years ended december 31 , 2017 , 2016 and 2015 , respectively ( see note 7 , `` income taxes '' , for further discussion on our income taxes ) : replace_table_token_14_th income tax expense increased by $ 17.9 million for the year ended december 31 , 2017 compared to the same period in 2016 due primarily to the write-off of dta 's as a result of the 2017 tax act partially offset by research and development and other tax credits . our investment in research and development qualifies for the research and development income tax credit under section 41 of the internal revenue code . unused research and development tax credits have a 20-year carryover and will provide future tax benefits once spok 's net operating losses are fully utilized . the company first applied this credit during 2017 and as a result has certain credits related to past periods . research and development tax credits totaled $ 1.4 million in 2017 of which $ 0.6 million related to prior periods . the pro-forma effective tax rate excludes the effects of the change in the valuation allowance and the changes related to the 2017 tax act to provide a more comparable effective tax rate .
| overview and highlights we are a comprehensive provider of critical communication solutions for enterprises . we offer a suite of unified critical communication solutions that include call center operations , clinical alerting and notifications , one-way and advanced two-way wireless messaging services , mobile communications and public safety response . our customers rely on spok for workflow improvement , secure texting , paging services , contact center optimization and public safety response . our product offerings are capable of addressing a customer 's mission critical communications needs . we develop , sell and support enterprise-wide systems for healthcare and other organizations needing to automate , centralize and standardize their approach to critical communications . our solutions can be found in prominent hospitals ; large government agencies ; leading public safety institutions , colleges and universities ; large hotels , resorts and casinos ; and well-known manufacturers . our primary market has been the healthcare industry , particularly hospitals . we have identified hospitals with 200 or more beds as the primary targets for our software and wireless solutions . 25 revenue generated by wireless messaging services ( including voice mail , personalized greeting , message storage and retrieval ) and equipment loss and or maintenance protection to both one-way and two-way messaging subscribers is presented as wireless revenue in our statements of operations . revenue generated by the sale of our software solutions , which includes software license , professional services ( installation , consulting and training ) , equipment procured by us from third parties ( to be used in conjunction with our software ) and post-contract support ( on-going maintenance ) , is presented as software revenue in our statements of operations . our software is licensed to end users under an industry standard software license agreement .
| 5,774 |
for a detailed discussion of these risks and uncertainties , see item 1a , “ risk factors ” of this annual report on form 10-k. we caution the reader not to place undue reliance on these forward-looking statements , which reflect management 's analysis only as of the date of this annual report on form 10-k. we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this annual report on form 10-k. throughout this discussion , unless the context specifies or implies otherwise , the terms “ zymeworks , ” “ we , ” “ us , ” and “ our ” refer to zymeworks inc. and its subsidiary . for a discussion regarding our financial condition and results of operations for fiscal 2018 as compared to fiscal 2017 see item 7 of our annual report on form 10-k for the fiscal year ended december 31 2018 , filed with the sec on march 6 , 2019. story_separator_special_tag 0px ; ; display : inline ; '' > icon-2 tissue factor adc for cancer . this is the first collaboration leveraging the zymelink platform and represents our third technology platform licensed to a collaborator . under the terms of the agreement , we will be eligible to receive development and commercial milestone payments and tiered royalties on worldwide net sales . in april 2019 , we announced that we earned a $ 3.5 million milestone payment from daiichi sankyo under our 2016 cross-licensing and collaboration agreement with daiichi sankyo , in connection with daiichi sanko exercising its option for a commercial license to a proprietary immune-oncology bispecific built on our azymetric and efect platforms . financing activities : on january 27 , 2020 , we announced the closing of our underwritten public offering which consisted of the issuance of 5,824,729 common shares , including the exercise in full of the underwriters ' over-allotment option to purchase 900,000 additional shares , and , in lieu of common shares , to a certain investor , pre-funded warrants to purchase up to 1,075,271 common shares . the common shares were offered at a price to the public of $ 46.50 per common share and the pre-funded warrants were offered at a price of $ 46.4999 per pre-funded warrant , for aggregate gross proceeds to the company of approximately $ 320.8 million , before deducting underwriting discounts and commissions and estimated offering expenses . the securities were offered in canada pursuant to our final prospectus supplement , dated january 22 , 2020 ( the “ canadian supplement ” ) , to our canadian final base shelf prospectus , dated november 18 , 2019 ( the “ base prospectus ” ) , and in the united states pursuant to our final prospectus supplement , dated january 22 , 2020 ( the “ u.s . supplement ” , together with the canadian supplement , the “ supplements ” ) , to our u.s. automatic shelf registration statement on form s-3asr , including a prospectus dated november 5 , 2019 ( the “ registration statement ” ) . the supplements were filed in canada and the united states on january 23 , 2020. in november 2019 , we filed an automatic shelf registration statement with the sec to replace our existing shelf registration statement on form s-3 , which permits us to take advantage of certain benefits only available to well- 89 known seasoned issuers under sec rules . concurrent with the filing of the registration statement , we entered into an at-the-market equity offering sales agreement ( the “ atm sales agreement ” ) with jefferies llc , effective as of november 5 , 2019. under the atm sales agreement , we may sell our common shares from time to time for up to $ 75.0 million in aggregate sales proceeds in “ at-the-market ” transactions . we voluntarily delisted our common shares from the tsx as of the close of business on october 1 , 2019. in june 2019 , we closed an underwritten public offering pursuant to which we sold 7,013,892 common shares ( including 1,458,336 common shares upon the full exercise of the underwriters ' over-allotment option ) at $ 18.00 per common share and in lieu of common shares , to a certain investor , 4,166,690 pre-funded warrants at $ 17.9999 per pre-funded warrant . we received net proceeds of approximately $ 188.0 million for the offering , after deducting underwriting discounts , commissions and offering expenses . board of director changes : in september 2019 , we announced the appointment of lota zoth as chair of the board of directors succeeding nick bedford , who retired from his functions as chair and board member . mr. bedford served as board chair since september 2004. in june 2019 , we announced the appointment of two independent biopharmaceutical executives , susan mahony and troy cox , to the board of directors . dr. mahony brings extensive operational , clinical , and commercialization experience to zymeworks board of directors from over 30 years of combined experience with lilly , schering-plough corporation ( “ schering-plough ” ) , amgen inc. , and bms . mr. cox brings extensive biotechnology business and executive leadership experience from numerous senior leadership positions at leading biopharmaceutical companies such as foundation medicine , inc. , roche-genentech , inc. , ucb s.a. , sanofi-aventis u.s. llc , and schering-plough . management changes : in october 2019 , kathryn o'driscoll was appointed chief people officer of zymeworks . ms. o'driscoll brings over 20 years of experience as an executive-level human resources leader across large global organizations in the technology and non-profit sectors . in her new role as zymeworks ' chief people officer , she will be responsible for growing and developing its highly diverse and skilled workforce . financial operations overview revenue our revenue consists of collaboration revenue , including amounts recognized relating to upfront non-refundable payments for licenses or options to obtain future licenses , research and development funding and milestone payments earned under collaboration and license agreements . story_separator_special_tag to determine revenue recognition for arrangements that the company determines are within the scope of topic 606 , the company performs the following five steps : ( i ) identify the contract ( s ) with a customer ; ( ii ) identify the performance obligations in the contract ; ( iii ) determine the transaction price ; ( iv ) allocate the transaction price to the performance obligations in the contract ; and ( v ) recognize revenue when or as the company satisfies a performance obligation . the company only applies the five-step model to contracts when it is probable that the company will collect the consideration that it is entitled to in exchange for the goods and services transferred to the customer . if the expectation at contract inception is such that the period between payment by the licensee and the completion of related performance obligations will be one year or less , the company assumes that the contract does not have a significant financing component . when applying the revenue recognition criteria of asc 606 to license and collaboration agreements , management applies significant judgment when evaluating whether contractual obligations represent distinct performance obligations , allocating transaction price to performance obligations within a contract , determining when performance obligations have been met , assessing the recognition and future reversal of variable consideration , and determining and applying appropriate methods of measuring progress for performance obligations satisfied over time . these judgments are discussed in more detail in the following paragraphs for each type of payment received by the company under the terms of the license and collaborations agreements . licenses of intellectual property including platform technology access : if the license to the company 's intellectual property is determined to be distinct from the other performance obligations identified in the arrangement , the company recognizes revenues from non-refundable , upfront fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license . for licenses that are not distinct from other promises , the company applies judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and , if over time , the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable , upfront fees . the company evaluates the measure of progress each reporting period and , if necessary , adjusts the related revenue recognition accordingly . milestone payments : at the inception of each arrangement that includes research , development or regulatory milestone payments , the company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method . if it is probable that a significant revenue reversal would not occur , the associated milestone value is included in the transaction price . milestone payments that are not within the control of the company or the licensee , such as regulatory approvals , are not considered probable of being achieved until those approvals are received . the transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis , for which the company recognizes revenue as or when the performance obligations under the contract are satisfied . 92 at the end of each subsequent reporting period , the company re-evaluates the probability of achievement of such development milestones and any related constraint , and if necessary , adjusts its estimate of the overall transaction price . any such adjustments are recorded on a cumulative catch-up basis , which would affect license , collaboration and other revenues and earnings in the period of adjustment . the process of successfully achieving the criteria for the milestone payments is highly uncertain . consequently , there is a significant risk that the company may not earn all of the milestone payments from each of its strategic partners . management applies significant judgment when assessing the likelihood of whether milestones are considered probable of being achieved and when allocating the transaction price to each performance obligation for revenue recognition purposes . royalties and commercial milestones : for arrangements that include sales-based royalties , including commercial milestone payments based on pre-specified level of sales , the company recognizes revenue at the later of ( i ) when the related sales occur , or ( ii ) when the performance obligation to which some or all of the royalty has been allocated has been satisfied ( or partially satisfied ) . achievement of these royalties and commercial milestones may solely depend upon performance of the licensee . since inception to date , the company has not recognized any royalty revenue or commercial milestone from any of its out-licensing arrangements . research support and other payments : payments by the licensees in exchange for research activities performed by the company on behalf of the licensee are recognized as revenue upon performance of such activities at rates consistent with prevailing market rates . payments for research supplies provided are recognized as revenue upon delivery of the supplies . research and development costs and related accrued expenses research and development costs are expensed as incurred and include costs that we incur for our own and for our strategic partners ' research and development activities . these costs primarily consist of employee-related expenses , including salaries and benefits , expenses incurred under agreements with contract research organizations on our behalf , costs associated with investigative sites and consultants that conduct our clinical trials , the cost of acquiring and manufacturing clinical trial materials and other allocated expenses , share-based compensation expense , and costs associated with nonclinical activities and regulatory approvals . clinical trial expenses represent a significant component of research and development expenses and we outsource a significant portion of these activities to third party contract research organizations . third-party clinical trial expenses include investigator fees , site costs , clinical research organization costs and other trial-related vendor costs .
| overview zymeworks is a clinical-stage biopharmaceutical company dedicated to the development of next-generation multifunctional biotherapeutics . our suite of complementary therapeutic platforms and our fully integrated drug development engine provide the flexibility and compatibility to precisely engineer and develop highly differentiated product candidates . these capabilities have resulted in multiple product candidates with the potential to drive positive outcomes in large underserved and unaddressed patient populations . our goal is to leverage our next-generation therapeutic platforms and proprietary protein engineering capabilities to become a domain dominator in the discovery , development and commercialization of best-in-class multifunctional biotherapeutics for the treatment of cancer and other diseases with high unmet medical need . our key priorities to achieve this goal are to : initiate zw25 registration-enabling studies in 2 nd line her2-positive btc and 1 st line her2-positive gea ; report zw49 phase 1 dose-escalation data and initiate expansion cohorts ; expand zw25 clinical development into additional her2-expressing cancers ; report zw25 phase 2 chemotherapy combination data from 1 st line her2-positive gea ; and continue building a strong preclinical pipeline through internal r & d and external partnerships . we commenced operations in 2003 and have since devoted substantially all of our resources to research and development activities including developing our therapeutic platforms , identifying and developing potential product candidates and undertaking preclinical studies and clinical trials . additionally , we have supported our research and development activities with general and administrative support , as well as by raising capital , conducting business planning and protecting our intellectual property . we have not generated any revenue from the sale of approved products to date and do not expect to do so until such time as we obtain regulatory approval and commercialize one or more of our product candidates . we can not be certain of the timing or success of approval of our product candidates .
| 5,775 |
overview we are principally an independent petroleum refiner that produces high-value refined products such as gasoline , diesel fuel , jet fuel , specialty lubricant products , and specialty and modified asphalt . we own and operate refineries having a combined crude oil processing capacity of 443,000 barrels per day that serve markets throughout the mid-continent , southwest and rocky mountain regions of the united states . our refineries are located in el dorado , kansas ( the el dorado refinery ) , tulsa , oklahoma ( the tulsa refineries ) , which comprise two production facilities , the tulsa west and east facilities , a petroleum refinery in artesia , new mexico , which operates in conjunction with crude , vacuum distillation and other facilities situated 65 miles away in lovington , new mexico ( the navajo refinery ) , cheyenne , wyoming ( the cheyenne refinery ) and woods cross , utah ( the woods cross refinery ) . for the year ended december 31 , 2013 , net income attributable to hollyfrontier stockholders was $ 735.8 million compared to $ 1,727.2 million for the year ended december 31 , 2012 . overall gross refining margins per produced product sold decreased 36 % over the year ended december 31 , 2012 due principally to significant contraction in wti to brent crude differentials as well as lower discounts on heavy sour crudes purchased during the second and third quarters of 2013. net income for the year ended december 31 , 2013 reflects pension settlement and debt extinguishment charges of $ 39.5 million and $ 22.1 million , respectively . also affecting current year net income were the effects of planned turnarounds at our el dorado , tulsa and navajo refineries as well as unplanned downtime incurred at each of our el dorado and cheyenne refineries due to fcc unit issues during the second quarter of 2013. our financial and operating results additionally reflect lower crude oil throughput rates for the southwest region , which averaged 74,370 bpd for the fourth quarter of 2013 compared to 99,610 bpd for the same period last year , as a result of waste water constraints at our navajo refinery during late 2013. this matter was resolved in january 2014 and throughput rates have since returned to planned levels . outlook our profitability is affected by the spread , or differential , between the market prices for crude oil on the world market ( which is based on the price for brent , north sea crude ) and the price for inland u.s. crude oil ( which is based on the price for wti ) . this differential constantly changes and at times can be volatile . while we have experienced wide differentials ( with brent prices in excess of wti prices ) in recent years , which have significantly enhanced our profitability , the differential between brent and wti narrowed significantly during the second half of 2013 - averaging approximately one-half of the differential experienced during 2012. differentials are likely to continue to be volatile in the near term . however , we expect the brent to wti differential to rebound upon completion of additional northern tier pipeline capacity into cushing , oklahoma , which we believe will create a surplus of light sweet crude oil on the u.s. gulf coast . ultimately , we believe pipeline tariffs from cushing to the gulf coast plus marine transportation costs to transport product from the gulf coast to alternative markets will set the inland - coastal differential . 34 table of content pursuant to the 2007 energy independence and security act , the epa promulgated the rfs2 regulations reflecting the increased volume of renewable fuels mandated to be blended into the nation 's fuel supply . the regulations , in part , require refiners to add annually increasing amounts of “ renewable fuels ” to their petroleum products or purchase credits , known as rins , in lieu of such blending . as of december 2013 , we are purchasing rins in order to meet approximately half of our renewable fuel requirements . recently , due in part to the nation 's fuel supply approaching the “ blend wall ” ( the 10 % ethanol limit prescribed by most automobile warranties ) , the price of rins has been extremely volatile with the price dramatically increasing due to real or perceived future shortages in rins . as a result , we expect to continue to experience higher than historical costs to comply with the renewable fuel mandate . in the wholesale markets we serve , we are seeing price adjustments to indicate that the cost of rins is being largely borne by the consumer at the pump . however , we continue to use various approaches to mitigate our exposure to the increasing cost of rins , which include additional renewable fuel blending , shifts in our refined product slate and changes in the way we conduct marketing operations . we can not predict with certainty whether and to what extent we will be successful in mitigating our exposure to increased rins costs , and anticipate that increased compliance costs may negatively impact our future results of operations . in 2013 , our ethanol rins purchases from third parties totaled approximately 215 million rins . a more detailed discussion of our financial and operating results for the years ended december 31 , 2013 , 2012 and 2011 is presented in the following sections . 35 table of content results of operations financial data replace_table_token_13_th ( 1 ) our consolidated financial and operating results reflect the operations of the merged frontier businesses beginning july 1 , 2011. other financial data replace_table_token_14_th 36 table of content ( 1 ) earnings before interest , taxes , depreciation and amortization , which we refer to as “ ebitda , ” is calculated as net income plus ( i ) interest expense , net of interest income , ( ii ) income tax provision , and ( iii ) depreciation and amortization . story_separator_special_tag sales and other revenues sales and other revenues increased 30 % from $ 15,439.5 million for the year ended december 31 , 2011 to $ 20,090.7 million for the year ended december 31 , 2012 , due principally to the inclusion of sales volumes and related revenues attributable to the el dorado and cheyenne refineries for a full year period and higher sales volumes of refined products produced from the legacy holly refineries . additionally , the average sales price we received per produced barrel sold increased 1 % from $ 118.82 for the year ended december 31 , 2011 to $ 119.48 for the year ended december 31 , 2012 . sales and other revenues for the years ended december 31 , 2012 and 2011 , include $ 47.6 million and $ 46.4 million , respectively , in hep revenues attributable to pipeline and transportation services provided to unaffiliated parties . cost of products sold cost of products sold increased 25 % from $ 12,680.1 million for the year ended december 31 , 2011 to $ 15,840.6 million for the year ended december 31 , 2012 , due principally to the inclusion of sales volumes and related cost of products sold at the el dorado and cheyenne refineries , partially offset by lower crude oil costs for 2012. the average price we paid per barrel for crude oil and feedstocks and the transportation costs of moving the finished products to the market place decreased 4 % from $ 98.18 for the year ended december 31 , 2011 to $ 94.59 for the year ended december 31 , 2012 . gross refinery margins gross refining margin per produced barrel increased 21 % from $ 20.64 for the year ended december 31 , 2011 to $ 24.89 for the year ended december 31 , 2012 . this is due to the effects of a current year decrease in crude oil and feedstock prices along with slightly higher sales prices received on produced products sold . gross refinery margin does not include the effects of depreciation or amortization . 39 table of content operating expenses operating expenses , exclusive of depreciation and amortization increased 33 % from $ 748.1 million for the year ended december 31 , 2011 to $ 995.0 million for the year ended december 31 , 2012 , due principally to the inclusion of the legacy frontier refinery operations for a full-year period and higher repair and maintenance and environmental remediation costs . in 2012 , we increased certain environmental remediation accruals by $ 46.1 million to reflect revisions to certain cost estimates and the timeframe for which certain environmental remediation and monitoring activities are expected to occur . also contributing to a much lesser extent were increased payroll costs attributable to the legacy holly refining operations . for the years ended december 31 , 2012 and 2011 , operating expenses include $ 88.9 million and $ 61.1 million , respectively , in costs attributable to hep operations . general and administrative expenses general and administrative expenses increased 7 % from $ 120.1 million for the year ended december 31 , 2011 to $ 128.1 million for the year ended december 31 , 2012 , due principally to higher employee benefit and equity-based compensation costs and increased corporate staffing levels as a result of our july 1 , 2011 merger , net of the effects of merger related severance and integration costs incurred during 2011. for the years ended december 31 , 2012 and 2011 , general and administrative expenses include $ 5.3 million and $ 4.3 million , respectively , in costs attributable to hep operations . depreciation and amortization expenses depreciation and amortization increased 52 % from $ 159.7 million for the year ended december 31 , 2011 to $ 242.9 million for the year ended december 31 , 2012 . the increase was due principally to depreciation and amortization attributable to the legacy frontier refinery assets , capitalized improvement projects and hep 's unev pipeline . for the years ended december 31 , 2012 and 2011 , depreciation and amortization expenses include $ 57.8 million and $ 33.3 million , respectively , in costs attributable to hep operations . interest income interest income for the year ended december 31 , 2012 was $ 4.8 million compared to $ 1.3 million for the year ended december 31 , 2011 . this increase was due to interest received on our increased cash position and investments in marketable debt securities . interest expense interest expense was $ 104.2 million for the year ended december 31 , 2012 compared to $ 78.3 million for the year ended december 31 , 2011 . this increase principally reflects interest on the senior notes assumed upon our merger with frontier . for the years ended december 31 , 2012 and 2011 , interest expense included $ 57.2 million and $ 38.2 million , respectively , in interest costs attributable to hep operations . merger transaction costs for the year ended december 31 , 2011 , we recognized merger transaction costs of $ 15.1 million related to our merger with frontier on july 1 , 2011. these costs included legal , advisory and other professional fees that were directly attributable to the merger . there were no such costs incurred for the year ended december 31 , 2012 . income taxes for the year ended december 31 , 2012 , we recorded income tax expense of $ 1,028.0 million compared to $ 582.0 million for the year ended december 31 , 2011 . this increase is due principally to significantly higher pre-tax earnings for the year ended december 31 , 2012 compared to the same period of 2011 . our effective tax rates , before consideration of earnings attributable to the noncontrolling interest , were 36.9 % and 35.5 % for the years ended december 31 , 2012 and 2011 , respectively . our effective tax rate for gaap disclosure purposes reflects the inclusion of non-taxable earnings attributable to noncontrolling interest holders in the denominator of our effective tax rate computation .
| summary net income attributable to hollyfrontier stockholders for the year ended december 31 , 2013 was $ 735.8 million ( $ 3.66 per basic and $ 3.64 per diluted share ) , a $ 991.4 million decrease compared to $ 1,727.2 million ( $ 8.41 per basic and $ 8.38 per diluted share ) for the year ended december 31 , 2012 . net income decreased due principally to a year-over-year decrease in refining margins , refinery downtime and pension settlement and debt extinguishment charges . refinery gross margins for the year ended december 31 , 2013 decreased to $ 15.99 per produced barrel from $ 24.89 for the year ended december 31 , 2012 . sales and other revenues sales and other revenues increased slightly from $ 20,090.7 million for the year ended december 31 , 2012 to $ 20,160.6 million for the year ended december 31 , 2013 due to higher refined product sales volumes , partially offset by a decrease in year-over-year sales prices . the average sales price we received per produced barrel sold decreased 3 % from $ 119.48 for the year ended december 31 , 2012 to $ 115.60 for the year ended december 31 , 2013 . refined product sales volumes for the current period reflect higher volumes of purchased products , comprising 8 % of total refined products sales compared to 3 % for the year ended december 31 , 2012 due to a decrease in refinery production and corresponding sales volumes of produced product as a result of planned turnaround and maintenance projects at our refineries and other unplanned refinery outages during the current year . sales and other revenues for the years ended december 31 , 2013 and 2012 include $ 53.4 million and $ 47.6 million , respectively , in hep revenues attributable to pipeline and transportation services provided to unaffiliated parties .
| 5,776 |
we did not have any customers that comprised more than 10 % of our total accounts receivable balances at december 31 , 2011 or 2010. we believe we do not have any financial instruments that could have potentially subjected us to significant concentrations of credit risk . since a portion of the revenues are paid at the beginning of the month via credit card or advance by check , the remaining accounts receivable amounts are generally due within 30 days , none of which is collateralized . note 11 : income taxes at december 31 , 2011 and 2010 , we had a federal net operating loss carry forward of approximately $ 6,000 and $ 564,000 , respectively . these loss carry forwards are available to reduce future taxable income and will expire through 2030 if not utilized . the provision ( benefit ) for income taxes story_separator_special_tag except for the historical information contained herein , the matters discussed in this form 10-k include certain forward-looking statements that involve risks and uncertainties , which are intended to be covered by safe harbors . those statements include , but are not limited to , all statements regarding our and management 's intent , belief and expectations , such as statements concerning our future and our operating and growth strategy . we generally use words such as `` believe , '' `` may , '' `` could , '' `` will , '' `` intend , '' `` expect , '' `` anticipate , '' `` plan , '' and similar expressions to identify forward-looking statements . you should not place undue reliance on these forward-looking statements . our actual results could differ materially from those anticipated in the forward-looking statements for many reasons including our ability to implement our business plan , our ability to raise additional funds and manage our substantial debts , consumer acceptance of our products , our ability to broaden our customer base , our ability to maintain a satisfactory relationship with our suppliers and other risks described in our reports filed with the securities and exchange commission . although we believe the expectations reflected in the forward-looking statements are reasonable , they relate only to events as of the date on which the statements are made , and our future results , levels of activity , performance or achievements may not meet these expectations . investors are cautioned that all forward-looking statements involve risks and uncertainties including , without limitation , the factors set forth under the risk factors section of this report . in light of the significant uncertainties inherent in the forward-looking statements included herein , the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved . all forward-looking statements made in this form 10-k is based on information presently available to our management . we do not intend to update any of the forward-looking statements after the date of this document to conform these statements to actual results or to changes in our expectations , except as required by law . 2011 overview for the year ended december 31 , 2011 , total revenue decreased 16 % to $ 3,228,099 from $ 3,860,513 in fiscal 2010. the decrease in revenue is primarily the result of a large print and fulfillment project that was executed in the second quarter of 2010 that accounted for 48 % of our revenue in fiscal 2010. comparatively , we did not have a similar project in fiscal 2011. in fact , no customer in fiscal 2011 accounted for more than 10 % of our revenue . in fiscal 2011 , revenue from compliance and reporting services increased by $ 1,037,152 to $ 1,632,889 in fiscal 2011 from $ 595,737 in fiscal 2010 , which helped offset the decrease in print and fulfillment revenue . the increase in compliance and reporting services is a direct result of the final phase of the sec 's three-year mandate for companies to begin filing quarterly and annual reports in xbrl format . furthermore , we achieve significantly high margins from these services , which allowed us to increase our gross margin to $ 1,836,132 during fiscal 2011 as compared to $ 1,351,097 in fiscal 2011 , even with lower revenue in fiscal 2011. for the year ended december 31 , 2011 , operating expenses increased to $ 1,587,767 as compared to $ 1,123,193 in fiscal 2011. a significant portion of the increase is due to $ 206,263 of litigation expenses incurred to defend the company against and ultimately settle a dispute with a former shareholder . this dispute has been fully resolved as of the date of this filing , and all related expenses were accrued at december 31 , 2011. therefore , we do not anticipate further litigation expenses in 2012. the remainder of the increase in operating expenses is largely due to increases in facilities costs and personnel cost as we expanded our infrastructure to provide us with greater flexibility and capacity to meet the needs of our customers , which will lead to additional revenue opportunities . we anticipate that our current infrastructure is adequate to support our needs for the foreseeable future , and do not anticipate a significant increases in general and administrative expenses in 2012. however , sales and marketing expenses may increase as we strive to increase revenue . our net income before taxes in fiscal 2011 increased to $ 261,076 compared to $ 208,606 in fiscal 2010. in fiscal 2010 , we recognized an income tax benefit in the amount of $ 220,800 based on our projections for future profitability . in fiscal 2011 , we fully utilized our remaining net operating loss carryforwards , and therefore recorded income tax expense of $ 21,800. therefore , net income was $ 239,276 in fiscal 2011 as compared to $ 429,406 in fiscal 2010. in january 2012 , we purchased certain assets from sec compliance services , inc. , which primarily consisted of customer contracts for annual xbrl services . story_separator_special_tag this dispute has been fully resolved as of the date of this filing , and all related expenses were accrued at december 31 , 2011. therefore , we do not anticipate further litigation expenses in 2012. depreciation and amortization depreciation and amortization expenses during fiscal 2011 increased $ 15,532 as compared to fiscal 2010. the increase in fiscal 2011 is primarily due to depreciation on new equipment and improvements for our new headquarters . 25 other income ( expense ) other income ( expense ) of $ 12,711 during fiscal 2011consisted primarily of finance charges to customers with past due balances that we are reasonably assured that we will collect . other income ( expense ) during fiscal 2010 of ( $ 19,298 ) includes interest expense on related party notes payable . in fiscal 2010 , we recorded non-cash interest expense of $ 34,178 upon the conversion of the notes payable into shares of the company for the value of the shares received in excess of the carrying value of the notes payable and accrued interest . income taxes at december 31 , 2009 , we had fully reserved our deferred income tax assets primarily resulting from net operating loss carryforwards . however , at december 31 , 2010 , we elected to only partially reserve our deferred tax assets based on our estimated profitability for the next two years . therefore , the reduction of our full valuation allowance on our deferred tax asset resulted in an income tax benefit of $ 220,800 for the year ended december 31 , 2010. during the year ended december 31 , 2011 , we utilized our remaining net operating loss carryforwards , and recorded income tax expense of $ 21,800 attributable to income in excess of the loss carryforwards . net income net income during fiscal 2011 was $ 239,276 as compared to $ 429,406 during fiscal 2010. although revenue was lower in fiscal 2011 as discussed previously , our gross profits increased $ 485,035 to $ 1,836,132 in fiscal 2011 as compared to $ 1,351,097 in fiscal 2010. the increases in gross profits were partially offset by increases in general and administrative expenses and litigation expenses previously discussed , resulting in an increase in net income before taxes of $ 52,470 to $ 261,076 in fiscal 2011 as compared to $ 208,606 in fiscal 2010. however , as previously discussed , we recorded income tax expense of $ 21,800 in fiscal 2011 as compared to an income tax benefit of $ 220,800 in 2010 , and therefore net income was lower in fiscal 2011 as compared to fiscal 2010. liquidity and capital resources we generated $ 478,158 in cash from our operating activities during fiscal 2011 , as compared to $ 446,297 in fiscal 2010. in fiscal 2011 , our net cash used in investing activities increased to $ 83,940 as compared to $ 48,127 in fiscal 2010 , primarily due to the acquisition of a customer list for $ 40,000 during fiscal 2011. as of december 31 , 2011 , we had $ 862,386 in cash and cash equivalents and $ 361,191 of net accounts receivable . current liabilities for the period ended december 31 , 2011 , totaled $ 450,598 , including accrued payroll liabilities ; accounts payable , accrued expenses , accrued litigation , and deferred revenue . at december 31 , 2011 , our total assets exceeded our total liabilities by $ 1,211,605. at december 31 , 2011 , we had $ 450,000 available to us under a line of credit with a bank . in january 2012 , we borrowed $ 270,000 under the line of credit to partially finance the purchase of certain assets from sec compliance services , inc. we manage our cash flow carefully with the intent to meet our obligations from cash generated from operations . there can be no assurance that cash generated from operations will be sufficient to fund our operating expenses or meet our other obligations , and there is no assurance that debt or equity financing will be available , or if available , that such financing will be upon terms acceptable to us . 26 disclosure about off-balance sheet arrangements we do not have any transactions , agreements or other contractual arrangements that constitute off-balance sheet arrangements . outlook the following statements and certain statements made elsewhere in this document are based upon current expectations . these statements are forward looking and are subject to factors that could cause actual results to differ materially from those suggested here , including , without limitation , demand for and acceptance of our services , new developments , competition and general economic or market conditions , particularly in the domestic and international capital markets . refer also to the cautionary statement concerning forward looking statements included in this report . our vision is to be a market leader of unified regulatory solutions for compliance professionals , by providing a true single sourced model for issuers and the capital markets . we pride ourselves on providing the best systems , the best service to our clients , the highest support to our staff ; record results , higher returns to our shareholders , and higher rewards to our team members . our strategy is focused on maximizing long-term shareholder value by driving profitable growth , continuing our focus on productivity , and acquiring and integrating complementary businesses . plan of operation the following plan of operations provides information , which our management believes , is relevant to an assessment and understanding of our business , operations and financial condition . the discussion should be read in conjunction with the financial statements as of and for the periods ended december 31 , 2011 and 2010 , and the notes thereto which are included in this annual report . this plan of operation contains forward-looking statements that involve risks , uncertainties and assumptions .
| results of operations comparison of results of operations for the years ended december 31 , 2011 and 2010 replace_table_token_6_th 22 revenues total revenue decreased by $ 632,414 , or 16 % , during the year ended december 31 , 2011 as compared to fiscal 2010. the overall decrease in revenue is primarily due to a decrease in printing and financial communication revenue of $ 963,325 and a decrease in fulfillment and distribution revenue of $ 553,338 during the year ended december 31 , 2011 as compared to fiscal 2010. these decreases were partially offset by an increase in compliance and reporting services revenue of $ 1,037,152 during the year ended december 31 , 2011 as compared to fiscal 2010. in 2012 , we anticipate that revenue from compliance and reporting services will continue to increase , both through new client acquisition , and from customers acquired from sec compliance services , inc. in january 2012. we may also consider other strategic partnerships and acquisitions to grow this revenue source . compliance and reporting service revenue increased $ 1,037,152 , or 174 % during the year ended december 31 , 2011 as compared to fiscal 2010. the increase in revenue from compliance and reporting services is primarily attributable to the final phase in of the sec 's three-year mandate for companies to begin filing quarterly and annual reports in xbrl format . a large portion of our clients are small reporting companies , and those companies are required to file quarterly and annual reports in xbrl format for all periods ended after june 15 , 2011. therefore , during fiscal 2011 , we began delivering initial xbrl tagging services and quarterly filings in xbrl format , which accounted for the overall increase in compliance and reporting service revenue . even though we are seeing pricing pressures in this new revenue stream , we will continue to allocate a prudent amount of resources focused on new client acquisition .
| 5,777 |
” 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 the sections entitled “ risk factors ” , '' `` business '' and the audited consolidated financial statements , including the related notes , appearing elsewhere in this form 10-k. all references to years , unless otherwise noted , refer to our fiscal years , which end on december 31 . as used in this form 10-k , unless the context suggests otherwise , “ we , ” “ us , ” “ our , ” “ the company ” or “ vectoiq ” refer to vectoiq acquisition corp. overview we are a newly organized company incorporated as a delaware corporation on january 23 , 2018 and formed for the purpose of effecting a merger , capital stock exchange , asset acquisition , stock purchase , recapitalization , reorganization or similar business combination with one or more businesses ( the “ initial business combination ” ) . we intend to effectuate our initial business combination using cash from the proceeds of our initial public offering ( the “ public offering ” ) and the sale of private placement units that occurred simultaneously with the consummation of the public offering . the issuance of additional shares of our stock in a business combination : · may significantly dilute the equity interest of investors in the public offering ; · may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock ; · could cause a change in control if a substantial number of shares of our common stock is issued , which may affect , among other things , our ability to use our net operating loss carry forwards , if any , and could result in the resignation or removal of our present officers and directors ; · may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us ; and · may adversely affect prevailing market prices for our common stock and or warrants . as indicated in the accompanying financial statements , we had $ 751,640 and $ 1,168,600 in cash , $ 10,316 and $ 47,979 of cash held in the trust account established for the benefit of the company 's public stockholders at j.p. morgan chase bank , n.a . ( the “ trust account ” ) , and investments held in the trust account of $ 238,372,960 and $ 235,243,004 at december 31 , 2019 and 2018 , respectively . we expect to continue to incur significant costs in the pursuit of our acquisition plans . we can not assure you that our plans to complete our initial business combination will be successful . 42 proposed business combination business combination agreement on march 2 , 2020 , we entered into the business combination agreement with merger sub and nikola , pursuant to which we will effect the proposed transaction . pursuant to the business combination agreement , at the closing , merger sub will be merged with and into nikola , with nikola surviving the merger as a wholly-owned direct subsidiary of us . immediately prior to the effective time of the merger ) , nikola will cause the shares of nikola 's preferred stock issued and outstanding immediately prior to the effective time to be automatically converted into shares of nikola common stock , and each converted share of nikola preferred stock will no longer be outstanding and will cease to exist . at the effective time , by virtue of the merger , all shares of nikola common stock issued and outstanding immediately prior to the effective time will be canceled and converted into the right to receive the number of shares of our common stock equal to the exchange ratio of 1.901 set forth in the business combination agreement . each nikola stock option that is outstanding immediately prior to the effective time , whether vested or unvested , will be converted into an option to purchase a number of shares of our common stock equal to the product ( rounded down to the nearest whole number ) of ( i ) the number of shares of nikola common stock subject to such option immediately prior to the effective time and ( ii ) the exchange ratio , at an exercise price per share ( rounded up to the nearest whole cent ) equal to ( a ) the exercise price per share of such option immediately prior to the effective time divided by ( b ) the exchange ratio . the closing is subject to certain conditions , including but not limited to the approval of our stockholders and nikola 's stockholders of the business combination agreement . the business combination agreement may also be terminated by either party under certain circumstances . nikola has agreed to customary “ no shop ” obligations subject to a customary “ fiduciary out , ” and nikola would be required to pay a termination fee in the amount of $ 82 million if the business combination agreement is terminated under certain circumstances . the closing will occur as promptly as practicable , but in no event later than three business days following the satisfaction or waiver of all of the closing conditions contained in the business combination agreement . if , by may 1 , 2020 , we and nikola determine that that the closing is unlikely to be consummated on or before may 18 , 2020 , then we will take all actions necessary to obtain the approval of our stockholders to extend our deadline to consummate our initial business combination to a date after such date but prior to august 31 , 2020 in accordance with our amended and restated certificate of incorporation . story_separator_special_tag we can not assure you that we will be able to regain compliance with the annual meeting requirement or that our securities will continue to be listed on nasdaq . 44 story_separator_special_tag 24pt '' > contractual obligations at december 31 , 2019 and 2018 , we did not have any long-term debt , capital lease obligations , operating lease obligations or long-term liabilities . we have entered into an administrative support agreement with our sponsor , pursuant to which the company is billed a total of $ 10,000 per month for office space and general administrative services . upon completion of the initial business combination or the company 's liquidation , the company will cease incurring these monthly fees . the company accrued $ 195,000 and $ 75,000 for office space and general administrative services at december 31 , 2019 and 2018 , respectively . controls and procedures section 404 of the sarbanes-oxley act requires that we evaluate and report on our system of internal controls beginning with our annual report on form 10-k for the year ending december 31 , 2019. only in the event we are deemed to be a large accelerated filer , or an accelerated filer will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting . further , for as long as we remain an emerging growth company , we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting . we expect to assess the internal controls of our target business or businesses prior to the completion of our initial business combination and , if necessary , to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls . a target business may not be in compliance with the provisions of the sarbanes-oxley act regarding the adequacy of internal controls . many small and mid-sized target businesses we may consider for our initial business combination may have internal controls that need improvement in areas such as : · staffing for financial , accounting and external reporting areas , including segregation of duties ; · reconciliation of accounts ; · proper recording of expenses and liabilities in the period to which they relate ; · evidence of internal review and approval of accounting transactions ; · documentation of processes , assumptions and conclusions underlying significant estimates ; and · documentation of accounting policies and procedures . because it will take time , management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market expectations for our operation of a target business , we may incur significant expense in meeting our public reporting responsibilities , particularly in the areas of designing , enhancing , or remediating internal and disclosure controls . doing so effectively also may take longer than we expect , thus increasing our exposure to financial fraud or erroneous financing reporting . 46 related party transactions in february 2018 , our founders purchased an aggregate of 5,750,000 shares ( the “ founder shares ” ) of the company 's common stock , par value $ 0.0001 , for an aggregate purchase price of $ 25,000 , or approximately $ 0.004 per share . the sponsor and cowen investments purchased 4,301,000 and 1,449,000 of the founder shares , respectively . in march 2018 , our sponsor transferred 15,000 founder shares to each of our initial director nominees . in april 2018 , the sponsor forfeited 435,606 founder shares and the anchor investor purchased 435,606 founder shares for an aggregate purchase price of $ 1,894 , or approximately $ 0.004 per share . in may 2018 , cowen investments forfeited 287,500 founder shares , which were subsequently purchased by the sponsor and our anchor investor . additionally , in may 2018 , our sponsor purchased 254,829 founder shares for an aggregate purchase price of $ 1,108 , or approximately $ 0.004 per share , and our anchor investor purchased 32,671 founder shares for an aggregate purchase price of $ 142 , or approximately $ 0.004 per share . the number of founder shares issued was determined based on the expectation that such founder shares would represent 20 % of the outstanding shares upon completion of the public offering ( excluding the private shares ) . prior to the initial investment of $ 25,000 by our founders , the company had no assets , tangible or intangible . the purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued . if we increase or decrease the size of the offering pursuant to rule 462 ( b ) under the securities act , we will effect a stock dividend or share contribution back to capital or other appropriate mechanism , as applicable , immediately prior to the consummation of the offering in such amount as to maintain the representation by the founder shares of 20 % of our issued and outstanding shares of common stock ( excluding the private shares ) upon the consummation of the initial public offering . up to 750,000 founder shares will be subject to forfeiture , depending on the extent to which the underwriter 's over-allotment option is exercised . we are obligated , commencing on the date of the public offering , to pay our sponsor a monthly fee of an aggregate of $ 10,000 for office space and general and administrative services .
| results of operations our entire activity from january 23 , 2018 ( inception ) through may 18 , 2018 , consisted of formation and preparation for the initial public offering , and as such , we had no operations and no significant operating expenses . subsequent to the closing of the initial public offering on inception , our other income consists of interest and dividend income earned on the investments in our trust account and our operating costs include costs associated with obtaining directors and officers insurance and other general and administrative costs . for the year ended december 31 , 2019 , we had net income of $ 2,730,459 , which consisted of $ 5,033,038 in interest earned on investments and marketable securities held in the trust account , offset by $ 910,209 in general and administrative costs , and $ 1,392,370 in income tax expense . for the period from january 23 , 2018 ( inception ) through december 31 , 2018 , we had net income of $ 1,913,035 , which consisted of $ 2,990,983 in interest earned on investments and marketable securities held in the trust account , offset by $ 402,302 in general and administrative costs , and $ 675,646 in income tax expense . liquidity and capital resources in may 2018 , we consummated the public offering , in which we sold 23,000,000 units ( including 3,000,000 units subject to the exercise of the underwriters ' over-allotment option ) at a price of $ 10.00 per unit generating gross proceeds of $ 230,000,000 before underwriting discounts and expenses .
| 5,778 |
these forward-looking statements involve risks and uncertainties that could cause our actual results and financial condition to differ materially from those expressed or implied in our forward-looking statements . such risks and uncertainties include , among others , those discussed in “ item 1a . risk factors ” of this annual report on form 10-k , as well as in our consolidated financial statements , related notes , and the other information appearing elsewhere in this report and our other filings with the sec . we do not intend , and undertake no obligation , to update any of our forward-looking statements after the date of this report to reflect actual results or future events or circumstances . given these risks and uncertainties , readers are cautioned not to place undue reliance on such forward-looking statements . you should read the following “ management 's discussion and analysis of financial condition and results of operations ” in conjunction with the audited consolidated financial statements and the related notes that appear elsewhere in this report . separation from ebay inc. on september 30 , 2014 , ebay inc. ( “ ebay ” ) announced its intent to separate its payments business into an independent , publicly traded company . to accomplish this separation , in january 2015 , ebay incorporated paypal holdings , inc. ( “ paypal holdings ” ) which is now the parent of paypal , inc. and holds directly or indirectly all of the assets and liabilities associated with paypal , inc. in june 2015 , the board of directors of ebay approved the separation ( the “ separation ” ) of ebay 's payments business through the distribution ( the “ distribution ” ) of 100 % of the outstanding common stock of paypal holdings to ebay 's stockholders . paypal holdings ' registration statement on form 10 , as amended , was declared effective by the u.s. securities and exchange commission on june 29 , 2015. on july 17 , 2015 ( the “ distribution date ” ) , paypal holdings became an independent publicly traded company through the pro rata distribution by ebay of 100 % of the outstanding common stock of paypal holdings to ebay stockholders . each ebay stockholder of record as of the close of business on july 8 , 2015 received one share of paypal holdings common stock for every share of ebay common stock held on the record date . approximately 1.2 billion shares of paypal holdings common stock were distributed on july 17 , 2015 to ebay stockholders . paypal holdings ' common stock began “ regular way ” trading under the ticker symbol “ pypl ” on the nasdaq stock market on july 20 , 2015. prior to the separation , ebay transferred substantially all of the assets and liabilities and operations of ebay 's payments business to paypal holdings , which was completed in june 2015 ( the “ capitalization ” ) . the consolidated financial statements prior to the capitalization were prepared on a stand-alone basis and were derived from ebay 's consolidated financial statements and accounting records . the consolidated financial statements reflect our financial position , results of operations , comprehensive income and cash flows as our business was operated as part of ebay prior to the capitalization . following the capitalization , our consolidated financial statements include the accounts of paypal holdings and its wholly-owned subsidiaries . the consolidated financial position , results of operations and cash flows as of dates and for periods prior to the separation may not be indicative of what our financial position , results of operations and cash flows would have been as a separate stand-alone entity during the periods presented , nor are they indicative of what our financial position , results of operations and cash flows may be in the future . for additional information , see “ note 1—overview and summary of significant accounting policies ” to our consolidated financial statements included elsewhere in this annual report on form 10-k. unless otherwise expressly stated or the context otherwise requires , references to “ we , ” “ our , ” “ us , ” “ the company ” and “ paypal ” refer to paypal holdings and its consolidated subsidiaries or , in the case of information as of dates or for periods prior to the separation , the consolidated entities of the payments business of ebay , including paypal , inc. and certain other assets and liabilities that had been historically held at the ebay corporate level but were specifically identifiable and attributable to the payments business . business environment we are a leading technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide . our vision is to democratize financial services , as we believe that managing and moving money is a right for all people , not just the affluent . our goal is to increase our relevance for consumers and merchants to manage and move their money anywhere in the world , anytime , on any platform and using any device . our combined payment solutions , including our paypal , paypal credit , braintree , venmo , xoom , and paydiant products , compose our proprietary payments platform . 36 we operate globally and in a rapidly evolving regulatory environment characterized by a heightened regulatory focus on all aspects of the payments industry . that focus continues to become even more heightened as regulators on a global basis focus on such important issues as countering terrorist financing , anti-money laundering , privacy and consumer protection . some of the laws and regulations to which we are subject were enacted recently , and the laws and regulations applicable to us , including those enacted prior to the advent of digital and mobile payments , are continuing to evolve through legislative and regulatory action and judicial interpretation . story_separator_special_tag our revenues can be significantly impacted by the following : the mix of merchants , products and services ; the mix between domestic and cross-border transactions ; the geographic region or country in which a transaction occurs ; and the amount of paypal credit loans receivable outstanding with consumers and merchants . net revenues analysis the components of our net revenue for the years ended december 31 , 2017 , 2016 and 2015 were as follows : replace_table_token_8_th transaction revenues transaction revenues increased by $ 1.9 billion , or 20 % , in 2017 compared to 2016 , and by $ 1.4 billion , or 17 % , in 2016 compared to 2015 . the increase in transaction revenues in 2017 and 2016 was due primarily to the growth in tpv , mainly from our paypal and braintree products , and in the number of payment transactions , both of which were due primarily to an increase in our active customer accounts and increased engagement from our customers ( measured by payment transactions per active account ) . xoom transaction revenues contributed two percentage points to the 2016 growth rate . net gains from our foreign currency exchange contracts recognized as a component of transaction revenues in 2017 were $ 17 million , compared to $ 119 million in 2016 . refer to “ note 8—derivative instruments ” to our consolidated financial statements included elsewhere in this annual report on form 10-k for additional information on our foreign currency exposure management program . 40 the following table provides a summary of our active customer accounts , number of payment transactions , tpv and related metrics : replace_table_token_9_th all amounts in tables are rounded to the nearest millions except as otherwise noted . as a result , certain amounts may not recalculate using the rounded amounts provided . ( 1 ) an active customer account is a registered account that successfully sent or received at least one payment or payment reversal through our payments platform , excluding transactions processed through our gateway and paydiant products , in the past 12 months . ( 2 ) payment transactions are the total number of payments , net of payment reversals , successfully completed through our payments platform , excluding transactions processed through our gateway and paydiant products . ( 3 ) number of payment transactions per active customer account reflects the total number of payment transactions within the previous 12 month period , divided by active customer accounts at the end of the period . ( 4 ) tpv is the value of payments , net of payment reversals , successfully completed through our payments platform , excluding transactions processed through our gateway and paydiant products . * * not meaningful transaction revenues grew more slowly than both tpv and number of payment transactions in 2017 due primarily to a higher proportion of person-to-person ( “ p2p ” ) transactions , primarily from our paypal and venmo products from which we earn lower rates and foreign exchange hedging losses . the percentage growth in transaction revenues was lower than the percentage growth in tpv and payment transactions in 2016 primarily due to a higher proportion of p2p transactions ( including our venmo products ) for which we earn lower rates , and a higher portion of tpv generated by large merchants who generally pay lower rates with higher transaction volume . the impact of increases or decreases in prices charged to our customers did not significantly impact transaction revenue growth in 2017 or 2016 . other value added services net revenues from other value added services increased by $ 340 million , or 25 % , in 2017 compared to 2016 , and by $ 232 million , or 21 % , in 2016 compared to 2015 . growth in net revenues from other value-added services in 2017 was due primarily to interest and fee income earned on our paypal credit loans receivable portfolio . swift revenues contributed approximately three percentage points to the 2017 growth rate . the total consumer and merchant loans receivable balance , including loans and receivables , held for sale , as of december 31 , 2017 and december 31 , 2016 was $ 7.8 billion and $ 5.7 billion , respectively , reflecting a year-over-year increase of 37 % . in november 2017 , we reached an agreement to sell our u.s. consumer credit receivables portfolio to synchrony bank , which we believe will enable us , at closing , to free up balance sheet capacity and cash flow for other uses , and mitigate balance sheet risk . historically , this portfolio was reported as outstanding principal balances , net of any participation interest sold and pro-rata allowances including , unamortized deferred origination costs and estimated collectible interest and fees . upon approval of the decision to sell these receivables from our board of directors , the portfolio was reclassified as held for sale , and recorded at the lower of cost or fair value . due to the designation as held for sale , the associated allowance for this portfolio was reversed , resulting in an increase of approximately $ 39 million in revenue from other value added services . this transaction will be accounted for as a sale , and the receivables will no longer be reported in our consolidated financial statements following the closing of this transaction , which is expected to occur in the third quarter of 2018 , synchrony bank will become the exclusive issuer of the paypal credit online consumer financing program in the u.s. , and we will no longer hold an ownership interest in the receivables generated through the program ( other than charged off receivables ) . in addition , we will earn a profit share on the portfolio of consumer receivables owned by synchrony bank . growth in net revenues from other value added services in 2016 was due primarily to interest and fee income earned on our paypal credit loans receivable portfolio .
| overview of results of operations the following table provides a summary of our consolidated operating results for the years ended december 31 , 2017 , 2016 and 2015 : replace_table_token_5_th all amounts in tables are rounded to the nearest millions , except as otherwise noted . as a result , certain amounts may not recalculate using the rounded amounts provided . ( 1 ) on july 17 , 2015 , the distribution date , ebay stockholders of record as of the close of business on july 8 , 2015 received one share of paypal common stock for every share of ebay common stock held as of the record date . ( 2 ) the weighted average number of common shares outstanding for diluted earnings per share for the year ended december 31 , 2015 was based on the number of common shares distributed on july 17 , 2015 for the period prior to distribution and the weighted average number of common shares outstanding for the period beginning after the distribution date . * * not meaningful net revenues increased $ 2.3 billion , or 21 % , in 2017 and $ 1.6 billion , or 17 % , in 2016 . the increases were primarily driven by growth in tpv ( as defined below under “ net revenues ” ) of 27 % in 2017 and 26 % in 2016 . net revenues from our recent acquisitions of tio and swift were not material . net revenues from xoom ( acquired in november 2015 ) contributed two percentage points to the 2016 growth rate . 37 total operating expenses increased $ 1.7 billion , or 18 % , in 2017 and $ 1.5 billion or 19 % in 2016 . the increase in 2017 was due primarily to an increase in transaction expense , sales and marketing , general and administrative , product development , and restructuring and other charges .
| 5,779 |
our operating leases also typically require payment of real estate taxes , common area maintenance and insurance . these components comprise the majority of our variable lease cost and are excluded from the present value of our lease obligations . in instances where they are fixed , they are included due to our election to combine lease and non-lease components , with the exception of our distribution facility asset class . operating lease assets include prepaid lease payments and initial direct costs and are reduced by lease incentives . our lease terms generally do not include options to extend or terminate the lease unless it is reasonably certain that story_separator_special_tag the following discussion and analysis contains forward-looking statements within the meaning of the federal securities laws , and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results , including those set forth in part i , item 1a , “ risk factors ” of this report . the information contained in this section should also be read in conjunction with our consolidated financial statements and related notes and the information contained elsewhere in this report . see also “ forward-looking statements ” immediately prior to part i , item 1 , “ business ” in this report . business overview headquartered in austin , texas , yeti is a global designer , retailer , and distributor of a variety innovative outdoor products . from coolers and drinkware to backpacks and bags , yeti products are built to meet the unique and varying needs of diverse outdoor pursuits , whether in the remote wilderness , at the beach , or anywhere life takes our customers . by consistently delivering high-performing , exceptional products , we have built a strong following of brand loyalists throughout the world , ranging from serious outdoor enthusiasts to individuals who simply value products of uncompromising quality and design . we have an unwavering commitment to outdoor and recreation communities , and we are relentless in our pursuit of building superior products for people to confidently enjoy life outdoors and beyond . effects of the covid-19 pandemic in march 2020 , the world health organization declared the novel strain of coronavirus ( covid-19 ) a global pandemic . the covid-19 pandemic has significantly impacted global economies , resulting in travel restrictions , business slowdowns or shutdowns in affected areas , reduced economic activity , and changes in consumer behavior . these covid-19 pandemic disruptions have affected our businesses , as well as those of our consumers , wholesale partners , and suppliers . as we entered 2020 , the great momentum from 2019 continued to be reflected in the strong sales performance throughout most of the first quarter of 2020. unfortunately , our sales were adversely impacted during the final weeks of the first quarter of 2020 due to the decrease in consumer spending and temporary store closures attributed to the covid-19 pandemic . however , during the second quarter of 2020 , our dtc channel significantly benefited from a demand surge for outdoor recreation and leisure lifestyle products as we saw consumers change their views towards how they spend their time experiencing nature and exploring the outdoors as home restriction were lifted , as well as more consumers shopping online while sheltering-in-place . the unprecedented demand across the dtc channel continued throughout the remainder of the year . in our wholesale channel , these changes in consumer behavior helped to fuel strong wholesale orders at the end of the second quarter of 2020 as our wholesale partners began to reopen stores and replenish inventories for anticipated demand for the remainder of 2020. despite the strong demand , the full-year performance of our wholesale channel was limited by inventory constraints throughout the second half of the year , as further discussed below . to date , we have experienced minimal supply-chain disruptions as a direct result of the covid-19 pandemic . additionally , restrictions or disruptions of transportation did not result in significantly higher costs or delays for us during 2020. however , in the final weeks of the second quarter of 2020 in the midst of the pandemic , we reduced inventory purchase orders to align with demand forecasts at the time and to provide enhanced financial flexibility . these actions coupled with the overall strong demand during 2020 contributed to lower than expected inventory levels throughout the second half of the year and , in turn , resulted in inventory constraints to meet demand in our wholesale channel , particularly in the fourth quarter of 2020. as part of our response strategy to the disruptions caused by the covid-19 pandemic and as a precautionary measure , we enhanced our liquidity position at the end of the first quarter of 2020 through a $ 50.0 million draw down on our revolving credit facility and began instituting cost reduction initiatives , including the reduction of discretionary spending , lowering of capital expenditures and investments , temporary hiring suspensions , employee furloughs , and workforce reductions . our senior leadership also agreed to temporarily reduce their base salaries and our board of directors agreed to temporarily waive their annual cash compensation starting in may 2020. in the second quarter of 2020 , we repaid in full the $ 50.0 million borrowed under the revolving credit facility . the cost reduction initiatives were scaled back during the second half of 2020. in august 2020 , salaries of senior leadership team members were restored to previously approved levels . additionally , the board of directors ' annual cash compensation was reinstated . 30 ta ble of contents throughout the pandemic , we have prioritized the health and safety of our employees and our consumers . in march 2020 , we temporarily closed our retail stores , domestic customization operations , and offices , including our innovation center , and implemented a remote work policy for all of our corporate employees , which , in most cases , we are still continuing to follow . story_separator_special_tag these factors , which contributed to the increase in gross margin were partially offset by the unfavorable impact of : increased tariff rates , which reduced gross margin by approximately 100 basis points ; higher inventory reserves , which reduced gross margin by approximately 70 basis points ; and end-of-life price reductions on our hopper two 30 soft cooler implemented in the second quarter of 2019 and other impacts , which reduced gross margin by approximately 50 basis points . selling , general , and administrative expenses sg & a expenses increased by $ 104.6 million , or 37 % , to $ 385.5 million in 2019 from $ 281.0 million in 2018. as a percentage of net sales , sg & a expenses increased 610 basis points to 42.2 % in 2019. the increase in sg & a expenses were primarily driven by : an increase in variable expenses of $ 22.8 million , or a 120 basis point increase , driven by our higher margin dtc channel : – higher distribution costs included outbound freight , online marketplace fees , credit card processing fees , and third-party logistics fees ; and 34 ta ble of contents an increase in non-variable expenses of $ 81.7 million , or a 490 basis point increase , comprised of : – higher non-cash stock-based compensation expense , primarily driven by pre-ipo performance-based restricted stock units that vested and were fully recognized in the fourth quarter of 2019 ; – increased personnel to support long-term growth in our business ; – higher marketing expenses , which were broad-based across both brand and performance marketing efforts ; – higher temporary labor and information technology expenses to support growth and continued development of our omni-channel capabilities ; – incremental costs incurred in connection with our ongoing transition to a public company , including costs incurred in connection with our secondary offerings in may 2019 and november 2019 ; – increased depreciation and amortization expense ; – increased non-variable distribution costs , including third-party logistics fees ; and – increased facilities costs ; these increases were partially offset by a decrease in other operating expenses . non-operating expenses interest expense was $ 21.8 million in 2019 , compared to $ 31.3 million in 2018. the decrease in interest expense was primarily due to decreased outstanding long-term debt under our credit facility . income tax expense was $ 16.8 million in 2019 , compared to $ 11.9 million in 2018. our effective tax rate for 2019 was 25 % compared to 17 % for 2018. the increase in effective tax rate was primarily due to an increase in state income tax expense due to expanding our operations to additional states and a discrete tax expense associated with the pre-ipo performance-based rsus that vested and were fully recognized in the fourth quarter of 2019. in addition , income tax expense in 2018 was lower due to a benefit from a revaluation of state deferred tax assets and the stock compensation tax benefit of exercised options primarily in connection with our ipo . liquidity and capital resources general our cash requirements have principally been for working capital purposes , long-term debt repayments , and capital expenditures . we fund our working capital , primarily inventory and accounts receivable , and capital investments from cash flows from operating activities , cash on hand , and borrowings available under our revolving credit facility ( as defined below ) . as discussed under “ —effects of the covid-19 pandemic ” above , although the potential magnitude and economic impacts of covid-19 are uncertain , we believe that the actions taken to date , together with our current operating performance , operating plan , our strong cash position , including cash generated from operations , inventory on hand and borrowings available under the revolving credit facility , will be sufficient to satisfy our liquidity needs and capital expenditure requirements for at least the next twelve months . current liquidity as of january 2 , 2021 , we had a cash balance of $ 253.3 million , a $ 64.5 million working capital deficit ( excluding cash ) , and $ 150.0 million of borrowings available under the revolving credit facility . credit facility we are party to a senior secured credit agreement ( the “ credit facility ” ) that provides for a $ 150.0 million revolving credit facility maturing on december 17 , 2024 and a $ 300.0 million term loan a maturing on december 17 , 2024 ( the “ term loan a ” ) . in december 2019 , we amended our existing credit facility to , among other changes , increase the remaining principal amount of the term loan a from approximately $ 298.0 million to $ 300.0 million , increase the commitments under the revolving credit facility from $ 100.0 million to $ 150.0 million , and extend the maturity date of both the term loan a and the revolving credit facility from may 19 , 2021 to december 17 , 2024. during 2020 , we made $ 15.0 million and $ 150.0 million in mandatory and voluntary repayments , respectively . at the end of the first quarter of 2020 , as a precautionary measure to enhance our liquidity position and to increase available cash on hand amidst the start of the covid-19 pandemic , we drew down $ 50.0 million on the revolving credit facility . during the second quarter of 2020 , we repaid in full the $ 50.0 million borrowed under the revolving credit facility . as of january 2 , 2021 , we had no outstanding borrowings and $ 150.0 million of borrowings available under the revolving credit facility . at january 2 , 2021 , we had $ 135.0 million principal amount of indebtedness outstanding under the credit facility .
| results of operations the following table sets forth selected statement of operations data , and their corresponding percentage of net sales , for the periods indicated ( dollars in thousands ) : replace_table_token_2_th year ended january 2 , 2021 compared to year ended december 28 , 2019 replace_table_token_3_th net sales net sales increased $ 178.0 million , or 19 % , to $ 1,091.7 million in 2020 from $ 913.7 million in 2019. the increase in net sales was driven by growth in our faster growing dtc channel . dtc channel net sales increased $ 194.8 million , or 50 % , to $ 580.9 million in 2020 from $ 386.1 million in 2019 , driven by both drinkware and coolers & equipment categories . net sales in our dtc channel were favorably impacted by increased demand for outdoor recreation and leisure lifestyle products as the covid-19 pandemic has significantly impacted consumers ' views towards how they spend their time experiencing nature and the outdoors as well as more consumers shopping online while sheltering-in-place , resulting in increased sales volume during the period . as a result , our channel mix significantly shifted towards our dtc channel from 42 % in 2019 to 53 % in 2020. net sales in our wholesale channel decreased $ 16.8 million , or 3 % , to $ 510.9 million in 2020 from $ 527.6 million in 2019 , primarily driven by coolers & equipment . while wholesale net sales trends returned to positive growth at the end of the second quarter of 2020 and continued during the second half of the year , the sharp decline of net sales during march and april 2020 , as a result of covid-19 related temporary store closures , adversely impacted the performance of the wholesale channel .
| 5,780 |
the company has a net operating loss carryforward for tax purposes totaling approximately $ 3,004,000 at july 31 , 2010 , expiring through 2029. there is a limitation on the amount of taxable income that can be offset by carryforwards after a change in control ( generally greater than a 50 % change in ownership ) . temporary differences , which give rise to a net deferred tax asset , are as follows : significant deferred tax assets at july 31 , 2010 and 2009 are as follows : replace_table_token_13_th the valuation allowance at july 31 , 2010 was approximately $ 1,850,000 . the net change in valuation allowance during the year ended july 31 , 2010 was an increase of approximately $ 1,213,000 . in assessing the realizability of deferred tax assets , management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized . the ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible . management considers the scheduled reversal of deferred income tax liabilities , projected future taxable income , and tax planning strategies in making this assessment . based on consideration of these items , management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of july 31 , 2010 and 2009 , respectively . f-20 clear-lite holdings , inc. and subsidiary notes to consolidated financial statements july 31 , 2010 and 2009 the actual tax benefit differs from the expected tax benefit for the year ended july 31 , 2010 and the period ended july 31 , 2009 ( computed by applying the u.s. federal corporate tax rate of 32.13 % to income before taxes and 5.5 % for state income taxes , a blended rate of 37.63 % ) as follows : replace_table_token_14_th note 9 concentrations the company had the following concentrations : ( a ) sales customer july 31 , 2010 july 31 , 2009 a 67 % - % b 33 % - % ( b ) accounts payable vendor july 31 , 2010 july 31 , 2009 a 16 % - % ( c ) purchases vendor july 31 , 2010 july 31 , 2009 a 98 % - % note 10 commitments and contingencies litigations , claims and assessments from time to time , the company may become involved in various lawsuits and legal proceedings , which arise in the ordinary course of business . however , litigation is subject to inherent uncertainties , and an adverse result in these or other matters may arise that may harm its business . the company is currently not aware of any such legal proceedings or claims that they believe will have , individually or in the aggregate , a material adverse affect on its business , financial condition or operating results . f-21 clear-lite holdings , inc. and subsidiary notes to consolidated financial statements july 31 , 2010 and 2009 employment agreement on july 31 , 2009 , the company entered into an employment agreement with its chief financial officer . the terms of the agreement are as follows : ● $ 4,000/month for financial statement preparation services ●hourly charges for services in excess of financial statement preparation ●300,000 shares of the company 's common stock for services rendered , having a fair value of $ 375,000 ( $ 1.25/share ) , based upon the quoted closing trading price . note 11 subsequent events ( a ) common stock issuances on august 14 , 2010 , the company issued 350,000 common shares for services rendered , having a fair value of $ 18,200 ( $ 0.05/share ) . fair value was based upon the quoted closing trading price of the company 's common stock . during the period august 1 , 2010 through november 12 , 2010 , 3 convertible noteholders converted the principal of their notes into shares of common stock . the noteholders converted principal , of $ 152,825 , at a conversion rate range of $ 0.004 - $ 0.019 , into 18,350,629 shares of the company 's common stock . at conversion , the company fully amortized the remaining debt discount associated with each convertible note , revalued the derivative liability with a mark to market adjustment through the statement of operations , and reclassified the fair value of the derivative liability to additional paid in capital . ( b ) issuance of convertible notes on july 19 , 2010 , the company entered into a convertible promissory note facility of up to $ 650,000 with one investor . on august 26 , 2010 , the company issued the investor 1 convertible promissory note with principal of $ 31,000 maturing on july 19 , 2013. the convertible promissory note bears interest at a rate of 10 % . the investor is entitled at its option to convert all or part of the principal and accrued interest into shares of the company 's common stock at a conversion price equal to the lesser of $ 0.10 or 65 % of the average of the two lowest closing prices of the common stock in the 22 trading days ( the closing bid price on the over-the-counter bulletin board or applicable trading market ) immediately prior to the conversion . the company classified the embedded conversion feature as a derivative liability due to management 's assessment that the company may not have sufficient authorized number of shares common stock required to net-share settle . story_separator_special_tag the aggregate face amount of the notes prior to the application of any original issue discount was $ 600,000 and the gross proceeds that we received were $ 500,000. on november 6 , 2009 , we consummated a private placement with nine ( 9 ) accredited investors for the issuance and sale of convertible promissory notes and series a and series b common stock purchase warrants . the notes are for the principal amount of $ 420,000 and are convertible into our shares of common stock . the series a warrant entitles the investors to purchase up to 1,400,000 shares of our common stock at an exercise price of $ 0.30 per share . the series b warrant entitles the investors to purchase up to 1,400,000 shares of our common stock at an exercise price of $ 0.60 per share . the warrants expire five years from the date of issuance . the aggregate face amount of the notes prior to the application of any original issue discount was $ 420,000 and the gross proceeds that we received were $ 350,000 . 16 on december 13 , 2009 , we consummated a private placement with one ( 1 ) accredited investor for the issuance and sale of a convertible promissory note and series a and series b common stock purchase warrants . the note is for the principal amount of $ 72,000 and is convertible into shares of our common stock at an exercise price of $ 0.30 per share . the series a warrant entitles the investor to purchase up to 240,000 shares of our common stock at an exercise price of $ 0.30 per share . the series b warrant entitles the investor to purchase up to 240,000 shares of our common stock at an exercise price of $ 0.60 per share . the warrants expire five years from the date of issuance . the aggregate face amount of the note prior to the application of any original issue discount was $ 72,000 and the gross proceeds received by us were $ 60,000. on february 26 , 2010 , the company issued a $ 100,000 convertible note with a maturity on november 26 , 2010 and bearing interest at 8 % per annum for cash proceeds of $ 100,000. the notes are convertible into shares of the company 's common stock at a 42 % discount of the average of the lowest three ( 3 ) trading prices ( the closing bid price on the over-the-counter bulletin board or applicable trading market ) for the company 's common stock during the ten ( 10 ) trading day period ending one ( 1 ) trading day prior to the date the conversion notice is sent by the noteholder to the company . the company has analyzed the contract and has concluded that a derivative liability exists . the company is in the process of determining the fair value of the derivative liability at issuance . on march 29 , 2010 , the company issued a $ 50,000 convertible note with a maturity on december 29 , 2010 and bearing interest at 8 % per annum for cash proceeds of $ 50,000. the notes are convertible into shares of the company 's common stock at a 42 % discount of the average of the lowest three ( 3 ) trading prices ( the closing bid price on the over-the-counter bulletin board or applicable trading market ) for the company 's common stock during the ten ( 10 ) trading day period ending one ( 1 ) trading day prior to the date the conversion notice is sent by the noteholder to the company . the company has analyzed the contract and has concluded that a derivative liability exists . the company is in the process of determining the fair value of the derivative liability at issuance . on april 15 , 2010 , the company issued a $ 50,000 convertible note with a maturity on january 15 , 2011 and bearing interest at 8 % per annum for cash proceeds of $ 50,000. the notes are convertible into shares of the company 's common stock at a 42 % discount of the average of the lowest three ( 3 ) trading prices ( the closing bid price on the over-the-counter bulletin board or applicable trading market ) for the company 's common stock during the ten ( 10 ) trading day period ending one ( 1 ) trading day prior to the date the conversion notice is sent by the noteholder to the company . the company has analyzed the contract and has concluded that a derivative liability exists . the company is in the process of determining the fair value of the derivative liability at issuance . on july 8 , 2010 , we entered into a subscription agreement with one ( 1 ) accredited investor . pursuant to the agreement , we issued the investor 1,500,000 shares of our common stock at a purchase price of $ 0.10 per share , for an aggregate purchase price of one hundred and fifty thousand dollars ( $ 150,000 ) . additionally , we issued a 5-year warrant to purchase 1,500,000 shares of our common stock at an exercise price of $ 0.10. on july 19 , 2010 we issued a convertible promissory note of up to $ 650,000 with one accredited investor .
| results of operations summary income statement for the year ended july 31 , 2010 as compared to the year ended july 31 , 2009. replace_table_token_2_th for the year ended july 31 , 2010 , as compared to the period from january 1 , 2009 to july 31 , 2009 , the company reported a net loss of $ ( 16,979,177 ) , or $ ( 0.28 ) per share and a net loss of $ ( 11,634,996 ) or $ ( 0.23 ) per share , respectively . the change in net loss between periods was primarily attributable to the following significant events : ● the company recommenced sales of the lighting product line in august 2009 , ● the company paid for services in the form of stock based compensation in the amount of $ 8,112,041during the year ended july 31 , 2010 as compared to $ 851,000 during the period from january 1 , 2009 to july 31 , 2009 , ● the company 's professional fees increased to $ 1,364,212 during the year ended july 31 , 2010 as compared to $ 1,054,502 during the period from january 1 , 2009 to july 31 , 2009. the increase is primarily attributable to fees associated with running a publicly traded company , ● an increase in interest expense associated with the convertible notes outstanding and the amortization of the debt discounts associated with the convertible notes , ● the increases in expenses were offset by a decrease in other income ( expenses ) . other income ( expenses ) decreased as a result of a decrease in derivative and changes in fair market value of the derivative liabilities embedded in the company 's convertible notes payable .
| 5,781 |
as of december 31 , 2020 , we , together with our credit-focused affiliates , collectively had $ 20.3 billion of assets under management . this amount included our assets , assets of the managed funds and a separate account managed by us , and assets of the collateralized loan obligations ( clos ) , separate accounts and various fund formats , including any uncalled commitments of private funds , as managed by the investment professionals of the advisor or its consolidated subsidiary . we are a direct lender to middle market companies and invest primarily in directly originated first lien senior secured loans , including unitranche investments . in certain instances , we also make second lien , subordinated , or mezzanine , debt investments , which may include an associated equity component such as warrants , preferred stock or other similar securities and direct equity investments . our first lien senior secured loans may be structured as traditional first lien senior secured loans or as unitranche loans . unitranche structures combine characteristics of traditional first lien senior secured as well as second lien and subordinated loans and our unitranche loans will expose us to the risks associated with second lien and subordinated loans to the extent we invest in the “ last-out ” tranche or subordinated tranche ( or piece ) of the unitranche loan . we may also provide advisory services to managed funds . we are an externally managed , non-diversified , closed-end investment company that has elected to be regulated as a business development company , or bdc , under the investment company act of 1940 act , as amended , or the 1940 act . as a bdc , we are required to comply with certain regulatory requirements . for instance , we generally have to invest at least 70 % of our total assets in “ qualifying assets , ” including securities of private or thinly traded public u.s. companies , cash , cash equivalents , u.s. government securities and high-quality debt investments that mature in one year or less . as a bdc , we must not acquire any assets other than “ qualifying assets ” specified in the 1940 act unless , at the time the acquisition is made , at least 70 % of our total assets are qualifying assets ( with certain limited exceptions ) . qualifying assets include investments in “ eligible portfolio companies. ” under the relevant u.s. securities and exchange commission , or sec , rules the term “ eligible portfolio company ” includes all private companies , companies whose securities are not listed on a national securities exchange , and certain public companies that have listed their securities on a national securities exchange and have a market capitalization of less than $ 250 million , in each case organized in the united states . since april 2010 , after we completed our initial public offering and commenced principal operations , through december 31 , 2020 , we have been responsible for making , on behalf of ourselves , our managed funds and separately managed account , over $ 2.3 billion in aggregate commitments into 143 separate portfolio companies through a combination of both initial and follow-on investments . since april 2010 through december 31 , 2020 , we , along with our managed funds and separately managed account , have received $ 1.8 billion of gross proceeds from the realization of investments . we alone have received $ 1.5 billion of gross proceeds from the realization of our investments during this same time period . as of december 31 , 2020 , our managed funds , first eagle greenway , llc , or greenway , and first eagle greenway ii , llc , or greenway ii , and its separately managed account , collectively greenway ii , have received $ 190.8 million , or 127.2 % of committed capital , and $ 208.5 million , 111.5 % of the committed capital , respectively . we have elected to be treated for tax purposes as a regulated investment company , or ric , under subchapter m of the internal revenue code of 1986 , as amended , or the code . to qualify as a ric , we must , among other things , meet certain source of income and asset diversification requirements . as a ric , we generally will not have to pay corporate-level income taxes on any income we distribute to our stockholders 79 covid-19 developments there is an ongoing global outbreak of covid-19 , which has spread to over 100 countries , including the united states , and has spread to every state in the united states . the world health organization has designated covid-19 as a pandemic , and numerous countries , including the united states , have declared national emergencies with respect to covid-19 . the global impact of the outbreak has been rapidly evolving , and as cases of covid-19 have continued to be identified in additional countries , many countries have reacted by instituting quarantines and restrictions on travel , closing financial markets and or restricting trading , and limiting operation of non-essential businesses . such actions are creating disruption in global supply chains and adversely impacting many industries . the outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown . we have enhanced our portfolio monitoring practices to include a potential threat assessment of the impact of covid-19 on our portfolio companies , and we are maintaining frequent contact with our borrowers , sponsors and co-lenders . we have continued to fund our existing debt commitments . we expect the impacts of covid-19 are likely to continue to some extent as the outbreak persists , and potentially even longer as a resurgence across the globe is widely anticipated in winter . story_separator_special_tag the following table shows the weighted average yield by investment category at their current cost . replace_table_token_5_th ( 1 ) includes all loans on non-accrual status and restructured loans for which income is not being recognized as of december 31 , 2020 ( 2 ) includes income from debt-like equity securities where there is a stated rate and amounts are due on a fixed payment schedule . at december 31 , 2020 , there is one debt-like income-producing security which we do not expect to collect stated income on . 81 ( 3 ) includes yields on controlled investments , but excludes the yield on the logan jv . ( 4 ) as of december 31 , 2020 and december 31 , 2019 , the dividend income portion of distributions declared and earned of $ 7.1 million and $ 9.8 million for the years ended december 31 , 2020 and december 31 , 2019 , respectively , represented a yield to us of 7.6 % and 10.5 % , respectively , based on average capital invested . we expect the dividend yield to fluctuate as a result of the timing of additional capital invested , the changes in asset yields in the underlying portfolio and the overall performance of the logan jv investment portfolio . ( 5 ) excluding restructured loans for which income is not being recognized as of december 31 , 2020 , the weighted average yield would be 7.6 % on first lien senior secured debt , 11.8 % on second lien debt , 7.8 % on debt and income-producing investments and 7.7 % on all investments including logan jv . the weighted average yield of our debt investments is not the same as a return on investment for our stockholders but , rather , relates to a portion of our investment portfolio and is calculated before the payment of our fees and expenses . the weighted average yield was computed using the effective interest rates as of december 31 , 2020 and 2019 , including accretion of original issue discount and loan origination fees . this weighted average yield reflects the impact of loans on non-accrual status and restructured loans for which income is not being recognized as of december 31 , 2020. there can be no assurance that the weighted average yield will remain at its current level . as of december 31 , 2020 and 2019 , 1.5 % and 1.7 % of our investment portfolio at fair value was comprised of non-income producing equity and warrant investments . we intend to continue to reduce our non-income producing investments in 2021 and beyond . no assurance can be given that we will be successful in achieving this target . in evaluating our portfolio performance , among other factors , we consider portfolio companies ' adjusted earnings before interest , taxes , depreciation and amortization , or ebitda , and leverage as an investment metric . as of december 31 , 2020 and 2019 , portfolio investments , in which we have debt investments , had a median ebitda of approximately $ 18.5 million and $ 16.0 million , respectively , based on the latest available financial information provided by the portfolio companies for each of these periods . as of december 31 , 2020 and 2019 , our median attachment point in the capital structure of our debt investments in portfolio companies is approximately 4.3 times and 4.6 times the portfolio company 's ebitda , respectively , based on our latest available financial information for each of these periods . we expect the percent of our portfolio investments in the companies not owned by a private equity sponsor , or unsponsored investments to decrease over time as we work through restructurings , which may include providing additional liquidity through revolving loans , and ultimately exit our unsponsored investments . however , these portfolio investments may require follow-on capital as we work through restructurings , which will increase our exposure to these investments . going forward we expect unsponsored investments we make , if any , would only be in first lien senior secured investments . as of december 31 , 2020 , our portfolio of unsponsored debt investments included two investments , excluding our investment in wheels up partners , llc , which is a non-income producing equity security . one is performing at or above our expectations and has an investment score of 2. the other unsponsored investment has an investment score of 5. as of december 31 , 2019 , our portfolio of unsponsored debt investments included four investments . three were performing at or above our expectations and had an investment score of 1 or 2. the other unsponsored investment had an investment score of 3. as of december 31 , 2020 , we have closed portfolio investments with 86 different sponsors since inception . as of december 31 , 2019 , we had closed portfolio investments with 71 different sponsors since inception . 82 the following table summarizes sponsored and unsponsored investments based on amortized cost and fair value ( in millions ) . replace_table_token_6_th ( 1 ) excludes greenway i , greenway ii , logan jv . the following table summarizes the amortized cost and fair value of investments by type as of december 31 , 2020 ( in millions ) . replace_table_token_7_th ( 1 ) all investments are categorized as level 3 in the fair value hierarchy , except for investments in funds and the logan jv , which are excluded from the fair value hierarchy in accordance with asu 2015-07 ; these assets are valued at net asset value . the following table summarizes the amortized cost and fair value of investments by type as of december 31 , 2019 ( in millions ) .
| results of operations comparison of the years ended december 31 , 2020 , 2019 and 2018 investment income we generate revenues primarily in the form of interest on the debt and other income-producing securities we hold . other income-producing securities include investments in funds . our investments in fixed income instruments generally have an expected maturity of five to seven years , and typically bear interest at a fixed or floating rate . interest on our debt securities is generally payable quarterly . payments of principal of our debt investments may be amortized over the stated term of the investment , deferred for several years or due entirely at maturity . in some cases , our debt instruments and preferred stock investments may defer payments of dividends or pay interest in-kind , or pik . any outstanding principal amount of our debt securities and any accrued but unpaid interest will generally become due at the maturity date . the level of interest income we receive is directly related to the balance of interest-bearing investments multiplied by the weighted average yield of our investments . in addition to interest income , we may receive dividends and other distributions related to our equity investments . we may also generate revenue in the form of fees from the management of greenway and greenway ii , prepayment premiums , commitment , loan origination , structuring or due diligence fees , exit fees , amendment fees , portfolio company administration fees , fees for providing significant managerial assistance and consulting fees . these fees may or may not be recurring in nature as part of our normal business operations . we disclose below what amounts , if any , are material non-recurring fees that have been recorded as income during each respective period .
| 5,782 |
for further discussion regarding closures and impairments recorded in 2014 , 2013 and 2012 , including the impairments story_separator_special_tag the discussion and analysis below for the company should be read in conjunction with the consolidated financial statements and the notes to such financial statements ( pages f-1 to f-34 ) , `` forward-looking statements '' ( page 3 ) and risk factors set forth in item 1a . our company texas roadhouse , inc. is a growing , moderately priced , full-service restaurant company . our founder , chairman and chief executive officer , w. kent taylor , started the business in 1993 with the opening of the first texas roadhouse in clarksville , indiana . since then , we have grown to 451 restaurants in 49 states and four foreign countries . our mission statement is `` legendary food , legendary service® . '' our operating strategy is designed to position each of our restaurants as the local hometown destination for a broad segment of consumers seeking high-quality , affordable meals served with friendly , attentive service . as of december 30 , 2014 , our 451 restaurants included : 372 `` company restaurants , '' of which 356 were wholly-owned and 16 were majority-owned . the results of operations of company restaurants are included in our consolidated statements of income and comprehensive income . the portion of income attributable to minority interests in company restaurants that are not wholly-owned is reflected in the line item entitled `` net income attributable to noncontrolling interests '' in our consolidated statements of income and comprehensive income . of the 372 restaurants we owned and operated at the end of 2014 , we operated 368 texas roadhouse and three operated as bubba 's 33 . 79 `` franchise restaurants , '' 23 of which we have a 5.0 % to 10.0 % ownership interest . the income derived from our minority interests in these franchise restaurants is reported in the line item entitled `` equity income from investments in unconsolidated affiliates '' in our consolidated statements of income and comprehensive income . additionally , we provide various management services to these franchise restaurants , as well as seven additional franchise restaurants in which we have no ownership interest . all of the franchise restaurants operated as texas roadhouse restaurants . we have contractual arrangements which grant us the right to acquire at pre-determined formulas ( i ) the remaining equity interests in 14 of the 16 majority-owned company restaurants and ( ii ) 66 of the franchise restaurants . presentation of financial and operating data we operate on a fiscal year that ends on the last tuesday in december . fiscal year 2013 was 53 weeks in length and , as such , the fourth quarter of fiscal 2013 was 14 weeks in length . fiscal years 2014 and 2012 were 52 weeks in length , while the quarters for those years were 13 weeks in length . long-term strategies to grow earnings per share our long-term strategies with respect to increasing net income and earnings per share , along with creating shareholder value , include the following : expanding our restaurant base . we will continue to evaluate opportunities to develop texas roadhouse and bubba 's 33 restaurants in existing markets and in new domestic and international markets . domestically , we will remain focused primarily on mid-sized markets where we believe a significant demand for our restaurants exists because of population size , income levels and the presence of shopping and entertainment centers and a significant employment base . our ability to expand our restaurant base is influenced by many factors beyond our control and therefore we may not be able to achieve our anticipated growth . our average capital investment for texas roadhouse restaurants 37 opened during 2014 , including pre-opening expenses and a capitalized rent factor , was $ 5.1 million , which is higher than our average capital investment in 2013 of $ 4.1 million . the increase in our 2014 average capital investment was primarily due to higher building costs at certain locations , such as anchorage , alaska and the new york city , ny vicinity , along with higher pre-opening costs due to unexpected delays in restaurant openings throughout the year . our capital investment ( including cash and non-cash costs ) for new restaurants varies significantly depending on a number of factors including , but not limited to : the square footage , layout , scope of any required site work , type of construction labor ( union or non-union ) , local permitting requirements , our ability to negotiate with landlords , cost of liquor and other licenses and hook-up fees and geographical location . we expect our average capital investment for texas roadhouse restaurants to be open in 2015 to be approximately $ 4.7 million . we continue to focus on driving sales and managing restaurant development costs in order to further increase our restaurant development in the future . we may , at our discretion , add franchise restaurants , domestically and or internationally , primarily with franchisees who have demonstrated prior success with texas roadhouse or other restaurant concepts and in markets in which the franchisee demonstrates superior knowledge of the demographics and restaurant operating conditions . in conjunction with this strategy , we signed our first international franchise development agreement in 2010 for the development of texas roadhouse restaurants in eight countries in the middle east over a ten year period , of which seven restaurants are currently open . in addition to the middle east , we currently have signed franchise development agreements for the development of texas roadhouse restaurants in the philippines and taiwan . we currently have two restaurants open in taiwan . additionally , in 2010 , we entered into a joint venture agreement with a casual dining restaurant operator in china for minority ownership in four non-texas roadhouse restaurants , all of which are currently open . we continue to explore opportunities in other countries for international expansion . story_separator_special_tag typically , new restaurants open with an initial start-up period of higher than normalized sales volumes , which decrease to a steady level approximately three to six months after opening . however , although sales volumes are generally higher , so are initial costs , resulting in restaurant operating margins that are generally lower during the start-up period of operation and increase to a steady level approximately three to six months after opening . 39 comparable restaurant sales growth . comparable restaurant sales growth reflects the change in sales over the same period of the prior years for the comparable restaurant base . we define the comparable restaurant base to include those restaurants open for a full 18 months before the beginning of the later fiscal period excluding restaurants closed during the period . comparable restaurant sales growth can be impacted by changes in guest traffic counts or by changes in the per person average check amount . menu price changes and the mix of menu items sold can affect the per person average check amount . average unit volume . average unit volume represents the average annual restaurant sales for company-owned texas roadhouse restaurants open for a full six months before the beginning of the period measured . average unit volume excludes sales on restaurants closed during the period . growth in average unit volume in excess of comparable restaurant sales growth is generally an indication that newer restaurants are operating with sales levels in excess of the company average . conversely , growth in average unit volume less than growth in comparable restaurant sales growth is generally an indication that newer restaurants are operating with sales levels lower than the company average . store weeks . store weeks represent the number of weeks that our company restaurants were open during the reporting period . restaurant margins . restaurant margins represent restaurant sales less cost of sales , labor , rent and other operating costs . depreciation and amortization expense , substantially all of which relates to restaurant-level assets , is excluded from restaurant operating costs and is shown separately as it represents a non-cash charge for the investment in our restaurants . restaurant margin is widely regarded as a useful metric by which to evaluate restaurant-level operating efficiency and performance . restaurant margin is not a measurement determined in accordance with generally accepted accounting principles ( `` gaap '' ) and should not be considered in isolation , or as an alternative , to income from operations or other similarly titled measures of other companies . restaurant margins , as a percentage of restaurant sales , may fluctuate based on inflationary pressures , commodity costs and wage rates . as such , we also focus on restaurant margin dollar growth per store week as a measure of restaurant-level profitability as it provides additional insight on operating performance . other key definitions restaurant sales . restaurant sales include gross food and beverage sales , net of promotions and discounts , for all company-owned restaurants . sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from restaurant sales in the consolidated statements of income and other comprehensive income . franchise royalties and fees . domestic franchisees typically pay a $ 40,000 initial franchise fee for each new restaurant . in addition , at each renewal period , we receive a fee equal to the greater of 30 % of the then-current initial franchise fee or $ 10,000 to $ 15,000. franchise royalties consist of royalties in an amount up to 4.0 % of gross sales , as defined in our franchise agreement , paid to us by our domestic franchisees . in addition , we include royalties and fees paid to us by our international franchisee . the terms of the international agreements may vary significantly from our domestic agreements . restaurant cost of sales . restaurant cost of sales consists of food and beverage costs . restaurant labor expenses . restaurant labor expenses include all direct and indirect labor costs incurred in operations except for profit sharing incentive compensation expenses earned by our restaurant managing partners . these profit sharing expenses are reflected in restaurant other operating expenses . restaurant labor expenses also include share-based compensation expense related to restaurant-level employees . 40 restaurant rent expense . restaurant rent expense includes all rent , except pre-opening rent , associated with the leasing of real estate and includes base , percentage and straight-line rent expense . restaurant other operating expenses . restaurant other operating expenses consist of all other restaurant-level operating costs , the major components of which are utilities , supplies , local store advertising , repairs and maintenance , equipment rent , property taxes , credit card and gift card fees , gift card breakage income and general liability insurance . profit sharing incentive compensation expenses earned by our restaurant managing partners and market partners are also included in restaurant other operating expenses . pre-opening expenses . pre-opening expenses , which are charged to operations as incurred , consist of expenses incurred before the opening of a new restaurant and are comprised principally of opening team and training compensation and benefits , travel expenses , rent , food , beverage and other initial supplies and expenses . on average , over 50 % of total pre-opening costs incurred per restaurant opening relate to the hiring and training of employees . pre-opening costs vary by location depending on a number of factors , including the size and physical layout of each location ; the number of management and hourly employees required to operate each restaurant ; the availability of qualified restaurant staff members ; the cost of travel and lodging for different geographic areas ; the timing of the restaurant opening ; and the extent of unexpected delays , if any , in obtaining final licenses and permits to open the restaurants . depreciation and amortization expenses .
| general and administrative expenses . general and administrative expenses ( `` g & a '' ) are comprised of expenses associated with corporate and administrative functions that support development and restaurant operations and provide an infrastructure to support future growth including the net amount of advertising costs incurred less amounts remitted by company and franchise restaurants . supervision and accounting fees received from certain franchise restaurants and license restaurants are offset against g & a . g & a also includes share-based compensation expense related to executive officers , support center employees and area managers , including market partners . the realized and unrealized holding gains and losses related to the investments in our deferred compensation plan , as well as offsetting compensation expense , are also recorded in g & a . interest expense , net . interest expense includes the cost of our debt obligations including the amortization of loan fees , reduced by interest income and capitalized interest . interest income includes earnings on cash and cash equivalents . equity income from unconsolidated affiliates . as of december 30 , 2014 , december 31 , 2013 and december 25 , 2012 , we owned a 5.0 % to 10.0 % equity interest in 23 franchise restaurants . while we exercise significant control over these texas roadhouse franchise restaurants , we do not consolidate their financial position , results of operations or cash flows as it is immaterial to our consolidated financial position , results of operations and or cash flows . additionally , as of december 30 , 2014 and december 31 , 2013 , we owned a 40 % equity interest in four non-texas roadhouse restaurants as part of a joint venture agreement with a casual dining restaurant operator in china . equity income from 41 unconsolidated affiliates represents our percentage share of net income earned by these unconsolidated affiliates . net income attributable to noncontrolling interests .
| 5,783 |
`` asu 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice with respect to ( i ) debt prepayment or debt extinguishment costs , ( ii ) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing , ( iii ) contingent consideration payments made after a business combination , ( iv ) proceeds from the settlement of insurance claims , ( v ) proceeds from the settlement of corporate-owned life insurance policies , including bank-owned life insurance policies , ( vi ) distributions received from equity method investees , ( vii ) beneficial interests in securitization transactions , and ( viii ) separately identifiable cash flows and application of the predominance principle . asu 2016-15 is effective for interim and annual story_separator_special_tag the following discussion and analysis should be read in conjunction with the selected financial data and the consolidated financial statements and notes . story_separator_special_tag style= '' font-family : inherit ; font-size:10pt ; '' > our phoenix portfolio totals 1.3 million square feet , represented 12.6 % of our net operating income for the fourth quarter of 2017 and was 97.3 % leased at december 31 , 2017. job growth in phoenix for the year ended december 31 , 2017 was 2.2 % and construction as a percentage of the total market square footage was a restrained 3.2 % . our portfolio is located in the high-growth submarket of tempe , in close proximity to arizona state university and its 80,000 students . with the job growth rate steady and new supply limited , vacancy levels have decreased and rental rates have increased . our tampa portfolio totals 1.7 million square feet , represented 10.4 % of net operating income for the fourth quarter of 2017 and was 96.5 % leased at december 31 , 2017. job growth in tampa for the year ended december 31 , 2017 was 2.3 % , and construction as a percentage of the total market square footage was 2.3 % . in the westshore submarket , where our portfolio is located , class a vacancy has declined to 6.6 % , and there are no office projects under development . metro-wide , the tampa office market is experiencing low vacancy rates , and westshore continues to command the top rents in the market , in part due to westshore 's proximity to the tampa airport . critical accounting policies our financial statements are prepared in accordance with gaap as outlined in the financial accounting standards board 's ( `` fasb '' ) accounting standards codification ( `` asc '' ) , and the notes to consolidated financial statements include a summary of the significant accounting policies for the company . the preparation of financial statements in accordance with gaap requires the use of certain estimates , a change in which could materially affect revenues , expenses , assets , or liabilities . some of the our accounting policies are considered to be critical accounting policies , which are ones that are both important to the portrayal of our financial condition , results of operations , and cash flows , and ones that also require significant judgment or complex estimation processes . our critical accounting policies are as follows : real estate assets cost capitalization . we are involved in all stages of real estate ownership , including development . prior to the point a project becomes probable of being developed ( defined as more likely than not ) , we expense predevelopment costs . after we determine a project is probable , all subsequently incurred predevelopment costs , as well as interest , real estate taxes , and certain internal personnel and associated costs directly related to the project under development , are capitalized in accordance with accounting rules . if we abandon development of a project that had earlier been deemed probable , we charge all previously capitalized costs to expense . if this occurs , our predevelopment expenses could rise significantly . the determination of whether a project is probable requires judgment . if we determine that a project is probable , interest , general and administrative , and other expenses could be materially different than if we determine the project is not probable . during the predevelopment period of a probable project and the period in which a project is under construction , we capitalize all direct and indirect costs associated with planning , developing , leasing , and constructing the project . determination of what costs constitute direct and indirect project costs requires us , in some cases , to exercise judgment . if we determine certain costs to be direct or indirect project costs , amounts recorded in projects under development on the balance sheet and amounts recorded in general and administrative and other expenses on the statements of operations could be materially different than if we determine these costs are not directly or indirectly associated with the project . once a certain project is constructed and deemed substantially complete and held for occupancy , carrying costs , such as real estate taxes , interest , internal personnel costs , and associated costs , are expensed as incurred . determination of when construction of a project is substantially complete and held available for occupancy requires judgment . we consider projects and or project phases to be both substantially complete and held for occupancy at the earlier of the date on which the project or phase reached economic occupancy of 90 % or one year after it 's initial occupancy . our judgment of the date the project is substantially complete has a direct impact on our operating expenses and net income for the period . real estate property acquisitions . upon acquisition of an operating property , we record the acquired tangible and intangible assets and assumed liabilities at fair value at the acquisition date . story_separator_special_tag if we determine that an asset that is held and used has indicators of impairment , we must determine whether the undiscounted cash flows associated with the asset exceed the carrying amount of the asset . if the undiscounted cash flows are less than the carrying amount of the asset , we must reduce the carrying amount of the asset to fair value . in calculating the undiscounted net cash flows of an asset , we must estimate a number of inputs . for operating properties , we must estimate future rental rates , expenditures for future leases , future operating expenses , and market capitalization rates for residual values , among other things . for land holdings , we must estimate future sales prices as well as operating income , 21 carrying costs , and residual capitalization rates for land held for future development . in addition , if there are alternative strategies for the future use of the asset , we must assess the probability of each alternative strategy and perform a probability-weighted undiscounted cash flow analysis to assess the recoverability of the asset . we must use considerable judgment in determining the alternative strategies and in assessing the probability of each strategy selected . in determining the fair value of an asset , we exercise judgment on a number of factors . we may determine fair value by using a discounted cash flow calculation or by utilizing comparable market information . we must determine an appropriate discount rate to apply to the cash flows in the discounted cash flow calculation . we must use judgment in analyzing comparable market information because no two real estate assets are identical in location and price . the estimates and judgments used in the impairment process are highly subjective and susceptible to frequent change . if we determine that an asset is held and used , the results of operations could be materially different than if we determine that an asset is held for sale . different assumptions we use in the calculation of undiscounted net cash flows of a project , including the assumptions associated with alternative strategies and the probabilities associated with alternative strategies , could cause a material impairment loss to be recognized when no impairment is otherwise warranted . our assumptions about the discount rate used in a discounted cash flow estimate of fair value and our judgment with respect to market information could materially affect the decision to record impairment losses or , if required , the amount of the impairment losses . investment in joint ventures we hold ownership interests in a number of joint ventures with varying structures . we evaluate all of our joint ventures and other variable interests to determine if the entity is a variable interest entity ( “ vie ” ) , as defined in accounting rules . if the venture is a vie , and if we determine that we are the primary beneficiary , we consolidate the assets , liabilities , and results of operations of the vie . we quarterly reassess our conclusions as to whether the entity is a vie and whether consolidation is appropriate as required under the rules . for entities that are not determined to be vies , we evaluate whether or not we have control or significant influence over the joint venture to determine the appropriate consolidation and presentation . generally , entities under our control are consolidated , and entities over which we can exert significant influence , but do not control , are accounted for under the equity method of accounting . we use judgment to determine whether an entity is a vie , whether we are the primary beneficiary of the vie , and whether we exercise control over the entity . if we determine that an entity is a vie and we are the primary beneficiary or if we conclude that we exercise control over the entity , the balance sheets and statements of operations would be significantly different than if we concluded otherwise . in addition , vies require different disclosures in the notes to the financial statements than entities that are not vies . we may also change our conclusions and , thereby , change our balance sheets , statements of comprehensive income , and notes to the financial statements , based on facts and circumstances that arise after the original consolidation determination is made . these changes could include additional equity contributed to entities , changes in the allocation of cash flow to entity partners , and changes in the expected results within the entity . we perform an impairment analysis of the recoverability of our investments in joint ventures on a quarterly basis . as part of this analysis , we first determine whether there are any indicators of impairment in any joint venture investment . if indicators of impairment are present for any of our investments in joint ventures , we calculate the fair value of the investment . if the fair value of the investment is less than the carrying value of the investment , we must determine whether the impairment is temporary or other than temporary , as defined by gaap . if we assesses the impairment to be temporary , we do not record an impairment charge . if we conclude that the impairment is other than temporary , we record an impairment charge . we use considerable judgment in the determination of whether there are indicators of impairment present and in the assumptions , estimations , and inputs used in calculating the fair value of the investment . these judgments are similar to those outlined above in the impairment of real estate assets . we also use judgment in making the determination as to whether the impairment is temporary or other than temporary by considering , among other things , the length of time that the impairment has existed , the financial condition of the joint venture , and the ability and intent of the holder to retain the investment long enough for a recovery in market value .
| overview of 2017 performance and company and industry trends our strategy is to create value for our stockholders through ownership of the premier urban office portfolio in sunbelt markets , with a particular focus on georgia , texas , north carolina , florida , and arizona . this strategy is based on a disciplined approach to capital allocation including value-add acquisition of assets , selective development projects , and timely disposition of non-core assets . this strategy is also based on a simple , flexible and low-leveraged balance sheet that allows us to pursue acquisitions and development opportunities at the most advantageous points in the cycle . to implement this strategy , we leverage our strong local operating platforms within each of our markets . 2017 activity during 2017 , we repositioned our portfolio of properties by reducing overall exposure to atlanta and by strategically exiting orlando and south florida . during the year , we commenced two new development projects and completed two projects . at year-end , we had five development projects in process ; our share of the total expected costs of these projects totaled $ 491 million . we also improved our balance sheet by issuing common equity , repaying four mortgage loans assumed in the merger with parkway properties , inc. ( `` parkway '' ) at above market interest rates , and closing a private placement of unsecured debt . in january 2018 , we expanded borrowing capacity under our credit facility from $ 500 million to $ 1 billion and extended the maturity date from 2019 to 2023. at year-end , we had cash balances ( including restricted cash ) of $ 205.7 million , no amounts outstanding under our credit facility , and our net debt-to-ebitda ratio was 3.75 . in 2017 , we leased or renewed approximately 2.2 million square feet of office space .
| 5,784 |
” see also “ forward-looking statements ” on page 2. overview marine products , through our wholly owned subsidiaries chaparral and robalo , is a leading manufacturer of recreational fiberglass powerboats . our sales and profits are generated by selling the products that we manufacture to a network of independent dealers who in turn sell the products to retail consumers . these dealers are located throughout the continental united states and in several international markets . dealers either remit payment upon receipt of the product or finance their inventory through third-party floor plan lenders , who pay marine products generally within ten days of delivery of the products to the dealers . we manage our company by focusing on the execution of the following business and financial strategies : ● manufacturing high-quality , stylish , and innovative powerboats for our dealers and retail consumers , ● providing our independent dealer network appropriate incentives , training , and other support to enhance their success and their customers ' satisfaction , thereby facilitating their continued relationship with us , ● managing our production and dealer order backlog to optimize operating results and reduce risk in the event of a downturn in sales of our products , ● maintaining a flexible , variable cost structure which can be reduced quickly when deemed appropriate , ● focusing on the competitive nature of the boating business and designing our products and marketing strategies in order to create a positive , memorable experience for our customers , thus growing and maintaining profitable market share , ● monitoring the recreational boat market for strong complementary product lines which we may enter through new product development or acquisition , ● extending our brand name recognition to enhance the success of new boat models that complement our existing offerings , ● improving our sales and profits by increasing the utilization of our manufacturing capacity , ● monitoring the activities and financial condition of our dealers and of the third-party floor plan lenders who finance our dealers ' inventories , ● maximizing stockholder return by optimizing the balance of cash invested in the company 's productive assets , the payment of dividends to stockholders , and the repurchase of the company 's common stock on the open market , and ● aligning the interests of our management and stockholders . in executing these strategies and attempting to optimize our financial returns , management closely monitors dealer orders and inventories , the production mix of various models , and indications of near term demand such as consumer confidence , interest rates , dealer orders placed at our annual dealer conferences , and retail attendance and orders at annual winter boat show exhibitions . we also consider trends related to certain key financial and other data , including our historical and forecasted financial results , market share , unit sales of our products , average selling price per boat , and gross profit margins , among others , as indicators of the success of our strategies . marine products ' financial results are affected by consumer confidence — because pleasure boating is a discretionary expenditure , interest rates — because many retail customers finance the purchase of their boats , and other socioeconomic and environmental factors such as availability of leisure time , consumer preferences , demographics and the weather . during 2019 , aggregate sales of the boating segments in which marine products operates declined by approximately two percent . sales in each segment in which we operate declined during the year , with the most pronounced decline observed in the fiberglass sterndrive segment , which recorded an 7.0 percent unit sales decline . our consolidated net sales declined slightly in 2019 compared to 2018 due to a decrease in unit sales across all model lines partially offset by a higher average selling prices resulting from a favorable model mix . unit sales in 2019 decreased by 9.6 percent compared to 2018. management will continue to monitor retail demand among the various segments in the recreational boat market , the actions of our competitors , dealer inventory levels and the availability of dealer and consumer financing for the purchase of our products and adjust our production levels as deemed appropriate . 21 we periodically monitor our market share in the 19 to 34 foot sterndrive category as one indicator of the success of our strategies and the market 's acceptance of our products . for the 12 month period ended september 30 , 2019 ( latest data available to us ) , chaparral 's market share in the 19 to 34 foot sterndrive category was 16.1 percent , unchanged in comparison to the prior year same period , the second highest market share in this category during this period . for the 12-month period ended september 30 , 2019 , robalo 's share of the 16 to 31 foot outboard sport fishing boat market was 5.3 percent , the second highest market share within this category . marine products corporation 's share of the outboard recreational market , including both robalo and chaparral 's outboard units , was 6.5 percent of the total market within its size range for the 12 months ended september 30 , 2019. the company held the highest share among manufacturers of various outboard brands during the period . we will continue to monitor our market share and believe it to be important , but we believe that maximizing profitability takes precedence over growing our market share . furthermore , as we continue to expand the breadth of our product offerings within our core category and new categories , we consider our overall market share across the various powerboat categories to be of greater importance to the long-term health of our company than our market share within any specific type of recreational boat . story_separator_special_tag we do not currently expect that additional contributions by the company to the retirement income plan will be made in 2020. on january 28 , 2020 , the board of directors approved a quarterly cash dividend of $ 0.12 per common share payable march 10 , 2020 to stockholders of record at the close of business on february 10 , 2020. the company has an agreement with one employee that provides for a monthly payment equal to 10 percent of profits ( defined as pretax income before goodwill amortization and certain allocated corporate expenses ) . in january 2008 , the board of directors authorized an additional 3,000,000 shares that the company may repurchase for a total aggregate authorization of 8,250,000 shares . the company repurchased 503,549 shares in the open market during 2019. as of december 31 , 2019 , the company has repurchased under this program a total of 6,581,632 shares in the open market and there are 1,668,368 shares that remain available for repurchase . the company has entered into agreements with third-party floor plan lenders where it has agreed , in the event of default by a dealer , to repurchase mpc boats repossessed from the dealer . these arrangements are subject to maximum repurchase amounts and the associated risk is mitigated by the value of the boats repurchased . the company repurchased dealer inventory totaling $ 3.4 million under contractual agreements during 2019 and had no repurchases during 2018. see further information regarding repurchase obligations in “ note 10 : commitments and contingencies ” of the consolidated financial statements . the company believes that the liquidity provided by its existing cash and cash equivalents , marketable securities , and cash expected to be generated from operations will provide sufficient capital to meet its requirements for at least the next twelve months . the company 's decisions about the amount of cash to be used for investing and financing purposes are influenced by its capital position and the expected amount of cash to be provided by operations . contractual obligations the following table summarizes the company 's contractual obligations as of december 31 , 2019 : replace_table_token_5_th ( 1 ) operating leases represent agreements for various office equipment . ( 2 ) as part of the normal course of business the company enters into purchase commitments to manage its various operating needs . however , the company does not have any obligations that are non-cancelable or subject to a penalty if canceled . ( 3 ) the company has agreements with various third-party lenders where it guarantees varying amounts of debt for qualifying dealers on boats in dealer inventory . as of december 31 , 2019 , there are no payables outstanding to floor plan lenders . ( 4 ) represents amounts related to the usage of corporate aircraft . 25 fair value measurements the company 's assets and liabilities measured at fair value are classified in the fair value hierarchy ( level 1 , 2 or 3 ) based on the inputs used for valuation . assets and liabilities that are traded on an exchange with a quoted price are classified as level 1. assets and liabilities that are valued using significant observable inputs in addition to quoted market prices are classified as level 2. the company currently has no assets or liabilities measured on a recurring basis that are valued using unobservable inputs and therefore no assets or liabilities measured on a recurring basis are classified as level 3. for defined benefit plan and supplemental executive retirement plan ( “ serp ” ) investments measured at net asset value , the values are computed using inputs such as cost , discounted future cash flows , independent appraisals and market based comparable data or on net asset values calculated by the fund and not publicly available . off balance sheet arrangements to assist dealers in obtaining financing for the purchase of its boats for inventory , the company has entered into agreements with various third-party floor plan lenders whereby the company guarantees varying amounts of debt for qualifying dealers on boats in dealer inventory . the company 's obligation under these guarantees becomes effective in the case of a default under the financing arrangement between the dealer and the third-party lender . the agreements typically provide for the return of all repossessed boats in “ new and unused ” condition subject to normal wear and tear , as defined , to the company , in exchange for the company 's assumption of specified percentages of the debt obligation on those boats , up to certain contractually determined dollar limits which vary by lender . the company repurchased dealer inventory totaling $ 3.4 million under contractual agreements during 2019 and had no material repurchases during 2018. management continues to monitor the risk of additional defaults and resulting repurchase obligation based primarily upon information provided by the third-party floor plan lenders and to adjust the guarantee liability at the end of each reporting period based on information reasonably available at that time . as of december 31 , 2019 , the company believes the fair value of its remaining guarantee liability is immaterial . see further information regarding repurchase obligations in “ note 10 : commitments and contingencies ” of the consolidated financial statements . the company currently has an agreement with one of the floor plan lenders whereby the contractual repurchase obligation is limited to a maximum of 16 percent of the average net receivables financed by the floor plan lender for dealers during the prior 12 month period , which was $ 13.1 million as of december 31 , 2019. the company has contractual repurchase agreements with additional lenders with an aggregate maximum repurchase obligation of approximately $ 7.7 million , with various expiration and cancellation terms of less than one year .
| results of operations replace_table_token_3_th 22 year ended december 31 , 2019 compared to year ended december 31 , 2018 net sales . marine products ' net sales decreased by $ 6.5 million or 2.2 percent in 2019 compared to 2018. the decrease was primarily due to a 9.6 percent decrease in the number of boats sold , as well as a decrease in parts and accessories sales , partially offset by 8.0 percent increase in the average gross selling price per boat . unit sales decreased due to lower sales for the majority of our model lines partially offset by an increase in unit sales of osx models . average selling prices increased primarily due to a favorable model mix which included increased sales of our larger boats . domestic net sales were $ 275.1 million , a small decrease of 1.5 percent compared to the prior year . international sales decreased 12.6 percent during 2019 compared to 2018. cost of goods sold . cost of goods sold increased 2.4 percent in 2019 compared to 2018. as a percentage of net sales , cost of goods sold decreased slightly to 77.6 percent in 2019 , compared to 77.8 percent in 2018 primarily due to decreases in production cost efficiencies including materials consistent with an improved model mix . selling , general and administrative expenses . selling , general and administrative expenses increased slightly by 1.0 percent in 2019 compared to 2018 primarily due to increases in professional fees and incentive compensation partially offset by a decrease in warranty expense consistent with the decline in net sales . selling , general and administrative expenses as a percentage of sales increased slightly to 10.7 percent in 2019 from 10.4 percent in 2018. as a percentage of net sales , warranty expense decreased to 1.3 percent in 2019 , compared to 1.4 percent in 2018. interest income .
| 5,785 |
the effective portion of the foreign currency forward contracts represents the change in fair value of the hedge that offsets the change in the fair value of the hedged item . to the extent the change in the fair value of the hedge does not perfectly offset the change in the fair value of the hedged item , the ineffective portion of the hedge is immediately recognized as nonoperating income ( story_separator_special_tag overview the following management 's discussion and analysis of financial condition and results of operations ( md & a ) is intended to help the reader understand the company and its operations . this discussion and analysis of our financial condition and results of operations contains forward-looking statements that involve risks and uncertainties . we have based these forward-looking statements on our current expectations and projections of future events . however , our actual results could differ materially from those discussed herein as a result of the risks that we face , including but not limited to those risks stated in the `` risk factors '' section of this report . see `` cautionary note regarding forward-looking statements , '' above . in addition , the following discussion should be read in conjunction with the audited consolidated financial statements and the related notes thereto included elsewhere in this report . story_separator_special_tag style= '' line-height:120 % ; padding-bottom:10px ; padding-top:10px ; font-size:10pt ; '' > the price and availability of aircraft fuel is extremely volatile due to global economic and geopolitical factors that we can neither control nor accurately predict . the decreases in aircraft fuel expense are illustrated in the following table : replace_table_token_10_th the decrease in fuel expense from 2016 to 2015 is primarily due to the decrease in average fuel price per gallon , partially offset by increased fuel consumption due to an additional aircraft in the fleet ( airbus 330-200 ) . we believe economic fuel expense is the best measure of the effect of fuel prices on our business as it most closely approximates the net cash outflow associated with the purchase of fuel for our operations and is consistent with how management manages our business and assesses our operating performance . we define economic fuel expense as gaap fuel expense plus ( gains ) /losses realized through actual cash ( receipts ) /payments received from or paid to hedge counterparties for fuel hedge derivative contracts settled in the period inclusive of costs related to hedging premiums . economic fuel expense is calculated as follows : replace_table_token_11_th see item 7a , quantitative and qualitative disclosures about market risk , for additional discussion of our jet fuel costs and related derivative program . wages and benefits expense increased by $ 56.0 million , or 11.2 % , in 2016 as compared to 2015 , due to an overall headcount increase of 11.7 % due to our growing capacity in 2016 , increased pension and postretirement benefit expenses , and increased profit-sharing expenses resulting from our improved financial performance as compared to the prior period . other rentals and landing fees expense increased by $ 13.0 million , or 13.7 % , in 2016 as compared to 2015 , primarily due to increased rates , passengers , and landing frequencies . also , we incurred additional cost year over year for our station rent amounts . purchased services expense increased by $ 14.4 million , or 17.6 % , in 2016 as compared to 2015 , due to an increase in outsourced web and third-party vendor reservation fees because of increased passenger counts . in 2016 , we incurred $ 109.1 million in special items . the $ 109.1 million is comprised of three components : ( 1 ) $ 49.4 million in impairment charges in connection with our owned boeing 767-300 fleet and related assets , ( 2 ) $ 38.8 million related to retroactive bonuses included within a tentative agreement between us and alpa as of february 2017 and profit sharing for other contract groups , and ( 3 ) $ 21.0 million related to the termination of our boeing 767-300 maintenance contract . the impairment analysis and ultimate charge was triggered by the decision in the fourth quarter of 2016 to early exit the boeing 767-300 fleet in 2018. the early exit of the boeing 767-300 fleet was made possible by our decision to acquire one airbus a330 ( to be delivered in 2017 ) , lease two additional airbus a321s ( to be delivered in 2018 and in addition to our existing aircraft orders ) , and our ability to early terminate our long-term power by the hour maintenance contract for the boeing 767-300 fleet . this fleet change allows us to streamline our fleet , simplify our operations , and potentially reduce our cost structure in the future . in order to assess whether there was an impairment of the boeing 767-300 asset group , we compared the projected undiscounted cash flows of the fleet to the book value of the assets and determined the book value was in excess of the undiscounted cash flows . we estimated the fair value of the boeing 767-300 fleet assets using third party pricing information and quotes from potential buyers of our owned aircraft , which resulted in a $ 49.4 million impairment charge . our 28 determination of fair value considered attributes specific to our boeing 767-300 fleet and aircraft condition ( e.g . age , maintenance requirements , cycles , etc. ) . the boeing 767-300 asset group consists of both owned and leased aircraft . we expect to remove three leased boeing 767-300 aircraft from service in 2018. at that time , these aircraft will have remaining lease payments of approximately $ 54.3 million . at the time each aircraft is removed from service , we will accrue for any remaining lease payments not mitigated through an arrangement with the lessor . in february 2017 , we reached a tentative agreement with the air line pilots association ( alpa ) , covering our pilots . story_separator_special_tag as of december 31 , 2016 , we had $ 326.0 million in cash and cash equivalents and $ 284.1 million in short-term investments , representing an increase of $ 50.0 million from december 31 , 2015 . as of december 31 , 2016 and 2015 , our restricted cash balance of $ 5.0 million consisted of cash held as collateral by entities that process our credit card transactions for advanced ticket sales . we have been able to generate sufficient funds from our operations to meet our working capital requirements and typically finance our aircraft through secured debt and lease financings . at december 31 , 2016 , we had $ 556.8 million of debt and capital lease obligations , including $ 58.9 million classified as a current liability in the consolidated balance sheets . as of december 31 , 2016 , our current liabilities exceeded our current assets by approximately $ 31.9 million . however , approximately $ 482.5 million of our current liabilities are related to our advanced ticket sales and frequent flyer deferred revenue , both of which largely represent revenue to be recognized for travel within the next 12 months and not actual cash outlays . the deficit in working capital does not have an adverse impact to our cash flows , liquidity , or operations . in december 2016 , we amended and restated the existing credit agreement with citigroup global markets inc. by increasing the secured revolving credit facility ( revolving credit facility ) from $ 175 million to $ 225 million . this revolving credit facility will expire in december 2019. as of december 31 , 2016 we had no outstanding borrowings under the revolving credit facility . cash flows net cash provided by operating activities was $ 417.4 million , $ 476.0 million , and $ 300.4 million in 2016 , 2015 , and 2014 , respectively . the decrease in 2016 was primarily due to : ( 1 ) a $ 66.1 million decrease in our deferred income tax expense as a result of becoming a cash taxpayer , ( 2 ) a $ 46.7 million net decrease in the change to unrealized gains/losses on our fuel derivative contracts , and ( 3 ) a $ 42.7 million net increase in pension and postretirement benefit contributions , partially offset by ( 4 ) an increase of $ 52.8 million in net income and ( 5 ) a $ 49.4 million increase relating to the impairment of our boeing 767-300 assets . the increase in 2015 was primarily due to the increased net income before deferred income tax expense , which does not impact our cash flows because our net operating loss carryforwards were used to satisfy this income tax obligation . net cash used in investing activities was $ 154.1 million , $ 35.3 million , and $ 686.8 million for 2016 , 2015 , and 2014 , respectively . the increase in net cash used in 2016 was primarily due to a $ 69.9 million decrease in cash received compared to 2015 , for purchase assignment and leaseback transactions , and engine credit payments received from the manufacturer . there was also an increase of $ 60.0 million in cash payments for property and equipment , including pre-delivery deposits for our airbus a330-200 and airbus a321neo fleet . the decrease in 2015 was due to acquisition of fewer aircraft during the year , which resulted in a $ 323.4 million reduction in capital expenditures . we also received $ 101.7 million from the purchase assignment and leaseback of three airbus a330-200 aircraft during the year , and reduced our net purchases of investments by $ 240.2 million in 2015 . 31 net cash used in financing activities was $ 218.8 million and $ 423.3 million for 2016 and 2015 , respectively , and net cash provided by financing activities was $ 227.1 million for 2014 . the decrease in cash used in 2016 was due to the lack of repurchases and payments for settlements of our convertible notes in 2016. the increase in cash used in financing activities in 2015 was due to the lack of long-term borrowings during the year , the early repayment of long-term debt , and the repurchase of convertible notes and common stock . this was partially offset by the net settlement of the convertible note call options and warrants . covenants under our financing arrangements under our bank-issued credit card processing agreements , certain proceeds from advance ticket sales may be held back to serve as collateral to cover any possible chargebacks or other disputed charges that may occur . these holdbacks , which are included in restricted cash in our consolidated balance sheets totaled $ 5.0 million as of december 31 , 2016 and 2015 . in the event of a material adverse change in the business , the holdback could increase to an amount up to 100 % of the applicable credit card activity for all unflown tickets , which would also result in an increase in the required level of restricted cash . if we are unable to obtain a waiver of , or otherwise mitigate the increase in the restriction of cash , it could have a material adverse impact on our operations . pension and other postretirement benefit plan funding as of december 31 , 2016 , the excess of the projected benefit obligations over the fair value of plan assets was approximately $ 359.3 million . we contributed $ 57.8 million , $ 20.4 million , and $ 8.9 million to our defined benefit pension plans and disability plan during 2016 , 2015 , and 2014 , respectively . future funding requirements for our defined benefit and other postretirement plans are dependent upon many factors such as interest rates , funded status , applicable regulatory requirements , and the level and timing of asset returns . in 2017 , we expect to contribute approximately $ 50.0 million to our defined benefit pension plans and disability plan .
| year in review 2016 financial highlights operating income decreased to $ 395 million compared to $ 426 million in the prior-year period . pre-tax income grew to $ 379 million compared to $ 296 million in the prior-year period . gaap net income of $ 235 million or $ 4.36 per diluted share compared to $ 183 million or $ 2.98 per diluted share in the prior year period . adjusted net income of $ 280 million or $ 5.19 per diluted share compared to $ 189 million or $ 3.09 per share in the prior year period . unrestricted cash and cash equivalents and short-term investments of $ 610 million compared to $ 560 million in the prior year period . extinguished $ 141 million of debt instruments that were originally scheduled to mature in 2022 and 2023. see `` non-gaap financial measures '' below for our reconciliation of non-gaap measures . outlook we expect our financial performance to remain strong in the first quarter of 2017 , as compared to the first quarter of 2016. we expect our passenger revenues to increase , coupled with expected increases in our aircraft fuel , wages and benefits , and rent expense which could potentially put pressure on our operating margins ( as compared to 2016 ) . we expect available seat miles during the first quarter of 2017 to increase by 2.5 % to 4.5 % from the same prior year period . despite the continued strengthening of the u.s. dollar , a decrease in fuel surcharges on our international routes , and an increase in industry capacity on our neighbor island routes , operating revenue per available seat mile could increase by up to 4.0 % to 7.0 % from the same prior year period .
| 5,786 |
as a result of many factors , such as those set forth in the section titled “ risk factors ” and elsewhere in this annual report on form 10-k , our actual results may differ materially from those anticipated in or implied by these forward-looking statements . for convenience of presentation some of the numbers have been rounded in the text below . overview we are a clinical-stage biopharmaceutical company dedicated to improving the lives of patients suffering from debilitating and life-threatening diseases through the discovery , development and commercialization of therapies to degrade disease-causing proteins . we use our proprietary technology platform to engineer proteolysis targeting chimeras , or protac targeted protein degraders , that are designed to harness the body 's own natural protein disposal system to selectively remove disease-causing proteins . we believe that our targeted protein degradation approach is a therapeutic modality that may provide distinct advantages over existing modalities , including traditional small molecule therapies and gene-based medicines . our small-molecule protac technology has the potential to address a broad range of intracellular disease targets , including those representing the up to 80 % of proteins that can not be addressed by existing small molecule therapies , commonly referred to as “ undruggable ” targets . we are using our protac discovery engine to build an extensive pipeline of protein degradation product candidates to target diseases in oncology , neuroscience , and other therapeutic areas . our two lead product candidates are arv-110 and arv-471 . we are developing arv-110 , a protac protein degrader targeting the androgen receptor protein , or ar , for the treatment of men with metastatic castration-resistant prostate cancer , or mcrpc . we initiated a phase 1 clinical trial of arv-110 in march 2019. this phase 1 trial is designed to assess the safety , tolerability and pharmacokinetics of arv-110 and also includes measures of anti-tumor activity as secondary endpoints , including reduction in prostate specific antigen , or psa , a well-recognized biomarker of prostate cancer progression . we received fast track designation for arv-110 for mcrpc in may 2019. in october 2020 , we initiated the phase 2 expansion for arv-110 . we are also developing arv-471 , a protac protein degrader targeting the estrogen receptor protein , or er , for the treatment of patients with locally advanced or metastatic er positive / her2 negative breast cancer . we initiated a phase 1 clinical trial of arv-471 in august 2019. this phase 1 trial is designed to assess the safety , tolerability and pharmacokinetics of arv-471 and also includes measures of anti-tumor activity as secondary endpoints . we amended the protocol for our phase 1 clinical trial for arv-471 in the first quarter of 2020 to include the phase 2 expansion cohort and in the fourth quarter of 2020 to include a phase 1b cohort expansion of arv-471 in combination with ibrance® ( palbociclib ) . in our preclinical studies , these lead product candidates have demonstrated potent and selective protein degradation . we believe favorable clinical trial results in these initial oncology programs would provide validation of our platform as a new therapeutic modality for the potential treatment of diseases caused by dysregulated intracellular proteins regardless of therapeutic area . as a result of the covid-19 pandemic , many companies have experienced disruptions in their operations and in markets served . we have instated some and may take additional precautionary measures intended to help ensure our employees , well-being and minimize business disruption . we temporarily shut down our laboratories in mid-march 2020 and initiated work with biology contract research organizations , or cros , but have since reopened our laboratories . our office-based employees continue to work remotely . we considered the impact of covid-19 on the assumptions and estimates used and determined that there were no material adverse impacts on our results of operations and financial position as of december 31 , 2020. the full extent of the future impacts of covid-19 on our operations is uncertain . a prolonged outbreak could have a material adverse impact on our financial results and business operations , including the timing and our ability to complete certain clinical trials and other efforts required to advance our preclinical pipeline . we commenced operations in 2013 , and our operations to date have been limited to organizing and staffing our company , business planning , raising capital , conducting discovery and research activities , filing patent applications , identifying potential product candidates , undertaking preclinical studies and clinical trials and establishing arrangements with third parties for the manufacture of initial quantities of our product candidates . to date , we have not generated any revenue from product sales and have financed our operations primarily through sales of our equity interests , proceeds from our collaborations , grant funding and debt financing . through december 31 , 2020 , we raised approximately $ 887.3 million in gross proceeds from the sale of equity instruments and the exercise of stock options , and had received an aggregate of $ 120.8 million in payments from collaboration partners , grant funding and partially forgivable loans from the state of connecticut . 94 in june 2019 , we entered into a collaboration and license agreement , or the collaboration agreement , with bayer ag , or , together with its controlled affiliates , bayer , which a greement became effective in july 2019 . we also entered into a stock purchase agreement with bayer , or the stock purchase agreement , pursuant to which we issued and sold to bayer 1,346,313 shares of our common stock , or the shares , for an aggregate purchase price of approximately $ 32.5 million . story_separator_special_tag if we are unable to raise capital when needed or on attractive terms , we could be forced to delay , reduce or eliminate our research or product development programs or any future commercialization efforts , or to relinquish valuable rights to our technologies , future revenue streams , research programs or product candidates or grant licenses on terms that may not be favorable to us . financial operations overview revenue to date , we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the foreseeable future . our revenues to date have been generated through research collaboration and license agreements . revenue is recognized ratably over our expected performance period under each agreement . we expect that any revenue for the next several years will be derived primarily from our current collaboration agreements and any additional collaborations that we may enter into in the future . to date , we have not received any royalties under any of the collaboration agreements . genentech license agreement in september 2015 , we entered into an option and license agreement with genentech , inc. and f. hoffmann-la roche ltd , collectively referred to as genentech , focused on protac targeted protein degrader discovery and research for target proteins , or targets , based on our proprietary platform technology , other than excluded targets as described below . this collaboration was expanded in november 2017 through an amended and restated option , license and collaboration agreement , which we refer to as the restated genentech agreement . under the restated genentech agreement , genentech has the right to designate up to ten targets for further discovery and research utilizing our protac platform technology . genentech may designate as a target any protein to which a protac targeted protein degrader , by design , binds to achieve its mechanism of action , subject to certain exclusions . genentech also has the right to remove a target from the collaboration and substitute a different target that is not an excluded target at any time prior to us commencing research on such target or in certain circumstances following commencement of research by us . at the time we entered into the original agreement with genentech we received an upfront payment of $ 11.0 million , and at the time we entered into the restated genentech agreement , we also received an additional $ 34.5 million in upfront payments and expansion target payments . we are eligible to receive up to an aggregate of $ 27.5 million in additional expansion target payments if genentech exercises its options for all remaining targets . we are also eligible to receive payments aggregating up to $ 44.0 million per target upon the achievement of specified development milestones ; payments aggregating up to $ 52.5 million per target ( assuming approval of two indications ) subject to the achievement of specified regulatory milestones ; and payments aggregating up to $ 60.0 million per protac targeted protein degrader directed against the applicable target , subject to the achievement of specified sales milestones . these milestone payments are subject to reduction if we do not have a valid patent claim covering the licensed protac targeted protein degrader at the time the milestone is achieved . we are also eligible to receive , on net sales of licensed protac targeted protein degraders , mid-single digit royalties , which may be subject to reductions . pfizer license agreement in december 2017 , we entered into a research collaboration and license agreement with pfizer , inc. , or pfizer , setting forth our collaboration to identify or optimize protac targeted protein degraders that mediate for degradation of targets using our proprietary platform technology that are identified in the agreement or subsequently selected by pfizer , subject to certain exclusions . we refer to this agreement as the pfizer collaboration agreement . under the pfizer collaboration agreement , pfizer has designated a number of initial targets . for each identified target , we and pfizer will conduct a separate research program pursuant to a research plan . pfizer may make substitutions for any of the initial target candidates , subject to the stage of research for such target . in the year ended december 31 , 2018 , we received an upfront non-refundable payment and certain additional payments totaling $ 28.0 million in 2018 in exchange for use of the company 's technology license and to fund pfizer-related research as defined within the agreement . we are also eligible to receive up to an additional $ 37.5 million in non-refundable option payments if pfizer exercises its options for all targets under the agreement . pfizer has exercised options for $ 4.9 million as of december 31 , 2020. we are also entitled to receive up to $ 225 million in development milestone payments and up to $ 550 million in sales-based milestone payments for all designated targets . in addition , we are eligible to receive , on net sales of protac targeted protein degrader-related products , mid- to high-single digit tiered royalties , which may be subject to reductions . pfizer paid us $ 1.2 million in december 2019 and $ 3.0 million in 2020 relating to adding additional targets into the collaboration . 96 bayer collaboration agreement in june 2019 , we entered into the bayer collaboration agreement with bayer , setting forth our collaboration to identify or optimize protac targeted protein degraders that mediate for degradation of targets , using our proprietary platform technology , that are selected by bayer , subject to certain exclusions and limitations . the bayer collaboration agreement became effective in july 2019. under the bayer collaboration agreement , we and bayer will conduct a research program pursuant to separate research plans mutually agreed to by us and bayer and tailored to each target selected by bayer . bayer may make substitutions for any such initial target candidates , subject to certain conditions and based on the stage of research for such target .
| results of operations comparison of years ended december 31 , 2020 and 2019 revenues revenues for the year ended december 31 , 2020 were $ 21.8 million , compared with $ 43.0 million for the year ended december 31 , 2019. revenues for the year ended december 31 , 2019 included $ 24.7 million recognized from the contribution of the license to oerth . the balance of the revenue increased by $ 3.5 million over the prior year primarily related to a full year of revenue in 2020 associated with the bayer collaboration agreement which was initiated in the third quarter of 2019 and an increase in activities related to the pfizer agreement . research and development expenses research and development expenses for the year ended december 31 , 2020 were $ 108.4 million , compared with $ 67.2 million for the year ended december 31 , 2019. the increase of $ 41.2 million was primarily due to an increase in our continued investment in our wholly-owned platform and exploratory programs of $ 17.6 million , expenses related to our ar program of $ 12.3 million and our er program of $ 11.3 million . the increase in spending over all of our programs was primarily due to increased personnel and personnel costs utilized across all our programs of $ 14.7 million , including an increase in stock compensation expense of $ 5.7 million . clinical trial costs and related drug manufacturing costs increased by $ 20.2 million as we expanded or ar and er programs in 2020. direct expenses related to our platform and exploratory programs increased $ 7.0 million in 2020 as we expanded the number of protein targets in the exploratory phase .
| 5,787 |
this section of the form 10-k omits discussion of year-to-year comparisons between 2018 and 2017 , which may be found in `` management 's discussion and analysis of financial condition and results of operations '' in part ii , item 7 of our 2018 form 10-k. forward-looking statements our annual report on form 10-k contains certain forward-looking statements related to the company 's businesses that are based on management 's current expectations . forward-looking statements are subject to certain risks , trends and uncertainties , including changes in advertising demand and other economic conditions that could cause actual results to differ materially from the expectations expressed in forward-looking statements . such forward-looking statements are made as of the date of this document and should be evaluated with the understanding of their inherent uncertainty . a detailed discussion of principal risks and uncertainties that may cause actual results and events to differ materially from such forward-looking statements is included in the section titled “ risk factors. ” the company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made . executive overview the e.w . scripps company ( “ scripps ” ) is a diverse media enterprise , serving audiences and businesses through a portfolio of local and national media brands . we are the fourth-largest independent owner of local television stations , with 60 stations in 42 markets that reach about 31 % of u.s. television households . we have affiliations with all of the “ big four ” television networks as well as the cw and mynetworktv networks . in our national media division , we operate national brands including podcast industry-leader stitcher and its advertising network midroll media ; next-generation national news network newsy ; five national multicast networks - bounce , grit , laff , court tv and court tv mystery - that make up the katz network s ; and triton , a global leader in digital audio technology and measurement services . we also operate an award-winning investigative reporting newsroom in washington , d.c. , and serve as the longtime steward of one of the nation 's largest , most successful and longest-running educational programs , the scripps national spelling bee . in our local media division , recent acquisitions have strengthened our economic durability , quadrupled the number of no.1 and no.2-ranked stations we operate and more than doubled the number of markets where we operate two stations . we have further expanded our attractive political advertising footprint and added new large markets . we now own 26 stations in the top 50 nielsen designated market areas . effective january 1 , 2019 , we acquired abc-affiliated stations in waco , texas and tallahassee , florida . on may 1 , 2019 , we acquired from cordillera communications , inc. 15 television stations serving 10 markets . on september 19 , 2019 , we acquired eight television stations in seven markets from the nexstar media group , inc. transaction with tribune media company . in order to fund these acquisitions , we issued a $ 765 million term loan b in may 2019 and $ 500 million of senior unsecured notes in july 2019. as a result , our focus is now on integrating the stations we acquired . we are committed to the continued investment in our national media businesses for long-term growth . we continue to increase our newsy audience , stitcher podcast listeners and katz u.s. household reach through our investment in and creation of quality content . on may 8 , 2019 , court tv launched as a fifth over-the-air network operated by katz , available for cable , satellite and over-the-air and over-the-top carriage . this network is devoted to live , gavel-to-gavel coverage , in-depth legal reporting and expert analysis of the nation 's most important and compelling trials . on june 10 , 2019 , we completed the acquisition of omny studio , which is a melbourne , australia-based podcasting software-as-a-service company now operating as part of triton . on september 30 , 2019 , katz rebranded its popular and widely available network , escape , as court tv mystery , which targets women 25-54 with programming anchored in true-crime . these rapidly growing national media brands are attracting large audiences and new advertisers . additionally , we deliver value to shareholders through our quarterly 5 cents per share dividend . dividends paid totaled $ 16.4 million during 2019. we intend to pay regular quarterly cash dividends for the foreseeable future . all subsequent dividends will be reviewed quarterly and declared by the board of directors at its discretion . the declaration and payment of future dividends will be dependent upon , among other things , the company 's financial position , results of operations , cash flow and other factors . f-3 results of operations the trends and underlying economic conditions affecting operating performance and future prospects differ for each of our business segments . accordingly , you should read the following discussion of our consolidated results of operations in conjunction with the discussion of the operating performance of our individual business segments that follows . story_separator_special_tag effective january 1 , 2019 , we acquired abc-affiliated stations in waco , texas and tallahassee , florida . these stations are referred to as the `` acquired stations '' in the discussion that follows . the inclusion of operating results from these stations for the periods subsequent to their acquisition impacts the comparability of our local media segment operating results . 2019 compared with 2018 revenues total local media revenues increased 11 % in 2019 . excluding the acquired stations , local media revenues decreased 11 % year-over-year , driven by lower political revenues in a non-election year . the decrease in political revenues was partially offset by increases in core , retransmission and other revenues . core advertising increased 1.4 % in 2019 due to the political displacement in the prior year . story_separator_special_tag one of the main factors contributing to the $ 101 million increase in cash used for working capital accounts was the timing of payments received on accounts receivable , which decreased cash by $ 83 million year-over-year . the main drivers in the accounts receivable change year-over-year were the nexstar-tribune acquisition and the impact of political advertising . we did not acquire working capital in the nexstar-tribune acquisition , and as advertisers tend to pay on a 60- to 90-day lag and retransmission partners on a 90- to 120-day lag , fourth quarter revenue resulted in growth of the accounts receivable balance and reduced cash flow . during the fourth quarter of 2019 , we recognized $ 41 million of core advertising and $ 22 million of retransmission revenue attributed to the stations acquired in the nexstar-tribune acquisition . additionally , we recognized $ 19 million in political revenue over the last two months of 2018 , which increased prior year cash flow , as political advertising is paid in advance . another factor contributing to the increase in cash used for working capital accounts was the $ 11 million tax payment made in the second quarter of 2019 related to the sale of our radio stations . f-10 investing activities cash used in investing activities for the years ended december 31 is as follows : replace_table_token_11_th in 2019 , 2018 and 2017 we used $ 1.3 billion , $ 207 million and $ 297 million , respectively , in cash for investing activities from continuing operations . the primary factors affecting our cash flows from investing activities for the years presented are described below . during 2019 , we acquired three television stations owned by raycom media for $ 55 million in cash , we acquired 15 television stations owned by cordillera communications , llc for $ 521 million in cash , plus an estimated working capital adjustment of $ 23.9 million , we completed the acquisition of omny studio for a cash purchase price of $ 8.3 million and we acquired eight television stations from the nexstar-tribune transactions for $ 582 million . in 2018 , we acquired triton for $ 150 million , net of cash acquired . in 2017 , we acquired katz for $ 281 million , net of cash acquired . during 2019 , capital expenditures increased $ 8 million year-over-year due to an increase in spending at local media as a result of our station growth during the year . included in local media 's 2019 capital expenditures was $ 16.7 million related to the fcc repacking process . in 2018 , capital expenditures increased $ 35 million . a significant portion of the increase was attributed to $ 17.9 million of capital expenditures incurred in 2018 related to the fcc repacking process . additionally in 2018 , national media 's capital expenditures increased $ 14.4 million year-over-year mainly as a result of one-time expenses incurred related to the expansion and renovation of office and studio space in our leased facilities that was needed to accommodate current and future growth of our national brands . in april of 2019 , we acquired assets from an independent station in stuart , florida , for $ 23.6 million in cash , the majority of which were intangible assets . in 2018 and 2017 , we recognized other intangible assets of $ 5.8 million and $ 9.7 million , respectively , related to the acquisition of cable and satellite carriage rights for newsy . in 2019 and 2018 , we received $ 7.0 million and $ 1.5 million , respectively , in proceeds from the fcc repacking process . miscellaneous investing activities for the current year include cash received from the sale of land and the sale of assets at triton . in the repacking process associated with the incentive spectrum auction conducted by the fcc in 2017 , the fcc has reassigned some stations to new post-auction channels . we do not expect reassignment to new channels to have a material impact on our stations ' broadcast signals as viewed in their markets . twenty-seven of our current full power stations ( including nine from recent acquisitions ) have been assigned to new channels . the legislation authorizing the incentive auction and repack provides the fcc with up to a $ 2.75 billion fund to reimburse reasonable costs incurred by stations that are reassigned to new channels in the repack . we expect the fcc fund will be sufficient to cover the costs we would expect to incur for the repack and that our only potential funding risks would be limited to any disagreements with the fcc over reimbursement of expenditures incurred . reimbursements provided by the fcc are recognized as the cash is received . we have spent $ 37.5 million to date on fcc repack and expect to incur approximately $ 20 million of additional expenditures through the end of 2020. we have received total reimbursement proceeds from the fcc of $ 8.5 million as of december 31 , 2019. f-11 financing activities cash used in or provided by financing activities for the years ended december 31 is as follows : replace_table_token_12_th for continuing financing activities , cash provided by financing activities was $ 1.2 billion and $ 273 million in 2019 and 2017 , respectively , while cash used in financing activities was $ 55 million in 2018 . the primary factors affecting our cash flows from financing activities are described below . we have $ 400 million of senior unsecured notes that mature on may 15 , 2025 and bear interest at a rate of 5.125 % per annum . we also have $ 500 million aggregate principal amount senior unsecured notes that mature on july 15 , 2027 , which bear interest at a rate of 5.875 % per annum . additionally , we have a $ 300 million term loan b that matures in october 2024 ( `` 2024 term loan '' ) .
| consolidated results of operations consolidated results of operations were as follows : replace_table_token_6_th on september 19 , 2019 , we acquired eight television stations from the nexstar-tribune transaction ; on may 1 , 2019 , we acquired 15 television stations from cordillera ; effective january 1 , 2019 , we acquired abc-affiliated stations in waco , texas and tallahassee , florida ; and on november 30 , 2018 , we acquired triton . these are referred to as the `` acquired operations '' in the discussion that follows . katz was acquired on october 2 , 2017. the inclusion of operating results from these businesses for the periods subsequent to their acquisition impacts the comparability of our consolidated and segment operating results . 2019 compared with 2018 operating revenues increased 18 % in 2019 . excluding the acquired operations , operating revenues decreased 2.6 % year-over-year . the decrease was due to lower political revenues in a non-election year , partially offset by higher retransmission revenues in our local media group and overall growth within our national media businesses . employee compensation and benefits increased 27 % in 2019 . excluding the acquired operations , employee compensation and benefits increased 6.5 % year-over-year , primarily driven by the expansion of our national media group . programming expense increased 29 % in 2019 . excluding the acquired operations , programming expense increased 15 % year-over-year due to higher network affiliation fees at our stations , reflecting contractual rate increases , as well as an increase in programming costs associated with our national media brands , katz and stitcher . f-4 other expenses increased 19 % in 2019 compared to the prior year . excluding the acquired operations , other expenses increased 2.8 % year-over-year , primarily driven by increases in marketing and promotion costs for our national brands , mainly katz and newsy .
| 5,788 |
63 10 ( www ) 1.25 lien trademark security agreement , dated as of october 31 , 2019 , by k. hov ip ii , inc. in favor of wilmington trust , national association , as 1.25 lien collateral agent ( incorporated by reference to story_separator_special_tag hovnanian enterprises , inc. ( “ hei ” ) conducts all of its homebuilding and financial services operations through its subsidiaries ( references herein to the “ company , ” “ we , ” “ us ” or “ our ” refer to hei and its consolidated subsidiaries and should be understood to reflect the consolidated business of hei 's subsidiaries ) . overview our community count increased 14.6 % from 123 communities at october 31 , 2018 to 141 at october 31 , 2019. for seven consecutive quarters through the third quarter of fiscal 2019 , our total number of lots controlled increased as compared to the same period of the prior year . although there was a slight decrease in total lots controlled of 3.2 % as of october 31 , 2019 as compared to october 31 , 2018 , the growth in lots controlled in previous quarters has led to the year-over-year community count growth . our strategy has been to grow through increased open for sale communities . as our recently opened communities begin delivering homes , we believe it should lead to additional delivery and revenue growth , and in turn profitability in future periods , absent adverse market factors . our cash position has allowed us to spend $ 562.8 million on land purchases and land development during fiscal 2019 , and still have total liquidity of $ 275.9 million , including $ 131.0 million of homebuilding cash and cash equivalents as of october 31 , 2019. we continue to see opportunities to purchase land at prices that make economic sense in light of our current sales prices , sales pace and construction costs and plan to continue actively pursuing such land acquisitions . new land purchases at pricing that we believe will generate appropriate investment returns and drive greater operating efficiencies are needed to return to sustained profitability ; however , we remain cautious and are carefully evaluating market conditions when pursuing new land acquisitions . additional results for the year ended october 31 , 2019 were as follows : ● for the year ended october 31 , 2019 , sale of homes revenues increased 2.3 % as compared to the prior year , as a result of a 2.0 % increase in deliveries , primarily due to our increased community count . ● gross margin percentage decreased from 15.2 % for the year ended october 31 , 2018 to 14.2 % for the year ended october 31 , 2019. this decrease was primarily due to the increase in cost of sales interest as a result of changes in estimates of interest per home for deliveries during fiscal 2019 in connection with our semi-annual community life planning process , along with a decrease due to the mix of communities delivering in each period . during this planning process , the duration of communities and timing of spending thereon could change , resulting in changes in total estimated community life capitalized interest . estimated community life capitalized interest is written-off with each delivery . gross margin percentage , before cost of sales interest expense and land charges , decreased slightly from 18.4 % for the year ended october 31 , 2018 to 18.1 % for the year ended october 31 , 2019 , primarily due to the mix of communities delivering . ● selling , general and administrative costs ( including corporate general and administrative expenses ) increased $ 4.3 million for the year ended october 31 , 2019 as compared to the prior year , primarily as a result of our increased community count , along with a lower adjustment to our warranty reserves ( as a result of our annual actuarial analysis ) in fiscal 2019 as compared to fiscal 2018. however , as a percentage of total revenue , such costs remained relatively flat at 11.6 % for the year ended october 31 , 2019 compared to 11.5 % for the year ended october 31 , 2018 . ● active selling communities at october 31 , 2019 increased 14.6 % over last year , and our average active selling communities increased by 5.4 % over last year . net contracts increased 14.3 % for the year ended october 31 , 2019 , compared to the prior year . ● net contracts per average active selling community increased to 39.0 for the year ended october 31 , 2019 compared to 35.9 in the prior year . ● contract backlog increased from 1,826 homes at october 31 , 2018 to 2,191 homes at october 31 , 2019 , with a dollar value of $ 880.1 million , representing a 18.0 % increase in dollar value compared to the prior year . when comparing sequentially from the third quarter of fiscal 2019 to the fourth quarter of fiscal 2019 , our gross margin percentage increased slightly from 14.0 % to 14.5 % and our gross margin percentage , before cost of sales interest expense and land charges , also increased slightly from 18.4 % to 18.9 % , both primarily as a result of product mix , as well as a minor increase due to the increase in delivery volume . selling , general and administrative costs ( including corporate general and administrative expenses ) as a percentage of total revenues decreased from 12.1 % to 7.6 % , as compared to the third quarter of fiscal 2019 , primarily due to the increase in delivery volume . 28 critical accounting policies management believes that the following critical accounting policies require its most significant judgments and estimates used in the preparation of the consolidated financial statements : income recognition from mortgage loans - our financial services segment originates mortgages , primarily for our homebuilding customers . story_separator_special_tag indicators of impairment include , but are not limited to , decreases in local housing market values , decreases in gross margins or sales absorption rates , decreases in net sales prices ( base sales price net of sales incentives ) , or actual or projected operating or cash flow losses . the assessment of communities for indication of impairment is performed quarterly . as part of this process , we prepare detailed budgets for all of our communities at least semi-annually and identify those communities with a projected operating loss . for those communities with projected losses , we estimate the remaining undiscounted future cash flows and compare those to the carrying value of the community , to determine if the carrying value of the asset is recoverable . the projected operating profits , losses , or cash flows of each community can be significantly impacted by our estimates of the following : ● future base selling prices ; ● future home sales incentives ; ● future home construction and land development costs ; and ● future sales absorption pace and cancellation rates . these estimates are dependent upon specific market conditions for each community . while we consider available information to determine what we believe to be our best estimates as of the end of a quarterly reporting period , these estimates are subject to change in future reporting periods as facts and circumstances change . local market-specific conditions that may impact our estimates for a community include : ● the intensity of competition within a market , including available home sales prices and home sales incentives offered by our competitors ; ● the current sales absorption pace for both our communities and competitor communities ; ● community specific attributes , such as location , availability of lots in the market , desirability and uniqueness of our community , and the size and style of homes currently being offered ; ● potential for alternative product offerings to respond to local market conditions ; ● changes by management in the sales strategy of the community ; ● current local market economic and demographic conditions and related trends of forecasts ; and ● existing home inventory supplies , including foreclosures and short sales . 30 these and other local market-specific conditions that may be present are considered by management in preparing projection assumptions for each community . the sales objectives can differ between our communities , even within a given market . for example , facts and circumstances in a given community may lead us to price our homes with the objective of yielding a higher sales absorption pace , while facts and circumstances in another community may lead us to price our homes to minimize deterioration in our gross margins , although it may result in a slower sales absorption pace . in addition , the key assumptions included in our estimate of future undiscounted cash flows may be interrelated . for example , a decrease in estimated base sales price or an increase in homes sales incentives may result in a corresponding increase in sales absorption pace . additionally , a decrease in the average sales price of homes to be sold and closed in future reporting periods for one community that has not been generating what management believes to be an adequate sales absorption pace may impact the estimated cash flow assumptions of a nearby community . changes in our key assumptions , including estimated construction and development costs , absorption pace and selling strategies , could materially impact future cash flow and fair-value estimates . due to the number of possible scenarios that would result from various changes in these factors , we do not believe it is possible to develop a sensitivity analysis with a level of precision that would be meaningful to an investor . if the undiscounted cash flows are more than the carrying value of the community , then the carrying amount is recoverable , and no impairment adjustment is required . however , if the undiscounted cash flows are less than the carrying amount , then the community is deemed impaired and is written down to its fair value . we determine the estimated fair value of each community by determining the present value of its estimated future cash flows at a discount rate commensurate with the risk of the respective community , or in limited circumstances , prices for land in recent comparable sale transactions , market analysis studies , which include the estimated price a willing buyer would pay for the land ( other than in a forced liquidation sale ) , and recent bona fide offers received from outside third parties . our discount rates used for all impairments recorded from october 31 , 2017 to october 31 , 2019 ranged from 16.8 % to 19.8 % . the estimated future cash flow assumptions are virtually the same for both our recoverability and fair value assessments . should the estimates or expectations used in determining estimated cash flows or fair value , including discount rates , decrease or differ from current estimates in the future , we may be required to recognize additional impairments related to current and future communities . the impairment of a community is allocated to each lot on a relative fair value basis . from time to time , we write off deposits and approval , engineering and capitalized interest costs when we determine that it is no longer probable that we will exercise options to buy land in specific locations or when we redesign communities and or abandon certain engineering costs . in deciding not to exercise a land option , we take into consideration changes in market conditions , the timing of required land takedowns , the willingness of land sellers to modify terms of the land option contract ( including timing of land takedowns ) , and the availability and best use of our capital , among other factors . the write-off is recorded in the period it is deemed not probable that the optioned property will be acquired .
| results of operations total revenues compared to the prior period , revenues increased ( decreased ) as follows : replace_table_token_12_th homebuilding sale of homes revenues increased $ 43.5 million , or 2.3 % , for the year ended october 31 , 2019 , decreased $ 433.8 million , or 18.5 % , for the year ended october 31 , 2018 , and decreased $ 260.8 million , or 10.0 % , for the year ended october 31 , 2017 as compared to the same period of the prior year . the increased revenues in fiscal 2019 were primarily due to the number of home deliveries increasing 2.0 % , and the average price per home increasing to $ 394,194 in fiscal 2019 from $ 393,280 in fiscal 2018. the increase in deliveries in fiscal 2019 were primarily due to the result of an increase in community count in fiscal 2019 as compared to fiscal 2018 of 14.6 % . the decreased revenues in fiscal 2018 were primarily due to the number of home deliveries decreasing 13.5 % and the average price per home decreasing to $ 393,280 in fiscal 2018 from $ 417,714 in fiscal 2017. the decreased revenues in fiscal 2017 were primarily due to the number of home deliveries decreasing 13.3 % , partially offset by the average price per home increasing to $ 417,714 in fiscal 2017 from $ 402,350 in fiscal 2016. the decrease in fiscal 2018 and 2017 deliveries were primarily the result of a reduction in community count by 5.4 % and 22.2 % , respectively . the fluctuations in average prices for fiscal 2019 , 2018 , and 2017 were primarily the result of geographic and community mix of our deliveries . for fiscal 2018 , there were also home price decreases ( which we increase or decrease in communities depending on the respective community 's performance ) , partially offset by price increases in some communities primarily in the west . for fiscal 2017 , we were also able to raise home prices in certain communities .
| 5,789 |
utilization of net operating losses and tax credits , including those acquired as a result of the merger , will be subject to an annual limitation due to ownership change limitations provided by internal revenue code section 382. the company believes that an ownership change limitation as defined under section 382 of the u.s. internal revenue code occurred as a result of its various historical financing transactions , and its offering of common stock completed in june 2015. future utilization of the federal net operating losses and tax credit carryforwards accumulated from june 2005 to the change in ownership date will be subject to annual limitations to offset future taxable income . the annual limitation may result in the expiration 64 of the net operating losses and credits before utilization . as such , a portion of the company 's net operating loss carryforwards may be limited . in assessing the realizability of deferred tax assets , management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized . the ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible . management considers the scheduled reversal of deferred tax liabilities , projected future taxable income and tax planning strategies in making this assessment . due primarily to the company 's history of operating losses , management is unable to conclude that it is more likely than not that the company will realize the benefits of these deductible differences , and accordingly has provided a valuation allowance against the entire net deferred tax asset of approximately $ 43.5 million at december 31 , 2018 , reflecting an increase of approximately $ 1.9 million from december 31 , 2017. during 2017 , deferred tax assets decreased $ 20.1million related to the remeasurement of the deferred tax assets from 34 % to the new 2018 u.s. federal corporate income tax rate of 21 % . the deferred tax assets are primarily comprised of net operating loss carryforwards and research and experimentation credit carryforwards . as of december 31 , 2018 , the company has not performed an internal revenue code section 382 limitation study . depending on the outcome of such a study , the gross amount of story_separator_special_tag we have included or incorporated by reference into this management 's discussion and analysis of financial condition and results of operations and elsewhere in this annual report on form 10-k , and from time to time our management may make , statements that constitute “ forward-looking statements ” within the meaning of section 27a of the securities act and section 21e of the exchange act . forward-looking statements may be identified by words including “ anticipate , ” “ plan , ” “ believe , ” “ intend , ” “ estimate , ” “ expect , ” “ should , ” “ may , ” “ potential ” and similar expressions . these statements involve known and unknown risks , uncertainties and other factors that may cause our actual results , levels of activity , performance or achievements to be materially different from the information expressed or implied by these forward-looking statements . while we believe that we have a reasonable basis for each forward-looking statement contained in this annual report , we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future , about which we can not be certain . we undertake no obligation to publicly update any forward-looking statements , whether as a result of new information , future events or otherwise . you are advised , however , to consult any further disclosures we make on related subjects in our quarterly reports on form 10-q , current reports on form 8-k , and our website . overview we are a biopharmaceutical company applying a precision medicine approach to developing genetically-targeted therapies for cardiovascular diseases . precision medicine refers to the tailoring of medical treatment to the individual characteristics of each patient through the ability to classify individuals into subpopulations that differ in their susceptibility to a particular disease , in the biology and or prognosis of those diseases they may develop , or in their response to a specific treatment . our lead product candidate , gencaro ( bucindolol hydrochloride ) , is an investigational , pharmacologically unique beta-blocker and mild vasodilator that we are developing to treat atrial fibrillation , or af , in certain patients who also have heart failure , or hf . 42 gencaro has a mechanism of action that we believe is unique in the beta-blocker drug class and is modulated by a specific genotype . we estimate this genotype is present in about 50 % of north america n and europe an general populations . we belie ve that gencaro 's potential efficacy is enhanced in treating patients who have this genotype and , if gencaro is approved by the u.s. food and drug administration , or the fda , gencaro could potentially be a safe and effective therapy for treating af in pati ents who have hf . we also believe that gencaro , if approved , will have market exclusivity based on patents and new chemical entity status , if approved in the united states , europe or other markets . in february 2018 , we reported the results of our phase 2b clinical trial , known as genetic-af , in which we evaluated gencaro for the prevention of af recurrence in patients with hf and a left ventricular ejection fraction , or lvef , < 0.50. this population included 267 patients that had hf with reduced lvef < 0.40 , or hfref , or hf with mid-range lvef ≥ 0.40 and < 0.50 , or hfmref . story_separator_special_tag cash flows from operating , investing and financing activities replace_table_token_3_th net cash used in operating activities for the year ended december 31 , 2018 decreased approximately $ 9.2 million compared with 2017. this was primarily due to a lower net loss in 2018 , as discussed in more detail above , offset by changes in operating assets and liabilities . net cash provided by investing activities for the year ended december 31 , 2018 was $ 3.0 million , consisting of $ 3.1 million of proceeds from the maturities of marketable securities , offset by $ 4,000 for the purchase of property and equipment . net cash provided by investing activities for the year ended december 31 , 2017 was $ 12.9 million , consisting of $ 18.4 million of proceeds from the maturities of marketable securities , offset by $ 5.5 million for the purchases of marketable securities and $ 3,000 for the purchase of property and equipment . 45 net cash provided by financing activities was $ 3.1 million for the year ended december 31 , 2018 representing $ 3.4 million of net proceeds from sales of our c ommon stock pursuant to our sales agreement , less $ 0.3 million in payments on a vendor financing arrangement . net cash provided by financing activities was $ 5.8 million for the year ended december 31 , 2017 representing $ 6.1 million of net proceeds from sal es of our common stock pursuant to our sales agreement , less $ 0.3 million in payments on a vendor financing arrangement . sources and uses of capital our primary sources of liquidity to date have been capital raised from issuances of shares of our preferred and common stock . the primary uses of our capital resources to date have been to fund operating activities , including research , clinical development and drug manufacturing expenses , license payments , and spending on capital items . in 2017 , we entered into a sales agreement , as amended , with an agent to sell , from time to time , our common stock having an aggregate offering price of up to $ 10.2 million , in an “ at the market offering. ” in january 2019 , we amended the amended sales agreement to increase the maximum aggregate value of shares which we may issue and sell from time to time under this sales agreement by approximately $ 2.5 million , from $ 10.2 million to $ 12.7 million . as of february 22 , 2019 , we have sold an aggregate of 9,242,406 shares of our common stock pursuant to the terms of such sales agreement , as amended , for aggregate gross proceeds of approximately $ 12.6 million . net proceeds received in the period were approximately $ 11.9 million , after deducting initial expenses for executing the “ at the market offering ” and commissions paid to the placement agent . we have sold all shares available under the current prospectus . our liquidity and our ability to raise additional capital or complete any strategic transaction depends on a number of factors , including , but not limited to , the following : the costs and timing for the potential additional clinical trials , including precision‑af , in order to gain possible regulatory approval for gencaro or any other product candidate ; the market price of our stock and the availability and cost of additional equity capital from existing and potential new investors ; our ability to retain the listing of our common stock on the nasdaq capital market ; our ability to control costs associated with its operations ; general economic and industry conditions affecting the availability and cost of capital ; the costs of filing , prosecuting , defending and enforcing any patent claims and other intellectual property rights ; and the terms and conditions of our existing collaborative and licensing agreements . we believe that our cash and cash equivalents as of december 31 , 2018 , together with the $ 2.4 million of net proceeds raised in 2019 from sales of our common stock , will be sufficient to fund our operations , at our projected cost structure , through the third quarter of 2019. however , our forecast of the period of time through which our financial resources will be adequate to support our current and forecasted operations could vary materially . we will need to raise additional capital to fund future operations and any additional development of gencaro or any other product candidates . such financing would likely result in dilution to our existing stockholders . if we raise additional funds through the incurrence of indebtedness , the obligations related to such indebtedness would be senior to rights of holders of our capital stock and could contain covenants that would restrict our operations . the significant uncertainties surrounding the clinical development timelines and costs and the ability to raise a significant amount of capital raises substantial doubt about our ability to continue as a going concern from one year after the company 's financial statements have been issued . critical accounting policies and estimates a critical accounting policy is one that is both important to the portrayal of our financial condition and results of operation and requires management 's most difficult , subjective or complex judgments , often as a result of the need to make estimates about the effect of matters that are inherently uncertain . while our significant accounting policies are described in note 1 of “ notes to financial statements ” included within item 8 in this report , we believe the following critical accounting policy affected our most significant judgments , assumptions , and estimates used in the preparation of our financial statements and , therefore , is important in understanding our financial condition and results of operations . accrued outsourcing expenses as part of the process of preparing our financial statements , we are required to estimate accrued outsourcing
| results of operations research and development expenses research and development , or r & d , expense is comprised primarily of clinical development , manufacturing process development , and regulatory activities and costs . our r & d expense continues to be almost entirely generated by our activities relating to the development of gencaro . our research and development expenses were $ 4.2 million for the year ended december 31 , 2018 as compared to $ 14.1 million for 2017. the $ 9.8 million decrease in research and development expenses in 2018 as compared to 2017 was primarily related to our genetic-af clinical trial that was completed in 2017. clinical expense decreased approximately $ 7.5 million for the year ended december 31 , 2018. the decrease was related to our genetic-af clinical trial that was completed in 2017. manufacturing process development costs decreased approximately $ 2.1 million for the year ended december 31 , 2018 compared to 2017. the decrease was a result of decreased production of clinical trial materials used in our genetic-af clinical trial that was completed in 2017. subject to securing significant additional financing , we anticipate initiating our precision‑af clinical trial in the fourth quarter of 2019. r & d expense in 2019 is expected to be higher than 2018 , if we initiate our precision‑af clinical trial . if we are unable to initiate our precision‑af clinical trial , then r & d expense is expected to be lower than 2018. general and administrative expenses general and administrative , or g & a , expenses primarily consist of personnel costs , consulting and professional fees , insurance , facilities and depreciation expenses , and various other administrative costs . g & a expenses were $ 3.9 million for the year ended december 31 , 2018 , compared to $ 4.6 million for 2017 , a decrease of approximately $ 0.8 million .
| 5,790 |
the towables recreational vehicle reportable segment consists of the following operating segments that have been aggregated : airstream ( towable ) , heartland ( including bison , crv and drv ) , jayco ( including jayco towable , starcraft and highland ridge ) , keystone ( including crossroads and dutchmen ) , and kz ( including venture rv ) . the motorized recreational vehicle reportable segment consists of the following story_separator_special_tag unless otherwise indicated , all dollar amounts are presented in thousands except per share data . our management 's discussion and analysis of financial condition and results of operations ( md & a ) should be read in conjunction with the company 's consolidated financial statements and notes thereto included in item 8 of this report . story_separator_special_tag expense in the fourth quarter of fiscal 2018 as a result of recent guidance related to limitations on the deductibility of executive compensation as provided under the tax act . the company is still analyzing the impacts of the tax act which potentially could affect the measurement of the deferred tax balances . the reduction in the statutory u.s. federal income tax rate is expected to positively impact the company 's future u.s. after-tax earnings . for fiscal 2019 , after considering the lower federal income tax rate of 21.0 % , an estimated blended state income tax rate , the elimination of the code section 199 deduction and the limitations on the deductibility of executive compensation , the company currently estimates an overall effective income tax rate between 23.0 % and 25.0 % , before consideration of any discrete tax items . fiscal 2016 jayco acquisition on june 30 , 2016 , the company closed on a stock purchase agreement ( jayco spa ) for the acquisition of all the issued and outstanding capital stock of towable and motorized recreational vehicle manufacturer jayco , corp. ( jayco ) for cash consideration of $ 562,690 , net of cash acquired . this acquisition was funded from the company 's cash on hand and $ 360,000 from an asset-based revolving credit facility as more fully described in notes 2 and 12 to the consolidated financial statements . jayco operates as an independent operation in the same manner as the company 's other recreational vehicle subsidiaries . the company purchased jayco to complement its existing towable and motorized rv product offerings and dealer base . discontinued operations on july 31 , 2013 , the company entered into a definitive stock purchase agreement and sold our bus business to allied specialty vehicles , inc. the sale closed on october 20 , 2013. thor 's bus business included champion bus , inc. , general coach america , inc. , goshen coach , inc. , el dorado national ( california ) , inc. , and el dorado national ( kansas ) , inc. as a result of the sale , the results of operations of the bus business are reported as loss from discontinued operations , net of income taxes on the consolidated statements of income and comprehensive income for the fiscal year ended july 31 , 2016. industry outlook the company monitors industry conditions in the rv market through the use of monthly wholesale shipment data as reported by the rvia , which is typically issued on a one-month lag and represents the manufacturers ' rv production and delivery to dealers . in addition , the company monitors monthly retail ( end user ) sales trends as reported by statistical surveys , inc. , whose data is typically issued on a month-and-a-half lag . we believe that monthly rv retail sales data is important as consumer purchases impact future dealer orders and ultimately our production and sales . we believe rv dealer inventory of thor products is generally at appropriate levels for seasonal consumer demand , although slightly elevated in certain locations due to several factors . rv dealer inventory of thor products as of july 31 , 2018 increased 26.3 % to approximately 138,500 units from approximately 109,700 units as of july 31 , 2017 , and we believe this increase is partially due to the july 31 , 2017 dealer inventory total being low based on retail demand at that time . thor 's total rv backlog as of july 31 , 2018 decreased $ 930,742 or 39.9 % to $ 1,401,057 from $ 2,331,799 as of july 31 , 2017 , with the decrease mainly attributable to our capacity expansions since the prior year allowing for increased production and therefore quicker delivery of units to dealers , the increase in existing dealer inventories noted above and a more typical seasonal order pattern compared to the elevated order levels from the prior year . 22 industry wholesale statistics calendar ytd key wholesale statistics for the rv industry , as reported by rvia for the periods indicated , are as follows : replace_table_token_5_th according to the most recent rvia forecast in august 2018 , shipments for towable and motorized units for the 2018 calendar year will approximate 444,000 and 61,900 units , respectively , which are 0.5 % higher and 1.2 % lower , respectively , than the corresponding 2017 calendar year wholesale shipments . the combined total of 505,900 units is 0.3 % higher than the total 2017 wholesale shipments of 504,599. travel trailers and fifth wheels are expected to account for approximately 86 % of all rv shipments in calendar year 2018. the outlook for calendar year 2018 growth in rv sales is based on the expectation of continued gains in jobs and disposable income . it also takes into account the impact of slowly rising interest rates , inflation and geopolitical risks . rvia has also forecasted that 2019 calendar year shipments for towables and motorized units will ease back to approximately 442,200 and 54,900 units , respectively , for a total of 497,100 units , a decline of 1.7 % from the expected 2018 calendar year shipments . this decline is primarily related to motorized units . story_separator_special_tag 25 fiscal 2018 vs. fiscal 2017 replace_table_token_10_th 26 consolidated consolidated net sales for fiscal 2018 increased $ 1,081,957 , or 14.9 % , compared to fiscal 2017. consolidated gross profit for fiscal 2018 increased $ 121,083 , or 11.6 % , compared to fiscal 2017. consolidated gross profit was 14.0 % of consolidated net sales for fiscal 2018 and 14.4 % for fiscal 2017. consolidated selling , general and administrative expenses for fiscal 2018 increased $ 57,597 , or 13.7 % , compared to fiscal 2017. amortization of intangible assets expense for fiscal 2018 decreased $ 8,807 , or 13.8 % , compared to fiscal 2017 , primarily due to lower dealer network amortization as compared to the prior-year period . consolidated income before income taxes for fiscal 2018 was $ 633,029 , as compared to $ 556,386 for fiscal 2017 , an increase of $ 76,643 , or 13.8 % . consolidated income before income taxes was 7.6 % of consolidated net sales for fiscal 2018 and 7.7 % for fiscal 2017. additional information concerning the changes in net sales , gross profit , selling , general and administrative expenses , amortization of intangible assets expense and income before income taxes are addressed in the segment reporting that follows . corporate costs included in selling , general and administrative expenses increased $ 15,120 to $ 66,473 for fiscal 2018 compared to $ 51,353 for fiscal 2017. the increase is due in part to an increase in compensation costs , as incentive compensation increased $ 1,809 in correlation with the increase in income before income taxes compared to the prior year , and stock-based compensation increased $ 4,500. the stock-based compensation increase is due to increasing income before income taxes over the past three years , as most stock awards are based on that metric and vest ratably over a three-year period . deferred compensation expense also increased $ 928 , which relates to the equal and offsetting increase in other income noted below due to the increase in the related deferred compensation plan assets . in addition , legal and professional fees , including costs related to sales and marketing initiatives as well as the joint venture and the strategic growth opportunity as discussed in notes 8 and 18 , respectively , to the consolidated financial statements , increased $ 5,786. corporate interest and other income and expense was $ 607 of net expense for fiscal 2018 compared to $ 5,213 of net expense for fiscal 2017. this favorable change of $ 4,606 is primarily due to interest expense and fees on the revolving credit facility decreasing $ 4,512 compared to the prior-year period as a result of the lower average outstanding debt balance . interest income also increased $ 1,264 in fiscal 2018 due primarily to increased rates of return on invested cash balances . in addition , the change in the fair value of the company 's deferred compensation plan assets due to market fluctuations and investment income resulted in an increase in income of $ 928 in the current-year period as compared to the prior-year period . these increases were partially offset by losses of $ 1,939 related to the company 's equity investment made in fiscal 2018 as discussed in note 8 to the consolidated financial statements . the overall annual effective tax rate for fiscal 2018 is 32.0 % on $ 633,029 of income before income taxes , compared with 32.7 % on $ 556,386 of income before income taxes for fiscal 2017. the tax cuts and jobs act ( the tax act ) was signed into law on december 22 , 2017. under the tax act , the federal corporate income tax rate has been reduced from 35.0 % to 21.0 % starting january 1 , 2018 , which results in the use of a blended federal corporate income tax rate of 26.9 % for the company 's 2018 fiscal year . the benefit of the lower blended tax rate for fiscal 2018 was mostly offset by approximately $ 34,000 of additional income tax expense in fiscal 2018 resulting from the revaluation of the company 's net deferred tax assets to reflect the impact of the lower tax rates in connection with the tax act . 27 segment reporting towable recreational vehicles analysis of change in net sales for fiscal 2018 vs. fiscal 2017 replace_table_token_11_th impact of change in product mix and price on net sales : % increase towables travel trailers and other 5.7 fifth wheels 1.7 total towables 4.4 the increase in total towables net sales of 17.2 % compared to the prior fiscal year resulted from a 12.8 % increase in unit shipments and a 4.4 % increase in the overall net price per unit due to the impact of changes in product mix and price . the other units within the travel trailers and other category consists primarily of truck and folding campers and other specialty vehicles . according to statistics published by rvia , for the twelve months ended july 31 , 2018 , combined travel trailer and fifth wheel wholesale unit shipments for the industry increased 13.8 % compared to the same period last year . the increases in the net price per unit within the travel trailer and other product lines of 5.7 % and the fifth wheel product lines of 1.7 % were both primarily due to changes in product mix and selective net price increases since the prior fiscal year . cost of products sold increased $ 782,729 to $ 5,126,468 , or 85.3 % of towables net sales , for fiscal 2018 compared to $ 4,343,739 , or 84.7 % of towables net sales , for fiscal 2017. the changes in material , labor , freight-out and warranty costs comprised $ 735,323 of the $ 782,729 increase in cost of products sold .
| executive overview we were founded in 1980 and have grown to be the largest manufacturer of rvs in north america . according to statistical surveys , inc. , for the six months ended june 30 , 2018 , thor 's combined u.s. and canadian market share was approximately 49.6 % for travel trailers and fifth wheels combined and approximately 40.0 % for motorhomes . our business model includes decentralized operating units , and we compensate operating management primarily with cash , based upon the profitability of the business unit which they manage . our corporate staff provides financial management , insurance , legal , human resource , risk management , marketing and internal audit functions . senior corporate management interacts regularly with operating management to assure that corporate objectives are understood and monitored appropriately . our rv products are sold to non-franchise dealers who , in turn , retail those products . we generally do not finance dealers directly , but do provide repurchase agreements to the dealers ' floor plan lenders . our growth has been both internal and by acquisition . our strategy is designed to increase our profitability through innovation , servicing our customers , manufacturing quality products , improving the efficiencies of our facilities and making acquisitions . we generally rely on internally generated cash flows from operations to finance our growth , however , we did obtain a credit facility to partially fund the jayco , corp. acquisition as more fully described in notes 2 and 12 to the consolidated financial statements . capital expenditures of $ 138,197 in fiscal 2018 were made primarily for purchases of land , production building additions and improvements and replacing machinery and equipment used in the ordinary course of business . significant events recent events subsequent event on september 18 , 2018 , the company and the shareholders of erwin hymer group se ( erwin hymer group ) announced that they entered into a definitive agreement for the company to acquire erwin hymer group .
| 5,791 |
000-28827 , filed january 10 , 2000 ) . 3.2 articles of amendment to the amended and restated articles of incorporation filed june 6 , 2001 . * 3.3 by-laws of the corporation ( incorporated by reference to exhibit 3.3 to the registration statement on form 10-sb , file no . 000-28827 , filed january 10 , 2000 ) . ( 4 ) instruments defining the rights of security holders 4.1 specimen common stock certificate ( incorporated by reference to exhibit 4.2 to the registration statement on form 10-sb , file no . 000-28827 , filed january 10 , 2000 ) . ( 10 ) material contracts 10.1 1998 stock option plan incorporated by reference to exhibit 10.1 to the registration statement on form 10-sb , file no . 000-28827 , filed january 10 , 2000 ) . 10.2 employment agreement with menderes akdag ( incorporated by reference to exhibit 10 of the registrant 's form 8-k filed march 30 , 2001 ) . 10.3 agreement for the sale and leaseback of the land and building ( incorporated by reference to exhibit 99.1 of the registrant 's form 8-k filed june 14 , 2001 ) . 10.4 amendment number 1 to executive employment agreement with menderes akdag ( incorporated by reference to exhibit 99.1 of the registrant 's form 8-k filed march 18 , 2004 ) . 10.5 amendment number 2 to executive employment agreement with menderes akdag ( incorporated by reference to exhibit 10.1 of the registrant 's form 8-k filed february 28 , 2007 ) . 10.6 2006 employee equity compensation restricted stock plan ( incorporated by reference to our definitive proxy statement for our 2006 annual meeting of stockholders filed june 22 , 2006 ) . 10.7 2006 outside director equity compensation restricted stock plan ( incorporated by reference to our definitive proxy statement for our 2006 annual meeting of stockholders filed june 22 , 2006 ) . 10.8 employment letter with bruce rosenbloom dated may 30 , 2001 ( incorporated by reference to exhibit 10.9 of the registrant 's form 8-k filed april 7 , 2009 ) . 10.9 amendment number 3 to executive employment agreement with menderes akdag ( incorporated by reference to exhibit 10.1 of the registrant 's form 8-k filed february 8 , 2010 ) . 10.10 amendment number 4 to executive employment agreement with menderes akdag ( incorporated by reference to exhibit 10.1 of the registrant 's form 8-k filed january 28 , 2013 ) . ( 14 ) corporate code of ethics 14.1 corporate code of ethics ( incorporated by reference to our definitive proxy statement for our 2004 annual meeting of stockholders filed june 30 , 2004 ) . ( 21 ) subsidiaries of registrant 21.1 subsidiaries of registrant * ( 31 ) certifications 31.1 certification of chief executive officer pursuant to rule 13a-14 ( a ) /15d-14 ( a ) . * 31.2 certification of chief financial officer pursuant to rule 13a-14 ( a ) /15d-14 ( a ) . * ( 32 ) certifications 32.1 certification of principal executive officer and principal financial officer pursuant to section 1350 . * * * filed herewith * * furnished herewith 42 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities exchange act of 1934 , as amended , the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized . dated : may 22 , 2015 petmed express , inc. ( the “ registrant ” ) by : menderes akdag menderes akdag chief executive officer and president ( principal executive 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 on may 22 , 2015. signature title chief executive officer and president menderes akdag ( principal executive officer ) menderes akdag officer and director robert c. schweitzer chairman of the board robert c. schweitzer director chief financial officer and treasurer bruce s. rosenbloom ( principal financial and accounting officer ) bruce s. rosenbloom officer ronald j. korn director ronald j. korn gian m. fulgoni director gian m. fulgoni frank j. formica director frank j. formica 43 story_separator_special_tag executive summary petmed express was incorporated in the state of florida in january 1996. the company 's common stock is traded on the nasdaq global select market under the symbol “ pets. ” the company began selling pet medications and other pet health products in september 1996. in march 2010 the company started offering for sale additional pet supplies on its website , and these items are drop shipped to customers by third party vendors . presently , the company 's product line includes approximately 3,000 skus of the most popular pet medications , health products , and supplies for dogs and cats . the company markets its products through national television , online , and direct mail/print advertising campaigns which aim to increase the recognition of the “ 1-800-petmeds ” brand name , and “ petmeds ” family of trademarks , increase traffic on its website at www.1800petmeds.com , acquire new customers , and maximize repeat purchases . approximately 80 % of all sales were generated via the internet in fiscal 2015 , compared to 79 % in fiscal 2014. the company 's sales consist of products sold mainly to retail consumers . the twelve-month average purchase was approximately $ 77 and $ 75 per order for the fiscal years ended march 31 , 2015 and 2014 , respectively . critical accounting policies our discussion and analysis of our financial condition and the results of our operations are based upon our consolidated financial statements and the data used to prepare them . story_separator_special_tag depreciation depreciation decreased by approximately $ 207,000 , to approximately $ 660,000 for the year ended march 31 , 2015 , from approximately $ 867,000 for the year ended march 31 , 2014. this decrease to depreciation for the year ended march 31 , 2015 can be attributed to more fixed assets becoming fully depreciated . other income other income increased slightly , to approximately $ 185,000 for the year ended march 31 , 2015 from approximately $ 181,000 for the year ended march 31 , 2014. interest income may decrease in the future as the company utilizes its cash balances on its share repurchase plan , with approximately $ 10.2 million remaining as of march 31 , 2015 , on any quarterly dividend payment , or on its operating activities . provision for income taxes for the fiscal years ended march 31 , 2015 and 2014 , the company recorded an income tax provision for approximately $ 10.3 million and $ 10.4 million , respectively . the decrease to the income tax provision for fiscal 2015 is related to a reduction in operating income for the period due to the one-time discontinued project charge of $ 1.7 million . the net after tax impact of this one-time charge was $ 1.1 million , which reduced the income tax provision by approximately $ 600,000. the effective tax rate for the fiscal years ended march 31 , 2015 and 2014 were 37.2 % and 36.7 % , respectively . the effective tax rate increase for the fiscal year ended march 31 , 2015 , can be attributed to a one-time charge related to a fiscal 2015 income tax under-accrual , which was recognized in the quarter ended december 31 , 2014 , compared to a one-time benefit related to a fiscal 2014 income tax over-accrual , which was recognized in the quarter ended december 31 , 2013. the company estimates its effective tax rate will be approximately 37.0 % for fiscal 2016. net income net income decreased by approximately $ 519,000 , or 2.9 % , to approximately $ 17.5 million for the fiscal year ended march 31 , 2015 from approximately $ 18.0 million for the fiscal year ended march 31 , 2014. the decrease was primarily due to a reduction in sales , and the recognition of one-time project charge of $ 1.7 million during the fiscal year . the net after tax impact of this one-time charge was $ 1.1 million . fiscal 2014 compared to fiscal 2013 sales sales increased by approximately $ 5.6 million , or 2.4 % , to approximately $ 233.4 million for the fiscal year ended march 31 , 2014 , from approximately $ 227.8 million for the fiscal year ended march 31 , 2013. the increase in sales for the fiscal year ended march 31 , 2014 can be attributed to increased reorder sales , offset by a reduction to new order sales . our sales increase was also due to an increase in the average order size during the year . the company acquired approximately 597,000 new customers for the year ended march 31 , 2014 , compared to approximately 630,000 new customers for the same period the prior year . 18 the following chart illustrates sales by various sales classifications : replace_table_token_7_th future sales may be adversely affected due to increased competition and consumers giving more consideration to price . no guarantees can be made that sales will grow in the future . the majority of our product sales were affected by the seasons , due to the seasonality of mainly heartworm , and flea and tick medications . for the quarters ended june 30 , september 30 , december 31 , and march 31 of fiscal 2014 , the company 's sales were approximately 32 % , 26 % , 21 % , and 21 % , respectively . for the quarters ended june 30 , september 30 , december 31 , and march 31 of fiscal 2013 , the company 's sales were approximately 30 % , 26 % , 22 % , and 22 % , respectively . sales in the march quarter of fiscal 2014 were negatively impacted by the colder-than-normal weather . cost of sales cost of sales increased by $ 5.1 million , or 3.4 % , to $ 155.8 million for the fiscal year ended march 31 , 2014 , from $ 150.7 million for the fiscal year ended march 31 , 2013. the increase in cost of sales is directly related to increased sales . as a percentage of sales , cost of sales was 66.7 % in fiscal 2014 , as compared to 66.1 % in fiscal 2013. the cost of sales percentage increase can be mainly attributed to an increase in product costs and an increase in promotional discounts . gross profit gross profit increased by $ 496,000 , to $ 77.6 million for the fiscal year ended march 31 , 2014 , from $ 77.1 million for the fiscal year ended march 31 , 2013. gross profit as a percentage of sales for fiscal 2014 was 33.3 % compared to 33.9 % , for fiscal 2013. the gross profit percentage decrease can be mainly attributed to an increase in product costs and an increase in promotional discounts . general and administrative expenses general and administrative expenses decreased by $ 240,000 , or 1.1 % , to $ 21.4 million for the fiscal year ended march 31 , 2014 from $ 21.6 million for the fiscal year ended march 31 , 2013. the decrease in general and administrative expenses for the fiscal year ended march 31 , 2014 was primarily due to the following : a $ 331,000 reduction in payroll expense primarily related to a reduction in stockbased compensation ; a $ 67,000 decrease in office expenses ; a $ 37,000 decrease in licenses and fees ; and a $ 36,000 decrease in telephone expenses .
| results of operations the following should be read in conjunction with the company 's consolidated financial statements and the related notes thereto included elsewhere herein . the following table sets forth , as a percentage of sales , certain operating data appearing in the company 's consolidated statements of comprehensive income : replace_table_token_5_th fiscal 2015 compared to fiscal 2014 sales sales decreased by approximately $ 4.0 million , or 1.7 % , to approximately $ 229.4 million for the fiscal year ended march 31 , 2015 , from approximately $ 233.4 million for the fiscal year ended march 31 , 2014. the decrease in sales for the fiscal year ended march 31 , 2015 was primarily due to decreased new order and reorder sales . fiscal 2015 sales were negatively impacted primarily by the weakness in demand for flea and tick topical pet medications . the company acquired approximately 529,000 new customers for the year ended march 31 , 2015 , compared to approximately 597,000 new customers for the same period the prior year . 16 the following chart illustrates sales by various sales classifications : replace_table_token_6_th going forward sales may continue to be adversely affected due to increased competition and consumers giving more consideration to price . the majority of our product sales were affected by the seasons , due to the seasonality of mainly heartworm , and flea and tick medications . for the quarters ended june 30 , september 30 , december 31 , and march 31 of fiscal 2015 , the company 's sales were approximately 32 % , 25 % , 21 % , and 22 % , respectively . for the quarters ended june 30 , september 30 , december 31 , and march 31 of fiscal 2014 , the company 's sales were approximately 32 % , 26 % , 21 % , and 21 % , respectively .
| 5,792 |
( 2 ) we have significant non-functional currency intercompany financing relationships that we may change at times and are subject to currency exchange rate volatility . the currency-related gains ( losses ) , net for the years ended june 30 , 2020 , 2019 and 2018 are primarily driven by this intercompany activity . in addition , we have certain cross-currency swaps designated as cash flow hedges , which hedge the remeasurement of certain intercompany loans , both presented in the same component above . the unrealized gain related to cross-currency swaps was $ 929 for the year ended june 30 , 2020 as compared to an unrealized loss of $ 3,484 for the year ended june 30 , 2019 , and an unrealized gain of $ 2,722 for the year ended june 30 , 2018. net income per share attributable to cimpress plc basic net income per share attributable to cimpress plc is computed by dividing net income attributable story_separator_special_tag this report contains forward-looking statements that involve risks and uncertainties . the statements contained in this report that are not purely historical are forward-looking statements within the meaning of section 27a of the securities act of 1933 and section 21e of the securities exchange act of 1934 , including but not limited to our statements about the anticipated growth and development of our businesses and revenues during and after the covid-19 pandemic , the potential effects of the pandemic , the expected effects of the actions we are taking and intend to take to address the pandemic including cost savings , the size of our market and our ability to take advantage of the market opportunity , expectations with respect to the development and efficacy of our mass customization platform , the competitive landscape and our competitive position , the expected effects of the reorganization of our technology team , sufficiency of our liquidity position , legal proceedings , and sufficiency of our tax reserves . without limiting the foregoing , the words “ may , ” “ should , ” “ could , ” “ expect , ” “ plan , ” “ intend , ” “ anticipate , ” “ believe , ” “ estimate , ” “ predict , ” “ designed , ” “ potential , ” “ continue , ” “ target , ” “ seek ” and similar expressions are intended to identify forward-looking statements . all forward-looking statements included in this report are based on information available to us up to , and including the date of this document , and we disclaim any obligation to update any such forward-looking statements . our actual results could differ materially from those anticipated in these forward-looking statements as a result of various important factors , including but not limited to flaws in the assumptions and judgments upon which our forecasts and estimates are based ; the development , severity , and duration of the covid-19 pandemic ; our failure to anticipate and react to the effects of the pandemic on our customers , supply chain , markets , team members , and business ; our inability to take the actions that we plan to take or the failure of those actions to achieve the results we expect ; loss or unavailability of key personnel or our inability to recruit talented personnel to drive performance of our businesses ; unanticipated changes in our markets , customers , or businesses ; changes in the laws and regulations , or in the interpretation of laws and regulations , that affect our businesses ; our failure to manage the growth and complexity of our business and expand our operations ; the willingness of purchasers of customized products and services to shop online ; our failure to maintain compliance with the covenants in our debt documents or to pay our debts when due ; competitive pressures ; general economic conditions ; and other factors described in this report . you should carefully review those factors and also carefully review the risks outlined in other documents that we file from time to time with the united states securities and exchange commission . executive overview cimpress is a strategically focused group of more than a dozen businesses that specialize in mass customization , via which we deliver large volumes of individually small-sized customized orders for a broad spectrum of print , signage , photo merchandise , invitations and announcements , writing instruments , packaging , apparel and other categories . we invest in and build customer-focused , entrepreneurial mass customization businesses for the long term , which we manage in a decentralized , autonomous manner . we drive competitive advantage across cimpress through a select few shared strategic capabilities that have the greatest potential to create cimpress-wide value . we limit all other central activities to only those which absolutely must be performed centrally . during the first quarter of fiscal 2020 , we revised our internal organizational and reporting structure leading to changes in our vistaprint and all other businesses reportable segments . our vistaprint corporate solutions , vistaprint india , and vistaprint japan businesses , which were previously aggregated based on materiality in our all other businesses , are now directly managed within the vistaprint business . these businesses are close derivatives or adjacencies of the vistaprint business and leverage the vistaprint brand , customers , technology , and or other assets . this change in reporting structure positions them closer to the vistaprint operations , capabilities , and resources . additionally , during the fourth quarter of fiscal 2020 , we reorganized technology teams that previously existed within our vistaprint business and our central teams . the reorganization resulted in some team member reductions in both organizations , and the net transfer of 177 team members from vistaprint to our central cimpress technology team . this change is intended to free up resources to make more vistaprint technologies available to other cimpress businesses in the future , to accelerate vistaprint 's re-platforming efforts , and to reduce costs where no longer necessary . story_separator_special_tag story_separator_special_tag style= '' font-family : arial ; font-size:10pt ; color : # ee2724 ; font-style : italic ; '' > in our central technology 36 teams , primarily due to an increase in headcount , as these teams continue to develop new technologies that are intended to support our businesses , combined with higher operating costs driven by our businesses ' increased adoption and usage of our central technology capabilities , which was partially offset by a reduction in travel and training expenses during the fourth quarter of fiscal 2020. additionally , we had a $ 2.8 million increase of expense in our vistaprint business , primarily related to the ongoing rebuild of its technology infrastructure . the increase during the year ended june 30 , 2020 , was also partially due to $ 5.2 million in the non-recurring reversal of share-based compensation expense for our supplemental psus in the comparative period . marketing and selling expense marketing and selling expense consists primarily of advertising and promotional costs ; payroll and related expenses for our employees engaged in marketing , sales , customer support and public relations activities ; direct-mail advertising costs ; and third-party payment processing fees . our vistaprint , national pen and buildasign businesses have higher marketing and selling costs as a percentage of revenue as compared to our printbrothers and the print group businesses . our marketing and selling expenses decreased by $ 139.8 million during the year ended june 30 , 2020 , as compared to the prior year . the decrease from the prior comparative period is primarily due to the reduction of advertising spend in our vistaprint business of $ 104.3 million , which was driven by two factors . the first was our reduction in advertising spend throughout the year as we continued our initiative to work to eliminate spend that does not meet our return thresholds . this was combined with our response to the decline in order volumes that started in march 2020 , whereby we further reduced our advertising spend by eliminating spend in certain marketing channels , while also tightening our required return thresholds . we also recognized a decrease in marketing costs in our national pen business of $ 28.8 million , primarily due to a planned reduction in direct mail prospecting activity as compared to last year 's elevated levels , as well as pandemic-related initiatives to lower costs , which included the delay of direct mail marketing campaigns , lower online advertising spend and cost savings initiatives to reduce costs in service centers . general and administrative expense general and administrative expense consists primarily of transaction costs , including third-party professional fees , insurance and payroll and related expenses of employees involved in executive management , finance , legal , strategy , human resources and procurement . for the year ended june 30 , 2020 , general and administrative expenses increased by $ 20.4 million , as compared to the prior period , primarily due to an increase in consulting costs associated with strategic projects in our vistaprint business , costs incurred centrally related to the cross-border irish merger , and professional fees and costs associated with our may 2020 financing activities . also included in the $ 20.4 million increase is additional share-based compensation expense of $ 8.1 million , primarily due to the reversal of supplemental psu expense in the comparative period as well as a loss of $ 1.5 million associated with the sale of our vida business on april 10 , 2020. during the year ended june 30 , 2020 , we incurred additional costs from our buildasign business as that business was only included for nine months of the comparable period . amortization of acquired intangible assets amortization of acquired intangible assets consists of amortization expense associated with separately identifiable intangible assets capitalized as part of our acquisitions , including customer relationships , trade names , developed technologies , print networks , and customer and referral networks . amortization of acquired intangible assets decreased by $ 1.5 million for the year ended june 30 , 2020 , as compared to the year ended june 30 , 2019 . the reduction during the year ended june 30 , 2020 is due to amortization within our printbrothers and the print group reportable segments as certain intangible assets became fully amortized during the prior fiscal year , partially offset by additional amortization for our buildasign business caused by the prior year timing of the acquisition . 37 restructuring expense restructuring expense consists of costs directly incurred as a result of restructuring initiatives , and includes employee-related termination costs , third party professional fees and facility exit costs . during the year ended june 30 , 2020 , we recognized restructuring expense of $ 13.5 million , primarily related to the reorganization of our vistaprint and central technology teams that were intended to better align technology tribes and accelerate the vistaprint re-platforming efforts , as well as cost savings actions taken by our national pen business in response to the pandemic . comparatively , we recognized restructuring expense of $ 12.1 million during the year ended june 30 , 2019 , primarily related to actions within our vistaprint business . impairment of goodwill for the year ended june 30 , 2020 , we recognized goodwill impairment charges of $ 100.8 million . we recognized a full goodwill impairment charge for our national pen and vida reporting units , which amounted to $ 34.4 million and $ 26.0 million , respectively , as well as a partial goodwill impairment charge for our exaprint reporting unit of $ 40.4 million . these impairment charges were primarily due to lower cash flow expectations for each for these business as a result of the decline in demand caused by the covid-19 pandemic lock down and related restrictions when compared to previous estimates . refer to note 8 in our accompanying consolidated financial statements for additional details .
| financial summary the primary financial metric by which we set quarterly and annual budgets both for individual businesses and cimpress wide is our adjusted free cash flow before cash interest expense related to borrowing ; however , in evaluating the financial condition and operating performance of our business , management considers a number of metrics including revenue growth , constant-currency revenue growth , operating income , adjusted ebitda , cash flow from operations and adjusted free cash flow . a summary of these key financial metrics for the year ended june 30 , 2020 as compared to the year ended june 30 , 2019 follows : fiscal year 2020 revenue decreased by 10 % to $ 2,481.4 million . consolidated constant-currency revenue decreased by 9 % and decreased by 11 % when excluding acquisitions and divestitures completed in the last four quarters . operating income decreased by $ 107.6 million to $ 56.0 million . adjusted ebitda ( a non-gaap financial measure ) increased by $ 13.2 million to $ 399.8 million . cash provided by operating activities increased by $ 7.3 million to $ 338.4 million . adjusted free cash flow ( a non-gaap financial measure ) increased by $ 32.2 million to $ 244.0 million . for fiscal year 2020 , the decrease in reported revenue is primarily due to a significant decline in order volumes starting in march , driven by the economic disruption associated with the covid-19 pandemic lock downs and related restrictions . our year-to-date revenue results through february 2020 , grew on a reported basis ; however we experienced a significant decline in demand starting in march 2020 , which worsened in april 2020 before starting to recover in the last two months of fiscal 2020. currency exchange rate fluctuations negatively impacted revenue during the current fiscal year .
| 5,793 |
as a result of the acquisition , management was required to determine estimated fair values of the assets acquired , including certain identifiable intangible assets , and liabilities assumed . we identified the determination of fair values of the identifiable intangible assets and the purchase price story_separator_special_tag the following discussion of our consolidated results of operations and cash flows for the years ended december 31 , 2020 , 2019 and 2018 and consolidated financial condition as of december 31 , 2020 and 2019 should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on form 10-k. the disc ussion and analysis of our financial condition and results of operations for 2020 compared to 2019 appears below . as permitted by sec rules , we have omitted the disc ussion and analysis of our financial condition and results of operations for 2019 compared to 2018. see item 7 , “ management 's discussions and analysis of financial condition and results of operations ” , in our annual report on form 10-k for the year ended december 31 , 2019 , for this discussion . overview we are a diversified global media , marketing and technology company that , through our television and radio segments , reaches and engages u.s. hispanics across acculturation levels and media channels . additionally , our digital segment , whose operations are located primarily in spain and latin america , reaches a global market . our operations encompass integrated marketing and media solutions , comprised of television , radio and digital properties and data analytics services . for financial reporting purposes , we report in three segments based upon the type of advertising medium : television , radio and digital . our net revenue for the year ended december 31 , 2020 was $ 344.0 million . of that amount , revenue attributed to our television segment accounted for approximately 45 % , revenue attributed to our digital segment accounted for approximately 42 % , and revenue attributed to our radio segment accounted for approximately 13 % . we own and or operate 54 primary television stations located primarily in california , colorado , connecticut , florida , kansas , massachusetts , nevada , new mexico , texas and washington , d.c. we own and operate 48 radio stations in 16 u.s. markets . our radio stations consist of 38 fm and 10 am stations located in arizona , california , colorado , florida , nevada , new mexico and texas . we also sell advertisements and syndicate radio programming to more than 100 markets across the united states . we also provide digital advertising solutions that allow advertisers to reach primarily hispanic online audiences worldwide . we operate proprietary technology and data platforms that deliver digital advertising in various advertising formats that allow advertisers to reach audiences across a wide range of internet-connected devices on our owned and operated digital media sites , the digital media sites of our publisher partners , and on other digital media sites we access through third-party platforms and exchanges . we generate revenue primarily from sales of national and local advertising time on television stations , radio stations and digital media platforms , retransmission consent agreements that are entered into with mvpds , and agreements associated with our television stations ' spectrum usage rights . advertising rates are , in large part , based on each medium 's ability to attract audiences in demographic groups targeted by advertisers . in our television and radio segments , we recognize advertising revenue when commercials are broadcast . in our digital segment , we recognize advertising revenue when display or other digital advertisements record impressions on the websites of our third party publishers or as the advertiser 's previously agreed-upon performance criteria are satisfied . we do not obtain long-term commitments from our advertisers and , consequently , they may cancel , reduce or postpone orders without penalties . we pay commissions to agencies for local , regional and national advertising . for contracts we have entered into directly with agencies , we record net revenue from these agencies . seasonal revenue fluctuations are common in our industry and are due primarily to variations in advertising expenditures by both local and national advertisers . our first fiscal quarter generally produces the lowest net revenue for the year . in addition , advertising revenue is generally higher during presidential election years ( 2020 , 2024 , etc . ) and , to a lesser degree , congressional mid-term election years ( 2022 , 2026 , etc . ) , resulting from increased political advertising in those years compared to other years . we refer to the revenue generated by agreements with mvpds as retransmission consent revenue , which represents payments from mvpds for access to our television station signals so that they may rebroadcast our signals and charge their subscribers for this programming . we recognize retransmission consent revenue earned as the television signal is delivered to an mvpd . our fcc licenses grant us spectrum usage rights within each of the television markets in which we operate . these spectrum usage rights give us the authority to broadcast our stations ' over-the-air television signals to our viewers . we regard these rights as a valuable asset . with the proliferation of mobile devices and advances in technology that have freed up spectrum capacity , the monetization of our spectrum usage rights has become a significant source of revenue in recent years . we generate revenue from agreements associated with these television stations ' spectrum usage rights from a variety of sources , including but not limited to agreements with third parties to utilize spectrum for the broadcast of their multicast networks ; charging fees to accommodate the operations of third parties , including moving channel positions or accepting interference with our broadcasting operations ; and modifying and or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements . story_separator_special_tag to partially address this situation , we have continued to significantly reduce some of our advertising rates , primarily in our radio segment , although the rate of decrease in our advertising rates was at a slower pace during the quarter ended december 31 , 2020 than it was during earlier periods in 2020 and has been somewhat moderated by political advertising in our inventory during the election cycle . we have also eased credit terms for certain of our advertising clients to help them manage their own cash flow and address other financial needs . depending upon the extent and duration of the pandemic and the continuing economic crisis that has resulted from the pandemic , we expect that these cancellations and reductions in the placement of new advertising will continue in future periods . therefore , our results of operations for the year ended december 31 , 2020 may not be indicative of our results of operations for any future period . we can not give assurance at this time whether a more prolonged or extensive impact of the pandemic and the continuing economic crisis that has resulted from the pandemic would not adversely affect our business , results of operations and financial condition in future periods during the course of the pandemic , or beyond . based on publicly available information , while it currently appears that the u.s. and some local economies have continued to improve month-over-month during the quarter ended december 31 , 2020 , such improvement is uneven geographically and by industry , and may be adversely impacted by the second wave of the pandemic . we believe that we have not yet felt the full impact of the continuing economic crisis , nor do we know how soon the global , u.s. and local economies will fully recover to pre-pandemic levels . therefore , while we hope for a different outcome , we anticipate that we may continue to experience an adverse financial impact on our business and results of operations , albeit at a potentially slower rate , and possibly our financial condition , for an unknown period of time even after lockdown , shelter-in-place , stay-at-home and similar orders have been fully lifted and businesses fully reopen . additionally , any resurgence of the pandemic , which began in many areas of the united states and certain parts of the world during the latter months of 2020 , and or the reimposition of lockdown , shelter-in-place , stay-at-home and similar orders , could intensify this adverse impact and add uncertainty to our business , results of operations and financial condition in future periods . primarily during the quarter ended march 31 , 2020 and early in the quarter ended june 30 , 2020 , we engaged in a small number of layoffs and significant number of furloughs of employees as a result of the pandemic . during the quarter ended december 31 , 2020 we terminated these previously furloughed employees . severance expense associated with these terminations was not material . we will continue to monitor this situation closely and may institute such further layoffs or furloughs at a future date if we think they are appropriate . we have elected to defer the employer portion of the social security payroll tax ( 6.2 % ) as provided in the coronavirus aid , relief and economic security act of 2020 , commonly known as the cares act . the deferral was effective from march 27 , 2020 through december 31 , 2020. the deferred amount will be paid in two installments and the amount will be considered timely paid if 50 % of the deferred amount is paid by december 31 , 2021 and the remainder is paid by december 31 , 2022. in order to preserve cash during this period , we have instituted certain cost reduction measures . on march 26 , 2020 , we suspended repurchases under our share repurchase program . effective april 16 , 2020 , we instituted a 2.5 % -22.5 % reduction in salaries company-wide , depending on the amount of then-current compensation . during the quarter ended december 31 , 2020 , these reductions were reversed and payments were restored retroactively , resulting in no financial impact on a fiscal year basis . effective may 16 , 2020 , we suspended company matching of employee contributions to their 401 ( k ) retirement plans . we also reduced our dividend by 50 % beginning in the second quarter of 2020 , and we may do so in future periods . additionally , effective may 28 , 2020 , the board of directors decreased its annual non-employee director fees by 20 % for the board year ending at the 2021 shareholders meeting . during the quarter ended december 31 , 2020 , these reductions were reversed and payments were restored retroactively , resulting in no financial impact on a fiscal year basis . we will continue to monitor all of these actions closely in light of current and changing conditions and may institute such additional actions as we may feel are appropriate at a future date . we believe that our liquidity and capital resources remain adequate and that we can meet current expenses for at least the next twelve months from a combination of cash on hand and cash flows from operations . in addition to the great personal toll that the pandemic has exacted and is expected to continue to exact , the challenges it is causing to the global , u.s. and local economies have created and will continue to create unprecedented uncertainty in our business and how we plan and respond to rapidly changing circumstances in our operations , as well as the impact this may have on our business , 52 results of operations and financial condition . we are closely monitoring the situation across all fronts and will need to remain flexible to respond to developments as they occur .
| highlights during 2020 , our consolidated revenue increased to $ 344.0 million from $ 273.6 million in the prior year , primarily due to increase in advertising revenue attributed to the acquisition of a majority interest in a company engages in the sale and marketing of digital advertising that together with its subsidiaries , does business under the name cisneros interactive , during the fourth quarter of 2020 , which did not contribute to net revenue in prior periods , and increases in political advertising revenue and retransmission consent revenue . the increase in advertising revenue was partially offset by decreases in local and national advertising revenue and revenue from spectrum usage rights . our audience shares remained strong in the nation 's most densely populated hispanic markets . net revenue for our television segment increased to $ 154.5 million in 2020 , from $ 149.7 million in 2019. this increase of approximately $ 4.8 million was primarily due to increases in political advertising revenue and retransmission consent revenue , partially offset by decreases in local and national advertising revenue and revenue from spectrum usage rights . the decrease in local and national advertising revenue was primarily a result of the continuing economic crisis resulting from the covid-19 pandemic , ratings declines , competitive factors with another spanish-language broadcaster , and changing demographic preferences of audiences . we have previously noted a trend for advertising to move increasingly from traditional media , such as television , to new media , such as digital media , and we expect this trend to continue .
| 5,794 |
asu 2017-04 removes the requirement to compare the implied fair value of goodwill with its story_separator_special_tag except for the historical information contained herein , the matters discussed in this management 's discussion and analysis of financial condition and results of operations ( “ md & a ” ) , including discussions of our product development plans , business strategies and market factors influencing our results , may include forward-looking statements that involve certain risks and uncertainties . actual results may differ from those anticipated by us as a result of various factors , both foreseen and unforeseen , including , but not limited to , our ability to continue to develop new products and increase systems sales in markets characterized by rapid technological evolution , consolidation and competition from larger , better-capitalized competitors . many other economic , competitive , governmental and technological factors could affect our ability to achieve our goals and interested persons are urged to review any risks that may be described in “ item 1a . risk factors ” as set forth herein , as well as in our other public disclosures and filings with the securities and exchange commission ( `` sec '' ) . this md & a is provided as a supplement to the consolidated financial statements and notes thereto included elsewhere in this annual report on form 10-k ( `` report '' ) in order to enhance your understanding of our results of operations and financial condition and should be read in conjunction with , and is qualified in its entirety by , the consolidated financial statements and related notes thereto included elsewhere in this report . historical results of operations , percentage margin fluctuations and any trends that may be inferred from the discussion below are not necessarily indicative of the operating results for any future period . company overview quality systems , inc. , known to our clients as nextgen healthcare , provides software , services and analytics solutions to the ambulatory care market . we are a healthcare information technology and services company that delivers the foundational capabilities to organizations that want to promote healthy communities . our technology provides a customizable platform that empowers physician practice success , enriches the patient care experience and lowers the cost of healthcare . we primarily derive revenue by developing and marketing software and services that automate certain aspects of practice management ( “ pm ” ) and electronic health records ( “ ehr ” ) for ambulatory care practices . in addition , our software and services facilitate interoperability . our software can be licensed and delivered on-premise or in the cloud as software-as-a-service ( “ saas ” ) . our services include maintenance and support , professional services , and complementary services such as managed cloud services , revenue cycle management ( “ rcm ” ) and electronic data interchange ( “ edi ” ) . we market and sell our solutions through a dedicated sales force and to a much lesser extent , through resellers . our clients span the entire ambulatory market from large multi-specialty to small single specialty practices and include networks of practices such as physician hospital organizations ( “ phos ” ) , management service organizations ( “ msos ” ) , accountable care organizations ( “ acos ” ) , ambulatory care centers and community health centers . we have a history of enhancing our solutions through both organic and inorganic activities . over the last few years , we have entered into strategic transactions to complement and enhance our product portfolio in the ambulatory care market . in october 2015 , we divested our former hospital solutions division . in january 2016 , we acquired healthfusion holdings , inc. ( `` healthfusion '' ) and in april 2017 , we acquired entrada , inc. ( `` entrada '' ) . quality systems , inc. was incorporated in california in 1974. our principal offices are located at 18111 von karman ave. , suite 800 , irvine , california , 92612. our websites are located at www.nextgen.com and www.qsii.com . we operate on a fiscal year ending on march 31. critical accounting policies and estimates the discussion and analysis of our consolidated financial statements and results of operations is based upon our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states of america ( `` gaap '' ) . the preparation of these consolidated financial statements requires us to make estimates and judgments that affect our reported amounts of assets , liabilities , revenue and expenses , and related disclosures . we base our assumptions , estimates and judgments on historical experience , current trends , and other factors we believe to be reasonable under the circumstances , and we evaluate these estimates on an ongoing basis . on a regular basis , we review the accounting policies and update our assumptions , estimates , and judgments , as needed , to ensure that our consolidated financial statements are presented fairly and in accordance with gaap . actual results could differ materially from our estimates under different assumptions or conditions . to the extent that there are material differences between our estimates and actual results , our financial condition or results of operations will be affected . our significant accounting policies , as described in note 2 , “ summary of significant accounting policies ” of our notes to consolidated financial statements included elsewhere in this report , should be read in conjunction with management 's discussion and analysis of financial condition and results of operations . we believe that the following accounting policies are the most critical to aid in fully understanding and evaluating our reported financial results because application of such policies require significant judgment regarding the effects of matters that are inherently uncertain and that affect our consolidated financial statements . story_separator_special_tag vsoe calculations are updated and reviewed on a quarterly or annual basis , depending on the nature of the product or service . we also must apply judgment in determining the appropriate timing and recognition of certain revenue deferrals . in certain transactions where collection risk is high , the revenue is deferred until collection occurs . if the fee is not fixed or determinable , then 30 the revenue recognized in each period ( subject to application of other revenue recognition criteria ) will be the lesser of the aggregate amounts due and payable or the amount of the arrangement fee that would have been recognized if the fees were being recognized using the residual method . we assess whether fees are considered fixed or determinable at the inception of the arrangement and negotiated fees generally are based on a specific volume of products to be delivered and not subject to change based on variable pricing mechanisms , such as the number of units copied or distributed or the expected number of users . although we currently believe that our approach to estimates and judgments as described herein is reasonable , actual results could differ and we may be exposed to increases or decreases in revenue that could be material . reserves on accounts receivable we maintain reserves for potential sales returns and uncollectible accounts receivable . in aggregate , such reserves reduce our gross accounts receivable to its estimated net realizable value . our standard contracts generally do not contain provisions for clients to return products or services . however , we historically have accepted sales returns under certain circumstances . accordingly , we estimate sales return reserves , including reserves for returns and other credits , based upon the rate of historical returns by revenue type in relation to the corresponding gross revenues and recognize revenue , net of an allowance for sales returns . if we are unable to estimate the returns , revenue recognition may be delayed until the rights of return period lapses , provided also , that all other criteria for revenue recognition have been met . if we experience changes in practices related to sales returns or changes in actual return rates that deviate from the historical data on which our reserves had been established , our revenues may be adversely affected . allowances for doubtful accounts and other uncollectible accounts receivable related to estimated losses resulting from our clients ' inability to make required payments are established based on our historical experience of bad debt expense and the aging of our accounts receivable balances , net of deferred revenue and specifically reserved accounts . specific reserves are based on our estimate of the probability of collection for certain troubled accounts . accounts are written off as uncollectible only after we have expended extensive collection efforts . our allowances for doubtful accounts are based on our assessment of the collectibility of client accounts . we regularly review the adequacy of these allowances by considering internal factors such as historical experience , credit quality and age of the client receivable balances as well as external factors such as economic conditions that may affect a client 's ability to pay and review of major third-party credit-rating agencies , as needed . if a major client 's creditworthiness or financial condition were to deteriorate , if actual defaults are higher than our historical experience , or if other circumstances arise , our estimates of the recoverability of amounts due to us could be overstated , and additional allowances could be required , which could have an adverse impact on our operating results . although we currently believe that our approach to estimates and judgments as described herein is reasonable , actual results could differ and we may be exposed to increases or decreases in required reserves that could be material . software development costs software development costs , consisting primarily of employee salaries and benefits , incurred in the research and development of new software products and enhancements to existing software products for external sale are expensed as incurred , and reported as net research and development costs in the consolidated statements of net income and comprehensive income , until technological feasibility has been established . after technological feasibility is established , any additional external software development costs are capitalized . amortization of capitalized software is recorded using the greater of the ratio of current revenues to the total of current and expected revenues of the related product or the straight-line method over the estimated economic life of the related product , which is typically three years . the total of capitalized software costs incurred in the development of products for external sale are reported as capitalized software costs within our consolidated balance sheets . we also incur costs to develop software applications for our internal-use and costs for the development of software as a service ( `` saas '' ) based products sold to our clients . the development costs of our saas-based products are considered internal-use for accounting purposes . our internal-use capitalized costs are stated at cost and amortized using the straight-line method over the estimated useful lives of the assets , which is typically three to seven years . application development stage costs generally include costs associated with internal-use software configuration , coding , installation and testing . costs related to the preliminary project stage and post-implementation activities are expensed as incurred . costs of significant upgrades and enhancements that result in additional functionality are also capitalized , whereas costs incurred for maintenance and minor upgrades and enhancements are expensed as incurred . capitalized software costs for developing saas-based products are reported as capitalized software costs within our consolidated balance sheets and capitalized software costs for developing our internal-use software applications are reported as equipment and improvements within our consolidated balance sheets . we periodically reassess the estimated economic life and the recoverability of our capitalized software costs .
| results of operations the following table sets forth the percentage of revenue represented by each item in our consolidated statements of net income and comprehensive income for the years ended march 31 , 2017 , 2016 , and 2015 ( certain percentages below may not sum due to rounding ) : replace_table_token_7_th 36 revenues the following table presents our consolidated revenues for the years ended march 31 , 2017 , 2016 , and 2015 ( in thousands ) : replace_table_token_8_th we generate revenue from sales of licensing rights and subscriptions to our software products , hardware and third party software products , support and maintenance services , revenue cycle management and related services ( `` rcm '' ) , electronic data interchange and data services ( “ edi ” ) , and professional services , such as implementation , training , and consulting performed for clients who use our products . consolidated revenue for the year ended march 31 , 2017 increased $ 17.1 million compared to the prior year due mostly to a $ 31.6 million increase in software related subscription services and $ 6.6 million increase in edi , partially offset by a $ 9.3 million decrease in professional services , $ 6.4 million decrease in support and maintenance , $ 5.0 million decrease in software license and hardware , and $ 0.5 million decrease in rcm . the increase in software related subscription services was primarily driven by a full year of sales related to the meditouch® cloud-based solution acquired from healthfusion in january 2016 , combined with growth in subscriptions related to our interoperability , patient portal , and qsidental web product offerings as we continue to expand our client base . the increase in edi is partially attributed to the acquisition of healthfusion and growth in edi transaction volume due to addition of new clients and further penetration of our existing client base .
| 5,795 |
if a termination without cause occurs within six months of a change in control ( as defined in his employment agreement ) , 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 included elsewhere in this annual report on form 10-k. some of the information contained in this discussion and analysis or set forth elsewhere in this annual report on form 10-k , including information with respect to our plans and strategy for our business , includes forward-looking statements that involve risks and uncertainties . you should review the “ risk factors ” section in this annual report on form 10-k 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 cerecor inc. ( the “ company ” or “ cerecor ” or “ we ” ) is a biopharmaceutical company focused on becoming a leader in development and commercialization of treatments for rare and orphan diseases . we are advancing a diverse pipeline of six assets in eight clinical development programs across immunology , oncology , and rare diseases . the management team spent the majority of their time in 2020 focusing on both progressing the pipeline and also on financing activities to fund pipeline development . these will also be the primary areas of focus in 2021. on february 3 , 2020 , the company consummated its merger with aevi genomic medicine , inc. ( “ aevi ” ) , in which cerecor acquired the rights to cerc-002 , cerc-006 and cerc-007 ( the “ aevi merger ” ) . the aevi merger was a transformative event in 2020 and it significantly broadened cerecor 's pipeline by adding the rights to these three key new assets , as well as bringing in critical leadership to guide the company and research and development of the expanded pipeline . the company successfully raised capital in 2020 and early 2021 which we believe is principally due to successfully improving our pipeline , development milestones and leadership team but also due in part to a robust biotechnology favorable capital markets environment which may not continue . the company will continue to focus on raising capital , however , with a broader focus on both non-dilutive and dilutive funding opportunities , as well as potential business development related opportunities such as the out-license or partnering of company assets . the company believes the potential monetization of the priority review vouchers that may be granted in 2022 ( if each compound is approved by the u.s. food and drug administration ) related to cerc-801 , cerc-802 and cerc-803 , which are in development for therapies for congenital disorders of glycosylation , to be an important part of the company 's capital plan . the covid-19 pandemic presented both challenges and opportunities to the company in 2020 and we expect that to continue in 2021. the company adapted to new ways to work remotely and , pursuant to the coronavirus aid , relief and economic security act ( the “ cares act ” ) , the company benefited from favorable tax reform and loan programs . most importantly , the company created , initiated and executed a successful exploratory phase 2 randomized , double-blind placebo-controlled proof of concept trial for the treatment of covid-19 associated mild-to-moderate acute respiratory distress syndrome ( “ ards ” ) . we are excited by the efficacy data of our primary endpoint ( patients alive and free of respiratory failure over 28 days ) and mortality . the development path for this compound in covid-19 ards and or potentially generalized ards will be an important focus of 2021. the rapidly changing environment of covid-19 continues to present both risks and opportunities in the successful development of this asset . management 's primary evaluation of the success of the company is the ability to progress its pipeline assets forward towards commercialization or successful out-license . we believe the ability to timely achieve the anticipated milestones as presented in the section entitled “ business ” in item 1 of this annual report on form 10-k represents our most immediate evaluation points as to the progress of our goal to move the pipeline forward . aevi merger as discussed briefly above , on february 3 , 2020 , the company consummated the aevi merger , in which cerecor acquired the rights to cerc-002 , cerc-006 and cerc-007 , thus expanding the company 's core pipeline to six assets in eight clinical development programs across immunology , oncology and rare diseases . we expect operating expenses , notably research and development expenses , to continue to outpace historic periods , as the company advances its expanded pipeline . cerecor also entered into an employment agreement with aevi 's chief executive officer , mike cola , for him to serve as cerecor 's chief executive officer and an employment agreement with aevi 's chief scientific officer , dr. garry neil , for him to serve as cerecor 's chief medical officer ( shortly thereafter promoted to chief scientific officer ) . additionally , mr. cola and dr. sol barer , the former chairman of the board of aevi , were appointed to the company 's board of directors . dr. barer serves as the chairman of 58 the company 's board . aytu divestiture during the fourth quarter of 2019 , the company sold to aytu bioscience , inc. ( “ aytu ” ) its rights , titles and interest in , assets relating to certain commercialized products ( the “ pediatric portfolio ” ) , as well as the corresponding commercial infrastructure consisting of the right to offer employment to cerecor 's sales force and the assignment of supporting commercial contracts ( the “ aytu divestiture ” ) . thus , our only commercial product is millipred ® , an oral prednisolone indicated across a wide variety of inflammatory conditions . story_separator_special_tag the overall $ 0.9 million increase for the year ended december 31 , 2020 as compared to the prior year was driven by a $ 0.6 million increase in advertising and marketing expense related to market research , a $ 0.1 million increase in salaries , benefits and related costs driven by increased headcount to support such initiatives . amortization expense the following table summarizes amortization expense for the years ended december 31 , 2020 and 2019 : year ended december 31 , 2020 2019 ( in thousands ) amortization of intangible assets $ 1,741 $ 1,339 amortization expense relates to the amortization of the assembled workforces acquired as part of previous acquisitions and mergers . in 2020 , as a result of the asset acquisition accounting treatment of the aevi merger , the company recorded an assembled workforce intangible asset of $ 0.9 million , which was assigned a two-year useful life . therefore , the $ 0.3 million increase to amortization expense was primarily driven by the amortization of the assembled workforce acquired as part of the aevi merger . change in fair value of contingent consideration the following table summarizes our change in fair value of contingent consideration from continuing operations for the years ended december 31 , 2020 and 2019 : year ended december 31 , 2020 2019 ( in thousands ) change in fair value of contingent consideration $ — $ ( 1,256 ) the company recognized a gain on the change in fair value of contingent consideration of $ 1.3 million for the year ended december 31 , 2019. the contingent consideration was related to the potential for future payment of consideration that was contingent upon the achievement of operation and commercial milestones related to the ulesfia product , which was acquired as part of the company 's acquisition of trx in 2017. during the second quarter of 2019 , the company entered into a settlement agreement related to the ulesfia product , which released the company from the potential contingent payments related to the trx acquisition , reducing the fair value down to $ 0. this represented a gain on the change of fair value of contingent consideration of $ 1.3 million for the year ended december 31 , 2019. as the company was released from the contingent payment in 2019 , there was no change in fair value of contingent consideration for the year ended december 31 , 2020. other income , net the following table summarizes our other income , net from continuing operations for the years ended december 31 , 2020 and 2019 : 62 replace_table_token_3_th other income , net increased $ 5.5 million for the year ended december 31 , 2020 as compared to the prior year . other income , net is mainly comprised of a $ 5.2 million gain on change in the fair value of the company 's investment in aytu . as consideration of the aytu divestiture in 2019 , the company received 9,805,845 shares of aytu series g preferred stock ( the “ investment in aytu ” ) , which was remeasured at the current fair value each reporting period . in april 2020 , the company converted its shares of aytu series g preferred stock into 9,805,845 shares of common stock and sold that common stock for net proceeds of approximately $ 12.8 million , which resulted in the company recognizing a realized gain of $ 5.2 million from its estimated fair value as of the divestiture date . the gain was primarily driven by a significant increase in aytu 's stock price from december 31 , 2019 to the dates the company sold its shares of aytu common stock in mid-april 2020. additionally , the company recognized $ 0.4 million of other income for the year ended december 31 , 2020 related to the paycheck protection program ( “ ppp ” ) loan received during the second quarter of 2020 as the company believes it meets the criteria for loan forgiveness . both transactions were unique to 2020 , thus causing the increase as compared to the prior year period . income tax ( benefit ) expense the company recognized an income tax benefit of $ 2.8 million for the year ended december 31 , 2020 and income tax expense of $ 0.3 million for the year ended december 31 , 2019. the tax benefit recognized for the year ended december 31 , 2020 was a result of a current year tax law change and the ability of the company to now carry back certain losses related to the cares act for taxes paid in fiscal year 2017. this benefit was recognized in the first and second quarters . the expense recognized for the year ended december 31 , 2019 was a primarily the result of estimated state cash taxes and interest on an unpaid tax liability . the annual effective tax rate was 4.21 % and ( 1.75 ) % for the years ended december 31 , 2020 and 2019 , respectively . liquidity and capital resources , including capital expenditure and cash requirements in 2020 , the company closed three equity offerings for net proceeds of approximately $ 44.4 million and in april 2020 , the company sold an investment for net proceeds of $ 12.8 million . the company also closed an underwritten public offering in january 2021 for net proceeds of approximately $ 37.6 million . as of december 31 , 2020 , cerecor had $ 18.9 million in cash and cash equivalents . the cares act provides stimulus measures , including the ppp , to provide certain small businesses with liquidity to support their operations ( such as to retain employees and maintain payroll and lease payments ) during the covid-19 pandemic . cerecor received a $ 0.4 million ppp loan during the second quarter of 2020. ppp loans have a 1 % fixed annual interest rate and mature in two years , and are eligible for forgiveness under certain conditions .
| results of operations comparison of the years ended december 31 , 2020 and 2019 product revenue , net net product revenue was $ 6.7 million for the year ended december 31 , 2020 , which was consistent with the net product revenue for the year ended december 31 , 2019. in the fourth quarter of 2020 , the company entered into an amended license and supply agreement for the millipred ® product with a wholly owned subsidiary of teva pharmaceutical industries ltd. ( “ teva ” ) , which extends the original license agreement for a period of thirty months ( from april 1 , 2021 through september 30 , 2023 ) . beginning april 1 , 2021 , cerecor will pay teva fifty percent of the net profit of the millipred product following each calendar quarter , subject to a $ 0.5 million quarterly minimum payment . we are currently exploring strategic alternatives for our non-core assets , which includes millipred ® . therefore , 59 our ability to increase revenue in the future will depend on developing and commercializing our current clinical pipeline of product candidates . license and other revenue during the third quarter of 2019 , the company assigned and transferred its rights , title , interest , and obligations with respect to cerc-611 to es therapeutics , llc ( “ es therapeutics ” ) in exchange for initial gross proceeds of $ 0.1 million , which was recognized as license and other revenue for the year ended december 31 , 2019. the company is also eligible for potential milestone payments upon achievement of certain targets of cumulative net sales of the licensed product .
| 5,796 |
the following table presents details of the company 's intangible assets arising from the american reliable acquisition as of december 31 , 2015 : replace_table_token_40_th amortization related to the company 's definite lived intangible assets resulting from american reliable acquisition was $ 25.7 million for the year ended december 31 , 2015. the company expects that amortization expense for the next five years related to the american reliable acquisition will be as follows : replace_table_token_41_th 113 global indemnity plc notes to consolidated financial statements ( continued ) the fair value , gross contractual amounts due , and contractual cash flows not expected to be collected of acquired receivables are as follows : ( dollars in thousands ) fair value gross contractual amounts due contractual cash flows not expected to be collected premium receivables $ 26,102 $ 26,896 $ 794 accounts receivable 11,311 11,311 reinsurance story_separator_special_tag the following discussion and analysis of the company 's financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes of global indemnity included elsewhere in this report . some of the information contained in this discussion and analysis or set forth elsewhere in this report , including information with respect to the company 's plans and strategy , constitutes forward-looking statements that involve risks and uncertainties . please see cautionary note regarding forward-looking statements at the end of this item 7 and risk factors in item 1a above for more information . you should review risk factors in item 1a above 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 herein . recent developments effective december 6 , 2015 , bruce lederman , raphael de balmann , and joseph w. brown were appointed to the company 's board of directors . on may 27 , 2015 , larry n. port was elected to the company 's board of directors . on october 29 , 2015 , global indemnity entered into a redemption agreement with certain affiliates of fox paine & company and agreed to redeem 8,260,870 of its ordinary shares for $ 190 million in the aggregate from affiliates of fox paine & company . global indemnity also acquired rights , expiring december 31 , 2019 , to redeem an additional 3,397,031 ordinary shares for $ 78.1 million , which is subject to an annual 3 % increase . after giving effect to the share redemptions and regardless of whether or not the additional redemption rights are exercised , affiliates of fox paine & company will continue to have the ability to cast a majority of votes on matters submitted to global indemnity shareholders for approval . the company reimbursed fox paine & company $ 1.15 million for expenses related to the redemption of the company 's ordinary shares . in connection with the redemption , the company sold $ 279.9 million of securities from its consolidated investment portfolio during october , 2015 . $ 102.0 million was used to pay down margin debt , with the remainder being used to fund a portion of the redemption transaction . on august 12 , 2015 , the company issued $ 100.0 million in aggregate principal amount of its 2045 subordinated notes through an underwritten public offering . see note 11 of the notes to the consolidated financial statements in item 8 of part ii of this report for additional information on this debt issuance . on june 12 , 2015 , a.m. best affirmed the financial strength rating of a ( excellent ) for global indemnity reinsurance and its u.s. insurance subsidiaries . on january 1 , 2015 , global indemnity group , inc. completed its acquisition of american reliable . the results of american reliable 's operations are included in the company 's consolidated financial statements since the date of acquisition on january 1 , 2015. the business acquired from american reliable is considered to be a separate segment , personal lines . for additional information related to the acquisition of american reliable , see note 3 and note 19 of the notes to the consolidated financial statements in item 8 of part ii of this report for additional information as well as the overview and results of operations sections below . overview in connection with the acquisition of american reliable , the company reevaluated segment classifications and determined that the company will operate and manage its business through three reportable business segments : commercial lines , personal lines , and reinsurance operations . 53 the company 's commercial lines segment distribute property and casualty insurance products through a group of approximately 120 professional general agencies that have limited quoting and binding authority , as well as a number of wholesale insurance brokers who in turn sell the company 's insurance products to insureds through retail insurance brokers . commercial lines operates predominantly in the excess and surplus lines marketplace . the company manages its commercial lines segment via product classification . these product classifications are : 1 ) penn-america , which includes property and general liability products for small commercial businesses distributed through a select network of wholesale general agents with specific binding authority ; 2 ) united national , which includes property , general liability , and professional lines products distributed through program administrators with specific binding authority ; and 3 ) diamond state , which includes property , casualty , and professional lines products distributed through wholesale brokers and program administrators with specific binding authority . the company 's personal lines segment , via american reliable , offers specialty personal lines and agricultural coverage through a group of approximately 290 agents , primarily comprised of wholesale general agents , with specific binding authority in the admitted marketplace . the company 's reinsurance operations consisting solely of the operations of global indemnity reinsurance , provides reinsurance solutions through brokers and on a direct basis . in prior years , the company provided reinsurance solutions through program managers and primary writers , including regional insurance companies . story_separator_special_tag selection of the paid loss pattern requires analysis of several factors including the impact of inflation on claims costs , the rate at which claims professionals make claim payments and closed claims , the impact of judicial decisions , the impact of underwriting changes , the 55 impact of large claim payments and other factors . claim cost inflation itself requires evaluation of changes in the cost of repairing or replacing property , changes in the cost of medical care , changes in the cost of wage replacement , judicial decisions , legislative changes and other factors . because this method assumes that losses are paid at a consistent rate , changes in any of these factors can impact the results . since the method does not rely on case reserves , it is not directly influenced by changes in the adequacy of case reserves . for many reserve categories , paid loss data for recent periods may be too immature or erratic for accurate loss projections . this situation often exists for long-tail exposures . in addition , changes in the factors described above may result in inconsistent payment patterns . finally , estimating the paid loss pattern subsequent to the most mature point available in the data analyzed often involves considerable uncertainty for long-tail reserve categories . the incurred development method is similar to the paid development method , but it uses case incurred losses instead of paid losses . since this method uses more data ( case reserves in addition to paid losses ) than the paid development method , the incurred development patterns may be less variable than paid development patterns . however , selection of the incurred loss pattern requires analysis of all of the factors listed in the description of the paid development method . in addition , the inclusion of case reserves can lead to distortions if changes in case reserving practices have taken place and the use of case incurred losses may not eliminate the issues associated with estimating the incurred loss pattern subsequent to the most mature point available . the expected loss ratio method multiplies premiums by an expected loss ratio to produce ultimate loss estimates for each accident year . this method may be useful if loss development patterns are inconsistent , losses emerge very slowly , or there is relatively little loss history from which to estimate future losses . the selection of the expected loss ratio requires analysis of loss ratios from earlier accident years or pricing studies and analysis of inflationary trends , frequency trends , rate changes , underwriting changes , and other applicable factors . the bornhuetter-ferguson method using premiums and paid losses is a combination of the paid development method and the expected loss ratio method . this method normally determines expected loss ratios similar to the method used for the expected loss ratio method and requires analysis of the same factors described above . the method assumes that only future losses will develop at the expected loss ratio level . the percent of paid loss to ultimate loss implied from the paid development method is used to determine what percentage of ultimate loss is yet to be paid . the use of the pattern from the paid development method requires consideration of all factors listed in the description of the paid development method . the estimate of losses yet to be paid is added to current paid losses to estimate the ultimate loss for each year . this method will react very slowly if actual ultimate loss ratios are different from expectations due to changes not accounted for by the expected loss ratio calculation . the bornhuetter-ferguson method using premiums and incurred losses is similar to the bornhuetter-ferguson method using premiums and paid losses except that it uses case incurred losses . the use of case incurred losses instead of paid losses can result in development patterns that are less variable than paid development patterns . however , the inclusion of case reserves can lead to distortions if changes in case reserving practices have taken place . the method requires analysis of all the factors that need to be reviewed for the expected loss ratio and incurred development methods . the average loss method multiplies a projected number of ultimate claims by an estimated ultimate average loss for each accident year to produce ultimate loss estimates . since projections of the ultimate number of claims are often less variable than projections of ultimate loss , this method can provide more reliable results for reserve categories where loss development patterns are inconsistent or too variable to be relied on exclusively . in addition , this method can more directly account for changes in coverage that impact the number and size of claims . however , this method can be difficult to apply to situations where very large claims or a substantial number of unusual claims result in volatile average claim sizes . projecting the ultimate number of claims requires analysis of several factors including the rate at which policyholders report claims to the company , the impact of 56 judicial decisions , the impact of underwriting changes and other factors . estimating the ultimate average loss requires analysis of the impact of large losses and claim cost trends based on changes in the cost of repairing or replacing property , changes in the cost of medical care , changes in the cost of wage replacement , judicial decisions , legislative changes and other factors . for many exposures , especially those that can be considered long-tail , a particular accident year may not have a sufficient volume of paid losses to produce a statistically reliable estimate of ultimate losses . in such a case , the company 's actuaries typically assign more weight to the incurred development method than to the paid development method . as claims continue to settle and the volume of paid losses increases , the actuaries may assign additional weight to the paid development method .
| results of operations year ended december 31 , 2015 compared with the year ended december 31 , 2014 management 's discussion and analysis of financial condition and results of operation references various non-gaap measures related to combined ratio , loss ratio , expense ratio , net losses and loss adjustment expenses , and acquisition cost and other underwriting expenses throughout the discussion and should be read in conjunction with gaap measures and the reconciliations of non-gaap measures . personal lines the components of income from the company 's personal lines segment and corresponding underwriting ratios are as follows : replace_table_token_16_th 66 ( 1 ) represent unaudited pro forma results of operation for the year ended december 31 , 2014 as if the acquisition had occurred on january 1 , 2014 as opposed to january 1 , 2015 . ( 2 ) includes excise tax of $ 1,265 and $ 1,273 related to cessions from the company 's personal lines to its reinsurance operations for the years ended december 31 , 2015 and 2014 , respectively . ( 3 ) this is a non-gaap ratio that excludes the impact of prior accident year adjustments . the most directly comparable gaap measure is the loss ratio . ( 4 ) this is a non-gaap ratio that excludes the impact of prior accident year adjustments . the most directly comparable gaap measure is the non-catastrophe loss ratio . ( 5 ) this is a non-gaap measure that excludes the impact of prior accident year adjustments . the most directly comparable gaap measure is the non-catastrophe losses . ( 6 ) this is a non-gaap ratio that excludes the impact of prior accident year adjustments . the most directly comparable gaap measure is the catastrophe loss ratio . ( 7 ) this is a non-gaap measure that excludes the impact of prior accident year adjustments . the most directly comparable gaap measure is the catastrophe losses .
| 5,797 |
accordingly , a significant portion of management 's time is devoted to seeking to maximize cash flows from our existing stores , as well as seeking investments in additional stores . the company expects to continue to earn a majority of its gross income from its store operations as its current store operations continue to develop and as it makes additional store acquisitions . over time , the company expects to divest its remaining portfolio of investment securities and use the proceeds to acquire and operate additional stores . the company expects its income from investment securities to continue to decrease as it continues to divest its holdings of investment securities . story_separator_special_tag style= '' text-align : justify ; margin-top:2pt ; margin-bottom:0pt ; text-indent:5.24 % ; font-family : times new roman ; font-size:10pt ; font-weight : normal ; font-style : normal ; text-transform : none ; font-variant : normal ; '' > in 2019 , the company expects to break ground on the millbrook , ny expansion , which , when completed , will add approximately 16,500 of gross square feet of all-climate-controlled units . the planning for the millbrook , ny expansion is underway and the company is actively evaluating proposals for its construction . we currently anticipate that construction will proceed and that construction will be completed approximately six to nine months after construction commencement . however , there is no guarantee that we will commence construction or complete this project in this timeframe or at all . results of operations for the year ended december 31 , 2018 compared with the year ended december 31 , 2017 revenues total revenues increased from $ 7,472,793 during the year ended december 31 , 2017 to $ 8,110,979 during the year ended december 31 , 2018 , an increase of $ 638,186 , or 8.5 % . rental income increased from $ 7,238,819 during the year ended december 31 , 2017 to $ 7,850,870 during the year ended december 31 , 2018 , an increase of $ 612,051 , or 8.5 % . the increase was attributable to the full year of 2018 's revenues of the expansion at the merrillville , in property as compared to 2017 's revenues , and the positive results of our revenue rate management program of raising existing tenant rates . the remaining increase in rental revenue was due primarily to an increase in rental and occupancy rates . other store related income consists of customer insurance fees , sales of storage supplies , and other ancillary revenues . other store related income increased from $ 233,974 in the year ended december 31 , 2017 to $ 260,109 in the year ended december 31 , 2018 , an increase of $ 26,135 , or 11.2 % . this increase was primarily attributable to increased insurance fees due to the expansion at the merrillville , in property and increased insurance participation and higher average occupancy . operating expenses total expenses decreased from $ 6,795,322 during the year ended december 31 , 2017 to $ 6,685,407 during the year ended december 31 , 2018 , a decrease of $ 109,915 , or 1.6 % . store operating expenses increased from $ 3,153,887 in the year ended december 31 , 2017 to $ 3,262,603 in the year ended december 31 , 2018 , an increase of $ 108,716 , or 3.4 % , which was primarily attributable to increased employment and administrative expenses . depreciation and amortization decreased from $ 1,699,555 in the year ended december 31 , 2017 to $ 1,398,358 in the year ended december 31 , 2018 , a decrease of $ 301,197 , or 17.7 % . the decrease is primarily attributable to the amortization during 2017 of the in-place leases related to the stores acquired in 2016. general and administrative expenses decreased 5.2 % or $ 101,139 for the year ended december 31 , 2018 as compared to the year ended december 31 , 2017. the change is primarily attributable to decreased legal , accounting , compliance , and investor relations consulting expenses for recurring business activities . business development , capital raising , and store acquisition expenses increased from $ 14,295 to $ 198,000 during the year ended december 31 , 2018 as compared to the year ended december 31 , 2017. these costs primarily consisted of consulting costs in connection with business development , capital raising , and future potential store acquisitions . the increase is primarily attributable to the recording in the fourth quarter of 2018 of expenses related to capital raising activities . the majority of these expenses are non-recurring and fluctuate based on business development activity during the time period . 29 operating income operating income increased from $ 677,471 during the year ended december 31 , 2017 to $ 1,425,572 during the year ended december 31 , 2018 , an increase of $ 748,101 or 110.4 % . other income ( expense ) interest expense on loans increased from $ 880,834 during the year ended december 31 , 2017 to $ 897,937 during the year ended december 31 , 2018. dividend and interest income was $ 76,296 during the year ended december 31 , 2018 compared to $ 57,073 during the year ended december 31 , 2017. the increase was primarily attributable to higher dividend payments received from investments in equity securities and increased interest rates for cash deposits held in interest paying bank accounts . in accordance with the adoption of asu 2016-01 , the company now recognizes changes in the fair value of its investments in equity securities with readily determinable fair values in net income and , as such , recorded an unrealized gain of $ 15,517 for the year ended december 31 , 2018. previously , changes in fair value of the company 's investments in equity securities were recognized in accumulated other comprehensive income on the company 's consolidated balance sheets . story_separator_special_tag 2018 versus the twelve months ended december 31 , 2017. as described in the section titled “ property tax expenses at dolton , il , ” the decrease in same-store cost of operations and increase in same-store noi for the three months ended december 31 , 2018 , was attributable in part to the loss of our class 8 tax incentive and subsequent property tax increase at ssg dolton llc , which was recorded during the fourth quarter of 2017. we believe that our results were driven by , among other things , our internet and digital marketing initiatives which helped our overall average occupancy maintain in the low 90 % range as of december 31 , 2018. also , contributing to our results were our customer service efforts which we believe were essential in building local brand loyalty resulting in powerful referral and word-of-mouth market demand for our storage units and services . another significant contributing factor to our results was our revenue rate management program which helped increase our total annualized revenue per leased square foot by 4.1 % for the three months ended december 31 , 2018 versus the three months ended december 31 , 2017 , and by 6.5 % for the twelve months ended december 31 , 2018 versus the twelve months ended december 31 , 2017 . 31 these results are summarized as follows : same - store properties replace_table_token_2_th same - store properties replace_table_token_3_th * from time to time , as guided by market conditions , net leasable square footage , net leased square footage and total available storage units at our properties may increase or decrease as a result of consolidation , division or reconfiguration of storage units . similarly , leasable square footage may increase or decrease due to expansion or redevelopment of our properties . the following table presents a reconciliation of same-store net operating income to net income as presented on our consolidated statements of operations for the periods indicated : 32 replace_table_token_4_th analysis of same-store revenue for the three months ended december 31 , 2018 , the 5.3 % revenue increase was due primarily to a 4.1 % increase in total annualized revenue per leased square foot . for the twelve months ended december 31 , 2018 , the 7.7 % revenue increase was due primarily to a 6.5 % increase in total annualized revenue per leased square foot . the increase in total annualized revenue per leased square foot was due primarily to existing tenant rent increases , an increase in available traditional and climate-controlled leasable square feet compared to available leasable parking square feet , and , to a lesser extent , increased move-in rental rates and decreased move-in rent “ specials ” discounting . same store average overall square foot occupancy for all of the company 's stores combined increased to 92.5 % in the twelve months ended december 31 , 2018 from 91.9 % in the twelve months ended december 31 , 2017. we believe that high occupancies help maximize our rental income . we seek to maintain an average square foot occupancy level at about 90 % by regularly adjusting the rental rates and promotions offered to attract new tenants as well as adjusting our online marketing efforts in order to generate sufficient move-in volume to replace tenants that vacate . demand fluctuates due to various local and regional factors , including the overall economy . demand is generally higher in the summer months than in the winter months and , as a result , rental rates charged to new tenants are typically higher in the summer months than in the winter months . we currently expect rental income growth , if any , to come from a combination of the following : ( i ) continued existing tenant rent increases , ( ii ) higher rental rates charged to new tenants , ( iii ) lower promotional discounts , and ( iv ) higher occupancies . our future rental income growth will also be dependent upon many factors for each market that we operate in including , among other things , demand for self storage space , the level of competitor supply of self storage space , and the average length of stay of our tenants . increasing existing tenant rental rates , generally on an annual basis , is a key component of our revenue growth . we typically determine the level of rental increases based upon our expectations regarding the impact of existing tenant rate increases on incremental move-outs . we currently expect existing tenant rent increases in 2019 to be about the same or lower than in 2018 . 33 we believe that the current trends in move-in , move-out , in place contractual rents , and occupancy levels are consistent with our current expectation of continued rev enue growth . however , such trends , when viewed in the short-term , are volatile and not necessarily predictive of our revenues going forward because they may be subject to many short-term factors . such factors include , among others , initial move-in rates , s easonal factors , the unit size and geographical mix of the specific tenants moving in or moving out , the length of stay of the tenants moving in or moving out , changes in our pricing strategies , and the degree and timing of rate increases previously passed to existing tenants . importantly , we continue to refine our ongoing revenue management program which includes regular internet data scraping of local competitors ' prices . we do this in order to maintain our competitive market price advantage for our various sized storage units at our stores . this program helps us maximize each store 's occupancies and our self storage revenue and noi . we believe that , through our various marketing initiatives , we can continue to attract high quality , long term tenants who we expect will be storing with us for years .
| financial condition and results of operations our financing strategy is to minimize the cost of our capital in order to maximize the returns generated for our stockholders . for future acquisitions , the company may use various financing and capital raising alternatives including , but not limited to , debt and or equity offerings , credit facilities , mortgage financing , and joint ventures with third parties . 27 on june 24 , 2016 , certain wholly owned subsidiaries ( “ term loan secured subsidiaries ” ) of the company entered into a loan agreement and certain other related agreements ( collective ly , the “ term loan agreement ” ) between the term loan secured subsidiaries and insurance strategy funding iv , llc ( the “ term loan lender ” ) . under the term loan agreement , the term loan secured subsidiaries are borrowing from term loan lender in the principa l amount of $ 20 million pursuant to a promissory note ( the “ term loan promissory note ” ) . the term loan promissory note bears an interest rate equal to 4.192 % per annum and is due to mature on july 1 , 2036. pursuant to a security agreement ( the “ term loan s ecurity agreement ” ) , the obligations under the term loan agreement are secured by certain real estate assets owned by the term loan secured subsidiaries . j.p. morgan investment management , inc. acted as special purpose vehicle agent of the term loan lender . the company entered into a non-recourse guaranty on june 24 , 2016 ( the “ term loan guaranty , ” and together with the term loan agreement , the term loan promissory note and the term loan security agreement , the “ term loan documents ” ) to guarantee the paymen t to lender of certain obligations of the term loan secured subsidiaries under the term loan agreement .
| 5,798 |
the company utilizes an accelerated amortization method for customer relationships so as to follow the pattern in which the story_separator_special_tag in part ii of our annual report on form 10-k for the year ended december 31 , 2018 , for additional information regarding results of operations for the year ended december 31 , 2018 , as compared to the year ended december 31 , 2017 , and segment operating results for 2018 as compared to 2017. acquisition of united steel supply , llc on march 1 , 2019 , we purchased 75 % of the equity interest of united steel supply , llc ( uss ) for cash consideration of $ 93.4 million , plus a customary working capital transaction purchase price adjustment of $ 3.7 million , which was paid in september 2019. additionally , we have an option to purchase , and the sellers have the option to require us to purchase , the remaining 25 % equity interest of uss in the future . headquartered in austin , texas , uss is a leading distributor of painted galvalume ® flat roll steel used for roofing and siding applications , with distribution centers strategically located in mississippi , indiana , arkansas , and oregon . uss provides the steel segment a new , complementary distribution channel and connects us to a rapidly growing industry segment with customers that do not traditionally purchase steel directly from a steel producer . uss 's operating results from and after march 1 , 2019 , are reflected in our financial statements in the steel operations reporting segment . segment operating results ( dollars in thousands ) replace_table_token_5_th 33 steel operations segment steel operations consist of our electric arc furnace steel mills , producing sheet and long products steel from ferrous scrap and scrap substitutes , utilizing continuous casting and automated rolling mills , with numerous downstream processing and coating lines , as well as idi , our liquid pig iron production facility that supplies solely the butler flat roll division . our steel operations sell a diverse portfolio of sheet and long products directly to end-users , steel fabricators , and service centers . these products are used in a wide variety of industry sectors , including the construction , automotive , manufacturing , transportation , heavy equipment and agriculture , and pipe and tube ( including octg ) markets ( see item 1. business ) . steel operations accounted for 76 % and 75 % of our consolidated net sales during 2019 and 2018 , respectively . steel operations shipments ( tons ) : replace_table_token_6_th segment results 2019 vs. 2018 overall domestic steel demand remained steady during 2019 , with continued strength in the automotive , construction and other industrial sectors . however , a challenging steel pricing environment continued throughout 2019 , due to customer inventory destocking in conjunction with weakening scrap prices , which led to decreasing steel selling prices compared to 2018. steel operations segment shipments decreased 2 % in 2019 , as compared to 2018. net sales for the steel operations decreased 11 % in 2019 34 when compared to 2018 , due primarily to decreases in overall steel selling prices , particularly in sheet steel , and decreased steel mill shipments . ferrous raw materials used in our electric arc furnaces represent our single most significant steel manufacturing cost , generally comprising approximately 55 to 60 percent of our steel mill operations ' manufacturing costs . our metallic raw material cost per net ton consumed in our steel operations decreased $ 48 , or 14 % , in 2019 compared to 2018 , consistent with overall decreased domestic scrap pricing . as a result of average selling prices decreasing more than scrap costs , metal spread ( which we define as the difference between average steel mill selling prices and the cost of ferrous scrap consumed in our steel mills ) decreased 10 % in 2019 compared to the record-high 2018. due to this metal spread contraction , most notably in sheet steel , operating income for the steel operations decreased 44 % , to $ 1.0 billion , in 2019 compared to the record results in 2018 . metals recycling operations segment metals recycling operations consists solely of omnisource and includes both ferrous and nonferrous scrap metal processing , transportation , marketing , and brokerage services , strategically located primarily in close proximity to our steel mills and other end-user scrap consumers throughout the eastern half of the united states . in addition , omnisource designs , installs , and manages customized scrap management programs for industrial manufacturing companies at hundreds of locations throughout north america . our steel mills utilize a large portion ( approximately 65 % ) of the ferrous scrap sold by omnisource as raw material in our steelmaking operations , and the remainder is sold to other consumers , such as other steel manufacturers and foundries . metals recycling operations accounted for 11 % and 13 % of our consolidated net sales during 2019 and 2018 , respectively . metals recycling operations shipments : replace_table_token_7_th segment results 2019 vs. 2018 our metals recycling operations were negatively impacted throughout 2019 by falling ferrous and nonferrous scrap prices compared to 2018 , as well as a challenging steel market in which customers were also reluctant to purchase during a falling pricing environment . net sales for our metals recycling operations decreased 22 % in 2019 as compared to 2018 , driven by decreased shipments and ferrous scrap prices declining in eight of the twelve months during the year . story_separator_special_tag ( 6 ) we expect to make cash outlays in the future related to our unrecognized tax benefits ; however , due to the uncertainty of the timing , we are unable to make reasonably reliable estimates regarding the period of cash settlement with the respective taxing authorities . accordingly , unrecognized tax benefits and related interest and penalties of $ 11.6 million as of december 31 , 2019 , have been excluded from the contractual obligations table above . refer to note 4. income taxes to the consolidated financial statements elsewhere in this report for additional information . other matters inflation we believe that inflation has not had a material effect on our results of operations . 39 environmental and other contingencies we have incurred , and in the future will continue to incur , capital expenditures and operating expenses for matters relating to environmental control , remediation , monitoring and compliance . during 2019 , we incurred costs related to the monitoring and compliance of environmental matters in the amount of approximately $ 32.1 million and capital expenditures related to environmental compliance of approximately $ 2.3 million . of the costs incurred during 2019 for monitoring and compliance , approximately 68 % were related to the normal transportation of certain types of waste produced in our steelmaking processes and other facilities , in accordance with legal requirements . we incurred combined environmental remediation costs of approximately $ 1.3 million at all of our facilities during 2019. we have an accrual of $ 3.6 million recorded for environmental remediation related to our metals recycling operations , and $ 2.6 million related to our minnesota ironmaking operations . we believe , apart from our dependence on environmental construction and operating permits for our existing and any future manufacturing facilities , that compliance with current environmental laws and regulations is not likely to have a materially adverse effect on our financial condition , results of operations or liquidity . however , environmental laws and regulations evolve and change , and we may become subject to more stringent environmental laws and regulations in the future , such as the impact of united states government or various governmental agencies introducing regulatory changes in response to the potential of climate change . critical accounting policies and estimates management 's discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . we review the accounting policies we use in reporting our financial results on a regular basis . the preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses and related disclosure of contingent liabilities . we evaluate the appropriateness of these estimations and judgments on an ongoing basis . 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 value of assets and liabilities that are not readily apparent from other sources . results may differ from these estimates due to actual outcomes being different from those on which we based our assumptions . we believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements . revenue recognition and allowance for doubtful accounts . except for our steel fabrication operations , we recognize revenues at the point in time the performance obligation is satisfied , and control of the product is transferred to the customer upon shipment or delivery , at the amount of consideration the company expects to receive , including any variable consideration . the variable consideration included in the company 's steel operations segment contracts , which is not constrained , include estimated product returns and customer claims , and may include volume rebates which are recorded on an expected value basis . our steel fabrication operations segment recognizes revenue over time at the amount of consideration the company expects to receive . revenue is measured on an output method representing completed fabricated tons to date as a percentage of total tons required for each contract . the company does not exercise significant judgements in determining the timing of satisfaction of performance obligations or the transaction price . provision is made for estimated product returns and customer claims based on historical experience . if the historical data used in our estimates does not reflect future returns and claims trends , additional provision may be necessary . the allowance for doubtful accounts is based on our best estimate of known credit risks , historical experience , and current economic conditions affecting our customers , which estimates may or may not prove accurate . we are exposed to credit risk in the event of nonpayment by our customers , which in steel operations are principally intermediate steel processors and service centers that sell our products to numerous industry sectors , including the construction , automotive , manufacturing , transportation , heavy and agriculture equipment , and pipe and tube ( including octg ) markets . our metals recycling operations sell ferrous scrap to steel mills and foundries , and nonferrous scrap , such as copper , brass , aluminum and stainless steel to , among others , ingot manufacturers , copper refineries and mills , smelters , and specialty mills . our steel fabrication operations sell fabricated steel joists and deck primarily to the non-residential construction market . we mitigate our exposure to credit risk , which we generally extend initially on an unsecured basis , by performing ongoing credit evaluations and taking further action when necessary , such as requiring letters of credit or other security interests to support the customer receivable . if the financial condition of our customers were to deteriorate , resulting in the impairment of their ability to make payments , additional allowance may be required . inventories .
| other operations consolidated results 2019 vs. 2018 selling , general and administrative expenses . selling , general and administrative expenses increased 5 % , or $ 19.9 million , to $ 436.5 million during 2019 compared to 2018 , representing 4.2 % and 3.5 % of net sales , respectively . profit sharing expense was $ 78.0 million in 2019 , a decrease of $ 78.0 million from the record $ 156.0 million earned during 2018. the company-wide profit sharing plan represents 8 % of pretax earnings ; therefore , our lower 2019 earnings resulted in lower profit sharing . 36 interest expense , net of capitalized interest . during 2019 , interest expense of $ 127.1 million was comparable to the $ 126.6 million incurred during 2018 , based on consistent debt levels during the majority of both years . income tax expense . during 2019 , income tax expense of $ 197.4 million , representing an effective income tax rate of 22.6 % , was down 46 % from the $ 364.0 million , representing an effective income tax rate of 22.5 % , during 2018 , consistent with lower pretax earnings . included in the balance of unrecognized tax benefits of $ 10.2 million at december 31 , 2019 , were potential benefits of $ 6.0 million that , if recognized , would affect our effective tax rate . we recognize interest and penalties related to our tax contingencies on a net-of-tax basis in income tax expense . during the year ended december 31 , 2019 , we recognized a benefit from the decrease of interest expense of $ 400,000 , net of tax . in addition to the unrecognized tax benefits noted above , we had $ 1.4 million accrued for the payment of interest and penalties at december 31 , 2019. we file income tax returns in the united states federal jurisdiction as well as income tax returns in various state jurisdictions .
| 5,799 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.